technical capability, financial commitments, implementation

Technical Capability, Financial Commitments, Implementation

Prepared For

OdessaSubarea

Leadership Irrigators,

Landowners, Financial Community,

Elected Officials, Agency Staff

CSRIA-10-2014

Darryll Olsen, Ph.D.Regional Planner/Resource Economist

CSRIA Board Representative

Columbia-Snake River Irrigators AssociationOdessa Subarea Systems 1, 2, and 4 Review

Private Sector Financing-Development for Surface Water Delivery

Mission StatementThe CSRIA will “keep the water at the pumps,” and it will work to enhance access to new water supplies for its irrigation, industrial, and municipal members.

The CSRIA supports water resources projects that are economically sound and promote the direct interests of water right holders and the communities that serve our economic base.

CSRIA working with the Odessa Subarea Irrigators: -- Preconstruction Engineering. -- Water System Financing.

-- Water Service Contract. CSRIA-10-2014



State-USBR Project (Modified Partial Replacement Alternative)

70,000 acres N/S-I-90

Private Projects 75,000 acres N-I-90



Phase II Analysis:Systems 1 and 2

Detailed PreconstructionAnalysis and

Economic Costs(CSRIA.org)



CSRIA-10-2014

System 1 Final Configuration



CSRIA-10-2014

N-I-90 Systems 1 (2 and 4) Private Sector Package Development:

• Participants’ Water System Agreement (WSA).Financial and Development “Instrument” for System Participants.

Legal Construction Contract and Development Management.

Legally Binds Land Owners-Lease Holders to System Financial Obligation.

Structures Post Development OM&R Obligations.



CSRIA-10-2014

It’s the Water—New State Conditional Water Use Permit Issued to USBR:

• New State Secondary Water Use Permit Issued to USBR.

• Office of Columbia River (OCR) and Eastern Region Office, Ecology,

Working with CSRIA to Verify System 1 Groundwater Rights with

System 1 Lands—On the Ground Water Determination.

• Water Right Verification and Application to New Lands.

Use of Nameplate Acres without Relinquishment.

RCW 90.03.380 Water Spreading to Include Extension-Seasonal Transfer Lands.

Economic-Financial Viability of ALL System Projects.



CSRIA-10-2014



Draft Water Service Contract Submittal:

Bringing 21st Century Irrigation Development to Subarea.

• Engineering for On-the-Ground Irrigation Efficiency and Water Use.

• Optimize the Environmental Regulations (EIS), State Water Code, Federal Water Service Contract Parameters.

• Rely on Private Sector Economics-Financial Model—There Is No

State-Federal Money.

Respecting the “Invisible Hand” of Private Sector Economics.

• For System(s) development, Allow the Irrigators to Make the Decision for Willingness-to-Pay; “Let Them Do as They Will...”

• Let the Irrigators for Each System Determine Payment Structure—

Multiple Zones with Marginal Costs.• Allow for Optimized Private Sector Financial

Capability with Water Spreading to Land Previously Receiving Groundwater.

• Equity Based on Market Capability, Determined by the Direct Stakeholders.

CSRIA-10-2014



Private Sector Irrigators vs. ECBID Public Sector Financial Models:

DevelopmentFactors

Private SectorEcon/Financing

ECBIDPublic Model

Engineering Pre-ConstructionCompleted

On-Going(Design?)

System CostAllocation

By System/Zone, (Marginal Costs)

“Normalized” ZoneOne Ave. Cost/Acre

Financing Direct Lending(Private by Party)

LID-Rev. Bonds(Non-Obligation)

Cost of CapitalTime Period

4-4.5%20-Years

5.2-6.0%(?)30-Years

Total Capital &OM&R/Acre

$275-500(Annual $/Acre)

$550-600(Annual $/Acre)

Acres SecuredParticipants

Syst.1:14,500Syst.2: 9,000Syst.4: 8,000

Unknown(Costs)?

Timing 2016-2017 2018?CSRIA-10-2014

Water System Contract Review Issues? Impeding Action?• Water Spreading.

“He Said, She Said, Who Said?” State Water Code Prevails. Required for Financial Viability.

• EIS Configuration: All Systems Must Be Within 87,000 Acres. Within Allocated Water Supply. Real Issue Is Actually Getting All the Acres. Changes Affect Any Allocation from EIS.

• USBR NED-B/C Analysis. Direct Net Value Must Be Positive Per Acre. Yes, It Is…Market Value Exceeds USBR Production

Budget Estimates.

• Direct Service Contract with Private Irrigators.• Operations Conveyed to ECBID.• Wait for Master Water Service Contract? Time and

Money Indifference? Meeting with USBR Regional Director-Accountability?



CSRIA-10-2014

Further Perspectives—Development Picture:• Move Now to Get Water on the Ground—Success Breeds

Success.

• Get System 1 Operational by 2016; Systems 2, 3, and 4 by 2017-2018.

• There Is No Further State-Federal $ Available for Development.

Future Federal $ for Direct Canal Expansion Below Lind Coulee?

Further State Dollars for Canal? Show Some Results!

• Do Not Snub Financial Reality—Take Advantage of Private Sector

Financing and Construction Capability.

• The “Normalized” Model Does Not Add Acres, It Further Disperses Acres and Increases Costs—Discouraging Irrigator/Lender Participation.

• ECBID: Focus on Canal Expansion to Lind Coulee and South.

• Obvious Question: Should the ECBID Request More State/Federal Funds, When They Are Not Supporting the Irrigators’ Private Sector Financing Model for System 1?

CSRIA-10-2014



technical capability, financial commitments, implementation

Documents

surface water delivery

water system financing

surface water delivery

odessa subarea irrigators

new water supplies

water resources projects

water right verification

water service contract