Los Angeles herald., 1910-11-15
BOND MESSAGE To
POINT OUT DANGER
Mayor Sums up Objections to the
Contract in Communication
to the Council
SMALL ADVANTAGE TO CITY
Deal Supplies Ready Money for
Aqueduct Work, but Ties up
Other Funds

Expressing his disapproval of the
conditions in the contract proposed
for the purchase of Owens river bonds
by the New York bond syndicate,
Mayor Alexander will send message
to the council today. In his message
the mayor points out the danger of
tying up the sinking fund and other
features of the proposed contract and
shows that the only advantage the
city will gain will be the advancement
of money for the siphons. The mayor
says:
To the Honorable the City Council:
Gentlemen-In reference to the
agreement which your honorable
body has instructed the city attor-
ney to prepare, modifying the pres
ent agreement between the city of
Los Angeles and the bond syndi-
cate, Kountze Bros. and others, as
to the aqueduct scnds, I would re-
spectfully make the following
statement:
Under the present agreement we
would have:
November 2. 1910. on hand. .....s $4,000
December 1 we will have available
in sinking fund .............'.. 100000
There is now in water department
fund aqueduct moneys amount
We now have in sinking fund
$3.50 900 of aqueduct bonds. held
subject to option of the syndi-
cate, which option expires Feb
ruary l, 1911. so that under pres
ent agreement on February l we
will have SS50000 of free bonds
which can be put on the market
at once or. If the syndicate ex-
ercises it's option. we will have
in cash .................. So0,OOO
FEBRUARY /. from bond syndicate. s16, 900
Making a total Of 1856. 900
for use between now and April /,
1911.
WOULD TIE Up FUND
The proposed agreement would
tie up our sinking fund so that
no moneys coming into 1t after De-
cember 1, 1910, could be used by
the city, and it would extend the
option on the $850,000 of bonds now
in the sinking fund so we could
not use that until February l,
1913; so that under the proposed
agreement we would have:
December l In sinking fund. 100000
From water department fund. 125,O0C
From the syndicate at once..... 1.o2o,o0(
Making a total of..........s2,2os 2os. 90,
to last until April 1, 1911, or $780,
rangement.
Under the present agreement,
commencing April 1, 1911, we would
have:
From the bond syndicate per
month. ACKNOWLEDGEMENTS 100000
And the sinking fund accumulates
at a rate which would give US
per month about .,.,........... $4,000
Making per month after April is 456, 900
Under the proposed agreement
we would have, commencing April
1, 1911, $4,000 per month, which
would be $4,000 per month more
than under the present agreement.
But we must remember that the
$646, 600 saved between now and
April 1 under the present agree
ment would enable us to run for
twelve months at the same rate
provided for in the proposed
agreement. The syndicate further
agrees to furnish, as needed, funds
for the big steel siphons, which
will cost $1,25S, ,00O.>
NOT DEFINITE CONTRACT
Under the proposed agreement the
city must sacrifice the premiums
the syndicate has promised to pay
on the balance of the aqueduct
bonds, amounting to $4,000.
Inc pIOpOSSu dSISSIIleLIly Ike luo
present one, is not q definite con-
tract of purchase, but merely an
option The only advantage the
city would gain would be more
than offset by the sacrifice of the
$4,000 of premiums and by the
tying up of the sinking funds so
that we cannot use them either for
the aqueduct or for the power or
harbor' bonds.
I realize the importance of hav-
ing money on hand for the pur-
chase of the siphons. realize also
that money can be saved by hav-
ing funds sufficient to run the en-
terprise at full blast. And if the
syndicate desires more of our bonds
at this time, l believe it would be
advisable to let it take million or
more from the end of the option
at par. If such an arrangement
cannot be made, it merely means
that we must run along at the
present rate, 100000 or less per
month, and in that way save
enough to pay for the siphons by
the time they will be ready.
Respectfully submitted,
GEORGE ALEXANDER,
Ma Vor