Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-03-21
BOND DEBTS CAUSE
HIGH WATER RATES
IN OTHER CITIES
Inquiries Show Some of 27
Cited by D. C. Heads Have
Not Paid for Systems.
SIX OF SEVEN QUERIED
HAVE TO PAY INTEREST
Plant Here Out of Debt and City
Has $9s,54O,oOo Equity,
Dram Reveals.

number of instances due to sinking
funds created to cover bonded indebted
ness, according to word received today
from some of these municipalities in re-
spouse to inquiries by The Star.
Since the District has no bonded In
0ebtedneSS on its water system, the sur
vey showed that the rates in Washing
ton are more nearly comparable to those
In the % cities which, the Commits
sloners pointed out, average 81 per cent
ABOVE the rate here for domestic con-
sumers. Bond issues and other methods
OF financing the water plants in these
II cities were not used as factors In the
comparative analysis of the Commits
sioners in support of their recon-
mendat1on for higher rates.
The Star queried of the 81 cities for
statements explaining the factors in
volved in the fixing of water rates.
merely to get cross-section of the
financial structures of other municipal
water plants. These were Baltimore,
Kansas City, Cincinnati, Providence.
Mass.
Six Have Bonded Debts.
The replies showed that six of these
citles-B Baltimore, Kansas City. Cincin-
nau, Providence, Los Angeles and
Akron-have bonded indebtedness on
their water systems, and their rates are
fixed to raise sufficient revenue to retire
bonds and pay interest and provide for
maintenance and operation. From
Springfield, however, came information
that Its present water tax is not actu-
ally based upon interest on bonded in
debtedness or the cost of extensions, as
the rates have been in effect since 1886,
Wnen the city purchased the water
works from private interests.
washington, however, has paid for its
water system, and has an equity in it.
according to Capt. Hugh Grab, Assist
ant Engineer Commissioner, amounting
to SIS, $4,000. As result water rates
here are lower than in those cities
which have not paid for their water
systems, primarily because there is no
bonded Indebtedness on plant. The in
crease, which the Commissioners urged
to be put into effect in the comink fiscal
year, he said, is designed to provide
| needed improvements in the system
which cannot be financed on the income
from current rates.
Assuming that the District had a
bonded indebtedness on ifs water svs-
tenn of $23.540,000, the amount of its
investment, Capt. Dram figured that, in
stead OF the average 26 per cent in
crease proposed for the new fiscal year,
water rates would have to be raised
about rs per cent in order to retire the
bonds pay the interest on them at the
rate of per cent year and carry out
the proposed program of improvements.
In other words, the present $685. do
nestle rate for metered service would
have to be raised to SLID instead of
$S.75, as planned under the new Sched-
ule, and the fiat rate unmetered serv-
ice rate would jump from sos to
$l2.37, instead of $685.. Average rates
paid by Westinghouse would be
higher still. The average water user
pays more than the minimum rates
cited above
Cincinnati Considers Cutting Rate.
Cincinnati, which is considering q
reduction in its current water rates,
according to j. A. Hitler, superintend-
end of water works, charges IL cents
a hundred cubic feet for water and
raises sufficient revenues to cover opera
ton and maintenance, carry interest
and sinking fund and provide for serv-
Ice extensions. The current District
metered rate is 8.48 cents for 100 cubic
feet, and the proposed increase will
raise it to 11.66 cents, or nearly equal
the Cincinnati rate, though the District
has no bonded indebtedness as a drain
on its income from the sale of water.
With bonded Indebtedness WASH
ington'S rates, however, would stiIl be
lower than those in the four remaining
cities which The Star investiga-
ton showed are paying for their water
systems, although there would not be
the marked difference cited in the COM
parsons made by the Commissioners.
Providence, according to Frank E.
Waterman, commissioner of public
works, has sliding scale which re-
duces with increased consumption, so
as to benefit commercial and industrial
interests. The rate paid by most do
mestic consumers, however, is 18 cents
for 100 cubic feet. The rate covers
interest on bonded indebtedness, in
addition to the ALLEGATION of $4,000
annually to an extension and de-
probation fund This rate, by the way,
is one of the highest in the country
for publicly owned plants.
In Akron II. Lester Newhan Of the
water work department said the ma
and use less than the allowable guam
tity This rate, he explained, covers
interest, payments to sinking fund, OPP
Grafton and maintenance. It has been
in effect since 1921 and no change is
contemplated.
BaItimore's Rate High.
Baltimore's domestic rate is 1874 cents
for 100 cubic feet. which e. q. Rost,
water engineer, said suStains the water
department and cares for interest and
sinking fund charges. The rate has
been stationary for the last six years,
and Rost declared there is no immedi-
ate prospect Of a change. Baltimore's
rate is another exceptionally high rate.
Kansas City also has a sliding scale,
which reduces from II cents for 100
cubic feet a month to a minimum Of 6
cents for 100 cubic feet month for all
over 100000 cubic feet. The water de-
partment's sinking fund, however, is
created by direct taxation against all
property, although the interest on in
debtedness is paid from revenue from
the sale of water. Plant extension Is
also covered by bond issues Kansas
City is now considering a readjustment
of rates.
Don j. Kinsey of the Department Of
Water and Power of Los Angeles re-
ported that the maximum domestic
rates there are Is cents per 100 cubic
feet, which cover operating and MAIN
tenance expense in addition to interest
and amortization of bonds and a noTni-
nal amount for betterments Extensions
in service, he SAID, are financed BY
bonds. This rate has been in effect
since 1925.
The table presented by the Com
missionerS names seven citieS--NeW
York City, Detroit, Cleveland, Mime
apolis. Milwaukee. st. Paul and Grand