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V . 5 It is noted that the recommendation for action at this tine is partially based on the fact that in consequence of the hearing to be held before the Commission in Case No. 1207, in November 1952, the Commission will probably order the construction of substantial improvements estimated to cost $600,000 or more, with the added possibility of UPRR Co. being declared a public utility in order to finance the improvements. However, if the Commission does order LVL&W Co. to provide such substantial improvements, 1 concur in the suggestion that the order be resisted in the courts. If the bonds are not voted and non-compliance with the Commission*s order to provide additional facilities could not be sustained in the courts, it would appear that LVL&W Co. would have no recourse other than to provide the facilities and seek such increases in water rates that would represent a reasonable return on the increased capital investment. At that time, it might be opportune to consider acquisition of the X.A&SL water facilities by the LVL&W Co. - the latter company at the same time to divest Itself of all other property as commented on in the 4th paragraph on Page 4 hereof. With respect to Mr. Rouse's letter of October 6, 1952? In the 4th paragraph on Page 1, reference is made to the principal sum of the mortgage. If the transfer of LA&3X* water facilities is mads at book cost, or March 1, 1913 value (whichever is greater), such amount is not presently available. However, the book cost of both water facilities, together with the recorded depreciation and amortization accrued thereon at August 31, 1952 is shown below: Gross investment Accrued depreciation and amortization LA&SLRR Co. LVL&W Co. Facilities Facilities Total $650,777.93 $1,021,194.64 $1,671,972.57 174.436.66 260.555.01 434,991.67 Depreciated Investment $676,341.07 $ 760,639.63 $1,436,960.70 The difference between the gross book Investment cost of the LA&SL facilities and the amount shown as item 3, col.(3) on the attached statement is due to the BIR base being slightly higher than the book cost. The difference between the depreciation and amortisation shown accrued on the LA&SLRRCc. facilities and the amount