Show ADVANTAGES OF BONDING A DRAINAGE DISTRICT R R. A. A HART Senior Drainage Engineer United States Department of Agriculture The financing of drainage Is one of ot the most important problems s arising in connection with reclamation reclamation reclamation tion by for tor in addition to the theland theland theland land being largely unproductive and of little present value it often heavily encumbered already and the owners owner as a rule are unable to offer other other security for loans In any event event It it would be difficult to secure long time l loan low interest t rates a as is r- r I Il Economics demand that the cost cost- of reclamation shall be borne by the theland theland land or more properly by the Increased in increased increased In- In creased returns from the l land nd The drainage statutes require that the benefits of reclamation Uon must exceed exceed exceed ex ex- ex- ex the cost plus any Incidental damage V As a matter of of fact the increased returns from lands reclaimed by drain drainage drainage age frequently amount to more the first year than the total cost of drainage drainage drainage drain drain- age and in general more than pay the cost of redemption This is truee truce whether the lands are almost entirely unproductive and therefore enjoy y a proportionately large increase or whether they are producing nearly maximum returns and are only slightly the costs of re- re reclamation re reclamation under the terms of the statutes are proportioned according to the relative benefits It will be seen een therefore that the only ohly slightly since the cost of ot reducing reducing reducing re re- re- re the least return and least able to o stand the cost of improvement Under the statutes the necessary funds are raised by annual assessments assessments assessments assess assess- ments so that only a u small part of ot the total amount required to pay for tor the drainage construction work is la available avail avail- able at any anyone one time It is necessary however that the reclamation be accomplished accomplished ac nc- ac- ac com pUshed at once and this in turn requires that tha t the entire fund be available available available avail avail- able at once The most satisfactory method of ott securing funds is to Issue drainage district bonds Such a proceeding is authorized by the drainage district statutes and has pr proved ved very satisfactory satisfactory satisfactory satis satis- factory and has many adv advantages some of ot which h follow 1 In the first pla place plage e the entire fund required may bo be raised at once This permits of the letting of ot contracts contracts con con- tracts for the complete reclamation Immediately and at lower unit cost coat Materials and supplies may be purchased purchased purchased pur pur- chased in largo large quantities at minimum minimum minimum mini mini- mum cost Freight and other transportation transportation transportation trans trans- rates will be lower on larger larg larg- er lots It also makes possible the use of machinery and labor saving devices which not only reduce the tho ultimate cost but the reclamation reclamation reclamation mation so that a minimum number of crops are lost loat Furthermore reputable reputable reputable able and contractors maybe may maybe maybe be Interested and closer and more efficient efficient ef ef- inspection may be given 2 Funds ma may be secured at a alow alow alow a- a low rate of ot interest The Tho statutes statutes t 1 prescribe a n maximum rate of ot seven I Iper per cent but drainage securities are in great demand at six per cent The i i statutes a also proved that the bonds cannot be sold besold sold for less less than par so there is no opportunity for for Juggling the issue Bonds are ara sold after a competitive lve letting and the h interest terest rate having once b been en fixed cannot be increased sed as asin in the case case of of mortgage mort mort- gage 3 Drainage dis district bo bonds ds constitute constitute con con- n- n a long time lo loan n By the terms of or the statutes such issues run for tor not less than th-an ten years years years' nor more than thanh h tw twenty nty years As Asa a rule the bonds are s serial and are r retired a cording to toi their he r serial I numbers s over e a period d of i Il a- a o Cr r k Y years ears It is is custom merY ry to have havethe the t the annual assessments during the first I year or so cover the interest t charge ge only nh Subsequently the a annual nual assessments assessments as as- are large enough to pay the interest charge and to provide a sinking sinking sinking sink sink- ing fund for the retirement of ot the bonds bonds The assessments ar are thus us very light at first but as the land is restored to full productiveness pod ess they become lar larger er As a matter master n tt r of fact it is is' possible to escape any ass assessment the first y year ar by making aking the bond iss issue e large enough to I Include dude the th-e first fiirst years year's Interest Thus the cost of ot drainage Is paid entirely by the In Increase Increase increase In- In crease in crop r returns and does not pot represent a bl burden r en directly o oil on l the ow owner er M 4 Drainage district b bonds are arc area arca a tax lien on V the the- theland land and therefore there therefore fore rore come ahead of any any other enc encumbrance encumbrance 2 brance previous or subsequent From this it follows that however heavily enc encumbered the land may be alre already dy it is still possible to raise the necessary funds for draining It it by issuing drainage district bon bonds And the he holders of mortgages connot complain complain com com- plain of this of-this this situation ton since it means menDS sh simply that a way Is provided for converting converting converting con con- their dubious security into one that is 19 gilt edged and all this without Involving any expense or risk to them e 5 5 Tho The drainage assessments are added to the the regular tax rolls and collected in the same same manner as aa general general gen gen- eral oral taxes Thus a n. landowner cannot cannot cannot can can- not pay his state county school and other other taxes without ut paying his drainage Improvement tax and in this wa way the remaining landowners within the district are protected against his I default IThe The statutes merely authorizes the raising of ot necessary funds by annual assessments and compell the landowners landowners landowners land land- owners to pay according to tho the beni benl- fits derived The method of ot securIng securing ing lug the tho funds for immediate work is optional with the landowners in each particular district The statutes provide the machinery by which a abond abond abond bond issue may be floated and they provide for tor an election within the district by which It Il is determined whether or not a majority of the landowners landowners landowners land land- owners desire to issue bonds There is a special provision in the law that permits any landowner to topa pa pay his assessment in full before the bonds are Issued d and thus escape having his land bonded and escape the payment of interest It is to the Interest interest interest in In- terest of ot both the tho district and the in individual individual In- In however to have havo all the tho thela la de da within the district included Inthe in tho the bond Issue So far as al the district II f Is concerned the demand for the bonds will be greater the larger the proportion of ot fairly good land and so far as the individual Is concerned his money can command a higher rate than he will have to pay under the tho bond issue Should ho desire he may usually purchase bonds of tho the district in the amount of his assessment or other am amount |