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<br />- 6 - <br /> <br />5. Due to the normal regulations for bond <br />financing such a scheme as that in section ~ of H.R. 3408 <br />would place the debt service obligation to repay the bonds <br />ahead of all other repayment obligations, including repay- <br />ment with interest of the power generating facilities at <br />the Storage Units, such as at the Glen Canyon, Flaming Gorge, <br />and Aspinall Storage Units. Thus, there would be large <br />unwarranted i,ncreases in interest on costs,allocated to power <br />that would also be chargeable against Basin Fund revenues. <br /> <br />6. The use of CRSP power revenues as outlined in <br />H.R. 3408 constitutes a Federal guarantee on the U.S. Treasury <br />by transferring Utah Water Conservancy District debt <br />obligations into Federal obligations that would interfere <br />with credit markets, especially for the Federal government. <br />Since Federally generated revenues would be <br />used to retire District bonds, there is no cost sharing <br />apparent by State and local entities. <br />There may also be a serious tax liability <br />created. The Internal Revenue Service should be consulted. <br /> <br />7. Although section 2 provides that the impact <br />on CRSP power rates of returning the non-federally financed <br />construction of projects with bonds shall not exceed that <br />impact which would have occurred had construction been by <br />the traditional CRSP Act method, there most certainly <br />would be an increase in power rates. If such a financing <br />scheme as proposed in H.R. 3408 is good for Utah, it is <br />doubly beneficial to Colorado with 46% of the apportioned <br />revenues to be applied to presently authorized and future <br />project costs. If the Bill is to be enacted, it should be <br />amended to include a long list of Colorado's potential <br />projects. Colorado has the Colorado Water Resources and <br /> <br />, <br /> <br />2264 <br /> <br />I <br />