Evening star., 1938-08-18

property owned absolutely and used
in the utility business, which value
shall be book value less such reserve
for depreciation or retirement, a. the
company may have established. and
subject to the lien of such mortgage
or mortgages securing the total mort
gage debt;
8. The total amount of obligations
containing an unconditional promise
to pay interest thereon shall not ex-
ceed sixty per cent OF the total capi-
talization, which shall not exceed sixty
per cent of the total capitalization,
which shall include all stock and any
obligations not containing an uncon-
ditional promise to pay interest
thereon;
10. For a period Of five fiscal years
Immediately preceding the date Of in
vestment, net earnings shall have
averaged per year not less than one
and two third times the average an
nual interest charges on its out
standing obligations containing an
unconditional promise to pay inter-
est thereon. applicable to that period
and for the last fiscal year preceding
the date of investment, such net
earnings shall have been not less than
one and three-quarters times such
interest charges for that year.
B. As used in this section, the
words public utility obligations" shall
include and mean obligations which
meet the following requirements:
/. The obligations shall be:
(a) If issued by a qualified public
utility corporation supplying other
than telephone service, such obliga-
tions must be part Of an issue OF not
less than 100000;
(b) II issued by a qualified public
utility corporation supplying tele-
phone service, such obligations must
be part Of an issue OF not less than
$4,000 900.
2. Such obligations shall also be:
(a) Mortgage bonds secured by a
first or refunding mortgage upon
property owned and operated by the
corporation issuing, or assuming the,
or underlying mortgage bonds SINH
larly secured; Provided, That a mort
gage junior to such underlying mort
gage bonds provides for their refund
ing or retirement. The bonds under
such Junior mortgage shall comply
with the requirements OF this section,
and such underlying mortgage shall
be either closed mortgage or shall
remain open solely for the issuance
OF additional bonds which are to be
pledged under such junior mortgage;
I'D If such mortgage is refunding
mortgage, it must provide for the re-
tirement on or before the date of
maturity of all bonds secured by prior
liens on the property.
c. For the purposes of this section
l. Gross operating revenues and
expenses shall be. respectively, the
total amount earned from the opera
ton Of. and the total expenses of
maintaining and operating all prop
erty owned and operated by. or leased
and operated by, such corporations, as
determined by the system of accounts
prescribed by the public service COM
mission or other similar regulatory
body having jurisdictioA, or by the
Federal Communications Commission.
2. Net earnings shall be the balance
obtained by deducting from its gross
operating revenues. its operating and
maintenance expenses, taxes (other
than Federal and State income taxes)
rentals. miscellaneous charges. and
provisions for depreciation, renewals
and retirements Of the physical as
sets of the corporation, and by adding
to such balance its income from Sc
curities and miscellaneous sources,
but not, however, exceeding fifteen
per cent Of such balance.
3. ta) For a public utility COM
mission other than a corporation sup
plying telephone service. the annual
allowance for depreciation. mainte-
nance. renewals, and retirements,
shall equal at least one per cent Of
the gross book value of its properties
used in supplying water and two per
cent of such value of all other prop
erty in determining net earnings;
(b) For a public utility corpora
ton engaged in supplying telephone
service. the annual allowance for de-
probation and maintenance must
equal at least six per cent Of the gross
book value Of its tangible properties
used in the business Of supplying tele-
phone service in determining net
earnings.
D. Washington Railway and Elec-
tric Company, consolidated mortgage
four per cent bonds, due December /,
1851; Anacostia and Potomac River
Railroad Company, first mortgage
gold five per cent bonds, due April
l. 1949 (principal and interest of
which are guaranteed by the Wash
ington Railway and Electric Com
pany); Washington Gas Light Com
pany general mortgage five per cent
nifty year gold bonds due November
l, 1860, and The Georgetown Gas
Light Company first mortgage fifty
year five per cent gold bonds, due Au-
gust /. 1861. shall also constitute
legal investments for trust funds In
the District Of Columbia.
Section vi. Obligations Secured by
Mortgage or Deed of Trust on Real
Estate. Subject to the Following Pro-
visions:
A. At the date of recording Of any
such mortgage or deed Of trust, or at
the date Of the last extension or re-
newal of the obligation secured there
by, such mortgage or deed Of trust
shall meet the following requirements:
l. Shall be a first lien upon real
estate situated within the District OF
Columbia, or within ten miles of the
boundary thereof.
. 2. II made as q term loan and pay
able in not more than five years after
date or after the last extension there
Of. the face amount OF the obligation
shall not exceed sixty per cent Of the
fair value Of such real estate If i'm
proved or If producing q fair rev.
enue and 80 per cent Of the fair value
Of such real estate If unimproved and
not producing fair revenue.