20 ‎(8)‎

• Board Meeting Date: 7/22/2009
• Description: WSP Section - Animas La Plata
• Board Meetings - Doc Type: Memo

Agenda Item 20, Ju1v 21-22, 2009 Board Meeting
Animas-La Plata Project
Page 3 of 4
reserve fund. Therefore, in addition to $27,600,000 capital cost, Colorado will need
approximately $376,000 annually for OM&R and pumping, assuming it buys its full allocation.
Pursuant to the Association's "CONCEPTS AND PRINCII'LES FOR THE OPERATION AND
ALLOCATION OF THE OM&R COSTS OF THE ANIMAS-LA PLATA PRO7ECT"
(Operating Principals) a$3.0 million "Variable OM&R Fund," using a portion of the Tribal
Resource Fund authorized by Congress in the 2000 ainendinents, will be established; the interest
on which will be used to offset the pumping costs. This will provide equity between proj ect
beneficiaries that divert from the reservoir and those that will take delivery of their allocation
directly from the river. Thus, the amount of cash required annually from the State would be
about $126,000, assuining the Variable OM&R Fund will be adequate to cover the puinping
costs.
Operating Entity
Reclamation requested a non-federal project operating entity be established prior to
project coinpletion in 2012. It was recognized that the sooner such an entity could be established
the better so that inanageinent for that entity could becoine fully fainiliar with the proj ect during
the latter stages of construction. Tribal and non-tribal project beneficiaries have established an
Association pursuant to an "INTERGOVERNIVIENTAL AGREEMENT ESTABLISHING THE
ANIMAS-LA PLATA OPERATIONS AND MAINTENANCE ASSOCIATION," and Exhibit
A thereto, "CONCEPTS AND PRINCIPLES FOR THE OPERATION AND ALLOCATION
OF THE OM&R COSTS OF THE ANIMAS-LA PLATA PRO7ECT" (IGA) to operate the ALP.
Colorado has participated on a very liinited basis in the developinent of the IGA siinply to try
and assure that should the State elect to purchase its allocation of proj ect water it could become a
ineinber of the Association under terins of the existing agreeinent at a cost that would be fair to
the State. Staff and the Attorney General's Office believe this has been accomplished and we
have attached a copy of the signed IGA hereta However, the Operating Principles left a nuinber
of water right administration and accounting questions unanswered by design that will need to be
addressed in the future. Thus, the Operating Principles will be revised froin tiine to tiine and the
State should monitor the actions of the Association until it has made a final determination on
whether or not to purchase its allocation.
OM&R Transfer Contract between Reclamation and the Association
A contract between Reclamation and the Association has been negotiated and is
undergoing final review within Reclaination prior to signing. The United States will pay the
OM&R costs for the Tribes until the Tribes actually apply their proj ect water allocations to use.
Although the United States is not a member of the Association, Reclamation and the Association
have a contractual obligation to consult with each other on proj ect operations. I have elected not
to include a copy of the draft contract at this tiine but would be happy to provide the final draft if
requested.
Financing Options and Markets
Financing options have not been explored in detail at this time, but given the State's
budget restrictions and caps on the use of potential funding sources at present it will be
extremely difficult to obtain funds to purchase the State's allocation without significant cost
share partners or other considerations. The financing options will also depend on the end use.
For exainple, if the water was used for coinpact coinpliance purposes the capital cost to acquire
the water would likely be in the forin of a grant froin Severance Tax, state appropriations, or
possibly the Water Supply Reserve Account. If the water is allocated to rural water suppliers,