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In asking this appraisal the valuation of th© water system sad© for tfe© District by J. M. Montgomery St Co., Inc. was used and th© physical inventories shown therein were cohered with those of the Union Pacific. In Boost cases, both inventories exactly agreed inaamich ae the original valuation by J. M. Montgomery'?.* Co,, Inc. was based on inventories furnished by Union Pacific engineers. However, the quantities so furnished were checked for accuracy, insofar as possible, by field investigations and studies of available plans and iaaps of th© various system facilities. The Union Pacific engineers, at the beginning of discussions, strongly favored an appraisal based on reproduction cost under existing conditions less accrued depreciation to arrive at a present value. It was pointed out to the Union Pacific engineers that this method would not be wholly acceptable to the District due to the fact that many of the conditions tending to increase present-day construction costs did not exist when the system was installed. However, in order that both appraisals would be on the earn® basis, it was agreed that the Union Pacific method would be followed, with the understanding that the District reserved th© right to make any adjustments which in its opinion would result in a more reasonable appraisal. Since th® new appraisal mad© for th® District shows a considerable increase over the appraisal made by J. M. Montgomery & Co., Inc. the following tabulation and explanation of differences is presented: Appraisal of Water System as of December 31, 1950 L./.&S.L. Production Facilities $1,217,048 $ 975, J.M.M. & Co.. Inc. District® ------------------- 1-----1- ?? 1 n-tr-rm r i - i n . r m i i . i i n i r w i r i m i . i i . n „ Reproduction Less Reproduction Less C0? t « m i wa Dempreciatio*n ?CMoIWsWtl . M i -.HM Il ll»Hl l>e IliNw wDnfrme Apt re,t-c TTi^-ra—t.iT,.i 1.oM nI ?. $1,442,298 $1,109,748 L.V.L.&W. Distribution Facilities 1 ,167,166 960,008 Total I2T3SS^jjr W ^ $ X s ~ ill?!1^55~ 'ittgfglS---- ®This appraisal is based on the physical assets of th® Water Co. as of 12/31/50 but th© price® used ©re as of 5/1/52 1 .212,230 ?2