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E. E. B 7 July 10, 1952 At Page 41 of his original report in the rate case (Exhibit nAn) Mr. Wehe stated that a study indicated that but approximately^ 55$ of the advances would be refunded in a ten-year period at 50$ of the revenues then current­ly being received. To be conservative, however, and to give weight to the pending increase in water rates he concluded that 70$ of the advances would be refunded. Sinee the date of the Commission^ decision the refund has been reduced to 35$ of the annual revenues rather than 50$, which will reduce the eventual refund even though a further increase in rates is given. Therefore I think it would be very conservative to say that the District would be eventually required to pay only 70$ of the advances in refunds if it takes over the liabil­ity under the contracts. Furthermore I believe it should be our opening position that the District should not re­ceive a credit of more than 70$ of the construction ad­vances. This leaves out of consideration the fact that the obligation under the contracts bears no interest and that the District has an obligation to refund charges de­ferred over a period of years. It would, therefore, be proper to further discount the credit to which the Dis­trict is entitled in view of the fact that the District will save considerable interest on the investment on the pipe lines covered by subdividers1 contracts over the pe­riod of years necessary to pay out the refunds. Franchise We have a 50-year franchise from the City of Las Ve­gas to lay mains in the city streets which has approxi­mately 30 years to run. This is not an exclusive fran­chise, but it undoubtedly has a value. In a rate case I do not believe it would be given any value, but in a con­demnation case I-believe that it would be possible to have a value assigned to the franchise as well as to the right which the Water Company owns to conduct a public utility business. Under the Nevada laws it is necessary to obtain a certificate of public convenience and necessity before going into the water utility business. A value in case of sale would attach to this right. As you know, cer­tificate rights to operate motor vehicles on the high­ways of this state are frequently sold for considerable sums of money. Since these franchise rights are entirely separate from going value,I think they are elements which should be considered in bargaining with the District. E. C. R.