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B i f f ® TO ACCOMPANY YHR3tf£-PAGi5 STATSMfNT DAT.D JVMM 18, 1952, ATTACHED TO LETTER TO MR, WH. REINHARDT DATED JbNE 25.1952 (1) Differences la Depreciated Values Difference due to prices * |1Q4»&59« Difference due to depreciation rates - - - - 161,351* Total - |266,212. (2) Explanation of Difference in Prices: Principal difference in prices Is due to difference in method of determining labor costs for las Vegas Land and Water Company pipelines. The Railroad Company estimate is based on actual contract labor costs of laying pips for several years immediately prior to December 31, 1950, and is well supported by cost analyses data on a considerable number of Las Vega* Land and Water Company jobs as well as the cost shown by recent Las Vegas Land and Water Company contracts. It is the opinion of Mr. Hubbard and me that prices used in Railroad Company appraisals should not be reduced. These record costs are not disputed by the District. The position of the District with respect to prices used in their appraisal, as stated by Mr. Montgomery, is that if the facilities are reproduced as one project under a reproduction program, competitive bidding would bring prices down, and that their prices are supported by contract costs for work done in desert territory similar to territory at Las Vegas, such as at Phoenix and Tucson, Arizona. We are not in agreement with Mr. Montgomery, as we do not believe that prices could be obtained which would be lower than those now prevailing at Las Vegas even though bids received could be obtained from a contractor for one project of a size which would assume reproduction of the entire facilities included In the appraisal. Our opinion is based on the fact that all of the labor costs in Las Vegas are controlled by the labor unions, and no reduction could be obtained even though a large contract of this else were undertaken. The only saving which might take place would be in the efficient use of a large a-mount of equipment which would be available under a reproduction program.