HJ r ™ yC-NBLF $C 1^5 0B3 Minneapolis Civic&Commefx:e Association A SUH\rb1Y OF THE EOITPET- DEBT THE 0PxM7-wI0:^ OP THE Si.ix.i.G FUHD OF MIUisOLAiPOLIS By The Bure/u of Municipal Pesearch March 27, Ibii^k-. A S U R V E Y OF A H D 111 5ZEPAT22N OF THE SINKING FUND F ISl 1111 9.L MiiiSEAPOLis HIS, SUGGESTIONS FOR A FINANCIAL PLAN. By The Bureau of Municipal Hesearch Of Tho Minneapolis Civic and Commerce Association '^ March 27, 1922. AU'7Afir ■ ' , , ; ; ••••*» J'j I' ', I :. In making the folio ving study of tho uitmi^xpolV^ 'Bbntlfed* Debt # find Sinking Fund tho Buror\.u of Ifunicipr^.l RosQ-^.roh has boon influenced by four factors, vis:- 1, The City is fast approaching tho bonding limit fixed by ntato law boyond vfhich no bonds inay bo issued. Zf Tho urgent need of I/iunicipal inrorovomonta calling for increas- ingly larr;o issues of bonds, 3» The inadequacy of the present Sinking Fund to provide s\ifficient sums to anortizG outstanding bonds* 4« The need to establish a sound financial policy for the future vrhich v/ill be cone a part of any City Charter that niay be adopted and v/hich \7ill as nearly as possible equalize tho burden of taxation and continue to keop tho city in a favorable position before tho bond- buying public. To this end tho following facts havo been gathered and are here presented to tho City Officials and tho general public. MINNEAPOLIS CIVIC & COISitJRCii; .'^SOGIATION COM4ITTEE ON MUNICIPAL RESEARCH A, M, SHELDON, Chairmn R. G, BLMCBY L. C. BURR E, J^.COUPER A. C. DA^r^WBAUM KiJlL DeLAITTRE W. P^ DSVEREUX W, S, DV/INNSLL V;. A, EGGLfiSTON FRED L. GR-^Y 0. D. HAUSCHILD D. P. JONES J. R. KINGMAI^ C. L. PILLS BURY C.J. RXK?/DOD E. S. SL/.TER H. D. THRALL P. L. OLSON, Director J. T. HELSOM,Aocountcuir SSS987 *•« ' *?*• • 1 • • ^ • Chaptor 1. TABLE OF CaiTENTS HISTORY OF MFNT^APOLIS DEBT & SINKING FUND "I. Definition of "Sinking Fund" 2. I:.- 30-Ycar Bond Theory 3. Shcrr, porm Bonds 4 • Graph S ha-r in^ ll txir it ios 5. Statistical Tables a. Tablo of Gross Dobt showing character of service or asset Rago 4 ft 7 8 11 b. Tablo of City Debt showing source of payment ^^2 c. Tablo shCT^ing years and amounts in which Bonds will mature ^4 d. Tabic showing interest due on present debt 15 II • MINIJEAPOLIS SINKING FUND REQUIRE?ffiNTS 1. Card Record of Sinking Fund j^7 2. Sinking Fund Balance & Shortage 18 3. Effect of Sinking Fund on Bond Prices 21 4. Limit of Bonded Debt ' 22 5. The 3-Mill Levy and Its Limitations 24 III. MODERN TENDENCIES IN MUNICIPAL FINANCE 1. The New Jersey Financial Code 29 2. The "Pay-as-you-go" Plan of the City cf Now York 5% 3. Serial Bonds & Their Relative Cost 32 IV. PROPOSAIS FOR THE FUTURE 1« Conclusions mM 2, Possible Courses Comprising Five Plans of Procoduro 3^ 3. The Recommendation of the Bureau of Municipal Research 4q V. MINNEAPOLIS BOND RECORD. 1. Valuation of City Owned Property 44 2, Official Record of All Bonds Issued by tho Citv of M-innopnrsI i e A e cf\ I, HI STORY OF MTimEAP OLIS DEPT. AND SINKING FUND 1, WHAT IS_A S INKING FUI^D ? . . The need for making, public improvements the lifei of which may extend over a period of years and oft«^n into the succeeding generation, has brought about the necessity of financing these improvements so that the burden of their cost \^ill be equally borne by all the tax payers deriving benefit therefrom. To this end bonds are issued, pledging through authorized officials, the faith and credit of the municipality, that such debt will be paid at its maturity • For the purpose of equalizing the burden of paying the debt over the period of its life and to provido an adequate sum with which to pay the debt at its maturity, a certain equitable amount is to be included in each year's tax levy and laid asido in- what has been termed a "Sinking Fund." This Fund has been defined as "a Contract entered into ^^rith the purchasers and holders A of long term bonds, which provides for the setting aside from current revenue annual installments to accumulate at interest in order to amortize the loan,"* In the majority of Minneapolis bond acts the sinking fund provision is to be found stated as follows:- "and the City Council of such city shall each year include in the tax levy for such city a sufficient amount to provide for the pa3Tnent of such interest as it accrues and for the ac cu mulation of a Sinking Fund for the redemption of such bond's*" at tTierf maturity .'"^' This sinking fund provision becomes on the issue and sale of bonds a contract with the bond holder , the obligation of which the Legislature has no power subsequently to impair by repeal or modification of the sinking fund provision . This point has been repeatedly held by the Federal Supreme Court.* * Dillon - Mun. Corp, 4th Ed. tt WQuUl 9e«m iher«f or» lba% in eaeh InstAXB^ trtref* t)i» Authorising >«it *ot> MgpfvSAly l^rovidea for the lavylo^ of % ««rtAUi mumaI •«KJtat4riKb0 K linking fund sufficient to p&y that isaue of bonda at its maiurfiy^ it beocmes standatory ttf the tax levying body to so Idvy and sot asldo oiioh sums for oach ^ially increasing amounts to care for enlarged municipal activities and improve- ments has caused serious consideration on the part of the City's financial officers as to the best method of equalizing the burden of bond redemption. Various plans have been tried, somo of which are illustrated below, (a) Bonds have been issued for shorter terms than the life of the improvement warranted, - such as Water Works bonds for |300,000 issued June 1913, payable in seven years \ (b) Serial Bonds have been issued - i. et the whole amount of the issue has been made payable in equa.l annual installments beginning with the first year - such a s Sfchool Bond^ for |1,230,'000 issued in July 1921 payable in 30 annual amounts of .f 4 1,000 each. (c) Issues have been divided into irregular amounts and made payable in non-cons ecutivo years in order that the peak years might be missed, - such as School Bonds for $2,000,000 issued Dec. 1920, (d) Issues were made payable in equal annual installments - the pay- m.ents however to begin after a number of years had elapsed - such as Funding Bonds for :ipl,000,000 issued August 1919, the first payment to be made in 1925. Under this latter method (d), an unnecessarily large burden in interest charges was imposed upon the tax payers as shown by the. following example: - In 1919 it v/as found necessary to care for a large deficit in the Current Expense Fund caused by salary increases, etc. by issuing bonds to an amount of | 1,000,000. This issue provided that the bonds be made payable in five equal portions of i5200,000 each, the first to fall due, however, in 1925 - six years after the date of issue, - and the balance in equal portions in the succeeding four years. Five percent interest - or ^50,000 annually will be paid on this loan for six years - a total of $300,000 - before the interest charges are reduced. And thi s o n a l oan covering a deficit in current expenses 1 9. Hote : Prior to the sale of the bonds referred to, the Gemini. tteo on Municipal Research addressed a letter to the City Council iU which it was suggested that inasmuch as these bonds vere issued to laetrt current expenses, they should be retired within the current period as nea'^ly as possible. The Committee therefore recoramendod 1. That the Londs be issued for a term of not more than five y'ears. 2. That they be Serial bonds. 3. That they be issued in installments of i^500,000 4. That a bill be presented to the Legislature providing for a special levy to produce rn amount sufficient to retire annually one-fifth of the principal and to pay the interest. How nearly these recommendations were carried out becomes apparent fr0 400,000.00 50,000.00 300,000.00 33,700.00 40,000.00 6,644,662.36 1,012,719.77 72,950.00 8,554,042.13 ^39,798,242.13 •12, 5-.b. TABLE NO. 2 SHailNG CITY DEBT AND SOURCE OF PAYKffiNT As of December 31, 1921. (Continued) DEDUCTABLE OBLIGATIOJg^, AS^ I^ SEC. 1848; R. S. 1913 Revolving Fund Bonds V 1,650, 000. 00 Water Works Bonds 1,750,000.00 Water Works Certificates 40,000.00 Electric Lig^t Plant Bonds 50,000.00 River Terminal Bonds 130,000.00 City Hall and Court House Bonds 400,000.00 Street Improvement Certifioatos Assessed portions (2/3 of Total) 4,711,546.76 Park Acquisition Certificates - Assessed portions (2/3 of Total) 730,001.72 Park Certificates - Ten year Plan - Assessed Portion 52,00 0.00 Total Deductions ' - 9 ,513 ,543.48 Balance -- 30,284,693.65 Sinking Fund, as of December 31, 1921. 2,606,318.20 Net Bonded Debt, as of December 31, 1921. i^ 27,678,375,45 13. 5c t TABL E NO. 3 SHavilIG YT:aRS AND AJIOTJNTS IN V/FICR YEAR SINKING FUIH) SPECIAL LEVIES GROSS DEBT 1922 S 557,000 $ 807 ,268.01 1923 735,500 655, ,942.80 1924 451,000 655 ,242.60 1926 1,064,000 557 ,042.80 1926 752,000 556 ,542.80 1927 2,182,000 558. ,083.54 1928 787,200 •54" ,793.50 1929 772,000 544, ,935.00 1930 470,000 537. ,575.00 1931 664,000 456. 375.00 1932 918,0(X) 384 ,895.00 1933 1,075,000 384, 845.03 1934 1,090,000 376, 275.85 1935 777,000 584, 545.00 1936 577,000 266, 475.00 1937 1,576,000 218, 400.00 1938 1,210,000 159, 000.00 1939 2,635,000 164, 000.00 1940 1,142,000 97, 000.00 1941 3, 151, '^00 46 J 000.00 1942 2,232,000 1943 673,300 1944 1,505,000 1945 697,500 1946 807,000 , 1947 775,000 1948 409,000 1949 935 ,000 1950 573,000 1951 53,000 PAID BY ASSESS. rIENTS ABAINST BENEFITTED PROPERTY 1,364 1,391 1,106 1,621 1,508 2,740 1,330 1,313 1,007 1,120 1,302 1,459 1,466 1,361 843 1,794 1,369 2,799 1,239 3,197 2,232 673 1,503 697 807 775 409 935 573 55 ,268.01 ,442.80 ,242.80 ,042.80 ,542.80 ,088.54 ,993.50 ,935.00 ,575.00 ,175.00 ,895.00 ,645.03 ,275.35 ,545.06 ,475.00 ,400.00 ,000.00 ,000,00 ,000.00 ,700.00 ,000.00 ,300.00 ,000.00 ,500.00 ,000.00 ,000.00 ,000.00 ,000.00 ,000.00 ,000.00 579,693.76 379,680.87 378,963.90 380,484.73 380,587.76 381,080.50 363,971,79 368,050.26- 364,793.66 313,524.70 266,661.06 265,848.31 269,263.23 239,164,97 193,629.67 160,409.98 120,343.31 123,951.86 71,196.49 37,217.37 AMOUNT TO BE PAID FROM genera: TAXATION t 984,574.25 1,011,761.93 727,258.90 1,240,568.07 927,955.04 2,359,008.04 964,021.71 948,874.74 642,781.30 806,650.30 1,036,233.94 1,193,996.72 1,197,012.62 1,122,380,03' 649,845.33 1,633,990.02 1,248,656.69 2,675,048.14 1,167,803.51 3,160,482.33 2,232,000.00 673,300.00 1,503,000.00 697,500.00 807,000.00 775,000.00 409,000.00 935,000.00 573,000.00 53,000.00 $31,244,200 s^8,554,042.13 v*539,798,242.13 05,441,548.48 $34,356,693.65 14. 5-d TABLE NO. 4 SHCMING INTEREST DUE ON BONDS BEGDINING WITH THE YEAR 1922 AND ENDING ^'TiEN AU. PRESENT BONDS HAVE IIATTJRED. INTEREST ON SINKING INTEREST PAID TOTAL FUIEi' BONDS PAID OUT OP BY SPECIAL INTEREST YE/iJ? GENERAL INTEREST FUND 1,345,088.35 TfiX LE^/IES DUE 1922 $ $ 133,988.59 $ 1,479,076.94 1923 1,317,008.25 116,312.43 1,433,320.68 1924 1,289,768.25 110,059/34 1,399^827.59 1925 1,259,858.25 93,869.79 1,358,728.04 1926 1,218,428.25 92,624.02 1,311,052.27 1927 1,143,833.75 86,470.65 1,233,304.40 1928 1,093,808.25 79,505.21 1,173,313.46 1929 1,053,690.25 73,315.83 1,127,006.08 1930 1,024,680.25 66,691.86 1,091,372.11 1931 999,7BC,25 56,223.01 1,055,973.26 1932 971,980.25 47,626.65 1,019,606.90 1933 926,825.75 42,736.27 969,562.02 1934 879,655.75 37,401.57 917,057,32 1935 838,870.25 43,117.66 861,987.91 1936 809,570.25 23,263.65 832,933.90 1937 781,748.25 17,857.54 799,605.79 1938 717,113.25 12,660.69 729,673.94 1939 667,668.25 10,984.00 678,652.25 1940 553,057.75 5,892.01 558,949.76 1941 462,073.89 2.519.50 464,593.39 1942 348,804.50 348,804.50 1943 288,558.00 288,558.00 1944 240,292.50 240,292.50 1945 197,682.00 197,682.00 1946 161,817.00 . 161,817.00 1947 123,899.50 123,899.50 . 1948 95,599.50 95,599.50 1949 65,812.00 65,812.00 1950 25,182.80 25,182.80 1951 2,350.00 2,350.00 $20,907,575.54 $1,158,020.27 ^22,065,595.81 Interest paid prior to 1922 on present Sinking Fund Bonds- 9,7R2,06O.OO 50,669,635.54 When the present outstanding bonds ($31,244,200) payable from the General Sinking Fund are all retired, the City will have paid a total in interest of $30,689,635 which shows that for each dollar borrowed an average of 98 cents will be paid in interest before the debt is cancelled. The foirowing question very naturally raises itself: Is there any economical system of financing public improvements that will save the 98 cents. Tliat question will be discussed in a later section of this report. 15. II , SINKIN G FUND REQUIREMENTS . 1. A SINKING FUND RTXORD . To make a coinplote examination of the Sinking Fund with the object in view of accurately cc»nputing its requirements, the Bxireau printed a card showing all of the information with regard to each separate bond issue. A reproduction of one of the cards follows: 16, ^Annual Installamtits base3~on Sinking Funia' j Earnings at 4^ (Factor .01783010 r*200,000 For Period of 30 Years) Annual Interest Charge 5566.02 Year Bond Year 1896 1897 1898 1899 1900 1901 1902 1903 1904 1905 1905 1907 1908 1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 J1919 1920 '•■'921 922 923 1924 1925 1 2 3 4 5 6 7 8 9 10 11 12 15 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Required S, at end of Bond Year F.i 3 7 11 15 19 25 28 52 37 42 48 53 59 65 71 77 84 91 98 106 114 122 130 139 148 158 167 178 188 200 565.02 274,68 131,72 142.92 314.64 652.84 165.92 357.52 737.80 813.36 091.80 581.48 290.72 228.40 403.44 825.68 504.64 450.80 674.80 187.80 001.32 127.32 578.44 367.56 508/28 014.60 901.20 195.32 877.20 000.00 .^.5000.00 •^ w O O H* P P 5 3 1+ C*' o* b- o O a> ♦^ o o o p 3 M 00 en ? a> o w o »-» O 3 O 3* P O I >-• O oa t3J 3 CD > *^ P3 •n nd o g ri •^d p c H- o ►t 3 3 era CO P o *^ c^ o a> a> 30 tft »i o c*- s; P o o <+ O iiore tlTan five yea rs shall be i^iJi©^ " Current Improvement" for v/hich no bonds iiiay be issued, but which shall be paid for out of ouxront tax lovj', Ner^v York State passed a law November 2, 1920 by a 2 to 1 voto - requiring that all dobts of the state except te.fporary loans, etc.-— — - "shall be paid in equal installiients the first of which shall bo payable not more than ono year and the last of v.'hich shall be payable not more tlian 50 years after such debt or portion tboroof shall \vxvQ been contracted." and further provides, that "llo such debt hereafter authorized shall be con- tracted for a period longer than that of the probable life of the %vork or object f|r '//hich the debt is to be contracted." In tho folia, ing brief outline of tho olassJ^'icatioA included in the Kev7 Jersey Law, and also in ttie proposed Ohio l^u it will be noted that different tj^pes of building and other construction ^ore classified under 29* various terms of bor^d Issues: 50 - Year Bonds may bo issued for; Acquisition of Land for Parks- Elimination of Grade Crossings- 40 - Year Bonds may be issued for; Tho construction of a Sewer System^ The construction of a Water Supply System- Buildings of Fireproof Construction- (Additions to such buildings to be 30-Year Bonds) 30 - Year Bonds may be issued for: Acquisition or construction of a Gas System- Acquiring lands for Playgrounds- Buildings of non-fireproof construction- (Additions to such buildings .o be 20- Year Bonds* Bridges (including retaining walls and approaches of Stone, Concrete or Iron construction..) Acquisition of land for Roads, Streets, Highways, Elimination of curves, or Grading Culverts, Bridges or Retaining Walls. Installation of Fire or Police Alarm, Telegraph and Telephone System* 20-»- Year Bonds may bo issued fort Acquisition or construction of Electric Lig)Kt System, and equipment, or machinery, or apnaratus. Buildings - Frame or brick veneer- (Additions to such buildings same as 15 year Bonds) Paving! -Blocks or Sheet Asphalt laid on concrete foundation. Concrete if not less than 6 inches in thickness. 15 - Year Bonds may be issued fort Paving: Bituminous concrete, 10 - Year Bonds may be issued for: Fire engines, trucks and hose aiiri other vehicles in Pire Department* Ambulances, Patrols or other municipal vehicles • Paving - Water-bound Macadam. Curbing or sidewalks of brick, stone or concrete* All equipment - apparatus and furnishings (not previously specified) • Incineration Plant and equipment or machinery. 5 - Year Bonds may be used for: Paving! Sand or Gravel Service connections - Sewer, Water, Gas from street to property line* S0« 2 , THE " PAY-AS-. YOU- Q Q" PUN There is a grcwing tendency in rnany citios throughout the country to place !!unicipal fxiiances on a Cash Basis or on what has been tormod a "PAY-AS-YOU-GO'' nian. Briefly, t-iis nlan as adq)ted in Nmr York contemplates the financing of all non-revenue producing improvements out of current taxation, and provides the method Ly which a city adopting such a plan may arrive at the lOC^ current taxation point, by gradinl ^tepc coverinp; a period of four yoars. This is moi-e clearly illustrated by the following cxcorpt from that plan adootod in the year 1914: Sec, 1. The post of all iranrovements of tho rovsnue producing class, such as rapid transit, docks, railvray and vater terminals and 'vater supply, shall bs defrayed by the issue of fifty year cornorate stock as heretofore. Sec, 2. The cost of all permanent impro\-e'nents other than those of the revenue producing class, shall be financed as follows: (a) Those author i2ed during the next succeeding year (1915) shall be paid for, three- quarters by the issue of fifteen year corporate stock; stock so issued shall mature either in not more than 15 years, amortized as provided by lav;, or in equal annual installments, during a period of not more than fifteen years. The remaining one-quarter of the cost of such improvements shall be paid throug)^ the medium of a one year bond, payable from the next annual tax Budget. 31. (b) Those authorized in the year 1916 shall be paid for, one-half by the issue of corporate stook, maturing as aforesaid. The remaining one-half of the cost of such improvements shall be paid through the medium of a one-year bond payable from the next annual tax budget ^ (c) Those authorized in the year 1917 shall be paid for, one-quart er by the issue of corporate Stock as aforesaid. The remaining three-quarters of the cost of such improvements shall be paid through the medium of a one-year bond pajrable from the next annual tax budget. (d) Those authorized during the year 1918 anu in subsequent years shall be financed through the inclusi;Jn of the entire cost thereof in the c.nnual budget of the city except the revenue pro- ducing imp^'ovements hereinbefore mentioned. Such a pl^n, if adopted :n Minneapolis, would subject all proposed future issues of bonds to a very careful scrutiny as to the urgency of the need of the contemplated improvement •> 3. SERIAL BONDS AND THE I R REUTIVE COS T Throughout all the plans being formulated in other cities and states looking toward a solution of their financial problems there is found in each instance the suggestion or .direction that ell bonds be issued as Serial Bonds payable in annual installments during the life of the issue. The reason for this stipulation is that city officials have too often been lax in their duty to levy sufficient taxes to create an adequate sinking fund for the amortization of bonds as they became due, frequently 32. necessitating tho refunding of loans ♦ There are three distinct methods which may be followed in the payment for public ImprcvementG, viz: a* The Pay^as-you-tro method , which providoc that the debt be paid from direct taxation not latur than one year after it is incurred". RESULT: High tax levy for debt redemption and a minimum tax levy for interest carrying charge. b» The Sinking Fu nd mothod , which provides that the burden be spreaT'ovLr a period of years, annual deposits being laid aside to accumulate at interest to Provide an adequate sum at maturity d^-te. The interest on the whole debt shall be paid ann^oally. RESHLT: Lc/r tax levy for debt redemption and maximum tax levy for interest carrying charge » c» The Sorial method, which provides for the redemption of a por'tTorr'(S'"th"e~?ebt annually from tax levy, which automatically reducer the annual interest charge. RESULT: Medium tax levy for debt redemption and gradually reducing levy for interest carrying charge. The Serial method of debt retirement carries with it the surety that the debt will be paid as it matures, inasmuch as the annual amount due is at all times known and the amount to bo levied is not left to the discretion of the tax-levying body, which is the case under tho Sinking Fund method., as practiced in Minneapolis . 33, r/. PROPOSALS FOR THE FUTTJRE. !• CO^^C LIB IONS In the foregoing pages, the Bureau ha? endeavored to analyze the present status of the Sinking Fund and the causes therefor # The facts gathered lead to the following conciusions:- 1» That the plan of lavying a mil lage tax for th o Sinking Fun d (one mill annually prior to 1917 and three mills annually thereafter) is n o t in accord with tho usu al pr ovisions of tho Bond \cts of tho legisla ture, and the legality of such plan is open t o quostion. (see reference to Supremo C^ourt decisions on page 4.) 2. That there i s an inadequate a mount in the Sinking Fund duo to the fol lo ving causes: a. Failure to make proper annual sinking fund levies, based oii amortization tables, sufficient to prc^rido funds to pay for each issue of bonds at maturity* b. The issuing of short term (f ive-six-sevon-ton and tv/elve year) bonds for impra'.'emcnts whosu life v^ar- ranted the issuance of 25 and^ 30 year bonds, causing an undue depletion in past years and "peak loads" in the future. 0. The issuing of bonds for a deficit in current expenses ■vTithout providing a special levy for their redemption, putting a direct and unwarranted burden on the Sinking Fund . 3. That if there had been a strict compliance with the law as pro- vided in each bond act, there would noiT b e in th o Sinking Fund a total of (approximate ly)0 7, 600, 000 (see page 19), an amount .'^^ 5., 000, 000 greater than the present Sinking Fund which would have applied as a reduction against the net debt and also have provided ample funds to protect all outstanding bonds. 34, stated briefly it appears as follows: Present Net Debt (See table pages 12 &13) !f!27,678,375 Deduct for required difference in Sinking Fund 5,000,000 True Net Debt, based on re-calculation $22,678,375 Protecting the re-calculated Not Debt there would have been a Sinking Fund of ;i7,600,000 or 25^ of all bonds to be paid from that fund, (131,244,200 - December 51, 1921) The importance of the above figures becomes apparent in the statement that a net debt of ;i?22,678,375 would have given a bonding margin of §13,600,000, ample for the needs of the city for many years to come, without the necessity of the curative legislation of 1921 to in6rease the margin by including Moneys and Credits as part of the assessed valuation. 4« That there is a ^rcat need for a broad p lan which would effectiv ely restrict borrowing. It is evident that the present laws .designed to restrict borrowing and place a limit on debt have failed in their purpose. For example:- (a) The statutory limit of ^% governing the indebtedness of cities under 'Home Rule was removed in 1921 when Minneapolis, by virtue of adopting a Home Rule Charter found itself beyond that limit. (b) Bond Acts providing for definite sinking fund deposits have been ignored. (o) Bonds have been issued to defray deficits in Current Expense, using a wrong method of payment (q. v. page 9) Each improvement for which bonds are to be issued should be carefully soritinized and its value and desirability determined. If it is of sufficient urgency to warrant the issuing of bonds, payment should be arranged so that othor needed improvements in future years may not be jeopardized by a fast approaching debt limit (compare the present status with the condition set forth in paragraph 3 above.) 35. 2 . POSSI BLE COURSES COMPRISING FIVE PLAM_S_ OF ■reO CEDURE There are jjariy courses open for the future control pfHhe issuance of bonds and njeans toward their redemption. A number of theso plans are ©numerated on the follov/ing pages, 1, Serial bo nds may be issue d to the a mount show n under column 4 of tab le on page ^4 and pl ace the burd en of their redemption on the Sinlcing Fundt RESULT ! The effect of this will be to fully deplete the. Sinlcing J^rnd in 1928 and necessitate an additional tax over the 3 mill levy. (See table on Page 27) ^ • Pay all futiye bon d issue maturities out of the Sin lcing Fund and refu nd some or all of certain sh ort term issues^ of 1915 for an additional term of 18 years which were issued for iiiprovements whose life warranted the issue of longer term bonds, but which no\7 fall due in 1927, visi- Water 100,000 School Buildings 6754OOO Hospital Buildings ICC, 000 Parks 218,000 Permanent In^rove- ment 75,000 Bassetts Creek 50,000 1,218,000 RESULT; This will lave the effect of delaying the depletion of the Sinlring !'\!nd balance until 1931 or possibly unt41 1932 depending upon the amount of interest earnings, during the period 1922-1931, 3, Issue Serial Bonds to the a mou nt shown on column 4 o f the table on Page 24 and j)rovide additi onal t ax levy each year over_ the pre^sont 5 mill le vy for the redeniption of s uch bonds a .s^ and_ vfhsn iss^dj^ RE5ULT: The effect of this plan v/ill be that the present 3-mill levj"- will provide an amount greater than necessary to redoea the present outstanding bonds as th^ matvire. (See table Page 26.) 36. 4. The "Fa^r-As-Y^-^'o" Flan. Fa ke a single budget fo r all estiinr.ted exp enditure s, both o urrent end p er^-nanent irnpro^/ement. Then ' a. Ijevy the Icrost necessary amount each yoar to provide for out- standing Cehi infeturities, including t.ll Sinking Fund, Serial and Soecial Levy Bon-'ls and Certificates. (See first two coluirins in Schedule Vlo.n ""'.- page 39), b. (a) Provide for the payuient of all permr.nont imnrovements authorized for the year 1923 by issuing short«torm serial bonds for oighty '^SO) per cert o.-^ the total of such author- ized amount - bonds to mature in equal annual installments beginning one year from their date of issue. The ri^maining tvrenty (20) percent to be financed by a one-year bond payable from taxation. c. Provide for sixty (fiO) percent oi all nennanent irnproveinents authorized for the ye^r 1924 to be financed by short-term serial bonds (maturing as stated in paragraph "a") and the remaining forty (40) percent by a one-year bond paj'able from taxation. d. Provide for forty (40) percent of all permanent iuprovement authorized for the year 1925 to be financed by short-term serial bonds (mr.turing as per paragraph "A") and the remaining sixty (60) norcent by a one-year bond payable from taxation. 0. Provide for ti^'^nty (20) porcent of ail nerman^nt improvement authorized for the year 1926 to do finar.ced b"- short-term serial bonds (maturing as per paragraph "A") and the remaining Eighty (80) pei ^ent by a one year bond payable from ta: This becoires necessary in order to provide su.f fie lent funds to redeem bonds as they mature, estimated ujider column 5, next p&g«« c« Levy annually tlie ai-nount necessary to redeem the iiiaturities of Special Issue bonds (Elwell, School Deficit "and others) estimated under colui^in 3, next page. d# Levy annually tho amount necessaa^y to redeem the maturities of future isGuerj of serial bonds as they fall duo, estimated imder column 4. ne:r:t page, 6« Grant authority to proper body to refund bonds To carry out such a plan will require an anjiu^l levy of approximately 7»75 mills as aigainst the 4.60 mills levied for 1922. A ten-year table showing the estiinated necessary levies follovTs: 41. TABLE NO. 11- SHOVVING ESTIMTED LEVIES TO FINANCE SINKIl'G FUND AS EER PLAN RBCOMh/iENDED BY THE BUREAU OF MUNICIPAL RESEARCH Required Special Year Sinking Fund Issue Deposit Ifeturities (See Table N o. 5 _g ,_Z0} 1923 4.70 1924 4.00 1925 3.30 1926 3olO 1927 2.70 1928 2.30 1929 2.00 1930 1.80 1931 1.65 1932 1.50 RESULT: 2.15 2.15 2.15 2.15 2.15 2.15 2.15 2.15 2.15 2.15 New Depos it Total Serial For Levy Maturities Sinking Fund In Sho?itage Mills .50 7.35 1.00 .50 7.65 1.35 1.00 7.80 1.60 1.00 7.88 1.90 1.00 7.75 2.25 1.00 7.70 2.50 1.00 7.65 2.75 1.00 7.70 3.00 1.00 7.80 3.05 1.00* 7.70 * Continuance rcoui/ed to 1151 The above plan provides for a ccxnnaratively even annual levy- as the increase in the annual levy for future issues of serial bonds is matched with the decreasing levy for present debt, -while the peak loads in present maturities is cared for by the one-mill levy (col. 5). The new issues will be governed by the increased assessed valuation. The figures are based on an annual increase of 32?^. If the actual increase proves to be in excess, it will permit of larger issues of bonds ^> but it will also provide a greater sum on the millage levied to care for their redemption. 42. V. 1. 2. COST YAUH.TIO-: OF CITY OVTJiiJD .PROPERTY*. OFFICI/.L R3CCRD OF ALL BONDS ISSUED BY THE CITY OF MINI.T^POLIS. 43. 1. COST VALUATION OF lAND, BUILDINGS AND EQUIPtJENT As of Docombor 31, 1920, From Roco^ds of City Conptrollor. Land and Buildings Equipment and Material Total GENER.\L GOVERT^Ti'ETTT City Hall (Cihy's Portion) 1,696,075.50 228,329.50 1,924,705.00 PROTECTION TO P3RS0NS Firo Polico Armory Building Inspector & ?R0P?jPTY 's Dopt. 552,150.73 85,629.32 287,465.62 797,772.88 71,294.65 10,971.91 10,748,08 SANITATION Inclnoration Pla.nt Comfort Stations Sewor System & Station 173,807.77 22,398.22 102,463.19 13,071,420.33 22,398.22 13,071,420.33 ■ HIGHWAYS Ward Warohou.sos 138,282.47 Pavemont, Curbing, Trcos Sidewalks Ward Machinery & Paving Equipment Bridges 16,883,887.38 2,983,253.18 421,165.42 3,594,318,07 138,282.47 16,883,887.38 2,983,253.18 421,165,42 3,594,318,07 CHARITIES, HOSPITAL ^ Hospital Workhouse Charitios CORRECT I03?S 1,716,557.8^. 299,641.73 3,600.00 61,687,87 2,010.00 5,126.84 1,778,245.71 301,651,73 8,726.84 EDUCATION Schools Libraries Art Museum 11,233,467.90 720,373.08 843,693.00 372,651.81 335,625.19 10,156.40 11,606,119,71 1,055,998,27 853,849.40 RECREATION Baths Parks 120,455.78 9,325,079.73 5,103.78 249,021,43 125,559.56 9,574,101.16 UTILITIES Water Works Wharves 1,418,310.3a 10,951,029.31 135,278.51 12,369,339.69 135,278.51 GENERAL — .-■ 36,232.18 36,232,18 TOTAIS 28,772,267.58 50,204,559.40 78,976,836.98 44. 2, OFFICIAL RECORD OF /'.LL BONDS ISSUED BY THE CITY OF MINNEAPOLIS, Purpose of Issue Appraisal Armory Date of Issue 1915 1917 19? 9 1905 Term 2&3 7 6 30 Rate of Interest 4^ Amount Matured C10,000 Amount Outstandin g 1913 26 1914 30 Bassett's Creek 1915 12 1916 5-25 1919 29-30 1872 20 1374 20 1875 30 1882 20 1887 30 1889 30 1903 30 1904 30 B ridges 1912 20 1913 26 1915 30 1913 21-30 1917 30 1919 30 1919 29 1920 28-29 1920 5-30 1874 20 1887 30 City Hall 1890 30 1891 30 1892 50 Comfort Station 1920 30 Elec. Lt. Plant 1911 30 Falls Imp. 1869 9 (East) 1870 12&15 Falls Imp. 1869 12&13 (West) 1870 13^15 1872 14-X8 4 C10,C00 4 16,000 ^25,(500 4 ri50,COO 4 25,000 4 50,000 4 50,000 4 2,000 48,000 5 100,000 C'27S,oO<5 8 250,000 8 20,000 8 50,000 * 4% 76,oc;o 4 390,000 4 30,000 4 50,000 4 165,000 4 200,000 4 650,000 4 85,000 4.15 100,000 5 100,000 44 50,000 5 100,000 5 150,000 5 395,000 ■ ^16,000 2,045,000 8 50,000 4* 250,000 4 200,000 44 250,000 4? T?(5,11Ca 50,000 5 50,000 4 50,000 10 5,000 10 10,000 ■ 15,000 10 30,000 10 30,000 8 84,000 T447CX50 45. Purpose of Date of Rat^ of Amount Amount Issue Issue Term Interest f.Tatured Outstanding ■ "^ •"~*' ■ -«•• •••■"^ "■"•**' ' ^ • 1874 15 (i% i- 12,000 . • 1882 20 4g- 10,000 1887 •30 4^ 50,000 1890 30 4 15,000 1903 30 4 ^ 100,000 1910 30 4 25,000 1911 10 4 25,000 1911 10 4 25,000 Fire Depart- 1912 20 4 25,000 ment 1913 10 4 25,000 1913 26 4 25,000 1914 30 4 25,000 1915 12 4 25,000 ?.916 5- 11 4 32,000 1917 30 4 15,000 1919 6 4 20,000 ^ 1^7,000" ■ 517,000 Funding 1919 6-10 5 1,000,000 General Funrl 1907 30 4 100,000 1892 30 4 25,000 1893 30 4 75,000 1911 30 4 400,000 1915 5 4 125,000 - 1915 26 • 4 25,000 Hospitals 1914 30 4 75,000 1915 30 4 47,500 1915 12 4 100,000 1917 7-9-11 4 175,000 1918 3 4 14,000 1919 28-29 5 175,000 139,000 1,097,500 1885 30 4* 60,000 Library 1886 30 4 40,000 1913 30 4 40,000 1920 30 5 250,000 100,000 2^,OoO Lookup 1887 30 4 30,000 1913 26 4 15,000 Municipal 1917 7 4 15,000 B aths 1919 15 5 25,000 1920 5-25 5 100,000 155,006 46. Purpose of Issue Date of Irsu: Term 1883 50 1884 30 1884 30 1889 30 1892 30 in93 30 1902 30 1907 30 1908 30 1909 30 1910 30 Parks 1911 30 1911 30 1912 50 1G15 5 191!^. 26 191'! 30 1915 12 1916 30 1917 15&19 1919 11 1919 12-15 1920 3- 6 1881 27 1882 20 1883 30 1884 30 1885 30 1887 30 1889 30 1889 50 1890 30 1892 30 1903 50 1904 30 Permanent 1907 30 Improvement 1908 30 19:4 20 1911 30 1912 30 1912 30 1913 7 1913 26 1914 30 X9J.5 12 1916 5-29 1917 8- 9 1918 30 1920 6 1920 6-30 Rate of I/iterest 4|fa i 4 4 4 3* 4 4 4 4 4^ 4 4 4 4 4 4 4 4 4 5 5 H 4$ 4i 4-5 4 4 4 4 4 4 4 4 4 4 4' 4 4 4 4 4 4 4 4 4* 5 5 Amount ^fcl^.urod Amouiio Outstanding 75,000 200,000 100,000 22'S,000 165,000 40,000 20, COO 70,000 150,000 50,000 . 300,000 50,000 150,000 250,000 300,000 50,000 100,000 218,000 275,000 175,000 100,000 300,000 ____ 300,000 763, 060 2,898,000 40,000 105,000 45,000 175,000 380,000 200,000 170,000 225,000 55,000 187,000 75,000 75,000 400,000 75,000 75,000 75.000 200,000 25,000 50,000 5,000 1,450, OOO" 50,000 250,000 75,000 230,000 55,000 175,000 50,»000 ,4^ 0,000 4482,000 47. Purpose of Date of Rate '-■; Anicvr+, Atiiount (« Ipsue Issue Term Irtere st Matured Outstanding, 1887 30 f^% % 150,010 % 13G3 30 4 205, fCO 1809 50 4 150,000 4 250,000 4^ 245,000 4 150,000 4 175,000 4 175,000 4 250,000 4 250,000 4 •• 100.000 4 225,000 4 525^X0 s 4 50,000 11,050,000 #r,^rDO,oco ■ Playgrounds 1912 30 4 . 80,000 Police Station 1920 10-30 6 TS^C-OO 1871 30 7 125,000 Railway 1877 20 7 125,000 "260,006 1914 30 4 75,000 River 1S16 10 4 30,000 Terminals 1917 5 4 }}*^ ^?- ISOO 30 1391 30 'ermanent 1901 30 Improvement 1903 30 Revolving 1S04 30 Fund 1907 30 1903 SO 1909 30 19]1 30 1^:^ 30 1913 5 48. Purpose of Date of Pate of Ainourt Amount Issue 1 3 s ue 1879 ) rerm 20 Interest 6 Matured t 40,000 Outstandin*; 1881 12&25 4 72,000 1885 30 80,000 ' 1887 30 4 50,000 ' 1689 30 4 200, ceo 13S0 30 4 60,000 1895 30 4 $100,000 1896 30 4 100,000 1897 30 4 200,000 1899 30 4 200,000 1903 30 3* 200,000 1906 30 4 200,000 1907 30 4 441,000 1909 30 4 . 616,000 1910 30 4 576,000 1911 30 4 666.400 1911 30 ^4 250,300 Schools 1912 30 4 700,000 1913 30 4 150,300 1913 7 4 125,000 1913 5 4 299,500 1913 10 4 500 1913 26 4 325,000 - 1914 30 4 600,000 1914 20 4 350,000 1915 20 4 100,000 1915 12 4 675,000 1916 5. -29 4 10,000 390,000 • 1916 SO 4 85,000 1917 1. -29 4 112,000 700,000 1919 15. -28 5 i;§50,ooo 1920 6- -10 5 250,000 1920 lO -28 5 1,250,000 - 1920 2 -29 5 2,000,000 1921 1 -30 5 1,230^000 11,038,500 C 13, 505, 500 School Funding 1919 2- - 5 5 100,000 300,000 1871 25 7 25,000 1872 30 7 25,000 1882 20 44 50,000 1886 30 4 35,000 , 1887 30 4 150,000 1888 30 4 90,000 1908 30 4 500,000 1911 30 4 275,000 1912 30 4 175,000 Sewers 1913 5 4 150,000 1913 26 4 150,000 ^ 1914 30 4 200,000 1916 5 -29 4 5,000 145,000 1917 30 4 250,000 1918 3 - 9 4 9,000 141,000 1919 30 4* 200,000 1919 30 5 100,000 1920 1 -30 5 5.000 145,000 1921 1 -30 5 ir^A:6o6 350,000 £2.631.000 Purpose of Date of Rate of Amount Mi'nint Issue Issuo Term Interest ifeitured OutstLri3ine Sundry- 1872 30 1% ;.. 20,000 / Pur poses 19C8 30 4 t 67,000 Tax 1907 30 4 100,000 Rebates 1016 30 4 82,000 1919 6 4 18,000 ^00,000 Voting 1903 20 4 116,200 Machines 1911 20 ^- 42,000 r5"8,0(X5"" 1868 10 10 40,000 1870 30 8 40,000 1871 20 8 55,000 1872 SO 7 40,000 1874 25 8 60,000 1878' 3 7 50,000 Water 1882 20 ^? 125,000 Works 1883 30 4 414,000 1885 30 4 30,000 1886 30 120,000 1887 30 4 330,000 1888 30 4 170,000 1890 30 4 50,000 1895 30 4 200,000 V 1897 SO 4 400,000 1902 30 4 250,000 1903 30 3i 100,000 1911 30 500,000 1913 10 4 200,000 1913 2 4 S00,000 1915 12 4 100,000 ■1,5"54;(50T)" T7750,00(> 1887 SO 4 30,000 1915 5 4 27,500 Workhouse 1917 7-8 4 25,000 1918 5 4 25,000 • 1919 6 4 30,000 1920 3 5 35,000 57,500' 115,000 TOTALS jD9, 280,000 a31, 244,200 Grand Total Bonds issued by C ity » 1868-1921) C.40,524^'200 50, UNIVEESITY OF CALIFORNIA LIBRAEY, BERKELEY THIS EOOK IS DUE ON THE LAST DATE STAMPED BELOW Books not returned on time are subject to a fine of 50c per volume after the third day overdue, increasing to $1.00 per volume after the sixth day. Books not in demand may be renewed if application is made before expiration of loan period. R'^^ytiV debt T)f tliG siii]ting fund or X city. .cB Z 1932 G2S987 NJ9 UNIVERSITY OF CALIFORNIA LIBRARY V iii! !ii;;a