BOROUGH FINANCE.

Taranaki Daily News, 18 March 1922, Page 6

BOROUGH FINANCE.

LOAN FLOTATIONS. . SALE OF DEBENTURES. The report of the general manager of the New Plymouth Borough (Mr. F. T. Bellringer), which is to be presented at Monday night’s meeting of the council, contains the following reference to loans: “During the month debentures to the value of £7400 of the £9OOO electric light loan w.ere sold, and the balance arranged for. The money has been placed on fixed deposit at the bank until required. Arrangements were made for the re-printing of the unsold debentures of the £72,000 loan, amounting to approximately £50,000, and it is hoped to have these on the market within the next few days. The rate nf interest fixed by the council, with the consent of the Government, is 64 per cent, per annum, and the currency of the loan is 11 years. With the easier money market it is anticipated that no great difficulty will be experienced in selling the whole of these debentures. Of the £lO,OOO waterworks loan agreed to be provided by the State Advances Office £3OOO has been received, and the borough engineer has been instructed to obtain tenders for the water pipes required. In the meantime the amount received has been placed at fixed deposit with the bank until required.” REPAYMENT LOAN.

Referring to the £142,000 loan to he raised for the repayment of expiring loans, the report states: “Authority has been obtained from the Government for the payment of interest upon this loan up to 7 per cent, per annum, provided the money is obtained outside the Dominion. ,No steps, however, have been taken in regard to raising the money required. The old loans expire on October 1 next, and, judging by the time taken by another im-. portant local body in raising a loan upon the London market, it appears advisable that the preliminary arrangements for the raising of this loan should be taken as soon as possible. The council may perhaps deem it desirable to consult the general manager at the Bank of New Zealand in regard to the matter, and, after fixing the terms, leave it to him to decide the date when the lo£n shall be actually placed upon the market.” ELECTRIC LIGHT SINKING FUNDS. The question of the sinking funds for electric light loans was reviewed by the report, which recalled that in December, 1920, the electrical engineer recommended that in order to eventually reduce the capital charges oil the electricity undertaking substantial increases should be made in the rate of sinking funds provided on the various electyic light loans. On that occasion, however, the general manager had recommended deferring decision, on account of the critical stage in the business of the department. Dealing with the 'present position, Mr. Bellringer states: “The matter has been before the council on several, occasions since, the final instructions being that it should be brought forward again this month. The only material alteration which has taken place since are that in making provision for the flotation of various electric light loans totalling £39,168, falling diie with other loans on October 1 next, provision has been made for the payment of a sinking fund of one per cent, in lieu of the i pei cent, payable on the existing loans, and instead of T>aying interest nn this amount at the existing rate of 4.6 per cent, the department will probably have to pay 6.5 per cent. These two items alone will increase the overhead charges from between £9OO to £lOOO per annum in addition, to those incurred by the capital cost of the extensions. In addition to the above the rearrangement of the renewal fund entails that approximately £lOOO per annum has to be paid to the renewal fund commissioners for investment, whereas previously the renewal fund was merely a book entry, the money itself being used for extensions. Under the circumstances it would not be advisable at the present time to add a further load by increasing the sinking fund payable by the department. Later on, when the future financial position of the department can be more accurately gauged, the question could be reviewed.”