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<br />C:\Users\brenda.malinowski\AppData\Local\Microsoft\Windows\INetCache\Content.Outlook\ME0ZKJ8Z\Little Canada Water and Sewer-Cost of Service Study (3).docx <br /> <br />June 19, 2019 <br /> <br /> <br />Brenda Malinowski, Finance Director <br />City of Little Canada <br />515 Little Canada Road East <br />Little Canada, MN 55117 <br /> <br />RE: Water and Sewer Cost of Service Study <br /> City of Little Canada, Minnesota <br /> <br />Dear Brenda, <br /> <br />As we discussed, I am pleased to present this scope and fee letter for services for the water and sewer rate <br />analysis. This letter will describe our understanding of the project, define our scope of work and provide <br />you with an estimate of the cost for our services. <br /> <br />The proposed study will include a review of financial data, establishing trends and projections, financial <br />needs determination, rate development model, and memorandum of understanding with rate <br />recommendations. The primary goal is to consider the following items in evaluating the water and sewer <br />rates: <br />1. Cost of providing normal operations <br />2. Maintenance needs <br />3. Capital Improvements for future projects <br />4. Develop rate structures to meet Capital and OM & R costs <br /> <br />It is important to understand that we are providing you an engineering document regarding rates and cost <br />of service. We recommend that you provide the information that we develop to the City’s municipal <br />financial planner for further analysis and c onfirmation of methodology on how to structure rates and <br />finalize changes with the City Council. We would be happy to work with your financial planner if you <br />would like and help coordinate this effort. <br /> <br />The following Scope of Work is included in this proposal: <br />I. Obtain and Review Data <br />A. Review Historical Utility Data. An initial list of information will be requested from the <br />City for inclusion in the rate model. Typically, five years of financial and demand/flow <br />data is required to establish a trend. Once received, the data will be checked for <br />completeness and organized into tables used to generate future rates needs. <br />II. Establish Historical Trends and Projections <br />A. Review Population and Connections. Historical data will be reviewed for establishing <br />trends. Population and system connections/system users will be reviewed first, since the <br />number of customers is an important part of the rate formula. Any City projections <br />relating to future connections or redevelopment will be incorporated at this point in the <br />study.