HomeMy WebLinkAbout2024-10-24 - Board of Directors Meeting Agenda Packet
AGENDA
YORBA LINDA WATER DISTRICT
BOARD OF DIRECTORS REGULAR MEETING
Thursday, October 24, 2024, 8:30 AM
1717 E Miraloma Ave, Placentia CA 92870
1. PARTICIPATION INSTRUCTIONS
This meeting will be held in person. For public convenience, the meeting can also be accessed via
internet-based service or telephone as indicated below. For questions regarding participation, please call
the Board Secretary at (714) 701-3020.
Computer/Mobile Device: https://us06web.zoom.us/j/83910539282
Telephone: (669) 444-9171 or (669) 900-6833
Meeting ID: 839 1053 9282
2. CALL TO ORDER
3. PLEDGE OF ALLEGIANCE
4. ROLL CALL
Trudi DesRoches, President
Tom Lindsey, Vice President
Brett R. Barbre, Director
Phil Hawkins, Director
Gene Hernandez, Director
5. ADDITIONS/DELETIONS TO THE AGENDA
Items may be added to the agenda upon determination by a two-thirds vote of the Board, or a
unanimous vote if only three Directors are present, that there is a need to take immediate action which
came to the District's attention subsequent to the agenda being posted. (GC 54954.2(b)(2))
6. AB2449 TELECONFERENCE REQUESTS
Items may be added to the agenda upon determination by a two-thirds vote of the Board, or a
unanimous vote if only three Directors are present, that there is a need to take immediate action which
came to the District's attention subsequent to the agenda being posted. (GC 54954.2(b)(2))
7. INTRODUCTIONS AND PRESENTATIONS
7.1. Introduction of New Hire
8. PUBLIC COMMENTS
Any individual wishing to address the Board (or Committee) is requested to identify themselves and state
the matter on which they wish to comment. If the matter is on the agenda, the Chair 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 three minutes and must be related to matters of public interest
within the jurisdiction of the Water District. (GC 54954.3)
9. DISCUSSION ITEMS
This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action
of the Board (or Committee) at the meeting, such as technical presentations, drafts of proposed policies,
or similar items for which staff is seeking advice and counsel. 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. Financial Reserves Policy Workshop
Page 1 of 8
10. CLOSED SESSION
The Board may hold a closed session on items related to personnel, labor relations and/or litigation. The
public is excused during these discussions.
10.1. Liability Claims
Pursuant to Subsections 54956.9(d) and (e)(3) of the California Government
Code
Claimants: Pascal & Ludwig Constructors and Mike Bubalo Construction
Agency Claimed Against: Yorba Linda Water District
10.2. Conference with Legal Counsel - Existing Litigation
Pursuant to Paragraph (1) of Subdivision (d) of Section 54956.9 of the California
Government Code
Name of Case: Irvine Ranch Water District v. Orange County Water District, et
al. (Los Angeles County Superior Court - Case No. BS168278)
10.3. Public Employee Performance Evaluation
Pursuant to Section 54957 of the California Government Code
Title: General Manager
11. ADJOURNMENT
11.1. The next regular Board meeting is scheduled Thursday, November 14, 2024 at
8:30 a.m.
Items Distributed to the Board Less Than 72 Hours Prior to the Meeting
Non-exempt materials related to open session agenda items that are distributed to a majority of the Board of
Directors (or Committee Members) less than seventy-two (72) hours prior to the meeting will be available for
public inspection in the lobby of the District’s Administrative building located at 1717 E Miraloma Ave, Placentia
CA 92870 during regular business hours. When practical, these materials will also be posted on the District’s
website at https://ylwd.com/. (GC 54957.5)
Accommodations for the Disabled
Requests for disability-related modifications or accommodations, including auxiliary aids or services, required for
participation in the above-posted meeting should be directed to the Board Secretary at (714) 701-3020 at least 24
hours in advance. (GC 54954.2(a))
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ITEM NO. 9.1.
AGENDA REPORT
MEETING DATE: October 24, 2024
TO: Board of Directors
FROM: Mark Toy, General Manager
STAFF CONTACTS: Delia Lugo, Finance Manager
Sophia Phuong, Accounting Supervisor
Paige Appel, Budget Analyst
SUBJECT: Financial Reserves Policy Workshop
BACKGROUND:
The Board of Directors have tasked staff to review the structure and language of the current Reserve
Policy and to make a recommendation of any warranted structure or language updates. Staff has
completed this task and will be presenting the due diligence review process and policy change
recommendations.
ATTACHMENTS:
1. 3010-005-POL - Financial Reserves Policy
Page 3 of 8
YORBA LINDA WATER DISTRICT 3010-005-POL
Page 1 of 5
FINANCIAL RESERVES
Dept/Div: Finance Approved By: Resolution No. 2024-14
Effective Date: July 1, 2024 Applicability: District Wide
Supersedes: Resolution No. 2023-14 See Also: N/A
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 select reserve funds, 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.
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
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YORBA LINDA WATER DISTRICT 3010-005-POL
Page 2 of 5
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+ ratings, the targeted total reserve balance is 365 days in cash at
the end of the fiscal year.
5.1.1 Operating Reserve.
5.1.1.1 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.
5.1.1.2 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 $11,258,299 $963,914
Maximum $22,516,599 $1,927,827
5.1.1.3 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
5.1.2.1 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.
5.1.2.2 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 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%
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YORBA LINDA WATER DISTRICT 3010-005-POL
Page 3 of 5
Levels Water Sewer
Minimum $6,435,482 $1,830,968
Maximum $12,870,965 $3,661,936
5.1.2.3 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
5.1.3.1 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.
5.1.3.2 Funding Level – The minimum target level for each reserve fund is 1.5 years
of capital improvement projects and capital outlay plus current Fiscal
Year depreciation. The maximum is 3 years of capital improvement
projects and capital outlay plus 3 times the current year’s depreciation.
The target levels in these reserve funds will fluctuate depending on the
capital improvement plan and timing of the projects.
Levels Water Sewer
Minimum $10,367,911 $3,264,520
Maximum $29,435,433 $10,311,810
5.1.3.3 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.
5.1.4 Rate Stabilization Reserve
5.1.4.1 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.
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YORBA LINDA WATER DISTRICT 3010-005-POL
Page 4 of 5
5.1.4.2 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 $2,491,808
Maximum $9,967,233
5.1.4.3 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 a specific purpose. Examples
include stipulated bond covenants and reserves held with a fiscal agent.
5.2.1 Conservation Reserve
5.2.1.1 Definition and Purpose – Established to provide funding for District-wide
conservation efforts.
5.2.1.2 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 $73,801
5.2.1.3 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
expenses outside the normal cost of service for each fiscal year. The
Board of Directors will draw down until there is a zero balance and
remove the reserve category from the Reserve Policy.
5.2.2 Employee Liability Reserve
5.2.2.1 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.
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YORBA LINDA WATER DISTRICT 3010-005-POL
Page 5 of 5
5.2.2.2 Funding Level – Funding for FY25 shall be established at a minimum target
level of $686,081.
Levels Water Sewer
Target $641,635 $44,446
5.2.2.3 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.
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