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Los Angels*t January 10, 1952 *0-11 Mr. W. H. louse: W M . R. JAN 14 1952 I have your latter of January #, 1952, your file 21dO, regarding the Las Yagas water facilities in which you asked for my comments on Mr. Hulsiser^ letter to Mr. Stoddard of January 7, 1952, on the same subject* I agree with Mr. Hulsizer that the primary consideration is to divest the Railroad and the Las Vegas Land and Water Company of the ownership of the water production and distribution facilities at Las Vegas as soon as possible if that can be done advantageously to the Railroad. So long as the Railroad or its subsidiary operates the water system at Las Vegas it will be called upon to make additional capital expenditures, and our present experience indicates that we shall have difficulty in obtaining satisfactory rates. Furthermore the operator of the water system at Las Vegas must deal with the troublesome problem created by the limited supply of underground water. The Company has spent a large amount of money in the last ten years on capital improvements, and X agree with Mr. Hulsisar that our substantial investment is a risky investment as a long-range project because the growth and prosperity of Las Vegas is not based upon a substantial foundation* The suggestion contained in my letter to Mr* Reinhardt of December 4, 1951» that consideration be given to the transfer of the water production facilities of the Railroad to the Water Company was not intended as an alternative to the idea of disposing of the water system altogether to the District. Nor was anything In that letter intended to comment upon the terms upon which the water system would be ultimately disposed of to the District. I did not suggest, as Mr. Hulsizer apparently understands,that the Railroad or the Water Company retain bonds as a lien upon the properties after transfer to the District. It was my idea that while the Water Company Was the operator of both the production and distribution system,the ownership of the Railroad Company in the Water Company should be evidenced both by equity and loan capital. My letter was intended as J