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a. Local organizations will be responsible for proJectiug w~ter supply meeds, e~t~mating benefits, and developing a schedule of future use and financing that will. permit repayment of the cost within the useful life of the reservoir. This will include evidence that it is more economical to include provisions for future supply in the initial construction of the project tha~ it w~uld be to defer such provisions untL1 the demand for the water supply arises. 'b. When P. L. 566 advances for future m~uicipal or indus- trial water supply are planned, local organizations must pay, before or during constructiOn, all other installation costs of a structure, allocated to municipal or industrial water supply, includi~g costs for land rights, water rights, storage capacity for immediate use for municipal or industrial, water supply, and all conveyance facil- ities for m~nicipal or industrial use; and their share of the costs allocated to other pu~poses.~ These costs may be financed through loans obtained in accordance with sectiOn 8 of the Act. c. P. L. 566 advances for storage capacity for future municipal or industrial water supply must be repaid with interest by the local organization within the 1L~e of the reservoir but no later than fifty years after the reservoir is built. Iuterest will not be charged until the water supply is first used frc~ such capacity or until ten years after the date of completion of a structure, which- ever is earlier. If the water supply is not used during the ten-year interest-free period, interest.will be charged after the tenth year. Ordinarily, payments of prmncmpal and interest will start one year after water is first used or eleven years from the scheduled completion date of a structure, whichever is earlier. The interest rate w~ll be the rate determined in accordance with the provisions of section 8 of the Act. d. Before execution of a project agreement, an agreement for repayment approved by the Farmers Home Administration must be executed by the local organization. (Revised - January 1969)