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Carl grown Consulting, lic Proposal to Perform User Charge Analyses for the City of Pequot Lakes, Minnesota Purpose This proposal describes the need,responsibilities,timeline,investment and other issues for user charge analyses to be performed by Carl Brown Consulting,LLC(later referred to as"I")for the City of Pequot Lakes,Minnesota(later referred to as"you"). Need As a preliminary step to planning future capital improvements,and in order to adequately fund current operation of your system,you need to analyze your rates,set them appropriately and periodically.reset them.The analysis services proposed are intended to satisfy those needs. Services That Will be Included or That you may Select,at Your Option • The base service package is the water user charge analysis.This analysis will include output from modeling of your current financial situation,called the"current rates scenario,"and several proposed rate scenarios that depict rate structures and other variables you may want to consider. • Option 1;is the wastewater user charge analysis.This package includes the same services as for the water user charge analysis.This is a service you may select,at your discretion. • Option 2 is one on-site visit.This visit would be to meet with the council to go over the analysis and assure no last minute changes are needed in the afternoon and then hold an evening public meeting to present the results of the analysis to all who are interested. This is a service you may select,at your discretion. • Option.3 is one follow-up examination in each of the subsequent two fiscal years—This examination will determine if your finances,repair and replacement performance and capital.improvement plans and actions were predicted accurately enough in the initial analysis to allow you to adjust all rates by a simple index factor.If so,I will recommend that rate adjustment factor to you.If this examination will not yield adequate financial assurance during one of those years,I will inform you that a full rate analysis is indicated and submit.a proposal to perform that rate analysis for you,if you desire.This is a service you may select,at your discretion. Methodology I intend to produce the majority of the user charge analysis output using my proprietary software called CBGreatRatesc.You will receive the output electronically in Portable Document Format(pdf). Expected Results With the completion of the analyses you should be able to do the following: 1. Successfully settle upon a desired financial performance level for your systems and arrive at new user charge rates to achieve that level of performance, 2. Successfully inform and promote to your decision making body and to your ratepayers the need to adjust rates now and to keep your rates current,and 3. Successfully acquire needed funding for any capital improvement projects that may be depicted in the analyses. Estimation of Return on Investment 1014 Carousel Drive,Jefferson city,Missouri 65101 www.cwlbrownconsulting_com corlbrown@mchsi_com (573)619-3411