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Slight variations wore made in these fitures by General Jervey, the then Oity Manager, but
<br />not onough to mako any difference at this time~
<br /> The effect of this scheme was to allow the City interest on the money derived from
<br />the Berkley plant as an income and it may have been e£fected in another way had the 0ity been
<br />able to pttvc~ase and cancel $415,680.00 in bonds. Had the city done so, it would have been
<br />required to pay $60,057.00 into the Sinking Fund but would have-saved interest on the bond.
<br /> The Gi~y Oouncil then, on February 12, 1925, passed a resolution, after taking into
<br />consideration a $35,000.00 note due on April 1, 1924, a~ the Irving National Bunk, in the fol-
<br />lowing words:
<br /> "BE IT RESOLVED BY THE COUNCIL OF THE CITY OF PORTSMOU~H, VA.. That~there be trans-
<br />ferred to the Sinking Fund to meet Sinking Fund requirement for~l~24, ~rom the profits o~ the
<br />Water Department, $60,05~o00, same being 2.1% cf the net water debt of $2,224,320.00 as of
<br />January l, 1~25; the saiGnet water debt being as follows:
<br /> Total Water bonds outstanding .... ~$ 2,~35,~00.00
<br /> Sinking Fund as of January l, 1924 ............ ~ 510,680.00
<br /> Net ........................................ $ 2,22~,000.00"
<br /> Adooted_ by the CounCil o~ the City of Portsmouth at a meeting held February 12,1924.
<br /> The above scheme was made to pay ~he balance of $2,225,320.00 at the end of 25 years,
<br />assuming that the Sinking Fund would earn 3~ on the a~uual paYments thereafter made.
<br /> In 1~28. just before it became necessary to increase the Sinking Fund paYments to
<br />take care of the $250,OO0.00 bond issue, an opinion was obtained from Thompson, Wood and Hoff-
<br />man, attorneys of New York, who were then selected by the city to pass upon bonds, in which
<br />they stated:
<br /> "According to our computation, the amount necessary to provide for the retirement of
<br />$2,950,O00,OO ~ater Bonds now outstanding, which amount should be paid into the sinking fund
<br />annually, is $$1,000.00 based on ~he assumption that the sinking fund Will earn at least three
<br />and three-~-arters per cent interest over the pe=iod of these bonds."
<br />
<br /> These attorneys also made the following s~tatement:
<br /> "Of course you will readily understand that if the income is estimated at a hiEher
<br />rate, and at some time in the future it should be found that the interest received on sinking
<br />funds is actually less than three and three-qua~rters per cent, it would be necessary to revise
<br />the ~mount to be paid into the sinking fund annually, and it might then be found that the in-
<br />come from the ~ater Department would not be sufficient to make up the necessary sinking fund
<br />requirement, and in s~oh event, of course the Water Bonds would i~nediately become chargeable
<br />against the bonded indebtedness of the City subject to the limitation fixed by the Oonstitu-
<br />tion of Virginia."
<br /> In view of the fact that payments made into the Sinking Fund from the sale of the
<br />Berkley Plant and those made prior to the enactment of the Sinking Fund Statute were equiva-
<br />lent to a ~edu¢~ion of the bonds, I believe that under the oha~ter, the following is the le-
<br />gal set-up of the Sinking Fund for the $2,700,000~100 issue.
<br /> Amount of bonds ................. $2,YOO,OO0.~O0
<br /> Amount of Sinking Fund ................. $75,~80.~0
<br /> Balaaoe ....................... $2,22~,32~.00
<br /> Requirements at l~ ................... 33,36 .80
<br /> This amount is less than the sum which would have been required in 1923 according to
<br />Mr. Thompaon's~basis on a ~ earning power, the amount being $35,357.74.
<br /> The above amount ~hould be supplemented by a sufficient sum to 'mature the ~2RO ~ ~
<br />bond issue on August 1, 195~,,whioh, ~ calculate, would require '2.~ 'of the issue or~$~,8~8~
<br />2.4~ of~the bond issue, or $25~00 per thous.a~d, is approximately the amount required to be
<br />contributed, annually for 25~ye~rs, which, with interest at 4% p~r ann~m thereon and accumula-
<br />tions thereof is necessary to produce at maturity the amount of the principal of the bonds.
<br />However, I have been un~ole to get a Sinking Fund table in accepted use among bankers.
<br /> This makes the total Sinking Fund requirement, under the Git y Gha~ter, according to
<br />my~ calculation, to be $3~,365.80.
<br /> Whether this Will meet the requirements 0~ the bond ~ttornoys employed to pass upon
<br />an issue o£ City bonds, I can not say, but I believe it meets the charter requirements, and
<br />undoubtedly,-under the City Manager's Calculations, is more than sufficient to pay the bonds
<br />at maturity, provided the Sinking Fund earns 4% on its money."
<br />
<br />Motion of Mr. Ogg to receive and file, was adopted.
<br />
<br />UNFINISHED ~JSINESS
<br />
<br />The following ordinance which was laid on table May 23rd, was taken up
<br />
<br />"AN ORDINANCE PROVIDING FOR THE CARE AND OPERATION OF THE k~JNIGIPAL
<br />GOLF COURSE AT THE PORTSMOUTH CITY PARE, AND PRESCRIBING FEES FOR THE
<br />USE T~OF."
<br />
<br />and read:
<br />
<br />On motion of Mr. Mayo, the ordinance was adopted, and by the following vote:
<br />Ayes: Brooks, Fox, Moore, Hutehins, Mayo, Oast, Og~;
<br />
<br />Nays: None.
<br />
<br />filed.
<br />
<br />Report of the Accounting Department for the month of May was received and ~dered
<br />
<br /> Report of adjustments to oons~uners and corporations in water bills for month of
<br />May was received and ordered filed.
<br />
<br /> .- NEW BUSINESS -
<br />
<br />Gilman for services in representing John Jackson,
<br />
<br />Bill of Attorney Tom E. mn ount
<br />
<br />
<br />
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