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Carl grown Consulting, LLC <br /> Proposal to Perform User Charge Analyses <br /> for the City of Pequot Lakes, Minnesota <br /> Purpose <br /> This proposal describes the need,responsibilities,timing,investment and other issues for user <br /> charge analyses to be performed by Carl Brown Consulting,LLC(later referred to as"I")for the city of <br /> Pequot Lakes,Minnesota(later referred to as"you"). <br /> Need <br /> As a preliminary step to planning future capital improvements and acquiring funding,and in order to <br /> adequately fund current operation of your system,you need to analyze your rates and fees,set them <br /> appropriately and periodically reset them.The analysis services proposed are intended to satisfy those <br /> needs. <br /> Services That Will be Included or That you may Select,at Your Option <br /> • The base service package is the water user charge analysis.This analysis will include output from <br /> modeling of your current financial situation and several proposed rate scenarios that depict rate <br /> structures and other variables you may want to consider. <br /> • Option 1 is the sewer user charge analysis and includes the same features as the water user charge <br /> analysis.Option i is a service you may select,at your discretion. <br /> • Option 2 is one on-site visit.Most likely,this visit would be to meet with the council to go over the <br /> analyses and assure no last minute changes are needed in the afternoon and then hold an evening <br /> public meeting to present the results of the analyses to all who are interested.Option 2 is a service <br /> you may select,at your discretion. <br /> • Option 3 is one follow-up examination available for each of the subsequent two fiscal years—This <br /> examination will determine if your finances,repair and replacement performance and capital <br /> improvement plans and actions were predicted accurately enough in the initial analyses to allow <br /> you to adjust all rates by a simple index factor.If so,I will recommend that rate adjustment factor <br /> to you.If this examination will not yield adequate financial assurance during one of those years,I <br /> will inform you that a full rate analysis is indicated and submit a proposal to perform that rate <br /> analysis for you,if you desire.Under this option you may choose,on the low end,one financial <br /> examination for one system for one year,which would total one financial examination,or one <br /> examination for each system for the next two years totaling four examinations on the high end. <br /> Option 3 is a service you may select,at your discretion. <br /> Methodology <br /> I intend to produce the majority of the user charge analysis output using my proprietary software <br /> called CBGreatRates©.You will receive the output electronically in Portable Document Format(pdf). <br /> Expected Results <br /> With the completion of the analyses you should be able to do the following: <br /> 1. Successfully settle upon desired financial performance levels for your systems and arrive at <br /> new user charge rates and fees to achieve those levels of performance, <br /> 2. Successfully inform and promote to your council and to your ratepayers and property owners <br /> the need to adjust rates and fees now and to keep them current,and <br /> 3. Successfully acquire needed funding for any capital improvement projects depicted in the <br /> analyses and/or fund improvements from system reserves. <br /> Estimation of Return on Investment <br /> Based upon the investments detailed in this proposal,my services would provide you several benefits <br /> or returns,most of which are difficult to reduce to dollars or percentage gains.You will enjoy several un- <br /> measurable benefits: <br /> 1. My recommendations and step-by-step action plan will guide you through the key actions you <br /> should take to make the projected outcomes happen. <br /> 1014 Carousel Drive,Jefferson City,Missouri 65101 www.caribrownconsulting.com <br /> carIbrown@mchsi.com (573)619-3411 <br />