works include reservoir outlets, spillway structures, and three of the floodways which would carry any water spilled from the reservoirs to natural drainages. Specific costs of recreation and fish and wildlife lands and facilities represent a nonreimbursable investment of $2,283,000 including project costs of $2,163,000 and interest during construction of $120,000. Mid-State project joint project costs of $51,766,000 involve interest during construction of $3,628,000 and a total investment of $55,394,000. Under provisions of H.R. 9032, recreation and fish and wildlife costs allowable as nonreimbursable joint investments would amount to $7 million for the first $40 million of joint costs and 10 percent of $15,394,000 (which sum is in excess of $40 million) amounting to $1,539,000. Thus, permissible nonreimbursable joint costs total $8,539,000 consisting of $7,980,000 project costs and $559,000 interest during construction. Segregation of specific and joint costs [In thousands of dollars] Specific costs of recreation and fish and wildlife development: Recreation-- Fish and wildlife. Amount $163 2,000 Electrical distribution system for project pumps and 115 kilovolt interconnection_‒‒‒‒ 4, 574 Subtotal____ 29, 081 Joint works not serving recreation or fish and wildlife: Chapman 1, 192 Joint works serving recreation and fish and wildlife among other purposes: Diversion Dam... Main supply canal.. Elm Creek inlet control structure__. Reservoir systems-- Wood River spillway structure-- Kearney and Shelton Floodways_ Lower Mid-State Canal and Floodway Reservoir outlet works___. General property and equipment.. Subtotal... Total project costs‒‒‒‒‒‒ 1, 468 3,793 253 28, 936 2, 005 6, 158 4, 042 4,377 594 140 51, 766 84, 202 The following table compares costs allocated to recreation and fish and wildlife with amounts allowed as nonreimbursable under H.R. 9032 so as to derive the remainder of reimbursable costs for these functions: The costs allocated to future commercial power are limited to minimum provisions for the addition of three commercial powerplants and an appropriate share of interest during construction. This investment would become repayable with interest as a part of Missouri River Basin project power costs commencing when construction of those Mid-State project facilities is completed. No analysis has been made of the effect of adding the deferred power costs to the Missouri River Basin project power investment; however, to avoid the necessity of handling the allocated costs in this manner, a further determination will be made during preconstruction investigations of the feasibility of commercial power development in the Mid-State project. If proven feasible, construction of all power features could be accomplished initially, or, if proven infeasible, the cost of providing for future power could be omitted from the plan. Current repayment analyses indicate that the basinwide commercial power investment will be amortized with interest by fiscal year 2014. With allowance of time for authorization, preconstruction studies, and construction of the Mid-State project as scheduled, it is estimated that the reimbursable recreation and fish and wildlife investment would enter plant-in-service about fiscal year 1978, or 37 years before completion of repayment of the basinwide power investment. Assuming that power revenues would be available in 2015 and that the reimbursable recreation and fish and wildlife investment would be repayable with interest at 3 percent, the costs of $1.880,000 as of 1978 would accrue to a total reimbursable amount of about $5,612,000 by 2015. Revenues Revenues for repayment of reimbursable irrigation costs will be derived from direct payments by water users using project service and from reclamation district ad valorem taxes. The direct payments by the irrigators will be implemented by contracts between individual landowners petitioning for service and the reclamation district. In addition the 1947 Nebraska Reclamation District Act provides the legal authority for the reclamation district to levy and collect ad valorem taxes on all tangible property within the district boundaries. Farm budget analysis was not made specifically for the Mid-State project. Irrigation payment capacity was derived by the application of farm budget data of the North Loup Division to the Mid-State area. Based upon a percentage distribution of irrigable land classes derived from sample areas, 39 percent of the irrigable land, or 55,000 acres, was delineated as class 1 and 61 percent, or 85,000 acres, as class 2. Extension of the farm budget data to this distribution resulted in a weighted average annual payment capacity of $10.15 per acre as shown below: The payout schedule contained in the April 1958 report on the Mid-State project proposed a water rate of $5.50 per acre-foot of water delivered with a minimum of $7 per acre. Based upon the anticipated water deliveries of about 1.7 acre-feet per acre, these rates resulted in an average annual charge to the irrigators of $9.31 per acre. This rate is within the payment capacity of $10.15 and allows for contingencies and incentive. Therefore, an average annual payment of $9.31 per acre is proposed. Ad valorem taxes from the reclamation district will provide a major source of income. Under the enabling legislation, a maximum levy of 1 mill upon all tangible property within the district boundaries is permitted prior to the delivery of water. This levy can be increased to 2 mills after water becomes available, and an additional levy of not to exceed 1 mill may be made in the event of defaults or deficiencies. The assessed valuation of all tangible property in the reclamation district approximates $134 million for 1963. A review of past records of assessed values in the Mid-State area shows a significant increase over the past decade. Projecting this rate of growth, it is anticipated that the assessed value will total $150 million by the 10th year of project operation. Assuming valuations of $134 million and $150 million for the 1st and 10th years of operation, respectively, annual revenues at the 2-mill rate would increase from $268,000 to $300,000. Although impacts of the development may result in a higher rate of growth in assessed valuations with corresponding increases in tax revenues, a constant amount has been assumed for the period of operation beginning in the 10th year. Total irrigation revenues, including payments by water users and ad valorem tax levies, would amount to $1,571,400 in the first year of operation. Anticipated increases in assessed values will raise these revenues to $1,603,400 in the 10th year and this sum is projected uniformly throughout the remaining payout period. Deduction of allocated annual operation, maintenance, and replacement costs of $735,500 results in an annual amortization capacity of $835,900 initially and $867,900 by and continuing from the 10th to the 50th year of operation as shown in the following table: Although lands in the project area of 140,000 acres would be provided irrigation service by blocks as groups of features are constructed, an overall period of 50 years is applied in the repayment analysis without adjustment for time of initial service to blocks of land. As scheduled, initial service to blocks of land would span 3 years. The 50-year repayment period would follow a 5-year development period. As proposed in the April 1958 Mid-State report, the reclamation district would use its tax resources during the development period to meet annual O.M. & R. expenses and to accumulate a reserve of funds for future operations and repayment obligations. Repayment of irrigation costs Total project repayment during a 50-year period will amount to $43,236,600. This total would not retire all reimbursable costs; however, it would repay 78 percent of the irrigation allocation of $55,431,000. A repayment summary of reimbursable irrigation costs follows: Project cost allocated to irrigation---- Amount $55. 431, 000 43, 236, 600 Balance repayable by Missouri River Basin project power revenues__ 12, 194, 400 The balance of irrigation costs not reimbursed by the reclamation district during a 50-year repayment period would be amortized along with irrigation costs of other Missouri River Basin project units by basinwide power revenues. The requirement to provide such financial assistance to the Nebraska Mid-State project was anticipated in the preparation of the studies summarized in the "Report on Financial Position, Missouri River Basin Project, December 1963." That report thus demonstrates that revenues are in prospect with which to repay all reimbursable costs of the proposed Mid-State project within 50 years plus a development period. On a per-acre basis, the Mid-State project irrigation investment amounts to $396 of which $309 would be paid by the district in 50 years and $87 represents required power revenue assistance. It is contemplated that the reclamation district will operate and maintain all project facilities except fish and wildlife and recreation features. Proper arrangements can be made in the repayment contract for handling the portion of O.M. & R. costs allocable to nonreimbursable purposes not otherwise financed. With respect to fish and wildlife and recreation facilities and reservoir lands used for those purposes, it is proposed to enter into agreement with an appropriate State or local agency for administration and operation of such facilities including responsibility for meeting their annual O.M. & R. costs. In the absence of such arrangements, however, provision should be made in the authorization for Bureau operation of those fish and wildlife and recreation lands and facilities. CONCLUSIONS The Mid-State project will benefit most of the 550,000 acres contained within the reclamation district boundaries. The benefit analysis evaluates only those benefits accruing to 303.000 acres of land, of which 140,000 acres would receive direct service and 163,000 acres would benefit from improved and stabilized ground water supplies. Although not evaluated, benefits will accrue to other lands potentially irrigable from stabilized ground water supplies. Other important benefits will arise from flood control, fish and wildlife, recreation, and area redevelopment aspects of the project. The analysis of the Mid-State project shows benefit-cost ratios well in excess of unity on the basis of either total benefits or direct benefits only. Allocated reimbursable costs to irrigation amount to $55.431,000 or 66 percent of the total project costs of $84,202,000. Revenues available from the reclamation district will return 78 percent of those irrigation costs in 50 years after meeting O.M. & R. expenses. The "Mid-State Project Report of April 1958," the evaluation statement of January 1960, and the reevaluation in this statement adequately demonstrate project justification and feasibility for purposes of authorization as a division of the Missouri River Basin project. Before construction is initiated it will be necessary to prepare a definite plan report, certify the irrigability of lands, and execute repayment contracts as are required for other divisions of the basinwide project. Hon. WAYNE N. ASPINALL, DEPARTMENT OF THE ARMY, Washington, D.C., March 11, 1964. Chairman, Committee on Interior and Insular Affairs, DEAR MR. CHAIRMAN: Reference is made to your request to the Secretary of Defense for the views of the Department of Defense with respect to H.R. 64, H.R. 1905, and H.R. 2681, 88th Congress, bills "To authorize the Secretary of the Interior to construct, operate, and maintain the Mid-State reclamation project, Nebraska, and for other purposes." The Department of the Army has been assigned responsibility for expressing the views of the Department of Defense on these bills. These bills would modify the Missouri River Basin project authorized by the Flood Control Act approved December 22, 1944 (58 Stat. 887, 891), as amended, to include the Nebraska Mid-State unit for the purposes of irrigation, flood control, fish and wildlife, and power. The unit would consist of a diversion dam on the Platte River, a main supply canal, an interconnected reservoir system, hydroelectric power facilities, wasteways, and related facilities. Some of the major project features of the Nebraska Mid-State unit will be used interchangeably for irrigation of the project area and flood protection for a larger area within the Platte River Basin. Flood protection will be provided by reservoir storage and by dual-purpose irrigation canals and floodways which intercept runoff below the reservoirs. The flood control benefits include widespread benefits creditable to the reservoirs and local benefits due to preventing damages from local runoff. In the case of projects developed under flood control law and credited, primarily, with the latter type of benefits, local interests have to meet certain requirements, in accordance with section 3 of the Flood Control Act of 1936. This project is unusual because of the nature of the physical features and the interrelationship of the irrigation and flood control measures. This characteristic presents unique problems with regard to project design and cost allocations. The resolution of these problems can be effected through coordination with the Secretary of the Interior in the normal manner during detailed planning studies after authorization of the project. The Department of the Army has no objection to authorization of this proposed improvement. The Bureau of the Budget advises that, from the standpoint of the administration's program, there is no objection to the presentation of this report for the consideration of the committee. Sincerely yours, Mr. ROGERS. Senator Curtis, you may proceed. (Discussion off the record.) STEPHEN AILES, Secretary of the Army. STATEMENT OF HON. CARL T. CURTIS, A U.S. SENATOR FROM THE STATE OF NEBRASKA Senator CURTIS. Mr. Chairman, may I express my personal thanks to you and to the other members of the committee for granting this hearing to the Mid-State project in Nebraska. I appreciate the courtesies that you have extended to the interested parties and it is good to get back here among my old friends in the House of Representatives. The Mid-State project is a good project and it has my support. I urge the favorable reporting of the legislation and the enactment of it by the Congress. Having served on the committee in the House of Representatives that handed the overall Missouri Basin plan involving the Army Engineers and the Bureau of Reclamation in the act of 1944, I have followed with interest all of the projects in the Missouri Basin. From |