Medford mail tribune. (Medford, Or.) 1909-1989, November 28, 1916, Image 6

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Medford mail tribune., November 28, 1916, Page 6, Image 6

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Newspaper Page TextPA0T5 RTX MEDFOTW MATT; TRTBTTNTR, MEnFOIlT). OTiF.rtON", TUESDAY. XOVEMTVmSfilfHO HANSON'S REPORT TO THE COUNCIL assessments levied upon private prop-vhurter provisions under those var crty for 'paving, aewcrs and 'water-; OUl! innirovemcnta have been carried Honorable Mayor and City Council: Medford, Oregon, Gentlemen: 1'urBuant to your direction I have conducted an Investigation ot the fi nancial condition of the City orf Mud lord with a view to devising and sub mlttlng to you for adoption a com prehensive plan for the readjustment of the finances ot the city. The special Inquiry deals with the condition of the local improvements assessments and the mode of pay ment thereof, licforo definite con clusions can be drawn regarding tbe Improvement Indebtedness Is is nec essary to consider the city's general debt and its water debt. I have there fore arranged all these obligations In three groups: (a) General City debt. (b) Water debt. (c) Improvement debt. Tho people must pay both principal Slid Interest of tho general debt by tin levy. The city water plant is a business institution producing reven ues and should be organized and con ducted with such business economy that' It will pay both principal and Interest upon the water debt and pro vide ouch other money an are requir ed to take care of depreciation and replacements. Tho Improvement debt comprises i bonds ofrset by assessments levied upon private property for paving, sower and water main Improvements. The asnessnieutB havo been bonded under the "Bancroft Act" and arc payable in Installments. These has been falling off of such installment payments within tho last two years. To avoid default In interest payment of these Improvement bonds tho city has advanced largo sums. These bonds commence to fall due In 1919 and annunlly thereafter. They must be paid at maturity unless a plan can be deviBed for refunding. In consid eding the matter of their payment or a plan for refunding, the debt pay ing ability of tho city and the private property assessed for these improve ments must be carefully analyzed. For the purpose of showing graph ically tho present status of all muni cipal bonds of "ho City of MoJ'nid and a comprehensjvo plan for their payment within reasonable time and with the lowest annual tax levy there for, I havo extended the bouded In debtedness upon the tables attucbed to the report. Tnblu 1 ( hiss A, (Jonornl City llond No sinking fund has been created for any of those Issues although $25, OOu falls. duo on February 1, 19 IK, and $38,000 on April 1, 1921. The $25,000 issuo I would roconimeii.l that you refund by tho issuance of twenty-year sorial bonds pnyublo In equal annual Installments. As to the $38,000 issuo, an $S,0()0 sinking fund Bhould bo created by maturity and the balance refunded by tho Issunncc of $ JO, 000 serial bonds payable In fifteen installments of $2,000 each. Tho $30,000 and tho 20,000 Issues shouldo be paid at maturity from a sinking fund realized from tax levies In accordance with tho table. Upon the basis of the existing pro perty valuation tho nnnual tax levy required to pay principal and Interest upou tho city's general debt Is shown In tho table, the levy for 1917 being two and one-fourth mills nnd never Increasing above two and lliroo fotirth mills. Table 1! (lass "II" Water II.. nils The $15,000 Issue falls due .Much 1. 1917 and h.i-. an available sinking fund of $1412:1.90. ICnougli should be taken from tn.i lovcnucs l raise this sinking fund 'i;i to $15, OOP, Un balance of $30,001) should be refund ed with twenty year serial bonds apyuhle in fifteen installments com mencing the sixth )car. The $:;n. lino hsue lias n.i sinking fund now. Waier iivopli .mould In set aside Into the -i -i It fund in ,ii rorduuei! with the forcenin", nihle to retire the principal al m.iliiiity. 1 In cline should be (bin with the i'Oii Issue and the S'-T,n0 Ripe, The f :ii:.,iiuii . i ; ih last 'o fall due, nmtming July i, i'..:s'. In a" much as the burden ot rinii th prlui'lpiil of the other water is-uer. must bo met before ' $.'(.)", IWO Is sue matures, I would rcuiin.ucnd that the payment into the slnl.ing funds Tor this hsu.i l.c de'.ayed t.ir Mime ye.irs. The revenues of the water plant hist year were InMiff'rieu: to meet tho cost ot operation bo 1 Inte-est. a sinking fund for principal and estah. llsh a depreciation and replacement account. In addition to the cok! of cporation and the fund f.ir deprecia tion and replacement it will re. lire a sum largely n excc- of thirty thou scud dollars annunlly for liuni 'st and principal from now null th iii.-.turity of the outstanding iv.it' . bonds On the oasis of the present Hiciapc oUor revenues ana ai-u-.i that the water plant can be c,.'-i.eit nlih 8' c!l business eronoiiv nd len.-ird foi the protection of its in. nice Hut -Jie ml sum of twenty-, i,-i I iinus'ind ('.ol l.m. annually may he ii.ee frun: :iic niter fund and appli-I in the wutei debt, principal ami mte t o'e servo the t illmvliu; t iu.lii in I as fhoWII Oil I: hie VI. . .jMe the .,.,- al7 tll I'll ini;u,. it ju the walvr 'bend debt in aceords.lv vulli the . ul.iii above Indicated is f J0.2il.ei'. This will permit setting asld.i into a burplus fund $4709.00. During tbe years 1917-18-19 and 20 tho surplus thus accumulating will amount to $10,009.00. During tho year 1921 all of the $2!",, 000 will bo needed to pay principal and interest. During the year 1922 the principal and Inter est on the water debt will exceed $28,000, during the years li2-23 and 21 the $10,000 reserve fund will be needed to moot the heavier princi pal and Interest payments, and it will also be necessary to raiso $3700 ad ditional by the levy, or one mill on tho present valuation. Muring the years 1925 to 1929, Inclusive, tax levies In aid of the principal and In terest of the water debt will be need ed, the maximum being one and one half mills on the present valuation. Kroni that time on, in addition to the annual sum of $25,000 from the water revenue, substantial annual tax levy contributions will be needed to pay nil or the water bond interest and principal Including the sinking fund for the $205,000 Issue. This sinking fund should be established not Inter than the year 1931). The ordinances providing for the wafer bonds declare that the interest shall be raised by tux levy and that the principal shall be raised from the revenues of the water plant. The plan which I have indicated on table 2 will make possible tho payment of all the principal (Aid a part of interest from the revenue alone, without ac cumulating large sinking funds over loo long a period of years. Hut It will be necessary during the years 1921 to 1938; when tho last Issuo of bonds finally matures to contribute to the payment of present water Debt by way of tax levies the sum of $138, 500. In other words for the next four years on this basis tho water revenues will carry the water debt, for the remaining seventeen years tax levy contributions must annually be made. It would require an annual levy of five mills to pay water bond Interest If the ordlnanco provisions were ex actly followed, and this would con tinuo with slight., reductions after 1923 due to tho gradual retirement of tho bonds and the taxpayers would bo required to contribute a total sum of $340,125 beside com mencing the Immediate accumulation of sinking fund accounts which would havo to bo carried over a long period of years. Mater Mefem Advised AVIth an ineroaf-o In population there will coins an increaso in rev entio porhapB sufficient to delay tho necessity of tax contribution for nome yours. This will bo possible however only on ono condition. The present dally consumption lit the timo of greatest use of water Is five hundred gallons per capita. If the city will through the uso of meters and by oth er protective measures eliminate the large dally wasto of water It will be posslblo to supply waler to an in creased population without Increas ing the capacity of the plant, which. 1e already taxed to Its limit at the time of greatest use. Any Increase In tho plant for the purpose of bringing more wnter to the city means a very heavy expendi ture, it Is estimated that tho cost of Installing pipes for bringing un increased supply of wuler to tho city, together with other expenditures which must be made, will cost about $305,000. It may safely be assumed that the water department will be called upon to niuk.i these expendi tures within the next twenty years. These new capital Investments will nppnixiuiitlely double the wnter debt. This inal.es It imperative that a def inite plan for the payment of the existing debt be adopted and carried out. New capital Investment should he financed by the Issuance of new bonds which in turn should be retired as to principal and interest from the revenues. The $ 15.000 bond debt was created in $lsS7 fur the purchase of the old pumping plant. No part of this prin cipal has ever been paid nnd the city has already paid $117,500 in In terest thereon besides Interest which it must pay rur tho coining fifteen years. All the money It has to apply npon the debt Is $14, 13". 90. The city has not laid aside a dollar to apply upon the principal of any of the oth er water bond Issues. In view of these facts and tho heavy expenditure for capital investment, which must be made before the present water bonds mature, It Is of the utmost Impor tance that the water revenues be pro tected In every way consistent with good business management to the end that the annual sum at least of $25, 000 of these revenues may be assured for principal and Inti rest of the water debt. Whether new capital In vestments must he retired as to prin cipal and interest entirely from sen crl tux levies or inn be met in part at b'ast from wnter revenues is de pendent on the amotit'.atlon of the present liabilities at maturllt y. Table :t (iss "("' Improvement lu.nils iin,p bonds me rupicaciued by mains. The total original amount of these assessments was $1,241,347.32. Tho unpaid principal Is $705,500. An initiative petition has been filed with tho city council and will be submitted to the voters In January, 1917, relat ing to the paving assessments. This measure provides: (a) That tho city shall assumo all ot the original pav ing debt, the principal sum of which was $920,292; (b) That the city shall pay back all paving assessments already paid: (cl That the city shall assumo all outstanding paving assess ments plus interest to be paid upon tho outstanding paving bonds. The initiative measure contem plates fl ) that the Interest which the city has already advanced shall be eliminated as u credit Item: (2) that general city warrants to the amount of $370,000 bearing 5 per cent inter est shall be Issued to the owners of property on which paving assess ments have been paid to the amount of such .payments, and that these warrants can be used for tho payment of taxes; that D per cent of the war rants ehall be payable annually, (3) The measure also provides for the Is suance ot $500,000 of general city refunding bonds to retlro tho existing paving bonds, teh rate of Interest be ing fixed at 5 per cent, bonds to be sold for not less than par nnd to be payable serially In twenty equal an nual installments. Assuming that the warrants shall ho Issued and delivered and that the bonds shall bo issued and sold, table 4 shows graphically the way In which such debt must bo paid and tho tax levy based on the present valuation necessary therefore. . Table 1 Class "C" Pending Itiltintive Measure In tho light of the present Involved condition of the finances of the city of Medford, It Is more than likely that the city will be unable to sell these proposed refunding bonds at 5 per cent. The Initiative measure pro hibits a sale at a higher rate or at a discount. If the city should adopt this proposed Initiative measure and thereby assume the entire paving debt, issue the warrants hut be un able to sell the refunding bonds, it would then be compelled to pay the warrants and to pay tho outstanding paving bonds with Interest at matur ity. Table 5 shows how much muat be loviod each year to pay tho outstand ing paving bonds at maturity and tbe warrants provided for by tbe pending measure, which llmitfl the annual levy therefore to 20 mills. On the basis of the present asscsii ed valuatiori the tax levies for the amounts necessary lo pay at matur ity tho outstanding paving bonds and tho warrants provided for In the init iative measure, as shown in table 5, will be forty-seven (4 7) mills In 1918 and cannot be made to average less than approximately forty-four mills during each of the years 1918-19-20 and 21. To place upon the city at largo a paving debt in excess of n million dol lars in addition to its existing general debt and water debt amounts to an Imposition on the taxpayers of un ob ligation beyond their ability to dis charge. On tho other hand if legal meas ures shall be taken to compel the property owners to pay assessments at maturity, such action whilu due to the delinquency of the property own urs themselves will In many cases amount to confiscation. A plan should, in my opinion, be adopted as an amendment to the city charter authorizing the extension of time within which the property owners may pay the unpaid balance not only of their pnvlng but of their sower mid wntermnln assessments. With tills In view, after a careful consider ation of the matter, I would recom mend that a charter amendment he prepared and submitted to the voters providing tliat during the years 1917, 19 IS nnd 1919 only interest be paid upon improvements assess ments and that one-tenth of the un paid principal be paid annually for tho following ten years. This plan will operate to relieve (he property owners of any payment on principal during the coming threo years and. distribute the burden of the unpaid principal over a period of years up to and Including 1930. 1'av In Life of Tiiipmvciiient.i While It Is true that the commun ity has carried forward a larger amount of street improvements than seems necessary for a city of tho pop ulation of Medford, nevertheless the improvements are substantial ami of a lasting character. The plan which I submit to you while extending the t'me of pnvment very materially is to arranged s to provide for final pay meat of the assessment within the life '.( tho Improvement. l'rovlslon should bo made In the charter amendment for a mere defin ite and adequate method to enforc-; col.i;on of unpaid assessments and installments. Ti this Plan for providing a more lenb-nt und reasonable method r.ml time for paying these assessments by the property owners shall meet with your approval. It will be necessary ;n relinauce the cxlstiug improvement lunula, liiisiiiint to stale law and out, the city has made 207 Improve ments necessitating 20 7, accounts. Portions of these accounts represent ing properties applying lo be bonded havo been consolidated Into fifty bond accounts and bonds issued on tho faith and credit of the city there for. The net result is that the city re corder must take luto consideration the two hundred sixty-seven Improve ment accounts and the fifty bond fund accounts, or a tolul of three hundred und seventeen individual ac counts. Separate consideration must be given to principal payments and lo interest payments In these various ac counts. The practical effect of this system is to create a confusion of ac counts which becomes worse con funded the longer It In continued. I would recommend that all ot the unpaid assessment accounts bc.audit cd and reconciled and transferred to one consolidate lien docket nnd estab lished as a consolidated improvement district. The fund for this district will carry only two accounts, one for principal and the other fur Interest. The outstanding Improvement bonds should be retired following the adop tion of Ihe charter provision by the issuance of refunding Improvement bonds against the consolidated dis trict. These bonds will provide that interest alone need be paid during the years 1917-18 and 19, and that the. city shall have the option to pay any of the bonds before maturity on any scml-nnnual Interest payment date. The last Installment payment of tho assessments will become due at the end of tho thirteenth year. It Is advisable that the bonds shall fall duo at a somewhat later date so that the assessments may be collected from delinquent property owners be fore tho bonds mature. I therefore recommend that the bonds mature at the end of fifteen years, which will allow ample .time for the collection of all assessments before their final ma turity. If tho city will adopt a systematic plan for the payment of Its general debt and the water debt as I have suggested above and will arrange to refinance its special Improvement In debtedness along tho lines indicated, it will have, In my opinion, every reasonablo prospect, fur securing a fair market for ItB refunding bonub and its Improvement bonds at fnvor ablo Interest rates. lgul J'bases The legality of the plan which 1 havo indicated for the readjustment of the improvement finances involves first, (I) the legnlityof the outstand ing assessments and; second (2), the powor of the city to provide in its charter for a different method of col .ccjiou and for the refunding of the bonds. 'That the city had power to make theso improvements und to levy special assessments therefor is well established in this state. Its right to rearscss under reiinlu conditions has recently boeu alflrmcd by the Oregon supreme court in tho case of Philips vs. the city of .Medford. North Itlvor sido avenue was Improved by paving and an assessment leviod against the property of Mrs. O. W. Henderson. A niortgngo against tills property in favor of the .li'ckson County bank was subsequently foieclosed and the city mndo a party defendant. The city did not appear to contest the litigation and protect its improve ment assessment Hon, which under tho law was superior to the mortgage liun. Tho decreo of the court as in other default cases followed the alle gations of the complaint and declared that thu mortgage lien was superior lo tho assessment lien, and that the assessment lien was cancelled by the foreclosure of the mortgage lien. The effect of this judgment Is that the city's assessment for pavement against this proporty is cancelled Tho decision, however, affects only tho property Involved in that litiga tion, it docs not change the existing law when declared that tho Hen of special assessments Is superior to all liens except general taxes. If the mayor and city council en tertain any doubt as to the correct ness ot this legal proposition they can speedily set the matter at rest by instituting proceeding to enforce the collection and acquire title to any selected property against which there la a delinquent improvement assess ment and also an outstanding mort gage. . " ' I'nder the Bancroft - act property owners are given the option of pay ing their assessments In cash or pay ing In installments upon making written application and waiving ir regularis in the proceedings. The legislature may provide a different method of collection and payment. Such powor under the Oregon consti tution may be expressed in tho Med ford charter. Tho exercise of that power Invades no vested rights. In my opinion, tho electors of Medford have tho legnl'iiower to amend their charter and the r.nncroft act Itself by providing a new method for the col lection of these unpaid Improvement Medford is not In financial condition i In the last analysis all theso debts o relieve the property owners of t'.icr ; must bo paid If the-crodlt of tho city r. eclal assessments. , is to be maintained. In my judgment . The best that It can hope to do is J tho general comprehensive plan nbova to put Its own finances in order, re- ; outlined, in view of all conditions, duce the tax levy to a minimum an i offers tho most reasonablo means for irovlde for an extension of time for their payment, the purnient of outstanding special , . ' assessments. CONTEST LOOMS IN The city general credit, already NOflTH DAKOTA COURT heavily involved, Is further nffect-ic J by the recent authorisation of nil is-( KAltUO, N. I)., Nov. 28. An oloo sue of $300,000 of Kailroad l'''-j ,Um t.01lU.Ht North Unkotu is proin striidlnn bonda. This Issue l ...... ,K,,,..W,., BraJ gatiou. If the ls;'ue . involved In litigation ui...ii i.n i, ,.h i lo be legal, the cty's ! lo general credit will no longer be at-already been claim their seats Monday as has reed between R, M. shall be held legal, and the city ahull acnlliesI.el in by I.uther K. nirdsell, succeed in selling the same, provision according to word received here to- asscssnients end by providing for ihe Ueeted thereby, but If these bandJ (nlce and J. K. Uoblnson, and partly issuance and sale ot refunding bonds as above Indicated and outlined. In the general ueniand for perma nent improvements, which marked tho development period in Medford, the day of payment was apparently often overlooked. That day has ar rived during a period of real estate inactivity. The burden of these as sessments often overtaxed the prop erty owners debt paying ability, and principal payments have fallen oif. The city has even advanced large sums to meet interest payments. Such reasonablo extension of time for the payments of these assessments should be 'M-oviitcd as will ennuio me tii'-a -est number of properly owners to pay both principal and Interest ui.d avoid losing their properties. It will l.o fcen from the foregoi.ig tables and .. ......U Fee llln Iinnll.il 1UV nient of $1S,000 Interest and tnelday. The justices-elect seek to tako retirement of the principal. I their scats on the supreme bench Summitry 1 Monday under a section of the stato In conclusion I beg to invite your j constitution . which provides that attention to the fact that the plan, justices should serve from the flrts which I have submitted to you above. Monday following their election. This contemplates an orderly arrangement . provision, present members ot the of the c'ltv's financial program with I court maintain wus adopted to suit special reference to a constructive un emergency In 1 889 when the state method for tho pavnient of Its geu- j was admitted to the union, erul debt, its water debt and tbe No justices since then havo sought special improvement debt in the light to'avall themselves of this clause, but of tho ability of the city and the pro perty owners to pay. The plan Is so arranged that the tax levy shall at all times be kept at the lowest pos sible point, and the burden of the special assessments will be extended Uie analysis thereof that tho city cf over a considerable period of time, have taken seats with other state of ficials on January 1. The state can vassing board does not meet until next Tuesday und It is asserted the lust ices-elect havo no legal right lo their seats until their election has been certified. "That's just what I've always wished a cigarette would do satisfy!" The feature of Chesterfields is that they begin where other cigarettes leave off. In other words, besides pleasing the taste.Chesterfields go further they satisfy! Just like a long drink of cold water satis fies when you're thirsty. And yet, Chesterfields are MILD! It's Chesterfields or nothing if you want this new cigarette delight, because no cigarette maker can copy the Chesterfield blend an entirely new combination of tobaccos and the biggest discovery in cigarette blending in 20 years. , "Give me a package of those cigarettes that SATISFY!" ma 3 El IV 13 I Like every 9 W. K. Kellogg i , - package, IS '-,rwJ Krumblesls Ij f To(fi1W,-3X protected by MW perfect seal. , iMW thu.Von.iur. EfiS3UU33lt "A Shine in ttf ' HI AHwv,.i I'ijl Every Drop" tU.Z.f '.ti, Afku lo- Ku-. IM'EUl im.VX At TOC'AU CO. TIM 12 C.VHI). Leave Medford for Ashland, Talent and Phoenix dally, except Sunday, at S.00 a. m., 1:00, 2:00, 4:00 and 5:15 p. m. Also on Saturday at 10:15 p. in. Sundays leave nt 10: "0 a. m. and 2:110, 5:00 and 9:30 p. m. Leave Ashland for Medford daily, except Sunday, at 9:00 a. m., 1:00, 2:00, -4:00 and 5:15 p. m. Also on Satur day nights at 6:!t'. Sundays leave Ashland at :00 a. m. and 1:00, 0:00 I mid 10. ;o p. in. Phantom Powder Your skin may not be naturally beautiful, but ono application of Phantom Powder will so conceal the defects It will appear beautifully natural. Kspecially good tor the neck, arras( hands and for evening make up. Free Demonstration by calling at i MAEINELLO HAIE SHOP (inniell-liirc) I'.nildini;. ' .