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Home My WebLink About2017-10-24 - Board of Directors Meeting Agenda Packet (B) AGENDA YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Tuesday, October 24, 2017, 6:30 PM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL J. Wayne Miller, President Al Nederhood, Vice President Andrew J. Hall, Director Phil Hawkins, Director Brooke Jones, Director 4. ADDITIONS/DELETIONS TO THE AGENDA 5. INTRODUCTIONS AND PRESENTATIONS 5.1. Elected Official Liaison Reports 6. 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 three minutes. 7. CONSENT CALENDAR All items listed on the consent calendar are considered to be routine matters, status reports, or documents covering previous Board instructions. The items listed on the consent calendar may be enacted by one motion. There will be no discussion on the items unless a member of the Board, staff, or public requests further consideration. 7.1. Minutes of the Board of Directors Special Meeting Held September 12, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.2. Minutes of the Board of Directors Regular Meeting Held September 12, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.3. Minutes of the Board of Directors Special Meeting Held September 14, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.4. Minutes of the Board of Directors Special Meeting Held September 20, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.5. Payments of Bills, Refunds, and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $2,550,667.09. 7.6. Terms and Conditions for Sewer Service with Marzola, 5162 Mountain View Avenue Recommendation: That the Board of Directors approve the Terms and Conditions for Sewer Service with Marzola, 5162 Mountain View Avenue, Job No. 201732S. 7.7. Amendment Two of the Well 21 Lease Agreement Recommendation: That the Board of Directors authorize approval and execution of Amendment Two of the Lease Agreement between the Orange County Water District and the Yorba Linda Water District for Warner Basin Complex - Well No. 21. 7.8. Brand Name Requirement for Pressure Regulating Station (PRS) Rehabilitation Phase 2 Project Recommendation: That the Board of Directors approve the Brand Name Requirement for the PRS Rehabilitation Phase 2 Project for the items as specified in staff's memorandum, namely ABB magnetic flow meters, Cla-Val pressure reducing valves, and Rosemont pressure transmitters. 8. ACTION CALENDAR This portion of the agenda is for items where staff presentations and Board discussions are needed prior to formal Board action. 8.1. Audit Reports for Fiscal Year Ending June 30, 2017 Recommendation: That the Board of Directors receive and file the Yorba Linda Water District Comprehensive Annual Financial Report for the Fiscal Year Ending June 30, 2017, the Report on Internal Control, and the Communication to Those in Governance Letter. 8.2. Pension Rate Stabilization Program and OPEB Funding Policy Recommendation: That the Board of Directors approve Resolution No. 17-33 adopting a Pension Rate Stabilization Program (PRSP) and Other Post- Employment Benefits (OPEB) Funding Policy for FY18. 8.3. Election for Appointment of Special District Representative to Orange County Redevelopment Agency Oversight Board Recommendation: That the Board of Directors designate a primary and alternate voting member to vote in the Orange County Special District Selection Committee election and consider nominating a candidate for appointment to Orange County's Redevelopment Agency Oversight Board. 8.4. Proposed Increased Assessments Affecting District Properties Located in Local Landscaping Zone L-5A of the City of Yorba Linda Street Lighting and Landscaping Maintenance District Recommendation: That the Board of Directors delegate the authority to the President of the Board to vote in favor of the increased assessments for these parcels and authorize staff to complete and submit the ballots as required. 9. DISCUSSION ITEMS This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action of the Board of Directors at the meeting, such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking the advice and counsel of the Board of Directors. Time permitting, it is generally in the District’s interest to discuss these more complex matters at one meeting and consider formal action at another meeting. This portion of the agenda may also include items for information only. 9.1. Cash and Investment Report for Period Ending September 30, 2017 9.2. Budget to Actual Reports for the Month Ending September 30, 2017 10. REPORTS, INFORMATION ITEMS, AND COMMENTS 10.1. Directors' Reports 10.2. General Manager's Report 10.3. General Counsel's Report 10.4. Future Agenda Items and Staff Tasks 11. COMMITTEE REPORTS 11.1. Interagency Committee with MWDOC and OCWD (Miller/Nederhood) · Next meeting scheduled November 20, 2017 at 4:00 p.m. 11.2. Joint Agency Committee with City of Yorba Linda (Miller/Hawkins) · Minutes of the meeting held September 18, 2017 at 4:00 p.m. · Next meeting scheduled December 18, 2017 at 4:00 p.m. at YL City Hall. 11.3. Joint Agency Committee with City of Placentia (Miller/Nederhood) · Next meeting yet to be scheduled. 12. INTERGOVERNMENTAL MEETINGS 12.1. LAFCO - October 11, 2017 (Nederhood - As Needed) 12.2. WACO - October 13, 2017 (Miller/Nederhood) 12.3. YL City Council - October 17, 2017 (Hawkins) 12.4. MWDOC Board - October 18, 2017 (Nederhood) 12.5. OCWA Luncheon - October 18, 2017 (Miller) 12.6. OCWD Board - October 18, 2017 (Jones) 13. BOARD OF DIRECTORS ACTIVITY CALENDAR 13.1. Meetings from October 25 - December 31, 2017 14. CONFERENCES, SEMINARS, AND SPECIAL EVENTS This section of the agenda is for the Board of Directors to authorize Director attendance at the listed events. 14.1. OCWA Luncheon - October 18, 2017 OCSD State of the District - November 17, 2017 Recommendation: That the Board of Directors ratify and/or approve Director attendance at these events if desired. 15. ADJOURNMENT 15.1. The next Regular Board of Directors Meeting will be held Tuesday, November 14, 2017. Closed Session (if necessary) will begin at 5:30 p.m. or 6:00 p.m. depending on time requirements and regular business at 6:30 p.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 24, 2017 Subject:Minutes of the Board of Directors Special Meeting Held September 12, 2017 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name:Description:Type: 2017-09-12_-_Minutes_-_BOD_(A).doc Minutes Minutes Minutes of the YLWD Board of Directors Special Meeting Held September 12, 2017 at 5:30 p.m. 1 2017-XXX MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING Tuesday, September 12, 2017, 5:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 5:31 p.m. 2. ROLL CALL DIRECTORS PRESENT STAFF PRESENT J. Wayne Miller, President Marc Marcantonio, General Manager Al Nederhood, Vice President Brett Barbre, Assistant General Manager Andrew J. Hall, Director Gina Knight, HR/Risk and Safety Manager Phil Hawkins, Director Marcus Millen, Records Management Specialist Brooke Jones, Director ALSO PRESENT Andrew Gagen, Partner, Kidman Law LLP 3. PUBLIC COMMENTS None. 4. CLOSED SESSION The meeting was adjourned to Closed Session at 5:32 p.m. All Directors in attendance were present. Also present were General Counsel Andrew Gagen, General Manager Marc Marcantonio, Assistant General Manager Brett Barbre, and HR/Risk and Safety Manager Gina Knight. The following items were taken out of order. 4.2. Conference with Legal Counsel – Existing Litigation Pursuant to Paragraph (1) of Subdivision (d) of Section 54956.9 of the California Government Code Name of Case: Brian Wooldridge vs. Yorba Linda Water District (OC Superior Court – Case No. 00886870) Minutes of the YLWD Board of Directors Special Meeting Held September 12, 2017 at 5:30 p.m. 2 2017-XXX General Manager Marcantonio and Assistant General Manager Barbre left the Closed Session prior to discussion of the following item. 4.1. Public Employee Performance Evaluation Pursuant to Section 54957 of the California Government Code Title: General Manager The Board reconvened in Open Session at 6:38 p.m. General Counsel Gagen provided a report during the regular meeting held immediately afterwards. 5. ADJOURNMENT 5.1. The meeting was adjourned at 6:38 p.m. Marc Marcantonio Board Secretary ITEM NO. 7.2 AGENDA REPORT Meeting Date: October 24, 2017 Subject:Minutes of the Board of Directors Regular Meeting Held September 12, 2017 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name:Description:Type: 2017-09-12_-_Minutes_-_BOD_(B).doc Minutes Minutes Minutes of the YLWD Board of Directors Regular Meeting Held September 12, 2017 at 6:30 p.m. 1 2017-XXX MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Tuesday, September 12, 2017, 6:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 6:38 p.m. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL DIRECTORS PRESENT STAFF PRESENT J. Wayne Miller, President Marc Marcantonio, General Manager Al Nederhood, Vice President Brett Barbre, Assistant General Manager Andrew J. Hall, Director Steve Conklin, Engineering Manager Phil Hawkins, Director John DeCriscio, Operations Manager Brooke Jones, Director Gina Knight, HR/Risk and Safety Manager Delia Lugo, Finance Manager Art Vega, Information Technology Manager Danielle Logsdon, Associate Engineer Kelly McCann, Senior Accountant Marcus Millen, Records Management Specialist ALSO PRESENT Andrew Gagen, Partner, Kidman Law LLP Tom Lindsey, Councilmember, City of Yorba Linda Robert Porr, Senior Vice President, Fieldman Rolapp & Associates 4. ADDITIONS/DELETIONS TO THE AGENDA None. General Manager Marc Marcantonio noted that additional materials related to Item Nos. 9.1., 9.2. and 9.3. had been distributed to the Board and made available to the public. Minutes of the YLWD Board of Directors Regular Meeting Held September 12, 2017 at 6:30 p.m. 2 2017-XXX 5. INTRODUCTIONS AND PRESENTATIONS 5.1. Elected Official Liaison Reports Councilmember Tom Lindsey commented on correspondence from a member of the public submitted to the District and copied to City officials related to the City’s vacation of a landscape maintenance easement on the homeowner’s property. President Miller asked General Counsel Andrew Gagen to provide a report out of Closed Session from the special Board meeting held prior to this meeting. General Counsel Gagen stated that no action had been taken during Closed Session that was required to be reported under the Brown Act. 6. PUBLIC COMMENTS None. 7. CONSENT CALENDAR Director Hawkins made a motion, seconded by Director Hall, to approve the Consent Calendar. Motion carried 5-0. 7.1. Minutes of the Board of Directors Regular Meeting Held June 27, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.2. Minutes of the Board of Directors Regular Meeting Held July 11, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.3. Payments of Bills, Refunds, and Wire Transfer Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $652,947.64. 7.4. Terms and Conditions for Water Service with Terra Culinary, Inc. Recommendation: That the Board of Directors approve the Terms and Conditions for Water Service with Terra Culinary, Inc., Job No. 201730. Minutes of the YLWD Board of Directors Regular Meeting Held September 12, 2017 at 6:30 p.m. 3 2017-XXX 7.5. Claim for Damages Filed by Nicholas Estanislau Recommendation: That the Board of Directors reject the claim filed by Nicholas Estanislau and refer it to ACWA/JPIA for further handling. 8. ACTION CALENDAR 8.1. Engineering Services for Asset Management Plan (AMP) Update Staff explained that proposals were solicited from five firms for consulting services to update the District’s AMP, three of which responded. Following examination of the proposals and fees, the District’s Review Team recommended award to Carollo Engineers. Discussion followed regarding staff’s ability to update the AMP in-house following completion, metrics used for ranking the proposals, and the timeline for completion of the project. Jeff Decker (resident) commented on information made available to the responding firms prior to submission of their proposals. Staff clarified that the same information was provided to all prospective firms. Director Hall made a motion, carried by Director Hawkins, to authorize execution of a Professional Services Agreement with Carollo in the amount of $131,875 for consulting services for the 2018 Asset Management Plan, Job No. 2017-15. Motion carried 5-0. 9. DISCUSSION ITEMS 9.1. Reserves Policy Ranges/Goals (Miller) Staff reviewed the District’s restricted and unrestricted reserve accounts, associated calculations, and suggested minimum, maximum and target levels. Discussion touched on the purpose of each reserve, revisions to the proposed levels, factors considered by credit rating agencies, potential issuance of a customer refund, minimum days of cash on hand, and reclassifying the Employee Liability Reserve as restricted. Staff was instructed to revise the financial reserves policy for Board consideration at a future meeting to reflect the minimum, maximum and target levels as presented and reclassify the Employee Liability Reserve as restricted. Minutes of the YLWD Board of Directors Regular Meeting Held September 12, 2017 at 6:30 p.m. 4 2017-XXX 9.2. Management of District’s Unfunded Accrued Liabilities (Jones) Staff reviewed the District’s unfunded accrued liabilities and suggested pay down strategies. Discussion touched on establishing a policy for funding the District’s Other Post-Employment Benefits (OPEB) Liability and participating in a program offered by the Public Agency Retirement Services (PARS) to prefund the District’s Public Employees’ Retirement System (PERS) Liability. Staff was instructed to prepare a 5 and 10 year pay down schedule for the OPEB Liability and a 5, 10, and 15 year pay down schedule for the PERS Liability for Board consideration at a future meeting. 9.3. Disposition of Annual Net Income and Potential Customer Refund (Jones) Staff explained that Fitch Ratings had agreed to analyze the potential impact on the District’s bond rating should the Board determine to issue a customer refund. Staff reviewed a checklist prepared with the assistance of the District’s financial advisors based off Fitch’s rating criteria for above- standard performance. Staff recommended the Board consider utilizing the remaining portion of YLWD’s net position for FY17 to pay down the District’s OPEB Liability rather than issuing a customer refund. Discussion touched on whether the potential refund would be one time or considered on an annual basis, recent and anticipated commodity rate increases from OCWD and MWDOC, financial impact of potential legislation related to climate change, and possibly expanding the District’s sewer cleaning activities. Discussion continued regarding the options presented to the Board and recommendations made by the Ad Hoc Citizens Advisory Committee (AHCAC) as related to the issuance of a customer refund. Jeff Decker (resident) commented on the District’s historical annual net income, previous water rate increase, and the AHCAC’s recommendations in regards to a customer refund. Discussion followed regarding the method for calculating and issuing a potential customer refund and requiring reaffirmation from Fitch of the District’s AA rating prior to issuance of same. Jeff Decker (resident) commented on the District’s previous and current business model. Staff was directed to present the options discussed for the disposition of the remaining portion of the District’s net position for FY17 for Board consideration at a future meeting. Minutes of the YLWD Board of Directors Regular Meeting Held September 12, 2017 at 6:30 p.m. 5 2017-XXX 9.4. Budget to Actual Reports for the Month Ending July 31, 2017 Staff provided a brief overview of the statements and the amortization of certain pre-paid expenses. 10. REPORTS, INFORMATION ITEMS, AND COMMENTS 10.1. Directors' Reports None. 10.2. General Manager's Report Mr. Marcantonio asked each of the managers (or their designee) to report on activities within their respective departments. He noted that a legislative update would be distributed via e-mail and reminded the Board of an upcoming event. 10.3. General Counsel’s Report None. 10.4. Future Agenda Items and Staff Tasks None. 11. COMMITTEE REPORTS 11.1. Interagency Committee with MWDOC and OCWD (Miller/Nederhood) Next meeting is scheduled September 28, 2017 at 4:00 p.m. 11.2. Joint Agency Committee with City of Yorba Linda (Miller/Hawkins) Next meeting is scheduled September 18, 2017 at 4:00 p.m. at YL City Hall. 11.3. Joint Agency Committee with City of Placentia (Miller/Nederhood) Next meeting yet to be scheduled. Minutes of the YLWD Board of Directors Regular Meeting Held September 12, 2017 at 6:30 p.m. 6 2017-XXX 12. INTERGOVERNMENTAL MEETINGS The Directors reported on their attendance at the following meetings. 12.1 SWRCB Briefing – August 23, 2017 (Jones/Miller/Nederhood) 12.2 OCSD Board – August 23, 2017 (Hawkins) 12.3. ACWA Region 8 Water Reliability Program – August 24, 2017 (Nederhood)* 12.4. MWDOC Water Policy Forum – August 30, 2017 (Jones/Hawkins/Miller/Nederhood) 12.5. WACO – September 1, 2017 (Miller) 12.6. ISDOC Executive Committee – September 5, 2017 (Nederhood)* 12.7. MWDOC Board – September 6, 2017 (Nederhood)* 12.8. OCSD Operations Committee – September 6, 2017 (Hawkins) 12.9. OCWD Board – September 6, 2017 (Jones) *No Directors attended these meetings. 13. BOARD OF DIRECTORS ACTIVITY CALENDAR 13.1. Meetings from September 13 – October 31, 2017 The Board reviewed the activity calendar and made no changes. 14. CONFERENCES, SEMINARS, AND SPECIAL EVENTS 14.1. ACWA Region 5 Tour – September 17-18, 2017 ACWA Regions 9 and 10 Tour – October 6, 2017 OCWD Groundwater Adventure Tour – October 26, 2017 YL State of the City Address – November 2, 2017 ACWA/JPIA Fall Conference – November 28, 2017 ACWA Fall Conference – November 28 – December 1, 2017 CRWUA Annual Conference – December 13-15, 2017 Minutes of the YLWD Board of Directors Regular Meeting Held September 12, 2017 at 6:30 p.m. 7 2017-XXX Director Hall made a motion, seconded by Director Hawkins, to approve Director attendance at these events if desired. Vice President Nederhood requested the following meeting be added: LAFCO Municipal Service Review Stakeholder Meeting – October 19, 2017 Director Hall made a motion to approve Director attendance at these events, including newly added meeting. Director Hawkins seconded the motion which carried 5-0. 15. ADJOURNMENT 15.1. The meeting was adjourned at 9:49 p.m. Marc Marcantonio Board Secretary ITEM NO. 7.3 AGENDA REPORT Meeting Date: October 24, 2017 Subject:Minutes of the Board of Directors Special Meeting Held September 14, 2017 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name:Description:Type: 2017-09-14_-_Minutes_-_BOD.doc Minutes Minutes Minutes of the YLWD Board of Directors Special Meeting Held September 14, 2017 at 4:30 p.m. 1 2017-XXX MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING Thursday, September 14, 2017, 4:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 4:31 p.m. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL DIRECTORS PRESENT STAFF PRESENT J. Wayne Miller, President Marc Marcantonio, General Manager Al Nederhood, Vice President Brett Barbre, Assistant General Manager Andrew J. Hall, Director Gina Knight, HR/Risk and Safety Manager Phil Hawkins, Director Vivian Lim, Human Resources Analyst Brooke Jones, Director Marcus Millen, Records Management Specialist Malissa Tem, Public Affairs Representative ALSO PRESENT Andrew Gagen, Partner, Kidman Law LLP Laura Kalty, Partner, Liebert Cassidy Whitmore 4. PUBLIC COMMENTS None. 5. ACTION CALENDAR HR/Risk and Safety Manager Gina Knight briefly explained the purpose of the meeting and material to be covered in Closed Session. 5.1. Identification of Agency Designated Representative(s) for Labor Negotiations No action was taken on this item. Minutes of the YLWD Board of Directors Special Meeting Held September 14, 2017 at 4:30 p.m. 2 2017-XXX 6. CLOSED SESSION The meeting was adjourned to Closed Session at 4:34 p.m. All Directors in attendance were present. Also present were General Counsel Andrew Gagen, Labor Counsel Laura Kalty, General Manager Marc Marcantonio, Assistant General Manager Brett Barbre, HR/Risk and Safety Manager Gina Knight, and HR Analyst Vivian Lim. 6.1. Conference with Labor Negotiators Pursuant to Section 54957.6 of the California Government Code Agency Designated Representative(s): Marc Marcantonio, General Manager Brett Barbre, Assistant General Manager Gina Knight, HR/Risk and Safety Manager Vivian Lim, Human Resources Analyst Laura Kalty, Labor Counsel Director Hawkins left the meeting at 5:35 p.m. The Board reconvened in Open Session at 6:46 p.m. No action was taken during Closed Session that was required to be reported under the Brown Act. 7 ADJOURNMENT 7.1. The meeting was adjourned at 6:46 p.m. Marc Marcantonio Board Secretary ITEM NO. 7.4 AGENDA REPORT Meeting Date: October 24, 2017 Subject:Minutes of the Board of Directors Special Meeting Held September 20, 2017 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name:Description:Type: 2017-09-20_-_Minutes_-_BOD_(A).doc Minutes Minutes Minutes of the YLWD Board of Directors Special Meeting Held September 20, 2017 at 5:30 p.m. 1 2017-XXX MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING Wednesday, September 20, 2017, 5:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 5:31 p.m. 2. ROLL CALL DIRECTORS PRESENT STAFF PRESENT J. Wayne Miller, President Marc Marcantonio, General Manager Al Nederhood, Vice President Brett Barbre, Assistant General Manager Andrew J. Hall, Director Gina Knight, HR/Risk and Safety Manager Phil Hawkins, Director Annie Alexander, Executive Assistant Brooke Jones, Director ALSO PRESENT Andrew Gagen, Partner, Kidman Law LLP 3. PUBLIC COMMENTS None. 4. CLOSED SESSION The meeting was adjourned to Closed Session at 5:31 p.m. All Directors in attendance were present. Also present were General Counsel Andrew Gagen and HR/Risk and Safety Manager Gina Knight. 4.1. Public Employee Performance Evaluation Pursuant to Section 54957 of the California Government Code Title: General Manager The Board reconvened in Open Session at 6:35 p.m. General Counsel Gagen reported that no action was taken during Closed Session that was required to be reported under the Brown Act. Minutes of the YLWD Board of Directors Special Meeting Held September 20, 2017 at 5:30 p.m. 2 2017-XXX 5. ADJOURNMENT 5.1. The meeting was adjourned at 6:35 p.m. Annie Alexander Assistant Board Secretary ITEM NO. 7.5 AGENDA REPORT Meeting Date: October 24, 2017 Budgeted:Yes To:Board of Directors Cost Estimate:$2,550,667.09 Funding Source:All Funds From:Marc Marcantonio, General Manager Presented By:Delia Lugo, Finance Manager Dept:Finance Reviewed by Legal:N/A Prepared By:Richard Cabadas, Accounting Assistant I CEQA Compliance:N/A 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 $2,550,667.09. DISCUSSION: The items on this disbursement list includes: A wire of $17,220.86 to So. California Edison for September 2017 electricity charges at multiple locations; a wire of $85.27 to So. California Gas Co. for September 2017 gas charges at multiple locations; a wire of $1,249,042.52 to MWDOC for August 2017 water purchases; a check of $227,720.17 to ACWA/JPIA for 2017/2018 Auto & General Liability insurance premium; a check of $111,013.09 to ACWA/JPIA for October 2017 medical & dental premium; and a check of $417,051.84 to Pacific Hydrotech Corporation for Fairmont booster pump station progress payment #10. The balance of $242,411.17 is routine invoices. The Accounts Payable check register total is $2,264,544.92; Payroll No. 20 total is $286,122.17; and the total of all listed disbursements for this agenda report is $2,550,667.09. A summary of the disbursements is attached. PRIOR RELEVANT BOARD ACTION(S): The Board of Directors approves bills, refunds and wire transfers semi-monthly. ATTACHMENTS: Name:Description:Type: 17-CS_1024.pdf Cap Sheet Backup Material CkReg102417.pdf Check Register Backup Material 17_CC_1024.pdf Credit Card Summary Backup Material Summary of Disbursements October 24, 2017 CHECK NUMBERS & WIRES: Computer Checks 70739—70847 $ 998,196.27 VOID 70778, 70796 & 70837 $ 0.00 ____________ $ 998,196.27 WIRES: W 101117 US Bank $ 85.27 W 101117A US Bank $ 17,220.86 W101317 MWDOC $ 1,249,042.52 _____________ $ 1,266,348.65 TOTAL OF CHECKS & WIRES $2,264,544.92 PAYROLL NO. 20: Direct Deposits $ 180,734.92 Third Party Checks 6789—6796 $ 15,490.11 Payroll Taxes $ 53,901.22 EFT – CalPERS Payroll #20 $ 35,995.92 $ 286,122.17 TOTAL OF PAYROLL $286,122.17 ---------------------------------------------------------------------------------------------------------------------- DISBURSEMENT TOTAL: $2,550,667.09 ================================================================== APPROVED BY THE BOARD OF DIRECTORS MINUTE ORDER AT BOARD MEETING OF OCTOBER 24, 2017 ==================================================================. Check No.Date Vendor Name Amount Description 70773 10/24/2017 ACWA/JPIA 227,720.17 AUTO & GENERAL INSURANCE PREMIUM - 10/2017 - 10/2018 70774 10/24/2017 ACWA/JPIA 111,013.09 MEDICAL & DENTAL PREMIUM -OCTOBER 2017 70775 10/24/2017 ACWA/JPIA 30,257.56 WORKER COMPENSATION PREMIUM -1ST QUARTER- JUL-SEP '17 70776 10/24/2017 Advanced Thermal Products 3,811.68 STATIONARY ENGINE MAINTENANCE 70763 10/24/2017 AIMEE SHAFIK 80.63 CUSTOMER REFUND 70777 10/24/2017 Al Nederhood 26.54 MILEAGE REIMBURSEMENT - SEPTEMBER 2017 70768 10/24/2017 AMDJ REALTY 233.47 CUSTOMER REFUND 70771 10/24/2017 AMS PAVING 879.80 CUSTOMER REFUND 70779 10/24/2017 Andrew J. Hall 47.13 MILEAGE REIMBURSEMENT - SDLA GOVERNANCE CONFERENCE 70780 10/24/2017 Aramark 381.74 UNIFORM SERVICE 70766 10/24/2017 ARMIN CORP 255.20 CUSTOMER REFUND 70746 10/24/2017 BARBARA ROMO 32.40 CUSTOMER REFUND 70781 10/24/2017 Bee Busters, Inc 150.00 BEE ABATEMENT - COMMERCIAL PROPERTY 70782 10/24/2017 BrightView Tree Care Services Inc.5,725.00 LANDSCAPE SERVICE & TREE SERVICE AT ELF MOUNTAIN BOOSTER 70783 10/24/2017 Brooke Jones 220.21 MILEAGE REIMBURSEMENT - SEPTEMBER 2017 70785 10/24/2017 CalCard US Bank 18,841.31 CREDIT CARD TRANSACTIONS - SEPTEMBER & OCTOBER 2017 70786 10/24/2017 California United Bank 21,950.10 J10-11B - FAIRMONT PUMP STATION UPGRADE - RETENTION #10 70784 10/24/2017 Calolympic Safety Co.2,074.71 REPAIRS - SAFETY EQUIPMENT 70787 10/24/2017 City Of Placentia 4,600.23 SEWER FEES - SEPTEMBER 2017 70788 10/24/2017 Culligan of Santa Ana 1,744.31 PE EQUIPMENT SOFTENER 70789 10/24/2017 Dapper Tire Co. Inc.508.43 TIRE REPLACEMENT - UNIT #170 70790 10/24/2017 Dell Marketing L.P.20,387.81 POWEREDGE R740XD SERVER & SOFTWARE 70792 10/24/2017 Eisel Enterprises, Inc.49.03 438 MTR BOX, LID & COVER 70793 10/24/2017 Elite Equipment Inc 634.22 EQUIPMENT MAINTENANCE - UNIT #E217 70794 10/24/2017 Enthalpy Analytical, Inc.1,536.40 WATER QUALITY LAB TESTING 70759 10/24/2017 ERIC HILL 51.20 CUSTOMER REFUND 70797 10/24/2017 EyeMed 1,231.86 EYEMED - OCTOBER 2017 70795 10/24/2017 Fairway Ford Sales, Inc.55.86 VEHICLE MAINTENANCE - UNIT #172 70798 10/24/2017 Fieldman Rolapp & Associates 2,316.37 PROFESSIONAL SERVICES - REVIEW RESERVE POLICY 70799 10/24/2017 Flex Advantage 112.50 FLEX ADVANTAGE - 25 PARTICIPANTS - SEPTEMBER 2017 70800 10/24/2017 Fry's Electronics 581.82 HARD DRIVES 70801 10/24/2017 Fullerton Paint & Flooring 278.82 PAINT - CATERPILLAR YELLOW 70802 10/24/2017 GP Electric Motor 315.00 TROUBLESHOOT VFD DRIVES 70752 10/24/2017 GREG SIMMS 103.17 CUSTOMER REFUND 70754 10/24/2017 GUARDIAN TEAM REALTY 175.50 CUSTOMER REFUND 70803 10/24/2017 Haaker Equipment Co.601.66 VEHICLE MAINTENANCE - UNIT #197 & #210 70804 10/24/2017 Hands on Wellness Center 100.00 BENEFIT FAIR - (2) THERAPIST 70805 10/24/2017 Infosend Inc.7,108.41 POSTAGE & BILLING FEE 70744 10/24/2017 ISAAC VARGAS 225.00 CUSTOMER REFUND 70806 10/24/2017 Jackson's Auto Supply - Napa 219.35 VEHICLE MAINTENANCE - UNIT #171 & #172 70745 10/24/2017 JAMES MURRAY 38.17 CUSTOMER REFUND 70750 10/24/2017 JAMIE COBURN 65.91 CUSTOMER REFUND 70758 10/24/2017 JIMMY GARREY 25.23 CUSTOMER REFUND 70808 10/24/2017 John Todd Howard 56.47 CELL PHONE SUPPLIES 70740 10/24/2017 JOSEPHONE CRUZ 32.97 CUSTOMER REFUND 70807 10/24/2017 Joy Wiggins 7,794.16 RES #100 - REIMBURSEMENT AGREEMENT - SEWER CONNECTION 70757 10/24/2017 KAREL TASKA 129.13 CUSTOMER REFUND 70809 10/24/2017 Kidman Law 12,907.75 LEGAL SERVICES 70810 10/24/2017 Konica Minolta Business 781.75 LEASE - C258 & C558 COPIERS 70812 10/24/2017 Managed Health Network 175.50 EAP OCTOBER 2017 70813 10/24/2017 Marc Marcantonio 137.59 MILEAGE & TRAVEL EXPENSE REIMBURSEMENT - SEPTEMBER 2017 70760 10/24/2017 MARK MURPHY 639.17 CUSTOMER REFUND 70747 10/24/2017 MARK SCHWING 2.70 CUSTOMER REFUND 70814 10/24/2017 Mc Fadden-Dale Hardware 874.90 TOOLS & EQUIPMENT 70742 10/24/2017 MELISSA MARTIN 100.65 CUSTOMER REFUND 70815 10/24/2017 MISCO 370.66 CL2 REPLACEMENT PARTS 70816 10/24/2017 Mobile Industrial Supply 8.00 WELDING SUPPLIES 70817 10/24/2017 Morton Salt, Inc.2,557.09 BULK INDUSTRIAL SALT 70818 10/24/2017 Motorola Solutions Inc.3,169.61 APX 4000 RADIOS 70847 10/24/2017 Municipal Water District 21,100.04 FY17/18 CHOICE PROGRAM BILLING W101317 10/13/2017 Municipal Water District 1,249,042.52 WATER DELIVERIES - AUGUST 2017 70819 10/24/2017 Muzak LLC 89.56 CUSTOMER MESSAGE/PHONE SERVICE - OCTOBER 2017 70764 10/24/2017 NADINE BLACK 24.05 CUSTOMER REFUND Yorba Linda Water District Check Register For Checks Dated: 10/11/2017 thru 10/24/2017 70820 10/24/2017 NatPay Online Business Solutions 23.55 DOCULIVERY - SEPTEMBER 2017 70821 10/24/2017 NetMotion Wireless Inc 1,718.75 NETMOTION PREMIUM MAINTENANCE 70822 10/24/2017 Nickey Kard Lock Inc 4,532.67 FUEL - 09/16/17 - 09/30/17 70823 10/24/2017 Nickey Petroleum Co Inc 2,424.38 KENDALL GT 5W-30 OIL 70824 10/24/2017 Nicole Dalton 80.00 CERTIFICATE REIMBURSEMENT - D2 70825 10/24/2017 Norm's Refrigeration & Ice Equipment 250.00 SERVICE AGREEMENT 10/1/2017 - 4/1/2018 70826 10/24/2017 Occu-Med, Ltd.70.00 PRE-EMPLOYMENT PHYSICALS 70827 10/24/2017 Office Solutions 1,853.26 OFFICE SUPPLIES, TONER, PAPER & OFFICE EQUIPMENT 70755 10/24/2017 OHL USA 973.30 CUSTOMER REFUND 70761 10/24/2017 OLTMANS CONSTRUCTION 77.50 CUSTOMER REFUND 70828 10/24/2017 Orange County - Tax Collector 9,771.17 PROPERTY TAX 2017 - 2018 & ENCROACHMENT PERMITS 70749 10/24/2017 OSSIMA HUSSRI 80.85 CUSTOMER REFUND 70830 10/24/2017 P.T.I. Sand & Gravel, Inc.1,107.30 MATERIAL - FILL SAND & CLS II BASE 70829 10/24/2017 Pacific Hydrotech Corporation 417,051.84 J10-11B - FAIRMONT PUMP STATION UPGRADE PROGRESS PAYMENT#10 70739 10/24/2017 PATSY JOHNSON 27.46 CUSTOMER REFUND 70762 10/24/2017 PICR LP 77.69 CUSTOMER REFUND 70748 10/24/2017 PRISCILLA SALGADO 190.75 CUSTOMER REFUND 70743 10/24/2017 PULTE GROUP 2009 216.99 CUSTOMER REFUND 70831 10/24/2017 RACHEL PADILLA 223.01 CUSTOMER SERVICE WEEK 2017 70769 10/24/2017 REAL PROPERTY MANAGEMENT 300.89 CUSTOMER REFUND 70832 10/24/2017 Red Wing Shoe Store 400.00 SAFETY BOOTS - MARCANTONIO & BARBRE 70833 10/24/2017 RKI Engineering, LLC 600.00 WELL 21 - CONTROL SUPPORT 70741 10/24/2017 ROBERT OH 6.23 CUSTOMER REFUND 70835 10/24/2017 S&J Supply Co.709.25 VALVE REPAIR & SEWER PARTS 70834 10/24/2017 Sanders Paving, Inc.21,993.75 ASPHALT PAVING 70836 10/24/2017 South Coast AQMD 2,018.86 RENEWAL & EMISSION FEES - I C E EQUIPMENT W101117 10/11/2017 Southern Calif Edison Co.85.27 MULTIPLE LOCATIONS -GAS CHARGES- SEPTEMBER 2017 W101117A 10/11/2017 Southern Calif Gas Co.17,220.86 MULTIPLE LOCATIONS -ELECTRICITY CHARGES- SEPTEMBER 2017 70838 10/24/2017 Sunrise Medical Group 736.50 NEW EMPLOYEE PHYSICAL 70767 10/24/2017 SUSAN SKIDGEL 43.40 CUSTOMER REFUND 70772 10/24/2017 TAIHO INVESTMENTS LLC 378.28 CUSTOMER REFUND 70839 10/24/2017 The Bee Man 195.00 BEE ABATEMENT - 5911 COUNTRY LN 70753 10/24/2017 THE FRESH MARKET 115.76 CUSTOMER REFUND 70811 10/24/2017 The Lighthouse Inc.459.05 LED LIGHTBARS - UNIT #144 & 157 70840 10/24/2017 Time Warner Cable 195.78 BASIC CABLE SERVICE - RICHFIELD 70841 10/24/2017 TMobile 0.17 T-MOBILE - 8/21/17 - 9/20/17 70756 10/24/2017 TOMMY SANCHEZ 192.38 CUSTOMER REFUND 70842 10/24/2017 Underground Service Alert 331.75 DIGALERT - SEPTEMBER 2017 70844 10/24/2017 United Water Works, Inc.4,521.73 WAREHOUSE STOCK & VALVE REPAIR PARTS 70843 10/24/2017 UNUM Life Insurance Co. of America 952.81 LIFE, AD&D, STD, & LTD-NOV17 70778 10/24/2017 VOID 0.00 VOID 70796 10/24/2017 VOID 0.00 VOID 70837 10/24/2017 VOID 0.00 VOID 70791 10/24/2017 White Nelson Diehl Evans LLP 1,295.00 GOVERNMENT TAX SEMINAR - 4 ATTENDEES/FINANCE STAFF 70751 10/24/2017 WILLIAM WEIRICH 13.20 CUSTOMER REFUND 70845 10/24/2017 YO Fire 3,403.08 WAREHOUSE STOCK & VALVE REPAIR PARTS 70765 10/24/2017 YOLANDA CASTILLO 36.06 CUSTOMER REFUND 70846 10/24/2017 Yorba Linda Chamber 780.00 YORBA LINDA CITY ADDRESS - SPONSOR 70770 10/24/2017 YUNQIN XUE 48.12 CUSTOMER REFUND 2,264,544.92 10-05-2017 PAYROLL #20 - EMPLOYEE DIRECT DEPOSIT 180,734.92 10-05-2017 PAYROLL #20 - PAYROLL TAX PAYMENT 53,901.22 10-05-2017 PAYROLL #20 - CALPERS EFT 35,995.92 6789 10-05-2017 COLONIAL LIFE 128.30 6790 10-05-2017 FLEX ADVANTAGE 1,914.72 6791 10-05-2017 LINCOLN FINANCIAL GROUP 3,833.85 6792 10-05-2017 NATIONWIDE RETIREMENT SOLUTIONS 8,271.33 6793 10-05-2017 GARNISHMENT 231.00 6794 10-05-2017 CA STATE DISBURSEMENT UNIT 366.92 6795 10-05-2017 CA STATE DISBURSEMENT UNIT 339.69 6796 10-05-2017 CA STATE DISBURSEMENT UNIT 404.30 286,122.17 Payroll Checks #20 Vendor Name Amount Description Cobra Solutions 445.00 Cobra Solutions renewal Orchard Supply 27.99 Tools & equipment Lieber Cassidy Whitmore 70.00 Calpers workshop - Compensation Earnable and Pensionable Online Information Services 642.59 Online Collection transactions & utility exchange report AWWA 545.00 AWWA CA/NV Fall Conference - Mendum, K Bed Bath & Beyond 19.37 Back support attachments - Ergonomics Best Value Tire 91.16 Best Value Tire and Wheel Amazon.com 25.11 Weed killer for productions Orchard Supply 33.56 Building repair parts Dan Copp Crushing 450.00 Road material disposal Costco 259.99 Supplies for Employee Health and Benefit Fair DELL 879.76 Dell 43" monitor McMaster Carr 212.96 Stainless steel tubing - productions Penner Partitions 102.36 Desk keys & desk parts - facilities Home Depot 48.38 Sod for landscape repairs Home Depot 175.28 Tools & equipment Lascari's 629.56 Lunch for Employee Health and Benefit Fair Ralphs 85.81 Snacks for Employee Health and Benefit Fair Verizon Wireless 3,575.20 Verizon Wireless - 07/21 - 08/20 ACWA 699.00 Registration for ACWA Conference for Dir. Nederhood ACWA 699.00 Registration for ACWA Conference for Dir. Jones ACWA 555.00 Registration for ACWA Conference for Dir. Miller ACWA 699.00 Registration for ACWA Conference for Marcantonio ISDOC 34.00 Registration for ISDOC Quarterly luncheon for Dir. Nederhood & Dir. Hawkins Toms Place 207.53 Customer service appreciation luncheon - 15 attendees YL Chamber of Commerce 220.00 Registration for Yorba Linda State of the City - 4 attendees Costco 227.99 Supplies - Employee Health & Benefit Fair GFOA 135.00 Annual Government GAAP update - Accounting staff Atlantic Casino Hotel 115.25 Travel Expense - AWWA CA/NV Conference - Marcantonio Atlantic Casino Hotel 122.03 Travel Expense - AWWA CA/NV Conference - DeCriscio DELL 976.74 Dell 43" monitor Baci di Firenze 153.77 Welcome lunch for Young, K - 5 attendees Best Value Tire 68.37 Mount and balance tires - Unit #172 AWWA CA/NV 990.00 Travel expense - AWWA CA/NV registration - Marcantonio & DeCriscio JetBlue 336.80 Travel expense - AWWA CA/NV registration - Marcantonio & DeCriscio Eagle Glen Grill 27.47 Travel Expense - Bond Buyer Conference - Lugo, D Omni Hotel 319.70 Travel Expense - Bond Buyer Conference - Lugo, D Amazon.com 212.15 Equipment supplies - Unit #E-171 Notorious Burger 33.16 Travel Expense - Bond Buyer Conference - Lugo & Marcantonio Park Hyatt 7.85 Travel Expense - Bond Buyer Conference - Lugo, D Park Hyatt 311.33 Travel Expense - Bond Buyer Conference - Lugo, D Subway 9.23 Travel expense - SDSF Governance Academy workshop - Dir. Hall LAX Airport Lot 37.00 Travel expense - SDSF Governance Academy workshop - Dir. Hall Jamba Juice 6.99 Travel expense - SDSF Governance Academy workshop - Dir. Hall Omni Hotel 10.77 Travel expense - Bond Buyer Conference - Marcantonio Cutratebatteries.com 158.00 Motorola charger and batteries Amazon.com 77.88 Motorola radio antennas Omni Hotel 29.00 Travel expense - Bond Buyer Conference - Marcantonio ACWA (65.00) CREDIT - ACWA Region 9 & 10 - Dir. Jones Zena's Lebanese Cuisine 109.45 Lunch meeting - Finance staff - 5 attendees Brimar 421.53 Signs - YLWD facilities Acrylite Shop 309.88 Material - black acrylite sheets Walmart 27.85 Cooler Amazon.com 32.86 Employee recognition awards Amazon.com 64.64 Employee recognition awards ACWA (65.00) CREDIT - ACWA Region 9 & 10 - Dir. Nederhood Fry's Electronics 86.18 Toner Amazon.com 170.23 Employee recognition awards Amazon.com 48.27 Employee recognition awards Amazon.com 49.99 Employee recognition awards Cal Card Credit Card U S Bank GFOA 85.00 GFOA Training - How to account for Capital Assets Amazon.com 52.44 Office supplies Amazon.com 35.55 Ergonomic equipment - Customer Service Amazon.com 21.55 Employee recognition awards Amazon.com 170.75 Employee recognition awards Amazon.com 13.04 Employee recognition awards Amazon.com 137.92 Employee recognition awards Amazon.com 73.34 Employee recognition awards Amazon.com 5.73 Employee recognition awards Hilton Hotel & Resorts 246.81 Travel expense - UWI Conference - Marcantonio Hilton Hotel & Resorts 493.62 Travel expense - UWI Conference - Dir. Nederhood & Jones NYNY Hotel 68.03 CREDIT - Travel Expense - Black Hat Hacker Convention Harbor Freight 25.80 Tools & equipment Home Depot 389.51 Tools & equipment Home Depot 32.25 Concrete & landscape repair 18,841.31 ITEM NO. 7.6 AGENDA REPORT Meeting Date: October 24, 2017 To:Board of Directors From:Marc Marcantonio, General Manager Account No:2-2600 Job No:201732S Presented By:Brett R. Barbre, Asst General Manager Prepared By:Delia Lugo, Finance Manager Subject:Terms and Conditions for Sewer Service with Marzola, 5162 Mountain View Avenue SUMMARY: Marco and Paula Marzola requested to connect their home at 5162 Mountain View Ave, Yorba Linda, to the public sewer system. The property is approximately 1.54 acres and is located within the District's Western Service Area. An exhibit depicting the project location is attached for your reference. STAFF RECOMMENDATION: That the Board of Directors approve the Terms and Conditions for Sewer Service with Marzola, 5162 Mountain View Avenue, Job No. 201732S. DISCUSSION: The proposed project is located in Drainage Area "1" within the District's Western Service Area. The District has an existing 8-inch sewer main pipeline in Mountain View Ave that terminates at the west end of 5200 Mountain View Ave. The applicant requests to extend 150 ft. of sewer main, northwesterly along Mountain View Ave, to install a lateral to their property. Engineering staff has determined that the proposed length is appropriate, but requires that the sewer main include a terminal manhole and lateral stub-outs for potential future connections, in accordance with the District Rules and Regulations for Sewer Service and in compliance with the District Sewer Standards and Specifications. Their neighbor, Landis Williams, of 5196 Mountain View Ave. is interested in the cost sharing of the project. The Marzolas will be entitled to reimbursement when future lateral connections are made. The Terms and Conditions for Sewer Service with Marzola are attached for the Board's consideration. PRIOR RELEVANT BOARD ACTION(S): The Board of Directors previously approved the Terms and Conditions for Sewer Service with Javier Brito, 5192 Mountain View Avenue, on January 12, 2017. Mr. Brito recently sold his property, and his neighbor, Marco and Paula Marzola opted to continue the sewer main extension project. ATTACHMENTS: Name:Description:Type: 201732S_T_C.docx Terms and Conditions Backup Material 201732S_Exhibit.pdf Exhibit Exhibit Date: OCTOBER 24, 2017 YORBA LINDA WATER DISTRICT TERMS AND CONDITIONS FOR SEWER SERVICE NAME OF APPLICANT: MARCO & PAULA MARZOLA LOCATION OF PROJECT: 5162 MOUNTAIN VIEW AVE., YORBA LINDA TRACT NUMBER: N/A JOB NUMBER: 201732S LOT(S): 1 The applicant will be required to complete to the satisfaction of the District the following items that have an “X” following the number. 1) X The applicant shall provide the District with a copy of the Grant Deed or Title Report of the property to be served. 2) X The applicant shall include information deemed necessary by the District in the event the applicant is required to file a Department of Real Estate Tax Disclosure statement. 3) The applicant shall provide to all purchasers of the homes a statement that the home is located within Improvement District No. 1 and that the home is subject to a property tax over and above the normal 1% Basic Tax Levy to pay for Production, Storage, and Transmission water facilities serving Improvement District No. l. 4) The applicant shall provide to all purchasers of the homes a statement that the home is located within Improvement District No. 2 and that the home is subject to a property tax over and above the normal 1% Basic Tax Levy to pay for Production, Storage, and Transmission water facilities serving Improvement District No. 2. 5) X The applicant shall submit two (2) sets of the improvement plans to the District for plan check processing. a) Improvement Plans b) Grading Plans c) Tract, Parcel or Vesting Map d) Landscaping Plans 6) X Improvement Plans submitted for plan check shall comply with the submittal requirements established by the YLWD Engineering Department. 7) X The applicant shall dedicate or obtain all easements deemed necessary by the District in accordance with the Rules and Regulations of the District. All easement documents shall be prepared under the supervision of and stamped by a Professional Land Surveyor or a Registered Civil Engineer Page 2 of 5 NAME OF APPLICANT: MARCO & PAULA MARZOLA LOCATION OF PROJECT: 5162 MOUNTAIN VIEW AVE., YORBA LINDA (licensed prior to January 1, 1982) licensed to practice in the State of California. 8) X The applicant shall provide the District with a copy of the Recorded Tract/Parcel Map(s) or Easement Documents illustrating all District easements required by Term and Condition No. 7, prior to requesting occupancy releases. 9) The applicant shall prepare and process all easements to be quitclaimed by the District in accordance with the Rules and Regulations of the District. 10) X The applicant shall furnish the District with a 24-hour emergency telephone number prior to the District’s approval of the construction plans. 11) X The applicant shall notify the District 48 hours prior to initiating any work related to required or proposed improvements. 12) X The applicant shall complete a Temporary Construction Meter Permit application for all water to be used in construction work and all water used under such permit shall be taken from the approved construction meter. 13) X The applicant shall provide per the District specifications one complete set of "As Built" mylars and electronic copy of ACAD drawings (version 2008 or later) for the Water and/or Sewer facilities. 14) The applicant shall complete an Application to and Agreement with the Yorba Linda Water District for Water Service. 15) The applicant shall pay all of the water fees as required by the Rules and Regulations for Water Service of the District. 16) The applicant shall pay meter fees associated with the installation of radio read meters for this project. 17) The applicant shall comply with the Rules and Regulations for Water Service of the Yorba Linda Water District. 18) The applicant shall provide the District with a set of plans stamped and approved by the Orange County Fire Authority, or fire agency having jurisdiction, that identifies approved fire hydrant locations. Such approved plan must be submitted to the District before staff will initiate a District plan check for water improvements. 19) The applicant shall have all water facilities designed in accordance with the District's Water Facilities Plan and the Standard Specifications and Drawings for Construction of Domestic Water and Sewer Facilities. All design plans shall be prepared under the supervision of and stamped by a Registered Civil Engineer licensed to practice in the State of California. Page 3 of 5 NAME OF APPLICANT: MARCO & PAULA MARZOLA LOCATION OF PROJECT: 5162 MOUNTAIN VIEW AVE., YORBA LINDA 20) The applicant’s engineer shall provide a computer hydraulic analysis report to confirm that the District’s existing water system can accommodate the project. 21) The applicant’s water facilities (on-site) shall be District owned and maintained. 22) X The applicant shall be required to conduct flow tests at their cost in the event the Orange County Fire Authority requires a flow test. A District representative shall be present to witness the flow test. 23) The applicant shall comply with all additional District requirements, relative to the fire protection system, fire hydrant construction and fire hydrant locations. 24) The applicant shall install water Sampling Station(s) in conformance with the District’s Standard Specifications and Drawings for Construction of Domestic Water and Sewer Facilities. 25) The applicant shall provide a completed Surety Bond for the water facilities prior to the District signing the Water Improvement Plans. The applicant shall also provide to the District an estimate of the construction costs of the proposed water facilities. 26) The applicant shall install the curb and gutters a minimum of one week prior to the installation of the water main and services. 27) All existing water services that are not useable in the new plan shall be cut and plugged at the main line. 28) The applicant shall coordinate through the District all connections of new water facilities to the existing District facilities. 29) The applicant shall provide a written copy of the Bacteriological Report prior to occupancy releases certifying that the water meets the Health Department's requirements. 30) The applicant shall adjust and raise to grade all valve covers within the limits of this project. 31) The applicant shall install a pressure regulator in all buildings that have over 80 p.s.i. static water pressure in accordance with the appropriate building codes. 32) The applicant shall complete a Temporary Water Permit for all water that will be used through the new water services to serve the new buildings. Page 4 of 5 NAME OF APPLICANT: MARCO & PAULA MARZOLA LOCATION OF PROJECT: 5162 MOUNTAIN VIEW AVE., YORBA LINDA 33) The applicant shall install a District approved backflow device in connection with any private fire suppression sprinkler facilities that may be required by the Orange County Fire Authority or fire agency having jurisdiction. 34) The applicant shall install a reduced pressure principle backflow prevention device on all commercial buildings and landscape services. 35) The applicant shall install and provide a written test report to the District for each backflow device certifying that the backflow devices are operating properly prior to the water meters being turned on for service. 36) The applicant shall install and provide a written test report to the District certifying that the double check detector assembly is operating properly prior to the double check detector assembly being turned on for service. 37) The applicant shall provide an annual written test report to the District certifying that the backflow devices and fire detector assemblies are operating properly pursuant to the District’s Backflow Prevention Program and the State of California Administrative Code, Title 17, Public Health Rules and Regulations Relating to Cross-Connections. 38) The applicant shall complete a Sewer Connection Application and Permit for Sewer Service. 39) X The applicant shall complete an Application to and Agreement with the Yorba Linda Water District for Sanitary Sewer Service. 40) X The applicant shall comply with the Rules and Regulations for Sewer Service of the Yorba Linda Water District. 41) X The applicant shall pay all of the sewer fees as required by the Rules and Regulations for Sewer Service of the District. 42) X The applicant shall have all sewer facilities designed in accordance with the District's Sewer Master Plan and the Standard Specifications and Drawings for Construction of Domestic Water and Sewer Facilities. All design plans shall be prepared under the supervision of and stamped by a Registered Civil Engineer licensed to practice in the State of California. 43) The applicant’s engineer shall provide sewer flow calculations to confirm that the District’s existing sewer system can accommodate the peak wastewater generation from the project. 44) X The applicant shall provide a completed Surety Bond for the sewer facilities prior to the District signing the Sewer Improvement Plans. The applicant shall also provide to the District an estimate of the construction costs of the proposed sewer facilities. Page 5 of 5 NAME OF APPLICANT: MARCO & PAULA MARZOLA LOCATION OF PROJECT: 5162 MOUNTAIN VIEW AVE., YORBA LINDA 45) X The applicant’s sewer facilities (on-site) shall be Privately owned and maintained. 46) X The applicant shall construct a sewer main and appurtenances in conformance with the approved plans and the District’s Standard Specifications and Drawings for Construction of Domestic Water and Sewer Facilities. 47) X The applicant shall adjust and raise to grade all sewer manhole covers within the limits of this project. 48) X The applicant shall install a sewer backflow prevention valve on all sewer service connections in which the pad elevations of the property being served is lower than the rim elevation of the upstream manhole. Installation of the backflow device shall comply with all requirements of the Building and Plumbing Codes of the appropriate agency having jurisdiction. 49) X The applicant shall submit a video inspection report of their sewer project in DVD format. The video of the sewer facilities shall be conducted in the presence of the District inspector, which will include stationing locations of manholes, cleanouts, wyes, laterals, backflow devices and appurtenances. (END OF STANDARD TERMS AND CONDITIONS) PROJECT SPECIFIC TERMS AND CONDITIONS 50) X The applicant shall construct approximately 150 feet of new 8-inch PVC sewer main with one terminal manhole, one sewer lateral and two sewer lateral stub-outs, per approved plans and District Specifications. The applicant shall be reimbursed per District Rules and Regulations for Sewer Service, when neighboring homes connect to the lateral stub-outs. I hereby certify that the foregoing Terms and Conditions were approved at the October 24, 2017 Regular meeting of the Board of Directors of the Yorba Linda Water District. The approved Terms and Conditions shall become void six (6) months from the approval date if a formal Application To and Agreement with the Yorba Linda Water District for Water and/or Sewer Service is not executed for the project under consideration. Marc Marcantonio, General Manager \ I PROPERTY LINE PROJECT SITE w z_ Lu J 5162 MOUNTAIN VIEW AVE. p �y a S o � � s 3 � I 5192 VICINITY MAP N.T.S. ?'•'. 5196 5200 PROP.4"SEWER PROP.4"SEWER \ r LATERAL STUB-OUT LATERAL STUB-OUT r�egNp RTy</N :�7 —EX.R/WEX.F.H. EX.8"WATER EX.8"V.C.P.SEWER w w w w w w w w� ER(F AVF �•/�_.EX:CII �Ek fvY.H. PROP.4"SEWER f s s o ss—sem LATERAL — — — — PROP.S.MJ3'_ —EX.A.C.BERM y / MOUNTAIN VIEW AVE. 0 SITE PLAN - - - - - - - ~I EX.RNV- �N a N.T.S. PROPOSED 8"SEWER N MAIN(APPROX.150 L.F.) 0 PREPARED BY: EXHIBIT SCALE: N.T.S. YORBA LINDA WATER DISTRICT SEWER MAIN EXTENSION DATE: El 1717 E. MIRALOMA AVENUE FOR 10/24/2017 PLACENTIA, CALIFORNIA 92870 5162 MOUNTAIN VIEW AVENUE FILENAME: (714) 701-3100 J2017-32S ITEM NO. 7.7 AGENDA REPORT Meeting Date: October 24, 2017 Budgeted:Yes Total Budget:$4,300/yr lease payment To:Board of Directors Cost Estimate:$4,300/year + 3% accrual Funding Source:Water Operating Fund From:Marc Marcantonio, General Manager Account No:1-4020-0625-00 Job No:2009-22#21 Presented By:Steve Conklin, Engineering Manager Dept:Engineering Reviewed by Legal:Yes Prepared By:Anthony Manzano, Senior Project Manager CEQA Compliance:MND Subject:Amendment Two of the Well 21 Lease Agreement SUMMARY: Amendment Two of the Well 21 Lease Agreement was requested by Orange County Water District (OCWD) staff, to accommodate the addition of a YLWD Air Valve located above ground on OCWD property. STAFF RECOMMENDATION: That the Board of Directors authorize approval and execution of Amendment Two of the Lease Agreement between the Orange County Water District and the Yorba Linda Water District for Warner Basin Complex - Well No. 21. DISCUSSION: Prior to installation of Well 21 improvements, a 50-year lease agreement was executed on December 20, 2012 between OCWD and YLWD to construct and operate Well 21 on OCWD property at the Warner Basin Complex, near La Palma and Van Buren. Section 1.1.3 of the Lease Agreement states, "OCWD shall have the right to use the surface of the Appurtenant Premises." The original design did not call-out above ground improvements for this area; however, during construction it was determined that an above ground Air Valve was required. Because of space limitations, the Air Valve was installed on OCWD property and YLWD requested approval from OCWD, resulting in this Amendment. YLWD produced the attached Exhibit "E," depicting the location of the Air Valve, which OCWD used to create Amendment Two for the Lease Agreement. Amendment Two was approved and executed by the OCWD Board of Directors on October 4, 2017. PRIOR RELEVANT BOARD ACTION(S): On December 20, 2012, the Board of Directors authorized execution of the "Lease Agreement, Yorba Linda Water District, Warner Basin Complex - Well No. 21", between the Orange County Water District and Yorba Linda Water District, for a 50-year period. ATTACHMENTS: Name:Description:Type: Well_21_Lease_Agmt_Amend_2.pdf Amendment Two Agreement Well_21_Lease_Agmt_Incl_Amend_1.pdf Original Agreement with Amendment One Agreement AMENDMENT TWO TO LEASE AGREEMEMT ORIGINAL THIS AMENDMENT is made and entered into this 4th day of October 2017 by and between the ORANGE COUNTY WATER DISTRICT, a political subdivision of the State of California organized under Chapter 924 of the Statues of 1933, as amended (hereinafter, the "Lessor") and Yorba Linda Water District, a special governmental district of the State of California (hereinafter, the "Lessee"): RECITALS WHEREAS, on December 19, 2012, the Board entered into a Lease Agreement with the Yorba Linda Water District (YLWD) to construct a groundwater production well and appurtenant pipeline and drain pipe at Warner Basin including a construction and maintenance area for a term of 50 years ending on December 31 , 2062, with an annual rent of $3,817 adjusted annually by 3%; WHEREAS, on September 3, 2015, the Board approved and authorize execution of an Easement Deed to the City of Anaheim for electrical service to the YLWD Well No. 21 at Warner Basin; WHEREAS, on July 1, 2015, the Board approved Amendment One to such Lease Agreement with YLWD to replace the current Legal Description of Premises in Lease Exhibit "A" (Legal Description) and shown in Exhibit "B" (Plat), with a revised Legal Description and Plat; and to authorize the General Manager or his designee to replace the revised Legal Description and Plat with an "as built" Legal Description and Plat; and WHEREAS, YLWD has requested that Exhibit "A", Well 21 Air Valve Exhibit, be added to the existing Lease Agreement, as Exhibit "E" to reflect the addition of the Air Valve placed above ground, in the existing underground Appurtenant Premises. NOW, THEREFORE, in consideration of the matters set forth in the foregoing recitals and the terms, covenants and conditions hereinafter contained, the parties do hereby agree as follows: 1 . Attachment 1 , Well 21 Air Valve Exhibit, is added to the existing Lease Agreement, as Exhibit "E" to reflect the addition of the Air Valve placed above ground, in the existing Appurtenant Premises. Attachment 1 is attached hereto and made a part hereof. 2. The following is added to Paragraph 1 .5 (Attachments) under the Lease: Exhibit E. Well 21 Air Valve Exhibit 3. Each and every other term, covenant and condition of the Lease not herein expressly modified is hereby ratified and confirmed and shall remain in full force and effect. SIGNATURES ON THE FOLLOWING PAGE I IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Lease as of the day and year first hereinabove written. "LESSOR" APPROVED AS TO FORM: ORANGE COUNTY WATER DISTRICT RUTAN &TUCKER, LLP. a political subdivision of the State of California organized under Chapter 924 of the Statues of 1933, as amended By: ,� By: qla,2,2-� Gen cobAiefor Denis R. Bilode , P.E , President Ora a County Water District I By: Mfchae-K Markus P.E., General Manager APPROVED AS TO FORM: "LESSEE" KIDMAN LAW LLP YORBA LINDA WATER DISTRICT, a special governmental district of the state of California By: _l By. s - J. Wayne Miller, Ph.D., President Andrew B. Gag Esq. General Counsel for Yorba Linda Water District By: Marc Marcantonio, General Manager Amendment Two YLWD(9/11/2017) 2 FILL POST WITH CONCRETE (ROUNDED ON TOP) z o w I GUARD POSTS SHALL BE _ ISI c PAINTED HY-LUX 3119 � L-i CATERPILLAR YELLOW. b Q � Gil SEE YLWD STD. SPEC. o J �_ SECTION 09900. 4':: EXISTING FENCE o oQ C) Q o � J U N L a < Q CD x to = z_ > "' EXISTING TREE TRUNKS o Q " ~ 4" STEEL PIPE o :D :�> h - `f' ww ° Qo x w w o C� O z X - 15' YLWD EASEMENT LIMITS 5' w o `� ` 4.5' 2.3' CL CONCRETE NEW AIR VALVE Co NEW 16 WELL 1.0' PAD AND LOVER „ DISCHARGE 2.0' 15 - PIPELINE M„o 18' � GUARD POST DETAIL Q O N % II II O I w � II II � NEW GATE SWING LIMITS ��'� �� o T LL-1 N � w L� J w N o NEW 16' GATE z � N i z n N ' C/ Co o x O•C•W•D• EDGE OF ACCESS ROAD w CL a CONROCK NEW GATE SWING LIMITS N BASIN 39' a i U 10' 1 ' 0 10' 20' U U SCALE: 1 ”=10' i PREPARED BY: PROJECT NO. ® Yorba Linda 1 ORB 17 E. LMIRALOMAEAVEINUEICT WELL 21 AIR VALVE EXHIBIT 2009-22 #21 Water District PLACENTIA CA 92870 SHEET (714) 701-3000 1 OF 1 N LEASE AGREEMENT (YORBA LINDA WATER DISTRICT) (Warner Bum Compla -Well No. 21) ORIGINAL This LEASE AGREEMENT ("Lease'') is made and entered .into as of December 19, 2012 by and between the ORANGE _COUNTY WATER. DISTRICT, ,a political subdivision of the State of California organized under Chapter 924 of the Statutes of 1933, as amended ("OCWD"), and the Yorba Linda Water Dutrlct, a special governmental districtof the State of California (''Lt.sseej. PARTI FUNDAMENTAL LJMJ TERMS 1.1 Lease: For and in consideration of the payment of rentals and the perfoltrl8Dce by Lessee of each and evtJrJ term. covenant and condition of this Lease, OCWD hereby leases to Lessee, and Lessee leases and hires from OCWD, the following real property owned-by OCWD, for the use, purpose or activity specified in Paragraph 1.1.2 and 1.1.3: 1.1.1 . Leased Property: Located at 4060 B. La Palma Avenue, Anaheim, California, and more particularly described in Exhibit "A" and depicted in Exhibit "B," both exhibits attached hereto and incorporated herein by this refetcnce ("Pnmrlses''). The Premises is defined as the Well Site Area, Appurtenant Premises (1), Appurtenant Premises (2), and Construction and Maintenance Area. 1.1.2 Use of Leued Pnmua: For and during the term of this Lease, and any extension or renewal of it, Lessee shall use the _Premises solely and exclusively for the following pmpose(s) or activity(ies): to install, construct, reconstruct, redevelop, inspect, maintain, operate, and improve one production water well (the "Well"), pipeline and appurtenant facilities· (collectively hereafter, "Well Site") including egress from and ingress to the Well Site over OCWD's paved and unpaved acceis road at Wamer Basin ("Access Road"), as shown on Exhibit "C", � hereto and incorporated herein. 1.1.3 Ute Limitation for.Pnmila. AB further defined, "Well Site Ami' shall be used exclusively by Lessee as the location of the Well, well enclosure, and appurtenant piping and other facilities, on a reinforced concrete slab. The "Construction and Maintenance Area" shall be used exclusively by Lessee during construction of the Well and later during construction of the wellhead facilities and appurtmant facilities connected thereto. Periodically, thereafter, Lessee may use the Construction and Maintenance Area for maintenance and upkeep of the Welt When not otherwise in use by Lessee, the Construction and Maintenance Area will be available for use by OCWD, and Lessee understands and acknowledges that it will not have the quiet enjoyment and use of the Construction and Maintenance Area at such times. The "Appurtenant Premises (l)" and "Appurtenant Premises (2)" (collectively, the "Appurtenant Premises") shall be used exclusively by Lessee during time of construction of pipelines and appurtenances. After completion of construction, OCWD shall have the right to use the surface of the Appurtenant Premises, subject to the condition that, if and when maintenance or repair of pipelines and appurtenances is required, L�ssee may require exclusive use of all or portions of Appurtenant Premises during the time of repair or maintenance. 1.2 Term: This Lease shall commence on December 31, 2012 ("Commencement Date'') and, subject to Part II below, shall continue to and terminate at 11 :59 p.m. local time on December 31, 2062 ("Expiration Date"), fifty (SO) years after commencement. If so agreed by both Parties, lease may be extended for a time period and at a cost as agteed to by both Parties. This Lease is subject to early tennination in accordance with Section 2.1 O and Paragraph 2.10.1 of this Lease, and the immediately following paragraph of this Paragraph 1.2. This Lease and the Lessee's rights hereunder may not be extended beyond the Expiration Date unless such extension is set forth in writing and signed by both OCWD and the Lessee. Notwithstanding any other provision of this Lease, OCWD or L essee shall have the right for any reason, at any time, with or without cause, to terminate this Lease prior to the Expiration Date, by giving the other party a twelve (12) month written notice of termination at the· address provided herein. Should OCWD detennine that the Premises are needed by OCWD for any reason, and terminates this Lease, by written notice delivered to Lessee at the address in Section 2.11 Paragraph 2.11.1 during the first 20 years of this Lease, OCWD shall reimburse Lessee for the initial construction cost incurred by Lessee for. the construction of the Well Site. The reimbursement shall be on a straight line depreciation basis (the "Depreciated Cost'l calculated over the initial 20 year term from the Commencement Date of this Lease. As an alternative to reimbursement, OCWD may develop similar facilities on other OCWD land for the benefit of Lessee, subject to Lessee approval of said facil�ty development BY PLACING ITS INITIALS HERE, LESSEE ACKNOWLEDGlt THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS LEASE FOR TERMINATION WITH OR WITHOUT CAUSE AS SET FORTH IN SECTION 1.2 HEREINABOVE. Lasee:� 1.3 Lease Con1ideradon: As partial consi4eration for the Lease of the Premises, Lessee shall pay to OCWD the sum of three thousand, eight hundred 1eventeen dollan and no cent& ($3,817.00) per year (the "Rental Payment'') subject to annual adjustment, in accordance with Exhibit "D" of this Lease. The Rental Payment shall be due as one lump sum on the Commencement_ Date of this Lease and annually thereafter on the anniversary of the Commencement Date. -2- 1.4 Notlea and Payments: All payments, notices and other writings required to be delivered under this Lease to either party shall be delivered in accordance with the provisions of Part II {General Lease Provisions), to OCWD and to Lessee at the address set forth in Section 2.11 · Paragraph_ 2.11.1. 1.5 Attachments: This Lease incorporates by reference the following Attachments to this Lease: Part I: Part II: Part ID: Exhibit A: BxhibitB: Exlu'bitC: ExhibitD: Fundamental Lease Term General Lease Provisions Special Lease Provisions Legal Description Premises (4 pages) Plat of Legal Description, Construction and Maintenance Area, and Appurtenant Premises (1) and (2) Plat of Wamer Basin Access Road Annual Rent Schedule 1.6 Integration: This Lease represents the entire understanctina of OCWD and Lessee as · to the Lease and all other matters contained herein. No prior oral or written understanding shall be of any force ·or effect with regard to those matters covered by this Lease. This Lease supersedes and cancels any and all previous negotiations, arrangements, agreements or understandings, if any, between the parties, and none shall be used to interpret this Lease. IN WITNESS WHEREOF, the parties have executed and entered into this Lease as of the date first set forth above. eve Conklin, P.E. Acting General Manager APPROVED AS TO FORM: KIDMAN LAW, LLP -3- Leuo Agrcommt Well No. 21 (Nov. 21, 2012) - Leuee Information: Address for Notices: Yorba Linda Water District Attention: General Manager 1717 E. Miraloma Ave. Placentia, CA 92870 Telephone Number: (714) 701-3102 Fax Number: .(714) 701-3028 PARTU GENERAL JcEMJ PROVISIONS 2.1 Lease Rental Payments 2.1.1 Tnmunittal of Paymmt,: Lessee shall make all Rental Payments, and pay all other sums due under this Lease, in lawfbl money of the United States, by check, payable to "ORANGE COUN1Y WATER DISTRICT," and shall pen.onally deliver or mail all Rental Payments without any notice or demand to OCWD at the address set forth in Paragraph 2.11.1 below. Lessee assumes all risk of loss or late payment if any payment is made by mail. 2.1.2 No Offsets: All Rental Payments and other sums due under this Lease shall be paid without offset or deduction. and shall be deemed payments on account. Neither the payment by Lessee nor the acceptance by OCWD of any Rental Payment or other sum in an amount which is less_ than the amount due and payable pursuant to this Lease, nor the issuance of a monthly statement showing as due and payable an amount less than is properly due ·and payable pursuant to the terms of this lase, shall constitute an agreement by OCWD modifying this Lease or a waiver of OCWD's right to receive all Rental Payments and other sums provided for in this Lease. No endorsement or statement on any check or any letter accompanying Ill)' check or p ayment shall. be deemed an accord or satisfaction, and OCWD shall accept all checks and payments from Lessee without prejudice to OCWD's right to recover the balance of the amount due or to pursue any other remedy in this Lease or otherwise provided by law. 2.1.3 Holdina Over: If· Lessee remains in possession of the PremiSes after the expiration of the Lease term or any authorizod extension or renewal thereof with the consent of OCWD (either express or implied) and without executing a new Lease, then such holding over ·shall not be considered a renewal of this Lease, but rather shall be construed as a tenancy from month to month, sub ject to all conditions, provisions, and obligations of this Lease insofar as the same are applicable to a month-to-month tenancy; provided, however, that Lessee shall pay as rent to OCWD, for each month that Lessee holds over, an amount equal to two hundred percent (2000/o) of the Rental. Payment as set forth in Section 1.3 and adjusted in accordance with Part III. Notwithstanding the foregoing, nothing contained in this Lease shall be deemed consent by OCWD to occupancy or pos_session of the Premises by Lessee after the expiration or termination of this Lease. 2.1.4 PreRiiee: In the Pleat tl!at Lessee's eWi1atien te make :A.eatal Payments temHBate8 ea seme ate etl!er tka tile las:t My ef a ealaada, meftf:lt; tile laet memh's -5- Nat sltall l,e p!'8ftltetl eased upen ll � (3Q� day !Befttfi te Mleet tile aeNal pe!iea ef teaaaey auriag that ealeaear melltft. 2.2 QIHnes fer Late P@ymeBts! If _,.. Lew Ratel Payment ei my etker NB Ekte OCWD is Bet Neewed ey OC'I.ZQ ·.·lithin tea (1 � daye after tile ee &te, Lessee 88&11 �e deelBeEI tlel&twt ift ke pa)'IMRt wl a late eeaige efene aae ese halfpe,eeat .(l.S9') ef� dellJNlll8Bt ame\BH; plus tile IR:llft efeae h.1:lll6Nd clell&H ESl00.09), sl!all Meeme ilamemately due 8B8payehle te OCWJ>. An aediB8B&:I eha,ge efeae aae ene h.alfpe!Nftt (l.S� ef81:18& dellJNlll8Bt p&}'llleBl EeJ(ekKtisg late el!arg� ahall he adtled fer eaes atWHieaal ealena m&Bth (er p-a tlleieet) that the �ueat MB felB8H1S e,aia. In tais Ngai,i: 2.2.1 Lessee and OCWD hereby acknowledge and agree that such late charges do not repre.,ent and shall not be deemed to be an interest payment, but that such late charges represent a fair and reasonable estimate of the costs and expenses that OCWD will incur by reason of �see's late payment. 2.2.2 Acceptance by OCWD of any delinquent payment or late charge shall in no way constitute a waiver of Lessee's default with respect to such overdue and delinquent payment, or in any way impair, prevent or restrict OCWD from exercising any of its rights or remedies set forth in this Lease or otherwise provided at law. 2.3 Condition and lpmection of Premises 2.3.1 Premises Leased "As-ls": Lessee acknowledges that the Premises are being leased to Lessee on an "as-is" basis, and Lessee 1*c,s and occupies the Premises without reliance upon any representation by OCWD, or any of its officers, employee_s, agents or representatives, or any other person, concerning the Premises, their fitness for Lessee's intended use or any other particular purpose of �, their income producing history, potential or capabilities, their value, or any �er promise, representation or inducement not expressly set forth in this Lease. 2.3.2 No R.q,resentation or Warranty Concernin& Prem i§§: Lessee acknowledges that neither OCWD, nor _any of its officers, employees, agents or representatives, has made any written or oral representation, promise, or warranty, expressed or implied, concerning the Premises, their fitness for Lessee's intended uSe or any other purpose or use, their income producing history, potential or capabilities, their value, or any other matter not expressly set forth in this Lease. 2.3.3 Inspection by Lessee: � acknowledges -that Lessee has had the opportunity to �d has inspected the Premises prior to the execution of this Lease, and that Lessee takes and leases the Premises in the condition in which the Premises exist as of the date of this Lease. Lessee stipulates that the Premises are in good, clean, safe -6- and leasable condition, and fit for Lessee's. intended use, as of the date of this Lease and the �encement Date. 2.4 Use of Pmpises 2.4.1 Conditions of Use: For and during the term (?f this Lease, and any extension or renewal thereot Lessee's use of the Premi3es shall be subject to the following conditions, covenants· and restrictions: 2.4.1.1 Except as provided in this Lease, the Premises shall be used only for the purposes specified in Paragraph 1.1.2 and 1.1.3 above, and the Premises shall not be used for any other use or �ose whatsoever, without the prior written consent of OCWD. 2.4.1.2 Leaaee shall at aU mes &fflll tile te111t ef 1Ms I.ease aa4 aay ateB&i81l er NBeWB1 thereefl maintaiB pMper ee IMftli&te peliei!tg ef die Ptemiw in el'Eler te wme 8ftlefly 11Se ef the Ptemi9es &Bd te ,...._t imNsi81l &em t:FespasseR, i,layiBg elliW!e, aae T./8l!ltlale. a.4.1.3 Lessee shell, te tile aatisfaetiea ef OCW;>, Jll&HltaiB. tile Pmmiseaaae all imprer:emeBts ef aay WM tltereiB ma Nie ef geed repai,. 2.4.1.4 Lessee shall not cause, permit or suffer any ''har.ardous material," "hazardous waste,, or "ha7.ardous chemicals" as those terms are used in CERCLA (42 U.S.C. § 9601(14)) or S� (42 U.S.C. § 11021 l(e)) or any similar Federal, State, or local .law, statute, ordinance, regulation or order, or . . otherwise deter.mined by OCWD, to be brought upon, left, ustd ·or abandoned on the Premises. 2.4.l.S Lessee a&all aet maifttai&; eemmit 8f penM tile mainteaanee er eemmifl!i8ft ef any waste er aay alliseee (ae EleiBe4 ill Califemia Ci¥il Cetle seeaea 347� ea tile Ptemisee, &IHI Leaaee Mall Bet w er penM the aee ef tae Ptemiaee fer aay llftla•;rJNI JNl'l'888. 2.4.1.6 OCWD or its authorized representative shall have the right at all reasonable times to enter upon the Premises and inspect the general condition of the Premises to determine if Lessee is complying with the terms, conditions, requirements and provisions of this Lease. 2.4.2 · U1ilitiea 11H1 s..;e.: I:.eaaee &WI 1,e aeleJy respeMiele fer eetaiaieg all� aM'Yiee wl fer the paymeat efall &lity eaaqe&; inel11diBg 1M aet limited te 'llflter an4 pe9Mf, Sllppfte& te tile Ptemises. All utilities shall he m tile B&JBe e( l.essee, &less OC\\t9 eleets etaef\vtae. 1'\11 Btility iastallatiens shall w Nejeet te .. · Pf8'lisieall ef 8eeti8B 2.7 helew. ..1- 2.4.3 Permits and J\Rprovals: Lessee shall obtain any and an governmental permits, approvals, licenses or other authorizations \_Vhich may be required in connection with the use of the Premises as set forth in this Lease. No approval or consent given under this Lease by OCWD shall affect or limit Lessee's obligations hereunder, nor shall any approvals or consents given by. OCWD, in its capacity as a party to this Lease, be deemed to be approval as to compliance · or confonnance with any applicable governmental codes, laws, orders, rules or regulations. �.s fflllHINe: WHhellt limitiag Lessee's HMleamiieaea ehlig&tieBS, Lessee shaU. aet take pe888S11i&J1 ef, � e, eeHpy die Premises 11&til Lessee hes ehtaiMEI aH ef the iMutaaee � heteHl &em. a eemp1111y er eem,anies. aeeeptal,le te OC\W>• ane Lessee shall m41iBtain aU Slle.h: iBstlraBee ill iWl fePee a elfeet at aH times e.riBg tke term ef tais l:.ease anti ay eJEteBeieB er NBewel tMleef. Ieuwe shall ee plaee4 with iw:eta 11a·,mg a NnBt AM. Best mtiBg ef Be Jess tltaB A !VII er efllHvaleBt er 88 8*erwise &JJP1eve4 &y ocw. 2.S.1 Lessee shall take out and maintain the following insur�: 2.5.1.1 Workers' Compensation and Employer's Liability Insurance: Lessee shall cover or insure under. the applicable laws relating to workers' compensation insurance all of its employees working on or abo:ut the Premises, in accordance with the "Workers' Compensation and Insurance Act," Division IV of the Labor Code of the State of California and any Acts amendatory thereof. Lessee shall provide worker's compensation insurance and employer's liability insurance with limits not less than one million dollars ($1,000,000) each occurrence, one million dollars ($1,000,000) disease policy limit, � one million dollars ($1,000,000) disease each employee. Such policy of workers compensation insurance shall contain the following sepazate endorsements: (a)''Insurer waives all rights of subrogation against the Orange County Water District, its officers, directors, employees, representatives and volunteers." (b) · "'Ibis insurance policy shall not be suspended, voided, reduced in coverage or in limits, cancelled, limited, non-renewed or materially chanF.f for any reason by the insurer l.Ultil thirty (30) days after receipt by the Orange County Water District of a written notice of such cancellation, limitation or reduction of coverage." 2.5.1.2 Commercial General Liability Insurance providing coverage in the following minimum limits: -8- (a)Combined single limit of five million dollars ($5,000,000) per occUtTCnce for Bodily htjury, Personal Injury or Death and Property. (b)Damage Coverage shall be at least as broad as Insurance Services· Offi�e (ISO) Commercial General Liability. coverage (occurrence Form CO 0001 ). ( c) If Commercial General IDSm11Dce or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the project/location (with the ISO C0.2503 or ISO CO 2504, or insurer's eq�valent endo�ent provided to OCWD), or the gmeral aggregate limit shall be twice the required occurrence limit. 2.5.l.3 Comprehensive Automobile Liability Insurance. inclµding owned, non-owned, leased, hired, and bon-owed automobiles and similar vehicles, providing the following minimum limits: (a)Combined single limit of one million dollars ($1,000,000) p� occurrence for Bodily Injury or Death and Property Damage. (b) �verage shall be at least as broad as hisuran,ce Services Office (ISO) Business and Auto Coverage (Form CA 0001) covering any auto. 2.5.2 Endorsements: The policies of liability insurance provided · for in Subparagraphs 2.5.l.2 and 2.5.1.3 shall specify that this specific. Lease is insured and that coverage for injury to participants resulting from Lessee's activities is not excluded, and shall be in ·a fonn satisfactory to OCWD and contain the following separate endorsements: (a)"The Orange County Wat.er District. its officers, directors, employees, representatives and volunteers, are. declared to be additional insureds on all of the above policies with respects to the operations and activities of the named insured at or from the premises of the Orange County Water District. The coverage shall contain no special limitations on the scope of protection afforded to the Orange County Water District, its officers, directors, employees, rcprese.n.tatiws and volunteers." (b) "This insurance ·policy shall not be suspended, voided, reduced in coverage or in limits, canceled, limited,. non-renewed, or materially changed for any reason until thirty (30) days after receipt by the Orange County Water District of a written notice of such cancellation, limitation or reduction of coverage." -9- (c)''This insurance policy is primary insurance and no insurance held or owned by the designated additional insureds shall be called upon or looked. to cover a loss under said policy; the Orange County water District shall not be liable for the payment of premiums or assessments on this policy." (d) "Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the Orange County Water District, its officers, directors, employees, representatives, or volunteers. 11 ( e)"This insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the • I liabili' "ty II msurer s 2.5.3 Evidence of Coverage: Lessee shall at the time of the execution of the Lease present to OCWD the original policies of insurance required by this Section 2.5 or a certificate of the insurance, with separate endorsements (Insurance Services Office Form CG 2026, or equivalent), showing the issuance of such insurance and the additional insured and other prQVisions and endorsements required herein and copies of all endorsements signed by the insurer's representative. All policies shall contain the Lessee's name and location of the Premises on the certificate. At least thirty (30) days prior to the expiration of any such policy, a signed complete certificate of insurance, with all endorsements provided herein, showing that such insurance coverage has been renewed or: extended, shall be filed with OCWD. Lessee's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. 2.5.4 Review of Coverap: OCWD shall have the right at any time to review the coverage, form, and limits of insurance required under this Lease. If, in the sole and absolute discretion of OCWD, the insurance provisions in this Leue do not provide adequate protection for OCWD, OCWD shall have the right to require Lessee to obtain insurance sufficient in coverage, form, and limits to provide adequate protection and Lessee ·shall promptly comply with any such requirement. OCWD's requirements shall not be unreasonable, but shall be adequate in the sole opinion of OCWD to protect against the kind and extent of risks which may exist at the time a change of insurance is required, or thereafter. 2.S.5 Deductibles: Any and all deducti'bles must be declared and approved by OCWD prior to execution of this Lease. 2.5.6 Lease Continpt Upon Coverage: Notwithstanding any other provision of this Lease, this Lease shall be null and void at all times wh:cn the above-referenced -10- original policies of insurance or Certificat.e of Insurance or Renewal Certificates or Endorsements are not on :file with OCWD. 2.6 Indernnjflcation 2;6.1 OCWD not Liable: OCWD shall not be liable at any time for any loss, damage or injury whatsoever to the person or property of any peraon or entity whatsoever, including but not limited to any employee, agent or contractor of Lessee, resulting from or arising out of any act or omission of Lessee or of any person or entity holding under · Lessee, or the occupancy or use of the Premises or any part thereof by or under Lessee, or any act or omission in the C)(crcise of any right or the performance of any obligation under this Lease, or directly or indirectly from any state or condition of the Premises, or any part thereo£ 2.6.2 Ipdempjfication: Irrespective of any insurance carried by Lessee for the benefit of OCWD, and notwithstanding any other provision of this Lease to the contrary, Lessee shall indemnify and hold OCWD, its officers, directors, employees, representatives and volunteers harmless from and against any and all actions, claims, demands, judgments, attorneys' fees, costs, damages to persons or property, penalties, obligations, expenses or liabilities of any. kind that may be asserted or claimed by any person or entity (including, but not limited tQ, any employee, BF.Dt, contractor, customer, or invitee of Lessee) in any way arising out of or in connection with this Lease, the operations carried on by Lessee on the Premises or any_ lands ·to which Lessee has access hereunder, or the occupation or use of the Premises by Lessee or any person or entity holding under Lessee (collectively, "Claims"), whether or not there is concurrent active or passive negligence on the part of OCWD, and/or ac13 for which the OCWD would be held strictly liable, but excluding Claims caused by the sole active negligence and willful misconduct of OCWD. In CODDeCtion therewith: 2.6.2.1 Lessee shall defend and hold OCWD, its officers, employees, agents, representatives and vol.un1-S, hannl� from any and all Claims, whether caused in whole or in part by OCWD's active or passive negligence, and/or acts for which OCWD would be held strictly liable, but excluding any Claim that results from the sole active negligence or willful misconduct of OCWD, its officers, employees, agenu,. or representatives; and Lessee .shall pay all expenses and costs, including attorneys' fees, incurred in connection therewith. 2.6.2.2 Lessee shall promptly pay any judgment rendered agaimt Lessee or OCWD covering any Claim, and hold and save OCWD harmless therefrom, whether such Claim was caused. in whole or in part by OCWD's active. or -11- passive negligence, and/or acts for which OCWD would be held strictly liable, but excluding the sole active negligence and willful misconduct ofOCWD. 2.6.2.3 In the event OCWD is made a party to any action or proceeding filed or prosecuted for or arising out of or in connection with any Claim, Lessee shall pay to OCWD any and all costs and expenses incurred by OCWD in any such action or proceeding. together with reasonable attorneys' fees . ..2.6.2.4 All of the indemnity obligations of Lessee under this Paragraph 2.6.2, or as otherwise set forth in this Lease, shall survive the expiration or earlier termination of this Lease. 2.7 Improvements 2. 7.1 Prior Consent for Jnmrpvcments: Lessee shall not J.118ke any alt.eration of or improvement to the Premises without the prior written approval of OCWD'S General Manag� or designee. 2. 7.1.1 In the event that Lessee desires to make any alteration, improvement, addition or utility installation in or about the Premises, L_essee shall present such request in writing to OCWD, together with detailed plans of the. . proposed alteration or improvement; and Lessee shall not commence such alteration or improvement unless and until OCWD'S General Manager or designee has granted approval thereto in writing. 2.7.1.2 In the event that OCWD'S General Manager or designee grants written approval to any requested alteration of or improvement to the Pre.mises, such approval shall be deemed conditioned upon Lessee acquiring all governmental licenses, approvals and pennits required therefore, and such alteration or improvement shall be cons1ructed in strict conformance with the plans approved therefore by OCWD'S General Manager� designee. Once approved by OCWD'S General Manager or designce, no changes or alterations shall. be made to the plans without the prior written approval by OCWD'S General Manager or dcsignee. 2.7.1..3 Ill tae ._._ that OCWD'S GeaeNl Mwger er designee lf8Dt8 vRiuea &PPf87.ral te MY reqaested akelaea ef • imp,evemeBt te ., Premises, Lessee SMII ee!HH:Net we1I: elteraaeB 8f ilBJtf9¥9IMBt at Lessee's sele eest IIIHi eKpeBN, a.1.2 OwJwahip ef lsme'1emeats: AU �i ilapre¥emeats, ixtmes wl ileili1ies (eKelusi·.re ef ua4e BK&1N11, ,e!tahle. lNilaiag&, vehieles anti aeteBBa�, e81181Netea er plaeed ·.vttms tile Pfemiaee lt)r Lessee, iBeltieiBg lNt Bet limited te -12- eleeaieal wl edler aliaes, lis1ee er RM; &hall, 11J8B tile eem,lede!l ef 88BS&Ne1ie1t, iBstallaaes er ,&aeemeat wHhiB tile .Ptemisee; t,e free &IHI Mil' ef aU Hem; e1eims BM B8l,ilky fer paymet fer lel,8!' a materW. 8Yeli Hil�J impl'&'., aBelH81 mRll1'N wl fMilme9 (8Kelueir.1e ef tFade fia...-,s., peJ!llahle INiltliBp;· riemeles IIHl lfltaa111), aaal:l 1,eeeme aaa NmaiB tke prepeftY ef OOWJ> at the -,iratiea ef � Lease er earlier tamiaaa81l 1-ee! Up• the apimtiH e• earli• tmtllinaties ef aia Leu&, OCWI> N&RS tile fight; ill jts aele s aeaehlte EliseN8eltt 8IMI hy 9.·lfi1tea a.eliee te Lessee, te NfllHN (ef, if feElwteEI "" Leaaee, te aUew) Lessee1 at EleNee's aele eeet aad •pease, te w·.Je all auah INikliBs&t -,� fildlns wi fieilitiea leaated ea the Pumises. Ia 1he .... OCWI> eitMf Nff1B!N er paatB penmeaiaa te :bessee, 8llell ,eme·,w 1,y Leasae shall illelude � tile P!emtttet. N8teri9g BBY Nl!M 1emeffll; WViBg any IIM8fgf811M eNtNeaem, filliBg BBY eJINt'.'fl1iem ancl � Rel! fiUetl aeavatiw te ni&et)t .1•eeat E999') eempaea81t. 2.7.3 "As-Built" Plana and Construction Costs: As a condition to the approval of any alteration of or improvement to the Pl'erniscs, OCWD shall have the right to require Lessee to prepare � furnish to OCWD, � Lessee's sole cost and expenae, and within sixty (60) days following completion of such. alteration or improvement, a complete set of reproducible "As-Built" plans for such alteration or improvement, and/or an itemized statement of the actual cost of the construction or installation of such altera�oti or improvement. 2.7.4 Oznmljance with Building Codes: Lessee shall comply with all Building Codes in effect at the time of construction or installation of an improvement of any kind on the Premi�. The applicable Building Codes shall be those codes as adopted by the local permitting jurisdiction (i.e., city or county) in which the Premises ·is located. In the event that Lessee fails to conform to the Building Codes., OCWD may require immediate compliance. If Lcsiee fails to comply, OCWD, at its option, may make such changes to � the improvement into compliance with the Building Codes and c;harge Lessee the cost of such changes plus ten percent (10%) to cover administrative costs. Lessee shall have tm (10) days from receipt of the invoice to reimburse OCWD for the cost·of rneking such changes. 2.7.S Lessee's MIJl1'8IR of Cgnmw;tion Coumletion: Prior to commencement of construction of. approved facilities, or any phase thereof, within the Premises by Lessee, Lessee shall furnish to OCWD evi4mce that assures OCWD that sufficient monies will be available to Lessee to complete the proposed construction in_ accordance with the plans approved by OCWD. The amount of money available shall be at least the total estimated construction cost. Such evidence may take one of the following forms: -13- (a)Completion bond issued to OCWD as oblige, and issued by a surety acceptable to OCWD. (b)Performance bond and labor and material bond (or performance bond containing the provisions of the labor and material bond), issued by a $Uiety acceptable to OCWD and supplied by Lessee's contractor � contractors, provided said bond(s) are issued jointly to Lessee and OCWD as obligees. ( c)Irrevocable letter of credit issued to OCWD from a financial institution acceptable to OCWD to remain in effect until OCWD acknowledges, in writing, satisfactory completion of construction. (d) Cash. ( e)Any combination of the above. 2. 7 .6 Mr&bapics Liens or Stqp-Noticesi Lessee shall at all times indemnify and save OCWD harmless from all claims, losses, demands, damages, costs, expenses, or liability costs for labor or materials in connection with construction, repair, alteration,or installation of structures, improvements, equipment, or facilities within the Premises, and from the cost of defending against such claim� including attorneys' fees and costs. In the event a lien or stop-notice is imposed upon the Premises as a result of such construction, repair, alteration, or installation, Lessee shall either: (a)R�rd a valid Release of Lien, or. (b) Procure and record a bond in accordance with Section 3143 of the Civil Code, which frees the Premises from the claim of the lien or stop-notice and from any action brought to foreclose the lien. Should Lessee fail to accomplish either of the two optional actions above within fifteen (15) days after the filing of such a lien or stop-notice, this Lease shall be in default and shall be subject to immediate termination. 2.8 Maintenance and Re,pair of )>remjp �.8.1 !.eNee's Obliliti8B te MAintaiB P!emiaeo: Less ee slwt. at all times euring :die tmtll ef tms Lease, aB4 aay eJaeBSie.B: 81 NBWels t&eNe( at its aele eest BH eJipense, �·1t1 all t!aah al ael,pis ftrem the Pfemisee. I.ewe shall alee keep wt :maiB1ais iB geeEI eene:litien aae iB Nestantial !ep8ir � te the satisfaeaea ef OCWD in it:s sele dia81Re8), the Ptemises aaa all &PP11ft8Beaees a 8\'et'Y pllt thereef, iBekiEling -14- 2.9 imprel'/8l!lellta ef ey lalKl 8P88tedt iMtalle4 ·er made ea er ·»itma tile Pfmaises. l.wee shall at all times ill 1he mei&WIIBN 8118 llN ef tlse Plenli189 1114 tM INildinp, lllNetllfe8, feeilities, impP81i'flllellts • tlfllBJtJMIH ikereea, eemply ·ntth all law., er4iwleee aa4 � ,.._.,;ag tkeMte, wl all eemlitieaa s ,eavietiw set ferth aeNiBs l.easee ap1easly apees te .maimaia tae �-ill e 8'lfe, elem, ·.rA!elesemew • --,' eeHiaea aatl fi:ree ef tlaih -1 tleMia, te tM aatisiumea ef OC:w.9 wl in eem.p:Yaaee with. all appl:ilahle la·.w, l;8.2 LessM's Defewt ef kB Mei,,-.. Duties: Ia the 111.eat that Lessee fails, aegleets er fEl:IIN te N111e·1e traall: er delis Elep.-1 lt)r l.eaaee er i11 iB•Jiteee ea tile PfeltlHes er te .maimaia er make repaifll er re,lae� • � 9)' tma I.we, OGWJ> eall B8tifyr 'beeaee iB Wfi1iag ef sueli failwe er refusal. Shellld Lewe fail er refese te eerreet 81lah deimlt vMWa tea (19) dayt &f reeeipt ef sll8ll 'Wfittm llMiee HB!B 00\1/l)t 00\1/1) may, 1Nt ahall aet 1,e � te, itself er 9)' eea1tad; lllltleRake tlle aeeesiafY mainteaaaee; repair e,. re,laeem•ta; alMl tile eea tllePee( iBekMliBg lNt Bet limitetl te tile eelt ·&f lal,m., materials wl 8f1llipmeat wl pre80lemeat ef iBftraBee, phla aa Mmini .... fee iB 11M ameat ef fiieee pereeB.t (1S14) ef the INIB ef Na1l eeeta, ahall 1,e pai.4,� l.easee te OCWI> yJitlliB tea (19) days ef · l.esaee's reeeipt &f a atatemelit ef 11188 eeata hm OCWI>. Arly !11188 maiBteaa&ee, repair 9f :Nplaelllltlld 1')' er ea hehalfefOCWD IIWI aet ·1,e deemed te l,e a ·.wiver ef Lwee's Wt IIB4er this l.we, 8IKt all :aet ill any way impai,, pieNBt er l'ISMet OC'WD frem •INiaiBg aay .ef its fig)Ha er remediea aet farta ill tms Lwe 8f etlieP.viee prei:ided at law, Lee;al Relations and Responsibilities I 2.9.1 . Nature of ReJ,tjgngip: OCWD and Lessee understand and agree that the only relationship between them created by this Lease is that of landlord and 1lmnt, and that this. Lease does not create, and shall not be comtrued to create, any agency, partnership, joint venture, or other relation.ship between OCWD and Lessee. 2.9.2 Ornm)jepe, with Laws: Lessee shall keep itself fully informed of all existing and future state and federal laws and all county and city ordinances and regulations which in any manner affect the activities of Lessee under 1his Leue, or the po�on or use of the Premises by � and of all such orders and decrees of bodies or tribunals having any jurisdiction or authority over the same. Lessee shall at all times observe and comply with all such existing and future laws, ordinances, regulations, orders and decrees, and shall protect and indemnify, u required herein, OCWD, i1s officers, directors, employees and agents against any claim or liability arising from or l;,ased on the violation of any such law, ordinancet regulation, order or decree, whether by Lessee or any person or entity holding under Lessee. -15- 2.9.3 1'\aai� 8Bd 8aleaaer I:.wee may Bet wip, eea·:ey. llypedteeate, � :l!l8ftpgeJ er eth8f\W1e 1:faBsfe! tms l.1111 er aay pmt thereeti er !Rtelwe aay p&Riea er all ef dle Pnmisee, r..'IRBelit tile prier Wfittea � ef OCWD , whiell OCw:9 may wiimele ill iu al,aela diaeretiaa fer any rease&; e, fer Be WB at all. Alty s1lelt wigumeat • Nl,lease .tty .E.111ee, wllether ·,eWy_ 811ty epe!'B&eft ef law, wkhem: tlle.p,i8f 'Wlitteft eeBNBt ef OCWD shall 1,e wid wl aaall; at tile eptien ef OCWD, tenniaate tma I.ease llfeB ·.·Ri.tten B88ee te .E.easee. A B8BN!lt 1,y OC'Wll te e:ae asaipaumt e, eae Nl,lease Mall set 1,e deemed a eeBNBt te aay &u1'88ftlllllt asMlft!MIR er Nhlease. Y" .E.essee is a 181p81&81t, 11BiBeetperated asseeietiea er �1 the 899ipmm\ lrwfer, eeaveyaee er wwnmwe ef aay 9teek 81 illte!eet in L.eaaee iB tM aaregate aeeeaing twaaty fi.ve pereeat (2S94) ah.ell l,e deemee te ee aa_asaigameat l'efl11:iri:Ba the p,ier 'HfitteB. eenaeat efOCJN:D. 2.9.4 Acknowledament of OCWD's Title: Lessee hereby acknowledges the title of OCWD in and to the Premises, including the real property fixtures and improvements existing or crccted thereon, and Lessee hereby covenants and promises never to assail,-contest or rcsist OCWD's title to the Premises. 2.9.S IJGm: Lessee shall maintain the Premises free from and clear of any claims, obligations, liabilities, liens, encumbrances and charges, including but not limited to any claims, liens or charges arising out of or in connection with the furnishing of materials or the performance of labor on the Premises. Lessee further shall protect and indemnify OCWD and the Premises from and hold them. and each of them, harmless against any and all such claims, obligations, liabilities, liens, encumbrances and charges. 2.9.6 Possessmy hrterest Taxation: A possessory interest S\lbject to property taxation may be created by this Lease. It is understood and agreed that if such a possessory interest is created, Lessee shall be responsible for the payment of all property taxes levied on such interest, and that OCWD shall have no responsibility therefore. 2.9.7 OCW;D's Besffl1118ft8! 2.9.7.l 001.J/D llefeey NNl'\1e8 tetl fight te gNRt easemeets wi .fig)Hs ef 'Wily fer pele er tewer liBea fer tfaMmiaeiea ef eleetfieity, wi ea&flllleate, lwee wi rights ef way fer teleplleae, telegtapft; teleeemlllllBieatiea faeilitie&, gas, 'Miter, sewer BRd eil �. fer 1'8W aae mshwaye; aad fer e._ similar 119811 er.w aae aere• the Premises at ey leeatiea er leeatiem 1;.·Mhia the Pfemises. 1B 11le ......at LelflN detefmiBes teat the gtamiBg er aeireiee ef ey 9lleh wemeat, lease, er fight ef. way aigaifieamly HIWefes wtdl l.emee'a pesseesiea er •e ef file Premtw, :bessee's 8Bl)r 1emetiy shall he te termiBate -16- this Lease 1:1pen thift:)r (3� day9 ;-m.ttea l!l8Ree te OCWD. Lessee &Mil Bet iB.tetute ,.Y."ffll BRY eaaemeals er ,ig1H9 ef ;,;e.y peR&iBiftg te er affeeang the PNmiaee. 2.9.7.2 OCWJl .herel,y ,ese,we the 1'ight te · seJI, 1faBsfer er �ae diepese af aay pemea ef tlie Piemises at any 1ime. IB tke eveat ef Reh sale, wwfer er dispesise&, BBEI lletwithetaBtlmg aay ether p,e,Asiea ef this Lwe, dti8 Lease shall, 11pea die elese ef N818W er tlte eeaveyaaee ef title, tamiuate ae te die pertieas ef t1te Ptemiw 11el4; 1Naefmetl er aispeaecl el, _a Lessee shaU Mleaee tlte w hm die teBM ef tl!is Lease ·BBEI firem any 8!lelHltBflHlee wt.lien fflRlltl &em this Lease. 2.9.7.3 OCWD reserves the right unto itself to perform any and all work involved in protecting, replenishing and/or conserving the basin groundwater supply and any other work necessary to the functions or purposes of OCWD, as set forth in the Orange County Water District A� Chapter 924 of the California Statutes of 1933, as amended, upon any portion or all of the Premises at any time. Such work may· be performed without incuning any liability of any nature whatsoever to Lessee and Lessee hereby releases OCWD from, and covenants not to sue OCWD for, any such liability. OCWD further reserves unto itself the 'rights of ingress and egress over all or any portion of the Premises. 2.9.8 Cen+ennea: If any peRiea ef th.e·Ptemises is taken e, aeffliired a,,r etlHlleBt Elemaia ·er ethePM98 fer a pe1'1ie er �-pllMie l:IH, · llli4 any pmt ef die P.tanises remains v.-ltieh is 1R11e8)Mi1Jle ef eeeupatie& •• this Leese, this I.ease IIMH, as• tke pan; er parts se. take&, te.&iaate as ef the date title er pessesaies. sllall wet iB tke eeMefBB81'. IR tlte weat all ef tke Ptemtsee er Neh part 1:llereef se that tlie!e aeea net ,emam a peniea 9Bleeptiele af eelM:lp&tiBB lil1tler 1his Lease, are take& er &ellHffl'&, this . I.ease skall therellpeR teJmiBete. Lesser shall lie Mltitled te aay a all eempeBSatie11: a;-.-aniefl llJ'eB 8118B: ees4esmatie&, BM Lessee MfMY aiselaims any fight te an,. eueh eempematiea. :a.9.9 W8P18f efClaims: AB a material pmt efihe eeasieer&ea te OGVII> 1Hl88!the I.ease, I.e11see lt:efel,y r.� any anti all elaims 1hat it lllllY s".-e against OCWD &lil'i&g ae tmm ef tMtt Lease, er any m.."temieR er l'eBeW8l thereei; _fer aay delnage te geeas, 'A'flNS BM :B!lefehBBEliae 'llfJ8B 8f aeelit � P!'8BIHl8B, an4 fat aay iajwy. te Leasee; its empleyees, agea1s, imiiteea, er te tl!ire patties iit: er ahem die Ptemisea, hm aay eal:198 afisiBg at aay time. 2.9.10 Surrender of Possession: At the expiration or termination of this Lease, for any reason whatsoever: -17- 2.9.10.1 Lessee shall execute, acknowledge and deliver to OCWD a quitclaim deed conyeying to OCWD all rights, title and. interest of Lessee to the Premises, both land and improv.ements. 2.9 .10.2 Lessee shall promptly quit and surrender the Premises in a good state of repair. 2.9.10.3 Lessee shall, at its sole cost and expense, remove all portable buildings, equipment and personal property placod on the Premises by Lessee, and clear the Premises of all debris; and the Premises shall be surrendered to OCWD in good order and clean condition. 2.9.11 Di$JK>sition of Abfmdoned Property: If Lessee abandons or quits the Premj.ses or is dispossessed thereof by process of law or otherwise, title to any personal property left on. the Premises for thirty (30) or more days after the notice to remove shall at OCWD's opinion, be deemed to have been abandoned and transferred to OCWD. OCWD shall have the right to remove and dispose of any and all such property without liability therefore to Lessee .or to any person or entity claiming under Lessee, and OCWD shall have no duty to account for such property. Lessee agrees to reimburse OCWD for any and all costs associated with OCWD transferring or disposing of Lessee's personal property pursuant to this Paragraph. 2.9.12 B,eker's Cn,mi1aien1 Lessee and OCWl> ,epwt • tkey have set agagetl. er are � ar.vare ef. my perse& IBtillee te a&y 9feketraae eemmisaiea; fiMef's fee e, lia eempeasatiea ia eetmeatiea Ylith .t&is . I.ease. Lei• ah&II maenUy 8llEl hele OCWl> 1Hllmlees &em a&e apiBst 1BY elaim asBefted er adjll4getl ageiBat OCWI> fer ey 8f8Bl'al9 eemmiasiea, Bftfief!s fee er like eempeRl&ea iMufflMl ey er as a ftl88lt ef ay aetie&; f8J'f8Beataae& er etatelll81!lt ey Lessee, er aay ef its effieel&, empleyees, ageats e, repre98B1aaves; BH Le11ee &WI pay all easts a:Bd -,wes iBellnM ey OC'W'» ill eewetien theN7litlt, i88ftl8ing NeSeB&ele attemeye' fees. 2.9.13 Dimutes: In the event that any action is commenced by a party to this Lease against the other to enforce its rights or obligation s arising from this Lease or seeking to in� this Lease, the prevailing party in such action, in addition to any other relief and recovery ordered by the court, shall be entitled to recover all statutory costs, plus reasonable attorneys' fees. Should OCWD be named in any suit brought by any third party against Lessee in connection with or in any way arising out of Lessee's occupancy or � t,f the Premises under this Lease, Lessee shall pay to OCWD its costs and expenses incurred in such suit, including reasonable attorneys' fees·. 2.9. 14 Seevib' Meanna: Les• aelmer.vleegee that tae Pfremises are lewe te wl aeeepted ey Lessee in aa "as is" ee!HIRie&; wl that the rent payal,le &em Leaaee te -18- OCW9 B8fellBMl' deea aet iBeJIMle tile eeat ef 11ee11My pal er aay etller se&lifffy NPVtee1 er measures. Leaaee· Rl!dler aelmewledgea that OC3tWl:illalN ae NpNNll111Rea er 'Mlfl8IHY, exJ)l1188 er imp)iedw ,..._. the NIIHHY eftM Prmtlsea er tile Beed fer er� ef llllf 1N11Rty m181Nfe8 at h.P,emJeas: e Leaaae fiatMr aelmewledaes tltat OCWI> alsall. :have M el,liptiea wllataeever te l'f'Mde gll8ftl INIAiee er ay ether saewity IBaalRll'U. Les.see Mpl'llily 11181i11198 all ,espelllihility fer the pieteetiea 11111 saBltfity ef the PNmiHs� Le11ee, ita apntt. empleyeea, mriteea 8B4I pl8pedy ¥IRHl 1he PNIIBisaa firem ay al ill aetl ef aay tmra J'll'l)'. 2.9.1S No Oblipt:ion to Third Parties: Execution and issuance of this Lease shall not be deemed to confer any rights upon, directly, indirectly or by way of subrogation, nor obligate either of the parties hereto to, any person or entity other than OCWD and Lessee. 2.9.16 Waiver: Any waiver by any party of a breach of any provision of this Lease shall not be deaned a continuing waiver or a waiver of any subsequent breach whether of the same or. of another provision hereof. 2,9il7 OCWD'a I jihffjty e 'FOl'l!dNtiMH Leaaee lilNe)r wair.w all damages er elaima fer «llllft88' teat may N •1111 � lllf &eaea e( OC'IJ» Bl temlH!atiag tm8 l:.easa (either rNitft er 'WRllellt Nllle), er 1alaBg. pe88Hl9iBB ef the PNmiAN 88 l'f81'./irlad m tms Lease er at law, 8IMI l:.aaaae. ·.vaiws all elaima fer damages te er l8aa ef Neil prepe!ty ef Leaaae aa � l,e ill er llp8B the Pftlll!lliw 1IJ'8ll the te• • iaadea ef this 2.9.18 Prior Leases: It� mutually agreed that, on and from the Commen<:em.ent Date, this Lease shall terminate and supersede any prior leases �r agreements between the parties hereto covering all or any portion of the Premises. 2.10 Default IP4 Tqmirurtinp 2.10.1 T-8!IB a Prier Ilffllinatiea: This L•• ahall eea1iB111 fer die tmm set fe:RJ! ia 8aeti81l 1.� eeive, IIBlw this Le111 it tefmiM&e� prier te its 8Jlpifati8ft JMBIIIBl te tma SeaHll l.19 er Pm HI. 2_.10.2 �t by Lessee: Each and ewzy covenant and agreement contained in this Lease is declared to be a condition to this Lease, and to the tmm · hereby demised to Lessee. Lessee shall be considered to have materially breached this Lease, giving Lessor the remedies specified in Paragraph 2.10.3 below, in the event that any one or more of the following occur: -1 9- (a) l:.eeaee fails er refeties te pay te OCWJ> an.y pera8B: ef tile R8Btal Pa,meat er ether 1111B &\18 a1f811Bder ·.vllea &lleJ aa4 INeh 911111 remaias epaia fer WM! (S) days after wfittea netiee te pay NBt er !RlffeBtler peseessieB ef tke PtelBises ·is l8P/N ea Lesaee tt,, Le888!; e, (b)Lessee defaults in the perfonnance of or breaches any covenant, condition or provision contained in this Lease other than as set forth in Paragraph 2.10.2(a) hereinabove, and such default or breach is not cured within thirty (30) days after written notice thereof is served by OCWD on Lessee; or ( d) Lessee becomes insolvent; for purposes of this Lease, Lessee shall be conclusively presumed to have become insolvent if: (i) A receiver is appointed to take possession of all or substantially all of Lessee's property because of insolvency; or (ii)Lessee makes a general assignment for the benefit of cre.ditors; or (iii) Lessee allevJB aay jllepleat against Lesaee te NIBIHI uasaasfiea er a 88Beed fer a pe!ietl ef thifty (39) aa,'9 er )eager; e, (iv)An attachment or execution is levied upon or against any or all of Lessee's right, title or interest in or under this Lease, and the same shall not have been released within thirty (30) days from· the date thereof; or (v)Proceedings in receivership or bankruptcy have been or are about to be instituted against Lessee; or (vi) Lessee is adjudicated a bankrupt. 2.10.3 Remedies on Lessee's Default Should Lessee breach this Lease, or should Lessee breach this Lease and abandon the Premises prior to the natural expiration of the term: of this Lease, OCWD.may, in addition to any other remedy given OCWD by law or in equity: (a)Continue this Lease in effect by not terminating Lessee's right to possession of the Premises, in which event OCWD shall be entitled to enforce all of OCWD's rights and remedies under this Lease, including the right to recover the rent specified in Section · 1.3 above, as such rent becomes. due under this Lease; m -20- (b) Terminate this Lcaac and Lessee's right to possession of the Premises, and recover from Lessee: (i) The worth at t1ie· � of award of the unpaid rent which had been earned at the time of termination of'the Lease; and (ii)The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination of the Lease until the time of award exceeds � amount of rental loss that Lessee pn,ves could� been reasonably avoided; and (iii) The worth at the time of awaid of the amount by which the unpaid rent for the balance of.the term after the time of award � the amount of rental loss that Lessee proves could be reasonably avoided; and (iv)Any other amount necessary to compensate Lessor for all detrim�t pro�ly caused by Lcssee'i failure to perform its obligations under the Lease; m: (t)Termimdc this Lease and Lessee's right to possession of the Prcmisca, and fn addition to BD)' MCOVeries that Lessee may seek under Paragraph 2.10.3(b) hercinabove, bring an action to reenter and regain possession of the Premises � the manner provided by the laws of unlawful detainer of the State of California then in effect; .m: � Ia tile e\'491lt Leaaee 1,eeemea imehem, OCWI> ma,; � � w.cmty (29) M)'9 •• .te E.e•ee er te the JHIINll appemttMI te maaa1e l.eeaee'a aflilira at die adlhw fer. Rel! p11198B lpJ!INnBg ill tM effieial '"8N9 ef die eemt that .appeitttetl Slle8 ,-aea; tenniaate tme lease aae � LeaSee'a iBtereat ill the Pfemiees BM ill aay imprft1.1elllellt8 er faeilitiea ea er .,,..... te 1he PN.miw. 2.10.4 Wai,m of BrenGb· The waiver by OCWD of any breach of any term, covenant, or condition of this Lease .iwI be in writing signed by OCWD, and shall not be deaned to be a continuing waiver pf such tam. covenant or condition, or a waiver of any subsequent breach of the same or any other term, covenant or condition con1ained in this Lease. The acceptariee of rent by OCWD under this Lease shall not be· deemed to be a waiver of any preceding bieach by Lessee of any term, covenant, or condition of this Lease, other than the failure of Le� to pay the particular rent so accepted by OCWD, regardless of OCWD's knowledge of such pJCCe<ting breach at the time of acceptance of such rent. -21- 2.10.5 Cumulative Remedies : The remedies given to OCWD in Paragraphs 2.10.2 and 2.10.3 above shall not be exclusive, but shall be cumulative and in addition to any and all other remedies now or hereafter allowed by Jaw or otherwise authorim:t elsewhere by this Lease; and the exercise of one or more of said rights, powers, elections or remedies shall not impair OCWD's right to exercise any other right. power, election or remedy. 2.10.6 Re-Rntry� No entry or re-entry into the Premises by OCWD shall be constt,,ied as an election to terminate this Lease, unless prior thereto or concurrently therewith written notice of intent to terminate is given by OCWD to Lessee. OCWD's entrr into possession of the Premises without having elected to terminate shall not prevent OCWD from making such an election and giving Lessee notice thereof. 2.11 Miscc)laneous 2.11.1 Notices: Any notice, payment or ins1l'Ument required or permitted to be given or delivered by this Lease may be given or dtlivered by personal delivery or by depositing the same in any United States mail. depository, first class postage prepaid, and addressed as follows: lfto OCWD: If by mail: If by personal delivery: If to Lessee: ORANGE COUNTY WATER DISTRICT P.O. Box 8300 Fountain Valley, CA 92728-8300 Attn: Property Manqement ORANGE COUNTY WATER DISTRICT 18700 Ward Street Fountain Valley, CA 92708 Attn: Property Management Yorba Linda Water District Attention: General Manager 1717 E. Miraloma Ave. Placentia, CA 92870 or such other person or address as � party may direct in writing to the other; provided, however, that such new or different person or address shall not become effective until aclcnowledged in writing by the party to who directed. Except where service is by personal delivery or by registered or certified mail, return receipt requested, service of any instrument or writing shall be deemed completed forty-eight ( 48)hours after deposit in a United States mail depository. 2.11.2 Wmanty of Authority: Each officer of OCWD and Lessee affixing his or her signature to this Lease warrants and represepts by such signature, that he or she has the full legal authority to bind his ot her respective party to all of the terms, conditions and provisions of this Lease, that his or her respective party has the full legal right, power, cap�ty and authority to enter into this Leise and perform all of its provisions and obligations, and that no other approvals or consents are necessary in connection therewith. 2.11.3 HeadiQ.ss: The titles and headings of Parts, Sections and Paragraphs of this Lease, as herein set forth, have been inserted for the '8b of co�v=ience only, and are not to be taken, deemed or construed to be any part of the terms, covenants or conditions of this Lease, or to control, limi,t or modify arty of the terms, covenants or conditions hereof 2. I 1.4 Time of .Essence: Time is of the essence of this Lease. Failure to comply with any requirement, including but not limited to .».y 1ime requirement, of this Lease shall constitut.e a material breach of this Lease. 2.11.5 ConstructioJi and Ampdrpept: This Lease shall be construed, interpreted, gc;,vemed and =.orced in. all respects according to the laws of the State of California and as if dtafted by both OCWD and Lessee. No �. change or modification of this d<>eµment $all be valid unless in writin$, stiting that it amends, changes or modifies this Lease, and signed by all of the �es hereto. 2.11.6 _Successors; Subject to the provisions of Paragraph 2.9.3 ab()ve, this Lease, and aU of the t.enns, conditions and provisions herein, shall inure. to the benefit of: and be bindin& upon, OCWD, Lessee, and their respective S\1CCC$Sors and assigns. 2.11. 7 Partial Invalidity: If any term, covenant, condition or provision of this Lease is held by a court of competent jurisdiction to be invalid, void, illegal, or unenforceable, the remainder of the provi�ons hereof shall remain in full force and effect � shall in no ·way affect, impair, or invalidate any ·other term, covenant, condition or provision contained in this Lepe. 2.11.8 Further Assurances:· Bach of the partie� hereto shall execute and deliver any and all additional papers, documents and other assurances and shall do any· and all acts and things reasonably necessary in connection with· the performance of their obligati� hereunder and to cmy out the intent of the parties hereto. 2.11.9 Pfeeedaaees Ill the e\'Et ef aay eenfiiet 1'•.'98B Patts eft:his Lease, Paft I s11a11 pNMlil e'Wll Pmts H, HI ane IV, Pmt I'/ shall pier;eil ever Part II a III, wt Part IH sJ!all p,eveil el'/ef Pert 11. -23- PARTm SPECIAL LJME PROVISIONS 3.1 Paragraph 2.1.4 (Proration) is hereby revised as follows. Section 2.2 and Paragraphs 2.2.1 and 2.2.2 are deleted from this Lease. 2.1.4 Proration: In the event that Lessee's obligation to make R,ental Payments terminates on some date other than the last day of a calendar month, the last month's rent ·shall be prorated based upon a three hundred ind sixt)' (360) day year to reflect the amua1 period of tenancy during that calendar year. 3.2 Section 2.2. (Charges for Late Payment) of this Lease is replaced with the following: 2.2 . Charges for Late Payments: If any Lease Rental Payment or any other sum due OCWD is not received by OCWD within thirty (30) days· afl;er the due date, Lessee shall be deemed delinquent in its payment and a late charge of Qne and onehalf percent (1.5%) of the delinquent amount, plus the sum of one hundred dollars ($100.00), shall become immediately due and pa.yabl� to OCWD. An additional charge of one and one-half percent (l .So/o) of such delinquent payment ( excluding late charges) sbali 'be added for each additional calendar �onth (or portion thereof) that the delinquent sum remains unpaid. In this regard: 3.3 Paragraphs 2.4.1.2;2.4.l.3, 2.4.1.5, and 2.4.2 of this Lease are.replaced with the following: 2.4. l_.2 Lessee shall -at all times during the term of this Lease and any extension or renewal thereof, maintain proper and adequate policing of the Well Site Area and during construction or maintenance activities maintain the Appurtenant Premises and Construction and Maintenance Area in order to assure orderly use of the Well Site Ami, Appurtenant Premises and Construction and Maintenance Area end to prevent intrusion from trespassers, playing children and vandals. 2.4.1.3 Lessee shall, to the satisfaction of OCWD, maintain the Well Site Area and . all improvements of any kind therein in a state of good repair, except the Lessee shall not be obligated to repair damage or other degradation caused by OCWD or other lessees/'mvitees of the Premises. During construction · or maintenance activities, Lessee � not damage the Appurtenant Premises and Construction and Maintenance Arca and all improvements of any kind �-If Lessee damages or causes such damage, Lessee shall promptly repair the property or improvement to OCWD's satisfaction. 2.4.1.S Lessee shall not maintain, commit or permit the maintenance or commission of any waste or any nuisance (as defined in California Civil Code section 3479) within the Well Site Area at any time. Lessee shall not maintain, commit or permit the maintenance or commission of any waste pr any nuisance within the Appurtenant Premises or the Comtruction and Mamten� Arca at iny time during Lesw's constructic;,n and maintenance activiti� within the Appurtenant Premises and Cons1ruction and Maintenance Area. Lessee shall not use or pormit the use of any portion the PrcmiJes for any JUllawful purpose. 2.4.2 Utilities 100 Sayices: Lcuee shall be $olely l'e$pOlllible for obtaining all of its utility service and for the payment of all of its utility charges, including but not limited to water and power, supplied to the Premises. All u1ilities �I be in.� name of Lessee, uniess OCWD elects otbetwiae. All utility installations shall be subject to the provisions of �on 2. 7 below. 3.4 The following provisions·arc added to Paragraph 2.4.1 (Conditions of Use) of this Lease: 2.4.l.7 Lessc,e shall erect and maintain an enclosure around the Well Site Area in a desigtJ. satisfactory to OCWD'S General Manager or his desip,e. Prior to construction or installation of such a:iclosure, the plans and specifications for said enclosure mmt be submitted to and expressly approved by OCWJ;>'S General Managa-or his desigMC. 2.4, l ,8 Sh9ul4 any d•tnJ1gc or injury to OCWD or Corona. Recreation, Inc. 's faciUties occur, ei� through the acts of agents. servants 01 employees of Lessee or by any indepmident contractor of Lessee in the exerdse of the riabta granted in this Lease, Lessee agrees to ·immediately, upon the written demand of OCWD, restore such facilities, at Lessee's sole cost and expense, to the condition of same imQ1e.diately J>ri()r to the date of� damage or injury. 2.4.1.9 If at any time OCWD determines in, its sole discretion, that the Well Site in.stalled by Lessee, as provided herein, must be modified, improved or cxtmded to protect OCWD's real property or facilities and OCWD's use of said real property or facilities, or in the event that said Well Site needs to be modified, improved or c,xtendcd to improve or .correct the t\inctioning thereof, such modification, improvement or extension S:hall be made by Lessee, within a reasonable period of time, and at Lessee's sole cost and expense; provided, however, that OCWD covenants to ex�ise in a reasonable miDner its cijscretion to require Lessee to modify, improve or extend the Well Site installed by Lessee and to exr.rciae � discretion only as necessary to fe8SODBb ly protect OCWD' s real property or facilities or use thereof or to reasonably improve or oorrcct the functioning of the Well Site installed by Lessee. Notwithstanding the foregoing, Lessee resaves the right to terminate this Lease with a thirty (30) dayB written notice to OCWD if Lasee determines 1he forgoing obligations arc cost prohibitive. 2.4.1.10 At the expiration or termination of this Lease. Lessee shall destroy the water well on the Premises, and remove all appurtenants to the water well that are the -25- subject _of this Lease, in accordance with all applicable federal, state and local laws,nues, re gulations or onlinances governing the destruction of water wells, unle ss OCWD delivers to Lessee a written � that OCWD, at no cost or expense to OCWD, will usume ownership and responsibility of the water well, in which case . . Lessee shall have no further obligation or liability for the water well. Through the deliverance of such written notice, OCWD further agrees that it will accept ownership of the well in an "as-is" condition. If OCWD does not deliver written notice to Lessee that OCWD will assume owi,enmp and responsibility for the water. weli, and Lessee tails to properly destroy the water well pursuant to this Paragraph, OCWD shall have the right tp �Y the water well and reinove all appurtenants to the water well without liability therefore to Lessee or to. any person or enti ty claiming under Lessee, and OCWD sball have no duty to account for such well site, appurtenants to the water wcll and property. Lessee agrees to reimburse OCWD, within 1hirty (30) days from the completion date of the well being destroyed, for· any and all costs assotjated with OCWD destroying the water well pursuant to this Paragraph. 2.4.1.11 Lessee shall n otify OCWD of any� activity that requires the use of a well developinem/pump rig at least thirty (30) days in advance of such memtenance -.uVI • -..+.: 'ty 2.4.1.12 La ydown areas for construction or maintenance materials shall be as approved by OCWD's General Manager or his designee but shall under no circumstances interfere with OCWD or Corona Recreation, Inc.'s use of the adjacent Warner Bcssin Complex. 2.4.1.13 OCWD's Lessee, Corona Recreation· Inc., currently leases Warner Basin Complex from OCWD for a fishing concession. Lessee sball not interfere with this activity end shall schedule any use allowed under this Lease so as not to interfere with OCWD's Lessee's operations. 3.S The following �ions in Section 2.S of this Lease are replaced or added with thefollowing: 2.5 Insurance: Without limiting Lessee•s indemnincation obligations, Lessee shall not take possession of, enter or occupy the Premises until Lessee has o� all of the insurance required. herein from a company or companies acceptable to OCWD, and Lessee shall maintain all such insurance in Ml force and effect at all times during the term of this_ Lease and any extension or renewal thereof. Insurance shall be placed with insurers having a current A.M. Best rating of no less than A-:Vll or equivalent or as otherwise approved by OCWD. Lessee may submit a letter of Self-Insurance in lieu ofa Certificate of Insurance in a form acceptable to ocwo•s Risk Manager. -26- 2.5.1.4 Enviropmom,t Xmwnnmt UnbUity -The Contractor shall provide and maintain coverage appropriate for the hazardous material/waste activity contemplated in this � Bnvironmontal Impairment Liability shall be maintained in an amount of $1,000,000 per claim/�. If an aggrc,pte limit applies, either the gmeral aggregate limit abalI appiy separately to the project/location or the gaiera1 aggregate limit shill be twice the required occuncnce limit 3.6 Paragraph 2.7.1.3 and 2. 7.2 of this Lease is �laced with the following: 2-.7.1.3 In the event that LESSOR's General Manaacr or designee grants� approval to any teqUCStcd llltenltion of or improvement to the Premises, Lessee shall construct such alteration or �t at Lessee's sole cost and expense. Lessee shall not �cc �on unle8$ Lessee Pt()vides LESSOR's General Manager or designee with wriUcn notice � (90) days prior to the �mcrment of the Well Site consttuction or any other related construction. 2.7.2 Ownership of Jmproyetneots: All buildings, improvements, fixtures and facilities (�elusive of trade fixtures, portable buildings, 'Vehicles and antminas), constiucted or placed within. the Premises by Lessee, includiq but not limitl!(i to electrical and other utilities, listed or � shall, upon the completion of construction, inatallatiotl or placement within the Preinises, be free and clear of all liens, claims and liabiljty for pa.ynx.nt for labor and material. SU9h buildings, improvcmcnti, nxturoa aJ1Ci facilities ( exc�usive of trade fixtures, motors, pwnp s, motor control centets and swi1c.hgear, control panels, fiber optic equipment, portable bull�, vehicles and antennas), shall become and remain the ptoperty of OCWD at the expiration of this Lease or earlier temduatio.a hereof. Upon the expiration or earlier teimmation of this � OCWD retains the right, in its solt, and abaolute clisc�OD, and by written notice to Lessee, to require (or, if� by Lesacc, to allow) Lessee, at Lessee's sole cost and expense. to rrmove .JI '1JCh buildiqs, improveQJ.e$1, fixtures and fiicilities located on the Premises. In the event OCWD ei1her requires or gr&Jlts penniSSion to Lessee, such removal by Lessee shall include leveling the Premises, restoring any berm s reinoved, removing any uni=ground obsti:uctions, filling any excavation.,, and compacting such filled excavations to nintty percent (9()0.4.) �on. If Lessee fails to remove all such b'!Jildings, improvemmts, fbctures and faoilities located on· the Premises purswmt to this Paragraph,· OCWD shall have the right to remove all such buildings, improvcm=ts, fixtures and facilities located on the Premises without liability therefore to Lessee or to any person or entity claiming under Lessee, and OCWD shall have no duty to &C.COunt for such to remove all such buildings, improvements, fixtures and facilities located on the Premises, Lessee � to reimburse OCWD for any and all costs associated with OCWD's removal of all such buil�, improvements, fixtures and facilities located on the Premises. . . -27- 3.7 Paragraphs 2.8.1 and 2.8.2 of this Lease are replaced with the following: 2.8.1 Lessee's Obliptjon to Maint,in Pmrnim: Lessee shall at all times during the tenn of this Lease, and any extension or renewals thereof, at its sole cost and expense, remove all trash and debris from the Well Site Area. Lessee shall also keep and maintain in good condition and in substantial repair (all to the satisfaction of OCWD in its sole discretion), the Well Site Area and all appurtenances and every part thereof, including impi:ovements of any kind erected, installed or made on or within the Well Site Area. Lessee shall at all times in the maintenance and use of the• Well Site Area and the bull� structures, facilities, improvements and equipment thereon, comply with all laws, ordinances and regulations pertaining thereto, and all conditions and restrictions set forth herein. Lessee expressly agrees to maintain the Well Site Area in a safe, clean, wholesome, and sanitary condition and free of trash and debris, to the satisfaction of OCWD and in compliance . with . all applicable laws. During maintenance or construction activities, Lessee is to maintain the Appurtenant Premises and Construction and Maintenance Area in the same manner as stated for the Well Site Area in this Paragraph. When no maintenance or construction activities occur, Lessor hereby waives the' maintenance requirement as stated in this Paragraph. 2.8.2 Lessee's Default of its MeiJJfpymce Duties: In the event that Lessee "fails, neglects or :refuses to remove trash or debris deposited by Lessee or its invitees on the Premises or to maintain or make repairs or replacements as required by this Lease, OCWD shall notify Lessee in writing of such failure or refusal. Should Lessee fail or refuse to correct such default within fifteen (15) days of receipt of such written notice from OCWD, OCWD may, but shall not be required to, itself or by comract, undertake the necessary maintenance, repair or replacements; and the cost thereof, including but not limited to the cost of labor, materials and equipment and procurement of insurance, pl\JS an administrative fee in the amo\Dlt of fifteen percent (15%) of the smn of such costs, shall be paid by Lessee to OCWD within thirty (30) days of Lessee's receipt of a statement of such costs from OCWD. Any such maintenance, repair or replacement by or on behalf of OCWD shall not be deemed to be a waiver of Lessee's default under this Lease, and shall not in any way impair, prevent or restrict OCWD from exercising any of its rights or remedies set forth in this Lease or otherwise provided at law. 3.8 Paragraphs 2.9.3, 2.9.8, 2.9.9, 2.9.14, and 2.9.17 and Subparagraphs 2.9.7.1 and 2.9.7.2 of tbis Lease arc replaced as follows; and Paragraph 2.9.12 of this Lease is deleted: 2.9.3 AssiiQDlC!lt and Sublease: Lessee may not assign, convey, hypothecate, encumber, mortgage, or otherwise transfer this Lease or any part thereof, or sublease -28- any portion or all of the Premises, without the prior written consent of OCWD, which OCWD may withhold in its absolute disaetion for any reason, or for no reason· at all. Any such assignment or sublease by Lessee. � voluntarily or by operation of law, without the prior written consent of OCWD-shall be void and shall, at the option of OCWD� terminate this Lease upon written notice to Lessee. � consmt by OCWD to one assignment or one �bleue shall not be deemed a consent to any subsequmt assignment or sublease. OCWD's-Rwrvations, 2.9.7.1 OCWD h� reserves the right to grmt easelileDts and rights-of-way for pole or tower lines for tnmsmission of electricity, and �, leases and rigbt&-of.;. way for telep� telegraph, tclccomm�cation facllltics, gas, water, sewer and oil lines, for roads and highways, and for other similar uses over and across the Premises at any location or locations within the Premises. OCWD qrccs to give Lessee written notice of such a gi1plt after thirty (30) days of its occuil'mce. Iri the event Lesaee �incs that the gnuiting or exercise of any such casement, lcaac, or right-of-way significantly � with �·s poss•sion or use of the Premises, Lesaoc's only remedY shall be to tmriinate this � upon thuty (30) days w.ntten notu:e to OCWD. Lessee shall not interfere with any easements or rights-of-way pa1aining to or · affecting the Premises,. howeve1r, if Lessee terminates this lease for a 1'e8S9D as stated in this paragraph during the nm ·20 yeara ot this Lease, Lessee shall be reimbursed the depreciated cosi of the Well Site as stat.ed in-Section 1.2 of this Lease. 2.9.7.2 OCWD hereby reserves the right to sell, 1l'BDsfer, lease or otherwise dispose of any portion of the Premises at any time. In the event of such sale, trinsfer, lease or dispotition, and notwitbsta.nding any otbm provision of this Lease, this Lease shall, µpon the close of �w or the CQDveyance of title, termmate as to the portions of the Premises &Qld, transferred, leased or disposed of, m4 Leisee -11 reieese the same from the terms of this Lease and from any encumbrance which �ts from this Lease. OCWD agrees to give Lessee thiey (30) days notice of the sale, transfer or disposition of the Premises, �cept that if such sale, transfer or disposition occurs during the first 20 � of this· Lease, Lessee shall be reimbursed 1he depreciated cost of the Well Site u stated in Section 1.2 of this Lease. 2.9.8 . CoD4mwation: If any portion of the Premises is taken or acquired by eminent domain or otherwise for a public or quasi-public use, and any part of the Premises remajn9 Which is �'ble of O�� under tlril Lease, this Lease shall, IS to the part or parts so taken, term• p of the ct.1e title or possession shall vest in the condcmnor. In the event all of the Premises or such part thereof so that �ere does not remain a portion susceptible of occupation under this LeaSc, are taken or acquired, this Lease shall thereupon terminate. Lessor shall be entitled to any and all compensation awarded upon such condemnation, aQ.d Lessee hereby disclaims any right to any such compensation. If such condemnation occurs during the first twmty (20)years of this Lease, Lessee shall be reimbursed an amo1D1t equal to the amount of· compensation paid by th� Condemning Agency to OCWD apportioned to the Well -29- Site, whic� amount shall not exceed the Depreciated Value of the Well Site, as stated in Section 1.2 of this Lease. 2!9.9 Waiver of Clojms: As a material part of the consideration to OCWD under the Lease, Lessee hereby waives any and all claims that it may have against OCWD during the term of this Lease, or any extension or renewal thereof: for any damage to goods, wares and merchandise upon or about the Premises, and for any injmy to Lessee, its employees, agents, invitees, or to third parties in or about the Premises, from any cause arising at any time, except for acts arising out ofOCWD's sole active negligence or willful misc;onduct. 2.9.12 (Bro.ter's Commission)-Deleted. 2.9.14 Security Measures: Lessee acknowledges that the Premises are leased to and accept.ed by Lessee in an "as-is'' condition, and that the rent payable from Lessee to OCWD hereunder does not include the cost of security guard or any other security services or measures. Lessee further acknowledges that OCWD makes no representation or warranty, express or implied, regarding the security of the Premises or the need for or propriety of any security measures at the Premises; and Lessee further acknowledges that OCWD shall have no obligation whatsoever to provide guard service or any other security Me8:S'JlCS, Lessee expressly · assumes all responsibility for the protection and secmity of the Well Site Area, Lessee, its agents, employees, invites and property within the Well Site Area from any and all acts of any third party. 2.9.17 OCWD's Liability on Termi nation: Lessee hereby waives all damages or clai� for damage that may be caused by any action of OCWO in terminating this Lease ( either with or without cause), or taking possession of the Premises as provided in this Lease or at law, and Lessee waives all claims for damages to or loss of such property of Lessee u may be in or upon the Premises upon the termination of this Lease, however, if OCWD terminates this lease for any reason other than nonpayment of rent or Lessee being in default of the terms and conditions of this Lease, during the first 20 years of this Lease, Lessee shall be reimbursed the depreciated cost of the Well Site as stated in Section 1.2 of this Lease. 3.9 Paragraphs 2.10.1, 2.10.2(a), 2.10.2(c), 2.10.2(d)(iii), and 2.10.3(d) of this Lease are replaced as follows; and Paragraphs 2.10. 7 and 2.10.8 me added to Section 10 (Default & Tmmination) as follows: 2.10.1 Term and Prior Termination: This Lease shall continue for the term set forth in Section 1.2, unless terminated earlier in accordance with another provision of this Lease. -30- 2.10.2(a) Lessee mils or refuses to pay to OCWD any portion of the Rental Payment or other sum due hereunder when due, and such SUin remains unpaid for thirty (30) days after written notice to pay rent or smrender possession of the Premises is served on Lessee by� or 2.I0.2(c)Lcssec abandons or vacates the Premises; provided however, that OCWDprovides a thirty (30) days written notice to Lessee of its belief of abandonment orthat the Premises has b� � and Lessee (a) fails to relp()nd; m (b) confirms inwritJng that it has aband�ned or vacated� Premises; or 2.10.2(d) (iii) Lessee allows any judgment against Lessee to nmiain unsatisfied or un�bonded for a period of ninety (90) days or Imwer; or 2.10.3(d)In the � Lesaee becomes insolvent, OCWD may, by giving � (30) days notice ·to Lessee or to the person appointed to �m,age Lessee's affairs at the address for such person ll]Jpe8ring in the official records of the court that appointed suoh pcrso� · terminate this lease and forfeit Lessee1s intttest in the Premises and in any improvemeats or facilities on or appurtenant to the Premises. 2.10. 7 This Le8$e shall automatically be revoked if Lessee has not completed twmty .. five percent (25%) of the construction of the Well Site, on or -before December 31, 2015 ("Completion Dat.e"). OCWD.,s Ocnetal Mattager or designeemay extend the Completion Date by giving written notice to Lessee in the event of construction delays, Qr for other unforeseen causu bey� the coD1l'ol of the Lessee as determined by OCWD's General Manager. 2.10.8 This Lease and its use shall be automaticaily revoked upon Lessee's abandonment or destruction of said Well Site. 3 .10 Paragraph 2.11.9 o.f this Lease is replaced as follows: 2.11.9 Precedence: In the event of any conflict between Parts of this Lellse, Part I, II, and III shall prevail over Exhibits A,· B, C and D, Part I shall prevail over Part II and ill, and .Part m shall prevail over Part II. [END SPECIAL LEASE PROVISIONS] -31- EXHIBIT "A" LEGAL DESCRIPTION WELL SITE AREA That Portion of Lots 18 of Block 36, of the �orba Linda Tract, in the City of Anaheim, County of Orange, State of California u shown in Book 13, Page 16, of Parcel Maps, Records of Orange County, State of California, recorded March 11, 1968 and descnoed as follows: Commencing at the centerline int.erscction of La Palma Avenue and Richfield Road u shown on a Record of Survey Field in Book 89, Page 41 of Records of Surveys, in the Office of the Recorder, County of Orange, State of Califomia; Thence along the centerline of said Richfield Road, Soutli 00°33'48" West, 400.18 feet; Thence leaving said centerline, North 89"28'06" West 2S.OO feet to the westerly right of way of said Richfield Road; Thence continuing North 89°28'06" Weat 616.00 feet to the southerly line of Parcel Map 13/16.; Thence South 33°S6'4S" West 15.00 feet; Thence North 89°28'06" West 24.86 feet to the True Point of Beginning; Thence North 89°28'06" West 40.00 feet; Thence South 00°3 l 'S4" West 20.00 feet; Thence South 89°28'06" East 40.00 feet; Thmce North 00'31 '54" East 20.00 feet to the True Point of Beginning; Area -800 square feet more or less. Shown on plat in "Exhibit "B" and made a part hereof . .. 32 .. EXHIBIT "A" LEGAL DESCRIPTION FOR APPURTENANT PREMISES (1) (Pipeline) That Portion of Lots 18 of Block 36, of the Yorba Linda T� in the City of Anaheim, County of Orange, State of Califomia as shown in Book 13, Page 16, of P-.rcel �. Records of Orange County, State of California, recorded March 11, 1968 and described as follows: Commencing at the centerline intersection of La P�ma Avenue � Richfield Road as shown on a Record of Survey Field in Book 89, Page 41 of Records of Smveys; in the Office of the Reconier, County of Orange, State of"California; Thence along the centerline of said Richfield Road, South 00°33 '48" West, 400.18 feet; Thence leaving said centerline, North 89°28'06" West 25.00 feet to the westerly right of way of said Richfield Road; Thence continuing South 00033 '48" West 30.00 feet to the True Point of Beginning; The.nee North $9°28'06" West 76.00 feet; �e North 45°00'00" West 21.00 feet; Thence North 89°28'06" West 407.53 feet; Thence South 79°43'31" West 80.00 feet; Thence North 89°28'06" West -58.20 feet; Thence South 4S°00'00" Bast 21.41 feet; Thence South 89°28'06" East 44.34 feet; Thence North 79°4�'31" East 80.00 feet; Thence South 89°28'06" East 399.98 feet; Thence S.outh 45"00'00" East 21.42'feet;Thence South 89°28'06,, East 82.60 feet;Thence North 00°33'48., East 15.00 feet to the True Point of Beginning; Area= 9,539 square feet more or less. Shown on plat in •'Exhibit "B" and made a part hereof. -33- EXIIIBIT "A" LEGAL DESCRIPTION FOR APPURTENANT PREMISES (2) IDrain fipe1inc) That Portions of Lots 18 and Lot 19 of Block 36, of the Yorba Linda Tract, ni the City· of Anaheim, County of Orange, State of California as shown in Book 13, Page 16, of Parcel Maps, Records of Orange County, State of Galifornia, recorded March 11, 1968 and described as follows: Commencing at the centerline intersection of La Palma A venue and Richfield Road as shown on a Record of Survey Field in Book 89, Page 41 of Records of Surveys, in the Office of the Recorder, County of Orange, State of Califotnia; Thence along the centerline of said Richfield Road, South 00°33'48" West, 400.18 feet; Thence leaving said centerline, North 89°28'06" West 25.00 feet to the westerly right of way of said Richfield Road; Thence continuing North 89°28'06'' West 616.00 feet; Thence South 33 °56·'45'; West 36.00 feet to the True Point of Beginning; Thence South 45°00'00" East 54.00 feet; Thence South 45°00'00" West 18.00 feet; Thence North 45°00'00" West S 1.00 feet; Thence North 33°56'45" East 18.00 feet to the True Point of Beginning; Area= 927 square feet more or _less. Shown on plat in ."Exhibit "B" and made a part hereof. -34- EXHIBIT" A" LEGAL DESCRIPTION CONSTRUCTION AND MAINTENANCE AREA That Portions of Lots 18 and Lot 19 of Block 36, of the Yorba Linda Tract, in the City of Anaheim, County of Orange, State of California as shown in Book 13, Pqe 16, of Parcel Maps, Records of Orange County, State of California, recorded March 1 �, 1968 and described as follows: Commencing 8* � centerUne.intersection of Lt Palma A�ue and Richfield Road as shown on a Record of Survey Field in Book 89, Page 41 of Records of Surveys, in the Office ofthe Recorder. Co\Ulty of 0ranp, State of Cali!omia;. Thence along the centetliile of said Richfield Road, South 00°33'48" West, 400.�8 feet; � leavin g said ceJ;lterline, North 89°28'06" West 25.00 feet to the westerly right of way of said Richfield Road; Thence coittinuirig North 89°28'06'' West 616.00 feet to the True Point of Begjnning; Thence North 89°28'06 h West 89.00 feet to the easterly line ofMWD R/W Parcel 1004-8-1 (P�IB); Thence Squth 08°15'13" West 128.00 feet; Thence South 81 °44'47'' East21.16 feet; Thence North 33°56'45" Bast 155,36 � to the True Point of Beginning; Area= 7,135 square feet more or less. Shown on plat in "Exhibit "B" and made a part hereo£ -35- EXHIBIT "B" PLAT OF LEGAL DESCRIPTION, CONSTRUCTION AND MAINTENANCE AREA, AND APPURTENANT PREMISES (1) AND (2) -36- EXHIBIT "C" PLATOFWARNERBASIN A�ROAD .37. EJHIRJT "D" ANNUAL RENT SCHEDULE Stnrting R-em ,_ .= - Total Yorba Linda Wuer Distriet Annnal RentAd,iUltniel:lt 3% A 22 2012UJ�I . Annualft_..t Y•r IYLWO VYell Na. 2,' 1 $ 311700 2 s S08Ut1 a.•.C049.Ae 4 s 41170 !111 15 1·· A ,i;e,07 e ' ·4�:MSIS 7 •Al551.10 8 s .CeMA!•'. 483S.29 10 $ 4'91i>.3211 ' S 129 ?J -11:, $ 52835213 ' 8442..1"3, .. s 6II05M 15 !. 8 713.5518 .. 15�16·17 $ e 125·1! 18 J 11aD8..821SI•e-1si. 20 J UID.1S ·21 $ 8893·93 22 s 7100,7,4 2a ' 7113.'17 24 ' 7531.18 26 I 77ll8.18 28 s 7Sl9U6 27 s 11231,71 21 ' ··a·<11s.ee'28 I 1·783.0'l scr I 88815.01 :r, $ 8-294.8832 I a�o 11 as· J IUSl,08 '3,4 s 1l) 121.88 35 ' 10G788 ae •10 740.IS-1 37 s 1l oe:us 38 s 11 394.81 S9 I 11 :7!11't."'8 ..0 s 1:1088.e .. ,41 s 12. 451.20 42 � 12824.73 413 s 13200.,48 44 s 13.006.79 � •14 013.83 48 $ 1404.:!IG A7 s 14887.3& <18 s 15313.<40 <Ml s 11577281 -AA •16 2«5.8SI•43015<115.8'1 .. 3g .. AMENDMENT ONE JO b§ASE AGREEMEMT THIS AMENDMENT Is made and entered Into this 1st day of July 2015 by and between the ORANGE COUNTY WATER Di8TRICT, a polttical subdivision of the State of Callfomia organized und er Chapter 924 of the Statues of . 1933, as amended (hereinafter, the "Lessot) and Yorba Linda Water Dl1trlct. a special governmental district of the State of Callfomla (hereinafter, the i..e8888•): RECITALS WHEREAS, on December 19, 2012, the Board entered Into a Lease Agreement with the Yorba Linda Water District (YLWD ) to construct a groundwater production well and appurtenant pipeline and drain ptpe at Warner Basin lncludlng a constnldlon and maintenance area for a tenn of 50 years ending on December 31, 2082, with an annual rent of $3,817 adjusted annually by 3%; WHEREAS, on September 3, 2014, the Board approved and authorize execution of an Easement Deed to the City of Anaheim for electrlcal service to the YLWD Well No. 21 at Warner Basin; and WHERE�. YLWD has requested that Lease Exhibits .. A., Legal De8cription, and Exhibit -e·, Plat of Legal Delcrfption, Construction and MaJntenance Area and Appurtenant Premises (1) and (2), be replaced with revised Exhibit ·A· and •e• to reflect the change in the alignment of the pipeline between YLWD Well No. 21 and Its main water pipeline In Rlchfleld Road, Anaheim and that an •aa bultr' legal description a_nd plat, ff needed, raplace the revised legal descrtption when ready. NOW, THEREFORE, In consideration of the matters aet forth In the foregoing redlala and the terms, covenants and conditions hereinafter contained, the parties do hereby agree as follows: 1.Exhibit ·A·. Legal Deacrtption P19mlse8 and ExhlbH •e• Plat of Legai Deacr1ptJon, Cons�ctlon and Maintenance Area and Appurtenant Pramlaes (1) and (2), are heraby replaced with the-revised Exhibit ·A·, Legal Delcrlption Premlaes r1.ega1 D�tion") and Exhibit •e• Plat of Legal C>escq)Uon, Construction and Maintenance Alea and Appurtenant Premises (1) and (2) ("Platj, both exhibltl are attached hereto and mad e a part hereof. 2.Authorize the General Manager or his designee to replace the revised Legal Deacrtptfon and Plat with an •as bullr Legal Description and PJat, If needed. 3.Each and every other term, covenant and condition of the Leaea not herein expressly modified is hereby ratified and · confirmed and shall remain In full force and effect l IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Lease as of the day and year first hereinaQove written. APPROVED AS TO FORM: RUTAN & TUCKER, LLP. Amendment One YLWD (6-15-1�) ORANGE COUNTY WATER DISTRICT a political subdivision of the State of California organized under Chapter 924 of the Statues of 1933, as amended "LESSEE" YORBA LINDA WATER DISTRICT, a special governmental district of the state of California By:_Z ___ ·· __ a-. ___ _ Ric Collett, President 2 EXHIBIT "A" REVISED LEGAL DESCRIPTION PREMISES PAGES 1 T04 3 EXHIBIT "A" LEGAL DF..SCRIPTION J.�or APPURTENANT PREMISES (I) That Portion of lots 18 of Block 36� of the Yorba Linda Tract. in the Cit)' of Anaheim. County of Orange. State of California as sho,"n in Book 13. Page 16. of Parcel Mnps. Records ofOrm1gc County. State of California. recorded March 11. 1968 and described as follows: Commencing at the centerline intersection of La Palma A venue and Richfield Road as shown on a Record of Sun·ey Field in Book 89. Page 41 of Records of Surveys. in the Office of the Recorder, County of Orange. State of California: Thence along the centerline of said Richfield Road. South 00°33 '48" West. 400.18 fc:et: Thence leaving said centerline, North 89°28'06 .. West 25.00 feet to the westerly right ofwuy of snid Richfield Road:· Thence continuing South 000 33 �4s·· West.17.00 feet to the True Point of Beginning: Thence North 89°28'06" \\'est 498.SS feet� Thence South 79°33'22"' West 96.28 feet; 1bcnce North 89°28'06 .. West 28.17 feet: Thence South 45°03 • 45•· East 21.43 feet: Thence South 89°28'06". East 14.34 feet: Thence North 79°33 '22"" East 96.25 feet: Thence South 89°28'06"" Bast 497.07 feet: Thence North 00033'48" East 15.00 feet to the True Point of Beginning; Area � 9 .229 square feet more or less. Shown on sketch .. Exhibit .. B .. a nd made a part hereof. 4 EXHIBIT ••A" LEGAL DESCRIPTION 14,or APPl'RTJi:NANT PRJ.:MISf.:S (2) That Ponions of Lots 18 and Lot 19 of Block 36. of the Yorba Linda Tract. in the City of Annheim. County of Orange� State of California as shown in Rook 13. Page 16. of Parcel Maps. Records of Orange County, State of California. recorded March 11. 1968 and· described as follows: Commencing at the centerline intersection of La Palma A,·enuc and Richfield Road ns shown on a Record ofSun·ey Field in Book 89. Page 41 of Records of Sun·eys. in the Otlicc of the Recorder. County of Orange. Stat� of California; Thence along the centerline ofsnid Richfield Road, South 00°33'48" WcsL .J00.18 feet: Thence leaving said centerline� North 89°28"06'" West 25.00 feet to the westerly right of way of said Richfield Road; Thence continuing North 89°28"06 .. West 616.00 feet: Thence South 33 °56'45'' West 42.00 feet to the True Point of BegiMing: Thence South 33°56"45 .. West 20.13 feet: Thence South 89°28"06 .. Eost 21.23 feet: Thence South45°03"45 .. East 23.10 feet; Thence North 69°08'33"" East 19.48 feet: 'Thence North 45°03'45'" West 37.00 feet; Thence North 89°28.06 .. \\'est J 8.38 feet to the True Point of Beginning� Area• 866 square feet more or less. Shown on sketch .. Exhibit .. B .. and made a part hereof. s EXHIBIT ••A" LEGAL DESCRIPTION CONSTRUCTION AND MAINTENANCE ARa.:A (3) That Portions of Lots 18 and Lot 19 of Block 36. of the Yorba I .inda Tract. in the Cit) of Anaheim. County of Orange. State of Culifornia as shown in Book 13. Page 16. of Pared !\lups. Records of Orange County. State of California. recorded March I I. 1968 und d�s�ribcd as follows: Commencing at the centerline intersection of La Palma Avenue and Richlield Road as shown on a Record of Sur\'ey Field in Book 89. Page 41 of Records of Sur\'eys. in the Office of the lkcardcr. County of Orange. Stutc or Cul i l'omin: Thence along the centerline of said Richlicld Road. South 00"33 · 48" \\\:sL 400.18 foct: Thence leaving suiu centerline. North 89'�8'06" West 25.00 foct to the wester!) right uf \\U) of said Richfield Road: Thence continuing North 89°28'06 .. West 616.00 feet to the True Point of Beginning: Thence North 89°'28'06'' West 89.00 feet to the easterly line ofMWD R./V/ Parcel 1004-8-1 (Parcel B): Thence South 08°15'13-West 128.00 tcet: Thence South 81 °44·47-1 �ust 21 .16 feet; Thence North 33 1:156'45" East 155.36 lcct to the True Point of Beginning: Arca -" 7.135 square foct more or less. Shown on sketch ··Exhibit '"B" and made a part hereof. 6 EXHIBIT "A" LEGAL DESCRIP'fION WEI..L SITE AREA (4) That Portion of Lots 18 of Block 36. of the Yorba Linda Tract. in the City of Anaheim. County of Orange. State ofCalifomi.a as shown in Book l 3. Page 16. of Parcel Maps. Records ofOmnge County. State of California, recorded �larch l l, 1968 and dcscrib\."1 as lb!lllws: Commencing at the centerline intersection of La Palma A,·cnuc and Richfield Road as shm\.n on a Record of Surve)' Field in Book 89. Page 41 of Records of Surveys. in the Office of the Recorder, County of Orange. State of California; Thence along the centerline of said Richfield Road. South 00°33 · 48" West . ..J00.18 lcct: Thence leaving sttid centerline. North 89°:!8"06" West :!5.00 feet to the\\ csterJy right of way uf said Richfield Rm1d; Thence continuing North 89°28"06" West 616.00 feet to the southerly line of Parcel �lup 13.- 16.: Thence South_33 °S6'4S"" West 15.00 feet; Thence North 89°28'06"' West 24.86 feet to the True Point of Beginning; Thence North 89°28'06 .. West 40.00 feet; Thence South 00 °31 •54•! West 20.00 feet; Thence South 89 u28'06"" East 40.00 feet; Thence North 00°31 '54"' East 20.00 feel to the True Point of Beginning; Area 800 square feet more or less. Shown on sketch "Exhibit ·•ff' and made a part hereof: 7 -- EXHIBIT•e• Plat of Legal Description, Construction and Maintenance Area and Appurtenant Premlaea (1) and (2) ... ...,. .. ... -.. YOUAUNDA WAT!ADL'ITR.IL7 17111,MlnlaltllJh......_Cllilllalll.1'11 1714)'101,31. -···----� ·--.J.Af'�.V.llfU&_ ··- ·-. .,. .... , ,.., ---··-· ,�� .. -........ l ii :� 1t t •-.-n" .. -""'' ==----1.!1'·jii YORBA. LIND.• TR.4C1" BLOCK .16 M.M. 5117-13 ' I ,�I =-1.-,, I.. •• i IOUlHUIIIHf'a,M,& IN " ,., .r .._._ ............ ::::=: =u,., ..... .. w ....... .. ill•'9llf"!tW'I •• EXHIBIT•e• Summary Vacation ofBuomcnt 11:ALa: ,.....OTl!P DATE: �11 8 ITEM NO. 7.8 AGENDA REPORT Meeting Date: October 24, 2017 Budgeted:Yes Total Budget:$726,000 To:Board of Directors Funding Source:All Water Funds From:Marc Marcantonio, General Manager Job No:J2014-11 Presented By:Steve Conklin, Engineering Manager Dept:Engineering Reviewed by Legal:N/A Prepared By:Bryan Hong, Water Quality Engineer CEQA Compliance:Exempt Subject:Brand Name Requirement for Pressure Regulating Station (PRS) Rehabilitation Phase 2 Project SUMMARY: District staff determined that several key design components and parts from specific suppliers are desired in order to match other products already in use in the District's water system. The purpose of this request is that for each of the three brand name items specified, the District has multiple locations with these items, District staff has specialized training for calibrating and maintaining the items, and continuing to specify those items allows staff to minimize the stocking of repair parts and calibration equipment. Previously, legal counsel determined that per Public Contract Code Section 3400, a Board finding is required to approve a brand name requirement. STAFF RECOMMENDATION: That the Board of Directors approve the Brand Name Requirement for the PRS Rehabilitation Phase 2 Project for the items as specified in staff's memorandum, namely ABB magnetic flow meters, Cla-Val pressure reducing valves, and Rosemont pressure transmitters. DISCUSSION: During the design process and review, District staff determined that several key design components and manufactured parts were desired from specific suppliers in order to match products already in use in the District's water system. The installation of the specified products will improve the efficiency of operating and maintaining the District’s water system, for the reasons as summarized above and further detailed in the attached staff memorandum. Legal counsel informed District staff that a brand name requirement cannot be used unless the Board makes a finding per Public Contract Code Section 3400. Attached is a copy of the staff memorandum setting forth the components and the reasons for requiring those brand name components and parts for the PRS Rehabilitation Phase 2 Project. ATTACHMENTS: Name:Description:Type: PRS_Rehab_Brand_Name_Memo.pdf Memo Backup Material 1 M E M O R A N D U M DATE: October 17, 2017 TO: Steve Conklin, Engineering Manager FROM: Bryan Hong, Water Quality Engineer SUBJECT: Recommended Brand Name Requirement for PRS Rehabilitation Phase 2 Project, J2014-11 BACKGROUND During the planning and design phase for a District improvement project, the Engineering Department meets with and solicits input from the Operations Department. The Operations Department has certain maintenance history and training with certain brand name components and parts in the District’s system. For certain projects, the Operations Department has requested that bid specifications require a part by brand name in order to improve the efficiency of operating and maintaining the District’s water system. However, Public Contracts Code Section 3400 (b) prohibits the drafting of specifications in a manner that will limit bidding to one specific concern, or call for a designated item by specific brand or trade name, unless the specifications are followed by the words “or equal” and which would allow the bidders to furnish an equal item. However, there are exceptions to this rule that support requiring brand name components and parts if the District’s Board makes certain findings. Per Section 3400 (c), the “or equal” rule is not applicable when the awarding authority makes a finding that the item as specified by the brand name is needed for one of the following reasons: (1) In order that a field test or experiment may be made to determine the product’s suitability for future use. (2) In order to match other products in use on a particular public improvement either completed or in the course of completion. 2 (3) In order to obtain a necessary item that is only available from one source. (4) In an emergency situation as described in detail in Section 3400. WATER SYSTEM COMPONENTS AND PARTS 1. Magnetic Flow Meters: Magnetic flow meters are the current standard of the industry for flow measurement accuracy and ease of maintenance. All of the District’s magnetic flow meters are manufactured by ABB. Flow meters must be calibrated on a regular basis and District staff has specialized training in calibration of ABB flow meters. The District also stocks repair parts and calibration equipment for ABB flow meters. Therefore, District staff is recommending that ABB magnetic flow meters be specified for new projects. 2. Pressure Reducing Valves: All of the District’s pressure reducing valves are manufactured by Cla-Val. The District has crews trained to work exclusively on maintenance and repairs of Cla-Val pressure reducing valves. Because these valves are manufactured locally, District staff has been able to will call parts and pick them up the same day, expediting repairs and enabling staff to promptly restore service. It is also a benefit to utilize the local manufacturer’s inventory in order to minimize the District’s warehouse inventory. Therefore, District staff is recommending that Cla-Val pressure reducing valves be specified for new projects. 3. Pressure Transmitters: A majority of the District’s pressure transmitters are manufactured by Rosemount. Rosemount pressure transmitters are compatible with the District’s SCADA system software. In addition, District staff has specialized training for these components and carries spare parts to facilitate timely repairs. Therefore, District staff is recommending that Rosemount pressure transmitters be specified for new projects. SUMMARY Requiring brand name components and parts to match other components and parts already in use in the District’s water system is in the best interest of the District for the reasons noted above. Therefore, it is the recommendation of Engineering and Operations staff that the components and parts listed in the following table be specified by brand name for the PRS Rehabilitation Phase 2 Project in order to match other products already in use in the District’s water system. No. Product Function Manufacturer 1. Magnetic Flow Meters Measures water flow ABB 2. Pressure Reducing Valves Controls water flow Cla-Val 3. Pressure Transmitters Measures pressure and transmits data Rosemont ITEM NO. 8.1 AGENDA REPORT Meeting Date: October 24, 2017 To:Board of Directors From:Marc Marcantonio, General Manager Presented By:Delia Lugo, Finance Manager Dept:Finance Prepared By:Delia Lugo, Finance Manager Subject:Audit Reports for Fiscal Year Ending June 30, 2017 STAFF RECOMMENDATION: That the Board of Directors receive and file the Yorba Linda Water District Comprehensive Annual Financial Report for the Fiscal Year Ending June 30, 2017, the Report on Internal Control, and the Communication to Those in Governance Letter. 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, 2017. White Nelson Diehl Evans LLP, the District's external auditing firm, has completed their audit of the Yorba Linda Water District for the fiscal year ending June 30, 2017, and have rendered an unqualified (clean) opinion on the attached CAFR. Ms. Daphnie Munoz, Partner of White Nelson Diehl Evans LLP, is in attendance to present the CAFR for the Fiscal Year Ending June 30, 2017, and will discuss key factors that contributed to the District's reported Change in Net Position. Ms. Munoz will also discuss the internal control finding that rose to the level of a "significant deficiency" as identified in the attached Report on Internal Control, which includes management's response to this finding. Lastly, Ms. Munoz will report on the required disclosures in the Communication to Those in Governance Letter. Staff will submit the CAFR for consideration of the GFOA Certificate of Achievement for Excellence in Financial Reporting. Staff is expectant that this CAFR will merit the highest level of recognition, just as the CAFR of June 30, 2016 did. ATTACHMENTS: Name:Description:Type: YLWD_2017_CAFR.pdf Backup Material Backup Material YLWD_2017_Audit_GAS_Letter.pdf Backup Material Backup Material YLWD_2017_Audit_ACL_Letter.pdf Backup Material Backup Material YORBA LINDA WATER DISTRICT of Yorba Linda, California Comprehensive Annual Financial Report WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS For the Years Ended June 30, 2017 and 2016 Prepared by: The Yorba Linda Water District Finance Department Delia Lugo,Finance Manager Kelly McCann, Senior Accountant Maria Trujillo, Accounting Assistant II Richard Cabadas, Accounting Assistant I This page intentionally left blank YORBA LINDA WAT ER DISTRICT TA BLE OF CONTENTS For the years ended June 30, 2017 and 2016 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)5 Basic Financial Statements:15 Statements of Net Position 16 Statements of Revenues, Expenses and Changes in Net Position 18 Statements of Cash Flows 19 Notes to Basic Financial Statements 21 Required Supplementary Information:61 Schedule of Proportionate Share of the Net Pension Liability 62 Schedule of Contributions -Defined Benefit Pension Plans 63 Other Post-Employment Benefits Plan -Schedule of Funding Progress 64 Supplementary Information:65 Combining Schedule of Net Position -2017 66 Combining Schedule of Revenues, Expenses and Changes in Net Position -2017 68 Combining Schedule of Cash Flows -2017 69 Schedule of Operating Expenses by Cost Center and Nature of Expenses for Water and Sewer -2017 71 Schedule of Capital Assets -2017 72 Combining Schedule of Net Position -2016 73 Combining Schedule of Revenues, Expenses and Changes in Net Position -2016 75 Combining Schedule of Cash Flows -2016 76 Schedule of Operating Expenses by Cost Center and Nature of Expenses for Water and Sewer -2016 78 Schedule of Capital Assets -2016 79 YORBA LINDA WAT ER DISTRICT TA BLE OF CONTENTS (CONTINUED) For the years ended June 30, 2017 and 2016 Page Number STAT ISTICAL SECTION:81 Description of Statistical Section 83 Financial Trends: Changes in Net Position 84 Revenue Capacity: Number of Connections 86 Te n Largest Customers 87 Debt Capacity: Ratio of Outstanding Debt 88 Debt Coverage 89 Demographic and Economic Information: Demographics 90 Te n Largest Employers 91 Operating Information: Number of Employees 92 Operating and Capacity Indicators 93 INTRODUCTORY SECTION This page intentionally left blank i October 11, 2017 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, 2017. 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 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, 2016. 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. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual ii 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 80 employees. The District’s Board of Directors meets on the second and fourth Tuesday 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 79,000 and currently provides water service through approximately 25,000 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 30%of its water supply from the Metropolitan Water District (MW D) through the Municipal Water District of Orange County (MW DOC) and the 70%from groundwater wells within the area.In FY17 the District provided 17,880 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 CNN Money’s “Best Places to Live for 2012”, Yorba Linda was one of four Southern California cities listed. Similarly, the City of Yorba Linda’s median income is 54% greater than the overall median income for Orange County, as reported by 2015 Census data. 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 shows moderate growth, which is projected to continue with new commercial business and a steadily improving housing market. iii In February 2016, the SW RCB extended their conservation regulations through October 31, 2016, where the District’s mandated conservation reduction percentage was held at 28%. On May 9, 2016, the Governor issued a new Executive Order (B-37-16) “Making Water Conservation a California Way of Life”. This made permanent some water use restrictions and further extended emergency conservations measures through January 2017. As advocated by YLW D, it also provided for an alternative to the mandated conservations percentage dictated by the SWRCB –a self-certification of local water supply reliability for three years under drought conditions. In the fiscal year the District was able to self-certify at a conservation mandate of 0%. As a result, the Operating Budget for FY17 reflected an increase in customer consumption of 12%. As of May 2014, the District was granted annexation of the remaining 26% of its service area into the Orange County Water District (OCWD). It was anticipated that with full annexation the District will be able to pump the maximum groundwater allowable each year, at a lower cost than purchasing the same amount of import (MW D) water. The annexation agreement, however, limits the District from producing fully OCW D’s Basin Production Percentage (BPP) now at 75% annually for five years. Current facility (infrastructure) limitations prevented the District from pumping more than 70% for the reporting fiscal year. Had the District been able to access the entirety of the BPP in the upcoming fiscal year, the District could potentially lower its variable water costs by approximately $1 million. California’s water supply continues to be a concern due to the current emergency drought mandates from the State Water Resource Control Board, projected population increases,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. 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. iv 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 Ac complishments during FY17 Upon the completion of FY 2016/17 and as budgeted in future fiscal years, capital projects totaling $13.5 million are scheduled for completion over the next five fiscal years.FY18 projects include the following: Well #22 Project Total Project Budget: $2,500,000 Proposed FY18 Budget: $1,018,000 This project will provide a new well to increase pumping capacity that allows the potential phase-out of older, lower-producing wells and still produce a full allotment of lower-cost groundwater. In FY17, a consultant was retained to prepare the environmental documents and plans for the drilling of the well. In FY18, the environmental documents will be completed, and work will proceed for the drilling of the well. Also in FY18, a consultant will be retained to begin to prepare engineering plans for well equipping. Budgeted for FY19 and FY20 is construction of wellhead facilities and a discharge pipeline at an estimated cost of $1,390,000. Fairmont Pump Station Upgrade Project Total Project Budget: $7,830,000 Proposed FY18 Budget: $3,663,000 The project is the refurbishment and upgrading of the Fairmont Booster Station. The existing 44-year-old booster station will be demolished and its two booster pumps will be replaced by eight, pumping to three different pressure zones. A new building will be constructed to house the pumps, as well as disinfection, electrical and back-up generation facilities. Construction began in mid FY17 and will be completed in FY20, with a total estimated construction cost of $7,070,000. This project will make it possible v for the District to deliver lower-cost groundwater to the higher, easterly section of its service area, as a fully redundant second source of water to all parts of the District. Lakeview Grade Separation Project Total Project Budget: $662,000 Proposed FY18 Budget: $150,000 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, the District’s water line in Lakeview Avenue through the project area had to be replaced. The District’s share of the pipeline replacement construction cost is $250,000. Construction of the pipeline and appurtenant work was completed by OCTA in FY16, with final close-out in FY18. As a result of this project, the District will have a new 18-inch diameter water line to replace an older line, nearing the end of its useful life. Pressure Reducing Station Rehabilitation Phase 2 Total Project Budget: $726,000 Proposed FY18 Budget: $575,000 The District begin the second phase of work for rehabilitation or replacement of existing Pressure Reducing Stations (PRS) that require frequent maintenance, and do not meet current District standards. This will also include water line replacement work. Design work will be completed in FY18 and construction will follow that year and the next at a cost of $715,000. Richfield Chlorination System Refurbishment Total Project Budget: $250,000 Proposed FY18 Budget: $250,000 The District has an on-site chlorine generation system that produces chlorine for injection into its transmission main for disinfection of groundwater that is pumped to the Highland Reservoir. That chlorine generation system is in need of refurbishment and that work will be completed this coming year at an estimated cost of $250,000. Chlorine Booster Systems at Two Water Reservoirs Total Project Budget: $50,000 Proposed FY18 Budget: $50,000 District staff installed temporary facilities at the Hidden Hills Reservoir a few years ago that included a small storage tank and a pump that injected chlorine solution into the Hidden Hills Reservoir that was mixed into the water in storage. This injection of chlorine provides a slight boost in the concentration of disinfection for the reservoir that is the most northeasterly in the system. This proved to be very successful and was followed by the installation of the same system at the Camino de Bryant Reservoir, the District’s most easterly reservoir. Because of the continuing success of the temporary facilities, staff of the State Water Resources Control Board, in their annual inspection of the water system, requested that the District install permanent facilities. District staff will be installing permanent chlorine booster systems at these two reservoirs at an estimated cost of $50,000. vi Pipeline Replacement Project Total Project Budget: $1,638,585 Proposed FY18 Budget: $100,000 As part of the District’s continuing Replacement & Refurbishment (R&R) Program to replace aging infrastructure, new pipeline replacement work is planned for the next two fiscal years. This includes replacement of pipelines in Susana, Bryant and John Bixby Streets, as well as replacement of old cast iron pipelines from the 1920s to 1940s in the westerly part of the District. Planned for FY18 is design work, at an estimated cost of $100,000, followed by bidding and construction in FY19 at an estimated cost of $1,488,000. Sewer R&R Project Total Project Budget: $200,000 Proposed FY18 Budget: $100,000 As part of the District’s continuing R&R Program to replace aging infrastructure, new sewer line work is planned for the next two years at an estimated cost of $100,000 per year. For sewer line refurbishment, relining is proposed, where a new liner is cast and cured in place. This method of refurbishment has a long record of success for District sewer lines and for many other utilities across the country. Other major accomplishments in FY17 include the following: Capital Improvement & Replacement Projects Completed •Completed the Construction of Well No. 21 •Completed the 2015 Waterline Replacement Project •Well No. 22 site negotiated and approved from OCWD •Richfield Road Pipeline Replacement under construction •Fairmont Booster Pump Station Replacement under construction Other District Activities & Accomplishments •Advanced Refunded 2008 Certificates of Participation with Revenue Bond, Series 2017A Offering, resulting in $4.2M in savings over 21 years (See Footnote 5 in CAFR) •AA+ rating reaffirmed by Standard & Poor's, with stable outlook •AA rating reaffirmed by Fitch •Received Positive Auditor’s Letter for FY16 •Received State and National Recognition for FY16 CAFR •Anticipated Receipt of National Recognition for FY18 Budget document (7th year in a row) •Completed FY17 Water Quality Report •Adopted a District Debt Management Policy •Updated District Water and Sewer Rules and Regulations document •Evaluated and updated District Financial Reserves Policy to Improve resiliency •Improved water use efficiency and compliance with District regulations •Continued implementation of the District’s Computerized Maintenance and Management System (CMMS) vii Future Years For the forthcoming FY18, the Yorba Linda Water District continues to experience one of its greatest challenges in addressing the Governor’s Executive Order (B-35-16) “Making Conservation a California Way of Life”. During FY16 and FY17 regulations in response to the Governor’s Order by the State Water Resources Control Board (SW RCB) mandated a conservation reduction (of water use) for YLW D of 36%, comparative to 2013 usage.The impacts of the decisions made by the District in order to meet the mandates continue to resonate with an uneasy public trust and four of five Board members newly elected.Executive Order (B-37-16) “Making Water Conservation a California Way of Life”made permanent some water use restrictions and will continue to develop the framework for further restrictions. As the District looks towards the future, with a new Board of Directors, anticipated updates to the Strategic Plan and Asset Management Plan, and a focus on rebuilding of public trust, this framework could greatly impact how the District continues to move forward. The forthcoming FY18 budget is predicated upon the assumption that with the lifting of the mandatory conservation reduction (of water use) and a self-certified conservation reduction of 0%, customer water consumption will remain relatively stable due to permanent landscaping changes, water use efficiency awareness, and a growing culture of drought sensitivity. Customer demand for FY18 is expected to rebound 13% from that of the FY16 fiscal year end and approximately 1% from the FY17 budget. We continue to monitor the State’s mandated water conservation restrictions, and with water conservation our ability to maintain a high level of services while holding costs down, has been seriously challenged. In addition to the above, District staff, with the assistance of Raftelis Financial Consultants, Inc, developed financial models for the water and sewer enterprises to ensure financial sufficiency that includes the establishment of adequate reserve balances, meets the operation and maintenance costs, and ensures sufficient funding for capital refurbishment and replacement needs. Water and Sewer Rates As of May 2016, the State of California mandated conservation levels were reduced based on local agency drought resilience (“stress tests”). The District’s mandated conservation level was further reduced from 28% to 0%. Due to this significant change in circumstance, the District anticipated that it would sell additional water in FY17, allowing a reduction of the monthly service charge with the goal of meeting the District’s cost of services as water conservation efforts continue to be necessary. Raftelis Financial Consultants were hired to update the 2015 Water and Sewer Rate Study with the new assumptions used to develop the FY17 Operating Budget.The reduction in the Service Charge was proportional to the meter size.Effective August 1, 2016 YLW D charged a uniform commodity rate of $2.70 per unit and a monthly fixed charge based on the size of the meter. Meters sized 5/8 and 3/4 inch were decreased from $26.29 to $19.45, 1 inch meters were decreased from $41.67 to $32.49, 1 ½ inch meters were viii decreased from $79.77 to $64.78,2 inch meters were decreased from $125.61 to $103.69, 3 inch meters were decreased from $270.77 to $227.04, 4 inch meters were decreased from $484.69 to $408.55 and 6 inch meters were decreased from $1,255.77 to $907.95. One unit of water equals 748 gallons, equating one gallon of water to a cost of approximately $0.05. At an average of 18 units of water per month (approximately 13,500 gallons),a typical 1 inch metered YLW D customer would pay about $81.09 on the average for their monthly water bill. YLWD also provided wastewater service to approximately 19,116 of the District’s water customer base in FY17, at a charge of $6.42 per month for traditional single family residential customers, $6.03 per month for multi-family residential customers, and $6.42 plus a $0.40 per unit charge based on water consumption above 7 units for commercial customers. These rates are the result of a Cost of Service analysis via the 2016 Water and Sewer Rate Update Report,which addressed the impacts of the Governor’s Executive Orders, including the self-certified conservation reduction of 0%and a projected bounce back in customer consumption of approximately 12%. In FY12, 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 London Inter-Bank Offered Rate (LIBOR), currently calculated at 1.10%. The line of credit allowed the District to pursue future capital improvement projects with a minimal borrowing cost and a lowered financial burden to our customers.The line of credit was paid in full on September 30, 2016. In FY17, Yorba Linda Water District faced many challenges related to water supply and demand. The District’s water supply is currently derived from both groundwater (70%) and import water (30%). Both import and groundwater prices have dramatically increased over the past five 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. Enhanced Outreach & Communications The District continues to enhance its communications presence within the community. Within the FY17 Budget, the District funded a Public Information Manager and one Public Affairs Representative position. 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. On January 12, 2017 the Board of Directors voted to recruit citizens to serve on a new voluntary ad hoc advisory committee for the purpose of reviewing the District’s rate structure.The Ad Hoc Committee, instead of focusing on general water issues in the State and local community, identified key issues, researched alternative solutions and made recommendations to the District on topics related to rate structures and/or rate setting.Once the Ad Hoc Committee completed and submitted a final report with ix recommendations in the area of assignment, the Ad Hoc Committee was disbanded. The Committee did not set regulations or policies for the District. 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 District’s 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 fiscal 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 financial statement presentation. 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 is to remain sufficiently liquid to enable the District to meet all operating requirements that might be reasonably anticipated. x 3.Return on Investments:The investment portfolio is 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. Au dit 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 Di strict’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 Statem ents 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 for their continued support in planning and implementation of the Yorba Linda Water District’s fiscal policies. Respectfully submitted, __________________________ ________________________________ Marc Marcantonio Delia Lugo General Manager Finance Manager xi Yo rba Linda Water District Board of Directors and Executive Staff J. W ayne Miller, President Al Nederhood, President Andrew J. Hall, Director Phil Hawkins, Director Brooke Jones, Director Marc Marcantonio, General Manager Brett Barbre, Asst General Manager Steve Conklin Engineering Mgr John DeCriscio Operations Mgr Gina Knight HR/Risk &Safety Mgr Delia Lugo Finance Manager Art Vega IT Manager BOARD OF DIRECTORS General Manager Finance 1•T• m Executive Communications Operations Manager Manager Secretary Manager Manager Customer Me ter Water Water Senior Services Conservation Water Service Accountant Production Maintenance Supervisor Lead Supervisor Superintendent Programmer I.S. 0 0 Administrator Superintendent Analyst Sr.Fleet SCADA Customer Accounting Meter Mechanic Administrator Ser.Rep.III Assistant 11 Reader ll Water Public Management 0 Sr.Plant Facilities g Conservation Affairs GIS Analyst Representative Representative Operator Maintenance Analyst I P Worker Customer Accounting Meter I.S. Mechanic III Instrumentation Ser.Rep.111 Assistant 1 Reader II Technician 1 m Water Conservation Representative Sr.Maint. Sr.Maint. Sr.Maint. Sr.Maint. Mechanic 11 Distribution a Distribution v Distribution Distribution Customer Meter Water Operator Operator Operator Operator Ser.Rep.11 Reader I Consevation Representative Maint. Maint. Maint. Maint. Maint. CustomerPlant Distribution a Distribution m Distribution Distribution Distribution Ser.Rep.11 Assistant j Operator 11 Operator III Operator III Operator III Operator III Operator III 's Engineering H.R./Risk Manager Manager PlantMaint. Maint. Maint. Wfor 11 Distribution Distribution m Distribution Clerk Operator 11 Operator 11 Operator 11 Records Plant Sr.Project HR m Management Operator 11 Maint. Maint. Maint. Maint. Manager Analyst Administrator Distribution ® Distribution - Distribution Distribution Operator 11 Operator 11 Operator 11 Operator 11 Const.Project a Associate Water Quality HR Records Supervisor Engineer Engineer Analyst Maint. Workernt. m Workernt. Maint. Management Worker I Worker I Worker I Worker I I � I Specialist Sr.Const. Safetyand Inspector Engineering Water Quality Workernt. Maint. Maint. Maint. Training Worker 1 Worker 1 Worker I Worker I Technician 11 Tech.11 Technician 0 Construction Maint. Inspector Engineering Worker I Technician 11 Job Classification Legend Management I Professional Confidential Bargaining Unit Part-Time Yorba Linda Water District ORGANIZATIONAL CHART Organizational Chart FY 2016-2017 xiii District Boundaries Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Yorba Linda Water District California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2016 Executive Director/CEO 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 A UDITORS’REPORT Board of Directors Yo rba Linda Water District Placentia, California Report on the Financial Statements We have audited the accompanying financial statements of Yorba Li nda Water District (the District), as of and for the years ended June 30, 2017 and 2016, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America, 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 audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the District’s preparation and fair presentation of the financial statements in order to design 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. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. -2 - Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yo rba Linda Wa ter District, as of June 30,2017 and 2016, and the changes in financial position and cash flows thereof for the years then ended in accordance 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. Other Matters Report on Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analys is, the schedule of proportionate share of the net pension liability, the schedule of contributions -defined benefit pension plans, and the other post-employment benefits plan -schedule of funding progress, identified as Required Supplementary Information (RSI)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 RSI 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 RSI because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audits were conducted for the purpose of forming an opinion on the financial statements that collectively comprise the District’s basic financial statements. The introductory section, supplementary information consisting of the combining schedules, the schedules of operating expenses by cost center and nature of expenses for water and sewer,and the schedules of capital assets,and the statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining schedules,the schedules of operating expenses by cost center and nature of expenses for water and sewer,and the schedules of capital assets,as of and for the years ended June 30, 2017 and 2016,as listed in the table of contents, are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. -3 - Other Matters (Continued) Other Information (Continued) Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements 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 combining schedules, the schedule of operating expenses by cost center and nature of expenses for water and sewer,and the schedule of capital assets are fairly stated in all material respects in relation to the basic financial statements taken as a whole. 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 express no opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 11 ,2017,on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and 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 in considering the District’s internal control over financial reporting and compliance. Irvine, California October 11, 2017 -4 - This page intentionally left blank -5 - MANAGEMENT’S DISCUSSION AND ANALYSIS YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2017 and 2016 -6 - 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 years ended June 30, 2017, and 2016. 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 FY 2017 The District’s net position increased by $2.6 million,or a 1.6%increase in net position. During the year the District’s revenues were $35.2 million, an increase of 0.17%. During the year, the District’s expenses were $35.2 million, an increase of 9.6%. FY 2016 The District’s net position increased by $3.75 million, or a 2.3% increase in net position. During the year the District’s revenues were $35.1 million, an increase of 9.3%. During the year, the District’s expenses were $32.1 million, a decrease of 4.2%. Required Financial Statements This annual report consists of a series of financial statements. The Statement of Net Position, Statement of Revenues, Expenses and Changes in Net Position 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 customers of the District are financed primarily through user charges. The Statement of Net Position includes all of the District’s investments in resources (assets), deferred outflows of resources,obligations to creditors (liabilities) and deferred inflow of resources. 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 Position. 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. YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Years Ended June 30, 2017 and 2016 -7 - The final required financial statement is the Statement of Cash Flows, which provides information about the District’s cash receipts and cash payments during the reporting period. The Statement of Cash Flows reports cash receipts,cash payments and net changes in cash resulting from operations, investing, non-capital financing, and capital and related financing activities and provides answers to such questions as where did cash come from, what was cash used for, and what was the change in cash balance during the reporting period. Financial Analysis of the District One of the most important questions asked about the District’s finances is, “Is the District better off or worse off as a result of this year’s activities?” The Statement of Net Position and the Statement of Revenues, Expenses and Changes in Net Position report information about the District in a way that helps answer this question. These statements include all assets, deferred outflows of resources, liabilities, and deferred inflows of resources 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 position and changes in them. You can think of the District’s net position (the difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources),as one way to measure the District’s financial health, or financial position. Over time, increases or decreases in the District’s net position is 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, conservation mandates, 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 21 through 59. YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Years Ended June 30, 2017 and 2016 -8 - Statements of Net Position Statement of Net Position for the year ended June 30, 2017 is as follows: 2017 2016 Chang e Assets: Current assets $39,924,566 $44,555,956 $(4,631,390) Restricted assets 5,189,724 2,199,135 2,990,589 Capit al assets: Not depre ciable 5,848,629 5,005,418 843,211 Depreciable , ne t of accumulated depreciatio n 184,811,581 184,944,351 (132,770) Note receiva ble - 78,567 (78,567) Othe r post-employme nt bene fit (O PEB) asset 411,343 276,289 135,054 Total as sets 236,185,843 237,059,716 (873,873) Deferred Outflow s of Resourc es: Deferred amounts on refunding & pe nsio n plans 2,366,673 1,137,794 1,228,879 Liabilit ie s: Liabilit ie s payable from unre stricted current assets 6,394,933 12,753,581 (6,358,648) Liabilit ie s payable from re stricted assets 1,240,000 1,080,000 160,000 Non-current lia bilit ie s 63,076,794 58,656,501 4,420,293 Total liabilitie s 70,711,727 72,490,082 (1,778,355) Deferred Inflow s of Resources: Deferred amounts from pension plans 861,366 1,331,326 (469,960) Net pos it io n: Net inve stme nt in capit al assets 154,273,025 153,776,247 496,778 Restricted for water cons ervatio n 1,222,452 1,572,527 (350,075) Unrestricted 11,483,946 9,027,328 2,456,618 Total ne t positio n $166,979,423 $164,376,102 $2,603,321 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Years Ended June 30, 2017 and 2016 -9 - Statement of Net Position for the year ended June 30, 2016 was as follows: 2016 2015 Chang e Assets: Current assets $44,555,956 $35,311,996 $9,243,960 Restricted assets 2,199,135 2,177,524 21,611 Capit al assets: Not depre ciable 5,005,418 3,533,928 1,471,490 Depreciable , ne t of accumulated depreciatio n 184,944,351 190,817,182 (5,872,831) Note receiva ble 78,567 154,107 (75,540) Othe r post-employme nt bene fit (O PEB) asset 276,289 142,700 133,589 Total as sets 237,059,716 232,137,437 4,922,279 Deferred Outflow s of Resourc es: Deferred amounts on refunding & pe nsio n plans 1,137,794 1,037,227 100,567 Liabilit ie s: Liabilit ie s payable from unre stricted current assets 12,753,581 5,221,619 7,531,962 Liabilit ie s payable from re stricted assets 1,080,000 1,045,000 35,000 Non-current lia bilit ie s 58,656,501 64,474,415 (5,817,914) Total liabilitie s 72,490,082 70,741,034 1,749,048 Deferred Inflow s of Resources: Deferred amounts from pension plans 1,331,326 1,810,965 (479,639) Net pos it io n: Net inve stme nt in capit al assets 153,776,247 157,092,210 (3,315,963) Restricted for water cons ervatio n 1,572,527 189,314 1,383,213 Unrestricted 9,027,328 3,341,141 5,686,187 Total ne t positio n $164,376,102 $160,622,665 $3,753,437 As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the District, assets and deferred outflows of resources of the District exceeded liabilities and deferred inflows of resources by $167 million and $164.4 million as of June 30, 2017 and 2016, respectively.The net change between these two reported fiscal years is primarily due the recording of contributed capital assets resulting for Developer projects. By far the largest portion of the District’s net position (92%and 94% as of June 30, 2017 and 2016, 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. YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Years Ended June 30, 2017 and 2016 -10 - For the year ended June 30,2017, the District showed a positive balances in its unrestricted net position of $11.5 million and in its restricted for water conservation position of $1.2 million, which indicates that there are reserves to be utilized in future years, which is an increase from the stated balance of $10.6 million for the year ended June 30,2016. Statements of Revenues, Expenses and Changes in Net Position Statement of Revenues, Expenses and Changes in Net Position for the ye ar ended June 30, 2017 is as follows: 2017 2016 Chang e Reve nue s: Operating revenue s: Water sales $29,326,565 $27,820,638 $1,505,927 Sewer revenue 2,099,947 1,849,114 250,833 Othe r ope ra ting revenue s 1,033,608 2,665,835 (1,632,227) Tota l ope rating reve nue s 32,460,120 32,335,587 124,533 Non-operating reve nue s: Investme nt in come 377,205 288,817 88,388 Prope rty taxes 1,687,384 1,615,454 71,930 Othe r non-ope ratin g in come 645,562 872,420 (226,858) Tota l non-operatin g reve nues 2,710,151 2,776,691 (66,540) Total re ve nue s 35,170,271 35,112,278 57,993 Expe nses: Operating expe nses: Variable cos ts 12,710,857 10,470,181 2,240,676 Pesonne l services 8,913,639 8,096,853 816,786 Supplie s and services 4,504,054 4,355,033 149,021 Depreciation 7,147,369 7,546,407 (399,038) Tota l ope rating e xpe ns es 33,275,919 30,468,474 2,807,445 Non-operating expe ns es: Inte rest expe nse 1,552,896 1,671,539 (118,643) Othe r non-ope ratin g expe nses 403,597 7,273 396,324 Tota l non-operatin g expens es 1,956,493 1,678,812 277,681 Total expe ns es 35,232,412 32,147,286 3,085,126 Ne t income(lo ss) be fo re capital contributio ns (62,141) 2,964,992 (3,027,133) Capit al contributions 2,665,462 788,445 1,877,017 Chang es in ne t positio n 2,603,321 3,753,437 (1,150,116) Ne t po sitio n, beginning of ye ar 164,376,102 160,622,665 3,753,437 Ne t po sitio n, e nd o f ye ar $166,979,423 $164,376,102 $2,603,321 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Years Ended June 30, 2017 and 2016 -11 - Statement of Revenues, Expenses and Changes in Net Position for the year ended June 30, 2016 was as followed: 2016 2015 Chang e Reve nue s: Operating revenue s: Water sales $27,820,638 $26,446,618 $1,374,020 Sewer revenue 1,849,114 1,775,676 73,438 Othe r ope ra ting revenue s 2,665,835 1,461,106 1,204,729 Tota l ope rating reve nue s 32,335,587 29,683,400 2,652,187 Non-operating reve nue s: Investme nt in come 288,817 187,316 101,501 Prope rty taxes 1,615,454 1,496,489 118,965 Othe r non-ope ratin g in come 872,420 744,572 127,848 Tota l non-operatin g reve nues 2,776,691 2,428,377 348,314 Total re ve nue s 35,112,278 32,111,777 3,000,501 Expe nses: Operating expe nses: Variable cos ts 10,470,181 12,733,762 (2,263,581) Pesonne l services 8,096,853 7,778,763 318,090 Supplie s and services 4,355,033 3,806,900 548,133 Depreciation 7,546,407 7,432,586 113,821 Tota l ope rating e xpe ns es 30,468,474 31,752,011 (1,283,537) Non-operating expe ns es: Inte rest expe nse 1,671,539 1,683,039 (11,500) Othe r non-ope ratin g expe nses 7,273 116,528 (109,255) Tota l non-operatin g expens es 1,678,812 1,799,567 (120,755) Total expe ns es 32,147,286 33,551,578 (1,404,292) Ne t income(lo ss) be fo re capital contributio ns 2,964,992 (1,439,801) 4,404,793 Capit al contributions 788,445 705,848 82,597 Chang es in ne t positio n 3,753,437 (733,953) 4,487,390 Ne t po sitio n, beginning of ye ar 160,622,665 161,356,618 (733,953) Ne t po sitio n, e nd o f ye ar $164,376,102 $160,622,665 $3,753,437 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Years Ended June 30, 2017 and 2016 -12 - The statement of revenues, expenses and changes of net position shows how the District’s net position changed during the fiscal years. In the case of the District, net position increased by $2.6 million and increased by $3.75 million for the fiscal years ended June 30, 2017 and 2016, respectively. A closer examination of the sources of changes in net position reveals that: In 2017, the District’s total revenues increased by $58 thousand, as well as a decrease in Other Operating Revenues of $1.6 million predominantly due to the suspension of the assessment of Administrative Penalties as authorized by Ordinance No. 16.01. Total expenses increased by $3.1 million primarily due to an increase in variable water costs for $2.2 million In 2016, the District’s total revenues increased by $3 million, primarily due to a net increase in water sales of $1.4 million as a result of the increase of rates (service charges) resulting from the 2015 Water and Sewer Rate Study, as well as an in increase in Other Operating Revenues of $1.2 million predominantly due to the assessment of Administrative Penalties as authorized by Ordinance No.15-01. Total expenses decreased by $1.4 million primarily due to a decrease in variable water costs of $2.3 million. Capital Assets Chang es in capital as set amounts for 2 017 we re as fo llo ws : Balance Trans fe rs /Balanc e 2016 Additio ns De le tio ns 2017 Capit al assets: Capit al assets, not be ing de pre ciated $5,005,418 $7,330,282 $(6,487,071) $5,848,629 Capit al assets, being de preciated 274,769,041 7,014,599 (88,259) 281,695,381 Less accumulated depreciation (89,824,690) (7,147,369) 88,259 (96,883,800) Total capit al assets, net $189,949,769 $7,197,512 $(6,487,071) $190,660,210 Chang es in capital as set amounts for 2 016 we re as fo llo ws : Balance Trans fe rs /Balanc e 2015 Additio ns De le tio ns 2016 Capit al assets: Capit al assets, not be ing de pre ciated $3,533,928 $2,599,329 $(1,127,839) $5,005,418 Capit al assets, being de preciated 273,377,461 1,688,763 (297,183) 274,769,041 Less accumulated depreciation (82,560,279) (7,546,407) 281,996 (89,824,690) Total capit al assets, net $194,351,110 $(3,258,315) $(1,143,026) $189,949,769 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Years Ended June 30, 2017 and 2016 -13 - At the end of fiscal years 2017 and 2016, the District’s investment in capital assets amounted to $190.6 million and $189.9 million, respectively (net of accumulated depreciation). This investment in capital assets includes land, transmission and distribution systems, reservoirs, tanks, pumps, buildings and structures, equipment, vehicles and construction-in-process, etc. Major capital assets projects in fiscal year 2016-17 include the construction of Well 21, various water and sewer main for development, and the purchase of various district vehicles and equipment. Where in fiscal year 2015-16 major capital asset projects included the construction of various water and sewer mains for development and the purchase of various district vehicles and equipment. Additional information regarding capital assets can be found in note 4 in Notes to Basic Financial Statements. Long-Term Liabilities Chang es in long -te rm de bt amo unts for the year ende d June 3 0, 2017 we re as fo llo ws : Beginning Ending Balanc e Additio ns Re ductio ns Balanc e 2008 Revenue Certificates of P articipa tion $29,865,000 $- $(29,865,000) $- 2012A Refuding Certificate of P articipa tion 7,515,000 - (285,000) 7,230,000 2017A Revenue Bonds - 29,335,000 - 29,335,000 Subtota l 37,380,000 29,335,000 (30,150,000) 36,565,000 Add (Less): 2008 Pemium 572,435 - (572,435)- 2012A P remium 814,919 - (47,703) 767,216 2017A P remium - 4,460,529 (34,712) 4,425,817 Total Certif ic ates of P articipa tion 38,767,354 33,795,529 (30,804,850) 41,758,033 Line of Credit 6,883,720 116,280 (7,000,000) - Compensated Absences 1,442,344 872,091 (694,782) 1,619,653 Tota l $47,093,418 $34,783,900 $(38,499,632) $43,377,686 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Years Ended June 30, 2017 and 2016 -14 - Change s in long-te rm liabilitie s amo unts for the year ende d June 30, 2 016 we re as follo ws : Beginning Ending Balanc e Additions Re ductions Balance 2008 Revenue Certificates of P articipa tion 30,630,000 $- $(765,000) $29,865,000 2012A Refuding Certificate of P articipa tion 7,795,000 - (280,000) 7,515,000 Subtotal 38,425,000 - (1,045,000) 37,380,000 Add (Less): 2008 Pemiu m 598,855 - (26,420)572,435 2012A P remium 862,620 - (47,701) 814,919 Total Certificates of P articipation 39,886,475 - (1,119,121) 38,767,354 Line of Credit 5,994,099 889,621 - 6,883,720 Compensated Absences 1,204,595 840,567 (602,817) 1,442,345 Total $47,085,169 $1,730,188 $(1,721,938) $47,093,419 In fiscal year 2016-17 two significant items occurred in relation to the District’s long-term debt. On September 30, 2016, the District paid down the Wells Fargo Line of Credit in the amount of $7 million.Secondly, in May of 2017, the District’s 2008 Revenue Certificates of Participation were refunded in advance by the Revenue Bonds, Series 2017A. The refunding will reduce debt service payments over the next 21 years by over $5.05 million, resulting in an economic gain (difference between the present value of the old and new debt service payments) of approximately $4.22 million. Additional information regarding long-term liabilities can be found in note 5 in Notes to Basic Financial Statements. Requests for Information This financial report is designed to provide the District’s funding sources, customers, stakeholders and other interested parties with an overview of the District’s financial operations and financial condition. Should the reader have questions regarding the information included in this report or wish to request additional financial information, please contact the District at 1717 E. Miraloma Avenue,Placentia, California 92807 or the Finance Department at (714) 701-3040. -15 - BASIC FINANCIAL STAT EMENTS 2017 2016 CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents (Note 2) 27,991,568$ 32,387,523$ Investments (Note 2) 6,920,955 7,288,244 Accounts receivable - water and sewer services 4,310,234 4,216,747 Accounts receivable - property taxes 19,581 13,629 Note receivable (Note 10) 78,567 75,540 Accrued interest receivable 47,841 46,424 Prepaid expenses and deposits 289,987 292,950 Inventory 265,833 234,899 TOTAL UNRESTRICTED ASSETS 39,924,566 44,555,956 RESTRICTED ASSETS: Cash and cash equivalents (Note 2) 5,189,724 78,403 Investments (Note 2)- 2,120,732 TOTAL RESTRICTED ASSETS 5,189,724 2,199,135 TOTAL CURRENT ASSETS 45,114,290 46,755,091 NONCURRENT ASSETS: Capital assets (Note 4): Not depreciable 5,848,629 5,005,418 Depreciable, net of accumulated depreciation 184,811,581 184,944,351 Note receivable (Note 10) - 78,567 Other post-employment benefit (OPEB) asset (Note 6) 411,343 276,289 TOTAL NONCURRENT ASSETS 191,071,553 190,304,625 TOTAL ASSETS 236,185,843 237,059,716 DEFERRED OUTFLOWS OF RESOURCES: Deferred amounts from pension plans 1,966,284 712,574 Deferred amount on refunding 400,389 425,220 TOTAL DEFERRED OUTFLOWS OF RESOURCES 2,366,673 1,137,794 See accompanying notes to basic financial statements. (Continued) - 16 - YORBA LINDA WATER DISTRICT STATEMENTS OF NET POSITION June 30, 2017 and 2016 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 2017 2016 CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable 4,608,076$ 4,127,475$ Accrued expenses 144,164 120,799 Compensated absences payable - current portion (Note 5) 404,913 360,586 Customer and construction deposits 650,848 521,967 Unearned revenue 300,263 324,769 Accrued interest payable 286,669 414,265 Payable on line of credit (Note 5) - 6,883,720 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS 6,394,933 12,753,581 PAYABLE FROM RESTRICTED ASSETS: Certificates of Participation - current portion (Note 5) 1,240,000 1,080,000 TOTAL PAYABLE FROM RESTRICTED ASSETS 1,240,000 1,080,000 TOTAL CURRENT LIABILITIES 7,634,933 13,833,581 LONG-TERM LIABILITIES (LESS CURRENT PORTION): Unearned annexation revenue 14,103,022 14,598,067 Compensated absences (Note 5) 1,214,740 1,081,758 Certificates of Participation (Note 5) 40,518,033 37,687,354 Net pension liability (Note 7) 7,240,999 5,289,322 TOTAL LONG-TERM LIABILITIES (LESS CURRENT PORTION) 63,076,794 58,656,501 TOTAL LIABILITIES 70,711,727 72,490,082 DEFERRED INFLOWS OF RESOURCES: Deferred amounts from pension plans 753,101 1,331,326 Deferred gain on refunding 108,265 - TOTAL DEFERRED INFLOWS OF RESOURCES 861,366 1,331,326 NET POSITION: Net investment in capital assets (Note 8) 154,273,025 153,776,247 Restricted for water conservation 1,222,452 1,572,527 Unrestricted 11,483,946 9,027,328 TOTAL NET POSITION 166,979,423$ 164,376,102$ See accompanying notes to basic financial statements. - 17 - YORBA LINDA WATER DISTRICT STATEMENTS OF NET POSITION (CONTINUED) June 30, 2017 and 2016 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 2017 2016 OPERATING REVENUES: Water sales 29,326,565$ 27,820,638$ Sewer revenues 2,099,947 1,849,114 Other operating revenues 1,033,608 2,665,835 TOTAL OPERATING REVENUES 32,460,120 32,335,587 OPERATING EXPENSES: Variable water costs 12,710,857 10,470,181 Personnel services 8,913,639 8,096,853 Supplies and services 4,504,054 4,355,033 Depreciation 7,147,369 7,546,407 TOTAL OPERATING EXPENSES 33,275,919 30,468,474 OPERATING INCOME (LOSS) (815,799) 1,867,113 NONOPERATING REVENUES (EXPENSES): Property taxes 1,687,384 1,615,454 Investment income 377,205 288,817 Interest expense (1,552,896) (1,671,539) Other nonoperating revenues 645,562 872,420 Other nonoperating expenses (403,597) (7,273) TOTAL NONOPERATING REVENUES (EXPENSES) 753,658 1,097,879 NET INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS (62,141) 2,964,992 CAPITAL CONTRIBUTIONS 2,665,462 788,445 CHANGES IN NET POSITION 2,603,321 3,753,437 NET POSITION - BEGINNING OF YEAR 164,376,102 160,622,665 NET POSITION - END OF YEAR 166,979,423$ 164,376,102$ See accompanying notes to basic financial statements. - 18 - YORBA LINDA WATER DISTRICT STATEMENTS OF REVENUES, EXPENSES For the years ended June 30, 2017 and 2016 AND CHANGES IN NET POSITION 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 32,357,591$ 31,395,182$ Cash payments to employees for salaries and wages (8,728,277) (8,560,432) Cash payments to suppliers of goods and services (16,624,358) (13,978,278) Other revenues 348,061 191,163 Other expenses (77,317) (17,558) NET CASH PROVIDED BY OPERATING ACTIVITIES 7,275,700 9,030,077 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Proceeds from property taxes and assessments 1,681,497 1,617,367 NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 1,681,497 1,617,367 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from annexation fees and capital contributions 94,746 1,559,883 Acquisition and construction of capital assets (5,228,389) (2,378,666) Proceeds from sales of capital assets 21,646 35,607 Proceeds from long-term debt issuance 33,795,529 - Payment to refunding escrow agent (29,511,305) - Bond issuance costs (326,280) - Principal paid on long-term liabilities (1,080,000) (1,045,000) Interest paid on long-term liabilities (1,768,613) (1,777,335) (Payment on)/proceeds from line of credit (6,883,720) 889,621 NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (10,886,386) (2,715,890) CASH FLOWS FROM INVESTING ACTIVITIES: Sale of investments 18,902,845 24,119,590 Purchase of investments (16,634,078) (23,946,800) Interest and investment earnings 375,788 278,956 NET CASH PROVIDED BY INVESTING ACTIVITIES 2,644,555 451,746 NET INCREASE IN CASH AND CASH EQUIVALENTS 715,366 8,383,300 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 32,465,926 24,082,626 CASH AND CASH EQUIVALENTS - END OF YEAR 33,181,292$ 32,465,926$ See accompanying notes to basic financial statements. (Continued) YORBA LINDA WATER DISTRICT STATEMENTS OF CASH FLOWS For the years ended June 30, 2017 and 2016 - 19 - 2017 2016 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (loss) (815,799)$ 1,867,113$ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 7,147,369 7,546,407 Other revenues 348,061 191,163 Other expenses (77,317) (17,558) Changes in operating assets, deferred outflows of resources, operating liabilities and deferred inflows of resources: (Increase) decrease in assets and deferred outflows of resources: Accounts receivable (93,487) (874,014) Inventory (30,934) 27,263 Prepaid expenses and deposits 2,963 (21,966) Other post-employment benefits (OPEB) asset (135,054) (133,589) Deferred outflows of resources from pension plans (1,253,710) (125,398) Increase (decrease) in liabilities and deferred inflows of resources: Accounts payable and accrued expenses 480,601 671,273 Accrued salaries and wages 23,365 (159,398) Accrued compensated absences 177,309 237,749 Customer and construction deposits 128,881 103,975 Net pension liability 1,951,677 196,696 Deferred inflows of resources from pension plans (578,225) (479,639) Total adjustments 8,091,499 7,162,964 NET CASH PROVIDED BY OPERATING ACTIVITIES 7,275,700$ 9,030,077$ CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION: Unrestricted 27,991,568$ 32,387,523$ Restricted 5,189,724 78,403 TOTAL CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION 33,181,292$ 32,465,926$ NONCASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES: Amortization related to long-term debt 104,432$ 74,121$ Capital contributions 2,647,734$ 759,665$ See accompanying notes to basic financial statements. - 20 - YORBA LINDA WATER DISTRICT STATEMENTS OF CASH FLOWS (CONTINUED) For the years ended June 30, 2017 and 2016 -21 - NOTES TO BASIC FINANCIAL STAT EMENTS -22 - YORBA LINDA WAT ER DISTRICT NOTES TO BASIC FINANCIAL STAT EMENTS June 30, 2017 and 2016 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES: a.Organization and Description of the Reporting Entity: The Yo rba Linda Wa ter 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 Wa ter and Sewer. Wa ter is provided to the entire service area. Sewer is provided to most of the service area. The District’s service area includes Yo rba Linda and portions of Placentia, Anaheim, Brea, and areas of unincorporated Orange County. The District provides water service to approximately 79,000 residents and sewer service to approximately 60,600 residents. The financial statements present the District (the primary government), the Yorba Linda Water District Public Financing Corporation (the Corporation)and the Yorba Linda Water District Financing Authority (the Authority). The Corporation and the Authority meet the definition of a “component unit”,and are presented on a “blended”basis,as if they are part of the primary government.Although they are legally separate entities, the governing board of the Corporation and the Authority are comprised of the same membership as the District’s Board of Directors. The District may impose its will on the Corporation and the Authority, including the ability to appoint, hire, reassign, or dismiss management. There is also a financial benefit/burden relationship between the District and the Corporation and the Authority. The Yorba Linda Water District Public Financing Corporation, a California nonprofit public benefit corporation, was 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. There are no separate financial statements for the Public Financing Corporation. The Yorba Linda Water District Financing Authority, a public agency was organized pursuant to a Joint Exercise of Powers Agreement (the JPA Agreement) between the District and California Municipal Finance Authority (CMFA), dated April 11 , 2017. The Authority is statutorily authorized by Article 4 of Chapter 5 of Division 7 of Ti tle 1 of the California Government Code and is empowered under the JPA Agreement to issue its bonds for, among other things, the purposes of the plan of financing described herein. Separate Basic Financial Statements prepared for the Yorba Linda Water District Financing Authority may be obtained from the Yo rba Linda Wa ter District,1717 East Miraloma Av enue, Placentia, California 92870. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -23 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): b.Basic Financial Statements: The basic financial statements are comprised of the Statements of Net Position, the Statements of Revenues, Expenses and Changes in Net Position,the Statements of Cash Flows and the notes to the basic financial statements. 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) 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, deferred outflows of resources,liabilities and deferred inflows of resources (whether current or noncurrent) associated with these activities are included on the Statements of Net Position. The Statements of Revenues, Expenses and Changes in Net Position present increases (revenues) and decreases (expenses) in total net position. 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.New Accounting Pronouncements: GASB Current Year Standards: GASB 73 -Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, contains provisions that address employer and governmental nonemployer contributing entities for pensions that are not within the scope of GASB 68, effective for periods beginning after June 15, 2016 and did not impact the District. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -24 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): e.New Accounting Pronouncements (Continued): GASB Current Year Standards (Continued): GASB 74 -Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, effective for periods beginning after June 15, 2016 and did not impact the District. GASB 77 -Tax Abatement Disclosure, effective for periods beginning after December 15,2015 and did not impact the District. GASB 78 -Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, effective for periods beginning after December 15,2015 and did not impact the District. GASB 79 -Certain External Investment Pools and Pool Participants, contains certain provisions on portfolio quality, custodial credit risk, and shadow pricing, effective for periods beginning after December 15, 2015 and did not impact the District. GASB 80 -Blending Requirements for Certain Component Units, effective for periods beginning after June 15, 2016 and did not impact the District. GASB 82 -Pension Issues, effective for periods beginning after June 15, 2016, except for certain provisions on selection of assumptions, which are effective in the first reporting period in which the measurement date of the pension liability is on or after June 15, 2017. GASB Pending Accounting Standards: GASB has issued the following statements,which may impact the District’s financial reporting requirements in the future: GASB 75 -Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, effective for periods beginning after June 15, 2017. GASB 81 -Irrevocable Split-Interest Agreements, effective for periods beginning after December 15, 2016 and did not impact the District. GASB 83 -Certain Asset Retirement Obligations, effective for periods beginning after June 15, 2018. GASB 84 -Fiduciary Activities, effective for periods beginning after December 15,2018. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -25 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): e.New Accounting Pronouncements (Continued): GASB Pending Accounting Standards (Continued): GASB 85 -Omnibus 2017, effective for periods beginning after June 15, 2017. GASB 86 -Certain Debt Extinguishment Issues, effective for periods beginning after June 15, 2017. GASB 87 -Leases, effective for periods beginning after December 15, 2019. f.Cash and Cash Equivalents: The District considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. g.Investments and Investment Policy: The District has adopted an investment policy directing the District’s General Manager or Finance Manager to invest, reinvest, sell or exchange securities. Investments are stated at fair value which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. h.Accounts Receivable: The District extends credit to customers in the normal course of operations. Management has evaluated the accounts and believes they are all collectible. Management evaluates all accounts receivable and if it is determined that they are uncollectible they are written off as a bad debt expense. A charge of $9,042 and $66,391 was made to bad debt expense for the years ended June 30,2017 and 2016, respectively. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -26 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): i.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. j.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. k.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 value at the date of acquisition. Upon retirement or other disposition of capital assets, the cost and related accumulated depreciation are removed from the respective balances and any gains or losses are recognized. Depreciation is recorded on the straight-line basis over the estimated useful lives of the assets as follows: Source of Supply 30 to 75 years Pumping Plant 20 to 40 years Wa ter 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 l.Interest Expense: The District incurs interest charges on the Line of Credit and Certificates of Participation. Interest expense of $7,671 and $21,923 has been capitalized as an addition to the cost of construction for the years ended June 30, 2017 and 2016, respectively. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -27 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): m.Deferred Outflows/Inflows of Resources: In addition to assets, the statements of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of re sources, represents a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expense) until that time. The District has the following items that qualify for reporting in this category: Deferred outflow related to loss on refunding. A deferred loss on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt, which is 20 years for the 2012A Revenue Refunding Certificates of Participation and 21 years for the 2017A Revenue Bonds. Deferred outflow related to pensions. This amount is equal to employer contributions made after the measurement date of the net pension liability. Deferred outflow related to pensions for differences between expected and actual experiences. This amount is amortized over a closed period equal to the average of the expected remaining services lives of all employees that are provided with pensions through the plans. Deferred outflow related to pensions for the changes in proportion and differences between employer contributions and the proportionate share of contributions. This amount is amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans. In addition to liabilities, the statements of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The District has the following items that qualify for reporting in this category: Deferred inflow related to pensions for differences between expected and actual experiences. This amount is amortized over a closed period equal to the average of the expected remaining services lives of all employees that are provided with pensions through the plans. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -28 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): m.Deferred Outflows/Inflows of Resources (Continued): The District has the following items that qualify for reporting in the deferred inflows of resources category (continued): Deferred inflow from pensions resulting from changes in assumptions. This amount is amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans. Deferred inflow related to pensions resulting from the difference in projected and actual earnings on investments of the pension plans fiduciary net position. This amount is amortized over five years. n.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 eligible leave. Permanent employees that retire in accordance with the California Public Employee’s Retirement System (CalPERS)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 CalPERS account. The District has accrued 100% of the unused sick leave as a liability as it expects most employees to meet the CalPERS requirements when retiring or leaving the District. o.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. p.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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -29 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): q.Unearned Revenue: Unearned revenue consists of customer refunds that have not been cashed. r.Unearned 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 40 years 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 and is amortized on a straight-line basis over 40 years. This unearned revenue source may be used for capital facilities in the future if approved by the Board. s.Net Position: In the Statements of Net Position, net position is classified in the following categories: Net investment in capital assets -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 position -This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments. Amounts reported in restricted net position for the years ended June 30, 2017 and 2016 represent the following: $1,222,452 and $1,572,527, respectively,which is the balance remaining of administrative penalty fees collected by the District that must be used for capital improvement projects that are related to conservation efforts, water use efficiency improvements, water conservation education, and regulatory compliance. Unrestricted net position -This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position”. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -30 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): t.Net Position Flow Assumptions: Sometimes the District will fund outlays for a particular purpose from both restricted (e.g.,restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted -net position and unrestricted -net position in the Statements of Net Position, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s practice to consider restricted -net position to have been depleted before unrestricted -net position is applied. u.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 providing water, sewer, and related services, administrative expenses and depreciation on capital assets. All expenses not meeting this definition are reported as nonoperating expenses. v.Property Taxes and Assessments: The Orange County A ssessor’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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -31 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): v.Property Taxes and Assessments (Continued): 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 w.Wa ter and Sewer Sales: The District recognizes water and sewer service charges based on cycle billings rendered to the customers each month. x.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. y.Pensions: For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the District’s California Public Employees’ Retirement System (CalPERS) plan (Plan) and additions to/deductions from the Plan fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. z.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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -32 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): aa.Use of Estimates: The financial statements are prepared in accordance 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. 2.CASH AND INVESTMENTS: Cash and Investments: Cash and investments as of June 30,2017 and 2016 are reported in the accompanying statements of net position as follows: 2017 2016 Unrestricted Current Assets: Cash and cash equivalents $27,991,568 $32,387,523 Investments 6,920,955 7,288,244 Restricted Assets: Cash and cash equivalents 5,189,724 78,403 Investments -2,120,732 To tal Cash and Investments $40,102,247 $41,874,902 Cash and investments as of June 30, 2017 and 2016 consisted of the following: 2017 2016 Cash on hand $1,250 $1,250 Deposits with financial institutions 1,806,502 1,192,898 Investments 38,294,495 40,680,754 To tal Cash and Investments $40,102,247 $41,874,902 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -33 - 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 30%None A and FDIC/ collateralized Local Agency Investment Fund 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 Tr easury Bills, Notes and Bonds 5 years None None N/A United States Government Sponsored Agency Securities 5 years None None N/A Corporate Bonds 5 years 30%None A Bankers Acceptances 180 days 10%5%A-1 Commercial Paper 270 days 25%5%A-1 CalTRUST Investment Pool N/A None None N/A Money Market Funds N/A 20%10%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, 2017 and 2016 -34 - 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 Ty pe Maturity Allowed in One Issuer United States Tr easury Bills, Notes and Bonds None None None United States Tr easury 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, 2017 and 2016 -35 - 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 tables that shows the distribution of the District’s investments by maturity as of June 30,2017 and 2016. June 30, 2017 Remaining Maturity (in Months) 12 Months 13 to 24 25 to 36 37 to 48 48 to 60 Investment Type or Less Months Months Months Months To tals CalTRUST Investment Pool $18,961,385 $-$-$-$-$18,961,385 Local Agency Investment Fund 7,333,431 ----7,333,431 United States Government Sponsored Agency Securities 997,440 ----997,440 Negotiable Certificates of Deposit 3,821,791 445,301 245,383 489,576 921,464 5,923,515 Held by Bond Trustee: Money Market Mutual Funds 5,078,724 ----5,078,724 $36,192,771 $445,301 $245,383 $489,576 $921,464 $38,294,495 June 30, 2016 Remaining Maturity (in Months) 12 Months 13 to 24 25 to 36 37 to 48 48 to 60 Investment Type or Less Months Months Months Months To tals CalTRUST Investment Pool $19,836,129 $-$-$-$-$19,836,129 Local Agency Investment Fund 11 ,435,649 ----11 ,435,649 United States Government Sponsored Agency Securities -1,502,210 -500,370 -2,002,580 Negotiable Certificates of Deposit 499,288 4,087,209 449,569 -249,598 5,285,664 Held by Bond Trustee: United States Government Sponsored Agency Securities -2,120,732 ---2,120,732 $31,771,066 $7,710,151 $449,569 $500,370 $249,598 $40,680,754 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -36 - 2.CASH AND INVESTMENTS (CONTINUED): 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 Moody’s credit rating as of June 30,2017 and 2016 for each investment type. June 30, 2017 Minimum To tal Legal as of Not Investment Type Rating June 30, 2017 Rated AA+AAA CalTRUST Investment Pool N/A $18,961,385 $14,868,526 $4,092,859 $- Local Agency Investment Fund N/A 7,333,431 7,333,431 -- United States Government Sponsored Agency Securities N/A 997,440 --997,440 Negotiable Certificates of Deposit A 5,923,515 5,923,515 -- Held by Bond Trustee: Money Market Mutual Funds N/A 5,078,724 --5,078,724 $38,294,495 $28,125,472 $4,092,859 $6,076,164 June 30, 2016 Minimum To tal Legal as of Not Investment Type Rating June 30, 2016 Rated AA+AAA CalTRUST Investment Pool N/A $19,836,129 $17,069,642 $2,766,487 $- Local Agency Investment Fund N/A 11,435,649 11,435,649 -- United States Government Sponsored Agency Securities N/A 2,002,580 --2,002,580 Negotiable Certificates of Deposit A 5,285,664 5,285,664 -- Held by Bond Trustee: United States Government Sponsored Agency Securities N/A 2,120,732 --2,120,732 $40,680,754 $33,790,955 $2,766,487 $4,123,312 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -37 - 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 with the exception of banker ’s acceptances, commercial paper and money market funds which are limited to an investment in any one issuer of 5%, 5% and 10%, respectively. 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 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. As of June 30, 2017 and 2016, all of the District’s deposits with financial institutions were covered by federal depository insurance limits or were held in collateralized accounts. 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). YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -38 - 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. Fair Value Measurements: The District categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles.The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are significant other observable inputs, and Level 3 inputs are significant unobservable inputs. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -39 - 2.CASH AND INVESTMENTS (CONTINUED): Fair Value Measurements (Continued): The District has the following recurring fair value measurements as of June 30, 2017 and 2016: June 30, 2017 Quoted Observable Unobservable Prices Inputs Inputs Level 1 Level 2 Level 3 To tal U.S. Government Sponsored Agency Securities $-$997,440 $-$997,440 Negotiable Certificates of Deposit -5,923,515 -5,923,515 To tal Leveled Investments $-$6,920,955 $-6,920,955 CalTRUST Investment Pool*18,961,385 Local Agency Investment Fund*7,333,431 Held by Bond Trustee: Money Market Mutual Fund*5,078,724 To tal Investments $38,294,495 June 30, 2016 Quoted Observable Unobservable Prices Inputs Inputs Level 1 Level 2 Level 3 To tal U.S. Government Sponsored Agency Securities $-$2,002,580 $-$2,002,580 Negotiable Certificates of Deposit -5,285,664 -5,285,664 Held by Bond Trustee: U.S. Government Sponsored Agency Securities -2,120,732 -2,120,732 To tal Leveled Investments $-$9,408,976 $-9,408,976 CalTRUST Investment Pool*19,836,129 Local Agency Investment Fund*11,435,649 To tal Investments $40,680,754 * Not subject to fair value measurements. 3.RESTRICTED ASSETS: Restricted assets were provided by, and are to be used for the following as of June 30, 2017 and 2016: Source Use 2017 2016 Bond proceeds Repayment of debt $5,078,724 $2,168,612 District funds Payment of retention 111 ,000 30,523 To tal Restricted Assets $5,189,724 $2,199,135 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -40 - 4.CAPITA L A SSETS: Changes in capital assets for the year ended June 30, 2017 were as follows: Balance Balance June 30, 2016 Additions Deletions June 30, 2017 Capital assets, not being depreciated: Land, mineral and water rights $287,419 $-$-$287,419 Construction in progress 4,717,999 7,330,282 (6,487,071)5,561,210 To tal capital assets, not being depreciated 5,005,418 7,330,282 (6,487,071)5,848,629 Capital assets, being depreciated: Source of supply 6,096,155 252,842 -6,348,997 Pumping plant 25,604,231 728,512 -26,332,743 Wa ter treatment plant 3,130,572 --3,130,572 Transmission and distribution plant 218,794,863 5,392,592 -224,187,455 General plant 21,143,220 640,653 (88,259)21,695,614 To tal capital assets, being depreciated 274,769,041 7,014,599 (88,259)281,695,381 Less accumulated depreciation for: Source of supply (2,484,228)(168,655)-(2,652,883) Pumping plant (8,499,624)(921,667)-(9,421,291) Wa ter treatment plant (1,750,637)(179,623)-(1,930,260) Transmission and distribution plant (67,024,340)(5,074,913)-(72,099,253) General plant (10,065,861)(802,511)88,259 (10,780,113) To tal accumulated depreciation (89,824,690)(7,147,369)88,259 (96,883,800) To tal capital assets, being depreciated, net 184,944,351 (132,770)-184,811,581 To tal capital assets, net $189,949,769 $7,197,512 $(6,487,071)$190,660,210 Depreciation expense for the depreciable capital assets was $7,147,369 in 2017. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -41 - 4.CAPITA L A SSETS (CONTINUED): Changes in capital assets for the year ended June 30, 2016 were as follows: Balance Balance June 30, 2015 Additions Deletions June 30, 2016 Capital assets, not being depreciated: Land, mineral and water rights $287,419 $-$-$287,419 Construction in progress 3,246,509 2,599,329 (1,127,839)4,717,999 To tal capital assets, not being depreciated 3,533,928 2,599,329 (1,127,839)5,005,418 Capital assets, being depreciated: Source of supply 6,096,155 --6,096,155 Pumping plant 25,604,231 --25,604,231 Wa ter treatment plant 3,130,572 --3,130,572 Transmission and distribution plant 217,719,069 1,075,794 -218,794,863 General plant 20,827,434 612,969 (297,183)21,143,220 To tal capital assets, being depreciated 273,377,461 1,688,763 (297,183)274,769,041 Less accumulated depreciation for: Source of supply (2,315,573)(168,655)-(2,484,228) Pumping plant (7,555,843)(943,781)-(8,499,624) Wa ter treatment plant (1,553,445)(197,192)-(1,750,637) Transmission and distribution plant (61,968,685)(5,055,655)-(67,024,340) General plant (9,166,733)(1,181,124)281,996 (10,065,861) To tal accumulated depreciation (82,560,279)(7,546,407)281,996 (89,824,690) To tal capital assets, being depreciated, net 190,817,182 (5,857,644)(15,187)184,944,351 To tal capital assets, net $194,351,110 $(3,258,315)$(1,143,026)$189,949,769 Depreciation expense for the depreciable capital assets was $7,546,407 in 2016. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -42 - 5.LONG-TERM LIABILITIES: Changes in long-term liabilities for the year ended June 30,2017 were as follows: Balance Balance Due Within June 30, 2016 Additions Reductions June 30, 2017 One Ye ar Certificates of Participation: 2008 Revenue Certificates of Participation $29,865,000 $-$(29,865,000)$-$- 2012A Revenue Refunding Certificates of Participation 7,515,000 -(285,000)7,230,000 295,000 2017A Revenue Bonds -29,335,000 -29,335,000 945,000 Subtotal 37,380,000 29,335,000 (30,150,000)36,565,000 1,240,000 Add (Less): 2008 Premium 572,435 -(572,435)-- 2012A Premium 814,919 -(47,703)767,216 - 2017A Premium -4,460,529 (34,712)4,425,817 - To tal Certificates of Participation 38,767,354 33,795,529 (30,804,850)41,758,033 1,240,000 Line of credit 6,883,720 116,280 (7,000,000)-- Compensated absences 1,442,344 872,091 (694,782)1,619,653 404,913 To tal $47,093,418 $34,783,900 $(38,499,632)$43,377,686 $1,644,913 Changes in long-term liabilities for the year ended June 30,2016 were as follows: Balance Balance Due Within June 30, 2015 Additions Reductions June 30, 2016 One Ye ar Certificates of Participation: 2008 Revenue Certificates of Participation $30,630,000 $-$(765,000)$29,865,000 $795,000 2012A Revenue Refunding Certificates of Participation 7,795,000 -(280,000)7,515,000 285,000 Subtotal 38,425,000 -(1,045,000)37,380,000 1,080,000 Add (Less): 2008 Premium 598,855 -(26,420)572,435 - 2012A Premium 862,620 -(47,701)814,919 - To tal Certificates of Participation 39,886,475 -(1,119,121)38,767,354 1,080,000 Line of credit 5,994,099 889,621 -6,883,720 6,883,720 Compensated absences 1,204,595 840,566 (602,817)1,442,344 360,586 To tal $47,085,169 $1,730,187 $(1,721,938)$47,093,418 $8,324,306 YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -43 - 5.LONG-TERM LIABILITIES (CONTINUED): 2008 Revenue Certificates of Participation: In February 2008, the Corporation 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. In May 2017,the 2008 Certificates were refunded in advance by the Revenue Bonds, Series 2017A. At June 30, 2017 and 2016, the 2008 Certificates outstanding balance was $0 and $29,865,000, respectively. 2012A Revenue Refunding Certificates of Participation: In September 2012, the Corporation issued $8,330,000 of Revenue Refunding Certificates of Participation, Series 2012A. The 2012A Certificates were issued to provide funds (1) to advance refund all of the currently outstanding District Certificates of Participation Series 2003 and (2) to pay costs of issuance of the 2012A Bonds. The District completed the refunding to reduce its total debt service payments over the next 21 years by over $1.72 million, resulting in an economic gain (difference between the present value of the old and new debt service payments) of over $1.32 million. The 2003 Certificates were paid off in October 2012. The Certificates bear interest ranging from 2% to 5%, payable semiannually on April 1 and October 1. There is no reserve requirement for the 2012A Revenue Refunding Certificates of Participation. 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 yi eld during each fiscal year net revenues equal to 110% of the debt service for such fiscal year. For fiscal years 2017 and 2016, the net revenues equal to 281%and 402%of the debt service, respectively. The Certificates of Participation are subject to federal arbitrage regulations. At June 30, 2017 and 2016, the 2012A Revenue Refunding Certificates of Participation outstanding balance was $7,230,000 and $7,515,000, respectively. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -44 - 5.LONG-TERM LIABILITIES (CONTINUED): 2012A Revenue Refunding Certificates of Participation (Continued): The annual debt service requirements for the 2012A Revenue Refunding Certificates of Participation outstanding at June 30,2017 are as follows: Ye ar Ending Principal Interest To tal 2018 $295,000 $293,312 $588,312 2019 310,000 281,212 591,212 2020 315,000 268,712 583,712 2021 335,000 255,712 590,712 2022 345,000 241,250 586,250 2023 -2027 1,985,000 937,705 2,922,705 2028 -2032 2,510,000 410,465 2,920,465 2033 1,135,000 37,132 1,172,132 Subtotal $7,230,000 $2,725,500 $9,955,500 2017A Revenue Bonds: In May 2017, the Authority issued $29,335,000 of Revenue Bonds, Series 2017A. The 2017A Bonds were issued to provide funds (1) to finance the acquisition and construction of certain improvements to the District’s water system; (2) to advance refund all of the currently outstanding District Revenue Certificates of Participation Series 2008 and (3) to pay costs of issuance of the 2017A Bonds. A portion of the proceeds were deposited in an escrow fund with a trustee. The funds will be used to pay the outstanding balance of the Revenue Certificates of Participation Series 2008. The District completed the refunding to reduce its total debt service payments over the next 21 ye ars by over $5.05 million, resulting in an economic gain (difference between the present value of the old and new debt service payments) of approximately $4.22 million. At June 30,2017, the 2017A Revenue Bonds outstanding balance was $29,865,000. The 2017A Bonds bear interest ranging from 3% to 5%, payable semiannually on April 1 and October 1. There is no reserve requirement for the 2017A Bonds. The 2017A Bonds are obligations of the Authority payable solely from payments received from the District pursuant to the Installment Purchase Agreement, by and between the District and the Authority. 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 yi eld during each fiscal year net revenues equal to 125% of the debt service for such fiscal year. For fiscal year 2017, the net revenues equal to 281% of the debt service. The 2017A Bonds are subject to federal arbitrage regulations. The District has no arbitrage calculation due until May 2018. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -45 - 5.LONG-TERM LIABILITIES (CONTINUED): 2017A Revenue Bonds (Continued): The annual debt service requirements for the 2017A Revenue Bonds outstanding at June 30,2017 are as follows: Ye ar Ending Principal Interest To tal 2018 $945,000 $1,196,486 $2,141,486 2019 830,000 1,317,044 2,147,044 2020 860,000 1,283,244 2,143,244 2021 895,000 1,243,669 2,138,669 2022 945,000 1,197,669 2,142,669 2023 -2027 5,480,000 5,211,720 10,691,720 2028 -2032 6,875,000 3,766,373 10,641,373 2033 -2037 8,490,000 2,097,000 10,587,000 2038 -2039 4,015,000 202,025 4,217,025 Subtotal $29,335,000 $17,515,230 $46,850,230 Line of Credit: On September 24, 2012, the District established 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 by September 30, 2016. The line of credit was paid off in 2017. Compensated Absences: Compensated absences are comprised of unpaid vacation leave, sick leave and compensating time off which are accrued as earned. (See Note 1n). YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -46 - 6.OTHER POST-EMPLOYMENT BENEFITS (OPEB)PLAN: 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. Tw o-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, 2017, the District made a contribution of $217,693 to the OPEB trust and made payments totaling $137,979 for retiree health care insurance benefits. For the year ended June 30, 2016, the District made a contribution of $211,867 to the OPEB trust and made payments totaling $135,100 for retiree health care insurance benefits. c.Annual OPEB Cost and Net OPEB 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. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -47 - 6.OTHER POST-EMPLOYMENT BENEFITS (OPEB)PLAN (CONTINUED): c.Annual OPEB Cost and Net OPEB Asset (Continued): 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 asset to the Retiree Health Plan: 2017 2016 Annual required contribution $217,693 $211,867 Interest on net OPEB asset (19,340)(9,989) Adjustment to annual required contribution 22,265 11,500 Annual OPEB cost (expense)220,618 213,378 Actual contributions made (355,672)(346,967) Increase in net OPEB asset (135,054)(133,589) Net OPEB asset -beginning of year (276,289)(142,700) Net OPEB asset -end of year $(411,343)$(276,289) The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB asset for the years ended June 30, 2017, 2016 and 2015 were as follows: Percentage Fiscal Annual of Annual Net Ye ar OPEB OPEB Costs OPEB Ended Cost Contributed Asset 6/30/15 $189,162 101.99%$(142,700) 6/30/16 213,378 162.61%(276,289) 6/30/17 220,618 161.22%(411,343) d.Funded Status and Funding Progress: As of July 1, 2015, the most recent actuarial valuation date, the plan was 34.74%funded. The actuarial accrued liability for benefits was $2,136,664, and the actuarial value of assets was $742,379, resulting in an unfunded actuarial accrued liability (UAAL) of $1,394,285. Assets were valued using a five year smoothing formula with a 20% corridor around market value. The covered payroll (annual payroll of active employees covered by the plan) was $5,899,338 and the ratio of the UAAL to the covered payroll was 23.63%. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -48 - 6.OTHER POST-EMPLOYMENT BENEFITS (OPEB)PLAN (CONTINUED): d.Funded Status and Funding Progress (Continued): 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 basic financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. e.Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2015 actuarial valuation, the entry age normal cost method was used. The actuarial assumptions included an inflation rate of 2.75% per annum, an investment return of 7%per annum, a projected salary increase of 2.75% 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 25 year amortization for any residual unfunded actuarial accrued liabilities. 7.PENSION PLANS: a.General Information about the Pension Plans: Plan Descriptions: All qualified permanent and probationary employees are eligible to participate in the District’s Miscellaneous Employee Pension Plan (the Plan), cost-sharing multiple employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plan are established by State statute and District resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -49 - 7.PENSION PLANS: a.General Information about the Pension Plans (Continued): Benefits Provided: CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. All members are eligible for non-industrial disability benefits after five (5)years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’Retirement Law. The Plans’provisions and benefits in effect at June 30, 2017, are summarized as follows: Tier I Tier II Tier III - PEPRA Prior to On or After On or After Hire date December 22, 2011 December 22, 2011 January 1, 2013 Benefit formula 2%@55 2%@60 2%@62 Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 63 50 - 63 52 - 67 Monthly benefits, as a % of eligible compensation 1.426% to 2.418%1.092% to 2.418%1.0% to 2.5% Required employee contribution rates 7%7%6.25% Required employer contribution rates Normal cost rate 8.880%7.612%6.555% Payment of unfunded liability 251,346$ 104$ 498$ Miscellaneous Contributions: Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. District contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -50 - 7.PENSION PLANS (CONTINUED): b.Pension Li abilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions: As of June 30, 2017, the District reported net pension liabilities for its proportionate shares of the net pension liability of all Plans as follows: Proportionate Share of Net Pension Liability Miscellaneous 7,240,999$ The District’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30,2016, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2015 rolled forward to June 30,2016 using standard update procedures. The District’s proportionate share of the net pension liability was based on a projection of the District’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The District’s proportionate share of the net pension liability for the Plan as of the measurement dates June 30, 2015 and 2016 was as follows: Miscellaneous Proportion - June 30, 2015 0.19280% Proportion - June 30, 2016 0.20844% Change - Increase (Decrease)0.01564% YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -51 - 7.PENSION PLANS (CONTINUED): b.Pension Li abilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued): For the year ended June 30, 2017, the District recognized pension expense of $875,286 At June 30,2017 the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows In flows of Resources of Resources Pension contributions subsequent to measurement date 755,544$ -$ Differences between actual and expected experience 24,099 (5,522) Change in assumptions - (227,995) Change in employer's proportion and differences between the employer's contributions and the employer's proportionate share of contributions 1,186,641 - Net differences between projected and actual earnings on plan investments - (519,584) Total 1,966,284$ (753,101)$ $755,544 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Year Ending June 30, Amount 2018 (240,386)$ 2019 (137,047) 2020 527,716 2021 307,356 2022 - Thereafter - YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -52 - 7.PENSION PLANS (CONTINUED): b.Pension Li abilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued): Actuarial Assumptions: For the measurement period ended June 30, 2016 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2015 total pension liability determined in the June 30, 2015 actuarial accounting valuation. The June 30, 2016 total pension liability was based on the following actuarial methods and assumptions: Miscellaneous Valuation Date June 30, 2015 Measurement Date June 30, 2016 Actuarial Cost Method Entry-Age Normal Cost Method Actuarial Assumptions: Discount Rate 7.65% Inflation 2.75% Salary Increases (1) Mortality Rate Table (2) Post Retirement Benefit Increase (3) (1)Varies by entry age and service. (2) (3) The mortality table used was developed based on CalPERS-specific data.The table includes 20 years of mortality improvements using Society of Actuaries Scale BB. For more details on this table,please refer to the April 2014 experience study report (based on CalPERS demographic data from 1997 to 2011)available on the CalPERS website. Contract COLA up to 2.75%until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter. All other actuarial assumptions used in the June 30,2015 valuation were based on the results of an actuarial experience study for the period from 1997 to 2011, including updates to salary increase, mortality and retirement rates.The Experience Study report can be obtained at the CalPERS website under Forms and Publications. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -53 - 7.PENSION PLANS (CONTINUED): b.Pension Li abilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued): Change of Assumptions: There were no changes of assumptions during the measurement period June 30, 2016. Deferred inflows of resources for changes of assumptions presented in the financial statements represent the unamortized portion of the changes of assumptions related to prior measurement periods. Discount Rate: The discount rate used to measure the total pension liability was 7.65% for each Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing of the Plans, the tests revealed the assets would not run out. Therefore,the current 7.65% discount rate is appropriate and the use of the municipal bond rate calculation is not deemed necessary. The long term expected discount rate of 7.65%is applied to all plans in the Public Employees Retirement Fund (PERF).The cash flows used in the testing were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained from the CalPERS website under the GASB 68 section. The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund (PERF) cash flows. Taking into account historical returns of all the Public Employees Retirement Funds’ asset classes (which includes the agent plan and two cost-sharing plans or PERF A, B, and C funds), expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each PERF fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -54 - 7.PENSION PLANS (CONTINUED): b.Pension Li abilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued): Discount Rate (Continued): The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation.The target allocation shown was adopted by the CalPERS Board effective on July 1, 2015. New Real Return Real Return Strategic Years Years Allocation 1 - 10 (a)11+ (b) Global Equity 51.00%5.25%5.71% Global Fixed Income 20.00%0.99%2.43% Inflation Sensitive 6.00%0.45%3.36% Private Equity 10.00%6.83%6.95% Real Estate 10.00%4.50%5.13% Infrastructure and Forestland 2.00%4.50%5.09% Liquidity 1.00%-0.55%-1.05% Total 100.00% (a)An expected inflation of 2.5% used for this period (b)An expected inflation of 3.0% used for this period Asset Class YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -55 - 7.PENSION PLANS (CONTINUED): b.Pension Li abilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued): Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate: The following presents the District’s proportionate share of the net pension liability for all Plans, calculated using the discount rate for each Plan, as well as what the District’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate: Miscellaneous 1% Decrease 6.65% Net Pension Liability 11,715,252$ Current Discount Rate 7.65% Net Pension Liability 7,240,999$ 1% Increase 8.65% Net Pension Liability 3,543,252$ Pension Plans Fiduciary Net Position: Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. Subsequent Events: There were no subsequent events that would materially affect the results presented in this disclosure. c.Payable to the Pension Plans: At June 30, 2017, the District had no outstanding amount of contributions to the pension plans required for the year ended June 30, 2017. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -56 - 8.NET INVESTMENT IN CAPITA L A SSETS: The balance of net investment in capital assets consisted of the following as of June 30, 2017 and 2016: 2017 2016 Capital assets, net of accumulated depreciation $190,660,210 $189,949,769 Certificates of participation -current (1,240,000)(1,080,000) Certificates of participation -long-term (40,518,033)(37,687,354) Unspent debt proceeds 5,078,724 2,168,612 Deferred amount on refunding 292,124 425,220 Net investment in capital assets $154,273,025 $153,776,247 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 Wa ter 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, 2017, 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 $5,000,000, combined single limit at $5,000,000 per occurrence. The Authority purchases additional excess coverage layers:$55 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 $100,000, and purchases excess coverage up to $150 million limited to insurable value, subject to a $1,000 deductible, except for a $500 deductible on vehicles. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -57 - 9.RISK MANAGEMENT (CONTINUED): Boiler and machinery coverage for the replacement cost up to $150 million per occurrence limited to insurable value, subject to various deductibles depending on the type of equipment. Wo rkers’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. 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 2017, 2016,and 2015. Li abilities 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 claims payable as of June 30,2017, 2016 and 2015. 10.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 30,2017 was $78,567 plus interest receivable of $3,142. The current portion of the note receivable and interest receivable as of June 30, 2017 is $78,567 and $3,142,respectively.The remaining outstanding balance at June 30,2016 was $154,107 plus interest receivable of $9,306. The current portion of the note receivable and interest receivable as of June 30, 2016 was $75,540 and $6,164, respectively.As of June 30, 2017 and 2016,the District reservoir improvements have been completed. The District has completed its obligation in its entirety and has earned the rights to the entire amount. Therefore, the outstanding balance is recorded in the District’s books as a note receivable. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -58 - 11.COMMITMENTS AND CONTINGENCIES: Construction Contracts: The District has a variety of agreements with private parties relating to the installation, improvement or modification of water facilities and distribution systems within its service area. The financing of such construction contracts is being provided primarily from the District’s replacement reserves and advances for construction. The District has committed to approximately $5,421,671 and $1,293,021 of open construction contracts as of June 30,2017 and. Construction contracts include: June 30, 2017 To tal Construction Balance Approved Costs to Project Name Contract to Date Complete We ll No. 22 $219,135 $42,804 $176,331 Lakeview Grade Separation 250,000 -250,000 YLWD-Fairmont/Zone 5 BPS Project 7,568,688 2,845,127 4,723,561 Richfield Road Pipeline 1,313,655 1,041,876 271,779 $9,351,478 $3,929,807 $5,421,671 June 30, 2016 To tal Construction Balance Approved Costs to Project Name Contract to Date Complete We ll No. 21 $1,057,745 $638,609 $419,136 Lakeview Grade Separation 250,000 -250,000 YLWD-Fairmont/Zone 5 BPS Project 657,588 557,440 100,148 2015 Wa terline Replacement 737,700 267,140 470,560 Richfield Road Pipeline 91,866 57,067 34,799 2016 Sewer Main CIPP Rehab Project 248,154 229,776 18,378 $3,043,053 $1,750,032 $1,293,021 Litigation: The District is a defendant in certain legal actions arising in the normal course of operations. In the opinion of management and legal counsel, any liability resulting from these actions will not result in a material adverse effect on the District’s financial statements. YORBA LINDA WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016 -59 - 12.SUBSEQUENT EVENTS: In July 2017, the Board approved a refund to customers of approximately $1,200,000, these refunds are related to the restricted net position which consists of penalty revenues assessed and collected in prior years due to the anticipated fines from the state. Since the Board did not approve this until July 2017, it is not a liability to the District until that date, which makes this an expense in the following period. In September 2017, the Board approved a rebate to customers of approximately $1,100,000, subject to a reaffirmation of the District’s “AA” rating by Fitch Ratings. In preparing these financial statements, the District has evaluated events and transactions for potential recognition or disclosure through October 11, 2017, the date the financial statements were available to be issued. -60 - This page intentionally left blank -61 - REQUIRED SUPPLEMENTARY INFORMATION Fiscal year ended June 30, 2017 June 30, 2016 June 30, 2015 Measurement date June 30, 2016 June 30, 2015 June 30, 2014 Plan's proportion of the net pension liability 0.08368% 0.07706% 0.08184% Plan's proportionate share of the net pension liability 7,240,999$ 5,289,322$ 5,092,626$ Plan's covered - employee payroll 5,899,338$ 5,564,327$ 5,054,265$ Plan's proportionate share of the net pension liability as a percentage of its covered - employee payroll 122.74% 95.06% 100.76% Plan's proportionate share of the fiduciary net position as a percentage of the Plan's total pension liability 74.06% 83.35% 83.03% Plan's proportionate share of aggregate employer contributions 967,937$ 916,213$ 673,737$ Notes to Schedule: Benefit Changes: Changes in Assumptions: From fiscal year June 30, 2015 to June 30, 2016: From fiscal year June 30, 2016 to June 30, 2017: There were no changes in assumptions. * - Fiscal year 2015 was the 1st year of implementation, therefore only three years are shown. YORBA LINDA WATER DISTRICT SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Last Ten Fiscal Years* There were no changes in benefits. - 62 - GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense. Fiscal year ended June 30, 2017 June 30, 2016 June 30, 2015 Contractually required contribution (actuarially determined) 755,544$ 674,827$ 587,176$ Contributions in relation to the actuarially determined contributions (755,544) (674,827) (587,176) Contribution deficiency (excess) -$ -$ -$ Covered - employee payroll 6,116,587$ 5,899,338$ 5,564,327$ Contributions as a percentage of covered - employee payroll 12.35% 11.44% 10.55% Notes to Schedule: Valuation Date 6/30/2013 Methods and Assumptions Used to Determine Contribution Rates: Cost-sharing employers Entry age** Amortization method Level percentage of payroll, closed** Asset valuation method Market Value*** Inflation 2.75%** Salary increases Depending on Age, Service, and type of employment** Investment rate of return 7.50%, net of pension plan investment expense, including inflation** Retirement age Mortality * - Fiscal year 2015 was the 1st year of implementation, therefore only three years are shown. ** - The valuation for June 30, 2012 and 2013 (applicable to fiscal years ended June 30, 2015 and 2016, respectively) included the same actuarial assumptions. *** - The valuation for June 30, 2012 (applicable to fiscal year ended June 30, 2015) valued assets using a 15 Year Smoothed Market method. The market value asset valuation method was utilized for the June 30, 2013 and 2014 valuations (applicable to fiscal years ended June 30, 2016 and 2017, respectively). YORBA LINDA WATER DISTRICT SCHEDULE OF CONTRIBUTIONS Last Ten Fiscal Years* - 63 - Morality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.** 50 for all plans with the exception of 52 for Miscellaneous PEPRA 2% @ 62** Retiree Health Plan Unfunded Actuarial Actuarial Actuarial UAAL as a Accrued Value Accrued Annual Percentage Actuarial Liability of Assets Liability Funded Covered of Covered Valuation (AAL) (AVA) (UAAL) Ratio Payroll Payroll Date (a) (b) (a) - (b) (b)/(a) (c) [(a)-(b)]/(c) 03/01/2011 1,594,667$ -$ 1,594,667$ 0.00% 5,044,860$ 31.61% 06/30/2011 1,597,488$ 164,291$ 1,433,197$ 10.28% 4,773,686$ 30.02% 07/01/2013 1,896,791$ 537,913$ 1,358,878$ 28.36% 5,200,000$ 26.13% 07/01/2015 2,136,664$ 742,379$ 1,394,285$ 34.74% 5,899,338$ 23.63% - 64 - For the years ended June 30, 2017 and 2016 YORBA LINDA WATER DISTRICT OTHER POST-EMPLOYMENT BENEFITS PLAN SCHEDULE OF FUNDING PROGRESS -65 - SUPPLEMENTARY INFORMATION Water Sewer Totals CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents 23,156,744$ 4,834,824$ 27,991,568$ Investments 6,717,737 203,218 6,920,955 Accounts receivable - water and sewer services 4,088,023 222,211 4,310,234 Accounts receivable - property taxes 18,514 1,067 19,581 Note receivable 78,567 - 78,567 Accrued interest receivable 41,221 6,620 47,841 Prepaid expenses and deposits 289,987 - 289,987 Inventory 265,833 - 265,833 TOTAL UNRESTRICTED ASSETS 34,656,626 5,267,940 39,924,566 RESTRICTED ASSETS: Cash and cash equivalents 5,189,724 - 5,189,724 TOTAL RESTRICTED ASSETS 5,189,724 - 5,189,724 TOTAL CURRENT ASSETS 39,846,350 5,267,940 45,114,290 NONCURRENT ASSETS: Capital assets: Not depreciable 5,694,086 154,543 5,848,629 Depreciable, net of accumulated depreciation 146,967,111 37,844,470 184,811,581 Other post-employment benefit (OPEB) asset 382,549 28,794 411,343 TOTAL NONCURRENT ASSETS 153,043,746 38,027,807 191,071,553 TOTAL ASSETS 192,890,096 43,295,747 236,185,843 DEFERRED OUTFLOWS OF RESOURCES: Deferred amounts from pension plans 1,740,613 225,671 1,966,284 Deferred loss on refunding 400,389 - 400,389 TOTAL DEFERRED OUTFLOWS OF RESOURCES 2,141,002 225,671 2,366,673 (Continued) ASSETS AND DEFERRED OUTFLOWS - 66 - YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET POSITION June 30, 2017 OF RESOURCES Water Sewer Totals CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable 4,493,454$ 114,622$ 4,608,076$ Accrued expenses 144,164 - 144,164 Compensated absences payable - current portion 404,913 - 404,913 Customer and construction deposits 566,525 84,323 650,848 Unearned revenue 300,263 - 300,263 Accrued interest payable 286,669 - 286,669 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS 6,195,988 198,945 6,394,933 PAYABLE FROM RESTRICTED ASSETS: Certificates of Participation - current portion 1,240,000 - 1,240,000 TOTAL PAYABLE FROM RESTRICTED ASSETS 1,240,000 - 1,240,000 TOTAL CURRENT LIABILITIES 7,435,988 198,945 7,634,933 LONG-TERM LIABILITIES (LESS CURRENT PORTION): Unearned annexation revenue 14,103,022 - 14,103,022 Compensated absences 1,214,740 - 1,214,740 Certificates of Participation 40,518,033 - 40,518,033 Net pension liability 6,409,947 831,052 7,240,999 TOTAL LONG-TERM LIABILITIES (LESS CURRENT PORTION) 62,245,742 831,052 63,076,794 TOTAL LIABILITIES 69,681,730 1,029,997 70,711,727 DEFERRED INFLOWS OF RESOURCES: Deferred amounts from pension plans 666,666 86,435 753,101 Deferred gain on refunding 108,265 - 108,265 TOTAL DEFERRED INFLOWS OF RESOURCES 774,931 86,435 861,366 NET POSITION: Net investment in capital assets 116,274,012 37,999,013 154,273,025 Restricted for water conservation 1,222,452 - 1,222,452 Unrestricted 7,077,973 4,405,973 11,483,946 TOTAL NET POSITION 124,574,437$ 42,404,986$ 166,979,423$ June 30, 2017 - 67 - LIABILITIES AND DEFERRED YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET POSITION (CONTINUED) INFLOWS OF RESOURCES Water Sewer Totals OPERATING REVENUES: Water sales 29,326,565$ -$ 29,326,565$ Sewer revenues - 2,099,947 2,099,947 Other operating revenues 890,594 143,014 1,033,608 TOTAL OPERATING REVENUES 30,217,159 2,242,961 32,460,120 OPERATING EXPENSES: Variable water costs 12,710,857 - 12,710,857 Personnel services 7,926,351 987,288 8,913,639 Supplies and services 4,078,260 425,794 4,504,054 Depreciation 5,809,682 1,337,687 7,147,369 TOTAL OPERATING EXPENSES 30,525,150 2,750,769 33,275,919 OPERATING LOSS (307,991) (507,808) (815,799) NONOPERATING REVENUES (EXPENSES): Property taxes 1,687,384 - 1,687,384 Investment income 335,786 41,419 377,205 Interest expense (1,552,896) - (1,552,896) Other nonoperating revenues 493,780 151,782 645,562 Other nonoperating expenses (396,208) (7,389) (403,597) TOTAL NONOPERATING REVENUES (EXPENSES) 567,846 185,812 753,658 NET INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS 259,855 (321,996) (62,141) CAPITAL CONTRIBUTIONS 1,556,801 1,108,661 2,665,462 CHANGES IN NET POSITION 1,816,656 786,665 2,603,321 NET POSITION - BEGINNING OF YEAR 122,757,781 41,618,321 164,376,102 NET POSITION - END OF YEAR 124,574,437$ 42,404,986$ 166,979,423$ - 68 - YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION For the year ended June 30, 2017 Water Sewer Totals CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 30,139,476$ 2,218,115$ 32,357,591$ Cash payments to employees for salaries and wages (7,745,279) (982,998) (8,728,277) Cash payments to suppliers of goods and services (16,169,704) (454,654) (16,624,358) Other revenues 177,538 170,523 348,061 Other expenses (69,928) (7,389) (77,317) NET CASH PROVIDED BY OPERATING ACTIVITIES 6,332,103 943,597 7,275,700 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Proceeds from property taxes and assessments 1,681,497 - 1,681,497 NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 1,681,497 - 1,681,497 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from annexation fees and capital contributions 68,762 25,984 94,746 Acquisition and construction of capital assets (5,178,626) (49,763) (5,228,389) Proceeds from sales of capital assets 21,646 - 21,646 Proceeds from long-term debt issuance 33,795,529 - 33,795,529 Payment to refunding escrow agent (29,511,305) - (29,511,305) Bond issuance costs (326,280) - (326,280) Principal paid on long-term liabilities (1,080,000) - (1,080,000) Interest paid on long-term liabilities (1,768,613) - (1,768,613) Payment on line of credit (6,883,720) - (6,883,720) NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (10,862,607) (23,779) (10,886,386) CASH FLOWS FROM INVESTING ACTIVITIES: Sale of investments 18,902,845 - 18,902,845 Purchases of investments (16,614,278) (19,800) (16,634,078) Interest and investment earnings 337,131 38,657 375,788 NET CASH PROVIDED BY INVESTING ACTIVITIES 2,625,698 18,857 2,644,555 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (223,309) 938,675 715,366 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 28,569,777 3,896,149 32,465,926 CASH AND CASH EQUIVALENTS - END OF YEAR 28,346,468$ 4,834,824$ 33,181,292$ (Continued) YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS For the year ended June 30, 2017 - 69 - Water Sewer Totals RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating loss (307,991)$ (507,808)$ (815,799)$ Adjustments to reconcile loss to net cash provided by operating activities: Depreciation 5,809,682 1,337,687 7,147,369 Other revenues 177,538 170,523 348,061 Other expenses (69,928) (7,389) (77,317) Changes in operating assets, deferred outflows of resources, operating liabilities and deferred inflows of resources: (Increase) decrease in assets and deferred outflows: of resources: Accounts receivable (69,980) (23,507) (93,487) Inventory (30,934) - (30,934) Prepaid expenses and deposits 2,963 - 2,963 Other post-employment benefits (OPEB) asset (125,600) (9,454) (135,054) Deferred outflows of resources from pension plans (1,109,821) (143,889) (1,253,710) Increase (decrease) in liabilities and deferred inflows of resources: Accounts payable and accrued expenses 555,888 (75,287) 480,601 Accrued salaries and wages 23,365 - 23,365 Accrued compensated absences 177,309 - 177,309 Customer and construction deposits 83,793 45,088 128,881 Net pension liability 1,727,682 223,995 1,951,677 Deferred inflows of resources from pension plans (511,863) (66,362) (578,225) Total adjustments 6,640,094 1,451,405 8,091,499 NET CASH PROVIDED BY OPERATING ACTIVITIES 6,332,103$ 943,597$ 7,275,700$ CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION: Unrestricted 23,156,744$ 4,834,824$ 27,991,568$ Restricted 5,189,724 - 5,189,724 TOTAL CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION 28,346,468$ 4,834,824$ 33,181,292$ NONCASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES: Amortization related to long-term debt 104,432$ -$ 104,432$ Capital contributions 1,539,073$ 1,108,661$ 2,647,734$ (CONTINUED) For the year ended June 30, 2017 - 70 - YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS Water Sewer Totals OPERATING EXPENSES: Variable Water Costs: Imported water 5,032,775$ -$ 5,032,775$ OCWD replenishment assessment 5,350,574 - 5,350,574 MWD connection charge 1,006,565 - 1,006,565 Fuel and power/pumping 1,320,943 - 1,320,943 Total Variable Water Costs 12,710,857 - 12,710,857 Personnel Services: Unit salaries 5,586,510 713,016 6,299,526 Fringe benefits 2,289,773 271,181 2,560,954 Director's fees 50,068 3,091 53,159 Total Personnel Services 7,926,351 987,288 8,913,639 Supplies and Services: Board election 120,873 9,098 129,971 Communications 156,860 9,339 166,199 Contractual services 410,650 29,672 440,322 Data processing 252,819 18,940 271,759 District activities 10,179 766 10,945 Dues and memberships 85,801 6,627 92,428 Fees and permits 250,021 15,010 265,031 Insurance 238,965 17,707 256,672 Maintenance 387,583 152,343 539,926 Materials 854,396 26,062 880,458 Noncapital equipment 150,346 23,357 173,703 Office expense 36,453 2,718 39,171 Professional services 587,855 26,433 614,288 Training 38,962 5,196 44,158 Travel and conferences 46,005 2,847 48,852 Uncollectible accounts 7,703 1,339 9,042 Utilities 148,529 11,474 160,003 Vehicle expense 294,260 66,866 361,126 Total Supplies and Services 4,078,260 425,794 4,504,054 Depreciation 5,809,682 1,337,687 7,147,369 TOTAL OPERATING EXPENSES 30,525,150$ 2,750,769$ 33,275,919$ - 71 - 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, 2017 Water Sewer Totals Land, Mineral and Water Rights: Land 78,558$ -$ 78,558$ Water rights 86,300 - 86,300 Mineral rights 63,650 - 63,650 Land rights and easements 385 58,526 58,911 Total Land, Mineral and Water Rights 228,893 58,526 287,419 Source of Supply: Wells 5,784,629 - 5,784,629 MWD connection 564,368 - 564,368 Total Source of Supply 6,348,997 - 6,348,997 Pumping Plant: Structures and improvements 13,532,628 - 13,532,628 Equipment 12,368,539 431,576 12,800,115 Total Pumping Plant 25,901,167 431,576 26,332,743 Water Treatment Plant: Structures and improvements 1,302,811 - 1,302,811 Equipment 1,827,761 - 1,827,761 Total Water Treatment Plant 3,130,572 - 3,130,572 Transmission and Distribution Plant: Mains 80,637,076 48,517,727 129,154,803 Reservoirs and tanks 61,565,606 - 61,565,606 Service and meter installation 6,481,027 3,047,684 9,528,711 Fire hydrants 7,305,363 - 7,305,363 Meters 9,664,331 - 9,664,331 Fire mains 717,746 - 717,746 Structures and improvements 2,875,096 - 2,875,096 Control system 3,342,314 33,485 3,375,799 Total Transmission and Distribution Plant 172,588,559 51,598,896 224,187,455 General Plant: Structures and improvements 13,381,591 - 13,381,591 Transportation equipment 2,160,191 1,401,250 3,561,441 Power operated equipment 601,673 - 601,673 Communication equipment 511,269 - 511,269 Computer equipment 2,146,325 238,071 2,384,396 Office furniture 1,098,711 - 1,098,711 Tools, shops and garage equipment 96,292 - 96,292 Store equipment 60,241 - 60,241 Total General Plant 20,056,293 1,639,321 21,695,614 Construction in Progress 5,465,193 96,017 5,561,210 Accumulated depreciation (81,058,477) (15,825,323) (96,883,800) Total Capital Assets 152,661,197$ 37,999,013$ 190,660,210$ YORBA LINDA WATER DISTRICT SCHEDULE OF CAPITAL ASSETS For the year ended June 30, 2017 - 72 - Water Sewer Totals CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents 28,491,374$ 3,896,149$ 32,387,523$ Investments 7,086,020 202,224 7,288,244 Accounts receivable - water and sewer services 4,018,043 198,704 4,216,747 Accounts receivable - property taxes 12,627 1,002 13,629 Note receivable 75,540 - 75,540 Accrued interest receivable 42,566 3,858 46,424 Prepaid expenses and deposits 292,950 - 292,950 Inventory 234,899 - 234,899 TOTAL UNRESTRICTED ASSETS 40,254,019 4,301,937 44,555,956 RESTRICTED ASSETS: Cash and cash equivalents 78,403 - 78,403 Investments 2,120,732 - 2,120,732 TOTAL RESTRICTED ASSETS 2,199,135 - 2,199,135 TOTAL CURRENT ASSETS 42,453,154 4,301,937 46,755,091 NONCURRENT ASSETS: Capital assets: Not depreciable 4,605,042 400,376 5,005,418 Depreciable, net of accumulated depreciation 147,140,467 37,803,884 184,944,351 Note receivable 78,567 - 78,567 Other post-employment benefit (OPEB) asset 256,949 19,340 276,289 TOTAL NONCURRENT ASSETS 152,081,025 38,223,600 190,304,625 TOTAL ASSETS 194,534,179 42,525,537 237,059,716 DEFERRED OUTFLOWS OF RESOURCES: Deferred amounts from pension plans 630,792 81,782 712,574 Deferred loss on refunding 425,220 - 425,220 TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,056,012 81,782 1,137,794 (Continued) ASSETS AND DEFERRED OUTFLOWS - 73 - YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET POSITION June 30, 2016 OF RESOURCES Water Sewer Totals CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable 3,937,566$ 189,909$ 4,127,475$ Accrued expenses 120,799 - 120,799 Compensated absences payable - current portion 360,586 - 360,586 Customer and construction deposits 482,732 39,235 521,967 Unearned revenue 324,769 - 324,769 Accrued interest payable 414,265 - 414,265 Payable on line of credit 6,883,720 - 6,883,720 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS 12,524,437 229,144 12,753,581 PAYABLE FROM RESTRICTED ASSETS: Certificates of Participation - current portion 1,080,000 - 1,080,000 TOTAL PAYABLE FROM RESTRICTED ASSETS 1,080,000 - 1,080,000 TOTAL CURRENT LIABILITIES 13,604,437 229,144 13,833,581 LONG-TERM LIABILITIES (LESS CURRENT PORTION): Unearned annexation revenue 14,598,067 - 14,598,067 Compensated absences 1,081,758 - 1,081,758 Certificates of Participation 37,687,354 - 37,687,354 Net pension liability 4,682,265 607,057 5,289,322 TOTAL LONG-TERM LIABILITIES (LESS CURRENT PORTION) 58,049,444 607,057 58,656,501 TOTAL LIABILITIES 71,653,881 836,201 72,490,082 DEFERRED INFLOWS OF RESOURCES: Deferred amounts from pension plans 1,178,529 152,797 1,331,326 NET POSITION: Net investment in capital assets 115,571,987 38,204,260 153,776,247 Restricted for water conservation 1,572,527 - 1,572,527 Unrestricted 5,613,267 3,414,061 9,027,328 TOTAL NET POSITION 122,757,781$ 41,618,321$ 164,376,102$ June 30, 2016 - 74 - LIABILITIES AND DEFERRED YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET POSITION (CONTINUED) INFLOWS OF RESOURCES Water Sewer Totals OPERATING REVENUES: Water sales 27,820,638$ -$ 27,820,638$ Sewer revenues - 1,849,114 1,849,114 Other operating revenues 2,596,208 69,627 2,665,835 TOTAL OPERATING REVENUES 30,416,846 1,918,741 32,335,587 OPERATING EXPENSES: Variable water costs 10,470,181 - 10,470,181 Personnel services 7,244,718 852,135 8,096,853 Supplies and services 3,895,962 459,071 4,355,033 Depreciation 6,182,985 1,363,422 7,546,407 TOTAL OPERATING EXPENSES 27,793,846 2,674,628 30,468,474 OPERATING INCOME (LOSS) 2,623,000 (755,887) 1,867,113 NONOPERATING REVENUES (EXPENSES): Property taxes 1,615,454 - 1,615,454 Investment income 265,006 23,811 288,817 Interest expense (1,671,539) - (1,671,539) Other nonoperating revenues 745,541 126,879 872,420 Other nonoperating expenses (7,273) - (7,273) TOTAL NONOPERATING REVENUES (EXPENSES) 947,189 150,690 1,097,879 NET INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS 3,570,189 (605,197) 2,964,992 CAPITAL CONTRIBUTIONS 347,795 440,650 788,445 CHANGES IN NET POSITION 3,917,984 (164,547) 3,753,437 NET POSITION - BEGINNING OF YEAR 118,839,797 41,782,868 160,622,665 NET POSITION - END OF YEAR 122,757,781$ 41,618,321$ 164,376,102$ - 75 - YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION For the year ended June 30, 2016 Water Sewer Totals CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 29,509,140$ 1,886,042$ 31,395,182$ Cash payments to employees for salaries and wages (7,652,080) (908,352) (8,560,432) Cash payments to suppliers of goods and services (13,677,200) (301,078) (13,978,278) Other revenues 93,261 97,902 191,163 Other expenses (17,558) - (17,558) NET CASH PROVIDED BY OPERATING ACTIVITIES 8,255,563 774,514 9,030,077 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Proceeds from property taxes and assessments 1,617,367 - 1,617,367 NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 1,617,367 - 1,617,367 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from annexation fees and capital contributions 1,531,103 28,780 1,559,883 Acquisition and construction of capital assets (1,649,272) (729,394) (2,378,666) Proceeds from sales of capital assets 5,004 30,603 35,607 Principal paid on long-term liabilities (1,045,000) - (1,045,000) Interest paid on long-term liabilities (1,777,335) - (1,777,335) Proceeds from line of credit 889,621 - 889,621 NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (2,045,879) (670,011) (2,715,890) CASH FLOWS FROM INVESTING ACTIVITIES: Sale of investments 24,108,938 10,652 24,119,590 Purchases of investments (23,946,800) - (23,946,800) Interest and investment earnings 256,600 22,356 278,956 NET CASH PROVIDED BY INVESTING ACTIVITIES 418,738 33,008 451,746 NET INCREASE IN CASH AND CASH EQUIVALENTS 8,245,789 137,511 8,383,300 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 20,323,988 3,758,638 24,082,626 CASH AND CASH EQUIVALENTS - END OF YEAR 28,569,777$ 3,896,149$ 32,465,926$ (Continued) YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS For the year ended June 30, 2016 - 76 - Water Sewer Totals RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (loss) 2,623,000$ (755,887)$ 1,867,113$ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 6,182,985 1,363,422 7,546,407 Other revenues 93,261 97,902 191,163 Other expenses (17,558) - (17,558) Changes in operating assets, deferred outflows of resources, operating liabilities and deferred inflows of resources: (Increase) decrease in assets and deferred outflows: of resources: Accounts receivable (846,067) (27,947) (874,014) Inventory 27,263 - 27,263 Prepaid expenses and deposits (21,966) - (21,966) Other post-employment benefits (OPEB) asset (124,238) (9,351) (133,589) Deferred outflows of resources from pension plans (111,006) (14,392) (125,398) Increase (decrease) in liabilities and deferred inflows of resources: Accounts payable and accrued expenses 515,335 155,938 671,273 Accrued salaries and wages (159,398) - (159,398) Accrued compensated absences 237,749 - 237,749 Customer and construction deposits 106,672 (2,697) 103,975 Net pension liability 174,122 22,574 196,696 Deferred inflows of resources from pension plans (424,591) (55,048) (479,639) Total adjustments 5,632,563 1,530,401 7,162,964 NET CASH PROVIDED BY OPERATING ACTIVITIES 8,255,563$ 774,514$ 9,030,077$ CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION: Unrestricted 28,491,374$ 3,896,149$ 32,387,523$ Restricted 78,403 - 78,403 TOTAL CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION 28,569,777$ 3,896,149$ 32,465,926$ NONCASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES: Amortization related to long-term debt 74,121$ -$ 74,121$ Capital contributions 347,795$ 411,870$ 759,665$ (CONTINUED) For the year ended June 30, 2016 - 77 - YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS Water Sewer Totals OPERATING EXPENSES: Variable Water Costs: Imported water 3,010,536$ -$ 3,010,536$ OCWD replenishment assessment 3,824,753 - 3,824,753 Continuous use program 1,241,474 - 1,241,474 MWD connection charge 1,181,136 - 1,181,136 Fuel and power/pumping 1,212,282 - 1,212,282 Total Variable Water Costs 10,470,181 - 10,470,181 Personnel Services: Unit salaries 5,435,979 684,520 6,120,499 Fringe benefits 1,751,863 163,740 1,915,603 Director's fees 56,876 3,875 60,751 Total Personnel Services 7,244,718 852,135 8,096,853 Supplies and Services: Communications 208,295 13,533 221,828 Contractual services 494,674 35,819 530,493 Data processing 210,246 15,057 225,303 District activities 8,153 591 8,744 Dues and memberships 73,585 5,716 79,301 Fees and permits 213,650 10,491 224,141 Insurance 238,391 17,943 256,334 Maintenance 337,744 188,595 526,339 Materials 772,078 33,564 805,642 Noncapital equipment 146,580 40,840 187,420 Office expense 38,507 2,556 41,063 Professional services 631,353 22,570 653,923 Training 23,863 3,898 27,761 Travel and conferences 45,877 2,983 48,860 Uncollectible accounts 61,639 4,752 66,391 Utilities 79,116 5,309 84,425 Vehicle expense 312,211 54,854 367,065 Total Supplies and Services 3,895,962 459,071 4,355,033 Depreciation 6,182,985 1,363,422 7,546,407 TOTAL OPERATING EXPENSES 27,793,846$ 2,674,628$ 30,468,474$ - 78 - 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, 2016 Water Sewer Totals Land, Mineral and Water Rights: Land 78,558$ -$ 78,558$ Water rights 86,300 - 86,300 Mineral rights 63,650 - 63,650 Land rights and easements 385 58,526 58,911 Total Land, Mineral and Water Rights 228,893 58,526 287,419 Source of Supply: Wells 5,531,787 - 5,531,787 MWD connection 564,368 - 564,368 Total Source of Supply 6,096,155 - 6,096,155 Pumping Plant: Structures and improvements 13,532,628 - 13,532,628 Equipment 11,640,027 431,576 12,071,603 Total Pumping Plant 25,172,655 431,576 25,604,231 Water Treatment Plant: Structures and improvements 1,302,811 - 1,302,811 Equipment 1,827,761 - 1,827,761 Total Water Treatment Plant 3,130,572 - 3,130,572 Transmission and Distribution Plant: Mains 78,385,673 47,419,209 125,804,882 Reservoirs and tanks 61,565,606 - 61,565,606 Service and meter installation 6,058,428 2,767,929 8,826,357 Fire hydrants 6,893,255 - 6,893,255 Meters 9,428,245 - 9,428,245 Fire mains 717,746 - 717,746 Structures and improvements 2,875,096 - 2,875,096 Control system 2,650,191 33,485 2,683,676 Total Transmission and Distribution Plant 168,574,240 50,220,623 218,794,863 General Plant: Structures and improvements 13,373,615 - 13,373,615 Transportation equipment 1,690,158 1,401,250 3,091,408 Power operated equipment 601,673 - 601,673 Communication equipment 511,269 - 511,269 Computer equipment 2,067,290 238,071 2,305,361 Office furniture 1,098,711 - 1,098,711 Tools, shops and garage equipment 96,292 - 96,292 Other 4,650 - 4,650 Store equipment 60,241 - 60,241 Total General Plant 19,503,899 1,639,321 21,143,220 Construction in Progress 4,376,149 341,850 4,717,999 Accumulated depreciation (75,337,054) (14,487,636) (89,824,690) Total Capital Assets 151,745,509$ 38,204,260$ 189,949,769$ YORBA LINDA WATER DISTRICT SCHEDULE OF CAPITAL ASSETS For the year ended June 30, 2016 - 79 - -80 - This page intentionally left blank -81 - STAT ISTICAL SECTION -82 - This page intentionally left blank YORBA LINDA WATER DISTRICT DESCRIPTION OF STATISTICAL SECTION CONTENTS June 30, 2017 and 2016 -83 - 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.84 Revenue Capacity these schedules contain information to help the reader assess the District’s most significant local revenue source, water sales.86 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.88 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.90 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.92 Changes in Net Position: 2017 2016 2015 2014 Operating Revenues Water Sales 29,326,565$ 27,820,638$ 26,446,618$ 28,376,082$ Sewer Revenues 2,099,947 1,849,114 1,775,676 1,762,816 Other Operating Revenues 1,033,608 2,665,835 1,461,106 1,047,625 Operating Expenses Variable Water Costs 12,710,857 10,470,181 12,733,762 14,673,144 Personnel Services 8,913,639 8,096,853 7,778,763 7,529,481 Supplies and Services 4,504,054 4,355,033 3,806,900 3,849,183 Depreciation 7,147,369 7,546,407 7,432,586 7,315,084 Operating Income (Loss) (815,799) 1,867,113 (2,068,611) (2,180,369) Nonoperating Revenues (Expenses) Property Taxes 1,687,384 1,615,454 1,496,489 1,394,722 Investment Income 377,205 288,817 187,316 145,048 Interest Expense (1,552,896) (1,671,539) (1,683,039) (1,715,429) Bond Issuance Costs - - - - Other Nonoperating Revenues 645,562 872,420 744,572 1,325,685 Other Nonoperating Expenses (403,597) (7,273) (116,528) (47,948) Total Nonoperating Revenues (Expenses) 753,658 1,097,879 628,810 1,102,078 Net Income (Loss) Before Capital Contributions and Extraordinary Items (62,141) 2,964,992 (1,439,801) (1,078,291) Capital Contributions 2,665,462 788,445 705,848 2,128,579 Extraordinary Items - - - 5,000,000 Changes in Net Position 2,603,321$ 3,753,437$ (733,953)$ 6,050,288$ Net Position by Component: Net Investment in Capital Assets 154,273,025$ 153,776,247$ 157,092,210$ 161,159,541$ Restricted 1,222,452 1,603,050 - - Unrestricted 11,483,946 8,996,805 3,530,455 6,617,328 Total Net Position 166,979,423$ 164,376,102$ 160,622,665$ 167,776,869$ Source: YLWD Audited Financial Statements (Continued) - 84 - Yorba Linda Water District Changes in Net Position Last Ten Fiscal Years Fiscal Year 2013 2012 2011 2010 2009 2008 26,369,940$ 24,998,673$ 22,686,251$ 21,806,164$ 19,626,738$ 19,470,109$ 1,762,039 1,785,804 1,274,579 1,275,980 1,259,723 1,247,907 723,577 848,238 1,035,545 1,102,143 439,302 380,175 13,509,336 12,275,853 11,268,306 10,688,318 10,859,328 10,516,507 7,225,729 6,979,088 6,902,995 6,677,757 6,498,959 5,751,384 4,222,398 3,811,125 3,686,333 3,576,147 4,151,058 4,361,512 6,884,213 6,595,720 5,279,860 5,153,891 4,167,958 3,572,726 (2,986,120) (2,029,071) (2,141,119) (1,911,826) (4,351,540) (3,103,938) 1,340,916 1,273,855 1,258,769 1,269,441 1,283,521 1,263,656 137,569 277,137 274,152 244,857 689,108 1,508,193 (1,781,416) (1,626,190) (1,172,503) (1,170,498) (1,469,925) (824,387) (192,410) - - - - - 588,854 805,654 739,062 589,201 479,911 270,429 (35,954) (108,984) (406,575) (151,300) (177,553) (133,604) 57,559 621,472 692,905 781,701 805,062 2,084,287 (2,928,561) (1,407,599) (1,448,214) (1,130,125) (3,546,478) (1,019,651) 1,174,673 17,214,138 706,319 6,278,135 4,363,527 4,100,051 - (5,000,000) - - - - (1,753,888)$ 10,806,539$ (741,895)$ 5,148,010$ 817,049$ 3,080,400$ 161,494,158$ 161,672,565$ 146,235,362$ 146,877,122$ 141,514,024$ 139,677,663$ - 9,598,420 12,620,256 15,797,432 14,063,802 14,523,549 232,423 (6,228,771) (4,619,943) (7,696,984) (6,158,513) (4,898,647) 161,726,581$ 165,042,214$ 154,235,675$ 154,977,570$ 149,419,313$ 149,302,565$ - 85 - Fiscal Year Yorba Linda Water District Number of Connections Fiscal Year Single Family Residential Multi-Family Residential Commercial/ Industrial Irrigation Direct Rate (Billing Unit) 2008 21,580 228 840 857 1.57 2009 21,672 228 831 855 1.79 2010 21,846 228 837 877 2.52 2011 21,701 231 833 879 2.52 2012 22,064 240 829 846 2.52 2013 22,480 158 908 933 2.52 2014 22,586 230 892 876 2.64 2015 22,649 230 898 876 2.70 2016 22,845 229 842 884 2.70 2017 22,991 232 845 902 2.70 Source: YLWD Billing System Last Ten Fiscal Years - 86 - 19,000 20,000 21,000 22,000 23,000 24,000 25,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Irrigation Commercial/ Industrial Multi‐Family Residential FY 2017 Customer Name Business Type Annual Revenues % of Total Revenues 1 City of Yorba Linda Government 2,169,121$ 6.68% 2 Placentia-Yorba Linda USD Government 353,955 1.09% 3 The Hills at Yorba Linda Homeowners' Assoc. 158,373 0.49% 4 Yorba Linda Villages Homeowners' Assoc. 126,346 0.39% 5 RRE Yorba Linda Homeowners' Assoc. 117,081 0.36% 6 Aseptic Technology Manufacturer 114,540 0.35% 7 Fairmont Hill Community Association Homeowners' Assoc. 91,788 0.28% 8 Woodgate Condominimums Homeowners' Assoc. 80,358 0.25% 9 Lake Park Mobile Home Community Homeowners' Assoc. 70,313 0.22% 10 Cartel Electronics Manufacturer 58,386 0.18% 3,340,261$ 10.29% FY 2011* Customer Name Business Type Annual Revenues % of Total Revenues 1 City of Yorba Linda Government 1,614,372$ 6.46% 2 Placentia-Yorba Linda USD Government 289,092 1.16% 3 Yorba Linda Villages Homeowners' Assoc. 106,004 0.42% 4 Rancho Dominquez Assoc. Homeowners' Assoc. 99,387 0.40% 5 Archstone Apts. Apartment Complex 91,111 0.36% 7 Cal Water Manufacturer 88,672 0.35% 6 Tac West Inc Manufacturer 81,068 0.32% 8 Placentia Linda Hospital Hospital 72,838 0.29% 9 Advanced Management Apartment Complex 68,314 0.27% 10 St Francis of Assissi Private School 66,345 0.27% 2,577,203$ 10.31% NOTES: * Last available data # Annual Sales may include Administrative Penalty Revenue Source: YLWD Billing Department Yorba Linda Water District Ten Largest Customers Current and Six Years Ago - 87 - Ten Largest Customers is based upon the total annual consumption in "units" (748 gallons per unit), not the total Annual Sales. Wells Certificates As a Share of Fiscal Fargo Bank of Per Per Personal Year Line of Credit Participation Debt Connection Capita Income 2008 -$ 45,502,080$ 45,502,080$ 1,932$ 637$ 1.53% 2009 - 44,911,092 44,911,092 1,900 628 1.50% 2010 - 44,065,104 44,065,104 1,848 611 1.50% 2011 - 43,189,117 43,189,117 1,827 604 1.44% 2012 - 42,278,129 42,278,129 1,764 575 1.32% 2013 1,171,131 42,009,722 43,180,853 1,802 577 1.28% 2014 4,642,656 40,970,599 45,613,255 1,858 616 1.32% 2015 5,994,099 39,886,475 45,880,574 1,861 613 1.33% 2016 6,883,720 38,767,354 45,651,074 1,841 581 1.26% 2017 - 41,758,033 41,758,033 1,684 527 1.14% Source: YLWD Audited Financial Statements Last Ten Fiscal Years Total - 88 - Yorba Linda Water District Ratio of Outstanding Debt $34,000,000 $36,000,000 $38,000,000 $40,000,000 $42,000,000 $44,000,000 $46,000,000 $48,000,000 Composition of Debt Line of Credit Participation $1,550 $1,600 $1,650 $1,700 $1,750 $1,800 $1,850 $1,900 $1,950 $2,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Debt per Connection Debt Service Fiscal Operating &Net Coverage Year Revenues Maint. Costs Revenues Principal Interest Total Ratio 2008 22,822$ 19,829$ 2,993$ 210$ 919$ 1,129$ 2.65 2009 22,514 20,604 1,910 570 2,051 2,621 0.73 2010 24,417 19,928 4,489 825 1,951 2,776 1.62 2011 25,912 20,845 5,067 855 1,949 2,804 1.81 2012 27,818 21,950 5,868 890 1,915 2,805 2.09 2013 27,055 23,790 3,265 925 1,985 2,910 1.12 2014 29,309 24,853 4,456 965 1,813 2,778 1.60 2015 27,759 23,102 4,657 1,010 1,714 2,724 1.71 2016 30,417 21,611 8,806 1,045 1,777 2,822 3.12 2017 30,217 24,715 5,502 1,080 1,768 2,848 1.93 NOTE: Excludes depreciation and debt service payments Source: YLWD Audited Financial Statements Yorba Linda Water District Debt Coverage Last Ten Fiscal Years - 89 - Personal Income Year Population * City of YL Population Personal Income per Capita 2008 71,428 68,312 2,974,469,711$ 41,643$ 2009 71,507 68,852 2,996,211,308 41,901 2010 72,083 69,816 2,943,660,024 40,837 2011 71,520 70,681 2,993,957,236 41,862 2012 73,498 72,706 3,192,753,120 43,440 2013 74,861 65,777 3,374,570,547 45,078 2014 73,990 67,069 3,461,036,956 46,777 2015 74,787 67,826 3,451,134,500 46,146 2016 78,539 67,637 3,624,303,533 46,147 2017 79,170 68,235 3,654,487,200 46,160 Personal Income Year Population Unemployment Rate Personal Income per Capita 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 2013^ 3,055,792 8.5% 160,072,905 52,383 2014 3,081,804 6.2% 168,966,068 54,827 2015 3,113,991 5.4% 177,412,900 56,973 2016 3,132,681 4.6% 169,792,810 54,200 2017 3,194,024 3.2% 172,509,495 54,010 NOTES: ^ 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 - 90 - County of Orange YLWD Yorba Linda Water District Demographics Last Ten Fiscal Years 2017* 2010+ Employer ^ Employees Employees Placentia Linda Hospital 488 0.030 % 441 0.023 % Costco Wholesale Corp. 389 0.024 % 276 0.014 % Nobel Biocare USA, Inc. 376 0.023 % 328 0.017 % Viasdys Respiratory Care, Inc. (CareFusion) 340 0.021 % 389 0.020 % Home Depot 320 0.020 % 300 0.015 % City of Yorba Linda 188 0.012 % 194 0.010 % Sprouts 168 0.010 % 110 0.006 % Emeritus Corporation 167 0.010 % 126 0.006 % Kohl's Inc. 150 0.009 % 158 0.008 % Stater Brothers 126 0.008 % 129 0.007 % Total 2,712 0.169 % 2,451 0.126 % 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 Nine Years Ago - 91 - % of Total % of Total Labor Force Labor Force Fiscal Human Year Administration Communications Engineering Finance Resources IT Operations Total 2008 4.0 13.0 16.0 3.0 6.0 32.0 74.0 2009 4.0 13.0 16.0 3.0 6.0 33.0 75.0 2010 4.5 12.0 15.0 3.0 6.0 35.5 76.0 2011 5.5 11.0 14.0 3.0 7.0 37.0 77.5 2012 5.0 11.0 14.0 3.0 7.5 37.0 77.5 2013 5.0 11.0 14.0 4.5 7.5 37.0 79.0 2014 5.5 10.0 13.0 4.0 7.0 38.0 77.5 2015 7.0 10.0 13.0 4.0 5.0 38.0 77.0 2016 #8.0 10.0 13.0 6.0 5.0 40.0 82.0 2017 ##3.0 5.0 10.0 13.0 6.0 5.0 40.0 82.0 NOTE: * Number of employees in each department are authorized and funded positions. #Includes 3FTE temporary positions in relation to the SWRCB Emergency Mandate ##Includes 3 Limited-term FT and 1 Limited-term PT positions in relation to the SWRCB Emergency Mandate Source: YLWD Human Resources Department - 92 - Yorba Linda Water District Number of Employees Last Ten Fiscal Years Full Time Equivalent Employees by Department * Department 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 # 2017 ## Operations IT Resources Finance Engineering Communications Administration Fiscal Miles of Water Yearly Water Average Number of Year Mains Installed*Production (MG) Production (MGD) Field Service Calls 2008 9.72 8,027 22.0 1,943 2009 9.72 7,590 20.8 1,674 2010 9.72 6,569 18.0 1,640 2011 2.00 6,282 17.2 1,924 2012 2.02 6,780 18.6 1,693 2013 1.10 7,099 19.4 1,561 2014 0.77 7,329 20.1 1,579 2015 1.53 6,447 17.7 1,247 2016 2.86 4,408 12.1 1,873 2017 1.15 5,827 16.0 1,782 Fiscal Number of Capacity by Booster Number of Capacity by Year Booster Pumps Pump (GPM)Reservoirs Reservoir (MG) 2008 11 43,025 11 41 2009 11 43,025 12 49 2010 11 43,025 12 49 2011 12 46,525 14 57 2012 12 46,525 14 57 2013 12 46,525 14 57 2014 12 46,525 14 57 2015 12 52,025 14 57 2016 12 52,025 14 57 2017 12 52,025 14 57 MG - Millions of Gallons MGD - Millions of Gallons per Day GPM - Gallon per Minute NOTE: * Miles of Water Main estimated Sources: YLWD Asset Management Plan 2010 YLWD Operations Department - 93 - Yorba Linda Water District Operating and Capacity Indicators Last Ten Fiscal Years -94 - 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, in accordance with the auditing standards generally accepted in the United States of America, 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, the financial statements of the Yorba Linda Water District (the District) as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements and have issued our report thereon dated October 11, 2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances 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. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control. 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. 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. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify a certain deficiency in internal control, described below, that we consider to be a significant deficiency. - 2 - Internal Control over Financial Reporting (Continued) Custodial Agreement over Certain Investments Auditors’ Comment and Recommendation During our review of investments, we reviewed an account agreement between First Empire (the broker) and the District. The account agreement discussed the responsibilities of Pershing, and included the following, “Pershing will hold in custody securities and cash received for your account, and will collect and disburse dividends and interest and process reorganization and voting instructions with respect to securities held in custody. Pershing is responsible for the custody of your cash and securities only after it comes into Pershing’s physical possession or control.” During our confirmation procedures, Pershing was believed to be the custodian of the investments, and First Empire was believed to be the broker. This segregation would allow the investment purchases to be recommended by First Empire and the custody of the investments to be with Pershing. In the fiscal year 2014-2015 confirmation, Pershing confirmed by letter that they act as the custodial agent for investments of the District. In addition, in the fiscal year 2014-2015 confirmation, Pershing responded in writing that their internal records reflect the investments are owned by the District. However, in the fiscal year 2014-2015, Pershing did not respond in writing to our inquiry regarding if there was a custodial agreement for investments between the District and Pershing. In fiscal years 2015-2016 and 2016-2017, Pershing did not respond in writing to any of our inquiries. We were unable to confirm if the District has a custodial agreement with Pershing. We recommend the District review its relationship with Pershing. Management’s Response District staff will review and discuss the current “Account Agreement” that sets forth the responsibilities of First Empire Securities and Pershing over Yorba Linda Water District’s investments. Upon completion of review, staff will make a recommendation to the Board of Directors that addresses and correct the listed significant deficiency. Staff will act in accordance to the decision of the Board of Directors for this matter. District’s Response to the Finding The District’s response to the finding identified in our audit is described above. The District’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Compliance and Other Matters As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, 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 - Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Irvine, California October 11, 2017 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 (the District) for the year ended June 30, 2017, and have issued our report thereon dated October 11, 2017. 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 planning communication letter to you dated May 17, 2017. 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 District are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended June 30, 2017. We noted no transactions entered into by the 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 value of investments is based on quoted prices in active market. When quoted prices in active markets are not available, fair values are based on evaluated prices received by the District’s asset manager from a third party service provider. b. Management’s estimate of useful lives of depreciable capital assets is based on the length of time it is believed that those assets will provide some economic benefit in the future. c. The value of the capital assets received as a contribution from developers was based on the developer’s acquisition cost. - 2 - Significant Audit Findings (Continued) Qualitative Aspects of Accounting Practices (Continued) Sensitive Estimates (Continued) d. The annual required contributions, pension expense, net pension liability and corresponding deferred outflows of resources and deferred inflows of resources for the District’s public defined benefit plans with CalPERS are based on an actuarial valuation provided by CalPERS. e. Management’s estimate of the Other Post-Employment Benefits Plan actuarial accrued liability, which impacts the annual required contributions, is based upon several key assumptions that are set by management with the assistance of an independent third party actuary. These key assumptions include anticipated investment rate of return, health care cost trends, projected salary increases, mortality and certain amortization periods. 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 Plan and Note 7 regarding the pension plans. The financial statement disclosures are neutral, consistent, and clear. 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. As a result of our audit related test work, we proposed no corrections to the financial statements. Disagreements with Management For purposes of this letter, a disagreement with management is 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. - 3 - Significant Audit Findings (Continued) Management Representations We have requested certain representations from management that are included in the management representation letter dated October 11, 2017. 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 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 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 Matters We applied certain limited procedures to the management’s discussion and analysis, the schedule of proportionate share of the net pension liability, the schedule of contributions - defined benefit pension plans, and the other post-employment benefits Plan - schedule of funding progress, which are Required Supplementary Information (RSI) that supplement the financial statements. Our procedures consisted of inquiries of management regarding 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 our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining schedules, the schedule of operating expenses by cost center and nature of expenses for water and sewer, and the schedule of capital assets, which accompany the financial statements but are not RSI. With respect to this supplementary information, 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. We were not engaged to report on the introductory and statistical sections, which accompany the financial statements but are not RSI. Such information has 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 it. - 4 - Restriction on Use 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 October 11, 2017 ITEM NO. 8.2 AGENDA REPORT Meeting Date: October 24, 2017 To:Board of Directors From:Marc Marcantonio, General Manager Presented By:Brett R. Barbre, Asst General Manager Prepared By:Delia Lugo, Finance Manager Subject:Pension Rate Stabilization Program and OPEB Funding Policy STAFF RECOMMENDATION: That the Board of Directors approve Resolution No. 17-33 adopting a Pension Rate Stabilization Program (PRSP) and Other Post-Employment Benefits (OPEB) Funding Policy for FY18. DISCUSSION: At the October 10, 2017 meeting, the Board approved Resolution No. 17-32 adopting the PARS Public Agencies Post-Employment Benefits Trust for the purpose of pre-funding the District's pension obligations and OPEB obligations. At that time, the Board directed staff to prepare a policy that would address the methodology and process for funding current and future contractual obligations to provide pension and retiree medical benefits as set forth in the District's personnel rules and regulations. The Pension Rate Stabilization Program (PRSP) and Other Post-Employment Benefits (OPEB) Funding Policy as written for the Yorba Linda Water District ("the District") establishes procedures that are formulated in compliance with the requirements of Section 115 of the Internal Revenue Code for a prudent and systemic investment program in support of the District’s overall mission. As such, the attached policy is being presented for the Boards review and approval. ATTACHMENTS: Name:Description:Type: Resolution_No._17-33.docx Resolution Backup Material 3010-008_-_PRSP_and_OPEB_Funding_Policy.docx Policy Backup Material Resolution No. 17-33 Setting Forth a PRSP and OPEB Funding Policy 1 RESOLUTION NO. 17-33 RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT SETTING FORTH A PENSION RATE STABILIZATION PROGRAM (PRSP) AND OTHER POST-EMPLOYMENT BENEFITS (OPEB) FUNDING POLICY WHEREAS, Internal Revenue Service Code Section 115 sets forth guidelines for the investment of public funds in an irrevocable trust; and WHEREAS, the Yorba Linda Water District (“District”) is eligible to participate in and desires to invest funds in the Public Agencies Post-Employment Benefit Trust (the “Program”) made available by PARS for the purpose of re- funding pension obligations and OPEB obligations; and WHEREAS, a policy setting forth guidelines for the investment of said funds is necessary for compliance with the principles of sound financial management; and WHEREAS, the Board of Directors of the Yorba Linda Water District desire to adopt the Pension Rate Stabilization Program (PRSP) and Other Post- Employment Benefits (OPEB) Funding Policy set forth herein. NOW, THEREFORE, BE IT RESOLVED by Board of Directors of the Yorba Linda Water District as follows: Section 1. That the Yorba Linda Water District Pension Rate Stabilization Program (PRSB) and Other Post-Employment Benefits (OPEB) Funding Policy as attached hereto is deemed implemented concurrent with passage and adoption of this Resolution. Resolution No. 17-33 Setting Forth a PRSP and OPEB Funding Policy 2 PASSED AND ADOPTED this 24th day of October 2017 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: J. Wayne Miller, Ph.D., President Yorba Linda Water District ATTEST: Annie Alexander, Assistant Board Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Andrew B. Gagen, Esq. Kidman Law LLP 3010-008 PRSP and OPEB Funding Policy Page 1 of 4 Policies and Procedures Policy No.: 3010-008 Adoption Method: Resolution No. 17-33 Effective Date: October 24, 2017 Prepared By: Delia Lugo, Finance Manager Applicability: District Wide POLICY: PENSION RATE STABILIZATION PROGRAM AND OTHER POST-EMPLOYMENT FUNDING POLICY 1.0 GENERAL POLICY The purpose of this Pension Rate Stabilization Program (PRSB) and Other Post- Employment Benefits (OPEB) Funding Policy (“Policy”) is to establish a methodology and a process for funding current and future costs associated with the District’s contractual obligations to provide pension and retiree medical benefits as set forth in the District’s personnel rules and regulations. 2.0 ADOPTION AND IMPLEMENTATION District Board of Directors are responsible for adopting the Pension Rate Stabilization Program (PRSP) and Other Post-Employment Benefits (OPEB) Funding Policy and for approving any significant revision. The General Manager, or his/her designee, is responsible for developing administrative procedures, as needed, to implement the Policy. In this role, the General Manager, or his/her designee, is authorized to make minor administrative changes in the Policy as long as they are intended to carry out the purpose of this Policy and will not have any significant policy impact. The Board of Directors will review and approve this policy via resolution, as needed, to ensure it meets the current and future needs of the District. 3.0 INITIAL SETUP The District shall establish an Internal Revenue Service Code Section 115 approved irrevocable trust to achieve a higher rate of return on investments than that earned on the pooled investment portfolio or the Local Agency Investment Fund. Once the District transfers funds into such a trust, they can only be utilized for payment of employee pension or OPEB costs. After the trust is set up with Public Agency Retirement Services (PARS), funds will be transferred over to the new combined Pension/OPEB Trust and shall be allocated entirely to the PRSP OPEB account. The following outlines the governance and administration of the proposed Trust: District Board of Directors have the authority to establish the Trust and define policies for the administration of the Trust funds. 3010-008 PRSP and OPEB Funding Policy Page 2 of 4 District General Manager and staff have overall responsibility for the Trust funds and will develop and manage procedures in accordance with the District Board of Director’s adopted policies. Trust Administrator, PARS, keeps plan documents current to ensure that they reflect the substantive plan and provides ongoing consulting, reporting and plan accounting records. Trustee, currently US Bank, will be the plan’s trustee and custodian and will safeguard the assets in the Trust, hold the investment securities for safekeeping and make disbursements on request. Investment Manager, currently Highmark Capital Management, will recommend investment portfolio allocations based upon the Pension/OPEB Trust Funds’ adopted investment policies and manage those assets accordingly. 4.0 TRUST ADMINISTRATOR Public Agency Retirement Services (PARS) has established a multiemployer irrevocable trust in compliance with the requirements of Section 115 of the Internal Revenue Code. While it is a multi-employer trust, each employer’s contributions benefit only its own employees. There is no sharing of either liability or investment earnings, and separate employer accounts are maintained. PARS serves as the administrator of the Trust 5.0 TRUSTEE Any contributions made to the program are held and invested by a trustee. The trustee duties include: Safeguarding assets for the benefit of retirees; Providing oversight protection of the investments; Custodian of the assets Disbursing funds to pay for pension costs and/or retiree healthcare premiums 6.0 INVESTMENT MANAGER Investment Manager assists the District with selecting investment strategy depending on what rate of return the District expects to earn and level of risk tolerance the District is willing to take. Investment Manager provides annual review of the investment portfolio and asset allocation as well as takes on fiduciary responsibility for the District’s pension and OPEB assets management. 7.0 ASSET ALLOCATION INVESTMENT STRATEGY PARS provides flexibility to the District in the selection of the investment strategy for its funds in the Trust, giving the District control on target yield and level of risk on its investments. Within the Trust, the District has the option of pre-funding either or both of the Pension and OPEB accounts. In either case, the District has the ability to select one of five Investment Options that best suits its desired or expected return on its investments in the Trust. Each Investment Option allocates the assets in varying investment combinations of equity, fixed income, and cash. With each Investment Option, as the expected rate of return increases so does the assumed risk. 3010-008 PRSP and OPEB Funding Policy Page 3 of 4 The Asset Allocation Strategies and the corresponding Investment Options currently available are: Strategy Equity Fixed Income Cash Conservative 5% - 20% 60% - 95% 0% - 20% Moderately 20% - 40% 50% - 80% 0% - 20% Moderate 40% - 60% 40% - 60% 0% - 20% Balanced 50% - 70% 30% - 50% 0% - 20% Capital Appreciation 65% - 80% 10% - 30% 0% - 20% The District General Manager, or his/her designee, in coordination with the District Treasurer and Investment Manager will select the most appropriate investment option for each account (Pension and OPEB) in the Trust. This Policy recognizes that there will be investment market place volatility and that actual economic and demographic experience will differ from assumed experience. Accordingly, this Policy is intended to provide flexibility to smooth such volatility and experience in a reasonable, systematic and financially sound manner. The selected investment strategy will be reviewed by the Board annually 8.0 ANNUAL CONTRIBUTIONS In order to establish realistic and appropriate thresholds for annual contributions, the District adopts the following requirement for contributions to be proportionate between Water and Sewer Funds in any given fiscal year: Program Fiscal Year Minimum Maximum Pension Liability FY18 – FY27 $436,713 $1,105,248 OPEB Liability FY18 $210,100 $587,339 OPEB Liability FY19 $224,700 $601,939 OPEB Liability FY20 $251,700 $628,939 OPEB Liability FY21 $254,400 $631,639 OPEB Liability FY22 $268,900 $646,139 Note: FY18 OPEB Obligation (Benefit to Retirees) is $210,100, as determined by the actuarial valuation report prepared in accordance with the Governmental Accounting Standards Board Statement No. 75. Per North Bay Pensions LLC’s Valuation of Retiree Health Benefits Report of GASB 75 Actuarial Valuation Report of July 1, 2017, if the District funds OPEB component of the Trust at the listed levels, the OPEB Trust would be fully funded by FY22. 9.0 ANNUAL WITHDRAWALS The purpose of this Pension Rate Stabilization Program (PRSB) and Other Post- Employment Benefits (OPEB) Funding Policy (“Policy”) is to establish a methodology and a process for funding current and future costs associated with the District’s contractual obligations to provide pension and retiree medical benefits as set forth in the District’s personnel rules and regulations. Minimum Maximum Pension $0 CalPERS Annual Required Contribution OPEB $0 Annual OPEB Obligation 3010-008 PRSP and OPEB Funding Policy Page 4 of 4 10.0 ACTUARIAL TERM DEFINITIONS Normal Cost The District incurs an annual pension retirement obligation for current employees and an OPEB retirement obligation for current employees hired on or prior to December 8, 2011. The ongoing cost for pension and OPEB earned by current employees during the current year is referred to as the “normal” cost. Actuarial Present Value of Projected Benefit Payments (APVPBP) The actuarial valuation calculates an actuarial present value of projected benefit payments (APVPBP) as of the valuation date. The APVPBP represents the amount the District would theoretically need to set aside at this time to fully fund all future benefits for former and existing employees. Total OPEB Liability (TOL) The TOL is the portion of the APVPVP which has been “earned” by employees based on past year of service (i.e. benefits allocated to past years of service). Plan Fiduciary Net Position (FNP) The FNP is equal to the value of asses that have been accumulated in an irrevocable trust for the benefits, plus the remaining unrecognized deferred outflows and inflows of resources relating to OPEB. Net OPEB Liability or Asset (NOL) The NOL is the excess of the Total OPEB Liability over the FNP. At the end of each fiscal year, beginning June 30, 2018, the District must show a liability equal to the NOL. ITEM NO. 8.3 AGENDA REPORT Meeting Date: October 24, 2017 To:Board of Directors From:Marc Marcantonio, General Manager Presented By:Brett R. Barbre, Asst General Manager Prepared By:Brett R. Barbre, Asst General Manager Subject:Election for Appointment of Special District Representative to Orange County Redevelopment Agency Oversight Board STAFF RECOMMENDATION: That the Board of Directors designate a primary and alternate voting member to vote in the Orange County Special District Selection Committee election and consider nominating a candidate for appointment to Orange County's Redevelopment Agency Oversight Board. DISCUSSION: Recent legislation gives the Orange County Local Agency Formation Commission (LAFCO) the responsibility to conduct elections for the special district representative to the new county-wide Orange County Redevelopment Agency Oversight Board (RDA) Board. California redevelopment law created an oversight board to monitor the remaining activities of each former redevelopment agency. In September 2015, the Governor signed SB 107, which required the consolidation of more than 400 RDA Oversight Boards into just one oversight board per county, with the exception of Los Angeles County. Each county's oversight board includes one special district representative to be appointed by that county's Independent Special District Selection Committee in accordance with that Committee's election procedures. The new law further states that should the Committee fail to appoint a special district representative to the oversight board by July 15, 2018, the Governor is empowered to make the appointments. SB 107 did not specify a term of office, merely specifying that a board member "shall serve at the pleasure of the entity that appointed such member". Additional information on the legislation that was prepared by the California Special Districts Association and the California Association of Local Agency Formation Commissions is attached for reference. Similar to other elections, LAFCO is conducting the 2018 election for the special district representative to the new Orange County RDA Oversight Board by mailed ballot. The nomination period began October 10, 2017 and ends November 10, 2017. The voting period will begin November 13, 2017 and end December 18, 2017. Ballots will be counted on and results announced on December 19, 2017. Currently, there are three candidates who have expressed interest in the position. The number of candidates may increase, but at this time, the following members of the Orange County water community who have announced their intention to seek election are the following: 1. Jim Fisler - Director of the Mesa Water District 2. Mary Aileen Matheis - Director of the Irvine Ranch Water District 3. Brian Probolsky - Director of the Moulton Niguel Water District A biography of each is attached. The Board does not need to act at this point, and it may be useful to ask all the candidates to appear before the Board at a future meeting in order to discuss their candidacy at which time the Board could vote to formally support one of the candidates. If a member of the Yorba Linda Water District Board of Directors is interested, it is recommended that the Board formally nominate that candidate and communicate their candidacy to the other 34 Special Districts in the County. Unless there is a member of the Yorba Linda Water District Board of Directors who is interested in pursuing the position, the options are as follows: 1. Nominate one of the above announced candidates for the position. The deadline for nominations to be received by the LAFCO staff is November 10, 2017; 2. Vote to empower the President or another Board Member to cast the vote on behalf of the Yorba Linda Water District for one of the candidates. Voting will occur between November 13, 2017 and December 18, 2017. ATTACHMENTS: Name:Description:Type: RDA_Oversight_Board_Nomination.pdf Backup Material Backup Material RDA_Oversight_Board_Background_Info.pdf Backup Material Backup Material Probolsky_-_MNWD.pdf Probolsky Bio Backup Material Fisler_-_Mesa_Water.pdf Fisler Bio Backup Material Matheis_-_Irvine_Ranch.pdf Matheis Bio Backup Material LOCAL AGENCY FORMATION COMMISSION 01ZAN('1T. COUNT17 ORANGE COUNTY LAFCO EST.1963 October 10, 2017 TO: Presiding Officers, Independent Special Districts of DEREK J.MCGREGOR Orange County Representative of General Public DR.ALLAN BERNSTEIN Subject: Start of Nomination Period for Redevelopment Agency Councilmember Oversight Board Appointment- County of Orange City of Tustin LISA BARTLETT As a follow-up to my September 21, 2017 letter regarding the election Supervisor process for the appointment of the special district member to the new 5m District county-wide Orange County Redevelopment Agency Oversight Board CHERYL BROTHERS (*"RDA Board,"), this memorandum is to inform you of the start of the Councilmember City of Fountain Valley nomination period for this appointment (Tuesday, October 10,2017). TODD SPITZER The election process for special district seats are governed by Supervisor 3'd District Government Code Section 56332 and the Independent Special Districts CHARLEY WILSON Selection Committee Bylaws. To participate in the process, both, the Director attached Declaration of Qualification to Vote and the Nomination Santa Margarita Water District Form (if your District is nominating a candidate) must be submitted to JOHN WITHERS LAFCO by November 10, 2017. The nomination and election by mail Director nch Water District process will be conducted pursuant to the following schedule: Irvine RaWENDY BUCKNUM DATE EVENT Councilmember Nomination Period Begins: LAFCO Executive Officer City of Mission Viejo Tuesday, emails notification letters with nomination form and October 10, Declaration of Qualification to Vote to independent JAMES FISLER 2017 special district presiding officers and general managers. Director Mesa Water District November 10, Nomination Period Ends: Deadline for submitting 2017(3 PM) nominations and Declaration of Qualification to Vote LOU PENROSE for RDA Oversight Board to LAFCO by 3:00 p.m.* Representative of General Public November 13, Voting Period Begins: Ballots emailed to all special 2017 district presiding officers/designees and general MICHELLE STEEL managers. Supervisor December 18, Voting Period Ends: Ballots due to LAFCO by 3:00 Z�d District 2017(3 PM) p.m. CAROLYN EMERY December 19, Ballots Counted: LAFCO staff tabulates ballots and Executive Officer 2017 announces results. Pursuant to Government Code§56332(f)(2),if only one candidate is nominated for a vacant seat,that candidate shall be deemed selected,with no further _proceedings. 2677 North Main Street,Suite 1050,Santa Ana,CA 92705 • (7 14)640-5100• FAX(7 14)640-5139 • http://www.oclafco.org Nomination Period for Redevelopment Agency Oversight Board Appointment October 10,2017 Page 2 of 2 With respect to potential nominations, please note the following: • To be eligible for a position, the nominee must be "elected or appointed to your district," for a fixed term. • Individuals eligible for these positions must be "members of the legislative body of an independent special district...but shall not be members of the legislative body of a city or county" (Government Code Section 56332(c). For example, a city council member serving as a board-member of a vector control district is ineligible. • Nominations must be made at a meeting of the governing board of the nominee's corresponding special district during the nominations period. • Health and Safety Code Section 341790)(3) reads in full: "One member may be appointed by the independent special district selection committee established pursuant to Section 56332 of the Government Code, for the types of special districts that are eligible to receive property tax revenues pursuant to Section 34188." • All completed nominations forms and any supplemental information must be received by LAFCO by the close of the nomination period, which is 3:00 p.m. on Friday, November 10, 2017. Nominations may be delivered by email at cemerv@oclafco.or& U.S. Mail, or by fax to (714) 640-5139. Should you have any questions regarding the election process, please contact me or our Commission Clerk, Cheryl-Carter Benjamin at (714) 640-5100. Sincerely, Carolyn Ei-nerry Exe utive Officer Attachments: Declaration of Qualification to Vote 2017 Nomination Form cc: Eric Woolery,Orange County Auditor-Controller Independent Special District General Managers DECLARATION OF QUALIFICATION TO VOTE J. Wayne Miller, Presiding Officer Yorba Linda Water District 1717 E. Miraloma Avenue Placentia, CA 92870-6785 board@ylwd.com; aalexander@ylwd.com I, ___________________________________,* hereby attest that _____________________________**has been authorized by the Board of _____________________________________to vote in the Orange County Special District Selection Committee election. The Board also designated _________________________ ***as the alternate voting member. Name and Title*: _____________________________________ Signature*: ________________________________ Date: __________________________ *Must be signed by either Board President or Board Secretary ** Must be a member of the Board ***Must be a member of the Board Completed forms must be received by LAFCO by 3 PM, Tuesday, November 10, 2017. Forms must be delivered to Orange County LAFCO by: (1) Email at: cemery@oclafco.org, or (2) Mail at: Orange County LAFCO 2677 North Main Street, Suite 1050 Santa Ana, CA 92705 Attn: Carolyn Emery, or (3) FAX at: (714) 640-5139, Attn: Carolyn Emery 2017 NOMINATION FORM Candidate for the Redevelopment Agency Oversight Board Appointment CANDIDATE INFORMATION FOR REDEVELOPMENT AGENCY OVERSIGHT BOARD MEMBER: NAME: TITLE: DISTRICT: ❑ Check box if resume or statement of qualifications is attached. SPECIAL DISTRICT SELECTION COMMITTEE MEMBER SUBMITTING NOMINATION (Must be the presiding officer or a designated alternate board member.) NAME: DATE: SIGNATURE: TITLE: DISTRICT: A resume or other supplemental information about the candidate may be included and will be distributed with the election ballots. All completed nomination forms and any supplemental information must be returned to Orange County LAFCO by: 1. Email at: cemervaoclafco.or2 or 2. Mail at: Orange County LAFCO 2677 North Main Street, Suite 1050 Santa Ana, CA 92705; or 3. Fax at: (714) 640-5139, Attn: Carolyn Emery All forms and supplemental information must be received by LAFCO by 3:00 p.m. on Tuesday, November 10,2017.Nomination forms or candidate information received after that deadline will not be considered. �"- LOCAL AGENCY FORMATION COMMISSION • GE COUNTY ORANGE COUNTY �" LAFCO September 21,2017 TO: Presiding Officers, Independent Special Districts of Orange DEREK J.MGGREGOR COIInty ReprcieneaWe oI Gmeml public RE: Redevelopment Agency Oversight Board Appointments- oaE:nuwN eERNsrelN County of Orange Councllmembei cly arumo Accent Legislation gives the Orange County Local Agency Formation Liss,BARTLETT Commission ("LAFCO") the responsibility to conduct elections for the supenl:o. s ecial district re resentative to the new coun wide Oran a Coun s^DhNa P P ty- g tS' Redevelopment Agency Oversight Board ("RDA Board"). The purpose cRERn BROTRERs of this letter is to inform you that LAFCO will conduct that 2018 election cry oiFo�.m,.abl�vauey by mailed ballot, as it does other Independent Special District Selection Committee elections. TOOO SPtneR Supervl5or - ya DKvlc[ $aCkClOnnd CRwRLEr vmLsoN Califonua redevelopment law created an oversight board to monitor the Dtrec[o� remaitling activities of each former redevelopment agency. In sans Mar'ganfv wale.Dlmm` September of 2015, the Governor signed SB 107, which required the JOHN WfTNER6 consolidation of more than 400 RDA Oversight Boards into just one w�i�`aan=n wale.ola.,« oversight boazd per county, with the exception of Los Angeles County (Health and Safety Code Section 34179.) Each county's oversight board weNov sucKNuta includes one special district representative to be appointed by that cn�n�umembe. coun s Inde endent S ecial District Selection Committee in Gfy of Mlssian Nefo �' P p accordance with that Committee's election procedures (Government ��Fis�R Code Section 56332(e)). The new law further states that should the Dnec(^. Committee fail to appoint a special district representative to the Mesa wa.e.of:m" oversight board by July 15, 2018, the Governor is empowered to make the appointments. SB 107 did not specify a term of office, merely LOV PENROSE aep,esM[anve^I specifying that a board member"shall serve at the pleasure of the entity �ene,an=�a°` that appointed such member." Mp NI o�STEE`- For your reference, I have included additional background on the 2`^Ol:ma legislation that was prepared by the California Special Districts cnso�rn EMERY Association ("CSDA") and the California Association of Local Agency EzecoWe orr e, Formation Commissions ("CALAPCO"). Apvointmenta to Oran¢ County ADA Oversight Board The Orange County Special District Selection Committee's Bylaws authorize the LAFCO Executive Officer to conduct the elections of the 2677 North Main SVeet Suite 1050.Santa Ana,GA 9D0a •(]I4)640.5100•FAX(714)640-5139 http://wwva.oclafco.otg RDA Oversight Board Appointments September 21,2017 Page 2 of 2 Committee in writing,which LAFCO has elected to do for the past several yeazs. This is to inform you that, as authorized by the new law, LAFCO will conduct the elections for the special district representative to the new Orange County RDA oversight boazd by the same means it conducts other elections,which is by mailed written ballot. The nomination and election by mail will be conducted pursuant to the following schedule: DATE EVENT � Nomination Period Begins: LAFCO Executive Officer emails notification letters with nomination form and Tuesday,October 10,2017 Dedazation of Qualification to Vote to independent special district presid1n¢�F cera and general managers. Nomination Perao Ends: Deadline for submitting November 10,2017 (3 PM) nominations and Dedazation of Qualification to Vote for RDA OversiPYtt Board to LAFCO by 3�00y.rrt.* November 13,2017 Voting Peaod Begins: Ballots emailed to all special district presiding officers/designees and general managers. December 18,2017(3 PM) Voting Period Ends: Ballots due to LAFCO by 3:00 p.m. Ballots Counted: LAFCO staff tabulates ballots and 1 December 19,2017 ��{� esj'esults. *Pssrsuant to Goverxtnaent Code g56��2 (2),i�ottly one candidate is nominated for a vacant seat, that candidate shall be deemed selected,with no further proceedings. Should you have any questions regarding the election process, please contact me or our Commission Qerlc, Cheryl-Carter Benjamin at(714)640-5100. Sincerely, C o me Ex five Officer Attachment"Countywide RDA Overnight Board Special District Appointments issued try CSDA 8r CALAFCO cc Eric Woolery,Orange County Auditor-Controller Special District General Managers - \ ATTACHMENT California Special � CO - Districts Assacietion DDDR Ois4icrs Stranger Together COUNTYWIDE RDA OVERSIGHT BOARD SPECIAL DISTRICT APPOINTMENTS CALIFORNIA SPECIAL DISTRICTS ASSOCIATION CALIFORNIA ASSOCIATION OF LOCAL AGENCY FORMATION COMMISSIONS Last Updated: September 27, 2016 Assay VAL { California Special 'CALAFCOI� Districts Association ��,� •' 'y° NHWU Districts Sti onger Together rmaaos` DISCLAIMER: This publication is provided for general information only and is not offered or intended as legal advice. Readers should seek the advice of an attorney when confronted with legal issues and attorneys should perform an independent evaluation of the issues raised in these materials. COPYRIGHT: Copyright©2016 by the California Special Districts Association(CSDA), Sacramento, California All rights reserved.This publication, or parts thereof, may not be reproduced in any form without CSDA's permission. ACKNOWLEDGEMENTS: In preparing this paper, CSDA and CALAFCO greatly benefited from individuals who were generous with their time and insightful with their views. Members of our working group held background experience as special district general managers and directors of finance, local agency formation commission executive officers, RDA oversight board representatives,and attorneys. CSDA and CALAFCO extend sincere appreciation to the individuals on our joint working group,who significantly contributed to the development of this guide.The contributions of the following people were invaluable: Gary Bell Attorney at Law Colantuono, Highsmith&Whatley, PC Jose C. Henriquez, Executive Officer EI Dorado County Local Agency Formation Commission Shane McAffee General Manager Greater Vallejo Recreation and Park District Keene Simonds Executive Officer Marin County Local Agency Formation Commission Charles Turner Director of Finance Eastern Municipal Water District 1 California Special 'CAlAFCO o Districts Association R©0E3 OistrictsStrartgerTogether °ryfio�ao o On July 1, 2018, more than 400 redevelopment agency(RDA) oversight boards will be consolidated into just one oversight board per county(and five oversight boards in Los Angeles County).When this occurs, each county's Independent Special Districts Selection Committee will be granted the authority to appoint one special district representative to that county's respective oversight board. If the Independent Special District Selection Committee in a county fails to act by July 15, 2018, the governor will make the appointment on its behalf. Therefore, it is important that the special districts in each affected county, and the Local Agency Formation Commissions (LAFCos)that administer the operations of the Independent Special Districts Selection Committees, take proactive steps to ensure a successful locally-controlled appointment process. Much is at stake in the decisions that go before oversight boards. In fiscal years 2015-16 and 2016-17 combined, the governor's 2016 May Revise estimated special districts will receive$316 million in property tax restoration due to the continued wind down of RDAs. Oversight board actions could affect the amount and speed of future property tax restorations to special districts and other local agencies. Due to the newness and uniqueness of the statute providing for countywide oversight boards,the many cross-references within the statute, and the lack of familiarity most LAFCos and special districts have with the Health and Safety Code in which the statute is included, the authorizing language for special district appointments may be challenging to some local officials. For these reasons, the California Special Districts Association (CSDA) and California Local Agency Formation Commission (CALAFCO)convened a working group to outline the process for appointing special district representatives to countywide oversight boards, and to provide guidance on potential questions related to that process. COUNTIES REQUIRING A COUNTYWIDE OVERSIGHT BOARD The following thirty-seven counties have two or more oversight boards that will be consolidated into one countywide oversight board on July 1, 2018 (except for Los Angeles County, which will be consolidated into five oversight boards): • Alameda • Monterey • Santa Barbara • Butte • Mendocino • Santa Clara • Contra Costa . Merced • Santa Cruz • Fresno • Nevada • Shasta • Humboldt • Orange • Solano • Imperial • Placer • Sonoma • Kern • Riverside • Stanislaus • Kings • Sacramento • Sutter • Lake • San Bernardino • Tulare • Los Angeles (five • San Diego • Ventura oversight boards) • San Joaquin • Yolo • Madera • San Luis Obispo • Yuba • Marin • San Mateo Of the counties noted above, the following eleven counties do not currently have an Independent Special Districts Selection Committee in place. Therefore, the special districts and LAFCo in each of these counties will need to form an Independent Special Districts Selection Committee in order to facilitate the appointment of a special district representative to the new countywide RDA oversight board: • Fresno • Merced • Tulare • Imperial • San Joaquin • Yolo • Kings • Solano • Yuba • Madera • Stanislaus 2 \lo,nla As5``a'o �f California Special "CALAFCOIG � .� Districts Association 1H©1713 Districts Stronger Together „o;c` SPECIAL DISTRICT REPRESENTATIVE APPOINTMENT PROCESS The statutory authorization for appointing the special district representative to a countywide oversight board is found in Health and Safety Code 34179, which can be found in the appendix. This publication overviews the application of this authority in conjunction with the relevant code sections cross-referenced to the Cortese-Knox-Hertzberg Act or"LAFCo Law" in the Government Code. On July 1, 2018, counties with 2—39 individual RDA oversight boards will be consolidated into one countywide oversight board. Upon consolidation, the county's Independent Special District Selection Committee is responsible for appointing the special district representative to the new countywide oversight board. The Independent Special District Selection Committee consists of the presiding officer of the legislative body of each independent special district or district-appointed alternate(Government Code Section 56332(a)). Procedures The LAFCo Executive Officer/Designee is responsible for calling and giving written notice of meetings of the Independent Special District Selection Committee, at which a representative may be appointed to the countywide RDA oversight board. (Government Code Section 56332(b)). • A majority of the Independent Special District Selection Committee may determine to conduct the committee's business by mail, including holding all elections by mailed ballot (Government Code Section 56332(e)). If the independent special district selection committee has determined to conduct the committee's business by mail or if the executive officer/designee determines that a meeting of the special district selection committee, for the purpose of selecting the special district members or filling vacancies, is not feasible, the executive officer/designee shall conduct the business of the committee by mail. Elections by mail shall be conducted as follows (Government Code Section 56332(f)): 1) The executive officer/designee shall prepare and deliver a call for nominations to each eligible district. The presiding officer, or his or her alternate as designated by the governing body, may respond in writing by the date specified in the call for nominations, which date shall be at least 30 days from the date on which the executive officer mailed the call for nominations to the eligible district. 2) At the end of the nominating period, if only one candidate is nominated for a vacant seat, that candidate shall be deemed appointed. If two or more candidates are nominated, the executive officer/designee shall prepare and deliver one ballot and voting instructions to each eligible district. The ballot shall include the names of all nominees and the office for which each was nominated. Each presiding officer, or his or her alternate as designated by the governing body, shall return the ballot to the executive officer/designee by the date specified in the voting instructions, which date shall be at least 30 days from the date on which the executive officer/designee mailed the ballot to the eligible district. 3) The call for nominations, ballot, and voting instructions shall be delivered by certified mail to each eligible district.As an alternative to the delivery by certified mail, the executive officer/designee,with prior concurrence of the presiding officer or his or her alternate as designated by the governing body, may transmit materials by electronic mail. 4) If the executive officer/designee has transmitted the call for nominations or ballot by electronic mail,the presiding officer, or his or her alternate as designated by the governing body, may respond to the executive officer/designee by electronic mail. 3 California Special /CALAFCO', 1.=.x Districts Association .. S 13©ElE3 Districts StrongerTogetIer 5) Each returned nomination and ballot shall be signed by the presiding officer or his or her alternate as designated by the governing body of the eligible district. 6) For an election to be valid, at least a quorum of the special districts must submit valid ballots.The candidate receiving the most votes shall be elected, unless another procedure has been adopted by the selection committee.Any nomination and ballot received by the executive officer/designee after the date specified is invalid, provided, however, that if a quorum of ballots is not received by that date, the executive officer/designee shall extend the date to submit ballots by 60 days and notify all districts of the extension. The executive officer/designee shall announce the results of the election within seven days of the date specified. o A quorum is the majority of members representing eligible districts(Government Code Section 56332(a)) 7) All election materials shall be retained by the executive officer/designee for a period of at least six months after the announcement of the election results Eligibility Requirements Members appointed by the independent special district selection committee shall be elected or appointed members of the legislative body of an independent special district residing within the county but shall not be members of the legislative body of a city or county(Government Code Section 56332(c)). • Special district appointees to current individual oversight boards (pre consolidation into countywide oversight boards) are not restricted to members of the legislative body of the district. There is no clear indication that the members appointed by the selection committee must be located in a former RDA. However, it could be implied by Health and Safety Code Section 341790)(3). • Current individual oversight boards (prior to consolidation into countywide oversight boards) limit eligibility to special districts that have territory in the territorial jurisdiction of the former RDA and are eligible to receive property tax residual from the RPTTF: "One member appointed by the largest special district, by property tax share, with territory in the territorial jurisdiction of the former redevelopment agency,which is of the type of special district that is eligible to receive property tax revenues pursuant to Section 34188" (Health and Safety Code Section 34179(a)(3)(A)). Based on Health and Safety Code Section 341790?(3), the committee should appoint a representative from a special district that receives property tax residual from the Redevelopment Property Tax Trust Fund (RPTTF). • Health and Safety Code Section 341790)(3) reads in full: "One member may be appointed by the independent special district selection committee established pursuant to Section 56332 of the Government Code, for the types of special districts that are eligible to receive property tax revenues pursuant to Section 34188." Deadlines and Vacancies If no one is appointed by July 15, 2018, the governor may appoint an individual on behalf of the Independent Special District Selection Committee.The governor may also appoint individuals for any member position that remains vacant for more than 60 days (Health and Safety Code Section 34179(k)). 4 n,a nisa Gam'7- •' i California Special s(�CALAFCO) Districts Association , g (SHM13 Districts Stronger Together Notification Requirements Health and Safety Code Section 341790)does not include notification requirements of the selected special district appointee. However, the current individual oversight boards (prior to consolidation into countywide oversight boards)were required to elect one of their members as the chairperson and report the name of the chairperson and other members to the Department of Finance(Health and Safety Code Section 34179(a)).Additionally, the LAFCo Executive Officer/Designee must announce the results of an Independent Special District Selection Committee election within seven days (Government Code Section 56332(f)(6)). Counties with Only One Individual Oversight Board In each county where only one individual RDA oversight board exists, as of July 1, 2018, there will be no consolidation into a countywide oversight board and no change to the composition of the existing oversight board (Health and Safety Code Section 34179(1)). Counties with 40 or More Individual Oversight Boards In each county where 40 or more individual oversight boards exist(Los Angeles County), as of July 1, 2018, there will be a consolidation into five oversight boards. The special district membership of each oversight board shall be selected as outlined in Health and Safety Code Section 341790)(3)via the Independent Special District Selection Committee process(Health and Safety Code Section 34179(q)(1)). The consolidated oversight boards in this county shall be numbered one through five, and their respective jurisdictions shall encompass the territory located within the respective borders of the first through fifth county board of supervisors districts, as those borders existed on July 1, 2018. Each oversight board shall have jurisdiction over each successor agency located within its borders (Health and Safety Code Section 34179(q)(2)). • If a successor agency has territory located within more than one county board of supervisors' district, the county board of supervisors shall, no later than July 15, 2018, determine which oversight board shall have jurisdiction over that successor agency. The county board of supervisors or their designee shall report this information to the successor agency and the department by the aforementioned date (Health and Safety Code Section 34179(q)(3)). Health and Safety Code Section 34179(q)does not specify if the city and special district appointees must be from an agency located in the respective supervisorial seat. POTENTIAL QUESTIONS What if my county does not currently have an Independent Special District Selection Committee? In the case where more than one successor agency exists within the county, an Independent Special District Selection Committee shall be created pursuant to Government Code Section 56332. Each independent special district shall appoint a member representative to the committee and notify the LAFCo of the appointed member. The LAFCo,shall then call and conduct a meeting of the committee, pursuant to Section 56332, for purposes of appointing a representative to the countywide RDA oversight board. 5 e California Special Districts Association Does the Independent Special District Selection Committee also select an alternate, as it does with LAFCo commissioners?How should a vacancy be addressed? The strictest interpretation of the statute only authorizes the appointment of one person, but a reasonable argument can be made for the appointment of an alternate. The Legislature expressly incorporated Government Code Section 56332 without elaboration, and that section allows for alternates. Health and Safety Code Section 34179 does not mention alternates for the countywide oversight boards, but does allow each appointing authority to appoint an alternate for the current individual oversight boards (prior to the consolidation into a countywide oversight board) (Health and Safety Code Section 34179(a)(11)). The selection process outlined in Government Code Section 56332(c) includes the selection of an alternate for the commission. To resolve any ambiguity, the Independent Special District Selection Committee may choose to adopt local policies, pursuant to its authority in Government Code section 56332, expressly authorizing the appointment of an alternate. If the LAFCo Executive Officer/Designee anticipates a vacancy will occur—or if an actual vacancy occurs —an election may be held for a representative to the countywide oversight board (Government Code section 56332(b)). What is the term of an appointment to the countywide RDA oversight board? Nothing in Health and Safety Code Section 34179 describes terms for members of the oversight board. Rather, Section 34179(g) provides that"Each member of an oversight board shall serve at the pleasure of the entity that appointed such member." Can an appointee be replaced mid-term? Yes- nothing in Health and Safety Code Section 34179 describes terms for members of the oversight board. Rather, Section 34179(g) provides that"Each member of an oversight board shall serve at the pleasure of the entity that appointed such member." Can the Independent Special District Selection Committee replace a special district representative appointed by the governor due to a vacancy? While not clearly outlined within the relevant statutes,the intent of having locally appointed representatives on the oversight board is undermined if the law is interpreted such that seats could become, essentially, permanent representatives of the governor. That being said, Independent Special District Selection Committees are strongly encouraged to appoint a representative no later than July 15, 2018, and within 60 days of any vacancy thereafter, in order to avoid this potential question. What should a LAFCo do where the law is not explicit as to the process for appointments to the countywide RDA oversight board? LAFCos should adopt local commission policies. Government Code Section 56300 allows LAFCos to adopt local policies either to clarify requirements or specify how a LAFCo will implement State law taking into account the local conditions. Case law has also indicated that these policies are allowed so long as they are not in conflict with State law. 6 �o Assocv California Special oi'CALAFC010 Districts Association . IH©t713 Districts Stranger Together m'ryfo�x c`� For example, Government Code 56325(d) indicates that, notwithstanding any other provision of the Cortese-Knox-Hertzberg Act, each LAFCo can appoint one member and one alternate member who represents the public at large. The same section goes on to specify that the appointment of the public and alternate members must be subject to an affirmative vote of at least one of the members from the other appointed authorities; and it also specifies the noticing requirements to announce the vacancy in this position. Section 56325(d)does not contain any direction for the process of appointing public members, nor does it have an indication of the vetting process for candidates eligible to be appointed to this position. With this unclear in the law, some LAFCos have adopted policies to clarify and indicate the basic appointment process. LAFCos may establish local polices for appointing special district representatives to the countywide RDA oversight board, so long as they are not in conflict with State law. DEFINITIONS Taxing entities Cities, counties, a city and county, special districts, and school entities, as defined in subdivision (f) of Section 95 of the Revenue and Taxation Code, that receive passthrough payments and distributions of property taxes pursuant to the provisions of this part(Health and Safety Code Section 34171(k)). Executive officer The executive officer or designee as authorized by the Local Agency Formation Commission (Government Code Section 56332(g)). 7 `on1a Psso\e;,\ � I California Special �,tgFCp1 w - Districts Association Iq NE]WO Distracts Stronger Together ry o atlo�% APPENDIX HEALTH AND SAFETY CODE DIVISION 24.COMMUNITY DEVELOPMENT AND HOUSING [33000 -37964] (Heading of Division 24 amended by Stats. 1975, Ch. 1137.) PART 1.85. DISSOLUTION OF REDEVELOPMENT AGENCIES AND DESIGNATION OF SUCCESSOR AGENCIES [34170 -34191.6] (Part 1.85 added by Stats. 2011, 1st Ex. Sess., Ch. 5, Sec. 7.) CHAPTER 4.Oversight Boards [34179 -34181] (Chapter4 added by Stats. 2011, 1st Ex. Sess., Ch. 5, Sec. 7. ) 34179. (a) Each successor agency shall have an oversight board composed of seven members. The members shall elect one of their members as the chairperson and shall report the name of the chairperson and other members to the Department of Finance on or before May 1, 2012. Members shall be selected as follows: (1) One member appointed by the county board of supervisors. (2) One member appointed by the mayor for the city that formed the redevelopment agency. (3) (A) One member appointed by the largest special district, by property tax share,with territory in the territorial jurisdiction of the former redevelopment agency, which is of the type of special district that is eligible to receive property tax revenues pursuant to Section 34188. (B) On or after the effective date of this subparagraph, the county auditor-controller may determine which is the largest special district for purposes of this section. (4) One member appointed by the county superintendent of education to represent schools if the superintendent is elected. If the county superintendent of education is appointed,then the appointment made pursuant to this paragraph shall be made by the county board of education. (5) One member appointed by the Chancellor of the California Community Colleges to represent community college districts in the county. (6) One member of the public appointed by the county board of supervisors. (7)One member representing the employees of the former redevelopment agency appointed by the mayor or chair of the board of supervisors, as the case may be, from the recognized employee organization representing the largest number of former redevelopment agency employees employed by the successor agency at that time. In the case where city or county employees performed administrative duties of the former redevelopment agency, the appointment shall be made from the recognized employee organization representing those employees. If a recognized employee organization does not exist for either the employees of the former redevelopment agency or the city or county employees performing administrative duties of the former redevelopment agency, the appointment shall be made from among the employees of the successor agency. In voting to approve a contract as an enforceable obligation, a member appointed pursuant to this paragraph shall not be deemed to be interested in the contract by virtue of being an employee of the successor agency or community for purposes of Section 1090 of the Government Code. (8) If the county or a joint powers agency formed the redevelopment agency, then the largest city by acreage in the territorial jurisdiction of the former redevelopment agency may select one member. If there are no cities with territory in a project area of the redevelopment agency,the county superintendent of education may appoint an additional member to represent the public. (9) If there are no special districts of the type that are eligible to receive property tax pursuant to Section 34188, within the territorial jurisdiction of the former redevelopment agency, then the county may appoint one member to represent the public. 8 California Special 'CAt.AFCO�� Districts Association d ©E9�0 Districts Stronger Together 'cyk�nnaPboG (10)If a redevelopment agency was formed by an entity that is both a charter city and a county, the oversight board shall be composed of seven members selected as follows: three members appointed by the mayor of the city, if that appointment is subject to confirmation by the county board of supervisors, one member appointed by the largest special district, by property tax share, with territory in the territorial jurisdiction of the former redevelopment agency,which is the type of special district that is eligible to receive property tax revenues pursuant to Section 34188, one member appointed by the county superintendent of education to represent schools, one member appointed by the Chancellor of the California Community Colleges to represent community college districts, and one member representing employees of the former redevelopment agency appointed by the mayor of the city if that appointment is subject to confirmation by the county board of supervisors,to represent the largest number of former redevelopment agency employees employed by the successor agency at that time. (11) Each appointing authority identified in this subdivision may, but is not required to, appoint alternate representatives to serve on the oversight board as may be necessary to attend any meeting of the oversight board in the event that the appointing authority's primary representative is unable to attend any meeting for any reason. If an alternate representative attends any meeting in place of the primary representative,the alternate representative shall have the same participatory and voting rights as all other attending members of the oversight board. (b) The governor may appoint individuals to fill any oversight board member position described in subdivision (a)that has not been filled by May 15, 2012, or any member position that remains vacant for more than 60 days. (c)The oversight board may direct the staff of the successor agency to perform work in furtherance of the oversight board's and the successor agency's duties and responsibilities under this part. The successor agency shall pay for all of the costs of meetings of the oversight board and may include such costs in its administrative budget. Oversight board members shall serve without compensation or reimbursement for expenses. (d) Oversight board members are protected by the immunities applicable to public entities and public employees governed by Part 1 (commencing with Section 810) and Part 2 (commencing with Section 814) of Division 3.6 of Title 1 of the Government Code. (e)A majority of the total membership of the oversight board shall constitute a quorum for the transaction of business. A majority vote of the total membership of the oversight board is required for the oversight board to take action. The oversight board shall be deemed to be a local entity for purposes of the Ralph M. Brown Act, the California Public Records Act, and the Political Reform Act of 1974.All actions taken by the oversight board shall be adopted by resolution. (f)All notices required by law for proposed oversight board actions shall also be posted on the successor agency's Internet Web site or the oversight board's Internet Web site. (g) Each member of an oversight board shall serve at the pleasure of the entity that appointed such member. (h) (1)The department may review an oversight board action taken pursuant to this part. Written notice and information about all actions taken by an oversight board shall be provided to the department as an approved resolution by electronic means and in a manner of the department's choosing.Without abrogating the department's authority to review all matters related to the Recognized Obligation Payment Schedule pursuant to Section 34177, oversight boards are not required to submit the following oversight board actions for department approval: (A) Meeting minutes and agendas. (B)Administrative budgets. (C) Changes in oversight board members, or the selection of an oversight board chair or vice chair. (D) Transfers of governmental property pursuant to an approved long-range property management plan. 9 e California Special Districts Association000 Districts Stronger Together (E) Transfers of property to be retained by the sponsoring entity for future development pursuant to an approved long-range property management plan. (2)An oversight board action submitted in a manner specified by the department shall become effective five business days after submission, unless the department requests a review of the action. Each oversight board shall designate an official to whom the department may make those requests and who shall provide the department with the telephone number and e-mail contact information for the purpose of communicating with the department pursuant to this subdivision. Except as otherwise provided in this part, in the event that the department requests a review of a given oversight board action, it shall have 40 days from the date of its request to approve the oversight board action or return it to the oversight board for reconsideration and the oversight board action shall not be effective until approved by the department. In the event that the department returns the oversight board action to the oversight board for reconsideration, the oversight board shall resubmit the modified action for department approval and the modified oversight board action shall not become effective until approved by the department. If the department reviews a Recognized Obligation Payment Schedule, the department may eliminate or modify any item on that schedule prior to its approval. The county auditor-controller shall reflect the actions of the department in determining the amount of property tax revenues to allocate to the successor agency. The department shall provide notice to the successor agency and the county auditor-controller as to the reasons for its actions. To the extent that an oversight board continues to dispute a determination with the department, one or more future Recognized Obligation Payment Schedules may reflect any resolution of that dispute. The department may also agree to an amendment to a Recognized Obligation Payment Schedule to reflect a resolution of a disputed item; however, this shall not affect a past allocation of property tax or create a liability for any affected taxing entity. (i) Oversight boards shall have fiduciary responsibilities to holders of enforceable obligations and the taxing entities that benefit from distributions of property tax and other revenues pursuant to Section 34188. Further,the provisions of Division 4(commencing with Section 1000) of the Government Code shall apply to oversight boards. Notwithstanding Section 1099 of the Government Code, or any other law, any individual may simultaneously be appointed to up to five oversight boards and may hold an office in a city, county, city and county, special district, school district, or community college district. Q) Except as specified in subdivision (q), commencing on and after July 1, 2018, in each county where more than one oversight board was created by operation of the act adding this part, there shall be only one oversight board, which shall be staffed by the county auditor-controller, by another county entity selected by the county auditor-controller, or by a city within the county that the county auditor-controller may select after consulting with the department. Pursuant to Section 34183,the county auditor-controller may recover directly from the Redevelopment Property Tax Trust Fund, and distribute to the appropriate city or county entity, reimbursement for all costs incurred by it or by the city or county pursuant to this subdivision, which shall include any associated startup costs. However, if only one successor agency exists within the county, the county auditor-controller may designate the successor agency to staff the oversight board.The oversight board is appointed as follows: (1) One member may be appointed by the county board of supervisors. (2) One member may be appointed by the city selection committee established pursuant to Section 50270 of the Government Code. In a city and county,the mayor may appoint one member. (3)One member may be appointed by the independent special district selection committee established pursuant to Section 56332 of the Government Code,for the types of special districts that are eligible to receive property tax revenues pursuant to Section 34188. (4) One member may be appointed by the county superintendent of education to represent schools if the superintendent is elected. If the county superintendent of education is appointed, then the appointment made pursuant to this paragraph shall be made by the county board of education. (5)One member may be appointed by the Chancellor of the California Community Colleges to represent community college districts in the county. (6)One member of the public may be appointed by the county board of supervisors. 10 o,n�a assocar. California Special rC A FCO Districts Association x9` ly [gElW M Districts Stronger Together N�71 (7) One member may be appointed by the recognized employee organization representing the largest number of successor agency employees in the county. (k) The governor may appoint individuals to fill any oversight board member position described in subdivision (j)that has not been filled by July 15, 2018, or any member position that remains vacant for more than 60 days. (1)Commencing on and after July 1, 2018, in each county where only one oversight board was created by operation of the act adding this part, then there will be no change to the composition of that oversight board as a result of the operation of subdivision (j). (m)Any oversight board for a given successor agency, with the exception of countywide oversight boards, shall cease to exist when the successor agency has been formally dissolved pursuant to Section 34187. A county oversight board shall cease to exist when all successor agencies subject to its oversight have been formally dissolved pursuant to Section 34187. (n)An oversight board may direct a successor agency to provide additional legal or financial advice than what was given by agency staff. (o)An oversight board is authorized to contract with the county or other public or private agencies for administrative support. (p) On matters within the purview of the oversight board, decisions made by the oversight board supersede those made by the successor agency or the staff of the successor agency. (q) (1) Commencing on and after July 1, 2018, in each county where more than 40 oversight boards were created by operation of the act adding this part, there shall be five oversight boards,which shall each be staffed in the same manner as specified in subdivision (j). The membership of each oversight board shall be as specified in paragraphs (1)through (7), inclusive, of subdivision Q). (2)The oversight boards shall be numbered one through five, and their respective jurisdictions shall encompass the territory located within the respective borders of the first through fifth county board of supervisors districts, as those borders existed on July 1, 2018. Except as specified in paragraph (3), each oversight board shall have jurisdiction over each successor agency located within its borders. (3) If a successor agency has territory located within more than one county board of supervisors' district, the county board of supervisors shall, no later than July 15, 2018, determine which oversight board shall have jurisdiction over that successor agency. The county board of supervisors or their designee shall report this information to the successor agency and the department by the aforementioned date. (4)The successor agency to the former redevelopment agency created by a county where more than 40 oversight boards were created by operation of the act adding this part, shall be under the jurisdiction of the oversight board with the fewest successor agencies under its jurisdiction. (Amended by Stats. 2015, Ch. 325, Sec. 11. Effective September 22, 2015.) 11 Brian S. Probolsky Vice President Director Brian S. Probolsky has served on the Board since 2008. He currently serves as Vice President of the Board and Chairman of the Finance and Technology Board and as a representative on the South Orange County Watershed Management Area(SOCWMA). An active member of our community,he has served on the OC Parks Commission, as a Laguna Niguel Parks &Recreation Commissioner and as a member of the Board of Governors for the Saddleback College Foundation. An accomplished entrepreneur and seasoned senior management professional, Mr. Probolsky has started and sold several successful business and is now the Business Practices Manager of Orange County Community Resources. Mr. Probolsky is a longtime resident of Laguna Niguel, where he lives with his wife and three children. Current term through 2020 Mesa Water District - James R. Fisler- Director Page 1 of 6 �k. James R. Fisler Director Division 2 2016-2020 James R. Fisler represents Division 2, encompassing the Mesa Verde area, on the Mesa Water District (Mesa Water®) Board of Directors. He was appointed to Mesa Water's Board in August 2009, elected in 2010 and re-elected in 2012, and was elected to serve as the Board's President from 2012-2014, which included service on the District's Executive https://www.mesawater.org/leadership/board/fames-r-fisler 10/18/2017 Mesa Water District - James R. Fisler- Director Page 2 of 6 Committee. Currently, Director Fisler is Chairman of Mesa Water's Legislative & Public Affairs Committee, and Vice Chairman of the District's Engineering & Operations Committee. He also serves as an Alternate on Mesa Water's Finance Committee. In addition to serving on Mesa Water's Board, Director Fisler serves the Association of California Water Agencies (ACWA) as a member of its Local Government Committee. He also serves on the City of Costa Mesa's Finance Advisory Committee, as a Board member of the Friends of the Costa Mesa Libraries, and as a Board member of the Costa Mesa Chamber of Commerce. Director Fisler was also elected as an alternate to the Local Agency Formation Commission of Orange County (OC LAFCO) in 2011, and re-elected in June 2014, to represent the Special Districts of Orange County. He also serves as Vice President of the Independent Special Districts of Orange County (ISDOC). Director Fisler's interest in serving Mesa Water began after attending several Board meetings, when he was motivated by the prospect of being involved in water supply, storage, and delivery to the community, as well as promoting conservation and efficient delivery of government services. From March 2010 to December 2012, Director Fisler also served as President of the Mesa Water District Improvement Corporation, a California nonprofit public benefit corporation formed to assist Mesa Water in financing certain improvements to the District's water system. Director Fisler has a passion for public policy and is immensely involved in community service. Prior to joining Mesa Water's Board, he served as Vice Chair of the City of Costa Mesa's Planning Commission and, before that, as a City Parks and Recreation Commissioner. He was also a member of the City's Residential Rehabilitation and Redevelopment Committee for more than a decade, serving in many capacities including as an alternate, full member, or liaison from the Planning Commission. Additionally, he volunteered in the City's Neighbors for Neighbors program for over 10 years, is a graduate of the Citizens Police Academy, and served as a Board member of the Costa Mesa Senior Center. https://www.mesawater.org/leadership/board/fames-r-fisler 10/18/2017 Mesa Water District - James R. Fisler- Director Page 3 of 6 Currently a REALTOR®with Torelli Realty in Mesa Verde, Director Fisler was a regional manager for Nordstrom stores for more than 12 years. Both positions have equipped him with the necessary skills to provide outstanding customer service. A Costa Mesa resident for over 44 years, Director Fisler has lived in the Mesa Verde area for 24 years. Board of Directors (/leadership/board) > Board Meetings (/leadershiplboardlmeetings) > Committee Assignments (/leadership/board/committee-assignments) > Election Information (/leadership/board/election-information) > Ethics Certificates (/leadershiplboardlethics-certificates) > Policy Positions (/leadershiplboardlpolicy-positions) > Public Notices (/news/public-notices) > Transparency(laboutltranspare ncy) > Departments (/about/organization) > General Manager (/leadership/general-manager) > Strategic Plan (/leadership/strategic-plan) Next Mesa Water Board Meeting regular meetings held the second Thursday of each month at 6pm November 09 (/leadership/board/meetings/timeline/314-board-meeting-11-09-17) https://www.mesawater.org/leadership/board/fames-r-fisler 10/18/2017 Board of Directors Page 2 of 3 Water Desalination Information FY 17-18 Prop 218 Notices Board • i rs Douglas Reinhart Peer Swan Steven LaMar Mary Aileen Matheis John Withers Board Meetings Mary Aileen Matheis (2016 - 2020) Mary Aileen Matheis has served on the IRWD Board of Directors since 1988 when she was appointed to fill an unexpired term.She has successfully run in the subsequent general election years.She has served as President in 2001 and 2012 and as Vice President in 2005 and 2011. She has served on several standing IRWD committees and currently is a member of the Finance &Personnel Committee.She also currently serves on the ACWA Legal Affairs Committee. Mary Aileen has represented the District on the Southern California Water Committee,and on the Board of the Urban Water Institute. She is a member of the Board of the San Joaquin Wildlife Sanctuary,Inc. She is President of Shadetree Partnership,an environmental non-profit corporation dedicated to distributing and planting native trees and shrubs throughout Orange County. A practicing lawyer,Mary Aileen is a member of the Orange County Bar Association and a member of the Orange County Association of Realtors. Matheis serves on the Assessment Appeals Board of Orange County.She has a Bachelor's Degree from Russell Sage College,and a Masters in Communication from the State University of New York. She earned a Juris Doctorate at Western State University College of Law.Matheis has been admitted to practice in the United States Supreme Court and the United States Tax Court. She was honored by the California Real Estate Association as Distinguished Realtor of the Year,and has received the Realtor of the Year award by the Orange County Association. She was chosen as Woman of the Year by Senator Ross Johnson and as Volunteer of the Year for Orange County by the Clerk of the Board of Supervisors. Her civic associations include The Exchange Club of Irvine,the Irvine Valley College Foundation Board of Governor and the Lincoln Club of Orange County.She was recently appointed to the Board of Catholic Charities of Orange County. Mary Aileen has lived in California since 1971 and in Irvine since 1978. email Mary Aileen Matheis 949-453-5300 Please note:For information on doing business with IRWD and specific contact information please visit:either Fnaineerina&Plannnina or Purchainc&Sunnliers. About the Board IRWD is governed by a five member publicly elected Board of Directors.These five elected officials are responsible for District policies and decision making on a large range of issues.Board members participate in bi-monthly IRWD Board meetings and Committee meetings where they evaluate and provide guidance on important water resource and reliability projects including water recycling, water use efficiency programs,infrastructure projects and the water banking program. Approval authority on critical IRWD projects ultimately rests with the IRWD Board of Directors.Reflective of the expertise and leadership of the IRWD Board,IRWD customers continue to enjoy among the lowest rates in Orange County and have a very reliable and diverse water supply. In support of these projects and programs and in keeping with our commitment to the community,IRWD and its Board members believe it is essential to be active and accessible to the communities we serve. IRWD Board members frequently attend community and industry meetings with the cities we serve including the city of Irvine,Lake Forest,Newport Beach,Costa Mesa,Orange as well as the unincorporated areas of Orange County such as Orange Park Acres and Santiago Canyon. IRWD Board members actively participate in meetings at the Orange County Water District,the Municipal Water District of Orange County,the Orange County Sanitation District and the Metropolitan Water District of Southern California. Board members connect with the business community through the Orange County Business Industry Association and the Orange County Business Council. Board members also contribute regularly to water supply reliability discussions and policy efforts at the state and federal level to ensure that our customers continue to enjoy a high level of service at the lowest possible cost-now and into the future. Public elections are held every two years and Directors serve four year terms.For information on elections please visit the Oranae Countv Registrar of Voters.Terms are staggered to ensure continuity. --------------------------------------------------------------------------------------------------------------------------------------------------------------- Latest News ;T11-k http://www.irwd.com/about-us/board-of-directors 10/18/2017 ITEM NO. 8.4 AGENDA REPORT Meeting Date: October 24, 2017 Budgeted: No To: Board of Directors Cost Estimate: $1 ,795.20 From: Marc Marcantonio, General Account No: 1-9010-0985-05 Manager Presented By: Brett R. Barbre, Asst General Manager Prepared By: Brett R. Barbre, Asst General Manager Subject: Proposed Increased Assessments Affecting District Properties Located in Local Landscaping Zone L-5A of the City of Yorba Linda Street Lighting and Landscaping Maintenance District STAFF RECOMMENDATION: That the Board of Directors delegate the authority to the President of the Board to vote in favor of the increased assessments for these parcels and authorize staff to complete and submit the ballots as required. DISCUSSION: At the June 13, 2017 meeting of the Yorba Linda Water District Board of Directors, the Board was asked to vote on balloted assessments for L-MAD Zone L-1 B. However, the ballots for the land owned by the Yorba Linda Water District had a $0.00 balloted assessment amount. As a result, the votes of the District would not have been counted even if they had been cast. The District received Official Assessment Ballots from the City of Yorba Linda for three parcels for which we pay lighting and landscaping assessments. While one does have a balloted assessment amount of $0.00, two have amounts that we would be required to pay and those ballots would be counted. Below is a chart of the current maximum charge, by Equivalent Benefit Unit (EBU) and the proposed maximum charge, by EBU, and what the new assessment would be should the increase be approved: LMAD Zone APN Current Max. Proposed Max. Assessment L-5A 322-291-25 $493.15 $1,088.00 $765.41 L-5A 322-291-24 $493.15 $1,088.00 $1,029.79 L-5A 322-041-34 $493.15 $1,088.00 $0.00 The three APN's refer to the following assets of the District: 322-291-25 — Gardenia Reservoir 322-291-24 — Valley View Reservoir 322-291-34 — land between the Gardenia Reservoir and the Diemer Plant Completed ballots must be received by the YL City Clerk no later than the close of testimony at the public hearing scheduled for Tuesday, November 7, 2017. ATTACHMENTS: Name: Description: Type: YL LMAD Ballots.Ddf Backup Material Backup Material G4 YORS� NOTICE OF PUBLIC HEARING AND ASSESSMENT BALLOT PROCEDURES �. LOCAL LANDSCAPING ZONE L-5A ` _ - •' * STREET LIGHTING AND LANDSCAPING MAINTENANCE DISTRICT / a+Pa4ATIo\4°' CITY OF YORBA LINDA In addition to what is outlined below, important information can be found on the City's website http:llwww.ci.yorba-linda.ca.uslindex.phplcity-departments/public-works, under LIVIAD. Puroose of this Notice The purpose of this notice, that includes both this document and the accompanying Assessment Ballot which also includes Instructions for Completion and Delivery of Assessment Ballot, is: • to provide information to the record owners of property within Local Landscaping Zone L-5A ("Zone L-5A") of Street Lighting and Landscaping Maintenance District ("District") of the City of Yorba Linda ("City'), regarding proceedings being undertaken by the City to levy new or increased annual assessments ("increased assessment") on those properties; • to transmit an Assessment Ballot to the owners of property within Zone L-5A,to enable such owner or owners to express support or opposition to the levy of the proposed increased assessment on such property, by completing and returning the Assessment Ballot; and • to identify the time and place of the scheduled public hearing on these matters and to provide instructions to the owner or owners to assist in completing the Assessment Ballot and returning it to the City. Reason for the Assessment The proposed increased assessment on properties within Zone L-5A will provide a stable revenue source to fund the ongoing special benefit expenses associated with the servicing and maintenance of local landscape improvements for Zone L-5A including, but not limited to approximately 2,950,184 square feet of designated landscape improvement area that incorporates an estimated 34,505 square feet of irrigated median landscaping; 2,286,151 square feet of sloped/mostly- sloped landscaped area of which 2,151,513 square feet is irrigated and 134,638 square feet is non-irrigated; and 629,528 square feet of flatlmoderate ly-sloped landscaped area of which 331,135 square feet is irrigated and 298,393 square feet is non-irrigated (10,269 square feet of natural vegetation or minimal-landscaped areas and 288,124 square feet of trails). These improvements are considered a particular and distinct special benefit to properties in Zone L-5A, and the increased assessments are intended to support the continued maintenance of these improvements at an appropriate level of service as well as related renovations or capital improvements. Basis upon which the Increased assessments are Calculated Each year the City determines the estimated cost to maintain and service the improvements within each Zone of the District to appropriately allocate those costs to only the benefiting properties. The cost of providing the improvements determined to be of special benefit are allocated to parcels within each Zone based on a benefit formula that equitably distributes those costs based on the proportional special benefits to each parcel. Parcels within each Zone are assigned an Equivalent Benefit Unit (EBU) that reflects each parcel's proportional special benefit as compared to other parcels that benefit from the improvements. In Zone L-5A, the benefiting properties assessed are primarily residential properties, with each single-family residential parcel being assigned 1.00 EBU. Other land uses in this Zone are assigned a proportional EBU based on acreage and may include Park or Va ca nt1U n developed parcels at 0.75 EBU per acre. The total eligible special benefit expenses for Zone L-5A ("Balance to Levy"), is divided by the total EBU of all parcels within Zone L-5A. The result of this calculation establishes an assessment rate per Equivalent Benefit Unit("Levy per EBU"or"Assessment Rate"). This Assessment Rate multiplied by each parcel's assigned EBU equals each parcel's annual assessment amount. Total Balance to Levy!Total EBU = Levy per EBU (Assessment Rate) Levy per EBU x Parcel ZEBU = Parcel Levy Amount A more detailed description of the improvements and basis upon which increased assessments have been calculated is described in the Engineer's Report, which is on file with the City and available on the City's website. The Total Annual Assessment Proposed to be Charaed The total annual amount of the assessments being balloted to properties within Zone L-5A is $838,111.74. This total amount balloted divided by the total number of Equivalent Benefit Units (EBUs) within Zone L-5A results in an increased assessment rate to $1,088.00 per EBU (Maximum Assessment Rate for Fiscal Year 201712018). The amount of the increased assessment identified on the accompanying Assessment Ballot as "Your Parcel's Balloted Assessment Amount" is based upon this new Maximum Assessment Rate and your property's proportional special benefit based on your parcel's EBU assignment. Your parcel's actual assessment for Fiscal Year 2017/2018 may be equal to or less than the amount indicated on the accompanying Assessment Ballot as "Your Parcel's Balloted Assessment Amount". However, if the increased assessments are approved in these proceedings, your parcel's assessment amount and the assessment rate are subject to the annual inflationary adjustment described herein. Inflationary Adiustment Because the cost of servicing and maintaining local landscaping improvements are impacted by inflation over time, the proposed maximum assessment rate of$1,088.00 per EBU and your parcel's corresponding assessment includes an annual inflationary adjustment based on the annual percentage change in the local Consumer Price Index as reported by the United States Department of Labor, Bureau of Labor Statistics, for the Los Angeles-Riverside-Orange County Metropolitan Area for All Urban Consumers. As part of your support or opposition to the increased assessment described in this notice and presented on the accompanying Assessment Ballot, you are also indicating your support or opposition to this annual inflationary adjustment that may be applied to future assessments. If the increased assessment is approved, this annual inflationary adjustment shall be applied to the maximum assessment rate established in these proceedings (maximum assessment rate for Fiscal Year 2017/2018) and your calculated assessment each year may be adjusted accordingly. Duration of the Assessments If approved, the proposed assessment indicated on the accompanying ballot may be assessed and appear on your 2017/2018 property tax bill, or a supplemental bill from the County or City. (At the City Council's discretion, a lesser amount may be assessed). Because the proposed assessments will provide annual funding for the ongoing maintenance and operation of the improvements, there is no sunset on the assessments (no end date), but the annual budget and assessments shall be presented at a public hearing each fiscal year, which is open to the public for comment and testimony. Public Hearina Notice is hereby given that a public hearing regarding the proposed levy of an increased assessment for Local Landscaping Zone L-5A, will be held during a regular meeting of the Yorba Linda City Council, in the City Council Chambers at City Hall, located at 4845 Casa Loma Avenue, Yorba Linda, California, on the following date and commencing at the following time: Tuesday, November 7, 2017, starting at 6.30 P.M. The City Council shall consider all objections and protests, if any, to the proposed increased assessment on properties within Zone L-5A which has been deemed necessary for the operation and maintenance of Zone L-5A's landscaping improvements.Any interested person shall be permitted to present written and oral testimony regarding these proceedings. The City Council may impose reasonable time limits on both the length of the entire public hearing and the length of each interested person's oral testimony. The City Council may also continue the public hearing from time to time. Protest Provisions Pursuant to California Constitution Article XIIID, Section 4 (e), at the Public Hearing, the City Council shall consider all protests against the proposed increased assessment. In addition to the property owner assessment ballots, written protests regarding the District and assessments may be filed with the City Clerk prior to or during the Public Hearing. The City shall not impose an assessment increase for Zone L-5A if there is a majority protest, as calculated set forth below. Assessment Ballot The amount of the assessment identified on the accompanying Assessment Ballot as "Your Parcel's Balloted Assessment Amount"represents your parcel's proportional special benefit of the total amount being balloted at the maximum assessment rate. Any time before the end of the Public Hearing, you may submit the Assessment Ballot to the City Clerk. To do so: mark the Ballot either " YES-- IN FAVOR OF THE INCREASED ASSESSMENT" or " NO—OPPOSED TO THE INCREASED ASSESSMENT", sign the Ballot, seal the Ballot in the enclosed return envelope, and mail or deliver it to the City Clerk. If you do not use the envelope provided, the return envelope should have the words "ASSESSMENT BALLOT, DO NOT OPEN" printed on the outside to ensure it is not opened in advance of the Public Hearing, The Ballot may be submitted, changed or withdrawn at any time before the end of the Public Hearing. If you need a replacement Ballot, call the "Contact Person" listed below. Only ballots issued by the City are considered valid ballots (copies or facsimiles are not valid ballots). Any Ballot returned unmarked or unsigned,or not received by the City Clerk before the end of the public hearing will be rejected and not counted. The proposed new assessment will not be imposed for Zone L-5A if the Ballots submitted in opposition to the increased assessment exceed the Ballots submitted in favor of the assessment, with each Ballot weighted according to the dollar amount of the assessment on the property to which that Ballot relates. in such case, the properties within Zone L-5A will continue to be subject to annual assessments for maintenance of improvements up to the authorized maximum assessment rate per EBU of $493.15 plus the annual inflationary adjustment based on the annual percentage change in the local Consumer Price Index that was previously established by the City Council for Zone L-5A. Only valid ballots received by the City Clerk before the end of the public hearing shall be counted. In addition to the property owner assessment ballots, written protests regarding the District and assessments may be filed with the Office of the City Clerk prior to or during the Public Hearing. Please ensure that your Assessor's Parcel Number (APN) listed on the accompanying Assessment Ballot is included on any written protest or correspondence so that your property can be correctly identified for the record. Please refer to the City's website for additional information and future actions upon completion of the ballot proceedings. Contact Information For more information, please contact the City's Public Works Department at 714.961.7170. o* YORRw OFFICIAL ASSESSMENT BALLOT V i •LG • r r Local Landscaping Zone L-5A �..� Street Lighting and Landscaping Maintenance District �' �r This Ballot is for the property designated as Assessor's Parcel Number:322-291-25 SES' 2 6 2017 BY Yorba Linda Water District PO Box 309 Yorba Linda, CA 92885 This is your official property owner assessment ballot regarding the proposed increased assessment for properties in Local Landscaping Zone L-5A("Zone L-5A")of Street Lighting and Landscaping Maintenance District("District")to fund the ongoing special benefit expenses associated with the maintenance of landscape improvements as outlined in the accompanying Notice and described more fully in the Engineer's Report, which is on file with the City Clerk and on the City's website. To complete your ballot, mark an (X)in the voting square next to the word "YES" or next to the word "NO" below,sign and date the ballot, and return the entire ballot to the City Clerk. If you wrongly mark,tear,or deface this ballot, return it to the City Clerk with a request for a replacement ballot. All ballots must be received by the City Clerk of the City of Yorba Linda no later than the close of testimony at the public hearing scheduled for November 7, 2017. Assessor's Parcel Number: 322-291-25 Current Authorized Maximum Assessment Rate: $493.15 per EBU (Equivalent Benefit Unit) Proposed New Maximum Assessment Rate: $ 1,088.00 per EBU (Equivalent Benefit Unit) Your Parcel's Balloted Assessment Amount: $ 765.41 This is an annual assessment that is collected as part of your County property tax bill. The amount assessed each fiscal year shall be based on the net expenses to be assessed, but the assessments may not exceed the Proposed New Maximum Assessment Rate shown above plus the annual inflation adjustment without the approval of the property owners. YES—IN FAVOR OF THE INCREASED ASSESSMENT Ll proposed for Zone L-5A and the assessment for my property �IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIINIIIIIIIIIillllllll shown above including the annual inflation adjustment applicable to future assessments based on the percentage change in the Consumer Price Index (CPI). NO—OPPOSED TO THE INCREASED ASSESSMENT proposed for Zone L-5A and the assessment for my property IIIIIIIIIIIIlIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII shown above including the annual inflation adjustment applicable to future assessments based on the percentage change in the Consumer Price Index (CPI). I hereby declare, under penalty of perjury, that I am the record owner of the property (Assessor's Parcel Number) identified on this ballot or I am the authorized representative of that record owner. Signed Date Please see the back of this sheet for information about your assessment ballot and instructions for completion and delivery of the assessment ballot. V+oR Y0R84 OFFICIAL ASSESSMENT BALLOT 0 J Local Landscaping Zone L-5A Street Lighting and Landscaping Maintenance District RECEIVED SEP 2 6 2017 This Ballot is for the property designated as Assessor's Parcel Number:322-291-24 YORBA LINDA WATER DISTRICT BY Yorba Linda Water District PO Box 309 Yorba Linda, CA 92885 This is your official property owner assessment ballot regarding the proposed increased assessment for properties in Local Landscaping Zone L-5A("Zone L-5A")of Street Lighting and Landscaping Maintenance District ("District")to fund the ongoing special benefit expenses associated with the maintenance of landscape improvements as outlined in the accompanying Notice and described more fully in the Engineer's Report, which is on fife with the City Clerk and on the City's website. To complete your ballot, mark an (X) in the voting square next to the word "YES" or next to the word "NO" below,sign and date the ballot, and return the entire ballot to the City Clerk. If you wrongly mark, tear, or deface this ballot, return it to the City Clerk with a request for a replacement ballot.All ballots must be received by the City Clerk of the City of Yorba Linda no later than the close of testimony at the public hearing scheduled for November 7, 2017. Assessor's Parcel Number: 322-291-24 Current Authorized Maximum Assessment Rate: $493.15 per EBU (Equivalent Benefit Unit) Proposed New Maximum Assessment Rate: $ 1,088.00 per EBU (Equivalent Benefit Unit) Your Parcel's Balloted Assessment Amount: $ 1,029.79 This is an annual assessment that is collected as part of your County property tax bill. The amount assessed each fiscal year shall be based on the net expenses to be assessed, but the assessments may not exceed the Proposed New Maximum Assessment Rate shown above plus the annual inflation adjustment without the approval of the property owners. YES—IN FAVOR OF THE INCREASED ASSESSMENT proposed for Zone L-5A and the assessment for my property IIIIlIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII shown above including the annual inflation adjustment applicable to future assessments based on the percentage change in the Consumer Price Index (CPI). NO—OPPOSED TO THE INCREASED ASSESSMENT proposed for Zone L-5A and the assessment for my property I��Illllllllllllllllf�lllllllllllllllllllllflllllllllllllll shown above including the annual inflation adjustment applicable to future assessments based on the percentage change in the Consumer Price Index (CPI). I hereby declare, under penalty of perjury, that I am the record owner of the property (Assessor's Parcel Number) identified on this ballot or I am the authorized representative of that record owner. Signed Date Please see the back of this sheet for information about your assessment ballot and instructions for completion and delivery of the assessment ballot. OFFICIAL ASSESSMENT BALLOT Local Landscaping Zone L-5A 0 Street Lighting and Landscaping Maintenance District ECEIVED This Ballot is for the property designated as Assessor's Parcel Number:322-041-34 SEP 2 6 2017 YORBA LINDA WATER DISTRICT BY Yorba Linda Water District PO Box 309 Yorba Linda, CA 92885 This is your official property owner assessment ballot regarding the proposed increased assessment for properties in Local Landscaping Zone L-5A("Zone L-5A") of Street Lighting and Landscaping Maintenance District("District")to fund the ongoing special benefit expenses associated with the maintenance of landscape improvements as outlined in the accompanying Notice and described more fully in the Engineer's Report, which is on file with the City Clerk and on the City's website. To complete your ballot, mark an (X) in the voting square next to the word "YES" or next to the word "NO" below, sign and date the ballot, and return the entire ballot to the City Clerk. If you wrongly mark, tear, or deface this ballot, return it to the City Clerk with a request for a replacement ballot. All ballots must be received by the City Clerk of the City of Yorba Linda no later than the close of testimony at the public hearing scheduled for November 7, 2017. Assessor's Parcel Number: 322-041-34 Current Authorized Maximum Assessment Rate: $493.15 per EBU (Equivalent Benefit Unit) Proposed New Maximum Assessment Rate: $ 1,088.00 per EBU (Equivalent Benefit Unit) Your Parcel's Balloted Assessment Amount: $ 0.00 This is an annual assessment that is collected as part of your County property tax bill. The amount assessed each fiscal year shall be based on the net expenses to be assessed, but the assessments may not exceed the Proposed New Maximum Assessment Rate shown above plus the annual inflation adjustment without the approval of the property owners. YES—IN FAVOR OF THE INCREASED ASSESSMENT L3proposed for Zone L-5A and the assessment for my property shown above including the annual inflation adjustment applicable to future assessments based on the percentage change in the Consumer Price Index (CPI). LiNO—OPPOSED TO THE INCREASED ASSESSMENT proposed for Zone L-5A and the assessment for my property `��l�lllll��II��I��I��I��II��IBI��I�l��1� shown above including the annual inflation adjustment applicable to future assessments based on the percentage change in the Consumer Price Index (CPI). I hereby declare, under penalty of perjury, that I am the record owner of the property(Assessor's Parcel Number) identified on this ballot or I am the authorized representative of that record owner. Signed Date Please see the back of this sheet for information about your assessment ballot and instructions for completion and delivery of the assessment ballot. INFORMATION ABOUT YOUR ASSESSMENT BALLOT AND INSTRUCTIONS FOR COMPLETION AND DELIVERY OF ASSESSMENT BALLOT Local Landscaping Zone L-5A Street Lighting and Landscaping Maintenance District City of Yorba Linda To Cast Your Ballot: Prior to the public hearing, completed ballots may be personally delivered to the City Clerk located at 4845 Casa Loma Avenue, Yorba Linda, California; or mailed to the City Clerk at the address indicated below. A return envelope has been provided for your convenience that is addressed to the City Clerk. You may also personally present completed ballots to the City Clerk at the public hearing on November 7, 2017. If you return your ballot by mail, please be sure to allow time for mail delivery; the City Clerk must receive all ballots no later than the end of the public testimony portion of the public hearing on November 7, 2017. If you damage or misplace your ballot, a replacement ballot can be obtained by contacting the City's Public Works department as indicated on the Notice accompanying this Ballot. All submitted ballots must be clearly marked to indicate either "Yes— In Favor of the increased assessment" or "No —Opposed to the increased assessment" and signed; otherwise the ballot will be rejected and not counted.To ensure the privacy of your ballot prior to the tabulation, please return your ballot in the envelope provided, or in a sealed envelope that indicates that a ballot is enclosed by noting on the front of the envelope "Assessment Ballot, Do Not Open". A ballot previously submitted may be withdrawn at any time prior to the close of the public hearing by request to the City Clerk, by the person(s) that signed the submitted ballot. An assessment ballot may be changed at any time prior to the end of the public hearing by requesting a withdrawal of the previous ballot and requesting a replacement ballot. Only the person(s)signing the ballot may make such a request. The replacement ballot must be received by the City Clerk prior to the deadline set forth herein. If you have questions: Should you have any questions prior to the public hearing, you may call the Public Works department at (714) 961-7170 during regular business hours. Important additional information is also available on the City's website. City Clerk P.O. Box 87014 Completed ballots MUST be received by the City Clerk no later Yorba Linda, CA 92885 than the close of the public testimony portion of the public hearing which is scheduled to begin on Tuesday, November 7, 2017 at 6:30 p.m., in the City Council Chambers at City Hall, located at 4845 Casa Loma Avenue, Yorba Linda, California How to cast your ballot -- 1 2 Sion an,. ? Return to the City Clerk on or before the Public Hearing on. Check Yes or No date it !November 7 2017 in accordance with the deadlines referenced above ITEM NO. 9.1 AGENDA REPORT Meeting Date: October 24, 2017 To:Board of Directors From:Marc Marcantonio, General Manager Presented By:Delia Lugo, Finance Manager Prepared By:Kelly McCann, Senior Accountant Subject:Cash and Investment Report for Period Ending September 30, 2017 SUMMARY: Government Code Section 530607, et. seq., requires the person delegated to invest funds to make monthly report of investments to the legislative body. DISCUSSION: The Cash & Investment Portfolio Report presents the market value and percent yield for all District investments by institution. The Cash & Investment Summary Report includes budget and actual interest and average term portfolio information as well as market value broken out by reserve categories. The Fair Value Measurement Report categorizes investments with the fair value hierarchy established by generally accepted accounting principles. The total average yield for the month ending September 30, 2017 is 1.21%. The overall decrease in the investment balance from the previous month is approximately $1,083,000. Larger balance changes include a decrease in the Water Operating Fund of $1,004,138 due to the semi annual Debt Service principal and interest payment of $1.9 million and a decrease in the Restrictive 2017A Acquisition Fund of $309,719 to pay Fairmont Booster Pump Station capital project costs. STRATEGIC PLAN: FR 1-F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a Timely and Transparent Manner to the Board of Directors and Member Agencies ATTACHMENTS: Name:Description:Type: Invst_Rpt_9-17.pdf Backup Material Backup Material Invst_Agenda_Backup_-_September_2017.xlsx Backup Material Backup Material Fair_Value_Measurement_Report_9-17.pdf Backup Material Backup Material Market %Date of Percent Value Par of Total Institution Maturity Yield Checking Account: 440,019$ 440,019$ Wells Fargo Bank 21,024 21,024 Pershing 461,043$ 461,043$ 1.22%Total 0.00% Money Market Accounts: 4,296,086$ 4,296,086 US Bank (Revenue Bonds)0.61% 952,748 952,748 Bank of the West 0.08% 5,248,834$ 5,248,834$ 13.94%Total 0.51% Federal Agency Securities: 498,610$ 500,000 Federal Home Loan Bank 06/12/18 1.00% 499,550$ 500,000 Federal Home Loan Bank 06/13/18 1.10% 998,160$ 1,000,000$ 2.65%Total 1.05% Certificates of Deposits: 247,819$ 248,000$ CIT Bank, Salt Lake 05/22/18 1.20% 248,010$ 248,000 Discover 05/22/18 1.19% 247,819$ 248,000 Goldman Sachs Bank 05/22/18 1.20% 248,057$ 248,000 Beal Bank 05/23/18 0.99% 248,386$ 247,000 Barclays Bank 04/30/18 2.23% 248,166$ 248,000 State Bank of India 05/14/18 1.14% 248,425$ 249,000 Webster Bank 05/03/18 0.90% 248,042$ 248,000 American Express Centurion Bank 05/23/18 1.19% 247,653$ 248,000 GE Capital Bank 05/24/18 1.10% 248,549$ 249,000 Oriental Bank & Trust 05/29/18 1.05% 248,465$ 249,000 Enterprise Bank & TR Co Lowell 05/30/18 1.00% 248,480$ 249,000 Safra National Bank 05/31/18 1.00% 247,462$ 248,000 Townebank Portsmouth 05/31/18 1.00% 248,467$ 249,000 Mascoma Savings Bank 05/29/18 1.00% 100,048$ 100,000 Ally Bank Midvale Utah 12/11/17 1.54% 198,508$ 200,000 World's Foremost Bk Sydney 05/28/19 1.30% 246,820$ 248,000 Capital One Bk USA Natl Assn 05/13/19 1.20% 245,765$ 249,000 Comenity Cap Bk Salt Lake City 06/30/21 1.67% 243,878$ 248,000 EnerBank USA Salt Lake City 08/26/20 1.32% 245,498$ 248,000 EverBank Jacksonville Fla CTF 08/30/19 1.16% 180,017$ 180,000 HSBC BK USA, NA MC Clean CTF 08/31/21 1.24% 241,944$ 248,000 Wells Fargo Bank NA Sioux Falls D 08/31/21 1.64% 247,726$ 247,000 PrivateBank & Tr Chicago Ill CTF 03/30/22 2.19% 250,489$ 249,000 JP Morgan Chase Bk NA Columbus 03/31/22 2.43% 5,674,492$ 5,693,000$ 15.07%Total 1.32% Pooled Investment Accounts: 6,252,623$ 6,252,623$ Local Agency Investment Fund 1.11% 1,318,486 1,318,680 CalTRUST Short Term 1.23% 17,712,868 17,772,138 CalTRUST Medium Term 1.46% 25,283,977$ 25,343,441$ 67.13%1.36% 37,666,506$ 37,746,318$ 100%Total Investments 1.21% Per Government Code requirements, the Investment Report is in compliance with the Yorba Linda Water District's Investment Policy, and there are adequate funds available to meet budgeted and actual expenditures for the next six months. 9/30/17 Yorba Linda Water District Cash & Investment Portfolio Report September 30, 2017 ________________________________ Kelly D. McCann, Senior Accountant Below is a chart summarizing the yields as well as terms and maturities for the month of September 2017: Average # of Month Portfolio Days to of 2017 Yield Maturity September 1.21% 111 Below are charts comparing operating fund interest for current and prior fiscal years. Actual Interest 9/30/2016 9/30/2017 Monthly - September 25,136$ 28,555$ Year-to-Date 55,426$ 67,599$ Budget 2016/2017 2017/2018 Interest Budget, September YTD 28,750$ 77,500$ Interest Budget, Annual 115,000$ 310,000$ Interest earned on investments is recorded in the fund that owns the investment. The distribution of investments in the portfolio both in dollars and as a percentage of the total portfolio by funds is as follows: Total of $37.6 million in cash and investments which is split between minimum reserve requirements and what is available to meet current year obligations (operating costs, debt service, capital costs). The number of Days in Cash for Un-Restricted Water Reserve balance is 373 and Un-Restricted Sewer Reserve balance is 1,277. Reserve Cash and Requirements Investments August 2017 % Alloc September 2017 % Alloc "Target Available for Fund Description Balance 8/31/2017 Balance 9/30/2017 Levels" CY Obligations Water Operating Reserve 14,538,404$ 42.96% 13,284,924$ 40.34% 9,459,287$ 3,825,637$ Water Emergency Reserve 3,469,413.68 10.25% 4,346,791.50 13.20% 7,790,359 (3,443,568) Water Capital Project Reserve 5,242,446.53 15.49% 5,714,159.66 17.35% 5,716,336 (2,176) Rate Stabilization Reserve 4,010,178.34 11.85% 4,006,897.83 12.17% 3,957,692 49,206 Un-Restricted Water Reserve Balance 27,260,442.62 27,352,772.91 26,923,674$ 429,099$ Conservation Reserve 111,261.91 0.33% 104,009.91 0.32% - 104,010$ Employee Liability Reserve 1,749,927.87 5.17% 272,062.39 0.83% 272,054 8 Restricted Reserve Balance 1,861,189.78 376,072.30 272,054$ 104,018$ Sewer Operating Reserve 1,244,779.04 3.68% 1,137,952.30 3.46% 498,142$ 639,810$ Sewer Emergency Reserve 1,150,035.71 3.40% 2,545,265.94 7.73% 2,545,934 (668) Sewer Capital Project Reserve 2,327,514.19 6.88% 1,518,337.18 4.61% 1,519,358 (1,021) Un-Restricted Sewer Reserve Balance 4,722,329 5,201,555 4,563,434 638,121 Total Reserve Balances 33,843,961$ 100.00% 32,930,401$ 100.00% 31,759,162$ 1,171,239$ Water Operating 175,268 424,609 Sewer Operating 125,130 15,410 300,397 440,019 Revenue Bond 2017A-Acquisition Fund 4,605,805 4,296,086 Total Cash and Investments 38,750,164$ 37,666,506$ Cash & Investment Summary Report Cash & Investment Summary Comparison Between Current and Previous Month Wells Fargo Bank Checking US Bank Held (Restricted) Yorba Linda Water District Fair Value Measurement Report September 30, 2017 Quoted Observable Unobservable Prices Inputs Inputs Investments Level 1 Level 2 Level 3 Total CalTRUST Investment Pool -$ 19,031,354$ -$ 19,031,354$ Local Agency Investment Fund - 6,252,623 - 6,252,623 U.S. Government Sponsored Agency Securities - 998,160 - 998,160 Negotiable Certificates of Deposit - 5,674,492 - 5,674,492 Total Investments -$ 31,956,629$ -$ 31,956,629$ ITEM NO. 9.2 AGENDA REPORT Meeting Date: October 24, 2017 To:Board of Directors From:Marc Marcantonio, General Manager Presented By:Delia Lugo, Finance Manager Dept:Finance Prepared By:Kelly McCann, Senior Accountant Subject:Budget to Actual Reports for the Month Ending September 30, 2017 DISCUSSION: For the month ending September 30, 2017, staff is presenting Budget to Actual reports for the District as a whole, as well as the individual water and sewer funds. Cumulative Volumetric Water Revenue, as reported through the month ending September 30, 2017, reflects an average rebound of 7.06% as compared to the prior year for the same reporting period. Residential classified customer connections have experienced the largest rebound in monthly consumption as conservation restrictions were lifted compared to the prior year. Total Variable Costs results reflect at 9.44% increase when compared to prior year for the same reporting period. The increase in costs is, in part, reflective of the In-Lieu Program that the District is currently participating in. While Supplies & Services costs within the Water Fund have decreased by 12.24%, when compared to the prior year. The Sewer Operating Revenue is reflecting a 12.95% increase when compared to the prior year for the same reporting period predominantly due to the approved increase in the sewer rate. STRATEGIC PLAN: FR 1-F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a Timely and Transparent Manner to the Board of Directors and Member Agencies ATTACHMENTS: Name:Description:Type: Pro_Forma_Sept_30_2017.pdf Backup Material Backup Material Consolidated_Budget_to_Actual_Statement_September_2017.pdf Backup Material Backup Material Water_Budget_to_Actual_Statement_September_2017.pdf Backup Material Backup Material Sewer_Budget_to_Actual_Statement_September_2017.pdf Backup Material Backup Material Variable_Water_Cost.pdf Backup Material Backup Material Variable_Cost_Analysis_Graph__September_2017.pdf Backup Material Backup Material FY18 Annual Budget YTD Actuals thru September 2017 YTD % of Budget Water Revenue (Residential)14,278,688$ 4,792,810$ 33.57% Water Revenue (Commercial & Fire Det.)2,071,031$ 554,747$ 26.79% Water Revenue (Landscape/Irrigation)3,079,054$ 1,305,955$ 42.41% Service Charges 10,106,238$ 2,498,416$ 24.72% Other Operating Revenue 769,106$ 212,310$ 27.60% Total Operating Revenue 30,304,117$ 9,364,238$ 30.90% Revenue (Non-Operating): Interest 275,000$ 62,514$ 22.73% Property Taxes 1,710,000$ 43,499$ 2.54% Other Non-Operating Revenue 604,646$ 158,076$ 26.14% Total Non-Operating Revenue 2,589,646$ 264,089$ 10.20% Total Revenue 32,893,763$ 9,628,327$ 29.27% Expenses (Operating): Variable Water Costs (G.W., Import & Power) Water-Related Costs 11,240,088$ 4,074,541$ 36.25% Fixed Costs 1,443,355$ 440,545$ 30.52% Power-Related Costs 1,285,413$ 288,798$ 22.47% Variable Water Costs Related Expenses Total 13,968,855$ 4,803,884$ 34.39% Salary Related Expenses 8,859,867$ 1,956,059$ 22.08% Salary Related Expenses - Limited-term Staff -$ -$ 0.00% Reduction for Capital Project Labor (215,000)$ -$ 0.00% Salary Related Expenses Total 8,644,867$ 1,956,059$ 22.63% Supplies & Services Communications 189,565$ 46,882$ 24.73% Contractual Services 519,653$ 83,706$ 16.11% Data Processing 235,322$ 35,137$ 14.93% Dues & Memberships 80,492$ 30,399$ 37.77% Fees & Permits 264,641$ 28,581$ 10.80% Board Election -$ -$ 0.00% Insurance 263,506$ 60,315$ 22.89% Materials 797,347$ 192,969$ 24.20% District Activities, Emp Recognition 22,506$ 2,598$ 11.54% Maintenance 339,342$ 108,089$ 31.85% Non-Capital Equipment 104,678$ 18,816$ 17.98% Office Expense 39,662$ 9,199$ 23.19% Professional Services 650,108$ 110,549$ 17.00% Training 61,728$ 6,165$ 9.99% Travel & Conferences 102,493$ 12,332$ 12.03% Uncollectible Accounts 17,205$ (74)$ -0.43% Utilities 158,100$ 54,663$ 34.57% Vehicle Expenses 286,812$ 64,529$ 22.50% Supplies & Services Sub-Total 4,133,160$ 864,855$ 20.92% Total Operating Expenses 26,746,883$ 7,624,797$ 28.51% Expenses (Non-Operating) Other Expense 15,220$ 5,983$ 39.31% Total Non-Operating Expenses 15,220$ 5,983$ 39.31% Total Expenses 26,762,103$ 7,630,780$ 28.51% Net Revenues 6,131,660$ 1,997,547$ 32.58% Less: Debt Service (Principal & Interest)2,729,799$ 1,919,271$ 70.31% Less: Committed Capital Expenditures (PayGo)2,635,755$ 472,888$ 17.94% Less: Special Item - Conservation Credit -$ 1,105,809$ 0.00% Transfer to/(from) Reserves 766,107$ (1,500,420)$ -195.85% Net -$ -$ Yorba Linda Water District Water Enterprise FY18 ProForma - Use of Funds September 2017 Yorba Linda Water District Summary Financial Report Water & Sewer Funds For Period Ending September 30, 2017 Annual YTD Sept YTD YTD Actual Prior Year Prior Year YTD Actual YTD Actual Budget Budget Actual Actual (Under) Over Sept. Actual Actual (thru vs vs FY 2018 FY 2018 FY 2018 FY 2018 YTD Budget FY 2017 Sept. 2016)PY Actual $PY Actual % Revenue (Operating): Water Revenue (Residential)$14,278,688 $4,661,992 $1,495,544 $4,792,810 130,818 $1,731,254 $4,334,221 $458,589 10.58% Water Revenue (Commercial & Fire Det.)2,071,031 676,192 162,479 554,747 (121,445)204,712 528,033 26,714 5.06% Water Revenue (Landscape/Irrigation)3,079,054 1,005,311 398,933 1,305,955 300,644 502,994 1,237,540 68,415 5.53% Water Revenue (Service Charge)10,106,238 2,526,560 831,686 2,498,416 (28,144)827,872 2,652,485 (154,069)-5.81% Sewer Charge Revenue 2,032,245 508,061 172,049 507,350 (711)159,783 451,458 55,892 12.38% Locke Ranch Assessments 223,000 - 130 214 214 193 267 (53) 0.00% Other Operating Revenue 866,161 216,540 83,919 240,882 24,342 84,756 266,331 (25,449)-9.56% Total Operating Revenue:32,656,417 9,594,655 3,144,740 9,900,374 305,719 3,511,564 9,470,335 430,039 4.54% Revenue (Non-Operating): Interest 310,000 77,500 28,555 67,599 (9,901)24,431 54,720 12,879 23.54% Property Tax 1,710,000 42,847 40,856 43,499 652 39,001 41,529 1,970 0.00% Other Non-Operating Revenue 624,521 156,131 8,560 159,127 2,996 52,453 93,840 65,288 69.57% Total Non-Operating Revenue:2,644,521 276,478 77,971 270,225 (6,253)115,885 190,089 80,137 42.16% Total Revenue 35,300,938 9,871,134 3,222,711 10,170,599 299,465 3,627,449 9,660,424 510,176 5.28% Expenses (Operating): Variable Water Costs (G.W., Import & Power)13,968,855 4,538,160 1,616,164 4,581,616 43,457 1,262,158 4,186,449 395,167 9.44% Salary Related Expenses 9,643,124 2,099,915 674,726 1,928,839 (171,075)635,195 2,267,698 (338,859)-14.94% Supplies & Services 4,621,895 1,023,851 337,733 972,432 (51,419)326,800 1,060,578 (88,146) -8.31% Total Operating Expenses 28,233,874 7,661,925 2,628,623 7,482,887 (179,038)2,224,153 7,514,725 (31,837)-0.42% Expenses (Non-Operating): Interest on Long Term Debt 1,489,796 339,635 111,181 333,542 (6,093) 155,918 423,879 (90,337) -21.31% Other Expense 15,220 3,805 458 5,983 2,178 458 (25,930)31,912 123.07% Total Non-Operating Expenses:1,505,016 343,440 111,639 339,525 (3,915) 156,376 397,949 (58,424) -14.68% Total Expenses 29,738,890 8,005,366 2,740,262 7,822,412 (182,953)2,380,529 7,912,674 (90,261)-1.14% Net Position Before Capital Contributions 5,562,048 1,865,768 482,449 2,348,187 482,419 1,246,920 1,747,750 600,437 34.35% Special Item - - 1,105,809 1,105,809 - - 1,105,809 0.00% Capital Contributions (Non-Cash Transaction -- - - - - - 638 (638) 0.00% GASB 34 Compliant) Net Position Before Depreciation 5,562,048 1,865,768 482,449 1,242,378 (623,390)1,246,920 1,748,388 (506,010)-28.94% Depreciation & Amortization 7,182,000 1,795,500 601,956 1,805,868 10,368 592,413 1,777,239 28,629 1.61% Total Net Position ($1,619,952)$70,268 ($119,507)($563,490)($633,758)$654,507 ($28,851)($534,639)-1853.10% (19,030)(54,935) (54,935) (19,764)(59,957) 5,022 -8.38% (With September 30, 2016 for comparison purposes) Annual YTD Sept YTD YTD Actual Prior Year Prior YTD YTD Actual YTD - CUR Budget Budget Actual Actual (Under)Over Sept. Actual Actual (thru vs vs FY 2018 FY 2018 FY 2018 FY 2018 YTD Budget FY 2017 Sept. 2016) PY Actual $PY Actual % Revenue (Operating): Water Revenue (Residential)$14,278,688 $4,661,992 $1,495,544 $4,792,810 130,818 $1,731,254 $4,334,221 $458,589 10.58% Water Revenue (Commercial & Fire Det.)2,071,031 $676,192 162,479 554,747 (121,445)204,712 528,033 26,714 5.06% Water Revenue (Landscape/Irrigation)3,079,054 $1,005,311 398,933 1,305,955 300,644 502,994 1,237,540 68,415 5.53% Water Revenue (Service Charge)10,106,238 2,526,560 831,686 2,498,416 (28,144)827,872 2,652,485 (154,069) -5.81% Other Operating Revenue 769,106 192,277 71,242 212,310 20,033 81,659 243,382 (31,072) -12.77% Total Operating Revenue:30,304,117 9,062,330 2,959,884 9,364,238 301,907 3,348,491 8,995,661 368,577 4.10% Revenue (Non-Operating): Interest 275,000 68,750 26,008 62,514 (6,236)22,688 51,225 11,289 22.04% Property Tax 1,710,000 42,847 40,856 43,499 652 39,001 41,529 1,970 0.00% Other Non-Operating Revenue 604,646 151,162 12,878 158,076 6,915 52,522 93,319 64,757 69.39% Total Non-Operating Revenue:2,589,646 262,759 79,742 264,089 1,330 114,211 186,073 78,016 41.93% Total Revenue 32,893,763 9,325,089 3,039,626 9,628,327 303,237 3,462,702 9,181,734 446,593 4.86% Expenses (Operating): Variable Water Costs (G.W., Import & Power)13,968,855 4,538,160 1,616,164 4,581,616 43,456 1,262,158 4,186,449 395,167 9.44% Salary Related Expenses 8,644,867 1,878,327 602,917 1,716,199 (162,128)561,203 2,023,519 (307,320) -15.19% Supplies & Services: Communications 189,565 47,391 30,528 46,882 (509)40,775 71,012 (24,130) -33.98% Contractual Services 519,653 89,913 29,129 83,706 (6,207)35,140 107,159 (23,453) -21.89% Data Processing 235,322 43,831 10,683 35,137 (8,694)22,071 42,273 (7,136) -16.88% Dues & Memberships 80,492 29,000 4,529 30,399 1,399 521 29,116 1,283 4.41% Fees & Permits 264,641 31,160 10,633 28,581 (2,579)14,292 29,777 (1,196) -4.02% Board Election - - - - - - 72,539 (72,539) -100.00% Insurance 263,506 65,877 19,968 60,315 (5,562)20,095 65,853 (5,538) -8.41% Materials 797,347 199,337 60,681 192,969 (6,368)87,068 213,383 (20,414) -9.57% District Activities, Emp Recognition 22,506 5,627 1,260 2,598 (3,029)457 1,930 669 34.65% Maintenance 339,342 84,836 51,433 108,089 23,254 17,617 50,957 57,132 112.12% Non-Capital Equipment 104,678 21,170 7,872 18,816 (2,353)10,210 22,123 (3,307) -14.95% Office Expense 39,662 9,916 4,493 9,199 (717)4,616 6,442 2,757 42.80% Professional Services 650,108 117,027 36,838 110,549 (6,478)28,806 132,915 (22,366) -16.83% Training 61,728 15,432 1,911 6,165 (9,267)1,513 7,717 (1,552) -20.11% Travel & Conferences 102,493 25,623 7,110 12,332 (13,291)4,357 12,768 (436) -3.42% Uncollectible Accounts 17,205 4,301 (174) (74) (4,375)(418) 3,363 (3,437) -102.20% Utilities 158,100 49,525 10,420 54,663 5,138 9,824 36,004 18,659 51.82% Vehicle Equipment 286,812 71,703 22,728 64,529 (7,174)7,904 80,162 (15,633) -19.50% Supplies & Services Sub-Total 4,133,160 911,667 310,042 864,855 (46,813)304,848 985,492 (120,637) -12.24% Total Operating Expenses 26,746,883 7,328,154 2,529,123 7,162,670 (165,485)2,128,209 7,195,460 (32,790) -0.46% Expenses (Non-Operating): Interest on Long Term Debt 1,489,796 339,635 111,181 333,542 (6,093)155,918 423,879 (90,337) -21.31% Other Expense 15,220 3,805 458 5,983 2,178 458 (25,930) 31,913 123.07% Total Non-Operating Expenses:1,505,016 343,440 111,639 339,525 (3,915) 156,376 397,949 (58,424) -14.68% Total Expenses 28,251,899 7,671,595 2,640,762 7,502,195 (169,400)2,284,585 7,593,409 (91,214) -1.20% Net Position Before Capital Contributions 4,641,864 1,653,495 398,864 2,126,132 472,637 1,178,117 1,588,325 537,807 33.86% Special Item - - 1,105,809 1,105,809 - - 1,105,809 0.00% Capital Contributions (Non-Cash Transaction -- - - - - - - - 0.00% GASB 34 Compliant) Net Position Before Depreciation 4,641,864 1,653,495 398,864 1,020,323 (633,172)1,178,117 1,588,325 (568,002)-35.76% Depreciation & Amortization 5,832,000 1,458,000 488,820 1,466,460 8,460 481,649 1,444,947 21,513 1.49% Total Net Position (1,190,136) 195,495 (89,956) (446,137) (641,632) 696,468 143,378 (589,515) -411.16% Capital - Direct Labor (17,178) (49,804)(49,804) (18,870) (56,678) 6,874 -12.13% (With September 30, 2016 for comparison purposes) Yorba Linda Water District Water Fund For Period Ending September 30, 2017 Annual YTD Sept YTD YTD Actual Prior Year Prior Year YTD Actual YTD - CUR Budget Budget Actual Actual (Under)Over Sept. Actual Actual (thru vs vs FY 2018 FY 2018 FY 2018 FY 2018 YTD Budget FY 2017 Sept. 2016)PY Actual $PY Actual % Revenue (Operating): Sewer Charge Revenue $2,032,245 $508,061 $172,049 $507,350 ($711)$159,783 $451,458 $55,892 12.38% Locke Ranch Assessments 223,000 0 130 214 214 193 267 (53) 0.00% Other Operating Revenue 97,055 24,264 12,678 28,572 4,308 3,097 22,949 5,623 24.50% Total Operating Revenue:2,352,300 532,325 184,857 536,136 3,812 163,073 474,674 61,462 12.95% Revenue (Non-Operating): Interest 35,000 8,750 2,547 5,085 (3,665)1,743 3,495 1,590 45.49% Other Non-Operating Revenue 19,875 4,969 (4,318) 1,051 (3,918)(69) 521 530 101.77% Total Non-Operating Revenue:54,875 13,719 (1,771)6,136 (7,583)1,674 4,016 2,120 52.79% Total Revenue 2,407,174 546,044 183,086 542,272 (3,771)164,747 478,690 63,583 13.28% Expenses (Operating): Salary Related Expenses 998,257 221,587 71,809 212,641 (8,946)73,992 244,179 (31,538)-12.92% Supplies & Services: Communications 12,010 3,003 696 1,769 (1,234)886 3,156 (1,387)-43.94% Contractual Services 28,237 7,059 2,193 6,301 (758)2,632 8,040 (1,739)-21.63% Data Processing 15,078 3,770 804 2,645 (1,125)1,661 3,182 (537)-16.88% Dues & Memberships 6,053 1,513 341 2,288 775 39 2,191 97 4.43% Fees & Permits 17,474 4,369 719 1,798 (2,571)917 1,931 (133)-6.89% Board Election - - - - - - 5,460 (5,460)-100.00% Insurance 19,834 4,959 1,503 4,540 (419)1,513 4,957 (417)-8.41% Materials 51,653 12,913 716 13,207 294 800 7,177 6,030 84.02% District Activities, Emp Recognition 1,694 424 91 192 (232)34 145 47 32.28% Maintenance 170,559 32,640 9,221 24,024 (8,616)5,903 11,572 12,452 107.60% Non-Capital Equipment 20,147 5,037 477 6,436 1,399 1,219 2,760 3,676 133.19% Office Expense 2,963 741 338 692 (49)347 485 208 42.83% Professional Services 40,417 10,104 1,439 6,396 (3,708)1,111 5,362 1,034 19.28% Training 6,782 1,696 125 415 (1,280)92 1,065 (650)-61.00% Travel & Conferences 12,752 3,188 535 1,306 (1,882)328 919 387 42.11% Uncollectible Accounts 1,295 324 29 61 (263)(72) 652 (591)-90.64% Utilities 12,600 3,150 842 4,288 1,138 792 2,878 1,410 48.99% Vehicle Equipment 69,188 17,297 7,622 31,219 13,922 3,749 13,153 18,066 137.36% Supplies & Services Sub-Total 488,735 112,184 27,691 107,577 (4,607) 21,951 75,084 32,493 43.28% Total Operating Expenses 1,486,991 333,771 99,500 320,218 (13,553) 95,943 319,263 955 0.30% Expenses (Non-Operating): Interest Expense - - - - - - - - - Other Expense - - - - - - - - - Total Non-Operating Expenses:- - - - - - - - 0.00% Total Expenses 1,486,991 333,771 99,500 320,218 (13,553) 95,943 319,263 955 0.30% Net Position Before Capital Contributions 920,183 212,272 83,586 222,054 9,782 68,804 159,427 62,628 39.28% Capital Contributions (Non-Cash Transaction -- - - - - - 638 (638) 0.00% GASB 34 Compliant) Net Position Before Depreciation 920,183 212,272 83,586 222,054 9,782 68,804 160,065 61,990 38.73% Depreciation & Amortization 1,350,000 337,500 113,136 339,408 1,908 110,764 332,292 7,116 2.14% Total Net Position (429,817) (125,228) (29,550) (117,354) 7,874 (41,960) (172,227) 54,874 31.86% Capital - Direct Labor (1,853) (5,130)(5,130) (893) (3,279)(1,851)56.45% Yorba Linda Water District Sewer Fund For Period Ending September 30, 2017 (With September 30, 2016 for comparison purposes) 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 July August September 72,759 72,759 72,759 1,392,554 1,567,572 1,403,213 Variable Water Cost (Variable vs. Fixed Expenses) Variable Portion of Costs Fixed Portion of Costs 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 July Augsut September October November December Januay February March April May June Variable Costs Analysis 2015-16 Var Costs 2016-17 Var Costs 2017-18 Var Costs (includes 100% of Annual Connection Charge in July) ITEM NO. 11.2 AGENDA REPORT Meeting Date: October 24, 2017 Subject:Joint Agency Committee with City of Yorba Linda (Miller/Hawkins) · Minutes of the meeting held September 18, 2017 at 4:00 p.m. · Next meeting scheduled December 18, 2017 at 4:00 p.m. at YL City Hall. ATTACHMENTS: Name:Description:Type: 2017-09-18_-_Minutes_-_YLWD-City_of_YL.pdf Minutes Minutes YLWD/CC Joint Advisory Committee Minutes September 18, 2017 CITY OF YORBA LINDA Land of Gracious Living YORBA LINDA WATER DISTRICT/ CITY COUNCIL JOINT ADVISORY COMMITTEE MEETING MINUTES September 18, 2017 4:00 p.m. CALL TO ORDER The Yorba Linda Water District/City Council Joint Advisory Committee meeting convened at 4:05 p.m. in the Council Chambers at 4845 Casa Loma Avenue, Yorba Linda. PLEDGE OF ALLEGIANCE ROLL CALL Committee Members City Council: Beth Haney, Councilwoman Tom Lindsey, Councilman Water District: Al Nederhood, Director Phil Hawkins, Director Committee Members Absent: J. Wayne Miller, President Staff Members: Marc Marcantonio, General Manager YL Water District Staff Members Absent: Mark Pulone, City Manager City of Yorba Linda YLWD/CC Joint Advisory Committee Minutes September 18, 2017 PUBLIC COMMENTS Pat Nelson, resident, stated her disapproval of the recent conservation credits issued to all rate payers, regardless of their water saving efforts. She said the action encouraged bad behavior and conveyed the wrong message. Julia Shultz, resident, spoke in opposition to the recent conservation credits and thought the monies could have been used for future projects. Greg Shultz, resident, agreed with the previous two speakers and expressed his frustration about the conservation credits. ACTION CALENDAR 1. Minutes of the YLWD/City Council Joint Advisory Committee meeting held on June 12, 2017. The YLWD/City Council Joint Advisory Committee approved the minutes of the June 12, 2017 meeting. DISCUSSION ITEMS 2. Drought Response, Water Conservation/Administrative Penalty Ordinances, and Community Outreach General Manager Marc Marcantonio spoke about the conservation credits issued to all active water accounts. These were equally divided between every water connection from remaining penalty funds held in the Conservation Reserve. He stated that the conservation department was now closed. General Manager Marcantonio said that a discussion was occurring regarding a Citizen Advisory Committee recommendation to provide a refund of revenues collected pending a favorable Fitch Credit Review. This discussion would be an action item at the September 26th YLWD Board meeting. General Manager Marcantonio spoke in detail about the “In-Lieu Program”. He explained that during the drought the aquifer had been significantly over-drafted and that the YLWD had been working closely with Orange County groundwater producers to find a solution to this. Mr. Marcantonio said that an innovative plan had been developed to be able to keep more water stored in the aquifer for future drought conditions. Pat Nelson, resident, stated that it would have been a better idea to have cities or agencies apply for a refund or the money could have been used to pay down bonds or pensions. YLWD/CC Joint Advisory Committee Minutes September 18, 2017 Julia Shultz, resident, said that as a staunch conservative she likes stability and prefers not to give back money when it’s not really necessary. 3. Current Water Conservation Legislation General Manager Marcantonio reviewed AB 1668/SB 606 and SB 623 and said he was happy to report that these bills did not pass the legislature. Pat Nelson, resident, spoke about SB 623 and referenced an article written by Assemblyman Phillip Chen in opposition to this tax increase. She was glad to hear the proposed bill did not pass and suggested that everyone support candidates who do not believe in over spending. 4. Support for California WaterFix Assistant General Manager Brett Barbre, explained the state-of-the-art solution to modernize, repair and protect California’s aging water delivery system and responded to questions from the committee members. 5. Emergency Response Planning General Manager Marcantonio spoke about emergency response planning and stated that it was important to develop close relations between all first responder agencies, of which the Water/Wastewater Sector is one. The National Infrastructure Protection Plan includes Water/Wastewater Sector specific plans, and all agencies need to be aware of our capabilities and vulnerabilities, response actions, protocols and disaster plans. We hope to meet with the City, law enforcement and fire services to improve our interoperability, communications, and overall disaster response. We recently met with Chief Kovacs for an initial meeting and need to meet with other first responder and City staff to provide the community with the right response when conditions dictate it. Pat Nelson, resident, commented on a water main break in San Diego during a conference she attended and stated she was glad to hear the Water District is preparing themselves in case of an emergency. Julia Shultz, resident, complimented the Water District staff for always addressing matters quickly and efficiently. She also stated her appreciation for the joint meetings which are important and suggested holding informational seminars to educate the public. Greg Shultz, suggested that a kiosk be placed in the new Town Center to include factual informational news such as events and upcoming legislation affecting the community. Councilman Lindsey asked for an update on the Fairmont pump station and a sewer pipe break which occurred last week. Engineering Manager Steve Conklin reported that a big water line break occurred on Casa Loma Avenue and the crew were able to have it repaired and back in operation YLWD/CC Joint Advisory Committee Minutes September 18, 2017 within three hours. He also said that work is progressing on schedule on the Fairmont pump station and that completion was expected in early 2019. Director Phil Hawkins asked for an update on the Town Center development. Public Works Director/City Engineer Michael Wolfe reported that work on the parking structure as well as the street improvements had begun, and that completion was expected by next spring. He also said that the initial design phase of the new library and arts center was complete and a construction management firm was in place. 6. Future Meeting Date and Agenda Items The Committee agreed to meet again on Monday, December 18, 2017 at 4:00 p.m. No additional items for the next Agenda were discussed. ADJOURNMENT General Manager Marc Marcantonio adjourned the meeting at 5:21 p.m. to the next Yorba Linda Water District/City Council Advisory Committee Joint meeting on Monday, December 18, 2017 at 4:00 p.m. ITEM NO. 13.1 AGENDA REPORT Meeting Date: October 24, 2017 Subject:Meetings from October 25 - December 31, 2017 ATTACHMENTS: Name:Description:Type: BOD_-_Activities_Calendar.pdf Backup Material Backup Material Event Date Time Attendance By October MWDOC/OCWD Joint Planning Committee Wed, Oct 25 8:30 AM Jones/Nederhood OCSD Wed, Oct 25 6:00 PM Hawkins/Jones Yorba Linda Planning Commission Wed, Oct 25 6:30 PM Hawkins (As Needed) OCWD Groundwater Adventure Tour Thu, Oct 26 8:00 AM Jones ISDOC Thu, Oct 26 11:30 AM Hawkins/Nederhood November MWDOC Wed, Nov 1 8:30 AM Nederhood OCSD Operations Committee Wed, Nov 1 5:00 PM Hawkins OCWD Wed, Nov 1 5:30 PM Jones YL State of the City Thu, Nov 2 11:30 AM Jones/Miller/Nederhood MWDOC Elected Officials' Forum Thu, Nov 2 6:00 PM Jones/Miller/Nederhood WACO Fri, Nov 3 7:30 AM Jones (All Directors PA) Well 21 Ribbon Cutting Ceremony Fri, Nov 3 10:00 AM Hall/Miller/Nederhood ISDOC Executive Committee Tue, Nov 7 7:30 AM Nederhood Yorba Linda City Council Tue, Nov 7 6:30 PM Miller LAFCO Wed, Nov 8 8:00 AM Nederhood (As Needed) Board of Directors Regular Meeting Tue, Nov 14 6:30 PM MWDOC Wed, Nov 15 8:30 AM Nederhood OCWD Wed, Nov 15 5:30 PM Jones Yorba Linda Planning Commission Wed, Nov 15 6:30 PM Hawkins (As Needed) Board of Directors Workshop Meeting Thu, Nov 16 6:30 PM OCSD State of the District Fri, Nov 17 8:00 AM Hawkins/Nederhood Interagency Committee Meeting with MWDOC and OCWD Mon, Nov 20 4:00 PM Miller/Nederhood YL City Council Tue, Nov 21 6:30 PM Nederhood OCSD Wed, Nov 22 6:00 PM Hawkins/Jones District Offices Closed Thu, Nov 23 7:00 AM ACWA/JPIA Fall Conference Mon, Nov 27 8:00 AM Nederhood ACWA/JPIA Fall Conference Tue, Nov 28 8:00 AM Nederhood ACWA Fall Conference Tue, Nov 28 8:00 AM Jones/Nederhood Board of Directors Regular Meeting Tue, Nov 28 6:30 PM ACWA Fall Conference Wed, Nov 29 8:00 AM Jones/Nederhood Yorba Linda Planning Commission Wed, Nov 29 6:30 PM Hawkins (As Needed) ACWA Fall Conference Thu, Nov 30 8:00 AM Jones/Nederhood December WACO Fri, Dec 1 7:30 AM Jones (All Directors PA) ACWA Fall Conference Fri, Dec 1 8:00 AM Jones/Nederhood ISDOC Executive Committee Tue, Dec 5 7:30 AM Nederhood Yorba Linda City Council Tue, Dec 5 6:30 PM Hall MWDOC Wed, Dec 6 8:30 AM Nederhood OCSD Operations Committee Wed, Dec 6 5:00 PM Hawkins OCWD Wed, Dec 6 5:30 PM Jones Board of Directors Workshop Meeting Thu, Dec 7 6:30 PM WACO Fri, Dec 8 7:30 AM Jones (All Board) Board of Directors Regular Meeting Tue, Dec 12 6:30 PM CRWUA Annual Conference Wed, Dec 13 8:00 AM Jones/Nederhood LAFCO Wed, Dec 13 8:00 AM Nederhood (As Needed) Yorba Linda Planning Commission Wed, Dec 13 6:30 PM Hawkins (As Needed) CRWUA Annual Conference Thu, Dec 14 8:00 AM Jones/Nederhood CRWUA Annual Conference Fri, Dec 15 8:00 AM Jones/Nederhood Joint Committee Meeting with City of Yorba Linda Mon, Dec 18 4:00 PM Nederhood/Hawkins YL City Council Tue, Dec 19 6:30 PM Hawkins MWDOC Wed, Dec 20 8:30 AM Nederhood OCWD Wed, Dec 20 5:30 PM Jones OCSD Wed, Dec 20 6:00 PM Hawkins/Jones District Offices Closed Mon, Dec 25 7:00 AM Yorba Linda Planning Commission Wed, Dec 27 6:30 PM Hawkins (As Needed) PA = Preauthorized Board of Directors Activity Calendar ITEM NO. 14.1 AGENDA REPORT Meeting Date: October 24, 2017 Subject:OCWA Luncheon - October 18, 2017 OCSD State of the District - November 17, 2017 STAFF RECOMMENDATION: That the Board of Directors ratify and/or approve Director attendance at these events if desired. ATTACHMENTS: Name:Description:Type: OCWA_Luncheon.pdf Backup Material Backup Material OCSD_Event.pdf Backup Material Backup Material OCWA LuncheonAnnouncement ctober,2017 I Oran a County _ ' ater Associatiory Fnlnhliwfiwrl 1117 �� J V — 61 j �1 �4 id JV October 18 Luncheon: To Register for the Developing and Implementing a October 18 Successful Asset Management Luncheon Presentation Program CLICK HERE Speakers: Roop Lutchman, Wednesday PE, PMP October 18,2017 11:30 am to 1:30 pm Principal, Business Consulting GHD Dave&Busters Irvine Spectrum 661 Spectrum Center Drive Irvine,California 92618 Ken Ortega (949)727-0555 Assistant General Manager, Water Replenishment District of Southern California Abstract Asset Management has been practiced for many years by a variety of Registration Info: organizations.Corporations,municipalities and,in general,owners of all The cost for sorts have created(or acquired)assets or infrastructure to meet their registration is: customers and citizens needs.In addition,they've invested operating and capital resources to ensure the availability and reliability of these assets $30 for OCWA members with over time. reservations before noon on Tuesday, Unfortunately,many asset owners are not always confident they're October 17 doing the right thing with those assets at the right time,at the right cost, and for the right reason.In a time of plenty,they can afford to"do more $40 for OCWA members with with more,"but as resources become limited,they're forced to figure out a without reservations after noon on Tuesday, how to"do more with less."And if they can't figure this out,they find October 17 themselves"doing less with less,"and as fiscal challenges rise the risk of troubles multiplies,a predicament that could lead to bankruptcy. $40 for non-members In response to these new realities,comprehensive asset management was Cancellations conceived as a series of"best in class concepts"focusing on strategy, must be received business processes,people and technology.Asset Management is all by the reservation deadline. about new ways to collaborate around the asset life;cycle. Late cancellations and no-shows will be billed. When Asset Management is successful,there's adequate capability to apply leading practices in all phases of business operations,and this For additional information, capability is reliably utilized to achieve the right balance,or level of please contact: service or production at the lowest cost and at an acceptable level of Leticia Villarreal risk.When properly applied,corporations can move to a"doing more (714)378-3203 with less"environment,which helps them sustain a high level of performance. The Executive Managment Team at the Water Replenishment District of Southern California(WRD)recognized early the importance of Asset Management to their business model.In cooperation with GHD,they moved quickly to embark on a comprehensive program of Asset Management. Join us October 18 for a fascinating overview of WRD's Asset Management journey.Our speakers will share their experiences,and their results,in what promises to be a useful exposition for those who are currently engaged in Asset Management,or in process of starting their own programs. About Our Speakers Roop Luchtman is a principal in GHD's Business Consulting/Advisory Services.With over 34 years of combined management consulting and industry experience,Roop is a professional engineer,project management professional,and recognized industry expert in the advisory services area.He has specific focus in Asset Management, Business Optimization,Knowledge&Information Management Solutions,and Project Management. Roop is the author of three books on these subjects,all published by DESTech Publishers: Computerized Work Management Systems for Utilities and Plant Operations(2003),Sustainable Asset Management (2006)and Creating and Managing Sustainable Organizations(2011). Roop is passionate about helping clients make the right decisions and develop the best solutions for their business. ORANGE COUNTY SANITATION DISTRICT OF THE BREAKFAST Friday, November 17, 2017 8 a.m. - 10 a.m. (Optional plant tour available after the event) Join Gregory C. Sebourn, Board Chair. David Shawver, Vice Chair, and Jim Herberg, General Manager as we discuss our accomplishements and exciting advances. ClubhouseMile Square Golf Course 10401 Warne r Avenue, Founta i n Val ley. CA 92 708 For questions. en-tail-forinforrnafion�Docsd.corn l BACKUP MATERIALS DISTRIBUTED LESS THAN 72 HOURS PRIOR TO THE MEETING M E M O R A N D U M TO: YLWD Board of Directors FROM: Brett R. Barbre DATE: October 24, 2017 RE: PARS Team for the YLWD Section 115 Trust Account PARS PARS is the trust administrator and consultant. They provide record keeping/sub-trust accounting, trustee and actuarial coordination. PARS also monitors contributions and plan compliance while also serving as ongoing client liaison. US BANK US Bank serves as the OPEB plan trustee for the District. They safeguard the plan assets; provide oversight protection; serves as the plans fiduciary and custodian of assets. HIGH MARK High Mark Capital Management is the investment manager of the Trust. They are an investment sub- advisor to US Bank. PARS US Bank High Mark Capital Role Trust Administrator Trustee Investment Manager Experience 33 years 154 years 98 years $ Managed $1.8 billion $4 trillion $15 billion Set-up Fee None None None Ongoing Fee 25 bp (.25%) 35 bp (.35%) Share US Bank fee ITEM NO. 8.2. MATERIALS SUBMITTED BY: Brett Barbre MEETING DATE: October 24, 2017 M E M O R A N D U M TO: YLWD Board of Directors FROM: Brett R. Barbre DATE: October 24, 2017 RE: The Steps to Opening a PARS Section 115 Trust Account STEP 1 YLWD Board of Directors authorizes the establishment of a Pension Trust and appoints a Plan Administrator. COMPLETED – 10-10-17 STEP 2 PARS provides legal documents for signature by Plan Administrator (YLWD General Manager Marc Marcantonio) upon approval of legal counsel. IN PROCESS STEP 3 YLWD Board develops policies and procedures for future annual contributions. ACTION ITEM 10-24-17 – Item 8.2 STEP 4 YLWD Board of Directors develops investment policy and guidelines for Investment Manager through workshop. Set the following items:  Target Discount Rate  Risk Tolerance  Active or Passive; custom investment strategy or model  Outline prohibited Investments WORKSHOP TO BE SCHEDULED STEP 5 YLWD Board of Directors approves initial deposit to Trust Fund. TO BE DETERMINED STEP 6 YLWD Board develops policies and procedures for future disbursements. TO BE DETERMINED ITEM NO. 8.2. MATERIALS SUBMITTED BY: Brett Barbre MEETING DATE: October 24, 2017 October 20, 2017 Honorable J. Wayne Miller Ph.D. President Yorba Linda Water District Board of Directors 1717 East Miraloma Avenue Placentia, CA 92870 Re: Special District Representative to the Orange County Redevelopment Agency Oversight Board Dear Mr. Miller, I am writing to seek your support in representing the Independent Special Districts of Orange County (ISDOC) on the Orange County Redevelopment Agency Oversight Board. Under California redevelopment law, each county is required to consolidate all remaining redevelopment oversight agencies into one oversight board per county. It would be my honor to serve your agency and surrounding special districts in ensuring continued outstanding public service that benefits our communities. Since 2012, I have represented the South County Special Districts as a Board Member and two-time Chairman of the City of Mission Viejo’s Redevelopment Oversight Board. With five years of direct experience as a Redevelopment Oversight Board Member, I am uniquely qualified to represent special districts and have a well-developed understanding of the complexities of redevelopment law. Vitally important but often-overlooked, Orange County’s special districts deliver the necessary public services that maintain our community’s health, protect our safety, supply our water, and preserve our parks and recreational facilities. As your representative on the Orange County Redevelopment Agency Oversight Board, I will help each special district continue to achieve its vital public service. Local government agencies are stronger when we work together to serve the public. During my three terms as a member of the Moulton Niguel Water District Board of Directors, our district has earned a reputation as a strong community partner. In response to California’s drought emergency, Moulton Niguel managed a number of successful water efficiency measures, including a turf replacement program, that helped many cities and special districts conserve water and save money. This fall, we marked a significant milestone: more than a quarter billion gallons of annual water savings -- a remarkable achievement made possible thanks to the cooperation of every Orange County local government agency. ITEM NO. 8.3. MATERIALS SUBMITTED BY: Brett Barbre MEETING DATE: October 24, 2017 Thank you for your consideration, and I would be honored to represent Orange County’s special districts on the Orange Country Redevelopment Oversight Board. If you have any questions, please reach me directly at (949) 533-4254 or email brian@probolsky.com. Sincerely, Brian S. Probolsky Vice President, Moulton Niguel Water District ITEM NO. 8.3. MATERIALS SUBMITTED BY: Brett Barbre MEETING DATE: October 24, 2017 ITEM NO. 8.3.MATERIALS SUBMITTED BY: Brett Barbre MEETING DATE: October 24, 2017 ITEM NO. 8.3.MATERIALS SUBMITTED BY: Brett Barbre MEETING DATE: October 24, 2017 Below is a chart summarizing the yields as well as terms and maturities for the month of September 2017: Average # of Month Portfolio Days to of 2017 Yield Maturity September 1.21%111 Below are charts comparing operating fund interest for current and prior fiscal years. Actual Interest 9/30/2016 9/30/2017 Monthly - September 25,136$ 28,555$ Year-to-Date 55,426$ 67,599$ Budget 2016/2017 2017/2018 Interest Budget, September YTD 28,750$ 77,500$ Interest Budget, Annual 115,000$ 310,000$ Interest earned on investments is recorded in the fund that owns the investment. The distribution of investments in the portfolio both in dollars and as a percentage of the total portfolio by funds is as follows: Total of $37.6 million in cash and investments which is split between minimum reserve requirements and what is available to meet current year obligations (operating costs, debt service, capital costs). The number of Days in Cash for Un-Restricted Water Reserve balance is 360 and Un-Restricted Sewer Reserve balance is 1,159. Reserve Cash and Requirements Investments August 2017 % Alloc September 2017 % Alloc "Target Available for Fund Description Balance 8/31/2017 Balance 9/30/2017 Levels"CY Obligations Water Operating Reserve 14,538,404$ 42.96%13,165,844$ 39.98%9,459,287$ 3,706,557$ Water Emergency Reserve 3,469,414 10.25%3,469,057 10.53%7,790,359 (4,321,302) Water Capital Project Reserve 5,242,447 15.49%5,714,160 17.35%5,716,336 (2,176) Rate Stabilization Reserve 4,010,178 11.85%4,006,898 12.17%3,957,692 49,206 Un-Restricted Water Reserve Balance 27,260,443 26,355,959 26,923,674 (567,715) Conservation Reserve 111,262 0.33%104,010 0.32%- 104,010$ Employee Liability Reserve 1,749,928 5.17%1,749,887 5.31%272,054 1,477,833 Restricted Reserve Balance 1,861,190 1,853,897 272,054 1,581,843 Sewer Operating Reserve 1,244,779 3.68%656,273 1.99%498,142$ 158,131$ Sewer Emergency Reserve 1,150,036 3.40%2,545,934 7.73%2,545,934 (0) Sewer Capital Project Reserve 2,327,514 6.88%1,518,337 4.61%1,519,358 (1,021) Un-Restricted Sewer Reserve Balance 4,722,329 4,720,544 4,563,434 157,110 Total Reserve Balances 33,843,961$ 100.00%32,930,401$ 100.00%31,759,162$ 1,171,239$ Water Operating 175,268 424,609 Sewer Operating 125,130 15,410 300,397 440,019 Revenue Bond 2017A-Acquisition Fund 4,605,805 4,296,086 Total Cash and Investments 38,750,164$ 37,666,506$ Cash & Investment Summary Report Cash & Investment Summary Comparison Between Current and Previous Month Wells Fargo Bank Checking US Bank Held (Restricted) REVISED ITEM NO. 9.1. MATERIALS SUBMITTED BY: Kelly McCann MEETING DATE: October 24, 2017