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3. Describe the voting structure of the proposed enterprise. Will it be proportional <br />to the amount of water allocated among the participants or will there be equal voting <br />between members? <br />Answer: Similar to the Subdistrict, the WGFP enterprise will consult with the WGFP <br />Allottees (project participants) on any decisions, and historically Northern has always <br />attempted to reach a consensus on such decisions. If a consensus cannot be reached, <br />Northern has typically asked for a vote on a per -entity basis, without regard to the <br />amount of water or units allocated to any particular entity. This structure could be <br />changed by participants in the future. However, as currently structured, the WGFP <br />Enterprise Board retains sole discretion over the decisions committed to it and reserves <br />all powers granted to it by its organizing resolution and the water activity enterprise <br />statute. <br />4. Is the Enterprise considered to be a related State entity or fully removed? Will it <br />be organized as a "for profit" or "non-profit" entity? Will the Enterprise enjoy any <br />forms or benefits of governmental immunity? <br />Answer: Northern and its Municipal Subdistrict own several enterprises, including the <br />WGFP Enterprise, and while we are unaware of any case law definitively resolving this <br />issue, Northern's position has been that water activity enterprises are entitled to <br />immunity from tort liability under the Colorado Governmental Immunity Act. <br />5. Under the Forfeiture Section of the allotment agreement, it states that, "if an <br />Allottee fails to pay its proportionate amount of capital expenses, then the amount of its <br />"Vested Allotment" (i.e. the amount of allotment for which it has already paid) will be <br />calculated, and 50% of its Vested Allotment and 100% of its Unvested Allotment is <br />forfeited and reallocated". What is the underlying logic for the specific percentages <br />used for the forfeiture and reallocations amounts? <br />Answer: As with many of the terms of the Allotment Contract, the forfeiture <br />requirements were negotiated in Legal Committee meetings with attorneys for all <br />WGFP Participants and the WGFP Enterprise. This provision was also discussed at <br />length by a specific Committee of Participants to find percentages that would be <br />acceptable to all Participants on a consensus basis. The logic of these forfeiture <br />provisions is to provide a strong incentive for all Participants to pay the capital <br />expenses for the WGFP, to ensure a level of confidence that capital costs will be paid <br />and the project will be completed. However, those concerns were balanced with an <br />effort to be fair to a Participant which has made substantial contributions to the project <br />but is unable to make future payments. This provides a level of assurance that each <br />Participant will obtain the benefits contemplated in the Allotment Contract (primarily <br />19 <br />