River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1906-03-01
City to Boy Water Powers.


with reference to the power plants
it uses to furnish electricity and
supply the water service. We as
sumo that every one understands
that situation.
The city uses the water powers
under lease, paying a rental of
81 500 year on the Junction Falls
plant and $500 year on the Powell
Falls plant, or $1,000 year in the
aggregate. This is equivalent to
an annual interest of 10 per cent on
the cost of the plants. The city
council proposes that the city buy
these plants, selling bonds to Sc
cure the amount for such purchase.
If the city buys, it will be credited
for the amount paid in interest
above six per cent per annum on the
SIG, 900 which the plants cost the
promoters-that is, of the 81 900
in annual rental the city be credit
ed back with $3.50 on each years
rent.
The leases run for Is years. If
the city uses the plants under the
leases for that length of time and
pays the yearly rental of $1,000, at
the end of the Is years it will have
paid $28,500 and still not own them.
Should it buy at the end of Is years
it would be credited back with two
fifths of that sum-$11 400, but if it
fails to buy it will lose that sum.
If the city is credited with the
amount paid in rental above the six
per cent interest there is due on the
two plants at this time $16,406.35.
The sum of $1,150 must be paid
this month. This, when paid, will
leave the sum of SIS, 256.35 due un-
der the option contract for pur-
chase. If the city is allowed until
June l to raise the money an addi-
tional interest of S305.12 must be
paid at that time, SO that the
amount necessary to raise to effect a
transfer of ownership will be
SIS, 561.47, but the $561.47 can be
paid out of the general fund so that
it will be necessary to raise by
bonding but $4,000.
1t will be seen by the proceedings
of the city council, published in an
other column, that the proposal is
to submit the question of bonding
to vote on April 3. The amount
of bonds is SIS 900, which it is pro-
posed shall all be paid in fifteen
years, the city paying $1,000 year.
1t is neasure. of public policy
for the city to buy the plants. The
situation is anomalous. We own
all the appliances for conducting
the water and light service. but do
not own the power upon which their
operation depends. There is cap
ital of SIS, 900 invested in this water
and lighting property, the annual
income from which, at low service
rates, is $4,000 (including cost of
operating the street lights.)
By investing $4,000 the city may
own the whole property. 1t is much
better that it should have the own
ership of all the property it is oblig-
ed t. make use of for light and wa
ter service. And while it is meas
ure of public policy that the owner
ship should not be divided, it is a
matter of economy that the owner
ship should inhere in the city, as a
saving may be effected of at least
$500 year by absolute ownership.
1t was a great convenience to US
that the plants could be secured for
use by rental under such favorable
conditions, and the rental is not ex-
cessive as compared with that of
other private property, but the city
can save by purchasing. The rent
paid is 10 per cent on the capital
expended in the purchase and de-
velopment of the plants. If the city
does not purchase the property it
is compelled to continue the pay
ment of this 10 per cent interest for
the balance of the unexpired lease
term and if it does not purchase at
the end of the term it will then lose
$11 400 which it may save by pur-
chasing. If the city buys these
plants it will save 6 per cent in in
terest while the bonds are matur-
ling, as the bonds can be foated at
4 per cent and the rental is on the
basis of 10 per cent. But if the city
buys it will be credited with all the
rent it has paid above per cent on
the money invested in the plants so
that it will have had the use of the
powers for the annual expenditure
! Of a c,1r,o eo11a1 TO 6 per cent of the