C1150233 approval ltr

• Contract/PO #: C150233
• Contractor Name: Tom Hill
• Contract Type: Loan
• County: Grand
• Loan Projects - Doc Type: Approval Letter

STATE OF COLORADO
Colorado Water Conservation Board
Department of Natural Resources
1313 Shemian Street, Room 721
Denver, Colorado 80203
Phone:[phone]
Fax:[phone]
www.cwcb. state.co.us
TO: Colorado Water Conservation Board Members
FROM: Vaughn McWilliams, Contract Manager ��' l
Mike Serlet, P.E., Chief � ���/�
Water Supply Planning and �inance Section
Bill Ritter Jr.
Govemor
Hazris D. Sherman
DNR Executive
Director
Jennifer L. Gnnbel
CWCB Director
Dan McAullife
DATE: May 13, 2008 CWCB Depury
Director
SUBJECT: Agenda Item No. 19a, May 20-21, 2008, Board Meeting
Water Supply, Planning and Finance — Changes to Existing Loans
Tom Hill — McElroy Dam Rehabilitation Project
Introduction
At the November 2006 board meeting, the Colorado Water Conservation Board (CWCB)
approved a loan to Tom Hill in the amount of $862,540 from the Severance Taac Trust Fund
Perpetual Base Account. The $862,5401oan was for the rehabilitation of the McElroy Reservoir
Dam on the Gore Pass Ranch (Ranch). The loan is secured by land and water rights associated
with the Gore Pass Ranch.
In a letter dated April 11, 2008, Mr. Hill and his wife Linda requested that the CWCB
subordinate its interest in the Gore Pass Ranch so that the Hills could sell a conservation
easement on the Ranch to the Colorado Division of Wildlife (DOW) for $3,750,000. The
conservation easement will preserve in perpetuity the Gore Pass Ranch in its current state for
agricultural use, and the requested subordination would ensure that the CWCB's lien on the
ranch is also subject to the conservation easement.
Staff Recommendation
Staff recommends that the Board approve subordinating the CWCB's interest in the Ranch to the
DOW's conservation easement, and to increase the collateral for the loan with 1) a first-position
lien on the Gore Pass Ranch, including its water rights; 2) a first-position lien on the Hills' 40-
acre Olathe property; and 3) a lien on any future property that the Hills purchase to defer taxes
from the sale of the conservation easement. In addition, staff recommends as a condition of
approval that the Hills agree to continue to market the Gore Pass Ranch for sale in good faith.
Finally, staff recommends amending the terms of the loan from 30 years at 2.5% per annum to
10 years at 2.0% per annum, as permitted by Financial Policy #7 (Interest Rates).
Water Supply Protection • Watershed Protection & Flood Mitigation • Stream & Lake Protection • Water Supply Planning & Finance
Water Conservation & Drought Planning • Intrastate Water Management & Development