The San Francisco call., 1908-10-08

FOR much Of the damag &c done Dy the
big fire.
In terse sentences Judge Harrington
dismisses the contention OF the COM
pany that the supervisors did not give
adequate consideration TO the claims OF
the company. He then proceeds TO
shatter the Substantial theory advanced
with such elaborate logic by Herman
Schussler. CHIEF engineer Of the COM
pany. Schussler had argued that the
value Of Spring Valley could be deter
mined by figuring the cost of the next
available system With this premise
Schussler proceeded with figures Of his
own concOctiOn TO demonstrate TO his
own satisfaction that IL would cost
$4,000. coo to develop the Hetch Hetchy
system. He concluded. therefore, that
the Spring Valley plant was worth
s52500.0Oe. Judge harrington disposes
Of this unique creation with these
words.
While the cost OF a substitute sys-
tenn may be considered in finding the
reasonable value of the Spring Valley
plant il can not be a controlling ele-
ment. otherwise by securing control of
all the available sources from which
water may be brought to san Fran
cisco the company might greatly eXag
gcrate the value Of its plant for rate
fixing purposes and thus absolutely
defeat the very purpose OF government
regulation"
REFUSES COMPANY'S ESTIMATE
The court also refuses to accept the
companys estimate OF $26O,OOQ for de-
probation and knocks 500. 900 off this
sum. No allowance is made for the
franchise although the company
claimed that it should be figured some
where between sl,0O0.O00 and s4,000,0O
The real value Of the decision to the
city lies in the definite estimate of s27,-
553.5l2 as the value Of the Spring Val
10y plant. When the city asked for an
oIor from the corporation it made a
tentative proposition to sell for $32,
coo 600, but later withdrew that tender
and declared that its plant was worth
s52.500.0o0 and not one cent less The
city's experts, covering a period Of five
years. have placed the value of the
plant at sums ranging from $4,000. 600
TO S2S000 600. When the supervisors
invited the directors Of the company to
submit an offer it is known that they
were prepared TO regard with favor any
tender that appeared TO be reasonable.
The valuation now fixed while not
in effect a binding obligation. is a ju-
dfcial determination that VIII go a long
way 10 help the city's cause. 1t would
be A bg factor in favor of the munich
pality should the city authorities in
tain the plant
After reviewing the case at issue, the
court points out that the proceeding is
unusual for the reason that heretofore
an injunction has been sought to re-
strain the enforcement of a decrease
in the rate schedule, wlfile in the pres
ent instance an injunction is sought
against a higher schedule than that in
force. The rates adopted by the super
visors il viii be recalled, are those
which have prevailed since 1902 with
an extra allowance for hydrant service.
The court then discusses the contention
that the supervisors failed TO give the
company a proper hearing. on this
point the decision says:
CAREFUL INVEsTIG ALTON
The evidence shows that months were
devoted To careful and conscientious in
TestigatiOn. The Spring Valley water
company had every opportunity to be
heard and TO present 10 the board any
evidence or argument which it deemed
proper. The president and attorney Of
the company addressed the board fire.
Quently- Representative citizens were
permitted 10 express their views. Ere
Quent discussions were had by the
board and its members personally in
spected the companys property In
short. there is nothing in the record
which indicates that the supervisors
were actuated by any other motives
than TO do the thing which was just
+NA fAEIL p OF the present proceeding &
this is a final disposition OF the allega-
tion that the ordinance OF 1908 was
passed Tor the purp9se OF depreciating
the vaf7e of complainant's property,
and that the rates fixed in the ordi-
nance are fraudulent
Passing from the supervisors esti-
mate Of the value of the plant at
s25.O000 600. Judge harrington proceeds
as follows:
At the present time in fixing the
probable fair and reasonable value of
the property. whether we consider the
market value OF the stock and bonds Of
the company before the beginning of
the rate litigation or wehther we con-
sider The original cost or the lands
water rights ana improvements, after
weighing the increased cost of labor
and materials. the deterioration of
structures caused by use and the or
dinary action of the elements and the
fire. the value Of the real estate and
water rights shown by recent prices
paid for similar or the same property.
i IS Hot easy TO escape the conclusion
that the value fixed by the board of su-
pervisors is too low. that the value
liked by Judge Morrow in the 1903 case,
S26.752. 500 was not then too high.
In order TO meet the changes which
have occurred since 1903, in the absence
Of any testimony clearly showing that
larger amount ought to be allowed.
the difference between the valuation
adopted by the city engineers Office
for the year 1903 and 1908 will be ad-
ded TO $26.752, 500, making the value
of complainant's property which is
found for the purposes Of this pro-
ceeding. S27.553.512
A higher amount is not warranted by
the testimony.
PROVISIONS FOR COMPANY
Pointing out that the sums estimated
for operating expenses and taxes have
not been challenged, the court figures
that the city must make the following
provisions for the company: Operating
expenses, $4,000 depreciation. $780,
O00; taxes. 1875. 900; per cent income
on s27.553.5I2, approximate present
value OF the property, s1.377 $3.50;
total gross income. $2.512. .e75.e0.
In conclusion the court deals with
the intricate problems presented by