The state is restructuring its debt on the Central Utah Project, saving taxpayers and water users about $200 million, according to Gov. Mike Leavitt.
In a Tuesday ceremony at the Jordanelle Reservoir in Wasatch County, Leavitt said Utah will sell its approximately $300 million share of obligations on the $1 billion CUP to the private sector."It's a real nice concept . . . it saves the state money, it means rates won't be affected, it helps the federal government reduce its debt," said David G. Ovard, general manager of the Salt Lake Water Conservancy District, the biggest user of CUP water.
Under the terms of the arrangement, the state will promptly pay off the note it owes Washington for the project, which is designed generally to funnel Colorado River water from eastern Utah across the Wasatch Mountains to users in seven counties that include the state's most populous cities.
The federal government in turn agrees to cut the debt in half.
Though the state's share of CUP was financed by the Interior Department via a 50-year note with an annual interest rate of only $3.2 percent, Ovard said Utah gets a better deal through the restructuring.
Private investors will underwrite the remaining $127 million debt at about 5 percent annually.
Ovard said the deal is similar to one arranged in 1992 by the Salt Lake district on construction of the Jordan Aquaduct, built to serve the fast-growing population of Salt Lake County.
He called it the "least burdensome way" to handle such costs, noting that alternatives could've included an increase in water rates or a legislative bail-out that would've tapped the state's general fund revenues.
The change required an act of Congress, which approved it last year.