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Los Angeles, November 14, 19.49 1-7334 Mr. L. A. Barnesi With further reference to the Las Vegas water situation; In reviewing various statements showing property investment and charges in connect ion with our water opera­tion, I note several factors that appear to be questionable as follows; 1. Railroad Investment* The monthly bill (See Bill No. 420258, dated Sept, 26th, Dopt. No* 6230, registered in October 1949 accounts), rendered by the Railroad against LVL&WCo* for use of railroad-owned facilities, shows valuation of facilities as of December 31, 1948, of $773,150*44. In discussing these charges with our Mainten­ance Dept., am advised that in general all Im­provements to the water lines and water produc­ing facilities are included in the valuation of facilities used as a basis for charging LVL&WCo. interest and depreciation, regardless of the fact that some of the facilities are used ex­clusively by the Railroad Company incident to its railroad operation, or used by fcjae Railroad Company incident to the sal© of water by the Railroad Co. to industries in our industrial district. It appears to me the valuation should include only such facilities as are used for the joint benefit of Railroad Co, and the Water Co. 2, Taxes. Taxes are charged on the basis of $1,75 per $100 of valuation, I understand this is an ap­proximate prorate of the taxes levied by the State upon Railroad holdings, I am advised, however, that in addition to this tax the local authorities levy an additional tax on the water producing facilities of approximately $4800 per annum.