HAWERA BOROUGH LOANS

Hawera Star, Volume LIII, 20 June 1933, Page 4

HAWERA BOROUGH LOANS

PROPOSALS TO RE-FINANCE

MONEY RAISED AT 3£ PER CENT.

SUM OF £45,000 INVOLVED.

BENEFIT TO RATEPAYERS.

Proposals to re-finance certain of its loans which could not be brought under the general conversion scheme advanced at the last meeting were adopted by' the Ilawera Borough Council last. evening. If the plan is carried into effect a reduction 1 of 10 per cent, in the special rates, equivalent to 4 or 44 per cent, of the general rates, will be possible. ■ . When considering the conversion of the borough loans at last meeting it was apparent that the conversion scheme then recommended by tho finance committee could not affect loans raised between 1901 and 1906 at 34 per cent., and amounting in all to £45,609 15s 4d, said the chairman of the finance committee (Cr. W. G. Walkley). The largest of these loans (£26,482 15s 9d) matured in 1941 and tho others fell due at various dates up to 1947. The 34 per cent, pay'able covered both principal and interest, . although these two elements were not separately' expressed in the instalments. The annual instalments- amounted to £1596 6s Bd, and the total payments to be made until the last maturity date amounted to £15,268. As the loans stood at present, this sum would have to be paid out of special rates for the next 10 years at the rate of £1596 Gs 8d per annum, and thereafter in .proportionately lesser sums as the loans were extinguished. It would be possible to reduce the special rate if some means could ho devised to reduce the present heavyannual pay-ments, and it was recommended that the treasury he approached to accept, say in February next, the present worth of the whole of.the remaining instalments at 3$ per cent. The present worth of the instalments totalling £15,268 would 'bo £11,112 7s Od. If this latter sum were raised by way' of loan at per cent, with a 3 per cent, sinking fund and a currency of 20 y-ears, the annual instalments would he £865 (interest £472, sinking fund £333) and the total of the instalments over the- whole 20 years would be £16,100 compared with £15,268, which would have to he paid under the terms of the existing loans.

Whilst therefore the actual sum paid would lie only £832 more than on the present loans, and it would be spread over 20 years, the annual special rate of £1596 6s 8d would bo reduced to £865, which meant that it would be necessary annually to collect £731 6s 8d less than at present. This would make it possible to reduce the special rates by' approximately 16 per cent., or the general rates from 4 per cent, to 44 per cent. It might he considered preferable to raise the money on a table loan instead of by way of loan with a sinking fund in tho vicinity of £SSO. • Irrespective of the method of refinancing adopted, it was recommended that the council take steps immediately to approach the treasury and ascertain whether repayment would be accepted on the basis of accepting the present worth of the future instalments payable on inscribed loans.

Cr. A. Reid said he couid not support the proposal as he did not favour anv extension of the loan.

Cr. A. K. North said he would agree that if times were good it would be a sound policy to pay off. loans as soon as possible. Under the present financial stringency, however, the council should give the ratepayers all the relief possible. Under the scheme the extensions would be only eight or nine years on a sum of £II,OOO. There were several advantages and the. present position would be very materially improved. The adoption of the report was moved by Cr. W. J. Bright and seconded by Cr. R. M. Rickard and carried without further discussion. Cr. Walkley and the town clerk were appointed to interview the Treasury'in connection with the proposal.