SINKING FUNDS

Rotorua Morning Post, Volume 2, Issue 516, 27 April 1933, Page 6

SINKING FUNDS

borough discussion PUBLIC TRUSTEE LOWERS INTEREST TO 3 1 PER CENT. WHOLE QUESTION FOR REVIEW When notification was received by the Rotorua Borough Council last evening from the Public Trustee that the interest on sinking funds was reduced to 31 per cent., Cr. 0. H. Coleman said that the council should protest. Was there any way the 'council could withdraw its funds from the Public Trust? The mayor: No, they've blocked that. He went on to explain that provision did exist whereby the local bodies could obtain some measure of relief with the consent of the Minister, by re-investing funds. The matter had been taken up by the Municipal Association and this relief had resulted. Local bodies sinking funds could now be earmarked for repayment and not used in farm mortgages. Some local bodies were secure, but the funds of others through the common fund were not so secure since ' they were invested by the Public Trustee on farm propOrties which, in some cases, no interest was being received. Now the local body could insipt on their funds being invested in local body debentures where there was less likelihood of default as there had only been one serious case of default — that of Thames. Not Seriously Affected In answer to Cr. E. T. Johnson, the mayor said that the position at present did not seriously affect the council, but if the low rate of interest continued at the time of the maturity of the loan, there would not be sufficient money in the sinking funds to pay off the loan. The present amount of the borough sinking funds was £4279. If the borough insisted on its funds going into local body debentures, it would gain a certain amount of interest — close on one per cent. Cr. Johnson thought that the council should apply to the Minister in this direetion, and the matter was referred to the Legal and Finance Committee, the mayor suggesting that the committee should go into the whole question of placing the borough loans on an amortization basis so that there would be no question of the loans liquidating themselves.