NEW LOAN OF £70,000

Timaru Herald, Volume CLV, Issue 22791, 15 January 1944, Page 4

NEW LOAN OF £70,000

Borough Of Timaru

Proposal For Street Improvements

A report on the proposed street improvements loan of £70,090 for the Borough of Timaru bv the Town Clerk (Mr E. A. S. Killick) was referred to next Monday night’s meeting of the Borough Council by the Finance Committee this Week. “It has been felt that possibly the Loans Board might object to a Street Sealing Loan for a longer term than 12 years and the loan proposal I worked out previously was for a term of 16 years, but the loan would be raised over a period of five years. £5OOO a year being raised in the first two years and £20,000 a year during the next three years,” stated Mr Killick. “Thus, when the loan is fully raised there would be only 12 years before it would be paid off. I sent a draft of my proposals to Mr Miller, the secretary of the Loans Board and he is of opinion that the Loans Board would require repayment within 12 years from 1946—i.e. mid-way in the period over which the loan is raised. I have, therefore, redrafted the proposals on these lines—i.e. a loan of 14 years from the date the first instalment is raised, or 10 years from the date the last instalment is raised. Burden on Rates "It is necessary to take into consideration the position of existing loans and their burden on the rates. It is the burden on the rates for the next few years that is our problem, if we desire to avoid adding materially thereto. In 1949 we could raise a substantial loan, the annual payment for interest and sinking fund on which would not increase our rates, but until then difficulties present themselves.” Presenting a table showing the proposed annual payment of interest and capital repayment on a loan of 14 years with interest at 31 per cent, Mr Killick added: "Notw-ithstanding the raising of the proposed loan there should be practically no increase in the annual burden on the rates. In 10 years’ time, or even earlier, we shall also be in a position to raise substantial loans, should the necessity arise, without in any way increasing our rating burden.” Any Increase Explained “The Library Loan if raised in. say, four years’ time would not increase the rates, if the £l5OO (.22d burden on rates) at present spent out of revenue, on road sealing and thus saved by reason of the loan is not spent on other purposes,” Mr Killick explained. “However, after consulting the Borough Engineer, I am of opinion that it would not be wise to count on any saving in the Works Items of the District Fund Account, except possibly in the first year or two. but this is a matter upon which he no doubt will report. Should it be decided, however, that no consequent reduction is to be made in the Works Department’s annual expenditure, as a result of the loan, it should be pointed out to the ratepayers, when the loan proposals are placed before them that the proposals (including the library) do not involve any Increase in the rates, but that about Id increase in the rates can be expected as a result of increased activities in the Borough Engineer’s Department and if these increased activities are approved, then the above mentioned increase would occur whether the loan polls are carried, or not. “It should be pointed out.” Mr Killick concluded, “that if the loan is not proceeded with, it would take more than 40 years at our present rate of expenditure out of revenue to undertake the work for which it is proposed to raise the loan.”