HomeMy WebLinkAbout2012-09-26 - Finance-Accounting Committee Meeting Agenda Packet
AGENDA
YORBA LINDA WATER DISTRICT
FINANCE-ACCOUNTING COMMITTEE MEETING
Wednesday, September 26, 2012, 4:00 PM
1717 E Miraloma Ave, Placentia CA 92870
COMMITTEE
Director Robert R. Kiley, Chair
Director Phil Hawkins
STAFF
Steve Conklin, Acting General Manager
Stephen Parker, Finance Manager
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. Submission of 2012 Audit Reports
Recommendation: That the Committee recommend the Board of Directors receive
and file the FY 2011/12 Comprehensive Annual Financial Report, the Report on
Internal Control and the Communication to Those In Governance Letter.
2.2. Authorization to Invest in Local Agency Investment Fund
Recommendation: That the Committee recommend the Board of Directors approve
Resolution No. 12-XX Authorizing Investment of Monies in the Local Agency
Investment Fund and Rescinding Resolution No. 11-14.
2.3. Authorized Officers for Investments Held at Pershing
Recommendation: That the Committee recommend the Board of Directors
authorize the President to sign Resolution No. 12-XX Authorizing the Acting
General Manager and Finance Manager to Act on Behalf of the District Relating to
District Investments Held at Pershing LLC.
2.4. Adopting Water Development and Customer Service Fees
Recommendation: That the Committee recommend the Board of Directors approve
Resolution No. 12-XX Adopting Water Development and Customer Service Fees
and Rescinding Resolution No. 12-06.
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. Budget to Actual Results for July and August 2012
3.2. Investment Reports for July and August 2012
3.3. Status of Strategic Plan Initiatives
3.4. Future Agenda Items and Staff Tasks
4. ADJOURNMENT
4.1. The next meeting of the Finance-Accounting Committee will be held October 22, 2012 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: September 26, 2012
To:Finance-Accounting Committee
From:Steve Conklin, Acting General
Manager
Presented By:Stephen Parker, Finance
Manager
Dept:Finance
Prepared By:Stephen Parker, Finance
Manager
Subject:Submission of 2012 Audit Reports
STAFF RECOMMENDATION:
That the Committee recommend the Board of Directors receive and file the FY 2011/12
Comprehensive Annual Financial Report, the Report on Internal Control and the Communication to
Those In Governance Letter.
DISCUSSION:
Staff is pleased to present the Finance-Accounting Committee with Yorba Linda Water District's
Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30, 2012. Staff will
submit the report for a Certificate in Achievement for Excellence in Financial Reporting award from the
Government Finance Officers Association. Staff is expectant that this year's CAFR will merit this
highest level of recognition, just as last years' CAFR did.
White Nelson Diehl Evans LLP, the District's external auditors, have completed their audit of the
Yorba Linda Water District for the fiscal year ending June 30, 2012, and have rendered an unqualified
(clean) opinion in the attached Comprehensive Annual Financial Report. They identified in the
attached Report on Internal Control, internal control findings that rose to the level of a significant
deficiency, and have included management's response to those comments. Lastly, they have reported
required disclosures to the Finance-Accounting Committee in the Communication To Those In
Governance.
The reports listed above were not available at the time of posting. They will be presented at the
Finance-Accounting Committee meeting or submitted separately electronically if available earlier.
STRATEGIC PLAN:
FR 1-G: Continue to Improve Communications of the Districts Financial Information to the Board of
Directors, Member Agencies, Management, and the Financial Community
ATTACHMENTS:
Name:Description:Type:
YLWD_FY_11.12_CAFR.pdf Backup Material Backup Material
YLWD_FY_11.12_ACL.pdf Backup Material Backup Material
YLWD_FY_11.12_GAS.pdf Backup Material Backup Material
Comprehensive Annual
Financial Report
for the
Fiscal Year Ended June 30, 2012
Yorba Linda, California
Our Mission
“Yorba Linda Water District will provide reliable, high quality water and sewer
services in an environmentally responsible manner at the most economical cost to
our customers.”
Our Vision
“Yorba Linda Water District will become the premier self-sufficient source for
reliable water, sewer and related services in the communities it serves.”
YORBA LINDA WATER DISTRICT
of Yorba Linda, California
Comprehensive Annual Financial Report
WITH REPORT ON AUDIT BY
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Prepared by:
The Yorba Linda Water District Finance Department
Stephen Parker, CPA – Finance Manager
Delia Lugo, Senior Accountant
Joann Gitmed, Accounting Assistant II
Maria Trujillo, Accounting Assistant I
and
Cindy Botts, Management Analyst
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YORBA LINDA WATER DISTRICT
TABLE OF CONTENTS
For the year ended June 30, 2012
Page
Number
INTRODUCTORY SECTION:
Letter of Transmittal i
Board of Directors and Executive Staff xi
Organization Chart xii
District Boundaries xiii
Certificate of Achievement for Excellence in Financial Reporting xiv
FINANCIAL SECTION:
Independent Auditors’ Report 1
Management’s Discussion and Analysis
(Required Supplementary Information) 3
Basic Financial Statements: 11
Combined Statements of Net Assets 12
Combined Statements of Revenues, Expenses
and Changes in Net Assets 14
Combined Statements of Cash Flows 15
Notes to Basic Financial Statements 17
Required Supplementary Information: 45
Other Post-Employment Benefit Plan - Schedule
of Funding Progress 46
Supplementary Information: 47
Combining Schedule of Net Assets 48
Combining Schedule of Revenues, Expenses and
Changes in Net Assets 50
Combining Schedule of Cash Flows 51
Schedule of Operating Expenses by Cost Center and
Nature of Expenses for Water and Sewer 53
Schedule of Capital Assets 54
YORBA LINDA WATER DISTRICT
TABLE OF CONTENTS
(CONTINUED)
For the year ended June 30, 2012
Page
Number
STATISTICAL SECTION: 55
Description of Statistical Section 57
Financial Trends:
Changes in Net Assets 58
Revenue Capacity:
Number of Connections 60
Ten Largest Customers 61
Debt Capacity:
Ratio of Outstanding Debt 62
Debt Coverage 63
Demographic and Economic Information:
Demographics 64
Ten Largest Employers 65
Operating Information:
Number of Employees 66
Operating and Capacity Indicators 67
INTRODUCTORY SECTION
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i
September 24, 2012
Members of the Board of Directors
Yorba Linda Water District
Introduction
It is our pleasure to submit Yorba Linda Water District’s Comprehensive Annual
Financial Report (CAFR) for the fiscal year ending June 30, 2012. This report was
prepared pursuant to the guidelines set forth by the Governmental Accounting
Standards Board (GASB).
District staff prepared this financial report in conjunction with an unqualified opinion
issued by the independent audit firm White, Nelson, Diehl, Evans LLP. The independent
auditor’s report is located at the front of the financial section of this document.
Management’s discussion and analysis (MD&A) immediately follows the independent
auditor’s report and provides a narrative introduction, overview and analysis of the basic
financial statements. MD&A complements this letter of transmittal and should be read in
conjunction with it.
This report consists of management’s representations concerning the finances of Yorba
Linda Water District. Consequently, management assumes full responsibility for the
completeness and reliability of the information presented in this report. To provide a
reasonable basis for making these representations, the District has established a
comprehensive internal control framework that is designed both to protect the District’s
assets from loss, theft or misuse, and to compile sufficient reliable information for the
preparation of the District’s financial statements in conformity with generally accepted
accounting principles (GAAP). Because the cost of internal control should not outweigh
its benefits, the District’s comprehensive framework of internal controls has been
designed to provide reasonable, rather than absolute, assurance that the financial
statements will be free from material misstatement. Management asserts that to the
best of our knowledge and belief this financial report is complete and reliable in all
material aspects.
The Government Finance Officers Association of the United States and Canada
(GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to
the Yorba Linda Water District for its comprehensive annual financial report for the fiscal
year ended June 30, 2011. In order to be awarded a Certificate of Achievement, a
governmental entity must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both generally accepted
accounting principles and applicable legal requirements.
ii
A Certificate of Achievement is valid for a period of one year only. We believe that our
current comprehensive annual financial report continues to meet the Certificate of
Achievement Program requirements and we are submitting it to the GFOA to determine
its eligibility for certificate again this year.
District Structure and Leadership
The Yorba Linda Water District is an independent special district, which operates under
the authority of Division 12 of the California Water Code. The Yorba Linda Water District
has provided water and sewer services to the residents of the City of Yorba Linda,
portions of Placentia, Brea, Anaheim, and nearby unincorporated areas since 1959, the
year it was formed to take over the assets and water service responsibilities of the
Yorba Linda Water Company, a mutual formed in 1909. The District is governed by a
five-member Board of Directors, elected at large from within the District’s service area.
The General Manager administers the day-to-day operations of the District in
accordance with policies and procedures established by the Board of Directors. The
Yorba Linda Water District employs a full-time staff of 76 employees. The District’s
Board of Directors meets on the second and fourth Thursday of each month. Meetings
are publicly noticed and citizens are encouraged to attend.
The District provides water, sewer or a combination of both services to residents and
businesses within its service area, which includes approximately 14,475 acres of land
comprising 22.6 square miles. The District serves a population of approximately 72,500
and currently provides water service through approximately 23,950 residential,
commercial, and light industrial connections.
District Services
Residential customers make up approximately 92% of the District’s customer base and
consume approximately 72% of the water provided annually by the District. The District
obtains about half of its water supply from the Metropolitan Water District (MWD)
through the Municipal Water District of Orange County (MWDOC) and the other half
from groundwater wells within the area. In FY 2010/11 the District provided 19,280 acre-
feet of water to its customers.
The District’s service area is known for having larger than average residential lots and a
network of horse trails spanning over 100 miles in length. In 2005, CNN ranked the City
of Yorba Linda as 21st among the best places in the United States to live. Similarly, in
an article by CNN Money, the City of Yorba Linda was listed as one of the most affluent
cities in the United States, as well as the highest median income in Orange County, as
reported by 2000 Census data, based on towns between 65,000 and 250,000 in
population.
iii
Economic Condition and Outlook
The District’s administrative offices are located in the City of Placentia in Orange
County. The economic outlook for the area is one of very slow growth, which is
projected to continue through 2013 because of the ongoing financial crisis and the
somewhat distressed housing market.
District expenses have increased approximately $500,000 per year over the past four
fiscal years, with the fiscal year 2012/13 budget expected to increase an additional
$300,000. A primary factor of the increase in these expenses is the cost of water YLWD
pays to the Municipal Water District of Orange County (MWDOC) for import water and
assessments. MWDOC’s cost is primarily based on the cost of water they must pay to
the Metropolitan Water District of Southern California (MWD). Impacting the fiscal year
2011/12 budget was a 7.5% rate increase from MWD, effective January 1, 2012. An
additional average 5% rate increase (6.7% actual for YLWD) was also adopted and will
take effect January 1, 2013. These rate increases are part of an overall 37% rate
increase since January 1, 2009. As the cost of import water has continued to increase,
the cost of groundwater, purchased from the Orange County Water District (OCWD) has
kept pace. In addition, due to the continued economic downturn, cooler weather and
unusual precipitation patterns, with rain occurring late in the year, the District sold less
water than anticipated for FY 2011/12. This amounts to a decrease in water sales
revenue of $2.8 million. As over the past three fiscal years the District has averaged
annual sales of 19,100 acre-feet, the District has budgeted for 19,000 acre-feet of water
sales for FY 2012/13.
The District is also pursuing annexation of the remaining 26% of its service area into
OCWD. This will allow the District to pump the maximum allowable volume each year,
at a lower cost than purchasing the same amount of import (MWD) water. Had the
District been able to access the entirety of OCWD’s Basin Production Percentage (BPP)
for the fiscal year 2011/12, the District would have been able to lower its variable water
costs by approximately $1.0 million. As variable water costs comprise approximately
53% of the District’s operating expenses, ensuring these costs are held as low as
possible is a top priority each and every fiscal year.
California’s water supply continues to be a concern due to projected population
increases, cyclical drought conditions, and environmental and regulatory restrictions
that threaten the State’s water supply and conveyance system through the Sacramento-
San Joaquin Delta—all of which lead to increasing supply costs. Within the District’s
boundaries, population growth is expected to increase only minimally in the next 5-10
years, as more than 50% of the current households have children under the age of 18
who are not expected to add to this growth via newborns. Additionally, the District’s area
is primarily “built out”, and an influx of residents from outside the area is expected to
remain fairly low. The State of California, however, is expected to grow by 20 million
people over the next 40 years.
iv
Mission/Vision Statement and Major Initiatives
The activities of the Board and staff of the District are driven by its Mission Statement:
“Yorba Linda Water District will provide reliable, high quality water and sewer services in
an environmentally responsible manner, while maintaining an economical cost and
unparalleled customer service to our community,” and its Vision Statement: “Yorba
Linda Water District will become the leading, innovative and efficient source for high
quality reliable services.” The Mission and Vision Statements dictate the following five
core values of the District.
1. Integrity– We demonstrate integrity every day by practicing the highest ethical
standards and by ensuring that our actions follow our words.
2. Accountability– We acknowledge that both the Board and the staff of the
District are accountable to the public that we serve, as well as to each other.
3. Responsibility– We take full responsibility for our actions- both our successes
and our opportunities for growth. We maintain a commitment of courtesy,
assessment and resolution with all customer concerns.
4. Transparency – We promote a culture where we actively listen to our customers
and communicate openly about our policies, processes and plans for the future.
5. Teamwork – Success centers on all departments working together and sharing
information and resources to achieve common goals. We are dedicated to
ensuring that every voice of the District, from the Board to each individual
employee is treated with dignity and respect, and that differences are valued and
individual abilities and contributions are recognized.
Major Accomplishments during FY 2011/12
Previously, the Board of Directors approved the FY 2007-2012 five-year capital
improvement plan totaling $57.7 million. The projects in this plan were identified for
funding with the 2003 and 2008 Series Certificates of Participation (Revenue Bonds), in
combination with annexation funds and other reserves held by the District. These
projects are completed or underway as of the time of preparation of this report.
For fiscal years 2011 through 2015, staff identified projects totaling $37.4 million.
Included in that amount, $4.3 million was spent through the end of fiscal year 2010/11.
The remaining $33.1 million is therefore proposed for consideration by the Board for
capital improvement projects/capital replacement projects (CIP/CRP) that will extend
through fiscal year 2014/15. Approximately $8.5 million of the $33.1 million was spent in
fiscal year 2011/12 for projects in planning, design and construction. Those projects
included the following:
v
Highland Booster Pump Station Upgrade Project
The new, 18,000-gpm-capacity pump station completed construction in fiscal year
2011/12. The high-capacity pump station will make it possible to deliver up to
70 percent more groundwater to the higher zones of the District than with the pump
station being replaced.
Ohio St. and Oriente Dr. Pipeline Replacement Project
Construction of approximately 4,900-ft. of 8- to 16-inch diameter pipeline, valves,
hydrants and appurtenance in Ohio Street and Oriente Drive was completed, replacing
60-70 year old waterlines. These pipelines are sized to serve the local area as well as to
deliver water to the planned Yorba Linda Booster Station.
2012 Waterline Replacement Project
The project consists of replacing old waterlines and appurtenances in eight locations,
ranging from 200 to 3,000 feet, with a total replacement length of approximately 6,700
feet. These locations were identified in the Asset Management Plan and the Capital
Improvement Plan as requiring near-term replacement due to age and condition of the
pipelines.
Well No. 20 Project
Well drilling and test pumping were completed in early 2010 to determine the safe yield
of the planned new Well No 20. Based on that information, design of the above-grade
well facilities was completed in fiscal year 2010/11, with construction of the well facilities
completed in fiscal year 2011/12, to provide new groundwater production to replace
older wells, and to increase the District’s local water resource production capabilities.
Yorba Linda Blvd Booster Pump Station and Pipeline Project
The project consists of replacing the existing Palm Avenue Booster Pump Station with a
three-pump 5,000-gpm capacity new pump station at Gun Club Road and Yorba Linda
Blvd. Work includes 4,700 feet of 20-inch pipeline and other improvements. The project
will make is possible to deliver more groundwater to the easterly portion of the District’s
service area. Design work was completed in fiscal year 2011/12, with construction
beginning in fiscal year 2012/13 and will be completed in early fiscal year 2013/14.
Computerized Maintenance and Management System (CMMS)
This project consists of a software-based maintenance and management system for
improved tracking of work performed on the District’s infrastructure. The system
integrates directly with the District’s GIS and financial information systems to produce
reports on true costs of service and to assist District staff on future infrastructure
planning and budgeting. Completion is scheduled for fiscal year 2012/13.
vi
Fairmont Reservoir, Pump Station and Site Improvements Project
The project is the refurbishment and upgrading of the Fairmont site. The existing
37-year old booster station will be demolished and its two booster pumps will be
replaced by six, with two each pumping to three different pressure zones. A new
building will be constructed to house the pumps, as well as facilities for operations and
maintenance and a SCADA control center. Facilities will also be provided for equipment
and material storage. The project will also include refurbishment of the Fairmont
Reservoir, with new valves and other appurtenances. Part of the cost of the
improvements will be offset by developer-provided funding. Planning and design work
was begun in fiscal year 2011/12 and will continue, along with construction, in fiscal
years 2012/13 and 2013/14.
Lakeview Grade Separation Project
The Orange County Transportation Authority (OCTA) is the lead agency for a planned
Lakeview Avenue bridge over Orangethorpe Avenue and the adjacent BNSF Railroad
tracks. As part of the project, it will be necessary to replace and relocate the District’s
water lines currently in Lakeview Avenue through the project area. The District has been
in discussions with OCTA as to how much of the total cost of the relocation and
replacement of its waterlines and appurtenances the District must pay for, estimated at
a cost in the range of $1 million. During this process, the District has been pursuing
means to minimize the project cost it will bear, through work with legal counsel. It is
anticipated that OCTA and the District will reach a decision on the project cost share to
be borne by each by late fiscal year 2012/13 or early fiscal year 2013/14.
Green Crest Dr Sewer Lift Station Upgrade Project
As part of the Sewer Transfer Agreement with the City of Yorba Linda, the District has
taken over operation and maintenance of the existing sewer lift station, which serves six
homes on Green Crest Drive. The agreement included transfer of $175,000 from the
City for O&M of the lift station, which is being used for upgrades. The upgrade work will
include new SCADA and control elements for the lift station, which will be tied into the
District’s central control and monitoring system at District Headquarters.
Pressure Regulating Stations Upgrade Project
The District owns and maintains 37 pressure reducing stations for its six pressure zones
in the water system. The stations are equipped with combination pressure
reducing/pressure sustaining valves, with many of the stations having lead valves and
one or two additional valves and pressure relief valves and other appurtenances. The
stations are located below ground, in streets and parkways, some of which are 30 to 40
years old. Design and refurbishment of the stations was begun in fiscal year 2011/12
and is expected to be completed in fiscal year 2012/13.
vii
Other major accomplishments in fiscal year 2011/12 include the following:
Updated District Strategic Plan
Developed a Multi-Year Financial Plan Model
Prepared a Three-Year Financial Needs Assessment
Adopted 2010 Urban Water Management Plan Update
Completed Hazard Mitigation Plan Update
Completed Water Recycling Facilities Planning Study
Completed Locke Ranch Annexation
Commenced Maintenance of Eastside Sewer Systems
Received Positive Auditors Letter for FY 2010/11
Received State and National Recognition for CAFR
Received State and National Recognition for FY 2011/12 Budget document
Instituted a Public Affairs Intern Program
Developed and Presented a Public Relations Master Plan
Board Committed Agency to work toward District of Distinction Achievement
Gained the ability to earn cash back on purchases using a rewards program
through Cal-Card.
Future Years
Amidst the national economic turmoil and the California state budget crisis, our region
continues to face water supply issues due to extended drought seasons, as well as
judicial, environmental and regulatory restrictions. First and foremost, we continue to
monitor the State’s budget shortfall and potential shift of our property tax revenues.
Secondly, with water conservation and reduced water sales, our ability to maintain a
high level of services while holding costs down, has been seriously challenged.
Water Rate & Increases
In FY 2011/12, YLWD charged a uniform commodity rate of $2.52 per unit and a
monthly fixed charge of $11.73 for all sizes of meters. One unit of water equals 748
gallons, equating one gallon of water to a cost of approximately $0.0034 (one third of a
cent). At an average of 30 units of water per month (approximately 22,500 gallons), a
typical YLWD customer would pay about $87 on the average for their monthly water bill.
YLWD also provided wastewater service to all 23,850 of the District’s water customer
base in fiscal year 2010/11, at a charge of $5.50 per month. The District also provided
sewer service to approximately 1,400 customers that it does not provide water to. These
customers, in the “Locke Ranch” area of Yorba Linda, are served by a private water
company— Golden State Water Company.
In FY 2012/13, Yorba Linda Water District faces many challenges related to water
supply and demand. The District’s water supply is currently derived from both
groundwater and import water, approximately 50% from each source. Both import and
groundwater prices have dramatically increased over the past four fiscal years, and it is
anticipated that costs will continue to increase as supplies become more strained from
projected population increases, cyclical drought conditions, and environmental and
regulatory restrictions.
viii
With the intent to develop a rate structure to support conservation and equitability
among customers, the District conducted a Cost of Service Analysis and Alternative
Water Rate Feasibility Study in fiscal year 2011/12, which addressed the impacts of
implementing a tiered water conservation rate structure and/or a budget-based water
rate structure for customers of the District. The result of this study was a three-year rate
increase to customers on the Monthly Service Charge, approved by the Yorba Linda
Water District Board of Directors. The approved rate increase is a percentage on the
District’s overall revenue and consists of a 1.5% revenue increase beginning on
July 1, 2012, a 2.5% increase beginning on July 1, 2013, and a 2.5% increase
beginning on July 1, 2014. These increases will assist in covering the costs associated
with operating, maintaining and replacing the District’s water facilities. The District will
also be passing through to customers any future increases on the commodity charge
from its water suppliers as these charges are based on the amount of water sold.
In conjunction with this rate increase, the Board of Directors recommended that staff
pursue a line of credit with Wells Fargo for $7 million with a 3-year renewable term and
an interest rate based on 1 month LIBOR, currently calculated at 1.14%. The line of
credit will allow the District to pursue future capital improvement projects with a minimal
borrowing cost and a lowered financial burden to our customers.
The District also issued Refunding Revenue Bonds, Series 2012A, which advance
refunded the 2003 Certificates of Participation (COP) Bonds. This is estimated to save
approximately $80,000 annually.
Annexation Initiative
While 75% of the District’s service boundary is within the territory of the Orange County
Water District (OCWD), the agency responsible for managing the groundwater basin,
District Staff and the Board are pursuing annexation of the remaining 25%. The
advantage of 100% annexation is a substantial cost savings in the water the District
produces from the groundwater basin. Currently, the OCWD groundwater basin has a
pumping limitation of 65% of each agency’s annual demands, which is applicable to all
Orange County water agencies that are completely annexed within OCWD. Since only
75% the District’s boundaries are within OCWD, this equates to a 48% pumping
limitation. The remaining water is supplied through the more costly import water. It is
estimated that the District would reduce its water costs by approximately $1.5M per year
if the entire area is annexed into OCWD.
Enhanced Outreach & Communications
The District continues to enhance its communications with and presence within the
community. Within the FY 2011/12 Budget, the District funded a Public Information
Officer position and two part-time Public Affairs Intern positions. The Public Affairs
division of the Administration department develops and disseminates information to the
public and supports water conservation programs with the overall goal of developing a
more transparent image of the District to the community.
ix
The District’s Citizens Advisory Committee, made up of local residents, who serve as
ambassadors to the community, meet with District staff on a monthly basis to discuss
and provide recommendations on various pending District issues. The committee has
been actively involved with issues such as the water rate increase, the water
conservation ordinance, continuing conservation outreach, public information, and
various other matters as they arise. In November 2010, three Citizens Advisory
Committee members ran for, and won election to seats on the District Board of
Directors. Those three seats will be up for re-election in November 2014.
Technological Advancements in Progress
Technological advancements include the incorporation of a Computerized Maintenance
& Management System (CMMS), which automates and tracks field work orders and
provide actual costs to perform work-order related functions. In planning is an
Automated Purchase Requisitioning System, which will provide better workflow and
approvals for purchasing items, as well as have direct integration with the new financial
software.
Internal Control Structure
District management is responsible for the establishment and maintenance of the
internal control structure that ensures the assets of the District are protected from loss,
theft or misuse. The internal control structure also ensures adequate accounting data is
compiled to allow for the preparation of financial statements in conformity with generally
accepted accounting principles. The District’s internal control structure is designed to
provide reasonable assurance that these objectives are met. The concept of reasonable
assurance recognizes that (1) the cost of a control should not exceed the benefits likely
to be derived, and (2) the valuation of costs and benefits requires estimates and
judgments by management.
Budgetary Control
The District Board of Directors adopts an operating and capital budget every year. The
budget authorizes and provides the basis for reporting and control of financial
operations and accountability for the District’s enterprise operations and capital projects.
The budget and reporting treatment applied to the District is consistent with the accrual
basis of accounting and the financial statement basis.
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Cash and Investment Management
In order of priority, the District’s objectives when investing, reinvesting, purchasing,
acquiring, selling and managing public funds are as follows:
1. Safety: Safety of principal is the foremost objective of the investment program.
Investments made by the District are undertaken in a manner that seeks to
ensure the preservation of capital in the overall portfolio. To attain this objective,
diversification is required to prevent any potential loss on any individual security
or depository from exceeding the income generated from the remainder of the
portfolio.
2. Liquidity: The investment portfolio will remain sufficiently liquid to enable the
District to meet all operating requirements that might be reasonably anticipated.
3. Return on Investments: The investment portfolio shall be designed with the
objective of attaining a market rate of return throughout budgetary and economic
cycles, taking into account the investment risk constraints and the cash flow
characteristics of the portfolio.
Audit and Financial Reporting
State Law and Bond covenants require the District to obtain an annual audit of its
financial statements by an independent certified public accountant. The accounting firm
of White, Nelson, Diehl, Evans LLP has conducted the audit of the District’s financial
statements. Their unqualified (clean) Independent Auditor’s Report appears in the
Financial Section.
Other References
More information is contained in the Management’s Discussion and Analysis and the
Notes to the Basic Financial Statements found in the Financial Section of the report.
Acknowledgements
Preparation of this report was accomplished by the combined efforts of District staff.
We appreciate the dedicated efforts and professionalism that these staff members
contribute to the District. We would also like to thank the members of the Board of
Directors and especially the Finance-Accounting Committee members for their
continued support in planning and implementation of the Yorba Linda Water District’s
fiscal policies.
Respectfully submitted,
______________________________ ________________________________
Steve Conklin Stephen Parker
Acting General Manager Finance Director
Yorba Linda Water District
Board of Directors and Executive Staff
Phil Hawkins, President Gary T. Melton, Vice President
Michael J. Beverage Robert R. Kiley Ric Collet
Director Director Director
Steven R. Conklin Lee Cory
Acting General Manager/ Operations Manager
Engineering Manager
Art Vega Gina Knight Stephen Parker
Interim IT Manager HR & Risk Manager Finance Manager
xi
xii
Yorba Linda Water District
Organization Chart
xiii
District Boundaries
xiv
GFOA Certificate of Achievement for Excellence in Financial
Reporting Award FY 2010/11
FINANCIAL SECTION
This page intentionally left blank
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
- 1 -
INDEPENDENT AUDITORS’ REPORT
Board of Directors
Yorba Linda Water District
Placentia, California
We have audited the basic financial statements of the Yorba Linda Water District (the District) as of
and for the year ended June 30, 2012 as listed in the table of contents. These basic financial statements
are the responsibility of the District’s management. Our responsibility is to express an opinion on
these basic financial statements based on our audit. The prior year partial comparative information has
been derived from the financial statements of the District for the year ended June 30, 2011 and in our
report dated October 18, 2011, we expressed an unqualified opinion on these financial statements.
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States, and the State Controller’s Minimum
Audit Requirements for California Special Districts. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the District’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the basic financial statements referred to above present fairly, in all material respects,
the financial position of Yorba Linda Water District as of June 30, 2012 and the results of its changes in
financial position and cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America, as well as the accounting systems prescribed by the
State Controller’s Office and State regulations governing Special Districts.
- 2 -
In accordance with Government Auditing Standards, we have also issued our report dated
September 21, 2012 on our consideration of the District’s internal control over financial reporting and
our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be considered in assessing
the results of our audit.
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis and other post-employment benefit plan - schedule of funding
progress, as identified in the accompanying table of contents, be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is
required by the Governmental Accounting Standards Board, who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational, economic,
or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America,
which consisted of inquiries of management about the methods of preparing the information and
comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements, and other knowledge we obtained during the audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance on them.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a
whole. The supplementary information listed in the table of contents is presented for purposes of
additional analysis and is not a required part of the basic financial statements of the District. Such
information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the financial statements. The information has
been subjected to the auditing procedures applied in the audit of the basic financial statements and
certain additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the basic financial statements of the District
or to the financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the information is fairly
stated in all material respects in relation to the basic financial statements taken as a whole.
Our audit was conducted for the purpose of forming an opinion on the District’s basic financial
statements taken as a whole. The Introductory Section and Statistical Section are presented for
purposes of additional analysis and are not a required part of the basic financial statements. The
Introductory Section and Statistical Section have not been subjected to the auditing procedures applied
in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide
any assurance on them.
Irvine, California
September 21, 2012
YORBA LINDA WATER DISTRICT
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Year Ended June 30, 2012
See independent auditors’ report.
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The following Management’s Discussion and Analysis (“MD&A”) of activities and financial
performance of the Yorba Linda Water District (“District”) provides an introduction to the financial
statements of the District for the fiscal year ended June 30, 2012. We encourage readers to consider the
information presented here in conjunction with the transmittal letter in the Introductory Section and
with the basic financial statements and related notes, which follow this section.
Financial Highlights
The District’s net assets increased by $10.8 million, or a 7.0% increase in net assets.
During the year the District’s revenues were $30.0 million, up 10.0%.
During the year, the District’s expenses were $31.4 million, up 9.3%.
Required Financial Statements
This annual report consists of a series of financial statements. The Statement of Net Assets, Statement
of Revenues, Expenses and Changes in Net Assets and Statement of Cash Flows provide information
about the activities and performance of the District using accounting methods similar to those used by
private sector companies.
The District’s statements consist of two funds; the Water Fund and the Sewer Fund. The District’s
records are maintained on an enterprise basis, as it is the intent of the Board of Directors that the costs
of providing water and sewer to the customer of the District are financed primarily through user
charges.
The Statement of Net Assets includes all of the District’s investments in resources (assets) and the
obligations to creditors (liabilities). It also provides the basis for computing a rate of return, evaluating
the capital structure of the District and assessing the liquidity and financial flexibility of the District.
All of the current year’s revenue and expenses are accounted for in the Statement of Revenues,
Expenses and Changes in Net Assets. This statement measures the success of the District’s operations
over the past year and can be used to determine if the District has successfully recovered all of its costs
through its rates and other charges. This statement can also be used to evaluate profitability and credit
worthiness. The final required financial statement is the Statement of Cash Flows, which provides
information about the District’s cash receipts and cash payments during the reporting period. The
Statement of Cash Flows reports cash receipts, cash payments and net changes in cash resulting from
operations, investing, non-capital financing, and capital and related financing activities and provides
answers to such questions as where did cash come from, what was cash used for, and what was the
change in cash balance during the reporting period.
YORBA LINDA WATER DISTRICT
MANAGEMENT’S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2012
See independent auditors’ report.
- 4 -
Financial Analysis of the District
One of the most important questions asked about the District’s finances is, “Is the District better off or
worse off as a result of this year’s activities?” The Statement of Net Assets and the Statement of
Revenues, Expenses and Changes in Net Assets report information about the District in a way that
helps answer this question. These statements include all assets and liabilities using the accrual basis of
accounting, which is similar to the accounting used by most private sector companies. All of the
current year’s revenues and expenses are taken into account regardless of when the cash is received or
paid.
These two statements report the District’s net assets and changes in them. You can think of the
District’s net assets (the difference between assets and liabilities), as one way to measure the District’s
financial health, or financial position. Over time, increases or decreases in the District’s net assets are
one indicator of whether its financial health is improving or deteriorating. However, one will need to
consider other non-financial factors such as changes in economic conditions, population growth,
zoning and new or changed government legislation, such as changes in Federal and State water quality
standards.
Notes to the Basic Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the basic financial statements. The notes to the basic financial statements can be found on pages 17
through 43.
YORBA LINDA WATER DISTRICT
MANAGEMENT’S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2012
See independent auditors’ report.
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Statement of Net Assets
As noted earlier, net assets may serve over time as a useful indicator of a government’s financial
position. In the case of the District, assets of the District exceeded liabilities by $165.0 million and
$154.2 million as of June 30, 2012 and 2011, respectively.
By far the largest portion of the District’s net assets (98% and 95% as of June 30, 2012 and 2011,
respectively) reflects the District’s investment in capital assets (net of accumulated depreciation) less
any related debt used to acquire those assets that is still outstanding. The District uses these capital
assets to provide services to customers within the District’s service area; consequently, these assets are
not available for future spending.
For the year ended June 30, 2012, the District showed a negative balance in its unrestricted net assets
of $6.2 million, which indicates that there aren’t any reserves to be utilized in future years, as was the
same with the negative balance of $5.3 million for the year ended June 30, 2011.
20122011Change
Assets:
Current unrestricted assets$14,593,330 $15,953,458 $(1,360,128)
Current restricted assets12,247,874 20,435,240 (8,187,366)
Other assets758,432 755,728 2,704
Capital assets, net201,049,856 181,633,788 19,416,068
Total Assets 228,649,492 218,778,214 9,871,278
Liabilities:
Liabilities payable from unrestricted current assets5,992,502 5,586,615 405,887
Liabilities payable from restricted assets1,399,418 1,373,171 26,247
Non-current liabilities56,215,358 57,582,753 (1,367,395)
Total Liabilities 63,607,278 64,542,539 (935,261)
Net Assets:
Invested in capital assets, net of related debt161,672,565 146,991,090 14,681,475
Restricted for capital construction9,598,420 12,620,256 (3,021,836)
Unrestricted(6,228,771) (5,375,671) (853,100)
Total Net Assets $165,042,214 $154,235,675 $10,806,539
YORBA LINDA WATER DISTRICT
MANAGEMENT’S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2012
See independent auditors’ report.
- 6 -
Statement of Revenues, Expenses and Changes in Net Assets
20122011Change
Revenues
Operating revenues:
Water sales$24,998,673 $22,686,251 $2,312,422
Sewer revenue1,785,804 1,274,579 511,225
Other operat ing revenue848,238 1,035,545 (187,307)
Total operating revenues27,632,715 24,996,375 2,636,340
Non-operating revenues:
Investment income277,137 274,152 2,985
Property taxes1,273,855 1,258,769 15,086
Other non-operating income805,654 739,062 66,592
Tota l non-operat ing revenues2,356,646 2,271,983 84,663
Total revenues 29,989,361 27,268,358 2,721,003
Expense s
Operating expenses:
Var iable water costs12,275,853 11,268,306 1,007,547
Personnel services6,979,088 6,902,995 76,093
Supplies and services3,811,125 3,686,333 124,792
Depreciation 6,595,720 5,279,860 1,315,860
Total operating expenses29,661,786 27,137,494 2,524,292
Non-operat ing expenses:
Interest expense1,626,190 1,172,503 453,687
Other non-operating expense108,984 406,575 (297,591)
Total non-operating expenses1,735,174 1,579,078 156,096
Total expenses 31,396,960 28,716,572 2,680,388
Net income (loss) before capital
contributions and extraordinary
item (1,407,599) (1,448,214) 40,615
Capital contributions17,214,138 706,319 16,507,819
Extraordinary item (5,000,000) - (5,000,000)
Change in net assets 10,806,539 (741,895) 11,548,434
Net assets, beginning of year 154,235,675 154,977,570 (741,895)
Net assets, end of year $165,042,214 $154,235,675 $10,806,539
YORBA LINDA WATER DISTRICT
MANAGEMENT’S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2012
See independent auditors’ report.
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Statement of Revenues, Expenses and Changes in Net Assets (Continued)
The statement of revenues, expenses and changes of net assets shows how the District’s net assets
changed during the fiscal years. In the case of the District, net assets increased by $10.8 million and
decreased by $742 thousand for the fiscal years ended June 30, 2012 and 2011, respectively.
A closer examination of the sources of changes in net assets reveals that:
In 2012, the District’s total revenues increased by $2.7 million, primarily due to an increase in water
sales of $2.3 million as a result of a warmer summer than the two previous years and an improving
economy. In addition, total expenses increased by $2.7 million primarily due to increased variable
water costs of $1.1 million due to increased water purchases and increased depreciation expenses of
$1.3 million as a result of a number of large capital assets closed in the previous year.
In 2011, the District’s total revenues increased by $1.0 million, primarily due to an increase in water
sales of $900 thousand from recognizing a full year with higher rates as a result of a large rate increase
that went into effect in September 2009. In addition, total expenses increased by $1.3 million
primarily due to water rates rising which caused an increase in variable water costs ($600 thousand
increase) and other non-operating expense increasing $300 thousand as a result of closing projects that
had accumulated in CIP and determining they should be expensed.
YORBA LINDA WATER DISTRICT
MANAGEMENT’S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2012
See independent auditors’ report.
- 8 -
Capital Assets
At the end of fiscal year 2012 and 2011, the District’s investment in capital assets amounted to $201.0
million and $181.6 million, respectively (net of accumulated depreciation). This investment in capital
assets includes land, transmission and distribution systems, reservoirs, tanks, pumps, buildings and
structures, equipment, vehicles and construction-in-process, etc. Major capital assets additions during
the year included upgrades to the District’s transmission and distribution system, most notably the
complete replacement of Highland Reservoir and bringing Hidden Hills Reservoir online.
Additional information regarding capital assets can be found in note 4 in Notes to Basic Financial
Statements.
Changes in capital asset amounts for 2012 were as follows:
BalanceTransfers/Balance
2011AdditionsDeletions2012
Capital assets:
Capital assets, not being depreciated$5,223,388 $8,785,670 $(3,122,565) $10,886,493
Capital assets, being depreciated232,232,836 20,438,265 (295,610) 252,375,491
Less accumulated depreciation(55,822,436) (6,595,720) 206,028 (62,212,128)
Total capital assets, net$181,633,788$22,628,215 $(3,212,147) $201,049,856
Changes in capital asset amounts for 2011 were as follows:
BalanceTransfers/Balance
2010AdditionsDeletions2011
Capital assets:
Capital assets, not being depreciated$24,014,834 $6,125,312 $(24,916,758) $5,223,388
Capital assets, being depreciated206,988,160 25,498,796 (254,120) 232,232,836
Less accumulated depreciation(50,680,845) (5,279,860) 138,269 (55,822,436)
Total capital assets, net$180,322,149 $26,344,248 $(25,032,609) $181,633,788
YORBA LINDA WATER DISTRICT
MANAGEMENT’S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2012
See independent auditors’ report.
- 9 -
Long-Term Liabilities
Additional information regarding long-term liabilities can be found in note 5 in Notes to Basic
Financial Statements.
Changes in long-term liabilities for the year ended June 30, 2012 were as follows:
Beginning Ending
BalanceAdditionsReductionsBalance
2003 Revenue Certificates
of Part icipat ion $9,200,000 $- $(235,000 ) $8,965,000
2008 Revenue Certificates
of Participation33,405,000 - (655,000) 32,750,000
Su btotal 42,605,000 - (890,000 ) 41,715,000
Add (Less):
Discount(120,418) - 5,432 (114,986)
Premium 704,535 - (26,420) 678,115
Total Certificates
of Part icipat ion43,189,117 - (910,988 ) 42,278,129
Compensated absences1,007,193 524,867 (468,488) 1,063,572
Ot her post-employment
liabili ty (asset)122,065 164,390 (319,085 ) (32,630)
Total$44,318,375 $689,257 $(1,698,561) $43,309,071
Changes in long-term liabilities for the year ended June 30, 2011 were as follows:
Beginning Ending
BalanceAdditionsReductionsBalance
2003 Revenue Certificates
of Part icipat ion $9,425,000 $- $(225,000 ) $9,200,000
2008 Revenue Certificates
of Participation34,035,000 - (630,000) 33,405,000
Su btotal 43,460,000 - (855,000 ) 42,605,000
Add (Less):
Discount(125,851) - 5,433 (120,418)
Premium 730,955 - (26,420) 704,535
Tota l Cert ificates
of Part icipat ion44,065,104 - (875,987 ) 43,189,117
Compensated absences1,050,888 518,006 (561,701) 1,007,193
Other post-employment
liability236,483 189,147 (303,565) 122,065
Total$45,352,475 $707,153 $(1,741,253) $44,318,375
YORBA LINDA WATER DISTRICT
MANAGEMENT’S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2012
See independent auditors’ report.
- 10 -
Requests for Information
This financial report is designed to provide the District’s funding sources, customers, stakeholders and
other interested parties with an overview of the District’s financial operations and financial condition.
Should the reader have questions regarding the information included in this report or wish to request
additional financial information, please contact the District at 1717 E. Miraloma Avenue, Placentia,
California 92807 or the Finance Department at (714) 701-3040.
- 11 -
BASIC FINANCIAL STATEMENTS
20122011
CURRENT ASSETS:
UNRESTRICTED ASSETS:
Cash and cash equivalents (Note 2)10,068,471$ 11,693,893$
Accounts receivable - water and sewer services3,855,326 3,642,035
Accounts receivable - property taxes128,477 114,949
Accrued interest receivable13,004 22,049
Prepaid expenses and deposits243,771246,919
Inventory 284,281 233,613
TOTAL UNRESTRICTED ASSETS14,593,330 15,953,458
RESTRICTED ASSETS:
Cash and cash equivalents (Note 2)10,084,11118,291,615
Investments (Note 2)2,157,7862,143,130
Accrued interest receivable5,977 495
TOTAL RESTRICTED ASSETS12,247,874 20,435,240
TOTAL CURRENT ASSETS26,841,204 36,388,698
NONCURRENT ASSETS:
Bond issuance costs725,802 755,728
Capital assets (Note 4):
Non-depreciable10,886,4935,223,388
Depreciable, net of accumulated depreciation190,163,363176,410,400
Other post-employment benefit (OPEB) asset (Notes 5 and 6)32,630-
TOTAL NONCURRENT ASSETS201,808,288 182,389,516
TOTAL ASSETS228,649,492 218,778,214
See independent auditors' report and notes to basic financial statements.(Continued)
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YORBA LINDA WATER DISTRICT
COMBINED STATEMENTS OF NET ASSETS
June 30, 2012
ASSETS
(With prior year data for comparison only)
20122011
CURRENT LIABILITIES:
PAYABLE FROM UNRESTRICTED CURRENT ASSETS:
Accounts payable 4,892,274$ 4,506,830$
Accrued expenses152,907 130,306
Compensated absences payable - current portion (Note 5)265,893 251,798
Customer and construction deposits267,896281,156
Deferred revenue413,532 416,525
TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS5,992,502 5,586,615
PAYABLE FROM RESTRICTED ASSETS:
Accrued interest payable474,418 483,171
Certificates of Participation - current portion (Note 5)925,000 890,000
TOTAL PAYABLE FROM RESTRICTED ASSETS1,399,418 1,373,171
TOTAL CURRENT LIABILITIES7,391,920 6,959,786
LONG-TERM LIABILITIES (LESS CURRENT PORTION):
Deferred annexation revenue14,064,55014,406,176
Compensated absences (Note 5)797,679 755,395
Other post-employment benefit (OPEB) liability (Notes 5 and 6)- 122,065
Certificates of Participation (Note 5)41,353,12942,299,117
TOTAL LONG-TERM LIABILITIES (LESS CURRENT PORTION)56,215,358 57,582,753
TOTAL LIABILITIES63,607,278 64,542,539
NET ASSETS:
Invested in capital assets, net of related debt (Note 8)161,672,565 146,991,090
Restricted for capital projects9,598,420 12,620,256
Unrestricted (6,228,771) (5,375,671)
TOTAL NET ASSETS165,042,214$ 154,235,675$
See independent auditors' report and notes to basic financial statements.
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YORBA LINDA WATER DISTRICT
COMBINED STATEMENTS OF NET ASSETS
(CONTINUED)
June 30, 2012
LIABILITIES
(With prior year data for comparison only)
20122011
OPERATING REVENUES:
Water sales 24,998,673$ 22,686,251$
Sewer revenues1,785,8041,274,579
Other operating revenues848,2381,035,545
TOTAL OPERATING REVENUES27,632,715 24,996,375
OPERATING EXPENSES:
Variable water costs12,275,85311,268,306
Personnel services6,979,0886,902,995
Supplies and services3,811,1253,686,333
Depreciation 6,595,7205,279,860
TOTAL OPERATING EXPENSES29,661,786 27,137,494
OPERATING LOSS(2,029,071) (2,141,119)
NONOPERATING REVENUES (EXPENSES):
Property taxes 1,273,8551,258,769
Investment income277,137274,152
Interest expense(1,626,190) (1,172,503)
Other nonoperating revenues805,654739,062
Other nonoperating expenses(108,984)(406,575)
TOTAL NONOPERATING REVENUES (EXPENSES)621,472 692,905
NET LOSS BEFORE CAPITAL CONTRIBUTIONS AND
EXTRAORDINARY ITEMS(1,407,599) (1,448,214)
CAPITAL CONTRIBUTIONS17,214,138706,319
EXTRAORDINARY ITEMS (NOTE 12)(5,000,000)-
CHANGES IN NET ASSETS10,806,539 (741,895)
NET ASSETS - BEGINNING OF YEAR154,235,675 154,977,570
NET ASSETS - END OF YEAR165,042,214$ 154,235,675$
See independent auditors' report and notes to basic financial statements.
- 14 -
YORBA LINDA WATER DISTRICT
COMBINED STATEMENTS OF REVENUES, EXPENSES
For the year ended June 30, 2012
AND CHANGES IN NET ASSETS
(With prior year data for comparison only)
20122011
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers27,396,429$ 25,257,632$
Cash payments to employees for salaries and wages(7,054,803) (7,056,529)
Cash payments to suppliers of goods and services(15,739,319) (15,879,098)
Other revenue 478,300 245,050
Other expenses (74,806) (263,781)
NET CASH PROVIDED BY OPERATING ACTIVITIES5,005,801 2,303,274
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Cash payments for extraordinary item(5,000,000) -
Proceeds from property taxes and assessments1,261,507 1,265,653
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES(3,738,493) 1,265,653
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Proceeds from annexation fees and capital contributions89,949 1,022,579
Acquisition and construction of capital assets(8,633,470) (5,599,745)
Proceeds from sales of capital assets11,249 13,678
Principal paid on long-term liability(890,000) (855,000)
Interest paid on long-term liability(1,919,822) (1,961,047)
NET CASH USED BY CAPITAL AND
RELATED FINANCING ACTIVITIES(11,342,094) (7,379,535)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale/purchase of investments, net(38,840) (2,073,253)
Interest and investment earnings280,700 275,723
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES241,860 (1,797,530)
NET DECREASE IN CASH AND CASH EQUIVALENTS(9,832,926) (5,608,138)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR29,985,508 35,593,646
CASH AND CASH EQUIVALENTS - END OF YEAR20,152,582$ 29,985,508$
See independent auditors' report and notes to basic financial statements.(Continued)
YORBA LINDA WATER DISTRICT
COMBINED STATEMENTS OF CASH FLOWS
For the year ended June 30, 2012
- 15 -
(With prior year data for comparison only)
20122011
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Operating loss(2,029,071)$ (2,141,119)$
Adjustments to reconcile operating loss to
net cash provided by operating activities:
Depreciation6,595,720 5,279,860
Other revenues478,300 245,050
Other expenses(74,806) (263,781)
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable(213,291) 281,520
Inventory(50,668) (25)
Prepaid expenses and deposits3,148 26,105
Increase (decrease) in liabilities:
Accounts payable and accrued expenses385,444 (1,030,018)
Accrued salaries and wages22,601 4,579
Accrued other post-employment benefits (OPEB) liability(154,695) (114,418)
Accrued compensated absences56,379 (43,695)
Customer and construction deposits(13,260) 59,216
Total adjustments7,034,872 4,444,393
NET CASH PROVIDED BY OPERATING ACTIVITIES5,005,801$ 2,303,274$
CASH AND CASH EQUIVALENTS -
FINANCIAL STATEMENT CLASSIFICATION:
Unrestricted10,068,471$ 11,693,893$
Restricted 10,084,111 18,291,615
TOTAL CASH AND CASH EQUIVALENTS -
FINANCIAL STATEMENT CLASSIFICATION 20,152,582$ 29,985,508$
NONCASH INVESTING, CAPITAL AND
RELATED FINANCING ACTIVITIES:
Amortization related to long-term debt 20,988$ 20,988$
Capital contributions17,480,462$ 6,278,135$
See independent auditors' report and notes to basic financial statements.
(With prior year data for comparison only)
- 16 -
YORBA LINDA WATER DISTRICT
COMBINED STATEMENTS OF CASH FLOWS
(CONTINUED)
For the year ended June 30, 2012
- 17 -
NOTES TO BASIC FINANCIAL STATEMENTS
See independent auditors’ report.
- 18 -
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Organization and Description of the Reporting Entity:
The Yorba Linda Water District (the District) is an independent special district established
in 1959, which operates under the authority of Division 12 of the California Water Code for the
purpose of providing water and sewer services to the properties within the District. The
District is governed by a five member board of Directors elected by the voters in the area to
four-year terms. The District provides two services which include Water and Sewer. Water is
provided to the entire service area. Sewer is provided to about two-thirds of the service area.
The District’s service area includes Yorba Linda and portions of Placentia, Anaheim, Brea, and
areas of unincorporated Orange County. The District provides water service to approximately
72,498 residents and sewer service to approximately 75,498 residents.
The criteria used in determining the scope of the reporting entity are based on the provisions of
GASB Statement 14. The District is the primary government unit. Component units are those
entities which are financially accountable to the primary government, either because the
District appoints a voting majority or the component unit’s board, or because the component
unit will provide a financial benefit or impose a financial burden on the District.
The District’s reporting entity includes the Yorba Linda Water District Public Financing
Corporation, a California nonprofit public benefit corporation, formed in July 2003 for the
purpose of providing assistance to the District and other public agencies in the State of
California of which the District is a member, or is otherwise engaged with in the financing,
refinancing, acquiring, constructing and rehabilitating of facilities, land and equipment, in the
sale or leasing of facilities, land and equipment for the use, benefit and enjoyment of the public
served by such agencies and any other purpose incidental thereto). Although the District and
the Public Facilities Corporation are legally separate entities, the District’s Board of Directors
is financially responsible for the Public Financing Corporation and, therefore, the
accompanying financial statements include the accounts and records of the Public Financing
Corporation using the blending method as required by accounting principles generally accepted
in the United States of America. There are no separate financial statements for the Public
Financing Corporation.
b. Basic Financial Statements:
The basic financial statements are comprised of the Combined Statements of Net Assets, the
Combined Statements of Revenues, Expenses and Changes in Net Assets, the Statements of
Cash Flows and the notes to the basic financial statements.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 19 -
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c. Basis of Presentation:
The accounts of the District are an enterprise fund. An enterprise fund is a Proprietary type
fund used to account for operations (a) that are financed and operated in a manner similar to
private business enterprises - where the intent of the governing body is that the costs (expenses,
including depreciation) of providing goods or services to the general public on a continuing
basis be financed or recovered primarily through user charges; or (b) where the governing body
has decided that periodic determination of revenues earned, expenses incurred, and/or net
income is appropriate for capital maintenance, public policy, management control,
accountability or other purposes.
d. Measurement Focus and Basis of Accounting:
Measurement focus is a term used to describe “which” transactions are recorded within the
various financial statements. Basis of accounting refers to “when” transactions are recorded
regardless of the measurement focus applied. The accompanying financial statements are
reported using the economic resources measurement focus, and the accrual basis of accounting.
Under the economic measurement focus all assets and liabilities (whether current or
noncurrent) associated with these activities are included on the Statement of Net Assets. The
Statement of Revenues, Expenses and Changes in Net Assets present increases (revenues) and
decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the
timing of related cash flows.
e. Net Assets:
In the Statement of Net Assets, net assets are classified in the following categories:
Invested in capital assets, net of related debt - This amount consists of capital assets net of
accumulated depreciation and reduced by outstanding debt that is attributed to the
acquisition, construction, or improvement of the assets.
Restricted net assets - This amount is restricted by external creditors, grantors, contributors,
or laws or regulations of other governments.
Unrestricted net assets - This amount is all net assets that do not meet the definition of
“invested in capital assets, net of related debt” or “restricted net assets”.
When both restricted and unrestricted resources are available for use, the District may use
restricted resources or unrestricted resources based on the Board’s discretion.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 20 -
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
f. Operating Revenues and Expenses:
Operating revenues, such as charges for services (water sales and sewer service charges) result
from exchange transactions associated with the principal activity of the District. Nonoperating
revenues, such as property taxes and assessments, and investment income, result from
nonexchange transactions or ancillary activities in which the District receives value without
directly giving equal value in exchange.
Operating expenses include the cost of sales and services, administrative expenses and
depreciation on capital assets. All expenses not meeting this definition are reported as
nonoperating expenses.
g. Cash and Cash Equivalents:
The District considers all highly liquid investments with a maturity of three months or less at
the time of purchase to be cash equivalents.
h. Investments and Investment Policy:
The District has adopted an investment policy directing the District’s General Manager or
Finance Manager to invest, reinvest, sell or exchange securities.
Investments are stated at fair value which represents the quoted or stated market value.
Changes in fair value that occur during a fiscal year are recognized as investment income
reported for that fiscal year. Investment income includes interest earnings, changes in fair
value, and any gains or losses realized upon the liquidation or sale of investments.
i. Accounts Receivable:
The District extends credit to customers in the normal course of operations. Management has
evaluated the accounts and believes they are all collectible. Management evaluates all
accounts receivable and if it is determined that they are uncollectible they are written off as a
bad debt expense. A charge of $22,995 and $20,263 were made to bad debt expense for the
fiscal years ended June 30, 2012 and 2011, respectively.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 21 -
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
j. Property Taxes and Assessments:
The Orange County Assessor’s Office assesses all real and personal property within the County
each year. The Orange County Tax Collector’s Office bills and collects the District’s share of
property taxes and assessments. The Orange County Treasurer’s Office remits current and
delinquent property tax collections to the District throughout the year. Property taxes in
California are levied in accordance with Article XIIIA of the State Constitution at 1% of
countywide assessed valuations. This levy is allocated pursuant to state law to the appropriate
units of local governments.
Property taxes receivable at year-end are related to property taxes collected by the Orange
County Tax Collector which have not been credited to the District’s cash balance as of June 30.
The property tax calendar is as follows:
Lien Date: January 1
Levy Date: July 1
Due Dates: First Installment - November 1
Second Installment - March 1
Collection Dates: First Installment - December 10
Second Installment - April 10
k. Prepaid Expenses:
Certain payments to vendors reflects costs or deposits applicable to future accounting periods
and are recorded as prepaid items in the basic financial statements.
l. Inventory:
Inventory consists primarily of materials and supplies used in the construction and
maintenance of the water and sewer systems and are stated at cost using the average-cost
method on a first in, first out basis.
m. Capital Assets:
Capital assets acquired and/or constructed are capitalized at historical cost. District policy has
set the capitalization threshold for reporting capital assets at $5,000. Contributed assets are
recorded at estimated fair market value at the date of contribution. Upon retirement or other
disposition of capital assets, the cost and related accumulated depreciation are removed from
the respective balances and any gains or losses are recognized.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 22 -
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
m. Capital Assets (Continued):
Depreciation is recorded on the straight-line basis over the estimated useful lives of the assets
as follows:
Source of Supply 30 to 75 years
Pumping Plant 20 to 40 years
Water Treatment Plant 12 to 40 years
Sewer Plant 5 to 60 years
Transmission and Distribution Plant 10 to 40 years
General Plant 3 to 40 years
n. Bond Issuance Costs:
Bond issuance costs are amortized on a straight-line methodology based on the estimated term
of the related bond debt. Bond issuance costs were $725,802 and $755,728 net of accumulated
amortization of $171,982 and $142,056 at June 30, 2012 and 2011, respectively.
o. Interest Expense:
The District incurs interest charges on the Certificates of Participation. Interest expense of
$258,459 and $753,855 has been capitalized as an addition to the cost of construction for the
years ended June 30, 2012 and 2011, respectively.
p. Compensated Absences:
The District’s policy is to permit employees to accumulate earned vacation and sick leave. The
liability for vested vacation and sick leave is recorded as an expense when earned. Employees
may carry forward up to one and one-half years of earned vacation days and an unlimited
number of sick leave days.
Upon termination or retirement, permanent employees are entitled to receive compensation at
their current base salary for all unused vacation leave except for those employees that have not
completed the probationary period.
Permanent employees that retire in accordance with the Public Employee’s Retirement System
qualifications are entitled to receive cash compensation at their current base salary for
three-eighths of all unused sick leave and the remaining five-eighths of the unused sick leave is
contributed to the employee’s PERS account. The District has accrued 100% of the unused
sick leave as a liability as it expects most employees to meet the PERS requirements when
retiring or leaving the District.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 23 -
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
q. Deferred Credits:
Deferred credits represent customer refunds that have not been cashed and are reported as part
of deferred revenue.
r. Construction Advances and Deposits:
Construction deposits are collected by the District to cover the cost of construction projects
within the District. Funds in excess of project costs are refunded to the customer.
s. Construction Bonding Deposits:
The District’s policy is to maintain certain bonding requirements for water and sewer
construction projects performed within District boundaries to ensure the proper completion of
the project. Deposited amounts are refunded upon final approval of the project.
t. Prepaid Connection Fees:
Connection fees are collected by the District to cover the cost of service connections within the
District. Funds in excess of connection costs are refunded to the customer. These amounts are
reported as part of deferred revenues.
u. Deferred Annexation Revenue:
The District collects a fee from newly annexed developments for all residential and
commercial properties. This fee is in-lieu of the District’s share of the 1% property tax revenue
which the District no longer received post-Proposition 13. The fee is a present worth value
required to generate a forty year revenue stream equivalent to the lost property tax revenue. It
is calculated based on the fair market value estimate of the improved property at the time the
fee is collected and based on the current rate of return on the District’s investments. The
deposit balance accrues interest and provides a source of operational revenue for the District.
This deferred revenue source may be used for capital facilities in the future if approved by the
Board.
v. Water and Sewer Sales:
The District recognizes water and sewer service charges based on cycle billings rendered to the
customers each month.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 24 -
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
w. Capital Contributions:
Capital contributions represent cash and capital asset additions contributed to the District by
property owners or real estate developers desiring services that require capital expenditures or
capacity commitment.
x. Budgetary Policies:
The District adopts annual nonappropriated budget for planning, control and evaluation
purposes. Budgetary control and evaluation are affected by comparisons of actual revenues
and expenses with planned revenues and expenses for the period. Encumbrance accounting is
not used to account for commitments related to unperformed contracts for construction and
services.
y. Use of Estimates:
The financial statements are prepared in conformity with accounting principles generally
accepted in the United States of America and, accordingly, include amounts that are based on
management’s best estimates and judgments. Accordingly, actual results could differ from the
estimates.
z. Prior Year Data:
Selected information regarding the prior year has been included in the accompanying financial
statements. This information has been included for comparison purposes only and does not
represent a complete presentation in accordance with generally accepted accounting principles.
Accordingly, such information should be read in conjunction with the District’s prior year
financial statements, from which this selected financial data was derived. Certain
reclassifications have been made to the prior year amounts to conform to the current year’s
presentation. There is no effect on the change in net assets.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 25 -
2. CASH AND INVESTMENTS:
Cash and Investments:
Cash and investments as of June 30, 2012 are reported in the accompanying combining schedule of
net assets as follows:
Water Sewer Total
Unrestricted Current Assets:
Cash and cash equivalents $ 7,598,440 $ 2,470,031 $ 10,068,471
Restricted Assets:
Cash and cash equivalents 10,084,111 - 10,084,411
Investments 2,157,786 - 2,157,786
Total Cash and Investments $ 19,840,337 $ 2,470,031 $ 22,310,368
Cash and investments as of June 30, 2012 consisted of the following:
Water Sewer Total
Cash on hand $ 1,200 $ - $ 1,200
Deposits with financial institutions 61,168 58,687 119,855
Escrow deposits 564,076 - 564,076
Investments 19,213,893 2,411,344 21,625,237
Total Cash and Investments $ 19,840,337 $ 2,470,031 $ 22,310,368
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 26 -
2. CASH AND INVESTMENTS (CONTINUED):
Investments Authorized by the California Government Code and the District’s Investment
Policy:
The table below identifies the investment types that are authorized for the District by the California
Government Code (or the District’s investment policy, where more restrictive). The table also
identifies certain provisions of the California Government Code (or the District’s investment
policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit
risk.
This table does not address investments of debt proceeds held by bond trustees that are governed
by the provisions of debt agreements of the District, rather than the general provisions of the
California Government Code or the District’s investment policy.
Maximum Maximum
Percentage Investment Minimum
Maximum of in One Credit
Authorized Investment Type Maturity Portfolio * Issuer Rating
Bank or Savings and Loans 5 years None None FDIC or
FSLIC
Negotiable Certificates of Deposit 5 years None None A and FDIC
Local Agency Investment Fund (LAIF) N/A None None N/A
Orange County Commingled
Investment Pool N/A None None N/A
California Asset Management Program N/A (1) None N/A
United States Treasury Bills, Notes
and Bonds 5 years None None N/A
United States Government Sponsored
Agency Securities 5 years 50% None N/A
Corporate Bonds 5 years 30% None A
Bankers Acceptances 180 days 10% None N/A
Commercial Paper 270 days 25% None A-1
CalTRUST Investment Pool N/A None None N/A
Money Market Funds N/A None None N/A
* Excluding amounts held by bond trustee that are not subject to California Government Code
restrictions.
(1) Limited to bond proceeds held by the District.
N/A - Not Applicable
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 27 -
2. CASH AND INVESTMENTS (CONTINUED):
Investments Authorized by Debt Agreements:
Investments of debt proceeds held by bond trustees are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the District’s
investment policy. The table below identifies the investment types that are authorized for
investments held by bond trustees. The table also identifies certain provisions of these debt
agreements that address interest rate risk and concentration of risk.
Maximum Maximum
Maximum Percentage Investment
Authorized Investment Type Maturity Allowed in One Issuer
Cash None None None
United States Treasury Bills, Notes
and Bonds None None None
United States Treasury Obligations None None None
Resolution Funding Corp. (REFCORP) None None None
Prefunded Municipal Bonds None None None
United States Government Sponsored
Agency Securities None None None
Commercial Paper None None None
Money Market Funds None None None
Certificates of Deposits None None None
Guaranteed Investment Contracts None None None
Bankers Acceptance 1 year None None
Repurchase Agreements 30 days None None
Local Agency Investment Fund None None None
Disclosures Relating to Interest Rate Risk:
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. One of the ways that the District manages its
exposure to interest rate risk is by purchasing a combination of shorter term and longer term
investments and by timing cash flows from maturities so that a portion of the portfolio is maturing
or coming close to maturity as necessary to provide the cash flow and liquidity needed for
operations.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 28 -
2. CASH AND INVESTMENTS (CONTINUED):
Disclosures Relating to Interest Rate Risk (Continued):
Information about the sensitivity of the fair values of the District’s investments (including
investments held by bond trustee) to market interest rate fluctuations is provided by the following
table that shows the distribution of the District’s investments by maturity as of June 30, 2012.
Remaining
Maturity
(in Months)
12 Months
Investment Type or Less
CalTRUST Investment Pool $ 16,125,055
LAIF 3,325,147
Held by bond trustee:
United States Government Sponsored
Agency Securities 2,157,786
Money market funds 17,249
$ 21,625,237
Disclosures Relating to Credit Risk:
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally
recognized statistical rating organization. Presented in the following table are the minimum rating
required by (where applicable) the California Government Code, the District’s investment policy,
or debt agreements, and the actual Standard and Poor’s credit rating as of June 30, 2012 for each
investment type.
Minimum
Legal Not
Investment Type Rating Total Rated AA+
CalTRUST Investment Pool N/A $16,125,055 $15,624,717 $ 500,338
LAIF N/A 3,325,147 3,325,147 -
Held by bond trustee:
United States Government Sponsored
Agency Securities N/A 2,157,786 - 2,157,786
Money market funds A 17,249 17,249 -
$21,625,237 $18,967,113 $ 2,658,124
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 29 -
2. CASH AND INVESTMENTS (CONTINUED):
Concentration of Credit Risk:
The investment policy of the District contains no limitations on the amount that can be invested in
any one issuer beyond that stipulated by the California Government Code.
Custodial Credit Risk:
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, the District will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a
transaction, the District will not be able to recover the value of its investment or collateral
securities that are in the possession of another party. With respect to investments, custodial credit
risk generally applies only to direct investments in marketable securities. Custodial credit risk does
not apply to a local government’s indirect investment in securities through the use of mutual funds
or government investment pools (such as LAIF, Orange County Pooled Investment Fund,
California Asset Management Program, and CalTRUST Investment Pool).
The California Government Code and the District’s investment policy do not contain legal or
policy requirements that would limit the exposure to custodial credit risk for deposits or
investments, other than the following provision for deposits: The California Government Code
requires that a financial institution secure deposits made by state or local governmental units by
pledging securities in an undivided collateral pool held by a depository regulated under state law
(unless so waived by the governmental unit). The market value of the pledged securities in the
collateral pool must equal at least 110% of the total amount deposited by the public agencies.
California law also allows financial institutions to secure District deposits by pledging first trust
deed mortgage notes having a value of 150% of the secured public deposits. The District had
deposits with bank balances of $909,510 as of June 30, 2012. Of the bank balances, up to
$717,012 are federally insured and the remaining balance is collateralized in accordance with the
Code; however, the collateralized securities are not held in the District’s name.
Investment in State Investment Pool
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is
regulated by California Government Code Section 16429 under the oversight of the Treasurer of
the State of California. The fair value of the District's investment in this pool is reported in the
accompanying financial statements at amounts based upon the District's prorate share of the fair
value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that
portfolio). The balance available for withdrawal is based on the accounting records maintained by
LAIF, which are recorded on an amortized cost basis.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 30 -
2. CASH AND INVESTMENTS (CONTINUED):
Investment in CalTRUST Investment Pool:
CalTRUST is a Joint Powers Agency Authority created by local public agencies to provide a
convenient method for local public agencies to pool their assets for investment purposes.
CalTRUST is governed by a Board of Trustees made up of experienced local agency treasurers and
investment officers. The Board sets overall policies for the program and selects and supervises the
activities of the investment manager and other agents. CalTRUST maintains and administers four
pooled accounts within the program: Money Market, Short-Term, Medium-Term and Long-Term.
The Money Market account permits daily transactions, with same-day liquidity (provided
redemption requests are received by 1:00 p.m. Pacific time), with no limit on the amount of funds
that may be invested. The Short-Term account permits an unlimited number of transactions per
month (with prior day notice), with no limit on the amount of funds that may be invested. The
Medium- and Long-Term accounts permit investments, withdrawals and transfers once per month,
with five days advance notice. All CalTRUST accounts comply with the limits and restrictions
placed on local agency investments by the California Government Code. CalTRUST imposes a
$250,000 minimum investment; however, there is no maximum limit. The fair value of the
District’s investment in this pool is reported in the accompanying financial statements at amounts
based upon the District’s percentage interest of the fair value provided by CalTRUST for the
CalTRUST accounts (in relation to the amortized cost of that portfolio). The balance available for
withdrawal is based on the accounting records maintained by CalTRUST.
3. RESTRICTED ASSETS:
Restricted assets were provided by, and are to be used for the following as of June 30, 2012
and 2011:
Source Use 2012 2011
Custodial receipts Custodial costs $ 564,076 $ 109,737
Bond proceeds, taxes, Construction of capital
assessments and interest assets expansion 11,683,798 20,325,503
$ 12,247,874 $ 20,435,240
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 31 -
4. CAPITAL ASSETS:
Changes in capital assets for the year ended June 30, 2012 is as follows:
Balance Balance
June 30, 2011 Additions Deletions June 30, 2012
Capital assets, not being depreciated:
Land, mineral and water rights $ 347,490 $ - $ - $ 347,490
Construction in progress 4,875,898 8,785,670 (3,122,565) 10,539,003
Total capital assets, not
being depreciated 5,223,388 8,785,670 (3,122,565) 10,886,493
Capital assets, being depreciated:
Source of supply 6,026,881 - (1,999) 6,024,882
Pumping plant 17,662,539 19,547 (14,810) 17,667,276
Water treatment plant 2,747,805 - (170,814) 2,576,991
Transmission and distribution plant 185,641,081 20,184,870 (10,276) 205,815,675
General plant 20,154,530 233,848 (97,711) 20,290,667
Total capital assets,
being depreciated 232,232,836 20,438,265 (295,610) 252,375,491
Less accumulated depreciation for:
Source of supply (1,651,014) (162,797) - (1,813,811)
Pumping plant (4,415,084) (651,930) 14,810 (5,052,204)
Water treatment plant (942,223) (144,740) 85,702 (1,001,261)
Transmission and distribution plant (42,833,060) (4,564,383) 7,805 (47,389,638)
General plant (5,981,055) (1,071,870) 97,711 (6,955,214)
Total accumulated depreciation (55,822,436) (6,595,720) 206,028 (62,212,128)
Total capital assets,
being depreciated, net 176,410,400 13,842,545 (89,582) 190,163,363
Total capital assets, net $ 181,633,788 $ 22,628,215 $ (3,212,047) $ 201,049,856
Depreciation expense for the depreciable capital assets was $6,595,720 in 2012.
The District has been involved in various construction projects throughout the year. The balance of
construction in progress at June 30, 2012 is $10,539,003.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 32 -
4. CAPITAL ASSETS (CONTINUED):
Effective July 1, 2011, all assets, liabilities, contractual rights and obligations, and any other real or
personal property or other interest whatsoever of the City of Yorba Linda related to the Sewer
Collection Facilities was transferred to the District. In exchange, the District agreed to assume the
obligation and responsibility to provide sewer service and maintenance to the East Yorba Linda
Area. The District recorded contributed capital in the amount of $17,044,530 to record the assets
received from the City of Yorba Linda. The fair market value was determined based on the
replacement cost at the date of the contribution reduced by accumulated depreciation from the date
placed in service to the date contributed.
5. LONG-TERM LIABILITIES:
Changes in long-term liabilities for the year ended June 30, 2012 were as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Certificates of Participation:
2003 Revenue Certificates
of Participation $ 9,200,000 $ - $ (235,000) $ 8,965,000 $ 245,000
2008 Revenue Certificates
of Participation 33,405,000 - (655,000) 32,750,000 680,000
Subtotal 42,605,000 - (890,000) 41,715,000 925,000
Add (Less):
Discount (120,418) - 5,432 (114,986) -
Premium 704,535 - (26,420) 678,115 -
Total Certificates
of Participation 43,189,117 - (910,988) 42,278,129 925,000
Compensated absences 1,007,193 524,867 (468,488) 1,063,572 265,893
Other post-employment
liability (asset) 122,065 164,390 (319,085) (32,630) -
Total $ 44,318,375 $ 689,257 $ (1,698,561) $ 43,309,071 $ 1,190,893
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 33 -
5. LONG-TERM LIABILITIES (CONTINUED):
2003 Revenue Certificates of Participation:
In August 2003, the Public Financing Corporation issued $10,645,000 2003 Revenue Certificates
of Participation for the purpose of financing the Highland Reservoir Renovation and
Richfield-Phase 3 Renovation Project. The Certificates bear interest ranging from 2% to 5%,
payable semiannually on April 1 and October 1. The Term Certificates of $2,295,000 are due on
October 1, 2028 and the Term Certificates of $2,930,000 are due on October 1, 2033.
A surety bond for $679,137 was issued by Financial Guaranty Insurance Company (FGIC). FGIC
is not rated by Moody’s Investors’ Service, Standard & Poor’s or Fitch Investors’ Service. At
June 30, 2012 the 2003 Certificates outstanding balance was $8,965,000.
The Certificates are obligations of the Corporation payable solely from payments received from
the District pursuant to the Installment Purchase Agreement, by and between the District and the
Corporation. The Installment Purchase Agreement requires the District to fix, prescribe and collect
rates and charges for the water service 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. For fiscal year 2012, the
net revenues equal to 209% of the debt service.
The annual debt service requirements for the 2003 Revenue Certificates of Participation
outstanding at June 30, 2012 are as follows:
Year Ending Principal Interest Total
2013 $ 245,000 $ 428,076 $ 673,076
2014 255,000 418,076 673,076
2015 265,000 407,411 672,411
2016 275,000 395,934 670,934
2017 285,000 383,752 668,752
2018 - 2022 1,645,000 1,703,898 3,348,898
2023 - 2027 2,080,000 1,249,250 3,329,250
2028 - 2032 2,655,000 659,875 3,314,875
2033 - 2034 1,260,000 63,750 1,323,750
Subtotal 8,965,000 5,710,022 14,675,022
Less: Discount (114,986) - (114,986)
Total $ 8,850,014 $ 5,710,022 $ 14,560,036
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 34 -
5. LONG-TERM LIABILITIES (CONTINUED):
2008 Revenue Certificates of Participation:
In February 2008, the District issued $34,995,000 2008 Revenue Certificates of Participation for
the purpose of financing the 2008 Capital Improvement Projects. The Certificates bear interest
ranging from 4% to 5%, payable semiannually on April 1 and October 1. The Term Certificates of
$10,885,000 are due on October 1, 2038. The legal reserve requirement is $2,147,096. At
June 30, 2012 the reserve fund had a balance of $2,160,486. At June 30, 2012 the
2008 Certificates outstanding balance was $32,750,000.
The Certificates are obligations of the Corporation payable solely from payments received from
the District pursuant to the Installment Purchase Agreement, by and between the District and the
Corporation. The Installment Purchase Agreement requires the District to fix, prescribe and collect
rates and charges for the water service 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. For fiscal year 2012, the
net revenues equal to 209% of the debt service.
The annual debt service requirements for the 2008 Revenue Certificates of Participation
outstanding at June 30, 2012 are as follows:
Year Ending Principal Interest Total
2013 $ 680,000 $ 1,451,096 $ 2,131,096
2014 705,000 1,423,396 2,128,396
2015 735,000 1,394,596 2,129,596
2016 765,000 1,364,596 2,129,596
2017 795,000 1,333,396 2,128,396
2018 - 2022 4,480,000 6,153,880 10,633,880
2023 - 2027 5,455,000 5,154,152 10,609,152
2028 - 2032 6,720,000 3,844,650 10,564,650
2033 - 2037 8,430,000 2,086,925 10,516,925
2038 - 2039 3,985,000 201,625 4,186,625
Subtotal 32,750,000 24,408,312 57,158,312
Add: Premium 678,115 - 678,115
Total $ 33,428,115 $ 24,408,312 $ 57,836,427
Compensated Absences:
Compensated absences are comprised of unpaid vacation leave, sick leave and compensating time
off which are accrued as earned. (See Note 1p).
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 35 -
6. OTHER POST EMPLOYMENT BENEFITS (OPEB):
a. Plan Description:
The District, through a single employer defined benefit plan, provides post-employment health
care benefits. Specifically, the District provides health (medical, dental and vision) insurance
for its retired employees and directors, their dependent spouses (if married and covered on the
District’s plan at time of retirement), or survivors in accordance with Board resolutions.
Medical coverage is provided for retired employees who are age 50 or over and who have a
minimum of 5 years service with the District. The District pays 100% of the premium for the
retiree and two-thirds of the premium amount for eligible dependents accrued at a rate of one
year for every three years of service. Two-thirds of the premium amount of medical coverage
is provided for the surviving spouse of retired employees for the remaining vested period. The
plan does not provide a publicly available financial report.
b. Funding Policy:
The contribution requirements of plan members and the District are established and may be
amended by the District, District’s Board of Directors, and/or the employee associations.
Currently, contributions are not required from plan members. The District has established a
trust to fund future OBEP benefits. For the year ended June 30, 2012, the District made a
medical contribution of $319,085 which paid $151,555 in health care costs for its retirees and
their covered dependents and a contribution of $167,530 to the OPEB trust.
c. Annual OPEB Cost and Net OPEB Obligation (Asset):
The District’s annual OPEB cost (expense) is calculated based on the annual required
contribution of the employer (ARC), an amount actuarially determined in accordance with
parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an
ongoing basis, is projected to cover normal cost each year and to amortize any unfunded
liabilities of the plan over a period not to exceed thirty years.
The following table shows the components of the District’s annual OPEB cost for the year, the
amount actually contributed to the plan, and changes in the District’s net OPEB obligation to
the Retiree Health Plan:
Annual required contribution $ 170,191
Interest on net OPEB obligation 4,645
Adjustment to annual required contribution (10,446)
Annual OPEB cost (expense) 164,390
Actual contributions made (319,085)
Decrease in net OPEB obligation (154,695)
Net OPEB Obligation - beginning of year 122,065
Net OPEB Asset - end of year $ (32,630)
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 36 -
6. OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED):
c. Annual OPEB Cost and Net OPEB Obligation (Asset) (Continued):
The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan,
and the net OPEB obligation for the years ended June 30, 2012, 2011 and 2010 were as
follows:
Percentage Net
Fiscal Annual of Annual OPEB
Year OPEB OPEB Costs Obligation
Ended Cost Contributed (Asset)
6/30/10 $ 224,018 48.35% $ 236,483
6/30/11 189,147 160.49% 122,065
6/30/12 164,390 194.10% (32,630)
d. Funded Status and Funding Progress:
As of November 2, 2011, the most recent actuarial valuation date, the plan was 10.28 percent
funded. The actuarial accrued liability for benefits was $1,597,488, and the actuarial value of
assets was $164,291, resulting in an unfunded actuarial accrued liability (UAAL) of
$1,433,197. The covered payroll (annual payroll of active employees covered by the plan) was
$4,773,686 and the ratio of the UAAL to the covered payroll was 30.02%.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about rates of employee turnover, retirement, mortality, as well as economic
assumptions regarding claim costs per retiree, healthcare inflation and interest rates. Amounts
determined regarding the funded status of the plan and the annual required contributions of the
employer are subject to continual revision as actual results are compared with past expectations
and new estimates are made about the future. The schedule of funding progress, presented as
required supplementary information following the notes to the financial statements, presents
multi-year trend information about whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liabilities for benefits.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 37 -
6. OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED):
e. Actuarial Methods and Assumptions:
Projections of benefits for financial reporting purposes are based on the substantive plan (the
plan as understood by the employer and the plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs
between the employer and plan members to that point. The actuarial methods and assumptions
used include techniques that are designed to reduce the effects of short-term volatility in
actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term
perspective of the calculations. In the November 2, 2011 actuarial investment valuation, the
entry age normal cost method was used. The actuarial assumptions included an inflation rate
of 3.0% per annum, an investment return of 7.61% per annum, a projected salary increase
of 3.0% per annum and a health inflation rate of 4.0% per annum. The District is using the
level percentage of payroll method to allocate amortization cost by year and a closed 30 year
period for the initial unfunded actuarial accrued liability and an open 30 year amortization for
any residual unfunded actuarial accrued liabilities.
7. DEFINED BENEFIT PENSION PLAN:
a. Plan Description:
The District participates in the 2.0% at 55 and 2.0% at 60 (effective for new hires after
December 22, 2011) Risk Pools of the California Employees Retirement System (CalPERS), a
cost sharing multiple-employer defined benefit pension plan. CalPERS provides retirement and
disability benefits, annual cost-of-living adjustments, and death benefits to plan members and
beneficiaries. CalPERS acts as a common investment and administrative agent for
participating public entities within the State of California. Benefit provisions and all other
requirements are established by State statute and District ordinance. Copies of CalPERS’
annual financial report may be obtained from their Executive Office located at, 400 P Street,
Sacramento, CA 95814.
b. Funding Policy:
The contribution rate for plan members in the CalPERS 2.0% at 55 and 2.0% at 60 Risk Pool
Retirement Plans is 7% of their annual covered salary. The District makes these contributions
required of District employees hired before January 26, 2012 on their behalf and for their
account. Employees hired after January 26, 2012 are responsible for making the 7% required
contribution. Also, the District is required to contribute the actuarially determined remaining
amounts necessary to fund the benefits for its members. The required employer contribution
rates are equal to the annual pension cost (APC) percentage of payroll for fiscal year 2012,
2011 and 2010.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 38 -
7. DEFINED BENEFIT PENSION PLAN (CONTINUED):
b. Funding Policy (Continued):
The contribution requirements of the plan members are established by State statute, and the
employer contribution rate is established and may be amended by CalPERS. For fiscal years
2012, 2011 and 2010 the District’s annual employer’s contributions for CalPERS were equal to
the District’s required and actual contributions for each year as follows:
2% at 55 Risk Pool
Fiscal Annual Percentage APC
Year Pension of APC Percentage
Ended Cost (APC) Contributed of Payroll
6/30/10 $ 492,476 100.00 % 10.062 %
6/30/11 527,743 100.00 % 10.461 %
6/30/12 548,528 100.00 % 11.507 %
2% at 60 Risk Pool
Fiscal Annual Percentage APC
Year Pension of APC Percentage
Ended Cost (APC) Contributed of Payroll
6/30/12 $ 780 100.00 % 8.197 %
8. NET ASSETS INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT AND
RESTRICTED NET ASSETS:
The balance of net investment in capital assets consisted of the following as of June 30, 2012
and 2011:
2012 2011
Capital assets, net of accumulated depreciation $ 201,049,856 $ 181,633,788
Certificates of participation - current (925,000) (890,000)
Certificates of participation - long-term (41,353,129) (42,299,117)
Unspent debt proceeds 2,175,036 7,790,691
Bond issuance costs 725,802 755,728
Net assets invested in capital assets,
net of related debt $ 161,672,565 $ 146,991,090
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 39 -
9. RISK MANAGEMENT:
The District is exposed to various risks of loss related to torts, theft of, damage to and destruction
of assets, errors and omissions, injuries to employees and natural disasters. In an effort to manage
its risk exposure, the District is a member of the Association of California Water Agencies Joint
Powers Insurance Authority (the Authority).
The Authority is a risk-pooling self-insurance authority, created under provisions of California
Government Code Sections 6500 et. seq. The purpose of the Authority is to arrange and administer
programs of insurance for the pooling of self-insured losses and to purchase excess insurance
coverage.
At June 30, 2012, as a member of the Authority, the District participated in the insurance programs
as follows:
General and auto liability, public officials and employee’s error and omissions: Total risk
financing self-insurance limits of $2,000,000, combined single limit at $2,000,000 per
occurrence. The Authority purchases additional excess coverage layers: $58 million for
general, auto and public officials liability, which increases the limits on the insurance
coverage noted above.
Employee dishonesty coverage up to $100,000 per loss includes public employee
dishonesty, forgery or alteration and theft, disappearance and destruction coverages, subject
to a $1,000 deductible per occurrence.
Property loss is paid at the replacement cost for property on file, if replaced within two
years after the loss, otherwise paid on an actual cash value basis. The District’s
Retrospective Allocation Point (deductible) is $25,000 per occurrence. The Authority is
self-insured for the first $50,000, and purchases excess coverage up to $100 million, subject
to a $1,000 deductible, except for a $500 deductible on vehicles.
Boiler and machinery coverage for the replacement cost up to $100 million per occurrence,
subject to various deductibles depending on the type of equipment.
Workers’ compensation insurance up to California statutory limits for all work related
injuries/illnesses covered by California law. The Authority is self-insured to $2,000,000
and has purchased excess insurance to the statutory limit.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 40 -
9. RISK MANAGEMENT (CONTINUED):
Settled claims have not exceeded any of the coverage amounts in any of the last three fiscal years
and there were no reductions in the District’s insurance coverage during the years ended 2012,
2011 and 2010, except for effects of the claim in Note 12. Liabilities are recorded when it is
probable that a loss has been incurred and the amount of the loss can be reasonably estimated net of
the respective insurance coverage. Liabilities include an amount for claims that have been incurred
but not reported (IBNR). There were no IBNR claims payable as of June 30, 2012, 2011 and 2010.
10. PROPOSITION 1A BORROWINGS BY THE STATE OF CALIFORNIA:
Under the provisions of Proposition 1A and as part of the 2009-2010 budget package passed by the
California state legislature on July 28, 2009, the State of California borrowed 8% of the amount of
property tax revenue, including those property taxes associated with the in-lieu motor vehicle
license fee, the triple flip in the lieu sales tax, and supplemental property tax, apportioned to cities,
counties and special districts (excluding redevelopment agencies). The state is required to repay
this borrowing plus interest by June 30, 2013. After repayment of this initial borrowing, the
California legislature may consider only one additional borrowing within a ten-year period. The
amount of this borrowing pertaining to the District was $102,192.
The borrowing by the State of California was recognized as a receivable in the accompanying
financial statements. It is reported as part of accounts receivable - property taxes.
11. PRE-ANNEXATION AGREEMENT:
In June 2008, the District entered into a pre-annexation agreement with Placentia Yorba Linda
Unified School District (PYLUSD) whereby the District intends to provide access to water and
sewer service to the PYLUSD for the benefit of a property that PYLUSD wishes to develop for
public high school use. Per the agreement, PYLUSD agreed to fund additional District reservoir
improvements equal to the cost of constructing additional 450,000 gallons of reservoir storage.
The cost for the additional water storage was estimated to be approximately $1.50 per gallon,
resulting in a total approximate cost of $675,000. PYLUSD paid the District $32,500 within
30 days of execution of the agreement. The remaining balance is payable over a nine-year period
at an annual interest rate of 4%. Annual payments of $81,704, which include principal and interest,
started in the fiscal year ended June 30, 2010. The remaining outstanding balance at June 30, 2012
was $428,308. As of June 30, 2012 the District reservoir improvements are still in progress. The
District has not yet completed its obligation in its entirety and has not earned the rights to the entire
amount. Therefore, the outstanding balance is not recorded in the District’s books.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 41 -
12. COMMITMENTS AND CONTINGENCIES:
Construction Contracts:
The District has a variety of agreements with private parties relating to the installation,
improvement or modification of water facilities and distribution systems within its service area.
The financing of such construction contracts is being provided primarily from the District’s
replacement reserves and advances for construction. The District has committed to approximately
$2,501,306 of open construction contracts as of June 30, 2012. Construction contracts include:
Total Construction Balance
Approved Costs to
Project Name Contract to Date Complete
Well No. 20 $ 103,065 $ 102,585 $ 480
Well No. 20 1,144,603 1,077,622 66,981
Highland BPS upgrade 4,678,650 4,402,586 276,064
YL Blvd Booster Station 216,322 179,764 36,558
YL Blvd Pipeline 216,322 179,764 36,558
YL Blvd Pipeline 1,681,650 321,100 1,360,550
Computerized maintenance and management system 338,000 307,022 30,978
Fairmont Reservoir Valve Replacement 219,350 197,415 21,935
PRS Upgrades 611,924 - 611,924
PRS Upgrades 95,085 85,790 9,295
Sewer Facilities GIS Conversion 20,960 14,960 6,000
Green Crest Drive Sewer Lift Station Upgrade 113,989 102,590 11,399
2010 Waterline Project - Phase II 246,269 213,685 32,584
$ 9,686,189 $ 7,184,883 $ 2,501,306
Litigation:
In 2008, a firestorm known as the Freeway Complex Fire, the largest wildfire in the County in half
a century, resulted in the destruction of several homes served by the District. Certain homeowners
sued the District, alleging that the water system failed to provide sufficient water for fire protection
purposes. The District’s excess liability insurers denied coverage for the Freeway Complex Fire
lawsuit.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 42 -
12. COMMITMENTS AND CONTINGENCIES (CONTINUED):
Litigation (Continued):
In June 2012, with no admission of liability, the District and ACWA JPIA paid $10,000,000 (the
“Settlement Amount”) as part of a settlement with the plaintiff-homeowners. The District’s
portion of the settlement amount was $5,000,000, which was paid from District reserves. As part
of the settlement, the lawsuit was referred to a third-party neutral who awarded damages in favor of
some plaintiff-homeowners. Under the settlement, the successful plaintiff-homeowners will
attempt to recover their awards in a separate lawsuit against the District’s excess liability insurers,
but will not pursue further recovery from the District.
The District believes that its excess liability insurers wrongfully denied coverage in connection
with the Freeway Complex Fire lawsuit and is currently in litigation against such insurers to
recover both the Settlement Amount and certain legal fees. There can be no assurance that the
District’s efforts to recover the Settlement Amount will be successful. However, the District is
protected from any further financial liability over and above the Settlement Amount.
13. SUBSEQUENT EVENTS:
On September 19, 2012, the District issued $8,330,000 in Revenue Refunding Bonds,
Series 2012A for the purpose of defeasing $8,965,000 of outstanding Revenue Certificates of
Participation Series 2003. The advance refunding resulted in a decrease in total debt service
payments over the next 21 years by over $1.72 million, resulting in an economic gain of over
$1.32 million.
On September 24, 2012, the District expects to establish a $7,000,000 Line of Credit (“Line”)
pursuant to a line of credit agreement (“Credit Agreement”) with Wells Fargo Bank, NA. The Line
is subordinate to the 2008 Revenue Certificates of Participation and the Revenue Refunding Bonds,
Series 2012A and borrowings from it are due and payable three years after the line is established,
though the maturity date can be extended by request of the District and agreement by the bank.
The Line has an interest rate equal to One-Month LIBOR + 0.90%, with an annual unused
commitment fee of 0.35%.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2012
See independent auditors’ report.
- 43 -
13. SUBSEQUENT EVENTS (CONTINUED):
On June 30, 2005, as a result of employing less than 100 people, the District was placed into an
agency multiple employer pool by CalPERS. In the process, any agency that was underfunded had
a side fund created. This side fund was kept separate from the pool and amortized over 20 years.
The amount the District owed on its side fund as of June 30, 2012 was $836,784, and the District’s
current actuarially determined annual payment was $80,671. The annual payment was scheduled
to be paid over the next 14 years, and was subject to decrease or increase based on gains or losses
by investments of CalPERS or decreases or increases in payroll. Since the District was assessed an
assumed 7.75% interest charge on the amount owed annually and operating reserves were earning
less than 1%, the Board believed it made prudent financial sense to pay down the side fund with
current operating reserves, and voted to authorize the General Manager to do so on July 12, 2012.
On July 17, 2012, the District wired $835,943 to CalPERS to pay off the side fund. By making that
payment, the District reduced its Employer Contribution Rate from 11.668 to 10.238 for the
remainder of the 2012-13 fiscal year, and will have a similar reduction in their employer
contribution rate for the next 13 years.
- 44 -
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- 45 -
REQUIRED SUPPLEMENTARY INFORMATION
OTHER POST-EMPLOYMENT BENEFIT PLAN
SCHEDULE OF FUNDING PROGRESS
Retiree Health Plan
Unfunded
ActuarialActuarialUAAL as a
AccruedActuarial ValueAccruedAnnualPercentage
ActuarialLiabilityof Assets LiabilityFundedCoveredof Covered
Valuation (AAL)(AVA)(UAAL)RatioPayrollPayroll
Date(a)(b)(a) - (b)(b)/(a)(c)[(a)-(b)]/(c)
06/01/091,740,127$ -$ 1,740,127$ 0.00%4,983,653$ 34.92%
03/01/111,594,667$ -$ 1,594,667$ 0.00%5,044,860$ 31.61%
11/02/111,597,488$ 164,291$ 1,433,197$ 10.28%4,773,686$ 30.02%
See independent auditors' report and notes to basic financial statements.
- 46 -
For the year ended June 30, 2012
YORBA LINDA WATER DISTRICT
REQUIRED SUPPLEMENTARY INFORMATION
OTHER POST-EMPLOYMENT BENEFIT PLAN
SCHEDULE OF FUNDING PROGRESS
- 47 -
SUPPLEMENTARY INFORMATION
WaterSewerTotals
CURRENT ASSETS:
UNRESTRICTED ASSETS:
Cash and cash equivalents7,598,440$ 2,470,031$ 10,068,471$
Accounts receivable - water and sewer services3,609,653245,6733,855,326
Accounts receivable - property taxes126,4392,038128,477
Accrued interest receivable10,9832,02113,004
Prepaid expenses and deposits243,771- 243,771
Inventory284,281- 284,281
TOTAL UNRESTRICTED ASSETS11,873,567 2,719,763 14,593,330
RESTRICTED ASSETS:
Cash and cash equivalents10,084,111- 10,084,111
Investment2,157,786- 2,157,786
Accrued interest receivable5,977 - 5,977
TOTAL RESTRICTED ASSETS12,247,874 - 12,247,874
TOTAL CURRENT ASSETS24,121,441 2,719,763 26,841,204
NONCURRENT ASSETS:
Bond issuance costs725,802- 725,802
Capital assets:
Non-depreciable10,512,780373,71310,886,493
Depreciable, net of accumulated depreciation150,334,39439,828,969190,163,363
Other post-employment benefit (OPEB) asset30,3462,28432,630
TOTAL NONCURRENT ASSETS161,603,322 40,204,966 201,808,288
TOTAL ASSETS185,724,763 42,924,729 228,649,492
See independent auditors' report.
ASSETS
- 48 -
YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF NET ASSETS
June 30, 2012
WaterSewerTotals
CURRENT LIABILITIES:
PAYABLE FROM UNRESTRICTED CURRENT ASSETS:
Accounts payable 4,822,182$ 70,092$ 4,892,274$
Accrued expenses152,907- 152,907
Compensated absences payable - current portion265,893 - 265,893
Customer and construction deposits217,96849,928267,896
Deferred revenue412,5321,000 413,532
TOTAL PAYABLE FROM
UNRESTRICTED CURRENT ASSETS5,871,482 121,020 5,992,502
PAYABLE FROM RESTRICTED ASSETS:
Accrued interest payable474,418- 474,418
Certificates of Participation - current portion925,000- 925,000
TOTAL PAYABLE FROM RESTRICTED ASSETS1,399,418 - 1,399,418
TOTAL CURRENT LIABILITIES7,270,900 121,020 7,391,920
LONG-TERM LIABILITIES (LESS CURRENT PORTION):
Deferred annexation revenue14,064,550- 14,064,550
Compensated absences797,679- 797,679
Certificates of Participation41,353,129- 41,353,129
TOTAL LONG-TERM
LIABILITIES (LESS CURRENT PORTION)56,215,358 - 56,215,358
TOTAL LIABILITIES63,486,258 121,020 63,607,278
NET ASSETS:
Invested in capital assets, net of related debt121,469,883 40,202,682 161,672,565
Restricted for capital projects9,598,420 - 9,598,420
Unrestricted(8,829,798) 2,601,027 (6,228,771)
TOTAL NET ASSETS122,238,505$ 42,803,709$ 165,042,214$
See independent auditors' report.
June 30, 2012
- 49 -
LIABILITIES
YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF NET ASSETS
(CONTINUED)
WaterSewerTotals
OPERATING REVENUES:
Water sales 24,998,673$ -$ 24,998,673$
Sewer revenues- 1,785,8041,785,804
Other operating revenues753,83094,408848,238
TOTAL OPERATING REVENUES25,752,503 1,880,212 27,632,715
OPERATING EXPENSES:
Variable water costs12,275,853- 12,275,853
Personnel services6,125,692853,3966,979,088
Supplies and services3,461,250349,8753,811,125
Depreciation and amortization5,359,0861,236,6346,595,720
TOTAL OPERATING EXPENSES27,221,881 2,439,905 29,661,786
OPERATING LOSS(1,469,378) (559,693) (2,029,071)
NONOPERATING REVENUES (EXPENSES):
Property taxes 1,273,855- 1,273,855
Investment income253,47823,659277,137
Interest expense(1,625,865) (325) (1,626,190)
Other nonoperating revenues538,468267,186805,654
Other nonoperating expenses(90,485) (18,499) (108,984)
TOTAL NONOPERATING
REVENUES (EXPENSES)349,451 272,021 621,472
NET LOSS BEFORE CAPITAL CONTRIBUTIONS,
TRANSFERS, AND EXTRAORDINARY ITEMS(1,119,927) (287,672) (1,407,599)
CAPITAL CONTRIBUTIONS98,241 17,115,898 17,214,139
TRANSFERS IN (OUT)(85,111) 85,111-
EXTRAORDINARY ITEM(5,000,000)- (5,000,000)
CHANGES IN NET ASSETS(6,106,797) 16,913,337 10,806,540
NET ASSETS - BEGINNING OF YEAR128,345,30225,890,372154,235,674
NET ASSETS - END OF YEAR122,238,505$ 42,803,709$ 165,042,214$
See independent auditors' report.
- 50 -
YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS
For the year ended June 30, 2012
WaterSewerTotals
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers25,579,916$ 1,816,513$ 27,396,429$
Cash payments to employees for salaries and wages(6,104,043) (950,760) (7,054,803)
Cash payments to suppliers of goods and services(15,332,056) (407,263) (15,739,319)
Other revenue207,307 270,993 478,300
Other expenses(55,127) (19,679) (74,806)
NET CASH PROVIDED BY OPERATING ACTIVITIES4,295,997 709,804 5,005,801
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Cash received from other funds- 85,111 85,111
Cash paid to other funds(85,111) - (85,111)
Cash payments for extraordinary item(5,000,000) - (5,000,000)
Proceeds from property taxes and assessments1,261,507 - 1,261,507
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES(3,823,604) 85,111 (3,738,493)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Proceeds from annexation fees and capital contributions88,949 1,000 89,949
Acquisition and construction of capital assets(8,294,098) (339,372) (8,633,470)
Proceeds from sales of capital assets11,249 - 11,249
Principal paid on long-term liability(890,000) - (890,000)
Interest paid on long-term liability(1,919,497) (325) (1,919,822)
NET CASH USED BY CAPITAL AND
RELATED FINANCING ACTIVITIES(11,003,397) (338,697) (11,342,094)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale/purchase of investments, net(35,032) (3,808) (38,840)
Interest and investment earnings257,282 23,418 280,700
NET CASH PROVIDED BY
INVESTING ACTIVITIES222,250 19,610 241,860
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS(10,308,754) 475,828 (9,832,926)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR27,991,305 1,994,203 29,985,508
CASH AND CASH EQUIVALENTS - END OF YEAR17,682,551$ 2,470,031$ 20,152,582$
See independent auditors' report.(Continued)
YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF CASH FLOWS
For the year ended June 30, 2012
- 51 -
WaterSewerTotals
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Operating loss(1,469,378)$ (559,693)$ (2,029,071)$
Adjustments to reconcile operating loss to
net cash provided by operating activities:
Depreciation5,359,086 1,236,634 6,595,720
Other revenues207,307 270,993 478,300
Other expenses(55,127) (19,679) (74,806)
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable(150,754) (62,537) (213,291)
Inventory(50,668) - (50,668)
Prepaid expenses and other deposits3,148 - 3,148
Increase (decrease) in liabilities:
Accounts payable and accrued expenses439,300 (53,856) 385,444
Accrued salaries and wages37,851 (15,250) 22,601
Accrued other post-employment benefits (OPEB) liability(141,601) (13,094) (154,695)
Accrued compensated absences125,399 (69,020) 56,379
Customer and other deposits(8,566) (4,694) (13,260)
Total adjustments5,765,375 1,269,497 7,034,872
NET CASH PROVIDED BY OPERATING ACTIVITIES4,295,997$ 709,804$ 5,005,801$
CASH AND CASH EQUIVALENTS -
FINANCIAL STATEMENT CLASSIFICATION:
Unrestricted7,598,440$ 2,470,031$ 10,068,471$
Restricted10,084,111 - 10,084,111
TOTAL CASH AND CASH EQUIVALENTS -
FINANCIAL STATEMENT CLASSIFICATION 17,682,551$ 2,470,031$ 20,152,582$
NONCASH INVESTING, CAPITAL AND
RELATED FINANCING ACTIVITIES:
Amortization related to long-term debt 20,988$ -$ 20,988$
Capital contributions364,564$ 17,115,898$ 17,480,462$
See independent auditors' report.
(CONTINUED)
For the year ended June 30, 2012
- 52 -
YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF CASH FLOWS
WaterSewerTotals
OPERATING EXPENSES:
Variable Water Costs:
Imported water8,257,535$ -$ 8,257,535$
OCWD replenishment assessment1,927,686- 1,927,686
In-Lieu822,011- 822,011
MWD connection charge663,086- 663,086
Fuel and power/pumping605,535- 605,535
Total Variable Water Costs12,275,853 - 12,275,853
Personnel Services:
Unit salaries4,233,576598,3414,831,917
Fringe benefits1,821,430251,1702,072,600
Director's fees70,6863,88574,571
Total Personnel Services6,125,692 853,396 6,979,088
Supplies and Services:
Communications199,03115,133214,164
Contractual services407,87629,997437,873
Data processing116,6779,056125,733
District activities12,06890612,974
Dues and memberships53,6504,78458,434
Fees and permits146,4447,700154,144
Insurance212,13616,668228,804
Maintenance398,784134,185532,969
Materials483,30621,053504,359
Noncapital equipment94,57716,801111,378
Office expense42,2453,83346,078
Professional services873,65034,312907,962
Training34,7104,32039,030
Travel and conferences19,1951,29420,489
Uncollectible accounts21,8331,16222,995
Utilities65,1415,12370,264
Vehicle expense279,92743,548323,475
Total Supplies and Services3,461,250 349,875 3,811,125
TOTAL OPERATING EXPENSES21,862,795$ 1,203,271$ 23,066,066$
See independent auditors' report.
- 53 -
YORBA LINDA WATER DISTRICT
SCHEDULE OF OPERATING EXPENSES BY COST CENTER
AND NATURE OF EXPENSES FOR WATER AND SEWER
For the year ended June 30, 2012
WaterSewerTotals
Land, Mineral and Water Rights:
Land138,629$ -$ 138,629$
Water rights86,300- 86,300
Mineral rights63,650- 63,650
Land rights and easements38558,52658,911
Total Land, Mineral and Water Rights288,964 58,526 347,490
Source of Supply:
Wells5,460,514- 5,460,514
MWD connection564,368- 564,368
Total Source of Supply6,024,882 - 6,024,882
Pumping Plant:
Structures and improvements9,529,805- 9,529,805
Equipment7,862,111275,3608,137,471
Total Pumping Plant17,391,916 275,360 17,667,276
Water Treatment Plant:
Structures and improvements1,302,812- 1,302,812
Equipment1,274,179- 1,274,179
Total Water Treatment Plant2,576,991 - 2,576,991
Transmission and Distribution Plant:
Mains71,162,93645,532,191116,695,127
Reservoirs and tanks61,484,568- 61,484,568
Service and meter installation5,466,9302,419,2257,886,155
Fire hydrants6,452,740- 6,452,740
Meters8,971,681- 8,971,681
Fire mains717,746- 717,746
Structures and improvements2,230,158- 2,230,158
Control system1,377,500- 1,377,500
Total Transmission and Distribution Plant157,864,259 47,951,416 205,815,675
General Plant:
Structures and improvements13,403,182- 13,403,182
Transportation equipment1,567,985979,7442,547,729
Power operated equipment549,710- 549,710
Communication equipment565,557- 565,557
Computer equipment1,694,051205,2421,899,293
Office furniture1,188,942- 1,188,942
Tools, shops and garage equipment82,715- 82,715
Other4,650- 4,650
Store equipment48,889- 48,889
Total General Plant19,105,681 1,184,986 20,290,667
Construction in Progress10,223,816315,18710,539,003
Total Capital Assets213,476,509$ 49,785,475$ 263,261,984$
See independent auditors' report.
YORBA LINDA WATER DISTRICT
SCHEDULE OF CAPITAL ASSETS
For the year ended June 30, 2012
- 54 -
- 55 -
STATISTICAL SECTION
- 56 -
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YORBA LINDA WATER DISTRICT
DESCRIPTION OF STATISTICAL SECTION CONTENTS
June 30, 2012
- 57 -
This part of the District’s comprehensive annual financial report presents detailed information as a
context for understanding what the information in the financial statements and the note disclosures say
about the government’s overall financial health.
Contents: Pages
Financial Trends these schedules contain trend information to help the reader
understand how the District’s financial performance and well-being have
changed over time. 58
Revenue Capacity these schedules contain information to help the reader
assess the District’s most significant local revenue source, water sales. 60
Debt Capacity these schedules present information to help the reader assess
the affordability of the District’s current levels of outstanding debt and the
District’s ability to issue additional debt in the future. 62
Demographic and Economic Information these schedules offer demographic
and economic indicators to help the reader understand the environment within
which the District’s financial activities take place. 64
Operating Information these schedules contain service and infrastructure data
to help the reader understand how the information in the District’s financial
report relates to the services the District provides and the activities it
performs. 66
Changes in Net Assets:2012201120102009
Operating Revenues
Water Sales24,998,673$ 22,686,251$ 21,806,164$ 19,626,738$
Sewer Revenues1,785,804 1,274,579 1,275,980 1,259,723
Other Operating Revenues848,238 1,035,545 1,102,143 439,302
Operating Expenses
Variable Water Costs12,275,853 11,268,306 10,688,318 10,859,328
Personnel Services6,979,088 6,902,995 6,677,757 6,498,959
Supplies and Services 3,811,125 3,686,333 3,576,147 4,151,058
Depreciation 6,595,720 5,279,860 5,153,891 4,167,958
Operating Loss(2,029,071) (2,141,119) (1,911,826) (4,351,540)
Nonoperating Revenues (Expenses)
Property Taxes1,273,855 1,258,769 1,269,441 1,283,521
Investment Income277,137 274,152 244,857 689,108
Interest Expense(1,626,190) (1,172,503) (1,170,498) (1,469,925)
Other Nonoperating Revenues805,654 739,062 589,201 479,911
Other Nonoperating Expenses(108,984) (406,575) (151,300) (177,553)
Total Nonoperating
Revenues (Expenses)621,472 692,905 781,701 805,062
Net Income (Loss) Before
Capital Contributions and
Extraordinary Items(1,407,599) (1,448,214) (1,130,125) (3,546,478)
Capital Contributions17,214,138 706,319 6,278,135 4,363,527
Extraordinary Items(5,000,000) - - -
Changes in Net Assets 10,806,539$ (741,895)$ 5,148,010$ 817,049$
Net Assets by Component:
Invested in Capital Assets,
Net of Related Debt161,672,565$ 146,235,362$ 146,877,122$ 141,514,024$
Restricted9,598,420 12,620,256 15,797,432 14,063,802
Unrestricted(6,228,771) (4,619,943) (7,696,984) (6,158,513)
Total Net Assets 165,042,214$ 154,235,675$ 154,977,570$ 149,419,313$
Source: YLWD Audited Financial Statements(Continued)
- 58 -
Yorba Linda Water District
Changes in Net Assets
Last Ten Fiscal Years
Fiscal Year
200820072006200520042003
19,470,109$ 18,944,233$ 17,017,275$ 14,533,021$ 14,138,952$ 12,128,715$
1,247,907 806,897 778,275 750,771 763,528 545,119
380,175 393,285 382,917 427,430 385,241 177,966
10,516,507 10,703,037 8,930,535 7,920,218 8,405,858 7,510,409
5,751,384 5,276,878 4,635,464 4,294,020 3,903,396 3,304,878
4,361,512 3,395,303 2,877,288 2,699,842 2,345,991 2,111,993
3,572,726 3,445,868 2,923,288 2,578,420 2,498,265 2,305,286
(3,103,938) (2,676,671) (1,188,108) (1,781,278) (1,865,789) (2,380,766)
1,263,656 1,186,441 335,075 252,663 1,005,859 3,304,314
1,508,193 2,180,067 1,425,663 638,235 342,554 549,093
(824,387) (468,087) (472,163) (565,581) (484,895) (214,842)
270,429 455,067 534,385 416,778 642,358 155,814
(133,604) (138,501) (336,649) (179,526) (296,528) (282,039)
2,084,287 3,214,987 1,486,311 562,569 1,209,348 3,512,340
(1,019,651) 538,316 298,203 (1,218,709) (656,441) 1,131,574
4,100,051 6,913,095 26,026,524 6,701,629 2,184,681 11,419,097
- - - - - -
3,080,400$ 7,451,411$ 26,324,727$ 5,482,920$ 1,528,240$ 12,550,671$
139,677,663$ 121,317,296$ 106,376,683$ 84,000,773$ 74,338,841$ 80,268,884$
14,523,549 23,089,201 22,274,814 23,196,485 25,140,038 16,774,957
(4,898,647) 1,815,668 10,119,257 5,248,769 7,484,228 8,391,026
149,302,565$ 146,222,165$ 138,770,754$ 112,446,027$ 106,963,107$ 105,434,867$
- 59 -
Fiscal Year
Yorba Linda Water District
Number of Connections
Single FamilyMulti-FamilyCommercial/Direct Rate
Fiscal YearResidentialResidentialIndustrialIrrigation(Billing Unit)
200320,383 2251,050 840 1.33$
200420,914 225849 829 1.33
200520,773 217842 803 1.48 *
200621,300 217847 838 1.57
200721,451 228792 868 1.57
200821,580 228840 857 1.79
200921,672 228831 855 2.52
201021,846 228837 877 2.52
201121,701 231833 879 2.52
201222,064 240829 846 2.52
NOTE: * $1.48 was approved January 1, 2005
Source: YLWD Billing System
Last Ten Fiscal Years
- 60 -
‐
5,000
10,000
15,000
20,000
25,000
2003200420052006200720082009201020112012
Irrigation
Industrial
Residential
Residential
FY 2012
Customer NameBusiness TypeAnnual Revenues% of Total
1City of Yorba LindaGovernment2,016,151.57$ 7.30%
2Placentia-Yorba Linda USDGovernment273,763.78 0.99%
3Yorba Linda VillagesHomeowners' Assoc.111,713.91 0.40%
4Archstone ApartmentsApartment Complex107,771.16 0.39%
5Fairmont Hill Community Assoc.Homeowners' Assoc.101,383.52 0.37%
6The Hills at Yorba LindaHomeowners' Assoc.86,257.80 0.31%
7Kerrigan Ranch II Community Assoc.Homeowners' Assoc.80,886.00 0.29%
8Lake Park Mobil Home CommunityHomeowners' Assoc.72,569.88 0.26%
9Woodgate CondominiumsHomeowners' Assoc.55,481.98 0.20%
10Rancho Dominguez CommunityHomeowners' Assoc.52,828.20 0.19%
2,958,807.80$ 10.71%
FY 2003
Customer NameBusiness TypeAnnual Revenues% of Total
1City of Yorba LindaGovernment1,162,249.51$ 9.04%
2Saba PetroleumManufacturer27,162.94 0.21%
3Tac West IncManufacturer18,409.96 0.14%
4St Francis of AssissiPrivate School13,001.84 0.10%
5Shigemi MuranakaNursery Retail12,303.44 0.10%
7Sunset TropicalsGovernment9,493.13 0.07%
6Placentia-Yorba Linda USDNursery Retail9,381.26 0.07%
8CostcoWarehouse Retail8,933.78 0.07%
9Excell CircuitsManufacturer8,893.10 0.07%
10Yorba Linda Country ClubPrivate Club8,453.53 0.07%
1,278,282.49$ 9.95%
Source: YLWD Billing Department
Yorba Linda Water District
Ten Largest Customers
Current and Nine Years Ago
- 61 -
Yorba Linda Water District
Ratio of Outstanding Debt
GeneralCertificatesAs a Share of
Fiscal ObligationofPerPerPersonal
YearBondsOCWD LoanParticipationDebtConnectionCapitaIncome
20033,671,446$ 149,061$ -$ 3,820,507$ 170$ 56$ 0.06%
20041,590,000 - 10,384,239 11,974,239 525 172 0.19%
2005- - 10,000,078 10,000,078 441 142 0.15%
2006- - 9,873,717 9,873,717 426 139 0.14%
2007- - 10,540,139 10,540,139 451 148 0.14%
2008- - 45,502,080 45,502,080 1,932 637 0.56%
2009- - 44,911,092 44,911,092 1,900 628 0.55%
2010- - 44,065,104 44,065,104 1,848 611 0.54%
2011- - 43,189,117 43,189,117 1,827 604 0.52%
2012- - 42,278,129 42,278,129 1,764 583 0.49%
Source: YLWD Audited Financial Statements
Last Ten Fiscal Years
Total
- 62 -
$‐
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
Composition of Debt
Participation
OCWD Loan
Bonds
$‐
$500
$1,000
$1,500
$2,000
$2,500
2003200420052006200720082009201020112012
Debt per Connection
Debt Service
Fiscal Operating &NetCoverage
YearRevenues Maint. CostsRevenuesPrincipalInterest TotalRatio
200316,215$ 12,873$ 3,342$ 2,172$ 229$ 2,401$ 1.39
200416,471 14,428 2,043 2,263 148 2,411 0.85
200516,178 14,230 1,948 1,760 299 2,059 0.95
200619,563 16,009 3,554 200 473 673 5.28
200723,036 18,703 4,333 205 469 674 6.43
200822,822 19,829 2,993 210 919 1,129 2.65
200922,514 20,604 1,910 570 2,051 2,621 0.73
201024,417 19,928 4,489 825 1,951 2,776 1.62
201125,912 20,845 5,067 855 1,949 2,804 1.81
201227,818 21,950 5,868 890 1,915 2,805 2.09
NOTE:Excludes depreciation and debt service payments
Source:YLWD Audited Financial Statements
Yorba Linda Water District
Debt Coverage
Last Ten Fiscal Years
- 63 -
Personal Income
YearPopulation *City of YL PopulationPersonal Incomeper Capita
2003 68,745 62,678 6,025,361,496$ 87,648$
2004 69,610 64,055 6,435,285,575 92,448
2005 70,364 65,382 6,699,301,248 95,209
2006 70,935 66,797 7,150,485,256 100,803
2007 71,258 67,904 7,623,582,080 106,986
2008 71,428 68,852 8,179,815,504 114,518
2009 71,507 68,852 8,239,633,400 115,228
2010 72,083 69,816 8,095,032,402 112,302
2011 71,520 70,681 8,233,404,978 115,120
2012 72,498 72,706 8,660,636,569 119,460
Personal Income
YearPopulationUnemployment RatePersonal Incomeper Capita
20032,983,731 5.0%117,722,484$ 39,455$
20043,019,889 4.8%125,670,056 41,614
20053,047,054 4.3%135,070,503 44,328
20063,072,336 3.2%145,435,581 47,337
20073,098,121 3.9%150,214,330 48,486
2008^3,121,251 5.2%157,828,108 50,566
2009^3,139,017 9.0%159,710,562 50,879
2010#^3,170,721 9.8%150,467,328 47,455
2011#^3,192,916 8.7%155,323,766 48,646
2012^3,182,171 7.9%160,637,055 50,480
NOTE: ^No personal income data available for County of Orange, used State of California data.
#No population data available for County of Orange, used State of California data.
Sources:City of Yorba Linda CAFR
County of Orange CAFR
State of California, Employment Development Department
State of California, Department of Finance
- 64 -
County of Orange
YLWD
Yorba Linda Water District
Demographics
Last Ten Fiscal Years
2008*2006+
Employer ^EmployeesEmployees
Viasys Respiratory Care, Inc.3891.19%3591.02%
Nobel Biocare USA, Inc.3280.93%3230.92%
Costco Wholesale Corp.2760.78%2040.58%
City of Yorba Linda1940.55%1800.51%
Vons1650.47%1670.48%
Kohl's Inc.1580.45%1450.41%
Best Buy1290.37%1350.38%
Sunrise Retirement Homes1260.36%1200.34%
Office Solutions920.26%980.28%
Cobra Engineering800.23%00.00%
Total1,9375.6%1,7314.9%
NOTES: * Most current available data
+ Oldest available data
^ The Placentia- Yorba Linda Unified School District has 2,500 employees and
serves the entire communities of Yorba Linda and Placentia, and also serves
parts of the Cities of Brea, Anaheim and Fullerton. YLWD cannot provide the
number of employees working within the boundaries of Yorba Linda.
Source: City of Yorba Linda CAFR
Yorba Linda Water District
Ten Largest Employers
Current and Six Years Ago
- 65 -
% of Total% of Total
Labor ForceLabor Force
FiscalHuman
YearAdministrationEngineering FinanceResourcesITOperationsTotal
20032.011.010.01.02.029.055.0
20043.012.010.01.02.032.060.0
20053.013.011.01.03.031.062.0
20064.014.013.03.03.028.065.0
20074.013.015.03.03.032.070.0
20084.013.016.03.06.032.074.0
20094.013.016.03.06.033.075.0
20104.512.015.03.06.035.576.0
20115.511.014.03.07.037.077.5
20125.011.014.03.07.537.077.5
NOTE: *Number of employees in each department are authorized and funded positions.
Source:YLWD Human Resources Department
- 66 -
Department
Full Time Equivalent Employees by Department *
Yorba Linda Water District
Number of Employees
Last Ten Fiscal Years
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
2003200420052006200720082009201020112012
Operations
IT
Resources
Finance
Engineering
Fiscal Miles of Water Yearly WaterAverage
Year Mains Installed*Production (MG)Production (MGD)
20030.787,92721.7
20043.647,86321.5
20053.647,04219.3
20062.527,50520.6
20079.728,36022.9
20089.728,02722.0
20099.727,59020.8
20109.726,56918.0
20112.006,28217.2
20122.026,78018.6
Fiscal Number of Number of Number of
YearBooster PumpsReserviorsField Service Calls
200311101,727
200411101,833
200511101,460
200611101,484
200712111,565
200812111,943
200912111,674
201012131,640
201112131,924
201212131,693
MG - Millions of Gallons
MGD - Millions of Gallons per Day
NOTE: * Miles of Water Main estimated
Sources:YLWD Asset Management Plan 2010
YLWD Operations Department
- 67 -
Yorba Linda Water District
Operating and Capacity Indicators
Last Ten Fiscal Years
- 68 -
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2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
- 1 -
Board of Directors
Yorba Linda Water District
Placentia, California
We have audited the financial statements of the Yorba Linda Water District for the year ended
June 30, 2012, and have issued our report thereon dated September 21, 2012. Professional standards
require that we provide you with information about our responsibilities under generally accepted
auditing standards and Government Auditing Standards, as well as certain information related to the
planned scope and timing of our audit. We have communicated such information in our engagement
letter dated July 3, 2012 and our meeting on planning matters on July 23, 2012. Professional standards
also require that we communicate to you the following information related to our audit.
Significant Audit Findings:
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the Yorba Linda Water District are described in Note 1 to the
financial statements. No new accounting policies were adopted and the application of existing
accounting policies was not changed during the year ended June 30, 2012. We noted no transactions
entered into by the Yorba Linda Water District during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in
the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management’s knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the financial statements and because of the possibility that future events affecting them
may differ significantly from those expected.
The most sensitive estimates affecting the financial statements were:
a. Management’s estimate of the fair market value of investments which is based on market
values provided by outside sources.
b. The estimated useful lives of capital assets for depreciation purposes which are based on
industry standards.
c. The value of the capital assets received as a contribution from the City of Yorba Linda
(City) due to the District providing sewer services to customers previously serviced by the
City.
d. The annual required contribution for the District’s Other Post-Employment Benefits was
prepared by an outside consultant.
- 2 -
Significant Audit Findings (Continued):
Qualitative Aspects of Accounting Practices (Continued):
We evaluated the key factors and assumptions used to develop these estimates in determining that they
were reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosures affecting the financial statements were
reported in Note 6 to the financial statements regarding the annual required contribution and the
actuarial liability for the District’s Other Post-Employment Benefits and in Note 12 regarding the
settlement of the Freeway Complex Fire case.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. The following material misstatements
detected as a result of audit procedures were corrected by management:
a. The accounts receivable balance was increased to correct mathematical errors on estimated
usage for unbilled water and sewer receivables.
b. The deferred revenue was decreased to correct mathematical errors within the calculation.
c. A variable water cost expense was reclassified to a different expense account as a result of
miscoding of invoices.
d. Inventory and accounts payable were increased to accrue invoices and record inventory
items received as of year-end.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that
could be significant to the financial statements or the auditors’ report. We are pleased to report that no
such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated September 21, 2012.
- 3 -
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation
involves application of an accounting principle to the Yorba Linda Water District’s financial
statements or a determination of the type of auditor’s opinion that may be expressed on those
statements, our professional standards require the consulting accountant to check with us to determine
that the consultant has all the relevant facts. To our knowledge, there were no such consultations with
other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the Yorba Linda Water District’s
auditors. However, these discussions occurred in the normal course of our professional relationship
and our responses were not a condition to our retention.
Other Information in Documents Containing Audited Financial Statements
With respect to the supplementary information accompanying the financial statements, we made
certain inquiries of management and evaluated the form, content, and methods of preparing the
information to determine that the information complies with accounting principles generally accepted
in the United States of America, the method of preparing it has not changed from the prior period, and
the information is appropriate and complete in relation to our audit of the financial statements. We
compared and reconciled the supplementary information to the underlying accounting records used to
prepare the financial statements or to the financial statements themselves.
This information is intended solely for the use of the Board of Directors and management of the Yorba
Linda Water District and is not intended to be and should not be used by anyone other than these
specified parties.
Irvine, California
September 21, 2012
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
- 1 -
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
The Board of Directors
Yorba Linda Water District
Placentia, California
We have audited the basic financial statements of the Yorba Linda Water District (the District) as of
and for the year ended June 30, 2012, and have issued our report thereon dated September 21, 2012.
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
Management of the District is responsible for establishing and maintaining effective internal control
over financial reporting. In planning and performing our audit, we considered the District’s internal
control over financial reporting as a basis for designing our auditing procedures for the purpose of
expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on
the effectiveness of the District’s internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the District’s internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the District’s financial statements will not be prevented, or detected and corrected on a
timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal control
over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We
did not identify any deficiencies in internal control over financial reporting that we consider to be
material weaknesses, as defined above. However, we identified certain deficiencies in internal control
over financial reporting, described below, that we consider to be significant deficiencies in internal
control over financial reporting. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough to
merit attention by those charged with governance.
- 2 -
Year-Ending Closing Procedures
Auditors’ Comment and Recommendation:
While conducting our audit, we noted that obtaining a complete and accurate final general ledger was
problematic, as was also the case for the inconsistencies of supporting schedules for balances in the
general ledger. These factors resulted in adjustments to accounts receivable, deferred revenue,
inventory and reclassification of an expense balance. Complete and accurate supporting schedules are
necessary for complete and accurate financial statements. We suggest the District review its procedures
and identify whether a more formal review process is required for year-end closing procedures or if
additional education and training is required in this area. An improvement in the year-end closing
procedures will result in a more complete and accurate final general ledger for financial reporting.
Management’s Response
The District believes that a large part of the difficulties with year-end closing procedures was due to a
vacancy in the Accounting Section immediately preceding the audit. However, the District agrees that
improvements can be made to ensure that complete and accurate closing schedules are provided to the
auditors, and will adjust year-end closing procedures to focus on improving in this area.
Segregation of Duties
Auditors’ Comment and Recommendation:
The Customer Service Supervisor and Customer Service Representatives I, II, and III can accept
customer payments and adjust customer accounts which can result in an employee retaining cash
received from a customer and adjusting the balance of the customer account to reflect the payment.
Currently, the District’s software is not designed to provide a report that contains all customer account
adjustments. Therefore, all customer account adjustments cannot be reviewed for propriety. We
recommend the District design a weekly report that contains all customer account adjustments. This
report should be reviewed by an employee outside of the cash receipt function.
Management’s Response
The District agrees that an independent review of credit memos made in Customer Service is
appropriate and necessary, and will work towards ensuring such a report is created to strengthen
internal controls.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free of
material misstatements, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit and, accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
- 3 -
The District’s responses to the comments identified in our audit are described above. We did not audit
the District’s responses and, accordingly, we express no opinion on them.
This report is intended solely for the information and use of the Yorba Linda Water District Directors
and management of the Yorba Linda Water District and is not intended to be and should not be used by
anyone other than these specific parties.
Irvine, California
September 21, 2012
ITEM NO. 2.2
AGENDA REPORT
Meeting Date: September 26, 2012
To:Board of Directors
From:Steve Conklin, Acting General
Manager
Presented By:Stephen Parker, Finance
Manager
Dept:Finance
Reviewed by Legal:Yes
Prepared By:Stephen Parker, Finance
Manager
Subject:Authorization to Invest in Local Agency Investment Fund
STAFF RECOMMENDATION:
That the Committee recommend the Board of Directors approve Resolution No. 12-XX Authorizing
Investment of Monies in the Local Agency Investment Fund and Rescinding Resolution No. 11-14.
DISCUSSION:
The District currently invests a portion of its reserves in the Local Agency Investment Fund (LAIF).
On June 23, 2011, the Board approved a resolution authorizing the General Manager, Finance
Director and Senior Accountant or their successors in office to deposit or withdraw monies in LAIF.
On July 1, 2011, the Finance Director position became the Finance Manager. Even though it is the
same employee, LAIF requires a new resolution for a change in title. Therefore, staff is bringing
forward the same resolution with the current titles of the three officers that were previously
authorized to deposit or withdraw monies in LAIF.
PRIOR RELEVANT BOARD ACTION(S):
On June 23, 2011, the Board approved Resolution No. 11-14 Authorizing Investment of Monies in
the Local Agency Investment Fund.
ATTACHMENTS:
Name:Description:Type:
Resolution_No._12-
XX_Authorizing_Investment_of_Monies_in_LAIF.doc Resolution No. 12-XX LAIF Backup Material
Resolution No. 12-XX Authorizing Investment of Monies in the Local Area Investment Fund 1
RESOLUTION NO. 12-XX
RESOLUTION OF THE BOARD OF DIRECTORS
OF YORBA LINDA WATER AUTHORIZING INVESTMENT
OF MONIES IN THE LOCAL AGENCY INVESTMENT FUND
AND RESCINDING RESOLUTION NO. 11-14.
WHEREAS, Pursuant to Chapter 730 of the statutes of 1976 Section 16429.1 was
added to the California Government Code to create a Local Agency
Investment Fund in the State Treasury for the deposit of money of a local
agency for purposes of investment by the State Treasurer; and
WHEREAS, the Board of Directors does hereby find that the deposit and withdrawal of
money in the Local Agency Investment Fund in accordance with the
provisions of Section 16429.1 of the Government Code for the purpose of
investment as stated therein as in the best interests of the Yorba Linda
Water District; and
WHEREAS, the District’s current investment policy approved December 2011
authorizes investments with the Local Agency Investment Fund.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
authorize the deposit and withdrawal of Yorba Linda Water District monies in the Local
Agency Investment Fund in the State Treasury in accordance with the provisions of
Section 16429.1 of Government Code for the purpose of investment as stated therein,
and verification by the State Treasurer’s Office of all banking information provided in
that regard.
BE IT FURTHER RESOLVED, that the following Yorba Linda Water District officers or
their successors in office shall be authorized to order the deposit or withdrawal of
monies in the Local Agency Investment Fund:
Steven R. Conklin Stephen Parker Delia Lugo
(NAME) (NAME) (NAME)
Acting General Manager Finance Manager Senior Accountant
(TITLE) (TITLE) (TITLE)
_____________________ ____________________ ____________________
(SIGNATURE) (SIGNATURE) (SIGNATURE)
Resolution No. 12-XX Authorizing Investment of Monies in the Local Area Investment Fund 2
BE IT FURTHER RESOLVED, that Resolution No. 11-14 is hereby rescinded effective
October 11, 2012.
PASSED AND ADOPTED this 11th day of October 2012 by the following called vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Phil Hawkins, President
Yorba Linda Water District
ATTEST:
Annie Alexander, Assistant Secretary
Yorba Linda Water District
Reviewed as to form by General Counsel:
Arthur G. Kidman, Esq.
Kidman Law, LLP
ITEM NO. 2.3
AGENDA REPORT
Meeting Date: September 26, 2012
To:Finance-Accounting Committee
From:Steve Conklin, Acting General
Manager
Presented By:Stephen Parker, Finance
Manager
Dept:Finance
Reviewed by Legal:Yes
Prepared By:Stephen Parker, Finance
Manager
Subject:Authorized Officers for Investments Held at Pershing
STAFF RECOMMENDATION:
That the Committee recommend the Board of Directors authorize the President to sign Resolution
No. 12-XX Authorizing the Acting General Manager and Finance Manager to Act on Behalf of the
District Relating to District Investments Held at Pershing LLC.
DISCUSSION:
In July 2012, staff completed the process of vetting Matthew D'Avanzo, Senior Vice-President -
Fixed Income Strategies at First Empire Securities as a broker/dealer. First Empire Securities has
an agreement with Pershing LLC where the District can choose to have investments purchased
through First Empire be held at Pershing at no cost to the District. First Empire picks up the
custodial fees Pershing charges as an incentive for governments to use First Empire as a
broker/dealer.
In order to utilize Pershing as a custodian of investments for no charge to the District, Pershing
needs the attached resolution to be approved by an officer of the District. The resolution names the
people authorized to act on behalf of the District relating to District investments held at Pershing.
In the District's current investment policy approved December 2011, the Board authorizes the
District's Treasurer to invest funds of the District. Staff recommends adding the Acting General
Manager to the resolution as a back-up should the Treasurer not be available for an extended
period of time.
PRIOR RELEVANT BOARD ACTION(S):
On December 22, 2011, the Board adopted the Public Funds Investment Policy in Resolution 11-24.
ATTACHMENTS:
Name:Description:Type:
Resolution_No_12-
XX_Authorized_Officers_for_Investments_Held_at_Pershing.doc
Resolution No. 12-XX Authorized Officers for
Investments Held at Pershing Backup Material
Resolution No. 12-XX Authorized Officers for Investments Held at Pershing
RESOLUTION NO. 12-XX
RESOLUTION OF THE BOARD OF DIRECTORS OF YORBA LINDA WATER
DISTRICT AUTHORIZING THE ACTING GENERAL MANAGER AND FINANCE
MANAGER TO ACT ON BEHALF OF THE DISTRICT RELATING TO DISTRICT
INVESTMENTS HELD AT PERSHING LLC
WHEREAS, in July 2012, District staff completed the process of vetting Matthew
D'Avanzo, Senior Vice-President - Fixed Income Strategies at First Empire
Securities (First Empire) as a broker/dealer;
WHEREAS, First Empire has an agreement with Pershing LLC (Pershing) where the
District can choose to have investments purchased through First Empire
be held at Pershing at no cost to the District;
WHEREAS, in order to utilize Pershing as a custodian of investments at no charge to
the District, Pershing requires that a resolution be adopted authorizing
people to act on behalf of the District relating to District investments held
at Pershing; and
WHEREAS, the District's current investment policy approved December 2011
authorizes the District’s Treasurer to invest funds of the District and the
Board of Directors desires adding the Acting General Manager as a back-
up should the Treasurer not be available for an extended period of time.
NOW, THEREFORE, THE BOARD OF DIRECTORS HEREBY RESOLVES, that each
and any of the following:
Steven R. Conklin, Acting General Manager, and
Stephen Parker, Finance Manager,
each of whom holds the office indicated, is authorized to act on behalf of the Yorba
Linda Water District to buy, sell, assign, loan, borrow, endorse for transfer, transfer and
receive stocks, bonds, securities, money and other assets now or hereafter registered in
[INTENTIONALLY BLANK]
Resolution No. 12-XX Authorized Officers for Investments Held at Pershing
the name of or held for Yorba Linda Water District at Pershing LLC.
PASSED AND ADOPTED this 11th day of October 2012 by the following called vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Phil Hawkins, President
Yorba Linda Water District
ATTEST:
Annie Alexander, Assistant Secretary
Yorba Linda Water District
Reviewed as to form by General Counsel:
Arthur G. Kidman, Esq.
Kidman Law, LLP
ITEM NO. 2.4
AGENDA REPORT
Meeting Date: September 26, 2012
To:Finance-Accounting Committee
From:Steve Conklin, Acting General
Manager
Presented By:Stephen Parker, Finance
Manager
Dept:Finance
Reviewed by Legal:Pending
Prepared By:Stephen Parker, Finance
Manager
Subject:Adopting Water Development and Customer Service Fees
SUMMARY:
In conjunction with the recently adopted Elective Meter Resizing Policy, the Water Development and
Customer Service Fees schedule needs to be revised in order to reflect fees referred to in the
approved Policy.
STAFF RECOMMENDATION:
That the Committee recommend the Board of Directors approve Resolution No. 12-XX Adopting
Water Development and Customer Service Fees and Rescinding Resolution No. 12-06.
DISCUSSION:
On September 6, 2012, the Board approved a Meter Resizing Policy. In conjunction with that policy,
the costs of certain up-sizing or down-sizing of meters was mentioned. Those costs are not
currently identified in the District's water development and customer service fee schedule.
Therefore, a revised resolution identifying the updated fees is being brought to the Finance-
Accounting Committee with a request for the committee's recommendation to bring it to the Board.
The recommended changes in the revised resolution from the one the Board adopted on March 8,
2012 include:
Adjustment of Section 1, to include costs of electively up-sizing and down-sizing meters.
Inclusion in Section 1 of the 3/4" meter size, which was erroneously excluded in the March 8,
2012 resolution.
Deletion of Section 5, which referred to Section 5.5 of the Rules and Regulations for Water
Service, also adopted on March 8, 2012. Section 5.5 of the Rules and Regulations for Water
Service specifically discusses changes in meter sizes and the reference is unnecessary as the
fees will be addressed in Section 1 of the attached Development and Customer Service Fees
schedule.
STRATEGIC PLAN:
FR 1-C: Revise the Water and Sewer Rules and Regulations and Evaluate Fee Schedules
Regularly for Proper Cost of Service Coverage
PRIOR RELEVANT BOARD ACTION(S):
On March 8, 2012 the Board approved Resolution No. 12-06 Adopting the Water Development and
Customer Service Fees.
ATTACHMENTS:
Name:Description:Type:
Resolution_12-
XX_Adopting_Revised_Water_Development_and_Customer_Service_Fees_DRAFT.docx
Resolution Adopting Customer Service
Fees
Backup
Material
Resolution No. 12-XX Adopting the Water Development and Customer Service Fees 1
RESOLUTION NO. 12-XX
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE YORBA LINDA WATER DISTRICT
ADOPTING THE WATER DEVELOPMENT AND CUSTOMER SERVICE FEES
AND RESCINDING RESOLUTION 12-06
WHEREAS, the Yorba Linda Water District Rules and Regulations for Rendition of
Water Service include a provision that development fees and customer
service charges shall be adopted by separate Resolution entitled Adopting
Water Development and Customer Service Fees; and
WHEREAS, the Board of Directors of the Yorba Linda Water District have, from time to
time, adopted Ordinances and Resolutions to change the Water
Development Fees and Customer Service fees for services provided by
the District; and
WHEREAS, the fees collected pursuant to this Resolution shall be used to finance
costs necessitated by the services provided by the District.
NOW THEREFORE, BE IT RESOLVED by the Board of Directors of the Yorba Linda
Water District to adopt Water Development and Customer Service Fees as follows:
Section 1. Fees identified in Sections 3.1 and 5.5 of the Rules and Regulations for
Water Service shall be as follows:
A. Elective Meter Resizing Up to 2 Inches
5/8 Inch to 3/4 Inch: $405.00 Each Meter
3/4 Inch to 1 Inch: $570.00 Each Meter
1 Inch to 1 ½ Inch: $885.00 Each Meter
1 ½ Inch to 2 Inch: $1,100.00 Each Meter
1 Inch to 3/4 Inch: $405.00 Each Meter
1 ½ Inch to 1 Inch: $700.00 Each Meter
2 Inch to 1 ½ Inch: $950.00 Each Meter
B. Meters Larger than 2 Inches Actual Costs
C. Temporary Meters $1,000.00 Deposit
Requested Move to a New Location $70.00 Per Occurrence
Unauthorized Movement $190.00 Per Occurrence
Resolution No. 12-XX Adopting the Water Development and Customer Service Fees 2
Section 2. Fees identified in Section 3.2 of the Rules and Regulations for Water
Service shall be as follows:
A. Administrative Fee $1,218.00 Per Application
B. Plan Check Fee
Number of Connections
1-5 $609.00 Flat Rate
6-10 $913.00 Flat Rate
11-20 $1,319.00 Flat Rate
21-40 $1,928.00 Flat Rate
41-60 $2,537.00 Flat Rate
61-80 $3,298.00 Flat Rate
81-99 $4,059.00 Flat Rate
100 and Up $5,581.00 Flat Rate
C. Inspection Fee
Number of Connections
1-10 $1,241.00 Per Connection
11-20 $697.00 Per Connection
21-30 $485.00 Per Connection
31-40 $390.00 Per Connection
41-50 $331.00 Per Connection
51 and Up $295.00 Per Connection
D. Records and Billing Fee $156.00 Per Connection
E. Single Service Fee $638.00 Per Permit
Section 3. Fees identified in Section 3.5 of the Rules and Regulations for Water Service
shall be as follows:
A. Temporary Untreated Water Fee $873.00 Per Acre-foot
Section 4. Fees identified in Section 3.9 of the Rules and Regulations for Water Service
shall be as follows:
A. Late Payment Fee $10.00 Per Occurrence
B. Notice of Discontinuance $10.00 Per Occurrence
C. Shut-off Due to Non-Payment $40.00 Per Occurrence
D. Re-establishment of Service $40.00 Per Occurrence
Resolution No. 12-XX Adopting the Water Development and Customer Service Fees 3
E. Callouts After Regular Hours $155.00 Per Occurrence
F. Tampered Locks:
Residential $80.00 Per Occurrence
Commercial $190.00 Per Occurence
G. Meter Removal $80.00 Per Occurrence
H. Meter Replacement $80.00 Per Occurrence
(Over/Improper Use) Plus Labor & Material
I. Change of Meter Location:
Residential Actual Costs Per Occurrence
Commercial $70 Per Occurrence
J. Meter Testing:
At the Source/YLWD $80 Per Occurrence
Independent Laboratory Actual Costs Per Occurrence
K. Residential Customer Deposit:
Potential of Risk: “Green” $0.00 Per Meter
Potential of Risk: “Yellow” $125.00 Per Meter
Potential of Risk: “Red” $225.00 Per Meter
L. Commercial Customer Deposit:
1 ½ Inch Meter & Below $450.00 Per Meter
2 & 3 Inch Meter $750.00 Per Meter
4 Inch Meter & Larger $2,500.00 Per Meter
M. Autopay/NSF Charge $25.00 Per Occurrence
N. New Account Set Up Fee $25.00 Per Occurrence
O. GIS Data Conversion Fee $100.00 Per Sheet
P. Copying Charges $0.25 Per Copy
Q. Fax Charges $0.75 Per Page
R. Mailing Charges Actual Costs
S. Shipping Charges Actual Costs
Resolution No. 12-XX Adopting the Water Development and Customer Service Fees 4
Section 5. Fees identified in Section 6.5 of the Rules and Regulations for Water Service
shall be as follows:
A. Backflow Device Monitoring Fee $28.00 Per Device
Section 6. The fees adopted herein shall take effect on October 15, 2012 and
Resolution No. 12-06 is hereby rescinded on October 15, 2012.
PASSED AND ADOPTED this 11th day of October 2012 by the following called vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Phil Hawkins, President
Yorba Linda Water District
ATTEST:
Steven C. Conklin
Yorba Linda Water District
Reviewed as to form by General Counsel:
Arthur G. Kidman, Esq.
Kidman Law, LLP
ITEM NO. 3.1
AGENDA REPORT
Meeting Date: September 26, 2012
To:Finance-Accounting Committee
From:Steve Conklin, Acting General
Manager
Presented By:Stephen Parker, Finance
Manager
Dept:Finance
Prepared By:Delia Lugo, Senior Accountant
Subject:Budget to Actual Results for July and August 2012
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 months of July and August 2012.
For the month of July 2012, the District water revenue is 9.2% of annual budget, which is slightly
lower for the historical trend by 2.2%. Our 20 by 2020 baseline is 298.1 gallons per capita per day
(GPCD), with a target of 238.5. For the current fiscal year through July 2012, the reduction of 47.5
GPCD brings us 80% of the way to our goal.
The majority of the Water Fund's individual Supplies and Services expenses are trending below or
near budget, with the exception of Vehicle Equipment due to the repair of wells and Utilities for
electrical fees. Dues & Membership, Fees & Permits, and Training expenses are over due to the
timing of receiving and paying for annual invoices. An item to note is the Special Item in the amount
of $835,943 for the Side Fund Pay Down made to the California Public Employee' Retirement
System.
Sewer Other Operating Revenue is well over budget due to the timing of invoicing and receiving
payments for FOG fees.
The Sewer Funds Supplies and Services expenses are trending below or on budget, with the
exception of the items mentioned for the Water Fund, as the Sewer Fund receives a 7% allocation
of most Water Fund expenses.
For the month of August 2012, the District water revenue is 22.2% of annual budget, which is
slightly lower for the historical trend by 1.2%. Our 20 by 2020 baseline is 298.1 gallons per capita
per day (GPCD), with a target of 238.5. For the current fiscal year through August 2012, the
reduction of 38.4 GPCD brings us 64% of the way to our goal.
The majority of the Water Fund's individual Supplies and Services expenses are trending below or
near budget, with the exception of Vehicle Equipment due to the repair of wells and Utilities for
electrical fees. Dues & Membership, Fees & Permits, and Training expenses are over budget due to
the timing of receiving and paying for annual invoices. Non-Capital Equipment is slightly higher due
to the purchase of replacement switches for the ring network communications for the wells and
purchase of components for the Redundant SCADA Communication Radio System.
Sewer Other Operating Revenue is well over budget due to the timing of invoicing and receiving
payments for FOG fees.
The Sewer Funds Supplies and Services expenses are trending below or on budget, with the
exception of Maintenance due to the repair of sewer lines throughout the District and the items as
mentioned for the Water Fund.
STRATEGIC PLAN:
FR 1-F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a
Timely and Transparent Manner to the Board of Directors and Member Agencies
ATTACHMENTS:
Name:Description:Type:
July_2012_Combined.xlsx July 2012 Consolidated Statement Backup Material
July_2012_Water.xlsx July 2012 Water Statement Backup Material
July_2012_Sewer.xls July 2012 Sewer Statement Backup Material
August_2012_Combined.xlsx August 2012 Consolidated Statement Backup Material
August_2012_Water.xlsx August 2012 Water Statement Backup Material
August_2012_Sewer_.xlsx August 2012 Sewer Fund Backup Material
OriginalYTDYTDYTD
BudgetActualUnder(Over)% of
FY 2013FY 2013BudgetBudget
Revenue (Operating):
Water Revenue (Residential)$15,405,197$1,485,233$13,919,9649.64%
Water Revenue (Commercial & Fire Det.)1,822,665168,3641,654,3019.24%
Water Revenue (Landscape/Irrigation)4,035,121405,9473,629,17410.06%
Water Revenue (Service Charge)3,755,191280,974 3,474,2177.48%
Sewer Charge Revenue1,548,682130,6921,417,9908.44%
Locke Ranch Assessments198,4332,038196,3951.03%
Other Operating Revenue643,73756,081587,6568.71%
Total Operating Revenue:27,409,0262,529,32924,879,6979.23%
Revenue (Non-Operating):
Interest 170,000- 170,0000.00%
Property Tax 1,244,32025,4301,218,8902.04%
Other Non-Operating Revenue494,43787,240407,19717.64%
Total Non-Operating Revenue:1,908,757112,6701,796,0875.90%
Total Revenue 29,317,7832,641,99926,675,7849.01%
Expenses (Operating):
Variable Water Costs (G.W., Import & Power)12,953,0241,572,30911,380,71512.14%
Salary Related Expenses7,648,891332,7587,316,1334.35%
Supplies & Services 3,849,602 233,532 3,616,070 6.07%
Yorba Linda Water District
Summary Financial Report
Water & Sewer Funds
For One Month Ending July 31, 2012
Supplies & Services 3,849,602 233,532 3,616,070 6.07%
Total Operating Expenses24,451,5172,138,59922,312,9188.75%
Expenses (Non-Operating):
Interest on Long Term Debt2,011,395155,9381,855,4577.75%
Other Expense 124,2102,947121,2632.37%
Total Non-Operating Expenses:2,135,605158,8851,976,7207.44%
Total Expenses 26,587,1222,297,48424,289,6388.64%
Net Income (Loss) Before Capital Contributions 2,730,661 344,515 (2,386,146)12.62%
Special Item - (835,943) (835,943) 0.00%
Net Income (Loss) Before Depreciation 2,730,661 (491,428)(2,386,146)-18.00%
Depreciation & Amortization6,602,339555,858 6,046,4818.42%
Total Net Income (Loss)($3,871,678)($1,047,286)$3,660,335 27.05%
JUL YTD YTD YTD
Budget Actual Actual Under(Over)% of
FY 2013 FY 2013 FY 2013 Budget Budget
Revenue (Operating):
Water Revenue (Residential)$15,405,197$1,485,233$1,485,233$13,919,9649.64%
Water Revenue (Commercial & Fire Det.)1,822,665168,364168,3641,654,3019.24%
Water Revenue (Landscape/Irrigation)4,035,121405,947405,9473,629,17410.06%
Water Revenue (Service Charge)3,755,191280,974 280,9743,474,2177.48%
Other Operating Revenue 585,92932,66332,663553,2665.57%
Total Operating Revenue:25,604,1032,373,1812,373,18123,230,9229.27%
Revenue (Non-Operating):
Interest 150,000 - - 150,000 0.00%
Property Tax 1,244,32025,430 25,4301,218,8902.04%
Other Non-Operating Revenue490,26278,66978,669 411,59316.05%
Total Non-Operating Revenue:1,884,582104,099104,0991,780,4835.52%
Total Revenue 27,488,685 2,477,280 2,477,280 25,011,405 9.01%
Expenses (Operating):
Variable Water Costs (G.W., Import & Power)12,953,0241,572,3091,572,30911,380,71512.14%
Salary Related Expenses6,741,403292,035292,035 6,449,3684.33%
Supplies & Services:
Communications 280,233(7,355)(7,355)287,588-2.62%
Contractual Services 455,04124,67924,679430,3625.42%
Data Processing 125,866 5,261 5,261 120,605 4.18%
Yorba Linda Water District
Water Fund
For One Month Ending July 31, 2012
Data Processing 125,866 5,261 5,261 120,605 4.18%
Dues & Memberships 57,60923,23723,23734,37240.34%
Fees & Permits 139,16519,93619,936119,22914.33%
Board Election 59,055- - 59,0550.00%
Insurance 259,6568,988 8,988250,6683.46%
Materials 455,22634,31034,310420,9167.54%
District Activities, Emp Recognition17,29823023017,0681.33%
Maintenance 310,32013,32613,326296,9944.29%
Non-Capital Equipment 81,3708,0908,09073,2809.94%
Office Expense 37,7022,9782,97834,7247.90%
Professional Services 749,87850,90650,906698,9726.79%
Training 41,353(7,539)(7,539)48,892-18.23%
Travel & Conferences 41,90298898840,9142.36%
Uncollectible Accounts 36,270- - 36,2700.00%
Utilities 79,0509,2879,28769,76311.75%
Vehicle Equipment 282,40030,19930,199252,20110.69%
Supplies & Services Sub-Total3,509,394217,521217,5213,291,8736.20%
Total Operating Expenses23,203,8212,081,8652,081,86521,121,9568.97%
Expenses (Non-Operating):
Interest on Long Term Debt2,009,778155,938155,9381,853,8407.76%
Other Expense 118,2102,9472,947115,2632.49%
Total Non-Operating Expenses:2,127,988158,885158,8851,969,1037.47%
Total Expenses 25,331,809 2,240,750 2,240,750 23,091,059 8.85%
Net Income (Loss) Before Capital Contributions 2,156,876 236,530 236,530 (1,920,346)10.97%
and Transfers
Special Item(s)- (835,943)(835,943)(835,943)0.00%
Net Income (Loss) Before Depreciation 2,156,876 (599,413)(599,413)(2,756,289)-27.79%
Depreciation & Amortization5,332,175449,583449,583 4,882,5928.43%
Total Net Income (Loss)($3,175,299)($1,048,996)($1,048,996)$2,126,303 33.04%
JUL YTD YTD YTD
Budget Actual Actual Under(Over)% of
FY 2013 FY 2013 FY 2013 Budget Budget
Revenue (Operating):
Sewer Charge Revenue$1,548,682$130,692$130,692 $1,417,9908.44%
Locke Ranch Assessments198,43320382,038196,395 1.03%
Other Operating Revenue57,80823,41823,41834,39040.51%
Total Operating Revenue:1,804,923156,148156,1481,648,7758.65%
Revenue (Non-Operating):
Interest 20,000- - 20,0000.00%
Other Non-Operating Revenue4,1758,5718,571(4,396)205.29%
Total Non-Operating Revenue:24,1758,5718,57115,604 35.45%
Total Revenue 1,829,098 164,719 164,719 1,664,379 9.01%
Expenses (Operating):
Salary Related Expenses907,48840,72340,723866,7654.49%
Supplies & Services:
Communications 23,018 (424) (424) 23,442 -1.84%
Contractual Services34,2802,0522,05232,2285.99%
Data Processing 9,4743963969,0784.18%
Dues & Memberships4,5831,7491,7492,83438.16%
Fees & Permits 12,155 3,244 3,244 8,911 26.69%
Board Election 4,445 - - 4,445 0.00%
Insurance 19,544 676 676 18,868 3.46%
Materials 34,799144 14434,6550.41%
District Activities, Emp Recognition1,302 17171,2851.31%
Maintenance 71,650 2,531 2,531 69,119 3.53%
Yorba Linda Water District
Sewer Fund
For One Month Ending July 31, 2012
Maintenance 71,650 2,531 2,531 69,119 3.53%
Non-Capital Equipment16,13051251215,6183.17%
Office Expense 2,8232242242,5997.93%
Professional Services37,5821,4081,40836,1743.75%
Training 4,747(183) (183) 4,930-3.86%
Travel & Conferences3,49874743,4242.12%
Uncollectible Accounts2,730- - 2,7300.00%
Utilities 5,9507757755,17513.03%
Vehicle Equipment 51,4992,8162,81648,6835.47%
Supplies & Services Sub-Total340,20916,01116,011 324,1984.71%
Total Operating Expenses1,247,69756,73456,7341,190,9634.55%
Expenses (Non-Operating):
Interest Expense 1,618 - - 1,618 0.00%
Other Expense 6,000 - - 6,000 0.00%
Total Non-Operating Expenses:7,618- - 7,6180.00%
Total Expenses 1,255,315 56,734 56,734 1,198,581 4.52%
Net Income (Loss) Before Depreciation 573,783 107,985 107,985 465,798 18.82%
Depreciation & Amortization1,270,164106275106,2751,163,889 8.37%
Total Net Income (Loss)($696,381)$1,710 $1,710 ($698,091)-0.25%
OriginalYTDYTDYTD
BudgetActualUnder(Over)% of
FY 2013FY 2013BudgetBudget
Revenue (Operating):
Water Revenue (Residential)$15,405,197$3,584,034$11,821,16323.27%
Water Revenue (Commercial & Fire Det.)1,822,665387,6231,435,04221.27%
Water Revenue (Landscape/Irrigation)4,035,121989,8203,045,30124.53%
Water Revenue (Service Charge)3,755,191593,673 3,161,51815.81%
Sewer Charge Revenue1,548,682266,5331,282,14917.21%
Locke Ranch Assessments198,4332,605195,8281.31%
Other Operating Revenue643,737159,526484,21124.78%
Total Operating Revenue:27,409,0265,983,81421,425,21221.83%
Revenue (Non-Operating):
Interest 170,00012,078157,9227.10%
Property Tax 1,244,32028,4471,215,8732.29%
Other Non-Operating Revenue494,437132,685361,75226.84%
Total Non-Operating Revenue:1,908,757173,2101,735,5479.07%
Total Revenue 29,317,7836,157,02423,160,75921.00%
Expenses (Operating):
Variable Water Costs (G.W., Import & Power)12,953,0243,048,5689,904,45623.54%
Salary Related Expenses7,648,8911,104,3626,544,52914.44%
Supplies & Services 3,849,602 586,811 3,262,791 15.24%
Yorba Linda Water District
Summary Financial Report
Water & Sewer Funds
For Two Months Ending August 31, 2012
Supplies & Services 3,849,602 586,811 3,262,791 15.24%
Total Operating Expenses24,451,5174,739,74119,711,77619.38%
Expenses (Non-Operating):
Interest on Long Term Debt2,011,395311,8761,699,51915.51%
Other Expense 124,2105,894118,3164.75%
Total Non-Operating Expenses:2,135,605317,7701,817,83514.88%
Total Expenses 26,587,1225,057,51121,529,61119.02%
Net Income (Loss) Before Capital Contributions 2,730,661 1,099,513 (1,631,148)40.27%
Special Item - (835,943) (835,943) 0.00%
Net Income (Loss) Before Depreciation 2,730,661 263,570 (1,631,148)9.65%
Depreciation & Amortization6,602,3391,111,716 5,490,62316.84%
Total Net Income (Loss)($3,871,678)($848,146)$3,859,475 21.91%
AUG YTD YTD YTD
Budget Actual Actual Under(Over)% of
FY 2013 FY 2013 FY 2013 Budget Budget
Revenue (Operating):
Water Revenue (Residential)$15,405,197$2,098,801$3,584,034$11,821,16323.27%
Water Revenue (Commercial & Fire Det.)1,822,665219,259387,6231,435,04221.27%
Water Revenue (Landscape/Irrigation)4,035,121583,873989,8203,045,30124.53%
Water Revenue (Service Charge)3,755,191312,699 593,6733,161,51815.81%
Other Operating Revenue 585,92996,247128,910457,01922.00%
Total Operating Revenue:25,604,1033,310,8795,684,06019,920,04322.20%
Revenue (Non-Operating):
Interest 150,000 10,487 10,487 139,513 6.99%
Property Tax 1,244,3203,017 28,4471,215,8732.29%
Other Non-Operating Revenue490,26245,293123,962366,30025.28%
Total Non-Operating Revenue:1,884,58258,797162,896 1,721,6868.64%
Total Revenue 27,488,685 3,369,676 5,846,956 21,641,729 21.27%
Expenses (Operating):
Variable Water Costs (G.W., Import & Power)12,953,0241,476,2593,048,5689,904,45623.54%
Salary Related Expenses6,741,403674,241966,276 5,775,12714.33%
Supplies & Services:
Communications 280,23318,37011,015269,2183.93%
Contractual Services 455,04130,27154,950400,09112.08%
Data Processing 125,866 10,974 16,235 109,631 12.90%
Yorba Linda Water District
Water Fund
For Two Months Ending August 31, 2012
Data Processing 125,866 10,974 16,235 109,631 12.90%
Dues & Memberships 57,60966223,89933,71041.48%
Fees & Permits 139,1657,44727,383111,78219.68%
Board Election 59,055- - 59,0550.00%
Insurance 259,65631 9,019250,6373.47%
Materials 455,22649,10583,415371,81118.32%
District Activities, Emp Recognition17,2981,1211,35115,9477.81%
Maintenance 310,32013,83527,161283,1598.75%
Non-Capital Equipment 81,37016,46224,55256,81830.17%
Office Expense 37,7028,14111,11926,58329.49%
Professional Services 749,87896,025146,931602,94719.59%
Training 41,3538,11757840,7751.40%
Travel & Conferences 41,9026011,58940,3133.79%
Uncollectible Accounts 36,270(403) (403) 36,673-1.11%
Utilities 79,0509,71919,00660,04424.04%
Vehicle Equipment 282,40029,94460,143222,25721.30%
Supplies & Services Sub-Total3,509,394300,422517,9432,991,45114.76%
Total Operating Expenses23,203,8212,450,9224,532,78718,671,03419.53%
Expenses (Non-Operating):
Interest on Long Term Debt2,009,778155,938311,8761,697,90215.52%
Other Expense 118,2102,9475,894112,3164.99%
Total Non-Operating Expenses:2,127,988158,885317,7701,810,21814.93%
Total Expenses 25,331,809 2,609,807 4,850,557 20,481,252 19.15%
Net Income (Loss) Before Capital Contributions 2,156,876 759,869 996,399 (1,160,477)46.20%
and Transfers
Special Item(s)- - (835,943)(835,943)0.00%
Net Income (Loss) Before Depreciation 2,156,876 759,869 160,456 (1,996,420)7.44%
Depreciation & Amortization5,332,175449,583 899,166 4,433,00916.86%
Total Net Income (Loss)($3,175,299)$310,286 ($738,710)$2,436,589 23.26%
AUG YTD YTD YTD
Budget Actual Actual Under(Over)% of
FY 2013 FY 2013 FY 2013 Budget Budget
Revenue (Operating):
Sewer Charge Revenue$1,548,682$135,841$266,533 $1,282,14917.21%
Locke Ranch Assessments198,4335672,605195,8281.31%
Other Operating Revenue57,8087,19830,61627,192 52.96%
Total Operating Revenue:1,804,923143,606299,7541,505,16916.61%
Revenue (Non-Operating):
Interest 20,0001,591 1,591 18,4097.96%
Other Non-Operating Revenue4,1751528,723(4,548)208.93%
Total Non-Operating Revenue:24,1751,74310,31413,86142.66%
Total Revenue 1,829,098 145,349 310,068 1,519,030 16.95%
Expenses (Operating):
Salary Related Expenses907,48897,362138,085769,40315.22%
Supplies & Services:
Communications 23,018 1,383 959 22,059 4.17%
Contractual Services34,2802,3274,37929,90112.77%
Data Processing 9,4748261,2228,25212.90%
Dues & Memberships4,583501,7992,78439.25%
Fees & Permits 12,155 1,261 4,505 7,650 37.06%
Board Election 4,445 - 4,445 0.00%
Insurance 19,544 2 678 18,866 3.47%
Materials 34,79979994333,8562.71%
District Activities, Emp Recognition1,302 841011,2017.76%
Maintenance 71,650 16,128 18,659 52,991 26.04%
Yorba Linda Water District
Sewer
For Two Months Ending August 31, 2012
Maintenance 71,650 16,128 18,659 52,991 26.04%
Non-Capital Equipment16,1302,5563,06813,06219.02%
Office Expense 2,8236138371,98629.65%
Professional Services37,5824,9886,39631,18617.02%
Training 4,7479537703,97716.22%
Travel & Conferences3,498451193,3793.40%
Uncollectible Accounts2,730(35) (35) 2,765-1.28%
Utilities 5,9508001,5754,37526.47%
Vehicle Equipment 51,49920,07822,89428,60544.46%
Supplies & Services Sub-Total340,20952,85868,869 271,34020.24%
Total Operating Expenses1,247,697150,220206,9541,040,74316.59%
Expenses (Non-Operating):
Interest Expense 1,618 - - 1,618 0.00%
Other Expense 6,000 - - 6,000 0.00%
Total Non-Operating Expenses:7,618- - 7,6180.00%
Total Expenses 1,255,315 150,220 206,954 1,048,361 16.49%
Net Income (Loss) Before Depreciation 573,783 (4,871) 103,114 470,669 17.97%
Depreciation & Amortization1,270,164106,275212,5501,057,614 16.73%
Total Net Income (Loss)($696,381)($111,146)($109,436)($586,945)15.71%
ITEM NO. 3.2
AGENDA REPORT
Meeting Date: September 26, 2012
To:Finance-Accounting Committee
From:Steve Conklin, Acting General
Manager
Presented By:Stephen Parker, Finance
Manager
Dept:Finance
Prepared By:Delia Lugo, Senior Accountant
Subject:Investment Reports for July and August 2012
SUMMARY:
Staff is submitting the July and August 2012 Monthly Investment Reports for the Committee's
review.
DISCUSSION:
The Investment Portfolio Report presents the market value and percent yield for all 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 reserve categories.
The total yield for the month ending July 2012 decreased to 0.75%. This is the result of the yield
change of investments held in CalTRUST's Medium Term portfolio from 1.01% to 0.89% and Short
Term portfolio from 0.44% to 0.38%.
The overall decrease in the July investment balance from the previous month is approximately $1.8
million. This is primarily due to the District's biannual replenishment assessment payment to Orange
County Water District in the amount of $1,263,230.90, and the side fund payout to California Public
Employees' Retirement System in the amount of $835,943. The increase reflected in the water
operating checking account are funds deposited in preparation for a transfer to a Bank of the West
money market account.
The total yield for the month ending August 2012 decreased to 0.73%. This is the result of a small
dip in the yield of investments held at CalTRUST as well as less overall investment in the Medium
Term account at CalTRUST.
The overall decrease in the August investment balance from the previous month is approximately
$122,000.
STRATEGIC PLAN:
FR 1-F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a
Timely and Transparent Manner to the Board of Directors and Member Agencies
ATTACHMENTS:
Name:Description:Type:
Invst_Rpt_7-12.xlsx Investment Report for July 2012 Backup Material
Invst_Agenda_Backup_-_July_2012.xlsx Investment Agenda Backup - July 2012 Backup Material
Invst_Rpt_8-12.xlsx Investment Report for August 2012 Backup Material
Invst_Agenda_Backup_-_August_2012.xlsx Investment Agenda Backup - August 2012 Backup Material
Market %Percent
Value Cost of Total Institution Yield
Checking Account:
1,536,651$ 1,536,651$ Wells Fargo Bank
1,536,651$ 1,536,651$ 7.72%Total0.00%
Money Market Accounts:
54,931$ 54,931$ Wells Fargo Money Market0.05%
17,24917,249US Bank (2008 Bond Reserve)0.04%
72,180$ 72,180$ 0.36%Total0.05%
Federal Home Loan Bank:
2,159,246$ 2,144,397$ US Bank (2008 Bond Reserve)1.35%
2,159,246$ 2,144,397$ 10.85%1.35%
Pooled Investment Accounts:
1,743,701$ 1,743,701$ Local Agency Investment Fund0.36%
2,668,072 2,668,072 CalTRUST Short Term0.38%
11,721,370 11,663,240 CalTRUST Medium Term0.89%
16,133,143$ 16,075,013$ 81.07%0.75%
Yorba Linda Water District
Investment Portfolio Report
July 31, 2012
16,133,143$ 16,075,013$ 81.07%0.75%
19,901,220$ 19,828,241$ 100%Total Investments 0.75%
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.
7/31/12
________________________________
Delia Lugo, Senior Accountant
Below is a chart summarizing the yields as well as terms and maturities for the month of July 2012:
Avg. PortfolioAvg. Portfolio# of
Month Yield WithoutYield WithDays to
of 2012 CalTRUST CalTRUST Maturity
July0.64%0.75%93
Below is are charts comparing operating fund interest for current and prior fiscal years.
Actual Interest 7/31/20117/31/2012
Monthly - July 81$ -$
Year-to-Date 81$ -$
Budget 2011/20122012/2013
Interest Budget, July YTD 15,833$ 12,500$
Interest Budget, Annual 190,000$ 150,000$
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:
June 2012% AllocJuly 2012% Alloc
Fund DescriptionBalance6/30/2012Balance7/31/2012
Water Operating Reserve3,622,785$ 16.71%1,216,941$ 6.63%
Water Emergency Reserve1,000,9924.62%1,003,8165.47%
Water Capital Project Reserve 11,248,023 51.88%10,035,019 54.64%
Investment Summary Report
Investment Summary Comparison Between Current and Previous Month
Water Capital Project Reserve 11,248,023 51.88%10,035,019 54.64%
Water Reserve for Debt Service1,021,9814.71%1,310,1427.13%
Maintenance Reserve200,0000.92%200,2141.09%
COP Revenue Bond 2008 - Reserve2,160,4869.97%2,161,94511.77%
COP Revenue Bond 200814,5490.07%14,5500.08%
Sewer Operating 204,3800.94%161,2820.88%
Sewer Emergency Reserve999,9914.61%1,002,8125.46%
Sewer Capital Project Reserve1,206,9795.57%1,257,8486.85%
21,680,166$ 100.00%18,364,569$ 100.00%
Water Operating 9,301 1,434,139
Sewer Operating 55,627 102,512
64,927 1,536,651
Totals 21,745,093$ 19,901,220$
Wells Fargo Bank Checking
Market %Percent
Value Cost of Total Institution Yield
Checking Account:
247,415$ 247,415$ Wells Fargo Bank
247,415$ 247,415$ 1.25%Total0.00%
Money Market Accounts:
54,934$ 54,934$ Wells Fargo Money Market0.05%
2,000,173 2,000,173 Bank of the West0.35%
17,25017,250US Bank (2008 Bond Reserve)0.04%
2,072,356$ 2,072,356$ 10.48%Total0.34%
Federal Home Loan Bank:
2,158,379$ 2,144,397$ US Bank (2008 Bond Reserve)1.35%
2,158,379$ 2,144,397$ 10.91%1.35%
Pooled Investment Accounts:
2,337,701$ 2,337,701$ Local Agency Investment Fund0.38%
2,686,984 2,686,983 CalTRUST Short Term0.37%
10,276,814 10,229,133 CalTRUST Medium Term 0.88%
Yorba Linda Water District
Investment Portfolio Report
August 31, 2012
10,276,814 10,229,133 CalTRUST Medium Term 0.88%
15,301,498$ 15,253,816$ 77.36%0.71%
19,779,648$ 19,717,983$ 100%Total Investments 0.73%
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.
8/31/12
________________________________
Delia Lugo, Senior Accountant
Below is a chart summarizing the yields as well as terms and maturities for the month of August 2012:
Avg. PortfolioAvg. Portfolio# of
Month Yield WithoutYield WithDays to
of 2012 CalTRUST CalTRUST Maturity
August0.73%0.66%88
Below is are charts comparing operating fund interest for current and prior fiscal years.
Actual Interest 8/31/20118/31/2012
Monthly - August 24,824$ 12,078$
Year-to-Date 24,905$ 12,078$
Budget 2011/20122012/2013
Interest Budget, August YTD 15,833$ 12,500$
Interest Budget, Annual 190,000$ 150,000$
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:
July 2012% AllocAug 2012% Alloc
Fund DescriptionBalance7/31/2012Balance8/31/2012
Water Operating Reserve1,216,941$ 6.63%1,965,551$ 10.07%
Water Emergency Reserve1,003,8165.47%1,004,5745.14%
Water Capital Project Reserve 10,035,019 54.64%10,172,163 52.08%
Investment Summary Report
Investment Summary Comparison Between Current and Previous Month
Water Capital Project Reserve 10,035,019 54.64%10,172,163 52.08%
Water Reserve for Debt Service1,310,1427.13%1,590,4198.14%
Maintenance Reserve200,2141.09%200,2141.03%
COP Revenue Bond 2008 - Reserve2,161,94511.77%2,161,07811.06%
COP Revenue Bond 200814,5500.08%14,5500.07%
Sewer Operating161,2820.88%161,4750.83%
Sewer Emergency Reserve1,002,8125.46%1,003,5705.14%
Sewer Capital Project Reserve1,257,8486.85%1,258,6426.44%
18,364,569$ 100.00%19,532,235$ 100.00%
Water Operating1,434,139 198,531
Sewer Operating102,512 48,882
1,536,651 247,413
Totals 19,901,220$ 19,779,648$
Wells Fargo Bank Checking
ITEM NO. 3.3
AGENDA REPORT
Meeting Date: September 26, 2012
Subject:Status of Strategic Plan Initiatives
DISCUSSION:
Attached are the strategies identified in the 2011-2013 Strategic Plan that relate to Fiscal
Responsibility, which are overseen by the Finance-Accounting Committee. Included is an update on
each strategy relating to Fiscal Responsibility.
ATTACHMENTS:
Name:Description:Type:
Strategic_Plan_Tracking-_FA.pdf Strategic Plan Trakcing - FA Backup Material
Strategies Lead Party Comments September 2012 Progress
FR 1: Maintain Fiduciary Responsibility
FR 1-C
Revise the Water and Sewer Rules
and Regulation and Evaluate Fee
Schedules Regularly for Proper
Cost of Service Coverage
General
Manager/
Finance
Director
Complete Study in House
and Recommend Fees
Structure Update for
Adoption by December 2011
Updated Customer Service Fee Schedule presented to Finance-Accounting
Committee on September 26. Sewer Rules and Regulations and Fee Schedule will
be brought before the Board at the end of 2012.
FR 1-F
Continue to Record and Report
the Fairly Stated Financial
Activities of the District in a
Timely and Transparent Manner
to the Board of Directors and
Member Agencies
General
Manager/
Finance
Director
Quarterly the Board receives
full-accrual financial
statements. The annual
audit is provided timely to
the Board and public.
The Board received the June 2012 investment report at the August 9th Board
meeting and the 4th quarter full-accrual financial statements at the September
13th Board meeting.
FR 1-G
Continue to Improve
Communications of the District's
Financial Information to the Board
of Directors, Member Agencies,
Management, and the Financial
Community
General
Manager/
Finance
Director
Monthly financial
information is provided to
management and the
Finance-Accounting
Committee.
The Finance-Accounting Committee received the July and August 2012 budget to
actual financial statements and the July and August 2012 investment report at
the September 26 Committee meeting.
Strategic Plan Initiatives Status Report
Finance-Accounting Committee
Completed
Strategies Lead Party Comments August 2012 Progress
FR 1-A Develop a Comprehensive Multi-
Year Financial Plan
Finance
Director
Finance Accounting
Committee to consider
Adding Sewer Model to
Contract in Jun-11
Multi-year financial plan provided to the Board during April 11 workshop. A
comprehensive version is included in the FY 2012/13 budget, which was presented
to the Board on June 14, 2012.
FR 1-B
Prepare a High Level Annual
Budget Document and
Comprehensive Annual Financial
Report and Compete for
Recognition by the Government
Finance Officers Association
Finance
Director
Include Fees in FY 2011/12
Budget
FY 2011/12 Budget and CAFR for period ending June 30, 2011 received
Government Finance Officer's Association awards for excellence. FY 2012/13
Budget approved by the Board on June 28, 2012. Staff submitted the CSMFO
budget award in August and will submit for the GFOA budget awards in August.
FR 1-D Evaluate and Revise the Sewer
Fund Allocation
Finance
Director
Revised Allocation included
in FY 2011/12 Budget
Completed March 2011. Consider changing allocation methodology in conjunction
with FY 2013/14 budget process.
FR 1-E Maintain Commitment to Strong
Debt Services Ratio
Board of
Directors
Substantial Rate Increase
Adopted in Sept 2009
followed by Pass Through
Increase in Aug 2010
Quarterly review of debt service ratios will continue as well as integrating the ratio
into forward financial projections.
FR 2-A Review the Reserve Policy and
Funding Levels Annually
Finance
Director/Board
of Directors
Latest Revisions Reviewed by
Finance- Accounting
Committee for Board of
Directors to Consider in Jun-
11
Completed review/revision of reserve policy for FY 12/13. Reserve policy adopted by
the Board on June 14, 2012.
FR 2-C Implement an Approach to Ensure
Reserves are Responsibly Funded
Finance
Director/Board
of Directors
Rates, COP's and Other
Capital Financing Options
Financial model allowed review of reserves on a long-term basis. Staff recommended
a 3-year rate increase to ensure reserves are responsibly funded. Board voted to
approve 1.5, 1.5, 2.5% rate increase on the fixed charge plus a change in the fixed
charge to be based on the meter size at the Public Hearing on June 21.
FR 3-B
Review Opportunities to Earn
"Cash Back" on Operating
Expense through Commercial
Credit Card Accounts
Finance
Director
Card Options Discussed with
Finance-Accounting
Committee in March - Add'l
research Required
YLWD is online with Cal-CARD.
FR 3-C Manage Cash Flow to Maximize
Investment Income
Finance
Director
Track Opportunities and
Effectiveness with Quarterly
Investment Reports
Delia Lugo, Senior Accountant reviews the cash balances and needs daily. Mutliple
times a month, excess cash is transferred to investments to earn interest until the
next check register.
FR 4-A Complete the Cost of Service and
Water Rates Study
Finance
Director/Board
of Directors
Board to Consider Rate
Structure Alternatives in Oct
2011
The January 16, 2012 Board Workshop showed the end product of the cost of service
and water rate study. Raftelis Financial Consultants completed a document to
support the District's Prop 218 notice, which was received and filed by the Board on
April 26.
FR 4-B
Evaluate Equitable Rate
Structures that Promote
Conservation and Efficiency
Board of
Directors/
General
Manager
Board to Consider Rate
Structure Alternatives in Oct
2011
A recommendation to update the current fixed charge with a volumetric approach
was presented to the Board during the April 11 Workshop. The Rate Increase Notice
approved by the Board on April 26 to be mailed to the District's customers reflects
those proposed changes. The public hearing on those changes occurred on June 21,
2012.