The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-04-12


total interest paid on the bonds
would be s16,000,O00.
This conclusion presupposes that
the entire 100000 of bonds will
fall due at the end of either the 20
year or 40year period. However. if
We assume that under the 20-year
plan the city retired after the sec
ond year an equal yearly amount
Of bonds, obligations in the pIinci-
pal amount Of approximately S444,-
444 automatically would be eX-
plunged annually. BY this method
the city would be canceling each
year S444 444 of bonds and, at the
same time, saving the interest
which would be payable on the OBJ
legations.
Under the proposal to have the
bonds mature in 40 years an annual
retirement sufficient to eliminate
the issue at maturity the city would
cancel only $21O,526 principal
amount of bonds each year after
the second year. The saving in in
tereSt, naturally, would be only half
that which would be realized under
the 20-year plan.
Thus, it is seen that this single
change in the resolution, whether
the bonds are to be a 4, Az or 5 per
cent issue, means that the total
money to be paid out on the obi
cations will be raised 100 per cent.
The second important change in
rocO1Y,tiO,1 ,tIoOf-izi~,r tho offer
ing of bonds pertains to the amount
of money which must be set aside
by the city to take care of principal
and interest in the event that the
purchaser or purchasers of the issue
specify that the bonds thus taken
will be serial bonds.
The original resolution provided
'Nat the city will pay into spe-
~lal account out of the net revenues
derived from the operation of said
gas system, sum equal to the total
annual interest on the entire bond
issue, plus $4,000, and the serial
retirements for each year shall be
fixed at an amount equal to the
difference between the sum thus to
be paid and the amount necessary
to pay the interest on the bonds
then outstanding
Clause as Amended
Under the new resolution this
clause has been amended so that the
city agrees to pay $450,000 each
year after the first two years from
the date of said bonds, out of the
revenues from the operation of the
gas plant for both principal and in
terest on the bonds. This fund will
be available in such proportions as
the bidder may specify.
Thus, the city-owned gas plant
two years after organization will as
sumo fixed charge of $450000 an
nually, or larger than that of the
present Citizens Gas Co. without
consideration to the lease with the
Indianapolis Gas Co.
In the event that the winning
syndicate specifies that the pro-
posed bonds are not to be serial
bonds, but straight maturity bonds
the city agrees to pay not less than
$4,000 and not more than 100000
each year after the first two years
into special sinking fund to be
specially applied to the redemption
and payment on or before the ma
turity of the bonds.
Equals Serial Bond Fund
This would work out in such a
manner that the money to be set
aside would be about equivalent to
the $450,000 annual requirement
necessary under serial bond provi-
SionS. For instance, annual inter-
est on the 100000 issue at per
cent would demand $400,O0O The
minimum of $4,000 could then be
applied to the sinking fund for re-
tirement of outstanding bonds.
Years later when sufficient bonds
have been retired and interest no
longer has to be paid on them, the
city could step up the sinking fund
account gradually to the maximum
of 100000
Directors of the Department of
Public Utilities declared that the
changes are intended to facilitate
the sale of the issue and make the
bonds more attractive.
AS a result of the changes the
city readvertised for bids today and
the date when bids will be received
at the city controllers Office has
been changed from April 25 to April
90.