Deming graphic. (Deming, N.M.) 1903-1948, 1920-03-30
WATER CO. DECLARES
MA|NSWORTHM0NEY.
In Interview With Local Paper G. M.
Cotton Says That Many Of Mains
Have Service Left In Them
OUTLAsT PRESENT FRANCHISE
Also Says That Franchise Is Worth
Money Because the Plant Il
Earning Good Dividends

G. NJ Cotton, manager OF the local
water company, arrived in the city
Tuesday, and In an interview with the
Deming Headlight, relative to the
value OF the water works property, as
prepared by City Engineer G. B. Nor
gan, expressed the opinion that the
report met with his absolute satisfac-
tion, as 1t was evident ON the face OF
this report that he price asked by the
United Land and Water Company Is
extremely reasonable to any thinking
person or anyone who would take the
trouble to digest the figures or 90 into
appraisals as made by the city en-
gineer
Mr.. Cotton, however, expressed his
that no attempt to esti-
mate the value OF the water mains now
under ground, or the value Of the fran
chise as an operating business concern
were taken into consideration. In fair
ness to the people OF Deming and the
water company, an explanation Is due
regarding the value OF these items.
IL In an absolute fact that the water
mains In this city have value, but
I'm getting at the actual value IL can
seldom be ascertained accurately. As
a rule water works system does not
come into being as a complete and
finished unit but Is constructed piece
meal as the demands for water war
rant The best authorities contend
that pipes II actually in use must be
taken into consideration.
To have working basis II would
be no more than fair to start with the
cost OF reproduction of the system of
water mains new. This would amount
10 at least $30,000-less depreciation.
The only way we have TO arrive at
this depreciation is that we know that
the life of the present system OF mains
will outlive the franchise, which has
nine years 10 run. and as part Of
the mains have been laid 10 years,
there IL still nine-twenty-f Of its
value left, which would amount to
S10,SOO, according to conservative fig
ures based upon the best water works
authorities in the country.
Consequently, with the ultra-con-
servative estimate Of the physical valu-
alton by Engineer Morgan, plus the
above estimated value of the mains
you have an amount approximately
equal TO the purchase price asked by
the United Land and Water Company
for its plant
Another important matter 10 be con-
sidered Is the value Of the franchise.
A franchise, to have any value, must
have definite life and must provide
for privileges to the holder. The
holder of franchise on which he can
earn fair return on capital actually
invested has a value that should be al
lowed for In valuation of this kind.
The courts hive decided that fran
chise IL property, and fair value
must be paid when taken for the pub
lie good. That being the fact, 1t would
seem that franchise with nine years
yet to run, allowing its holder TO earn
a fair return, has value that should
bring the totals far In excess OF the
amount asked for the property OF the
water company.
Now, In regard to the going value
of the company's properties. Most
water companies mt the start are a
losing proposition, and Deming Is no
exception.
The general premises on which go
ing concerns value have been based
are these:
(a) Estimated deficits that would
he incurred before n new plant could
equal the present business OF the es'
tablished plant.
(b) Estimated deficits that would be
incurred before new plant would be
on paying basis.