Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
Technical Capability, Financial Commitments, Implementation
Prepared For:
House
Capital Budget
Committee
Work
Session
December 5, 2014
Olympia, WA
Darryll Olsen, Ph.D.
Regional Planner/Resource Economist
CSRIA Board Representative
CSRIA-11-5-2014
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
East Low Canal System
USBR EIS
Moses Lake
State-USBR Project:
Modified
Partial Replacement
Alternative 70,000 acres
N/S-I-90
CSRIA Objective:
1) Protect Economic
Benefits of Irrigated Ag.
2) Optimize Water Use.
3) Provide a Private Sector
Financing Structure for
Off-Canal Development.
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
Phase II Analysis:
Systems 1 and 2
Detailed Preconstruction
Analysis and
Economic Costs
(CSRIA.org)
System 4 Analysis
Detailed Preconstruction
Analysis and
Economic Costs
(CSRIA.org)
CSRIA-11-5-2014
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
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-11-5-2014
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
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-11-5-2014
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
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.
• Private Sector Economics-Financial Model—There Are No State$-Federal$.
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 Determine Payment Structure—Multiple Zones
with Marginal Costs.
• Optimized Private Sector Financial
Capability with Water Spreading.
CSRIA-11-5-2014
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
Private Sector Irrigators vs. ECBID Public Sector Financial Models:
CSRIA-11-5-2014
Development
Factors
Private Sector
Econ/Financing
ECBID Nov.
Public Model
Engineering
Status
Pre-Construction
Completed
On-Going Design?
System Cost
Allocation
By System/Zone,
(Marginal Costs)
“Normalized” Zone
One Ave. Cost/Acre
Financing
Direct Ag. Lending
LID-Rev. Bonds
Cost of CapitalTime PeriodTotal Debt Serv.-
4-4.5%
20-Years
5.5-6.0%(?)
30-Years
>20% of Private
Total Capital &
OM&R/Acre
$250-500
(Annual $/Acre)
$350-400*
(Annual $/Acre)
Acres Secured
Participants
Syst.1:
14,500
Syst. 2&4: 17,000
Unknown
(Costs)?
Timing
2016-2017
2018?
*CSRIA Modified Estimate.
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
Water System Contract Review Issues? Impeding Action?
• Water Spreading.
 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.
• 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.
 Turn Key Operations Conveyed to ECBID.
 Wait for Master Water Service Contract? Time and Money Indifference?
CSRIA-11-5-2014
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
Further Perspectives—Development Picture:
• Move Now to Get Water on the Ground—Success Breeds Success.
• Get System 1 Operational by 2017; Systems 2, 3, and 4 by 2017-2018.
• Further State/Federal Dollars for Canal? Show Some Results First!
• Financial Reality—Take Advantage of the POWER of Private Sector
Financing and Construction.
• The “Normalized” Model Does Not Add Acres, It Further Disperses Acres
and Can Increase Costs—Discouraging Irrigator/Lender Participation.
• ECBID: Focus on Canal Expansion to Lind Coulee and South.
• Should the ECBID Receive More State/Federal Funds, When They Are Not
Accepting the Irrigators’ Private Sector Financing for System 1 or the Other
Systems ($40-100 Million of Active Private Sector Capital).
CSRIA-11-5-2014