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Los Angeles, March 23# 1954 30-11 Mr# R# M# Sutton: (cc - Mr. Wra. Reinhardt Mr. .tf* H# Hulsizer Mr# C. M. Bates) I have your letter of March 18, 1954, your file 704-36 enclosing statement showing additions and de­ductions from the Basic Purchase Price as of January 31#1954. I think it is proper to deduct from the pur-, chase price such deposits as are referred to in the i- tem 'Other Deposits”• I understand that the resulting figure of $2,297#116*14 does not include adjustments for the tax prorate or the portion of the escrow charges to be borne by the Water District# It is my understand­ing that it includes all charges which have been taken into account as of January 31, 1954, but excludes any other items which may be taken into account thereafter and prior to the sale date# Section 7 of the contract provides that the pur­chase price of the water system will be paid to us when we have delivered the transfer documents referred to in that section. However I think it is obvious that the to­tal purchase price cannot be definitely ascertained on the sale date and that there will have to be an adjust­ment made after the sale date to reflect the charges and credits to the Basic Purchase Price which will be made as a result of a final accounting pursuant to the terms of the contract* Accordingly I propose to suggest to the District that we enter into an escrow which will provide that we will convey the water system to the Dis­trict upon payment of an arbitrary sum of money and that final adjustments fixing the exact purchase price be made upon completion of the accounting after the sale date. Mr. Beebe, the attorney for the District, has agreed that the sale date should fall at the end of a month and has now tentatively fixed May 31# 1954, as the date upon which the District will be able to take over the water system. It appears to me that the figures shown on your statement of l2,297#H6.l4, adjusted by the tax proratlon figures which Mr, Hulsizer will furnish, would be a proper