Letter from E. E. Bennett (Los Angeles) to William Reinhardt, December 11, 1951

Los Angeles - Dec. 11, 1951 4747-11-64 (Case #1214) Mr. Wm. Reinhardt (2) Pursuant to your request, I attended a meeting in Las Vegas Friday, December 7, 1951, to discuss the various water problems. The meeting was attended by some of the Directors of the Water District, some of the City Commissioners and representatives of the Chamber of Commerce. Mr. Calvin Cory and Mr. W.H. Johnson were present at the meeting. Mr. Tom Campbell presided and initially he raised the question as to the sale of the Water Company to the District or the City and the approximate price thereof. I told him we would sell to either the City or the District and that we were waiting for one of them to make us an offer. I explained to them that the Water District has had for some period of time a statement of the physical Inventory of the production and distributing facilities of the Water Company and the Railroad as of December 31, 1950, but nothing had been done by them and that we could also furnish them with a statement showing the increased facilities since that date and the cost thereof to the Railroad or the Water Company. -1- Mr. Wm. Reinhardt December 11, 1951 2. They stated that they had employed the Montgomery firm to check into this matter but the District ran out of money and the Montgomery firm had discontinued work. After some discussion, they agreed to re-employ the Montgomery firm to start work on this check and have a report to us along about the middle of January. I think, therefore, it would be desirable for you to arrange to have statements made up of the new facilities installed since December 31, 1950 and the cost thereof, the statement being brought up to December 1, 1951, if that is possible. It may be that some of these work orders have an estimated cost and I think the statements should be broken down to show where such jobs are completed and the actual cost, and where such jobs have not been completed the estimated cost. It may be that a third subdivision will be necessary to show work-orders outstanding upon Which no work has been done and the estimated amount of such Jobs. This, in view of the fact that possibly those work-orders will have been completed prior to the final negotiations. The next question discussed was the value of the property. I drew Mr. Campbell's attention to the fact that he had been quoted in the newspapers as fixing a value of $1,500,000 and I then reminded him of a meeting we held nearly two years ago, at which you were present, at which time you Mr. Wm. Reinhardt December 11, 1951 3. stated that the value was approximately $2,000,000 more or less and that since that time we had made a great many improvements to the facilities and that speaking without having the definite figures before me, I felt they should be giving consideration to a figure of $2,750,000.00. He then asked me if that included the land and I told them that it did not as we did not know how much land the District intended to buy. I suggested to him that he have some engineer determine the amount of land they felt necessary to protect their water supply, including therein the necessary rights of way for existing pipe lines and power lines, have the land appraised by a committee of local real estate men, and give us the figure they felt to be reasonable. They next brought up the question as to whether we would accept bonds of the district for the purchase price. I told them that that matter would have to be considered by our New York office and I thought it would be desirable for them to write you asking whether the Company would accept bonds and In that letter give a brief outline of the form of bonds which would probably be offered, especially with respect to sinking fund provisions, approximate rate of return, income tax free provisions, and the nature of the security back of the bonds. Mr. Wm. Reinhardt December 11, 1951 4. They seemed to be rather hesitant to write such a letter and Mr. Hamilton, representing the O'Melveny firm and also the District, felt that the prospective purchaser of the bonds should state what provisions they feel should be incorporated in such bonds before they would be accepted. I told him I thought that since his firm was employed to pass upon the proceedings of the District and would probably have to give a report as to the legality of the bonds, that such information should come from them or from the District. The matter was therefore left in abeyance and I hope to get in touch with Mr. Hamilton in the near future in an effort to ascertain Just who is going to initiate this particular phase of the matter. The next question brought up was with respect to our dismissing the present application for discontinuance of installation of future water mains or the making of any new water connections. I told them that at the present time I would not recommend dismissal of this application and that those were your views. I explained to them that the application had been filed approximately six months ago and although it received considerable publicity in the newspapers, no effort was made by anyone to conserve water in the city and that no one in the city paid any attention to the application and that many new subdivisions have been started since the application was filed. Mr. Wm. Reinhardt December 11, 1951 5. They told me that the recent order of the Commission, which was vacated, had caused several financial institutions to withdraw financial support to proposed housing projects. I told them I could not understand how that could be since there was no more financial insecurity at the present time than there was six months ago immediately after the application was filed, which application requested an ex parte order. At this point, Mr. Cashman stated he had reason to believe that by the first of this year all of their troubles would be settled and that they would be assured of water from Lake Mead. I told him I hoped he was correct in his assumption but that I had heard that story for the last year and that I thought the District was being given the "brush-off" by 'smart politicians' and that the only thing left to do was to make some effort to conserve water for the coming summer. He asked what I would suggest and I told him I would suggest enforcement of the city laws relating to waste of water. This statement brought down upon my head comments from the City Commissioners that the laws WERE being enforced. I told them I knew that was not the case?that they may have arrested one or two people and given them suspended sentences or nominal fines but the only way they could bring to the attention of the people the necessity for conservation of water was to "crack down" on a Mr. Wm. Reinhardt December 11, 1951 6. few of them and make examples of them by a "stiff fine" and see that those matters were given publicity. I do not think they are going to do anything along this line. The next question was whether they could persuade Senator McCarran to do anything looking toward definite action by Mr. Larson, or the Colorado River Commission, or the lessees at Henderson, and it was agreed that the Chamber of Commerce and various service organizations and individuals would wire the Senator and that Mr. Cory would go up this week and discuss the matter with him. It was also agreed that the Chamber of Commerce and the various service organizations would at once begin a campaign to impress upon the people the potential drought situations in Las Vegas for this coming summer. I told them that we had sat in several meetings where we had been given the same kind of assurance and nothing ever happened but If they actually started things along that line and I was convinced they were sincere in their efforts, I would recommend the application be dismissed, with the distinct understanding that if they did not continue their efforts that we would file a new application and press it to a hearing and decision. Later I talked to Mr. Allen, Chirman of the Public Service Commission of Nevada, who stated that in view of his engagements, the hearing would go on January 22nd as heretofore advised. EEB:AF E. E. Bennett