Warning: You may be
up-set to know
| Voters in the six newly-formed
Golden Gate Bridge and Highway District counties went to the polls on Nov 4, 1930 to
approve a major bond issue during the depths of the Depression to fund construction
of the Golden Gate Bridge. Promises made during the campaign were amusing.
This 1930 campaign brochure promised that tolls on the proposed bridge would drop to
25 cents a car by 1960, and transit across the span would be free by 1970. The “yes” vote
was 145,697, and 47,005 voted “no.” The bridge also replaced the profitable Sausalito ferry,
but the District, later, raised tolls to support an expensive, and unprofitable, bus and ferry system.
The total bond issue to be voted upon at the election November 4 for the Golden Gate Bridge, will be $35,000,000. Total earnings in 40 years will be $110,942,800. Bonded indebtedness in any one of the six counties included in the Golden Gate Bridge and Highway District will not be increased by the approval of the bond issue. The bridge will pay for itself out of tolls. These tolls will redeem the bond issue, pay all interest, pay for maintenance of the bridge and accumulate a vast profit--not less than $17,242,800, within the 40 year period. It is the consensus of opinion of all who have studied the subject that the construction of this span will increase property values not only in the territory tributary to the bridge, but throughout the entire metropolitan bay area.
| The Golden Gate Bridge with its six traffic lanes
will have the capacity to pass without congestion all traffic that its north and south approaches will
Directors of the Golden Gate Bridge and Highway District are on record in a signed pledge to
the voters of the District that if after the bridge bond issue of $35,000,000 has been approved
at the polls by the necessary two-thirds majority vote, it is found that bids upon the span exceed
the present estimates of the engineers,
35 million, the bonds will NOT be sold but the whole proposition will be re-submitted to the voters.
This will act as an effectual safeguard against any possible overrun in the estimated cost of the bridge, silencing the objection that after the bonds once have been voted, the cost of the bridge will run many millions of dollars above the engineers' estimates. The financing plan employed by the Golden Gate Bridge and Highway District is the issuance of forty year 5% bonds covering the cost of building the bridge and placing it in operation and redeemed from the earnings of the bridge at five year intervals. The cost above referred to includes the carrying charges during construction.
| This plan of financing has been established as
the safest and the best. It not only protects the District, but the bondholder is protected as well, because
the District guarantees the payment of interest and redemption of the bond. This makes the bond salable
at the highest premium and at the lowest possible interest rate. This method is the only method approved
by financiers and the only method in use for toll bridges.
Earnings have redemption possible during the twenty-first year of operation, but for better salability the bonds will run forty years. At the end of forty years, the bridge becomes a free bridge and reverts for operation to the State, at the option of the State. Under this plan of financing, the taxpayers carry no burden. The toll pays for the bridge and also refund the preliminary expense tax. The plan presents a thoroughly tested method of bridge financing, established as standard practice by leading cities and States. It substitutes a users’ tax for a direct tax, and thus not only eliminates bridge taxation but produces revenues applicable for the lessening of general taxation.
| The Golden Gate Bridge District as finally formed
includes the counties of San Francisco, Marin, Sonoma, Del Norte and parts of Mendocino and Napa.
As the result of a careful investigation the Board of Directors fixed the total amount of bonds to
be authorized at $35,000,000. Of this amount $32,000,000 may be issued and $3,000,000 retained
as a reserve. The estimated cost of completing the structure is $32,815,000. Thirty-two million dollars
face value of bonds with a coupon rate of five per cent will with the expected premium produce an
amount in excess of the
construction “cost” sufficient to provide a further contingency item.
The policy of the directors will be to award contracts in open competition to the lowest qualified and responsible bidders. The successful contractors will be bonded to insure faithful performance. Under this procedures, unless bids come within the estimates of the engineers, no contracts will be awarded, hence the completion of the bridge within its estimated cost is automatically guaranteed.
| This policy, and the reserve of approximately $3,000,000 in bonds
safeguards the enterprise against the possibility is often suggested
that the bridge may be started and not finished for lack of money, and
that additional financing might become necessary. The foregoing was the procedure followed in the building of the Hudson
River bridge in New York, the engineers of which are also the engineers
for the Golden Gate Bridge, the contract awards in the case of the
Hudson River bridge under-ran the engineers' estimates.
The power to fix tolls rests with the Board of Directors, but the rate of toll is governed by economic considerations as the charges of any public or private service are governed. The toll schedule proposed in the beginning will produce a revenue of 84.3 cents per average vehicle, which is approximately the average toll in effect at the Carquinez bridge and lower by approximately fifteen percent than the present average San Francisco-Sausalito ferry rate.
| Tolls will be progressively decreased as earnings warrant to a minimum
of 25 cents during the last ten years. Under the system of financing adopted, the bridge district lends its
credit only, and reliance is placed on the demonstrated ability of the toll
bridge to redeem the bonds issued to cover their cost. The schedule of
redemption set up assumes that retirements will not begin until the
tenth year, and then at the rate of only 200 bonds per year, but that
this rate is to be gradually increased at five-year intervals until the last
five-year period of the term, the rate of redemption will be 2800 bonds
annually. At the fortieth year, the bridge having retired its bonds, and
accumulated a substantial surplus of seventeen million odd dollars
besides, can become free.
The Golden Gate Bridge is based on the most rational of all methods of taxation, namely, the user’s tax. This tax falls only on those who use the bridge. The toll system of payment for the building of the Golden Gate Bridge is not only logical but the most favorable plan of financing from the standpoint of tax immunity and tax relief that it is possible to devise. Roads, schools and like public improvements are liabilities-public charges. A public toll bridge, on the other hand, is an asset, an income-bearing property, a profit-sharing public corporation, in which each taxpayer in the district is a stockholder and receives annual dividends.
From a book in the history of San Francisco: in San Francisco, CA. Bridging the Famed Golden Gate