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Mr. Eric Scott <br /> RE:Lamb Lakes Site M-2018-039 <br /> December 2, 2019 <br /> alternatives. However, the Division informed NWCWD that self-insurance is no longer a <br /> Financial Warranty option. <br /> In order to issue a corporate surety bond, NWCWD is required to agree to an open-ended <br /> indemnification of the surety company as well as its officers, directors, affiliated companies and <br /> others. Legal counsel has advised NWCWD that it does not have the legal right to issue an <br /> open-ended indemnification. It has been advised that local governments in Colorado are <br /> generally legally prohibited from entering into indemnification agreements and that, if they do <br /> so, the indemnification agreement is void and unenforceable. <br /> Specifically, Section 29-1-110, C.R.S., which is part of the Local Government Budget Law of <br /> Colorado, states that, during the fiscal year, no officer or employee of a local government <br /> (including special districts governed by the Special District Act) may expend or contract to <br /> expend money or incur any liability which, by its terms, involves expenditures of money in <br /> excess of the amounts appropriated. Any contract made in violation of this section shall be void <br /> and no money belonging to the local government shall be paid on such contract. Thus, NWCWD <br /> cannot agree to the indemnifications required by the corporate surety which will continue during <br /> the term of the extended surety bond. <br /> Similarly, NWCWD has been advised that multi-year fiscal obligations under Article X, <br /> Section 20 of the Colorado Constitution known as the Taxpayer's Bill of Rights, require an <br /> election for the creation of multi-fiscal year direct or indirect district debt or other financial <br /> obligation without adequate present cash reserves pledged irrevocably and held for payments in <br /> future years. Multi-year fiscal obligations entered into in violation of this election requirement <br /> are void and unenforceable. <br /> Based upon the foregoing, the corporate surety bond is not an option available to NWCWD to <br /> provide proof of financial responsibility in connection with the issuance of the permit. Other <br /> forms of financial guarantees, such as irrevocable letters of credit, certificates of deposit, deeds <br /> of trust and other forms of security during the term of the permit are not feasible for NWCWD. <br /> Financial Capability of NWCWD: We recognize that the reason for providing proof of financial <br /> responsibility is that certain newly formed governmental entities may not have sufficient assets <br /> to fully implement their responsibilities under the terms of the DRMS permit. However, <br /> NWCWD is a financially responsible unit of local government with substantial financial <br /> capability in excess of many smaller municipalities. <br /> NWCWD has been serving customers in northern Weld and eastern Larimer counties, including <br /> the towns of Pierce, Ault, Eaton, Nunn, Severance, Windsor, Lucerne, Gill, and Galeton <br /> since 1962. NWCWD encompasses 325 square miles, 5,200 water taps, and over 1.75 billion <br /> gallons of water usage per year. An independent financial audit through December 31, 2018, <br /> found total capital assets in excess of $115.1 million while long term debt was roughly <br /> $12.2 million. <br /> Page 2 of 3 <br />