The Bluffton news. [volume] (Bluffton, Ohio) 1875-current, 1946-08-22
TERMS IN SALE
OF BONDS HIT
AS TOO DRASTIC
Provision for Foreclosure on
Plant Draws Fire of Council
Chamber.
Council Refers Contract Back to
Board of Public Affairs for
Study.

because of provisions which they
deemed too severe, Buttons town
council Monday night refused TO
sign the contract presented by
Stranahan, Harris & Co., Toledo
bond buyers who were low bidders
on the issue of S125,000 in revenue
bonds to finance improvements at
the municipal light plant here.
The councils stand came as an
unforeseen development in what was
expected to have been routine
procedure in final steps of legislation
necessary to authorize the bond
issue.
Contract from the Toledo bond
buying firm arrived here by mail
Monday morning and councilmen
first learned of its provisions when
it was presented at the meeting
Monday night. A voluminous docu-
ment, it required nearly a half-hour
for reading by w. o. Geiger, town
clerk.
Council Criticizes Contract
Singled out for council criticism
of the contract was a section
providing that in case any of the
bond payments over 20-year period
should be defaulted, holders of %
per cent of the bonds could proceed
with foreclosure on the light plant.
Also included in the proposed
contract was provision that in case
foreclosure proceedings were insti-
tuted, interests taking over the plant
would be granted a 20-year franchise
to provide electrical current for the
town, with rates to be adjusted up
ward whenever necessary to guaran-
tee return of eight per cent to
the plant owners.
News To Council
Councilmen said these conditions
were not presented to them at a
meeting two weeks ago when they
were asked to certify the Toledo
bond firm as low bidders for pur-
chase of the light plant bonds.
Dissatisfaction with the contract
resulted in their refusal to sign it
as presented, and they referred the
matter back to the board of public
affairs for its consideration of the
conditions.
Members of the board said Tues
day they had not seen the contract
prior to its submission to the
council, and that they would study
it and make a recommendation to
councilmen soon.
Foreclosure Is Target
Principal target of councilmen at
Mondays meeting was the section
giving bond holders the right to
foreclose on the plant should it be
impossible to meet any single pay
ment when it falls due.
Altho it is felt the plant is in a
position to finance adequately the
bond program, it was cited that dur
ing the last depression outstanding
bonds for improvement at the plant
were defaulted for virtually a 10
year period.
Should those conditions be repeat
ed during the 90 years the bond
issue is in effect, it is reasonably
possible Bluffton would lose its
municipal plant under the conditions
of the contract proposed by the bond
buyer>.
Pay For Street Lights
Another phase of the contract
regarded with disfavor by council
men was the stipulation that the
village would be required to pay
for its street lights should plant
earnings drop below certain level
established by the contract at any
time during the 20-year period
bonds were outstanding.
Uncertainty clouded the future of
the proposed s125,00O bond issue as
result of councils dissatisfaction
with the contract.
1t was felt in some sources that
perhaps the severity of the contract
is due to the fact that the bonds
bear a low interest rate (1.9s per
cent? and that they are secured only
by earnings of the plant.
Bonds of the plant defaulted dur
ing the depression of the thirties
were in an issue representing a
general lien on the village, and bore
five per cent interest.
Higher Interest Bonds?
Whether bonds could be sold now