cation to the Housing and Home Finance Agency for these funds, but each city has good reason to believe that they will have difficulty in selling any more bonds on the public loan for these facilities and desire to use the Housing and Home Finance Agency for the sale of their bonds for these public improvements. The cities are as follows: These facts may be substantiated by the facts contained in the files of the Housing and Home Finance Agency at the Louisville office or the Housing and Home Finance Agency, Federal Building, 6th and Broadway, Louisville, Ky. We are enclosing herewith a Verifax letter from Hon. B. M. Fast, mayor of the city of Brandenburg, Ky., in which he enclosed a letter from the Charles A. Hinsch & Co., Inc., of Cincinnati, Ohio, which clearly indicates that the city of Brandenburg will not be able to sell its bonds on the open market for the amount required to build a city sewer system and sewage treatment facilities. They are enclosed herewith and marked for identification purposes as exhibits A and B. We submit this actual correspondence between the mayor of the city and this bonding house, because it illustrates clearly the need for financing directly through the facilities of the Housing and Home Finance Agency, and from practical experience, the smaller cities under population of 5,000 will, in most cases, require this type of financing, if they are to have adequate public water supplies and sewage treatment facilities. Due to the time element involved, I have been unable to secure this information from more of the cities in Kentucky, but there are many in the same situation that could submit such a statement, if they had time to secure it. Also, in order to project this subject a little further, we submit herewith letters concerning the financing of the public water supply for the city of Tompkinsville, Ky. These letters are submitted by Frank S. Parrigin, civil engineer, who is the engineer in charge of this project and also assisting the city in applying to the Housing and Home Finance Agency for a loan for these funds. These clearly indicate the problem facing these small cities in Kentucky, and I hope they will be acceptable as factual information, which applies to many other cities in Kentucky of the same population class. These exhibits are submitted herewith and marked for identification purposes as exhibits C, D, E, and F. Also, I have a letter which I have enclosed herewith from Hon. Tom F. Underwood, Jr., attorney at law, Lexington, Ky., who represents several small cities in the State of Kentucky, which are set out in the letter. Mr. Underwood indicates that the facts we have stated regarding the inability of small cities and towns to finance public water supplies and sewage facilities are true, and he further substantiates this by his letter and enclosures. Since his letters and statements from investment houses are self-explanatory, we include them herewith and mark them for identification purposes as "Exhibits G, H, and I." We also enclose herewith a letter from Hon. W. E. Sparks, mayor of the city of Greenville, Ky., in which he states that it was necessary for the city of Greenville to apply to the Housing and Home Finance Agency for a Federal grant in order to finance the city water system and sewage treatment facilities. We have marked this letter for identification purposes as "Exhibit J." We are also enclosing correspondence which we have received from the city of Olive Hill, Ky., which urgently needs a sewage disposal plant and also the city of Radcliffe, Ky. These are marked for identification purposes as "Exhibits K and L." Also, we wish to state that in a few rare instances where small cities have been able to finance a public water supply, the financing has been so tremendously costly and high that it has been too expensive to use public financing. As an example of this, I want to state as follows: The city of Radcliffe, which is located in Hardin County, Ky., east of Fort Knox, financed a water system by the sale of revenue bonds on the open market. Because of the full risk involved in the sale of these bonds, it was necessary for the city to pay 5 percent interest, 5 percent fiscal agent fee, and the bonds were discounted 5 percent. This made the total cost for the sale of these bonds 15 percent. For verification of this, the committee may acquire these specific facts from the mayor of the city of Radcliffe, Hardin County, Ky., or the fiscal agent and bonding house that represented the city. Not only do we have the problem of being unable to sell revenue bonds on the open market by the smaller cities, but we also have the problem of tremendous and unreasonable interest rates, fiscal agent charges, and discount rates, which intelligent people refuse to pay. This is indeed another great reason why the smaller communities cannot, and will not, pay this tremendous cost to borrow the money to finance these projects. Therefore, because of the unreasonableness of the interest rates and other incidental costs, these small communities cannot obtain the required amount of funds at a reasonable rate of interest or cost. From years of experience and giving financial advice to these small communities throughout the State of Kentucky, I wish to reiterate and restate that if we are to have a successful water pollution control program and if these smaller communities are to have acceptable public water supplies and sewage treatment facilities, there must be more money made available to them at a reasonable rate of interest and other financing costs. In the first paragraphs of this letter, we have enumerated the amount of funds applied for by these cities. If you would multiply the number of cities in Kentucky that have actually applied for a grant and the cities that have made inquiry concerning the terms of the loan from the Housing and Home Finance Agency, it would conclusively indicate the need for these funds in the State of Kentucky. When the other cities below 5,000 are added to the list, it will be easily seen that the amount of money required in Kentucky alone would be tremendous. When this amount is added, which I am sure is average for the States throughout the United States, it can be seen that additional Federal funds will be urgently needed to support the requirements of these various small communities throughout the United States. If the funds needed in Kentucky could be multiplied by the requirements of all States in the United States, it will be readily apparent that the requests and amounts set forth in H.R. 5944 are badly needed and in the long run, will have to be increased as the years pass, if these needs are going to be met. If they are not met by the Federal Government through the Housing and Home Finance Agency or some such similar agency, these smaller cities and communities will never have adequate and approved water supplies or sewage treatment facilities. I request that this information be added to my statement made before your committee on April 27, 1959. If further information would be helpful and if there would be time for me to acquire it, I will be glad to supply all the information obtainable. I deeply regret that I have not had sufficient time to obtain actual statements from the responsible city officials of many small communities in Kentucky that need these funds in order that you might have firsthand information. I wish to advise also that the city of Beechwood Village has applied to the Housing and Home Finance Agency for a loan and along with the application, they submitted to the Housing and Home Finance Agency three letters from three different bonding houses, in which each bonding house stated that in their opinion, the bonds of Beechwood Village could not be sold on the open market. These letters are in the official files of the Housing and Home Finance Agency at Atlanta, Ga., and the committee may acquire these letters from the Housing and Home Finance Agency through Commissioner Hazeltine, or the director of the regional office at Atlanta, Ga. Most respectfully yours, WILLIAM A. LAMKIN, Jr., Attorney, Water Pollution Control Commission. EXHIBIT A KENTUCKY WATER POLLUTION COMMISSION. CITY OF BRANDENBURG, Brandenburg, Ky., April 30, 1959. DEAR SIR: At your request I am enclosing a letter from Robert R. Meyer, of Charles A. Hinsch & Co., dated June 17, 1958. This was in reply to our inquiry about financing a sanitary sewer system for the city of Brandenburg. While I have several later letters from Mr. Meyer they all feel that we should do the financing through the Housing and Home Finance Agency if possible. Yours truly, B. M. FAST, Mayor. Mr. B. M. FAST, EXHIBIT B CHARLES A. HINSCH & Co., INC., Mayor, City of Brandenburg, Brandenburg, Ky. DEAR MAYOR FAST: We understand the city of Brandenburg desires to construct a sewer system to serve the people of the city and based on present estimates of your engineer, the cost will be somewhere between $275,000 and $300,000. You have requested that we, as the fiscal agent for the city of Brandenburg, advise you regarding the possibilities of financing this project on a revenue basis whereby a sewer charge would be made, the proceeds of which would be used to pay principal and interest on any bonds issued to finance the project. We have given this matter careful consideration in order to advise you as to the action we think you should take in order to secure a sewer system to serve the city of Brandenburg. In order for the city to sell bonds in a sufficient amount to finance this project, we believe it would be necessary to combine the sewer system with the waterworks system into a joint operation whereby water and sewer charges would be combined on the same statement, thereby providing a better security for the purchasers of the bonds issued to construct the sewers. The city has outstanding an issue of waterworks revenue bonds and in order to finance the proposed project it would be necessary to either redeem the outstanding bonds or purchase them from the present owners or otherwise the proposed issue of bonds would be second-lien bonds. The outstanding bonds are not redeemable until July 1964, so consequently, that method of securing the outstanding bonds could not be used. Therefore, the only method possible would be to purchase the bonds from the present owners and this not only would be difficult but possibly expensive. We have not been furnished a copy of the engineering report on your sewer project and without first reviewing the report we would not be in a position to give you a definite decision regarding the financing, but we believe it would be difficult, if not impossible, to finance this project through the sale of bonds unless the waterworks system was combined with the sewer system and the presently outstanding bonds were refunded into the new issue so that all the outstanding bonds would be first-lien bonds. If, however, you wish to proceed on this basis we, as fiscal agent, will be happy to proceed with the necessary work and will endeavor to sell the bonds for you at public sale. We understand that you have discussed the financing with the Housing and Home Finance Agency with the thought that perhaps that agency would arrange to loan you the necessary funds for your sewer project. It would be our recommendation and suggestion that you make application to the Housing and Home Finance Agency to borrow the necessary funds to construct your sewer system. While we think the loan would be a good one and adequately secured, which after all is the main consideration of the Housing and Home Finance Agency, with us it is a question not only of security but the possibility of marketing the bonds. Should you make application to the Housing and Home Finance Agency for a loan to construct your sewer system and in the event such application is refused, we suggest you let us know and we will endeavor to develop a method whereby this project can be financed. We believe, however, that the borrowing of the money from the Housing and Home Finance Agency would be more practical and certainly would be less expensive not only in interest charges but in overall financing costs to the city. We will appreciate your keeping us advised concerning your project and we wish to emphasize that in the event you cannot secure a loan from the Housing and Home Finance Agency we, as your fiscal agent, will do everything we possibly can to assist you in the issuance and sale of the bonds so that you might ultimately construct your sewer project. We will appreciate your advising us your final decision and we suggest you keep us advised regarding future developments. Thanking you and with kindest regards, we remain, ROBERT R. MEYER. EXHIBIT C TOMPKINSVILLE, KY., July 29, 1958. Mr. RALPH C. PICKARD, Director of Environmental Health, Louisville, Ky. DEAR MR. PICKARD: I am forwarding you, under separate cover, three copies of plans and specifications of a proposed water supply system for Gamaliel, Ky., which we trust will receive early approval of your office. In the event any exception is taken to anything let me have the information by letter, without marking the documents sent you. Addendum can be added to the documents if need is found for changes. The city is applying for a bond purchase loan with which to do this project. They are assured of a nice factory if they get a water supply. Yours very truly, FRANK S. PARRIGIN, Civil Engineer. EXHIBIT D TOMPKINSVILLE, KY., October 14, 1958. Mr. RALPH C. PICKARD, Director, Environmental Health, State Board of Health, Louisville, Ky. MY DEAR SIR: I am forwarding you three sets of specifications and the plan sheets (No. 8), of Gamaliel waterworks, in keeping with letter for your Mr. Nick Johnson covering a standpipe which it seems would be more desirable than an elevated tank for the little city of Gamaliel. It is believed you will find these very good and complete, and your approval is requested. It is not known yet whether the Federal Government will finance the project (the application has been in the agency's hands for 2 months) but if it is financed this will save some time. Yours very truly, F. S. PARRIGIN, Civil Engineer. EXHIBIT E TOMPKINSVILLE, KY., October 17, 1958. Mr. RALPH C. PICKARD, Director, Environmental Health, Louisville, Ky. (Attention: Nick Johnson.) DEAR SIR: This will supply the information requested in your phone conversation of this date relative to elevations for standpipe at Gamaliel, Ky. The standpipe located on the spot shown for the elevated storage tank will have at its base elevation of 865-there are only two small spots in the town that have an elevation of 860-one of these is just across the street from the tank location and can be reached by hose lines from the 8-inch main. Most of town will be at elevation 820 to 840, the exceptions being the business district which is on backbone, or ridge. 39807-59-17 A standpipe, 16 feet in diameter and 120 feet in height will hold 179,000 gallons of water-using round numbers, 1,490 gallons per foot-in the top 50 feet, we get 74,500 gallons, or almost as much as the elevated tank would give us with 50 feet used, 70 feet, level would give 30 pounds, static pressure on the main, neglecting friction, so the first feet used would give a pressure well above the 21 pounds plus the rating bureau asks for, in fact above any reasonable demand for fire protection. Using 80 feet takes 119,200 gallons from the tank; at the rate of 500 gallons per minute that amount of water would fight a fire for almost 4 hours. A 75,000 gallon tank would fight a fire for just 21⁄2 hours at the same rate of usage. Cost data: The 75,000-gallon elevated tank would cost $22,000 plus the foundation which would add about $3,400, giving a total cost of $25,400. The 179,000gallon tank will cost about $16,000 plus about $5,000 for foundation, a saving of about $4,400 and the lower the costs on the water supply for this town the better it will be financially. I might add with 80 feet of water used, the higher ground would still have 17 pounds static pressure neglecting friction. This would not be great due to the high spots being close to standpipe and on an 8-inch main. It is proposed to get bids on both these structures if the HHFA ever approves the financing-it's bee in their hands 2 months now. Yours very truly, EXHIBIT F F. S. PARRIGIN, TOMPKINSVILLE, KY., April 29, 1959. Mr. RALPH C. PICKARD, Director, Division of Sanitary Engineering, DEAR SIR: It will be appreciated if you will write a letter (four copies) setting forth what you know about Lewisburg, Ky., and the need of the city for a good domestic water supply, as you did in the case of Ganaliel, Ky. These should be addressed to the HHFA Communities Facilities Administration, but lodged with me until I can get a set of documents prepared to go with your letters. You did a nice job on the Ganaliel project, and I judge you are aware of conditions at Lewisburg so it can be given the same sort of treatment. The Federal Government, Department of Agriculture, is going to build a lake near the city which has a designed capacity of 452 acre-feet that the city can use. I have made a preliminary investigation, and it seems feasible. I had a talk with someone in your office who agreed you could approve a oneunit filter for this particular town, capacity 140 gallons per minute, and when it gets to the design stage I would like to visit your office and have it looked over before completion, so we will be in agreement and not have to report to addendums. These folks have been talking and thinking about a water project a long time. Someone in the State university told them about 50 gallons per minute would be about their requirement, which for a full day is about correct, but no one wants a plant that small. One of my handbooks says about 63 gallons per minute would do, certainly 140 gallons per minute is ample, and while I prefer a twounit filter, one unit is all the cost this project could stand. Yours truly, EXHIBIT G FRANK S. PARRIGIN, Civil Engineer. Mr. W. A. LAMKIN, LAW OFFICE OF TOM R. UNDERWOOD, JR., Attorney for Kentucky Water Pollution Control Commission, DEAR MR. LAMKIN: No private funds whatever from any source have been available to Kentucky small towns and districts for revenue bond financing of new water and sewer projects at any time during the past 5 years. |