CWCB Repayment Contract ALP

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E l Inited `Mates De��artmel�t of the (1.1i.erfor
BUIUAU O RECLAMATION
Upper t;olnr3d0 Ittgioutil Of(cc
Weslern Colontdu Ana Office
,y RCH V REFER fn
27(x7 Cvmp,ici Drive. Suitc 106 CjY _ 3 '� 835 L 2.,1 Avenue, SWIC 300
Gland lundion, CO 81506 -8785 Dutatl;a, CO 81301-5415
WCD- RIZandol
VIN-6.20
Mr. Dan Law
Executive Director
Colorado Water Rcsources and Lower
Dcvc)opamem .Authority
1580 Logan Street, Suitc 620
De -fiver, C:O 80203
'FAKE PRI OF-'
INAM 1ER ICA
Subject: Modification to the Methodology to Estimate the Ji lated Reimlllirsement Cap,
Section 207 of P.I,. 108.447, as Amended, Animas -La Plata Project, Colorado and New
Mexico
Dear Mr. 1 3w:
The purpose of this lctier is to consult with you regaarding a change ncecssaly in the mctllodolo6Y
to calculate the lnflateci Reimbarsenient (_rap (IRC) for the Animas-La Plata Project (Project).
-Chas Original trict11odology was described in a rTletnol'atlrlum to existil)g and potential Project
repayment sponsors, Licited June 7, 2006 (see attached table ftlr example of the ilriginal
methodology). This proposed change in methodology was discussed at the March 20, 2008
Project Construction Committee (PC Q inecting and those allcoding rcquested a letter from
Reclaarrintion oescrihing the change.
We have recently determined that when the IRC was updaatcd to reflect tho latest Post indexing of
1110 COLISfrllCtiOn Cost E- Stilnate (CCC), the increase was proportionally greater than increases in
the joint Project costs. This has, the ctlixt of artificially over- iriflalting the reimbursable cap. This
disproportionate ine mace can be attributed to the inclusion of the following three items in the
amount to be inflated:
1) Ibc pre -199') stink costs Have been expended and, as �mch, tic not subject to indexing;
2) ( akijlatioil of tlae (:olotado Water Resources and Power Development Audi ority (CWRI'L)A)
indexed specific costs is conducted separately, as these costs are not distributed ainong the
Project sponsors; and
3) 'Chc costs associated with the Nvvaijo Nation Municipal Pipclinc (NN M1') are specific to the
Naavrilo Natio►i and do not impact the reirnbursablejoint costs. These costs have not been
expended and as such, are being indexed in their entirety. The effect of indexing on this
substantial poition of*Pro.ject costs resulted in further dispropoillonate increase in the IRC.