74TH CONGRESS 1st Session } SENATE { REPORT No. 527 ISSUANCE AND SALE TO THE UNITED STATES OF CERTAIN BONDS OF MUNICIPAL GOVERNMENTS IN PUERTO RICO APRIL 15 (calendar day, APRIL 18), 1935.-Ordered to be printed Mr. BONE, from the Committee on Territories and Insular Affairs, submitted the following REPORT [To accompany S. 1227] The Committee on Territories and Insular Affairs, to whom was referred the bill (S. 1227) to authorize the issuance and sale to the United States of certain bonds of municipal governments in Puerto Rico, and for other purposes, having considered the same, report favorably thereon and recommend that the bill do pass with the following amendment: Strike out all after the enacting clause and insert in lieu thereof the following: That bonds or other obligations of Puerto Rico or any municipal government therein, payable solely from revenues derived from any public improvement or undertaking (which revenues may include transfers by agreement or otherwise from the regular funds of the issuer in respect of the use by it of the facilities afforded by such improvement or undertaking), and issued and sold to the United States of America, or any agency or instrumentality thereof, shall not be considered public indebtedness of the issuer within the meaning of section 3 of an Act approved March 2, 1917, entitled "An Act to provide a civil government for Porto Rico, and for other purposes", as amended." The bill, as amended in committee, has the approval of the Department of the Interior, and its purposes are set out in full in the following letter from the Secretary: Hon. MILLARD E. TYDINGS, DEPARTMENT OF THE INTERIOR, Chairman Committee on Territories and Insular Affairs, United States Senate. MY DEAR MR. CHAIRMAN: Enclosed herewith is a draft of a proposed bill exempting revenue bonds or other obligations issued and sold to the United States by Puerto Rico and its municipal governments from the limitation of public indebtedness contained in section 3 of an act of Congress approved March 2, 1917 (39 Stat. 951), entitled "An act to provide a civil government for Puerto Rico, and for other purposes", as amended. On January 21, 1935, in response to my letter to you of January 15, 1935, a somewhat similar bill, S. 1227, was introduced in the Senate by Senator Hayden. The bill then introduced, S. 1227, was framed primarily for the purpose of aiding municipalities in Puerto Rico in their efforts to provide very necessary public undertakings without imposing additional tax burdens upon the people by permitting them to issue, to the United States, bonds payable solely from the revenues of the undertakings constructed. It contains, however, some other provisions which, while desirable, are not essential to the main purpose. Those additional provisions are a direct grant of authority to issue such bonds to the United States without the intervention of the insular legislature, and the validation of all bonds sold to the United States. Legislation satisfactory to the Department which will make such additional provisions unnecessary has been introduced in the present session of the insular legislature, and the Department feels satisfied that those matters can properly be left to the initiative of the insular legislature. It is considered extremely desirable in the interest of the island, however, that the main portion of the bill be enacted into law. For this reason, and in order to simplify the bill, the enclosed substitute will prove satisfactory in its place. On March 19, 1935, a resolution of the Senate of Puerto Rico memorializing the President of the United States, the President of the Senate, and the Speaker of the House of Representatives and others to approve legislation introduced in the Congress to amend the Organic Act of Puerto Rico, in the sense that bonds issued by municipalities to carry out self-liquidating projects should not be charged against their borrowing capacity, was referred to the Committee on Territories and Insular Affairs. The attached bill will effectuate the result requested as to bonds issued to the United States and payable from revenues of self-liquidating projects. In view of the facts presented, it is respectfully requested that the proposed bill be placed before the Senate for appropriate action, in lieu of the bill previously introduced, and its enactment is recommended. Sincerely yours, HAROLD C. ICKES, О Secretary of the Interior. APRIL 15 (calendar day, APRIL 18), 1935.-Ordered to be printed Mr. BONE, from the Committee on Territories and Insular Affairs, submitted the following REPORT [To accompany S. 2315] The Committee on Territories and Insular Affairs, to whom was referred the bill (S. 2315) to authorize the incorporated town of Valdez, Alaska, to construct a public-school building and for such purpose to issue bonds in any sum not exceeding $50,000; and to authorize said town to accept grants of money to aid it in financing any public works, having considered the same, report favorably thereon and recommend that the bill do pass with the following amendment: On page 5, line 3, after "purpose", insert "including the Emergency Relief Appropriation Act of 1935,". The above amendment was also recommended to the House of Representatives by the Committee on the Territories in House Report No. 509, Seventy-fourth Congress, accompanying a companion bill (H. R. 6723) in the House of Representatives. The purposes of this bill are set out in full in said report, which is incorporated herein and made part of this report. [H.Rept. No. 509, 74th Cong., 1st sess.] The Committee on the Territories, to whom was referred the bill (H. R. 6723) to authorize the incorporated town of Valdez, Alaska, to construct a publicschool building and for such purpose to issue bonds in any sum not exceeding $50,000; and to authorize said town to accept grants of money to aid it in financing any public works, having considered the same, recommend that the bill be amended as follows: Page 5, line 3, after the word "purpose" insert the following: "including the Emergency Relief Appropriation Act of 1935", and that as so amended, the bill do pass. The town of Valdez was founded in 1897. Its population, as shown by the census of 1930, was 442. It is now reported that the population of the town has increased more than 100 during the past year due to renewed activity in gold mining in the district in consequence of the increased price of gold from $20.67 to $35 per ounce. Valdez is the southern terminus of the Richardson Highway which extends north from this place to Fairbanks in the interior of Alaska and thence to Circle on the Yukon River. Traffic over the highway is increasing from year to year, and this traffic has some influence upon the prosperity of the town. The town now desires to build a new schoolhouse, it being reported that the old one has fallen into such a state of disrepair as to be no longer really fit for use as a schoolhouse, and the upkeep thereon being quite expensive. It is proposed to apply to the Public Works Administration for a loan and grant of not to exceed $50,000. It is entirely possible that the total loan and grant will not be more than $40,000, in which event, under the provisions of the National Industrial Recovery Act, a grant would be made of 30 percent of the cost of labor and materials used in construction, and a loan for the balance. So it is likely that the amount of bonds to be issued will not exceed $30,000, or at the most $35,000. However, the Public Works Administration advises that authority be given to issue bonds for the amount of loan and grant desired. A number of children of native blood attend the town school and it is thought that the education of these children should be taken care of by the Federal Government or that upon its failure to do so the Federal Government should contribute to the cost of the building in a sum greater than the usual grant allowed by the Public Works Administration. It is not certain that this will or can be done. The town has no outstanding obligations or liabilities of any kind. A statement of the receipts and disbursements of the town for the years 1933 and 1934, together with a statement of the tax rate and the assessed valuation of taxable property follows. Although the assessed valuation of taxable property is small, it is thought that such a loan as may be authorized by the Public Works Administration under this act will be justified considering the history of the town and the need for this improvement. In this connection, another feature concerning the history and the financial status of the town is worthy of consideration. Valdez is situated in a wide, open valley through which flows what is known as the "Glacier Stream." Since its inception the town has probably spent upward of $50,000 in the construction and maintenance of dikes to protect the town from the damage caused during the highwater stages of this stream. The Delegate from Alaska reports that several years ago the town had accumulated, over and above its running expenses, approximately $7,000 to be used in construction of the proposed schoolhouse. Thereafter, the Glacier Stream tore away a portion of the dike surrounding the town, making it necessary to use this money in repair of the dike. Thus all ready funds were exhausted. Later the Territorial Government and the Alaska Road Commission jointly raised and improved the dike so that the town is now safe and no futher expenditures of this kind will be required of the town. Were it not for the unusual burden thus imposed upon the town, it would not be necessary at this time to seek to sell bonds in order to secure funds for the construction of the schoolhouse. Assessed valuation of taxable property, based on 100-percent ratio: 1933. $423, 482 The town has no outstanding obligations or liabilities. $8,859.36 9,799. 52 |