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<br />As can be seen, the repayment contract does not obligate <br />Tri-County to renegotiate, or make any other adjustments in, its <br />contractual obligation should the costs allocable to M&I water <br />supply exceed $38 million. Tb the contrary, the $38 million <br />figure is an absolute ceiling. <br /> <br />The $38 million ceiling was arrived at by adding 35 percent <br />to the original cost estimate of $27,966,000 in order to cover <br />the anticipated impacts of inflation over the course of <br />construction as originally scheduled in the definite plan <br />report. However, as noted above, the start of construction was <br />delayed by nearly three years by the Bureau of Reclamation, large <br />claims have been lodged by the contractor on stage one, and now <br />the Bureau has lost yet another year in initiating construction <br />on stage two. <br /> <br />As a result of these delays, the Bureau now estimates that <br />the costs allocable to M&I water supply will be approximately $76 <br />million. About 60 percent of the increase from the orginally <br />estimated $28 million to the now estimated $76 million has <br />resulted from changes in construction costs caused by design <br />changes, state of the art considerations, dam safety <br />considerations, and added instrumentation, all of which were <br />unanticipated at the time the repayment contract was negotiated. <br /> <br />The remaining 40 percent of the cost increase is <br />attributable to inflation resulting from delays in construction. <br />Absent this delay, inflation would not have accounted for 40 <br />percent of the increase in allocable costs. Rather, increased <br />costs due to inflation would have been well within the 35 percent <br />increase originally provided for. <br /> <br />In short, it is actions of the federal government, not <br />Tri-County, which have caused the costs of construction <br />allocable to M&I water supply to exceed Tri-CountY'5 contractual <br />obligation. This fact, coupled with the absence of a <br />renegotiation clause in the repayment contact, present a <br />compelling case in Tri-County's favor. <br /> <br />H.R. 4483 gives recognition to the legal and moral <br />obligation which the United States has to the Tri-County Water <br />Conservancy District. Thus, the bill confirms that the portion <br />of the costs of the project allocable to M&I water supply which <br />exceed the $38 million fixed repayment ceiling in the repayment <br />contract shall not be reimbursable. The binding obligations of a <br />contractual committment, let alone equity and fairness, demand <br />that Tri-County's repayment obligation be limited to $38 <br />million. <br /> <br />gl <br /> <br />-3- <br /> <br />,- f. ~', " <br /> <br />,_ _', i ~ ~, ~ <br />