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HFC Oct. 3 0 , 1951 MOTES TAKEN AT THE AMERICAN WATER WORKS ASSOCIATION MEETING IN SAN FRANCISCO, CALIFORNIA, OCT. 24-27th, 1951. When purchasing a water utility* The buyer should pay no special attention to the inventoiy which the owner presents. The owner of course, hopes the value of the inventory may be the purchase price. The buyer should approach the purchase by the means of capital­izing the net profits* Capitalize at 10$ the net profits* Reason for the ten percent-interest @ Taxes,(income) @ A well seasoned engineer of Southern California who has sat in on and officiated at many purchases, as well as sales, gave me this line of approach* He said that this means avoided the valuing of pavement over mains, going concern, Intangibles, etc* Then call owner’s attention to the improvements necessary to create additional storage, true here), etc* SCHEDULE of FLAT RATESl To originate, develop and recommend a set of flat rates as a new venture with a water utility is without limit on the am n « n t . of unsuccessful work that can be tried out* Using an existing former flat rate schedule, as HFC has said, and upping it by some percentage to arrive at the total revenue desired from flat rates, is the only safe way— and then one must keep in mind “out-pricing" one’s business* INTEREST ON BOND ISSUES: No 3$ money is available for ventures like LVYWD. STATURE OF ENGINEER SUPPORTING PROJECT COSTS; Due to present inflation, any guarantee on prices is impossible. CONSULTING ENGINEER FOR OUR PROJECT! ( verbal discussion by HFC)