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Pequot Lakes,MN User Charge Analysis RFQ Response,March 1,2007,Page 2 of 3 <br /> I thoroughly examine all issues relevant to the finances of each client's system—rates and rate <br /> affordability,system incomes,current operating costs and how they will change over the years, <br /> equipment replacement and capital improvement needs and how they will be financed,expected <br /> growth in the city and other issues that affect the systems,their performance and their future <br /> prospects. <br /> I perform analyses using a program I developed called CBGreatRates©.This program enables <br /> me to do unlimited"what-if"scenarios quickly so there is no arbitrary limit to the number of <br /> "runs"I can do for your analyses.Thus,after receiving the basic data from you I would model <br /> your situation.I would then share that with you,likely by e-mail,to get your thoughts and <br /> guidance.I would then model the next iteration and we would continue that process until we <br /> arrived at rates that suit your specific needs.I have attached a sample rate study and its <br /> explanatory cover letter,with the permission of that client.Another is available at <br /> http://earlbrownconsulting.com/PineHaven.htm.These items will give you a good idea of what <br /> your study results will look like. <br /> I generally project rates and financial performance for io years into the future.This projection <br /> will serve as your benchmark against which you can set budgets and compare your actual <br /> financial performance.If your performance closely matches my projections,you would increase <br /> fees incrementally each year by the percentages recommended in the analyses.If my projections <br /> and your performance are only moderately close,you would make adjustments to your rates that <br /> take those variances into account.Eventually my projections and your performance would <br /> diverge enough that a new rate analysis would be indicated.My goal is to provide you with <br /> projections that are accurate enough to carry you for four to five years before you need a new <br /> rate analysis.I also offer an optional service whereby I examine your financial performance in '1 <br /> the one or two years following my analyses to determine where your rates need to be set for the <br /> next one or two years.Think of this as a financial check-up. <br /> Rate adjustments need careful consideration.However,if you need a rate increase,don't <br /> procrastinate.The longer you wait the higher you will need to raise rates to reach the same <br /> financial goal.I will push you—the city—to get the rate adjustments done quickly so you can <br /> maximize your income and reduce the increase in rates needed to produce that income.You are <br /> probably now losing more in unbilled and uncollected rate revenues in a couple of weeks than <br /> my fees will total.One of my goals is to get your rates up,assuming they need to go up,more <br /> quickly and higher than you could do it yourself,even to the point that the shortened time to <br /> rate increases will more than pay my fees.In essense,I don't want my services to cost you <br /> money. I want them to make you money.I suggest you have your selection team keep this <br /> principle in mind as you proceed with your service acquisition process.The longer it takes to get <br /> your service provider started on the project,the more money you lose. <br /> City Staff Support <br /> My intent is to have your staff gather most of the data and information I will need for the <br /> analysis so be aware,you will make an investment in the analysis besides paying my fee.That <br /> internal investment will probably total about$500.I request your staff's involvement for two <br /> main reasons.First,it is economically inefficient for me to go to Pequot Lakes to review your <br /> books and records to locate data.Your staff can do that much more economically and accurately, <br /> given some guidance from me on what to look for.Second,your staff need to know most of this <br /> information anyway to provide good on-going management of the system.The basic information <br /> I will need is covered in the enclosed guide called,"What we Need From you to Analyze Your <br /> Rates"http:/Zcarlbrownconsulting.com/DataNeedsSheet.pdf.I will also need input from you <br /> and possibly other decision-makers on capital improvements and other long-term issues so I <br /> can correctly model rates that will satisfy your long-term needs. '� <br />