Delta Legislation Fiscal Analysis 10-12-09

8/14/2019 Delta Legislation Fiscal Analysis 10-12-09

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The New Costs Triggered byThe Delta Legislation Are Simply Unaffordable

The legislature has embarked on a major reform of the states water system, heedless ofthe enormous costs involved, just when the states financial condition has never been

more dire.

A realistic assessment of the total costs of the Delta legislation comes to $52B to $78B ormore.

This $52B to $78B range of costs is the sum of three major components:

$18B$44B for conveyance; $16B for new programs and projects in the Delta; and $18B in new statewide costs associated with a proposed $12.375B bond measure plus required

matching.

A series of huge capital projects would be initiated by the Delta legislation including: new Deltaconveyance, construction of several new surface storage reservoirs, construction of other local watermanagement and delivery projects, Delta levee strengthening, ecosystem restoration, and creation ofthree new state agencies and expanded state programs to prepare and implement the Delta Plan.

The exporters have repeatedly stated they will pay the cost of new conveyance.

The $18B - $44B Delta conveyance cost estimate is based on The Sacramento San Joaquin

Delta 2009, An Exploration of Costs, Examination of Assumptions and Identification ofBenefits, by Steve Kasower. These costs include the construction cost of building a canal ortunnel on an eastern or western alignment, plus necessary levee upgrades to continue throughDelta operations, new rights of way, mitigation and relocation of impactedfacilities/infrastructure. The reason for the wide range of estimated costs ($18B-$44B) is that atunnel will be substantially more expensive than an open canal.

The $18B estimate comes from information in Table 1, second column:o $4.2B for Isolated Conveyance (eastern alignment) based on DWR work in 2008; pluso $9.8B for Through Delta Conveyance based on DWR work in 2008; pluso $4B for Mitigation Costs characterized as mid-range.

The $44B estimate comes from information provided in Table 1, third column:o $9.8B for Through Delta Conveyance (DWR); pluso $33B for Tunnel Conveyance based on actual construction costs for the London Paris

Channel Tunnel or Chunnel; pluso $2B for mid-range Mitigation Costs.


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All users of water from the Delta watershed will have to pay the $16B cost of newprograms and projects in the Delta Plan. It is expected that the $16B cost of newprograms and projects in the Delta Plan will be funded through a surcharge orfee on water use.

$16B in state water fees spread over 30 years is approximately $530M per year in new statewater fees, not counting the likely fee increases over time.

For the same urban customers south of the Delta who are financing the new Delta conveyance,this fee would come to $11B more on their water bills. $11B is approximately 70% of $16Band represents the share of new Delta costs attributable to urban users south of the Delta.

This $16B would provide:

$14B in levee repair and strengthening, plus new staffing costs for the Delta Plan.o The estimated cost for Delta levees is based on preliminary work conducted under the

Delta Risk Management Strategy where costs for improving Delta levees to a variety ofstandards were estimated in 2008. The cost to improve the Delta levees to a seismicallyresistant standard is $13.812B in 2008 dollars.

o Sections 85305(a) and 85306 of the Delta bill, AB 68, direct the Delta Plan to promotestrategic levee investments and to recommend priorities for state investments in leveeoperation, maintenance, and improvements in the Delta, including both project andnonproject levees.

o Levee repairs and maintenance will be necessary in order to maintain and protect costlyecosystem restoration projects, especially those projects that will be implemented on

Delta islands.

o The costs for new agencies and staff can be tabulated by reviewing the enacted budgetsof current agencies such as the CALFED Bay Delta Authority, the Water RightsDivision of the State Water Resources Control Board and the California IntegratedWaste Management Board.

$2B for ecosystem restoration not included as part of the new Delta conveyance.o The $2B for Delta ecosystem restoration is the amount not accounted for when the $2B

proposed under a $12.375B General Obligation Bond (draft SB 371 9/3/09) is

subtracted from the $4B estimated cost of restoration presented by Kasower (2009),Table 1 - second and third columns, Restoration line item.


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A General Obligation bond of $12B has been proposed which has been linked to theDelta package but the actual price tag of the water projects identified in this GObond measure is an additional $18B.

The proposed $12.375B bond measure (Cogdill, draft SB 371 9/3/09) contains several chapters wherenew costs and matching requirements are identified for delta improvements and infrastructure

throughout the state:

Chapter 6 - $2.325B for water supply reliability that would fund water supply managementprograms in hydrologic regions throughout the State with a required match of $1.19B in non-state funds.

Chapter 8 - $3B for Delta Sustainability, including $2B for ecosystem restoration and $1B forlocal improvements, including levee improvements.

Chapter 9 - $4B for the public benefit portion of qualified storage projects and groundwaterprojects. Matching is required by SB 371 and draft AB 893 (9/11/09, Sec. 79745) requires it tobe at least 50% (i.e. $4B for $8B of total costs).

Chapter 10 - $1.5B for watershed and coastal protection throughout the state. Chapter 11 - $1.05B for groundwater cleanup and water quality improvement. Of this amount

$0.3B devoted to stormwater quality may require matching of up to $0.3B.

Chapter 12 - $0.5B for water recycling projects and requires non-state matching of at least$0.5B.

Due to the local match requirements of the bond bill, water customers will also have to payanother $6B to be eligible for state assistance in three major categories set forth in the bondmeasure. Therefore, the actual cost of the various proposed water infrastructure projectsidentified in the existing bond measure is $18B. This bond measure would provide:

Over $2B for local water supply reliability projects, requiring a local match of up to 50%. $3B for Delta sustainability, including projects to improve water quality, and protect and

restore fish and wildlife.

$4B in continuous appropriations for surface water storage. This funding is for the publicbenefit portion of any project and requires a $4B match.

$1.5B for conservation and watershed protection (including outside the Delta), and protectthe Delta from invasive species.

Over $1B for groundwater protection and water quality. $0.5B for water recycling and advanced treatment technologies, requiring a local match of

at least 50%.

The State Treasurer has recommended user fees as the preferred financing tool,which is the method of financing used over the last hundred years to construct andoperate Californias water storage and delivery infrastructure.

The State Treasurer has recently issued a report concluding that general obligation bonds are notthe appropriate financing tool for new water infrastructure. Some of the financing for these$12B in water projects identified in the GO Bond measure may instead be paid for withadditional user fees.


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Urban SWP and CVP customers located south of the Delta will pay the majority of thecosts for this Delta legislation.

There are an estimated 24 million urban SWP and CVP customers located south of the Delta thatcomprise about 70% of the states population and will pay between $42B and $68B, which will likely

to be amortized over thirty years.

This $42B to $68B estimate includes the full cost of conveyance at $18B - $44B. It alsoincludes $24B comprised of 70% of the $16B in costs for new Delta projects or programs and70% of the $18B in new statewide costs associated with a proposed $12.375B bond measure plusthe required matching.

The agricultural water districts have repeatedly told the Legislature that they can payneither the costs of the new Delta conveyance, nor any fee on water use. This would shiftall the costs enumerated above onto urban water customers in California.

As a result, urban water customers south of the Delta would carry the full cost of a new Deltaconveyance, two-thirds of the cost of the Delta Plan, plus their share of surface storage and regionalprojects. In the absence of drastic cost-cutting, the debt service for these urban customers could cometo more than $4B/year. This debt service estimate is based on the 6.5% benchmark used by theLegislative Analysts Office or $65 million per $1B borrowed. Based on the full share of costs forsouth of Delta urban customers of $42B to $68B, the debt service would range from $2.7B - $4.2B.

Paying this huge price tag via water user fees on the water bill will result in more than doublingof the water rates for these urban customers, as well as additional huge annual water rateincreases for many years into the future. The projected 2010 water sales revenues for the largest

SWP urban contractor that serves more than half of the urban water customers south of the Deltaare $1.1B (reference Metropolitan Water DistrictBudget 2009/2010, page 30). To raise its $2Bor more annual share of $4B/year in debt service, it would need at least an additional $2B overits $1B in current annual water sales revenues.

The money to pay the entire $52B to $78B price tag for the programs and projectsassociated with the Delta legislation will be demanded from the same Californianswho are enduring the worst recession since the 1930s.

The state share of any bond repayments will strain the states already overburdened GeneralFund. This long-term over-commitment of taxpayer and ratepayer dollars must be rigorouslyscrutinized by the Legislature, and the costs scaled down to meet financial reality.


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THE S ACRAME NTO S AN J OAQUIND E L TA 2 0 0 9

AN EXPLORATION OF COSTS, EXAMINATION OF ASSUMPTIONS, ANDIDENTIFICATION OF BENEFITS

THIS IS A DRAFT DOCUMENT

PREPARED BY

STEVEN KASOWER, PRINCIPAL

S T R A T E G I C E C O N O M I C A P P L I C A T I O N S C O M P A N Y

R E S O U R C E S O L U T I O N S W I T H V I S I O N A N D V A L U E

S T R A T E G I C E C O N O M I C A P P L I C A T I O N S C O M P A N Y

1 7 2 0 Q S T R E E T

S A C R A M E N T O , C A 9 5 8 1 1 - 6 7 1 7


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3 | P a g e

Table 1 - Delta Facilities, Summary of Costs

User Pays Public PaysFeatures Configurations

Isolated andThroughDelta

Tunnel andThroughDelta

Isolated andThroughDelta

Tunnel andThroughDelta

Conveyance,Isolated East

$4.2 B $4.2 B

Conveyance,

ThroughDelta

$9.8 B1,2 $9.8 B $9.8 B $9.8 B

Conveyance,Tunnel

$33 B3 $33 B

Mitigation $4 B4 $2 B5 $46 $2

Restoration $4 B7 $4 B $4 B $4 B

Off-Stream

Storage

$5 B8 $5 B $2.59 $2.5 $2.5 $2.5

Total $23 B $53.8 B $20.5 B $47.3B $6.5 B $6.5 B

1 Through Delta Improvements include levee earthwork, setback levees, channel dredging, intake,

siphon, operable gates from California Department of Water Resources, An Initial Assessment ofDual Delta Water Conveyance As requested by the Delta Vision Blue Ribbon Task Force, May2008 [online]http://deltavision.ca.gov/BlueRibbonTaskForce/June2008/Item_7_Attachment1.pdf

2 Both isolated as well as through Delta Facilities are required to provide the protection and yieldfrom the Delta. This was from testimony of Greg Gartrell, Assistant General Manager, ContraCosta Water Agency, at the Joint Legislative Hearing on the 2009 Proposed Delta/Water, August18, 2009

3 From text4 This is a mid-range estimate. Estimates range from $2 Billion to $6 Billion from various sources.5 Assumed to be in the midrange of values.6 Users will pay for mitigation according to the testimony of Roger Patterson, Deputy General

Manager, Metropolitan Water District of Southern California, at the Joint Legislative Hearing onthe 2009 Proposed Delta/Water, August 18, 2009.

7 This is a guess only for tabular use. This number could be greater due to the political characteristicsof restoration and the definition that is finally agreed upon.

8 Cost estimates presently are explained as ranges. For the purposes of this table, a total slightlylower than maximum was selected.

9 Discussions on off-stream storage options include discussions on a 50/50 split between projectbeneficiaries and the general obligations of the public.


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An Initial Assessment

of

Dual Delta Water Conveyance

As requested by the Delta Vision Blue Ribbon Task Force

Prepared by California Department of Water Resources

April 2008


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Initial Dual Conveyance AssessmentDelta Vision Report

Table 1 Estimated Costs for Dual Conveyance Configurations A through D ($ Billion)

CONFIGURATIONSFEATURES A B C D

Eastern Alignment1

Canal,intake, fish screen, pumpingplant, control structure, siphons,bridges, culverts, utilityrelocation, railway impacts,forebay, land, some mitigation

$4.2 B $4.2 B -- --

Western Alignment2 Canal,pipeline, pumping plant, pipeline,tunnel, forebay, no mitigation

-- -- $7.4 B $7.4 B

Through-Delta Improvements 13 Levee earthwork, setback

levees

-- $8.6 B $8.6 B

Through-Delta Improvements 2 Channel dredging, intake, siphon,operable gates

$1.2 B $1.2 B

TOTAL $4.2 B5.4 B -$14 B

$7.4 B8.6 B -$17.2 B

All estimates include a contingency cost for engineering, construction management, legal,and project administration costs of approximately 30%. The cost estimates do not includepossible near-term through-Delta improvements being considered in the BDCP process.

For configuration A, the cost for construction of the canal is the highest at 26% of the totalcost, followed by the radial gates for the siphons at 17%.

For configuration C, the cost of the tunneling is more than 50% of the total cost.

For configuration D, the cost of the setback levees is the highest at 40% of the total cost,followed by tunneling at 27%.

Retrofitting existing levees and constructing setback levees for the Through-Deltaimprovements are the most expensive features. Both of these costs were originallyincluded to maintain the Through-Delta Component after a catastrophic earthquake. Dueto the high cost associated with this approach, relying on the Isolated Conveyance

1 Cost estimates for the eastern alignment include real estate, environmental documentation, and mitigation.

2 Cost estimates for the western alignment include real estate.

3 Cost estimates for the through-Delta improvements include environmental documentation and mitigation.

April 23, 2008 16 DWR Bay-Delta Office


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Levee References

Levee cost estimate CALFED Delta Levees and Habitat Subcommittee Handout 6/08

Total cost to repair the 87 islands identified by the Delta Risk Management Strategy to aseismically resistant standard = $13,812M

Levee work is included in the Delta Plan - SB 68 9/11/09

85305. (a) The Delta Plan shall attempt to reduce risks to people, property, andstate interests in the Delta by promoting effective emergency preparedness, appropriateland uses, and strategic levee investments.

85306. The council, in consultation with the Central Valley Flood Protection Board, shallrecommend in the Delta Plan priorities for state investments in levee operation,

maintenance, and improvements in the Delta, including both levees that are a part of theState Plan of Flood Control and nonproject levees.

Fees are intended to fund the implementation of the Delta Plan - PP SB 1 8/4/09

Chapter 3. Other Users of Water from the Bay-Delta Watershed85405. (a) There is hereby imposed an annual fee on each person or entity who holds aright, permit, or license to divert water within the watershed of the San FranciscoBay/Sacramento-San Joaquin Delta. The fee shall apply to holders of water rights,including riparian rights, appropriative rights without regard to the date on which thoserights were perfected, pueblo rights, or any other rights to use water within the Delta

watershed.(b) Until December 31, 2012, the council shall establish fees in an amount that providesonly for the funding necessary to complete the Delta Plan, establish the council, andimplement the early actions identified in Part 2 (commencing with Section 85080). Thecouncil shall establish these fees initially by emergency regulation.(c) Commencing January 1, 2013, and each year thereafter, the council shall, byregulation, set the fee schedule authorized by this section so that the total revenuecollected from the fees equals the appropriate proposed annual budget; or, so that thetotal revenue collected from the fees equals the amount needed in the councils judgmentto accomplish both the following:(1) To pay the costs of facilities and program activities intended to mitigate damage to

fish populations and other natural resources in the Delta and its tributaries that arereasonably related to the diversion of water and other activities of the holder of waterrights subject to this section.(2) To pay the administrative costs and other costs of the council related to councilactivities financed pursuant to this part, including all costs incurred by the council or anyother agency in establishing, administering, defending, or collecting the fees authorizedpursuant to this section.


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$M/mile)

6-FootofLeveeRaise

6

0.645

1.524

1.080

0.846

0.890

1.644

1.181

1.179

1.742

1.218

0.856

1.060

1.203

1.228

1.479

1.229

0.918

1.267

1.620

1.310

0.697

1.830

0.979

1.287

0.764

1.252

0.721

1.384

1.095

1.433

1.310

1.601

1.150

1.671

0.671

1.416

1.361

1.211


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1.456

1.094

1.297

0.876

0.907

0.756

1.204

1.720

1.463

1.061

1.497

0.796

0.795

1.795

1.089

0.878

1.527

0.802

0.802

0.595

0.976

1.693

1.003

1.511

1.241

1.499

1.579

1.223

0.911

1.680

1.429

1.378

0.714

1.532

1.143

1.379

1.177

1.21


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BillLockyer,Treasurer

CaliforniaStateTreasurer

October1,2009

FellowCaliornians:

TherecessionthathasrockedthenationaleconomyandworldfnancialmarketshasdealtourStateandlocalgovernmentfnancesapowerulblowInthepastyear,theGovernorandLegislaturewereorcedbyrapidlyallingrevenuesandrisingunemploymenttoenactthreedierentversionsotheannualbudgetbeorecompletingtheirworkonthe2009-10spend-ingplanAlongtheway,theStatewasorcedtosuspendordelayworkonmorethan5,000job-creatinginrastructureprojectstoconservecashorvitalpublicservices

Statebudgetwritersultimatelyhadtoovercomeanunprecedentedcumulativeshortallocloseto$60billion Doingsocameatgreatcosttoundingorourschools,universities,andhealthandhumanservicesprogramsCities,countiesandlocaldistrictswereorcedtodealwithlossesosimilarmagnitude Theirfnances,likeStategovernments,remainatriskosubstantialdefcitsoratleastthenextthreeyearsasCaliorniagraduallyrecoversromwhatislikelytheworstandlongestrecessionsincetheGreatDepression

Forour2009DebtAordabilityReport,TheInvestmentsWeNeedortheFutureWeWant:CaliorniaNeedsaMasterPlan,Iaskedourstatosurveythedamagedonebytherecessionanddysunctionalcreditmarkettoourstatesabilitytofnanceitscriticalinrastructureneeds TheReportassessestheeectsoverthenear-termandthenexttwodecades,andupdatesthefndingsoour2007DebtAordabilityReport Thateditionunderscoredtheneedorlonger-rangeplanningorcapitalprojectsandtobetterintegrateinrastructurepriority-settingwithintheStatebudgetprocess

ThisyearsreportconcludesthefscalearthquakethatstruckCaliorniain2008and2009willcausedebtservicetocon-sumealargerpieceotheStatesGeneralFund Theportionwillgrowromthecurrent67percentto10percentormorebythemiddleothenextdecadeunlessthebudgetimprovesSoitismoreurgentthanevertoarriveatconsensusaboutinrastructureneedsandfnancingcostsandtoincorporatecareuldebtplanningintothebudgetprocess

ThecurrentdebateabouthowtofnanceimprovementstoCaliorniaswaterinrastructuresystemprovidesatimelyandpressingcasestudySomehavesuggestedpayingtheentirecostwithStategeneralobligationbonds,whichmustberepaidromtheGeneralFundButthisreportmakesclearthaturtherincreasingtheGeneralFundsdebtburden,especiallyinthenextthreedifcultbudgets,wouldrequirecuttingevendeeperintocrucialservicesalreadyreelingrombillionsodol-larsinreductions Thecaseoruser-undingormostwatersystemimprovementsiscompelling,bothasamatteroequityandfscalprudence

Exactly50yearsago,theLegislatureandGovernorEdmundGPatBrownestablishedaCommissiononaMasterPlanorHigherEducation ThemembersincludedhighereducationleadersandexpertpublicmembersChargedwithdevel-opingablueprintormeetingthehighereducationdemandsoourrapidlygrowingstate,theCommissioncompleteditsworkwithinayear TheMasterPlanlaidoutspecifcguidelinesorfnancing,constructingandallocatingresourcesFortheollowingourdecades,itguideddecisionsandmeasuredsuccess,andCaliorniashighereducationsystembecamethebestontheplanet Today,weneedthesamebipartisancommitment,goodwillandgoodsensetoplanandbuildthekindoCaliorniawewantorourselves,ourchildrenandourgrandchildren

SothisreporturgesthecreationoaCommissiononaMasterPlanorInrastructureFinancingandDevelopment TheCommissionwouldcompleteathoroughandpublicassessmentothestatesinrastructureneeds,costsandfnancingalternativesAnditwouldproduceablueprintandtimetableorbuildingaCaliorniathatisprosperousandagreatplacetocallhomeInadditiontocreatingtheCommission,IurgetheLegislatureandGovernortopermanentlyandsystemati-callyincorporatethestatesinrastructurefnanceneedsintotheannualbudgetprocess

IcommendandthankthestaotheStateTreasurersOfce,andourfnancialadvisersandeconomistsTheyhelpedusmakesenseotherapidandotenchaoticeventsthatsoprooundlychangedCaliorniasfnancesoverthepasttwoyearsTheireortsmadeitpossibletodealeectivelywithseveredifcultieswhilekeepingclosewatchonCaliorniasuturewell-being

Ontheirbehalandmine,thankyouortheopportunitytoservethepeopleoCaliornia

BILLLOCKYERCaliorniaStateTreasurer


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Caliornias Fiscal Outlook

Legislative Analysts Ofce42

extent to which the nancial and credit marketsstabilize ollowing their October disruptions.

DebtService Ratio (DSR). The DSR or

bondsthat is, the ratio o annual General Funddebtservice costs to annual General Fund rev-enues and transersis oten used as one indicatoro the states debt burden. There is no one rightlevel or the DSR. However, the higher it is andmore rapidly it rises, the more closely bond raters,nancial analysts, and investors tend to look at thestates debt practices, and the more debtserviceexpenses limit the use o revenues or other pro-grams. Figure 7 shows what Caliornias DSR hasbeen in the recent past and our DSR projections or

the orecast period. We estimate that:

The DSR or inra-structure bonds willrise to 7.8 percent in201112 beore all-ing to 7.5 percent by2013-14. Thereater, itwill steadily decline asoutstanding bonds arepaid o.

I the states decit-nancing bonds (knownas Economic RecoveryBonds) are included inDSR, it would peak at9.4 percent in 2011-12.It is anticipated thatthese bonds will bepaid o ollowing ourorecast period, atwhich time the DSR

will drop down to refect only inrastructurebonds.

As noted in the gure, the DSR we are project-

ing is considerably higher than in past years. Inpart, this refects the sharp all-o in General Fundrevenues we are projecting, which has the eect odriving the ratio up or a given level o debt service.It also is important to note that to the extent ad-ditional bonds are authorized and sold in uture

years beyond those already approved, the statesdebtservice costs and DSR would be higher thanprojected above. For example, each additional$1 billion o bonds authorized would add roughly$65 million annually to debtservice costs once

they are sold.

Projected Debt-Service Ratioa

Figure 7

aRatio of annual debt-service payments to General Fund revenues and transfers.

Budget-Related

Forecast

1

2

3

4

5

6

7

8

9

10%

90-91 92-93 94-95 96-97 98-99 00-01 02-03 04-05 06-07 08-09 10-11 12-13

Infrastructure


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Population Data

Urban SWP and CVP customers located south of the Delta are about 70% of state population

Source: DWR (B160-05), referencing 2000 Population. (B160-09 does not use 2005 data yet)

Total State Population (2000) = 34,000,000Those receiving water from Delta watershed = 32,000,000 (94%)

Using DWR population (2000), SWP population looks close to 22,000,000 w/o double counting.Other urban receiving from CVP only = 2,000,000+ (Fresno, CCWD, Tracy, San Juan, EDID, SEWD,

etc.)

Urban population served by SWP & CVP = 24,000,000 (2000 Pop.); CVP is mostly North of Delta -

Tracy P.P. (subtract 1M)

23M/34M = 67.6% (roughly 2/3 of State population) This percentage applies to statewide cost

23M/32M = 72% of those reliant on Delta watershed.

This percentage applies to Delta watershed costs

MWD serves more than half of the urban south of Delta customers

Based on population

MWD population served = 18.2M (MWD At A Glance Fact Sheet)

Total SWP CVP urban population = 24M (this is not limited to south of Delta and will yield aconservatively low estimate of MWDs portion)

(18.2M/24M)x100= 76%

Based on water volume

SWP Urban South of Delta (based on Table A Allocations)

South Bay = 210,000 AF

Central Coast = 70,486 AF

MWD = 2,011,500 AFOther So Cal = 271,350 AF {at 50% split Urban-Ag}

Total Urban SWP South of Delta = 2,563,000 AF (63%)

MWD share of SWP South of Delta (2,011,500/2,563,000)x100= 78%


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BUDGET 2009/10


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Five-Year Financial Forecast

2009/10 Annual Budget 31 Five-Year Financial Forecast

Figure 11 illustrates historical and forecastedsales. The expected case projection is based onnormal weather (average condition). The highand low forecasts represent sales levels that

could occur under dry and wet hydrologicconditions.

In addition to hydrology, other major factorsaffecting sales include retail demand and localsupply production. The level of water sales isthe most influential variable affecting future

water rates.

Figure 11. Water Sales*

* Includes Exchange sales

SOURCES OF FUNDS

Water Sales Receipts

Water sales receipts are expected to increasefrom $1.1 billion in 2009/10 to $1.5 billion in2013/14. This increase is due to anticipatedrate increases and water sales.

Fixed charge receipts (readiness-to-serve andcapacity charge) are expected to increase fromabout $136.5 million in 2009/10 to

$197.9 million in 2013/14. A forecast of themajor receipts categories for the next fiveyears is shown in Figure 12.

Property tax and annexation revenue isexpected to decrease from $91.4 million in2009/10 to $83.2 million in 2013/14. This isbased on the maximum tax rate allowed underSection 124.5 of the Metropolitan WaterDistrict Act.

Power sales from Metropolitans hydroelectricpower recovery plants, excess Colorado Riverpower, and DVL power generation areprojected to average about $26.1 million peryear over this period.

Interest income is projected to average about$41.5 million per year over this period. Theaverage return on the investment portfolio is

expected to be 4.5% from 2009/10 to 2013/14.

Delta Legislation Fiscal Analysis 10-12-09

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