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Show WATER BOND WMSTE W v r aossissDr 1INISTRRTI0N SHOWN UP IN REPOST A report from J. William Edmunds, expert auditor audi-tor employed by . resolution of the City Council to looK Into the accounts of the water and sewer bond funds, . made public today, maKes a startling arraignment of the late Morris administration in handling the $1,-000,000 $1,-000,000 voted by the people for the improvement of the water and sewer systems. The report will be sub-mltted sub-mltted to the City Council next Monday night The re- w' port is exhaustive in detail, and is as follows: In compliance with the resolution presented pre-sented to the Salt Lake City Council, by Councilman M. E. Mulvey, on May 17 last, and approved by the Mayor on May IS last. I have the honor to hand you here-' here-' with financial atatement, showing re-ceipts re-ceipts and disbursements. In detail, up to and Including December SI, 1905, of the funds derived from the sale of 850 water bonds, series "D," and 150 sewer bonds, - all at $1000 each. . Also supplementary statement, showing receipts and disbursements dis-bursements of said funds. In detail, from January 1, 1906, to June 30, inclusive. Receipts. As shown on the attached schedule, the receipts amount to $1,015,100. being $850,-000 $850,-000 received from the sale of 850 water bonds, at $1000 each; $150,000 from the sale of 150 sewer bonds, at $1000 each, and $15,100 premium paid by the purchaser pur-chaser of the bonds. The bid for the bonds, on the sbove terms, was made to and , accepted by the Salt Lake City Council on February 27. 1905, by the Mutual Life Insurance company of New York, through its local manager, Mr. Rulon S. Wells, and the money was ultimately ulti-mately paid to the City Treasurer by the United States Mortgage and Trust company com-pany of New York City. - In addition to the amount of $1,015,100, tho receipts in connection with the sale of the above bonds were as fololws: July 14, 1905, accrued interest. . .$5,223.23 f October 9, 1905, accrued interest... 323.32 i December 5, 1905, accrued interest 1,667.27 December 31, 1905,. interest from f local banks for bond funds on f deposit 3,251. ir January 15, 190fl, interest from U. 8. Mortgage ft Trust company for funds on deposit 48.78 Total 89.408.61 The above dates (with the exception of-the item $43.78) are taken from the bank pass books, as the city records do not indicate the exact dates on which either the principal or Interest, derived from the sale of the bonds, were received by the city. . The amounts are entered respectively on the journal of the City Treasurer, in gross (without explanation - as to detail) on July 31. October 31 and December 31,- 1M)5. These Interest items have been credited to Waterworks department de-partment and contingent fund and the Interest paid by the city, on the bonds, has been charged to the same accounts. They do not. therefore, appear on the attached schedule. It will be observed, with reference to the first accrued Interest Item. $5222.22, which occurs in connection with the first sale of 500 bonda. that there is a discrepancy dis-crepancy between the amount of accrued Interest, as paid by the United States Mortgage and Trust company, and the actual amount of Interest due to the city. The bonds call for the payment of 4 per cenfjer annum interest, payable every six months, from the first day of April, 1905, which would make the amount of accrued Interest on $500,000 to July 14, 1905, $5777.77; as the city only received $5222.22. it would appear as if the United States Mortgage and Trust compsny still ower the city $555.55 on this Item. The second and third ssles, of 250 bonds each. an absolutely correct distribution at this date an utter Impossibility. The account was carried on the records of the Engineering department, under the above heading, until it reached the sum of $21,662.49. when on November 17, 1905. the Engineering department made the following distribution of the sum: Big Cottonwood eonduit $10,761.68 Right of war 8,160.00 Little Cottonwood diversion. . . . ' 870.00 East Jordan canal 985.00 Seepage diversion 600.00 Improving City canal 105.00 Pumping works, B. C. district... 920,00 Spring creek 6T6.00 Parley's power plant 290.00 Water right exchanges 810.00 Utah lake development 60.00 Distribution system 380.16 Big Cottonwood eonduit 3,800.00 City Treasurer 8.66 Total $21,562.49 The writer has exhausted every source of Information at his disposal, even to examining the field notes of the Engineering Engi-neering department. In an earnest effort to ascertain the correctness of the above distribution and, as a result. Is forced to the unavoidable conclusion that the distribution Is abritrary and Imaginative and Irreconcilable with any detail on record. The distribution In both the City Auditor's and City Engineer's departments depart-ments being evidently forced, it was impossible im-possible to give the details of the various accounts ao dlatributed and It therefore became necessary to make a redistribution redistribu-tion from the original entries. This the writer has endeavored to do in the appended ap-pended schedules, as far as the lnsuf-. lnsuf-. flcient and unsatisfactory information obtainable ob-tainable would permit It Is singular that the Engineering department de-partment has In thirty Instances (see Appendix "A") charged employees' time to "Utah Lake Improvements," when the records of the department show distinctly distinct-ly that the time so charged waa employed on -other work; so distinctly, distinct-ly, in fact, that it Is difficult to believe the transposition of charges was accidental acci-dental or unintentional. This list of erroneous er-roneous charges Is probably not as complete com-plete as it might be, owing to the fact that the engineering daily time-slips for 1904 have been destroyed, and It Is consequently con-sequently impossible to check In detail some of the charges made against the bond fund, from the general engineering pay-roll. The total amount shown on Appendix "A" Is $721-15 and the Auditor should be Instructed to reverse the entries en-tries by crediting the bond fund and charging the expense account .of -the Engineering En-gineering department with the various amounts making the sum total. Another Irregular circumstance In connection con-nection with the bond fund Is that in twenty Instances (see Appendix "B") the Engineering department has charged the account with instruments, etc., when, as a matter of fact the articles so charged (with very few exceptions) have not been used at all for that purpose. This applies ap-plies only to the Items particularised In Appendix "B." The numeroua charges to the Tund during 1904 and 1905. under the headings of "Office Supplies" and "Sundry Expenses," appear to the writer to be disproportionate and excessive, but he has no means of ascertaining the correct cor-rect searreeatlon. The total amount of lng amounts had been paid on the above contracts: P. J. Moras $54,943.10 The Salt Lsk Hardware company. 8,005.03 Silver Bros. . . 1,876.00 James Kennedy 2,416.45 164,788.67 Deducting ' these payments from the total amount of contracts, an unpaid balance is left of $879,692.68; adding to this the warranta issued against the bond fund to December SI, 1906. $188,844.78. and also adding the amounts paid in January and February. 1906, on account of Indebtedness Incurred prior to December Decem-ber 81, 1906, as per Appendix "C." 4391.13. we have a total of $673,880.48. Deducting this amount from the sum received re-ceived from the sale of the bonda, $1. 015,100, wa have an available balance left on January 1. 1906. of $441,769.64. Sewer rand Overdrawn. The aewer fund was overdrawn on December De-cember SI. 1905. to the extent of $21,-906.70, $21,-906.70, as follows: James Kennedy,, contract $148,850.00 James Kennedy, contract 39,140.00 The Salt Lake Hardware company, contract 6,175.00 Utah Mining Machinery sad Sup- ply company, contract 729. 75 Warrants drawn on aeoonnt of sewer, exclusive of payments on contracts 8,073.94 Liabilities unpaid en December 81, 1905, paid in January, 1906.. 689.01 $188,006.70 Credit by 150 bonds sold $150,000.00 Premium on 1000 bonds 18,100.00 165.100.00 i $33,906.70 Amount Overdrawn. The total amount of warrants drawn against the water and sewer bond fund from January 1 to June SO. 1906, Inclusive, Inclu-sive, was $168,735.95. distributed as follows: Big Cottonwood eonduit $118,017.03 Gravity outlet sewer 30,646.54 Jordan snd Salt Lake canal-.... 16.946.13 Istereepting sewer 7,107.61 Water right "exchanges 3,174.01 Liberty park wells 1.178.91 Emigration canyon samp ...... 1,065.97 Parley's ereek canal 769.70 Distributing water system 488.68 East Jordan canal 140.00 Sal of bonda expense ......... 125.00 Little Cottonwood diversion 66.18 Right of way 23.60 Seepage diversion , 17.60 Watershed improvements 10.90 Extinguishment of power right. . 4.06 $168,785.95 Adding this figure to the amount of bond fund warrants Issued prior to January Jan-uary 1. 1906, $188,344.78, we have a total of $357,080.73. The amount paid on eon-tracts eon-tracts from January 1 to June 80, 1906, was $153,284.30; deducting this from the unpaid balance of contracts, as shown on psge 10, $379,592.66, we hsve as unpaid balance on contracts of $226,306.26; adding add-ing this to the above total. $367,080.78, we have a grand total of paid and unpaid Indebtedness on account of the bond fund, up to and Including June 30, 1906, of $588,386.99. Deducting this from the original receipts, $1.018400, an available balance of bond funds Is left on July 1, 1908. of $431,713.01. Morris Lost City Money. , The Interest paid and unpaid on the bond Issue to June SO, 1906, after deducting de-ducting Interest received by the city on the bond money, amounts to $30,693.39. As the unused balance of bond funds on deposit (without drawing Interest) on July 1. 1906, was $702,382.69, and as It Is probsble thst $400,000 will be still unused un-used on December 31, 1906, It will readily be. seen that the city has lost .money through selling the whole issue of the bonds before there was a nscessity of raising the funds. Had $250,000 of these bonds been sold on July 1, 1905. and $250,000 on January 1. 1906. the Interest on the bonds so sold, to July 1, 1906, would have been $15,000, while the city would have had $500,000 water and sewer bonds In Its treasury and a balance to Its credit In the local banks of over $200,000 on account of the bonds Issued. As we have seen, the Interest Inter-est on the bond Issue, up to July 1, 1906, waa $30,693.39, making a loss to the city, up to that date, of $15,693.89 for unnecessary unneces-sary Interest paid on the bond Issue and with Interest accumulating, at the rate of 4 per cent per annum, on $500,000 bonds, superfluously Issued. In the address Issued to the property taxpayers of Salt Lake City by the City Council, under, date of December 14, 1904, the estimated cost of "money consideration considera-tion in exchange of water" was $60,000. Up to June 30, 1906, there bad been spent on this account $80,854.81, which Included the payment of $2226 to Mr. Moses W. Taylor for his ssrvlces in securing the water rights. This leaves the' amount expended $30,364.81 (or over 60 par cent) In excess of the estimated cost. On January 11. 1906. a warrant for $2000 was Issued to th secretary of the East Jordan Irrigation company, being for assessment as-sessment on the 1600 shares in that company com-pany purchased by the city In September, 1906, at a cost of $40,000 and charged to the bond fund; and on January 30, 1906, a warrant was given to the East Jordan Irrigation company for $1.50, being for advertising the delinquent assessment. These amounts have not been charged to the bond fund, and the writer is uncertain uncer-tain If they properly belong there. If the stock was purchased ubject to this assessment. It would seem as If the bond fund should be charged with the amount; if not. then- It is probably correct to treat the assessment warrants as the City Auditor has treated the charges for the maintenance and operation of the fifth pump at Utah lake, that Is, charging charg-ing It to accounts other than those pertaining per-taining to the water and sewer bonds. In conclusion, the writer begs to state that appendix "D" represents th clerical errors, pro and con, discovered by him In the bond fund accounts during the course of the present investigation. These are principally errors of omission and make a total of $2265.62 to be charged to the bond fund on the City Auditor's books. It Is respectfully suggested that the Auditor be directed to make the necessary nec-essary transfers, in order to reconcile his books with this report I have the honor to remain, yours very truly, J. WILLIAM EDMUNDS. Accountant. Salt Lake City, Utah, July 26, 1906. en contract work la usually 4, being: 1H par .cant for preliminary work and 1V4 per cent for construction; though la work as costly as the Big Cottonwood conduit It Is usual for the percentage to run less than 4. Taking the extreme figure of 4 per cent, however, and estimating the coat of engineering on that basis, we find thst on estimates amounting to $78485.84 the charge, after allowing 1H Per cent for preliminary work on the total amount of contracts, 248,S74.S8. should be 85801.25; making the engineering chargaa on the Big Cottonwood conduit, up to and Including December Si, 1808, exclv la the a urn of $11,484.87. Big Cottonwood Condoit. The total amount of contracts entered Into by the city, for the Big Cottonwood conduit, was 1246474. JO; the amount of engineering charge to December 81, 1905, was 117,068.12. or 6.928 per cent of the total amount contracted for. The total amount of contract - work completed com-pleted on December 31, 1905, was $78485.64. or S0.976 . per cent of the total amount contracted for. So that with only about 81 per cent of the contract con-tract work actually completed, the engineering en-gineering charges were almost S per cent In excess of what they should be for the total amount of contracts. In other words, estimating the percentage per-centage liberally, namely, at 4 per cent, the engineering expense for contracta amounting to $246,274.38 should be $9850.97; the englnssrlng charges to the bond fund for contract estlmatss amount lng to $76488.64 were $17,066.18, making $7216.16 more for $76485.64 than It should be for $246474.88. Taking the percentage charged by the engineering department to the bond fund, up to December SI, 1905, as a basis, we find thst to complete the contracts con-tracts of $246474.8$ It would cost the city, for engineering expenses, $55,094.04. When It Is remembered thst In the address ad-dress to the property taxpayers of Salt Lake City on an Increased water and sewsg system, formulated by the Salt Lake City Council and a special citizens committee on December 14, 1904, the estimated expenses for "engineering "engineer-ing preliminaries and supervision" on estimated contracts amounting to $760,- 000, was $40,000, the excesslvsness of tha engineering departments charges to the bond tund, for the period ending December De-cember SI. 1905, will be self-apparent. Inters ting Comparison. The amount of contract work done on the Big Cottonwood conduit from January 1, to June SO, 1906, inclusive, was $156,425.85. The amount of engineering charges to the bond fund, on account of Big Cottonwood conduit, for the same period, was $3081.89, or 1.969 per cent of the completed contract work. According Ac-cording to tho seals of charges for engineering en-gineering work, from January 1, 1906, to June SO, 1906, we find that the engineering en-gineering cost of contract work amount-lng amount-lng to $76,285.64, exclusive of the 1H per cent for preliminary work, would be $1602.06. We have already seen that up to December 31, 1906, the engineering cost for the same amount of work waa $17,066.12; deducting from this figure $3694.11, being 1H per cent allowance for preliminary work on tha total amount of contracts, $248474.60, a balance Is left of 113.371.01; a difference of $11,869.96. Expressing this difference In percentages, ths cost of engineering on the Big Cottonwood conduit, for the years 1904 and 1906, waa aeven hundred and ninety per cent greater, for a given amount of work, than the cost of engineering for the period between January and June, 1906. In view of the foregoing figures. It Is not unreasonable to Infer that the same class of error (charging Items Improperly Improper-ly to the bond fund) exists in the special payrolls, as they have, been demonstrated to exist, where a detailed check on the charge waa possible. In the absence of any positive evidence to the contrary, however, the writer Is constrained to accept the figures . on these spsclal payrolls. Incidental Expense) Unclassified. The - Itama shown in the attached schedule, under the heading of "Incidental "Inci-dental Expenses (unclassified)," amounting amount-ing to $8620, are shown In this manner owing to no Information being procurable from tho records as to the correct distribution dis-tribution of the same. They are as follows: fol-lows: F. S. Richards, legal services. ..... .85.500 A. F. Doremu engineering 1,500 Matual Life Insurance company, attorney' attor-ney' fee in caae George . Eller- beck v. Salt Lake City 840 R. P. Morris,- trip to Kew Tork 250 R. 8. Wells, trip to Kew Tork 250 F. 8. Richard, trip to Mew York .... 250 J. 8. Critchlow, trip to Kew Tork .. 250 Deseret Krw company, briefs fot F. S. Richard 80 Total ...$8,520 With reference to the Item F. 8. Richards, Rich-ards, $5600, It may be observed that la Mr. Rlchards's bill, calling for this amount, he says, amongst other matters: mat-ters: "Also making trip to New Tork," and,' "Also preparing brief and arguing case of the State of Utah, ex rel. George E. Ellerbeck vs. Salt Lake City, ..... establishing the validity of -.the city's watsr and sewer bonds." It will be noted, however. In the Items given above that Mr. Richards received a separate warrant for. $260 for "Trip to New York." and that the Mutual Life Insurance company received a warrant for $540 for "Attorney's fee In case George E. Ellerbeck vs. Salt Lake City." Mr. Rlchards's explanation, with reference refer-ence to the above mentioned warrant for $260, Is that this sum represented his expenses to New York, while the Item In hia bill waa for hie aervlcea to Salt Lake City. Regarding th warrant iaaued for $540 to the Mutual Life In-aurance In-aurance company, for "Attorney'a fee In case George E. Ellerbeck vs Salt Lake City," Mr. Richards states that be has no personal knowledge of this Item, but presumes that it was for the services of the attorney opposing the city, and since he, Mr. Richards, was on ths other side of the case, the Item has no connection with the charges In his bill to the city. If Mr. Richards Is correct In this surmise. It would sppear that the city of Salt Lake was paying not only for special legal services to defend it in addition to the City Attorney At-torney and bis assistant but wa also paying for the services of the attorney attacking It.. , Warrants Paid. The warrants Issued against the water and sewer bond fund up to and Including December 21, 1906, have all been paid, with the exoeptlon of No. 90,494, for 8200, Issusd In favor of B. B. Bltner, for "exchanging "ex-changing waters of Big Cottonwood creek, for other waters." This warrant Is at present In the vault of the City Auditor, Mr. Bltner having refused acceptance of same. The contrsets entered Into by the city, on account of the watsr and sewer bonds, to December $1, 1905, amount to $444,-$31.13. $444,-$31.13. and are as follows: 1808. Aagust 80, the Salt Lake Hard- war company, eonduit f 8,119.88 September 6, P. J. Moran, eon- doit 888,676.00 September 12, th Salt Lak Hardware company, sewer.... 6,176.00 October 4, J. Kennedy, sewer. ... 146,850.00 October 6, Silver Broe, eoodult.. 1,680.00 October 9, . Kennedy, sewer. . . . 99,140.00 December 11, HeaUy A Ritchie, enl , 18,668.00 December 18, Utah M. M. sad Supply Co, sewer 1.729.78 $444,881.18 These flgurea are baaed on englneer'a estimates and are Subject to variation. Up to Decsmbar SI, 1905, the follow- were made respectively on October 9, 1905, and December 5, 1905. As the first Interest coupons on these bonds matured on October 1, 1905, prior to date of sale, the United States Mortgage and Trust compsny surrendered the coupons on completing purchase, 'and the accrued interest in-terest on the bonds purchased on October 9 and December 6 was figured at 4 per cent per annum from October 1, 1905. On this basis, the second accrued Interest Item of $222.22 is correct, but it Is noticeable notice-able that the Interest on $250,000, at 4 per cent per annum, from October 1 to December De-cember 5, 1905, amounts to $1805.65. while the city only received $1667.27. leaving a ' difference still to be explained, in this Item, of $138.28. The writer has been unsble to discover any records which afford af-ford the least solution of this disparity , in figures, and though the City Auditor has recently addressed two communications communica-tions to the United States Mortgage and Trust company, asking for an itemized statement showing how they- arrived at ' -, the amount of accrued interest paid by them to the city, he is at this data without with-out an answer to bis question. The premium ($15,100) paid for the entire en-tire Issue of the bonds hss been credited to the sewer fund, but the sewer fund -has never been charged with Its proportion propor-tion of the expenses In bond elections, sale of bonds, advertising, etc. Disbursements. As per attached schedules, the warrants war-rants -issued on account of the bond fund, up to hnd Including December 31, amount to $188,844.78, distributed as follows fol-lows : Big Cottonwood conduit 78,408.11 Water right exchanges 78,180.80 Incidental expenses 8.520.00 - 'Main intercepting sewer ...... 6,245.63 Expense of bond election .... 4,138.89 Right of way 8,341.80 Fifth pump at Utah Lake .... 8,210.76 Emigration Canyon snmp 2,023.68 (Gravity outlet sewer ' 1,801.94 ' Liberty Park wells 1,262.93 Jordan and Salt Lak canal .. 748.64 Distributing water system .... 662.28 East Jordan canal 116.00 Spring erek v. 100.00 ExtinguTsBtnent of power right.. 60.00 Seepage diversion 88.05 Waterabed improvement 3.80 Total ....$188,844.78 As the above distribution does not correspond with the City Auditor's records, rec-ords, the following explanation Is neons-. neons-. aary: la anticipation of the funds, for th purpose of increasing th water supply of - Salt Lake City, to be received from the sale of bonds, preliminary work was be- . - gun by the City Engineering department during June. 1904. For a considerable period subsequent to June, 1904, the Engl- - necring department charged all expenditures expendi-tures pertaining to the proposed In- ; ereased water supply to "Utah lak improvements," im-provements," an obviously Incorrect heading, "as It doss not appear that th Engineering department did any work at all at Utah lake. It Is to be rsgretted thst the City Auditor did not, at th in-f in-f caption of the account, insist upon a dstalled distribution of the charges handed hand-ed Into his office, under the heading of , "Utah laks Improvements"; bis failure fail-ure to do this at th proper time makea - x . Improper chargea abown on Appendix "B" la $1186.30, and the writer auggeata that the City Auditor be directed to credit cred-it the bond fund with thla amount and charge the engineering lnatrumcnt and toola account with same. This suggestion sugges-tion Is made in face of th fact that one Instrument, costing $147.25, and one horse, costing $S5, both shown on Appendix Appen-dix "B" are at present being used In the construction of the Big Cottonwood conduit, con-duit, for the following reasons: Why Suggestion Is Made. First Any Instrument used for special work Is not necessarily unfit for further use when the speclsl work Is completed and, on the completion of the work, become be-come part of the general property of the city and not of the special fund for which it was purchased. It msy possibly pos-sibly be correct to charge the special fund with the .use of the Instrument, but It Is certainly Incorrect to charge It with, its full cost. Second When an instrument Is charged to the Instruments and tools account of the Engineering department and thence taken into the Inventory, the city has a check upon It and should It be lost or stolen, the responsibility for Its absence msy be determined. It It is charged to any special fund, all trace ef It, for practical prac-tical purposes. Is lost. In this connection It may be mentioned that the Inventory of the City Engineer's Instruments and tools Is at present In an unsatisfactory condition. Should the city desire to know the extent of Its assets in this respect, It would be Impracticable Im-practicable to glv the figure correctly from the present records. City Inventories. Referring more particularly to city Inventories, In-ventories, and desiring to emphasise th Importance of having them kept correctly, correct-ly, the writer bege to state that his Investigations In-vestigations have led him to examine the waterworks storehouse account, as shown on the City Audltor'a recorda, and that he finds a discrepancy In figures .hss existed in this account since January 1. 1904. On that date the Auditor's books show that the waterworks storehouse Inventory In-ventory should be $39441.67, while the waterworks superintendent's figures show only $23,115.70, leaving a difference of $16,125.97. As far as shown on the city records, this deficiency haa never been accounted for. The "special pay-rolls" charged by the Engineering department during 1904 and 1905 to "Utah Lake Improvements" amount la the aggregate to a considerable sum. In no Instance is it feasible to check these amounts in detail, as no time sheets accompanied these special pay-rolls, no distribution is shown on thm and thre is no information on record as to time, place or quantity of work don by th individuals whose names appear on these pay-rolls. As shown on tb engineering recorda1. th total amount of construction work dona on the Big Cottonwood conduit, up to and including December SI, 1906, waa $76486.64, while the Engineering charta for th aame account, up to tha earn daU, wa $17,066.13. Thla figure repre-aenta repre-aenta 22.371 .par cant of the amount of contract work completed to that date. Th prcntagf of engineering charges |
