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~ ....J 0" (f\ Appendix A Repayment Analyses The Lower Colorado River Basin repayment spreadsheet gives a comparison of estimates between the net revenues from the Lower Colorado River Basin Development (LCRBD) Fund and Lower Colorado River Basin States' (Arizona, California, and Nevada) share of the reimbursable costs for salinity control projects. The reimbursable costs to the States are based on capital and O&M costs from fiscal year 1990 budget costs and estimates from fiscal years 1991, 1992, and 1993 budget proposals. Projected cost estimates from 1994 to 2010 are estimated costs based on implementing this salinity program to meet the salinity target level in 2010. This is done on an annual basis from 1990 to 2010. This comparison assists program managers in developing a program of salinity projects that meet the salinity numeric criteria at the three stations on the river. Projects in the implementation plan are either completed or are in various stages of planning and construction. Cost estimates for those projects being planned or constructed were indexed to October 1989 values using Reclamation's composite construction cost trends. Cost estimates for the projects were obtained from various sources, and are on record in Reclamation's offices. The reimbursable portion of these projects by the Lower Colorado River Basin States are based on two repayment formulas determined by Public Law 93-320 and Public Law 98-569. Projects authorized under Public Law 93-320 are Grand Valley Stage One and Stage Two, Las Vegas Wash, and Paradox Valley. The repayment formula that is applied after project construction is completed consists of 25 percent of the total investment cost as reimbursable by the States and 85 percent of this reimbursable share is to be paid by the Lower Colorado River Basin States over a 50-year time period. The formula applied in the spreadsheet is as follows: (Total investment costs X 0.25 X 0.85) / 50 years. Repayment of operation and maintenance (O&M) costs applies a similar formula-annual O&M costs X 0.25 X 0.85, and repayment is in the next fiscal year after ths costs are incurred. Projects authorized under Public Law 98-569 are Lower Gunnison Basin Unit (Winter Water) and the Dolores Project (salinity control portion). For purposes of the repayment analysis, the following projects are assumed to have the same repayment obligations: Price-San Rafael Rivers, San Juan River (Hammond portion), and G1enwood-Dotsero Springs Units. The repayment formula applied to these projects is as follows: (Total investment costs x 0.30 x 0.85) /50 and (O&M costs X 0.30 X 0.85), after the fiscal year in which the O&M costs are incurred. The repayment spreadsheet contains the LCRBD Fund 1989 balance ($16,983,000) and the estimated schedule of revenues up to the year 2010. Estimated annual repayment costs for the LCRB States are deducted from the LCRBD Fund from 1990 to 2010. For those years when the repayment costs are greater than the balance in the LCRBD Fund, interest on the deficit is calculated and that interest plus the deficit balance is added to the next year's repayment costs. The interest rate (8.126 per- cent) used is the most recent for fiscal year 1990 to be applied on repayment of projects under the Colorado River Basin Salinity Control Act. A sensitivity analysis was performed by developing a spreadsheet that calculates the rate of inflation such that the balance of the LCRBD fund amounts to zero in 2010. A calculated inflation rate that appears reasonable based on recent history indicates the program can probably be repaid by 2010 with no adverse effects of inflation. The rate calculated for the 1990 Repayment Analysis is 2.9 percent which indicates that implementation must be expedited or there will probably still be some outstanding cost to be paid after 2010. 17