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Frca the prelim inary work dons to date it would eeea that, if it is legal to do so, it might be veil for the District to assume the obligation of the unrefunded portion of the advances in ©id of construction, thereby reducing the amount of the initial bond issue by approximately $Jt00,006. Overhead Coats The Union Pacific appraisal includes varying overhead coats which have been added to their total reproduction and depreciated coats, to overhead charge cf 8.7065$ has been saad® on production facilities as of December 31, 1950 which includes 2$ for engineering, l|$ for genera 1 expenditures raid 5$ tar interest during cons true tic®. An over-head charge of lb,1^18$ has been made on production facilities constructed between January 1, 1951 and May 1, 1952, consisting of 5$ for freight, 2$ for engineering, l|$ for general expenditures and 5$ for interest during construction. On all dis­tribution facilities including service connections, as of May 1, 1952, an overhead charge of 6.3593$ has been saad®, consisting at 1$ for engineering, l|$ for general expend!toes and 3-3A$ for interest during construction. The variation in overhead percentages was not explained by the Union Pacific in their summary although certain at the variations see® obvious. Evidently the 2$ engineering charge on production facilities as opposed to t o 1$ charge ran distribution facilities arises fro© t o faot that t o production facilities, being of a more complicated and detailed nature, require much Bor© planning and supervision than the distribution system which is relatively simple of construction. Also, the variation in interest during construction is probably du© to a longer estimated construction period for production facilities than that required for t o distribution system. The reasons behind the 5$ fo r fre ig h t charges on production faci­lities constructed between J a m m y 1, 15*11 i;zd May 1, 1552 as*3 set clear inasmuch as this item was not included in any other valuation overhead charge. -11-