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FLOOD05130
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Last modified
1/25/2010 6:48:21 PM
Creation date
10/5/2006 1:16:54 AM
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Floodplain Documents
County
Statewide
Community
State of Colorado
Basin
Statewide
Title
Water Project Development Financing Needs
Date
12/30/1982
Floodplain - Doc Type
Educational/Technical/Reference Information
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<br />Limitations on Revenue Financing <br /> <br />The availability and cost of revenue financing will be a <br />function of the r~venues which a project may be expected to <br />generate, tax considerations, and the anticipated risks of the <br />expected revenues not materializing. Thus, the ability of a <br />project to generate sufficient revenues is the critical <br />determinant of whether project construction and rehabilitation <br />can be accomplished without use of tax revenues. <br /> <br />The generation of revenues by a water project is primarily a <br />function of two factors: <br /> <br />(1) the administr,ative practicability of charging for the <br />benefits produced by a project, and <br /> <br />(2) 'the willingness of potential users to pay for the <br />benefits produced by a project. <br /> <br />The benefits of, or outputs from, water resources projects <br />are often characterized as being either vendibles or nonven- <br />dibles. Vendibles include water supply for municipal, <br />industrial, and agricultural purposes and the production of <br />hydroelectric power. These outputs are referred to as vehdibles <br />because they are items over which ownership and control can be <br />exercised and are therefore items which can be bought and sold. <br /> <br />In contrast, benefits such as flood control protection and <br />recreational opportunities are not readily marketed outputs. <br />Although it is not necessarily impossible in either case to <br />collect fees directly from those who benefit from flood control <br />protection and recreational oP'9ortunities, administrative <br />problems can make it difficult to require the beneficiaries of <br />these kinds of project functions to pay for the benefits <br />received. As a consequence, the full value of flood control and <br />recreational benefits is often not recovered frOOlthose who <br />receive those benefits. <br /> <br />Apart and separate from the question of the administrative <br />practicability of collecting revenUes is the question of the <br />willingness of potential users to pay for the full value of <br />project outputs. Generally speaking, the constuction and <br />financing costs of municipal and industrial water supply projects <br />have been and can be borne by project beneficiaries. However, it <br />has become evident in the last several years tbat the rapidly <br />escalating costs of construction, coupled with high interest <br />rates in private financial markets, are making it increasingly <br />difficult for Colorado's small rural communities to bear the cost <br />of new proj ects. <br /> <br />with respect to irrigation projects, it is clear that the <br />costs of developing new facilities are significantly greater than <br />the value of ,the additional water supplies produced. This has <br /> <br />-3- <br />
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