HomeMy WebLinkAbout2019-10-08 - Financing Authority Meeting Agenda PacketAGENDA
YORBA LINDA WATER DISTRICT
FINANCING AUTHORITY REGULAR MEETING
Tuesday, October 8, 2019, 6:30 PM
1717 E Miraloma Ave, Placentia CA 92870
1. CALL TO ORDER
1.1. NOTE: This meeting will be called to order following consideration of Item No.
8.1. on the agenda for the Regular Board of Directors Meeting on Tuesday,
October 8, 2019 at 6:30 p.m.
2. ROLL CALL
Brooke Jones, President
Phil Hawkins, Vice President
Andrew J. Hall, Director
J. Wayne Miller, Director
Al Nederhood, Director
3. PUBLIC COMMENTS
Any individual wishing to address the Board or Committee is requested to identify themselves and state
the matter on which they wish to comment. If the matter is on the agenda, the Chair will recognize the
individual for their comment when the item is considered. No action will be taken on matters not listed
on the agenda. Comments are limited to three minutes and must be related to matters of public interest
within the jurisdiction of the Water District. (GC 54954.3)
4. ACTION CALENDAR
This portion of the agenda is for items where staff presentations and Board discussions are needed
prior to formal Board action.
4.1.Minutes of the Financing Authority Regular Meeting Held December 11, 2018
Recommendation: That the Board of Directors approve the minutes as
presented.
4.2.Audit Report for Fiscal Year Ending June 30, 2019
Recommendation: That the Board of Directors receive and file the Yorba
Linda Water District Financing Authority Comprehensive Annual Financial
Report for Fiscal Year Ending June 30, 2019.
5. ADJOURNMENT
5.1. The next regular meeting of the Financing Authority will be held Tuesday,
December 10, 2019 at 6:30 p.m.
Items Distributed to the Board Less Than 72 Hours Prior to the Meeting
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Nonexempt materials related to open session agenda items that are distributed to a majority of the Board or
Committee less than seventytwo (72) hours prior to the meeting will be available for public inspection in the lobby
of the District’s Administrative building located at 1717 East Miraloma Avenue, Placentia CA 92870 during regular
business hours. When practical, these materials will also be available on the District’s website
(http://www.ylwd.com/). (GC 54957.5)
Accommodations for the Disabled
Requests for disabilityrelated modifications or accommodations, including auxiliary aids or services, required for
participation in the above posted meeting should be directed to the Board Secretary at (714) 7013020 at least 24
hours in advance. (GC 54954.2(a))
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ITEM NO. 4.1.
AGENDA REPORT
MEETING DATE:October 8, 2019
TO:Board of Directors
FROM:Marc Marcantonio, General Manager
STAFF CONTACTS:Annie Alexander, Executive Assistant/Board Secretary
SUBJECT:Minutes of the Financing Authority Regular Meeting Held
December 11, 2018
RECOMMENDATION:
That the Board of Directors approve the minutes as presented.
ATTACHMENTS:
1.Draft Meeting Minutes
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Minutes of the YLWD Financing Authority Regular Meeting Held December 11, 2018 at 6:30 p.m.1
FA-2018-XXX
MINUTES OF THE
YORBA LINDA WATER DISTRICT
FINANCING AUTHORITY REGULAR MEETING
Tuesday, December 11, 2018, 6:30 p.m.
1717 E Miraloma Ave, Placentia CA 92870
1.CALL TO ORDER
The meeting was called to order at 6:41 p.m.
2.ROLL CALL
DIRECTORS PRESENT STAFF PRESENT
Andrew J. Hall Marc Marcantonio, General Manager
Phil Hawkins Brett Barbre, Assistant General Manager
Brooke Jones John DeCriscio, Operations Manager
J. Wayne Miller Gina Knight, HR/Risk and Safety Manager
Al Nederhood Delia Lugo, Finance Manager
Rosanne Weston, Engineering Manager
Annie Alexander, Exec Asst/Board Secretary
Mike Carreon, Facilities Maintenance Worker
Danielle Logsdon, Senior Engineer
Anthony Manzano, Senior Project Manager
Kaden Young, Management Analyst
ALSO PRESENT
Andrew Gagen, General Counsel, Kidman Gagen Law LLP
3.PUBLIC COMMENTS
None.
4.ACTION CALENDAR
4.1.Affirmation of Officers for the Financing Authority
Director Hawkins made a motion, seconded by Director Hall, to affirm the
individuals designated as Chair, Vice Chair, Executive Director, Treasurer
and Secretary of the Yorba Linda Water Financing Authority in accordance
with the Joint Exercise of Powers Agreement between the District and the
California Municipal Finance Authority. Motion carried 5-0-0-0.
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Minutes of the YLWD Financing Authority Regular Meeting Held December 11, 2018 at 6:30 p.m.2
FA-2018-XXX
4.2.Minutes of the Financing Authority Regular Meeting Held October 9, 2018
Director Hawkins made a motion, seconded by Director Hall, to approve
the minutes as presented. Motion carried 5-0-0-0.
5.ADJOURNMENT
5.1.The meeting adjourned at 6:42 p.m.
Annie Alexander
Board Secretary
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ITEM NO. 4.2.
AGENDA REPORT
MEETING DATE:October 8, 2019
TO:Board of Directors
FROM:Marc Marcantonio, General Manager
STAFF CONTACTS:Delia Lugo, Finance Manager
SUBJECT:Audit Report for Fiscal Year Ending June 30, 2019
RECOMMENDATION:
That the Board of Directors receive and file the Yorba Linda Water District Financing Authority
Comprehensive Annual Financial Report for Fiscal Year Ending June 30, 2019.
BACKGROUND:
Staff is pleased to present to the Board of Directors with the Yorba Linda Water District
Financing Authority Comprehensive Annual Financial Report (CAFR) for the Fiscal Year
Ending June 30, 2019.
White Nelson Diehl Evans LLP, the District's external auditing firm, complete their audit of the
Yorba Linda Water District Financing Authority for the fiscal year end June 30, 2019. Ms.
Daphnie Munoz, Partner of White Nelson Diehl Evans LLP, will be in attendance to present
the CAFR.
ATTACHMENTS:
1.Financing Authority Audit Report
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YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
(A COMPONENT UNIT OF
YORBA LINDA WATER DISTRICT)
BASIC FINANCIAL STATEMENTS
WITH REPORT ON AUDIT
BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30, 2019
Page 7 of 19
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
For the Fiscal Year Ended June 30, 2019
Table of Contents
Page
Number
Independent Auditors’ Report 1 - 2
Management Discussion and Analysis
(Required Supplementary Information) 3 - 4
Basic Financial Statements:
Statement of Net Position 5
Statement of Revenues, Expenses, and Changes in Net Position 6
Statement of Cash Flows 7
Notes to the Basic Financial Statements 8 - 11
Page 8 of 19
2875 Michelle Drive, Suite 300 | Irvine, California 92606 | WNDECPA.com | 714.978.1300
1
INDEPENDENT AUDITORS’ REPORT
Board of Directors
Yorba Linda Water District Financing Authority
Placentia, California
We have audited the accompanying financial statements of the Yorba Linda Water District Financing
Authority (the Authority) (a component unit of the Yorba Linda Water District) as of and for the year
ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the
Authority’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these basic financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the basic financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditors consider internal control relevant to the
Authority’s preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Authority’s internal control. Accordingly, we express no such opinion. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of significant accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
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2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the Authority as of June 30, 2019, and the changes in financial position and cash
flows thereof for the year ended June 30, 2019, in accordance with accounting principles generally
accepted in the United States of America.
Emphasis of a Matter
As described more fully in Note 1A, the basic component unit financial statements present only the
Authority and are not intended to present fairly the financial position and results of operations of the
Yorba Linda Water District in accordance with accounting principles generally accepted in the United
States of America.
Other Matter
Report on Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, identified as Required Supplementary Information (RSI) in the
accompanying table of contents, be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board, who considers it to be an essential part of financial reporting for placing
the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the RSI in accordance with auditing standards generally accepted
in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained during the
audit of the basic financial statements. We do not express an opinion or provide any assurance on the
RSI because the limited procedures do not provide us with sufficient evidence to express an opinion or
provide any assurance.
Irvine, California
September 13, 2019
Page 10 of 19
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Year Ended June 30, 2019
3
This section of the Authority's annual financial report presents our analysis of the Authority's financial
performance during the fiscal year that ended on June 30, 2019. Please read it in conjunction with the financial
statements, which follow this section.
FINANCIAL HIGHLIGHTS
The Authority's net position did not change, as the revenue and interest earned on the money market equaled the
expenditures and interest expense on the bonds payable.
OVERVIEW OF THE FINANCIAL STATEMENTS
The discussion and analysis are intended to serve as an introduction to the Yorba Linda Water District Financing
Authority's basic financial statements. The Authority's basic financial statements consist of two components:
(I) financial statements and (2) notes to the financial statements. The Authority is a self-supporting entity and
follows the enterprise fund reporting. Accordingly, the financial statements are presented using the accrual basis
of accounting.
FINANCIAL ANALYSIS OF THE AUTHORITY
Our analysis of the Authority begins on page 6 of the financial statements. The goal of the Authority is to have
the installment contract and interest income receivables remain equal to the amount of outstanding debt in order
that its proceeds are available to pay the debt. Thus, net position of the Authority (the difference between the
interest income received and the unpaid debt) should be zero. Since the Authority is a financing entity, all of the
revenues and principal collected on the investment in Yorba Linda Water District’s Financing Authority's Revenue
Bonds, Series 2017A is used to pay the interest and principal on the Bonds resulting in no change in net position.
NET POSITION
To begin our analysis a summary of the Authority's Statement of Net Position is as follows:
Fiscal Year Fiscal Year
2019 2018
Interest receivable 325,111$ 333,411$
Installment contract receivable:
Due in one year 860,000 830,000
Due in more than one year 26,700,000 27,560,000
27,885,111 28,723,411
Interest payable 325,111 333,411
Long-term Liabilities
Due in one year 860,000 830,000
Due in more than one year 26,700,000 27,560,000
TOTAL LIABILITIES 27,885,111 28,723,411
-$ -$
Page 11 of 19
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Year Ended June 30, 2019
4
REVENUES, EXPENSES AND CHANGES IN NET POSITION
The Authority's Statement of Net Position as June 30, 2018 is as follows:
Fiscal Year Fiscal Year
2018 2017
Interest receivable 333,411$ 211,866$
Installment contract receivable:
Due in one year 830,000 945,000
Due in more than one year 27,560,000 28,390,000
28,723,411 29,546,866
Interest payable 333,411 211,866
Long-term Liabilities
Due in one year 830,000 945,000
Due in more than one year 27,560,000 28,390,000
TOTAL LIABILITIES 28,723,411 29,546,866
-$ -$
REVENUES, EXPENSES AND CHANGES IN NET POSITION
The interest income of $325,111 and $333,411 was used to pay the interest expense on the bonds as of
June 30, 2019 and June 30, 2018, respectively.
BUDGETARY HIGHLIGHTS
The Authority's Board of Directors is not required to adopt a budget.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets - The Authority does not own any capital assets.
Long-term Debt - At year-end, the Authority had $27,560,000 and $28,390,000 in long-term debt as of
June 30, 2019 and June 30, 2018, respectively. More detailed information about the Authority's long-term
debt is presented on page 10 in the Notes to the Financial Statements.
CONTACTING THE AUTHORITY’S FINANCIAL MANAGER
This financial report is designed to provide our citizens, customers, investors, and creditors with a general
overview of the Authority's finances and to demonstrate the Authority's accountability for the money it receives.
If you have questions about the report or need additional financial information, please contact the District at
1717 E. Miraloma Avenue, Placentia, California 92807 or the Finance Department at (714) 701-3040.
Page 12 of 19
Interest receivable 325,111$
Installment contract receivable:
Due in one year 860,000
Due in more than one year 26,700,000
TOTAL ASSETS 27,885,111
Interest payable 325,111
Long-term liabilities:
Due in one year 860,000
Due in more than one year 26,700,000
TOTAL LIABILITIES 27,885,111
-$ NET POSITION
ASSETS:
LIABILITIES:
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
STATEMENT OF NET POSITION
June 30, 2019
See accompanying notes to the basic financial statements.
5
Page 13 of 19
OPERATING REVENUES -$
OPERATING EXPENSES -
OPERATING INCOME -
NONOPERATING INCOME (EXPENSES):
Interest income 1,308,744
Interest expense (1,308,744)
TOTAL NONOPERATING INCOME (EXPENSES) -
CHANGE IN NET POSITION -
NET POSITION - BEGINNING OF PERIOD -
NET POSITION - END OF PERIOD -$
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
For the year ended June 30, 2019
See accompanying notes to the basic financial statements.
6
Page 14 of 19
CASH FLOWS FROM OPERATING ACTIVITIES:
Total operating revenues -$
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Principal paid on 2017A Revenue Bonds (830,000)
Interest paid on 2017A Revenue Bonds (1,317,044)
Contract receivable installment payments received 2,147,044
NET CASH PROVIDED BY CAPITAL AND
RELATED FINANCING ACTIVITIES -
NET CHANGE IN CASH AND CASH EQUIVALENTS -
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR -
CASH AND CASH EQUIVALENTS - END OF YEAR -$
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
STATEMENT OF CASH FLOWS
For the year ended June 30, 2019
See accompanying notes to the basic financial statements.
7
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8
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
For the Fiscal Year Ended June 30, 2019
Notes to Basic Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Description of the Reporting Entity
The Yorba Linda Water District Financing Authority (the Authority) was organized pursuant to
a Joint Exercise of Powers Agreement (the JPA Agreement) between the Yorba Linda Water
District (the District) and California Municipal Finance Authority, dated April 11, 2017. The
Authority is statutorily authorized by Article 4 of Chapter 5 of Division 7 of Title 1 of the
California Government Code and is empowered under the JPA Agreement to issue its bonds for,
among other things, the purposes of the plan of financing described herein.
The Authority is an integral part of the reporting entity of the District. The financial activity of
the Authority has been included within the scope of the basic financial statements of the
District because the Board of Directors of the District is the governing board over the
operations of the Authority. Only the financial activity of the Authority is included herein;
therefore, these financial statements do not purport to represent the financial position or results
of operations of the District.
B. Basic Financial Statements
The basic financial statements are composed of the statement of net position, the statement of
revenues, expenses, and changes in net position, the statement of cash flows, and the notes to
the basic financial statements.
C. Basis of Presentation
The accounts of the Authority are that of an enterprise fund. An enterprise fund is a proprietary
type fund used to account for operations (a) that are financed and operated in a manner similar
to private business enterprises where the intent of the governing body is that the costs
(expenses) of providing goods or services to the general public on a continuing basis be
financed or recovered primarily through user charges; or (b) where the governing body has
decided that periodic determination of revenues earned, expenses incurred, and/or net income
is appropriate for capital maintenance, public policy, management control, accountability, or
other purposes.
D. Measurement Focus and Basis of Accounting
Measurement focus is a term used to describe which transactions are recorded within the
financial statements. Basis of accounting refers to when transactions are recorded regardless of
the measurement focus applied. The accompanying financial statements are reported using the
economic resources measurement focus and the accrual basis of accounting. Under the
economic measurement focus, all assets and liabilities (whether current or noncurrent)
associated with these activities are included on the statement of net position. The statement of
revenues, expenses, and changes in net position presents increases (revenues) and decreases
(expenses) in total net position. Under the accrual basis of accounting, revenues are recorded
when earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows.
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YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
For the Fiscal Year Ended June 30, 2019
Notes to Basic Financial Statements
9
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. New Accounting Pronouncements
GASB Current-Year Standards
GASB 83 - Certain Asset Retirement Obligations, effective for periods beginning after
June 15, 2018, and did not impact the Authority.
GASB 88 - Certain Disclosures Related to Debt, Including Direct Borrowings and Direct
Placements, effective for periods beginning after June 15, 2018, and did not significantly
impact the Authority.
GASB Pending Accounting Standards
GASB has issued the following statements, which may impact the Authority’s financial
reporting requirements in the future:
GASB 84 - Fiduciary Activities, effective for periods beginning after December 15, 2018.
GASB 87 - Leases, effective for periods beginning after December 15, 2019.
GASB 89 - Accounting for Interest Cost Incurred before the End of a Construction Period,
effective for periods beginning after December 15, 2019.
GASB 90 - Majority Equity Interests – an amendment of GASB Statements No. 14 and
No. 61, effective for periods beginning after December 15, 2018.
GASB 91 - Conduit Debt Obligations, effective for periods beginning after December 15,
2020.
F. Cash and Investments
The Authority considers all highly liquid investments with a maturity of three months or less at
the time of purchase to be cash equivalents.
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YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
For the Fiscal Year Ended June 30, 2019
Notes to Basic Financial Statements
10
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. Investments
Investments are stated at fair value, which is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the
measurement date. Changes in fair value that occur during a fiscal year are recognized as
investment income reported for that fiscal year. Investment income includes interest earnings,
changes in fair value, and any gains or losses realized upon the liquidation or sale of
investments.
H. Use of Estimates
The financial statements are prepared in accordance with accounting principles generally
accepted in the United States of America and, accordingly, include amounts that are based on
management’s best estimates and judgments. Accordingly, actual results could differ from the
estimates.
2. INSTALLMENT CONTRACT RECEIVABLE
In May 2017, the Authority issued $29,335,000 of Revenue Bonds, Series 2017A (the 2017A
Revenue Bonds) (see Note 3) and loaned the proceeds to the District pursuant to an Installment
Purchase Agreement dated May 1, 2017. The loan proceeds were used by the District to refund the
District’s 2008 Revenue Certificates of Participation, as well as to provide funds for certain
improvements to the District’s water system. Under the Installment Purchase Agreement, the
District agrees to pay the Authority installment payments in an amount sufficient to pay the
principal and interest coming due on the bonds solely from water revenues of the District’s water
system that are remaining after paying operation and maintenance costs. The balance of the
receivable from the District at June 30, 2019, was $27,560,000.
For the year ended June 30, 2019, the receivable of the Authority consists of the following:
Balance Balance
July 1, 2018 Additions Deletions June 30, 2019
2017 Installment Purchase Agreement 28,390,000$ -$ (830,000)$ 27,560,000$
3. LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities of the Authority for the year ended
June 30, 2019:
Due in
Balance Balance Due Within More Than
July 1, 2018 Additions Deletions June 30, 2019 One Year One Year
2017A Revenue
Bonds 28,390,000$ -$ (830,000)$ 27,560,000$ 860,000$ 26,700,000$
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YORBA LINDA WATER DISTRICT FINANCING AUTHORITY
For the Fiscal Year Ended June 30, 2019
Notes to Basic Financial Statements
11
3. LONG-TERM LIABILITIES (CONTINUED)
2017A Revenue Bonds
In May 2017, the Authority issued $29,335,000 of 2017A Revenue Bonds to provide funds for the
refunding of the District’s 2008 Revenue Certificates of Participation, as well as to provide funds
to the District for certain improvements to the District’s water system.
The 2017A Revenue Bonds bear interest at rates ranging from 3% to 5%, payable semiannually on
April 1 and October 1. There is no reserve requirement for the 2017A Revenue Bonds.
The 2017A Revenue Bonds are payable solely from installment payments to be made to the
Authority from the District, with annual principal payments starting October 1, 2017. The
installment payments required from the District are scheduled to provide sufficient monies to retire
the revenue bonds as they become due and payable. The balance outstanding on the 2017A
Revenue Bonds at June 30, 2019, was $27,560,000.
The annual debt service requirements for the 2017A Revenue Bonds outstanding at June 30, 2019
are as follows:
Year
Ending
June 30, Principal Interest Total
2020 860,000$ 1,283,244$ 2,143,244$
2021 895,000 1,243,669 2,138,669
2022 945,000 1,197,669 2,142,669
2023 990,000 1,149,294 2,139,294
2024 1,045,000 1,098,419 2,143,419
2025-2029 6,035,000 4,636,095 10,671,095
2030-2034 7,435,000 3,184,835 10,619,835
2035-2039 9,355,000 1,208,475 10,563,475
27,560,000$ 15,001,700$ 42,561,700$
4. SUBSEQUENT EVENTS
In preparing these financial statements, the Authority has evaluated events and transactions for
potential recognition or disclosure through September 13, 2019, the date the financial statements
were available to be issued.
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