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Brought forward I 390,893 District Engineers that they were using 1 9 5 a costs and no question was raised in this re­spect since the appraisal we were checking was admittedly as of Dec. 31, 1950. I recommend that no reduction he allowed for this item when considering "Sale Price" as I believe the District has already set up too much depreciation by using shorter service lives for pipe than can he Justified, In setting up Railroad Company Estimated Cost of Reproduction New - less Depreciation as of May 1, 1952 as shown in 3-page statement dated June 18, 1952, it will he noted that I have not shown any additional depreciation in Repro­duction Costs to provide for depreciation in period Dec. 1950 to May 1952 for the reason that depreciation occurring in this period is more than offset by an appreciation in value due to increased construction costs, including both labor and material, which fact is well supported by statistics and our experience. fotal exclusions suggested by fames M, Montgomery Total exclusive of Land III Add Land and Water Rights This amount represents appraisal value of land only as determined by Mr, C, M, Bates for the portion of water bearing lands which the District has proposed to purchase, Value of water rights was not included by Mr, Bates Total for Land Total including Land IV Credit to District Estimated amount refundable under contracts,Mr, Montgomery admits that above figure is purely an estimate and will fluctuate as time goes on. Service installation charges Mr. Montgomery takes the position that since the Water Company makes a charge of #5*00 for each service Installed, the District should be allowed I 390,893 #2,184,821 # 267,650 # 267,650 #2,452.471 # 403,762 34,385 3-