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. ' ' ~FRYINGPAN-ARKANSAS PROJECTJUN to
1993 ]FINAL COST ALLOCATI<DN
TABLE OF CONTENTS
I. Introduction
A. Project Description 1. Project Features
2. Responsible Federal Agency
3. Sponsoring Agency B. Legislative History
l. House Document 187
2. House Document 130 - Operating Principles
3. House Document 353 4. Public Law 87-590
5. Reclamation Development Act of 1974 6. Amendment to the Fryingpan-Arkansas Act 7. Bessemer Ditch
IT. The Allocation of Costs
A. Procedure
B. Costs
C. Justifiable Expenditure
D. Interest Rate and Period of Analysis
E. Operation, Maintenance, and Replacement Costs F. Separation of East and West Slope Allocations III. National Economic Development Objectives
A. West Slope
l. Replacement Reservoir 2. Marketable Water Supply 3. Fish and Wildlife Enhancement 4. Flood Control Benefits
5. Recreation
6. Highway Improvement
.
B. East Slope
1. Reimbursable Purposes a. Irrigation
b. Municipal and Industrial Water Supply
c. Municipal and Industrial Water Delivery System
(1) Fountain Valley Conduit (2) Arkansas Valley Conduit d. Hydropower ( 1) Market Demand (2) System Design (3) Justifiable Expenditure 2. Nonreimbursable Purposes a. Section 4 Costs
(1) Fish and Wildlife
(2) Recreation
(3) Scenery Conservation
(4) Historical/ Archeological b. Flood Control
c. Highway Improvement IV. Cost Allocation Comparison
V. Project Repayment
A. Contracting Entities
B. Southeastern Colorado Water Conservancy District C. Fountain Valley Conduit
D. Water Sales from Ruedi E. Pueblo West
F. Power Revenues VI. Glossary
FR YINGPAN-ARKANSAS PROJECT FINAL COST ALLOCATION
INTRODUCTION
The Fryingpan-Arkansas Project (Project) is a multipurpose water resource development authorized by the Act of Congress dated August 16, 1962, (76 Stat. 389) as amended. Project purposes include a supplemental irrigation and municipal and industrial (M&I) water supply, power generation, flood control, recreation enhancement, and the conservation of fish, wildlife, scenic, historical, and archeological resources. Construction began in 1964 and the Project was substantially complete in fiscal year (FY) 1'982 when deliveries of water began on a permanent basis. Construction continued on fish and wildlife facilities and other minor items after FY 1982. Completion of construction signals the task of determining the
Project's total cost and of providing an equitable basis for the allocation of reimbursable and nonreimbursable joint costs. The purpose of this report is to provide that final allocation of costs to Project purposes. Repayment obligations will be based on the costs allocated to
reimbursable purposes.
The tabulations on the pages 3 and 4 summarize the investment costs allocated to project purposes and are the basis of repayment obligations. Estimates of annual operation, maintenance, and replacement (OM&R) costs are capitalized and included in the cost allocation process. As authorized, the costs allocated to recreation, fish and wildlife enhancement, flood control, scenery, historical, and archeological conservation, and roads
improved to standard are non-reimbursable.
Project Description
Water in the Colorado River Basin on the west slope of the Continental Divide is collected
from the headwater tributaries of the Fryingpan River and Hunter Creek for transportation
through the Charles H. Boustead Tunnel to Turquoise Lake on the eastern slope. Water
flows from Turquoise, through Mt. Elbert Conduit to Mt. Elbert Forebay to Twin Lakes.
The two units of the Mt. Elbert pumped-storage powerplant are located at Twin Lakes which serves as the afterbay for the powerplant. From Twin Lakes, water flows into the Arkansas
River and is stored in Pueblo Dam and Reservoir. The imported water, plus regulation of
Arkansas River water, provides supplemental water supplies for irrigation, M&I, and power generation. Flood control space is provided in Pueblo Dam and Reservoir on the Arkansas River above Pueblo and the operation of Ruedi Dam and Reservoir (Ruedi) on the Fryingpan
River on the western slope. Benefits are also realized for recreation and fish and wildlife
enhancement through Project operations and facilities.
Structures at Turquoise Lake and Twin Lakes which existed prior to the Project have been
water and storage rights with previous owners. The Project also regulates and transports water of the Homestake Project, a transmountain diversion developed by the Colorado front range communities of Colorado Springs. and Aurora. '
An average annual 69,200 acre-feet are imported from the Colorado River Basin to the Arkansas ValJey for a supplemental irrigation water supply for 280,600 acres and a M&I water supply for communities on the eastern slope. Power facilities of the Project have a total capacity of 200 megawatts of pumped-storage power generation. The Fountain Valley Conduit diverts water from Pueblo Reservoir for delivery to municipalities in the Colorado Springs area.
Operation of the Project conforms to the criteria and limitations of the "Operating Principles, Fryingpan-Arkansas Project." These principles reflect agreements by affected parties on both
the eastern and western slopes to protect existing recreation and fishing environments and established water rights.
Project Features
Major Project features on the west slope are Ruedi Dam and Reservoir and the Northside and Southside Collection Systems which divert water to the Charles H. Doustead Tunnel. East
slope facilities are Sugar Loaf Dam and Turquoise Lake, the Mt. Elbert Conduit, Halfmoon Diversion Dam, Mt. Elbert Forebay, Twin Lakes Dam and Reservoir, Pueblo Dam and Reservoir, the Fountain Valley M&I water conduit, Mt. Elbert pumped-storage powerplant,
transmission lines and substations, and permanent maintenance facilities. These major features and the population served are located in Eagle, Pitkin, Lake, Chaffee, Fremont, Pueblo, El Paso, Otero, Crowley, Bent, Prowers, and Kiowa counties in Colorado. A
detailed description of Project facilities is included and the final environmental statement completed in 1975 contains descriptions of Project facilities and operations.
Responsible Agencies
The Bureau of Reclamation (Reclamation) of the United States Department of the Interior is
the Federal agency responsible for construction and operation of the Project. The Western
Area Power Administration
CVV
APA) of the Department of Energy markets the power generated at Mt. Elbert. The United States Forest Service constructed and maintains recreation facilities at Ruedi, Sugar Loaf, and Twin Lakes Reservoirs. The State ofColorado (State) constructed and operates recreation facilities, the wildlife management area,
and the fish hatchery at Pueblo Reservoir. The Fountain Valley Authority operates the M&I
water supply conduit.
FRYII'-IGP>\t-1 PROJECT
SUMMARY TABLE OF COSTS
RUEDI ALLOCATlON (2)
PURPOSE SEPARABLE JOINT TOTAL REIMBURSABLE NON-REIMBURSABL§
MARKETABLE WATER
Construction Costa 1,850,000 6,828,000 8,678,000 8,678,000
-Interest During Construction 143,000 491,000 634,000 634,000-Estimated Annual OM&R 0 16,200 16,200 16,200
-REPLACEMENT WATER
Conatrucdon Cosl8 7,600,000 0 7,600,000 7,600,000
-Interest During Construction 586,000 0 586,000 586,000
-Estimated Annual OM&R 12,000 0 12,000 12,000
-FlOOD CONTROL
Conatrucllon Coats 0 155,000 155,000
-
155,000Interest During Conatructlon 0 11,000 11,000
-
11,000Estimated Annual OM&R 0 400 400
-
400RECREATION
Construction Costa 1,326,000 0 1,326,000
-
1,326,000Interest During Construction 84,000 0 84,000
-
84,000Estimated Annual OM&R (1) 55,000
.
0 55,000-
55,000,--~ ---·
-·--FISH AND WILDLIFE
Construction Costa 1,283,000 5,208,000 6,491,000
-
6,491,000Interest Durfng Construction 148,000 375,000 523,000
-
523,000Estimated Annual OM&R (1) 0 12,400 12,400
-PUBLIC LAW 87-874
Construcdon Coals 604,000 0 604,000
-
604,000Interest During Construction 47,000 0 47,000
-
47,000Estimated Annual OM&R (1) 0 0 0
-TOTAL REIMBURSABLEINON·AEIMBUASABLE INVESTMENT COSn 26,739,000 17,498,000 9,241,000
(1) Annual operation, maintenance, and replaoement coats are the reaponalbKity of lh• admlnl.eterfng agency.
(2) The Rued allocadon II at 1969 prfoe levels.
FRYINOPAN ARKANSAS PROJECT SUMMARY TABLE OF COSTS
EAST SLOPE AUOCAnON
----
-----PURPOSE SEPARABLE JOINT TOTAL REIMBURSABLE NON-REIMBURSABLE
----IRRIGATIONConstruction Costs 14,081,000 61,947,000 76,028,000 76,028,000 0
Interest During Construction 3,717,000 13,351,000 17,068,000 0 17,068,000
Estimated Annual OM&R 0 321,871 321,871 321,871 0
MUNICIPAL AND INDUSTRIAL WATER
Construction Costs 5,267,000 40,900,000 46,167,000 46,167,000
Interest During Consti\JCtlon 1,390,000 8,815,000 10,205,000 10,205,000
Estimated Annual OM&R 0 212,513 212,513 212,513
POWER
Consii\JCtlon Costs 115,933,000 10,343,000 126,276,000 126,276,000 Interest During Construction 19,004,000 2,229,000 21,233,000 21,233,000 Estimated Annual OM&R 3,397,935 53,741 3,451,676 3,451,676
FLOOD CONTROl
Consti\Jctlon Costs 10,212,000 26,712,000 36,924,000 36,924,000
Interest During ConstructJon 2,696,000 5,757,000 8,453,000 8,453,000
Estimated Annual OM&R 138,796 138,796 138,796
FISH AND WILDLIFE
Construction Costs 34,676,000 49,963,000 84,639,000 84,639,000
Interest During Consti\JCtlon 4,088,000 10,768,000 14,856,000 14,856,000
Estimated Annual OM&R (1) 634,947 259,605 894,552
RECREATION
Consti\JCtlon Costs 41,705,000 0 41,705,000 41,705,000
Interest During Consti\JCtlon 3,167,000 0 3,167,000 3,167,000
Estimated Annual OM&R (1) 1,232,261 0 1,232,261
SCENERYCONSERVAnON
ConstnJctlon Costs 24,307,000 0 24,307,000 24,307,000
lntemst During Consti\JCtlon 4,676,000 0 4,676,000 4,676,000
Estimated Annual OM&R 0 0 0
HISTORICAUARCHEOlOGICA1.
ConstNCtlon Costs 961,000 0 961,000 961,000
lnterost During Construction 101,000 0 101,000 101,000
Estimated Annual OM&R 0 0 0
PUBLIC LAW 87-874
Consii\JCtlon Costs 935,000 0 935,000 935,000
lnterost During Conswctlon 184,000 0 184,000 184,000
Estimated Annual OM&R 0 0 0 0
FOUNTAIN VALLEY CONDUIT
Consti\JCtlon Costs 57,676,000 0 57,676,000 57,676,000
Interest During ConstructJon 7,193,000 0 7,193,000 7,193,000 Estimated Annual OM&R (1) 1,314,000 0 1,314,000 1,314,000
~ ---·
t RKANSAS VALLEY CONDUIT
Construcllon Costs 2,294,000 0 2,294,000 2,294,000
lnterost Durtng Construction 55,000 0 55.000 55,000
1-
Estimated Annual OM&R 0 0 0 0~TOTAL REIMBURSABLEJtiON-RE MBURSABLE INVESTMENT cosn 585,103,000 347,127,00 237,976,000
--
--
---
Sponsoring Agency
The Southeastern Colorado Water Conservancy District (District) is the sponsoring agency for this Project. The District's boundary extends along the Arkansas River from Buena Vista to Lamar and along Fountain Creek from Colorado Springs to its confluence with the
Arkansas River at Pueblo. This District was organized according to the laws of the State in
1958.
Repayment Entities
The District has contracted with the United States to repay the reimbursable costs allocated to irrigation and the M&I purposes on the eastern slope. Costs allocated to the M&I delivery systems is a repayment obligation of the District. The Fountain Valley Authority has subcontracted with the District for repayment of the investment costs of the Fountain Valley
Conduit and is responsible for the annual operation, maintenance, and replacement costs.
Investment costs allocated to the power purpose are repaid by users of the power generated at
Mt. Elbert.
Legislative History
House Document 187
House Document 187 of the 83rd Congress, dated June 18, 1953, presents the plan of the Project to Congress. This plan is the basis for the authorizing legislation in 1962. The
Project's development retains the basic concepts of the authorizing legislation with modifications.
House Document 130 - Operating Principles
The State adopted operating principles for the Project on April 30, 1959. These operating
principles, as amended, were subsequently incorporated into section 3 of the authorizing
legislation. They include the requirement that the west slope replacement reservoir be
complete and operational before any water is diverted to the eastern slope. Thus, Ruedi was the first facility to be constructed and completed. The operating principles are contained in House Document 130, 87th Congress, 1st Session, printed March 15, 1961.
House Document 353
This report, dated March 7, 1960, presented the plan for construction of Ruedi in lieu of Aspen Dam and Reservoir described in House Document 187. Incorporation of Ruedi in the Project provided for a larger reservoir at a site more acceptable to western slope interests. Substantial benefits in the form of fish and wildlife and recreation benefits, an assured water
supply for irrigation and M&I uses, and flood control benefits are realized for western slope interests with the larger reservoir.
Public Law 87-590
The Project was authorized August 16, 1962, (Public Law 87-590, 76 Stat. 389). The stated purposes were to supply water for irrigation, domestic, and M&I uses; to generate and transmit hydroelectric power; and to control floods. In addition to the Project purposes noted, the authorizing legislation provided for nonreimbursable planning, construction, operation and maintenance (O&M) of public recreational facilities, and the conservation of scenic, natural, historic, and archeological objects. These costs are referred to as section 4 costs.
Section l.(b) authorizes the construction of Ruedi as the replacement storage facility on the west slope. Water imported from the Colorado River Basin is limited to use within the State. Section 1. (c) permitted the construction of M&I water supply works by the Federal government should a determination be made that the construction of those facilities was infeasible for communities, individually or jointly. Repayment, with interest, for such facilities is required within 50 years from the first deliveries of water. The contracting entities must assume operation, maintenance and replacement (OM&R) costs.
Repayment of the irrigation allocation must be realized within 50 years subject to the irrigator's ability to pay. A water service contract in accordance with section 9.(e) of the 1939 Reclamation Act has been negotiated with the District. The legislation requires that the rates set for power and M&I be sufficient to recover the costs of construction and O&M allocated to those purposes within a 50-year timeframe and, if necessary, to provide power and M&I revenues to repay the irrigation component exceeding the repayment ability of the irrigators.
The Project is to be operated subject to provisions of compacts and treaties, notably the Colorado River Compact, the Mexican Water Treaty, and the Operating Principles. Reclamation Development Act of 1974
Title XI of Public Law 93-493 increased the appropriations ceiling of the Project. This legislation, dated October 24, 1974, also authorized the construction of the second tOO-megawatt unit at the Mt. Elbert pumped-storage powerplant.
Amendment to the Fryingpan-Arkansas Act
Title IX of Public Law 95-586, dated November 3, 1978, amended the authorizing legislation to include modifications and description's of the Project contained in the final environmental statement. This amendment also required compliance with state laws for minimum
streamflows and specified the maximum diversions from the Hunter Creek watershed. 6
Bessemer Ditch
Public Law 96-309, dated July 9, 1980, authorized design and construction to line 8,000 to
10,000 feet of Bessemer Ditch within the city of Pueblo. A heavy silt load was present in
the ditch prior to completion of Pueblo Reservoir. Seepage from the ditch increased with the
release of clear water from Pueblo Reservoir with a negative impact to homes and businesses
near the ditch. Costs of the ditch lining are allocated to the purposes served by Pueblo Dam
and Reservoir. The Bessemer Irrigation Ditch Company is responsible for maintenance and replacement of the completed gunite lining. Section 23 of Public Law 100-516 dated October 24, 1988, authorized the appropriation of funds for construction of 11,000 feet of lining.
THE ALLOCATION OF COSTS
The development of a water resource project to serve many purposes can provide efficiencies and economies which would not be achieved by construction of separate facilities, each serving a single purpose. The cost allocation process provides a means to establish and
measure compliance with Project financial requirements; to assign clearly identifiable costs associated with a particular purpose; and to allocate equitably the remaining joint costs that serve two or more purposes. The agency implementing the project is responsible for the
allocation of costs.
Procedure
The planning process for a particular project is a series of steps that identifies the water resource related problems or opportunities, identifies alternative plans or solutions, evaluates
and compares those alternatives, and ends in the selection of a plan. Several iterations may
be required before the selection of a recommended plan that meets the Federal objective and specific state and local concerns. The Federal objective is to promote efficient development
and utilization of water and land resources and to provide benefits for future generations. Benefits are measured by the difference in future conditions with and without the existence of the proposed project plan using compatible standards and for a common period of analysis.
Evaluation standards are defined in Reclamation Instructions and assume a long-term Federal perspective. Benefits attributable to Federal project costs will exclude those attributable to
private costs and to non-Federal public costs.
The period of analysis for a project with a Federal perspective is either the 100 years from
the initial date of service or the expecte{l economic life of the project. Increments to plans
should provide a net increase in benefits or include cost effective measures to address
specific concerns. The authorizing legislation and other documentation provide the logic and
processes used in the original plan development. The procedures used in that evaluation and
this final cost allocation follow procedures outlined in Reclamation Instructions, Part 116, dated July 16, 1959. Interim cost allocations prepared during construction years also
followed these procedures. These interim allocations are prepared as a budgetary tool and are not intended to stand as a definitive statement of the allocation. The last interim allocation was prepared for FY 1984.
The separable cost-remaining benefits (SCRB) method is used to allocate costs. The three major components of any SCRB cost allocation are the costs to be allocated, including
specific costs, the benefits to be realized for each purpose, and the cost of the single purpose
alternative for each purpose that provides the same level of benefits. Following is a brief
explanation of those components and other terms used in the allocation process.
Financial costs are defined as investment costs which include all implementation outlays,
corollary costs, the market value of contributions-in-kind, and interest during construction (IDC), plus estimated annual OM&R costs. Costs are estimated during the planning stage of
the project but once construction begins, costs renect annual financial statements showing expenditures, replacement, reconstruction, abandonment, and other financial transactions
recorded during the period of construction and operation. Estimated costs such as annual OM&R costs, the costs of single purpose alternatives, and benefit evaluations are calculated
to provide a common point in time for comparison. Most benefits began accruing in 1982
with the first permanent delivery of water. Any exceptions are noted. Upon completion of the final cost allocation, any anomalies in the prior application of revenue or distribution of
investment or operating costs are adjusted.
Separable costs are those costs which would be omitted from the project if one purpose of the project were excluded. They may also be costs incurred for structures serving several
but not all purposes. Costs which are not identifiable for a single purpose are defined as remaining joint costs and are then assigned proportionately to each purpose based on the remaining justifiable expenditure.
Certain costs are reimbursable and those are repaid by irrigators, power users,
municipalities, the State, or other entities which have contracted with the Federal government for repayment of project costs. The concept of reimbursable costs is provided in basic Reclamation law with the intent that those costs be repaid within a specific timeframe. Authorizing legislation for this Project requires repayment of reimbursable costs within 50
years. All reimbursable project costs are repajd with interest with the exception of costs allocated to irrigation which are non-interest bearing. The authorizing legislation provides for nonreimbursable expenditures for recreation, scenery conservation, fish and wildlife
enhancement, and historical and archeological resources. Costs for the flood control purpose are nonreimbursable in compliance with legislation in effect at the time of authorization.
Justifiable Expenditure
The total separable and remaining joint costs assigned to a particular purpose may not exceed the justifiable expenditure for that purpose. The justifiable expenditure is defined as the lesser of the capitalized annual benefits or the cost of a single purpose project providing those same benefits. Estimated annual benefits for the anticipated life of the project are capitalized to the present value in the first year of project operation - 1982. Benefits are measured by comparing conditions expected to occur with ultimate development of the project to those conditions expected to occur without the project.
Interest Rate and Period of Analysis
Interest during construction is computed using a simple rate of 3.046 percent, which is the unconstrained yield for long-term Government bonds in the fiscal year that construction began. Interest during construction accrues as construction costs are incurred for each feature and continues until benefits for project purposes begin to be realized. At that time the project is moved from construction to O&M status. Funds expended for activities after authorization but prior to construction are accumulated and included in the first year of construction costs. Construction was initiated in 1964. Interest during construction has been calculated for the total Project, specific features, and each purpose. Interest is not applied to the preauthorization costs which are nonreimbursable.
The costs allocated to power generation and the M&I water supply and delivery functions are reimbursable with interest. The interest bearing period for reimbursable costs begins in the year after the project is operational and benefits are realized. Interest is charged annually at the Project repayment rate. Interest on the marketable water supply in Ruedi Reservoir was deferred for 10 years under the provisions of the Water Supply Act of 1958. The interest rate on reimbursable costs is the same as the Project authorized rate - 3.046%.
Operation. Maintenance. and Replacement Costs
Operation, maintenance, and replacement costs were estimated based on expenditures actually incurred in project operation. Information on these costs was provided by WAPA, the State, the Forest Service, and the Eastern Colbrado Projects Office of the Bureau.
Separation of East and West Slope Allocations
Two cost allocations are prepared for the Fryingpan-Arkansas Project. Costs for Ruedi are separated between east and west slope purposes as Ruedi was constructed on a scale larger than required for a replacement reservoir. The costs of Ruedi as a replacement reservoir, including construction, associated IDC, and estimated OM&R, are incorporated as joint costs in the cost allocation prepared for the Eastern Slope.
Construction costs of the replacement reservoir are defined in the Operating Principles (House Document 130) as $7,600,000- the estimated cost of the replacement reservoir proposed at the Aspen site. Costs which exceed the cost of the replacement reservoir, are allocated to west slope purposes -a marketable supply of water for irrigation and M&I purposes, nonreimbursable fish and wildlife enhancement, recreatjon, and highway improvement. Incidental flood control benefits result from reservoir operations.
NATIONAL ECONOMIC DEVELOPMENT OBJECTIVES West Slope
The Operating Principles represent agreement between the eastern and western slope stakeholders. The Principles define the operation of the Project, establish ground rules for construction, and protect the rights of established water rights holders. Of particular importance to the western slope community is the provision for a replacement reservoir. Original plans included a 29,000 acre-feet reservoir above the town of Aspen on the Roaring Fork River at a cost of $7,600,000. In 1958 the Colorado Water Conservation Board
requested studies of alternative reservoir sites as area residents found the Aspen Dam site unacceptable. The geology and water supply conditions at a more acceptable site, Ruedi, permitted the development of a larger reservoir than Aspen, met the replacement
requirements of the Operating Principles and also provided an additional regulated water supply for other uses on the western slope. Construction costs 'for Ruedi were incurred from
1965 through 1969. Benefits and single purpose alternatives are evaluated at 1969 cost levels to provide a comparable time frame with the construction costs.
Replacement Reservoir
The separable construction costs for the replacement reservoir plus IDC equal $8,186,000. These separable costs are then incorporated in the allocation for the east slope as joint costs. OM&R is adjusted to the 1982 level and added to other east slope joint OM&R costs. Marketable Water Supply
Marketable water supply benefits on the western slope result from the provision of conservation space in Ruedi above the required size for a replacement reservoir. An alternative single purpose project, with a capacity of 54,000 acre-feet to provide this same water supply, is located at the Ruedi site. The cost of the single purpose alternatives, including lDC and capitalized annual OM&R costs, is $21 ,282,000.
The demand for M&I water on the western slope was anticipated to occur in 1975 with the development of the oil shale industry and the accompanying growth in the surrounding communities. Provisions of the Water Supply Act of 1958 (Public Law 85-500) are applicable and an interest-free period of 10 years is allowed for the allocated M&I costs
beginning in 1969. The entire amount of the construction costs, including IDC, are to be repaid within 50 years from the date water is initially stored.
Fish and Wildlife Enhancement- Ruedi Reservoir
The Fish and Wildlife single purpose alternative has been located at the Ruedi site with a capacity of 29,600 acre-feet and is estimated to cost $17,770,000. Benefits have been estimated by the Fish and Wildlife Service for the net gain in fishing provided by the permanent pool of 1,000 acre-feet of water. The 1969 present value of this stream of benefits is $16,144,000.
Flood Control - Ruedi Dam and Reservoir
The estimate of benefits for Ruedi was provided by the Los Angeles District Office of the Army Corps of Engineers. Snowmelt floods are the principal source of flood damage in that region, and flood control by reservoir regulation appreciably reduces the flood menace. The range of annual benefits at 1959 price levels is estimated to be from $8,000 to $15,000. The midrange of this estimate ($11 ,500), is indexed to 1969 price levels and capitalized for the life of the Project at $437,000.
Recreation
Recreation costs are those separable costs associated with the recreation facilities constructed plus road paving costs incurred specifically to accommodate the increased traffic attributable to recreation. Benefits are assumed to equal those costs and are nonreimbursable as section 4, Public Law 87-590 costs.
Highway Improvement
The separable costs included are those road improvements exceeding replacement-in-kind costs, equal the justifiable expenditure, and are nonreimbursable under the authority of Public Law 87-874. The cost allocation for Ruedi is displayed on the following page.
FRYINGPAN ARKANSAS PROJECT RUEDI COST ALLOCATION
(100 YEARS AT 3.046%) ($1000)
epla;ement Marketable
Total
~enefRs Cap tafized 37,863
Alternative Costs 47,542 Justifiable Expenditures 50,200 Separable Costs 15,760 Project Costs 12,663 IDC 1,007 OM&R Capitalized 2,090 Remaining Justifiable Expenditure 34,439 Percent distribution 100.00%
Remaining Joint Costs 13,973
Project Costs 12,191 IDC 877 OM&R Capitalized 905 Total Allocation 29,733 Project Costs 24,854 IDC 1,884 OM&R Capitalized 2,995
Avera e Annual OM&R Dollars 96,000
Allocation of separable OM&R of Ruedi to East Slope Allocation $7,600/24,859
=
.3J572. Allocated to Replacement Res.-Water Water A 21,282 8,560 21,282 8,560 21,282 8,560 1,993 7,600 1,850 586 143 374 0 0 19,289 0.00% 56.01% 0 7,826 0 6,828 0 491 0 507 8,560 9,819 7,600 8,678 586 634 374 507 12,000 16,2)0 $29,350 Floo Control 437 437 0 0 0 0 437 1.2:1% 177 155 11 11 177 155 11 11 400 Annually Fis and Recreation Wildlife PL87-874 16,144 17,700 3,126 16,144 651 3,126 1,431 651 1,326 1,283 604 84 148 47 1,716 0 0 0 14,713 0 0.00% 42.72% 0.00% 0 5,969 0 0 5,208 0 0 375 0 0 387 0 3,126 7,400 651 1,326 6,491 604 84 523 47 1,716 387 0 55,000 12,400
The costs displayed for the Ruedi allocation are either actual costs or at 1969 levels with the exception of the estimated OM&R. This is a deviation from the East Slope allocation as Ruedi was complete and in service in fiscal year 1969.
East Slope Reimbursable Purposes
The costs identified for the replacement reservoir and associated IDC and OM&R are added to the East Slope allocation as joint costs. The construction costs equal $7,600,000 plus
$586,000 of IDC. Annual OM&R costs are estimated to be $28,948 in 1982 dollars or
$903,110 capitali1ed over the life of the project. The OM&R costs used in the Ruedi allocation are at 1969 levels and therefore were indexed to the 1982 point in time. Trrigation.--The major portion of the irrigated lands which benefit from the supplemental water supply of the Project are located between the city of Pueblo and the Kansas border. The discovery of gold in Colorado in 1858, the Homestead Act of 1962, and railroad
transportation were key factors for migration and the establishment of permanent settlements in this valley.
Surface direct flow rights were early sources of water for irrigators in the Arkansas Valley. During the period of 1890 through 1910, farmers began to form ditch companies to construct reservoirs to store and regulate early spring high flows for use later in the season. However, as the need for water increased beyond what native flows could furnish, irrigators and cities began to explore other water sources. The first transmountain project to divert water from the western slope to the Arkansas River Valley began in 1906 and by 1935, seven such projects were complete. During this time, irrigators also began the withdrawal of groundwater.
Agriculture remains the major occupation and source of income in the valley. The irrigated farms produce alfalfa, corn, sorghum, small grains, melons, and truck crops. The upper reaches of the valleys are used for grazing cattle and sheep. Nonirrigated farms are scattered throughout the basin in the high plains region adjacent to the stream valleys east of Pueblo. The principle non irrigated crops include wheat, sorghum, barley, and oats.
Benefits for the supplemental water supply are based on the increased net farm income attributable to the dependable water supply. Benefits were derived by comparing net farm income from a representative farm operation without irrigation to the net farm income of a farming operation representative of conditions with a full water supply. Prices received and paid for the farm operations are at 1982 price levels. Including indirect and public benefits,
$5,989,500 is the annual benefit attributable to the increased dependable water supply for
irrigation. The present value of that stream of benefits is $186,850,000.
A transmountain diversion project that delivers that same quantity of water for irrigation is estimated to cost $142,543,000.
Municipal and Industrial Water Supply.--At the time of authorization, an estimated 20,500 acre-feet of Project water was allocated to M&T purposes on the east slope.
Ten thousand acre-feet were reserved for Colorado Springs, an additional 7,500 acre-feet were allocated to eight Arkansas Valley towns, and Pueblo was allocated 3,000 acre-feet.
However, M&I requirements were re-evaluated based on a near doubling of the population of
Colorado Springs and surrounding communities between 1960 and 1970. The allocation for Colorado Springs and four smaller communities was increased to accommodate this growth. Communities in the Arkansas Valley dependent on groundwater supplies were experiencing
water quality problems. It became apparent from legislation and court decisions that those
groundwater supplies impacted surface water supplies and might be adjudicated to have
junior rights. The number of communities interested in municipal water increased to 42.
The present allocation for M&I water is 41,000 acre-feet.
Benefits for the M&I water supply are based on the costs incurred for a similar project constructed to deliver M&I water. The Homestake Project is a transmountain diversion project constructed and operated by the East Slope communities of Colorado Springs and
Aurora. Water is diverted from Homestake Creek in the Eagle River basin on the west slope
and transported through the Homestake tunnel. The procedure identifies the cost per acre-foot of the Homestake Project and multiplies that amount by an average 41,000 acre-feet of estimated demand for M&I supply for communities on the East Slope. The annual benefits are estimated to be $7,844,000. These benefits capitalized over the 100-year life of the
Project are estimated to be $244,694,000. In the Fryingpan-Arkansas Project, the delivery
system {the Fountain Valley Conduit) is constructed and financed separately by the users.
The single purpose alternative which would provide an equivalent supply of water consists of
a west slope replacement reservoir, collection system, transmountain tunnel, high mountain
reservoir, and channelization and protective works for the Arkansas River. The capitalized
cost of that Project is estimated to be $89,019,000.
Municipal and Industrial Water Delivery System.-Delivery systems for M&I water supply
developed by the Fryingpan-Arkansas Project were intended to be constructed by the
communities as separate from the Project. However, section 1. (c) of Public Law 87-590
does authorize the Secretary of the Interior to construct the delivery system for the M&I
water supply if it was found that local communities could not feasibly construct these systems
independently. On December 5, 1969, Secretary of the Interior, Walter Hickel approved and
adopted the Commissioner's report dated November 3, 1969, which " . .. demonstrated that
the various interests to be served by the conduit system do not have the financial capability,
either singly or jointly, to construct the works themselves. "1 Thomas S. Kleppe, Secretary
of the Interior, affirmed this decision with approval of the report "Feasibility of Financing
Construction of the Fountain Valley Conduit by the Using Entities - Fryingpan-Arkansas
1 Memorandum from lhc Commiuioner of Reclamation
10 lhc Secrcury of lhe lnk:rior, "Financial Po•ition of lntereata 10 be Served by lhe Municipal and Industrial Water DeliverySyatcms-Frylngpan-A.rl:ansaaProject, Colorado", Novcmber3, 1969.
·.
Project, Colorado", on November 10, ~976, transmitted by memorandum dated March 5, 1976, from the Commissioner of Reclamation to the Secretary of the Interior.
Water for the municipal users is provided through the· south outlet and manifold at Pueblo Dam. Costs of the manifold and south outlet works are allocated based on the capacity required by each entity for water delivery. The manifold has a total capacity of 359 fr/s.
Pueblo West assumes the repayment of 5.28 percent of the costs of the manifold and outlet works; the Fountain Valley Authority assumes 8.52 percent of the costs. The remainder of
these separable costs are presently allocated to the Arkansas Valley Conduit.
Fountain Valley Conduit.--The plan for the Fountain Valley Conduit anticipated diverting water from the Arkansas River near Canon City for conveyance to Colorado Springs. As constructed, it transports water from Pueblo Reservoir to the communities of
Colorado Springs, Widefield, Security, Fountain, and Stratmoor Hills through a pipeline which generally follows Interstate 25. The communities are repaying the cost of this
delivery system through the Fountain Valley Authority which contracts with the District
The Authority's obligation is )jmited to the Fountain Valley Conduit construction cost, simple IDC, and interest compounded annually on the unamortized construction cost including IDC.
Those costs are recoverable within a 40-year period beginning in the year the conveyance service first became operational ( 1985). Costs of this delivery system are assumed entirely by the communities, including the annual O&M expense. Construction and financing of a water treatment plant is the separate responsibility of the Fountain Valley Authority.
FR YINGP AN-ARKANSAS PROJECT
MUNICIPAL AND INDUSTRIAL WATER DELIVERY SYSTEMS
SEPARABLE COSTS($)
FEATURE CONSTRUCTION INTEREST OPERATIONS,
COST DURING MAINTENANCE,
CONSTRUCTION REPLACEMENT Fountain Valley 57,676,000 1,193,000 40,992,000 Conduit Arkansas Valley 2,294,000 55,000 Conduit Totals 59,970,000 7,248,000 40,992,000
Arkansas Valley Conduit--Communities in the lower Arkansas Valley experience water
quality and water shortage problems. A firm, high quality water supply could be delivered through the Arkansas Valley Conduit to those communities. Plans for construction of this
conduit are indefinite. Separable costs incurred for this delivery system are delineated in a suballocation of delivery system costs should construction be initiated and completed at a future date. The cost of the manifold and south outlet not allocated to Pueblo West or the Fountain Valley Conduit is included here. The District is obligated for the reimbursable
costs incurred to date.
Hydropower
Market Demand.--Power market studies conducted prior to authorization of the
Fryingpan-Arkansas Project indicated a future need for electric energy in southern Colorado east of the Continental Divide and in the Gunnison and Saguache areas in south central Colorado. Seven powerplants, with an installed capacity of 123,900 kilowatts, were planned to furnish baseload power to this local market area. Subsequent analyses during the post authorization phase indicated a need for peaking power in the entire State. Power production
was consolidated at the Mt. Elbert site with a 100,000-kilowatt capacity plant to meet the anticipated demand for peaking power and provision for a second 100,000-kilowatt pumped-storage unit at Mt. Elbert which would be built as demand for peaking power developed. It was anticipated power produced at Mt. Elbert would be integrated with the Federal power system.
System Design.--Pians for the revised power system anticipated the two pump-back peaking powerplants at Mt. Elbert, the appurtenant switchyard, a 45-mile 230-kilovolt (kV)
transmission line to Poncha Springs, and a substation at Poncha Springs which would provide access to the Colorado River Storage Project power system. A planned 11,000-kilowatt
powerplant at Otero was eventually dropped from consideration. Construction of the substation at Poncha Springs was completed in I 98 I and transferred to the Colorado River Storage Project (CRSP). However, the proposed transmission line from Mt. Elbert to Poncha was not constructed. The transmission line from Mt. Elbert to Poncha roughly paralleled an existing 115-Kv line of the Public Service Company and negotiations with the Public Service Company of Colorado resulted in construction of a 230-Kv transmission line
from Mt. Elbert to the Malta substation owned by Public Service. Access to lines operated by Public Service is provided at this substation and Public Service wheels Mt. Elbert power as part of an exchange agreement. The Public Service Company of Colorado provided contributions of $996,372 to facilitate the modification of the Malta and Poncha substations.
The modifications at Poncha allowed Public Service Company access to the federal grid.
Power is marketed by WAPA. The contract for this cooperative effort expired in December 1990 and is included in the reference data. At this time, Mt. Elbert power production is not directly tied to the Federal power grid but is marketed through the Public Service substation at Malta. Energy requirements of the pump back units are also provided through the Malta
substation.
Planned facilities of the hydropower purpose that were not constructed include the Mt. Elbert to Poncha transmission line and the facilities associated with the Otero powerplant.
Justifiable Expenditure.--The single purpose project providing peaking power to meet the anticipated demand is a 200,000-k:ilowatt combined cycle plant operating with a plant factor of 17.5 percent. Assumptions used in the derivation of the cost of the alternative project are discussed in the supporting documentation for single purpose alternatives. The capitalized cost at 1982 price levels for this plant is estimated to be $261,768,000. Benefits for this purpose were evaluated by the taxes foregone method and exceed the cost of the single purpose alternative. The capitalized value of these benefits is $317,113,000.
·
.
NONREIMBURSABLE COSTS
Flood Control
Costs incurred for flood control are non-reimbursable in conformance to Jaws in effect at the time of Project authorization.
Section 4 Costs
Legislation for the Project recognized the unique scenic, cultural, and existence values present in the area. Section 4 of Public Law 87-590 authorizes the investigation, planning, construction, and O&M of public recreational facilities on withdrawn lands acquired for the Project; the conservation of scenery, wildlife, and historic and archeologica1 objects; the conservation and development of fish and wildlife resources; and provision for public use, enjoyment of facilities of the Project. The costs for these activities are "nonreimbursable and nonreturnable. "1 Certain costs incurred in the construction of the Project have thus been assigned to these Project purposes.
Highway Improvement
In addition, Public Law 87-874 authorizes the expenditure of funds to allow for the construction of roads to the standard in effect at the time of construction rather than to a replacement standard. Certain roads constructed on Project lands have been constructed to accommodate the increased traffic related to recreational benefits. That additional cost has been assigned to the nonreimbursable section 4 recreation costs. The following table
summarizes these nonreimbursable costs incurred under the authorities of section 4 of Public Law 87-590 and Public Law 87-874. Solicitor opinions affirming the legality of these costs are included in the reference data.
Fish and Wildlife.--Benefits for fish and wildlife enhancement consist of four components. Those four components are (1) benefits provided by the Fish and Wildlife Service for increased fishing and hunting opportunities at Project facilities and on the Arkansas River, for water provided to the Leadville National Fish Hatchery, and the Pueblo Reservoir fish hatchery; (2) the nonreimbursable separable costs for modifications to Project facilities for the benefit of the fish exchange agreement with Twin Lakes Canal Company; (3) the provision of a specific flow level in Lake Creek from Twin La.J.<es outlet to the Arkansas River; and (4) fish habitat improvements from the channelization of Lake Fork Creek.
The benefits identified by the Fish and Wildlife Service are contained in an August 28, 1969, memorandum from that agency. Additional benefits are contingent on the implementation of certain recommendations. The recommended actions which have been implemented are the construction of a combination warm-water hatchery and cold-water rearing unit and provision
1 Fryinwan·Arlcansu Projec1, Public
Law 87-590, Scclion 4.(b), dated Aueull 16, 1962.
for public access near the Clear Creek confluence with the Arkansas River. Benefits have
been indexed to 1982 levels.
One of the main features of the fish and wildlife component is the fish hatchery at Pueblo
Dam and Reservoir. This hatchery has the capability of hatching and raising cold-water, cool-water, and warm-water fish species for stocking waters in the State. The State directed
the design of this state-of-the art facility and will assume the costs of OM&R. Through a unique outlet system, water for the hatchery is provided from Pueblo Reservoir allowing
year-round fish production. The fish hatchery became operational in FY 1988.
In addition, the separable fish and wildlife costs of modifications to the collection system to
accommodate the fish exchange agreement with the Twin Lakes Canal and Reservoir
Company are nonreimbursable fish and wildlife costs with the benefits equal to those costs. A solicitor's opinion dated June 17, 1969, supports this decision.
The Forest Service has identified annual benefits associated with the channelization of Lake
Fork Creek. The Fish and Wildlife Service has also defined benefits for increased flows in
Lake Creek between Twin Lakes Dam and the Arkansas River.
These annual benefits have been adjusted to the same level of costs and capitalized over the
100-year life of the Project at the Project discount rate and total $362,998,000.
BENEFIT SUMMARY
FISH AND WILDLIFE ENHANCEMENT
FRYINGPAN-ARKANSAS PROJECT EAST SLOPE INCREASED ACTIVITY ANNUAL BENEFIT Lake Fishing 3,051,000 Stream Fishing 225,000
Upland Game Hunting 10,000
Turnout for Leadville Hatchery 2,773,000
Wildlife Management Area 187,000
Public Access to Arkansas River 83,000
Fish Hatchery 4,853,000
Channelization of Lake Fork Creek 119,000
Recommended Flow of 15 cfs in Lake Creek 68,000
Separable Costs Associated with Fish '
Exchange Agreement 267,021 TOTAL $ 11,041,322 CAPITALIZED BENEFIT 3 95,180,000 7,019,000 312,000 86,507,000 5,833,000 2,589,000 151,396,000 3,712,000 2,121,000 8,329,000 362 '998' 000
The single purpose alternative for the fish and wildlife enhancement purpose of the east slope
is a project consisting of a tunnel diverting an adequate water supply, a Twin Lakes Dam and Reservoir with a capacity of 166,000 acre-feet, a 170,000 acre-feet capacity Pueblo Dam and Reservoir, the pipeline to the Leadville Fish Hatchery, the Pueblo Fish Hatchery, the
purchase of 4,996 acres for a game management unit, and 111,000 acre-feet of water for the
initial filling of the reservoir, plus auxiliary structures. This alternative, providing the same
level of benefits for fish and wildlife enhancement as the Fryingpan-Arkansas Project, is estimated to cost $159,185,000.
Recreation.--Costs allocated to the recreation purpose are those identified separable costs for
recreation facilities constructed at Twin Lakes, Turquoise, and Pueblo Reservoir. These costs are nonreimbursable under section 4 of the authorizing legislation. No joint costs are
' 100 yeara It 3.046$ It 1982 price Ieveii.
allocated to this purpose. The separable construction costs plus IDC total $41,705,000. Annual OM&R is estimated to be $1,232,261 at 1982 cost levels.
Scenery Conservation.-Section 4.(a) of the authorizing act states, "The Secretary is authorized and directed among other things" (2) to conserve the scenery " . .. on lands withdrawn or acquired as a part of the Fryingpan-Arkansas Project." Section 4.(b) states that "The costs . . . of the undertakings describe-d in subsection (a) of this section shall be
nonreimbursable and nonreturnable . . . "
Certain incremental costs were incurred to protect and conserve scenic values in the Project area and are aJiocated to the scenic conservation purpose. An example of those costs is the buried penstocks for the Mt. Elbert powerplant. The total separable costs including IDC equal $28,983,000.
Historical/ArcheologicaL--Two historical sites in the Project area were identified and
registered as historical districts by the Advisory Council on Historic Preservation. The cost to relocate and preserve the buildings of the Interlaken Hotel complex and Twin Lakes Village Historic Districts represents the major expenditure of funds for this purpose. The total costs for historical and archeological preservation, including IDC, are $1,062,000. Flood Control
Flood control benefits have been provided by the Army Corps of Engineers, Albuquerque District, for Pueblo Dam and Reservoir. Pueblo Reservoir contains 27,024 acre-feet of exclusive flood control capacity. The estimated annual flood control benefits are summarized below. Costs allocated to the flood control purpose are nonreimbursable in accordance with guidelines in effect at the time of authorization.
FRYINGPAN-ARKANSAS PROJECT
FLOOD CONTROL BENEFITS - PUEBLO RESERVOIR
Existing Future Development
Development Total
Annual Benefits $1,891,300 $246,800 $2,138,100
Capitalized at 3.046%, 100 years $66,700,000
The east slope allocation is displayed on the following page.
M&l IRRIGATION
TOTAL WATER WATER.
~enofits Capnalized 1,177,507 243,846 186,850
~ttomawe Costs 727,628 89,019 142,543
~sUfl4ble Expondnures 941,903 89,019 142,543
~porable Costs 559,563 6,657 17,798
Projclct Costa 308,047 5,267 14,081
IDC 46,271 1,390 3,717
OM &A Capitahzod 205,245 0 0
Remaining Justifiable Expondrture 382,340 82,362 124,745
Porccnt distribution 100.00'l' 21.5-4')(. 32.63"
~malnlng Joint Costs 261,561 56,344 85,339
Project Costs 189,865 40,900 61,947 IDC 40,920 8,815 13,351 OM&R Capitalized 30,776 6,630 10,041 otal Allocation 821,124 63,001 103,137 Project Costs 497,912 46,167 76,028 IDC 87,191 10,205 17,068 OM&R Capr1Bhzed 236,021 6,630 10,041
Average Annual OM&R Dollars 7,565,673 212,513 321,871
FRYINGPAN ARKANSAS COST AllOCATION EAST SLOPE COST AUOCATION
($1,000)
fl..OOD FISH AND
POWER. CX)]'.'TROL Wn..DUFE RE~TION
317,113 66,700 362,998 261,768 75,113 159,185 261,768 66,700 159,185 83,314 240,940 12,908 58,572 83,314 115,933 10,212 ~4,676 41,705 19,004 2,696 4,088 3,167 106,003 0 19,808 38,442 20,828 53,792 100,613 0 5.45'l' 14.07'l' 26.32')(. O.O()'J(. 14,249 36,799 68,830 0 10,343 26,712 49,963 0 2,229 5,757 10,768 0 1,677 4,330 8,099 0 255,189 49,707 127~402 83,314 126,276 36,924 84,639 41,705 21,233 8,453 14,856 3,167 107,680 4,330 27,907 38,442 3,451,676 138,796 894,552 1,232,261 22
M&l DELIVERY SYSTEMS
FOUI'o'T AI !'I ARKANSAS SCENERY HISTORICAL
PL87-a74 VAU.EY VAU.EY CONSERVATION ARCHEOLOGICAl
1,119 105,861 2,349 28,983 1,062 1,119 105,861 2,349 28,983 1,062 935 57,676 2,294 24,307 961 184 7,193 55 4,676 101 0 40,992 0 0 0 0 0 0 0 0 O.OO'l' O.OO'l' 0.00% 0.00% 0.00')(. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,119 105,861 2,349 28,983 1,062 935 57,676 2,294 24,307 961 184 7,193 55 4,676 101 0 40,992 0 0 0 0 1,314,000 0 0 0
PROJECT REPAYMENT
Repayment of the reimbursable costs of the Project is the obligation of the benefitting
irrigators, M&I water supply users, power purchasers, and the municipalities who have
contracted for the Fountain VaHey Conduit. Following is a summary of the repayment arrangements for the reimbursable costs.
Contracting Entities
The District is the primary contractor for repayment of reimbursable Project costs allocated to irrigation and M&I water supply. This conservancy district was organized to cover an eleven county area under the laws of the State in 1958. The master contract between the United States and this District, signed January 21, 1965, establishes the basis on which the District will provide the project water supply and related services, and the manner of
repayment. The contract is a 40-year water service contract with provision for renewal. By the end of the 50-year payment period allowed in the authorizing legislation, the cost of
Project works allocated to irrigation and assigned to be returned by the District, the cost of
Project works allocated to M&I uses, plus simple interest during and compound interest after construction at the rate of 3.046 percent per annum shall be repaid. An appropriate share of the OM&R costs is assessed annually. Payment began on the date of initial delivery of water -January 1, 1982. Revenue for annual payments consists of (I) an amount equal to
nine-tenths of one mill on the assessed valuation of all taxable property in the District for the
preceding year, (2) a charge for each acre-foot of Project water delivered to the District for
irrigation and M&I use, and (3) a charge for each acre-foot of winter stored water delivered
to the District. The component of payment based on the ad valorem tax levy is required
each year. Colorado law permits the District to assess up to one mill of assessed valuation
within its boundary. Payments for deliveries of Project water are made in advance.
The charge for each acre-foot of water is based on the determination of the ability to pay of
the irrigators. Anticipated water deliveries were estimated to be 80,400 acre-feet on an average annual basis. The District is entitled to the use of the indirect water supply which
accrues from return flows. The master contract has been modified by five amendments to date.
Amendment I -dated August 31. 1976. This amendment clarifies the language in the
contract for the allocation of the available water supply each year. The District adopted a resolution which allocates 51 percent of the water supply to municipal users and 49 percent to irrigators. This language conforms to the language contained in the principles of
allocation.
Amendment 2- dated October 23. 1981. This amendment adjusts payments made by the District for water service and defines the initial date of water service. The rates for water
service were increased to $8.00 per delivered acre-foot and the rate for winter storage was increased to $3.20 for each acre-foot delivered based on a review of repayment ability. This
amendment also includes a provision to review and adjust water service rates to ensure that
the irrigator's full payment capacity is being utilized over the life of the contract.
Amendment 3 - dated August 8, 1984 .. Article 12 of the cont~ct amendment to establish the initial delivery date and adjust the district's payments, (Amendment 2), required court
confirmation before the amendment became binding. At the request of the District, the Department of the Interior reviewed that position and ·a determination was made that this
court confirmation was not necessary. This amendment deletes Article 12 from the
amendment.
Amendment 4 - dated January 23. 1986. This amendment adjusts the dates for estimating water deliveries, provides guidelines for spill priorities, and anticipates language for short-term contracts. It also conforms the contract to the Reclamation Reform Act of 1982, except for cost appraisal which remains as designated in the original contract.
Amendment 5 -dated February 26. 1988. Changes in Colorado law limiting the increase in property tax assessments prompted this amendment which eliminates the reference to a percentage increase limitation and requires the District to collect the maximum revenues
allowable under Colorado law, and provides the District's annual mill levy be reduced below the maximum one mill permitted under Colorado law due to property reevaluations.
The intent of this contract is to provide for repayment of Project costs allocated to the irrigation and M&I water supply within the 50-year timeframe of the authorizing legislation. Irrigators would repay within their ability to pay which is reviewed on a regular basis. The three components of revenues - the ad valorem tax, the water service charge for Project
water delivered, and the service charge for water delivered from winter water
storage-remain essentially the same.
Fountain Valley Conduit
On July 10, 1979, the District executed
a
contract with the United States for the repaymentof costs associated with the construction of the Fountain Valley Conduit. The District has
subcontracted with the Fountain Valley Authority, the cities of Colorado Springs, the
Security and Stratmoor Hills Water Districts, and the Widefield Homes Water Company for
the repayment of those costs. This contract limits the District's obligation to the collection
of money due the United States as the District's repayment capability is reserved to meet its obligations under its 1965 contract. Payments were set at a level adequate to cover the conduit's estimated construction cost, simple IDC at the Project rate (3.046%), interest
compounded annually on the unamortized construction costs including IDC, and the annual OM&R costs. That rate is based on the average interest rate payable by the United States Treasury upon its outstanding marketable public obligations with a life of 15 years on the date construction is initiated. Contract terms established specific rates for each
subcontracting entity with a provision for adjustment to reflect the final construction cost plus
IDC. Each subcontractor is obligated to repay its individual obligation within 40 years. A
