The Idaho recorder. [volume] (Salmon City, Idaho) 1886-1927, 1916-12-29
PUBLIC ROAD FUNDS
IMPORTANT SAVINGS EFFECTED
BY ISSUING HIGHWAY BONDS
ON DEFERRED SERIAL RETIRE.
MENT PLAN.

ON DEFERRED SERIAL RETIRE
MENT PLAN.
People of county intending 10
raise funds for highway improvement
would do we'll to consider the advan-
tages to them of the deferred serial
plan over the ordinary sinking-fund
plan of retiring long-term bonds. I'm
der the serial plan certain amount
of bonds Is retired each year and the
bonds so retired cease to be an in,
terest charge on the community. I'M
der the snking-fund plan none of the
bonds is retireable until the end OF
a definite period, and the entire sum
raised bears interest for the entire
life of the bond. The county, there |
fore, pays interest on the money sol
borrowed and in addition sets aside
each year as sinking fund an
| amount sufficient to retire all the
bonds when they become due. The
sinking fund is deposited with banks
and earns some interest This inter
est ordinarily is only per cent,
whereas the county has to pay or s
per cent to its bondholders. The ser
ial plan is a much cheaper method of
raising money for road Improvement,
even when the sinking fund earn in
terest as high as per cent. and in
the opinion of the road specialists of
the department should be utilized
whenever it is possible to market
serial bonds.
In a study of the road bond issues
: of several counties, ]. E. Pennybacker
and NJ o. Eldridge. of the Public
Roads and Rural Engineering. found
: that the serial plan, if 1t had been
+ adopted by several counties. would
have saved the taxpayers in one coun
y ty 1854, ,269 in another county $SO7O2
5 and in third county $65,S67 ovel
o the other plan with a sinking fund
r bearing interest at per cent. Will
sinking fund earning per cent, thu
savings would have run as high al
These conclusions appear in the re
Gently published department bulletiI
1898, Economic Surveys OF Count!
Highway Improvement.
T The following concrete example
r are taken from this bulletin:
In Dallas county, Ala, the bond
amounted to $35O,O0O, payable in 3
" years at per cent. Assuming tn
lie sinking fund to bear 3 per cent intel
a est, as set forth in the chapter o
Ir- Dallas county, the total financial bu
as den to the county for interest and tn
IA liquidation of the bonds during tn
ce 3O.year period will be S745.702.S0. A
IL equal amount of bonds at the sam
he rate of interest, if issued under III
ay deferred serial bond method, with n
ial first bonds payable years from Il
on date of issuance and an equal amom
ct payable each year thereafter for
at wears. would cost the county at Il
ms end of the 80 years $665,Oo0, or
ac- difference, as compared with the sin
or ing fund method, of SS0.702. II p
cent could be realized on the sinkil
lay fund instead of per cent the savil
lar for the deferred serial plan over Z
sid sinking g-fund plan would still be 81
ira els
)dy "I.auderdale county, Miss, viii
Dis issued $500, 900 OF and 51a per &C
full bonds. adopted the deferred serl
all bond method, with a FIRST payne
lay, coming II years from the date Of
un- sue and the last payment 25 yea
nat. If the county had issued the bonds
on the 5-25-year basis the cost wo'
have been S9O6.s75. as compared W
ent s972.232. or a difference Of S65,367
ost- Even in the case OF small isi
we'd the advantage Of the serial plan
star illustrated in Dinwiddie county.
orth This county issued $105.0 OF
; in G percent bonds, payable IN 30 YET
but the bonds are called after
mail years. Assuming that they will
,ost- retired al the end OF 25 years on
TO sinking.fund plan, with interest
light sinking fund at per cent, the q
Iuar cost would be S21s,031. whereas
rail they had adopted the 6-25-year 80
for method The cost would be 1901,
was OF A difference of &l6,93l
two
. at ACTIVITY AGAIN AT OLD