PA0T5 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.
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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;. ' .