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general public has no bearing on Company’s private business use
of that property.
The sewage ratepayers’ use of the pipeline is based on
removing and ultimately disposing of their sewage and is also
based on their residence within the service area of the sewage
system. There are no specially negotiated rate arrangements with
the sewage ratepayers for the disposal of their sewage. See sec.
1.141-3(c)(2), Income Tax Regs. Ordinances set uniform and
standardized sewer rates and connection fees for all users in the
service area of the sewage system. The sewage disposal functions
of petitioner’s sewage system are available for general public
use. We hold that the sewage ratepayers’ use of the pipeline
constitutes general public use.
3. Use of the Pipeline
Respondent’s determination considered three users and two
different uses of the financed pipeline:
The City Project is used by Company, the irrigators,
and the ratepayers. Use of the City Project by the
ratepayers is based on removing and ultimately
disposing of their sewage. In contrast, use of the
City Project by the Company and the irrigators is based
on supplying the wastewater for use in the geyser field
or on irrigable property.
He relies solely on Company’s purported use of the financed
pipeline and concludes that such use is a private business use of
more than 10 percent of the proceeds of the bond issue. For the
reasons stated below, we disagree.
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