AGENDA YORBA LINDA WATER DISTRICT FINANCING AUTHORITY REGULAR MEETING Tuesday, October 9, 2018, 6:30 PM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 1.1. Please note that this meeting will be called to order following consideration of Item No. 8.4. on the agenda for the Regular Board of Directors Meeting on Tuesday, October 9, 2018 at 6:30 p.m. 2. ROLL CALL Al Nederhood, President Brooke Jones, Vice President Andrew J. Hall, Director Phil Hawkins, Director J. Wayne Miller, Director 3. 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. 4. ACTION CALENDAR This portion of the agenda is for items where staff presentations and Board discussions are needed prior to formal Board action. 4.1. Minutes of the Regular Financing Authority Meeting held December 12, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 4.2. Amending the Financing Authority's Conflict of Interest Code Recommendation: That the Board of Directors approve Resolution No. FA-18-01 adopting a Conflict of Interest Code for the Financing Authority which supersedes all prior Conflict of Interest Codes and amendments previously adopted. 4.3. Audit Report for Fiscal Year Ending June 30, 2018 5. ADJOURNMENT Recommendation: That the Board of Directors receive and file the Yorba Linda Water District Financing Authority Comprehensive Annual Financial Report for Fiscal Year Ending June 30, 2018.
5.1. The next regular meeting of YLWD's Financing Authority is scheduled to be held Tuesday, December 11, 2018 at 6:30 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.
AGENDA REPORT ITEM NO. 4.1 Meeting Date: October 9, 2018 Subject: Minutes of the Regular Financing Authority Meeting held December 12, 2017 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name: Description: Type: 2017-12-12_-_Minutes_-_FA.doc Minutes Report(s)
2017-XXX MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCING AUTHORITY REGULAR MEETING Tuesday, December 12, 2017, 6:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 7:01 p.m. 2. ROLL CALL DIRECTORS PRESENT STAFF PRESENT Andrew J. Hall Marc Marcantonio, General Manager Phil Hawkins Brett Barbre, Assistant General Manager Brooke Jones Steve Conklin, Engineering Manager Al Nederhood John DeCriscio, Operations Manager J. Wayne Miller Gina Knight, HR/Risk and Safety Manager Delia Lugo, Finance Manager Art Vega, Information Technology Manager Annie Alexander, Executive Assistant Mike Carreon, Facilities Maintenance Worker ALSO PRESENT Andrew Gagen, Partner, Kidman Law LLP 3. PUBLIC COMMENTS None. 4. ACTION CALENDAR 4.1. Affirmation of Officers for the Financing Authority Director Jones made a motion, seconded by Director Hawkins, to affirm the individuals designated as Chair, Vice Chair, Executive Director, Treasurer and Secretary of the Yorba Linda Water District Financing Authority in accordance with the Joint Exercise of Powers Agreement between the District and the California Municipal Finance Authority. Motion carried 5-0. Minutes of the YLWD Financing Authority Regular Meeting Held December 12, 2017 at 6:30 p.m. 1
2017-XXX 4.2. Minutes of the Financing Authority Special Meeting Held October 24, 2017 5. ADJOURNMENT Director Hall made a motion, seconded by Director Hawkins, to approve the minutes as presented. Motion carried 5-0. 5.1. The meeting was adjourned at 7:02 p.m. Annie Alexander Board Secretary Minutes of the YLWD Financing Authority Regular Meeting Held December 12, 2017 at 6:30 p.m. 2
AGENDA REPORT ITEM NO. 4.2 Meeting Date: October 9, 2018 To: From: Board of Directors Marc Marcantonio, General Manager Dept: Administration Prepared By: Subject: Annie Alexander, Executive Assistant Amending the Financing Authority's Conflict of Interest Code STAFF RECOMMENDATION: That the Board of Directors approve Resolution No. FA-18-01 adopting a Conflict of Interest Code for the Financing Authority which supersedes all prior Conflict of Interest Codes and amendments previously adopted. DISCUSSION: In compliance with Section 81000 et. seq. of the California Government Code, the Board of Directors of the Financing Authority (FA) has adopted a Conflict of Interest Code (Code) governing the disclosure of financial interests by certain designated employees. The Political Reform Act requires every local government agency to review its code on a biennial basis. Staff recently reviewed the FA's Code and has identified a few minor revisions. The positions of Finance Manager (Treasurer) and General Manager (Executive Director) were renamed to Finance Manager and General Manager respectively as the offices of Treasurer and Executive Director are designated in accordance with the FA's agreement with the California Municipal Finance Authority and are not part of the positions' titles. Following adoption by the Board, a copy of the Resolution and updated Code must be submitted for review and approval by the Orange County Board of Supervisors, after which it will be considered in effect. ATTACHMENTS: Name: Description: Type: Resolution_No._FA-18-01_-_FA_COI.docx Resolution Resolution FA_COI.pdf Exhibit Exhibit
RESOLUTION NO. FA-18-01 RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT FINANCING AUTHORITY ADOPTING A CONFLICT OF INTEREST CODE WHICH SUPERSEDES ALL PRIOR CONFLICT OF INTEREST CODES AND AMENDMENTS PREVIOUSLY ADOPTED WHEREAS, the Political Reform Act of 1974, Government Code Section 81000 et. seq. ( the Act ), requires a local government agency to adopt a Conflict of Interest Code pursuant to the Act; and WHEREAS, the Yorba Linda Water District Financing Authority has previously adopted a Conflict of Interest Code and that Code now requires updating; and WHEREAS, amendments to the Act have in the past and foreseeably will in the future require conforming amendments to be made to the Conflict of Interest Code; and WHEREAS, the Fair Political Practices Commission has adopted a regulation, Title 2, California Code of Regulations, Section 18730, which contains terms for a standard model Conflict of Interest Code, which, together with amendments thereto, may be adopted by public agencies and incorporated by reference to save public agencies time and money by minimizing the actions required of such agencies to keep their codes in conformity with the Political Reform Act. NOW THEREFORE BE IT RESOLVED by the Board of Directors of the Yorba Linda Water District Financing Authority as follows: Section 1. The terms of Title 2, California Code of Regulations, Section 18730 (Attachment A) and any amendments to it duly adopted by the Fair Political Practices Commission are hereby incorporated by reference and, together Resolution No. FA-18-01 Adopting a Conflict of Interest Code 1
with Exhibits A and B in which members and employees are designated and disclosure categories are set forth, constitute the Conflict of Interest Code of the Yorba Linda Water District Financing Authority. Section 2. The provisions of all Conflict of Interest Codes and Amendments thereto previously adopted by the Yorba Linda Water District Financing Authority are hereby superseded. Section 3. The Filing Officer is hereby authorized to forward a copy of this Resolution to the Clerk of the Orange County Board of Supervisors for review and approval by the Orange County Board of Supervisors as required by California Government Code Section 87303. PASSED AND ADOPTED this 9 th day of October 2018 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: Al Nederhood, President YLWD Financing Authority Annie Alexander, Board Secretary YLWD Financing Authority Reviewed as to form by General Counsel: Andrew B. Gagen, Esq. Kidman Gagen Law LLP Resolution No. FA-18-01 Adopting a Conflict of Interest Code 2
ATTACHMENT A CONFLICT OF INTEREST CODE FOR THE YORBA LINDA WATER DISTRICT FINANCING AUTHORITY The Political Reform Act, Government Code Sections 81000, et seq., requires state and local government agencies to adopt and promulgate Conflict of Interest Codes. The Fair Political Practices Commission has adopted a regulation (2 Cal. Code of Regs. Section 18730) which contains the terms of a standard Conflict of Interest Code, which may be incorporated by reference in an agency s code. After public notice and hearing it may be amended by the Fair Political Practices Commission to conform to amendments in the Political Reform Act. Therefore, the terms of 2 California Code of Regulations Section 18730 and any amendments to it duly adopted by the Fair Political Practices Commission are hereby incorporated by reference. This regulation and the attached Appendix designating officials and employees and establishing disclosure categories, shall constitute the Conflict of Interest Code of the Yorba Linda Water District Financing Authority. Designated employees shall file statements of economic interests with the Yorba Linda Water District Financing Authority s Political Reform Act Filing Officer, Board Secretary, who will make the statements available for public inspection and reproduction (Government Code Section 82008). Upon receipt of the statements of Members of the Board of Directors, General Manager, Assistant General Manager, Finance Manager, and General Counsel, the Yorba Linda Water District Financing Authority s Filing Officer shall make and retain a copy and forward the original of these statements to the Clerk of the Orange County Board of Supervisors as the Filing Officer for these designated positions. Statements for all other designated positions will be retained by the Yorba Linda Water District Financing Authority s Filing Officer. Resolution No. FA-18-01 Adopting a Conflict of Interest Code 3
Conflict of Interest Code EXHIBIT A (Working Draft) Entity: Agency: Water Districts Yorba Linda Water District Financing Authority Position Disclosure Category Files With Status Consultant OC-30 Agency Unchanged General Counsel OC-01 COB Unchanged Total: 2 OFFICIALS WHO ARE SPECIFIED IN GOVERNMENT CODE SECTION 87200 Officials who are specified in Government Code section 87200 (including officials who manage public investments, as defined by 2 Cal. Code of Regs. 18700.3 (b)), are NOT subject to the Agency s Conflict of Interest Code, but are subject to the disclosure requirements of the Political Reform Act, Government Code section 87100, et seq. Gov t Code 87203. These positions are listed here for informational purposes only. The positions listed below are officials who are specified in Government Code section 87200: Assistant General Manager Files with COB Unchanged Finance Manager Reason: General Manager Reason: Files with Renamed Office of Treasurer is designated in accordance with the Financing Authority's agreement with the California Municipal Finance Authority and is not part of the position's title. Office of Executive Director is designated in accordance with the Financing Authority's agreement with the California Municipal Finance Authority and is not part of the position's title. Member of the Board of Directors Files with Files with COB COB COB Renamed Unchanged The disclosure requirements for these positions are set forth in Government Code section 87200, et. seq. They require the disclosure of interests in real property in the agency s jurisdiction, as well as investments, business positions and sources of income (including gifts, loans and travel payments). Run date/time: Tuesday, October 02 2018 04:28:55 PM Page 1 of 1
Disclosure Descriptions EXHIBIT B (Working Draft) Entity: Agency: Water Districts Yorba Linda Water District Financing Authority Disclosure Category 87200 Filer OC-01 OC-30 Disclosure Description Form 87200 filers shall complete all schedules for Form 700 and disclose all reportable sources of income, interests in real property, investments and business positions in business entities, if applicable, pursuant to Government Code Section 87200 et seq.. All interests in real property in Orange County, the authority or the District as applicable, as well as investments, business positions and sources of income (including gifts, loans and travel payments). Consultants shall be included in the list of designated employees and shall disclose pursuant to the broadest category in the code subject to the following limitation: The County Department Head/Director/General Manager/Superintendent/etc. may determine that a particular consultant, although a designated position, is hired to perform a range of duties that is limited in scope and thus is not required to fully comply with the disclosure requirements in this section. Such written determination shall include a description of the consultant s duties and, based upon that description, a statement of the extent of disclosure required. The determination of disclosure is a public record and shall be filed with the Form 700 and retained by the Filing Officer for public inspection. Status Unchanged Unchanged Unchanged Grand Total: 3 Run date/time: Tuesday, October 02 2018 04:28:56 PM Page 1 of 1
Conflict of Interest Code EXHIBIT A (Working Draft) Entity: Agency: Water Districts Yorba Linda Water District Financing Authority Consultant General Counsel Position OC-30 OC-01 Disclosure Category Files With Agency COB Total: 2 OFFICIALS WHO ARE SPECIFIED IN GOVERNMENT CODE SECTION 87200 Officials who are specified in Government Code section 87200 (including officials who manage public investments, as defined by 2 Cal. Code of Regs. 18700.3 (b)), are NOT subject to the Agency s Conflict of Interest Code, but are subject to the disclosure requirements of the Political Reform Act, Government Code section 87100, et seq. Gov t Code 87203. These positions are listed here for informational purposes only. The positions listed below are officials who are specified in Government Code section 87200: Assistant General Manager Finance Manager General Manager Member of the Board of Directors Files with Files with Files with Files with COB COB COB COB The disclosure requirements for these positions are set forth in Government Code section 87200, et. seq. They require the disclosure of interests in real property in the agency s jurisdiction, as well as investments, business positions and sources of income (including gifts, loans and travel payments). Run date/time: Tuesday, October 02 2018 04:28:56 PM Page 1 of 1
Disclosure Descriptions EXHIBIT B (Working Draft) Entity: Agency: Water Districts Yorba Linda Water District Financing Authority Disclosure Category 87200 Filer OC-01 OC-30 Disclosure Description Form 87200 filers shall complete all schedules for Form 700 and disclose all reportable sources of income, interests in real property, investments and business positions in business entities, if applicable, pursuant to Government Code Section 87200 et seq.. All interests in real property in Orange County, the authority or the District as applicable, as well as investments, business positions and sources of income (including gifts, loans and travel payments). Consultants shall be included in the list of designated employees and shall disclose pursuant to the broadest category in the code subject to the following limitation: The County Department Head/Director/General Manager/Superintendent/etc. may determine that a particular consultant, although a designated position, is hired to perform a range of duties that is limited in scope and thus is not required to fully comply with the disclosure requirements in this section. Such written determination shall include a description of the consultant s duties and, based upon that description, a statement of the extent of disclosure required. The determination of disclosure is a public record and shall be filed with the Form 700 and retained by the Filing Officer for public inspection. Grand Total: 3 Run date/time: Tuesday, October 02 2018 04:28:56 PM Page 1 of 1
AGENDA REPORT ITEM NO. 4.3 Meeting Date: October 9, 2018 To: From: Board of Directors Marc Marcantonio, General Manager Presented By: Delia Lugo, Finance Manager Dept: Finance Prepared By: Kelly McCann, Senior Accountant Subject: Audit Report for Fiscal Year Ending June 30, 2018 STAFF RECOMMENDATION: That the Board of Directors receive and file the Yorba Linda Water District Financing Authority Comprehensive Annual Financial Report for Fiscal Year Ending June 30, 2018. DISCUSSION: Staff if pleased to present to the Board of Directors with the Yorba Linda Water District Financing Authority Comprehensive Annual Financial Report (CAFR) for the Fiscal Year Ending June 30, 2018. White Nelson Diehl Evans LLP, the District's external auditing firm, completed their audit of the Yorba Linda Water District Financing Authority for the fiscal year ending June 30, 2018. Ms. Daphnie Munoz, Partner of White Nelson Diehl Evans LLP, is in attendance to present the CAFR. STRATEGIC PLAN: G2 1A - Comply with Governmental Accounting Standards Board regulations. ATTACHMENTS: Name: Description: Type: FY18_FA_CAFR.pdf Backup Material Backup Material
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY (A COMPONENT UNIT OF YORBA LINDA WATER DISTRICT) BASIC FINANCIAL STATEMENTS WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR ENDED JUNE 30, 2018
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY For the Fiscal Year Ended June 30, 2018 Table of Contents 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 8-11
Board of Directors Yorba Linda Water District Financing Authority Placentia, California INDEPENDENT AUDITORS REPORT 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 year ended June 30, 2018, 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. 1 2875 Michelle Drive, Suite 300, Irvine, CA 92606 Tel: 714.978.1300 Fax: 714.978.7893 Offices located in Orange and San Diego Counties
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, 2018, and the changes in financial position and cash flows thereof for the year ended June 30, 2018, 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 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 September 20, 2018 2
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY MANAGEMENT S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2018 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, 2018. 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: (1) 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: Fiscal Year Fiscal Year 2018 2017 ASSETS: Interest receivable $ 333,411 $ 211,866 Installment contract receivable: Due in one year 830,000 945,000 Due in more than one year 27,560,000 28,390,000 TOTAL ASSETS 28,723,411 29,546,866 LIABILITIES: Interest payable 333,411 211,866 Long-term Liabilities Due in one year 830,000 945,000 Due in more than one year 27,560,000 28,390,000 TOTAL LIABILITIES 28,723,411 29,546,866 NET POSITION $ - $ - 3
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY MANAGEMENT S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2018 REVENUES, EXPENSES AND CHANGES IN NET POSITION The interest income of $1,318,031 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 $28,390,000 in long-term debt. More detailed information about the Authority's long-term debt is presented on page 10 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, please contact the District at 1717 E. Miraloma Avenue, Placentia, California 92807 or the Finance Department at (714) 701-3040. 4
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY STATEMENT OF NET POSITION June 30, 2018 ASSETS: Interest receivable $ 333,411 Installment contract receivable: Due in one year 830,000 Due in more than one year 27,560,000 TOTAL ASSETS 28,723,411 LIABILITIES: Interest payable 333,411 Long-term liabilities: Due in one year 830,000 Due in more than one year 27,560,000 TOTAL LIABILITIES 28,723,411 NET POSITION $ - See accompanying notes to the basic financial statements. 5
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION For the year ended June 30, 2018 OPERATING REVENUES $ - OPERATING EXPENSES - OPERATING INCOME - NONOPERATING INCOME (EXPENSES): Interest income 1,318,031 Interest expense (1,318,031) 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 CASH FLOWS For the year ended June 30, 2018 CASH FLOWS FROM OPERATING ACTIVITIES: Total operating revenues $ - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Principal paid on 2017A Revenue Bonds (945,000) Interest paid on 2017A Revenue Bonds (1,196,486) Contract receivable installment payments received 2,141,486 NET CASH PROVIDED 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. 7
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY For the Fiscal Year Ended June 30, 2018 Notes to Basic Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING 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 Yorba Linda Water District (the District) and California Municipal Finance Authority, dated April 11, 2017. The Authority is statutorily authorized by Article 4 of Chapter 5 of Division 7 of Title 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 composed 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 that of 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. 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 presents 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. 8
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY For the Fiscal Year Ended June 30, 2018 Notes to Basic Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. New Accounting Pronouncements GASB Current-Year Standards GASB 75 - Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, effective for periods beginning after June 15, 2017, and did not impact the Authority. 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, and did not impact the Authority. GASB 85 - Omnibus 2017, effective for periods beginning after June 15, 2017, and did not impact the Authority. GASB 86 - Certain Debt Extinguishment Issues, effective for periods beginning after June 15, 2017, and did not impact the Authority. GASB Pending Accounting Standards GASB has issued the following statements, which may impact the Authority s financial reporting requirements in the future: 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 87 - Leases, effective for periods beginning after December 15, 2019. GASB 88 - Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements, effective for periods beginning after June 15, 2018. GASB 89 - Accounting for Interest Cost Incurred before the End of a Construction Period, 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. 9
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY For the Fiscal Year Ended June 30, 2018 Notes to Basic Financial Statements 1. SUMMARY OF 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 (the 2017A Revenue Bonds) (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 s water system that are remaining after paying operation and maintenance costs. The balance of the receivable from the District at June 30, 2018, was $28,390,000. For the year ended June 30, 2018, the receivable of the Authority consists of the following: Balance Balance July 1, 2017 Additions Deletions June 30, 2018 2017 Installment Purchase Agreement $ 29,335,000 $ - $ (945,000) $ 28,390,000 3. LONG-TERM LIABILITIES The following is a summary of changes in long-term liabilities of the Authority for the year ended June 30, 2018: Due in Balance Balance Due Within More Than July 1, 2017 Additions Deletions June 30, 2018 One Year One Year 2017A Revenue Bonds $ 29,335,000 $ - $ (945,000) $ 28,390,000 $ 830,000 $ 27,560,000 10
YORBA LINDA WATER DISTRICT FINANCING AUTHORITY For the Fiscal Year Ended June 30, 2018 Notes to Basic Financial Statements 3. LONG-TERM LIABILITIES (CONTINUED) 2017A Revenue Bonds In May 2017, the Authority issued $29,335,000 of 2017A Revenue Bonds 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 2017A Revenue Bonds bear interest at rates ranging from 3% to 5%, payable semiannually on April 1 and October 1. There is no reserve requirement for the 2017A Revenue Bonds. The 2017A Revenue 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, 2018, was $28,390,000. The annual debt service requirements for the 2017A Revenue Bonds outstanding at June 30, 2018 are as follows: 4. SUBSEQUENT EVENTS Year Ending June 30, Principal Interest Total 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 990,000 1,149,294 2,139,294 2024-2028 5,755,000 4,930,845 10,685,845 2029-2033 7,150,000 3,482,604 10,632,604 2034-2038 8,910,000 1,663,275 10,573,275 2039 2,055,000 51,100 2,106,100 $ 28,390,000 $ 16,318,744 $ 44,708,744 In preparing these financial statements, the Authority has evaluated events and transactions for potential recognition or disclosure through September 20, 2018, the date the financial statements were available to be issued. 11