HomeMy WebLinkAbout2019-06-25 - Board of Directors Meeting Agenda Packet (B)
AGENDA
YORBA LINDA WATER DISTRICT
BOARD OF DIRECTORS REGULAR MEETING
Tuesday, June 25, 2019, 6:30 PM
1717 E Miraloma Ave, Placentia CA 92870
1. CALL TO ORDER
2. PLEDGE OF ALLEGIANCE
3. ROLL CALL
Brooke Jones, President
Phil Hawkins, Vice President
Andrew J. Hall, Director
J. Wayne Miller, Director
Al Nederhood, Director
4. ADDITIONS/DELETIONS TO THE AGENDA
5. INTRODUCTIONS AND PRESENTATIONS
5.1. Elected Official Liaison Reports
5.2. Federal and State Legislative Update
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 May 14, 2019
Recommendation: That the Board of Directors approve the minutes as presented.
7.2. Payments of Bills, Refunds, and Wire Transfers
Recommendation: That the Board of Directors ratify and authorize disbursements in
the amount of $739,574.68.
7.3. Award of Construction Contract for Camino Verde and Mickel Lane Waterline
Improvements
Recommendation: That the Board of Directors award the Construction Contract
for Camino Verde and Mickel Lane Waterline Improvements to Cedro Construction,
Inc. for $576,178.90, Job No. J2018-03.
7.4. Amending the Debt Management Policy
Recommendation: That the Board of Directors approve Resolution No. 2019-XX
amending the Debt Management Policy previously adopted by Resolution No. 18-
13 on June 5, 2018.
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. Financial Reserves Policy for Fiscal Year 2020
Recommendation: That the Board of Directors approve Resolution No. 2019-XX
adopting a Financial Reserves Policy for Fiscal Year 2020 and rescinding
Resolution No. 18-24.
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. OC LAFCO’s Election for Special District Regular and Alternate Representatives (Jones)
9.2. Planning for Performance of Water/Sewer Rate Study and Future Proposition 218
Process (Hawkins)
9.3. Budget to Actual Reports for Month Ending May 31, 2019
9.4. Cash and Investment Report for Period Ending May 31, 2019
10. REPORTS, INFORMATION ITEMS, AND COMMENTS
10.1. Directors' Reports
· Intergovernmental Meetings, Conferences, and Events
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
(Jones/Hawkins)
· Next meeting scheduled July 25, 2019 at 4:00 p.m.
11.2. Joint Agency Committee with City of Yorba Linda
(Jones/Hawkins)
· Minutes of the meeting held June 17, 2019 at 4:00 p.m. will provided when available.
· Next meeting is scheduled September 16, 2019 at 4:00 p.m. at Yorba Linda City Hall.
11.3. Joint Agency Committee with City of Placentia
(Jones/Hawkins)
· Next meeting yet to be scheduled.
12. BOARD OF DIRECTORS ACTIVITY CALENDAR
12.1. Meetings from June 26 - August 31, 2019
13. ADJOURNMENT
13.1. The next Regular Board Meeting will be held Tuesday, July 9, 2019. 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: June 25, 2019
Subject:Minutes of the Board of Directors Regular Meeting Held May 14, 2019
STAFF RECOMMENDATION:
That the Board of Directors approve the minutes as presented.
ATTACHMENTS:
Name:Description:Type:
2019-05-14_-_Minutes_-_BOD.docx Minutes Minutes
Minutes of the YLWD Board of Directors Regular Meeting May 14, 2019 at 6:30 p.m. 1
2019-XXX
MINUTES OF THE
YORBA LINDA WATER DISTRICT
BOARD OF DIRECTORS REGULAR MEETING
Tuesday, May 14, 2019, 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
Brooke Jones, President Brett R. Barbre, Asst General Manager
Andrew J. Hall John DeCriscio, Operations Manager
J. Wayne Miller Gina Knight, Human Resources/Risk Manager
Al Nederhood Delia Lugo, Finance Manager
Pasquale Talarico, Director of Public Affairs
Rosanne Weston, Engineering Manager
Annie Alexander, Executive Asst/Board Secretary
Vivian Lim, Human Resources Analyst
Javier Martinez, Production Superintendent
Kaden Young, Senior Management Analyst
DIRECTORS ABSENT ALSO PRESENT
Phil Hawkins, Vice President Andrew Gagen, General Counsel, Kidman Gagen Law LLP
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 May 14, 2019 at 6:30 p.m. 2
2019-XXX
5.2. Federal and State Legislative Update
Director of Public Affairs Pasquale Talarico briefed the Board on the status
of Senate Bills 669, 414, and 200.
Brett Barbre, in his capacity as Director for the Metropolitan Water District
of Southern California (MWD) and President for Municipal Water District of
Orange County (MWDOC), commented on the status of the California
WaterFix and noted that Governor Gavin Newsom was pursuing a single
tunnel rather than two.
6. PUBLIC COMMENTS
Pat Nelson, resident, commented on recent developments associated with the
California WaterFix.
7. CONSENT CALENDAR
Director Nederhood requested to remove Item No. 7.3. from the Consent
Calendar for separate action.
Director Hall 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 Special and Regular Meetings Held
March 26, 2019
Recommendation: That the Board of Directors approve the minutes as
presented.
7.2. Minutes of the Board of Directors Special and Regular Meetings Held April
9, 2019
Recommendation: That the Board of Directors approve the minutes as
presented.
ITEMS REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE ACTION
7.3. Payments of Bills, Refunds, and Wire Transfers
Staff responded to questions from Director Nederhood regarding multiple
items on the Check Register.
Minutes of the YLWD Board of Directors Regular Meeting May 14, 2019 at 6:30 p.m. 3
2019-XXX
Director Nederhood requested an item on a future agenda to discuss the
cost-benefit of electronic versus paper billing. Brief discussion regarding
associated costs followed.
Director Nederhood made a motion, seconded by Director Jones, to ratify
and authorize disbursements of April 23, 2019 and for May 14, 2019 in the
amount of $2,003,276.36. Motion carried 4-0-0-1 with Director Hawkins
being absent.
Julia Shultz, resident, spoke against charging customers for receiving a
paper bill.
8. ACTION CALENDAR
8.1. Nominations for Orange County Local Area Formation Commission
(LAFCO) Regular and Alternate Special District Member Seats
Staff briefly explained the ballot process and listed the nominated
candidates to date. No Directors expressed an interest in being
nominated.
Director Miller made a motion, seconded by Director Hall, to designate
Director Jones and Director Hawkins to serve as the District’s primary and
alternate voting representatives, respectively, in the upcoming OC LAFCO
election for the Regular and Alternate Special District Member seats.
Motion passed 4-0-0-1 with Director Hawkins being absent.
8.2. Request from Mesa Water District for Financial Contribution to Support
Advocacy Efforts Related to South Coast Air Quality Management
District’s (SCAQMD) Proposed Amended Rule (PAR) 1403
Staff outlined the request and responded to questions from the Board
regarding the benefit to the District. Brief discussion followed and no
action was taken on this matter.
8.3. Request from Municipal Water District of Orange County (MWDOC) for
Financial Contribution to Conduct Financial Analysis for Small Non-
Compliant Drinking Water Systems
Staff summarized the request and did not recommend the District make a
contribution. Following brief discussion, Director Miller made a motion to
deny the request. Motion failed for lack of a second.
Minutes of the YLWD Board of Directors Regular Meeting May 14, 2019 at 6:30 p.m. 4
2019-XXX
8.4. Request from California Association of Sanitation Agencies (CASA)
Education Foundation for Donation to Support Scholarship Program
Staff explained the request and responded to questions from the Board
regarding the benefit to the District. Director Miller stated that he would
need to abstain from voting on this matter as he contributed to a separate
scholarship program. Additional discussion followed and no action was
taken on this matter.
8.5. Draft Operating Budgets for Fiscal Years 2020-21
Staff presented multiple water rate adjustment scenarios, including the
impact on the District’s debt covenant ratio, reserve balances, and days in
cash requirements. Lengthy discussion ensued regarding the proposed
rate adjustment percentage and effective date.
President Jones requested a future agenda item to discuss debt-funding
alternatives for critical Capital Improvement Projects.
Julia Shultz, resident, commented on the proposed rate adjustment
percentage and effective date.
Director Hall made a motion, seconded by Director Miller, to approve and
adopt a 9% increase to the base charge, effective July 1, 2019, and any
potential commodity rate adjustment by October 1, 2019. Motion passed
3-1-0-1 with Director Nederhood voting No and Director Hawkins being
absent.
9. DISCUSSION ITEMS
9.1. Draft Capital Improvement Plan for Fiscal Years 2020-24
Staff reviewed the draft plan and highlighted the projects identified as
most critical.
The following item was taken out of order.
9.5. Status of Operations Activities
Staff reported on the status of multiple well maintenance projects.
Minutes of the YLWD Board of Directors Regular Meeting May 14, 2019 at 6:30 p.m. 5
2019-XXX
9.2. Capital Asset Planning Policy
Staff outlined the draft policy and explained its purpose. Additional
revisions are expected and will be presented to the Board at a future
meeting.
Staff reviewed key information contained in the following financial reports.
9.3. Unaudited Financial Statements for Third Quarter of Fiscal Year 2019
9.4. Cash and Investment Report for Period Ending March 31, 3029
The following item was deferred to the next regular meeting.
9.6. Status of Community Facilities Districts / Assessment Districts for
Connecting Customers with Septic Tanks to District’s Wastewater
Collection System (Jones)
10. REPORTS, INFORMATION ITEMS, AND COMMENTS
10.1. Directors’ Reports
Intergovernmental Meetings, Conferences, and Events
The Directors noted their attendance at the listed meetings and
events.
10.2. General Manager’s Report
Assistant General Manager Barbre asked each of the managers or their
designees to report on activities within their respective departments. He
then commented on Fitch Ratings’ new water and sewer rating criteria and
a 2014 report issued by the US Senate Committee on Environment and
Public Works.
10.3. General Counsel’s Report
None.
10.4. Future Agenda Items and Staff Tasks
Director Nederhood requested staff promote the District’s electronic billing
service.
Minutes of the YLWD Board of Directors Regular Meeting May 14, 2019 at 6:30 p.m. 6
2019-XXX
Greg Schultz, resident, commented on MWD’s annual solar cup education
program.
11. COMMITTEE REPORTS
11.1. Interagency Committee with MWDOC and OCWD
(Jones/Hawkins)
Minutes of the meeting held March 28, 2019 at 4:00 p.m. were
included in the agenda packet.
Next meeting is scheduled May 23, 2019 at 4:00 p.m.
11.2. Joint Agency Committee with City of Yorba Linda
(Jones/Hawkins)
Next meeting is scheduled June 17, 2019 at 4:00 p.m. at Yorba
Linda City Hall.
11.3. Joint Agency Committee with City of Placentia
(Jones/Hawkins)
Next meeting is yet to be scheduled.
12. BOARD OF DIRECTORS ACTIVITY CALENDAR
12.1. Meetings from May 15 – June 30, 2019
The Board may no changes to the activity calendar.
13. ADJOURNMENT
13.1. The meeting adjourned at 9:29 p.m.
Annie Alexander
Board Secretary
ITEM NO. 7.2
AGENDA REPORT
Meeting Date: June 25, 2019 Budgeted:Yes
To:Board of Directors Cost Estimate:$739,574.68
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 $739,574.68.
DISCUSSION:
The items on this disbursement list include: a check of $126,065.58 to ACWA/JPIA for July 2019
medical & dental premium; a wire of $56,519.07 to MWDOC for April 2019 water deliveries; and a
wire of $37,109.46 to So. California Gas Company for May 2019 gas charges at multiple locations.
The balance of $213,570.97 is routine invoices.
The Accounts Payable check register total is $433,265.08 and Payroll No. 11 total is $306,309.60;
where the total of all listed disbursements for this agenda report is $739,574.68. 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:
19-CS_0625.pdf Cap Sheet Backup Material
CkReg062519.pdf Check Register Backup Material
19_CC_0625.pdf Credit Card Summary Backup Material
Summary of Disbursements
June 25, 2019
CHECK NUMBERS:
06/25/2019 Computer Checks 74427-74507 $ 339,636.55
____________
$ 339,636.55
WIRES:
W 061419 MWDOC $ 56,519.07
W061419A So. California Gas Co. $ 37,109.46
____________
$ 93,628.53
TOTAL OF CHECKS & WIRES $ 433,265.08
PAYROLL NO. 11:
Direct Deposits $ 191,960.88
Third Party Checks 7196-7205 $ 23,649.30
Payroll Taxes $ 51,415.32
EFT – CalPERS Payroll #11 $ 39,284.10
$ 306,309.60
TOTAL OF PAYROLL $ 306,309.60
----------------------------------------------------------------------------------------------------------------------
DISBURSEMENT TOTAL: $739,574.68
==================================================================
APPROVED BY THE BOARD OF DIRECTORS MINUTE ORDER AT BOARD
MEETING OF JUNE 25, 2019
==================================================================.
Check No.Date Vendor Name Amount Description
74427 06/25/2019 VECCHIO REAL ESTATE 199.08 CUSTOMER REFUND
74428 06/25/2019 MELISSA AVENVANO 43.75 CUSTOMER REFUND
74429 06/25/2019 BING SUN 423.99 CUSTOMER REFUND
74430 06/25/2019 SELECT PORTFOLIO SERVICING INC 14.37 CUSTOMER REFUND
74431 06/25/2019 BENJAMIN K DORWEILER 64.51 CUSTOMER REFUND
74432 06/25/2019 YUMEI WU 91.14 CUSTOMER REFUND
74433 06/25/2019 GMC 1,497.50 CUSTOMER REFUND
74434 06/25/2019 AARON SMITH 173.96 CUSTOMER REFUND
74435 06/25/2019 BROOKE WIMBERLY 31.02 CUSTOMER REFUND
74436 06/25/2019 JOUD CONSTRUCTION 1,585.00 CUSTOMER REFUND
74437 06/25/2019 NATALIE POWELL 4.63 CUSTOMER REFUND
74438 06/25/2019 T & T MARKETING CONCEPTS CORP 420.67 CUSTOMER REFUND
74439 06/25/2019 MISSION PAVING & SEALING 97.90 CUSTOMER REFUND
74440 06/25/2019 ACWA/JPIA 126,065.58 MEDICAL & DENTAL PREMIUM - JULY 2019
74441 06/25/2019 Al Nederhood 57.54 MILEAGE REIMBURSEMENT - MAY 2019
74442 06/25/2019 Alternative Hose Inc.1,262.22 VEHICLE MAINTENANCE - UNIT #184
74443 06/25/2019 Aqua-Metric Sales Co.23,198.21 METERS & OPERATIONS WORK MATERIAL
74444 06/25/2019 Aramark 680.32 UNIFORM SERVICE
74445 06/25/2019 Armando Raya 250.00 SAFETY BOOTS REIMBURSEMENT
74446 06/25/2019 AT & T - Calnet3 1,783.72 ATT CALNET 3
74447 06/25/2019 BrightView Tree Care Services Inc.1,824.70 LANDSCAPE SERVICE - JUNE 2019
74448 06/25/2019 Brooke Jones 105.91 MILEAGE REIMBURSEMENT - MAY 2019
74449 06/25/2019 CalCard US Bank 2,114.48 CREDIT CARD TRANSACTIONS - APRIL 2019
74450 06/25/2019 California Newspaper Partnership 936.00 AD - LIST OF UNCLAIMED MONIES
74451 06/25/2019 City Of Placentia 625.00 (3) ENCROACHMENT PERMITS
74452 06/25/2019 Complete Paperless Solutions 13,424.00 LASERFICHE SUPPORT - 1 YEAR
74453 06/25/2019 Cortech Engineering 2,077.23 CL2 PARTS
74454 06/25/2019 Culligan of Santa Ana 2,165.00 EQUIPMENT PE SOFTENER
74455 06/25/2019 C. Wells Pipeline 244.91 HYDRANT REPAIR PARTS
74456 06/25/2019 Danielle Logsdon 142.44 REIMBURSEMENT - TRAVEL & EXPENSE - PROJ. MGMT PROF.
BOOTCAMP7445706/25/2019 Dell Marketing L.P.4,291.19 DELL EXTENDED SERVICE
74458 06/25/2019 Delta Wye Electric, Inc.1,094.85 INSTALLATION OF (4) LINE REACTOR
74459 06/25/2019 Dentino Associates LLC 2,979.00 J2009-03 - WATER & SEWER CASH BOND RELEASE
74460 06/25/2019 Dick's Lock & Safe Inc.333.83 KEYS & CYLINDER COMBINATION CHANGE
74461 06/25/2019 Dion & Sons, Inc.5,804.48 STATIONARY ENGINE MAINTENANCE
74462 06/25/2019 Eisel Enterprises, Inc.1,100.37 METER BOXES & LIDS
74463 06/25/2019 Enkay Engineering & Equipment Inc 900.00 REMOVAL & DISPOSAL -TRANSITE PIPE
74464 06/25/2019 Enthalpy Analytical, Inc.1,972.00 WATER QUALITY SAMPLING - MAY
74465 06/25/2019 EyeMed 1,448.62 EYE MED PREMIUM - JUNE 2019
74466 06/25/2019 Fieldman Rolapp & Associates 1,862.00 GENERAL ADVISORY SERVICES
74467 06/25/2019 Georgina Knight 23.68 REIMBURSEMENT - TRAVEL & EXPENSE - GFOA CONFERENCE
74468 06/25/2019 Haaker Equipment Co.6,263.40 MAINTENANCE - UNIT #168
74469 06/25/2019 Hi-Tech Security Solutions 11,139.47 FIRE ALARM SERVICE WORK
74470 06/25/2019 Hollinger - Metal Edge 8,139.53 STORAGE CASES & FILE FOLDERS
74471 06/25/2019 Hydrex Pest Control 193.00 PEST CONTROL
74472 06/25/2019 Infosend Inc.8,476.92 BILLING & POSTAGE - CUST BILL
74473 06/25/2019 Inland Group 1,048.08 J2019-16 - PRINTING - OPEN HOUSE
74474 06/25/2019 Jeremy Smith 81.00 MEETING SUPPLIES - SAFETY MEETING
74475 06/25/2019 John Seiler 300.00 OP-ED ARTICLE & PUBLICATION
74476 06/25/2019 Jon's Flags & Poles, Inc.1,364.81 (10) FLAGS
74477 06/25/2019 KB Design 280.15 YLWD UNIFORM
74478 06/25/2019 Kidman Gagen Law 34,409.93 LEGAL SERVICES - MAY 2019
74479 06/25/2019 Konica Minolta Business 861.51 COPIER LEASE - C258 & C558
74480 06/25/2019 Managed Health Network 173.25 EAP - JUNE 2019
74481 06/25/2019 Mc Fadden-Dale Hardware 592.37 HARDWARE & TOOL SUPPLIES
74482 06/25/2019 Measurement Control Systems, Inc 284.16 MISCELLANEOUS WAREHOUSE PARTS
74483 06/25/2019 Mobile Industrial Supply 8.00 WELDING SUPPLIES
74484 06/25/2019 Morton Salt, Inc.3,040.65 COARSE SALT
74485 06/25/2019 Municipal Water District 111.00 TURF REMOVAL PROGRAM INSPECTION FEES
74486 06/25/2019 NatPay Online Business Solutions 40.46 DOCULIVERY - MAY 2019
74487 06/25/2019 Nickey Kard Lock Inc 4,680.23 FUEL - 05/16/19 - 05/31/19
74488 06/25/2019 Office Solutions 1,499.96 OFFICE SUPPLIES, PAPER & EQUIPMENT
74489 06/25/2019 PARMA 150.00 MEMBERSHIP - 7/2019 - 6/2020
74490 06/25/2019 Praxair Distribution 160.35 WELDING SUPPLIES
74491 06/25/2019 P.T.I. Sand & Gravel, Inc.1,764.04 ROAD MATERIAL
Yorba Linda Water District
Check Register
For Checks Dated: 06/12/2019 thru 06/25/2019
74492 06/25/2019 Quinn Company 6,443.20 STATIONARY ENGINE MAINTENANCE
74493 06/25/2019 Roberto Cuellar 87.00 CERTIFICATE REIMBURSEMENT - C1
74494 06/25/2019 RYAN PACE 256.00 REIMBURSEMENT FOR CLASS A PERMIT AND D-2 CERTIFICATE
74495 06/25/2019 Security Solutions 4,335.00 INSTALL (2) WIRELESS GATE MOTORS
74496 06/25/2019 Source 1 Environmental 493.77 HARDWARE SUPPLIES & TOOLS
74497 06/25/2019 Rachel Padilla/Petty Cash 651.88 PETTY CASH - O042019, O043019, O053019 & Y060519
74498 06/25/2019 Step Saver Inc 583.30 COARSE SALT
74499 06/25/2019 Trench Shoring 244.95 TRENCH TOP 8'X12' RENTAL
74500 06/25/2019 United Industries 228.19 PPE EQUIPMENT
74501 06/25/2019 UNUM Life Insurance Co. of America 1,242.10 LIFE, AD&D, STD & LTD - JUNE 2019
74502 06/25/2019 United Water Works, Inc.12,865.31 OPERATION WORK MATERIALS
74503 06/25/2019 West Coast Safety Supply Co 1,900.53 TOOLS & EQUIPMENT
74504 06/25/2019 YO Fire 8,812.41 OPERATIONS WORK MATERIALS
74505 06/25/2019 ARC 40.83 J2018-03 - PW/DOCUMENT MANAGEMENT
74506 06/25/2019 City Of Placentia 12,975.01 SEWER FEES - JANUARY - MAY 2019
W061419 06/14/2019 Municipal Water District 56,519.07 WATER DELIVERIES - APRIL 2019
W061419A 06/14/2019 SO. CALIFORNIA GAS CO.37,109.46 GAS CHARGES - MULTIPLE LOCATIONS - MAY 2019
433,265.08
5/30/2019 PAYROLL #11 - EMPLOYEE DIRECT DEPOSIT 191,960.88
5/30/2019 PAYROLL #11 - PAYROLL TAX PAYMENT 51,415.32
5/30/2019 PAYROLL #11 - CALPERS EFT 39,284.10
7196 5/30/2019 COLONIAL LIFE & ACCIDENT 107.10
7198 5/30/2019 NATIONWIDE RETIREMENT SOLUTIONS 14,400.23
7199 5/30/2019 CALIFORNIA STATE DISBURSEMENT UNIT 366.92
7200 5/30/2019 CALIFORNIA STATE DISBURSEMENT UNIT 384.92
7201 5/30/2019 AMERICAN HERITAGE LIFE 1,476.13
7202 5/30/2019 MIDLAND LIFE INSURANCE 200.00
7203 5/30/2019 RELIANCE DI 66.61
7204 5/30/2019 AMERITAS 1,854.68
7205 5/30/2019 LINCOLN FINANCIAL GROUP 4,792.71
306,309.60
Payroll Checks #11
Vendor Name Amount Description
Home Depot 17.54 Hardware supplies - facilities
FIRST AID SUPPLIES ONLINE 417.38 First aid supplies - fleet vehicles
Home Depot 67.77 Hardware supplies - sewer crew
Home Depot 119.14 Paint & shop supplies
Orange County Water Assn.-Dues 30.00 OCWA luncheon - DeCriscio, J
Orange County Water Assn.-Dues 90.00 OCWA Luncheon - Martinez & Talarico
Southwest Airlines 20.00 Travel & Expense - AWWA Conference - DeCriscio, J
North American Recycling and Crushing, LLC 660.00 Road material disposal
North American Recycling and Crushing, LLC 660.00 Road material disposal
The Toll Roads 32.65 Toll fees for standby crew - After Hours
2,114.48
25-Jun-19
Cal Card Credit Card
U S Bank
ITEM NO. 7.3
AGENDA REPORT
Meeting Date: June 25, 2019 Budgeted:Yes
Total Budget:$600,000
To:Board of Directors Cost Estimate:$600,000
Funding Source:All Water Funds
From:Marc Marcantonio, General
Manager
Job No:J2018-03
Presented By:Rosanne Weston, Engineering
Manager
Dept:Engineering
Reviewed by Legal:N/A
Prepared By:Danielle Logsdon, Senior
Engineer
CEQA Compliance:Exempt
Subject:Award of Construction Contract for Camino Verde and Mickel Lane Waterline
Improvements
SUMMARY:
On May 9, 2019, bids were received from six contractors for Camino Verde and Mickel Lane
Waterline Improvements. Following review of the bids, staff recommends award to the low-
bidder, Cedro Construction, Inc. for $576,178.90.
STAFF RECOMMENDATION:
That the Board of Directors award the Construction Contract for Camino Verde and Mickel Lane
Waterline Improvements to Cedro Construction, Inc. for $576,178.90, Job No. J2018-03.
DISCUSSION:
As part of the District's Capital Improvement Plan, it was determined that the waterlines in the
vicinity of Camino Verde and Mickel Lane were in need of improvements due to the age of the pipe
and fire flow deficiencies. District staff completed the design plans and project specifications for the
improvements.
On April 12, 2019, the District solicited bids for Camino Verde and Mickel Lane Waterline
Improvements. On May 9, 2019, sealed bids were received from six contractors. District staff
provided an Engineer's Estimate of $600,000. The six bids ranged from a low of $576,178.90 to a
high of $1,199,570.00, as shown in the summary below.
No. Contractor Total Bid Amount
1 Cedro Construction, Inc. $576,178.90
2 GCI Construction, Inc. $659,595.00
3 Creative Home dba CHI Construction $673,728.00
The bid tabulation and bid documents from the low-bidder, Cedro Construction, Inc., were reviewed
and confirmed by District staff and found to be responsive and fully in order. Accordingly, staff
recommends award to Cedro Construction, Inc.
4 J A Salazar Construction & Supply Corp. $809,864.00
5 Kana Pipeline, Inc. $993,883.00
6 Colich & Sons L.P. $1,199,570.00
ITEM NO. 7.4
AGENDA REPORT
Meeting Date: June 25, 2019
To:Board of Directors
From:Marc Marcantonio, General
Manager
Presented By:Delia Lugo, Finance Manager Dept:Finance
Prepared By:Delia Lugo, Finance Manager
Subject:Amending the Debt Management Policy
STAFF RECOMMENDATION:
That the Board of Directors approve Resolution No. 2019-XX amending the Debt Management
Policy previously adopted by Resolution No. 18-13 on June 5, 2018.
DISCUSSION:
The Government Finance Officers Association (GFOA) has set forth that as a "Best Business
Practice", state and local governments adopt a comprehensive debt management policy. In it
publication entitled "Best Practice Debt Management Policy", GFOA states that debt management
policies are written guidelines, allowances, and restrictions that guide issuance practices of state
and local governments, including the issuance process, on the management of a debt portfolio, and
adherence to various laws, reporting requirements, and regulations.
The Debt Management Policy as presented, has been updated and structured to meet the
recommendations as set for by GFOA, to comply with reporting requirements to the California Debt
and Investment Advisory Committee, and to now comply with the Securities and Exchange
Commission's amendments to Rule 15c2-12 ("Rule") pertaining to the Municipal Securities
Disclosure Rule under the Securities Exchange Act of 1934 (“Exchange Act”). The amendments to
the Rule, which had a compliance date of February 27, 2019, add transparency to the municipal
securities market by increasing the amount of information that is publicly disclosed about material
financial obligations incurred by issuers and obligated persons. The policy as presented addresses
the transparency requirements in Section 10.4 Continuing Disclosure.
Staff also added "Special Tax Bonds" in Section 2.4 Permitted Debt by Type of the policy to provide
the District an additional option for consideration.
ATTACHMENTS:
Name:Description:Type:
Resolution__No._2019-
XX_Debt_Management_Policy.docx Resolution Resolution
Debt_Mgmt_Policy.docx Exhibit Exhibit
Resolution No. 2019-XX Amending the District’s Debt Management Policy 1
RESOLUTION NO. 2019-XX
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE YORBA LINDA WATER DISTRICT
AMENDING THE DISTRICT’S DEBT MANAGEMENT POLICY
WHEREAS, State and local agencies should adopt comprehensive written debt
management policies pursuant to the recommendation of the Government
Finance Officers Association; and
WHEREAS, debt management policies are written guidelines, allowances, and
restrictions that guide the debt issuance practices of state or local
governments, including the issuance process, management of a debt
portfolio, and adherence to various laws and regulations; and
WHEREAS, a debt management policy should improve the quality of decisions,
articulate policy goals, provide guidelines for the structure of debt
issuance, and demonstrate a commitment to long-term capital and
financial planning; and
WHEREAS, the Board of Directors of the Yorba Linda Water District desires to amend
the District’s Debt Management Policy previously adopted by Resolution
No. 18-13.
NOW, THEREFORE, BE IT RESOLVED by Board of Directors of the Yorba Linda
Water District as follows:
Section 1. That effective June 25, 2019 Policy No. 3010-003 - Debt Management be
amended to read as attached hereto and by this reference incorporated
herein.
Resolution No. 2019-XX Amending the District’s Debt Management Policy 2
PASSED AND ADOPTED this 25th day of June 2019 by the following called vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Brooke Jones, Board 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
3010-003 Debt Management Policy Page 1 of 13
Policies and Procedures
Policy No.: 3010-003
Adoption Method: Resolution No. 2019-XX
Effective Date: June 25, 2019
Last Revised: June 5, 2018
Prepared By: Delia Lugo, Finance Manager
Applicability: District Wide
POLICY: DEBT MANAGEMENT
1.1 INTRODUCTION
1.2 Purpose and Overview
In its publication entitled Best Practice Debt Management Policy, the
Government Finance Officers Association (GFOA) states that Debt
management policies are written guidelines, allowances, and restrictions that
guide debt issuance practices of Board adopted issuance processes,
management of a debt portfolio, and adherence to state and federal laws and
regulations. A debt management policy should improve the quality of
decisions, and articulate policy goals, provide guidelines for the structure of
debt issuance, and demonstrate a commitment to long-term capital financial
planning. The Yorba Linda Water District Debt Management Policy as set forth
herein provides a set of comprehensive guidelines for the issuance and
management of the District’s debt portfolio. Adherence to the policy is
essential to ensure the District maintains a diversified debt portfolio that
supports the District’s financing needs and minimizes the District’s cost of
funds.
1.3 Roles and Responsibilities
Finance Manager - The primary responsibility for debt management rests with
the Finance Manager. The Finance Manager shall:
• Provide for the issuance of District debt at the lowest possible cost and
risk;
• Determine the available debt capacity of the District;
• Provide for the issuance of District debt at appropriate intervals and in
reasonable amounts as required to fund approved and budgeted capital
expenditures;
• Recommend to the District’s Board of Directors (the “Board”) the method
and manner of sale of District debt;
• Monitor opportunities to refund debt and recommend such refunding as
appropriate to reduce costs or to achieve other policy objectives;
• Comply with all Internal Revenue Service (IRS), Municipal Securities
Rulemaking Board (MSRB), Securities and Exchange Commission (SEC),
and California Debt Investment Advisory Commission (“CDIAC”) rules and
regulations governing the issuance of debt;
3010-003 Debt Management Policy Page 2 of 13
• Maintain a current database with all outstanding debt;
• Provide for the timely payment of principal and interest on all debt;
• Comply with all terms and conditions, including continuing disclosure,
required by the legal documents governing the debt issued;
• Submit to the Board all recommendations to issue debt in accordance with
this Policy;
• Distribute to appropriate repositories information regarding the District’s
financial condition and affairs at such times and in the form required by
law, regulation and general practice;
• Provide for the frequent distribution of pertinent information to the rating
agencies;
• Apply and promote prudent fiscal practices; and
• To ensure that proceeds of any debt issued in accordance with its
governing documents and this Policy no disbursements shall be make
without the approval of the Finance Manager and General Manager. The
draw request shall be provided to the District by the project engineer with
the consent of the District’s inspector. Approval shall only be provided
when the Finance Manager is in receipt of an appropriate certification from
the construction project manager with supporting invoices from suppliers
and / or contractors evidencing appropriate expenses in connection with
the project.
In the case of an issue of bonds the proceeds of which will be used by a
governmental entity other than the District, the District may rely upon a
certification by such other governmental entity that it has adopted the policies
described in SB 1029.
The District shall also comply with Government Code Section 5852.1 by
disclosing specified good faith estimates in a public meeting prior to the
authorization of the issuance of bonds.
2.1 LEGAL GOVERNING PRINCIPLES
In the issuance and management of debt, the District shall comply with all legal
constraints and conditions imposed by federal, state and local law. The following
section highlights the key governing documents and certain debt limitations.
2.2 Governing Law
County Water District Law – The District was established in 1959 as a
county water district under the County Water District Law, Division 12 of the
Water Code of the State of California, as the successor to a private water
company that was incorporated in or about 1909, for purposes of supplying
water for domestic, irrigation, sanitation, industrial, commercial, recreation
and fire suppression use.
Federal Tax Law – The District shall issue and manage debt in accordance
with the limitations and constraints imposed by federal tax law, to maximize
its ability to sell tax-exempt debt. Such constraints include, but are not limited
to, private activity tests, review of eligible projects, spend-down tests, and
arbitrage rebate limitations.
Securities Law – The District shall comply with the requirements of federal
and state securities laws in offering District debt and the District shall comply
with securities law requirements in providing ongoing disclosure to the
securities markets.
3010-003 Debt Management Policy Page 3 of 13
2.3 Governing Legal Documents
Indenture – The District’s debt issuance is further governed in part by the
Indenture of Trust, adopted September 8, 2016 of which constitutes the
“Indenture.” The Indenture establishes the basic security structure of debt
issued by the District that is secured by Net Water Revenues. Key terms and
conditions include, but are not limited to, the definition of pledged revenues,
the rate covenant and the additional bonds test. A copy of the Indenture can
be found in Appendix B. The District shall comply with all limitations imposed
under the Indenture, so long as such Indenture is in full force and effect.
2.4 Permitted Debt by Type
The District may legally issue both short-term and long-term debt, using the
debt instruments described below. The Finance Manager, in consultation with
the District’s General Counsel, Bond Counsel, and Municipal Advisor shall
determine the most appropriate instrument for funding purposes.
General Obligation Bonds – The District is empowered, under California
law, to levy taxes on all taxable property within its boundaries for the purpose
of paying its voter-approved general obligation bonds and, subject to certain
limitations.
Certificates of Participation – Certificates of Participation (COP) provide
debt financing through a lease, installment sale agreement or contract of
indebtedness and typically do not require voter approval. Board action is
sufficient to legally authorize a COP issue. The District shall pledge net
revenues to the repayment of its COPs, under the terms and conditions
specified in the Indenture.
JPA Revenue Bonds – As an alternative to COPs, the District may obtain
financing through the issuance of Debt by a joint exercise of powers agency
with such Debt payable from amounts paid by the District under a lease,
installment sale agreement, or contract of indebtedness.
Commercial Paper – The District may issue short-term revenue certificates,
including commercial paper and extendable commercial paper. Board action
is sufficient to legally authorize a commercial paper issue. The District’s
commercial paper is secured by net revenues. Voter approval is not required
to issue commercial paper.
Lines of credit - The District may enter into financing arrangements providing
for a source of funds that can be readily accessed by the District for capital or
operational needs. Board action is sufficient to legally authorize the
establishment of a line of credit. Voter approval is not required to establish or
access a lien of credit.
Variable Rate Debt – The District is authorized to issue variable rate debt
including, but not limited to, public market indexed notes, indexed notes or
loans placed directly with financial institutions and other alternative variable
rate and market access products as well as traditional variable rate demand
obligations backed by bank liquidity facilities. Prior to the issuance of variable
rate debt, the savings and other possible advantages compared to a fixed rate
borrowing will be evaluated and a comparative analysis presented to the
Board of Directors as part of the approval process.
3010-003 Debt Management Policy Page 4 of 13
Refunding Revenue Bonds – The District is authorized to issue refunding
revenue bonds to refund outstanding District indebtedness pursuant to the
State of California local agency refunding revenue bond law (Articles 10 and
11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of
the State of California).
Loans – The District is authorized to enter into loans, installment payment
obligations, or other similar funding structures secured by a prudent source,
or sources of repayment.
Assessment Bonds – The District is authorized to issue assessment bonds
pursuant to the Improvement Bond Act of 1915, subject to requirements
imposed by Proposition 218. Such bonds are typically repaid from
assessments collected within an assessment district formed pursuant to the
Municipal Improvement Act of 1913. Assessments are levies of charges on
real property to pay for projects or services that specifically benefit that parcel
of property.
Special Tax Bonds – Issued by community facilities districts (“CFDs”) formed
by the District pursuant to the provisions of the Mello-Roos Community
Facilities Act of 1982, as amended, will be used to finance capital costs and
projects identified within the proceedings under which the applicable CFD was
formed.
Other Obligations – There may be special circumstances when other forms
of financing are appropriately utilized by the District. The District will evaluate
such proposed transactions on a case-by-case basis. Such other forms
include, but are not limited to, grant anticipation notes and judgment or
settlement obligation bonds.
2.5 Limitations on Debt Issuance
Short-Term Debt – The District’s short-term debt shall not exceed 30 percent
of its total debt at the time of issuance. The calculation of short- term debt
shall include any variable rate obligations, the authorized amount of
commercial paper, any notes/bonds with a maturity equal to or less than five
years.
Variable Rate Debt – The Finance Manager will consult with the District’s
Municipal Advisor to determine appropriate parameters for the issuance of
variable rate debt and may rely on rating agency standard’s and other industry
standards for establishing prudent financial goals and establishing the amount
of variable rate debt to be issued.
Subordinate Lien Long-Term Debt - The District’s subordinate lien debt, for
which net revenues are pledged, shall be limited to that amount for which
current and projected revenues generate overall debt service coverage of at
least 100 percent.
Senior Lien Long-Term Debt – The District’s senior lien long-term debt, for
which net revenues are pledged, shall be limited to that amount for which
current and projected revenues generate a senior lien debt service coverage
of at least 125 percent. The calculation of debt service shall not include
General Obligation Bonds, Assessment Bonds, or Special Tax Bonds to which
revenue sources other than pledged revenues, as defined in the Indenture,
3010-003 Debt Management Policy Page 5 of 13
are pledged. It should be noted that the District will target to issue debt to
attempt to meet the senior lien debt service coverage target of 225 percent in
keeping with its prudent financial management practices and to maintain
credit ratings aligned with rating agency methodologies.
2.6 Purpose for Borrowing
The District shall issue debt solely for the purpose of financing the cost of
design, engineering acquisition, and/or construction of water and wastewater
system improvements in furtherance of the District’s Capital Improvement
Program (CIP). Additionally, the District may, subject to Federal tax code
limitations, include operational expenses in any debt issuance.
2.7 Ethical Standards Governing Conduct
Members of the District, the Board and its consultants, service providers, and
underwriters shall adhere to standards of conduct as stipulated by the
California Political Reform Act, as applicable. All debt financing participants
shall maintain the highest standards of professional conduct at all times, in
accordance with:
• MSRB Rules, including Rule G-37 and G-42 shall be followed at all times;
• Debt financing participants will assist the District staff in achieving its goals
and objectives as defined in this Debt Management Policy; and
• All debt financing participants shall make cooperation with the District staff
their highest priority.
2.8 Use of Derivatives
The use of derivative products can, among other things, increase District
financial flexibility and provide opportunities for interest rate savings or
enhanced investment yields. Careful monitoring of such products is required
to preserve District credit strength and budget flexibility. Swaps will not be
used to speculate on perceived movements in interest rates. Before the
District enters into any derivative product associated with debt, the Board shall
adopt an interest rate swap policy.
3.1 INTEGRATION OF CAPITAL PLANNING AND DEBT ACTIVITIES
3.2 Evaluating Capital Improvement Program Spending
The District shall develop and maintain a capital finance model to evaluate
the impact of capital program spending, operations and maintenance costs,
and debt service on its financial condition. To that end, the Finance Manager
shall oversee the ongoing maintenance of quantitative modeling that includes,
but is not limited to, the following:
• Five years of historic and projected cash flows;
• Five years of historic and projected capital expenditures;
• Five years of historic and projected operating costs;
• Five years of historic and projected fund balances for any funds
established by the District’s then-adopted Reserve Fund
• Five years of historic and projected debt service coverage;
• The most efficient mix of funding sources (long-term debt; short-term debt,
and cash);
• Projected revenue requirements; and
• Projected rates and charges.
3010-003 Debt Management Policy Page 6 of 13
4.1 PROCUREMENT AND EVALUATION OF PROFESSIONAL SERVICES
4.2 Appointment of Service Providers – The Finance Manager may solicit from
time to time bids, quotes or proposals, including sole source proposals for the
following services on an as needed basis:
• Municipal Advisor – Service provider that ensures the District complies
with all financial management procedures and policies and ensures
successful closing for bond transactions.
• Bond Counsel – Service provider that drafts appropriate documentation to
ensure successful and timely closing and create valid and legally binding
security for bond issues, and provide appropriate advice and taking
appropriate actions to ensure legal validity of bond issues under state and
federal laws as applicable.
5.1 TRANSACTION-SPECIFIC POLICIES
5.2 Method of Sale – The Finance Manager shall determine the most appropriate
form of sale of its debt. In making a recommendation to the Board the Finance
Manger may consult with the District’s Municipal Advisor and Bond Counsel
and may take into account, among other things, the type and tenor of the
proposed debt; the District’s credit ratings; the amount of funding necessary;
the timing of the needed funds; local and national economic conditions; and
general bond market conditions.
5.3 Competitive Bid Method - When necessary to minimize the costs and risks
of any District borrowing, the Finance Manager may submit to the Board a
request to sell bonds on a competitive basis. Such bids may take the form of
hand- delivered or electronically transmitted offers to purchase the bonds. Any
competitive sale of District debt will require approval of the Board. District debt
issued on a competitive bid basis will be sold to the bidder proposing the
lowest true interest cost to the District provided the bid conforms to the official
notice of sale.
5.4 Negotiated Bid Method – A negotiated bond issue will provide for the sale of
debt by negotiating the terms and conditions of the sale, including price,
interest rates, credit facilities, underwriter or remarketing fees, and
commissions. Examples of such sales include:
• Variable rate demand obligations;
• An issue of debt so large that the number of potential bidders would be
too limited to provide the District with truly competitive bids;
• An issue requiring the ability to react quickly to sudden changes in interest
rates (e.g. refunding bonds);
• An issue requiring intensive marketing efforts to establish investor
acceptance;
• An issue of debt with specialized distribution requirements; and
• An issue of debt sold during a period of extreme market disruption or
volatility.
If bonds are sold on a negotiated basis, the negotiations of terms and
conditions shall include, but not be limited to, prices, interest rates,
underwriting or remarketing fees, and underwriting spreads and timing of sale.
The District, with the assistance of its Municipal Advisor, shall evaluate the
terms offered by the underwriting team. Guidelines with respect to price,
interest rates, fees, and underwriting spreads shall be based on prevailing
terms and conditions in the marketplace for comparable issuers, credit
ratings, tenor and paramount.
3010-003 Debt Management Policy Page 7 of 13
If more than one underwriter is included in the negotiated sale of debt, the
District shall establish appropriate levels of liability, participation and priority
of orders. Such levels shall be based upon District policy with regards to the
underwriting responsibility among the team members, the desired allocation
of total fees, and the desired distribution of bonds. Guidelines for establishing
liability, participation, and priority of orders shall be based on prevailing terms
and conditions in the marketplace for comparable issuers.
The District shall, with the assistance of its Municipal Advisor, oversee the
bond allocation process. The bond allocation process shall be managed by
the lead underwriter, with the following requirements:
• The bonds are allocated fairly among members of the underwriting team,
consistent with the previously negotiated terms and conditions;
• The allocation process complies with all MSRB regulations governing
order priorities and allocations;
• The lead underwriter shall submit to the Finance Manager a complete and
timely account of all orders, allocations, and underwriting activities with
the investor names identified as appropriate.
The Finance Manager Services shall require a post-sale analysis and
reporting for each negotiated bond sale. The Municipal Advisor or the lead
underwriter may perform such analysis. A post-sale analysis will include, but
not be limited to:
• Summary of the pricing, including copies of the actual pricing wires;
• Results of comparable bond sales in the market at the time of the District’s
pricing;
• Detailed information on orders and allocation of bonds, by underwriting
firm;
• Detailed information on final designations earned by each underwriter;
and
• Summary of total compensation received by each underwriter.
STRUCTURAL ELEMENTS
5.5 Pledge of Revenues – The District’s pledge of revenues shall be determined
for each debt issue depending upon the debt instrument:
• General Obligation Bonds of the District shall be repaid from voter-
approved property taxes on property within the jurisdiction of the District.
• Certificates of Participation of the District shall be repaid from net
revenues, as defined in the Indenture.
• Revenue Bonds of the District shall be repaid from net revenues, as
defined in the Indenture.
• Loans of the District may be repaid from net revenues of the water and or
wastewater systems, or other financially prudent sources of repayment.
• Assessment Bonds of the District shall be repaid levies or charges
collected within an assessment district formed by the District pursuant to
the Municipal Improvement Act of 1913.
• Special Tax Bonds of the District shall be payable from net special taxes
collected in applicable taxing jurisdiction as a result of the levy of special
taxes.
5.6 Maturity – The District may issue tax-exempt debt with an average life equal
to, but no greater than 125% of, the average life of the assets being financed.
The final maturity of the debt should be no longer than 40 years absent
3010-003 Debt Management Policy Page 8 of 13
compelling circumstances or facts. Factors to be considered when
determining the final maturity of debt include: the average useful life of the
assets being financed, relative level of interest rates, intergenerational equity
and the year-to-year differential in interest rates.
5.7 Maturity Structure – The District’s long-term debt may include serial and
term bonds. Other maturity structures may also be considered if they are
consistent with prudent financial management practices.
5.8 Coupon Structure – Debt may include par, discount and premium. Discount
and premium bonds must be demonstrated to be advantageous relative to par
bond structures taking into consideration market conditions and opportunities.
For variable rate debt, the variable rate may be based on one of a number of
commonly used interest rate indices and the index will be determined at the
time of pricing.
5.9 Debt Service Structure – Debt service may be structured primarily on an
approximate level (combined annual principal and interest) basis. Certain
individual bond issues, such as refunding bonds, may have debt service that
is not level. However, on an aggregate basis, debt service should be
structured primarily on a level basis.
5.10 Redemption Features – In order to preserve flexibility and refinancing
opportunities, District debt will generally be issued with call provisions. The
District may consider calls that are shorter than traditional and/or non-call debt
when warranted by market conditions and opportunities. For each transaction,
the District will evaluate the efficiency of call provision alternatives.
5.11 Credit Enhancement – The District shall competitively procure credit
enhancement for an original sale of bonds if the Finance Manager, in
consultation with the Municipal Advisor and the senior underwriter,
determines that it is cost effective to do so. The Finance Manager may in
consultation with the Municipal Advisor and the senior underwriter determine
that due to certain circumstances a sole source procurement process may be
more advantageous than a competitive process.
5.12 Senior/Subordinate Lien – The District may utilize both a senior and a
subordinate lien structure. The choice of lien will be determined based on such
factors as overall cost of debt, impact on debt service, impact on rates, and
marketing considerations.
5.13 Debt Service Reserve Funds – The District shall provide for debt service
reserve funds to secure District debt when necessary.
6.1 COMMUNICATION AND DISCLOSURE
6.2 Rating Agencies
The District shall maintain its strong ratings through prudent fiscal
management and consistent communications with the rating analysts. The
Finance Manager shall manage relationships with the rating analysts
assigned to the District’s credit, using both informal and formal methods to
disseminate information. Communication with the rating agencies may include
one or more of the following:
• Full disclosure on an annual basis of the financial condition of the District;
3010-003 Debt Management Policy Page 9 of 13
• A formal presentation, at least annually or as becomes necessary to the
rating agencies, covering economic, financial, operational, and other
issues that impact the District’s credit;
• Timely disclosure of major financial events that impact the District’s credit;
• Timely dissemination of the Comprehensive Annual Financial Report,
following its acceptance by the District’s Board;
• Full and timely distribution of any documents pertaining to the sale of
bonds; and
• Periodic tours of the water system operations, as appropriate.
6.3 Bond Insurers
The Finance Manager shall manage relationships with the bond insurers, to
the extent any Debt is so insured, by providing appropriate information.
Communication with other bond insurers shall be undertaken when the
Finance Manager, with the assistance of the District’s Municipal Advisor,
determines that credit enhancement is cost effective for a proposed bond
issue.
Disclosure Reports – The District shall comply with its disclosure
undertakings and make disclosure reports readily available to market
participants though the Electronic Municipal Market Access website.
Web Site – The District may use its website as a tool for providing timely
information to investors.
7.1 REFUNDING POLICIES
The District shall strive to refinance debt to maximize savings and minimize the cost
of funds as market opportunities arise. A net present value analysis will be prepared
that identifies the economic effects of any refunding to be proposed to the Board.
The District shall target a 3% net present value savings for current and 5% for
advance refunding transactions. Upon the advice of the Finance Manager, with the
assistance of the Municipal Advisor and Counsel, the District will consider
undertaking refundings for other than economic purposes, such as to restructure
debt, change the type of debt instruments being used, or to retire a bond issue and
indenture in order to remove undesirable covenants.
7.2 Savings Thresholds – Minimum savings thresholds have been established
to help guide the economic analysis of refunding bonds. The minimum
savings guidelines are applicable on a maturity-by-maturity basis and are
expressed as a percentage of refunded bond par calculated by dividing the
expected net present value savings generated by the proposed refunding by
the par amount of refunded bonds. At the recommendation of the Finance
Manager, with the assistance of the Municipal Advisor, the District may
complete a refunding for net present values savings equal to the target
specified above on an aggregate bond issue basis rather than a maturity by
maturity basis. Generally, the District shall only refund bonds to generate debt
service savings of the specified minimum savings set forth in the previous
paragraph can be achieved.
7.3 Coupon on Refunded Bond – The Finance Manager may take into
consideration whether the coupon on the refunded bond is significantly higher
or lower than the most common outstanding bond coupons of approximately
five percent.
3010-003 Debt Management Policy Page 10 of 13
7.4 General Interest Rate Environment – The Finance Manager may take into
consideration whether the available refunding bond interest rates are
generally high or generally low relative to long-term averages of historical
rates.
7.5 General Interest Rate Outlook – The Finance Manager may take into
consideration the general outlook for future interest rates, as derived from
economic forecasts, market forecasts, implied forward rates, or other
sources.
7.6 Debt Management Considerations – The Finance Manager may take into
consideration debt management issues such as cost and staff efficiencies
associated with combining multiple refunding bond issues or combining
refunding and new money bond issues.
7.7 Call Date – The Finance Manager may take into consideration the amount of
time between the pricing/closing date of the refunding Debt and the call date
of the Debt to be refunded.
7.8 Final Maturity Date – The Finance Manager may take into consideration the
amount of time remaining until the final maturity of the Debt to be refunded.
8.1 REINVESTMENT OF PROCEEDS
8.2 General – The District shall comply with all applicable Federal, State, and
contractual restrictions regarding the use and investment of bond proceeds.
This includes compliance with restrictions on the types of investment
securities allowed, restrictions on the allowable yield of some invested funds,
as well as restrictions on the time period during over which some bond
proceeds may be invested. To the extent that a bond issue is credit enhanced,
the District shall adhere to the investment guidelines of the credit
enhancement provider.
8.3 Requirements of Indenture – The District will comply with all terms and
conditions of the appropriate legal documents related to the Debt. Such
limitations shall include, but not be limited to Investments in the Indenture.
9.10 CREATION AND MAINTENANCE OF FUNDS
The District maintains a number of different funds integral to the long-range financial
planning process. Each of these funds is held for a specific purpose and can
generally be categorized as either an operating, capital or debt reserve fund. The
District will comply with all requirements and limitations created under its Reserve
Policy.
10.1 COMPLIANCE
10.2 Arbitrage Liability Management
The District shall minimize the cost of arbitrage rebate and yield restrictions
while strictly complying with tax law. Because of the complexity of arbitrage
rebate regulations and the severity of non-compliance penalties, the District
shall solicit the advice of bond counsel and other qualified experts about
arbitrage rebate calculations. The District shall contract with a qualified third-
party for preparation of the arbitrage rebate calculation.
3010-003 Debt Management Policy Page 11 of 13
The District shall maintain an internal system for tracking expenditure of bond
proceeds and investment earnings. The expenditure of bond proceeds shall
be tracked in the financial accounting system by issue. Investment may be
pooled for financial accounting purposes and for investment purposes. When
investment of bond proceeds are co-mingled with other investments, the
District shall adhere to IRS rules on accounting allocations.
10.3 Post-Issuance Tax Compliance
The District has adopted Written Procedures to Ensure Compliance with
Requirements for Tax-Exempt Bonds. The District shall comply with such
procedures to maintain the tax-exempt status of District debt obligations or to
maintain eligibility for direct pay subsidy payments, as applicable.
10.4 Continuing Disclosure
The District shall comply with the requirements of each Continuing Disclosure
Certificate entered into at the time of a sale of bonds. Annual information
provided by the District shall mirror the information in any District offering
statement at the time of a primary offering. Annual financial information will
be sent by the District or its designated consultant, within the time required
under the Continuing Disclosure Certificate to the EMMA System This shall
include:
• Comprehensive Annual Financial Report of the District; and
• Updated tables from the Official Statement, as detailed in the Continuing
Disclosure Certificate.
In addition to annual disclosure, the District shall provide ongoing information
about certain enumerated events, as defined by regulation, to the EMMA
System.
The District may engage a firm to assist it in ensuring timely completion and
filing of annual reports and in identifying, and making timely filings with respect
to, the occurrence of reportable enumerated events.
In addition, the District’s Continuing Disclosure Agreements entered into after
February 27, 2019 call for the District to notify investors of the incurrence of
any “financial obligation,” if material, and the District will be obligated to
disclose defaults on, acceleration of and certain other information with respect
to any “financial obligation” regardless of when the financial obligation was
incurred.
Rule 15c2-12 provides a general definition of a “financial obligation.” While
the impetus for the obligation to disclose information about financial
obligations was a perception by the SEC and others that municipal issuers
were increasingly entering into bank or other private placement debt, Rule
15c2-12 defines “financial obligation” more broadly to include “a debt
obligation, derivative instrument K.. or a guarantee of either a debt obligation
or a derivative instrument.”
To date, the SEC has provided limited guidance on the specific application of
the definition of “financial obligation.” The SEC has suggested that a key
concept is that a “financial obligation” involves the borrowing of money. In
public comments, representatives of the SEC have declined to provide a
definition of a “guarantee,” but they did indicate that the SEC will not look to
state law definitions of a “guarantee” or “debt.”
3010-003 Debt Management Policy Page 12 of 13
As described in detail below, the District will need to monitor agreements or
other obligations entered into by the District, and any modifications to such
agreements or other obligations, to determine whether they constitute
“financial obligations” under Rule 15c2-12 and, if material, need to be
disclosed on to investors.
In addition, if the District entity receives a notice of default or an event of
default or of an acceleration, termination event, modifications of or other
similar event on any agreement or other obligation, the District will need to
determine whether such obligation constitutes a “financial obligation”
(regardless of when originally incurred) and whether such default or other
event reflects financial difficulty (i.e., reduction in overall liquidity,
creditworthiness or debt owner’s rights).
Types of agreement or other obligations which are likely to be “financial
obligations” under Rule 15c2-12 include:
a. Bank loans or other obligations which are privately placed;
b. Letters of credit, including letters of credit which are provided to third
parties to secure the District’s obligation to pay or perform;
c. Capital leases for property, facilities or equipment; and
d. Agreements which guarantee the payment or performance
obligations of a third party (regardless of whether the agreements
constitute guarantees under California law).
Types of agreements which could be a “financial obligation” under Rule 15c2-
12 include:
a. Payment agreements which obligate the District to pay a share of
another public agency’s debt service (for example, an agreement with
a joint powers agency whereby the District, agrees to pay a share of
the joint powers agency’s bonds, notes or other obligations);
b. Service contracts with a public agency or a private party pursuant to
which the District is obligated to pay a share of such public agency’s
or private party’s debt service obligation (for example, certain types
of public-private partnership arrangements);
c. Agreements pursuant to which the District is obligated to pay amounts
expressly tied to another party’s debt service obligations, regardless
of whether service is provided or not;
d. Agreements which include a rate component that expressly passes
through debt service or capital obligation of the other party; and
e. Agreements the payments under which are not characterized as an
operation and maintenance expenses for accounting purposes if such
agreements could be characterized as the borrowing of money.
The District General Counsel and/or Finance Manager will notify the District’s
bond counsel and/or disclosure counsel of the receipt by the District of any
default, event of acceleration, termination event, modification of terms (only if
material or reflecting financial difficulties), or other similar events (collectively,
Potentially Reportable Events) under any agreement or obligation to which
the District is a party and which may be a “financial obligation” as discussed
above. Such notice should be provided by the General Counsel or the
Finance Manager as soon as the General Counsel or Finance Manager
receives notice from District staff, consultants or external parties of such event
or receives direct written notice of such event so that the City can determine,
with the assistance of bond counsel and/or disclosure counsel, whether notice
of such Potentially Reportable Event is required to be filed on EMMA pursuant
3010-003 Debt Management Policy Page 13 of 13
to Rule 15c2-12. If filing on EMMA is required, the filing is due within 10
business days of such Potentially Reportable Event to comply with the
applicable Continuing Disclosure Agreement.
The Finance Manager will catalog the execution by the District of any
agreement or other obligation which might constitute a “financial obligation”
for purposes of Rule 15c2-12 and which is entered into after February 27,
2019. Amendments to existing agreements or financial obligations which
relate to covenants, events of default, remedies, priority rights, or other similar
terms should be reported to the District’s bond counsel and/or disclosure
counsel as soon as notice of amendment requests is received by District staff,
consultants, or external parties of such event. Such notice is necessary so
that the District can determine, with the assistance of bond counsel and/or
disclosure counsel, whether such agreement or other obligation constitutes a
material “financial obligation” for purposes of Rule 15c2-12. If such
agreement or other obligation is determined to be a material “financial
obligation” or a material amendment to a “financial obligation” described
above, notice thereof would be required to be filed on EMMA within 10
business days of execution or incurrence.
10.5 Legal Covenants
The District shall comply with all covenants and conditions contained in
governing law and any legal documents entered into at the time of a bond
offering.
11.1 DEBT DATABASE MANAGEMENT
The District shall maintain complete information on its outstanding debt portfolio, in
a spreadsheet or database program format. The information in the database shall
include, but not be limited to, the following:
• Issue Name
• Initial Issue Par Amount
• Dated Date of the Issue
• Principal Maturity Amounts
• Coupon Rate by Maturity
• Amount Outstanding
• Call Provisions
• Purpose of the Issue
• Credit Enhancer, if any
• Competitive or Negotiated Sale
• Names of Underwriting Team Members
The District shall use the debt database for the following purposes:
• Generate reports
• Gross annual debt service
• Net annual debt service
• Refunding Analyses
• Output to Fund Accounting System
ITEM NO. 8.1
AGENDA REPORT
Meeting Date: June 25, 2019
To:Board of Directors
From:Marc Marcantonio, General
Manager
Presented By:Delia Lugo, Finance Manager Dept:Finance
Prepared By:Delia Lugo, Finance Manager
Subject:Financial Reserves Policy for Fiscal Year 2020
STAFF RECOMMENDATION:
That the Board of Directors approve Resolution No. 2019-XX adopting a Financial Reserves Policy
for Fiscal Year 2020 and rescinding Resolution No. 18-24.
DISCUSSION:
Attached is the proposed Financial Reserves Policy for Fiscal Year 2020.
Maintaining adequate reserves is an essential aspect of sound financial management. Being
fiscally prudent involves funding reserves to levels that enable the District to provide reliable service
to our customers, maintain infrastructure for current and future customers, finance capital projects,
as well as capital repair and replacement, and the provide the ability to respond to changing
circumstances.
Upon review of the District's current reserve balances and the approved FY20 Operating and
Capital Improvement Project Budgets, staff is recommending that the funding of all listed reserves
be set at least to the recommended minimum target levels.
In order for the District to maintain its current AA and AA+ ratings, it is recommended that the total
"unrestricted" water reserve balance be at least $30.4 million by June 30, 2020 to maintain the
minimum required 365 days in cash calculation.
ATTACHMENTS:
Name:Description:Type:
Resolution_No._2019-XX_-_Reserves_Policy.docx Resolution Resolution
Financial_Reserves_Policy.docx Exhibit Exhibit
Resolution No. 2019-XX Adopting the Financial Reserves Policy for Fiscal Year 2020 1
RESOLUTION NO. 2019-XX
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE YORBA LINDA WATER DISTRICT
ADOPTING THE FINANCIAL RESERVES POLICY FOR
FISCAL YEAR 2020 AND RESCINDING RESOLUTION NO. 18-24
WHEREAS, the purpose of the Yorba Linda Water District’s (YLW D) Financial
Reserves Policy is to ensure that the District continues to have sufficient
funding available to meet its operating, non-operating, capital and debt
service obligations; and
WHEREAS, adequate reserves and sound financial policies maintain YLWD’s bond
ratings in the capital markets, provide financing flexibility and sustain debt
covenant compliance; and
WHEREAS, the District has completed a comprehensive Asset Management Plan and
has prepared a rate study and five-year financial plan; and
WHEREAS, the Financial Reserves Policy recommends establishing various reserve
categories, defines the purpose and use of these funds and identifies
target levels and priority funding of the reserves; and
WHEREAS, the Board of Directors desires to adopt a new Financial Reserves Policy
for Fiscal Year 2020.
NOW THEREFORE, the Board of Directors of the Yorba Linda Water District does find,
determine, and resolve:
Section 1. That effective July 1, 2019 Policy No 3010-005 is hereby adopted to read
as attached hereto and by this reference incorporated herein.
Section 2. That Resolution No. 18-24 is hereby rescinded effective July 1, 2019.
Resolution No. 2019-XX Adopting the Financial Reserves Policy for Fiscal Year 2020 2
PASSED AND ADOPTED this 25th day of June 2019 by the following called vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Brooke Jones, Board President
Yorba Linda Water District
ATTEST:
Annie Alexander, Board Secretary
Yorba Linda Water District
Reviewed as to form by General Counsel:
Andrew Gagen, Esq.
Kidman Gagen Law LLP
3010-005 Financial Reserves Policy Page 1 of 5
Policies and Procedures
Policy No.: 3010-005
Adoption Method: Resolution No. 2019-XX
Effective Date: July 1, 2019
Last Revised: June 25, 2018
Prepared By: Delia Lugo, Finance Manager
Applicability: District Wide
POLICY: FINANCIAL RESERVES
1.0 GENERAL POLICY
Maintaining adequate reserves is an essential part of sound financial
management. The Yorba Linda Water District Board of Directors realizes the
importance of reserves in providing reliable service to its customers, well-
maintained infrastructure for current and future customers, financing capital
projects as well as capital repair and replacement, and the ability to respond to
changing circumstances. Interest derived from reserve balances shall be credited
to the reserve account from which it was earned.
2.0 CATEGORIES
Yorba Linda Water District (YLWD or District) shall accumulate, maintain and
segregate its reserve funds into the following categories:
• Board Designated Unrestricted Reserves; and
• Board Designated Restricted Reserves.
3.0 SCOPE
This policy will assist the Board of Directors in establishing:
• Minimum and Maximum Funding Levels, with target goals as a percentage
of maximum funding level for each reserve fund, unless otherwise noted;
• Requirements for the use of reserve funds; and
• Periodic review requirements for each reserve.
4.0 PERIODIC REVIEW
Staff and the YLWD Board shall review the reserve balances and targets annually
as a part of the annual budget process. The Finance Staff will continue to review
all reserve and investment balances monthly, with a quarterly report going to the
full Board. Any changes must be approved by resolution of the District Board of
Directors. Changes can include, but are not limited to, establishment of additional
reserve funds, changes in reserve target levels, and changes in types of reserve
categories.
3010-005 Financial Reserves Policy Page 2 of 5
5.0 DESIGNATED UNRESTRICTED AND RESTRICTED RESERVES
5.1 Board Designated Unrestricted Reserves
These are reserve funds earmarked for the purpose of funding such items as
new capital facilities, repair or replacement of existing facilities, and general
operating reserves designated for a specific purpose and use by the Board
of Directors. All reserves in this category will be funded at least to the
recommended minimum level. As a means for the District to retain its AA and
AA+ ratings, the targeted total reserve balance is 365 days in cash at the end
of the fiscal year.
5.1.1 Operating Reserve
A. Definition and Purpose – Established to cover temporary cash
flow deficiencies that occur as a result of timing differences
between the receipt of operating revenue and expenditure
requirements and unexpected expenditures occurring as a
result of doing business.
B. Funding Level – The District’s current funding levels will be a
minimum of 25% and a maximum of 50% of the annual
operating budget, including interest expense, for both the
water and sewer funds. In the event this fund falls below its
minimum funding level, the Board will act to restore the
balance above the minimum funding level within twelve (12)
months from the date that the fund fell below the minimum
level.
C. Events or Conditions Prompting the Use of the Operating
Reserve – This reserve may be utilized as needed to pay
outstanding operating expenditures prior to the receipt of
anticipated operating revenues.
5.1.2 Emergency Reserve
A. Definition and Purpose – Established to provide protection
recovery to the District and its customers for losses arising
from an unplanned event or circumstance (i.e. fires,
earthquakes or financial emergencies). The reserve level
combined with YLWD’s existing insurance policies should
adequately protect YLWD and its customers in the event of a
loss.
B. Funding Level – Established at a minimum level equal to 5%
and a maximum level equal to 10% of the net capital assets
Levels Water Sewer
Minimum 25% 25%
Maximum 50% 50%
Levels Water Sewer
Minimum $7,608,171 $440,587
Maximum $15,216,343 $881,175
3010-005 Financial Reserves Policy Page 3 of 5
for both the District’s water and sewer funds. In the event this
fund falls below its minimum funding level, the Board will act
to restore the balance above the minimum funding level within
twelve (12) months from the date that the fund fell below the
minimum level.
C. Events or Conditions Prompting the Use of the Emergency
Reserve – This reserve shall be utilized to cover unexpected
losses experienced by the District as a result of a disaster or
other unexpected loss. Any reimbursement received by the
District from insurance companies as a result of a submitted
claim shall be deposited back into the reserve as
replenishment for the loss.
5.1.3 Capital Replacement Reserve
A. Definition and Purpose – Established to provide funding for
general use on capital projects as well as capital repair and
replacement funding as the District’s infrastructure
deteriorates over its expected useful life. In addition, funding
is to provide for non-scheduled capital asset repair and
replacement and other capital related expenses.
B. Funding Level – The minimum target level for each reserve
fund is the current Fiscal Year capital budget and the
maximum is the current year plus 100% of the subsequent
Fiscal Year capital budget. The target levels in these reserve
funds will fluctuate depending on the capital improvement
plan and timing of the projects. Therefore, no target level will
be established. In the event these fund falls below the
minimum funding level, the Board will act to restore the
balance above the minimum funding level within twelve (12)
months from the date that the fund fell below the minimum
level.
C. Events or Conditions Prompting the Use of the Capital
Replacement Reserve – Through the annual budget process,
staff shall recommend anticipated asset replacement and
capital improvement projects. The Board of Directors shall
take action to approve recommended project appropriations
from the capital replacement reserve. Should unplanned
replacement be necessary during any fiscal year, the Board
Levels Water Sewer
Minimum 5% 5%
Maximum 10% 10%
Levels Water Sewer
Minimum $5,799,234 $1,914,347
Maximum $11,598,468 $3,828,694
Levels Water Sewer
Minimum $3,204,425 $1,084,045
Maximum $7,314,221 $1,909,045
3010-005 Financial Reserves Policy Page 4 of 5
of Directors may take action to amend the budget and
appropriate needed funds as required.
5.1.4 Rate Stabilization Reserve
A. Definition and Purpose – Established to assist in smoothing
out water rate increases. This reserve is governed by the
District’s bond covenants and funds deposited into this
reserve are treated as operating revenues in the fiscal year
designated by the District and will be treated as such in fiscal
years of such designation for the purposes of computing the
District's debt service coverage ratio.
B. Funding Level – Established at a minimum level of 5% and
maximum level of 20% of budgeted water sales for the current
fiscal year. The Board of Directors have the option of funding
the Rate Stabilization Reserve at a lower level.
C. Events or Conditions Prompting the Use of the Rate
Stabilization Reserve – The reserve can be used during any
year where other revenues are not sufficient to meet the
required debt service coverage ratio or when the maximum
level in the reserve is reached.
5.2 Board Designated Restricted Reserves
These are funds held to either satisfy limitations set by external requirements
established by creditors, grant agencies or law, or to Only be used for
Examples include stipulated bond covenants and reserves held with a fiscal
agent.
5.2.1 Conservation Reserve
A. Definition and Purpose – Established to provide funding for
District-wide conservation efforts.
B. Funding Level – Funding shall be established as the net result
of administrative penalties assessed less allowed
expenditures of each fiscal year.
C. Events or Conditions Prompting the Use of the Conservation
Reserve – This reserve may be used to fund district-wide
conservation efforts in relation to, but not limited to, salary and
Levels Water
Minimum 5%
Maximum 20%
Levels Water
Minimum $1,666,354
Maximum $6,665,415
Levels Water
Minimum $0
Maximum $102,713
3010-005 Financial Reserves Policy Page 5 of 5
related, maintenance, and material expenses for leak
detection, conservation efforts, and other allowable expenses
outside the normal cost of service for each fiscal year.
5.2.2 Employee Liability Reserve
A. Definition and Purpose – The purpose is to cover employees’
accrued vacation and other compensatory time and to ensure
the complete funding associated with the liability incurred for
employees whom have met the requirements necessary for
district paid health benefits at retirement.
B. Funding Level – Funding for FY20 shall be established at a
minimum target level of $281,979.
C. Events or Conditions Prompting the Use of the Employee
Liabilities Reserve – This reserve may be used in the event
that operating funds are not adequate to meet vacation,
compensatory and sick time paid out or retiree medical cost
obligations within the current year.
Level Water Sewer
Target $254,103 $27,876
ITEM NO. 9.1
AGENDA REPORT
Meeting Date: June 25, 2019
Subject:OC LAFCO’s Election for Special District Regular and Alternate
Representatives (Jones)
ATTACHMENTS:
Name:Description:Type:
LAFCO_Ballot.pdf Backup Material Backup Material
BALLOT
REGULAR SPECIAL DISTRICT MEMBER
Orange County Local Agency Formation Commission
Term of Office Expires 06/30/2020
Yorba Linda Water District
____________________________________________________
Print Name of District
Certification of Voting Member
I, , hereby certify that I am: Print Name Here
the presiding officer of the above-named district.
a member of the Board of the above-named district designated to vote in the absence of the
presiding officer pursuant to G.C. §56332(a). I have submitted proof of this designation to
the Executive Officer of OC LAFCO.
Signature Date
CANDIDATES FOR REGULAR SPECIAL DISTRICT MEMBER OF OC LAFCO:
(Check one ONLY.)
_______ James Fisler, Mesa Water District
_______ Saundra Jacobs, Santa Margarita Water District
_______ Abstain
Elect James R. Fisler to OC LAFCO
* KNOWLEDGE * EXPERIENCE * COMMITMENT *
James R. Fisler – Mesa Water District Director
• Orange County Local Agency Formation Commission
(OC LAFCO) Special District Alternate Commissioner,
2011-present
• Independent Special Districts of Orange County (ISDOC)
Executive Committee – Immediate Past President;
President, 2016-2018
• Mesa Water District Director, 2009-present;
President, 2012-2014
• Mesa Water District Improvement Corporation President,
2010-2012 & 2017-present; Engineering & Operations
Committee Chairman; Legislative & Public Affairs Committee
Vice Chairman
• Association of California Water Agencies Local Government Committee, 2016-present
• County of Orange Housing & Community Development Commission, 2017-present
(appointed by the Orange County Board of Supervisors)
• City of Costa Mesa
o Planning Commissioner & Vice Chairman
o Parks & Recreation Commissioner
o Finance Committee Chairman; Finance & Pension Advisory Committee Chairman
o Residential Rehabilitation & Redevelopment Committee
o Citizen’s Police Academy graduate; Neighbors for Neighbors volunteer
• Costa Mesa Chamber of Commerce Board Member
• Costa Mesa Senior Center Board Member
• Friends of Costa Mesa Libraries Board Member
As your advocate at OC LAFCO over the past 8 years, James R. Fisler has been a strong leader and
voice for Special Districts. Director Fisler is grateful to have been elected to serve as your
representative at both OC LAFCO and ISDOC.
With a passion for public policy and community service, Director Fisler is committed to representing
the mutual interests of Orange County’s water, wastewater, sanitary, cemetery, library, vector control,
recreation and parks, and other special districts that provide services to their communities.
Director Fisler is a Broker/Associate with Torelli Realty in Mesa Verde. Prior to that, he was a regional
manager for Nordstrom for over 12 years. Both positions have equipped him with the skills and
expertise to provide outstanding customer service in advocating for your interests in alignment with
the shared interests of Orange County’s Special Districts and those we serve.
Director Fisler would be honored to receive your vote to serve as Commissioner representing Orange
County’s Special Districts.
AIV
May 15, 2019
MesaWNater RE: Declaration of Candidacy of James R. Fisler for OC LAFCO
D I STR I CTO representing the Special Districts of Orange County
Dedicated to It has been my honor to serve on the Orange County Local Agency Formation
Satisfying our Community's Commission (OC LAFCO) as your Special District Alternate Commissioner for the
last 8 years, having been elected by the Independent Special Districts Selection
Water Needslast
in 2011 and re-elected in 2014 and 2018.
In April 2019, one of the two Special District voting members resigned from
the Commission. I am announcing my candidacy to fill this vacated seat.
BOARD OF DIRECTORS During my service as an Alternate Commissioner, I have sat on the dais and
Shawn Dewane participated fully in all OC LAFCO discussions on all agenda items, and thus have
President broad knowledge of the OC LAFCO process and experience as a Commissioner.
Division V As such, I am the most experienced and qualified candidate.
Marice H. DePasquale I have been an effective Commissioner at OC LAFCO who has positively
Vice President influenced decisions that have benefitted and protected special districts and local
Division III control. I have been a strong advocate for the Special Districts of Orange County
Jim Atkinson on OC LAFCO, as well as at the Independent Special Districts of Orange County
Director (ISDOC) where I served as President in 2017 and 2018.
Division IV
I have personally visited all of the Special Districts in Orange County multiple
Fred R. Bockmiller, P.E. times over the past 8 years. It would be a distinct honor to serve Orange County's
Director Special Districts as a full voting member at OC LAFCO to ensure the economical,
Division I effective, and efficient delivery of government services to the public.
James R. Fisler
Director There are some who want to "regionalize" this election by saying this seat must go
Division II to someone from "South County" due to ongoing and future development of
Rancho Mission Viejo. This is a flawed premise since OC LAFCO is strictly
prohibited from making land use development decisions. Those development
decisions are made by the local governing agency. In the case of Rancho Mission
Viejo, the entities involved in development there are the OC Planning Commission
Paul E. Shoenberger, P.E. and the OC Board of Supervisors. OC LAFCO's role will be looking at future
General Manager optimal governance structure and identifying the Special Districts that will provide
the area's water and wastewater services.
Denise Garcia
District Secretary Additionally, the approved OC LAFCO work plan has a multitude of projects
Marwan Khalifa, CPA, MBA located throughout Orange County, not just South Orange County. Feel free to
District Treasurer contact me at 714.423.4351 with any questions concerning the OC LAFCO role at
Rancho Mission Viejo or the remaining 27 unincorporated islands located
Atkinson, Andelson, throughout Orange County including large islands in Anaheim and North Tustin.
Loya, Ruud &Romo
Legal Counsel Please review my enclosed statement of qualifications. Thank you for your
consideration of my knowledge, experience, and commitment when you vote for
this very important seat.
Sincerely,
1965 Placentia Avenue
Costa Mesa, CA 92627
tel 949.631.1200
fax 949.574.1036
info@MesaWater.org James R. Fisler
Mesawater.org Mesa Water Director
BOARD QF DIRECTORS
SAUNDRA F.JACOBS BETTY H.OLSON,PH.D
CHARLEY WILSON CHARLES GIBSON
JUSTIN McCUSKER
DANIEL R.FERCNS
GENERAL MANAGER
Santa Maugap-ita Waterz District
Dear OC LAFCO Special District Members:
I am delighted to announce my candidacy for Special District Representative to the Orange County
Local Agency Formation Commission("LAFCO"). I would be honored to receive your district's
support to elect me as your next LAFCO Commissioner.
In the next few years, LAFCO will be called on to address a host of issues on the governance in
our county particularly as it relates to special districts. From the planned schedule of Municipal
Service Reviews to the ultimate governance of the remaining unincorporated areas of the county—
many of which are in south Orange County where I currently serve on the Board of the Santa
Margarita Water District; there is much work to be done.
My passion for public service and the work of special districts comes from my 23 years on the
Santa Margarita Water District Board. As your President of the Executive Committee for the
Independent Special Districts of Orange County I have a keen interest and awareness of the needs
and requirements for the success of all special districts—from library, cemetery and vector control
districts,to water,sewer,and other community services,both non-enterprise and enterprise. I hope
that I have adequately demonstrated my willingness to provide leadership in organization, advo-
cacy, and communications to benefit and nurture special districts of every stripe and that I am fully
prepared to step in the role of LAFCO Commissioner.
I have enclosed some background information on my experience in public service and business as
well as my platform as a candidate for LAFCO Special District Representative. I would be de-
lighted to discuss my candidacy with you and your board colleagues further and answer any ques-
tions you may have. I hope you will contact me at 949/702-1145 or at saundraiaa,smwd.com. It
would be my honor to serve you and our organizations and I humbly ask for your vote and support.
Sincerely,
Saundra F. Jacobs, resident
Santa Margarita Water District
Santa Margarita Water District-26111 Antonio Parkway,Rancho Santa Margarita,CA 92688
www,SMWD.cotn - (949)459-6420
BOARD OF DIRECTORS
SAUNDRA F.JACOBS
Santamarzoarzi to B TTY CHARLES T.G1aSON
CHARLEY WILSON
Watem Dista ict JUSTIN McCUSKER
DANIEL R.FERONS
GENERAL MANAGER
Saundra F. Jacobs
Candidate for
Special District Representative,
LAFCO
Special District Organizations
• President, Santa Margarita Water District, (Current; Elected Board Member since
1996)
• President, Executive Committee, Independent Special Districts of Orange
County, (Current; Board Member since 1999)
• South Orange County Watershed Management Area Executive Committee,
(Current Member, Former Chair)
• California Special Districts Association, Member
• Association of California Water Agencies (ACWA), Region 16 Member,
Communications Committee
• ACWA Joint Powers Authority, Executive Committee Member
• Former President, Board of Directors, Lake Mission Viejo Association
Professional O raa n izati ons
• Registered Environmental Assessor
• American Planning Association, Member
• Association of Environmental Professionals, Member
• California Wireless Association, Member
Platform
I believe LAFCO is a facilitating organization. Its job is to support and enable cooperative
and voluntary applications and conduct the reviews and inquiries required by statute
without bias or favor. I believe in local control; that local communities know what is best
for their ratepayers, their residents and their businesses. I do not support involuntary
consolidations or dissolutions of special districts or other units of government except in
extreme cases of insolvency or other dire circumstances.
Santa Margarita Water District• 111 I Antonio Parkway,Rancho Santa Margarita,CA 92688
www.SMWD.com 0 (949)459-6420
BALLOT
ALTERNATE SPECIAL DISTRICT MEMBER
Orange County Local Agency Formation Commission
Term of Office Exuires 06/30/2022
Yorba Linda Water District
Print Name of District
Certification of Voting Member
hereby certify that I am:
Print Name Here
the presiding officer of the above-named district.
a member of the Board of the above-named district designated to vote in the absence of the
presiding officer pursuant to G.C. §56332(a). I have submitted proof of this designation to the
Executive Officer of OC LAFCO.
Signature Date
CANDIDATES FOR ALTERNATE SPECIAL DISTRICT MEMBER OF OC LAFCO:
(Check one ONLY.)
Cecilia Aguinaga, Orange County Mosquito &Vector Control District
Kathryn Freshley, El Toro Water District
Margie L. Rice, Midway City Sanitary District
Abstain
May 20, 2019
TO WHOM IT MAY CONCERN:
I'm writing you to officially announce my candidacy for Special District Alternate
Representative to the Orange County Local Agency Formation Commission (LAFCO). I
would be honored to receive your support to elect me as your LAFCO representative.
As your LAFCO commissioner, I will make sure that transparency, honesty and integrity
will be in place to continue serving our communities.
I have attached to this letter my resume and biography of my 25 years of experience
volunteering in different boards and commissions serving the community. Especially the
many years I have served in the Orange County Mosquito Vector control (OCMVCD)
Special district will give the experience need it to be part of the LAFCO board.
As your LAFCO Representative, I will make sure to preserve local control, to respect the
rights of our constituents. I will be honor to have your vote. If you have any questions,
please don't hesitate to call me, or email me.
Best Regards,
KI
Cecilia Aguinaga
REALTOR@Roman Realtors
BRE#01936111
P: 714-478-2918
W: ceciliaaauinaua2019(&amail.com
P: ceciaguinaga@msn.com
CECILIA AGUINAGA
BIOGRAPHY
REALTOR@ROMAN REALTORS
Contact Information
Phone: (714) 478-2918
Emails:
Personal:ceciaguinaga@msn.com
Work: ced1iaaguinaga2019@gmai1.com
Website: ceciliaaguinaga.com
Education: Associate of Arts Degree (Santa Ana College, Santa Ana CA)
Cecilia was born in Jalisco, Mexico and
r immigrated to the United States in 1918. She has
lived with her husband, Armando Aguinaga, in
the city of Santa Ana for more than 37 years.
Cecilia and her husband have two sons (Ramsey
- and Allan) and a daughter (Sylvia). Ramsey
served proudly as a police officer for both Santa
Ana and Los Angeles Police Departments.
Unfortunately he passed of Sarcoma Cancer
February 15 2o18. Allan graduated from the
Culinary School of the Arts. He is now working as
a Chef at Farmhouse Restaurant at Roger
Gardens. Their daughter Sylvia graduated from
the University of California, Berkeley, with a
degree in Psychology. Sylvia obtained her
master's degree in Information Science from San
Jose State University and is currently a Program
Manager for a nonprofit organization aimed to
train teachers to teach computer science. Cecilia and her husband have owned a business
for more than 6o years in the City of Santa Ana.
After helping her husband manage the business,Cecilia became interested and devoted to
helping children become successful in school. She identified with the local population
and realized that many students faced difficulties with language barriers, financial
hardships, and crime. Cecilia did not want students to have the limitations that she
encountered herself and wanted to help provide students more opportunities. She started
working for the District of Santa Ana in 1994 as an Instructional Teacher Assistant at the
elementary level. She was promoted to a Bilingual Special Education Teacher Assistant at
the high school level where she worked for 7 years. She was promoted to Bilingual
Community Worker, and later received a promotion as a School Police Parent
Coordinator. She worked for the District of Santa Ana for 15 years.
Cecilia was appointed to the Human Relations Commission of the City of Santa Ana from
2004-2009. She served as a Chair and later, Vice Chair of the Human Relations
Commission. In this role, she presided over the selection of social services programs and
funds, to improve the quality of life in the City of Santa Ana.
Cecilia also served on the board of the Housing Redevelopment Commission as a Chair,
Vice-Chair, and commissioner for the City of Santa Ana. In this role, she continued
participating in the selection of social programs and funds to help the community, as well
as helping people who can't afford housing.
Cecilia was the first woman President of the Lions Club of the City of Santa Ana. As a
Lions Club member, she devoted herself to helping the children of Santa Ana with eye
issues.
Cecilia has served as President, Vice President, Parliamentarian, Historian, Ways and
means, and she is currently an active member of the PTA (Parent Teachers Association)
Council for The Santa Ana Unified School District. This inspired her to become an
advocate for parents and their children. She was a board member of the executive board
for LYLI Latino Youth Leadership Institute organization to help high school students
become leaders within their community.
Cecilia was also very involved in school and community programs including but not
limited to the following:
• English Language Advisory Committee (ELAC),
• District Language Advisory Committee (DELAC) Puente,
•Advancement Via Individual Determination (AVID),
• Santa Ana High School Site Council,
• SAUSD Workability and Transition Partnership Program,
• Floral Park Neighborhood Association,
• Bristol-Warner Neighborhood Association,
• Central-Mid City Neighborhood Association,
• Delhi Neighborhood Association,
• Fairlawn Gardens Neighborhood Association,
• Com-link Neighborhood Associations
During her service with the Santa Ana Unified School District, she has learned about
student needs and has a solid understanding of the issues that need attention in
education. Her participation on the following boards and committees have given her
extensive experience and knowledge in the field of education:
• Public Relations Coordinator for the Executive Board Association of Mexican
American Educators (AMAE)
• Santa Ana Unified School District Superintendent Classified Cabinet Representative
• Santa Ana Unified School District Vice President of the Parent Teachers and Students
Association (PTSA) at Santa Ana High School
• Parent Teacher Association (PTA) Council, Historian and Parliamentarian for the
Santa Ana Unified School District
• CSEA cite representative and active member of her union to protect the rights of her
fellow workers
Cecilia has attended numerous trainings and workshops that have given her a good
understanding of the legal system to better help the Santa Ana Communities.
Gang Prevention Conference (Washington D C)
Site Council Conferences (Sacramento)
PTA Conferences (Sacramento, San Jose, etc.)
CSEA Conferences (Las Vegas, San Jose, Sacramento, etc.)
Leadership Conferences (Las Vegas, Long Beach, Sacramento, Washington D C., etc.)
Cecilia currently serves on the following boards:
❖ OCVC (Orange County Vector Control), appointed by the mayor and the city
council to represent the city of Santa Ana. This agency is dedicated to
protecting the public health by controlling rats, flies, mosquitoes, and other
vector related problems.
❖ Currently Housing Redevelopment Commissioner to allocate the funding given to
the city to distributed to the non-profit organizations to help the community.
❖ Active member of YMTF (Young Motivation Task Force) to motivate students
to pursue their education.
❖ Executive Committee Board of the Regional Occupational Program (ROP) for
the Santa Ana Unified School District. In this position she advises on how to
operate and improve the program. This position enables her to help students
who can't or do not want to pursue higher education.
❖ Current Life Member, of UMAVA. She has served four years as a Secretary on
the executive board of UMAVA(United Mexican American Veterans
Association), to help and honor the veterans who fight for our country.
❖ Former Vice-Chair of the board of Parks and Recreation representing the City
of Santa Ana. In this capacity she was one of the decision maker to created
programs to improved Parks and Recreations.
❖ Former board member of Measure Q for the Santa Ana College to represent
the tax payers and make sure that the money is invested correctly.
�+ y
EI Tara Water District
" A District of Distinction "
Serving the Public - Respecting the Environment
May 21, 2019
CANDIDANCY OF KATHRYN FRESHLEY FOR OC LAFCO,AS THE
ALTERNATE SPECIAL DISTRICTS MEMBER
Special District Directors,
- I served on the Orange County LAFCO as the Alternate Public Member for two years,
July 2015 through July 2017. As a result,I have a good understanding of the role of the
Alternative Special District Member of the commission. California LAFCO's have a
unique responsibility to rationalize and evaluate governance of communities and
service providers in this state. Having participated in the CALAFCO Annual
Conferences and Southern district meetings, I leaned that each county LAFCO has
-- . .. similar issues and additionally, unique challenges relating to their location in the state.
Legislation creating the commissions is the same, the focus of each commission differs
because the needs of each county are different. This leads to questioning the processes
and objectives by other government organizations, such as, The Little Hoover
Commission and the OC Grand Jury. The LAFCO commissioners need to expand their
communication and to ensure a greater understanding of LAFCO's role in our
governmental processes.
�s
The legislative delegated responsibilities are intended to facilitate rational development
and effective delivery of services to our citizens. As the Special District Alternative
Representative, it is critical to review and participate, as appropriate MSR's and SOI j
studies that will be conducted in 2019 and 2020. These reviews are critical to providing
guidance to opportunities of shared services between agencies,as well as ensuring the
suggested proposed opportunities that will fulfill the needs of our customers and the
agencies involved.
Therefore, my previous service provides me an understanding of OC LAFCO'S role as j
a county commission and effective advocate for the Special District Agencies in
Orange County.
I ask for your support and thank you for considering me.
�' . Respectively,
i
Kathryn Freshley
4"^
P.O. Box 4000 ® Laguna Hills, CA 92654-4000 • Phone 949.837.7050 ® Fax 949.837.7092
www.etwd .com
gig 1 2019 Board of Directors
Chi Charlie Nguyen
Sergio Contreras
AI Krippner
Andrew Nguyen
Margie L.Rice
1 General Manager
Ken Robbins
Margie L. Rice is in her 29t11 year serving on the Board of Directors for the Midway City
Sanitary District (MCSD). Director Rice was first elected in November of 1990 and has
served as its President, President Pro-Tem, Secretary and Treasurer. Director Rice has also
served as the Districts representative to the Orange County Sanitation District, the
Westminster Chamber of Commerce, California Special Districts Association and California
Association of Sanitation Agencies. I was also appointed by Janet Nguyen to serve on the
Orange County Waste Management Commission for four years.
Director Rice has been instrumental in the following projects for the District: the
reorganization of the Garden Grove/Midway City Sanitary District, rehabilitation of all four
of the Districts lift stations (completed in 2008), and installation of a SCADA system to
monitor the upgraded lift stations. MCSD was one of the first Districts to transform to an
automated solid waste collection system, and implementation of a SSMP (Sewer System
Master Plan) before it was mandated and many other projects to benefit the District and its
patrons. The MCSD not only boasts of a state of the art system but is proud of having some
of the lowest rates in the region.
Director Rice served 12 years as Mayor of the City of Westminster (elected for a sixth time
in November 2010). In addition, Director Rice has served an additional eight (8) years as a
City Council Member. Prior to her service to the City of Westminster Director Rice served
seventeen and a half(17 '/2) years as a Trustee of the Westminster School District. She has 4
children, 19 grandchildren, 24 great grandchildren, and 13 great-great grandchildren.
When Special Districts were first given the right for representation on LAFCO, a committee
was formed to advise them, and I was appointed to that committee. As this is my last term on
our Board at MCSD, I would like to serve as the Alternate Special District Member for OC
LAFCO.
Thank you for your consideration,
Margie L. Rice
14451 Cedanvood Avenue • Westminster,California 92683 • (714)893-3553 • Fax(714)891-8624
www.mcsandst.com
ITEM NO. 9.3
AGENDA REPORT
Meeting Date: June 25, 2019
To:Board of Directors
From:Marc Marcantonio, General
Manager
Presented By:Delia Lugo, Finance Manager Dept:Finance
Prepared By:Saira Hernandez, Accountant
Subject:Budget to Actual Reports for Month Ending May 31, 2019
DISCUSSION:
For the month ending May 31, 2019, staff is presenting Budget to Actual Reports for the District as a
whole, as well as the individual water and sewer funds.
Cumulative Volumetric Water Revenue, as reported through the month ending May 31, 2019,
reflects an average decrease of 11.48% as compared to the prior year for the same reporting
period.
Total Variable Costs results, as reported through the month ending May 31, 2019, reflect a 11.61%
decrease when compared to prior year for the same reporting period. The decrease in costs is
predominantly reflective of the decrease in total water demand, which as reported, is 11.65% below
that of prior year.
STRATEGIC PLAN:
G2 3B - Regularly assess net position and steps to meet strategic goals.
ATTACHMENTS:
Name:Description:Type:
Financial_Reports_May_19.pdf Backup Material Backup Material
FY19 Annual
Budget
YTD Actuals thru
May 2019
YTD % of
Budget
Water Revenue (Residential)16,592,437$ 12,701,851$ 76.55%
Water Revenue (Commercial & Fire Det.)1,964,205 1,559,086 79.37%
Water Revenue (Landscape/Irrigation)3,863,805 3,160,600 81.80%
Service Charges 10,116,528 9,207,081 91.01%
Other Operating Revenue 827,887 853,605 103.11%
Total Operating Revenue 33,364,861 27,482,223 82.37%
Revenue (Non-Operating):
Interest 310,000 587,831 189.62%
Property Taxes 1,850,000 1,843,257 99.64%
Other Non-Operating Revenue 605,346 830,732 137.23%
Total Non-Operating Revenue 2,765,346 3,261,820 117.95%
Total Revenue 36,130,207$ 30,744,043$ 85.09%
Expenses (Operating):
Variable Water Costs (G.W., Import & Power)
Water-Related Costs 12,247,280$ 9,766,685$ 79.75%
Fixed Costs 1,188,085 674,251 56.75%
Power-Related Costs 1,358,012 1,567,830 115.45%
Variable Water Costs Related Expenses Total 14,793,377 12,008,767 81.18%
Salary Related Expenses 9,931,772 8,318,865 83.76%
Reduction for Capital Project Labor (279,000) (247,086) 88.56%
Salary Related Expenses Total 9,652,772 8,071,779 83.62%
Supplies & Services
Communications 159,120 140,306 88.18%
Contractual Services 475,966 340,980 71.64%
Data Processing 285,129 236,273 82.87%
Dues & Memberships 82,077 74,056 90.23%
Fees & Permits 264,546 234,063 88.48%
Board Election 69,750 52,742 75.62%
Insurance 281,967 244,404 86.68%
Materials 658,714 788,098 119.64%
District Activities, Emp Recognition 43,013 28,893 67.17%
Maintenance 432,971 418,281 96.61%
Non-Capital Equipment 136,294 123,538 90.64%
Office Expense 40,343 33,649 83.41%
Professional Services 475,804 328,022 68.94%
Training 67,188 35,648 53.06%
Travel & Conferences 125,279 75,081 59.93%
Uncollectible Accounts 2,790 2,501 89.63%
Utilities 169,911 162,359 95.56%
Vehicle Expenses 316,262 261,012 82.53%
Supplies & Services Sub-Total 4,087,123 3,579,906 87.59%
Total Operating Expenses 28,533,272 23,660,452 82.92%
Expenses (Non-Operating)
Other Expense 8,600 (120) -1.39%
Total Non-Operating Expenses 8,600 (120) -1.39%
Total Expenses 28,541,872$ 23,660,332$ 82.90%
Net Revenues 7,588,335 7,083,710 93.35%
Less: Debt Service (Principal & Interest)2,738,258 2,738,256 100.00%
Less: Committed Capital Expenditures (PayGo)4,484,500 3,003,699 66.98%
Transfer to/(from) Reserves 365,577 1,341,755 367.02%
Net Total -$ -$
Yorba Linda Water District
Water Enterprise
FY19 ProForma - Use of Funds
May 2019
1
Yorba Linda Water District
Summary Financial Report
Water & Sewer Funds
For Period Ending May 31, 2019
Annual YTD May YTD YTD Actual Prior Year Prior Year YTD Actual YTD Actual
Budget Budget Actual Actual (Under) Over May Actual Actual (thru vs vs
FY19 FY19 FY19 FY19 YTD Budget FY18 May 2018)PY Actual $PY Actual %
Revenue (Operating):
Water Revenue (Residential)16,592,437$ 14,997,904$ 1,431,838$ 12,701,851 (2,296,053)$ 1,540,174$ 14,187,504$ (1,485,653)$ -10.47%
Water Revenue (Commercial & Fire Det.)1,964,205 1,775,445 160,311 1,559,086 (216,359) 174,263 1,737,952 (178,866) -10.29%
Water Revenue (Landscape/Irrigation)3,863,805 3,492,493 354,522 3,160,600 (331,893) 425,085 3,661,443 (500,843) -13.68%
Water Revenue (Service Charge)10,116,528 9,273,484 840,323 9,207,081 (66,403) 835,761 9,168,008 39,074 0.43%
Sewer Charge Revenue 2,229,246 2,043,475 187,455 2,024,895 (18,580) 174,167 1,881,676 143,219 7.61%
Locke Ranch Assessments 273,250 273,245 1,338 297,468 24,223 1,905 261,978 35,490 0.00%
Other Operating Revenue 894,617 820,066 86,938 908,314 88,248 83,657 740,122 168,192 22.72%
Total Operating Revenue:35,934,087 32,676,111 3,062,725 29,859,295 (2,816,816) 3,235,012 31,638,683 (1,779,388) -5.62%
Revenue (Non-Operating):
Interest 358,000 328,167 45,530 694,744 366,577 58,032 453,401 241,343 53.23%
Property Tax 1,850,000 1,833,350 65,014 1,843,257 9,908 58,402 1,717,182 126,075 0.00%
Other Non-Operating Revenue 639,846 586,526 123,011 864,952 278,426 68,093 337,697 527,255 156.13%
Total Non-Operating Revenue:2,847,846 2,748,042 233,555 3,402,953 654,911 184,527 2,508,280 894,673 35.67%
Total Revenue 38,781,933 35,424,152 3,296,280 33,262,248 (2,161,905) 3,419,539 34,146,963 (884,715) -2.59%
Expenses (Operating):
Variable Water Costs (G.W., Import & Power)14,793,377 13,404,052 1,132,782 12,008,767 (1,395,285) 1,311,137 13,586,140 (1,577,373) -11.61%
Salary Related Expenses 10,784,493 9,365,653 1,043,039 8,927,350 (438,303) 985,338 8,650,100 277,250 3.21%
Supplies & Services 4,571,268 4,072,366 312,085 3,939,619 (132,747) 347,317 3,799,308 140,311 3.69%
Total Operating Expenses 30,149,138 26,842,071 2,487,906 24,875,736 (1,966,335) 2,643,792 26,035,548 (1,159,812) -4.45%
Expenses (Non-Operating):
Interest on Long Term Debt 1,325,785 1,285,580 111,601 1,239,014.5 (46,566) 115,401 1,256,752 (17,738) -1.41%
Other Expense 14,200 13,017 (2,032) 986,388.0 973,371 451 (54,785) 1,041,173 -1900.48%
Total Non-Operating Expenses:1,339,985 1,298,597 109,569 2,225,403 926,806 115,852 1,201,967 1,023,435 85.15%
Total Expenses 31,489,123 28,140,668 2,597,475 27,101,139 (1,039,530) 2,759,644 27,237,515 (136,377) -0.50%
Net Position Before Capital Contributions 7,292,810 7,283,484 698,805 6,161,109 (1,122,375) 659,895 6,909,447 (748,339) -10.83%
Special Item - - - - - (2,205,847) 2,205,847 -100.00%
Capital Contributions (Non-Cash - - 38,556 38,556 101,952 3,549,269 (3,510,713) 0.00%
Transaction GASB 34 Compliant)
Net Position Before Depreciation 7,292,810 7,283,484 698,805 6,199,665 (1,083,819) 761,847 8,252,870 (2,053,205) -24.88%
Depreciation & Amortization 7,726,142 7,063,797 604,259 6,720,712 (343,085) 629,748 6,840,715 (120,003) -1.75%
Total Net Position (433,332)$ 219,688$ 94,546$ (521,047)$ (740,734)$ 132,099$ 1,412,155$ (1,933,202)$ -136.90%
Capital - Direct Labor (300,000)(275,000)(27,657) (315,944) (40,944) (31,422) (239,378) (76,566) 31.99%
(With May 31, 2018 for comparison purposes)
2
Annual YTD May YTD YTD Actual Prior Year Prior YTD YTD Actual YTD - CUR
Budget Budget Actual Actual (Under)Over May Actual Actual (thru vs vs
FY19 FY19 FY19 FY19 YTD Budget FY18 May 2018) PY Actual $PY Actual %
Revenue (Operating):
Water Revenue (Residential)16,592,437$ 14,997,904$ 1,431,838$ 12,701,851$ (2,296,053)$ 1,540,174$ 14,187,504$ (1,485,653)$ -10.47%
Water Revenue (Commercial & Fire Det.)1,964,205 1,775,445 160,311 1,559,086 (216,359) 174,263 1,737,952 (178,866) -10.29%
Water Revenue (Landscape/Irrigation)3,863,805 3,492,493 354,522 3,160,600 (331,893) 425,085 3,661,443 (500,842) -13.68%
Water Revenue (Service Charge)10,116,528 9,273,484 840,323 9,207,081 (66,403) 835,761 9,168,008 39,074 0.43%
Other Operating Revenue 827,887 758,896 84,963 853,605 94,709 70,988 664,732 188,873 28.41%
Total Operating Revenue:33,364,861 30,298,222 2,871,957 27,482,223 (2,815,999) 3,046,271 29,419,638 (1,937,415) -6.59%
Revenue (Non-Operating):
Interest 310,000 284,167 42,970 587,831 303,664 54,423 394,909 192,922 48.85%
Property Tax 1,850,000 1,833,350 65,014 1,843,257 9,907 58,402 1,717,182 126,075 7.34%
Other Non-Operating Revenue 605,346 554,901 118,649 830,732 275,832 65,911 355,229 475,503 133.86%
Total Non-Operating Revenue:2,765,346 2,672,417 226,633 3,261,820 589,403 178,736 2,467,320 794,499 32.20%
Total Revenue 36,130,207 32,970,639 3,098,590 30,744,043 (2,226,596) 3,225,007 31,886,959 (1,142,916) -3.58%
Expenses (Operating):
Variable Water Costs (G.W., Import & Power)14,793,377 13,404,052 1,132,782 12,008,767 (1,395,285) 1,311,137 13,586,140 (1,577,373) -11.61%
Salary Related Expenses 9,652,772 8,386,200 927,492 8,071,779 (314,421) 888,282 7,725,710 346,069 4.48%
Supplies & Services:
Communications 159,120 145,860 11,964 140,306 (5,554) 16,146 125,971 14,335 11.38%
Contractual Services 475,966 391,302 26,632 340,980 (50,322) 53,329 380,409 (39,429) -10.36%
Data Processing 285,129 262,319 13,336 236,273 (26,045) 23,458 174,858 61,415 35.12%
Dues & Memberships 82,077 75,511 440 74,056 (1,455) 603 77,414 (3,358) -4.34%
Fees & Permits 264,546 242,501 9,733 234,063 (8,438) 9,973 214,216 19,847 9.27%
Board Election 69,750 69,750 52,742 (17,008) - - 52,742
Insurance 281,967 258,470 19,719 244,404 (14,066) 21,558 229,251 15,152 6.61%
Materials 658,714 603,821 63,890 788,098 184,277 62,887 663,933 124,166 18.70%
District Activities, Emp Recognition 43,013 39,429 2,263 28,893 (10,536) 6,896 23,742 5,150 21.69%
Maintenance 432,971 396,890 40,720 418,281 21,391 9,928 362,904 55,377 15.26%
Non-Capital Equipment 136,294 124,936 15,652 123,538 (1,398) 5,807 103,589 19,950 19.26%
Office Expense 40,343 36,981 1,979 33,649 (3,332) 2,565 33,372 277 0.83%
Professional Services 475,804 389,154 20,786 328,022 (61,131) 44,077 557,212 (229,190) -41.13%
Training 67,188 61,589 5,060 35,648 (25,941) (10) 26,660 8,988 33.72%
Travel & Conferences 125,279 109,339 9,089 75,081 (34,258) 7,302 58,607 16,474 28.11%
Uncollectible Accounts 2,790 2,558 (743) 2,501 (57) 1,404 4,131 (1,631) -39.47%
Utilities 169,911 155,752 10,115 162,359 6,607 12,831 154,900 7,459 4.82%
Vehicle Equipment 316,262 282,407 40,119 261,012 (21,394) 43,090 233,325 27,688 11.87%
Supplies & Services Sub-Total 4,087,123 3,648,566 290,754 3,579,906 (68,660) 321,844 3,424,494 155,413 4.54%
Total Operating Expenses 28,533,272 25,438,818 2,351,028 23,660,452 (1,778,367) 2,521,263 24,736,343 (1,075,892) -4.35%
Expenses (Non-Operating):
Interest on Long Term Debt 1,325,785 1,285,580 111,601 1,239,015 (46,566) 115,401 1,256,752 (17,738) -1.41%
Other Expense 8,600 7,883 (2,032) 977,013 969,130 451 (52,670) 1,029,683 -1954.97%
Total Non-Operating Expenses:1,334,385 1,293,464 109,569 2,216,028 922,564 115,852 1,204,082 1,011,945 84.04%
Total Expenses 29,867,657 26,732,282 2,460,597 25,876,480 (855,802) 2,637,115 25,940,426 (63,946) -0.25%
Net Position Before Capital Contributions 6,262,550 6,238,357 637,993 4,867,563 (1,370,794) 587,892 5,946,533 (1,078,970) -18.14%
Special Item - - - - - (2,205,847) 2,205,847 -100.00%
Capital Contributions (Non-Cash Transaction -- - 34,500 34,500 60,139 1,907,644 (1,873,144) -98.19%
GASB 34 Compliant)
Net Position Before Depreciation 6,262,550 6,238,357 637,993 4,902,063 (1,336,294) 648,031 5,648,330 (746,267) -13.21%
Depreciation & Amortization 6,329,146 5,783,217 489,407 5,459,853 (323,365) 514,790 5,587,608 (127,756) -2.29%
Total Net Position (66,596)$ 455,140$ 148,586$ (557,790) (1,012,929)$ 133,241$ 60,722$ (618,511)$ -1018.60%
Capital - Direct Labor (279,000) (255,750) (23,155) (247,086) 8,664 (27,507) (217,461) (29,625) 13.62%
Yorba Linda Water District
Water Fund
For Period Ending May 31, 2019
(With May 31, 2018 for comparison purposes)
3
$27,806,163
$29,359,511 $28,720,017
$31,886,959 $30,744,043
-3.58%
$22,898,104
$21,316,685
$23,284,070
$25,940,426 $25,876,480
-0.25%
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
May. 2015 May. 2016 May. 2017 May. 2018 May. 2019
Water Revenues & Expenses -May
(excludes Depreciation, Special Items, and Contributed Capital )
Total Revenue Total Expenses
4
Annual YTD May YTD YTD Actual Prior Year Prior Year YTD Actual YTD - CUR
Budget Budget Actual Actual (Under)Over May Actual Actual (thru vs vs
FY19 FY19 FY19 FY19 YTD Budget FY18 May 2018)PY Actual $PY Actual %
Revenue (Operating):
Sewer Charge Revenue 2,229,246$ 2,043,475$ 187,455$ 2,024,895$ (18,580)$ 174,167$ 1,881,676$ 143,220$ 7.61%
Locke Ranch Assessments 273,250 273,245 1,338 297,468 24,223 1,905 261,978 35,490 0.00%
Other Operating Revenue 66,730 61,169 1,975 54,709 (6,460) 12,669 75,390 (20,681) -27.43%
Total Operating Revenue:2,569,226 2,377,889 190,768 2,377,072 (816) 188,741 2,219,044 158,029 7.12%
Revenue (Non-Operating):
Interest 48,000 44,000 2,560 106,913 62,913 3,609 58,493 48,420 82.78%
Other Non-Operating Revenue 34,500 31,625 4,362 34,220 2,595 2,183 (17,532) 51,752 -295.19%
Total Non-Operating Revenue:82,500 75,625 6,922 141,133 65,508 5,792 40,961 100,172 244.55%
Total Revenue 2,651,726 2,453,514 197,690 2,518,205 64,691 194,533 2,260,005 258,200 11.42%
Expenses (Operating):
Salary Related Expenses 1,131,721 979,453 115,547 855,571 (123,882) 97,056 924,390 (68,819) -7.44%
Supplies & Services:
Communications 11,977 10,978 901 7,794 (3,184) 1,215 7,698 96 1.25%
Contractual Services 29,766 27,285 1,893 21,498 (5,787) 3,726 28,068 (6,571) -23.41%
Data Processing 17,322 15,878 804 15,498 (381) 1,766 13,100 2,397 18.30%
Dues & Memberships 6,153 5,640 33 5,574 (66) 45 5,984 (410) -6.84%
Fees & Permits 15,907 14,581 641 9,907 (4,675) 672 9,988 (81) -0.81%
Board Election 5,250 4,813 3,970 (843) - - 3,970
Insurance 21,223 19,454 1,484 18,326 (1,129) 1,623 17,144 1,181 6.89%
Materials 28,622 26,237 3,257 46,690 20,453 4,844 37,995 8,695 22.88%
District Activities, Emp Recognition 3,238 2,968 170 2,106 (862) 519 1,777 329 18.53%
Maintenance 171,630 137,328 3,709 83,212 (54,115) 747 111,319 (28,106) -25.25%
Non-Capital Equipment 36,157 33,144 3,132 26,180 (6,964) 351 18,977 7,203 37.96%
Office Expense 2,957 2,711 139 2,315 (395) 193 2,474 (158) -6.39%
Professional Services 33,996 31,163 607 42,950 11,787 1,889 30,588 12,363 40.42%
Training 13,052 11,964 276 17,777 5,813 (22) 4,969 12,807 257.73%
Travel & Conferences 14,061 12,889 650 6,258 (6,631) 533 4,373 1,884 43.09%
Uncollectible Accounts 210 193 (111) 82 (110) 182 452 (370) -81.79%
Utilities 13,489 12,365 761 12,584 219 1,021 12,180 405 3.32%
Vehicle Equipment 59,138 54,209 2,985 36,992 (17,217) 6,168 67,728 (30,736) -45.38%
Supplies & Services Sub-Total 484,145 423,800 21,331 359,713 (64,087) 25,472 374,814 (15,101) -4.03%
Total Operating Expenses 1,615,866 1,403,253 136,878 1,215,284 (187,969) 122,528 1,299,204 (83,919) -6.46%
Expenses (Non-Operating):
Other Expense 5,600 5,133 9,375 4,241 - (2,116) 11,490 -543.11%
Total Non-Operating Expenses:5,600 5,133 - 9,375 4,241 - (2,116) 11,490 -543.11%
Total Expenses 1,621,466 1,408,386 136,878 1,224,659 (183,728) 122,528 1,297,088 (72,429) -5.58%
Net Position Before Capital Contributions 1,030,259 1,045,127 60,812 1,293,546 248,419 72,005 962,917 330,629 34.34%
Capital Contributions (Non-Cash - - 4,056 4,056 41,813 1,641,626 (1,637,570) -99.75%
Transaction GASB 34 Compliant)
Net Position Before Depreciation 1,030,259 1,045,127 60,812 1,297,602 252,475 113,818 2,604,543 (1,306,941) -50.18%
Depreciation & Amortization 1,396,996 1,280,579 114,852 1,260,859 (19,720) 114,958 1,253,106 7,753 0.62%
Total Net Position (366,736)$ (235,452)$ (54,040)$ 36,743$ 272,194$ (1,140)$ 1,351,437$ (1,314,694)$ -97.28%
Capital - Direct Labor (21,000) (19,250) (4,502) (68,858)(49,608) (3,915) (21,917)(46,941)214.18%
Yorba Linda Water District
Sewer Fund
For Period Ending May 31, 2019
(With May 31, 2018 for comparison purposes)
5
$1,732,943
$1,871,078
$2,135,394
$2,260,005
$2,518,205
11.42%
$1,082,998 $1,154,471
$1,239,376 $1,297,088 $1,224,659
-5.58%
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
May. 2015 May. 2016 May. 2017 May. 2018 May. 2019
Sewer Revenues & Expenses -May
(excludes Depreciation, Special Items, and Contributed Capital)
Total Revenue Total Expenses
6
$3,974,626 $4,590,888
$9,502,713 $9,287,996 $9,168,008 9,207,081$1,815,129 $1,775,738
$1,540,516 $1,616,731 $1,737,952 1,559,086
$4,099,389 $3,825,996
$2,357,635 $2,904,153 $3,661,443 3,160,600
$15,278,651 $15,527,128
$11,039,022
$11,921,152
$14,187,504
$12,701,851
$25,167,795 $25,719,750
$24,439,886
$25,730,032
$28,754,906
-7.39%decrease
compared to FY18
$26,628,619
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
FY14 FY15 FY16 FY17 FY18 FY19
Water Revenue Comparison by Fiscal Year
Water Revenue (Service Charge) Water Revenue (Commercial & Fire Det.) Water Revenue (Landscape/Irrigation) Water Revenue (Residential)Total
7
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19
DECEMBER JANUARY FEBRUARY MARCH APRIL MAY
41,197
49,277
29,976
29,725
42,840 44,271
40,920
48,163
27,314
38,942
39,778
27,776
51,279
38,906 36,243
47,552
65,973
52,932
62,133
100,928
59,372
17,947
88,221
49,880
15,732
92,152
14,160
36,200
70,377
10,653
100,176
64,775 62,542
114,809
171,732
122,305
CONSUMPTION BY UNITS CCF
Residential Commercial Landscape
8
0.000.501.001.502.002.500.0010.0020.0030.0040.0050.0060.0070.001‐May2‐May3‐May4‐May5‐May6‐May7‐May8‐May9‐May10‐May11‐May12‐May13‐May14‐May15‐May16‐May17‐May18‐May19‐May20‐May21‐May22‐May23‐May24‐May25‐May26‐May27‐May28‐May29‐May30‐May31‐MayinchesVolume, AFRainfall and EToGroundwaterOC‐36Import WaterConsumptionEToRainfall9
012243648607284961081200.0010.0020.0030.0040.0050.0060.0070.001‐May2‐May3‐May4‐May5‐May6‐May7‐May8‐May9‐May10‐May11‐May12‐May13‐May14‐May15‐May16‐May17‐May18‐May19‐May20‐May21‐May22‐May23‐May24‐May25‐May26‐May27‐May28‐May29‐May30‐May31‐MayTemperature, degrees FahrenheitVolume, AFTemperatureGroundwaterOC‐36Import WaterConsumptionTemperature10
1,069,354
494,671
494,190
886,166
1,080,372
1,194,567
1,518,953
939,601 1,019,271
788,116
1,200,582
1,311,137
1,019,234
657,883
460,667
590,007
945,974
1,132,782
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Dec Jan Feb Mar April May
Variable Costs Analysis
FY17 Var Costs FY18 Var Costs FY19 Var Costs
11
ITEM NO. 9.4
AGENDA REPORT
Meeting Date: June 25, 2019
To:Board of Directors
From:Marc Marcantonio, General
Manager
Presented By:Delia Lugo, Finance Manager Dept:Finance
Prepared By:Saira Hernandez, Accountant
Subject:Cash and Investment Report for Period Ending May 31, 2019
SUMMARY:
Government Code Section 530607, et. seq., requires the person delegated to invest funds to make
monthly report of investments to the legislative body.
DISCUSSION:
The Cash & Investment Portfolio Report presents the market value and percent yield for all District
investments by institution. The Cash & Investment Summary Report includes budget and actual
interest and average term portfolio information as well as market value broken out by reserve
categories. The Fair Value Measurement Report categorizes investments with the fair value
hierarchy established by generally accepted accounting principles. The Unrestricted Reserves and
Days in Cash Graph presents Water Unrestricted Reserve Balances and Days in Cash at a
particular point in time for the last four years.
The average portfolio yield for the month ending May 31, 2019 is 2.22%.
The District's Total Cash and Investment balance at May 31, 2019 resulted in an increase
of approximately $688,095 when compared to the ending balance of the previous month. A large
balance change includes an increase in Water Operating Funds of $716,118 due to a positive net
effect between operating revenues and expenses through the reporting month.
STRATEGIC PLAN:
G2 1D - Retain cash on hand of 365+ days at fiscal year end.
ATTACHMENTS:
Name:Description:Type:
Cash___Investment_Reports_May_2019.pdf Backup Material Backup Material
Market %Date of Percent
Value Par of Total Institution Maturity Yield
Checking Account:
524,333$ 524,333$ Wells Fargo Bank
524,333$ 524,333$ 1.44%Total 0.00%
Money Market Accounts:
252$ 252$ US Bank (Revenue Bonds)2.00%
3,248,081 3,248,049 US Bank (Money Market)2.12%
260,489 260,489 Public Agency Retirement Svcs. (PARS)
3,508,821$ 3,508,789$ 9.61%Total 2.12%
Certificates of Deposits:
244,441 249,000 Comenity Cap Bk Salt Lake City 06/30/21 1.68%
244,483 248,000 EnerBank USA Salt Lake City 08/26/20 1.32%
247,231 248,000 EverBank Jacksonville Fla CTF 08/30/19 1.15%
180,204 180,000 HSBC BK USA, NA MC Clean CTF 08/31/21 1.25%
243,062 248,000 Wells Fargo Bank NA Sioux Falls D 08/31/21 1.63%
244,733 247,000 PrivateBank & Tr Chicago Ill CTF 03/30/22 2.22%
248,415 249,000 JP Morgan Chase Bk NA Columbus 03/31/22 2.46%
1,652,569$ 1,669,000$ 4.53%Total 1.69%
Pooled Investment Accounts:
12,282,666$ 12,282,666$ Local Agency Investment Fund 2.45%
1,365,198 1,364,003 CalTRUST Short Term 2.44%
17,186,312 17,204,161 CalTRUST Medium Term 2.18%
30,834,176$ 30,850,830$ 84.43%2.30%
36,519,899$ 36,552,952$ 100%Total Investments 2.22%
Per Government Code requirements, the Investment Report is in compliance with the Yorba
Linda Water District's Investment Policy, and there are adequate funds available to meet
budgeted and actual expenditures for the next six months.
5/31/19
Yorba Linda Water District
Cash & Investment Portfolio Report
May 31, 2019
________________________________
Saira Hernandez, Accountant
1
Below is a chart summarizing the yields as well as terms and maturities for the month of May 2019:
Average # of
Month Portfolio Days to
of 2019 Yield Maturity
May 2.22%50
Below are charts comparing operating fund interest for current and prior fiscal years.
Actual Interest 5/31/2018 5/31/2019
Monthly - May 58,032$ 45,530$
Year-to-Date 453,401$ 694,744$
Budget 2017/2018 2018/2019
Interest Budget, May YTD 284,167$ 328,167$
Interest Budget, Annual 310,000$ 358,000$
Interest earned on investments is recorded in the fund that owns the investment.
The distribution of investments in the portfolio both in dollars and as a percentage of the total portfolio by funds
is as follows:
The table below displays the District's Cash and Investment balance of $36.5 million which is allocated between the established
reserve funds, Wells Fargo Checking Account, and the restricted funds held at U.S. Bank for the construction of the Fairmont Booster
Pump Station. The number of Days in Cash are 384 for the Un-Restricted Water Reserve balance and 1,165 for the Un-Restricted Sewer
Reserve balances, as of May 31, 2019.
FY19 Reserve Cash and
Requirements Investments
April 2019 % Alloc May 2019 % Alloc "Target Available for
Fund Description Balance 4/30/2019 Balance 5/31/2019 Levels"CY Obligations
Water Operating Reserve 14,709,995$ 41.16%15,164,866$ 42.44%7,593,220$ 7,571,646$
Water Emergency Reserve 7,083,221 19.82%7,115,078 19.91%5,813,701 1,301,377
Water Capital Project Reserve 3,897,652 10.91%3,801,276 10.64%6,327,500 (2,526,224)
Rate Stabilization Reserve 4,067,991 11.38%4,092,329 11.45%1,600,999 2,491,330
Un-Restricted Water Reserve Balance 29,758,858 30,173,550 21,335,420 8,838,130
Conservation Reserve 104,236 0.29%102,713 0.29%- 102,713
Employee Liability Reserve 300,111 0.84%300,111 0.84%273,000 27,111
Restricted Reserve Balance 404,347 402,824 273,000 129,824
Sewer Operating Reserve 1,972,854 5.52%2,173,574 6.08%403,967 1,769,607
Sewer Emergency Reserve 2,620,497 7.33%2,625,783 7.35%1,899,951 725,832
Sewer Capital Project Reserve 358,228 1.00%359,096 1.00%2,000,000 (1,640,904)
Un-Restricted Sewer Reserve Balance 4,951,579 5,158,452 4,303,918 854,534
Total Reserve Balances 35,114,784$ 98.26%35,734,826$ 100.00%25,912,338$ 9,822,488$
Water Operating 257,548 518,794
Sewer Operating 203,695 5,539
461,242 524,333
Rev. Bond 2012A & 2017A-Principal & Interest 251 252
Public Agency Retirement Svc. -PARS (Restricted)255,526 260,489
Total Cash and Investments 35,831,804$ 36,519,899$
Cash & Investment Summary Report
Cash & Investment Summary Comparison Between Current and Previous Month
Wells Fargo Bank Checking
US Bank Held (Restricted)
2
Investment Balances (as of 5-31-2019)
Checking Account:
/1.44%
Money Market Accounts:
I 9.61%
Certificates of Deposit:
4.53%
Pooled Investment Accounts:
84.43%
—js�/
Checking Account: $ 524,333 1.44%
Money Market Accounts: $ 3,508,821 9.61%
Certificates of Deposit. $ 1,652,569 4.53%
Pooled Investment Accounts: $ 30,834,176 84.43%
Total $ 36,5199899 100.00%
3
Yorba Linda Water District
Fair Value Measurement Report
May 31, 2019
Quoted Observable Unobservable
Prices Inputs Inputs
Investments Level 1 Level 2 Level 3 Total
CalTRUST Investment Pool -$ 18,551,510$ -$ 18,551,510$
Local Agency Investment Fund - 12,282,666 - 12,282,666
U.S. Government Sponsored
Agency Securities - - - -
Negotiable Certificates of Deposit - 1,652,569 - 1,652,569
Total Investments -$ 32,486,745$ -$ 32,486,745$
4
PARS (Public Agency Retirement Services) Funding Reconciliation
Transaction Contributions PARS Expenses Investment Available
Description Date & Gains & Losses Return (%)Balance
Beginning Balance 7/1/2018 247,389.78$ 247,389.78$
Investment Return 7/31/2018 3,520.41$ 250,910.19$
Investment Expenses 7/31/2018 (51.54)$ 250,858.65$
Investment Return 8/31/2018 3,307.14$ 254,165.79$
Investment Expenses 8/31/2018 (52.26)$ 254,113.53$
Investment Return 9/30/2018 (332.13)$ 253,781.40$
Investment Expenses 9/30/2018 (52.94)$ 253,728.46$
Investment Return 10/31/2018 (10,505.63)$ 243,222.83$
Investment Expenses 10/31/2018 (52.86)$ 243,169.97$
Investment Return 11/30/2018 2,837.57$ 246,007.54$
Investment Expenses 11/30/2018 (50.66)$ 245,956.88$
Investment Return 12/31/2018 (9,674.65)$ 236,282.23$
Investment Expenses 12/31/2018 (51.24)$ 236,230.99$
Investment Return 1/31/2019 12,505.79$ 248,736.78$
Investment Expenses 1/31/2019 (49.21)$ 248,687.57$
Investment Return 2/28/2019 4,053.65$ 252,741.22$
Investment Expenses 2/28/2019 (51.81)$ 252,689.41$
Investment Return 3/31/2019 2,889.57$ 255,578.98$
Investment Expenses 3/31/2019 (52.64)$ 255,526.34$
Investment Return 4/30/2019 5,015.52$ 260,541.86$
Investment Expenses 4/30/2019 (53.23)$ 260,488.63$
subtotal =260,488.63$
Initial Deposit 12/28/2017 247,599.00$
Gain(Loss) from initial Deposit 12,889.63$
5
$33,902,416
$27,815,071 $29,004,527
$30,173,550
462
393 396 384
60
110
160
210
260
310
360
410
460
510
$20,000
$5,020,000
$10,020,000
$15,020,000
$20,020,000
$25,020,000
$30,020,000
$35,020,000
$40,020,000
May. 16 May. 17 May. 18 May. 19
Unrestricted Reserves & Days in Cash (Water)
Unrestricted Reserves (Water)Days in Cash (Water)
6
ITEM NO. 10.1
AGENDA REPORT
Meeting Date: June 25, 2019
Subject:Directors' Reports
· Intergovernmental Meetings, Conferences, and Events
SUMMARY:
The Directors will report on their attendance at the following events:
1. AWWA Annual Conference - June 10-12, 2019 (Jones)
2. YL Planning Commission - June 12, 2019 (Hawkins - As Needed)
3. FBPS Dedication Ceremony - June 15, 2019
4. WACO Planning Committee - June 18, 2019 (Jones)
5. SAWPA Commission - June 18, 2019 (Jones - As Needed)
6. YL City Council - June 18, 2019 (Hawkins)
7. OCWD Board - June 19, 2019 (Jones)
ITEM NO. 12.1
AGENDA REPORT
Meeting Date: June 25, 2019
Subject:Meetings from June 26 - August 31, 2019
ATTACHMENTS:
Name:Description:Type:
BOD_-_Activities_Calendar.pdf Backup Material Backup Material
Board of Directors Activity Calendar
Event Date Time Attendance By
June
CA United Water Conference Wed, Jun 26 5:30 PM Jones
OCSD Board Wed, Jun 26 6:00 PM Hawkins
YL Planning Commission Wed, Jun 26 6:30 PM Hawkins (As Needed)
CA United Water Conference Thu, Jun 27 8:00 AM Jones
ISDOC Thu, Jun 27 11:30 AM Hawkins/Nederhood
CA United Water Conference Fri, Jun 28 7:30 AM Jones
ISDOC Executive Committee Tue, Jul 2 7:30 AM Nederhood
SAWPA Commission Tue, Jul 2 9:30 AM Jones (As Needed)
YL City Council Tue, Jul 2 6:30 PM Hall
July
MWDOC Board Wed, Jul 3 8:30 AM Miller/Nederhood
OCWD Board Wed, Jul 3 5:30 PM Jones
District Offices Closed Thu, Jul 4 7:00 AM
Board of Directors Regular Meeting Tue, Jul 9 6:30 PM
OC LAFCO Wed, Jul 10 8:15 AM Nederhood (As Needed)
YL Planning Commission Wed, Jul 10 6:30 PM Hawkins (As Needed)
WACO Fri, Jul 12 7:30 AM
WACO Planning Committee Tue, Jul 16 7:30 AM Jones/Nederhood
SAWPA Commission Tue, Jul 16 9:30 AM Jones (As Needed)
YL City Council Tue, Jul 16 6:30 PM Miller
MWDOC Board Wed, Jul 17 8:30 AM Miller/Nederhood
OCWA Luncheon Wed, Jul 17 11:30 AM Jones
OCWD Board Wed, Jul 17 5:30 PM Jones
Board of Directors Regular Meeting Tue, Jul 23 6:30 PM
MWDOC/OCWD Joint Planning Committee Wed, Jul 24 8:30 AM
OCSD Board Wed, Jul 24 6:00 PM Hawkins
YL Planning Commission Wed, Jul 24 6:30 PM Hawkins (As Needed)
Interagency Committee Meeting with MWDOC and OCWD Thu, Jul 25 4:00 PM Jones/Hawkins
August
WACO Fri, Aug 2 7:30 AM
ISDOC Executive Committee Tue, Aug 6 7:30 AM Nederhood
SAWPA Commission Tue, Aug 6 9:30 AM Jones (As Needed)
YL City Council Tue, Aug 6 6:30 PM Nederhood
MWDOC Board Wed, Aug 7 8:30 AM Miller/Nederhood
OCWD Board Wed, Aug 7 5:30 PM Jones
Board of Directors Regular Meeting Tue, Aug 13 6:30 PM
UWI Annual Conference Wed, Aug 14 8:00 AM Jones
OC LAFCO Wed, Aug 14 8:15 AM Nederhood (As Needed)
YL Planning Commission Wed, Aug 14 6:30 PM Hawkins (As Needed)
UWI Annual Conference Thu, Aug 15 8:00 AM Jones
UWI Annual Conference Fri, Aug 16 8:00 AM Jones
WACO Planning Committee Tue, Aug 20 7:30 AM Jones/Nederhood
SAWPA Commission Tue, Aug 20 9:30 AM Jones (As Needed)
YL City Council Tue, Aug 20 6:30 PM Jones
MWDOC Board Wed, Aug 21 8:30 AM Miller/Nederhood
OCWA Luncheon Wed, Aug 21 11:30 AM TBD
OCWD Board Wed, Aug 21 5:30 PM Jones
Board of Directors Regular Meeting Tue, Aug 27 6:30 PM
OCSD Board Wed, Aug 28 6:00 PM Hawkins
YL Planning Commission Wed, Aug 28 6:30 PM Hawkins (As Needed)
As of June 17, 2019
BACKUP MATERIALS DISTRIBUTED LESS THAN 72 HOURS PRIOR TO THE MEETING
3010-003 Debt Management Policy Page 1 of 13
Policies and Procedures
Policy No.: 3010-003
Adoption Method: Resolution No. 2019-XX
Effective Date: June 25, 2019
Last Revised: June 5, 2018
Prepared By: Delia Lugo, Finance Manager
Applicability: District Wide
POLICY: DEBT MANAGEMENT
1.1 INTRODUCTION
1.2 Purpose and Overview
In its publication entitled Best Practice Debt Management Policy, the
Government Finance Officers Association (GFOA) states that Debt
management policies are written guidelines, allowances, and restrictions that
guide debt issuance practices of Board adopted issuance processes,
management of a debt portfolio, and adherence to state and federal laws and
regulations. A debt management policy should improve the quality of
decisions, and articulate policy goals, provide guidelines for the structure of
debt issuance, and demonstrate a commitment to long-term capital financial
planning. The Yorba Linda Water District Debt Management Policy as set forth
herein provides a set of comprehensive guidelines for the issuance and
management of the District’s debt portfolio. Adherence to the policy is
essential to ensure the District maintains a diversified debt portfolio that
supports the District’s financing needs and minimizes the District’s cost of
funds.
1.3 Roles and Responsibilities
Finance Manager - The primary responsibility for debt management rests with
the Finance Manager. The Finance Manager shall:
• Provide for the issuance of District debt at the lowest possible cost and
risk;
• Determine the available debt capacity of the District;
• Provide for the issuance of District debt at appropriate intervals and in
reasonable amounts as required to fund approved and budgeted capital
expenditures;
• Recommend to the District’s Board of Directors (the “Board”) the method
and manner of sale of District debt;
• Monitor opportunities to refund debt and recommend such refunding as
appropriate to reduce costs or to achieve other policy objectives;
• Comply with all Internal Revenue Service (IRS), Municipal Securities
Rulemaking Board (MSRB), Securities and Exchange Commission (SEC),
and California Debt Investment Advisory Commission (“CDIAC”) rules and
regulations governing the issuance of debt;
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 2 of 13
• Maintain a current database with all outstanding debt;
• Provide for the timely payment of principal and interest on all debt;
• Comply with all terms and conditions, including continuing disclosure,
required by the legal documents governing the debt issued;
• Submit to the Board all recommendations to issue debt in accordance with
this Policy;
• Distribute to appropriate repositories information regarding the District’s
financial condition and affairs at such times and in the form required by
law, regulation and general practice;
• Provide for the frequent distribution of pertinent information to the rating
agencies;
• Apply and promote prudent fiscal practices; and
• To ensure that proceeds of any debt issued in accordance with its
governing documents and this Policy no disbursements shall be make
without the approval of the Finance Manager and General Manager. The
draw request shall be provided to the District by the project engineer with
the consent of the District’s inspector. Approval shall only be provided
when the Finance Manager is in receipt of an appropriate certification from
the construction project manager with supporting invoices from suppliers
and / or contractors evidencing appropriate expenses in connection with
the project.
In the case of an issue of bonds the proceeds of which will be used by a
governmental entity other than the District, the District may rely upon a
certification by such other governmental entity that it has adopted the policies
described in SB 1029.
The District shall also comply with Government Code Section 5852.1 by
disclosing specified good faith estimates in a public meeting prior to the
authorization of the issuance of bonds.
2.1 LEGAL GOVERNING PRINCIPLES
In the issuance and management of debt, the District shall comply with all legal
constraints and conditions imposed by federal, state and local law. The following
section highlights the key governing documents and certain debt limitations.
2.2 Governing Law
County Water District Law – The District was established in 1959 as a
county water district under the County Water District Law, Division 12 of the
Water Code of the State of California, as the successor to a private water
company that was incorporated in or about 1909, for purposes of supplying
water for domestic, irrigation, sanitation, industrial, commercial, recreation
and fire suppression use.
Federal Tax Law – The District shall issue and manage debt in accordance
with the limitations and constraints imposed by federal tax law, to maximize
its ability to sell tax-exempt debt. Such constraints include, but are not limited
to, private activity tests, review of eligible projects, spend-down tests, and
arbitrage rebate limitations.
Securities Law – The District shall comply with the requirements of federal
and state securities laws in offering District debt and the District shall comply
with securities law requirements in providing ongoing disclosure to the
securities markets.
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 3 of 13
2.3 Governing Legal Documents
Indenture – The District’s debt issuance is further governed in part by the
Indenture of Trust, adopted September 8, 2016 of which constitutes the
“Indenture.” The Indenture establishes the basic security structure of debt
issued by the District that is secured by Net Water Revenues. Key terms and
conditions include, but are not limited to, the definition of pledged revenues,
the rate covenant and the additional bonds test. A copy of the Indenture can
be found in Appendix B. The District shall comply with all limitations imposed
under the Indenture, so long as such Indenture is in full force and effect.
2.4 Permitted Debt by Type
The District may legally issue both short-term and long-term debt, using the
debt instruments described below. The Finance Manager, in consultation with
the District’s General Counsel, Bond Counsel, and Municipal Advisor shall
determine the most appropriate instrument for funding purposes.
General Obligation Bonds – The District is empowered, under California
law, to levy taxes on all taxable property within its boundaries for the purpose
of paying its voter-approved general obligation bonds and, subject to certain
limitations.
Certificates of Participation – Certificates of Participation (COP) provide
debt financing through a lease, installment sale agreement or contract of
indebtedness and typically do not require voter approval. Board action is
sufficient to legally authorize a COP issue. The District shall pledge net
revenues to the repayment of its COPs, under the terms and conditions
specified in the Indenture.
JPA Revenue Bonds – As an alternative to COPs, the District may obtain
financing through the issuance of Debt by a joint exercise of powers agency
with such Debt payable from amounts paid by the District under a lease,
installment sale agreement, or contract of indebtedness.
Commercial Paper – The District may issue short-term revenue certificates,
including commercial paper and extendable commercial paper. Board action
is sufficient to legally authorize a commercial paper issue. The District’s
commercial paper is secured by net revenues. Voter approval is not required
to issue commercial paper.
Lines of credit - The District may enter into financing arrangements providing
for a source of funds that can be readily accessed by the District for capital or
operational needs. Board action is sufficient to legally authorize the
establishment of a line of credit. Voter approval is not required to establish or
access a lien of credit.
Variable Rate Debt – The District is authorized to issue variable rate debt
including, but not limited to, public market indexed notes, indexed notes or
loans placed directly with financial institutions and other alternative variable
rate and market access products as well as traditional variable rate demand
obligations backed by bank liquidity facilities. Prior to the issuance of variable
rate debt, the savings and other possible advantages compared to a fixed rate
borrowing will be evaluated and a comparative analysis presented to the
Board of Directors as part of the approval process.
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 4 of 13
Refunding Revenue Bonds – The District is authorized to issue refunding
revenue bonds to refund outstanding District indebtedness pursuant to the
State of California local agency refunding revenue bond law (Articles 10 and
11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of
the State of California).
Loans – The District is authorized to enter into loans, installment payment
obligations, or other similar funding structures secured by a prudent source,
or sources of repayment.
Assessment Bonds – The District is authorized to issue assessment bonds
pursuant to the Improvement Bond Act of 1915, subject to requirements
imposed by Proposition 218. Such bonds are typically repaid from
assessments collected within an assessment district formed pursuant to the
Municipal Improvement Act of 1913. Assessments are levies of charges on
real property to pay for projects or services that specifically benefit that parcel
of property.
Special Tax Bonds – Issued by community facilities districts (“CFDs”) formed
by the District pursuant to the provisions of the Mello-Roos Community
Facilities Act of 1982, as amended, will be used to finance capital costs and
projects identified within the proceedings under which the applicable CFD was
formed.
Other Obligations – There may be special circumstances when other forms
of financing are appropriately utilized by the District. The District will evaluate
such proposed transactions on a case-by-case basis. Such other forms
include, but are not limited to, grant anticipation notes and judgment or
settlement obligation bonds.
2.5 Limitations on Debt Issuance
Short-Term Debt – The District’s short-term debt shall not exceed 30 percent
of its total debt at the time of issuance. The calculation of short- term debt
shall include any variable rate obligations, the authorized amount of
commercial paper, any notes/bonds with a maturity equal to or less than five
years.
Variable Rate Debt – The Finance Manager will consult with the District’s
Municipal Advisor to determine appropriate parameters for the issuance of
variable rate debt and may rely on rating agency standard’s and other industry
standards for establishing prudent financial goals and establishing the amount
of variable rate debt to be issued.
Subordinate Lien Long-Term Debt - The District’s subordinate lien debt, for
which net revenues are pledged, shall be limited to that amount for which
current and projected revenues generate overall debt service coverage of at
least 100 percent.
Senior Lien Long-Term Debt – The District’s senior lien long-term debt, for
which net revenues are pledged, shall be limited to that amount for which
current and projected revenues generate a senior lien debt service coverage
of at least 125 percent. The calculation of debt service shall not include
General Obligation Bonds, Assessment Bonds, or Special Tax Bonds to which
revenue sources other than pledged revenues, as defined in the Indenture,
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 5 of 13
are pledged. It should be noted that the District will target to issue debt to
attempt to meet the senior lien debt service coverage target of 225 percent in
keeping with its prudent financial management practices and to maintain
credit ratings aligned with rating agency methodologies.
2.6 Purpose for Borrowing
The District shall issue debt solely for the purpose of financing the cost of
design, engineering acquisition, and/or construction of water and wastewater
system improvements in furtherance of the District’s Capital Improvement
Program (CIP). Additionally, the District may, subject to Federal tax code
limitations, include operational expenses in any debt issuance.
2.7 Ethical Standards Governing Conduct
Members of the District, the Board and its consultants, service providers, and
underwriters shall adhere to standards of conduct as stipulated by the
California Political Reform Act, as applicable. All debt financing participants
shall maintain the highest standards of professional conduct at all times, in
accordance with:
• MSRB Rules, including Rule G-37 and G-42 shall be followed at all times;
• Debt financing participants will assist the District staff in achieving its goals
and objectives as defined in this Debt Management Policy; and
• All debt financing participants shall make cooperation with the District staff
their highest priority.
2.8 Use of Derivatives
The use of derivative products can, among other things, increase District
financial flexibility and provide opportunities for interest rate savings or
enhanced investment yields. Careful monitoring of such products is required
to preserve District credit strength and budget flexibility. Swaps will not be
used to speculate on perceived movements in interest rates. Before the
District enters into any derivative product associated with debt, the Board shall
adopt an interest rate swap policy.
3.1 INTEGRATION OF CAPITAL PLANNING AND DEBT ACTIVITIES
3.2 Evaluating Capital Improvement Program Spending
The District shall develop and maintain a capital finance model to evaluate
the impact of capital program spending, operations and maintenance costs,
and debt service on its financial condition. To that end, the Finance Manager
shall oversee the ongoing maintenance of quantitative modeling that includes,
but is not limited to, the following:
• Five years of historic and projected cash flows;
• Five years of historic and projected capital expenditures;
• Five years of historic and projected operating costs;
• Five years of historic and projected fund balances for any funds
established by the District’s then-adopted Reserve Fund
• Five years of historic and projected debt service coverage;
• The most efficient mix of funding sources (long-term debt; short-term debt,
and cash);
• Projected revenue requirements; and
• Projected rates and charges.
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 6 of 13
4.1 PROCUREMENT AND EVALUATION OF PROFESSIONAL SERVICES
4.2 Appointment of Service Providers – The Finance Manager may solicit from
time to time bids, quotes or proposals, including sole source proposals for the
following services on an as needed basis:
• Municipal Advisor – Service provider that ensures the District complies
with all financial management procedures and policies and ensures
successful closing for bond transactions.
• Bond Counsel – Service provider that drafts appropriate documentation to
ensure successful and timely closing and create valid and legally binding
security for bond issues, and provide appropriate advice and taking
appropriate actions to ensure legal validity of bond issues under state and
federal laws as applicable.
5.1 TRANSACTION-SPECIFIC POLICIES
5.2 Method of Sale – The Finance Manager shall determine the most appropriate
form of sale of its debt. In making a recommendation to the Board the Finance
Manger may consult with the District’s Municipal Advisor and Bond Counsel
and may take into account, among other things, the type and tenor of the
proposed debt; the District’s credit ratings; the amount of funding necessary;
the timing of the needed funds; local and national economic conditions; and
general bond market conditions.
5.3 Competitive Bid Method - When necessary to minimize the costs and risks
of any District borrowing, the Finance Manager may submit to the Board a
request to sell bonds on a competitive basis. Such bids may take the form of
hand- delivered or electronically transmitted offers to purchase the bonds. Any
competitive sale of District debt will require approval of the Board. District debt
issued on a competitive bid basis will be sold to the bidder proposing the
lowest true interest cost to the District provided the bid conforms to the official
notice of sale.
5.4 Negotiated Bid Method – A negotiated bond issue will provide for the sale of
debt by negotiating the terms and conditions of the sale, including price,
interest rates, credit facilities, underwriter or remarketing fees, and
commissions. Examples of such sales include:
• Variable rate demand obligations;
• An issue of debt so large that the number of potential bidders would be
too limited to provide the District with truly competitive bids;
• An issue requiring the ability to react quickly to sudden changes in interest
rates (e.g. refunding bonds);
• An issue requiring intensive marketing efforts to establish investor
acceptance;
• An issue of debt with specialized distribution requirements; and
• An issue of debt sold during a period of extreme market disruption or
volatility.
If bonds are sold on a negotiated basis, the negotiations of terms and
conditions shall include, but not be limited to, prices, interest rates,
underwriting or remarketing fees, and underwriting spreads and timing of sale.
The District, with the assistance of its Municipal Advisor, shall evaluate the
terms offered by the underwriting team. Guidelines with respect to price,
interest rates, fees, and underwriting spreads shall be based on prevailing
terms and conditions in the marketplace for comparable issuers, credit
ratings, tenor and paramount.
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 7 of 13
If more than one underwriter is included in the negotiated sale of debt, the
District shall establish appropriate levels of liability, participation and priority
of orders. Such levels shall be based upon District policy with regards to the
underwriting responsibility among the team members, the desired allocation
of total fees, and the desired distribution of bonds. Guidelines for establishing
liability, participation, and priority of orders shall be based on prevailing terms
and conditions in the marketplace for comparable issuers.
The District shall, with the assistance of its Municipal Advisor, oversee the
bond allocation process. The bond allocation process shall be managed by
the lead underwriter, with the following requirements:
• The bonds are allocated fairly among members of the underwriting team,
consistent with the previously negotiated terms and conditions;
• The allocation process complies with all MSRB regulations governing
order priorities and allocations;
• The lead underwriter shall submit to the Finance Manager a complete and
timely account of all orders, allocations, and underwriting activities with
the investor names identified as appropriate.
The Finance Manager Services shall require a post-sale analysis and
reporting for each negotiated bond sale. The Municipal Advisor or the lead
underwriter may perform such analysis. A post-sale analysis will include, but
not be limited to:
• Summary of the pricing, including copies of the actual pricing wires;
• Results of comparable bond sales in the market at the time of the District’s
pricing;
• Detailed information on orders and allocation of bonds, by underwriting
firm;
• Detailed information on final designations earned by each underwriter;
and
• Summary of total compensation received by each underwriter.
STRUCTURAL ELEMENTS
5.5 Pledge of Revenues – The District’s pledge of revenues shall be determined
for each debt issue depending upon the debt instrument:
• General Obligation Bonds of the District shall be repaid from voter-
approved property taxes on property within the jurisdiction of the District.
• Certificates of Participation of the District shall be repaid from net
revenues, as defined in the Indenture.
• Revenue Bonds of the District shall be repaid from net revenues, as
defined in the Indenture.
• Loans of the District may be repaid from net revenues of the water and or
wastewater systems, or other financially prudent sources of repayment.
• Assessment Bonds of the District shall be repaid levies or charges
collected within an assessment district formed by the District pursuant to
the Municipal Improvement Act of 1913.
• Special Tax Bonds of the District shall be payable from net special taxes
collected in applicable taxing jurisdiction as a result of the levy of special
taxes.
5.6 Maturity – The District may issue tax-exempt debt with an average life equal
to, but no greater than 125% of, the average life of the assets being financed.
The final maturity of the debt should be no longer than 40 years absent
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 8 of 13
compelling circumstances or facts. Factors to be considered when
determining the final maturity of debt include: the average useful life of the
assets being financed, relative level of interest rates, intergenerational equity
and the year-to-year differential in interest rates.
5.7 Maturity Structure – The District’s long-term debt may include serial and
term bonds. Other maturity structures may also be considered if they are
consistent with prudent financial management practices.
5.8 Coupon Structure – Debt may include par, discount and premium. Discount
and premium bonds must be demonstrated to be advantageous relative to par
bond structures taking into consideration market conditions and opportunities.
For variable rate debt, the variable rate may be based on one of a number of
commonly used interest rate indices and the index will be determined at the
time of pricing.
5.9 Debt Service Structure – Debt service may be structured primarily on an
approximate level (combined annual principal and interest) basis. Certain
individual bond issues, such as refunding bonds, may have debt service that
is not level. However, on an aggregate basis, debt service should be
structured primarily on a level basis.
5.10 Redemption Features – In order to preserve flexibility and refinancing
opportunities, District debt will generally be issued with call provisions. The
District may consider calls that are shorter than traditional and/or non-call debt
when warranted by market conditions and opportunities. For each transaction,
the District will evaluate the efficiency of call provision alternatives.
5.11 Credit Enhancement – The District shall competitively procure credit
enhancement for an original sale of bonds if the Finance Manager, in
consultation with the Municipal Advisor and the senior underwriter,
determines that it is cost effective to do so. The Finance Manager may in
consultation with the Municipal Advisor and the senior underwriter determine
that due to certain circumstances a sole source procurement process may be
more advantageous than a competitive process.
5.12 Senior/Subordinate Lien – The District may utilize both a senior and a
subordinate lien structure. The choice of lien will be determined based on such
factors as overall cost of debt, impact on debt service, impact on rates, and
marketing considerations.
5.13 Debt Service Reserve Funds – The District shall provide for debt service
reserve funds to secure District debt when necessary.
6.1 COMMUNICATION AND DISCLOSURE
6.2 Rating Agencies
The District shall maintain its strong ratings through prudent fiscal
management and consistent communications with the rating analysts. The
Finance Manager shall manage relationships with the rating analysts
assigned to the District’s credit, using both informal and formal methods to
disseminate information. Communication with the rating agencies may include
one or more of the following:
• Full disclosure on an annual basis of the financial condition of the District;
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 9 of 13
• A formal presentation, at least annually or as becomes necessary to the
rating agencies, covering economic, financial, operational, and other
issues that impact the District’s credit;
• Timely disclosure of major financial events that impact the District’s credit;
• Timely dissemination of the Comprehensive Annual Financial Report,
following its acceptance by the District’s Board;
• Full and timely distribution of any documents pertaining to the sale of
bonds; and
• Periodic tours of the water system operations, as appropriate.
6.3 Bond Insurers
The Finance Manager shall manage relationships with the bond insurers, to
the extent any Debt is so insured, by providing appropriate information.
Communication with other bond insurers shall be undertaken when the
Finance Manager, with the assistance of the District’s Municipal Advisor,
determines that credit enhancement is cost effective for a proposed bond
issue.
Disclosure Reports – The District shall comply with its disclosure
undertakings and make disclosure reports readily available to market
participants though the Electronic Municipal Market Access website.
Web Site – The District may use its website as a tool for providing timely
information to investors.
7.1 REFUNDING POLICIES
The District shall strive to refinance debt to maximize savings and minimize the cost
of funds as market opportunities arise. A net present value analysis will be prepared
that identifies the economic effects of any refunding to be proposed to the Board.
The District shall target a 3% net present value savings for current and 5% for
advance refunding transactions. Upon the advice of the Finance Manager, with the
assistance of the Municipal Advisor and Counsel, the District will consider
undertaking refundings for other than economic purposes, such as to restructure
debt, change the type of debt instruments being used, or to retire a bond issue and
indenture in order to remove undesirable covenants.
7.2 Savings Thresholds – Minimum savings thresholds have been established
to help guide the economic analysis of refunding bonds. The minimum
savings guidelines are applicable on a maturity-by-maturity basis and are
expressed as a percentage of refunded bond par calculated by dividing the
expected net present value savings generated by the proposed refunding by
the par amount of refunded bonds. At the recommendation of the Finance
Manager, with the assistance of the Municipal Advisor, the District may
complete a refunding for net present values savings equal to the target
specified above on an aggregate bond issue basis rather than a maturity by
maturity basis. Generally, the District shall only refund bonds to generate debt
service savings of the specified minimum savings set forth in the previous
paragraph can be achieved.
7.3 Coupon on Refunded Bond – The Finance Manager may take into
consideration whether the coupon on the refunded bond is significantly higher
or lower than the most common outstanding bond coupons of approximately
five percent.
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 10 of 13
7.4 General Interest Rate Environment – The Finance Manager may take into
consideration whether the available refunding bond interest rates are
generally high or generally low relative to long-term averages of historical
rates.
7.5 General Interest Rate Outlook – The Finance Manager may take into
consideration the general outlook for future interest rates, as derived from
economic forecasts, market forecasts, implied forward rates, or other
sources.
7.6 Debt Management Considerations – The Finance Manager may take into
consideration debt management issues such as cost and staff efficiencies
associated with combining multiple refunding bond issues or combining
refunding and new money bond issues.
7.7 Call Date – The Finance Manager may take into consideration the amount of
time between the pricing/closing date of the refunding Debt and the call date
of the Debt to be refunded.
7.8 Final Maturity Date – The Finance Manager may take into consideration the
amount of time remaining until the final maturity of the Debt to be refunded.
8.1 REINVESTMENT OF PROCEEDS
8.2 General – The District shall comply with all applicable Federal, State, and
contractual restrictions regarding the use and investment of bond proceeds.
This includes compliance with restrictions on the types of investment
securities allowed, restrictions on the allowable yield of some invested funds,
as well as restrictions on the time period during over which some bond
proceeds may be invested. To the extent that a bond issue is credit enhanced,
the District shall adhere to the investment guidelines of the credit
enhancement provider.
8.3 Requirements of Indenture – The District will comply with all terms and
conditions of the appropriate legal documents related to the Debt. Such
limitations shall include, but not be limited to Investments in the Indenture.
9.10 CREATION AND MAINTENANCE OF FUNDS
The District maintains a number of different funds integral to the long-range financial
planning process. Each of these funds is held for a specific purpose and can
generally be categorized as either an operating, capital or debt reserve fund. The
District will comply with all requirements and limitations created under its Reserve
Policy.
10.1 COMPLIANCE
10.2 Arbitrage Liability Management
The District shall minimize the cost of arbitrage rebate and yield restrictions
while strictly complying with tax law. Because of the complexity of arbitrage
rebate regulations and the severity of non-compliance penalties, the District
shall solicit the advice of bond counsel and other qualified experts about
arbitrage rebate calculations. The District shall contract with a qualified third-
party for preparation of the arbitrage rebate calculation.
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 11 of 13
The District shall maintain an internal system for tracking expenditure of bond
proceeds and investment earnings. The expenditure of bond proceeds shall
be tracked in the financial accounting system by issue. Investment may be
pooled for financial accounting purposes and for investment purposes. When
investment of bond proceeds are co-mingled with other investments, the
District shall adhere to IRS rules on accounting allocations.
10.3 Post-Issuance Tax Compliance
The District has adopted Written Procedures to Ensure Compliance with
Requirements for Tax-Exempt Bonds. The District shall comply with such
procedures to maintain the tax-exempt status of District debt obligations or to
maintain eligibility for direct pay subsidy payments, as applicable.
10.4 Continuing Disclosure
The District shall comply with the requirements of each Continuing Disclosure
Certificate entered into at the time of a sale of bonds. Annual information
provided by the District shall mirror the information in any District offering
statement at the time of a primary offering. Annual financial information will
be sent by the District or its designated consultant, within the time required
under the Continuing Disclosure Certificate to the EMMA System This shall
include:
• Comprehensive Annual Financial Report of the District; and
• Updated tables from the Official Statement, as detailed in the Continuing
Disclosure Certificate.
In addition to annual disclosure, the District shall provide ongoing information
about certain enumerated events, as defined by regulation, to the EMMA
System.
The District may engage a firm to assist it in ensuring timely completion and
filing of annual reports and in identifying, and making timely filings with respect
to, the occurrence of reportable enumerated events.
In addition, the District’s Continuing Disclosure Agreements entered into after
February 27, 2019 call for the District to notify investors of the incurrence of
any “financial obligation,” if material, and the District will be obligated to
disclose defaults on, acceleration of and certain other information with respect
to any “financial obligation” regardless of when the financial obligation was
incurred.
Rule 15c2-12 provides a general definition of a “financial obligation.” While
the impetus for the obligation to disclose information about financial
obligations was a perception by the SEC and others that municipal issuers
were increasingly entering into bank or other private placement debt, Rule
15c2-12 defines “financial obligation” more broadly to include “a debt
obligation, derivative instrument K.. or a guarantee of either a debt obligation
or a derivative instrument.”
To date, the SEC has provided limited guidance on the specific application of
the definition of “financial obligation.” The SEC has suggested that a key
concept is that a “financial obligation” involves the borrowing of money. In
public comments, representatives of the SEC have declined to provide a
definition of a “guarantee,” but they did indicate that the SEC will not look to
state law definitions of a “guarantee” or “debt.”
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 12 of 13
As described in detail below, the District will need to monitor agreements or
other obligations entered into by the District, and any modifications to such
agreements or other obligations, to determine whether they constitute
“financial obligations” under Rule 15c2-12 and, if material, need to be
disclosed on to investors.
In addition, if the District entity receives a notice of default or an event of
default or of an acceleration, termination event, modifications of or other
similar event on any agreement or other obligation, the District will need to
determine whether such obligation constitutes a “financial obligation”
(regardless of when originally incurred) and whether such default or other
event reflects financial difficulty (i.e., reduction in overall liquidity,
creditworthiness or debt owner’s rights).
Types of agreement or other obligations which are likely to be “financial
obligations” under Rule 15c2-12 include:
a. Bank loans or other obligations which are privately placed;
b. Letters of credit, including letters of credit which are provided to third
parties to secure the District’s obligation to pay or perform;
c. Capital leases for property, facilities or equipment; and
d. Agreements which guarantee the payment or performance
obligations of a third party (regardless of whether the agreements
constitute guarantees under California law).
Types of agreements which could be a “financial obligation” under Rule 15c2-
12 include:
a. Payment agreements which obligate the District to pay a share of
another public agency’s debt service (for example, an agreement with
a joint powers agency whereby the District, agrees to pay a share of
the joint powers agency’s bonds, notes or other obligations);
b. Service contracts with a public agency or a private party pursuant to
which the District is obligated to pay a share of such public agency’s
or private party’s debt service obligation (for example, certain types
of public-private partnership arrangements);
c. Agreements pursuant to which the District is obligated to pay amounts
expressly tied to another party’s debt service obligations, regardless
of whether service is provided or not;
d. Agreements which include a rate component that expressly passes
through debt service or capital obligation of the other party; and
e. Agreements the payments under which are not characterized as an
operation and maintenance expenses for accounting purposes if such
agreements could be characterized as the borrowing of money.
The District General Counsel and/or Finance Manager will notify the District’s
bond counsel and/or disclosure counsel of the receipt by the District of any
default, event of acceleration, termination event, modification of terms (only if
material or reflecting financial difficulties), or other similar events (collectively,
Potentially Reportable Events) under any agreement or obligation to which
the District is a party and which may be a “financial obligation” as discussed
above. Such notice should be provided by the General Counsel or the
Finance Manager as soon as the General Counsel or Finance Manager
receives notice from District staff, consultants or external parties of such event
or receives direct written notice of such event so that the City can determine,
with the assistance of bond counsel and/or disclosure counsel, whether notice
of such Potentially Reportable Event is required to be filed on EMMA pursuant
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 13 of 13
to Rule 15c2-12. If filing on EMMA is required, the filing is due within 10
business days of such Potentially Reportable Event to comply with the
applicable Continuing Disclosure Agreement.
The Finance Manager will catalog the execution by the District of any
agreement or other obligation which might constitute a “financial obligation”
for purposes of Rule 15c2-12 and which is entered into after February 27,
2019. Amendments to existing agreements or financial obligations which
relate to covenants, events of default, remedies, priority rights, or other similar
terms should be reported to the District’s bond counsel and/or disclosure
counsel as soon as notice of amendment requests is received by District staff,
consultants, or external parties of such event. Such notice is necessary so
that the District can determine, with the assistance of bond counsel and/or
disclosure counsel, whether such agreement or other obligation constitutes a
material “financial obligation” for purposes of Rule 15c2-12. If such
agreement or other obligation is determined to be a material “financial
obligation” or a material amendment to a “financial obligation” described
above, notice thereof would be required to be filed on EMMA within 10
business days of execution or incurrence.
10.5 Legal Covenants
The District shall comply with all covenants and conditions contained in
governing law and any legal documents entered into at the time of a bond
offering.
11.1 DEBT DATABASE MANAGEMENT
The District shall maintain complete information on its outstanding debt portfolio, in
a spreadsheet or database program format. The information in the database shall
include, but not be limited to, the following:
• Issue Name
• Initial Issue Par Amount
• Dated Date of the Issue
• Principal Maturity Amounts
• Coupon Rate by Maturity
• Amount Outstanding
• Call Provisions
• Purpose of the Issue
• Credit Enhancer, if any
• Competitive or Negotiated Sale
• Names of Underwriting Team Members
The District shall use the debt database for the following purposes:
• Generate reports
• Gross annual debt service
• Net annual debt service
• Refunding Analyses
• Output to Fund Accounting System
CURRENT POLICY ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 1 of 113
Policies and Procedures
Policy No.: 3010-003
Adoption Method: Resolution No. 2019-XX18-13
Effective Date: June 25, 20198
Last Revised: June 5, 2018October 27, 2016
Prepared By: Delia Lugo, Finance Manager
Applicability: District Wide
POLICY: DEBT MANAGEMENT
1.1 INTRODUCTION
1.2 Purpose and Overview
In its publication entitled Best Practice Debt Management Policy, the
Government Finance Officers Association (GFOA) states that Debt
management policies are written guidelines, allowances, and restrictions that
guide debt issuance practices of Board adopted issuance processes,
management of a debt portfolio, and adherence to state and federal laws and
regulations. A debt management policy should improve the quality of
decisions, and articulate policy goals, provide guidelines for the structure of
debt issuance, and demonstrate a commitment to long-term capital financial
planning. The Yorba Linda Water District Debt Management Policy as set forth
herein provides a set of comprehensive guidelines for the issuance and
management of the District’s debt portfolio. Adherence to the policy is
essential to ensure the District maintains a diversified debt portfolio that
supports the District’s financing needs and minimizes the District’s cost of
funds.
1.3 Roles and Responsibilities
Finance Manager - The primary responsibility for debt management rests with
the Finance Manager. The Finance Manager shall:
• Provide for the issuance of District debt at the lowest possible cost and
risk;
• Determine the available debt capacity of the District;
• Provide for the issuance of District debt at appropriate intervals and in
reasonable amounts as required to fund approved and budgeted capital
expenditures;
• Recommend to the District’s Board of Directors (the “Board”) the method
and manner of sale of District debt;
• Monitor opportunities to refund debt and recommend such refunding as
appropriate to reduce costs or to achieve other policy objectives;
• Comply with all Internal Revenue Service (IRS), Municipal Securities
Rulemaking Board (MSRB), Securities and Exchange Commission (SEC),
and California Debt Investment Advisory Commission (“CDIAC”) rules and
regulations governing the issuance of debt;
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 2 of 113
• Maintain a current database with all outstanding debt;
• Provide for the timely payment of principal and interest on all debt;
• Comply with all terms and conditions, including continuing disclosure,
required by the legal documents governing the debt issued;
• Submit to the Board all recommendations to issue debt in accordance with
this Policy;
• Distribute to appropriate repositories information regarding the District’s
financial condition and affairs at such times and in the form required by
law, regulation and general practice;
• Provide for the frequent distribution of pertinent information to the rating
agencies;
• Apply and promote prudent fiscal practices; and
• To ensure that proceeds of any debt issued in accordance with its
governing documents and this Policy no disbursements shall be make
without the approval of the Finance Manager and General Manager. The
draw request shall be provided to the District by the project engineer with
the consent of the District’s inspector. Approval shall only be provided
when the Finance Manager is in receipt of an appropriate certification from
the construction project manager with supporting invoices from suppliers
and / or contractors evidencing appropriate expenses in connection with
the project.
In the case of an issue of bonds the proceeds of which will be used by a
governmental entity other than the District, the District may rely upon a
certification by such other governmental entity that it has adopted the policies
described in SB 1029.
The District shall also comply with Government Code Section 5852.1 by
disclosing specified good faith estimates in a public meeting prior to the
authorization of the issuance of bonds.
2.1 LEGAL GOVERNING PRINCIPLES
In the issuance and management of debt, the District shall comply with all legal
constraints and conditions imposed by federal, state and local law. The following
section highlights the key governing documents and certain debt limitations.
2.2 Governing Law
County Water District Law – The District was established in 1959 as a
county water district under the County Water District Law, Division 12 of the
Water Code of the State of California, as the successor to a private water
company that was incorporated in or about 1909, for purposes of supplying
water for domestic, irrigation, sanitation, industrial, commercial, recreation
and fire suppression use.
Federal Tax Law – The District shall issue and manage debt in accordance
with the limitations and constraints imposed by federal tax law, to maximize
its ability to sell tax-exempt debt. Such constraints include, but are not limited
to, private activity tests, review of eligible projects, spend-down tests, and
arbitrage rebate limitations.
Securities Law – The District shall comply with the requirements of federal
and state securities laws in offering District debt and the District shall comply
with securities law requirements in providing ongoing disclosure to the
securities markets.
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 3 of 113
2.3 Governing Legal Documents
Indenture – The District’s debt issuance is further governed in part by the
Indenture of Trust, adopted September 8, 2016 of which constitutes the
“Indenture.” The Indenture establishes the basic security structure of debt
issued by the District that is secured by Net Water Revenues. Key terms and
conditions include, but are not limited to, the definition of pledged revenues,
the rate covenant and the additional bonds test. A copy of the Indenture can
be found in Appendix B. The District shall comply with all limitations imposed
under the Indenture, so long as such Indenture is in full force and effect.
2.4 Permitted Debt by Type
The District may legally issue both short-term and long-term debt, using the
debt instruments described below. The Finance ManagerDirector of
Administrative Services, in consultation with the District’s General Counsel,
Bond Counsel, and MunicipalFinancial Advisor shall determine the most
appropriate instrument for funding purposes.
General Obligation Bonds – The District is empowered, under California
law, to levy taxes on all taxable property within its boundaries for the purpose
of paying its voter-approved general obligation bonds and, subject to certain
limitations.
Certificates of Participation – Certificates of Participation (COP) provide
debt financing through a lease, installment sale agreement or contract of
indebtedness and typically do not require voter approval. Board action is
sufficient to legally authorize a COP issue. The District shall pledge net
revenues to the repayment of its COPs, under the terms and conditions
specified in the Indenture.
JPA Revenue Bonds – As an alternative to COPs, the District may obtain
financing through the issuance of Debt by a joint exercise of powers agency
with such Debt payable from amounts paid by the District under a lease,
installment sale agreement, or contract of indebtedness.
Commercial Paper – The District may issue short-term revenue certificates,
including commercial paper and extendable commercial paper. Board action
is sufficient to legally authorize a commercial paper issue. The District’s
commercial paper is secured by net revenues. Voter approval is not required
to issue commercial paper.
Lines of credit - The District may enter into financing arrangements providing
for a source of funds that can be readily accessed by the District for capital or
operational needs. Board action is sufficient to legally authorize the
establishment of a line of credit. Voter approval is not required to establish or
access a lien of credit.
Variable Rate Debt – The District is authorized to issue variable rate debt
including, but not limited to, public market indexed notes, indexed notes or
loans placed directly with financial institutions and other alternative variable
rate and market access products as well as traditional variable rate demand
obligations backed by bank liquidity facilities. Prior to the issuance of variable
rate debt, the savings and other possible advantages compared to a fixed rate
borrowing will be evaluated and a comparative analysis presented to the
Board of Directors as part of the approval process.
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 4 of 113
Refunding Revenue Bonds – The District is authorized to issue refunding
revenue bonds to refund outstanding District indebtedness pursuant to the
State of California local agency refunding revenue bond law (Articles 10 and
11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of
the State of California).
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 5 of 113
Loans – The District is authorized to enter into loans, installment payment
obligations, or other similar funding structures secured by a prudent source,
or sources of repayment.
Assessment Bonds – The District is authorized to issue assessment bonds
pursuant to the Improvement Bond Act of 1915, subject to requirements
imposed by Proposition 218. Such bonds are typically repaid from
assessments collected within an assessment district formed pursuant to the
Municipal Improvement Act of 1913. Assessments are levies of charges on
real property to pay for projects or services that specifically benefit that parcel
of property.
Special Tax Bonds – Issued by community facilities districts (“CFDs”) formed
by the District pursuant to the provisions of the Mello-Roos Community
Facilities Act of 1982, as amended, will be used to finance capital costs and
projects identified within the proceedings under which the applicable CFD was
formed.
Other Obligations – There may be special circumstances when other forms
of financing are appropriately utilized by the District. The District will evaluate
such proposed transactions on a case-by-case basis. Such other forms
include, but are not limited to, grant anticipation notes and judgment or
settlement obligation bonds.
2.5 Limitations on Debt Issuance
Short-Term Debt – The District’s short-term debt shall not exceed 30 percent
of its total debt at the time of issuance. The calculation of short- term debt
shall include any variable rate obligations, the authorized amount of
commercial paper, any notes/bonds with a maturity equal to or less than five
years.
Variable Rate Debt – The Finance Manager will consult with the District’s
MunicipalFinancial Advisor to determine appropriate parameters for the
issuance of variable rate debt and may rely on rating agency standard’s and
other industry standards for establishing prudent financial goals and
establishing the amount of variable rate debt to be issued.
Subordinate Lien Long-Term Debt - The District’s subordinate lien debt, for
which net revenues are pledged, shall be limited to that amount for which
current and projected revenues generate overall debt service coverage of at
least 100 percent.
Senior Lien Long-Term Debt – The District’s senior lien long-term debt, for
which net revenues are pledged, shall be limited to that amount for which
current and projected revenues generate a senior lien debt service coverage
of at least 125 percent. The calculation of debt service shall not include
General Obligation Bonds, Assessment Bonds, or Special Tax Bonds to which
revenue sources other than pledged revenues, as defined in the Indenture,
are pledged. It should be noted that the District will target to issue debt to
attempt to meet the senior lien debt service coverage target of 225 percent in
keeping with its prudent financial management practices and to maintain
credit ratings aligned with rating agency methodologies.
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 6 of 113
2.6 Purpose for Borrowing
The District shall issue debt solely for the purpose of financing the cost of
design, engineering acquisition, and/or construction of water and wastewater
system improvements in furtherance of the District’s Capital Improvement
Program (CIP). Additionally, the District may, subject to Federal tax code
limitations, include operational expenses in any debt issuance.
2.7 Ethical Standards Governing Conduct
Members of the District, the Board and its consultants, service providers, and
underwriters shall adhere to standards of conduct as stipulated by the
California Political Reform Act, as applicable. All debt financing participants
shall maintain the highest standards of professional conduct at all times, in
accordance with:
• MSRB Rules, including Rule G-37 and G-42 shall be followed at all times;
• Debt financing participants will assist the District staff in achieving its goals
and objectives as defined in this Debt Management Policy; and
• All debt financing participants shall make cooperation with the District staff
their highest priority.
2.8 Use of Derivatives
The use of derivative products can, among other things, increase District
financial flexibility and provide opportunities for interest rate savings or
enhanced investment yields. Careful monitoring of such products is required
to preserve District credit strength and budget flexibility. Swaps will not be
used to speculate on perceived movements in interest rates. Before the
District enters into any derivative product associated with debt, the Board shall
adopt an interest rate swap policy.
3.1 INTEGRATION OF CAPITAL PLANNING AND DEBT ACTIVITIES
3.2 Evaluating Capital Improvement Program Spending
The District shall develop and maintain a capital finance model to evaluate
the impact of capital program spending, operations and maintenance costs,
and debt service on its financial condition. To that end, the Finance
ManagerDirector shall oversee the ongoing maintenance of quantitative
modeling that includes, but is not limited to, the following:
• Five years of historic and projected cash flows;
• Five years of historic and projected capital expenditures;
• Five years of historic and projected operating costs;
• Five years of historic and projected fund balances for any funds
established by the District’s then-adopted Reserve Fund
• Five years of historic and projected debt service coverage;
• The most efficient mix of funding sources (long-term debt; short-term debt,
and cash);
• Projected revenue requirements; and
• Projected rates and charges.
4.1 PROCUREMENT AND EVALUATION OF PROFESSIONAL SERVICES
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 7 of 113
4.2 Appointment of Service Providers – The Finance Manager may solicit from
time to time bids, quotes or proposals, including sole source proposals for the
following services on an as needed basis:
• MunicipalFinancial Advisor – Service provider that ensures the District
complies with all financial management procedures and policies and
ensures successful closing for bond transactions.
• Bond Counsel – Service provider that drafts appropriate documentation to
ensure successful and timely closing and create valid and legally binding
security for bond issues, and provide appropriate advice and taking
appropriate actions to ensure legal validity of bond issues under state and
federal laws as applicable.
5.1 TRANSACTION-SPECIFIC POLICIES
5.2 Method of Sale – The Finance Manager shall determine the most appropriate
form of sale of its debt. In making a recommendation to the Board the Finance
Manger may consult with the District’s MunicipalFinancial Advisor and Bond
Counsel and may take into account, among other things, the type and tenor
of the proposed debt; the District’s credit ratings; the amount of funding
necessary; the timing of the needed funds; local and national economic
conditions; and general bond market conditions.
5.3 Competitive Bid Method - When necessary to minimize the costs and risks
of any District borrowing, the Finance ManagerDirector of Administrative
Services may submit to the Board a request to sell bonds on a competitive
basis. Such bids may take the form of hand- delivered or electronically
transmitted offers to purchase the bonds. Any competitive sale of District debt
will require approval of the Board. District debt issued on a competitive bid
basis will be sold to the bidder proposing the lowest true interest cost to the
District provided the bid conforms to the official notice of sale.
5.4 Negotiated Bid Method – A negotiated bond issue will provide for the sale of
debt by negotiating the terms and conditions of the sale, including price,
interest rates, credit facilities, underwriter or remarketing fees, and
commissions. Examples of such sales include:
• Variable rate demand obligations;
• An issue of debt so large that the number of potential bidders would be
too limited to provide the District with truly competitive bids;
• An issue requiring the ability to react quickly to sudden changes in interest
rates (e.g. refunding bonds);
• An issue requiring intensive marketing efforts to establish investor
acceptance;
• An issue of debt with specialized distribution requirements; and
• An issue of debt sold during a period of extreme market disruption or
volatility.
If bonds are sold on a negotiated basis, the negotiations of terms and
conditions shall include, but not be limited to, prices, interest rates,
underwriting or remarketing fees, and underwriting spreads and timing of sale.
The District, with the assistance of its MunicipalFinancial Advisor, shall
evaluate the terms offered by the underwriting team. Guidelines with respect
to price, interest rates, fees, and underwriting spreads shall be based on
prevailing terms and conditions in the marketplace for comparable issuers,
credit ratings, tenor and paramount.
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 8 of 113
If more than one underwriter is included in the negotiated sale of debt, the
District shall establish appropriate levels of liability, participation and priority
of orders. Such levels shall be based upon District policy with regards to the
underwriting responsibility among the team members, the desired allocation
of total fees, and the desired distribution of bonds. Guidelines for establishing
liability, participation, and priority of orders shall be based on prevailing terms
and conditions in the marketplace for comparable issuers.
The District shall, with the assistance of its MunicipalFinancial Advisor,
oversee the bond allocation process. The bond allocation process shall be
managed by the lead underwriter, with the following requirements:
• The bonds are allocated fairly among members of the underwriting team,
consistent with the previously negotiated terms and conditions;
• The allocation process complies with all MSRB regulations governing
order priorities and allocations;
• The lead underwriter shall submit to the Finance ManagerDirector of
Administrative Services a complete and timely account of all orders,
allocations, and underwriting activities with the investor names identified
as appropriate.
The Finance Manager Services shall require a post-sale analysis and
reporting for each negotiated bond sale. The MunicipalFinancial Advisor or
the lead underwriter may perform such analysis. A post-sale analysis will
include, but not be limited to:
• Summary of the pricing, including copies of the actual pricing wires;
• Results of comparable bond sales in the market at the time of the District’s
pricing;
• Detailed information on orders and allocation of bonds, by underwriting
firm;
• Detailed information on final designations earned by each underwriter;
and
• Summary of total compensation received by each underwriter.
STRUCTURAL ELEMENTS
5.5 Pledge of Revenues – The District’s pledge of revenues shall be determined
for each debt issue depending upon the debt instrument:
• General Obligation Bonds of the District shall be repaid from voter-
approved property taxes on property within the jurisdiction of the District.
• Certificates of Participation of the District shall be repaid from net
revenues, as defined in the Indenture.
• Revenue Bonds of the District shall be repaid from net revenues, as
defined in the Indenture.
• Loans of the District may be repaid from net revenues of the water and or
wastewater systems, or other financially prudent sources of repayment.
• Assessment Bonds of the District shall be repaid levies or charges
collected within an assessment district formed by the District pursuant to
the Municipal Improvement Act of 1913.
• Special Tax Bonds of the District shall be payable from net special taxes
collected in applicable taxing jurisdiction as a result of the levy of special
taxes.
5.6 Maturity – The District may issue tax-exempt debt with an average life equal
to, but no greater than 125% of, the average life of the assets being financed.
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 9 of 113
The final maturity of the debt should be no longer than 40 years absent
compelling circumstances or facts. Factors to be considered when
determining the final maturity of debt include: the average useful life of the
assets being financed, relative level of interest rates, intergenerational equity
and the year-to-year differential in interest rates.
5.7 Maturity Structure – The District’s long-term debt may include serial and
term bonds. Other maturity structures may also be considered if they are
consistent with prudent financial management practices.
5.8 Coupon Structure – Debt may include par, discount and premium. Discount
and premium bonds must be demonstrated to be advantageous relative to par
bond structures taking into consideration market conditions and opportunities.
For variable rate debt, the variable rate may be based on one of a number of
commonly used interest rate indices and the index will be determined at the
time of pricing.
5.8
5.105.9 Debt Service Structure – Debt service may be structured primarily
on an approximate level (combined annual principal and interest) basis.
Certain individual bond issues, such as refunding bonds, may have debt
service that is not level. However, on an aggregate basis, debt service should
be structured primarily on a level basis.
5.115.10 Redemption Features – In order to preserve flexibility and
refinancing opportunities, District debt will generally be issued with call
provisions. The District may consider calls that are shorter than traditional
and/or non-call debt when warranted by market conditions and opportunities.
For each transaction, the District will evaluate the efficiency of call provision
alternatives.
5.125.11 Credit Enhancement – The District shall competitively procure credit
enhancement for an original sale of bonds if the Finance ManagerDirector, in
consultation with the MunicipalFinancial Advisor and the senior underwriter,
determines that it is cost effective to do so. The Finance ManagerDirector may
in consultation with the MunicipalFinancial Advisor and the senior underwriter
determine that due to certain circumstances a sole source procurement
process may be more advantageous than a competitive process.
5.135.12 Senior/Subordinate Lien – The District may utilize both a senior and
a subordinate lien structure. The choice of lien will be determined based on
such factors as overall cost of debt, impact on debt service, impact on rates,
and marketing considerations.
5.145.13 Debt Service Reserve Funds – The District shall provide for debt
service reserve funds to secure District debt when necessary.
6.1 COMMUNICATION AND DISCLOSURE
6.2 Rating Agencies
The District shall maintain its strong ratings through prudent fiscal
management and consistent communications with the rating analysts. The
Finance ManagerDirector shall manage relationships with the rating analysts
assigned to the District’s credit, using both informal and formal methods to
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 10 of
disseminate information. Communication with the rating agencies may include
one or more of the following:
• Full disclosure on an annual basis of the financial condition of the District;
• A formal presentation, at least annually or as becomes necessary to the
rating agencies, covering economic, financial, operational, and other
issues that impact the District’s credit;
• Timely disclosure of major financial events that impact the District’s credit;
• Timely dissemination of the Comprehensive Annual Financial Report,
following its acceptance by the District’s Board;
• Full and timely distribution of any documents pertaining to the sale of
bonds; and
• Periodic tours of the water system operations, as appropriate.
6.3 Bond Insurers
The Finance ManagerDirector shall manage relationships with the bond
insurers, to the extent any Debt is so insured, by providing appropriate
information. Communication with other bond insurers shall be undertaken
when the Finance ManagerDirector of Administrative Services, with the
assistance of the District’s MunicipalFinancial Advisor, determines that credit
enhancement is cost effective for a proposed bond issue.
Disclosure Reports – The District shall comply with its disclosure
undertakings and make disclosure reports readily available to market
participants though the Electronic Municipal Market Access website.
Web Site – The District may use its website as a tool for providing timely
information to investors.
7.1 REFUNDING POLICIES
The District shall strive to refinance debt to maximize savings and minimize the cost
of funds as market opportunities arise. A net present value analysis will be prepared
that identifies the economic effects of any refunding to be proposed to the Board.
The District shall target a 3% net present value savings for current and 5% for
advance refunding transactions. Upon the advice of the Finance ManagerDirector
of Administrative Services, with the assistance of the MunicipalFinancial Advisor
and Counsel, the District will consider undertaking refundings for other than
economic purposes, such as to restructure debt, change the type of debt
instruments being used, or to retire a bond issue and indenture in order to remove
undesirable covenants.
7.2 Savings Thresholds – Minimum savings thresholds have been established
to help guide the economic analysis of refunding bonds. The minimum
savings guidelines are applicable on a maturity-by-maturity basis and are
expressed as a percentage of refunded bond par calculated by dividing the
expected net present value savings generated by the proposed refunding by
the par amount of refunded bonds. At the recommendation of the Finance
ManagerDirector of Administrative Services, with the assistance of the
MunicipalFinancial Advisor, the District may complete a refunding for net
present values savings equal to the target specified above on an aggregate
bond issue basis rather than a maturity by maturity basis. Generally, the
District shall only refund bonds to generate debt service savings of the
specified minimum savings set forth in the previous paragraph can be
achieved.
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 11 of
7.3 Coupon on Refunded Bond – The Finance ManagerDirector of
Administrative Services may take into consideration whether the coupon on
the refunded bond is significantly higher or lower than the most common
outstanding bond coupons of approximately five percent.
7.4 General Interest Rate Environment – The Finance ManagerDirector of
Administrative Services may take into consideration whether the available
refunding bond interest rates are generally high or generally low relative to
long-term averages of historical rates.
7.5 General Interest Rate Outlook – The Finance ManagerDirector of
Administrative Services may take into consideration the general outlook for
future interest rates, as derived from economic forecasts, market forecasts,
implied forward rates, or other sources.
7.6 Debt Management Considerations – The Finance ManagerDirector of
Administrative Services may take into consideration debt management
issues such as cost and staff efficiencies associated with combining multiple
refunding bond issues or combining refunding and new money bond issues.
7.7 Call Date – The Finance ManagerDirector of Administrative Services may
take into consideration the amount of time between the pricing/closing date of
the refunding Debt and the call date of the Debt to be refunded.
7.8 Final Maturity Date – The Finance ManagerDirector of Administrative
Services may take into consideration the amount of time remaining until the
final maturity of the Debt to be refunded.
8.1 REINVESTMENT OF PROCEEDS
8.2 General – The District shall comply with all applicable Federal, State, and
contractual restrictions regarding the use and investment of bond proceeds.
This includes compliance with restrictions on the types of investment
securities allowed, restrictions on the allowable yield of some invested funds,
as well as restrictions on the time period during over which some bond
proceeds may be invested. To the extent that a bond issue is credit enhanced,
the District shall adhere to the investment guidelines of the credit
enhancement provider.
8.3 Requirements of Indenture – The District will comply with all terms and
conditions of the appropriate legal documents related to the Debt. Such
limitations shall include, but not be limited to Investments in the Indenture.
9.10 CREATION AND MAINTENANCE OF FUNDS
The District maintains a number of different funds integral to the long-range financial
planning process. Each of these funds is held for a specific purpose and can
generally be categorized as either an operating, capital or debt reserve fund. The
District will comply with all requirements and limitations created under its Reserve
Policy.
10.1 COMPLIANCE
10.2 Arbitrage Liability Management
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 12 of
The District shall minimize the cost of arbitrage rebate and yield restrictions
while strictly complying with tax law. Because of the complexity of arbitrage
rebate regulations and the severity of non-compliance penalties, the District
shall solicit the advice of bond counsel and other qualified experts about
arbitrage rebate calculations. The District shall contract with a qualified third-
party for preparation of the arbitrage rebate calculation.
The District shall maintain an internal system for tracking expenditure of bond
proceeds and investment earnings. The expenditure of bond proceeds shall
be tracked in the financial accounting system by issue. Investment may be
pooled for financial accounting purposes and for investment purposes. When
investment of bond proceeds are co-mingled with other investments, the
District shall adhere to IRS rules on accounting allocations.
10.3 Post-Issuance Tax Compliance
The District has adopted Written Procedures to Ensure Compliance with
Requirements for Tax-Exempt Bonds. The District shall comply with such
procedures to maintain the tax-exempt status of District debt obligations or to
maintain eligibility for direct pay subsidy payments, as applicable.
10.4 Continuing Disclosure
The District shall comply with the requirements of each Continuing Disclosure
Certificate entered into at the time of a sale of bonds. Annual information
provided by the District shall mirror the information in any District offering
statement at the time of a primary offering. Annual financial information will
be sent by the District or its designated consultant, within the time required
under the Continuing Disclosure Certificate to the EMMA System This shall
include:
• Comprehensive Annual Financial Report of the District; and
• Updated tables from the Official Statement, as detailed in the Continuing
Disclosure Certificate.
In addition to annual disclosure, the District shall provide ongoing information
about certain enumerated events, as defined by regulation, to the EMMA
System.
The District may engage a firm to assist it in ensuring timely completion and
filing of annual reports and in identifying, and making timely filings with respect
to, the occurrence of reportable enumerated events.
In addition, the District’s Continuing Disclosure Agreements entered into after
February 27, 2019 call for the District to notify investors of the incurrence of
any “financial obligation,” if material, and the District will be obligated to
disclose defaults on, acceleration of and certain other information with respect
to any “financial obligation” regardless of when the financial obligation was
incurred.
Rule 15c2-12 provides a general definition of a “financial obligation.” While
the impetus for the obligation to disclose information about financial
obligations was a perception by the SEC and others that municipal issuers
were increasingly entering into bank or other private placement debt, Rule
15c2-12 defines “financial obligation” more broadly to include “a debt
obligation, derivative instrument ….. or a guarantee of either a debt obligation
or a derivative instrument.”
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 13 of
To date, the SEC has provided limited guidance on the specific application of
the definition of “financial obligation.” The SEC has suggested that a key
concept is that a “financial obligation” involves the borrowing of money. In
public comments, representatives of the SEC have declined to provide a
definition of a “guarantee,” but they did indicate that the SEC will not look to
state law definitions of a “guarantee” or “debt.”
As described in detail below, the District will need to monitor agreements or
other obligations entered into by the District, and any modifications to such
agreements or other obligations, to determine whether they constitute
“financial obligations” under Rule 15c2-12 and, if material, need to be
disclosed on to investors.
In addition, if the District entity receives a notice of default or an event of
default or of an acceleration, termination event, modifications of or other
similar event on any agreement or other obligation, the District will need to
determine whether such obligation constitutes a “financial obligation”
(regardless of when originally incurred) and whether such default or other
event reflects financial difficulty (i.e., reduction in overall liquidity,
creditworthiness or debt owner’s rights).
Types of agreement or other obligations which are likely to be “financial
obligations” under Rule 15c2-12 include:
a. Bank loans or other obligations which are privately placed;
b. Letters of credit, including letters of credit which are provided to third
parties to secure the District’s obligation to pay or perform;
c. Capital leases for property, facilities or equipment; and
d. Agreements which guarantee the payment or performance
obligations of a third party (regardless of whether the agreements
constitute guarantees under California law).
Types of agreements which could be a “financial obligation” under Rule 15c2-
12 include:
a. Payment agreements which obligate the District to pay a share of
another public agency’s debt service (for example, an agreement with
a joint powers agency whereby the District, agrees to pay a share of
the joint powers agency’s bonds, notes or other obligations);
b. Service contracts with a public agency or a private party pursuant to
which the District is obligated to pay a share of such public agency’s
or private party’s debt service obligation (for example, certain types
of public-private partnership arrangements);
c. Agreements pursuant to which the District is obligated to pay amounts
expressly tied to another party’s debt service obligations, regardless
of whether service is provided or not;
d. Agreements which include a rate component that expressly passes
through debt service or capital obligation of the other party; and
e. Agreements the payments under which are not characterized as an
operation and maintenance expenses for accounting purposes if such
agreements could be characterized as the borrowing of money.
The District General Counsel and/or Finance Manager will notify the District’s
bond counsel and/or disclosure counsel of the receipt by the District of any
default, event of acceleration, termination event, modification of terms (only if
material or reflecting financial difficulties), or other similar events (collectively,
Potentially Reportable Events) under any agreement or obligation to which
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 14 of
the District is a party and which may be a “financial obligation” as discussed
above. Such notice should be provided by the General Counsel or the
Finance Manager as soon as the General Counsel or Finance Manager
receives notice from District staff, consultants or external parties of such event
or receives direct written notice of such event so that the City can determine,
with the assistance of bond counsel and/or disclosure counsel, whether notice
of such Potentially Reportable Event is required to be filed on EMMA pursuant
to Rule 15c2-12. If filing on EMMA is required, the filing is due within 10
business days of such Potentially Reportable Event to comply with the
applicable Continuing Disclosure Agreement.
The Finance Manager will catalog the execution by the District of any
agreement or other obligation which might constitute a “financial obligation”
for purposes of Rule 15c2-12 and which is entered into after February 27,
2019. Amendments to existing agreements or financial obligations which
relate to covenants, events of default, remedies, priority rights, or other similar
terms should be reported to the District’s bond counsel and/or disclosure
counsel as soon as notice of amendment requests is received by District staff,
consultants, or external parties of such event. Such notice is necessary so
that the District can determine, with the assistance of bond counsel and/or
disclosure counsel, whether such agreement or other obligation constitutes a
material “financial obligation” for purposes of Rule 15c2-12. If such
agreement or other obligation is determined to be a material “financial
obligation” or a material amendment to a “financial obligation” described
above, notice thereof would be required to be filed on EMMA within 10
business days of execution or incurrence.
10.5 Legal Covenants
The District shall comply with all covenants and conditions contained in
governing law and any legal documents entered into at the time of a bond
offering.
11.1 DEBT DATABASE MANAGEMENT
The District shall maintain complete information on its outstanding debt portfolio, in
a spreadsheet or database program format. The information in the database shall
include, but not be limited to, the following:
• Issue Name
• Initial Issue Par Amount
• Dated Date of the Issue
• Principal Maturity Amounts
• Coupon Rate by Maturity
• Amount Outstanding
• Call Provisions
• Purpose of the Issue
• Credit Enhancer, if any
• Competitive or Negotiated Sale
• Names of Underwriting Team Members
The District shall use the debt database for the following purposes:
• Generate reports
• Gross annual debt service
• Net annual debt service
• Refunding Analyses
PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-003 Debt Management Policy Page 15 of
• Output to Fund Accounting System PROPOSED REVISIONS ITEM NO. 7.4.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-005 Financial Reserves Policy Page 1 of 5
Policies and Procedures
Policy No.: 3010-005
Adoption Method: Resolution No. 18-24
Effective Date: July 1, 2018
Last Revised: August 26, 2017
Prepared By: Delia Lugo, Finance Manager
Applicability: District Wide
POLICY: FINANCIAL RESERVES
1.0 GENERAL POLICY
Maintaining adequate reserves is an essential part of sound financial
management. The Yorba Linda Water District Board of Directors realizes the
importance of reserves in providing reliable service to its customers, well-
maintained infrastructure for current and future customers, financing capital
projects as well as capital repair and replacement, and the ability to respond to
changing circumstances. Interest derived from reserve balances shall be credited
to the reserve account from which it was earned.
2.0 CATEGORIES
Yorba Linda Water District (YLWD or District) shall accumulate, maintain and
segregate its reserve funds into the following categories:
Board Designated Unrestricted Reserves; and
Board Designated Restricted Reserves.
3.0 SCOPE
This policy will assist the Board of Directors in establishing:
Minimum and Maximum Funding Levels, with target goals as a
percentage of maximum funding level for each reserve fund, unless
otherwise noted;
Requirements for the use of reserve funds; and
Periodic review requirements for each reserve.
4.0 PERIODIC REVIEW
Staff and the YLWD Board shall review the reserve balances and targets
annually as a part of the annual budget process. The Finance Staff will continue
to review all reserve and investment balances monthly, with a quarterly report
going to the full Board. Any changes must be approved by resolution of the
District Board of Directors. Changes can include, but are not limited to,
establishment of additional reserve funds, changes in reserve target levels, and
changes in types of reserve categories.
CURRENT POLICY ITEM NO. 8.1.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-005 Financial Reserves Policy Page 2 of 5
5.0 DESIGNATED UNRESTRICTED AND RESTRICTED RESERVES
5.1 Board Designated Unrestricted Reserves
These are reserve funds earmarked for the purpose of funding such items
as new capital facilities, repair or replacement of existing facilities, and
general operating reserves designated for a specific purpose and use by
the Board of Directors. All reserves in this category will be funded at least to
the recommended minimum level. As a means for the District to retain its
AA and AA+ ratings, the targeted total reserve balance is 365 days in cash
at the end of the fiscal year.
5.1.1 Operating Reserve
A. Definition and Purpose – Established to cover temporary
cash flow deficiencies that occur as a result of timing
differences between the receipt of operating revenue and
expenditure requirements and unexpected expenditures
occurring as a result of doing business.
B. Funding Level – The District’s current funding levels will be a
minimum of 25% and a maximum of 50% of the annual
operating budget, including interest expense, for both the
water and sewer funds. In the event this fund falls below its
minimum funding level, the Board will act to restore the
balance above the minimum funding level within twelve (12)
months from the date that the fund fell below the minimum
level.
Levels Water Sewer
Minimum 25% 25%
Maximum 50% 50%
Levels Water Sewer
Minimum $7,593,220 $403,967
Maximum $15,186,441 $807,933
C. Events or Conditions Prompting the Use of the Operating
Reserve – This reserve may be utilized as needed to pay
outstanding operating expenditures prior to the receipt of
anticipated operating revenues.
5.1.2 Emergency Reserve
A. Definition and Purpose – Established to provide protection
recovery to the District and its customers for losses arising
from an unplanned event or circumstance (i.e. fires,
earthquakes or financial emergencies). The reserve level
combined with YLWD’s existing insurance policies should
adequately protect YLWD and its customers in the event of a
loss.
B. Funding Level – Established at a minimum level equal to 5%
and a maximum level equal to 10% of the net capital assets
for both the District’s water and sewer funds. In the event
this fund falls below its minimum funding level, the Board will
CURRENT POLICY ITEM NO. 8.1.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-005 Financial Reserves Policy Page 3 of 5
act to restore the balance above the minimum funding level
within twelve (12) months from the date that the fund fell
below the minimum level.
Levels Water Sewer
Minimum 5% 5%
Maximum 10% 10%
Levels Water Sewer
Minimum $5,813,701 $1,899,951
Maximum $11,627,401 $3,799,901
C. Events or Conditions Prompting the Use of the Emergency
Reserve – This reserve shall be utilized to cover unexpected
losses experienced by the District as a result of a disaster or
other unexpected loss. Any reimbursement received by the
District from insurance companies as a result of a submitted
claim shall be deposited back into the reserve as
replenishment for the loss.
5.1.3 Capital Replacement Reserve
A. Definition and Purpose – Established to provide funding for
general use on capital projects as well as capital repair and
replacement funding as the District’s infrastructure
deteriorates over its expected useful life. In addition, funding
is to provide for non-scheduled capital asset repair and
replacement and other capital related expenses.
B. Funding Level – The minimum target level for each reserve
fund is the current Fiscal Year capital budget and the
maximum is the current year plus 100% of the subsequent
Fiscal Year capital budget. The target levels in these reserve
funds will fluctuate depending on the capital improvement
plan and timing of the projects. Therefore, no target level will
be established. In the event these fund falls below the
minimum funding level, the Board will act to restore the
balance above the minimum funding level within twelve (12)
months from the date that the fund fell below the minimum
level.
Levels Water Sewer
Minimum $6,327,500 $2,000,000
Maximum $14,555,738 $2,280,000
C. Events or Conditions Prompting the Use of the Capital
Replacement Reserve – Through the annual budget
process, staff shall recommend anticipated asset
replacement and capital improvement projects. The Board of
Directors shall take action to approve recommended project
appropriations from the capital replacement reserve. Should
unplanned replacement be necessary during any fiscal year,
the Board of Directors may take action to amend the budget
and appropriate needed funds as required.
CURRENT POLICY ITEM NO. 8.1.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-005 Financial Reserves Policy Page 4 of 5
5.1.4 Rate Stabilization Reserve
A. Definition and Purpose – Established to assist in smoothing
out water rate increases. This reserve is governed by the
District’s bond covenants and funds deposited into this
reserve are treated as operating revenues in the fiscal year
designated by the District and will be treated as such in fiscal
years of such designation for the purposes of computing the
District's debt service coverage ratio.
B. Funding Level – Established at a minimum level of 5% and
maximum level of 20% of budgeted water sales for the
current fiscal year. The Board of Directors have the option of
funding the Rate Stabilization Reserve at a lower level.
Levels Water
Minimum 5%
Maximum 20%
Levels Water
Minimum $1,600,999
Maximum $6,403,997
C. Events or Conditions Prompting the Use of the Rate
Stabilization Reserve – The reserve can be used during any
year where other revenues are not sufficient to meet the
required debt service coverage ratio or when the maximum
level in the reserve is reached.
5.2 Board Designated Restricted Reserves
These are funds held to either satisfy limitations set by external requirements
established by creditors, grant agencies or law, or to Only be used for
Examples include stipulated bond covenants and reserves held with a fiscal
agent.
5.2.1 Conservation Reserve
A. Definition and Purpose – Established to provide funding for
District-wide conservation efforts.
B. Funding Level – Funding shall be established as the net
result of administrative penalties assessed less allowed
expenditures of each fiscal year.
Levels Water
Minimum $0
Maximum $104,000
C. Events or Conditions Prompting the Use of the Conservation
Reserve – This reserve may be used to fund district-wide
conservation efforts in relation to, but not limited to, salary
and related, maintenance, and material expenses for leak
detection, conservation efforts, and other allowable
CURRENT POLICY ITEM NO. 8.1.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
3010-005 Financial Reserves Policy Page 5 of 5
expenses outside the normal cost of service for each fiscal
year.
5.2.2 Employee Liability Reserve
A. Definition and Purpose – The purpose is to cover
employees’ accrued vacation and other compensatory time
and to ensure the complete funding associated with the
liability incurred for employees whom have met the
requirements necessary for district paid health benefits at
retirement.
B. Funding Level – Funding for FY19 shall be established at a
minimum target level of $273,000.
Levels Water
Target $273,000
C. Events or Conditions Prompting the Use of the Employee
Liabilities Reserve – This reserve may be used in the event
that operating funds are not adequate to meet vacation,
compensatory and sick time paid out or retiree medical cost
obligations within the current year.
CURRENT POLICY ITEM NO. 8.1.
MATERIALS SUBMITTED BY: Delia Lugo
MEETING DATE: June 25, 2019
ell 1 NI. 9.5. _
jh
Yorba Linda
Water District
DDW Proposed Revisions to
PFOA and PFOS Notification & Response Levels
Effective July 8, 2019
Nb cj&fM}S-SUBMITTED Sly: Rosanne Westq,'ba t nd,:�v f �
MEETING DATE: June 25, 2019
111111111111 IMF!
- EM 11,1115.
Additional Notification When Water Served is Above Response
14 13 n/a
Level — DDW recommends the Following:
Item PFOA PFOS PFOA + PFOS
Current Notification Levels
Proposed Notification Levels
Current Response Levels
10
Proposed Response Levels*
40
Highland Reservoir - Blended
yW�S SUBMITTED BY: Rosanne WestO?9;b,,-PiTn-6�vv It
MEETING DATE: June 25, 2019
21.8 38.3 60.1
*effective July 8, 2019
Jill �G Mill I
• Notify local governing body:
— Water is being provided that exceeds the chemical's Response Level
— And reason for the continued use of the source.
• Notify water system's customers and other water consumers:
— Contaminant above Response Level in drinking water
— DDW recommends source removal above Response Level
— State reason for the continued use of the source
• Provide notice to customers and to water-consuming population
that would not directly receive notification (e.g. renters, workers
and students)
A.
MOJJJW S SUBMITTED BY: Rosanne West�'ba��dV - ,� � : " �,��•�
MEETING DATE: June 25, 2019 --
I -N6. 9.5. _
I _ •
• Notify consumers directly (e.g. posted notices, hand-delivered notices,
and water bill inserts)
• Issue press release to local media
• Conduct monthly sampling and analysis of drinking water supply for as
long as contaminant exceeds Response Levels
• Conduct quarterly sampling for 12 months, should the concentration drop
below the Response Levels
• Notify water system's customers and other consumers quarterly for as
long as contaminant is present at concentrations greater than Response
Levels
NOTE: Should the water system refuse to provide additional consumer
notification, DDW may provide that notification
M#JJJW S SUBMITTED BY: Rosanne WeSt0?9'b t]-n-d&VV R
MEETING DATE: June 25, 2019
Potential Financial Impact to use 100% import water
• 100% Import Water Annual Cost : $23, 255, 220
• FY20 Budgeted Water Cost : $ 15, 110,810
• Unfunded Difference : -$8, 144,410
• Existing debt covenant ratio would drop from 253% to -45%
• By end of FY20 would be in default at -$ 1,353,623 net income
(sewer and water) or -$2,536,832 net income (water only) .
3
N jj, tW}S SUBMITTED BY: Rosanne WestOOR'ba� dV , : " f.�•�
MEETING DATE: June 25, 2019 --
• Currently, $2 .80/unit
• Need $8, 144,410 to transition to 100% import
• Projecting 18, 273 AF in water consumption
• $ 1 .02 difference per unit
• NEW RATE : $3 .82/unit
S SUBMITTED B•aF: Rosanne i • " 1
���rba t neFa-d1/a
MEETING DATE: June 25, 2019 _
rF
YLWD Proposed Plan to Address PFAS
06�- -M .
Protecting Public Health and Safety is our most
important job !
• Work with OCWD to address DDW's proposed
changes to PFAS Response Levels
• Conduct PFAS pilot study with Purolite
• Evaluate operational & engineering solutions to
address PFAS
�
MOJJJW S SUBMITTED BY: Rosanne Westc?R'ba ti-n-6�dV ,�
MEETING DATE: June 25, 2019 �' f'J - --
it
• Monitoring and reporting PFOA and PFOS since 2013
— Consumer Confidence Reports
— DDW
— Notifications to governing bodies
• Implemented blending plan to meet Health Advisory
Level, and later Response Level
• Consulted PFAS experts, attended PFAS seminars and
conducted PFAS facility site visits
• Formed "Tiger Team"
• OCWD's PFAS Groundwater Producer Task Force
A.
MOJJJW S SUBMITTED BY: Rosanne Wester ba�� �, .
MEETING DATE: June 25, 2019 �' f'J - --
GENERAL MANAGER’S REPORT
MEETING DATE: June 25, 2019
TO: Board of Directors
FROM: Marc Marcantonio, General Manager
YLWD Ribbon Cutting Ceremony: June 15, very successful. We conducted an early pre-tour for the
local neighborhoods, which was very interesting and successful. The entire event was well received by
the public and dignitaries attending.
PFAS Update: As of this morning, we just learned that California plans on July 8 to publish new
"Notification Levels" and new "Response Levels". Here are the new lower PFAS limits they will
announce:
Notification level (ppt) Response Level (ppt)
PFOA 5.1 10
PFOS 6.5 40
These Levels are incorporated in the chart below, along with our blended numbers. Although by taking
some wells out of service we may be able to reduce the blended levels slightly lower, they will still not
achieve the Response Level desired by the State specifically for PFOA. It is important to note that with
this coming announcement, the State is no longer looking at a combined PFOA + PFOS limit; now each
has their own limit. We meet PFOS with our blending now; it is the PFOA that would require more
treatment. Staff will calculate how much MWD water would be required (if possible).
As a reminder, the State is not establishing a Maximum
Contaminant Level (MCL), but instead is “recommending” a
response level. Their current recommendation is that water
providers take out of service water sources that are not
below the Response Level. We will NOT be able to
immediately comply with the new Response Levels without
going directly to 100% import water.
We could eventually comply after building a treatment plant
(back of the envelope estimate is $10 million plus annual
O&M for all wells, although we could likely meet the
Response Level with a scaled down plant to treat the wells
with the highest levels, and blend).
Here is the preliminary immediate financial impact for
transitioning our system to 100% import water from
MWDOC/MWD:
100% Import Water annual cost: $23,255,220
FY20 Budgeted Water cost: $15,110,810
Unfunded Difference: -$8,144,410
Item PFOA
(ng/L)
PFOS
(ng/L)
PFOA
+
PFOS
(ng/L)
Current
Notification
Levels
14 13 n/a
Proposed
Notification
Levels*
5.1 6.5 n/a
Current
Response
Levels
n/a n/a 70
Proposed
Response
Levels*
10 40 n/a
Highland
Reservoir -
Blended
21.8 38.3 60.1
*effective
July 8, 2019
ITEM NO. 10.1.
MATERIALS SUBMITTED BY: Marc Marcantonio
MEETING DATE: June 25, 2019
Going to 100% Import Water will drop our existing debt covenant ratio from 253% to -45% and end
FY20 in default at -$1,353,623 net income (sewer and water) or -$2,536,832 net income (water only).
On the other hand, making up the -$8,144,410 shortfall could be a pass-through cost on the
commodity charge without requiring a Prop 218, as this would be a purchased wholesale water cost.
To make up the shortfall would require about a $1.02 increase in the commodity charge, bringing it up
to $3.82 per unit. We could keep our current commodity rate, and add a pass-through line to meet
DDW Health Advisory Recommendations of the $1.02.
We would want to install a Pressure Reducing Valve and vault (about $125K) at Highland Reservoir to
flow the import water into the reservoir, and this cost would need to be factored as well.
Our immediate priority is not in trying to calculate the least expensive manner to comply with the lower
limits. It is to delay these new limits until health studies are completed and an economic
feasibility study is completed. We are scrambling here making phone calls and doing everything
possible to stop this July 8 notification of an artificially lower Response Level. Pasquale is burning up
the phone lines and internet with his political contacts.
Staff and I will be attending an emergency meeting tomorrow morning at OCWD to discuss this. I spent
a long time on the phone today with Mike Marcus to collaborate on how to stop these lower Response
Levels. His legislative team is working Joaquin Esquivel of the SWRCB, Darren of DDW, most
importantly Jared Blumenthal, and Umber, Daly, QuirkSilva, and Ling Ling Chang to put pressure to
stop the release of this level.
Jason Dadakis at OCWD produced the below talking points for use with the individuals listed above:
• Main point: More conclusive science and additional time is needed for a decision of this
magnitude. Rushed and overly conservative limits could needlessly confuse and alarm the
public, as well as burden California ratepayers with $100 of millions if not billions of dollars of
additional cost.
• Toxicology
o Proposed Notification and Response Levels are based on data from an unpublished
federal National Toxicology Program (NTP) study.
o Cancer endpoint (pancreatic) selected by OEHHA has not typically been applied to
develop drinking water standards. There is less consistency and less replication in the
literature of this endpoint, leading to significantly less certainty on quality and
applicability of the results.
o The relevant PFOA/PFOS human epidemiological literature does not support this
endpoint, in that such studies have not determined pancreatic cancer can be caused by
PFOA/PFOS exposure, much less at the low thresholds implied by OEHHA’s
interpretation of the NTP data
o NTP study only found the response in male rats, not females. The tumor-forming
mechanism is a) unique to rodents and b) known to be stronger in males. There are
significant questions as to if this mechanism has any relevance to humans
• OCWD Producer Impacts
o 37 out of the 49 OCWD-area drinking water wells recently tested under state monitoring
orders would be above the Proposed new Response Level of 10 ppt for PFOA;DDW
would recommends these wells be taken out of service, or blended or treated to below
this level.
ITEM NO. 10.1.
MATERIALS SUBMITTED BY: Marc Marcantonio
MEETING DATE: June 25, 2019
o We project that at least 71 of the ~200 OCWD-area Producer wells would be above the
proposed DDW response Level.
o We estimate approximately $200 million in capital costs to treat these 71 wells with a
combined annual O&M of $15 million/year
o If these wells were to be taken out of service and the supply replaced with treated MWD
water, the water supply cost for the OCWD service area would increase by $50 million
• Statewide impacts
o Statewide, about 300 of the 612 well monitoring orders have reported data from their first
round of testing; 65 of these 300 have results >10 ppt for PFOA
o Counties with affected wells at RL = 10 ppt for PFOA: Los Angeles, Orange, Riverside,
San Joaquin, and San Luis Obispo
o Water agencies affected wells at RL = 10 ppt for PFOA: City of Glendale, Santa Clarita
Valley W.A., City of Corona, Desert Water Agency, Elsinore Valley MWD, City of
Riverside, City of Lathrop, and Atascadero Mutual Water Company
Political Aspect of PFAS: The State of California is stating where they THINK standards should be,
so they can look tough without sticking their necks out by establishing a MCL. They are going to leave
it to us, the retail water agencies to both clean up the mess and deal with the harm to public confidence
in our water at the same time while they stand back and safely watch. In addition, at no time do they
even care to ask how much this will cost; nor will they consider the loss of public trust in public drinking
water, and the unintended consequences that result.
Orange County Register Interview: On June 17 Jason Dadakis (OCWD) and myself met with Martin
Wisckol, a reporter for the Orange County Register. The interview went very well. There is nothing
imminent to be published; it turned out this was more fact-finding and not deadline driven. OCWD and
we did well. The 2.5 hours we spent educating Martin should serve us well when he publishes an
article as he will be better informed with facts instead of emotions.
Op Ed for CalMatters.org: While at the Monterrey ACWA conference in May, one of the attorney
presentations involved the increase in potential Inverse Condemnation cases forthcoming because of
the many wildland fires last year. YLWD was discussed at that meeting, and I spoke about the lawsuit
and judgement we received as a result of the 2008 Freeway Complex Fire. Since the State is
considering the PG & E bankruptcy, and legislation to hold utilities liable for wildland fires, I was asked
to share my thoughts in an Op-ed piece for CALMatters.org. The Op-ed was circulated at the State
Capitol, and picked up by B.C. Water News in two consecutive issues. I received a lot of favorable
emails by water utilities and organizations from all over the state. I was also asked to make a
presentation in November to a Water and Wastewater Organization in Seattle, Washington (expenses
paid).
Wildland Fire Helicopter Hydrant System Project: I am happy to report that we received OCFA
approval for our pilot Heli-Hydrant site at our Santiago Reservoir. Yesterday we met at the site with
representatives from Whaling Fire, Superior Tank Co, City of Yorba Linda, OCFA Air Opns, and staff.
We are calculating the weight load the Heli-Hydrant will place on our reservoir corner to make sure we
are good, and once cleared we are ready to proceed with our first Heli-Hydrant.
AWWA ACE National Meeting: June 9-13 in Denver. President Jones, John D. and myself attended.
The discussions about PFAS ruled the week and each class was standing room only. I picked up some
very valuable tips on public messaging and on treatment that alone made the trip well worth attending.
It also validated our past and current actions are on target.
ITEM NO. 10.1.
MATERIALS SUBMITTED BY: Marc Marcantonio
MEETING DATE: June 25, 2019
California wildfires threaten water supply. Here’s how
Guest Commentary | June 20, 2019 | Commentary, ENVIRONMENT, JUSTICE, My Turn, WATER
GUEST COMMENTARY: Find out more about submitting a commentary.
By Marc Marcantonio, Special to CALMatters
In 2008, a fire swept through the Santa Ana Canyon in Orange County. The fire lasted
10 days and burned over 30,000 acres, leveling hundreds of buildings.
The fire was started by a car on the side of the freeway–a fluke which gave the fire its
name, the Freeway Complex Fire.
Ten years later, while firefighters and communities are gearing up for another wildfire
season, California’s lawmakers are grappling with tough questions over how to assign financial responsibility
for wildfire damages. The Freeway Complex Fire holds important lessons for all.
Among the many victims of the fire was a public drinking water supplier that serves about 80,000 residents in
Orange County, the Yorba Linda Water District, where I work as general manager.
Of the hundreds of structures damaged by the Freeway Complex Fire, one was the water district’s facilities
needed to pump water through portions of the system.
After the fire, the water district was slapped with a lawsuit and ultimately had to pay a $69 million judgment.
Even though the court determined that the Yorba Linda Water District didn’t ignite the fire or act
inappropriately, the district was still held liable for fire damages because the fire incapacitated the pumps
needed to push water to the fire hydrants in one neighborhood.
The Yorba Linda Water District and the people who depend on it got stuck with the bill because of an arcane
legal standard unique to California. That standard allows public service providers, including drinking water
suppliers, to be held liable for property damage, even when they haven’t done anything wrong.
This same legal standard–sometimes called “strict liability”–is now being used in lawsuits across California
against other public drinking water suppliers when their facilities are affected by fires. The case against the
Yorba Linda Water District should serve as a cautionary tale.
Public drinking water suppliers’ financial stability is threatened if they are saddled with the cost of damage
caused by fires they don’t start. And that could put the safety of our drinking water at risk.
It also could hinder the ability of water suppliers to adapt to climate change and help the state achieve its
greenhouse gas reduction goals. It could drain millions of dollars needed to maintain and upgrade California’s
water infrastructure. And it could leave ratepayers and taxpayers on the hook for exorbitant costs and threaten
workers’ jobs.
In the coming weeks, the Legislature will hold hearings addressing wildfire risk to the state. Lawmakers should
not wait for one or more public water supplier to declare bankruptcy before addressing this significant issue.
The Legislature should implement reforms making it clear that public drinking water suppliers are not
responsible for the damage from fires they do not start.
Marc Marcantonio is general manager of Yorba Linda Water District, mmarcantonio@ylwd.com. He wrote this
commentary for CALmatters.
ITEM NO. 10.1.
MATERIALS SUBMITTED BY: Marc Marcantonio
MEETING DATE: June 25, 2019