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UMBAUGH K J. Umbaugh & Associates Certified Public Accountants, LLP 112 Iron Works Avenue Suite C Mishawaka, IN 46544 Phone: 574935 -5178 Fax: 574 -935 -5928 wa,v.umbaugh.com ACCOUNTANTS' RATE STUDY AND COMPILATION REPORT March 6, 2015 Mr. Eric C. Horvath, Director Department of Public Works City of South Bend 1316 County -City Building Re: South Bend (Indiana) Solid Waste (the "Utility) In connection with the proposed increase in the Utility's schedule of Solid Waste rates and charges, we have, at your request, compiled this special purpose rate study report. This special purpose rate study report has been prepared for the purpose of adopting a new schedule of Solid Waste rates and charges and should not be used for any other purpose. Further, the pro forma financial information in this report which has not been compiled, reviewed or audited by us, is based upon unaudited financial information for the twelve months ended August 31, 2014, which was compiled by us and assumptions provided by management and their consulting engineers or obtained from other sources. This pro forma financial information is prepared for the purpose of showing the estimated financial effects on the Utility's revenue and revenue requirements of an increase in rates and charges for service and other changes that may be reasonably fixed, known or measured. The actual results achieved may vary from the pro forma information and the variations may be material. We have no responsibility to update this report for events and circumstances occurring after the date of this report. We have compiled the accompanying comparative schedule of historical fund balances and the comparative schedule of revenues and expenses as of December 31, 2012 and 2013 and as of August 31, 2014, and for the periods then ended and supplementary data. We have not audited or reviewed the accompanying historical financial statements and supplementary data, and accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the cash basis of accounting. Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements. (Continued on next page) 1