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HomeMy WebLinkAbout2010-10-14 - Board of Directors Meeting Agenda PacketYorba Linda Water District AGENDA YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Thursday, October 14, 2010, 8:30 AM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL William R. Mills, President Michael J. Beverage, Vice President Ric Collett Phil Hawkins John W. Summerfield 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 Alfredo Vargas, Newly Hired GIS Technician 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 September 23, 2010 Recommendation: That the Board of Directors approve the minutes as presented. 7.2. Payments of Bills, Refunds, and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $3,924,917.39. 7.3. Engineering Services for the 2010 Waterline Replacement Project Recommendation: That the Board of Directors authorize execution of a Professional Services Agreement with RBF, for a fee not to exceed $219,309, to provide engineering design, bidding support services and construction management for the 2010 Waterline Replacement Project. 7.4. Terms and Conditions for Water and Sewer Service with K. Hovnanian Homes for Tract 17105 Recommendation: That the Board of Directors approve the Terms and Conditions for Water and Sewer Service with K. Hovnanian Homes for Tract No. 17105, Job No. 201023. 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. Application and Agreement with the California Public Employees' Retirement System Recommendation: That the Board of Directors approve Resolution 10 -20 Aproving the Execution of an Application and Agreement (PERS MED -32D) with the California Public Employees' Retirement System. 8.2. Authorized and Budgeted Positions for the Remainder of FY 2010/2011 Recommendation: That the Board of Directors approve Resolution No. 10 -21 Revising the Authorized and Budgeted Positions for the Remainder of Fiscal Year 2010/11 and Rescinding Resolution No. 10 -17. 8.3. Audit Reports for Fiscal Year 2009/10 Recommendation: That the Board of Directors receive and file the FY 2009/10 Comprehensive Annual Financial Report, the Report on Internal Control and the Communication To Those In Governance Letter. 9. DISCUSSION ITEMS This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action of the Board of Directors at the meeting, such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking the advice and counsel of the Board of Directors. Time permitting, it is generally in the District's interest to discuss these more complex matters at one meeting and consider formal action at another meeting. This portion of the agenda may also include items for information only. 9.1. Results of Fire Flow Testing in Hidden Hills Area 10. REPORTS. INFORMATION ITEMS. AND COMMENTS 10.1. President's Report 10.2. Directors' Reports 10.3. General Manager's Report • ACWA Legal Conference Presentation - September 30, 2010 10.4. General Counsel's Report 10.5. Future Agenda Items and Staff Tasks 11. COMMITTEE REPORTS 11.1. Executive Administrative - Organizational Committee (Mills /Beverage) Alternate: Collett • Meeting scheduled October 19, 2010 at 4:00 p.m. 11.2. Finance - Accounting Committee (Summerfield /Collett) Alternate: Mills • Minutes of meeting held October 11, 2010 at 4:00 p.m. (To be provided at the meeting.) • Meeting scheduled November 8, 2010 at 4:00 p.m. 11.3. Personnel -Risk Management Committee (Collett /Hawkins) Alternate: Summerfield • Minutes of meeting held October 12, 2010 at 4:00 p.m. (To be provided at the meeting.) • Meeting scheduled November 9, 2010 at 4:00 p.m. 11.4. Planning- Engineering- Operations Committee (Mills /Summerfield) Alternate: Beverage Minutes of meeting held October 6, 2010 at 4:00 p.m. Meeting scheduled November 4, 2010 at 4:00 p.m. 11.5. Public Information - Technology Committee (Beverage /Hawkins) Alternate: Summerfield • Meeting scheduled October 5, 2010 was rescheduled to October 20, 2010 at 4:00 p.m. 11.6. MWDOC /OCWD Ad Hoc Committee (Mills /Beverage) Alternate: Collett Minutes of meeting held September 28, 2010 at 4:00 p.m. Meeting scheduled November 23, 2010 was rescheduled to November 16, 2010 at 4:00 p.m. 11.7. Citizens Advisory Committee Minutes of meeting held September 27, 2010 at 8:30 a.m. Meeting scheduled October 25, 2010 at 8:30 a.m. 12. INTERGOVERNMENTAL MEETINGS 12.1. YL Planning Commission - September 29, 2010 (Collett) 12.2. ISDOC - September 30, 2010 (Beverage) 12.3. WACO - October 1, 2010 (Hawkins) 12.4. YL City Council - October 5, 2010 (Mills) 12.5. MWDOC /MWD Workshop - October 6, 2010 (Staff) 12.6. OCWD Board - October 6, 2010 (Staff) 12.7. YL Planning Commission - October 13, 2010 (Collett) 13. BOARD OF DIRECTORS ACTIVITY CALENDAR 13.1. Meetings from October 15, 2010 - November 30, 2010 14. CONFERENCES AND SEMINARS 14.1. MWDOC Water Policy Forum & Dinner - November 4, 2010 MWDOC 20 x 2020 Summit - November 10, 2010 Recommendation: Authorize Directors and such staff members of the District as approved by the General Manager to attend the above listed conferences. 15. 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. 15.1. Conference with Legal Counsel — Pending Litigation Pursuant to Subdivision (a) of Section 54956.9 of the California Government Code Name of Case: Itani, et al vs. YLWD (OC Superior Court — Case No. 00124906) Name of Case: Johnson, et al vs. YLWD, et al (OC Superior Court — Case No. 00125994) Name of Case: State Farm General Insurance Company vs. YLWD (OC Superior Court — Case No. 00311353) Name of Case: Weiss vs. YLWD (OC Superior Court - Case No. 00319080) Name of Case: Lindholm vs. YLWD, et al (OC Superior Court - Case No. 00320239) Name of Case: Travelers Commercial Insurance Company vs. YLWD (OC Superior Court - Case No. 00327152) Name of Case: Manista vs. YLWD, et al (OC Superior Court - Case No. 00332968) Name of Case: Rodriguez vs. YLWD, et al (OC Superior Court - Case No. 00333938) Name of Case: American Security Insurance Company, et al vs. YLWD (OC Superior Court - Case No. 00348304) Name of Case: Buc vs. YLWD (OC Superior Court - Case No. 00409755) 16. ADJOURNMENT 16.1. The Board of Directors will be holding a workshop meeting on October 21, 2010 at 9:00 a.m. The next regular meeting of the Board of Directors will be held October 28, 2010 at 8:30 a.m. Items Distributed to the Board Less Than 72 Hours Prior to the Meetina 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: October 14, 2010 ITEM NO. 7.1 Subject: Minutes of the Regular Board of Directors Meeting Held September 23, 2010 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name: Description: Type: 092310 BOD - Minutes.doc BOD Mtg Minutes 09/23/10 Minutes Approved by the Board of Directors of the Yorba Linda Water District 10/14/2010 RC /PH 5 -0 MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING September 23, 2010 Michael J. beverage, Vice Nresident Ric Collett Nat vrady, Assistant Veneral Manager Steve Conklin, Engineering Manager e Cory, Operations Manager 9phen Parker, Finance Director ithony Manzano, Sr Project Manager hn DeCriscio, Chief Plant Operator hn Brundahl, Sr Plant Operator inie Alexander, Executive Secretary OTHER VISITORS Nancy Rikel, Mayor Pro Tem, City of Yorba Linda 4. ADDITIONS /DELETIONS TO THE AGENDA None. 5. PUBLIC COMMEN .. None. 6. SPECIAL RECOGNITION 6.1. Recognize John Brundahl, Senior Plant Operator, for Completion of the ACWA/JPIA Professional Development Program The Board of Directors commended Mr. Brundahl for completion of the Supervisor Basics specialty in the ACWA/JPIA Professional Development Program. Messrs. DeCriscio and Brundahl left the meeting at this time. 7. CONSENT CALENDAR Staff responded to questions payments included on Item No. from Director Beverage regarding a few bill r &A On a motion by Director Beverage, seconded by Director Collett, the Board voted 4 -0 to approve the Consent Calendar. Director Collett abstained from voting on Check No. 54973 of Item No. 7.2. as he had a financial interest with the vendor. Recommendation. That the Board of Directors approve Progress Payment No. 28, in the net amount of $251,805.53, to Schuler Engineering Corporation and 5% retention of $13,252.92, deposited to Citizens Business Bank escrow account, for construction of the Highland Reservoir Replacement Project, Job No. 200309. ®® ®® MEMO MENEM MEN Water Supply Assessment for the City of Yorba Linda 2008/2014 Housing Element Mr. Conklin explained that staff had received a request from the City of Yorba Linda to prepare a Water Supply Assessment for their 2008/2014 Housing Element and Implementation Plan for the potential rezoning of 13 properties to higher density, multi - family residential communities. Staff has completed the assessment and estimates a maximum annual demand of 553 AF per year for this project. The Planning- Engineering- Operations Committee reviewed this matter at its meeting on September 8, 2010 and supports staff recommendation. Mr. Conklin then responded to questions from the Board regarding the assessment. On a motion by Director Beverage, seconded by Director Hawkins, the Board voted 4 -0 to adopt the Water Supply Assessment for the City of Yorba Linda's Draft 2008 -2014 Housing Element and Implementation Plan, to be incorporated as part of the Project Draft EIR. 2 8.2. MWDOC Turf Removal Rebate Program Mr. Vecchiarelli stated that this item had not been presented to the Public Information - Technology Committee due to time constraints. Mr. Vecchiarelli then explained that MWDOC was looking to implement a new turf removal rebate program. The program would require participating agencies to conduct their own before and after inspections. Mr. Vecchiarelli reported the District could provide matching funds from currently budgeted conservation programs up to $10K. Mr. Vecchiarelli then responded to questions from the Board regarding the budget for this program, the possible linking of programs currently being offered at the Fullerton Arboretum, and the City of Yorba Linda's landscape ordinance. On a motion by Director Beverage, seconded by Director Collett, the Board voted 4 -0 to participate in MWDOC's Turf Removal Rebate Program with matching funds up to $10,000. 8.3. ISDOC Quarterly Meeting, Executive Committee Election and Ratification of Annual Membership Dues Mr. Vecchiarelli explained that in conjunction with its regular quarterly meeting on September 30, 2010, ISDOC would be conducting an Executive Committee election and asking its membership to ratify their annual dues. ISDOC has requested that the Board designate one representative and one alternate to vote on the District's behalf at this meeting. The Board then discussed whether or not they supported the slate of candidates for the Executive Committee. Following further discussion it was determined that Director Beverage would attend the meeting and vote on the District's behalf. 9.1. President's Report None. 9.2. Directors' Reports None. 9.3. General Manager's Report Mr. Vecchiarelli reported on his attendance at the CSDA pre- conference workshop held September 20, 2010 regarding effective strategic planning for special districts. 9.4. Future Agenda Items and Staff Tasks None. 3 10. COMMITTEE REPORTS 10.1. Executive - Administrative - Organizational Committee (Mills /Beverage) Alternate: Collett �or August ® ® ® ®® Meeting scheduled October 19, 2010 at 4:00 p.m. Meeting scheduled October 11, 2010 at 4:00 p.m. 10.3. Personnel -Risk Management Committee (Collett /Hawkins) Alternate: Summerfield Meetinq scheduled September 14, 2010 at 4:00 p.m. was cancelled. Meeting scheduled October 12, 2010 at 4:00 p.m. 10.4. Planning- Engineering- Operations Committee (Mills /Summerfield) Alternate: Beverage Meeting scheduled October 7, 2010 at 4:00 p.m. was rescheduled to October 6, 2010 at 4:00 p.m. 10.5. Public Information - Technology Committee (Beverage /Hawkins) Alternate: Summerfield Minutes of the meeting held September 16, 2010 were provided in the agenda packet. Matters discussed during the meeting were as follows: IT Projects Monthly Status; GIS & IT Master Plan Elements; Proposed YLWD Bottled Water Policy; Sports Groups Interest in Elk Mountain Project; Fullerton Arboretum Water Conservation Class Curriculum; Fall Newsletter Content; Public Outreach Activities; and Conservation Ordinance Monthly Statistics. 12 Meeting scheduled October 5, 2010 at 4:00 p.m. was rescheduled to October 20, 2010 at 4:00 p.m. 10.6. MWDOC /OCWD Ad Hoc Committee (Mills /Beverage) Alternate: Collett Meeting scheduled September 28, 2010 at 4:00 p.m. 10.7. Citizens Advisory Committee Meeting scheduled September 27, 2010 at 8:30 a.m. 11. INTERGOVERNMENTAL MEETINGS 12.1. Meetings from September 24, 2010 — October 31, 2010 The Board reviewed the listed meetings and made no additional changes. 13. ADJOURNMENT 13.1. The meeting was adjourned at 9:20 a.m. The next regular meeting of the Board of Directors will be held October 14, 2010 at 8:30 a.m. Ken Vecchiarelli Board Secretary 5 AGENDA REPORT Meeting Date: October 14, 2010 To: Board of Directors From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, 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. 7.2 Yes N/A $3,924,917.39 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 $3,924,917.39. DISCUSSION: The major items and wire transfers on this disbursement list are as follows: A wire of $86,207.95 to ACWA -HBA for October 2010 health premium; a wire of $1,835,449.24 to U S Bank for 2003 and 2008 Certificates of Participation interest and principal payment; a wire of $1,113,945.62 to MWDOC for August 2010 water purchase; and, a check of $70,108.75 to Southern California Edison for September 2010 utility services on all sites. The balance of $334,005.39 is routine invoices. The Accounts Payable check register total is $3,439,716.95; Payroll Nos. 19 and 20 totals are $236,022.40 and $249,178.04, respectively; and, the disbursements of this agenda report are $3,924,917.39. 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: Name: Description: Type: CkReg101414 BOD.pdf Check Register Backup Material 10 -CS 1014.doc Cap Sheet Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/14/2010 RC /PH 5 -0 RC abstained from voting on Check No. 55093 as he had a financial interest with the vendor. Yorba Linda Water District Check Register For Checks Dated: 9/24/2010 thru 10/14/2010 Check No. Date Vendor Name Amount 55015 10/14/2010 A -1 Auto Parts & Auto Glass, Inc, 270.98 55016 10/14/2010 Abbott Staffing Group, Inc. 4,596.80 55017 10/14/2010 ACWA /JPIA 27,055.00 55018 10/14/2010 ACWA -Assn Of Ca Water Agencies 635.00 55137 10/14/2010 ACWA -Assn Of Ca Water Agencies 635.00 W92710 09/27/2010 ACWA -H BA 86,207.95 55019 10/14/2010 AJK Communications 3,751.88 55020 10/14/2010 Alternative Hose Inc. 74.97 55021 10/14/2010 Anthem Blue Cross EAP 162.80 55022 10/14/2010 Aqua- Metric Sales Co. 26,724.77 55023 10/14/2010 Aramark Uniform Services, Inc 675.89 55024 10/14/2010 Archie's Towing 218.75 55025 10/14/2010 Arrow Hardware 228.80 55026 10/14/2010 Associated Laboratories 2,372.10 55028 10/14/2010 AT & T 45.07 55027 10/14/2010 AT & T - Calnet2 4,436.66 55029 10/14/2010 AW Direct Inc. 97.08 55030 10/14/2010 Bank Of America 528.34 55031 10/14/2010 Battery Systems 266.13 55032 10/14/2010 Bryan Tyson 255.54 55043 10/14/2010 C & L Refrigeration Corp. 282.69 55033 10/14/2010 CA Department Of Public Health 20,704.19 55034 10/14/2010 Caesars Las Vegas 241.92 55035 10/14/2010 CATS 251.00 55036 10/14/2010 Calolympic Safety Co. 20.93 55037 10/14/2010 CALPELRA 350.00 SS038 10/14/2010 Carollo Engineers 15,680.00 55039 10,/14/2010 Centa Corporation 625.79 55040 10/14/2010 Ceridian Benefits Services 76.50 55041 14/14/2010 Chambers Group Inc. 1,403.75 55042 10/14/2010 City Of Placentia 11,109.73 55044 10/14/2010 Cobra Solutions, Inc 395.00 55045 10/14/2010 Cogsdale Services Corporation 4,583.33 55046 10/14/2010 Colorado River Water Users Asc 395.00 55047 10/14/2010 Cortech Engineering 900.05 55087 14/14/2014 County of Orange 623.20 55048 10/14/2010 CPS Human Resource Services 310.00 55049 10/14/2010 Dangelo Co. 76.02 55050 10/14/2010 Dell Marketing L.P. 7,567.78 55051 10/14/2010 Delta Wye Electric, Inc. 4,820.00 55052 10/14/2010 Derek Nguyen 255,00 55053 10/14/2010 Dick's Lock & Safe Inc. 25.03 55054 10/14/2010 Eisel Enterprises, Inc. 584.53 55055 10/14/2010 Employee Relations, Inc. 57.50 55056 10/14/2010 Employment Development Dept. 5,699.00 Description IS25k or greaterl Workers' Comp Jul -Sep 2010 Inventory re -stock 55057 10/14/2010 Fairway Ford Sales, Inc. 481.27 55058 10/14/2010 Federal Express 52.45 55059 10/14/2010 Fidelity Security Life Ins/EyeMed 1,391.92 55060 10/14/2010 Fleet Services, Inc 2,906.30 55061 10/14/2010 Fry's Electronics 278.28 55062 10/14/2010 Golden Bell Products 206.63 55063 10/14/2010 Home Depot Credit Services 272.13 55064 10/14/2010 Infosend Inc. 8,478.13 55065 10/14/2010 Inland (Overhead Door Company 461.50 55010 09/27/2010 ISDOC (Independent Special Dist OC) 16,00 55066 10/14/2010 Jackson's Auto Supply - Napa 584.06 55067 10/14/2010 Jesus Sosa 31.00 55469 10/14/2010 Joyce Dale Consulting 1,210.50 55470 10/14/2010 KB Design 4,164.31 55071 10/14/2010 Kenneth R. Vecchiarelli 232.60 55011 10/14/2010 Larry Garrison 857.23 55072 10/14/2010 Layne Christensen Company 29,531.95 55073 10/14/2010 Leighton Consulting, Inc. 7,012.35 55074 10/14/2010 Liebert Cassidy Whitmore 2,646.00 55075 10/14/2010 Marina Landscape, Inc 931.47 55076 10/14/2010 Mc Cormick,Kidman & Behrens LLP 2,657.81 55077 10/14/2010 Mc Fadden -Dale Hardware 314.92 55078 10/14/2010 Mc Master -Carr Supply Co. 489.13 55079 10/14/2010 Mobile Industrial Supply 101.02 W101410 10/14/2010 Municipal Water District 1,113,945.62 55080 10/14/2010 Muzak LLC 65.25 55081 10/14/2010 MWH Americas, Inc. 1,375.00 55082 10/14/2010 Nickey Petroleum Co 9,230.41 55083 10/14/2010 Novusolutions 3,800.00 55084 10/14/2010 Occu -Med, Ltd. 57.00 55085 10/14/2010 Office Solutions 1,117.69 55086 10/14/2010 ONLINE Collections 48.87 W92910A 09/29/2010 Orange County Water District 8,809.00 55088 10/14/2010 Orange Tool & Industrial Supply 168.05 55100 10/14/2010 P.T.I. Sand & Gravel, Inc. 914.51 55089 10/14/2010 Pacific Coast Tool & Supply 299.06 55090 10/14/2010 Pacific Safety Council 1,795.00 55091 10/14/2010 Parts Source Anaheim 5.49 55012 10/14/2010 PAUL WATSON 88.52 55092 10/14/2010 PELRAC 150.00 55093 10/14/2010 Placentia Disposal 4676 573.96 55094 10/14/2010 Plumbers Depot Inc. 1,190.81 55095 16/14/2010 Praxair Distribution 833.26 55096 10/14/2010 Priority Mailing Systems LLC 463.00 55097 10/14/2010 Process Solutions, Inc. 1,575.00 55098 10/14/2010 Progressive Medical International 40.55 55099 10/14/2010 Prudential Group Insurance 3,002.98 55101 10/14/2010 Quality First Woodworks Inc 650.00 55104 10/14/2010 R J Services, Inc 4,734.59 55102 10/14/2010 Randy's Automotive & Transmission 3,921.56 55103 10/14/2010 Renaissance Esmerelda Resort & Spa 393.84 55013 10/14/2010 RITCHIE COCHRAN 24.23 55105 10/14/2010 RKI Engineering, LLC 3,300.00 55106 10/14/2010 Ryan W.Vanderhook 750.00 55107 10/14/2010 Safety -Kleen Corp. 329.30 Well optimiztn Engine repair August 2010 water purchase 55108 10/14/2010 Schorr Metals, Inc. 261.96 55109 10/14/2010 Shape Products Co. 175.59 55110 10/14/2010 Shred -It USA Inc 72.15 55068 10/14/2010 Snap -On Tools 320.51 55111 10/14/2010 South Coast ARM D 1,868.26 55112 10/14/2010 Southern Calif Edison Co. 70,108.75 55113 10/14/2010 Southern Calif Gas Co. 3,926.78 55114 10/14/2010 Southwest Networks Inc. 1,843.31 55115 1011412010 Spinitar 315.00 55116 10/14/2010 Stacy Bavol /Petty Cash 252.13 55117 10/14/2010 Staples Advantage 697.61 55118 10/14/2010 Suburban Propane 25.12 55119 10/14/2010 Systems Source Inc 445.71 55120 10/14/2010 Terminix Processing Center 185.00 55121 10/14/2010 Terminix Processing Center 312.00 55122 10/14/2010 Tetra Tech, ISG 16,749.98 W92910 09/29/2010 U S Bank Trust National Assn. 1,835,449.24 55123 10/14/2010 Underground Service Alert 183-00 55124 10/14/2010 United Industries 173.67 55125 10/14/2010 United Rentals - Fullerton 301.60 55126 10/14/2010 United Traffic Services & Supply 346.37 55127 10/14/2010 USA Blue Book 587.80 55128 10/14/2010 Valverde Construction, Inc. 17,073.73 55129 10/14/2010 Village Nurseries 125.94 55130 10/14/2010 Water Environment Federation 217.00 55131 10/14/2010 Wells Supply Co 16,204.09 55132 10/14/2010 West Coast Safety Supply Co 2,833.20 55133 10/14/2010 Westside Building Material 1,479.90 55009 10/04/2010 William Wittich - 604,90 55009 09/24/2010 William Wittich 604.90 55134 10/14/2010 William Wittich 604.90 55014 10/14/2010 Winston Chan 84.12 55135 1.0/14/2010 Xerox Corporation 1,224.25 55136 10/14/2010 Yorba Linda Hardware 19.32 Total $3,439,716.95 Utility all sites September 2003 and 2008 COP int/principl Check lost in mail by cult October 14, 2010 CHECK NUMBERS: Manual Check 55009 $ 604.90 Void Check 55009 $ (604.90) Manual Check 55010 $ 16.00 Computer Checks 55011-55137 $ 395,289.14 4652 $ 395, 305.14 WIRES: W -92710 ACWA -HBA $ 86,207.95 W -92910 U S Bank $1,835,449.24 W-9291 OA OCWD $ 8,809.00 W- 101410 MWDOC $1,113,945.62 $3,044,411.81 TOTAL OF CHECKS AND WIRES $ 3,439,716.95 PAYROLL NOS. 19 and 20: Computer Checks 4638 — 4641 Manual Checks 4642 — 4650 Void Check 4651 Manual Check 4652 $ 236,022.40 Computer Checks 4653 — 4656 Manual Checks 4657 — 4666 $ 249,178.04 ---------------------------------------------------------------------------------------------------------------------- DISBURSEMENT TOTAL: $ 3,924,917.39 ------------------------------------------------------------------ ------------------------------------------------------------------ APPROVED BY THE BOARD OF DIRECTORS MINUTE ORDER AT BOARD MEETING OF OCTOBER 14, 2010 ------------------------------------------------------------------ ------------------------------------------------------------------ AGENDA REPORT Meeting Date: October 14, 2010 To: Board of Directors From: Ken Vecchiarelli, General Manager Presented By: Steve Conklin, Engineering Manager Prepared By: Anthony Manzano, Senior Project Manager Budgeted: Total Budget: Cost Estimate: Funding Source: Account No: Job No: Dept: ITEM NO. 7.3 Yes $2M $220,000 (Design & CM) Water Operating Fund 101 -2700 201012 Engineering Reviewed by Legal: Pending CEQA Compliance: Exempt Subject: Engineering Services for the 2010 Waterline Replacement Project SUMMARY: Staff issued a Request for Proposal for engineering design, bidding support services and construction management for the 2010 Waterline Replacement Project. The District received four proposals, which were evaluated and ranked. Subsequent to this evaluation, staff recommends award of the project to RBF Consulting, Inc. (RBF), for a fee not to exceed of $219,309. STAFF RECOMMENDATION: That the Board of Directors authorize execution of a Professional Services Agreement with RBF, for a fee not to exceed $219,309, to provide engineering design, bidding support services and construction management for the 2010 Waterline Replacement Project. COMMITTEE RECOMMENDATION: The Planning- Engineering- Operations Committee discussed this item at its meeting on October 6, 2010 and supports staff's recommendation. DISCUSSION: The project consists of waterline replacements at eight locations, ranging from 200 to 3,000 feet in length, totaling approximately 6,700 feet. The Project locations are identified in the Asset Management Plan and the Capital Improvement Plan as priority replacements. The eight locations were packaged as one project for efficiency and cost effectiveness. Staff solicited proposals from five consulting firms experienced in this field. Four firms submitted proposals. The District's review team ranked and scored the proposals based on experience of staff and firm, content, and understanding of the project. Following the technical evaluation and ranking, separate envelopes with fees for each proposal were opened by staff. Results of the ranking and the proposed fee for each are as follows: Firm Evaluation Score RBF Consulting, Inc. (RBF) 1271 Albert A. Webb Associates (Webb) 1262 PSOMAS 1226 Tetra Tech, Inc. (TTI) 1219 Fee $ 219,309 $ 203,900 $ 346,978 $ 280,000 After extensive review of the four proposals, the engineering staff review team determined that RBF had the best overall proposal, including a well experienced project manager and project team, a very good project approach, and a reasonable and competitive proposed fee. Based on all factors, staff recommends award to RBF. ATTACHMENTS: Name: Exhibit A.pdf Exhibit B.pdf Approved by the Board of Directors of the Yorba Linda Water District 10/14/2010 RC /PH 5 -0 Description: Type: Exhibit A Backup Material Exhibit B Backup Material Birch 4\ EXHIBIT "A" La Palma Legend Proposed Pipeline Project ����J sde.SDE.YLWD_Service_Boundary 2010 PIPELINE REPLACEMENT PROJECT VICINITY MAP 0 1,375 2,750 N W+ E S 5,500 8,250 Feet 111111 \�� ��► r E ��� ■ IMMIN ■11111. a .■ ■■D■■■■ i ■� �� 1 moll /111 _ ills ONE, n PLumosa Dr., from Lemon Dr. to Bastanchury Road i d�,C: A Hidden Hills BPS Discharge Line N L4 W +E S 2010 PIPELINE REPLACEMENT PROJECT LOCATION MAP 1 THRU 8 NO SCALE EXHIBIT "B" Tamarisk Dr., Fircrest Dr. & Pebble Beach Ln. i i 1i I j I North of Catalina Ct., & S. of Joel Brattain Dr. 11111E E �► � ��� IIIII - • - I■ \R�q< 3 Sunwood / Peppertree Ln. RENO /' 6 Easement S. of Gordon Ln. & E. of Ohio St. .EN7E- �� ORANG�THORPE o� 7 Richfield Rd. , 1200 LF of Proposed Slip Lining $ Richfield Rd. , Nancita St. to approximately 100' N. of OCFCF - 200 LF of new 8" dia. pipeline ITEM NO. 7.4 AGENDA REPORT Meeting Date: October 14, 2010 Budgeted: N/A To: Board of Directors Funding Source: Developer Funded From: Ken Vecchiarelli, General Manager Job No: 201023 Presented By: Steve Conklin, Engineering Dept: Engineering Manager Reviewed by Legal: N/A Prepared By: Earl Hamanaka, Engineering CEQA Compliance: N/A Tech II Subject: Terms and Conditions for Water and Sewer Service with K. Hovnanian Homes for Tract 17105 SUMMARY: K. Hovnanian Homes is proposing to develop Tract 17105 into 143 condominium units on 16.49 acres. Annexation Fees will be required for this area which lies within Village 4, Planning Area "T" of Vista Del Verde. The project is located east of Lakeview Avenue and north of Bastanchury Road as shown on the attached exhibit. STAFF RECOMMENDATION: That the Board of Directors approve the Terms and Conditions for Water and Sewer Service with K. Hovnanian Homes for Tract No. 17105, Job No. 201023. DISCUSSION: The pad elevations within Tract 17105 are between 571 and 636 above mean sea level. The entire tract will be served by the Gardenia Reservoir in the District's Pressure Zone 4, which has a high water elevation of 780 feet. A portion of the lots will require individual pressure regulators since the water pressures will exceed 80 p.s.i. The District has an existing Zone 4 pipeline in Lakeview Avenue fronting this project, which is adequate in size and of sufficient pressure to serve the project. Staff will also require that the applicant loop the proposed onsite water facilities at "G" Street and "C" Street to provide greater redundancy onsite and to adjacent tracts. Tract 17105 is located within Drainage Area "2" of the District's Sewer Service Area. The District has an existing sewer main connection in Lakeview Avenue fronting the proposed project. Staff will require the applicant to make a connection on the existing sewer main, which is adequate in size to serve the project. The applicant will be required to comply with the District's Standard Terms and Conditions for Water and Sewer Service. The proposed Terms and Conditions for Water and Sewer Service with K. Hovnanian Homes, Tract No. 17105 are attached for your consideration. ATTACHMENTS: Name: 201023 T C.doc Tract_ 17105_ Area_T.pdf Approved by the Board of Directors of the Yorba Linda Water District 10/14/2010 RC /PH 5 -0 Description: Terms and Conditions for Water and Sewer Service Tract 17105 Exhibit Type: Backup Material Backup Material Date: October 14, 2010 YORBA LINDA WATER DISTRICT TERMS AND CONDITIONS FOR WATER AND SEWER SERVICE NAME OF APPLICANT: K. HOVNANIAN HOMES LOCATION OF PROJECT: EAST OF LAKEVIEW AVE. & NORTH OF BASTANCHURY RD. TRACT NUMBER: 17105 JOB NUMBER: 201023 LOT(S): 143 The applicant will be required to complete to the satisfaction of the District the following items that have an "X" following the number. 1) X The applicant shall provide the District with a copy of the Grant Deed or Title Report of the property to be served. 2) X The applicant shall include information deemed necessary by the District in the event the applicant is required to file a Department of Real Estate Tax Disclosure statement. 3) The applicant shall provide to all purchasers of the homes a statement that the home is located within Improvement District No. 1 and that the home is subject to a property tax over and above the normal 1 % Basic Tax Levy to pay for Production, Storage, and Transmission water facilities serving Improvement District No. I. 4) The applicant shall provide to all purchasers of the homes a statement that the home is located within Improvement District No. 2 and that the home is subject to a property tax over and above the normal 1 % Basic Tax Levy to pay for Production, Storage, and Transmission water facilities serving Improvement District No. 2. 5) X The applicant shall submit two (2) sets of the improvement plans to the District for plan check processing. a) Improvement Plans b) Grading Plans c) Tract, Parcel or Vesting Map d) Landscaping Plans 6) X Improvement Plans submitted for plan check shall comply with the submittal requirements established by the YLWD Engineering Department. Page 2 of 6 NAME OF APPLICANT: K. HOVNANIAN HOMES LOCATION OF PROJECT: EAST OF LAKEVIEW AVE. & NORTH OF BASTANCHURY RD. 7) X The applicant shall dedicate or obtain all easements deemed necessary by the District in accordance with the Rules and Regulations of the District. All easement documents shall be prepared under the supervision of and stamped by a Professional Land Surveyor or a Registered Civil Engineer (licensed prior to January 1, 1982) licensed to practice in the State of California. 8) X The applicant shall provide the District with a copy of the Recorded Tract /Parcel Map(s) or Easement Documents illustrating all District easements required by Term and Condition No. 7, prior to requesting occupancy releases. 9) The applicant shall prepare and process all easements to be quitclaimed by the District in accordance with the Rules and Regulations of the District. 10) X The applicant shall furnish the District with a 24 -hour emergency telephone number prior to the District's approval of the construction plans. 11) X The applicant shall notify the District 48 hours prior to initiating any work related to required or proposed improvements. 12) X The applicant shall complete a Temporary Construction Meter Permit application for all water to be used in construction work and all water used under such permit shall be taken from the approved construction meter. 13) X The applicant shall provide per the District specifications one complete set of "As Built" mylars and electronic copy of ACAD drawings (version 2008 or later) for the Water and Sewer facilities. 14) X The applicant shall complete an Application to and Agreement for Water Service. 15) X The applicant shall pay all of the water fees as required by the Rules and Regulations of the District. 16) X The applicant shall pay meter fees associated with the installation of radio read meters for this project. 17) X The applicant shall comply with the Rules and Regulations of the Yorba Linda Water District with regard to the Rendition of Water Service. 18) X The applicant shall provide the District with a set of plans stamped and approved by the Orange County Fire Authority, or fire agency having jurisdiction, that identifies approved fire hydrant locations. Such approved plan must be submitted to the District before staff will initiate a District plan check for water improvements. Page 3 of 6 NAME OF APPLICANT: K. HOVNANIAN HOMES LOCATION OF PROJECT: EAST OF LAKEVIEW AVE. & NORTH OF BASTANCHURY RD. 19) X The applicant shall have all water facilities designed in accordance with the District's Water Facilities Plan and the District's Standard Specifications. All design plans shall be prepared under the supervision of and stamped by a Registered Civil Engineer licensed to practice in the State of California. 20) X The applicant's water facilities (on -site) shall be District owned and maintained. 21) X The applicant shall be required to conduct flow tests at their cost in the event the Orange County Fire Authority requires a flow test. A District representative shall be present to witness the flow test. 22) X The applicant shall comply with all additional District requirements, relative to the fire protection system, fire hydrant construction and fire hydrant locations. 23) X The applicant shall install one 1 water Sampling Station(s) in conformance with the District's Standard Plans. 24) X The applicant shall provide a completed Surety Bond for the water facilities prior to the District signing the Water Improvement Plans. The applicant shall also provide to the District an estimate of the construction costs of the proposed water facilities. 25) X The applicant shall install the curb and gutters a minimum of one week prior to the installation of the water main and services. 26) All existing water services that are not useable in the new plan shall be cut and plugged at the main line. 27) X The applicant shall coordinate through the District all connections of new water facilities to the existing District facilities. 28) X The applicant shall provide a written copy of the Bacteriological Report prior to occupancy releases certifying that the water meets the Health Department's requirements. 29) X The applicant shall adjust and raise to grade all valve covers within the limits of this project. 30) X The applicant shall install a pressure regulator in all dwellings that have over 80 p.s.i. static water pressure in accordance with the appropriate building codes. 31) X The applicant shall complete a Temporary Water Permit for all water that will be used through the new water services to serve the new dwellings. Page 4 of 6 NAME OF APPLICANT: K. HOVNANIAN HOMES LOCATION OF PROJECT: EAST OF LAKEVIEW AVE. & NORTH OF BASTANCHURY RD. 32) X The applicant shall install a District approved backflow device in connection with any private fire suppression sprinkler facilities that may be required by the Orange County Fire Authority or fire agency having jurisdiction. 33) X The applicant shall install a reduced pressure principle backflow prevention device on all commercial buildings and landscape services. 34) X The applicant shall install and provide a written test report to the District for each backflow device certifying that the backflow devices are operating properly prior to the water meters being turned on for service. 35) X The applicant shall install and provide a written test report to the District certifying that the double check detector assembly is operating properly prior to the double check detector assembly being turned on for service. 36) X The applicant shall provide an annual written test report to the District certifying that the backflow devices and fire detector assemblies are operating properly pursuant to the District's Backflow Prevention Program and the State of California Administrative Code, Title 17, Public Health Rules and Regulations Relating to Cross - Connections. 37) The applicant shall complete a Sewer Connection Application and Permit for Sewer Service. 38) X The applicant shall complete an Application to and Agreement for Sewer Service. 39) X The applicant shall comply with the Rules and Regulations of the Yorba Linda Water District with regard to the Rendition of Sanitary Sewer Service. 40) X The applicant shall pay all of the sewer fees as required by the Rules and Regulations of the District. 41) X The applicant shall have all sewer facilities designed in accordance with the District's Sewer Master Plan and Standard Specifications. All design plans shall be prepared under the supervision of and stamped by a Registered Civil Engineer licensed to practice in the State of California. 42) X The applicant shall provide a completed Surety Bond for the sewer facilities prior to the District signing the Sewer Improvement Plans. The applicant shall also provide to the District an estimate of the construction costs of the proposed sewer facilities. 43) X The applicant's sewer facilities (on -site) shall be District owned and maintained. 44) X The applicant shall construct a sewer main and appurtenances in conformance with the approved plans and the District's Plans and Specifications. Page 5 of 6 NAME OF APPLICANT: K. HOVNANIAN HOMES LOCATION OF PROJECT: EAST OF LAKEVIEW AVE. & NORTH OF BASTANCHURY RD. 45) X The applicant shall adjust and raise to grade all sewer manhole covers within the limits of this project. 46) X The applicant shall install a sewer backflow prevention valve on all sewer service connections in which the pad elevations of the property being served is lower than the rim elevation of the upstream manhole. Installation of the backflow device shall comply with all requirements of the Building and Plumbing Codes of the appropriate agency having jurisdiction. 47) X The applicant shall submit a video inspection report of their sewer project in DVD format. The video of the sewer facilities shall be conducted in the presence of the District inspector, which will include stationing locations of manholes, cleanouts, wyes, laterals, backflow devices and appurtenances. (END OF STANDARD TERMS AND CONDITIONS) PROJECT SPECIFIC TERMS AND CONDITIONS 48) X The applicant shall comply with all provisions of the "Water and Sewer Facilities Phasing Agreement between Yorba Linda Water District and Shell Western E & P, Inc.," executed on May 27, 1999, and recorded as Document No. 19990486356 on June 30, 1999, in the Orange County Recorder's Office. The applicant shall pay all annexation fees in accordance with Section II, B of the Facilities Phasing Agreement. 49) X The applicant shall comply with all provisions of the Settlement Agreement and Mutual Release executed on November 22, 2005. 50) X In addition to the Zone 4 water pipeline connection in Lakeview Avenue, the applicant shall loop the proposed public onsite water system at "G" Street and at the easterly end of "C" Street. The loop connections shall be made onto the existing 8" ductile iron main located at the easterly end of Tract 17105, per approved plans and District Standards and Specifications. I hereby certify that the foregoing Terms and Conditions were approved at the October 14, 2010 Regular Meeting of the Board of Directors of the Yorba Linda Water District. The approved Terms and Conditions shall become void six (6) months from the approval date if a formal Application To and Agreement with the Yorba Linda Water District for Sewer Service is not executed for the project under consideration. Kenneth R. Vecchiarelli, General Manager i r. LOOP TO EXIST: ; n' WATERNMAIN / r • 1 + f ' \�` f ' An'O LOOP TO EX WATER MAIN - ---- - EX. 36° WATER C EX. }2" WATER 1 '1: LAKEWEW RESERVOIR `A � PREPARED BY: SCALE: PROPOSED WATER AND SEWER N. T S' -� - YORBA LINDA WATER DISTRICT IMPROVEMENT DATE: -- -- - - - - -- - -- -- 9717 E. MIRAL OMA AVENUE FOR TRACT 17105 0913012010 vs PLACENTIA, CALIFORNIA 92870 PLANNING AREA T FILE NAME: �� (794) 701-3100 J-201023 -3100 Meeting Date: To: From: Presented By: Prepared By: Subject: SUMMARY: AGENDA REPORT October 14, 2010 Board of Directors Ken Vecchiarelli, General Manager Budgeted Cost Estimate: Funding Source: Gina Knight, Human Resources Dept: Manager Reviewed by Legal: Amelia Cloonan, Personnel CEQA Compliance: Technician ITEM NO. 8.1 No $5,200 /yr All Water Funds Administration Yes N/A Application and Agreement with the California Public Employees' Retirement System The Board of Directors at its meeting held February 11, 2010, approved Resolution No. 10 -01 Establishing a Deemed Retirement System Pursuant to Section 218(d)(6) of the Federal Social Security Act. STAFF RECOMMENDATION: That the Board of Directors approve Resolution 10 -20 Aproving the Execution of an Application and Agreement (PERS MED -32D) with the California Public Employees' Retirement System. COMMITTEE RECOMMENDATION: The Personnel -Risk Management Committee discussed this matter at its meeting held January 12, 2010 and recommended that the Board of Directors approve the coverage. Completion of the PERS application and execution of the agreement is required to complete this process. DISCUSSION: The District made the decision to allow the pre -April 1986 employees the opportunity to elect Medicare -only coverage. The entire process will take up to one (1) year to complete. The Board approved Resolution 10 -01 on February 11, 2010 authorizing staff to move forward with the process. An election for division was held with a final filing date of September 11, 2010. Of the five employees eligible to participate in the election, only one indicated that they did not wish to be covered under Medicare. The election was certified, and the results were sent to CalPERS. The next step in the process is the adoption of the Resolution by the Board of Directors authorizing execution of the Application and Agreement for Medicare coverage for employees of the Yorba Linda Water District. Upon receipt of the Resolution and signed copy of the Application and Agreement, Cal PERS will request the Federal Government to include the Yorba Linda Water District in the Health Insurance program. PRIOR RELEVANT BOARD ACTION(S): The Board of Directors, at its meeting held January 28, 2010, approved the proposal to extend Medicare -only coverage to five long -term employees. ATTACHMENTS: Name: Description: Resolution No. 10- 20.doc Resolution No. 10 -20 CalPERS Agreement.pdf PERS Agreement Approved by the Board of Directors of the Yorba Linda Water District 10/14/2010 MB /RC 5 -0 Roll Call RESOLUTION NO. 10 -20 RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT APPROVING THE EXECUTION OF AN APPLICATION AND AGREEMENT (PERS MED -32D) WITH THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM WHEREAS, a division of the California Public Employees' Retirement System with respect to eligible employees of the Yorba Linda Water District, hereinafter referred to as "Public Agency ", who are members of and in positions covered by said retirement system, has been conducted in accordance with Federal and State Laws and State regulations for the purposes of coverage under the insurance system established by the Federal Social Security Act and a deemed retirement system, hereinafter referred to as Group B of the California Public Employees' Retirement System, has been established thereby as provided in Section 218(d)(6) of the Federal Social Security Act, composed of positions of members of such retirement system who desire coverage under the Health Insurance system established by the Federal Social Security Act; and WHEREAS, the Public Agency desires to file an application with the State and to enter into an agreement with the State to extend coverage under the said insurance system on behalf of the Public Agency to services performed by individuals as employees of the Public Agency as members of a coverage group, as defined in Section 218(d)(4) of the Federal Social Security Act, of the said Group B of the California Public Employees' Retirement System; and WHEREAS, official form "Application and Agreement, PERS - MED -32D" containing the terms and conditions under which the State will effect such inclusion has been examined by this body; NOW THEREFORE BE IT RESOLVED by the Board of Directors of the Yorba Linda Water District, that said Application and Agreement on said official form be executed on behalf of the Public Agency and submitted to the State to provide coverage under the California State Social Security Agreement of March 9, 1951, of all services performed by individuals as employees of the Public Agency as members of a coverage group (as defined in Section 218(d)(4) of the Social Security Act) of said Group B of the California Public Employees' Retirement System, except the following: 1. All services excluded from coverage under the agreement by Section 218 of the Social Security Act; and 2. Services excluded by option of the Applicant as indicated in Resolution No. 10 -01 adopted at a meeting of the Board of Directors the 11th day of February, 2010: NONE Resolution No. 10 -20 Approving the Execution of an Application and Agreement with CalPERS Effective date of coverage of services under said agreement to be January 1, 2010; and BE IT FURTHER RESOLVED, that Gina Knight, Human Resources Manager; PO Box 309, Yorba Linda CA 92885, is hereby authorized and directed to execute said Application and Agreement on behalf of and as Authorized Agent of the Public Agency and to forward same to the State for acceptance and further action; and BE IT FURTHER RESOLVED, that authority hereafter to act as Authorized Agent, and so to conduct all negotiations, conclude all arrangements, submit all reports; and sign all agreements and instruments which may be necessary to carry out the letter and intent of the aforesaid application and agreement, in conformity with all applicable Federal and State laws, rules and regulations, is vested in the position of Human Resources Manager. PASSED AND ADOPTED this 14th day of October 2010, by the following called vote: AYES: NOES: ABSTAIN: ABSENT: William R. Mills, President Yorba Linda Water District ATTEST: Ken Vecchiarelli, Secretary Yorba Linda Water District Resolution No. 10 -20 Approving the Execution of an Application and Agreement with CalPERS Return original and one copy to: California Public Employees' Retirement System Employer Services Division Public Agency Contract Services P.O. Box 942709 Sacramento, CA 94229 -2709 This is your contract for Medicare coverage. Please read carefully. File State - approved copy in permanent file APPLICATION AND AGREEMENT For the purposes of this application and agreement, any reference made herein to any State or Federal statute or statutes, or regulations, or part thereof, applies to all amendments thereto now or hereafter made. For the purposes of this application and agreement, "Federal System" means Old -Age, Survivors, and Disability and Health Insurance system established by the Federal Social Security Act, "Federal agency" means the Commissioner of Social Security, or successor in function to such officer, "Board" means the Board of Administration of the California Public Employees' Retirement System, acting on behalf of the State of California. The Yorba Linda Water District, a public agency as defined in Section 22009 of the Government Code* hereinafter called Applicant, hereby makes application to the Board to execute a modification to the California State Social Security Agreement extending thereunder the "Medicare Only" coverage in conformity with Section 218(n) of the Social Security Act; to all services performed by individuals as employees of the Applicant in a coverage group (as defined in Section 218(d)(4) of the Social Security Act *) of Group B, California Public Employees' Retirement System, a deemed retirement system established by division of a retirement system pursuant to Section 218(d)(6) of the Social Security Act, composed of positions of members desiring coverage under said insurance system, except the following: PERS- MED -32D (6108) 1 Application and Agreement (Division) 1. Those services mandatorily excluded from said agreement by Section 218 of the Social Security Act.* 2. The following services excluded by option of the Applicant pursuant to Resolution No. 10 -01 adopted on February 11, 2010: NONE* *See Attachment In order to carry into effect the common governmental duties under such statutes and in consideration of the mutual promises hereinafter made, the Applicant and the Board agree as follows: 1. The Board will execute a modification to the California State Social Security Agreement to extend thereunder the "Medicare Only" coverage the services of employees of Applicant as hereinbefore applied for. 2. Applicant will comply promptly and completely, throughout the term of this application and agreement, with the letter and intent of all statutes of the State of California, and Section 218 of the Federal Social Security Act, and applicable Federal and State regulations adopted pursuant thereto. 3. Applicant will pay as the State regulation may prescribe, amounts equivalent to the sum of taxes (employer- employee contributions) which would be imposed under the Federal Insurance Contributions Act if the services of employees covered by the application and agreement constituted employment as defined in such Act. Applicant shall keep or cause to be kept accurate records of all remuneration for such services, said records to be maintained as required by Federal or State regulations, and said records shall be available for inspection or audit by the Board or its designated representative. PERS- MED -32D (6JO8) 2 Application and Agreement (Division) 4. Applicant will prepare and submit such wage and other reports as may be required. 5. Applicant will pay and reimburse the State at such times as may be determined by the State: (a) Any sums of money that the State may be obligated to pay or forfeit to the Federal Government by reason of any failure of the Applicant, for any cause or reason, to pay the contributions, penalties, or interest required by the agreement between the Federal agency and the State at such time or in such amounts as required by the said agreement and any State or Federal regulations adopted pursuant thereto. (b) In such amounts as may be determined by the State, its proportionate share of any and all costs incurred by the State in the administration of the Federal System as it affects the Applicant and its employees. (c) In such amounts as may be determined by the State, the cost of any and all work and services relating to any division for the purposes of coverage under the Federal System held with respect to the coverage group for which coverage is requested herein. (d) In such amounts as may be determined by the State, the costs of any audits of the books and records of the Applicant made by the State or its designated representatives pursuant to Section 22559 of the Government Code. 6. The coverage herein provided for shall be effective January 1, 2010. PERS- MED -32D (6108) 3 Application and Agreement (Division) 7. That, subject to the aforesaid provisions and applicable law, this application and agreement may be amended by the mutual consent of the parties in writing. 8. After the filing of this application and agreement, its acceptance and execution by the State shall constitute it a binding agreement between the Applicant and the State of California with respect to the matters herein set forth. ACCEPTED: YORBA LINDA WATER DISTRICT Signed by Authorized Agent And by (Witness) (Title) (Date) STATE OF CALIFORNIA BOARD OF ADMINISTRATION PUBLIC EMPLOYEES' RETIREMENT SYSTEM BY Marion Montez, Assistant Division Chief Employer Services Division PERS- MED -32D (6108) 4 Application and Agreement (Division) ATTACHMENT Section 220019, Government Code: "Public Agency" means the State, any city, county, city and county, district„ municipal or public corporation or any instrumentality thereof, or boards and committees established under Chapter 10 of Division 6 of the Agricultural Code, Chapter 754 of Statutes of 1933, as amended, or Chapter 367 of the Statutes of 1935, as amended, the employees of which constitute one or more coverage groups or retirement system coverage groups. Section 218(d)(4): For the purposes of subsection (c) of this section, the following employees shall be deemed to be a separate coverage group: (A) all employees in positions which were covered by the same retirement system on the date the agreement was made applicable to such system (other than employees to whose services the agreement already applied on such date); (B) all employees in positions which became covered by such system at any time after such date; and (C) all employees in positions which were covered by such system at any time before such date and to whose services the insurance system established by this title has not been extended before such date because the positions were covered by such retirement system - including employees to whose services the agreement was not applicable on such date because such services were excluded pursuant to subsection (c)(3)(B). The following services are mandatorily excluded: (a) service performed in a policeman's or fireman's position, covered by a retirement system at the time coverage is extended to the Public Agency; (b) service performed by an individual who is employed to relieve him from unemployment; (c) service performed in a hospital, home, or other institution by a patient or inmate thereof; (d) covered transportation service (as defined in Section 21 O(k) of the Social Security Act, as amended); PERS- MED -32D (610$) 5 Application and Agreement (Division) (e) service (other than agricultural labor or service performed by a student) which is excluded from employment by any provision of Section 21 O(a) of the Social Security Act, other than paragraph 7 of such section, or service the remuneration for which is excluded from wages by paragraph (2) of Section 209(h); (f) service performed by an individual as an employee on a temporary basis in case of fire, storm, snow, earthquake, or similar emergency; (g) services performed by election officials or election workers for each calendar year in which the remuneration paid for such service is less than the threshold amount mandated by law. (The threshold amount as of January 1, 2009 was $1,600.) PERS- MED -32D (6108) 6 Application and Agreement (Division) Meeting Date: To: From: Presented By: Prepared By: Subject SUMMARY: AGENDA REPORT October 14, 2010 Personnel -Risk Management Committee Ken Vecchiarelli, General Manager Budgeted Funding Source: Gina Knight, Human Resources Dept: Manager Reviewed by Legal: ITEM NO. 8.2 Yes All Funds Human Resources /Risk Management N/A Gina Knight, Human Resources CEQA Compliance: N/A Manager Authorized and Budgeted Positions for the Remainder of FY 2010/2011 The purpose of this report is for the Board to review and consider a proposed revision to the authorized positions for FY 2010/2011. The revision proposes a change in title for one existing budgeted and filled position with no compensation change recommended. The change does not authorize any additional budgeted positions for the remainder of the fiscal year. STAFF RECOMMENDATION: That the Board of Directors approve Resolution No. 10 -21 Revising the Authorized and Budgeted Positions for the Remainder of Fiscal Year 2010/11 and Rescinding Resolution No. 10 -17. COMMITTEE RECOMMENDATION: The Personnel -Risk Management Committee will discuss this item at its meeting being held October 12, 2010. Staff will report the Committee's recommendation at the Board meeting. DISCUSSION: As part of the District's annual budget process, the Board of Directors approve the number of authorized positions for each fiscal year. During this last budget process the Human Resources Manager received a request to conduct a job duties /classification assessment and title review, to determine if a change and /or salary adjustment was warranted. Staff completed the job assessment and met several times with the employee's supervisor, department head and bargaining unit representative, in order to reach an agreement on a proposed title change with no salary adjustment. This process exceeded the time necessary to include the recommended title change with Resolution 10 -17, which was adopted by the Board on June 24, approving the authorized positions for FY 2010/2011. The issue regarding the title change has been resolved. The Human Resources /Risk Manager is proposing that the job title for the Meter Services Representative position be changed to the Meter Services Lead. The attached Proposed Authorized Positions Revision Report for FY 2010/2011 identifies the title change with a proposed effective date of November 1, 2010. ATTACHMENTS: Name: Resolution No. 10- 21.doc Reso 10 -21 Exhibit A.pdf Exhibit A.pdf Approved by the Board of Directors of the Yorba Linda Water District 10/14/2010 RC /PH 5 -0 Roll Call Description: Type: Resolution No. 10 -21 Resolution Exhibit A Exhibit Exhibit A (Corrected) Exhibit RESOLUTION NO. 10 -21 RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT REVISING THE AUTHORIZED AND BUDGETED POSITIONS FOR THE REMAINDER OF FISCAL YEAR 2010/11 AND RESCINDING RESOLUTION NO. 10 -17 WHEREAS, the Board of Directors of the Yorba Linda Water District adopted Resolution No. 10 -09, Adopting Personnel Rules for the Yorba Linda Water District, on May 27, 2010; and WHEREAS, the "Personnel Rules" direct that the number of Authorized Positions and Salary Ranges are subject to approval by the Board of Directors; and WHEREAS, the Board of Directors adopted Resolution No. 10 -17 on June 24, 2010 approving the Authorized and Budgeted Positions for Fiscal Year 2010/11; and WHEREAS, it is the desire of the Board of Directors to revise the Authorized and Budgeted Positions for the remainder of Fiscal Year 2010/11, and rescind Resolution No. 10 -17. NOW THEREFORE BE IT RESOLVED by the Board of Directors of the Yorba Linda Water District as follows: Section 1. The number of authorized and budgeted positions as set forth in Exhibit "A" attached hereto is approved and adopted for the remainder of Fiscal Year 2010/11 effective November 1, 2010. Section 2. The General Manager is hereby authorized to employ up to the number of employees authorized, budgeted and funded in each fiscal year without further approval of the Board of Directors. Section 3. The General Manager is hereby authorized to fill an authorized and budgeted position that is vacated while this Resolution is active with a new employee at a lower or equal classification. The General Manager is further authorized to fill an authorized and budgeted position with a part - time employee or contract staff. Section 4. That Resolution No. 10 -17 is hereby rescinded effective November 1, 2010. Resolution No. 10 -21 Approving Authorized Positions for FY 2010/11 PASSED AND ADOPTED this 14th day of October 2010, by the following called vote: AYES: NOES: ABSTAIN: ABSENT: William R. Mills, President Yorba Linda Water District ATTEST: Ken Vecchiarelli, Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. McCormick, Kidman and Behrens Resolution No. 10 -21 Approving Authorized Positions for FY 2010/11 Exhibit "A" Resolution No. 10 -21 Authorized and Budgeted Positions for FY 2010/2011 Effective November 1, 2010 Authorized Budgeted Change to Authorized Budgeted Salary as of as of Auth. as of as of Range Position Classification 7/1/2010 7/1/2010 Positions 10/14/2010 10/14/2010 1 -11 (Temporary Help) 0 0 0 0 15 Customer Service Rep 1 1 1 1 1 16 Meter Reader 1 2 2 2 2 17 Customer Service Rep 11 1 1 1 1 Accounting Assistant 1 1 1 1 1 Maintenance Worker 1 8 8 8 8 Mechanic 1 0 0 0 0 Engineering Secretary 1 1 1 1 Operations Secretary 0 0 0 0 18 Meter Reader 11 2 2 2 2 19 Customer Service Rep 111 2 2 2 2 Storekeeper 1 1 1 1 Operations Assistant 1 1 1 1 20 Engineering Technician 1 0 0 0 0 Water Quality Technician 1 0 0 0 0 Maintenance Dist. Operator 11 8 7 8 7 21 Facilities Maintenance 1 1 1 1 Accounting Assistant 11 2 1 2 1 Mechanic 11 1 1 1 1 22 Water Quality Technician 11 1 1 1 1 Information Systems Tech 1 1 1 1 1 23 Maintenance Dist. Operator 111 5 4 5 4 Meter Services Representative 1 1 -1 0 0 Meter Services Lead 0 0 1 1 1 Personnel Technician 1 1 1 1 Plant Operator 11 4 3 4 3 Mechanic I11 1 1 1 1 24 Construction Inspector 1 1 1 1 Engineering Technician 11 3 3 3 3 Information Systems Tech 11 1 1 1 1 GIS Technician 1 0.5 1 0.5 25 Executive Secretary 1 1 1 1 Human Resources Analyst 1 1 1 1 Sr. Accountant 1 1 1 1 Instrumentation Technician 1 1 1 1 Assistant Administrator 1 0 0 0 0 26 GIS Administrator 1 1 1 1 Project Engineer 2 2 2 2 Sr. Maintenance Dist. Operator 4 4 4 4 Sr. Plant Operator 1 1 1 1 Sr. Construction Inspector 1 1 1 1 Sr. Fleet Mechanic 1 1 1 1 27 Customer Service Supervisor 1 1 1 1 During FY 2010/2011 the District will promote three (3) Maintenance Worker I positions that are currently underfilling three (3) Maintenance Distribution Operator II positions. During the FY 2010/2011 Budget the GIS Technician will be reclassified to the GIS Administrator position. GIS Tech proposed as a part -time position in FY 2010/11. ** Sr. Project Manager is currently a three year limited -term position. Authorized Budgeted Change to Authorized Budgeted Salary as of as of Auth. as of as of Range Position Classification 7/1/2010 7/1/2010 Positions 10/14/2010 10/14/2010 28 Management Analyst 1 1 1 1 29 Water Quality Engineer 1 1 1 1 Safety and Training Officer 0 0 0 0 Sr. Project Engineer 0 0 0 0 30 Water Maint. Superintendent 1 1 1 1 SCADA Administrator 1 1 1 1 Public Information Specialist 1 1 1 1 IS Administrator 1 1 1 1 31 Chief Plant Operator 1 1 1 1 34 Sr. Project Manager 1 1 1 1 — 36 Human Resources Manager 1 1 1 1 37 Finance Director 1 1 1 1 Operations Manager 1 1 1 1 Information Technology Director 1 0 1 0 Engineering Manager 1 1 1 1 40 AGM /IT Director 1 1 1 1 Salary General Manager 1 1 1 1 Set by Board Total 40442 40436.5 0 40547 40541.5 During FY 2010/2011 the District will promote three (3) Maintenance Worker I positions that are currently underfilling three (3) Maintenance Distribution Operator II positions. During the FY 2010/2011 Budget the GIS Technician will be reclassified to the GIS Administrator position. GIS Tech proposed as a part -time position in FY 2010/11. ** Sr. Project Manager is currently a three year limited -term position. CORRECTED Exhibit "A" Resolution No. 10 -21 Authorized and Budgeted Positions for FY 2010/2011 Effective November 1, 2010 Authorized Budgeted Change to Authorized Budgeted Salary as of as of Auth. as of as of Range Position Classification 7/1/2010 7/1/2010 Positions 10/14/2010 10/14/2010 1 -11 (Temporary Help) 0 0 0 0 15 Customer Service Rep 1 1 1 1 1 16 Meter Reader 1 2 2 2 2 17 Customer Service Rep 11 1 1 1 1 Accounting Assistant 1 1 1 1 1 Maintenance Worker 1 8 8 8 8 Mechanic 1 0 0 0 0 Engineering Secretary 1 1 1 1 Operations Secretary 0 0 0 0 18 Meter Reader 11 2 2 2 2 19 Customer Service Rep 111 2 2 2 2 Storekeeper 1 1 1 1 Operations Assistant 1 1 1 1 20 Engineering Technician 1 0 0 0 0 Water Quality Technician 1 0 0 0 0 Maintenance Dist. Operator 11 8 7 8 7 21 Facilities Maintenance 1 1 1 1 Accounting Assistant 11 2 1 2 1 Mechanic 11 1 1 1 1 22 Water Quality Technician 11 1 1 1 1 Information Systems Tech 1 1 1 1 1 23 Maintenance Dist. Operator 111 5 4 5 4 Meter Services Representative 1 1 -1 0 0 Meter Services Lead 0 0 1 1 1 Personnel Technician 1 1 1 1 Plant Operator 11 4 3 4 3 Mechanic 111 1 1 1 1 24 Construction Inspector 1 1 1 1 Engineering Technician 11 3 3 3 3 Information Systems Tech 11 1 1 1 1 GIS Technician 1 0.5 1 0.5 25 Executive Secretary 1 1 1 1 Human Resources Analyst 1 1 1 1 Sr. Accountant 1 1 1 1 Instrumentation Technician 1 1 1 1 Assistant Administrator 1 0 0 0 0 26 GIS Administrator 1 1 1 1 Project Engineer 2 2 2 2 Sr. Maintenance Dist. Operator 4 4 4 4 Sr. Plant Operator 1 1 1 1 Sr. Construction Inspector 1 1 1 1 Sr. Fleet Mechanic 1 1 1 1 27 Customer Service Supervisor 1 1 1 1 Salary Budgeted Range Position Classification 28 Management Analyst 29 Water Quality Engineer as of Safety and Training Officer 7/1/2010 Sr. Project Engineer 30 Water Maint. Superintendent 10/14/2010 SCADA Administrator 1 Public Information Specialist 1 IS Administrator 31 Chief Plant Operator 34 Sr. Project Manager 36 Human Resources Manager 37 Finance Director 0 Operations Manager 0 Information Technology Director Engineering Manager 40 AGM /IT Director Salary General Manager Set by Board Total CORRECTED Authorized Budgeted Change to Authorized Budgeted as of as of Auth. as of as of 7/1/2010 7/1/2010 Positions 10/14/2010 10/14/2010 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 0 1 1 1 1 1 1 1 1 1 1 1 1 82 76.5 0 82 76.5 During FY 2010/2011 the District will promote three (3) Maintenance Worker I positions that are currently underfilling three (3) Maintenance Distribution Operator 11 positions. During the FY 2010/2011 Budget the GIS Technician will be reclassified to the GIS Administrator position. GIS Tech proposed as a part -time position in FY 2010/11. ** Sr. Project Manager is currently a three year limited -term position. Meeting Date: To: From: Presented By: Prepared By: AGENDA REPORT October 14, 2010 Board of Directors Ken Vecchiarelli, General Manager Budgeted: Funding Source: Stephen Parker, Finance Director Dept: Reviewed by Legal: Stephen Parker, Finance Director CEQA Compliance: Subject: Audit Reports for Fiscal Year 2009/10 ITEM NO. 8.3 N/A N/A Finance N/A N/A STAFF RECOMMENDATION: That the Board of Directors receive and file the FY 2009/10 Comprehensive Annual Financial Report, the Report on Internal Control and the Communication To Those In Governance Letter. COMMITTEE RECOMMENDATION: The Finance - Accounting Committee will discuss this item at its meeting on October 11, 2010 and report on its recommendation at the Board meeting. DISCUSSION: Staff is pleased to present the Board of Directors with Yorba Linda Water District's first Comprehensive Annual Financial Report, which will be submitted for recognition and consideration for an award from the Government Finance Officers Association (GFOA). Diehl Evans & Company, LLP, the District's external auditors, have completed their audit of the Yorba Linda Water District for the fiscal year ending June 30, 2010, and have rendered an unqualified (clean) opinion in the attached Comprehensive Annual Financial Report. They also identified no internal control findings that rose to the level of a significant deficiency as documented in the attached Report on Internal Control. Lastly, they have reported required disclosures to the Finance - Accounting Committee in the Communication To Those In Governance. ATTACHMENTS: Name 6.30.10_CAFR.pdf 6.30.10_ Report_ on Internal_Control.pdf 6.30.10_ Communication_ To Those In Governance.pdf Approved by the Board of Directors of the Yorba Linda Water District 10/14/2010 JS /RC 5 -0 Description: FY 09/10 Comprehensive Annual Financial Report FY 09/10 Report on Internal Control FY 09/10 Communication to Those In Governance Type: Backup Material Backup Material Backup Material YORBA LINDA WATER DISTRICT of Yorba Linda, California Comprehensive Annual Financial Report WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR ENDED JUNE 30, 2010 Prepared by: The Yorba Linda Water District Finance Department Stephen Parker, CPA - Finance Director Delia Lugo, Senior Accountant JoAnn Gitmed, Accounting Assistant II tIM Cindy Botts, Management Analyst YORBA LINDA WATER DISTRICT TABLE OF CONTENTS For the year ended June 30, 2010 Page Number INTRODUCTORY SECTION: Letter of Transmittal i Board of Directors and Executive Staff xiii Organization Chart xiv District Boundaries xv FINANCIAL SECTION: Independent Auditors' Report 1 Management's Discussion and Analysis (Required Supplementary Information) 3 Basic Financial Statements: 11 Combined Statements of Net Assets 12 Combined Statements of Revenues, Expenses and Changes in Net Assets 14 Combined Statements of Cash Flows 15 Notes to Basic Financial Statements 17 Required Supplementary Information: 43 Other Post - Employment Benefit Plan - Schedule of Funding Progress 44 Supplementary Information: 45 Combining Schedule of Net Assets 46 Combining Schedule of Revenues, Expenses and Changes in Net Assets 48 Combining Schedule of Cash Flows 49 Schedule of Operating Expenses by Cost Center and Nature of Expenses for Water and Sewer 51 Schedule of Capital Assets 52 YORBA LINDA WATER DISTRICT TABLE OF CONTENTS (CONTINUED) For the year ended June 30, 2010 Page Number STATISTICAL SECTION: 53 Description of Statistical Section 55 Financial Trends: Changes in Net Assets 56 Revenue Capacity: Number of Connections 58 Ten Largest Customers 59 Debt Capacity: Ratio of Outstanding Debt 60 Debt Coverage 61 Demographic and Economic Information: Demographics 62 Ten Largest Employers 63 Operating Information: Number of Employees 64 Operating and Capacity Indicators 65 INTRODUCTORY SECTION 0 Yorba Linda Water District September 15, 2010 Members of the Board of Directors Yorba Linda Water District Introduction It is our pleasure to submit Yorba Linda Water District's Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30, 2010. This report was prepared pursuant to the guidelines set forth by the Governmental Accounting Standards Board (GASB). District staff prepared this financial report in conjunction with an unqualified "clean" opinion issued by Diehl, Evans & Company, LLP. The independent auditor's report is located at the front of the financial section of this report. Management's discussion and analysis (MD &A) immediately follows the independent auditor's report and provides a narrative introduction, overview and analysis of the basic financial statements. MD &A complements this letter of transmittal and should be read in conjunction with it. 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. This report is organized into three sections: (1) Introductory (2) Financial and (3) Statistical. The Introductory section offers general information about the District's organization and current District activities along with 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. The Statistical section includes a ten -year history of financial trends, revenue and debt capacity, demographic and other operating information in table and graphical format. District Structure and Leadership The Yorba Linda Water District is an independent special district, which operates under the authority of Division 12 of the California Water Code. The Yorba Linda Water District has been providing water and sewer services to the residents of the City of Yorba Linda, portions of Placentia, Brea, Anaheim, and nearby unincorporated areas since 1959, the year it was formed to take over the assets and water service responsibilities of the Yorba Linda Water Company, a mutual formed in 1909. The District is governed by a five- member Board of Directors, elected at large from within the District's service area. The General Manager administers the day -to -day operations of the District in accordance with policies and procedures established by the Board of Directors. The Yorba Linda Water District employs a full -time staff of 76 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 service area, which includes approximately 14,475 acres of land comprising 22.6 square miles. The District serves a population of approximately 75,000 and currently provides water service through approximately 23,850 residential, commercial, and light industrial connections. District Services Residential customers make up 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 Metropolitan Water District (MWD) through the Municipal Water District of Orange County (MWDOC) and the other half from groundwater wells within the area. In 2009 and 2010, the District provided 23,417 acre -feet and 20,162 acre -feet of water to customers, respectively. The District's service area is known for having larger than average residential lots and more than 30 horse trails of more than 100 miles of aggregate length. In 2005, CNN ranked the City of Yorba Linda as 21" among the best places in the United States to live. Similarly, in an article by CNN Money, the City of Yorba Linda was listed as one of the most affluent cities in the United States, as well as the highest median income in Orange County, as reported by 2000 Census data, based on towns between 65,000 and 250,000 in population. 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 2011 because of the ongoing financial crisis and the somewhat distressed housing market. ii 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. Within the District's boundaries, population growth is expected to increase only minimally in the next 5 -10 years, as more than 50% of the current households have children under the age of 18 who are not expected to add to this growth via newborns. Additionally, the District's area is primarily "built out ", and an influx of residents from outside the area is expected to remain fairly low. The State of California, however, is expected to grow by 20 million people over the next 40 years. In June 2008, the Governor responded to severe cuts in water allocation by declaring a statewide drought, which directed his 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. Additionally, as part of this declaration, he instituted the "20 by 2020" initiation, which requires agencies to reduce their usage by twenty percent by the year 2020. 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 without paying significant penalties. In essence, a water allocation has been placed on the District by MWDOC, 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. While allocations were anticipated, the District implemented a conservation ordinance effective July 1, 2009 placing restrictions and curtailing excessive water use. As of the end of the fiscal year 2009/10, the ordinance has proven to be successful with District customers reducing water usage by an overwhelming 18 %. With this trend, the District is optimistic water usage will remain within allocation, penalties will be avoided and the District's will reach the State's "20 by 2020" mandate. Table 1- Historical Water Use Gallon s Fiscal % Change Con m sued Year (Acre -ft) (from prev. yr) 2004/05 21,611.5 2005/06 23,032.9 6% 2006/07 25,656.5 100/0 2007/08 19,843.3 -29% 2008/09 23,416.8 150/0 iii Water Conservation Programs The District has implemented conservation management practices since the late 1980's. District staff participates in community events and distributes informational materials to encourage water conservation. Through a partnership program with MWDOC, the District offers the following conservation programs offering rebates for purchase and installation of: Weather -based Irrigation Landscape Controllers Rotating Irrigation Nozzles High Efficiency Clothes Washers In addition to these programs, the District also implemented a Water Conservation Ordinance on July 1, 2009. The ordinance focuses on water use efficiency through the prohibition of wasteful practices and the establishment of water conservation stages. During fiscal year 2009/10, the District remained at a Stage 2: Moderate Water Shortage Condition, in sync with MWD's water shortage stage. Water Conservation Stages ­.N.._. Stage 1 Minimum Water Shortage Reduce usage by 10% ModerateWater Shortage II Stage 2 Reduce usage by 10% - 20% Stage 3 Severe Water Shortage Reduce usage by 20 -35% Cri 'cal Water Shortage e usage more than Mission /Vision Statement and Maior 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 ", and its Vision Statement: "Yorba Linda Water District will become the premier self - sufficient source for reliable water, sewer and related services in the communities it serves." The Mission and Vision Statements dictate the following six major initiatives of the District. 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 reliably serve customer needs. 3. To utilize the District's financial resources in an effective and prudent manner. 4. To provide high 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. IV Major Accomplishments durin14 FY 2009/10 In FY 2009/10, the Board of Directors approved a Five -Year Capital Improvement Program for 2009 to 2014 with a combined total of $44.4M. Of that amount, an estimated $18.2M was budgeted for FY 2009/10 for projects in planning, design and construction. Those projects included the following: Highland Reservoir The new $11.2M Highland Reservoir, in use as of July 2010, provides six million gallons of potable water storage and is expected to be fully completed by September 2010. 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, considered to be the hub of water storage for the District's groundwater transmission facilities, replaced the Highland Reservoir, originally constructed in 1911. (Highland Reservoir in construction) Zone Reconfiguration Project Approximately 800 homes located within the District's Pressure Zone 3A were observed to have low water pressures during certain times of the year. The condition occurred in periods of high water demands within three locations of the service area. This $1.1M pipeline project separated and created a new zone for those homes with higher water pressure throughout the year. The project included the installation of approximately 8,500 feet of new pipeline and various valves. This project was completed in November 2009. San Antonio Pressure Regulating Station Upgrade Project Located on San Antonio Road, this $250,000 upgrade project consisted of replacing outdated pressure regulating valves, piping and controls. This underground facility will regulate pressure and flow to the new service subarea created by the Zone Reconfiguration Project. The vault has also been improved with better access, lighting, ventilation, remote controls and telemetry. This project was completed in October 2009. v Hidden Hills Reservoir Project Located at the top of Hidden Hills Road, this $7M project will provide more efficient operation in the District's highest pressure zones within the Hidden Hills area. The project includes construction of a two million gallon buried concrete reservoir and improvements to the Santiago Booster Pump Station. It is currently in use and will be fully completed by September 2010. (Lakeview Reservoir in Construction) Lakeview Sewer Lift Station Replacement The District's only sewer lift station is located within the County of Orange Flood Control area known as the Yorba Linda Lakebed and "lifts" the wastewater collected up to an area where it can be incorporated along with other District wastewater flows and ultimately drain, via gravity flow, into the Orange County Sanitation District (OCSD) sewer pipelines. The sewer lift station was fully retrofitted at a cost of $200,000 with new larger pumps, a new control system and an upgraded electrical supply. Construction was completed in November 2009. Highland Booster Pump Station Replacement The Highland Booster Pump Station Replacement project allows the District to reliably pump up to 18,000 gallons per minute of water from the adjacent 6 million gallon Highland Reservoir to customers in the largest pressure zone served by the District and up to the Lakeview Reservoir. A feasibility study was completed in early 2009 and the project design plans were completed in June 2010. Construction of the $7M project is scheduled to start in October 2010 with completion in late 2011. vi Solar Panel Pilot Program The District installed a photovoltaic solar panel system on the roof of its administration building in April 2010. This system will convert DC electric current from the solar panels to AC electrical power and ultimately reduce the building's electricity bills by approximately twenty percent, reduce atmospheric emissions and serve as a test site for future renewable energy solutions at other District facilities. The solar panels will generate approximately 31,500 watts of power annually, which equates to about 20% of the District's usage at the new headquarters. District Well Projects The District's water demand is approximately 22,000 to 24,000 acre -feet per year. Of that total, approximately half is pumped from the groundwater basin and the remainder 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 CIP includes various well projects, including the following: Wells 1, 5 and 12 Upgrade Project The District refurbished Wells 1, 5 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. Well 20 Project This project includes construction of a new groundwater production well near existing Well 11, located at the southerly end of Richfield Road. 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. Construction should be completed by September 2011. West Wellfield Project Initial work has commenced on potential locations and feasibility of a proposed West Wellfield Project. The project concept consists of three to four groundwater wells located westerly of the District's service area in Anaheim, CA. Information available from Orange County Water District indicates that the groundwater basin and aquifer is deeper and more productive further west than the District's current well locations. 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 8,000 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. vii Additional major accomplishments in FY 2009/10 include: Asset Management Master Plan The District completed an Asset Management Plan (AMP) in May 2010. The plan identifies 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. A proposed funding policy to maintain the District's assets on an ongoing basis, based on the AMP recommendation was approved by the District Board of Directors in July 2010. Technological Advancements From FY 2008/09 to the present, the District has continued to implement a series of technological improvements including hardware and software system integrations. By ensuring that the District remains current with technology improvements, efficiency gains have been achieved, which include centralizing key information, reducing or eliminating inefficient, redundant manual processes, and updating software to industry standards. One of the largest advancements is the implementation of a new financial software package, which will allow for a streamlined, computerized and centralized approach to the general ledger, accounts payable, inventory, purchase orders, payroll, project accounting, bank reconciliation and budgeting processes. A new and advanced Utility Billing software system has also been implemented, with access to customer history and consumption information, which also offers improved integration with online bill pay, backflow device maintenance and tracking, and integration with the District's Geographical Information System (GIS). Reserve Policy Adoption of a financial reserves policy is a critical component of responsible public governance. The District's reserve policy establishes written goals and objectives and provides guidelines for managing funding and use of the District's financial reserves. Together with the recent Asset Management Plan (AMP), the preparation of a cost of service and alternative rate structure study, and the development of a five year financial plan; the reserves policy is an important pillar in the overall financial planning process. A formal reserve policy also demonstrates to the public and the District's stakeholders that the District continues to manage its current and future financial obligations in a prudent and fiscally responsible manner. Risk Management The District is a member of the Association of California Water Agencies Joint Power Insurance Authority (JPIA). The purpose of the JPIA is to arrange and administer programs of insurance for the pooling of self - insured losses and to purchase excess insurance coverage. Additionally, the District has assigned responsible charge of risk management activities within the Human Resources Department and has reactivated a Safety Committee of employees from different departments to better focus on internal safety measures, reinforce safety training and to decrease risk both within and outside the District. viii Future Years Amidst the national economic turmoil and the California state budget crisis, our region continues to face water supply issues due to extended drought seasons, as well as judicial, environmental and regulatory restriction. First and foremost, we continue to monitor the State's budget shortfall and potential shift of our property tax revenues. Secondly, with water conservation and reduced water sales, our ability to maintain a high level of services while holding costs down, has been seriously challenged. The slump in the real estate market in our region has also caused lower connection fee revenues and slower increases in the projected future water demands. As a result we have adjusted our ten year capital improvement plan to reflect the anticipated slower growth in future years. Water Rate & Increases In FY 2009/2010, YLWD charged a uniform commodity rate of $2.52 per unit and a monthly fixed charge of $10.20 for all sizes of meters. One unit of water equals 748 gallons, equating one gallon of water to approximately $0.0034 (one third of a cent). At an average of 30 units of water per month (approximately 22,500 gallons), a typical YLWD customer would pay about $87 on the average for their monthly water bill. YLWD also provides wastewater service to approximately two - thirds of the District's customer base, at an additional charge of $5.50 per month. In FY 2010/11, Yorba Linda Water 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. With limited water available to recharge the groundwater basin, pumping restrictions have also increased which has lowered the amount of the cheaper groundwater we can utilize in our supply portfolio. Both import and groundwater prices have dramatically increased over the past two fiscal years. In January 2009, import water prices increased by 14.1% and another 19.7% in September 2009. Effective January 1, 2011, import water costs will increase again by 7.5% and are scheduled to increase by an additional 7.5% in January 2012. These most recent increases alone have translated to over $2M in additional costs in FY 2009/10. As a result, the District implemented a 41% water rate increase, beginning September 14, 2009. An additional pass- through rate adjustment resulting from the January 2011 and 2012 import water rate increases, has prompted the District Board to approve a monthly service charge increase to $11.73, beginning August 1, 2010. With the intent to develop a rate structure to support conservation and equitability among customers, the District developed a Request for Proposals to conduct a Cost of Service Analysis and Alternative Water Rate Feasibility Study in November 2009. This study will address the impacts of implementing a tiered water conservation rate structure and /or a budget -based water 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 Directors in December 2010, with potential for implementation beginning July 1, 2011. ix Annexation Initiative While 75% of the District's service boundary is within the territory of the Orange County Water District (OCWD), the agency responsible for managing the groundwater basin, 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 annual demands, which is applicable to all Orange County water agencies that are completely annexed within OCWD. Since only 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 costs by over $1.OM per year if the entire area is annexed into OCWD. Enhanced Outreach & Communications The District continues to enhance its communications with and presence within the community. Within the FY 2009/10 Budget, the District has funded a newly formed position of a Public Information Officer. This position develops additional public information and water conservation programs with the overall goal of developing a more transparent 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, the water conservation ordinance, continuing conservation outreach, public information, and various other matters as they arise. The committee continues to meet and make recommendations to staff and to the Board of Directors. Sewer Master Plan In FY 2009/10 the District budgeted for a Sewer Master Plan to supplement the current plan completed in 1978. The revised plan is currently in progress and will identify existing sewer facilities, develop and calibrate a hydraulic computer model, provide flow monitoring, identify any existing system deficiencies, forecast deficiencies that may develop with future build out, and provide recommendations for future improvements, repairs and replacements. Future Technological Advancements Future technological advancements include the incorporation of a Computerized Maintenance & Management System (CMMS), which will automate and track all field work orders and provide actual costs to perform work order related functions. An Automated Purchase Requisitioning System, which would provide better workflow and approvals for purchasing items, as well has have direct integration with the new financial software. x 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 from 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 Reporting 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. xi 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. 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, Kenneth R. Vecchiarelli General Manager xii Stephen Parker Finance Director Yorba Linda Water District Board of Directors and Executive Staff William R. Mills, President Michael J. Beverage, Vice - President John W. Summerfield Director Kenneth R. Vecchiarelli General Manager Lee Cory Operations Manager Phil Hawkins Director Pat Grady Asst. General Manager/ IT Director Gina Knight Human Resources & Risk Manager xiii Ric Collet Director Stephen Parker Finance Director Steven R. Conklin Engineering Manager Engineering Manager Sr. Project Engineering Manager Secretary Eng. Technician Project If Engineer 3 FTE IIIIIIIII Sr. Accountant ' Accounting Assistant I /II 2 FTE ■ YL W Finance Director Project Engineer Sr. Construction Inspector Construction Inspector RMCustomer Svc. Storekeeper Supervisor Customer Srv. Rep. 1/11/111 Meter Services Lead 4 FTE Meter Reader 1 /11 4 FTE Board of Directors General Manager Management Analyst HR & Risk Assist. GM /IT Director Executive Secretary Operations Water Maint. Chief Plant G.I.S. Info. Systems S.C.A.D.A. Water Quality Technician Administrator Administrator Engineer Sr. Maintanance . Info. Systems Dist. Operator Facilities Technician 1 /11 WQ Technician Maintenance I 1 /11 2 PPE I FTE Management Analyst HR & Risk Operations Manager Manager HR Analyst Personnel Sr. Fleet Operations Water Maint. Chief Plant Technician Mechanic Assistant Superintendent Operator Mechanic Sr. Maintanance II /111 Dist. Operator Facilities Sr. Plant Maintenance I Operator 2 FTE 4 FTE Maintanance Dist. Maintanance Dist. Maintanance Plant Operator Operator III Operator If Worker I If 4 FTE 6 FTE Z FTE 3 FTE CA& i r 1 A P&. 6fk i .9�I $AWAMIX Rfv ER DISTRICT BOUNDARIES �f xv This page intentionally left blank xvi FINANCIAL SECTION DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS 5 CORPORATE PARK, SUITE 100 IRVINE, CALIFORNIA 92606 -5165 (949) 399 -0600 • FAX (949) 399 -0610 www.diehlevans.com September 15, 2010 INDEPENDENT AUDITORS' REPORT Board of Directors Yorba Linda Water District Placentia, California MICHAEL R. LUDIN, CPA CRAIG W. SPRAKER, CPA NITIN P. PATEL, CPA ROBERT CALLANAN, CPA *PHILIP H. HOLTKAMP, CPA *THOMAS .. \9. PERLOWSKI, CPA *HARVEY J. SCHROEDER, CPA KENNETH R. AMES, CPA WILLIAM C. PENTZ, CPA *A PROFESSIONAL CORPORATION We have audited the basic financial statements of the Yorba Linda Water District (the District) as of and for the year ended June 30, 2010 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. The prior year partial comparative information has been derived from the financial statements of the District for the year ended June 30, 2009 and in our report dated September 11, 2009, we expressed an unqualified opinion on these financial statements. 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, and the State Controller's Minimum Audit Requirements for California Special Districts. 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control over financial reporting. Accordingly, we express no such opinion. 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, 2010 and the results of its changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America, as well as the accounting systems prescribed by the State Controller's Office and State regulations governing Special Districts. -1- 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 In accordance with Government Auditing Standards, we have also issued our report dated September 15, 2010 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. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and other post- employment benefit plan - schedule of funding progress, as identified in the accompanying table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance on them. Our audit was made for the purpose of forming 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. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements of the District or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Our audit was conducted for the purpose of forming an opinion on the District's basic financial statements as a whole. The Introductory Section and Statistical Section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2010 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, 2010. 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 • The District's net assets increased by $5.1 million, or 3.45 %. • During the year the District's revenues were $25.9 million, up 8.75 %, while expenses were $27.4 million, up 0.34 %. • Capital contributions to the District amounted to $6.7 million. 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 two funds; the Water Fund and the Sewer Fund. 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. 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. -3- YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2010 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 18 through 42. Statement of Net Assets Assets: Current unrestricted assets Current restricted assets Other assets Capital assets, net Total Assets Liabilities: Condensed Statements of Net Assets Liabilities payable fromunrestricted current assets Liabilities payable fromrestricted assets Non - current liabilities Total liabilities Net Assets: Invested in capital assets, net of related debt Restricted Unrestricted 2010 2009 Change $ 13,259,954 $ 15,461,086 $ (2,201,132) 26,908,949 36,076,326 (9,167,377) 785,655 815,581 (29,926) 180,322,149 164, 911,787 15,410,362 221,276,707 217,264,780 4,011,927 7,038,086 7,208,558 (170,472) 1,346,440 1,324,195 22,245 58,324,858 59,312,717 (987,859) 66,709,384 67,845,470 (1,136,086) 146,877,122 141,514,024 5,363,098 15,797,432 14, 063,802 1,733,630 (8,107,231) (6,158,513) (1,948,718) Total Net Assets $ 154,567,323 $ 149,419,313 $ 5,148,010 YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2010 Statement of Net Assets (Continued) 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 of the District exceeded liabilities by $154.6 million and $149.4 million as of June 30, 2010 and 2009, respectively. By far the largest portion of the District's net assets (95% and 95% as of June 30, 2010 and 2009, 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. For the year ended June 30, 2010, the District showed a negative balance in its unrestricted net assets of $8.1 million, which indicates that there aren't any reserves to be utilized in future years, as was the same with the negative balance of $6.2 million for the year ended June 30, 2009. -5- YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2010 Statement of Revenues, Expenses and Changes in Net Assets Revenues Operating revenues: Water sales Sewer revenue Other operating revenue Total operating revenues Non -operating revenues: Investment income Property taxes Other non- operating income Total non - operating revenues Total revenues Expenses Operating expenses: Variable water costs Personnel services Supplies and services Depreciation Total operating expenses Non -operating expenses: Interest expense Other non-operating expense Total non - operating expenses Total expenses Net income (loss) before capital contributions Capital contributions Change in net assets Net assets, beginning of year Net assets, end of year 2010 2009 Change $ 22,141,731 $ 19,626,738 $ 2,514,993 1,275,979 1,259,723 16,256 571,903 439,302 132,601 23,989,613 21,325,763 2,663,850 268,424 689,108 (420,684) 1,269,441 1,283,521 (14,080) 331,227 479,911 (148,684) 1,869,092 2,452,540 (583,448) 25,858,705 23,778,303 2,080,402 10,688,318 10,859,328 (171,010) 6,677,757 6,498,959 178,798 3,576,147 4,151,058 (574,911) 5,153,891 4,167,958 985,933 26,096,113 25,677,303 418,810 1,170,498 1,469,925 (299,427) 151,300 177,553 (26,253) 1,321,798 1,647,478 (325,680) 27,417,911 27,324,781 93,130 (1,559,206) (3,546,478) 1,987,272 6,707,398 4,363,527 2,343,871 5,148,192 817,049 4,331,143 149.419.313 148.602.264 817.049 $ 154,567,505 $ 149,419,313 $ 5,148,192 The statement of revenues, expenses and changes of net assets shows how the District's net assets changed during the fiscal years. In the case of the District, net assets increased by $5.1 million and $800 thousand for the fiscal years ended June 30, 2010 and 2009, respectively. YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2010 Statement of Revenues, Expenses and Changes in Net Assets (Continued) A closer examination of the sources of changes in net assets reveals that: In 2010, the District's total revenues increased by $2.1 million, primarily due to an increase in operating revenues of $2.7 million from increased water and sewer services as a result of a 41% rate increase that went into effect in September 2009. Also, non - operating revenues decreased by $600 thousand primarily due to lower interest rates and more use of cash on extensive capital projects. In addition, total expenses increased by only $100 thousand despite a $1.0 million increase in depreciation expense and an increase in imported water rates, primarily due to an 18% reduction in water usage by conserving customers and cuts made by District staff in the supplies and services area. In 2009, the District's total revenues decreased by $400 thousand, primarily due to an increase in water sales offset by a decrease in interest earnings. Total expenses increased by $2.2 million, due to increases in imported water costs, groundwater replenishment, and departmental and operational expenses. Capital Assets Changes in capital asset amounts for 2010 were as follows: Capital assets: Capital assets, not being depreciated Capital assets, being depreciated Less accumulated depreciation Total capital assets, net Balance Transfers/ Transfers/ Balance 2009 Additions Deletions 2010 (26,782,172) $ 12,298,890 14,082,190 (2,366,246) 24,014,834 198,268,513 8,854,536 (134,889) 206,988,160 (45,655,616) (5,153,891) 128,662 (50,680,845) S 164,911,787 17,782,835 (2,372,473) 180,322,149 Changes in capital asset amounts for 2009 were as follows: Balance 2008 Capital assets: Capital assets, not being depreciated $ 30,032,709 Capital assets, being depreciated 164,602,200 Less accumulated depreciation (41,561,713) Total capital assets, net S 153,073,196 -7- Transfers/ Balance Additions Deletions 2009 9,048,353 (26,782,172) 12,298,890 34,175,639 (509,326) 198,268,513 (4,415,966) 322,063 (45,655,616) 38,808,026 (26,969,435) 164,911,787 YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2010 Capital Assets At the end of fiscal year 2010 and 2009, the District's investment in capital assets amounted to $180.3 million and $164.9 million, 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, most notably the complete replacement of Lakeview Reservoir. Additional information regarding capital assets can be found in note 5 in Notes to Basic Financial Statements. YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2010 Long -Term Liabilities Changes in longtermliabilifies for the year ended June 30, 2010 were as follows: Beginning Ending Balance Additions Reductions Balance 2003 Revenue Certificates of Participation $ 9,645,000 $ - $ (220,000) $ 9,425,000 2008 Revenue Certificates of Participation 34,640,000 - (605,000) 34,035,000 Subtotal 44,285,000 - (825,000) 43,460,000 Add (Less): Discount (131,283) - 5,432 (125,851) Premium 757,375 - (26,420) 730,955 Total Certificates of Participation 44,911,092 - (845,988) 44,065,104 Compensated absences 1,101,916 552,599 (603,627) 1,050,888 Other post -employ ieit liability 120,774 224,018 (108,309) 236,483 Total $ 46,133,782 $ 776,617 $ (1,557,924) $ 45,352,475 Changes in longtermliabilifies for the year ended June 30, 2009 were as foll ows: Beginning Ending Balance Additions Reductions Balance 2003 Revenue Certificates of Participation $ 9,860,000 $ - $ (215,000) $ 9,645,000 2008 Revenue Certificates of Participation 34,995,000 - (355,000) 34,640,000 Subtotal 44,855,000 - (570,000) 44,285,000 Add (Less): Discount (136,715) - 5,432 (131,283) Premium 783,795 - 26,420 757,375 Total Certificates of Participation 45,502,080 - (590,988) 44,911,092 Compensated absences 461,979 1,009,760 (369,823) 1,101,916 Other post enploynent liability - 217,979 (97,205) 120,774 Total $ 45,964,059 $ 1,227,739 $ (1,058,016) $ 46,133,782 Additional information regarding long -term liabilities can be found in note 6 in Notes to Basic Financial Statements. KIM YORBA LINDA WATER DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2010 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. -10- BASIC FINANCIAL STATEMENTS -11- YORBA LINDA WATER DISTRICT COMBINED STATEMENTS OF NET ASSETS June 30, 2010 (With prior year data for comparison only) ASSETS 2010 2009 CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents $ 8,686,564 $ 2,959,002 Cash and investments - 9,248,752 Accounts receivable - water and sewer services 3,923,554 2,564,759 Accounts receivable - property taxes 120,976 29,183 Accrued interest receivable 22,248 32,033 Prepaid expenses and deposits 273,024 344,661 Inventory 233,588 282,699 TOTAL UNRESTRICTED ASSETS 13,259,954 15,461,089 RESTRICTED ASSETS: Cash and cash equivalents 26,907,082 32,671,116 Cash and investments - 3,399,809 Accrued interest receivable 1,867 5,401 TOTAL RESTRICTED ASSETS 26,908,949 36,076,326 TOTAL CURRENT ASSETS 40,168,903 51,537,415 NONCURRENT ASSETS: Bond issuance costs 785,655 815,581 Capital assets (Note 5): Non - depreciable 24,014,834 12,298,890 Depreciable, net of accumulated depreciation 156,307,315 152,612,897 TOTAL NONCURRENT ASSETS 181,107,804 165,727,368 TOTAL ASSETS 221,276,707 217,264,783 See independent auditors' report and notes to basic financial statements. (Continued) -12- YORBA LINDA WATER DISTRICT COMBINED STATEMENTS OF NET ASSETS (CONTINUED) June 30, 2010 (With prior year data for comparison only) LIABILITIES 2010 2009 CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable $ 5,536,848 $ 5,558,142 Accrued expenses 125,727 174,579 Compensated absences payable (Note 6) 262,722 275,479 Customer and construction deposits 632,187 610,420 Deferred revenue 480,602 589,938 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS 7,038,086 7,208,558 PAYABLE FROM RESTRICTED ASSETS: Accrued interest payable 491,440 499,195 Certificates of Participation - current portion (Note 6) 855,000 825,000 TOTAL PAYABLE FROM RESTRICTED ASSETS 1,346,440 1,324,195 TOTAL CURRENT LIABILITIES 8,384,526 8,532,753 LONG -TERM LIABILITIES (LESS CURRENT PORTION) Deferred annexation revenue 14,090,105 14,279,414 Compensated absences (Note 6) 788,166 826,437 Other post - employment benefit (OPEB) liability (Notes 6 and 7) 236,483 120,774 Certificates of Participation (Note 6) 43,210,104 44,086,092 TOTAL LONG -TERM LIABILITIES (LESS CURRENT PORTION) 58,324,858 59,312,717 TOTAL LIABILITIES 66,709,384 67,845,470 NET ASSETS: Invested in capital assets, net of related debt (Note 9) 146,877,122 141,514,024 Restricted (Note 9) 15,797,432 14,063,802 Unrestricted (8,107,231) (6,158,513) TOTAL NET ASSETS $ 154,567,323 $ 149,419,313 See independent auditors' report and notes to basic financial statements. -13- YORBA LINDA WATER DISTRICT COMBINED STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the year ended June 30, 2010 (With prior year data for comparison only) OPERATING REVENUES: Water sales Sewer revenues Other operating revenues 2010 $ 22,141,731 1,275,979 571,903 2009 $ 19,626,738 1,259,723 439,302 TOTAL OPERATING REVENUES 23,989,613 21,325,763 OPERATING EXPENSES: Variable water costs 10,688,318 10,859,328 Personnel services 6,677,757 6,498,959 Supplies and services 3,576,147 4,151,058 Depreciation 5,153,891 4,167,958 TOTAL OPERATING EXPENSES 26,096,113 25,677,303 OPERATING LOSS (2,106,500) (4,351,540) NONOPERATING REVENUES (EXPENSES): Property taxes 1,269,441 1,283,521 Investment income 268,242 689,108 Interest expense (1,170,498) (1,469,925) Other nonoperating revenues 331,227 479,911 Other nonoperating expenses (151,300) (177,553) TOTAL NONOPERATING REVENUES (EXPENSES) 547,112 805,062 NET LOSS BEFORE CAPITAL CONTRIBUTIONS (1,559,388) (3,546,478) CAPITAL CONTRIBUTIONS 6,707,398 4,363,527 CHANGES IN NET ASSETS 5,148,010 817,049 NET ASSETS - BEGINNING OF YEAR, AS RESTATED (NOTE 13) 149,419,313 148,602,264 NET ASSETS - END OF YEAR $ 154,567,323 $ 149,419,313 See independent auditors' report and notes to basic financial statements. -14- YORBA LINDA WATER DISTRICT COMBINED STATEMENTS OF CASH FLOWS For the year ended June 30, 2010 (With prior year data for comparison only) See independent auditors' report and notes to basic financial statements. (Continued) -15- 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 22,589,206 $ 23,377,263 Cash payments to employees for salaries and wages (6,661,928) (6,257,272) Cash payments to suppliers of goods and services (14,101,632) (14,673,677) NET CASH PROVIDED BY OPERATING ACTIVITIES 1,825,646 2,446,314 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Proceeds from property taxes and assessments 1,173,205 1,274,303 Other revenue 333,391 665,540 Other expenses (115,942) (142,195) NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 1,390,654 1,797,648 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Property taxes received for debt service 4,443 6,883 Proceeds from capital contributions 130,619 623,292 Acquisition and construction of capital assets (13,505,308) (12,286,690) Proceeds from sales of capital assets 4,063 1,635 Principal paid on long -term liability (825,000) (570,000) Interest paid on long -term liability (1,991,711) (2,157,836) NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (16,182,894) (14,382,716) CASH FLOWS FROM INVESTING ACTIVITIES: Sale /purchase of investments, net 12,671,946 (5,364,774) Interest and investment earnings 258,176 513,191 NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 12,930,122 (4,851,583) NET DECREASE IN CASH AND CASH EQUIVALENTS (36,472) (14,990,337) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 35,630,118 50,620,455 CASH AND CASH EQUIVALENTS - END OF YEAR $ 35,593,646 $ 35,630,118 See independent auditors' report and notes to basic financial statements. (Continued) -15- YORBA LINDA WATER DISTRICT COMBINED STATEMENTS OF CASH FLOWS (CONTINUED) For the year ended June 30, 2010 (With prior year data for comparison only) 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 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 construction 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. -16- 2010 2009 $ (2,106,500) $ (4,351,540) 5,153,891 4,167,958 (1,358,795) 2,078,635 49,111 115,286 71,637 474,957 (21,294) (347,076) (48,852) 90,924 115,709 120,774 (51,028) 29,989 21,767 73,726 - (7,319) 3,932,146 6,797,854 $ 1,825,646 $ 2,446,314 $ 8,686,564 $ 2,959,002 26,907,082 32,671,116 $ 35,593,646 $ 35,630,118 $ 20,988 $ 20,988 $ 6,278,134 $ 3,416,512 NOTES TO BASIC FINANCIAL STATEMENTS -17- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 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 provides two services which include Water and Sewer. Water is provided to the entire service area. Sewer is provided to about two - thirds of the service area. 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 81,893 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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 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. Under the economic measurement focus all assets and liabilities (whether current or noncurrent) associated with these activities are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets present increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. See independent auditors' report. -19- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): 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. e. Operating Revenues and Expenses: Operating revenues, such as charges for services (water sales and sewer service charges) 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. See independent auditors' report. -20- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): g. Investments and Investment Policy: The District has adopted an investment policy directing the District's General Manager or Finance Director to invest, reinvest, sell or exchange securities. 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 $41,612 and $27,135 were made to bad debt expense for the fiscal years ended June 30, 2010 and 2009, respectively. 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 Orange 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: January 1 July 1 First Installment - November 1 Second Installment - March 1 First Installment - December 10 Second Installment - April 10 See independent auditors' report. -21- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): j. Prepaid Expenses: 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. 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 $785,655 and $815,581 net of accumulated amortization of $112,130 and $82,204 at June 30, 2010 and 2009, respectively. n. Interest Expense: The District incurs interest charges on the Certificates of Participation. Interest expense of $787,038 and $580,963 has been capitalized as an addition to the cost of construction for the years ended June 30, 2010 and 2009, respectively. See independent auditors' report. -22- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): 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 cash compensation at their current base salary for three- eighths of all unused sick leave and the remaining five- eights of the unused sick leave is contributed to the employee's PERS account. The District has accrued 100% of the unused sick leave as a liability as it expects most employees to meet the PERS requirements when retiring or leaving the District. 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. See independent auditors' report. -23- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): 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 I% 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. 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 annual 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. See independent auditors' report. -24- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): y. Prior Year Data: Selected information regarding the prior year has been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the District's prior year financial statements, from which this selected financial data was derived. 3. CASH AND INVESTMENTS: Cash and Investments: Cash and investments as of June 30, 2010 are reported in the accompanying combining schedule of net assets as follows: Unrestricted Current Assets: Cash and cash equivalents Restricted Assets: Cash and cash equivalents Total Cash and Investments Water Sewer Total $ 6,850,711 $ 1,835,853 $ 8,686,564 26,907,082 - 26,907,082 33.757.793 S 1.835.853 S 35.593.646 Cash and investments as of June 30, 2010 consisted of the following: Water Sewer Cash on hand $ 1,200 $ - Deposits with financial institutions 2,047,977 121,766 Escrow deposits 1,282,379 - Investments 30,426,237 1,714,087 Total Cash and Investments See independent auditors' report. -25- Total $ 1,200 2,169,743 1,282,379 32,140,324 33,757,793 1,835,853 35,593,646 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 3. CASH AND INVESTMENTS (CONTINUED): 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 California 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 by bond trustee that are not subject to California Government Code restrictions. N/A - Not Applicable See independent auditors' report. -26- Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity_ of Portfolio * in One Issuer Bank or Savings and Loans 5 years None None Local Agency Investment Fund (LAIF) N/A None $10 million Orange County Commingled Investment Pool N/A None $10 million California Asset Management Program N/A None None United States Treasury Bills, Notes and Bonds 5 years None None United States Government Sponsored Enterprise Securities 5 years 50% None Corporate Bonds 5 years 30% None Bankers Acceptances 180 days 10% None Commercial Paper 270 days 25% None CalTRUST Investment Pool N/A N/A $10 million Money Market Funds N/A 20% None * Excluding amounts held by bond trustee that are not subject to California Government Code restrictions. N/A - Not Applicable See independent auditors' report. -26- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 3. CASH AND INVESTMENTS (CONTINUED): Investments Authorized by Debt 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 Cash United States Treasury Bills, Notes and Bonds United States Treasury Obligations Resolution Funding Corp. (REFCORP) Prefunded Municipal Bonds United States 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: 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 term 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 flow and liquidity needed for operations. See independent auditors' report. -27- Maximum Maximum Maximum Percentage Investment Maturity Allowed in One Issuer None None None None None None None None None None 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 term 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 flow and liquidity needed for operations. See independent auditors' report. -27- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 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, 2010. Investment Ty CalTRUST Investment Pool Held by bond trustee: Money market funds Disclosures Relating to Credit Risk: Remaining Maturity (in Months) 12 Months or Less $ 21,520,247 10,620,077 32.140.324 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. Minimum Legal Not Investment Type Rating Total Rated AAA AA+ Ca1TRUST Investment Pool N/A $ 21,520,247 $ 17,186,223 $ - $ 4,334,024 Held by bond trustee: Money market funds A 10,620,077 - 10,620,077 - See independent auditors' report. $ 32,140,324 $ 17,186,223 S 10,620,077 S 4,334,024 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 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 LAIF). 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 governmental 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 $2,182,276 as of June 30, 2010. Of the bank balances, up to $250,000 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. -29- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 3. CASH AND INVESTMENTS (CONTINUED): Investment in CalTRUST Investment Pool: CalTRUST is a Joint Powers Agency Authority created by local public agencies to provide a convenient method for local public agencies to pool their assets for investment purposes. CalTRUST is governed by a Board of Trustees made up of experienced local agency treasurers and investment officers. The Board sets overall policies for the program and selects and supervises the activities of the investment manager and other agents. CalTRUST maintains and administers four pooled accounts within the program: Money Market, Short -Term, Medium -Term and Long -Term. The Money Market account permits daily transactions, with same -day liquidity (provided redemption requests are received by 1:00 p.m. Pacific time), with no limit on the amount of funds that may be invested. The Short-Term account permits an unlimited number of transactions per month (with prior day notice), with no limit on the amount of funds that may be invested. The Medium- and Long -Term accounts permit investments, withdrawals and transfers once per month, with five days advance notice. All CalTRUST accounts comply with the limits and restrictions placed on local agency investments by the California Government Code. CalTRUST imposes a $250,000 minimum investment; however, there is no maximum limit. The fair value of the District's investment in this pool is reported in the accompanying financial statements at amounts based upon the District's percentage interest of the fair value provided by CalTRUST for the CalTRUST accounts (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by CalTRUST. 4. RESTRICTED ASSETS: Restricted assets were provided by, and are to be used for the following as of June 30, 2010 and 2009: Source Use 2010 2009 Custodial receipts Bond proceeds, taxes, assessments and interest See independent auditors' report. Custodial costs Construction of capital assets expansion -30- $ 1,282,379 $ 1,074,800 25,626,570 35,001,526 26.908.949 S 36.076.326 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 5. CAPITAL ASSETS: Changes in capital assets for the year ended June 30, 2010 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 July 1, 2009 Balance (As Restated) Additions Deletions June 30, 2010 $ 347,490 $ - $ - $ 347,490 11,951,400 14,082,190 (2,366,246) 23,667,344 12,298,890 14,082,190 (2,366,246) 24,014,834 5,769,117 - (47,234) 5,721,883 16,867,820 - - 16,867,820 2,556,613 67,268 - 2,623,881 154,974,084 8,325,816 (8,655) 163,291,245 18,100,879 461,452 (79,000) 18,483,331 198,268,513 8,854,536 (134,889) 206,988,160 (1,374,629) (140,910) 44,352 (1,471,187) (3,205,619) (609,150) - (3,814,769) (697,516) (104,933) - (802,449) (35,807,133) (3,526,536) 5,310 (39,328,359) (4,570,719) (772,362) 79,000 (5,264,081) (45,655,616) (5,153,891) 128,662 (50,680,845) 152,612,897 3,700,645 (6,227) 156,307,315 164.911.787 17.782.835 (2.372.473) 180.322.149 Depreciation expense for the depreciable capital assets was $5,153,891 in 2010. The District has been involved in various construction projects throughout the year. The balance of construction in progress at June 30, 2010 is $23,667,344. See independent auditors' report. -31- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 6. LONG -TERM LIABILITIES: Changes in long -term liabilities for the year ended June 30, 2010 were as follows: Certificates of Participation: 2003 Revenue Certificates of Participation 2008 Revenue Certificates of Participation Subtotal Add (Less): Discount Premium Total Certificates of Participation Compensated absences Other post - employment liability Total Beginning Balance Ending Due Within (As Restated) Additions Reductions Balance One Year $ 9,645,000 $ - $ (220,000) $ 9,425,000 $ 225,000 34,640,000 - (605,000) 34,035,000 630,000 44,285,000 - (825,000) 43,460,000 855,000 (131,283) - 5,432 (125,851) - 757,375 - (26,420) 730,955 - 44,911,092 - (845,988) 44,065,104 855,000 1,101,916 552,599 (603,627) 1,050,888 262,722 120,774 224,018 (108,309) 236,483 - 46,133,782 776,617 (1,557 224) 45.352.475 1.117.722 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. 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, 2010 the 2003 Certificates outstanding balance was $9,425,000. 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 2010, the net revenues equal to 222% of the debt service. See independent auditors' report. -32- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 6. LONG -TERM LIABILITIES (CONTINUED): 2003 Revenue Certificates of Participation (Continued): The annual debt service requirements for the 2003 Revenue Certificates of Participation outstanding at June 30, 2010 are as follows: Year Ending 2011 2012 2013 2014 2015 2016-2020 2021 -2025 2026-2030 2031 -2034 Subtotal Less: Discount Total 2008 Revenue Certificates of Participation: Principal $ 225,000 235,000 245,000 255,000 265,000 1,500,000 1,890,000 2,410,000 2,400,000 9,425,000 (125,851) Interest $ 445,726 437,382 428,076 418,076 407,411 1,848,890 1,447,069 913,000 247,500 6,593,130 Total $ 670,726 672,382 673,076 673,076 672,411 3,348,890 3,337,069 3,323,000 2,647,500 16,018,130 (125,851) 9.299.149 S 6.593.130 S 15.892.279 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, 2010. At June 30, 2010 the 2008 Certificates outstanding balance was $34,035,000. 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 2010, the net revenues equal to 222% of the debt service. See independent auditors' report. -33 - rol 7 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 LONG -TERM LIABILITIES (CONTINUED): 2008 Revenue Certificates of Participation (Continued): The annual debt service requirements for the 2008 Revenue Certificates of Participation outstanding at June 30, 2010 are as follows: Year Ending 2011 2012 2013 2014 2015 2016-2020 2021 -2025 2026-2030 2031 -2035 2036-2039 Subtotal Add: Premium Total Compensated Absences: Principal $ 630,000 655,000 680,000 705,000 735,000 4,140,000 5,040,000 6,170,000 7,675,000 7,605,000 34,035,000 730,955 34.765.955 Interest $ 1,503,496 1,477,796 1,451,096 1,423,396 1,394,596 6,498,480 5,582,601 4,413,004 2,861,764 783,375 27,389,604 Total $ 2,133,496 2,1 32,796 2,131,096 2,128,396 2,129,596 10,638,480 10,622,601 10,583,004 1 0,536,764 8,388,375 61,424,604 730.955 27.389.604 S 62.155.559 Compensated absences are comprised of unpaid vacation leave, sick leave and compensating time off which are accrued as earned. (See Note 20). 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. -34- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 7. 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, 2010, the District paid $108,309 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 6,039 224,018 108,309 115,709 120,774 S 236,483 The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the years ended June 30, 2010 and 2009 (the first year in which GASB Statement 45 is required to be implemented) were as follows: Fiscal Year Ended 6/30/09 6/30/10 Annual OPEB Cost $ 217,979 224,018 Percentage of Annual OPEB Costs Contributed 44.64% 48.35% See independent auditors' report. -35- Net OPEB Obligation $ 120,774 236,483 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 7. OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED): d. Funded Status and Funding Progress: As of June 1, 2009, the most recent 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. See independent auditors' report. -36- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 8. 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. CalPERS 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 CalPERS 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 2010, 2009 and 2008 were 10.062 %, 9.886% and 9.471 %, 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 2010, 2009 and 2008 the District's annual contribution were $857,291, $847,632 and $763,653, respectively, for CalPERS and was equal to the District's required and actual contributions for each year. 9. NET ASSETS INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT AND RESTRICTED NET ASSETS: The balance of net investment in capital assets consisted of the following as of June 30, 2010 and 2009: 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. -37- 2010 $ 180,322,149 (855,000) (43,210,104) 10,620,077 2009 $ 164,911,787 (825,000) (44,086,092) 21.513.329 146.877.122 S 141.514.024 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 9. NET ASSETS INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT AND RESTRICTED NET ASSETS (CONTINUED): Restricted Net Assets: Restricted net assets represents amounts restricted for debt service for constraints by the third party holders of the Certificates of Participation. 10. 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). The Authority is a risk - pooling self - insurance authority, created under provisions of California Government Code Sections 6500 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, 2010, 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. See independent auditors' report. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 10. RISK MANAGEMENT (CONTINUED): 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 2010, 2009 and 2008. 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, 2010, 2009 and 2008. 11. 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 $2,035,774 of open construction contracts as of June 30, 2010. Construction contracts include: See independent auditors' report. -39- Total Construction Balance Approved Costs to Project Name Contract to Date Complete Design of Hidden Hills Reservoir (2MG) $ 322,769 $ 319,541 $ 3,228 Hidden Hills Reservoir construction 5,012,458 4,525,453 487,005 Hidden Hills Reservoir construction management 348,520 346,383 2,137 Hidden Hills Reservoir geotechnical services 113,470 44,541 68,929 Hidden Hills Reservoir construction support services 277,465 263,592 13,873 CM for Highland Reservoir Replacement (6MG) 605,856 442,164 163,692 Geotechnical support services for Highland Reservoir Replacement 86,200 79,699 6,501 Environmental support services for Highland Reservoir Replacement 37,951 32,515 5,436 Construction of Highland Reservoir Replacement (6MG) 9,384,921 8,610,597 774,324 GIS parcel database 5 -year purchase agreement 42,118 33,694 8,424 Zone reconfiguration project 215,751 207,365 8,386 Zone Reconfiguration Project construction materials testing 39,400 37,605 1,795 See independent auditors' report. -39- YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 11. COMMITMENTS AND CONTINGENCIES (CONTINUED): Construction Contracts (Continued): Litigation: In November 2009, 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 10), 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. 12. PROPOSITION IA BORROWINGS BY THE STATE OF CALIFORNIA: Under the provisions of Proposition I and as part of the 2009 -2010 budget package passed by the California state legislature on July 28, 2009, the State of California borrowed 8% of the amount of property tax revenue, including those property taxes associated with the in -lieu motor vehicle license fee, the triple flip in the lieu sales tax, and supplemental property tax, apportioned to cities, counties and special districts (excluding redevelopment agencies). The state is required to repay this borrowing plus interest by June 30, 2013. After repayment of this initial borrowing, the California legislature may consider only one additional borrowing within a ten -year period. The amount of this borrowing pertaining to the District was $102,192. See independent auditors' report. .1 Total Construction Balance Approved Costs to Project Name Contract to Date Complete Construction services for Well 20 $ 349,037 $ 292,770 $ 56,267 Design, CM services for Well 20 79,820 19,644 60,176 Hydrogeological services Wells 1, 5 and 12 upgrade project 89,785 55,566 34,219 Parts and supplies for Wells 1, 5 and 12 upgrade project 222,528 171,064 51,464 Parts and supplies for Wells 1, 5 and 12 upgrade project 51,249 50,889 360 Parts and supplies for Wells 1, 5 and 12 upgrade project 27,880 - 27,880 Design services for Highland Booster Station replacement 561,533 490,000 71,533 Design services for Anaheim Intertie Project 26,100 20,000 6,100 Consultant serves for Sewer Master Plan 300,210 116,165 184,045 18.195.021 16.159.247 2A35.774 Litigation: In November 2009, 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 10), 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. 12. PROPOSITION IA BORROWINGS BY THE STATE OF CALIFORNIA: Under the provisions of Proposition I and as part of the 2009 -2010 budget package passed by the California state legislature on July 28, 2009, the State of California borrowed 8% of the amount of property tax revenue, including those property taxes associated with the in -lieu motor vehicle license fee, the triple flip in the lieu sales tax, and supplemental property tax, apportioned to cities, counties and special districts (excluding redevelopment agencies). The state is required to repay this borrowing plus interest by June 30, 2013. After repayment of this initial borrowing, the California legislature may consider only one additional borrowing within a ten -year period. The amount of this borrowing pertaining to the District was $102,192. See independent auditors' report. .1 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2010 12. PROPOSITION IA BORROWINGS BY THE STATE OF CALIFORNIA (CONTINUED): The borrowing by the State of California was recognized as a receivable in the accompanying financial statements. It is reported as part of accounts receivable - property taxes. 13. RESTATEMENT OF NET ASSETS: Net assets at July 1, 2009 was restated as follows: Net assets, July 1, 2009, as originally reported To adjust construction in progress for unrecorded developers contributions To adjust construction in progress to delete capitalized overhead that should have been expensed To adjust construction in progress to delete capitalized costs that should have been expensed To remove capital assets disposed in prior years To adjust accumulated depreciation on construction in progress reclassified to utility plant To adjust compensated absences for additional accrual for accumulated sick leave Net assets, July 1, 2009, as restated See independent auditors' report. -41- $ 150,119,614 2,096,695 (1,515,071) (324,094) (99,875) (248,008) (609,948) 149.419.313 This page intentionally left blank -42- REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFIT PLAN SCHEDULE OF FUNDING PROGRESS -43- YORBA LINDA WATER DISTRICT REQUIRED SUPPLEMENTARY INFORMATION For the year ended June 30, 2010 OTHER POST - EMPLOYMENT BENEFIT PLAN SCHEDULE OF FUNDING PROGRESS Retiree Health Plan See independent auditors' report and notes to basic financial statements. .. Actuarial Value Unfunded Annual UL as a Actuarial Accrued of Assets Liability Funded Covered Percentage Valuation Liability (AVA) (UL) Ratio Payroll of Payroll Date (a) (b) (a) - (b) (b) /(a) (c) [(a)- (b)] /(c) 06/01/09 $ 1,740,127 $ - $ 1,740,127 0.00% $ 4,983,653 34.92% See independent auditors' report and notes to basic financial statements. .. SUPPLEMENTARY INFORMATION -45- YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET ASSETS June 30, 2010 ASSETS Water Sewer Totals CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents Accounts receivable - water and sewer services Accounts receivable - property taxes Accrued interest receivable Prepaid expenses and deposits Inventory TOTAL UNRESTRICTED ASSETS RESTRICTED ASSETS: Cash and cash equivalents Accrued interest receivable TOTAL RESTRICTED ASSETS TOTAL CURRENT ASSETS NONCURRENT ASSETS: Bond issuance costs Capital assets (Note 5): Non - depreciable Depreciable, net of accumulated depreciation TOTAL NONCURRENT ASSETS TOTAL ASSETS See independent auditors' report. -46- $ 6,850,711 $ 1,835,853 $ 8,686,564 3,742,266 181,288 3,923,554 120,976 - 120,976 20,251 1,997 22,248 275,088 (2,064) 273,024 233,588 - 233,588 11,242,880 2,017,074 13,259,954 26,907,082 - 26,907,082 1,867 - 1,867 26,908,949 - 26,908,949 38,151,829 2,017,074 40,168,903 785,655 - 785,655 23,440,046 574,788 24,014,834 132,605,574 23,701,741 156,307,315 156,831,275 24,276,529 181,107,804 194,983,104 26,293,603 221,276,707 YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET ASSETS (CONTINUED) June 30, 2010 LIABILITIES Water Sewer Totals CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable $ 5,547,859 $ (11,011) $ 5,536,848 Accrued expenses 125,727 - 125,727 Compensated absences 262,722 - 262,722 Customer and construction deposits 171,906 460,281 632,187 Deferred revenue 480,602 - 480,602 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS 6,588,816 449,270 7,038,086 PAYABLE FROM RESTRICTED ASSETS: Accrued interest payable 491,440 - 491,440 Certificates of Participation - current portion 855,000 - 855,000 TOTAL PAYABLE FROM RESTRICTED ASSETS 1,346,440 - 1,346,440 TOTAL CURRENT LIABILITIES 7,935,256 449,270 8,384,526 LONG -TERM LIABILITIES (LESS CURRENT PORTION): Deferred annexation revenue 14,090,105 - 14,090,105 Compensated absences 788,166 - 788,166 Other post - employment benefit (OPEB) liability 215,200 21,283 236,483 Certificates of Participation 43,210,104 - 43,210,104 TOTAL LONG -TERM LIABILITIES (LESS CURRENT PORTION) 58,303,575 21,283 58,324,858 TOTAL LIABILITIES 66,238,831 470,553 66,709,384 NET ASSETS: Invested in capital assets, net of related debt 122,600,593 24,276,529 146,877,122 Restricted 15,797,432 - 15,797,432 Unrestricted (95653,752) 155465521 (85107,231) TOTAL NET ASSETS $ 128,744,273 $ 25,823,050 $ 154,567,323 See independent auditors' report. -47- YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the year ended June 30, 2010 OPERATING REVENUES: Water sales Sewer revenues Other operating revenues TOTAL OPERATING REVENUES OPERATING EXPENSES: Variable water costs Personnel services Supplies and services Depreciation and amortization TOTAL OPERATING EXPENSES OPERATING LOSS NONOPERATING REVENUES (EXPENSES): Property taxes - debt service Investment income Interest expense Other nonoperating revenues Other nonoperating expenses TOTAL NONOPERATING REVENUES (EXPENSES) NET LOSS BEFORE CAPITAL CONTRIBUTIONS CAPITAL CONTRIBUTIONS CHANGES IN NET ASSETS NET ASSETS - BEGINNING OF YEAR, AS RESTATED NET ASSETS - END OF YEAR See independent auditors' report. -48- Water $ 22,141,731 455,507 Sewer Totals $ - $ 22,141,731 1,275,979 1,275,979 116396 571,903 22,597,238 1,392,375 23,989,613 10,688,318 - 10,688,318 5,863,006 814,751 6,677,757 3,228,241 347,906 3,576,147 4,561,701 592,190 5,153,891 24,341,266 1,754,847 26,096,113 (1,744,028) (362,472) (2,106,500) 1,269,441 - 1,269,441 248,882 19,360 268,242 (1,169,955) (543) (1,170,498) 301,888 29,339 331,227 (148,476) (2,824) (151,300) 501,780 45,332 547,112 (1,242,248) (317,140) (1,559,388) 5,973,683 733,715 6,707,398 4,731,435 416,575 5,148,010 124,012,838 25,406,475 149,419,313 $ 128,744,273 $ 25,823,050 $ 154,567,323 YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS For the year ended June 30, 2010 CASH FLOWS FROM OPERATING ACTIVITIES: 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 Water Sewer Totals $ 21,219,512 $ 1,369,694 $ 22,589,206 (5,849,493) (812,435) (6,661,928) (13,711,673) (389,959) (14,101,632) 1,658,346 167,300 1,825,646 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Proceeds from property taxes and assessments 1,171,251 1,954 1,173,205 Other revenue 301,170 32,221 333,391 Other expenses (113,118) (2,824) (115,942) NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 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 Principal paid on long -term liability Interest paid on long -term liability NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Sale /purchase of investments, net Interest and investment earnings NET CASH PROVIDED BY INVESTING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR See independent auditors' report. -49- 1,359,303 31,351 1,390,654 4,443 - 4,443 123,415 7,204 130,619 (13,107,653) (397,655) (13,505,308) 4,063 - 4,063 (825,000) - (825,000) (1,991,168) (543) (1,991,711) (15,791,900) (390,994) (16,182,894) 11,735,138 936,808 12,671,946 240,473 17,703 258,176 11,975,611 954,511 12,930,122 (798,640) 762,168 (36,472) 34,556,433 1,073,685 35,630,118 $ 33,757,793 $ 1,835,853 $ 35,593,646 (Continued) YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS (CONTINUED) For the year ended June 30, 2010 NONCASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES: Amortization related to long -term debt Capital contributions See independent auditors' report. -50- $ 20,988 $ - $ 20,988 $ 5,551,623 $ 726,511 $ 6,278,134 Water Sewer Totals RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating loss $ (1,744,028) $ (362,472) $ (2,106,500) Adjustments to reconcile operating loss to net cash provided by operating activities: Depreciation 4,561,701 592,190 5,153,891 Changes in operating assets and liabilities: (Increase) decrease in assets: Accounts receivable (1,342,774) (16,021) (1,358,795) Inventory 49,111 - 49,111 Prepaid expenses and other deposits 66,684 4,953 71,637 Increase (decrease) in liabilities: Accounts payable and accrued expenses 54,190 (75,484) (21,294) Accrued salaries and wages (39,938) (8,914) (48,852) Accrued other post - employment benefits (OPEB) liability 104,479 11,230 115,709 Accrued compensated absences (51,028) - (51,028) Customer and other deposits (51) 21,818 21,767 Total adjustments 3,402,374 529,772 3,932,146 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,658,346 $ 167,300 $ 1,825,646 CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION: Unrestricted $ 6,850,711 $ 1,835,853 $ 8,686,564 Restricted 26,907,082 - 26,907,082 TOTAL CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION $ 33,757,793 $ 1,835,853 $ 35,593,646 NONCASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES: Amortization related to long -term debt Capital contributions See independent auditors' report. -50- $ 20,988 $ - $ 20,988 $ 5,551,623 $ 726,511 $ 6,278,134 YORBA LINDA WATER DISTRICT SCHEDULE OF OPERATING EXPENSES BY COST CENTER AND NATURE OF EXPENSES FOR WATER AND SEWER For the year ended June 30, 2010 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 See independent auditors' report. -51- Water Sewer Totals $ 6,727,831 $ - $ 6,727,831 2,435,207 - 2,435,207 1,052,148 - 1,052,148 473,132 - 473,132 10,688,318 - 10,688,318 2,673,364 421,197 3,094,561 1,462,164 124,597 1,586,761 1,671,134 245,101 1,916,235 45,797 3,907 49,704 10,547 19,949 30,496 5,863,006 814,751 6,677,757 647,209 29,223 676,432 966,724 103,409 1,070,133 204,884 18,229 223,113 70,032 9,977 80,009 282,591 27,331 309,922 243,904 38,585 282,489 398,636 75,029 473,665 105,003 10,385 115,388 31,158 2,854 34,012 35,696 4,185 39,881 29,740 3,009 32,749 13,971 1,305 15,276 104,782 12,281 117,063 34,952 6,660 41,612 2,968 294 3,262 55,991 5,150 61,141 3,228,241 347,906 3,576,147 $ 19,779,565 $ 1,162,657 $ 20,942,222 YORBA LINDA WATER DISTRICT SCHEDULE OF CAPITAL ASSETS For the year ended June 30, 2010 Land, Mineral and Water Rights: Land Water rights Mineral rights Land rights and easements Total Land, Mineral and Water Rights Source of Supply: Wells MWD connection Total Source of Supply Pumping Plant: Structures and improvements Equipment Total Pumping Plant Water Treatment Plant: Structures and improvements Equipment Total Water Treatment Plant Transmission and Distribution Plant: Mains Reservoirs and tanks Service and meter installation Fire hydrants Meters Fire mains Structures and improvements Total Transmission and Distribution Plant General Plant: Structures and improvements Transportation equipment Power operated equipment Communication equipment Computer equipment Office furniture Tools, shops and garage equipment Other Store equipment Total General Plant Construction in Progress Total Capital Assets See independent auditors' report. -52- Water Sewer Totals $ 138,629 $ - $ 138,629 86,300 - 86,300 63,650 - 63,650 385 58,526 58,911 288,964 58,526 347,490 5,211,307 - 5,211,307 517,275 (6,699) 510,576 5,728,582 (6,699) 5,721,883 9,387,884 - 9,387,884 7,450,696 29,240 7,479,936 16,838,580 29,240 16,867,820 1,473,626 1,150,255 2,623,881 1,473,626 1,150,255 2,623,881 66,380,759 28,062,615 94,443,374 43,614,586 - 43,614,586 5,366,832 2,390,450 7,757,282 6,244,986 - 6,244,986 8,669,133 - 8,669,133 717,746 - 717,746 1,844,138 - 1,844,138 132,838,180 30,453,065 163,291,245 13,160,535 - 13,160,535 1,490,658 971,316 2,461,974 542,239 - 542,239 565,557 - 565,557 448,484 - 448,484 1,188,942 - 1,188,942 62,061 - 62,061 4,650 - 4,650 48,889 - 48,889 17,512,015 971,316 18,483,331 23,151,082 516,262 23,667,344 $ 198,981,284 $ 32,021,710 $ 231,002,994 STATISTICAL SECTION -53- This page intentionally left blank -54- YORBA LINDA WATER DISTRICT DESCRIPTION OF STATISTICAL SECTION CONTENTS June 30, 2010 This part of the District's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements and the note disclosures say about the government's overall financial health. Contents: Pages Financial Trends these schedules contain trend information to help the reader understand how the District's financial performance and well -being have changed over time. 56 Revenue Capacity these schedules contain information to help the reader assess the District's most significant local revenue source, the property tax. 58 Debt Capacity these schedules present information to help the reader assess the affordability of the District's current levels of outstanding debt and the District's ability to issue additional debt in the future. 60 Demographic and Economic Information these schedules offer demographic and economic indicators to help the reader understand the environment within which the District's financial activities take place. 62 Operating Information these schedules contain service and infrastructure data to help the reader understand how the information in the District's financial report relates to the services the District provides and the activities it performs. 64 -55- Changes in Net Assets: Operating Revenues Water Sales Sewer Revenues Other Operating Revenue Operating Expenses Yorba Linda Water District Changes in Net Assets Last Ten Fiscal Years Fiscal Year 2010 2009 2008 $ 22,141,731 $ 19,626,738 $ 19,470,109 1,275,979 1,259,723 1,247,907 571,903 439,302 380,175 Variable Water Costs 10,688,318 10,859,328 10,516,507 Personnel Services 6,677,757 6,498,959 5,751,384 Supplies and Services 3,576,147 4,151,058 4,361,512 Depreciation 5,153,891 4,167,958 3,572,726 Operating Loss Non operating Revenue (Expenses) Property Taxes Investment Income Interest Expense Other Non operating Revenue Other Non operating Expense Total Non - Operating Revenue (Expense) Net Income (Loss) Before Capital Contributions Capital Contributions Changes in Net Assets Net Assets by Component: Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Net Assets NOTE: GASB 34 implemented in 2002 SOURCE: YLWD Audited Financial Statements (2,106,500) (4,351,540) (3,103,938) 1,269,441 1,283,521 1,263,656 268,242 689,108 1,508,193 (1,170,498) (1,469,925) (824,387) 331,227 479,911 270,429 (151,300) (177,553) (133,604) 547,112 805,062 2,084,287 (1,559,388) (3,546,478) (1,019,651) 6,707,398 4,363,527 4,100,051 $ 5,148,010 $ 817,049 $ 3,080,400 $ 146,877,122 $ 141,514,024 $ 139,677,663 15,797,432 14,063,802 14,523,549 (8,107,231) (6,158,513) (4,898,647) $ 154,567,323 $ 149,419,313 $ 149,302,565 -56- $ 18,944,233 806,897 393,285 $ 17,017,275 778,275 382,917 Fiscal Year $ 14,533,021 $ 14,138,952 750,771 763,528 427,430 385,241 $ 12,128,715 545,119 177,966 $ 12,080,445 525,188 174,572 10,703,037 8,930,535 7,920,218 8,405,858 7,510,409 7,018,095 5,276,878 4,635,464 4,294,020 3,903,396 3,304,878 2,874,817 3,395,303 2,877,288 2,699,842 2,345,991 2,111,993 1,762,580 3,445,868 2,923,288 2,578,420 2,498,265 2,305,286 2,073,348 (2,676,671) (1,188,108) (1,781,278) (1,865,789) (2,380,766) (948,635) 1,186,441 335,075 252,663 1,005,859 3,304,314 3,247,591 2,180,067 1,425,663 638,235 342,554 549,093 914,100 (468,087) (472,163) (565,581) (484,895) (214,842) (291,352) 455,067 534,385 416,778 642,358 155,814 277,198 (138,501) (336,649) (179,526) (296,528) (282,039) (311,231) 3,214,987 1,486,311 562,569 1,209,348 3,512,340 3,836,306 538,316 298,203 (1,218,709) (656,441) 1,131,574 2,887,671 6,913,095 26,026,524 6,701,629 2,184,681 11,419,097 1,884,633 $ 7,451,411 $ 26,324,727 $ 5,482,920 $ 1,528,240 $ 12,550,671 $ 4,772,304 $ 121,317,296 $ 106,376,683 $ 84,000,773 $ 74,338,841 $ 80,268,884 $ 67,026,121 23,089,201 22,274,814 23,196,485 25,140,038 16,774,957 16,593,197 1,815,668 10,119,257 5,248,769 7,484,228 8,391,026 9,264,878 $ 146,222,165 $ 138,770,754 $ 112,446,027 $ 106,963,107 $ 105,434,867 $ 92,884,196 -57- Yorba Linda Water District Number of Connections Current and Nine Years Ago 25,000 20,000 15,000 Other Industrial 10,000 Residential Residential 5,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Direct Rate (Billing Unit) $ 1.03 1.13 1.33 1.33 1.48 1.57 1.57 1.79 2.52 2.52 SOURCE: YLWD Billing System -58- Single Family Multi - Family Commercial/ Irrigation/ Fiscal Year Residential Residential Industrial Other 2001 19,518 238 976 803 2002 19,915 234 1,056 933 2003 20,383 225 1,050 865 2004 20,914 225 849 831 2005 20,773 217 842 828 2006 21,300 217 847 828 2007 21,451 228 792 915 2008 21,580 228 840 904 2009 21,672 228 831 909 2010 21,846 228 837 933 NOTE: * $1.48 was approved January 1, 2005 25,000 20,000 15,000 Other Industrial 10,000 Residential Residential 5,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Direct Rate (Billing Unit) $ 1.03 1.13 1.33 1.33 1.48 1.57 1.57 1.79 2.52 2.52 SOURCE: YLWD Billing System -58- Yorba Linda Water District Ten Largest Customers Current and Nine Years Ago FY 2008+ FY 2002* Customer Name Business Type 1 City of Yorba Linda Government 2 Placentia Yorba Linda USD Government 3 Yorba Linda Villages Homeowner's Assoc. 4 Rancho Dominquez Assoc. Homeowner's Assoc. 5 Archstone Apts Apartment Complex 6 Cal Water Manufacturer 7 Tac West Manufacturer 8 Placentia Linda Hospital Hospital 9 Advanced Management Apartment Complex 10 St Francis of Assisi Private School FY 2002* Note: + Most recent available data * Latest available data SOURCES: City of Yorba Linda CAFR YLWD Billing Department -59- Annual Revenues % of Total $ 1,162,249.51 Customer Name Business Type 1 City of Yorba Linda Government 2 Saba Petroleum Manufacturer 3 Tac West Inc Manufacturer 4 St Francis of Assissi Private School 5 Shigemi Muranaka Nursery Retail 7 Placentia Unified School Government 6 Sunset Tropicals Nursery Retail 8 Costco Warehouse Retail 9 Excell Circuits Manufacturer 10 YL Country Club Private Club Note: + Most recent available data * Latest available data SOURCES: City of Yorba Linda CAFR YLWD Billing Department -59- Annual Revenues % of Total $ 1,162,249.51 5.51% 27,162.94 0.13% 18,409.96 0.09% 13,001.84 0.06% 12,303.44 0.06% 9,493.13 0.04% 9,381.26 0.04% 8,933.78 0.04% 8,893.10 0.04% 8,453.53 0.04% $ 1,278,282.49 6.06% Annual Revenues % of Total $ 1,915,251.67 14.99% 175,921.20 1.38% 98,367.66 0.77% 97,005.47 0.76% 78,760.00 0.62% 31,609.61 0.25% 30,968.79 0.24% 30,308.28 0.24% 27,839.87 0.22% 25,743.78 0.20% $ 2,511,776.33 19.65% Yorba Linda Water District Ratio of Outstanding Debt $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $2,500 Composition of Debt 0 0 0 0 0 0 0 0 0° 0 0 0 0 0 0 0 0 0 0 Debt per Connection Participation Loan Bonds $2,000 $1,500 $1,000 $500 $- _ _ 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 SOURCE: YLWD Audited Financial Statements -60- Total General Certificates As a Share of Fiscal Obligation OCWD of Per Per Personal Year Bonds Loan Participation Debt Connection Capita Income 2001 $ 7,360,216 $ 192,292 $ - $ 7,552,508 $ 321 $ 87 0.13% 2002 5,742,169 171,048 - 5,913,217 252 68 0.09% 2003 3,671,446 149,061 - 3,820,507 163 44 0.05% 2004 1,590,000 - 10,384,239 11,974,239 510 138 0.16% 2005 - - 10,000,078 10,000,078 426 115 0.13% 2006 - - 9,873,717 9,873,717 420 114 0.12% 2007 - - 10,540,139 10,540,139 449 121 0.12% 2008 - - 45,502,080 45,502,080 1,936 523 0.50% 2009 - - 44,911,092 44,911,092 1,911 517 0.44% 2010 - - 44,065,104 44,065,104 1,875 507 0.45% $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $2,500 Composition of Debt 0 0 0 0 0 0 0 0 0° 0 0 0 0 0 0 0 0 0 0 Debt per Connection Participation Loan Bonds $2,000 $1,500 $1,000 $500 $- _ _ 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 SOURCE: YLWD Audited Financial Statements -60- Yorba Linda Water District Debt Coverage Last Ten Fiscal Years NOTE: * Excludes depreciation and debt service payments ** Includes capitalized interest reduction of $94, $581, and $787 (in thousands) for the years 2008, 2009 and 2010; respectively. SOURCE: YLWD Audited Financial Statements -61- Debt Service Fiscal Operating & Net Coverage Year Revenues Maint. Costs Revenues Principal Interest ** Total Ratio 2001 $ 15,617 $ 11,294 $ 4,323 $ 2,011 $ 376 $ 2,387 1.81 2002 16,568 11,759 4,809 2,086 305 2,391 2.01 2003 16,215 12,873 3,342 2,172 229 2,401 1.39 2004 16,471 14,428 2,043 2,263 148 2,411 0.85 2005 16,178 14,230 1,948 1,760 299 2,059 0.95 2006 19,563 16,009 3,554 200 473 673 5.28 2007 23,036 18,703 4,333 205 469 674 6.43 2008 22,822 19,829 2,993 210 370 580 5.16 2009 22,514 20,604 1,910 570 1,577 2,147 0.89 2010 24,417 19,928 4,489 825 1,194 2,019 2.22 NOTE: * Excludes depreciation and debt service payments ** Includes capitalized interest reduction of $94, $581, and $787 (in thousands) for the years 2008, 2009 and 2010; respectively. SOURCE: YLWD Audited Financial Statements -61- Yorba Linda Water District Demographics Last Ten Fiscal Years YLWD Year Population ** City of YL Population Personal Income Personal Income per Capita 2001 69,084 60,073 $ 4,761,072,547 $ 68,917 2002 70,566 61,362 5,081,187,350 72,006 2003 72,080 62,678 6,025,361,496 83,593 2004 73,663 64,055 6,435,285,575 87,361 2005 75,189 65,382 6,699,301,248 89,099 2006 76,817 66,797 7,150,485,256 93,085 2007 78,090 67,904 7,623,582,080 97,626 2008 78,559 68,312 8,179,815,504 104,123 2009 80,209 69,747 9,465,109,914 118,006 2010 81,893 71,211 9,224,696,122 112,643 County of Orange Year Population Unemployment Rate Personal Income Personal Income per 2001 N/A + 4.0% N/A N/A 2002 2,940,743 5.0% $ 111,750,294 $ 38,001 2003 2,983,731 5.0% 117,722,484 39,455 2004 3,019,889 4.8% 125,670,056 41,614 2005 3,047,054 4.3% 133,031,819 43,659 2006 3,072,336 3.2% 143,949,044 46,853 2007 3,098,121 3.9% 151,039,900 48,752 2008 3,121,251 5.2% 155,459,600 49,807 2009 3,139,017 9.0% 155,459,600 49,525 2010 3,158,479 9.8% * 151,510,926 47,970 NOTE: * As of July 2010 + Information was not tracked by the County prior to implementation of GASB No. 34 in FY 2001 -2002 ** Based on City of Yorba Linda population, plus an additional 15% of estimated population for customers outside of the City SOURCES: City of Yorba Linda CAFR County of Orange CAFR State of California, Employment Development Department State of California, Department of Finance YLWD Billing System -62- Employer ^ Viasys Respiratory Care, Inc. Nobel Biocare USA, Inc. Costco Wholesale Corp. City of Yorba Linda Vons Kohl's Inc. Best Buy Sunrise Retirement Homes Office Solutions Cobra Engineering Total Yorba Linda Water District Ten Largest Employers Current and Four Years Ago 2008* l % of Total Employees Labor Force 389 1.19 % 328 0.93 % 276 0.78 % 194 0.55 % 165 0.47 % 158 0.45 % 129 0.37 % 126 0.36 % 92 0.26% 80 0.23 % 1,937 5.6 % NOTE: * Most current available data + Latest available data The Placentia- Yorba Linda Unified School District has 2,500 employees and serves the entire communities of Yorba Linda and Placentia, and also serves parts of the cities of Brea, Anaheim and Fullerton. YLWD cannot provide the number of employees working within the boundaries of Yorba Linda. Source: City of Yorba Linda CAFR -63- 2006+ % of Total Employees I Labor Force 359 1.02 % 323 0.92 % 204 0.58 % 180 0.51 % 167 0.48 % 145 0.41 % 135 0.38 % 120 0.34% 98 0.28 % 0 0.00% 1,731 4.9 % Yorba Linda Water District Number of Employees Last Ten Fiscal Years Full Time Equivalent Employees by Department Department Fiscal Human Year Administration Engineering Finance Resources IT Operations Total 2001 2 10 2002 2 10 2003 2 11 2004 3 12 2005 3 13 2006 4 14 2007 4 13 2008 4 13 2009 4 13 2010 5 13 10 1 1 27 51 10 1 1 29 53 10 1 2 29 55 10 1 2 32 60 11 1 3 31 62 13 3 3 28 65 15 3 3 32 70 15 3 6 33 74 16 3 6 33 75 16 3 7 32 76 80 70 60 50 Operations IT 40 Resources Finance 30 Engineering Administration 20 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 NOTE: * Number of employees in each department are authorized, funded and filled positions. SOURCE: YLWD Human Resources Department -64- Fiscal VPar Yorba Linda Water District Operating and Capacity Indicators Last Ten Fiscal Years Miles of Water Mains Installed* Yearly Water Average Production (MG) Production (MGD) 2001 2.40 6,996 19.2 2002 4.81 7,548 20.7 2003 0.78 7,796 21.4 2004 3.64 7,863 21.5 2005 3.64 7,042 19.3 2006 2.52 7,505 20.6 2007 9.72 8,360 22.9 2008 9.72 8,027 22.0 2009 9.72 7,590 20.8 2010 9.72 6,569 18.0 Fiscal Number of Number of Number of Year Booster Pumps Reserviors Field Service Calls 2001 9 8 1,534 2002 9 9 1,535 2003 11 10 1,727 2004 11 10 1,833 2005 11 10 1,460 2006 11 10 1,484 2007 12 11 1,565 2008 12 11 1,943 2009 12 11 1,674 2010 12 13 1,640 MG - Millions of Gallons MGD - Millions of Gallons per Day NOTE: * Miles of Water Main estimated SOURCES: YLWD Asset Management Plan 2010 YLWD Operations Department -65- DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS MICHAEL R. LUDIN, CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W. SPRAKER, CPA NITIN P. PATEL, CPA ROBERT CALLANAN, CPA 5 CORPORATE PARK, SUITE 100 *PHILIP H. HOLTKAMP, CPA IRVINE, CALIFORNIA 92606 -5165 *THOMAS CHR OEDER P A J. *HARVEY J. SCREDE, CPA (949) 399 -0600 • FAX (949) 399 -0610 KENNETH R. AMES, CPA www.diehlevans.com WILLIAM C. PENTZ, CPA *A PROFESSIONAL CORPORATION September 15, 2010 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, 2010, and have issued our report thereon dated September 15, 2010. 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. -1- 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 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. DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS MICHAEL R. LUDIN, CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W. SPRAKER, CPA NITIN P. PATEL, CPA ROBERT CALLANAN, CPA 5 CORPORATE PARK, SUITE 100 *PHILIP H. HOLTKAMP, CPA IRVINE, CALIFORNIA 92606 -5165 *THOMAS CHR OEDER P A J. *HARVEY J. SCREDE, CPA (949) 399 -0600 • FAX (949) 399 -0610 KENNETH R. AMES, CPA www.diehlevans.com WILLIAM C. PENTZ, CPA *A PROFESSIONAL CORPORATION September 15, 2010 Board of Directors Yorba Linda Water District Placentia, California We have audited the financial statements of the Yorba Linda Water District for the year ended June 30, 2010, and have issued our report thereon dated September 15, 2010. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter dated March 27, 2008 and during our planning meeting on August 9, 2010. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings: Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Yorba Linda Water District are described in Note 2 to the financial statements. No new accounting policies were adopted and the application of existing accounting policies was not changed during the year ended June 30, 2010. We noted no transactions entered into by the Yorba Linda Water District during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. OTHER OFFICES AT: -1- 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92008 -2389 (760) 729 -2343 • FAX (760) 729 -2234 613 W. VALLEY PARKWAY, SUITE 330 ESCONDIDO, CALIFORNIA 92025 -2598 (760) 741 -3141• FAX (760) 741-9890 Significant Audit Findings (Continued): Qualitative Aspects of Accounting Practices (Continued): The most sensitive estimates affecting the financial statements were: a. Management's estimate of the fair market value of investments which is based on market values by outside sources. b. The estimated useful lives of capital assets for depreciation purposes which are based on industry standards. c. The annual required contribution for the District's Other Post - Employment Benefits was prepared by an outside consultant. We evaluated the key factors and assumptions used to develop these estimates in determining that they were reasonable in relation to the financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements was reported in Note 7 to the financial statements regarding the annual required contribution and the actuarial liability for the District's Other Post - Employment Benefits. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit's financial statements taken as a whole Disagreements with Mana eg ment For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated September 15, 2010. -2- Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Yorba Linda Water District's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Yorba Linda Water District's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. This information is intended solely for the use of the Board of 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 specified parties. ) I L/�, Cv c�,) a, CL 6:ri, � 0 L L Ili ITEM NO. 11.2 AGENDA REPORT Meeting Date: October 14, 2010 Subject: Finance - Accounting Committee (Sum merfield /Collett) Alternate: Mills • Minutes of meeting held October 11, 2010 at 4:00 p.m. (To be provided at the meeting.) • Meeting scheduled November 8, 2010 at 4:00 p.m. ATTACHMENTS: Name: Description: Type: 101110 FA - Minutes.doc FA Mtg Minutes 10/11/10 Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCE -ACCOUNTING COMMITTEE MEETING October 11, 2010 A meeting of the Finance - Accounting 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 John W. Summerfield, Chair Director Ric Collett STAFF Ken Vecchiarelli, General Manager Stephen Parker, Finance Director OTHER ATTENDEES Nitin Patel, CPA — Partner, Diehl Evans & Company, LLP Daphne Munoz, CPA — Manager, Diehl Evans & Company, LLP 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR 2.3. Submission of Audit Reports (This item was considered first) Mr. Vecchiarelli indicated that this was the first Comprehensive Annual Financial Report (CAFR) that the District had completed. Mr. Parker identified the three deliverables to the Committee from the annual audit and deferred the discussion to Mr. Patel. Mr. Patel discussed the Report on Internal Control. He mentioned that there were no comments on it in the current year. He referred to one of the findings from the previous year — closing out old jobs on the CIP listing as having been addressed, and resulting in a prior period adjustment on the CAFR. Mr. Patel went through the disclosures on the Communication To Those In Governance letter. He indicated that the disclosures in the letter were basically boilerplate with nothing special occuring in the current year. Mr. Patel then discussed the CAFR and explained that this first CAFR reached a higher level of disclosure and prestige and could be advantageous when issuing debt. He reviewed the auditors' opinion on page 1 and 2 with the Committee and indicated some of the limitations of an audit, which components of the CAFR were reviewed by Diehl, Evans and Company, LLP, and explained that the current years' opinion issued was an unqualified or "clean" opinion. He further discussed the adjustments that related to prior years that were corrected in the current year as detailed in footnote 13. 1 He then referred to the Combined Statement of Revenues, Expense and Changes in Net Assets and pointed out that the District's net assets increased by $5.1 million during the year ended June 30, 2010, which is a positive indicator of the District's financial health and management. He also noted that there was actually a net loss of $1.6 million prior to capital contributions, and the reason net assets increased was related to developer contributions of capital assets. On a less positive note, Mr. Patel reported the District's unrestricted net assets continued to decline from negative $6.2M to negative $8.1 M during the fiscal year ended June 30, 2010. Mr. Patel shared that he had not encountered another water district with negative unrestricted net assets. The Committee discussed what could be done to remedy this situation. Mr. Vecchiarelli explained that funding additional reserves would definitely help improve this indicator. The District has already made some improvements in this area over previous years. The Committee recommended that staff submit the audit reports to the Board of Directors to receive and file. 2.1. August 2010 Budget to Actual Results Mr. Parker discussed the monthly budget to actual results. He noted that water operating revenues are lower than expected due to lower water consumption. Mr. Vecchiarelli explained that the current conservation rate of over 21% is actually a 40% increase over the 15% conservation rate that was budgeted for the current fiscal year. Mr. Parker shared that variable water costs as a percentage of the yearly budget are higher than operating revenues. Mr. Vecchiarelli shared that the same practice that was used last year to save over $190,000 (purchasing water from MWDOC aggressively prior to an upcoming rate increase) was being utilized again in the current year. Ultimately, he explained, this would result in lower water costs for the year, as less import water would have to be purchased after the rate increase goes into effect. Mr. Parker shared that other expenses and revenues were generally on target with budgeted projections, and explained a couple of the more minor line items that varied from budgeted expectations. The Committee received and filed the August 2010 Budget to Actual Results. 2.2. August 2010 Monthly Investment Report Mr. Parker presented the August monthly investment report and noted that the vast majority of the money in CalTRUST's Money Market Account was now transferred into their Short Term Account, which currently yields more than twice the return and is still available within 1 day. He also reported on transfers made between sewer funds (operating and reserves) implementing recommendations consistent with the adopted financial reserves policy. The Committee asked about the CalTRUST investment program. Mr. Parker stated he was pleased with it and noted the benefits of its ability to allow tracking of different reserve accounts. He also shared the benefits of investing in a fund that has an average days to maturity of over a year, yet still allows access to funds within a month. The 2 Committee received and filed the August 2010 Monthly Investment Report. 3. DISCUSSION ITEMS 3.1. Future Agenda Items and Staff Tasks None. 4. ADJOURNMENT 4.1. The Committee adjourned at 4:36 p.m. The next regular meeting of the Finance - Accounting Committee will be held on November 8, 2010 at 4:00 p.m. 3 ITEM NO. 11.3 AGENDA REPORT Meeting Date: October 14, 2010 Subject: Personnel -Risk Management Committee (Collett /Hawkins) Alternate: Summerfield • Minutes of meeting held October 12, 2010 at 4:00 p.m. (To be provided at the meeting.) • Meeting scheduled November 9, 2010 at 4:00 p.m. ATTACHMENTS: Name: Description: Type: 101210 PRM - Minutes.doc PRM Mtg Minutes 10/12/10 Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT PERSONNEL -RISK MANAGEMENT COMMITTEE MEETING October 12, 2010 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 STAFF Director Ric Collett, Chair Ken Vecchiarelli, General Manager Director Phil Hawkins Miguel Serna, Human Resources Analyst 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR 2.1. Proposed Authorized Positions Revision for FY 2010/2011 Staff presented a proposal to reclassify the Meter Services Representative to a Meter Services Lead. This is a classification change with no salary adjustment. The committee discussed the issue and supported the staff recommendation, which will be presented to the Board Directors at the meeting on October 14, 2010. 3. DISCUSSION ITEMS 3.1. Status of Recruitments and Authorized /Budgeted Positions Staff gave an update on the current recruitment for the position of Engineering Secretary. Staff also reported on three promotions in the Maintenance Distribution Operator II classification and the hiring of a part- time GIS Technician. 3.2. Status of Human Resources and Risk Management Activities The committee reviewed and discussed the updated activities log. Staff informed the committee of the three Automatic External Defibrillators purchased and installed at various locations throughout the campus. In addition, staff reported on employee events. A Hot Tap demonstration and horseshoe competition was held on September 1, 2010 during an employee luncheon. The finalists represented the District at OCWA's Annual Picnic, which was held on September 15, 2010. The District will hold an employee Health Benefits Fair on October 27, 2010. Staff also reported on the coordination of five (5) health and wellness related discussions presented through the Employee Assistance Program. Forklift training was conducted on October 7, 2010. HR staff attended the Public Employees Labor Relations Association of California (PELRAC) one -day conference on October 7, 2010. Finally, staff reported the receipt of $70,044.56 from ACWA -JPIA for reimbursement of the District's expenses related to the Ohio and Villa Terrace water break incident of March 27, 2010. 3.3. Future Agenda Items and Staff Tasks None. 4. ADJOURNMENT 4.1. The Committee adjourned at 4:45 p.m. The next regular meeting of the Personnel -Risk Management Committee will be held November 9, 2010 at 4:00 p.m. 2 ITEM NO. 11.4 AGENDA REPORT Meeting Date: October 14, 2010 Subject: Planning- Engineering- Operations Committee (Mills /Summerfield) Alternate: Beverage Minutes of meeting held October 6, 2010 at 4:00 p.m. Meeting scheduled November 4, 2010 at 4:00 p.m. ATTACHMENTS: Name: Description: Type: 100610 - PEO Minutes.doc PEO Mtg Minutes 10/06/10 Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT PLANNING - ENGINEERING - OPERATIONS COMMITTEE MEETING October 6, 2010 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 Director William R. Mills, Chair Director John Summerfield 1. PUBLIC COMMENTS None. 2. DISCUSSION ITEMS STAFF Ken Vecchiarelli, General Manager Steve Conklin, Engineering Manager Lee Cory, Operations Manager 2.1. Monthly Groundwater Production and Purchased Import Water Report. Mr. Vecchiarelli reported that water demand for September was 0.7% above that projected by staff and that overall, water demand is still 17.7% below the conservation percentage established in July 2009. He also reported that 65.1% of demands since July 2010 have been met with imported water, which will be reduced later in the year when the higher price for MWD water goes into effect. Mr. Vecchiarelli also noted that the average monthly temperature of 70.8 degrees for September was lower than the prior two years, and that monthly total water use was also lower. 2.2. Monthly Preventative Maintenance Program Report. Mr. Cory reported on PM progress, noting that a new report format will be developed that will provide more details on progress and will be expanded to show PM progress on the District's 40 plus pressure - regulating stations. He also noted that PM progress is not uniform for facilities; rather, the field crews concentrate on one work element for greatest efficiency and then move to another in later months. Mr. Vecchiarelli reported that in addition to other tasks, field staff completed retrofitting of the District's 37 sampling stations throughout the water system. The Committee asked about the fire hydrant testing performed this date in Hidden Hills. Mr. Vecchiarelli reported that the testing was successfully completed, under the observation of a representative from the Orange County Fire Authority and local, interested homeowners. He noted that the data collected indicates that hydrant flows at all test sites exceeded 2,400 gallons per minute, in some areas over twice that amount. All areas tested well in excess of the 1,500 gallons per minute per the fire code for 1 K� 4. 5. single - family developments. The Committee asked that staff provide a summary report of the testing and findings at the October 14 Board meeting. ACTION CALENDAR 3.1. Engineering Services for the 2010 Waterline Replacement Project. Mr. Conklin reported that staff solicited proposals from five consulting engineering firms for engineering design services for the replacement of old District pipelines in eight locations. Information was provided to the Committee showing the location of each site. Following discussion, the Committee supported staff recommendation that the Board authorize execution of an agreement with RBF Consulting, Inc., for a fee not to exceed $219,309 for engineering design, bidding support and construction management services for the project. DISCUSSION ITEMS 4.1. Groundwater Producers Meeting Report Mr. Conklin reported on the September 8, 2010 monthly meeting of the groundwater producers. He reported that for the preparation of the Program EIR for the proposed annexation by IRWD, Anaheim and YLWD to OCWD, two proposals were received by OCWD, prepared by Chambers Group and by Michael Brandman Associates. The proposal review team of staff from IRWD, Anaheim, YLWD and OCWD unanimously recommended the Brandman proposal based on staff experience and qualifications, background and experience, and familiarity with the project and issues. Negotiations are in progress between the review team and Brandman on final scope and fee. 4.2. Status Report on Capital Projects in Progress Mr. Conklin reported on the status of capital projects in planning, design and construction. 4.3. Future Agenda Items and Staff Tasks. None. ADJOURNMENT 5.1. The meeting adjourned at 4:45 Planning- Engineering- Operations 2010 at 4:00 p.m. 2 p.m. The next regular meeting of the Committee will be held November 4, ITEM NO. 11.6 AGENDA REPORT Meeting Date: October 14, 2010 Subject: MWDOC /OCWD Ad Hoc Committee (Mills /Beverage) Alternate: Collett Minutes of meeting held September 28, 2010 at 4:00 p.m. Meeting scheduled November 23, 2010 was rescheduled to November 16, 2010 at 4:00 p.m. ATTACHMENTS: Description: Type: 092810 MWDOC OCWD - Minutes.doc MWDOC /OCWD Mtg Minutes 09/28/1 C Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT MWDOC AND OCWD AD HOC COMMITTEE MEETING September 28, 2010 A meeting of the YLWD /MWDOC /OCWD Ad Hoc Committee was called to order at 4:00 p.m. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. YLWD COMMITTEE MEMBERS Director William R. Mills, Chair Director Michael J. Beverage MWDOC COMMITTEE MEMBERS Director Brett Barbre OCWD COMMITTEE MEMBERS Director Roger Yoh 1. PUBLIC COMMENTS None. 2. DISCUSSION ITEMS YLWD STAFF Ken Vecchiarelli, General Manager MWDOC STAFF Kevin Hunt, General Manager OCWD STAFF Mike Markus, General Manager 2.1. MWDOC Settlement Agreement MWDOC Director Barbre reported on the status of the agreement and is recommending a wait and see approach for the agencies he represents to allow certain south county agencies to execute this agreement first. The Committee discussed this consideration and the impacts of the agreement to various agencies. 2.2. Results of MWDOC Strategic Review Mr. Hunt presented a summary report of MWDOC's recent Strategic Planning process and left Mr. Vecchiarelli a copy of the staff presentation. 2.3. Upgrade of MWD's OC -51 Connection Director Barbre and Mr. Vecchiarelli reported on a meeting held prior to the Ad Hoc Committee Meeting, attended by staff from MWDOC and YLWD with Brett. The group discussed the purpose, intent and options for improving the OC -51 connection. Staff is waiting for additional information from MWD to determine the next step in the process. iXlMLTiUJI ell M41 =- Mr. Hunt reported on various MWD issues including their draft Integrated resources Plan (IRP) and 2010 update of their Urban Water Management Plan (UWMP). 2.5. Status of OCWD Annexation Process Mr. Markus reported on the status and progress of the annexation process. OCWD requested proposals for preparation of the CEQA documentation and is working closely with the annexation agencies to select a consultant to begin this work. Mr. Markus also reported OCWD will host several workshop discussions with the groundwater producers over the next twelve months to discuss their concerns regarding the proposed annexations including impacts on the basin production percentage and costs. 2.6. Future Agenda Items and Staff Tasks The Committee will discuss the proposed expansion of the Groundwater Replenishment System (GWR) at the next meeting. 3. ADJOURNMENT 3.1. The Committee adjourned at 5:00 p.m. after agreeing to schedule the next meeting of the YLWD /MWDOC /OCWD Ad Hoc Committee on November 16, 2010 at 4:00 p.m. 2 ITEM NO. 11.7 AGENDA REPORT Meeting Date: October 14, 2010 Subject: Citizens Advisory Committee Minutes of meeting held September 27, 2010 at 8:30 a.m. Meeting scheduled October 25, 2010 at 8:30 a.m. ATTACHMENTS: Name: Description: Type: 092710 - CAC Minutes.doc CAC Mtg Minutes 09/27/10 Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT CITIZENS ADVISORY COMMITTEE MEETING September 27, 2010 1. CALL TO ORDER A meeting of the Citizens Advisory Committee was called to order at 8:30 a.m. by Committee Chair Carl Boznanski. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. 2. K� COMMITTEE MEMBERS PRESENT Bill Guse Gene Scearce Bob Kiley Greg Meyers Carl Boznanski Lindon Baker Cheryl Borden Modesto Llanos Gary Melton Oscar Bugarini STAFF PRESENT Ken Vecchiarelli, General Mgr Damon Micalizzi, PI Officer PUBLIC COMMENTS None. DISCUSSION ITEMS 3.1. YLWD Water Rate Study and Pass - Through Rate Increase Mr. Vecchiarelli presented to the Committee a report on various options for water rate structures currently being studied for the District. He also explained to the group how YLWD has already incorporated Metropolitans two future known rate increases into our current rate that went into effect on August 1St and the methodology behind implementing that one -time consolidated Pass - Through increase. 3.2. YLWD Water Rate Reduction Petition Mr. Vecchiarelli presented to the group information regarding a current petition aimed at setting a lower YLWD rate, and the implications should the petition garner enough support. 3.3. Status of Sewer System Transfer Agreement Mr. Vecchiarelli updated the Committee on the latest dealings between the City of Yorba Linda and the District in the drafting of a transfer agreement for the City- operated Sewer System. 3.4. District Wide Water Usage and Conservation Update Mr. Vecchiarelli updated the Committee on the most recent Conservation and Water Usage statistics for the District. 3.5. Future Agenda Items The Committee asked for an update on the Elk Mountain Practice Field Project and for a Future Agenda Item outlining current rebates offered for water saving devices. 4. ADJOURNMENT 4.1. The Committee adjourned at 10:13 a.m. The next regular meeting of the Citizens Advisory Committee will be held October 25, 2010 at 8:30 a.m. 2 ITEM NO. 13.1 AGENDA REPORT Meeting Date: October 14, 2010 Subject: Meetings from October 15, 2010 - November 30, 2010 ATTACHMENTS: Name: Description: Type: BOD - Activity Calendar.pdf BOD Activity Calendar Backup Material Board of Directors Activity Calendar Event Date Time Attendance by: October 2010 Exec - Admin- Organizational Committee Meeting Tue, Oct 19 4:00PM Mills /Beverage Yorba Linda City Council Tue, Oct 19 6:30PM Summerfield MWDOC Board Wed, Oct 20 8:30AM Staff Public Information - Technology Committee Meeting Wed, Oct 20 4:00PM Beverage /Hawkins OCWD Board Wed, Oct 20 5:30PM Staff Board of Directors Workshop Meeting Thu, Oct 21 9:00AM Hawkins Citizens Advisory Committee Meeting Mon, Oct 25 8:30AM Summerfield /Collett Yorba Linda Planning Commission Wed, Oct 27 7:00PM Hawkins Board of Directors Regular Meeting Thu, Oct 28 8:30AM November 2010 Public Information - Technology Committee Meeting Tue, Nov 2 4:00PM Beverage /Hawkins Yorba Linda City Council Tue, Nov 2 6:30PM Mills MWDOC /MWD Workshop Wed, Nov 3 8:30AM Staff OCWD Board Wed, Nov 3 5:30PM Staff Planning- Engineering- Operations Committee Meeting Thu, Nov 4 4:00PM Mills /Summerfield WACO Fri, Nov 5 7:30AM Hawkins Finance - Accounting Committee Meeting Mon, Nov 8 4:00PM Summerfield /Collett Personnel -Risk Management Committee Meeting Tue, Nov 9 4:00PM Collett /Hawkins Board of Directors Regular Meeting Wed, Nov 10 8:30AM Yorba Linda Planning Commission Wed, Nov 10 7:00PM Collett Holiday Thu, Nov 11 7:30AM District Offices Closed MWDOC /OCWD Ad Hoc Committee Meeting Tue, Nov 16 4:00PM Mills /Beverage Yorba Linda City Council Tue, Nov 16 6:30PM Summerfield MWDOC Board Wed, Nov 17 8:30AM Staff OCWD Board Wed, Nov 17 5:30PM Staff Exec - Admin- Organizational Committee Meeting Thu, Nov 18 4:00PM Mills /Beverage Citizens Advisory Committee Meeting Mon, Nov 22 8:30AM Board of Directors Regular Meeting Wed, Nov 24 8:30AM Yorba Linda Planning Commission Wed, Nov 24 7:00PM Hawkins Holiday Thu, Nov 25 7:30AM District Offices Closed Holiday Fri, Nov 26 7:30AM District Offices Closed 10/11/2010 8:30:19 AM AGENDA REPORT Meeting Date: October 14, 2010 ITEM NO. 14.1 Subject: MWDOC Water Policy Forum & Dinner - November 4, 2010 MWDOC 20 x 2020 Summit - November 10, 2010 STAFF RECOMMENDATION: Authorize Directors and such staff members of the District as approved by the General Manager to attend the above listed conferences. ATTACHMENTS: MWDOC Water Policy Forum.pdf MWDOC_20by2020.pdf Approved by the Board of Directors of the Yorba Linda Water District 10/14/2010 PH /JS 5 -0 Description: Type: Event Flyer Backup Material Event Flyer Backup Material Online registration is now available by clicking the link below. Register Now! Please register by Friday. October 29. 2010 so that we may provide the hotel with an accurate head count and ensure that you receive your requested entree. Also, any cancellations received after this date and event "no shows" will be billed. MUNICIPAL WATER POLICY FORUM Ft DINNER WATER r� olsTrcT FEATURING OF ORANGE GREGORY K. WILKINSON COLJN TY BEST BEST Ft KRIEGER, LLP NOVEMBER 4, 2010 EVENT DATE The Municipal Water District of Orange County November 4, 2010 (MWDOC) invites you and your colleagues to its Water Policy Forum & Dinner on Thursday, November 6:00 p.m. - 8:30 p.m. 4, 2010, from 6:00 - 8:30 p.m. The event will be held at the Westin South Coast Plaza, located at 686 EVENT LocATiON Anton Blvd., in Costa Mesa. Westin South Coast Plaza We are pleased to welcome as our guest speaker 686 Anton Blvd. Gregory K. Wilkinson with the law firm of Best Best & Krieger, LLP. Mr. Wilkinson is one of the lead Costa Mesa, CA 92626 attorneys in the legal challenge to the U.S. District Court rulings that have imposed water pumping restrictions in the Delta to protect the endangered Delta Smelt and several species of salmon. - This is an outstanding opportunity for policy makers, community and business leaders, water industry professionals, and others to learn about the current status of this litigation and its significance as it relates to future application of the Endangered Species Act and the management of our water b supply. -r;- -. You are also invited to attend a special reception honoring Linda Ackerman, a recent appointee of Governor Schwarzenegger to the Santa Ana Regional Water Quality Control Board, and one of MWDOC's Driving, Directions representatives to the Metropolitan Water District of Southern California's Board of Directors. The MWDOC CALENDAR OF reception begins at 6:00 p.m. with dinner following at March 23 -24, 2011: 7 :00 p.m. Registration for this event is $65 per person, which Children's Water Education includes the reception (with cash bar), three - course Festival dinner, and self - parking. For additional event information, contact Tiffany Baca May 20, 2011: at (714) 593 -5013 or tbaca @mwdoc.com. O.C. Water Summit Sincerely, For more information about Joan C. Finnegan MWDOC events and activities, Board President please visit www.mwdoc.com. Municipal Water District of Orange County Online registration is now available by clicking the link below. Register Now! Please register by Friday. October 29. 2010 so that we may provide the hotel with an accurate head count and ensure that you receive your requested entree. Also, any cancellations received after this date and event "no shows" will be billed. 20X2020 k I Wki . W ■ r *M- 4 t Page 1 of 1 { Save the Date Wednesday, , No ember 1 O, 20. 0 20 X 2020* on-0 Building the Momentum *New statewide la w that requires urban water suppliers Eo reduce per pemon crater consumption 20 pemrent by 2020. Timodiy F. Brick Chairman, Board of Directors The Metropolitan Water District of Southern California Invites you to attend a one -day summit at Union Station Dovvntovm Los Angeles from 9 a.m. to 3 p.m. This summit will bring together a mix of federal and state legislators and regulators, water industry experts, municipal planners, environmentalists, climatologists and other stakeholders who will discuss all aspects of the exteusive work being carried out across the Mate of California. to help ensure water supply reliability through the year 2-035. The Metropolitan 'Water District of Southern California 700 North Alameda Street Los Angeles, CA 90012 Summit Informadow (213) 1-17-6675 or 20 2O2O,W mwdbzP.vt»ii Register No http : / /www.mwdh2o.com /docsvcspubs /20x2020 /Save The Date.html 9/30/2010 Public Comments by Mark Schock October 14, 2010 YLWD Regular Board of Directors Meeting Good Morning Members of the Board, Water District Staff, and Water District Counsel. On August 26, 2010, at the Regular Board of Directors Meeting, I was very heartened to hear the YLWD General Counsel make several comments regarding the City of Bell situation. The purpose of his comments under the General Counsel's Report appeared to be both cautionary and advisory in nature regarding how the City of Bell situation might impact the Yorba Linda Water District. The Counsel's specific comment that struck a resonant point, was that because of the City of Bell's controversy, it would "no longer be business as usual for water districts ". Although I did not attend the Regular Board Meeting on September 9, 2010, 1 read in the official minutes of that meeting, that the General Counsel again addressed the Board and "briefly commented on the current legislative activity related to the City of Bell controversy". Unfortunately, because of my non- attendance at that meeting, I do not know what the General Counsel's specific comments were due to the Yorba Linda Water Districts policy of not tape recording or videotaping Board Meetings. Why might you ask am I bringing this up? In the last eleven months, I attended three different Yorba Linda Water District Meetings that I personally found to be of concern in terms of the way that they were conducted. All three of the meetings were of the Yorba Linda Water District Public Financing Corporation. The meetings that I reference were conducted on November 25, 2009, March 11, 2010, and June 10, 2010. 1 found these meetings to be curious in the way that they were conducted because of the following reasons: • All of the Public Financing Corporation Meetings were scheduled on the same days as Regular Board of Directors Meetings for YLWD. • All of the three meetings were conducted immediately after the Regular Board Meetings • All three of these meetings lasted only 1 -2 minutes before being adiourned. Although the minutes have not yet been prepared for the June 10, 2010 meeting, and they will apparently not be prepared until the next scheduled Public Financing Corporation meeting on December 9, 2010, 1 was there and know how long the meeting lasted. • Unapproved minutes of these meetings are not made available for public viewing for months until the Public Financing Corporation Meeting is held. In the case of the June 10, 2010 meeting, those meeting minutes will not be available for more than five months! It is my understanding that YLWD Board Members get compensated for each meeting that they attend. I do not know if YLWD members get specific compensation for the Public Finance Corporation Meetings mentioned. According to a number of articles in the Los Angeles Times, the Los Angeles County District Attorney is investigating a number of similarly structured meetings conducted by officials in the City Bell. The Los Angeles District Attorney has called such meetings "Phantom Meetings ", being possibly scheduled by Bell officials for the purpose of getting compensation. I certainly hope that this is not the case in the Yorba Linda Water District. In order to address public concern over the length, structure and scheduling of "phantom meetings ", the interim government of the City of Bell took immediate steps to incorporate all of these short meetings within the confines of their regular City Council Meetings. This removes the possibility of improper compensation for short meeting attendance. Possibly the Yorba Linda Water District Board may wish to take action at a future Board Meeting to take immediate steps to review, address and clarify its policy on the conduct of short meetings, and related compensation for Board Members. Remember, public perception is very important. Please attach a copy of these comments to the official Board Minutes. Thank You.