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<br />- --- '!" <br /> <br />. <br /> <br />. <br /> <br />the following: <br /> <br />annual operating and maintenance expenses <br />- deposits to any required reserve funds <br />the annual payments on all outstanding loan debt and the proposed loan debt <br /> <br />If the borrower had made a rate adjustment in the past 12 months, the analysis would be made <br />based on the adjusted revenue rate. <br /> <br />SPECIFIC REQUEST FOR PARITY DEBT PROVISION: TOWN OF LYONS <br /> <br />The Town of Lyons is in the process of rehabilitating several components of their water system <br />at a cost of almost $1 million. The raw water portion of this project is being funded by a loan <br />from the CWCB in the amount of $280,500. Tile Town had existing loans from the State of <br />Colorado Department of local Affairs (DOlA) and the Authority, in addition to a bond issue, <br />all of which had liens against the Town's revenues. <br /> <br />The Town conducted a Parity Lien Test and certified that its revenues were sufficient to pay <br />the operating and maintenance expenses and the annual debt service for all of the loans <br />involved. Both the Authority and the DOlA con$ented to'parity status for the CWCB's lien on <br />the Town's revenues. <br /> <br />So, although the CWCB's lien on the revenues Is junior to the DOlA's and Authority's liens, <br />all three liens now have equal (proportionate) claims to the revenues in the event of a default. <br /> <br />The Town recently notified us that it was preptlring to close on an additional loan from the <br />Authority. Because of this additional loan as well as loans it anticipates obtaining for future <br />improvements to its water system, the Town requested that CWCB add a parity debt provision <br />to its contract. <br /> <br />The Parity Lien Test conducted for our contract included the debt service for this loan from the <br />Authority, so the Town's revenues are sufficient to cover all of its expenses and debt service, <br />and the Town has met all of the other proposed CWCB requirements. <br /> <br />STAFF RECOMMENDATION "^,,,hr'" Ioty' ~')J1.., ~ ~ <:<... ~ ~ <br /> <br />The staff recommends: ~ / es~ ~ tofr~_ <br /> <br />tn-I Co....... ~ ~ <br />1. That the Board authorize the staff to include a parity debt provision in CWCB loan contracts <br />or contract amendments which will set forth requirements that borrowers must meet to incur <br />. additional debt on a parity status in accordance with the GUIDELINES FOR PARITY STATUS AND <br />PARITY LIEN TEST, as applicable. <br /> <br />2. That the Board authorize the staff to amend the CWCB loan contract with the Town of <br />Lyons to include a parity debt provision in accordance ~'th the GUIDELINES FOR PARITY STATUS <br />AND PARITY LIEN TEST. I " r . I n :fP2 <br />O\L 51A.v'\''J-V\. (foN{)~ <br /> <br />V, VM^^ <br /> <br />Page 3 of 3 <br />