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suggests, that the characterization of use as incidental to the
overall governmental purpose of a financed facility has no
relevance. On the contrary, we believe this characterization has
relevance not only in determining whether a particular
arrangement or special economic benefit constitutes private
business use, but also in determining whether such a use of
proceeds or financed property exceeds the 10-percent threshold.
The regulations provide a list of the circumstances under
which a nongovernmental person is treated as a private business
user of proceeds and financed property. The list includes
ownership, leases, management contracts, output contracts, and
research agreements. See sec. 1.141-3(b)(2) through (6), Income
Tax Regs. The regulations also identify a catch-all category:
“Any other arrangement that conveys special legal entitlements
for beneficial use of bond proceeds or of financed property that
are comparable to the special legal entitlements” listed above.
Sec. 1.141-3(b)(7)(i), Income Tax Regs.
Respondent determined that Company’s reservation of a
certain capacity of wastewater from the pipeline is a special
legal entitlement for the use of that facility. He relies on
section 1.141-3(b)(7)(i), Income Tax Regs., and contends that the
priority rights that Company has under its contract with
petitioner are comparable to those arrangements listed in the
regulations. Specifically, he relies on the example contained in
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