HomeMy WebLinkAbout2012-03-26 - Finance-Accounting Committee Meeting Agenda Packet Yorba Linda
Water District
AGENDA
YORBA LINDA WATER DISTRICT
FINANCE-ACCOUNTING COMMITTEE MEETING
Monday, March 26, 2012, 4:00 PM
1717 E Miraloma Ave, Placentia CA 92870
COMMITTEE STAFF
Director Robert R. Kiley, Chair Ken Vecchiarelli, General Manager
Director Phil Hawkins Stephen Parker, Finance Manager
1. PUBLIC COMMENTS
Any individual wishing to address the committee is requested to identify themselves and state the matter on
which they wish to comment. If the matter is on this agenda, the committee Chair will recognize the individual for
their comment when the item is considered. No action will be taken on matters not listed on this agenda.
Comments are limited to matters of public interest and matters within the jurisdiction of the Water District.
Comments are limited to five minutes.
2. PRESENTATIONS
2.1. Opportunity for Refunding of 2003 Certificates of Participation
3. DISCUSSION ITEMS
This portion of the agenda is for matters such as technical presentations, drafts of proposed policies, or similar
items for which staff is seeking the advice and counsel of the Committee members. This portion of the agenda
may also include items for information only.
3.1. Line of Credit Financing Option
3.2. February 2012 Budget to Actual Results
3.3. Investment Report for Period Ending February 2012
3.4. Comparison of Investment Types and Yields of Local Water Districts
3.5. Draft Reserve Policy for FY 2012/13
3.6. Future Agenda Items and Staff Tasks
4. ADJOURNMENT
4.1. The next meeting of the Finance-Accounting Committee will be held on April 23, 2012 at
4:00 p.m.
Items Distributed to the Committee Less Than 72 Hours Prior to the Meeting
Pursuant to Government Code section 54957.5, non-exempt public records that relate to open session agenda items
and are distributed to a majority of the Committee 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.
ITEM NO. 2.1
AGENDA REPORT
Meeting Date: March 26, 2012
Subject: Opportunity for Refunding of 2003 Certificates of Participation
s
ATTACHMENTS:
Name: Description: Type:
YLWD Refunding Opportunity.pdf Refunding Opportunity Backup Material
Yorba Linda Water District
YoTba Linda
Water District
The Municipal Market & Opportunity to Refund
2003 Certificates of Participation
March 26, 2012
Overview of Existing certificates of Participation
Yorba Linda
Water District
2003 Certificates of Participation
• District sold in September, 2003 $ 10.645 million of Certificates of Participation
("2003 Certificates")
• Proceeds from the 2003 Certificates were used:
- Finance the following 2003 Projects:
Richfield Plant - Phase 3
Highland Reservoir Renovation
Purchase a surety bond from FGIC to funded the reserve requirement
Purchase a bond insurance policy from FGIC
- Pay delivery costs
• 2003 Certificates have maturities from October 1, 2004 through October 1,
2033
• 2003 Certificates are reinsured by National Public Finance Guarantee
Corporation (formerly MBIA)
• 2003 Certificates are currently rated:
- Standard & Poor's : AA+ (Underlying Rating)
- Fitch: AA (Underlying Rating
N
Overview of Existing certificates of Participation
Yorba Linda
Water District
2008 Certificates of Participation
District sold in February, 2008 $34.995 million of Certificates of
Participation ("2008 Certificates")
� Proceeds from the 2008 Certificates were used:
• Some of the various 2008 Projects (as identified on the page)
• Cash fund a reserve fund for the 2008 Certificates
• Pay delivery costs
* 2008 Certificates have maturities from October 1, 2008 through
October 1, 2038
• 2008 Certificates are currently rated:
• Standard & Poor's : AA + (Underlying Rating)
• Fitch: AA (Underlying Rating)
2
Overview of Existing Certificates of Participation
2008 Projects Water Linda
District
A Hidden Hills Reservoir and Santiago Booster Anaheim Intertie Connection Improvements
Upgrades;
Completion of the Lakeview Reservoir
A Elk Mountain Reservoir Improvements
A Lakeview Booster Pump Station
(4) Palm Avenue Booster Pump Station and Yorba
Linda Boulevard Pipeline
(4) Zone 1000 Booster Pump Station
Fairmont Booster Pump Station
Reconfiguration
Well No. 19 Long Term Storage Program
* Well No. 20
* Groundwater Capacity Restoration
* OC-51 Upgrade; (Xii) 2005 C.I. Replacements
(Ohio Street, Buena Vista and Grandview
Avenues)
* Zone 3 Transmission Pipeline, S&S Reach 5
6 Zone 4 Transmission Pipeline, S&S Reach 5
Fire Flow Improvement (Via Sereno and Ohio)
Zone 4C Reconfiguration
Foxtail Drive Pipeline
Meter Replacement Program, Phase I
8 Meter Replacement Program, Phase II
,A) Radio Read Water Meter Conversion Project,
Phase I
Fairmont Booster Pump Station Site Improvements
Edison Power Pole Relocations
Richfield Road Widening
Mira Loma Through Street Improvements
Mira Loma Storm Drain Project
District Geographical Information System Project
Extension of Pressure Zone 4C Reconfiguration
i" Completion of the Highland Reservoir
Replacement
Municipal Market Update
Yorba Linda
Water District
Municipal Market has rallied since Thanksgiving 2011
• Municipal new issuance supply was down by 41. 1% in 2011 compared to 2010
• Active secondary market for municipal bonds
• Municipal market outperforming US Treasuries
Lack of new issuances and investors demand for municipal paper
equates to low interest rate environment
Institutional investors - buying maturities go out 10 years and after
• Retail investors - buying maturities within first 10 years
Municipal Mutual funds in flows moving in right direction
• Fund flows positive since August 31
• Funds experience record cash outflows from November 2010 through
May 2011
0
Municipal Market Update — Continued
(A) "'Municipal bonds have
gone
where no municipal
bonds
have gone before"
• Tax-Exempt yields have hit all-time
new lows in February
• Credit spreads have improved
among all credit types
• Significant gap between short-term
rates and long-term rates
• Strong demand for essential service
credits such as Yorba Linda Water
District
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
08/01/08 02/01/09 08/01/09 02/01/10 08/01/10 02/01/11 08/01/11 02/01/12
Yorba Linda
Water District
Historical Change in 'AAA'MMD Fields
n 008 ttil'ol,�i�1V_�rtr'i7 16.20 i
—'AAA'N=10-Ye Mr Ids —'AAA'MbD 30-Ye Yields
300
250
700
c
b150
a
100
50
0
]an-08 Mag08 Oct-08 Mar-09 Aug09 Dec-09 Map-30 Oct-10 Mar-11 Aug-11 Dec-11
5
30-Year MMD Credit Spreads
]anuxy 1,2008 through March 16,2012
—SAN 10,4D Spreads to'AAA' —'A'MMD Spreads to'AAA' —'AA'MMD Spreads to'AAA'
Refunding of ?003 Certificates
Yorba Linda
Water District
v 2003 Certificates are eligible for refunding in advanced of the
October 1, 2013 prepayment date based on the current low
interest rate environment
.
Current savings:
$685,000 Gross Savings
• $500,000 Net Present Savings
• = 5.61% Refunding Savings
• = $31,000 Average Annual Savings
Assumptions:
1. Yorba Linda Water District AA+/AA category credit rating
affirmed
2. No funding of debt service reserve fund
3. Based on market conditions and are subject to change
0
Next Steps
Yorba Linda
Water District
(k Board approves moving forward with refunding of
2003 Certificates
6 Engage Bond Counsel
A) Mobilize the Financing Team
4 Issue Revenue Refunding Bonds - Government Code
Section 53570-53572
Implement similar legal structure used on prior
transactions
Procure ratings from Standard & Poor's & Fitch Ratings
0
Questions and Discussion
Yorba Linda
Water District
ITEM NO. 3.1
AGENDA REPORT
Meeting Date: March 26, 2012
To: Finance-Accounting Committee
From: Ken Vecchiarelli, General
Manager
Presented By: Stephen Parker, Finance Dept: Finance
Manager
Prepared By: Stephen Parker, Finance
Manager
Subject: Line of Credit Financing Option
DISCUSSION:
Staff has been exploring opportunities with its primary financial institution - Wells Fargo Bank - to
determine if there is a tool that could limit future rate increases but still allow the District to complete
the current Capital Improvement Projects.
Staff explored a number of different short-term financing options, but the option that staff believes
makes the most sense for the District is a line of credit. Preliminary discussions have centered
around the District borrowing up to $15,000,000 with a 3 year renewable term at a rate of One-
Month Libor + 90 basis points, and an unutilized fee of 35 basis points. The upfront legal fees are
estimated at $15,000 - $30,000 for this option.
Staff is planning on presenting the line of credit as a financing option in the upcoming budget
workshop. If the Board is in favor of exploring this option, the next step would be to have bond
counsel - Kurt Yeager of Stradling Yocca Carlson & Rauth - look into the information provided by
Wells Fargo.
STRATEGIC PLAN:
FR 1-A: Develop a Comprehensive Multi-Year Financial Plan
ITEM NO. 3.2
AGENDA REPORT
Meeting Date: March 26, 2012
To: Finance-Accounting Committee
From: Ken Vecchiarelli, General
Manager
Presented By: Stephen Parker, Finance Dept: Finance
Manager
Prepared By: Delia Lugo, Senior Accountant
Subject: February 2012 Budget to Actual Results
DISCUSSION:
Attached are the District's budget to actual summary results for the Water Fund, Sewer Fund and a
combined statement for both funds pertaining to the reporting month of February 2012.For the
month of February 2012, the District water revenue is trending slightly below expectations. Water
operating revenue is 63.5% of annual budget, which is lower by approximately 1.8% from the
historical trend for the first eight reporting months of the fiscal year. Our 20 by 2020 baseline is
286.1 gallons per capita per day (GPCD), with a target of 228.9. For the current fiscal year through
February 2012, the reduction of 39.2 GPCD brings us 69% of the way to our goal.
Other Operating Revenue is 77% of annual budget for the month of February. This is primarily due
to the activity that was reported in the previous months in relation to the Vista Del Verde project.
The majority of the Water Fund's individual Supplies and Services expenses are trending below or
on budget, with the exception of Dues and Memberships and Insurance due to timing differences,
while Materials are higher primarily due to unbudgeted replacement meter purchases.
Sewer Other Operating Revenue is well over budget due to the Vista del Verde Project as reported
in previous months. Sewer Other Non-Operating revenue is also well over budget, primarily due to
receiving $264,000 from the City of Yorba Linda for the sewer transfer.
The Sewer Fund's Supplies and Services expenses are trending below or on budget, with the
exceptions of Dues and Memberships and Insurance, which are higher due to timing differences,
while Materials and Maintenance are higher due to the cost of sewer main repairs on Woodcrest,
Los Altos Trail, Yorba Linda Blvd, and at the flood control easement. Training is higher due to
unbudgeted class A driver's license training as previously reported.
ATTACHMENTS:
NamE Description: Type:
February 2012 Combined Statement.xlsx February 2012 Consolidated Statement Backup Material
February 2012 Water Statement.xlsx February 2012 Water Statement Backup Material
February 2012 Sewer Statement.xls February 2012 Sewer Statement Backup Material
Yorba Linda Water District
Summary Financial Report
Water&Sewer Funds
For Eight Months Ending February 29, 2012
Original YTD YTD YTD
Budget Actual Under(Over) % of
FY 2012 FY 2012 Budget Budget
Revenue (Operating):
Water Revenue (Residential) $17,904,893 $10,728,678 $7,176,215 59.92%
Water Revenue (Commercial & Fire Det.) 1,726,651 1,266,421 460,230 73.35%
Water Revenue (Landscape/Irrigation) 3,757,058 2,671,362 1,085,696 71.10%
Water Revenue (Service Charge) 3,406,392 2,244,598 1,161,794 65.89%
Sewer Charge Revenue 1,548,550 1,016,576 531,974 65.65%
Locke Ranch Assessments 159,862 112,711 47,151 70.51%
Other Operating Revenue 754,361 634,756 119,605 84.14%
Total Operating Revenue: 29,257,767 18,675,102 10,582,665 63.83%
Revenue (Non-Operating):
Interest 190,000 168,873 21,127 88.88%
Property Tax 1,232,000 717,620 514,380 58.25%
Other Non-Operating Revenue 499,369 649,555 (150,186) 130.08%
Total Non-Operating Revenue: 1,921,369 1,536,048 385,321 79.95%
Total Revenue 31,179,136 20,211,150 10,967,986 64.82%
Expenses (Operating):
Variable Water Costs (G.W., Import& Power) 13,671,538 8,525,111 5,146,427 62.36%
Salary Related Expenses 7,941,306 4,467,328 3,473,978 56.25%
Supplies &Services 4,070,833 2,385,647 1,685,186 58.60%
Total Operating Expenses 25,683,677 15,378,086 10,305,591 59.87%
Expenses (Non-Operating):
Interest on Long Term Debt 1,906,426 1,260,893 645,533 66.14%
Other Expense 123,193 91,007 32,186 73.87%
Total Non-Operating Expenses: 2,029,619 1,351,900 677,719 66.61%
Total Expenses 27,713,296 16,729,986 10,983,310 60.37%
Net Income(Loss) Before Capital Contributions 3,465,840 3,481,164 (15,324) 100.44%
Contributed Capital - 16,976,316 16,976,316 0.00%
Net Income(Loss) Before Depreciation 3,465,840 20,457,480 23,923,320 590.26%
Depreciation &Amortization 5,561,699 4,371,715 1,189,984 78.60%
Total Net Income(Loss) ($2,095,859) $16,085,765 $22,733,336 -767.50%
Capital -Direct Labor - (254,194) 254,194
Yorba Linda Water District
Water Fund
For Eight Months Ending February 29,2012
Feb YTD YTD YTD
Budget Actual Actual Under(Over) % of
FY 2012 FY 2012 FY 2012 Budget Budget
Revenue(Operating):
Water Revenue (Residential) $17,904,893 $917,755 $10,728,678 $7,176,215 59.92%
Water Revenue (Commercial & Fire Det.) 1,726,651 120,136 1,266,421 460,230 73.35%
Water Revenue (Landscape/Irrigation) 3,757,058 166,680 2,671,362 1,085,696 71.10%
Water Revenue (Service Charge) 3,406,392 280,786 2,244,598 1,161,794 65.89%
Other Operating Revenue 697,360 39,165 535,170 162,190 76.74%
Total Operating Revenue: 27,492,354 1,524,522 17,446,229 10,046,125 63.46%
Revenue(Non-Operating):
Interest 170,000 17,633 155,004 14,996 91.18%
Property Tax 1,232,000 823 717,620 514,380 58.25%
Other Non-Operating Revenue 495,394 35,231 390,049 105,345 78.74%
Total Non-Operating Revenue: 1,897,394 53,687 1,262,673 634,721 66.55%
Total Revenue 29,389,748 1,578,209 18,708,902 10,680,846 63.66%
Expenses (Operating):
Variable Water Costs (G.W., Import& Power) 13,671,538 665,174 8,525,111 5,146,427 62.36%
Salary Related Expenses 6,953,531 476,937 3,897,460 3,056,071 59.40%
Supplies &Services:
Communications 369,303 16,913 121,369 247,934 32.86%
Contractual Services 527,888 28,526 266,211 261,677 50.43%
Data Processing 119,645 205 56,488 63,157 47.21%
Dues & Memberships 55,973 2,006 51,671 4,302 92.31%
Fees &Permits 140,030 8,659 80,392 59,638 57.41%
Insurance 221,526 1,171 182,259 39,267 82.27%
Materials 361,161 48,362 322,058 39,103 89.17%
District Activities, Emp Recognition 20,758 351 8,865 11,893 42.71%
Maintenance 418,603 29,664 278,398 140,205 66.51%
Non-Capital Equipment 79,221 6,930 41,496 37,725 52.38%
Office Expense 45,686 5,767 30,174 15,512 66.05%
Professional Services 794,406 45,265 456,575 337,831 57.47%
Training 49,964 (613) 21,054 28,910 42.14%
Travel &Conferences 48,221 2,306 13,644 34,577 28.29%
Uncollectible Accounts 35,340 21,401 21,833 13,507 61.78%
Utilities 114,855 4,282 44,301 70,554 38.57%
Vehicle Equipment 278,209 28,251 164,582 113,627 59.16%
Supplies &Services Sub-Total 3,680,788 249,446 2,161,370 1,519,418 58.72%
Total Operating Expenses 24,305,857 1,391,557 14,583,941 9,721,916 60.00%
Expenses (Non-Operating):
Interest on Long Term Debt 1,906,426 155,938 1,260,568 645,858 66.12%
Other Expense 117,193 2,947 75,067 42,126 64.05%
Total Non-Operating Expenses: 2,023,619 158,885 1,335,635 687,984 66.00%
Total Expenses 26,329,476 1,550,442 15,919,576 10,409,900 60.46%
Net Income(Loss) Before Capital Contributions 3,060,272 27,767 2,789,326 270,946 91.15%
and Transfers
Transfers(To)/From - - (85,111) (85,111) 0.00%
Capital Contributions - - 16,537 16,537 0.00%
Net Income(Loss) Before Depreciation 3,060,272 27,767 2,720,752 202,372 88.91%
Depreciation &Amortization 4,628,999 444,931 3,565,534 1,063,465 77.03%
Total Net Income(Loss) ($1,568,727) ($417,164) ($844,782) ($861,093) 53.85%
Capital- Direct Labor - (28,705) (232,982) 232,982 -
Yorba Linda Water District
Sewer Fund
For Eight Months Ending February 29,2012
Feb YTD YTD YTD
Budget Actual Actual Under(Over) %of
FY 2012 FY 2012 FY 2012 Budget Budget
Revenue(Operating):
Sewer Charge Revenue $1,548,550 $126,247 $1,016,576 $531,974 65.65%
Locke Ranch Assessments 159,862 551 112,711 47,151 70.51%
Other Operating Revenue 57,001 3,006 99,586 (42,585) 174.71%
Total Operating Revenue: 1,765,413 129,804 1,228,873 536,540 69.61%
Revenue(Non-Operating):
Interest 20,000 1,966 13,869 6,131 69.35%
Other Non-Operating Revenue 3,975 - 259,506 (255,531) 6528.45%
Total Non-Operating Revenue: 23,975 1,966 273,375 (249,400) 1140.25%
Total Revenue 1,789,388 131,770 1,502,248 287,140 83.95%
Expenses(Operating):
Salary Related Expenses 987,775 63,634 569,868 417,907 59.84%
Supplies&Services:
Communications 27,797 2,300 10,468 17,329 37.66%
Contractual Services 39,733 2,194 20,627 19,106 51.91%
Data Processing 9,006 15 1,850 7,156 20.54%
Dues&Memberships 4,213 151 4,231 (18) 100.43%
Fees&Permits 10,540 1,048 6,216 4,324 58.98%
Insurance 16,674 88 13,691 2,983 82.11%
Materials 27,184 6,320 19,390 7,794 71.33%
District Activities, Emp Recognition 1,562 26 666 896 42.63%
Maintenance 74,267 18,820 70,040 4,227 94.31%
Non-Capital Equipment 18,799 396 10,720 8,079 57.02%
Office Expense 3,439 434 2,272 1,167 66.07%
Professional Services 59,794 438 24,610 35,184 41.16%
Training 3,761 (54) 3,852 (91) 102.43%
Travel&Conferences 3,630 174 1,059 2,571 29.18%
Uncollectible Accounts 2,660 1,148 1,162 1,498 43.68%
Utilities 8,645 380 3,598 5,047 41.62%
Vehicle Equipment 78,341 1,926 29,825 48,516 38.07%
Supplies&Services Sub-Total 390,045 35,804 224,277 165,768 57.50%
Total Operating Expenses 1,377,820 99,438 794,145 583,675 57.64%
Expenses(Non-Operating):
Interest Expense - - 325 (325) 0.00%
Other Expense 6,000 - 15,940 (9,940) 265.67%
Total Non-Operating Expenses: 6,000 - 16,265 (10,265) 271.08%
Total Expenses 1,383,820 99,438 810,410 573,410 58.56%
Net Income(Loss)Before Capital Contributions 405,568 32,332 691,838 (286,270) 170.58%
and Transfers
Transfers(To)/From - - 85,111 85,111
Contributed Capital - - 16,959,779 16,959,779 0.00%
Net Income(Loss)Before Depreciation 405,568 32,332 17,736,728 16,758,620 4373.30%
Depreciation&Amortization 932,700 107,367 806,181 126,519 86.44%
Total Net Income(Loss) ($527,132) ($75,035) $16,930,547 $16,632,101 -3211.83%
Capital-Direct Labor (3,514) (21,212) 21,212
ITEM NO. 3.3
AGENDA REPORT
Meeting Date: March 26, 2012
To: Finance-Accounting Committee
From: Ken Vecchiarelli, General
Manager
Presented By: Stephen Parker, Finance Dept: Finance
Manager
Prepared By: Delia Lugo, Senior Accountant
Subject: Investment Report for Period Ending February 2012
SUMMARY:
Staff is submitting the February 2012 Monthly Investment Reports for the Committee's review.
DISCUSSION:
The Investment Portfolio Report presents the market value and percent yield for all District
investments by institution. The Investment Report Summary includes budget and actual interest and
average term portfolio information as well as market value broken out by reserves categories. The
total yield for the month ending February 2012 increased to 1 .07%. This is the result of spending
down the 2008 Revenue Bond held in a money market account earning only 0.05%, as well as the
yield change of investments held in CaITRUST's Medium Term portfolio increasing from 1 .15% to
1 .27%.
The overall decrease in the investment balance from the previous month is approximately $100,000.
A couple of the larger balance changes include an increase in the Reserve for Debt Service fund of
$241 ,000 due to the District meeting its monthly obligation to ensure that funds are set aside for the
March 2012 debt service interest payment and a decrease of $540,000 in the Water Capital
Projects fund for CIP project activity. With the drawdown of all available funds from the 2008 COP
Revenue account, payment of all future CIP project invoices will now be funded from Water Capital
Projects fund money held in LAIF and CaITRUST.
STRATEGIC PLAN:
FR 3-C: Manage Cash Flow to Maximize Investment Income
ATTACHMENTS:
Name: Description: Type:
Invst Rpt Feb 2012.xlsx February 2012 Investment Report Backup Material
Invst Agenda Backup - Feb 2012.xlsx Agenda Backup Backup Material
Yorba Linda Water District
Investment Portfolio Report
February 29, 2012
Market % Percent
Value Cost of Total Institution Yield
Checking Account:
$ 365,966 $ 365,966 Wells Fargo Bank
$ 365,966 $ 365,966 1.36% Total 0.00%
Money Market Accounts:
$ 9,968 $ 9,968 Wells Fargo Money Market 0.05%
214,446 214,446 US Bank(2008 Revenue Bond) 0.04%
2,699 2,699 US Bank(2008 Bond Reserve) 0.04%
$ 227,113 $ 227,113 0.85% Total 0.04%
Federal Home Loan Bank:
$ 2,161,995 $ 2,144,397 US Bank(2008 Bond Reserve) 1.34%
$ 2,161,995 $ 2,144,397 8.06% 1.34%
Pooled Investment Accounts:
$ 3,606,075 $ 3,606,075 Local Agency Investment Fund 0.39%
2,135,305 2,135,052 Ca1TRUST Short Term 0.54%
18,317,130 18,241,883 Ca1TRUST Medium Term 1.27%
$ 24,058,510 $ 23,983,011 89.73% 1.07%
$ 26,813,584 $ 26,720,486 100% Total Investments 1.07%
Per Government Code requirements,the Investment Report is in compliance with the Yorba
Linda Water District's Investment Policy, and there are adequate funds available to meet
budgeted and actual expenditures for the next six months.
f
Delia Lugo, Senior Accountant
2/29/12
Investment Summary Report
Below is a chart summarizing the yields as well as terms and maturities for the month of February 2012:
Avg. Portfolio Avg. Portfolio #of
Month Yield Without Yield With Days to
of 2012 CalTRUST CalTRUST Maturity
February 0.68% 1.07% 86
Below is are charts comparing operating fund interest for current and prior fiscal years.
Actual Interest 2/28/2011 2/29/2012
Monthly- February $ 23,038 $ 19,599
Year-to-Date $ 156,055 $ 168,873
Budget 2010/2011 2011/2012
Interest Budget, February YTD $ 104,000 $ 120,667
Interest Budget, Annual $ 156,000 $ 190,000
Interest earned on investments is recorded in the fund that owns the investment.
Investment Summary Comparison Between Current and Previous Month
The distribution of investments in the portfolio both in dollars and as a percentage of the total portfolio by funds
is as follows:
January 2012 %Alloc February 2012 %Alloc
Fund Description Balance 1/31/2012 Balance 2/29/2012
Water Operating Reserve $ 2,605,487 9.71% $ 2,546,136 9.64%
Water Emergency Reserve 1,005,122 3.75% 1,006,102 3.80%
Water Capital Project Reserve 17,554,662 65.49% 17,014,820 64.33%
Water Reserve for Debt Service 933,263 3.48% 1,174,012 4.44%
COP Revenue Bond 2008- Reserve 2,165,866 8.08% 2,161,995 8.17%
COP Revenue Bond 2008 217,089 0.81% 217,145 0.82%
Sewer Operating 277,589 1.04% 227,211 1.62%
Sewer Emergency Reserve 1,004,473 3.75% 1,005,452 3.80%
Sewer Capital Project Reserve 1,043,378 3.89% 1,094,745 3.38%
$ 26,806,929 100.00% $ 26,447,618 100.00%
Wells Fargo Bank Checking
Water Operating 21,930 251,368
Sewer Operating 81,376 114,598
103,306 365,966
Totals $ 26,910,235 $ 26,813,584
ITEM NO. 3.4
AGENDA REPORT
Meeting Date: March 26, 2012
To: Finance-Accounting Committee
From: Ken Vecchiarelli, General
Manager
Presented By: Stephen Parker, Finance Dept: Finance
Manager
Prepared By: Delia Lugo, Senior Accountant
Subject: Comparison of Investment Types and Yields of Local Water Districts
DISCUSSION:
As requested, staff has accumulated information from local water district's December 2011
Treasurer's Reports and is presenting this information for discussion.
The main items to note are that investments common to local water districts are ones that abide by
the California Government Code, and have safety as the primary function. Therefore, investments in
money market funds, Local Agency Investment Fund, and investments issued by the federal
government or having the full faith and credit of the federal government are the most common.
The District's yield is extremely competitive as compared to these other local water districts.
Individual investments that are gaining more yield than CaITRUST are primarily federal agency
securities that were purchased years ago and are soon maturing, or recently purchased federal
agency securities that still have years before they will mature.
Staff have intentionally not purchased federal agency securities because of the uncertainty of when
the current investments will be needed according to our current CIP plan. Through the budget
process this year, staff believes that future needs for cash flow purposes will become more clear,
offering up the possibility of utilizing investments with longer maturities.
STRATEGIC PLAN:
FR 3-C: Manage Cash Flow to Maximize Investment Income
ATTACHMENTS:
Warne: Description: Type:
Dec 2011 - Agency Investment Comparison.xlsx Comparison of Investment Types and Yields Backup Material
Yorba Linda Water District
Comparison of Investment Types and Yields of Local Water Districts
As of December 31, 2011
Days to
Agency and Portfolio Make-up Market Value Yield Rate Maturity
El Toro Water District
Union Bank of California -Operational Accts $1,140,361 0.00% 0
Union Bank of California -Sinking Fund $182,845 0.05% 0
Local Agency Investment Fund $10,482,925 0.38% 1
Bank of New York/CAMP:
FHLMC Global Reference Notes $1,029,004 4.63% 299
FNMA Notes $964,921 0.75% 412
FHLB Global Notes $502,368 1.75% 167
FNMA Notes $1,013,111 1.25% 598
FHLMC Notes $1,022,266 1.38% 786
CAMP Money Market Fund $5,052,138 0.21% 0
CAMP Capital Facilities Fund $200,000 0.21% 0
Total Investment Portfolio- ETWD $21,589,939 0.65% 102
Mesa Consolidated Water District
U S Bank Accounts $1,154,238 0.00% 0
Bank First Account $2,500 0.00% 0
Orange County Investment Pool $5,002,453 0.43% 1
Local Agency Investment Fund $2,844,372 0.38% 1
Union Bank Custody Account:
FFCB $4,109,738 1.46% 1,452
FHLB $1,245,038 1.34% 1,824
FHLMC $5,265,618 1.49% 1,597
FNMA $3,005,980 1.33% 1,479
ACWA Advanced Dues Deposit Agreement $12,485 4.00% 1,460
Total Investment Portfolio- MCWD $22,642,421 1.01% 933
Santa Margarita Water District
U S Treasury Bond/Note $5,800,686
Money Market Fund $6,601,774
Federal Agency Bond/Note $23,943,625
Corporate Note $7,249,378
Certificate of Deposit $476,580
Total Investment Portfolio-SMWD $44,072,043 0.47% 302
* Cash in bank information was not available. Due to the methodology used in
reporting this information,Yield and Days to Maturity data is not available by
investment type.
Yorba Linda Water District
Comparison of Investment Types and Yields of Local Water Districts
As of December 31, 2011
Days to
Agency and Portfolio Make-up Market Value Yield Rate Maturity
South Coast Water District
Bank Deposit Accounts $4,060,560 0.00% 0
Interest Bearing Deposit Account $931,892 0.32% 1
Money Market Funds $8,185,953 0.02% 1
Governmental Investment Pools $4,990,114 0.13% 1
Local Agency Investment Fund $17,441,702 0.38% 1
Federal Agency Callable Bonds $10,027,510 1.11% 580
Total Investment Portfolio-SCWD $45,637,731 0.41% 128
Walnut Valley Water District
Cash Custodial Account $2,753,335 0.00% 0
FDIC Insured U S Corporate $3,932,660 0.17% 299
Local Agency Investment Fund $10,021,940 0.38% 1
Federal Agency Funds $20,349,090 0.60% 920
U S Corporate $6,882,922 1.14% 671
U S Treasury $5,913,918 0.48% 1,153
Total Investment Portfolio-WVWD $49,853,865 0.55% 629
Yorba Linda Water District
Wells Fargo Bank $38,667 0.00% 0
Wells Fargo Money Market Account $9,997 0.05% 1
U S Bank Money Market Account $1,645,249 0.10% 1
U S Bank : FHL $2,156,687 1.35% 879
Local Agency Investment Fund $4,977,179 0.38% 1
CaITRUST Medium Term/Pooled $19,977,136 1.19% 35
Total Investment Portfolio-YLWD $28,804,915 1.00% 90
ITEM NO. 3.5
AGENDA REPORT
Meeting Date: March 26, 2012
To: Finance-Accounting Committee
From: Ken Vecchiarelli, General
Manager
Presented By: Stephen Parker, Finance Dept: Finance
Manager
Prepared By: Stephen Parker, Finance
Manager
Subject: Draft Reserve Policy for FY 2012/13
DISCUSSION:
Attached is a draft and red-line version of the reserve policy for FY 12/13 for the Finance-
Accounting Committee to review. This information will be presented to the entire Board at the
Budget Workshop.
The main change staff is proposing in this years' reserve policy is to revise the District's Operating
Reserve to the same targets as the Government Finance Officers Association recommends - 8 -
17%. The District's current targets are 5-8%. The other major change is adjusting the Maintenance
Reserve to have a target of $200,000. Currently the policy is written to fund $200,000 annually, but
after internal discussions, staff believes that a pool of $200,000 that is annually replenished should
be sufficient for most unplanned failures of assets in any one year. The remaining changes are
minor and primarily include updating account balances, which are required annually.
STRATEGIC PLAN:
FR 2-A: Review the Reserve Policy and Funding Levels Annually
ATTACHMENTS:
Description: Type:
Draft Reserve Policy FY 12.13.docx Draft Reserve Policy Backup Material
Draft Reserve Policy FY 12.13 Red Line.pdf Draft Reserve Policy-Red Line Backup Material
RESERVE POLICY
A. GENERAL POLICY:
Maintaining adequate reserves is an essential part of sound financial management. The Yorba
Linda Water District Board of Directors realizes the importance of reserves in providing reliable
service to its customers, financing of long-term capital projects and funding availability for
emergencies should the need arise. Interest derived from reserve balances shall be credited to the
reserve account from which it was earned.
B. CATEGORIES:
YLWD shall accumulate, maintain and segregate its reserve funds into the following categories:
Restricted and Designated Reserves
1. Board Designated Reserves; and
2. Contractually Restricted Reserves.
C. SCOPE:
This policy will assist the Board of Directors in establishing:
1. Target levels for reserve funds;
2. Requirements for the use of reserve funds; and
3. Periodic review requirements for each reserve.
D. PERIODIC REVIEW:
Staff and the YLWD Board shall review the reserve balances and targets annually as a part of the
annual budget process. The Finance-Accounting Committee will continue to review all reserve
and investment balances monthly, with a quarterly report going to the full Board.
E. RESTRICTED AND DESIGNATED RESERVES:
1. Board Designated Reserves:
These are reserve funds earmarked for the purpose of funding such items as new capital
facilities, repair or replacement of existing facilities and general operating reserves designated
for a specific purpose and use by the Board of Directors.
1.0 Operating Reserve
A. Definition and Purpose — Established to cover temporary cash flow deficiencies that
occur as a result of timing differences between the receipt of operating revenue and
expenditure requirements and unexpected expenditures occurring as a result of doing
business.
March 26, 2011 Page 1 of 3
B. Target Level — The Government Finance Officers Association (GFOA) recommends
that funding should be no less than one to two months (or 8% - 17%) of the District's
annual operating budget. The District's current target will be a minimum of 8% and a
maximum of 17% of the annual operating budget for both the water and sewer funds.
C. Events or Conditions Prompting the Use of the Operating Reserve— This reserve may
be utilized as needed to pay outstanding operating expenditures prior to the receipt of
anticipated operating revenues.
1.1 Emergency Reserve
A. Definition and Purpose — Established to provide protection recovery to the District
and its customers for losses arising from an unplanned event or circumstance. The
reserve level combined with YLWD's existing insurance policies should adequately
protect YLWD and its customers in the event of a loss.
B. Target Level —Established at a minimum level equal to $1,000,000 for the water fund
and shall accumulate interest and annual contributions as determined by the District's
annual operation to a maximum level of $4,000,000. The target for sewer will be a
minimum of$250,000 and a maximum of$1,000,000.
C. Events or Conditions Prompting the Use of the Emergency Reserve — This reserve
shall be utilized to cover unexpected losses experienced by the District as a result of a
disaster or other unexpected loss. Any reimbursement received by the District from
insurance companies as a result of a submitted claim shall be deposited back into the
reserve as replenishment for the loss.
1.2 Capital Replacement Reserve
A. Definition and Purpose — Established to provide capital repair and replacement
funding as the District's infrastructure deteriorates over its expected useful life.
B. Target Level — The Board-approved 2010 Asset Management Plan recommended that
the annual contribution to this reserve be at a minimum level of $1,820,000 for the
water fund and $345,000 for the sewer fund, less money set aside for the Maintenance
Reserve. Funding with available funds based on the District's operations shall be
allocated quarterly.
C. Events or Conditions Prompting the Use of the Capital Replacement Reserve —
Through the annual budget process, staff shall recommend anticipated asset
replacement projects. The Board of Directors shall take action to approve
recommended project appropriations from the capital replacement reserve. Should
unplanned replacement be necessary during any fiscal year, the Board of Directors
may take action to amend the budget and appropriate needed funds as required.
1.3 Maintenance Reserve
A. Definition and Purpose — Established to provide funding for non-scheduled capital
asset repair and replacement.
March 26, 2011 Page 2 of 3
B. Target Level— $200,000 subject to an annual review.
C. Events or Conditions Prompting the Use of the Maintenance Replacement Reserve —
Unplanned failure of assets including but not limited to pumps, motors and major
facilty repairs.
1.4 Employee Liabilities Reserve
A. Definition and Purpose — The purpose is to cover employees' accrued vacation and
other compensatory time and to ensure the complete funding associated with the
liability incurred for employees whom have met the requirements necessary for
district paid health benefits at retirement.
B. Target Level — The annual contribution will be $100,000 ($93,000 for water and
$7,000 for sewer) to be evaluated and/or adjusted annually thereafter based on an
analysis of current employees' vacation and sick time accrued and actuarial
determinations of future retiree costs. The amount of actuarily-determined
contributions for the District's Other Post Employment Benefit (OPEB) costs that the
District has underfunded and is therefore shown as a long-term liability as of June 30,
2011 was $122,065. When combined with a liability on the District's books for
vacation, compensatory and sick time of $1,007,193 at June 30, 2011, the target is
projected to be approximately $1,130,000 for the combined water and sewer
enterprises.
C. Events or Conditions Prompting the Use of the Employee Liabilities Reserve — This
reserve may be used in the event that operating funds are not adequate to meet
vacation, compensatory and sick time paid out or retiree medical cost obligations
within the current year.
2. Contractually Restricted Reserves:
These are funds held to satisfy limitations set by external requirements established by creditors,
grant agencies or law. Examples include stipulated bond covenants and reserves held with a
fiscal agent.
2.0 US Bank 2008 COP Reserve
A. Definition and Purpose — Established to cover reserve requirements held with a
designated fiscal agent(US Bank) for the 2008 Certificates of Participation.
B. Target Level—Funding shall be held in an amount equal to $2,147,096.
C. Events or Conditions Prompting the Use of the Contractually Restricted Reserve —
This reserve may be utilized as needed by the fiscal agent to pay any outstanding debt
service payments not covered by the District within the specified billing and due
dates.
End of Policy Document
March 26, 2011 Page 3 of 3
RESERVE POLICY
A. GENERAL POLICY:
Maintaining adequate reserves is an essential part of sound financial management. The Yorba
Linda Water District Board of Directors realizes the importance of reserves in providing reliable
service to its customers, financing of long-term capital projects and funding availability for
emergencies should the need arise. Interest derived from reserve balances shall be credited to the
reserve account from which it was earned.
B. CATEGORIES:
YLWD shall accumulate, maintain and segregate its reserve funds into the following categories:
Restricted and Designated Reserves
1. Board Designated Reserves; and
2. Contractually Restricted Reserves.
C. SCOPE:
This policy will assist the Board of Directors in establishing:
1. Target levels for reserve funds;
2. Requirements for the use of reserve funds; and
3. Periodic review requirements for each reserve.
D. PERIODIC REVIEW:
Staff and the YLWD Board shall review the reserve balances and targets annually as a part of the
annual budget process. The Finance-Accounting Committee will continue to review all reserve
and investment balances monthly, with a quarterly report going to the full Board.
E. RESTRICTED AND DESIGNATED RESERVES:
1. Board Designated Reserves:
These are reserve funds earmarked for the purpose of funding such items as new capital
facilities, repair or replacement of existing facilities and general operating reserves designated
for a specific purpose and use by the Board of Directors.
1.0 Operating Reserve
A. Definition and Purpose — Established to cover temporary cash flow deficiencies that
occur as a result of timing differences between the receipt of operating revenue and
expenditure requirements and unexpected expenditures occurring as a result of doing
business.
March 2623, 2011 Page 1 of 3
B. Target Level — The Government Finance
Officers Association (GASBGFOA) recommends that funding should be no less than
one to two months (or 8% - 17%) of the District's annual operating budget. The
District's ifiitial current target will be a minimum of 8-5% and a maximum of$170 of
the annual operating budget for both the water and sewer funds.
C. Events or Conditions Prompting the Use of the Operating Reserve—This reserve may
be utilized as needed to pay outstanding operating expenditures prior to the receipt of
anticipated operating revenues.
1.1 Emergency Reserve
A. Definition and Purpose — Established to provide protection recovery to the District
and its customers for losses arising from an unplanned event or circumstance. The
reserve level combined with YLWD's existing insurance policies should adequately
protect YLWD and its customers in the event of a loss.
B. Tarizet Level—Established at a minimum level equal to $1,000,000 for the water fund
and shall accumulate interest and annual contributions as determined by the District's
annual operation to a maximum level of $4,000,000. The target for sewer will be a
minimum of$250,000 and a maximum of$1,000,000.
C. Events or Conditions Prompting the Use of the Emergency Reserve — This reserve
shall be utilized to cover unexpected losses experienced by the District as a result of a
disaster or other unexpected loss. Any reimbursement received by the District from
insurance companies as a result of a submitted claim shall be deposited back into the
reserve as replenishment for the loss.
1.2 Capital Replacement Reserve
A. Definition and Purpose — Established to provide capital repair and replacement
funding as the District's infrastructure deteriorates over its expected useful life.
B. Tarizet Level — The Board-approved 2010 Asset Management Plan recommended that
the annual contribution to this reserve be at a minimum level of $1,820,000 for the
water fund and$345,000 for the sewer fund, less money set aside for the Maintenance
Reserve. Funding with available funds based on the District's operations shall be
allocated quarterly.
C. Events or Conditions Prompting the Use of the Capital Replacement Reserve —
Through the annual budget process, staff shall recommend anticipated asset
replacement projects. The Board of Directors shall take action to approve
recommended project appropriations from the capital replacement reserve. Should
unplanned replacement be necessary during any fiscal year, the Board of Directors
may take action to amend the budget and appropriate needed funds as required.
1.3 Maintenance Reserve
A. Definition and Purpose — Established to provide funding for non-scheduled capital
asset repair and replacement.
March 2624, 2011 Page 2 of 3
B. Target Level— $200,000 afifitially subject to an annual review.
C. Events or Conditions Prompting the Use of the Maintenance Replacement Reserve —
Unplanned failure of assets including but not limited to pumps, motors and major
facilty repairs.
1.4 Employee Liabilities Reserve
A. Definition and Purpose — The purpose is to cover employees' accrued vacation and
other compensatory time and to ensure the complete funding associated with the
liability incurred for employees whom have met the requirements necessary for
district paid health benefits at retirement.
B. Target Level — The annual contribution will be $100,000 ($93,000 for water and
$7,000 for sewer) to be evaluated and/or adjusted annually thereafter based on an
analysis of current employees' vacation and sick time accrued and actuarial
determinations of future retiree costs. The amount of actuarily-determined
contributions for the District's Other Post Employment Benefit (OPEB) costs that the
District has underfunded and is therefore shown as a long-term liability as of June 30,
2010-2011 was $236,49J122,065. When combined with a liability on the District's
books for vacation, compensatory and sick time of $ 91,007,193 at June 30,
20 02011, the target is projected to be approximately $ 300,0001,130,000 for the
combined water and sewer enterprises.
C. Events or Conditions Prompting the Use of the Employee Liabilities Reserve — This
reserve may be used in the event that operating funds are not adequate to meet
vacation, compensatory and sick time paid out or retiree medical cost obligations
within the current year.
2. Contractually Restricted Reserves:
These are funds held to satisfy limitations set by external requirements established by creditors,
grant agencies or law. Examples include stipulated bond covenants and reserves held with a
fiscal agent.
2.0 US Bank 2008 COP Reserve
A. Definition and Purpose — Established to cover reserve requirements held with a
designated fiscal agent (US Bank) for the 2008 Certificates of Participation.
B. Target Level—Funding shall be held in an amount equal to $2,147,096.
C. Events or Conditions Prompting the Use of the Contractually Restricted Reserve —
This reserve may be utilized as needed by the fiscal agent to pay any outstanding debt
service payments not covered by the District within the specified billing and due
dates.
End of Policy Document
March 2624, 2011 Page 3 of 3