Utility District Secures Finances for Purchase of Power and Water System
February 10, 1935
Completion of arrangements for securing funds for the purchase of light and water systems serving Susanville and adjoining territory was announced today by Paul Hopper, secretary for the Lassen Municipal Utility District, marking definite steps towards a municipal power and water plant.
Final plans were completed for financing this week by the board of directors of the district.
A survey of the two systems will be made by competent engineers and their value determined as soon as possible. As soon as this information is available the directors will offer to purchase the existing systems. Should the district’s offer be refused by the present owners, plans and specifications for competing systems will be made immediately by the engineers employed by the district.
In short, the board of directors has determined to give this community a municipal light and water supply at the earliest opportunity and the money is available for that purpose, Hopper said.
To Sell Bonds
The bonds to be sold to finance the projects are revenue bonds and will be a charge against the revenues of the district only. The exact time for which these bonds will be issued has not been definitely decided, but only the interest will be paid the first three years. They will bear 5% interest, or less, and will be callable at any time after issue. They will be sold for not less than par plus accrued interest.
These financial arrangements have been made possible only through the influence of the National Municipal Utilities Association; an organization sponsored and maintained by Municipal Utility Districts throughout the country.
To Safeguard Investors
The contract entered into between the directors of the Lassen Municipal District and representatives of the National Municipal Utilities Association provides for the strict supervision of the management of utility districts financed by the latter organization. This supervision is undertaken as a means of safeguarding the interests of both the residents of the district and the investors in the revenue bonds issued by the directors.
The contract as agreed upon makes it possible for the directors to deal directly with the owners of the light and water systems without having to wait the action of the state railroad commission. The only permission necessary to obtain from the commission is the owner’s permit to sell his property.
Competing Systems
All legal steps necessary for the validation of the contract are under way and final arrangements for either the purchase of the existing systems or the construction of new ones will be completed as rapidly as circumstances will permit. Arrangements for additional supplies of both water and electricity can be arranged should it become necessary to build competing systems.
The contract provides for rates sufficient to maintain the distribution systems, pay the expense of operation and interest, and to retire the bonds issued on the date of maturity. While all extensions and betterments of the systems are under the direct control of the board of directors, yet the reduction of rates is recommended as the most desirable feature of municipal ownership.
