.. ~r ■ M m-, -X-ft ' ■ ' - • ■ ' xpxy x-x-:' X. • ft- : tfx i i • • -ft • » • .t- • .. •• ft:.-"';". • Report of Hazen , Whipple & Puller on Curb am Wat er Com any , Durham , Jan. 1, 1916. X IT. C, — — * TD 225 .D87 H394 1916 Trinity College Library Durham, N. C. (V' Rec’d 7>La^j. M - /-fJ-S- - ! - - UJ aJCLx/ » . Report of Hazen, Whipple & Fuller ON Durham Water Company Durham, North Carolina With Appraisal of its Plant as of January 1, 1916 > /-%*/ ¥7 Report of \ \ Hazen, Whipple & Fuller ON Durham Water Company Durham, North Carolina With Appraisal of its Plant as of January 1, 1916 e/ Digitized by the Internet Archive in 2016 with funding from Duke University Libraries https://archive.org/details/reportofhazenwhi01haze Correspondence Preceding Report MBA )^) Ce> [Letter] City oe Durham, November 13th, 1915. Mr. Charles F. Batchelder, Durham, N. C. Dear Sir : Upon your statement that you are representing the Durham Water Company and Messrs. E. H. Rollins & Son, of Boston, I am directed by the Special Committee from the Board of Aldermen of the City of Durham to request through you permission of the Durham Water Company to have the engineers of the City of Durham inspect and ap- praise the Durham Water Company’s plant and system, and to have inspected and, if necessary, audited the books of the Water Company, both here and in Boston. It is, of course, understood that the City of Durham will bear the cost of this inspection and appraisement. This request is made because the Board of Aldermen desires to enter into a satisfactory arrangement for the purchase of the proper- ties of the Durham Water Company, and therefore desires to get a fair and equitable estimate of all values of the Water Company as a basis on which to submit a bid for its purchase. If we are granted the permission to make the inspection and ap- praisement as requested, it is our intention to proceed with this work as soon as possible. Yours truly, (Signed) J. L. MOREHEAD, Approved: City Attorney. (Signed) B. S. SKINNER, Mayor. [Telegram] New York, November 15, 1915. B. S. Skinner, Mayor, and J. S. L. Morehead, City Attorney, Durham, N. C. Answering your letter to Batchelder, November thirteenth. Water Company glad to have their property valued and books opened as follows : — Hoping to save time, avoid all possible disagreements, have some finding which will eliminate all criticism and command confidence on all sides Company will agree this investigation shall be done at once by your representative and theirs acting jointly in conference. 4 Durham Water Company Company will select Hazen, Whipple and Fuller as high grade, inde- pendent, unprejudiced representatives. Wire me Boston when your engineer will be ready to start and we will instruct Hazen to act accordingly. JOHN D. HARDY. [Telegram] Durham, N. C., November 16, 1915. John D. Hardy, 11 High St., Boston. Your wire, November fifteenth. We are pleased to note your ex- pression of willingness to allow the City under certain conditions to make examination of your property and books in order to secure the necessary information on which to base a price which we hope will be satisfactory to yourselves. In your selecting Hazen would you expect the City to pay his charges. J. L. MOREHEAD, City Attorney. [Telegram] Boston, November 17, 1915. /. L- Morehead, City Attorney, Durham, N. C . Your wire of yesterday received today. Thank you. We expect to pay Hazen. Will instruct him to go to Durham on receipt your wire. JOHN D. HARDY. [Telegram] Durham, November 19, 1915. John D. Hardy, ii High St., Boston, Mass. Your wire seventeenth. Our engineer can start week beginning November twenty-ninth. Our understanding is that this inspection is made without prejudice to either party and while it is made by engi- neers working together their estimates and reports may be made separately. J. L. MOREHEAD. City Attorney. Durham Water Company 5 [Telegram] Boston, November 20, 1915. /. L. Morehead, City Attorney, Durham, N. C. Am asking Hazen, Whipple and Fuller to be on hand November twenty-ninth. My understanding same as yours namely : inspection and appraisement are made without prejudice to either party and while they are made by engineers working together their estimates and reports may be made separately. I hope they will agree and unite in one report. JOHN D. HARDY. INSTRUCTIONS TO HAZEN, WHIPPLE AND FULLER Boston, November 22, 1915. Messrs. Hazen, Whipple and Fuller, SO East 42nd Street, New York City. Gentlemen : The City of Durham, North Carolina, through its officers has asked permission to value the property of the Durham Water Company and to inspect its books. It asks this because its Board of Aldermen de- sires to enter into a satisfactory arrangement for the purchase of the properties of the Company and therefore desires to get a fair and equi- table estimate of all values of the Water Company as a basis on which to submit a bid for its purchase. The Company has been glad to agree that this investigation be made at once by the representative of the City and the representative of the Company, acting jointly in conference. It is agreed between City and Company that this inspection is made without prejudice to either party, and while it is made by engineers working together their estimates and reports may be made separately. I hope however that the City’s engineer and yourselves may agree and join in one report. Though you have been known to me by reputation only, because that reputation accords to you high character and efficiency in water works matters and in the general practice of your profession, in anticipation of the agreement just concluded with the City and to save time, I already have asked you briefly if you could go to Durham and you have said you would if you should be called on to do so. The City’s representative will be ready to start on this appraise- ment in the week beginning Monday, November 29th. Will you please be in Durham to start on that date on the work desired. 6 Durham Water Company The Company wishes to put everything it has without reserve at the disposal of yourselves and the City representative. Data on the physical properties of the Company will be found in Durham as well as all of its books of accounts except the treasurer’s books in Boston. These will be sent to Durham whenever they are wanted. I have no directions to give. You will use the means and methods in reaching a just and fair valuation of Company’s property, exclusive of cash balance and bills and accounts receivable and payable, which you think best and which are sanctioned by best practice in similar cases. Col. J. C. Michie, the superintendent of the Company, in whose in- tegrity you may put absolute confidence, will extend to you all the resources of his office. Yours very truly, (Signed) JOHN D. HARDY, Receiver, Durham Water Company. Report on the Value of the Property of the Durham Water Company Durham, N. C. February 24, 1916. John D. Hardy, Esq., Receiver, Durham Water Co., Durham, N. C. Sir : In accordance with your instructions, we have examined the prop- erty of the Durham Water Company and made an estimate of its value. In our judgment, the fair value of the property as of January 1, 1916, is $589,000. In placing this value on the property, we have taken into consider- ation the fact that the city of Durham has started the construction of works for a water supply on Flat River and that the company must anticipate competition in the future. If the company were to continue its business in the future as it has in the past, without com- petition, charging fair and reasonable rates for water, the value of the plant would be greater than the sum which we have given above. We have examined the income and operating expenses of the company; have made an estimate of the cost of the improvements and extensions which are needed to put the plant into thoroughly good condition ; and find that the prospective net earnings of the company in the future will be sufficient to render a return on $589,000 which will be larger than the rate of interest usually received from water works properties. We recognize the fact that it will be better for both the company and the city to avoid competition, and believe that this value which we have given, although it is less than the business is worth under conditions which existed before the city decided to build its own plant, represents a fair value under the present conditions. This value is substantially the estimated cost of reproduction of the property, less a fair allowance for depreciation, plus the cost of obtaining the busi- ness which the company now has from its consumers which are con- nected to its pipes, and the value of the unexpired franchise^ Competition in supplying water to a city is economically wrong. It results invariably in waste due to duplication of works and labor. It results ultimately in poorer service and higher rates to the con- sumers than would otherwise be the case. In every instance where competition has actually taken place the results have been unfortunate 8 Durham Water Company for all parties concerned. Fortunately there are but few such cases, as usually those who have been in control of water companies and municipalities have appreciated the situation, and private works have been taken over by the municipalities at a value arrived at through agreement or through arbitration or condemnation proceedings. Our understanding of the contention of the City of Durham, as indicated to us by Mr. Gilbert C. White, its engineer, during our con- ferences, is that the city having decided on the Flat River water supply, has no use for some parts of the company’s property on the Eno River. Under these conditions, the city claims that the. company should take part of the loss which will be involved if the Eno River plant is given up. This condition is one created by the city itself. In our opinion, the Eno River supply is the better one for the city. It is clear- ly a more economical one, both as to construction of works and as to operation of them. The quality of the water from the Flat River and from the Eno River is, under present conditions, substantially equal. In the future, the additional safety provided by the storage reservoir which is planned for the Eno River supply will render the supply a better one from the standpoint of sanitary protection than the supply from the Flat River, unless corresponding storage is pro- vided on that stream. With adequate purification, which can readily be obtained, either river will render a satisfactory supply. With the storage possible above the company’s property on Eno River an ade- quate quantity of water for Durham for the future is assured. Under these conditions, it seems to us that any attempt to reduce the value of the property below that which we have given as the fair value is not equitable. For your information we have drawn up a schedule of the repro- duction cost of the items of the property owned by the company which would immediately come into service if the Flat River supply were connected to the company’s mains as is now proposed. Besides these items, there is at the Eno River Station a considerable amount of equipment which the city could make use of to advantage in connection with the supply works at Flat River. We have estimated the saving to the city if these items were used on the basis of the cost of repro- duction less the depreciation and less the cost of removing and haul- ing the equipment to the site of the Flat River works. The 12 inch force mains from the Eno River plant to the reservoir could be taken up and relaid in the pipe system. We have estimated the value of this pipe on this basis, deducting from its cost first its depreciation and then the cost of taking up and hauling the pipe. We have estimated the remaining equipment at Eno River at the amount for which we believe it could be sold either for use for other purposes than water supply or for scrap. Durham Water Company 9 Taking these values together, we obtained a figure of about $504,000, as shown on Table T-39. MAINTAINABLE NET INCOME One of the most important elements in the valuation of a water works plant is its power to earn. It is necessary to determine whether the plant is able to maintain a satisfactory net income under fair and reasonable rates while it is giving adequate service. In order to ascer- tain this, it is necessary to estimate the probable future growth of the city and the probable future earnings and expenses. It is not necessary to carry this estimate for a long time into the future, but only to such a time as the plant can be put in thoroughly good condition. In Table T-30 we have shown the past and estimated future popu- lation of Durham and of the district supplied by the Durham Water Company, together with the past and estimated future earnings and expenses. It is the experience of nearly all cities that the earnings of a water plant increase at a more rapid rate than the population. This is be- cause people are constantly using more water for all purposes and because the percentage of people which are not connected to the plant is growing constantly less. We believe that the figures given in Table T-30 are below those which will actually be obtained in the future. These figures are taken as conservative ones which will be reasonably certain to be reached or exceeded. In Table T-31 we have shown the estimated cost of operation and earnings for the next five years, together with the estimated cost of constructing new works required to put the plant in thoroughly good condition, and the estimated cost of extensions to meet the increased demand for water. After allowing for a fair return on the additional investment required, there remains during these five years an average net income sufficient to return 7% on $611,000. This would allow 1% to be set aside for depreciation and 6% to be paid out. If the Company gives up the water works to the City, it will mean the sacrifice of an investment, built up after years of struggle, which is worth $611,000. If the City should take these works, put them in thoroughly good condition, and operate them as the water company has done, it could earn a substantial profit, as it could obtain the money at a comparatively low interest rate, and would save in taxes. ENO RIVER AS A SOURCE OF SUPPLY We have examined the Eno River and the Flat River as regards their availability for water supply for Durham. In our opinion the Eno River is the better supply and should be continued in use by the city. The source of the supply is closer to the city and is at a higher 10 Durham Water Company elevation than the Flat River. It is, therefore, clearly a cheaper supply, both as to the cost of development and the cost of operation. It will always retain this advantage and the greater the amount of water that is used in Durham, the greater will be the difference between the expense involved in the two supplies. The quality of the water as obtained from the two rivers is under present conditions substantially equal. Neither supply will be satis- factory without purification and either of them will be satisfactory if proper purification is secured. On the Eno River near the company’s plant there exists an excep- tionally good location for a large storage reservoir. By the construc- tion of a dam some 40 feet in height some 600 million gallons of water can be stored. This amounts to about 300 days’ storage of water at the present rate of consumption in Durham. The construction of this reservoir will increase the available supply for the City, will pro- vide additional water power for pumping, and will improve the quality of the water. With this storage provided, the Eno River will furnish a sufficient quantity of water for the city of Durham for a great many years to come. A city of 100,000 to 150,000 population or more can be supplied from the Eno River with this storage available. There are other sites where reservoirs could be constructed in the distant future, so that the Eno River will suffice as the Durham supply for an indefinite period. The construction of this dam will materially benefit the quality of the water. The benefit of long storage is. well recognized among those who have had experience with the water supplies in this country and abroad. Many cities, including such cities as New York and Boston, rely on storage to protect them against pollution of the water from streams flowing through country far more thickly populated than the water shed of the Eno River. Neither of these cities has a filter plant. The effect of storage has been studied with great care by the officials in charge of the water supply for the city of London, England. Lon- don obtains its water supply from streams upon the catchment areas of which there is a very large population residing. It stores this water and then filters it, thus obtaining an excellent water. The advantage of the storage of water in reservoirs is shown by the experience of the Metropolitan Water Board of London. This has been ably set forth by Dr. A. C. Houston, the Board’s Director of Water Examination, who has made continued studies for the Board since its consolidation over ten years ago. As a result of Dr. Houston’s observations over a long period, the following extract, taken from his book entitled “Studies in Water Supply,” page 96, may be quoted : “It is impossible within the compass of this work to do more than Durham Water Company 11 condense the chief points showing the advantages accruing from the simple storage of raw river water : (1) Storage reduces (a) The number of bacteria of all sorts. (b) The number of bacteria capable of growing on agar at blood heat. (c) The number of bacteria, chiefly excremental bacteria, capable of growing on a bile-salt medium at blood heat. (d) The number of coli-like microbes. (e) The number of “typical” B. coli. (f) The amount of suspended matter, colour, ammoniacal nitrogen and oxygen absorbed from permanganate. (g) The hardness. (2) Storage alters certain initial ratios, for example: (h) It reduces the number of “typical” B. coli to a propor- tionately greater extent than it does the number of bacteria of all sorts. (i) The colour results improve relatively to a greater extent than those yielded by the permanganate test. (3) Storage, if sufficiently prolonged, devitalises the microbes of water-borne disease, e. g., the typhoid bacillus and the cholera vibrio. (4) Storage produces a marked “leveling” or “equalizing” effect. (5) An adequately stored water is to be regarded as a “safe water,” and the “safety change” which has occurred in a stored water can be recognized, and demonstrated by ap- propriate tests. (6) The use of stored water permits of a constant check being maintained on the safety of a water supply antecedent to, and irrespective of, filtration. (7) The use of stored water goes far to neutralize or wipe out the gravity of any charge that a water supply is derived from polluted sources. (8) The use of adequately stored water renders any accidental breakdown in the filtering arrangements much less serious than might otherwise be the case.” Not only would the long storage materially benefit the water as to its sanitary quality, but it would make the operation of filters simpler and cheaper. It would serve to dilute any small mill wastes which now enter the Eno River, so that the water would not be subject to any 12 Durham Water Company sudden changes as to alkalinity. With this storage provided on Eno River, the quality of the raw water would be superior to that from the Flat River unless an equivalent amount of storage were there provided. By the construction of this dam, a large increase in the available water power would be obtained. We have examined the records of the Durham Water Company as to its pumpage by water power in the past, have examined the records of stream flow for streams in the vicinity of Durham and have estimated that from 80 to 90 per cent of the total water used by Durham at the present time could be pumped by water power with the increased head and water made available by the construction of the storage reservoir. We have estimated the cost of this improvement and find that the saving effected by the use of the water power is sufficient to furnish a fair return on the invest- ment involved. The construction of this reservoir would, therefore, not reduce the available net return to the company. In the future, as the consumption of water increases, the value of the water power would be greater. REPRODUCTION COST Our estimate of the cost of reproduction of the physical plant is based on conditions as they existed on the date of this appraisal, January 1, 1916, and upon normal prices. By normal prices we mean the .prices which have on the average prevailed during recent years and which may reasonably be anticipated in the immediate future. We have not used the prevailing prices at the exact date of appraisal as prices fluctuate with the market while the values of water works properties do not. Using normal prices gives the normal reproduction cost. For this appraisal it would have been distinctly advantageous to the Company if the present higher prices of material had been used. For instance, the cost for cast iron pipe in the system, excluding any cost for laying, has been estimated at about $180,000. If the pre- vailing price as of January 1, 1916 had been used, this would have been increased by about $8,000. The prices used are intended to be sufficient so that the works could be actually built for them by the com- pany or by. the city under careful business management. They are intended to include reasonable compensation for all material and labor used, including a profit for such contractors as would naturally be employed. They do not include any profit to the company, but only the actual net cost in money to the company. We have obtained all the information which we could as to the actual cost to the company of the various items in the plant. We have given these prices due consideration in making up our repro- duction cost. In many cases our estimates of reproduction cost are materially less than the actual cost to the company, because we have estimated on the cost of doing work under contracts of considerable Durham Water Company 13 magnitude, while the work has actually been done piecemeal at a greater cost. In making our estimate, we have made a careful study of the con- ditions existing in Durham as affecting the cost of doing the work. We have studied the cost of laying pipe and doing other work in Durham and in other cities and towns in this section of the country. We have also considered the data furnished us by Mr. White as to contract prices for laying pipe lines and other works. PIPE LAYING It must be remembered in comparing pipe laying prices that the difference in the character of the excavation, the difference in the labor conditions, the amount of congestion in the streets, and other matters, affect them materially. Prices obtained for easy digging, or those obtained for laying pipe in small villages and in the outlying sections of cities cannot be used without modification for conditions which exist in Durham. The estimate which we have given we consider to be as low as it would be possible to lay pipe in Durham by a contractor in a thorough- ly workmanlike manner, with a reasonable profit, under normal con- ditions. In considering prices which have been secured in the last few years, it must be remembered that contract work has been scarce and that contractors have taken work in many cases at little or no profits. Such conditions will not continue and are not normal conditions. It must also be remembered that many contracts are taken at too low a figure. Generally when this is done, the contractor, finding that he is losing money, does poorer work than would otherwise be the case. In this way the owner also suffers. We believe that it is not a fair basis of valuation to take the lowest prices which can be obtained in competitive bidding. These prices are well known not to represent the cost of pipe well laid ; they do not cover the many extras which come into the case, and do not cover the frequent additional expense due to the fact that in many cases the bondsmen have to finish the contract ; they do not cover the cases where the contractor receives as extras an amount which makes the actual cost materially in excess of that obtained by using unit prices taken from his bid. These facts are well recognized by the courts and commissions which have had experience in valuation. In comparing the cost of laying pipe in Durham with the cost of laying elsewhere in the vicinity, it must be remembered that the ex- cavation in many places in the South is comparatively easy and can be done at a lesser cost than would be required for the work in Durham. A certain proportion of the excavation in Durham will be 14 Durham Water Company sand rock, which will require considerable additional expense, although it may not be classed as hard rock excavation. Some of the pipe laying in Durham will cost much in excess of the figure which we have given. At places where the streets are con- gested, where difficulty will be met with in handling the material, where unforseen underground obstructions are encountered, where trolley tracks and railroads will have to be crossed, and where other obstructions are encountered, there will be much additional cost. If a contract was let for pipe laying, under the conditions ordinarily found in small villages, the overcoming of all of these difficulties would be extra work and would amount to a large proportion of the cost of lay- ing. We have estimated a figure of from 2 to 3 cents per foot for all the pipe in the city for the additional cost of overcoming these ob- stacles. In some streets of the city the cost will be more than double the cost in others and this allowance is taken as an average figure. In cities in the North of similar size and character as Durham, but with somewhat more difficult conditions, the estimate has frequently been 5 and 6 cents per foot for the same item. CAST IRON PIPE In obtaining a proper cost to allow for the cast iron pipe in the system, we ascertained the prices which the company has paid the last ten years and prices which have been paid elsewhere in this locality. We find that in general the prices thus obtained agree very closely with New York tidewater prices during times when prices are not abnormally high or low. The prices in the South do not, however, go to quite the low levels that the New York prices do. This fact has been noted not only in Durham, but elsewhere, and it is probable that the pipe manufacturers are able to somewhat control the prices and keep them from going to the low levels which are the direct result of strong competition. We have taken for cast iron pipe a price per ton of $26 for 6" pipe. This represents the average price at which pipe could be obtained at Durham during the past ten 3-ears. This price is materially less than the present price of cast iron pipe in Dur- ham. The quotation on January 1st for pipe in Durham was at the rate of $27 per ton. Since that time the price of pipe has increased and it is likely that it will further increase. The average price for the past ten years is clearly a conservative estimate. In this connection it may be noted that the pipe which the Durham Water Company has placed has been thoroughly tested out. It has been in the ground and tested under conditions equivalent to any which it will have to stand. Such pipe as was of poor quality has broken and been replaced. The pipe that is in the ground is equivalent to pipe which has been thoroughly tested at the mill. The cost of such testing is considerable, but no allowance is made for it. Durham Water Company 15 During the life of the company, the grade of streets has been chang- ed from time to time and the company has had to lower the pipe to meet these changes in grade. No allowance has been made for this, but it may be mentioned as one of the points which should be fairly considered if the actual cost to the company for construction work were to be taken. SPECIALS The price taken for specials is 2.8 cents per pounds, which is ap- proximately the average price paid for specials during the last ten years. LEAD We have used 5*4 cents per pound as the proper cost of lead, which represents a normal price for this material in Durham. GATES AND HYDRANTS We have studied the actual cost of gates, hydrants and appur- tenances to the water company and have compared them to prices which prevail elsewhere. These prices are reasonable ones and we have used them. In the case of the connections which the company has made with the Smith tapping machine, we have considered that these would be replaced, if new works were built, by ordinary specials and gates. The object of the tapping machine is to make the connections against pressure, thus avoiding shutting off the pipe. For new construction this would not be necessary and we have estimated on the cheaper method of doing the work. SERVICES The original cost of installing the .service pipes has been paid by the consumer, the company making the tap and charging a nominal price for it. The services have been maintained by the company. Many of them have been replaced. In some places where new mains have been laid to replace older mains, all the services have been taken out and largely replaced. That the company does have some ownership in these ser- vics is clear. This point has been frequently brought up before courts and allowances have been made. No specific allowance has been made for this item in our estimate. We have considered this as one of the intangible values of the property. ADDITIONAL COST OE LAYING MAINS UNDER PAVING We have made an allowance for the cost of cutting and replacing paving which exists in the streets over the pipe lines. If a new water works pipe system were to be laid now, it would be necessary to cut this paving, to save the material so far as it could be used again, to 16 Durham Water Company take precautions in backfilling the trench so that settling would not result, and to replace the paving as nearly as possible in its present condition. WROUGHT IRON AND APPURTENANCES Considerable quantities of wrought iron pipe, on which we have put a present value of $15,667, have been laid in the section of the city where the amount of business to be obtained was not sufficient to render a fair return on the investment required for larger cast iron mains. The laying of this pipe is common practice in cities of the South and is fully justified under the existing conditions. Ultimately, as the business increases, much of this pipe may be replaced by cast iron mains. In the interval, however, the saving in interest on the investment will cover the cost of the pipe. METERS The estimated cost of reproduction of the meters is considerably less than the actual cost to the company. The unit prices allowed are those for which a large quantity of meters, such as would be re- quired if the plant were reproduced as a whole, would be purchased and installed. We may call attention to the fact that the price thus allowed for meters is less than has generally been made in appraisals. STRUCTURES AND EQUIPMENT AT EN0 RIVER We made a study of the actual cost of the structures and equip- ment at the Eno River Station and have used the actual cost to the company for items whose cost represents normal prices under present conditions. In many cases the information as to the actual cost is not sufficiently complete to enable it being used. In such cases we have estimated the reproduction cost. We may call your attention to the fact that the older machinery and the filters have been depreciated largely, as they are approaching the end of their usefulness. Details of the estimate for the Eno River plant are given in schedule on Page T-2. The amount of equipment installed in the pumping station in the last three years has been large, and as a result the average age of all the pumping equipment is but 6.2 years. The average age of the buildings is 13 years. RESERVOIR The estimated reproduction cost of the distribution reservoir has been taken as the cost to build under normal prices of labor. We have considered that the reservoir would, if reproduced now, probably be built cheaper of concrete instead of stone masonry, and have ac- cordingly made our estimate lower. Durham Water Company 17 ENGINEERING AND CONTINGENCIES We have allowed \ 2]/ 2 per cent of the base cost of structures for engineering, administration, contingencies and errors and omissions. This allowance is intended to cover the cost of the services of engi- neers, administrative officers, lawyers and others whose services are required for the planning and building of the works, the errors and omissions from the inventory and the many items of expense which have to be met with during construction of the works and which cannot be well foreseen. INTEREST DURING CONSTRUCTION Six per cent for interest during construction is allowed. It is as- sumed that it will take two years after the construction of the plant is started before it could be put into actual service. The money to pay for the construction work would have to be advanced from time to time during this interval. Interest on this money must be paid. On the payments for some of the early work a full two years’ interest will accrue, while for the last payments there will be practically no interest. The figure used represents an average for the whole system. LAND, WATER RIGHTS AND EASEMENTS For land, water rights and easements, we have used for the repro- duction cost, so far as it can be ascertained, the actual cost of these items to the company at the time of purchase. No allowance for value due to favorable location or usefulness for water supply pur- poses has been made. We have allowed S per cent overhead charge on the land to cover surveys, legal and administration expenses con- nected with its acquisition. We have allowed 6 per cent interest per annum for two years on the land, as it would be necessary to acquire all the land before the plant was started and the interest would accrue during the entire construction period. GOING VALUE Going value may be defined as that which represents the difference in value between the pipes connected with consumers and earning revenue and a corresponding system of pipes equally complete but without actual connections or contracts or revenue. The difference in value is represented by the difference in revenue that the two plants otherwise equal would secure, one with the full businss at- tached and the other with the business to be acquired. It may be accepted as a fact that almost any water company dur- ing its early years fails to make a fair return on the capital invested .and that there is an actual cost to the company in acquiring the business. That it cost the Durham Water Company a much larger amount to acquire the business than we have estimated as the going 2 18 Durham Water Company value is evident from the financial records of the early years of the company’s existence. The amount of going value may be estimated by considering the history and the probable future of the present plant and comparing it with another plant similar in all respects except that at the start it would be without business. The difference in the net earnings of the two plants reduced to its present worth is the amount of the going value. The details of this computation for obtaining going value are shown in Table T - 32 , Valuable information as to the rate at which new water works are able to acquire business is furnished by the experience of the City of New Orleans, where a new water works plant was built in its entirety and put in service as rapidly as possible. This plant was started early in the year 1909. Prior to that date there was a small water company which furnished muddy Mississippi River water to a small percentage of the population. Practically the city depended on cisterns for its water supply for domestic uses. The need for a satisfactory water supply was urgent, as it was generally recognized that the use of cisterns had much to do with the unsatisfactory health conditions in the city. In order to make the use of the water as gen- eral as possible, unusually low rates were charged. In spite of all the favorable conditions for acquiring the business, it has taken six years to get 82 per cent of the premises connected to the pipe system. In Table T-36 we have shown the statistics taken from the official reports of the New Orleans Water Department as to the rate of ac- quiring the consumers. In the last column of this table we have shown for comparison the rate at which we have estimated that the business would be acquired in Durham if a new water company should start busines at this time. It will be noted that the rate which we have estimated is much more rapid than that which actually resulted in New Orleans. Our estimate is a conservative one and under the con- ditions existing in Durham the business could scarcely be acquired more rapidly than we have assumed and might come much more slowly. ADVANTAGES TO THE CITY NOT CONSIDERED IN THE ESTIMATES There are many elements involved which make it more desirable for the city to acquire the Durham Water Company’s plant in prefer- ence to building a new distribution system. Among these may be men- tioned the following: The present pipes are tapped for house services. If a new system were installed by the city, the cost of this tapping would have to be borne by either the city or by the consumers. The service pipes are now installed and connected to the taps on the company’s mains. Ir- Durham Water Company 19 respective of the ownership of these services, it would be necessary to have them connected to the new system. In making the change from the present system to the new system, many of the old pipes which are now and will remain for some time entirely serviceable would be broken or would be made to leak. It would be found that much ex- pense would be involved in changing these services from one system of pipes to the other. As we have already mentioned in the report, the company has replaced many of the services and can justly claim at least partial ownership in them. In order to install the new distribution system, every street in the city would have to be dug up while the new pipes were being laid. During the progress of the work, more or less damage would be caus- ed to the property of other utilities and to private property. Actual loss of business due to the bad conditions of the streets always results from such work. It is, moreover, inconvenient and annoying to the entire population. To have the streets of the city in such condition means that each individual person suffers to some extent. These matters are not given any specific value in this estimate, but they should be considered by the city in considering the purchase of the plant at a fair value based on the other elements of value of the plant to the company. franchise value Under the terms of the franchise, the city would normally take the water company’s property on April 1, 1918. If the company sells the plant now, it loses the revenues from the business in the interval. If the company by continuing its business can earn a net rate, after paying all operating expenses and a fair allowance for depreciation, which is in excess of the amount of interest which the money ob- tained from the sale of the plant would earn, it is clear that the com- pany is making a sacrifice in selling the plant at the present time. The difference between the net earnings of the company and the amount earned from a safe investment of the money obtained from the sale of the plant discounted to the present time may be taken as the fran- chise value. This value has been allowed by the courts in other cases and it has been recognized that the franchise has a value distinct from the going value. We have estimated this franchise value in Table T -37. We may call your attention to the fact that this franchise value is dependent on the value which is placed on the other elements of value in the plant; that is, with a smaller estimated value of the plant a larger franchise value is obtained. The relation between the franchise value and the value of the plant excluding franchise value, together with the details of the com- putation of the franchise value, are shown in Table T-37-38. 20 Durham Water Company DEPRECIATION During the past few years, the matter of the proper depreciation to be allowed on water works plants and other public utilities has been given much consideration by engineers, public utility commissions and the courts. Extended discussions of this matter have been pub- lished and a more thorough understanding of it has been obtained than formerly was the case. It has been recognized that methods of depreciation which may be applicable to properties where the units are of comparatively short life and which have to be frequently re- newed are not equitable when applied to the long-lived structures in- volved in water works and similar utilities. The so-called straight line method of depreciation — that is, the method of taking off a fixed percentage of the value of a structure each year, this percentage to be the ratio between the age and the assumed life of a structure, is not an equitable one for use with long-lived structures. The so-calldd sinking fund method is now generally used. By this method the de- preciation is made the equivalent of a sinking fund which, with its accrued interest, will be sufficient to replace the structure at the end of its life. To illustrate the difference in the two methods of depreciation, it may be useful to consider the more familiar case of a sinking fund for bonds. We have given in the table below the results which would be obtained if the principles involved were applied to such a case. CREATION OF A FUND TO RETIRE $500,000 OF 50 YEAR BONDS USING SINKING EUND METHOD Amount required to be set aside each year at 4% interest, .00655 X $500, 000=$3, 275 Total amount of sinking fund at end of 50 years, Principal $163,750 Accrued interest at 4%... 336,250 $500,000 USING METHOD INVOLVING SAME PRINCIPLE AS THE STRAIGHT LINE METHOD OF depreciation Amount required to be set aside each year, $500,000 =$ 10,000 50 Total amount of fund at end of 50 years, at 4% interest, Principal $ 500,000 Accrued interest 1,026,670 $1,526,670 The first of the above methods is, of course, the one used in pro- viding sinking funds for bonds. It is the proper method and provides Durham Water Company 21 all the funds necessary to pay the bonds. In the second method it will be seen that the amount to be set aside yearly is such that over three times the necessary funds result. Exactly the same will result if the straight line method is applied to depreciation. Utility Commissions have in many cases advised that the com- panies should not be required to carry an actual sinking fund in- vested in other securities, but should rather re-invest the money put aside for depreciation in the plant itself. In this way the money- usually can earn a higher rate of return than it could if it were put aside in other securities. As nearly all water companies need ex- tensions and improvements, the money can be thus used to advantage. The Durham Water Company has consistently followed this prac- tice. It has not only put its depreciation fund into its plant, but it has also put the greater part of its earnings into it. The Company has not regularly paid the interest on its bonds, but has instead put the earnings directly back into the plant. Under these conditions it is clear that the company has provided in its plant the full equivalent to a sinking fund. It is sometimes stated to justify the use of the straight line method that if a piece of property has been used for one-half its useful life it is worth only one-half of its value when new. This statement while plausible is erroneous. It overlooks the fact that we are measuring worth in money, that money earns interest and that the money to be paid now is worth more than money to be paid in the future. If the property is equally useful for supplying water and the conditions remain otherwise the same, the earnings from it will be just as great during the last half of its life as during the first half. Under these conditions, if the straight line method is used, the owner of the prop- erty during the first half of its life would have to carry an interest charge on a capital of exactly double that carried by the owner of the property during the second half of its life, while the returns would be the same. In such a case, the owner of the property during the first half of its life might be unable to earn a reasonable interest on the capital, while the owner during the second half made a substan- tial profit over and above his interest charges. This is clearly unjust, but it is the fact which exists if the straight line method is accepted and used for depreciating public utility properties. ILLUSTRATIONS OF DIFFERENCE IN RESULTS OBTAINED BY THE USE OF THE TWO METHODS OF DEPRECIATION In the following table we have shown, using round numbers for convenience, the results obtained by using the two methods of de- preciation for a case similar to that existing in Durham. 22 Durham Water Company Assumptions: (Using round numbers for convenience). Cost of reproduction of physical property, new $500,000 Useful life, of plant 50 years Age of plant 15 years Accrued depreciation at end of 15 years, on straight line method 150,000 Accrued depreciation at end of 15 years, on sinking fund » method, 4% interest basis 65,579 Cost of reproduction, less depreciation, by straight line method $500,000— $150,000= 350,000 Cost of reproduction less depreciation, by sinking fund method $500,000— $65,579= 434,421 CASE I USING “SINKING FUND” DEPRECIATION METHOD Assuming that a city has $500,000 in cash to use and that an exist- ing plant could be purchased for the cost of reproduction less the ac- crued depreciation at the end of the 15 years, it could either build a new plant for $500,000 cash or purchase the existing one. If the existing plant were purchased, $65,579 the amount of the accrued depreciation could be invested in securities, while if a new plant were built the total amount would have to go into construction. The earnings from the property would be the same in either case. The results to the City are given below : IF CITY BUILDS NEW PLANT Cost to build $500,000 Value of plant at end of 35 years from date of purchase, using sinking fund method of depreciation, on 4% interest basis, $500,000 less dep. 258,780 Total value of property owned by city at end of 35 years 258,780 IF CITY PURCHASES AN EXISTING PLANT, 15 YEARS OLD Cost to purchase existing plant $434,421 Sum which could be invested 65,579 Value of plant at end of 35 years from date 0 Amount of the principal of $65,579 and compound inter- est, at 4%, for 35 years 258,780 In the above case it is clear that the city is equally well off at the end of 35 years, whether it builds a new plant or purchases the existing one, and that the method is a fair one for both parties. Durham Water Company 23 CASE II USING STRAIGHT LINE METHOD OF DEPRECIATION Using same assumptions as in Case I, except that in this case the amount available for investment in other securities would be $150,000 instead of $65,579. IF CITY BUILDS NEW PLANT Cost to build $500,000 Value of plant at end of 35 years, using straight line me- thod of depreciation. ... 150,000 Total value of property at end of 35 years $150,000 IF CITY PURCHASES EXISTING PLANT Cost to purchase existing plant $350,000 Amount which can be invested $150,000 Value of plant at end of 35 years 0 Amount of principal of $150,000 with compound interest at 4%, for 35 years $592,000 From the above it is seen that if the straight line method of de- preciation were used, at the end of the thirty-five year period, if the city had purchased the existing plant, the value of its property would be $442,000 more than if it had built a new plant. Such a result is clearly unjust to the company and shows that the allowance for ac- crued depreciation by the straight line method is excessive. We may call attention to the fact that in a recent report of the Committee on Valuation of the American Society of Civil Engineers the Sinking Fund Method of Depreciation was recommended and that it is now in general use. We have used the sinking fund method of depreciation in this ap- praisal for all structures which we have depreciated in accordance with a definite term of useful life. For some of the structures other methods of determining depreciation are clearly better and have been used. For cast iron pipe, the life of which is unknown, which has in some cities been used over 100 years and which it is generally admitted will last for a very long time, the depreciation can be better estimated by determining its relative usefulness as compared to new pipe. The cast iron itself may be considered as practically indestructible. It is true, however, that cast iron pipe becomes more or less tuberculated with deposits in time and that the carrying capacity of the pipe be- comes somewhat less. Many experiments have been made to determine the loss in carry- ing capacity of the pipe from this cause. This loss varies with differ- ent waters and conditions. We have examined the pipe systems in 24 Durham Water Company many different cities and have determined the loss in capacity for many different pipes. We have depreciated the value of the pipes in the Durham Water Company’s system on this basis. Evidence as to the condition of the pipe is furnished by specimens of the pipe removed and also by the fact that the friction in the pipes of the supply mains is not large. The tuberculation in some of the pipes is undoubtedly greater than in others. A piece of the original pipe taken from the 12 inch force main from the pumping station to the reservoir, laid some twenty-eight years ago, shows very little, if any, tuberculation after this period of service. There is a thin layer of dirt in the bot- tom of the pipe. Its carrying capacity is practically as great as when it was put down. The tar coating originally put on is still in good condition. The value of this pipe is little, if any, less than when it was put down. On the other hand, we have examined a piece of pipe which was taken out of the system, which is also twenty-eight years old, on which there are considerable tubercles. This piece of pipe was in the early days on a dead end, and for some time was used to only a limited extent, although now considerable quantities of water go through it. The fact that the water in the dead end was not in motion enabled the deposits to form easier than at other places. The average condition of the pipes is somewhere between these two extremes. The tuberculation on these pipes is probably not materially different from the average of pipe throughout the country. We have depreciated the pipe lines to a greater extent than would be justified on the theory of reduced capacity alone, because we realize that due to strengthening of the distribution systems which is required from time to time as cities grow, there is always a small percentage of the pipes which are either taken up and replaced by larger mains or duplicated. While the amount of pipe affected by such changes as might now be reasonably made in Durham is small, we have made allowance for it. We have also depreciated some lines which are unnecessarily in duplicate, as the two pipes could be replaced by one larger one at a smaller cost. We may call attention to the fact that the pipes in the streets of Durham which have been laid for some years occupy a position of assured stability and have been thoroughly tested under actual service conditions and in that way are better than pipes just laid. Deprecia- tion has been allowed for gates, specials, cutting and replacing paving on the same basis as the pipe in or over which they are laid. In depreciating machinery and other structures, we have given due consideration to functional depreciation (that is, where the machinery or structure is of a type not as well adapted to the service it is rendering as other types of machinery now available would be, we have depreciated its value for that reason.) Durham Water Company 25 We have not allowed depreciation on structures which are of permanent construction and are fully useful. We consider dams and reservoirs under this class. The Nancy Rhodes pond has been depreciated because it has been gradually filling up. We have taken a depreciated cost based on a low estimate of the original cost of this pond and on the cost of removing the sediment now in it and obtaining a storage capacity equal to the original capacity. Nancy Rhodes pond has served a very useful purpose to the company and will continue to be useful as a coagulating basin so long as the plant is used. This large reservoir is more useful than any smaller reservoir which could be built in another location for the same cost. It is worth more than the depreciated value allowed. No additional claim has, however, been made on this account. If it were desired to have the original storage which was available on Nancy Rhodes pond, it could be obtained by removing the sediment in it. Similar basins are used at other plants and are cleaned out from time to time as the additional capacity is needed. The deposit in such basins is light and is easily removed by pumps at small cost. A few thousand dollars will suffice to excavate this basin to its original capacity and this can be done by the company whenever it is thought desirable. The distribution reservoir is worth more to this system or to any system for water works in Durham than it cost. We have given no depreciation on this structure, (except a small amount on the fence) because it is as good now as it was when it was built. INVENTORY The inventories of the various items of the property which make up the plant were made under the direction of our office. Mr. Chester M. Everett, a member of the firm, was in charge of the work. A thorough inspection of the property and an examination of the records of the company was made, and every effort made to get the inventory as complete as possible. In obtaining the inventory for the plant at Eno River and of the distribution reservoir, Mr. C. E. Bosch, rep- resenting Mr. Gilbert C. White, co-operated with Mr. Everett. Mr. W. M. Piatt, who was employed by the company for the purpose, measured the streets to ascertain the actual length of pipe in the ground. Schedules of the gates and of other appurtenances were obtained from actual inspection. The schedules thus made up were checked from the records of the company and by employees of the company who were familiar with the system. During the confer- ences with Mr. White the company offered to uncover pipes in the distribution system at twenty different places, to be selected by Mr. White, in order to establish the accuracy of the schedules. It also offered to cut out pieces of pipe from the distribution system at 26 Durham Water Company any points which Mr. White might select in order to show the actual condition of the pipe in the system. These offers were not accepted by Mr. White. In the valuation of the property we have included $13,986 as the value of the materials and supplies on hand. The inventory for these items was made by the company. We have used the amount fur- nished us without checking it, as the items which go to make up this inventory will be different at the time the plant is taken over and it is likely that a new inventory will be necessary at that time. CONCLUSIONS The Durham Water Company was started in 1886 and we under- stand first served the city with water in 1887. Since that time, or for a period of twenty-nine years, the company has continued to supply the city. During the early years Durham was a small place. The records of the company clearly indicate that for many years the water works did not earn enough to make any considerable return on the capital invested. The city has grown rapidly and the company has enlarged and improved its plant to meet the increased consumption of water.. It has to a large extent put its earnings into increased plant. If a fair value is now obtained for the Durham Water Company’s plant, it will allow a return of the original investment, together with a moderate interest on it for the full period during which this capital has been used to serve the public. The early years of a water works company are always full of difficulties, and it is seldom that adequate returns are obtained dur- ing them. Unless a fair return in later years is secured or a fair value of the plant is obtained in case of purchase, the investors in water works properties are not fairly compensated. It should be recog- nized that those who build and operate public utilities companies with all the attendant risks and troubles, and who devote their time and attention to the business are entitled to reasonable pay for their services and for the capital invested. Unless a fair value is paid to the Durham Water Company if will have carried the business during the unprofitable years during which the city was building up, and be deprived of the rights to operate the business when it becomes reas- onably profitable. It should be remembered that the City of Durham could not have been built up to its present size and importance without a water supply and it is clearly but just that the capital used for the benefit of the city should be returned with a fair interest. Under the existing conditions, our judgment is that the fair value of the plant as of January 1, 1916, as between a willing buyer and a willing seller, is $589,000. This value is a conservative one. The seller gets the return of the capital he has invested, together with a moderate interest thereon, while the buyer gets a going business which Durham Water Company 27 will render an adequate return on its value at the present time after all necessary improvements have been made, and which is capable of being further developed so that it will render a greater return in the future. We consider this a fair value of the plant as a going concern with all its business and rights. Respectfully submitted, HAZEN, WHIPPLE & FULLER, By Weston E. Fueler. T-l Durham Water Company ESTIMATED COST OF REPRODUCTION OF PHYSICAL PLANT, AND ESTIMATED DEPRECIATION THEREON ITEM Eno River Peant : Power dam Nancy Rhodes Pond Buildings Equipment Filters Distribution reservoir ....... Supply and force mains Distribution System and Misceeeaneous Piping: Cast iron pipe, etc., Wrought iron pipe, etc.,... Hydrants Meters Meter boxes Fire Station Telephone Line Sum Engineering and contingen- cies, 12 l / 2 °/o Interest on construction, 6%.. Land $14,000 5% overhead 700 $14,700 Interest 12% 1,764 Total estimated cost of re- production of physical plant Supplies and materials on hand, as per company’s inventory Going Value Estimated Approxi Sup- cost to mate porting build at average schedule, present age, page time years Depre- ciation Cost to build less depre- ciation T-2 $ 3,120 28 $ 200 $ 2,920 T-2 6,560 28 2,560 4,000 T-2 19,704 13 6,024 13,680 T-2-3 44,014 6.2 11,574 32,440 T-3 13,150 17 7,250 5,900 T-4 16,000 28 100 15,900 T-5 107,838 19.2 10,350 97,488 T-6 $192,243 14.8 $15,226 $177,017 T-6 18,383 6.3 2,716 15,667 T-6 7,423 13.5 1,477 5,946 T-6 19,076 8.9 4,883 14,193 T-6 2,343 8.5 476 1,867 T-12 7,820 18 6,820 1,000 T-12 815 5 200 615 $458,489 $69,856 $388,633 57,311 8,732 48,579 $515,800 $78,588 $437,212 30,948 4,715 26,233 $546,748 $83,303 $463,445 16,464 0 16,464 $563,212 $83,303 $479,909 13.986 T-32 85.750 Franchise Value T-38 $579,645 9,638 Durham Water Company T-2 ESTIMATED COST OF REPRODUCTION OF ENO RIVER PLANT Sup- ITEM porting Estimat- ed cost to build DEPRECIATION Cost to build less schedule, at pres- Age, Total Total deprecia- page ent time years per cent amount tion Power dam T-14 $3,030 28 6.6 $ 200 $2,830 Excavation, tail race... T-14 90 28 0 0 90 Nancy Rhodes Pond. . . T-14 6,560 28 39 2,560 4,000 Buildings : Water power house. T-15 3,900 18 42.35 1,652 2,248 Filter house T-15 4,963 Av.16 49.57 2,460 2,503 Pumping st. house.. T-15 7,141 Av.10 18.93 1,351 5.790 Dwelling T-15 1,200 23 34.30 411 789 Club house T-15 500 10 19 95 405 Alum shed T-15 100 2 3 3 97 Office building T-15 50 2 3 2 48 Oil house T-15 150 2 3 5 145 Chemical house .... T-15 100 2 3 3 97 Dwelling T-15 1,600 3 2.61 42 1,558 Sum . ■. $19,704 $6,024 $13,680 Equipment : Water Power : 1 35" Leffel Wheel.. T-16 2,465 15 32.5 800 1,665 1 15" Holyoke Wheel T-16 825 9 16.6 137 688 1 Bethlehem power pump T-16 2,992 10 60 1,792 1,200 Steam Equipment : Corliss engine T-16 2,057 9 30 617 1,440 Beth’m power pump. T-16 3,488 6 30 1,046 2,442 Beth’m power pump. T-16 2,942 10 30 882 2,060 Blake pump T-17 1,840 17 78.2 1,440 400 Dean pump T-17 1,000 100 1,000 0 Platt pump, high lift T-17 6,065 2 3.09 188 5,877 Ball engine T-17 590 10 50 295 295 Worthington pump.. T-17 210 3 4.75 10 200 Platt pump, low lift. T-17 1,375 2 6.20 85 1,290 Boilers : 66 x 16 fire tube. . . . T-17 1,400 10 38 535 865 66 x 18 fire tube. . . . T-17 1,650 17 78.4 1,350 300 78 x 20 fire tube. . . . T-17 2,400 2 6.2 150 2,250 78 x 20 fire tube. . . . T-17 2,450 1 3 75 2,375 T-3 Durham Water Company ESTIMATED COST OF REPRODUCTION OF ENO RIVER PLANT — Continued Sup- ITEM porting Estimat- ed cost to build depreciation Cost to build less Schedule, at pres- Age, Total Total deprecia- page ent time years per cent amount tion Webster feed water heater T-18 410 2 6.2 25 385 Coil feed water h’r.. T-18 150 17 78 117 33 Worth’n feed pump. T-18 125 10 26.36 33 92 Worth’n feed pump. T-18 100 2 4.3 4 96 Traps T-18 75 2 9.5 7 68 Separators T-18 500 2 4.3 22 478 24" Pelton wheel T-18 305 12 2.4 73 232 12" Pelton wheel T-18 70 8 14.4 10 60 3 K. W. generator T-18 96 2 4.3 4 92 2 K. W. generator T-18 75 8 20 15 60 Oil filters T-18 40 5 16.7 7 33 Recording gauge T-18 40 8 20 8 32 Stoves T-18 60 5 43.94 26 34 Pyrene fire extinguishers T-18 21 2 16.3 3 18 Badger fire extinguish’r T-18 100 5 43.94 44 56 Electric light system . . . T-19 150 8 14.4 22 128 Plumbing system T-19 200 10 19 38 162 Steam and Water Piping : Old piping T-19 1,724 10 26 455 1,269 New piping T-19 6,024 2 4.3 259 5,765 Sum $44,014 $11,574 $32,440 Filters : 2 250,000 gallon units T-19 5,500 21 75 4,120 1,380 3 350,000 gallon units T-19 7,650 14 41 3,130 4,520 Sum $13,150 $7,250 $5,900 Durham Water Company T-4 ESTIMATED COST OF REPRODUCTION OF DISTRIBUTION RESERVOIR Estimated cost ITEM to build at present time Distribution Reservoir : 200 feet in diameter, 15 feet deep, capacity 3.5 million gallons to top 1,200 cu. yds. rock excavation, at $1 $ 1,200 5,100 cu. yds. earth excavation, at 40 cents.. 2,040 Masonry wall, 2 feet at top, 5 feet at bot- tom 18 feet high; 1,- 470 cu. yds. at $8.40.... 12,325 700 lineal feet of fence, at 30 cents 210 Concrete steps 25 Building, 15' x 15' 200 Total estimated cost of reproduction $16,000 Cost DEPRECIATION to build less Age, Total Total deprecia- years per cent Amount tion 28 0.6 100 $15,900 T-5 Durham Water Company ESTIMATED COST OF REPRODUCTION OF SUPPLY AND FORCE MAINS (Supporting Schedule for Pipe Laying, T-20) Estimated Cost Cost Depreciation to build ITEM to build at less present Age, Total Total deprecia- ting years per cent amount tion 12" Pipe; Line;, River to Reservoir : 8,504 ft. pipe, @ $1.44.. $12,246 Extra for rock, 935 1 manhole 25 10 air valves, @ $4 . . . . 40 1,926 lbs. spec., @ 3 cts. 58 1 12" gate, @ $12.... 36 13 valve boxes, @ $2.75 36 1 12 x 4 Smith connect’n 20 $13,396 29 17.63 $2,360 $11,036 12" Line, River to Reservoir : 8,526 ft. pipe, @ $1.44.. $12,277 Extra for rock 935 16 ft. 4" pipe, @ 54 cts. 9 2 air valves, @ $4 8 1 12" check valve 60 1,133 lbs. spec., @ 3 cts. 34 1 4" gate, 7 4 12" gates, @ $37.... 148 17 valve boxes, @ $2.75 47 1 12 x 4 Smith Con’s.. 20 13,545 6 1.93 270 13,275 12" Line, Reservoir to City : 17,248 ft. pipe, @ $1.44 $24,837 Extra for rock 900 12 ft. 4" pipe, @ 54 cts. 6 7 air valves, @ $4 28 2,346 lbs. spec., @ 3 cts. 70 1 4 " gate, 7 1 6" gate, 12 4 12" gates, @ $37.... 148 13 valve boxes, @ $2.75 36 1 12 x 2 Smith con’s.. 8 1 12 x 4 Smith con’s.. 20 Extra for crossing .... 700 26,772 29 17.63 4.720 22,052 Durham Water Company T-5a ESTIMATED COST OF REPRODUCTION OF SUPPLY AND FORCE MAINS — Continued (Supporting Schedule for Pipe Laying, T-20) Estimated Cost Cost Depreciation to build ITEM to build at less present Age, Total Total deprecia- ting years per cent Amount tion 20" Line, Reservoir to City : 17,083 ft. pipe, @ $2.91 $49,711 Extra for rock, 2,000 Extra for crossing .... 1,300 42 ft 4", @ 54 cts 22 110 ft. 12”, @ $1.44.... 158 8 air valve§, @ $4 32 4,451 lbs. spec., @ 3 cts. 133 3 4" gates, @ $7.50. . . 23 1 6" gate 12 1 12” gate, 37 5 20" gates, @ $125. . . . 625 19 valve boxes, @ $2.75 52 1 12 x 4 Smith con’s.. 20 54,125 14 5.54 3,000 51,125 Total $107,838 $97,488 T-6 Durham Water Company SUMMARY OF ESTIMATED COST OF REPRODUCTION OF DISTRIBUTION SYSTEM Estimated Cost ITEM Sup- cost to porting - build at schedule, present page time DEPRECIATION Age , Total Total years per ct. amount to build less deprecia- tion Cast iron pipe . T- 7 $154,278 Gates . T- 7 5,484 Specials . T- 7 3,132 Valve boxes . T- 7 1,378 Smith connections Check valves, flange spec- . T- 8 1,677 ials and manhole, Additional cost of laying . T- 8 606 mains under paving. . . . T- 9 25,688 Sum $192,243 14.8 7.9 $15,226 $177,017 Wrought iron pipe . T- 9 $ 17,107 Stops, lead connections, etc. T- 9 994 Curb boxes . T- 9 70 Mueller connections . T-10 212 Sum $18,383 6.3 14.7 $2,716 $15,667 Hydrants . T-10 7,423 13.5 19.9 1,477 5,946 Meters . T-10 19,076 8.9 25.6 4,883 14,193 Meter boxes . T-ll 2,343 8.5 20.3 476 1,867 Total estimated cost of reproduction of distri- bution system $239,468 13.6 10.3 $24,778 $214,690 Durham Water Company T-7 ESTIMATED COST OF REPRODUCTION OF DISTRIBU- TION SYSTEM CAST IRON PIPES Size of Supporting length Cost pipe, schedule in per inches page feet foot Total 4 T-21, 22 12,663 $ .48 $ 6,078 6 T-21, 22 122,292 .68 83,159 8 T-21, 22 18,833 .90 16,950 10 T-21, 22 3,254 1.18 3,840 12 T-21, 22 12,828 1.48 18,985 14 T-21, 22 3,443 1.82 6,266 16 T-21, 22 2,572 2.20 5,658 18 T-21, 22 252 2.58 650 20 T-21, 22 4,259 2.98 12,692 $180,396 $154,278 GATE VALVES Size of gates 4 T-24 Number 71 $ 7.5C $ 533 6 T-24 198 12.00 2,376 8 T-24 37 18.50 685 10 T-24 12 26.50 318 12 T-24 22 37.00 814 14 T-24 7 48.00 336 16 T-24 3 65.00 195 18 T-24 1 102.00 102 20 T-24 1 125.00 125 352 $5,484 SPECIALS 111,863 pounds T-23 per pound, $0,028 3,132 VALVE BOXES T-26 per box, $2.75 1,378 501 T-8 Durham Water Company SMITH CONNECTIONS .Size of connec- tion Supporting schedule page Number Unit price Total 20 x 12 Cross T-25 l $114.80 $ 115 20 x 12 Tee T-25 2 69.30 138 20 x 8 ” T-25 4 46.80 187 20 x 6 ” T-25 5 39.20 196 20 x 4 ” T-25 1 34.20 34 14 x 12 ” T-25 2 57.70 • 115 12 x 8 ” T-25 4 34.40 137 12 x 6 ” T-25 5 26.80 134 12 x 4 ” T-25 1 21.60 22 12 x 2 ” T-25 1 8.00 8 10 x 6 ” T-25 2 23.60 47 10 x 4 ” T-25 1 18.40 18 8 x 8 ” T-25 1 28.80 29 8 x 6 ” T-25 2 21.00 42 8 x 4 ” T-25 8 15.70 126 8 x 2 ” T-25 1 8.00 8 6 x 6 ” T-25 4 18.90 76 6 x 4 ” T-25 8 13.60 109 6 x 2 ” T-25 15 8.00 120 4 x 2 ” T-25 2 8.00 16 $1,677 CHECK VALVES 18 1 $200 200 12 1 54 54 8 2 24 48 $302 MANHOLES 1 manhole, @ $25, $ 25 I BEAMS 3 8-inch I-beams, @ $7, $21 FLANGE SPECIALS 6,434 pounds flange specials, @ 4 cents $258 Durham Water Company T-9 ADDITIONAL COST OF LAYING MAINS UNDER PAVING PAVING Length Supporting Cost per in schedule foot of feet page Description trench Total 98,090 T-24 Macadam, $ .16 $15,694 24,537 T-24 Bit. macadam, .32 7,852 2,901 T-24 Brick on sand, .33 957 902 T-24 Belgian block, .58 523 1,140 T-24 Asphalt .58 662 127,570 $25,688 WROUGHT IRON PIPE Length in feet H 17,616 .14 $ 2,466 l 40,085 .15 6,013 11,485 .19 2,182 2 29,299 .22 6,446 98,485 $17,107 STOPS, LEAD CONNECTIONS AND CORPORATION COCKS Size in Supporting schedule, Unit inches page Description Number price Total % T-26 Stops, 20 $ .30 $ 6 1 T-26 Stops, 93 .80 74 V6 T-26 Stops, 21 3.00 63 2 T-26 Stops, 52 5.00 260 A T-26 Lead connections 34 3.50 119 l T-26 Lead connections, 68 4.50 306 H T-26 Corporation cocks. 33 .50 17 1 T-26 Corporation cocks, 180 501 .83 149 $994 CURB BOXES 97 curb boxes, @ $0.72, $70 T-10 Durham Water Company MUELLER CONNECTIONS Supporting ITEM schedule, page Number Unit price Total 4- way, T-25 22 $8.00 $176 3-way, T-25 4 5.50 22 2-way, T-25 4 3.50 14 HYDRANTS Supporting ITEM schedule, page Number Unit price $212 Total Corey steamers T-28 2 $26.50 $ 53 Darling steamers T-28 19 30.50 580 4" Glamorgan T-28 110 28.25 3,108 6" Glamorgan T-28 7 28.50 200 Glamorgan steamers .... T-28 4 30.75 123 Glamorgan sprinklers.. T-28 5 23.50 117 4" Columbian T-28 2 26.50 53 6" Columbian T-28 3 28.95 87 4 " Smith T-28 7 25.00 175 6" Smith T-28 6 27.00 162 Smith steamers T-28 18 27.00 486 4" Coffin T-28 83 26.50 2,200 4" Matthews . .' T-28 3 26.50 79 METERS , SET, WITHOUT BOXES $7,423 y 2 " Hersey T-29 1 $11.25 $ 11 Y" Hersey T-29 146 11.25 1,642 54" Crown T-29 427 14.60 6,234 1" Crown T-29 8 31.50 252 1/4" Crown T-29 2 49.00 98 2" Crown T-29 7 65.00 455 3" Crown T-29 1 132.80 133 54" Empire T-29 65 11.25 731 6" Empire compound . . . T-29 1 428.65 429 54” Neptune T-29 14 11.25 158 54” Lambert T-29 711 • 11.25 7,999 1" Lambert T-29 18 19.00 342 1 J4" Lambert T-29 1 31.00 31 2" Lambert T-29 8 50.00 400 54" Worthington T-29 1 8.65 9 1" Worthington T-29 4 15.40 62 54" Gamon T-29 9 10.00 90 $19,076 Durham Water Company T-ll METER BOXES Number Description Unit price Total 916 Kerr’s Foundry $ .50 $ 458 293 Glamorgan 3.80 1,112 189 Griffin Foundry 2.00 378 9 Cooks Machine works 2.00 18 21 Brick manholes, iron covers 17.00 357 2 Brick manholes, wood covers 10.00 20 1,430 $2,343 T-12 Durham Water Company ESTIMATED COST OF REPRODUCTION OF FIRE PUMP AND RESERVOIR AT DUKE’S FACTORY Reservoir : 14 feet deep, SO feet in diameter, capacity, 206,000 gallons. Excavation, 1,100 cubic yards, @ 40 cents $ 440 Masonry, 180 cubic yards, @ $8.00 1,440 $1,880 Pump : 1 3.6-million gallon, horizontal compound duplex pump, against 125 pounds, 183 water horse power, @ $30.00 $5,490 Erection 300 Foundations 150 $5,940 Total estimated cost of reproduction $7,820 ESTIMATED COST OF REPRODUCTION OF TELEPHONE LINE Length, Sy 2 Miees 290 poles, @ $2.00 $580.00 290 holes, @ $0.15 43.50 Setting poles, @ 30 cents 87.00 Insulators and brackets r.. 10.00 No. 12 galvanized wire 41.40 Erecting wire 54.00 Total estimated cost of reproduction $815.90 Durham Water Company T-13 ESTIMATED ORIGINAL COST OF LAND, WATER RIGHTS AND EASEMENTS 33 acres land alone, at plant $1,850 10 acres at Cole’s Mill, including flowage rights.... 3,500 For reservoir 500 Water rights, including damages, etc., 5,150 Easements on pipe lines 3,000 Total estimated actual cost of land, water rights and easements $14,000 T-14 Durham Water Company ESTIMATED COST OF REPRODUCTION, ENO RIVER PLANT Description Power Dam : Rock excavation, 1,200 cu. yds., @ $1 Masonry walls, 148 cu. yds., @ $8 Rock fill, 326 cu. yds., @ 75c. Timber, oak, 8,000 BM, @ $50 Tail Race : Rock excavation, 90 cu. yds., @ $1 Cost to Depreciation Build Cost to less reproduce Age, Total Total deprecia- new yrs. per ct. amt. tion $1,200 1,185 245 400 $3,030 28 6.6 $200 $2,830 90 28 0 90 Nancy Rhodes Pond : 6 million gals. cap. Dam : Masonry walls, 353 cu. yds., @ $8 $2,824 Earth embankment, 1,865 cu. yds., @ 40 cts 746 Timber, oak, 4,500 BM. @ $50 225 Clearing site 50 Screens and foot bridge 100 $3,945 Road Crossing on Emb: Masonry, 57 cu. yds., @ $8... $ 456 Earth embankment, 410 cu. yds., @ 40 cts 164 Timber, 800 BM, @ $50 40 $ 660 Canal West Side oe Pond : Masonry, 66 cu. yds., con- crete, @ $8 $ 528 Rock excavation, 1,011 cu. yds., @ $1 1,011 Earth excavation, 530 cu. yds., @ 30 cts 160 Canal, East Side : Rock excavation, 196 cu. yds., @ $1 196 Earth excavation, 196 cu. yds., @ 30 cts 60 $1,955 $6,560 28 39 $2,560 $4,000 Durham Water Company T-15 ESTIMATED COST OF REPRODUCTION OF ENO RIVER PLANT — Continued Cost to Depreciation Build Description Cost to less reproduce Age, Total Total deprecia- new yrs. per ct. amt. tion Structures : Buildings : Water power house : Super- structure, frame, 22,300 cu. ft., @ 6 cts., 1,488 sq. ft. $1,338 Foundations : Rock excava- tion, 367 cu. yds., @ $1.50 Earth excavation, 40 cu. yds. @ 30 cts Masonry, 250 cu. yds.; @ $8.. 550 12 2,000 $3,900 18 42.35 $1,652 $2,248 Filter house: Superstruc- ture frame, 71,000 cu. ft., @ 6 cts., 3,850 sq. ft 4,260 Foundations: Earth excava- tion, 425 cu. yds., @ 30c... 127 Masonry concrete, 72 cu. yds., @ $8 576 $4,963 16 49.57 $2,460 $2,503 Pumping station building : Superstructure, galvaniz- ed iron on frame, 100,- 000 cu. ft., @ 5 cts $5,000 Foundations : Rock excava- tion, 100 cu. yds., @ $1... 100 Earth excavation, 750 cu. yds., @ 30 cts 225 Masonry foundation and walls exclusive of pump foundations, 227 cu. yds., @ $8 $1,816 $7,141 10 18.93 $1,351 $5,790 1 dwelling house $1,200 23 34.30$ 411 $ 789 1 house 500 10 19 95 405 1 alum shed 100 2 3 3 97 1 office building 50 2 3 2 48 1 oil house 150 2 3 5 145 1 chemical house 100 2 3 3 97 King’s house 1,600 3 2.61 42 1,558 T-16 Durham Water Company ESTIMATED COST OF REPRODUCTION OF ENO RIVER PEANT — Continued Cost to Depreciation Build Description Cost to less reproduce Age Total Total deprecia- new yrs. per ct. amt. tion Equipment : Water Power : 1-35" Leffel vertical water wheel with flumes, no governor $1,365 Head gates, trash racks, hauling and erection 1-15" Holyoke vertical wheel $1,100 $2,465 15 32.5 $ 800 $1,665 and pump $ 775 Hauling and erection 1-9M? x 18 Bethlehem power $ 50 $ 825 9 16.6 $ 137 $ 688 pump, belt driven, capa- city 1.5 mil. gals., $2,253 Hauling and erection 425 Belt 274 Oiling system Steam pumping equipment : 1-14 x 36 Corliss engine, 40 $2,992 10 60 $1,792 $1,200 driving 2 power pumps.. $1,237 Bearings and shafting 265 Erection 235 Foundation 1-10 x 20 duplex single $ 320 $2,057 9 30 $ 617 $1,440 acting Bethlehem power pump, capacity 2-14 mil- lion gallons $2,428 Erection 400 Foundations 120 Belt 400 Oil system 40 Air chambers 1 9l4 x 18 Duplex single 100 $3,488 6 30 $1,046 $2,442 acting Bethlehem power pump, capacity 1.5 mil. gals $2,207 Erection and hauling 350 Foundations 96 Belt 249 Oil svstem 40 $2,942 10 30 $ 882 $2,060 Durham Water Company T-17 ESTIMATED COST OF REPRODUCTION OF ENO RIVER PLANT — Continued Cost to Depreciation Build Description Cost to less reproduce Age, Total Total deprecia- new yrs. per ct. amt. tion 1 Blake, horizontal com- pound, 14 x 20 x 11 du- plex, capacity 1.5 million gals $1,500 Erection 300 Foundations 40 $1,840 17 78.2 $1,440 $ 400 Dean pump $1,000 100. $1,000 0 1 Platt horizontal tandem, compound duplex, 16 x 26 x 16 x 24; head 300 feet, capacity 3 MGD ; duty, 50 million, with surface condenser circu- lating and air pump $5,385 Erection 200 Foundations 480 $6,065 2 3.09$ 188 $5,877 1 Ball single engine, driv- ing Worthington centri- fugal pump Erection Foundations 500 50 40 $590 10 50 $295 $295 1 8" Class D Worthington volute pump Erection Foundation $ 150 40 20 $210 3 4.75 $10 $200 1 14" Platt Centrifugal pump, direct connected to 1 8 x 9 Fleming en- gine, capacity 5 MGD. Head 35 ft., erected $1,375 $1,375 2 6.2 $85 $1,290 Boilers : 1 66 x 16, 100 H. P„ F. T. cost set $1,400 10 38.0 $ 535 $ 865 1 66 x 16, 125 H. P„ F. T... 1,650 17 78.4 1,350 300 1 78 x 20, 200 H. P„ F. T... 2,400 2 6.2 150 2,250 1 78 x 20, 200 H. P., F. T. with steel casing 2,450 1 3.0 75 2,375 T-18 Durham Water Company ESTIMATED COST OF REPRODUCTION OF ENO RIVER PLANT — Continued Description 1 Webster vacuum feed water heater, 400 H. P., with 10" separator, 6" gate valve, and 1" grease trap $ 360 Cost to Depreciation Build Cost to less reproduce Age Total Total deprecia- new yrs. per ct. amt. tion- Erection 50 $410 2 6.2 $25 $385 1 coil feed water heater 16x4x6 Worthington 150 $150 17 78 $117 $33 boiler feed pump, erected 1 514 x 3]/ 2 x 5 Worthing- ton boiler feed pump, $125 10 26.36 $33 $92 erected $100 2 4.3 4 $96 3 Anderson traps, @ $25 75 2 9.5 7 68 1 12" steam separator 150 2 4.3 7 143 1 10" steam separator, @ $1 . . 100 2 4.3 4 96 1 3" separator receiver 100 2 4.3 4 96 1 5" separator receiver 1 24" Pelton wheel, Hauling and setting $230 40 150 2 4.3 7 143 Foundation 1 12" Pelton wheel 35 50 $305 12 24 $73 $232 Setting 1 3 KW G. E.. D. C. gener- 20 $70 8 14.4 $10 $60 ator 1 2 IvW Holtzer Cabot 96 2 4.3 4 92 Generator 75 8 20 15 60 1 5 gallon oil filter 25 5 16.7 4 21 1 3 gallon oil filter 1 Bristol recording pressure 15 5 16.7 3 12 gauge 40 8 20 8 32 3 stoves, @ $20 3 Pyrene fire extinguishers, 60 5 43.94 26 34 @ $7 4 Badger fire extinguishers, 21 2 16.3 3 18 @ $25 100 5 43.94 44 56 Durham Water Company T-19 ESTIMATED COST OF REPRODUCTION OF ENO RIVER PLANT — Continued Description Electric light system, includ- ing outside lines Plumbing system Old steam and water piping and fittings, erected New steam and water piping and fittings, all installed in 1913, erected Filter Plant : 3 250,000 gallon units, War- ren Gravity wood tub filters, erected in place with most of the piping,. Extra piping Part of the erection done by company 3 350,000 gallons units, same type, erected with part of piping Extra piping Part of erection done by company Above filters include wood- en coagulating basin and wooden pure well. Cost to Depreciation Build Cost to less reproduce Ag’e, Total Total deprecia- new yrs. per ct. amt. tion $150 8 14.4 22 $128 200 10 19.0 38 162 1,724 10 26 455 1,269 6,024 2 4.3 259 5,765 $4,500 500 500 $5,500 21 75 $4,120 $1,380 $6,150 750 750 $7,650 14 41 $3,130 $4,520 T-20 Durham Water Company ESTIMATED COST OF LAYING PIPE IN FORCE MAINS Size of pipe, inches 12 in. 20 in. Width of trench at top, feet 3.0 4.0 Width of trench at bottom, feet 2.5 3.5 Depth of trench in feet 3.5 4.2 Cubic yards per foot 0.36 0.58 Weight of pipe per ft. class B, X 1.5% for overweight. .83.4 177.6 Weight of lead in one joint, pounds 20 40 Cost of lead joint every 12 ft., in cts., per foot of pipe.... 8.75 17.50 Cost per Foot: Excavation $ .13 $ .209 Lead 09 .175 Other costs .10 .18 Cost of laying $ .32 $ .564 Hauling .042 .088 Cost of pipe per ton For 12" $25.75 Cost of pipe per ton For 20" 25.50 Cost per foot $1,074 $2,264 $1,436 $2,916 $1.44 $2.91 Total Use Durham Water Company T-21 ESTIMATED COST OF LAYING CAST IRON PIPE IN DISTRIBUTION SYSTEM SIZE OF PIPE. IV INCHES 4 Width of trench at 6 8 10 12 14 16 18 20 at top, feet.... 2.5 Width of trench at 2.5 2.5 2.7 3.0 3.2 3.5 3.7 4.0 bottom, feet . . 2.0 Depth of trench in 2.0 2.0 2.2 2.5 2.7 3.0 3.2 3.5 feet 2.8 3.0 3.2 3.3 3.5 3.7 3.8 4.0 4.2 Cubic yards per ft. 0.23 Weight of pipe per ft., Class B, X 0.25 0.27 0.31 0.36 0.41 0.46 0.52 0.58 1.5% overweight 22. 33.8 48.2 64.7 83.4 104. 126.9 152.2 177.6 Lead in joints, lbs. 7. Cost of lead, joints, 11 ft., 5i4 cts:, per lb., in cents 10. 13. 16. 20. 24. 32. 35. 40. per foot of pipe 3.5 Cost per foot exca- 5.0 6.5 8.0 10.0 12. 16. 17.5 20. vation, @ 40 cts. 0.090 0.100 0.108 0.124 0.144 0.164 0.184 0.208 0.232 Lead 0.035 0.050 0.065 0.080 0.100 0.120 0.160 0.175 0.200 Other costs 0.03 0.05 0.06 0.08 0.10 0.12 0.14 0.16 0.18 Cost of Laying. . . . 0.155 0.20 0.233 0.284 0.344 0.404 0.484 0.543 0.612 Hauling 0.01 0.02 0.025 0.03 0.04 0.05 0.06 0.07 0.08 Pipe per ton 26.50 26.00 26.00 26.00 25.75 25.75 25.75 25.50 25.50 Cents per foot of pipe 0.292 0.440 0.626 0.842 1.07 1.34 1.63 1.94 2.26 Sum 0.46 0.66 0.88 1.156 1.45 1.79 2.17 2.55 2.95 Add for city con- ditions and cros- sings Total 0.02 0.02 0.02 0.025 0.03 0.03 0.03 0.03 0.03 0.48 0.68 0.90 1.18 1.48 1.82 2.20 2.58 2.98 T-22 Durham Water Company Durham Water Company T-23 ACTUAL PRICES PAID BY THE DURHAM WATER COMPANY FOR SPECIALS AND LEAD DURING THE LAST TEN YEARS Prices paid Average price per cents per pound pound per year for Date Specials I^ead Specials L,ead 1906 April 2.9 5.25 June 2.9 September 3.25 6.3 November 7.0 3.2 6.18 1907 March 3.25 7.25 May 3.25 7.25 July 3.25 7.5 August 3.25 October 6.50 November 3.25 6.75 December 5.25 3.25 6.75 1908 March 2.9 4.75 April 2.8 4.75 May 2.75 4.95 September 2.75 5.25 December 5.00 2.80 4.94 1909 April 2.75 5.00 September 2.75 2.75 5.00 1910 April 2.75 5.00 May 2.75 June 5.00 2.75 5.00 1911 April 2.75 5.10 May 4.90 August 2.75 October 2.75 5.25 2.75 5.08 1912 April 2.75 July 2.50 5.50 September 2.75 5.50 November 2.75 5.75 2.69 5.50 1913 Tanuary 2.65 5.50 February 2.75 March 2.75 May 2.65 2.70 5.50 1914 March 5.00 April 2.75 5.00 October 2.75 4.75 December 4.75 2.75 4.87 1915 January 2.75 5.00 July 2.75 7.50 August 2.75 6.5 September 2.75 6.0 2.75 6.25 Average for ten years. . . . 2.82 5.507 T-24 Durham Water Company ACTUAL AVERAGE COST TO THE WATER COMPANY OF GATES BOUGHT DURING THE LAST 10 YEARS, WITH ESTIMTED COST OF SETTING . SIZE, IN INCHES 4 6 8 10 12 14 16 18 20 Average cost.... $7.00 $11.00 $17.00 $25.00 $35.00 $45.00 $60.00 $ 95.00 $115.00 Setting .. .50 1.00 1.50 1.50 2.00 3.00 5.00 7.00 10.00 Total ....$7.50 $12.00 $18.50 $26.50 $37.00 $48.00 $65.00 $102.00 $125.00 ESTIMATED COST OF CUTTING AND REPLACING PAVEMENT BASED ON A WIDTH OE CUTTING OE 3 FEET For brick on sand @ $1.00 For asphalt on concrete.. @ $1.75 For macadam @ $ .50 For bitumen macadam.... @ $1.00 For stone block @ $1.75 per sq. yd. $ .33 per ft. of trench per sq. yd. $ .58 per ft. of trench per sq. yd. $ .16 per ft. of trench per sq. yd. $ .32 per ft. of trench per sq. yd. $ .58 per ft. of french Durham Water Company T-25 ESTIMATED COST OF REPLACING SMITH CONNECTIONS WITH AN EQUIVALENT REGULAR SPECIAL AND GATE, 2" CONNECTIONS FIGURED AS TAPS Size Cost 20 X 12 cross $114.80 20 X 12 tee 69.30 20 X 8 tee 46.80 20 X 6 tee 39.20 20 X 4 tee 34.20 14 X 12 tee 57.70 12 X 8 tee 34.40 12 X 6 tee 26.80 12 X 4 tee 21.60 12 X 2 tee 8.00 10 X 6 tee 23.60 10 X 4 tee 18.40 8 X 8 tee 28.80 8 X 6 tee 21.00 8 X 4 tee 15.70 8 X 2 tee 8.00 6 X 6 tee 18.90 6 X 4 tee 13.60 6 X 2 tee 8.00 4 X 2 tee 8.00 ESTIMATED COST OF REPLACING MUELLER CONNEC- TIONS WITH AN EQUIVALENT TAP AND STOP For 4-way, allow one 2" tap, @ $3.00 and one 2" stop @ $5.00. . $8.00 For 3-way, allow one 1J4" tap @ $2.50 and one V/z" stop @ $3.00 5.50 For 2-way, allow, one V/\' tap @ $2.00, and one 1 14" stop @ 1.50 3.50 T-26 Durham Water Company ACTUAL COST TO WATER COMPANY OF VARIOUS APPUR- TENANCES TO THE DISTRIBUTION SYSTEM WITH ESTIMATED COST OF SETTING Glamorgan standard valve boxes $2.30 Estimated cost of setting 45 Total $2.75 Curb Boxes $ .60 Estimated cost of setting 12 $ .72 Stops : Vi” 1" 1J4" 2" $ .30 $ .80 $3.00 $5.00 Lead connections: connection, without cock $2.00 Estimated cost of setting 1.50 Total $3.50 1" connection, without cocks $3.00 Estimated cost of setting 1.50 Total $4.50 Corporation cocks : Listed separately from lead connections : Z/ A " $ .50 1" 83 Durham Water Company T-2 7 TOTAL WEIGHT OF PIPE IN SYSTEM DISTRIBUTING SYSTEM AND PIPING AROUND STATION PUMPING Size, in I^eng-th Weight in pounds Total weight inches in feet per foot in pounds 4 12,663 21.7 274,787 6 122,292 33.3 4,072,324 8 18,833 47.5 894,567 10 3,254 63.8 207,605 12 12,828 82.1 1,053.179 14 3,443 102.5 352,907 16 2,572 125.0 321,500 18 252 150.0 37,800 20 4,259 175.0 745,325 180,396 7,959,994 Weight of specials in distribution system 111,863 lbs. Add for Smith connections 28,676 140,539 Per cent of specials 1.77 FORCE AND SUPPLY MAINS Size in Length Weight Total weight inches in feet in lbs. per foot in pounds 12” 34,278 82.1 2,814,224 20” 17,083 175.0 2,989,525 Tootal 5,803,749 Weight of specials in force and supply mains 9,856 lbs. Add for Smith connections 2,365 12,221 Total weight of pipe in system 13,916,503 6,958 tons T-28 Durham Water Company ACTUAL PRICES PAID BY THE DURHAM WATER COM- PANY FOR HYDRANTS Make Size and type Cost of hydrant Setting Total Glamorgan 4" $24.75 $3.50 $28.25 6" 25.00 3.50 28.50 Steamer 27.25 3.50 30.75 Sprinkler 20.00 3.50 23.50 Smith 4" 21.50 3.50 25.00 6" 23.50 3.50 27.00 Steamer 23.50 3.50 27.00 Columbian 4" 23.00 3.50 26.50 6" 25.45 3.50 28.95 Darling Steamer 27.00 3.50 30.50 Corey 4" 23.00 3.50 26.50 Corey Steamer 23.00 3.50 26.50 Coffin 4" 23.00 3.50 26.50 Matthews 4" 23.00 3.50 26.50 Durham Water Company T-29 ESTIMATED COST OF REPRODUCTION OF METERS AND SETTING Allowed for Net Size dis- repro- of Coup- counts duction meter Make Meter 54" Lambert $ 8.50 1 " Lambert 16.50 1 Yz" Lambert 30.50 2 " Lambert 51.00 54" Gamon 7.25 54" Empire 10.00 6 " Empire Comp 408.65 54" Crown 12.00 1 " Crown 30.00 V/ 2 " Crown 50.00 2 " Crown 65.00 3 " Crown 123.40 54” Hersey 9.40 54" Worthington 7.25 1 " Worthington 13.50 54" Neptune 8.00 ling' Wiper Setting etc. in place $ .40 $ 3.00 $ .65 $ 11.25 .80 3.25 1.55 19.00 3.50 3.00 31.00 4.00 5.00 50.00 .50 3.00 .75 10.00 .40 .40 3.00 2.55 11.25 20.00 428.65 .40 .40 3.00 1.20 14.60 .80 .40 3.25 2.95 31.50 .40 3.50 4.90 49.00 .40 4.00 4.40 65.00 2.00 .40 7.00 132.80 .50 3.00 1.65 11.25 3.00 .60 8.65 3.25 1.35 15.40 .40 .50 3.00 .65 11.25 T-30 Durham Water Company TABLE SHOWING POPULATION AND EARNINGS Year Population of City of Durham Population of Durham Township Estimated population of district served by Durham Water Company Total earnings per capita Total earnings 1890 5,485 10,420 7,500 $1.15 $ 8,620 1900 6,679 19,055 10,000 2.41 24,145 1910 18,241 27,606 24,000 2.52 60,550 1915 31,000 3.04 94,496 1920 38,000* 3.30* *125,000 *Estimated. EARNINGS AND EXPENSES, 1900 TO 1915 INC. Gross earnings Operating expenses Net earnings 1900 $24,145 $ 9,147 $14,998 1901 28,697 12,652 16,045 1902 32,924 10,277 22,647 1903 36,942 11,418 25,524 1904 39,295 13,673 25,532 1905 42,530 20,524 22,006 1906 45,828 17,951 27,877 1907 50,568 23,038 27,530 1908 54,828 23,369 31,459 1909 55,177 24,852 30,325 1910 60,556 27,825 32,731 1911 63,439 32,808 30,631 1912 73,986 34,339 39,647 1913 80,501 42,658 37.843 1914 89,381 49.333* 40.048 1915 94,496 45,649 48,847 * These operating for new construction, expenses are revised extraordinary legal to exclude charges which were obviously services, and other expenses, which were abnormal for this year. Note: — The operating expenses, except those for 1914, are those carried by the company and include some amounts which should properly be charged to construction. Durham Water Company T-31 MAINTAINABLE NET INCOME, TOGETHER WITH ESTI- MATED COST OF OPERATION AND EARNINGS FOR THE NEXT FIVE YEARS Year 1915 1916 1917 1918 1919 1920 Gross earnings ....! $94,175 $100,000 $106,250 $112,500 $119,000 $125,500 Operating expenses 50,825 55,500 59,500 63, 500 67,750 72,000 Net revenue 43,350 44,500 46,750 49,000 51,250 53,500 Estimated total con- struction during the year $60,000 $30,000 $10,000 $10,000 $10,000 Total additional in- vestment 60,000 90,000 100,000 110,000 120,000 Interest and depre- ciation on above additional invest- ments 6l4% .... 3,900 5,850 6,500 7,150 7,800 Net income, less in- terest on addi- tional investment 40,600 40,900 42,500 44,100 45,700 Average net earnings for five-year period $ 42,760 An amount sufficient to return 7% on..... 611,000 This will allow 6% interest to be paid after 1% has been set aside for depreciation. T-32 Durham Water Company COMPUTATION FOR GOING VALUE Earnings, Present Plant : In the following table, under Present Plant, in the second column, is given the estimated rate of gross revenue of the present plant during the next five years if it should continue in business. The figures have been obtained by a consideration of the gross earnings for some years back. Expenses, Present Plant: The third column under the same heading contains a similar esti- mate of the probable rate of expense of the present plant. In making up these figures due weight has been given to the fact that on the company’s books have been made charges against expenses which should properly have been made to construction, and also to the fact that until 1912 part of the pumping was done by water power. Earnings, New Plant: The following assumptions have been made as to the earnings which would be secured by the new plant. Public hydrant rentals will be obtained at once and will be the same as the present plant at all times. It is assumed that the remaining business will be secured in ac- cordance with the following schedule : Percentage of estimated earnings of the present plant, exclusive of At the end of hydrant rentals Six months 40% One year 60% Two years 80% Three years 90% Four years 97% Five years 100% Durham Water Company T -33 The total earnings of the new plant will be the sum of the public hydrant rentals and the above proportions of the remaining earnings. Operating Expenses, New Plant: It is assumed that at the beginning the operating expenses of the new plant will be 75% of those of the present plant during the same period of time. The remaining 25% of the operating expenses is as- sumed in proportion to the rate at which the business develops ; that is, that is, 40% at the end of six months 60% at the end of one year and so on. Total Going Value : On the above assumptions the probable profits of the present plant, and of a new plant for the next five years, have been estimated. The amount each year by which the profits of the present plant would exceed those of the new plant have been determined, and the sum of these amounts reduced to present worth represents the Total Going V t alue. The tables are as follows : T-34 Durham Water Company COMPUTATION OF GOING VALUE COMPARISON OF EARNINGS OF NEW AND PRESENT PLANTS Present Peant Time, Approximate estimated rate of gross revenue Approximate estimated rate of expenses Approximate estimated rate of net earnings 1916 Jan. 1 $ 97,000 $53,500 $43,500 1916 July 1 100,000 55,500 44,500 1917 Jan. 1 103,000 57,500 45,500 1918 Jan. 1 109,300 61,500 47,800 1919 Jan. 1 115,800 65,500 50,300 1920 Jan. 1 122,200 69,750 52,450 1921 Jan. 1 128,800 73,750 55,050 New Plant Estimated rate of gross earnings Estimated rate of present of public hydrant plant less hy- Time, rentals drant rental Approximate Estimated estimated earnings, rate of exclusive of gross revenue, hydrant rentals new plant 1916 Jan. 1 $10,650 $ 86,350 @ 0% $ 10,650 1916 July 1 10,850 89,150 © 40% $ 35,650 46,500 1917 Jan. 1 11,050 91,950 © 60% 55,150 66,200 1918 Jan. 1 11,450 97,850 © 80% 78,300 * 89,750 1919 Jan. 1 11,850 103,950 © 90% 93,550 105,400 1920 Jan. 1 12,250 109,950 © 97% 106,650 118,900 1921 Jan. 1 12,650 116,150 @ 100% 116,150 128,800 Durham Water Company T-35 ESTIMATED RATE OF EXPENSES FOR NEW PLANT 75% expense rate of present 25% expense rate of present Time plant plant 1916 Jan. 1 $40,100 $13,400 @ 1916 July 1 41,600 13,900 @ 1917 Jan. 1 43,100 14,400 @ 1918 Jan. 1 46,100 15,400 @ 1919 Jan. 1 49,100 16,400 @ 1920 Jan. 1 52,300 17,450 @ 1921 Jan. 1 * Deficit. 55,300 18,450 @ Portion of the Estimated total rate of Estimated rate of net 25% assumed expense earnings to be required for new new for new plant plant plant 0% $40,100 —$29,450* 40% $ 5,550 47,150 —650* 60% 8,650 51,750 14,450 80% 58,400 31,350 90% 14,750 63,850 41,550 97% 16,950 69,250 49,650 100% 18,450 73,750 55,050 EXCESS OF NET EARNINGS OF PRESENT PLANT OVER THOSE OF NEW PLANT Time Rate of excess During Average rate Total amount Discount factor at 6% Present worth 1916 Jan. 1 $72,950 1916* $59,050 $29,525 0.9855 $29,100 1916 July 1 45,150 1916t 38,100 19,050 0.9573 18,225 1917 Jan. 1 31,050 1917 23,750 23,750 0.9163 21,750 1918 Jan. 1 16,450 1918 12,600 12,600 0.8645 10,900 1919 Jan. 1 8,750 1919 5,775 5,775 0.8155 4,700 1920 Jan. 1 2,800 1920 1,400 1,400 0.7694 1,075 Going Value $85,750 *Firsthalf of year. tSecond half of year. T-36 Durham Water Company TABLE SHOWING RATE AT WHICH BUSINESS WAS AC- QUIRED IN NEW ORLEANS, TOGETHER WITH RATE AT WHICH IT IS ASSUMED IT WOULD BE ACQUIRED IN DURHAM IEW ORLEANS * Per ct. of Per ct. of premises total connected revenue Number of to exclusive services Approximate total of hydrant connected number number of rentals at end of premises premises assumed of year connected in city for Durham At start : 2,000 2,000 2.5 40 First year 12,700 15,800 20.5 60 Second year 22,600 26,000 33.5 80 Third year 29,068 36,000 46.5 90 Fourth year 33,959 46,000 59.0 97 Fifth year 40,883 55,000 70.5 100 Sixth year 47,653* 64,000 82.0 *Total number of premises in city, 78,000 Durham Water Company T -37 ESTIMATED VALUE OF THE FRANCHISE, ON THE BASIS THAT $579,000 IS THE VALUE OF THE PLANT, EX- CLUSIVE OF THE FRANCHISE VALUE Assume value of plant January 1, 1916 $579,000 Assume that $60,000 construction work is done during the first year : Add one-half of $60,000. . 30,000 Average value of plant during 1916 $609,000 Estimated net income during first year $44,500 Interest and depreciation charge, 6j4% of $609,000 39,585 Profit during first year $ 4,915 Remainder of Construction first year $ 30,000 Plant value at end of 1916 $639,000 Assume $30,000 construction during second year, and add one-half of this $15,000 Average plant value during 1917 $654,000 Estimated income during second year $46,750 Interest and depreciation charge, 6 % of $654,000 42,510 Profit during second year $ 4,240 Remainder of Construction second year $ 15,000 Total value at end of 1917 $669,000 Assume $2,500 construction in first three months 1918, and add one-half of this $ 1,250 Average value, first three months of 1918 $670,250 Estimated income, first three months of 1918.... $12,000 Interest and depreciation at 6j4% per year on $670,250 10,892 Profit during first three months of 1918 $ 1,108 T-38 Durham Water Company SUMMARY Net Discount factor Present Year profits to 6 % worth 1916 $4,915 0.9713 $4,744 1917 4,240 0.9163 3,885 979 First three month of 1918 1,108 0.8836 Total present worth of profits, or franchise value.. $9,638 RELATION EXISTING BETWEEN “FRANCHISE VALUE” AND THE TOTAL VALUE OF THE PLANT, EX- CLUDING “FRANCHISE VALUE” If the total value of the plant were reduced, the interest charges in the above table would be reduced by 6^4% of this reduction, and the profits increased accordingly. Therefore the relation between the “Franchise Value” and the Total Value is as follows: INCREASE IN FRANCHISE VALUE IN PER CENT OF DE- CREASE OF TOTAL VALUE, EXCLUSIVE OF FRANCHISE First year 6 Discount factor, 0.9713 6.313% Second year 614% Discount factor, 0.9163 5.956% First three months, % of 614% Discount factor, 0.8836 1.436% Total '. 13.705% This means that if the total value were reduced say $100,000 that the franchise value will be greater than above given by 13.705% of $100,000, or $13,705. Durham Water Company T-39 ESTIMATED COST OF REPRODUCTION LESS DEPRECIA- TION OF THAT PORTION OF THE COMPANY’S PLANT WHICH WOULD BE USED AT ONCE IF THE FLAT RIVER SUPPLY WERE CONNECTED TO PRESENT SYSTEM Distribution Reservoir on Huckleberry Hill $ 15,900 Supply mains from reservoir to city 73,175 Distribution System 206,690 Sum $295,765 Engineering and contingencies @ \2 l / 2 % 36,971 $332,736 Interest at 6% 19,964 $352,700 Land and easements necessary for above structures $2,500 5% overhead 125 $2,625 12% interest 315 $ 2,940 $355,640 Going Value 85,750 Franchise Value 9,638 $451,028 Inventory of material and supplies on hand (from company’s inventory) 13,986 Total $465,614 A further portion of the company’s plant could be made of use to the city by removing it from its present location and setting it up at the city’s plant. The following estimate is on the basis of the cost of reproduction less depreciation less a further amount for re- moving and transporting to the new site. Items at Eno River plant, chiefly pumps and boilers $ 18,169 12" force mains from river to reservoir 10,415 Adding these to the above sum= $493,598 The remaining portion of the compnay’s plant not included in above schedule would have a value as scrap or for other purposes than water supply estimated to be 10,325 Total $503,923 Memoranda Regarding Professional Work Done by Hazen, Whipple Fuller During the Last Twenty Years Hazen, Whipple & Fuller were unknown personally to anyone connected with the Durham Water Company. They were engaged because of their high standing and experience and because they had enjoyed the confidence of the City of Durham and had been employed by it. Asked for a statement of work done by the firm, they submitted the following memorandum. The bulk of these items covers work done by municipalities. ADVICE REGARDING WATER SUPPLIES, INCLUDING RE- PORTS AND RECOMMENDATIONS FOR IMPROVE- MENTS AND INCREASE IN SUPPLIES. RECOM- MENDATIONS AS TO FILTRATION, PLANS AND SPECIFICATIONS, SUPERVISION OF CONSTRUCTION OF WORK AND OPERATION OF PLANTS Albany, N. Y. East Orange, N. J. Auburn, N. Y. Grand Hotel, N. Y. Augusta, Me. Grand Rapids, Mich. Austin, Tex. Greenfield, Mass. Baltimore, Md. Guelph, Ont. Bangor, Me. Gilbertsville, N. Y. Battle Creek, Mich. Hackensack Water Co. Bethlehem, Pa. Hartford, Conn. Boston, Mass. Holyoke, Mass. Brandon, Man. Hudson River Hospital Brisbane, Queensland Hudson, N. Y. Burlington, N. J. Indianapolis, Water Co. Burlington, Vt. Jersey City, N. J. Charleston, S. C. Johnson & Johnson Mfg. Co. Chester, Pa. Kingston, N. Y. Cleveland, Ohio Lake Placid Columbia, S. C. Lancaster, Pa. Columbus, Ohio Lawrence, Mass. Concord, N. H. Lima, Ohio Elyria, Ohio, Water Co. Lincoln, Mass. Lorain, Ohio Lynn, Mass. Menominee Water Co. Miami Water Co. Minneapolis Montclair Water Co. New Brunswick, N. J. Newburgh, N. Y. New Jersey Zinc Co. New York City Norfolk, Va. Northampton, Mass. Nyack, N. Y. Oswego, N- Y. Ottawa, Ont. Painesville, Ohio Palmer Water Co., Palmerton, Pa. Peoples Water Co., Oakland, Cal. Peterboro, N. H. Philadelphia, Pa. Piqua, Ohio Pittsburgh, Pa. Plainfield Water Co. Portland, Me. Poughkeepsie, N. Y. Providence, R. I. Reading, Pa. Rockefeller Estate, Tarrytown Rutland, Vt. Saginaw, Mich. St. Albans, Vt. St. Johns, N. F. St. Louis, Mo. St. Thomas, Ont. Salem & Beverly, Mass. Salisbury, Md. Salisbury, N. C. San Francisco, Cal. Saranac Lake, N. Y. Saratoga Springs Springfield, Mass. Toledo, Ohio Trenton, N. J. Tuxedo Park, N. Y. Vassar College Vergennes, Vt. Wallingford, Conn. Washington, D. C. Watertown, N. Y. Waterville, Me. West Point Military Academy Wilmington, Dela. Winnipeg, Man. Yonkers, N. Y. GENERAL ADVICE REGARDING SEWERS AND SEWAGE DISPOSAL Altoona, Pa. Bay Head, N. J. Cincinnati, Ohio Cleveland (State Board of Englewood, N. J. Guelph, Ont. Hudson River Hospital Louisville, Ky. Millbury, Mass. Milwaukee, Wis. Northampton, Mass. Passaic Valley Sewerage Com. Paterson, N. J. Health) Penna. State Lunatic Hospital Pittsburgh, Pa. Poughkeepsie, N. Y. Rochester (State Board of Health) Vassar College Westbrook, Me. Willsboro, N. Y. FILTRATION PLANTS DESIGNED Albany, N. Y., covered sand filters. Auburn, N. Y., not yet built. Brisbane, Queensland (building). Hartford, Conn., covered sand filters, not built. Hudson River Hospital, covered sand filters. Ithaca, N. Y., mechanical filters. Ogdensburg, N. Y., covered sand filters. Ottawa, Ont., mechanical filters, two plants on different locations, not yet built. Peekskill, N. Y., covered sand filters. Pennsylvania State Lunatic Hospital, Harrisburg, open sand filters. Red Bank, N. J., open sand filters. Springfield, Ludlow supply, intermittent filters ; Little River supply, covered sand filters. These filters were included as part of an en- tirely new source of supply, consisting of dams, pipe lines and other structures. Superior, Wis., covered sand filters. Toronto, Ont., covered sand filters. Washington, D. C., covered sand filters. Watertown, N. Y., mechanical filters. Yonkers, N. Y., open sand filters and two separate additions of covered sand filters. VALUATION CASES Athol, Mass., value of plant for the town. Augusta, Maine, for the city. Cortland Water Co., for the company. (Plant sold to city without litigation). Denver Union Water Company; member of board of five engineers; two selected by city and two by company; Mr. Hazen acted jointly for company and city. Des Moines Water Company, for the company. Gardner Water Company, for the company. Gloucester, Mass., for the city. Ithaca Water Works Company, for the company. Newburyport, Mass., for the city, value of filters, etc. Racine Water Company, for the company. Spring Valley Water Co., (supply for San Francisco, Cal.), for the company; now in progress. Staten Island Companies, for the City of New York. Waterly Water Company, for the company. Wildwood Water Works Co., for the company. Wilmington, Clarendon Water Co., value of plant, agreeing on value with city’s representative. 3 Portland, Me., value of physical property for the city. Hackensack Water Co., (supply for some 300,000 people in New Jersey), for the Bergen County Freeholders. ASSISTANCE IN LITIGATION Butler Water Company, infringement suits. Bangor, Maine. Gloversville, N. Y., sewerage. Millbury, Mass., sewerage. State of Missouri vs. Chicago Drainage Canal. Denver Union Water Co. MISCELLANEOUS WORK Charles River Dam, advice to parties regarding construction work on the river. Florida Everglades ; drainage of certain lands. Isthmian Canal, member of board of engineers, 1909, reporting on Gatun dam and general condition of work at the Isthmus. The above is not a complete list. Smaller places and certain other work not included. 4 ##dv' ; ■ •>'+£%■ %^' ■ '-7--'v *.».? ••.: ffia " t r m " '^mM ' " : 0\ - - ’• - - • & ' -•^-e- V-V-^; •'■ ' ’: =■::.: '• v :.,, : - : A-Xi>. ' : "■ v ,.V ^ "v" • :< ^ ; Ov •-. v..; f V^; 7 v • ■ — *' '-*'■ ■ .‘ r J ■'«*?•' 5 |. • • v 4 &, V. ’ - •P ; -' : : 4 ' - - «> ..'^A ■'. .,<'h;v - •:-' <: ;• v 4 T’ ,• .-p'^ ' : /T - v‘ w -. ;;- * . • •- \ •• ' i';'i • i$‘ ' •• 'H' ■ ■;'"■. *■ K\iS>' ■ TS** ?-w:A'':, r •j.'w , ■' ■;■«;• -=v - ' •» ■•■•.' ■ ‘---V.?.:'-- 1 , •• ,v >; * ,v ■ ■ . ■ ■ ' ' ‘fir*--.: ■-&%§$ Duke University Libraries D01134 92