HomeMy WebLinkAbout16-Water Department
CITY OF SAN BERNARDINO - REBUEST FOR COUNCIL ACTION
lt: Water
Subject: Receive and File - Annual Audit of the Water
Department's Water and Sewer Utilities for the fiscal year
ending June 30, 2005
From: Stacey R. Aldstadt, General Manager
Date: 2/9/2006
M&CC Meeting Date: 3/6/2006
Synopsis of Previous Council Action:
Similar action taken each year following completion of the annual Audit Report
Recommended motion:
-r'''it the Mayor and Council receive and file the Annual Audit of the Water Department's Water and Sewer Utilities for
fiscal year ending June 30, 2005.
Si91f!ur~
Contact person: Stacev R. Aldstadt. General ManaQer
Phone:
384-5091
Supporting data attached:
Yes Ward:
FUNDING REQUIREMENTS:
Amount: N/A
Source:(Acct. No.) Water Department
(Acct. Description)
Finance:
Council Notes:
3/ t,flJlf,
Agenda Item NO.1...!o..-
75-0262
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
STAFF REPORT
Subject:
Annual Audit of the Water Department's Water and Sewer Utilities for the fiscal year ending
June 30, 2005.
Background:
The firm of Conrad & Associates, L.L.P. has completed the Annual Audit of the Water
Department's Water and Sewer Utilities for the fiscal year ending June 30,2005. This report
was presented to and accepted by the Board of Water Commissioners at their meeting of
January 17, 2006.
Financial Impact:
None.
Recommendation:
That the Mayor and Common council receive and file the completed Annual Audit of the Water
Department's Water and Sewer Utilities for the fiscal year ending June 30,2005.
MUNICIPAL WATER DEPARTMENT OF THE
CITY OF SAN BERNARDINO, CALIFORNIA
Financial Statements
Year ended June 30, 2005
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Financial Statements
Year ended June 30, 2005
TABLE OF CONTENTS
Page
FINANCIAL SECTION
Independent Auditors' Report
Management's Discussion and Analysis
Basic Financial Statements:
Statement of Net Assets
Statement of Revenues, Expenses, and Changes in Net Assets
Statement of Cash Flows
Notes to Basic Financial Statements
1
5
10
13
14
16
SUPPLEMENT ARY INFORMATION
Statistical Schedules:
Board of Water Commissioners and Organization 43
Schedule of Insurance Coverage 44
Schedule of Water System Demographics 46
Schedule of Water Production 47
Schedule of Water Rates 48
Schedule of Sundry Water Statistical Data 50
Schedule of Service Area and Customers 52
Schedule of Sewer Rates and Statistics 53
Schedule - 1992 Certificates of Participation, San Bernardino
Public Safety Authority 56
Schedule - 1998 Refunding Sewer Revenue Certificates of Participation,
San Bernardino Public Safety Authority 57
Series 1998A Water and Wastewater Revenue Bonds 58
Bond Schedule - General Obligation Waterworks Bonds, Series C 59
Report on Compliance and Other Matters and on Internal Control over
Financial Reporting Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards 61
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CONRAD AND
ASSOCIATES, LLP.
CERTIFIED PUBLIC ACCOUNTANTS
2301 DUPONT DRIVE. SUITE 200
IRVINE, CALIFORNIA 92612
(9491474-2020
Fax (949) 263-5520
Water Commissioners Board
Municipal Water Department of the City of
San Bernardino, California
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying financial statements of each major fund of the Municipal
Water Department of the City of San Bernardino (the "Municipal Water Department"), as of and
for the year ended June 30, 2005, which collectively comprise the Municipal Water Department's
basic financial statements, as listed in the table of contents. These financial statements are the
responsibility of the Water Department's management. 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 of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinions.
As discussed in Note I, the financial statements present only the Municipal Water Department
and are not intended to present fairly, in all material respects, the financial position of the City of
San Bernardino, California, and the results of its operations and cash flows of its proprietary nmd
types, in conformity with accounting principles generally accepted in the United States of
America.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of the Municipal Water Department of the City of San Bernardino, as of
June 30, 2005, and the respective changes in financial position and cash flows, where applicable,
of the Municipal Water Department of the City of San Bernardino for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
The information identified in the accompanying table of contents as management's discussion
and analysis and required supplementary information are not a required part of the basic
financial statements, but are supplementary information required by accounting principles
generally accepted in the United States of America. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement
and presentation of the required supplementary information. However, we did not audit the
information and express no opinion on it.
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
Water Commissioners Board
Municipal Water Department of the City of
San Bernardino, California
Page Two
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Municipal Water Department's basic financial statements. The
individual fund statements and schedules listed in the table of contents are presented for purposes
of additional analysis and are not a required part of the basic financial statements. The fund
financial statements and schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, are fairly stated in all material respects
in relation to the basic financial statements taken as a whole. The statistical tables have not been
subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we express no opinion on them.
In accordance with Government Auditing Standards, we have also issued a report dated
November 4, 2005 on our consideration of the Municipal Water Department's internal control
over financial reporting and our tests of its compliance with certain provisions of laws,
regulations, contracts, grant agreements, and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and
the results of that testing, and not to provide an opinion on the internal control over financial
reporting or on compliance. That rep011 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.
~,"'/__"'/AI?"":',,/:,,; 4~,J
November 4, 2005
2
MANAGEMENT'S DISCUSSION AND ANALYSIS
3
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4
MANAGEMENT'S DISCUSSION AND ANALYSIS
Our discussion and analysis of the San Bernardino Municipal Water Department's financial
perfonnance provides an overview of the Department's financial activities for the year ended
June 30, 2005. Please read it in conjunction with the Department's basic financial statements.
This annual financial report consists of two parts; Management's Discussion and Ana]ysis (this
section), and the Basic Financial Statements. The financial statements include notes that explain
some of the infonnation therein, as well as provide more detailed data.
]n December 1998, the Governmental Accounting Standards Board (GASB) issued Statement No.
33, Accounting and Financia] Reporting for Non-Exchange Transactions. GASB No. 33 set new
revenue recognition rules, including the reporting of contributed capital as Income in the
Statement of Revenues, Expenses, and Changes in Equity. In June ] 999, the GASB issued
Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for
State and Loca] Governments. GASB No. 34 establishes financial reporting standards for state
and local governments, cities, villages, and special purpose governments. GASB No. 34 required
the following changes to the Department's financial statements:
1. The fonnat of the balance sheet has been changed. Assets and liabilities are now
categorized as current and noncurrent. The equity section is displayed in three
categories: (1) invested in capita] assets, net of related debt, (2) restricted, and (3)
unrestricted. Unrestricted equity is no longer reserved or designated on the face of the
balance sheet.
2. The Statement of Revenues, Expenses, and Changes in Equity now reports contributed
capital as revenue, rather than a direct change to equity.
3. The Statement of Cash F]ows now includes a summary of the cash flows from
operating activities and continues to reconcile the reasons why cash from operating
activities differs from operating income.
Financial Hil!hlil!hts
During the year ended June 30, 2005, the Water Fund net assets increased $]4.5 million. This is
primarily due to $13.7 million in capita] contributions for the year. The Water Department's
decrease of operating revenue ($1,007,056), increase of operating expense ($],344,231) and
decrease of non-operating revenue ($1,]43,787) combined to decrease net profit by $3,495,074.
Net profit decreased from a $4,343,535 gain to an $848,461 gain from 2004 to 2005. The net
profit of $.8 million and contributed capita] of $13.7 million increased net assets by $]4.5
million.
During the year ended June 30, 2005, the Sewer Fund net assets increased $5.2 million. The
Sewer Department's increase in operating revenue ($2,773,649), increase in operating expense
($2,629,725) and decrease of non-operating expense ($895,109) combined to decrease net loss by
$1,039,033. Net profit increased from a $1,085,000 loss to a $45,967 loss from 2004 to 2005.
The net loss of $.04 million and contributed capital of $5.2 million increased net assets by 5.2
million.
5
Financial Analvsis of the Department
Equity - The Water Fund's net assets increased $14.5 million between fiscal years 2004 and
2005, increasing from $94.3 million to $108.8 million. The primary reason for the increase is the
$13.7 million in capital contributions. Other assets and other liabilities increased substantially
due to entry into the Consent Decree. More detailed information about the Consent Decree is
presented in Note 12 to the financial statements. The Sewer Fund's net assets increased from
$91.9 million to $97.1 million between fiscal years 2004 and 2005. The primary reason for the
increase is the $5.2 million in capital contributions.
Water Department's Equity
(In Millions of Dollars)
Water FI/lld Sewer FI/lld
2005 2004 %Cltallf!e 2005 2004 %Cltallfle
Current Other Assets 108.0 35.5 204.2 41.2 35.9 14.8
Capital Assets 96.7 79.8 21.2 110.7 112.5 (1.6)
Total Assets 204.7 115.3 77.5 151.9 148.4 2.4
Lonf!-Term Deb! 10.9 12.5 (12.8) 50.2 53.6 (6.3)
Other Liabilities 82.5 8.5 871.0 4.6 2.9 58.6
Total Liabilities 93.4 21.0 344.8 54.8 56.5 (3.0)
Ne! Assets
Invested in caoital assets net ofrelated debt 95.4 77.8 22.6 54.5 62.5 (12.8)
Restricted 6.8 3.3 106.1 13.2 9.2 43.5
Unrestricted 6.6 13.2 (50.0) 29.4 20.2 45.5
Total Net Assets 108.8 94.3 15.4 97.1 91.9 5.7
Change in Net Assets - The Water Fund's operating revenues decreased by 5.1 % to $20.5
million. This decrease is due to a smaller volume of water purchased due to wet weather
conditions last winter. The Water Fund's operating expenses increased 6.7% to $22.3 million.
Operating expenses increased primarily due to an overall increase in labor and fringe benefit costs
of about $.8 million, and an increase in legal fees of about $.8 million related to the completion of
the Consent Decree.
The Water Fund's non-operating revenues (expenses) decreased 29.7% to $2.6 million due to a
$2.5 million gain on the sale of a $3 million land p~rce1 in fiscal year 2004. Capital contributed
to the Water Department increased 260.5% to $13.7 million due to increased construction activity
in our service area and the partial use of an $8.5 million grant from the Department of Defense.
The combination of non-operating revenues ($2.6 million) and contributed capital ($13.7
million), plus the current year operating loss of $1.7 million caused an increase in net assets of
$14.5 million.
The Sewer Fund's operating revenues increased by 15.4% to $20.2 million. TIle Sewer Fund's
operating expenses increased 16.4% to $19.2 million. Operating revenues increased due to a rate
increase effective July I, 2004. Operating expenses increased partially due to an increase in
depreciation expense ($1.0 million) caused by a reclassification of fixed assets into shorter, more
accurate useful lives. Operating expenses also increased due to additional administrative fees
owed to the City of San Bernardino ($.5 million) along with additional electricity ($.2 million)
and chemical ($.2 million) costs in plant operations.
6
The Sewer Fund's non-operating revenues (expenses) decreased 45% to ($1.1 million) due to an
investment adjustment of $694,000 in fiscal year 2004 which decreased investment income by
this amount. Capital contributed to the Sewer Fund increased to $5.2 million. The net loss of
$.04 million and contributed capital of$5.2 million left an increase of$5.2 mil1ion to net assets.
Water Department's Changes in Net Assets
(In Millions of Dollars)
Water FI/lld Sewer FI/lld
1005 1004 %CltallJ(e 1005 1004 %Cltall1le
Rel'elllles:
Program Revenues:
Charges for Services 20.5 21.6 (5.1 ) 20.2 17.5 15.4
Contributed Capital 13.7 3.8 260.5 5.2 4.1 26.8
General Revenues:
InvestrnentIncome .9 .2 350.0 I.3 .5 160.0
Noncapital Grant Funds 1.0 1.2 (16.7)
Rental Income and Other .2 .2
36.3 27.0 34.4 26.7 22.1 20.8
Program Expenses: 21.8 18.8 16.0 21.5 19.1 12.5
Increase in Equity 14.5 8.2 76.8 5.2 3.0 73.3
Prior Period Adiustment - Net
Increase in Equity after Prior Period Adjustment 14.5 8.2 76.8 5.2 3.0 73.3
Total Net Assets - BegiIUling of tile Year 94.3 86.1 9.5 91.9 88.9 3.4
Total Net Assets - End of the Year 108.8 94.3 15.4 97.1 91.9 5.7
Capital Assets
At June 30, 2005, the Water Fund had invested $96.7 mil1ion in capital assets net of $45.6 million
of accumulated depreciation. This amount represents a net increase (including additions and
deductions) of $16.9 million or 21.2% from the prior year. A $4.3 million increase in property,
plant and equipment and a $15.5 million increase in construction in progress were partial1y offset
by a $2.9 million increase in accumulated depreciation. The primary reason for the $16.9 million
increase in net capital assets is due to increased construction in progress for newer projects, such
as the Enhanced Reliability Schedule of Improvements projects.
At June 30, 2005, the Sewer Fund had invested $110.7 million in capital assets net of $64.1
million of accumulated depreciation. This amount represents a net decrease (including additions
and deductions) of $1.8 million or 1.6% from the prior year.
More detailed information about the Department's capital assets is presented in Note 3 to the
financial statements.
Water Department's Capital Assets
(In Millions of Dollars)
Watel' FI/lld Sewer FI/lld
1005 2004 %Cltall1le 2005 2004 %CI1all1le
Construction in Progress 35.4 19.9 77.9 2.4 J.7 41.2
Accumulated Depreciation & Amortization 45.6 42.7 6.8 64.1 58.8 9.0
Total 96.7 79.8 21.2 110.7 112.5 ( 1.6)
7
Lonl!: Term Debt
At June 30, 2005 the Water Fund had $10.9 million in bonds outstanding, a decrease of 12.8%
from the prior year. It is anticipated that the Water Fund will apply for a second $10 million loan
from the California Infrastructure Economic Development Bank to cover the replacement of
aging infrastructure and new infrastructure within our service area during fiscal years 2006 and
2007.
At June 30, 2005, the Sewer Fund had $50.2 million in bonds outstanding, a decrease of 6.3%
from the prior year. No new debt was issued during the year and no new debt is anticipated in the
coming year.
More detailed information about the Department's long-term debt is presented in Note 5 to the
financial statements.
8
BASIC FINANCIAL STATEMENTS
9
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Statement of Net Assets
June 30, 2005
(With comparative totals for 2004)
Water Sewer Interfund Totals
Utilitv Utilitv Eliminations 2005 2004
Assets
ClIlTent asseL~:
Cash and investments (note 2) $ 10,935,889 18,862,289 29,798,178 30,914,635
Accounts receivable, net 9,366,953 2,636,301 12,003,254 6,478,549
Due from other entities 3,614,183 338,470 3,952,653 1,262,807
Intellund receivable 29,802 (29,802)
Related parties receivable (note 8) 276,674 440,052 716,726 762,913
Inventory 1,488,046 1,488,046 1,472,401
Prepaid expenses 52,594 1,203,348 1,255,942 22,620
Total current assets 25,734,339 23,510,262 (29,802 ) 49,214,799 40,913,925
NoncUlTent assets.
Restricted assets.
Cash and investments (note 2).
Restricted for debt service 20,150 3,565,352 3,585,502 4,002,273
Restlicted for capital-related fees 6,844,618 13,162,408 20,007,026 12,532,379
Resuicted for consumer deposits 2,194,334 2,194,334 2,224,512
Resu-icted for consent decree (note 12) ] 8,213 ,244 18,213,244
Interest receivable 192,803 80,765 273,568 J 22,537
Prepaid insurance - consent decree (note] 2) 49,866,440 49,866,440
Note proceeds held by state 4,373,005 4,373,005 10,000,000
Total restricted assets 81,704,594 16,808,525 98,513,119 28,881,701
Notes receivable 600,000 600,000 600,000
Capital assets (note 3):
Land and easements 2,944,972 12,470,740 15,415,712 15,179,915
Water rights, wells, pumping plants 37,830,047 3,192,218 41,022,265 38,685,054
Distribution systems 55,335,012 55,335,012 54,605,417
Building, plants and store yards 1,409,750 149,718,453 151,128,203 148,951,888
Tools and equipment 2,]69,581 4,] 38,198 6,307,779 5,858,277
Autos 2,985,214 1,002,099 3,987,313 3,895,962
Oflice leasehold improvements J51,126 151,J26 141,926
Oflice, computer, engineering
equipment 3,288,088 1,192,632 4,480,720 3,505,679
Radio and interoffice communication
equipment 283,802 105,239 389,041 416,770
Telemetry systems and equipment 291,252 336,610 627,862 584,948
Miscellaneous 233,534 193,015 426,549 426,549
Construction in progress 35,354,357 2,438,934 37,793,291 21,558,953
Less accumulated depreciation and
amortization (45,590,809) (64,086,291) (109,677 , 100) (101,442,5]0)
Total capital assets (net of
accumulated depreciation
and amortization) 96,685,926 110,701,847 207,387,773 192,368,828
Other assets:
Debt issue costs, net 5,867 343,652 349,519 404,441
Defened call premium 487,948 487,948 530,073
Total other assets 5,867 831,600 837,467 934,514
Total noncurrent assets 178,996,387 128,341,972 307,338,359 222,785,043
Total assets 204,730,726 151,852,234 (29,802) 356,553,158 263,698,968
!O (Continued)
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Statement of Net Assets
(Continued)
Water Sewer Interli.md Totals
Utility Utility Eliminations 2005 2004
Liabilities and net assets
Liabilities'
ClIn-ent liabilities'
Accounts payable 3,842,449 2,615,575 6,458,024 3,249,983
Interfund payable 29,802 (29,802)
Related paliies payable (note 8) 597,841 212,730 810,571 707,860
Accrued expenses 14,587 9,592 24,179 47,676
Accrued compensation 2,559,680 970,030 3,529,710 2,792,578
Claims payable (note 10) 434,900 70,803 505,703 445,374
Consumer deposits 6,818,982 570 6,819,552 977,297
Defen-ed revenl!e 21,495
ClIlTent pOliion of leases payable (note 5) 68,626 68,626
CUlTent portion of notes payable (note 5) 427,980 1,788,614 2,216,594 2,142,442
CUlTent portion of certiticates of
participation (note 5) 1,790,753 1,790,753 1,705,304
CUlTenl portion of bonds payable (note 5) 1,249,524 1,249,524 1,160,640
AccIued interest payable 147,263 721,859 869,122 883,977
Total clln-ent liabilities 16,191,634 8,180,526 (29,802) 24,342,358 14,134,626
NoncUlTent liabilities:
Consumer deposits 2,248,240 2,248,240 2,270,516
DefelTed revenue - consent decree (note 12) 67,975,325 67,975,325
Leases payable (note 5) 241,220 241,220
Notes payable (note 5) 9,157,873 18,863,863 28,021,736 30,238,329
Certificates of participation (note 5) 27,732,674 27,732,674 29,523,426
Bonds payable (note 5) 75,000 75,000 1,324,524
Total noncuo'ent liabilities 79,697,658 46,596,537 126,294,195 63,356,795
T otalliabilities 95,889,292 54,777,063 (29,802) 150,636,553 77,491,421
Net assets:
Invested in capital assets, net of related
debt (note 13) 95,362,154 54,505,342 149,867,496 140,257,605
Restricted tor:
Capital-related fees 6,844,618 13,162,408 20,007,026 12,532,379
Unrestricted 6,634,662 29,407,421 36,042,083 33,417,563
Total net assets $ 108,841,434 97,075,171 205,916,605 186,207,547
See accompanying notes to basic financial statements
II
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12
MUNlCIP AL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Statement of Revenues, Expenses, and Changes in Net Assets
Year Ended June 30, 2005
(With comparative totals for 2004)
Water Sewer Interfund Totals
Utilitv Utility Eliminations 2005 2004
Operating revenues:
Charges for services $ 18,605,346 19,551,823 (41,420) 38,115,749 36,483,762
Olher operating revenues 1,943,268 646,714 (811,791) 1,778,191 1,607,106
Total operating revenues 20,548,614 20,198,537 (853,211) 39,893,940 38,090,868
Operating expenses:
Administration and customer service 5,470,639 (37,841) 5,432,798 4,993,846
Engineering, operations, and distribution
administration 695,517 1,446,704 (811,791) 1,330,430 1,153,789
Plant operations 4,999,249 8,112,631 (3,975) 13,107,905 13,251,128
Maintenance 1,067,463 2,506,002 (25,208) 3,548,257 3,435,496
Environmental control 449,501 449,501 377,638
Distribution 3,075,032 3,075,032 2,881,355
Engineering 1,723,818 1,723,818 1,468,972
General, administration, and overhead 1,802,455 1,348,294 3,150,749 1,948,466
Depreciation and amortization (note 3) 3,458,350 5,311,326 8,769,676 7,092,645
Total operating expenses 22,292,523 19,174,458 (878,815) 40,588,166 36,603,335
Operating income (loss) (1,743,909) 1,024,079 25,604 (694,226) 1,487,533
Non-operating revenues (e:\llenses).
Investment income 878,743 1,296,693 2,175,436 744,560
Rental income 97,239 26,912 124,151 94,808
Noncapital grant funds 1,001,047 1,001,047 1,214,167
Gain (loss) on asset disposition 949,839 (8,161) (25,604) 916,074 2,475,087
Interest e:\llense and fiscal charges (449,020) (2,299,236) (2,748,256) (2,800,705)
Amortization of issuance costs (44,118) (47,711) (91,829) (61,473)
Other 158,640 (38,543) 120,097 104,558
Total non-operating revenues (expenses) 2,592,370 (1,070,046) (25,604) 1,496,720 L771,002
Net profit (loss) 848,461 (45,967) 802,494 3,258,535
Capital contributions:
Capital grants 7,009,839 7,009,839 1,351,197
Acquisition fees 4,414,993 4,414,993 2,055,130
Capacity fees 2,269,294 5,014,874 7,284,168 4,178,628
Other capital restricted fees 2,146 195,418 197,564 357,542
Total capital contributions 13,696,272 5,210,292 18,906,564 7,942,497
Net assets:
Balance at beginning of year 94,296,701 91,910,846 186,207,547 175,006,515
Balance at end of year $ 108,841,434 97,075,171 205,916,605 186,207,547
See accompanying notes to basic financial statements.
13
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Statement of Cash Flows
Year Ended June 30, 2005
(With comparative totals for 2004)
Totals
Water Sewer 2005 2004
Cash flows ITom operating activities:
Cash received ITom customers $ 18,589,012 19,832,030 38,421,042 38,800,055
Rental income 97,239 26,912 124,151 94,808
Nonoperating miscellaneous revenue (expenses) 6,313,791 (46,704) 6,267,087 1,979,645
Settlement received 67,975,325 67,975,325
Cash paid to employees for services (7,455,717) (9,342,173) (16,797,890) (14,919,331)
Purchase of insurance policy (49,866,440) (49,866,440)
Cash paid to suppliers of goods and services (6,241,794) (1,370,479) (7,612,273) (9,113,920)
Net cash provided by operating activities 29,411,416 9,099,586 38,511,002 16,841,257
Cash flows ITom noncapital financing activities:
Noncapital grant proceeds 1,001,047 1,001,047 1,214,167
Net cash provided by noncapital financing activities 1,001,047 1,001,047 1,214,167
Cash flows from capital and related financing activities:
Capital fees received 6,686,433 5,210,292 11,896,725 6,591,300
Capital grant proceeds 7,009,839 (6,065,949) 943,890 1,351,197
Cash paid to acquire fixed assets (23,210,300) (23,210,300) (16,611,032)
Principal paid on capital-related debt (850,794) (3,391,472) (4,242,266) (4,402,904)
Interest paid on capital-related debt (457,256) (2,342,762) (2,800,018) (2,713,037)
Net cash provided by (used for) capital and related
financing activities (10,822,078) (6,589,891) (17,411,969) (15,784,476)
Cash flows ITom investing activities:
Interest received 727,712 1,296,693 2,024,405 702,788
Net cash provided by investing activities 727,712 1,296,693 2,024,405 702,788
Net increase in cash 20,318,097 3,806,388 24,124,485 2,973,736
Cash and cash equivalents at beginning of year 17,890,138 28,309,911 46,200,049 43,226,313
Cash and cash equivalents at end of year $38,208,235 32,116,299 70,324,534 46,200,049
(Continued)
14
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Statement of Cash Flows
(Continued)
Totals Totals
Water Sewer 2005 2004
Reconciliation of cash and cash equivalents to amounts
reported on the balance sheet:
Reported on the balance sheet:
Cash and investments $11,132,427 18,862,289 29,994,716 30,914,635
Restricted assets 81,508,056 16,808,525 98,316,581 28,881,701
Less restricted assets not meeting the definition of
cash equivalents:
Investment agreements (3,473,750) (3,473,750) (3,473,750)
Interest receivable (192,803) (80,765) (273,568) (122,537)
Prepaid insurance - consent decree (49,866,440) (49,866,440)
Note proceeds held by state (4,373,005) (4,373,005) (10,000,000)
Cash and cash equivalents at end of year $38,208,235 32,116,299 70,324,534 46,200,049
Reconciliation of operating income to net cash
provided by (used for) operating activities:
Operating income $ (1,743,909) 1,024,079 (719,830) 1,487,533
Depreciation and amortization 3,458,350 5,311,326 8,769,676 7,092,645
Nonoperating miscellaneous revenue (expenses) 158,640 (38,543) 120,097 104,558
Rental income 97,239 26,912 124,151 94,808
Gain (loss) on asset disposition 949,839 (8,161) 941,678 2,475,087
Settlement received 67,975,325 67,975,325
Purchase of insurance policy (49,866,440) (49,866,440)
Adjustments:
(Increase) decrease in accounts receivable (5,319,322) (205,383) (5,524,705) (1,041,789)
(Increase) decrease in due ITom other entities (2,544,143) (145,703) (2,689,846) 516,165
(Increase) decrease in interfund receivable 23,388 (29,802) (6,4J4) 5,402
(Increase) decrease in related parties receivable 8,418 37,769 46,187 (115,239)
(Increase) decrease in inventory ( 15,645) ( 15,645) (97,788)
(Increase) decrease in prepaid expenses (39,416) (1,193,906) (1,233,322) 48,824
(Increase) decrease in note proceeds held by state 5,212,848 5,212,848
(Increase) decrease in notes receivable (600,000)
(Increase) decrease in other assets 2,897,430 2,590,198 5,487,628 5,487,404
Increase (decrease) in accounts payable 1,836,903 1,371,138 3,208,041 645,899
Increase (decrease) in interfund payable 29,802 (23,388) 6,414 (5,402)
Increase (decrease) in related parties payable (20,777) 123,488 102,711 (200,357)
Increase (decrease) in accrued expenses (24,369) 872 (23,497) 23,136
Increase (decrease) in accrued compensation 519,970 217,162 737,132 329,243
Increase (decrease) in claims payable 18,801 41,528 60,329 (82,205)
Increase (decrease) in consumer deposits - current 5,842,255 5,842,255 406,134
Increase (decrease) in consumer deposits - non current (22,276) (22,276) 245,704
Increase (decrease) in deferred revenue (21,495) (21,495) 21,495
Net cash provided by operating activities $29,411,416 9,099,586 38,511,002 16,841,257
Noncash Investing, Caoital and Financing Activities
There were no significant non-cash investing, capital and financing activities for the years ended June 30, 2005 and June
30, 2004.
See accompanying notes to basic financial statements.
IS
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
Year ended June 30, 2005
(1 ) Summary of Significant Accounting Policies
Reporting Entitv
The Municipal Water Department of the City of San Bernardino, California ("the
Department") is governed under the Charter of the City of San Bernardino. A Board of
Water Commissioners who is appointed by the Mayor of the City of San Bernardino has
certain limited powers with respect to the Department. The Department has no separate
organizing document and is a part of the legal entity of the City of San Bernardino. The
Municipal Water Department of the City of San Bernardino operates two enterprise
funds: the Water Utility Enterprise Fund (Water Utility) and the Sewer Utility Enterprise
Fund (Sewer Utility). The Water Utility also provides administrative services and
contracted services to the Sewer Utility. The accounting policies of the Department
conform to generally accepted accounting principles (GAAP) as applicable to
governments.
The preparation of these financial statements requires management to make estimates and
assumptions. Those estimates and assumptions affect the reported amounts of assets,
liabilities, revenues, and expenses, as well as the disclosure of contingent assets and
liabilities. Actual results could differ from those estimates. Management also determines
the accounting principles to be used in the preparation of the financial statements. A
description of the significant accounting policies employed in the preparation of these
financial statements follows:
Fund Accounting
The accounts of the Department are organized and operated on the basis of funds. A fund
is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund
accounting segregates funds according to their intended purpose and uses them to aid
management in demonstrating compliance with finance-related legal and contractual
provisions. The Department's financial statements include only enterprise funds, which
are a proprietary fund type. Enterprise funds are used to account for those operations that
are financed and operated in a manner similar to private business or where the Board has
decided that the determination of revenues earned, costs incurred and/or net income is
necessary for management accountability.
Basis of Accounting
Proprietary funds are accounted for on the flow of economic resources measurement
focus and use the accrual basis of accounting. Under this method, revenues are recorded
when earned and expenses are recorded at the time liabilities are incurred. The
Department applies all applicable GASB pronouncements in accounting and reporting for
its proprietary operations and applicable F ASBs that occurred prior to November 30,
1989.
16
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies. (Continued)
Cash and Investments
Investments are reported in the accompanying balance sheet at fair value, except for
certain certificates of deposit and investment contracts that are reported at cost because
they are not transferable and they have terms that are not affected by changes in market
interest rates.
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.
Cash for the Department is pooled with the City of San Bernardino for investment
purposes in order to maximize interest earnings. Such earnings are credited to the various
funds within the City of San Bernardino based upon average monthly cash balances. The
investment policies and the associated risk factors as they relate to the Department are
included in the City's Comprehensive Annual Financial Report.
For the purpose of the statement of cash flows, cash and cash equivalents include all
highly liquid investments (including restricted assets) with maturity of three months or
less when purchased.
Receivables
Trade receivables are shown net of an allowance for uncollectible accounts based on
management's estimate.
Interfund Receivables and Pavables
Transactions between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either "interfund
receivables/payables" (i.e., the current portion of interfund loans) or "advances to/from
other funds" (i.e., the non-current portion of interfund loans). All interfund transactions
are eliminated for financial reporting purposes.
Inventories
Inventories are valued at the lower of cost, using the average-cost method, or market.
17
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies. (Continued)
Restricted Assets
Various resources of the Department are limited as to their use by law or by certificates of
participation and bond covenants and are classified on the balance sheet as restricted
assets. Proceeds of the certificates of participation and bonds are restricted for the
construction of water and sewer system improvements and for repayments. Assessments
collected from property owners are restricted for the payment of bond principal and
interest. Also, fees imposed on new real estate development are restricted by law for the
construction of capital improvements that benefit the development projects.
Issuance Costs and Discount
Issuance costs, discounts, and deferred funding charges for certificates of participation
and bonds payable are being amortized using the effective interest rate method over the
term of the related certificate or bond or the straight-line method which approximates the
effective interest method.
Capital Assets
Property, plant, equipment and water rights are recorded at cost. The Department's policy
is to capitalize all property having a value of $5,000 or more and a life expectancy of 3
years or more. Major outlays for capital assets and improvements are capitalized as
projects are constructed. When material interest incurred during the construction phase
is reflected in the capitalized value of the asset constructed, net of interest earned on the
invested proceeds over the same period, if any. Overhead costs are capitalized at the rate
of 28.9% for labor/benefits, 10% for materials/supplies, 2% for significant contracts and
are reflect in the capitalized value of the asset constructed. Depreciation has been
provided for using the straight-line method over the estimated useful lives of the related
assets. Useful lives for depreciation purposes are as follows:
Wells, pumping plants, reservoirs, and distribution system
Interceptor lines
Disposal plant
Leasehold improvements
Shops, offices, stores, and yards
Tools and equipment
Office equipment
Communication equipment
Computer equipment
Automotive equipment
8 to 50 years
50 years
35 to 50 years
5 to 25 years
10 to 20 years
4 to 20 years
5 to 20 years
8 to 10 years
3 to 5 years
3 to 15 years
Equipment leased under capital leases is recorded at cost, and amortization has been
provided for using the straight-line method over the estimated useful life. Amortization is
included in depreciation expense.
18
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies. (Continued)
Compensated Absences
Employees gain a vested right to accumulated unpaid vacation based on years of service
but cannot accumulate more than two years of accrued vacation. Once each fiscal year,
employees with at least three weeks of accrued vacation have the option of receiving
payment at their regular rate of pay for up to two weeks of regular paid vacation.
Employees' vacation benefits are recognized as a liability of the Department.
Sick leave is accumulated without limit for each employee at the rate of 3.7 hours per pay
period. Leave with pay is provided when employees are absent for health reasons. Upon
termination employees are entitled to 25 percent of accumulated sick leave with five years
of service and a minimum of 480 hours of accumulated sick leave. Upon retirement or
death, employees are entitled to 50 percent of accumulated sick leave up to a maximum
of 1,152 hours. Accrued sick leave benefits are recognized as a liability of the
Department.
Classification of Revenues and Expenses
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and producing
and delivering goods in connection with a proprietary fund's principal ongoing
operations. The principal operating revenues of the Department's enterprise funds are
charges to customers for services. The Department also recognizes as operating revenue
the cost of connecting new customers to the system. Operating expenses for the enterprise
funds include the cost of services, administrative expenses, and depreciation on capital
assets. All revenues and expenses not meeting this definition are reported as nonoperating
revenues and expenses.
Capital contributions consist of contributed capital assets and special charges that are
legally restricted for capital expenditures by state law or by the Board action that
established those charges.
Interfund Eliminations
The interfund eliminations column represents entries made to eliminate interfund income
and expenditure transactions between the water and sewer funds for the purposes of
consolidated financial statements.
19
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies. (Continued)
Prior Year Totals
Prior year data does not represent a complete presentation of prior year financial
information in accordance with generally accepted accounting principles but has been
presented for comparative purposes only.
(2) Cash and Investments
Cash and investments as of June 30, 2005 are classified in the accompanying financial
statements as follows:
Statement of net assets:
Cash and investments
Cash and investments held by bond trustee
Total cash and investments
$ 70,232,180
3.566.104
$ 73.798.284
Cash and investments as ofJune 30, 2005 consist of the following:
Cash on hand
Deposits with financial institutions
Investments
$ 5,700
3,520,467
70.272.117
$ 73.798.284
Total cash and investments
Investments Authorized bv the California Government Code and the Entity's Investment
Policy
The table below identifies the investment types that are authorized for the Municipal
Water Department by the California Government Code (or the Municipal Water
Department's investment policy, where more restrictive). The table also identifies certain
provisions of the California Government Code (or the Municipal Water Department's
investment policy, where more restrictive) that address interest rate risk, credit risk, and
concentration of credit risk. This table does not address investments of debt proceeds held
by bond trustee that are governed by the provisions of debt agreements of the Municipal
Water Department, rather than the general provisions of the California Government Code
or the Municipal Water Department's investment policy.
20
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(2) Cash and Investments. (Continued)
Authorized by Maximum Maximum
Investment Types Investment Maximum Percentage Investment
Authorized bv State Law Policv Maturity'" of Portfolio'" In One Issuer'"
Local Agency Bonds No 5 years None None
U.S. Treasury Obligations Yes 5 years None None
U.S. Agency Securities Yes 5 years None None
Banker's Acceptances Yes 180 days 40% 30%
Commercial Paper Yes 270 days 25% 10%
Negotiable Certificates of Deposit Yes 5 years 30% None
Repurchase Agreements Yes 1 year None None
Reverse Repurchase Agreements No 92 days 20% of base value None
Medium-Term Notes No 5 years 30% None
Mutual Funds No N/A 20% 10%
Money Market Mutual Funds Yes N/A 20% 10%
Mortgage Pass-Through Securities No 5 years 20% None
County Pooled Investment Funds No N/A None None
Local Agency Investment Fund Yes N/A None None
JP A Pools (other investment pools) No N/A None None
* Based on state law requirements or investment policy requirements, whichever is more
restrictive.
The Board of water Commissioners has also authorized the investment of Consent Decree
funds (see note 12) in the state Local Agency Investment Fund (LAIF) and in guaranteed
investment contracts (GrCs) with maturities in excess of five years.
21
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(2) Cash and Investments. (Continued)
Investments Authorized bv Debt Agreements
Investment of debt proceeds held by bond trustee are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the
City's investment policy. The table below identifies the investment types that are
authorized for investments held by bond trustee. The table also identifies certain
provisions of these debt agreements that address interest rate risk, credit risk, and
concentration of credit risk.
Maximum
Authorized
Investment Type
Maximum
Maximum
Maturity
U.S. Treasury Obligations
U.S. Agency Securities
Banker's Acceptances
Commercial Paper
Money Market Mutual Funds
Repurchase Agreements
Investment Contracts
None
None
180 days
270 days
N/A
270 days
30 years
Disclosures Relating to Interest Rate Risk
Percentage
Allowed
Investment
In One Issuer
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Interest rate risk is the risk that changes in market interest rates will adversely affect the
fair value of an investment. Generally, the longer the maturity of an investment, the
greater the sensitivity of its fair value to changes in market interest rates. One of the ways
that the Municipal Water Department manages its exposure to interest rate risk is by
purchasing a combination of shorter term. and longer term investments and by timing cash
flows from maturities so that a portion of the portfolio is maturing or coming close to
maturity evenly over time as necessary to provide the cash flow and liquidity needed for
operations.
22
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(2) Cash and Investments, (Continued)
Disclosures Relating to Interest Rate Risk, (Continued)
Information about the sensitivity of the fair values of the Municipal Water Department's
investments (including investments held by bond trustee) to market interest rate
fluctuations is provided by the following table that shows the distribution of the
Municipal Water Department's investments by maturity:
Remaining Maturing (in Months)
12 Months 13 to 24 25 to 60 More Than
Or Less Months Months 60 Months
Investment Type
Equity in City
Investment pool
Held by bond trustee:
Money market funds
Federal agency
securities
Total
$ 70,179,763 70,179,763
752 752
91,602 91,602
$ 70 272.117 70.272.117
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its
obligation to the holder of the investment. This is measured by the assignment of a rating
by a nationally recognized statistical rating organization. Presented below is the minimum
rating required by (where applicable) the California Government Code, the Municipal
Water Department's investment policy, or debt agreements, and the actual rating as of
year end for each investment type.
Minimum Exempt Rating as of Year End
Legal From Not
Investment Tvoe Rating Disclosure AAA Aa Rated
Equity in City
Investment pool $70,179,763 N/A 70,179,763
Held by bond trustee:
Money market funds 752 AAA 752
Federal agency
Securities 91.602 AAA 91.602
Total $70272 117 70 179 763 ~
23
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(2) Cash and Investments, (Continued)
Concentration of Credit Risk
The investment policy of the Municipal Water Department contains no limitations on the
amount that can be invested in anyone issuer beyond that stipulated by the California
Government Code. There were no investments in anyone issuer (other than U.S.
Treasury securities, mutual funds, and external investment pools) that represent 5% or
more of total Municipal Water Department.
Custodial Credit Risk
Custodial credit risk for deposits (including banlc investment contracts) is the risk that, in
the event of the failure of a depository financial institution, a government will not be able
to recover its deposits or will not be able to recover collateral securities that are in the
possession of an outside party. The custodial credit risk for investments is the risk that, in
the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a
government will not be able to recover the value of its investment or collateral securities
that are in the possession of another party. The California Government Code and the
Entity's investment policy do not contain legal or policy requirements that would limit
the exposure to custodial credit risk for deposits or investments, other than the following
provision for deposits: The California Government Code requires that a financial
institution secure deposits made by state or local governmental units by pledging
securities in an undivided collateral pool held by a depository regulated under state law
(unless so waived by the governmental unit).
The market value of the pledged securities in the collateral pool must equal at least 110%
of the total amount deposited by the public agencies. California law also allows financial
institutions to secure Municipal Water Depal1ment deposits by pledging first trust deed
mortgage notes having a value of 150% of the secured public deposits.
For investments identified herein as held by bond trustee, the bond trustee selects the
investment under the terms of the applicable trust agreement, acquires the investment,
and holds the investment on behalf of the reporting government.
24
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(2) Cash and Investments. (Continued)
Investment in State Investment Pool
The Municipal Water Department is a voluntary participant in the Local Agency
Investment Fund (LAIF) that is regulated by the California Government Code under the
oversight of the Treasurer of the State of California. The fair value of the Municipal
Water Department's investment in this pool is reported in the accompanying financial
statements at amounts based upon the Municipal Water Department's pro-rata share of
the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized
cost of that portfolio). The balance available for withdrawal is based on the accounting
records maintained by LAIF, which are recorded on an amortized cost basis.
25
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(3) Capital Assets
Capital asset activity for the year ended June 30, 2005 is as follows:
Balance at Balance at
June 30. 2004 Additions Deletions June 30. 2005
Capital projects, not being depreciated:
Land and easements $ 15,179,915 235,797 15,415,712
Construction in progress 21.558.953 21.839.648 (5.605.310) 37.793.291
Total capital assets, not being depreciated 36.738.868 22.075.445 (5.605.310) 53.209.003
Capital assets, being depreciated:
Water rights, wells and pumping plants 38,685,054 2,551,311 (214,100) 41,022,265
Distribution systems 54,605,417 987,727 (258,132) 55,335,012
Building, plants and store yards 148,951,888 2,189,764 ( 13,449) 151,128,203
Tools and equipment 5,858,277 453,673 (4,171) 6,307,779
Autos 3,895,962 180,337 (88,986) 3,987,313
Office leasehold improvements 141,926 9,200 151,126
Office, computer, engineering equipment 3,505,679 1,013,799 (38,758) 4,480,720
Radio and interoffice communication equipment 416,770 8,051 (35,780) 389,041
Telemetry system and equipment 584,948 42,914 627,862
Miscellaneous 426.549 426.549
Total capital assets, being depreciated 257.072.470 7.436.776 ( 653.376) 263.855.870
Less accumulated depreciation for:
Water rights, wells and pumping plants (17,719,035) (1,410,467) 134,680 ( 18,994,822)
Distribution systems (21,154,180) (1,220,131) (22,374,311)
Building, plants and store yards (54,277,697) (4,859,274) 2,788 (59,134,183)
Tools and equipment (3,562,715) (320,079) 74,681 (3,808,113)
Autos (2,109,486) (462,899) 267,667 (2,304,718)
Office leasehold improvements (63,451) (6,796) (70,247)
Office, computer and engineering equipment (1,894,018) (401,998) 23,963 (2,272,053)
Radio and interoffice computer equipment (259,693) (23,727) 31,307 (252,113)
Telemetry system and equipment (185,404) (52,518) (237,922)
Miscellaneous (216.831 ) (11.787) (228.618)
Total accumulated depreciation (101.442.510) (8.769.676) 535.086 (109.677.100)
Total capital assets, being depreciated, net 155.629.960 ( 1.332.900) (118.290) 154.178.770
Net property, plant and equipment $192 368 828 20742.545 (5 723 600) 207 387 773
26
MUNICIPAL WATER DEP ARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(3) Capital Assets, (Continued)
(Continued)
Significant project commitments as of June 30, 2005 are as follows:
Proiect Description
Water Fund:
USEPA Newmark Groundwater
Cleanup Plan Modifications
USEPA Muscoy site assessment
USEPA Muscoy OU EPA wells
108-112 drill and equipment
USEPA Muscoy OU Site Improvements
Victoria Farms Mutual Water Company
Design and Expand 215 Freeway
Remodel City Hall
Scott Labs Reservoir Constmction
10tl1 Street Transmission Main
Ten"ace Main Construction
Ogden Transmission Main
Terrace Main Construction
Sewer Fund:
Replacement of process control gates,
aeration basin
Project
Budget
Cumulative Unexpended
Expenditures to date Commitments
$ 625,052 625,052
513,807 513,807
3,115,400 2,424,654 (690,746)
1,142,7]0 555,265 (587,445)
825,000 645,442 ( 179,558)
745,150 1,053,5] 5 308,365
1,700,000 1,586,138 (113,862)
8,579,206 3,993,843 (4,585,363)
10,662,721 1,697,9] 5 (8,964,806)
] ,055,250 1,105,346 50,096
3,170,812 1,874,402 (1,296,410)
] ,030,000 682,785 (347,2] 5)
1,187,254
994,879
(192,375)
(4) Operating Leases
The Department leases office space from the City of San Bernardino under a
noncancellable operating lease that terminates on March 31, 2007. The following is a
schedule of minimum lease payments as of June 30, 2005:
Office Space
For the year ending June 30 Water Sewer Total
2006 $156,487 21,339 177 ,826
2007 117,365 16,004 133,369
$273.852 37.343 311.195
Rent expense was $177,826 and $177,826 at June 30, 2005 and 2004, respectively.
27
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(5) Long-Tenn Debt
The following is a summary of changes in long-term debt obligations for the year ended
June 30, 2005:
Amounts Amounts Due
Balance at Balance at Due Within Beyond
July L 2004 Additions Reductions June 30. 2005 One Year One Year
Notes payable $32,380,771 (2,142,441 ) 30,238,330 2.216,594 28,021,736
Lease payable 363,000 (53,154) 309,846 68,626 241,220
Certificates of
Participation 31,500,000 ( I ,730,000) 29,770,000 1,8] 5,000 27,955,000
Less deferred amounts:
Unamortized discounts (271,270) 24,697 (246,573) (24,247) (222,326)
Bonds payable 2,545,000 (1,200,000) 1,345,000 1,270,000 75,000
Less deferred amounts:
Unamortized discounts
and advance refunding (59,835) . 39.360 (20,475) (20,475)
-
~ 094~666 illJ!QQ (5061 540) ~ ~~g~ j2& ~~.QlQ.lUQ
Lease/Purchase Payable
California First Leasing Corporation
Maturity date: 2009
Interest rate: 3.68%
Repayment provisions: Quarterly principal and interest
Payments of $19,772.00
Balance
$309,846
On December 28, 2004, the Water Department entered into a master equipment
lease/purchase agreement with California First Leasing Corporation for furniture and
equipment for the 5th Floor Remodeling Project, in the amount of $363,000. The furniture
and equipment are pledged as collateral for the term of lease/purchase agreement.
Notes Payable
California Infrastructure and Economic Development Bank
Maturity date: 2022
Interest rate: 3.34%
Repayment provisions: Annual principal and interest
payments ranging from $776,905 to $750,319
Balance
$9,585,853
28
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(5) Long-Term Debt. (Continued)
San Bernardino Valley Municipal Water District
Original amount: $5,084,729
Maturity date: 2013
Interest rate: 7.25%
Repayment provisions: Annual principal and interest
payments of $456,250
Balance
State Water Resources Control Board (SWRCB)
Original amount: $4,015,216
Maturity date: 2011
Interest rate: 3.3%
Repayment provisions: Annual principal and interest
payments of $279,293
Balance
2,698,206
1,498,054
State Water Resources Control Board (SWRCB)
Original amount: $25,978,599
Maturity date: 2016
Interest rate: 2.8%
Repayment provisions: Annual principal and interest
payments of$I,761,739
Balance
Less current portion
16.456,217
30,238,330
(2.216.594)
$28.021.736
Long-term portion
On March 18, 2004, the California Infrastructure and Economic Development Bank
(CIEDB) issued its Infrastructure State Revolving Fund Revenue Bonds to provide
funding for a portion of the costs of Phases I and II of the Water System Reliability
Schedule of Improvements including transmission mains, booster stations, and a
reservoir. Installment Sale Agreement No. 02-027 between the City of Santa Bernardino
Municipal Water Department and the CIEDB was pledged as security for the bonds. The
Department sets aside water revenues to make installment payments on the bonds as due.
29
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(5) Long-Term Debt. (Continued)
The State Revolving Fund loans between the State Water Resources Control Board and
the Santa Ana Watershed Authority provided funding for the construction of the San
Bernardino/Colton Rapid Infiltration Extraction (RIX) Project. The loan agreements were
amended in April 2001 to transfer the loan obligations to the successors in interest, being
the City of San Bernardino Board of Water Commissioners, and the City of Colton. The
loans require the Department to establish a Wastewater Capital Reserve Sinking Fund
(WCRF) for expansion, major repair or replacement of wastewater treatment works at
one-half of one percent of the total loan amount over a period of ten years. The
Department has decided to use the revenues of the Sewer Utility Fund towards repayment
of the loans.
Certificates ofParticioation
Interest
Rates
Issue
Date
Maturity
Date
Original
Amount
Annual
Principal
Installments
Balance
1998 Refmancing Sewer 3.95%
to
5.00%
1998
2017
$36,230,000 $1,505,000
to
$3,220,000 $29,770,000
Less unamortized discount
(246.574)
29,523,426
Less current portion payable from
restricted assets, net of unamortized
discount of$24,247
(1.791.023)
Long-term portion, net of unamortized
discount of$246,574
$27 732 403
It has been determined that the amount of $24,480 was due under Internal Revenue Code
Section 148(1)(4)(B) for the temporary investments of the 1998 Refinancing Sewer
Treatment Plan Certificates of Participation and for arbitrage rebate.
In 1998, the Department refinanced the acquisition and construction of certain capital
improvements which were originally financed by the 1992 Sewer Certificates of
Participation, dated February 1, 1992. The refinancing was accomplished by issue of the
1998 Refunding Sewer Revenue Certificates of Participation in the amount of
$36,230,000. The proceeds of the 1998 Certificates were invested and used to pay interest
on the 1998 issue until February 1, 2001. The 1992 Certificates were called on
February I, 2001 at a prepayment premium of two percent. The funds from the 1998 issue
were used to payoff the 1992 Certificates. The Department will now begin paying the
installment payments on the 1998 Certificates from the net revenues on the Sewer System.
30
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(5) Long-Term Debt. (Continued)
The Department has covenanted that it will budget amounts sufficient to make all
installment payments due.
The required reserve for the 1998 Refunding Sewer Revenue Certificates of Participation
is $1,811,500. As of June 30, 2005, the reserve was fully funded.
Costs related to the issuance of the 1998 Certificates have been paid out of the proceeds of
the issue.
Bonds Pavable
Interest
Rates
Issue
Date
Maturity
Date
Original
Amount
Annual
Principal
Installments
Balance
1998 Water and
Wastewater
Revenue Bonds
3.75%
to
4.40%
1998
2005
$8,610,000 $860,000
to
$1,260,000 $1,260,000
Waterworks Bonds,
Series C
7.75%
1988
2013
$150,000 $5,000
to
$15,000 85.000
Total bonds payable
$1,345,000
Less unamortized discount
and deferred advance
refunding charge
(20.476)
1,324,524
Less current portion payable from
restricted assets, net of unamortized
discount and deferred advance
refunding charge of $39,360
(1.249.524)
Long-term portion, net of unamortized
discount and deferred advance
refunding charge of $20,476
$ 75 000
The Department has covenanted to set aside Water revenues to make installment
payments on the Bonds as due. A financial guaranty insurance policy has been issued, and
accordingly, no cash reserve balance is required to be established.
31
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(5) Long-Tenn Debt. (Continued)
The annual requirements to amortize long-tenn debt subsequent to June 30, 2005 are as
follows:
June 30 Princioal Interest Total
Notes payable 2006 $2,216,594 1,054,755 3,271,349
2007 2,293,717 976,348 3,270,065
2008 2,373,955 894,783 3,268,738
2009 2,457,461 809,906 3,267,367
2010 2,544,395 721,554 3,265,950
2011-2015 12,039,194 2,237,916 14,277,110
2016-2020 4,888,478 661,751 5,550,229
2021-2025 1.424.535 78.205 1.502.740
30.238.329 7.435.218 37.673.547
Certificates of participation 2006 $ 1,815,000 1,434,323 3,249,323
2007 1,910,000 1,357,185 3,267,185
2008 2,010,000 1,275,055 3,285,055
2009 2,125,000 1,174,555 3,299,555
20010 2,240,000 1,078,930 3,318,930
2011-2015 13,295,000 3,647,288 16,942,288
2016-2020 6.375,000 479.750 6.854,750
29.770.000 10.447,085 40.217,085
Bonds payable 2006 $ 1,270,000 34,308 1,304,308
2007 10,000 5,812 15,812
2008 10,000 5,038 15,038
2009 10,000 4,263 14,263
2010 10,000 3,488 13,488
2011-2015 35.000 5.813 40.813
1.345.000 58.721 1.403.721
$61.353.329 17 .941.023 79.294.353
Compensated Absences
The Department's policies relating to compensated absences are described in note 1. This
liability, amounting to $2,126,723 and $1,905,220 at June 30, 2005 and June 30, 2004,
respectively, will be paid in future years from future resources.
32
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(5) Long-Term Debt. (Continued)
Prior Year Defeasance of Debt
As of June 30, 2005, approximately $1,233,000 of outstanding 1990 Water Facilities
Certificates of Participation are considered in substance defeased through the issuance of the
Series 1998A Water and Wastewater Revenue Bonds (see Bonds Payable) and are not
included as a liability of the Department in these financial statements.
(6) Defined Benefit Pension Plan
Qualified employees are covered under a multiple-employer contributory retirement plan
maintained by an agency of the State of California, California Public Employees'
retirement System (PERS).
Plan Description
The Department is a part of the City of San Bernardino. The City contributes to PERS,
an agent multiple-employer public employee retirement system defined benefit pension
plan administered by PERS. All employees who work 1,000 hours or more are eligible to
participate. The plan provides retirement and disability benefits, annual cost-of-living
adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are
established by state statutes, as legislatively amended, within the Public Employees'
Retirement Law. PERS issues a separate comprehensive annual financial report that
includes financial statements and required supplementary information. Copies of the
PERS annual financial report may be obtained from the PERS Executive Office, 400 "P"
Street, Sacramento, California 95814. PERS also issues a separate report on the actuarial
valuation of the plan of the City of San Bernardino, which is available at the Department.
Additional information regarding the City's participation in PERS can be found in the
City's financial statements.
(7) Post-Retirement Health Care Benefits
In addition to the pension benefits described in note 6, the Department provides the
minimum monthly premium for post-retirement medical-health care benefits to each
retiree that meets the eligibility criteria for coverage under a department group health
insurance plan. The retirees may continue to participate in the health care plan provided
the retirees make the arrangements for premiums to be paid with the group plan
administrator. This benefit is dependent upon the continued approval of the insurance
carriers.s
33
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
Q) Post-Retirement Health Care Benefits, (Continued)
For those retirees who retired on or after attaining age 55 with a minimum of 15 years of
service, the Department's contribution is paid directly to the group plan administrator for
a portion of the premium up to $482 per month. Premium amounts in excess of the
contribution are paid by the retirees. Twenty-five Water Utility retirees and three Sewer
Utility retiree are receiving the benefit. For those retirees who are not eligible to receive
the monthly contribution and currently enrolled in the Department health group insurance
plan, the Department pays to the group plan administrator the amount equivalent to the
then current minimum eligibility amount from the previous health plan coverage with the
California Public Employees Retirement System. This amount is currently $48.20 per
month effective April 1,2005 and is anticipated to escalate annually. Currently, eighteen
retirees are receiving this benefit. During the year ended June 30, 2005, and June 30,
2004, expenses of $116,658 and $107,195, respectively, were recognized for post-
retirement health care benefits and administrative costs for the Water and Sewer Utilities.
(8) Related Party Transactions
Following is a summary of transactions and balances with the City of San Bernardino and
its various departments as of and for the years ended June 30, 2005 and 2004:
Revenues
City of San Bernardino
Revenue from water charges
Revenue from sewer charges
Revenue from geothermal charges
Billing and collection charges - refuse
Billing and collection charges - storm drain
Cost reimbursement
Reimbursement - sale of land
Interest income
2005
$ 48,767
58,601
22,545
185,375
5,094
6,385
392,692
1,728,917
Economic Development Agency
Revenue from geothermal charges
Reimbursement - sale of land
916
575,232
$3.024.524
Total revenue from related parties
34
2004
39,104
42,417
19,438
151,870
5,188
3,400
1,698,445
3,396
1.963.258
MUNICIP AL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(8) Related Party Transactions, (Continued)
Expenses 2005 2004
City of San Bernardino
10% water revenue $1,889,149 1,957,748
Sewer collection system maintenance 2,825,844 1,252,287
Worker's compensation - administration charges 138,216 102,172
Printing services 3,827 11,327
Postage 10,435 10,661
City Hall rent 177,827 177 ,827
Phone charges 124,398 123,225
Refuse disposal service 88,171 70,321
Civil service 113,000 45,000
Legal services/affirn1ative action 190,000 105,000
Rideshare coordination 5,000 3,000
Employee assistance 6,200
Data processing services 408,873 373,400
Police & Fire Protection 500,000
Revenue transfer - land sale 272,388
Facilities Management - new construction 25,000
Fuel charges 37,523
Other services 1,472 13,740
Miscellaneous charges 1,554 14,891
Total expenses to related parties $6.812.677 4.266.799
Receivables
City of San Bernardino
Finance Department $825,329 864,988
Economic Development Agency 1,983 797
Total receivables from related parties $827.312 865.785
Payables
City of San Bernardino
Finance Department $ 1,878,532 953,013
Total payables to related parties $1,878.532 953.013
The Department collects and transmits to the City of San Bernardino ten percent of
collections on gross water revenue and one hundred percent of collections on sewer
collection system maintenance charges from Sewer Utility customers. These remittances
are included in the related party expense shown above.
35
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(9) Joint Venture
West End Water Development. Treatment and Conservation Joint Powers Authority
On August 15, 1990, the City of San Bernardino joined the West End Water
Development, Treatment and Conservation Joint Powers Authority (WEJPA) as a
financing vehicle for construction of water facilities. A separate three-member board
consisting of one representative from each agency's governing body governs the WEJPA.
The financial statements for the WEJP A are available at the Department. The
Departments' investment in the joint venture is included in the property, plant, and
equipment of the Department. The financial statements of WEJP A are available at West
Valley Water District, 855 West Base Line, Rialto, California 92736. The joint venture is
not experiencing fiscal stress.
San Bernardino Public Safetv Authority
On April 1, 1968, the City of San Bernardino and the County of San Bernardino formed
the San Bernardino Public Safety Authority (PSA), a joint powers authority, as a
financing vehicle to construct (1) public safety buildings and (2) improvements to the
wastewater treatment plant.
According to the original joint powers agreement, title to the PSA-constructed wastewater
treatment facility will automatically vest in the City with the residual cash being
transferred to the City after the bonds are repaid. A separate board consisting of three
members, one appointed by the San Bernardino City Council and two members appointed
by the San Bernardino County Board of Supervisors, governs PSA. Effective with the
transfer of the Sewer Utility to the Department, all the assets and activities ofPSA related
to the wastewater treatment plant were also transferred to the Department pursuant to the
enabling resolution of October 1973 and are included in the property, plant, and
equipment of the Sewer Utility. The financial statements ofPSA are available at the Clerk
of the Board of Supervisors, County of San Bernardino, 385 N. Arrowhead Avenue, 2nd
Floor, San Bernardino, California 92402. The joint venture is not experiencing fiscal
stress.
36
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(9) Joint Venture. (Continued)
Colton/San Bernardino Regional Tertiary Treatment and Water Reclamation Authority
On August 2, 1994, the City of San Bernardino, through the Department, formed a joint
powers authority with the City of Colton to construct, operate, use, and maintain tertiary
wastewater treatment, disposal, and water reclamation systems, including the Regional
Rapid Infiltration and Extraction Facility (RIX). The Colton/San Bernardino Regional
Tertiary Treatment and Water Reclamation Authority is governed by a separate board
consisting of four members, two of whom are appointed by the City of San Bernardino
through the Department's Board of Water Commissioners and two appointed by the City
Council of the City of Colton. Construction of the project was administered by the Santa
Ana Watershed Project Authority (SA WP A) and was substantially completed during
1996. Administration and operation of the project was turned over to the Colton/San
Bernardino Regional Tertiary Treatment and Water Reclamation Authority at that time.
Title to the property will be transferred upon final resolution of construction issues. Each
of the cities, San Bernardino and Colton, has an undivided interest in the real property
and any related debt of the RIX project based on a split of 80 percent and 20 percent,
respectively. The Departments' investment in the joint venture is included in the
property, plant, and equipment of the Department. The financial statements are available
at the Department. The joint venture is not experiencing fiscal stress.
(10) Construction and Other Significant Commitments
Commitments
Commitments in the form of signed contracts for costs to complete construction projects
or other improvements amounted to $16,007,325 and $2,874,938 at June 30, 2005 and
June 30, 2004, respectively.
Risk Management
The Department's risk management activities are recorded in both of the utility funds.
Significant losses are covered by commercial insurance for all major events except
workers' compensation, for which the Department retains risk of loss in conjunction with
the City of San Bernardino's risk management program for workers' compensation. For
insured events, there have been no significant reductions in insurance coverage.
Settlement amounts have not exceeded insurance coverage for the current year or the
three prior years.
37
MUNICIP AL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(0) Construction and Other Significant Commitments
Workers' Compensation Claims Liabilities
The Department records an estimated liability for workers' compensation. Claims
liabilities are based on estimates of the ultimate cost of reported claims (including future
claim adjustment expenses) and an estimate for claims incurred but not reported based on
historical experience. Workers' compensation unpaid claims liabilities are not discounted.
The folIowing represents the changes in approximate aggregate liabilities for the
Department for the year ended June 30, 2005:
Total
Liability balance, June 30, 2004
Claims and changes in estimates
Claim payments
Liability balance, June 30, 2005
$445,374
207,470
047.141)
$505.703
The folIowing represents the changes in approximate aggregate liabilities for the
Department for the year ended June 30, 2004:
Total
Liability balance, June 30, 2003
Claims and changes in estimates
Claim payments
Liability balance, June 30, 2004
$527,579
176,854
(259.059)
$445.374
(1) Contingencies
Federal and State Grants
Amounts received or receivable from grant agencies are subject to audit and adjustment
by grantor agencies, principalIy the federal and state governments. Any disalIowed
claims, including amounts already colIected, may constitute a liability of the Department.
The amount, if any, of expenditures which may be disalIowed by the grantor cannot be
~etermined at this time although the Department expects such amounts, if any, to be
Immaterial.
38
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(12) Consent Decree
On March 15, 2005, the United States District Court, Central District, ordered entry of the
consent decree in the matter of City of San Bernardino v. United States of America. The
consent decree settles the City's and the state's claims arising from groundwater
contamination allegedly caused by the United States' Department of the Army. The
consent decree contains a number of provisions obligating the City (the City of San
Bernardino Municipal Water Department) to operate and maintain the Newmark
Groundwater Superfund Site.
The consent decree provided for the payment of $69 million dollars from the United States
Department of the Army (Army) to the City of San Bernardino for performance of the
work outlined in the consent decree. Essentially, upon entry of the consent decree, the City
of San Bernardino, through its Water Department, received title to all of the facilities
constructed by the Unitea States Environmental Protection Agency (USEP A) for the
Newmark Groundwater Superfund Site and agreed to operate and maintain the
groundwater extraction and treatment system (the Newmark Groundwater Superfund Site)
for a period of fifty (50) years. The $69 million dollar payment by the Army consisted of
$59 million for operation and maintenance (O&M) and $10 million for construction of
certain capital facilities needed in the future.
The funds received are subject to strict limitations on how they may be spent.
O&M including interest or other returns actually earned on that account, have been set
aside to be used only to operate and maintain the effectiveness of the Interim Remedial
Action at the Newmark Groundwater Superfund Site. The O&M funds can not be used to .
fund activities required to construct, operate or maintain the Department's potable water
supply system after the point of interconnection between the Newmark Groundwater
Superfund Site treatment systems and the Department's potable water supply system, or
any activities required to construct, operate or maintain other extraction and treatment
facilities for the Department's water supply, unless specifically allowed in the consent
decree.
Pursuant to the Consent Decree, the Construction funds in the amount of $10 million,
including interest or other returns actually earned on that account, have been set aside to be
used only for (i) funding construction of treatment and directly related transmission
systems that expanded the De}Jartment's capacity to deliver potable water to its residents,
and (ii) funding for work performed by the Department to complete construction of the
Muscoy Operable Unit extraction system. The Department will complete the construction
of the Muscoy Operable Unite extraction system, first using $6,249,000 currently obligated
by EP A for that purpose, and then using Consent Decree funds. Consent Decree funds
cannot be used for costs incurred by the Department to operate, maintain, repair or retrofit
components of the Newmark Groundwater Superfund Site extraction and treatment systems
that were constructed by EP A.
At the time of receipt, the Department recorded the consent decree proceeds as deferred
revenue. Revenue associated with the consent decree are recognized at the time that
eligible expenses are incurred.
With the $69 million dollar payment from the Federal government, the Department used
$50+ million to purchase a blended insurance policy from AIG Insurance. This policy
provides both }Jollution legal liability coverage and a financial vehicle/insurance policy
blend that provides cost cap coverage for the first 30 years of the Department's 50-year
obligations. This policy pays the Department back for itemized expenses and, when
appropriate, for the capital expenses that will be incurred. The payment made to purchase
thiS insurance has been recorded as prepaid insurance on the balance sheet of the
Department's Water Fund. This asset is amortized over the period of benefit as costs are
incuITed.
39
MUNICIP AL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Basic Financial Statements
(Continued)
(12) Consent Decree, (Continued)
It is anticipated that the remaining Consent Decree funds in the amount of approximately
$18 million (after purchase of the AIG policy) will be sufficient to pay for a financial
vehicle that will payout years 31 through 50. The Department expects to invest the
remaining funds III such an investment agreement when the market Rrovides for an
appropriate entry into that Rarticular form of investment. Currently~ these funds are
invested substantially in a LAIF (Local Agency Investment FunQ) account in the
investment pool maintained by the State of California.
The distribution and status of the consent decree funds are as follows:
Settlement Purchase of Invested
Proceeds AIG Policv in LAIF
Operations and maintenance $ 59,000,000 41,137,188 17,862,812
Construction 10.000,000 9,753,927 246,073
Total 69,000,000 50,891,115 18,108,885
Eligible costs incurred to date 0,024.675) (1.024,675)
Balance as of year end $ 67,975,325 49,866,440 18,108,885
Interest earnings in LAIF 108,244
Less amounts held by City Treasurer (3,885)
LAIF balance at year end $ 18,213,244
(13) Net Assets
Amounts invested in capital assets net of related debt is calculated as follows:
Water Sewer
Total capital assets (net of accumulated depreciation
and accumulated amortization)
Less related debt: .
Notes payable
Water bonds payable
Certificates of participation
Add back:
Portion of debt offsetting debt service reserves
$96,685,926
(1,324,524)
752
$95.362.154
Amounts restricted for debt service is calculated as follows:
Water
Cash and investments with fiscal agent restricted for
debt service
Less portion of debt offsetting unexpended debt
proceeds held in the debt service amounts
$
752
(752)
$
40
110,701,847
(30,238,330)
(29,523,427)
3,565.352
54.505.442
Sewer
3,565,352
(3.565.352)
SUPPLEMENTARY INFORMATION
41
(This page intentionally left blank)
42
MUNICIP AL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Board of Water Commissioners and Organization
As of January 17,2006
MAYOR OF THE CITY OF SAN BERNARDINO
Judith Valles
BOARD OF WATER COMMISSIONERS
Name
B. Warren Cocke
Toni Callicott
Louis A. Fernandez
Judith W. Battey
Norine 1. Miller
ADMINISTRATION
Stacy R. Aldstadt
General Manager
Robin L. Ohama
Deputy General Manager
W. William Bryden, P.E.
Director, Water Utility
John A. Perry, P.E.
Director, Water Reclamation
Vacant
Director, Administration and Finance
Jon K. Turnipseed, CSP
Safety Program Manager
ORGANIZATION
Office
President
Commissioner
Commissioner
Commissioner
Commissioner
The City of San Bemardino Municipal Water Department was formed in 1904 under the Charter
of the City of San Bernardino. The Department is governed by a Board of Water Commissioners
who are appointed by the Mayor of the City of San Bernardino. The Charter gives the Board of
Water Commissioners semi-autonomous authority to govern the Department independent of the
City Council. The Department operates two enterprise funds: the Water Utility Enterprise Fund
and the Sewer Utility Enterprise Fund. Water service encompasses the City, with the exception
of the east end, which is serviced by the East Valley Water District. Sewer service encompasses
all of the City of San Bernardino, East Valley Water District, City of Lorna Linda, the former
Norton Air Force Base and Patton State Hospital.
43
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Insurance Coverage
As of June 30, 2005
Insurance coverage for the Department at June 30, 2005 is summarized below:
Multiple insurance companies and policies; all-risk property coverage, including
earthquake and flood - July 1, 2004 to July 1, 2005
Primary limit:
Commonwealth Insurance Company, Policy #US5238
Excess limits:
RSUllndemnity, Policy #NHD409837
Clarendon Insurance Company, Policy #PCA 12939
Essex Insurance Company, Policy #ESPW3039
RSUllndemnity, Policy NHD409836
Commonwealth Insurance Company, Policy #US5246
Gt. American E & S Ins., Policy #CGP5166042
RSUllndemnity, Policy #NHD409833
10,000,000
5,000,000
10,000,000
11,000,000
5,000,000
6,000,000
3,000,000
75,000,000
Pacific Indemnity Company, Polley #78357989; boiler and machinery
coverage - July 1, 2004 to July 1, 2005
Per occurrence limit
$ 10,000,000
American Alternative Insurance Co., Policy #SDISSK91 00525; generai
liability, including bodily injury and property damage, personal injury and
advertising injury, professional liability and wrongful acts -
June 30, 2004 to June 30, 2005
Bodily injury and property damage
Per occurance
Aggregrate
Damages to premises rented to you
Anyone premises
Personal injury and advertising injury
Per person
Aggregrate
Employee benefits liability
Per person
Aggregrate
Professional iiability
Per claim
Aggregrate
Wrongful acts
Per claim
Aggregrate
1,000,000
3,000,000
1,000,000
1,000,000
3,000,000
1,000,000
3,000,000
1,000,000
3,000,000
1,000,000
3,000,000
American Alternative Insurance Co., Policy #SDISSK91 00525; business
automobile coverage - June 30, 2004 to June 30 ,2005
Owned automolbile liability limit
Hired/nonowned automobile liability
Hired car physical damage
Uninsured motorist liability
Medical
1 ,000,000
1,000,000
50,000
1,000,000
5,000
(Continued)
44
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Insurance Coverage
As of June 30, 2005
Multiple insurance companies and policies; excess liability coverage -
June 30, 2004 to June 30, 2005
Primary limit:
American Alternative Insurance Company
Excess limits:
Evanston Insurance Company
10,000,000
9,000,000
American International Specialty Lines, Policy #26738997; pollution
liability - October 30,2004 to October 30, 2009 (each incidenVaggregate)
Third-Party Claims, On-Site Bodily Injury and Property Damage
Third-Party Claims, Off-Site Clean-Up Resulting from New Conditions
Third-Party Claims, Off-Site Bodily Injury and Property Damage
5,000,000
5,000,000
5,000,000
Travelers, Policy #104204117; employment practices liability -
October 30, 2004 to October 30, 2005
1,000,000
Hartford Fire Insurance Company, Policy #72BPEAK4746; crime
coverages - March 25, 2000 until cancelled
Employee theft (each incident)
. Theft, disappearance and destruction
250,000
250,000
American International Specialty Lines, Policy #7783901; pollution
legal liability clean-up cost cap - September 28, 2004 to March 23, 2035
Coverage A - Legal liability for pollution conditions
Coverage B - Consent decree required clean-up
25,000,000
150,000,000
The Department is self-insured through the City of San Bernardino for workers' compensation liability
and material damage to rolling stock.
45
MUNICIP AL WATER DEPARTMENT OF THE CITY OF
SAN BERNARDINO, CALIFORNIA
Schedule of Water System Demographics
Water Production/Utilization (Cubic Feet)
2004-2005
Water utilization (shown in cubic feet)
Water sold to direct customers
Water sold to other agencies
Water sold to or used by City
] ,783,045,900
56,760,2] 8
70,903,097
1,910,709,2]5
182,631,975
8.724%
Loss and other factors
Loss and other factors percentage
Total water sold, used or lost
2,093,34],] 90
46
2003-2004
1,965,264,900
38,268,704
69,701,161
2,073,234,765
] 80,575,623
8.012%
2,253,8 J 0,388
2002-2003
1,785,563, I 00
86,751,578
76,]33,820
1,948,448,498
178,266,332
8.382%
2,126,7] 4,830
Summary of totnl water
production and purchased cost
Total productiou, purchases, aud
supplemeutal
Production and pumping expenses
Total expense before depreciation
Depreciation of plant facilities
Totals
Summ:tI"Y of costs pc.' lIerc foot
Acre feet
Cost per acre feet before
depreciation
Cost per acre feet including
depreciation of plant facilities
MUNICIPAL WATER DEPARTMENT OF THE CITY OF
SAN BERNARDINO, CALIFORNIA
SCHEDULE OF WATER PRODUCTION
June 30, 2005
2004-2005
Total Water
Pel' 1,000
Amount Cubic Feet
2003-2004
Total Water
Per 1,000
Amount Cubic Feet
2002-2003
Total Water
Per 1,000
Amount Cubic Feet
$4,9] 9,498
2.093,341 2,253.810 2.126,715
$5,570,502 $5.659,161
$2.35007 5,570,502 $247159 5,659,]61 $2.66099
0.60945 ] ,034,982 0.4592 ] 1,043,319 0.49058
$2.95952 $6,605,484 $2.93081 $6,702,480 $3.15156
48,056.497 51,740.358 48,822.658
$107.66 $11591
$127.67 $13728
4,919,498
1,275,788
$6,195,286
$102.37
$128.92
47
MUNICIPAL WATER DEPARTMENT OF THE CITY OF
SAN BERNARDINO, CALIFORNIA
SCHEDULE OF WATER RATES
Water mtes l\J'e summl\J'ized below:
Single Family Dwelling Units
Meter
Size
Minimum Monthly CharJ:e
Effective Dates
January 1, 2002 AJlrill,2000
5/8"
3/4"
$8.05
$10.75
$12.85
$23.0.5
$32.20
$54 75
$92.95
$167.35
$251.00
$313.75
$376.55
$7.60
$10.10
$12.15
$21.75
$30.35
$51. 65
$87 70
$157.90
$236.80
$296.00
$355.25
1"
1-1/2"
2"
3"
4"
(-i"
8"
10"
12"
Cubic Foot
Allowance
500
500
500
500
500
500
500
500
500
500
500
All water usage in excess of 500 cubic feet per month is at the rate of $0.88 and $0.83 per 100 cubic feet effective January
1, 2002, and April 1, 2000, respectively
MultiJlle Family Dwelling Units
Includes duplexes, triplexes, apartments, mobile home parks, condominiums, and town homes served by one or more
master meters.
The minimum monthly charge for the first dwelling unit is the same as a single family dwelling with each additional
dwelling unit served by the meter at the rate of $3.35 and $3.15 per unit per month effective January 1,2002, and April I,
2000, respectively.
The cubic foot allowance for the first dwelling unit is 500 cubic feet per month with each additional dwelling unit served
by the meter at the rate of 200 cubic feet per mouth.
All water usage in excess of the allowance per month is at the rate of $0.88 and $0.83 per 100 cubic feet effective January
1,2002, and April 1, 2000, respectively.
48
(Continued)
MUNICIPAL WATER DEPARTMENT OF THE CITY OF
SAN BERNARDINO, CALIFORNIA
SCHEDULE OF WATER RATES
Commercial, Landscape, and Indust.-ial Users
Meter
Size
Minimum Monthly Charge
Effective Dates
January 1, 2002 Allrill,2000
1-1/2"
$8.05
$10.75
$12.85
$23.05
$32.20
$54.75
$92.95
$167.35
$251.00
$313.75
$376.55
$7.00
$10.10
$12.15
$2175
$3035
$5165
$87.70
$157.90
$236.80
$296.00
$355.25
5/8"
3/4"
1"
2"
3"
4"
6"
8"
10"
12"
All water usage per month is at the rate of $0.88 and $0.83 per 100 cubic feet effective January I, 2002, and April I,
2000, respectively with no minimum allowance.
Municipal Water Users
Effective July I, 1995, water furnished for municipal use to the City of San Bernardino is exempt from all water service
charges as long as water usage does not exceed 1I0 percent of the fiscal year 199411995 water usage. Water usage in
excess of this amount is charged at $0.288 per 100 cubic foot. Water furnished for use by the City of San Bernardino for
landscape assessment districts or flll1ded form other than the City's general flmd is charged at $0.288 per ]00 cubic foot.
All other rates remained unchanged
Energy Surcharge
Effective July 5, 2001, all consumption, except municipal, sball be charged $0.05 per cubic foot to offset tbe increased
power costs.
49
MUNICIPAL WATER DEPARTMENT OF THE CITY OF
SAN BERNARDINO, CALIFORNIA
Schedule of Sundry Water Statistical Data
2004-2005 2003-2004
Production Percent Production Percenl
Pumping Plants in Cubic Feet Production in Cubic Feet Production
Antil Plant 33,443,800 1.63% 82,571,200 3.79%
Baseline & California Well 12,249,100 0.60% 20,784,900 0.95%
Cajon Boulevard Plant 114,021,100 5.54% 98,009,400 4.50%
Cajon Pass & Vincent Wells 26,840,000 1.30% 38,443,100 1.76%
Devil Canyon Plant 94,388,390 4.59% 123,324,880 5.66%
EPA Wells - Newmark au 576,392,400 28.02% 565,447,170 25.93%
EPA Wells - Muscoy au 133,156,900 6.47% 0 0.00%
40th Street Well 1,505, I 00 0.07% 1,676,100 0.08%
Gilbert Street Well 43,913,100 2.14% 83,912,300 3.85%
Kenwood Wells 153,162,100 7.45% 166,971,400 7,66%
LeRoy Street Well 59,151,700 2.88% 60,969,500 2.80%
Lynwood Well 38,705,300 1.88% 53,509,860 2.45%
Lytle Creek Plant 5,509,700 0.27% 31,152, I 00 1.43%
Mallory Well 35,523, I 00 1.73% 21,317,100 0.98%
Mill & "D" Streets Well 20,305,400 0.99% 14,140,800 0.65%
Newmark Plant 148,870,200 7.24% 158,321,800 7.26%
19th Street Plant J 29,585,600 6.30% 132,848,000 6.09%
Olive & Garner Well 96,972,900 4.71% 115,058,398 5.28%
Pen'is Hill Plant 17,526,200 0.85% 17,280,200 0.79%
7th Street Well 5,186,600 0.25% 37,796,200 1.73%
Sierra Way & 16th Street Wells 166,100 0.01% 205,100 0.01%
10th & "J" Street Well 98,420,900 4.79% 129,074,500 5.92%
30th & Mountain View Wells 116,906,300 5.68% 122,995,600 5.64%
27th Street Well 27,794,700 1.35% 31,616,500 1.45%
Waterman Avenue Plant 67,056,200 3.26% 72,891,380 3.34%
Total Water Produced 2,056,752,890 100.00% 2,180,317,488 100.00%
Purchased water -
East Valley Water District 36,588,300 73,492,900
Total Water Production 2,093,341,190 100.00% 2,253,810,388 100.00%
50
2002-2003 2001-2002 2000-200 I
Production Percent Production Percent Production Percent
in Cubic Feet Production in Cubic Feet Production in Cubic Feet Production
55,968,400 2.70% 70,400,200 3.28% 84,590,700 4.21%
16,895,500 0.82% 21,749,200 \.01% 16,913,200 0.84%
94,775,100 4.58% 112,510,200 5.24% 110,704,500 550%
72,855,700 3.52% 68,773,600 3.20% 100,532,800 5.00%
117,012,030 5,65% 109,735,500 5.11% 90,029,660 4.49%
502,864,300 24.28% 593,338,500 27.63% 595,230,100 29.59%
0 0.00% 0 0.00% 0 0.00%
1,569,000 0.08% 3,085,700 0.14% 3,669,800 0.18%
34,258,200 1.65% 49,751,700 2.32% 1,483,900 0.07%
62,409,200 3.01% 1\7,803,100 5.49% 96,952,100 4.82%
101,743,600 4.91% 29,554,700 1.38% 30,756,500 1.53%
95,388,500 4.61% 109,885,900 5.12% 62,404,600 3.10%
53,527,500 2.58% 55,204,600 2.57% 85,\37,800 4.23%
10,662,600 0.51% 13,922,100 0.65% 16,497,900 0.82%
16,517,300 0.80% 16,969,400 0.79% 19,177,500 0.95%
174,258,800 8.42% 185,990,500 8.66% 159,374,100 7.92%
I 82,126,500 8.80% 160,675,200 7.48% 150,736,400 7.49%
47,612,000 2.30% 102,798,600 4.79% 82,548,300 4.10%
18,21\,200 0.88% 11,699,500 0.54% 1,637,900 0.08%
4,544,200 0.22% 6,108,700 0.28% 3,255,400 0.16%
422,900 0.02% 205,500 0.01% 162,600 0.01%
107,6\ 0,600 5.20% 142,552,700 6.64% 126,792,300 6.30%
187,466,000 9.05% 78,513,900 3.66% 71,341,400 1.55%1
11,021,500 0.53% 15,143,400 0.71% 14,487,800 0.72%
101,031,700 4.88% 70,918,400 3.30% 87,412,200 4.34%
2,070,752,330 100,00% 2,147,290,800 100.00% 2,011,829,460 100.00%
55,962,500 105,745,800 89,351,500
2,126,714,830 100.00% 2,253,036,600 100.00% 2,255,178,570 100.00%
51
MUNICIPAL WATER DEPARTMENT OF THE CITY OF
SAN BERNARDINO, CALIFORNIA
WATER UTILITY
Schedule of Service Area and Customers
Number of Active Connections by Classification of User
as of June 30, 200 I through June 30, 2005
User Type 2005 2004 2003 2002 2001
Single family residential 34,360 34,075 33,762 33,512 32,991
Multiple family residential 2,930 2,929 2,886 2,839 2,792
Com merci al/i nsti tutional 3,812 3,761 3,752 3,728 3,703
Other 1,299 1,223 1,154 1,139 1,148
Total all users, active 42,401 41,988 41,554 41,218 40,634
Revenue by Class of User
Fiscal Year 2004-2005
Fiscal Year Percentage of
User Class Revenue Annual Revenue
Single family residential $ 9,519,955 52.38%
Multiple family residential 3,230,089 17.77%
Commercial/industrial 4,726,952 26.01%
Other and unmetered 699,183 3.85%
TOlal all users $ 18, I 76, 179 100%
Largest users: The System had no customer accounting for more than three percent of the
revenues for the fiscal year 2004-2005
52
MUNICIPAL WATER DEPARTMENT OF HIE CITY OF SAN BERNARDINO. CALIFORNIA
Schedule of Sewer Rates and Statistics
Classification
Rates effective as oflllne I. 1995:
Residential
Commercial:
MlIlti~fal1lily. mobil home parks
(4 or more units)
Retnil. commercial, light industrial
(non-ofnce. bakeries, markets.
theaters, dry cleaners)
Auto repair. car wash
Onices. motels (without restaurants)
Rest?",ants. hotels (hotel/motels
with restaurants)
Laundromats
Hospitals. convalescent homes
Schools. churches, nursery schools,
day cares
Industry
Rates efrective as ofluly 1,2004:
Residential
Commercial:
Multi-family, mobil home parks
(4 or more units)
Retail. commercial, light industrial
(non-onice, bakeries, markets,
thenters, dry c1enners)
Auto repair. car wash
Otlices, motels (without restaurants)
Restaurants, hotels (hotel/motels
with restaurants)
Laundromats
Hospitals, convalescent homes
Schools. churches, nUTsey schools,
daycalcs
Industry
Regional
Facilities
and Collection
Treatment System Total monthly
Charge Charge City Charge
$ I3 25 per month $1.3 5 per 1110nth $1460
$075/HCF $0 15/HCF $0.90/HCF
$1 10tHCF $0 15/HCF $1 25/HCF
$ J.20/HCF SO.15/HCF $1 35/HCF
SO 95/HCF $0 15/HCF $1 10/HCF
$ L70tHCF $0 15/HCF $1 85/HCF
$O.90tHCF $0.15/HCF $1 05/HCF
$0 80tHCF $0.15/HCF $0.95/HCF
$0 50tHCF $0 15/HCF $0 65/HCF
$826 67/MG DF $264 .22/1 ,000 LBS BOD
$264 22/1 ,000 LBS BOD $32428/1,000 LBS SS
$324.28/1 ,000 LBS SS
$14 50 per month $3 45 per month $1795
$0 83/HCF $0 15/HCF SO.98/HCF
+ $2 OO/month + $1 OO/month + $3 OO/month
SUO/HCF $033/HCF $2.03/HCF
+ $2 OO/month + $I OO/l11onth + $300/l11onth
$1 17/HCF $0 33/HCF $1 50/HCF
+ $2 OO/month + $IOO/month + $3.00/month
$132tHCF $0 33/HCF $1 65tHCF
+ $2.00/l11onth + $IOO/month + $3 OO/month
$1.84/HCF $0 33/HCF $217/HCF
+ $2 OO/month + $IOO/l11onlh + $3.00/l11onth
$1 15/HCF $OJ3/HCF $ 1.48/HCF
+ $2.00/month + $1 OO/month + $3.00/month
$0.84/HCF $0 33/HCF $ \.I7!HCF
+ $2.00/l11onlh + $1 OO/month + $3.00/month
SO 62/HCF $0.33/HCF $0.95/HCF
+ $2 OO/l11onth + SI.OO/month + $3 OO/month
$81610/MGDF $OJ3tHCF
$264.91/1,000 LBS BOD + $1.00/monlh
$577.41/1,000 LBS SS
HCF = Per 100 cubic teet of water usage
MG ~ Per million gallons of water usage
BOD ~ Per 1,000 pounds of biological oxygen del11and.
SS = Per 1,000 pounds of suspended solids
DF= Discharge flow
(Continned)
53
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNJA
Schedule of Sewer Rates and Statistics, (Continued)
June 30, 2005
Residential Nonresidential Total
Number of connections
City of San Bernardino $ 32,027 5,635 37,662
East Valley Water District 17,684 1,160 18,844
City of Lorna Linda 4,370 569 4,939
$ 54,081 7,364 61,445
Annual billings
City of San Bernardino $ 6,141,646 6,671,493 12,813,139
East Valley Water District 3,224,702 1,946,936 5,171,638
City of Lorna Linda 691,920 840,248 1,532,168
$ 10,058,268 9,458,677 19,516,945
Average monthly billings
City of San Bernardino $ 511,804 555,958 1,067,762
East Valley Water District 268,725 162,245 430,970
City of Lorna Linda 57,660 70,021 127,681
$ 838,189 788,223 1,626,412
54
June 30, 2004 June 30, 2003
Residential Nonresidential Total Residential Nonresidential Total
31,553 5,240 36,793 30,948 5,160 36,108
17,265 1,128 18,393 16,910 1,126 18,036
4,061 566 4,627 3,951 563 4,514
52,879 6,934 59,813 51,809 6,849 58,658
5,526,450 5,247,261 10,773,711 5,515,768 5,095,405 10,61 ],]72
2,970,140 1,694,656 4,664,796 2,836,617 1,627,022 4,463,638
617,8]3 726,191 1,344,004 612,488 772,148 1,384,635
9,114,403 7,668,108 ]6,782,511 8,964,872 7,494,574 16,459,446
460,537
247,512
51 ,484
437,272
141,221
60,516
897,809
388,733
112,000
459,647
236,385
51,041
424,617
135,585
64,346
884,264
371,970
115,386
759,534
639,009
1,398,543
747,073
624,548
1,371,620
55
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule - 1992 Certificates of Participation
San Bernardino Public Safety Authority
June 30, 2005
EARLY PAY OFF
During Fiscal Year 200], the 1992 Cel1ificates of Participation were retired by an early call and payoff.
The total principal amount of$34,805,000 was paid off February 1,2001.
An early call premium of$674,000 was incun-ed due to this transaction. This amount will be amortized
annually in the amount of $42, I 25 over a sixteen year period.
The unamol1ized discount balance of$19] ,401 will continue to be amortized annually in the amount of
$16,520 with the final payment of $9,681 due February 1,2017.
Funds used for the Pri111G1Y Hydraulic Reliability Project, remodel of the administration laboratOlY
building and design of 3A secondGlY treatment.
56
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule - 1998 Refunding Sewer Revenue Certificates of Participation
San Bernardino Public Safety Authority
June 30, 2005
Principal
Principal Unamortized Payments Interest
Date Due Payments Discounts (Net) Interest Total Rate
811 /05 $ 717,161 717,161 4.25%
2/1/06 1,815,000 7,727 1,807,273 717,161 2,524,434 4.25%
8/1/06 678,593 678,593 4.30%
211 /07 1,910,000 7,257 1,902,743 678,593 2,581,336 4.30%
8/1/07 637,528 637,528 5.00%
2/1 /08 2,010,000 6,760 2,003,240 637,528 2,640,768 5.00%
8/1 /08 587,278 587,278 4.50%
2/1 /09 2,125,000 6,238 2,118,762 587,278 2,706,040 4.50%
8/1 /09 539,465 539,465 4.70%
2/1/10 2,240,000 5,687 2,234,313 539,465 2,773,778 4.70%
811/10 486,825 486,825 5.00%
2/1 /11 2,365,000 5,105 2,359,895 486,825 2,846,720 5.00%
8/1/11 427,700 427,700 4.75%
2/1/12 2,510,000 4,492 2,505,508 427,700 2,933,208 4.75%
811/12 368,088 368,088 4.85%
2/1 /13 2,650,000 3,840 2,646,160 368,088 3,014,248 4.85%
8/1/13 303,825 303,825 4.75%
2/1/14 2,805,000 3,152 2,801,848 303,825 3, I 05,673 4.75%
8/1/14 23 7 ,206 237,206 5.25%
2/1/15 2,965,000 2,424 2,962,576 237,206 3, I 99,782 5.25%
811115 159,375 159,375 5.00%
211 /16 3,155,000 1,655 3,153,345 159,375 3,312,720 5.00%
8/1/16 80,500 80,500 5.00%
2/1/17 3,220,000 836 3,219,164 80,500 3,299,664 5.00%
$ 29,770,000 55,173 29,714,827 10,447,088 40,]61,915
57
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Series 1998A Water and Wastewater Revenue Bonds
June 30, 2005
Unamortized
Discounts
and Principal
Principal Deferred Payments Interest
Date Due Payments Charges (Net) Interest Total Rate
10/1/05 $ 1,260,000 20,476 1,239,524 27,720 1,267,244 4.40%
$ 1,260,000 20,476 1,239,524 27,720 1,267,244
58
MUNICIPAL WATER DEPARTMENT OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Bond Schedule - General Obligation Waterworks Bonds, Series C
June 30, 2005
Principal In terest
Date Due Payments Interest Total Rate
9/1/05 $ 3,294 3,294 7.75%
3/1/06 10,000 3,294 13,294 7.75%
9/1/06 2,906 2,906 7.75%
3/1 /07 10,000 2,906 12,906 7.75%
9/1/07 2,519 2,519 7.75%
3/1 /08 10,000 2,519 ]2,519 7.75%
9/1/08 2,131 2,131 7.75%
3/1 /09 10,000 2,131 12,131 7.75%
9/1/09 1,744 1,744 7.75%
3/1/10 10,000 1,744 11,744 7.75%
9/1/10 1,356 1,356 7.75%
3/1/11 10,000 1,356 11,356 7.75%
9/1/11 969 969 7.75%
3/1/12 ]0,000 969 10,969 7.75%
9/1/12 580 580 7.75%
3/1113 15,000 580 15,580 7.75%
$ 85,000 30,998 115,998
Bonds related to water system improvements for South San Bernardino Water District,
which was acquired by the Department in 1991.
59
(This page intentionally left blank.)
60
CONRAD AND
ASSOCIATES,
L. L. P.
CERTIFIED PUBLIC ACCOUNTANTS
2301 DUPONT DRIVE, SUITE 200
IRVINE, CALIFORNIA 92612
(949) 474.2020
Fax (949) 26).5520
Water Commissioners Board
Municipal Water Department of the City of San Bernardino, California
REPORT ON COMPLIANCE AND OTHER MATTERS AND ON
INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the Municipal Water Department of the City of San
Bernardino ("Department") as of and for the year ended June 30, 2005, and have issued our
report thereon dated November 4, 2005. 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.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Department's financial statements
are free of material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts and grant agreements, noncompliance with which could have a direct
and material effect on the determination of financial statement amounts. Such provisions
included those provisions of laws and regulations identified in the Guidelines for Comptroller
Audits of California Redevelopment Agencies, issued by the State Controller and as interpreted in
the Suggested Auditing Procedures for Accomplishing Compliance Audits of California
Redevelopment Agencies, issued by the Governmental Accounting and Auditing Committee of
the California Society of Certified Public Accountants. However, providing an opinion on
compliance with those provisions was not an objective of our audit and, accordingly, we do not
express such an opinion. The results of our tests disclosed no instances of noncompliance or
other matters that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Department's internal control over
financial reporting in order to determine our auditing procedures for the purpose of expressing
our opinion on the financial statements and not to provide an opinion on the internal control over
financial reporting. Our consideration of the internal control over financial reporting would not
necessarily disclose all matters in the internal control that might be a material weakness. A
material weakness is a reportable condition in which the design or operation of one or more of
the more internal control components does not reduce to a relatively low level the risk that
misstatements caused by error or fraud in amounts that would be material in relation to the
financial statements being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. We noted no matters
involving the internal control over financial reporting and its operation that we consider to be a
material weakness.
61
MEMBER5 OF AICPA AND CALIFORNIA 50Clffi OF CERTIFIED PUBLIC ACCOUNTANT5
MEMBER OF MlERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
Water Commissioners Board
Municipal Water Department of the City of San Bernardino, California
Page Two
This report is intended solely for the information and use of the Water Commissioners Board and
management of the Department and is not intended to be and should not be used by anyone other
than these specified parties.
~ -,/ 4fS(/~'R~ ~~,P
November 4, 2005
62