Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2009-11-12 - Board of Directors Meeting Agenda Packet
Yorba Linda Water District AGENDA YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Thursday, November 12, 2009, 8:30 AM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL John W. Summerfield, President William R. Mills, Vice President Paul R. Armstrong Michael J. Beverage Ric Collett 4. ADDITIONS /DELETIONS TO THE AGENDA 5. PUBLIC COMMENTS Any individual wishing to address the Board is requested to identify themselves and state the matter on which they wish to comment. If the matter is on the agenda, the Board 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 matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to five minutes. 6. SPECIAL RECOGNITION 6.1. Introduce Lenica Castner, Temporary GIS Technician 6.2. Introduce Freddie Ojeda, Lateral Transfer to Plant Operator II 7. CONSENT CALENDAR All items listed on the consent calendar are considered to be routine matters, status reports, or documents covering previous Board instructions. The items listed on the consent calendar may be enacted by one motion. There will be no discussion on the items unless a member of the Board, staff, or public requests further consideration. 7.1. Minutes of the Regular Board of Directors Meeting Held October 21, 2009 Recommendation: That the Board of Directors approve the minutes as presented. 7.2. Minutes of the Special Board of Directors Meeting Held October 23, 2009 Recommendation: That the Board of Directors approve the minutes as presented. 7.3. Payments of Bills, Refunds, and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $2,366,343.94. 7.4. Progress Payment No. 3 for the Lakeview Sewer Lift Station Rehabilitation Project Recommendation: That the Board of Directors approve Progress Payment No. 3 in the amount of $29,019.14 to Schuler Engineering Corp. for the Lakeview Sewer Lift Station Rehabilitation. 7.5. Progress Payment No. 3 for the San Antonio Pressure Reducing Station Upgrade Project Recommendation: That the Board of Directors approve Progress Payment No. 3 in the net amount of $21,262.50 to Paulus Engineering, Inc. for construction of the San Antonio Pressure Reducing Station Upgrades Project, Job No. 200901. 7.6. Progress Payment No. 18 for the Highland Reservoir Replacement Project Recommendation: That the Board of Directors approve Progress Payment No. 18 in the net amount of $224,141.90 to Schuler Engineering Corporation and 10% retention of $24,904.66 deposited to Citizens Business Bank escrow account for construction of the Highland Reservoir Replacement Project, Job No. 200309. 7.7. FY 2008/09 Audited Financial Statements Recommendation: That the Board of Directors receive and file the audited FY 2008109 financial statements. 7.8. 1 st Quarter Profit & Loss for the Water and Sewer Funds Recommendation: That the Board of Directors approve, receive, and file the 1st quarter budgeted financial results for the Water and Sewer funds. 8. ACTION CALENDAR This portion of the agenda is for items where staff presentations and Board discussions are needed prior to formal Board action. 8.1. Professional Services Agreement - Townsend Public Affairs Recommendation: That the Board of Directors authorize the General Manager to terminate the Professional Services Agreement with Townsend Public Affairs. 8.2. Professional Services Agreement - Sacramento Advocates Recommendation: That the Board of Directors authorize the General Manager to terminate the Professional Services Agreement with Sacramento Advocates. 9. REPORTS. INFORMATION ITEMS. AND COMMENTS 9.1. President's Report 9.2. Directors' Reports 9.3. General Manager's Report 9.4. General Counsel's Report 9.5. Future Agenda Items and Staff Tasks 10. COMMITTEE REPORTS 10.1. Executive Administrative - Organizational Committee (Summerfield /Mills) Alternate: Collett Meeting scheduled for November 17, 4:00 p.m. 10.2. Finance - Accounting Committee (Beverage /Summerfield) Alternate: Mills Minutes of meeting held October 27, 4:00 p.m. Meeting scheduled for November 10, 4:00 p.m. has been cancelled. Meeting scheduled for December 8, 4:00 p.m. 10.3. Personnel -Risk Management Committee (Armstrong /Collett) Alternate: Summerfield Minutes of meeting held November 9, 4:00 p.m. (To be provided at the meeting.) Meeting scheduled for December 14, 4:00 p.m. 10.4. Planning- Engineering- Operations Committee (Mills /Armstrong) Alternate: Beverage Minutes of meeting held November 5, 4:00 p.m. Meeting scheduled for December 3, 4:00 p.m. 10.5. Public Information - Technology Committee (Collett /Beverage) Alternate: Armstrong Minutes of meeting held November 3, 4:00 p.m. Meeting scheduled for December 1, 4:00 p.m. 10.6. MWDOC /OCWD Ad Hoc Committee (Mills /Collett) Alternate: Summerfield Meeting scheduled for November 24, 4:00 p.m. 10.7. City of Placentia Ad Hoc Committee (Beverage /Vecchiarelli) • Meeting to be scheduled. 10.8. Citizens Advisory Committee Minutes of meeting held October 26, 8:30 a.m. Meeting scheduled for November 23, 8:30 a.m. 11. INTERGOVERNMENTAL MEETINGS 11.1. Yorba Linda Planning Commission, October 28 (Summerfield) 11.2. Yorba Linda City Council, November 3 (Mills) 11.3. MWDOC /MWD Workshop, November 4 (Staff) 11.4. OCWD Board, November 4 (Staff) 11.5. Yorba Linda Planning Commission, November 11 (Collett) 12. BOARD OF DIRECTORS ACTIVITY CALENDAR 12.1. Meetings from November 13, 2009 thru December 31, 2009 13. CLOSED SESSION The Board may hold a closed session on items related to personnel, labor relations and /or litigation. The public is excused during these discussions. 13.1. Conference with Legal Counsel — Pending Litigation Pursuant to Subdivision (a) of Section 54956.9 of the California Government Code Name of Case: Marc vs. YLWD (Orange County Superior Court - Case No. 00122904) Name of Case: Itani, et al vs. YLWD (Orange County Superior Court — Case No. 00124906) Name of Case: Johnson, et al vs. YLWD, et al (Orange County Superior Court — Case No. 00125994) Name of Case: State Farm General Insurance Company vs. YLWD (Orange County Superior Court - Case No. 00311353) 13.2. Conference with Real Property Negotiators Pursuant to Section 54956.8 of the California Government Code Property: APN 346- 101 -01 Agency Negotiators: Pat Grady and Steve Conklin Negotiating Parties: Designated Representatives of Orange County Water District Under Negotiation: Price and Terms of Payments 14. ADJOURNMENT 14.1. The Board of Directors will be meeting on November 20, 2009 at 9:00 a.m. to conduct a water rate workshop. The next regular meeting of the Board of Directors will be held November 25, 2009 at 8:30 a.m. Items Distributed to the Board Less Than 72 Hours Prior to the Meeting Pursuant to Government Code section 54957.5, non - exempt public records that relate to open session agenda items and are distributed to a majority of the Board less than seventy -two (72) hours prior to the meeting will be available for public inspection in the lobby of the District's business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870, during regular business hours. When practical, these public records will also be made available on the District's internet website accessible at http: / /www.ylwd.com /. Accommodations for the Disabled Any person may make a request for a disability - related modification or accommodation needed for that person to be able to participate in the public meeting by telephoning the Executive Secretary at 714 - 701 -3020, or writing to Yorba Linda Water District, P.O. Box 309, Yorba Linda, CA 92885 -0309. Requests must specify the nature of the disability and the type of accommodation requested. A telephone number or other contact information should be included so the District staff may discuss appropriate arrangements. Persons requesting a disability - related accommodation should make the request with adequate time before the meeting for the District to provide the requested accommodation. AGENDA REPORT Meeting Date: November 12, 2009 ITEM NO. 7.1 Subject: Minutes of the Regular Board of Directors Meeting Held October 21, 2009 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: vescription: 102109 BOD - Minutes.doc BOD Mtg Minutes 10�2vG MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING October 21, 2009 1. CALL TO ORDER The October 21, 2009 regular meeting of the Yorba Linda Water District Board of Directors was called to order by President Summerfield at 8:30 a.m. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL DIRECTORS PRESENT 4. 5. 91 John W. Summerfield, President William R. Mills, Vice President Michael J. Beverage Ric Collett DIRECTORS ABSENT Paul R. Armstrong STAFF PRESENT Ken Vecchiarelli, General Manager Pat Grady, Assistant General Manager Steve Conklin, Engineering Manager Lee Cory, Operations Manager Gina Knight, HR Manager Cindy Navaroli, Interim Finance Director Derek Nguyen, Water Quality Engineer Annie Alexander, Executive Secretary ADDITIONS /DELETIONS TO THE AGENDA None. PUBLIC COMMENTS None. SPECIAL RECOGNITION 6.1. Introduce Derek Nguyen, Newly Hired Water Quality Engineer Mr. Conklin introduced Mr. Nguyen to the Board of Directors. Mr. Nguyen left the meeting following his introduction. 1 7. CONSENT CALENDAR On a motion by Director Beverage, seconded by Director Mills, the Board voted 4 -0 to approve the Consent Calendar. 7.1. Minutes of the Special Board of Directors Meeting Held October 5, 2009 Recommendation. That the Board of Directors approve the minutes as presented. 7.2. Minutes of the Regular Board of Directors Meeting Held October 8, 2009 Recommendation. That the Board of Directors approve the minutes as presented. 7.3. Minutes of the Special Board of Directors Meeting Held October 13, 2009 Recommendation. That the Board of Directors approve the minutes as presented. 7.4. Payment of Bills, Refunds, and Wire Transfers Recommendation. That the Board of Directors ratify and authorize disbursements in the amount of $2,478,450.45. 7.5. Progress Payment No. 4 for the Zone Reconfiguration Project Recommendation. That the Board of Directors approve Progress Payment No. 4 in the net amount of $142,596.02 to Ken Thompson, Inc. for construction of the Zone Reconfiguration Project, Job No. 200710. 7.6. Progress Payment No. 5 for Construction of the Hidden Hills Reservoir Project Recommendation. That the Board of Directors approve Progress Payment No. 5 in the net amount of $143,237.61 to Pacific Hydrotech Corporation for construction of the Hidden Hills Reservoir Project, Job No. 200028. 7.7. Progress Payment No. 17 for the Highland Reservoir Replacement Project Recommendation. That the Board of Directors approve Progress Payment No. 17 in the net amount of $333,487.79 to Schuler Engineering Corporation and 10% retention of $37,054.20 deposited to Citizens Business Bank escrow account for construction of the Highland Reservoir Replacement Project, Job No. 200309. K 8. ACTION CALENDAR 8.1. Amended Budget — Revised October 21, 2009 Ms. Navaroli explained that the proposed budget amendment reflected changes resulting from the recent water rate increase and adjustment to the implementation of that increase. If the budget amendment is approved by the Board, staff will then file it with the District's bond trustees. On a motion by Director Beverage, seconded by Director Mills the Board voted 4 -0 to approve the attached amendments to the Approved Budget for Fiscal Year 2009110 which reflect revised water revenues, expenses and debt service ratio calculations sufficient to meet current revenue requirements and covenants. 8.2. Employee Agreements for the Period July 1, 2009 Through June 30, 2010 Ms. Knight explained that the members of the Employees Association Bargaining Unit had voted to ratify the Memorandum of Understanding at a recent Meet and Confer meeting. Both the Supervisory /Confidential and Management employee groups are unrepresented. Ms. Knight and Mr. Vecchiarelli then responded to questions from the Board. Director Summerfield stated that the Personnel -Risk Management Committee had reviewed the employee agreements and recommended that they be presented to the Board for approval. On a motion by Director Beverage, seconded by Director Collett the Board voted 4 -0 on a Roll Call to adopt Resolutions No. 09 -19, 09 -20 and 09 -21 adopting the Memorandum of Understanding and Pay Plan with the Yorba Linda Water District Employees Association for Fiscal Year 2009 -2010 (Resolution No. 09 -19), the Employee Compensation and Terms of Employment for Supervisory and Confidential Employees (Resolution No. 09 -20) and the Employee Compensation and Terms of Employment for Management Employees (Resolution No. 09 -21) for the period July 1, 2009 through June 30, 2010. 9. DISCUSSION ITEMS 9.1. Set Date for Water Rate Workshop Mr. Vecchiarelli explained that staff had contacted HDR to facilitate a budget based water rate workshop for the Board. The Board of Directors discussed potential dates for the workshop and chose to hold the meeting on December 18, 2009 at 9:00 a.m. Mr. Vecchiarelli then responded to questions from the Board regarding the content of the workshop and timeline for adoption of a tiered water rate. K3 Following further discussion, it was the consensus of the Board to hold the workshop on November 20, 2009 at 9:00 a.m. instead. 10. REPORTS, INFORMATION ITEMS AND COMMENTS 10.1. President's Report None. 10.2. Directors' Reports Director Mills commented on a recent news article regarding increased water quality in the City of Placentia due to recent changes in OCWD's Groundwater Replenishment System. Director Mills suggested that staff look into the possibility of drilling additional wells in this area. Mr. Vecchiarelli stated that staff would look into this possibility during the next site study process. 10.3. General Manager's Report Mr. Vecchiarelli reported that the second water conservation gardening class was held at the Fullerton Arboretum. There were a total of 68 attendees of which 63 were YLWD customers. Staff is continuing to monitor customer participation in the new online bill pay program. Approximately 564 individuals had signed up for the service to date. A bill insert regarding this new program is being included with all billing cycles. Director Summerfield then asked if a District representative was able to attend the recent Yorba Linda City Council meeting where the possibility of transferring the cities sewers over to YLWD was discussed. Yorba Linda City Council Member Nancy Rikel addressed the Board and stated that the matter had been discussed but no decision was made. Council Member Rikel suggested that any related information the District could provide would be helpful. 10.4. Future Agenda Items and Staff Tasks None. 11. COMMITTEE REPORTS 11.1. Executive - Administrative - Organizational Committee (Summerfield /Mills) Alternate: Collett Minutes of the meeting held October 20 were provided at the meeting. Directors Summerfield and Mills attended. Items discussed during the meeting were as follows: OCWD Annexation; Reports on Legislative and Grant Activities; and General Counsel's Monthly Summary Billing Report. Meeting scheduled for November 17, 4:00 p.m. CI 11.2. Finance - Accounting Committee (Beverage / Summerfield) Alternate. Mills Meeting scheduled for October 27, 4:00 p.m. 11.3. Personnel -Risk Management Committee (Armstrong /Collett) Alternate. Summerfield Minutes of the meeting held October 12 were provided in the agenda packet. Directors Armstrong and Collett attended. Items discussed during the meeting were as follows: Employee Agreements for the Period July 1, 2009 through June 30, 2010; and Status of Recruitments and Department Activities. Meeting scheduled for November 9, 4:00 p.m. 11.4. Planning- Engineering- Operations Committee (Mills /Armstrong) Alternate. Beverage Meeting scheduled for November 5, 4:00 p.m. 11.5. Public Information - Technology Committee (Collett /Beverage) Alternate. Armstrong Meeting scheduled for November 3, 4:00 p.m. 11.6. MWDOC /OCWD Ad Hoc Committee (Mills /Collett) Alternate. Summerfield Meeting scheduled for November 24, 4:00 p.m. Mr. Vecchiarelli explained that OCWD representatives may not be available to attend this meeting as it falls near a holiday. MWDOC representatives would still prefer to hold the meeting as scheduled. Following discussion, it was decided that this meeting would remain as scheduled. 11.7. City of Placentia Ad Hoc Committee (Beverage /Vecchiarelli) Meeting to be scheduled. 11.8. Citizens Advisory Committee Meeting scheduled for October 26, 8:30 a.m. Mr. Vecchiarelli reported that members of the Citizens Advisory Committee had been invited to attend the Board of Directors facilities tour on October 23, 2009 at 9:00 a.m. 61 12. INTERGOVERNMENTAL MEETINGS 12.1. Yorba Linda Planning Commission, October 14 ( Summerfield) Director Summerfield did not attend. 12.2. Yorba Linda City Council, October 20 (Armstrong) Director Armstrong did not attend. 12.3. MWDOC Board, October 21 (Staff) Staff did not attend. 12.4. OCWD Board, October 21 (Staff) Staff did not attend. 13. BOARD OF DIRECTORS ACTIVITY CALENDAR 13.1. Meetings from October 22, 2009 thru November 30, 2009 The Board reviewed the listed meetings with no additional changes. 14. CONFERENCES AND SEMINARS 14.1. Water Policy Forum & Dinner— November 5, 2009 Director Mills expressed interest in attending the event. The Board then agreed to authorize Directors Mills' attendance. 15. ADJOURNMENT 15.1. The meeting was adjourned at 9:17 a.m. The next regular meeting of the Board of Directors will be held November 12, 2009 at 8:30 a.m. Ken Vecchiarelli Board Secretary C.1 AGENDA REPORT Meeting Date: November 12, 2009 ITEM NO. 7.2 Subject: Minutes of the Special Board of Directors Meeting Held October 23, 2009 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: vescription: 102309 BOD - Minutes.doc BOD Mtg Minutes 10�23�C MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING October 23, 2009 1. CALL TO ORDER The October 23, 2009 special meeting of the Yorba Linda Water District Board of Directors was called to order by President Summerfield at 9:00 a.m. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL DIRECTORS PRESENT CI 5. John W. Summerfield, President Michael J. Beverage Ric Collett DIRECTORS ABSENT William R. Mills, Vice President Paul R. Armstrong STAFF PRESENT Ken Vecchiarelli, General Manager Steve Conklin, Engineering Manager Derek Nguyen, Water Quality Engineer CAC MEMBERS PRESENT Gene Scearce Bob Kiley ADDITIONS /DELETIONS TO THE AGENDA None. PUBLIC COMMENTS None. 6. ACTION CALENDAR 6.1. Board of Directors Annual Tour of District Facilities and Construction Projects The meeting attendees departed the Administration building at 9:15 a.m. for a tour of the District's facilities. The tour included stops at the Highland Reservoir, Lakeview Reservoir, Fairmont Site Improvement and Booster Station, Zone Reconfiguration Project, and Hidden Hills Reservoir. The tour ended at the Administration building at 11:30 a.m. 1 7. ADJOURNMENT 7.1. The meeting was adjourned at 11:31 a.m. The next regular meeting of the Board of Directors will be held November 12, 2009 at 8:30 a.m. Ken Vecchiarelli Board Secretary K AGENDA REPORT Meeting Date: November 12, 2009 To: Board of Directors From: Pat Grady, Assistant General Manager Presented By: Cindy Navaroli, Interim Finance Director Prepared By: Maria Trujillo, Accounting Assistant I Budgeted: Total Budget: Cost Estimate: Funding Source: Account No: Job No: Dept: Reviewed by Legal: CEQA Compliance: Subject: Payments of Bills, Refunds, and Wire Transfers SUMMARY: ITEM NO. 7.3 Yes N/A $2,366,343.94 All Funds N/A N/A Finance N/A N/A Section 31302 of the California Water Code says the District shall pay demands made against it when they have been approved by the Board of Directors. Pursuant to law, staff is hereby submitting the list of disbursements for Board of Directors' approval. STAFF RECOMMENDATION: That the Board of Directors ratify and authorize disbursements in the amount of $2,366,343.94. DISCUSSION: The major items and wire transfers on this disbursement list are as follows: A wire of $76,870.55 to ACWA -HBA for November 2009 health premium; a wire of $1,125,694.00 to MWDOC for September 2009 water purchase; a check of $224,141.90 to Schuler Engineering Corporation for Job 200309 October 2009 progress payment; and, a check of $69,042.74 to Southern California Edison for October 2009 usage on various sites. The balance of $653,101.63 is routine invoices.ADP issues the District's payroll checks, with the exception of the third party checks. The Accounts Payable check register total is $2,148,850.82; Payroll No. 21 total is $217,493.12; and, the disbursements of this agenda report are $2,366,343.94. A summary of the checks is attached. PRIOR RELEVANT BOARD ACTION(S): The Board of Directors approves bills, refunds and wire transfers semi - monthly. ATTACHMENTS: Description: Type: CkReg111209 BOD.pdf Check Register 11/12/09 Backup Material 09 -CS 1112.doc Cap Sheet 11/12/09 Backup Material Yvrba Linda Water District Check Register For Checks Dated: 10/22/2009 to 11/12/2009 Check No. date Vendor Name Amount 52775 11/12/2009 Abigail Abbott Staffing Svc 9,825.95 52776 11/12/2009 Acute Care Med /Placentia Lin 341.00 W102909 10/29/2009 ACWA /JPIA 23,021.00 52777 11/12/2009 ACWA -Assn Of Ca Water Agencies 335.00 W102709A 10/27/2009 ACWA -EAP 258.42 W102709 10/27/2009 ACWA -H BA 76,870.55 52778 11/12/2009 Advanced Infrastructure 88.13 52779 11/12/2009 Alternative Hose Inc. 100.80 52780 11/12/2009 Anaheim Wheel &Tire 1,183.00 52743 11/12/2009 Anthony Abajian 35.80 52781 11/12/2009 Aqua - Metric Sales Co. 15,701.26 52782 11/12/2009 Ararnark Uniform Services, Inc 704.59 52783 11/12/2009 Arrow Hardware 204.45 52784 11/12/2009 Arrowhead 44.88 52785 11/12/2009 Artistic Maintenance, Inc 3,495.60 52787 11/12/2009 AT & T 45.09 52786 11/12/2009 AT & T - Calnet2 3,411.89 52788 11/12/2009 AWWA - CA -NV Section 460.00 52790 11/12/2009 B & M Lawn and Garden Inc 1,911.83 52789 11/12/2009 Bell Pipe & Supply 81.85 52791 11/12/2009 Bonterra Consulting 2,560.00 52765 11/12/2009 Brenda Weaver 32.05 52771 11/12/2009 Bryce Pennington 4.59 52792 11/12/2009 Butier Engineering Inc 42,600.00 52801 11/12/2009 C & L Refrigeration Corp. 1,740,43 52793 11/12/2009 Carolio Engineers 44,108.00 52794 11/12/2009 CDM, Inc. 10,639.61 52795 11/12/2009 CDW Government, Inc 615.75 52796 11/12/2009 Ceridian Benefits Services 100.00 52797 11/12/2009 Chambers Group Inc. 6,920.31 52798 11/12/2009 Cindy Navaroli, CPA 26,745.00 52799 11/12/2009 Citizen's Business Bank 24,904.66 52800 11/12/2009 Clinical Lab. Of San Bern. 1,545.00 52802 11/12/2009 Cogsdale Services Corporation 10,747.50 52739 10/23/2009 Costco Membership 423.30 52740 10/30/2009 Cousyn Grading & Demolition 980.00 52803 11/12/2009 Culligan 1,794.40 52804 11/12/2009 Dangelo Co. 1,162.32 52805 11/12/2009 Datalok Orange County 297.53 52806 11/12/2009 Datanet Solutions Inc. 9,33075 52758 11/12/2009 Dawn Alvarado 38.35 52807 11/12/2009 Dell Marketing L.P. 366.10 52808 11/12/2009 Diehl, Evans & Company, LLP 1,980.00 52809 11/12/2009 Don Wolf & Associates Inc. 12,403.76 52745 11/12/2009 Dorothy Schauer 4.04 52810 11/12/2009 Doug A. Baker 191.34 52811 11/12/2009 D rage rSafety Inc. 32.09 52812 11/12/2009 Eisel Enterprises, Inc. 533.92 52813 11/12/2009 Employee Relations, Inc. 13775 52814 11/12/2009 Employment Development Dept. 6,45028 52752 11/12/2009 Flanigan Constrcction Inc 972.08 52815 11/12/2009 Fleet Services, Inc 285.06 52816 11/12/2009 Fry's Electronics 87.96 52817 11/12/2009 Fullerton Arboretum 2,500.00 52818 11/12/2009 General Pump Co., Inc. 66,173.39 52819 11/12/2009 Gladwell Governmental Services Inc. 4,000.00 52820 11/12/2.009 Graybar Electric Co 3,153.75 52821 11/12/2009 Haaker Equipment Co. 1,975.50 52750 11/12/2009 Haitbrink Asphalt Paving Inc 21,384.12 52748 11/12/2009 Herman Weissker Inc 847.50 52822 11/12/2009 HSBC Business Solutions 208.29 52823 11/12/2009 Infosend Inc, 12,769.33 52826 11/12/2009 1 & S Construction 1,475.00 52824 11/12/2009 Jackson's Auto Supply - Napa 310.39 52753 11/12/2009 Jamison Engineering 791.10 52774 11/12/2009 Jeff Carefoot 11.04 52755 11/12/2009 Jennifer Aguirre 3.31 52825 11/12/2009 Jobs Available 700.00 52773 11/12/2009 Joshua Mather 44.51 52751 11/12/2009 JRH Construction 569.42 52744 11/12/2009 Judy A. Cook 3.68 52827 11/12/2009 Katrina Brown 1,068.86 52828 11/12/2009 Kenneth R. Vecchiarelli 152.95 52767 11/12/2009 Laura Wimberly 17.18 52829 11/12/2009 Leighton Consulting, Inc. 10,670.00 52830 11/12/2009 Liebert Cassidy Whitmore 2,789.00 52761 11/12/2009 Linda Graves 6.81 52831 11/12/2009 LPR 300,87 52759 11/12/2009 Lupe Navarro 7.84 52754 11/12/2009 Mark Bora 63.17 52832 11/12/2009 Mc Fadden -Dale Hardware 564.39 52833 11/12/2009 Merchants Building Maintenance LLC 5,993.13 52747 11/12/2009 Michelle Clancy 35.32 52834 11/12/2009 Minuteman Press 610.21 52835 11/12/2009 Morton Salt 2,56376 52737 10/23/2009 Municipal Water District 8000 52836 11/12/2009 Municipal Water District 189.00 W111209 11/12/2009 Municipal Water District 1,125,694,00 52837 11/12/2009 Muzak OA 65.25 52838 11/12/2009 MWH Americas, Inc. 42,946.97 52764 11/12/2009 Myron White 10.25 52839 11/12/2009 Nextel Of California 1,724.04 52840 11/12/2009 Nickey Petroleum Co 8,631,56 52741 11/12/2009 Nidia Perez 8,27 52841 11/12/2009 Nobel Systems 1,650.00 52842 11/12/2009 Office Solutions 1,680.67 52843 11/12/2009 Orange County - Tax Collector 11,896.20 52844 11/12/2009 Orvac Electronics 1,064.14 52855 11/12/2009 P.T.I. Sand & Gravel, Inc. 1,467.38 52845 11/12/2009 Parts Source Anaheim 57.20 52846 11/12/2009 Paulus Engineering Inc. 21,262.50 52847 11/12/2009 Peggy Mcclure 1,968.75 52848 11/12/2009 Pete's Parts & Accessories 2,541.65 52849 11/12/2009 Pete'S Road Service Inc 70.00 52850 11/12/2009 Placentia Disposal #676 1,013.52 52851 11/12/2009 Plumbers Depot Inc. 353.98 52772 11/12/2009 Pravin Parekh 3.13 52852 11/12/2009 Praxair Distribution 739.66 52853 11/12/2009 Project Partners, Inc. 8,181.00 52854 11/12/2009 Psornas & Associates 6,046.13 52858 11/12/2009 R.J. Noble Company 1,718.24 52856 11/12/2009 RCL & Associates, Inc. 13,983.40 52756 11/12/2009 Real Estate Establishment, Inc 53.50 52762 11/12/2009 Rebecca Rheinheimer 60.10 52760 11/12/2009 Richard L. Meza 10.25 52857 11/12/2009 Rick Walkemeyer 565.37 52763 11/12/2009 Robert Larson 111.42 52738 10/23/2009 Rose Business Solutions Inc 55.00 52859 11/12/2009 Sacramento Advocates 6,000.00 52860 11/12/2009 Safety -Kleen Corp. 328.47 52861 11/12/2009 Sancon Technologies Inc. 13,900.00 52863 11/12/2009 SC Fuels 825.85 52862 11/12/2009 SCEC 1,627.73 52864 11/12/2009 Schuler Engineering Corp. 224,141.90 52890 11/12/2009 Schuler Engineering Corp. 29,019.14 52865 11/12/2009 Scott W. Moulton 6,885.00 52866 11/12/2009 Selman Chevrolet Company 130.17 52867 11/12/2009 Severn Trent Services 1,024.03 52868 11/12/2009 Shape Products Co. 350.80 52869 11/12/2009 Shred -It Los Angeles 7215 52870 11/12/2009 SHRM 160.00 52757 11/12/2009 Sierra Douglas 29.16 52871 11/12/2009 Source Refrigeration 340.50 52872 11/12/2009 Southern Calif Edison Co. 69,042.74 52873 11/12/2005 Southern Calif Gas Co. 20,05533 52874 11/12/2009 Southern Counties 5,212.53 52875 11/12/2009 Staples Business Advantage 212.29 52876 1.1/12/2009 Suburban Propane 370.64 52768 11/12/2009 SuneetChadha 16.85 52877 11/12/2009 Tab Products Co. 121.50 52878 11/12/2009 Time Warner Cable 258.03 52879 11/12/2009 Tall Brothers 183.83 52766 11/12/2009 Tony Pellegrino 82.52 52736 10/23/2009 Town and Country Resort 469.14 52770 11/12/2009 Travin Lu'i 7685 52881 11/12/2009 U S Bank Trust National Assn. 2,750.00 52889 11/12/2009 Underground Service Alert 171.00 52880 11/12/2009 Urethane Solutions, Inc. 8,887.50 52882 11/12/2009 Vernon Wireless 360.08 52746 11/12/2009 Verne's Plumbing Inc 77.50 52769 11/12/2009 Victor Romero 56.58 52883 11/12/2009 Village Nurseries 98.31 52884 11/12/2009 Vision Service Plan 1,578.00 52885 11/12/2009 Wells Supply Co 4,618.51 52886 11/12/2009 Western Highway Products, Inc. 158.86 52887 11/12/2009 Westside Building Material 383.26 52888 11/12/2009 Xerox Corporation 1,232.04 52749 11/12/2009 Yorba Linda Country Club 910.53 52742 11/12/2009 Yvonne Spiwak 9013 Tote 1 $2,148,850.82 November 12, 2009 CHECK NUMBERS: Manual Checks 52736 —52740 $ 1,987.44 Computer Checks 52741 —52890 $ 921,019.41 $ 923,006.85 WIRES: W- 102709 ACWA -H BA $ 76, 870.55 W- 102709A ACWA -EAP $ 258.42 W- 102909 ACWA/J P IA $ 23, 021.00 W- 111209 Municipal Water District $ 1,125.694.00 $ 1,225,843.97 TOTAL OF WIRES AND CHECKS PAYROLL NO. 21 (including ADP checks): District Manual Checks 4370 —4376 DISBURSEMENT TOTAL: $ 2,148,850.82 $ 217,493.12 $ 2,366,343.94 ------------------------------------------------------------------ ------------------------------------------------------------------ APPROVED BY THE BOARD OF DIRECTORS MINUTE ORDER AT BOARD MEETING OF NOVEMBER 12, 2009 ------------------------------------------------------------------ ------------------------------------------------------------------ TOTAL DISBURSEMENTS ARE DISTRIBUTED TO THE FUND ACCOUNTS AS FOLLOWS: WATER $2,186,007.73 SEWER $ 69,666.73 D # 1 $ 30, 869.80 I D # 2 $ 79, 799.68 TOTAL: $ 2,366,343.94 ITEM NO. 7.4 AGENDA REPORT Meeting Date: November 12, 2009 Budgeted: Yes Total Budget: $250,000 To: Board of Directors Cost Estimate: $250,000 Funding Source: Sewer Operating Fund From: Pat Grady, Assistant General Account No: 201 -2700 Manager Job No: J- 200905 Presented By: Steve Conklin, Engineering Dept: Engineering Manager Reviewed by Legal: N/A Prepared By: Hank Samaripa, Project CEQA Compliance: Exempt Engineer Subject: Progress Payment No. 3 for the Lakeview Sewer Lift Station Rehabilitation Project SUMMARY: The Notice to Proceed for the Lakeview Sewer Lift Station Rehabilitation was issued August 11, 2009. Work includes replacement of the wet well pumps, new 3 -phase electric service, new control panel, and miscellaneous appurtenances. The successful low bid contractor was Schuler Engineering Corporation. STAFF RECOMMENDATION: That the Board of Directors approve Progress Payment No. 3 in the amount of $29,019.14 to Schuler Engineering Corp. for the Lakeview Sewer Lift Station Rehabilitation. DISCUSSION: In accordance with the contract documents, Schuler Engineering submitted a request for Progress Payment No. 3 in the amount of $29,019.14 for completed work through October 31, 2009. During this period, the contractor set up OCFCD signs, installed by -pass sleeves, fabricated wet well lid and valve vault top, fabricated pump control panel and installed new electrical underground conduits for the project. The status of the construction contract with Schuler Engineering Corp. is as follows: • The current contract is $132,087.00 and 120 calendar days starting August 11, 2009. • If approved, Progress Payment No. 3 is $32,246.49 (24.4% of the total contract amount) less 10% retention of $3,224.35 for a net payment of $29,019.14. • If approved, total progress payment to date including retention is $73,675.47 (55.7% of the total contract amount). • As of October 31, 2009, 81 calendar days were used (67.5 of the contract calendar days). Staff reviewed the Progress Payment request and recommend payment. A copy of the Progress Payment Request No. 3 is attached for your information. PRIOR RELEVANT BOARD ACTION(S): Construction bids were received and a construction contract in the amount of $137,087.00 was awarded to the low bidder, Schuler Engineering on July 9, 2009. On October 8, 2009, the Board approved Progress Payment No. 2 in the net amount of $34,363.78. ATTACHMENTS: Description: Type: SchulerPP 3 102809.pdf Schuler Progress Payment No. 3 Backup Material YORBA LINDA WATER DISTRICT PROGRESS PAY REPORT PROJECT Lakeview Sewer Lift Station PROGRESS PAY REQUEST NO. 3 LOCATION Yorba Linda PROJECT NO. J-0906 PAGE OF PAGES CONTRACTOR Schuler Engineering DATE ORIGINAL CONTRACT AMOUNT: $ 132,087 AUTHORIZED CHANGE ORDERS: A REVISED CO NTRAC T AMOUNT: —$ 132,087 PAY ESTIMATE FOR PERIOD OdDberi,2009 TO PREVIOUS THI VALUE OF WORK COMPLETED $ 41,431.981 $ CHANGE ORDER WORK COMPLETED $ . 1 $ TOTAL VALUE OF WORK COMPLETED $ 41,431.98 1 $ LESS RETENTION 10% LESS OTHER DEDUCTIONS AMOUNT DUE THIS ESTIMATE LESS AMOUNT PREVIOUSLY PAID BALANCE DUE THIS ESTIMATE COMPLETION TIME APPROVED TIME EXTENSIONS TOTAL CONTRACT TIME TIME EXPENDED TO DATE TIME REMAINING 120 CALENDAR DAYS CALENDAR DAYS 120 CALENDAR DAYS 81 CALENDAR DAYS 39 CALENDAR DAYS October 31, 2009 DNTH TO DATE 32,243.49 $ 73,675.47 32,24349 $ 73,675.47 $ 7,367.55 $ 66,307.92 $ 37,288,78 I$ 29,019.14 REQUESTED BY: DATE: / , /07 ,ZcLt,r - Chas c I Schuler Engineering APPROVED BY: DATE: Owners Representative — Hank Samaripa-,VLWD APPROVED BY: DATE! OWNER — Steve Conklin-YLWD Meeting Date: To: From: Presented By: Prepared By: Subject SUMMARY: AGENDA REPORT November 12, 2009 Board of Directors Pat Grady, Assistant General Manager Steve Conklin, Engineering Manager Budgeted: Total Budget: Cost Estimate: Funding Source: Account No: Job No: Dept: Reviewed by Legal: Joe Polimino, Project Engineer CEQA Compliance: ITEM NO. 7.5 Yes $280,000 $280,000 ID No. 1 GO Bonds 101 -2700 200901 Engineering No Exempt Progress Payment No. 3 for the San Antonio Pressure Reducing Station Upgrade Project On April 27, 2009, bids were received from 11 contractors for the construction of the San Antonio Pressure Reducing Station Upgrade Project. It will consist of removing the upper half of the underground vault, installation of new pressure reducing valves and piping, and rebuilding the vault with improved access, lighting and ventilation. The low bid was $236,250 by Paulus Engineering, Inc. The Engineer's Estimate was $280,000. STAFF RECOMMENDATION: That the Board of Directors approve Progress Payment No. 3 in the net amount of $21,262.50 to Paulus Engineering, Inc. for construction of the San Antonio Pressure Reducing Station Upgrades Project, Job No. 200901. DISCUSSION: In accordance with the contract documents, Paulus Engineering, Inc. submitted a request for Progress Payment No. 3, in the amount of $23,625.00 for completed work through October 31, 2009. During this period, the contractor completed rebuilding vault, installed ladder and other vault appurtenances. Trench was completed for AT &T telephone line and conduit was installed. The vault top was installed, including hatches. The contractor maintained traffic control devices throughout the project limits. The status of the construction contract with Paulus Engineering, Inc. is as follows: • The current contract is $236,250.00 and 100 calendar days starting June 22, 2009. • If approved, Progress Payment No. 3 is $23,625.00 (10.0% of the total contract amount), less 10% retention of $2,362.50 for a net payment of $21,262.50. • Total payments to date including retention are $212,625.00 (90.0% of the total contract amount). As of October 31, 2009, 132 calendar days were used (132.0% of the contract time. Staff and Paulus are currently negotiating a change order request for additional costs and a time extension associated with extra work required to complete the project.) District staff reviewed the contractor's progress payment and recommend approval. A copy of Progress Payment No. 3 is attached for your reference. PRIOR RELEVANT BOARD ACTION(S): On December 4, 2008, the Board of Directors authorized the President and Secretary to Amend the Consultants Agreement with Psomas, in the amount of $43,125 for additional work to provide design services and bid assistance for upgrades to the San Antonio PRS in conjunction with the Zone Reconfiguration Project, Job No. 200710. The Board of Directors approved two progress payments to date, the last which was approved on October 8, 2009. ATTACHMENTS: Description: Paulus_ Progress_ Pay Report_3.pdf Paulus Progress Pay Request 3 Y ©RBA LINDA WATER DISTRICT PROJECT San Antonio Pressure Reducing Station LOCATION Yorks Linda, CA PROJECT NO. CONTRACTOR Paulus Engineering, Inc. ORIGINAL CONTRACT AMOUNT: $ 236,250.00 AUTHORIZED CHANGE ORDERS: $ - REVISED CONTRACT AMOUNT: $ 236,250.00 PROGRESS PAY REPORT PROGRESS PAY REQUEST NO. 003 200901 PAGE 1 OF 1 PAGES DATE 10131/09 PROGRESS PAY ESTIMATE FOR PERIOD October 1, 2009 TO PREVIOUS THIS MONTH VALUE OF WORK COMPLETED CHANGE ORDER WORK COMPLETED TOTAL VALUE OF WORK COMPLETED LESS RETENTION 10% LESS OTHER DEDUCTIONS NET EARNED TO DATE LESS AMOUNT PREVIOUSLY PAID BALANCE DUE THIS ESTIMATE NOTICE TO PROCEED COMPLETION TIME APPROVED TIME EXTENSIONS TOTAL CONTRACT TIME TIME EXPENDED TO DATE TIME REMAINING w - I w $ 169,000.00 $ Electronic Wire Fees .tune 22. 2009 100 CALENDAR DAYS 0 CALENDAR DAYS ion CALENDAR DAYS 132 CALENDAR DAYS TO DATE .00 $ 212,625,00 .00 f $ 212,625.00 I $ 21.262.50 $ 191,362 -50 $ 170,100.00 $ 2126250 REQUESTED BY: 4 DATE: .lason Paulus, V.P s En 1heering, Inc. APPROVED BY: DATE: 1410? �- Jeags 5asa, Construction Inspector, YLWD APPROVED BY: DATE: Steve Conklin, Engineering Manager, YLWD Meeting Date: To: From: Presented By: Prepared By: Subject SUMMARY: AGENDA REPORT November 12, 2009 Board of Directors Pat Grady, Assistant General Manager Steve Conklin, Engineering Manager Budgeted: Total Budget: Cost Estimate: Funding Source: Account No: Job No: Dept: Reviewed by Legal: Joe Polimino, Project Engineer CEQA Compliance: ITEM NO. 7.6 Yes 11.2M $11.2M Water Revenue Bond 101 -2700 200309 Engineering No MND Progress Payment No. 18 for the Highland Reservoir Replacement Project The Board of Directors awarded a contract to Schuler Engineering for construction of the Highland Reservoir Replacement Project on April 10, 2008 and approved a project construction budget of $11.2M on May 15, 2008. Submitted for consideration is construction Progress Payment No. 18. STAFF RECOMMENDATION: That the Board of Directors approve Progress Payment No. 18 in the net amount of $224,141.90 to Schuler Engineering Corporation and 10% retention of $24,904.66 deposited to Citizens Business Bank escrow account for construction of the Highland Reservoir Replacement Project, Job No. 200309. DISCUSSION: In accordance with the contract documents, Schuler Engineering Corporation submitted a request for Progress Pay No. 18 for the period ending October 31, 2009. This progress pay request includes payment for continued installation of rebar and formwork for the base slabs for Basins 1 & 2. The contractor also began placing rebar and wall forms for the first wall pour. Contractor placed approximately 454 c.y. of concrete into prepared bottom slab forms in both bays. The status of the construction contract with Schuler Engineering is as follows: • The current contract amount is $9,481,193.87 and 804 calendar days (includes $431,847.87 in authorized change orders and additional 74 calendar days with approved time extensions). • If approved, Progress Payment No. 18 is $249,046.55 (2.6% of the revised contract amount) less 10% retention of $24,904.66 for a net payment of $224,141.90. • If approved, total progress payments to date including retentions are $6,049,703.79 (63.8% of the total revised contract amount). • As of October 31, 2009, 517 calendar days were used (64.3% of the revised contract calendar days). Staff and Carollo Engineers, the District's construction progress payment request and recommend payment. is attached for your information. PRIOR RELEVANT BOARD ACTION(S): management consultant, reviewed the A copy of Progress Payment Request No. 18 The Board has approved 17 progress payments to date, the most recent of which was approved on October 15, 2009. ATTACHMENTS: Name: Description: Schuler Engineering PPR 18 Highland Reservoir.pdf Schuler Engineering PPR18 Highland Reservoir Type: Backup Material YORBA LINDA WPTEFE DISTRICT PROGRESS PAY REPORT PROJECT Highland Reservoir PROGRESS PAY REQUEST NO. 18 LOCATION Yorba Linda PROJECT NO. J- PAGE 1 OF 1 PAGES _200309 CONTRACTOR Schuler Engineering — DATE Oct. 31,2009 ORIGINAL. CONTRACT AMOUNT: $ 9,049,346.00 CALENDAR DAYS AUTHORIZED CHANGE ORDERS: $ 431,847.87 CALENDAR DAYS REVISED CONTRACT AMOUNT: $ 9,481,193.87 PAY ESTIMATE FOR PERIOD October 1,2009 TO LIE OF WORK COMPLETED ,NGE ORDER WORK COMPLETED AL VALUE OF WORK COMPLETED S RETENTION 10% S OTHER DEDUCTIONS )UNT DUE THIS ESTIMATE S AMOUNT PREVIOUSLY PAID ANCE DUE THIS ESTIMATE NOTICE TO PROCEED COMPLETION TIME APPROVED TIME EXTENSIONS TOTAL CONTRACT TIME TIME EXPENDED TO DATE TIME REMAINING REQUESTED BY: APPROVED BY: $ 5,978,032.03 S $ 422,625.21 S 5.800,657.24 1 S June 2,2008 730 CALENDAR DAYS 74 CALENDAR DAYS 804 CALENDAR DAYS 517 CALENDAR DAYS 287 CALENDAR DAYS ___.,- hasWck Brian Wilson October 31,2009 TO DATE $ 5.627 S 422 220,591.50 224,141.90 DATE: lel�27k�� DATE: ! C/ -Z f APPROVED BY: DATE: _.. YLWD- OWNER Steve Conklin AGENDA REPORT Meeting Date: November 12, 2009 To: Board of Directors From: Pat Grady, Assistant General Manager Presented By: Cindy Navaroli, Interim Finance Director Prepared By: Cindy Navaroli, Interim Finance Director Budgeted Funding Source: Dept: Reviewed by Legal: CEQA Compliance: Subject: FY 2008/09 Audited Financial Statements SUMMARY: ITEM NO. 7.7 N/A N/A Finance N/A N/A The Board of Directors receives the audited financial statements on a yearly basis. STAFF RECOMMENDATION: That the Board of Directors receive and file the audited FY 2008/09 financial statements. DISCUSSION: The FY 2008/09 audited financial statements were prepared by Diehl, Evans & Company, LLP, who are in the second year of a three year agreement. The auditors opined that the financial statements are presented according to generally accepted accounting principles (GAAP) and issued an unqualified (clean) opinion. The auditors noted that the accrued liability for retiree benefits on pages 49 & 54 were in error, and should be $1,740,127 rather than $2,950,127. The attached financial statements are the final report and are not different from the draft version except for this change. PRIOR RELEVANT BOARD ACTION(S): The Board of Directors reviewed the FY 2008/09 draft audited financial statements at the October 13, 2009 special board meeting. ATTACHMENTS: Description: Type: Large Attachment.doc Large Attachment Backup Material YORBA LINDA WATER DISTRICT ANNUAL FINANCIAL REPORT WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR ENDED JUNE 30, 2009 YORBA LINDA WATER DISTRICT TABLE OF CONTENTS June 30, 2009 Page Number INTRODUCTORY SECTION: Letter of Transmittal I FINANCIAL SECTION: Independent Auditors' Report 15 Management's Discussion and Analysis (Required Supplementary Information) 17 Basic Financial Statements: 23 Combined Statement of Net Assets 24 Combined Statement of Revenues, Expenses and Changes in Net Assets 26 Statement of Cash Flaws 27 Notes to Basic Financial Statements 29 Required Supplementary Information: 53 Other Post- Employment Benefit Plan - Schedule of Funding Progress 54 SUPPLEMENTARY INFORMATION: 55 Combining Schedule of Net Assets 56 Combining Statement of Revenues, Expenses and Changes in Net Assets 60 Schedule of Operating Expenses by Cost Center and Nature of Expenses for Water and Sewer 63 Schedule of Capital Assets 64 Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 67 INTRODUCTORY SECTION Yorba Linda Water District September 17, 2009 To the President of the Board of Directors, Members of the Board, and Citizens of the Yorba Linda Water District Introduction State law and local ordinances require the District to annually publish a comprehensive report of its financial condition and activities, audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, it is our pleasure to submit the Annual Financial Report for the Yorba Linda Water District for the fiscal year ended June 30, 2009, following guidelines set forth by the Governmental. Accounting Standards Board. District staff prepared this financial report. The District is ultimately responsible for both the accuracy of the data and the completeness and the fairness of presentation, including all disclosures in this financial report. We believe that the data presented is accurate in all material respects. The report is designed in a manner that we believe necessary to enhance your understanding of the District's financial position and activities. This report consists of management's representations concerning the finances of Yorba Linda Water District. Consequently, management assumes full responsibility for the completeness and reliability of the information presented in this report. To provide a reasonable basis for making these representations, management of the District has established a comprehensive internal control framework that is designed both to protect the district's assets from loss, theft or misuse, and to compile sufficient reliable information for the preparation of the District's financial statements in conformity with generally accepted accounting principles (GAAP). Because the cost of internal control should not outweigh their benefits, the District comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief this financial report is complete and reliable in all material aspects. Yorba Linda Water District's financial statements have been audited by Diehl Evans & Company LLP, a firm of certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2009 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent audit concluded, based upon the audit, that there was reasonable basis for rendering an unqualified ( "clean") opinion that the Yorba Linda Water District financial statements for the year ended June 30, 2009 are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. This report is organized into two sections: (1) Introductory and (2) Financial. The Introductory section offers general information about the District's organization and current District activities and reports on a summary of significant financial results. The Financial section includes the Independent Auditors' Report, Management's Discussion and Analysis of the District's basic financial statements, and the District's audited basic financial statements with accompanying Notes. GAAP requires that management provide a narrative introduction, overview and analysis to accompany the financial statements in the form of the Management's Discussion and Analysis (MD &A) section. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The District's MD&A can be found immediately after the Independent Auditors' Report. District Structure and Leadership The Yorba Linda Water District (the District) is an independent special district, which operates under the authority of Division 12 of the California Water Code. The District has been providing water and sewer services to the residents of the City of Yorba Linda and surrounding communities since 1959. The District is governed by a fine- member Board of Directors, elected at -large from within the District's service area. The General Manager administers the day - today operations of the District in accordance with policies and procedures established by the Board of Directors. The District employs a full -time staff of 78 employees. The District's Board of Directors meets on the second and fourth Thursday of each month. Meetings are publicly noticed and citizens are encouraged to attend. The District provides water, sewer or a combination of both services to residents and businesses within its sL vice area. The service area lies within most of the City of Yorba Linda and portions of the cities of Anaheim, Brea, and Placentia. The District includes approximately 14,475 acres of land comprising 22.6 square miles. The District serves a population of approximately 75,000 and currently provides service to approximately 23,600 residential, commercial, and agricultural connections. District Services Residential customers are approximately 92 % of the District's customer base and consume approximately 72 % of the water provided annually by the District. The District obtains about half of its water supply from the Municipal Water District of Orange County and is supplemented by groundwater wells within the area. In 2009 and 2008, the District provided 23,417 and 24,633 acre -feet of water to customers, respectively. Economic Condition and Outlook The District's administrative offices are located in the City of Placentia in Orange County. The economic outlook for the area is one of very slow growth, which is projected to continue through 2010 because of the ongoing financial crisis and the somewhat distressed housing market. California's water supply continues to be a concern due to projected population increases and drought conditions. This concern has increased focus on the need for conservation as well as more efficient irrigation methods and systems, In June 2008, the Governor issued Executive Order 5 -06-08 declaring a statewide drought, which directed state agencies and departments, including the California Department of Water Resources, to take immediate action to address the serious drought conditions and water delivery reductions that exist in California. OA Simultaneously with the rising cost of import water, the District is also limited with the amount of water it is able to provide to customers. In essence, a water allocation has been placed on the District by Municipal Water District of Orange County (MWI3OC) which amounts to a reduction of water usage of 10% below the District's average water use for calendar years 2004 -2006. Failure to remain within this allocation results in substantial penalties. Since allocations were anticipated, the District implemented a conservation ordinance effective July 1, 2009 placing restrictions and curtailing water use. As of September 2009, the ordinance has proven to be successful with District customers reducing water usage by 19% through the months of July and August 2009. With this trend, the District is optimistic water usage will remain within allocation and penalties will be avoided. Water Conservation Recommendations Some ways residential customers can reduce their water use by ten percent voluntary conservation include: • Watering lawns one less day each week; • Turning off water when not needed — while brushing teeth, while soaping up in the shower, etc.; • Washing your clothes at the appropriate water setting, and • Repairing all leaky faucets and toilets. Conservation education incentives outlined in the Water Proclamation include:. • Providing table -top placards to restaurants, informing customers that water will only be served if requested; • Working with the Placentia -Yorba Unified School District to provide added water education programs; • Working with local hotels to request long -term guests reuse towels and bed linens; and • Encouraging customers to take advantage of rebates for certain conservation products. The current water conservation programs that the District is sponsoring are outlined below and as new programs become available they can be found on the District's website. Water Conservation Programs The District has implemented conservation management practices since the late 1980's. District staff participates in community events and distributes materials to encourage water conservation. The District offers the following conservation programs: • Smart-Timer Irrigation Landscape Controller • High Efficiency Clothes Washers • High Efficiency Toilets 3 Major Initiatives The activities of the Board and staff of the District are driven by its Mission Statement: "To provide reliable, high quality water and sewer services in an environmentally responsible manner at the most economical cost to our customers." 1. To supply clean, wholesome water to the community and provide water for the future. 2. To plan, construct, operate, maintain and upgrade the water system facilities to adequately serve customer needs. 3. To utilize the District's financial resources in an effective and prudent manner. 4. To provide quality customer service for District customers. 5. To inform, educate, and communicate with the community on District and water issues including conservation awareness. 6. To review and maintain a plan to be proactive in preventative maintenance of the District's water and sewer systems. Major Accomplishments during FY 2008/2009 In the midst of financial turmoil of many sectors in our economy, the District completed several capital projects that will decrease operational costs for the District in the future, such as: Lakeview Reservoir The new $11.5M Lakeview Reservoir, completed in June 2009, stores eight million gallons of potable water, doubling the former storage at this site. The buried, reinforced concrete reservoir serves the southwesterly part of the District, and is designed with provisions for expansion to 12 million gallons. The reservoir is a trey element in the District plan to meet long -term storage requirements and to deliver more water supplied by groundwater in place of the more costly import water from MWDOC_ 4 Zone 3 & 4 Pipeline Project The Zones 3 and 4 Pipeline Project was recently completed. This six -mile pipeline project connected the Gardenia and Valley View reservoirs to the Spring View and Fairmont reservoirs, to allow the efficient transfer of water during peak water demand periods typically experienced during hot weather, and to assist with fire demands. This was primarily a developer- funded project, to which the District contributed $1.7M for upsizing of pipelines for the future needs of the District beyond the capacity needs of the developers. Future Years Amidst the national economic turmoil and the California state budget crisis, our region continues to face water supply issues due to extended draught seasons. First and foremost, we continue to monitor the State's budget shortfall and potential shift of our property tax revenues. In terms of water supply, the District's priorities remain focused on the Urban Water Management. Plan to assure a reliable water supply in future years. Utilizing the Metropolitan Water District's drought groundwater storage account with Orange County Water District of Southern California, increasing recycled water use and promoting additional conservation measures will be critical to assuring an adequate supply to our region. Meeting these challenges will be on the top of the District's priority list. Water Hate .Increase In FY 2009110, the District faces many challenges related to water supply and demand. The District's water supply is currently derived by both groundwater and import water, approximately 50% from each source. As drought conditions have worsened, the cost of import water has significantly increased by unprecedented amounts. The District purchases its import water supply from the Municipal Water District of Orange County (MWDOC), which in twm purchases import water from the Metropolitan Water District. In January 2009, import water prices increased by 14.1 % and another 19.7% in September 2009. In January 2011, import water costs are scheduled to increase by an additional 21.5 %. These increases alone have translated to over $2M in additional costs in FY 2009110. As a result, the District implemented a 41 % water rate increase beginning September 14, 2009. In December 2009, the District will be developing a Request for Proposals to conduct a rate study. This study will address a tiered water conservation rate structure, in addition to budget based water allocation rate structure for customers of the District. It is the District's goal for the study to be completed and approved by the Board of Director for implementation beginning in FY 2010111. Annexation Initiative While 75% of the District's service boundary is within the territory of the Orange County Water District (OCWD), District Staff and the Board will pursue annexation of the remaining 25 %. The advantage of 100% annexation is a substantial cost savings in the water the District produces from the groundwater basin. Currently, the OCWD groundwater basin has a pumping limitation of 62% of each agency's demand, which is applicable to all Orange County water agencies that are completely annexed within OCWD. Since 75% the District's boundaries are within OCWD, this equates to a 47% pumping limitation. The remaining water is supplied through the more costly import water. It is estimated that the District would reduce its water cost by over $1.0M if the entire area were annexed into OCWD. Enhanced Outreach & Communications The District continues to enhance its communication with the community. In the FY 2009110 budget, the District is funding a newly formed position of a Public Information Specialist. This position will develop additional public information and water conservation programs with the overall goal of developing a more transparent and complete image of the District to the community. Additionally, it is the District's intent to develop a short-term and long -term public information master plan. In February 2009, the District formed a Citizens Advisory Committee to serve as ambassadors to the community. On a monthly basis, the committee meets with District Staff to discuss and provide recommendations on various pending District issues. The committee has been actively involved with issues such as the water rate increase, water conservation, public information, and other matters as they arise. The committee continues to meet and make recommendations to the Board of Directors. Sewer Master Plan The District has budgeted in FY 2009110 for a Sewer Master Plan to supplement the current plan completed in 1959. The plan will identify existing sewer facilities, develop and calibrate a hydraulic computer model, provide flow monitoring, identify deficiencies, and provide recommendations for repair and replacements. Asset Management Master Plan The District has begun preparation of an Asset Management Plan (AMP ). The plan will identify all of the District's capital assets, the current condition of each, the risk profiles, and the long -term rehabilitation and replacement (R&R) funding requirements. With the understanding of R &R requirements, the AMP will present a proposed funding policy and mechanism to fulfill the needs to maintain the District's assets on an ongoing basis. The plan is expected to be completed in early 2010. 2 Capital Projects In FY 2009110, the Board of Directors approved a hive -Year Capital Improvement Program for 2009 to 2014 with a combined total of $44.4M. Of that amount, an estimated $18.2M is budgeted in FY 2009110 for projects in planning, design and construction. Those projects include the following: Highland Reservoir The new $11.2M Highland Reservoir, planned for completion in mid 2010, will provide six million gallons of potable water storage. The buried, reinforced concrete reservoir serves the most southerly part of the District and is designed with provisions for expansion to nine million gallons. The new reservoir will increase the storage capacity at the site by 1.7 million gallons and will make it possible to optimize groundwater production capabilities. The new reservoir replaces the original Highland Reservoir, which was constructed in 1911. That concrete -lined reservoir remained intact and unchanged except for two diffLTent roof coverings for the past 98 years. Zone Reconfiguration Project Certain areas located within the District's Zone 3A were observed to have low water pressure occurring in three locations of the service area. This $1.1M pipeline project will separate and create a new zone for those homes with higher water pressure. The project will include the installation of approximately 8,500 feet of new pipeline and various valves. Currently in construction, it is estimated to be completed by December 2009. • San Antonio Pressure Regulating Station Upgrade Project Located on San Antonio Road, this $250,000 upgrade project consists of replacing outdated pressure regulating valves, piping and controls. This underground facility will regulate pressure to the new Zone Reconfiguration Project. The vault will also be improved with better access, lighting and ventilation.. This project is currently under construction and is scheduled to be completed in December 2009. 7 • Hidden Hills Reservoir Project Located at the top of Hidden Hills Road, this $7M project will provide more efficient operation in the District's higher pressure zones in the Hidden Hills area. The project consists of the construction of a two million gallon buried concrete reservoir and improvements to the Santiago Booster Pump Station. It is currently in construction and will be completed in mid 2010. • Lakeview Sewer Lift Station Replacement The District's only sewer lift station is located within. the County of Orange Flood Control area at Lakeview Avenue and Buena Vista Avenue. The sewer lift station is being fully retrofitted at a cost of $200,000 with new larger pumps, a new control system and a new electrical supply. Construction is expected to be completed in November 2009. Highland Booster Station Replacement Located off Highland Avenue, the Highland Booster Station Replacement Project will allow the District to reliably pump up to 1$,000 gallons per minute of water from the adjacent 6 million gallon Highland Reservoir to the nearby residents and to Lakeview Reservoir. A feasibility study was completed in early 2009 and the $7M project is currently in design. Construction is expected to be completed in late 2010. District Well Projects The District's water demand is approximately 24,000 acre -feet per year_ Of that total, approximately half is pumped from the groundwater basin and the remaining half is imported water purchased through MWDOC. The cost of groundwater, including the cost of pumping, is about half the cost of imported water. As such, the District is working to ensure it can pump its full allotment of groundwater. To do so, it must fully utilize its existing wells, optimize their capacity, and construct new wells when necessary. In this regard, the District has various well projects, including the following: o Wells 1, 5, 11 and 12 Upgrade Project The District is completing refurbishment of Wells 1, 5, 11, and 12 located close to District headquarters. These wells have a combined capacity of approximately 5,000 gallons per minute. These wells were originally drilled between 1934 and 1950 and were refurbished to increase capacity and service life. Refurbishment results in continued groundwater production, enabling the District to reduce the use of more expensive imported water. o Well 20 Project Well 20 will replace existing Well 11 located at the southerly end of Richfield Road, near the Santa Ana River. Well 11 was drilled in 1934 and was relined in the 1990's, but has recently become less productive due to age and wear. Well 20, at a cost of approximately $2M, will provide an estimated 2,000 gallons per minute of groundwater production. It will improve the District's capability to produce its full allotment of groundwater in place of the more expensive imported water. Design is being completed and well- drilling is expected to commence by late 2009, with construction of the above -grade facilities to follow. o West Wellfield Project Initial work has commenced on the proposed West Wellfield Project. The project will consist of three to four groundwater wells located westerly of the District's service area in Anaheim, C.A. Information available from Orange County Water District indicates that the groundwater basin and aquifer is deeper and more productive further west. Consultants have been retained to evaluate water quality and quantity in the area, and to identify potential well sites, south of Mira Loma Avenue and west of Tustin Avenue. The combined capacity of these new wells may yield 6,000 to $,000 gallons per minute. This new groundwater production will enable the District to reduce dependence on some of its older wells and to improve its overall groundwater production in place of more expensive imported water. This project may take three or four years to implement at a cost of approximately $9M. • Other Upcoming Projects In addition to the above, the District is proceeding with other challenging projects in the near - term. These include the following: a Solar Power Generation Project The District will be constructing a solar power generation project as a pilot program, located on the roof of the Administration Building. The pilot program will determine the actual cost for constructing, and operating and maintaining a solar facility for potential expansion to other District facilities. o Water Recycling Project The District plans to complete a feasibility study for construction of a small -scale wastewater recycling facility to produce water for landscaping and irrigation of golf courses and greenbelts. The District will be applying for a grant, which is available to partially fiend recycled water pro] ect studies. 9 Internal Control Structure District management is responsible for the establishment and maintenance of the internal control structure that ensures the assets of the District are protected from loss, theft or misuse. The internal control structure also ensures adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The District's internal control structure is designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by management. Budgetary Control The District Board of Directors adopts an operating and capital budget every year. The budget authorizes and provides the basis for reporting and control of financial operations and accountability for the District's enterprise operations and capital projects. The budget and reporting treatment applied to the District is consistent with the accrual basis of accounting and the financial statement basis. Cash and Investment Management In order of priority, the District's objectives when investing, reinvesting, purchasing, acquiring, selling and managing public funds are as follows: 1. Safety: Safety of principal is the foremost objective of the investment program. Investments made by the District are undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective, diversification is required to prevent any potential loss on any individual security or depository form exceeding the income generated from the remainder of the portfolio. 2. Liquidity: The investment portfolio will remain sufficiently liquid to enable the District to meet all operating requirements that might be reasonably anticipated_ 3. Return on Investments: The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and the cash flow characteristics of the portfolio. Audit and Financial Re ortin State Law and Bond covenants require the District to obtain an annual audit of its financial statements by an independent certified public accountant. The accounting firm of Diehl, Evans & Company, LLP has conducted the audit of the District's financial statements. Their unqualified (clean) Independent Auditor's Report appears in the Financial Section. Risk Management The District is a member of the Association of California Water .Agencies Joint Power Insurance Authority (Authority). The purpose of the Authority is to arrange and administer programs of insurance for the pooling of self - insured losses and to purchase excess insurance coverage. Other References More information is contained in the Management's Discussion and Analysis and the Notes to the Basic Financial Statements found in the Financial Section of the report. 10 Acknowledtements Preparation of this report was accomplished by the combined efforts of District staff. We appreciate the dedicated efforts and professionalism that these staff members contribute to the District. We would also like to thank the members of the Board of Directors and especially the Finance - Accounting Committee members for their continued support in planning and implementation of the Yorba Linda Water District's fiscal policies. Respectfully submitted, K n Vecchiarelli Pat Grady General Manager Assistant Gi 11 Mission and Vision Statements Mission Statement Yorba Linda Water District will provide reliable, high quality water and sewer services in an environmentally responsible manner at the most economical cost to our customers. Vision Statement Yorba Linda Water District will become the premier sey'-safficient source for reliable water, sewer and related services in the communities it serves. Board of Directors The Yorba Linda Water District is governed by five Board of Directors elected to four -year terms by the registered voters within the District. The Board establishes policies and programs leading to the achievement of the District's mission. John W. Suzxamerfield President Elected 11/07/06 R:_ Paul R. Armstrong Director Elected 11/07/06 Michael J. Beverage Director Elected 11/04/08 12 William R. Mills Vice President Elected 11/07/06 Ric Collett Director Elected 11/04/08 District Boundaries CITY OF BREA ii WESTERN SERVICE AREA n� wlsn �vm a�ve � � RRW Mk . of pp Aw d' i CITY OF PLACENTIA �--" CHINO HILLS 13 YORBA LINDA WATER DISTRICT Disarirt Boundary This page intentionally left blank 14 FINANCIAL SECTION DIEHL, EVANS & COMPANY, LLP CERTIFIEII PUBLIC ACCOUNTANTS & CONSULTANTS WCHAEL R. LUOTN. CPA A PARTNERS}IIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W. SPP,AKER. CPA N1TIN P. PA ITI.. CPA pT� ROBERI 7. [:r,i.:..ANAN, CPA 5 CORPORATE PARIS., SUITE 100 'ri4 M 13. Ei(]iEKLOvlP• C'. ( ;I'I-IC)Mf 4 N. PERLUU'SKi. C'k'A IRVINE, CALIFORNIA 92606 -5165 'NARV }•:y .1. St7iEif 1!`.'.)i`. R. CPA (949) 399 -0600 • FAX (949) 399 -0610 KENNETH rz AMES' CPA w ww.diehlevam-com 'WILLIAM C. PENTZ, CPA September 11, 2009 'A PROFESSIONAL CORPORATION INDEPENDENT AUDITORS' REPORT Board of Directors Yorba Linda Water District Placentia, California We have audited the basic financial statements of the Yorba Linda Water District (the District) as of and for the year ended June 30, 2009 as listed in the table of contents. These basic financial statements are the responsibility of the District's management. 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 and the standards applicable to financial audits contained in Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Yorba Linda Water District as of June 30, 2009 and the results of its operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 10 to the financial statements, the District adopted the provisions of Governmental Accounting Standards Board Statement No. 45. "Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions'', for the year ended June 30, 2009. -15- OTHER OFFICES AT: 2965 ROOSEVELT STREET 513 W. VALLEY PARKWAY, SUITE 330 CARLSBAD, CALIFORNIA 92008 -2389 ESCONDIDO. CALIFORNIA 92025 -2598 (760) 729 -2343 • FAX (760) 729 -2234 (760) 741 -3141 • FAX (760) 741 -9890 In accordance with Government Auditing Standards, we have also issued our report dated September l 1, 2009 on our consideration of the District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, 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 and should be considered in assessing the results of our audit. The management's discussion and analysis and other required supplementary information, identified in the accompanying table of contents, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures to this required supplementary information, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this required supplementary information. However, we did not audit the required supplementary information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the District's basic financial statements. The Introductory Section is presented for purpose of additional analysis and is not a required part of the basic financial statements. The Introductory Section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it. Our audit was made for the purpose of farming an opinion on the basic financial statements taken as a whole. The supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements of the District. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. 16 YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS For the year ended June 30, 2009 The following Management's Discussion and Analysis (MD&A) of activities and financial performance of the Yorba Linda Water District (District) provides an introduction to the financial statements of the District for the fiscal year ended June 30, 2009. We encourage readers to consider the information presented here in conjunction with the transmittal letter in the Introductory Section and with the basic financial statements and related notes, which follow this section. Financial Highlights Water Services + The District's Water Services 2009 operating loss was ($4,051,275) or ($289,165) more than the District's Water Services 2008 operating loss of ($3,762,110). • The District's Water Services 2009 net loss before capital contributions was ($3,512,524) or ($2,143,297) greater than the District's Water Services 2008 net loss before capital contributions of ($1,369,227). .Sewer Services ■ The District's Sewer Services 2009 operating loss was ($300,265) or ($128,159) more than the District's Sewer Services 2008 operating loss of ($172,106). • The District's Sewer Services 2009 net loss before capital contributions was ($247,196) or ($118,838) greater than the District's Sewer Services 2008 net loss before capital contributions of ($128,358). Required Financial Statements This annual report consists of a series of financial statements. The Statement of Net Assets, Statement of Revenues, Expenses and Changes in Net Assets and Statement of Cash Flows provide information about the activities and performance of the District using accounting methods similar to those used by private sector companies. The District's statements consist of four funds, the Water Fund, the Sewer Fund, Improvement District No. 1, and Improvement District No. 2. The District's records are maintained on an enterprise basis, as it is the intent of the Board of Directors that the costs of providing water and sewer to the customer of the District are financed primarily through user charges. See independent auditors' report. -17- YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the year ended June 30, 2009 Required Financial Statements (Continued) The Statement of Net Assets includes all of the District's investments in resources (assets) and the obligations to creditors (liabilities). It also provides the basis for computing a rate of return, evaluating the capital structure of the District and assessing the liquidity and financial flexibility of the District. All of the current year's revenue and expenses are accounted for in the Statement of Revenues, Expenses and Changes in Net Assets. This statement measures the success of the District's operations over the past year and can be used to determine if the District has successfully recovered all of its costs through its rates and other charges. This statement can also be used to evaluate profitability and credit worthiness. The final required financial statement is the Statement of Cash Flows, which provides information about the District's cash receipts and cash payments during the reporting period. The Statement of Cash Flows reports cash receipts, cash payments and net changes in cash resulting from operations, investing, non - capital financing, and capital and related financing activities and provides answers to such questions as where did cash come from, what was cash used for, and what was the change in cash balance during the reporting period. Financial Analysis of the District One of the most important questions asked about the District's finances is, "Is the District better off or worse off as a result of this year's activities?" The Statement of Net Assets and the Statement of Revenues, Expenses and Changes in Net Assets report information about the District in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private sector companies. All of the current year's revenues and expenses are taken into account regardless of when the cash is received or paid. These two statements report the District's net assets and changes in them. You can think of the District's net assets (the difference between assets and liabilities), as one way to measure the District's financial health, or financial position. Over time, increases or decreases in the District's net assets are one indicator of whether its financial health is improving or deteriorating. However, one will need to consider other non - financial factors such as changes in economic conditions, population growth, zoning and new or changed government legislation, such as changes in Federal and State water quality standards. Notes to the Basic Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the basic financial statements. The notes to the basic financial statements can be found on pages 29 through 52. See independent auditors' report. -18- YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the year ended June 30, 2009 Statement of Net Assets 7,056,071 7,348,976 (292,905) Liabilities payable from restricted assets Condensed Statements of Net Assets 1,157,041 167,154 Non - current liabilities 2009 2008 Change Assets: _ 67.235522 68,269.742 lr ,034.220 Unrestricted assets $ 14,007,432 $ 16,306,313 $ (2,298,881) Restricted assets 37,529,983 47,347,291 (9,817,308) Other current assets 815,581 845,507 (29,926) Capital assets, net 165,002 140 151073.196 11 92 8,944 Total assets 217,355,136 217,57 3D7 21( 7.171) Liabilities: Liabilities payable from unrestricted current assets 7,056,071 7,348,976 (292,905) Liabilities payable from restricted assets 1,324,195 1,157,041 167,154 Non - current liabilities 58.855.256 59.763,725 �9.) Total liabilities _ 67.235522 68,269.742 lr ,034.220 Net assets: Net investment in capital assets 141,604,377 139,677,663 1,926,714 Restricted 15,517,459 14,523,549 993,910 Unrestricted (7.002.,222) (4198.6471 (2.101575) Total net assets $ 150.1 19.614 $ 149,302,565 $17444 As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the District, assets exceeded liabilities by $150,119,614 and $149,302,565 as of June 30, 2009 and 2008, respectively. By far the largest portion of the District's net assets (94% and 94% as of June 30, 2009 and 2008, respectively) reflects the District's investment in capital assets (net of accumulated depreciation.) less any related debt used to acquire those assets that is still outstanding. The District uses these capital assets to provide services to customers within the District's service area; consequently, these assets are not available for future spending. At the end of fiscal year 2009, the District showed a negative balance in its unrestricted net assets of $7,402,222 which indicates that there aren't any reserves to be utilized in future years, as was the same with the negative balance of $4,898,647 at the end of fiscal year 2408. See independent auditors' report. -19- YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the year ended June 30, 2009 Statement of Revenues, Expenses and Changes in Net Assets Condensed Statements of Revenues, Expenses and Changes in Net Assets Revenues: Operating revenues Non- operating revenues Total revenues Expenses: Operating expenses Depreciation and amortization Nan - operating expenses Total expenses Net lass before capital contributions Capital contributions Change in net assets Net assets, beginning of year Net assets, end of year 2049 $ 21,325,763 2,452,540 23,778,303 21,509,345 4,167,958 1,647,748 27,324,781 (3.546,478) 4,363,527 817,049 2008 $ 21,098,191 3,042,278 24,140,469 20.629,403 3,572,726 957,991 25,160,120 (1,019,651) Change $ 227.572 (589,738) (362,166) 879,942 595,232 689,487 2,164,661 (2,526,827) 4,100,051 263.476 3,080,400 (2,263,351) 149,302,565 146222,165 3,080,400 $ 150,1 19,614 $ 149,302,565 $ 817,049 The statement of revenues, expenses and changes of net assets shows how the District's net assets changed during the fiscal years. Net assets increased by $817,449 and $3,480,400 for the fiscal years ended June 30, 2009 and 2008, respectively. A closer examination of the sources of changes in net assets reveals that: In 2409, the District's total revenues decreased by $362,166, primarily due to an increase in water sales offset by a decrease in interest earnings. Total expenses increased by $2,164,661, due to increases in imported water costs, groundwater replenishment, and departmental and operational expenses. In 2048, the District's total revenues increased by $174,479, primarily due to an increase in operating revenues of $123,498 from increased water and sewer services. In addition, total expenses increased by $1,732,446, due to increases in imported water costs, groundwater replenishment, and departmental and operational expenses. See independent auditors' report. 20 YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the year ended June 30, 2009 Capital Assets Changes in capital asset amounts for 2009 were as follows: Balance Transfers/ Balance 2008 Additions Deletions 2009 Capital assets Capital assets, not being depreciated $ 30,032,709 $ 9,048,353 $ (20,208,978) $ 18,872,084 Capital assets, being depreciated 164,602,200 27,444,790 (509,326) 191,537,664 Less accumulated depreciation (41,561,713) (4,167,558) 322,063 (45,407,608) Total capital assets, net $ 153,073,196 $ 32,325,185 $ (20,396,241) $ _ 165,002,140 Changes in capital asset amounts for 2008 were as follows: At the end of fiscal year 2009 and 2008, the District's investment in capital assets amounted to $165,002,140 and $153,073,196, respectively,. (net of accumulated depreciation). This investment in capital assets includes land, transmission and distribution systems, reservoirs, tanks, pumps, buildings and structures, equipment, vehicles and construction -in- process, etc. Major capital assets additions during the year included upgrades to the District's pumping plant and the transmission and distribution system. Additional information regarding capital assets can be found in Note 5 to the financial statements. See independent auditors' report. -21 Balance Transfers/ Balance 2007 Additions Deletions 2008 Capital assets: Capital assets, not being depreciated $ 19,036,654 $ 21,433,164 $ (10,437,109) $ 30,032,709 Capital assets, being depreciated 152,822,705 14,266,477 (2,486,982) 164,602,260 Less aeeurnulated depreciation (40,472,063) (3,572,726) 2,483,076 (41,561,713) Total capital assets, net $ 131,387,296 $ 32,126.915 $ (10,441,015) $ 153,073,196 At the end of fiscal year 2009 and 2008, the District's investment in capital assets amounted to $165,002,140 and $153,073,196, respectively,. (net of accumulated depreciation). This investment in capital assets includes land, transmission and distribution systems, reservoirs, tanks, pumps, buildings and structures, equipment, vehicles and construction -in- process, etc. Major capital assets additions during the year included upgrades to the District's pumping plant and the transmission and distribution system. Additional information regarding capital assets can be found in Note 5 to the financial statements. See independent auditors' report. -21 YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the year ended June 30, 2009 LONG -TERM LIAB]IMES Changes in long -term liabilities amounts for the year ended June 30, 2009 were as follows: 2003 Revenue Certificates of Participation 2008 Revenue Certificates of Participation Subtotal Add (Less). Discount Premium Total Beginning Balance Additions $ 9,860,000 $ 34.995.000 44,855,000 Ending - $ (215,000) $ 9,645,000 {355.000) 34.640,000 (570,000) 44,285,000 (136,715) - 5,432 (131,283) 783,795 - 26 420 757,375 $ _4 0 $ $ �Q.� $ v 4$..91.1,022 Changes in long -term liabilities amounts for the year ended Juae 30, 2008 were as follows: 2003Revenue Certificates of Participation 2008 Revenue Certificates of Participation Subtotal Add (Less): Discount Premium Total Beginning Ending Balance Additions Reductions Balance $ 10,070,000 $ - $ (210,000) $ 9,860,000 - 34_ 99, ,000 - _ 34.995.000 I0,070,000 34,995,000 (210,000) 44,855,000 (142,148) - 5,433 (1.36,715) 792.602 (8.807) 783,795 —.. 9.927.852 $2�2 $ X02 $ $ 4 5iL2 4$,4 Additional information regarding long -term debts can be found in Note 7 to the financial statements. Requests for Information This financial report is designed to provide the District's funding sources, customers, stakeholders and other interested parties with an overview of the District's financial operations and financial condition. Should the reader have questions regarding the information included in this report or wish to request additional financial information, please contact the District at 1717 E. Miraloma Avenue, Placentia, California 92807 or the Finance Department at (714) 701 -3040. See independent auditors' report. -22- BASIC FINANCIAL STATEMENTS -23 - YORBA LINDA WATER DISTRICT COMBINED STATEMENT OF NET ASSETS June 30, 2009 (With comparative totals as of June 30, 2008) ASSETS CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents Cash and investments Accrued interest receivable Accounts receivable - water and sewer services Accounts receivable - property taxes Construction advances and deposits Inventory Prepaid expenses and other deposits TOTAL UNRESTRICTED ASSETS RESTRICTED ASSETS: Cash and casb equivalents Cash and investments Accrued interest receivable TOTAL RESTRICTED ASSETS TOTAL CURRENT ASSETS NONCURRENT ASSETS: CAPITAL ASSETS (NOTE 5): Capital assets, not being depreciated Capital assets, being depreciated Less accumulated depreciation TOTAL CAPITAL ASSETS, NET OTHER ASSETS: Bond issuance costs TOTAL NONCURRENT ASSETS TOTAL ASSETS See independent auditors' report and notes to basic financial statements, -24- 2009 2008 $ 1,505,345 $ 5,342,253 9,248,752 5,045,886 32,033 30,329 2,564,759 4,643,394 29,183 26,848 168,076 643,814 282,699 397,985 176,585 175,804 14,007,432 16,306,313 34,124,773 45,278,202 3,399,809 2,023,735 5,401 45,354 37,529,983 47,347,291 51,537,415 63,653,604 1.8,872,084 30,032,709 191,537,664 164,602,200 (45,407,608) (41,561,713) 165,002,140 153,073,196 815,581 845,507 165,817,721 15 3,918, 703 217,355,136 217,572,307 (Continued) YORBA LINDA WATER DISTRICT COMBINED STATEMENT OF NET ASSETS (CONTINUED) June 30, 2009 (With comparative totals as of June 30, 2008) LIABILITIES CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable and accrued expenses Accrued salaries and wages Accrued compensated absences (Note 6) Customer and other deposits Construction bonding deposits Deferred credits TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS PAYABLE FROM RESTRICTED ASSETS: Accrued interest payable Prepaid connection fees Certificates of Participation - current portion (Note 7) TOTAL PAYABLE FROM RESTRICTED ASSETS TOTAL CURRENT LIABILITIES LONG -TERM LIABILITIES (LESS CURRENT PORTION) (NOTE 7): Deferred annexation revenue Accrued compensated absences Accrued other post - employment benefit (OPEB) liability (Note 10) Certificates of Participation (Note 7) TOTAL LONG -TERM LIABILITIES (LESS CURRENT PORTION) TOTAL LIABILITIES NET ASSETS: Invested in capital assets, net of related debt (Note 8) Restricted Unrestricted TOTAL NET ASSETS See independent auditors' report and notes to basic financial statements. -25- 2009 2008 . $ 5,558,142 $ 5,905,218 174,579 83,655 122,992 115,495 477,341 406,540 133,079 130,154 589,938 707,914 7,056,071 7,348,976 499,195 579,722 7,319 825,000 570,000 1,324,195 1,157,041 8,380,266 8,506,017 14,279,414 14.485,161 368,976 346,484 120,774 - 44,086,092 44,932,080 58,855,256 59,763,725 67,235,522 68,269,742 141,604,377 139,677,663 15,517,459 14,523,549 (7,002,222) (4,898,647) $ 150,119,614 $ 149,302,565 YORBA LINDA WATER DISTRICT COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the year ended June 30, 2009 (With comparative totals for the year ended June 30, 2008) OPERATING REVENUES: Metered water sales Metered water sales restricted for debt service Sewer maintenance charges Construction water sales Irrigation sales Customer service fees Rents and royalties Outside of District water sales Unmetered water sales Other charges and services TOTAL OPERATING REVENUES OPERATING EXPENSES: Variable water costs Personnel services Supplies and services TOTAL OPERATING EXPENSES OPERATING LOSS BEFORE DEPRECIATION DEPRECIATION OPERATING LOSS NONOPERATING REVENUES (E PENSES): Property taxes - debt service Property taxes - operations Interest and investment earnings Other nonoperating revenues Interest expense Other expense TOTAL NONOPERATING REVENUES (E)CPF.hSES) NET LOSS BEFORE CAPITAL CONTRIBUTIONS CAPITAL CONTRIBUTIONS CHANGES IN NET ASSETS NET ASSETS - BEGINNING OF YEAR NET ASSETS - END OF YEAR See independent auditors' report and notes to basic financial statements. -26- 2009 2008 $ 16,188,560 3,022,468 1,259,723 302,312 84,631 215,273 41,566 20,559 8,208 182,463 21,325,763 $ 18,227,040 830,278 1,247,907 292,117 78,340 160,225 49,605 32,518 9,816 170,345 21,098,191 10, 859,328 10,516,507 6,498,959 5,751,384 4,151,058 4,361,512 21,509,345 20,629,403 (183,582) 468,788 4,167,958 3,572,726 (4,351.540) 6,883 1,276,638 689,108 479,911 (1,469,925) (177,553) 805,062 (3,546,478) (3,103,938) 5,713 1,257,943 1,508,193 270,429 (824,387) 133,604) 2,084,287 (1,019,651) 4,363,527 4,100,051 817,049 149,302,565 3,080,400 146.222.165 $ 150,119,614 $ 149,302,565 YORBA LINDA WATER DISTRICT STATEMENT OF CASH FLOWS For the year ended June 30, 2009 (With comparative totals for the year ended June 30, 2008) CASH FLOWS FROM OPERATING ACT =S: Cash received from customers Cash payments to employees for salaries and wages Cash payments to suppliers of goods and services NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Proceeds from property taxes and assessments Otherrevenue Other expenses NET CASH PROVIDED BY NONCAPITAL FINANCING ACTNITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Property taxes received for debt service Proceeds from capital contributions Acquisition and construction of capital assets Proceeds from sales of capital assets Proceeds from bond issuance Bond premium Payment of bond issuance costs Principal paid on long -term liability Interest paid on long -terns liability Proceeds from deposits and advances for construction NET CASH PROVIDED (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Sale/purchase of investments, net Interest and investment earnings NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQi3IVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR See independent auditors' report and notes to basic financial statements. -27- 20D9 2008 $ 23,377,263 (6,257,272) (15,152,340) 1.967.651 1,274,303 665,540 (142,195 $ 20,959,151 (5,722,039) (14,699,187) 537,925 1,253.746 270,836 (111,929) 1,797,648 1,412,653 6,883 623,292 (12,286,690) 1,635 (570,000) (2,157,836) 478,663 5,713 30,048 (21,653,453) 3,499 34,995,000 792,602 (615,757) (210,000) (464,595) (698,109) (13,904,053) 12,184,948 (5,364,774) 11,129,037 513,191 1,379,743 (4,851,583) 12,508,780 (14,990,337) 26,644,306 50,620,455 23,976,149 $ 35,630,118 $ 50,620.455 (Continued) YOiZBA LINDA WATER DISTRICT STATEMENT OF CASH FLOWS (CONTINUED) For the year ended June 30, 2009 (With comparative totals for the year ended June 30, 2008) RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating loss Adjustments to reconcile operating loss to net cash provided by operating activities: Depreciation Changes in operating assets and liabilities: (Increase) decrease in assets: Accounts receivable Inventory Prepaid expenses and other deposits Increase (decrease) in liabilities: Accounts payable and accrued expenses Accrued salaries and wages Accrued other post - employment benefits (OPEB) liability Accrued compensated absences Customer and other deposits Prepaid connection fees Total adjustments NET CASH PROVIDED BY OPERATING ACTIVITIES CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION: Unrestricted Restricted TOTAL CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION NONCASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES: Amortization related to long -term debt Capital contributions See independent auditors' report and notes to basic financial statements. -28- 2009 2008 $ (4,351,540) $ (3,103,938) 4,167,958 2,078,635 115,286 (781) (347,076) 90,924 120,774 29,989 70,801 (7,319) 3,572,726 (125,609) (23,809) (1,538) 164,580 12,842 16,502 26,169 6,319,191 3,641.863 $ 1,967,651 $ 537.925 $ 1,505,345 $ 5,342,253 34,124,773 45,278,202 $ 35,630,118 $ 50,620,455 $ 20,988 $ 3,374 S 3,416,512 S 3,514,722 NOTES TO BASIC FINANCIAL STATEMENTS -29- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2009 1. ORGANIZATION AND DESCRIPTION OF THE REPORTING ENTITY: The Yorba Linda Water District (the District) is an independent special district established in 1959, which operates under the authority of Division 12 of the California Water Code for the purpose of providing water and sewer services to the properties within the District. The District is governed by a five member board of Directors elected by the voters in the area to four -year terms. The District utilizes four districts which include Water, Sewer, Improvement District No. 1 and Improvement District No. 2. Water is provided to the entire service area. Sewer is provided to about two- thirds of the service area. Improvement District No. 1 provides capital facilities to an area of approximately 4,700 acres. Improvement District No. 2 provides capital facilities to an area of approximately 3,200 acres. The District's service area includes Yorba Linda and portions of Placentia, Anaheim, Brea, and areas of unincorporated Orange County. The District provides water and sewer service to approximately 2.3,700 residents. The criteria used in determining the scope of the reporting entity are based on the provisions of GASB Statement 14. The District is the primary government unit. Component units are those entities which are financially accountable to the primary government, either because the District appoints a voting majority or the component unit's board, or because the component unit will provide a financial benefit or impose a financial burden on the District. The District's reporting entity includes the Yorba Linda Water District Public Financing Corporation, a California nonprofit public benefit corporation, formed in July 2003 for the purpose of providing assistance to the District and other public agencies in the State of California of which the District is a member, or is otherwise engaged with in the financing, refinancing, acquiring, constructing and rehabilitating of facilities, land and equipment, in the sale or leasing of facilities, land and equipment for the use, benefit and enjoyment of the public served by such agencies and any other purpose incidental thereto). Although the District and the Public Facilities Corporation are legally separate entities, the District's Board of Directors is financially responsible for the Public Financing Corporation and, therefore, the accompanying financial statements include the accounts and records of the Public Financing Corporation using the blending method as required by accounting principles generally accepted in the United States of America. There are no separate financial statements for the Public Financing Corporation. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: a. Basic Financial Statements: The basic financial statements are comprised of the Combined Statements of Net Assets, the Combined Statements of Revenues, Expenses and Changes in Net Assets, the Statements of Cash Flows and the notes to the basic financial statements. See independent auditors' report. -30- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): b. Basis of Presentation: The accounts of the District are 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, including depreciation) 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. The District has elected under Governmental Accounting Standards Board (GASB) Statement 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, to apply all GASB pronouncements as well as any applicable pronouncements of the Financial Accounting Standards Board (FASB), the Accounting Principles Board (APB), or any Accounting Research Bulletins (ARB) issued on or before November 30, 1989, unless they contradict or conflict with GASB pronouncements. c. Measurement Focus and Basis of Accounting: Measurement focus is a term used to describe "which" transactions are recorded within the various 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 ". Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. d. Net Assets: In the Statement of Net Assets, net assets are classified in the following categories: Invested in capital assets, net of related debt - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets. Restricted net assets - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments. Unrestricted net assets - This amount is all net assets that do not meet the definition of "invested in capital assets, net of related debt" or "restricted net assets ". When both restricted and unrestricted resources are available for use, the District may use restricted resources or unrestricted resources based on the Board's discretion. See independent auditors' report. -31- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): e. Operating Revenues and Expenses: Operating revenues, such as charges for services (water sales) result from exchange transactions associated with the principal activity of the District. Nonoperating revenues, such as property taxes and assessments, and investment income, result from nonexchange transactions or ancillary activities in which the District receives value without directly giving equal value in exchange. Operating expenses include the cost of sales and services, administrative expenses and depreciation on capital assets. All expenses not meeting this definition are reported as nonoperating expenses. f. Cash and Cash Equivalents: The District considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. g. Investments and Investment Policy: The District has adopted an investment policy directing the District's General Manager to deposit funds in financial institutions. Investments are stated at fair value which represents the quoted or stated market value. 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. Accounts Receivable: The District extends credit to customers in the normal course of operations. Management has evaluated the accounts and believes they are all collectible. Management evaluates all accounts receivable and if it is determined that they are uncollectible they are written off as a bad debt expense. A charge of $27,135 and $13,431 were made to bad debt expense for the fiscal years ended June 30, 2009 and 2008, respectively. See independent auditors' report. _32_ YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 Z. SUMMARY OF SIGNIFICANT ACCOUNTING :POLICIES (CONTINUED): i. Property Taxes and Assessments: The Orange County Assessor's Office assesses all real and personal property within the County each year. The Orange County Tax Collector's Office bills and collects the District's share of property taxes and assessments. The Orange County Treasurer's Office remits current and delinquent property tax collections to the District throughout the year. Property taxes in California are levied in accordance with Article XIIIA of the State Constitution at I% of countywide assessed valuations. This levy is allocated pursuant to state law to the appropriate units of local governments. Property taxes receivable at year -end are related to property taxes collected by the Change County Tax Collector which have not been credited to the District's cash balance as of June 30. The property tax calendar is as follows: Lien Date: Levy Date: Due Dates: Collection Dates: j. Prepaid Expenses: January 1 July 1 First Installment - November 1 Second Installment - March 1 First Installment - December 10 Second Installment - April 10 Certain payments to vendors reflects costs or deposits applicable to future accounting periods and are recorded as prepaid items in the basic financial statements. k. Inventory: Inventory consists primarily of materials and supplies used in the construction and maintenance of the water and sewer systems and are stated at cost using the average -cost method on a first in, first out basis. 1. Capital Assets: Capital assets acquired and/or constructed are capitalized at historical cost. District policy has set the capitalization threshold for reporting capital assets at $5,000. Contributed assets are recorded at estimated fair market value at the date of contribution. Upon retirement or other disposition of capital assets, the cost and related accumulated depreciation are removed from the respective balances and any gains or losses are recognized. See independent auditors' report. -33 - YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): 1. Capital Assets (Continued): Depreciation is recorded on the straight -line basis over the estimated useful lives of the assets as follows:. Source of Supply 10 to 75 years Pumping Plant 10 to 40 years Water Treatment Plant 15 to 40 years Transmission and Distribution Plant 5 to 100 years General Plant 3 to 40 years m. Bond Issuance Costs: Bond issuance costs are amortized on a straight -line methodology based on the estimated term of the related bond debt. Bond issuance costs were $815,581 and $845,507 net of accumulated amortization of $82,204 and $52,278 at June 30, 2009 and 2008, respectively. n. Interest Expense: The District incurs interest charges on the Certificates of Participation. Interest expense of $580,963 has been capitalized as an addition to the cost of construction for the year ended June 30, 2009. o. Compensated Absences: The District's policy is to permit employees to accumulate earned vacation and sick leave. The liability for vested vacation and sick leave is recorded as an expense when earned. Employees may carry forward up to one and one -half years of earned vacation days and an unlimited number of sick leave days. Upon termination or retirement, permanent employees are entitled to receive compensation at their current base salary for all unused vacation leave except for those employees that have not completed the probationary period. Permanent employees that retire in accordance with the Public Employee's Retirement. System qualifications are entitled to receive compensation at their current base salary for three - eighths of all unused sick leave. See independent auditors' report. -34- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2449 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): p. Deferred Credits: Deferred credits represent customer refunds that have not been cashed. q. Construction Advances and Deposits: Construction deposits are collected by the District to cover the cost of construction projects within the District. Funds in excess of project costs are refunded to the customer. r. Construction Bonding Deposits: The District's policy is to maintain certain bonding requirements for water and sewer construction projects performed within District boundaries to ensure the proper completion of the project. Deposited amounts are refunded upon final approval of the project. s. Prepaid Connection Fees: Connection fees are collected by the District to cover the cost of service connections within the District. Funds in excess of connection costs are refunded to the customer. t. Deferred Annexation Revenue: The District collects a fee from newly annexed developments for all residential and commercial properties. This fee is in -lieu of the District's share of the 1 % property tax revenue which the District no longer received post - Proposition 13. The fee is a present worth value required to generate a forty year revenue stream equivalent to the lost property tax revenue. It is calculated based on the fair market value estimate of the improved property at the time the fee is collected and based on the current rate of return on the District's investments. The deposit balance accrues interest and provides a source of operational revenue for the District. This deferred revenue source may be used for capital facilities in the future if approved by the Board. u. Water and Sewer Sales: The District recognizes water and sewer service charges based on cycle billings rendered to the customers each month. See independent auditors' report. -35- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): v. Capital Contributions: Capital contributions represent cash and capital asset additions contributed to the District by property owners or real estate developers desiring services that require capital expenditures or capacity commitment. w. Budgetary Policies: The District adopts a two -year nonappropriated budget for planning, control and evaluation purposes. Budgetary control and evaluation are affected by comparisons of actual revenues and expenses with planned revenues and expenses for the period. Encumbrance accounting is not used to account for commitments related to unperformed contracts for construction and Services. x. Use of Estimates: The financial statements are prepared in conformity 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. 3. CASH AND INVESTMENTS: Cash and Investments: Cash and investments as of June 30; 2009 are reported in the accompanying comparative statements of net assets as follows: Current Assets: Cash and cash equivalents Cash and investments Restricted Assets: Cash and cash equivalents Cash and investments Total Cash and Investments See independent auditors' report. Improvement Improvement District District Water Sewer No.I No.2 Total $ 431,660 $ 1,073,685 $ 8,31 3,971 934,781 $ - $ 1,505,345 - 9,248,752 23,988,171 - 2,226,493 7,910,509 34,124,773 - - 2.100.592 1,299.217 3.399.809 -36- _.726 S_4U78,679 3 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 CASH AND INVESTMENTS (CONTINUED): Cash and Investments (Continued): Cash and investments as of June 30, 2009 consisted of the following: Investments Authorized by the California Government Code and the District's Investment Policy: The table below identifies the investment types that are authorized for the District by the California Government Code (or the District's investment policy, where more restrictive). The table also identifies certain provisions of the Califomia Government Code (or the District's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the District, rather than the general provisions of the California Government Code or the District's investment policy. Maximum Improvement Improvement Percentage Authorized Investment Type Maturity of Portfolio District District None Local Agency Investment Fund (LAIF) Water None __ No. i No. 2 Total Cash on hand $ 1,200 _S_ewer $ - $ - - $ 1,200 Deposits (overdraft) with financial institutions (1,202,940) 726,593 1,446,124 684,703 1,654.480 Escrow deposits 1,421,185 - - 53,615 1,074,800 Investments 32,914,357 1,281.873 2.880.561 8,471.408 45,548,199 Total Cash and Investments $32,713.802 �4$4tk L 6,37 , 85 $ 9- ?09,,726 $ 48.27$,679 Investments Authorized by the California Government Code and the District's Investment Policy: The table below identifies the investment types that are authorized for the District by the California Government Code (or the District's investment policy, where more restrictive). The table also identifies certain provisions of the Califomia Government Code (or the District's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the District, rather than the general provisions of the California Government Code or the District's investment policy. * Excluding amounts held restrictions. NIA - Not Applicable See independent auditors' report. Maximum Investment in One Issuer None $10 million $10 million None None None None None None None by bond trustee that are not subject to California Government Code -37- Maximum Maximum Percentage Authorized Investment Type Maturity of Portfolio Bank or Savings and Loans S years None Local Agency Investment Fund (LAIF) NIA None Orange County Commingled. Investment Pool NIA None California Asset Management Program NIA None U.S Treasury Bills, Notes and Bonds 5 years None U.S. Government Sponsored Enterprise Securities 5 years 50x/0 Corporate Bonds 5 years 30% Bankers Acceptances 180 days 10% Commercial Paper 270 days 25% Money Market Funds N/A None * Excluding amounts held restrictions. NIA - Not Applicable See independent auditors' report. Maximum Investment in One Issuer None $10 million $10 million None None None None None None None by bond trustee that are not subject to California Government Code -37- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 3. CASH AND INVESTMENTS (CONTINUED); Investments Authorized by Deist Agreements: Investments of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the District's investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk and concentration of risk. Authorized Investment Type Cash U.S. Treasury Bills, Notes and Bonds U.S. Treasury Obligations Resolution Funding Corp. (REFCORP) Prefunded Municipal Bonds U.S. Government Sponsored Enterprise Securities Commercial Paper Money Market Funds Certificates of Deposits Guaranteed Investment Contracts Bankers Acceptance Repurchase Agreements Local Agency Investment Fund Disclosures Relating to Interest Rate Risk: Maximum Maturity None None None None None Maximum Percentage Allowed None None None None None Maximum Investment in One Issuer None None None None None None None None None None None None None None None None None None None None 1 year None None 30 days None None None None None Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter tern and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity as necessary to provide the cash flaw and liquidity needed for operations. See independent auditors' report. -38- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 3. CASH AND INVESTMENTS (CONTINUED): Disclosures Relating to Interest Rate Risk (Continued): Information about the sensitivity of the fair values of the District's investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the District's investments by maturity as of June 30, 2009. Investment Type Money market funds Commercial paper California Asset Management Program U.S. Government Sponsored Enterprise Securities Corporate obligations U.S. Treasury Obligations Held by bond trustee: Money market funds Disclosures Relating to Credit Risk: Remaining Maturity (in Months 12 Months 13-24 Total or Less Months S 3,746,795 S 3,746,795 $ - 2,895,951 2,895,951 - 6,689,780 6,689,780 - 7,401,321 6,392,000 1,009,321 2,273,249 1,939,406 333,843 1,027,773 1,027,773 - 21,513,330 21513,330 - $ 45,548,192 $ 44- 205,035 $ 1. 43.164 Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented in the following table are the minimum rating required by (where applicable) the California Government. Code, the District's investment policy, or debt agreements, and the actual Standard and Poor's credit rating as of year end for each investment type. Investment Money market funds Commercial paper California Asset Management Program U.S. Government Sponsored Enterprise securities Corporate obligations U.S. Treasury Obligations Held by bond trustee: Minimum Not Legal Required --Rum— Total jg_�S Rated AAA _ AA A+ A A -1+ A -1 AAA S 3,746,795 S S 3,746,795 S S $ - S A -1 2,895,951 - 1449,030 1,446921 NIA 6,689,780 6,689,780 NIA 7,401.321 7,401321 - - - A 2,273.249 500.016 835,120 938,113 NIA 1.027,773 1.027,773 - - - Money market funds AAA 2LS 13.330 - 21.513.330 $45.548.199 R 1 427.773 U9.3U 228 a soa_alb See independent auditors' report. -39- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 3. CASH AND INVESTMENTS (CONTINUED): Concentration of Credit Risk: The investment policy of the District contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Custodial Credit Risk: Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the District will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker - dealer) to a transaction, the District will not be able to recover the value of its investment or collateral securities that are in the possession of another party. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government's indirect investment in securities through the use of mutual funds or government investment pools (such as LA1F). The California Government Code and the District's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governrental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure District deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. The District had deposits with bank balances of $1,586,768 and $1,722,724 as of June 30, 2009 and 2008, respectively. Of the bank balances, up to $250,000 and $100,000, as of June 30, 2009 and 2008, are federally insured and the remaining balance is collateralized in accordance with the Code; however, the collateralized securities are not held in the District's name. See independent auditors' report. -40- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 3. CASH AND INVESTMENTS (CONTINUED): Investment in California Asset Management Program: The California Asset Management Program (the CAMP) is a public joint powers authority which provides California Public Agencies with investment management services for surplus funds and comprehensive investment management, accounting and arbitrage rebate calculation services for proceeds of tax - exempt financings. The CAMP currently offers the Cash Reserve Portfolio, a short - terns investment portfolio, as a means for Public Agencies to invest these funds. Public Agencies that invest in the Pool (Participants) purchase shares of beneficial interest. Participants may also establish individual, professionally managed investment accounts (Individual Portfolios) by separate agreement with the Investment Advisor. Investments in the Pools and Individual Portfolios are made only in investments in which Public Agencies generally are permitted by California statute. The CAMP may reject any investment and may limit the size of a Participant's account. The Pool seeks to maintain, but does not guarantee, a constant net asset value of $1.00 per share. A Participant may withdraw funds from its Pool accounts at any time by check or wire transfers. Requests for wire transfers must be made by 9:00 a.m. that day. Fair value of the Pool is determined by the fair value per share of the Pool's underlying portfolio. 4. RESTRICTED ASSETS: Restricted assets were provided by, and are to be used for the following as of June 30, 2009 and 2008: Source Bond proceeds, taxes, assessments and interest Bond proceeds, taxes, assessments and interest Custodial receipts Water sales Bond proceeds, taxes, assessments and interest Use Construction of assets in Improvement District No. 1 Construction of assets in Improvement District No. 2 Custodial costs Debt service Construction of capital assets expansion. See independent auditors' report. -41- 2009 2008 $ 4,326,685 9,156,111 1,074,800 1,453,657 $ 4,128,550 9,439,735 796,827 830,278 21,518,730 32,151,901 $ 37,529,983 S 47 291 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 5. CAPITAL ASSETS; Changes in capital assets for the year ended June 30, 2009 is as follows: Capital assets, being depreciated: Source of supply Balance Balance - July 1. 2008 Additions Deletions June 30, 2009 Capital assets, not being depreciated: 6,563,390 (369,682) Land, mineral and water rights $ 347,490 $ - $ - $ 347,490 Construction in progress 29,685119 9,048,353 (20,208,978) 18,524,594 Total capital assets, not 128,314,764 20,476,333 being depreciated 30,032,709 9,048,353 (2Q208,978) 18 872,084 Capital assets, being depreciated: Source of supply 5,775,674 - - 5,775,674 Pumping plant 10,674,112 6,563,390 (369,682) 16,867,820 Water treatment plant 2,556,613 - - 2,556,613 Transmission and distribution plant 128,314,764 20,476,333 (106,501) 148,684,596 General plant 17.281,037 405,067 (33,143) 17,652 961 Total capital assets, Total accumulated depreciation ep (41,561,713) being depreciated 164,602,200 27,444,790 (509,326) 191,537,664 Less accumulated depreciation for: Source of supply (1,232,397) (144,358) - (1,376,755) Pumping plant (2,957,268) (455,989) 207,638 (3,205,619) Water treatment plant (580,067) (117,449) - (697,516) Transmission and distribution plant (33,012,241) (2,657,339) 81,281 (35,588,299) General plant (3,779,740) (792,823) 33,144 (4,539,419) Total accumulated depreciation ep (41,561,713) 4.1 67,958) 322,063 (45.407.608) Total capital assets, being depreciated, net 123.040,487 23,276,832 (187,263) 146,130,056 T Total capital assets, net ,Q 3, 9 $321= g5 (20.396 241)x^.165,002,.1.4.0 See independent auditors' report. -42- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 5. CAPITALASSETS (CONTINUED): Changes in capital assets for the year ended June 30, 2008 is as follows: Capital assets, not being depreciated: Land, mineral and water rights Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Source of supply Pumping plant Water treatment plant Transmission and distribution plant General plant Total capital assets, being depreciated Less accumulated depreciation for: Source of supply Pumping plant Water treatment plant Transmission and distribution plant General plant Total accumulated depreciation Total capital assets, being depreciated, net Total capital assets, net Balance Balance July 1, 2007 Additions Deletions June 30, 2008 $ 347,490 $ - $ - $ 347,490 18,689,164 21,433,164 (10.437,109) _ 29,685,219 19,036,654 21,433,164 [10,437,109} 30,032,709 5,775,674 - - 5,775,674 11,039,201 - (365,089) 10,674,112 2,594,232 - (37,619) 2,556,613 125,336,627 4,560,702 (1,582,565) 128,314,764 8,076,971 9,705,775 _ {501,709} 17,281,037 152,822,705 14,266,477 (2,486,982) 164.602,200 (1,088,039) (144,358) - (1,232,397) (2,960,100) (362,257) 365,089 (2,957,268) (500,236) (117,450) 37,619 (580,067) (32,076,917) (2,513,983) 1,578,659 (33,012,241) (3,$46,771} (434,678) 501,709 3,779 740) (40,472,063) (3,572,726) 1483,076 (41,- 561,713) 112350,642 10.693,751 (3,906) 123,040,487 Depreciation expense for the depreciable capital assets was $4,167,958 and $3,572,726 in 2009 and 2008, respectively. The District has been involved in various construction projects throughout the year. The balance of construction in progress at June 30, 2009 and 2008 are $18,524,594 and $29,685,219, respectively. See independent auditors' report. -43- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 6. COMPENSATED ABSENCES: Compensated absences are comprised of unpaid vacation leave, sick leave and compensating time off which are accrued as earned. The District's liability for compensated absences is determined annually. The following is a summary of changes to compensated absences balances at .tune 30, 2009: Balance Balance Due Within July 1, 2008 Earned Taken June 30. 2009 One Year S 461-979 - 399,812 $ (369.823) $ �..49_l,_468 S—_122,222 The following is a summary of changes to compensated absences balances at :tune 30, 2008: Balance July 1, 2007 S 445.477 7. LONG -TERM LIABILITIES: Earned 372.441 Taken Balance June 30, 2008 461.979 Changes in long -term liabilities for the year ended June 30, 2009 were as follows: 2003 Revenue Certificates of Participation 2008 Revenue Certificates of Participation Subtotal Add (Less): Discount Premium Total Due Within One Year 115.495 Beginning Ending Due Within Balance Additions Reductions Balance One Year $ 9,860,000 $ - $ (215,000) $ 9,645,000 $ 220,000 34.995.000 (355,000) 34.640,000 605.000 44,855,000 (570,000) 44,285,000 L__K5,j7�0 (136,715) - 5,432 (131,283) 783,795 - (26,420) 757375 45,502,080 _$ _ (590.988) $44.911.042 2003 Revenue Certificates of Participation: In August 2003, the Public Financing Corporation issued $10,645,000 2003 Revenue Certificates of Participation for the purpose of financing the Highland Reservoir Renovation and Richfield -Phase 3 Renovation Project. The Certificates bear interest ranging from 2% to 5 %, payable semiannually on April 1 and October 1, commencing April 1, 2004. The Term Certificates of $2,295,000 are due on October 1, 2028 and the Term Certificates of $2,930,000 are due on October 1, 2033. See independent auditors' report. -44- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 7. LONG -TERM LIABILITIES (CONTINUED): 2003 Revenue Certificates of Participation (Continued ): A surety bond for $679,137 was issued by Financial Guaranty Insurance Company (FGIC ). FGIC is not rated by Moody's Investors' Service, Standard & Poor's or Fitch investors' Service. At June 30, 2009 the 2003 Certificates outstanding balance was $9,645,000. The Certificates are obligations of the Corporation payable solely from payments received from the District pursuant to the Installment Purchase Agreement, by and between the District and the Corporation. The Installment Purchase Agreement requires the District to fix, prescribe and collect rates and charges for the water service which will be at least sufficient to yield during each fiscal year net revenues equal to 110% of the debt service for such fiscal year. For fiscal year 2009, the net revenues equal to 81 % of the debt service. The annual debt service requirements for the 2003 Revenue Certificates of Participation outstanding at June 30, 2009 are as follows: Year Endin 2010 2011 2012 2013 2014 2015-2019 2020-2024 2025-2029 2030-2034 Subtotal Less: Discount Total 2008 Revenue Certificates of Participation: Principal $ 220,000 225,000 235,000 245,000 255,000 1,440,000 1,800,000 2,295,000 2,930,000 9,645,000 (131,283} $ 913M Interest 453,074 445,726 437,382 428,076 418,076 1,914,526 1,537,969 1,030,625 380.750 7,046,204 ! 1' Total $ 673,074 670,726 672,382 673,076 673,076 3,354,526 3,337,969 3,325,625 3,3 1 O 750 16,691,204 (131.283) $ 16.559.921 In February 2008, the District issued $34,995,000 2008 Revenue Certificates of Participation for the purpose of financing the 2008 Capital Improvement Projects. The Certificates bear interest ranging from 4% to 5 %, payable semiannually on April 1 and October 1, commencing October 1, 2008. The Term Certificates of $10,885,000 are due on October 1, 2038. The legal reserve requirement of $2,147,096 was fully funded at June 30, 2009. At June 30, 2009 the 2008 Certificates outstanding balance was $34,640,000. See independent auditors' report. -45- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2409 7. LONG -TERM LIABILITIES (CONTINUED): 2008 Revenue Certificates of Participation (Continued): The Certificates are obligations of the Corporation payable solely from payments received from the District pursuant to the Installment Purchase Agreement, by and between the District and the Corporation. The Installment Purchase Agreement requires the District to fix, prescribe and collect rates and charges for the water service which will be at least sufficient to yield during each fiscal year net revenues equal to 110% of the debt service for such fiscal year. For fiscal year 2009, the net revenues equal to 81 % of the debt service. The annual debt service requirements for the 2008 Revenue Certificates of Participation outstanding at dune 30, 2009 are as follows: - Year Ending 2010 2011 2012 2013 2014 2015-2019 2020-2024 2025-2029 2030-2034 2035-2039 Subtotal Add: Premium Total Principal $ 605,000 630,000 655,000 680,000 705,004 3,980,404 4,845,000 5,920,000 7,335,000 9.285,000 34,640,000 757,375 35.397,375 Interest $ 1,528,196 1,503,496 1 ,477,796 1,451,096 1,423,396 6,660,880 5,780,980 4,674,645 3,211,690 1.205.625 28,917,800 ' :11 8. NET ASSETS INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT: Total 2,133,196 2,133,496 2,1 32,796 2,131,096 2,128,396 14,640,880 10,625,980 10,594,645 10,546,690 10,490,625 63,557,800 757,375 64.315,175 The balance of net investment in capital assets consisted of the following as of June 30, 2009 and 2008: Capital assets, net of accumulated depreciation Certificates of participation - current Certificates of participation - long -term Unspent debt proceeds Net assets invested in capital assets, net of related debt See independent auditors' report. _46_ 2009 $ 165,002,140 (825,000) (44,086,092) 21.513,329 2008 $ 153,073,196 (570,000) (44,932,080) 32,106,547 141,604,377 139,677.6_ YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 9. DEFINED BENEFIT PENSION PLAN: a. Plan Description: The District contributes to the California Employees Retirement System (CalPERS), an agent multiple- employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost -of- living adjustments, and death benefits to plan members and beneficiaries. Ca1PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and District ordinance. Copies of CalPERS' annual financial report may be obtained from their Executive Office located at, 400 P Street, Sacramento, CA 95814. b. Funding Policy: The contribution rate for plan members in the CaIPERS 2.0% at 55 Risk Pool Retirement Plan is 7% of their annual covered salary. The District makes these contributions required of District employees on their behalf and for their account. Also, the District is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The required employer contribution rates for fiscal year 2009, 2008 and 2007 were 9.886%,9.471% and 7.930 %, respectively. The contribution requirements of the plan members are established by State statute, and the employer contribution rate is established and may be amended by CalPERS. For fiscal years 2009, 2008 and 2007 the District's annual contribution were $847,632, $763,653 and $613,905, respectively, for CalPERS and was equal to the District's required and actual contributions for each year. 10. OTHER POST EMPLOYMENT BENEFITS (OPEB): a. Plan Description: The District, through a single employer defined benefit plan, provides post - employment health care benefits. Specifically, the District provides health insurance for its retired employees and directors, their dependent spouses (if married and covered on the District's plan at time of retirement), or survivors in accordance with Board resolutions. Medical coverage is provided for retired employees who are age 50 or over and who have a minimum of 5 years service with the District. The District pays 100% of the premium for the retiree and the dependent coverage, for one year for every three years of service. Medical coverage is provided for the surviving spouse of retired employees and the surviving spouse of active employees who upon death had attained age 50 and who had a minimum of 5 years of service with the District, for one year for every three years of service. The plan does not provide a publicly available financial report. See independent auditors' report. -47- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 10. OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED): b. Funding Policy: The contribution requirements of plan members and the District are established and may be amended by the District, District's Board of Directors, and/or the employee associations. Currently, contributions are not required from plan members. The District is currently funding this OPEB obligation on a pay -as- you -go basis. For the year ended June 30, 2009, the District paid $97,205 in health care costs for its retirees and their covered dependents. c. Annual OPEB Cost and Net OPEB Obligation: The District's annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded liabilities of the plan over a period not to exceed thirty years. The following table shows the components of the District's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the District's net OPEB obligation to the Retiree Health Plan: Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost (expense) Actual contributions made Increase in net OPEB obligation Net OPEB Obligation - beginning of year Net OPEB Obligation - end of year $ 217,979 217,979 97,205 120,774 $ 20.774 The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the year ended June 30, 2009, the first year in which GASB Statement 45 is required to be implemented, were as follows: Fiscal Year Ended 6/30/09 Annual OPEB Cost $ 217,979 Percentage of Annual OPEB Costs Contributed 44.64% See independent auditors' report. -48- Net OPEB Obligation $ 120,774 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 10. OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED): d. Funded Status and Funding Progress: As of June 1, 2009, the first actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability for benefits was $1,740,127, and the actuarial value of assets was zero, resulting in an unfunded accrued liability (UAL) of $1,740,127. The covered payroll (annual payroll of active employees covered by the plan) was $4,983,653 and the ratio of the UAL to the covered payroll was 34.9 %. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about rates of employee turnover, retirement, mortality, as well as economic assumptions regarding claim costs per retiree, healthcare inflation and interest rates. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. e. Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short -term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long -term perspective of the calculations. In the June 1, 2009 actuarial investment valuation, the entry age normal cost method was used. The actuarial assumptions included an interest rate of 5% per annum, a projected salary increase of 3.0% per annum and a health inflation rate of 4.0% per annum. 11. RISK MANAGEMENT: The District is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, injuries to employees and natural disasters. In an effort to manage its risk exposure, the District is a member of the Association of California Water Agencies Joint Powers Insurance Authority (the Authority). See independent auditors' report. -49- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 11. RISK MANAGEMENT (CONTINUED): The Authority is a risk - pooling self - insurance authority, created under provisions of California Government Code Sections 5500 et. seq. The purpose of the Authority is to arrange and administer programs of insurance for the pooling of self- insured losses and to purchase excess insurance coverage. At June 30, 2009, as a member of the Authority, the District participated in the insurance programs as follows: General and auto liability, public officials and employee's error and omissions: Total risk financing self- insurance limits of $1,000,000, combined single limit at $1,000,000 per occurrence. The District purchased additional excess coverage layers: $59 million for general, auto and public officials liability, which increases the limits on the insurance coverage noted above. • Employee dishonesty coverage up to $100,000 per loss includes public employee dishonesty, forgery or alteration and theft, disappearance and destruction coverages, subject to a $1,000 deductible per occurrence. • Property loss is paid at the replacement cost for property on file, if replaced within two years after the loss, otherwise paid on an actual cash value basis. ACWA JPIA is self - insured for the first $50,000, and then purchased excess coverage up to $100 million, subject to a $2,500 deductible, except for a $1,000 deductible on vehicles. • Boiler and machinery coverage for the replacement cost up to $100 million per occurrence, subject to various deductibles depending on the type of equipment. • Workers' compensation insurance up to California statutory limits for all work related injuries /illnesses covered by California law. Settled claims have not exceeded any of the coverage amounts in any of the last three fiscal years and there were no reductions in the District's insurance coverage during the years ended 2009, 2008 and 2007. The coverage limits were increased from $40,000,000 to $60,000,000 for the year ended June 30, 2009 for general and auto liability, public officials and employee's error and omissions. Liabilities are recorded when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated net of the respective insurance coverage. Liabilities include an amount for claims that have been incurred but not reported (IBNR). There were no IBNR clams payable as of June 30, 2009, 2008 and 2007. See independent auditors' report. -50- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 12. COMMITMENTS AND CONTINGENCIES: Construction Contracts: The District has a variety of agreements with private parties relating to the installation, improvement or modification of water facilities and distribution systems within its service area. The financing of such construction contracts is being provided primarily from the District's replacement reserves and advances for construction. The District has committed to approximately $11,244,461 of open construction contracts as of June 30, 2009. Construction contracts include: Project Name Design of Hidden Hills Reservoir (2MG) CM for Highland Reservoir Replacement (6MG) Geotechnical support services for Highland Reservoir Replacement Environmental support services for Highland Reservoir Replacement Construction of Highland Reservoir Replacement (6MG) Construction of 18 -inch and 36 -inch Transmission Pipelines CM for 18 -inch and 36 -inch Bastanchury Transmission Pipelines Design, CM and Inspection of Lakeview Avenue Res. GIS data conversion contract GIS parcel database 5 -year purchase agreement Zone reconfiguration project Hidden Hills Reservoir construction Hidden Hills Reservoir construction management Hidden. Hills Reservoir geotechnical services Hidden Hills Reservoir construction support services Zone Reconfiguration Project construction Zone Reconfiguration Project construction materials testing Lakeview Sewer Lift Station See independent auditors' report. -51- Total Construction Balance Approved Costs to Contract to Date Cow $ 322,769 $ 319,541 $ 3,228 605,856 268,650 337,206 86,200 35,308 50,892 37,951 29,309 8,642 9,384,921 4,550,577 4,834,344 1,011,222 900,717 110,505 142,780 136,520 6,260 1,626,582 1,553,625 72,957 183,576 181,496 2,080 42,118 24,771 17,347 2.15,751 172,292 43,459 5,012,458 845,350 4,167,108 348,520 9,983 338,537 113,470 789 112,681 267,500 42,800 224,700 1,099,000 218,725 880,275 39,400 8,120 31,280 X19 9_60 17,000 2,.960 _ $ 9.315.573 LILL44.4 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 12. COMMITMENTS AND CONTINGENCIES: Litigation: In November 2008, a series of wildfires, also known as the Yorba Linda - Corona Fire by the news media, or Triangle Complex Fire, spread across the communities of Corona, Chino Hills, Yorba Linda, Anaheim Hills, and Brea in Orange and Riverside, County, California, and also spread to Diamond Bar in Los Angeles County. The fire burned about 30,305 acres, destroyed about 200 structures, and forced the evacuations of about 7,000 homes. There are claims being asserted against the District by homeowners and others damaged by the fires. As a member of ACWA JPIA (see Note 11), these claims are currently handled by the JPIA's legal counsel. The District's management believes the ultimate outcome of these claims will be not exceed the District's insurance coverage amounts. See independent auditors' report. -52- REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFIT PLAN SCHEDULE OF FUNDING PROGRESS - 53 - YORBA LINDA WATER DISTRICT REQUIRED SUPPLEMENTARY INFORMATION For the year ended June 30, 2009 OTHER POST - EMPLOYMENT BENEFIT PLAN SCHEDULE OF FUNDING PROGRESS Retiree Health Plan See independent auditors' report. -54- Actuarial Value Unfunded Annual UI as a Actuarial Accrued of Assets Liability Funded Covered %of Payroll Valuation Liability (AVA) (ijZ) Ratio Payroll Percentage of Date (a) (b) (a) - (b) (b) /(a) (c) L(a)-(b)] /(c) 06/01/09 $ 1,740,127 $ - $ 1,740,127 0.00 %, $ 4,983,653 34.92% See independent auditors' report. -54- SUPPLEMENTARY INFORMATION -55- YORBA LINDA WATER DISTRICT COMBINING SCHEDULE NET ASSETS June 30, 2009 ASSETS CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents Cash and investments Accrued interest receivable Accounts receivable - water and sewer services Accounts receivable - property taxes Construction advances and deposits Inventory Prepaid expenses and other deposits TOTAL UNRESTRICTED ASSETS RESTRICTED ASSETS: Cash and cash equivalents Cash and investments Accrued interest receivable TOTAL RESTRICTED ASSETS TOTAL CURRENT ASSETS NONCURRENT ASSETS: CAPITAL ASSETS: Capital assets, not being depreciated Capital assets, being depreciated Less accumulated deprecation TOTAL CAPITAL ASSETS, NET OTHER ASSETS: Bond issuance costs TOTAL NONCURRENT ASSETS TOTAL ASSETS See independent auditors' report. IS7E Water Sewer $ 431,660 $ 1,073,685 8,313,971 934,781 21,056 2,367 2,399,492 165,267 27,229 1,954 165,187 2,889 282,699 - 176,585 - 11,817,879 2,180,943 23,988,171 - 5,401 - 23,993,572 - 35,811,451 2,180,943 15,373,864 566,546 126,071,542 29,992,128 (28,117,877) (7,146,143) 113,327,529 23,412,531 815,581 - 114,143,110 23,412,531 149,954,561 25,593,474 Improvement Improvement District No. 1 District No. 2 Totals 1,505,345 9,248,752 5,320 3,290 31033 - - 2,564,759 29,183 168,076 282,699 176,585 5320 3,290 14,007,432 2,226,093 7,910,509 34,124,773 2,100,592 1,299,217 3,399,809 - - 5,401 4,326,685 9,209,726 37,529,983 4,332,005 9,213,016 51,537,415 820,900 2,110,774 18,872,084 17,920,588 17,553,406 191,537,664 (5,003,374) (5,140,214 ) (45,407,608) 13, 738,114 14,523,966 165,002,140 815,581 13,738,114 14,523,966 165,817,721 18,070,119 23,736,982 217,355,136 57 YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET ASSETS (CONTINUED) June 30, 2009 LIABILITIES CURRENT LIAI3II.TTIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable and accrued. expenses Accrued salaries and wages Accrued compensated absences Customer and other deposits Construction bonding deposits Deferred credits TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS PAYABLE FROM RESTRICTED ASSETS: Accrued interest payable Certificates of Participation - current portion TOTAL PAYABLE FROM RESTRICTED ASSETS TOTAL CURRENT LIABILITIES LONG -TERM LIABILITIES (LESS CURRENT PORTION): Deferred annexation revenue Accrued compensated absences Accrued OPEB liability Certificates of Participation TOTAL LONG -TERM LIABILITIES (LESS CURRENT PORTION) TOTAL LIABILITIES NET ASSETS: Invested in capital assets, net of related debt Restricted Unrestricted TOTAL NET ASSETS See independent auditors' report. -58- Water $ 4,820,989 164,871 122,992 83,215 88,742 589,938 Sewer $ 64,473 8,914 394,126 44,337 5,870,747 511,850 499,195 - 825,000 - 1,324,195 - 7,194,942 511,850 14,279,414 - 368,976 - 110,721 10,053 44,086,092 - 58,845,203 10,053 66,040,145 521,903 89,929,766 23,412,531 2,025,385 (44,337) (8,040,735) 1,703,377 $ 83,914,416 $ 25,071,571 Improvement Improvement District No. 1 District No. 2 Totals $ 234,259 $ 438,421 $ 5,558,142 - 794 174,579 - 122,992 477,341 133,079 589,938 234.259 439,215 7,056,071 499,195 825,000 1,324,195 234,259 439,215 8,380,266 14,279,414 368,976 120,774 44,086,092 58.855 256 234 -259 439.215 67,235,522 13,738,114 14,523,966 141,604,377 4,326,685 9,209,726 15,517,459 (228,939) (435,925) (7,002,22 $ 17,835,860 $ 23,297,767 $ 150,119,614 _$9- YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the year ended June 30, 2009 OPERATING EXPENSES: Variable water costs Water Sewer OPERATING REVENUES: 5,864,468 634,4$1 Metcred water sales $ 16,188,560 $ - Metered water sales restricted for debt service 3,022,468 - Sewer maintenance charges - 1,259,723 Construction water sales 302,312 - Irrigation sales 84,631 - Cwnomer service fees 215,273 - Rents and royalties 41,566 - Outside of District water sales 20,559 - Unmetered water sales 8,208 - Other charges and services 118,801 63,662 TOTAL OPERATING REVENUES 20,002,378 1,323385 OPERATING EXPENSES: Variable water costs 10,859,328 - Personnel services 5,864,468 634,4$1 Supplies and services 3,705,278 445,780 TOTAL OPERATING EXPENSES 20,429,074 1,080,271 TOTAL OPERATING INCOME (LOSS) BEFORE DEPRECIATION (426,696) 243,114 DEPECIATION 3,624,579 543,379 OPERATING LOSS (4,051,275) (300,265) NONOPERATING REVENUES (EXPENSES): Property taxes - debt service - - Property taxes - operations 1,276,638 - Interest and investment earnings 468,011 22,874 Other nonoperating revenues 430,953 32,381 Interest expense (1,469,925) - Other expense (166,926) (2,194) TOTAL NONOPERATING REVENUES (EXPENSES) 538,751 53,069 NET INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS (3,512,524) (247,196) CAPITAL CONTRIBUTIONS 2,140,299 2,223,228 CHANGES INT NET ASSETS (1,372,225) 1,976,032 NET ASSETS - BEGINNING OF YEAR 85,286,641 23,095,539 NET .ASSETS - END OF YEAR $ 83,914,416 $ 25,071,571 See independent auditors' report. -60- Improvement Improvement District No. 1 District No. 2 Totals $ 16,188,560 _ - 3,022,468 1,259,723 302,312 84,631 215,273 41,566 20,559 8,208 182,463 21,325,763 10,859,328 6,498,959 4,151,058 21,509,345 (183,582) 4,167,958 (4,351,540) 1,228 5,655 6,883 _ 1,276,638 61,442 136,781 689,108 11,184 5,385 479,911 _ - (1,469,925) (5,204) _ (3,229) (177,553) 68,650 144.592 805,062 68,650 144,592 (3,546,478) 4,363,527 68.650 144,592 817,049 17- 767,210 23,153,175 149,302,565 $ 17,835,860 $ 23,297,767 $ 150,119,614 IME This page intentionally left blank IBM YORBA LINDA WATER DISTRICT SCHEDULE OF OPERATING EXPENSES BY COST CENTER AND NATURE OF EXPENSES FOR WATER AND SEWER Far the year ended June 30, 2009 OPERATING EXPENSES: Variable Water Costs: Imported water OCWD replenishment assessment Fuel and power /pumping MWD connection charge Total Variable Water Costs Personnel Services: Unit salaries Management, supervisor and confidential salaries Fringe benefits Director's fees Salaries - other Total Personnel. Services Supplies and Services: Maintenance Contractual services Insurance Data processing Communications Vehicle expense Professional services Utilities Office expense Training Dues and memberships Travel and conferences Noncapital equipment Bad debt expense Recreation committee Other Total Supplies and Services TOTAL OPERATING EXPENSES Water Sewer Totals $ 5,973,147 3,009,576 1,492,611 383,994 $ - $ 5,973,147 3,009,576 1,492,611 383,994 10,859,328 - 10,859,328 2,651,902 304,870 2,956,772 1,3 59,064 141,285 1,500,349 1,722,466 184,437 1,906,903 37,799 3,686 41,485 93,237 213 93,450 5,864,468 634,491 6,498,959 857,937 58,504 916,441 779,231 99,064 878,295 230,792 22,826 253,618 134,037 1,863 135,900 304,623 25,910 330,533 342,387 50,630 393,017 494,167 58,893 553,060 25,621 215 25,836 34,171 3,380 37,551 16,941 6,056 22,997 22,417 2,315 24,732 28,021 2,291 30,312 63,260 3,661 66,921 24,615 2,520 27,135 14,467 1,431 15,898 332,591 106,221 43 8, 812 3,705,278 445,780 4,151,058 See independent auditors' report. -63- S 20.429.074 $ 1,080,271 $ 21,509,345 YORBA LINDA WATER DISTRICT SCHEDULE OF CAPITAL ASSETS For the year ended June 30, 2009 Transmission and Distribution Plant: Mains Water Sewer Land, Mineral and Water Rights: 28,958,730 - Land $ 138,629 $ - Water rights 86,300 - Mineral rights 63,650 - Land rights and easements 385 58,526 Total Land, Mineral and Water Rights 288,964 58,526 Source of Supply: 92,075,721 29,007,521 Wells 3,868,911 - MWD connection 373,937 - Total Source of Supply 4,242,848 - Pumping Plant: 228,181 - Structures and improvements 6,445,016 - Equipment 6,167,457 29,240 Total Pumping Plant 12,612,473 29,240 Water Treatment Plant: 50,675 - Structures and improvements 932,474 - Equipment 804,633 - Total Water Treatment Plant 1,737,107 - Transmission and Distribution Plant: Mains 44,337,117 26,826,567 Reservoirs and tanks 28,958,730 - Service and meter installation 5,121,615 2,180,954 Fire hydrants 6,081,483 - Meters 5,573,820 - Fire mains 714,886 - Structures and improvements 1,288,070 - Total Transmission and Distribution Plant 92,075,721 29,007,521 General Plant: Structures and improvements 11,401,765 - Transportation equipment 1,537,716 955,367 Power operated equipment 228,181 - Communication equipment 565,557 - Computer equipment 400,958 - Office furniture 1,188,942 - Tools, shops and garage equipment 50,675 - Other 4,650 - Store equipment 24,949 - Total General Plant 15,403,393 955,367 Construction in Progress 15,084,900 508,020 Total Capital Assets S 141.445,406 $ 30,558,674 See independent auditors' report. -64- Improvement District No. I Improvement District No. 2 Totals 825,649 468,552 12,695,966 - 2,493,083 228,181 565,557 400,958 1,188,942 50,675 _ - 4,650 - 24,949 825,649 468,552 17,652,961 820,900 2,1.10,774 18,524,594 $ 18,741,488 $ 19,664,180 $ 210,409,748 -65- 138,629 _ - 86,300 - 63,650 58,91.1 _ - 347,490 753,618 588,778 5,211,307 123,514 66,916 564,367 877,132 65 5,694 5,775.674 781,868 2,161,000 9,387,884 1,117.891 165,348 7,479,936 1.899.759 2,326,348 16,867,820 370.338 170, 814 1,473,626 278354 - 1,082,987 648,692 170,814 2,556,613 7,614,845 5,531,549 84,310,078 5,822,555 8,400,449 43,181,734 - - 7,302,569 _ - 6,081,483 _ - 5,573,820 - 714,886 231,956 - 1,520,026 13,669,356 13,931,998 148,684,596 825,649 468,552 12,695,966 - 2,493,083 228,181 565,557 400,958 1,188,942 50,675 _ - 4,650 - 24,949 825,649 468,552 17,652,961 820,900 2,1.10,774 18,524,594 $ 18,741,488 $ 19,664,180 $ 210,409,748 -65- This page intentionally left blank -66- DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS MICHAEL R. LUD04. CPA A PARTNERSHIP rNCLIIDING ACCOUNTANCY CORPORATIONS CRAIG W. SPEAKER. CPA NffIld P. PATEL CPA ROBERTI, CALLANAN. CPA "PHILIP H. HOLTKAMP. CPA 5 CORPORATE PARK. SUTFE 100 "THOMAS M PERLOWSKI. CPA IRVINE, CALIFORNIA 92606 -5165 *HARVEY 1. SCHROEDER, CPA WIF,LIAM C {949} 399 -06€10 e FAX (949) 399 -0610 � %ULI C. AMTS' CPA . PENT'l. CPA www.di eIllOVariS.CpIL7 September 11, 2009 'A PROFESSIONAL CORPORATION INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Directors Yorba Linda Water District Placentia, California We have audited the basic financial statements of the Yorba Linda Water District (the District) as of and for the year ended June 30, 2009, and have issued our report thereon dated September 11, 2009. 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over financial reporting, described below. 10�0 OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330 CARLSBAD, CALIFORNIA 92008 -2389 ESCONDIDO. CALIFORNIA 92025 -2598 (760) 729 -2343 • FAX (760) 729 -2234 (760) 741 -3141 • FAX (760) 741 -9890 Internal Control Over Financial Reporting (Co_ntinu5�d) Capital Assets System Auditors' Comment and Recommendation: A comprehensive capital asset accountability system could provide the District valuable benefits such as asset procurement, construction and utilization management, loss control and theft prevention, and responsible asset stewardship. Currently, the District manages its capital asset construction -in- progress projects in various spreadsheets and a manual ledger system and not in a comprehensive capital asset accountability system. We recommend that the District acquire a comprehensive capital asset accountability system so that capital asset construction -in- progress additions and deletions can be entered into the system on an ongoing basis as soon as they occur and not in a manual ledger system. This will allow the District to maintain updated and accurate general ledger balances of capital assets, will automate the depreciation expense calculations and will provide management with other useful capital asset information. Management's Response and Corrective Action: Management concurs with the comment. The District is planning to implement the fixed asset management module in the new accounting software in late 2009, which will allow for more timely and accurate financial information. Payroll Auditors' Comment and Recommendation: During our testing over payroll processing, we noted that the payroll accountant can add new employees and make pay rate changes. One of the basic elements of internal accounting control involves the segregation of duties in such a manner that the responsibility for custody of assets is not placed with the same employee that maintains, or has access to, the related accounting records. We recommend that District limit the duties of the payroll accountant to processing the payroll only. The payroll accountant should not have the ability to add employees and make pay rate changes. Management's Response and Corrective Action: Management concurs with the comment. The District is in the process of limiting the duties of the payroll accountant to process payroll only. �31 Internal Control Over Financial Reporting, (Continued) Communication between Departments Auditors' Comment and Recommendation: During our review of trust accounts for contractor's retention, we noted that the general ledger balance of one the trust accounts did not agree with the bank statement. Per further review, we noted that a portion of the retention amount was released during the year. This was not communicated with the finance department which caused the general ledger balance to be inaccurate. We recommend that the District establish proper communication procedures between finance department and other departments to ensure that accurate information is timely forwarded to finance department for financial reporting purposes. Management's Response and Corrective Action: Management concurs with the comment. The District is in the process of examining all accounting processes in conjunction with other departments, as well as implementing a sophisticated new accounting software system that will help maintain timely and accurate communication. Inventory Auditors' Comment and Recommendation: The District's warehouse is managed by one storekeeper. The storekeeper is responsible for receiving inventory from vendors and issuing inventory to employees. We noted that during the days when the storekeeper is on his day off or on vacation, nobody manages the warehouse. While the District requires employees to fill out a "Warehouse Transaction Record" when they take an inventory item, there is no one to monitor that this is followed when the storekeeper is out. This can result to unauthorized usage of inventory. We recommend that the District consider assigning a storekeeper to the warehouse at all times to control issuance of inventory. Management's Response and Corrective Action: Management concurs with the comment. The District currently has a temporary worker that controls inventory usage when the storekeeper is not in. The District has plans to re- design the storekeeper duties and responsibilities to help maintain more effective internal controls. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. • Compliance and Other Matters As part of obtaining reasonable assurance about whether the District's financial statements are free of material misstatements, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the Yorba Linda Water District Directors and management of the Yorba Linda Water District and is not intended to be and should not be used by anyone other than these specific parties. -70- AGENDA REPORT Meeting Date: November 12, 2009 To: Board of Directors From: Pat Grady, Assistant General Manager Presented By: Cindy Navaroli, Interim Finance Director Prepared By: Cindy Navaroli, Interim Finance Director Budgeted: Funding Source: Dept: Reviewed by Legal: CEQA Compliance: Subject: 1st Quarter Profit & Loss for the Water and Sewer Funds STAFF RECOMMENDATION: ITEM NO. 7.8 N/A N/A Finance N/A N/A That the Board of Directors approve, receive, and file the 1st quarter budgeted financial results for the Water and Sewer funds. COMMITTEE RECOMMENDATION: The 1 st quarter budget results were presented to the Finance - Administrative Committee at the October 27, 2009 meeting. The Committee recommended that the budget results be presented to the Board of Directors for approval. DISCUSSION: Presented are the 1 st quarter FY 09/10 summary budgeted results for the Water and Sewer funds. Overall, the District is performing as expected in water and sewer revenues, and related salary and supplies expenses. The Water fund's variable water costs are higher than budgeted in the first quarter due to the timing of the groundwater pumping and resultant costs. The other non - operating revenues are higher than budgeted because the actual results include annexation revenue amortization, which is a non -cash revenue and therefore not included in the annual budget. Overall, the District's net loss is 38% of the total annual budgeted net loss. Staff expects this net loss to slow down and level off as the rate increase becomes effective in the remaining three quarters. ATTACHMENTS: Description: Type: 1st Quarter Fin Stmts.xls 1st Qtr Fin Stmts Report(s) Yorba Linda Water District Summary Financial Report Water & Sewer For the Three Months Ending September 30, 2009 Full Year % of Budget Actual Annual Budget FY 09/10 1st QTR Amended Amended 10/13/09 FY 09/10 10/13/09 Revenue (Operating): Water Revenue (Consumption & Flat Charge) $23,027,873 $5,862,303 25% (Restricted for Debt Service) (842,006) Sewer Revenue 1,276,000 308,565 24% Other 586,892 194,763 33% --------------------------- - - - - -- ---------------------------- Total Operating Revenue: 24,890,765 5,523,625 22% Expenses (Operating): Variable Water Costs (G.W., Import & Power) 12,259,938 3,789,766 31% Salary Related Expenses 7,005,049 1,579,480 23% Supplies & Services 4,479,584 1,092,886 24% Depreciation & Amortization 4,540,800 1,150,574 25% --------------------------- - - - - -- ---------------------------- Total Operating Expenses: 28,285,371 7,612,706 27% Operating Income (Loss) (3,394,606) (2,089,081) 62% Revenue (Non- Operating): Interest 147,500 41,749 28% Property Taxes 1,200,000 45,227 4% Debt Service Income (through water revenue) 842,006 Other 107,500 112,894 105% --------------------------- - - - - -- ---------------------------- Total Non - Operating Revenue: 1,455,000 1,041,876 72% Expenses (Non- Operating): Interest on Long Term Debt 1,981,300 492,591 25% Other Expense 201,800 18,161 9% --------------------------- - - - - -- ---------------------------- Total Non - Operating Expenses: 2,183,100 510,752 23% Non - Operating Income (Loss) (728,100) 531,124 ----------------- - - - - -- --------------- - - -- Net Income (Loss) (4,122,706) (1,557,957) 38% ------------- - - - - -- ------------------- ---------------- --------------- - Contributed Capital 381,924 166,644 44% AGENDA REPORT Meeting Date: November 12, 2009 To: Board of Directors From: Pat Grady, Assistant General Manager Presented By: Pat Grady, Assistant General Manager Budgeted Funding Source: Dept: ITEM NO. 8.1 N/A N/A Administration Reviewed by Legal: N/A Prepared By: Pat Grady, Assistant General CEQA Compliance: N/A Manager Subject: Professional Services Agreement - Townsend Public Affairs SUMMARY: At the request of the Executive - Administrative - Organizational Committee, this item has been placed on the agenda for Board discussion and possible action. STAFF RECOMMENDATION: That the Board of Directors authorize the General Manager to terminate the Professional Services Agreement with Townsend Public Affairs. COMMITTEE RECOMMENDATION: That the Board of Directors terminate the Professional Services Agreement with Townsend Public Affairs. DISCUSSION: At the Executive - Administrative - Organizational Committee meeting held on October 20, 2009, the Committee requested that the Professional Services Agreement with Townsend Public Affairs (TPA) be discussed and potentially acted upon by the full Board at a regular meeting. In August, 2005, the District executed a Professional Services Agreement with TPA at a cost of $5,240/mo ($62,880 /year). The primary scope of work was to locate grant opportunities, assist with the application process, and implement proactive advocacy strategies for the District to obtain grant funding from both State and Federal sources. Additionally, TPA was to provide monthly legislative updates to the District. Since 2005, the District has paid $251,520 to TPA and the District has not been successful obtaining grant funding with TPA assistance. In 2007, the District submitted a $3 million grant application for replacement of the Highland Reservoir, with unsuccessful results. In CY 2009, the following projects were submitted for grant funding with unsuccessful results: 1. Zone Reconfiguration Project - $700,000 2. Hidden Hills Reservoir - $2,000,000 3. Well No. 20 Project - $900,000 4. Landscape Irrigation Project - $300,000 Additionally, the District submitted a grant application for the Water Recycling Facility Feasibility Study in the amount of $75,000 (Total cost being $150,000), without the assistance of TPA. Staff was recently notified that this project will likely be funded with a grant from the State Water Resources Control Board. Because of the budget constraints the District is currently experiencing, both Staff and the Executive - Administrative - Organizational Committee are recommending the Professional Services Agreement with TPA be terminated saving $62,880 per year. Staff believes this savings could help offset the potential loss of revenue the District is experiencing from water conservation, above the targeted 10% budgeted allocation. Additionally, since the Municipal Water District of Orange County is now offering rebate programs for synthetic turf, this may provide opportunity for District participation since funds were not budgeted for this particular rebate program. Staff will research the details of this program and forward it to the Public- Information - Technology Committee for further discussion. While TPA provides the District with updated legislative activity, this task could be accomplished by the Public Information Specialist, which is currently in the recruitment process. Tracking legislation and the potential effects on the District is listed within the job description of this particular position. At the recommendation of Vice - President Mills, Staff researched an online service by the name of ECivis. This online service provides the latest grant availability, nationwide, at a cost of $1,200 /year. It also provides grant alert notifications when a grant does become available. Should the Board vote to cancel the agreement, TPA or another firm could be re -hired in the future to assist the District. Most, if not all lobby firms, offer their services on a project -by- project or time & material basis, without a monthly financial commitment. Attached for the Board's reference, is a list of State lobby firms that currently represent other southern California water agencies. Should the District reconsider a lobby firm in the future, there are multiple firms to choose from where the RFP and the interview process could be utilized to ensure the Board selects the firm that best suits the needs of the District. Section 3.0 of the Professional Services Agreement allows the Board to terminate the agreement with a 10 day written notice. PRIOR RELEVANT BOARD ACTION(S): This item was previously discussed by the Board on November 12, 2008. No action was taken. ATTACHMENTS: Name: Description: Type: Lobbyist Info.pdf State Lobby Firms Backup Material 2009 -2010 REGISTERED LOBBYISTS SERVING WATER AGENCIES IN SOUTHERN CALIFORNIA ARNOLD & ASSOCIATES ESCONDIDO; CITY OF LONG BEACH WATER DEPARTMENT OXNARD; CITY OF THREE VALLEYS MUNICIPAL WATER DISTRICT BROWNSTEIN HYATT FARBER SCHRECK , LLP GOLDEN STATE WATER COMPANY OLIVENHAIN MUNICIPAL WATER DISTRICT OTAY WATER DISTRICT WEST VALLEY WATER DISTRICT CALIFORNIA RESOURCE STRATEGIES, INC. EASTERN MUNICIPAL WATER DISTRICT CAPITOL ADVOCACY, LLC METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA CAPITOL STRATEGIES GROUP, INC. ALHAMBRA; CITY OF CARPI & CLAY, INC. SAN DIEGO COUNTY WATER AUTHORITY CONSERVATION STRATEGY GROUP LLC LOS ANGELES; CITY OF DOLPHIN GROUP; THE CUCAMONGA VALLEY WATER DISTRICT INLAND EMPIRE UTILITIES AGENCY SANTA ANA WATERSHED PROJECT AUTHORITY WEST BASIN MUNICIPAL WATER DISTRICT GEYER ASSOCIATES INC. INLAND EMPIRE UTILITIES AGENCY GOLDEN STATE ADVOCACY CENTRAL BASIN MUNICIPAL WATER DISTRICT GONSALVES & SON; JOE A. LAKEWOOD; CITY OF SAN GABRIEL VALLEY WATER ASSOCIATION GUALCO GROUP, INC.; THE HI- DESERT WATER DISTRICT SAN BERNARDINO VALLEY MUNICIPAL WATER DISTRICT UPPER SAN GABRIEL VALLEY MUNICIPAL WATER DISTRICT ISENBERG /O'HAREN IRVINE RANCH WATER DISTRICT KP PUBLIC AFFAIRS MOJAVE WATER AGENCY WESTERN MUNICIPAL WATER DISTRICT LANG HANSEN O'MALLEY AND MILLER GOVERNMENTAL RELATIONS CENTRAL BASIN MUNICIPAL WATER DISTRICT SAN DIEGO COUNTY WATER AUTHORITY SAN GABRIEL VALLEY MUNICIPAL WATER DISTRICT WEST BASIN MUNICIPAL WATER DISTRICT LEHMAN LEVI PAPPAS & SADLER DOWNEY; CITY OF LIND & ASSOCIATES; ALLAN CENTRAL BASIN MUNICIPAL WATER DISTRICT MILLENNIUM GOVERNMENT ADVOCATES WATER REPLENISHMENT DISTRICT OF SOUTHERN CALIFORNIA NOSSAMAN LLP CALIFORNIA WATER SERVICE COMPANY SAN GABRIEL VALLEY WATER COMPANY PLATINUM ADVISORS, LLC HESPERIA; CITY OF SAN BERNARDINO; CITY OF SAN BERNARDINO; COUNTY OF YUCAIPA VALLEY WATER DISTRICT PRINGLE & ASSOCIATES; CURT IRVINE RANCH WATER DISTRICT PUBLIC POLICY ADVOCATES, LLC CONTRA COSTA WATER DISTRICT LOS ANGELES; CITY OF QUANTUM GOVERNMENT RELATIONS COACHELLA VALLEY WATER DISTRICT REEB GOVERNMENT RELATIONS, LLC DESERT WATER AGENCY EAST VALLEY WATER DISTRICT ROSE & KINDEL WATER REPLENISHMENT DISTRICT OF SOUTHERN CALIFORNIA SACRAMENTO ADVOCATES INC. YORBA LINDA WATER DISTRICT SLOAT HIGGINS JENSEN AND ASSOCIATES CORONA; CITY OF METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA SAN DIEGO; CITY OF TOWNSEND PUBLIC AFFAIRS, INC. GLENDALE; CITY OF MESA CONSOLIDATED WATER DISTRICT MUNICIPAL WATER DISTRICT OF ORANGE COUNTY ORANGE COUNTY WATER DISTRICT SAN JUAN CAPISTRANO; CITY OF SOUTH COAST WATER DISTRICT TORRANCE; CITY OF YORBA LINDA WATER DISTRICT WHITE ASSOCIATES; V. JOHN SAN DIEGO COUNTY WATER AUTHORITY AGENDA REPORT Meeting Date: November 12, 2009 To: Board of Directors From: Pat Grady, Assistant General Manager Presented By: Pat Grady, Assistant General Manager Budgeted Funding Source: Dept: ITEM NO. 8.2 N/A N/A Administration Reviewed by Legal: N/A Prepared By: Pat Grady, Assistant General CEQA Compliance: N/A Manager Subject: Professional Services Agreement - Sacramento Advocates SUMMARY: At the request of the Executive - Administrative - Organizational Committee, this item has been placed on the agenda for Board discussion and possible action. STAFF RECOMMENDATION: That the Board of Directors authorize the General Manager to terminate the Professional Services Agreement with Sacramento Advocates. COMMITTEE RECOMMENDATION: That the Board of Directors terminate the Professional Services Agreement with Sacramento Advocates. DISCUSSION: At the Executive - Administrative - Organizational Committee meeting held on October 20, 2009, the Committee requested that the Professional Services Agreement with Sacramento Advocates be discussed and potentially acted upon by the full Board at a regular meeting. In March, 2005, the District executed a Professional Services Agreement with Sacramento Advocates at a cost of $3,000 /mo ($36,000 /year). The primary scope of work was to provide "routine governmental lobbying services to the District which includes monitoring legislative activities that affect the District's interests and advocacy on behalf of the District." Services outside of the routine scope of work would be charged as a separate fee accordingly. Since 2005, the District has paid $162,000 to Sacramento Advocates. Because of the budget constraints the District is currently experiencing, both Staff and the Executive - Administrative - Organizational Committee are recommending the Professional Services Agreement with Sacramento Advocates be terminated saving $36,000 per year. Staff believes this savings could help offset the potential loss of revenue the District is experiencing from water conservation, above the targeted 10% budgeted allocation. Additionally, since the Municipal Water District of Orange County is now offering rebate programs for synthetic turf, this may provide opportunity for District participation since funds were not budgeted for this particular rebate program. Staff will research the details of this program and forward it to the Public-Information- Technology Committee for further discussion. While Sacramento Advocates provide the District with updated legislative activity, this task could be accomplished by the Public Information Specialist, which is currently in the recruitment process. Tracking legislation and the potential effects on the District is listed within the job description of this particular position. Should the Board vote to cancel the agreement, Sacramento Advocates or another firm could be re- hired in the future to assist the District. Most, if not all lobby firms, offer their services on a project - by- project or time & material basis, without a monthly financial commitment. Should the District reconsider a lobby firm in the future, there are multiple firms to choose from where the RFP and the interview process could be utilized to ensure the Board selects the firm that best suits the needs of the District. Section 4 of the Professional Services Agreement allows the Board to terminate the agreement with a 10 day written notice. PRIOR RELEVANT BOARD ACTION(S): This item was previously discussed by the Board on November 12, 2008. No action was taken. ITEM NO. 9.3 AGENDA REPORT Meeting Date: November 12, 2009 Subject: General Manager's Report ATTACHMENTS: Description: Type: Document.pdf Zone Reconfig Customer Letter Backup Material arrba Linda Water District Reliable and Trusted Service for More Than 100 Years November 10, 2009 In the interest of improving water service to the community, the Yorba Linda Water District is completing construction of the Zone Reconfiguration Project in your neighborhood. We plan to increase water pressure in your area starting November 19, 2009. On that date the water pressure will increase approximately five pounds per square inch (psi). With this small increase in pressure, we anticipate that homeowners will not have any problems with their existing plumbing connections, such as hoses to appliances, However, we recommend that all homeowners check all household plumbing appurtenances, especially hose connections to toilets, washing machines and dishwashers. The following day, November 20, we plan to increase your water pressure another five psi, and suggest that homeowners check for any leaks. The following workday, Monday November 23, we plan to make the last five psi increase in your water pressure. In summary, the planned pressure changes are as follows: Qay_and Date Pressure Increase Thursday, Nov 19 5 psi Friday, Nov 20 5 psi Monday, Nov 23 5 psi Total 15 psi Note that if you have any concerns regarding your household plumbing connections or if you have your own booster pump, you may want to contact a plumber to look at the water supply in Your home. Another issue for your information concerns water quality. The District receives its water from two sources, Local Groundwater and Imported Surface Water. As part of the program to increase water pressure, the water supply to your area will be changing from predominantly Local Groundwater to predominantly Imported Surface Water. One of the minor differences between Local Groundwater and Imported Surface Water is that Imported Surface Water is disinfected with chloramines (a blend of ammonia and chlorine). With chloramines, extra care should be taken with fish aquariums to insure proper de- chlorination when adding fresh water to the tank. Also anyone using dialysis equipment should contact their medical physician. Rest assured that regardless of which water source you receive, the District will ensure that it meets or exceeds all the California Department of Public Health Drinking Water Standards If you have questions regarding water quality, please call Derrick Nguyen, Water Quality Engineer at 714 -701- 3115. If you have questions regarding other issues related to the project, please call Joe Polimino, Project Engineer at 714 - 701 - 3104. Sincerely, Steve Conklin, Engineering Manager 1717 E. MiralonnaAvenue Placentia, CA 92870 714 -701 -3000 714 -701 -3058 Fax Meeting Date: Subject: ATTACHMENTS: ITEM NO. 10.2 AGENDA REPORT November 12, 2009 Finance - Accounting Committee (Beverage /Summerfield) Alternate: Mills Minutes of meeting held October 27, 4:00 p.m. Meeting scheduled for November 10, 4:00 p.m. has been cancelled. Meeting scheduled for December 8, 4:00 p.m. Description: Type: 102709 FA - Minutes.doc FA Mtg Minutes 10/27/09 Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCE - ACCOUNTING COMMITTEE MEETING October 27, 2009 A meeting of the Finance - Accounting Committee was called to order by Director Beverage at 4:00 p.m. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. COMMITTEE Director Michael J. Beverage, Chair Director John W. Summerfield 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR STAFF Ken Vecchiarelli, General Manager Pat Grady, Assistant General Manager Cindy Navaroli, Interim Finance Director Sandi Van Etten, Senior Accountant 2.1. 1 st Quarter FY 09/10 Financial Statements Ms. Navaroli presented the Financial Statements in various formats. They were reviewed and accepted as presented. 2.2. Monthly Investment Report for July and August 2009 Ms. Navaroli presented the Investment Reports. It was noted that although interest rates are fairly low, the trade off is increased liquidity. The investment reports were reviewed and accepted as presented. 3. DISCUSSION ITEMS 3.1. Monthly Portfolio Report for September 2009 The Committee reviewed the reports and opted not to call Mr. Khorey. 3.2. Investment Holdings in Foreign Companies The Committee reviewed the reports and requested that the District invest in American investments rather than domestic issues of foreign companies. Staff will follow up on the question of whether any of these investments are ETF's. 3.3. Alternatives to District Retirement Plan The Committee discussed alternatives to the CalPERS 2% at 55 retirement plan. Staff was directed to research the financial impacts of a two tier plan and a 401 K plan for further discussion at the December Finance - Administrative Committee meeting. Director Beverage expressed concern with a cafeteria plan. The Committee will continue to look into different options during this fiscal year. 1 3.4. Bond Covenants Timeline The Committee discussed the debt service / bond covenant ratio. Ms. Navaroli presented a chart comparing 1 st quarter net revenues to 110% of debt service. It was requested that Staff prepare the same report each quarter projecting a timeline for the current fiscal year. 3.5. Overtime Analysis The Committee discussed the amount of overtime for last year compared to this year and noted that it was a relatively small percent of the total labor costs. Much of the overtime was due to emergencies or after -hours service requests, and 95% of it was from the Operations Department, in particular the maintenance and production divisions. 3.6. Future Agenda Items and Staff Tasks • Staff will research various retirement alternatives to determine what other districts and municipalities are doing to mitigate rising retirement and post employment benefit costs • Staff will prepare an updated bond covenant calculation timeline that includes the 1 st quarter of FY 08/09 • Staff will bring a cash flow forecast with projected year -end debt service ratios to the February Committee meeting 4. ADJOURNMENT 4.1. The Committee adjourned at 5:25 p.m. The next meeting scheduled for November 10, 2009 was cancelled. The next regular meeting of the Finance - Accounting Committee will be held December 8, 2009 at 4:00 p.m. 2 Meeting Date: Subject: ATTACHMENTS: ITEM NO. 10.3 AGENDA REPORT November 12, 2009 Personnel -Risk Management Committee (Armstrong /Collett) Alternate: Summerfield • Minutes of meeting held November 9, 4:00 p.m. (To be provided at the meeting.) Meeting scheduled for December 14, 4:00 p.m. Description: Type: 110909 PRM - Minutes.doc PRM Mtg Minutes 11/09/09 Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT PERSONNEL -RISK MANAGEMENT COMMITTEE MEETING November 9, 2009 A meeting of the Personnel -Risk Management Committee was called to order by Director Collett at 4:00 p.m. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. COMMITTEE Director Ric Collett Director John W. Summerfield, Alternate 1. PUBLIC COMMENTS None. 2. DISCUSSION ITEMS STAFF Pat Grady, Assistant General Manager Gina Knight, Human Resources Mgr 2.1. Finance Director — Recruitment Status Staff gave an update on the tentative interview schedule for the Finance Director position. An interview panel has been selected from neighboring agencies to assist the District with the interview process. The recruitment closed on November 6, 2009. The Human Resources department received twenty -one (21) applications for this position. 2.2. Public Information Specialist — Recruitment Status Staff gave an update on the tentative interview schedule for the Public Information Specialist position. An interview panel has been selected from neighboring agencies to assist the District with the interview process. This recruitment closes November 20, 2009. To date the Human Resources department has received thirty (30) applications for this position. 2.3. Status of Recruitments Staff gave an update on status of all recruitments. Interviews were conducted on November 5, 2009 for the Accounting Assistant II position and a tentative offer of employment was extended. Staff informed the committee of the District's Storekeeper's retirement scheduled for December 31, 2009. 2.4. Status of Risk Management Activities Staff gave an update on two (2) recent claims that were submitted and denied by staff. In addition, staff gave an update on the latest department activity including an update on various draft policies and procedures. 2.3. Future Agenda Items and Staff Tasks None. 3. ADJOURNMENT 3.1. The Committee adjourned at 4:25 p.m. The next regular meeting of the Personnel -Risk Management Committee will be held December 14, 2009 at 4:00 p.m. 2 AGENDA REPORT Meeting Date: November 12, 2009 Subject: Planning- Engineering- Operations Committee (Mills /Armstrong) Alternate: Beverage Minutes of meeting held November 5, 4:00 p.m. Meeting scheduled for December 3, 4:00 p.m. ATTACHMENTS: ITEM NO. 10.4 Description: Type: 110509 PEO - Minutes.doc PEO Mtg Minutes 11/05/09 Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT PLANNING - ENGINEERING - OPERATIONS COMMITTEE MEETING November 5, 2009 A meeting of the Planning- Engineering- Operations Committee was called to order by Director Mills at 4:00 p.m. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. COMMITTEE STAFF Director William R. Mills, Chair Director Michael J. Beverage, Alternate 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR Pat Grady, Assistant General Manager Steve Conklin, Engineering Manager Lee Cory, Operations Manager Ken Mendum, Ops Superintendent John DeCriscio, Chief Plant Operator 2.1. Proposed Casino Ridge Project, Tract 16488 Messrs. Mark Guithues and Gordon Thomson were present to discuss the project and their proposal to address the issues of water pressure and water supply. Following introductions, Mr. Guithues handed out copies of their proposal and presented their information. During and after the presentation there were questions by the Committee. At the conclusion, Mr. Grady indicated that since Staff has had the proposal for less than one day, more time is necessary for review. The Committee agreed, asking that Staff and the project representatives meet for further discussions, and that the project be agendized for the December PEO Committee meeting for further consideration. 2.2. Terms and Conditions for Sewer and Water Service with Hadi Atail, Parcel Map 2007 -196 Mr. Conklin reported on the proposed subdivision of the 1.9 -acre parcel into three lots and the proposed terms and conditions for sewer and water service. Following discussion, the Committee supported Staff's recommendation for approval of the terms and conditions. 2.3. Terms and Conditions for Water Service with Placentia -Yorba Linda Unified School District (PYLUSD) Mr. Conklin reported on the proposed plans by the school district to construct two new buildings at the Van Buren Elementary School site and the proposed terms and conditions for water service. Following discussion, the Committee supported Staff's recommendation for approval of the terms and conditions. 3. DISCUSSION ITEMS 3.1. Monthly Groundwater Production and Purchased Water Report Mr. DeCriscio reported on the monthly groundwater production and total water use for the month of October. He indicated that for the month, the District is 3.2% under the projected use, and for the first four months of the new FY, we are 5.9% under projected use, which is 15.9% less than prior year. He noted that groundwater use remains at 60.6% of demand and that we have met our CUP obligation for FY 09 -10. 3.2. Monthly Preventative Maintenance Program Report Mr. Mendum reported on the monthly PM Report for October, indicating that the District is on target meeting maintenance goals. Mr. Cory also reported that our sewer cleaning efforts are paying off, as we have had no sewer spills in 11 months. The Committee complimented Maintenance staff on their efforts. 3.3. Monthly Groundwater Producers Meeting Report Mr. Conklin reported on the October Groundwater Producers Meeting. He noted that, at the request of MWDOC, 11 groundwater producers are shifting production for Oct -Dec to more groundwater and less Met water so that MWDOC does not exceed its Tier 1 limit and have to pay higher Tier 2 prices for an estimated 7,300 AF. This will save the MWDOC producers an estimated $560,000. The 11 groundwater producers will make a reverse shift after January 1 to balance their water source production. 3.4. Status Report on Capital Projects in Progress Mr. Conklin reported on the status of capital projects in planning, design and construction. 3.5. Future Agenda Items and Staff Tasks None. 4. ADJOURNMENT 4.1. The meeting was adjourned at 5:50 p.m. The next regular meeting of the Planning- Engineering- Operations Committee will be held December 3, 2009 at 4:00 p.m. 2 AGENDA REPORT Meeting Date: November 12, 2009 Subject: Public Information - Technology Committee (Collett /Beverage) Alternate: Armstrong Minutes of meeting held November 3, 4:00 p.m. Meeting scheduled for December 1, 4:00 p.m. ATTACHMENTS: ITEM NO. 10.5 Description: Type: 110309 PIT - Minutes.doc PIT Mtg Minutes 11/03/09 Minutes MINUTES OF THE YORBA LINDA WATER DISRICT PUBLIC INFORMATION - TECHNOLOGY COMMITTEE MEETING November 3, 2009 A meeting of the Public Information - Technology Committee was called to order by Director Collett at 4:00 p.m. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. COMMITTEE Director Ric Collett, Chair Director Michael J. Beverage 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR STAFF Pat Grady, Assistant General Manager Annie Alexander, Executive Secretary 2.1. Water Bill Statement Redesign Mr. Grady explained that as the District was transitioning to new utility billing software it would be an ideal time to consider updating the design of the water bills. Staff plans to compare the bill designs of other like agencies and provide 3 different versions for Committee consideration. The Committee then discussed various types of historical information that could be included on future bills. 3. DISCUSSION ITEMS 3.1. Conservation Signs Mr. Grady provided the Committee with photos and map locations for each of the installed signs. The Committee then reviewed the location of each sign and made suggestions to staff for improved visibility. Mr. Grady further explained that the remaining two signs would be installed shortly. Mr. Grady then responded to questions from the Committee regarding the magnetic conservation vehicle signage provided by MWDOC. Staff will provide the Committee with a report regarding the different sign designs and number purchased at the next meeting. 3.2. Fire Hydrant Out -Of- Service Covers Mr. Grady provided the Committee with a sample cover and tag used by District staff to signify when a fire hydrant is out of service. Mr. Grady then responded to questions from the Committee regarding repair procedures when a fire hydrant is out of service. Director Collett suggested that staff identify the date a hydrant went out of service on the cover or tag using a marker. 1 3.3. Winter Newsletter Preliminary Content Mr. Grady explained that staff would be working on developing content for the next edition of the customer newsletter. The Committee then discussed potential topics to be included as well as graphics to be used. A draft version of the newsletter will be provided to the Committee for review prior to print. 3.4. Update of District's Participation in Community Events Mr. Grady provided the Committee with a summary of the District's participation in recent community events. The Committee then instructed staff to distribute the water droplets previously purchased and provide the Committee with a replacement product for consideration. 3.5. Conservation Ordinance Monthly Statistics The Committee reviewed the monthly hotline calls and violations issued and appealed. Staff will report on the status of the 2nd violation issued at the next meeting. 3.6. Progress Report of Information Technology Projects Mr. Grady provided the Committee with an update regarding current IT projects and related budgets. Mr. Grady responded to questions from the Board regarding employee training for new software and the status of the electronic meter reading project. Staff will provide additional information regarding this particular project and the status of the District's rebate programs at the next Committee meeting. Mr. Grady reported that he would be attending a meeting at MWDOC to discuss the budget based tiered rates project and will provide a report at the next Board meeting. District staff will be notifying approximately 100 home owners within the Zone Reconfiguration Project regarding increased water pressure and the need for pressure regulators. Lenica Castner has also been hired as a Temporary GIS Technician during Anh Nguyen's absence. 3.7. Future Agenda Items and Staff Tasks None. 4. ADJOURNMENT 4.1. The meeting was adjourned at 5:08 p.m. The next regular meeting of the Public Information - Technology Committee will be held December 1, 2009 at 4:00 p.m. 2 Meeting Date: Subject: ATTACHMENTS: AGENDA REPORT November 12, 2009 Citizens Advisory Committee Minutes of meeting held October 26, 8:30 a.m. Meeting scheduled for November 23, 8:30 a.m. ITEM NO. 10.8 Description. Type: 102609 - CAC Minutes.doc CAC Mtg Minutes 10/26/09 Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT CITIZENS ADVISORY COMMITTEE MEETING October 26, 2009 A meeting of the Citizens Advisory Committee was called to order at 8:30 a.m. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. COMMITTEE Carl Boznanski Lindon Baker Gary Melton Phil Hawkins Gene Scearce Robert Kiley Howard Weber 1. PUBLIC COMMENTS None. 2. DISCUSSION ITEMS STAFF Ken Vecchiarelli, General Manager OTHER ATTENDEES Mark Schock 2.1. Introduce Customer Service Representatives Mr. Vecchiarelli brought the CAC members into the Customer Service area and had Stacy Bavol, Customer Service Supervisor introduce the service representatives that answer the District's phones, interface with customers and process the water bills. The Committee members asked questions about the billing process and future capabilities of the new billing system. 2.2. Status Report on Conservation Efforts Mr. Vecchiarelli gave a verbal report on the status of compliance activities related to the Conservation Ordinance and success of the conservation efforts. He further reported on the Board of Directors' action to temporarily waive the fall limitation of watering only two days per week. The Board action taken on October 8, 2009 authorized a continuation of the three day per week water schedules. All other water waste restrictions are still in force. 2.3. Workshop on Budget Based Water Rates Mr. Vecchiarelli reported the Board of Directors has scheduled a Water Rate Workshop in November to explore options including a budget based water rate structure. The Committee discussed the complexities and conflicting pressures of mandated water use reductions with rising water rates. The Committee further discussed the importance of getting supporting messages out to the community. 1 2.4. OCWD Groundwater Adventure Tour — November 13, 2009 Mr. Vecchiarelli reminded the Committee members of the upcoming tour opportunity and to let Annie Alexander know before the end of the week if they wish to attend. 2.5. Future Agenda Items Mr. Vecchiarelli offered to have the Committee take a more active role in determining the issues and matters they would like to see explored and discussed on future agendas. 3. ADJOURNMENT 3.1. The meeting was adjourned at 10:10 a.m. The next meeting of the Citizens Advisory Committee will be held November 23, 2009 at 8:30 a.m. 2 Meeting Date: Subject: ATTACHMENTS: November 12, 2009 BOD Activities Calendar.pdf ITEM NO. 12.1 AGENDA REPORT Meetings from November 13, 2009 thru December 31, 2009 Description: BOD Activities Calendar Type: Backup Material Board of Directors Activitv Calendar Event Date Time Attendance by: November 2009 Exec - Admin- Organizational Committee Meeting Tue, Nov 17 4:OOPM Summerfield /Mills Yorba Linda City Council Tue, Nov 17 6:30PM Armstrong MWDOC Board Wed, Nov 18 8:30AM Staff OCWD Board Wed, Nov 18 5:OOPM Staff Board of Directors Workshop Meeting Fri, Nov 20 9:OOAM Mills /Armstrong Citizens Advisory Committee Meeting Mon, Nov 23 8:30AM Beverage /Summerfield MWDOC /OCWD Ad Hoc Committee Meeting Tue, Nov 24 4:OOPM Mills /Collett Board of Directors Regular Meeting Wed, Nov 25 8:30AM Holiday Thu, Nov 26 7:30AM District Offices Closed Holiday Fri, Nov 27 7:30AM District Offices Closed December 2009 Public Information - Technology Committee Tue, Dec 1 4:OOPM Collett /Beverage Yorba Linda City Council Tue, Dec 1 6:30PM Mills MWDOC /MWD Workshop Wed, Dec 2 7:30AM Staff OCWD Board Wed, Dec 2 5:OOPM Staff Planning- Engineering- Operations Committee Thu, Dec 3 4:OOPM Mills /Armstrong Finance - Accounting Committee Meeting Tue, Dec 8 4:OOPM Beverage /Summerfield Yorba Linda Planning Commission Wed, Dec 9 7:OOPM Collett Board of Directors Regular Meeting Thu, Dec 10 8:30AM Personnel -Risk Management Committee Meeting Mon, Dec 14 4:OOPM Armstrong /Collett Exec - Admin- Organizational Committee Meeting Tue, Dec 15 4:OOPM Summerfield /Mills Yorba Linda City Council Tue, Dec 15 6:30PM Armstrong MWDOC Board Wed, Dec 16 8:30AM Staff OCWD Board Wed, Dec 16 5:OOPM Staff Board of Directors Regular Meeting Wed, Dec 23 8:30AM Yorba Linda Planning Commission Wed, Dec 23 7:OOPM Summerfield Holiday Thu, Dec 24 7:30AM Holiday Fri, Dec 25 7:30AM District Offices Closed Citizens Advisory Committee Meeting Mon, Dec 28 8:30AM 11 /6/2009 8:38:59 AM