Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1897-04-26

these safeguards all the proceedings VIII
| be legal and the bonds a safe purchase.
All the questions presented IN your
case were involved In the erection ana
lease Of the city building in Augusta. 1t
became nv duty here to examine with
care every case in the United States IN
| yolving in the remotest degree the vanu-
| ity of such proceedings as your enapiing
act proposes. ! felt more tIiaii usual
| responsibility for / was passing upon a
question Of vital Importance TO my CITY.
j tried to decide tnem without bias or
prejudice.
/ was finally able to advise the building
CORPORATION and the city that the plan
proposed was legally safe. Our savings
banks are now buying the stock as fast
| as they can secure it. Your case pre-
sents the same questions me proposed
lease of your buildings to the city py the
commission, asauthorized by the enapihS
| act would not directly or indirectly vio-
| late the constitutional amendment as TO
Indebtedness nor be construed as an
evasion of it's terms.
| Every city has the undoubted right to
/ lease for municipal purposes, for year
| or for q term of years, rooms or IL
\ building, provided 1t pays no more than
IA reasonable rent therefor. A rental OF
4 per cent. upon the actual cost. with the
insurance. taxes and repairs, would be
upheld by the court as reasonable, mas
| much as that is the ordinary basis for
| lcasehold rentals between private per-
| sons.
| Such lease for term of years, the
| rent to be due annually and payable only
| after occupancy. would not create any
| debt or liability" except for one years
| rental. BY assessing each year. through
| the appropriation bill tax sulfclent TO
meet the years rental for the year to
come no debt or liability is created as
| contemplated by the constitution.
In some states the courts nave held
| that the total liability on such contracts
or leases is to be calculated by multiply
| ing the annual burden by the number or
years. and calling the sum so aseertained
| a present liability. But in most of the
states. and notably in Massachusetts,, the
| courts hold that when the lease or con-
| tract calls for a sum of money to be paid
annually among the other current ex-
penses of the town, the payments appro-
priated by the town and annually raised
| by taxation. no debt is incurred.
| The courts say that such a transaction
| is in effect a cash transaction, where the
payments are made only with the yearly
service, which determines the amount TO
| be paid; and that it is like the other or
binary expenses of the town, within the
limit of its annual current expenses.
| The great weight of authority throughout
| the country sustains the rule THAT towns
maye lease buildings for municipal pur
poses for a term of years at a reasonable
rental. to be annually paid out of taxes
previously assessed for that year.
The precise question has never been
| decided by the law court of this State,
| although Judge Foster held in a recent
case that such was the law. and no APP
peal was taken from his decision. The
city building in Augusta was built by
| corporation and leased to the city for 80
years. with an option of purchase at an
annual rental, payable out of the annual
taxes, of per cent upon the cost. the
| city agreeing to pay the insurance, taxes
and repairs.
Some of our largest taxpayers threat
| ened TO ask the court to issue an in
junction to prevent the execution of the
| lease. | advised the corporation and the
| city that inasmuch the lease was for
| a lawful purpose. the court had no power.
under decision in this State precisely
similar in principle, to issue an injunc-
| ton.
| If the lease in your case is properly
| each year to meet the annual rental.
| ingly advise investors to buy the bonds
| TO be issued by the commission AS the
| bondholders will have no claim on the
| city. under any circumstances, the validity
| OF the law interests them more than il
| does the city.
| Deciding the question from the stand
| point of the bondholder, who takes all
| the risks, | feel safe in advising you that
| the enabling act is constitutional. and
| that the city will have full power to
| lease for a term of years such building
| as the Incorporated commission may
| build under it's provisions.
| Respectfully submitted.
| II. NJ. HEATH.
| Augusta. Me.