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File: 3703.1 OMAHA - May 7, 1942 (COPY) Mr. 0. F. Ashby - Omaha: (2) Sines our report to Mr. Jeffers of Marsh 26 we have been giving, as you suggested, further intensive study to the possible transfer of the LAASLRRCO1S investment in the Las Vegas water sup­ply suetem to the Las Vegas Land and Water Company. This study indieates eueh transfer would be almost wholly advantageous, and 1 recommend it for several reasons: 1* Over 90j£ of the water passing through the trans­mission mains is now taken by the Water Company, and this situa-tion binds^ fair to continue indefinitely. ? ^ H xH 2. The I.O.C. Bureau of Valuation has protested the inclusion of our large and growing investment in the Las Vegas water-producing property in account 70l/ They take the position the property should be transferred to account 705, and it is prob­able we cannot leave it in account 701. 3. The investigations of the Mevada Public Service Commission uncovered the details of Onion Pacific charges against the Water Company for water, and as a result there has been criti­cism of rental charge based on 6% of the investment in land and im­provements and 4% of the cost of improvements for annual depreciat­ion. By sale of the L.A. H . L . property to the Water Company the 6/6 Interest charge would not be a controversial item, and de­preciation can, in my opinion, be more acceptably determined by applying to the different features of the property, rates based