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<br />. <br /> <br />. <br /> <br />. <br /> <br />Colorado Water Conservation Board <br />Department of Natural Resources <br />721 Centennial Building <br />, 31 3 Sherman Street <br />Denver, Colorado 80203 <br />Phone: (303) 866-3441 <br />FAX: (303) 866-4474 <br /> <br />STATE OF COLOMDO <br /> <br />o <br /> <br />Roy Romer <br />Governor <br /> <br />MEMORANDUM <br /> <br />James S. Lochhead <br />Executive Director, DNR <br />Danes C. Lile, P.E. <br />Director, eweB <br />Peter H. Evans <br />Acting Director, eweB <br /> <br />TO: <br /> <br />Colorado Water Conservation Board Members <br />/\ <br />Bill Stanton, Section Chief ~' <br />Jan lilian, Contract Adtninistr. t\ <br />Construction Fund Set!!g!v'f <br />! <br /> <br />May 4, 1998 <br /> <br />FROM: <br /> <br />DATE: <br /> <br />SUBJECT: Agenda Item 20, May 11-12, 1998, Board Meeting <br />Water Project Construction Loan Program <br />Operation, Maintenance and Replacement Accounts <br /> <br />INTRODUCTION <br /> <br />This is in response to a recent Board inquiry concerning the borrower's operation and <br />maintenance account requirements for Construction Fund loans. <br /> <br />This memo mainly addresses ditch and reservoir companies because there don't appear <br />to be readily available sources of management information for such companies, <br />Governmental entities have numerous sources for financial information and assistance <br />such as the State of Colorado Division of Local Government or the U. S, Department of <br />Agriculture's Rural Development, or nonprofit corporations such as Rural Community <br />Assistance Corporation. <br /> <br />A concern for both the Board and the CWCB staff is that once we lend money to a <br />borrower, that the borrower maintain its financial ability to repay the loan and to operate <br />the project in a financially responsible manner. <br /> <br />DISCUSSION <br /> <br />CWCB's PROCESS FOR MONITORING A BORROWER'S FINANCIAL CONDITION, The first step in <br />determining a borrower's financial condition occurs during the staffs review of the <br />feasibility study, The study shows if the borrower's income is initially adequate to cover <br />the cost of operation, maintenance, and all debt service related to the proposed project. <br />After the borrower begins repaying the loan, providing the CWCS staff with its annual <br />financial statements would allow staff to stay apprised of each borrower's financial <br />condition. If the staffs review of the borrower's annual financial statement suggests that <br />the borrower's income is not adequate, the CWCB may exercise its authority under the <br />