Every local authority is hereby empowered to borrow and raise money by way of loan under this Act for the construction of a public work within the meaning of this Act; and shall have and may exercise all such powers, rights, and authorities as such local authority has or could exercise under any Act of the General Assembly in respect of works or undertakings which it is thereby empowered to construct or undertake, and shall be subject to all such liabilities in respect thereof as would arise under any such Act.

Before granting any loan the Treasurer shall be satisfied that the local authority has been duly empowered to raise money by way of loan for the construction of a public work, and has made a special rate for the purpose of paying the interest and other charges thereon, and has taken all necessary steps to comply with an Act passed in the present session of the General Assembly, called “The Local Bodies Loans Act, 1886,” or with such other Act of the General Assembly as may empower the local authority to construct or undertake a public work within the meaning of this Act, and borrow money upon the security of a special rate, or upon the security of a special rate, together with such other security as may be authorized by any such Act and this Act.

The Treasurer shall not grant any loan to any local authority under this Act in any case where any part of the special rate forming the whole or part of the security for such loan is payable by or could be levied upon the Crown or Native owners, in respect of Crown lands or Native lands, under the provisions of “The Crown and Native Lands Rating Act, 1882,” or any amendment thereof.

The Treasurer may, in his discretion, refer any application for a loan, with particulars of the security offered thereon, to the Controller and Auditor-General, and may require him to advise as to the sufficiency of such security. In any such case the Treasurer shall be bound by the opinion of the Controller and Auditor-General.

The revenues to be derived from any public work, or from any endowments or other property of the local body, may be made a part of the security for the payment of the annual or other charges upon any loan, and such loan may be secured over such work, undertaking, or property, and the revenues derivable therefrom, in addition to a special rate to be levied for that purpose; but such special rate shall represent at least one-half of the annual liability of the local authority jn respect of the loan.

The moneys to be lent or advanced to a local authority shall be paid out of such funds as are in the control of the Treasurer by virtue of Part III. of this Act, and the local authority shall from time to time do all acts and things and execute all instruments necessary to give effect to this Act.

The Treasurer may enter into an agreement with a local authority for all or any of the purposes following, and may from time to time modify or alter any such agreement:—

He may agree to make a loan in one sum, or to lend apart of such sum in one financial year and another part in the next succeeding or a subsequent year.

He may agree to make advances to the local authority of such sums on account of such loan, and at such time or times as shall be set forth in the agreement.

All such advances shall bear interest at the rate of four pounds per centum per annum until the thirty-first day of January next following, when debentures shall be given to the Treasurer by the local authority as hereinafter provided.

But if any amount so advanced or any part thereof shall be a fraction of fifty pounds such fraction may, if the loan be not completed in that year, be carried on to the next year, and shall in that case be treated as if it were part of the advances to be made in the year to which it is carried forward.

The Treasurer shall, as soon as may be after the thirty-first day of January in each year, render an account to each local authority that has received advances under the foregoing provisions, and the local authority shall immediately thereupon make and issue to the Treasurer debentures for the sums advanced as aforesaid, together with interest thereon at the rate aforesaid added thereto.

Where a local authority has not received any advance on account of the loan, then the debentures shall be given and issued on the loan being paid over to such authority.

Every such debenture shall be in such form as the Governor in Council shall from time to time prescribe, and subject thereto shall—

Be for such amounts as the Treasurer directs, and shall hear interest at the rate of five pounds per centum per annum, which shall be payable by the local authority to the holder of the debenture half-yearly for twenty-six years, dating from the first day of February in the year when such, debenture is made and issued:

Contain an undertaking by the Treasurer to pay the principal sum of each debenture at the end of twenty-six years from such first day of February:

Contain such other provisions as the Governor in Council may think necessary to give effect to this Act.

The Treasurer shall not lend or agree to lend in any one year, to any of the local authorities hereinafter mentioned, a larger sum than that set opposite the name of each local authority, that is to say,—

To a County Council a sum exceeding six thousand pounds;

To a Road Board a sum exceeding three thousand pounds ;

To a Town Board a sum exceeding three hundred pounds;

To a River Board a sum exceeding one thousand pounds: Provided that the Treasurer may agree with any local authority to lend it any sum not exceeding the amounts above specified for two successive years.

If any part of a loan agreed to be taken by a local authority in any one year is not so taken, the same may be carried on to the next or any succeeding year, and may then be taken as may be agreed between the Treasurer and the local authority.

If on the completion of the public work for which any loan has been obtained it shall be found that all the money lent is not required for the purpose for which it was borrowed, then such part as is not so required shall be repaid to the Treasurer, and the Treasurer shall return to the local authority debentures to a corresponding amount.

Interest on any debentures so returned shall be paid by the local authority up to the date of such return.

If any part of the money not required as aforesaid is less than fifty pounds, then the local authority may pay it into the local fund, to form part of its ordinary revenue.

The Treasurer shall from time to time give notice in the Gazette, and in such other manner as he may think expedient, of the date on which he will be prepared to consider applications from local authorities for loans under this Act.

Applications for loans in cases of extraordinary damage where a public work has been destroyed by flood, tempest, or accident, or to carry out the terms of a prior agreement made between the Treasurer and a local authority as hereinbefore authorized, shall have priority over other applications made under this Act.

If at any time there are not sufficient funds available under this Act to enable the Treasurer to make loans to all the local authorities that have applied for them, the Treasurer shall (but subject to the terms of the last-preceding section) grant such applications pro ratâ:

Provided that if the amount alloted pro ratâ to any local authority is considered by such authority inadequate to commence the public work for which money is required, the Treasurer may agree with the local authority to hold over such amount for its use until the next succeeding year when the same shall be available, in addition to any sum which such authority may then be entitled to or make application for.

The Treasurer shall refuse to grant loans under this Act only upon one or other of the grounds following:—

That applicants have not complied with the terms of this Act:

That there is no money then available:

That the security is not sufficient.

Fresh application for a loan may be made at any time.

The statement of the Treasurer that this Act has not been complied with, that the security is not sufficient, or that no money is available in respect of any application, shall be conclusive, and no such statement shall be questioned, or be the subject of legal proceedings at the instance of any local authority, or of any person, in any Court of judicature.

If the moneys granted on one application are found insufficient to complete the public work in respect of which application is made, a further application may be made by the local authority, and may be granted by the Treasurer if money is then available and the expenditure contemplated is covered by the previous consent of the ratepayers of the district.

If the amount required on such further application is not greater than ten per centum of the sum originally authorized by the ratepayers to be borrowed, such further application may be granted by the Treasurer.

In any such case it shall not be necessary to give any notice to, or take a further poll of, the ratepayers, and further debentures may be made and issued, and the amount paid over, and a special rate may be made by the local authority as security for the interest and other charges in respect of such further debentures.

Such last-mentioned special rate shall be deemed to be and may be levied as a part of and in addition to the special rate made and levied in respect of the original loan.

All debentures made and issued by any local authority, and delivered to the Treasurer under this Act, shall be retained in the custody of the officers appointed to retain custody of securities for public moneys under “The Public Revenues Act, 1885”. Provided that nothing herein shall be deemed to affect any right or power conferred by this Act on the Treasurer in respect of any such debentures.

In any case where default may be made by a local authority in payment of the interest due upon any debenture issued under this Act, the same may be recovered from the corporate body which such local authority represents as a debt due to the Crown or the holder of such debenture, as the case may be.

In addition to any such remedy the Controller and Auditor General, in the case of the Crown, and any other person, in the case of a creditor, may be appointed a Receiver of the special rate or other security on which any debenture is wholly or partly secured, in the manner prescribed by “The Local Bodies Loans Act, 1886,” or such other Act providing for the appointment of a Receiver as may be in force in the district of such local authority.

The Council of a borough established under any Act relating to Municipal Corporations, the inhabitants of which at the time of the last census were returned as numbering less than four thousand, may apply for and obtain aid for the construction of a wharf under the control of the Council, or of a bridge on a main road upon the same terms and conditions as a local authority, provided that not more than eight hundred pounds shall be lent in any one year to any one borough.

All the provisions of this Act shall, mutatis mutandis, apply to a loan made and granted by virtue of the last-preceding section, and to the payment of the interest thereon by a local authority, and to all moneys payable by the Treasurer, as if such loan had been made to a local authority.

The Treasurer may from time to time decide, on the advice of the Minister for Public Works, what roads shall be deemed “main roads” within the meaning of the last-preceding section.

In order to afford relief to local bodies which have issued debentures under “The Roads and Bridges Construction Act, 1882,” the Treasurer shall at the request of any such local body as to any such debentures falling due after the passing of this Act receive from the local body in satisfaction thereof debentures under this Act amounting to the present value of the outstanding debentures computed at four pounds ten shillings per centum.

For the purposes of this and the next succeeding four sections, the expressions “local authority” and “local body” shall include a Borough Council that has issued debentures under the Act therein mentioned.

The Treasurer may surrender the debentures he holds under the said Act, and accept in place thereof debentures issued by the local authority under the eleventh and twelfth sections of this Act.

Every such local authority shall have full power to avail itself of the provisions of this Act, and may execute and issue such new debentures or do such other acts as shall be necessary to convert their original liability into a liability under this Act.

All debentures issued in lieu of debentures made under “The Roads and Bridges Construction Act, 1882,” shall be subject to the same terms and conditions in all respects as debentures made and issued under this Act, as effectually as if made in respect of a loan granted under its provisions, and such debentures may be dealt with or disposed of under the provisions of this Act accordingly.

All moneys arising from any composition or arrangement in respect of debentures outstanding under “The Roads and Bridges Construction Act, 1882,” and converted as aforesaid into a liability under this Act, or the proceeds of debentures received from any local authority in respect thereof, or of any debentures issued in substitution thereof, shall belong to and form part of the Public Works Fund.

The Treasurer may cause a register to be kept in the Treasury, in which shall be inscribed the total amounts of the debentures which each local authority would be required to give as security for moneys lent to it under the provisions of this Act, and in such case it shall not be required that the local authority shall give such debentures as hereinbefore provided.

Before such inscription the Treasurer shall give notice to the local authority that he intends so to inscribe such debt and the amount thereof; and if any difference shall arise as to the amount so to be inscribed, the matter shall be referred to the Controller and Auditor-General, and his decision thereon shall be final.

When any debt shall have been so inscribed the same liabilities shall attach to the local authority thereunder as would have attached to it if the local authority had issued debentures as hereinbefore provided, and all the provisions hereinbefore made in respect of any such debentures shall mutatis mutandis apply to any such inscription.

All debts due or which may become due from local authorities, and secured by debentures now held or which may be held by the Government under the provisions of “The Roads and Bridges Construction Act, 1882,” or which may be converted into a liability under this Act by virtue of the powers hereinbefore contained, may be inscribed under the provisions of this Part of this Act, and in case of any such inscription the Treasurer shall cause any such debentures to be cancelled and returned to the local authority by which the same were issued.

The stock inscribed under the provisions of this Part of this Act shall be inscribed in the names of the custodians of securities under the fourth section of “The Public Revenues Act, 1885.”

The Treasurer may in each financial year grant loans to local bodies under this Act to such an amount as shall be appropriated by Parliament for that purpose.

If no sum be so appropriated in any financial year, the Treasurer may make loans under the authority of this Act in such year to a total amount not exceeding two hundred thousand pounds, and such amount shall be in addition to any loans agreed by the Treasurer to be made previously but not yet completed.

Subject to the provisions of this Act, and for the purpose of providing the money to make loans to local authorities, the Treasurer, as often as occasion requires, and upon being authorized to do so by the Governor in Council shall have and may exercise the following powers, or any of them:—

He may in each financial year borrow any such moneys from the Public Account or from any fund in such account under the control of the Treasurer.

He may borrow such moneys entirely from one fund in such account, or partly from one such fund and partly from another, or may borrow the whole or any part of such moneys from any bank or monetary institution.

As security for moneys borrowed he may give scrip in such form as may be prescribed by the Governor in Council, and agree to redeem such scrip after he receives debentures from local authorities under this Act.

He may sell all or any part of any debentures received by him from a local authority for a part or the whole of the time they are current, with or without the option of redeeming them before they are due. No such debenture shall be sold at such a price as to produce to the purchaser an interest of more than five pounds per centum on the price paid.

He may borrow money on security of such debentures, and may hypothecate or pledge the same accordingly.

He may issue fresh debentures representing the whole or any part of such debentures. Such debentures shall bear interest at a rate not exceeding four pounds per centum per annum, and shall be current for not longer than twenty-five years from the issue thereof, or

He may issue debentures with a currency of not longer than five years, bearing interest at five pounds per centum per annum.

Any such debentures may be issued with or without taking power of redemption earlier, at the option of the Treasurer, and may be made payable in or out of the colony, and at such date as he thinks fit, or by means of a sinking fund, or by notice.

Every debenture, scrip, or other security issued and made by the Treasurer under or by virtue of this Act shall be countersigned by the Controller and Auditor-General, and without such countersignature no such debenture, scrip, or other security shall have any effect or operation.

The Treasurer shall not, in exercise of any power vested in him under or by virtue of this Act, make or issue debentures, scrip, or other security to a larger amount than is represented by debentures issued by local authorities under this Act, and remaining in the custody or control of the Treasurer, or of the officers appointed to retain custody of securities for public moneys as hereinbefore mentioned.

The restriction contained in this section shall not apply where the Treasurer issues scrip as security for moneys borrowed by him in anticipation of receiving debentures from local authorities, as provided in sub-clause three of section thirty-eight of this Act.

Whenever the Treasurer, in exercise of any power as aforesaid, issues any debentures representing debentures of a local authority or authorities, there shall be retained in such custody or control as aforesaid debentures of such authority or authorities to an amount equal to the amount of debentures issued by the Treasurer to represent them.

The Governor may, by Order in Council, from time to time, empower the Treasurer to borrow any moneys he is authorized to lend under this Act from the Postmaster-General, the Public Trustee, and the Commissioners of the Public Debts Sinking Funds. Provided that the aggregate sum to be borrowed from the Post Office Savings Bank shall not exceed two hundred and fifty thousand pounds.

Such Order in Council shall be sufficient authority to the Postmaster-General, the Public Trustee, or the Commissioners of Public Debts Sinking Funds to lend any of the funds under their control respectively, not exceeding the amount specified in such Order in Council.

The Governor may, by Order in Council, from time to time declare and prescribe—

In what manner any sums borrowed by the Treasurer under this Act shall be secured or repaid to the fund from which they have been borrowed.

What interest shall be paid when such moneys are borrowed from the Postmaster-General, the Public Trustee, or the Commissioners of the Public Debts Sinking Funds.

In what form, and upon what terms and conditions, any scrip, debenture, or other security shall be made and issued by the Treasurer for any purpose for which the same may be made or issued under this Act.

Prescribe or do any other act or thing which it is provided by this Act shall be prescribed or done by the Governor in Council.

No Order in Council made under this Act shall be repugnant to any express enactment herein contained.

There shall be a sinking fund created for the purposes of this Act, which shall be under the control of the Commissioners of Public Debts Sinking Funds, and

Such fund shall consist of such amount as may be annually appropriated from time to time by the General Assembly not exceeding two per centum on the amount of all debentures received by the Treasurer from local authorities under this Act, and he shall pay the same into the sinking fund accordingly;

The payments to be made to the sinking fund shall continue for a period of twenty-six; years, and the first of such payments shall commence within twelve months after the issue of such debentures.

The Treasurer may cause any scrip or debentures which may be issued under this part of this Act to be converted into stock, and inscribed in the manner provided by “The New Zealand Colonial Inscribed Stock Loan Act, 1882,” or may, in lieu of issuing such scrip or debentures, cause an equivalent amount to be inscribed in the manner aforesaid; and all the provisions of the said last-mentioned Act, excepting those contained in the third, fourth, fifth, and sixth sections, shall apply to stock inscribed under the provisions of this section.

The Commissioners of Public Debts Sinking Funds shall have all such powers, duties, and authorities in respect of the sinking fund created under this Act as they now have in respect of any other sinking fund vested in them or under their control by virtue of “The Public Debts Sinking Funds Act, 1868,” and any Act amending the same.

The Treasurer shall not be in any manner personally liable to any local authority, or to any person or body corporate, for or in respect of any act or thing made, done, or executed by him by virtue of this Act.

Whenever power is given to make a loan or advance, or to pay or issue any money, to a local authority under this Act, then, unless express provision is otherwise made, the Treasurer may do so out of any moneys available for that purpose, without any further appropriation or authority other than this Act.

The Treasurer shall annually lay before the General Assembly, within fourteen days after the first meeting thereof, a report of all matters done under this Act, showing—

What applications have been made by local authorities, and which of them have been granted or refused, as the case may be;

What sums have been granted or advanced to local authorities, and for what purposes, and the names of such authorities;

What sums have been borrowed or raised by the Treasurer, and what are the outstanding liabilities and the assets.