Letter from R. L. Adamson (Los Angeles) to F. H. Knickerbocker, September 10, 1928

Los Angeles, September 10, 1928. 20-6-1 Mr. F. H. Knickerbocker: Please refer to your file 085-355 regarding proposed contract between the Railroad Company and the Las Vegas Land and Water Company covering use of water facilities owned by the Railroad Company, existing contract being covered by Audit No. 2850-A, extended to September 30, 1928. Subsequent to installation of meters authorized under Work Order 7392, monthly record has been kept of water used by both the Railroad Company and the Las Vegas Land and Water Company. To date we have record of nine months' water consumption and in order to arrive at amount used during 1928 estimate has been made covering consumption during the last four months of the year, giving consideration to meter readings taken during December 1927. On September 5th and 6th, 1928 careful measurement was made of the water flowing from the Springs and the well, at which time it was found that the total water available for use at Las Vegas amounted to 8.964 cubic feet per second, or 4,023 gallons per minute, which compares with 7.12 cubic feet per second, or 3,195 gallons per minute available February 9. The increase in flow results from well having discharged approx- imately one hundred tons of sand during June, thereby clearing itself and increasing the flow of approximately 6 cubic feet per second from slightly less than 4 cubic feet per second measured in February. The flow from the Springs has decreased slightly. I am setting forth below the quantity of water used by the Las Vegas Land and Mater Company and the Railroad Company, and the quantity available for irrigation on the later Company's ranch. The amount available for irrigation is the difference between the total flow and the amount used by the two Companies at Las Vegas. Quantity of Water in Gallons 1928 LVL&W CO. Railroad Co. Irrigation January 25,604.900 15,723,330 135,575.626 February 28,473,200 15,615,560 121,401,944 March 39,120,300 18,185,275 119,598,281 April 41.554,000 19,293,165 110,350,115 May 53,499,200 24,630,665 98,773,971 June 63,517,800 28,848,800 78,830,680 July 64,167,000 30.838,820 99,648,698 August 65,305,900 33,825,700 95,522,918 September 60,510,000 31,896,000 95,969,340 Ootober 43,865,000 29,856,000 120,933,518 November 36,390,000 21,096,000 130,889,340 December 31,372,000 19,471,000 143,811,518 Total 553,379,300 289,280,335 1,351,305,949 In order that we might be assured of reasonable accuracy of water measurements test was made September 6th at which time the overflow from the pipe line was carefully measured every five minutes and the quantity obtained thereby was deducted from the total flow, resulting in checking the metered amount used at Las Vegas within 19,000 gallons, which test is considered satisfactory. The ownership of the water is divided as follows: L.V.L. & W. Co. 60% Railroad Company 40% The Railroad Company, however, paid for the well, catch basin, spring houses, and pipe lines; therefore, it would appear that the Las Vegas Land and water Company should only pay rental for the use of these facilities and the basis for this annual rental would of course be a matter of policy. In determining the cost of water for outside party use it is my opinion that the most equitable basis on which to divide the annual charges is in proportion to use; however, in this particular case the Las Vegas Land and Water Company is a subsidiary of the Railroad Company and you may desire to give consideration to other features involved. Probably the Water Company derives considerable benefit by furnishing large quantities of water to consumers at low cost, thereby permitting growth of lawns and irrigation of trees, enhancing the value of property and promoting development. The availability of cheap water in the town is also an asset to the Railroad Company as its employes are benefited thereby. In determining the rental which the Water Company should pay for use of oar water facilities yon may desire to consider the total Railroad revenue as compared with 5-3/4% of valuation for. if there is a possibility of recapture by the Government, it would not be advisable to increase our revenue at the expense of the subsidiary. It will be noted from the tabulation given above that the Water Company will use, during 1928, approximately 553,379,300 gallons, while the Railroad Company will use 289,280.335 gallons, making the total amount of water used 842,659,635 gallons. When divided in accordance with use, the resulting percentages are 65.67 and 34.33 respectively which, when applied to the annual charges, result in a monthly charge of $962.35 for the Las Vegas Land and Water Company and $502.72 for the Railroad Company. The valuation of the facilities used in common by the two Companies is attached for your information. I am also attaching statement showing the method of arriving at these figures. It will also be noted that the average cost of water per thousand gallons is $0.0208 which compares with $0.0058 reported to you in my letter November 10. 1927, your file 9215-W-47, and did not include pipe line from Little Spring, con- structed during 1927, or concrete reservoir, which will be constructed this year. It should also be borne in mind that it is proposed to install 24" cast iron pipe line next year which will further increase the annual charges. Should consideration be given to increasing rate charged for water in Las Vegas townsite which, at the present time, varies from $0.50 to $5.00, as set forth in Las Vegas Land and Water Company's Form 14 covering water rates, then necessity for appearing before Nevada Public Utilities Commission and the probable action that will be taken by that body should be considered. It is my understanding that conference will be held between officers of the Railroad Company and Las Vegas Land and Water Company with a view of determining a fair rental for the use of the Railroad Company's water facilities, and the above information is intended to facilitate that determination. R. L. Adamson LAS VEGAS WATER FACILITIES Water Used Per Year L.A.& S.L. Railroad Company 289.280.335 gal. = 34.33% Las Vegas Land and Water Company 553.379.300 " = 65.67% Total 842,659.635 " 100.00% Proportion of Valuation According to Use L.A.& S.L. Railroad Company 34.33% of $118,467.18 = $ 40,669.78 Las Vegas Land and Water Company 65.67% of $118.467.18 = 77,797.40 Total $118,467.18 Annual Cost of Water LA&SL RR CO LVL&W CO. Interest at 6% Depreciation 4% Insurance Taxes $1.75 per $100 of Valuation Maintenance and Extraordinary O.E. Average cost per thousand gallons Average cost per month $2,440.19 1,626.79 5.71 711.72 1,248.23 $6,032.64 $0.0208 $502.72 $4,667.84 3,111.90 19.29 1,361.46 2,387.76 $11,548.24 .0208 962.35 ----oOo---- Office of Assistant Chief Engineer Los Angeles, California September 10. 1928 LAS VEGAS WATER FACILITIES Valuation of facilities used in furnishing water to the Las Vegas Land and Water Company, including the main pipe line from the catch basin near the well to a point in Clark Street 230 feet east of the west side of Main Street; the pipe lines from Big Spring and Little Spring to the catch basin; the artesian well; catch basin; spring houses; 16" meter, and the estimated cost of reservoir and pipe line changes authorized under Work Order No. 8248. Ledger Value of facilities as furnished by Valuation Engineer June 28, 1927 $ 40,751.76 Work Order 7393 - Completed Nov. 30, 1927 Lay 1306' of 12" C.I. pipe from Little Spring to settling basin; construct concrete manhole, concrete forebay and roof over spring house ............... . . 6,010.23 Work Order 7392 - Completed Jan. 30, 1928 Install 16" meter in main pipe line ...... 1,405.19 Work Order 8248 - Not completed Sept. 1, 1928 Construct 2,500,000 gallon reservoir and 14' x 40' settling basin and rearrange pipe lines. Form 30 estimate ....... . . . . 71,000.00 Total...........$118,467.18 ---oOo?- Office of Assistant Chief Engineer Los Angeles, California September 10, 1928