The special transportation committee of the city council made public Tuesday a proposed franchise to replace the agreement under which the street railway has operated for the last half century.

Negotiated between the committee and Winnipeg Electric Company the draft document still has to run the gauntlet of scrutiny by the city council and the legislature. In 1937 the present franchise was extended until 1942.

Following are some features of the proposed agreement:

1. It would extend for a period of 25 years and be automatically renewable for successive five-year periods until the street railway was purchased by the city.
2. It would change the basis of taxing the tram system so as to ease somewhat its financial burdens.
3. It would set out the method to be followed in determining the price to be paid should the city take over the system.
Bus Services
4. It would provide for the modernization of the system in the course of the next five years, including the conversion of at least eight street car services into trolley bus services.

The original franchise came into effect in 1892 and was for a period of 35 years to be automatically renewed for successive five-year periods.

Three times this franchise was renewed in spite of strenuous attempts by the company to induce the city to negotiate a new agreement. In 1932 the company even asked the legislature to intervene, but it declined.

The draft document was the result of many months work by the transportation committee headed by Ald. Morrison.

The next step is for the committee to call in all members of council for an informal discussion. The franchise will then be submitted to council, and if passed, to the legislature for enactment.

The new method of taxation proposed is a straight tax on gross earnings.

The first franchise fixed three types of taxation:

• five percent of gross earnings
• a $20 license fee on each street car or bus, and
• general tax on the utility.

In 1940 these three totalled $206,000.

The new plan is to replace the three with one tax on gross earnings.

• 6 per cent up to $3,000,000
• 4 per cent on any sum in excess of that figure.

This would have yielded $168,000 or $38,000 less than the present tax setup yielded in 1940.

The problem of taxation was the knottiest one that faced the committee and the company during the negotiations. In all the city made three proposals and the company made two counter-proposals before a solution was found. Varioius forms of gross earnings and per diem taxes were considered.

Considerable space is given in the draft franchise to the procedure to be followed should the city purchase the railway.

The city would have this right at the end of the 25-year period or of any of the successive five-year periods to come afterwards. The price to be paid would be determined by a board of three valuators, one chosen by the city, one by the company and the third by these two men jointly.

Property such as the Electric Railway Chambers, the Power building and River park, owned by the company, would not be included in the sale and only equipment connected with the street railway in the various electric power substations would be included.

The document outlines a rule of thumb to guide the valuators in setting a price. But a maximum price is fixed at 45 percent of the aggregate replacement cost of the system. The city would be required to give one year's notice before exercising its right to purchase.

The original franchise merely provided for the simple right of purchase with little elaboration.

Under the proposed agreement the city and company would refer to the provincial Municipal and Public Utilities Board disputes concerning fares, service, time schedules, and other matters. This is a new feature not contained in the franchise hitherto in effect.

Between May 1 and 15 each year the city would have the right to apply to the Municipal and Public Utility Board for any change in fares desired and the company would have the privilege of presenting its case.

The proposed franchise differs from the old in that it introduces into its preamble the question of the necessity of modernizing the street railway service.

The company would be required to modernize its equipment unless prevented from doing so by war or other restrictions.

As in the original franchise the company would be obliged to remove the snow and lay and maintain the pavement between and on each side of the tracks. In past years these requirements have brought vigorous protests from the company.

However some easing of the responsibility for clearing away the snow would be permitted by the clause providing "that the company will be regarded as performing the provisions of this clause if it carries out any arrangement agreed to by the city engineer."

The company would be compelled to removed all trolley wires, rails and other structures where tracks are abandoned within time limits set by the city engineer. The company would also have to restrore the pavement where it pulled up tracks.

Permission would have to be obtained from the city council before any street car tracks could be laid.

Where the city mantains pedestrian crossings approaching the street car tracks the company would construct and keep in good repair crossings similar to those of the city.

Where buses make regular stops and the cost of maintaining the pavement at that point increases the company would put up the additional money.

And it would be required that fares would not be greater than necessary "to provide for reasonable return on the value of the transporation property of the company."

Propsed Tax Change

This table shows the taxes paid by the street railway in the last three years and the comparative figures as they would have been under the proposed tax.

                                     1938        1939       1940
Gross Earnings.................   $2,400,000  $2,600,000 $2,800,000

Present Tax, 5% on Gross Plus
    $66,000 Utility Tax and
    Vehicle Licenses ..........      186,000     196,000    206,000

Proposed Tax, 6% on Gross up
    to $3,000,000, 4% on Excess      144,000     156,000    168,000

Comparative Features