BOARD00899

• Board Meeting Date: 9/16/1959
• Description: Minutes
• Board Meetings - Doc Type: Meeting

I

MR. STAPLETON:

MR. SPARKS:

MR. CONOUR:

MR. SPARKS:

I

MR. CONOD.R:
MR. SPARKS:
MR. McCANDLESS:

1619

interest rate is applied to them, that is,
the Colorado River formula. It is absolute-
ly imperative that this formula be reduced
in line with what other projects are paying
and what the Government is paying for money.

The Bureau of the Budget - I was back in
Washington about three weeks ago now on this
very problem, discussed it with the Bureau of
Reclamation, the Bureau of the Budget and Con-
gressional officials - and the Bureau of the
Budget has agreed, formally agreed, to come off
of the old interest rate which we are now sad-
dled with. They have approved the interest rate
which is set forth in this resolution."

"Larry, as clarification for me - when Sena-
tor Carroll talks about an average yield on
government securities, I usually think of yield
in terms of what the government bonds are now
selling for and arrive at a yield percentage.
What does that mean under the Colorado River
Storage Project Act?'

"Under the interest formula which we have
under the present Act, the words 'average
yield' is used. When I was in Washington we
had to get expert help on the interest rate
problem. Apparently there is a great differ-
ence between 'yield' and 'average rate of in-
terest paid'. I really can't explain the dif-
ference. All I know is that there is a dif-
ference which has something to do with the
market quotations."

"Mr. Sparks, that cuts both ways. If the
government securities go under par, then the
yield is considerably less than the interest
rate."

"That is correct but there is a trememdous
variation. In other words, we cannot figure
our project costs based upon this formula be-
cause it fluctuates so trememdously."

"It changes from day to day."

"That's the big handicap."

"Larry, does it mean now with that tele-
gram, that this resolution is not necessary?'