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HomeMy WebLinkAbout2018-10-09 - Board of Directors Meeting Agenda Packet (B) AGENDA YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Tuesday, October 9, 2018, 6:30 PM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL Al Nederhood, President Brooke Jones, Vice President Andrew J. Hall, Director Phil Hawkins, Director J. Wayne Miller, 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 Regular Meeting Held August 28, 2018 Recommendation: That the Board of Directors approve the minutes as presented. 7.2. Minutes of the Board of Directors Special and Regular Meetings Held September 11, 2018 Recommendation: That the Board of Directors approve the minutes as presented. 7.3. Payments of Bills, Refunds, and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $2,432,746.16. 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. Establishing Procedure for the Presentation of Claims Not Covered by the Government Claims Act Recommendation: That the Board of Directors adopt Ordinance No. 18-01 establishing a Local Claims Ordinance and delegating authority to the General Manager to resolve small claims. 8.2. Amending the District's Conflict of Interest Code Recommendation: That the Board of Directors approve Resolution No. 18-31 adopting a Conflict of Interest Code which supersedes all prior Conflict of Interest Codes and amendments previously adopted. 8.3. Election of Independent Special District of Orange County (ISDOC) Officers Recommendation: That the Board of Directors instruct the President or alternate Director to cast the District's ballot in this election. 8.4. Audit Report for Fiscal Year Ending June 30, 2018 Recommendation: That the Board of Directors receive and file the Yorba Linda Water District Comprehensive Annual Financial Reports for Fiscal Year Ending June 30, 2018, the Report on Internal Control, and the Communication to Those in Governance Letter. 8.5. Adjourn to Yorba Linda Water District Financing Authority and Public Financing Corporation Regular Meetings 9. DISCUSSION ITEMS This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action of the Board of Directors at the meeting, such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking the advice and counsel of the Board of Directors. Time permitting, it is generally in the District’s interest to discuss these more complex matters at one meeting and consider formal action at another meeting. This portion of the agenda may also include items for information only. 9.1. Results of Annual Assessment of Governing Board Effectiveness 9.2. Status of Engineering Activities 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 (Nederhood/Jones) · Minutes of the meeting held September 27, 2018 at 4:00 p.m. will be provided when available. · Next meeting scheduled November 19, 2018 at 4:00 p.m. 11.2. Joint Agency Committee with City of Yorba Linda (Nederhood/Jones) · Minutes of meeting held September 10, 2018 at 4:00 p.m. · Next meeting scheduled December 10, 2018 at 4:00 p.m. at YL City Hall. 11.3. Joint Agency Committee with City of Placentia (Nederhood/Jones) · Next meeting yet to be scheduled. 12. INTERGOVERNMENTAL MEETINGS 12.1. CSDA Annual Conference - September 24-27, 2018 (Nederhood) 12.2. OCSD Board - September 26, 2018 (Hawkins) 12.3. MWD Inspection Trip - September 28-30, 2018 (Miller) 12.4. YL City Council - October 2, 2018 (Jones) 12.5. MWDOC Board - October 3, 2018 (Jones) 12.6. OCSD Operations Committee - October 3, 2018 (Hawkins) 12.7. OCWD Board - October 3, 2018 (Miller/Jones) 12.8. ACWA MCL Economic Feasibility Work Group - October 4, 2018 (Miller) 12.9. WACO - October 5, 2018 13. BOARD OF DIRECTORS ACTIVITY CALENDAR 13.1. Meetings from October 10 - December 31, 2018 14. ADJOURNMENT 14.1. A Board of Directors Workshop Meeting has been scheduled Wednesday, October 17, 2018 at 4:30 p.m. The Regular Meeting scheduled Tuesday, October 23, 2018 has been cancelled. The next Regular Meeting will be held Tuesday, November 13, 2018. Closed Session (if necessary) will begin at 5:30 p.m. 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 9, 2018 Subject:Minutes of the Board of Directors Regular Meeting Held August 28, 2018 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name:Description:Type: 2018-08-28_-_Minutes_-_BOD_(B).docx Minutes Minutes Minutes of the YLWD Board of Directors Regular Meeting Held August 28, 2018 at 6:30 p.m. 1 2018-XXX MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Tuesday, August 28, 2018, 6:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 6:30 p.m. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL DIRECTORS PRESENT STAFF PRESENT Al Nederhood, President Marc Marcantonio, General Manager Brooke Jones, Vice President Brett Barbre, Assistant General Manager Andrew J. Hall John DeCriscio, Operations Manager J. Wayne Miller Gina Knight, HR/Risk and Safety Manager Delia Lugo, Finance Manager DIRECTORS ABSENT Rosanne Weston, Engineering Manager Phil Hawkins Annie Alexander, Exec Asst/Board Secretary Mike Carreon, Facilities Maintenance Worker Malissa Muttaraid, Public Affairs Specialist Kaden Young, Management Analyst ALSO PRESENT Andrew Gagen, General Counsel, Kidman Gagen Law LLP Joe Berg, Director of Water Use Efficiency, Municipal Water District of Orange County (MWDOC) 4. ADDITIONS/DELETIONS TO THE AGENDA None 5. INTRODUCTIONS AND PRESENTATIONS 5.1. Elected Official Liaison Reports Assistant General Manager Brett Barbre, in his capacity as Director for MWDOC and the Metropolitan Water District of Southern California (MET), reported on the recent activities of both agencies. Minutes of the YLWD Board of Directors Regular Meeting Held August 28, 2018 at 6:30 p.m. 2 2018-XXX 6. PUBLIC COMMENTS None. 7. CONSENT CALENDAR Vice President Jones requested to remove Item No. 7.4. from the Consent Calendar for separate action. Director Jones made a motion, seconded by Director Miller, to approve the remainder of the Consent Calendar. Motion carried 4-0-0-1 with Director Hawkins being absent. 7.1. Minutes of the Board of Directors Regular Meeting Held July 10, 2018 Recommendation: That the Board of Directors approve the minutes as presented. 7.2. Minutes of the Board of Directors Special Meeting Held July 24, 2018 Recommendation: That the Board of Directors approve the minutes as presented. 7.3. Authorization of Director Attendance at Conferences, Seminars, and Special Events Recommendation: That the Board of Directors approve Director attendance at the Water Education Foundation Summit on September 20, 2018. 7.5. Payments of Bills, Refunds, and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $1,276,331.84. ITEMS REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE ACTION 7.4. Vehicle Replacement for Operations Department Staff responded to questions from the Board regarding the District’s vehicle replacement program. Minutes of the YLWD Board of Directors Regular Meeting Held August 28, 2018 at 6:30 p.m. 3 2018-XXX Director Jones made a motion, seconded by Director Miller, to authorize the General Manager to purchase three vehicles from George Chevrolet for $81,558.66 and $5,000 for vehicle equipment, totaling in $86,558.66. Motion carried 4-0-0-1 with Director Hawkins being absent. 8. DISCUSSION ITEMS 8.1. MWDOC’s Water Use Efficiency (WUE) Programs and Initiatives (Nederhood) Joe Berg from MWDOC presented information on the following topics: how WUE programs were implemented in Southern California; why these programs were implemented regionally; programs provided by MET and MWDOC; future opportunities for program expansion; YLWD’s historical urban water use and future targets; YLWD’s historical participation in MWDOC’s programs; and ideas for promoting available programs to YLWD’s customers. 8.2. Unaudited Financial Statements for the Fourth Quarter of FY18 Staff reviewed key information contained in this report. 9. REPORTS, INFORMATION ITEMS, AND COMMENTS 9.1. Directors' Reports Director Miller reported on his attendance at the ACWA Water Quality Committee Meeting on August 23, 2018. President Nederhood reported on his attendance at the UWI Conference held August 22-24, 2018. 9.2. General Manager's Report General Manager Marc Marcantonio asked each of the managers in attendance to report on activities within their respective departments. He then informed the Board of some upcoming events. 9.3. General Counsel’s Report None. Minutes of the YLWD Board of Directors Regular Meeting Held August 28, 2018 at 6:30 p.m. 4 2018-XXX 9.4. Future Agenda Items and Staff Tasks The Board and staff briefly reviewed matters to be discussed at the first regular Board meeting in January. The group also discussed staff efforts to finalize the 5-year forecast of the District’s operating budget and scheduling a future workshop meeting to review same. Staff noted that a presentation on the proposed Poseidon Desalination Project would be provided at the regular meeting on September 11, 2018. 10. COMMITTEE REPORTS 10.1. Interagency Committee with MWDOC and OCWD (Nederhood/Jones) Minutes of the meeting held July 26, 2018 at 4:00 p.m. will be provided when available. Next meeting is scheduled September 27, 2018 at 4:00 p.m. 10.2. Joint Agency Committee with City of Yorba Linda (Nederhood/Jones) Next meeting is scheduled September 10, 2018 at 4:00 p.m. at YL City Hall. 10.3. Joint Agency Committee with City of Placentia (Nederhood/Jones) Next meeting is yet to be scheduled. 11. INTERGOVERNMENTAL MEETINGS The Directors noted their attendance at the following meetings and events. 11.1. MWDOC Board – August 15, 2018 (Nederhood/Jones) 11.2. OCWA Luncheon – August 15, 2018 (Jones/Miller/Nederhood) 11.3. OCWD Board – August 15, 2018 (Miller/Jones) 11.4. YL Planning Commission – August 15, 2018 (Hawkins – As Needed) 11.5 YL City Council – August 21, 2018 (Hall) 11.6. UWI Conference – August 22-24, 2018 (Jones/Nederhood) Minutes of the YLWD Board of Directors Regular Meeting Held August 28, 2018 at 6:30 p.m. 5 2018-XXX 11.7. OCSD Board – August 22, 2018 (Hawkins) 11.8. ACWA Water Quality Committee Meeting – August 23, 2018 (Miller) 12. BOARD OF DIRECTORS ACTIVITY CALENDAR 12.1. Meetings from August 29 – October 31, 2018 The Board made no changes to the activity calendar. 13. ADJOURNMENT 13.1. The meeting was adjourned at 8:54 p.m. Annie Alexander Board Secretary ITEM NO. 7.2 AGENDA REPORT Meeting Date: October 9, 2018 Subject:Minutes of the Board of Directors Special and Regular Meetings Held September 11, 2018 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name:Description:Type: 2018-09-11_-_Minutes_-_BOD_(A).docx Minutes Minutes 2018-09-11_-_Minutes_-_BOD_(B).docx Minutes Minutes Minutes of the YLWD Board of Directors Special Meeting Held September 11, 2018 at 5:30 p.m. 1 2018-XXX MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING Tuesday, September 11, 2018, 5:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 5:35 p.m. 2. ROLL CALL DIRECTORS PRESENT STAFF PRESENT Al Nederhood, President Marc Marcantonio, General Manager Brooke Jones, Vice President Brett Barbre, Assistant General Manager Andrew J. Hall Gina Knight, HR/Risk and Safety Manager Phil Hawkins Annie Alexander, Executive Assistant/Board Secretary DIRECTORS ABSENT ALSO PRESENT J. Wayne Miller Andrew Gagen, General Counsel, Kidman Gagen Law LLP 3. PUBLIC COMMENTS None. General Manager Marc Marcantonio stated that only two Directors were available to attend the workshop meeting scheduled Thursday, September 13, 2018 and asked if the Directors present were available the following Tuesday afternoon instead. The Board agreed to reschedule the workshop to Tuesday, September 18, 2018 at 4:00 p.m. 4. CLOSED SESSION The meeting was adjourned to Closed Session at 5:37 p.m. All Directors in attendance were present. Also present were HR/Risk and Safety Manager Gina Knight and General Counsel Andrew Gagen. 4.1. Public Employee Performance Evaluation Pursuant to Section 54957 of the California Government Code Title: General Manager HR/Risk and Safety Manager Knight left the Closed Session at 6:00 p.m. Minutes of the YLWD Board of Directors Special Meeting Held September 11, 2018 at 5:30 p.m. 2 2018-XXX General Manager Marc Marcantonio joined the Closed Session at 6:04 p.m. The Board reconvened in Open Session at 6:35 p.m. General Counsel Gagen stated that no action was taken during Closed Session that was required to be reported under the Brown Act. 5. ADJOURNMENT 5.1. The meeting adjourned at 6:35 p.m. Annie Alexander Board Secretary Minutes of the YLWD Board of Directors Regular Meeting Held September 11, 2018 at 6:30 p.m. 1 2018-XXX MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Tuesday, September 11, 2018, 6:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 6:35 p.m. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL DIRECTORS PRESENT STAFF PRESENT Al Nederhood, President Marc Marcantonio, General Manager Brooke Jones, Vice President Brett Barbre, Assistant General Manager Andrew J. Hall John DeCriscio, Operations Manager Phil Hawkins Gina Knight, HR/Risk and Safety Manager Delia Lugo, Finance Manager DIRECTORS ABSENT Rosanne Weston, Engineering Manager J. Wayne Miller Annie Alexander, Exec Asst/Board Secretary Mike Carreon, Facilities Maintenance Worker Kaden Young, Management Analyst ALSO PRESENT Andrew Gagen, General Counsel, Kidman Gagen Law LLP John Kennedy, Exec Dir of Engineering Water Resources, Orange County Water Dist (OCWD) Scott Maloni, Vice President - Project Development, Poseidon Water Peer Swan, Director, Irvine Ranch Water District (IRWD) 4. ADDITIONS/DELETIONS TO THE AGENDA None. 5. INTRODUCTIONS AND PRESENTATIONS 5.1. Elected Official Liaison Reports None. Minutes of the YLWD Board of Directors Regular Meeting Held September 11, 2018 at 6:30 p.m. 2 2018-XXX 5.2. Proposed Poseidon Resources Huntington Beach Ocean Desalination Project John Kennedy of OCWD provided some background information for the project and a summary of the term sheet and project benefits. He then reviewed a comparison of Poseidon and Metropolitan Water District of Southern California’s (MET) projected costs, OCWD’s key remaining tasks, and projected increases to the Replenishment Assessment, Basin Production Percentage, and typical monthly residential water bill. Mr. Kennedy also outlined five key elements of the distribution plan, OCWD’s historical total water demands and projected water supply sources, and potential future local water supply projects. Scott Maloni of Poseidon reviewed the status of regulatory permits for the project and displayed images of the existing site and conceptual design for the plant. Mr. Maloni then reviewed the benefits of the project and policies adopted by OCWD’s Board in support of same. He also provided an overview of Poseidon’s risk allocation for the project. Director Peer Swan reviewed IRWD’s perspectives on the project. This included an overview of the cost of water from the project, MET’s Local Resources Program (LRP), Orange County’s MET water supply without Poseidon versus with Posieon and the LRP, and MET’s water supply reliability. He then shared IRWD’s policy position on desalination. President Nederhood declared a recess at 8:19 p.m. The meeting was reconvened at 8:27 p.m. 6. PUBLIC COMMENTS None. 7. CONSENT CALENDAR Director Hawkins made a motion, seconded by Director Jones, to approve the Consent Calendar. Motion carried 4-0-0-1 on a Roll Call vote with Director Miller being absent. 7.1. Payments of Bills, Refunds, and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $720,103.08. Minutes of the YLWD Board of Directors Regular Meeting Held September 11, 2018 at 6:30 p.m. 3 2018-XXX 7.2. Directors and General Manager Fees and Expenses Report for Fourth Quarter of Fiscal Year 2018 Recommendation: That the Board of Directors receive and file the Directors and General Manager Fees and Expenses Report for Fourth Quarter of Fiscal Year 2018. 7.3. Revised Budgeted Positions for Remainder of Fiscal Year 2019 and Amendments to the Memorandum of Understanding with the YLWD Employees Association and Personnel Manual for Unrepresented Employees Recommendation: That the Board of Directors adopt Resolution No. 18- 27 ratifying the Budgeted Positions for the remainder of Fiscal year 2019 and rescinding Resolution No. 18-09; adopt Resolution No. 18-28 amending Exhibit A of the Memorandum of Understanding between the District and the YLWD Employees Association for the remainder of Fiscal Years 2019-2023; and adopt Resolution No. 18-29 amending Section 6.02 and Exhibit A of the Personnel Manual for Unrepresented Employees for the remainder of Fiscal Years 2019-2023. 8. ACTION CALENDAR 8.1. Determination of Agency Designated Representative Director Hall made a motion, seconded by Director Hawkins, to identify Andrew Gagen as the District’s agency designated representative to negotiate an amendment to the present employment agreement with the General Manager in accordance with Government Code Section 54957.6(a). Motion carried 4-0-0-1 with Director Miller being absent. 9. DISCUSSION ITEMS 9.1. Status of Operations Activities Staff reviewed the status of preventative maintenance and water leak repair activities. 9.2. Cash and Investment Report for Period Ending July 31, 2019 Staff reviewed key information contained in this report. Minutes of the YLWD Board of Directors Regular Meeting Held September 11, 2018 at 6:30 p.m. 4 2018-XXX 9.3. Annual Assessment of Governing Board Effectiveness The Board discussed utilizing the same survey instrument as the previous year and the meaning of certain phrases contained in questions 13 and 43. The Board requested management staff complete the survey as well. 10. REPORTS, INFORMATION ITEMS, AND COMMENTS 10.1. Directors' Reports None. 10.2. General Manager's Report General Manager Marc Marcantonio asked each of the managers in attendance to report on activities within their respective departments. He then briefed the Board on upcoming conferences and events. 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 (Nederhood/Jones) Minutes of the meeting held July 26, 2018 at 4:00 p.m. were provided in the agenda packet. Next meeting is scheduled September 27, 2018 at 4:00 p.m. 11.2. Joint Agency Committee with City of Yorba Linda (Nederhood/Jones) Minutes of the meeting held September 10, 2018 at 4:00 p.m. will be provided when available. Next meeting is yet to be scheduled. Minutes of the YLWD Board of Directors Regular Meeting Held September 11, 2018 at 6:30 p.m. 5 2018-XXX 11.3. Joint Agency Committee with City of Placentia (Nederhood/Jones) Next meeting yet to be scheduled. 12. INTERGOVERNMENTAL MEETINGS The Directors noted their attendance at the following meetings and events. 12.1. ISDOC Executive Committee – September 4, 2018 (Nederhood) 12.2. MWDOC Board – September 5, 2018 (Nederhood/Jones) 12.3. OCSD Operations Committee – September 5, 2018 (Hawkins) 12.4. OCWD Board – September 5, 2018 (Miller/Jones) 12.5 WACO – September 7, 2018 (Miller) 13. BOARD OF DIRECTORS ACTIVITY CALENDAR 13.1. Meetings from September 12 – November 30, 2018 The Board made no changes to the activity calendar. 14. CLOSED SESSION The meeting was adjourned to Closed Session at 8:58 p.m. All Directors in attendance were present. Also present was General Counsel Andrew Gagen. 14.1 Conference with Labor Negotiators Pursuant to Section 54957.6 of the California Government Code Agency Designated Representative: Andrew Gagen, General Counsel Unrepresented Employee: General Manager Minutes of the YLWD Board of Directors Regular Meeting Held September 11, 2018 at 6:30 p.m. 6 2018-XXX The following Closed Session was not held. 14.2. Conference with Labor Negotiators Pursuant to Section 54957.6 of the California Government Code Agency Designated Representatives: Marc Marcantonio, General Manager Brett Barbre, Asst General Manager Gina Knight, HR/Risk and Safety Mgr Vivian Lim, Human Resources Analyst Employee Organization: YLWD Employees Association The Board reconvened in Open Session at 9:18 p.m. General Counsel Gagen stated that no action was taken during Closed Session that was required to be reported under the Brown Act. 15. ADJOURNMENT 15.1. The meeting was adjourned at 9:18 p.m. Annie Alexander Board Secretary ITEM NO. 7.3 AGENDA REPORT Meeting Date: October 9, 2018 Budgeted:Yes To:Board of Directors Cost Estimate:$2,432,746.16 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 $2,432,746.16. DISCUSSION: The items on this disbursement list include: a check of $48,229.77 to CalCard US Bank for August 2018 credit card transactions; a check of $74,405.62 to City of Anaheim for August 2018 electricity charges at La Palma & Richfield Rd.; a check of $108,332.00 to City of Yorba Linda for road improvements, widening & rehabilitation at Bastanchury Rd and La Palma Ave.; a check of $250,359.63 to ACWA/JPIA for Auto & General Liability insurance premium; a wire of $13,988.83 to So. California Edison for August 2018 electricity charges at multiple locations; a wire of $7,667.10 to Liebert Cassidy Whitmore for August 2018 legal services; and a wire of $1,496,658.97 to US Bank for the 2017A Revenue Bond principal & interest payment. The balance of $134,351.17 is for routine invoices. The Accounts Payable check register total is $2,133,993.09 and Payroll No. 19 total is $298,753.07, where the total of all listed disbursements for this agenda report is $2,432,746.16. 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: 18-CS_1009.pdf Cap Sheet Backup Material CkReg100918.pdf Check Register Backup Material 18_CC_1009.pdf Credit Card Summary Backup Material Summary of Disbursements October 09, 2018 CHECK NUMBERS & WIRES: Computer Checks 72979—73040 $ 615,678.19 ____________ $ 615,678.19 WIRES: W092118 So. California Edison $ 13,988.83 W092418A Liebert Cassidy Whitmore $ 7,667.10 W092718 US Bank N.A. $ 1,496,658.97 ____________ $ 1,518,314.90 TOTAL OF CHECKS & WIRES $2,133,993.09 PAYROLL NO. 19: Direct Deposits $ 184,200.51 Third Party Checks 7030—7041 $ 26,979.29 Payroll Taxes $ 49,149.02 EFT – CalPERS Payroll #19 $ 38,424.25 $ 298,753.07 TOTAL OF PAYROLLS $298,753.07 ---------------------------------------------------------------------------------------------------------------------- DISBURSEMENT TOTAL: $2,432,746.16 ================================================================== APPROVED BY THE BOARD OF DIRECTORS MINUTE ORDER AT BOARD MEETING OF OCTOBER 09, 2018 ==================================================================. Check No.Date Vendor Name Amount Description 72987 10/09/2018 ACWA/JPIA 4,485.00 JPIA LEADERSHIP - LUGO, KNIGHT & PADILLA 73040 10/09/2018 ACWA/JPIA 250,359.63 AUTO & GENERAL LIABILITY INSURANCE - 10/2018 - 10/2019 72980 10/09/2018 All American Asphalt 1,297.70 CUSTOMER REFUND 72988 10/09/2018 Aqua-Metric Sales Co.4,214.15 OPERATIONS WORK MATERIAL 72989 10/09/2018 Aramark 255.10 UNIFORM SERVICE 73039 10/09/2018 ARC 20.00 PW DOC MANAGEMENT 72990 10/09/2018 AT & T - Calnet3 4,204.47 AT&T CALNET3 72991 10/09/2018 Autoscribe Corporation 934.00 TRANSACTION VISION GATEWAY - AUGUST 2018 72992 10/09/2018 CalCard US Bank 48,229.77 CREDIT CARD TRANSACTIONS - AUGUST 2018 72993 10/09/2018 Carlos Murillo 188.00 REIMBURSEMENT - CWEA II MEMBERSHIP 72994 10/09/2018 Chambers Group Inc.4,172.00 J18-23 - HIDDEN HILLS MITIGATION 72995 10/09/2018 City Of Anaheim 74,405.62 LA PALMA & RICHFIELD -ELECTRICITY CHARGES- 8/09/18 -9/11/18 72996 10/09/2018 City Of Yorba Linda 108,332.00 BASTANCHURY & LA PALMA - ROAD IMPROVEMENT, WIDENING & REHABILITATION 72998 10/09/2018 Clark County Assessor 377.02 CLARK CITY NEVADA - PROPERTY TAX FY19 72997 10/09/2018 Cla-Val Co.2,672.86 CLA-VALVE PARTS 72999 10/09/2018 Clinical Lab. Of San Bern.2,940.00 WATER QUALITY SAMPLING 73000 10/09/2018 Coastal Ignition & Controls 989.72 WELL #7 - MAINTENANCE 73001 10/09/2018 Coastline Equipment 1,050.69 VEHICLE MAINTENANCE - UNIT #139 & #220 73002 10/09/2018 Culligan of Santa Ana 2,288.00 EQUIPMENT PE SOFTENER 73003 10/09/2018 Daniels Tire Service 2,211.64 VEHICLE MAINTENANCE - UNIT #166, #180, & #195 73004 10/09/2018 Dell Marketing L.P.12,148.50 OPTIPLEX DESKTOP & VLA WINDOWS SERVER 73006 10/09/2018 Enthalpy Analytical, Inc.2,810.00 WATER QUALITY SAMPLING 73007 10/09/2018 Fairway Ford Sales, Inc.135.97 VEH. MAINTENANCE - UNIT #187 73008 10/09/2018 Federal Express 15.96 SHIPPING FEES 72981 10/09/2018 FELIZ PADILLA 62.02 CUSTOMER REFUND 73009 10/09/2018 Haaker Equipment Co.937.50 VEHICLE MAINTENANCE - UNIT #197 72982 10/09/2018 HOME RANCH COMMUNITY CENTER LLC 333.48 CUSTOMER REFUND 73010 10/09/2018 Infosend Inc.13,829.04 BILLING & POSTAGE - CUSTOMER BILLING 73011 10/09/2018 Jackson's Auto Supply - Napa 252.85 VEHICLE MAINTENANCE - UNIT #176, #197 & #210 72984 10/09/2018 JAMES CROWLEY 163.41 CUSTOMER REFUND 73012 10/09/2018 Jon's Flags & Poles, Inc.157.69 US & CA FLAGS 73013 10/09/2018 KB Design 9,897.79 DISTRICT UNIFORMS 72983 10/09/2018 KELLE MORTENSEN 45.81 CUSTOMER REFUND 73014 10/09/2018 Konica Minolta Business 1,659.23 COPIER LEASE PAYMENT - C258 & C558 73015 10/09/2018 Lancab, Inc.2,293.75 CAT6 INSTALLATION W092418A 09/24/2018 Liebert Cassidy Whitmore 7,667.10 LEGAL SERVICES - AUGUST 2018 73016 10/09/2018 Mc Fadden-Dale Hardware 233.67 HARDWARE SUPPLIES 73017 10/09/2018 Mc Master-Carr Supply Co.120.30 SUPPLIES - HIGHLAND #1 73018 10/09/2018 Murcal, Inc.280.59 MAINTENANCE - HIGHLAND #1 73019 10/09/2018 NatPay Online Business Solutions 27.03 DOCULIVERY - AUGUST 2018 73020 10/09/2018 Nickey Kard Lock Inc 5,500.19 FUEL - 09/01/18 - 09/15/18 73021 10/09/2018 Nickey Petroleum Co Inc 982.68 FLEET MAINTENANCE 73023 10/09/2018 P.T.I. Sand & Gravel, Inc.2,148.59 ROAD MATERIAL 73022 10/09/2018 Powerstride Battery 104.86 VEHICLE MAINTENACE - UNIT #195 73026 10/09/2018 Rachel Padilla/Petty Cash 56.22 PETTY CASH - O091918 73024 10/09/2018 Raftelis Financial Consultants, Inc.866.25 2018 WATER FINANCIAL PLAN UPDATE 73025 10/09/2018 Rootx 4,849.87 SEWER MAIN SUPPLIES 72979 10/09/2018 SANDRA GROELL 161.91 CUSTOMER REFUND W092118 09/21/2018 So. California Edison 13,988.83 ELECTRICAL CHARGES - MULTIPLE LOCATIONS - AUGUST 2018 73027 10/09/2018 Stater Bros. Markets 73.52 MEETING SUPPLIES 73028 10/09/2018 Step Saver Inc 1,694.34 COARSE SALT 73029 10/09/2018 Sunstate Equipment Co 995.05 BOOM LIFT 60' 73030 10/09/2018 Switch Ltd 570.84 DATA HOSTING-CO-LOCATION 73031 10/09/2018 The Shredders 66.00 ON SITE SHRED SERVICE 73032 10/09/2018 Time Warner Cable 3,031.70 T10MB DEDICATED INTERNET & SPECTRUM BUSINESS TV 72985 10/09/2018 TONY LOPEZ 4.18 CUSTOMER REFUND 72986 10/09/2018 TWO UNITED OIL INC 359.57 CUSTOMER REFUND W092718 09/27/2018 U S Bank 1,496,658.97 2017A BOND - INTEREST & PRINCIPAL - SEPTEMBER 2018 73033 10/09/2018 Underground Service Alert 392.80 DIGALERT - AUGUST 2018 73034 10/09/2018 United Industries 855.48 BREAKROOM SUPPLIES 73036 10/09/2018 United Water Works, Inc.10,735.08 OPERATIONS WORK MATERIAL 73035 10/09/2018 UNUM Life Insurance Co. of America 4,372.41 LIFE, AD&D, STD & LTD - OCTOBER 2018 73037 10/09/2018 Westside Building Material 208.18 MISCELLANOUS WAREHOUSE PARTS Yorba Linda Water District Check Register For Checks Dated: 09/26/2018 thru 10/09/2018 73005 10/09/2018 White Nelson Diehl Evans LLP 17,000.00 PROFESSIONAL SERVICES - AUGUST 2018 - 2ND INSTALLMENT 73038 10/09/2018 YO Fire 1,616.51 OPERATIONS WORK MATERIAL 2,133,993.09 09-20-2018 PAYROLL #19 - EMPLOYEE DIRECT DEPOSIT 184,200.51 09-20-2018 PAYROLL #19 - PAYROLL TAX PAYMENT 49,149.02 09-20-2018 PAYROLL #19 - CALPERS EFT 38,424.25 7030 09-20-2018 VOID 0.00 7031 09-20-2018 FLEX ADVANTAGE 2,479.09 7032 09-20-2018 LINCOLN FINANCIAL GROUP 4,966.93 7033 09-20-2018 NATIONWIDE RETIREMENT SOLUTIONS 14,945.41 7034 09-20-2018 CA STATE DISBURSEMENT UNIT 366.92 7035 09-20-2018 CA STATE DISBURSEMENT UNIT 339.69 7036 09-20-2018 CA STATE DISBURSEMENT UNIT 384.92 7037 09-20-2018 AMERICAN HERITAGE LIFE 1,447.09 7038 09-20-2018 MIDLAND LIFE INSURANCE 200.00 7039 09-20-2018 RELIANCE DI 57.46 7040 09-20-2018 AMERITAS 1,684.68 7041 09-20-2018 COLONIAL LIFE 107.10 298,753.07 Payroll Checks #19 Vendor Name Amount Description South Point Hotel 107.35 Travel expense -Tri-State seminar -DeCriscio, J CalCard US Bank (171.27)Return of mechanic shop tool County of Orange 6.00 Travel expense - meeting with OC Public Works - DeCriscio Energy Environmental Soln, Inc 2,400.00 Emission test - Valley View Engine Polly's Pies 56.96 All Hands meeting - 08/09/18 Amazon.com 101.98 Nighstick flashlight - 4 pack Harrington Industrial 180.02 Production parts for CL2 work Red Wing Shoe Store 247.81 Safety boot - Arnado, B Red Wing Shoe Store 247.81 Safety boot - Martinez, J FTP Today 1,188.00 ylwd.ftptoday.com - annual renewal - 8/2018-08/2019 Time Warner Cable 2,845.38 Time Warner Cable Thai Lingo Restaurant 78.10 Lunch meeting - Accounting staff - (5) attendees Red Wing Shoe Store 4,723.48 Safety boots - Yorba Linda District employees Harrington Industrial 147.13 Production repair - CL2 parts Imperial Sprinkler Supply,Inc.156.21 Tools - PVC Cutter, blades & shovels ComplianceSigns, Inc.62.50 GHS labels for production facility & equipment United Limousine & Charter Inc.99.00 Deposit - Tour Bus on 09/22/18 Orchard Supply Hardware 34.47 Sun & shade pop-up AWWA - CA-NV Section 153.50 Water Distribution Grade D1 - Publications - 4 books Amazon.com 137.99 Trimble recon battery charger AWWA 91.50 AWWA M3 safety management for utilities County of Orange 8.00 Parking - LAFCO meeting - Dir. Nederhood Placentia Disposal #676 555.38 Placentia Disposal Amazon.com 40.45 (2) quick coupler Harrington Industrial 362.04 Production repair - CL2 parts Westin Hotels & Resorts 232.16 AWWA CA/NV Fall Conference Pinnacle Seating 1,645.00 Office chair - Engineering Manager Harbor Freight Tools 194.95 Tools for sewer crew Staples 1,283.02 Printer ink supplies - Operations Best Value Tire & Wheel 47.27 Vehicle maintenance - Unit #180 AutoZone 25.84 (2) Oil absorbent Amazon.com 181.66 Laptop docking station - Unit #205 Harrington Industrial 34.74 Production repair - CL2 parts Home Depot 63.00 Hardware supplies Mobile Industrial Supply 58.19 (2) 50lbs of CO2 Verizon Wireless 4,329.19 Verizon Wireless ONLINE Information Services, Inc.621.37 Online Collections Dunkin Donuts 11.49 Business meeting supplies - Auditors Hilton San Diego 20.00 Travel expense - UWI Conference - Dir. Nederhood Hilton San Diego 19.74 Travel expense - UWI Conference - Dir. Jones Home Depot 89.91 Hardware supplies - concrete repair Amazon.com 99.39 Ergodriven - Anti-fatigue mat Chameleon Beverage Company, Inc.16,075.40 YLWD bottle water - district events Boot World Inc.581.78 Safety boots - Yorba Linda District employees AWWA 81.50 M44 Manual - Distribution valves B & M Lawn and Garden Inc 198.55 Landscape supplies Orchard Supply Hardware 13.57 Gopher bait & tools 9-Oct-18 Cal Card Credit Card U S Bank Hilton San Diego 231.02 Travel expense - UWI Conference - Dir. Nederhood Hilton San Diego 251.02 Travel expense - UWI Conference - Dir. Jones Flappy Jacks 62.87 Breakfast meeting - (4) attendees Home Depot 128.98 Hardware supplies & tools Village Nurseries 398.08 SOD for landscape repairs Red Wing Shoe Store 204.71 Safety boots - Diaz, J Shred Confidential, Inc.664.50 Secure hard drive destruction Industrial Hearing 320.00 Audiometric testing, Medical clearance & fit test Orange County Water Assn 45.00 OCWA - Operator training Answer One Communications 699.60 Virtual reception service - After hours Orchard Supply Hardware 24.23 Facilities supplies Concrete Fastening 135.77 (2) boxes of strike anchors UPS Freight 91.63 RMA to ship cables & power supply Amazon.com 96.96 Service recognition award Dan Copp Crushing Corp.240.00 Road material disposal UPS Freight 59.59 Equipment shipment to co-location El Farolito 43.89 Lunch meeting - (3) attendees Water Education Foundation 100.00 WEF Membership - Dir. Nederhood ACWA-Assn Of Ca Water Agencies 50.00 ACWA Region 10 - Registration - Dir. Nederhood Yorba Linda Chamber 100.00 Yorba Linda Mayor Prayer Breakfast - Registration United Rentals - Fullerton 328.38 Rental of concrete trailer & concrete mix Dan Copp Crushing Corp.500.00 Road material disposal Amazon.com 6.18 Service recognition award Amazon.com 19.22 Service recognition award Cal Municipal Treasurers Assn 25.00 Certified California Municipal Treasurer - Application fee Steven Enterprises 103.46 Printer supplies - Engineering Light Bulbs Etc 38.68 Electrical supplies - light fixtures Anaheim Public Works 510.00 Annual encrochment permit Harrington Industrial 21.59 Production repair - CL2 parts Southwest Airlines 167.92 Travel expense -NEOGOV Conference- Segura, J & Lim, V Water Education Foundation 300.44 WEF Conference - Registration - Dir. Nederhood Caesars Las Vegas 146.26 Travel expense - CRWUA Conference - Dir. Nederhood ACWA-Assn Of Ca Water Agencies 50.00 Travel expense - ACWA Region 10 - Dir. Jones ACWA-Assn Of Ca Water Agencies 50.00 Travel expense - ACWA Region 10 - Marcantonio, M Caesars Las Vegas 146.26 Travel expense - CRWUA Conference - Marcantonio, M Praxair Distribution 47.77 Welding supplies Home Depot 131.33 Hardware supplies & tools Amazon.com 50.00 Service recognition gift Smart & Final 29.54 Meeting supplies Smart & Final 209.19 Emergency response meals Smart & Final 10.82 Snacks for interview panel Canva Pty Ltd.12.95 Graphic design subscription National Notary Association 33.00 Errors & Omissions Notary Insurance - Alexander, A Southwest Airlines 305.96 Travel expense - WEF Water Summit - Dir. Nederhood Colorado River Water User Association 505.00 Registration & membership - CRWUA Conference - Marcantonio, M Smart & Final 51.56 All hands meeting supplies Jet Blue 102.20 Travel expense - CSDA Board Secretary Conference - Alexander, A Fry's Electronics 86.18 Fry's Electronics Renaissance Esmerelda Resort & Spa 193.98 Travel expense - CSDA Conference - Dir. Nederhood OfficeSupply.com 35.98 Mousepad and (2) wrist rests Grainger 295.56 Electrical supplies - facilities 48,229.77 ITEM NO. 8.1 AGENDA REPORT Meeting Date: October 9, 2018 To:Board of Directors From:Andrew B. Gagen, General Counsel Subject:Establishing Procedure for the Presentation of Claims Not Covered by the Government Claims Act STAFF RECOMMENDATION: That the Board of Directors adopt Ordinance No. 18-01 establishing a Local Claims Ordinance and delegating authority to the General Manager to resolve small claims. DISCUSSION: Presentation of Claims Under the Government Claims Act Under the Government Claims Act (“Claims Act”), before a lawsuit for “money or damages” can be filed against a public agency such as the District, a claim must be presented to the public agency describing the facts, the nature of the damages, and the estimated amount of damages. The time limit for presenting a claim under the Act (“Claims Period”) is either six months or twelve months after the alleged event, depending on the type of claim (e.g. personal injury versus breach of contract). These presentation requirements help to “ensure prompt claims investigation and possible settlement, enabling the public entity to make appropriate fiscal adjustments and provide the opportunity to avoid future liability by taking remedial steps to prevent a reoccurrence.” [1] Any lawsuit based on a presented claim must be commenced within six months after the District gives notice of its rejection of the claim. Failure to present a claim prior to filing a lawsuit is fatal to the lawsuit. Claims Exempted from the Claims Act and Governed by this Ordinance The Claims Act expressly exempts certain claims from these presentation requirements because many of them have procedures already provided for them in other statutes. So, a claimant may sue on these exempted claims without first presenting the claim - so long as the lawsuit is filed within the applicable statute of limitations (e.g. 2 years, 3 years, 4 years). However, the Claims Act provides public agencies the opportunity to remove this exemption. Accordingly, the proposed Local Claims Ordinance lists most of these exempted claims to be governed by the Ordinance. This governance requires these claims to be presented in a certain manner to the District and within six or twelve months of the alleged event, depending on the type of claim. Otherwise, the Ordinance authorizes the District to deny deficient and/or untimely claims. For sufficient and timely claims that are listed in the Ordinance, the District’s exposure would be limited to only six or twelve months of damages versus 2 years, 3 years, 4 years, depending on the type of claim. Again, these presentation requirements, including a shorter Claims Period, promote prompt claims investigation and possible settlement, enable the District to budget appropriately, and encourage remedial steps to prevent a reoccurrence. Authority Delegated to the General Manager to Resolve Small Claims The Claims Act also authorizes the delegation of certain Board authority to a District employee, including the General Manager, for the limited purpose of resolving any claim up to $50,000. Notably, though, the Ordinance requires the General Manager to report resolution of any such claim to the Board and the Board retains all non-delegated authority under the Claims Act. Similar to above, this delegation of authority promotes efficiency within the District, particularly where District liability is clear and the claim amount is reasonable. [1] Cal School Employees Assn. v. Governing Bd. of So. Orange Co. Comm. College District (2004) 124 Cal.App.4th 574, 589. ATTACHMENTS: Name:Description:Type: Ordinance_No._18-01_-_Local_Claims.docx Ordinance Ordinance Ordinance No. 18-01 Establishing a Local Claims Ordinance 1 ORDINANCE NO. 18-01 ORDINANCE OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT ESTABLISHING A LOCAL CLAIMS ORDINANCE AND DELEGATING AUTHORITY TO THE GENERAL MANAGER TO RESOLVE SMALL CLAIMS WHEREAS, presentation of claims against California public entities and public employees is generally governed by the Government Claims Act at California Government Code §§ 810 et seq. (“Claims Act”); and WHEREAS, Government Code § 935 authorizes local public entities to establish claims presentation procedures for certain claims not governed by the Claims Act; and WHEREAS, Government Code § 935.4 authorizes the Board of Directors to delegate authority to the General Manager to perform certain functions of the Board of Directors under the Claims Act; and WHEREAS, it is in the public interest for the District to establish a procedure for the presentation of claims for money or damages against the District regarding certain claims not covered by the Claims Act; and WHEREAS, it is in the public interest to delegate authority to the District’s General Manager to perform certain functions of the Board of Directors under the Claims Act and this Ordinance. NOW, THEREFORE BE IT ORDAINED, by the Board of Directors of the Yorba Linda Water District as follows: Section 1. Claims Governed by This Ordinance Claims against the District for money or damages that are not governed either by the Claims Act or other state law shall be governed by this Ordinance. Aside from all claims governed by Section 4, the claims governed by this Ordinance are: A. Claims under the Revenue and Taxation Code or other statute prescribing procedures for the refund, rebate, exemption, cancellation, amendment, modification, or adjustment of any tax, assessment, fee, or charge or any portion thereof, or of any penalties, cost or charges related thereto; B. Claims by public employees for fees, salaries, wages, or other expenses and allowances; Ordinance No. 18-01 Establishing a Local Claims Ordinance 2 C. Claims for which workers’ compensation authorized by Division 4 (commencing with Section 3200) of the Labor Code is the exclusive remedy; D. Applications or claims for any form of public assistance under any provision of law relating to public assistance programs, and claims for goods, services, provisions, or other assistance rendered for or on behalf of any recipient of any form of public assistance; E. Applications or claims for money or benefits under any public retirement or pension system; F. Claims for principal or interest upon any bonds, notes, warrants, or other evidences of indebtedness; G. Claims by the state or by a state department or agency or by another local public entity or by a judicial branch entity; H. Claims arising under any provision of the Unemployment Insurance Code, including, but not limited to, claims for money or benefits, or for refunds or credits of employer or worker contributions, penalties, or interest, or for refunds to workers of deductions from wages in excess of the amount prescribed; and I. Claims for the recovery of penalties or forfeitures made pursuant to Article I (commencing with Section 1720) of Chapter 1 of Part 7 of Division 2 of the Labor Code. Section 2. Claim Presentation Requirements The claims listed in Section 1 must comply with the claim presentation requirements of the Claims Act and shall be presented within the time and manner prescribed by Part 3 of Division 3.6 of Title 1 of the California Government Code (commencing with Section 900 thereof), as those provisions now exist or may be hereafter amended. Section 3. Legal Action Requirements A. Prerequisite to a Legal Action. Prior to filing a legal action on a claim in Section 1, the claim must be presented as required under this Ordinance and acted upon by the District according to law, including the Claims Act. No legal action may be maintained by a person or entity who has not complied with the requirements of this Ordinance. Ordinance No. 18-01 Establishing a Local Claims Ordinance 3 B. Requirements to Bring a Legal Action. Any legal action brought against the District on a claim in Section 1 must conform to the requirements in Government Code Sections 940-949. Any legal action brought against any employee of the District on a claim in Section 1 must conform to the requirements in Sections 940-944 and 950-951 of the Government Code. Section 4. Delegation to General Manager of Certain Board Authority. A. Pursuant to Government Code Section 935.4, the District’s General Manager is authorized and directed to perform all functions of the Board of Directors under the Claims Act to allow, compromise or settle any claim, including but not limited to the claims in Section 1, against the District up to fifty thousand dollars ($50,000). B. After the claim is resolved and the agreement memorializing the settlement is fully executed by all parties to the claim, the General Manager shall report resolution of the claim to the Board during an open session of a District Board meeting. C. Except as expressly delegated to the General Manager herein, the Board of Directors shall retain and exercise all authority under the Claims Act. Section 5. General Provisions A. Severability. If any portion of this Ordinance is held to be invalid by decision of any court, such decision will not affect the validity of the remaining portions of this Ordinance. The District hereby declares that it would have adopted this ordinance irrespective of whether any portion is declared invalid. B. Effective Date. The Secretary of the Board shall certify adoption of this Ordinance and shall cause the Ordinance to be published within 15 days of adoption and in a manner according to law. This Ordinance shall take effect 30 days after adoption. PASSED AND ADOPTED this 9th day of October 2018 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Al Nederhood, President Yorba Linda Water District Ordinance No. 18-01 Establishing a Local Claims Ordinance 4 ATTEST: Annie Alexander, Board Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Andrew B. Gagen, Esq. Kidman Gagen Law LLP ITEM NO. 8.2 AGENDA REPORT Meeting Date: October 9, 2018 To:Board of Directors From:Marc Marcantonio, General Manager Prepared By:Annie Alexander, Executive Assistant Subject:Amending the District's Conflict of Interest Code STAFF RECOMMENDATION: That the Board of Directors approve Resolution No. 18-31 adopting a Conflict of Interest Code which supersedes all prior Conflict of Interest Codes and amendments previously adopted. DISCUSSION: In compliance with Section 81000 et. seq. of the California Government Code, the Board of Directors has adopted a Conflict of Interest Code (Code) governing the disclosure of financial interests by certain designated employees of the District. The Political Reform Act requires every local government agency to review its code on a biennial basis. Staff recently reviewed the District's code and has identified the following minor revisions: The position of Communications Manager was eliminated. The position of Customer Service Supervisor was renamed to Customer Service Billing Administrator. The position of Water Maintenance Superintendent was renamed to Maintenance Superintendent. The position of Operations/Warehouse Assistant was renamed to Operations Assistant. The position of Chief Water System Operator was renamed to Operations Superintendent. The position of Water Quality Engineer was renamed to Principal Engineer. The position of Water Production Superintendent was renamed to Production Superintendent. The position of Associate Engineer was renamed to Senior Engineer. The position of Finance Manager (Treasurer) was renamed to Finance Manager. The position of General Manager (Secretary) was renamed to General Manager. Following adoption by the Board, a copy of the Resolution and updated Code must be submitted for review and approval by the Orange County Board of Supervisors, after which it will be considered in effect. PRIOR RELEVANT BOARD ACTION(S): The District's Conflict of Interest Code was last updated on December 8, 2016 by Resolution No. 16-22. ATTACHMENTS: Name:Description:Type: Resolution_No._18-31_-_YLWD_COI.docx Resolution Resolution YLWD_COI.pdf Exhibit Exhibit Resolution No. 18-31 Adopting a Conflict of Interest Code 1 RESOLUTION NO. 18-31 RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT ADOPTING A CONFLICT OF INTEREST CODE WHICH SUPERSEDES ALL PRIOR CONFLICT OF INTEREST CODES AND AMENDMENTS PREVIOUSLY ADOPTED WHEREAS, the Political Reform Act of 1974, Government Code Section 81000 et. seq. (“the Act”), requires a local government agency to adopt a Conflict of Interest Code pursuant to the Act; and WHEREAS, the Yorba Linda Water District has previously adopted a Conflict of Interest Code and that Code now requires updating; and WHEREAS, amendments to the Act have in the past and foreseeably will in the future require conforming amendments to be made to the Conflict of Interest Code; and WHEREAS, the Fair Political Practices Commission has adopted a regulation, Title 2, California Code of Regulations, Section 18730, which contains terms for a standard model Conflict of Interest Code, which, together with amendments thereto, may be adopted by public agencies and incorporated by reference to save public agencies time and money by minimizing the actions required of such agencies to keep their codes in conformity with the Political Reform Act. NOW THEREFORE BE IT RESOLVED by the Board of Directors of the Yorba Linda Water District as follows: Section 1. The terms of Title 2, California Code of Regulations, Section 18730 (Attachment A) and any amendments to it duly adopted by the Fair Political Practices Commission are hereby incorporated by reference and, together with Exhibits A and B in which members and employees are designated and Resolution No. 18-31 Adopting a Conflict of Interest Code 2 disclosure categories are set forth, constitute the Conflict of Interest Code of the Yorba Linda Water District. Section 2. The provisions of all Conflict of Interest Codes and Amendments thereto previously adopted by the Yorba Linda Water District are hereby superseded. Section 3. The Filing Officer is hereby authorized to forward a copy of this Resolution to the Clerk of the Orange County Board of Supervisors for review and approval by the Orange County Board of Supervisors as required by California Government Code Section 87303. PASSED AND ADOPTED this 9th day of October 2018 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Al Nederhood, President Yorba Linda Water District ATTEST: Annie Alexander, Board Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Andrew B. Gagen, Esq. Kidman Gagen Law LLP Resolution No. 18-31 Adopting a Conflict of Interest Code 3 ATTACHMENT A CONFLICT OF INTEREST CODE FOR THE YORBA LINDA WATER DISTRICT The Political Reform Act, Government Code Sections 81000, et seq., requires state and local government agencies to adopt and promulgate Conflict of Interest Codes. The Fair Political Practices Commission has adopted a regulation (2 Cal. Code of Regs. Section 18730) which contains the terms of a standard Conflict of Interest Code, which may be incorporated by reference in an agency’s code. After public notice and hearing it may be amended by the Fair Political Practices Commission to conform to amendments in the Political Reform Act. Therefore, the terms of 2 California Code of Regulations Section 18730 and any amendments to it duly adopted by the Fair Political Practices Commission are hereby incorporated by reference. This regulation and the attached Appendix designating officials and employees and establishing disclosure categories, shall constitute the Conflict of Interest Code of the Yorba Linda Water District. Designated employees shall file statements of economic interests with the Yorba Linda Water District’s Political Reform Act Filing Officer, Board Secretary, who will make the statements available for public inspection and reproduction (Government Code Section 82008). Upon receipt of the statements of Members of the Board of Directors, General Manager, Assistant General Manager, Finance Manager, General Counsel, Labor Counsel, Construction Project Supervisor, Customer Service Billing Administrator, Engineering Manager, Human Resources/Risk and Safety Manager, Information Systems Administrator, Information Technology Manager, Maintenance Superintendent, Management Analyst, Operations Assistant, Operations Manager, Operations Superintendent, Principal Engineer, Production Superintendent, Senior Accountant, Senior Engineer, Senior Fleet Mechanic, and Senior Project Manager, the Yorba Linda Water District’s Filing Officer shall make and retain a copy and forward the original of these statements to the Clerk of the Orange County Board of Supervisors as the Filing Officer for these designated positions. Statements for all other designated positions will be retained by the Yorba Linda Water District’s Filing Officer. Conflict of Interest Code EXHIBIT A (Working Draft) Entity:Water Districts Yorba Linda Water DistrictAgency: StatusFiles WithDisclosure CategoryPosition Reason: This position has been eliminated. DeletedCOBOC-41Communications Manager UnchangedCOBOC-05Construction Project Supervisor UnchangedAgencyOC-30Consultant Reason: Position of Customer Service Supervisor was renamed to Customer Service Billing Administrator. RenamedCOBOC-05Customer Service Billing Administrator UnchangedCOBOC-41Engineering Manager UnchangedCOBOC-01General Counsel UnchangedCOBOC-41Human Resources/Risk and Safety Manager UnchangedCOBOC-05Information Systems Administrator UnchangedCOBOC-41Information Technology Manager UnchangedCOBOC-01Labor Counsel Reason: Position of Water Maintenance Superintendent was renamed to Maintenance Superintendent. RenamedCOBOC-05Maintenance Superintendent UnchangedCOBOC-05Management Analyst Reason: Position of Operations/Warehouse Assistant was renamed to Operations Assistant. RenamedCOBOC-05Operations Assistant UnchangedCOBOC-41Operations Manager Reason: Position of Chief Water System Operator was renamed to Operations Superintendent. RenamedCOBOC-05Operations Superintendent Reason: Position of Water Quality Engineer was renamed to Principal Engineer. RenamedCOBOC-05Principal Engineer Reason: Position of Water Production Superintendent was renamed to Production Superintendent. RenamedCOBOC-05Production Superintendent UnchangedCOBOC-05Senior Accountant Reason: Position of Associate Engineer was renamed to Senior Engineer. RenamedCOBOC-05Senior Engineer UnchangedCOBOC-05Senior Fleet Mechanic UnchangedCOBOC-05Senior Project Manager Total: 21 Run date/time: Tuesday, October 02 2018 02:18:45 PM Page 1 of 2 Conflict of Interest Code EXHIBIT A (Working Draft) Entity:Water Districts Yorba Linda Water DistrictAgency: OFFICIALS WHO ARE SPECIFIED IN GOVERNMENT CODE SECTION 87200 Officials who are specified in Government Code section 87200 (including officials who manage public investments, as defined by 2 Cal. Code of Regs. § 18700.3 (b)), are NOT subject to the Agency’s Conflict of Interest Code, but are subject to the disclosure requirements of the Political Reform Act, Government Code section 87100, et seq.  Gov’t Code § 87203. These positions are listed here for informational purposes only. The positions listed below are officials who are specified in Government Code section 87200: UnchangedCOBFiles with Reason: Office of Treasurer is appointed by the Board of Directors and is not part of the position's title. RenamedCOBFiles with Assistant General Manager Finance Manager RenamedGeneral Manager Files with COB Reason: Office of Secretary is appointed by the Board of Directors and is not part of the position's title. Member of the Board of Directors Files with COB Unchanged The disclosure requirements for these positions are set forth in Government Code section 87200, et. seq.  They require the disclosure of interests in real property in the agency’s jurisdiction, as well as investments, business positions and sources of income (including gifts, loans and travel payments). Run date/time: Tuesday, October 02 2018 02:18:45 PM Page 2 of 2 Disclosure Descriptions EXHIBIT B (Working Draft) StatusDisclosure DescriptionDisclosure Category Water Districts Yorba Linda Water District Entity: Agency: Unchanged Form 87200 filers shall complete all schedules for Form 700 and disclose all reportable sources of income, interests in real property, investments and business positions in business entities, if applicable, pursuant to Government Code Section 87200 et seq.. 87200 Filer Unchanged All interests in real property in Orange County, the authority or the District as applicable, as well as investments, business positions and sources of income (including gifts, loans and travel payments).OC-01 Unchanged All investments in, business positions with and income (including gifts, loans and travel payments) from sources that provide services, supplies, materials, machinery, equipment (including training and consulting services) used by the County Department, Authority or District, as applicable. OC-05 Unchanged Consultants shall be included in the list of designated employees and shall disclose pursuant to the broadest category in the code subject to the following limitation: The County Department Head/Director/General Manager/Superintendent/etc. may determine that a particular consultant, although a “designated position,” is hired to perform a range of duties that is limited in scope and thus is not required to fully comply with the disclosure requirements in this section. Such written determination shall include a description of the consultant’s duties and, based upon that description, a statement of the extent of disclosure required. The determination of disclosure is a public record and shall be filed with the Form 700 and retained by the Filing Officer for public inspection. OC-30 Unchanged All interests in real property in Orange County, the District or Authority, as applicable, as well as investments in, business positions with and income (including gifts, loans and travel payments) from sources that provide services, supplies, materials, machinery, vehicles, or equipment (including training and consulting services) used by the County Department, Authority or District, as applicable. OC-41 Grand Total: 5 Run date/time: Tuesday, October 02 2018 02:18:45 PM Page 1 of 1 Conflict of Interest Code EXHIBIT A (Working Draft) Entity:Water Districts Yorba Linda Water DistrictAgency: Files WithDisclosure CategoryPosition COBOC-05Construction Project Supervisor AgencyOC-30Consultant COBOC-05Customer Service Billing Administrator COBOC-41Engineering Manager COBOC-01General Counsel COBOC-41Human Resources/Risk and Safety Manager COBOC-05Information Systems Administrator COBOC-41Information Technology Manager COBOC-01Labor Counsel COBOC-05Maintenance Superintendent COBOC-05Management Analyst COBOC-05Operations Assistant COBOC-41Operations Manager COBOC-05Operations Superintendent COBOC-05Principal Engineer COBOC-05Production Superintendent COBOC-05Senior Accountant COBOC-05Senior Engineer COBOC-05Senior Fleet Mechanic COBOC-05Senior Project Manager Total: 20 OFFICIALS WHO ARE SPECIFIED IN GOVERNMENT CODE SECTION 87200 Officials who are specified in Government Code section 87200 (including officials who manage public investments, as defined by 2 Cal. Code of Regs. § 18700.3 (b)), are NOT subject to the Agency’s Conflict of Interest Code, but are subject to the disclosure requirements of the Political Reform Act, Government Code section 87100, et seq.  Gov’t Code § 87203. These positions are listed here for informational purposes only.   The positions listed below are officials who are specified in Government Code section 87200: COBFiles withAssistant General Manager COBFiles withFinance Manager COBFiles withGeneral Manager Run date/time: Tuesday, October 02 2018 02:18:46 PM Page 1 of 2 Conflict of Interest Code EXHIBIT A (Working Draft) Entity:Water Districts Yorba Linda Water DistrictAgency: COBFiles withMember of the Board of Directors The disclosure requirements for these positions are set forth in Government Code section 87200, et. seq.  They require the disclosure of interests in real property in the agency’s jurisdiction, as well as investments, business positions and sources of income (including gifts, loans and travel payments). Run date/time: Tuesday, October 02 2018 02:18:46 PM Page 2 of 2 Disclosure Descriptions EXHIBIT B (Working Draft) Disclosure DescriptionDisclosure Category Water Districts Yorba Linda Water District Entity: Agency: Form 87200 filers shall complete all schedules for Form 700 and disclose all reportable sources of income, interests in real property, investments and business positions in business entities, if applicable, pursuant to Government Code Section 87200 et seq.. 87200 Filer All interests in real property in Orange County, the authority or the District as applicable, as well as investments, business positions and sources of income (including gifts, loans and travel payments).OC-01 All investments in, business positions with and income (including gifts, loans and travel payments) from sources that provide services, supplies, materials, machinery, equipment (including training and consulting services) used by the County Department, Authority or District, as applicable. OC-05 Consultants shall be included in the list of designated employees and shall disclose pursuant to the broadest category in the code subject to the following limitation: The County Department Head/Director/General Manager/Superintendent/etc. may determine that a particular consultant, although a “designated position,” is hired to perform a range of duties that is limited in scope and thus is not required to fully comply with the disclosure requirements in this section. Such written determination shall include a description of the consultant’s duties and, based upon that description, a statement of the extent of disclosure required. The determination of disclosure is a public record and shall be filed with the Form 700 and retained by the Filing Officer for public inspection. OC-30 All interests in real property in Orange County, the District or Authority, as applicable, as well as investments in, business positions with and income (including gifts, loans and travel payments) from sources that provide services, supplies, materials, machinery, vehicles, or equipment (including training and consulting services) used by the County Department, Authority or District, as applicable. OC-41 Grand Total: 5 Run date/time: Tuesday, October 02 2018 02:18:46 PM Page 1 of 1 ITEM NO. 8.3 AGENDA REPORT Meeting Date: October 9, 2018 To:Board of Directors From:Marc Marcantonio, General Manager Prepared By:Annie Alexander, Executive Assistant Subject:Election of Independent Special District of Orange County (ISDOC) Officers STAFF RECOMMENDATION: That the Board of Directors instruct the President or alternate Director to cast the District's ballot in this election. DISCUSSION: ISDOC is conducting a vote of Regular Special District Members for its election of officers. Currently, there are two nominations each for the positions of President and First Vice President (Programs). Only one candidate was nominated for the positions of Second Vice President, Third Vice President and Treasurer. As such, these candidates shall be deemed selected in accordance with ISDOC's bylaws. As there were no nominations for the position of Secretary, the ISDOC Executive Committee will either fill the vacancy by appointment or call for a special election within the first 60 days of 2019. The names of the candidates are listed on the attached ballot. Each Regular Member District in good standing is entitled to one vote which must be cast (signed) by the District's presiding officer or an alternate selected by its Board of Directors. Ballots must be received by 5:00 p.m. on Tuesday, October 23, 2018 in order to be counted. The names of the elected officers will be announced at the quarterly meeting on October 25, 2018. ATTACHMENTS: Name:Description:Type: ISDOC_Election.pdf Backup Material Backup Material September 21, 2018 RE: Election of Independent Special Districts of Orange County (ISDOC) Officers Dear Member Districts, The nomination period for Executive Committee officer positions closed on September 18th, 2018. At this time, ISDOC is conducting a vote of Regular Special District Members for the election of officers. This letter serves as official notice of the election. The names of nominated candidates are printed on the ballot. Please vote for one candidate per seat. The Executive Committee meets at 7:30 am on the first Tuesday of the month. Meetings are open to the public. Duties of Executive Committee members are contained in the ISDOC bylaws, which may be found at the ISDOC website - http://www.mwdoc.com/ISDOC. Each Regular Member District in good standing shall be entitled to one vote. In accordance with current bylaws, the vote must be cast (signed) by the district's presiding officer or an alternate selected by the district board. You may submit your ballot via mail or email to Heather Baez: P.O. Box 20895, Fountain Valley, CA 92728 (mail) or hbaez@mwdoc.com (email). Ballots must be received by 5:00 p.m. on Tuesday, October 23, 2018 in order to be counted. Even if positions are uncontested, it is important to submit a ballot since a quorum of voting members is required for the election of officers. The names of officers elected will be announced at the October 25th quarterly meeting. If you have any questions or wish to discuss the election process further, please contact Heather Baez (MWDOC) at hbaez@mwdoc.com or (714) 593-5012. Sincerely, James Fisler, James R. Fisler, President Independent Independent Special Districts of Orange County Enclosed: Ballot for ISDOC Election of Officers Candidates’ Statements Mailing Address P.O. Box 20895 Fountain Valley, CA 92728 Meeting Location MWDOC/OCWD 18700 Ward Street Fountain Valley, CA 92708 (714) 963-3058 (714) 964-5930 fax www.mwdoc.com/isdoc Executive Committee President Hon. James Fisler Mesa Water District 1st Vice President Hon. Saundra Jacobs Santa Margarita Water District 2nd Vice President Hon. Mark Monin El Toro Water District 3rd Vice President Hon. Mary Aileen Matheis Irvine Ranch Water District Secretary Hon. Doug Davert East Orange County Water District Treasurer Hon. Joan C. Finnegan Municipal Water District of Orange County Immediate Past President Hon. Mike Scheafer Costa Mesa Sanitary District Staff Administration Heather Baez Municipal Water District of Orange County Sylvia Prado East Orange County Water District INDEPENDENT SPECIAL DISTRICTS OF ORANGE COUNTY ELECTION OF OFFICERS The ISDOC Executive Committee consists of the President, First Vice President, Second Vice President, Third Vice President, Secretary, Treasurer and Immediate Past President. Officers are elected in October of even numbered years for two year terms. Please vote for one candidate per seat. The ISDOC bylaws indicate, “At the end of the nominating period if only one candidate is nominated for a vacant seat, that candidate shall be deemed selected.” This is the case for the Second Vice President, Third Vice President and Treasurer positions, therefore they are not on the ballot. Arlene Schafer from Costa Mesa Sanitary District, Mary Aileen Matheis from Irvine Ranch Water District and Joan Finnegan from Municipal Water District of Orange County, respectfully, have been selected to these seats. As there were no nominations for the Secretary position, the ISDOC Executive Committee will either fill the vacancy by appointment or call for a special election within the first sixty days of 2019. Cast your Vote: Please cast your vote for the remaining seats by placing an “X” on the line next to the individual for which you wish to vote in each position. If you are writing in a candidate, please include their district affiliation and position. THE SIGNATURE PAGE IS ON THE REVERSE SIDE OF THE BALLOT. IT MUST BE SIGNED BY YOUR VOTING REPRESENTATIVE IN ORDER TO BE COUNTED. President ________ Saundra Jacobs, Vice President Santa Margarita Water District ________ Michael Posey, Trustee Orange County Mosquito & Vector Control District First Vice President (Programs) ________ Lucille Kring, President Orange County Mosquito & Vector Control District ________ Mark Monin, Director El Toro Water District ------------------------------------------------------------------------------------------------------------------------ ________________________________________________________________ DISTRICT NAME ________________________________________________________________ SIGNATURE OF VOTING REPRESENTATIVE Ballots must be received no later than 5 p.m. October 23, 2018. You may return your ballot by mail or email to: Heather Baez P.O. Box 20895 Fountain Valley, CA 92728 Attention: ISDOC Executive Committee Election OR Email: hbaez@mwdoc.com BOARD OF DIRECTORS JUSTIN MCCUSKER SAUNDRA F.JACOBS BETTY H.OLSON,PH.D CHARLEY WILSON CHARLES GIBSON DANIEL R.FERONS GENERAL MANAGER Santa Margarita Waten District August 28, 2018 Dear Colleagues: I am delighted to announce my candidacy for President of the Independent Special Districts of Orange County("ISDOC"). I am writing today to ask for your districts' support. I have a deep and abiding commitment to the twenty-six Special Districts that competently and ably provide critical public services in our county. It has been my privilege to serve in ISDOC leadership during my 12 consecutive years on the ISDOC Board. I am currently the First Vice President and serve on the Executive Committee. My passion for public service and the work of special districts comes from my 22 years on the Santa Mar- garita Water District("SMWD")Board of Directors. While I have extensive experience in the water sector I also have a keen interest and awareness of the needs and requirements for success of all special districts— from library and vector control to water,sewer,and other community services. I hope that I have adequately demonstrated my willingness to provide leadership in organization, advocacy, and comnnmication to ben- efit and nurture special districts of every stripe. ISDOC is an important association of agencies providing important services associated with LAFCO and CSDA. We need the continued leadership of all individuals who have a demonstrated commitment to serv- ing the public, a strong sense of responsibility for the protection of the value that special districts provide, and a vision to plan for the future of the organization here in Orange County. It would be my honor to serve you and our organization as President and I humbly ask for your vote and support. If you or your colleagues have questions about my candidacy I hope you will contact me at 949/702-1145 or at saundraj@smwd.com. Sincerely, aundra F. c ?s SMWD Board Member First VP, ISDOC Santa Margarita Water District• 26111 Antonio Parkway,Rancho Santa Margarita,CA 92688 www.SMWD.con 0 (949)459-6420 Michael Posey an 708 Main St.*Huiilington Beach,CA 92648•Phone:714-412-0174 GMail:mikeposey@earthlink.uet Date: September 17, 2018 Independent Special Districts of Orange County 18700 Ward St. Fowitain Valley,CA 92708 Dear Selection Committee I am writing to you today to express my keen interest in serving as President of ISDOC. I was nominated to apply and voted unanimously by my peers at Orange County Mosquito and Vector Control where I serve on the Board of Trustees as well serve as the Chair for the Budget and Finance Committee. Until year-end, I also serve as Mayor for the City of Huntington Beach voted in unanimously by my City Council colleagues in December 2017 for a one-year term. First elected to the City Council in 2014 1 am finishing my first term and running for re-election for a second term. Prior to my election to City Council, I served as a Planning Commissioner. Other County-wide service includes Commissioner for Orange County Parks. I was nominated to serve by Orange County Supervisor, Michelle Steel with my nomination confirmed unanimously by the entire Board. I also serve as Chair of the West Orange County Water District and an alternate on Sanitation District. Committees served at the Cityof Huntington Beach include Chair of Economic Development Committee, Chair of Intergovernmental Relations, Personnel Committee, Special events and many others. Non-Governmental service with the Association of California Cities include, Co-Chair of the Jobs and Economic Development Committee and member of the Legislative Affairs Committee. I also serve on the Government<1l Affairs Committee for the Huntington Beach Chamber of Commerce. Lastly, I am on the Board of SCAG, OCCOG and serve as the alternate voting member of the RHNA Committee for SCAG. I respectfully ask that nomination be considered: I have the demonstrated leadership, organizational and relationship building skills to well serve ISDOC and its members. Sincerely, c Michael Posey BOARD OFFICERS FOR 2018 • 13001 GARDEN GROVE BOULEVARD PRESIDENT GARDEN GROVE,CA 92843-2102 LUCILLE KRING PHONES:(714)971-2421 VICE-PRESIDENT CHERYL BROTHERS (949)654-2421 SECRETARY -_ FAX:(714)971-3940 SHARI L.HORNE — _ ocvcd@ocvcd.org ' ocvector.org DISTRICT MANAGER facebook.comlocvectorcontrol RICHARD HOWARD • CLERK OF THE BOARD • '� �,,.", tWitter.comlocvector. • TAWNIA E.PETT BOARD OF TRUSTEES-2018 ALISO VIEJO September 17, 2018 PHILLIP B.TSUNODA ANAHEIM LUCILLE KRING BREA CECILIA HUPP BUENA PARK MICHAEL DAVIS COSTA MESA SANDRA GENIS My name is Lucille Kring, councilwoman in Anaheim for 14 years. CYPRESS PAULO MORALES DANA POINT I am running for 1St Vice President of ISDOC. This organization is needed to RICHARD VICZOREK FOUNTAIN VALLEY serve the community of Orange County. It does a great job and needs to be CHERYL BROTHERS protected. FULLERTON p JENNIFER FITZGERALD GARDEN GROVE STEPHANIE KLOPFENSTEIN I have served on the Orange County Sanitation District board for over 4 years. HUNTINGTON BEACH MIKE POSEY IRVINE I served on the Transportation Corridor Agencies board for over 8 years. LYNN SCHOTT LA HABRA LA JAMES ALMAGOMEZ I am currently the president of the Orange County Mosquito and Vector Control MARSHALL GOODMAN board and have served for over 11 years, twice as President. LAGUNA BEACH ROB ZUR SCHMIEDE LAGUNA HILLS LARRY WOODRUFF I believe my background on these boards and council has prepared me to be a part LAGUNA NIGUEL of ISDOC. JOHN MARK JENNINGS LAGUNA WOODS SHARI L.HORNE LAKE FOREST Thank you for your consideration, ROBERT HOLTZCLAW LOS ALAMITOS MARK CHIRCO MISSION VIEJO ROBERT RUESCH Lucille Kring NEWPORT BEACH SCOTT PEOTTER ORANGE MICHAEL ALVAREZ PLACENTIA CRAIG GREEN RANCHO SANTA MARGARITA APRIL JOSEPHSON SAN CLEMENTE MICHELLE SCHUMACHER SAN JUAN CAPISTRANO PAM PATTERSON SANTA ANA CECILIA AGUINAGA SEAL BEACH SANDRA MASSA-LAVITT STANTON ALETHANS TUSTIN LETITIA CLARK VILLA PARK BILL NELSON WESTMINSTER SERGIO CONTRERAS YORBA LINDA PEGGY HUANG COUNTY OF ORANGE LILLY SIMMERING "An Independent Special District Serving Orange County Since 1947" The mission of the Orange County Mosquito and Vector Control District is to provide the citizens of Orange County with the highest level of protection from vectors and vector-borne diseases. .,o, EI Toro Water District -4 0 „�,�♦,� " A District of Distinction " Serving the Public - Respecting the Environment September 4, 2018 RECEIVED MWDOC SEP 0 7 2010 Attention: Brett Barber Board ' Directors 18700 Ward Street ScottM. • Fountain Valley, CA 92708 MWD OF OC William H. Kahn •se F.Vergara Re: Mark Monin for ISDOC 1St Vice President Frederick J. . . Mark L.Monin Dear Mr. Barber, General .._ I would be honored to serve as 1 st Vice President for the Independent Special Districts of Orange Robert County and would love to speak with your District. I am a Director on the EI Toro Water District Board and Vice Chairman /Commissioner of the Orange County Airport Land Use Commision. I was also a PGF Fire Fighter with the Orange County Fire Authority. I have proven to be a fiscally responsible individual with a "think out of the box mentality" and I look forward to working with the other ISDOC Board members to achieve greatness. I love Orange County and want to work hard here and in Sacramento to help Special Districts progress into the future. Since first becoming involved with ISDOC I have been attending the Executive Committee meetings on a regular basis which is important because I know the issues that have affected ISDOC in the past and what is important to propel this fine organization in the future. My qualifications for this position include: > EXPERIENCED LEADER > COMMITTED TO SPECIAL DISTRICTS > FISCALLY RESPONSIBLE > DEDICATED As you know ISDOC is a membership association that was formed more than 30 years ago to serve the needs of Orange County's independent special districts. I want to build on that fine tradition, work hard with others to achieve a higher degree of member satisfaction and make ISDOC even stronger. I feel we can do more with the membership, continue to provide valuable information and presentations on issues that affect your district which can help you with important discussions in the future. I am very active in Orange County and my community. Please see the accompanying resume outlining my experience and education. I would love to hear your thoughts on how we can make ISDOC even better and please contact me with your input, ideas or questions on my experience or platform. I can be reached at(949) 939-6612 or markmonin(crosn.com. Sincerely, EL TORO WATER DISTRICT -�1,1 c—'L d Mark Monin, Director P.O. Box 4000 • Laguna Hills, CA 92654-4000 • Phone 949.837.7050 • Fax 949.837.7092 www.etwd.com ITEM NO. 8.4 AGENDA REPORT Meeting Date: October 9, 2018 To:Board of Directors From:Marc Marcantonio, General Manager Presented By:Delia Lugo, Finance Manager Dept:Finance Prepared By:Kelly McCann, Senior Accountant Subject:Audit Report for Fiscal Year Ending June 30, 2018 STAFF RECOMMENDATION: That the Board of Directors receive and file the Yorba Linda Water District Comprehensive Annual Financial Reports for Fiscal Year Ending June 30, 2018, 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, 2018. White Nelson Diehl Evans LLP, the Districts' external auditing firm, has completed their audit of the Yorba Linda Water District for the fiscal year ending June 30, 2018, and have rendered an unmodified (clean) opinion on the attached CAFR. Ms. Daphnie Munoz, Partner of White Nelson Diehl Evans LLP, is in attendance to present the CAFR. She will discuss key factors that contributed to the District's reported Change in Net Position, internal control comment including management's response to this comment, and 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 expecting that this CAFR will merit the highest level of recognition as obtained for the CAFR of June 30, 2017. STRATEGIC PLAN: G2 1A - Comply with Governmental Accounting Standards Board regulations. ATTACHMENTS: Name:Description:Type: FY18_CAFR.pdf Backup Material Backup Material FY18_GAS_Letter.pdf Backup Material Backup Material FY18_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 Year Ended June 30, 2018 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 II Saira Hernandez, Accountant This page intentionally left blank YORBA LINDA WATER DISTRICT For the Fiscal Year Ended June 30, 2018 Table of Contents Page Number INTRODUCTORY SECTION: Letter of Transmittal i Board of Directors and Executive Staff viii Organization Chart ix District Boundaries x Certificate of Achievement for Excellence in Financial Reporting xi FINANCIAL SECTION: Independent Auditors’ Report 1 Management’s Discussion and Analysis (Required Supplementary Information) 5 Basic Financial Statements: 15 Statement of Net Position 16 Statement of Revenues, Expenses, and Changes in Net Position 18 Statement of Cash Flows 19 Notes to Basic Financial Statements 21 Required Supplementary Information: 59 Schedule of Proportionate Share of the Net Pension Liability 60 Schedule of Contributions - Defined Benefit Pension Plans 61 Schedule of Changes in the Net OPEB Liability and Related Ratios 62 Schedule of Contributions - OPEB 63 Supplementary Information: 65 Combining Schedule of Net Position - 2018 66 Combining Schedule of Revenues, Expenses, and Changes in Net Position - 2018 68 Combining Schedule of Cash Flows - 2018 69 Schedule of Operating Expenses by Cost Center and Nature of Expenses for Water and Sewer - 2018 71 Schedule of Capital Assets - 2018 72 Combining Schedule of Net Position - 2017 73 Combining Schedule of Revenues, Expenses, and Changes in Net Position - 2017 75 Combining Schedule of Cash Flows - 2017 76 Schedule of Operating Expenses by Cost Center and Nature of Expenses for Water and Sewer - 2017 78 Schedule of Capital Assets - 2017 79 YORBA LINDA WATER DISTRICT For the Fiscal Year Ended June 30, 2018 Table of Contents Page Number STATISTICAL SECTION: 81 Description of Statistical Section 83 Financial Trends: Changes in Net Position 84 Revenue Capacity: Number of Connections 86 Ten Largest Customers 87 Debt Capacity: Ratio of Outstanding Debt 88 Debt Coverage 89 Demographic and Economic Information: Demographics 90 Ten Largest Employers 91 Operating Information: Number of Employees 92 Operating and Capacity Indicators 93 INTRODUCTORY SECTION This page intentionally left blank i September 20, 2018 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, 2018. 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 unmodified 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, 2017. 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 ii year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program requirements and we are submitting it to the GFOA to determine its eligibility for certificate again this year. District Structure and Leadership The Yorba Linda Water District is an independent special district, which operates under the authority of Division 12 of the California Water Code. The Yorba Linda Water District has provided water and sewer services to the residents of the City of Yorba Linda, portions of Placentia, Brea, Anaheim, and nearby unincorporated areas since 1959, the year it was formed to take over the assets and water service responsibilities of the Yorba Linda Water Company, a mutual formed in 1909. The District is governed by a five- member Board of Directors, elected at large from within the District’s service area. The General Manager administers the day-to-day operations of the District in accordance with policies and procedures established by the Board of Directors. The Yorba Linda Water District employs a full-time staff of 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 80,000 and currently provides water service through approximately 25,000 service connections. District Services Residential customers make up approximately 92% of the District’s customer base and consume approximately 73% of the water provided annually by the District. The District obtains about 30% of its water supply from the Metropolitan Water District (MWD) through the Municipal Water District of Orange County (MWDOC) and the 70% from groundwater wells within the area. In FY18 the District provided 20,386 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. The City of Yorba Linda’s median income is approximately 25% greater than the overall median income for Orange County, as reported by 2016-17 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. On May 9, 2016, the Governor issued a new Executive Order (B-37-16) “Making Water Conservation a California Way of Life”. Though the District still encourages it customers to conserve, it was anticipated that customer consumption would increase above the prior iii year regardless of permanent restrictions on water use. As a result, the Operating Budget for FY18 reflected an increase in customer consumption of 8% from the calculated customer consumption projected by the end of FY17. Experiencing a year of minimal rainfall and record setting heat days, actual customer consumption for FY18 surpassed that of FY17 by approximately 14% (6% greater than projected). As staff monitors the proposals and discussions of the SWRCB, as they pertain to “Making Water Conservation a Way of Life” and potential future mandatory conservation efforts, staff is diligently working on preparing proactive proposals on how to best incorporate potential future changes as smoothly as possible, while ensuring customer needs are met. 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 (MWD) water. The October 2, 2013 Annexation Agreement between OCWD and the District, however, has limited the District from producing the full OCWD’s Basin Production Percentage (BPP), 75%, over the past five years and is due to expire in October 2018. Current facility (infrastructure) limitations and agreement limitations prevented the District from pumping more than 70% for the reporting fiscal year. Upon completion of the Fairmont Booster Pump Station (FBPS) in Fall 2018, the District will be able to meet the maximum BPP as set by OCWD (now at 77%). Once the FBPS is fully operational, the District will experience a significant decrease in its annual variable water costs by using more groundwater that is less expensive. Future financial challenges are likely to be due to increasing regulatory requirements at both the state and federal levels. California’s water supply continues to be a concern due to the current drought conditions and potential mandates from the State Water Resource Control Board 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. Additionally, the District’s area is primarily “built out”, and an influx of residents from outside the area is expected to remain fairly low. 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 water and sewer services to protect public health and the environment with financial integrity and superior customer service,” and its Vision Statement: “Yorba Linda Water District will accomplish our mission to improve the quality of life for those we serve by: Embracing proven technology, improving customer satisfaction, providing efficient and responsive operations, and ensuring reliable infrastructure.” The Mission and Vision Statements dictate the following six 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. We maintain a commitment of courtesy, assessment, and resolution with all customer concerns. 4. Transparency – We listen to our customer and communicate openly about our policies, processes, and plans for the future. 5. Teamwork – We work together by sharing information and resources to achieve common goals. 6. Respect – We ensure every voice of the District is treated with dignity and civility; differences are valued and individual abilities and contributions are recognized. Future Years In 2018, the California State Legislature enacted two policy bills, Senate Bill 606 and Assembly Bill 1668. Both bills are direct outcomes of the Governor’s Executive Order (B-37-16) “Making Conservation a California Way of Life” and will establish a new foundation for long-term improvements in water conservation and drought planning. In the forthcoming FY19, this new framework will assist the District in using water more wisely (developing a water budget), eliminating water waste, and strengthening local drought resiliency. As the District looks towards the future, the goals, objectives and initiatives within the updated District Strategic Plan and Asset Management Plan will pave the way as to how the District continues to move forward. The forthcoming FY19 budget is predicated upon the assumption that customer water consumption will remain as resulted in the prior year due to permanent landscaping changes, water use efficiency awareness, and a growing culture of drought sensitivity. As we continue to adapt to the State’s mandated water conservation regulations, and with reduced consumption, our ability to maintain a high level of service while holding costs down has been challenged. District staff, with the assistance of Raftelis Financial Consultants, Inc, has 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. Policies and procedures have been revised to ensure financial strength. v Long-term Financial Planning and Policies The District perpetually maintains a five-year Financial Forecast to identify and focus on current and projected economic conditions. The purpose of the forecast is to identify the District’s ability over the next five years to continue current services, maintain existing assets and fund new initiatives or acquire new capital assets. The Board of Directors also annually reviews and adopts a five-year forecast of Capital Improvement Projects. These investments reflect the Board of Directors commitment to maintain and improve the District, in order to provide citizens the highest possible service. The District’s Debt Management Policy has a significant impact on the District’s water and sewer rates set by the Board of Directors on an annual basis. District annual rates and charges shall be set to maintain an annual debt coverage ratio of at least 225% to retain a AA rating from bond rating agencies. Therefore, having an impact on the District’s reportable net position for each fiscal year end. Water and Sewer Rates With the absence of a conservation mandate from the SWRCB, staff had projected that the annual customer consumption for FY18 would increase by approximately 8% from the projected year-end results of FY17. This projected consumption increase therefore, enabled the District to retain the commodity rate and monthly service charges as set by the Board of Directors in FY17 for FY18 with the goal of meeting the District’s cost of service and providing superior customer service. As such, the District’s commodity rate was set at $2.70/unit and the monthly service charges were set at follows: 5/8 and ¾ inch meters at $19.45, 1” meters at $32.49, 1 ½ inch meters at $64.78, 2” meters at $103.69, 3’ meters at $227.04, 4’ meters at $408.55 and 6” meters at $907.95. One unit of water equals 748 gallons, equating one gallon of water to a cost of approximately $0.01. At an average of 18 units of water per month (approximately 13,500 gallons), a typical 1 inch metered YLWD residential classed customer would pay about $81.09 for their monthly water bill. YLWD also provided wastewater service to approximately 19,191 customer connections in FY18, at a charge of $6.94 per month for traditional single-family residential customers, $6.52 per month for multi-family residential customers, and $6.94 plus a $0.44 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. 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 regulations. vi Enhanced Outreach & Communications The District continues to enhance its communications presence within the community. 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. Technological Advancements in Progress Technological advancements include the incorporation of a Computerized Maintenance & Management System (CMMS), which automates and tracks fieldwork orders and provides 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 (GAAP). 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. vii 2. Liquidity: The investment portfolio is to remain sufficiently liquid to enable the District to meet all operating requirements that might be reasonably anticipated. 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. Audit and Financial Reporting State Law and Bond covenants require the District to obtain an annual audit of its financial statements by an independent Certified Public Accountant. The accounting firm of White, Nelson, Diehl, Evans LLP has conducted the audit of the District’s financial statements. Their unmodified (clean) Independent Auditor’s Report appears in the Financial Section. Other References More information is contained in the Management’s Discussion and Analysis and the Notes to the Basic Financial Statements found in the Financial Section of the report. Acknowledgements Preparation of this report was accomplished by the combined efforts of District staff. We appreciate the dedicated efforts and professionalism that these staff members contribute to the District. We would also like to thank the members of the Board of Directors 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 viii Yorba Linda Water District Board of Directors and Executive Staff Al Nederhood, President Brooke Jones, Vice- President Andrew J. Hall, Director Phil Hawkins, Director J. Wayne Miller, Director Marc Marcantonio, General Manager Brett Barbre, Asst General Manager Rosanne Weston Engineering Mgr John DeCriscio Operations Mgr Gina Knight HR/Risk & Safety Mgr Delia Lugo Finance Manager Art Vega IT Manager  Job Classification Legend      FY 2017‐2018 ORGANIZATIONAL CHART BOARD OF DIRECTORSGeneral ManagerEngineering ManagerSenior Project ManagerEngineering Technician IIEngineering Technician IIConstruction Project SupervisorSenior Construction InspectorConstruction InspectorPrincipal EngineerSenior   EngineerGIS AnalystFinance ManagerCustomer Service Billing AdministratorCustomer Service Rep. IIICustomer Service Rep. IIICustomer Service Rep. IICustomer Service Rep. IISenior AccountantAccountantAccounting Technician IIAccounting Technician IIHuman Resources/   Risk & Safety ManagerRecords Management AdministratorRecords Management SpecialistSafety & Training  AnalystHuman Resources AnalystHuman Resources TechnicianInformation   Technology ManagerInformation Systems AdministratorInformation Systems Technician I Operations ManagerProduction SuperintendentPlant     Operator IIWater Quality Technician IIPlant     Operator IISenior SCADA TechnicianPlant     Operator IIMeter Services LeadMeter        Reader IIMeter        Reader IIMeter        Reader IPlant Operator I (Operator‐in‐Training)Senior Plant OperatorOperations SuperintendentSenior Fleet MechanicMechanic IIIMechanic IIFacilities MaintenanceOffice           ClerkOperations AssistantMaintenance SuperintendentSenior Maintenance WorkerMaintenance Worker IIIMaintenance Worker IIMaintenance Worker IIMaintenance Worker IMaintenance Worker ISenior Maintenance WorkerMaintenance Worker IIIMaintenance Worker IIMaintenance Worker IIMaintenance Worker IMaintenance Worker ISenior Maintenance WorkerMaintenance Worker IIIMaintenance Worker IIIMaintenance Worker IIMaintenance Worker IMaintenance Worker ISenior Maintenance WorkerMaintenance Worker IIIMaintenance Worker IIMaintenance Worker IMaintenance Worker IMaintenance Worker IAssistant             General ManagerManagement AnalystPublic Affairs RepresentativeInformation Systems AdministratorExecutive AssistantUnrepresented EmployeesBargaining Unit Employees   x 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 34, 2017 041&� P. Executive Director/CEO This page intentionally left blank FINANCIAL SECTION This page intentionally left blank 2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893 Offices located in Orange and San Diego Counties 1 INDEPENDENT AUDITORS’ REPORT Board of Directors Yorba Linda Water District Placentia, California Report on the Financial Statements We have audited the accompanying financial statements of the Yorba Linda Water District (the District), as of and for the year ended June 30, 2018, 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 audit. We conducted our audit 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 the District as of June 30, 2018, and the changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Notes 1e and 13 of the financial statements, the District adopted Governmental Accounting Standards Board’s (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. The adoption of this standard required retrospective application resulting in a $2,514,827 reduction of previously reported net position. Our opinion is not modified with respect to this matter. Other Matters Prior-Year Comparative Information The statements include summarized prior-year comparative information. Such information does not include sufficient detail to constitute a presentation in accordance with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the District’s financial statements as of and for the year ended June 30, 2017, from which such summarized information was derived. Report on Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedule of proportionate share of the net pension liability, the schedule of contributions - defined benefit pension plans, the schedule of changes in the net other post-employment benefit (OPEB) liability and related ratios, and the schedule of contributions - OPEB, 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 GASB, 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 audit was 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 year ended June 30, 2018, 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 schedules of operating expenses by cost center and nature of expenses for water and sewer, and the schedules 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 September 20, 2018, 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 September 20, 2018 4 This page intentionally left blank 5 MANAGEMENT’S DISCUSSION AND ANALYSIS YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2018 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 year ended June 30, 2018. 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 2018  The District’s net position decreased by $1.1 million, or a .7 % decrease in net position.  During the year the District’s revenues were $37.9 million, an increase of 7.8%.  During the year, the District’s expenses were $37.9 million, an increase of 7.5%.  The District had net additions to capital assets of $3.6 million. 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%.  The District had net additions to capital assets of $.7 million. 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 customer 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 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2018 7 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. 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 57. YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2018 8 Statement of Net Position Statement of Net Position for the year ended June 30, 2018 is as follows: 2018 2017 Change Assets: Current assets $ 41,482,969 $ 39,924,566 $ 1,558,403 Restricted assets 593,767 5,189,724 (4,595,957) Capital assets, net Not depreciable 10,788,120 5,848,629 4,939,491 Depreciable, net of accumulated depreciation 183,473,005 184,811,581 (1,338,576) Other post-employment benefit (OPEB) asset - 411,343 (411,343) Total assets 236,337,861 236,185,843 152,018 Deferred Outflows of Resources:3,524,983 2,366,673 1,158,310 Liabilities: Liabilities payable from unrestricted current assets 7,957,100 7,523,933 433,167 Liabilities payable from restricted assets 346,205 111,000 235,205 Non-current liabilities 64,894,947 63,076,794 1,818,153 Total liabilities 73,198,252 70,711,727 2,486,525 Deferred Inflows of Resources:787,723 861,366 (118,609) Net position: Net investment in capital assets 154,271,627 154,273,025 (1,398) Restricted 352,063 1,222,452 (870,389) Unrestricted 11,253,179 11,483,946 (230,767) Total net position $ 165,876,869 $ 166,979,423 $ (1,102,554) YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2018 9 Statement of Net Position for the year ended June 30, 2017 was as follows: 2017 2016 Change Assets: Current assets $ 39,924,566 $ 44,555,956 $ (4,631,390) Restricted assets 5,189,724 2,199,135 2,990,589 Capital assets, net Not depreciable 5,848,629 5,005,418 843,211 Depreciable, net of accumulated depreciation 184,811,581 184,944,351 (132,770) Note receivable - 78,567 (78,567) Other post-employment benefit (OPEB) asset 411,343 276,289 135,054 Total assets 236,185,843 237,059,716 (873,873) Deferred Outflows of Resources:2,366,673 1,137,794 1,228,879 Liabilities: Liabilities payable from unrestricted current assets 7,523,933 13,775,913 (6,251,980) Liabilities payable from restricted assets 111,000 57,668 53,332 Non-current liabilities 63,076,794 58,656,501 4,420,293 Total liabilities 70,711,727 72,490,082 (1,778,355) Deferred Inflows of Resources:861,366 1,331,326 (469,960) Net position: Net investment in capital assets 154,273,025 153,776,247 496,778 Restricted 1,222,452 1,572,527 (350,075) Unrestricted 11,483,946 9,027,328 2,456,618 Total net position $ 166,979,423 $ 164,376,102 $ 2,603,321 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 $165.8 million and $166.9 million as of June 30, 2018 and 2017, respectively. The net change between these two reported fiscal years is primarily due in Net Position “Restricted” balance. By far the largest portion of the District’s net position (93.0% and 92.4% as of June 30, 2018 and 2017, 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 Year Ended June 30, 2018 10 For the year ended June 30, 2018, the District showed a positive balances in its unrestricted net position of $11.2 million and in its Restricted for Water Conservation/OPEB contribution position of $352,063, which indicates that there are reserves to be utilized in future years and is a decrease from the stated balance of $12.7 million for the year ended June 30, 2017. Statement of Revenues, Expenses and Changes in Net Position Statement of Revenues, Expenses and Changes in Net Position for the year ended June 30, 2018 is as follows: 2018 2017 Change Revenues: Operating revenues: Water sales $ 32,082,152 $ 29,326,565 $ 2,755,587 Sewer revenue 2,330,809 2,099,947 230,862 Other operating revenue 831,733 1,033,608 (201,875) Total operating revenues 35,244,694 32,460,120 2,784,574 Non-operating revenues: Investment income 518,600 377,205 141,395 Property taxes 1,749,957 1,687,384 62,573 Other non-operating income 413,465 645,562 (232,097) Total non-operating revenue 2,682,022 2,710,151 (28,129) Total revenues 37,926,716 35,170,271 2,756,445 Expenses: Operating expenses: Variable costs 15,028,131 12,710,857 2,317,274 Pesonnel services 9,874,212 8,913,639 960,573 Supplies and services 4,298,863 4,504,054 (205,191) Depreciation 7,465,977 7,147,369 318,608 Total operating expenses 36,667,183 33,275,919 3,391,264 Non-operating expenses: Interest expense 1,106,515 1,552,896 (446,381) Other non-operating expense 89,021 403,597 (314,576) Total non-operating expenses 1,195,536 1,956,493 (760,957) Total expenses 37,862,719 35,232,412 2,630,307 Net income(loss) before capital contributions 63,997 (62,141) 126,138 and special items Capital contributions 3,554,123 2,665,462 888,661 Special item (2,205,847) - (2,205,847) Change in net position 1,412,273 2,603,321 (1,191,048) Net position, beginning of year 166,979,423 164,376,102 2,603,321 Prior-period Adjustments (2,514,827) - (2,514,827) Net position, end of year $ 165,876,869 $ 166,979,423 $ (1,102,554) YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2018 11 Statement of Revenues, Expenses and Changes in Net Position for the year ended June 30, 2017 was as followed: 2017 2016 Change Revenues: Operating revenues: Water sales $ 29,326,565 $ 27,820,638 $ 1,505,927 Sewer revenue 2,099,947 1,849,114 250,833 Other operating revenue 1,033,608 2,665,835 (1,632,227) Total operating revenues 32,460,120 32,335,587 124,533 Non-operating revenues: Investment income 377,205 288,817 88,388 Property taxes 1,687,384 1,615,454 71,930 Other non-operating income 645,562 872,420 (226,858) Total non-operating revenue 2,710,151 2,776,691 (66,540) Total revenues 35,170,271 35,112,278 57,993 Expenses: Operating expenses: Variable costs 12,710,857 10,470,181 2,240,676 Pesonnel services 8,913,639 8,096,853 816,786 Supplies and services 4,504,054 4,355,033 149,021 Depreciation 7,147,369 7,546,407 (399,038) Total operating expenses 33,275,919 30,468,474 2,807,445 Non-operating expenses: Interest expense 1,552,896 1,671,539 (118,643) Other non-operating expense 403,597 7,273 396,324 Total non-operating expenses 1,956,493 1,678,812 277,681 Total expenses 35,232,412 32,147,286 3,085,126 Net income(loss) before capital contributions (62,141) 2,964,992 (3,027,133) Capital contributions 2,665,462 788,445 1,877,017 Change in net position 2,603,321 3,753,437 (1,150,116) Net position, beginning of year 164,376,102 160,622,665 3,753,437 Net position, end of year $ 166,979,423 $ 164,376,102 $ 2,603,321 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 decreased by $1.1 million and increased by $2.6 million for the fiscal years ended June 30, 2018 and 2017, respectively. YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2018 12 A closer examination of the sources of changes in net position reveals that: In 2018, the District’s total revenues increased by $2.8 million, primarily due to a net increase in water sales of $2.76 million as a result of the increase of water usage. Total expenses increased by $2.6 million primarily due to a increase in variable water costs of $2.3 million. In 2017, the District’s total revenues increased by $58 thousand, as well as a decrease in Other Operating Revenue 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 Capital Assets Changes in capital asset amounts for 2018 were as follows: Balance Transfers/ Balance 2017 Additions Deletions 2018 Capital assets: Capital assets, not being depreciated $ 5,848,629 $ 11,076,270 (6,136,779) $ 10,788,120 Capital assets, being depreciated 281,695,381 6,201,313 (384,828) 287,511,866 Less accumulated depreciation (96,883,800) (7,465,977) 310,916 (104,038,861) Total capital assets, net $ 190,660,210 $ 9,811,606 $ (6,210,691) $ 194,261,125 Changes in capital asset amounts for 2017 were as follows: Balance Transfers/ Balance 2016 Additions Deletions 2017 Capital assets: Capital assets, not being depreciated $ 5,005,418 $ 7,330,282 (6,487,071) $ 5,848,629 Capital assets, being depreciated 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 capital assets, net $ 189,949,769 $ 7,197,512 $ (6,487,071) $ 190,660,210 At the end of fiscal year 2018 and 2017, the District’s investment in capital assets amounted to $194.3 million and $190.6 million, respectively (net of accumulated depreciation). This investment in capital assets includes land, transmission and distribution systems, reservoirs, tanks, pumps, buildings and structures, equipment, vehicles and construction-in-process, etc. Major capital assets projects in fiscal year 2017-18 include the construction of Fairmont Booster Pump Station, Well 22, and the purchase of various district vehicles and equipment. Where in fiscal year 2016-17, major capital asset projects included the construction of Well 21, various water and sewer mains for development and the purchase of various district vehicles and equipment. YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2018 13 Additional information regarding capital assets can be found in note 4 in Notes to Basic Financial Statements. Long-Term Liabilities Changes in long-term debt amounts for the year ended June 30, 2018 were as follows: Beginning Ending Balance Additions Reductions Balance 2012A Refuding Certificate of Participation $ 7,230,000 $ - $ (295,000) $ 6,935,000 2017A Revenue Bonds 29,335,000 - (945,000) 28,390,000 Subtotal 36,565,000 - (1,240,000) 35,325,000 Add (Less): 2012A Premium 767,216 - (47,703) 719,513 2017A Premium 4,425,817 - (208,274) 4,217,543 Total Certificates of Participation 41,758,033 - (1,495,977) 40,262,056 Compensated Balances 1,619,653 880,816 (745,207) 1,755,262 Total $ 43,377,686 $ 880,816 $ (2,241,184) $ 42,017,318 Changes in long-term debt amounts for the year ended June 30, 2017 were as follows: Beginning Ending Balance Additions Reductions Balance 2008 Revenue Certificates of Participation $ 29,865,000 $- $ (29,865,000) $- 2012A Refuding Certificate of Participation 7,515,000 - (285,000) 7,230,000 2017A Revenue Bonds - 29,335,000 - 29,335,000 Subtotal 37,380,000 29,335,000 (30,150,000) 36,565,000 Add (Less): 2008 Pemium 572,435 - (572,435)- 2012A Premium 814,919 - (47,703) 767,216 2017A Premium - 4,460,529 (34,712) 4,425,817 Total Certificates of Participation 38,767,354 33,795,529 (30,804,850) 41,758,033 Line of Credit 6,883,720 116,280 (7,000,000) - Compensated Balances 1,442,344 872,091 (694,782) 1,619,653 Total $ 47,093,418 $ 34,783,900 $ (38,499,632) $ 43,377,686 YORBA LINDA WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) For the Year Ended June 30, 2018 14 In fiscal year 2017-18, long-term debt decrease by 1.4 million due to the principal payments on the 2012A and 2017A Revenue Bonds. Compared to 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 $4.22 million. Additional information regarding long-term liabilities can be found in note 5 in Notes to Basic Financial Statements. Requests for Information This financial report is designed to provide the District’s funding sources, customers, stakeholders and other interested parties with an overview of the District’s financial operations and financial condition. Should the reader have questions regarding the information included in this report or wish to request additional financial information, please contact the District at 1717 E. Miraloma Avenue, Placentia, California 92807 or the Finance Department at (714) 701-3040. 15 BASIC FINANCIAL STATEMENTS 2018 2017 CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents (Note 2) 34,795,833$ 27,991,568$ Investments (Note 2) 2,063,675 6,920,955 Accounts receivable - water and sewer services 4,131,858 4,310,234 Accounts receivable - property taxes 21,518 19,581 Note receivable (Note 10)- 78,567 Accrued interest receivable 51,039 47,841 Prepaid expenses and deposits 170,557 289,987 Inventory 248,489 265,833 TOTAL UNRESTRICTED ASSETS 41,482,969 39,924,566 RESTRICTED ASSETS: Cash and cash equivalents (Note 2) 593,767 5,189,724 TOTAL RESTRICTED ASSETS 593,767 5,189,724 TOTAL CURRENT ASSETS 42,076,736 45,114,290 NONCURRENT ASSETS: Capital assets (Note 4): Not depreciable 10,788,120 5,848,629 Depreciable, net of accumulated depreciation 183,473,005 184,811,581 Other post-employment benefit (OPEB) asset - 411,343 TOTAL NONCURRENT ASSETS 194,261,125 191,071,553 TOTAL ASSETS 236,337,861 236,185,843 DEFERRED OUTFLOWS OF RESOURCES: Deferred amounts from pension plans 2,749,826 1,966,284 Deferred amounts from OPEB 399,599 - Deferred loss on refunding 375,558 400,389 TOTAL DEFERRED OUTFLOWS OF RESOURCES 3,524,983 2,366,673 (Continued) YORBA LINDA WATER DISTRICT STATEMENT OF NET POSITION June 30, 2018 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES (With comparative totals for June 30, 2017) See accompanying notes to basic financial statements. 16 2018 2017 CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable 4,969,190$ 4,497,076$ Accrued expenses 182,110 144,164 Compensated absences payable - current portion (Note 5) 438,816 404,913 Customer and construction deposits 553,128 650,848 Unearned revenue 268,592 300,263 Accrued interest payable 405,264 286,669 Certificates of Participation - current portion (Note 5) 1,140,000 1,240,000 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS 7,957,100 7,523,933 PAYABLE FROM RESTRICTED ASSETS: Retention payable 346,205 111,000 TOTAL PAYABLE FROM RESTRICTED ASSETS 346,205 111,000 TOTAL CURRENT LIABILITIES 8,303,305 7,634,933 LONG-TERM LIABILITIES (LESS CURRENT PORTION): Unearned annexation revenue 13,607,976 14,103,022 Compensated absences (Note 5) 1,316,446 1,214,740 Certificates of Participation (Note 5) 39,122,056 40,518,033 Net pension liability (Note 7) 8,575,054 7,240,999 Net OPEB liability (Note 6) 2,273,415 - TOTAL LONG-TERM LIABILITIES (LESS CURRENT PORTION) 64,894,947 63,076,794 TOTAL LIABILITIES 73,198,252 70,711,727 DEFERRED INFLOWS OF RESOURCES: Deferred amounts from pension plans 639,586 753,101 Deferred amounts from OPEB 44,966 - Deferred gain on refunding 103,171 108,265 TOTAL DEFERRED INFLOWS OF RESOURCES 787,723 861,366 NET POSITION: Net investment in capital assets (Note 8) 154,271,627 154,273,025 Restricted: Water conservation 104,673 1,222,452 Other post-employment benefits 247,390 - Unrestricted 11,253,179 11,483,946 TOTAL NET POSITION 165,876,869$ 166,979,423$ YORBA LINDA WATER DISTRICT STATEMENT OF NET POSITION (CONTINUED) June 30, 2018 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES (With comparative totals for June 30, 2017) See accompanying notes to basic financial statements. 17 2018 2017 OPERATING REVENUES: Water sales 32,082,152$ 29,326,565$ Sewer revenues 2,330,809 2,099,947 Other operating revenues 831,733 1,033,608 TOTAL OPERATING REVENUES 35,244,694 32,460,120 OPERATING EXPENSES: Variable water costs 15,028,131 12,710,857 Personnel services 9,874,212 8,913,639 Supplies and services 4,298,863 4,504,054 Depreciation 7,465,977 7,147,369 TOTAL OPERATING EXPENSES 36,667,183 33,275,919 OPERATING INCOME (LOSS) (1,422,489) (815,799) NONOPERATING REVENUES (EXPENSES): Property taxes 1,749,957 1,687,384 Investment income 518,600 377,205 Interest expense (1,106,515) (1,552,896) Other nonoperating revenues 413,465 645,562 Other nonoperating expenses (89,021) (403,597) TOTAL NONOPERATING REVENUES (EXPENSES)1,486,486 753,658 NET INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS 63,997 (62,141) CAPITAL CONTRIBUTIONS 3,554,123 2,665,462 CHANGES IN NET POSITION, BEFORE SPECIAL ITEM 3,618,120 2,603,321 SPECIAL ITEM (NOTE 12)(2,205,847) - CHANGES IN NET POSITION 1,412,273 2,603,321 NET POSITION - BEGINNING OF YEAR 166,979,423 164,376,102 PRIOR-PERIOD ADJUSTMENT (NOTE 13)(2,514,827) - NET POSITION - BEGINNING OF YEAR, AS RESTATED 164,464,596 164,376,102 NET POSITION - END OF YEAR 165,876,869$ 166,979,423$ YORBA LINDA WATER DISTRICT STATEMENT OF REVENUES, EXPENSES, For the year ended June 30, 2018 AND CHANGES IN NET POSITION (With comparative totals for the year ended June 30, 2017) See accompanying notes to basic financial statements. 18 2018 2017 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 35,418,459$ 32,357,591$ Cash payments to employees for salaries and wages (9,448,361) (8,728,277) Cash payments to suppliers of goods and services (18,576,010) (16,624,358) Other revenues 234,874 348,061 Other expenses (89,021) (77,317) Refund to customers (2,205,847) - NET CASH PROVIDED BY OPERATING ACTIVITIES 5,334,094 7,275,700 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Proceeds from property taxes and assessments 1,751,697 1,681,497 NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 1,751,697 1,681,497 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from annexation fees and capital contributions 77,206 94,746 Acquisition and construction of capital assets (7,351,354) (5,228,389) Proceeds from sales of capital assets 11,556 21,646 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 (1,240,000) (1,080,000) Interest paid on long-term liabilities (1,509,535) (1,768,613) Payment on line of credit - (6,883,720) NET CASH USED IN CAPITAL AND RELATED FINANCING ACTIVITIES (10,012,127) (10,886,386) CASH FLOWS FROM INVESTING ACTIVITIES: Sale of investments 15,984,982 18,902,845 Purchase of investments (11,385,477) (16,634,078) Interest and investment earnings 535,139 375,788 NET CASH PROVIDED BY INVESTING ACTIVITIES 5,134,644 2,644,555 NET INCREASE IN CASH AND CASH EQUIVALENTS 2,208,308 715,366 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 33,181,292 32,465,926 CASH AND CASH EQUIVALENTS - END OF YEAR 35,389,600$ 33,181,292$ (Continued) YORBA LINDA WATER DISTRICT STATEMENT OF CASH FLOWS For the year ended June 30, 2018 (With comparative totals for the year ended June 30, 2017) See accompanying notes to basic financial statements. 19 2018 2017 RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating loss (1,422,489)$ (815,799)$ Adjustments to reconcile operating loss to net cash provided by operating activities: Depreciation 7,465,977 7,147,369 Other revenues 234,874 348,061 Other expenses (89,021) (77,317) Refund to customers (2,205,847) - 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 178,376 (93,487) Inventory 17,344 (30,934) Prepaid expenses and deposits 119,430 2,963 Other post-employment benefits (OPEB) asset - (135,054) Deferred outflows of resources from pension plans (783,542) (1,253,710) Deferred outflows of resources from OPEB (43,926) - Increase (decrease) in liabilities and deferred inflows of resources: Accounts payable and accrued expenses 707,319 480,601 Accrued salaries and wages 37,946 23,365 Accrued compensated absences 135,609 177,309 Customer and construction deposits (97,720) 128,881 Net pension liability 1,334,055 1,951,677 Net OPEB liability (185,742) - Deferred inflows of resources from pension plans (113,515) (578,225) Deferred inflows of resources from OPEB 44,966 - Total adjustments 6,756,583 8,091,499 NET CASH PROVIDED BY OPERATING ACTIVITIES 5,334,094$ 7,275,700$ CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION: Unrestricted 34,795,833$ 27,991,568$ Restricted 593,767 5,189,724 TOTAL CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION 35,389,600$ 33,181,292$ NONCASH INVESTING, CAPITAL, AND RELATED FINANCING ACTIVITIES: Amortization related to long-term debt 255,077$ 104,432$ Capital contributions 3,523,811$ 2,647,734$ (With comparative totals for the year ended June 30, 2017) (CONTINUED) For the year ended June 30, 2018 YORBA LINDA WATER DISTRICT STATEMENT OF CASH FLOWS See accompanying notes to basic financial statements. 20 21 NOTES TO BASIC FINANCIAL STATEMENTS 22 YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Organization and Description of the Reporting Entity The Yorba Linda Water District (the District) is an independent special district established in 1959, which operates under the authority of Division 12 of the California Water Code for the purpose of providing water and sewer services to 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 that include water and sewer. Water is provided to the entire service area. Sewer is provided to most of the service areas. The District’s service area includes Yorba Linda, portions of Placentia, Anaheim, and Brea, and areas of unincorporated Orange County. The District provides water service to approximately 79,500 residents and sewer service to approximately 61,000 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 composed 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 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 in the financing, refinancing, acquiring, constructing, and rehabilitating of facilities, land, and equipment; 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 Corporation. The Authority, a public agency, was organized pursuant to a Joint Exercise of Powers Agreement (the JPA Agreement) between the District and the California Municipal Finance Authority (CMFA), dated April 11, 2017. The Authority is statutorily authorized by Article 4 of Chapter 5 of Division 7 of Title 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 Authority may be obtained from the Yorba Linda Water District, 1717 East Miraloma Avenue, Placentia, CA 92870. b. Basic Financial Statements The basic financial statements are composed of the statement of net position, the statement of revenues, expenses, and changes in net position, the statement of cash flows, and the notes to the basic financial statements. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 23 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) c. Basis of Presentation The accounts of the District are that of 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 statement of net position. The statement 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 In fiscal year 2017-2018, the District implemented Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expenses for post-employment benefits other than pension. Accounting changes adopted to conform to the provisions of this statement should be applied retroactively. The result of the implementation of this statement decreased the net position at July 1, 2017, of the District by $2,514,827. 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, and did not impact the District. GASB 85 - Omnibus 2017, effective for periods beginning after June 15, 2017, and did not impact the District. GASB 86 - Certain Debt Extinguishment Issues, effective for periods beginning after June 15, 2017, and did not impact the District. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 24 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) e. New Accounting Pronouncements (Continued) GASB Pending Accounting Standards GASB has issued the following statements, which may impact the District’s financial reporting requirements in the future:  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.  GASB 87 - Leases, effective for periods beginning after December 15, 2019.  GASB 88 - Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements, effective for periods beginning after June 15, 2018.  GASB 89 - Accounting for Interest Cost Incurred before the End of a Construction Period, 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 $4,611 and $9,042 was made to bad debt expense for the years ended June 30, 2018 and 2017, respectively. i. Prepaid Expenses Certain payments to vendors reflect costs or deposits applicable to future accounting periods and are recorded as prepaid items in the basic financial statements. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 25 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 with an expected useful life of greater than one year. Contributed assets are recorded at acquisition 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 - 75 years Pumping Plant 20 - 40 years Water Treatment Plant 12 - 40 years Sewer Plant 5 - 60 years Transmission and Distribution Plant 10 - 40 years General Plant 3 - 40 years l. Interest Expense The District incurs interest charges on the line of credit and certificates of participation. Interest expense of $265,638 and $7,671 has been capitalized as an addition to the cost of construction for the years ended June 30, 2018 and 2017, respectively. m. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to future periods and 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.  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 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. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 26 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) m. Deferred Outflows/Inflows of Resources (Continued)  Deferred outflow 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.  Deferred outflow related to OPEB. This amount is equal to employer contributions made after the measurement date of the net pension liability. In addition to liabilities, the statement 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 gain on refunding. A deferred gain 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.  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.  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 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.  Deferred inflow related to OPEB resulting from the difference in projected and actual earnings on investments of the OPEB 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-a-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 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 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. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 27 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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 that the District no longer receives post-Proposition 13. The fee is a present worth value required to generate a 40-year revenue stream equivalent to the lost property tax revenue. The fee is calculated based on the fair market value estimate of the improved property at the time the fee is collected and is 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 of Directors. s. Net Position In the statement 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, 2018 and 2017, represent the following:  Amounts of $104,673 and $1,222,452, respectively, which are 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. In addition, the June 30, 2018 balance reflects a contribution the District made to a PARS account which has a remaining balance of $247,390.  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 June 30, 2018 28 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING 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 statement 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, 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 costs 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 Assessor’s Office assesses all real and personal property within Orange County each year. The Orange County Tax Collector’s Office bills and collects the District’s share of property taxes and assessments. The Orange County Treasurer’s Office remits current and delinquent property tax collections to the District throughout the year. Property taxes in California are levied in accordance with Article XIIIA of the State Constitution at 1% of countywide assessed valuations. This levy is allocated pursuant to state law to the appropriate units of local governments. Property taxes receivable at year-end are related to property taxes collected by the Orange County Tax Collector, which have not been credited to the District’s cash balance as of June 30. The property tax calendar is as follows: Lien Date January 1 Levy Date July 1 Due Dates First Installment - November 1 Second Installment - March 1 Collection Dates First Installment - December 10 Second Installment - April 10 w. Water and Sewer Sales The District recognizes water and sewer service charges based on cycle billings rendered to the customers each month. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 29 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 CalPERS plan and additions to/deductions from the plan’s 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. Post-Employment Benefits Other Than Pensions (OPEB) For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the District’s OPEB plan and additions to/deductions from the OPEB plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, the District’s OPEB plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value. aa. 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. ab. 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. ac. Prior-Year Data Selected information regarding the prior year has been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Authority’s prior-year financial statements from which this selected financial data was derived. Certain amounts in the June 30, 2017 financial statements have been reclassified for comparative purposes to conform to the presentation in the June 30, 2018 financial statements. There was no change in reported net income or net position related to these reclassifications. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 30 NOTE 2 - CASH AND INVESTMENTS Cash and Investments Cash and investments as of June 30, 2018 and 2017, are reported in the accompanying statement of net position as follows: 2018 2017 Unrestricted current assets: Cash and cash equivalents 34,795,833$ 27,991,568$ Investments 2,063,675 6,920,955 Restricted assets: Cash and cash equivalents 593,767 5,189,724 Total cash and investments 37,453,275$ 40,102,247$ Cash and investments as of June 30, 2018 and 2017, consisted of the following: 2018 2017 Cash on hand 1,250$ 1,250$ Deposits with financial institutions 1,142,589 1,806,502 Investments 36,309,436 38,294,495 Total cash and investments 37,453,275$ 40,102,247$ YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 31 NOTE 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. This table does not address investments of the employer contributions to the other post-employment benefit trust that are governed by the trust agreement or the investments of funds within the other post-employment benefit (OPEB) trusts that are governed by the agreement between the District and the trustees, rather than the general provisions of the California Government Code or the District’s Investment Policy. Maximum Maturity Maximum Percentage of Portfolio Maximum Investment in One Issuer Minimum Credit 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 None Orange County Commingled Investment Pool N/A None None N/A California Asset Management Program N/A (1)None N/A United States Treasury Bills, Notes and Bonds 5 years None None N/A United States Government-Sponsored Agency Securities 5 years None None N/A Corporate Bonds 5 years 30%None A Banker’s Acceptance 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 (1) Limited to bond proceeds held by the District. N/A Not applicable Authorized Investment Type Investments Authorized by Debt Agreements Investments of debt proceeds held by bond trustees are governed by the provisions of debt agreements, rather than the general provisions of the California Government Code or the District’s investment policy. Investments authorized for funds held by bond trustees include, US Treasury Bills, Notes and Bonds, US Treasury Obligations, Resolution Funding Corp (REFCORP), Prefunded Municipal Bonds, US Government-Sponsored Agency Securities, Commercial Paper, Money Market Mutual Funds, Certificates of Deposits, Guaranteed Investment Contracts, Banker’s Acceptance, Repurchase Agreements, and Local Agency Investment Funds. There are no limitations on the maximum amount that can be invested in one issuer, maximum percentage allowed, or the maximum maturity of an investment, except for the maturity of Banker’s Acceptance, which are limited to one year and Repurchase Agreements, which are limited to 30 days. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 32 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) 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. 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 show the distribution of the District’s investments by maturity as of June 30, 2018 and 2017. 12 Months 13 to 24 25 to 36 37 to 48 48 to 60 or Less Months Months Months Months Total CalTRUST Investment Pool 19,043,553$ -$ -$ -$ -$ 19,043,553$ Local Agency Investment Fund 11,745,304 - - - - 11,745,304 OPEB Trust - PARS Pooled Trust 247,390 - - - - 247,390 Negotiable Certificates of Deposits 443,752 244,263 479,012 896,648 - 2,063,675 Money Market Mutual Funds 3,209,342 - - - - 3,209,342 Held by Bond Trustee: Money Market Mutual Funds 172 - - - - 172 Total 34,689,513$ 244,263$ 479,012$ 896,648$ -$ 36,309,436$ 12 Months 13 to 24 25 to 36 37 to 48 48 to 60 or Less Months Months Months Months Total 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 Deposits 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 Total 36,192,771$ 445,301$ 245,383$ 489,576$ 921,464$ 38,294,495$ Investment Type Investment Type Remaining Maturity (in Months)June 30, 2018 June 30, 2017 Remaining Maturity (in Months) YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 33 NOTE 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 ratings 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, 2018 and 2017, for each investment type. Minimum Total Legal as of Not Rating June 30, 2018 Rated AA+AAA CalTRUST Investment Pool N/A 19,043,553$ 17,710,872$ 1,332,681$ -$ Local Agency Investment Fund N/A 11,745,304 11,745,304 - - OPEB Trust - PARS Pooled Trust N/A 247,390 247,390 - - Negotiable Certificates of Deposits A 2,063,675 2,063,675 - - Money Market Mutual Funds 3,209,342 3,209,342 - - Held by Bond Trustee: Money Market Mutual Funds N/A 172 172 - - Total 36,309,436$ 34,976,755$ 1,332,681$ -$ Minimum Total Legal as of Not 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 Deposits A 5,923,515 5,923,515 - - Held by Bond Trustee: Money Market Mutual Funds N/A 5,078,724 - - 5,078,724 Total 38,294,495$ 28,125,472$ 4,092,859$ 6,076,164$ June 30, 2018 Investment Type June 30, 2017 Investment Type 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. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 34 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) 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 the Local Agency Investment Fund (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, 2018 and 2017, 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 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 pro rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). 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 of Trustees 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 accounts. 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. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 35 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Cash and Investments - Other Post-Employment Benefit (OPEB) Trust The District established a trust account with the Public Agency Retirement Services (PARS) to hold assets that are legally restricted for use in administering the District’s OPEB health plan. The OPEB trust funds’ specific cash and investments are managed by a third-party portfolio manager under guidelines approved by the District. The District-approved guidelines are as follows: Risk Tolerance Moderate high mark plus Risk Management The portfolio is constructed to control through four layers of diversification - asset classes (cash, fixed income, equity), investment styles (large cap, small cap, international, value growth), managers, and securities. Disciplined mutual fund selection and monitoring process help to drive return potential while reducing portfolio risk. Investment Objective To provide growth of principal and income. It is expected that dividend and interest income will comprise a significant portion of total return, although growth through capital appreciation is equally important. Strategic Ranges 0% - 20% Cash 40% - 60% Fixed Income 40% - 60% Equity Fair Value Measurements The District categorizes its fair value measurement within the fair value hierarchy established by accounting principles generally accepted in the United States of America. 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 quoted prices for similar assets in active markets, and Level 3 inputs are significant unobservable inputs. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 36 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Fair Value Measurements (Continued) The District has the following recurring fair value measurements as of June 30, 2018 and 2017: June 30, 2018 Quoted Observable Unobservable Prices Inputs Inputs Level 1 Level 2 Level 3 Total Negotiable Certificates of Deposit -$ 2,063,675$ -$ 2,063,675$ Total Leveled Investments -$ 2,063,675$ -$ 2,063,675 CalTRUST Investment Pool*19,043,553 Local Agency Investment Fund*11,745,304 OPEB Trust - PARS Pooled Trust*247,390 Money Market Mutual Funds*3,209,342 Held by Bond Trustee: Money Market Mutual Funds*172 Total Investments 36,309,436$ June 30, 2017 Quoted Observable Unobservable Prices Inputs Inputs Level 1 Level 2 Level 3 Total United States Government-Sponsored Agency Securities -$ 997,440$ -$ 997,440$ Negotiable Certificates of Deposit - 5,923,515 - 5,923,515 Total 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 Funds*5,078,724 Total Investments 38,294,495$ * Not subject to fair value measurement hierarchy. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 37 NOTE 3 - RESTRICTED ASSETS Restricted assets are provided by and are to be used for the following uses as of June 30, 2018 and 2017: Use 2018 2017 Bond proceeds Repayment of debt 172$ 5,078,724$ OPEB Trust - PARS Pooled Trust Payment of OPEB benefits 247,390 - District funds Payment of retention 346,205 111,000 Total restricted assets 593,767$ 5,189,724$ Source NOTE 4 - CAPITAL ASSETS Changes in capital assets for the year ended June 30, 2018, were as follows: Balance at Deletions/ Balance at July 1, 2017 Additions Transfers June 30, 2018 Capital assets, not depreciated: Land, mineral, and water rights 287,419$ -$ -$ 287,419$ Construction in progress 5,561,210 11,076,270 (6,136,779) 10,500,701 Total capital assets, not depreciated 5,848,629 11,076,270 (6,136,779) 10,788,120 Capital assets, being depreciated: Source of supply 6,348,997 - - 6,348,997 Pumping plant 26,332,743 48,324 (31,989) 26,349,078 Water treatment plant 3,130,572 377,097 - 3,507,669 Transmission and distribution plant 224,187,455 5,317,578 (132,601) 229,372,432 General plant 21,695,614 458,314 (220,238) 21,933,690 Total capital assets, being depreciated 281,695,381 6,201,313 (384,828) 287,511,866 Less accumulated depreciation for: Source of supply (2,652,883) (177,083) - (2,829,966) Pumping plant (9,421,291) (989,764) 21,060 (10,389,995) Water treatment plant (1,930,260) (178,634) - (2,108,894) Transmission and distribution plant (72,099,253) (5,340,119) 69,618 (77,369,754) General plant (10,780,113) (780,377) 220,238 (11,340,252) Total accumulated depreciation (96,883,800) (7,465,977) 310,916 (104,038,861) Total capital assets, being depreciated, net 184,811,581 (1,264,664) (73,912) 183,473,005 Total capital assets, net 190,660,210$ 9,811,606$ (6,210,691)$ 194,261,125$ Depreciation expense for the depreciable capital assets was $7,465,977 in 2018. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 38 NOTE 4 - CAPITAL ASSETS (CONTINUED) Changes in capital assets for the year ended June 30, 2017, were as follows: Balance at Deletions/ Balance at July 1, 2016 Additions Transfers June 30, 2017 Capital assets, not depreciated: Land, mineral, and water rights 287,419$ -$ -$ 287,419$ Construction in progress 4,717,999 7,330,282 (6,487,071) 5,561,210 Total capital assets, not 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 Water 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 Total 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) Water 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) Total accumulated depreciation (89,824,690) (7,147,369) 88,259 (96,883,800) Total capital assets, being depreciated, net 184,944,351 (132,770) - 184,811,581 Total capital assets, net 189,949,769$ 7,197,512$ (6,487,071)$ 190,660,210$ Depreciation expense for the depreciable capital assets was $7,147,369 in 2017. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 39 NOTE 5 - LONG-TERM LIABILITIES Changes in long-term liabilities for the year ended June 30, 2018, were as follows: Balance Balance Due Within July 1, 2017 Additions Deletions June 30, 2018 One Year Certificates of Participation: 2012A Revenue Refunding Certificates of Participation 7,230,000$ -$ (295,000)$ 6,935,000$ 310,000$ 2017A Revenue Bonds 29,335,000 - (945,000) 28,390,000 830,000 Subtotal 36,565,000 - (1,240,000) 35,325,000 1,140,000 Add (Less): 2012A Premium 767,216 - (47,703) 719,513 - 2017A Premium 4,425,817 - (208,274) 4,217,543 - Total Certificates of Participation 41,758,033 - (1,495,977) 40,262,056 1,140,000 Compensated balances 1,619,653 880,816 (745,207) 1,755,262 438,816 Total 43,377,686$ 880,816$ (2,241,184)$ 42,017,318$ 1,578,816$ Changes in long-term liabilities for the year ended June 30, 2017, were as follows: Balance Balance Due Within July 1, 2016 Additions Deletions June 30, 2017 One Year 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 - Total 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 balances 1,442,344 872,091 (694,782) 1,619,653 404,913 Total 47,093,418$ 34,783,900$ (38,499,632)$ 43,377,686$ 1,644,913$ YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 40 NOTE 5 - LONG-TERM LIABILITIES (CONTINUED) 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). The 2012A Certificates were issued to provide funds (1) to advance refund all of the currently outstanding District Certificates of Participation Series 2003 (the 2003 Certificates) 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 2012A Certificates bear interest ranging from 2% to 5%, payable semiannually on April 1 and October 1. There is no reserve requirement for the 2012A Certificates. The 2012A 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 that will be at least sufficient to yield during each fiscal year net revenues equal to 110% of the debt service for such fiscal year. For fiscal years 2018 and 2017, the net revenues are equal to 263% and 281% of the debt service, respectively. The 2012A and 2003 Certificates are subject to federal arbitrage regulations. At June 30, 2018 and 2017, the 2012A Certificates’ outstanding balance was $6,935,000 and $7,230,000, respectively. The annual debt service requirements for the 2012A Certificates outstanding at June 30, 2018, are as follows: Year Ending June 30,Principal Interest Total 2019 310,000$ 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 360,000 225,388 585,388 2024 - 2028 2,085,000 836,855 2,921,855 2029 - 2033 2,610,000 313,715 2,923,715 2034 575,000 9,344 584,344 6,935,000$ 2,432,188$ 9,367,188$ YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 41 NOTE 5 - LONG-TERM LIABILITIES (CONTINUED) 2017A Revenue Bonds In May 2017, the Authority issued $29,335,000 of Revenue Bonds, Series 2017A (the 2017A Bonds). 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 was 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 2008 Certificates were paid off in October 2017. The District completed the refunding to reduce its total debt service payments over the next 21 years by more than $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, 2018 and 2017, the 2017A Bonds’ outstanding balance was $28,390,000 and $29,335,000, respectively. The 2017A Bonds bear interest at rates ranging from 3% to 5%, payable semiannually on April 1 and October 1. There is no reserve requirement for the 2017A Bonds. The 2017A Bonds are obligations of the Authority payable solely from payments received from the District pursuant to the Installment Purchase Agreement by and between the District and the Authority. The Installment Purchase Agreement requires the District to fix, prescribe, and collect rates and charges for the water service that will be at least sufficient to yield during each fiscal year net revenues equal to 125% of the debt service for such fiscal year. For fiscal years 2018 and 2017, the net revenues are equal to 263% and 281% of the debt service, respectively. The 2017A Bonds are subject to federal arbitrage regulations. The annual debt service requirements for the 2017A Bonds outstanding at June 30, 2018, are as follows: Year Ending June 30,Principal Interest Total 2019 830,000$ 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 990,000 1,149,294 2,139,294 2024 - 2028 5,755,000 4,930,845 10,685,845 2029 - 2033 7,150,000 3,482,604 10,632,604 2034 - 2038 8,910,000 1,663,275 10,573,275 2039 2,055,000 51,100 2,106,100 28,390,000$ 16,318,744$ 44,708,744$ YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 42 NOTE 5 - LONG-TERM LIABILITIES (CONTINUED) Compensated Absences Compensated absences are composed of unpaid vacation leave, sick leave, and compensating time off, which are accrued as earned (see Note 1n). NOTE 6 - OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN a. General Information about the OPEB Plan Plan Description The District, through an agent multiple-employer defined benefit plan, provides post-employment health-care benefits to retirees managed through California Employers’ Retiree Benefit Trust (CEBRT). 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 of Director resolutions. Medical coverage is provided for retired employees who are age 50 or over and who have a minimum of five years of service with the District. Only employees hired prior to December 8, 2011, qualify for these benefits. The District pays 100% of the premium for the retiree and two-thirds of the premium amount for eligible dependents accrued at a rate of one year for every three years of service. Two-thirds of the premium amount of medical coverage is provided for the surviving spouse of retired employees for the remaining vested period. The plan does not provide a publicly available financial report. Employees Covered As of the June 30, 2017, actuarial valuation, the following current and former employees were covered by the benefit terms under the plan: Inactive employees or beneficiaries currently receiving benefits15 Active employees 48 Total 63 YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 43 NOTE 6 - OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) a. General Information about the OPEB Plan (Continued) Contributions Contribution requirements are established by District policy and may be amended by the Board of Directors. The annual contribution is based on the actuarially determined contribution. For the fiscal year ended June 30, 2018, the District made a contribution of $257,706 to the OPEB trust and made payments totaling $141,893 for retiree health-care insurance benefits. b. Net OPEB Liability The District’s net OPEB liability was measured as of June 30, 2017, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2017. A summary of the principal assumptions and methods used to determine the total OPEB liability is shown below. Actuarial Assumptions The total OPEB liability in the June 30, 2017, actuarial valuation was determined using the following actuarial assumptions and applied to all periods included in the measurement, unless otherwise specified: Valuation Date June 30, 2017 Measurement Date June 30, 2017 Actuarial Cost Method Entry-age normal cost method, level percent of pay Actuarial Assumptions: Discount Rate 6.50% Inflation 2.75% Projected Salary Increase 2.75% per year Expected Long-Term Investment Rate of Return 6.50% Health-care Cost Trend Rates 4.00% per year Preretirement Turnover Derived from 2014 CalPERS OPEB assumptions model for "public agency miscellaneous" Mortality Derived from 2014 CalPERS OPEB assumptions model for "public agency miscellaneous" The actuarial assumptions used in the June 30, 2017, valuation were based on a standard set of assumptions the actuary has used for similar valuations, modified as appropriate for the District. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 44 NOTE 6 - OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) b. Net OPEB Liability (Continued) The long-term expected rate of return was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. The asset class percentages are taken from the current composition of the California Employers’ Retiree Benefit Trust, and the expected yields are taken from a recent CalPERS publication for the pension fund: New Strategic Long-Term Expected Allocation Real Rate of Return Global equity 57.00% 5.25% Fixed income 27.00% 0.99% Treasury securities 5.00% 0.45% Real estate trusts 8.00% 4.50% Commodities 3.00% 3.90% Total 100.00% Asset Class The estimated yield of 3.9% for commodities was obtained from various sources and is a rough guess. Using these figures, the weighted-average real rate of return is estimated to be 3.73%. Adding estimated inflation of 2.75%, the District obtains 6.48% as an estimate of the expected rate of return, which is rounded to 6.5%. Discount Rate The discount rate used to measure the total OPEB liability was 6.50%. The projection of cash flows used to determine the discount rate assumed that the District’s contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on the plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. Change of Discount Rate The discount rate utilized in the June 30, 2017, valuation was 6.50% as compared to the June 30, 2015, valuation discount rate of 7%. The discount rate was changed due to the implementation of GASB Statement No. 75. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 45 NOTE 6 - OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) c. Changes in the Net OPEB Liability The changes in the net OPEB liability are as follows: Total Plan Net OPEB Fiduciary OPEB Liability Net Position Liability (Asset) Balance at June 30, 2016 (Measurement Date)3,442,911$ 983,754$ 2,459,157$ Changes in the Year: Service cost 71,330 - 71,330 Interest on the total OPEB liability 219,305 - 219,305 Contribution - employer - 355,672 (355,672) Net investment income - 121,311 (121,311) Administrative expenses - (606) 606 Benefit payments (137,979) (137,979) - Net Changes 152,656 338,398 (185,742) Balance at June 30, 2017 (Measurement Date)3,595,567$ 1,322,152$ 2,273,415$ Increase (Decrease) Change of Assumptions There was no change of assumptions. Change of Benefit Terms There was no change of benefit terms. Subsequent Events There were no subsequent events that would materially affect the results presented in this disclosure. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 46 NOTE 6 - OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) c. Changes in the Net OPEB Liability (Continued) Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the District, as well as what the District’s net OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (5.50%) or one percentage point higher (7.50%) than the current discount rate: 1% Decrease Discount Rate 1% Increase (5.50%) (6.50%) (7.50%) Net OPEB Liability 2,626,437$ 2,273,415$ 1,965,207$ Sensitivity of the Net OPEB Liability to Changes in Health-care Cost Trend Rates The following presents the net OPEB liability of the District, as well as what the District’s net OPEB liability would be if it were calculated using health-care cost trend rates that are one percentage point lower (3.00%) or one percentage point higher (5.00%) than the current health-care cost trend rates: Current Health-care 1% Decrease Cost Trend Rates 1% Increase (3.00%) (4.00%) (5.00%) Net OPEB Liability 1,946,738$ 2,273,415$ 2,650,959$ d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2018, the District recognized OPEB expense of $214,896. At June 30, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources OPEB contributions subsequent to measurement date 399,599$ -$ Differences between actual and expected experience - - Change in assumptions - - Differences between projected and actual earnings - 44,966 Total 399,599$ 44,966$ The net difference between projected and actual earnings on plan investments is amortized over a five-year period. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 47 NOTE 6 - OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued) Amount of $399,599 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows: Year Ending June 30, Amount 2019 (11,242)$ 2020 (11,242) 2021 (11,242) 2022 (11,240) 2023 - Thereafter - e. Payable to the OPEB Plan At June 30, 2018, the District had no outstanding amount of contributions to the OPEB plan as required for the year ended June 30, 2018. NOTE 7 - PENSION PLANS a. General Information about the Pension Plans Plan Description All qualified permanent and probationary employees are eligible to participate in the District’s separate Miscellaneous Employee Pension Plans (Plans), which are cost-sharing multiple-employer defined benefit pension plans administered by CalPERS. Benefit provisions under these plans 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. 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 nonindustrial disability benefits after five 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. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 48 NOTE 7 - PENSION PLANS (CONTINUED) a. General Information about the Pension Plans (Continued) The Plans’ provisions and benefits in effect at June 30, 2018, 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 8.921%7.653%6.533% Payment of unfunded liability 318,966$ 215$ 632$ Miscellaneous Contributions Section 20814(c) of CalPERS law requires that the employer contribution rates for all public employers be 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’s 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 pension plan terms as plan member contribution requirements are classified as plan member contributions. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 49 NOTE 7 - PENSION PLANS (CONTINUED) b. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2018, the District reported net pension liabilities for its proportionate share of the net pension liability of the Plans as follows: Proportionate Share of Net Pension Liability Miscellaneous 8,575,054$ The District’s net pension liability for the Plans is measured as the proportionate share of the net pension liability. The net pension liability of the Plans is measured as of June 30, 2017, and the total pension liability for the Plans used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2016, rolled forward to June 30, 2017, 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 Plans as of the measurement dates June 30, 2016 and 2017, was as follows: Miscellaneous Proportion - June 30, 2016 0.20844% Proportion - June 30, 2017 0.21753% Change - Increase (Decrease) 0.00909% YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 50 NOTE 7 - PENSION PLANS (CONTINUED) b. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) For the year ended June 30, 2018, the District recognized pension expense of $1,287,390. At June 30, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Pension contributions subsequent to measurement date 850,393$ -$ Differences between actual and expected experience 12,403 (177,703) Change in assumptions 1,538,977 (117,348) Change in employer's proportion and differences between the employer's contributions and the employer's proportionate share of contributions - (344,535) Net differences between projected and actual earnings on plan investments 348,053 - Total 2,749,826$ (639,586)$ An amount of $850,393 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Year Ending June 30, Amount 2019 112,812$ 2020 849,262 2021 504,417 2022 (206,644) 2023 - Thereafter - YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 51 NOTE 7 - PENSION PLANS (CONTINUED) b. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) Actuarial Assumptions For the measurement period ended June 30, 2017 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2016, total pension liability determined in the June 30, 2016, actuarial accounting valuation. The June 30, 2017, total pension liability was based on the following actuarial methods and assumptions: Miscellaneous Valuation Date June 30, 2016 Measurement Date June 30, 2017 Actuarial Cost Method Entry-age Normal Cost Method Actuarial Assumptions: Discount Rate 7.15% Inflation 2.75% Salary Increases (1) Mortality Rate Table (2) Postretirement 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 cost of living adjustment 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, 2016, 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. Change of Assumptions In fiscal year 2017-2018, the financial reporting discount rate was reduced from 7.65% to 7.15%. Deferred outflows of resources and deferred inflows of resources for changes of assumptions represent the unamortized portion of this assumption change and the unamortized portion of the changes of assumptions related to prior measurement periods. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 52 NOTE 7 - PENSION PLANS (CONTINUED) b. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) Discount Rate The discount rate used to measure the total pension liability was 7.15% for each plan and reflects the long- term expected rate of return for the each plan, net of investment expenses and without reduction for administrative expenses. 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 that the assets would not run out. Therefore, the current 7.15% discount rate is appropriate and the use of the municipal bond rate calculation is not deemed necessary. The long-term expected discount rate of 7.15% 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 would make their required contributions on time and as scheduled in all future years. The stress test results are presented in a detailed report titled “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 PERF 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 June 30, 2018 53 NOTE 7 - PENSION PLANS (CONTINUED) b. Pension Liabilities, 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 of Directors effective on July 1, 2014. New Real Return Real Return Strategic Years Years Allocation 1 - 10 (a) 11+ (b) Global Equity 47.00% 4.90% 5.38% Global Fixed Income 19.00% 0.80% 2.27% Inflation Sensitive 6.00% 0.60% 1.39% Private Equity 12.00% 6.60% 6.63% Real Estate 11.00% 2.80% 5.21% Infrastructure and Forestland 3.00% 3.90% 5.36% Liquidity 2.00% -0.40% -0.90% 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 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 the 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 one-percentage point lower or one-percentage point higher than the current rate: Miscellaneous 1% Decrease 6.15% Net Pension Liability 13,647,962$ Current Discount Rate 7.15% Net Pension Liability 8,575,054$ 1% Increase 8.15% Net Pension Liability 4,373,579$ YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 54 NOTE 7 - PENSION PLANS (CONTINUED) b. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) Pension Plans Fiduciary Net Position Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. c. Payable to the Pension Plans At June 30, 2018, the District had no outstanding amount of contributions to the pension plans required for the year ended June 30, 2018. NOTE 8 - NET INVESTMENT IN CAPITAL ASSETS The balance of net investment in capital assets consisted of the following as of June 30, 2018 and 2017: 2018 2017 Capital assets, net of accumulated depreciation 194,261,125$ 190,660,210$ Certificates of participation - current (1,140,000) (1,240,000) Certificates of participation - long term (39,122,056) (40,518,033) Unspent debt proceeds 172 5,078,724 Deferred amount on refunding 272,386 292,124 Net investment in capital assets 154,271,627$ 154,273,025$ NOTE 9 - RISK MANAGEMENT The District is exposed to various risks of loss related to torts, and theft of, damage to, and destruction of assets, errors and omissions, injuries to employees, and natural disasters. In an effort to manage its risk exposure, the District is a member of the Association of California Water Agencies Joint Powers Insurance Authority (the Insurance Authority). The Insurance Authority is a risk-pooling self-insurance authority created under provisions of California Government Code Sections 6500 et seq. The purpose of the Insurance 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, 2018, as a member of the Insurance Authority, the District participated in the insurance programs as follows:  General, auto liability, and 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 Insurance Authority purchases additional excess coverage layers of $55 million for general, auto and public officials liability, which increases the limits on the insurance coverage noted above.  Employee dishonesty coverage of 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. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 55 NOTE 9 - RISK MANAGEMENT (CONTINUED)  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 Insurance Authority is self-insured for the first $100,000 and purchases excess coverage of up to $500 million limited to insurable value ($29,146,579), subject to a $1,000 deductible, except for a $500 deductible on vehicles.  Boiler and machinery coverage for the replacement cost of up to $150 million per occurrence limited to insurable value, subject to various deductibles depending on the type of equipment.  Workers’ compensation insurance of up to California statutory limits for all work related injuries/illnesses covered by California law. The Insurance Authority is self-insured to $2,000,000 and has purchased excess insurance to the statutory limit.  Cyber security coverage is $3 million per occurrence with $50,000 deductible per occurrence limited to the insurable value. 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 2018, 2017, and 2016. Liabilities are recorded when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated net of the respective insurance coverage. Liabilities include an amount for claims that have been incurred but not reported. There were no claims payable as of June 30, 2018, 2017, and 2016. NOTE 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 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 an 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 balance was paid in full during fiscal year 2017-2018. The remaining outstanding balance at June 30, 2017, was $78,567 plus interest receivable of $3,142. As of June 30, 2017, 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 as of June 30, 2017, is recorded in the District’s books as a note receivable. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 56 NOTE 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 $2,061,122 and $5,421,671 of open construction contracts as of June 30, 2018 and 2017, respectively. Construction contracts include the following: June 30, 2018 Total Construction Balance Approved Costs to Contract to Date Complete Well No. 22 1,029,565$ 765,961$ 263,604$ Lakeview Grade Separation 250,000 187,695 62,305 YLWD - Fairmont/Zone 5 BPS Project 8,225,509 7,673,247 552,262 PRS Rehabilitation Phase II 630,585 268,355 362,230 Tract 15199 Waterline Replacement 654,610 - 654,610 2018 Sewer Main CIPP Rehabilitation 166,111 - 166,111 10,956,380$ 8,895,258$ 2,061,122$ June 30, 2017 Total Construction Balance Approved Costs to Contract to Date Complete Well 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$ 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. NOTE 12 - SPECIAL ITEM During the fiscal year 2017-2018, the Board of Directors approved a refund to customers of $2,205,847. These refunds are related to the restricted net position that consists of penalty revenues assessed and collected in prior years due to the anticipated fines from the state of $1,105,809 and a one-time refund associated with rate charges of $1,100,038. YORBA LINDA WATER DISTRICT Notes to Basic Financial Statements June 30, 2018 57 NOTE 13 - RESTATEMENT OF PRIOR-YEAR FINANCIAL STATEMENTS The implementation of GASB Statement No. 75 requires reporting the net OPEB liability of the District’s agent multiple employer defined benefit plan in the financial statements and is applied retroactively by restating the net position as of the beginning of the fiscal year. The implementation of GASB Statement No. 75 resulted in a reduction of net position by $2,514,827 as of July 1, 2017. NOTE 14 - SUBSEQUENT EVENTS Events occurring after June 30, 2018, have been evaluated for possible adjustments to the financial statements or disclosure as of September 20, 2018, which is the date these financial statements were available to be issued. 58 This page intentionally left blank 59 REQUIRED SUPPLEMENTARY INFORMATION Fiscal year ended June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Measurement date June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Plans' proportion of the net pension liability 0.08647% 0.08368% 0.07706% 0.08184% Plans' proportionate share of the net pension liability 8,575,054$ 7,240,999$ 5,289,322$ 5,092,626$ Plans' covered - employee payroll 6,116,587$ 5,899,338$ 5,564,327$ 5,054,265$ Plans' proportionate share of the net pension liability as a percentage of its covered - employee payroll 140.19% 122.74%95.06% 100.76% Plans' proportionate share of the fiduciary net position as a percentage of the Plan's total pension liability 73.31% 74.06% 83.35% 83.03% Plans' proportionate share of aggregate employer contributions 1,071,006$ 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. From fiscal year June 30, 2017 to June 30, 2018: The discount rate was reduced from 7.65% to 7.15%. *Fiscal year 2015 was the first year of implementation; therefore, four 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. 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. 60 Fiscal year ended June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Contractually required contribution (actuarially determined)850,393$ 755,544$ 674,827$ 587,176$ Contributions in relation to the actuarially determined contributions (850,393) (755,544) (674,827) (587,176) Contribution deficiency (excess)-$ -$ -$ -$ Covered - employee payroll 6,561,629$ 6,116,587$ 5,899,338$ 5,564,327$ Contributions as a percentage of covered - employee payroll 12.96% 12.35% 11.44% 10.55% Notes to Schedule: Valuation Date 6/30/2015 6/30/2014 6/30/2013 6/30/2012 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 first year of implementation; therefore, four years are shown. ** The valuation for June 30, 2012, 2013, and 2014 (applicable to fiscal years ended June 30, 2015, 2016, and 2017, 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, 2014, and 2015, valuations (applicable to fiscal years ended June 30, 2016, 2017, and 2018, respectively). YORBA LINDA WATER DISTRICT SCHEDULE OF CONTRIBUTIONS - DEFINED BENEFIT PENSION PLANS Last Ten Fiscal Years* 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** 61 Measurement date 6/30/2017 Total Pension Liability: Service cost 71,330$ Interest on total OPEB liability 219,305 Benefit payments, including refunds of (137,979) Net Change in Total OPEB Liability 152,656 Total OPEB Liability - Beginning of Year 3,442,911 Total OPEB Liability - End of Year (a) 3,595,567 Plan Fiduciary Net Position: Contributions - employer 355,672 Net investment income 121,311 Administrative expenses (606) Benefit payments (137,979) Net Change in Plan Fiduciary Net Position 338,398 Plan Fiduciary Net Position - Beginning of Year 983,754 Plan Fiduciary Net Position - End of Year (b) 1,322,152 Net OPEB Liability - Ending (a)-(b) 2,273,415$ Plan fiduciary net position as a percentage of the total OPEB liability 36.77% Covered - employee payroll 4,498,586$ Net OPEB liability as percentage of covered - employee payroll 50.54% Notes to Schedule: Benefit Changes: Changes in Assumptions: * Fiscal year 2018 was the first year of implementation; therefore, only one year is shown. YORBA LINDA WATER DISTRICT SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS Last Ten Fiscal Years* There were no changes in benefits. There were no changes in assumptions. 62 6/30/2018 Actuarially determined contribution 257,706$ Contributions in relation to the actuarially determined contributions (399,599) Contribution deficiency (excess)(141,893)$ Covered - employee payroll 4,698,671$ Contributions as a percentage of covered - employee payroll 8.50% Notes to Schedule: Valuation Date 6/30/2017 Methods and Assumptions Used to Determine Contribution Rates: Single and agent employers Entry age Amortization method Level percentage of payroll, closed Asset valuation method Market Value Inflation 2.75% Salary increases 2.75% Investment rate of return 6.50% Mortality *Fiscal year 2018 was the first year of implementation; therefore, only one year is shown. 2014 CalPERS OPEB Assumptions Model YORBA LINDA WATER DISTRICT SCHEDULE OF CONTRIBUTIONS - OPEB Last Ten Fiscal Years* 63 64 This page intentionally left blank 65 SUPPLEMENTARY INFORMATION Water Sewer Total CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents 29,026,904$ 5,768,929$ 34,795,833$ Investments 1,860,005 203,670 2,063,675 Accounts receivable - water and sewer services 3,884,879 246,979 4,131,858 Accounts receivable - property taxes 16,774 4,744 21,518 Accrued interest receivable 38,693 12,346 51,039 Prepaid expenses and deposits 170,557 - 170,557 Inventory 248,489 - 248,489 TOTAL UNRESTRICTED ASSETS 35,246,301 6,236,668 41,482,969 RESTRICTED ASSETS: Cash and cash equivalents 593,767 - 593,767 TOTAL RESTRICTED ASSETS 593,767 - 593,767 TOTAL CURRENT ASSETS 35,840,068 6,236,668 42,076,736 NONCURRENT ASSETS: Capital assets: Not depreciable 10,642,238 145,882 10,788,120 Depreciable, net of accumulated depreciation 145,331,943 38,141,062 183,473,005 TOTAL NONCURRENT ASSETS 155,974,181 38,286,944 194,261,125 TOTAL ASSETS 191,814,249 44,523,612 236,337,861 DEFERRED OUTFLOWS OF RESOURCES: Deferred amounts from pension plans 2,434,229 315,597 2,749,826 Deferred amounts from OPEB 353,737 45,862 399,599 Deferred loss on refunding 375,558 - 375,558 TOTAL DEFERRED OUTFLOWS OF RESOURCES 3,163,524 361,459 3,524,983 (Continued) ASSETS AND DEFERRED OUTFLOWS YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET POSITION June 30, 2018 OF RESOURCES 66 Water Sewer Total CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable 4,881,397$ 87,793$ 4,969,190$ Accrued expenses 182,110 - 182,110 Compensated absences payable - current portion 438,816 - 438,816 Customer and construction deposits 456,339 96,789 553,128 Unearned revenue 268,592 - 268,592 Accrued interest payable 405,264 - 405,264 Certificates of Participation - current portion 1,140,000 - 1,140,000 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS 7,772,518 184,582 7,957,100 PAYABLE FROM RESTRICTED ASSETS: Retention payable 346,205 - 346,205 TOTAL PAYABLE FROM RESTRICTED ASSETS 346,205 - 346,205 TOTAL CURRENT LIABILITIES 8,118,723 184,582 8,303,305 LONG-TERM LIABILITIES (LESS CURRENT PORTION): Unearned annexation revenue 13,607,976 - 13,607,976 Compensated absences 1,316,446 - 1,316,446 Certificates of Participation 39,122,056 - 39,122,056 Net pension liability 7,590,892 984,162 8,575,054 Net OPEB liability 2,012,494 260,921 2,273,415 TOTAL LONG-TERM LIABILITIES (LESS CURRENT PORTION) 63,649,864 1,245,083 64,894,947 TOTAL LIABILITIES 71,768,587 1,429,665 73,198,252 DEFERRED INFLOWS OF RESOURCES: Deferred amounts from pension plans 566,179 73,407 639,586 Deferred amounts from OPEB 39,805 5,161 44,966 Deferred gain on refunding 103,171 - 103,171 TOTAL DEFERRED INFLOWS OF RESOURCES 709,155 78,568 787,723 NET POSITION: Net investment in capital assets 115,984,683 38,286,944 154,271,627 Restricted: Water conservation 104,673 - 104,673 Other post-employment benefits 247,390 - 247,390 Unrestricted 6,163,285 5,089,894 11,253,179 TOTAL NET POSITION 122,500,031$ 43,376,838$ 165,876,869$ June 30, 2018 LIABILITIES AND DEFERRED YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET POSITION (CONTINUED) INFLOWS OF RESOURCES 67 Water Sewer Total OPERATING REVENUES: Water sales 32,082,152$ -$ 32,082,152$ Sewer revenues - 2,330,809 2,330,809 Other operating revenues 763,069 68,664 831,733 TOTAL OPERATING REVENUES 32,845,221 2,399,473 35,244,694 OPERATING EXPENSES: Variable water costs 15,028,131 - 15,028,131 Personnel services 8,828,638 1,045,574 9,874,212 Supplies and services 3,865,733 433,130 4,298,863 Depreciation 6,098,375 1,367,602 7,465,977 TOTAL OPERATING EXPENSES 33,820,877 2,846,306 36,667,183 OPERATING LOSS (975,656) (446,833) (1,422,489) NONOPERATING REVENUES (EXPENSES): Property taxes 1,749,957 - 1,749,957 Investment income 444,371 74,229 518,600 Interest expense (1,106,515) - (1,106,515) Other nonoperating revenues 403,721 9,744 413,465 Other nonoperating expenses (47,465) (41,556) (89,021) TOTAL NONOPERATING REVENUES (EXPENSES) 1,444,069 42,417 1,486,486 NET INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS 468,413 (404,416) 63,997 CAPITAL CONTRIBUTIONS 1,907,644 1,646,479 3,554,123 CHANGES IN NET POSITION, BEFORE SPECIAL ITEM 2,376,057 1,242,063 3,618,120 SPECIAL ITEM (2,205,847) - (2,205,847) CHANGES IN NET POSITION 170,210 1,242,063 1,412,273 NET POSITION - BEGINNING OF YEAR 124,574,437 42,404,986 166,979,423 PRIOR-PERIOD ADJUSTMENT (2,244,616) (270,211) (2,514,827) NET POSITION - BEGINNING OF YEAR, AS RESTATED 122,329,821 42,134,775 164,464,596 NET POSITION - END OF YEAR 122,500,031$ 43,376,838$ 165,876,869$ YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION For the year ended June 30, 2018 68 Water Sewer Total CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 33,044,210$ 2,374,249$ 35,418,459$ Cash payments to employees for salaries and wages (8,431,746) (1,016,615) (9,448,361) Cash payments to suppliers of goods and services (18,128,973) (447,037) (18,576,010) Other revenues 201,180 33,694 234,874 Other expenses (47,465) (41,556) (89,021) Refund to customers (2,205,847) - (2,205,847) NET CASH PROVIDED BY OPERATING ACTIVITIES 4,431,359 902,735 5,334,094 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Proceeds from property taxes and assessments 1,751,697 - 1,751,697 NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 1,751,697 - 1,751,697 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from annexation fees and capital contributions 46,895 30,311 77,206 Acquisition and construction of capital assets (7,311,989) (39,365) (7,351,354) Proceeds from sales of capital assets 11,556 - 11,556 Principal paid on long-term liabilities (1,240,000) - (1,240,000) Interest paid on long-term liabilities (1,509,535) - (1,509,535) NET CASH USED IN CAPITAL AND RELATED FINANCING ACTIVITIES (10,003,073) (9,054) (10,012,127) CASH FLOWS FROM INVESTING ACTIVITIES: Sale of investments 15,984,982 - 15,984,982 Purchases of investments (11,357,398) (28,079) (11,385,477) Interest and investment earnings 466,636 68,503 535,139 NET CASH PROVIDED BY INVESTING ACTIVITIES 5,094,220 40,424 5,134,644 NET INCREASE IN CASH AND CASH EQUIVALENTS 1,274,203 934,105 2,208,308 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 28,346,468 4,834,824 33,181,292 CASH AND CASH EQUIVALENTS - END OF YEAR 29,620,671$ 5,768,929$ 35,389,600$ (Continued) YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS For the year ended June 30, 2018 69 Water Sewer Total RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating loss (975,656)$ (446,833)$ (1,422,489)$ Adjustments to reconcile loss to net cash provided by operating activities: Depreciation 6,098,375 1,367,602 7,465,977 Other revenues 201,180 33,694 234,874 Other expenses (47,465) (41,556) (89,021) Refund to customers (2,205,847) - (2,205,847) 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 203,144 (24,768) 178,376 Inventory 17,344 - 17,344 Prepaid expenses and deposits 119,430 - 119,430 Deferred outflows of resources from pension plans (693,616) (89,926) (783,542) Deferred outflows of resources from OPEB (38,885) (5,041) (43,926) Increase (decrease) in liabilities and deferred inflows of resources: Accounts payable and accrued expenses 734,148 (26,829) 707,319 Accrued salaries and wages 37,946 - 37,946 Accrued compensated absences 135,609 - 135,609 Customer and construction deposits (110,186) 12,466 (97,720) Net pension liability 1,180,945 153,110 1,334,055 Net OPEB liability (164,425) (21,317) (185,742) Deferred inflows of resources from pension plans (100,487) (13,028) (113,515) Deferred inflows of resources from OPEB 39,805 5,161 44,966 Total adjustments 5,407,015 1,349,568 6,756,583 NET CASH PROVIDED BY OPERATING ACTIVITIES 4,431,359$ 902,735$ 5,334,094$ CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION: Unrestricted 29,026,904$ 5,768,929$ 34,795,833$ Restricted 593,767 - 593,767 TOTAL CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION 29,620,671$ 5,768,929$ 35,389,600$ NONCASH INVESTING, CAPITAL, AND RELATED FINANCING ACTIVITIES: Amortization related to long-term debt 255,977$ -$ 255,977$ Capital contributions 1,907,643$ 1,616,168$ 3,523,811$ (CONTINUED) For the year ended June 30, 2018 YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS 70 Water Sewer Total OPERATING EXPENSES: Variable Water Costs: Imported water 5,973,705$ -$ 5,973,705$ OCWD replenishment assessment 5,469,856 - 5,469,856 In lieu 1,497,366 - 1,497,366 MWD connection charge 833,002 - 833,002 Fuel and power/pumping 1,254,202 - 1,254,202 Total Variable Water Costs 15,028,131 - 15,028,131 Personnel Services: Unit salaries 5,929,459 738,340 6,667,799 Fringe benefits 2,846,131 303,431 3,149,562 Director's fees 53,048 3,803 56,851 Total Personnel Services 8,828,638 1,045,574 9,874,212 Supplies and Services: Communications 138,958 8,676 147,634 Contractual services 400,827 29,493 430,320 Data processing 228,103 16,965 245,068 District activities 27,010 2,023 29,033 Dues and memberships 78,219 6,044 84,263 Fees and permits 244,196 10,636 254,832 Insurance 250,493 18,743 269,236 Maintenance 398,511 140,363 538,874 Materials 720,410 38,460 758,870 Noncapital equipment 123,995 26,187 150,182 Office expense 40,087 2,993 43,080 Professional services 674,815 35,565 710,380 Training 32,350 5,399 37,749 Travel and conferences 78,429 5,753 84,182 Uncollectible accounts 4,155 456 4,611 Utilities 169,758 13,299 183,057 Vehicle expense 255,417 72,075 327,492 Total Supplies and Services 3,865,733 433,130 4,298,863 Depreciation 6,098,375 1,367,602 7,465,977 TOTAL OPERATING EXPENSES 33,820,877$ 2,846,306$ 36,667,183$ 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, 2018 71 Water Sewer Total 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 12,384,874 431,576 12,816,450 Total Pumping Plant 25,917,502 431,576 26,349,078 Water Treatment Plant: Structures and improvements 1,302,811 - 1,302,811 Equipment 2,204,857 - 2,204,857 Total Water Treatment Plant 3,507,668 - 3,507,668 Transmission and Distribution Plant: Mains 83,029,078 49,790,247 132,819,325 Reservoirs and tanks 61,565,606 - 61,565,606 Service and meter installation 7,047,491 3,439,358 10,486,849 Fire hydrants 7,579,804 - 7,579,804 Meters 9,887,847 - 9,887,847 Fire mains 745,360 - 745,360 Structures and improvements 2,875,096 - 2,875,096 Control system 3,379,060 33,485 3,412,545 Total Transmission and Distribution Plant 176,109,342 53,263,090 229,372,432 General Plant: Structures and improvements 13,389,583 - 13,389,583 Transportation equipment 2,223,112 1,401,250 3,624,362 Power operated equipment 601,673 - 601,673 Communication equipment 532,132 - 532,132 Computer equipment 2,287,135 238,071 2,525,206 Office furniture 1,098,711 - 1,098,711 Tools, shop, and garage equipment 101,782 - 101,782 Store equipment 60,241 - 60,241 Total General Plant 20,294,369 1,639,321 21,933,690 Construction in Progress 10,413,346 87,356 10,500,702 Accumulated Depreciation (86,845,936) (17,192,925) (104,038,861) Total Capital Assets 155,974,181$ 38,286,944$ 194,261,125$ YORBA LINDA WATER DISTRICT SCHEDULE OF CAPITAL ASSETS For the year ended June 30, 2018 72 Water Sewer Total 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 YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET POSITION June 30, 2017 OF RESOURCES 73 Water Sewer Total CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable 4,382,454$ 114,622$ 4,497,076$ 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 Certificates of Participation - current portion 1,240,000 - 1,240,000 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS 7,324,988 198,945 7,523,933 PAYABLE FROM RESTRICTED ASSETS: Retention payable 111,000 - 111,000 TOTAL PAYABLE FROM RESTRICTED ASSETS 111,000 - 111,000 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 0 108,265 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 LIABILITIES AND DEFERRED YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF NET POSITION (CONTINUED) INFLOWS OF RESOURCES 74 Water Sewer Total 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$ YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION For the year ended June 30, 2017 75 Water Sewer Total 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) Proceeds from line of credit (6,883,720) - (6,883,720) NET CASH USED IN 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 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 76 Water Sewer Total RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating loss (307,991)$ (507,808)$ (815,799)$ Adjustments to reconcile operating 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 YORBA LINDA WATER DISTRICT COMBINING SCHEDULE OF CASH FLOWS 77 Water Sewer Total OPERATING EXPENSES: Variable Water Costs: Imported water 5,032,775$ -$ 5,032,775$ OCWD replenishment assessment 5,350,574 - 5,350,574 Continuous use program - - - 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$ 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 78 Water Sewer Total 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 Other - - - 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 79 80 This page intentionally left blank 81 STATISTICAL SECTION 82 This page intentionally left blank YORBA LINDA WATER DISTRICT Description of Statistical Section Contents June 30, 2018 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: 2018 2017 2016 2015 Operating Revenues Water Sales 32,082,152$ 29,326,565$ 27,820,638$ 26,446,618$ Sewer Revenues 2,330,809 2,099,947 1,849,114 1,775,676 Other Operating Revenues 831,733 1,033,608 2,665,835 1,461,106 Operating Expenses Variable Water Costs 15,028,131 12,710,857 10,470,181 12,733,762 Personnel Services 9,874,212 8,913,639 8,096,853 7,778,763 Supplies and Services 4,298,863 4,504,054 4,355,033 3,806,900 Depreciation 7,465,977 7,147,369 7,546,407 7,432,586 Operating Income (Loss) (1,422,489) (815,799) 1,867,113 (2,068,611) Nonoperating Revenues (Expenses) Property Taxes 1,749,957 1,687,384 1,615,454 1,496,489 Investment Income 518,600 377,205 288,817 187,316 Interest Expense (1,106,515) (1,552,896) (1,671,539) (1,683,039) Bond Issuance Costs - - - - Other Nonoperating Revenues 413,465 645,562 872,420 744,572 Other Nonoperating Expenses (89,021) (403,597) (7,273) (116,528) Total Nonoperating Revenues (Expenses) 1,486,486 753,658 1,097,879 628,810 Net Income (Loss) Before Capital Contributions, Special Items and Extraordinary Items 63,997 (62,141) 2,964,992 (1,439,801) Capital Contributions 3,554,123 2,665,462 788,445 705,848 Speical Items (2,205,847) - - - Extraordinary Items - - - - Changes in Net Position 3,618,120$ 2,603,321$ 3,753,437$ (733,953)$ Net Position by Component: Net Investment in Capital Assets 154,271,627$ 154,273,025$ 153,776,247$ 157,092,210$ Restricted 352,063 1,222,452 1,603,050 - Unrestricted 11,253,179 11,483,946 8,996,805 3,530,455 Total Net Position 165,876,869$ 166,979,423$ 164,376,102$ 160,622,665$ Source: YLWD Audited Financial Statements (Continued) 84 Yorba Linda Water District Changes in Net Position Last Ten Fiscal Years Fiscal Year 2014 2013 2012 2011 2010 2009 28,376,082$ 26,369,940$ 24,998,673$ 22,686,251$ 21,806,164$ 19,626,738$ 1,762,816 1,762,039 1,785,804 1,274,579 1,275,980 1,259,723 1,047,625 723,577 848,238 1,035,545 1,102,143 439,302 14,673,144 13,509,336 12,275,853 11,268,306 10,688,318 10,859,328 7,529,481 7,225,729 6,979,088 6,902,995 6,677,757 6,498,959 3,849,183 4,222,398 3,811,125 3,686,333 3,576,147 4,151,058 7,315,084 6,884,213 6,595,720 5,279,860 5,153,891 4,167,958 (2,180,369) (2,986,120) (2,029,071) (2,141,119) (1,911,826) (4,351,540) 1,394,722 1,340,916 1,273,855 1,258,769 1,269,441 1,283,521 145,048 137,569 277,137 274,152 244,857 689,108 (1,715,429) (1,781,416) (1,626,190) (1,172,503) (1,170,498) (1,469,925) - (192,410) - - - - 1,325,685 588,854 805,654 739,062 589,201 479,911 (47,948) (35,954) (108,984) (406,575) (151,300) (177,553) 1,102,078 57,559 621,472 692,905 781,701 805,062 (1,078,291) (2,928,561) (1,407,599) (1,448,214) (1,130,125) (3,546,478) 2,128,579 1,174,673 17,214,138 706,319 6,278,135 4,363,527 - - - - - - 5,000,000 - (5,000,000) - - - 6,050,288$ (1,753,888)$ 10,806,539$ (741,895)$ 5,148,010$ 817,049$ 161,159,541$ 161,494,158$ 161,672,565$ 146,235,362$ 146,877,122$ 141,514,024$ - - 9,598,420 12,620,256 15,797,432 14,063,802 6,617,328 232,423 (6,228,771) (4,619,943) (7,696,984) (6,158,513) 167,776,869$ 161,726,581$ 165,042,214$ 154,235,675$ 154,977,570$ 149,419,313$ 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) 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 2018 23,055 256 821 908 2.70 Source: YLWD Billing System Last Ten Fiscal Years 86  20,000  20,500  21,000  21,500  22,000  22,500  23,000  23,500  24,000  24,500  25,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Irrigation Commercial/ Industrial Multi‐Family Residential FY 2018 Customer Name Business Type Annual Revenues % of Total Revenues * 1 City of Yorba Linda Government 2,461,999$ 7.21% 2 Placentia Yorba Linda USD Government 379,162 1.11% 3 The Hills at Yorba Linda Homeowner's Assoc. 165,731 0.49% 4 Yorba Linda Villages Homeowner's Assoc. 141,227 0.41% 5 Fairmont Hill Community Assoc. Homeowner's Assoc. 125,092 0.37% 6 Aseptic Technology Manufacturing 112,692 0.33% 7 RRE Yorba Linda Homeowner's Assoc. 109,572 0.32% 8 Lake Park Mobile Home Community Homeowner's Assoc. 101,717 0.30% 9 Placentia Linda Hospital Hospital 94,510 0.28% 10 Amalfi Hills Community Assoc. Homeowner's Assoc. 93,235 0.27% 3,784,936$ # 11.08% FY 2014 Customer Name Business Type Annual Revenues % of Total Revenues 1 City of Yorba Linda Government 1,860,227$ 5.96% 2 Placentia Unified School Government 267,442 0.86% 3 Fairmont Hill Community Association Homeowner's Assoc. 110,976 0.36% 4 Archstone Apartments Apartment Complex 108,023 0.35% 5 Yorba Linda Villages Homeowner's Assoc. 99,849 0.32% 7 The Hills at Yorba Linda Homeowner's Assoc. 94,025 0.30% 6 Lake Park Mobile Home Community Homeowner's Assoc. 53,825 0.17% 8 Woodgate Condominiums Homeowner's Assoc. 59,401 0.19% 9 Kerrigan Ranch II Community Assoc. Homeowner's Assoc. 59,149 0.19% 10 Aspetic Tech Manufacturing 55,728 0.18% 2,768,645$ # 8.88% NOTES: * Total "actual revenues" represents revenue generated from customer billings (water and sewer related) Source: YLWD Billing Department Yorba Linda Water District Ten Largest Customers Current and Five Years Ago 87 # Annual Revenues represents the listed customer's annual total billing for water and sewer services (including Base Service Charges) Wells Certificates As a Share of Fiscal Fargo Bank of Per Per Personal Year Line of Credit Participation Debt Connection Capita Income 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 1,672 527 1.14% 2018 - 40,262,056 40,262,056 1,612 506 1.10% 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  $1,400  $1,500  $1,600  $1,700  $1,800  $1,900  $2,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Debt per Connection Debt Service Fiscal Operating &Net Coverage Year Revenues Maint. Costs Revenues Principal Interest Total Ratio 2009 22,514$ 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 2018 32,845 27,723 5,122 1,240 1,509 2,749 1.86 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 2009 71,507 68,852 2,996,221,308$ 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 67,890 3,654,487,200 46,160 2018 79,565 68,229 3,672,735,413 46,160 Personal Income Year Population Unemployment Rate Personal Income per Capita 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 3.7% 172,509,495 54,010 2018 3,221,103 3.3% 174,062,080 54,038 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 2018* 2010+ Employer ^ Employees Employees Placentia Linda Hospital 480 0.029 % 441 0.023 % Costco Wholesale Corp. 355 0.022 % 276 0.014 % Nobel Biocare USA, Inc. 298 0.018 % 328 0.017 % Viasys Respiratory Care, Inc. (CareFusion) 308 0.019 %- - % City of Yorba Linda 204 0.013 % 194 0.010 % Sprouts 170 0.010 % 110 0.006 % Emeritus Corporation 167 0.010 % 126 0.006 % Office Solution 161 0.010 % 92 0.005 % Kohl's Inc. 150 0.009 % 158 0.008 % White House Catering 120 0.007 % 125 0.006 % Total 2,413 0.148 % 1,850 0.095 % 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 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 5.5 10.0 13.0 6.0 5.0 40.0 82.5 2018 4.0 1.0 10.0 14.0 6.0 5.0 40.0 80.0 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 2009 2010 2011 2012 2013 2014 2015 2016 # 2017 ## 2018 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 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 2018 1.50 6,643 18.2 1,681 Fiscal Number of Capacity by Booster Number of Capacity by Year Booster Pumps Pump (GPM)Reservoirs Reservoir (MG) 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 2018 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 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, 2018, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated September 20, 2018. 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 opinions 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 entity’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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 2 Internal Control over Financial Reporting (Continued) 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 an instance of noncompliance or other matter that is required to be reported under Government Auditing Standards and which is described below. Compliance with Bond Requirements Auditors’ Comment and Recommendation During our review of long-term debt, we noted that the District did not obtain an arbitrage report related to Revenue Bonds, Series 2017A, which was required to be completed within 55 days of the bond year-end of October 1, 2017. We recommend that the District implements procedures to ensure compliance with the bond requirements. Management’s Response Upon becoming aware of the required arbitrage report, staff immediately engaged BLX Group LLC to prepare the calculation, which has been completed as of September 12, 2018. As a means to ensure future compliance, staff has added this reporting requirement to our internal reporting schedule. District’s Response to 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. 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 entity’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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Irvine, California September 20, 2018 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) as of and for the year ended June 30, 2018, and have issued our report thereon dated September 20, 2018. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America 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 22, 2018. 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. As discussed in Notes 1e and 13 to the financial statements, the District has recorded the net other post- employment benefits (OPEB) liability, deferred outflows of resources, and deferred inflows of resources related to the OPEB plan due to the adoption of Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions - An Amendment of GASB Statement No. 45, The adoption of this standard requires retrospective application resulting in a $2,514,827 reduction of previously reported net position. No other accounting policies were adopted, and the application of other existing polices was not changed during the year ended June 30, 2018. 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 as follows: a. Management’s estimate of the fair value of investments is based on quoted prices in active markets. 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. 2 Significant Audit Findings (Continued) Qualitative Aspects of Accounting Practices (Continued) Sensitive Estimates (Continued) 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. 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. The actuarially determined contribution, OPEB expense, net OPEB liability, and corresponding deferred outflows of resources and deferred inflows of resources for the District’s OPEB plan are based on actuarial valuation provided by a third party. We evaluated 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 District’s Other Post-Employment Benefits Plan, Note 7 regarding the pension plans, and Note 13 regarding restatement of net position. 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 September 20, 2018. 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, the schedule of changes in the net OPEB liability and related ratios, and the schedule of contributions - OPEB, 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 September 20, 2018 ITEM NO. 9.1 AGENDA REPORT Meeting Date: October 9, 2018 Subject:Results of Annual Assessment of Governing Board Effectiveness DISCUSSION: The Board of Directors previously determined to perform an assessment of the governing body's effectiveness and its relationship with staff on an annual basis before October 31st. Attached are the results of the surveys conducted September 2018 and February 2018 for comparison. Please note that February's rankings changed slightly as the calculation was modified to utilize points and median data instead of points and average data to improve accuracy. Also, only 6 managers participated in the September survey compared to 7 in February. In order to present an "apples to apples" data set, responses from the position not included in the September survey were excluded from the February results. ATTACHMENTS: Name:Description:Type: BOD_-_Mgmt_Assessment.pdf Backup Material Backup Material 4.00 1.00 4.00 6.00 3.00 7.00 7.00 5.00 3.003.00 2.00 2.00 6.00 3.00 7.00 5.00 4.00 3.00 0 1 2 3 4 5 6 7 8 9 10 A Supportive Framework Conflict Management Process Teamwork Roles Community Rapport Staff Relationships Clear Sense of Purpose Chairperson Leadership Productivity Board of Directors Median Comparison February 2018 vs. September 2018 Very Effective Somewhat Effective Somewhat Ineffective Very Ineffective 02/18 09/18 2.00 2.00 2.00 6.00 1.50 3.00 6.00 5.50 3.50 2.00 4.50 5.00 8.00 3.50 3.50 7.50 6.00 6.00 0 1 2 3 4 5 6 7 8 9 10 A Supportive Framework Conflict Management Process Teamwork Roles Community Rapport Staff Relationships Clear Sense of Purpose Chairperson Leadership Productivity Management Median Comparison February 2018 vs. September 2018 Very Effective Somewhat Effective Somewhat Ineffective Very Ineffective 02/18 09/18 4 1 3 7 2 8 9 6 5 3 1 2 8 3 6 9 5 7 0 1 2 3 4 5 6 7 8 9 10 A Supportive Framework Conflict Management Process Teamwork Roles Community Rapport Staff Relationships Clear Sense of Purpose Chairperson Leadership Productivity Board of Directors Rank Comparison February 2018 vs. September 2018 Very Effective Somewhat Effective Somewhat Ineffective Very Ineffective 02/18 09/18 2 2 4 8 1 5 7 9 6 1 4 5 9 2 3 7 8 6 0 1 2 3 4 5 6 7 8 9 10 A Supportive Framework Conflict Management Process Teamwork Roles Community Rapport Staff Relationships Clear Sense of Purpose Chairperson Leadership Productivity Management Rank Comparison February 2018 vs. September 2018 Very Effective Somewhat Effective Somewhat Ineffective Very Ineffective 02/18 09/18 3 1 2 8 3 6 9 5 7 Board of Directors Categories by Rank September 2018 A Supportive Framework Conflict Management Process Teamwork Roles Community Rapport Staff Relationships Clear Sense of Purpose Chairperson Leadership Productivity 1 4 5 9 23 7 8 6 Management Categories by Rank September 2018 A Supportive Framework Conflict Management Process Teamwork Roles Community Rapport Staff Relationships Clear Sense of Purpose Chairperson Leadership Productivity ASSESSING GOVERNING BOARD EFFECTIVENESSSUMMARY TABULATIONBOARD OF DIRECTORS' RESPONSES (5 TOTAL)RANK DESCRIPTION02/18 09/18 % CHG 02/18 09/18 % CHG 02/18 09/18 % CHG 02/18 09/18 % CHGAA Supportive Framework 28 13 -53.6% 5.60 2.60 -53.6% 4.00 3.00 -25.0% 4 3 -25.0%BConflict Management Process 20 9 -55.0% 4.00 1.80 -55.0% 1.00 2.00 100.0%1 1 0.0%CTeamwork 24 11 -54.2% 4.80 2.20 -54.2% 4.00 2.00 -50.0% 3 2 -33.3%DRoles 34 26 -23.5% 6.80 5.20 -23.5% 6.00 6.00 0.0% 7 8 14.3%ECommunity Rapport 23 13 -43.5% 4.60 2.60 -43.5% 3.00 3.00 0.0% 2 3 50.0%FStaff Relationships 36 24 -33.3% 7.20 4.80 -33.3% 7.00 7.00 0.0% 8 6 -25.0%GClear Sense of Purpose 41 27 -34.1% 8.20 5.40 -34.1% 7.00 5.00 -28.6% 9 9 0.0%HChairperson Leadership 34 21 -38.2% 6.80 4.20 -38.2% 5.00 4.00 -20.0% 6 5 -16.7%IProductivity 31 25 -19.4% 6.20 5.00 -19.4% 3.00 3.00 0.0% 5 7 40.0%TOTAL271 169 -37.6% 6.02 3.76 -37.6% 4.00 3.00 -25.0%*Negative % change indicates improvement. Positive % change indicates decline.MANAGEMENT TEAM'S RESPONSES (6 TOTAL)RANK DESCRIPTION02/18 09/18 % CHG 02/18 09/18 % CHG 02/18 09/18 % CHG 02/18 09/18 % CHGAA Supportive Framework 13 15 15.4% 2.17 2.50 15.4% 2.00 2.00 0.0% 2 1 -50.0%BConflict Management Process 13 32 146.2% 2.17 5.33 146.2% 2.00 4.50 125.0% 2 4 100.0%CTeamwork 21 32 52.4% 3.50 5.33 52.4% 2.00 5.00 150.0% 4 5 25.0%DRoles 36 47 30.6% 6.00 7.83 30.6% 6.00 8.00 33.3% 8 9 12.5%ECommunity Rapport 13 19 46.2% 2.17 3.17 46.2% 1.50 3.50 133.3% 1 2 100.0%FStaff Relationships 22 23 4.5% 3.67 3.83 4.5% 3.00 3.50 16.7% 5 3 -40.0%GClear Sense of Purpose 35 42 20.0% 5.83 7.00 20.0% 6.00 7.50 25.0% 7 7 0.0%HChairperson Leadership 38 45 18.4% 6.33 7.50 18.4% 5.50 6.00 9.1% 9 8 -11.1%IProductivity 23 35 52.2% 3.83 5.83 52.2% 3.50 6.00 71.4% 6 6 0.0%TOTAL214 290 35.5% 3.96 5.37 35.5% 3.50 5.11 46.0%Very IneffectiveCATEGORYCATEGORYPOINTSPOINTS1-23-47-95-63-47-95-61-2Somewhat IneffectiveVery IneffectiveSomewhat IneffectiveVery EffectiveVery EffectiveSomewhat EffectiveSomewhat EffectiveMEDIANMEDIAN RANKRANKAVGAVGSurveys Conducted February and September 2018 ASSESSING GOVERNING BOARD EFFECTIVENESSRANK AND AVERAGE COMPARISONRANK COMPARISON02/18 09/18 % CHG 02/18 09/18 % CHGAA Supportive Framework 4 3 -25.0% 2 1 -50.0%RANK DESCRIPTIONBConflict Management Process 1 1 0.0% 2 4 100.0%CTeamwork 3 2 -33.3% 4 5 25.0%DRoles 7 8 14.3% 8 9 12.5%ECommunity Rapport 2 3 50.0% 1 2 100.0%FStaff Relationships 8 6 -25.0% 5 3 -40.0%GClear Sense of Purpose 9 9 0.0% 7 7 0.0%HChairperson Leadership 6 5 -16.7% 9 8 -11.1%IProductivity5 7 40.0% 6 6 0.0%MEDIAN COMPARISONNOTE:Respondents consisted of 5 Directors and 6 Managers.Negative % change indicates improvement.Positive % change indicates decline.02/18 09/18 % CHG 02/18 09/18 % CHGAA Supportive Framework 4.00 3.00 -25.0% 2.00 2.00 0.0%BConflict Management Process 1.00 2.00 100.0% 2.00 4.50 125.0%CTeamwork 4.00 2.00 -50.0% 2.00 5.00 150.0%DRoles 6.00 6.00 0.0% 6.00 8.00 33.3%ECommunity Rapport 3.00 3.00 0.0% 1.50 3.50 133.3%FStaff Relationships 7.00 7.00 0.0% 3.00 3.50 16.7%GClear Sense of Purpose 7.00 5.00 -28.6% 6.00 7.50 25.0%HChairperson Leadership 5.00 4.00 -20.0% 5.50 6.00 9.1%IProductivity 3.00 3.00 0.0% 3.50 6.00 71.4%OVERALL MEDIAN4.00 3.00 -25.0% 3.50 5.11 46.0%AVERAGE COMPARISON02/18 09/18 % CHG 02/18 09/18 % CHGAA Supportive Framework 5.60 2.60 -53.6% 2.17 2.50 15.4%BConflict Management Process 4.00 1.80 -55.0% 2.17 5.33 146.2%CTeamwork 4.80 2.20 -54.2% 3.50 5.33 52.4%DRoles 6.80 5.20 -23.5% 6.00 7.83 30.6%ECommunity Rapport 4.60 2.60 -43.5% 2.17 3.17 46.2%FStaff Relationships 7.20 4.80 -33.3% 3.67 3.83 4.5%GClear Sense of Purpose 8.20 5.40 -34.1% 5.83 7.00 20.0%HChairperson Leadership 6.80 4.20 -38.2% 6.33 7.50 18.4%IProductivity 6.20 5.00 -19.4% 3.83 5.83 52.2%OVERALL AVERAGE6.02 3.76 -37.6% 3.96 5.37 35.5%CATEGORYMGMT MEDIANCATEGORYLEGENDCATEGORY7-9 Very Ineffective5-6 Somewhat Ineffective3-4 Somewhat EffectiveMGMT RANKMGMT AVG1-2 Very EffectiveBOD RANKBOD AVGBOD MEDIANSurveys Conducted February and September 2018 ASSESSING GOVERNING BOARD EFFECTIVENESSDETAILED TABULATIONPOINT ALLOCATIONNOTE: Respondents consisted of 5 Directors and 6 Managers.0Statement is very true.1Statement is somewhat true.2Statement is somewhat untrue.3Statement is very untrue.02/18 09/18 02/18 09/18 02/18 09/18 02/18 09/18 02/18 09/18 02/18 09/181.Board meetings start on time.1 0 1 2 0.2 0 0.17 0.33 0 0 0 010.There is agreement on who is ultimately responsible for putting items on and/or removing them 6 6 6 5 1.2 1.2 1.00 0.83 1 1 1 1from the agenda.19.The board does not spend too much time modifying or correcting the minutes at meetings. 3 0 0 0 0.6 0 0.00 0.00 0 0 0 028.Operating rules and procedures are known by all board members. 71 5 5 1.4 0.2 0.83 0.83 2 0 1 137.The agenda packet is "user friendly". 6 3 0 1 1.2 0.6 0.00 0.17 1 1 0 046.Staff provides all the significant alternatives in their staff reports. 5 3 1 2 1 0.6 0.17 0.33 1 1 0 02.All board members feel free to express their opinions. 4 2 1 5 0.8 0.40.17 0.83 0 0 0 111.Members feel free to critique each other's positions on issues.3 2 3 6 0.6 0.4 0.50 1.00 0 0 1 120.Civilized disagreement is a board strength. 4 2 2 7 0.8 0.4 0.33 1.17 0 00229."Baggage" from one argument is not carried to the next. 3 1 3 5 0.6 0.2 0.50 0.83 0 0 1 138.Decisions are usually made only after each members has had his/her say. 3 1 2 3 0.6 0.2 0.33 0.50 0 0 0 047.Members know how to keep conflict from becoming destructive. 3 1 26 0.6 0.2 0.33 1.00 0 0 0 13.All members are contributing members of the board team. 3 1 1 3 0.6 0.2 0.17 0.50 0 0 0 112.The board works well as a team. 4 2 5 8 0.8 0.4 0.83 1.33 1 0 1 121.Team members actively listen to each other. 5 4 4 7 1 0.8 0.67 1.17 0 1 1 130.While board members may have positions, minds are not made up before meetings. 3 2 7 7 0.6 0.4 1.17 1.17 1 0 1 139.Members are open with each other. 5 1 4 6 1 0.2 0.67 1.00 1 0 1 148.The board does not operate as an exclusive country club. 4 1 0 1 0.80.2 0.00 0.17 0 0 0 04.The elected body does not attempt to micro-manage. 5 7 14 15 1 1.4 2.33 2.50 1 1 3 313.Our board does not engage in solution "reengineering" at meetings. 5 5 9 12 1 1 1.50 2.00 1 1 1 222.Staff does not get overly involved in policy decisions. 5 3 2 4 1 0.60.33 0.67 1 1 0 131.Individual board members do not try to influence personnel decisions. 7 3 5 6 1.4 0.6 0.83 1.00 1 1 1 140.Board members adequately communicate goals and philosophies to staff. 8 6 6 7 1.6 1.2 1.00 1.17 2 1 1 149.The board is not complacent about its oversight responsibilities. 4 2 0 3 0.8 0.4 0.00 0.50 0 0 0 1Roles Teamwork Conflict Management Process A Supportive FrameworkPOINTSBoard Total Mgmt Total Board Avg Mgmt Avg Board Median Mgmt MedianSurveys Conducted February and September 2018Page 1 of 3 ASSESSING GOVERNING BOARD EFFECTIVENESSDETAILED TABULATIONPOINT ALLOCATIONNOTE: Respondents consisted of 5 Directors and 6 Managers.0Statement is very true.1Statement is somewhat true.2Statement is somewhat untrue.3Statement is very untrue.02/18 09/18 02/18 09/18 02/18 09/18 02/18 09/18 02/18 09/18 02/18 09/18POINTSBoard Total Mgmt Total Board Avg Mgmt Avg Board Median Mgmt Median5.While they may not like some of the decisions, people perceive the board as fair. 5 3 3 5 1 0.6 0.50 0.83 1 1 0 114.Board members avoid berating members of the audience; even if provoked. 2 2 1 6 0.4 0.4 0.17 1.00 0 0 0 123.Meaningful public participation is encouraged. 4 2 1 1 0.8 0.4 0.17 0.1700 0032.Board members keep the audience informed of each item, the issue, the background and 5 3 4 2 1 0.6 0.67 0.33 1 1 1 0possible decisions.41.Members of the audience do not feel intimidated when appearing before the board. 3 0 2 0 0.6 0 0.33 0.00 0 0 0 050.Board members take care to observe the appearance as well as the principle of impartiality. 4 3 2 5 0.8 0.6 0.33 0.83 1 1 0 16.Staff provides a recommendation on every issue no matter how controversial. 5 6 2 3 1 1.2 0.33 0.50 1 1 0 115.The board conducts timely and meaningful evaluations of the manager's performance. 8 2 6 5 1.6 0.4 1.00 0.83 2 0 1 124.Staff does not filter the information it passes on to the board. 6 3 1 1 1.2 0.6 0.17 0.17 1 1 0 033.Staff follows through as promised. 7 3 0 1 1.4 0.6 0.00 0.17 1 1 0 042.Openness and trust exists between the board and staff. 4 6 6 6 0.8 1.2 1.00 1.00 1 1 1 151.The board and staff do not surprise each other at meetings. 6 4 7 71.2 0.8 1.17 1.17 1 1 1 17.The board has an overall vision for the community. 7 6 7 10 1.4 1.2 1.17 1.67 1 1 1 216.The board has developed its own mission or goal statement. 5 1 4 4 10.2 0.67 0.67 1 0 1 125.Members know what the board's top five goals are. 9 8 8 10 1.8 1.6 1.33 1.67 2 2 1 234.Day-to-day decisions are consistent with the board's overall goals. 7 3 3 5 1.4 0.6 0.50 0.83 1 1 1 143.The board develops an annual work program with clear objectives. 9 6 7 4 1.8 1.2 1.17 0.67 2 1 1 152.Our priorities do not change too often. 4 3 6 9 0.8 0.6 1.00 1.50 1 1 1 28.The chair keeps audience members informed of board issues and actions. 6 2 5 4 1.2 0.4 0.83 0.67 1 0 1 117.The chairperson prevents dominating board members from having a disproportionate influence. 7 4 9 10 1.4 0.8 1.50 1.67 1 1 1 226.The chairperson protects board members from audience or colleague attacks. 5 2 10 9 1 0.4 1.67 1.50 1 0 2 235.The chairperson prevents premature rejection of new thoughts without a fair evaluation. 5 4 4 5 1 0.8 0.67 0.83 1 1 1 144.The chairperson does not unfairly use the powers of the position to win a point or argument. 4 2 2 7 0.8 0.4 0.33 1.17 0 0 0 153.In our meetings, the discussion rarely drifts off the subject. 77 8 10 1.4 1.4 1.33 1.67 1 1 1 2Chairperson Leadership Clear Sense of Purpose Staff RelationshipsCommunity RapportSurveys Conducted February and September 2018Page 2 of 3 ASSESSING GOVERNING BOARD EFFECTIVENESSDETAILED TABULATIONPOINT ALLOCATIONNOTE: Respondents consisted of 5 Directors and 6 Managers.0Statement is very true.1Statement is somewhat true.2Statement is somewhat untrue.3Statement is very untrue.02/18 09/18 02/18 09/18 02/18 09/18 02/18 09/18 02/18 09/18 02/18 09/18POINTSBoard Total Mgmt Total Board Avg Mgmt Avg Board Median Mgmt Median9.Our board gets things done.4 4 1 6 0.8 0.8 0.17 1.00 0 1 0 118.The board does not get stalemated over the process or procedures. 5 4 8 6 1 0.8 1.33 1.00 1 1 2 127.The board made significant progress on its top goals last year.4 3 1 8 0.8 0.6 0.17 1.33 0 1 0 136.Board members do their homework before meetings. 7 5 8 4 1.4 1 1.33 0.6711 1145.The board is not reluctant to make an important, yet controversial decision. 4 4 3 6 0.8 0.8 0.50 1.00 0 1 0 154.The board is adept at identifying and exploiting opportunities.7 5 2 5 1.4 1 0.33 0.83 1 1 0 1TOTAL271 169 214 290 1.00 0.63 0.66 0.90 1 1 1 1ProductivitySurveys Conducted February and September 2018Page 3 of 3 ITEM NO. 11.2 AGENDA REPORT Meeting Date: October 9, 2018 Subject:Joint Agency Committee with City of Yorba Linda (Nederhood/Jones) · Minutes of meeting held September 10, 2018 at 4:00 p.m. · Next meeting scheduled December 10, 2018 at 4:00 p.m. at YL City Hall. ATTACHMENTS: Name:Description:Type: 2018-09-10_-_Minutes_-_YLWD-City_of_YL.pdf Minutes Minutes YLWD/CC Joint Advisory Committee Minutes September 10, 2018 Page 1 of 2 CITY OF YORBA LINDA Land of Gracious Living YORBA LINDA WATER DISTRICT/ CITY COUNCIL JOINT ADVISORY COMMITTEE MEETING MINUTES September 10, 2018 4:00 p.m. 1.CALL TO ORDER The Yorba Linda Water District/City Council Joint Advisory Committee meeting convened at 4:00 p.m. in the Council Chambers at 4845 Casa Loma Avenue, Yorba Linda. 2.PLEDGE OF ALLEGIANCE Yorba Linda Water District General Manager Marc Marcantonio, 3.ROLL CALL Committee Members City Council: Gene Hernandez, Mayor Tom Lindsey, Councilman Water District: Al Nederhood, President Brooke Jones, Vice President Staff Members: Marc Marcantonio, General Manager YL Water District Mark Pulone, City Manager City of Yorba Linda 4.PUBLIC COMMENTS None YLWD/CC Joint Advisory Committee Minutes September 10, 2018 Page 2 of 2 5.ACTION CALENDAR 5.1 Minutes of the YLWD/City Council Joint Advisory Committee meeting held on June 4, 2018. The YLWD/City Council Joint Advisory Committee approved the minutes of the June 4, 2018 meeting. 6.DISCUSSION ITEMS 6.1 . Pending Legislation – SB 845 (Monning) and SB 998 (Dodd) Vice President Brooke Jones summarized Senate Bills 845 and 998 and announced that SB 845 had been defeated. He stated that SB 998 was passed and is currently on the Governor’s desk for signature. However, the Water District along with Association of California Water Agencies (ACWA) continue to oppose the bill and are asking for a veto due to the administrative burden it places on Districts, the requirement for Districts to determine income and health status of customers and the shifting of costs to customers who haven’t incurred those costs. 6.2 State’s Long-term Framework for Indoor/Outdoor Water Use Efficiency Mr. Jones said that the State is determining how individual Water Serve Areas’ Water Budgets will be calculated; new indoor standards are defined, but not outdoor water calculations. The Water District is proactively working to ascertain how much irrigable space exists for each of the 25,000 parcels the District serves. Mr. Jones reviewed past drought saving techniques which helped save water during the drought. Julia Schultz, resident, commented on the State’s determination of residents’ outdoor water use and asked about future water restrictions and how that might be enforced. General Manager Marc Marcantonio responded and said the state will calculate an outdoor standard formula, which the district will then implement. He stated that the Board would be studying the matter along with public input to come up with a plan. 6.3 Future Meeting Date and Agenda Items The Committee agreed to meet again on Monday, December 10, 2018 at 4:00 p.m. No additional items for the next Agenda were discussed. 7.ADJOURNMENT 7.1 City Manager Mark Pulone adjourned the meeting at 4:25 p.m. to the next Yorba Linda Water District/City of Yorba Linda Joint Agency Committee meeting on Monday, December 10, 2018 at 4:00 p.m. ITEM NO. 13.1 AGENDA REPORT Meeting Date: October 9, 2018 Subject:Meetings from October 10 - December 31, 2018 ATTACHMENTS: Name:Description:Type: BOD_-_Activities_Calendar.pdf Backup Material Backup Material Board of Directors Activity Calendar Event Date Time Attendance By October OC LAFCO Wed, Oct 10 8:15 AM Nederhood (As Needed) YL Planning Commission Wed, Oct 10 6:30 PM Hawkins (As Needed) MWDOC Water Policy Forum Thu, Oct 11 5:30 PM Jones/Miller/Nederhood ACWA Regulatory Summit Tue, Oct 16 9:00 AM Miller YL City Council Tue, Oct 16 6:30 PM Hawkins MWDOC Board Wed, Oct 17 8:30 AM Nederhood/Jones OCWA Luncheon Wed, Oct 17 11:30 AM Jones/Nederhood Board of Directors Workshop Meeting Wed, Oct 17 4:30 PM OCWD Board Wed, Oct 17 5:30 PM Miller/Jones ACWA Region 10 Workshop Thu, Oct 18 9:00 AM Jones/Nederhood OCSD State of the District Fri, Oct 19 8:00 AM Jones/Nederhood CA-NV AWWA Fall Conference Mon, Oct 22 8:00 AM Jones/Nederhood CA-NV AWWA Fall Conference Tue, Oct 23 8:00 AM Jones/Nederhood CA-NV AWWA Fall Conference Wed, Oct 24 8:00 AM Jones/Nederhood MWDOC/OCWD Joint Planning Committee Wed, Oct 24 8:30 AM Jones/Miller/Nederhood YL State of the City Wed, Oct 24 5:30 PM Jones/Nederhood/Miller OCSD Board Wed, Oct 24 6:00 PM Hawkins YL Planning Commission Wed, Oct 24 6:30 PM Hawkins (As Needed) CA-NV AWWA Fall Conference Thu, Oct 25 8:00 AM Jones/Nederhood ISDOC Thu, Oct 25 11:30 AM TBD November WACO Fri, Nov 2 7:30 AM TBD ISDOC Executive Committee Tue, Nov 6 7:30 AM Nederhood YL City Council Tue, Nov 6 6:30 PM Hall MWDOC Board Wed, Nov 7 8:30 AM Nederhood/Jones OCSD Operations Committee Wed, Nov 7 5:00 PM Hawkins OCWD Board Wed, Nov 7 5:30 PM Miller/Jones Board of Directors Regular Meeting Tue, Nov 13 6:30 PM OC LAFCO Wed, Nov 14 8:15 AM Nederhood (As Needed) YL Planning Commission Wed, Nov 14 6:30 PM Hawkins (As Needed) Interagency Committee Meeting with MWDOC and OCWD Mon, Nov 19 4:00 PM Nederhood/Jones YL City Council Tue, Nov 20 6:30 PM Miller MWDOC Board Wed, Nov 21 8:30 AM Nederhood/Jones OCWD Board Wed, Nov 21 5:30 PM Miller/Jones District Offices Closed Thu, Nov 22 7:00 AM ACWA-JPIA Fall Conference Mon, Nov 26 8:00 AM Jones ACWA-JPIA Fall Conference Tue, Nov 27 8:00 AM Jones ACWA Groundwater Committee Tue, Nov 27 10:00 AM Jones ACWA Water Quality Committee Tue, Nov 27 3:00 PM Miller ACWA Fall Conference Tue, Nov 27 5:00 PM Jones/Miller/Nederhood ACWA Fall Conference Wed, Nov 28 8:00 AM Jones/Miller/Nederhood OCSD Board Wed, Nov 28 6:00 PM Hawkins YL Planning Commission Wed, Nov 28 6:30 PM Hawkins (As Needed) ACWA Fall Conference Thu, Nov 29 8:00 AM Jones/Miller/Nederhood ACWA Fall Conference Fri, Nov 30 8:00 AM Jones/Miller/Nederhood December ISDOC Executive Committee Tue, Dec 4 7:30 AM Nederhood YL City Council Tue, Dec 4 6:30 PM Nederhood MWDOC Board Wed, Dec 5 8:30 AM Nederhood/Jones OCSD Operations Committee Wed, Dec 5 5:00 PM Hawkins OCWD Board Wed, Dec 5 5:30 PM Miller/Jones MWDOC Elected Officials' Forum Thu, Dec 6 6:00 PM Hawkins/Miller WACO Fri, Dec 7 7:30 AM Nederhood Joint Committee Meeting with City of Yorba Linda Mon, Dec 10 4:00 PM Nederhood/Jones Board of Directors Regular Meeting Tue, Dec 11 6:30 PM CRWUA Annual Conference Wed, Dec 12 8:00 AM Jones/Nederhood OC LAFCO Wed, Dec 12 8:15 AM Nederhood (As Needed) YL Planning Commission Wed, Dec 12 6:30 PM Hawkins (As Needed) CRWUA Annual Conference Thu, Dec 13 8:00 AM Jones/Nederhood CRWUA Annual Conference Fri, Dec 14 8:00 AM Jones/Nederhood YL City Council Tue, Dec 18 6:30 PM Jones MWDOC Board Wed, Dec 19 8:30 AM Nederhood/Jones OCWD Board Wed, Dec 19 5:30 PM Miller/Jones OCSD Board Wed, Dec 19 6:00 PM Hawkins District Offices Closed Tue, Dec 25 7:00 AM As of October 2, 2018 BACKUP MATERIALS DISTRIBUTED LESS THAN 72 HOURS PRIOR TO THE MEETING Status of Engineering Activities October 9, 2018 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 Projects in Design •Well 22 Equipping •Mickel Lane and Camino Verde Waterline Replacement •Stonehaven Water Main (Cielo Vista) •Hidden Hills BPS Improvements (Cielo Vista) ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 PROJECT START DATE END DATE CONTRACT AMOUNT PAID TO DATE % COMPLETE Fairmont BPS Upgrade 11/1/2016 1/31/2019 $ 7,297,599.39 $ 7,006,139.39 96% PRS Rehab Phase 2 3/19/2018 1/13/2019 $ 663,485.00 $ 595,305.00 90% Tract 15199 Waterline Replacement 6/4/2018 11/1/2018 $ 654,610.00 $ 528,975.00 81% 2018 Sewer Main CIPP Rehab 7/9/2018 11/6/2018 $ 166,110.90 $ 159,629.00 96% Lakeview Sewer Lift Station Decommissioning Late August 2018 Late November 2018 $ 1,520,666.24 $ - 0% Projects in Construction ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 Fairmont Booster Pump Station Upgrade ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 PRS Rehabilitation Phase 2 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 Tract 15199 Waterline Replacement ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 Lakeview Sewer Lift Station Decommissioning ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 Water Quality •Triennial Lead and Copper Testing •66 participants •Samples collected in August •All results below the Action Level for Lead and Copper •Participants notified of results on 9/13/18 •Report submitted to SWRCB DDW on 9/24/18 ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018 Other Items •Wireless Communications Facilities (ATS) •CAW Nut Plains Well Treatment Unit Tour in Sacramento •Well 23 siting ITEM NO. 9.2. MATERIALS SUBMITTED BY: Rosanne Weston MEETING DATE: October 9, 2018