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Letter from William Reinhardt (Los Angeles) to A. E. Stoddard (Washington), September 19, 1952







Discussion of various points of the drafted purchase contract for water production facilities by the Las Vegas Valley Water District.

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Physical Identifier

Box 25 Folder 80-11 Vol. 2 of 3 Part 2, LVL&W Co. Proposed Sale of Water Production Facilities of UPRR Co.


hln001244. Union Pacific Railroad Collection, 1828-1995. MS-00397. Special Collections and Archives, University Libraries, University of Nevada, Las Vegas. Las Vegas, Nevada.


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Los Angeles - September 19, 1952 Mr. A. E. Stoddard - Washington - New York - Omaha: (CC - Mr. W. R. Rouse - Omaha Mr. W. H. Hulsizer - Omaha) Under date of August 26th I forwarded to you copy of a formal offer which we had received from the Las Vegas Valley Water District of $2,500,000 for certain properties outlined in the letter. We have now clarified some of the points set out in that letter and we analyze it to result in substantially the following not return to the Water Company for the combined producing and distributing properties. Offer by Water District - effective 9/1/52 $2,500,000.00 Less expenditures to be borne by RR for Hyde Park additions and betterments - estimated ($18,400 expended to 9/1) 127,600.000 $2,372,400.00 Less expenditures incurred 5/1 to 9/1/52 on projects authorized, completed or under construction 15,370.71 Approximate net return on basis of costs 5/1 to 9/1/52 not returned to us $2,357,029.29 The amount of $127,600.00 shown as being deducted from the original bid in the amount of our appropriation for the completion of the Hyde Park additions and betterments. This cost under the bid as shown in paragraph lettered (e) is to be borne wholly by the Water Company. Calculations upon which this offer was received were made as of May 1, 1952. The bid, however, as shown under (e) makes the effective date as to property inventory, September 1, 1952 (except, of course, for the Hyde Park installation above noted). We had under way and authorized as of September 1st work for which appropriation had been obtained $44,907.73, of this amount $15,370.71 had been expended as of September 1, 1952 and is therefore deducted. The remaining portion of these authorizations as indicated by the 2nd paragraph of paragraph (f) will be returnable and therefore does not affect the cash position of the Company in the transaction. The net return to the Water Company then as we calculate it here would be $2,357,029.29. There is, of course, the matter of the "Construction advances-subject to refund" which is referred to in your letter of August 12th addressed to Mr. Hulsizer, of which I received copy. While this fund is not mentioned in the Water District bid, it will be deducted from the BCC- E. E. Bennett final cash payment made to the Water Company at the conclusion of the negotiations. This fund now amounts to approximately $338,000.00, but will be subject to some deductions and possibly some additions before the final accounting data arrives. As indicated above, my analysis of this bid indicates a net return to the Water Company of $2,357,029.29 which is, of course, substantially above the minimum of $2,000,000.00 set out in your letter of August 12th. There will be, of course, several items which will have to to cleared up in the final Contact of Sale which will be entered into pending the voting of the bond issue, some of these are outlined below with reference to lettered paragraphs set out in the bid: (c) Matter of right-of-way for pipe lines involves two of the principal feeder lines transporting water fron the production area to the town. These lines cross certain properties not being sold to the District in such a way as to make them almost unusable for any other purpose. We are now discussing with the District a constact under which they will make monthly payments into a bank, which payments in a period of approximately twenty years would amortize the cost of building one large line on the section line running into the District property and the removal of the existing lines. (d) The above mentioned agreement will also provide for the moving of certain power lines which are in bad locations for the ultimate use of some of the property not being sold. (e) The clarification of our rights regarding the production of water on shop property is being clarified along the linas of the Operating Department's study. (f) (Paragraph 1) This paragraph is too broad in its implications and Mr. Bennett is now working with the District representatives in order to make it more workable. (f) (Paragraph 2) I have already outlined the effect of this paragraph with regard to expenditures now being made. The final accounting on this item will, of course, have to be made as of the date the property is taken over by the District. (f) (Paragraph 3) This involves the question of whether we would demand cash in full for the obligation or whether we would accept bonds. When the time comes for a decision on this matter, we will of course supply you with full information on the subject and will undertake no obligation without proper authority. My thinking, however, is that there is no reason why we should accept bonds unless they were of a character which would be readily selable and which we would consider as a good investment. Under these conditions there is no particular reason for our taking bonds. The District representatives, however, feel that if we would accept part payment in bonds, it would give the bonds a reputation which they might not otherwise have and thereby be helpful in disposing of them. (f) (Paragraph 4) This will, of course, be taken care of in our Contract of Sale. (f) (Paragraph 5) We are all a little uncertain as to what the object of this paragraph is. Unless it was put in to enable the District to withdraw the offer in case substantial public criticism developed when the bid was made public. As this criticism has not developed so far, it is doubtful if the right will be exercised. There is one more matter which may have some effect on the amount of the final payment to be made to us by the District. However, it will not effect the net return we will receive for the property. Notice has been served on us by the Utility Commission that further complaints have been received regarding the adequacy of water service and that the hearings which were held about a year ago on this subject will be resumed. You will remember at that time we installed pumps on certain wells in order to temporarily increase our productive capacity. Should the Commission order us to make further expenditures in the hope of increasing this water capacity we will, of course, request the approval of the District before making each expenditures, and naturally the expenditures will be added to the amount which the District will be called upon to pay us. As indicated above, I consider this offer as being well within the authority given in your letter of August 12th. However, I would appreciate your concurrence or comments, and if you agree, your approval to so advise the Water District. I would appreciate as prompt action on this as possible as in spite of all the dilly-dallying and delays of the District is these negotiations, they are now pressing us almost daily for a reply to their bid. Wm. Reinhardt