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HomeMy WebLinkAbout2012-03-26 - Finance-Accounting Committee Meeting Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCE-ACCOUNTING COMMITTEE MEETING March 26, 2012 A meeting of the Finance-Accounting Committee was called to order by Director Kiley 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 Robert R. Kiley, Chair Ken Vecchiarelli, General Manager Director Phil Hawkins Stephen Parker, Finance Manager OTHER ATTENDEES Thomas DeMars, Managing Principal, Fieldman Rolapp & Associates Joshua Lentz, Assistant Vice President, Fieldman Rolapp & Associates 1. PUBLIC COMMENTS None. 2. PRESENTATIONS 2.1. Opportunity for Refunding of 2003 Certificates of Participation Mr. DeMars and Mr. Lentz from Fieldman Rolapp & Associates went through the slides of a PowerPoint presentation they had created for the committee. They shared that the current bond market for municipal bonds was excellent, with demand high and a small number of new issuances. As such, there is an opportunity for the District to advance refund the 2003 COP's, and save around $500,000 in net present savings, with an average annual savings of $31,000. Mr. Lentz explained that the market for this could change, but the majority of fees associated with the advance refunding would be contingent on the market staying strong and the District completing the refunding. The next steps included the Board authorizing moving forward with advance refunding the 2003 COP's, engaging bond counsel and mobilizing the finance team. The total timeline for the process would be between 90 and 120 days. The Finance-Accounting Committee supported staff's recommendation of proceeding forward with advance refunding and recommended having the Fieldman Rolapp & Associates team present this option at the next Board meeting. Mr. DeMars and Mr. Lentz left the meeting at this time. 1 3. DISCUSSION ITEMS 3.1. Line of Credit Financing Option Mr. Parker shared that staff had been exploring a line of credit financing option with Wells Fargo bank, the District's primary financial institution. Mr. Parker explained that as a result of the District's strong credit rating and history with Wells Fargo, the terms of obtaining a line of credit were very favorable. In addition, staff considers this an effective tool to limit the amount of future rate increases or maximize the CIP projects that the District could finance. Mr. Parker explained that staff would present the line of credit as a financing option in the upcoming budget workshop. If the Board supported moving forward with this option, the next step would be to have bond counsel look into the terms and contract proposed by Wells Fargo. 3.2. February 2012 Budget to Actual Results Mr. Parker indicated that the budget to actual results were similar to the previous month, and that almost all line items other than ones that had been previously mentioned were following in line with being two thirds of the way through the fiscal year. He did point out the newest change was that Sewer Fund's materials and maintenance accounts were higher than expected budget due to unexpected sewer main repairs in a number of areas. The committee had no further questions. 3.3. Investment Report for Period Ending February 2012 Mr. Parker indicated that the District's yield raised to 1.07% as a result of spending down most of the 2008 COP proceeds and CaITRUST's Medium Term portfolio increasing. Major activity for the month included spending over $500,000 of the Water Capital Projects fund for CIP project activity and moving money in the Reserve for Debt Service fund to Cal-TRUST's Short-Term portfolio to allow the interest portion of the 2003 and 2008 COP's to be paid at the end of March. The committee had no further questions. 3.4. Comparison of Investment Types and Yields of Local Water Districts Mr. Parker offered the committee a comparison of YLWD's investment types and yields to other local water districts per previous requests by the committee. Mr. Parker explained that as water districts must all abide by the State of California Government Code, most investments within that group will be similar, including investments in Local Agency Investment Fund, money market accounts, and federal securities. The Committee noted that the District's yield was higher than all others except Mesa Consolidated Water District, which was higher by the slightest of margins — one one-hundredth of a percent. 2 Mr. Parker pointed out that Mesa had a large amount of their reserves wrapped up in long-term investments, and the District's current financial position did not allow for similar investments to be made. Mr. Parker also indicated that the District's yield was high because of its investment in CaITRUST, but that investment also subjected the principal to gains and losses, while federal securities — as long as they are held to maturity — do not. This is something that has been discussed before with the committee, and Mr. Parker indicated he would like to pursue some diversification of the portfolio as a result of that risk. 3.5. Draft Reserve Policy for FY 2012/13 Mr. Parker presented the draft reserve policy for FY 2012/13. He explained that there were two main changes from the prior years' version. The first change was to revise the District's Operating Reserve target from 5-8% up to the Government Finance Officers Association's recommendation of 8-17%. The second change is to adjust the Maintenance Reserve to include a target of $200,000 instead of annual funding of $200,000. The remaining changes were mostly updating figures that needed to be updated annually. Mr. Parker explained that the draft reserve policy would be presented as a part of the Budget Workshop. 3.6. Future Agenda Items and Staff Tasks The committee asked that staff present a comparison of the District's investment types and yields to other local water districts on an annual basis. 4. ADJOURNMENT 4.1. The Committee adjourned at 5:04 p.m. The next meeting of the Finance- Accounting Committee will be held April 23, 2012 at 4:00 p.m. 3