Show Advantage of Bonding Drainage Dist Ry By II n. A. A Hart Senior Drainage o J. J En Engineer Engineer n. n U. U S S. S Dept Hept of or Agriculture Drainage district laws usually provide pro pro- I pro provide r vide that the districts organized according ac according ac- ac cording to their provisions have t the e power of ot issuing bonds to secure funds with which to accomplish t the e reclamation work The Tho fact that that this power is granted is prima facie fade evidence that this method of ot financIng financing ing Is at least desirable effective a and and d legitimate Practical e ehas has shown that the method is the most satisfactory that has been evolved evol- evol evl- evl ved ed and in iii most cases it is the only I feasible method I ISome Some of the cheif cheit advantages are areas are areas as foll follows ws All the tho funds required for the re reclamation re- re e- e may be secured at once I A low rate of oC interest t is charged d for the loan A long time for tor the tho repayment of bf the principal is granted Repayment ma may be made in easy easy I payments A bond lien does not constitute a mortgage on the land J The The necessary amount of oC mon money y may be secured even if it is greater greater great r than the present value of the land land Bonded land may be mortgaged br mortgaged land may be bonded i r Federal farm loans ma may be sec secured secured red r- r ed on bonded land Each tract of land is responsible for tor its portion of the bond issue Bonds may be purchased by any land owner desiring to avoid interest interest interest inter inter- est cost Additional bonds may mar be sold If it the original amount proves ent Equity and economy demand that all lands in a district be reclaimed ed within as short a period as possible Contractors for the whole works should be let to responsible con con- tractors Materials should be purchased in large quantities Advantage Advantage Ad Ad- Ad- Ad vantage should be taken of carload rates on shipments All of th these se annual assessment or otherwise The rate of interest on drainage bonds rarely exceed d 6 percent which is much lower than that on notes note or other forms of time short-time ac ac- ac- ac Drainage bonds are generally issued on a basis that provides provides provides pro pro- vides for Interest payments only durIng during during dur dur- Ing the first few years after reclamation reclamation thus affording the land time In which to be put In a paying condition condition condition con con- be before Core the payments of principal principal prin- prin cipal become due As a result the actual cost of drainage Is borne by bythe bythe bythe the Increased crop returns and Is no noa not nota a direct burden burden on the owner and need not take one cent from hi his p pocket On the tho other hand the Increased in increased increased In- In creased crop returns in one or two years as a result of drainage usually usually usually us us- pay the entire cost of the drain drain- age A drainage bond is a time long-time obligation obligation obligation ob ob- ob- ob with all the advantages o of such a form of financing A very satisfactory method of ot retiring bonds is on the basis of paying of off tenth one-tenth of the total amount due each year for ten years beginning with the eleventh year after the reclamation reclamation reclamation re re- re- re and ending with the twentieth year Funds lunds for retirIng retiring retiring ing bonds are raised as a part o othe of oC the regular taxes by the same officers officers officers of of- and in the same way so the whole situation atlon resolves Itself into reclaiming the land at the expense of buyers bond-buyers paying a slightly greater tax out of the Increased profits profits profits pro pro- fits for ten years ears to take care of the Interest and then a slightly greater tax for another ten years to take care of the payments on the principal That a bond lien Is not a mortgage mortgage mortgage mort mort- gage on land Is shown by the fact fac that land may be bonded for drainage drainage drainage drain drain- age even if it it has a first and second mortgage upon It or it can be mortgaged mortgaged mortgaged mort mort- after a drainage bond has been placed upon it Holders ol of mortgage never object to a bond being placed on the land in question lumps while drainage bonds are re retired retired retired re- re tired In an payment easy-payment schedule I Finally with a mortgage on the land It Is difficult to raise money on the theland theland theland land for other purposes while with witha a drainage bond on the land that Is ia easy Federal farm loans may be secured secured secured ed on bonded land but not on land already mortgaged except to retire the old mortgage Federal farm loans are not satisfactory for financIng financing financing ing drainage reclamation for Cor many of ot the reasons Just given as IndicatIng Indicating Indicating ing that a mortgage is not satisfactory satisfactory satisfactory tory form of raising funds for drainage drainage drainage drain drain- age reclamation Good use may be made of the federal loans after drainage drainage drainage drain drain- age has been accomplished however for the purpose of oC new equipment Improvement of fences 3 of ot seed hiring of extra labor and perhaps making necessary changes in the irrigation arrangement of the farm Drainage bons bans are a lien Hen upon the thea a annual annual nual assessments and not on the theland theland the theland land itself and so long as the assessments assessments assessments assess assess- ments are paid as they fall due the theland theland I Iland land Is not obligated The assessments assessments assessments assess assess- ments being collected as a a. a part of the regular taxes Insures fairness and makes takes it impossible for any owner to default on his drainage assessment assessment assessment as as- and thus throw a burden on other lands In the district If It default default default de de- de- de fault Is made on all the tax the land will of ot course be sold subject to re re- re- re In every district there are persons who prefer to pay the entire cost of drainage at once and thus escape the bond lien and the interest payments Th J laws provide that payments may maybe maybe maybe be made in full before the bonds are Issued This is entirely unnecessary unnecessary unnecessary sary however since the owners may purchase bonds in sufficient amount to cover their assessment for drain drain- age Moreover l the interest rate on drainage bonds is so low loin that it itis itis itis is good business to 10 bond the land and Invest he amount of ot the drainage assessment assessment assessment as as- in securities that pay a higher rate The laws provide that bonds may maybe maybe maybe be issued up to the amount of the total assessment of benefits Thus if it the first issue is insufficient to pay the co cost cost Cof of drainage drai ge a i t i bonds ma may be issued These are usually taken by the original buyers but in any event the results of the drainage already done are always so that no difficulty Is experienced experienced experienced ex ex- ex- ex in obtaining the necessary funds The average cost of drainage is about 2000 per acre The usual rate of interest on drainage bonds is about 6 per cent Thus if it bonds are retired over a ten year period beginning after ten years the maximum maximum maximum max max- annual cost will be only a couple of or bales of hay or a couple of bushels of potatoes or a couple of sacks of grain or a half ton of beets at average prices |