BOROUGH FINANCE.

Taranaki Daily News, 2 August 1921, Page 4

BOROUGH FINANCE.

NEW LOANS PENDING. NEW PLYMOUTH PROPOSALS At last night’s meeting of the New Plymouth Borough Council it was decided that a poll be taken on the question of raising a waterworks Joan of £lO,OOO. Replying to Cr. J. Kibby, who asked in what direction the money would be expended, the Mayor (Mr. F. E. Wilson) said it would be utilised partly for new pipes, and a portion for extension of the service. A letter was also before the meeting from the general manager (Mr. F. T. Bellringer), who dealt with the question of raising £134,200 to meet loans falling due next year. This was referred to the finance committee, the Mayor intimating that the council would probably put this and the waterworks loan before the ratepayers at the same poll. The general manager’s report was us follows: “Referring to the question of raising a loan for the purpose of paying off the loans totalling £134,200 falling due on October 1, 1922, it will be necessary to decide what the amount of the loan shall be, the rate of interest and the special rate to be pledged as security. At March 31 last the accumulated sinking fund amounted to £3107 19s Id, and will amount in round figures to £3500 at the maturity of the loans. Eleven hundred and eightysix pounds of the sinking fund is invested upon mortgage of land, and if the moratorium is still in existence in 1922 we may not be able to obtain repayment of the whole of this amount at the time it is required. “The rate of interest for new loans is fixed by the Act at 5J per cent, per annum, although there is provision enabling the Minister of Finance to permit a higher rate to be paid. It must not be overlooked that he may grant this permission by authorising the council to sell the debentures bellow par in order to return to the lender the higher rate . In this case the amount of the loan would require to be greater in order to provide for the fact that we would not receive £lOO for each £lOO debenture. Provision should also be made for the cost of raising the loan. If the financial stringency continues— and there is very little appearance of abatement —at least 5 per cent, should be allowed for this. The rate to be offered as security will depend upon what rate of interest it is proposed to pay. Under these circumstances it might, perhaps, be well to refer the whole matter to the finance committee to settle. “There is also the fact that the security for the majority of the maturing loans were special rates over the original area of the borough, and not over the whole of the present area. It has, however, always been understood that the security for the new loan would be a rate over the whole borough, and, indeed, this is a necessity if the money is to be raised.”