Memo from Thomas A. Campbell (Las Vegas) after receiving a letter from Alan K. Browne (San Francisco), January 7, 1954

Ed: Read this and weep; Look's like we've done everything wrong and will have to start all over again. Oh, well, you can run the system for a couple more years while we keep fooling around with the deal. . Mr. Thomas A. Campbell, President Lee Vegas Valley Water District POO South Fifth Street Las Vegas, Nevada Dear Mr. Campbell: This is to acknowledge your letter of January 4 in which you enclose drafts of an act to validate all acts and proceedings of the Las Vegas Water District for the authorization, issuance and sale of bonds of said District and an outline of Resolution of Issuance of the Las Vegas Water District Waterworks bonds, 1954, In addition to these documents, we have received, under date of January 6, from Mr. James M. Montgomery, Consulting Engineer, an engineering report dated December 8, 1953, on the Proposed Supplemental Water Supply and Reinforcement of Distribution System. Prior to this, we received a copy of a report on the proposed official statement of the Las Vegas Valley Water District prepared by California Municipal Statistics, Inc. In accordance with your request, we have reviewed the various documents and while we have not been able to devote as much time to this as we would like to, we can appreciate that a great deal of excellent work has been done in an effort to establish a marketable security. It is still our considered opinion that to provide a good security and a readily marketable security, the Las Vegas Valley Water District would be well advised to employ a recognized financial consultant to coordinate the work of the engineer and attorneys and develop financial data necessary and required for bidders and the ultimate investor. We feel that this issue being the largest that has been approved within the State of Nevada representing area which is not too well known from the credit standpoint and with the limitations imposed by Nevada law requires every possible effort to make the bonds salable. In this connection, a financial consultant would be responsible for preparing a prospectus for the use of interested bidders and for investors. He, in turn, would be required to seek out all questions that are raised as to the security, as well as to hold meeting for the purpose of supplying dealers and investors with the facts and also to answer their questions. The work would be the difference between a good bid or an unsatisfactory bid. We do not wish to imply that the work that has been done is not good. However, we feel much more should be done and this was our original recommendation, when the matter was first broached to us. Inasmuch as it is not our policy to underwrite municipal bonds outside of the State of California and particularly issues which would not qualify for our investment program, we are reluctant to pass on the merits of the various documents submitted. However, possibly we can give you our thoughts on a few points which come to mind as follows: (1) There is reason to question whether the District has made the bonds as strong as possible from a revenue standpoint. You have a quasi ? revenue limited tax obligation which is somewhat different than merchandise that usually finds its way to market. (2) Covenant 7 about providing sufficient revenues is qualified so the bondholder cannot rely on it as with the usual wholly revenue-secured bond. Of course, you can point out the possibility of levying taxes to make up deficits, under the complicated Nevada laws, but this is a negative argument which will not appeal to many potential bond buyers. (3) The California Municipal Statistics report gives only limited coverage of utility aspects. (b) Under Section 17, it appears that no payments need be made on principal until after acquisition of the Las Vegas Land & Water Co. While this is no doubt an attempt to keep too heavy a burden from the taxpayers, in the event the transaction does not go through, it weakens the security of the bonds. (5) Provisions for selling bonds publicly seem a little weak. (6) The Engineer's report does not seem to be adequate in deriving a comprehensive understanding as to the effectiveness and condition of the system to be acquired nor the effectiveness and necessity for the proposed additions and improvements. Please understand that the above brief comments are not in any way intended as criticisms, but merely are comments made after a quick review of the documents which we have not had sufficient time to study. In addition, on background information on the origination and development of the proposed financing, we do not have adequate material on which to base a firm opinion. Mr. Thomas A. Campbell -2- January 7, l?5b A. K. BROWNE Vice President BANK OF America national TRUST AND savings association