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<br />FRYINGPAN-ARKANSAS PROJECT, COLORADO
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<br />LETTER TO THE SECRETARY FROM BUREAU OF THE BUDGET
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<br />EXECUTIVE OFFICE OF THE PRESIDENT,
<br />BUREAU OF THE BUDGET,
<br />Washington, D, 0" June 8, 1953,
<br />The honorable the SECRETARY OF THE INTERIOR.
<br />My DEAR MR. SECRETARY: Receipt is acknowledged of your
<br />letter of April 30, 1953, submitting your revised report on the Fry-
<br />ingpan-Arkansas project, Colorado, and requesting advice as to its
<br />relationship to the program of the President.
<br />This proposed multipurpose project would provide irrigation, power,
<br />flood control, municipal water, and other benefits. The plan contem-
<br />plates several small powerplants and a system of canals, reservoirs,
<br />and tunnels to divert water from the western to the eastern slope of
<br />the Continental Divide and to produce better control and utilization
<br />of upper Arkansas River water. .
<br />The estimated cost is $172,898,000, of which $75,128,000 is allocated
<br />to irrigation, $41,945,000 to power, $32,654,000 to municipal water
<br />supply-reimbursable items-and $20,341,000 to flood control and
<br />$2,830,000 to fish and wildlife-nonreimbursable items, The benefit-
<br />cost ratio is stated as 1.48 to 1.00.
<br />The repayment plan contemplates that the power and municipal
<br />water-supply investments would be entirely repaid with interest at
<br />2)1, percent in 53 and 63 years, respectively, or within 50 years after
<br />all facilities are placed in operation, The plan also contemplates that
<br />the irrigation investment would be returned without interest over a
<br />period of 69 years, in part from payments by irrigation-water users
<br />and in part by revenUes from power and municipal water supply
<br />after these latter investments are fully repaid. The irrigators would
<br />repay $622,000 annually for 69 years, based on an ad valorem tax of
<br />1 mill and payments ranging from $5.40 per acre-foot for water diverted
<br />from the Colorado River Basin to $2,25 per acre-foot for reregulated
<br />Arkansas River winter flow, Irrigators now have prior water rights
<br />to the Arkansas River winter flow at no cost.
<br />This office believes that a reasonable basis for appraising the repay-
<br />ment of Federal irrigation projects should be not more than 50 years,
<br />and that this would be consistent with the general practice of most
<br />Federal agencies in determining the economic evaluation and financial
<br />feasibility of water resources developments, On the basis of a 50-year
<br />repayment and the Department of the Interior's estimate of the water
<br />users' ability to repay, the water users would return $31,100,000 of
<br />the $75,128,000 allocated to irrigation, leaving unpaid at the end of
<br />50 years $44,028,000, or 60 percent of the estimated construction
<br />cost. Thus, the water users would have paid $100 per acre out of a
<br />total investment of $243 per acre.
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