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Home My WebLink About2012-10-11 - Board of Directors Meeting Agenda Packet AGENDA YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Thursday, October 11, 2012, 8:30 AM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL Phil Hawkins, President Gary T. Melton, Vice President Michael J. Beverage Ric Collett Robert R. Kiley 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. Recognize Steve Clayton, Plant Operator II, for Completion of the ACWA/JPIA Supervisor Basics Certification Program 7. COMMITTEE REPORTS 7.1. Citizens Advisory Committee (Beverage) · Minutes of meeting held September 24, 2012 at 8:30 a.m. · Meeting scheduled October 22, 2012 at 8:30 a.m. 8. PRESENTATIONS 8.1. Presentation by Craig Stehsel, Business Account Executive for Southern California Edison, Regarding District's Receipt of $36,936 Rebate Check for Participation in Energy Efficiency Program 9. 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. 9.1. Minutes of the Board of Directors Regular Meeting Held September 27, 2012 Recommendation: That the Board of Directors approve the minutes as presented. 9.2. Minutes of the Board of Directors Special Meeting Held October 3, 2012 Recommendation: That the Board of Directors approve the minutes as presented. 9.3. Payments of Bills, Refunds, and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $2,292,133.93. 9.4. Progress Payment No. 3 for Pressure Regulating Station Upgrades, Phase 1 Recommendation: That the Board of Directors approve Progress Payment No. 3 in the net amount of $139,178.34 to Vido Samarzich, Inc. for construction of Pressure Regulating Station Upgrades Project, Phase 1. Job No. J-201108. 9.5. Progress Payment No. 4 for the Yorba Linda Blvd Pipeline Project Recommendation: That the Board of Directors approve Progress Payment No. 4 in the net amount of $126,060.00 to Garcia Juarez Construction, Inc. for construction of the Yorba Linda Blvd Pipeline Project, Job No. 200817. 9.6. Amendment No. 4 to MWH Americas Professional Services Agreement - Construction Support Services for the Highland Booster Pump Station Replacement Recommendation: That the Board of Directors approve Amendment No. 4 to the Professional Services Agreement (PSA) with MWH Americas, in the amount of $9,998 for additional construction support services for the Highland Booster Pump Station Replacement and Expansion Project, Job No. 200814. 9.7. Approval of Change Order Nos. 7-10 for Pressure Regulating Stations Upgrade Project, Phase 1 Recommendation: That the Board of Directors approve Change Order Nos. 7-10 for one-half additional work day and $2,820.33 to Vido Samarzich, Inc. for construction of the Pressure Regulating Stations Upgrade Project, Job No. 201108. 10. ACTION CALENDAR This portion of the agenda is for items where staff presentations and Board discussions are needed prior to formal Board action. 10.1. Affirmation of Compliance with the Brown Act Recommendation: That the Board of Directors adopt Resolution No. 12-21 Affirming of Compliance with the Ralph M. Brown Act. 10.2. Memorandum of Understanding Fiscal Years 2012-2015 Recommendation: That the Board of Directors adopt Resolution No. 12-22, the Memorandum of Understanding and Pay Plans with the Yorba Linda Water District Employees Association for the period of July 1, 2012 through June 30, 2015. 10.3. Authorization to Invest in Local Agency Investment Fund Recommendation: That the Board of Directors approve Resolution No. 12-23 Authorizing Investment of Monies in the Local Agency Investment Fund and Rescinding Resolution No. 11-14. 10.4. Authorized Officers for Investments Held at Pershing Recommendation: That the Board of Directors approve Resolution No. 12-24 Authorizing the Acting General Manager and Finance Manager to Act on Behalf of the District Relating to District Investments Held at Pershing LLC. 10.5. Adopting Water Development and Customer Service Fees Recommendation: That the Board of Directors approve Resolution No. 12-25 Adopting Water Development and Customer Service Fees and Rescinding Resolution No. 12-06. 10.6. Audit Reports for Fiscal Year 2011/12 Recommendation: That the Board of Directors receive and file the FY 2011/12 Comprehensive Annual Financial Report, the Report on Internal Control and the Communication to Those In Governance Letter. 11. REPORTS, INFORMATION ITEMS, AND COMMENTS 11.1. President's Report 11.2. Directors' Report · ACWA CLE Risk Management Workshop - October 4, 2012 (Melton) 11.3. Acting General Manager's Report 11.4. General Counsel's Report 11.5. Future Agenda Items and Staff Tasks 12. COMMITTEE REPORTS CONTINUED 12.1. Executive-Administrative-Organizational Committee (Hawkins/Melton) · Minutes of meeting held September 21, 2012 at 12:00 p.m. · Meeting scheduled October 15, 2012 at 4:00 p.m. 12.2. Finance-Accounting Committee (Kiley/Hawkins) · Minutes of meeting held September 26, 2012 at 4:00 p.m. · Meeting scheduled October 22, 2012 at 4:00 p.m. 12.3. Personnel-Risk Management Committee (Beverage/Collett) · Minutes of meeting held October 9, 2012 at 4:00 p.m. (To be provided at the next regular Board meeting.) · Meeting scheduled October 23, 2012 at 4:00 p.m. 12.4. Planning-Engineering-Operations Committee (Collett/Kiley) · Minutes of meeting held October 4, 2012 at 3:00 p.m. (To be provided at the next regular Board meeting.) · Meeting scheduled November 1, 2012 at 3:00 p.m. 12.5. Public Affairs-Communications-Technology Committee (Melton/Beverage) · Minutes of meeting held October 1, 2012 at 4:00 p.m. · Meeting scheduled October 24, 2012 at 4:00 p.m. 12.6. YLWD-MWDOC-OCWD Joint Agency Committee (Hawkins/Beverage) · Minutes of meeting held September 25, 2012 at 4:00 p.m. · Meeting scheduled November 27, 2012 at 4:00 p.m. 13. INTERGOVERNMENTAL MEETINGS 13.1. YL City Council - October 2, 2012 (Hawkins) 13.2. MWDOC/MWD Workshop - October 3, 2012 (Melton/Staff) 13.3. OCWD Board - October 3, 2012 (Kiley/Staff) 13.4. WACO - October 5, 2012 (Hawkins) 13.5. YL Planning Commission - October 10, 2012 (Kiley) 14. BOARD OF DIRECTORS ACTIVITY CALENDAR 14.1. Meetings from October 12, 2012 - November 30, 2012 14.2. Scheduling of Board of Directors Workshop Meeting to Discuss Study Goals and Work Tasks Associated with Organizational Efficiency Study and Development of Job Description for the Position of General Manager 15. CONFERENCES, SEMINARS, AND SPECIAL EVENTS This section of the agenda is for the Board of Directors to authorize Director attendance at the listed events. 15.1. OC Water Use Efficiency Master Plan Stakeholder Workshop - October 15, 2012 Recommendation: That the Board of Directors authorize Director attendance at this event if desired. 16. 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. 16.1. Conference with Legal Counsel – Pending Litigation Pursuant to Subdivision (a) of Section 54956.9 of the California Government Code Name of Case: ACWA/JPIA, et al vs. Insurance Company of the State of Pennsylvania, et al (OC Superior Court - Case No. 00486884) Name of Case: MAMCO, Inc. vs. Yorba Linda Water District (OC Superior Court - Case No. 00595177) 16.2. Conference with Legal Counsel - Anticipated Litigation Pursuant to Subdivision (b) of Section 54956.9 of the California Government Code Number of Potential Cases: One Existing Facts and Circumstances under Section 54956.9(b)(3)(B): Dispute with Orange County Transportation Authority over payment of cost to relocate District water pipelines to make way for construction of Lakeview Avenue overcrossing of ATSF rail tracks and Orangethorpe Avenue. 17. ADJOURNMENT 17.1. The next regular meeting of the Board of Directors will be held Thursday, October 25, 2012 at 8:30 a.m. Items Distributed to the Board Less Than 72 Hours Prior to the Meeting Pursuant to Government Code section 54957.5, non-exempt public records that relate to open session agenda items and are distributed to a majority of the Board less than seventy-two (72) hours prior to the meeting will be available for public inspection in the lobby of the District’s business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870, during regular business hours. When practical, these public records will also be made available on the District’s internet website accessible at http://www.ylwd.com/. Accommodations for the Disabled Any person may make a request for a disability-related modification or accommodation needed for that person to be able to participate in the public meeting by telephoning the Executive Secretary at 714-701-3020, or writing to Yorba Linda Water District, P.O. Box 309, Yorba Linda, CA 92885-0309. Requests must specify the nature of the disability and the type of accommodation requested. A telephone number or other contact information should be included so the District staff may discuss appropriate arrangements. Persons requesting a disability-related accommodation should make the request with adequate time before the meeting for the District to provide the requested accommodation. ITEM NO. 7.1 AGENDA REPORT Meeting Date: October 11, 2012 Subject:Citizens Advisory Committee (Beverage) · Minutes of meeting held September 24, 2012 at 8:30 a.m. · Meeting scheduled October 22, 2012 at 8:30 a.m. ATTACHMENTS: Name:Description:Type: 092412_-_CAC_Minutes.docx CAC Mtg Minutes 09/24/12 Minutes 1 MINUTES OF THE YORBA LINDA WATER DISTRICT CITIZENS ADVISORY COMMITTEE MEETING September 24, 2012 CALL TO ORDER A meeting of the Citizens Advisory Committee was called to order at 8:30 a.m. by Chair Daniel Mole. The meeting was held at the District’s Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. COMMITTEE MEMBERS PRESENT Daniel Mole Fred Hebein Joe Holdren Lindon Baker Cheryl Spencer-Borden Rick Buck Carl Boznanski Oscar Bugarini Sr. YLWD DIRECTORS PRESENT YLWD STAFF PRESENT Michael J. Beverage, Director Steve Conklin, Acting General Manager Damon Micalizzi, Public Information Officer Lee Cory, Operations Manager Diane Dalton, Sr Maint Distribution Operator Ariel Bacani, Engineering Technician II OTHER VISITORS Craig Young 1. PUBLIC COMMENTS None. Director Beverage provided the Committee with a copy of Municipal Water District of Orange County’s Monthly Water Usage Report. The Committee agreed that this information was useful and of interest for the group moving forward. 2. PRESENTATIONS 2.1. A Look Inside YLWD’s Sewers (PowerPoint Presentation) Mr. Cory, Ms. Dalton and Mr. Bacani presented the Committee with a detailed look at the YLWD sewer system and what it takes to maintain it. A main point of discussion was the condition of the sewers on the eastern end of the city, inherited by the District as a result of the past year’s sewer transfer. Mr. Bacani also discussed with the group his role in making sure the hundred or so restaurants that are served by the District adhere to the mandated guidelines for disposal of fats, oils and grease (FOG). 2 3. DISCUSSION ITEMS 3.1. Showcase of New YLWD Displays and Promotional Items Mr. Micalizzi presented to the Committee some of the items that the District will be using at community events and school education as part of the District’s public outreach efforts. 3.2. Future Agenda Items At this time, the Committee discussed consolidation of the November and December meetings due to the holidays. However, because there are already presentations scheduled for those months, the group decided to keep both meetings but move the date of the December meeting to the 17th to better accommodate those who may be traveling or busy during the holidays. There was also discussion on planning a presentation at the January meeting regarding the Golden State Water Company service area. October 22 – OCFA Presentation November 26 – MWDOC Presentation December 17 – Reorganization of Committee, OCWD Presentation 3. ADJOURNMENT 3.1. The Committee adjourned at 10:17 a.m. The next regular meeting of the Citizens Advisory Committee will be held Monday, October 22, 2012 at 8:30 a.m. ITEM NO. 9.1 AGENDA REPORT Meeting Date: October 11, 2012 Subject:Minutes of the Board of Directors Regular Meeting Held September 27, 2012 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name:Description:Type: 092712_BOD_-_Minutes.doc BOD Mtg Minutes 09/27/12 Minutes Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 GM/RC 5-0 (Approved as corrected.) 1 MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Thursday, September 27, 2012, 8:30 a.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The September 27, 2012 Regular Meeting of the Yorba Linda Water District Board of Directors was called to order by Vice President Melton at 8:30 a.m. The meeting was held in the Board Room at the District’s Administrative Building located at 1717 East Miraloma Avenue in Placentia, California 92870. 2. PLEDGE OF ALLEGIANCE President Hawkins led the pledge. 3. ROLL CALL DIRECTORS PRESENT STAFF PRESENT Gary T. Melton, Vice President Steve Conklin, Acting General Manager Michael J. Beverage Gina Knight, HR/Risk Manager Ric Collett Lee Cory, Operations Manager Robert Kiley Stephen Parker, Finance Manager Art Vega, Interim IT Manager DIRECTORS ABSENT Annie Alexander, Executive Secretary Phil Hawkins, President Nicole Dalton, Meter Reader II Ken Graff, Maint Distribution Operator II ALSO PRESENT Rick Hipolito, Engineering Technician II Brett Barbre, Director, MWDOC Ricardo Jimenez, Maintenance Worker I Nancy Rikel, Councilmember, City of YL Ken Mendum, Water Maint Superintendent Art Kidman, Partner, Kidman Law LLP Damon Micalizzi, Public Information Officer Andrew Gagen, Partner, Kidman Law LLP Derek Nguyen, Water Quality Engineer Eddy Beltran, Senior Counsel, Kidman Law Cody Peterson, Public Affairs Intern Joe Polimino, Project Engineer 4. ADDITIONS/DELETIONS TO THE AGENDA None. 5. PUBLIC COMMENTS None. 2 6. SPECIAL RECOGNITION 6.1. Recognition of Individuals for Their Service to the District Rick Hipolito, Engineering Technician II (25 Years) Nicole Dalton, Meter Reader II (5 Years) Ken Graff, Maintenance Distribution Operator II (5 Years) Ricardo Jimenez, Maintenance Worker I (5 Years) Ken Mendum, Water Maintenance Superintendent (5 Years) Joe Polimino, Project Engineer (5 Years) Anthony Varian, Maintenance Distribution Operator II (5 Years) Messrs. Conklin, Parker, and Cory introduced the staff members listed above (with the exception of Mr. Varian) and provided a brief overview of their work history. Mr. Conklin presented each employee with a pin commemorating the number of years they had worked for the District. The Board then commended these individuals for their dedication. (Recognition of Mr. Varian will take place at a future Board meeting.) Messrs. Graff, Hipolito, Jimenez and Polimino and Ms. Dalton left the meeting at this time. Ric Collett, Director (5 Years) Mr. Conklin explained that Director Collett had served on the Board for a total of 8 years and recently retired after working in the solid waste management industry for over 40 years. Mr. Conklin then presented Director Collett with a pin commemorating the first 5 years of his service with the District. Art Kidman, General Counsel (35 Years) Mr. Conklin provided a brief summary of Mr. Kidman’s work history and long standing association with YLWD. Mr. Conklin then presented Mr. Kidman with a pin commemorating his 35 years of service for the District. Mr. Kidman commented on his experience in working with the District and the many challenges and successes that have occurred during his tenure as general counsel. 6.2. Recognize Ken Mendum, Water Maintenance Superintendent, for Completion of the ACWA/JPIA Human Resources Certification Program Mr. Cory summarized Mr. Mendum’s efforts to complete this certification program. Mr. Conklin presented Mr. Mendum with an updated plaque commemorating his accomplishment. 3 6.3. Recognize Derek Nguyen, Water Quality Engineer, for Completion of the ACWA/JPIA Operations Certification Program Mr. Conklin summarized Mr. Nguyen’s efforts to complete this certification program and presented him with an updated plaque commemorating his accomplishment. Messrs. Mendum and Nguyen left the meeting at this time. 7. CONSENT CALENDAR Director Collett made a motion, seconded by Director Kiley, to approve the Consent Calendar. Motion carried 4-0-1 with Director Hawkins being absent. Director Collett abstained from voting on Check No. 59924 on Item No.7.3. as he has a financial interest with the vendor. 7.1. Minutes of the Board of Directors Regular Meeting Held September 5, 2012 Recommendation: That the Board of Directors approve the minutes as presented. 7.2. Minutes of the Board of Directors Regular Meeting Held September 13, 2012 Recommendation: That the Board of Directors approve the minutes as presented. 7.3. Payments of Bills, Refunds and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $2,749,880.49. 7.4. Progress Payment No. 2 for Pressure Regulating Station Upgrades, Phase 1 Recommendation: That the Board of Directors approve Progress Payment No. 2 in the amount of $214,529.64 to Vido Samarzich, Inc. for construction of Pressure Regulating Station Upgrades Project, Phase 1 Job No. J-201108. 7.5. Approval of Change Orders No. 4 & 5 for Pressure Regulating Stations Upgrade Project, Phase 1 Recommendation: That the Board of Directors approve Change Orders No. 4 & 5 for one additional work day and $3,303.18 to Vido Samarzich, Inc. for construction of the Pressure Regulating Stations Upgrade Project, Job No. 201108. 4 7.6. Approval of Change Order No. 6 for Pressure Regulating Stations Upgrade Project, Phase 1 Recommendation: That the Board of Directors approve Change Order No. 6 for two additional work days and $7,208.91 to Vido Samarzich, Inc. for construction of the Pressure Regulating Stations Upgrade Project, Job No. 201108. 7.7. Final Payment/Change Order No. 4 Green Crest Lift Station Project Recommendation: That the Board of Directors approve Change Order No. 4, for a credit in the amount of $1,162, from Pascal & Ludwig; authorize staff to file the Notice of Completion and release the retention thirty-five days following recordation, if no liens have been filed; release the Payment Bond, and release the Faithful Performance Bond in one year if no defects have been found for the construction of the Green Crest Lift Station Repairs Project, Job No. 2011-16S. 8. REPORTS, INFORMATION ITEMS, AND COMMENTS 8.1. President’s Report None. 8.2. Directors’ Report Joint Agency Emergency Planning Workshop – September 25, 2012 (Kiley) Director Kiley was unable to attend this event. 8.3. Acting General Manager’s Report Mr. Conklin stated that he was pleased to report that the process for obtaining the $7M line of credit was completed on September 24, 2012. The District was required to draw $100K from the account in order to activate it. These funds were used to pay part of the costs for projects in the District’s Capital Improvement Plan. The rest of the funds will be kept in reserve. Mr. Conklin noted that District staff had participated in both the pipe tapping contest and the horseshoe tournament at OCWA’s annual barbeque held September 19, 2012. Each of the teams performed well but unfortunately did not place in either of the events. Mr. Conklin reported that staff had also participated in a joint agency emergency planning workshop on September 25, 2012. The event was held at the District’s EOC with representatives from the Cities of Yorba Linda, Brea, and Placentia, as well as OCFA, WEROC, GSWC, OC Public Works and the OC Sheriff’s Office in attendance. The event lasted over 4 hours and dealt with how each of the agencies would work together following a potential earthquake along the Whittier fault. 5 Mr. Conklin further reported that the contractor is continuing to make very good progress on the Yorba Linda Blvd pipeline project. Staff is expecting the project to be completed in November. Mr. Conklin concluded his report by stating that the District had been awarded a rebate in the amount of $36,936 from SCE for the installation of high efficiency motors at the newly completed Highland booster station. A representative from SCE will provide a brief presentation regarding the program at the next regular Board meeting. 8.4. General Counsel’s Report None. 8.5. Future Agenda Items and Staff Tasks None. 9. COMMITTEE REPORTS 9.1. Executive-Administrative-Organizational Committee (Hawkins/Melton) Minutes of the meeting held September 21, 2012 at 12:00 p.m. will be provided at the next regular Board meeting. Next meeting is scheduled October 15, 2012 at 4:00 p.m. 9.2. Finance-Accounting Committee (Kiley/Hawkins) Minutes of the meeting held September 26, 2012 at 4:00 p.m. will be provided at the next regular Board meeting. Next meeting is scheduled October 22, 2012 at 4:00 p.m. 9.3. Personnel-Risk Management Committee (Beverage/Collett) Minutes of the meeting held September 6 at 10:00 a.m. were provided in the agenda packet. Next meeting is scheduled October 9, 2012 at 4:00 p.m. 9.4. Planning-Engineering-Operations Committee (Collett/Kiley) Minutes of the meeting held September 6, 2012 at 3:00 p.m. were provided in the agenda packet. Next meeting is scheduled October 4, 2012 at 3:00 p.m. 6 9.5. Public Affairs-Communications-Technology Committee (Melton/Beverage) Next meeting is scheduled October 1, 2012 at 4:00 p.m. 9.6. YLWD-MWDOC-OCWD Joint Agency Committee (Hawkins/Beverage) Minutes of the meeting held September 25, 2012 at 4:00 p.m. will be provided at the next regular Board meeting. Next meeting is scheduled November 27, 2012 at 4:00 p.m. 9.7. Citizens Advisory Committee (Beverage) Minutes of the meeting held September 24, 2012 at 8:30 a.m. will be provided at the next regular Board meeting. Next meeting is scheduled October 22, 2012 at 8:30 a.m. 10. INTERGOVERNMENTAL MEETINGS 10.1. YL City Council – September 18, 2012 (Melton) Director Melton attended and commented on the status of the Cielo Vista Project, the law enforcement services transition, and Fiesta Days Parade which were discussed during the meeting 10.2. MWDOC Board – September 19, 2012 (Melton/Staff) Director Melton attended but did not have any District related business to report. Director Barbre addressed the Board and commented on his long standing relationship with the new Chief of Police, Lt. Bob Wren. Director Barbre then reported on the status of the current water supply situation and the benefits of conducting joint agency meetings with the District, MWDOC and OCWD. 10.3. OCWD Board – September 19, 2012 (Kiley/Staff) Director Kiley attended but did not have any District related business to report. 11. BOARD OF DIRECTORS ACTIVITY CALENDAR 11.1. Meetings from September 28, 2012 – October 31, 2012 The Board reviewed the activity calendar and made no changes. 7 12. CONFERENCES, SEMINARS, AND SPECIAL EVENTS 12.1. ACWA CLE Risk Management Workshop – October 4-5, 2012 Yorba Linda Mayor’s Prayer Breakfast – October 18, 2012 ACWA/JPIA Fall Conference – December 3-4, 2012 ACWA Fall Conference – December 4-7, 2012 CRWUA Annual Conference – December 12-14, 2012 Director Beverage made a motion, seconded by Director Collett, to authorize Director attendance at the above listed events. Motion carried 4-0-1 with Director Hawkins being absent. 13. CLOSED SESSION The meeting was adjourned to Closed Session at 9:08 a.m. All Directors with the exception of Director Hawkins were present. Also present were Mrs. Knight and Messrs. Conklin, Kidman, Gagen and Beltran. 13.1. Conference with Legal Counsel – Pending Litigation Pursuant to Subdivision (a) of Section 54956.9 of the California Government Code Name of Case: ACWA/JPIA, et al vs. Insurance Company of the State of Pennsylvania, et al (OC Superior Court – Case No. 00486884) Name of Case: MAMCO, Inc. vs. Yorba Linda Water District (OC Superior Court – Case No. 00595177) Name of Case: In the Matter of Yorba Linda Water District and Michael Beverage (FPPC No. 11/49G) The Board reconvened in Open Session at 9:45 am. Vice President Melton announced that no action was taken during Closed Session that was required to be reported under the Brown Act. 14. ADJOURNMENT 14.1. The meeting was adjourned at 9:45 am. A special Board of Directors meeting has been scheduled for Wednesday, October 3, 2012 at 8:00 a.m. to conduct a Closed Session. The next regular meeting of the Board of Directors will be held Thursday, October 11, 2012 at 8:30 a.m. Annie Alexander Assistant Board Secretary ITEM NO. 9.2 AGENDA REPORT Meeting Date: October 11, 2012 Subject:Minutes of the Board of Directors Special Meeting Held October 3, 2012 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name:Description:Type: 100312_BOD_-_Minutes.docx BOD Mtg Minutes 10/03/12 Minutes Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 GM/RC 5-0 1 MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING Wednesday, October 3, 2012, 8:00 a.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The October 3, 2012 Yorba Linda Water District Board of Directors Special Meeting was called to order by President Hawkins at 8:01 a.m. The meeting was held in the Board Room at the District’s Administrative Building located at 1717 E Miraloma Avenue in Placentia, California 92870. 2. PLEDGE OF ALLEGIANCE Director Hawkins led the pledge. 3. ROLL CALL DIRECTORS PRESENT STAFF PRESENT Phil Hawkins, President Steve Conklin, Acting General Manager Gary T. Melton, Vice President Gina Knight, HR/Risk Manager Michael J. Beverage Annie Alexander, Executive Secretary Ric Collett Robert R. Kiley OTHER ATTENDEES Richard Kreisler, Partner, Liebert Cassidy Whitmore Art Kidman, Partner, Kidman Law LLP 4. PUBLIC COMMENTS None. 5. CLOSED SESSION The meeting was adjourned to Closed Session at 8:02 a.m. All Directors were present. Also present were Messrs. Conklin, Kreisler and Kidman and Mrs. Knight. 5.1. Conference with Labor Negotiators Pursuant to Section 54956.7 of the California Government Code Agency Designated Representatives: Steve Conklin Gina Knight Richard Kreisler Employee Organization: Yorba Linda Water District Employees Association President Hawkins announced that no action was taken during Closed Session that was required to be reported under the Brown Act. 2 6. ADJOURNMENT 6.1. The meeting was adjourned at 8:54 a.m. The next regular meeting of the Board of Directors will be held Thursday, October 11, 2012 at 8:30 a.m. Annie Alexander Assistant Board Secretary ITEM NO. 9.3 AGENDA REPORT Meeting Date: October 11, 2012 Budgeted:Yes To:Board of Directors Cost Estimate:$2,292,133.93 Funding Source:All Funds From:Steve Conklin, Acting General Manager Presented By:Stephen Parker, Finance Manager Dept:Finance Prepared By:Maria Trujillo, Accounting Assistant I Subject:Payments of Bills, Refunds, and Wire Transfers SUMMARY: Section 31302 of the California Water Code says the District shall pay demands made against it when they have been approved by the Board of Directors. Pursuant to law, staff is hereby submitting the list of disbursements for Board of Directors' approval. STAFF RECOMMENDATION: That the Board of Directors ratify and authorize disbursements in the amount of $2,292,133.93. DISCUSSION: The wire and major items on this disbursement list are as follows: A wire of $1,403,935.02 to MWDOC for August water purchase; a check of $128,060.00 to Garcia Juarez Construction Company for YL Blvd Pipeline Construction September progress payment; a check of $139,178.34 to Vido Samarzich, Incorporated for Pressure Reducing Station Upgrades' progress payment; and, a check of $147,643.81 to Inland Kenworth USA, Incorporated for 2013 T440 Dump Truck. The balance of $217,432.29 is routine invoices. The Accounts Payable check register total is $2,036,249.46; Payroll No. 20 total is $255,884.47; and, the disbursements of this agenda report are $2,292,133.93. 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: CkReg101112_BOD.pdf Check Register Backup Material 12-CS_1011.doc Cap Sheet Backup Material 12_CC_1011.xls Credit Card Summary Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 GM/RC 5-0 Yorba Linda Water District Check Register For Checks Dated : 9/28/2012 thru 10/11/2012 Check No. Date Vendor Name Amount Description 59962 10/11/2012 Anthem Blue Cross EAP 166.32 ANTHEM BC EAP 59963 10/11/2012 Aqua-Metric Sales Co. 14720.47 WHS STOCK 59964 10/11/2012 Aramark 1 ,208.97 UNIFORM 59965 10/11/2012 Associated Laboratories 41720.80 LAB ANALYSES JUL,AUG 2012 59966 10/11/2012 AT & T - Calnet2 3, 122.65 COMMUNICATIONS 812-911 59967 10/11/2012 Autoscribe Corporation 215.25 TRX/PYMT VISION GTWY AUG 59968 10/11/2012 AW WA - CA-NV Section 525.00 FALL .CONF OCT WALKEMEYER 59971 10/11/2012 B & M Lawn and Garden Inc 342.87 MISC BLDG MAINT SUPPLIES 59969 10/11/2012 Bank Of America 939.58 YLWD REWARDS VISA 59970 10/11/2012 Bee Busters, Inc 300.00 COLONY ABATEMT 59978 10/11/2012 C & L Refrigeration Corp. 2,621 .16 MIRALOMA SERVICE CALL 59973 10/11/2012 CalCard US Bank 6,552.35 CAL CARD YLWD VISA 59974 10/11/2012 CDW Government, Inc 11182.02 MISC IT SUPPLIES 59975 10/11/2012 Chambers Group Inc. 11128.50 HIDDEN HILLS RES AUGUST SVCS 59957 10/11/2012 CHANTE ALLEN 158.00 CUSTOMER REFUND 59976 10/11/2012 City Of Placentia 169.25 ROW PERM/SHERWOOD VIL CR 59977 10/11/2012 Clinical Lab. Of San Bern. 1 ,390.00 LAB ANALYSES AUGUST 59979 10/11/2012 Coastline Equipment (0.42) VOID CHECK 59979 10/11/2012 Coastline Equipment 0.42 UNIT 145 COTTER PIN 59980 10/11/2012 Community Bank 6,740.00 PALM AV BPS PP4 RETNTN SEPT 59981 10/11/2012 Community Lock & Safe Service, Inc. 27.10 KEYS 59982 10/11/2012 Culligan of Santa Ana 11 .40 WTR SOFTENER SVC 59983 10/11/2012 Datalok Orange County 1 ,787.77 DATA STORAGE/DESTRUCTION 59986 10/11/2012 Dean Criske Trucking 1 ,947.97 ROAD MATERIAL 59984 10/11/2012 Dell Marketing L.P. 1 ,072.02 USB2 VIRTUAL MEDIA 59985 10/11/2012 Delta Wye Electric, Inc. 765.00 ELECTRICAL MAINT 59987 10/11/2012 Eisel Enterprises, Inc. 1 $ 09.21 DEVELOPER 438 METER BX 59961 10/11/2012 EL CAMINO ASPHALT PAVING 972.22 CONSTRUCTION METER 59989 10/11/2012 EyeMed 1 ,346.44 VISION OCTOBER 59988 10/11/2012 Fairway Ford Sales, Inc. 69.07 MISC VEHICLE PARTS 59990 10/11/2012 Flex Advantage 99.00 FLEX A/C PROCESSING SEPT 59991 10/11/2012 Fry's Electronics 77.50 SCADA COMPONENTS 59992 10/11/2012 Garcia Juarez Construction Inc 128,060.00 PALM AVE PROG PAY SEPT 59959 10/11/2012 GINASANTANA 225.00 CUSTOMER REFUND 59993 10/11/2012 Gladwell Governmental Services Inc. 1 ,200.00 RECORD MGT ASSESS/PLAN 59994 10/11/2012 Haaker Equipment Co. 1 , 103.61 MISC VEHICLE PARTS 59995 10/11/2012 Hall & Foreman, Inc 1 ,872.63 PRS CONSULTING AUG 59996 10/11/2012 Henry Pratt Company 1 ,000.00 LABOR/FIELD SVC 59997 10/11/2012 Infosend Inc. 13, 112.05 BILL MAILING,E-BILL PROC AUG 60043 10/11/2012 Inland Kenworth USA Inc 147,643.81 2013 T440 DUMP TRUCK 60007 10/11/2012 Innovyze 1 ,200.00 INFO WATER MAINT RENWAL 59998 10/11/2012 Jackson's Auto Supply - Napa 226.71 MISC VEHICLE PARTS 59958 10/11/2012 JOANNE ABU-QARTOUMY 200.58 CUSTOMER REFUND 59999 10/11/2012 John Bogosian 564.61 PORT BOOSTER PK,SOCKET SET 60000 10/11/2012 Kimco Staffing Services Inc 830.48 C.HOLLAND W/E 9/16 60001 10/11/2012 Konica Minolta Business 458. 15 COPY CHARGE C552 W92412 09/28/2012 Law Offices of Kathleen C. Johnson 11 ,985.00 SVCS/TAX-EXEMPT LINE/CREDIT 60002 10/11/2012 LPR-Laser Printer Repair Co 410. 15 SERVICE CALL PRINTERS 60003 10/11/2012 Marina Landscape, Inc 2,053.01 LANDSCAPE MAINT SEPT 59956 10/11/2012 MBK HOMES/GREENBRIER LLC 729.16 CONSTRUCTION METER 60004 10/11/2012 Mc Fadden-Dale Hardware 389.66 PURCH SEPTEMBER 60005 10/11/2012 Mc Master-Carr Supply Co. 135.81 MISC AUTO SHOP SUPPLIES 60006 10/11/2012 Municipal Water District 825.00 SMART TIMER AUGUST W101112 10/11/2012 Municipal Water District 17403,935.02 WATER PURCHASE AUG 2012 60008 10/11/2012 Nickey Kard Lock Inc 5,351 .77 FUEL SEPTEMBER 60009 10/11/2012 Norman A. Traub Associates 2,062.56 INVESTIGATIVE SVCS/HR 60010 10/11/2012 Office Solutions 866.66 GENL, PAPER SUPPLY 60012 10/11/2012 One Source Distributors, LLC 11425.56 PRESSURE CTRLS 60011 10/11/2012 One Stop Parts Source 65.84 MISC VEHICLE PARTS 60013 10/11/2012 ONLINE Information Services, Inc. 50.00 UTILITY EXCHANGE 60021 10/11/2012 P.T.I. Sand & Gravel, Inc. 266.88 FILL SAND 60014 10/11/2012 Pacific Coast Tool & Supply 343.09 REPAIR IMPACT WRENCH 60015 10/11/2012 Pete's Road Service Inc 21777.76 UNIT 107 SERVICE CALL 60016 10/11/2012 Placentia Medical LLC 928.00 CASH BOND RELEASE 60017 10/11/2012 Powerstride Battery 89.17 UNIT 173 GROUP 5A BATTERY 60018 10/11/2012 Praxair Distribution 119.15 CYLINDER RENTAL 60019 10/11/2012 Priority Mailing Systems LLC 199.25 INK CARTRIDGE IM350SYS 60020 10/11/2012 Prudential Group Insurance 2,561 .87 LIT DISABILITY OCTOBER 60022 10/11/2012 Refrigeration Supplies 249.20 FILTERS 60023 10/11/2012 Rutan & Tucker, LLP 139.50 FIRE CASES AUGUST 60024 10/11/2012 Safety-Kleen Corp. 331 . 15 PARTS WASHER 60025 10/11/2012 Severn Trent Services 23,220.24 CHLOR SYS PLC REPL 60026 10/11/2012 Siemens Industry 885.99 TRANSDUCER 60027 10/11/2012 South Coast AQMD 1 ,980.66 RICHFIELD ICE,EMISS FEES 60028 10/11/2012 South Coast AQMD 535.75 HIGHLAND G/E I&M FEE 60042 10/11/2012 South Coast AQMD 710.82 HIGHLAND G/E ADMIN CHNGE 60029 10/11/2012 Southern Calif Edison Co. 43,553.55 ELECTRICAL CHGS SEPTEMBER 59955 09/28/2012 Southern Calif Gas Co. 5,498.54 HIGHLAND 02081025005 AUGUST 60030 10/11/2012 Southern Calif Gas Co. 7,640.66 SERVICES ALL SITES SEPT 60031 10/11/2012 Southwest Networks Inc. 1 ,920.00 EXT WARRANTY/HARWARE RENWL 60032 10/11/2012 Staples Business Advantage 152.94 DATA BINDERS ETC 59972 10/11/2012 State of CA - Dept of Public Health 13,968.77 WTR SYS FEES 11-1243010037 60033 10/11/2012 Stephen Parker/ Petty Cash 153.32 PETTY CASH/OFFICE 60034 10/11/2012 Terminix Processing Center 337.00 DRYWOOD TERMITE TRTMT PLAN 60035 10/11/2012 Underground Service Alert 148.50 NEW TICKETS 60036 10/11/2012 United Industries 154.44 SUNSCREEN TOWLETTE 60037 10/11/2012 Verizon Wireless 1 ,932.54 CELL USAGE,MOBILE BIB 60038 10/11/2012 Vido Samarzich Inc 139, 178.34 PRS PROG PAY SEPT 60039 10/11/2012 Village Nurseries 179.94 SOD 60040 10/11/2012 Walters Wholesale Electric Co. 96.07 WIRE 59960 10/11/2012 WENDY REA 300.65 CUSTOMER REFUND 60041 10/11/2012 Westin Engineering, Inc. 2,025.00 CMMS AUGUST SVCS Total $2,0363249.46 . October 11, 2012 CHECK NUMBERS: Void Check 59979 $ (0.42) Manual Check 59955 $ 5,498.54 Computer Checks 59956—60042 $ 614,831.32 $ 620,329.44 WIRES: W-92412 Law Offices of Kathleen C Johnson $ 11,985.00 W-101112 MWDOC $1,403,935.02 $1,415,920.02 TOTAL OF CHECKS AND WIRES $ 2,036,249.46 PAYROLL NOS. 20: Direct Deposits $ 140,042.30 Third Party Checks 5388—5400 $ 77,635.93 Payroll Taxes $ 38,206.24 TOTAL OF PAYROLL $ 255,884.47 ---------------------------------------------------------------------------------------------------------------------- DISBURSEMENT TOTAL: $ 2,292,133.93 ================================================================== APPROVED BY THE BOARD OF DIRECTORS MINUTE ORDER AT BOARD MEETING OF OCTOBER 11, 2012 ================================================================== Date Vendor Name Amount Description 09/26/12 Answer One 939.58 Answering service TOTAL 939.58 Date Vendor Name Amount Description 09/17/12 Jon's Flags 740.24 Flags replacement 09/17/12 Mars Air Systems 143.18 Damage repair/Farmer Boys 09/18/12 John Deere Landscapes 78.52 Irrigation supplies 09/18/12 Biard & Crockett 16.77 Admin Bldg bathroom repair 09/18/12 Light Bulbs Etc 213.29 Light bulbs 09/18/12 Home Depot 939.39 Quick shade, concrete 09/19/12 Applied Membranes 106.12 Filters 09/20/12 Stefano's 39.72 Lunch/EAO Committee mtg 09/20/12 Stefano's 182.40 Lunch/Joint Workshop 09/23/12 Penton Media 3,090.00 Win/DevConnections Conference-IT 9/14/2012-10/2/2012 Cash Rewards Credit Card Bank of America 9/14/2012-10/2/2012 Cal Card Credit Card U S Bank 09/23/12 Penton Media 3,090.00 Win/DevConnections Conference-IT 09/24/12 Smart & Final 86.79 Joint Workshop supplies 09/26/12 Laserfiche 695.00 Laserfiche Conference Alexander 09/26/12 Home Depot 113.83 Building maint supplies 09/27/12 Biard & Crockett 107.10 Parts/Toilet repairs TOTAL 6,552.35 ITEM NO. 9.4 AGENDA REPORT Meeting Date: October 11, 2012 Budgeted:Yes Total Budget:$750,000 To:Board of Directors Cost Estimate:$139,178.34 Funding Source:All Water Funds From:Steve Conklin, Acting General Manager Account No:101-2700 Job No:J-201108 Presented By:Steve Conklin, Acting General Manager Dept:Engineering Reviewed by Legal:N/A Prepared By:Derek Nguyen, Water Quality Engineer CEQA Compliance:Exempt Subject:Progress Payment No. 3 for Pressure Regulating Station Upgrades, Phase 1 SUMMARY: Work is proceeding on construction of the Pressure Regulating Station Upgrades Project. It includes improvements to four pressure regulation stations (PRS) with concrete vaults, piping, valves, safety ladders, traffic-rated hatches, and appurtenances to meet new design and safety standards. STAFF RECOMMENDATION: That the Board of Directors approve Progress Payment No. 3 in the net amount of $139,178.34 to Vido Samarzich, Inc. for construction of Pressure Regulating Station Upgrades Project, Phase 1. Job No. J-201108. DISCUSSION: In accordance with the contract documents, Vido Samarzich, Inc. submitted a request for Progress Payment No. 3, in the net amount of $139,178.34 for completed work through September 28, 2012. During this period, the contractor removed the existing vault, valves, piping and appurtenances at the Camino de Bryant site and completed installation of the new station. The status of the construction contract with Vido Samarzich is as follows: The current contract amount is $624,715.76 and 144.5 calendar days starting June 12, 2012. If approved, Progress Payment No. 3 is $146,503.51 less a 5% retention of $7,325.18 for a net payment of $139,178.33 (22.3% of the total contract amount). Total payments to date including retention are $440,309.10 (70.5% of the total contract amount). As of September 28, 2012, 101 calendar days were used (70% of the contract time). Staff reviewed the contractor's progress payment and recommend approval. A copy of Progress Payment No. 3 is attached for your reference. STRATEGIC PLAN: SR 3-A: Complete Implementation of Five Year Capital Improvement Plan from FY 2011-2015 with adopted amendments PRIOR RELEVANT BOARD ACTION(S): On May 10, 2012 the Board of Directors awarded the construction contract in the amount of $597,020 to Vido Samarzich, Inc. for the construction of the Pressure Regulating Station Upgrades, Job No. 2011-08. On July 12, 2012, the Board of Directors approved Change Order No. 1 for 27 additional work days and no additional cost to Vido Samarzich, Inc. for the construction of the Pressure Regulating Station Upgrades, Job No. 2011-08. On August 9, 2012 the Board of Directors approved Change Orders 2 & 3 for 3 additional work days and $14,904.07 to Vido Samarzich, Inc. for the construction of the Pressure Regulating Station Upgrades, Job No. 2011-08. On August 9, 2012, the Board of Directors approved Progress Payment No. 1 in the net amount of $86,601.12 to Vido Samarzich, Inc. for the construction of the Pressure Regulating Station Upgrades, Job No. 2011-08 On September 27, 2012, the Board of Directors approved Change Orders 4, 5 & 6 for a combined three additional work days and $10,512.09 to Vido Samarzich, Inc. for the construction of the Pressure Regulating Station Upgrades, Job No. 2011-08. On September 27, 2012, the Board of Directors approved Progress Payment No. 2 in the net amount of $214,529.64 to Vido Samarzich, Inc. for the construction of the Pressure Regulating Station Upgrades, Job No. 2011-08. On October 4, 2012, the Planning-Engineering-Operations Committee considered Change Orders No. 7-10 for one-half additional work day and $2,820.33 to Vido Samarzich, Inc. for construction of the Pressure Regulating Stations Upgrade Project, Job No. 201108. Change Orders No. 7-10 are pending Board approval on October 11, 2012. ATTACHMENTS: Name:Description:Type: Vido_Samarzich_Prog.Payment_No.3_09282012.pdf Vido_Samarzich_Prog. Payment No. 3_09282012 Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 GM/RC 5-0 YORBA LINDA WATER DISTRICT PROGRESS PAY REPORT PROJECT Pressure Regulating Station PROGRESS PAY REQUEST 003 _p8rades - NO. LOCATION Yorba Unda,CA PROJECT NO. 201108 PA 1 OF 1 PAGES GE CONTRACTOR trdo Samarzich,Inc. DATE Sept. 28,2012 ORIGINAL CONTRACT AMOUN 1: $ 697,020.00 AUTHOR17FD CHANGE ORDERS: $ 27,696.76 REVISED CONTRACT AMOUNT: $ 624,715.76 PROGRESS PAY ESTIMATE FOR PERIOD "P"mber 1,2012 TO 3s0bmb39,2012 PREVIOUS 1 HIS MON 1 H TO DATE VALUF.OF WORK COMPLETED S_ 200 779.50 1137,015.00 8413,787.50 CHANOF ORDER WORK COMPI rTED S 10.207.23 S 9 408.51 2/.008.76 I DIAL VALUE Or WORK COMPLCI tD Is 31097975 $140,503.rl S _ 483403.26 1 ESS RFTFNTION 51A 3 23 174.16 LGSS OTHER DbL1UC TIONS CbGVon, Wire fees S NET FARNEU F0 DATE 8 440,3Q19.1 LCSS AMOUNT PREVIOUSLY PAID S_ 301 tin 7 RAI ANCC DUr THIS CSTIMATE S 139.178.34 NOTICE TO PROCEED June 12,2012 COMPLETION IIMF 111 CALENDAR DAYS APPROVED TIME EXTFNSIONS 33.S CAL ENDAR DAYS TOTAL CONTRACT TIME 141.E CALENDAR DAYS TIME EXPENDFD TO DATE __ ' CALENDAR DAYS TIME REMAINING 625 S CALENDAR DAYS RCQUESTED BY: Jw DATE. Id0 �b� ,Y t6sida1lL ConUador A n RECOMMENDED: DATE: 4IZ 712 D IZ k Nwven� n .YLWD APPROVCU UY: �— DATE: Steve CoNdin,Aldlny Genoral Manapor,YLWO _-- —" ITEM NO. 9.5 AGENDA REPORT Meeting Date: October 11, 2012 Budgeted:Yes Total Budget:$2.25 M To:Board of Directors Cost Estimate:$1.7 M Funding Source:All Water Funds From:Steve Conklin, Acting General Manager Account No:101-2700 Job No:J-200817 Presented By:Steve Conklin, Acting General Manager Dept:Engineering Reviewed by Legal:No Prepared By:Joe Polimino, Project Engineer CEQA Compliance:MND Subject:Progress Payment No. 4 for the Yorba Linda Blvd Pipeline Project SUMMARY: Work continues on construction of the Yorba Linda Blvd Pipeline Project. It includes 5,170 lineal feet of 20-inch diameter water transmission main, various valves, blow-off and air-release installations in Yorba Linda Blvd. STAFF RECOMMENDATION: That the Board of Directors approve Progress Payment No. 4 in the net amount of $126,060.00 to Garcia Juarez Construction, Inc. for construction of the Yorba Linda Blvd Pipeline Project, Job No. 200817. DISCUSSION: In accordance with the contract documents, Garcia Juarez Construction, Inc. submitted a request for Progress Payment No. 4, in the amount of $134,800.00 for completed work through September 30, 2012. During this period, the contractor maintained traffic controls and signs, and installed approximately 270 lineal feet of 20-inch pipe and 150 lineal feet of 12-inch pipe. They also installed three butterfly valves, three air release assemblies and two 6-inch blow-off assemblies. The status of the construction contract with Garcia Juarez Construction, Inc. is as follows: The current contract is $1,681,650.00 and 182 calendar days starting May 29, 2012. If approved, Progress Payment No. 4 is $134,800.00 (8.0% of the total contract amount), less 5% retention of $6,740.00 for a net payment of $128,060.00. If approved, total payments to date including retention will be $1,460,550.00 (86.9% of the total contract amount). As of September 30, 2012, 125 calendar days were used (68.7% of the contract time). Staff reviewed the contractor's progress payment and recommend approval. A copy of Progress Payment No. 4 is attached for your reference. PRIOR RELEVANT BOARD ACTION(S): The Board authorized the President and Secretary to execute a construction agreement in the amount of $1,681,650.00 for the Yorba Linda Blvd Pipeline Project with Garcia Juarez Construction, Inc. on May 24, 2012. The Board has approved three progress payments to date for this project, the last of which was approved on September 13, 2012. ATTACHMENTS: Name:Description:Type: GJC_YL_BLVD_Project_Progress_Pay_Request_4.pdf YL Blvd. Pipeline Progress Payment 4 Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 GM/RC 5-0 YORBA LINDA WATER DISTRICT PROGRESS PAY REPORT PROJECT Yorba Linda Blvd.Pipeline Project PROGRESS PAY REQUEST NO. 004 LOCATION Yorba Linda,CA PROJECT NO. 200817 PAGE 1 OF 1 PAGES CONTRACTOR Garcia Juarez Construction DATE 9126/12 ORIGINAL CONTRACT AMOUNT: $ 1,681,650.00 AUTHORIZED CHANGE ORDERS: $ REVISED CONTRACT AMOUNT: $ 1,681,650.00 PROGRESS PAY ESTIMATE FOR PERIOD September 1,2012 TO September 30,2012 PREVIOUS THIS MONTH TO DATE VALUE OF WORK COMPLETED $ 1,325,750.00 $ 134,800.00 $ 1,460,550.00 CHANGE ORDER WORK COMPLETED $ $ _ $ _ TOTAL VALUE OF WORK COMPLETED $ 1,325,750.00 $ 134,800.00 $ 1,460,550.00 LESS RETENTION 5% Is 1,259,462.50 $ 128,060.00 $ 1,387,522.50 LESS OTHER DEDUCTIONS Electronic Wire Fees NET EARNED TO DATE $ 1,387,522.50 LESS AMOUNT PREVIOUSLY PAID $ 1,259,462.50 BALANCE DUE THIS ESTIMATE Is 128,060.00 NOTICE TO PROCEED May 29,2012 COMPLETION TIME 182 CALENDAR DAYS APPROVED TIME EXTENSIONS 0 CALENDAR DAYS TOTAL CONTRACT TIME 182 CALENDAR DAYS TIME EXPENDED TO DATE 125 CALENDAR DAYS TIME REMAINING 57 CALENDAR DAYS REQUESTED BY: DATE: im a n,Project Manager,GJC RECOMMENDED: ' DATE: 19 2� Joe Polimino,Project Engineer,YLWD APPROVED BY: DATE: Steve Conklin.Engineering Manager,YLWD ITEM NO. 9.6 AGENDA REPORT Meeting Date: October 11, 2012 Budgeted:Yes Total Budget:$5.5 Million To:Board of Directors Cost Estimate:$10,000 Funding Source:Water Revenue Bond From:Steve Conklin, Acting General Manager Account No:101-2700 Job No:J-200814 Presented By:Steve Conklin, Acting General Manager Dept:Engineering Reviewed by Legal:No Prepared By:Joe Polimino, Project Engineer CEQA Compliance:MND Subject:Amendment No. 4 to MWH Americas Professional Services Agreement - Construction Support Services for the Highland Booster Pump Station Replacement SUMMARY: Construction of the new Highland Booster Pump Station (BPS) commenced in December 2010 and was recently completed. District staff and the project team determined that additional construction support services were performed by MWH to complete the project, that were not included in the existing Scope of Work for the Professional Services Agreement (PSA). At the District's request, MWH prepared a proposal for the additional construction support services, which staff has reviewed and recommends for approval. STAFF RECOMMENDATION: That the Board of Directors approve Amendment No. 4 to the Professional Services Agreement (PSA) with MWH Americas, in the amount of $9,998 for additional construction support services for the Highland Booster Pump Station Replacement and Expansion Project, Job No. 200814. COMMITTEE RECOMMENDATION: The Planning-Engineering-Operations Committee discussed this item on October 4, 2012 and supports staff recommendation. DISCUSSION: The existing PSA for MWH Americas, including Board-approved Amendments No. 1, 2 and 3, covered construction support services based upon a project completion date of March 2012. However, project completion was not achieved until September 2012, six months later than anticipated. Over the last six months, MWH continued to provide construction support services to the District, including contractor coordination, scheduling and sub-consultant management. Services provided by MWH that were outside of their approved scope of work are described in the attached letter from MWH and summarized below. MWH reviewed additional RFI's including the review of proposed additional re-wiring work required to place the existing air compressor into service with the new pump station. They also reviewed a proposed change to the communication for the existing generator to the PLC. This required additional analysis of existing and proposed conditions for the PLC by MWH. MWH performed additional assistance to the District as needed to coordinate information between the engine manufacturer and the Contractor's sub for testing. The District's original consultant was not contracted by the contractor so additional coordination was required to prepare for the AQMD source testing. MWH provided additional support to the District during the startup and commissioning phase, as the gas engines had multiple failures that required additional assistance for continued analysis of failure cause and providing solutions. MWH provided additional review and investigation when the contractor stated that the engine blankets were damaging instruments on the exhaust system. It was proposed that a portion of the insulating blankets be removed from the engines. The instruments were faulting so the change was made as a precaution to future failure of the instruments. MWH attended additional project meetings and site visits at the request of the District during the construction. MWH attended an additional 3 meetings to support construction. District staff have reviewed proposed Amendment No. 4 in the amount of $9,998 and recommend approval. PRIOR RELEVANT BOARD ACTION(S): On July 9, 2009, the Board of Directors approved the award of the Professional Services Agreement for the Highland Booster Pump Station Replacement Project to MWH Americas, for a fee not to exceed $469,593. On January 28, 2010 the Board of Directors approved Amendment No. 1 for a fee not to exceed $91,940. On February 11, 2010 the Board of Directors approved Amendment No. 2 for a fee not to exceed $18,929. On February 10, 2011, the Board of Directors approved Amendment No.3 for a fee not to exceed $219,791. ATTACHMENTS: Name:Description:Type: Addendum_4_Updated_9_19_12_1.pdf MWH Amendment No. 4 for Highland Pump Station Project Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 GM/RC 5-0 19900 MacArthur Blvd. TEL 949-328-2400 Suite 250 FAX 949-328-2448 Irvine, California 92612 www.mwhglobal.com September 19, 2012 Mr. Joe Polimino Yorba Linda Water District 1717 E Miraloma Avenue Placentia, CA 92870 Subject: Request for Amendment #4 – Construction Support Services Highland Booster Station Replacement Project Dear Mr. Polimino: MWH is requesting an amendment to our scope of work for additional work performed to provide engineering services during construction for the Highland Booster Station Replacement Project. Our Amendment # 3 included engineering support services through the estimated completion date of March 2012. However, additional services were provided to assist with construction management support for an additional six months. MWH and the design team provided the required support during construction for successful completion of the project. The substantial completion of the project was completed on-time. However, the startup and commissioning took longer than originally scheduled and MWH performed additional services to complete the construction of the project. Enclosed is a list of tasks and a cost summary sheet that were performed during the construction phase. MWH is requesting $9,998 for the additional services provided during construction. If you have questions about any aspect of this amendment, please call our Project Manager, Michael Moore at (949) 328-2405. Sincerely, MWH Americas, Inc. Richard D. Plecker Vice President and Regional Manager BUILDING ABUILDING ABUILDING ABUILDING A BETTER WORLDBETTER WORLDBETTER WORLDBETTER WORLD Mr. Joe Polimino -2- September 19, 2012 EXHIBIT A SCOPE OF WORK The project construction for Highland Booster Station Replacement was scheduled for completion in March 2012. However, the project was extended due to contractor delays and changes. The estimate below is based on overall completion of the contract for providing additional engineering services during construction. Record drawing preparation is included in our original contract. . Additional Project Management MWH contract included the project management budget until March 2012. MWH provided additional project management for six (6) months. The project management work includes the coordination with the contractor, scheduling, budgeting, and sub consultant management. Additional Request For information (RFIs) Air Compressor -MWH provided the required support for the review of RFI for existing air compressor. This additional work was required because the as-built drawings for existing air compressor were not accurate and it required re-wiring to supply power. RTD Landing Point – The design included RTD communication for the generator to the PLC. It was decided during construction to eliminate this data, since the as- builts were not accurate on the existing facilities. This required additional analysis of existing and proposed conditions for the PLC by MWH AQMD Source Testing MWH performed additional assistance during construction to prepare for the AQMD source testing. The assistance was needed to coordinate information between the engine manufacturer and the Contractor’s sub for testing. The District’s original consultant (Bill Winchester) was not contracted by the contractor and this required more coordination by MWH. Engine Failures Engine Failures – MWH provided support to the District during the startup and commissioning. The gas engines had multiple failures that required MWH assistance to during the commissioning phase. Engine Blankets The contractor stated the engine blankets were damaging instruments on the exhaust system. MWH investigated their request to remove a portion of the blankets and submittals. The instruments were faulting and one needed replaced. The change was made as a precaution to future failure of the instruments. Meetings MWH attended additional project meetings and site visit at the request of the District during the construction. Our contract with amendment # 3 included 17 meetings. MWH attended an additional 3 meetings to support construction. YLWD HP - Addendum # 4 Budget Task Principal Principal Senior Senior Professional Subconsult Total Professional Engineer Designer Addendum 3 235 220 155 150 135 1. Additional Project Management 2 6 4 $1,940 RBF $460 $460 2. Additional RFI's 2 6 $1,370 RBF $460 $460 3. AQMD Source Testing 2 6 $1,370 RBF $0 4. Engine Failures and Engine Blankets 4 6 $1,810 RBF $0 5. Meetings 6 $1,320 RBF $920 $920 Other Direct Cost $348 Total 2 14 24 0 4 $1,840 $9,998 ITEM NO. 9.7 AGENDA REPORT Meeting Date: October 11, 2012 Budgeted:Yes Total Budget:$750,000 To:Board of Directors Cost Estimate:$2,820.33 Funding Source:All Water Funds From:Steve Conklin, Acting General Manager Account No:101-2700 Job No:J-201108 Presented By:Steve Conklin, Acting General Manager Dept:Engineering Reviewed by Legal:N/A Prepared By:Derek Nguyen, Water Quality Engineer CEQA Compliance:Exempt Subject:Approval of Change Order Nos. 7-10 for Pressure Regulating Stations Upgrade Project, Phase 1 SUMMARY: Construction is in progress for the Pressure Regulating Stations Upgrade Project. Submitted for consideration are Change Order Nos. 7-10 for one-half additional work day and $2,820.33 for additional time, labor and materials for the changes in condition for the Camino de Bryant site. STAFF RECOMMENDATION: That the Board of Directors approve Change Order Nos. 7-10 for one-half additional work day and $2,820.33 to Vido Samarzich, Inc. for construction of the Pressure Regulating Stations Upgrade Project, Job No. 201108. COMMITTEE RECOMMENDATION: The Planning-Engineering-Operations Committee considered this item at its October 4, 2012 meeting and supports staff's recommendation. DISCUSSION: In accordance with the contract documents, Vido Samarzich, Inc. submitted Change Order Nos. 7- 10 for changed conditions for the Camino de Bryant Pressure Regulating Station, summarized as follows: Proposed Change Order No. 7 requests $1,011.45 and one-half additional work day to remove slurry around the existing vault and piping which includes haul and dump fee. Proposed Change Order No. 8 requests $377.14 and no additional time to install anchor plates to prevent the roof slab of the new vault from sliding due to the 13" elevation grade change. Proposed Change Order No. 9 requests $891.01 and no additional time to break-up, remove and dispose of existing concrete slabs over 14" water main and water service line in preparation for the new tie-in. Proposed Change Order No. 10 requests $540.73 and no additional time to cut and shorten the 4" pressure relief line as a result of the 13" elevation grade change. The additional work includes excavation, hauling and dumping existing slurry and concrete debris, installation of fittings for the new vault and cutting a spool section and providing restraining kits with stainless steel nuts and bolts. District staff and its engineering consultant have reviewed the changed conditions and the time request and recommend approval. Copy Change Order Nos. 7-10 are attached for review and information. The status of the construction contract with Vido Samarzich is as follows: The current contract is $622,436.16 with 144 working days starting June 12, 2012. If approved, Change Order Nos. 7-10 add one-half work day (0.3% of current contract days) and $2,820.33 (0.5% of current contract cost). If approved, the revised construction contract would be $625,256.49 and 144.5 days. The sum of the ten change orders to date would equate to 4.7% added contract cost and 30.1% added contract days over the original contract amounts. STRATEGIC PLAN: SR 3-A: Complete Implementation of Five Year Capital Improvement Plan from FY 2011-2015 with adopted amendments PRIOR RELEVANT BOARD ACTION(S): On May 10, 2012 the Board of Directors awarded the construction contract in the amount of $597,020 to Vido Samarzich, Inc. for the construction of the Pressure Regulating Stations Upgrade, Job No. 2011-08. On July 12, 2012 the Board of Directors approved Change Order No. 1 for 27 additional work days and no additional cost to Vido Samarzich, Inc. for the Construction of the Pressure Regulating Stations Upgrade, Job No. 2011-08. On August 9, 2012 the Board of Directors approved Change Order Nos. 2 & 3 for 3 additional work days and $14,904.07 to Vido Samarzich, Inc. for the Construction of the Pressure Regulating Stations Upgrade, Job No. 2011-08. On September 27, 2012 the Board of Directors approved Change Orders 4, 5 and 6 for a combined 3 additional work days and $10,512.09 to Vido Samarzich, Inc. for the Construction of the Pressure Regulating Stations Upgrade, Job No. 2011-08 ATTACHMENTS: Name:Description:Type: CO_7-10_Camino_de_Bryant_PRS.pdf Change Orders 7-10 Camino de Bryant Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 GM/RC 5-0 YORBA LINDA WATER DISTRICT CHANGE ORDER NO. 7 DATE September i 2012 Page 1 Of t CONTRACT NAME: Pressure Regulating Stations Upgrade CONTRACT AMT.: $622,436.16 DAYS: 144 CONTRACTOR: Vide Samarzich, Inc. THIS CHANGE: $1,011.45 DAYS: .5 PROJECT NO: 2011 a18 OWNER: Yorba Linda Water District REVISED CONTRACT AMT: $623,447.61 DAYS: 144 .5 This Change Order covers changes to the subject contract as described herein. The Contractor shall construct, furnish equipment and materials, and perform all work as necessary or required to complete the Change Order items for a lump sum price agreed upon between the Contractor and YoNa Linda Water District otherwise oriented to as Owner. +INCREASE CONTRACT DESCRIPTION OF CHANGES I OR TIME +EXTENSION/ -DECREASE IN OR-REDUCTION CONTRACT (DAYS) AMOUNT Camino De Bryant P.R.S-Additional veork to remove slurry poured around the existing $1,011.45 .5 vault and piping-approx 6 cy-includes haul and dump fee NETCHANGE $1,011.45 .5 REVISED CONTRACT AMOUNT AND TIME $623,447,61 144.5 The amount of the contract will be increased by the sum of $1,011.45 and the contract time shall be increased by .5 calendar days. The undersigned Contractor approves the foregoing Change Order as to the changes, R any, In the contract price specified for each Rem including any and all supervision cosh and other miscellaneous costs relating to the change in work, and as to the extension of time allowed, f any for completion of the enfirs work on account of said Change Order. The Contractor agrees to furnish all labor and materials and perform all other necessary work, inclusive V that directly or indirectly related to the approved time extension, required to complete the Change order items. This document will became a supplement of the contract and all provisions will apply hereto. It Is understood that the Change Order shall be effeake when approved by the Owner. This Change Order continues full, final, and complete compensation to the Contractorfw all costs, expenses, overhead, prof¢, and any damages of every kind that the Connector may incur in connection with the above referenced changes in the work, including any impact on the referenced work of any other work under the contract, any changes in the sequences of any work, any delay to any wok, any Lisrupbon of any work any rescheduling of any work, and any other effect on any of the work under this contract. By the aknituOn of the Change Order, the Contractor accepts the contract price change and the contract completion date change, f any, and expressly wanes any claims for any addbbnal compensation, damages or time extensions, in connection with the above-referenced changes. �//� ,t RECOMMENDED: c{-�\Jiµ 1/M7t"' - I OWNER DATE: DereR guyen, r ACCEPTED: CONTRACTOR DATE: 41h(2017, Vido Samarzlch, Vice-President Vice Samarzlch, Inc. APPROVED: OWNER DATE: Steve Conklin, General Manager YORBA LINDA WATER DISTRICT CHANGE ORDER NO, 8 DATE September 6, 2012 Page-I Of 1 CONTRACT NAME: Pressure Regulating Stations Upgrade CONTRACT AMT.: $623,447.61 DAYS: 144 5 CONTRACTOR: Vido Samaraich, Inc. THIS CHANGE: $377.14 DAYS D PROJECT NO 201 "it OWNER: Yorba Linda Water District REVISED CONTRACT AMT: $623,824.75 DAYS: 144 .5 This Change Order covers changes fo the subject contract as described herein. The Contractor shall construct, furnish equipment and maters, and perform all work as necessary or required to complete the Change Order items for a lump sum price agreed upon between the Contractor and Yorba Linda Water Disbbt otherwise asked to as Owner. *INCREASE CONTRACT DESCRIPTION OF CHANGES /oR TIME +EXTENSION / — DECREASE IN OR -REDUCTION CONTRACT (DAYS) AMOUNT (s) Camino De Bryant P.R.S.-Fumish and install (2)-4" x W x %" steel plate Vol (2) -9/161 $377,14 0 holes and anchored w/ (2)-12' x 5 W wedge anchore into the inside of the North vault wall, 2" of the plate will stand above the tap of the wall to prevent the top deck from sliding out of place to the South. The vault was initially designed level, but due to a 13" elevation difference in the field, the vault was re-designed to match surrounding grades. The installation of the steel tabs are due to the change in elevations. NET CHANGE $377.14 0 REVISED CONTRACT AMOUNT AND TIME $623,824.75 144.5 The amount of the contract will be increased by the sum of $377.14 and the contract time shall ba increased by 0 calendar days. The undersigned Contractor approves the foregoing Change Order as to the changes, g any, in the contract price spealad for each item including any and all supervision costs and other miscellaneous costa relating to the change in work, and as to the extension of time allowed, 8 any, for completion of the entire work on acmurd of said Change Oder. The Contractor agrees to furnish all labor and materials and pedorm all other necessary work, inclusive of that tlireGy or indirectly related to the approved time extension, rationed to complete the Change Order gems. This document will become a supplement of the contract and all provisions will apply hereto. It is understood test the Change Order shad be effective when approved by the Owner. This Change Oder constinu she full, final, and complete compensation to the Contractor for all vats, expenses, overhead, profit, and any damages of every kind that the Contractor may incur in connection with the above referenced changes in Me work, including any Impact on the referenced work of any other work under the contract, any changes in the sequences of any work, any delay to any work, any disruption of any work, any rescheduling of any work, and any other effect on any of the work under this coneed. By the execution of tae Change Order, the Connector adepts the contrast price change and me contract completion date change, 8 any, and expressly waives any claims for any additional compensation, damages or tine extensions, in connection with the above-referenced changes. n �,,.IC RECOMMENDED: OWNER DATE: '1 1914M 2, Derek Ng e , Pr n ger ACCEPTED: CONTRACTOR DATE: SEA }` S Zpfj_, do am 'on, v1pre,rhaboment ---� Vido areartich, Inc. APPROVED: OWNER DATE: Steve Conkbn, General Marsger YORBA LINDA WATER DISTRICT CHANGE ORDER NO. 9 DATE September 10, 2012 Page 1 Of 1 CONTRACT NAME: Pressure Regulating Stations Upgrade CONTRACTAMT.: $623,824.75 DAYS'. 144 .5 CONTRACTOR: Vide Samardeh, Inc. THIS CHANGE: $891.01 DAYS: 0 PROJECT NO: 201101-08 OWNER: Yards Linda Water District REVISED CONTRACT AMT: $624,715.76 DAYS: 144 .5 This Change Order covers changes to the subject contract as described herein. The Contractor shall construct, furnish equipment and materials. and perform all work as necessary or required to complete the Change Order Hems for a lump sum price agreed upon behveen the Contractor and Yeats Linda Water District otherwise referred to as Owner. +INCREASE CONTRACT DESCRIPTION OF CHANGES / OR TIME +EXTENSIONI - DECREASE IN OR -REDUCTION CONTRACT (DAYS) AMOUNT Camino De Bryant P.R.S.-Remove and dispose of (2) concrete slabs that were poured $891.01 0 over the existing 14" ACP main and the 2" copper water service. The portion of the concrete slab that was removed over the 14" main was approx. 4' x 2'x 3' deep and was removed in pieces w the backhoe and sledge hammer. The portion of the concrete slab that was removed over the 2° copper service was approx 4' x 4' x 3'and was removed in one piece and hauled off to our yard to be broken dawn with a breaker and disposed of at a later time. I have included photos of the slab. - NETCHANGE $891.01 0 REVISED CONTRACT AMOUNT AND TIME $624,715.78 144.5 The amount of the contract will be Increased by the sum of $624,716.76 and the convect time shall be increased by 0 calendar days. The undersigned Contractor approves the foregoing Change Oder as to the changes, If any, in the contract price specified for each item Including any and all supervision costs and other miscellaneous costs relating to the change in work, and as to 0e extension of time allowed, If any, for completion of the entire work on account of said Change Order. The Contractor agrees to furnish all labor and materials and perform a0 other necessary wont, inclusive of that directly or indirectly related to the approved time extension, required to complete the Change Order gems. This document will become a supplement of the contract and all provisions will apply hereto. It Is Understood that the Change Oder shall be effective when approved by the Owner. This Change Order mandates full, final, and complete compensation to the Contractor for all costs, expenses, overhead, profit, and any damages of every kind that the Connector may incur in connection with the above referenced changes In the work, including any impact on the referenced work of any other work under the contract, any changes in the sequences of any work, any delay to any work, any disruption of any work, any rescheduling of any work and any other end on any of the we* under this common By the execution of the Change Order, the Contractor accepts the contrad price change and the contract completion data change, if any, and expressly waives any claims for any addgionat compensation, damages or time extensions, in connection with file above-referenced changes. � � u (zol2 RECOMMENDED: OWNER DATE: gu ' , Pr . ge ACCEPTED: f CONTRACTOR DATE: Mile Sam � ✓ an, 3 X1 '.•'1 Z ViCeo'President Vido Samanich, Inc. APPROVED: OWNER DATE: Steve Conklin, General Manager YORBA LINDA WATER DISTRICT CHANGE ORDER NO, 10 DATE September 17, 2012 Page 1 Of 1 CONTRACT NAME. Pressure Regulating Stations Upgrade CONTRACTAMT.: $624,715.76 DAYS: 144 .5 CONTRACTOR: N ido Samarzich, Inc. THIS CHANGE: $540.73 DAYS: 0 PROJECT NO: 2011-08 OWNER: Yorba Linda Water District REVISED CONTRACTAMT: $625,256.49 DAYS: 144 .5 This Change Order coven changes to the subject contract as described herein. The Contractor shall construct, fumbh equipment and matedab, and pedorm at woM as necessary or required to complete me Change Order items for a lump sum price agreed upon behween the Contractor and Yorba Unde Water District otherwise refined to as Owner. +INCREASE CONTRACT DESCRIPTION OF CHANGES /OR TIME +EXTENSION/ DECREASE IN OR -REDUCTION CONTRACT (DAYS) AMOUNT Camino De Bryant P.R.S.-the 4' flanged spool that runs up to the 90 degree bend forlhe $540.73 0 pressure relief blow off energy dissipation structure had to be shortened in order for the piping to ft in the steel cage. The spool per plan did not fit due to the grade changes that were made to the vault and piping. In order to shorten the spool, we cut out a section of the spool that was ordered per plan and installed a V sleeve with (2) restraining gland kits and stainless steel nuts and balls. I have included pictures of the work performed. NETCHANGE $540.73 0 REVISED CONTRACT AMOUNT AND TIME $625,255.49 144.5 The amount of the contract wgl be Increased by the sum a $625,256.49 and the contract time shah be increased by a calendar days. The undersigned Contractor approves the foregoing Change Order as to the changes, If any, in the contract price specified for each Item Including any and all supervision costs and cMer miscellaneous costs relating to the change in want, and as to the sxtetance of time aliewed, g any, for completion of the entire work on account of said Change Order. The Contractor agrees to furnish all labor and materials and perform all other necessary work, inclusive of that directly or indirectly related to the approved time extension, required to complete the Charge Order Items. This document will became a supplement of the cantred and all provisions Mil apply hereto. It is understand that the Change Oder shall be eRective when approved by to Omer. This Change Order conatilutea Nit, anal, and complete companeadon to the Contractor for all were, expenses, overhead, profit, and any damages of every kind that the Contractor may incur In connection with the above re(e enced changes in the work, Including ant Impact on Me referenced wmrk a any other work under the contract, any changes In the sequences of any work, any delay to any woM, any disruption of any work, any rescheduling of any work, and any other effect on any of the work under this contract. By the execution of the Change Oder, the Contractor amepts the created price change and ate contract completion date change, If any, and expressly waives any claims for airy oWdional compematlon, damages or time extensions. In connection with the above-referenced changes. ///� 1 RECOMMENDED: uXC OWNER DATE: �Ilal�)Z Dare guye ACCEPTED: CONTRACTOR DATE: Ido Santa s, Vi president Vido Samarzich, Inc. APPROVED: OWNER DATE: -Steve Conklin, General Manager ITEM NO. 10.1 AGENDA REPORT Meeting Date: October 11, 2012 Budgeted:N/A To:Board of Directors From:Steve Conklin, Acting General Manager Presented By:Steve Conklin, Acting General Manager Dept:Administration Reviewed by Legal:No Prepared By:Cindy Botts, Management Analyst Subject:Affirmation of Compliance with the Brown Act SUMMARY: The State of California is required to reimburse local agencies for the actual costs of implementing mandates, including provisions within the Ralph M. Brown Act. On June 27, 2012, AB 1464 and SB 1006 became effective, as a method by the State to reduce its budget. Combined, they contain a schedule of state mandates that are suspended for fiscal years 2012/13, 2013/14 and 2014/15, including portions of the Brown Act. STAFF RECOMMENDATION: That the Board of Directors adopt Resolution No. 12-21 Affirming of Compliance with the Ralph M. Brown Act. COMMITTEE RECOMMENDATION: The Executive-Administrative-Organizational Committee reviewed this item at its meeting on September 21, 2012 and supports staff's recommendation. DISCUSSION: The portions of the Brown Act that have been suspended include: The preparation and posting at least 72 hours before a regular meeting of an agenda that contains a brief general description of each item of business to be transacted or discussed at the meeting. The inclusion on the agenda of a brief general description of all items to be discussed in closed session. The disclosure in open session of any item to be discussed in closed session at that meeting. In specific circumstances, the making of a report in open session of the actions and votes taken in that meeting's closed session. In specific circumstances, the providing of copies to the public of closed session documents. In an effort to remain transparent, open and responsive, the California Special Districts Association (CSDA), as well as the League of California Cities, the Association of California Cities and Liebert,Cassidy, Whitmore all encourage local agencies to continue to comply with all aspects of the Brown Act, including those that have been suspended. STRATEGIC PLAN: CP 1-E: Effectively Use Broad Spectrum Communication Opportunities ATTACHMENTS: Name:Description:Type: Resolution_No._12-21.docx Resolution Resolution Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 RC/RK 5-0 Roll Call Resolution No. 12-21 Affirming Compliance with the Ralph M. Brown Act 1 RESOLUTION NO. 12-21 RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT AFFIRMING COMPLIANCE WITH THE RALPH M. BROWN ACT WHEREAS, the Yorba Linda Water District is a steward of public trust and resources and it is the responsibility of the Yorba Linda Water District to represent its citizens in a transparent and open manner consistent with the laws of the State of California; and WHEREAS, a key tool in providing transparency has been the Ralph M. Brown Act (“Brown Act”), a law that requires, among other things, that meetings of local governments be held in public, that local governments inform the public of all meetings and report the results of such meetings in a proactive and timely manner; and WHEREAS, in the interest of good government and commitment to its citizens, the Yorba Linda Water District has adhered to the spirit and letter of the Ralph M. Brown Act since the formation of the Yorba Linda County Water District in 1958; and WHEREAS, Assembly Bill 1464 and Senate Bill 1006 suspended certain requirements of the Ralph M. Brown Act for the next three fiscal years (July 1, 2012- June 30, 2015) as part of the State of California’s attempt to balance its budget; and WHEREAS, suspended portions of the Ralph M. Brown Act include requirements to prepare and post agendas of regular meetings72 hours prior to the regular meeting and to report on the results of a closed session meeting following its conclusion under specified circumstances; and WHEREAS, Assembly Bill 1464 and Senate Bill 1006 also suspended the requirement that the State reimburse the Yorba Linda Water District for the actual costs it incurs in implementing the suspended provisions of the Ralph M. Brown Act, including, but not limited to, costs associated with the publishing and posting of the agenda and closed session meeting reporting; and WHEREAS, notwithstanding the suspension of these Ralph M. Brown Act provisions and the funding for the District’s costs to implement these provisions, the Board of Directors of the Yorba Linda Water District affirms that the District shall continue to implement all applicable requirements of the Ralph M. Brown Act. Resolution No. 12-21 Affirming Compliance with the Ralph M. Brown Act 2 NOW THEREFORE, BE IT RESOLVED by the Board of Directors of the Yorba Linda Water District that the District shall continue to implement all applicable requirements of the Ralph M. Brown Act to ensure transparent, open and responsive government. PASSED AND ADOPTED this 11th day of October 2012 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Phil Hawkins, President Yorba Linda Water District ATTEST: Annie Alexander, Assistant Board Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. Kidman Law LLP ITEM NO. 10.2 AGENDA REPORT Meeting Date: October 11, 2012 Budgeted:Yes To:Board of Directors From:Steve Conklin, Acting General Manager Presented By:Gina Knight, HR/Risk Manager Dept:Human Resources/Risk Management Reviewed by Legal:Yes Prepared By:Gina Knight, HR/Risk Manager Subject:Memorandum of Understanding Fiscal Years 2012-2015 SUMMARY: The District's Employees Association Bargaining Unit members accepted the District's offer of a three-year agreement for the period of July 1, 2012 through June 30, 2015. STAFF RECOMMENDATION: That the Board of Directors adopt Resolution No. 12-22, the Memorandum of Understanding and Pay Plans with the Yorba Linda Water District Employees Association for the period of July 1, 2012 through June 30, 2015. DISCUSSION: From the period of May 14, 2012 through July 26, 2012, staff met with and conferred with representatives of the Yorba Linda Water District Employees Association to negotiate a Memorandum of Understanding (MOU) for FY's 2012-2015. On August 1, 2012, the Employees Association held an election to agree to accept the 2012-2015 MOU. The highlights of the MOU for fiscal years 2012-2015 include the following: 1. Three-year contract; 2. Continuation of a 4/10 work schedule; 3. 9% Cost of Living Adjustment over the three year contract (3% per year); 4. Merit increases based on job performance; 5. Requiring all Employees Association members to pay 100% of the statutory CalPERS employee contribution rate to CalPERS in the 25th month of the three year term; 6. Vacation accrual increase for 10 to 15 years of service and 20+ years of service at the rate of .769 hours per pay period (additional 20 hours or one half week per year; 7. Short Term Disability insurance effective November 1, 2012; 8. Enhanced Certificate Pay for certificates acquired above and beyond the required certification for a specific classification; 9. Implementation of AB 340 provisions - pension reform; PRIOR RELEVANT BOARD ACTION(S): On December 8, 2011, the Board of Directors adopted Resolution No. 11-20, approving the Memorandum of Understanding for Fiscal Year 2011-2012 with the Yorba Linda Water District Employees Association. ATTACHMENTS: Name:Description:Type: Resolution_No._12-22.doc Resolution No. 12-22 Backup Material DOCSLA-#628771-v2-CLEAN_MOU-AB340.DOC MOU FYs 2012-20125 Backup Material Exhibit_A_BU_Salary_Ranges_FLSA_Status_and_Authorized_Classifications_9- 13-2012.doc MOU FYs 2012-2015 - Exhibit A Backup Material 9step-_2012-2013_BU_3%8-14-2012.XLS MOU FYs 2012-2015 - Exhibit B Backup Material 9step-_2013-2014_BU_3%8-14-2012.XLS MOU Fys 2012-2015 - Exhibit C Backup Material 9step-_2014-2015_BU_3%8-14-2012.XLS MOU FYs 2012-2015 - Exhibit D Backup Material DOCSLA-#350310-v1-Exhibit_E_Holidays_-_Final.doc MOU Fys 2012-2015 - Exhibit E Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 MB/GM 5-0 Roll Call Resolution No. 12-22 Adopting the MOU and Pay Plans Between the District and the YLWD Employees Association 1 RESOLUTION NO. 12-22 RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT ADOPTING THE MEMORANDUM OF UNDERSTANDING AND PAY PLAN BETWEEN THE DISTRICT AND THE YORBA LINDA WATER DISTRICT EMPLOYEES ASSOCIATION WHEREAS, District Personnel Rule 12 provides for the recognition of employee organizations in order to promote communication between the District, its employees and recognized employee organizations; and WHEREAS, District employees have elected to be represented by the Yorba Linda Water District Employees Association; and WHEREAS, the District has recognized the Yorba Linda Water District Employees Association as the recognized employee organization; and WHEREAS, an agreement between the District and the Yorba Linda Water District Employees Association exists and the details are set forth in the 2012- 2015 Memorandum of Understanding between the District and the Yorba Linda Water District Employees Association. NOW THEREFORE BE IT RESOLVED by the Board of Directors of the Yorba Linda Water District as follows: Section 1. The General Manager is authorized to execute the Memorandum of Understanding between the Yorba Linda Water District and the Yorba Linda Water District Employees Association for fiscal years 2012-2015 as attached hereto and by this reference incorporated herein including its attachments Exhibits “A” through “E”. Section 2. That Resolution No. 11-20 is hereby rescinded. PASSED AND ADOPTED this 11th day of October 2012 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Phil Hawkins, President Yorba Linda Water District Resolution No. 12-22 Adopting the MOU and Pay Plans Between the District and the YLWD Employees Association 2 ATTEST: Annie Alexander, Assistant Board Secretary Yorba Linda Water District Reviewed as to form by General Counsel: __________________________ Arthur G. Kidman, Esq. Kidman Law, LLP AB340 MODIFIED 628771.2 YO030-018 MEMORANDUM OF UNDERSTANDING 2012-2015 BY AND BETWEEN THE YORBA LINDA WATER DISTRICT AND THE YORBA LINDA WATER DISTRICT EMPLOYEES ASSOCIATION AB340 MODIFIED 628771.2 YO030-018 TABLE OF CONTENTS Page ARTICLE 1. RECOGNITION ......................................................................... 1 ARTICLE 2. SALARY SCHEDULE ............................................................... 1 Section 2.1 Salary Schedules ........................................................... 1 Section 2.2 Employee PERS Contribution Rate ................................ 2 Section 2.3 Merit Increases ............................................................... 3 Section 2.4 Acting Appointments ...................................................... 4 Section 2.5 Salary Deduction ............................................................ 6 Section 2.6 Probation ........................................................................ 6 ARTICLE 3. OVERTIME AND COMPENSATORY TIME OFF ...................... 6 Section 3.1 Overtime ......................................................................... 6 Section 3.2 Compensatory Time ....................................................... 7 ARTICLE 4. STANDBY AND CALL OUT COMPENSATION ........................ 8 Section 4.1 Standby Compensation .................................................. 8 Section 4.2 Call-Out Compensation .................................................. 9 ARTICLE 5. INSURANCE ........................................................................... 12 Section 5.1 Life Insurance ............................................................... 12 Section 5.2 Health Insurance .......................................................... 12 Section 5.3 Dental Insurance .......................................................... 13 Section 5.4 Vision Coverage ........................................................... 13 Section 5.5 Domestic Partners ........................................................ 14 Section 5.6 Retiree Insurance Benefits ........................................... 14 Section 5.7 Cafeteria Plan ............................................................... 15 Section 5.8 Long-Term Disability .................................................... 15 Section 5.9 Short-Term Disability .................................................... 16 ARTICLE 6. HOURS ................................................................................... 16 ARTICLE 7. HOLIDAYS .............................................................................. 18 ARTICLE 8. VACATION .............................................................................. 19 ARTICLE 9. LEAVES .................................................................................. 22 Section 9.1 Sick Leave .................................................................... 22 Section 9.2 Disability Leave ............................................................ 24 AB340 MODIFIED 628771.2 YO030-018 Section 9.3 Leave of Absence Without Pay .................................... 25 Section 9.4 Maternity Leave ............................................................ 26 Section 9.5 Jury Duty/Court Testimony ........................................... 27 Section 9.6 Bereavement Leave ..................................................... 27 Section 9.7 Emergency Leave Policy .............................................. 27 ARTICLE 10. GRIEVANCE PROCEDURE ................................................... 28 Section 10.1 Purpose ........................................................................ 28 Section 10.2 Matters Subject to the Grievance Procedure ................ 28 Section 10.3 Informal Grievance Adjustment .................................... 28 Section 10.4 Formal Grievance Procedure ....................................... 29 Section 10.5 General Conditions ....................................................... 30 ARTICLE 11. EMPLOYEE DISCIPLINE ....................................................... 31 Section 11.1 Forms of Discipline ....................................................... 31 Section 11.2 Procedure ..................................................................... 31 Section 11.3 Appeal of Disciplinary Action ........................................ 32 ARTICLE 12. JOB POSTING ........................................................................ 35 ARTICLE 13. MISCELLANEOUS BENEFITS ............................................... 35 Section 13.1 Safety Boot Allowance ................................................. 35 Section 13.2 Reimbursement for Certificates .................................... 36 Section 13.3 Education Reimbursement ........................................... 39 Section 13.4 Uniforms ....................................................................... 41 Section 13.5 Job Description ............................................................. 41 Section 13.6 Extended Work Accommodation .................................. 41 ARTICLE 14. DRUG POLICY ....................................................................... 42 ARTICLE 15. COMPLETION OF MEET AND CONFER ............................... 42 ARTICLE 16. CONCERTED ACTIVITIES ..................................................... 43 ARTICLE 17. TERM OF AGREEMENT ........................................................ 44 ARTICLE 18. DISTRICT GOVERNING BOARD APPROVAL ....................... 44 Exhibit A Salary Ranges and Authorized Classifications Exhibit B Pay Plan Bargaining Unit Employees 2012-2013 Exhibit C Pay Plan Bargaining Unit Employees 2013-2014 Exhibit D Pay Plan Bargaining Unit Employees 2013-2015 Exhibit E Holiday Schedule AB340 MODIFIED 628771.2 YO030-018 1 ARTICLE 1. RECOGNITION Pursuant to the provisions of the Government Code and the Rules and Regulations of the District, Yorba Linda Water District (hereinafter called the “District”) has recognized the Yorba Linda Water District Employees Association, (hereinafter called the “Association”) as the recognized representative of a bargaining unit consisting of the classifications listed in Exhibit “A” (hereinafter sometimes called “unit employees,” “employees,” “members” or “unit members”) to this Memorandum of Understanding (hereinafter “MOU”.) ARTICLE 2. SALARY SCHEDULE Section 2.1 Salary Schedules (a) For those employees who are employed as of the date of ratification of this MOU, the salary schedule attached hereto as Exhibit “B” will remain in effect beginning July 1, 2012 through June 30, 2013 (reflecting a 3.0% base salary increase.) (b) Effective July 1, 2013, the salary schedule attached hereto as Exhibit “C” shall be effective for FY 2013-2014 (reflecting a 3.0% base salary increase.) (c) Effective July 1, 2014, the salary schedule attached hereto as Exhibit “D” shall be effective for FY 2014-2015 (reflecting a 3.0% base salary increase.) (d) Subject to the singular exception of deducting employee health, dental, vision, supplemental life and supplemental accidental death and dismemberment (AD&D) insurance contributions over 24 payroll periods, the AB340 MODIFIED 628771.2 YO030-018 2 District employs 26 payroll periods of two (2) weeks each as a means of distributing compensation. (e) Upon implementing the 4/10 schedule, paychecks will be distributed on the Thursday following the end of a payroll period, with the payroll period commencing on a Sunday and ending on the last Saturday of the two (2) week period. If the Thursday payday falls on a holiday, the pay shall be distributed on the prior day, a Wednesday. (f) Employee payroll deductions for the employee share of health, dental, vision, supplemental life and supplemental accidental death and dismemberment (AD&D) insurance premium contributions shall be amortized over 24 payroll periods and deducted during said 24 payroll periods. Section 2.2 Employee PERS Contribution Rate and Formula The District’s current contract as of the date of ratification with CalPERS is for a retirement benefit based on the single highest year with a Fourth Level of 1959 Survivor Benefit Program. However, and subject to the provisions of AB340 or similar legislation (see below), individuals hired by the District after the adoption date of the 2011-2012 MOU, shall be enrolled in the 2% at 60 retirement formula and shall pay 100% of the statutory CalPERS employee contribution to CalPERS. Presently, such employee contribution rate is 7% of compensation. (a) Effective July 1, 2012 or concurrent with adoption of the documentation required by PERS to allow this provision to be effective, whichever event occurs later, all bargaining unit employees hired before January AB340 MODIFIED 628771.2 YO030-018 3 26, 2012, shall pay 29% of the 7% statutory CalPERS employee contribution rate to CalPERS (equivalent to 2% of compensation.) (b) Effective July 1, 2013, all bargaining unit employees hired before January 26, 2012, shall pay 57% of the 7% statutory CalPERS employee contribution rate to CalPERS (equivalent to 4% of compensation.) (c) Effective July 1, 2014, all bargaining unit employees hired before January 26, 2012, shall pay 100% of the statutory CalPERS employee contribution rate to CalPERS. (d) AB340 or similar Legislation At the time of Board of Directors adoption of the 2012-15 MOU, AB340, as memorialized in an August 28, 2012 PROPOSED CONFERENCE REPORT, was either awaiting signature by the Governor or had already been signed by the Governor. Although AB340 is to be effective January 1, 2013, the parties acknowledge that if signed by the Governor, AB340 is subject to modification on and after Board of Directors adoption of the 2012-15 MOU. If signed by the Governor, AB340, as it may from time to time exist, shall in its entirety be given full force and effect during and after the term of the 2012- 15 MOU, unless the legislation is modified. Any provision in the 2012-15 MOU which contradicts any provision of AB340 (or similar retirement-related legislation), shall be deemed null and void, with the contrary AB340 provision(s) being given full force and effect. Therefore, no provision of AB340 shall be deemed to impair any provision of the 2012-15 MOU or any MOU, Agreement, Rule or Regulation predating the 2012-15 MOU. Unit employees newly employed by the District on and after January 1, 2013, shall individually pay an initial Member CALPERS contribution rate of 50% of the normal cost rate for the Defined Benefit Plan in which said newly hired employee is enrolled, rounded to the nearest quarter of 1%, or the current contribution rate of similarly situated employees, whichever is greater. (AB340 – Government Code section 7522.30) Unit members who are new District employees on and after January 1, 2013, shall be enrolled in the AB340 provided for 2.5% @ 67 retirement formula (AB340, Government Code §7522.20) AB340 MODIFIED 628771.2 YO030-018 4 Section 2.3 Merit Increases Merit Increases Unit employees may be considered for merit salary increases. These merit increases to steps within an established salary range shall not be automatic but may be granted only for continued or sustained improvement by the unit employees in the effective performance of the duties of his/her position as determined within the District’s sole discretion. Effective October 1, 2006, the District implemented a nine (9) step salary schedule with a 2.5% salary difference between steps replacing the District’s previous five (5) step salary schedule. Subsequent movement on the salary schedule is based on merit as follows: Evaluation Process Each employee will be annually reviewed on a one-year interval following completion of their probationary period. An employee who receives a meets job expectations evaluation shall be entitled to move one (1) step and an employee who receives an exceeds job expectations evaluation, shall move up two (2) steps. Movement shall take place until an employee has reached Step 9. The District shall endeavor to have performance reviews completed within two (2) weeks after the employee’s anniversary date with the effective date of any merit salary increase being on the anniversary date. If the evaluation is delayed beyond the two (2) week period, any subsequent salary increase to which the AB340 MODIFIED 628771.2 YO030-018 5 employee is entitled as a result of the performance review rating, shall be retroactive to the anniversary date. Effective December 1, 2006 or soon thereafter as possible, the District will implement a new performance evaluation form. Bargaining unit employee representatives will be invited to participate in any training given to management and supervisory employees in the use of the form. (Until implementation of the new form, the existing performance evaluation form will remain in effect with the understanding that bargaining unit members may be given written goals that will be added to the new performance evaluation which will be used in evaluating future performance.) Section 2.4 Acting Appointments The Personnel Officer may appoint an employee to serve in a position on a temporary “acting appointment” basis. Although the District shall give reasonable consideration to an employee’s expression of unwillingness to serve in an acting appointment, such expression shall not be controlling, and the District shall be empowered to make the acting appointment regardless of such expression by the employee. The District’s decision to appoint an employee to an acting position shall not be subject to administrative or civil challenge. After serving in an acting position for 30 consecutive calendar days, the employee shall be paid prospectively on the 31st consecutive calendar day at an amount closest to 5% more than his/her normal rate of pay or shall be placed on step 1 of the range established for the acting position whichever is higher. However, in no case shall said acting position compensation be less than 4.5%. Eligibility for this AB340 MODIFIED 628771.2 YO030-018 6 “acting” compensation is contingent on the responsible supervisor determining that the employee has satisfactorily served the necessary consecutive calendar days in the acting position. For example, if an employee serves in an acting position for 29 consecutive calendar days, is removed, and reappointed 10 calendar days later for a period of 29 consecutive calendar days, no acting compensation shall be paid. If an employee works for 45 consecutive calendar days in an acting position, is then removed from the acting position and reappointed 10 working days later for 20 calendar days, acting pay is earned for the 15 calendar days worked as part of the 45 consecutive calendar day period described in this sentence and no acting pay is earned for the subsequent 20 calendar days. The employee shall return to his/her original position and salary step at the discretion of the Personnel Officer. The term of an “acting appointment” shall last not longer than one (1) year (365 consecutive calendar days.) Section 2.5 Salary Deduction The District shall maintain a “414(h)(2)” plan under the Internal Revenue Code for the purpose of treating contributions to PERS as deferred income for tax purposes to the extent permitted by law. Contributions will continue to be deducted from the employee’s actual gross salary as reflected on the employee’s pay stub. Employees shall otherwise be responsible for all taxes related to fringe and reimbursement benefits and the District shall make deductions in accordance with the law. AB340 MODIFIED 628771.2 YO030-018 7 Section 2.6 Probation Effective October 1, 2006, all new hires shall be subject to a twelve (12) month probationary period. Such new hires shall accrue vacation commencing with the start of employment but shall be ineligible to use accrued vacation time prior to successful completion of six (6) months of service. An existing employee who is promoted to a new position shall be required to serve a six (6) month promotional probationary period in the promotional position. ARTICLE 3. OVERTIME AND COMPENSATORY TIME OFF Section 3.1 Overtime A. Non-exempt FLSA unit employees covered by this Memorandum of Understanding who perform authorized work in excess of forty (40) hours in a seven (7) day work period, shall be compensated for such overtime work at the rate of one and one-half times his/her regular hourly rate of pay. Overtime shall be calculated to the nearest one-quarter hour of overtime worked. In order to receive overtime compensation, non-emergency overtime must be authorized in advance by the appropriate department manager and approved by the General Manager. B. Exempt employees covered by this Memorandum of Understanding shall be compensated for overtime at a straight time rate, pursuant to all of the conditions precedent to overtime eligibility as stated in Section 3(A) above. C. Sick leave hours which are utilized by the employee, shall not be considered hours worked for purposes of computing overtime eligibility, whether AB340 MODIFIED 628771.2 YO030-018 8 pursuant to this MOU or pursuant to the requirements of the FLSA. Additionally, vacation hours not authorized twenty-four (24) hours prior to use, shall not be considered hours worked for purposes of computing overtime eligibility, whether pursuant to this MOU or pursuant to the requirements of the FLSA. Utilized compensatory time off shall be considered hours worked for purposes of computing overtime eligibility. Section 3.2 Compensatory Time At the employee’s option, overtime may be earned as “compensatory time off” instead of as cash. The maximum amount of compensatory time off which shall be accrued is forty (40) hours. Compensatory time off shall be credited at the rate of 1-1/2 hours of compensatory time off for each hour of overtime worked. At the employee’s discretion, the employee may submit a written request to payroll for cash distribution of not greater than twenty (20) hours of accrued compensatory time off during any payroll period. Upon separation from employment, the employee shall be compensated at the then existing regular rate of pay for all accrued compensatory time off. An employee desiring to utilize compensatory time off shall submit a written application to a supervisor authorized to grant the use of the time off, and shall be allowed the time off, in 15 minute increments, unless in the supervisor’s sole determination, use of the compensatory time off at the requested date and time, shall result in an undue hardship to the District. AB340 MODIFIED 628771.2 YO030-018 9 ARTICLE 4. STANDBY AND CALL OUT COMPENSATION (Implementation of the following 1.5 hour minimum compensation at the 1.5 premium rate shall be effective on and after Board adoption of this MOU.) Section 4.1 Standby Compensation A unit employee assigned to standby duty for purposes of being on call to handle emergency situations arising at times other than normal scheduled working hours, and not as an extension of a regularly scheduled shift, shall be paid a flat fee for each day he/she is assigned to standby duty. In those instances where the standby occurs on Monday through and including Thursday, the flat fee during the term of this MOU shall be Thirty Five Dollars ($35.00.) In those instances where the standby occurs on a District recognized holiday and/or Friday through and including Sunday, the flat fee during the term of this MOU shall be Fifty-Five Dollars ($55.00.) A “standby day” for purposes of calculating standby compensation shall be that period of time when a unit employee has been assigned to be available for purposes of handling emergency situations arising at times other than normally scheduled working hours and not as an extension of a regularly scheduled shift. (It is understood that standby duty for pump operations will be provided by qualified and available employees as assigned by the supervisor and/or operations manager, and that those individuals in Maintenance Worker I and Maintenance Distribution Operator II positions determined qualified by the District shall be eligible for standby duty. Otherwise, standby eligibility will be as existed prior to the date of this Memorandum of Understanding.) The pay for standby AB340 MODIFIED 628771.2 YO030-018 10 compensation may be accrued to the second payday in December and paid in a lump sum or it may be paid at the regular pay period in which the standby duty is completed. Section 4.2 Call-Out Compensation Call-out compensation shall be defined and governed as follows: A “call-out” occurs when a unit employee on assigned standby duty is required to return to a District-designated worksite or is otherwise required to commence work following completion of the employee’s regularly scheduled work shift and following the employee’s departure from the worksite at the end of that regular scheduled work shift. Therefore, a “call-out” is not an extension of a regular scheduled work shift. Upon being initially “called-out” during each standby day, the employee shall be entitled to a minimum compensation of two (2) hours at 1.5 times the employee’s base rate of pay, regardless of whether or not the initial call-out work is completed in less than two (2) hours time. During any standby day, there shall be only one, two (2) hour minimum compensation at 1.5 times the employee’s base rate of pay. If a subsequent call-out commences during the period of time for which the employee has received the initial minimum compensation of two (2) hours, there shall not be an additional minimum compensation for this subsequent call-out. The employee shall be compensated at the rate of 1.5 times the employee’s base rate of pay for all hours worked, over the initial two (2) hour minimum compensation provided because of the initial call-out. AB340 MODIFIED 628771.2 YO030-018 11 However, if a call-out occurs subsequent to the initial call-out and two (2) hours or more have elapsed between commencement of the initial call-out and commencement of the subsequent call-out, there shall be a one and one-half (1.5) hour minimum call-out compensation provided to the employee for this subsequent call-out. This one and one-half (1.5) hour minimum eligibility shall repeat itself throughout the standby period as long as there is a one and one half (1.5) hour or more passage of time between the initial of any subsequent call-out and the following call-out. EXAMPLE: Start Shift 0700 – End Shift 1630 1630 1700 1730 1800 1830 1900 1930 1945 2000 2030 2100 2130 2200 2230 2300 2400 Call out commences 1800 & ends 1900 10 minute phone call 30 minute call 30 minutes = 2 hours x 1.5 times base hourly rate included in 2 hour minimum .25 hour at 1.5 times base hourly rate 1.5 hours at 1.5 times base hourly rate Call-out commences at 1800 hours and is completed at 1900 hours. The employee shall be paid two (2) hours compensation at 1.5 times the base hourly rate. At 1930 hours, the employee commences a ten (10) minute electronic call. No additional payment is due as the employee has already received the two (2) hour minimum. At 1945 hours, the employee commences a thirty (30) minute electronic call. The employee shall be paid for .25 additional hours at 1.5 times the base hourly rate, as the employee has already received the two (2) hour minimum. The call which lasted until 2015 hours commenced during the initial two (2) hour minimum payment period of time but exceeded that period by fifteen AB340 MODIFIED 628771.2 YO030-018 12 (15) minutes. However, if the initial call-out commenced at 1830 hours and is completed at 1900 hours and the next call-out commenced at 2030 hours, the employee would be eligible for a one and one-half (1.5) hour minimum call-out payment at 1.5 times the employee’s base hourly rate, because one and one half (1.5) hours or more have passed between the initial call-out and the subsequent call-out. It would not be until a subsequent call-out was to commence on or after 2200 hours that the employee would be eligible for an additional one and one- half (1.5) hour minimum. Where a “call-out” requires the employee to leave his/her residence and respond to a designated worksite, computation of compensable work hours shall commence with and include travel time to and from the residence and the worksite. Compensable work hours shall also include the time spent on the telephone or other electronic device whereby the “call-out” is assigned and/or efforts by telephone or other electronic devise are undertaken to address the subject of the “call-out.” ARTICLE 5. INSURANCE Section 5.1 Life Insurance The District shall continue to provide group life insurance, in the amount of one times basic annual salary rounded to the next higher multiple of $1,000, for each full-time permanent unit employee under age 70 on the first day of the month following their date of hire, in accordance with the provisions of the contract between the District and any company of the District’s choosing providing such coverage. An employee may increase the coverage by up to an AB340 MODIFIED 628771.2 YO030-018 13 additional $100,000 by authorizing the additional premium to be deducted from his/her salary. Section 5.2 Health Insurance The District shall pay 100% of the premium for hospital and medical insurance for all unit employees who work in excess of 30 hours per week, after they have worked for two calendar months, and up to 2/3 of the additional premium toward unit employee dependent coverage for covered employees with one dependent or up to 2/3 of the additional premium toward unit employee dependent coverage for covered employees with more than one dependent in accordance with the provisions of any contract between the District and any company or companies of the District’s choosing. The individual employee shall pay the cost of the difference in premium, to be deducted from his/her salary to cover the employee’s share of the dependent coverage. The employees shall have the option of selecting a District-designated Health Maintenance Organization (“HMO”.) The District contribution for HMO coverage will be in accordance with this paragraph. Section 5.3 Dental Insurance The District shall pay 100% of the premium for dental insurance for all unit employees who work 30 hours or more per week, after they have worked for two calendar months, and 2/3 of the additional premium toward unit employee dependent coverage for covered employees with one dependent or 2/3 of the additional premium toward unit employee dependent coverage for covered employees with more than one dependent in accordance with the provisions of AB340 MODIFIED 628771.2 YO030-018 14 any contract between the District and any company or companies of the District’s choosing. The individual employee shall pay the cost of the difference in premium, to be deducted from his/her salary. The employees shall have the option of selecting “Delta Care” with the contribution for “Delta Care” to be in accordance with this paragraph. Section 5.4 Vision Coverage The District shall pay 100% of the premium, toward the premium for vision insurance for unit members who work more than 30 hours per week, commencing the first day of the month following the month of hire and 2/3 of the additional premium toward dependent coverage for covered employees with one dependent, or 2/3 of the additional premium toward dependent coverage for covered employees with more than one dependent, in accordance with the provisions of any contract between the District and any company or companies of the District’s choosing. The individual employee shall pay the cost of the difference in premium, to be deducted from his/her salary. Section 5.5 Domestic Partners Effective October 1, 2006, “dependent” shall include a domestic partner for whom a California State Registration Certificate is provided. Section 5.6 Retiree Insurance Benefits As regards individuals employed by the District on or before the adoption of the 2011-2012 MOU, and subject to carrier approval, the District shall pay the amounts provided in Sections 5.2, 5.3 and 5.4 of this Agreement for any employee who retires from the District for a period of time which is equivalent to AB340 MODIFIED 628771.2 YO030-018 15 one (l) year or pro-ration thereof on a monthly basis for each three (3) years of service to the District or pro-ration thereof on a quarterly basis. To be eligible for this benefit, the employee must be at least 50 years of age, must have five (5) years of service with the District, must provide ninety (90) days notice of intent to retire, must remain in a retired status, and must retire from the District during the term of this Agreement while in good standing (did not retire after being provided written notice that disciplinary investigation/proceedings were pending which in the sole judgment of the District are reasonably anticipated to result in a recommendation of dismissal from employment or which have resulted in a determination by the District to impose dismissal. If a dismissal is appealed and results in a final administrative decision, (and where appealable, a court determination) reinstating the employee, the withheld benefit shall be retroactively implemented to the date of dismissal.) If any benefit period remains when the employee or his/her spouse reaches ages 65, whichever is latest, the coverage shall end and convert to Medicare Supplement for the remainder of the benefit period. For purposes of this Agreement, retired status means that the employee shall not work for compensation for more than nine hundred sixty (960) hours in any fiscal year (July 1 through June 30.) The District shall require an employee to certify under penalty of perjury that the employee has remained on retired status and/or to submit to such additional verification as the District deems necessary to demonstrate retired status. The retired employee must make any contribution required of a regular employee pursuant to Section 5.2, 5.3 or 5.4 prior to the first day of the month in which coverage is to be extended. Failure of AB340 MODIFIED 628771.2 YO030-018 16 an employee to make such payment shall result in termination of coverage and termination of any right to any benefit pursuant to this section. Individuals hired after the adoption date of this 2011-2012 MOU, shall be ineligible to receive this benefit. Section 5.7 Cafeteria Plan To the extent lawful, the District shall extend its current plan under Section 125 of the Internal Revenue Code to cover unit employees. Section 5.8 Long-Term Disability The District shall provide a long-term disability plan for employees which has a 90-day elimination period and provides at least sixty percent (60%) of salary for a designated period of time in accordance with coverage procured by the District from a carrier to be determined at the District’s sole discretion. Section 5.9 Short Term Disability The Board shall provide unit members the same short term disability plan made available in 2012 to unrepresented District employees. Enrollment in the plan shall be effective approximately two (2) weeks after Board of Directors approval of the 2012-2015 MOU. ARTICLE 6. HOURS 1. The regular work week for all full-time unit employees covered by this MOU shall be forty (40) hours as scheduled by department heads. It is expressly understood the department manager may schedule maintenance and plant operation shifts which include evening, weekend and holiday work. (Specifically, the department manager may create crews consisting of two AB340 MODIFIED 628771.2 YO030-018 17 individuals, one from either a Sr. Maintenance Distribution Operator or Maintenance Distribution Operator III, and the other from a Maintenance Distribution Operator II or Maintenance Worker I position assigned to an on-duty maintenance shift available for emergency situations and other maintenance assignments that may be required to work Fridays, Saturdays or Sundays. Volunteers for such crews shall first be solicited. In the event that there are insufficient volunteers, all maintenance employees shall be assigned to such crews on a three (3) month rotating basis. Employees may work out trades, provided that the trade is completed within the same work week and one (1) day notice is given to the supervisor. Plant operators shall be assigned in accordance with past practice. For all unit employees with an average regular work week of forty (40) hours, the hourly rate of pay shall be twelve times the monthly rate divided by 2,080 (40 hours times 52 weeks.) An employee may request a part-time assignment which shall be granted at the sole discretion of the General Manager or his/her designee. 2. Effective as soon as is reasonably practicable after adoption of the 2011-2012 MOU, but not later than January 1, 2012 unit members shall be assigned to a four (4) day workweek, consisting of ten (10) scheduled hours of work each day (a 4/10 schedule.) The parties agree, understand and acknowledge that management clearly and unequivocally has the right to terminate the 4/10 schedule at any time during the term of the MOU or after, and that any such termination of the 4/10 schedule shall not be subject to the meet and confer process, either as to the management decision being made and/or as AB340 MODIFIED 628771.2 YO030-018 18 to the impact of that decision. In such case, the schedule shall revert to the 9/80 schedule as it existed immediately prior to implementation of the 4/10 schedule. Any District-proposed change to the 9/80 schedule shall be subject to the meet and confer process. Employees shall continue to earn sick leave at the rate of 3.70 hours per payroll period. 3. Those unit employees covered by this Memorandum of Understanding whose regularly scheduled forty (40) hour work week or special shift work week includes working hours after 6:00 P.M. and/or before 6:00 A.M. Monday through Thursday, and/or any hours on Friday, Saturday and/or Sunday and/or holidays, shall be paid a differential equal to their regular hourly rate plus five percent (5%) for each hour worked after 6:00 P.M. and/or before 6:00 A.M. Monday through Thursday, and/or all hours worked on Friday, Saturday and/or Sunday and/or holidays. ARTICLE 7. HOLIDAYS 1. Holidays for full-time unit employees covered by this Memorandum of Understanding (with the exception of employees assigned to special shift work for pumping plant operations and on-duty maintenance available for emergency situations) as set forth in Exhibit “E”. 2. For purposes of holiday compensation, compensation shall be equal to the number of hours that the employee normally would have worked other than for the holiday. For those unit employees whose scheduled work week is Monday through Thursday, a holiday falling on a Friday or Saturday shall not result in AB340 MODIFIED 628771.2 YO030-018 19 Thursday being a holiday, and a holiday falling on a Sunday, shall not result in Monday being a holiday. Instead observed holidays that fall on a Friday, Saturday or Sunday shall be recognized as floating holidays earned. The floating holidays earned as a result of the above situation shall be used within 12 months following the accrual of each floating holiday. 3. Unit employees assigned to special shift work shall be entitled to receive one day of paid time off (an in-lieu holiday) on a day designated or approved by the District at the regular rate of pay for each holiday whether or not the holiday falls on a regularly scheduled workday for that employee, so long as the pumping plant is manned and/or a maintenance crew is on duty at work for emergency situations during the holiday period. 4. If unit employees, other than employees assigned to special shift work, are required to work on a recognized holiday, they shall receive, in addition to the paid holiday, compensation equivalent to one and one-half (1-1/2) times their regular rate of pay for the time actually worked during a regularly scheduled holiday. 5. In order to be eligible for holiday pay, a unit employee must be either at work or on paid leave of absence on the regularly scheduled workday immediately preceding the day observed as the holiday and the regularly scheduled workday immediately following the day observed as the holiday. AB340 MODIFIED 628771.2 YO030-018 20 ARTICLE 8. VACATION 1. Unit employees covered by this Memorandum of Understanding shall receive annual vacation with pay in accordance with the following provisions: Full-time unit employees with an average regular work week of 40 hours shall accrue paid vacation at the following rate: Duration of Continuous Hours Accrued per Pay Period Regular Employment During 1st through 60th month 3.077 hrs = 2.0 weeks/yr During 61st through 120th month 4.615 hrs = 3.0 weeks/yr During 121st through 180th month 5.384 hrs = 3.5 weeks/yr During 181st through 240th month 6.153 hrs = 4.0 weeks/yr During 241st month and thereafter 6.922 hrs = 4.5 weeks/yr Part-time unit employees shall accrue paid vacation in proportion to the average or normal hours worked as a part-time employee. 2. For vacation accrual, the last day of the month shall be considered the ending of the accrual period and all accruals for the preceding month or fraction of a month thereof shall be credited to the employee at this time; provided, however, that the date for determining a change in the accrual rate provided in paragraph 9.1(a) shall be the first day of the month on which the employee was hired by the District. 3. Paid vacation hours shall continue to accrue in accordance with the above provisions during any period of leave with pay. 4. All vacations shall be scheduled and taken in accordance with the best interest of the District and the department in which the employee is employed. AB340 MODIFIED 628771.2 YO030-018 21 5. The maximum amount of vacation that may be taken at any given time shall be that amount that has accrued to the employee concerned. The minimum amount of vacation that may be taken at any given time shall be fifteen (15) minutes. 6. A unit employee shall be eligible to take any accrued vacation after completion of thirteen (13) pay periods during their original twelve (12) month probationary period. 7. Each unit employee shall have vacation time deducted in fifteen (15) minute increments. 8. The maximum vacation that may be accrued shall not be more than one and one-half (1-1/2) times the amount that may be accrued in one year of service. If the employee has accrued the maximum amount of hours of vacation, no additional hours shall be accrued, nor shall the cash equivalent of what would have been excess hours, be earned by the employee. However, where in the sole discretion of the General Manager it is determined that requirements of the District are the sole reason for an employee being unable to timely schedule and utilize vacation time off, said employee may be provided authorization to accrue additional vacation time in an amount determined in the sole discretion of the General Manager. 9. Upon termination, a unit employee shall be compensated in cash at his/her current rate of pay for any vacation accrued but not taken. 10. In the event that any recognized holiday occurs during a unit employee’s vacation, the vacation account shall not be debited for the holiday AB340 MODIFIED 628771.2 YO030-018 22 hours. The only vacation hours that shall be charged against the employee’s accrued vacation time shall be those hours that the employee is regularly scheduled to work. 11. For the term of this MOU only, unit members who have been employed by the District for more than one year may sell to the District up to forty (40) hours of accrued unused vacation time upon thirty (30) days prior notice, provided that a minimum of one-half (1/2) the vacation time to which he/she is entitled within the same annual period of the sold vacation time remains in the employee’s vacation account after the cash distribution. A member who has been employed by the District for more than one year may also buy from the District up to an additional forty (40) hours of vacation time within any calendar year for use during the same calendar year, provided that full and complete payment has been made for the purchased vacation time by salary modification prior to use of the vacation time. It is expressly understood that this benefit is provided at the sole discretion of the District and shall automatically terminate upon the expiration of this MOU unless an extension is expressly agreed to by the District. ARTICLE 9. LEAVES Section 9.1 Sick Leave 1. Sick leave is provided for use if the employee is unable to work because of illness, and as otherwise allowed by law. 2. A unit employee eligible for paid sick leave shall be granted such leave for the following reasons: AB340 MODIFIED 628771.2 YO030-018 23 (a) Physical incapacity of the employee due to illness or injury. (b) Enforced quarantine of the employee in accordance with community health regulations. (c) Illness of a member of the employee’s immediate family (child, parent, spouse or domestic partner) which requires the attendance of the employee (sick leave usage shall not exceed one half (1/2) of a year’s accrual of sick leave.) (d) Routine medical or dental appointments for the employee only or illness of an emergency nature within the employee’s immediate family. In order to receive sick pay for the routine medical or dental appointments, the employee must notify his immediate supervisor twenty-four (24) hours in advance; otherwise, sick leave will be denied. Subject to the following exception, sick leave for routine medical or dental leave is for the length of the appointment only and for reasonable travel time to and from the appointment and the work site. However, an employee utilizing sick pay for the routine medical or dental appointment shall be authorized to debit the employee’s earned sick leave balance for an entire scheduled work day, where the employee presents the Human Resources Manager with documentation from the health care provider treating the employee, of indication that the treatment has resulted in the employee being incapacitated for the remainder of the work day, from performing the essential duties of the position. 3. In the event that a unit employee is absent on paid sick leave in excess of one (1) day, or if the District has cause to believe that an employee is AB340 MODIFIED 628771.2 YO030-018 24 misusing sick leave, the District may require that the employee submit a written statement by a physician licensed by the State of California certifying that the employee’s or the employee’s family member’s condition prevented him/her from performing the duties of his/her position. 4. Unit employees shall accrue annual sick leave with pay in accordance with the following provisions: Full-time unit employees with an average regular work week of forty (40) hours shall receive paid sick leave at the rate of 3.70 hours per payroll period. Part-time unit employees shall receive sick pay in proportion to the average or normal hours worked as a part-time, employee (e.g., an employee whose regular work week is twenty (20) hours shall receive one-half (1/2) day sick leave per month.) Paid sick leave shall continue to accrue in accordance with the above provisions during any period of leave with pay. 5. Each unit employee may use sick leave in fifteen (15) minute increments. An employee with a regular workday of ten (10) hours shall have ten (10) hours deducted from his/her accrued sick leave time for each regularly scheduled working day that he/she is on paid sick leave. 6. In the event that any paid holiday occurs during a period when a unit employee is on paid sick leave, the employee’s sick leave account shall not be debited for what would otherwise be a holiday usage. The only sick leave AB340 MODIFIED 628771.2 YO030-018 25 hours that shall be charged against the employee’s accrued sick leave shall be those hours that the employee is regularly scheduled to work. 7. A unit employee who retires (in accordance with the Public Employees’ Retirement System qualifications) shall be paid at the rate of his final salary for 3/8 of his/her accumulated days of sick leave, if any, at the time of separation from active employment. The remaining 5/8 of his/her accumulated days of sick leave will be converted into CalPERS service credit. If the employee should die, his/her estate shall be entitled to such payment. Section 9.2 Disability Leave 1. In situations where a unit employee has been injured in a non-duty accident and his/her disability leave exceeds one calendar month or the total use of his/her accumulated leaves, including sick leave, paid time off and vacation exceeds one calendar month, that portion of the leave exceeding 30 calendar days, shall constitute a break in service and his/her merit review dates and anniversary date will be adjusted accordingly. 2. An injured employee may elect to take as much of his/her accumulated sick leave, or his/her accumulated vacation as when added to his/her disability indemnity will result in a payment to him/her of not more than his/her full salary or wage. Section 9.3 Leave of Absence Without Pay 1. Department managers may grant a regular or probationary unit employee leave of absence without pay for a period not to exceed two (2) weeks. AB340 MODIFIED 628771.2 YO030-018 26 Such leaves shall be reported to the Personnel Officer in the manner and method which he/she shall prescribe. 2. The General Manager may grant a regular or probationary unit employee a leave of absence without pay or seniority for a period not to exceed six (6) months. After six (6) months, the leave of absence may be extended if authorized by the Board of Directors. No such leave shall be granted except upon written request of the employee, setting forth the reason for the request. Approval shall be in writing from the General Manager or his/her designee and entirely within his/her discretion. 3. In situations where a unit employee shall request leave without pay for a period in excess of one (1) calendar month, he/she shall submit to the District any and all actual premiums for any and all insurance coverage. If the employee chooses not to submit any or all of these premiums, his/her coverage shall be terminated within the limits prescribed by the benefit carriers and will be reinstated within the limits prescribed by the benefit carrier at the time of his/her reinstatement by the District. 4. Upon expiration of a regularly approved leave or within twenty-four (24) hours notice to return to duty, the unit employee shall be reinstated in the position held at the time the leave was granted. Failure on the part of a unit employee on leave to report promptly at its expiration, or within forty-eight (48) hours after notice to return to duty shall be cause for immediate discharge. The depositing in the United States mail of a first-class postage-paid letter addressed to the unit employee’s last known place of residence shall be reasonable notice. AB340 MODIFIED 628771.2 YO030-018 27 Section 9.4 Maternity Leave Maternity leave with or without pay shall follow the same procedures as leave granted for other disabilities provided, however, that an employee who has exhausted all accrued sick leave, compensatory time and vacation time shall be entitled to an unpaid leave of absence for a total of four (4) months leave when combined with sick leave, vacation and compensatory time, provided that the employee furnishes to District a physician’s verification of inability to work. Each request for maternity leave must be accompanied by a statement from a licensed physician verifying the pregnancy, the last day the unit member may work, and the expected date of return to work. In no case will the expectant mother be allowed to work beyond the date specified by her physician, and notification must be given to the District thirty (30) days prior to the last scheduled date of work. Section 9.5 Jury Duty/Court Testimony A full-time unit employee required to serve as a trial juror shall be entitled to be absent from his/her duties during the period of such service. During these periods of service, the employee shall receive full compensation from the District for a period not to exceed 10 working days for each period of jury duty. If court records indicate that the employee advised the court of this 10 working day limit, and the employee is nonetheless selected for a jury where the jury duty exceeds 10 working days, the excess days shall be paid by the District, if witness fees or juror fees, except mileage reimbursement, are submitted to the District. AB340 MODIFIED 628771.2 YO030-018 28 Section 9.6 Bereavement Leave Upon the death of a member of an employee’s immediate family, an employee shall be entitled to use up to three (3) days of District-paid bereavement leave for attendance at funeral services and conduct of business associated with the deceased. Immediate family shall include spouse, child, brother, sister, parent, parent-in-law, grandparent, grandchild, son-in-law, daughter-in-law, stepparent, stepbrother, stepsister, stepchild, a state registered domestic partner or any other relative living in the same household. The General Manager, at his/her sole discretion, may allow the employee to use up to an additional four (4) days of sick leave for this purpose or use of such leave for bereavement of non-immediate family members. Section 9.7 Emergency Leave Policy Please refer to the District’s Emergency Leave Policy for information. ARTICLE 10. GRIEVANCE PROCEDURE Section 10.1 Purpose The purpose of this section is to enhance communications between the District and unit employees by providing a fair and impartial review and consideration of grievances at the level closest to their point of origin within a reasonable time period without jeopardizing the employee’s position or employment. Section 10.2 Matters Subject to the Grievance Procedure 1. A grievance may be filed for the alleged violation of this Memorandum of Understanding. AB340 MODIFIED 628771.2 YO030-018 29 2. The grievance procedure shall not be used to establish new policies or change any existing rules. It shall not be used in matters resulting from any form of disciplinary action or evaluation content. Section 10.3 Informal Grievance Adjustment 1. Whenever possible, a unit employee who has a complaint shall try to solve the problem through informal discussion with his/her supervisor not later than 10 working days after the aggrieved employee knew or reasonably should have known of the basis for commencing the grievance procedure. The supervisor shall make whatever investigation he/she deems necessary and reply in writing within ten (10) working days. Any matters for which he/she does not have authority to make a decision shall be brought to the attention of a higher level supervisor who does have the proper authority. 2. If the unit employee is not satisfied with the decision reached through the informal discussion, and/or some other extenuating circumstances exist, he/she shall in writing bring the matter to the attention of the next level of authority not later than ten (10) working days after receipt of the informal decision. The higher level supervisor shall make whatever investigation he/she deems necessary and reply in writing not later than ten (10) working days after receipt of the written grievance. If the employee is still not satisfied with the decision, he/she may file a formal grievance within ten (10) working days of receipt of the higher level supervisor’s written decision. AB340 MODIFIED 628771.2 YO030-018 30 Section 10.4 Formal Grievance Procedure 1. The formal grievance procedure may be followed only after failure to resolve a problem through informal grievance adjustment. If the unit employee is not in agreement with the informal written decision reached, he/she may, within ten (10) working days of the receipt of the higher level supervisor’s written decision, file a formal grievance in writing with the Personnel Officer with a copy to the General Manager. The Personnel Officer shall make whatever investigation he/she deems necessary to allow fair consideration of the situation and shall present a written reply to the employee within ten working days after receipt of the written grievance. A copy of the reply shall be forwarded to the General Manager. 2. If the unit employee is not satisfied with the decision of the Personnel Officer, he/she may file a written appeal to the General Manager within five (5) working days after having received the written reply of the Personnel Officer. Within ten (10) working days of receipt of the written appeal, the General Manager shall make a written decision which shall be final and binding on all parties. The General Manager may conduct whatever investigation and/or meeting(s) which he/she deems appropriate. Section 10.5 General Conditions 1. The Personnel Officer shall receive and retain copies of all written materials pertaining to the grievance. AB340 MODIFIED 628771.2 YO030-018 31 2. A unit employee may represent himself/herself or at his/her own expense, select whomever he/she desires to represent him/her in the grievance procedure. 3. If a unit employee fails to proceed with a grievance within any of the time limits specified in the section, the grievance shall be deemed denied with no further basis for appeal. 4. If a District supervisor/manager below the level of the General Manager fails to reply within any of the time limits specified in this section, the grievance shall be deemed denied. The time limits for appeal of a denied grievance shall commence running either upon receipt by the grievant of a timely written grievance rejection, or absent such rejection, at the end of the supervisory reply period, where no written rejection has been provided. 5. Any of the time limits specified in this section may be extended when mutually agreed upon by all parties concerned. 6. Either the grievant, or the Personnel Officer or General Manager, may request a meeting to review the grievance prior to a decision. 7. When it is grievant or designated representative to attend a grievance meeting or hearing with management during the work day, he/she will be released without loss of pay in order to permit participation in the foregoing activities provided advance arrangements are made with the employee’s department head. AB340 MODIFIED 628771.2 YO030-018 32 ARTICLE 11. EMPLOYEE DISCIPLINE Section 11.1 Forms of Discipline The employment of every unit employee who has passed probation shall be subject to suspension, demotion or dismissal for cause. Section 11.2 Procedure 1. When a unit employee who has passed probation is to be dismissed, demoted or suspended without pay, specific written charges shall be prepared and presented by the employee’s department manager for action by the Personnel Officer. 2. The Personnel Officer shall provide such a unit employee with written notice of the proposed action, the date it will be effective, the charge(s) on which the proposal is based, and relevant written materials, written reports and documents, and notification that the employee is entitled to respond to the charges as provided below. Prior to the effective date of the proposed action, such a unit employee shall have the right to file with the Personnel Officer a written response to the charges or request the right to make an oral response. The Personnel Officer may act upon the initial written or oral presentation of the employee or may request that the employee submit a further response in writing, or permit the employee a further oral presentation. Failure of the employee to make a written response or request an oral presentation shall constitute waiver of this pre- disciplinary provision. At his/her own expense, the employee shall be entitled to AB340 MODIFIED 628771.2 YO030-018 33 be represented by counsel or other person of his/her choosing during the course of the above proceedings. 3. The Personnel Officer shall provide written notice of his/her final determination to such a unit employee. The decision of the Personnel Officer shall be immediately implemented. Section 11.3 Appeal of Disciplinary Action 1. When disciplinary action has been taken by the Personnel Officer pursuant to Section 11.2 the employee shall have the right to appeal. Appeal shall not suspend the effective date of the discipline. Failure to timely appeal by the employee or his/her representative will make the action by the Personnel Officer final and conclusive. 2. Subject to paragraph 11.3.1, such a unit employee who has been disciplined, within fifteen (15) calendar days after having been furnished with a copy of the final notice of action by the Personnel Officer may appeal to the Board of Directors by filing with the General Manager a written answer to the charges and requesting a hearing thereon. 3. In the case of suspensions of less than ten (10) working days, the Board of Directors may appoint two (2) of its members to informally hear and make recommendations concerning the appeal. No written transcript of proceedings shall be required, but any documents submitted by either side shall be included with the report of the two (2) members. The report of the two (2) members shall be submitted to the full Board and shall include a summary of the AB340 MODIFIED 628771.2 YO030-018 34 facts supporting their recommendation that the discipline be sustained, modified, or rejected. The determination of the full Board shall be final. 4. In the case of a disciplinary action other than set forth in paragraph 11.3.3, the Board of Directors shall appoint a hearing officer to conduct a hearing on appeal of any disciplinary action. 5. The hearing shall be conducted in the manner most conducive to determination of the truth, and the hearing officer shall not be bound by technical rules of evidence. 6. The hearing officer shall determine the relevancy, weight, and credibility of testimony and evidence. The hearing officer shall base his/her findings on the preponderance of evidence. 7. Each side will be permitted an opening statement and closing argument. The Personnel Officer or his/her representative shall first present his/her witnesses and evidence to sustain the charges and the unit employee will then present his/her witnesses and evidence in defense. 8. Each side will be allowed to examine and cross-examine witnesses. 9. Both the Personnel Officer and the unit employee may be represented by legal counsel. The unit employee may retain counsel or other representative, at his/her own expense. 10. The hearing officer shall, if requested by either party, subpoena witnesses and/or require production of other relevant records or relevant evidence. AB340 MODIFIED 628771.2 YO030-018 35 11. The hearing officer may, prior to or during a hearing, grant a continuance for any reason he/she believes to be important to his/her reaching a fair and proper decision. 12. The hearing officer shall prepare a recommended decision and forward it to the Board of Directors no later than thirty (30) days after the matter of appeal was taken under submission by the hearing officer. The recommended decision shall set forth which charges, if any, the hearing officer feels are sustained and the reasons therefore. 13. Such an employee or his/she representative may obtain a copy of the transcript of the hearing upon request and agreement to pay for necessary costs. 14. After receiving the recommendation of the committee of the two (2) members or the hearing officer, and after consideration of the record only, the Board of Directors may sustain or reject any or all of the charges filed against the unit employee. If the Board of Directors modifies the discipline, the Board shall, consistent with its decision, order all or part of the employee’s full compensation from the time of dismissal or suspension to be paid. 15. Such a unit employee who has been suspended or dismissed may be reinstated to his/her position as a result of a successful appeal. In the event of such reinstatement, the employee shall be entitled to his/her former status of employment. 16. Dismissal of a unit employee from the District service following the pre-disciplinary meeting at the Personnel Officer level, shall: AB340 MODIFIED 628771.2 YO030-018 36 (a) Constitute a dismissal as of the same date from all positions which the unit employee may hold in the District service. (b) Terminate the salary of the unit employee as of the effective date of his/her dismissal except that he/she shall be compensated for any unpaid salary, unused vacation, compensatory time off, and “alternative time” to his/her credit as of the date of dismissal. ARTICLE 12. JOB POSTING All openings for employment positions in the District shall be posted for at least two (2) weeks prior to the deadline for submission of applications. ARTICLE 13. MISCELLANEOUS BENEFITS Section 13.1 Safety Boot Allowance Unit employees including those assigned to Engineering who are required to wear work boots in the performance of their job, as determined by the Department Manager, shall be eligible for District-purchased boots in an amount not to exceed $200.00, provided that the boots are from a list pre-approved by the General Manager or his/her designee. The difference between $200.00 and the amount actually used may be carried over for one year and combined with a subsequent allocation for boot reimbursement. Section 13.2 Reimbursement for Certificates The following proposal shall be effective concurrent with Board of Directors approval of a Memorandum of Understanding. AB340 MODIFIED 628771.2 YO030-018 37 The District shall reimburse unit employees for sums paid to the appropriate state agencies after successfully obtaining or renewing of production or distribution certificates. In addition, the District shall provide the below indicated stipend(s) where any unit member in one of the classifications listed in Table “A” has been issued a State of California Department of Health Services Distribution, and/or Treatment, and/or Collection Certificate(s) that is above and beyond the certification required for the particular unit member’s job classification, and where the certificate(s) has been determined in the sole discretion of the General Manager to be relevant to the employee’s principle duties and which is other than a certificate(s) which is (are) a job requirement. The affected unit classifications and the description of certification that is required in order to hold each classification, is indicated in the following Table “A” chart: TABLE “A” CLASSIFICATION REQ’D TREATMENT REQ’D DISTRIBUTION PLANT OPERATOR II T2 D3 SR. PLANT OPERATOR T2 D3 MAINT. WORKER I D1 (REQUIRED TO ACHIEVE STEPS 8 AND 9 IN SALARY RANGE) MAINT. DIST. OPERATOR II D2 MAINT. DIST. OPERATOR III D3 SR. MAINT. DIST. OPERATOR D3 ENGINEERING TECH I/II CONSTRUCTION INSPECTOR D1 AB340 MODIFIED 628771.2 YO030-018 38 WATER QUALITY TECH I D1 METER READER I METER READER II D1 METER SERVICES LEAD D1 In those instances where a Table “A” unit member has a Treatment and/or Distribution, and/or Collection Certificate that is in addition to the certification required for the individual unit member’s classification, the following one-time per year certificate(s) compensation shall be distributed during the last payroll period of June of each year. In no case, shall a certificate pay distribution exceed the cumulative value of two (2) certificates. TREATMENT CERTIFICATE DISTRIBUTION CERTIFICATE COLLECTION CERTIFICATE STIPEND/ONE- TIME PER ANNUM T-1 D-1 C-1 $150.00 T-2 D-2 C-2 $175.00 T-3 D-3 C-3 $200.00 T-4 D-4 C-4 $225.00 T-5 D-5 X $250.00 Subject to certificate pay being limited to a total of two (2) certificates, each affected unit member shall be eligible to receive, one-time per year, the combined total of the stipend that relates to any of the above particular levels. For example, a unit member having been issued a T-3 certificate shall receive a $200.00 stipend. A unit member having been issued a T-3 and a D-4 shall receive a $425.00 stipend. A unit member having a T-5, D-5 and a C-4, shall receive $500.00. (Where three or more certificates have been issued, the two (2) certificates having the highest stipend shall be utilized to determine the total AB340 MODIFIED 628771.2 YO030-018 39 stipend.) (As indicated above, a stipend will only be paid for an issued certificate which is above the certification required of the unit member holding a specific classification. Thus, a Plant Operator II having been issued a T-2 and a D-3 certificate, shall receive no stipend. A Plant Operator II having been issued a T-2 certificate and a D-4 certificate shall receive a $225.00 stipend.) TABLE “B” CLASSIFICATION Mechanic I Mechanic II Mechanic III Senior Fleet Mechanic Table “B” addresses the unit classifications of Mechanic I, II and III and Senior Fleet Mechanic. Individuals within these classifications are eligible for the following certificate compensation upon being awarded specified certificates issued by the National Institute for Automotive Service Excellence (“ASE”.) It has been agreed by the parties that the following available ASE certificates shall be deemed relevant to the employee’s principal duties. Those certificates as defined by the ASE are: Automobile & Light Truck Truck Equipment Alternate Fuels Advanced Engine Performance Specialist Electronic Diesel Engine Diagnosis Specialist AB340 MODIFIED 628771.2 YO030-018 40 Medium-Heavy Truck Undercar Specialist Exhaust Systems Unlike the classifications described in Table “A” above, the classifications described in Table “B” do not require any specified certification as a condition precedent to employment. Accordingly, where a Table “B” classified employee has been issued an ASE certificate deemed by the General Manager to be relevant to the employee’s principal duties, the employee shall receive a one- time per annum stipend of $150.00 for each certificate, not to exceed two (2) certificates ($300.00) per annum. The distribution shall be made at the same time as are made distributions applicable to Table “A” classifications. Payment by the District of any Table “A” or “B” certification registration fees, per test fees, recertification fees or similar fees shall only be made following provision to the District of evidence that the employee has successfully qualified for and been awarded the pertinent certificate(s.) The one-time per annum stipend(s) for Table “A” or “B” certificates shall be paid only while a certificate remains valid. Section 13.3 Education Reimbursement The District shall provide educational reimbursement to unit employees for costs of tuition, fees, books and parking relating to educational courses taken and completed at accredited institutions at a rate not to exceed standard resident fees as charged by the California State University. Tuition shall not be granted for on-line attendance or other attendances at what are referred to as “degree mills.” For purposes of this MOU only, a “degree mill” is an organization that awards AB340 MODIFIED 628771.2 YO030-018 41 academic degrees and diplomas with substandard or no academic study and without recognition by official educational accrediting bodies. These degrees are often awarded based on vaguely construed life experience. Some such organizations claim accreditation by non-recognized/unapproved accrediting bodies set up for the purposes of providing a veneer of authenticity. Course work must be job related as determined and approved in advance by the General Manager. Proof of payment and successful completion of the course must accompany the reimbursement request on a form provided by the District. (If a licensing agency requires a minimum grade, that grade shall be the measure of “successful” course completion.) Employee shall be responsible for any tax consequences as a result of education reimbursement. If for any reason, other than having been laid off pursuant to District layoff policy, the employee separates from District employment prior to completion of one (1) calendar year from the date of distribution by the District of funds provided for herein, all such amounts distributed during that one (1) calendar year period, shall be considered a judgment due and owing to the District. The judgment amount shall be deducted from the employee’s closing check. Any remaining, non-reimbursed amount shall be paid to the District within ninety (90) calendar days of separation from District employment. Each employee receiving funds pursuant to this Section shall sign a written agreement to comply with the terms of this section as a condition precedent to receipt of any such funds. AB340 MODIFIED 628771.2 YO030-018 42 Section 13.4 Uniforms The field uniforms provided to employees may include District-issued shorts and T-shirts which may only be worn in accordance with District established safety guidelines. Additionally, the District provides a District-funded cleaning service for the above pants and shirts with name and District logo. Section 13.5 Job Description The Association hereby agrees to the implementation of the job descriptions presented as of the date of ratification of this Agreement. Section 13.6 Extended Work Accommodation In any instance where at the direction of a supervisor, an affected employee works sixteen (16) or more consecutive hours during a 24 hour period of time said employee shall be provided at the end of the sixteen (16) consecutive hours or longer assignment, with six (6) consecutive hours of non work time before being compelled to commence a regularly scheduled shift or to commence other duties on behalf of the District. In any instance where use of the six (6) consecutive hour period results in the employee being excused from scheduled hours of work, the employee shall have said hours credited as compensable hours worked. In any instance where utilization of the six (6) consecutive hour period would result in there being three (3) or less hours of scheduled work shift time remaining should the employee return to his/her work assignment, a manager shall have discretion to relieve the affected employee of the obligation to report to the District for the remainder of the scheduled hours of work. Where the manager exercises that discretion, the three (3) or less AB340 MODIFIED 628771.2 YO030-018 43 remaining hours of scheduled work shall be considered compensable hours worked. ARTICLE 14. DRUG POLICY In addition to any other District adopted drug policy, effective January 1, 1996, the Yorba Linda Water District must comply with the United States Department of Transportation regulations implementing the Federal Omnibus Transportation Employee Testing Act of 1991. Specifically, the District must comply with the regulations of the Federal Highway Administration (FHWA.) Adoption of a policy is one of the District’s obligations under the regulations, and it is the intent of the District to comply fully with both the letter and spirit of this law, as well as to continue to administer the District’s Drug Free Workplace policy, adopted in 1993. ARTICLE 15. COMPLETION OF MEET AND CONFER It is understood that this MOU represents the sole and complete understanding between the parties and shall govern their entire relationship and shall be the sole source of any rights which may be asserted hereunder and that the parties shall not be obligated to meet and confer except pursuant to their mutual consent, or with respect to any subject or matter, specifically provided for by this MOU. The parties further understand that all rights not clearly and expressly limited by this MOU are expressly reserved to the District as evidenced by the EERR, even though not enumerated in this MOU. The express provisions of this MOU constitute the only limitations upon the District’s rights to determine, implement, supplement, change, modify, or discontinue in whole or in part any AB340 MODIFIED 628771.2 YO030-018 44 term or condition of employment or adopt any policy, rule, regulation or practice as the District deems fit or appropriate (herein described as “management rights”,) provided however, that the District shall meet and confer as regards the impact of its exercise of “management rights,” and shall comply with all federal and state laws relating to employee rights, opportunities and benefits. ARTICLE 16. CONCERTED ACTIVITIES 1. Apart from and in addition to existing legal restrictions upon remedies for work stoppages, the Association hereby agrees that neither it nor its members, agents, representatives or persons acting in concert with any of them, shall incite, engage or participate in any strike, walkout, slowdown, sick-out or other work stoppage of any nature against the District whatsoever or wheresoever located, including, but not limited to disputes which are related to the subject matter contained in this MOU; disputes between the District and any other organization, persons or employees; or jurisdictional disputes. In the event of any strike, walkout, slowdown, sick-out or other work stoppage or threat thereof against the District, the Association and its officers will take all steps reasonably within their control to end or avert the same. 2. Those represented by the Association shall not authorize, engage in, encourage, sanction, recognize or assist in any strike, walkout, sick-out or other work stoppage or picket in furtherance thereof, or participate in concerted interference in violation of this provision or refuse to perform duly assigned services in violation of this provision. It is understood that any person AB340 MODIFIED 628771.2 YO030-018 45 represented by the Association found in violation of this provision will be subject to discipline, including termination, as determined appropriate by the District. ARTICLE 17. TERM OF AGREEMENT This agreement shall remain in force for the period of July 1, 2012 through June 30, 2015 by resolution of the governing board of the District. ARTICLE 18. DISTRICT GOVERNING BOARD APPROVAL It is the understanding of the District and the Association that this MOU shall have no force or effect whatsoever unless or until adopted by resolution of the governing board of the District. Following approval of the governing board, the District shall implement the terms of this MOU by appropriate resolution or other means. IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute this Memorandum of Understanding the day, month and year noted. YORBA LINDA WATER DISTRICT YORBA LINDA WATER DISTRICT EMPLOYEE’S Association ____________________ __________ ____________________ __________ Brian Vargas Date Steve Conklin Date President Acting General Manager ____________________ __________ ____________________ __________ Jennifer Hill Date Gina Knight Date Vice President Human Resources & Risk Manager ____________________ __________ Ariel Bacani Date Secretary ____________________ __________ Joann Gitmed Date AB340 MODIFIED 628771.2 YO030-018 46 Director ____________________ __________ Denise Salazar Date Director 350831.1 YO030-008 EXHIBIT A YORBA LINDA WATER DISTRICT BARGAINING UNIT EMPLOYEES ASSOCIATION SALARY RANGES AND AUTHORIZED CLASSIFICATIONS 7-1-2012 through 6-30-2015 CLASSIFICATION TITLE SALARY RANGES FLSA Accounting Assistant I BU17 NON-EX Accounting Assistant II BU21 NON-EX Construction Inspector BU24 NON-EX Customer Service Representative I BU15 NON-EX Customer Service Representative II BU17 NON-EX Customer Service Representative III BU19 NON-EX Engineering Secretary BU17 NON-EX Engineering Technician I BU20 NON-EX Engineering Technician II BU24 NON-EX Facilities Maintenance BU21 NON-EX GIS Administrator BU26 NON-EX GIS Technician BU24 NON-EX Information Systems Technician BU22 NON-EX Information Systems Technician II/Programmer BU24 NON-EX Instrumentation Technician BU25 NON-EX Maintenance Distribution Operator II BU20 NON-EX Maintenance Distribution Operator III BU23 NON-EX Maintenance Worker I BU17 NON-EX Mechanic I BU17 NON-EX Mechanic II BU21 NON-EX Mechanic III BU23 NON-EX Meter Reader I BU16 NON-EX Meter Reader II BU18 NON-EX Meter Services Lead BU23 NON-EX Operations Assistant BU19 NON-EX Plant Operator I BU17 NON-EX Plant Operator II BU23 NON-EX Sr. Fleet Mechanic BU26 NON-EX Sr. Maintenance Distribution Operator BU26 NON-EX Sr. Plant Operator BU26 NON-EX Water Quality Technician I BU20 NON-EX Water Quality Technician II BU22 NON-EX Exhibit "B" Pay Plan Bargaining Unit Employees Effective July 1st, 2012 thru June 30, 2013 Range Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 BU 10 Monthly $2,485.9539 $2,548.1027 $2,611.8053 $2,677.1004 $2,744.0280 $2,812.6287 $2,882.9444 $2,955.0180 $3,028.8934 Hourly $14.3420 $14.7006 $15.0681 $15.4448 $15.8309 $16.2267 $16.6324 $17.0482 $17.474 ' BU 11 Monthly $2,610.2516 $2,675.5079 $2,742.3956 $2,810.9555 $2,881.2294 $2,953.2601 $3,027.0916 $3,102.7689 $3,180.3381 Hourly $15.0591 $15.4356 $15.8215 $16.2171 $16.6225 $17.0380 $17.4640 $17.9006 $18.3481 BU 12 Monthly $2,740.7642 $2,809.2833 $2,879.5154 $2,951.5032 $3,025.2908 $3,100.9231 $3,178.4462 $3,257.9073 $3,339.3550 Hourly $15.8121 $16.2074 $16.6126 $17.0279 $17.4536 $17.8899 $18.3372 $18.7956 $19.2655 BU 13 Monthly $2,877.8024 $2,949.7474 $3,023.4911 $3,099.0784 $3,176.5554 $3,255.9693 $3,337.3685 $3,420.8027 $3,506.3228 Hourly $16.6027 $17.0178 $17.4432 $17.8793 $18.3263 $18.7844 $19.2540 $19.7354 $20.2288 BU 14 Monthly $3,021.6925 $3,097.2348 $3,174.6657 $3,254.0323 $3,335.3831 $3,418.7677 $3,504.2369 $3,591.8428 $3,681.6389 Hourly $17.4328 $17.8687 $18.3154 $18.7733 $19.2426 $19.7237 $20.2168 $20.7222 $21.2402 BU 15 Monthly $3,172.7771 $3,252.0966 $3,333.3990 $3,416.7339 $3,502.1523 $3,589.7061 $3,679.4488 $3,771.4350 $3,865.7208 Hourly $18.3045 $18.7621 $19.2311 $19.7119 $20.2047 $20.7098 $21.2276 $21.7583 $22.3022 BU 16 Monthly $3,331.4160 $3,414.7014 $3,500.0689 $3,587.5706 $3,677.2599 $3,769.1914 $3,863.4212 $3,960.0067 $4,059.0069 Hourly $19.2197 $19.7002 $20.1927 $20.6975 $21.2150 $21.7453 $22.2890 $22.8462 $23.4173 BU 17 Monthly $3,497.9868 $3,585.4365 $3,675.0724 $3,766.9492 $3,861.1229 $3,957.6510 $4,056.5922 $4,158.0071 $4,261.9572 Hourly $20.1807 $20.6852 $21.2023 $21.7324 $22.2757 $22.8326 $23.4034 $23.9885 $24.5882 BU 18 Monthly $3,672.88611 $3,764.7083 $3,858.82601 $3,955.29661 $4,054.17901 $4,155.53351 $4,259.42191 $4,365.90741 $4,475.0551 Hourly $21.18971 $21.7195 $22.26251 $22.81901 $23.38951 $23.97421 $24.57361 $25.18791 $25.8176 (Page 2 of 2) Exhibit B Range Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 BU 19 Monthly $3,856.5304 $3,952.9437 $4,051.7673 $4,153.0615 $4,256.8880 $4,363.3102 $4,472.3930 $4,584.2028 $4,698.8078 Hourly $22.2492 $22.8054 $23.3756 $23.9600 $24.5590 $25.1729 $25.8023 $26.4473 $27.1085 BU 20 Monthly $4,049.3570 $4,150.5909 $4,254.3556 $4,360.7145 $4,469.7324 $4,581.4757 $4,696.0126 $4,813.4129 $4,933.7482 Hourly $23.3617 $23.9457 $24.5444 $25.1580 $25.7869 $26.4316 $27.0924 $27.7697 $28.4639 BU 21 Monthly $4,251.8248 $4,358.1204 $4,467.0734 $4,578.7503 $4,693.2190 $4,810.5495 $4,930.8132 $5,054.0836 $5,180.4357 Hourly $24.5298 $25.1430 $25.7716 $26.4159 $27.0763 $27.7532 $28.4470 $29.1582 $29.8871 BU 22 Monthly $4,464.4160 $4,576.0264 $4,690.4271 $4,807.6878 $4,927.8800 $5,051.0770 $5,177.3539 $5,306.7877 $5,439.4574 Hourly $25.7562 $26.4002 $27.0602 $27.7367 $28.4301 $29.1408 $29.8693 $30.6161 $31.3815 BU 23 Monthly $4,687.6368 $4,804.8278 $4,924.9485 $5,048.0722 $5,174.2740 $5,303.6308 $5,436.2216 $5,572.1271 $5,711.4303 Hourly $27.0441 $27.7202 $28.4132 $29.1235 $29.8516 $30.5979 $31.3628 $32.1469 $32.9506 BU 24 Monthly $4,922.0187 $5,045.0691 $5,171.1959 $5,300.4758 $5,432.9877 $5,568.8124 $5,708.0327 $5,850.7335 $5,997.0018 Hourly $28.3963 $29.1062 $29.8338 $30.5797 $31.3442 $32.1278 $32.9310 $33.7542 $34.5981 BU 25 Monthly $5,168.1196 $5,297.3226 $5,429.7557 $5,565.4996 $5,704.6371 $5,847.2530 $5,993.4343 $6,143.2702 $6,296.8519 Hourly $29.8161 $30.5615 $31.3255 $32.1087 $32.9114 $33.7342 $34.5775 $35.4419 $36.3280 BU 26 Monthly $5,426.52561 $5,562.18871 $5,701.24351 $5,843.77451 $5,989.868911 $6,139.61561 $6,293.10601 $6,450.43371 $6,611.6945 Hourly $31.30691 $32.08961 $32.89181 $33.71411 $34.55691 $35.42091 $36.30641 $37.2140 $38.1444 * In the event of a keying/formula discrepancy, all pay plans (salary matrices)are calculated @ 2.5% between each step and 5.0% between each range. Exhibit "C" Pay Plan Bargaining Unit Employees Effective July 1st, 2013 thru June 30, 2014 Range Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 BU 10 Monthly $2,560.5325 $2,624.5458 $2,690.1595 $2,757.4134 $2,826.3488 $2,897.0075 $2,969.4327 $3,043.6685 $3,119.7602 Hourly $14.7723 $15.1416 $15.5202 $15.9082 $16.3059 $16.7135 $17.1313 $17.5596 $17.9986 BU 11 Monthly $2,688.5591 $2,755.7731 $2,824.6674 $2,895.2841 $2,967.6662 $3,041.8579 $3,117.9043 $3,195.8519 $3,275.7482 Hourly $15.5109 $15.8987 $16.2962 $16.7036 $17.1212 $17.5492 $17.9879 $18.4376 $18.8985 BU 12 Monthly $2,822.9871 $2,893.5618 $2,965.9008 $3,040.0483 $3,116.0495 $3,193.9508 $3,273.7995 $3,355.6445 $3,439.5356 Hourly $16.2865 $16.6936 $17.1110 $17.5387 $17.9772 $18.4266 $18.8873 $19.3595 $19.8435 BU 13 Monthly $2,964.1364 $3,038.2398 $3,114.1958 $3,192.0507 $3,271.8520 $3,353.6483 $3,437.4895 $3,523.4268 $3,611.5124 Hourly $17.1008 $17.5283 $17.9665 $18.4157 $18.8761 $19.3480 $19.8317 $20.3275 $20.8356 BU 14 Monthly $3,112.3433 $3,190.1518 $3,269.9056 $3,351.6533 $3,435.4446 $3,521.3307 $3,609.3640 $3,699.5981 $3,792.0880 Hourly $17.9558 $18.4047 $18.8648 $19.3365 $19.8199 $20.3154 $20.8233 $21.3438 $21.8774 BU 15 Monthly $3,267.9604 $3,349.6594 $3,433.4009 $3,519.2359 $3,607.2168 $3,697.3973 $3,789.8322 $3,884.5780 $3,981.6924 Hourly $18.8536 $19.3250 $19.8081 $20.3033 $20.8109 $21.3311 $21.8644 $22.4110 $22.9713 BU 16 Monthly $3,431.3584 $3,517.1424 $3,605.0710 $3,695.1977 $3,787.5777 $3,882.2671 $3,979.3238 $4,078.8069 $4,180.7771 Hourly $19.7963 $20.2912 $20.7985 $21.3184 $21.8514 $22.3977 $22.9576 $23.5316 $24.1190 BU 17 Monthly $3,602.9264 $3,692.9995 $3,785.3245 $3,879.9576 $3,976.9566 $4,076.3805 $4,178.2900 $4,282.7472 $4,389.8159 Hourly $20.7861 $21.3058 $21.8384 $22.3844 $22.9440 $23.5176 $24.1055 $24.7082 $25.3259 BU 18 Monthly $3,783.07271 $3,877.6495 $3,974.59071 $4,073.95551 $4,175.80441 $4,280.19951 $4,387.20451 $4,496.88461 $4,609.3067 Hourly $21.8254 $22.3711 $22.9303 $23.5036 $24.0912 $24.6935 $25.3108 $25.9436 $26.5922 (Page 2 of 2) Exhibit C Range Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 BU 19 Monthly $3,972.2263 $4,071.5320 $4,173.3203 $4,277.6533 $4,384.5946 $4,494.2095 $4,606.5647 $4,721.7288 $4,839.7721 Hourly $22.9167 $23.4896 $24.0768 $24.6788 $25.2957 $25.9281 $26.5763 $27.2407 $27.9218 BU 20 Monthly $4,170.8376 $4,275.1086 $4,381.9863 $4,491.5359 $4,603.8243 $4,718.9200 $4,836.8929 $4,957.8153 $5,081.7607 Hourly $24.0625 $24.6641 $25.2807 $25.9127 $26.5605 $27.2245 $27.9052 $28.6028 $29.3178 BU 21 Monthly $4,379.3795 $4,488.8640 $4,601.0856 $4,716.1127 $4,834.0156 $4,954.8659 $5,078.7376 $5,205.7060 $5,335.8487 Hourly $25.2657 $25.8973 $26.5447 $27.2083 $27.8886 $28.5858 $29.3004 $30.0329 $30.7837 BU 22 Monthly $4,598.3485 $4,713.3072 $4,831.1399 $4,951.9184 $5,075.7163 $5,202.6092 $5,332.6745 $5,465.9913 $5,602.6411 Hourly $26.5289 $27.1922 $27.8720 $28.5688 $29.2830 $30.0151 $30.7654 $31.5346 $32.3229 BU 23 Monthly $4,828.2659 $4,948.9726 $5,072.6969 $5,199.5143 $5,329.5022 $5,462.7397 $5,599.3082 $5,739.2909 $5,882.7732 Hourly $27.8554 $28.5518 $29.2656 $29.9972 $30.7471 $31.5158 $32.3037 $33.1113 $33.9391 BU 24 Monthly $5,069.6792 $5,196.4212 $5,326.3317 $5,459.4900 $5,595.9773 $5,735.8767 $5,879.2736 $6,026.2555 $6,176.9118 Hourly $29.2481 $29.9794 $30.7288 $31.4971 $32.2845 $33.0916 $33.9189 $34.7669 $35.6360 BU 25 Monthly $5,323.1632 $5,456.2422 $5,592.6483 $5,732.4645 $5,875.7761 $6,022.6705 $6,173.2373 $6,327.5682 $6,485.7574 Hourly $30.7106 $31.4783 $32.2653 $33.0719 $33.8987 $34.7462 $35.6148 $36.5052 $37.4178 BU 26 Monthly $5,589.32131 $5,729.05441 $5,872.28071 $6,019.08771 $6,169.56491 $6,323.80411 $6,481.89921 $6,643.94661 $6,810.0453 Hourly $32.24611 $33.05221 $33.87851 $34.72551 $35.59361 $36.48351 $37.39561 $38.3305 $39.2881 * In the event of a keying/formula discrepancy, all pay plans (salary matrices)are calculated @ 2.5% between each step and 5.0% between each range. Exhibit "D" Pay Plan Bargaining Unit Employees Effective July 1st, 2014 thru June 30, 2015 Range Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 BU 10 Monthly $2,637.3485 $2,703.2822 $2,770.8643 $2,840.1359 $2,911.1393 $2,983.9178 $3,058.5157 $3,134.9786 $3,213.3531 Hourly $15.2155 $15.5959 $15.9858 $16.3854 $16.7950 $17.2149 $17.6453 $18.0864 $18.5386 BU 11 Monthly $2,769.2159 $2,838.4463 $2,909.4075 $2,982.1427 $3,056.6962 $3,133.1136 $3,211.4415 $3,291.7275 $3,374.0207 Hourly $15.9762 $16.3757 $16.7850 $17.2047 $17.6348 $18.0757 $18.5275 $18.9907 $19.4655 BU 12 Monthly $2,907.6767 $2,980.3686 $3,054.8779 $3,131.2498 $3,209.5310 $3,289.7693 $3,372.0136 $3,456.3139 $3,542.7217 Hourly $16.7751 $17.1944 $17.6243 $18.0649 $18.5165 $18.9794 $19.4539 $19.9403 $20.4388 BU 13 Monthly $3,053.0606 $3,129.3871 $3,207.6217 $3,287.8123 $3,370.0076 $3,454.2578 $3,540.6142 $3,629.1296 $3,719.8578 Hourly $17.6138 $18.0542 $18.5055 $18.9681 $19.4424 $19.9284 $20.4266 $20.9373 $21.4607 BU 14 Monthly $3,205.7136 $3,285.8564 $3,368.0028 $3,452.2029 $3,538.5080 $3,626.9707 $3,717.6449 $3,810.5861 $3,905.8507 Hourly $18.4945 $18.9569 $19.4308 $19.9166 $20.4145 $20.9248 $21.4480 $21.9842 $22.5338 BU 15 Monthly $3,365.9993 $3,450.1492 $3,536.4030 $3,624.8131 $3,715.4334 $3,808.3192 $3,903.5272 $4,001.1154 $4,101.1433 Hourly $19.4192 $19.9047 $20.4023 $20.9124 $21.4352 $21.9711 $22.5203 $23.0834 $23.6604 BU 16 Monthly $3,534.2992 $3,622.6567 $3,713.2231 $3,806.0537 $3,901.2050 $3,998.7352 $4,098.7036 $4,201.1711 $4,306.2004 Hourly $20.3902 $20.8999 $21.4224 $21.9580 $22.5070 $23.0696 $23.6464 $24.2375 $24.8435 BU 17 Monthly $3,711.0142 $3,803.7895 $3,898.8843 $3,996.3564 $4,096.2653 $4,198.6719 $4,303.6387 $4,411.2297 $4,521.5104 Hourly $21.4097 $21.9449 $22.4936 $23.0559 $23.6323 $24.2231 $24.8287 $25.4494 $26.0856 BU 18 Monthly $3,896.56491 $3,993.9790 $4,093.82851 $4,196.17421 $4,301.07861 $4,408.60551 $4,518.82071 $4,631.79121 $4,747.5860 Hourly $22.48021 $23.0422 $23.61821 $24.20871 $24.81391 $25.43431 $26.07011 $26.72191 $27.389 (Page 2 of 2) Exhibit D Range Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 BU 19 Monthly $4,091.3931 $4,193.6780 $4,298.5199 $4,405.9829 $4,516.1325 $4,629.0358 $4,744.7617 $4,863.3807 $4,984.9653 Hourly $23.6042 $24.1943 $24.7992 $25.4191 $26.0546 $26.7060 $27.3736 $28.0580 $28.7594 BU 20 Monthly $4,295.9628 $4,403.3619 $4,513.4459 $4,626.2821 $4,741.9391 $4,860.4876 $4,981.9998 $5,106.5498 $5,234.2135 Hourly $24.7844 $25.4040 $26.0391 $26.6901 $27.3573 $28.0413 $28.7423 $29.4609 $30.1974 BU 21 Monthly $4,510.7609 $4,623.5300 $4,739.1182 $4,857.5962 $4,979.0361 $5,103.5120 $5,231.0998 $5,361.8773 $5,495.9242 Hourly $26.0236 $26.6742 $27.3411 $28.0246 $28.7252 $29.4433 $30.1794 $30.9339 $31.7073 BU 22 Monthly $4,736.2990 $4,854.7065 $4,976.0741 $5,100.4760 $5,227.9879 $5,358.6876 $5,492.6548 $5,629.9711 $5,770.7204 Hourly $27.3248 $28.0079 $28.7081 $29.4258 $30.1615 $30.9155 $31.6884 $32.4806 $33.2926 BU 23 Monthly $4,973.1139 $5,097.4418 $5,224.8778 $5,355.4998 $5,489.3873 $5,626.6220 $5,767.2875 $5,911.4697 $6,059.2564 Hourly $28.6910 $29.4083 $30.1435 $30.8971 $31.6695 $32.4613 $33.2728 $34.1046 $34.9572 BU 24 Monthly $5,221.7696 $5,352.3139 $5,486.1217 $5,623.2748 $5,763.8566 $5,907.9530 $6,055.6519 $6,207.0432 $6,362.2193 Hourly $30.1256 $30.8787 $31.6507 $32.4420 $33.2530 $34.0843 $34.9365 $35.8099 $36.7051 BU 25 Monthly $5,482.8581 $5,619.9296 $5,760.4278 $5,904.4385 $6,052.0495 $6,203.3507 $6,358.4345 $6,517.3953 $6,680.3302 Hourly $31.6319 $32.4227 $33.2332 $34.0641 $34.9157 $35.7886 $36.6833 $37.6004 $38.5404 BU 26 Monthly $5,757.00101 $5,900.92601 $6,048.44921 $6,199.66041 $6,354.651911 $6,513.51821 $6,676.35621 $6,843.26511 $7,014.3467 Hourly $33.21351 $34.04381 $34.89491 $35.76731 $36.66151 $37.57801 $38.51741 $39.4804 $40.4674 * In the event of a keying/formula discrepancy, all pay plans (salary matrices)are calculated @ 2.5% between each step and 5.0% between each range. 350310.1 YO030-008 EXHIBIT E 2012-2015 HOLIDAY SCHEDULE 1. Independence Day 2. Labor Day 3. Veterans Day 4. Thanksgiving 5. Day after Thanksgiving 6. Christmas Eve 7. Christmas Day 8. New Years Day 9. Presidents Day 10. Memorial Day 11. Employee Chosen Floater ITEM NO. 10.3 AGENDA REPORT Meeting Date: October 11, 2012 To:Board of Directors From:Steve Conklin, Acting General Manager Presented By:Stephen Parker, Finance Manager Dept:Finance Reviewed by Legal:Yes Prepared By:Stephen Parker, Finance Manager Subject:Authorization to Invest in Local Agency Investment Fund STAFF RECOMMENDATION: That the Board of Directors approve Resolution No. 12-23 Authorizing Investment of Monies in the Local Agency Investment Fund and Rescinding Resolution No. 11-14. COMMITTEE RECOMMENDATION: The Finance-Accounting Committee discussed this item at its meeting held September 26, 2012 and supports staff's recommendation. DISCUSSION: The District currently invests a portion of its reserves in the Local Agency Investment Fund (LAIF). On June 23, 2011, the Board approved a resolution authorizing the General Manager, Finance Director and Senior Accountant or their successors in office to deposit or withdraw monies in LAIF. On July 1, 2011, the Finance Director position became the Finance Manager. Even though it is the same employee, LAIF requires a new resolution for a change in title. Therefore, staff is bringing forward the same resolution with the current titles of the three officers that were previously authorized to deposit or withdraw monies in LAIF. PRIOR RELEVANT BOARD ACTION(S): On June 23, 2011, the Board approved Resolution No. 11-14 Authorizing Investment of Monies in the Local Agency Investment Fund. ATTACHMENTS: Name:Description:Type: Resolution_No._12- 23_Authorizing_Investment_of_Monies_in_LAIF.doc Resolution No. 12-23 LAIF Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 RK/GM 5-0 Roll Call Resolution No. 12-23 Authorizing Investment of Monies in the Local Area Investment Fund 1 RESOLUTION NO. 12-23 RESOLUTION OF THE BOARD OF DIRECTORS OF YORBA LINDA WATER AUTHORIZING INVESTMENT OF MONIES IN THE LOCAL AGENCY INVESTMENT FUND AND RESCINDING RESOLUTION NO. 11-14. WHEREAS, Pursuant to Chapter 730 of the statutes of 1976 Section 16429.1 was added to the California Government Code to create a Local Agency Investment Fund in the State Treasury for the deposit of money of a local agency for purposes of investment by the State Treasurer; and WHEREAS, the Board of Directors does hereby find that the deposit and withdrawal of money in the Local Agency Investment Fund in accordance with the provisions of Section 16429.1 of the Government Code for the purpose of investment as stated therein as in the best interests of the Yorba Linda Water District; and WHEREAS, the District’s current investment policy approved December 2011 authorizes investments with the Local Agency Investment Fund. NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby authorize the deposit and withdrawal of Yorba Linda Water District monies in the Local Agency Investment Fund in the State Treasury in accordance with the provisions of Section 16429.1 of Government Code for the purpose of investment as stated therein, and verification by the State Treasurer’s Office of all banking information provided in that regard. BE IT FURTHER RESOLVED, that the following Yorba Linda Water District officers or their successors in office shall be authorized to order the deposit or withdrawal of monies in the Local Agency Investment Fund: Steven R. Conklin Stephen Parker Delia Lugo (NAME) (NAME) (NAME) Acting General Manager Finance Manager Senior Accountant (TITLE) (TITLE) (TITLE) _____________________ ____________________ ____________________ (SIGNATURE) (SIGNATURE) (SIGNATURE) Resolution No. 12-23 Authorizing Investment of Monies in the Local Area Investment Fund 2 BE IT FURTHER RESOLVED, that Resolution No. 11-14 is hereby rescinded effective October 11, 2012. PASSED AND ADOPTED this 11th day of October 2012 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Phil Hawkins, President Yorba Linda Water District ATTEST: Annie Alexander, Assistant Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. Kidman Law, LLP ITEM NO. 10.4 AGENDA REPORT Meeting Date: October 11, 2012 To:Board of Directors From:Steve Conklin, Acting General Manager Presented By:Stephen Parker, Finance Manager Dept:Finance Reviewed by Legal:Yes Prepared By:Stephen Parker, Finance Manager Subject:Authorized Officers for Investments Held at Pershing STAFF RECOMMENDATION: That the Board of Directors approve Resolution No. 12-24 Authorizing the Acting General Manager and Finance Manager to Act on Behalf of the District Relating to District Investments Held at Pershing LLC. COMMITTEE RECOMMENDATION: The Finance-Accounting Committee discussed this item at its meeting held September 26, 2012 and supports staff recommendation. DISCUSSION: In July 2012, staff completed the process of vetting First Empire Securities as an approved broker/dealer with the District. First Empire Securities has an agreement with Pershing LLC where the District can choose to have investments purchased through First Empire be held at Pershing at no cost to the District. First Empire picks up the custodial fees Pershing charges as an incentive for governments to use First Empire as a broker/dealer. Pershing was founded in 1939 and was purchased by the Bank of New York in 2003. Pershing is a global leader as a safekeeping agent, and has more customers who clear with them than any other firm. They service more than 1,500 institutional, high net-worth, and retail financial institutions and independent registered investment advisors. Pershing has approximately $1.01 trillion in global client assets, and their parent company, BNY Mellon, has $27.1 trillion in assets under custody and administration. All investments staff would consider purchasing through either currently approved broker/dealers - First Empire Securities and Wells Fargo Institutional Securities - or any broker/dealers that maybe be approved in the future are insured by the Federal Deposit Insurance Corporation (up to $250,000 per institution). Also, Pershing is a member of the Securities Investor Protector Corporation (SIPC). As a result, potential District assets held in custody by Pershing are protected by SIPC, up to $500,000 in value, including $250,000 for claims for uninvested cash awaiting reinvestment (all securities registered in the District's name at a failed brokerage firm would go back to the District). In addition, Pershing provides coverage in excess of SIPC from Lloyd's of London in conjunction with other insurers, which provides a per-client protection for assets held in custody by Pershing of $1.9 million for cash awaiting reinvestment. In order to utilize Pershing as a custodian of investments for no charge to the District, Pershing needs the attached resolution to be approved by an officer of the District. The resolution names the people authorized to act on behalf of the District relating to District investments held at Pershing. In the District's current investment policy approved December 2011, the Board authorizes the District's Treasurer to invest funds of the District. Staff recommends adding the Acting General Manager to the resolution as a back-up should the Treasurer not be available for an extended period of time. PRIOR RELEVANT BOARD ACTION(S): On December 22, 2011, the Board adopted the Public Funds Investment Policy in Resolution 11-24. ATTACHMENTS: Name:Description:Type: Resolution_No_12- 24_Authorized_Officers_for_Investments_Held_at_Pershing.doc Resolution No. 12-24 Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 RC/RK 5-0 Roll Call Resolution No. 12-24 Authorized Officers for Investments Held at Pershing RESOLUTION NO. 12-24 RESOLUTION OF THE BOARD OF DIRECTORS OF YORBA LINDA WATER DISTRICT AUTHORIZING THE ACTING GENERAL MANAGER AND FINANCE MANAGER TO ACT ON BEHALF OF THE DISTRICT RELATING TO DISTRICT INVESTMENTS HELD AT PERSHING LLC WHEREAS, in July 2012, District staff completed the process of vetting Matthew D'Avanzo, Senior Vice-President - Fixed Income Strategies at First Empire Securities (First Empire) as a broker/dealer; WHEREAS, First Empire has an agreement with Pershing LLC (Pershing) where the District can choose to have investments purchased through First Empire be held at Pershing at no cost to the District; WHEREAS, in order to utilize Pershing as a custodian of investments at no charge to the District, Pershing requires that a resolution be adopted authorizing people to act on behalf of the District relating to District investments held at Pershing; and WHEREAS, the District's current investment policy approved December 2011 authorizes the District’s Treasurer to invest funds of the District and the Board of Directors desires adding the Acting General Manager as a back- up should the Treasurer not be available for an extended period of time. NOW, THEREFORE, THE BOARD OF DIRECTORS HEREBY RESOLVES, that each and any of the following: Steven R. Conklin, Acting General Manager, and Stephen Parker, Finance Manager, each of whom holds the office indicated, is authorized to act on behalf of the Yorba Linda Water District to buy, sell, assign, loan, borrow, endorse for transfer, transfer and receive stocks, bonds, securities, money and other assets now or hereafter registered in [INTENTIONALLY BLANK] Resolution No. 12-24 Authorized Officers for Investments Held at Pershing the name of or held for Yorba Linda Water District at Pershing LLC. PASSED AND ADOPTED this 11th day of October 2012 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Phil Hawkins, President Yorba Linda Water District ATTEST: Annie Alexander, Assistant Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. Kidman Law, LLP ITEM NO. 10.5 AGENDA REPORT Meeting Date: October 11, 2012 To:Board of Directors From:Steve Conklin, Acting General Manager Presented By:Stephen Parker, Finance Manager Dept:Finance Reviewed by Legal:Yes Prepared By:Stephen Parker, Finance Manager Subject:Adopting Water Development and Customer Service Fees SUMMARY: In conjunction with the recently adopted Elective Meter Resizing Policy, the Water Development and Customer Service Fees schedule needs to be revised in order to reflect fees referred to in the approved policy. STAFF RECOMMENDATION: That the Board of Directors approve Resolution No. 12-25 Adopting Water Development and Customer Service Fees and Rescinding Resolution No. 12-06. COMMITTEE RECOMMENDATION: The Finance-Accounting Committee discussed this item at its meeting held September 26, 2012, and supports staff recommendation. DISCUSSION: On September 6, 2012, the Board approved a Meter Resizing Policy. In conjunction with that policy, the costs of certain up-sizing or down-sizing of meters was mentioned. Those costs are not currently identified in the District's water development and customer service fee schedule. Therefore, a revised resolution identifying the updated fees is being brought to the Board. The recommended changes in the revised resolution from the one the Board adopted on March 8, 2012 include: Adjustment of Section 1, to include costs of electively up-sizing and down-sizing meters. Inclusion in Section 1 of the 3/4" meter size, which was erroneously excluded in the March 8, 2012 resolution. Deletion of Section 5, which referred to Section 5.5 of the Rules and Regulations for Water Service, also adopted on March 8, 2012. Section 5.5 of the Rules and Regulations for Water Service specifically discusses changes in meter sizes and the reference is unnecessary as the fees will be addressed in Section 1 of the attached Development and Customer Service Fees schedule. In addition, there have been two changes to the resolution since it was discussed with the Finance- Accounting Committee. Those changes, both of which were discussed with legal counsel, are: Per the Finance-Accounting Committee's recommendation, clarifying language was added that indicates a customer desiring to change their meter size would not be responsible for the meter cost if it was scheduled for replacement. This language is found in Section 1D. Subsequent to the committee meeting, staff identified and is recommending for correction a fee that does not agree with our current practice. The Late Payment Fee in Section 4A used to be $10, but in practice, the District has charged a fee of 10% of past due balances, with a maximum fee of $10. This ensures that a customer who pays a $10 water bill late is assessed only a $1 late fee as opposed to a $10 late fee. STRATEGIC PLAN: FR 1-C: Revise the Water and Sewer Rules and Regulations and Evaluate Fee Schedules Regularly for Proper Cost of Service Coverage PRIOR RELEVANT BOARD ACTION(S): On March 8, 2012 the Board approved Resolution No. 12-06 Adopting the Water Development and Customer Service Fees. ATTACHMENTS: Name:Description:Type: Resolution_12- 25_Adopting_Revised_Water_Development_and_Customer_Service_Fees.docx Resolution No. 12-25 Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 RK/RC 5-0 Roll Call Resolution No. 12-25 Adopting the Water Development and Customer Service Fees 1 RESOLUTION NO. 12-25 RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT ADOPTING THE WATER DEVELOPMENT AND CUSTOMER SERVICE FEES AND RESCINDING RESOLUTION 12-06 WHEREAS, the Yorba Linda Water District Rules and Regulations for Rendition of Water Service include a provision that development fees and customer service charges shall be adopted by separate Resolution entitled Adopting Water Development and Customer Service Fees; and WHEREAS, the Board of Directors of the Yorba Linda Water District have, from time to time, adopted Ordinances and Resolutions to change the Water Development Fees and Customer Service fees for services provided by the District; and WHEREAS, the fees collected pursuant to this Resolution shall be used to finance costs necessitated by the services provided by the District. NOW THEREFORE, BE IT RESOLVED by the Board of Directors of the Yorba Linda Water District to adopt Water Development and Customer Service Fees as follows: Section 1. Fees identified in Sections 3.1 and 5.5 of the Rules and Regulations for Water Service shall be as follows: A. Elective Meter Resizing Up to 2 Inches (Labor Plus New Meter Costs) 5/8 Inch to 3/4 Inch: $405.00 Each Meter 3/4 Inch to 1 Inch: $570.00 Each Meter 1 Inch to 1 ½ Inch: $885.00 Each Meter 1 ½ Inch to 2 Inch: $1,100.00 Each Meter 1 Inch to 3/4 Inch: $405.00 Each Meter 1 ½ Inch to 1 Inch: $700.00 Each Meter 2 Inch to 1 ½ Inch: $950.00 Each Meter B. Elective Meters Resizing of Meters That Are Larger than 2 Inches Actual Costs C. Temporary Meters $1,000.00 Deposit Requested Move to a New Location $70.00 Per Occurrence Unauthorized Movement $190.00 Per Occurrence Resolution No. 12-25 Adopting the Water Development and Customer Service Fees 2 D. Discount of Meter Costs The cost to the customer for the new meter is based on the age of the existing meter, and will be discounted as follows: Age of Existing Meter Discount on New Meter 0- 11 years old: 0% Discount 11-12 years old: 10% Discount 12-13 years old: 20% Discount 13-14 years old: 30% Discount 14-15 years old: 40% Discount 15-16 years old: 50% Discount 16-17 years old: 60% Discount 17-18 years old: 70% Discount 18-19 years old: 80% Discount 19-20 years old: 90% Discount 20+ years old: 100% Discount Section 2. Fees identified in Section 3.2 of the Rules and Regulations for Water Service shall be as follows: A. Administrative Fee $1,218.00 Per Application B. Plan Check Fee Number of Connections 1-5 $609.00 Flat Rate 6-10 $913.00 Flat Rate 11-20 $1,319.00 Flat Rate 21-40 $1,928.00 Flat Rate 41-60 $2,537.00 Flat Rate 61-80 $3,298.00 Flat Rate 81-99 $4,059.00 Flat Rate 100 and Up $5,581.00 Flat Rate C. Inspection Fee Number of Connections 1-10 $1,241.00 Per Connection 11-20 $697.00 Per Connection 21-30 $485.00 Per Connection 31-40 $390.00 Per Connection 41-50 $331.00 Per Connection 51 and Up $295.00 Per Connection D. Records and Billing Fee $156.00 Per Connection E. Single Service Fee $638.00 Per Permit Resolution No. 12-25 Adopting the Water Development and Customer Service Fees 3 Section 3. Fees identified in Section 3.5 of the Rules and Regulations for Water Service shall be as follows: A. Temporary Untreated Water Fee $873.00 Per Acre-foot Section 4. Fees identified in Section 3.9 of the Rules and Regulations for Water Service shall be as follows: A. Late Payment Fee 10% Per Occurrence (on past due balance) ($10.00 Maximum) B. Notice of Discontinuance $10.00 Per Occurrence C. Shut-off Due to Non-Payment $40.00 Per Occurrence D. Re-establishment of Service $40.00 Per Occurrence E. Callouts After Regular Hours $155.00 Per Occurrence F. Tampered Locks: Residential $80.00 Per Occurrence Commercial $190.00 Per Occurence G. Meter Removal $80.00 Per Occurrence H. Meter Replacement $80.00 Per Occurrence (Over/Improper Use) Plus Labor & Material I. Change of Meter Location: Residential Actual Costs Per Occurrence Commercial $70 Per Occurrence J. Meter Testing: At the Source/YLWD $80 Per Occurrence Independent Laboratory Actual Costs Per Occurrence K. Residential Customer Deposit: Potential of Risk: “Green” $0.00 Per Meter Potential of Risk: “Yellow” $125.00 Per Meter Potential of Risk: “Red” $225.00 Per Meter L. Commercial Customer Deposit: 1 ½ Inch Meter & Below $450.00 Per Meter 2 & 3 Inch Meter $750.00 Per Meter 4 Inch Meter & Larger $2,500.00 Per Meter Resolution No. 12-25 Adopting the Water Development and Customer Service Fees 4 M. Autopay/NSF Charge $25.00 Per Occurrence N. New Account Set Up Fee $25.00 Per Occurrence O. GIS Data Conversion Fee $100.00 Per Sheet P. Copying Charges $0.25 Per Copy Q. Fax Charges $0.75 Per Page R. Mailing Charges Actual Costs S. Shipping Charges Actual Costs Section 5. Fees identified in Section 6.5 of the Rules and Regulations for Water Service shall be as follows: A. Backflow Device Monitoring Fee $28.00 Per Device Section 6. The fees adopted herein shall take effect on October 15, 2012 and Resolution No. 12-06 is hereby rescinded on October 15, 2012. PASSED AND ADOPTED this 11th day of October 2012 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Phil Hawkins, President Yorba Linda Water District ATTEST: Annie Alexander, Assistant Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. Kidman Law, LLP ITEM NO. 10.6 AGENDA REPORT Meeting Date: October 11, 2012 To:Board of Directors From:Steve Conklin, Acting General Manager Presented By:Stephen Parker, Finance Manager Dept:Finance Prepared By:Stephen Parker, Finance Manager Subject:Audit Reports for Fiscal Year 2011/12 STAFF RECOMMENDATION: That the Board of Directors receive and file the FY 2011/12 Comprehensive Annual Financial Report, the Report on Internal Control and the Communication to Those In Governance Letter. COMMITTEE RECOMMENDATION: The Finance-Accounting Committee discussed this item at its meeting held September 26, 2012 and supports staff's recommendation. DISCUSSION: Staff is pleased to present the Board of Directors with Yorba Linda Water District's Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30, 2012. Staff will submit the report for the Certificate in Achievement for Excellence in Financial Reporting award from the Government Finance Officers Association. Staff is expectant that this year's CAFR will merit this highest level of recognition, just as last years' CAFR did. White Nelson Diehl Evans LLP, the District's external auditors, have completed their audit of the Yorba Linda Water District for the fiscal year ending June 30, 2012, and have rendered an unqualified (clean) opinion in the attached CAFR. They identified in the attached Report on Internal Control, internal control findings that rose to the level of a significant deficiency, and have included management's response to those comments. Lastly, they have reported required disclosures to the Finance-Accounting Committee in the Communication To Those In Governance. STRATEGIC PLAN: FR 1-G: Continue to Improve Communications of the Districts Financial Information to the Board of Directors, Member Agencies, Management, and the Financial Community ATTACHMENTS: Name:Description:Type: YLWD_FY_11.12_CAFR.pdf FY 11/12 Comprehensive Annual Financial Report Backup Material YLWD_FY_11.12_GAS.pdf FY 11/12 Report on Internal Control Backup Material YLWD_FY_11.12_ACL.pdf FY 11/12 Communication to Those In Governance Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 RC/RK 5-0 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2012 Yorba Linda, California Our Mission “Yorba Linda Water District will provide reliable, high quality water and sewer services in an environmentally responsible manner at the most economical cost to our customers.” Our Vision “Yorba Linda Water District will become the premier self-sufficient source for reliable water, sewer and related services in the communities it serves.” YORBA LINDA WATER DISTRICT of Yorba Linda, California Comprehensive Annual Financial Report WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Prepared by: The Yorba Linda Water District Finance Department Stephen Parker, CPA – Finance Manager Delia Lugo, Senior Accountant Joann Gitmed, Accounting Assistant II Maria Trujillo, Accounting Assistant I and Cindy Botts, Management Analyst This page intentionally left blank YORBA LINDA WATER DISTRICT TABLE OF CONTENTS For the year ended June 30, 2012 Page Number INTRODUCTORY SECTION: Letter of Transmittal i Board of Directors and Executive Staff xi Organization Chart xii District Boundaries xiii Certificate of Achievement for Excellence in Financial Reporting xiv 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: 45 Other Post-Employment Benefit Plan - Schedule of Funding Progress 46 Supplementary Information: 47 Combining Schedule of Net Assets 48 Combining Schedule of Revenues, Expenses and Changes in Net Assets 50 Combining Schedule of Cash Flows 51 Schedule of Operating Expenses by Cost Center and Nature of Expenses for Water and Sewer 53 Schedule of Capital Assets 54 YORBA LINDA WATER DISTRICT TABLE OF CONTENTS (CONTINUED) For the year ended June 30, 2012 Page Number STATISTICAL SECTION: 55 Description of Statistical Section 57 Financial Trends: Changes in Net Assets 58 Revenue Capacity: Number of Connections 60 Ten Largest Customers 61 Debt Capacity: Ratio of Outstanding Debt 62 Debt Coverage 63 Demographic and Economic Information: Demographics 64 Ten Largest Employers 65 Operating Information: Number of Employees 66 Operating and Capacity Indicators 67 INTRODUCTORY SECTION This page intentionally left blank i September 24, 2012 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, 2012. 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 opinion issued by the independent audit firm White, Nelson, Diehl, Evans LLP. The independent auditor’s report is located at the front of the financial section of this document. 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, 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 its benefits, the District’s 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. Management asserts that to the best of our knowledge and belief this financial report is complete and reliable in all material aspects. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Yorba Linda Water District for its comprehensive annual financial report for the fiscal year ended June 30, 2011. In order to be awarded a Certificate of Achievement, a governmental entity must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. ii A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program requirements and we are submitting it to the GFOA to determine its eligibility for certificate again this year. 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 provided 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 72,500 and currently provides water service through approximately 23,950 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 FY 2010/11 the District provided 19,280 acre- feet of water to its customers. The District’s service area is known for having larger than average residential lots and a network of horse trails spanning over 100 miles in length. In 2005, CNN ranked the City of Yorba Linda as 21st 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. iii 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 2013 because of the ongoing financial crisis and the somewhat distressed housing market. District expenses have increased approximately $500,000 per year over the past four fiscal years, with the fiscal year 2012/13 budget expected to increase an additional $300,000. A primary factor of the increase in these expenses is the cost of water YLWD pays to the Municipal Water District of Orange County (MWDOC) for import water and assessments. MWDOC’s cost is primarily based on the cost of water they must pay to the Metropolitan Water District of Southern California (MWD). Impacting the fiscal year 2011/12 budget was a 7.5% rate increase from MWD, effective January 1, 2012. An additional average 5% rate increase (6.7% actual for YLWD) was also adopted and will take effect January 1, 2013. These rate increases are part of an overall 37% rate increase since January 1, 2009. As the cost of import water has continued to increase, the cost of groundwater, purchased from the Orange County Water District (OCWD) has kept pace. In addition, due to the continued economic downturn, cooler weather and unusual precipitation patterns, with rain occurring late in the year, the District sold less water than anticipated for FY 2011/12. This amounts to a decrease in water sales revenue of $2.8 million. As over the past three fiscal years the District has averaged annual sales of 19,100 acre-feet, the District has budgeted for 19,000 acre-feet of water sales for FY 2012/13. The District is also pursuing annexation of the remaining 26% of its service area into OCWD. This will allow the District to pump the maximum allowable volume each year, at a lower cost than purchasing the same amount of import (MWD) water. Had the District been able to access the entirety of OCWD’s Basin Production Percentage (BPP) for the fiscal year 2011/12, the District would have been able to lower its variable water costs by approximately $1.0 million. As variable water costs comprise approximately 53% of the District’s operating expenses, ensuring these costs are held as low as possible is a top priority each and every fiscal year. California’s water supply continues to be a concern due to projected population increases, cyclical drought conditions, and environmental and regulatory restrictions that threaten the State’s water supply and conveyance system through the Sacramento- San Joaquin Delta—all of which lead to increasing supply costs. 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. iv Mission/Vision Statement and Major Initiatives The activities of the Board and staff of the District are driven by its Mission Statement: “Yorba Linda Water District will provide reliable, high quality water and sewer services in an environmentally responsible manner, while maintaining an economical cost and unparalleled customer service to our community,” and its Vision Statement: “Yorba Linda Water District will become the leading, innovative and efficient source for high quality reliable services.” The Mission and Vision Statements dictate the following five core values of the District. 1. Integrity– We demonstrate integrity every day by practicing the highest ethical standards and by ensuring that our actions follow our words. 2. Accountability– We acknowledge that both the Board and the staff of the District are accountable to the public that we serve, as well as to each other. 3. Responsibility– We take full responsibility for our actions- both our successes and our opportunities for growth. We maintain a commitment of courtesy, assessment and resolution with all customer concerns. 4. Transparency – We promote a culture where we actively listen to our customers and communicate openly about our policies, processes and plans for the future. 5. Teamwork – Success centers on all departments working together and sharing information and resources to achieve common goals. We are dedicated to ensuring that every voice of the District, from the Board to each individual employee is treated with dignity and respect, and that differences are valued and individual abilities and contributions are recognized. Major Accomplishments during FY 2011/12 Previously, the Board of Directors approved the FY 2007-2012 five-year capital improvement plan totaling $57.7 million. The projects in this plan were identified for funding with the 2003 and 2008 Series Certificates of Participation (Revenue Bonds), in combination with annexation funds and other reserves held by the District. These projects are completed or underway as of the time of preparation of this report. For fiscal years 2011 through 2015, staff identified projects totaling $37.4 million. Included in that amount, $4.3 million was spent through the end of fiscal year 2010/11. The remaining $33.1 million is therefore proposed for consideration by the Board for capital improvement projects/capital replacement projects (CIP/CRP) that will extend through fiscal year 2014/15. Approximately $8.5 million of the $33.1 million was spent in fiscal year 2011/12 for projects in planning, design and construction. Those projects included the following: v Highland Booster Pump Station Upgrade Project The new, 18,000-gpm-capacity pump station completed construction in fiscal year 2011/12. The high-capacity pump station will make it possible to deliver up to 70 percent more groundwater to the higher zones of the District than with the pump station being replaced. Ohio St. and Oriente Dr. Pipeline Replacement Project Construction of approximately 4,900-ft. of 8- to 16-inch diameter pipeline, valves, hydrants and appurtenance in Ohio Street and Oriente Drive was completed, replacing 60-70 year old waterlines. These pipelines are sized to serve the local area as well as to deliver water to the planned Yorba Linda Booster Station. 2012 Waterline Replacement Project The project consists of replacing old waterlines and appurtenances in eight locations, ranging from 200 to 3,000 feet, with a total replacement length of approximately 6,700 feet. These locations were identified in the Asset Management Plan and the Capital Improvement Plan as requiring near-term replacement due to age and condition of the pipelines. Well No. 20 Project Well drilling and test pumping were completed in early 2010 to determine the safe yield of the planned new Well No 20. Based on that information, design of the above-grade well facilities was completed in fiscal year 2010/11, with construction of the well facilities completed in fiscal year 2011/12, to provide new groundwater production to replace older wells, and to increase the District’s local water resource production capabilities. Yorba Linda Blvd Booster Pump Station and Pipeline Project The project consists of replacing the existing Palm Avenue Booster Pump Station with a three-pump 5,000-gpm capacity new pump station at Gun Club Road and Yorba Linda Blvd. Work includes 4,700 feet of 20-inch pipeline and other improvements. The project will make is possible to deliver more groundwater to the easterly portion of the District’s service area. Design work was completed in fiscal year 2011/12, with construction beginning in fiscal year 2012/13 and will be completed in early fiscal year 2013/14. Computerized Maintenance and Management System (CMMS) This project consists of a software-based maintenance and management system for improved tracking of work performed on the District’s infrastructure. The system integrates directly with the District’s GIS and financial information systems to produce reports on true costs of service and to assist District staff on future infrastructure planning and budgeting. Completion is scheduled for fiscal year 2012/13. vi Fairmont Reservoir, Pump Station and Site Improvements Project The project is the refurbishment and upgrading of the Fairmont site. The existing 37-year old booster station will be demolished and its two booster pumps will be replaced by six, with two each pumping to three different pressure zones. A new building will be constructed to house the pumps, as well as facilities for operations and maintenance and a SCADA control center. Facilities will also be provided for equipment and material storage. The project will also include refurbishment of the Fairmont Reservoir, with new valves and other appurtenances. Part of the cost of the improvements will be offset by developer-provided funding. Planning and design work was begun in fiscal year 2011/12 and will continue, along with construction, in fiscal years 2012/13 and 2013/14. Lakeview Grade Separation Project The Orange County Transportation Authority (OCTA) is the lead agency for a planned Lakeview Avenue bridge over Orangethorpe Avenue and the adjacent BNSF Railroad tracks. As part of the project, it will be necessary to replace and relocate the District’s water lines currently in Lakeview Avenue through the project area. The District has been in discussions with OCTA as to how much of the total cost of the relocation and replacement of its waterlines and appurtenances the District must pay for, estimated at a cost in the range of $1 million. During this process, the District has been pursuing means to minimize the project cost it will bear, through work with legal counsel. It is anticipated that OCTA and the District will reach a decision on the project cost share to be borne by each by late fiscal year 2012/13 or early fiscal year 2013/14. Green Crest Dr Sewer Lift Station Upgrade Project As part of the Sewer Transfer Agreement with the City of Yorba Linda, the District has taken over operation and maintenance of the existing sewer lift station, which serves six homes on Green Crest Drive. The agreement included transfer of $175,000 from the City for O&M of the lift station, which is being used for upgrades. The upgrade work will include new SCADA and control elements for the lift station, which will be tied into the District’s central control and monitoring system at District Headquarters. Pressure Regulating Stations Upgrade Project The District owns and maintains 37 pressure reducing stations for its six pressure zones in the water system. The stations are equipped with combination pressure reducing/pressure sustaining valves, with many of the stations having lead valves and one or two additional valves and pressure relief valves and other appurtenances. The stations are located below ground, in streets and parkways, some of which are 30 to 40 years old. Design and refurbishment of the stations was begun in fiscal year 2011/12 and is expected to be completed in fiscal year 2012/13. vii Other major accomplishments in fiscal year 2011/12 include the following:  Updated District Strategic Plan  Developed a Multi-Year Financial Plan Model  Prepared a Three-Year Financial Needs Assessment  Adopted 2010 Urban Water Management Plan Update  Completed Hazard Mitigation Plan Update  Completed Water Recycling Facilities Planning Study  Completed Locke Ranch Annexation  Commenced Maintenance of Eastside Sewer Systems  Received Positive Auditors Letter for FY 2010/11  Received State and National Recognition for CAFR  Received State and National Recognition for FY 2011/12 Budget document  Instituted a Public Affairs Intern Program  Developed and Presented a Public Relations Master Plan  Board Committed Agency to work toward District of Distinction Achievement  Gained the ability to earn cash back on purchases using a rewards program through Cal-Card. 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 restrictions. 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. Water Rate & Increases In FY 2011/12, YLWD charged a uniform commodity rate of $2.52 per unit and a monthly fixed charge of $11.73 for all sizes of meters. One unit of water equals 748 gallons, equating one gallon of water to a cost of 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 provided wastewater service to all 23,850 of the District’s water customer base in fiscal year 2010/11, at a charge of $5.50 per month. The District also provided sewer service to approximately 1,400 customers that it does not provide water to. These customers, in the “Locke Ranch” area of Yorba Linda, are served by a private water company— Golden State Water Company. In FY 2012/13, Yorba Linda Water District faces many challenges related to water supply and demand. The District’s water supply is currently derived from both groundwater and import water, approximately 50% from each source. Both import and groundwater prices have dramatically increased over the past four fiscal years, and it is anticipated that costs will continue to increase as supplies become more strained from projected population increases, cyclical drought conditions, and environmental and regulatory restrictions. viii With the intent to develop a rate structure to support conservation and equitability among customers, the District conducted a Cost of Service Analysis and Alternative Water Rate Feasibility Study in fiscal year 2011/12, which addressed the impacts of implementing a tiered water conservation rate structure and/or a budget-based water rate structure for customers of the District. The result of this study was a three-year rate increase to customers on the Monthly Service Charge, approved by the Yorba Linda Water District Board of Directors. The approved rate increase is a percentage on the District’s overall revenue and consists of a 1.5% revenue increase beginning on July 1, 2012, a 2.5% increase beginning on July 1, 2013, and a 2.5% increase beginning on July 1, 2014. These increases will assist in covering the costs associated with operating, maintaining and replacing the District’s water facilities. The District will also be passing through to customers any future increases on the commodity charge from its water suppliers as these charges are based on the amount of water sold. In conjunction with this rate increase, the Board of Directors recommended that staff pursue a line of credit with Wells Fargo for $7 million with a 3-year renewable term and an interest rate based on 1 month LIBOR, currently calculated at 1.14%. The line of credit will allow the District to pursue future capital improvement projects with a minimal borrowing cost and a lowered financial burden to our customers. The District also issued Refunding Revenue Bonds, Series 2012A, which advance refunded the 2003 Certificates of Participation (COP) Bonds. This is estimated to save approximately $80,000 annually. 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 are pursuing 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 65% 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 48% 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 approximately $1.5M 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 2011/12 Budget, the District funded a Public Information Officer position and two part-time Public Affairs Intern positions. The Public Affairs division of the Administration department develops and disseminates information to the public and supports water conservation programs with the overall goal of developing a more transparent image of the District to the community. ix The District’s Citizens Advisory Committee, made up of local residents, who serve as ambassadors to the community, meet with District staff on a monthly basis 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. In November 2010, three Citizens Advisory Committee members ran for, and won election to seats on the District Board of Directors. Those three seats will be up for re-election in November 2014. Technological Advancements in Progress Technological advancements include the incorporation of a Computerized Maintenance & Management System (CMMS), which automates and tracks field work orders and provide actual costs to perform work-order related functions. In planning is an Automated Purchase Requisitioning System, which will provide better workflow and approvals for purchasing items, as well as have direct integration with the new financial software. 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. x 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 White, Nelson, Diehl, Evans LLP has conducted the audit of the District’s financial statements. Their unqualified (clean) Independent Auditor’s Report appears in the Financial Section. 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. Acknowledgements 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, ______________________________ ________________________________ Steve Conklin Stephen Parker Acting General Manager Finance Director Yorba Linda Water District Board of Directors and Executive Staff Phil Hawkins, President Gary T. Melton, Vice President Michael J. Beverage Robert R. Kiley Ric Collet Director Director Director Steven R. Conklin Lee Cory Acting General Manager/ Operations Manager Engineering Manager Art Vega Gina Knight Stephen Parker Interim IT Manager HR & Risk Manager Finance Manager xi xii Yorba Linda Water District Organization Chart xiii District Boundaries xiv GFOA Certificate of Achievement for Excellence in Financial Reporting Award FY 2010/11 FINANCIAL SECTION This page intentionally left blank 2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893 Offices located in Orange and San Diego Counties - 1 - INDEPENDENT AUDITORS’ REPORT Board of Directors Yorba Linda Water District Placentia, California We have audited the basic financial statements of the Yorba Linda Water District (the District) as of and for the year ended June 30, 2012 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, 2011 and in our report dated October 18, 2011, 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, 2012 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. - 2 - In accordance with Government Auditing Standards, we have also issued our report dated September 21, 2012 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 taken 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. Irvine, California September 21, 2012 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2012 See independent auditors’ report. - 3 - 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, 2012. 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 $10.8 million, or a 7.0% increase in net assets.  During the year the District’s revenues were $30.0 million, up 10.0%.  During the year, the District’s expenses were $31.4 million, up 9.3%. 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. YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2012 See independent auditors’ report. - 4 - 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 17 through 43. YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2012 See independent auditors’ report. - 5 - Statement of Net Assets 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 $165.0 million and $154.2 million as of June 30, 2012 and 2011, respectively. By far the largest portion of the District’s net assets (98% and 95% as of June 30, 2012 and 2011, 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, 2012, the District showed a negative balance in its unrestricted net assets of $6.2 million, which indicates that there aren’t any reserves to be utilized in future years, as was the same with the negative balance of $5.3 million for the year ended June 30, 2011. 20122011Change Assets: Current unrestricted assets$14,593,330 $15,953,458 $(1,360,128) Current restricted assets12,247,874 20,435,240 (8,187,366) Other assets758,432 755,728 2,704 Capital assets, net201,049,856 181,633,788 19,416,068 Total Assets 228,649,492 218,778,214 9,871,278 Liabilities: Liabilities payable from unrestricted current assets5,992,502 5,586,615 405,887 Liabilities payable from restricted assets1,399,418 1,373,171 26,247 Non-current liabilities56,215,358 57,582,753 (1,367,395) Total Liabilities 63,607,278 64,542,539 (935,261) Net Assets: Invested in capital assets, net of related debt161,672,565 146,991,090 14,681,475 Restricted for capital construction9,598,420 12,620,256 (3,021,836) Unrestricted(6,228,771) (5,375,671) (853,100) Total Net Assets $165,042,214 $154,235,675 $10,806,539 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2012 See independent auditors’ report. - 6 - Statement of Revenues, Expenses and Changes in Net Assets 20122011Change Revenues Operating revenues: Water sales$24,998,673 $22,686,251 $2,312,422 Sewer revenue1,785,804 1,274,579 511,225 Other operat ing revenue848,238 1,035,545 (187,307) Total operating revenues27,632,715 24,996,375 2,636,340 Non-operating revenues: Investment income277,137 274,152 2,985 Property taxes1,273,855 1,258,769 15,086 Other non-operating income805,654 739,062 66,592 Tota l non-operat ing revenues2,356,646 2,271,983 84,663 Total revenues 29,989,361 27,268,358 2,721,003 Expense s Operating expenses: Var iable water costs12,275,853 11,268,306 1,007,547 Personnel services6,979,088 6,902,995 76,093 Supplies and services3,811,125 3,686,333 124,792 Depreciation 6,595,720 5,279,860 1,315,860 Total operating expenses29,661,786 27,137,494 2,524,292 Non-operat ing expenses: Interest expense1,626,190 1,172,503 453,687 Other non-operating expense108,984 406,575 (297,591) Total non-operating expenses1,735,174 1,579,078 156,096 Total expenses 31,396,960 28,716,572 2,680,388 Net income (loss) before capital contributions and extraordinary item (1,407,599) (1,448,214) 40,615 Capital contributions17,214,138 706,319 16,507,819 Extraordinary item (5,000,000) - (5,000,000) Change in net assets 10,806,539 (741,895) 11,548,434 Net assets, beginning of year 154,235,675 154,977,570 (741,895) Net assets, end of year $165,042,214 $154,235,675 $10,806,539 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2012 See independent auditors’ report. - 7 - Statement of Revenues, Expenses and Changes in Net Assets (Continued) 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 $10.8 million and decreased by $742 thousand for the fiscal years ended June 30, 2012 and 2011, respectively. A closer examination of the sources of changes in net assets reveals that: In 2012, the District’s total revenues increased by $2.7 million, primarily due to an increase in water sales of $2.3 million as a result of a warmer summer than the two previous years and an improving economy. In addition, total expenses increased by $2.7 million primarily due to increased variable water costs of $1.1 million due to increased water purchases and increased depreciation expenses of $1.3 million as a result of a number of large capital assets closed in the previous year. In 2011, the District’s total revenues increased by $1.0 million, primarily due to an increase in water sales of $900 thousand from recognizing a full year with higher rates as a result of a large rate increase that went into effect in September 2009. In addition, total expenses increased by $1.3 million primarily due to water rates rising which caused an increase in variable water costs ($600 thousand increase) and other non-operating expense increasing $300 thousand as a result of closing projects that had accumulated in CIP and determining they should be expensed. YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2012 See independent auditors’ report. - 8 - Capital Assets At the end of fiscal year 2012 and 2011, the District’s investment in capital assets amounted to $201.0 million and $181.6 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 transmission and distribution system, most notably the complete replacement of Highland Reservoir and bringing Hidden Hills Reservoir online. Additional information regarding capital assets can be found in note 4 in Notes to Basic Financial Statements. Changes in capital asset amounts for 2012 were as follows: BalanceTransfers/Balance 2011AdditionsDeletions2012 Capital assets: Capital assets, not being depreciated$5,223,388 $8,785,670 $(3,122,565) $10,886,493 Capital assets, being depreciated232,232,836 20,438,265 (295,610) 252,375,491 Less accumulated depreciation(55,822,436) (6,595,720) 206,028 (62,212,128) Total capital assets, net$181,633,788$22,628,215 $(3,212,147) $201,049,856 Changes in capital asset amounts for 2011 were as follows: BalanceTransfers/Balance 2010AdditionsDeletions2011 Capital assets: Capital assets, not being depreciated$24,014,834 $6,125,312 $(24,916,758) $5,223,388 Capital assets, being depreciated206,988,160 25,498,796 (254,120) 232,232,836 Less accumulated depreciation(50,680,845) (5,279,860) 138,269 (55,822,436) Total capital assets, net$180,322,149 $26,344,248 $(25,032,609) $181,633,788 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2012 See independent auditors’ report. - 9 - Long-Term Liabilities Additional information regarding long-term liabilities can be found in note 5 in Notes to Basic Financial Statements. Changes in long-term liabilities for the year ended June 30, 2012 were as follows: Beginning Ending BalanceAdditionsReductionsBalance 2003 Revenue Certificates of Part icipat ion $9,200,000 $- $(235,000 ) $8,965,000 2008 Revenue Certificates of Participation33,405,000 - (655,000) 32,750,000 Su btotal 42,605,000 - (890,000 ) 41,715,000 Add (Less): Discount(120,418) - 5,432 (114,986) Premium 704,535 - (26,420) 678,115 Total Certificates of Part icipat ion43,189,117 - (910,988 ) 42,278,129 Compensated absences1,007,193 524,867 (468,488) 1,063,572 Ot her post-employment liabili ty (asset)122,065 164,390 (319,085 ) (32,630) Total$44,318,375 $689,257 $(1,698,561) $43,309,071 Changes in long-term liabilities for the year ended June 30, 2011 were as follows: Beginning Ending BalanceAdditionsReductionsBalance 2003 Revenue Certificates of Part icipat ion $9,425,000 $- $(225,000 ) $9,200,000 2008 Revenue Certificates of Participation34,035,000 - (630,000) 33,405,000 Su btotal 43,460,000 - (855,000 ) 42,605,000 Add (Less): Discount(125,851) - 5,433 (120,418) Premium 730,955 - (26,420) 704,535 Tota l Cert ificates of Part icipat ion44,065,104 - (875,987 ) 43,189,117 Compensated absences1,050,888 518,006 (561,701) 1,007,193 Other post-employment liability236,483 189,147 (303,565) 122,065 Total$45,352,475 $707,153 $(1,741,253) $44,318,375 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2012 See independent auditors’ report. - 10 - Requests for Information This financial report is designed to provide the District’s funding sources, customers, stakeholders and other interested parties with an overview of the District’s financial operations and financial condition. Should the reader have questions regarding the information included in this report or wish to request additional financial information, please contact the District at 1717 E. Miraloma Avenue, Placentia, California 92807 or the Finance Department at (714) 701-3040. - 11 - BASIC FINANCIAL STATEMENTS 20122011 CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents (Note 2)10,068,471$ 11,693,893$ Accounts receivable - water and sewer services3,855,326 3,642,035 Accounts receivable - property taxes128,477 114,949 Accrued interest receivable13,004 22,049 Prepaid expenses and deposits243,771246,919 Inventory 284,281 233,613 TOTAL UNRESTRICTED ASSETS14,593,330 15,953,458 RESTRICTED ASSETS: Cash and cash equivalents (Note 2)10,084,11118,291,615 Investments (Note 2)2,157,7862,143,130 Accrued interest receivable5,977 495 TOTAL RESTRICTED ASSETS12,247,874 20,435,240 TOTAL CURRENT ASSETS26,841,204 36,388,698 NONCURRENT ASSETS: Bond issuance costs725,802 755,728 Capital assets (Note 4): Non-depreciable10,886,4935,223,388 Depreciable, net of accumulated depreciation190,163,363176,410,400 Other post-employment benefit (OPEB) asset (Notes 5 and 6)32,630- TOTAL NONCURRENT ASSETS201,808,288 182,389,516 TOTAL ASSETS228,649,492 218,778,214 See independent auditors' report and notes to basic financial statements.(Continued) - 12 - YORBA LINDA WATER DISTRICT COMBINED STATEMENTS OF NET ASSETS June 30, 2012 ASSETS (With prior year data for comparison only) 20122011 CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable 4,892,274$ 4,506,830$ Accrued expenses152,907 130,306 Compensated absences payable - current portion (Note 5)265,893 251,798 Customer and construction deposits267,896281,156 Deferred revenue413,532 416,525 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS5,992,502 5,586,615 PAYABLE FROM RESTRICTED ASSETS: Accrued interest payable474,418 483,171 Certificates of Participation - current portion (Note 5)925,000 890,000 TOTAL PAYABLE FROM RESTRICTED ASSETS1,399,418 1,373,171 TOTAL CURRENT LIABILITIES7,391,920 6,959,786 LONG-TERM LIABILITIES (LESS CURRENT PORTION): Deferred annexation revenue14,064,55014,406,176 Compensated absences (Note 5)797,679 755,395 Other post-employment benefit (OPEB) liability (Notes 5 and 6)- 122,065 Certificates of Participation (Note 5)41,353,12942,299,117 TOTAL LONG-TERM LIABILITIES (LESS CURRENT PORTION)56,215,358 57,582,753 TOTAL LIABILITIES63,607,278 64,542,539 NET ASSETS: Invested in capital assets, net of related debt (Note 8)161,672,565 146,991,090 Restricted for capital projects9,598,420 12,620,256 Unrestricted (6,228,771) (5,375,671) TOTAL NET ASSETS165,042,214$ 154,235,675$ See independent auditors' report and notes to basic financial statements. - 13 - YORBA LINDA WATER DISTRICT COMBINED STATEMENTS OF NET ASSETS (CONTINUED) June 30, 2012 LIABILITIES (With prior year data for comparison only) 20122011 OPERATING REVENUES: Water sales 24,998,673$ 22,686,251$ Sewer revenues1,785,8041,274,579 Other operating revenues848,2381,035,545 TOTAL OPERATING REVENUES27,632,715 24,996,375 OPERATING EXPENSES: Variable water costs12,275,85311,268,306 Personnel services6,979,0886,902,995 Supplies and services3,811,1253,686,333 Depreciation 6,595,7205,279,860 TOTAL OPERATING EXPENSES29,661,786 27,137,494 OPERATING LOSS(2,029,071) (2,141,119) NONOPERATING REVENUES (EXPENSES): Property taxes 1,273,8551,258,769 Investment income277,137274,152 Interest expense(1,626,190) (1,172,503) Other nonoperating revenues805,654739,062 Other nonoperating expenses(108,984)(406,575) TOTAL NONOPERATING REVENUES (EXPENSES)621,472 692,905 NET LOSS BEFORE CAPITAL CONTRIBUTIONS AND EXTRAORDINARY ITEMS(1,407,599) (1,448,214) CAPITAL CONTRIBUTIONS17,214,138706,319 EXTRAORDINARY ITEMS (NOTE 12)(5,000,000)- CHANGES IN NET ASSETS10,806,539 (741,895) NET ASSETS - BEGINNING OF YEAR154,235,675 154,977,570 NET ASSETS - END OF YEAR165,042,214$ 154,235,675$ See independent auditors' report and notes to basic financial statements. - 14 - YORBA LINDA WATER DISTRICT COMBINED STATEMENTS OF REVENUES, EXPENSES For the year ended June 30, 2012 AND CHANGES IN NET ASSETS (With prior year data for comparison only) 20122011 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers27,396,429$ 25,257,632$ Cash payments to employees for salaries and wages(7,054,803) (7,056,529) Cash payments to suppliers of goods and services(15,739,319) (15,879,098) Other revenue 478,300 245,050 Other expenses (74,806) (263,781) NET CASH PROVIDED BY OPERATING ACTIVITIES5,005,801 2,303,274 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Cash payments for extraordinary item(5,000,000) - Proceeds from property taxes and assessments1,261,507 1,265,653 NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES(3,738,493) 1,265,653 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from annexation fees and capital contributions89,949 1,022,579 Acquisition and construction of capital assets(8,633,470) (5,599,745) Proceeds from sales of capital assets11,249 13,678 Principal paid on long-term liability(890,000) (855,000) Interest paid on long-term liability(1,919,822) (1,961,047) NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES(11,342,094) (7,379,535) CASH FLOWS FROM INVESTING ACTIVITIES: Sale/purchase of investments, net(38,840) (2,073,253) Interest and investment earnings280,700 275,723 NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES241,860 (1,797,530) NET DECREASE IN CASH AND CASH EQUIVALENTS(9,832,926) (5,608,138) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR29,985,508 35,593,646 CASH AND CASH EQUIVALENTS - END OF YEAR20,152,582$ 29,985,508$ See independent auditors' report and notes to basic financial statements.(Continued) YORBA LINDA WATER DISTRICT COMBINED STATEMENTS OF CASH FLOWS For the year ended June 30, 2012 - 15 - (With prior year data for comparison only) 20122011 RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating loss(2,029,071)$ (2,141,119)$ Adjustments to reconcile operating loss to net cash provided by operating activities: Depreciation6,595,720 5,279,860 Other revenues478,300 245,050 Other expenses(74,806) (263,781) Changes in operating assets and liabilities: (Increase) decrease in assets: Accounts receivable(213,291) 281,520 Inventory(50,668) (25) Prepaid expenses and deposits3,148 26,105 Increase (decrease) in liabilities: Accounts payable and accrued expenses385,444 (1,030,018) Accrued salaries and wages22,601 4,579 Accrued other post-employment benefits (OPEB) liability(154,695) (114,418) Accrued compensated absences56,379 (43,695) Customer and construction deposits(13,260) 59,216 Total adjustments7,034,872 4,444,393 NET CASH PROVIDED BY OPERATING ACTIVITIES5,005,801$ 2,303,274$ CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION: Unrestricted10,068,471$ 11,693,893$ Restricted 10,084,111 18,291,615 TOTAL CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION 20,152,582$ 29,985,508$ NONCASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES: Amortization related to long-term debt 20,988$ 20,988$ Capital contributions17,480,462$ 6,278,135$ See independent auditors' report and notes to basic financial statements. (With prior year data for comparison only) - 16 - YORBA LINDA WATER DISTRICT COMBINED STATEMENTS OF CASH FLOWS (CONTINUED) For the year ended June 30, 2012 - 17 - NOTES TO BASIC FINANCIAL STATEMENTS See independent auditors’ report. - 18 - YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2012 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: a. 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 service to approximately 72,498 residents and sewer service to approximately 75,498 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. b. 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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 19 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): c. 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. d. 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. e. 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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 20 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): f. 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. g. 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. h. Investments and Investment Policy: The District has adopted an investment policy directing the District’s General Manager or Finance Manager 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. i. 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 $22,995 and $20,263 were made to bad debt expense for the fiscal years ended June 30, 2012 and 2011, respectively. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 21 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): j. 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 1% 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: January 1 Levy Date: July 1 Due Dates: First Installment - November 1 Second Installment - March 1 Collection Dates: First Installment - December 10 Second Installment - April 10 k. 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. l. 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. m. 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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 22 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): m. Capital Assets (Continued): Depreciation is recorded on the straight-line basis over the estimated useful lives of the assets as follows: Source of Supply 30 to 75 years Pumping Plant 20 to 40 years Water Treatment Plant 12 to 40 years Sewer Plant 5 to 60 years Transmission and Distribution Plant 10 to 40 years General Plant 3 to 40 years n. 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 $725,802 and $755,728 net of accumulated amortization of $171,982 and $142,056 at June 30, 2012 and 2011, respectively. o. Interest Expense: The District incurs interest charges on the Certificates of Participation. Interest expense of $258,459 and $753,855 has been capitalized as an addition to the cost of construction for the years ended June 30, 2012 and 2011, respectively. p. 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-eighths 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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 23 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): q. Deferred Credits: Deferred credits represent customer refunds that have not been cashed and are reported as part of deferred revenue. r. 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. s. 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. t. 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. These amounts are reported as part of deferred revenues. u. Deferred Annexation Revenue: The District collects a fee from newly annexed developments for all residential and commercial properties. This fee is in-lieu of the District’s share of the 1% property tax revenue which the District no longer received post-Proposition 13. The fee is a present worth value required to generate a forty year revenue stream equivalent to the lost property tax revenue. It is calculated based on the fair market value estimate of the improved property at the time the fee is collected and based on the current rate of return on the District’s investments. The deposit balance accrues interest and provides a source of operational revenue for the District. This deferred revenue source may be used for capital facilities in the future if approved by the Board. v. Water and Sewer Sales: The District recognizes water and sewer service charges based on cycle billings rendered to the customers each month. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 24 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): w. 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. x. 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. y. 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. z. 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. Certain reclassifications have been made to the prior year amounts to conform to the current year’s presentation. There is no effect on the change in net assets. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 25 - 2. CASH AND INVESTMENTS: Cash and Investments: Cash and investments as of June 30, 2012 are reported in the accompanying combining schedule of net assets as follows: Water Sewer Total Unrestricted Current Assets: Cash and cash equivalents $ 7,598,440 $ 2,470,031 $ 10,068,471 Restricted Assets: Cash and cash equivalents 10,084,111 - 10,084,411 Investments 2,157,786 - 2,157,786 Total Cash and Investments $ 19,840,337 $ 2,470,031 $ 22,310,368 Cash and investments as of June 30, 2012 consisted of the following: Water Sewer Total Cash on hand $ 1,200 $ - $ 1,200 Deposits with financial institutions 61,168 58,687 119,855 Escrow deposits 564,076 - 564,076 Investments 19,213,893 2,411,344 21,625,237 Total Cash and Investments $ 19,840,337 $ 2,470,031 $ 22,310,368 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 26 - 2. 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. Maximum Maximum Percentage Investment Minimum Maximum of in One Credit Authorized Investment Type Maturity Portfolio * Issuer Rating Bank or Savings and Loans 5 years None None FDIC or FSLIC Negotiable Certificates of Deposit 5 years None None A and FDIC Local Agency Investment Fund (LAIF) N/A None None N/A Orange County Commingled Investment Pool N/A None None N/A California Asset Management Program N/A (1) None N/A United States Treasury Bills, Notes and Bonds 5 years None None N/A United States Government Sponsored Agency Securities 5 years 50% None N/A Corporate Bonds 5 years 30% None A Bankers Acceptances 180 days 10% None N/A Commercial Paper 270 days 25% None A-1 CalTRUST Investment Pool N/A None None N/A Money Market Funds N/A None None N/A * Excluding amounts held by bond trustee that are not subject to California Government Code restrictions. (1) Limited to bond proceeds held by the District. N/A - Not Applicable YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 27 - 2. 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. Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity Allowed in One Issuer Cash None None None United States Treasury Bills, Notes and Bonds None None None United States Treasury Obligations None None None Resolution Funding Corp. (REFCORP) None None None Prefunded Municipal Bonds None None None United States Government Sponsored Agency Securities None None None Commercial Paper None None None Money Market Funds None None None Certificates of Deposits None None None Guaranteed Investment Contracts None None None Bankers Acceptance 1 year None None Repurchase Agreements 30 days None None Local Agency Investment Fund None None None 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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 28 - 2. 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, 2012. Remaining Maturity (in Months) 12 Months Investment Type or Less CalTRUST Investment Pool $ 16,125,055 LAIF 3,325,147 Held by bond trustee: United States Government Sponsored Agency Securities 2,157,786 Money market funds 17,249 $ 21,625,237 Disclosures Relating to Credit Risk: 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 June 30, 2012 for each investment type. Minimum Legal Not Investment Type Rating Total Rated AA+ CalTRUST Investment Pool N/A $16,125,055 $15,624,717 $ 500,338 LAIF N/A 3,325,147 3,325,147 - Held by bond trustee: United States Government Sponsored Agency Securities N/A 2,157,786 - 2,157,786 Money market funds A 17,249 17,249 - $21,625,237 $18,967,113 $ 2,658,124 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 29 - 2. 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, Orange County Pooled Investment Fund, California Asset Management Program, and CalTRUST Investment Pool). 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 $909,510 as of June 30, 2012. Of the bank balances, up to $717,012 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. Investment in State Investment Pool The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. 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 prorate share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 30 - 2. 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. 3. RESTRICTED ASSETS: Restricted assets were provided by, and are to be used for the following as of June 30, 2012 and 2011: Source Use 2012 2011 Custodial receipts Custodial costs $ 564,076 $ 109,737 Bond proceeds, taxes, Construction of capital assessments and interest assets expansion 11,683,798 20,325,503 $ 12,247,874 $ 20,435,240 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 31 - 4. CAPITAL ASSETS: Changes in capital assets for the year ended June 30, 2012 is as follows: Balance Balance June 30, 2011 Additions Deletions June 30, 2012 Capital assets, not being depreciated: Land, mineral and water rights $ 347,490 $ - $ - $ 347,490 Construction in progress 4,875,898 8,785,670 (3,122,565) 10,539,003 Total capital assets, not being depreciated 5,223,388 8,785,670 (3,122,565) 10,886,493 Capital assets, being depreciated: Source of supply 6,026,881 - (1,999) 6,024,882 Pumping plant 17,662,539 19,547 (14,810) 17,667,276 Water treatment plant 2,747,805 - (170,814) 2,576,991 Transmission and distribution plant 185,641,081 20,184,870 (10,276) 205,815,675 General plant 20,154,530 233,848 (97,711) 20,290,667 Total capital assets, being depreciated 232,232,836 20,438,265 (295,610) 252,375,491 Less accumulated depreciation for: Source of supply (1,651,014) (162,797) - (1,813,811) Pumping plant (4,415,084) (651,930) 14,810 (5,052,204) Water treatment plant (942,223) (144,740) 85,702 (1,001,261) Transmission and distribution plant (42,833,060) (4,564,383) 7,805 (47,389,638) General plant (5,981,055) (1,071,870) 97,711 (6,955,214) Total accumulated depreciation (55,822,436) (6,595,720) 206,028 (62,212,128) Total capital assets, being depreciated, net 176,410,400 13,842,545 (89,582) 190,163,363 Total capital assets, net $ 181,633,788 $ 22,628,215 $ (3,212,047) $ 201,049,856 Depreciation expense for the depreciable capital assets was $6,595,720 in 2012. The District has been involved in various construction projects throughout the year. The balance of construction in progress at June 30, 2012 is $10,539,003. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 32 - 4. CAPITAL ASSETS (CONTINUED): Effective July 1, 2011, all assets, liabilities, contractual rights and obligations, and any other real or personal property or other interest whatsoever of the City of Yorba Linda related to the Sewer Collection Facilities was transferred to the District. In exchange, the District agreed to assume the obligation and responsibility to provide sewer service and maintenance to the East Yorba Linda Area. The District recorded contributed capital in the amount of $17,044,530 to record the assets received from the City of Yorba Linda. The fair market value was determined based on the replacement cost at the date of the contribution reduced by accumulated depreciation from the date placed in service to the date contributed. 5. LONG-TERM LIABILITIES: Changes in long-term liabilities for the year ended June 30, 2012 were as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Certificates of Participation: 2003 Revenue Certificates of Participation $ 9,200,000 $ - $ (235,000) $ 8,965,000 $ 245,000 2008 Revenue Certificates of Participation 33,405,000 - (655,000) 32,750,000 680,000 Subtotal 42,605,000 - (890,000) 41,715,000 925,000 Add (Less): Discount (120,418) - 5,432 (114,986) - Premium 704,535 - (26,420) 678,115 - Total Certificates of Participation 43,189,117 - (910,988) 42,278,129 925,000 Compensated absences 1,007,193 524,867 (468,488) 1,063,572 265,893 Other post-employment liability (asset) 122,065 164,390 (319,085) (32,630) - Total $ 44,318,375 $ 689,257 $ (1,698,561) $ 43,309,071 $ 1,190,893 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 33 - 5. LONG-TERM LIABILITIES (CONTINUED): 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. 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, 2012 the 2003 Certificates outstanding balance was $8,965,000. 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 2012, the net revenues equal to 209% of the debt service. The annual debt service requirements for the 2003 Revenue Certificates of Participation outstanding at June 30, 2012 are as follows: Year Ending Principal Interest Total 2013 $ 245,000 $ 428,076 $ 673,076 2014 255,000 418,076 673,076 2015 265,000 407,411 672,411 2016 275,000 395,934 670,934 2017 285,000 383,752 668,752 2018 - 2022 1,645,000 1,703,898 3,348,898 2023 - 2027 2,080,000 1,249,250 3,329,250 2028 - 2032 2,655,000 659,875 3,314,875 2033 - 2034 1,260,000 63,750 1,323,750 Subtotal 8,965,000 5,710,022 14,675,022 Less: Discount (114,986) - (114,986) Total $ 8,850,014 $ 5,710,022 $ 14,560,036 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 34 - 5. LONG-TERM LIABILITIES (CONTINUED): 2008 Revenue Certificates of Participation: 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. The Term Certificates of $10,885,000 are due on October 1, 2038. The legal reserve requirement is $2,147,096. At June 30, 2012 the reserve fund had a balance of $2,160,486. At June 30, 2012 the 2008 Certificates outstanding balance was $32,750,000. 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 2012, the net revenues equal to 209% of the debt service. The annual debt service requirements for the 2008 Revenue Certificates of Participation outstanding at June 30, 2012 are as follows: Year Ending Principal Interest Total 2013 $ 680,000 $ 1,451,096 $ 2,131,096 2014 705,000 1,423,396 2,128,396 2015 735,000 1,394,596 2,129,596 2016 765,000 1,364,596 2,129,596 2017 795,000 1,333,396 2,128,396 2018 - 2022 4,480,000 6,153,880 10,633,880 2023 - 2027 5,455,000 5,154,152 10,609,152 2028 - 2032 6,720,000 3,844,650 10,564,650 2033 - 2037 8,430,000 2,086,925 10,516,925 2038 - 2039 3,985,000 201,625 4,186,625 Subtotal 32,750,000 24,408,312 57,158,312 Add: Premium 678,115 - 678,115 Total $ 33,428,115 $ 24,408,312 $ 57,836,427 Compensated Absences: Compensated absences are comprised of unpaid vacation leave, sick leave and compensating time off which are accrued as earned. (See Note 1p). YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 35 - 6. 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 (medical, dental and vision) 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 two-thirds of the premium amount for eligible dependents accrued at a rate of one year for every three years of service. Two-thirds of the premium amount of medical coverage is provided for the surviving spouse of retired employees for the remaining vested period. The plan does not provide a publicly available financial report. 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 has established a trust to fund future OBEP benefits. For the year ended June 30, 2012, the District made a medical contribution of $319,085 which paid $151,555 in health care costs for its retirees and their covered dependents and a contribution of $167,530 to the OPEB trust. c. Annual OPEB Cost and Net OPEB Obligation (Asset): 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 $ 170,191 Interest on net OPEB obligation 4,645 Adjustment to annual required contribution (10,446) Annual OPEB cost (expense) 164,390 Actual contributions made (319,085) Decrease in net OPEB obligation (154,695) Net OPEB Obligation - beginning of year 122,065 Net OPEB Asset - end of year $ (32,630) YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 36 - 6. OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED): c. Annual OPEB Cost and Net OPEB Obligation (Asset) (Continued): 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, 2012, 2011 and 2010 were as follows: Percentage Net Fiscal Annual of Annual OPEB Year OPEB OPEB Costs Obligation Ended Cost Contributed (Asset) 6/30/10 $ 224,018 48.35% $ 236,483 6/30/11 189,147 160.49% 122,065 6/30/12 164,390 194.10% (32,630) d. Funded Status and Funding Progress: As of November 2, 2011, the most recent actuarial valuation date, the plan was 10.28 percent funded. The actuarial accrued liability for benefits was $1,597,488, and the actuarial value of assets was $164,291, resulting in an unfunded actuarial accrued liability (UAAL) of $1,433,197. The covered payroll (annual payroll of active employees covered by the plan) was $4,773,686 and the ratio of the UAAL to the covered payroll was 30.02%. 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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 37 - 6. OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED): 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 November 2, 2011 actuarial investment valuation, the entry age normal cost method was used. The actuarial assumptions included an inflation rate of 3.0% per annum, an investment return of 7.61% per annum, a projected salary increase of 3.0% per annum and a health inflation rate of 4.0% per annum. The District is using the level percentage of payroll method to allocate amortization cost by year and a closed 30 year period for the initial unfunded actuarial accrued liability and an open 30 year amortization for any residual unfunded actuarial accrued liabilities. 7. DEFINED BENEFIT PENSION PLAN: a. Plan Description: The District participates in the 2.0% at 55 and 2.0% at 60 (effective for new hires after December 22, 2011) Risk Pools of the California Employees Retirement System (CalPERS), a cost sharing multiple-employer 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 and 2.0% at 60 Risk Pool Retirement Plans is 7% of their annual covered salary. The District makes these contributions required of District employees hired before January 26, 2012 on their behalf and for their account. Employees hired after January 26, 2012 are responsible for making the 7% required contribution. 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 are equal to the annual pension cost (APC) percentage of payroll for fiscal year 2012, 2011 and 2010. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 38 - 7. DEFINED BENEFIT PENSION PLAN (CONTINUED): b. Funding Policy (Continued): 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 2012, 2011 and 2010 the District’s annual employer’s contributions for CalPERS were equal to the District’s required and actual contributions for each year as follows: 2% at 55 Risk Pool Fiscal Annual Percentage APC Year Pension of APC Percentage Ended Cost (APC) Contributed of Payroll 6/30/10 $ 492,476 100.00 % 10.062 % 6/30/11 527,743 100.00 % 10.461 % 6/30/12 548,528 100.00 % 11.507 % 2% at 60 Risk Pool Fiscal Annual Percentage APC Year Pension of APC Percentage Ended Cost (APC) Contributed of Payroll 6/30/12 $ 780 100.00 % 8.197 % 8. 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, 2012 and 2011: 2012 2011 Capital assets, net of accumulated depreciation $ 201,049,856 $ 181,633,788 Certificates of participation - current (925,000) (890,000) Certificates of participation - long-term (41,353,129) (42,299,117) Unspent debt proceeds 2,175,036 7,790,691 Bond issuance costs 725,802 755,728 Net assets invested in capital assets, net of related debt $ 161,672,565 $ 146,991,090 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 39 - 9. 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, 2012, 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 $2,000,000, combined single limit at $2,000,000 per occurrence. The Authority purchases additional excess coverage layers: $58 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. The District’s Retrospective Allocation Point (deductible) is $25,000 per occurrence. The Authority is self-insured for the first $50,000, and purchases excess coverage up to $100 million, subject to a $1,000 deductible, except for a $500 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. The Authority is self-insured to $2,000,000 and has purchased excess insurance to the statutory limit. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 40 - 9. 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 2012, 2011 and 2010, except for effects of the claim in Note 12. 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 claims payable as of June 30, 2012, 2011 and 2010. 10. PROPOSITION 1A BORROWINGS BY THE STATE OF CALIFORNIA: Under the provisions of Proposition 1A 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. 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. 11. PRE-ANNEXATION AGREEMENT: In June 2008, the District entered into a pre-annexation agreement with Placentia Yorba Linda Unified School District (PYLUSD) whereby the District intends to provide access to water and sewer service to the PYLUSD for the benefit of a property that PYLUSD wishes to develop for public high school use. Per the agreement, PYLUSD agreed to fund additional District reservoir improvements equal to the cost of constructing additional 450,000 gallons of reservoir storage. The cost for the additional water storage was estimated to be approximately $1.50 per gallon, resulting in a total approximate cost of $675,000. PYLUSD paid the District $32,500 within 30 days of execution of the agreement. The remaining balance is payable over a nine-year period at an annual interest rate of 4%. Annual payments of $81,704, which include principal and interest, started in the fiscal year ended June 30, 2010. The remaining outstanding balance at June 30, 2012 was $428,308. As of June 30, 2012 the District reservoir improvements are still in progress. The District has not yet completed its obligation in its entirety and has not earned the rights to the entire amount. Therefore, the outstanding balance is not recorded in the District’s books. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 41 - 12. COMMITMENTS AND CONTINGENCIES: Construction Contracts: The District has a variety of agreements with private parties relating to the installation, improvement or modification of water facilities and distribution systems within its service area. The financing of such construction contracts is being provided primarily from the District’s replacement reserves and advances for construction. The District has committed to approximately $2,501,306 of open construction contracts as of June 30, 2012. Construction contracts include: Total Construction Balance Approved Costs to Project Name Contract to Date Complete Well No. 20 $ 103,065 $ 102,585 $ 480 Well No. 20 1,144,603 1,077,622 66,981 Highland BPS upgrade 4,678,650 4,402,586 276,064 YL Blvd Booster Station 216,322 179,764 36,558 YL Blvd Pipeline 216,322 179,764 36,558 YL Blvd Pipeline 1,681,650 321,100 1,360,550 Computerized maintenance and management system 338,000 307,022 30,978 Fairmont Reservoir Valve Replacement 219,350 197,415 21,935 PRS Upgrades 611,924 - 611,924 PRS Upgrades 95,085 85,790 9,295 Sewer Facilities GIS Conversion 20,960 14,960 6,000 Green Crest Drive Sewer Lift Station Upgrade 113,989 102,590 11,399 2010 Waterline Project - Phase II 246,269 213,685 32,584 $ 9,686,189 $ 7,184,883 $ 2,501,306 Litigation: In 2008, a firestorm known as the Freeway Complex Fire, the largest wildfire in the County in half a century, resulted in the destruction of several homes served by the District. Certain homeowners sued the District, alleging that the water system failed to provide sufficient water for fire protection purposes. The District’s excess liability insurers denied coverage for the Freeway Complex Fire lawsuit. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 42 - 12. COMMITMENTS AND CONTINGENCIES (CONTINUED): Litigation (Continued): In June 2012, with no admission of liability, the District and ACWA JPIA paid $10,000,000 (the “Settlement Amount”) as part of a settlement with the plaintiff-homeowners. The District’s portion of the settlement amount was $5,000,000, which was paid from District reserves. As part of the settlement, the lawsuit was referred to a third-party neutral who awarded damages in favor of some plaintiff-homeowners. Under the settlement, the successful plaintiff-homeowners will attempt to recover their awards in a separate lawsuit against the District’s excess liability insurers, but will not pursue further recovery from the District. The District believes that its excess liability insurers wrongfully denied coverage in connection with the Freeway Complex Fire lawsuit and is currently in litigation against such insurers to recover both the Settlement Amount and certain legal fees. There can be no assurance that the District’s efforts to recover the Settlement Amount will be successful. However, the District is protected from any further financial liability over and above the Settlement Amount. 13. SUBSEQUENT EVENTS: On September 19, 2012, the District issued $8,330,000 in Revenue Refunding Bonds, Series 2012A for the purpose of defeasing $8,965,000 of outstanding Revenue Certificates of Participation Series 2003. The advance refunding resulted in a decrease in total debt service payments over the next 21 years by over $1.72 million, resulting in an economic gain of over $1.32 million. On September 24, 2012, the District expects to establish a $7,000,000 Line of Credit (“Line”) pursuant to a line of credit agreement (“Credit Agreement”) with Wells Fargo Bank, NA. The Line is subordinate to the 2008 Revenue Certificates of Participation and the Revenue Refunding Bonds, Series 2012A and borrowings from it are due and payable three years after the line is established, though the maturity date can be extended by request of the District and agreement by the bank. The Line has an interest rate equal to One-Month LIBOR + 0.90%, with an annual unused commitment fee of 0.35%. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2012 See independent auditors’ report. - 43 - 13. SUBSEQUENT EVENTS (CONTINUED): On June 30, 2005, as a result of employing less than 100 people, the District was placed into an agency multiple employer pool by CalPERS. In the process, any agency that was underfunded had a side fund created. This side fund was kept separate from the pool and amortized over 20 years. The amount the District owed on its side fund as of June 30, 2012 was $836,784, and the District’s current actuarially determined annual payment was $80,671. The annual payment was scheduled to be paid over the next 14 years, and was subject to decrease or increase based on gains or losses by investments of CalPERS or decreases or increases in payroll. Since the District was assessed an assumed 7.75% interest charge on the amount owed annually and operating reserves were earning less than 1%, the Board believed it made prudent financial sense to pay down the side fund with current operating reserves, and voted to authorize the General Manager to do so on July 12, 2012. On July 17, 2012, the District wired $835,943 to CalPERS to pay off the side fund. By making that payment, the District reduced its Employer Contribution Rate from 11.668 to 10.238 for the remainder of the 2012-13 fiscal year, and will have a similar reduction in their employer contribution rate for the next 13 years. - 44 - This page intentionally left blank - 45 - REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFIT PLAN SCHEDULE OF FUNDING PROGRESS Retiree Health Plan Unfunded ActuarialActuarialUAAL as a AccruedActuarial ValueAccruedAnnualPercentage ActuarialLiabilityof Assets LiabilityFundedCoveredof Covered Valuation (AAL)(AVA)(UAAL)RatioPayrollPayroll Date(a)(b)(a) - (b)(b)/(a)(c)[(a)-(b)]/(c) 06/01/091,740,127$ -$ 1,740,127$ 0.00%4,983,653$ 34.92% 03/01/111,594,667$ -$ 1,594,667$ 0.00%5,044,860$ 31.61% 11/02/111,597,488$ 164,291$ 1,433,197$ 10.28%4,773,686$ 30.02% See independent auditors' report and notes to basic financial statements. - 46 - For the year ended June 30, 2012 YORBA LINDA WATER DISTRICT REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFIT PLAN SCHEDULE OF FUNDING PROGRESS - 47 - SUPPLEMENTARY INFORMATION WaterSewerTotals CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents7,598,440$ 2,470,031$ 10,068,471$ Accounts receivable - water and sewer services3,609,653245,6733,855,326 Accounts receivable - property taxes126,4392,038128,477 Accrued interest receivable10,9832,02113,004 Prepaid expenses and deposits243,771- 243,771 Inventory284,281- 284,281 TOTAL UNRESTRICTED ASSETS11,873,567 2,719,763 14,593,330 RESTRICTED ASSETS: Cash and cash equivalents10,084,111- 10,084,111 Investment2,157,786- 2,157,786 Accrued interest receivable5,977 - 5,977 TOTAL RESTRICTED ASSETS12,247,874 - 12,247,874 TOTAL CURRENT ASSETS24,121,441 2,719,763 26,841,204 NONCURRENT ASSETS: Bond issuance costs725,802- 725,802 Capital assets: Non-depreciable10,512,780373,71310,886,493 Depreciable, net of accumulated depreciation150,334,39439,828,969190,163,363 Other post-employment benefit (OPEB) asset30,3462,28432,630 TOTAL NONCURRENT ASSETS161,603,322 40,204,966 201,808,288 TOTAL ASSETS185,724,763 42,924,729 228,649,492 See independent auditors' report. ASSETS - 48 - YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET ASSETS June 30, 2012 WaterSewerTotals CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable 4,822,182$ 70,092$ 4,892,274$ Accrued expenses152,907- 152,907 Compensated absences payable - current portion265,893 - 265,893 Customer and construction deposits217,96849,928267,896 Deferred revenue412,5321,000 413,532 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS5,871,482 121,020 5,992,502 PAYABLE FROM RESTRICTED ASSETS: Accrued interest payable474,418- 474,418 Certificates of Participation - current portion925,000- 925,000 TOTAL PAYABLE FROM RESTRICTED ASSETS1,399,418 - 1,399,418 TOTAL CURRENT LIABILITIES7,270,900 121,020 7,391,920 LONG-TERM LIABILITIES (LESS CURRENT PORTION): Deferred annexation revenue14,064,550- 14,064,550 Compensated absences797,679- 797,679 Certificates of Participation41,353,129- 41,353,129 TOTAL LONG-TERM LIABILITIES (LESS CURRENT PORTION)56,215,358 - 56,215,358 TOTAL LIABILITIES63,486,258 121,020 63,607,278 NET ASSETS: Invested in capital assets, net of related debt121,469,883 40,202,682 161,672,565 Restricted for capital projects9,598,420 - 9,598,420 Unrestricted(8,829,798) 2,601,027 (6,228,771) TOTAL NET ASSETS122,238,505$ 42,803,709$ 165,042,214$ See independent auditors' report. June 30, 2012 - 49 - LIABILITIES YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET ASSETS (CONTINUED) WaterSewerTotals OPERATING REVENUES: Water sales 24,998,673$ -$ 24,998,673$ Sewer revenues- 1,785,8041,785,804 Other operating revenues753,83094,408848,238 TOTAL OPERATING REVENUES25,752,503 1,880,212 27,632,715 OPERATING EXPENSES: Variable water costs12,275,853- 12,275,853 Personnel services6,125,692853,3966,979,088 Supplies and services3,461,250349,8753,811,125 Depreciation and amortization5,359,0861,236,6346,595,720 TOTAL OPERATING EXPENSES27,221,881 2,439,905 29,661,786 OPERATING LOSS(1,469,378) (559,693) (2,029,071) NONOPERATING REVENUES (EXPENSES): Property taxes 1,273,855- 1,273,855 Investment income253,47823,659277,137 Interest expense(1,625,865) (325) (1,626,190) Other nonoperating revenues538,468267,186805,654 Other nonoperating expenses(90,485) (18,499) (108,984) TOTAL NONOPERATING REVENUES (EXPENSES)349,451 272,021 621,472 NET LOSS BEFORE CAPITAL CONTRIBUTIONS, TRANSFERS, AND EXTRAORDINARY ITEMS(1,119,927) (287,672) (1,407,599) CAPITAL CONTRIBUTIONS98,241 17,115,898 17,214,139 TRANSFERS IN (OUT)(85,111) 85,111- EXTRAORDINARY ITEM(5,000,000)- (5,000,000) CHANGES IN NET ASSETS(6,106,797) 16,913,337 10,806,540 NET ASSETS - BEGINNING OF YEAR128,345,30225,890,372154,235,674 NET ASSETS - END OF YEAR122,238,505$ 42,803,709$ 165,042,214$ See independent auditors' report. - 50 - YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the year ended June 30, 2012 WaterSewerTotals CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers25,579,916$ 1,816,513$ 27,396,429$ Cash payments to employees for salaries and wages(6,104,043) (950,760) (7,054,803) Cash payments to suppliers of goods and services(15,332,056) (407,263) (15,739,319) Other revenue207,307 270,993 478,300 Other expenses(55,127) (19,679) (74,806) NET CASH PROVIDED BY OPERATING ACTIVITIES4,295,997 709,804 5,005,801 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Cash received from other funds- 85,111 85,111 Cash paid to other funds(85,111) - (85,111) Cash payments for extraordinary item(5,000,000) - (5,000,000) Proceeds from property taxes and assessments1,261,507 - 1,261,507 NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES(3,823,604) 85,111 (3,738,493) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from annexation fees and capital contributions88,949 1,000 89,949 Acquisition and construction of capital assets(8,294,098) (339,372) (8,633,470) Proceeds from sales of capital assets11,249 - 11,249 Principal paid on long-term liability(890,000) - (890,000) Interest paid on long-term liability(1,919,497) (325) (1,919,822) NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES(11,003,397) (338,697) (11,342,094) CASH FLOWS FROM INVESTING ACTIVITIES: Sale/purchase of investments, net(35,032) (3,808) (38,840) Interest and investment earnings257,282 23,418 280,700 NET CASH PROVIDED BY INVESTING ACTIVITIES222,250 19,610 241,860 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(10,308,754) 475,828 (9,832,926) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR27,991,305 1,994,203 29,985,508 CASH AND CASH EQUIVALENTS - END OF YEAR17,682,551$ 2,470,031$ 20,152,582$ See independent auditors' report.(Continued) YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS For the year ended June 30, 2012 - 51 - WaterSewerTotals RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating loss(1,469,378)$ (559,693)$ (2,029,071)$ Adjustments to reconcile operating loss to net cash provided by operating activities: Depreciation5,359,086 1,236,634 6,595,720 Other revenues207,307 270,993 478,300 Other expenses(55,127) (19,679) (74,806) Changes in operating assets and liabilities: (Increase) decrease in assets: Accounts receivable(150,754) (62,537) (213,291) Inventory(50,668) - (50,668) Prepaid expenses and other deposits3,148 - 3,148 Increase (decrease) in liabilities: Accounts payable and accrued expenses439,300 (53,856) 385,444 Accrued salaries and wages37,851 (15,250) 22,601 Accrued other post-employment benefits (OPEB) liability(141,601) (13,094) (154,695) Accrued compensated absences125,399 (69,020) 56,379 Customer and other deposits(8,566) (4,694) (13,260) Total adjustments5,765,375 1,269,497 7,034,872 NET CASH PROVIDED BY OPERATING ACTIVITIES4,295,997$ 709,804$ 5,005,801$ CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION: Unrestricted7,598,440$ 2,470,031$ 10,068,471$ Restricted10,084,111 - 10,084,111 TOTAL CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION 17,682,551$ 2,470,031$ 20,152,582$ NONCASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES: Amortization related to long-term debt 20,988$ -$ 20,988$ Capital contributions364,564$ 17,115,898$ 17,480,462$ See independent auditors' report. (CONTINUED) For the year ended June 30, 2012 - 52 - YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS WaterSewerTotals OPERATING EXPENSES: Variable Water Costs: Imported water8,257,535$ -$ 8,257,535$ OCWD replenishment assessment1,927,686- 1,927,686 In-Lieu822,011- 822,011 MWD connection charge663,086- 663,086 Fuel and power/pumping605,535- 605,535 Total Variable Water Costs12,275,853 - 12,275,853 Personnel Services: Unit salaries4,233,576598,3414,831,917 Fringe benefits1,821,430251,1702,072,600 Director's fees70,6863,88574,571 Total Personnel Services6,125,692 853,396 6,979,088 Supplies and Services: Communications199,03115,133214,164 Contractual services407,87629,997437,873 Data processing116,6779,056125,733 District activities12,06890612,974 Dues and memberships53,6504,78458,434 Fees and permits146,4447,700154,144 Insurance212,13616,668228,804 Maintenance398,784134,185532,969 Materials483,30621,053504,359 Noncapital equipment94,57716,801111,378 Office expense42,2453,83346,078 Professional services873,65034,312907,962 Training34,7104,32039,030 Travel and conferences19,1951,29420,489 Uncollectible accounts21,8331,16222,995 Utilities65,1415,12370,264 Vehicle expense279,92743,548323,475 Total Supplies and Services3,461,250 349,875 3,811,125 TOTAL OPERATING EXPENSES21,862,795$ 1,203,271$ 23,066,066$ See independent auditors' report. - 53 - 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, 2012 WaterSewerTotals Land, Mineral and Water Rights: Land138,629$ -$ 138,629$ Water rights86,300- 86,300 Mineral rights63,650- 63,650 Land rights and easements38558,52658,911 Total Land, Mineral and Water Rights288,964 58,526 347,490 Source of Supply: Wells5,460,514- 5,460,514 MWD connection564,368- 564,368 Total Source of Supply6,024,882 - 6,024,882 Pumping Plant: Structures and improvements9,529,805- 9,529,805 Equipment7,862,111275,3608,137,471 Total Pumping Plant17,391,916 275,360 17,667,276 Water Treatment Plant: Structures and improvements1,302,812- 1,302,812 Equipment1,274,179- 1,274,179 Total Water Treatment Plant2,576,991 - 2,576,991 Transmission and Distribution Plant: Mains71,162,93645,532,191116,695,127 Reservoirs and tanks61,484,568- 61,484,568 Service and meter installation5,466,9302,419,2257,886,155 Fire hydrants6,452,740- 6,452,740 Meters8,971,681- 8,971,681 Fire mains717,746- 717,746 Structures and improvements2,230,158- 2,230,158 Control system1,377,500- 1,377,500 Total Transmission and Distribution Plant157,864,259 47,951,416 205,815,675 General Plant: Structures and improvements13,403,182- 13,403,182 Transportation equipment1,567,985979,7442,547,729 Power operated equipment549,710- 549,710 Communication equipment565,557- 565,557 Computer equipment1,694,051205,2421,899,293 Office furniture1,188,942- 1,188,942 Tools, shops and garage equipment82,715- 82,715 Other4,650- 4,650 Store equipment48,889- 48,889 Total General Plant19,105,681 1,184,986 20,290,667 Construction in Progress10,223,816315,18710,539,003 Total Capital Assets213,476,509$ 49,785,475$ 263,261,984$ See independent auditors' report. YORBA LINDA WATER DISTRICT SCHEDULE OF CAPITAL ASSETS For the year ended June 30, 2012 - 54 - - 55 - STATISTICAL SECTION - 56 - This page intentionally left blank YORBA LINDA WATER DISTRICT DESCRIPTION OF STATISTICAL SECTION CONTENTS June 30, 2012 - 57 - 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. 58 Revenue Capacity these schedules contain information to help the reader assess the District’s most significant local revenue source, water sales. 60 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. 62 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. 64 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. 66 Changes in Net Assets:2012201120102009 Operating Revenues Water Sales24,998,673$ 22,686,251$ 21,806,164$ 19,626,738$ Sewer Revenues1,785,804 1,274,579 1,275,980 1,259,723 Other Operating Revenues848,238 1,035,545 1,102,143 439,302 Operating Expenses Variable Water Costs12,275,853 11,268,306 10,688,318 10,859,328 Personnel Services6,979,088 6,902,995 6,677,757 6,498,959 Supplies and Services 3,811,125 3,686,333 3,576,147 4,151,058 Depreciation 6,595,720 5,279,860 5,153,891 4,167,958 Operating Loss(2,029,071) (2,141,119) (1,911,826) (4,351,540) Nonoperating Revenues (Expenses) Property Taxes1,273,855 1,258,769 1,269,441 1,283,521 Investment Income277,137 274,152 244,857 689,108 Interest Expense(1,626,190) (1,172,503) (1,170,498) (1,469,925) Other Nonoperating Revenues805,654 739,062 589,201 479,911 Other Nonoperating Expenses(108,984) (406,575) (151,300) (177,553) Total Nonoperating Revenues (Expenses)621,472 692,905 781,701 805,062 Net Income (Loss) Before Capital Contributions and Extraordinary Items(1,407,599) (1,448,214) (1,130,125) (3,546,478) Capital Contributions17,214,138 706,319 6,278,135 4,363,527 Extraordinary Items(5,000,000) - - - Changes in Net Assets 10,806,539$ (741,895)$ 5,148,010$ 817,049$ Net Assets by Component: Invested in Capital Assets, Net of Related Debt161,672,565$ 146,235,362$ 146,877,122$ 141,514,024$ Restricted9,598,420 12,620,256 15,797,432 14,063,802 Unrestricted(6,228,771) (4,619,943) (7,696,984) (6,158,513) Total Net Assets 165,042,214$ 154,235,675$ 154,977,570$ 149,419,313$ Source: YLWD Audited Financial Statements(Continued) - 58 - Yorba Linda Water District Changes in Net Assets Last Ten Fiscal Years Fiscal Year 200820072006200520042003 19,470,109$ 18,944,233$ 17,017,275$ 14,533,021$ 14,138,952$ 12,128,715$ 1,247,907 806,897 778,275 750,771 763,528 545,119 380,175 393,285 382,917 427,430 385,241 177,966 10,516,507 10,703,037 8,930,535 7,920,218 8,405,858 7,510,409 5,751,384 5,276,878 4,635,464 4,294,020 3,903,396 3,304,878 4,361,512 3,395,303 2,877,288 2,699,842 2,345,991 2,111,993 3,572,726 3,445,868 2,923,288 2,578,420 2,498,265 2,305,286 (3,103,938) (2,676,671) (1,188,108) (1,781,278) (1,865,789) (2,380,766) 1,263,656 1,186,441 335,075 252,663 1,005,859 3,304,314 1,508,193 2,180,067 1,425,663 638,235 342,554 549,093 (824,387) (468,087) (472,163) (565,581) (484,895) (214,842) 270,429 455,067 534,385 416,778 642,358 155,814 (133,604) (138,501) (336,649) (179,526) (296,528) (282,039) 2,084,287 3,214,987 1,486,311 562,569 1,209,348 3,512,340 (1,019,651) 538,316 298,203 (1,218,709) (656,441) 1,131,574 4,100,051 6,913,095 26,026,524 6,701,629 2,184,681 11,419,097 - - - - - - 3,080,400$ 7,451,411$ 26,324,727$ 5,482,920$ 1,528,240$ 12,550,671$ 139,677,663$ 121,317,296$ 106,376,683$ 84,000,773$ 74,338,841$ 80,268,884$ 14,523,549 23,089,201 22,274,814 23,196,485 25,140,038 16,774,957 (4,898,647) 1,815,668 10,119,257 5,248,769 7,484,228 8,391,026 149,302,565$ 146,222,165$ 138,770,754$ 112,446,027$ 106,963,107$ 105,434,867$ - 59 - Fiscal Year Yorba Linda Water District Number of Connections Single FamilyMulti-FamilyCommercial/Direct Rate Fiscal YearResidentialResidentialIndustrialIrrigation(Billing Unit) 200320,383 2251,050 840 1.33$ 200420,914 225849 829 1.33 200520,773 217842 803 1.48 * 200621,300 217847 838 1.57 200721,451 228792 868 1.57 200821,580 228840 857 1.79 200921,672 228831 855 2.52 201021,846 228837 877 2.52 201121,701 231833 879 2.52 201222,064 240829 846 2.52 NOTE: * $1.48 was approved January 1, 2005 Source: YLWD Billing System Last Ten Fiscal Years - 60 - ‐ 5,000 10,000 15,000 20,000 25,000 2003200420052006200720082009201020112012 Irrigation Industrial Residential Residential FY 2012 Customer NameBusiness TypeAnnual Revenues% of Total 1City of Yorba LindaGovernment2,016,151.57$ 7.30% 2Placentia-Yorba Linda USDGovernment273,763.78 0.99% 3Yorba Linda VillagesHomeowners' Assoc.111,713.91 0.40% 4Archstone ApartmentsApartment Complex107,771.16 0.39% 5Fairmont Hill Community Assoc.Homeowners' Assoc.101,383.52 0.37% 6The Hills at Yorba LindaHomeowners' Assoc.86,257.80 0.31% 7Kerrigan Ranch II Community Assoc.Homeowners' Assoc.80,886.00 0.29% 8Lake Park Mobil Home CommunityHomeowners' Assoc.72,569.88 0.26% 9Woodgate CondominiumsHomeowners' Assoc.55,481.98 0.20% 10Rancho Dominguez CommunityHomeowners' Assoc.52,828.20 0.19% 2,958,807.80$ 10.71% FY 2003 Customer NameBusiness TypeAnnual Revenues% of Total 1City of Yorba LindaGovernment1,162,249.51$ 9.04% 2Saba PetroleumManufacturer27,162.94 0.21% 3Tac West IncManufacturer18,409.96 0.14% 4St Francis of AssissiPrivate School13,001.84 0.10% 5Shigemi MuranakaNursery Retail12,303.44 0.10% 7Sunset TropicalsGovernment9,493.13 0.07% 6Placentia-Yorba Linda USDNursery Retail9,381.26 0.07% 8CostcoWarehouse Retail8,933.78 0.07% 9Excell CircuitsManufacturer8,893.10 0.07% 10Yorba Linda Country ClubPrivate Club8,453.53 0.07% 1,278,282.49$ 9.95% Source: YLWD Billing Department Yorba Linda Water District Ten Largest Customers Current and Nine Years Ago - 61 - Yorba Linda Water District Ratio of Outstanding Debt GeneralCertificatesAs a Share of Fiscal ObligationofPerPerPersonal YearBondsOCWD LoanParticipationDebtConnectionCapitaIncome 20033,671,446$ 149,061$ -$ 3,820,507$ 170$ 56$ 0.06% 20041,590,000 - 10,384,239 11,974,239 525 172 0.19% 2005- - 10,000,078 10,000,078 441 142 0.15% 2006- - 9,873,717 9,873,717 426 139 0.14% 2007- - 10,540,139 10,540,139 451 148 0.14% 2008- - 45,502,080 45,502,080 1,932 637 0.56% 2009- - 44,911,092 44,911,092 1,900 628 0.55% 2010- - 44,065,104 44,065,104 1,848 611 0.54% 2011- - 43,189,117 43,189,117 1,827 604 0.52% 2012- - 42,278,129 42,278,129 1,764 583 0.49% Source: YLWD Audited Financial Statements Last Ten Fiscal Years Total - 62 - $‐ $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 Composition of Debt Participation OCWD Loan Bonds $‐ $500 $1,000 $1,500 $2,000 $2,500 2003200420052006200720082009201020112012 Debt per Connection Debt Service Fiscal Operating &NetCoverage YearRevenues Maint. CostsRevenuesPrincipalInterest TotalRatio 200316,215$ 12,873$ 3,342$ 2,172$ 229$ 2,401$ 1.39 200416,471 14,428 2,043 2,263 148 2,411 0.85 200516,178 14,230 1,948 1,760 299 2,059 0.95 200619,563 16,009 3,554 200 473 673 5.28 200723,036 18,703 4,333 205 469 674 6.43 200822,822 19,829 2,993 210 919 1,129 2.65 200922,514 20,604 1,910 570 2,051 2,621 0.73 201024,417 19,928 4,489 825 1,951 2,776 1.62 201125,912 20,845 5,067 855 1,949 2,804 1.81 201227,818 21,950 5,868 890 1,915 2,805 2.09 NOTE:Excludes depreciation and debt service payments Source:YLWD Audited Financial Statements Yorba Linda Water District Debt Coverage Last Ten Fiscal Years - 63 - Personal Income YearPopulation *City of YL PopulationPersonal Incomeper Capita 2003 68,745 62,678 6,025,361,496$ 87,648$ 2004 69,610 64,055 6,435,285,575 92,448 2005 70,364 65,382 6,699,301,248 95,209 2006 70,935 66,797 7,150,485,256 100,803 2007 71,258 67,904 7,623,582,080 106,986 2008 71,428 68,852 8,179,815,504 114,518 2009 71,507 68,852 8,239,633,400 115,228 2010 72,083 69,816 8,095,032,402 112,302 2011 71,520 70,681 8,233,404,978 115,120 2012 72,498 72,706 8,660,636,569 119,460 Personal Income YearPopulationUnemployment RatePersonal Incomeper Capita 20032,983,731 5.0%117,722,484$ 39,455$ 20043,019,889 4.8%125,670,056 41,614 20053,047,054 4.3%135,070,503 44,328 20063,072,336 3.2%145,435,581 47,337 20073,098,121 3.9%150,214,330 48,486 2008^3,121,251 5.2%157,828,108 50,566 2009^3,139,017 9.0%159,710,562 50,879 2010#^3,170,721 9.8%150,467,328 47,455 2011#^3,192,916 8.7%155,323,766 48,646 2012^3,182,171 7.9%160,637,055 50,480 NOTE: ^No personal income data available for County of Orange, used State of California data. #No population data available for County of Orange, used State of California data. Sources:City of Yorba Linda CAFR County of Orange CAFR State of California, Employment Development Department State of California, Department of Finance - 64 - County of Orange YLWD Yorba Linda Water District Demographics Last Ten Fiscal Years 2008*2006+ Employer ^EmployeesEmployees Viasys Respiratory Care, Inc.3891.19%3591.02% Nobel Biocare USA, Inc.3280.93%3230.92% Costco Wholesale Corp.2760.78%2040.58% City of Yorba Linda1940.55%1800.51% Vons1650.47%1670.48% Kohl's Inc.1580.45%1450.41% Best Buy1290.37%1350.38% Sunrise Retirement Homes1260.36%1200.34% Office Solutions920.26%980.28% Cobra Engineering800.23%00.00% Total1,9375.6%1,7314.9% NOTES: * Most current available data + Oldest 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 Yorba Linda Water District Ten Largest Employers Current and Six Years Ago - 65 - % of Total% of Total Labor ForceLabor Force FiscalHuman YearAdministrationEngineering FinanceResourcesITOperationsTotal 20032.011.010.01.02.029.055.0 20043.012.010.01.02.032.060.0 20053.013.011.01.03.031.062.0 20064.014.013.03.03.028.065.0 20074.013.015.03.03.032.070.0 20084.013.016.03.06.032.074.0 20094.013.016.03.06.033.075.0 20104.512.015.03.06.035.576.0 20115.511.014.03.07.037.077.5 20125.011.014.03.07.537.077.5 NOTE: *Number of employees in each department are authorized and funded positions. Source:YLWD Human Resources Department - 66 - Department Full Time Equivalent Employees by Department * Yorba Linda Water District Number of Employees Last Ten Fiscal Years 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 2003200420052006200720082009201020112012 Operations IT Resources Finance Engineering Fiscal Miles of Water Yearly WaterAverage Year Mains Installed*Production (MG)Production (MGD) 20030.787,92721.7 20043.647,86321.5 20053.647,04219.3 20062.527,50520.6 20079.728,36022.9 20089.728,02722.0 20099.727,59020.8 20109.726,56918.0 20112.006,28217.2 20122.026,78018.6 Fiscal Number of Number of Number of YearBooster PumpsReserviorsField Service Calls 200311101,727 200411101,833 200511101,460 200611101,484 200712111,565 200812111,943 200912111,674 201012131,640 201112131,924 201212131,693 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 - 67 - Yorba Linda Water District Operating and Capacity Indicators Last Ten Fiscal Years - 68 - This page intentionally left blank 2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893 Offices located in Orange and San Diego Counties - 1 - 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, 2012, and have issued our report thereon dated September 21, 2012. 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 Management of the District is responsible for establishing and maintaining effective 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 internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over financial reporting, described below, that we consider to be significant deficiencies in internal control over financial reporting. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. - 2 - Year-Ending Closing Procedures Auditors’ Comment and Recommendation: While conducting our audit, we noted that obtaining a complete and accurate final general ledger was problematic, as was also the case for the inconsistencies of supporting schedules for balances in the general ledger. These factors resulted in adjustments to accounts receivable, deferred revenue, inventory and reclassification of an expense balance. Complete and accurate supporting schedules are necessary for complete and accurate financial statements. We suggest the District review its procedures and identify whether a more formal review process is required for year-end closing procedures or if additional education and training is required in this area. An improvement in the year-end closing procedures will result in a more complete and accurate final general ledger for financial reporting. Management’s Response The District believes that a large part of the difficulties with year-end closing procedures was due to a vacancy in the Accounting Section immediately preceding the audit. However, the District agrees that improvements can be made to ensure that complete and accurate closing schedules are provided to the auditors, and will adjust year-end closing procedures to focus on improving in this area. Segregation of Duties Auditors’ Comment and Recommendation: The Customer Service Supervisor and Customer Service Representatives I, II, and III can accept customer payments and adjust customer accounts which can result in an employee retaining cash received from a customer and adjusting the balance of the customer account to reflect the payment. Currently, the District’s software is not designed to provide a report that contains all customer account adjustments. Therefore, all customer account adjustments cannot be reviewed for propriety. We recommend the District design a weekly report that contains all customer account adjustments. This report should be reviewed by an employee outside of the cash receipt function. Management’s Response The District agrees that an independent review of credit memos made in Customer Service is appropriate and necessary, and will work towards ensuring such a report is created to strengthen internal controls. 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. - 3 - The District’s responses to the comments identified in our audit are described above. We did not audit the District’s responses and, accordingly, we express no opinion on them. 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. Irvine, California September 21, 2012 2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893 Offices located in Orange and San Diego Counties - 1 - 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, 2012, and have issued our report thereon dated September 21, 2012. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government 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 July 3, 2012 and our meeting on planning matters on July 23, 2012. 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 1 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, 2012. 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. 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 provided by outside sources. b. The estimated useful lives of capital assets for depreciation purposes which are based on industry standards. c. The value of the capital assets received as a contribution from the City of Yorba Linda (City) due to the District providing sewer services to customers previously serviced by the City. d. The annual required contribution for the District’s Other Post-Employment Benefits was prepared by an outside consultant. - 2 - Significant Audit Findings (Continued): Qualitative Aspects of Accounting Practices (Continued): 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 disclosures affecting the financial statements were reported in Note 6 to the financial statements regarding the annual required contribution and the actuarial liability for the District’s Other Post-Employment Benefits and in Note 12 regarding the settlement of the Freeway Complex Fire case. 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. The following material misstatements detected as a result of audit procedures were corrected by management: a. The accounts receivable balance was increased to correct mathematical errors on estimated usage for unbilled water and sewer receivables. b. The deferred revenue was decreased to correct mathematical errors within the calculation. c. A variable water cost expense was reclassified to a different expense account as a result of miscoding of invoices. d. Inventory and accounts payable were increased to accrue invoices and record inventory items received as of year-end. Disagreements with Management 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 21, 2012. - 3 - 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. Other Information in Documents Containing Audited Financial Statements With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. 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. Irvine, California September 21, 2012 ITEM NO. 12.1 AGENDA REPORT Meeting Date: October 11, 2012 Subject:Executive-Administrative-Organizational Committee (Hawkins/Melton) · Minutes of meeting held September 21, 2012 at 12:00 p.m. · Meeting scheduled October 15, 2012 at 4:00 p.m. ATTACHMENTS: Name:Description:Type: 092112_EAO_-_Minutes.doc EAO Mtg Minutes 09/21/12 Minutes 1 MINUTES OF THE YORBA LINDA WATER DISTRICT EXEC-ADMIN-ORGANIZATIONAL COMMITTEE MEETING September 21, 2012 A meeting of the Yorba Linda Water District’s Executive-Administrative-Organizational Committee was called to order by Director Hawkins at 12:00 p.m. The meeting was held at the District’s Administrative Office at 1717 E Miraloma Ave, Placentia, CA 92870. COMMITTEE STAFF Director Phil Hawkins, Chair Steve Conklin, Acting General Manager Director Gary T. Melton Damon Micalizzi, Public Information Officer OTHER ATTENDEES Arthur G. Kidman, Partner, Kidman Law LLP Christopher Townsend, President, Townsend Public Affairs Matthew Hicks, Associate, Townsend Public Affairs Mr. Conklin requested to add the following case to the Closed Session section of the agenda as the item came to staff’s attention subsequent to the agenda being posted and action on this matter needed to be considered before the October EAO Committee meeting. In the Matter of Yorba Linda Water District and Michael Beverage (FPPC No. 11/49G) Directors Hawkins and Melton agreed to add discussion of this matter under Item No. 4.1. on the agenda. 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR 2.1. Affirmation of Compliance with the Brown Act Mr. Conklin reported that the State, as a cost-saving measure, suspended for the next three years, certain state mandates including portions of the Brown Act. He noted that, in an effort to remain transparent, open and responsive, the CSDA, League of California Cities, and other entities encouraged local agencies to continue to comply with all aspects of the Brown Act, including those recently suspended. Mr. Conklin provided examples of actions taken by the City of Yorba Linda and MWDOC to affirm continued compliance. Following discussion, the Committee 2 recommended that the Board adopt a resolution affirming the District’s compliance with all aspects of the Brown Act. 3. DISCUSSION ITEMS 3.1. Legislative Affairs Update (Verbal Report) Mr. Townsend and Mr. Hicks joined the meeting for this item. Mr. Townsend reported on a meeting he had with Supervisor Campbell, and Mr. Kidman reported on his meeting with attorney Ken Smart, regarding the Lakeview Grade Separation Project and the Orange County Transportation Authority. Discussion with the Committee followed on the matter, and Mr. Townsend and Mr. Kidman were provided direction. Thereafter, Mr. Townsend and Mr. Hicks reported on issues relating to water matters in Sacramento and locally. At the completion of this item, Mr. Townsend and Mr. Hicks left the meeting. 3.2. Organizational Efficiency Study (Verbal Report) Mr. Conklin reported on the various ideas proposed for the Organizational Efficiency Study. After discussion, the Committee recommended that this item be brought to the Board on September 27 to schedule a date for a Board Workshop to develop a scope of work for the study and to develop a job description for the position of General Manager. 3.3. Use of Expedited Delivery Services (Verbal Report) The Committee had a brief discussion on the potential use of Fed Ex versus courier service for delivery of time-sensitive items. The Committee directed the Acting General Manager to handle this at the staff level. 3.4. Customer Service Feedback Report The above report, showing customer service calls by category and customer feedback responses for January through August 2012, were reviewed with the Committee. 3.5. Status of Strategic Plan Initiatives The status of the above was reviewed with the Committee. 3.6. Future Agenda Items and Staff Tasks Mr. Conklin reported that several staff members, including Mrs. Knight, the HR & Risk Manager, had recently attended training workshops on the topics “Managing the Marginal Employee,” and on “Performance Management.” The consensus of staff was that these were valuable training, and that all District staff who manage staff and perform staff evaluations could benefit from these classes. Following discussion, the Committee directed the Acting General Manager to make arrangements for these classes to be presented at the District for all staff who are managers, supervisors and leads. 3 The Committee adjourned to Closed Session at 1:45 p.m. Directors Hawkins and Melton were present. Also present were Messrs. Conklin and Kidman. 4. CLOSED SESSION 4.1. Conference with Legal Counsel – Pending Litigation Pursuant to Subdivision (a) of Section 54956.9 of the California Government Code Name of Case: ACWA/JPIA, et al vs. Insurance Company of the State of Pennsylvania, et al (OC Superior Court – Case No. 00486884) Name of Case: MAMCO, Inc. vs. Yorba Linda Water District (OC Superior Court – Case No. 00595177) Name of Case: In the Matter of Yorba Linda Water District and Michael Beverage (FPPC No. 11/49G) The Committee reconvened in Open Session at 2:10 pm. Director Hawkins announced that no action was taken during Closed Session that was required to be reported under the Brown Act. 5. ADJOURNMENT 5.1. The meeting was adjourned at 2:10 pm. The next meeting of the Executive-Administrative-Organizational Committee will be held Monday, October 15, 2012 at 4:00 p.m. ITEM NO. 12.2 AGENDA REPORT Meeting Date: October 11, 2012 Subject:Finance-Accounting Committee (Kiley/Hawkins) · Minutes of meeting held September 26, 2012 at 4:00 p.m. · Meeting scheduled October 22, 2012 at 4:00 p.m. ATTACHMENTS: Name:Description:Type: 092612_FA_-_Minutes.doc FA Mtg Minutes 09/26/12 Minutes 1 MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCE-ACCOUNTING COMMITTEE MEETING September 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 Steve Conklin, Acting General Manager Director Phil Hawkins Stephen Parker, Finance Manager OTHERS Nitin Patel, Partner, White Nelson Diehl Evans LLP 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR 2.1. Submission of 2012 Audit Reports Mr. Parker summarized the three reports that were being presented to the Committee as a result of the completion of the audit process and introduced Mr. Nitin Patel, Partner at White Nelson Diehl Evans LLP, who was the engagement partner on the job. Mr. Patel went over the language on the opinion letter and explained what it meant. He explained that the District received an unqualified (or “clean”) opinion. Mr. Patel then went over the GAS (Governmental Auditing Standards) letter, which described the auditor’s review of internal controls and identified two items as significant deficiencies, where internal controls could be improved. Mr. Patel explained that while Management’s Response was included in the letter, the auditors do not issue an opinion on the comments. The Committee asked if staff had the opportunity to review the comments prior to them being issued, and Mr. Patel indicated that they had. Lastly, Mr. Patel went over the Communication to Those in Governance letter. These are required disclosures that identify sensitive estimates in the financial statements, corrected misstatements detected by audit procedures and any potential disagreements with management among other disclosures. Mr. Patel pointed out that the documents being presented were provided to the Finance-Accounting Committee last year on October 24th, so there was a significant improvement in the timeline for accomplishing the audit. 2 Mr. Parker gave his thanks to White Nelson Diehl Evans for working successfully within a tight timeline and despite the District’s Accounting section being short-staffed. Mr. Patel deferred all the credit for that went to the Senior on the engagement – Kassie Radermacher. The Committee thanked Mr. Patel for his firm’s work on the audit and coming to present it to them. The Committee supported presenting the CAFR, GAS Letter and Communication to Those in Governance letter to the whole Board for acceptance at the October 11 meeting. At that point Mr. Patel left the meeting. 2.2. Authorization to Invest in Local Agency Investment Fund Mr. Parker explained that the resolution the Board approved June 23, 2011 authorized the GM, Finance Director and Senior Accountant or their successors in office to interact with LAIF on behalf of the District. Steve Conklin, being the Acting GM, therefore, is authorized to transfer District funds held at LAIF. However, if there is a position change, LAIF requires a new resolution. While the duties remained the same, on July 1, 2012 the Finance Director position was changed to Finance Manager, and this triggered a requirement for a new resolution. Therefore, Mr. Parker indicated that the resolution before the Finance-Accounting Committee was identical to the one submitted last year, just with a changed title for Mr. Parker, and a new person in the GM position. The Committee supported staff’s recommendation. 2.3. Authorized Officers for Investments Held at Pershing Mr. Parker discussed conversations staff had with multiple broker/dealers. Every broker/dealer had a preferred third party custodian for investments. Some had monthly fees, while others were free if purchases were made from the particular broker/dealer. Only one custodian was willing to have no holding fees for purchases made from the broker/dealer they interact with most as well as purchases made through other broker/dealers. That custodian was Pershing LLC. First Empire Securities, a broker/dealer that has been approved by the District, has a relationship with Pershing LLC that would allow all investments to be held without fees to the District (the fees are paid by First Empire Securities). Staff therefore brought to the Committee a resolution that would provide authorization to the Finance Manager and Acting General Manager to act on the District’s behalf relating to investments held at Pershing LLC. The Committee had questions about Pershing related to insurance, their customers, the length of time they had been in business and how many holdings they had. The Committee supported staff recommendation, but asked that their questions be addressed in the agenda report that went to the Board. 3 2.4. Adopting Water Development and Customer Service Fees Mr. Parker explained that the Board approved the Meter Resizing Policy on September 6, but that the water development and customer service fees did not match the policy. Therefore, staff updated the policy to include in Section 1 the costs of any elective meter resizing. The Committee supported staff’s recommendation, but requested that additional language be included that removes the cost of the meter if the meter was scheduled for replacement. 3. DISCUSSION ITEMS 3.1. Budget to Actual Results for July and August 2012 Mr. Parker presented the budget to actual results for July and August 2012. The Committee and Mr. Parker discussed some individual line items and had no outstanding questions. 3.2. Investment Reports for July and August 2012 Mr. Parker presented the investment reports for July and August 2012. The Committee and Mr. Parker discussed some changes in balances and the new investment of a money market account with Bank of the West and had no outstanding questions. 3.3. Status of Strategic Plan Initiatives Mr. Parker updated the Committee on strategic plan initiatives relating to Fiscal Responsibility. The completion of the Refunding Revenue Bonds, Series 2012A and the establishment of the Line of Credit with Wells Fargo were also discussed. The Committee recommended not drawing down the line besides the initial funding unless it was necessary and staff agreed. 3.4. Future Agenda Items and Staff Tasks • That the agenda report for the resolution authorizing officers for investments held at Pershing include information related to insurance, Pershing’s customers, their length of time in business and holdings. • That the resolution adopting water development and customer service fees be changed to reflect a reduction in fees for elective meter resizing where the District was scheduled to replace the meter already. 4. ADJOURNMENT 4.1. The Committee adjourned at 5:10 p.m. The next meeting of the Finance- Accounting Committee will be held Monday, October 22, 2012 at 4:00 p.m. ITEM NO. 12.5 AGENDA REPORT Meeting Date: October 11, 2012 Subject:Public Affairs-Communications-Technology Committee (Melton/Beverage) · Minutes of meeting held October 1, 2012 at 4:00 p.m. · Meeting scheduled October 24, 2012 at 4:00 p.m. ATTACHMENTS: Name:Description:Type: 100112_PACT_-_Minutes.docx PACT Mtg Minutes 10/01/12 Backup Material 1 MINUTES OF THE YORBA LINDA WATER DISTRICT PUBLIC AFFAIRS-COMMUNICATIONS-TECHNOLOGY COMMITTEE MEETING October 1, 2012 A meeting of the Public Affairs-Communications-Technology Committee was called to order by Director Melton 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 Gary T. Melton, Chair Steve Conklin, Acting General Manager Director Michael J. Beverage Art Vega, Interim IT Manager Damon Micalizzi, Public Information Officer Gina Knight, HR/Risk Manager 1. PUBLIC COMMENTS None. 2. DISCUSSION ITEMS 2.1. Computerized Maintenance and Management System Project Status Mr. Vega informed the Committee that CMMS is now operational for the valve crew. There were no further questions from the Committee. 2.2. Faxing & Printer Toner Issue (Verbal Report) The Committee discussed the issues associated with faxing, the availability of toner cartridges for printers and issues relating to emailing very large files. The resulting recommendations are for staff to perform a monthly inventory of toner and other supplies for copy and fax machines, and to remind staff to use the “Out of Office” notification feature in Outlook. Concerning the issue of emailing large files, IT staff will review the current limitations on outgoing and incoming emails, and will report back to the Committee on options and recommendations. Mrs. Knight left the meeting following this discussion. 2.3. Bottled Water Contest Update (Verbal Report) Mr. Micalizzi presented the Committee with the post-card-sized flyer that will be distributed to elementary schools in the District’s service area, promoting this year’s contest. He also outlined plans for the judging and selection process that will include a social media campaign and coincide with the launch of the District’s new Website. 2 2.4. Status of Website Redesign (Verbal Report) Mr. Micalizzi updated the Committee on the status of the redesign of the District’s Website, noting that training is scheduled October 9 for about a dozen District employees in the use and modification of the new website program. The expected date for the launch of the District’s new website is Monday October 22nd. 2.5. Public Affairs Workshop (Verbal Report) The Committee briefly discussed the plans for a potential Public Affairs Workshop to tentatively be scheduled before the end of the Calendar year. Mr. Micalizzi discussed items for the workshop and ideas for the District’s new messaging plan. The Public Affairs Workshop will not be scheduled until a date and time is set for the District’s Organization and Efficiency Study Workshop. 2.6. Past-Due Reminder Notice The Committee reviewed the District’s Past-Due Reminder Notice, as a follow-up, after an upset customer contacted the District at the Customer Service Counter after receiving a reminder notice. Following discussion, the Committee asked that staff take this to the EAO Committee for further review and consideration. 2.7. Status Report on Strategic Plan Initiatives The Committee reviewed the update on Strategic Plan Initiatives noting that all of the updated items had been previously discussed in the meeting. 2.8. Future Agenda Items The Committee discussed having two meetings a month for the rest of the Calendar year so to tend to items that had been idle during Mr. Micalizzi’s unexpected extended absence. The following were tentatively setup as meeting dates and times for future meetings: Oct 24 4pm, Nov. 5 4pm, Nov. 20 4pm, Dec 3 3pm and Dec. 19 4pm. 3. ADJOURNMENT 3.1. The meeting was adjourned at 5:27 p.m. The next meeting of the Public Affairs-Communications-Technology Committee will be held Wednesday, October 24, 2012 at 4:00 p.m. ITEM NO. 12.6 AGENDA REPORT Meeting Date: October 11, 2012 Subject:YLWD-MWDOC-OCWD Joint Agency Committee (Hawkins/Beverage) · Minutes of meeting held September 25, 2012 at 4:00 p.m. · Meeting scheduled November 27, 2012 at 4:00 p.m. ATTACHMENTS: Name:Description:Type: 092512_MWDOC_OCWD_-_Minutes.docx Joint Agency Mtg Minutes 09/25/12 Minutes 1 MINUTES OF THE YORBA LINDA WATER DISTRICT JOINT COMMITTEE MEETING WITH MWDOC AND OCWD September 25, 2012 A meeting of the YLWD/MWDOC/OCWD Joint Agency Committee was called to order at 4:00 p.m. The meeting was held at the District’s Administrative Office at 1717 East Miraloma Avenue, Placentia CA 92870. YLWD COMMITTEE MEMBERS YLWD STAFF Director Phil Hawkins Steve Conklin, Interim General Manager Director Michael J. Beverage MWDOC COMMITTEE MEMBERS MWDOC STAFF Director Brett Barbre Karl Seckel, Assistant General Manager OCWD COMMITTEE MEMBERS OCWD STAFF Director Roger Yoh John Kennedy, Assistant General Manager 1. PUBLIC COMMENTS None. 2. DISCUSSION ITEMS 2.1. Extension of MWD’s Water Purchase Agreements Director Barbre reported that MWD has extended the current water purchase agreement for an additional two years. He noted that MWD has several lawsuits it is dealing with. It hopes to get these settled before tackling the issue of a new water purchase agreement. Mr. Seckel noted that MWD will be looking to increase the fixed-charge element more so than the commodity charge, as a means to provide more stabilization in annual revenue. Mr. Barbre also reported that he has been appointed vice-chair of MWD’s Finance and Insurance Committee. 2.2. Status of Bay Delta Conservation Plan Director Barbre reported that there will be a presentation by Brian Thomas, Managing Director for Public Financial Management, Inc., at the MWDOC/MWD Joint Workshop meeting on October 3, 2012 at 8:30 a.m. It was noted that YLWD has a Board meeting that morning and that no Directors will be able to attend the workshop. Director Barbre indicated that he will provide information for YLWD from the presentation, including a fact sheet. 2.3. YLWD Annexation to OCWD Mr. Kennedy reported that a first-draft EIR will be distributed to the agencies in December 2012 for review and comment. Thereafter, the draft EIR will be released in early 2013 for review and comment to all 2 parties, for a 45-day review period. The final EIR and consideration of the annexation may come to the OCWD Board by summer or early fall 2013. 2.4. YLWD Well Site on OCWD Property Mr. Conklin reported that he is working with OCWD staff on conditions for the draft lease agreement for the well site. He noted that it may take in the range of three years to complete all tasks for a finished well. The YLWD directors asked that staff look at ways to expedite the process so that the well may be operational by the time that the potential annexation is approved. 2.5. MWDOC and OCWD Representative Availability to Address YLWD Citizens Advisory Committee Mr. Conklin reported that the dates requested for the 8:30 am CAC presentations are November 26, 2012 for Director Barbre, MWDOC, and December 17, 2012 for Director Yoh, OCWD. 2.6. Future Agenda Items and Staff Tasks None. 3. ADJOURNMENT 3.1. The Committee adjourned at 4:50 p.m. The next meeting of the YLWD- MWDOC-OCWD Joint Agency Committee will be held Tuesday, November 27, 2012 at 4:00 p.m. ITEM NO. 14.1 AGENDA REPORT Meeting Date: October 11, 2012 Subject:Meetings from October 12, 2012 - November 30, 2012 ATTACHMENTS: Name:Description:Type: BOD_-_Activities_Calendar.pdf Backup Material Backup Material Event Date Attendance by: October 2012 Exec-Admin-Organizational Committee MeetingMon, Oct 15Hawkins/Melton Yorba Linda City CouncilTue, Oct 16Melton MWDOC BoardWed, Oct 17Melton/Staff OCWD BoardWed, Oct 17Kiley/Staff YL Mayor's Prayer BreakfastThu, Oct 18Hawkins/Kiley/Melton OCWD Groundwater Adventure TourThu, Oct 18Collett Citizens Advisory Committee MeetingMon, Oct 22Beverage Finance-Accounting Committee MeetingMon, Oct 22Kiley/Hawkins Personnel-Risk Management Committee MeetingTue, Oct 23Beverage/Collett Pub Affairs-Communications-Tech Committee MeetingWed, Oct 24Melton/Beverage Yorba Linda Planning CommissionWed, Oct 24Collett Board of Directors Regular MeetingThu, Oct 25 November 2012 Planning-Engineering-Operations Committee MeetingThu, Nov 1Collett/Kiley WACOFri, Nov 2Hawkins Pub Affairs-Communications-Tech Committee MeetingMon, Nov 5Melton/Beverage Yorba Linda City CouncilTue, Nov 6Hawkins MWDOC/MWD WorkshopWed, Nov 7Melton/Staff OCWD BoardWed, Nov 7Kiley/Staff Board of Directors Regular MeetingThu, Nov 8 District Offices ClosedMon, Nov 12 Personnel-Risk Management Committee MeetingTue, Nov 13Beverage/Collett LAFCOWed, Nov 14Beverage Yorba Linda Planning CommissionWed, Nov 14Kiley Exec-Admin-Organizational Committee MeetingMon, Nov 19Hawkins/Melton Pub Affairs-Communications-Tech Committee MeetingTue, Nov 20Melton/Beverage Yorba Linda City CouncilTue, Nov 20Melton MWDOC BoardWed, Nov 21Melton/Staff Board of Directors Regular MeetingWed, Nov 21 OCWD BoardWed, Nov 21Kiley/Staff District Offices ClosedThu, Nov 22 District Offices ClosedFri, Nov 23 Citizens Advisory Committee MeetingMon, Nov 26Beverage Finance-Accounting Committee MeetingMon, Nov 26Kiley/Hawkins Joint Committee Meeting with MWDOC and OCWDTue, Nov 27Hawkins/Beverage Personnel-Risk Management Committee MeetingWed, Nov 28Beverage/Collett Yorba Linda Planning CommissionWed, Nov 28Collett ISDOCThu, Nov 29Collett 7:00PM 11:30AM 7:00AM 7:00AM 8:30AM 4:00PM 4:00PM 4:00PM 4:00PM 4:00PM 6:30PM 8:30AM 8:30AM 5:30PM 5:30PM 8:30AM 7:30AM 4:00PM 9:00AM 7:00PM 3:00PM 7:30AM 4:00PM 6:30PM 8:30AM 4:00PM 4:00PM 4:00PM 7:00PM 8:30AM 6:30PM 8:30AM 5:30PM 7:00AM 8:00AM 8:30AM Board of Directors Activity Calendar Time 4:00PM 10/4/2012 11:44:11 AM ITEM NO. 15.1 AGENDA REPORT Meeting Date: October 11, 2012 Subject:OC Water Use Efficiency Master Plan Stakeholder Workshop - October 15, 2012 STAFF RECOMMENDATION: That the Board of Directors authorize Director attendance at this event if desired. ATTACHMENTS: Name:Description:Type: OC_WUE_Workshop.pdf Backup Material Backup Material Approved by the Board of Directors of the Yorba Linda Water District 10/11/2012 MB/GM 5-0 Street Address: 18700 Ward Street Fountain Valley, California 92708 Mailing Address: P.O. Box 20895 Fountain Valley, CA 92728-0895 (714) 963-3058 Fax: (714) 964-9389 www.mwdoc.com Joan C. Finnegan President Jeffery M. Thomas Vice President Brett R. Barbre Director Wayne A. Clark Director Larry D. Dick Director Susan Hinman Director Ed Royce, Sr. Director Kevin P. Hunt, P.E. General Manager MEMBER AGENCIES City of Brea City of Buena Park East Orange County Water District El Toro Water District Emerald Bay Service District City of Fountain Valley City of Garden Grove Golden State Water Co. City of Huntington Beach Irvine Ranch Water District Laguna Beach County Water District City of La Habra City of La Palma Mesa Consolidated Water District Moulton Niguel Water District City of Newport Beach City of Orange Orange County Water District City of San Clemente City of San Juan Capistrano Santa Margarita Water District City of Seal Beach Serrano Water District South Coast Water District Trabuco Canyon Water District City of Tustin City of Westminster Yorba Linda Water District Announcement Orange County Water Use Efficiency Master Plan Stakeholder Workshop #1 The Municipal Water District of Orange County (MWDOC) is embarking on a process to develop a Water Use Efficiency Master Plan (Plan) for Orange County, and we invite your participation in the planning process. The purpose of this Plan will be to evaluate Orange County’s progress in saving water, quantify remaining water savings potential, and develop a portfolio of programs to implement over the next five years. MWDOC will be holding three stakeholder workshops throughout the next several months to engage interested parties in the Water Use Efficiency Master Planning process and explore opportunities for new programs and partnerships. Details for the first workshop are as follows: Date: October 15, 2012 Time: 9:30 am to noon Location: Municipal Water District of Orange County 18700 Ward Street Fountain Valley, CA 92708 Who Should Attend: Water agency representatives, watershed coordinators, environmental organizations, and interested members of the public RSVP to: http://tinyurl.com/9xuu88g If you have any questions, please call Joe Berg, Water Use Efficiency Program Manager, at (714) 593-5008.