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, . . e . . Agenda Item 17j. November 24, 1997 (Updated December 1, 1997) Page 3 COLLATERAL The District will receive revenues from its water customers. The CWCB will take a security interest in this stream of revenues, and will be in a parity position with all debts of the District. The District has taxing authority, and will own water rights that can be used as collateral. STAFF RECOMMENDATION The staff recommends: I. That a Construction Fund Authorization in an amount of $500,000, not to exceed 75% of actual cost, be recommended for the Chatfield South Water District to purchase water rights and to pay for the usual and customary costs of legal and engineering services needed to transfer these water rights to District use, and 2. That the fmancing terms for this Construction Fund Authorization shall be at an annual percentage rate equal to the "Standard" income rate for a municipality (as set by the CWCB November 24 1997), for a duration of 20 vears, and 3. That loan approval shall be contingent upon an appraisal of the value of the water rights to be acquired, and upon all standard contracting provisions of the CWCB, as determined by the CWCB Director, and 4. That collateral for the loan shall be a security interest in the stream of income derived by the District from the sale of water, and a security interest in the water rights purchased. Action Taken bv the CWCB November 25. 1997: The CWCB approved the Staff recommendation with the additioual provision that the loan may be nsed to refmance a purchase of raw water rights that has already been completed, if approved by the CWCB Director. The interest rate for the loan will be 4.75%. In addition, the District, as a condition of contracting must properly approve the nse of water rights as collateral. Attachments D:\msword\ChatficldSo97 .memo