HomeMy WebLinkAbout2008-10-14 - Finance-Accounting Committee Meeting Agenda Packet0 EYorba Linda
Water District
FINANCE - ACCOUNTING COMMITTEE MEETING
Tuesday, October 14, 2008, 2:00 p.m.
1717 E. Miraloma Avenue, Placentia - Tel: (714) 701 - 3020
AGENDA
COMMITTEE: STAFF:
Director Michael J. Beverage, Chair Michael A. Payne, General Manager
Director John W. Summerfield Diane Cyganik, Finance Director
Alternate: Director William R. Mills Sandi Van Etten, Senior Accountant
INTRODUCTION OF VISITORS AND 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.
• Mr. Nitin Patel, CPA and Ms. Daphnie Fuertez, CPA of Diehl, Evans & Company, LLP.
ACTION ITEMS:
This portion of the agenda is for items where staff presentations and committee discussions are needed
prior to formal committee actions.
Audited Financial Statements for Fiscal Year 2007/08.
Recommendation: That the Finance-Accounting Committee review and
recommend to the Board of Directors that the Audited Financial Statements
for the Fiscal Year ended June 30, 2008 be received and filed.
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.
2. Investment Report Ending August 31, 2008.
3. Monthly Portfolio Reports Ending September 30, 2008. Report by Keith Khorey,
Wells Capital Management.
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ADJOURNMENT:
The next Finance-Accounting Committee meeting is scheduled for November 10, 2008
at 8:00 a.m.
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 Michael A. Payne, District 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.
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ITEM NO. /
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YORBA LINDA WATER DISTRICT
ANNUAL FINANCIAL REPORT
WITH REPORT ON AUDITBYINDEPENDENT.14
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CERTIFIED PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30.2008
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YORBA LINDA WATER DISTRICT
TABLE OF CONTENTS
June 30, 2008
INTRODUCTORY SECTION:
Letter of Transmittal
FINANCIAL SECTION:
Independent Auditors' Report
Managemet
Basic Finan
Statement
Statement
Change:
Statement
Notes to F
SUPPLEMENT
Combining
Combining State6ifit,of Revenues. Exl)enses and
Changes in Net Assi&§,
Schedule of Operating Exp6fi§es by Cost Center and
Nature of Expenses for Water and Sewer
Schedule of Capital Assets
Independent Auditors' Report on Internal Controls Over
Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
Page
Number
1
7
9
15
16
18
19
21
43
44
48
51
52
55
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INTRODUCTORY SECTION
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September 20, 2008
Yorba Linda
Water District
Board of Directors
Yorba Linda Water District
Introduction
It is our pleasure to submit the Annual Financial P
the fiscal year ended June 30, 2008, following
Accounting Standards Board. District staff prep
ultimately responsible for both the accuracy of the
presentation, including all disclosures in this Anaric
is accurate in all material respects. The reporf is&
to enhance your understanding of the District's; fina
This report is organized into two
section offers general informati.0i
and reports on a summary of si
Independent Auditors' Report R
financial statements, and-the Di!
Notes.
Generally Accepted
narrative introductio~f
of the Management'
designed to complen
MD&A can be found
District Administrative Offices
he YorWL,inda Water District for
set forth =by the Governmental
financial report. The District is
ie completeness and the fairness of
We believe that the data presented
manner that we believe necessary
on and activities.
ductory and (2) Financial. The Introductory
's organization and current District activities
results. The Financial section includes the
,ussion and Analysis of the District's basic
,ic financial statements with accompanying
rnnciptes (UAAY) requires that management provide a
id analysis to accompany the financial statements in the form
and Analysis (MD&A) section. This letter of transmittal is
iA and should be read in conjunction with it. The District's
after the Independent Auditors' Report.
The District has recently moved their administrative offices from 4622 Plumosa Drive, Yorba
Linda, CA 92885 to 1717 E. Miraloma Avenue, Placentia, CA 92870 in April 2008. A new
District Headquarters building now provides the much needed room for the administrative staff,
it also puts administration and operations on the same campus.
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 been
providing water and sewer services to the residents of the City of Yorba Linda and surrounding
communities since 1959. The District is governed by a five-member Board of Directors, elected
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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 78 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. The service area lies within most of the City of Yorba Linda and portions
of the cities of Anaheim, Brea, and Placentia. The District includes approximately 14,475 acres
of land comprising 22.6 square miles. The District serves a population of approximately 75,000
and currently provides service to approximately 23,600 residential, commercial, and agricultural
connections.
District Services
Residential customers are 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 Municipal Water District -t Orange County and is
supplemented by groundwater wells within the area. In 208 and 2107, the District provided
24,633 and 25,657 acre-feet of water, respectively.
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 veryft growth, which is projected to continue through
2009 because of the ongoing financial crisis 6W ffiii istressed'*ousing market.
California's water supply continues to-be a concern 'due to "projected population increases and
drought conditions. This concern gas increased #'ocus on the need for conservation as well as •
more efficient irrigation methods and sysbeins
In June 2008, the Governor is~ed Executive girder S-06-08 declaring a statewide drought,
which directed his state agencies aril departments, including the California Department of Water
Resources, to take impiediate action tc~ address the serious drought conditions and water delivery
reductions that existan California
The Yorba Linda Wa >)istrict,s Board of Directors voted on June 26, 2008 to approve a Water
Conservation Resolution fiat asks all customers within its service area to voluntarily reduce their
daily water usage by ten percent. The resolution is in response to California's drought
conditions, and outlines additional steps that the District will be taking to further educate
customers on ways to conserve.
The conservation request is currently voluntary in nature, but if water supplies continue to be
restrained and. voluntary reductions do not occur, mandatory conservation may be implemented
as outlined in the District's 2005 Urban Water Management Plan.
In September 2008, the Department of Water Resources established a Drought Water Bank,
which will purchase water from willing sellers primarily north of the Sacramento-San Joaquin
Valley Delta. This water will then be transferred to areas in southern California that are at risk
of experiencing water shortages next summer.
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Water Conservation Recommendations
• Some ways residential customers can reduce their water use by ten percent voluntary
conservation include:
• Watering lawns one less day each week;
• Turning off water when not needed - while brushing teeth, while soaping up in the
shower, etc.;
• Washing your car at a commercial car wash which must recycle its water;
• Running dishwashers only when full and washers on the appropriate water setting, and
• Repairing all leaky facets and toilets.
Conservation education incentives outlined in the Water Proclamation include:
• Providing table-top placards to restaurants, informing cussto_ that water will only be
served if requested;
• Working with the Placentia-Yorba Unified School' District provide added water
education programs;
• Working with local hotels to request long-term"'=~uestsmuse towels and bed linens; and
• Encouraging customers to take advantage of rebates for certain conservation products.
The current water conservation programs- that the if ct is sponsoring are outline below
and as new programs become available they;. can be. found on the District's website
(www.vlwd.com) under the tab at the top>of page eitled "Conservation".
• Water Conservation Programs
The District has implemented conservation management practices since the late 1980's. District
staff participates in community events and distributes materials to encourage water conservation.
The District offers the following conservation programs:
• Smart Titer 1rrigati6*j andscape Controller
• High Efficiency Clothes-."Washers
• High Efficiency Toilets
• Synthetic Turf
Major Initiatives
The activities of the Board and staff of the District are driven by its Mission Statement: "To
provide reliable, high quality water and sewer services in an environmentally responsible manner
at the most economical cost to our customers."
L To supply clean, wholesome water to the community and provide water for the future.
2. To plan, construct, operate, maintain and upgrade the water system facilities to
adequately serve customer needs.
3. To utilize the District's financial resources in an effective and prudent manner.
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4. To provide quality customer service for District customers.
5. To inform, educate, and communicate with the community on District and water issues •
including conservation awareness.
6. To review and maintain a plan to be proactive in preventative maintenance of the
District's water and sewer systems.
All programs and operations of the District are developed and performed to provide the highest
level of services to its customers.
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 aq `f ted accounting principles.
The District's internal control structure is designed to provide reasonable assurance that these
objectives are met. The concept of reasonable assurance recQ, -:that (1) the cost of a control
should not exceed the benefits likely to be derived, and 'the valuation of costs and benefits
requires estimates and judgments by management.
Budgetary Control
The District Board of Directors adopts an operating aW"! capital budget every two-years. The
budget authorizes and provides the basis for,reporting and.ontrol of financial operations and
accountability for the District's enterprise operations and `capital projects. The budget and
reporting treatment applied to the District is co' sistent with: he accrual basis of accounting and
the financial statement basis. •
Investment Policy
The Board of Directors has adopted.= investment policy that conforms to state law, District
ordinance and resolutionsprudert ii►oney management, and the "prudent person" standards.
The objective of the Investment Policy ts. safety, liquidity and yield.
Water and Sewer Rates and
District policy directiou;.ensures gat all revenues from user charges and surcharges generated
from District customers 3riust sztpport all District operations including capital project funding.
Accordingly, water and se-we' rates are reviewed periodically. Water rates are user charges
imposed on customers for services and are the primary component of the District's revenue.
Water rates are composed of a commodity (usage) charge and a fixed (readiness-to-serve)
charge. Sewer rates are composed of a fixed charge for typical residential usage and a
commercial rate based on proportionate water usage.
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 Diehl, Evans
& Company, LLP has conducted the audit of the District's financial statements. Their
unqualified Independent Auditor's Report appears in the Financial Section.
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Risk Management
• The District is a member of the Association of California Water Agencies Joint Power Insurance
Authority (Authority). 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.
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 polici
Respectfully submitted,
Michael A. Payne
General Manager
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Diand wanik
Finance Director
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FINANCIAL SECTION
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Board of Directors
Yorba Linda Water. District
Yorba Linda, California
INDEPENDENT AUDITORS' REPORT
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We have audited the basic financial statements of the YA
and for the year ended June 30, 2008 as listed in the table
are the responsibility of the District's management. Ot
these basic financial statements based on our audit.
We conducted our audit in accordance with au
of America and the standards applicable to
Standards. Those standards require that we pl
about whether the financial statements,are free
on a test basis, evidence supporting the amour
also includes assessing the accounting principl
as well as evaluating the overall final c 4;state
reasonable basis for our 00,111
In our opinion, the bas%c .financi,
the financial position ofYba Li
and cash flows for the year then
the United States of America.
September 20, 2008
District (the District) as of
se, lasic financial statements
is to express an opinion on
d~tntg ,standards generally accepted in the United States
financial audits contained in Government Auditing
n and perform the audit to obtain reasonable assurance
of material misstatement. An audit includes examining,
is and disclosures in the financial statements. An audit
es .used and significant estimates made by management,
ment-presentation. We believe that our audit provides a
ments referred to above present fairly, in all material respects,
ater District as of June 30, 2008 and the results of its operations
in conformity with accounting principles generally accepted in
In accordance with Government Auditine Standards. we have also issued our report dated
September 20, 2008 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 Auditine Standards and should be considered in assessing
the results of our audit.
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The management's discussion and analysis identified in the accompanying table of contents is not a
required part of the basic financial statements but is supplementary information required by accounting
principles generally accepted in the United States of America. We have applied certain limited
procedures to the management's discussion and analysis, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of this required supplementary
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information. However, we did not audit the management's discussion and analysis and express no
opinion on it.
Our audit was conducted for the purpose of forming an opinion on the District's basic financial
statements. The Introductory Section is presented for purpose of additional analysis and is not a
required part of the basic financial statements. The Introductory Section has not been subjected to the
auditing procedures applied in the audit of the basic financial statements and, accordingly, we express
no opinion on it.
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. The
information has been subjected to the auditing procedures applied :;the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects `I ;relation to the basic financial
statements taken as a whole.
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
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For the year ended June 30, 2008
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 years ended June 30, 2008 and 2007. 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
Water Services
• The District's Water Services 2008 operating loss was
the District's Water Services 2007 operating loss of ($2;
The District's Water Services 2008 net loss '
($1,566,482) greater than the District's W
contributions of $197,255.
Sewer Services
• The District's Sewer Services 2008
District's Sewer Services 2007 onerz
The District's Sewer
$147,304 less than the
($275,662).
Required Financial
This annual report consis
of Revenues, Expenses a
about the activities and p
private sector companies.
10) or $1,463,567 more than
:ontributio, us was ($1,369,227) or
2007 net income before capital
72,106) or $206,022 less than the
ore capital contributions was ($128,358) or
2007 net loss before capital contributions of
s-`of financial statements. The Statement of Net Assets, Statement
in Net Assets and Statement of Cash Flows provide information
of the District using accounting methods similar to those used by
The District's statements consist of four funds, the Water Fund, the Sewer Fund, Improvement District
No. 1, and Improvement District No. 2. 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.
0 See independent auditors' report.
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YORBA LINDA WATER DISTRICT ,
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
For the year ended June 30, 2008 •
Required Financial Statements (Continued)
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 Statem'=bf Cash Flows, which provides
information about the District's cash receipts and cash payme.sits durfng the reporting period. The
Statement of Cash Flows reports cash receipts, cash payments and net chattges in cash resulting from
operations, investing, non-capital financing, and capital and related financii 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.
Financial Analysis of the District
One of the most important questions asked:;about the Distnet's finances is, "Is the District better off or
worse off as a result of this years.atwrties?" TheStatement of Net Assets and the Statement of •
Revenues, Expenses and Changes iii 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 ancl -xpeO'_ +es 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 poiYton. 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.
See independent auditors' report. •
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
S For the year ended June 30, 2008
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 21
through 42.
Statement of Net Assets
Condensed Statements of Net Assets
2008 :007
Change
A
ssets:
Current assets
$ 16,3106;313
$ 23,682,132
$ (7,375,819)
Restricted assets
4?,347,291
23,528,786
23,818,505
Nan-current assets
245,992
599,515
Capital assets, net
153.073 196
131.387.296
21.685,900
Total Assets
572,307
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178,844,206
38,728,101
Liabilities:
A
Liabilities payable from unrestricted currentassets
; 7;565,306
7,529,851
35,455
• Liabilities payable from restricted assets
1,287,195
484,261
802,934
Non-current liabilities
59A17241
24.607.929
34.809,312
Total Liabilities = 68,269,742
32,622,041
35,647,701
Net Assets:
Invested in capital bt
139,677,663
130,994,777
8,682,886
Restricted
14,523,549
13,719,192
804,357
Unrestricted
(4.898.647)
1.508.196
(6.406.843)
Total P
Ass
$149,302,565
$146,222,165
$ 3,080,400
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 $149,302,565 and
$146,222,165 as of June 30, 2008 and 2007, respectively.
By far the largest portion of the District's net assets (94% and 90% as of June 30, 2008 and 2007,
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.
is See independent auditors' report.
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
For the year ended June 30, 2008
Statement of Net Assets (Continued)
At the end of fiscal year 2008, the District showed a negative balance in its unrestricted net assets of
$4,898,647 which indicates that there aren't any reserves to be utilized in future years as compared to a
positive balance of $1,508,196 at the end of fiscal year 2007.
Statement of Revenues, Expenses and Changes in Net Assets
Condensed Statements of Revenues, Expenses and Changes` in Net Assets
2008 2007 Change
Revenues:
Operating revenues $ 21,0 8,191 $ 2014'-015 $
Non-operating revenues 3;Ei42,278 3,821;575
Total Revenues
Expenses:
Operating expenses
Depreciation
Non-operating expenses
Total Expenses
Net Income(Loss) befog
Capital Contributions
Capital contributions
Change in #01 assets
Net assets, beVIRWng of
Net assets, end of ;
(1,019,651)
4,100,051
3,080,400
146,222,165
23,965,990
19,375,218
3,445,868
606,588
23,427,674
538,316
6,913,095
7,451,411
138,770,754
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953,776
(779,297)
174,479
1,254,185
126,858
351,403
1,732,446 •
(1,557,967)
(2,813,044)
(4,371,011)
7,451,411
149,302,565 $ 146,222,165 $ 3,080,400
The statement of revenues, expenses and changes of net assets shows bow the District's net assets
changed during the fiscal years. In the case of the District, net assets increased by $3,080,400 and
$7,451,411 for the fiscal years ended June 30, 2008 and 2007, respectively.
A closer examination of the sources of changes in net assets reveals that:
In 2008, the District's total revenues increased by $174,479, primarily due to an increase in operating
revenues of $953,776 from increased water and sewer services. Additionally, non-operating revenues
decreased by $779,297 primarily due to lower interest rates and more use of cash on extensive projects.
In addition, total expenses increased by $1,732,446, due to increases in imported water costs,
groundwater replenishment, and departmental and operational expenses.
24~I-4,QiA~I
2fJ,629,40
,572 ..7.26
957,491
25,160,120
See independent auditors' report. •
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I YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
is For the year ended June 30, 2008
Statement of Revenues, Expenses and Changes in Net Assets (Continued)
In 2007, the District's total revenues increased by $3,492,400, primarily due to an increase in operating
revenues of $4,965,948 from increased water and sewer services. Additionally, non-operating
revenues increased by $1,526,452 primarily due to higher interest rates and gains on investments. In
addition, total expenses increased by $3,252,287, due to increases in imported water costs,
groundwater replenishment, and departmental and operational expenses.
Capital Assets
At the end of fiscal year 2008 and 2007, the District's investinen capital assets amounted to
$153,073,196 and $131,387,296, respectively, (net of accunxlated depredation). This investment in
capital assets includes land, transmission and distribution systems, reservou•s,'tan ks, pumps, buildings
and structures, equipment, vehicles and construction ta~rocess, etc. Major capital assets additions
during the year included upgrades to the District's pumping plant and the transmission and distribution
system.
Changes in capital asset amounts for 2008 wq%, follows
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Balance
Transfers/
Balance
2007
Additions
Deletions
2008
Capital assets:
Capital assets, not being depreciated 19,036,654 $
21,433,164
$
(10,437,109) $
30,032,709
Capital assets, being dep mciatetl 152,822,705
_
14,266,477
(2,486,982)
164,602,200
Less accumulated dpeciation (40,472,063)
(3,572,726)
2,483,076
(41,561,713)
Total capital ass&k.Ru t $ 131,387,296 $
32,126,915
$
(10,441,015) $
153,073,196
Changes in capital asset amovn#s for 2007-vere as follows:
Balance
Transfers/
Balance
2006
Additions
Deletions
2007
Capital assets:
Capital assets, not being depreciated $ 8,680,187 $
10,511,754
$
(155,287) $
19,036,654
Capital assets, being depreciated 145,039,254
7,842,360
(58,909)
1.52,822,705
Less accumulated depreciation (37,067,758)
(3,445,868)
41,563
(40,472,063)
Total capital assets, net $ 116,651.683 $
14,908,246
$
(172,633) $
131,387,296
Additional information regarding capital assets can be found in Note 5 to the financial statements.
• See independent auditors' report.
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
For the year ended June 30, 2008
Long-term Liabilities
Changes in long-term liabilities for the year ended June 30, 2008 were as follows:
2003 Revenue Certificates
of Participation
2008 Revenue Certificates
of Participation
Subtotal
Add(Less) :
Discount
Premium
Total
Beginning Ending
Balance Additions Reductions Balance
$ 10,070,000 $ $ (210,000) $ 9,860,000
$
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34,995;000
34,995,000
10,070,000
95,000
:j210,000)
44,855,000
(142,148)
5,433
(136,715)
79.2';602
(8,807)
783,795
9,927,852
$
3`;187,602
$ (213,374) $
45,502,080
ebts Iran be found-in Note 7 to the financial statements.
Additional information regarding long-term
Conditions Affecting Current
Management is unaware of any
financial position, net assets,. ox
worldwide financial crists._i is-'
the District will continue to opera
Requests for
toffs that ,±could have a significant impact on the District's
~g results in terms of past and present. But with the ongoing
'as, to the impact it will have, if any, in the future. However,
macially prudent and stable manner.
This financial report is designedz4 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.
•
See independent auditors' report. •
-14-
4
•
•
U
BASIC FINANCIAL STATEMENTS
-15-
YORBA LINDA WATER DISTRICT
STATEMENT OF NET ASSETS
June 30, 2008
(With comparative totals as of June 30, 2007)
ASSETS
CURRENT ASSETS:
UNRESTRICTED ASSETS:
Cash and investments (Note 3)
Cash and investments - annexation (Note 3)
Accrued interest receivable
Accounts receivable - water and sewer services, net
Accounts receivable - property taxes
Construction advances and deposits
Inventory
Prepaid expenses and other deposits
TOTAL UNRESTRICTED ASSETS
RESTRICTED ASSETS:
Cash and investments with fiscal agent (Note 3)
Accrued interest receivable
TOTAL RESTRICTED ASSETS
TOTAL CURRENT ASSETS
NONCURRENT ASSETS:
CAPITAL ASSETS (NOTE 5)
Capital assets, not being debated;;,
Capital assets, being depirated
Less accumulated depieGiation
TOTAL CAPITAL ASSET$V''
OTHER ASSETS:
Deferred charges, net
TOTAL NONCURRENT ASSETS
TOTAL ASSETS
2008
$
758,083
9,630,056
30,329
4,643,394
26,848
643,814
397,985
175,804
06,313
I. V06,313
47,301,937
45,354
-
47,347,291
63,653,604
30,032,709
164,602,200
(41,561,713)
153,073,196
845,507
153,918,703
217,572,307
See independent auditors' report and notes to basic financial statements.
-16-
i 1
2007
$ 2,392,542
16,075,056
125,656
4,517,785
22,651
374,176
174,266
23,682,132
23,502,837
25,949
23,528,786
47,210,918
19,036,654
152,822,705
(40,472,063)
131,387,296
245,992
131,633,288
178,844,206
(Continued)
•
r~
~J
•
YORBA LINDA WATER DISTRICT
•
STATEMENT OF NET ASSETS
(CONTINUED)
June 30, 2008
(With comparative totals as of June 30, 2007)
LIABILITIES 2008
CURRENT LIABILITIES:
PAYABLE FROM UNRESTRICTED CURRENT ASSETS:
Accounts payable and accrued expenses $
5,905,218
Accrued salaries and wages
83,655
Accrued compensated absences (Note 6)
461,979
Customer and other deposits
406,540
Construction advances and deposits
-
4
Deferred credits
707,91
TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS
7,565,306
PAYABLE FROM RESTRICTED ASSETS:
Construction bonding deposits
130,154
Accrued interest payable
579,722
Prepaid connection fees
7,319
Certificates of Participation- current portion (Note 7)
570,000
TOTAL PAYABLE FROM RESTRICTED ASSETS -
1,287,195
TOTAL CURRENT LIABILITIES
8,852,501
LONG-TERM LIABILITIES (LESS CUR 664T POR") (NOTE 7):
Deferred annexation revenue
14,485,] 61
Certificates of Participation (Note 7)
44,932,080
TOTAL LONG -TER vI LIABIL&WS (L9" CURRENT PORTION)
59,417,241
TOTAL
NET ASSETS:
Invested in capital assets, net c
Restricted
Unrestricted
TOTAL NET ASSETS
debt (Note 8)
68,269,742
2007
$ 5,740,638
70,813
445,477
380,371
34,273
858,279
7,529,851
150,176
116,766
7,319
210,000
484,261
8,014,112
14,890,077
9,717,852
24,607,929
32,622,041
139,677,663 130,994,777
14,523,549 13,719,192
(4,898,647) 1,508,196
$ 149,302,565 $ 146,222,165
See independent auditors' report and notes to basic financial statements.
• -17-
YORBA LINDA WATER DISTRICT
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS
For the year ended June 30, 2008
(With comparative totals for the year ended June 30, 2007)
OPERATING REVENUES:
Metered water sales
Sewer maintenance charges
Construction water sales
Irrigation sales
Customer service fees
Rents and royalties
Outside of District water sales
Unmetered water sales
Other charges and services
TOTAL OPERATING REVENUES
OPERATING EXPENSES:
Variable water cost
Personnel services
Supplies and services
TOTAL OPERATING EXPENSES
OPERATING INCOME BEFORE I
2008
$ 19,057,318
1,247,907
292,117
78,340
160,225
49,605
32,518
9,816
_ = . 170,345
10,516,507
5,751,384
4,361,512
_ 20,629,403
468,788
DEPRECIATION
OPERATING LOSS
NONOPERATING REVENUES (EXPENSES)
Property taxes - debt servt,.
Property taxes -operations
Interest and investment earningk',
Other nonoperating revenues
Interest expense
Other expense
TOTAL NONOPERATING REVENUES (EXPENSES)
NET INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS
CAPITAL CONTRIBUTIONS
CHANGES IN NET ASSETS
NET ASSETS - BEGINNING OF YEAR
NET ASSETS - END OF YEAR
See independent auditors' report and notes to basic financial statements.
-18-
3,572,726
(3,103,938)
5,713
1,257,943
1,508,193
270,429
(824,387)
(133,604)
2,084,287
(1,019,651)
4,100,051
3,080,400
146,222,165
$ 149,302,565
•
2007
$ 18,489,306
806,897
332,893
78,897
139,911
41,442
38,876
4,261
211,932
20,144,415
10,703,037
5,276,878
3,395,303
19,375,218
769,197 is
3,445,868
(2,676,671)
5,509
1,180,932
2,180,067
455,067
(468,087)
(138,501)
3,214,987
538,316
6,913,095
7,451,411
138,770,754
$ 146,222,165
is
YORBA LINDA WATER DISTRICT
STATEMENT OF CASH FLOWS
•
For the year ended June 30, 2008
(With comparative totals for the year ended June 30, 2007)
2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $
20,959,151
Cash payments to employees for salaries and wages
(5,7221039)
Cash payments to suppliers of goods and services
(14,699,187)
NET CASH PROVIDED BY OPERATING ACTIVITIES
537,925
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Proceeds from property taxes and assessments
1,253,746
Other revenue =
270,836
Other expenses
(111.929)
NET CASH PROVIDED BY NONCAPITAL FINANCING ACTTVI S
4-.412,653
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES: = =
Property taxes received for debt service
5,713
Proceeds from capital contributions
30,048
Develo ment fees received from developers -
-
p
Acquisition and construction of capital assets
• Proceeds from sales of capital assets
Proceeds from. bond issuance
Bond premium
Payment of bond issuance costs = =
Principal paid on long-term liability
Interest paid on long-term liab~iity
Proceeds from deposits and advances for-constri
NET CASH F
RELATED
BY CAPITAL AND
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale/purchase of investments, net
Interest and investment earnings
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS - END OF YEAR
(21,653,453)
3,499
34,995,000
792,602
(615,757)
(210,000)
(464,595)
(698,109)
12,184,948
11,129,037
1,379,743
12,508,780
26,644,306
23,976,149
$ 50,620,455
2007
$ 19,349.053
(5,252,865)
(12,024,466)
2,071,722
1,182,744
1,182,744
5,509
1,111,145
455,067
(7,842,358)
(205,000)
(468,087)
(695,098)
(7,638,822)
(6,141,276)
2,180,067
(3,961,209)
(8,345,565)
32,321,714
$ 23,976,149
• See independent auditors' report and notes to basic financial statements. (Continued)
-19-
YORBA LINDA WATER DISTRICT
STATEMENT OF CASH FLOWS
(CONTINUED)
For the year ended June 30, 2008
(With comparative totals for the year ended June 30, 2007)
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Operating loss
Adjustments to reconcile operating loss to
net cash provided by operating activities:
Depreciation
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable
Inventory
Prepaid expenses and other deposits
Increase (decrease) in liabilities:
Accounts payable and accrued expenses
Accrued salaries and wages
Accrued compensated absences
Customer and other deposits
Construction advances and deposits
Deferred revenue
Total adjustments
NET CASH PROVIDED BY OPERATING
NONCASH INVESTING, CAPIT
RELATED FINANCING AC`s''
Capital contributions
2008 2007
$ (3,103,938) $ (2,676471)
3,572,726
(125,609)
(23,809)
(1,538)
164,580
i 2,842
16,502
26,169
3,445,868
(797,017)
(46,848)
19.687
3,069,148
24,013
9,385
(618,059)
(357,784)
3,641,863
$ 537,925
4,748,393
$ 2,071,722
$ 3,514,722 $ -
•
C
See independent auditors' report and notes to basic financial statements. •
-20-
•
•
E
NOTES TO BASIC FINANCIAL STATEMENTS
-21-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2008 •
1. 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 utilizes four districts which include Water, Sewer, Improvement District No. 1 and
Improvement District No. 2. Water is provided to the entire service area. Sewer is provided to
about two-thirds of the service area. Improvement District No.,;trovides capital facilities to an
area of approximately 4,700 acres. Improvement District No 2_provides capital facilities to an
area of approximately 3,200 acres. The District's service arira ind ides Yorba Linda and portions
of Placentia, Anaheim, Brea, and areas of unincorporatedOrange Coutaty. The District provides
water and sewer service to approximately 67,000 residents.
2. SUMMARY OF SIGNIFICANT ACCOUNTING
a. Basic Financial Statements:
The basic financial statements are ggmprised o£tlie Comparative Statements of Net Assets, the •
Comparative Statements of Revenue ,Expenses and Changes in Net Assets, the Comparative
Statements of Cash Flows and the notes to the basic financial statements.
111,1
b. Basis of
The accounts ofthe Distract ire an enterprise fund. An enterprise fund is a Proprietary type
fund used to actaunt for operations (a) that are financed and operated in a manner similar to
private business enterpnses _ where the intent of the governing body is that the costs
(expenses, including 4epreciation) 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. The District has elected under Governmental Accounting
Standards Board (GASB) Statement 20, Accounting and Financial Reporting for Proprietary
Funds and Other Governmental Entities That Use Proprietary Fund Accounting, to apply all
GASB pronouncements as well as any applicable pronouncements of the Financial Accounting
Standards Board (FASB), the Accounting Principles Board (APB), or any Accounting Research
Bulletins (ARB) issued on or before November 30, 1989, unless they contradict or conflict
with GASB pronouncements.
See independent auditors' report. •
-22-
P
0
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c. 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". Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows.
•
d. Net Assets:
In the Statement of Net Assets, net assets are
YORBA LINDA WATER DISTRICT
June 30, 2008
• Invested in capital assets, net of related. debt -
accumulated depreciation and reducer bX ,
acquisition, construction, or improvement of
• Restricted net assets -
or laws or regulations
er
is
• Unrestricted net
"invested in cap
When both restricted and
restricted resourcei* unre
e. Operating Revenues
following categories:
consists of capital assets net of
debt that is attributed to the
by external creditors, grantors, contributors,
is amount is all net assets that do not meet the definition of
ts. net of related debt" or "restricted net assets".
Icted resources are available for use, the District may use
resources based on the Board's discretion.
Operating revenues, such as charges for services (water sales) 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 gives (receives) value without directly
receiving (giving) equal value in exchange.
Operating expenses include the cost
depreciation on capital assets. All
nonoperating expenses.
of sales and services, administrative expenses and
expenses not meeting this definition are reported as
• See independent auditors' report.
-23-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
•
(CONTINUED)
June 30, 2008
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
f. Cash and Cash Equivalents:
Substantially all of the District's cash is invested in interest bearing accounts. The District
considers all highly liquid investments with a maturity of three months or less at the time of
purchase to be cash equivalents.
g. Investments and Investment Policy:
The District has adopted an investment policy direc#bk the `IDS trict's General Manager to
deposit funds in financial institutions.
Investments are stated at fair value which represents .-he quoted or stated market value.
Changes in fair value that occur during a fiscal ='t'ear are recognized as investment income
reported for that fiscal year. Investment, income inctudes interest earnings, changes in fair
value, and any gains or losses realized upozl the liquidah6n or sale of investments.
h. Accounts Receivable: •
The District extends credito customers;iz the formal 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 cha~g of $13,431 and $13,713 were made to bad debt expense for the
fiscal years ends June 30, 2(lD8 and 2007, respectively.
i. Property Taxes
The Orange County Asses'sor'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.
See independent auditors' report. •
-24-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
• June 30, 2008
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
i. Property Taxes and Assessments (Continued):
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:
Levy Date:
Due Dates:
Collection Dates:
j. Prepaid Expenses:
January 1
March I
First Installment hTovemb&..,]
Second Installm6ii - March 1
First Installment - December 1
Second Installment:: April 10
Certain payments to vendors reflects costs dep st~u _licable to future accounting periods
and are recorded as prepaid items4n;;.the basic financial statements.
• k. Materials and Supplies Invtory
Inventory consists primarily Qf' materials and supplies used in the construction and
maintenance of the water and suer systems and are stated at cost using the average-cost
method on a first h. first out basis.
1. 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. 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
Transmission and Distribution Plant 5 to 60 years
General Plant 3 to 40 years
• See independent auditors' report.
-25-
YORBA LINDA WATER DISTRICT
June 30, 2008
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
in. 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 $845,507 and $245,992 net of accumulated
amortization of $52,278 and $36,035 at June 30, 2008 and 2007, respectively.
n. Interest Expense:
The District incurs interest charges on the Certificz
$94,357 has been capitalized as an addition to the
June 30, 2008.
o. Compensated Absences:
The District's policy is to permit em]
liability for vested vacation and sick
may carry forward up to one and c
number of sick leave days.
Upon termination or retirex
their current base salary fax
completed the probationary
Permanent
of all unused
p. Deferred Credits:
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
entitled to
Participation. Interest expense of
of construction for the year ended
earned vacation and sick leave. The
n. expense when earned. Employees
`ed vacation days and an unlimited
s are entitled to receive compensation at
except for those employees that have not
ce with the Public Employee's Retirement System
sation at their current base salary for three-eights
Deferred credits represent customer refunds that have not been cashed.
q. 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.
r. 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.
See independent auditors' report.
-26-
•
•
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
• June 30, 2008
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
s. 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.
t. Deferred Annexation Revenue:
The District collects a fee from newly annexed devenpments for all residential and
commercial properties. This fee is in-lieu of the District's share .the I% property tax revenue
which the District no longer received post-Proposition 13. The feei..s a present worth value
required to generate a forty year revenue stream
esluivalent; to the lostproperty tax revenue. It
is calculated based on the fair market value estim. a of 'improved property at the time the
fee is collected and based on the current rate of~turr 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 us6d, 6or r4 al faeii ties in the future if approved by the
Board.
• u. Water and Sewer Sales:
The District recognizes water _and prover *y ce charges based on cycle billings rendered to the
customers each month..
v. Capital
Capital contributions represeAt cash and capital asset additions contributed to the District by
property owners or rolestnte developers desiring services that require capital expenditures or
capacity commitment.
w. Budgetary Policies:
The District adopts a two-year 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.
• See independent auditors' report.
-27-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
x. Reclassification:
Certain prior year information has been reclassified to conform with the current year financial
statement presentation.
y. Use of Estimates:
The financial statements are prepared in conformity
accepted in the United States of America and, accordin
management's best estimates and judgments. Accord.-
estimates.
3. CASH AND INVESTMENTS:
Cash and Investments:
Cash and investments as of
statements of net assets as folio
Current Assets:
Cash and investments-,','-.
Cash and investments - lm et
Restricted Assets:
Cash and investments with fis
Total Cash and Investments
sting principles generally
amounts that are based on
cults could differ from the
in the accompanying comparative
Improvement Improvement
District District
No. 1 No. 2
(545,955) $ 1,304,038 $
9,630,056 -
Total
- $ 758,083
- 9,630,056
33.733.651 - 4.128.550 9.439.736 47.301.937
1-42,817.752 $_x,,304.038 $ 4.U8.550 % 9.439.7 ¢ $ 57.6 0.076
Cash and investments as of June 30, 2008 consisted of the following:
Cash on hand
Deposits with financial institutions
Investments
Total Cash and Investments
See independent auditors' report.
Improvement
Improvement
District
District
Water
Sewer
No.1
No.2
Total
$ 1,200
$ -
$ -
$ -
$ 1,200
(773,386)
827,356
1,224,205
963,796
2,241,971
43.589,938
476.682
2.904.345
8.475.940
55.446.905
42 -17M
",3QJ.Q2B
$ 4_12$,55Q
$ 9.439.736
J57.690,06
•
•
-28-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
is
•
3. 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, crec#'sk, and concentration of credit
risk.
This table does not address investments of debt proceeds field by bond trustees that are governed
by the provisions of debt agreements of the Distriet,'tather than the general provisions of the
California Government Code or the District's investt i~nt policy:
Maximum
Maximum
- maximum
Percentage
Investment
Authorized. Investment Tv De
Iulat ty
of Portfolio *
in One Issuer
Bank or Savings and Loans
years'
None
None
N/A
Local Agency Investment FU IF)
None
$10 million
Orange County Commingled Inv' , nt Pool N/A
None
$1.0 million
California Asset
N/A
None
None
U.S Treasury Bills,
5 years
None
None
U.S. Government
Enterprise Securities
5 years
50%
None
Corporate Bonds
5 years
30%
None
Bankers Acceptances
180 days
10%
30%
Commercial Paper
270 days
25%
10%
* Excluding amounts held by bond trustee that are not subject to California Government Code
restrictions.
N/A - Not Applicable
See independent auditors' report.
-29-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
3. 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;;;;
Authorized Investment Tvve
Cash
U.S. Treasury Bills, Notes and Bonds
U.S. Treasury Obligations
Resolution Funding Corp. (REFCORP)
Prefunded Municipal Bonds
U.S. Government Sponsored
Enterprise Securities
Commercial Paper
Money Market Funds
Certificates of Deposits
Guaranteed Inve
Bankers Accepta
Repurchase Agn
Local Agency In
Disclosures Relating to Interest Rate Risk:
maximum
Maximum
Maximum
Pereecitage
Investment
Mtv
A116va6i
in One Issuer
l~Qne
None
None
Nome
None
None
:<:.,.Ivone
None
None
iTn
None
None
None
None
None
None
None
None
None
None
None
None
?done
None
None
None
None
None
None
None
I year
None
None
30 days
None
None
None
None
None
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.
•
•
See independent auditors' report. is
-30-
YORBA LINDA WATER DISTRICT
•
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
Tune 30, 2008
3. 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, 2008.
•
Remaining Maturity
(in Months)
12 Months
Investment Tvne
;.Total
or Less
Money market funds
$ 9;687,233
$ 9,687,233
Commercial paper
2,495,462
29495,462
California Asset Management Program
6,583,504
6,583,504
U.S. Government Sponsored Enterprise Secures
995,900
995,900
Corporate obligations
3,578,259
3,578,259
Held by bond trustee:
Money market funds
32.106.547
32,106.547
55,446.905
S 55.446 905
Disclosures Relating to
Generally, credit risl
holder of the inves
recognized statistics
required by (where
or debt agreements,
investment type,
Investment Tvne
Money market funds
Commercial paper
California Asset Management
Program
U.S. Government Sponsored
Enterprise Securities
Corporate obligations
Held by bond trustee:
Money market funds
the n k;_that ..issuer of an investment will not fulfill its obligation to the
nt. This;, is measured by the assignment of a rating by a nationally
ing organization. Presented in the following table are the minimum rating
icable) the California Government Code, the District's investment policy,
iae ad al Standard and Poor's credit rating as of year end for each
Minimum
Legal Rating
Total
AAA
$ 9,687 233 $
A-l
2,495,462
N/A
6.583,504
AA
A
AAA AA- A+ A A-1
9,687,233 $ $ $ $ _
- - 2,495,462
6,583,504 -
995,900 995,900 - - -
3,578,259 - 1,099,543 1.146,082 1,332,634
32.106.547 32.106.547 - -
$ 55.446.905 g 49.373.184 $1.09-54-1 $1.14"0 51.33 .634 1.49546?
• See independent auditors' report.
-31-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008 •
3. 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 ofthe_:.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 counterpw".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 ath 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 sec ties through the use of mutual funds
or government investment pool (such as LAIF}
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 fbllowmg lovision `fair deposits: The California Government Code
requires that a financial institutt~n secure deposits made by state or local. governmental units by
pledging securities in an mtdtvided 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 musU' ual at leapt 116%0 of the total amount deposited by the public agencies.
California law also Mows financial institutions to secure District deposits by pledging first trust
deed mortgage notes'hauing a value of 150% of the secured public deposits. The District had
deposits with bank balances of $1,722,724 and $872,197 as of June 30, 2008 and 2007,
respectively. Of the bank balances, up to $100,000 is 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 pro-rata 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.
See independent auditors' report. •
-32-
YORBA LINDA WATER DISTRICT
•
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
3. CASH AND INVESTMENTS (CONTINUED):
Investment in California Asset Management Program:
The California Asset Management Program (the CAMP) is a public joint powers authority which
provides California Public Agencies with investment management services for surplus funds and
comprehensive investment management, accounting and arbitrage rebate calculation services for
proceeds of tax-exempt financings. The CAMP currently offers the Cash Reserve Portfolio, a
short-term investment portfolio, as a means for Public Agencies` to invest these funds. Public
Agencies that invest in the Pool (Participants) purchase shares obeneficial interest. Participants
may also establish individual, professionally managed investment lwounts (Individual Portfolios)
by separate agreement with the Investment Advisor.
•
Investments in the Pools and Individual Portfolios arc
Agencies generally are permitted by California statute.
may limit the size of a Participant's account..,The Pool
constant net asset value of $1.00 per share.-' A :Part
accounts at any time by check or wire transfers B
9:00 a.m. that day. Fair value of the Pool is d2etermn
underlying portfolio.
RESTRICTED ASSETS:
Restricted assets
2007:
Source
Bond proceeds
Bond proceeds
Custodial receipts
Water sales
Taxes, assessments
and interest
;only in investments in which Public
AMP may reject any investment and
to maintain, but does not guarantee, a
°.may withdraw funds from its Pool
for wire transfers must be made by
the fair value per share of the Pool's
are to be used for the following as of June 30, 2008 and
Use
nstruction of assets in
Improvement District No. 1
Construction of assets in
Improvement District No. 2
Custodial costs
Debt service
Construction of capital
assets expansion
2008 2007
$ 4,128,550 $ 4,380,803
9,439,735
796,827
830,278
9,326,500
32,151,901 9.821,483
$ 47.347.291 S 23.528.786
• See independent auditors' report.
-33-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
5. CAPITALASSETS:
Changes in capital assets for the year ended June 30, 2008 is as follows:
Capital assets, not being depreciated:
Land, mineral and water rights
Construction in progress
Total capital assets, not
being depreciated
Capital assets, being depreciated:
Source of supply
Pumping plant
Water treatment plant
Transmission and distribution plant
General plant
Total capital assets,
being depreciated
Less accumulated depreciation foie
Source of supply
Pumping plant
Water treatment plant
Transmission and'siribution plan(
General plant
Total accumulated depreciation
Total capital assets,
being depreciated, net
Total capital assets, net
Balance Balance
Julv 1. 2007 Additions Deletions June 30. 2008
347,490 $ - $ - $
18.689.164 21.433.1641.711 0.437. 109)
19.036,654 21,43 164: ;(:10.437.109)
5,775,67:_ -
-
11,039,20N_,,,.;;;_".:; -
(365,089)
x,594,232 -
4
S
702
3°°3
(37,619)
565
1
582
,
2;
6,627
b0,
)
(
,
,
9.705,775
91769
7 1
(501,709)
1
52.822.705 14.266.477
(2.486.982)
(1,088,039)
(144,358)
-
(2,960,100)
(362,257)
365,089
(500,236)
(117,450)
37,619
(32,076,917)
(2,513,983)
1,578,659
(3.846.771)
(434.678)
501,709
347,490
29.685.219
30.032.709
•
5,775,674
10,674,112
2,556,613
128,314,764
17.281.037
164,602,200 •
(1,232,397)
(2,957,268)
(580,067)
(33,012,241)
(3.779.740)
(40.472.063) (3.572.726) 2,483.076 (41,561.713)
112,350,642 10,693,751 (3,906) 123.040.487
&-131.387.296 &32A26 L5 S(10.44J.015)$ 153.073.196
See independent auditors' report, •
-34-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
•
5. CAPITAL ASSETS (CONTINUED):
Changes in capital assets for the year ended June 30, 2007 is as follows:
•
Capital assets, not being depreciated:
Land, mineral and water rights $
Construction in progress
Total capital assets, not
being depreciated
Capital assets, being depreciated:
Source of supply
Pumping plant
Water treatment plant
Transmission and distribution plant
General plant
Total capital assets,
being depreciated
Less accumulated depreciation
Source of supply
Pumping plant
Water treatment
Transmission and'
General plant
Total accumulated
Total capital assets,
being depreciated, net
Total capital assets, net
June 30, 2008
Balance Balance
Julv 1. 2006 Additions Deletions June 30. 2007
347,490 $ - - $ 347,490
8.332.697 10.511.754'(155.287) 18.689.164
8.680.187 10.3:4.754: (155.287) 19.036.654
5,775,67::
11,039,201 `
9-594 'M
I
145.0394254 7.842.360
(943,680) (144,359)
(2,597,325) (362,775)
(382,787) (117,449)
(29,687,921) (2,397,052)
(3.45 6.045) (424.233)
(37.067.758) (3.445.868)
107.971.496 4.396.492
5,775,674
11,039,201
2,594,232
(25,402) 125,336,627
(33.507) 8.076.971
(58.909) 152.822.705
(1,088,039)
(2,960,100)
- (500,236)
8,056 (32,076,917)
33.507 (3.846.771)
41.563 (40.472.063)
(17.346) 112.350.642
$ 116.651.683 $1.4.908,246, S--- 7? 633.) S 131,,3$.7,2
Depreciation expense for the depreciable capital assets was $3,572,726 and $3,445,868 in 2008
and 2007, respectively.
The District has been involved in various construction projects throughout the year. The balance of
construction in progress at June 30, 2008 and 2007 are $29,685,219 and $18,689,164, respectively.
• See independent auditors' report.
-35-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008 •
6. COMPENSATED ABSENCES:
Compensated absences comprise unpaid vacation leave, sick leave and compensating time off
which is accred as earned. The District's liability for compensated absences is determined
annually.
The following is a summary of changes to compensated absences balances at June 30, 2008:
Balance
balance Due Within
Julv 1. 2007 Earned
Taken 3 30. 2008
One Year
477 372.44 1
445,
S
559321'...:`,-S ' ;:.461.979 $
461
.
_
,
The following is a summary of changes to compensated absences balaneest June 30, 2007:
Balance
Balance Due Within
July 1. 2006 Earned
Taken June 30. 2007
One Year
436.092 s 221.345 _
-2
445.477 $
1.9
445.477
7. LONG-TERM LIABILITIES:
Changes in long-term liabilitiest r the year ended June 30, 2008 were as follows:
•
Begiring'
Ending
Due Within
_B.alance,
Additions Reductions Balance
One Year
2003 Revenue CertifiPaie's
of Participation $ I0,0 0,000 $
- $ (210,000) $ 9,860,000
$ 215,000
2008 Revenue Certificates ,
of Participation -
34.995.000 - 34.995.000
355.000
Subtotal ?``10,070,000
34,995,000 (210,000) 44,855,000
$ 570,000
Add (Less):
Discount (142,148)
- 5,433 (136,715)
Premium -
792.602 (8.807) 783.795
Total __9_927_R52 $
35.7$1&U (?13-3-L4) 5_4.5 5D aW
2003 Revenue Certificates of Participation:
In August 2003, the District 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, commencing April 1, 2004. 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.
See independent auditors' report. •
-36-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
• June 30, 2008
7. LONG-TERM LIABILITIES (CONTINUED):
2003 Revenue Certificates of Participation (Continued):
The annual debt service requirements for the 2003 Revenue Certificates of Participation
outstanding at June 30, 2008 are as follows:
Year Endinp-
Principal
Ierest
Total
2009
$ 215,000 $
459,306
$ 674,306
2010
220,000 453,074
673,074
2011
225,000,H-7:
445,726
670,726
2012
235,00
43<7,382
672,382
2013
2451000
42$;076
673,076
201.4 - 2018
1,3,000 _
1,975,905
3,355,905
2019 - 2023
1,72(1"
1,623,541
3,343,541
2024 - 2028
2,185,b40
1,142,625
3,327,625
2029 - 2033
523,750
3,313,750
2034 - 2038
0.
16.125
661.125
• Subtotal
9060,000
7,505,510
17,365,510
Less: Discount
136.7151
(136.715)
Total , -
$ 9.723.285 $
7.505.5 l Q
$ 17.228-'L9-5
2008 Revenue Certificates of Participation:
In February 2008, the l~istnet issued $34,995,000 2008 Revenue Certificates of Participation for
the purpose of financing tie 2x08 Capital Improvement Projects. The Certificates bear interest
ranging from 4% to 5% payable semiannually on April 1 and October 1, commencing
October 1, 2008. The Term Certificates of $10,885,000 are due on October 1, 2038.
• See independent auditors' report.
-37-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
7. LONG-TERM LIABILITIES (CONTINUED):
2008 Revenue Certificates of Participation (Continued):
The annual debt service requirements for the 2008 Revenue Certificates of Participation
outstanding at June 30, 2008 are as follows:
Year Ending
Principal
prest
Total
2009
$ 355,000 $ 698,528
$ 2,053,528
2010
605,000 528,196
2,133,196
2011
630,000"'i
1,503,496
2,133,496
2012
655,00O
1,477,796
2,132,796
2013
680," 00
1,451',096
2,131,096
2014 - 2018
3,825,000 ;
6,816,980
10,641,980
2019 - 2023
41666-.0001 "
5,971,080
10,631,080
2024 - 2028
5,680,0{J{3
4,921,406
10,601,406
2029 - 2033
7,020,000
3,537,875
10,557,875
2034 -2038
8,845,000
1,658,875
10,503,875
2039
2:040.OOC1
51.000
2,091.000
Subtotal
34,995,000
30,616,328
65,611,328
Add: Premium
783.795
-
783,795
8. NET
The balance of net
2007:
$ 35.778.795 $ 30.616328
$ 66.395.123
assets consisted of the following as of June 30, 2008 and
Capital assets, net
Certificates of participation - current
Certificates of participation - long-term
Unspent proceeds
Net investment in capital assets
See independent auditors' report.
2008 2007
$ 153,073,196 $ 131,387,296
(570,000) (210,000)
(44,932,080) (9,717,852)
32.106.547 9.535.333
139,677.663 $ 130.994.777
-38-
•
•
•
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
•
9. DEFINED BENEFIT PENSION PLAN:
a. Plan Description:
June 30, 2008
The District contributes to the California Employees Retirement System (Ca1PERS), an agent
multiple-employer public employee defined benefit pension plan. Ca1PERS provides retirement
and disability benefits, annual cost-of-living adjustments, and death benefits to plan members
and beneficiaries. Ca1PERS 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 CaIPERS'
annual financial report may be obtained from their Exe_eutive O ice located at, 400 P Street,
Sacramento, CA 95814. _
•
b. Funding Policy:
The contribution rate for plan members in the
is 7% of their annual covered salary e
District employees on their behalf and ixar #
contribute the actuarially determined remnir
members. The required employer contnbut oa
9.471%,7.930% and 6.883%,,respectively. 11
are established by State statute, and -the empl
amended by CaIPERS. For fiscal years 200$,
was $763,653, $613,905 and _$514,003, 'rest
District's required and<actual contributions
10. POST
a1PERS 2.0% at 55 Risk Pool Retirement Plan
iistrict makes these contributions required of
r accot€ilt: Also, the District is required to
mounts necessary to fund the benefits for its
motes fcif fiscal year 2008, 2007 and 2006 were
contribution requirements of the plan members
er contribution rate is established and may be
)07 and 2006 the District's annual contribution
ctively, for Ca1PERS and was equal to the
In addition to a pensiort elan, s'stantially all the District's employees may become eligible for
certain health care benefitsfor those retired employees that attained the age of 50 years and their
dependants and have servedAhe District on a full-time basis for five years. These benefits are
provided through an insurance company whose premiums are based on benefits paid.
The District finances the plans on a pay-as-you-go basis. In 2008 and 2007, the District paid
$103,482 and $81,778, respectively, in post-employment health care benefits, net of retiree
contributions, and had thirteen eligible retired employees in 2008 and twelve eligible retired
employees in 2007.
11. 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).
• See independent auditors' report.
-39-
for each year.
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008 •
11. RISK MANAGEMENT (CONTINUED):
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, 2008, as a member of the Authority, the District participated in the insurance programs
as follows:
• General and auto liability, public officials and emplbyee's `e ti, r and omissions: Total risk
financing self-insurance limits of $1,000,000, cavmbined single limit at $1,000,000 per
occurrence. The District purchased additio 1 excess coverage layers: $49 million for
general, auto and public officials liability, which stcieases the limits on the insurance
coverage noted above.
• Employee dishonesty coverage up to' $100,000 loss includes public employee
dishonesty, forgery or alteration and th0t, disappearance and destruction coverages, subject
to a $1,000 deductible per occurrence
•
• Property loss is paid at :the re_ACe:rnent cost for property on file, if replaced within two
years after the loss, otmerwiw- paid on an actual cash value basis. ACWA JPIA is
self-insured for the :first $51,400, and then purchased excess coverage up to $100 million,
subject to a $l, S(30 de&ctible, except for a $500 deductible on vehicles.
• Boiler and Y;chinery coverage for the replacement cost up to $100 million per occurrence,
subject to var ous,,deducti, s depending on the type of equipment.
• Public officials personal liability up to $100,000 each occurrence, with an annual aggregate
of $100,000 per each elected/appointed official to which this coverage applies, subject to
the terms, with a deductible of $1,000 per claim.
• Workers' compensation insurance up to California statutory limits for all work related
injuries/illnesses covered by California law.
Settled claims have not exceed 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 2008, 2007
and 2006. 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 clams
payable as of June 30, 2008, 2007 and 2006.
See independent auditors' report. •
-40-
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
• June 30, 2008
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
$12,356,642 of open construction contracts as of June 30, 2008
Construction contracts include:
- Total
Cos#ruction
Balance
Appro+ed
Costs
to
Proiect Name
~ritract
to Date
Complete
Design of Hidden Hills Reservoir (2MG)
'S&:322,769
$ 316,314
$ 6,455
Oil well abandonment at Highland Reservoir Site ,179,065
79,302
99,763
Inspection and oversight of oil well abandonment at
Highland Reservoir Site 94,509
69,755
24,754
CM for Highland. Reservoir Replacement (SM)
605,856
47,667
558
189
•
Geotechnical support services for Highland Res -r
,
Replacement 86,200
1,145
85,055
Environmental support services for ffi* nd lteservov
Replacement
22,251
1,602
20,649
Construction of Highlan¢ Reservoir l lacefi*bt (6MG)
9,049,346
329,058
8,720,288
Construction of 18 ino and 36-inch Tr4 ismisszon
Pipelines
1,011,222
807,735
203,487
CM for 18-inch and 36-inch tanchury'Transmission
Pipelines
142,780
138,175
4,605
Design, CM and Inspection of Lakeview Avenue Res.
2,278,114
2,018,992
259,122
CM and inspection of Lakeview Avenue Res.
199,350
21,238
178,112
Lakeview 8 million gallon Reservoir Project
10,642,388
8,691,780
1,950,608
GIS data conversion contract
183,576
74,066
109,510
GIS parcel database 5-year purchase agreement
42,118
16,847
25,271
Zone reconfiguration project
113.676
2.902
110.774
$ 12,616,57$
12.356-64J
Litigation:
In the ordinary course of operations, the District is subject to claims and litigation from outside
parties. After consultation with legal counsel, the District believes the ultimate outcome of such
matters, if any, will not materially affect its financial condition.
• See independent auditors' report.
-41-
•
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-42-
•
•
•
0
•
SUPPLEMENTAL INFORMATION
-43-
YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE NET ASSETS
ASSETS
CURRENT ASSETS:
UNRESTRICTED ASSETS:
Cash and investments
Cash and investments - annexation
Accrued interest receivable
Accounts receivable - water and sewer services, net
Accounts receivable - property taxes
Construction advances and deposits
Inventory
Prepaid expenses and other deposits
TOTAL UNRESTRICTED ASSETS
RESTRICTED ASSETS:
Cash and investments with fiscal agent
Accrued interest receivable
TOTAL RESTRICTED ASSETS
TOTAL CURRENT ASSETS
NONCURRENT ASSETS: _
CAPITAL ASSETS:
Capital assets, not being depreetatl
Capital assets, being dep-miated
Less accumulated deptecation
TOTAL CAPITAL ASSETS ,;NET
OTHER ASSETS:
Deferred charges, net
TOTAL NONCURRENT ASSETS
TOTAL ASSETS
June 30, 2008
Water
$ (545,955) $
9,630,056
20,784
4,377,196
_ 25.360
80,124
397,985
175,804
-4,161,354
33,733,651
-
45,354
33,779,005
47,940,359
27,208,199
102,579,146
(25,432,331)
104,355,014
845,507
105,200,521
153,140,880
Sewer
1,304,038
863
266,198
1,488
563,690
2,136,277
2,136.277
1,103,793
26,933,258
(6,663,721)
21,373,330
21,373,330
23,509.607
•
•
See independent auditors' report. •
-44-
~ 0
•
•
Improvement
District No. 1
5,257
5,257
4,128,550
4,128,550
4,133,807
734,370
17,536,390
(4,637,357)
13,633,403
13,633,403
17,767,210
Improvement
District No. 2 Totals
$ 758.083
9,630.056
3,425 30,329
- 4,643,394
')A Rd8
aal
13 61;449 153,073,196
- 845.507
13,711,449 153,918,703
23,154,610 217,572,307
-45-
YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF NET ASSETS
(CONTINUED)
June 30, 2008
LIABILITIES Water
CURRENT LIABILITIES:
PAYABLE FROM UNRESTRICTED CURRENT ASSETS:
Accounts payable and accrued expenses $ 5,875,858 $
Accrued salaries and wages 76,413
Accrued compensated absences 461,979
Customer and other deposits 70,814
Deferred credits 707 914
TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS
_ 7,192,978
PAYABLE FROM RESTRICTED ASSETS:
_
Construction bonding deposits
86,979
Accrued interest payable
179,722
Prepaid connection fees
7,319
Certificates of Participation - current portion
570,000
TOTAL PAYABLE FROM RESTRICTED ASSETS,.:;;~•`€;-, 1,244,020
TOTAL CURRENT LIABILITIES
8
436
998
,
,
LONG-TERvI LIABILITIES (LESS CURRENT:PORT1£)N)
Deferred revenue
Certificates of Participation
TOTAL LONG-TERMLIBILITIES (I;ESS CURRENT PORTION)
TOTAL LIABILTS
NET ASSETS:
Invested in capital assets, net of related_deit
Restricted -
Unrestricted
TOTAL NET ASSETS
See independent auditors' report.
-46-
14,485,161
44,932,080
59,417,241
67,854,239
•
Sewer
28,129
7,038
335,726
370,893
43,175
43,175
414,068
•
414,068
90,959,481 21,373,330
955,263 -
(6,628,103) 1,722,209
$ 85,286,641 $ 23,095,539
is
•
Improvement
District No, 1
•
Improvement
District No. 2 Totals
1,231 $ 5,905,218
204 83,655
- 461,979
- 406,540
707,914
1,435 7,565,306
1,435
-
44,932,080
59,417.241
-
1,435
68,260,742
13,633,403
13.71 1,4}9 139,677,663
'
4,128,550
9,4397%-'-
14,523,549
5,257
1,990
(4,898,647)
$ 17,767,210
$ 23,153,175
$ 149.302,565
0 -47-
YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS
For the year ended June 30, 2008
OPERATING REVENUES:
Metered water sales
Sewer maintenance charges
Construction water sales
Irrigation sales
Customer service fees
Rents and royalties
Outside of District water sales
Unmetered water sales
Other charges and services
TOTAL OPERATING REVENUES
OPERATING EXPENSES:
Variable water cost
Personnel services
Supplies and services
TOTAL OPERATING EXPENSES
TOTAL OPERATING INCOME BEFORE
DEPECIATION
OPERATING LOSS
NONOPERATING REVENUES (1
Property taxes - debt service
Property taxes - operations
Interest and investment eak ings
Other nonoperating revenues
Interest expense
Other expense
Water Sewer
$
19,057,318
292,11.7
78,340
160,225
49,605
32,518
9,816
_
144,461
19,824,400
ltI516,507
5,168,852
4,010,377
19,695,736
128,664
TOTAL NONOPERATING REVENUES (EXPENSES)
NET INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS
CAPITAL CONTRIBUTIONS
CHANGES IN NET ASSETS
NET ASSETS - BEGINNING OF YEAR
NET ASSETS - END OF YEAR
See independent auditors' report.
-48-
3,060,496
(2,931,832)
1,257,943
1,028,575
224,408
(824,387)
(123,934)
1,562,605
(1,369,227)
3,940,721
2,571,494
82,715,147
$ 85,286,641
$
1,247,907
25,884
1,273,791
582,532
351,135
933,667
340,124
512,230
(172,106)
14,566
29,628
(446)
43,748
(128,358)
1,505,793
1,377,435
21,718,104
$ 23,095,539
•
r
Improvement
District No. 1
Improvement
District No. 2
Totals
$ 19,057,318
1,247,907
292,11.7
78,340
160,225
49,605
751
130,344
134,708
1,508J93
11,065
5,328
270,429
(6,123)
136,037
34l,80T`::i`
21084,287
136,037
341,897
(1,019,651)
(875,201)
(471,262)
4,100,051
(739,164)
(129,365)
3,080,400
18,506,374
23,282,540
146.222,165
$ 17,767,210
$ 23,153,1.75
$ 149,302,565
0 -49-
•
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- 50 -
•
•
,
•
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, 2008
OPERATING EXPENSES:
Variable Water Costs:
Imported water
OCWD replenishment assessment
Fuel and power/pumping
MWD connection charge
Total Variable Water Costs.
Personnel Services:
Unit salaries
Management, supervisor and confidential salaries
Fringe benefits
Director's fees
Salaries - other
Total Personnel Services
Supplies and Services:
Maintenance
Contractual services
Insurance
Data processing
Communications = -
Vehicle expense - - -
Professional services
Utilities
Office expense - r.
Training
Dues and memberships
Travel and conferences
Noncapital equipment
Bad debt expense
Recreation committee
Other
Total Supplies and Services
TOTAL OPERATING EXPENSES
• See independent auditors' report.
-51-
Water
$ 5,550,971 $
3,228,652
1,359,316
377,568
10,516,507
1,326;177
,;,:;1:475,935
41,277
~kU8,852
_ `Y14 -1.2,217
1,321,654
202,495
122,966
185,440
338,473
491,550
32,390
33,979
40,395
25,385
58,511
82,262
12,429
11,571
38,660
4,010,377
$ 19,695,736 $
Sewer Totals
$ 5,550,971
3,228,652
1,359,316
377,568
10,516,507
279,642 2,685,537
138,713 1,364,890
160,317 1,636,252
3,860 45,137
- 19,568
582,532 5,751,384
42,435
1,054,652
146,030
1,467,684
20,027
222,522
5,421
128,387
13,933
199,373
42,791
381,264
47,545
539,095
1,268
33,658
3,357
37,336
2,194
42,589
2,402
27,787
5,258
63,769
9,276
91,538
1,002
13,431
1,144
12,715
7,052
45,712
351,135 4,361,512
933,667 $ 20,629,403
Land, Mineral and Water Rights:
Land
Water rights
Mineral rights
Land rights and easements
Total Land, Mineral and Water Rights
Source of Supply:
Wells
MWD connection
Total Source of Supply
Pumping Plant:
Structures and improvements
Equipment
Total Pumping Plant
Water Treatment Plant:
Structures and improvements
Equipment
Total Water Treatment Plant
Transmission and Distribution Plant:
Mains
Reservoirs and tanks
Service and meter installation
Fire hydrants
Meters
Fire mains
Structure and improvemefft$_,
Total Transmission an&bistril
General Plant:
Structures and improvements
Transportation equipment
Power operated equipment
Communication equipment
Computer equipment
Office furniture
Tools, shops and garage equipment
Other
Store equipment
Total General Plant
Construction in Progress
Total Capital Assets
See independent auditors' report.
YORBA LINDA WATER DISTRICT
SCHEDULE OF CAPITAL ASSETS
For the year ended June 30, 2008
Water
-52-
$ 138,629 $
86,300
63,650
385
288,964
3,868,911
373,938
4,242,849
s -
.3,830,690
2;x:72,272
6.802.962
- = 932,474
804,633
1,737,107
41,329,143
16,129,101
4,633,807
5,575,344
5,117,424
714,886
1.288.070
74,787,775
11,245,398
1,407,416
138,527
565,557
372,212
1,199,069
50,675
4,650
24,949
15,008,453
26,919,235
$ 129,787,345
•
Sewer
58,526
58,526
29,240
29,240
24,166,507
1,759,128
25,925,635
978,383
978.383
1,045,267
$ 28,037,051
is
•
•
Improvement Improvement
District No. 1 District No. 2
753,617
123,514
877,131
588.778
781,868
733,694
1,515,562
370,338
278,354
648,692
Totals
138,629
86,300
63,650
58,911
347,490
5.211.306
231,956
1,520,026
13,669,356
13'.93,1,998
",:128,314,764
825,649
468,55:
12,539,599
-
-
2,385,799
-
138,527
-
-
565,557
-
-
372.212
-
-
1,199,069
-
-
50,675
-
-
4,650
-
-
24,949
825,649
468,552
17,281,037
734,370
986,347
29,685,219
$ 18,270,760
$ 18,5391753
$ 194,634,909
7,614,845
5,822,555
• -53-
•
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-54-
•
•
•
September 20, 2008
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
is
The Board of Dire
Yorba Linda Watei
Yorba Linda, Calii
We have audited 1
and for the year e
We conducted our
of America and
Standards, issued 1
Internal Control O
In planning and I
reporting as a basi
the financial state
District's internal
effectiveness of th,
Our consideration of the i
in the preceding paragraph
might be significant
identified a deficiency in
deficiency.
internal
riot (the District) as of
d September 20, 2008.
ed in the United States
Government Auditiniz
control over financial
ressing our opinion on
he effectiveness of the
ress an opinion on the
L--.:; I over financial reporting was for the limited purpose described
ild not necessarily identify all deficiencies in internal control that
:)ver material weaknesses. However, as discussed below, we
control over financial reporting that we consider to significant
A control deficiency 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
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the District's ability to initiate, authorize, record, process, or
report financial data reliably in accordance with generally accepted accounting principles such that
there is more than a remote likelihood that a misstatement of the District's financial statements that is
more than inconsequential will not be prevented or detected by the District's internal control. We
consider the deficiency described below to be significant deficiency in internal control over financial
reporting.
-55-
•
Internal Control Over Financial Renortine (Continued).
Capital Assets Svstem
A comprehensive capital asset accountability system could provide the District valuable benefits such •
as asset procurement, construction and utilization management, loss control and theft prevention, and
responsible asset stewardship. Currently, the District manages its capital asset construction-in-process
projects in various spreadsheets and a manual ledger system and not in a comprehensive capital asset
accountability system
We recommend that the District acquire a comprehensive capital asset accountability system so that
capital asset construction-in-process additions and deletions can. be entered into the system on an.
ongoing basis as soon as they occur and not in a manual ledger system. This will allow the District to
maintain updated and accurate general ledger balances of capital assets, will automate the depreciation
expense calculations and will provide management with other useful capital asset information
A material weakness is a significant deficiency, or combination of.s ~ iificant deficiencies, that results
in more than a remote likelihood that a material misstatement of ~ancial statements will not be
prevented or detected by the District's internal control.
Our consideration of the internal control over financial retorting was for the Iited purpose described
in the preceding paragraph and would not necessarily identify. , 'deficiencies in internal control that
might be significant deficiencies and, accordingly, would pat disclose all significant deficiencies that
are also considered to be material weaknesses However, we believe that the significant deficiency
described above is not a material weakness.
Compliance and Other Matters
As part •
of obtaining reasonable assurance aboul_whAer the Districts financial statements are free of
material misstatements, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant ag>pents, 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-,pr visions was- not a <nbjective of our audit and, accordingly, we do not express
such an opinion. The cults of our tSts disclosed an instance of noncompliance or other matters that
are required to be reported. nder Government Auditing Standards.
Compliance with Investment
On October 27, 2005, the District adopted resolution 05-11 setting forth the public funds investment
policy for the District. The resolution details the types of investments that the District is permitted to
invest in. At June 30, 2008 and throughout the fiscal year, the District had investments in mutual funds.
Government Code Section 53601 allows local agencies to invest in mutual funds. However, the
District's investment policy does not specifically list mutual funds as a permitted investment.
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.
-56- 0
J
ITEM NO. ;2..
AGENDA REPORT
0 Committee Meeting Date: October 14, 2008
To: Finance-Accounting Committee
From: Michael A. Payne, General Manager
Staff Contact: Diane Cyganik, Finance Director
Sandi Van Etten, Senior Accountant
Reviewed by General Counsel: N/A Budgeted:
Funding Source:
CEQA Account No:
Compliance: N/A Estimated Costs:
Subject: Investment Report for August 2008
N/A Total Budget: N/A
N/A
Job No:
N/A Dept: Bus
SUMMARY:
Government Code Section 53607, et, seq., requires the person delegated to invest funds to
make a quarterly report of the investments to the legislative body.
DISCUSSION:
I am submitting the August 2008 monthly investment report for your information. I will submit a
formal report of the investments for Board action for the quarter ending September 30, 2008
upon approval of the Investment Report.
Below is a chart summarizing the yields as well as terms and maturities for the month of August
2008:
Avg.
Avg. Portfolio
Portfolio
# of
Avg. Term
Month Yield Without
Yield With
Days to
of
Portfolio in
of 2008 Wells Capital
Wells Capital
Maturity
Days
August 1.83%
2.05%
70
21
Below is a chart comparing operating fund interest for current and prior fiscal years:
Actual Interest
Monthly, Operating Fund
Year-to-Date, Operating Fund
08/31/07 08/31/08
$ 6,383 $ 358
$11,879 $ 922
Budget 2007/2008 2008/2009
Interest Budget, Operating Fund, August YTD $14,333 $10,750
Interest Budget, Operating Fund, annual $86,000 $64,500
Interest earned on investments is recorded in the Fund that owns the investment.
r
Investment Summary Comparison
The distribution of investments in the portfolio both in dollars and as a percentage of the total
portfolio by funds is as follows:
Fund Description
Balance
08/31/08
Annexation Fund
9,413,117
17.79%
Water Fund
(3,907,467)
-7.39%
Water R&R Operating Reserve
2,017,617
3.81%
Water Reserve for Capital Projects
149,500
0.28%
Water Restricted for 2008 Debt Service
1,413,102
2.67%
2003 Bond Fund
6
0.00%
2008 Bond Fund
28,659,910
54.18%
Sewer Fund
1,213,843
2.30%
Sewer R&R Operating Reserve
199,035
0.38%
Imp. Dist. No. 1
4,215,518
7.97%
Imp. Dist. No. 2
9.526.809
18.01%
$52.900.990
100.00%,
PRIOR RELEVANT BOARD ACTION(S):
These reports are presented to the Finance-Accounting Committee on a regular basis. Quarterly
Investment Reports are presented to the Board of Directors.
STAFF RECOMMENDATION:
That the Finance-Accounting Committee receive and file the report.
r
0
Market
Value Cost
Cash & Checking Accounts:
$ 849,062 $ 849,062
1,200 1,200
$ 850,262 $ 850,262
Money Market Accounts:
Yorba Linda Water District
Investment Portfolio Report
August 31, 2008
of Total Institution
Wells Fargo Bank
Imprest Cash
1.61% Total
Percent Investment Maturity
Yield Date Date
0.00%
N/A
$ 37,702
$
37,702
Wells Fargo Money Market
0.10% N/A
16,712
16,712
Wells Fargo MM/Annexation
0.10%
$ 54,414
$
54,414
0.10%
Total
0.10%
$ 904,676
$
904,676
1.71%
Sub-total
0.01%
California Asset Mgmt. Program:
$ 6,611,663
$
6,611,663
12.50%
California Asset Mgmt. Program
2.53% N/A
Money Market
Account.
28,659,910
$
28,659,910
US Bank 2008 Revenue Bond
1.72%
6
6
US Bank 2003 Revenue Bond
0.00% N/A
$ 28,659,916
$
28,659,916
54.21%
1.72%
$ 36,176,255
$
36,176,255
68.41%
Sub Total Investments
1.83%
Individual Management Account:
$ 16,724,735 $ 16,705,445 31.59% Wells Capital Management 2.53% N/A
$ 52,900,990 $ 52,881,700 100% Total Investments 2.05%
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.
l ix* V" e_4&1K,
Sandi Van Etten, Senior Accountant
8/31/2008
~ 0
ITEM NO.
WILLS CAPITAL MANAGEMENT
As you know, Wells Fargo and Wachovia announced today that they have signed a
definitive agreement for the merger of the two companies (Press Release:
httDs://www.wellsfareo.com/nress/2008/20081003_Wachovia). Some additional high
level details of the combination are available at:
httns://www.wellsfarLo.com/downloads/ndf/Dress/WFC WACHOVIA 100308.Ddf.
It will take time for the transaction to gain regulatory approval. In the meantime, Wells
Fargo is taking a very thoughtful, disciplined approach to understanding Wachovia's
various businesses and culture, including its investment management firm, Evergreen. As
details become available about the future structure of the investment management
businesses, we will immediately provide them to you.
Wells Capital Management would like to assure clients and consultants that it is `business
as usual' and we are focused on continuing to exceed our clients' expectations in terms of
investment performance and client service.
•
Wells Capital Management - October 3, 2008
0
Account Overview
Yorba Linda Water District
Account #18611500
Funding Date: 10/25/2005
Portfolio Statistics as of: 9/30/2008
Account Characteristics:
Portfolio Yield to Maturity 3.39%
Total Unrealized Gains/(Losses) - Current: (18,376)
is Total Net Realized Gains/(Losses) -Since Inception: 496
Total Long-Term Investments: -
Total Short Duration Investments/Money Market Secs: 16,317,121
Total Market Value: 16,317,121
Total Number of Issues in the Portfolio: 15
MARKET DATA
Overnight Fed Funds Rate: 2.00%
6-Month T-Bill Yield: 0.98%
12-Month T-Note Yield: 1.23%
•
WELLS CAPITAL MANAGEMENT
Portfoleummary Report 4P Yorbs LWI ater District
For the period :09/01/08 to 09/30/08 18611500 '
Portfolio Characteristics Portfolio Breakdown
Market Value: 16,317,120.85 Market Value %of Account
Unrealized G/L: (18,376.21) Agency Discount Note 3,239,900.00 19.86%
Commercial Paper 3,637,665.95 22.29%
Yield To Maturity: 3.39% Floating Rate 1,337,753.30 8.20%
Portfolio Duration: 0.14 Years Money Market Fund 8,101,801.54 49.65%
Pending_Cash 0.06 0.00%
Avg. Days to Maturity: 54 Total 16,317,120.85 100.00%
Avg. Portfolio Credit Quality: Aa1
Market Data 09/30/08 08/31/08
Yields
6 Month Treasury Bill: 1.61% 1.95%
2 Year Treasury Note: 1.96% 2.37%
5 Year Treasury Note: 2.98% 3.09%
Fed Funds Target: 2.00% 2.00%
Effective Maturity Distribution
0.50
P1/MIG1NMIG1/A-1 22.3%
Aaa/AAA 19.9% 0a0
Aa/AA 0.0%
A/A 8.2%
Baa/BBB 0.0% 0.30
Other 0.0%
Cash/Overnights 49.7%
Not Rated 0.0% 0.20
100.0%
0.10
Moody's Ratings-Primary
S&P Ratings-Secondary
Fitch Ratings-Tertiary 0.00
o/n 2 to 90 91 to 180 181 to 1 year 1 to 2 years >2 years
The above information is an estimate of certain investment calculations and does not represent your audited statement of record.
i
a
YORBA LINDA WATER DISTRICT
• Statement of Cash Flows/Earnings for September 2008
I - Beginning Period Balances
As of 8/31/2008
Total Original Cost
16,682,193
+ Net Amort/Accr to Date
23,252
=Adjusted Book Value:
16,705,445
+ Accrued Interest Receivable
19,656
+ Unrealized Gain/(Loss)
(366)
= Total Market Value Plus Accrued Interest
16,724,735
II: Period Income Earned
+ Ending Accrual
21,534
- Begininning Accrual
(19,656)
+ Interest Received
19,234
- Interest Paid at Purchase
-
+ Interest Received at Sale
-
= Interest Earned in Period
21,1121
+ (Amort)/Accr This Period
16,877
= Monthly Portfolio Income I $
37,9901
+ Contributions
186,051
• - Withdrawals
(589,330)
+ Realized Gain/(Loss)
Fees Paid This Period
(2,780)
- Prior Period Unrealized Gain/Loss
(366)
+ End Of Period Unrealized Gain/Loss
(18,376)
+ Net Receipts/Deliveries in Kind
0.00
+ Adjustments
0.00
= Net Change to the Portfolio
(407,192) 1
=Total Market Value Plus Accrued
Interest
16,338,655
III: End of Period Balances As of 9/30/2008
Total Original Cost 16,310,767
+ Net Amort/Accr to Date 24,730
= Adjusted Book Value 16,335,497
+ Accrued Interest Receivable 21,534
+ Unrealized Gain/(Loss) (18,376)
= Total Market Value Plus Accrued
Interest 16,338,655
• Reconciliation Difference: -
Wells Capital Management
Holding Oort • Yorba Liooter District s
Securities Held as of 9/30/08 on a Trade Date Basis 18611500
Identifier Credit Ratings Par Value Security Description Coupon Final Effective Days Duration Market Price Market Market Value Holdings as YTM at
Maturity Maturity to Eff Value Accrued Percentage of Purchase
Maturity Interest Account or Reset
Moody's S&P Fitch
I.Cash&Cash Equivalents(Original maturity of 90 days or less)
Cash
U.S.DOLLARS (0) PENDING CASH (0) (0) 0.00% 0.00%
(0) 0 0.00 0 0 0.00% 0.00%
Money Mkt Securities
Agency Discount Note
31358BK20 AGY AGY AGY 600,000 FNMA 0.000 10/10108 10/10/08 10 0.03 99.990 599,940 599,940 3.68% 2.33%
Commercial Paper
04821TK38 P-1 A-1 NR 500,000 ATLANTIC ASSET SEC CORP 0.000 10/03/08 10/03/08 3 0.01 99.967 499,836 499,836 3.06% 2.71%
2363F6K74 P-1 A-1+ NR 500,000 DANSKE CORPORATION 0.000 10/07/08 10/07/08 7 0.02 99.939 499,693 499,693 3.06% 2.70%
3410BAKVB P-1 A-1 NR 500,000 FLORIDA POWER&LIGHT CO 0.000 10/29/08 10/29/08 29 0.08 99.706 498,530 498,530 106% 2.69%
70017GL30 P-1 A-1 NR 500,000 PARK AVENUE RECEIVABLES 0.000 11103/08 11/03/08 34 0.09 99.573 497,864 497,864 3.05% 2.67%
7588ROKF3 P-1 A-1 NR 500,000 REGENCY MARKETS#1 CPDN 0.000 10/15/08 10/15/08 15 0.04 99.825 499,127 499,127 3.06% 2.96%
922171-1-56 P-1 A-1+ NR 450,000 VARIABLE FUNDING CAPITAL 0.000 11/05/08 11/05108 36 0.10 99.611 448,250 448,250 2.75% 2.82%
Money Market Fund
VP7000038 NR NR NR 8,101,802 WF ADV MONEY MKT TR#645 3.991 10/01108 1 0.00 100.000 8,101,802 8,119,441 49.65% 3.99%
Cash&Cash Equivalents Total 1,350,000 40 0.07 1,337,753 1,341,648 8.20% 2.69%
II.Marketable Securities(Original maturity greater than 90 days)
I/A:Short Term Securities(Remaining maturity of less than 365 days)
Corporate Securities
Corporate Obligation
Floating Rate
617446A82 Al A+ AA- 650,000 MORGAN STANLEY 2.511 11/21/08 11/21/08 52 0.06 98.665 641,321 641,729 3.93% 2.51%
929903AQ5 Al A+ A+ 700,000 WACHOVIA CORP 2.846 10/28/08 10/28/08 28 0.07 99.490 696,432 699,919 4.27% 2.85%
Govt Securities
Gov Agncy Obligation
Money Mkt Securities
Agency Discount Note
313385KS4 AGY AGY AGY 1,000,000 FHLB 0.000 08/21/09 08/21109 325 0.88 97.270 972,700 972,700 5.96% 3.02%
313589FH1 AGY AGY AGY 700,000 FNMA 0.000 05/08/09 05/08/09 220 0.59 98.180 687,260 687,260 4.21% 2.98%
313589GE7 AGY AGY AGY 1,000,000 FNMA 0.000 05/29/09 05/29/09 241 0.65 98.000 980,000 980,000 6.01% 2.91°
Commercial Paper
06737HM55 P-1 A-1+ NR 500,000 BARCLAYS US FUNDING LLC 0.000 12/05/08 12/05108 66 0.18 99.357 496,786 496,786 104% 2.86%
6323AONP9 P-1 A-1+ NR 200,000 NATEXIS BANQUES POP USF CPI 0.000 01/23/09 01/23109 115 0.31 98.790 197,581 197,581 1.21% 3.08%
Short Term Securities Total 4,750,000 174 0.46 4,672,080 4,675,975 28.63% 2.88%
I/8:Long-Term Securities(Remaining maturity greater than 365 days)
Corporate Securities
Marketable Securities Total 4,750,000 174 0.46 4,672,080 4,675,975 28.63% 2.88%
The above information is an estimate of certain investment calculations and does not represent your audited statement of record. Page: 1 of 2
Holdinglaort is Yorba Lin*ter District o6
Securities Held as of 9/30/08 on a Trade Date Basis 18611500
Identifier Credit Ratings Par Value Security Description Coupon Final Effective Days Duration Market Price Market Market Value Holdings as YTM at
Maturity Maturity to Eff Value +Accrued Percentage of Purchase
Maturity Interest Account or Reset
Moody's S&P Fitch
16,401,802 64 0.14 16,317,121 16,338,655 100.00% 3.39%
The above information is an estimate of certain investment calculations and does not represent your audited statement of record. Page: 2 of 2
REPORTING OF
SIGNIFICANT EVENT
IN CONNECTION WITH THE CONTINUING DISCLOSURE OBLIGATIONS:
$10,645,000
YORBA LINDA WATER DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION
(HIGHLAND RESERVOIR RENOVATION AND RICHFIELD PLANT - PHASE 3
RENOVATION PROJECT) SERIES 2003
YORBA LINDA WATER DISTRICT
P.O. Box 309
Yorba Linda, California 92885-0309
$10,645,000
YORBA LINDA WATER DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION
(HIGHLAND RESERVOIR RENOVATION AND RICHFIELD PLANT - PHASE 3
RENOVATION PROJECT) SERIES 2003
MATURITY DATE
(October 1) CUSIP
2009
98618M AF 6
2010
98618M AG 4
2011
98618M AH 2
2012
98618M AJ 8
2013
98618M AK 5
2014
98618M AL 3
2015
98618M AM 1
2016
98618M AN 9
2017
98618M AP 4
2018
98618M AQ 2
2019
986181\1 AR 0
2020
98618NI AS 8
2021
98618M AT 6
2022
98618M AU 3
2023
98618NI AV 1
2028
98618M AW 9
2033
98618M AX 7
REPORTING OF SIGNIFICANT EVENT
(RATING CHANGES)
This Reporting of Significant Event has been prepared to satisfy the obligations of the Yorba
Linda Water District (the "District"), pursuant to Section 5 of that certain Continuing Disclosure
Certificate, dated September 10, 2003 (the "Disclosure Certificate"), executed by the District, in
connection with the execution and delivery of the District's $10,645,000 Revenue Certificates of
Participation (Highland Reservoir Renovation and Richland Plan - Phase 3 Renovation Project) Series
2003 (the "Certificates"), and the requirements of Rule 15c2-12(b)(5)(i)(C) of the Securities Exchange
Act of 1934, as amended. The Certificates have been executed and delivered pursuant to a Trust
Agreement, dated as of August 1, 2003 (the "Trust Agreement"), by and among the District, the Yorba
Linda Water District Public Financing Corporation and U.S. Bank National Association, as Trustee.
As provided in Section 5 of the Disclosure Certificate, this Reporting of Significant Event is
being prepared to be forwarded to each Repository listed on Exhibit A attached hereto. All capitalized
terms used herein shall have the meanings set forth in the Disclosure Certificate.
NOTICE IS HEREBY GIVEN that Fitch Ratings ("Fitch") has downgraded its ratings with
respect to Financial Guaranty Insurance Company ("FGIC"), the insurer with respect to the Certificates.
Fitch has downgraded FGIC's rating to "CCC".
This Reporting of Significant Event may contain information material to Holders and does not
purport to contain all material information with respect to the Certificates or the financial condition of
the District. The information contained in this Reporting of Significant Event is not guaranteed as to
accuracy or completeness.
Dated: October 13, 2008 YORBA LINDA WATER DISTRICT
Michael A. Payne
General Manager VVV
EXHIBIT A
REPOSITORY LIST
The following are the current Nationally Recognized Municipal Securities Information
Repositories as approved by the Securities and Exchange Commission.
Bloomberg Municipal Repository
100 Business Park Drive
Skillman, NJ 08558
Phone: (609) 279-3225
Fax: (609) 279-5962
htto: / /www.bloomberL).com/markets /rates /municontacts.html
Email: Murisna.Bloomberg.COm
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
Phone: (201) 346-0701
Fax: (201) 947-0107
httD://www.MuniFILINGS.com
Email: nrmsir a.docdata.com
Interactive Data Pricing and Reference Data, Inc.
Attn: NRMSIR
100 William Street, 15th Floor
New York, NY 10038
Phone: 212-771-6999; 800-689-8466
Fax: 212-771-7390
http: / /www.interactivedata-t)rd.com
Email: NRMSIR a.interactivedata.com
Standard & Poor's Securities Evaluations, Inc.
55 Water Street
45th Floor
New York, NY 10041
Phone: (212) 438-4595
Fax: (212) 438-3975
httn: / /wwcv.disclosuredirectory.standardandnoors.com/
Email: nrmsir ret)ository(c,sandn.com
EXHIBI'T' A-1
APPLIED BEST PRACTICES
VA v]-m, N 111
Due to Bond Insurer Rating Changes
The major rating agencies (Standard & Poor's, Moody's Investors Service, and Fitch Ratings) are continuing on-going
reviews of all the bond insurers. Many local government agencies have municipal securities which are insured by these
bond insurers. A rating change of a bond insurer may likely trigger the need for a 'Material Event Notification to be
disseminated.
Recent rating changes include:
Aa3, Nehatke Oodook
AA, *Watch Effective
Not Hated, AFithdrawn
Ambac 1 suraaec C;orx>ratiore
t
{9.18-:2(Nlb)
(d-141 ,VOS)
(6-26-20(0
Aaa, \X atc) Effective
AAA, Slahl,Y Outlook
AAA, htAbl Outlook
Assured C;uarann Corp.
(721-266L)
(6-18-2005)
(1,74-2-2007)
Berkshire Harhau-a}
Area, `;t310e Outlook
AAA, Stable Outlook
Not Rated
Ahsurance C;orporati„t)
(2-21-200S)
( 11-2NU)
C;IFG ASrurance Non'h
Bat, Watch Effective
[I, Negative Outlook
CCC, Watch Effective
America, I tic.
(4-26-2604)
)7 .~66()
(J-30-?(16,4)
Financial Cruararrty Inautance
III, Watch Effective
1313, Negative Ontlook
Negative Outlook
Company
(6-2(i-
:.1X18)
(6-6-200e?)
.yl-:.'t)iT<)
t'io:tncial Sacurity Asmcmcc
Aaa, \C'atch Effective
AAA, Negative Watch FATeoive
AAA, Stable Outlook
Inc.
(721-`00,19
(104-20S)
f1-;7r_.~o7~F)
A2, Negative Outlook
AA, Ncgatix c Outt+wk
Not Rued, Al ithdrawn
btI31A Insurance Cut roc+tie,u
i
(6-19-200s)
(h-1,F-u(wb)
(6-36-2007 )
A3, Negative Oudook
1113Bt, Negative Outlook
Not Rated, V irhdr vy n
Radian Asset Assuraw e Im.
9 I ''t111,F•
(c-36-2668)
(i- a- 2.11(/A.')
S%ntora Guarantee Inc.
132, Negative Outlook
131313^, Credit Watch Negative
Not Rated, \X'irhd raven
(forrrMtl}' XL CJJ)4ai)
(S-6-2068)
(6-6-2000?)
(9-.Y-2663)
* Disclaimer - This material is current as of the indicated date. ABP bas not undertaken any obkgation to update this material This material has been
prepared for informational purposes only, is subject to change and is not intended to be used and disseminated forpurposes of secondary market disclosure fAngs.
An email from the SEC's Office of 'Municipal Securities initially indicated that no ;Material Event Notice needed to be
filed due to the widespread press coverage regarding downgraded bond insurers. However, On February 7, 2008, SEC
staff provided guidance on downgrades of insured bonds to the National Association of Bond Lawyers which indicated
that specific action may be necessary including the filing of a Material Event Notice involving a change in rating to any
of the bond insurers. Based on a remark made recently by a SEC staff attorney, issuers of municipal securities should,
in his opinion, file :Material Event Notices when ratings on their municipal securities are downgraded, even if the rating
agencies are not formally notifying Issuers of such downgrades. Action should be based on the requirements set forth
in the continuing disclosure document pertaining to a specific municipal security. After discussion with numerous bond
counsels, the most prudent course of action may be to proceed with a Material Event Notification for municipal
securities insured by downgraded bond insurers.
Npp!icd licst Practiccs, a subsidiary of Fieldman, Rolapp & .-Associates, provides assistance in the preparation and
filing of material event notices and continuing disclosure annual reports. We have been assisting many of our clients in
preparing notices regarding these specific downgrades to ensure full disclosure to the secondary marketplace and
compliance with continuing disclosure requirements. If we can be of assistance, please don't hesitate to call us and ask
for Joshua Lentz (949-660-7320 direct).
02008 Apphed Best Practices, LLC.
19900 MacArthur Blvd., Suite 111111 • Irvine, CA 92612 • phone: 949.660.7300 • Fax: 949.474.8773
September 20, 2008
Board of Directors
Yorba Linda Water District
Placentia, California
We have audited the financial statements of the Yorba Linda Waster District for the year ended
June 30, 2008, and have issued our report thereon dated September 20, 2008. Professional standards
require that we provide you with the following information related to our audit.
Our Responsibility Under Auditing Standards Generally Accepted in the United States of
America:
As stated in our engagement letter dated March 27, 2008, ;our responsibility, as described by
professional standards, is to express an opinion about whether the financial statements prepared by
management with your oversight are fairly presented, in all material respects, in conformity with
accounting principles generally accepted' in the United States of America. Our audit of the financial
statements does not relieve you or management of your responsibilities. Our responsibility is to plan
and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements are
free of material misstatement. As part of our audit, we considered the internal control of the Yorba
Linda Water District. Such considerations were solely for the purpose of determining our audit
procedures and not to provide any assurance: concerning such internal control. We are responsible for
communicating significant matters related to the audit that are, in our professional judgment, relevant
to your responsibilities in overseeing the financial reporting process. However, we are not required to
design procedures specifically to identify such matters.
Planned Scope and Timing of the Audit:
We performed the audit according to the planned scope and timing previously communicated to you in
our meeting about planning matters on July 7, 2008.
Significant Audit Findings:
Oualitative Aspects of Accountin! 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 2 to the
financial statements. No new accounting policies were adopted and the application of existing policies
was not changed during the year ended June 30, 2008. 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. There are no significant transactions that have been recognized in the financial statements
in a different period than when the transaction occurred.
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 by outside sources.
b. The estimated useful lives for capital assets which.are'based on industry standards.
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 .s a.whole.
Difficulties Encountered in Performjng 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. Generally accepted accounting principles requires interest paid on funds borrowed to
finance the costs of capital assets to capitalized as part of the cost . For tax-exempt
borrowings, interest paid less any interest earned on temporary investments of proceeds of
the borrowing is required to be capitalized as part of the capital asset. For the current fiscal
year, construction in progress was understated and interest expense was overstated as the
District did not capitalize interest attributable to the capital assets under construction.
-2-
Significant Audit Findings (Continued):
Disaa-reements 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 Renresentations
We have requested certain representations from management that are included in the management
representation letter dated September 20 2008.
Management Consultations with Other Indenendent Accountants
In some cases, management may decide to consult with other
accounting matters, similar to obtaining a "second opinion" on c
involves application of an accounting principle to the Yorba
statements or a determination of the type of auditor's opinion
statements. our professional standards require the consulting accour
that the consultant has all the relevant facts. To our knowledge, thei
other accountants.
Other Audit Findings or Issues
We generally discuss a variety of
auditing standards, with managemei
auditors. However, these discussioi
and our responses were not a conditi
This information is intended
Linda Water District and is
specified parties.
accountants about auditing and
, tain situations. If a consultation
Linda. Water District's financial
that may be expressed on those
tant to chedk with us to determine
•e were no such consultations with
the application of accounting principles and
retention as the Yorba Linda Water District's
c)rmal course of our professional relationship
the use of the Board of Directors and management of the Yorba
led to be and should not be used by anyone other than these
-3-