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<br />I. <br /> <br />. <br /> <br />COLORADO WATER CONSERVATION BOARD <br />823 State Centennial Building <br />1313 Sherman Street <br />Denver, Colorado 80203 <br /> <br />March, 1983 <br /> <br />Dolores Project <br />(Dolores Water Conservancy District) <br /> <br />Introduction <br /> <br />Planning requirements for the Dolores Project, a Bureau of <br />Reclamation (Bureau) project, were completed in the spring of <br />1977. Construction started in FY 1978. Prime contracts have <br />been awarded for, and construction is underway on, McPhee Dam and <br />the Dolores Tunnel. The next major award of a construction <br />contract--for the Great Cut Dike pumping plant--is scheduled for <br />May, 1983. <br /> <br />In September, 1977, the Dolores Water Conservancy District <br />(District) executed a repayment contract with the United States. <br />This contract provides, inter alia, for repayment with interest <br />of all project costs allocated~municipal and industrial water <br />(including an allocation of interest during construction). The <br />contract specifies a maximum obligation of $20,000,000 for the <br />municipal and industrial water allocation, but with provision for <br />renegotiations of this amount upon the demand of the United <br />States if the allocation exceeds $20,000,000. The contract <br />states that continuation of construction shall be contingent upon <br />execution of an amendatory contract if the $20,000,000 ceiling is <br />exceeded. <br /> <br />Discussion <br /> <br />The estimated costs allocated to municipal and industrial <br />water, based on October, 1975 price levels and 1977 interest <br />rates, totaled $12,409,000. This was the basis for the ceiling <br />in the repayment contract, taking into account the then expected <br />effects of inflation. Based on the Bureau's normal cost <br />allocation procedures and the current cost indexed to completion, <br /> <br />135 <br />ai/8a <br />