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About The Oregon daily journal. (Portland, Or.) 1902-1972 | View Entire Issue (Dec. 6, 1913)
v. It THE OREGON DAILY JOURNAL; PORTLAND, SATURDAY EVENING, DECEMBER 6, 1913. C'ilfE 5 K WEXPLAINEO Proposed Change Would Permit Bonding Before Instead of Afterlmprovement Is Made,--Penalize Oe-lin(tentsr ' "Facilitate Retiring Bonds) and Economy. Title Of Amendment Ho. 1. Am Act ta amend the City Charter of Portland by adding thereto two ec tiona defining the word tmproTement, proYidiaff (or the Issuance of bonds and . payment aa the work progresses of a portion of the cost of ths Improvements, authorising the assessment of the cost f any Improvement npon property spe cially benefited thereby, permlttlnff property owners to bond and pay in 80 ami-annual Installments any assess- '' meat amounting to five dollars or over, urovidinar for interest, for penalty on . delinquent assessments, and repealing Charter Section 425. Khali the Charter be so amended? . 100. Tea. .. 101. SO. On -July 81, 1913, the city's Improve ment bond BinkliiK fund lmd J940.097.68 on deposit with Portland banks. This money; nearly a million' dollars, was drawing J per cent Interest. .Against this sum, improvement bonds bearing per -ent interest were outstanding-. Tortland was pnylnsr 6 per rent on nearly a million dollars of in debtedness, while the money was on hand to discharge the debt. Portland was losing 4 per cent inter est on th full-amount because of an In efficient charter provision regulating the retirement of improvement, bonds. During the past three years un aver age of I76SI.345 improvement bond slnk ing funds has been on deposit with the banks, drawing 2 per cent Interest During the past two years the average bank deposit has been I92S.OOO. During the same periods bonds which these bank deposits should have redeemed were drawing 6 per cent Interest. City Has tost Heavily. -Since the improvement bond provis ion . lias been In effect, April 1, 1901, the city has lost $97,960 because of ex cess Interest Imposed by a charter pro vision . preventing immediate retire ment of bonds when money became available in the sinking fund. Since April 1, 1901. mismanagement of the improvement bond system, a mN-management-not chargeable against of flciala, but against an Inadequate sys tem, l as cost the city 1263,09". Of this amount. $97,960 was due to excess in terest aa stated above. Interest paid on contractors' warrants added $120,860, and -Interest on money advanced from the general fund to pay the first in terest Installment on bonds added $36.- 048. To get the city from under this sys tem of bad financing of local Improve ment the commissioners have proposed a, charter amendment, suggested by Robert G. Dieck. If adopted by the vot ers December 9 the amendment will per mit bonds to be sold in advance of an improvement. A revolving fund, from which contractors can be paid in month ly Installments, will be created. future Xosaes Eliminated. . ' It is urged on behalf of the pro posed amendment that it will result in lower contract prices on local improve ments; that It will eliminate futuro losses due to poor, financial manage ment; that all local improvements can be bonded if the property owner do wishes; that It will effect a consider able, saving to individual property own ers and to the city as a whole. ' Under the present charter provision an Improvement cannot be bonded until the contract is let and the work fin ished and accepted. Contractors are compelled to finance themselves while Jthe work is in progress, and often dur ing delays incident to final acceptance. It has been reasonably well established that hich contract . prices are due in large part to the system, that the cost of delays in payments, including in terest iu money employed by the con- ! ! 7"raetrr Is included In the eontract price. !; Thus the property owner pays these overhead charges Indirectly. Two Defects Voted. There are two outstanding defects in the present method of bonding local Improvements, One is Inability of the city to begin paying contractors until their work is completed and accepted. The other 'is the method provided for redeeming bonds. - L'nder the present system each lm , provement Is bonded separately. ln- terest and installments are payable by 'I property owners annually. But Interest due the bondholder is payable semi annually, thus making it necessary for the city to advance from Its general ; fund the first six months' Interest on ' the bonds. The general fund is reim bursed, but it actually loses the earning "power of money so employed. The amendment provides that bonds 'shall draw interest semi-annually as at "present, but it also says that Install ments and Interest due from property owners shall be paid semi-annually. i The purpose of this provision in ta i ' makn the bondinir nvstem Kelf-Kiiutaiii. I I ' l4ng by requiring payments from prop ( ..erty v owners at intervals coincident ..with payments due bondholders. It Js j . jjrged that the city's credit may prop i " , ,r,y be used in tle property owner's be . ' bait', but the property owner should not J .; 'ask the city to advance money for meet 'f . jng the first six months' Interest on t bonda issued for his benefit. ' ' Bonds Bell at Premium. Improvement bonds have been selling ' . atfa ptemlnm, and under the present ; system the premium goes into the city's general fund. The amendment provides that, all premium money shall ,e rred- jtea me improvement ijuiki interest ..fund, there to remain a long us It in '.needed. This provision Is expected to make unnecessary the practice of trans- . .Jerring money from the general fund to meet interest, jmy merits on bond. It is also provided in tiie amendment that. Instead of each improvement bc '. ing rbonded separately, as at present. ;i . number of improvements may be , grouped, and the proceeds from sales of bonds be applied to each project us the inonejrjs needed. - Tlieramount of bonds to be issued In any one month will be determined from the city engineer's certificates of work done. J From this total will be deducted' the percentage withheld from run trac tors, and also the percentage of rash payments on improvement assess ments., This latter item will be esti mated aa nearly as possible from data available In the auditor's office. ' Present System Defective. Tho big defect of the present system ' is the method . provided for retiring . bonds. It Is Urged that in practice the ''Stem is as much an investment as it Is a: redemption system, when its real purpose ahould be to retire bonds as fast s possible.;' v Plnce, Portland began bonding for lo cal Improvements more than $17,000,000 ta this class of city securities have been t 'Imied; v 0f--Uie, Jess than $3,000,000 , have been redeemed. On July II redemption totaled $2,882. T. But oh that dute I94Q.097 was ly.. in i the banks at 2 '.per cent, whereas' tn, bontis it was paid In to retire worsi fund at 6 per cent, the interrt rate It niUHt earn to break even wjth bonds out standing ugalnst It. On the name date the Kinking fund held $1,176,995 Improvement bonds s an Investment. Tliene bonds stood on the books as uu apparent i lly liability, when in fact they worn not u liability, be cause the city was borrowing of Itself. Costs City 4 Per Cent. t'ombiiiiiiK these totals, it Is appar ent that while more than $.".,(100,000 had been paid in for the redemption of bonds oiilv I2.S82.967 had been actually re tired. A block of $1.17,n9i was lying in tho sinking fund, and nearly $l.o0u. 000 was In the banks, losing 4 per cent Interest for the city. The reason for this situation is the charter provision which says Improve ment bonds shall be retired on an in terest hearing dato in numerical order only. This is tho provision which has wrought havoc with the redemption sys tem. Its actual working can be nius trated us follows: Km, noun improvement bonds to the amount of $50,000 a month are out fitnnriinir with Interest bearing dates running from January to July, a total of $350,000. Suppose that in January the redemption fund has $100,000 avail able for the retirement of bonds. Under the present charter provision the 150.000 block of January bonds could be paid and canceled, wiping them off the books. But the provision re quiring bonds to bo retired, on Inter est bearing dates In numerical order only, would prevent use of the other $30,000 In retiring bonds. Hone' Could Be Betlred. The July bonds would be at an in terest bearing date, but none of these bonds could be retired strictly In numerical order. The February bonds could not be called. They would be in numerical order, but their Interest bearing date hud not been reached. Lacking a chance opportunity to In vest the second $50,000 In new bonds, the money would be deposited In the banks at 2 per cent, entailing a net loss of 4 per cent. If the city had ac cumulated half a million dollars In the redemption fund in January, only $50,000 of the amount could be used in retiring bonds, for bonds must be re tired in numerical order only, on In terest bearing dates only. On the other hand, suppose that In January there was no money in the re demption fund, as has sometimes hap pened. The January bonds could not be retired for lack of funds. The re sult would be that, because of the nu merical order provision, no bonds could be retired for the next six months. If during the intervening months, be fore another Interest bearing date Is reached on the January bonds, a mil lion dollars should accumulate In the sinking fund, none of the money could be used for retiring bonds. The Jan uary bonds, having-! lie lowest serial numbers, must be retired ahead of all other bonds, and the January bonds could not be called until the following July, the next Interest bearing date. Critics of the present system, say It was devised solely in the investor's be half. The proposed amendment safe guards him and at the same time takes account of the city's and property own er's Interests. The amendment says that after a life of one year bonda niajr be called on the first day of any moVith, In numer ical order, with accrued Interest to the date of payment. .The. "Interest date" limitation is dlscurded. In the illustration above, after $50. 000 had been used In retiring the Jan. nary bonds, the other $30,000 would be used in retiring the February issue. The process would bo repeated month ufter month, l!i city whittling away at its uiit standing securities as fast as inimey came into the sinking fund. -Bow Proposed System . WWM- . Iloinl buyers prefer the present sys tem, but they admitted to the city com missioners tlmt it Is not advantageous to tiie city and property owners.' If the amendment is approved by tno voters there will be no necessity for serkinit: Investment of sinking funds paid into the treasury for tho retire , rut of future Issues of bonds. The money can be used immediately in dls chni Kiiik' tho duty for winch It is In tended. There would be an end of bad financing. The city would quit losing 4 per cent Interest on sinking fund de posits at the banks. If the amendment Is adopted Port land will lie enabled to pay off Its im movement bonds as rapidly as the money becomes available. It Is said that "the securities will still command a premium, but In any event no bonds enn be sold under par. .t the present time Portland's lm provement bonds are held largely I" the eat;t. They are purchased through local dealers, who find ready takers for irllt-edired ti ner cent securities. Prac tically all the interest money Portland. Popular Sle of Bonds. The amendment provides that the city coiiiiiilsMnner nay arrange for popular sale of these bonds over tho city treas urer's counter to Portland people. Bonds mav bo issued in small denominations, on which a stated price, par or better, shall be fixed. These bonds will bt available to a".' person with a limited capital for Investment. The person with $100 in savings will have an opporiu nlty to walk Into the city treasurers of flee and biiv a $100 bond Just as a yard of calico is bought. The numose of this provision is tj give the commissioners authority ti make popular bond sales practicable in Portland. l'nder the present system, which requires bids on all bonds sold. the small investor Is at . a, disadvantage. l'nder tl in. proposed amendment thl small Investor may be accommodated on equal terms with the eastern la vestor. leave RESTRAINING ORDER IS ASKED AGAINST CITY To restrain the city from enforcing orders to tear down buildings at the southwest corner of Third and Yamhill streets and at 205 and 207 Front street, between Taylor and Salmon, suit has been filed against the city. Mayor Al bee. Building Inspector Plummer, City Commissioner Dieck and Health Of ficer Marcel his by M. K. Arbuckle and S. A. and II. E. Ray. Arbuckle und the Rays own thtee fifths interests In the two properties. The Third street property includes two one story buildings of brick and frame construction, valued at $2000 and bring ing In a revenue of $455 a month, ac cording to the complaint. The Front street property has a two story frame building valued at $1500 and rents for $100 a month. The buildings were condemned Octo ber 14 and a complaint was filed in the municipal court October 22. It. 1,. Ray, owner of another one-fifth inter est, was arrested and the case against lilm is pending. The plaintiffs say their buildings are not unsanitary or unsafe. Serums Superseding Surgery. Milwaukee, Dec. 6. "Serum and anti toxins are superseding surgery, " said J)r. J. B. Murphy, of Chicago, before a railroad surgeons' convention: The Best Christmas Buy on the News-stands With its great George Barr McCutcheon novel, complete in one issue, with its other fiction, its articles, its miscel lany and its fine illustrations both black and in colors. MUNSEY'S MAGAZINE FOR DECEMBER is emphatically the biggest Christmas buy on the news stands this year. On all News-stands, 15 cents By the year, $1.50 FRANK A. MUNSEY NEW YORK -uwlug per cent. There was no op-1 port unity for Investment of the sinking-" Protect Yourself Ak for ORIGINAL GENUINE The Food Drink For All Ages Highly Nutrition and Convenient Rich milk, with malted grain extract, in powder form-dissolves in water more neaitmui man tea or coffee. Used in training athletes. The best diet for Infants, Growing Children, Invalids, and the Aged. It agrees with the weakest digestion. 'Ask ton "HORLICK'S"-at Hotels, Restaurants, Fountains. Don t travel without it Also keep it at home. A lunch in a minute. In Lunch Tablet fono, also, ready to eat. . Convenient nttiitioua. , : ... . IRVINGTON CLUB WILL ERECT BIG uYMiSli Steel and Glass Structure for Children Will 'Be. Financed ISy'Kond Issuer"""1"" 7 A $100,000 clubhoiiHp. Including a ball room, dining room, library and reading room, sleeping rooms for men, a .hind, soma natatortum and a roofed ovsr gym nasium of steel and glass priori at, th sides to take the place of outdoor play grounds will 'bo' built by tha Irvlngtbn club to occupy 'the entlra end of -Its property where the . children's play grounds are now situated. . . -.,r The present tenhl courts, which oc cupy 12 lots, wfll be moved a little to the south and the .eight playground lots occupied by the new clubhouse.' The property is bounded ., by Thompson, Bruaee, J5as Twentieth and EasVTwen-ty'-flrst "streets." v ' No donations will be solicited, but the clubhouse will probably be financed by the issuing of. bonds In denominations of $100 to be sold to members and resi dents of the district,,, to' be redeemable by-th0 clutf at stated Intervals, forming a safe investment, but with the Interest not guaranteed;. 4.! 1itv,,,v:'"'v;'"4 -.'. The present playgrounds f Uhq club are" not adequate ' for the systematic hitidllng of the great -number of. chil dren in the district.. The' plan, of 'the iaylngton club is to provide facllltlejt for all its members every day in the week. ) . - v The club: has been conducting a' series of meetings of members and residents of the' community In connection with its campaign 7 iecure Wnr members. A new committee -of women member has been formed to ' further the cam paign. It is composed of Mrs. - J. . Is. Cameron, Mrs., Frank Kerr, Mrs. yf. 3. Hofmann,' Mrs. -IT. M. - Haller an Mra.v r Frank B. "Fields,- and will later expend ; Its membership. . Twenty-five life tnjaji- war ,my.e . .."" .r.rr i ., . v.-'vy ' As soon as iha',j60"Jlfe members -have , been' secured a ampattn to semira.'ZOOO , new active members will be inaugurated. ; WlUlam F. 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Portland Service 24-26 Fifth Street, Branch North Don't Be Talked Into a Substitute Your own dealer or any reliable, dedler can supply you with United States Tires Smooth Tread, "Nobby Tread," or "Chaitt Tread." If he has no stock on hand, insist that he get them for you at once, or go to another . dealer. Note This Dealers who sell United States Tires sell tho best of everything. Vi.V.'.S "' -".' T yT?.?r??rfn-,i faf.,rfM.r4W;rr-,,.