HomeMy WebLinkAbout2011-02-07 - Finance-Accounting Committee Meeting Minutes
MINUTES OF THE
YORBA LINDA WATER DISTRICT
FINANCE-ACCOUNTING COMMITTEE MEETING
February 7, 2011
A meeting of the Finance-Accounting Committee was called to order by Director Collett
at 4:00 p.m. The meeting was held at the District's Administrative Office at 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
None.
2. ACTION CALENDAR
2.1. December 2010 Budget to Actual Results
Mr. Parker presented the December 2010 budget to actual results.
Despite demands being down 25% year to date, the District is in a healthy
financial position as a result of lower than budgeted spending in supplies
and services and salary-related expenses. Mr. Vecchiarelli pointed out
that through the midpoint of the year, the District actually has a net income
of $246,000 rather than a budgeted net loss of $1,120,000. The
Committee asked for more detail in the Communications, Materials,
Maintenance and Professional Services areas. The Committee received
and filed the December Budget to Actual Results.
2.2. December 2010 Investment Report
Mr. Parker presented the December 2010 Investment Report and
explained the factors affecting increases in the Sewer Operating, Water
Operating and Water Reserve for Debt Service accounts with CaITRUST.
He also pointed out that the District's yield on investments was 0.80%.
The Committee received and filed the December 2010 Investment Report.
3. DISCUSSION ITEMS
3.1. CSMFO Award Notification
Mr. Parker shared the news as provided by the California Society of
Municipal Finance Officers (CSMFO), that YLWD's 2010 Comprehensive
Annual Financial Report (CAFR) qualified to receive the Certificate of
Award for Outstanding Financial Reporting. He added that the report
through June 30, 2010, was the first time the District received the CSMFO
award for a CAFR. The Committee congratulated staff on this
accomplishment.
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3.2. December 2010 Debt Service Ratio
Mr. Parker presented the December 2010 debt service ratio. He
explained that in issuing the 2003 and 2008 Certificates of Participation
(COP's - aka, revenue bonds), the District covenanted to receive revenue
that was at least 110% of annual debt service expenses. He gave
background into the situation the District found itself in at the end of the
08/09 fiscal year with three large MWD rate increases in rapid succession,
water supply allocations and a slowing economy lowering demands and
revenues, all combining to place the District well under its revenue
covenant, and forcing a significant water rate increase in September 2009.
As a result, last year's revenue covenant was made, with a debt service
ratio of 165%. As of December 2010, the unaudited debt service ratio is
202%. Mr. Parker explained that part of the increase in the 2010/11 FY
can be attributed to finally reaping the complete benefits of a rate increase
that missed some very big water demand months in the 2009/10 FY. He
gave assurances that this would be calculated quarterly, and that a repeat
of falling below the revenue covenant would not happen again as long as
water costs were passed along as they were in the current fiscal year.
3.3. Proposed Calendar for FY 2011/12 Budget
Mr. Parker presented the draft budget calendar and explained that the
respective Committees would have an opportunity to see the various
components of the budget including each and every department's budget
twice with the current calendar. Mr. Parker indicated that as changes
were made to the budget calendar, they would be presented to the
Committee and to the full Board. Mr. Vecchiarelli shared that the matter of
preparing a one-year or two-year budget was discussed at the Executive-
Administration-Organizational Committee Meeting on February 4 and
would be presented for consideration to the full Board at their meeting on
February 24.
3.4. OCWD Replenishment Assessment History
Mr. Vecchiarelli spoke about the historical semi-annual Orange County
Water District (OCWD) replenishment assessment payment, and pointed
out the substantial difference between OCWD and the Municipal Water
District of Orange County (MWDOC) water supply rates. The Committee
discussed the importance of proceeding with the annexation of YLWD's
eastern and northerly areas into OCWD. The other attached charts were
reviewed and discussed.
3.5. Continuing Disclosure Annual Report
Mr. Parker explained that as a part of our 2003 and 2008 COP's, an
annual report is required to be disclosed for the current bondholders,
rating agencies and for potential investors. Mr. Parker presented the
report and pointed out that while the District's water rates look high in
comparison to several other local agencies listed, our average meter size
is 1 inch, which usually has a much higher monthly service charge at other
agencies. Mr. Vecchiarelli pointed out an error in the report, and Mr.
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Parker explained that while he had corrected it on the draft version, the
District's bond consultant had not followed through with this correction.
The Committee suggested following up on this oversight and Mr. Parker
stated he would do so.
3.6. Reporting of Significant Event
Mr. Parker explained that another requirement of our COP's is disclosure
to stakeholders whenever reportable events occur. Recently the reinsurer
of the 2003 COP's was downgraded by Standard & Poor's (S&P) from "A"
to "BBB", and that triggered a reporting requirement. Mr. Parker stated
that the District's bond consultant explained while this is not a cause for
alarm, it does require disclosure.
3.7. Future Agenda Items and Staff Tasks
None.
4. ADJOURNMENT
4.1. The Committee adjourned at 8:49 a.m. The next regular meeting of the
Finance-Accounting Committee will be held on March 14, 2011 at 4:00
p.m.
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