Omaha daily bee., 1908-12-28
Objects to Issuance of Water Works
Bonds at This Time.
ALSO OPPOSES TEST OF LEGALITY
COunciImen who Have Been Urging
Municipal Plant Expect to Pass
Resolutions over Mayors
Veto.

water works plant ADOPTED at a SESSION OA
the council last Monday night.
In his communication returning without
his official signature the resolution pro-
vidlng for the issuing OF the bonds at 5
per cent interest In fifteen series Mayor
Maloney will give the following reasons
for his disapproval:
The resolution provides that the council
shall have engraved 800 bonds to be after
ward disposed OF by the city treasurer ana
finance committee, and the
expenditure Of such sum as shall be neces-
sary to procure the engraved bonds at this
time.
The cost OF engraving these bonds is no
small iteIn OF expense and should not De
contracted at this time, because the bonds
can never be used until the electors nave
approved the contract for the building OF
the water works, and can never DO OF any
use printed in the form suggested by the
resolution II Il should be found that there
Is an Illegally In the proceedings Whlch
might affect the validity OF tie bonds. Be
sides by another resolution adopted by your
body you have proposed TO test the validity
of these bonds, and should you insist upon
that course, then IL would be unwlse 10
incur the expense OF engraving these ponds
until that question is settled.
l do not favor that clause OF the resolu-
ton which permits the sale OF the BONDS
in the manner indicated, for II It means
that the finance committee shall have the
privilege of placing a small fraction OF the
bonds with one person or organization,
and a small fraction with another person
or organization, provided that they take
them at their face value, l do not believe
that It would be for the best interests OF
the city, as / think the sale of the entire
issue would be more advantageous because
they should in that way command a bet
ter price. II we assume that the bonds
are valid, then at 8 per cent interest II
should be a gilt-edged investment and ought
to bring a good premium inasmuch as the
ordinary rate paid for deposits by the banks
is but 3 per cent.
Issue May BE Too Large.
-. A--Na 80 ItGaaaa
OF such an amount Of bonds nor provide
so high a rate Of interest, IL 1t is not nee
essary. We have been Informed by a spe-
cial engineer, Mr.. Bryan, employed by the
city. that the proposed plant could be
built for a great deal less money tnan
$GOO,O The committee that employed Mr..
Bryan and published his report is no doubt
satisfied with the accuracy Of his claim,
and, assuming that to be true, 1t would De
very unwise to issue bonds for more than
an amount actually necessary. believe
that the plan for the work should be ma
tured, bids advertised for, the contract
made, and the same approved by ths n eleGi
be sold. The presence in the treasurers
office OF the engraved bonds would ada
nothing by way of melting confidence. IN
this connection would also suggest that II
II would not interfere with the sale OF the
bonds, It might be well to make the iaser
maturity at the option of the city so thaI
in the event that there was money on hand
with which some of the bonds could De palo
off, the same might be applied.
reference to this particular resolution Is
provisions are TO be carried out We will
be required to pay $4,000 interest annually
upon the bonds for a Reri4 3Ss Of rr exe years por-
ton OF which while the plant Is under con-
struction we will be under obligation 70
pay the same either from taxes imposed
or by using the principal Tor that purpose,
in either event the burden must rest OIL
rectly or indirectly upon the taxpayers. An
| examination of the method OF payment
provided by the resolution Will disclose
that under the plan proposed we must pay
at least 0,0o0 interest for the SU0,OO
which we expect TO borrow, and II we were
compelled to pay, three years interest from
the principal itself we would then be called
upon to pay that amount Of interest for
the use OF $4,000 or $4,000 with the esti-
mated premium Of $4,000. And II we were
unable 10 meet the payments promptly
then the amount Of interest would be still
further increased, 80 that the necessity of
borrowing only so much as she'll be abso-
lustely needed and at as low a rate as
possible IL quite apparent. IL does not
justify any Ill considered action on nus
plant will eventually pay all of these
charges because that means that the con-
would otherwise be exacted. Because the
law permits the city to pay 5 per cent upon
good reason for doing so. Even our local
banks get for investment much more than
, the entire sum that we need at 3 per cent,
a rate when our reliability Is much more
lasting? And believe that we should be
) b baht T Of tSe plant liant before SUn' we underts axe
1 any expense with reference 10 these bonds.
/ believe it will cause no greater delay, than
the method proposed and be more IN Keep
ling with sound business principles.
' BY making these objections l wish 1t to
A tention is not 10 put any obstacle in the
, way OF proceeding with the building of the
plant, except what good business methods
and judgment suggest. The matter Is OF
such weighty Importance that we cannot
5 give 1t too much consideration, and now,
e ever. is the time that Il should have
that consideration. I would also suggest
IN this connection that when there are
r matters of Importance coming up before a
e committee Of the council and upon which
the mayor Is expected TO pass it would be
well to invite the latter TO be present dur.
4 thus enable hin to learn and consider the
reasons which lead to its report In that
standing Of the ideas OF the COMMITTEES
with reference TO the proposed action.
objects 10 Law Suit.
e In declining 10 sign the resolution au-
o thorizing the expenditure OF 500 TO test
: the legality of this bond issue Mayor Ma
loney Will give the following reasons for
= his action:
This resolution contemplates the expondi-
amount for costs. not estimated. for the
purpose or commencing a law suit which
4 Will involve the question OF the validity
- A
Z Both the city solicitor and the committee
on water have on numerous occasions as
S sured US OF the legality OF these bonds and
z no reason Is suggested for doubling their
! Judgment in the matter. This expense is
= therefore unwarranted at this time. Be
sides such things are always investigated
d by those proposing to purchase the bonds
at their own expense.
You intend b. this resolution 10 com
e mence a law suit and pay for the services
n of the attorneys representing both sides
: OF the case. and II does not seem possible
that a lawyer will, In good faith, liugate
a question involving a $4,000 transaction
for a fee OF 500 and that would be only
an opening wedge for future appropria.
tons to carry on the law suit.
II this city Is to start this law suit by
8 an arrangement with some individual
where and when Is Il TO end? And II once
! started we must postpone advertising for
bids and the making of a contract for
the building OF the water works until the
law suit Is finally ended. II also seems
10 me that litigation OF that character "a
OF but little value, as / have never known
q an instance where two persons could gel
together and make an agreement which
would be binding upon another person whC
has no part In H. l may not know whal
the law Is IN a case OF that kind. bul
common sense leads me TO believe that suci
.aAH1