| OCR Text |
Show of reclamation projects it is generally the prac- tice of the Department of the Interior to apply the interest on the power investment-the "in- terest component"-toward the repayment of that portion of the irrigation investment which is beyond the ability of the water users to repay. If the interest does not cover this portion of the irrigation investment, the balance is met from additional power revenues. A similar practice is followed, in given cases, with respect to the revenues derived from municipal water supply and from other miscellaneous functions. With respect to the repayment period, it is the general policy to require appropriate organi- zations of water users to sign repayment contracts in advance of construction. These contracts provide for repayment of the irrigation obliga- tion within 40 years but allow a maximum devel- opmental period of 10 years from the first water delivery. In a number of cases, longer repay- ment periods, ranging up to 68 years beyond the development period, have been permitted. In at least one special case the repayment period extends over the useful life of the project. In lieu of a repayment contract (except for the costs of any1 irrigation water distribution system), util- ity-type wa.ter service contracts may be made for periods not exceeding 40 years at rates cal- culated to produce revenues sufficient to cover an appropriate share of (a) the annual opera- tion and maintenance cost, and (b) such fixed charges as the Secretary deems proper. A variable repayment plan, sometimes referred to as the noxmal and percentage plan, is available for both existing and new projects, with varying annual payments to reflect variation in farm income. Repayment arrangements for irrigation water from Army Engineers' flood control projects are made by the Department of the Interior. In all cases where additional works are provided by the Department of the Interior to distribute water, the arrangements follow reclamation law. Where additional works are not required, it is the current praxtice of the Engineers to recommend repayment arrangements consistent with recla- mation law. Ever since the Reclamation Act of 1902, the Federal investment in irrigation projects has been repayable without interest. As it became recog- nized that some irrigation projects had flood con- trol and navigation benefits, the costs of such benefits were made nonreimbursable, in accord- ance with policy established for such benefits in other parts of the country. Thus the nonreim- bursement principle established for flood control in the 1936 Flood Control Act was carried over into reclamation. In a recent bill-H. R. 1770 of the Eighty-first Congress-additional nonreimbursable alloca- tions of costs were proposed for such benefits as general welfare, national defense, recreation, sa- linity and sediment control, improvement of pub- lic transportation, protection of public health, and fulfillment of international obligations. Current practices in determining the share of the irrigation investment to be borne by the pri- mary beneficiaries are open to serious question. In the first place, the calculation of the farmer's ability to pay is conditioned by external factors, such as the cost of financing his investment in farm structures and equipment, which may affect adversely his capacity to repay the Federal irri- gation investment. The quality of farm man- agement and efficiency of operations may greatly affect ability to pay. Educational facilities ~nu guidance through extension service programs for irrigation farmers are not adequate. Thus a farmer's ability to pay may be significantly re- duced by such factors as costly private financing and inefficient irrigation-farming practices. Per- haps a more direct method of calculating repay- ment schedules, based upon a revised method for determining the economic value of irriga- tion water to land, should receive careful consideration. A second weakness with respect to sources of repayment funds for irrigation projects has been the general failure to assess the community or some larger area as the State, or both, for second- ary benefits derived from the project. Success- ful irrigation projects are very likely to increase real estate values in the immediate vicinity and some increase in incomes over a wider area. In many cases the strongest pressure for projects comes from those who will gain from the larger 70 |
