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HomeMy WebLinkAbout2011-02-07 - Finance-Accounting Committee Meeting Agenda Packet Yorba Linda Water District AGENDA YORBA LINDA WATER DISTRICT FINANCE-ACCOUNTING COMMITTEE MEETING Monday, February 7, 2011, 8:00 AM 1717 E Miraloma Ave, Placentia CA 92870 COMMITTEE STAFF Director Ric Collett, Chair Ken Vecchiarelli, General Manager Director Robert R. Kiley Stephen Parker, Finance Director 1. PUBLIC COMMENTS Any individual wishing to address the committee is requested to identify themselves and state the matter on which they wish to comment. If the matter is on this agenda, the committee Chair will recognize the individual for their comment when the item is considered. No action will be taken on matters not listed on this agenda. Comments are limited to matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to five minutes. 2. ACTION CALENDAR This portion of the agenda is for items where staff presentations and committee discussions are needed prior to formal committee action. 2.1. December 2010 Budget to Actual Results Recommendation: That the Committee review, receive and file the December 2010 Budget to Actual Results. 2.2. December 2010 Investment Report Recommendation: That the Committee review, receive and file the December 2010 Investment Report. 3. DISCUSSION ITEMS This portion of the agenda is for matters such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking the advice and counsel of the Committee members. This portion of the agenda may also include items for information only. 3.1. CSMFO Award Notification 3.2. December 2010 Debt Service Ratio 3.3. Proposed Calendar for FY 2011/12 Budget 3.4. OCWD Replenishment Assessment History 3.5. Continuing Disclosure Annual Report 3.6. Reporting of Signficant Event 3.7. Future Agenda Items and Staff Tasks 4. ADJOURNMENT 4.1. The next regular meeting of the Finance-Accounting Committee will be held on March 14, 2011 at 4:00 p.m. Items Distributed to the Committee 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 Committee 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. 2.1 AGENDA REPORT Meeting Date: February 7, 2011 Budgeted: Yes To: Finance-Accounting Committee Funding Source: All Funds From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Director Prepared By: Delia Lugo, Senior Accountant Subject: December 2010 Budget to Actual Results STAFF RECOMMENDATION: That the Committee review, receive and file the December 2010 Budget to Actual Results. DISCUSSION: Attached are the District's budget to actual summary results for the Water Fund, Sewer Fund and a combined statement for both funds pertaining to the reporting month of December 2010. Overall, the District revenue is trending below expectations due to lower water consumption from above normal rainfall and cooler temperatures. Water operating revenue is only 50.9% of annual budget, which is lower by approximately 4%from the normal trend for the first six months of the fiscal year. The budget was based on 15% conservation (i.e. reduced demands), and through December customers demands are down by 25% year to date. Variable water costs as a percentage of year to date budget are slightly higher than operating revenues. This is a result of the District's operational strategy to use proportionately more import water in the first six months. Fees & Permits as well as Dues & Memberships expense categories are significantly above budget due to the timing of payment due dates. The majority of Supplies and Services expenses are trending below or on budget, with a few exceptions that have been previously discussed in Finance- Accounting Committee meetings. PRIOR RELEVANT BOARD ACTION(S): On January 10, 2010 the Committee reviewed, received and filed the November 30, 2010 Budget to Actual Results. ATTACHMENTS: Name: Description; Type: Water Sewer December 2010.xls December 2010 Consolidated Statement Backup Material Water Dec 2010.xls December 2010 Water Statement Backup Material Sewer December 2010.xls December 2010 Sewer Statement Backup Material Yorba Linda Water District Summary Financial Report Water & Sewer Funds For Six Months Ending December 31, 2010 Annual Actual YTD Budget YTD through Under/(Over) % of FY 10/11 December 31, 2010 Budget Annual Budget Revenue (Operating): Water Revenue (Consumption & Flat Charge) $25,672,831 $12,937,224 $12,735,607 50.39% Sewer Revenue 1,235,402 669,471 $565,931 54.19% Other 7142221 4932329 $220,892 69.07% Total Operating Revenue: 27,622,454 14,100,024 13,522,430 51.05% Expenses (Operating): Variable Water Costs (G.W., Import & Power) 12,667,236 6,624,533 6,042,703 52.30% Salary Related Expenses 7,624,683 3,172,766 4,451,917 44.80% Supplies & Services 3,996,585 1,568,385 2,428,200 39.24% Depreciation & Amortization 5,017,876 2,614,522, 2,4032354 52.10% Total Operating Expenses: 29,306,380 13,980,206 15,326,174 47.70% Operating Income (Loss) (1,683,926) 119,818 (1,803,744) -7.12% Revenue (Non-Operating): Interest and Investments 156,000 133,430 22,570 85.53% Property Taxes 1,206,000 650,807 555,193 53.96% Other 1262133 3492762 (223,629) 277.30% Total Non-Operating Revenue: 1,488,133 1,133,999 354,134 76.20% Expenses (Non-Operating): Interest on Long Term Debt (1,940,954) (961,401) (979,553) 49.53% Other Expense (103,193) (462312) (56,881) 44.88% Total Non-Operating Expenses: (2,044,147) (1,007,713) (1,036,434) 49.30% Non-Operating Income (Loss) (556,014) 126,286 (682,300) -22.71% I I Net Income (Loss) ($2,239,940) $246,104 ($2,486,044) -10.99% Contributed Capital 145,860 445,168 (299,308) 305.20% Capital - Direct Labor - 243,128 243,128 Yorba Linda Water District Water Fund For Six Months Ending December 31, 2010 FY 2011 YTD % of Annual December Actual Under/(Over) Annual Budget 2010 YTD Budget Budget Revenue (Operating): Water Revenue (Residential) $ 17,248,481 $ 1,151,430 $ 8,249,799 $ 8,998,682 47.83% Water Revenue (Commercial & Fire Det.) 1,522,341 146,370 969,312 553,029 63.67% Water Revenue (Landscape/Irrigation) 3,588,335 218,592 2,120,988 1,467,347 59.11% Water Revenue (Service Charge) 3,313,674 279,092 1,597,125 1,716,549 48.20% Other Operating Revenue 701,089 34,334 482,127 218,962 68.77% Total Operating Revenue: 26,373,920 1,829,818 13,419,351 12,954,569 50.88% Expenses (Operating): Variable Water Costs (G.W., Import & Power) 12,666,536 710,773 6,624,215 6,042,321 52.30% Salary Related Expenses 6,809,598 512,702 2,821,195 3,988,403 44.97% Supplies & Services: Communications 374,576 13,822 117,903 256,673 31.48% Contractual Services 707,007 44,234 347,892 359,115 49.21% Data Processing 109,596 22,483 34,622 74,974 31.59% Dues & Memberships 30,778 528 19,832 10,946 64.44% Fees & Permits 44,020 1,538 37,719 6,301 85.69% Board Election 72,800 - - 72,800 0.00% Insurance 314,314 319 163,174 151,140 51.91% Materials 337,800 24,611 199,849 137,951 59.16% District Activities, Emp Recognition 11,648 321 4,493 7,155 38.57% Maintenance 325,227 4,145 49,276 275,951 15.15% Non-Capital Equipment 92,611 5,662 25,987 66,624 28.06% Office Expense 41,221 2,406 13,690 27,531 33.21% Professional Services 638,224 13,064 188,433 449,791 29.52% Training 45,735 1,014 9,170 36,565 20.05% Travel & Conferences 40,602 3,962 9,572 31,030 23.58% Uncollectible Accounts 45,955 - 5,612 40,343 12.21% Utilities 111,930 4,880 51,369 60,561 45.89% Vehicle Equipment 256,302 19,699 105,379 150,923 41.12% Supplies & Services Sub-Total 3,600,346 162,688 1,383,972 2,216,374 38.44% Depreciation & Amortization 4,403,257 388,155 2,313,596 2,089,661 52.54% Total Operating Expenses 27,479,737 1,774,318 13,142,978 14,336,759 47.83% Operating Income (Loss) (1,105,817) 55,500 276,373 (1,382,190) -24.99% Revenue (Non-Operating): Interest 142,000 19,629 122,408 19,592 86.20% Property Taxes 1,206,000 550,499 650,807 555,193 53.96% Other Non-Operating Revenue 100,687 14,103 336,102 (235,415) 333.81% Total Non-Operating Revenue: 1,448,687 584,231 1,109,317 339,370 76.57% Expenses (Non-Operating): Interest on Long Term Debt (1,940,954) (158,855) (961,401) (979,553) 49.53% Other Expense (102,193) (2,947) (38,445) (63,748) 37.62% Total Non-Operating Expenses: (2,043,147) (161,802) (999,846) (1,043,301) 48.94% Non-Operating Income (Loss) (594,460) 422,429 109,471 (703,931) -18.42% Total Income (Loss) $ (197009277) $ 4779929 $ 3859844 (2,086,121) -22.69% Contributed Capital $ 92,807 $ 1181531 $ (25,724) 127.72% ,Capital - Direct Labor $ 33,337 $ 240,830 $ 240,830 1 .1 Yorba Linda Water District Sewer Fund For Six Months Ending December 31, 2010 FY 2011 YTD % of Annual December Actual Underi(Over) Annual Budget FY 2010 YTD Budget Budget Revenue (Operating): Sewer Charge Revenue $ 1,132,574 $ 97,150 $ 612,693 $ 519,881 54.10% Locke Ranch Assessments 102,828 49,570 56,778 46,050 55.22% Other Operating Revenue 13,132 9,119 11,202 1,930 85.30% Total Operating Revenue: 1,248,534 155,839 680,673 567,861 54.52% Expenses (Operating): Variable Costs (Power) 700 58 318 382 45.43% Salary Related Expenses 815,085 61,588 351,571 463,514 43.41% Supplies & Services: Communications 39,284 1,584 11,842 27,442 30.14% Contractual Services 61,478 6,637 32,169 29,309 52.33% Data Processing 10,839 2,224 3,425 7,414 31.60% Dues & Memberships 3,340 52 2,105 1,235 63.02% Fees & Permits 6,382 9 4,212 2,170 66.00% Board Election 7,200 - - 7,200 0.00% Insurance 31,086 32 16,139 14,947 51.92% Materials 18,815 618 13,999 4,816 74.40% District Activities 1,152 32 444 708 38.54% Maintenance 41,973 236 28,991 12,982 69.07% Non-Capital Equipment 20,509 2,200 5,194 15,315 25.33% Office Expense 3,879 238 1,340 2,539 34.54% Professional Services 67,176 1,930 22,064 45,112 32.85% Training 5,314 560 1,836 3,478 34.55% Travel & Conferences 4,348 390 937 3,411 21.55% Uncollectible Accounts 4,545 - 555 3,990 12.21% Utilities 11,070 483 5,062 6,008 45.73% Vehicle Equipment 57,849 11,157 34,099 23,750 58.94% Supplies & Services Sub-Total 396,239 28,382 184,413 211,826 46.54% Depreciation & Amortization 614,619 50,461 300,926 313,693 48.96% Total Operating Expenses 1,826,643 140,489 837,228 989,415 45.83% Operating Income (Loss) (578,109) 15,350 (156,555) (421,554) 27.08% Revenue (Non-Operating): Interest 14,000 1,669 11,022 2,978 78.73% Other Non-Operating Revenue 25,446 (3,035) 13,660 11,786 53.68% Total Non-Operating Revenue: 39,446 (1,366) 24,682 14,764 62.57% Expenses (Non-Operating): Other Expense (1,000) (1,307) (7,867) 6,867 786.70% Total Non-Operating Expenses: (1,000) (1,307) (7,867) 6,867 786.70% Non-Operating Income (Loss) 38,446 (2,673) 16,815 21,631 43.74% Total Income (Loss) $ (539,663) $ 12,677 $ (139,740) $ (399,923) 25.89% Contributed Capital $53,053 326,637 (273,584) 615.68% Capital - Direct Labor - (505) (2,298) $2,298 0.00% ITEM NO. 2.2 AGENDA REPORT Meeting Date: February 7, 2011 To: Finance-Accounting Committee Funding Source: All Funds From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Director Dept: Finance Prepared By: Delia Lugo, Senior Accountant Subject: December 2010 Investment Report SUMMARY: Government Code Section 53607, et. seq., requires the person delegated to invest funds to make a quarterly report of the investments to the legislative body. STAFF RECOMMENDATION: That the Committee review, receive and file the December 2010 Investment Report. DISCUSSION: Staff is submitting the December 2010 Monthly Investment Report for your review and approval. The Investment Portfolio Report presents the market value and percent yield for all the District investments by institution. The Investment Report Summary includes budget and actual interest and average term portfolio information as well as market value broken out by reserves categories. Items of particular interest to note in this report are summarized as follows. The Water Operating Fund investment held at CaITRUST increased by approximately $590,800, due to the transfer of excess funds from the District's general checking account. These transfers will be brought back in to the general checking account in the coming month to offset the fees for the biannual replenishment assessment and the annual annexation charge due to Orange County Water District. In addition, the Water Reserve for Debt Service account held at CaITRUST increased by approximately $174,000. Lastly, Sewer Operating increased by approximately $100,000 as a result of a quarterly reconciliation and reimbursement from the Sewer Capital Project Fund relating to capital projects that were initially paid by the Sewer Operating Fund. PRIOR RELEVANT BOARD ACTION(S): Monthly Investment Reports are presented to the Finance-Accounting Committee on a regular basis. Quarterly Investment Reports are presented to the Board of Directors. The Investment Report for the month ended November 30, 2010, was received and filed by the Finance-Accounting Committee on January 10, 2011. The Investment Report for the quarter ended September 30, 2010, was received and filed by the Board of Directors on November 10, 2010. ATTACHMENTS: Narnp: Description: Type: Invst_Rpt 1210.xlsx Investment Report Backup Material Agenda Feb_backup-December_2010.docx Agenda Backkup Backup Material Yorba Linda Water District Investment Portfolio Report December 31, 2010 Market % Percent Value Cost of Total Institution Yield Cash & Checking Accounts: $ 151,774 $ 151,774 Wells Fargo Bank $ 151,774 $ 151,774 0.45% Total 0.00% Money Market Accounts: $ 906,605 $ 906,605 Wells Fargo Money Market 0.30% $ 906,605 $ 906,605 2.75% Total 0.30% $ 1,058,379 $ 1,058,379 3.21% Sub-total 0.30% Money Market Account: $ 8,295,130 $ 8,295,130 US Bank 2008 Revenue Bond 0.20% $ 8,295,130 $ 8,295,130 25.18% 0.20% CaITR UST $ 5,584,617 $ 5,563,561 Ca1TRUST Short Term 0.50% $ 18,003,129 $ 17,810,955 Ca1TRUST Medium Term 1.19% $23,587,745 $23,374,516 71.62% 1.03% $ 32,941,255 $ 32,728,026 100% Total Investments 0.80% 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. Delia Lugo, Senior Accountant 12/31/10 Investment Report Summary Below is a chart summarizing the yields as well as terms and maturities for the month of December 2010: Avg. Portfolio Avg. Portfolio # of Avg. Term Month Yield Without Yield With Days to of Portfolio of 2010 CaITRUST CaITRUST Maturity in Days December 0.21% 0.80% 368 251 Below is a chart comparing operating fund interest for current and prior fiscal years. Actual Interest 12/31/09 12/31/10 Monthly - December $19,642 $21,298 Year-to-Date $117,461 $133,430 Budget 2009/2010 2010/2011 Interest Budget, December YTD $63,950 $78,000 Interest Budget, Annual $127,900 $156,000 Interest earned on investments is recorded in the Fund that owns the investment. Investment Summary Comparison The distribution of investments in the portfolio both in dollars and as a percentage of the total portfolio by funds is as follows: Fund Description Balance 11/30/10 Water Operating $ 968,770 2.88% Water Emergency Reserve 2,068,926 6.16% Water Capital Project Reserve 19,510,370 58.09% Water Reserve for Debt Service 546,957 1.63% COP Revenue Bond 2008 - Reserve 2,147,096 6.39% COP Revenue Bond 2008 6,148,034 18.30% Sewer Operating 495,325 1.47% Sewer Emergency Reserve 1,003,087 2.99% Sewer Capital Project Reserve 699,165 2.09% $33,587,730 100.00% Wells Fargo Bank Checking Water Operating (640,237) Sewer Operating 6( ,238) 64( 6,475) Total 32.941.255 ITEM NO. 3.1 AGENDA REPORT Meeting Date: February 7, 2011 Budgeted: N/A To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Director Reviewed by Legal: N/A Prepared By: Stephen Parker, Finance Director Subject: CSMFO Award Notification DISCUSSION: Yorba Linda Water District was notified that their Comprehensive Annual Financial Report for the fiscal year ended June 30, 2010 qualified to receive the Certificate of Award for Outstanding Financial Reporting by the California Society of Municipal Finance Officers. This is the first time that YLWD's CAFR has attained this recognition. ATTACHMENTS: Name: Description: Type: CSMFO Award notification - 2010 CAFR.pdf CSMFO Award Notification Backup Material CALIFORNIA SOCIETYof MUNICIPAL 81111FINANCE OFFICERS I)cdcar d to Ewellence itl Alun cipcal Financial 21,fei 7l7ge1ntwt January 31, 2011 Stephen Parker Finance Director Yorba Linda Water District 1717 E. Miraloma Avenue Placentia, CA 92870 Dear Stephen: Congratulations! Your Comprehensive Annual Financial Report (CAFR) for Fiscal 2009-10 has qualified to receive the Certificate of Award for Outstanding Financial Reporting. This award is given by the California Society of Municipal Finance Officers in recognition of meeting the program's required criteria and established professional standards as it pertains to your entity's financial reporting. Attached are comments that were generated during the review process (if there were no comments this will be so indicated). Please incorporate the comments listed into your next year's CAFR submission. Your Certificate of Award will be issued by CSMFO and emailed to you no later than February 28t", 2011. Thank you for participating in the CSMFO CAFR Awards Program. We commend you on your dedication to excellence in financial reporting and encourage your continued participation in our program. Sincerely, Laura M. Nomura Professional Standards & Recognition Committee Enclosures YORBA LINDA WATER DISTRICT CSMFO CAFR AWARDS PROGRAM Pg. 13: Combined Statement of Net Assets & Pg. 37: Note 9 The calculation of Net Assets Invested in Capital Assets, Net of Related Debt should not include Unspent Debt Proceeds. (GASB 34, 2005 GAAFR pg. 161) Pg. 18: Notes to the Financial Statements The Summary of Significant Accounting Policies (SSAP) should be presented as either the first Note, or as a separate presentation immediately preceding the Notes (2005 GAAFR - pg. 199). The Description of the Reporting Entity is usually the first subheading of the SSAP. Pg. 55: Statistical Section The description of the District's most significant local revenue source (under Revenue Capacity) lists the property tax; shouldn't this be water service charges, as indicated on Pg. 58. GFOA checklist can be found at : http://www. fg oa.or~-),/downloads/GENERALPURPOSECHECKLIST.pdf ITEM NO. 3.2 AGENDA REPORT Meeting Date: February 7, 2011 Budgeted: N/A To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Director Reviewed by Legal: N/A Prepared By: Stephen Parker, Finance Director Subject: December 2010 Debt Service Ratio DISCUSSION: When the newly elected Board came into office, one of the requests of staff was to provide information regarding the rate covenant and debt service ratio (DSR) related to the District's bond indebtedness. Yorba Linda Water District covenanted with the issuance of the 2003 and 2008 Certificates of Participation (COP's, aka Revenue Bonds), "...to fix, prescribe and collect rates and charges for Water Service which will be at least sufficient to yield, during each Fiscal Year, Net Revenues equal to 110% of the Debt Service for such Fiscal Year." That quote is taken from page 8 of the 2003, and page 9 of the 2008, Official Statements (OS) for issuance of the COP's. Every capitalized phrase has a specific legal definition also included in the COP's. To confirm the covenant is upheld, a calculation is made and reviewed by the external auditors and included in the annual Comprehensive Annual Financial Report (CAFR). Honoring these covenants allows the District to maintain high bond ratings and provides confidence in the financial markets for any bond resales and future issuances. During the audit process for FY 2008/09, the auditors determined that the debt service calculation was 86% - well below the rate covenant. That prompted a significant rate increase in September 2009. Thereafter, staff is calculating the District's debt service ratio on a quarterly basis and reports this figure to the Finance-Accounting Committee. Accordingly, December 2010's unaudited debt service is 202% as shown in the attached calculation. The District's financial health for the first six months of Fiscal Year 2010-2011 is strong as it pertains to the debt service calculation. ATTACHMENTS: Name: Descripdon: Type: December 2010 Unaudited Debt Service Ratio Calculation. Asx December 2010 Debt Service Ratio Backup Material Yorba Linda Water District Water Fund For Six Months Ending December 31, 2010 FY 2010/11 Included in Actual YTD DSR Calc. Revenue (Operating): Water Revenue (Residential) $8,249,799 $ 8,249,799 Water Revenue (Commercial & Fire Det.) 969,312 969,312 Water Revenue (Landscape/Irrigation) 2,120,988 2,120,988 Water Revenue (Service Charge) 1,597,125 1,597,125 Other Operating Revenue 482,127 482,127 Total Operating Revenue: 13,419,351 13,419,351 Expenses (Operating): Variable Water Costs (G.W., Import & Power) 6,624,215 6,624,215 Salary Related Expenses 2,821,195 2,821,195 Supplies & Services: Communications 117,903 117,903 Contractual Services 347,892 347,892 Data Processing 34,622 34,622 Dues & Memberships 19,832 19,832 Fees & Permits 37,719 37,719 Board Election - - Insurance 163,174 163,174 Materials 199,849 199,849 District Activities, Emp Recognition 4,493 4,493 Maintenance 49,276 49,276 Non-Capital Equipment 25,987 25,987 Office Expense 13,690 13,690 Professional Services 188,433 188,433 Training 9,170 9,170 Travel & Conferences 9,572 9,572 Uncollectible Accounts 5,612 5,612 Utilities 51,369 51,369 Vehicle Equipment 105,379 105,379 Supplies & Services Sub-Total 1,383,972 1,383,972 Depreciation & Amortization 2,313,596 - Total Operating Expenses 13,142,978 10,829,382 Operating Income (Loss) 276,373 2,589,969 Revenue (Non-Operating): Interest 122,408 122,408 Property Taxes 650,807 650,807 Other Non-Operating Revenue 336,102 336,102 Total Non-Operating Revenue: 1,109,317 1,109,317 Expenses (Non-Operating): Interest on Long Term Debt (961,401) - Other Expense (38,445) (38,445) Total Non-Operating Expenses: (999,846) (38,445) Non-Operating Income (Loss) 109,471 1,070,872 Total Income (Loss) $ 385,844 $ 3,660,841 Contributed Capital $ 118,531 DEBT SERVICE RATIO CALCULATION: NET REVENUES $ 3,660,841 DEBT SERVICE $ 1,816,401 % 242% ITEM NO. 3.3 AGENDA REPORT Meeting Date: February 7, 2011 Budgeted: N/A To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Director Reviewed by Legal: N/A Prepared By: Stephen Parker, Finance Director Subject: Proposed Calendar for FY 2011/12 Budget DISCUSSION: Attached is the proposed budget calendar for FY 2011/12. This schedule includes two complete reviews of all departmental expenses and other budget components by each respective Board Committee. In addition, a number of managers meetings and two Board Workshops are included. This schedule will be updated as changes become necessary. ATTACHMENTS: Name: Description: Type: Budget Calendar FY 11 12.xls Draft Budget Calendar Backup Material BUDGET CALENDAR FOR FISCAL YEAR 2011/12 DATE BOARD/COMMITTEE OBJECTIVES FEBRUARY February 1, 2011 Manager's Meeting Discuss Budget Calendar and Process February 7, 2011 Finance-Accounting Committee Approval of the Budget Calendar February 10, 2011 Manager's Meeting Personnel & Capital budget discussion February 17, 2011 Rate Alternatives/Financial Plan Workshop Board Workshop - review alternatives and three to five year plan MARCH March 15, 2011 Manager's Meeting Department budgets complete (v 1.0) and submitted to the Finance Dept. March 25, 2011 Board Workshop - Budget Discussion, guidance, goals and objectives APRIL April 4, 2011 Public Information-Technology Committee IT & Public Information budget (v 1.0) April 7, 2011 Planning-Engineering-Operations Committee Capital improvement & replacement projects budget (v 1.0) Engineering and Operations budget (v 1.0) April 11, 2011 Finance-Accounting Committee Finance budget (v 1.0), Reserve policy analysis (v 1.0) Revenues (v 1.0), Preliminary budget overview (v 1.0) April 12, 2011 Personnel-Risk Mgmt Committee Labor and benefits (v 1.0), HR budget (v 1.0) April 19, 2011 Exec-Admin-Organizational Committee Board of Directors and Administration budget (v 1.0) April 21, 2011 Board Workshop - Draft Budget Preliminary budget overview (v 2.0) Possible Prop 218 decision April 26, 2011 Manager's Meeting Department budgets (v 2.0) (if needed) MAY May 2, 2011 Public Information-Technology Committee IT & Public Information budget (v 2.0) (if needed) May 5, 2011 Planning-Engineering-Operations Committee Capital improvement & replacement projects budget (v 2.0) Engineering and Operations budget (v 2.0) (if needed) May 9, 2011 Finance-Accounting Committee Draft budget overview, Draft reserve policy May 10, 2011 Personnel-Risk Mgmt Committee Labor and benefits (v 2.0) (if needed) May 24, 2011 Exec-Admin-Organizational Committee Board of Directors and Administration budget (v 2.0) (if needed) May 26, 2011 Board of Directors Draft Budget (Full Board) JUNE * June 6, 2011 Finance-Accounting Committee Budget adjustments as needed June 9, 2011 Board of Directors Budget adoption (full board), Reserve policy June 23, 2011 Board of Directors Budget adoption (full board) & rate hearing (if needed) * June 28, 2011 Board of Directors Prop 218 Public Hearing (if needed) * Tentative date if needed ITEM NO. 3.4 AGENDA REPORT Meeting Date: February 7, 2011 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Director Prepared By: Joann Gitmed, Accounting Assistant II Subject: OCWD Replenishment Assessment History ATTACHMENTS: Name: Description: Type: RA History.xlsx Historical Information Backup Material REPLENISHMENT ASSESSMENT HISTORY (Jul. 2005 thru Dec 2010) Period Rate per A/F A/F Pumped RA Payment MWDOC Rate 07/05- 12/05 205.00 3,263.85 $ 669,089.80 $ 472.50 01/06 - 06/06 205.00 1,059.85 $ 217,269.40 $ 481.50 07/06- 12/06 223.00 5,078.35 $ 1,132,483.30 $ 478.50 01/07 - 06/07 223.00 5,445.75 $ 1,215,450.50 $ 489.50 07/07- 12/07 237.00 7,459.70 $ 1,768,162.80 $ 489.50 01/08 - 06/08 237.00 6,162.20 $ 1,460,489.30 $ 519.50 07/08- 12/08 249.00 6,026.25 $ 1,500,536.25 $ 528.50 01/09 - 06/09 249.00 6,060.40 $ 1,509,039.60 $ 603.50 07/09- 12/09 249.00 4,875.90 $ 1,214,099.10 $ 707.50 01/10 - 06/10 249.00 4,479.55 $ 1,115,407.95 $ 707.50 07/10 - 12/10 249.00 3,445.80 $ 858,004.20 $ 707.75 *Sept 09 Rote change Replenishment Assessment Payment (July 2005 thru December 2010) $2,000,000 $1,800,000 1,768,163 $1,600,000 1,500,536 1,509,040 - 24 $1,400,000 1,460,489 $1,200,000 1,132,483 1,115,408 i 1,215,451 1,214,099 M $1,000,000 $800,000 858,004 RA Payment $600,000 669,09 $400,000 $200,000 217,269 $0 o ly~~o oo~o~ ly~~o~ oo~ow ~~~ow o~~o~ ly o o o o~~oo w o~~ow C5 o~o~~tio o~~tio Reporting Period OCWD/MWDOC Rate Comparison (July 2005 thru December 2010) $900 $800 $707.50 $707.75 $700 $603.50 $707.50 $600 $528.50 $472.50 $478.50 $489.50 i $500 - _ , $ 519.50 c $481.50 $489.50 $400 - OCWD Rate per A/F $300 223.00 237.00 249.00 249.00 249.00MWDOC Rate per A/F 205.00 $200 223.00 237.00 249.00 249.00 205.00 $100 ff (0 ti~~o~ o~~o~ titi~o oti~~o~ ly o~~tio V o\~o< o~\o~ oA oA oy~o~ o~~ow ooo oo oo oA\tio Reporting Period BASIN EQUITY ASSESSMENT (July 2005 thru June 2010) Period Groundwater Import Water Total BPP BEA AF BEA Pd 07/05 - 06/06 11,091.00 6,299.70 17,390.70 64.00% $ 340.00 $ - 07/06 - 06/07 13,346.60 6,028.60 19,375.20 69.00% $ 307.00 $ - 07/07 - 06/08 13,691.40 4,911.90 18,603.30 80.20% $ 334.00 $ - 07/08 - 06/09 12,142.10 5,486.90 17,629.00 69.00% $ 371.00 $ - 07/09 - 06/10 9,316.40 5,617.30 14,933.70 62.00% $ 499.63 $ 28,729.00 BEA Assessment History July 2005 thru June 2010 25,000 20,000 15,000 w w LL N i U a 10,000 Import Water Groundwater 5,000 0 o~~oA o~~ow oo~o~ o~~tio QA) O, oAe oo~~ow oAlo Reporting Period Basin Equity Percentage July 2005 thru June 2010 90% 80.20% 80% 69.00% 69.00% 0 70% 64.00% 62.00% i 60% i +1 50% C w U i a 40% 30% BPP 20% 10% 0% obllo~ Q5 ClAe Reporting Period BEA per Acre Foot July 2005 thru June 2010 $600 $499.63 $500 $400 $371.0 $340.00 $334.00 ,A $ 307.00 y o $300 - '-BEA per A/F $200 $100 o(b~o~ o~~tio o0 o(0o ooe IZA0, oAlo o'Aloe oAlo o~ , 1b, Reporting Period ITEM NO. 3.5 AGENDA REPORT Meeting Date: February 7, 2011 Budgeted: N/A To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Director Reviewed by Legal: Yes Prepared By: Stephen Parker, Finance Director Subject: Continuing Disclosure Annual Report DISCUSSION: The Continuing Disclosure Annual Report is required to be filed annually as long as the District has outstanding obligations relating to their 2003 and 2008 Certificates of Participation (COP's). Attached is the most recently filed Continuing Disclosure Annual Report for the Fiscal Year Ending (FYE) June 30, 2010. ATTACHMENTS: Name: Description: Type: Continuing Disclosure Annual Report Continuing Disclosure Annual Report Backup Material FYE 6 30 10.pdf - Adobe Acrobat.pdf CONTINUING DISCLOSURE ANNUAL REPORT FISCAL YEAR ENDING JUNE 30, 2010 IN CONNECTION WITH THE CONTINUING DISCLOSURE OBLIGATIONS FOR: YORBA LINDA WATER DISTRICT REVENUE CERTIFICATES OF PARTICIPATION (HIGHLAND RESERVOIR RENOVATION AND RICHFIELD PLANT - PHASE 3 RENOVATION PROJECT) SERIES 2003 YORBA LINDA WATER DISTRICT REVENUE CERTIFICATES OF PARTICIPATION (2008 CAPITAL IMPROVEMENT PROJECTS) SERIES 2008 YORBA LINDA WATER DISTRICT 1717 E. Miraloma Avenue Placentia, California 92870 YORBA LINDA WATER DISTRICT REVENUE CERTIFICATES OF PARTICIPATION (HIGHLAND RESERVOIR RENOVATION AND RICHFIELD PLANT - PHASE 3 RENOVATION PROJECT) SERIES 2003 Maturity CUSH* (October 1) 2011 98618X1 All 2 2012 98618M AJ 8 2013 98618M AK 5 2014 9861811 AL 3 2015 98618M AM 1 2016 98618M AN 9 2017 98618M All 4 2018 98618M AQ 2 2019 98618M AR 0 2020 98618M AS 8 2021 98618M AT 6 2022 98618M AL 2023 98618M AV 1 2028 9861811 AXX 9 2033 98618\1 AZ 7 * CUSIPR' is a registered trademark of the American Bankers Association. Copyright. 1999-2011 Standard & Poor's, a Division of the McGraw Hill Companies, Inc. All rights reserved. CUSIPR, data herein is provided by Standard & Poor's CUSIP Service Bureau. This data is not intended to create a database and does not serve in any way a substitute for the CUSIP Service Bureau. CUSINW, ntmbers are provided for convenience of reference only. The Yorba Linda Water District does not take any responsibility for the accuracy of such numbers. YORBA LINDA WATER DISTRICT REVENUE CERTIFICATES OF PARTICIPATION (2008 CAPITAL IMPROVEMENT PROJECTS) SERIES 2008 Maturity CUSH* (October 1) 2011 98618M BB 4 2012 98618M BC 2 2013 98618M BD 0 2014 98618M BE 8 2013 98618M BL 5 2016 98618M BG 3 2017 9861811B]11 2018 9861811 BI 7 2019 98618M BIz 4 2020 98618M BL 2 2021 98618M BM 0 2022 9861811 BIB 8 2023 98618M BP 3 2024 9861811BQ 1 2025 98618M BR 9 2026 9861811 BS 7 2027 98618M BT 5 2028 98618M BU 2 2029 98618M BV() 2030 98618M Byy' 8 2031 98618M BZ 6 2032 98618M BY 4 2038 98618M BZ 1 * CUSIPR' is a registered trademark of the American Bankers Association. Copyright. 1999-2011 Standard & Poor's, a Division of the McGraw Hill Companies, Inc. All rights reserved. CUSIPR, data herein is provided by Standard & Poor's CUSIP Service Bureau. This data is not intended to create a database and does not serve in any way a substitute for the CUSIP Service Bureau. CUSINW, ntmbers are provided for convenience of reference only. The Yorba Linda Water District does not take any responsibility for the accuracy of such numbers. CONTINUING DISCLOSURE ANNUAL REPORT FOR FISCAL YEAR ENDING JUNE 30, 2010 THIS CONTINUING DISCLOSURE ANNU,, L, REPORT" has been prepared to satisfy the obligations of the Yorba Linda \Vatcr District (the "District"), as provided in the following continuing disclosure certificates: 2003 Certificates. The Continuing Disclosure Certificate, dated September 10, 2003 (the "2003 Disclosure Certificate"), executed by the District, in connection with the execution and delivery of the District's Revenue Certificates of Participation (f Iighland Reservoir Renovation and Richland Plan - Phasc 3 Renovation Projcct) Series 2003 (the "2003 Certificates"). The 2003 Certificates have been executed and delivrered pursuant to a Trust Agreemcnt, dated as of August 1, 2003 (thc "2003 'T'rust Agreement"), by and among the District, the Yorba Linda Water District Public Financing Corporation (the "Corporation") and U.S. Bank National Association, as trustee (the "Trustec"). 2008 Certificates. The Continuing Disclosure Certificate, dated as of February 1, 2008 (the "2008 Disclosure Certificate" and together with the 2003 Disclosure Certificate, the "Disclosure ('ertificates"), executcd by the District, in connection with the execution and dcliverv of the District's Rcvcnuc Certificates of Participation (2008 Capital Improvement Projects) Series 2008 (the "2008 Certificates" and together with the 2003 Certificates, the "Certificates-). The 2008 Certificates have been executed and delivered pursuant to a Trust Agreement, dated as of February 1, 2008 (the "2008 Trust Agreement"), by and among the District, the Corporation and the T"rustec. t1s provided in Section 3 of the Disclosure Certificates, this Continuing Disclosure Annual Report is heing prepared for publication with the Electronic -Municipal lMarkct Access, a service of the -Municipal Securities Rulemaking Board, for the benefit of the Owners of the Certificates and the Participating Underwriters. All capitalized terms used herein shall have the meanings set forth in the Disclosure Certificates. 'fhe following information is being provided as required under Scction 4 of the Disclosure Certificates: 1. 'fhe audited financial statements of the District for the Fiscal Year ending Junc 30, 2010 are attached hereto as Exhibit A. 2. The following tables are updated from the 2003 Certificates Official Statement, dated August 26, 2003 and the 2008 Certificates Official Statement, dated February 12, 2008: 1 A. Historic Water Supply Set forth below is a suminarv of the District's sources of water supple for the last five fiscal \'cars. YORBA LINDA WATER DISTRICT HISTORIC GROUNDWATER AND IMPORTED WATER (IN ACRE-FEET PER YEAR) Fiscal Year ending the last day of June Pumped Water Imported Water Total Increase 2006 11,062 11,971 23,039 6.60% 2007 13,299 12,358 25,657 11.36 2008 13,659 10,974 24,633 (3.99) 2009 12,117 11,083 23,200 (5.82) 2010 9,234 10,835 20,069 (13.50) Source. The District. B. Historic Water Connections The following tahle shows the number of water connections to the District's Water S\-stem for the five most recent fiscal Nears. YORBA LINDA WATER DISTRICT HISTORIC WATER CONNECTIONS Fiscal Year ending the last day of June Connections Increase 2006 23,192 2.35% 2007 23,386 0.84 2008 23,552 0.71 2009 23,640 0.37 2010 23,844 0.86 Source. The District. 2 C. Historic Water Deliveries "I'he following table presents a summary of historic water deliveries for the Water Systcm in acre- feet per year for the five most recent fiscal years. YORBA LINDA WATER DISTRICT HISTORIC WATER DELIVERIES (IN ACRE FEET PER YEAR) Fiscal Year ending the last day of June All Deliveries Increase 2006 21,656 3.50`% 2007 24,021 10.88 2008 23,922 (0.41) 2009 23,018 (3.78) 2010 19,351 (15.93) SOUrcc: The District. D. Historic Water Sale Revenues The following table shows annual water sale revenues from water sales in the service area for the five most recent fiscal hears. The increases in xvatcr sales revcnues reflect both increased connections as well as rate increases. YORBA LINDA WATER DISTRICT HISTORIC WATER SALES REVENUES Fiscal Year ending the last day of June Sales Revenues Increase 2006 517,017,275 17.1 "/o 2007 18,944,233 11.3 2008 19,470,109 2.8 2009 19,626,738 8.0 2010 22,141,731 12.8 Source. The District. 3 E. Tax Levies and Delinquencies The table below sets forth property tax collections and delinquencies in the District as of June 30 for fiscal N~cars 2006 through 2010. The information in the table below has been provided by California Municipal Statistics, Inc. The District has not independently verified the information in this table bclow and does not guaranty its accuracy. YORBA LINDA WATER DISTRICT PROPERTY TAX LEVIES AND COLLECTIONS FISCAL YEARS 2005 THROUGH 2009 Amount Secured Delinquent % Delinquent Tax Charge (1) June 30 June 30 2005-06 51,096,288.94 523,911.87 2.18`/0 2006-0T, 1,163,557.71 38,081.94 3.27 2007-08 1,233,431.30 49,578.43 4.02 2008-09 1,235,906.65 45,472.67 3.68 2009-10 1,125,148.67 27,179.99 2.24 f'Y,~ General Fund apportiomncnt. lrrcludcs sccurcd and supplemental rolls. Dclincqucnc- reflects count- v\idc rate of 3.58% for sccurcd roll and 13.88" for supplcrncntal roll. Source California Municipal Statistics, Inc. F. Largest Customers The following table sets forth the District's tcn largest customers in the scryicc area as of Junc 30, 2010 as determined b}' annual payments. YORBA LINDA WATER DISTRICT TEN LARGEST WATER SYSTEM CUSTOMERS Customer Annual Payments City of Yorba Linda S 1,305,856 Placentia-Yorba Linda LSD 185,532 Tac \Y%cst 38,873 Shigemi Muranaka 29,721 Cal \\,'atcr 27,393 Costco #445 25,502 St. Francis of Assisi 24,537 Greka Oil & Gas 23,801 Loma Vista Nursery 22,499 Yorba Linda Villages 20,016 Total 1.703.730 Source. The District. 4 G. Water System Rates and Charges General District rates and charges for water service in the District's service area arc set by the Board of Directors and arc not subject by statute to the jurisdiction of, or regulation bv, the California Public L tilities Commission or any other regulatory bode. The Board of Directors currendv sets water charges to pad the costs of water pumping and to recover operating expenses for the `Water Systcm. Capital improvements and debt service pahmcnts for the Water System are funded from capital facilities fees and property tax revenues. Water Service Charges. The District requires water meters for all of its customers. Effective August 1, 2010, the District's water service charge constitutes a fee of 511.73 per month for all meter sizes plus 52.52 pcr acre foot of water use. The table below sets forth a comparison of the District annual water rates and charges for a single family residential user to those of nearby water purvcti,ors as of 1lugust 1, 2010: WATER SERVICE CHARGE COMPARISON Community Total Bill Cith of Anaheim 542.05(1) Yorba Linda Water District 60.600)(2) City of Brea 56.280) City of La Palma 52.23(1)(3) Goldcn Statc Watcr Company 74.230) Irvine Ranch Water District 29.800) Based upon 20 units used per month. LffCCti% c 1lu11ust 1, 2010, the District's water scr%ice charge coast totes a tee of 511.73 pcr month for all meter sizes plus 2.52 pcr unit of mater use. Based upon assumed monthly fixed charge of 514.83, plus per unit/commodity charge of S1.87 per unit. Source 'the District. 5 H. Historic Operating Results and Debt Service Coverage "IThe following table is a summary of operating results of the Water System of the District for the last five fiscal years. YORBA LINDA WATER DISTRICT HISTORICAL OPERATING RESULTS FISCAL YEAR ENDED THE LAST DAY OF JUNE 2006 2007 2008 2009 2010 Revenues Water Sales S 17,017,275 S 18,944,233 S 19,470,109 S 19,626,738 S 22,141,731 Ad Valorem Tax Revenues 329,881 1,180,932 1,257,943 1,276,638 1,269,441 Interest Income 954,480 1,503,192 1,028,575 468,011 248,882 Capital Contributions - - - 119,358'') - Other 843,631 783,354 578,699 806,593 757,395 Total Revenues S 19.145,267 S_22.41 1.71 1 S 22,335,326 S 22.297.338 S 24.417.449 Operating Expenses Variable Water Costs S 8,930,535 S 10,714,411 S 10,516,507 S 10,859,328 S 10,688,318 Personnel Services 4,099,737 4,741,016 5,168,852 5,864,468 5,863,006 Supplies & Services 2,645,606 3,118,743 4,010,377 3,705,278 3,228,241 Total Operating and Maintenance Expenses S 15.675.878 S 18574 . 170 S 19.695.736 S 20,429,074 S 19.779.565 Net Operating Revenues after O&M Costs S 3,469,389 S 3,837,541 S 2,639,590 S 1,868,264 S 4,637,884 Non-Operating Expenses Other Expense S 308,288 S 121,100 S 123,934 S 157,241S 148,476 Total Non-Operating Expenses S 308.288 S 121.100 S 123.934 S 157.241 S 148.476 Net Revenues S 3.161.101 S 3.716,441 S 2.515.656 S 1,711,023 S 4,489.408 Debt Obligations Series 2003 Installment Payments S 673,163 S 674,113 S 674,595 $ 674,306 S 673,074 Series 2008 Installment Payments - - - 1,472,565«' 2,133,196 Total Debt Obligations S 673,163 S 674,113 S 674,595 S 2,146,870 S 2,806,270 Net Revenues After Debt Obligations S 2,487,939 S 3,042,329 S 1,841,061 S (435,847) S 1,683,138 Debt Service Ratio 4.70 5.51 3.73 0.80 1.60 Includes Capital Grants contributions that were collected in cash and available for use by the Water System. Adjusted for the removal of bond issuance, refunding and premium amortization costs. (3) 5580,963 of capitalized interest was applied to pay Series 2008 Installment Payments. Source: The District. 6 PRINCIPAL AMOUNT OF OUTSTANDING CERTIFICATES Currently, the outstanding principal amount on the 2003 Certificates is 59,200,000. Currently, the outstanding principal amount on the 2008 Certificates is 533,405,000. AMOUNTS IN THE RESERVE FUNDS Pursuant to the 2003 Trust zlgrecmcnt, the District is required to establish the Rcscrvc Fund (the "2003 Rcscrvc Fund") in an amount equal to X679,137.50, the Reserve Fund Requirement The 2003 Rcscrvc Fund is currcntly funded by a ?\1unicipal Bond Debt Service Rcserec Fund Policy issued by Financial Guaranty Insurance Company. Pursuant to the 2008 Trust Agrcement, the District is required to establish the Rcscrvc Fund (the "2008 Reserve Fund") in an amount equal to 52,147,076.26, the Rcscrvc Fund Requirement The balance of the 2008 Rcserec Fund was J2,147,096.26 as ofJanuary 4, 2011. 7 1 hC T ',IX hCV1CS Gild De11i1(1LIeiicles inforniation which was obtained f[oin California Niclillcipal 5tarlstics, IIlc. IS belle-ve'd by the Dist.rlct. co be rellable but has nor ",-)Ceti independeIlrlā¯‘ verified by the District and i not uararlt.c:cd as to accuracy by the District. There can be no assurance. as to Clio. accuracy of such infclrmarinil and incluiriCS coilcerrlin the scope and Inethndology of procCdures carried chit to c01Y1plete such information shuLdcl be directed to California Municipal Statisucs, Inc., at 5460 College Avenue, t_)aliland. California `14618 whose tclephione number is (510) 658-2640. 'r°C)RBA LINDA WATER DIS1RTf;'I, Ken VecchiareE, Secretary /General Manager ITEM NO. 3.6 AGENDA REPORT Meeting Date: February 7, 2011 Budgeted: N/A To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Director Reviewed by Legal: Yes Prepared By: Stephen Parker, Finance Director Subject: Reporting of Signficant Event DISCUSSION: Attached is a Reporting of Significant Event in conjunction with the District's Continuing Disclosure Annual Report for the FYE June 30, 2010. This disclosure is completed and published with the Electronic Municipal Market Access (EMMA) as required by our 2003 Continuing Disclosure Certificate. ATTACHMENTS: Name: Description: Type: Reporting of Signficant Event.doc Reporting of Significant Event Backup Material REPORTING OF SIGNIFICANT EVENT IN CONNECTION WITH THE CONTINUING DISCLOSURE OBLIGATION: YORBA LINDA WATER DISTRICT REVENUE CERTIFICATES OF PARTICIPATION (HIGHLAND RESERVOIR RENOVATION AND RICHFIELD PLANT PHASE 3 RENOVATION PROJECT) SERIES 2003 YORBA LINDA WATER DISTRICT 1717 E. Miraloma Avenue Placentia, California 92870 YORBA LINDA WATER DISTRICT REVENUE CERTIFICATES OF PARTICIPATION (HIGHLAND RESERVOIR RENOVATION AND RICHFIELD PLANT PHASE 3 RENOVATION PROJECT) SERIES 2003 Maturity Date (October 1) CUSIP* 2011 98618M AH 2 2012 98618M AJ 8 2013 98618M AK 5 2014 98618M AL 3 2015 98618M AM 1 2016 98618M AN 9 2017 98618M AP 4 2018 98618M AQ 2 2019 98618M AR 0 2020 98618M AS 8 2021 98618M AT 6 2022 98618M AU 3 2023 98618M AV 1 2028 98618M AW 9 2033 98618M AX 7 CUSIP® is a registered trademark of the American Bankers Association. Copyright© 1999-2011 Standard & Poor's, a Division of the McGraw Hill Companies, Inc. All rights reserved. CUSIP® data herein is provided by Standard & Poor's CUSIP Service Bureau. This data is not intended to create a database and does not serve in any way a substitute for the CUSIP Service Bureau. CUSIP® numbers are provided for convenience of reference only. The Yorba Linda Water District does not take any responsibility for the accuracy of such numbers. REPORTING OF SIGNIFICANT EVENT (RATINGS CHANGE) S&P DOWNGRADES NPFG S RATING FROM A TO BBB NOTICE IS HEREBY GIVEN that Standard & Poor's Ratings Services ("S&P"), has downgraded its rating on National Public Finance Guarantee Corporation ("NPFG"), as successor to MBIA Insurance Corporation and as reinsurer of certain Financial Guaranty Insurance Company policies, the reinsurer on the Yorba Linda Water District Revenue Certificates of Participation (Highland Reservoir Renovation and Richland Plan - Phase 3 Renovation Project) Series 2003 (the "Certificates"). S&P has downgraded NPFG's rating from "A" to "BBB". This Reporting of Significant Event has been prepared to satisfy the obligations of the Yorba. Linda Water District (the "District") pursuant to that certain Continuing Disclosure Certificate, dated September 10, 2003 (the "Disclosure Certificate"), executed by the District, in connection with execution and delivery of the Certificates, and the requirements of Rule 15c2-12 of the Securities Exchange Act of 1934, as amended As provided in the Disclosure Certificate, this Reporting of Significant Event is being prepared for publication with the Electronic Municipal Market Access, a service of the Municipal Securities Rulemaking Board All capitalized terms used herein shall have the meanings set forth in the Disclosure Certificate. Dated January 6, 2011 YORBA LINDA WATER DISTRICT /s/ Ken Vecchiarelli Secretary/General Manager