PETONE'S LOANS.

Dominion, Volume 3, Issue 824, 24 May 1910, Page 4

PETONE'S LOANS.

SINKING FUNDS. THE CONSOLIDATION SCHEME. Tho question of sinking funds on borough loans was again befoTe the retone Borough Council at its meeting last night, when tho town clerk presented a tabular return giving particulars of al the oouncil's loans. In summarising the position, the town clerk said that the total sum, as shown in the balance-sheet, with subsequent drawings, was ,£102,i:i5 Is. 9d. Of this sum .£12,835 Is. &1. was Government inscribed stock, on which interest and sinking fund moneys were payable, and had. been paid half-yearly. Of the balance, X 25,500 had to be repaid in February next; the accumulated sinking fund_in -connection with these loan 9 was .£1217 os. Sd. The short periods for which they were issued—eight and ten years— did not allow time for a larger accrued fund, and practically the whole amount would require to form part of the loan consolidation scheme now to be undertaken. There was a further amount of •1'M,500 issued, witli tho option of redeeming the same in live years from date of issue. The interest paid on these loans was the highest allowed by law, the short period given and the high interest paid placed tho amount in the light of a temporary loan, and councillei's would see by the Tetnrn that an amount of ,£4SO7 19s. 7d. was available towards reducing tho amount. There was an amount of -£1000 which tho council had the option of paying off in February next This also was a 5 per cent loan. It was one of the early loans for which no sinking fund had been provided. It would repay the council to include this amount in any consolidation scheme proposed. The balance was .£ 15,600, being recent loans for which the council were asked ■to find sinking funds for the first time this year. The Mayor's Proposals. The Mayor moved:— "That copies of tie .return of loans and sinking funds, as supplied by the town clerk, be typed and forwarded to each councillor, and, further, that the information thus supplied be in future added to the tabulated list of loans which appears in the council's annual balance-sheet." The Mayor weot on to say that the balance-sheets did not give sufficiently full information to enable the council as a whole to grasp tho actual position of each loan account. He would also, at the next meeting, ask the council to consider the advisability of consolidating the whole of tho gasworks loans. The first was .£BSOO at 4 per cent., and there was no sinking fund in connection with it. In regard to the others, sinking funds had been arranged, and had been provided for to some extent. The gasworks loans totalled <£26,500, but that amount could be reduced by. the accumulated sinking fund and the receipts from the Hutt Borough Council for sal© of plant, these two items amounting to .£5159, and bringing the capital cost of the works down to <£21,041. It might also be necessary to consider tho question of raising money to build an additional gasholder. This had been under the consideration of the council on previous occasions, and he believed that within the next eighteen months, it would become an urgent matter. He would suggest that in considering the consolidation of the gasworks loans—which could readily be done next February, and for which the council had ample time to make tho necessary arrangements—they should also consider this question of obtaining ah additional gasholder. Consolidation. The Mayor further suggested for consideration at the next meeting the consolidation of the following loans Drainage and street improvement loans raised in 189G, totalling ifiKWO, on which there was no sinking fund; a later street improvement loan of ,£7090, on which .£575 had been paid by way of sinking fund; Jlutt Bridge loau, ,£500; Hutt Itoad loan, ,£1000; total, .£12,500. This could be readily consolidated at tho same time as the gasworks loans. In regard to the last-mentioned group of loans, it was quite possible that they might 1)0 able jto arrange with the State Guaranteed Advances Board, but in view of the attitude taken up by the Prime Minister, it would bo hopeless to expect the board to deal with the gasworks loans. The motion was carried unanimously.

Information Wanted. The Mayor further moved;—

'That the town clerk prepare a precis of all leases, agreements, and contracts entered into by the council other than those connected with loans."

In moving this, Mr. MT3wan said he had looked carefully into the matter. The object was to put tho council as a body in the possession of detailed information which it did not now possess. He thought the time had arrived when the old methods that had been in vogue would have to be improved. It was too late in tho day now to expect such information to rest with one man. The council as a whole 'should have ready access to information of this kind, without having .to wade through a pile of documents. He had excluded loan matters from the motion because that information had now been supplied. ■ _ The motion was seconded by Councillor Young and carried unanimously.

The Recreation Ground Loan. Councillor List remarked that, if the councillors had known the exact stato of affairs in regard to tho various loans, things would have been in a different position; The Mayor stated that on the recreation ground loan of .£4IOO tho council had had to provide a sinking fund. It did seem just a littlo bit absurd to have to find a sinking fuud for a loan like that, seeing that the property was worth .£20,000 to ,£30,000, and would increase in value as the years wont by. However, this had been provided for and in August next the first payment would bo due. The loan was issued in debentures of ,£loo,' and when the accumulated sinking fund had reached that sum it was handed, say, -to the A.M.P., and a debenture was received back. A councillor: Will that process extinguish the loan? s The Mayor: Not in the time. It may comc to 25 per cent, or 30 per cent. In the case of nearly all the loans, the sinking funds will not wipe them out within the time fiacd, except as regards the Government inscribed stock. No Fear of the Bailiffs. The Mayor concluded with the remark that councillors would see that he was justified in saying at tho last meeting that there was no cause for alarm. Councillor Jones: Then there's no chance of the bailiffs coming in? ■ Tho Mayor: Certainly not! I quite agreo that there should have been sinking funds, aud somebody is to blame. But take the four chief cities, and look at their sinking funds, as shown in tho Municipal Year Book, and then tell mo if we are not better off thaii any of them. Councillor Young remarked that if they had provided the sinking funds, the rates would have had tq be raised. The Moyor: Or wo should have had less improvements. Councillor Young: We could not have done with less.