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HomeMy WebLinkAbout2017-10-24 - Financing Authority Meeting Agenda PacketAGENDA YORBA LINDA WATER DISTRICT FINANCING AUTHORITY SPECIAL MEETING Tuesday, October 24, 2017, 6:15 PM 1717 E Miraloma Ave, Placentia CA 92870 1. ROLL CALL J. Wayne Miller, President Al Nederhood, Vice President Andrew J. Hall, Director Phil Hawkins, Director Brooke Jones, Director 2. PUBLIC COMMENTS Any individual wishing to address the Board is requested to identify themselves and state the matter on which they wish to comment. If the matter is on the agenda, the Board will recognize the individual for their comment when the item is considered. No action will be taken on matters not listed on the agenda. Comments are limited to matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to three minutes. 3. ACTION CALENDAR This portion of the agenda is for items where staff presentations and Board discussions are needed prior to formal Board action. 3.1. Minutes of the Financing Authority Special Meeting Held August 22, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 3.2. Audit Report for Fiscal Year Ending June 30, 2017 Recommendation: That the Board of Directors receive and file the Comprehensive Annual Financial Report for Fiscal Year Ending June 30, 2017. 4. ADJOURNMENT 4.1. The next regular meeting of YLWD's Financing Authority is scheduled to be held Tuesday, December 12, 2017 at 6:15 p.m. Items Distributed to the Board Less Than 72 Hours Prior to the Meeting Pursuant to Government Code section 54957.5, non-exempt public records that relate to open session agenda items and are distributed to a majority of the Board less than seventy-two (72) hours prior to the meeting will be available for public inspection in the lobby of the District’s business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870, during regular business hours. When practical, these public records will also be made available on the District’s internet website accessible at http://www.ylwd.com/. Accommodations for the Disabled Any person may make a request for a disability-related modification or accommodation needed for that person to be able to participate in the public meeting by telephoning the Executive Secretary at 714-701-3020, or writing to Yorba Linda Water District, P.O. Box 309, Yorba Linda, CA 92885-0309. Requests must specify the nature of the disability and the type of accommodation requested. A telephone number or other contact information should be included so the District staff may discuss appropriate arrangements. Persons requesting a disability-related accommodation should make the request with adequate time before the meeting for the District to provide the requested accommodation. ITEM NO. 3.1 AGENDA REPORT Meeting Date: October 24, 2017 Subject:Minutes of the Financing Authority Special Meeting Held August 22, 2017 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name:Description:Type: 2017-08-22_-_Minutes_-_FA.doc Minutes Minutes Minutes of the YLWD Financing Authority Special Meeting Held August 22, 2017 6:25 p.m. 1 FA-2017-XXX MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCING AUTHORITY SPECIAL MEETING Tuesday, August 22, 2017, 6:25 p.m. 1717 E Miraloma Ave, Placentia CA 92870 CALL TO ORDER The meeting was called to order at 6:23 p.m. 1. ROLL CALL DIRECTORS PRESENT STAFF PRESENT J. Wayne Miller, President Marc Marcantonio, General Manager Al Nederhood, Vice President Brett Barbre, Assistant General Manager Andrew J. Hall, Director Steve Conklin, Engineering Manager Phil Hawkins, Director John DeCriscio, Operations Manager Brooke Jones, Director Gina Knight, HR/Risk and Safety Manager Delia Lugo, Finance Manager Art Vega, Information Technology Manager Annie Alexander, Executive Assistant Malissa Muttaraid, Public Affairs Representative ALSO PRESENT Andrew Gagen, Partner, Kidman Law LLP 2. PUBLIC COMMENTS None. 3. ACTION CALENDAR 3.1. Minutes of the Financing Authority Regular Meeting Held April 25, 2017 Director Hall made a motion, seconded by Director Hawkins, to approve the minutes as presented. Motion carried 5-0. Minutes of the YLWD Financing Authority Special Meeting Held August 22, 2017 6:25 p.m. 2 3.2. Adding the Position of Assistant General Manager to the Financing Authority’s Conflict of Interest Code The Board briefly discussed the reason why this position was previously removed from the District’s other Conflict of Interest Codes. Staff explained that the position was eliminated several years back, and the Codes had been revised to reflect that change. Director Hawkins made a motion, seconded by Director Hall, to approve Resolution No. FA-17-03 adopting a Conflict of Interest Code for the Yorba Linda Water District Financing Authority and rescinding Resolution No. FA-17-02. Motion carried 5-0 on a Roll Call vote. 5. ADJOURNMENT 5.1. The meeting was adjourned at 6:28 p.m. Annie Alexander, Board Secretary ITEM NO. 3.2 AGENDA REPORT Meeting Date: October 24, 2017 To:Board of Directors From:Marc Marcantonio, General Manager Presented By:Delia Lugo, Finance Manager Dept:Finance Prepared By:Delia Lugo, Finance Manager Subject:Audit Report for Fiscal Year Ending June 30, 2017 STAFF RECOMMENDATION: That the Board of Directors receive and file the Comprehensive Annual Financial Report for Fiscal Year Ending June 30, 2017. DISCUSSION: Staff is pleased to present the Board of Directors with the Yorba Linda Water District Financing Authority's Comprehensive Annual Financial Report (CAFR) for the Fiscal Year Ending June 30, 2017. White Nelson Diehl Evans LLP, the Authority's external auditor, have completed their audit of the Yorba Linda Water District Financing Authority for the fiscal year ending June 30, 2017, and have rendered an unqualified (clean) opinion on the attached CAFR. Ms. Daphnie Munoz, Partner of White Nelson Diehl Evans LLP, is in attendance to present the CAFR for the fiscal year ended June 30, 2017. ATTACHMENTS: Name:Description:Type: YLWDFA_CAFR_FY17.pdf Backup Material Backup Material YORBA LINDA WATER DISTRICT FINANCING A UTHORITY (A COMPONENT UNIT OF YORBA LINDA WATER DISTRICT) BASIC FINANCIAL STATEMENTS WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE PERIOD FROM APRIL 11, 2017 TO JUNE 30, 2017 YORBA LINDA WAT ER DISTRICT FINANCING AUTHORITY TA BLE OF CONTENTS June 30, 2017 Page Number Independent Auditors’Report 1 -2 Management Discussion and Analysis (Required Supplementary Information)3 -4 Basic Financial Statements: Statement of Net Position 5 Statement of Revenues, Expenses and Changes in Net Position 6 Statement of Cash Flows 7 Notes to the Basic Financial Statements 8 -12 2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893 Offices located in Orange and San Diego Counties - 1 - INDEPENDENT A UDITORS’REPORT The Board of Directors Yo rba Linda Wa ter District Financing Authority Placentia, California We have audited the accompanying financial statements of the Yorba Linda Water District Financing Authority (the Authority), (a component unit of the Yorba Linda Water District) as of and for the period from April 11, 2017 to June 30, 2017, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’Responsibility Our responsibility is to express an opinion on these basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Authority’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. -2 - Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Authority as of June 30,2017, and the changes in financial position and cash flows thereof for the period from April 11, 2017 to June 30, 2017 in accordance with accounting principles generally accepted in the United States of America. Emphasis of a Matter As described more fully in Note 1A, the basic component unit financial statements present only the Authority and are not intended to present fairly the financial position and results of operations of the Yo rba Linda Wa ter District in accordance with accounting principles generally accepted in the United States of America. Other Matter Report on Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, identified as Required Supplementary Information (RSI) in the accompanying table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the RSI in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the RSI because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Irvine, California October 11, 2017 YORBA LINDA WATER DISTIRCT FINANCING AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2017 -3 - This section of the Authority's annual financial report presents our analysis of the Authority's financial performance during the fiscal year that ended on June 30, 2017. Please read it in conjunction with the financial statements, which follow this section. FINANCIAL HIGHLIGHTS The Authority's net position did not change, as the revenue and interest earned on the money market equaled the expenditures and interest expense on the bonds payable. OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis are intended to serve as an introduction to the Yorba Linda Water District Financing Authority's basic financial statements. The Authority's basic financial statements consist of two components: (I) financial statements and (2) notes to the financial statements. The Authority is a self- supporting entity and follows the enterprise fund reporting. Accordingly, the financial statements are presented using the accrual basis of accounting. FINANCIAL ANALYSIS OF THE AUTHORITY Our analysis of the Authority begins on page 6 of the financial statements. The goal of the Authority is to have the installment contract and interest income receivables remain equal to the amount of outstanding debt in order that its proceeds are available to pay the debt. Thus, net position of the Authority (the difference between the interest income received and the unpaid debt) should be zero. Since the Authority is a financing entity, all of the revenues and principal collected on the investment in Yorba Linda Water District’s Financing Authority's Revenue Bonds, Series 2017A is used to pay the interest and principal on the Bonds resulting in no change in net position. NET POSITION To begin our analysis a summary of the Authority's Statement of Net Position is as follows: Fisc al Year 2017 ASSETS: Interes t rec eivable 211,866$ Installment cont rac t rec eiva lbe: Due in one year 945,000 Due in more than one year 28,390,000 TO TA L ASSETS 29,546,866 LIABILITIE S: Interes t pay able 211,866 Long-t erm Liabilities Due in one year 945,000 Due in more than one year 28,390,000 TO TA L LIA BILITI ES 29,546,866 NE T POSITION -$ YORBA LINDA WATER DISTIRCT FINANCING AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2017 -4 - REVENUES, EXPENSES AND CHANGES IN NET POSITION The interest income of $211,866 was used to pay the interest expense on the bonds. BUDGETARY HIGHLIGHTS The Authority's Board of Directors is not required to adopt a budget. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets -The Authority does not own any capital assets. Long-term Debt -At year-end, the Authority had $29,335,000 in long-term debt. More detailed information about the Authority's long-term debt is presented on page 13 in the Notes to the Financial Statements. CONTACTING THE AUTHORITY’S FINANCIAL MANAGER This financial report is designed to provide our citizens, customers, investors, and creditors with a general overview of the Authority's finances and to demonstrate the Authority's accountability for the money it receives. If you have questions about the report or need additional financial information, contact the Interest receivable 211,866$ Installment contract receivable: Due in one year 945,000 Due in more than one year 28,390,000 TOTAL ASSETS 29,546,866 Interest payable 211,866 Long-term liabilities: Due in one year 945,000 Due in more than one year 28,390,000 TOTAL LIABILITIES 29,546,866 -$ See accompanying notes to the basic financial statements. ASSETS: - 5 - LIABILITIES: YORBA LINDA WATER DISTRICT FINANCING AUTHORITY STATEMENT OF NET POSITION June 30, 2017 NET POSITION OPERATING REVENUES -$ OPERATING EXPENSES - OPERATING INCOME - NONOPERATING INCOME (EXPENSES): Interest income 211,866 Interest expense (211,866) TOTAL NONOPERATING INCOME (EXPENSES)- CHANGE IN NET POSITION - NET POSITION - BEGINNING OF PERIOD - NET POSITION - END OF PERIOD -$ See accompanying notes to the basic financial statements. - 6 - YORBA LINDA WATER DISTRICT FINANCING AUTHORITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION For the period from April 11, 2017 to June 30, 2017 CASH FLOWS FROM OPERATING ACTIVITIES Total operating revenues -$ CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from long-term debt issuance 33,795,529 Loan to the District (33,795,529) NET CASH PROVIDED (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES - NET CHANGE IN CASH AND CASH EQUIVALENTS - CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR - CASH AND CASH EQUIVALENTS - END OF YEAR -$ See accompanying notes to the basic financial statements. YORBA LINDA WATER DISTRICT FINANCING AUTHORITY STATEMENT OF CASH FLOWS For the period from Apirl 11, 2017 to June 30, 2017 - 7 - -8 - YORBA LINDA WAT ER DISTRICT FINANCING AUTHORITY NOTES TO BASIC FINANCIAL STAT EMENTS June 30, 2017 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES: A.Description of the Reporting Entity: The Yorba Linda Water District Financing Authority (the Authority), was organized pursuant to a Joint Exercise of Powers Agreement (the JPA Agreement) between the Yo rba Linda Wa ter District (the District)and California Municipal Finance Authority (CMFA), dated April 11 , 2017. The Authority is statutorily authorized by Article 4 of Chapter 5 of Division 7 of Ti tle 1 of the California Government Code and is empowered under the JPA Agreement to issue its bonds for, among other things, the purposes of the plan of financing described herein. The Authority is an integral part of the reporting entity of the District. The financial activity of the Authority has been included within the scope of the basic financial statements of the District because the Board of Directors of the District is the governing board over the operations of the Authority. Only the financial activity of the Authority is included herein, therefore, these financial statements do not purport to represent the financial position or results of operations of the District. B.Basic Financial Statements: The basic financial statements are comprised of the Statement of Net Position, the Statement of Revenues, Expenses and Changes in Net Position, the Statement of Cash Flows and the notes to the basic financial statements. C.Basis of Presentation: The accounts of the Authority are an enterprise fund. An enterprise fund is a Proprietary type fund used to account for operations (a) that are financed and operated in a manner similar to private business enterprises -where the intent of the governing body is that the costs (expenses) 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. YORBA LINDA WAT ER DISTRICT FINANCING AUTHORITY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 -9 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): D.Measurement Focus and Basis of Accounting: Measurement focus is a term used to describe “which” transactions are recorded within the financial statements. Basis of accounting refers to “when” transactions are recorded regardless of the measurement focus applied. The accompanying financial statements are reported using the economic resources measurement focus, and the accrual basis of accounting. Under the economic measurement focus all assets and liabilities (whether current or noncurrent) associated with these activities are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. E.New Accounting Pronouncements: Governmental Accounting Standards Board (GASB)Current Year Standards: GASB 73 -Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, contains provisions that address employer and governmental nonemployer contributing entities for pensions that are not within the scope of GASB 68, effective for periods beginning after June 15, 2016 and did not impact the Authority. GASB 74 -Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, effective for periods beginning after June 15, 2016 and did not impact the Authority. GASB 77 -Tax Abatement Disclosure, effective for periods beginning after December 15,2015 and did not impact the Authority. GASB 78 -Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, effective for periods beginning after December 15,2015 and did not impact the Authority. GASB 79 -Certain External Investment Pools and Pool Participants, contains certain provisions on portfolio quality, custodial credit risk, and shadow pricing, effective for periods beginning after December 15, 2015 and did not impact the Authority. GASB 80 -Blending Requirements for Certain Component Units, effective for periods beginning after June 15, 2016 and did not impact the Authority. YORBA LINDA WAT ER DISTRICT FINANCING AUTHORITY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 -10 - 1.SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES (CONTINUED): E.New Accounting Pronouncements (Continued): Governmental Accounting Standards Board (GASB) Current Year Standards (Continued): GASB 82 -Pension Issues, effective for periods beginning after June 15, 2016, except for certain provisions on selection of assumptions, which are effective in the first reporting period in which the measurement date of the pension liability is on or after June 15, 2017. GASB Pending Accounting Standards: GASB has issued the following statements,which may impact the Authority’s financial reporting requirements in the future: GASB 75 -Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, effective for periods beginning after June 15, 2017. GASB 81 -Irrevocable Split-Interest Agreements, effective for periods beginning after December 15, 2016 and did not impact the Authority. GASB 83 -Certain Asset Retirement Obligations, effective for periods beginning after June 15,2018. GASB 84 -Fiduciary Activities, effective for periods beginning after December 15,2018. GASB 85 -Omnibus 2017, effective for periods beginning after June 15, 2017. GASB 86 -Certain Debt Extinguishment Issues, effective for periods beginning after June 15, 2017. GASB 87 -Leases, effective for periods beginning after December 15, 2019. F.Cash and Investments: The Authority considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. YORBA LINDA WAT ER DISTRICT FINANCING AUTHORITY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 -11 - 1.SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): G.Investments: Investments are stated at fair value which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. H.Use of Estimates The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and, accordingly, include amounts that are based on management’s best estimates and judgments. Accordingly, actual results could differ from the estimates. 2.INSTALLMENT CONTRACT RECEIVABLE: In May 2017, the Authority issued $29,335,000 of Revenue Bonds, Series 2017A (see Note 3) and loaned the proceeds to the District pursuant to an Installment Purchase Agreement dated May 1, 2017. The loan proceeds were used by the District to refund the District’s 2008 Revenue Certificates of Participation, as well as to provide funds for certain improvements to the District’s Water System. Under the Installment Purchase Agreement, the District agrees to pay the Authority installment payments in an amount sufficient to pay the principal and interest coming due on the Bonds solely from water revenues of the District water system remaining after paying operation and maintenance costs. The balance of the receivable from the District at June 30, 2017, was $29,335,000. For the period from April 11, 2017 to June 30,2017, the receivable of the Authority consists of the following: Balance Balance April 11, 2017 Additions Deletions June 30, 2017 2017 Installment Purchase Agreement $-$29,335,000 $-$29,335,000 YORBA LINDA WAT ER DISTRICT FINANCING AUTHORITY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 -12 - 3.LONG-TERM LIABILITIES: The following is a summary of changes in long-term liabilities of the Authority for the period from April 11, 2017 to June 30,2017: Due Due in Balance Balance Within More Than April 11, 2017 Additions Retirements June 30, 2017 One Ye ar One Ye ar 2017A Revenue Bonds $-$29,335,000 $-$29,335,000 $945,000 $28,390,000 2017A Revenue Bonds: In May 2017, the Authority issued $29,335,000 of Revenue Bonds, Series 2017A to provide funds for the refunding of the District’s 2008 Revenue Certificates of Participation, as well as to provide funds to the District for certain improvements to the District’s Water System. The Bonds bear interest ranging from 3% to 5%, payable semiannually on April 1 and October 1. There is no reserve requirement for the 2017A Bonds. The Bonds are payable solely from installment payments to be made to the Authority from the District, with annual principal payments starting October 1, 2017. The installment payments required from the District are scheduled to provide sufficient monies to retire the revenue bonds as they become due and payable. The balance outstanding on the 2017A Revenue Bonds at June 30,2017 was $29,335,000. The annual debt service requirements for the 2017A Revenue Bonds outstanding at June 30,2017 are as follows: Ye ar Ending Principal Interest To tal 2018 $945,000 $1,196,486 $2,141,486 2019 830,000 1,317,044 2,147,044 2020 860,000 1,283,244 2,143,244 2021 895,000 1,243,669 2,138,669 2022 945,000 1,197,669 2,142,669 2023 -2027 5,480,000 5,211,720 10,691,720 2028 -2032 6,875,000 3,766,373 10,641,373 2033 -2037 8,490,000 2,097,000 10,587,000 2038 -2039 4,015,000 202,025 4,217,025 $29,335,000 $17,515,230 $46,850,230 YORBA LINDA WAT ER DISTRICT FINANCING AUTHORITY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 -13 - 4.SUBSEQUENT EVENTS: In preparing these financial statements, the Authority has evaluated events and transactions for potential recognition or disclosure through October 11, 2017,the date the financial statements were available to be issued.