Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1922-05-04

day by the public utilities commits
sion authorizing the Kennebec Water
District to issue and to sell at not
less than the par value and accrued
interest bonds to the amount of $685.
900 bearing interest at the rate of
five per cent per annum and to be
callable at par within one year from
the date of issue, at the option OF the
district. The proceeds of the bonds
are to be used for the reimburse
ment of the treasury Of the corpora
ton. In addition, the kennebec
Water District is authorized to issue
and to sell at not less than % per
cent of the par value, and accrued
interest, bonds in the sum Of sss.00o
bearing interest at the rate OF five
per cent per annum, to be due and
payable on the first day of March,
1947. The proceeds of these bonds
are to be used for constructing,
building, extending and making addi-
tons and improvements to its pres
ent system, and the completion and
Improvement of its facilities. Any
unexpended portion of this amount.
not required for the purposes for
which the bonds are issued, is to be
retained in Il separate fund and re-
ported to the commission. The dis
count on the issue of bonds is to be
amortized over the period of the du-
ration of the bonds, and annually
each years portion of such discount
is to be deducted from the income in
accordance with the classification of
the public utilities commission.
1T was in evidence that since the
organization of the district it has
accumulated to and including
June 80, 1921, for the purposes of it's
sinking fund, a sum of money. which.
with the interest thereon. amounted
to $1S2,276.21," says the decision Of
the public utilities commission.
From this amount it had pur-
chased certain bonds and invested
in sinking fund investments in the
aggregate amount of $S4,15917. for
the same period, according to the
evidence submitted by the treasurer
Of the district" continues the deci-
sion.
This left a balance in the sinking
fund of s9S,117.04, which it now seeks
to re-establish.
Eve do not assume that the
trustees of the district would expect
to sell bonds in the amount of $685.
117.04 in the general market and
then to take the proceeds of such
bonds for the purchase of these
same bonds or other outstanding
bonds for retirement a a higher cost;
therefore in this instance we shall
authorize the issue of bonds for re-
endorsement of the treasury in the
amount of s98000, which said bonds
shall be sold at not less than par
and shall be callable within one year
at par, thus obviating the possibility
of any financial loss TO the district
by reason of such re reimbursement Of
the treasury under the statute.
1T is not the desire of the district
trustees to capitalize the expendi-
lures represented by the purchase of
the China Lake land and by the
building of the reservoir any further
than is necessary for the replenish-
ment Of the sinking fund which we
Authorize. and to pay the so called
floating Indebtedness represented by
promissory notes of the district.
Some of these notes were issued
in renewal of preceding notes. but
that is not material to our study
here for the reason we have, in each
instance, specified the consideration
70 n
gard any of these notes as proper
subjects of capitalization either I'M
der the provisions of the charter of
the district, or under Chapter SIS,
Section 81, as amended by Chapter
l28, Public Laws of 1919. The note
for $4,000 is secured by a pledge of
the Liberty Bonds for the purchase
of which it was originally issued.
Current expenses are to be pro-
vided from the rates chargeable 10
the districts customers. The dis
count on bonds is, under the commits
sion's orders, amortized over the pc
Rod of time for which the bonds are
issued.
The Liberty Loan Bonds are with
in the class of bonds for the pur-
oHe'SS VI WHICH inc sinking una
may properly be applied, but we are
not aware of any authority by which
the district may issue its promissory
notes and with the proceeds purchase
them and then capitalize such pur-
chase by bond issue. Such a pro-
cecding would result in an issue Of
bonds for the purchase of other
bonds-an absurd, unnecessary and
unwise circle. Corporations Of this
kind should proceed with strict ad-
herence to the limitations estab-
lished by the law from which they
derive their powers"