Los Angeles herald., 1892-02-16

would not exceed say per cent interest
on $4,000,000, operating expenses and
renewals, repairs and betterments. and
that after ten years there should be
created sinking fund amounting to
e-fortieth of the debt, or in any case
such an amount as would extinguish the
entire debt at the expiration Of the
lease.
1t might be we'll to provide that the
city should receive the sinking fund and
pay off the bonds at maturity. if this
can be done legally. The amounts to
be raised during the first ten years
would be as follows:
FIRST YEAR.
Interest on account at per cent on
$3,OUO,OOO .......... ................ SlSOOOO
Operating expenses. s..................... 100000
s2so,ooo
Revenues. after deducting present
rates, an average Of Is per cent. $3.50 900
To be raised by taxation for sprinkling
and fire protection, mill rate on
$OO,OOU,UUO. .-...............-.... oU OOU
s2sO,OOO
SECOND YEAR EXPENDITURE.
Interest on s3,50O,O0O at per cent. $4,000
Operation. :. Observation-Disclosures. 100000
$40. 900
REVENUES.
Increased consumption being 10 per
cent over volume at beginning of .. 900
Water sales at rates Of first year. gem. 253,O00
Increase on taxable values in two
Tax Of one mill on $50 900 600. 10000
$4,000
THIRD YEAR
Revenues, including increased con-
Tax of Il mill on s65, ,0OO,O0 ......... 32,5OO
1856 $500
EXPENDITURES.
Interest on $4,000 900, per cent. :. .s24O, 900
Operation. ........ ................ 100000
s34o, 900
This would leave a margin of SIS, 900
at the end of the third year, and after
that date the increase of consumption
would admit of still further reduction
of the rates each year, until the tenth
year, when the accumulation OF the
sinking fund would have to begin, and
rates would have to remain stationary
for two years, after which time reduc-
tion in rates, equal to the increase in
consumption, could take place, for the
reason that at no time during the entire
fifty years could the expenditure de-
mand ever exceed $450,000.
At the end of ten years, when the
first 100000 of the sinking fund shall
have been paid into the treasury, then
the company could be released from the
$100, 900 bond for the fulfllmept of all
their agreements.
have not noticed that any one has
taken into account matter which our
expert covered in his report against any
attempt at building works in competi-
ton with existing ones. even if we could
do so legally, and the same objections
would apply to water works built by the
city.
The existing company has its own
water, its own pipes, and its connec-
tions are made with 5000 houses, and
the Citizens company has 5000 more,
making about IL, 900 connections. There
is no law to make them take up their
pipes, and they would always undersell
the competing company. The existing
now owe but 100000, and
could soon pay that out OF earnings.
With no debt, they could run and
make but trihe over operating expenses
until they would ruin the other COM
pany. If the city was in competition
with them, they could reduce their
rates to operating expenses, and thus
the taxpayers would have to pay inter-
est and principal of bonded debt which
would be thrown away, for the city
could get only the business of the con-
nections hereafter to be made.
The property owners would not change
to the new supply at the same rates, be-
cause they would lose not only the $12
paid for connections they now have, but
would have to pay for new ones, which
if put in at cost could not be made for
less than SO each.
The $4,000 connections have cost the
owners $144,0 900, which would
be q dead loss, and new connections
would amount to $10S,000 more, or
total loss to the people OF $252, 600.
These are part of the reasons why no
capitalist would risk his money in any
scheme which does not include existing
water companies.
Another point is the repair of streets,
which is not taken into account by the
city engineer or any one else. The cost
of replacing the streets would be not
less than 1927 900, which would fall
upon the competing company; but if
the city built the works, the taxpayers
or water consumers would have it to
pay. Add this to the loss by connec-
tions and the total amounts to nearly
81 500 900. Add this to the cost of the
', an, ,1lont o1raoIx rysvop at cR DO 000