CLEARWATER FEASIBILITY STUDY CONTRACT BUDGET AMENDMENT REQUEST - PO# 24001051Docusign Envelope ID: B05E95F1-4ACE-40E6-AF88-EA6B82219A19
NewGen
Strategies
& Solutions
October 2, 2025
via david.margolis@myclearwater.com
Mr. David Margolis, B.C.S.
City Attorney
City of Clearwater
600 Cleveland Street, Suite 600
Clearwater, FL 33755
225 Union Boulevard
Suite 450
Lakewood, CO 80228
Phone: (720) 633-9514
Subject: Clearwater Feasibility Study Contract Budget Amendment Request
PO#: 24001051
Dear David:
As discussed, NewGen Strategies and Solutions, LLC (NewGen) is requesting a budget amendment to the
existing City of Clearwater (City) Feasibility Study contract (Purchase Order #: 24001051). The purpose of
this budget amendment is to provide appraisal services for the Duke Energy Florida (Duke) distribution -
related assets within the proposed Clearwater Municipal Electric Utility (MEU) service territory.
NewGen has prepared the enclosed Scope of Services to develop an opinion as to the Fair Market Value
of the defined "assets" as of a specific valuation date (see Attachment A). The defined assets and
valuation date will be determined in coordination with the City and its legal counsel. The Fair Market
Value appraisal of the assets will be supported with a standalone report as well as written testimony as
requested by the City. NewGen will rely on generally accepted valuation methods and procedures in
conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by
the Appraisal Standards Board of the Appraisal Foundation.
Grant Rabon, who is an Accredited Senior Appraiser (ASA) with a designation in Public Utilities from the
American Society of Appraisers, will lead the development of this appraisal. Grant will be supported by
me as the Project Manager and other staff as necessary. As noted herein, NewGen does not provide
appraisals of real estate property; therefore, the City will need to contract with a qualified entity to
provide a real property appraisal, as necessary, to support its efforts.
NewGen is requesting an amendment to the current Feasibility Study contract budget for a not -to -exceed
amount of $604,000 to complete this assignment, which will be billed to the City on a time and expense
basis. As indicated herein, this assignment includes the development of direct testimony as requested to
support the City's acquisition of the Duke assets. However, the litigation process may require extended
interactions with Duke in the period leading up to a trial and may also involve post -appraisal tasks. These
may include responding to interrogatories; participating in depositions, hearings, and trial; and
performing other tasks as necessary to support the City's litigation efforts. The request for the amended
contract budget does not contemplate these post -appraisal tasks and, therefore, additional budget may
be required to continue to support the City through a final determination of all issues as necessary and as
requested.
Economics I Strategy I Stakeholders I Sustainability
www.newgenstrategies.net
Docusign Envelope ID: B05E95F1-4ACE-40E6-AF88-EA6B82219A19
Mr. David Margolis, B.C.S.
October 2, 2025
Page 2
We greatly appreciate the opportunity to continue our relationship with the City in its Feasibility Study
and to provide our appraisal services. If you have any questions regarding the enclosed, please contact
me directly at (720) 259-1762 or sburnham@newgenstrategies.net.
Sincerely,
NewGen Strategies and Solutions, LLC
/—DocuSlgned by: Signed by:
araiki NOV,
'—B7FBFC962DA6432... D0BBF3F379164C0...
Scott Burnham Grant Rabon
Partner Partner, ASA
Attachment A:
CITY OF CLEARWATER, FL
SCOPE OF SERVICES FOR UTILITY APPRAISAL SERVICES
NewGen Budget Amendment Request_10.02.25
Countersigned:
Bruce Re
Mayor
Approved as to form:
A4
David Margolis
City Attorney
CITY OF CLEARWATER, FLORIDA
By:
Attest:
e nif r Poirrier
City Manager
Rosemarie Call
City Clerk
Docusign Envelope ID: B05E95F1-4ACE-40E6-AF88-EA6B82219A19
ATTACHMENT A
CITY OF CLEARWATER, FL
SCOPE OF SERVICES FOR UTILITY APPRAISAL SERVICES
INTRODUCTION
NewGen Strategies and Solutions, LLC (NewGen) is pleased to submit this proposal for appraisal services
for the City of Clearwater, Florida (City). We are excited to be a part of this historic project and believe
that its impact on the City will be significant.
Our appraisal team includes accredited public utility appraisers that have relevant experience with similar
engagements for other public entities. Additionally, NewGen has partnered with Barr Engineering—
specifically with Tom Ghidossi—on numerous projects, giving us direct familiarity with their work product
and ensuring a seamless workflow. The collective project team will provide the City with the data it needs
to support the acquisition of Duke Energy Florida's electric distribution system serving customers in the
City and its enclaves. NewGen will rely on the identification of assets to be acquired (the Assets), as
determined by Barr Engineering.
FIRM INFORMATION
NewGen is a management and economic consulting firm specializing
in serving the utility industry. NewGen primarily serves public sector
utilities and provides nationally recognized expertise in utility cost of
service and rate design studies; depreciation and appraisal studies;
litigation support for state and federal regulatory proceedings; utility
business and financial planning; and stakeholder engagement for
electric, natural gas, water, wastewater, and solid waste utilities.
NewGen applies our expertise
and delivers high -impact
solutions through our diverse and
integrated market perspectives—
resulting in effective decision-
making and implementation.
NewGen was created by consultants dedicated to our clients' missions and recognized as experts in our
respective fields of service. We provide assistance to the public sector with keen insight into navigating
uncertain markets, the growing role of stakeholders, resource availability (including renewables),
environmental concerns, the cost of providing utility services, and evolving economic conditions. This
integrated perspective ensures thoughtful decision-making and allows us to deliver solutions and
recommendations tailored to our clients' needs. In short, "Thoughtful Decision Making for Uncertain
Times" captures our commitment to providing expert guidance and practical strategies in an ever-
changing utility landscape. NewGen employs three of an elite group of fewer than 20 individuals
nationwide who have earned the Accredited Senior Appraiser (ASA) designation in the Public Utilities from
the American Society of Appraisers.
PROJECT APPROACH
NewGen proposes to perform a Fair Market Value (FMV) appraisal of the Assets and support the appraisal
with testimony as needed. NewGen will rely on generally accepted valuation methods and procedures in
conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by
the Appraisal Standards Board of the Appraisal Foundation. There are three generally accepted valuation
approaches that can be used to estimate the FMV of the Assets: the Cost Approach; the Income Approach;
and the Market Approach.
■ The Cost Approach analyzes various cost methods, such as the Original Cost Method and the
Reproduction Cost Method.
Thoughtful Decision Making for Uncertain Times 1
Docusign Envelope ID: B05E95F1-4ACE-40E6-AF88-EA6B82219A19
ATTACHMENT A
CITY OF CLEARWATER, FL
SCOPE OF SERVICES FOR UTILITY APPRAISAL SERVICES
• The Income Approach values the property by determining the current worth of prospective net
earnings using a discounted cash flow analysis. This approach will inherently include the going
concern value of the Assets.
• The Market Approach assesses value based on recent sales of similar systems under similar
circumstances.
It is understood that the assets to be acquired will likely include all electric distribution facilities necessary
to provide electrical service within the proposed Clearwater Municipal Electric Utility (MEU) service
territory, which includes areas within and beyond the Clearwater municipal boundaries. The assets to be
acquired will include all overhead and underground distribution lines, street lights and poles, connections
to the transmission grid, distribution transformers, protection and sectionalizing equipment, voltage
regulating equipment, customer meters, fiber and communications systems, and ancillary interests and
appurtenances, as well as the property interests related to the facilities. Critically, NewGen does not
appraise real estate, so the City will need to have any real property appraised by a qualified entity.
NewGen will review the work product of the real estate appraiser and incorporate this into our appraisal,
as appropriate.
Scope of Work
Task 1: Project Initiation and Data Collection
After reviewing the work product of Barr Engineering, NewGen may develop a data request to cover
desired data needed to complete the appraisal. We expect that some data may be available in the public
domain; however, we understand that Duke Energy Florida may not be forthcoming with information in
response to a data request. Therefore, to the extent necessary, NewGen will develop surrogate data or
make reasonable assumptions where possible to compensate for any information not obtainable from
Duke Energy Florida or in the public domain.
Task 2: System Inventory, Cost Estimates, and Age
NewGen will rely upon Barr Engineering's work product, including an inventory of the existing assets
segregated by type of facility (e.g., overhead or underground distribution, transformers, meters,
substations, etc.), as well as unit cost estimates for reproduction cost new applicable to each of the types
of facilities. To the extent that the age of facilities is not known (either from data provided by Duke Energy
Florida or from an observable manufacturer's label), the approximate age of facilities will be estimated by
Barr Engineering. This estimate of age may need to be inferred from context clues, such as visible
observation, prevalence of asset type over time, or surrounding infrastructure being served. For example,
if a neighborhood was constructed in the 198Os, it can be reasonably inferred that the distribution system
serving that neighborhood was constructed in the same timeframe.
Task 3: Site Visit and Condition Assessment
NewGen will tour a representative sample of the facilities to be acquired. This site visit will be limited to
a visual and external observation for the purpose of assisting in forming an opinion as to whether the
property has been maintained, preserved, and kept in good repair, working order, and condition. The
review will not be of sufficient depth to reveal all conditions relating to safety or to conformance with
agreements, codes, permits, rules, or regulations governing the design, construction, operation, and
2 Thoughtful Decision Making for Uncertain Times
Docusign Envelope ID: B05E95F1-4ACE-40E6-AF88-EA6B82219A19
CITY OF CLEARWATER, FL
SCOPE OF SERVICES FOR UTILITY APPRAISAL SERVICES
maintenance of the property. If conditions are discovered during the field review that warrant further
investigations, we will bring these to the attention of the City.
Without Duke Energy Florida's support, this work will be limited to areas that are accessible to the public
and overhead facilities.
Task 4: Estimate Value Under the Cost Approach
NewGen will develop indicators of value using the Cost Approach. Barr Engineering will estimate the
Reproduction Cost New for the Assets as of the valuation date. Reproduction cost is generally defined as
the cost of reproducing a new replica of the property at current prices with the same or closely related
materials. Replacement cost is generally defined as the current cost of a similar new property having the
nearest equivalent utility as the property being appraised. While these two terms are often used
interchangeably for appraisal purposes—as technology has not changed most utility property (especially
electric distribution property)—there can be differences in equipment used over time. Thus, NewGen will
work with Barr Engineering to ensure that the values estimated are reflective of reproduction cost.
Using the results of the condition assessment and the approximate age of the facilities, NewGen will apply
depreciation parameters (average service life, survivor curves, and net salvage rates) applicable to Duke
Energy Florida to estimate the amount of physical depreciation present in the facilities. In addition,
NewGen will assess the extent to which any functional obsolescence or economic obsolescence is present
in the Assets, which were not considered in any preliminary work completed by NewGen.
NewGen will then determine an independent estimate of the Reproduction Cost New Less Depreciation
(RCNLD) value of the Assets by deducting the estimated depreciation discussed above from the estimated
Reproduction Cost New. We will also determine the estimated Original Cost Less Depreciation (OCLD)
value using appropriate construction cost indices based on the average age (vintage year) of the property
to estimate the net book value of the Assets.
Task 5: Estimate Value Under the Income Approach
The development of the value for the Assets under the Income Approach will be based on a discounted
cash flow (DCF) analysis. This method requires the development of a projection of revenues, expenses,
capital expenditures, and resulting free cash flow. The DCF analysis will be performed under the
assumption of a hypothetical buyer—specifically, a taxable entity (i.e., an investor-owned utility).
Task 6: Estimate Value Under the Market Approach
NewGen will review non -confidential information that is available to us, trade press articles, and other
databases to help determine the sales prices for other electric distribution systems to form an indication
of value for the Assets.
Task 7: Estimation of Fair Market Value
Taking into consideration all the indicators of value determined in the preceding tasks, NewGen will
develop an opinion as to the FMV of the Assets as of the valuation date. While the exact definition of
FMV can vary in different states or in different engagements, a common definition of FMV used in
appraisals is as follows:
The price, expressed in terms of cash equivalents, at which property would change hands
between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting
Thoughtful Decision Making for Uncertain Times 3
Docusign Envelope ID: BO5E95F1-4ACE-40E6-AF88-EA6B82219A19
ATTACHMENT A
CITY OF CLEARWATER, FL
SCOPE OF SERVICES FOR UTILITY APPRAISAL SERVICES
at arm's length in an open and unrestricted market, when neither is under compulsion to buy
or sell and when both have reasonable knowledge of the relevant facts.'
Compensation under F.S.A. § 73.0175 "shall include the reproduction cost of the property sought to be
appropriated less depreciation, together with going concern value, and, when less than the entire
property is sought to be appropriated, any damages to the remainder caused by the taking." Thus,
NewGen's appraisal will inform compensation appropriate under Florida statutes for the type of property
to be acquired.
Task 8: Reports
NewGen will prepare an appraisal report documenting the basis for our opinion of the FMV of the Assets
as of the valuation date. We will submit a draft of the report to the City for review and comment.
Following receipt of comments, the final appraisal report will be prepared, incorporating comments on
the draft report where appropriate. Direct testimony will be developed, as needed, to communicate the
results of the appraisal in a litigated venue.
Schedule of Work
NewGen will commit the necessary resources to complete a draft of the appraisal for review and comment
within six months of notice to proceed.
FEE ESTIMATE
The services outlined in the scope of work will be conducted on a time -and -expense basis and within the
revised, amended Feasibility Study's not -to -exceed contract value of $604,000. This revised contact value
is inclusive of the development of direct testimony as needed to support the City's acquisition of the
Assets. However, this process may involve lengthy interactions with Duke Energy Florida during the lead -
up to a trial. These post -appraisal activities might include responding to interrogatories, participating in
depositions/hearings/trial, and conducting other tasks in support of the City. The estimated revised
contract value above does not contemplate these post -appraisal tasks and, therefore, additional budget
may be required to continue to support the City through a final determination of all issues.
' Pratt, Shannon P., Robert F. Reilly, and Robert P. Schweihs. Valuing a Business: The Analysis and Appraisal of
Closely Held Companies, Fourth Edition. New York: McGraw-Hill, 2000, Appendix A, International Glossary of
Business Valuation Terms, page 913. See also American Society of Appraisers. Valuing Machinery and Equipment:
The Fundamentals of Appraising Machinery and Technical System, Second Edition. Washington, DC: American
Society of Appraisers, 2005, Glossary of Terms, page 566.
4 Thoughtful Decision Making for Uncertain Times