HomeMy WebLinkAbout11/06/2018 21B Yakima River Basin Integrated Water Resource Management PlanBUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
1
Item No. 21.B.
For Meeting of: November 6, 2018
ITEM TITLE: 2018 Cost Estimate and Financing Plan for Yakima River Basin
Integrated Water Resource Management Plan
SUBMITTED BY: Carmen Mendez, Councilwoman
David Brown, Interim Assistant Public Works Director, 509-575-
6204
Scott Schafer, Public Works Director
SUMMARY EXPLANATION:
Enclosed is the 2018 Cost Estimate and Financing Plan for the Yakima River Basin Integrated
Water Resource Management Plan. This report is prepared regularly for the Governor and the
Washington State Legislature by the Department of Ecology and the Office of the State
Treasurer.
The report provides cost estimates of implementing the Yakima Basin Integrated Plan which are
broken out by the full build out cost and cost by 10 -year phases. This report also includes
possible funding options from state, federal, tribal and local agencies.
This report is provided for Council's information.
ITEM BUDGETED:
NA
STRATEGIC PRIORITY: Economic Development
APPROVED FOR
SUBMITTAL:
STAFF RECOMMENDATION:
BOARD/COMMITTEE RECOMMENDATION:
ATTACHM E NT S :
Description Upload Date
IP Finance Plan 10/8/2018
2
Type
Backup Material
3
2018 Cost Estimate and Financing Plan
Yakima River Basin Integrated Water Resource Management Plan
October 2018
Publicaion 18-12-006
DEPARTMENT OF
ECOLOGY
11111/P11.11 State of Washington
4
Publication and Contact Information
This document is available on the Department of Ecology's website at:
https : //fortress. wa.gov/ecy/publications/summarypages/1812006.html
For more information, contact:
Office of Columbia River
1250 W Alder St
Union Gap, WA 98903-0009
Phone: 509-575-2490
Washington State Department of Ecology www.ecology.wa.gov
• Headquarters, Olympia 360-407-6000
• Northwest Regional Office, Bellevue 425-649-7000
• Southwest Regional Office, Olympia 360-407-6300
• Central Regional Office, Union Gap 509-575-2490
• Eastern Regional Office, Spokane 509-329-3400
To request ADA accommodation including materials in a format for the visually impaired, call
Ecology at 509-575-2490 or visit https: /ecologv. a.gov,'accessibility. People with impaired hearing
may call Washington Relay Service at 711. People with speech disability may call TTY at 877-
833-6341.
Cover photo Phase II construction of the Cle Elum juvenile fish passage facility.
5
2018 Cost Estimate and Financing Plan
Yakima River Basin Integrated Water Resource Management Plan
Submitted by
The Office of Columbia River
Washington State Department of Ecology
Union Gap, WA
And
Debt Management Division
Office of the State Treasurer
Olympia, WA
October 5, 2018
DEPARTMENT OF
ECOLOGY
State of Washington
The Honorable Jay Inslee, Governor
Honorable Members of the Washington State Legislature
Olympia, Washington
6
RE: 2018 Cost Estimate & Financing Plan for the Yakima River Basin Integrated Water
Resource Management Plan
The Department of Ecology (Ecology) and the Office of the State Treasurer (Treasurer)
respectfully submit this 2018 Cost Estimate & Financing Plan for the Yakima River Basin
Integrated Water Resource Management Plan, the third in the series as required under RCW
90.38.120.
Compiled by Ecology's Office of Columbia River in collaboration with the Treasurer's Debt
Management Division, this report provides cost estimates of implementing the Yakima Basin
Integrated Plan, which are broken out by the full build out cost and cost by 10 -year phases. This
report also includes possible funding options from state, federal, tribal, and local sources.
This report is now available at this website:
https://fortress.wa.govlecylpublicationslsummarypages11812006.html
If you have any questions regarding this report or would like more information, please contact me
by phone at (509) 574-3989 or by email at: thomas.tebbgecy.wa. g,ov. If you would like hard
copies of the report, contact Colleen Smith by phone at (509) 454-4239 or email at:
colleen.smith@ecy.wa.gov.
Sincerely,
G. Thomas Tebb, L.Hg., L.E.G. Jason Richter
Director Deputy Treasurer, Debt Management
Office of Columbia River Office of the State Treasurer
Table of Contents
7
Page
Statutory Directive RCW 90.38.120 iii
Executive Summary 1
Initial Development Phase - Five Year Update 1
Investments 2
Innovative Funding Partnerships 2
Introduction 4
An Adaptable Approach 9
Estimated Costs and Funding Needs 10
Full Buildout Costs - 2013 to 2043 10
Initial Development Phase - 2013 to 2023 12
Financing Plan 14
State Funding Mechanisms 14
Non -State Funding Sources 20
Financing Mechanism Viability Matrixes 28
Future Outlook 32
Adaptive Management Plan 32
Funding Challenges 33
Funding Successes 34
Next Steps 35
Appendix A - Members of the Yakima River Basin Water Enhancement Plan Workgroup 36
Publication 18-12-006 i October 2018
8
List of Figures and Tables
Page
Figures
Figure 1: YRBWEP to YBIP 3
Figure 2: Annual Economic Output from the Yakima Basin 5
Figure 3: Integrated Plan Project Elements 8
Figure 4: Cle Elum Fish Passage Conceptual Buildout & Cost Estimate 9
Figure 5: Initial Development Phase Estimated Costs 12
Tables
Table 1: Estimated Costs for Integrated Plan 30 Year Implementation Project 11
Table 2: Initial Development Phase Estimated Costs 15
Table 3: Other Potential State Funding Sources 19
Table 4: Other Potential Federal Funding Sources 22
Table 5: Other Potential Tribal Funding Sources 23
Table 6: Other Potential Nongovernmental Funding Sources 27
Table 7: State Funding Matrix 28
Table 8: Federal Funding Matrix 29
Table 9: Tribal Funding Matrix 30
Table 10: Local and Other Funding Matrix 31
Publication 18-12-006 ii October 2018
9
Statutory Directive RCW 90.38.120
Legislative intent - Cost to implement the integrated plan.
(1) (a) It is the intent of the legislature for the state to pay its fair share of the cost to implement
the integrated plan. At least one-half of the total costs to finance the implementation of the
integrated plan must be funded through federal, private, and other nonstate sources, including
a significant contribution of funding from local project beneficiaries. This section applies to
the total costs of the integrated plan and not to individual projects within the plan.
(b) The state's continuing support for the integrated plan shall be formally reevaluated
independently by the governor and the legislature if, after December 31, 2021, and
periodically thereafter, the actual funding provided through nonstate sources is less than one-
half of all costs and if funding from local project beneficiaries does not comprise a significant
portion of the nonstate sources.
(2) The department shall deliver, consistent with the intent of this section, a cost estimate and
financing plan that addresses the total estimated cost to implement the integrated plan and analyzes
various financing options. The cost estimate and financing plan must include a description of state
expenditures as of September 28, 2013, incurred implementing the integrated plan and proposed state
expenditures in the 2015-2017 biennium and beyond with proposed financing sources for each
project.
(3) In addition, the office of the state treasurer shall prepare supplementary chapters to the cost
estimate and financing plan for the department that:
(a) Identifies and evaluates potential new state financing sources to pay for the state's
contribution towards the overall costs of the Yakima integrated plan's implementation;
(b) Identifies and evaluates potential new local financing sources to pay for a significant local
contribution towards the overall costs of the Yakima integrated plan's implementation;
(c) Considers the viability, and evaluates the advantages and disadvantages of various
financing mechanisms such as revenue bonds, general obligation bonds, and other financing
models;
(d) Identifies past, current, and anticipated future costs that will be, or are anticipated to be,
paid by nonstate sources such as federal sources, private sources, and local sources; and
(e) Considers how cost overruns of projects associated with the integrated plan could affect
long-term financing of the overall integrated plan and provides options for how cost overruns
can be addressed.
(4) The department may, in the sole discretion of the department, contract with state universities or
private consultants for any part of the cost estimate and financing plan required under this section.
(5) The initial cost estimate and financing plan required by this section must be provided to the
governor and the legislature, consistent with RCW 1, ,Q, by no later than December 15, 2014,
for consideration in preparing the 2015-2017 biennial budget and future budgets. The cost estimate
and financing plan must be updated by September 1st of each successive even -numbered year.
[
Publication 18-12-006
iii October 2018
10
Executive Summary
The Yakima River Basin Integrated Water Resources Management Plan (Integrated Plan) began
in 2009 as an offshoot of the Yakima Basin Storage Study. Basin stakeholders developed the
Integrated Plan as a commonsense approach to solving decades of water conflicts. This plan
defines a vision for addressing chronic water supply issues, drought resiliency, climate change,
fish passage, ecosystem restoration, economic vitality and growing communities. After the
passage of the Yakima River Basin Water Resource Management Act (RCW 90.38) in 2013, the
Department of Ecology's Office of Columbia River (OCR) in collaboration with the US Bureau
of Reclamation (Reclamation) and the Yakama Nation embarked on implementing the 30 year
Integrated Plan.
Compiled by OCR in collaboration with the Office of the State Treasurer, this report builds upon
information provided in previous legislative reports with updated cost estimates to implement the
unprecedented range of projects within the Integrated Plan for full build -out (30 -year) and for the
first decade.
Initial Development Phase - Five Year Update
Over the past five years, OCR, Reclamation, the Yakama Nation and many other partners
advanced a wide range of projects through feasibility, planning, and design, to environmental
review, permitting, and funding, with a few projects even reaching the construction phase, as part
of the first 10 -year phase of the Integrated Plan, also known as the Initial Development Phase
(IDP).
As the Integrated Plan hits the halfway point of its IDP, we submit this third Cost Estimate and
Financing Plan for the Yakima River Basin Integrated Water Resources Management Plan, in
accordance with RCW 90.38.120. The full buildout, 30 -year (2013 thru 2043) cost estimates in
this report were originally identified in the Yakima River Basin Integrated Water Resource
Management Plan Programmatic Environmental Impact Statement' (PETS). The current full
buildout cost is now estimated to be approximately $4.1 billion. Cost estimates will be adjusted
as needed as projects advance through their various feasibility, design and construction stages.
The current cost estimate of the IDP, which began in 2013 and continues through 2023, is
approximately $990 million, but has ranged from $896 million up to $990 million in any given
year since 2013. Out of $990 million, $639.7 million (65 percent) is expected to come from
federal and other funding sources, with the State contributing approximately $351.2 million (35
percent). It is important to note these percentages are likely to change as project planning
advances and annual federal and biennial state appropriations are realized.
I Integrated Plan PEIS website: lutps:llfortresscvlpublicationsldocumentsl1212002.pdf
Publication 18-12-006 1 October 2018
11
Investments
To date, the State has invested over $200 million directly in the Integrated Plan. This does not
include earlier investments made by the State prior to the legislation passing in 2013, nor does it
include ongoing work in the basin under Yakima River Basin Water Enhancement Project Phase
2. Overall investments in the Integrated Plan have been growing since it launched in 2013,
including increased annual federal funding, which peaked at $43 million in 2017, up from the
$24 million contributed in 2014.
Over the past 5 years, many stakeholders have made smaller capital investments, ranging from
several thousand dollars to several million dollars per year, in water conservation, habitat
restoration and water banking. These same stakeholders, including state and federal agencies, the
Yakama Nation, irrigation districts, counties, cities and conservation groups, also contributed
operating dollars to support implementation of the Integrated Plan through workgroup
participation, subcommittee meetings, and overseeing project implementation.
A variety of funding opportunities from federal, tribal, state, local and private sources are
detailed in this report, which are instrumental in leveraging state funds and bring additional
financial support to the Integrated Plan.
Innovative Funding Partnerships
The success of the Integrated Plan is due, in part, to its flexible adaptive management approach
and the innovative funding partnerships with its federal -state -local -private stakeholders. An
example of this successful partnership is reflected in the Kachess Drought Relief Pumping Plant
with OCR and Reclamation funding the design, permitting and environmental review, and the
proratable irrigation districts financing the construction and operation and maintenance of this
project.
Even with its flexible adaptive management approach and funding partnerships, there are
funding challenges that Integrated Plan projects will need to overcome. For instance, the funding
needs of large construction projects will vary widely over several biennia. One such project is the
Cle Elum fish passage facility. The cost of this project increases greatly as it moves from design
and permitting (approximately $15 million) to construction (estimated < $200 million) and
dropping again to less than $10 million during the operation and maintenance (O&M) phase.
Budgeting a large capital project within the State biennial budget cycle and a federal 3 -year
budget cycle can be challenging, coupled with unforeseen project delays, helps one quickly grasp
the complexity of Integrated Plan project development and project management.
Similar to the first five years, the next five years of the IDP implementation of the Integrated
Plan will continue to adapt and change in order to meet project needs and overall goals of the
Integrated Plan. This approach allows new projects to come online while older projects are
completed, and allows all seven elements of the Integrated Plan to progress simultaneously.
Over the next two years, OCR plans to coordinate with the Office of State Treasurer to develop a
funding plan for the second 10 -year phase, also known as the Middle Development Phase
(MDP), of the Integrated Plan, which will include options on how the State will contribute up to
50 percent of the projected $1.6 billion MDP cost, setting the stage for the 2020 Integrated Plan
Cost Estimate and Financing Plan.
Publication 18-12-006 2 October 2018
STUDIES
AUTHORIZED
YRBWEP 2
Voluntary
Conservation
YBIP
YaYn'i h;;esin :nt -irate'+.I Flan
12
1979
After a devastating drought in 1977, Congress directed
the Bureau of Reclamation to work with the State of
Washington to conduct studies and develop a plan to
provide water for irrigation, treaty rights, aquatic life
and fish habitat.This effort was titled the
Early studies identified fish passage issues.The
Hoover Power Plant Act of 1984 authorized fish
passage facilities throughout the Yakima Basin,
partially funded by the Bonneville Power
Administration. YRBWEP 1 designed and enacted
fish passage basinwide.
1984
After the 1992-1994 drought, legislation authorized
water conservation and instream flow projects. Costs
for water conservation are shared by Reclamation, the
Washington Dept. of Ecology and irrigators. 2/3rds of
irrigation water conserved remains instream to help
with flows, while1!3 is retained by irrigators for use in
drought years.
Following another drought in 2005, Reclamation and Ecology built on
YRBWEP 1 and 2 by creating a stakeholder workgroup to address other
elements of the water supply and fisheries issue. In 2009, this group began
developing the Yakima Basin Integrat.'d Plan IYBIPi, a watershed -scale
approach to sustainable water supply for fish, families, farms and forests.
2009
YRBWEP 1
Fish Passage
YBIP
(YRBWEP 31
Yakima Basin
Integrated
Plan
Figure 1: YRBWEP to YBIP
YBIP is a 30 year package of actions divided into three
10 -year phases of its own.
DEPARTMENT OF
ECOLOGY
State of Washington
13
Introduction
In 2013, the Washington State Legislature passed the Yakima River Basin Water Resource
Management Act (Second Substitute Senate Bill 5367) to address the Yakima River Basin's
chronic water supply shortages. This act is now codified in RCW 90.38 and authorizes the
Department of Ecology (Ecology) to implement the extensive 30 -year effort known as the
Yakima River Basin Integrated Water Resource Management Plan. This management plan, also
known as the Yakima Basin Integrated Plan (Integrated Plan), is the third phase of the Yakima
River Basin Water Enhancement Program (YRBWEP) (Figure 1).
Developed by Ecology and US Bureau of Reclamation (Reclamation), in partnership with the
Yakama Nation and a group of basin stakeholders known as the YRBWEP workgroup
(Appendix A), the Integrated Plan is a collaborative effort that stretches beyond the decade of
conflict that proceeded it, and provides a comprehensive approach to water supply improvements
and ecosystem restoration in the Yakima River Basin. Through this approach, the Integrated Plan
aims to improve water reliability for both instream and out -of -stream water uses, restore salmon
and steelhead, and protect the basin's economy, communities, and watersheds. The success of
the Integrated Plan is thanks in part to the diverse parties that make up the YRBWEP workgroup
and its subcommittees putting aside their differences, coming together as one.
Located east of the Cascade Mountains in south-central Washington, the Yakima River Basin
encompasses 6,155 square miles and is home to a population of approximately 370,000, which
includes over 10,000 members of the Yakama Nation. This basin provides cold -water habitats
vital to the spawning and rearing of salmon, steelhead, and the federally listed Bull Trout. The
Yakima River Basin also supports over 96,000 water dependent jobs that provide $13.1 billion in
annual economic activity.
As one of the most productive agricultural regions of the State, the agricultural and food
processing industries alone provide 44,300 of these jobs that drive the $4.5 billion economic
engine, leading to over $1 billion in agricultural exports annually (Figure 2 next page). In a river
basin plagued by chronic water supply shortages, this can lead to severe economic losses. During
the 2015 drought, three of Yakima's irrigation districts felt the impacts of water supply shortages
in the form of $122 million in crop losses.
Improving water supply reliability allows the basin to buffer snowpack losses, prepare for
periods of declared drought, secure the regional economy that is dependent on water supply, and
prepare for future population growth. Water supply improvements will also aid in fishery
restoration and addressing the federal treaty obligation to the Yakama Nation. With salmon and
steelhead numbers increasing to 50,000 fish, from 3,000 fish documented in the mid -1990's, it is
estimated that with continued instream flow improvements these numbers could eventually reach
up to 300,0003.
2 ECONorthwest. (2017). Water Security for the Yakima River Basin's Economy, Communities, and Watersheds.
Washington Department of Ecology (Publication No. 17-12-010).
Wildlife, W. D. (2002). Status Report Columbia River Fish Runs and Fisheries 1938-2000. Washington
Department of Fish and Wildlife.
Publication 18-12-006 4 October 2018
14
Figure 2: Annual Economic Output from the Yakima Basin
To ensure the basin remains as a place for families, farms and fish to thrive today and into the
future, the Integrated Plan is a 30 -year vision with the following goals:
• Provide opportunities for comprehensive watershed protection, and
ecological restoration that address instream flows, aquatic habitat, and fish
passage.
• Improve water supply reliability during drought years for agricultural and
municipal needs.
• Develop a comprehensive approach for conservation of water supplies for
crop irrigation, municipal and domestic uses, and power generation.
• Improve the ability of water managers to respond and adapt to the potential
effects of climate change.
• Contribute to the vitality of the regional economy and sustain the riverine
environment.
For a project to be selected under the Integrated Plan it must provide tangible improvements to
instream flows, fish habitat, fish passage, and/or increased water security of existing out -of -
stream water supplies in the Yakima Basin. These projects may also improve economic and
environmental sustainability, meet the needs of water users, restore salmon, Bull Trout, and
steelhead runs, and/or conserve and restore vital habitats.
Ecology, Reclamation, and its partners are working with the YRBWEP workgroup Executive
Committee to develop a process of qualitatively and quantitatively evaluating new and modified
projects. This evaluation process, once finalized, will be used to verify that projects are meeting
the goals of the Integrated Plan. All Integrated Plan projects are housed within one of seven
elements (Figure 3) and the diverse and broad group of supporters of the Integrated Plan are
committed to moving all seven elements forward simultaneously.
Publication 18-12-006 5 October 2018
15
These seven elements are as follows:
1. Habitat/Watershed Protection and Enhancement - Targets critical habitat for wildlife
and anadromous (ocean migrating) and resident fish, particularly several salmon species,
including sockeye salmon, the federally -listed Bull Trout and the federally listed
steelhead, through land acquisition, watershed protection and habitat restoration and
enhancement proj ects.
In 2013, the State purchased 50,241 acres of forestland in the upper Yakima Basin,
moving the plan closer towards achieving its goal to conserve and restore 70,000 acres of
vital watershed, shrub -steppe, and forest habitats. The Legislature designated this land as
the State's first community forest and named it the Teanaway Community Forest (TCF).
Integrated Plan partners continue to manage recreation and grazing activities and habitat
restoration efforts in the TCF.
2. Fish Passage - Focuses on providing both upstream and downstream fish passage at all
five major storage reservoirs in the basin, allowing fish to reach their historic spawning
sites in the coldest and cleanest water located in the headwaters of the Yakima Basin.
Phase II construction of the Cle Elum fish passage facility is currently underway.
Construction of all phases is anticipated to be completed in 2022.
3. Enhanced Water Conservation4 - Strives to improve both instream flows in critical
stream reaches and reliable water supplies for proratable water users by achieving more
precise water delivery through aggressive implementation of water delivery and water
use efficiency measures.
To date, projects under this element have conserved over 10,000 acre-feet (ac -ft.) of
water, with a total of 85,000 ac -ft. planned to be conserved by 2023. The Integrated Plan
aims to reach its goal to conserve over 170,000 ac -ft. of water by the end of its final
development phase.
4. Structural and Operational Changes - Promotes operational efficiency and flexibility
at existing in -basin facilities, some of which are over 100 years old, through facility
expansion and conveyance improvements.
A major accomplishment under this element is the completion of the 3 feet radial gate
(pool raise) construction at Cle Elum Dam. Once shoreline stabilization around the
reservoir is complete, Cle Elum reservoir will hold an additional 14,600 ac -ft. of water
for fish flows.
4Water conservation efforts are only one part of securing reliable water supply in the Yakima Basin. Conservation
efforts at the top of the basin may reduce water supply for downstream users, limiting their ability to exercise their
water right. Lining or piping a canal reduces seepage, but seeping water eventually makes its way back to the river
and the downstream users awaiting that water. Unless offset by managed aquifer recharge, reducing seepage may
also limit groundwater infiltration, which recharges aquifers and helps cool stream temperatures during summer
months.
Publication 18-12-006 6 October 2018
16
5. Surface Water Storage - Seeks to develop an additional 450,000 ac -ft. of new surface
water storage for supporting instream and out -of -stream water uses.
The Kachess Drought Relief Pumping Plant will access 200,000 ac -ft. of water held in
the Kachess reservoir below the existing dam outlet works. The Supplemental Draft
Environmental Impact Statement (EIS) for the Kachess Drought Relief Pumping Plant
and Keechelus-to-Kachess projects was released to the public April 2018 with a final EIS
expected by the end of 2018.
6. Groundwater Storage - Utilizes surface water to recharge aquifers to store water for
later withdrawal and use, and improve stream flow conditions.
The City of Yakima Aquifer Storage and Recovery project water right permit has been
issued. Other regional approaches using irrigation district infrastructure to recharge
groundwater are currently being evaluated.
7. Market Driven Reallocation - Improves water supply and instream flow conditions
through water banking and exchange programs that build on existing water market
programs. This will reduce barriers to exchanging water and focus on water transfer
between districts, which may require changes to existing laws and policies.
In September 2017, a Reclamation WaterSMART Water Marketing Strategies Grant was
awarded to the Kittitas Reclamation District (KRD), in partnership with Trout Unlimited,
to begin a water marketing analysis for the Yakima Basin. Both Yakima County and
Kittitas County are also working on water banking programs to enable construction of
property developments and individual homes that rely on water acquisition or mitigation
credits from willing sellers.
Kachess Reservoir
Publication 18-12-006
7
October 2018
Building A Future for Water, Wildlife, and Working Lands
Yakima River Basin Integrated Water Resource Management Plan
passage ae:
1. Clear Loko
2. Cle Eium
3. Bumping
4. Pieter (R'rnr'r.ck)
5. Keechelus
5. Kacties,
Implement ar agrc.2OJral water
conservation program designed to
conserve up to 170,000 acre-''ec
water in good water years.
2. Create a fund to promote water
use efficiency basin -wide using
voluntary; ncenhve.-^"sed
programs. FOCUS on o'Jt:oor JSes
as too priorti.
Kittitas County
GW Storage
'on #1
Conducted
Basin -Wide
Protet -70,005 acres of lard by
acduiring h gl elevation polions of
the v°atershed and forest enc saru0
stepoe nnbioar.
Evaluaoo poterrial wilderness
area and wild and scenic river
de.signatiorl5 to prstece streams and
habitat.
Create a habitat enhancement
in to address reach -level
fI odela n restos ion priorities 010
restore access to key tributaries.
Market
Realization
Conducted
Basin -Wide
Yakima County
Benton Courtly
Figure 3: Integrated Plan Project Elements
Groundwater Storage
1. Construct pilot. p'o:eels .c
evaluate recharging she low
aquifers via groundwate•
intiltrat on. Full scale
Imaementation may fo low.
2. Build an aquifer ,:orage and
recovery facility allowing Yakima
Cit/ tow thdrat' water from the
Nachos R ver during h gh flow
pe-cds and store ir unde-gramd
fp.* use during lo•,, Flaw periods.
Surface Water Storage
1. Access an adC:timet 200,000
Kat o` water by tapping into
iractve storage e: I ake Kachess.
2. Build a 152,500 acR off channel
surface storage fooliey at Wymer
on Lmuria Creek.
3. Construct a row dam at Bumping
Reservoir to increase capact/ to
190,000 ac -ft.
4. Begin appraisal of po:entel
pro,ects to transfer water from
Fine Columbia Rive- to :le Yakima
Lawn.
tlnplov a water market and/or a
water hank to improve water supply
in the Yakima River basin. Me'ket
rcarlocation wet. d bo conducted ir
two 7hases:
The mea' -Germ pias:.vouid con-
tinue eaiiting water marketing arc
banking p'ograms in the basin: cut
take a.Atonal s-epr. to 'educe ho-
riers to crater trarssfe's.
The lonc-'e-m program wo.de focus
on facilitating water transfers ce-
tweer 'rigation distric:s. This would
al cw an irrgation district to fallow
land withir lie district and lease
water rights for that lard outside
the distrct.
Structural & Operational Manges
1. Raise the Cle Elum Pool by three
feel to add L1,600 ac -I'- in storage
capacity.
2. Mo: Mfr' Kitttas Reclamation
D'striet canals to prov'ice efficiero,
savirgs.
3. Construct a pipeline from Lek?
Keecheles _^ Lake Kactess to
ry5,lre flows and improve habitat
conditions during high flow
releases oeio•.v Keechelus and
t _ provide moria water storage
in Lake Kachess 'or dormstreain
needs.
4. Decrease power gere-ation at
Roza Dam and Chandler pcvrer
plan: to scppor, outmigration of
juvenile fish.
5. Make efficiency irnpruuements tc
the Wapatox Canal
18
An Adaptable Approach
The success of the Integrated Plan is due to its flexible adaptive management approach and the
innovative funding partnerships with federal -state -local -private stakeholders. An example of this
successful partnership is reflected in the Kachess Drought Relief Pumping Plant with OCR and
Reclamation funding the design, permitting and environmental review and the proratable
irrigation districts financing the construction and operation and maintenance of this project.
Even with its flexible adaptive management approach, Integrated Plan projects still face funding
challenges they will need to overcome. For instance, the funding needs of large construction
projects, such as the Cle Elum fish passage project, will vary widely over several biennia. As
illustrated in Figure 4, the Cle Elum fish passage project spans multiple state biennial budget
cycles, with varying costs of each stage of the project. Budgeting this large capital cost project
within the State biennial budget cycle and a federal 3 -year budget cycle can be challenging, as
seen in the decreased dip in funding for 2017-2019, which may affect project phasing and
completion dates.
Along with these current funding challenges, new funding challenges are likely to transpire as
multiple large-scale capital construction projects, such as a major surface water supply project
and a fish passage project enter their high cost construction phases simultaneously.
Cle Elum Fish Passage Conceptual Buildout & Cost Estimate
Biennium 2005-07 2007-09 2009-11 2011-13 2013-15 2015-17 2017-19 2019-21 2021-23 2023-25 2025-27 2027-29 2029-31
$25
co 520
0
$15
$10
$5
2005
2010
2015
2020
2025
2030
Figure 4: Cle Elum Fish Passage Conceptual Buildout & Cost Estimate
Publication 18-12-006
9
October 2018
19
Estimated Costs and Funding Needs
The estimated cost and funding needs for implementation of the Integrated Plan are presented in
the following sections. These sections include the cost estimates for the full buildout (30 -year)
by element and separated into three decade-long phases (Table 1). Detailed cost estimates for the
IDP are laid out in Table 2.
Full Buildout Costs - 2013 to 2043
The current estimated cost for implementing the full buildout of the Integrated Plan is
approximately $4.1 billion, remaining consistent with the previous 2016 Cost Estimate and
Financing Plan. Over the last two years additional investigations, project proposals, and
changing timelines have shifted cost among the three development phases. Regardless of these
timeline changes, the full buildout cost estimate of the plan have remained relatively unchanged
since 2013.
The cost estimates provided in Table 1 are high-level estimates, which are being refined as
projects undergo feasibility studies and design. The Surface Water Storage Element holds the
highest estimated full buildout costs among all seven elements, at approximately $2.2 billion.
The lowest projected full buildout cost estimate is for the Market Driven Water Reallocation
Element at $4.0 million. Cost estimates of the other five elements, Habitat/Watershed Protection
and Enhancement, Fish Passage, Structural and Operational Changes, Enhanced Water
Conservation Elements, and Groundwater Storage all range in the multiple hundreds of millions,
specifically between approximately $123 million to $530 million.
Full buildout cost estimates are derived from a combination of the Initial Development Phase
funding needs as identified by the PEIS6, and the estimated undiscounted capital cost found in
the 2012 Yakima River Basin Integrated Water Resource Management Plan Framework for
Implementation Report. Ecology and Reclamation also issued a four -accounts benefit to cost
analysis of the Integrated Plan at full buildout (30 -year costs) in 2012.
The benefit to cost analysis tabulated the combined benefits and the costs of the full suite of
Integrated Plan projects. Analyzed as a suite of integrated projects versus individual projects, the
Integrated Plan yields favorable benefit -to -cost ratios. However, when the Integrated Plan is
separated into its component pieces, benefit -to -cost ratios of some individual projects are not
favorable, putting a few project's economic viability into question. This is why the integrated
approach was specifically developed to capture the synergy of all elements, projects, and
activities progressing simultaneously.
5 Cost estimates do not include inflation.
6 Integrated Plan PEIS website: haps://fortress. wa. goy lecv/pub lic ationsldo c uments/1212002.pdf
Publication 18-12-006 10 October 2018
20
Table 1: Estimated Costs for Integrated Plan 30 Year Implementation Project
INTEGRATED PLAN
ELEMENT
INITIAL
DEVELOPMENT
PHASE
(DECADE 1)
MIDDLE
DEVELOPMENT
PHASE
(DECADE 2)
FINAL
DEVELOPMENT
PHASE
(DECADE 3)
FULL
DEVELOPMENT
COSTS
(3 DECADES)
Habitat/watershed
protection and
enhancement
$361,400,000
$59,550,000
$59,550,000
$480,500,000
Fish passage (6
projects)
$185,200,000
$244,800,000
$100,000,000
$530,000,000
Surface water storage
*$247,700,000
**$986,425,000
**$982,425,000
$2,216,550,000
Groundwater storage
regional and municipal
$7,400,000
$57,900,000
$57,900,000
$123,200,000
Structural and
operational changes
$120,500,000
***$102,800,000
***$102,800,000
$326,100,000
Enhanced water
conservation
$65,600,000
$181,950,000
$181,950,000
$429,500,000
Market driven
reallocation
$3,100,000
$475,000
$475,000
$4,050,000
Integrated plan update
costs
$1,500,000
$1,500,000
$3,000,000
Total
$990,900,000
$1,635,400,000
$1,486,600,000
$4,112,900,000
*Keechelus to Kachess Pipeline was classified as Operational Modifications in the IDP Costs. The Kachess
Reservoir Drought Relief Pumping Plant Project is included as Surface Water Storage.
**Average costs of nest two projects recommended under the Integrated Plan, plus updated water needs analysis
and Columbia River availability analysis. The cost of subsequent storage projects described in the Integrated Plan
have been averaged and divided equally between decade two and decade three because final decisions regarding
whether to proceed with those projects and project sequencing have not been made. Decade two costs also include
estimates for providing updated water needs and Columbia River water availability analyses.
***Includes prorated costs of Wapatox Canal Conveyance, KRD Main Canal, South Branch Modifications and
Roza subordination. Estimated costs for the Wapatox Canal Conveyance, KRD Main Canal and South Branch
Modification, and Roza Subordination projects have been totaled and divided equally between decade two and
decade three because decisions regarding project sequencing have not been made.
Publication 18-12-006 11 October 2018
Habitat
Fish Passa
e
Structural &
Operational
Surface Storage
Groundwater
Storage
Water
Conservation
Market
Reallocation
Total
$ 7.4
6
120.5
185.2
5381.4
Other Share 2013-2023
State Share 2013-2023
21
5990.9
$ 5100 5200 5300 5400 5500 5600 5700 $800 5900 51000
Anticipated Cost by Funding Source {millions)
Figure 5: Initial Development Phase Estimated Costs
Initial Development Phase - 2013 to 2023
The Initial Development Phase (IDP) is the first 10 -year phase, beginning in July 2013 and
continuing through June 2023. Current funding estimates for the IDP are approximately $990.9
million, with federal and other project partners expected to contribute approximately $640
million (65%) of estimated costs (Figure 5). The cost estimate of the IDP has ranged from $896
million up to $990 million in any given year since 2013.
Projected cost estimates are expected to change as project designs are developed and refined;
funding sources are identified, feasibility studies are completed and permitting and mitigation
requirements are determined. While the full buildout costs have remained relatively unchanged
since the 2013, funding needs have shifted between all three development phases (Figure 1) as
project priorities and timelines have been modified and additional projects are incorporated into
the IDP. The difference between the IDP estimates are largely the result of the movement of
several projects between development phases.
In particular, an additional $200 million was moved from the Middle Development Phase (MDP)
to the IDP cost estimate for the potential construction of the Kachess Drought Relief Pumping
Plant, increasing the anticipated IDP cost estimate (and lowering the MDP). Furthermore,
several large projects originally anticipated to start mid -IDP are now expected to span both the
Initial and Middle phases. Both the Keechelus to Kachess Conveyance Project and the Tieton
Dam Fish Passage Project are now expected to shift portions of their project timelines into the
MDP, spreading out the anticipated cost between the IDP and MDP. Further discussion on these
changes are discussed in the Adaptive Management Plan section of this report.
Publication 18-12-006 12 October 2018
22
Yakima Valley
The IDP7 includes funding for a number of specific large capital projects including (Table 2)
• Kachess Drought Relief Pumping Plant — $236.2 million.
• Fish Passage at Cle Elum Dam — $ 131.6 million.
• Three-foot pool raise at Cle Elum Reservoir — $26.8 million.
Other components of the IDP to highlight include:
• $57.4 million in agricultural conservation.
• $99.3 million for the acquisition of the Teanaway Community Forest.
• $7.4 million in aquifer storage and recovery projects. $3.1 million for
fostering water banking and exchange programs.
These dollars amounts do not necessarily reflect total project costs, but rather the cost of implementation for each
project during the IDP.
Publication 18-12-006 13 October 2018
23
Financing Plan
Consistent with RCW 90.38. 120(3), the financing plan must:
• Identify and evaluate potential new state financing sources to pay for the
State's contribution towards the overall cost of Integrated Plan
implementation;
• Identify and evaluate potential new local financing sources to pay for a
significant local contribution towards the overall cost of Integrated Plan
implementation;
• Consider the viability and evaluates the advantages and disadvantages of
various financing mechanisms such as revenue bonds, general obligation
bonds, and other financing models;
• Identify past, current, and anticipated future costs that will be, or are
anticipated to be, paid by non -state sources; and
• Consider how cost overruns of projects associated with the Integrated Plan
could affect long-term financing of the overall plan, and provide options for
addressing cost overruns.
Each of these requirements are addressed in the sections below. Additional funding strategies
and potential funding sources are also presented here to clarify overall financing issues related
to the Integrated Plan.
State Funding Mechanisms
State backed capital projects are typically funded through two primary mechanisms, bonds and
cash (pay -go). These projects and their funding sources are determined by the legislature and are
included in the biennial capital budget. Additionally, there are alternative financing mechanisms,
including grants, loans, and Public Private Partnerships (P3s), that may be available to fund
portions of the Integrated Plan projects, if approved.
The Legislature has delegated to the State Finance Committee the authority to supervise and
control the issuance of all State bonds and other state obligations, including financing leases,
authorized by the Legislature. The Committee is composed of the Governor, Lieutenant
Governor and Treasurer. The Treasurer is the Chairman of the Committee, and the Office of the
State Treasurer provides administrative support to the Committee.
Publication 18-12-006 14 October 2018
Table 2: Initial Development Phase Estimated Costs
Amount in Millions (blank cells denote "0" funding or request)
Requested Anticipated Federal &
State State Other Sources
Appropriated State Funding Funding Funding of Funding
Integrated Plan
Elements
Projects
Projected
Funding Anticipated
Requests from Federal &
all Sources Other Share
2013-2023 2013-2023
Anticipated
State Share
2013-2023
2013- 2015-
2015 2017
2017 - 2014- 2019-
2019 2019-2021 2021-2023 2018 2023a
Habitat
Teanaway Forest Acquisition
Teanaway Forest Planning & Operations
(non -Ecology)
Kittitas County impacts offset for
Teanaway Forest
Other State Land Acquisitionsb
NRCS RCPP - Yakama Nation Projects
NRCS EQIP
NMFS Pacific Coastal Salmon Recover
Fund
USACOE levee reconfiguration., setback &
removal
BPA NPCC Fish and Wildlife Program
Tributary/Mainstem Habitat Restoration
Projects
Bull Trout Enhancement
Federal, Tribal, Local Habitat Actions &
Land Acquisitionsc
99.3
7.5
10.0 5.0
14.0
22.6
20.5
8.2
22.6
20.5
20.4 20.4
13.2 13.2
94.3 94.3
38.8 19.4
13.6 6.8
7.2 6.9
99.3
7.5
5.0
5.8
19.4
6.8
0.3
99.3
1.0 0.5
5.0
5.8
1.5 2.3 2.2
2.4 2.5 5.4 4.3 4.8
1.7 1.7 1.7 1.7
0.3
8.2
5.3
5.0
6.0
4.7
94.3
6.9
5.0
0.0
17.3
15.5
14.4
8.5
0.0
19.4
6.8
0.0
Fish Passage
Cle Elum Dam
Tieton Dam
Clear Lake Dam passage
Box Canyon Creek
USFWS National Fish Passage Program
funds
131.6 71.9
44.8 22.0
8.0 4.0
TBD TBD
0.8 0.8
59.7
22.8
4.0
TBD
8.8 9.0
0.6 0.5
9.0 20.1 12.8
0.8 20.9
1.5 1.0 1.5
TBD TBD
32.4
0.8
39.5
22.0
4.0
TBD
0.0
Structural Keechelus to Kachess Conveyance Project
& Operational Cle Elum Dam/Pool Raise
Modifications Roza Power Subordinationd
Chandler Power Subordinationd
Kittitas Reclamation District Canal
Modifications
Upper Yakima System Storage
89.0
26.8
0.2
TBD
TBD
4.5
43.7
13.4
TBD
TBD
2.5
45.3
13.4
0.2
TBD
TBD
2.0
0.5
2.8
0.2
4.2
1.0
0.0
40.6 1.0
3.0 3.3 3.3 2.0
TBD TBD
TBD TBD
2.0
42.7
11.4
0.0
TBD
TBD
Publication 18-12-006 15 October 2018
2.5
Kachess Drought Relief Pumping Plant
Surface Storage (KDRPP)e
Wymer Dam and Reservoir
Bumping Reservoir Enlargement
236.2
•
1.0
218.6
3.5....
0.5
17.6
0.5
0.5
05
4.3 EE
0.7
2.6
Groundwater Regional Storage Options
Storage Municipal ASR Projects
7.0
0.4
3.5
0.2
3.5
0.2
0.2 0.5 1.1 0.6
0.2
1.1
5
0.2
Municipal/Domestic Conservation
Programs
BIA WIP improvements
1.2
7.0
0.6
7.0
0.6
0.1
0.6
0.0
Market Driven
later
Reallocation
Total
General support for markets and banking
3.1
1.5
1.6
0.4
0.5
0.6
0.1
1.4
990.9
639.7
351.2
143.3 30.0E II 32.6 II 44.3 I'
101.0
180.1 459.6
percentage
Share
100%
64.6%
35.4%
14.5% 3.0% 3.3% 4.5%
10.2%
18.2% 46.4%,,
Notes:
(1) RCW 90.38.120 - Legislative Intent - Cost to implement integrated plan states: (1)(a) It is the intent of the legislature for the State to pay its fair share of the cost to implement
the integrated plan. At least one-half of the total costs to finance the implementation of the integrated plan must be funded through federal, private, and other nonstate sources,
including a significant contribution of funding from local project beneficiaries. This section applies to the total costs of the integrated plan and not to individual projects within the
plan.
(2) RCW 90.38.120 - Legislative Intent - Cost to implement integrated plan states: (1)(b) The State's continuing support for the integrated plan shall be formally reevaluated
independently by the governor and the legislature if, after December 31, 2021, and periodically thereafter, the actual funding provided through nonstate sources is less than one-
half of all costs and if funding from local project beneficiaries does not comprise a significant portion of the nonstate sources.
(3) The projects and specific costs are subject to change or modification as new information becomes available over the course of the 30 year implementation schedule of the
Yakima Integrated Plan. The State and non -state cost share is yet to be defined. This estimate is guided by the projected state support provided over the next three biennia If non -
state funding was increased during this time, the required state funding might need to be increased to conform to RCW 90.38 and in conformance with agreed upon cost -share
methodology. The estimates provided in this projection illustrates a possible state and non -state cost share approach and may not be consistent with other published cost estimates
for the overall integrated plan.
(4) Costs do not include inflation. They are listed in dollars from the most recent study available (typically 2012 to 2015 dollars) and are subject to change as new information
becomes available through additional feasibility and design studies and/or changes by the Yakima Integrated Plan Workgroup.
(a) In 2016, the funding estimate for 2016-2023 federal and other sources is projected to be equivalent to the anticipated state share of funding for the 2013-2023 timeframe. The
specific amount dedicated to each project is yet to be determined for the federal and other sources of funding. The 2019 - 2023 estimates were not updated as a result of this
original equivalency estimate.
(b) Includes Tieton Cattle Co. /North Fork Cowiche Creek; and Heart of the Cascades/Manastash Block.
(c) Funded by LWCF in 2014 and 2015. Includes acquisitions in Naches watershed; Cabin Creek, Log/Thetis Creek. Some of these went beyond "primary" YBIP goals.
(d) Funding for power subordination costs and KRD canal modification costs are listed as TBD due to insufficient information to reasonably cost -out. Inclusion of costs for these
three items will increase the total state and non -state share of overall funding.
(e) Includes funds spent by Roza ID on Kachess Emergency Floating Pumping Plant - cost assumes floating plant alternative.
Publication 18-12-006 16 October 2018
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Taxes
The State's options for increasing taxes to pay for the Integrated Plan are very limited. The one
exception would be the State public utility tax. This tax applies to gross income derived from
operation of public and privately owned utilities. These utilities include the general categories of
transportation, communications, and the supply of energy and water. Income from utility
operations is taxed under the public utility tax and is in lieu of the Business & Occupation tax.
Any increase in the public utility tax would be universal across the State.
Pay -Go
Historically, the State's most common method of financing capital projects such as building
construction, land acquisition, and transportation is through appropriations of State revenues, or
"pay -go". Pay -go offers the most cost effective way to pay for projects with State funds, as it
removes the interest costs included with debt financings. Note that cash funding projects may be
subject to political pressures. If the project construction takes place over more than one
biennium, it will require re -appropriation to carry forward the expenditure authority initially
established.
Bonds
The alternative to cash funding state capital projects is to issue bonds. Bonds are a form of debt
financing that are issued in exchanged for guaranteed future principal and interest payments
(debt service) to the bondholders. With debt financings, funds are available for the project
immediately and with greater predictability than other sources of funds. Although the State pays
interest, debt-financed capital projects can be cost-effective if borrowing costs are less than the
costs associated with construction delays. In addition, debt financing can promote tax equity, as
each asset is paid for over its useful life and not all -at -once by current taxpayers in a given year.
Various forms of bonds that the State has historically issued include general obligation (GO)
bonds, revenue bonds, and certificates of participation.
GO bonds are the most common type of bond issued by the State. A GO bond is debt backed by
the full faith, credit, and taxing power of the State. The State's GO bond program is structured to
be very conservative. These bonds are issued with a 25 -year maturity and level debt service
payments over the life of the bonds. Nearly all GO debt is subject to the debt limit. The GO
pledge and the conservative structure of the program allow the State to maintain a strong credit
rating with the major rating agencies8.
Obligating future tax revenues for the repayment of debt commits resources from future biennia
for today's capital projects. For this reason, the amount of debt service that can be paid in a given
s The State's GO credit rating is Aal, AA+, AA+ (Moody's, A&P, Fitch). Having a strong credit rating is valuable,
as a rating downgrade would substantially add to the interest costs when issuing debt.
Publication 18-12-006 17 October 2018
27
year is limited by the State Constitution to a percentage of the general state revenues. RCW
90.38 was amended to established two accounts in the State Treasury specifically for the deposit
of proceeds from bond sales for the Yakima River Basin Integrated Water Resource
Management proj ects.
Other State Funding Sources
Lease/Purchase Program — Office of the State Treasurer
Certificates of Participation (COPs) are a form of debt issued by the Office of the State Treasurer
through the State's Lease/Purchase program. The Lease/Purchase Program provides state
agencies with alternative ways to finance essential real estate and equipment over a multi-year
period. COPs consolidate financing contracts from the various agencies that agree to pay a lease
on property or equipment purchased through the State. This program benefits agencies with the
programs low tax-exempt financing rates and provides economy of scale.9 Each lease requires a
minimum $10,000 threshold, and terms of the lease cannot exceed the useful life of the asset
being financed (maximum 20 years). Local governments have access to COPs through the Office
of State Treasurer's LOCAL Program.
Recreation and Conservation Office
The Recreation and Conservation Office (RCO) is a state agency that manages a variety grant
programs to create outdoor recreation opportunities, protect the State's wildlife, habitat, and
farmland, and to help return salmon from near extinction. RCO supports numerous funding
programs through the Recreation and Conservation Funding Board (RCFB) and the Salmon
Recovery Funding Board (SRFB). The RCFB was established in 1964 by Citizen Initiative 215
to finance recreation and conservation projects throughout the State.
RCFB funds can be used for a variety of projects including the construction of parks, trails, ball
fields, and boating facilities to the conservation and restoration of wildlife habitat. Specific grant
programs administered by the RCFB include Aquatic Lands Enhancement Account, the Land
and Water Conservation Fund, and the Washington Wildlife and Recreation Program.
In 1999, the Washington State Legislature established the SRFB to administer state and federal
funding and to assist with a broad range of salmon -related activities with the primary goal of
recover salmonids (salmon, trout, and steelhead) by providing grants to local organizations. The
SRFB provides funding for habitat projects that will achieve sustainable and measurable benefits
for salmon and other fish species. Projects can include riparian, freshwater, estuarine, nearshore,
saltwater, and upland protection and restoration of salmon habitat. Specific grant programs
administered by the SRFB include the Estuary and Salmon Restoration Program, the Family
Forest Fish Passage Program, and the Salmon Recovery Grants.
9 The State's COP credit rating is rated Aa2 by Moody's, a slight step down from the Aal/AA+/AA+ (Moody's
S&P, Fitch) rating of the State's GO program.
Publication 18-12-006 18 October 2018
28
Centennial Clean Water Program Grants
Authorized by Chapter 173-95A WAC and Chapter 70.146 RCW, the Centennial Clean Water
program is funded by state dollars, provided primarily via the State Building Construction
Account. The Centennial program provides grants for water quality infrastructure and nonpoint
source pollution projects to improve and protect water quality. Ecology is responsible for the
administration of Centennial Program grants to local governments, special purpose districts,
conservation districts, and federally recognized Tribes. Eligible infrastructure projects are limited
to wastewater treatment preconstruction and construction projects for qualified hardship
communities. Eligible nonpoint projects include stream restoration and buffers, on-site septic
repair and replacement, education and outreach, and other eligible nonpoint activities.
Floodplains by Design
Floodplains by Design is a collaborative partnership integrating flood risk reduction with habitat
protection and restoration. While Ecology, The Nature Conservancy, and the Puget Sound
Partnership lead the initiative, the hallmark of Floodplains by Design is that the supported
projects are built from the ground up by local project proponents and community stakeholders.
Since 2013, the State of Washington has been investing in projects using the Floodplains by
Design approach by leveraging significant funds from other state and federal sources. As the
Floodplains by Design partnership has grown, so have the number of floodplains projects in need
of funding. The State awarded new funding in the 2015-2017 budget for this program, allowing
seven projects to move forward including the Yakima Floodplain Management Program.
Other potential state funding sources are summarized below in Table 3.
Table 3: Other Potential State Funding Sources
SOURCE OF FUNDS
FUNDING AGENCY
TYPES OF PROJECTS
REPAYMENT SOURCE
Public Works Board
Washington State
Department of
Commerce
Infrastructure
Improvements
Loan
Clean Water State
Revolving Fund Loans
Washington State
Department of Ecology
pollution Control Projects
Loan
Washington Water
Acquisitions Program
Washington State
Department of Ecology
Water Rights Acquisitions
Grant
Family Forest Fish Passage
Program
Washington State
Department of Natural
Resources
Culvert and stream
Crossings Improvements
Grant
Brian Abbott Fish Barrier
Removal Board
Washington State
Department of Fish and
Wildlife
Fish barrier removal
Grant
Publication 18-12-006
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October 2018
29
Non -State Funding Sources
Federal
The Bureau of Reclamation has partnered with the State of Washington since 2009 to develop
the Integrated Plan. While the State passed the Yakima River Basin Water Resource
Management Act in 2013, to date no federal legislation has passed. Currently there are two bills
regarding the Integrated Plan moving through the 115th Congress, Senate Bill 714 and House
Resolution 4419. Both bills have passed out of their respective committees and are awaiting
further action in their houses of origin.
The two bills are different in terms of how they propose to move the Initial Development Phase
of the Integrated Plan forward. The Integrated Plan's Implementation Committee has been
working with Washington's Congressional delegation to support these efforts and eventually
reconcile the two legislative approaches if and when they move through the next steps in the
115th Congress. Unfortunately, until the proposed legislation moves forward through Congress,
the large scale funding needed for implementation of major projects is not available from the
federal government.
Although no Integrated Plan federal legislation has passed to date, Congress has passed relevant
legislation related to the Yakima River Basin. In 1979, Congress authorized the Yakima River
Basin Water Enhancement Project (93 Sat. 1241, Public Law 96-162). In 1984, Congress
authorized the Hoover Power Plant Act, which authorizes Reclamation to install fish passage on
Reclamation's dams. Finally, in 1994, Congress authorized Title XII of the Yakima River Basin
Watershed Enhancement Project (Public Law 103-434). It is with these federal authorities that
Reclamation has provided significant contributions to the Cle Elum Fish passage facility
construction.
Water and Related Resources Account
The Water and Related Resources account is the Bureau of Reclamation's principal operating
account. It supports the development, management, and restoration of water and related natural
resources in 17 Western States. The account includes funds for the operation and maintenance of
existing facilities and to conduct studies focused on ways to improve water use and related
natural resources. Projects and programs funded under this account are conducted in partnership
with other Federal agencies and non -Federal entities. Examples of funded programs include
Reclamation's Endangered Species Act recovery programs, actions in support of the goals of the
America's Great Outdoors Program, and the WaterSMART Grants Program.
Over the past several years, the State has repeatedly requested through our congressional
delegation that the Bureau of Reclamation be appropriated addition funding to help fund
authorized portions of the Integrated Plan such as fish passage and water supply projects. For
fiscal year 2019, the State requested $30 million dollars be appropriated to Reclamation for
Integrated Plan support.
Publication 18-12-006 20 October 2018
30
Water Infrastructure Finance and Innovation Program
The Water Infrastructure Finance and Innovation Program (WIFIA) was established in 2014 by
the Water Infrastructure Finance and Innovation Act. The WIFIA program is a federal credit
program administered by the EPA to provide long-term, low cost supplemental loans for
regionally and nationally significant water infrastructure projects. Modeled after the
Transportation Infrastructure Finance and Innovation Act, the program is intended to leverage
nonfederal funds by providing loan guarantees and direct loans at long-term Treasury rates.
WIFIA funds can achieve significant leverage because they only have to cover the risk of project
defaults, which historically have been infrequent. WIFIA eligible projects must be determined to
be creditworthy with loans repayable from a dedicated revenue source within 35 years of project
completion. In October 2014, the House Natural Resource Committee passed proposed
legislation that would apply the basic provisions of WIFIA to Reclamation projects.
WaterSMART
Reclamation's WaterSMART Water and Energy Efficiency Grants (formerly Challenge Grants)
provide 50/50 cost share funding to irrigation and water districts, tribes, states, and other entities
with water or power delivery authority. Projects are selected through a competitive process and
the focus is on projects that can be completed within two to three years. Water and Energy
Efficiency grants are awarded to projects that result in quantifiable water savings and those that
support broader water reliability benefits. Additional grant types of the WaterSMART program
initiative include Small -Scale Water Efficiency Projects and Water Marketing Strategy Grants.
Small -Scale Water Efficiency Projects are awarded to small-scale water management projects
identified through previous planning efforts. Water Marketing Strategy Grants are awarded to
entities exploring actions that develop or facilitate water marketing.
Completed Cle Elum Pool Raise 3' Radial Gate Expansion
Publication 18-12-006
21
October 2018
31
Other potential federal funding sources are summarized below in Table 4.
Table 4: Other Potential Federal Funding Sources
SOURCE OF FUNDS
FUNDING AGENCY
TYPES OF PROJECTS
REPAYMENT', SOURCE
The Water Infrastructure
Improvements for the
Nation (WIIN) Act
U.S. Army Corps of
Engineers, U.S. Bureau of
Reclamation
Water Infrastructure
Improvement
Grant
North American
Wetlands Conservation
Act (NAWCA)
U.S. Fish & Wildlife
Wetland Habitat
Restoration
Grant
Fish & Wildlife
Conservation Act
U.S. Forest Service, NOAA
Conservation of
Nongame Fish and
Wildlife
Grant
Cooperative Endangered
Species Conservation
Fund (CESCF)
U.S. Fish & Wildlife
Endangered Species
Conservation
Grant
Regional Conservation
Partnership Program
(RCGP)
U.S. Department of
Agriculture's National
Resource Conservation
Service
Voluntary Land
Conservation
Grant
Land and Water
Conservation Fund
(LWCF)
U.S. Department of
Interior
Land, Water, and
Wetlands Purchases
Grant
Partners for Fish &
Wildlife
U.S. Fish & Wildlife
Habitat Restoration
Grant
USFWS Recovery
Implementation Program
U.S. Fish & Wildlife
Endangered Species
Conservation
Grant
BLM/USFS Interagency
Special Status/Sensitive
Species Program (ISSSSP)
Grants
U.S. Bureau of Land
Management/ U.S. Forest
Service
Conservation and
Management of Rare
Species
Grant
EPA Clean Water Act
Section 319 Grants
U.S. Environmental
Protection Agency
Water Pollution
Prevention
Grant
Hazard Mitigation Grant
Program
Federal Emergency
Management Agency
Flood Prevention/Habitat
Restoration
Grant
Publication 18-12-006 22 October 2018
32
Tribal
Bureau of Indian Affairs
As part of the Division of Natural Resources, the Branch of Water Resources contains the Water
Management, Planning, & Predevelopment Program that funds projects that aid in the protection
and management of their water resources. These projects typically include, but are not limited to,
ground and surface water studies regarding quantity and quality of water, water needs
assessments, stream gauging, and the preparation of comprehensive water management plans.
Bonneville Power Administration Columbia Fish Accords
Signed in May 2008, the Bonneville Power Administration Columbia Fish Accords secured $900
million for salmon restoration projects throughout the Columbia River Basin that focus on
adaptive management of dam operations addressing salmon passage and survival. Projects can
focus on sustainable harvesting, fish passage, fish propagation strategies, habitat conservation
and restoration, lamprey recovery, and/or public education and outreach.
Clean Water Act Section 106 Tribal Grant Program
This program assists federally recognized Tribes in developing institutional capacity for the
administration of water quality and natural resource protection programs. Eligible projects
include water quality monitoring and assessments, developing a monitoring strategy, developing
and implementing ground water quality monitoring programs, producing annual water quality
assessment reports, and developing tribal -approved water quality standards.
Clean Water Act Section 319 Tribal Grant Program
This program provides grants and technical assistance to federally recognized tribal
environmental programs for the assessment and management of nonpoint source pollution
problems and threats. Eligible projects include, but are not limited to, watershed -based
development plans, riparian planting, livestock exclusion fencing, nonpoint source pollution
ordinance development, and public outreach and education.
Other potential tribal funding sources are summarized below in Table 5.
Table 5: Other Potential Tribal Funding Sources
SOURCE OF FUNDS
FUNDING AGENCY
TYPES OF PROJECTS
REPAYMENT SOURCE
Community Economic
Revitalization Board
Washington State
Department of
Commerce
Public Infrastructure
Loan
Indian Affairs LoanTribe-Owned
Guarantee Program
Bureau of Indian Affairs
or Small -
Business Projects
Loan
Water and Wastewater
Predevelopment Planning
Grants
U.S. Environmental
Protection Agency
Development of Rural
Water and Waste
Disposal Projects
Grant
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October 2018
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Local
Property Taxes
Local property taxes are one of the main revenue sources for municipal governments across the
state. The non-voter approved total property tax limit in Washington is $10 per $1,000 of
assessed value. The state (including education) receives up to $3.60 of this amount and local
districts receive $5.90. The remaining $0.50 goes to additional purposes such as affordable
housing and criminal justice. Of the $5.90 limit for local government, cities can receive up to
$3.375 and counties can receive up to $1.80 for the general fund. Counties can also increase
county road levies up to $2.25 in unincorporated areas. Junior taxing districts (e.g. fire, water,
hospital, etc.) then receive any remainder. Public Utility Districts (PUDs) and port districts are
senior districts that have an additional limit of $0.45 and are not subject to the $5.90 aggregate
limit for local regular levies.
A local government can utilize the single year or multi-year levy authorization. Each levy is
voter approved and is for specific purposes. A single year levy approach is not practical for long-
term investments. However, a multi-year levy could help authorize some components of the
Integrated Plan. An alternative is for the legislature to authorize a specific levy within the three
counties for plan investments. All three counties under the Integrated Plan have the ability to
increase their total tax level. Benton County's levy rate is $1.279 per $1,000 of assessed value,
Kittitas County's value is $1.347 per $1,000 assessed value, and Yakima County's is $1.620 per
$1,000 of assessed value.
Local Sales Taxes
Local governments have the ability to propose sales tax increases in their district, subject to voter
approval, for a variety of purposes. The state has rights to the first 6.5% of sales taxes. Examples
of this include Prosser, which currently has a 2.1% sales tax on top of the state's portion, and the
City of Yakima that currently has an additional 1.7% sales tax on top of the state's portion.
City Utility Tax
City utility taxes can be levied on the gross operating revenues earned by private utilities from
operations within the boundaries of a city, and by a city's own municipal utilities. Taxable
utilities include electric, water, sewer, solid waste, storm water, gas, telephone, cable TV and
internet, and steam. Limitations to utility taxes include the set rate of 6% on electric, gas, cable,
steam and telephone. Taxes on utilities are allowed to be put in the general fund, unlike rates
collected by utilities, which must be spent on that specific enterprise.
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Municipal Bonds
Similar to the state, local governments also have the ability to issue municipal bonds. The
Washington State Constitution limits the amount of outstanding debt a government can have.
This limitation is based on a percentage of the assessed valuation of the taxable properties within
the jurisdiction. The formula is uniform for all jurisdiction types, but allows two exceptions - one
for cities and towns and one for school districts.
Local government's limitation is 1.5% of assessed value for non-voter approved debt. When debt
is approved by 60% of a jurisdiction's voters, total allowable debt increases to 5% of assessed
value. Cities and towns are allowed an additional 5%, provided the extra 5% is voter -approved
and is used to supply the city or town with jurisdiction -owned and operated water, lighting, and
sewer services. School districts are also allowed an additional 5% for capital outlays, assuming
the projects are voter approved.
Revenue and special assessment debt are the two main categories of debt that do not count
against debt capacity. Revenue debt pledges a specific stream of revenue. Examples include debt
for jurisdiction -owned water and sewer systems, which pledge the fees paid by system users.
Special assessment debt may be paid off by collecting property taxes assessed only on the
specific parcels that benefit from a financed project. A typical example is taxes assessed on an
individual neighborhood for the installation of streetlights or sidewalks.
Certificates of Participation (LOCAL Program) - Office of the State Treasurer
Similar to the State's Lease/Purchase program, the Office of the State Treasurer offers a COP
program to municipal governments, called the LOCAL program. Local governments are able to
achieve economies of scale and use the LOCAL programs strong credit rating to finance real
estate and equipment.
Local Improvement Districts
Most municipal governments (cities, counties, water and sewer districts, ports, fire protection
districts) can use the basic Local Improvement Districts (LID) processes established in RCW
35.43 through 35.56. The LIDS are a way to assist local municipal governments in financing
needed capital improvements through the formation of special assessment districts. Special
assessment districts permit improvements to be financed and paid for over a period of time
through assessments on the benefiting properties.
A LID sells bonds to investors and then repays those bonds via annual assessments on the
property owners within the district. The goal of the LID process is to develop a structure with a
credit that is attractive to investors, and with assessments that are as fair as possible in relation to
special benefits received. Statutes specify that parcel assessments must not exceed the special
benefit of the improvement to that parcel, which is defined as the difference between the fair
market value of the property before and after the local improvement project. The assessments
must also be proportionate to one another.
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Irrigation and Reclamation Districts
Irrigation districts focus on providing irrigation water whereas reclamation districts are
responsible for reclaiming and/or maintaining land threatened by permanent or temporary
flooding for agricultural, residential, commercial, or industrial use. Both are governed by an
elected board of directors and derive their revenue primarily from property assessments tied to
the delivery of irrigation water. Both districts have the authority to issue general obligation and
revenue bonds to pay for capital improvements. Landowners within the district have the
authority to petition the district for a local improvement district, which will have the authority to
incur debt for specific improvements.
Public Utility District Grant
Northern Wasco and Klickitat County Public Utility Districts (PUD) provide financial support
for the McNary Mitigation Fund. The McNary Mitigation Fund provides grant funding for
projects that focus on fish and habitat restoration efforts above the McNary Dam. Project
proposals are reviewed by the McNary Fisheries Compensation Committee, which is made up of
representatives from the National Marine Fisheries Service, U.S. Fish and Wildlife Service,
Columbia River Inter -Tribal Fish Commission, Oregon Department of Fish and Wildlife,
Washington Department of Fish and Wildlife, the Yakama Indian Nation, and the PUD.
Public -Private Partnerships
In general, a Public Private Partnership (P3) is a long-term contract between a private party and a
government entity to deliver a public asset or service in which the private party bears a certain
amount of risk and management responsibility. P3s, with appropriate state legislation, could be
authorized at the local, state, and federal levels and can take a variety of forms, but typically
involve a private party participating in a combination of five different aspects of project delivery:
design, build, finance, operate, and maintain. At the end of the contract, the asset is generally
transferred back to the public.
The private party's compensation can be linked to their performance in executing their
contracted service. Legal and transaction costs can be significant due to the challenge of setting
terms for the transaction and defining, measuring, and allocating the responsibilities,
compensation, and risk for each of the parties over several decades. In accordance with
recommendations from the Government Finance Officials Association, the Office of the State
Treasurer strongly recommends that proposed public-private partnership transactions undergo a
careful review by state finance professionals. This review will include a detailed comparison of
public and private costs for major components, as well as a scenario analysis that address risks
associated with different possible economic and financial outcomes over the term of the
transaction.
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Other — Nongovernmental Funding Sources
National Fish and Wildlife Foundation
The National Fish and Wildlife Foundation provides funding on a competitive basis through
several programs. Projects that are eligible for these funds must focus on sustaining, restoring,
and enhancing fish, wildlife, and plants and their habitats. Two examples of these programs
include the Bring Back the Natives program and the Columbia Basin Water Transactions
Program. The Bring Back the Natives program funds conservation projects that improve and
protect aquatic ecosystems, increase in -stream flows, and create partnerships that benefit native
fish species by coordinating with private landowners and federal agencies, tribes, corporations,
and states. The Columbia Basin Water Transactions Program funds projects that address
chronically diminished stream flows in tributaries of the Columbia River through acquiring water
rights voluntarily from willing landowners.
Western Native Trout Initiative Small Grants Program
The Western Native Trout Initiative Small Grants Program provides funding for projects that
focus on restoration and/or protection of fish habitat. These projects can focus on riparian and
instream habitat restoration, fish barriers construction or removal, population and watershed
needs for prioritization and planning improvements, instream flow improvement measures,
and/or development of native trout community outreach and education programs.
Other potential nongovernmental funding sources are summarized below in Table 6.
Table 6: Other Potential Nongovernmental Funding Sources
SOURCE OF FUNDS
FUNDING AGENCY
TYPES OF PROJECTS
REPAYMENT SOURCE
Climate Resilience Fund
Non -Governmental
Organization/Private
Foundation
Climate Resilience
Projects
Grant
National Forest
Foundation
Non -Governmental
Organization/Private
Foundation
Forest Health and
Recreation
Grant
Trout and Salmon
Foundation
Non Governmental
Organization/Private
Foundation
Trout and Salmon
Restoration
Grant
World Trout Initiative
Non -Governmental
Organization/Private
Foundation
Habitat restoration and
conservation. Instream
flow improvement.
Grant
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Financing Mechanism Viability Matrixes
The following series of tables (Tables 7-10) provide summaries on the potential advantages and
disadvantages (as determined by Ecology and the Washington State Treasurer's Office) of
various Integrated Plan funding sources and financing alternatives: Table 7: State Funding
Matrix, Table 8: Federal Funding Matrix, Table 9: Tribal Funding Matrix, and Table 10: Local
and Other Funding Matrix.
Table 7: State Funding Matrix
SOURCE OF FUNDS
ADVANTAGES
DISADVANTAGES
Pay -go
Lowest total cost; does not require
borrowed capital
Subject to political pressure; increased costs
for phasing large scale capital projects in 2 -
year biennial cycles
State General Obligation
(GO) Bonds (Financing) 10
Lowest cost of borrowing capital
Counts against State's debt limit
Revenue Bonds (Financing)
Does not count against debt limit
Typical has a higher cost of borrowing than
the State's GO debt
Certificates of Participation
(Financing)
Allows state agencies to finance real
estate and equipment outside the
State's Debt Limit
Slightly higher cost of borrowing than the
State's GO debt
State Public Utility Tax
Tax on public/private utilities
Increase must be statewide
RCO Recreation and
Conservation Funding Board
Multiple grants administered by the
board
Grants may require additional recreation or
conservation plan
RCO Salmon Recovery
Funding Board
Multiple grants administered by the
board
Projects must pass through local lead entity
review and prioritization
Ecology Centennial Grants
Program
State funded grant program
Limited to water quality infrastructure and
nonpoint source pollution projects
Floodplains by Design
Heavy local stakeholder involvement
Limited to flood risk reduction with habitat
protection and restoration
Public Works Board
Low interest loans
Only qualified applicants and limited to
infrastructure
Clean Water State Revolving
Fund Loans
Low interest and forgivable loans
Limited to wastewater treatment, eligible
nonpoint source reduction.
Washington Water
Acquisitions Program
State has cost share partners for this
program
Voluntary based program
Family Forest Fish Passage
Program
Multi -State agency coordination,
option for small forest landowners
Eligibility requirements, Prioritized based on
fish habitat benefit
Brian Abbott Fish Barrier
Removal Board
No grant cap, except for design only
projects which are limited to
$200,000
Eligible projects must address fish barriers
1" GO Bonds, via the State Building Construction Account (SBCA), are the current funding source for Ecology's
biennial capital appropriations for the Integrated Plan since 2013.
Publication 18-12-006 28
October 2018
Table 8: Federal Funding Matrix
SOURCE OF FUNDS
ADVANTAGES
DISADVANTAGES
US Bureau of Reclamation Water and Related
Resources Account
Principal operating account that can include design,
technical support and 0 & M for federal Reclamation
Projects (including Integrated Plan)
Annual action by U.S. Congress, Competition for
limited resources
EPA11 Water Infrastructure Finance and Innovation
Program (WIFIA)
Loan program for non-federal water projects, long
repayment period with deferred payment option
Loan fees are applicable
US Bureau of Reclamation WaterSMART
Grant program
Requires 50% match
Water Infrastructure Improvements for the Nation
(WIIN) Act
New Federal funding authority
Support up to 50% of costs for existing federally
owned SW12 storage project or up to 25% of a non-
federal GW13 or SW project
North American Wetlands Conservation Act (NAWCA)
Small Grants (< $75,000) Program
Requires 50% match
Fish and Wildlife Conservation Act
Authorizes Federal agencies to assist any State in
developing conservation plans
Requires congressional reauthorization
USFWS14 Cooperative Endangered Species
Conservation Fund (CESCF)
Requires 25% of non-federal matc1s
matchl5
State must have a cooperative agreement in place to
grant funding
NRCS16 Regional Conservation Partnership Program
{RCGP}
Three different funding pools (Critical Conservation
Areas, National, State), Columbia River Basin
designated one of the CCAs
Competition amongst farming, ranching, and forest
operations for funding
Land and Water Conservation Fund (LWCF)
Provides funds for federal, state, and local
governments to purchase land, water, and wetlands
Set to expire Sept 30, 2018 without action from
Congress
USFWS Partners for Fish & Wildlife
Provides technical and financial assistance to private
landowners and Tribes
Requires congressional reauthorization
USFWS Recovery Implementation Program
No cost share requirement
Annual funding notification, small (10k to 80k) funding
awards
BLM17/USFS Interagency Special Status/Sensitive
Species Program (ISSSSP) Grants
Target species broader than federally listed Threatened
or Endangered species
Competition for limited resources
EPA Clean Water Act Section 319 Grants
Focus on State and local nonpoint source efforts
Requires 40 % match, high priority on Total Maximum
Daily Load (TMDL) reductions
FEMA18 Hazard Mitigation Grant Program
Requires 25% of non-federal match
Limited opportunities for Integrated Plan overlap
11 EPA - Environmental Protection Agency
12 SW - Surface water
13 GW - Groundwater
14 USFWS - U.S. Fish and Wildlife Service
15 For this analysis, 25% or less match is considered an advantage
16 NRCS - Natural Resource Conservation Service
17 BLM - Bureau of Land Management
18 FEMA - Federal Emergency Management Agency
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October 2018
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Table 9: Tribal Funding Matrix
SOURCE
OF FUNDS
ADVANTAGES
DISADVANTAGES
BIA'Water
Management, Planning, &
Predevelopment Program
Can encompass a wide variety of water related projects
that support the management, conservation, and
utilization of trust water resources
Non-recurring
appropriations
through the U.S.
Congress
BPA2° Columbia Basin Fish
Accords
Secures available funding for a ten year period
Five years,into the
original 10 year
agreement
EPA Clean Water Act
Section 106 Tribal Grant
Program
Limited match requirements
Competition for funds
with all federally
recognized tribes
EPA Clean Water Act
Section 319 Tribal Grant
Program
Focus on nonpoint source (NPS) pollution'
Requires an approved
NPS Assessment
Report
Community Economic
Revitalization Board
Loans and grants to recognized Native American Tribes
Limited to public
infrastructure
BIA Indian Affairs Loan
Guarantee Program
Up to 90% loan guarantee or loan insurance
$500,000 maximum
USDA21 Water and
Wastewater
Predevelopment Planning
Grants
Financial assistance for low income communities,
Requires at least 25% match
Rural areas with
populations or 10,000
or less
19 BIA - Bureau of Indian Affairs
20 BPA - Bonneville Power Administration
21 USDA - U.S. Department of Agriculture
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Table 10: Local and Other Funding Matrix
SOURCE OF FUNDS
ADVANTAGES
DISADVANTAGES
LOCAL
Local Property Tax
Well established for local
infrastructure
Maximum tax rate of $1.80 per $1,000
of assessed value, requires legislative
action
Local Sales Tax
Local funding
Additional tax on local communities,
Subject to political pressure on revenue
priorities
City Utility Taxes
City general fund
Considered enterprise funds and must
be spent accordingly
Municipal Bonds (Financing)
Easy and immediate access to capital
Statutory limitations, requires pay back
of borrowed capital, may require voter
approval
Certificates of Participation (Financing)
Provides economies of scale for local
governments
Limited to real estate and equipment
Local Improvement Districts
Benefits local properties needing
capital improvements
Limited to financing infrastructure
improvements
Irrigation and Reclamation Districts
Revenue based on property
assessments
Requires support of Board of Directors
and voting of membership
OTHER
Public -Private Partnerships
Private sector participation in portions
of financing, design, construction, and
long-term O&M, possibilities for
shared risk
Needs legislative approval, significantly
higher legal and financing costs,
requires long-term contract
McNary Fisheries Compensation
Committee
No state or federal affiliation required
Limited geographically to upstream of
McNary Dam
National Fish and Wildlife Foundation
Competitive Grant program
Federal funding not available as match
dollars
Western Native Trout Initiative
Small dollar amounts, < $3,000
Competition with all western states
Climate Resilience Fund
Climate change project focused
501(c)(3) applicant status only, Typically
require 50% match
National Forest Foundation
Multiple grant programs
Various levels of match requirements
and eligibility requirements
Trout and Salmon Foundation
Small dollar amounts, <$10,000
Typically require 50% match
World Trout Initiative
Small dollar amounts, between $5,000
and $15,000
One proposal per group per fiscal year
(May 1 to April 30)
Washington Water Trust
Voluntary, market-based transactions
Limited applicability
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Future Outlook
Adaptive Management Plan
The Integrated Plan is an ambitious 30 -year effort encompassing a wide variety of both short-
term (1-2 year) and long-term (> 10 year) projects. Planning and cost estimates of this 30 -year
plan must be broken into the State of Washington's biennial (2 -year) funding cycles or the
federal 3 -year funding cycles. A flexible adaptive management approach is critical to the long-
term success of the Integrated Plan.
As the full buildout of the Integrated Plan moves forward, individual project schedules, costs,
and timelines can change. These changes alter the IDP's timeline, affecting funding requests for
the upcoming biennium. For example, construction schedules for fish passage projects (Cle
Elum, Tieton Dam, and Clear Lake Dam) are being shifted to allow for design, permitting,
technical and project management staff to focus on the first Integrated Plan fish passage project
(Cle Elum Dam fish passage). As construction of an innovative fish passage facility was
underway at Cle Elum dam, Ecology and Reclamation recognized that getting the first fish
passage facility nearly complete was a priority before starting the second major fish passage
facility at Tieton Dam.
An example of this adaptive timeline is the implementation of the Tieton Dam Fish Passage
Project. This project will now shift from beginning in the 2019-2021 biennium to the following
2021-2023 biennium or maybe even the 2023-2025 biennium to allow for the Cle Elum Fish
Passage project to remain fully funded and on schedule (projected juvenile fish passage facility
completion goal is 2022).
Another example of schedule shifting is the Kachess Drought Relief Pumping Plant (KDRPP)
and the Keechelus to Kachess Conveyance (KKC) project. In 2015, the Roza Irrigation District
(Roza) proposed to finance and develop an emergency temporary pumping project to help offset
drought related impacts by accessing water storage below the existing outlet structure in the
Kachess Reservoir that is normally unavailable during drought conditions. As new information
on design options, project costs, and forecasted precipitation came through in late 2015, Roza's
Board of Directors decided not to pursue the temporary pumping plant. Instead, the board
decided to support a permanent pumping facility known as the Kachess Drought Relief Pumping
Plant (KDRPP) and has continued to progress on the design, feasibility and environmental
review of the facility.
The proposed primary funding source for KDRPP will be provided by the water users that would
benefit from the proposed project. In 2016, Roza, Kittitas Reclamation District (KRD), and
Wapato Irrigation Project have all signed a letter of participation as it relates to the Supplemental
Draft Environmental Impact Statement of this project. Roza continues to explore P3 financing
strategies with the US Department of Interior's Natural Resource Investment Center as KDRPP
moves through the environmental review process.
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The KKC project was originally proposed to begin implementation in the 2019-2021 biennium
as a standalone project. However, as environmental review process of KKC proceeds, KKC is no
longer proposed as a standalone project but rather is coupled with the some but not all Kachess
Drought Relief Pumping Plant (KDRPP) alternatives. Depending on which KDRPP alternative
is selected, will determine the fate of KKC proceeding in the IDP. If a KDRPP alternative that
includes KKC is selected as a preferred alternative as a result of the environmental review
process, the earliest KKC would proceed is the 2021-2023 biennium, subsequently -delaying the
capital funding request also.
The Wymer Reservoir project is one of the proposed surface water storage projects in the
Integrated Plan. This project is designed to create an off -channel surface water storage facility in
the stream channel of Lmuma Creek. The confluence of Lmuma Creek is approximately eight
miles upstream of the Roza Diversion Dam on the Yakima River. The proposed reservoir site is
currently under private ownership and would hold up to 162,500 acre-feet.
In 2014 as part of the long term planning process, a Cost Risk Assessment (CRA) workshop was
conducted for the proposed Wymer Reservoir. This workshop updated and built upon a previous
CRA conducted in 2012. The objective of the 2014 CRA workshop was to quantify uncertainty
and risk related to costs and schedules of the preconstruction and construction of the Wymer
Reservoir under three different storage capacity scenarios. As a result of this workshop, 20 high-
risk elements or potential events were identified that could potentially impact the project cost or
schedule. As new information becomes available, the CRA is revaluated. By identifying high-
risk elements or events beforehand, project planners are better equipped to estimate project costs
and prepare more develop schedules.
Funding Challenges
One of the challenges for a long-term project is the potential of individual project cost overruns
causing scheduling delays and escalating overall Integrated Plan costs. Ecology and the
Treasurer's Office considered how cost overruns of Integrated Plan projects could affect the
long-term financing of the overall plan.
There are numerous steps that can be taken to minimize the likelihood of project cost overruns.
The primary method is to include a reasonable contingency for construction overruns at each
phase (e.g., 10%) and then roll that forward into the next biennium if unused. Additional steps
include pledging local match in excess of funding needed to cover this contingency, or using
supplemental budget requests in between biennia to cover any cost overruns.
The Office of the State Treasurer routinely recommends that long-term finance plans should be
based on conservative projections of revenues and expenditures. Scenario analysis must address
alternative sources of revenue and project scoping in the event that deliverables are not met. Due
to the planning steps outlined above, cost overruns have not been a major challenge for the
Integrated Plan to date.
As you reflect on year five of the IDP, federal legislation to authorize all major Integrated Plan
projects, with the exception of Cle Elum Dam fish passage, still eludes the planning process. The
Publication 18-12-006 33 October 2018
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Integrated Plan Implementation Committee has been actively working with the State's
congressional delegation on this critical milestone for 2 years; unfortunately, to date, no federal
legislation has passed. Therefore, the large scale funding needed for implementation of major
projects is still not available from the federal government. Until such time, the state of
Washington will continue to support the Integrated Plan and work towards its successful
implementation with Reclamation in coordination with the basin stakeholders.
A final challenge has been the recent successes in acquiring matching project funds. These
matching project funds have the potential to complicate the proposed budget projections, as they
require an "in kind" match of dollars from the Integrated Plan, which are difficult to predict
ahead of time. While this is largely considered a positive problem, the difficulty in predicting the
success of these funding requests requires an additional level of planning and contingency.
Funding Successes
Non -state Integrated Plan partners, including the Yakama Nation, county governments, cities,
major irrigation districts (IDs), and environmental groups, continue to successfully bring outside
funds from a variety of sources to work on Integrated Plan related projects. These more local
based funding sources can be spent on both administrative related tasks (e.g., meeting
attendance, environmental and permitting review, outreach) and project implementation and
constructing. The Integrated Plan also continues to receive support from many federal agency
funding programs for all seven elements.
As an example, the Yakama Nation has successfully leveraged state Integrated Plan funds to
receive Regional Conservation Partnership Program (RCPP) funding for water conservation and
pipeline replacement projects as part of the Wapato Irrigation Project in Yakima County. The
Kittitas Conservation Trust has successfully leveraged Integrated Plan project funding to secure a
US Fish and Wildlife
Service Cooperative
Award for habitat
restoration and work on
large woody debris
restoration in Box
Canyon Creek, in
Kittitas County.
Ecology will continue to
work with and support
our Integrated Plan
partners to seek out
additional non -state
funding opportunities.
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WIP Infrastructure Improvements
34
October 2018
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Next Steps
The 30 -year Integrated Plan is now half way through its first 10 -year phase known as the Initial
Development Phase (IDP), which runs from 2013-2023. Up-to-date cost estimates for the IDP are
currently at $990.9 million, with the State projected to contribute approximately $351.2 million (35%).
Projected full buildout costs of the Integrated Plan have remained steady since 2013 at approximately
$4.1 billion.
Each of the three development phases contain a balanced mix of projects that span all seven elements of
the Integrated Plan. These projects provide tangible improvements to instream flows, fish habitat, fish
passage, and increased water security of existing out -of -stream water supplies in the Yakima Basin,
which in turn provides improvements to economic and environmental sustainability, meeting the needs
of water users, restoring salmon, Bull Trout, and steelhead runs, and conserving and restoring vital
habitat.
Even with the $990 million cost estimate for the IDP, the Integrated Plan has a long way to go in
securing the overall $4.1 billion needed to see the plan to completion. This translates to the state funding
up to $2 billion dollars over 30 years or $1.793 billion over the next 25 years ($2 billion minus $207
million invested by the State from 2013 - 2018). In order to successfully continue implementation of the
Integrated Plan as it progresses through its IDP and into its next phase, it is crucial that a framework
supporting a combined cost sharing approach from federal, State, and local sources be incorporated into
the State's budgeting process.
The Office of Columbia River and the Office of the State Treasurer will look to provide a more detailed
financial analysis for the next iteration (2020) of this Yakima Basin Cost Estimate and Financing Plan
report. This detailed analysis will be one of the building blocks needed as the Integrated Plan moves
from the IDP to the MDP, further outlining the financial planning options to meet the funding challenges
anticipated as multiple large scale projects proceed concurrently.
Also, to attain the plan's full buildout funding needs and water supply goals, Ecology will continue to:
• Support federal legislation to implement the Integrated Plan.
• Leverage state funds and explore a variety of funding opportunities discussed in the
previous sections of this report.
• Utilize our flexible adaptive management approach as projects enter new phases
(feasibility, environmental review, design, permitting, construction), while some
projects come to completion.
• Implement projects that move all seven elements of the Integrated Plan forward.
In conclusion, the Integrated Plan is a watershed -scale, commonsense approach to solve decades of
water conflict. Founded on an innovative federal -state -local -private funding partnership, the Integrated
Plan provides a collaborative model for others to emulate nationwide. To ensure a smooth transition
from the Initial Development Phase to the Middle Development Phase, federal authorization and a
secure state funding framework are crucial steps to continued implementation of large scale, high cost,
capital funded infrastructure projects. This ambitious plan provides both water supply security and
ecosystem restoration, ensuring the basin's natural resources, culture and economy remain in balance for
generations to come.
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Appendix A - Members of the Yakima River Basin
Water Enhancement Plan Workgroup
American Rivers
Benton County Commission
Kennewick Irrigation District
Kittitas County Commission
Kittitas Reclamation District
National Marine Fisheries Service
Roza Irrigation District
Sunnyside Valley Irrigation District
Trout Unlimited
US Army Corps of Engineers
US Bureau of Reclamation
US Fish and Wildlife Service
US Forest Service
WA Department of Agriculture
WA Department of Ecology
WA Department of Fish and Wildlife
WA Department of Natural Resources
Yakama Nation
Yakima Basin Fish & Wildlife Recovery Board
Yakima Basin Storage Alliance
Yakima City Council
Yakima County Commission
Yakima-Tieton Irrigation District
Wendy McDermott
Jerome Delvin
Seth Defoe
Cory Wright
Urban Eberhart
Dale Bambrick
Scott Revell
Ron Cowin
Lisa Pelly
Bret Walters
Dawn Wiedmeier
Jim Craig
Mike Williams
Jaclyn Hancock
Tom Tebb
Mike Livingston
Josh Wilund
Phil Rigdon and Dave Fast
Alex Conley
Sid Morrison
Carmen Mendez
Mike Leita
Rick Dieker
Publication 18-12-006 36 October 2018