upr000160 105

% Los Angles| January 10, 1952 t - 8T*n y*.< g -"H. A; /- ? •.". - ; M g ? M M w W& 1 v- \ " . .. • | | ‘jO f.. = 'V. ' ’ V \ ''V.-:.,.; o Mr. ¥ . H. lo u se s I have your l e t t e r o f Ja n u ary # , 1952, your f i l e 2110, re g a rd in g th e Las ? « ia s w a te r f a c i l i t i e s In which you asked f o r my coam ents on Mr. H u ls la e r ’ s l e t t e r to Mr. fto d d a rd o f Ja n u a ry 7 , 1952, on th e same s u b je c t, ? i a g ree w ith H r. R u ls ia e r t h a t th e p rim ary c o n sid ­e r a t io n is* to d iv e s t th e R a ilro a d and th e L as vegaa lan d an d Water Company o f th e ow nership o f th e w ater produc­tio n and • d is tr ib u tio n f a c i l i t i e s a t Las Vegas a s soon as p o s s ib le i f t h a t can h© dor,® ad v an tag eo u sly to th e R a il­ro a d . ' So lo n g as th e R ailro ad , o r i t s s u b s id ia r y o p er-m a t e s th e w a te r system a t Las 7egaa i t w i l l be c e lle d up­on to make a d d itio n a l c a p i t a l e x p e n d itu re s,- and o u r p r e s ­e n t e x p e rie n c e in d ic a t e s t h a t we s h a l l have d i f f i c u l t y in o b ta in in g s a t i s f a c t o r y r a t e s . F urtherm ore th e o p e ra to r o f th e w ater system a t Las Vegas must d e a l w ith th e -troublesom e problem c ru s te d by th e lim ite d su p p ly o f un­derground w a te r. The Company has sp e n t a la rg e amount o f money in th e l a s t ten- y e a rs on c a p i t a l im provem ents, and 1 a g re e w ith Mr. H u is ia e r t h a t our s u b s t a n t i a l in v estm en t i s a r is k y in v estm en t a s a lo n g -ra n g e p r o je c t because th e grow th and p r o s p e r ity o f Las Tegae i s not based upon a s u b s t a n tia l f o u n d a tio n . The s u g g e s tio n c o n ta in e d in my l e t t e r to Mr. R ein­h a rd t o f 'December 4 , 1951, t h a t c o n s id e r a tio n be riv e n t o th e t r a n s f e r o f th e w ater p ro d u c tio n f a c i l i t i e s o f th e R a ilro a d t o th e - a to r Company was not in te n d e d as m a l t e r n a t i v e to th e id e s o f d isp o s in g o f th e w ater system a lto g e th e r to th e D i s t r i c t . f»or was an y th in g in t h a t - l e t t e r in te n d e d to comment upon th e term s upon which th e w a te r system would he u ltim a te ly d isp o sed o f t o t h e - D i s t r i c t , ' l d id n o t s u g g e s t, as H r. H u ls ia e r ap­p a r e n tly u n d e r s ta n d s ,th a t th e .R ailro ad o r - th e H ater Com­pany r e t a i n bonds a s a l i e n upon th e p r o p e r tie s a f t e r .t r a n s f e r t o th e D i s t r i c t . I t was my 5dee t h a t w h ile th e H ater Company was th e o p e r a to r o f both th e p ro d u c tio n and d i s t r i b u t i o n sy s te m ,th e ow nership o f th e R a ilro a d Company in th e l a t e r Company sh o u ld W ev id en ced bo th by a c u ity and lo a n c a p ita l* My l e t t e r was in te n d e d a©