~r~ Re: Continuing disclosure undertaking of Metropolitan Water District of Salt Lake & Sandy (Utah) CICI: WSGSDWQU727366

Transcription

1 Metropolitan Water District of Salt Lake & Sandy 3430 East Danish Road, Cottonwood Heights, UT Phone: Fax: November 17, 2017 Via electronic submission to Elctronic Municipal Market Access ("EMMA"); emma.msrb.org Re: Continuing disclosure undertaking of Metropolitan Water District of Salt Lake & Sandy (Utah) CICI: WSGSDWQU EMMA: In accordance with the provisions of paragraph (b)(5)(i)(a) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Rule"), the Metropolitan Water District of Salt Lake & Sandy (Utah) (the "District") files the financial statements of the District for June 30, 2017 and 2017 (the "2017 FS") and the Supplemental Continuing Disclosure Memorandum of the District dated on or before December 27, 2017 (the "2017 SCDM"). This letter, the 2017 FS, and the 2017 SCDM constitute the annual financial information and operating data concerning the District to be filed in compliance with the District's obligation under those certain agreements entered into in connection with the offering of the following securities (identified by CUSIP number) described in the following Official Statements: Securities (CUSIP ), _ AF7, AG5, AH3, AJ9, AK.6, AL4, AM2, ANO, AP5, AQ3, ARI, AS9, AT7, AU4, AV2 and AWO BC3, BD1, BE9, BF6, BG4; and BH BL3, BMl, BN9, BP4, BQ2, BRO, BS8, BT6, BU3, BVl, BW9, BX7, BY5, BZ2, CA6, CB4 and CC CDO, CE8, CF5, CG3, CHI, CJ7, CK4, CL2.... Official Statement $107,645,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Project and Refunding Bonds, Series 2012A, dated March 1, $12,105,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Refunding Bonds, Series 2012B, dated March 1, 2012 $5,975,000 Metropolitan Water District of Salt Lake & Sandy (Utah) Water Revenue Bonds, Series 2015A, dated February 17, 2015 $59,200,000 Metropolitan Water District of Salt Lake & Sandy (Utah) Water Revenue Refunding Bonds, Series 2016A, dated May 12, 2016 From November 1, 2016 (the District's last annual filing date on EMMA) to the date of the 2017 SCDM submitted herewith, no event described in paragraph (b)(5)(i)(c) of the Rule has occurred that is required to be disclosed with respect to any of the abovedescribed securities. Sincerely, Metropolitan Water District of Salt Lake & Sandy ~r~ General Manager

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3 Supplemental Continuing Disclosure Memorandum For Metropolitan Water District of Salt Lake & Sandy (Utah) CICI: WSGSDWQU Filed with Electronic Municipal Market Access (EMMA) Submitted and dated as of November 24, 2017 (Annual submission required by December 27, 2017)

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5 Table Of Contents GENERAL... 1 Metropolitan Water District Of Salt Lake & Sandy (Utah)... 1 Contact Person For Metropolitan Water District... 1 The Issues... 1 $107,645,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Project and Refunding Bonds, Series 2012A... 2 $12,105,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Refunding Bonds, Series 2012B... 3 $5,975,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Bonds, Series 2015A... 4 $59,200,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Refunding Bonds, Series 2016A... 5 INFORMATION SPECIFIC TO THE 2012A BONDS AND THE 2012B BONDS... 6 Historical Results Of Operations And Debt Service Coverage... 6 Five Year Financial Summaries... 7 Water Sources Certain Water Facilities Annual Water Sales Audited Financial Information For Fiscal Year INFORMATION SPECIFIC TO THE 2015A BONDS AND THE 2016A BONDS Historical Results Of Operations And Debt Service Coverage Five Year Financial Summaries Page Audited Financial Information For Fiscal Year METROPOLITAN WATER DISTRICT S FINANCIAL STATEMENTS JUNE 30, 2017 AND iii

6 P:\Metro Water District SLC\MWDSLC Master Plan PM\Graphics\Figures\Wall Display-System Facilities\4-2007_Wall Display\MWDSLS-System Facilities Wall Display cdr Provo River Project Watersheds and Upper Basin Collection System GREAT SALT LAKE Olmsted Diversion Jordan Aqueduct Reach No. 3 DESIGN CAPACITY: 120 CFS (78 MGD) FACILITIES: (1) 48-inch Pipe Terminal Reservoir DESIGN CAPACITY: 100 MG FACILITIES: 2/7 MWDSLS 28.6 MG Jordan Aqueduct Reach No. 2 DESIGN CAPACITY: 270 CFS (175 MGD) FACILITIES: (1) 78-inch Pipe South Pipeline DESIGN CAPACITY: 33 MGD (Gravity) 84 MGD (POMA Sleeve Valves) 50% MWDSLS Point of the Mountain Aqueduct (Untreated Water) DESIGN CAPACITY: 151 MGD FACILITIES: (1) 84-inch Pipe (2) 2.5 Miles in Length 2100 South 5400 South Welby Canal Jordan Valley Water Treatment Plant DESIGN CAPACITY: 180 MGD 2/7 MWDSLS 51 MGD Salt Lake City South REDWOOD ROAD Jordan River Jordan River South STATE STREET Salt Lake City 3300 South 4500 South Sandy City Draper 7 Wasatch Blvd Fort Union Blvd Point of the Mountain Water Treatment Plant DESIGN CAPACITY: 70 MGD Little Dell Dam DESIGN CAPACITY: 20,500 AC-FT FACILITIES: (1) 224-foot High Dam (2) Outlet Spillway Big Cottonwood Canyon 8 Salt Lake Aqueduct Little Cottonwood Canyon Terminal Reservoir DESIGN CAPACITY: 175 CFS (113 MGD) FACILITIES: (1) 69-inch Concrete Pipe (2) Alpine Tunnel (3) Various Welded Steel Siphons (4) 42 Miles Total Length (5) 33 Miles Untreated Water (6) 9 Miles Treated Water Little Cottonwood Water Treatment Plant DESIGN CAPACITY: 143 MGD Point of the Mountain Aqueduct (Treated Water) DESIGN CAPACITY: North to South (Gravity) MGD South to North (Pumped) - 80 MGD FACILITIES: (1) 60-inch Welded Steel Pipe (2) 12 Miles in Length 80 DESIGN CAPACITY: 40 MG FACILITIES: (1) Two 20 MG Concrete Reservoirs Salt Lake County Utah County Summit County Salt Lake County Jordanelle Reservoir Deer Creek Dan & Reservoir DESIGN CAPACITY: ,500 AC-FT 314,006 AC-FT Active Pool 3,026 AC-FT Dead Pool Normal year yield to MWDSLS is 20,000 AC-FT FACILITIES: (1) Dam (2) Land Around Reservoir (3) Outlet Works and Spillway RECREATION USE: Managed by Utah State Parks & Recreation OUTLET WORKS CAPACITY: 2,300 CFS Park City SPILLWAY CAPACITY: 5,510 CFS Bureau of Reclamation Facility (Central Utah Project) Operated by Central Utah Water Conservancy District Wasatch County DESIGN CAPACITY: 152,564 AC-FT 149,700 AC-FT Active Pool 2,864 AC-FT Dead Pool 49,700 AC-FT Carry Over 100,000 Association Shares Normal year yield to MWDSLS is 61,700 AC-FT FACILITIES: (1) Dam (2) Land Around Reservoir (3) Outlet Works and Spillway (4) Salt Lake Aqueduct Intake (MWDSLS Facility) RECREATION USE: Managed by Utah State Parks & Recreation OUTLET WORKS CAPACITY: 2 Tube Valves SPILLWAY CAPACITY: 12,000 CFS Bureau of Reclamation Facility (Provo River Project) Operated by Provo River Water Users Association Provo River 40 Heber Jordan Aqueduct Reach No. 1 MWDSLS SERVICE AREA Facilities DESIGN CAPACITY: 270 CFS (175 MGD) FACILITIES: (1) 78-inch Pipe DEER CREEK DAM MURDOCK DIVERSION OLMSTED TUNNEL & SIPHON POINT OF THE MOUNTAIN AQUEDUCT UNTREATED WATER INTAKE JORDAN NARROWS INTAKE & SIPHON 7 ALPINE DRAPER TUNNEL (Salt Lake Aqueduct) 8 MURRAY POWER PLANT INTAKE 9 LITTLE COTTONWOOD & BELL CANYON CREEK INTAKE 10 LITTLE COTTONWOOD WATER TREATMENT PLANT MG RESERVOIR 12 TERMINAL RESERVOIR 13 POINT OF THE MOUNTAIN WATER TREATMENT PLANT 14 OLMSTED DIVERSION 15 JORDAN VALLEY WATER TREATMENT PLANT MG TERMINAL RESERVOIR 17 LITTLE DELL RESERVOIR 18 UTAH LAKE PUMP STATION Jacob Canal JORDAN NARROWS TURBINE & PUMPING PLANT Jordan River Utah Lake Pump Station DESIGN CAPACITY: 769 CFS Total 135 CFS MWDSLS (17.6%) FACILITIES: (1) 4 Vertical Propeller 200 CFS Each (2) 1400 HP Total Provo River Aqueduct DESIGN CAPACITY: 626 CFS Maximum 187 CFS MWDSLS FACILITIES: (1) 21.5 miles of 126-inch and 120-inch diameter welded steel pipe UTAH LAKE North Orem Provo River Provo River Aqueduct Jordan Aqueduct Reach No. DESIGN CAPACITY: 270 CFS (175 MGD) FACILITIES: (1) 72-inch & 66-inch Welded Steel Pipe Olmsted Siphon Provo 14 Provo River 189 Murdock Diversion DESIGN CAPACITY: 550 CFS FACILITIES: (1) Diversion Dam 1 Deer Creek Powerhouse DESIGN CAPACITY: 5 MW FACILITIES: (1) 2-2,475 kw Generators Wasatch County Utah County SYSTEM FACILITIES Metropolitan Water District of Salt Lake & Sandy

7 GENERAL Metropolitan Water District Of Salt Lake & Sandy (Utah) Metropolitan Water District of Salt Lake & Sandy (the Metropolitan Water District ) exists under, and was organized in 1935 under Title 17B, Chapter 2a, Part 6, Utah Code Annotated 1953, as amended, and other applicable provisions of Title 17B, Chapter 2a Utah Code Annotated 1953, as amended. Metropolitan Water District functions as a supplemental wholesale provider of water to Salt Lake City, Utah ( Salt Lake ) and Sandy City, Utah ( Sandy ). Metropolitan Water District supplies approximately 35% to 50% of the treated water used by Salt Lake each year and approximately 50% to 75% of the treated water used by Sandy each year. Metropolitan Water District obtains its principal water supply through its ownership interest in the Provo River Water Users Association. Metropolitan Water District also has two accepted petitions for Central Utah Project Bonneville Unit water. Metropolitan Water District owns and operates two water treatment plants and owns a 2/7 undivided interest in a third water treatment plant. Metropolitan Water District owns or has rights to utilize capacity in various reservoirs and aqueducts and other water facilities. Metropolitan Water District also treats water that belongs to Salt Lake and Sandy. Metropolitan Water District s CICI number is WSGSDWQU Metropolitan Water District maintains an office in Cottonwood Heights, Utah its Web site may be accessed at The information available at this Web site is provided by Metropolitan Water District in the course of its normal operations and has not been reviewed for accuracy or completeness. Such information is not a part of this Supplemental Continuing Disclosure Memorandum. When used herein the terms Fiscal Year[s] 20YY or Fiscal Year[s] End[ed][ing] June 30, 20YY shall refer to the year beginning on July 1 of the year prior to the year indicated and ending on June 30 of the year indicated. Contact Person For Metropolitan Water District As of the date of this Supplemental Continuing Disclosure Memorandum, the chief contact person for Metropolitan Water District is: The Issues Michael J. DeVries, General Manager devries@mwdsls.org Metropolitan Water District of Salt Lake & Sandy 3430 E Danish Rd Cottonwood Heights UT f Metropolitan Water District is providing continuing disclosure on four bond issues issued by Metropolitan Water District. 1

8 1. $107,645,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Project and Refunding Bonds, Series 2012A Bonds dated and issued on: March 1, 2012 CUSIP numbers on the 2012A Bonds are provided below. Background Information. The $107,645,000, Water Revenue Project and Refunding Bonds, Series 2012A, dated March 1, 2012 (the 2012A Bonds ) were awarded pursuant to negotiated sale on February 1, 2012 to Wells Fargo Securities, Charlotte, North Carolina and Citigroup, New York, New York. Zions Public Finance, Inc., Salt Lake City, Utah, acted as Financial Advisor. The 2012A Bonds are fully registered bonds in book entry form only, registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ). DTC is acting as securities depository for the 2012A Bonds. Principal of and interest on the 2012A Bonds (interest payable January 1 and July 1 of each year) are payable by ZB, National Association, dba Zions Bank, Corporate Trust Department, Salt Lake City, Utah ( Zions Bank ), to the registered owners thereof, currently DTC. Optional Redemption. The 2012A Bonds maturing on or after July 1, 2023 are subject to redemption at the election of Metropolitan Water District on July 1, 2022, or on any date thereafter, from such maturities or parts thereof as shall be selected by Metropolitan Water District, at the redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the redemption date. Current Maturity Schedule. Current principal outstanding: $95,270,000 Original issue amount: $107,645,000 Dated: March 1, 2012 $71,655,000 Serial Bonds Due: July 1, as shown below Due July 1 CUSIP Principal Amount Original Interest Rate Due July 1 CUSIP Principal Amount Original Interest Rate 2018 AF7 $6,005, % 2026 AP5 $3,130, % 2019 AG5 6,250, AQ3 3,295, AH3 6,850, AR1 3,255, AJ9 7,180, AS9 3,390, AK6 7,510, AT7 1,150, AL4 8,745, AU4 1,190, AM2 6,670, AV2 4,070, AN0 2,965, $23,615, % Term Bond due July 1, 2037 (CUSIP AW0) Mandatory Sinking Fund Redemption. The 2012A Bonds maturing on July 1, 2037 are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount of such 2012A Bonds to be so redeemed, plus accrued interest to the redemption date, on the dates and in the principal amounts as follows: 2

9 Mandatory Sinking Fund Sinking Fund Redemption Date Requirements July 1, $ 4,275,000 July 1, ,490,000 July 1, ,710,000 July 1, ,945,000 July 1, 2037 (final maturity)... 5,195,000 Total... $23,615, $12,105,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Refunding Bonds, Series 2012B Bonds dated and issued on: April 3, 2012 CUSIP numbers on the 2012B Bonds are provided below. Background Information. The $12,105,000, Water Revenue Refunding Bonds, Series 2012B, dated April 3, 2012 (the 2012B Bonds ) were awarded pursuant to negotiated sale on March 6, 2012 to Wells Fargo Securities, Charlotte, North Carolina and Citigroup, New York, New York. Zions Public Finance, Inc., Salt Lake City, Utah, acted as Financial Advisor. The 2012B Bonds are fully registered bonds in book entry form only, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2012B Bonds. Principal of and interest on the 2012B Bonds (interest payable January 1 and July 1 of each year) are payable by Zions Bank, to the registered owners thereof, currently DTC. No Optional Redemption. The 2012B Bonds are not subject to redemption prior to maturity. Current Maturity Schedule. Current principal outstanding: $6,870,000 Original issue amount: $12,105,000 Dated: April 3, 2012 Due: July 1, as shown below Due July 1 CUSIP Principal Amount Original Interest Rate Due July 1 CUSIP Principal Amount Original Interest Rate 2018 BC3 $1,155, % 2021 BF6 $1,240, % 2019 BD1 1,175, BG4 1,305, BE9 1,225, BH2 770, (The remainder of this page has been intentionally left blank.) 3

10 3. $5,975,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Bonds, Series 2015A Bonds dated and issued on: February 17, 2015 CUSIP numbers on the 2012A Bonds are provided below. Background Information. The $5,975,000, Water Revenue Bonds, Series 2015A, dated February 17, 2015 (the 2015A Bonds ) were awarded pursuant to negotiated sale on February 3, 2015 to George K. Baum & Company, Kansas City, Missouri. Zions Public Finance, Inc., Salt Lake City, Utah, acted as Financial Advisor. The 2015A Bonds are fully registered bonds in book entry form only, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2015A Bonds. Principal of and interest on the 2015A Bonds (interest payable January 1 and July 1 of each year) are payable by Zions Bank, to the registered owners thereof, currently DTC. Optional Redemption. The 2015A Bonds maturing on or after July 1, 2025 are subject to redemption at the election of Metropolitan Water District on July 1, 2024, or on any date thereafter, from such maturities or parts thereof as shall be selected by Metropolitan Water District, at the redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the redemption date. Current Maturity Schedule. Current principal outstanding: $5,505,000 Original issue amount: $5,975,000 Dated: February 17, 2015 Due: July 1, as shown below Due July 1 CUSIP Principal Amount Original Interest Rate Due July 1 CUSIP Principal Amount Original Interest Rate 2018 BL3 $240, % 2027 BV1 $330, % 2019 BM1 250, BW9 340, BN9 255, BX7 355, BP4 265, BY5 370, BQ2 270, BZ2 385, BR0 280, CA6 400, BS8 295, CB4 415, BT6 305, CC2 435, BU3 315, (The remainder of this page has been intentionally left blank.) 4

11 4. $59,200,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Refunding Bonds, Series 2016A Bonds dated and issued on: May 12, 2016 CUSIP numbers on the 2016A Bonds are provided below. Background Information. The $59,200,000, Water Revenue Refunding Bonds, Series 2016A, dated May 12, 2016 (the 2016A Bonds ) were awarded pursuant to competitive bond sale held on the Parity electronic bid submission system on April 28, 2016 to J. P. Morgan Securities LLC, New York, New York at a true interest rate of 2.21%. Zions Public Finance, Inc., Salt Lake City, Utah, acted as Municipal Advisor. The 2016A Bonds are fully registered bonds in book entry form only, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2016A Bonds. Principal of and interest on the 2016A Bonds (interest payable January 1 and July 1 of each year) are payable by Zions Bank, to the registered owners thereof, currently DTC. Optional Redemption. The 2016A Bonds maturing on or before July 1, 2025 are not subject to redemption prior to maturity. The 2016A Bonds maturing on or after July 1, 2026 are subject to redemption at the election of the Metropolitan Water District on January 1, 2026 or on any date thereafter, from such maturities or parts thereof as shall be selected by the Metropolitan Water District, at the redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the redemption date. Current Maturity Schedule. Current principal outstanding: $59,200,000 Original issue amount: $59,200,000 Dated: May 12, 2016 Due: July 1, as shown below Due July 1 CUSIP Principal Amount Original Interest Rate Due July 1 CUSIP Principal Amount Original Interest Rate 2024 CD0 $3,925, % 2028 CH1 $9,250, % 2025 CE8 8,025, CJ7 9,475, CF5 8,425, CK4 5,425, CG3 9,025, CL2 5,650, (The remainder of this page has been intentionally left blank.) 5

12 INFORMATION SPECIFIC TO THE 2012A BONDS AND THE 2012B BONDS Historical Results Of Operations And Debt Service Coverage The following table represents the historical operating results and debt service coverage of Metropolitan Water District for the following Fiscal Years. Fiscal Year Ended June (1) 2013 Water deliveries (in acre feet) 86,706 71,195 70,142 76,342 82,903 Revenues: Water sales.. $ 20,259,556 $ 17,613,138 $ 15,541,662 $ 15,889,571 $ 15,922,220 Special assessment (2) 12,248,671 12,246,768 12,238,943 12,220,261 12,215,073 Property tax revenues (3) 11,717,539 11,645,715 11,094,954 11,115,082 9,995,985 Transfers from property taxes (4) (981,486) (1,054,434) (957,681) (1,117,886) Water treatment 1,049, , , , ,949 Interest income 439, , , , ,022 Other (5) 470, ,489 64, ,588 99,284 Total revenues 45,202,855 41,651,308 38,805,622 38,865,295 39,153,533 Operating expenses (6): Cost of sales and services 11,141,747 10,948,959 10,887,426 11,299,766 10,592,203 General and administrative 1,851,563 2,060,071 1,832,579 1,858,837 1,741,564 Total operating expenses 12,993,310 13,009,030 12,720,005 13,158,603 12,333,767 Available for debt service $ 32,209,545 $ 28,642,278 $ 26,085,617 $ 25,706,692 $ 26,819,766 Debt service: Debt service (7) $ 15,762,269 $ 17,622,984 $ 17,387,727 $ 17,470,263 $ 16,361,599 Debt service coverage 2.04X 1.63X 1.50X 1.47X 1.64X Rate coverage requirement 1.15X 1.15X 1.15X 1.15X 1.15X (1) Restated in June (2) Special assessments to Salt Lake City and Sandy City are not subject to water sales. (3) Property tax revenues are not pledged to the payment of debt service, but may be used for operation and maintenance expenses. (4) Contributions from District s property tax revenues to other entities who have established redevelopment agencies. (5) Includes aqueduct capacity rentals, laboratory fees, and other miscellaneous revenues from the District s basicfinancial statements (does not include gains or loss on sale of capital assets, investment in Provo River Water Users Association or value of investments). (6) Does not include depreciation and amortization. (7) A portion of the existing debt service consists of variable rate debt. All of the variable rate bonds has been swapped into a synthetic fixed rate. (Source: Metropolitan Water District.) (Source: Information extracted from the financial statements of the Metropolitan Water District by Zions Public Finance, Inc.) 6

13 Five Year Financial Summaries The summaries contained herein were extracted from Metropolitan Water District s annual Financial Statements for Fiscal Years 2017 through The summaries have not been audited. (The remainder of this page has been intentionally left blank.) 7

14 Metropolitan Water District of Salt Lake & Sandy Statements of Net Position (This summary has not been audited) As of June (1) 2013 Assets and deferred outflows of resources Current assets: Cash and cash equivalents $ 10,921,196 $ 6,916,947 $ 5,405,260 $ 9,895,169 $ 9,739,301 Accounts receivable 2,720,431 2,482,308 3,956,483 2,120,348 2,359,149 Supplies 184, , , , ,953 Prepaid expenses and other receivables 85, , , , ,158 Total current assets 13,912,248 10,224,380 9,662,165 12,383,827 12,502,561 Noncurrent assets: Restricted assets: Investments 18,619,653 18,563,473 18,323,817 12,031,620 10,107,080 Cash and cash equivalents 15,257,829 16,688,925 21,305,570 24,912,231 29,660,394 Total restricted assets 33,877,482 35,252,398 39,629,387 36,943,851 39,767,474 Capital assets, net ,170, ,522, ,854, ,906, ,019,680 Investment in Provo River Water Users Association 147,606, ,273, ,421,878 42,420,570 40,652,684 Investment in Utah Lake Water Users Association 2,372,689 2,372,689 2,372,689 2,372,689 2,372,689 Net pension asset ,277 Total non current assets 535,027, ,421, ,280, ,643, ,812,527 Total assets 548,939, ,645, ,942, ,027, ,315,088 Deferred outflows of resources: Deferred charge on bond refundings... 12,678,481 13,807,613 11,490,604 12,400,576 13,310,549 Deferred outflow on interest rate swap agreement 12,001,767 17,200,298 13,080,497 12,279,518 11,964,423 Deferred outflows relating to pensions.. 1,397,387 1,193, , ,719 Total assets and deferred outflows of resources $ 575,017,436 $ 577,847,397 $ 576,907,163 $ 468,028,030 $ 470,590,060 Liabilities and net position Current liabilities: Bonds payable, current. $ 7,110,000 $ 6,855,000 $ 6,410,000 $ 6,045,000 $ 5,780,000 Accounts payable 4,353,382 3,191,299 1,868,100 2,311,008 2,530,898 Accrued interest payable 3,807,315 3,299,047 4,609,413 4,667,032 4,782,532 Accrued expenses.. 604, , , , ,669 Total current liabilities 15,875,055 14,010,991 13,658,172 13,765,049 13,778,099 Long term liabilities: Bonds payable net of current portion. 225,645, ,755, ,730, ,165, ,210,000 Unamortized bond premium, net of discounts 24,026,848 25,427,392 25,208,170 25,950,833 27,464,114 Interest rate swap agreement 12,101,767 17,200,298 13,080,497 12,279,518 11,964,423 Net pension liability. 2,672,780 2,402,950 1,815,618 2,256,698 Total long term liabilities 264,446, ,785, ,834, ,652, ,638,537 Total liabilities ,321, ,796, ,492, ,417, ,416,636 Deferred inflows of resources: Deferred inflows relating to pensions , , ,622 Total liabilities and deferred inflows of resources 280,694, ,040, ,725, ,417, ,416,636 Net position: Unrestricted. 175,904, ,124, ,488,573 64,219,710 62,419,447 Net invested in capital assets ,259,819 96,233,918 90,481,052 93,530,031 92,847,195 Restricted 15,257,829 14,448,881 15,212,459 14,861,191 14,906,782 Total net position 294,422, ,806, ,182, ,610, ,173,424 Total liabilities, deferred inflows of resources and net position $ 575,117,436 $ 577,847,397 $ 576,907,163 $ 468,028,030 $ 470,590,060 (1) Information has been restated in the 2015 financial statements. (Source: Information taken from Metropolitan Water District s financial statements compiled by Zions Public Finance, Inc. This summary itself has not been audited.) 8

15 Metropolitan Water District of Salt Lake & Sandy Statements of Revenues, Expenses, and Changes in Net Position (This summary has not been audited) Fiscal Year Ended June (1) 2013 Operating revenues: Water sales $ 20,259,556 $ 17,613,138 $ 15,541,662 $ 15,889,571 $ 15,922,220 Water treatment 1,049, , , , ,949 Total operating revenues 21,308,651 18,361,234 16,122,909 16,258,073 16,491,169 Operating expenses: Cost of sales and services... 11,141,747 10,948,959 10,887,426 11,299,766 10,592,203 Depreciation 10,686,523 10,751,104 10,679,989 10,246,350 10,232,996 General and administrative 1,851,563 2,060,071 1,832,579 1,858,837 1,741,564 Total operating expenses 23,679,833 23,760,134 23,399,994 23,404,953 22,566,763 Operating loss (2,371,182) (5,398,900) (7,277,085) (7,146,880) (6,075,594) Non operating revenues (expenses): Special assessment revenue 12,248,671 12,246,768 12,238,943 12,220,261 12,215,073 Property tax revenues 11,717,539 11,645,715 11,094,954 11,115,082 9,995,985 Gain (loss) on disposal of capital assets 622,381 17,300 68,207 22,000 Interest income 439, , , , ,022 Other revenue. 470, ,489 64, ,110 98,014 Unrealized gain (loss) on investments... (170,490) 47,096 28, ,593 (161,764) Gain (loss) on investment in Provo River Water Users Association (4,926,465) (4,407,656) 104,395,563 (1,378,050) (1,454,074) Interest expense (8,432,739) (9,923,111) (10,258,442) (9,891,605) (10,683,373) Laboratory fees 1,478 1,270 Total non operating revenues (expenses), net 11,968,377 10,078, ,805,918 12,638,253 10,385,153 Income before contributions 9,597,195 4,679, ,528,833 5,491,373 4,309,559 Contributions to other governments (981,486) (1,054,434) (957,681) (1,117,886) Change in net position.... 8,615,709 3,624, ,571,152 4,373,487 4,309,559 Net position, beginning of year (as restated) ,806, ,182, ,610, ,237, ,863,865 Net position, end of year $ 294,422,596 $ 285,806,887 $ 282,182,084 $ 172,610,932 $ 170,173,424 (1) Information has been restated in the 2015 financial statements. (Source: Information taken from Metropolitan Water District s financial statements compiled by Zions Public Finance, Inc. This summary itself has not been audited.) 9

16 Water Sources Metropolitan Water District derives its source of water through various ownership and contractual interests in Little Cottonwood Creek ( LCC ), the Provo River Project ( PRP ), the Central Utah Project ( CUP ), and the Ontario Drain Tunnel ( ODT ) as further described below: Metropolitan Water District s member cities, Salt Lake City and Sandy City, own water rights in LCC that, by contract, are utilized by Metropolitan Water District to be treated and conveyed to the member cities and others. Metropolitan Water District owns 61,700 shares of the 100,000 authorized and outstanding shares of stock of the PRP. These shares entitle Metropolitan Water District to receive 61.7% of PRP annual water supply, or 61,700 acre feet ( AF ) in most water years. Metropolitan Water District has petitioned for 20,000 AF annually of CUP water. This petition is with the Central Utah Water Conservancy District. Metropolitan Water District, on behalf of Sandy City, purchased water rights in ODT. This water supply is a part of the Provo River system and is utilized in conjunction with other available resources. The following table sets forth the amounts (in acre feet) of water actually obtained by Metropolitan Water District from the various sources: % change Fiscal Year LCC PRP CUP ODT Total from prior year ,076 55,746 19,432 2,645 96, % ,247 51,249 11,712 3,000 85, ,109 26,501 26,303 3,120 76, ,735 27,435 19,492 3,125 72,787 (21.8) ,865 47,922 19,491 3,776 93, Note: The variation in amounts of CUP water reflects seasonal weather and water use patterns due to this report being based on a Fiscal Year basis. The annual water year amount (November 1 thru October 31) for CUP water is 20,000 acre feet. (Source: Metropolitan Water District.) Certain Water Facilities Little Cottonwood Water Treatment Plant. Metropolitan Water District s Little Cottonwood Water Treatment Plant treats water from the Salt Lake Aqueduct belonging to Metropolitan Water District and others, as well as water from Little Cottonwood and Bell Canyon Creeks belonging to Salt Lake City and Sandy City. The Little Cottonwood Water Treatment Plant capacity is 143 million gallons per day ( MGD ). Point of the Mountain Water Treatment Plant. Metropolitan Water District s Point of the Mountain Water Treatment Plant treats water from the Provo River Aqueduct and the Jordan Aqueduct belonging to Metropolitan Water District and others. The treatment capacity is 70 MGD. Jordan Valley Water Treatment Plant. Metropolitan Water District owns 2/7ths (or approximately 28.57%) of the capacity of the Jordan Valley Water Treatment Plant which treats water from the Provo River Aqueduct and the Jordan Aqueduct belonging to Metropolitan Water District and others. Metropolitan Water District s portion of the treatment capacity is approximately 51 MGD. 10

17 Jordan Narrows Pump Station and Turbine. Metropolitan Water District meets its obligations set forth in an exchange agreement with Utah Lake Distributing Company by furnishing water through the Jordan Narrows Pump Station and Turbine facilities. The pumping capacity is approximately 135 cubic feet per second ( cfs ). (The remainder of this page has been intentionally left blank.) 11

18 Annual Water Sales Metropolitan Water District of Salt Lake & Sandy Fiscal Year Salt Lake City Sandy City Other (1) Rate Per Acre Feet (2) Totals Acre Acre Acre July October Acre Revenue Feet Revenue Feet Revenue Feet September June Revenue Feet (3) 2017 $ 14,789,476 50,554 $ 5,470,080 23,894 $ 1,049,095 12,258 $ 316 $ 316 $ 21,308,651 86, ,649,968 43,924 4,963,170 17, ,096 10, ,361,234 71, ,628,791 44,726 3,917,683 15, ,937 10, ,127,410 70, ,853,977 51,095 4,035,594 17, ,860 7, ,258,431 76, ,399,714 53,797 3,522,506 18, ,949 10, ,491,169 82,903 (1) (2) (3) This volume amount (in acre feet) includes water sales (of Metropolitan Water District supplies) to irrigation entities. This revenue amount includes water sales to irrigation entities and treatment and conveyance charges to others for Metropolitan Water District treating and conveying the other entities supplies. The rate per acre foot (currently $316) only applies to a portion of the Other sales. In Fiscal Year 2017, a new water sales approach for the Metropolitan Water District s member cities (Salt Lake City and Sandy City) was implemented. This new approach provides revenue stability through requiring the Metropolitan Water District s member cities to pay a monthly fixed rate for water (as opposed to a rate per acre foot). The volume amounts indicated only include metered sales of Metropolitan Water District supplies to the member cities and irrigation entities. The supplies used as shown in the table under INFORMATION SPECIFIC TO THE 2012A BONDS AND THE 2012B BONDS Water Sources above include deliveries to meet exchange agreement obligations and any system losses in addition to the metered sales. (Source: Metropolitan Water District.) 12

19 Audited Financial Information For Fiscal Year 2017 See METROPOLITAN WATER DISTRICT S FINANCIAL STATEMENTS JUNE 30, 2017 AND 2016 below (page 15). (The remainder of this page has been intentionally left blank.) 13

20 INFORMATION SPECIFIC TO THE 2015A BONDS AND THE 2016A BONDS Historical Results Of Operations And Debt Service Coverage See INFORMATION SPECIFIC TO THE 2012A BONDS AND THE 2012B BONDS Historical Results Of Operations And Debt Service Coverage (page 6). Five Year Financial Summaries See INFORMATION SPECIFIC TO THE 2012A BONDS AND THE 2012B BONDS Five Year Financial Summaries (page 7). Audited Financial Information For Fiscal Year 2017 See METROPOLITAN WATER DISTRICT S FINANCIAL STATEMENTS JUNE 30, 2017 AND 2016 (page 15). (The remainder of this page has been intentionally left blank.) 14

21 METROPOLITAN WATER DISTRICT S FINANCIAL STATEMENTS JUNE 30, 2017 AND 2016 Included with this supplement are Metropolitan Water District s financial statements for Fiscal Years 2017 and (The remainder of this page has been intentionally left blank.) 15

22 (This page has been intentionally left blank)

23 FINANCIAL STATEMENTS June 30, 2017 and 2016

24 C O N T E N T S Page Independent Auditor's Report... Management's Discussion and Analysis Financial Statements: Statements of Net Position... Statements of Revenues, Expenses, and Changes in Net Position... Statements of Cash Flows... Notes to Financial Statements... Required Supplementary Information: Schedule of Proportionate Share of the Net Pension Liability... Schedule of Contributions... Notes to Required Supplementary Information... Independent Auditor's Report as required by the State Compliance Audit on Compliance with General State Compliance Requirements and on Internal Control over Compliance Schedule of Findings - Compliance - State of Utah... Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards

25 INDEPENDENT AUDITOR S REPORT Keddington Christensen Certified Public Accountants, LLC Gary K. Keddington, CPA Phyl R. Warnock, CPA Marcus Arbuckle, CPA Board of Trustees Metropolitan Water District of Salt Lake & Sandy Cottonwood Heights, Utah Report on the Financial Statements We have audited the accompanying financial statements of Metropolitan Water District of Salt Lake & Sandy (the District) as of and for the fiscal years ended June 30, 2017 and 2016, and the related notes to the financial statements, which collectively comprise the District 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. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 auditor s 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 auditor considers internal control relevant to the District 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 District 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 opinions. Opinions In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the District as of June 30, 2017 and 2016, and the results of its operations and its cash flows for the fiscal years then ended in conformity with accounting principles generally accepted in the United States of America. Telephone (801) West 2200 South, Suite 201 Fax (801) Salt Lake City, Utah 84119

26 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management s Discussion and Analysis, Schedule of Proportionate Share of the Net Pension Liability, Schedule of Contributions and the related notes to the required supplementary information, as listed in the table of contents, are presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Report Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 3, 2017, on our consideration of the District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Keddington & Christensen, LLC October 3, 2017

27 MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED) June 30, 2017 The management of the Metropolitan Water District of Salt Lake & Sandy (the "District") presents to the reader of the District's financial statements this discussion and analysis of the District's financial performance for the fiscal years ended June 30, 2017 and Overview of the Financial Statements The District's financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States, promulgated by the Governmental Accounting Standards Board ("GASB"). The District reports as a single enterprise fund. Revenues are recognized when earned and expenses are recognized in the period in which they are incurred. See the notes to the financial statements for a summary of the District's significant accounting policies (Note 1 and others). Metropolitan Water District of Salt Lake & Sandy's Net Position June 30, Assets Current and other assets $ 197,769,300 $ 197,122,936 $ 202,087,396 Capital assets 351,170, ,522, ,854,920 Total assets 548,939, ,645, ,942,316 Deferred outflow of resources Total assets and deferred outflow of resources 26,177,635 32,201,761 24,964, ,117, ,847, ,907,163 Current and other liabilities Long-term liabilities Deferred inflow of resources Total liabilities and deferred inflow of resources Net position Invested in capital assets, net of related debt Restricted Unrestricted Total net position 15,875,055 14,010,991 13,658, ,446, ,785, ,834, , , , ,694, ,040, ,725, ,259,819 96,233,918 90,481,052 15,257,829 14,448,881 15,212, ,904, ,124, ,488,573 $ 294,422,596 $ 285,806,887 $ 282,182,084 Financial Analysis The District s total assets and deferred outflows exceeded its total liabilities as of the close of the most recent year by $294,422,596 (net position). Of this amount, $175,904,948 (unrestricted) may be used to meet the District s ongoing obligations. The District s net capital assets increased by $2,647,801. The District s long-term liabilities decreased by $13,339,245. The District s operating revenues increased by $2,947,417. 3

28 The District s primary sources of revenue are made up from water sales, property taxes, and special assessment revenues. Each source of revenue is predictably stable with slight variations in property taxes due to changes in property values and/or certified tax rates. Special assessment revenues are based on each member city s investment in new system capacity and/or new water supplies. Once the special assessments are established, they remain stable until the investment in system capacity or water supply has been paid. Metropolitan Water District of Salt Lake & Sandy's Changes in Net Position Operating revenues Operating expenses Operating loss Non-operating revenues Non-operating expenses Contributions to other governments Total non-operating revenues (expenses), net Change in net position Net position - beginning of year Net position - end of year $ 21,308,651 $ 18,361,234 $ 16,122,909 (23,679,833) (23,760,134) (23,399,994) (2,371,182) (5,398,900) (7,277,085) 25,498,071 24,408, ,064,360 (13,529,694) (14,330,767) (10,258,442) (981,486) (1,054,434) (957,681) 10,986,891 9,023, ,848,237 8,615,709 3,624, ,571, ,806, ,182, ,610,932 $ 294,422,596 $ 285,806,887 $ 282,182,084 Metropolitan Water District of Salt Lake & Sandy's Summary of Revenues Operating revenues Water sales Water treatment Total operating revenues Non-operating revenues Property tax revenues Special assessment revenue Interest income Gain on investment in PRWUA Unrealized gain on investments Gain on disposal of capital assets Other income Total non-operating revenues Total revenues $ 20,259,556 $ 17,613,138 $ 15,541,662 1,049, , ,247 21,308,651 18,361,234 16,122,909 11,717,539 11,645,715 11,094,954 12,248,671 12,246,768 12,238, , , , ,395,563-47,096 28, ,381 17, , ,489 64,014 25,498,071 24,408, ,064,360 $ 46,806,722 $ 42,770,138 $ 144,187,269 4

29 Metropolitan Water District of Salt Lake & Sandy's Summary of Expenses Operating expenses Cost of sales and services General and administrative Depreciation Total operating expenses Non-operating expenses Interest expense Loss on investment in PRWUA Unrealized loss on investments Total non-operating expenses Total expenses $ 11,141,747 $ 10,948,959 $ 10,887,426 1,851,563 2,060,071 1,832,579 10,686,523 10,751,104 10,679,989 23,679,833 23,760,134 23,399,994 8,432,739 9,923,111 10,258,442 4,926,465 4,407, , ,529,694 14,330,767 10,258,442 $ 37,209,527 $ 38,090,901 $ 33,658,436 Capital Asset Activity The District's capital assets for its governmental activities, as of June 30, 2017 and 2016, amounted to $351,170,501 and $348,522,700, respectively (net of accumulated depreciation). This investment in capital assets includes the water system, land, administrative buildings and equipment, aqueduct rights and privileges, and investments in surface water resources. The District continued the replacement of the terminal reservoir of the Salt Lake Aqueduct. Construction activity began in December Additional financing was accomplished in fiscal year 2015 and completed the financing activity necessary to fully fund the project. The cost of the project is anticipated to be approximately $42 million. Phases 1-4 of the 5 phase project were completed in The remaining phases of the project will be completed by November Economic Factors and Budgetary Analysis The District continues to find its revenues and expenses to be following a predictable trend. Water sales revenues are expected to increase an average of 3% per year over the next 5 years. This forecast has been communicated to the member cities and they anticipate the change. Operations and maintenance expenses are budgeted at an inflationary index of 3% per year. Capital expenditures are planned using asset management techniques that evaluate the condition, criticality, and consequence of the asset. Long-term debt is reviewed on an ongoing basis in an effort to capitalize on any opportunities. As of June 30, 2017, the District's bond ratings are AA+ and AA+ by S&P and Fitch, respectively. The anticipated revenue increases are necessary to meet future O&M, capital, and debt service costs. Request for Information This financial report is designed to give its readers a general overview of the District's finances. Questions regarding any information contained in this report or requests for additional information should be addressed to the General Manager, 3430 East Danish Road, Cottonwood Heights, Utah or by calling

30 FINANCIAL STATEMENTS 6

31 STATEMENTS OF NET POSITION June 30, 2017 and ASSETS CURRENT ASSETS Cash and cash equivalents (Note 2) $ 10,921,196 $ 6,916,947 Accounts receivable 2,720,431 2,482,308 Prepaid expenses and other receivables 85, ,192 Supplies 184, ,933 TOTAL CURRENT ASSETS 13,912,248 10,224,380 NONCURRENT ASSETS Restricted assets (Note 2): Cash and cash equivalents 15,257,829 16,688,925 Investments 18,619,653 18,563,473 TOTAL RESTRICTED ASSETS 33,877,482 35,252,398 Investment in Provo River Water Users Association (Note 5) 147,606, ,273,382 Investment in Utah Lake Water Users Association (Note 5) 2,372,689 2,372,689 Net pension asset (Note 8) - 87 Capital assets, net (Note 4) 351,170, ,522,700 TOTAL NONCURRENT ASSETS 535,027, ,421,256 TOTAL ASSETS 548,939, ,645,636 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows relating to pensions (Note 8) 1,397,387 1,193,850 Deferred charge on bond refundings 12,678,481 13,807,613 Deferred outflow on interest rate swap agreement (Note 7) 12,101,767 17,200,298 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 575,117,436 $ 577,847,397 LIABILITIES AND NET POSITION CURRENT LIABILITIES Accounts payable $ 4,353,382 $ 3,191,299 Accrued expenses 604, ,645 Accrued interest payable 3,807,315 3,299,047 Bonds payable, current (Note 6) 7,110,000 6,855,000 TOTAL CURRENT LIABILITIES 15,875,055 14,010,991 LONG-TERM LIABILITIES Interest rate swap agreement (Note 7) 12,101,767 17,200,298 Unamortized bond premium, net of discounts 24,026,848 25,427,392 Bonds payable, net of current portion (Note 6) 225,645, ,755,000 Net pension liability (Note 8) 2,672,780 2,402,950 TOTAL LONG-TERM LIABILITIES 264,446, ,785,640 TOTAL LIABILITIES 280,321, ,796,631 DEFERRED INFLOWS OF RESOURCES Deferred inflows relating to pensions (Note 8) 373, ,879 TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 280,694, ,040,510 NET POSITION Net investment in capital assets 103,259,819 96,233,918 Restricted (Note 3) 15,257,829 14,448,881 Unrestricted (Note 3) 175,904, ,124,088 TOTAL NET POSITION $ 294,422,596 $ 285,806,887 The accompanying notes are an integral part of the financial statements. 7

32 STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION Years Ended June 30, 2017 and OPERATING REVENUES Water sales $ 20,259,556 $ 17,613,138 Water treatment 1,049, ,096 TOTAL OPERATING REVENUES 21,308,651 18,361,234 OPERATING EXPENSES Cost of sales and services 11,141,747 10,948,959 General and administrative 1,851,563 2,060,071 Depreciation 10,686,523 10,751,104 TOTAL OPERATING EXPENSES 23,679,833 23,760,134 OPERATING LOSS (2,371,182) (5,398,900) NON-OPERATING REVENUES (EXPENSES) Property tax revenues 11,717,539 11,645,715 Special assessment revenue 12,248,671 12,246,768 Interest income 439, ,536 Interest expense (8,432,739) (9,923,111) Unrealized (loss) gain on investments (170,490) 47,096 Loss on investment in Provo River Water Users Association (4,926,465) (4,407,656) Gain on disposal of capital assets 622,381 17,300 Other revenue 470, ,489 TOTAL NON-OPERATING REVENUES (EXPENSES), NET 11,968,377 10,078,137 INCOME BEFORE CONTRIBUTIONS 9,597,195 4,679,237 CONTRIBUTIONS TO OTHER GOVERNMENTS 981,486 1,054,434 CHANGE IN NET POSITION 8,615,709 3,624,803 NET POSITION, BEGINNING OF YEAR 285,806, ,182,084 NET POSITION, END OF YEAR $ 294,422,596 $ 285,806,887 The accompanying notes are an integral part of the financial statements. 8