HomeMy WebLinkAbout; ; 1989-1990 CMWD CAFR; 1990-06-30' ^.'"vairifc- ^ ' "T^3r*\. Ik-
Allan O. Kelly Operations Center
Dedicated July 18, 1990
CARLSBAD MUNICIPAL WATER DISTRICT
Comprehensive Annual Financial Report
for Fiscal Year Ending June 30, 1990
Comprehensive Annual Financial Report
for Fiscal Year Ending June 30, 1990
Table of Contents
Introductory Section
Transmittal Letter A-l
District Purposes and Powers A-2
District Officials A-3
District Organizational Chart A-4
Financial Section
Auditor's Opinion B-l
Balance Sheets B-2
Statement of Operations B-4
Statement of Changes in Equity B-5
Statement of Cash Flows B-6
Statements of Changes in Financial Position B-7
Notes to Financial Statements B-8
Water Treatment, Transmission and Distribution,
and Administrative and General Expenses B-25
Improvement Districts' Balance Sheet B-26
Improvement Districts' Statement of Revenues
and Expenditures B-27
Supplemental Section
Water Purchases (1985/86 thru 1989/90) C-l
Agricultural Usage (1985/86 thru 1989/90) C-2
Water Purchases and Agricultural Usage - Graph C-3
Cost of Purchased Water (1985/86 thru 1989/90) C-4
Employee Summaries C-5
Introductory Section - A
^/?<V Carlsbad
v/(\? Municipa Water District%V/"*, — <$? 5950 E! Camino Real, Carlsbad, CA 92008
^ M/ATt*Engineering: (619) 438-3367
Administration: (619) 438-2722
Fax: (619) 431-1601
Board of Directors
Carlsbad Municipal Water District
5950 El Camino Real
Carlsbad, CA 92008
Fiscal Year 1988-90 was another year in which the District took great strides in a wide variety
of areas, and at the same time continued to enjoy its sound financial condition. In particular,
the District confirmed its commitment to capital project construction with the completion
of numerous improvements. Construction projects initiated during the year will benefit existing
consumers by upgrading the current distribution system and ensure future consumers that the
facilities will be in place to meet projected needs. Existing consumers will benefit by the
replacement of the major pipeline in El Camino Real from Palomar Airport Road to Tamarack.
In preparation for the future, the Allan O. Kelly Operations Center was completed that includes
a state-of-the-art telemetry system for water distribution system monitoring that is unsurpassed
by any other water agency in the County. Additionally, the first phase of the improvements to the
District's 195 million-gallon Maerkle Reservoir was completed with the construction of a 10
million-gallon reservoir. This is the first in a series of projects to that crucial component of the
water system. Also, an application was filed during the year for a low-interest loan from the State
of California for the construction of reclaimed water facilities. This as well as the other actions are
all significant portions of Carlsbad's water resource planning efforts.
Also during the year, the District's public education programs were tested with the declaration of
a Stage II-Water Alert in response to the current drought conditions. In conjunction with the
San Diego County Water Autority, consumers in our service area were asked to reduce demands
by 10%. Over the summer months, which go beyond the 1989-90 fiscal year, demands were
reduced by 9.5% in comparison to those experienced during the same period hi previous years.
More important, consumers in the District took steps toward permanently altering their water use
habits by creating a new water ethic for Carlsbad.
Special recognition should be given to members of the District's Board of Directors and Water
Commission for their assistance in giving the policy direction needed in these vital undertakings.
In addition, the staff at the District should receive accolades for their hard work during the year,
for without them, none of these activities could have occurred.
Sncerely,
A-l
Robert J. Greaney' ' /
General Manager/District Engineer
"Serving Carlsbad for over 35 years"
District Purposes and Powers
The Carlsbad Municipal Water District (formerly Costa Real Municipal Water District)
was formed March 22, 1954, under the Municipal Water District Act of 1911, to apply for
water service from the San Diego County Water Authority. Local water sources had been
utilized to the extent that an alternate supply was required to meet the demands of Carlsbad.
Now in its 35th year of service, the District has kept pace with the phenomenal demands of an
area that is experiencing tremendous growth. However, just as significantly, the District has
retained a "work ethic" that meets the extremely high level of service that the residents
Carlsbad have grown accustomed to receiving. This commitment, on the part of all public
service providers in the City, has contributed to the evolution of Carlsbad into one of the most
desirable communities in all of San Diego County.
The District's Board of Directors sets all rates and fees which are required for opera-
tions and maintenance of District facilities, principal and interest on debt obligations, and
system replacement and expansion. Expenditures are funded from the various revenue sources
available to the District dependent upon the project's beneficiary. Projects that benefit future
residents in the form of new construction or expansion of existing facilities are funded by fees
collected when a building permit is issued. Likewise, the replacement of existing projects and
the day-to-day operations of the District are funded primarily by property taxes and water
rates. This system ensures equitable financing of all District activities.
A-2
Carlsbad Municipal Water District
Listing of District Officials
Board of Directors
Claude "Bud" Lewis, President
Ann Kulchin, Vice President
Eric Larson
John Mamaux
Mark Pettine
Water Commission
John Henley, Chair
Fred Maerkle, Vice Chair
Margaret Bonas
Roger Greer
E.J. Woodward Jr.
Officials
Raymond Patchett, Executive Manager
Robert Greaney, General Manager / District Engineer
Geoffrey Poole, Administrative Manager
Kurt Musser, Superintendent
F. Jerry Whitley, Engineering Manager
A-3
Carlsbad Municipal Water District
Organizational Chart
p — — - — -i• Administrative Engineering
iGeneral Manager/1
' District Engineer '
r Water ~I
Commission II i
11-27-90
Financial Section - B
CARLSBAD MUHICIPAL WATER DISTRICT
Financial Statements and Schedules
June 30, 1990 and 1989
(With Independent Auditors' Report Thereon)
KPMG Peat Marwick
Certified Public Accountants
North County Office: Telephone 619 931-8700 Telecopier 619 438-4298
2011 Palomar Airport Road
Carlsbad, CA 92008 Independent Auditors' Report
The Board of Directors
Carlsbad Municipal Water District:
We have audited the accompanying balance sheets of Carlsbad Municipal Water
District as of June 30, 1990 and 1989, and the related statements of
operations, and changes in equity for the years then ended, the statement of
cash flows for the year ended June 30, 1990, and the statement of changes in
financial position for the year ended June 30, 1989. These component unit
financial statements are the responsibility of the District's management. Our
responsibility is to express an opinion on these component unit financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the component unit financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the component
unit financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall component unit financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the component unit financial statements referred to above
present fairly, in all material respects, the financial position of Carlsbad
Municipal Water District at June 30, 1990 and 1989, and the results of its
operations for the years ended June 30, 1990 and 1989, its cash flows for the
year ended June 30, 1990 and its changes in financial position for the year
ended June 30, 1989 in conformity with generally accepted accounting
principles.
As discussed in Note I to the component unit financial statements, the
District adopted Statement of Governmental Accounting Standards No. 9
"Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and
Governmental Entities that use Propriety Fund Accounting" in 1990.
Our audits were made for the purpose of forming an opinion on the component
unit financial statements taken as a whole. The current year's supplementary
information included in Schedules 1 through 3 is presented for purposes of
additional analysis and is not a required part of the component unit financial
statements. Such supplementary information, except for that portion marked
"unaudited," on which we express no opinion, has been subjected to the
auditing procedures applied in the audits of the component unit financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the component unit financial statements taken as a whole.
September 28, 1990
, • • • B-l
Member Firm of
Klvnvefd Peat Marwick Goerdeler
CARLSBAD MUNICIPAL WATER DISTRICT
Balance Sheets
June 30, 1990 and 1989
Assets
Current assets:
Cash (note 2)
Investments (note 2)
Accounts receivable
Inventories
Total current assets
Current restricted assets:
Cash (notes 2 and 6)
Investments (notes 2 and 6)
Interest receivable
Contract receivable
Total current restricted assets
Restricted assets:
Investments (notes 2 and 6)
Deferred compensation investment (note 9)
Utility plant (notes 1 and 3):
Property and equipment, at cost, net of
accumulated depreciation
Construction in progress
Total utility plant
1990
$ 209,356
8,280,302
2,095,605
191.805
26,289
2,252,169
214,456
2.492.914
1,339,059
862.010
2.201.069
30,340,339
8.914.026
39.254.365
$ 54.725.416
1989
349,791
12,007,904
1,956,247
162.050
10.777.068 14.475.992
24,424
1,617,815
227,981
3.125
1.873.345
5,656,934
646.967
6.303.901
26,515,277
2.352.005
28.867.282
51.520.520
B-2 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Balance Sheets, Continued
June 30, 1990 and 1989
Liabilities and Equity
Current liabilities:
Accounts payable
Current portion of certificates of
participation payable (note 4)
Current portion of note payable
Interest payable
Accrued expenses
Construction deposits
1990 L989
740,598
610,000
-
153,188
326,040
152.218
1,074,602
575,000
20,502
160,270
280,848
155.914
Total current unrestricted liabilities 1,982,044 2,267,136
Current liabilities payable from restricted assets:
Current portion of bonds payable (note 5)
Accrued interest and unredeemed bonds and
bond coupons
Total current liabilities
Certificates of participation payable, net of
unamortized issuance costs of $400,650 in
1990 and $427,361 in 1989 (note 4)
Bonds payable (note 5)
Deferred compensation payable (note 9)
Total liabilities
Equity:
Equity in utility plant
Retained earnings:
Reserved (note 6)
Unreserved:
Designated (note 6)
Undesignated
Total equity
623,000
35.308
12,299,350
40,000
862.010
28,015,703
1,154,420
9,245,371
468.210
38.883.704
$ 54.725.416
65,000
36.005
2,640,352 2,368,141
12,882,639
663,000
646.967
15.841.712 16.560.747
18,880,916
1,135,886
14,399,413
543.558
34.959.773
51.520.520
See accompanying notes to financial statements.
B-3
CARLSBAD MUNICIPAL WATER DISTRICT
Statements of Operations .
Years ended June 30, 1990 and 1989
Operating revenues:
Water sales
Cost of water purchased
Gross margin from water sales
Other operating revenues:
Facilities revenue
Miscellaneous revenue
Operating expense:
Water treatment
Transmission, distribution and maintenance
Administrative and general
Reimbursement agreement
Depreciation
Loss on disposal of assets
Total operating expense
Net income from operations
Other income (expense):
Property taxes
Interest earned
Rent
Interest expense, net of capitalized interest
Amortization of issuance costs
Total other income, net
Income before extraordinary item
Extraordinary item - increased principal on
early extinguishment of debt (note 4)
Net income
1990
$ 6,513,806
4.969.862
2,661,294
194.595
4.399.833
74,346
965,444
1,163,687
24,561
648,974
82.908
2.959.920
1.439.913
668,427
1,524,172
19,775
(645,557)
(26.710)
1.540.107
2,980,020
1989
5,996,772
4.166.065
1,543,944 1,830,707
2. 980. 020
2,225,380
214.026
4.270.113
118,900
909,694
994,353
74,723
604,766
2.702.436
1.567.677
637,989
1,727,611
18,400
(951,782)
(23. 275")
1.408.943
2,976,620
1.812.322
.164.298
See accompanying notes to financial statements.
B-4
CARLSBAD MUNICIPAL WATER DISTRICT
Statements of Changes in Equity
For the years ended June 30, 1990 and 1989
Balance at June 30, 1988
Net income
Contribution of assets
Transfer pursuant to debt
agreements
Transfer to fund current
year's depreciation expense
Transfer to designated
retained earnings (note 6)
Balance at June 30, 1989
Net income
Contribution of assets
Transfer pursuant to debt
agreements
Transfer from undesignated
retained earnings for major
facilities and replacement
project fees (note 6)
Transfer from designated
retained earnings for
capital expenditures
(note 6)
Balance at June 30, 1990
Equity in
Utility
Plant
$ 17,150,623
1,125,527
Retained Earnings
Unreserved- Unreserved-
Designated UndesiqnatedReserved
1,091,341
Total
1,951,695 12,476,289 32,669,948
1,164,298 1,164,298
1,125,527
44,545 - (44,545)
604,766 - - (604,766)
12.447.718 (12.447.718)
18,880,916 1,135,886 14,399,413 543,558
2,980,020
943,911
-
-
34,959,773
2,980,020
943,911
18,534 - (18,534)
2,661,294 (2,661,294)
8.190.876 . (7.815.336) (375.540) -
$ 28.015.703 1.154.420 9.245.371 468.210 38.883.7Q4
See accompanying notes to financial statements.
B-5
CARLSBAD MUNICIPAL WATER DISTRICT
Statement of Cash Flows
For the year ended June 30, 1990
Cash flows from operating activities:
Net income from operations $ 1,439,913
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 675,684
Increase in receivables (136,684)
Increase in inventories (29,755)
Decrease in accounts payable and accrued expenses (288,812)
Increase in deferred compensation payable 215.043
Net cash provided by operating activities 1.875.389
Cash flows from noncapital financing activities:
Property taxes received 668,427
Rent received 19.775
Net cash provided by noncapital
financing activities 688.202
Cash flows from capital and related financing activities:
Acquisition and construction of capital assets (9,700,106)
Principal payments on bonds (70,000)
Interest paid on bonds (1,046,242)
Decrease in construction deposits (3,696)
Decrease in notes payable (20,502)
Principal payments on certificate of participation (575,000)
Increase in unredeemed coupons and bonds payable 1.867
Net cash used in capital and
related financing activities (11.413.679)
Cash flows from investing activities:
Net decrease in investments 7,042,234
Interest on investments 1.510.647
Net cash provided by investing activities 8,552,881
Net decrease in cash (297,207)
Cash and cash equivalents at beginning of period 8.583.324
Cash and cash equivalents at end of period $ 8.286.117
Supplemental schedule of noncash investing and
financing activities - Capital assets contributed
by contractors $ 943.911
See accompanying notes to financial statements.
B-6
CARLSBAD MUNICIPAL WATER DISTRICT
Statement of Changes in Financial Position
Year ended June 30, 1989
Sources of working capital:
Net income before extraordinary item $ 2,976,620
Depreciation 604,766
Amortization 23.275
Working capital provided by operations
before extraordinary loss 3,604,661
Extraordinary item, net of write-off of issuance costs 1.463.189
Working capital provided by operations 2,141,472
Contributed utility plant 1,125,527
Issuance of refunding certificate of participation payable 14,370,000
Increase in deferred compensation payable 178.920
Total sources of working capital 17.815.919
Uses of working capital:
Issuance costs paid with debt proceeds 427,361
Certificates of participation payable defeased 11,650,000
Additions to utility plant, net 3,636,240
Increase in restricted assets 224,478
Current maturity of long-term debt 70,000
Decrease in current liabilities payable from
restricted assets 2,332
Current maturity of certificates of participation payable 1.060.OOP
Total uses of working capital 17.070.411
Increase in working capital $ 745.508
Increase (decrease) in working capital:
Cash (41,161)
Investments 1,392,176
Accounts receivable 241,524
Inventories (29,133)
Accounts payable (530,105)
Current portion of certificates of participation payable (225,000)
Current portion of note payable 200
Accrued expenses and interest payable (69,130)
Construction deposits 6.137
Increase in working capital $ 745.508
See accompanying notes to financial statements.
B-7
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements
June 30, 1990 and 1989
(1) Reporting Entity and Summary of Significant Accounting Policies
(a) Reporting Entity;
The Carlsbad Municipal Water District, (the District) of the City of
Carlsbad (City) operates under a water service agreement with the
City wherein the District provides all capital facility financing
and development, operation and maintenance and planning for the
consolidated water system, and the City provides all customer
service functions for essentially the entire City of Carlsbad. The
District is a member of the San Diego County Water Authority, from
whom it purchases its water.
On January 1, 1990, the District was established as a component unit
of the City. The City and the District continued to function as
separate entities for reporting purposes until December 31, 1989.
The District is an integral part of the reporting entity of the
City. The accounts of the District have been included within the
scope of the general purpose financial statements of the City
because the City Council exercises oversight responsibility over
the operations of the District. Only the accounts of the District
are included herein; therefore, these financial statements do not
purport to represent the financial position or results of
operations of the City of Carlsbad.
The District maintains two fund types which are combined on the face
of the financial statements, the description of which is as follows:
(1) General Fund - The general fund is used to account for the major
portion of District operations which are financed and operated in
a manner similar to that of a private business enterprise. The
intent of the District is to establish rates and fees sufficient
to provide for payment of general District operations and
maintenance expenses as well as required annual debt service.
(2) Improvement District Funds - Improvement district funds are used
to account for the financing of public improvements as set forth
in original bond covenants as established by voter approval. The
District accounts for the activity related to each improvement
district's debt and acquisition appropriations within separate
improvement district funds.
B-8 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(1) Reporting Entity and Summary of Significant Accounting Policies. Continued
(b) Summary of Significant Accounting Policies:
The accounting policies of the District conform to generally accepted
accounting principles as applicable to single enterprise funds.
Revenues and expenses are recorded on the accrual basis of
accounting. Resources are allocated to and accounted for in
individual funds based upon the purpose for which they are to be
spent and the means by which spending activities are controlled.
(i) Investments;
Investments are recorded at cost, which approximates market
value.
(ii) Inventories;
Inventories of materials are stated at weighted average
cost. Inventory of water is stated on a lower of cost
(last-in, first-out) or market basis.
(iii) Utility Plant;
Utility plant is stated at cost or, if donated, at estimated
fair market value at date of transfer. Expenditures for
improvements and betterments (including labor and overhead)
are capitalized. Maintenance, repairs and minor improvements
are expensed as incurred. Depreciation is computed using the
straight-line method over the estimated useful lives of the
respective assets.
(iv) Vacation and Sick Leave;
The District records a liability equal to 100 percent of
eligible vacation and sick leave available to employees.
(v) Interest Earned;
The District maintains centralized cash and investment
accounts in order to maximize investment return. The
District allocates interest earned among the various funds
based on each fund's share of the cash and investment balance.
(vi) Statement of Cash Flows and Cash Equivalents;
In September 1989, the Governmental Accounting Standards
Board issued Statement No. 9, "Reporting Cash Flows of
Proprietary and Nonexpendable Trust Funds and Governmental
B-9 .. (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(1) Reporting Entity and Summary of Significant Accounting Policies. Continued
(b) Summary of Significant Accounting Policies. Continued;
(vi) Statement of Cash Flows and Cash Equivalents. Continued;
Entities that Use Proprietary Fund Accounting." Effective
June 30, 1990, the District prospectively adopted the
provisions of Statement No. 9 and has presented a statement
of cash flows instead of the statement of changes in
financial position for the year ended June 30, 1990. The
District has elected not to restate the statement of changes
in financial position for the year ended June 30, 1989.
For purposes of the statement of cash flows, cash and cash
equivalents consists of cash on hand, Local Agency Investment
Fund and County Treasurer Investment Pool.
(vii) Issuance Costs;
Issuance costs of the 1988 COP are amortized using a
straight-line method over the 16-year life of the issue.
(2) Cash and Investments
Authorized deposits and investments of the District are governed by the
California Government Code as well as policies set forth by the Board
of Directors. Within the contents of these limitations, permissible
investments include: obligations of the U.S. Treasury, agencies and
instrumentalities, bankers' acceptances, commercial paper rated A-1+ by
Standard and Poor's Corporation or P-l by Moody's Commercial Paper
Record, and certificates of deposit issued by nationally or
state-chartered banks or federal or state savings and loans
associations. Funds may also be invested in the State Treasury's Local
Agency Investment Fund and the County Treasurer Investment Pool.
In order to diversify the District's portfolio, a policy was adopted
which provides for the District to only hold deposits and investments
totalling up to 30% of total available investment capital at any one
bank or savings and loan, up to the lesser of $5,000,000 or 50% of
total available investment capital in the Local Agency Investment Fund
and the option to invest with a registered investment advisory firm.
B-10 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(2) Cash and Investment. Continued
State statutes require that all deposits be insured or collateralized.
Depositories holding public funds on deposit are required to maintain
collateral in the form of a pool of securities with the agent of the
depository having a market value of at least 10 to 50 percent in excess
of the total amount of all public funds on deposit. The District's
deposits are entirely insured or collateralized.
A summary of cash and investments is as follows:
1990 1989
Deposits:
Cash $ 235,645 374,215
Time certificates of deposit 2.482,000 4.855.000
2,717,645 5,229,215
Investments 10.251,540 15.074.620
12,969,185 20,303,835
Less restricted portion 4.479,527 7.946.140
Unrestricted cash and investments $ 8.489.658 12.357.695
Deposits:
The following summary presents the amount of the District's deposits
which are fully insured or collateralized with securities held by the
District or its agent in the District's name (Category One), those
deposits which are collateralized with securities held by the pledging
financial institution's trust department or agent in the District's
name (Category Two), and those deposits which are not collateralized or
are collateralized with securities held by the pledging financial
institution or its trust department or agent but not in the District's
name (Category Three) at June 30, 1990.
B-ll (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(2) Cash and Investments. Continued
Cash
Time certificates of deposit
Investments;
Category
One
126,290
2.482.000
Two Three
143,647
Total Bank
269,937
2.482.000
Carrying
Amount
235,645
2,482.000
$ 2.608.290 2.751.937
The District categorizes investments according to the level of risk
assumed by the District. Category One includes investments that are
insured, registered or held by the District's agent in the District's
name. Category Two includes uninsured and unregistered investments
held by the counterparty's trust department or agent in the District's
name. Category Three includes uninsured and unregistered investments
held by the counterparty, its trust department or its agent, but not in
the District's name. Certain investments have not been categorized
because securities are not used as evidence of the investment. These
uncategorized investments include ownership interests in pooled
investment funds. The summary below identifies the level of risk
assumed by the District and the total carrying amount and market value
of the District's investments at June 30, 1990.
Local agency
investment fund
County treasurer
investment pool
U.S. Treasury Bills
Money Market Fund
Deferred compensation
investment fund
Total
Category
One Two Three
1,221,876
117,182
$ 1.339.058
Invest-ments Market
5,000,000 5,000,000 5,000,000
3,050,472 3,050,472 3,050,472
1,221,876 1,239,269
117,182 117,215
862.010 862.010 862.010
8.912.482 1Q.251.54Q 10.268.966
B-12 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(3) Utility Plant
A summary of utility plant and the related accumulated depreciation as of
June 30, 1990 and 1989 follows:
Cost of participation - San Diego
Water Authority
Land and easements
Reservoirs and dams
Pipelines and pumping stations
Chlorination stations
Meters and accessories
Buildings
Machinery and equipment
Office fixtures and equipment
Less accumulated depreciation
Construction in progress
Net utility plant
1990
33,175
1,023,186
9,650,951
20,615,977
83,267
662,810
2,206,372
823,589
410.777
35,510,104
5.169.765
30,340,339
8.914.026
33,175
322,007
9,717,095
19,185,582
83,267
662,810
303,686
665,977
193.668
31,167,267
4.651.990
26,515,277
2.352.005
$ 39.254.365 28.867.282
Interest costs incurred during construction of the District's projects
have been capitalized as costs of acquiring the assets and such costs
will be amortized on a straight-line basis over the life of the related
assets. Interest costs of $391,040 and $91,475 were capitalized in
1990 and 1989, respectively. Total interest costs incurred, including
capitalized amounts during these same periods, were $1,036,597 and
$1,043,257, respectively.
B-13 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements. Continued
(3) Utility Plant. Continued
Depreciation is computed on the straight-line method over the estimated
lives of the respective assets, as follows:
Estimated
Assets useful lives
Reservoirs and dams 75 years
Pipelines and pumping stations 50 years
Chlorination stations 25 to 40 years
Meters and accessories 25 to 40 years
Buildings 40 years
Machinery and equipment 5 to 20 years
Office fixtures and equipment 5 to 10 years
(4) Certificates of Participation
In November 1988, the District issued $14,370,000 in Certificates of
Participation (1988 COP). A portion of the proceeds were used to
refund $12,000,000 of the outstanding 1984 Certificates of
Participation (1984 COP). The District deposited funds in an
irrevocable trust with an escrow agent to provide for all future
service payments on the 1984 COP. As a result, the 1984 COPs are
considered to be defeased and the liability for those certificates are
not included in the District's financial statements. At June 30, 1990,
$11,250,000 of outstanding 1984 COPs are considered defeased.
The 1988 COPs bear interest ranging from 5.6% to 7.3% per year, payable
semi-annually on May 1 and November 1, beginning May 1, 1989.
Principal payments are payable annually through May 1, 2004. The debt
agreement stipulates that the District adhere to specified covenants.
At June 30, 1990, the District was in compliance with these
requirements.
Although the advance refunding resulted in increased principal payments
of approximately $1,812,000 which is reflected in the statement of
operations for the year ended June 30, 1989, the District in effect
reduced its aggregate debt service payments by $3,229,000 over the next
15 years and obtained an economic gain (difference between the present
values of the old and new debt service payments) of $609,000.
B-14 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(4) Certificates of Participation. Continued
Maturities of the 1988 COPs during the years subsequent to June 30, 1990
are as follows:
1991 $ 610,000
1992 645,000
1993 685,000
1994 730,000
1995 775,000
Thereafter 9.865.000
$ 13.310.000
(5) Bonds Payable
Bonds payable at June 30, 1990 comprise the following individual issues:
Improvement
District 2 Improvement Improvement
Series 2 District 3 District 4 Total
Date of issue 1961-Series 2 1961 1961
Coupon interest rate 4.5% 4.75 & 5.0% 3.5 & 4.0%
Interest payment dates 5/1 & 11/1 3/1 & 9/1 6/1 & 12/1
Principal payment dates 5/1 3/1 12/1
Authorized $ 425,000 1,000,000 690,000 2,115,000
Authorized - unissued - (200.000) - (200.000)
Original issue 425,000 800,000 690,000 1,915,000
Redeemed as of
June 30, 1990 (400.000) (242.000) (610.000) (1.252.000)
Outstanding as of
June 30, 1990 25,000 558,000 80,000 663,000
Less current portion (25.000) (558.000) (40.000) (623.000)
Long-term portion $ - - 40.000 40.000
Minimum annual principal payments for retirement of outstanding bonds as
of June 30, 1990 are as follows:
Fiscal Years
Ending June 30.
1991
1992
Total
Series 2
1961
$ 25,000
$ 25.000
B-15
1961
558,000
558.000
1961
40,000
40.000
80.000
Total
623,000
40.000
663.000
(Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(5) Bonds Payable. Continued
A sinking fund was established in conjunction with the issuance of bonds
for Improvement District No. 3. Board Resolution No. 128 prescribes
the establishment of the sinking fund for the payment of debt as it
becomes due.
(6) Reserved/Designated Retained Earnings
The following is a summary of reserved/designated retained earnings as of
June 30, 1990 and 1989:
1990 1989
Reserved for debt agreements:
Sinking Fund $ - 539,466
Debt Service 623,702 65,702
Acquisition 530.718 530.718
1.154.420 1.135.886
Designated for:
Contingencies 1,856,112 1,710,004
Construction 500,000 500,000
Major Facilities Charges 6,534,955 8,889,445
Replacement Projects 354,304 3,230,737
Fully reserved assets -. 69.227
9.245.371 14.399.413
$ 10.399.791 15.535.299
The following reserves have been established pursuant to debt agreements:
(a) Sinking Fund;
This reserve was established in conjunction with the issuance of
bonds for Improvement District No. 3. Funding of the sinking fund
during fiscal 1989 was by proceeds from property taxes and
transfers of interest from the general fund.
(b) Debt Service;
These reserves were established in conjunction with the various bond
issues. The reservations are restricted to the payment of current
bond service requirements.
B-16 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(6) Reserved/Designated Retained Earnings. Continued
(c) Acquisition;
The original bond issues of the District were for the purpose of
acquisition of facilities. To date, through various reimbursements
to these acquisition funds, there remains $530,718 reserved for
acquisition purposes.
The following designations of retained earnings have been established:
(a) Contingencies;
During fiscal 1990 and 1989, the Board of Directors designated an
amount equal to 25% of the subsequent years annual operating
budget. This appropriation was made to offset the "stand by" fees
which are now kept by the City of Carlsbad as part of the Water
Service Agreement (Note 7). The "stand by" fees provide a source
of revenue even if water sales were significantly reduced. Amounts
appropriated are to be used for operations in the event of a
temporary decline in water revenue from an unforeseen event.
(b) Construction:
During fiscal 1985, the Board
$500,000 to be used for em
appropriated are only to
of Directors designated an amount of
=rgency capital improvements. Amounts
De used for significant non-recurring
items which are not included in the operating budget.
(c) Major Facilities Charges:
During fiscal 1984, the Board of Directors established a program for
funding the construction of new major facilities. The balance of
$6,534,955 at June 30, 1990 is the cumulative result of the fees
collected and expenditures identified as major facilities during
the period that this program has been in place.
(d) Replacement Projects;
During fiscal 1984, the Board of Directors established a program for
funding replacement projects. The balance of $354,304 at June 30,
1990 is the cumulative result of fees collected and expenditures
identified as replacement projects during the period that this
program has been in place.
B-17 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(7) Agreement With the City of Carlsbad
As part of an agreement with the City of Carlsbad, the City has set aside
a water utility fund, approximately $4,700,000 as of June 30, 1990, for
the District for the acquisition and construction of certain specific
projects which will benefit the District. This agreement also
specified that if and when a piece of property presently held by the
City is sold or leased, all proceeds will be donated to the District.
(8) Defined Benefit Pension Plan
(a) Plan Description;
The District contributes to the California Public Employees'
Retirement System (PERS), an agent multiple-employer public
employee retirement system that acts as a common investment and
administrative agent for participating public entities within the
state of California. For the years ended June 30, 1990 and 1989,
the District's payroll for employees covered by the PERS was
$1,047,044 and $1,026,090, respectively. Total payroll for the
same period was $1,152,725 and $1,069,408, respectively.
All full-time District employees are eligible to participate as
members of the PERS. Benefits vest after 5 years of service.
District employees who retire at or after age 60 with 5 years of
credited service are entitled to an annual retirement benefit,
payable monthly for life, in an amount equal to 2% of their average
salary during their last 12 months of employment or another period
of 12 months selected by the member if the average pay rate was
higher. The PERS also provides death and disability benefits.
These benefit provisions and all other requirements are established
by state statute and District ordinance.
District employees contribute 7% of their annual salary to the PERS.
This is paid by the District for the benefit of the employees in
lieu of salary. The District is required to contribute the
remaining amounts necessary to fund the benefits for its members,
using the actuarial basis recommended by the PERS actuaries and
actuarial consultants and adopted by the Board of Administration.
B-18 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(8) Defined Benefit Pension Plan, Continued
(b) Funding Status and Progress;
The amount shown as the "pension benefit obligation" is a
standardized disclosure measure of the present value of pension
benefits, adjusted for the effects of projected salary increases
and step-rate benefits, estimated to be payable in the future as a
result of employee service to date. The measure is intended to
help users assess the funding status of the PERS on a going-concern
basis, assess progress made in accumulating sufficient assets to
pay benefits when due and make comparisons among employers. The
measure is the actuarial present value of credited projected
benefits and is independent of the funding method used to determine
contributions to the PERS.
The pension benefit obligation was computed as part of an actuarial
valuation performed as of June 30, 1989. Significant actuarial
assumptions used in the valuation include:
(1) A rate of return on the investment of present and future assets
of 8.5% a year compounded annually;
(2) Projected salary increases of 5% a year compounded annually,
attributable to inflation;
(3) Additional projected salary increases of 2% a year, attributable
to seniority/merit, and
(4) No post-retirement benefit increases.
B-19 - (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(8) Defined Benefit Pension Plan, Continued
(b) Funding Status and Progress. Continued;
Assets in excess of the pension benefit obligation applicable to the
District's employees was $75,724 at June 30, 1989 (the date of the
latest actuarial valuation), as follows:
Pension benefit obligation:
Retirees and beneficiaries currently receiving
benefits and terminated employees not yet
receiving benefits $ 459,979
Current employees:
Accumulated employee contributions, including
allocated investment earnings 422,880
Employer-financed vested 197,852
Employer-financed nonvested 61.012
Total pension benefit obligation 1,141,723
Net assets available for benefits, at cost
(market value, $1,426,848) 1.217.447
Assets in excess of the pension benefit obligation $ 75.724
(c) Actuariallv Determined Contribution Requirements and Contribution
Made;
PERS uses the Entry Age Normal Actuarial Cost Method which is a
projected benefit cost method. It takes into account those
benefits that are expected to be earned in the future as well as
those already accrued. According to this cost method, the normal
cost for an employee is the level amount which would fund the
projected benefit if it were paid annually from date of employment
until retirement. PERS uses a modification of the Entry Age Cost
Method in which the employer's total normal cost is expressed as a
level percentage of payroll.
B-20 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(8) Defined Benefit Pension Plan. Continued
(c) Actuariallv Determined Contribution Requirements and Contribution
Made, Continued;
PERS also uses the level percentage of payroll method to amortize any
unfunded actuarial liabilities. At June 30, 1990 and 1989, the
District did not have any unfunded actuarial liabilities. The
amortization period of the unfunded actuarial liability ends on
June 30, 1990 for the prior service benefit and June 30, 2000 for
other benefits.
The significant actuarial assumptions used to compute the actuarially
determined contribution requirement are the same as those used to
compute the pension benefit obligation as described above.
The actuarially determined employer and employee contributions
applicable to the District at June 30, 1990 and 1989 were as
follows:
Required normal
cost contribution
Less overfunding
Total required
contributions
Contributions made
by the District
Contributions made
by the employees
Total actual
contributions
1990 1989
Contri-
butions
80,738
(55.420)
Covered
Payroll
Contri-
butions
7.7 % 73,112
:5.3)% (39,071)
2.4 %
80,826 7.7 % 76,956
73.374 7.0 % 66.363
Covered
Payroll
7.8 %
3.6 %
8.2 %
7.1 %
$ 154.200 14.7 % 143.319 13.3 %
B-21 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(8) Defined Benefit Pension Plan. Continued
(c) Actuariallv Determined Contribution Requirements and Contribution
Made. Continued:
The District has a surplus as a result of prior year actuarial
gains. In order to maintain a level pattern of contributions, the
District has chosen not to apply it to fully offset the current
years contributions.
Trend information gives an indication of the progress made in
accumulating sufficient assets to pay benefits when due. Ten-year
historical trend information is not available from the California
Public Employees Retirement System; therefore, only the available
information is presented.
Fiscal year ended June 30.
1989 1988 1987
Net assets available for benefits
(at cost) $ 1,217,447 981,451 823,110
Pension benefit obligation (PBO) 1,141,723 941,218 749,880
Net assets as a % of PBO 106.6% 104.3% 109.8%
Assets in excess of pension benefit
obligation 75,730 40,240 73,240
Annual covered payroll 1,026,090 960,250 825,380
Assets in excess of PBO as a % of
annual covered payroll 7.4% 4.2% 8.9%
The following is three-year trend information which gives an
indication of the progress made in accumulating sufficient assets
to pay benefits when due. The pension benefit obligation has not
yet been calculated by PERS for the plan year 1990, therefore, some
B-22 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(8) Defined Benefit Pension Plan. Continued
(c) Actuarially Determined Contribution Requirements and Contribution
Made. Continued;
of the percentages noted below were not available (N/A) for
disclosure:
1990 1989 1988
Net assets available for benefits as
a percentage of pension benefit
obligation N/A 106.6% 104.3%
Assets in excess of the pension benefit
obligation as a percentage of annual
covered payroll N/A 7.4% 4.2%
Actuarially determined employer
contributions as a percentage of
annual covered payroll 7.7% 3.6% 4.1%
(9) Deferred Compensation Plan
The District offers its employees a deferred compensation plan created in
accordance with Internal Revenue Code Section 457. The plan, available
to all District employees, permits them to defer a portion of their
salary until future years. The deferred compensation is not available
to employees until termination, retirement, death, or unforeseen
emergency.
All amounts of compensation deferred under the plan, all investments and
rights purchased with those amounts, and all income attributable to
those amounts, or rights, are (until paid or made available to the
employee or other beneficiary) solely the property and rights of the
District (without being restricted to the provisions of benefits under
the plan), subject only to the claims of the District's general
creditors. Participants' rights under the plan are equal to those of
general creditors of the District in an amount equal to the fair market
value of the deferred account of each participant.
B-23 (Continued)
CARLSBAD MUNICIPAL WATER DISTRICT
Notes to Financial Statements, Continued
(9) Deferred Compensation Plan. Continued
The District believes it has no liability for losses under the plan but
does have the duty of due-care that would be required of an ordinary
prudent investor. The District believes that it is highly unlikely
that it will use the assets to satisfy the claims of general creditors
in the future.
(10) Commitments
Various construction contracts were in progress at June 30, 1990 with an
estimated cost to complete of approximately $540,000.
B-24
Schedule 1
CARLSBAD MUNICIPAL WATER DISTRICT
Water Treatment, Transmission and Distribution,
and Administrative and General Expenses
For the year ended June 30, 1990
(With comparative totals for the year ended June 30, 1989)
(Unaudited)
Water treatment:
Labor I
Chlorine
Equipment, maintenance,
materials and supplies
Laboratory services testing
Total
Transmission, distribution
and maintenance:
Water distribution
Pipeline installation
Pipeline repair and maintenance
Fire hydrant maintenance and
installation
Waterline markout
Vehicle maintenance
Purchasing/receiving
Facility maintenance
Total
Administrative and general:
Administration
Engineering and special services
Professional fees
Directors fees and expenses
Utilities
Insurance
Office supplies and expense
Water conservation
Total
Budget
56,130
15,000
5,000
25.000
101,130
290,164
71,467
251,978
47,133
25,518
56,851
32,268
167.106
942.485
309,433
454,168
165,000
22,550
39,500
68,000
31,750
30.000
1.120.401
2.164.016
Actual
29,769
15,056
3,131
26.390
74.346
352,712
141,676
204,228
43,385
22,423
48,499
52,780
99.741
965.444
245,385
542,150
188,445
17,765
45,716
54,783
38,429
31.014
1.163.687
2.203.477
(Over)
under
Budget
26,361
(56)
1,869
(1.390)
26.784
(62,548)
(70,209)
47,750
3,748
3,095
8,352
(20,512)
67.365
(22.959)
64,048
(87,982)
(23,445)
4,785
(6,216)
13,217
(6,679)
(1.014)
(43.286)
(39.461)
1989
Actual
54,751
29,498
7,862
26.789
118.900
377,158
89,769
255,688
41,950
52,670
92.459
909.694
241,666
487,418
89,359
23,832
38,484
56,470
35,200
21.924
994.353
2.022.947
B-25
CARLSBAD MUNICIPAL WATER DISTRICT
Improvement Districts' Balance Sheet
June 30, 1990
(With comparative totals for June 30, 1989)
Schedule 2
Assets
Current restricted assets:
Cash
Investments
Contract receivable
Restricted assets - Investments
Utility plant:
Water transmission and
distribution facility
Less accumulated depreciation
Liabilities and Equity
Current liabilities payable from
restricted assets:
Current portion of bonds payable
Accrued interest and unredeemed
bonds and bond coupons
Total current
liabilities payable
from restricted assets
Bonds payable
Total liabilities
Equity:
Equity in utility plant
Retained earnings (deficit):
Reserved
Unreserved:
Designated
Undes ignated
Total equity
Improvement
District #1
2
345
348
1,074
(599
475
323
,367
,827
.194
,916
,132)
,784
.978
Improvement
District #2
16
737
754
4,191
(1,387
2,803
3,557
,818
,636
,454
,056
.820)
.236
.690
Improvement
District #3
6
1,048
1,055
1,108
(480
628
1.683
,521
,648
,169
,849
,125)
,724
.893
Improvement
District #4
120
120
731
(276
455
575
583
,058
,641
,540
,327)
,213
.854
Total
1990
26
2,252
2,278
7,106
(2,743
4,362
6,641
,289
,169
,458
,361
,404)
,957
,415
1,
2.
7,
(2.
4,
6.
1989
24,424
617,815
3,125
539,466
184,830
106,362
607,009)
499,353
684.183
2,367
2,367
2,367
546,751
274,860
821,611
823,978
25,000
16,304
41,304
41,304
3,454,756
413,165
(351,535)
3,516,386
3,557,690
558,000
15,822
573,822
573,822
256,133
701,255
152,683
1,110,071
1,683,893
40,000
816
40,816
40,000
80,816
311,790
40,000
143,248
495,038
575,854
623,000
35,309
658,309
40,000
698,309
4,569,430
1,154,420
219,256
5,943,106
6,641,415
65,000
36,005
101,005
663,000
764,005
4,433,034
1,135,. 886
69,228
282,030
5,920,178
6,684,183
B-26
Schedule 3
CARLSBAD MUNICIPAL WATER DISTRICT
Improvement Districts' Statement of Revenues and Expenditures
For the year ended June 30, 1990
(With comparative totals for the year ended June 30, 1989)
Improvement Improvement Improvement Improvement Total
District #1 District #2 District #3 District #4 1990 1989
Operating expense -
Depreciation
Net operating loss
Other income (expense):
Property taxes - 3,550 1,433 3,027 8,010 59,392
Interest earned 27,466 59,796 84,937 11,007 183,206 174,882
Interest on bonds and note
payable
Total other income, net
Net income (loss)
B-27
Supplemental Section - C
The following data is presented in order for the reader to get a better
understanding of the District and its operations. The information is taken
from a variety of sources and while appropriate measures were taken to
ensure material provided is as accurate as possible, the information was
not audited, and is solely the responsibility of District staff.
Carlsbad Municipal Water District
Water Purchases
(Acre Feet)
Month 85/86 86/87 87/88 88/89 89/90 Average
July
August
September
October
November
December
January
February
March
April
May
June
1,522.0
1,631.4
1,449.4
1,370.2
864.4
612.1
856.0
613.1
740.7
1,107.2
1,482.9
1,427.4
1,620.4
1,745.3
1,474.0
1,130.0
1,054.5
868.3
746.9
775.1
796.0
1,301.6
1,526.7
1,632.2
1,687.9
1,828.0
1,624.2
1,149.4
858.5
753.1
698.9
906.6
1,300.0
1,152.7
1,529.0
1,668.6
1,886.3
1,797.4
1,674.9
1,517.3
1,003.4
893.5
897.7
847.9
1,140.8
1,409.8
1,651.2
1,667.5
1,997.2
2,093.6
1,741.3
1,712.5
1,445.2
1,397.0
896.9
854.0
1,193.3
1,203.2
1,775.1
1,609.5
1,742.8
1,819.1
1,592.8
1,375.9
1,045.2
904.8
819.3
799.3
1,034.2
1,234.9
1,593.0
1,601.0
Annual Demands 13,676.8 14,671.0 15,156.9 16,387.7 17,918.8 15,5623
C-l
Carlsbad Municipal Water District
Agricultural Usages
(Acre Feet)
Month 85/86 86/87 87/88 88/89 89/90 Average
July
August
September
October
November
December
January
February
March
April
May
June
352.3
375.7
320.5
299.9
113.8
95.2
89.0
53.4
128.1
201.1
203.3
256.6
251.9
318.5
260.0
167.8
55.9
76.8
74.4
68.5
153.0
194.6
189.6
238.5
207.1
275.2
289.5
86.9
72.4
44.8
87.0
100.1
138.1
124.4
226.0
249.1
266.5
259.0
233.1
295.7
79.3
62.2
176.0
170.3
178.7
244.5
138.4
213.4
259.3
309.8
253.3
234.4
129.9
93.7
70.4
78.4
128.4
187.9
247.2
235.2
267.4
307.6
271.3
216.9
90.3
74.5
99.4
94.1
145.3
190.5
200.9
238.6
Demands 2,488.9 2,049.5 1,900.6 2^17.1 2,227.9 2,196.8
C-2
Agricultural vs. Total Usage
1985-86 thru 1989-90
Acre Feet (326,000 Gal.)
o
iL^il Agricultural
85-86 86-87 87-88 88-89
Fiscal Year
89-90
Carlsbad Municipal Water District
Cost of Purchased Water
(In $1,000)
Month 85/86 86/87 87/88 88/89 89/90 Average
July
August
September
October
November
December
January
February
March
April
May
June
366.8
393.1
349.3
330.2
208.3
147.5
206.3
147.7
178.5
266.8
357.3
344.0
400.2
431.1
364.1
279.1
260.5
214.5
184.5
191.4
196.6
321.5
377.1
403.2
416.9
451.5
401.2
283.9
212.0
186.0
176.1
228.5
327.6
290.5
385.3
420.5
484.8
461.9
430.4
390.0
257.9
229.6
235.2
222.2
298.9
369.4
432.6
436.9
553.2
579.9
482.3
474.4
400.3
387.0
248.4
236.6
330.5
333.3
491.7
445.8
444.4
463.5
405.5
351.5
267.8
232.9
210.1
205.3
266.4
316.3
408.8
410.1
Annual Demands 3,295.8 3,623.8 3,780.0 4,249.8 4,963.4 3,982.6
C-4
Carlsbad Municipal Water District
Employee Summaries
85/86 86/87 87/88 88/89 89/90
Managerial
Administration
Engineering
Operations
4.0
4.0
5.0
13.0
3.0
4.0
5.0
14.0
4.0
4.0
6.0
15.0
4.0
3.0
6.0
15.0
4.0
5.0
7.0
15.0
Total 26.0 26.0 29.0 28.0 3LO
Tenure Summary
> 20 Years
15-19 Years
10-14 Years
5-9 Years
< 5 Years
Avg, Years
of Service
2
4
8
5
12
7.90
C-5