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C _ 3 ) O 'M E L V E N Y & MYERS 433 South Spring St. Los Angeles 13, California In reply Refer to B-2805 Subject LAS V EG A S VALLEY WATER D ISTRICT. Mr. Thoonas A Campbell, President Las Vegas Valley Water District 135 South Fourth Street Las Vegas, Nevada Dear Mr. Campbell: This will acknowledge receipt of various letters recently received concerning the offer, acceptance and formal contract of purchase between the Las Vegas Valley Water District and Union Pacific Railroad Company and its subsidiaries. As bond counsel for the District, the provisions set forth in the offer and acceptance appear to be satisfactory with one possible exception. One of the conditions in Union Pacific's acceptance is Condition 5, which would require a provision in the formal agreement for termination of said formal agreement on December 31, 1953 "if on or before that date (the District) shall not have paid the full purchase price for said properties." For reasons which are hereinafter men tioned, we feel that said deadline might force the District to engage in a premature marketing of its bonds. From the time that the Water District undertook active measures to acquire the existing water supply and distribution system of Las Vegas and to obtain a new supply of water from Lake Mead, it has been recognized that it is highly important to the success of the project that the interest charges on bonded indebtedness be held to a minimum. It is important that the directors of the Water District have power to time the marketing of bonds to obtain the best possible bids. It is difficult to predict the degree of fluctuation or the duration of the long term municipal bond rate The needs of most public agencies engaging in public financing do not permit time to delay financing for a long period of time until the most advantageous long term rate can be obtained. Thus, most public agencies go to the bond market as soon as they need the money. This will undoubtedly be the situation with the Las Vegas Valley Water District. If the bonds are approved by the voters, the Water District probably will market its bonds at the earliest practical time after executing formal contracts for the acquisition of the Las Vegas Valley Water system.