Cost-Sharing and Project Financing
Meyer, John W.
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The Water Resources Development Act of 1986 (WRDA 86), Public Law 99-662, established new rules for the cost sharing of Federally authorized water resources projects. For the first time, sponsors are required to share in the cost of feasibility studies to ensure that dwindling Federal dollars are spent wisely with priority to those projects with strong sponsor support. Sponsors are also required to pay a share of the Planning, Engineering, and Design (PED) and project construction costs in addition to the traditional costs for lands, easements and rights-of way. With the passage of WRDA 86, the roles and responsibilities of both the Corps of Engineers (CoE) and the non-Federal sponsors changed radically. The CoE (no longer a sole benefactor) and the non-Federal sponsor (no longer a passive recipient) became partners in the development of water resources projects. This partnership brings along increased financial responsibilities to the non-Federal sponsor and increased management responsibilities to the CoE. The Project Cooperation Agreement (PCA), formerly LCA, details the responsibilities of all parties involved in project development. An important element of the PCA is a financial analysis package to ascertain the non-Federal sponsor's ability to meet financial requirements necessary for project implementation. New cost-sharing requirements under WRDA 86 and the elements of the financial analysis package are the two main topics of this paper.