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On July 24th, 1933, the Nanager advised the Attorneys that if the earnings
<br />of the ~und went below 4%, p~vments would be immediately increased, to take care of the de-
<br />ficiency.
<br /> On July 2?th, 1933, the Attorneys advised the City Nanager that annual pay-
<br />ments of $33,500.00 would be sufficient for the present at least. The Attorneys also ad -
<br />vised that, if in the future, the interest received on the Sinking Fund is actually less tham
<br />3 3/4%, it would be necessary to revise the amount paid in~o the Sinking Fund, and that if
<br />the increase from the Water Department should not be sufficient to make the Sinking Fund re =
<br />quirements, then the Water Bonds would immediately become chargeable against the Bonded In
<br />debtedness of the Oity.
<br />
<br /> Reference is .made, at some length, to the Sinking Fund, because this is an
<br />important item, in considering~the question of reducing the earnings of the Water Department.
<br />
<br />REDUCTION IN RATES.
<br />
<br /> There are 6,5~O consumers now paying at the
<br />the reduction to $2.50 is made, and if consumers keep within the proposed minimum,
<br />will be a loss in revenue of $5,232.00 per annum, distributed as follows:
<br />
<br />In ~ortamouth
<br />In Norfolk Oounty
<br />In ~uffolk
<br />
<br />rate of $2.70 per quarter. If
<br /> the result
<br />
<br />3,596°OO
<br />51o.oo
<br />
<br />5,232.00
<br />
<br /> If t~, same reduction is made to ¢ons~mmers now paying less than
<br /> per
<br />quarter minimum, the resBlt will be an additional loss.in revenue of $2,127.00 per annum,
<br />meaning a to%al annual shrinkage in.the revenue of the Department of $~,359.O0, while the
<br />saving to the individual consumer will mean only 80 cts. per annum.
<br />
<br />DEPOSITS.
<br />
<br />Deposits are not required of those living in their own homes.
<br />
<br /> An owner of property, for rentj may sign an agreement for his tenant, and
<br />thereby avoid the deposit, and in which instance if the tenant fails to pay his water bill,
<br />the owner is responsible for the period of four months only, regardless of the amo~a~, delin~
<br />quent. The object of the deposit is protection of the ~ater Departmen~ from loss of revenue.
<br />
<br /> The deposit is fixed at $5.00 minimum because, in practical operation, it
<br />is impossible to shut off water immediately after the expiration of the fifteen days allowed
<br />for payment.
<br /> An effort is made to shut off delinquents, within the succeeding quarter for
<br />quarterly consumers, and within the succeeding month for monthly consumers. Therefore, water
<br />bills for approximately two ~quarters or two months, as the case may be, become due before
<br />the delinquents are shut.off for non-payment.
<br /> ~he deposit of $5.00 has no special application to the minimum charges, as
<br />a delinquent bill for one quarter frequently equals the amount of the deposit.
<br />
<br /> A deposit of $5.00 appears to be the minimum which will reasonably protect
<br />the Department from loss of revenue, even when bills are for the mimimum amount.
<br /> During 193~, one thousand and sixteen deposits were used for paymen~of de -
<br />linquent bills and the total deposits were Just about sufficient to pay the total of the bills
<br />involved.
<br /> Of the total water bills charged off in 1934, as uncollectible, ~he deposits
<br />amounted to $1,630.00, which amount the City saved by having deposits of $5. O0.~
<br />
<br />RECAPITULATION.
<br />
<br />enoe in
<br />
<br /> An abbreviated tabulation of the foregoing data is made below for conveni-
<br />considering the many angles to the question:
<br />
<br />1. Shrinkage in surplus from 1931-to 1935 S ~6,9~9.26
<br />2. " "cashew lance !931 to
<br /> from 1935 ~3,23].~0
<br />3- Cash deficit for the year l934 19,~6.1~
<br />Estimated cash balance as of Dec. 31s~, 1935 9,6~2.38
<br />~ Cons~mmers' deposits on hand 13,275.OO
<br />Estimated operating result for 1935, by Superintendent 3~,000.O0
<br />y. Units, 47 yrs. old, which may require replacement or ex-
<br />
<br /> tensive repairs; additional mains required each year, etc.
<br /> ~. National Board of Eire Underwriters' repor~
<br /> 9. Amorti~ation of 1935 bond issue of $25,000.00
<br />lO, Sinking Fund Requirements.
<br />ll. Result of reduction in rates: loss ~o Departmen~ of $7,~59,00,
<br /> and saving to the consumer of only 80 cts. per year.
<br />12. Necessity for the $5. OO deposit°
<br />
<br /> In conclusion, both the Superintendent of the Water Department and I are of
<br />the opinion that to make a further reduction in the earnings of the Water Department is inad-
<br />visable at this time, and under existing conditions.
<br /> We are of ~he furthe~ opinion that the wise policy is to continue the pre -
<br />vailing charges and deposit for one or two years longer, when operating results may ~hen be
<br />appraised and reductions made, if found to be ex~edient, and~we so recommend.
<br /> Yours truly,
<br /> E.B~ Hawks, City Nanager.~
<br />
<br />
<br />
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