Minutes 01/24/1961 - Laserfiche WebLink

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~60 TUESDAY JANUARY 24, 1961 pertaining to Council's recorded intention of acquiring Annalachian's facilities in the area annexed to tbe City on January 1, 1960: You have asked by means of your letter of January 17th, tl:at we supply you with a valuation of the physical facilities which our company owns in the newly annexed area knm.m as Druid Hills. These facilities are necessary to serve the 111 customers nresently existj.ng there and will provide the facilities for some 200 additional customers as they occur in this new residential area. The present day value depreciated of this property as of December 31, 1960, is enumerated on the attached exhibit. You 1.-Till find tl~at we have identified each of the costs by their F.P.C. accolmt n~~bers and this provides considerable detailed data. We again wish to state that we prefer not to sell this part of our business but we have acceded to your denand that '.Te establish a sales price whicD Has recited in our pronosal letter of January q. The value of the business is the basis of our proposal. "\ole do not consider that the physical nroperty is a fair basis for determining value because these facilities are merely the vehicles employed to convey and distribute the electric energy. It requires no more poles to transmit a large block of power that a small quantity. Since the number of physical units has no relationship to the amount of energy conveyed or the value of this cO!l1Jnodity, He have abandoned physical measnrements and aC!optec3 revenue production n.s a fair and universally accepted basis for Ol~ proposal. When you consider that ~4artinsville would be conveyed a block of business with an assured large profit and when you consider that this business has a potential profit of three times its present size with very little added investment, then our proposal must be considered not only fair but quite conservat:ive. As you know, we offered to purchase the City of Hartinsville facilities at a price for the business of $4,864,500. Your valuation of the physical facilities was $1,507,9'70, a ratio of 3.23 to 1. ~.Je now offer to sell our business at your insistence for $67,394, Hhereas the vaDlation is $40,201, a ratio of only 1.68 to 1. This further confirms that our method of pricing is moderate and just by any equitable standard of mlsiness practice. Again, we offer to meet with yml and Members of the Council of the City of Martinsville at any time to discuss our nroposal. 350.2 354 355 358.1 358.3 359. 1 360. 1 360.3 363.1 Present Day Cost Depreciated As of 12-31-60 Land and Land Rights $ 1,045. Distribution Poles, Towers & Fixtures 9,741. Distribution Overhead Conductors & Devices7,3?O. Line Transformers - In Service 9,502. Line Transformer Devices 1,340. Overhead Services 3,340. Meters - In Service 2,076. ~eter Devices 510. Overhead Street Lighting 5.277. Total $40,201. Account