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
Odessa
Subarea
Leadership
Irrigators,
Landowners,
Financial Community,
Elected Officials,
Agency Staff
Darryll Olsen, Ph.D.
Regional Planner/Resource Economist
CSRIA Board Representative
CSRIA-10-2014
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
Mission Statement
The 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
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
State-USBR Project (Modified Partial
Replacement Alternative)
70,000 acres N/S-I-90
Private Projects
75,000 acres N-I-90
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)
CSRIA-10-2014
Columbia-Snake River Irrigators Association
Odessa Subarea Systems 1, 2, and 4 Review
Private Sector Financing-Development for Surface Water Delivery
System 1 Final Configuration
CSRIA-10-2014
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-10-2014
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-10-2014
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,
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
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-10-2014
Development
Factors
Private Sector
Econ/Financing
ECBID
Public Model
Engineering
Pre-Construction
Completed
On-Going
(Design?)
System Cost
Allocation
By System/Zone,
(Marginal Costs)
“Normalized” Zone
One Ave. Cost/Acre
Financing
Direct Lending
(Private by Party)
LID-Rev. Bonds
(Non-Obligation)
Cost of Capital
Time 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 Secured
Participants
Syst.1:14,500
Syst.2: 9,000
Syst.4: 8,000
Unknown
(Costs)?
Timing
2016-2017
2018?
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.
 “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
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 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