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SECTIO N I: GEN ERAL im p o s s ib le , to a cq u ire ca p a city righ ts in the system . In F e b ru a ry 1952, a join t re p o rt b y R alph W. O 'N e ill and Jam es M . M on tgom ery, C onsulting E n g in eers, to the C o lora d o R iv er C o m ­m is s io n of N evada show ed the fe a s ib ility of in cre a sin g the ca p a city of the B .M .I . w ater supply sy stem fr o m a p p rox im a tely 30 m illio n gallon s p er day to a p p rox im a tely 50 m illio n gallon s p er day. A fter a p e r io d of n egotiation , the L as V egas V a lle y W ater D is tr ic t en tered into a c o n ­tra ct with B a s ic M anagem ent, In c. w hich g iv es the W ater D is tr ic t the righ t to w ithdraw up to 5 m illio n gallon s p er day fr o m the existin g sy ste m . The con tra ct fu rth er p ro v id e s that the W ater D is tr ic t m ay in c re a s e its w ithdraw al to 13.75 m illio n gallon s p er day if and when the W ater D is tr ic t p ro v id e s the additional pum ping and rela te d f a c i l i ­ties n e c e s s a r y to in c re a s e the ca p a city of the existin g sy ste m b y 13.75 m illio n gallon s p er day. F r o m the tim e the W ater D is tr ic t was org a n ized , the B o a rd of D ir e c to r s has r e a liz e d that financing on a la rg e sca le w ould be re q u ire d to pay fo r the n e c e s s a r y im p rov em en ts. E ven though g en era l obligation bonds are voted, the W ater D is tr ic t A ct re q u ir e s w ater ra tes and c h a r ­ges be fix e d .in o rd e r to p rod u ce su fficien t reven u es to pay m aintenance and op era tion , g en era l ex p en ses, and, so fa r as p o s s ib le , bond ch a rg e s. The d ir e c to r s a lso fe lt that m o re e fficie n t op era tion of the b a sin as a wholo cou ld be a cco m p lish e d b y the a cq u isition of the p rin cip a l p ro d u ce r in the B asin - - the w ater sy ste m of the L a s V egas Land and W ater C o m ­pany, a su b sid ia ry of the Union P a c ific R a ilro a d . E a rly in 1952, the W ater D is tr ic t's B oa rd of D ir e c to r s en tered into n egotiation s with o ffic ia ls of the Union P a c ific look in g tow ard p u r - ca s e , b y the W ater D is tr ic t, of the existin g w ater p rod u ction , stora ge and d istrib u tion sy ste m in L as V eg a s. N egotiation s w ere continued into 1953 and an a greem en t was fin a lly re a ch e d w h ereby the R a ilro a d C om pany a g reed to s e ll the w ater u tility to the L as V egas V a lle y W ater D is tr ic t fo r a p r ic e of $ 2 ,5 0 0 ,0 0 0 plus additions and b etterm en ts after S ep tem ber 1, 1952. B oth of these co n tra cts, the agreem en t with B .M .I . and that with the R a ilro a d and its su b sid ia ry com p a n ies, are contingent upon fin an cin g. D uring the tim e that the two con tra cts w ere being n egotiated, studies w ere m ade of the fa c ilitie s re q u ire d to d e liv er the Lake M ead supply to L as V egas and those re q u ire d to extend and r e in fo r c e the existin g L as V egas w ater sy stem . The estim a ted co s t of acqu irin g the existin g utility, con stru ctin g new fa c ilitie s , and p rovid in g fo r all - 4 -