A bill to amend the Water Supply Act of 1958 to secure more timely repayment of Federal investments in multipurpose water resources development projects, to encourage more prudent participation in such projects by non-Federal interests, and for other purposes.

Amends the Water Supply Act of 1958, with respect to municipal and industrial water supplied from Federal projects, to require that any letter of assurance from State or local interests desiring a water supply project under such Act state when: (1) the future water supply storage will be used; and (2) the costs will be repaid.

Decreases from 30 percent to 20 percent the estimated costs which may be allocated to future demands for any water storage project under such Act. Limits the payment-free period to a maximum of ten years.

Requires all annual operation, maintenance, and replacement costs for municipal and industrial water supply storage to be reimbursed from State or local interests on an annual basis.

Revises the method for determining the interest rate used in computing the interest during construction and the interest on the unpaid balance of any repayment obligation.