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HomeMy WebLinkAbout2021-10-13 - Financing Authority Meeting Agenda PacketYorba Linda Water District AGENDA YORBA LINDA WATER DISTRICT FINANCING AUTHORITY REGULAR MEETING Wednesday, October 13, 2021, 6:30 PM 1717 E Miraloma Ave, Placentia CA 92870 1. PARTICIPATION INSTRUCTIONS YLWD Board of Directors' meetings are now being held in person. Public comments can only be made in person during the meeting or submitted in writing. For the public's convenience, the meetings are also live -streamed on YouTube at https://www.youtube.com/channel/UCk3TahvOMunKXRS2-uc8Dog. For questions regarding participation, please call the Board Secretary at (714) 701-3020. 2. CALL TO ORDER 2.1. NOTE: This meeting will be called to order following consideration of Item No. 9.1. on the agenda for the Regular Board of Directors Meeting on Wednesday, October 13, 2021 at 6:30 p.m. 3. ROLL CALL Phil Hawkins, President J. Wayne Miller, PhD, Vice President Trudi DesRoches, Director Brooke Jones, Director Tom Lindsey, Director 4. 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) 5. CONSENT CALENDAR All items on the consent calendar are considered routine and may be approved by a single motion. There will be no discussion of these items unless a member of the Board, staff, or public requests separate consideration. 5.1. Minutes of the Financing Authority Regular Meeting Held December 8, 2020 Recommendation: That the Board of Directors approve the minutes as presented. 6. ACTION CALENDAR This portion of the agenda is for items where staff presentations and Board or Committee discussions are needed prior to formal action. 6.1. Audit Report for Fiscal Year Ending June 30, 2021 Recommendation: That the Board of Directors receive and file the Yorba Linda Water District Financing Authority Comprehensive Annual Financial Report for the Fiscal Year Ending June 30, 2021. 7. ADJOURNMENT Page 1 of 19 7.1. The next regular meeting of the Financing Authority is scheduled to be held Wednesday, December 15, 2021 at 6:30 p.m. Items Distributed to the Board Less Than 72 Hours Prior to the Meeting Non-exempt materials related to open session agenda items that are distributed to a majority of the Board of Directors (or Committee Members) less than seventy-two (72) hours prior to the meeting will be available for public inspection in the lobby of the District's Administrative building located at 1717 E Miraloma Ave, Placentia CA 92870 during regular business hours. When practical, these materials will also be posted on the District's website at https://ylwd.com/. (GC 54957.5) Accommodations for the Disabled Requests for disability -related 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) 701-3020 at least 24 hours in advance. (GC 54954.2(a)) Page 2 of 19 ITEM NO. 5.1. ' rba Linda Water District /_[r]=1►1I7_\V=1aelAI MEETING DATE: October 13, 2021 TO: Board of Directors FROM: Brett R. Barbre, General Manager STAFF CONTACTS: Annie Alexander, Senior Executive Assistant / Board Secretary SUBJECT: Minutes of the Financing Authority Regular Meeting Held December 8, 2020 RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: 1. Draft Meeting Minutes Page 3 of 19 2020 -XXX MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCING AUTHORITY REGULAR MEETING Tuesday, December 8, 2020, 6:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. TELECONFERENCE INFORMATION As noted on the agenda, this meeting was facilitated via teleconference pursuant to Paragraph 3 of Executive Order N-29-20 issued by the Governor of California on March 17, 2020. 2. CALL TO ORDER The meeting was called to order at 6:44 p.m. 3. ROLL CALL DIRECTORS PRESENT STAFF PRESENT Phil Hawkins, President Brett R. Barbre, General Manager Trudi DesRoches Doug Davert, Assistant General Manager Brooke Jones John DeCriscio, Operations Manager J. Wayne Miller, PhD Gina Knight, Human Resources and Risk Manager Delia Lugo, Finance Manager Rosanne Weston, Engineering Manager Annie Alexander, Sr Exec Asst/Board Secretary Alison Martin, Public Affairs Manager Veronica Ortega, Executive Assistant Kaden Young, Sr Management Analyst ALSO PRESENT Andrew Gagen, General Counsel, Kidman Gagen Law LLP 4. PUBLIC COMMENTS 10 re" 5. CONSENT CALENDAR Director Jones made a motion, seconded by Director Miller, to approve the Consent Calendar. Motion carried 4-0-0-0 on a Roll Call vote. 5.1. Minutes of the Financing Authority Regular Meeting Held October 13, 2020 Minutes of the Financing Authority Regular Meeting Held December 8, 2020 at 6:30 p.m. Page 4 of 19 Recommendation: That the Board of Directors approve the minutes as presented. 5.2. Affirmation of Officers for the Financing Authority Recommendation: That the Board of Directors affirm the individuals designated as Chair, Vice Chair, Executive Director, Treasurer, and Secretary of the Yorba Linda Water District Financing Authority in accordance with the Joint Exercise of Powers Agreement between the District and the California Municipal Finance Authority. 6. ADJOURNMENT 6.1. The meeting was adjourned at 6:44 p.m. Annie Alexander Board Secretary Minutes of the Financing Authority Regular Meeting Held December 8, 2020 at 6:30 p.m. 2 Page 5 of 19 ITEM NO. 6.1. Yorba Linda Water District /_[r]=1►1I7_\V=1161AI MEETING DATE: October 13, 2021 TO: Board of Directors FROM: Brett R. Barbre, General Manager STAFF CONTACTS: Delia Lugo SUBJECT: Audit Report for Fiscal Year Ending June 30, 2021 RECOMMENDATION: That the Board of Directors receive and file the Yorba Linda Water District Financing Authority Comprehensive Annual Financial Report for the Fiscal Year Ending June 30, 2021. BACKGROUND Staff is pleased to present the Board of Directors with the Yorba Linda Water District Financing Authority Comprehensive Annual Financial Report (CAFR) for the Fiscal Year Ending June 30, 2021. CliftonLarsonAllen LLP, the District's external auditing firm, has completed its annual audit of the Yorba Linda Water District Financing Authority for the fiscal year ending June 30, 2021. Ms. Kassie Radermacher, Principal of Clifton LarsonAllen LLP, will be available via video conference to present the CAFR. ATTACHMENTS: 1. YLWD Financing Authority CAFR for FY21 Page 6 of 19 YORBA LINDA WATER DISTRICT FINANCING AUTHORITY (A COMPONENT UNIT OF YORBA LINDA WATER DISTRICT) FINANCI, 1'/=F_1:»Z,II YORBA LINDA WATER DISTRICT FINANCING AUTHORITY TABLE OF CONTENTS YEAR ENDED JUNE 30, 2021 INDEPENDENT AUDITORS' REPORT MANAGEMENT'S DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS STATEMENT OF NET POSITION 3 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION 6 STATEMENT OF CASH FLOWS 7 NOTES TO FINANCIAL STATEMENTS 8 Page 8 of 19 Clifton LarsonAllen LLP . CLAconnect.com 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, 2021, 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 financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the 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 auditor considers internal control relevant to the entity'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 entity'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. A member of CLA is an independent member of Nexia International, a leading, global network of independent Nexia accounting and consulting firms. See nexia.com/member-firm-disclaimer for details. International 0 Page 9 of 19 Board of Directors Yorba Linda Water District Financing Authority 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, 2021, and the changes in financial position and cash flows thereof for the year ended June 30, 2021, in accordance with accounting principles generally accepted in the United States of America. Other Matter Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 and 4 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 required supplementary information 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 our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 28, 2021, on our consideration of the Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control over financial reporting and compliance. Clifton LarsonAllen LLP Irvine, California September 28, 2021 (2) Page 10 of 19 YORBA LINDA WATER DISTIRCT FINANCING AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2021 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, 2021. 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 as June 30, 2021 is as follows: ASSETS: Interest receivable Installment contract receivable: Due in one year Due in more than one year TOTAL ASSETS LIABILITIES: Interest payable Long-term Liabilities Due in one year Due in more than one year TOTAL LIABILITIES 1►1�111Z�I.yYY[�l�l (3) Fiscal Year Fiscal Year 2021 2020 $ 305,323 $ 316,511 945,000 895,000 24,860,000 25,805,000 26,110,323 27,016,511 305,323 316,511 945,000 895,000 24,860,000 25,805,000 26,110,323 27,016,511 Page 11 of 19 YORBA LINDA WATER DISTIRCT FINANCING AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2021 The Authority's Statement of Net Position as June 30, 2020 is as follows: ASSETS: Interest receivable Installment contract receivable: Due in one year Due in more than one year TOTAL ASSETS LIABILITIES: Interest payable Long-term Liabilities Due in one year Due in more than one year TOTAL LIABILITIES NET POSITION Fiscal Year Fiscal Year 2020 2019 $ 316,511 $ 325,111 895,000 860,000 25,805,000 26,700,000 27,016,511 27,885,111 316,511 325,111 895,000 860,000 25,805,000 26,700,000 27,016,511 27,88 5,111 REVENUES, EXPENSES AND CHANGES IN NET POSITION The interest income of $305,323 and $316,511 was used to pay the interest expense on the bonds as of June 30, 2021 and June 30, 2020, 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 $24,860,000 and $25,805,000 in long-term debt as of June 30, 2021 and June 30, 2020, 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. (4) Page 12 of 19 YORBA LINDA WATER DISTRICT FINANCING AUTHORITY STATEMENT OF NET POSITION JUNE 30, 2021 ASSETS Interest Receivable Installment Contract Receivable: Due in One Year Due in More Than One Year Total Assets LIABILITIES Interest Payable Long -Term Liabilities: Due in One Year Due in More Than One Year Total Liabilities NET POSITION See accompanying Notes to Financial Statements. (5) $ 305,323 945,000 24,860,000 26,110,323 305,323 945,000 24,860,000 26,110,323 Page 13 of 19 YORBA LINDA WATER DISTRICT FINANCING AUTHORITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2021 OPERATING REVENUES $ OPERATING EXPENSES - OPERATING INCOME - NONOPERATING INCOME (EXPENSES) Interest Income 1,232,481 Interest Expense (1,232,481) Total Nonoperating Income (Expenses) - CHANGE IN NET POSITION - Net Position - Beginning of Year - NET POSITION - END OF YEAR $ - See accompanying Notes to Financial Statements. z Page 14 of 19 YORBA LINDA WATER DISTRICT FINANCING AUTHORITY STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2021 CASH FLOWS FROM OPERATING ACTIVITIES Total Operating Revenues $ CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal Paid on 2017A Revenue Bonds (895,000) Interest Paid on 2017A Revenue Bonds (1,243,669) Contract Receivable Installment Payments Received 2,138,669 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 $ - See accompanying Notes to Financial Statements. (7) Page 15 of 19 YORBA LINDA WATER DISTRICT FINANCING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization 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. 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. 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. 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. IN Page 16 of 19 YORBA LINDA WATER DISTRICT FINANCING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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. 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. NOTE 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, 2021, was $25,805,000. For the year ended June 30, 2021, the receivable of the Authority consists of the following: Balance Balance July 1, June 30, 2020 Additions Deletions 2021 2017 Installment Purchase Agreement $ 26,700,000 $ - $ (895,000) $ 25,805,000 H Page 17 of 19 YORBA LINDA WATER DISTRICT FINANCING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 NOTE 3 LONG-TERM LIABILITIES The following is a summary of changes in long-term liabilities of the Authority for the year ended June 30, 2021: Balance Balance Due in July 1, June 30, Due Within More Than 2020 Additions Deletions 2021 One Year One Year 2017A Revenue Bonds $ 26,700,000 $ _L__L95,0001 $ 25,805,000 $ 945,000 $ 26,750,000 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, 2021, was $25,805,000. The annual debt service requirements for the 2017A Revenue Bonds outstanding at June 30, 2021 are as follows: Year Ending June 30, 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2039 Total Principal $ 945,000 990,000 1,045,000 1,095,000 1,145, 000 6,605,000 8,095,000 5,885,000 $ 25,805,000 (10) Interest $ 1,197,669 1,149,294 1,098,419 1,044,919 988,919 4,047,370 2,500,022 448,175 $ 12,474,787 Total $ 2,142,669 2,139,294 2,143,419 2,139,919 2,133,919 10,652,370 10,595,022 6,333,175 $ 38,279,787 Page 18 of 19 Investment advisory services are offered through Clifto n La rsonAlle n Wealth Advisors, LLC, an SEC -registered investment A member of advisor. CLA is an independent member of Nexia International, a leading, global network of independent accounting and Nexia consulting firms. See nexia-cc mlmember-firm-disclaimer for details. Clifton LarsonAllen LLP 0 International Page 19 of 19