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. I I I I i' ,I I I I .1 '. :1 I I I I I I forthcoming until the" project is finished. By definition, the very presence of a grant implies that the issuer has limited other sources of revenue; therefore, it is important that this vehicle be carefully used. It is probably not appropriate for long term construction projects like the Narrows unless one has a high degree of certainty that Congress will appropr iate its share of the funds. In 1981, the Winter Park Water & Sanitation District issued a GAN in anticipation of its agreement with FanA at an interest rate of 7-1/2%. '!he prevailing bank rate offered was 70% of the prime at that time, or 13.30%. In addition, the District was able to invest the. funds during construction at an average rate of approximately 15.10%. 'lbday, the comparables \>Quld be 7%, 11.20%, and 14.20%, respectively. Not a financing vehicle for everyone, but beneficial to those who can use it. Commercial Paper Tax-exempt commercial paper, while still in its infancy is showing signs of becoming more widely used, particularly for large power projects or water projects payable from llSer charges. Commercial paper is negotiable, unsecured promissory notes issued by political subdivisions. Maturin:! in 365 days or less, commercial. paper often replaces costly bank credit 1 ines which often require compensating balances and float with the prime. Commercial paper is used for working capital, interim construction financing, or to supplement irregular cash flows. It is conceivable that in the future state, large cities or large water or power projects will / issue commercial paper instead of the Notes we talked about earlier with the commercial paper repaid from projected taxes, revenues, grants or long term bond financing. 5