The Skyland post. [volume] (West Jefferson, N.C.) 193?-1988, 1937-09-16
ASHE BOND LETTER

STATE OF NORTH CAROLINA
LOCAL GOVERNMENT
COMMISSION
Raleigh, N. c.
Sept. Is, 1887
Mr.. Ira T. Johnston,
County Attorney,
Ashe County,
Jefferson, North Carolina.
RE: ASHE COUNTY, NORTH
CAROLINA.
Dear Sir:
Replying to your letters of recent
date relative to the proposed plan
for refunding the indebtedness of
Ashe County.
The plan, as understand it, con-
templates the forgiveness of one
half of the amount of past due in
terest by the bond holders and the
funding of the remainder, adding
it to the principal amount. The
new bonds maturing in 1872, bear
interest at the rate of 800 for the
first ten years, 31h@o for the next
ten years, 400 for the next ten years
and $50 for the remaining five
years. The bonds to be callable, at
the option of the County, in whole
or in part, on any interest payment
date, the County having the privi-
lege of purchasing any of the bonds
in the open market at prices less
than par. The tax levy for the next
two or three years to provide only
for the payment of interest, there
after, the levy will be increased in
order to provide sinking fund for
the retirement of the principal of
the debt.
In 1888 there were g. counties
in the State which were in default
in the payment of principal or in
terest, or both. Today there are
only 26 counties in default, Is of
which have already proposed re-
financing plans which have been
accepted by majority of the Gre
ditors. In the settlement of the af-
fairs of these So counties our SER
vices have extended from advice to
the actual drafting of plans and con-
| tact;ng the bond holders in behalf
of the counties. This service which
we have been able to render to the
local government units in NORTH
Carolina has extended our expert
ence to almost every conceivable
| situation. No two have been eX-
actly the same but always there are
some extraordinary or unusual
conditions affecting the particular
unit involved.
There are certain features pecu-
liar to Ashe County and after a
further consideration of the pro-
posal which the present officials
are ready to make, am of the opin-
ion that it is as favorable as other
counties, in like circumstances, have
obtained as to time and interes:
rates. If the County can obtain this
settlement from it's creditors,
believe that it would be to the ad-
vantage of the County to accept it
In all of the other settlements which
have been made, not single one
has contemplated the reduction
of the principal amount of the debt
at the time of refunding. Where any
compromises we're then made they
have been in the forgiveness of past
due interest and a reduction of inter
est rates on the new bonds. In eff
feet, however, the principal of the
debt will be retired at a reduction
by reason of the privilege granted
the County, under terms which the
refunding bonds are issued, to pur-
chase any of the bonds at less than
oar. This is already being done by a
number of units which have refund
ed their Indebtedness and they are
/ purchasing the refunding bonds is
sued in some cases at prices lower
than the bonds were selling for be-
fore the refunding operation.
It has been our observation that
u, as long as local unit remains in an
unsettled condition with respect to
its default obligations and does not
secure settlement, just so long will
business conditions and real estate
values in such unit remain unsettl-
ed and unsatisfactory. A remark
able upturn in business conditions
and real estate values has invariab-
ly occurred after a unit has satisfac-
torily readjusted its Indebtedness
with its creditors. Without having
made a satisfactory settlement the