Efforts to correct a decade-old mistake in cost allocations could give Salt Lake water users a $5 million refund and some extra recreation features at Little Dell Reservoir.

Water officials revealed at a public meeting Wednesday that the Army Corps of Engineers has acknowledged the error and is willing to work with local agencies to resolve the issue within the next few months.If the agreement lives up to expectations, a "shoestring" plan for recreation facilities at Little Dell would be upgraded, Salt Lake City can scratch the cost off its budget, and the Metropolitan Water District's depleted reserves will get a $5 million infusion.

Located on U-65 about two miles northeast of Mountain Dell Reservoir in Parleys Canyon, Little Dell has no recreation facilities and now is off limits to everyone.

District General Manager Nick P. Sefakis said local officials were told in 1986 that a proposed $15 million recreation component at Little Dell wasn't eligible for federal cost-sharing because the local agencies could afford their half of the cost. So, work on the new reservoir began without recreation facilities.

As construction progressed, the cost of the reservoirs increased from $49.3 million to $60.5 million, forcing the district to dip into reserves that were intended for system improvements. Faced with an unanticipated financial obligation, the district hired a consultant - a retired Corps official - who discovered that the recreation component was eligible for 50-50 cost sharing all along.

"If we had known that, we could have built recreation into the project," Sefakis said.

With the Corps now acknowledging its mistake, an agreement could be worked out that gives the district $5 million from the original cost allocation along with 50 percent of all the recreation costs.

Salt Lake public utilities director LeRoy W. Hooton Jr. said if the proposed agreement succeeds as expected, the city can scratch the $150,000 it allocated to Little Dell recreation off this year's budget. And, it can look forward to better recreation facilities at the reservoir financed entirely by the Corps and the district.

Under a revised plan, the recreation component would cost about $470,000 and feature 56 picnic tables, additional parking and an improved trail system, said Lon Richardson Jr., chairman of the city's Public Utilities Advisory Committee.

He said the goal is to permit some recreation use of Little Dell while preserving the environment and water quality. For example, there will be no paved parking, no motorized boating, catch-and-release fishing and only two restrooms.

"We're striving for very low impact, similar to what we have in City Creek Canyon, with reservations required and fees charged," Richardson said. "With the Corps and the district working out a solution, we could end up with a nicer development than we expected, but it will still be very limited. The extra money allows us to do it right."

Hooton added, "Drinking water standards are so stringent, that whatever else happens, water quality will be the controlling element. Mayor (Deedee) Corradini has insisted on an environmentally sensitive recreation plan, and that's what we'll have."

He said a properly balanced plan can give the public access to a prime recreation area five minutes from the Wasatch Front while maintaining water quality. The larger Mountain Dell Reservoir, one of the city's principal sources of drinking water, and its water treatment plant will act as "buffers" between Little Dell and the water system and will remain off limits.