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AGREEMENT FOR OPTION AND ACQUISITION OF
MUNICIPAL AND INDUSTRIAL WATER SUPPLY FROM THE
ANIMAS -LA PLATA WATER CONSERVANCY DISTRICT
DEPLETION ALLOCATION IN THE ANIMAS -LA PLATA PROJECT, COLORADO
THIS AGREEMENT is entered into this 13th day of April, 2005, by and between the City of
Durango, Colorado, a municipal home rule corporation, ( "Purchaser"), and the Colorado Water
Resources and Power Development Authority, a political subdivision of the State of Colorado
("Authority").
Recitals.
1.1 Pursuant to statutory enactments, including the Colorado River Storage Project Act of
1956, the Colorado River Basin Project Act of 1968, the Colorado Ute Indian Water Rights
Settlement Act of 1988, and the Colorado Ute Settlement Act Amendments of 2000, the United
States has investigated, planned, and commenced construction of the Animas -La Plata Project for the
storage, conversion, salvage, and distribution of waters of the Animas River for purposes, among
others, of furnishing water for municipal, industrial, domestic, and other beneficial uses.
1.2 The Animas -La Plata Project comprises construction of a reservoir, pumping plant,
inlet conduit, and other appurtenant facilities with sufficient capacity to divert and store water from
the Animas River for an average annual depletion of 57,100 acre feet of water to be used for
municipal and industrial water supply.
1.3 The Colorado Ute Settlement Act Amendments of 2000 provides for an allocation to
the Animas -La Plata Water Conservancy District of a portion of the project water made available as
a result of the Animas -La Plata Project, such allocation being equal to 2,600 acre feet of average
annual municipal and industrial depletion (the "ALPD Depletion Allocation ") conditioned upon
payment of the non -tribal water capital obligation for the Animas -La Plata Project attributable to the
ALPD Depletion Allocation.
1.4 Pursuant to a Funding Agreement and Repayment Contract dated November 9, 2001,
between the Authority and the United States Bureau of Reclamation ("Funding Agreement'), the
Authority has contracted to secure the ALPD Depletion Allocation of 2,600 acre feet of average
annual depletion in consideration of payment of the non -tribal capital obligation attributable to such
ALPD Depletion Allocation.
1.5 The payment obligation of the Authority to the Bureau of Reclamation under the
terms of the Funding Agreement is based upon the costs of project construction; estimates for those
costs were set forth in the Funding Agreement, but estimates have increased substantially since that
time. Accordingly, it is anticipated that the Authority will be subject to an Additional Repayment
Obligation pursuant to paragraph 8 of the Funding Agreement in order to secure the full ALPD
Depletion Allocation. Pursuant to P.L. 108 -447, the Consolidated Appropriations Act of 2005, dated
December 8, 2004, the reimbursable cost of the non -tribal repayment obligation shall not exceed