ALP Project Water Supply and Demand Study

NIMAS - LA F'LATA vVATER SUpP1 -Y AND DE11r1AND STUDY
2. COST ANALYSIS
2.1 Capital Cost for A -LP Project Water
The repayment obligation of non - federal entities for a project constructed by the USBR is a detailed and
co lex subject. The information presented below is correct for the circumstances of the State of Colorado
repa ing the federal government for all, or a portion, of the 10,460 AF of annual yield from the A -LP Project
wat to the best of Brown and Caldwell's ability as of the date of this report Uanuary 2010). However, the
inte sted reader is cautioned against extrapolating further conclusions beyond the narrow conditions of this
rep without exploring these in full with knowledgeable personnel of the USBR.
SCHEDULE FOR PURCHASING STATE'S ALLOCATION
Anquiry was made to the USBR concerning if there was a deadline by which the State had to indicate it
wo purchase all or a portion of the 10,460 AF allocation? The response was:
"The 2000 Settlement Amendments state that the repayment obligation of the non -Tribal
entities is subject to final cost allocation. This could be interpreted to mean that the State
has until final cost allocation to decide whether or not to participate in the A -LP Project;
however, in order to ensure that the final cost allocation is completed in a timely and
efficient manner, it is imperative that the State make a commitment regarding its
participation in the A -LP Project sooner rather than later."
2.3 CAPITAL COSTS
If th State of Colorado (State) decides to purchase A -LP Project water, the State will have to pay its share of
prof (ct capital costs. If the State were to purchase all 10,460 AF allotted to the State, this will amount to
$27, 54,506 (in October 2009 dollars, see note 1, Appendix B).
The State could pay the capital costs in one lump sum payment or make annual payments over a 40 -year
peri at the present interest rate of 8.135 percent which will result in an annual payment of $2,775,556 per
Y, see note 2, Appendix B). The basis for the 40 -year repayment period and the 8.135 percent interest rate
is f her explained in note 3, Appendix B.
In ad Jition to this annual payment for the capital costs, the State will also be required to pay its share of IDC
from the day construction started as explained in the next section.
2.4 INTEREST DURING CONSTRUCTION (IDC)
If thl State decides to purchase A -LP Project water, it will have to pay its share of the project IDC costs.
IDC Is calculated at the 8.135 percent rate. If Colorado decides to make a lump sum payment for the capital
costs the State will still owe its allocated share of accumulated IDC to date.
As olSeptember 30, 2009, the IDC accumulated for Colorado was $6,719,900 (see note 4, Appendix B). The
State Van avoid making additional IDC and interest payments by making a lump sum payment for the full
2 -1
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