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Home My WebLink About2022-05-12 - Board of Directors Meeting Agenda PacketYorba Linda Water District AGENDA YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING Thursday, May 12, 2022, 3:00 PM 1717 E Miraloma Ave, Placentia CA 92870 1. PARTICIPATION INSTRUCTIONS Due to the continuing state of emergency declared by the California Governor related to preventing the spread of Coronavirus (COVID-19), and pursuant to California Government Code Section 54953(e), this meeting will be facilitated in a hybrid format. As such, Directors and members of the public may choose to participate in person or by video/teleconference. Information for accessing this meeting by telephone or internet-based service is provided below. For questions regarding participation, please call the Board Secretary at (714) 701-3020. Computer/Mobile Device: https://us06web.zoom.us/m/88214800865 Telephone: (669) 900-6833 or (346) 248-7799 Meeting ID: 882 1480 0865 Live -stream: https://www.ylwd.com/youtube 2. CALL TO ORDER 3. PLEDGE OF ALLEGIANCE 4. ROLL CALL J. Wayne Miller, PhD, President Brooke Jones, Vice President Trudi DesRoches, Director Phil Hawkins, Director Tom Lindsey, Director 5. 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) 6. DISCUSSION ITEMS This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action of the Board (or Committee) at the meeting, such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking advice and counsel. Time permitting, it is generally in the District's interest to discuss these more complex matters at one meeting and consider formal action at another meeting. This portion of the agenda may also include items for information only. 6.1. Presentation from Municipal Advisors on Potential Debt Financing 6.2. Summary of Draft Budget for Fiscal Year 2022-23, Analysis of Supplies and Services, Analysis of Salaries and Related Expenses, Review of Financial Scenarios and Customer Impact Page 1 of 43 7. ADJOURNMENT 7.1. A special Board meeting to consider adoption of the budget is scheduled Tuesday, May 24, 2022 at 6:00 p.m. The next regular Board meeting is scheduled Tuesday, June 14, 2022. Closed Session (if necessary) will begin at 5:30 p.m. and regular business at 6:30 p.m. Items Distributed to the Board Less Than 72 Hours Prior to the Meeting- Non-exempt eetingNon-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 43 Ai* r FIELDMAN ROLAPP & ASSOCIATES EXPERIENCE, INTEGRITY & SERVICE FIELDMAN, Ro Pp &ASSOCIATES, INC. YORBA LINDA WATER DISTRICT BOARD MEETING Yorba Linda Water District May 12th, 2022 Page 3 of 43 YORBA LINDA WATER DISTRICT'S CIP The District has a need for approximately $20,000,000 in capital projects and approximately $10,000,000 to retire the balance on its revolving fund credit facility New capital projects are expected to start construction in August 2022 and be completed by August 2026 The District's capital reserves contain approximately $3,800,000 The District may be able to refund its 2012 bonds simultaneously with issuing its new money bonds FIELDMAN I ROLAPP Page 4 of 43 & ASSOCIATES g FEDERAL RESERVE ACTIONS • On March 16, 2022 the Federal Reserve increased its short-term rate by 0.25% • On May 4, 2022, the Federal Reserve increased its short-term rate by 0.50% • The Fed is now targeting interest rates in a range between 0.75% and 1.00%, with some Fed officials advocating for raising the target closer to 2.5% by the end of the year and potentially up to 3% • Generally, the Fed's actions and inflationary pressures have caused rates to rise HELDMAN ROLAPP Page 5 of 43 nssoc]A res 9 r .j� HELDMAN I ROLAPP & ASSOCIATES OVERVIEW OF US TREASURY & MUNICIPAL BOND MARKETS Page 6 of 43 US TREASURY YIELDS JANUARY 3, 2022 -MAY 6, 2022 Historic US Treasury Yields (January 3, 2022 through May 6, 2022) 3.50 10 -Year UST 30 -Year UST 3.00 2.50 2.00 1.50 1.00 0.50 0.00 oL� OLS OLS 00� O1� O1�' O1� 0p 0p Op Op Otis' Otis' Otis Otis Op OLS OLS FIELDMAN I ROLAPP Page 7 of 43 & ASSOCIATES g 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 HISTORIC CHANGE IN AAN MMD YIELDS Historic Change in 'AAA' MMD Yields (April 26, 2017 through May 6, 2022) 'AAA' MMD 10 -Year Yields 'AAA' MMD 30 -Year Yields 0.00 4/26/2017 4/26/2018 4/26/2019 4/26/2020 4/26/2021 4/26/2022 FIELDMAN I ROLAPP Page 8 of 43 & ASSOCIATES g 2 $20,000 $15,000 $10,000 $5,000 $0 ($5,000) ($10,000) ($15,000) ($20,000) ($25,000) ($30,000) ($35,000) ($40,000) ($45,000) MUNI BOND FLOWS Monthly Flow Into and Out of Municipal Bond Mutual Funds illiliilli. � Monthly Inflow / Outflow 3 -Month Moving Average O O O O O O O O O O O O r+ - c. r+ r+ — N N N N N N N N N N NN NN N N NN N N N N N N N N N N N N N N NN „ , , Source: ICI Investment Company Institute FIELDMAN I ROLAPP Page 9 of 43 & ASSOCIATES g � Monthly Inflow / Outflow 3 -Month Moving Average O O O O O O O O O O O O r+ - c. r+ r+ — N N N N N N N N N N NN NN N N NN N N N N N N N N N N N N N N NN „ , , Source: ICI Investment Company Institute FIELDMAN I ROLAPP Page 9 of 43 & ASSOCIATES g YLWD ESTIA-IATED DEBT PROFILE* $6,000,000 $5,000,000 00,00J�IIIIIIIIIII�� _�� Illlllillllllllllllll 16V o6v otic' 1b A 6V 6V otic otic o'5° 1'5 1'5 1'5 ('5 6b 1"5 1"5 o'55 ':: -05 o°° o°ti 'Z� 'Z� o°° Q° e o°� o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti o�ti ■ Series 2022 Revenue Bonds ■ Series 2012A Refunding Revenue Bonds ■ Series 2017A Revenue Bonds *Preliminary, subject to change. Based on market conditions as of May 9, 2022. FIELDMAN I ROLAPP Page 10 of 43 & ASSOCIATES g PROPOSED SCHEDULE Week of Monday, May 9, 2022 Board Meeting Presentation Week of Monday, May 16, 2022 Distribution of 1 st draft legal documents and District section of POS Tuesday, May 24, 2022 Board Approval of Underwriter Week of Monday, June 20, 2022 Distribute first full draft of POS Monday, July 4, 2022 July 4th Holiday +/- Tuesday, July 12, 2022 Rating Call @ TBD Monday, July 25, 2022 Credit Ratings received Tuesday, July 26, 2022 Board Meeting to approve legal documents and the POS Tuesday, August 9, 2022 Bond Pricing Conference Call TBD Thursday, August 18, 2022 Closing and receipt of funds FIELDMAN I ROLAPP Page 11 of 43 & ASSOCIATES g DISCLAIMER These materials include an assessment of current market conditions, and include assumptions about interest rates, execution costs, and other matters related to municipal securities issuance or municipal financial products. These assumptions may change at any time subsequent to the date these materials were provided. The refinancing and refunding scenarios presented herein are not intended to be inclusive of every feasible or suitable refinancing alternative. Fieldman, Rolapp & Associates, Inc. is an SEC -registered Municipal Advisor, and undertaking a fiduciary duty in providing financial advice to the Yorba Linda Water District only. Compensation contingent on the completion of a financing or project is customary for municipal financial advisors. To the extent that our compensation for a transaction is contingent on successful completion of the transaction, a potential conflict of interest exists as we would have a potential incentive to recommend the completion of a transaction that might not be optimal for the public agency. However, Fieldman, Rolapp & Associates, Inc. undertakes a fiduciary duty in advising public agencies including the Authority regardless of compensation structure. FIELDMAN ROLAPP Pae 12 of 43 nssoc]A res 9 r .j� HELDMAN I ROLAPP & ASSOCIATES OVERVIEW OF BOND ISSUANCES Page 13 of 43 WHAT ARE BONDS? Municipal bonds are a type of security issued to the public capital market to many investors (not just one financial institution i.e. commercial bank) ✓ Issue is divided into different maturities and interest rates (i.e. 1-30 year maturities) to appeal to various investor types Municipal governments that issue bonds receive a cash payment at the time of issuance in exchange for a promise to repay investors principal plus interest over time ✓ Bonds used to finance long-term municipal infrastructure projects are typically repaid over 20-30 years (match useful life of the asset to term of bonds) Accessing the capital markets generally results in getting the lowest cost of capital for projects of size Bonds are repaid through a pledge of revenue received from providing services (i.e. the maintenance and operation of the water system) FIELDMAN I ROLAPP Page 14��Sf 43 & ASSOCIATES g HOW WILL THE BONDS BE ISSUED? Rating Agency's (i.e. S&P, Fitch and Moody's) provide a credit rating on bonds issued in the public capital market ✓ Rating process is a thorough examination of many factors and is a report card of how an agency's financial results match up against its peers — describes the ability of the special district to repay debt ✓ Highest offered rating is "AAA" which offers the best possible (lowest) yields in the market Finance team works together to make the Bonds credit -worthy and marketable Legal documentation outlines the (limited) rights of the bondholders and the mechanics for repayment; team aids District to disclose information on the credit to potential investors Yorba Linda Water District may offer to investors through an investment bank Bonds Municipal advisor carefully monitors pricing at time of sale. > Retail Investors Bond Funds > $ > Insurance Companies — Underwriter manages the sale of the Bonds to investors — Underwriter will offer Bonds at certain prices on a maturity -by -maturity basis based on investor demand — If less than 100% of bonds are sold, underwriter typically underwrites a portion of the bonds FIELDMAN I ROLAPP Page 1 d>f 43 & ASSOCIATES 9 Bond Counsel Prepares legal documentation, (Installment Sales Agreement, Indenture) resolutions, provides the validity opinion letter for bond issuance and that the Bonds are exempt from Federal income taxes. Financial Advisor Has fiduciary relationship with issuer; provides advice on structure and mechanics of YL1 1 � 1 , transaction. Reviews legal documentation, WPreliminary and Final Official Statements; Water District manages transaction flow; manages rating agency process, including creation of credit presentation; represents District during pricing process. Disclosure Counsel Prepares the Preliminary and final Official Statements. POS and OS provide details of District, e.g. financial results, forecast, customers, etc., and other material information for investors to make an informed decision to buy or not to buy. BENEFITS OF BOND FINANCING Generally, using cash to fund long-term capital infrastructure is impractical as it requires increasing rates well in advance of expenditures and investing cash to maintain pace with inflation Using bonds to fund large capital projects allows the repayment period of the debt to equal the useful life of the project (infrastructure projects benefit current and future rate payers) ✓ Current rate payers do not feel the burden of replenishing cash reserves to keep up with policies and inflation ✓ Future rate payers share the debt cost of funding larger capital projects Pros Avoids negative arbitrage No interest expense No interest rate risk HELDMAN I ROLAPP & ASSOCIATES Cons Depletes reserves; must maintain policy levels Lose operational and liquidity flexibility Must fund project costs (including inflation) in advance of expenditures Pros Cons Inter -generational equity Added interest expense Lock in current interest rates More affordable and stable water rate structure Market risk Annually meet bond covenants Page 17 of 43 Yorba Linda Water District Page 18 of 43 Response to Directors' Requests For Additional Information/Detail/Analysis • Supplies &Services—Analysis • 10% Reduction in Water Sales • Salary Related Expenses Detail • Sewer Analysis • Summary of FY2022-23 Budget • Effect on Customer Bills 05/12/2022 FMMM=, YL W l J Page 19 of 43 YL ,W� Page 20 of 43 PriorYear FY2020-21to FY2021-22 Projections Supplies & Services - Maintenance This analysis is for the maintenance expense account from FY2020-21 PriorYear Actuals to FY2021-22 Projections. Listed below are items that present the most impact on the increase. Maintenance Expense Item Gardenia Reservoir Lakeview Reservoir Fairbury Waterline Abandonment Well 11 Abandonment Well 15 Abandonment City of Yorba Linda & Placentia Pavement Program [Cost Increase] Camino De Bryant - Asphalt Paving s Increased by $775,400 Increased by 97% Amount Comment $ 22,000 Grading and drainage improvements to address slope failure issue. $ 66,000 Geotechnical evaluation, monitoring and repairs at the reservoir site $ 90,000 $ 60,000 $ 40,000 $ 128,000 $ 57,000 Heli -Hydrant Camino De Bryant paving was re-evaluation as expense, not capitalized. Leak Detection Program $ 30,000 Emergency Main Break Repair on Esperanza $ 55,000 Painting & Fencing [Cost Increase] $ 212,000 05/12/2022 Page 21 of 43 4 FY2021-22 Projections to FY2022-23 Budget Supplies & Services - Summary Prior Year Projected Budget $ VAR Projected % VAR Projected FY2020-21 FYE2021-22 FY2022-23 FY22to Budget FY22to Budget FY23 FY23 Communications $ 164,667 $ 140,985 $ 193,000 $ 52,015 37% Contractual Services 715,712 551,996 614,039 62,043 11% Data Processing 311,867 322,529 416,614 94,085 29% Dues & Memberships 87,809 103,366 97,522 (5,844) -6% Fees & Permits 362,049 441,182 467,990 26,808 6% Board Election - - 137,000 137,000 - Insurance 274,975 284,869 434,590 149,721 53% Materials 719,502 714,317 1,001,300 286,983 40% District Meetings & Events 24,032 34,995 45,500 10,505 30% Maintenance 800,875 1,576,275 1,509,900 (66,375) -4% Non Capital Equipment 197,846 167,579 204,300 36,721 22% Office Expense 39,758 41,817 42,300 483 1% Professional Services 1,025,746 1,385,819 1,713,760 327,941 24% Professional Development 35,858 45,362 83,150 37,788 83% Travel & Conferences 10,247 43,529 102,780 59,251 136% Uncollectible Accounts 15,906 11,337 10,000 (1,337) -12% Utilities 202,963 171,510 224,000 52,490 31% Vehicle Expenses 469,611 408,341 538,550 130,209 32% PFAS - 611500 1,422,000 1,360,500 2212% $ 5,459,423 $ 6,507,308 $ 9,258,295 $ 2,750,987 42% 05/12/2022 Page 22 of 43 5 Supplies & Services Analysis This analysis will be the expense accounts that are increasing over s5o,000 from FY2021-22 Projections to FY2022-23 Budget. Each expense account will be represented individually with a list of items that present the most impact on the increase. Communications $ Increased by $52,015 % Increased by 37% Expense Item Amount Comment Water Conservation Communications Program $ 40,000 Moved from Engineering professional services to Public Communications. Sponsorship Fees [Cost Increase] $ 10,000 Contractual Services s Increased by 662,043 % Increased by 11% Expense Item Janitorial Service [Cost Increase] Landscape Service [Cost Increase] 05/12/2022 Amount Comment $ 30,000 A new contract will be bid on in FY2022-23 and is estimated to have an increase in cost from current contract. A new contract will be bid on in FY2022-23 and is estimated to have an $ 40,000 increase in cost from current contract. Additional landscape service at Lakeview Reservoir Slope Stabilization. Page 23 of 43 6 Supplies & Services Analysis Cont. Data Processing $ Increased by $94,085 Expense Item Amount New GIS Parcel Data Software $ 3,000 New GIS Aerial Image Software $ 20,000 SCADA Alarm Software $ 6,000 Microsoft 365 Licenses $ 45,000 Additional Dell Support $ 5,000 Board Election Insurance Increased by 29% Comment New Engineering Software (Annual) New Engineering Software Update to increase efficiency of GIS and Cityworks programs. New software for entire district. This allows for increased security, efficiency and compatibility with our system. $ Increased by $137,000 Estimates from OC ROV is $112k - $161k $ Increased by $149721 % Increased by 53% Expense Item Amount Comment ACWA-JPIA Liability Insurance [Cost Increase] $ 72,000 Premium rates have increased. ACWA-JPIA Property Insurance [Cost Increase] $ 39,000 Property insurance increase due to the PFAS Treatment Plant. ACWA-JPIA Cybersecurity Insurance $ 42,000 05/12/2022 Page 24 of 43 7 Supplies & Services Analysis Cont. materials Expense Item Replacement Meters Replacement Registers Replacement MXU Methane Sensors (5) Work on Flow Meters Salt Materials [Cost Increase] Professional Services Expense Item Water Master Plan Decrease in Legal Services s Increased by $286,983 % Increased by 40% Amount Comment YL L � J Grant program ended, meters will be replaced as maintenance. Prior years $ 75,000 totals will give a comparative amount (FY18 $147k) (FY19 $193k). Grant program ended, meters registers will be replaced as maintenance. $ 86,000 prior years totals will give a comparative amount (FY18 $Ok) (FY19 $42k). $ 28,000 Grant program ended, meters MXU's will be replaced as maintenance. Prior years totals will give a comparative amount (FY18 $8k) (FY19 $113). $ 10,000 Methane sensors at Booster Stations have failed and need replaced. $ 16,000 Instrumentation and controls related work for Well sites. $ 25,000 Groundwater production increased from FY22. Amount is on trend from prior years. s Increased by $327941 Increased by 24% Amount Comment $ 550,000 Removed from FY2021-22 Projections and moved to FY2022-23 Budget. $ (165,000) 05/12/2022 Page 25 of 43 8 Supplies & Services Analysis Cont. Travel & Conferences $ Increased by $59,251 Expense Item Amount Comment See Travel & Conferences Detail in Future Slide Utilities Increased by 136% $ Increased by $52,490 % Increased by 31% Expense Item Amount Comment Power [Cost Increase] $ 52,490 Edison cost increase of 12% and increase in cost of Gas. Vehicle Expenses $ Increased by $130,209 % Increased by 32% Expense Item Amount Comment Diesel [Cost Increase] $ 10,000 We estimated diesel prices going from $3.50/gallon to $5.50/gallon. Gas [Cost Increase] $ 50,000 We estimated gas prices going from $3.50/gallon to $5.50/gallon. Stationary Engine Maintenance [Cost Increase] $ 50,000 As Wells production will increase, more maintenance will be required on stationary equipment. Water Vehicle Maintenance [Cost Increase] $ 15,000 Increases are being realized for vehicle maintenance. 05/12/2022 Page 26 of 43 9 Travel & Conference Board of Directors Board of Directors ACWA Semi -Annual Conferences (2) AWWA Annual Conference (2) CA -NV AWWA Annual Conference (2) CASA Semi -Annual Conferences (1) Other Conferences and Workshops UWI Semi -Annual Conferences (2) CRWUA Annual Conference (2) ISDOC Quarterly Meetings (5) OCWA Monthly Meetings (3) Legislative Meetings Meeting Mileage Finance Finance Admin Gov't Tax Update (2) CALPERS (2) FY2022-23 Budget Priority 4,000 4,800 3,700 4,150 1,000 4,700 2,500 400 1,100 4,000 2,000 32,350 FY2022-23 Budget Priority 900 1 1,000 1 1,900 05/12/2022 Page 27 of 4310 FY2022-23 Accounting Budget Priority GFOA 1,500 1 CalPERS (2) 500 1 CMTA 1,500 1 CSM FO 1,500 1 5,000 05/12/2022 Page 27 of 4310 Travel & Conference Administration 05/12/2022 FY2022-23 Records Management Budget Priority ARMA InfoCon (2) 1,100 1 Laserfiche Empower (2) 4,000 2 Other Conferences and Workshops 400 3 5,500 Page 28 of 43 11 FY2022-23 Administration Budget Priority ISDOC Quarterly Meetings (2) 160 1 OCWA Monthly Meetings (2) 720 1 Meeting Mileage 500 1 Legislative Meetings (2) 4,000 2 ACWA Semi -Annual Conferences (2) 4,000 2 Other Conferences and Workshops 3,000 3 CRWUA Conference (2) 2,500 3 MMC Academy (1) 1,600 3 CSDA Board Secretary/Clerk Conference (1) 2,000 3 CA -NV AWWA Annual Conference (2) 3,700 3 UWI Semi -Annual Conferences (2) 4,700 3 CASA Semi -Annual Conferences (1) 4,150 3 31.030 05/12/2022 FY2022-23 Records Management Budget Priority ARMA InfoCon (2) 1,100 1 Laserfiche Empower (2) 4,000 2 Other Conferences and Workshops 400 3 5,500 Page 28 of 43 11 FY2022-23 Public Communications Budget Priority Legislative Advocacy - Sacramento (5 Trips) 5,400 1 ACWA Fall Conference 2,000 2 OCBC Sacramento 1,500 2 ACCOC Sacramento 1,500 2 Urban Water Institute Conference 1,100 2 11,500 05/12/2022 FY2022-23 Records Management Budget Priority ARMA InfoCon (2) 1,100 1 Laserfiche Empower (2) 4,000 2 Other Conferences and Workshops 400 3 5,500 Page 28 of 43 11 Travel & Conference Human Resources FY2022-23 Human Resources Budget Priority Liebert Cassidy Whitmore (LCW) Conference (2) 4,000 1 FY2022-23 Risk Management Budget Priority Public Agency Risk Management Assoc. (PARMA) 2,500 1 NEOGOV Annual Conference (1) 2,000 2 NEOGOV Annual Conference (1) 2,000 2 6,000 4,500 Engineering FY2022-23 Engineering Budget Priority Water Education Seminar (4) 1,000 1 Cal -Nevada AWWA Conference (3) 1,500 2 Operations FY2022-23 Operations Budget Priority Tri-State Conference (3) 2,500 1 2,500 05/12/2022 Page 29 of 4312 YL ,W� Page 30 of 43 Financial Summary Consolidated Zo%Reduction in Water Sales Proposed Revenue Budget FY2022-23 Revenue (Operating) $ 42,260,299 Revenue (Non -Operating) 5,998,767 Total Revenue $ 48,259,066 Rate Study Assumptions $ 46,560,875 4% 10% Reduction in Demand Budget FY2022-23 $ 40,193,945 5,998,767 $ 46,192,712 $ 46,560,875 _1% Consumption 7,159312 Reduction in Revenue $z,o66,354 Expenses $ 5,628,003 $ 5,156,096 Expenses (Operating): - - Variable Costs $ 17,686,074 $ 16,091,627 Reduction Salary Related Expenses 13,231,809 13,231,809 Demand 17,504.3 Supplies & Services 9,258,295 9,258,295 $471,907 Expenses (Non -Operating) 2,454,885 2,454,885 Reduction Total Expenses $ 42,631,063 $ 41,036,616 _ in Expense Rate Study Assumptions $ 38,222,320 $ 38,222,320 Variance % 12% 7% $1,594,447 Net Position Before Capital Contributions & Depreciation $ 5,628,003 $ 5,156,096 Capital Contributions - - Depreciation 9,500,000 9,500,000 Reduction Total Net Income (Loss) $ (3,871,997) $ (4,343,904) in Net Debt Service $ 3,686,750 $ 3,686,750 $471,907 Ratio 1.96 1.84 Per Policy 2.25 2.25 05/12/2022 Page 31 of 4314 W N,'/' Salary Related 1 Expenses Detail Salary Related Expenses Detail 2021 Rate Study Assumptions FY2020-21 FY2021-22 FY2022-23 Salary Related - Water $ 10,156,647 $ 11,893,405 $ 12,770,939 Salary Related - Sewer 1,738,874 2,041,083 2,191,322 $ 11,895,521 $ 13,934,488 $ 14,962,261 Salaries & Related Expenses Detail Prior Year Projected Budget FY2020-21 FY2021-22 FY2022-23 Salaries $ 7,223,556 $ 7,608,005 $ 8,386,138 Mandatory Benefits 2,222,836 1,778,580 2,633,869 Fringe Benefits 1,501,503 2,516,175 2,211,802 $ 10,947,895 $ 11,902,760 $ 13,231,809 Variance from Assumptions Rate Study Assumptions $ (947,626) $ (2,031,728) $ (1,730,452) Variance % -8% -15% -12% *Amounts include the labor for capital projects which is capitalized. 05/12/2022 Page 33 of 4316 YL ,W� Page 34 of 43 Financial Summary Sewer — 9% Rate Increase Revenue Revenue (Operating) Revenue (Non -Operating) Total Revenue Proposed 15% Rate Increase Budget FY2022-23 $ 3,788,399 69,995 $ 3,858,394 9% Rate Increase Budget FY2022-23 $ 3,595,185 69,995 $ 3,665,180 Rate Study Assumptions $ 3,668,273 $ 3,668,273 Variance % 5% 0.2% Expenses Expenses (Operating): Salary Related Expenses Supplies & Services Expenses (Non -Operating) Total Expense Rate Study Assumptions Variance % $ 1,872,417 1,155,882 5,785 $ 3,034,084 $ 1,872,417 1,337,720 5,785 $ 3,215,922 $ 3,228,163 $ 3,228,163 -6% 0% Net Position Before Capital Contributions & Depreciation $ 824,310 $ 452,351 I CIFJIICII l U[ Ill IIJUIIUI IJ - - Depreciation 1,495,000 1,495,000 Total Net Income (Loss) $ (670,690) $ (1,045,742) 05/12/2022 Reduction in Revenue $193214 Reduction in Expense $O Reduction in Net $193214 Page 35 of 43 YL ,W� Page 36 of 43 Various Customer Bills Customer #1 @ 4 Units $ 72.70 $ 79.27 $ 79.35 $ 79.85 $ 79.93 Customer #2 @ 9 Units $ 85.90 $ 93.67 $ 93.85 $ 94.25 $ 94.43 Customer #3 @ 12 Units $ 93.82 $ 102.31 $ 102.55 $ 102.89 $ 103.13 Customer #3 @ 18 Units $ 109.66 $ 119.59 $ 119.95 $ 120.17 $ 120.53 Customer #4 @ 23 Units $ 122.86 $ 133.99 $ 134.45 $ 134.57 $ 135.03 Customer #5 @ 29 Units $ 138.70 $ 151.27 $ 151.85 $ 151.85 $ 152.43 Customer #6 @ 55 Units $ 207.34 $ 226.15 $ 227.25 $ 226.73 $ 227.83 05/12/2022 Page 37 of 43 20 YL W FY2022-23 FY2022-23 FY2022-23 FY2022-23 Billing # of Units (12 mo. Avg) w/ 9% Wtr & w/ 9% Wtr & w/ 9% Wtr & w/ 9% Wtr & Monthly Bill w/ CFC 9% Swr Adj 9% Swr Adj 15% Swr Adj 15% Swr Adj Plus $0.02 Pass -Through Plus $0.02 Pass -Thi FY2022-23 FY2022-23 FY2022-23 FY2022-23 Billing # of Units (12 mo. Avg) w/ 9% Wtr & w/ 9% Wtr & w/ 9% Wtr & w/ 9% Wtr & 9% Swr Adj 9% Swr Adj 15% Swr Adj 15% Swr Adj Monthly Bill w/ CFC Plus $0.02 Pass -Through Plus $0.02 Pass-Thro PME=q YL L-- W Page 39 of 43 Financial Summary - Consolidated Prior Year Projected Budget Revenue FY2020-21 FYE2021-22 FY2022-23 Revenue (Operating) $ 39,250,600 $ 38,426,328 $ 42,260,299 Revenue (Non -Operating) 3,568,724 5,784,790 5,998,767 Total Revenue $ 42,819,324 $ 44,211,118 $ 48,259,066 Rate Study Assumptions $ 39,720,066 $ 43,727,333 $ 46,560,875 Variance % 8% 1% 4% Expenses Expenses (Operating): Variable Costs $ 18,638,471 $ 20,766,799 $ 17,686,074 Salary Related Expenses 10,947,895 11,902,760 13,231,809 Supplies & Services 5,459,423 6,507,308 9,258,295 Expenses (Non -Operating) 2,153,233 1,268,928 2,454,885 Total Expenses $ 37,199,022 $ 40,445,795 $ 42,631,063 Rate Study Assumptions $ 36,725,574 $ 39,170,380 $ 38,222,320 Variance % 1% 3% 12% Net Position Before Capital Contributions & Depreciation $ 5,620,302 $ 3,765,323 $ 5,628,003 Capital Contributions 2,051,988 8,966 - Depreciation 7,858,355 8,769,648 9,500,000 Total Net Income (Loss) $ (186,065) $ (4,995,359) $ (3,871,997) 05/12/2022 Page 40 of 43 �3 Financial Summary -Water Prior Year Projected Budget Revenue FY2020-21 FYE2021-22 FY2022-23 Revenue (Operating) $ 36,374,319 $ 35,120,509 $ 38,471,900 Revenue (Non -Operating) 3,459,038 5,588,271 5,928,772 Total Revenue $ 39,833,357 $ 40,708,780 $ 44,400,672 Rate Study Assumptions $ 36,914,814 $ 40,519,621 $ 42,892,602 Variance % 8% 0% 4% Expenses Expenses (Operating): Variable Costs $ 18,638,471 $ 20,766,799 $ 17,686,074 Salary Related Expenses 9,389,188 10,174,107 11,359,392 Supplies & Services 4,465,134 5,486,003 8,102,413 Expenses (Non -Operating) 2,137,203 1,256,936 2,449,100 Total Expenses $ 34,629,996 $ 37,683,845 $ 39,596,979 Rate Study Assumptions $ 33,630,572 $ 36,113,679 $ 34,994,157 Variance % 3% 4% 13% Net Position Before Capital Contributions & Depreciation $ 5,203,361 $ 3,024,935 $ 4,803,693 Capital Contributions 1,297,379 8,966 - Depreciation 6,380,976 7,282,836 8,005,000 Total Net Income (Loss) $ 119,764 $ (4,248,935) $ (3,201,307) Debt Service $ 2,729,381 $ 2,728,919 $ 3,686,750 Ratio 2.38 1.57 1.96 Per Policy 2.25 2.25 2.25 05/12/2022 Page 41 of 43�4 Financial Summary - Sewer Prior Year Projected Budget Revenue FY2020-21 FYE2021-22 FY2022-23 Revenue (Operating) $ 2,876,281 $ 3,305,819 $ 3,788,399 Revenue (Non -Operating) 109,686 196,519 69,995 Total Revenue $ 2,985,967 $ 3,502,338 $ 3,858,394 Rate Study Assumptions $ 2,805,252 $ 3,207,712 $ 3,668,273 Variance % 6% 9% 5% Expenses Expenses (Operating): Salary Related Expenses $ 1,558,707 $ 1,728,653 $ 1,872,417 Supplies & Services 994,289 1,021,305 1,155,882 Expenses (Non -Operating) 16,030 11,992 5,785 Total Revenue $ 2,569,026 $ 2,761,950 $ 3,034,084 Rate Study Assumptions Variance % Net Position Before Capital Contributions & Depreciation $ 3,095,002 $ 3,056,701 $ 3,228,163 -175vo -10% -6% $ 416,941 $ 740,388 $ 824,310 Capital Contributions 754,609 - - Depreciation 1,477,379 1,486,812 1,495,000 Total Net Income (Loss) $ (305,829) $ (746,424) $ (670,690) �YL L � J 05/12/2022 Page 42 of 43 25 5 -Yr CIP FY23 Budget PROJECT NAME Hidden Hills BPS Upgrades Timber Ridge BPS Pump Replacement Well 22 Equipping BNSF Crossing -Weir Canyon / YL Blvd BNSF Crossing -Veteran's Village and Highland Resiliency Improvements to District Facilities (AWIA) Site and Security Upgrades at District Facilities (AWIA) Well Rehabilitation Project Lakeview BPS Piping Waterline Replacement *Based on AMP and Leak History PRS Rehabilitation Project *Based on AMP and Asset Scores Golden Ave Waterline Santiago BPS Rehab Well 23 Drilling & Equipping Total Water CIP $ Main Street and YL Pines Sewer Green Crest Lift Station Rehab Sewer System Rehabilitation and Replacement Project Buena Vista Sewer Main Improvements CAPITAL OUTLAY Network Redesign Records Scanner Operations Department 05/12/2022 Total Sewer CIP $ FY2022-23 1,407,603 4,199,550 1,901,208 134,655 1,975,557 330,000 10,000 9,958,573 $ 813,000 813,000 $ FY2023-24 1,399,850 220,000 220,000 165,000 2,877,600 803,100 266,805 1,819,070 1,734,900 9,506,325 $ 396,000 396,000 $ FY2024-25 275,000 275,000 165,000 1,210,000 1,320,000 2,705,000 5,950,000 $ 385,500 r'TLVL7-LO 275,000 275,000 165,000 1,210,000 1,320,000 3,245,000 $ 440,000 385,500 $ 440,000 $ FY2026-27 275,000 275,000 165,000 1,210,000 1,320,000 3,245,000 $ 1,130,500 1,130,500 $ CIP Total $ 10,771,573 $ 9,902,325 $ 6,335,500 $ 3,685,000 $ 4,375,500 $ 35,069,898 FY23 FY24 FY25 FY26 FY27 TOTAL 30,000 - - - - 30,000 8,000 - - - - 8,000 1,725,000 516,000 505,000 710,000 820,000 41276,000 Outlay Total $ 1,763,000 $ 516,000 $ 505,000 $ 710,000 $ 820,000 $ 4,314,000 Grand Total $ 12,534,573 $ 10,418,325 $ 6,840,500 $ 4,395,000 $ 5,195,500 $ 39,383,898 Page 43 of 43 26 BACKUP MATERIALS DISTRIBUTED LESS THAN 72 HOURS PRIOR TO THE MEETING Yorba Linda Water District Current Outstanding Debt Outstanding Maturity Issuance Principal Interest Rate Year Refunding Revenue Bonds, Series 2012A Revenue Bonds, Series 2017A $20M Revolving Line of Credit - B of A anticipate to borrow up to $10M "Fixed Rate" means an annualized fixed rate, for the applicable Interest Period (rounded upward to the fourth decimal place) that is equal to the sum o£ (i) the product of (x) the Applicable Factor and (y) the LIBOR Rate (Fixed) for the applicable Interest Period, and (ii) the Applicable Margin; provided, however that immediately and upon the occurrence of an Event of Default (and without any notice given with respect thereto) and during the continuation of such Event of Default, "Fixed Rate" shall mean the Default Rate. $ 5,975,000 2.86% 2034 $ 25,805,000 3.20% 2039 $ 4,543,751 1 Month LIBOR May 2023 Avg at 0.5% MATERIALS SUBMITTED BY: Delia Lugo MEETING DATE: May 12, 2022 "LIBOR Rate (Fixed) " means, for any Interest Period with respect to a Fixed Rate Revolving Loan, a rate per annum equal to the London Interbank Offered Rate, or a comparable or successor rate which rate is approved by the Lender, as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Lender from time to time) at or about 11:00 a.m., London time, two London Banking Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period); provided that (i) to the extent a comparable or successor rate is approved by the Lender in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Lender, such approved rate shall be applied in a manner as otherwise reasonably determined by the Lender and (ii) if the LIBOR Rate (Fixed) shall be less than zero, such rate shall be deemed zero ITEM NO. 6.1.