HomeMy WebLinkAbout11- Water Department CITY OF SAN BERNARDINO
MUNICIPAL WATER DEPARTMENCE!v -M�?
INTEROFFICE MEMORANDUM •98 7r 30 P 5 :15
To: Rachel Clark, City Clerk
FROM: Stacey R. Aldstadt, Deputy General Manager
SUBJECT: 1997-1998 AUDIT REPORT FOR WATER DEPARTMENT
WATER AND SEWER UTILITIES
DATE: December 28, 1998 Dr'r�' i � ��, gL
CC: Bernard C. Kersey, John Murphy
The firm of Soren♦MCAdam4Bartells has completed the 1997-1998
Annual Audit of the Water Department' s Water and Sewer Utilities .
This report was presented to and accepted by the Board of Water
Commissioners at their meeting held on December 15, 1998 .
Transmitted herein is one copy of the audit for the Mayor and
Common Council to "receive and file. "
Please contact me or John Murphy, Director of Finance, if you have
any questions.
i:4.PU�6tiJ
Stace R. Aldstadt
Deputy General Manager
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SOREN McADAM BARTELLS
' CERTIFIED PUBLIC ACCOUNTANTS, INC.
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ORIGINAL
MUNICIPAL WATER DEPARTMENT
OF THE
CITY OF SAN BERNARDINO, CALIFORNIA
Financial Statements
And
Supplementary Information
With
Independent Auditors' Report
For the Year Ended June 30, 1998
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Combining Financial Statements 3
Combining Balance Sheet
Combining Statement of Operations 8
Combining Statement of Changes in Fund Equity 8
Combining Statement of Cash Flows 9
Notes to Combining Financial Statements 11
Supplementary Information
Board of Water Commissioners and Organization 34
Schedule of Expenditures of Federal Awards 35
Schedule of Insurance Coverage 3
Schedule of Water System Demographics 38 8
Schedule of Water Production 39
40
Schedule of Water Rates
Schedule of Sundry Water Statistical Data 44
44
Schedule of Service Area and Customers
Schedule of Sewer Rates and Statistics 45
Certificates of Participation Schedule - San Bernardino Public Safety Authority 48
Bond Schedule - Series 1998A Water and Wastewater Revenue Bonds 50
Bond Schedule - General Obligation Waterworks Bonds, Series C 51
MICHAEL R.ADCOCK.C.P.A.
THOMAS E.AHERN,C.P.A. MEMBERS
M GARY L.CHRISTENSON,C.P.A.DENTIN, A
LINDA S.DENTIN,C.P .
RHEE ELIKER,C.P.A.
WING K.LAU,C.P.A. ASSOCIATED REGIONAL
DOUGLAS R.MrADAM,C.P.A. ACCOUNTING FIRMS(ARAF)
JESSIE C.POWELL,C.P.A.
JAMES L.SOREN,C.P.A.
KIRK G.STITt,C P.A. AMERICAN INSTITUTE OF
NO RA .P.A. SOREN • McADAM ♦ BARTELLS
NORA I.TEATLY,C P.A. CERTIFIED PUBLIC ACCOUNTANTS
CERTIFIED PUBLIC ACCOUNTANTS. INC. PRIVATE COMPANIES PRACTICE SECTION
Independent Auditors' Report
To the Board of Water Commissioners
Municipal Water Department of the
City of San Bernardino, California
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We have audited the accompanying combining financial statements of the Municipal Water Department
of the City of San Bernardino, California as of and for the year ended June 30, 1998 as listed in the table
of contents. These financial statements are the responsibility of the Municipal Water Department's
management. Our responsibility is to express an opinion on time financial statements based on our audit.
We did not audit the financial statements of the West End Water Development, Treatment and
Conservation Joint Powers Authority, the San Bernardino Public Safety Authority, or the San
Bernardino/Colton Rapid Infiltration Extraction Project which represent 17.0 and 1.0 percent of the total
assets and operating revenues, respectively, of the Municipal Water Department. Those financial
statements were audited by other auditors whose reports have been furnished to us, and our opinion,
insofar as it relates to the amounts included for these organizations and project, is based on the reports of
the other auditors.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require
r 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 opinion.
r As discussed in Note 1,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 fund types,in conformity with
generally accepted accounting principles.
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2068 Orange Tree Lane,Suite 100 ♦ Post Office Be.8010 ♦ Redlands,CA 92375-1210 ♦ (909)798-2222 ♦ (909)824-5110 ♦ Fax(909)798-9772
^ Riverside Office, ♦ BR.Sharp Financial Center ♦ 2155 Chicago Avenue,Suite 100 ♦ Riverside,CA 92507 ♦ (909)683-0672 ♦ Fax(909)686-7780
In our opinion, based on our audit and the reports of other auditors, 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, California as of June 30, 1998, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting principles.
As discussed in Note 1, the Municipal Water Department retroactively changed its method of accounting
for investments as of June 30, 1997.
Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a
whole. The supplementary information shown on pages 34 through 51 is presented for purposes of
additional analysis and is not a required part of the basic financial statements. The supplementary
information, except for management supplied data on pages 38 through 47 on which we express no
opinion, was subjected to the auditing procedures applied in the audit of the financial statements and, in
our opinion, based on our audit and the reports of other auditors, is fairly stated, in all material respects,
in relation to the basic financial statements taken as a whole.
SOREN ♦ McADAM♦ BARTELLS
Certified Public Accountants, Inc.
Redlands, California
October 30, 1998 By: Jessie C. Powell, CPA
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Balance Sheet
June 30, 1998
(With Comparative Information for June 30, 1997)
Water Sewer Combined
ASSETS Utility Utility Eliminations 1998 1997
Current assets
Cash and cash equivalents $2,145,193 $ 3,170,532 $ 5,315,725 $ 5,881,165
Investments 5,177,721 7,652,521 12,830,242 13,525,470
Accounts receivable,net 2,982,720 3,035,442 6,018,162 6,518,822
Interfund receivable 112,714 4,820 $(117,534)
Related parties receivable 205,820 145,312 351,132 373,904
Inventory 1,214,920 160,537 1,375,457 1,517,820
Prepaid expenses 115 883 175,680 291 563 350,683
Total current assets 11,954,971 14.344 844 (117,534) 26,182,281 28,167,8
Restricted assets
Crib and cash equivalents 1,451,573 1,451,573
Investments 885,592 7,748,065 8,633,657 11,622,630
Notes receivable 219,414 219,414 509,602
Interest receivable 28 124,836 124,864 152,886
Related parties receivable 183 34,078 34,261 40,482
Taxes receivable 16,107 16,107
Other 1,991 1,991 3,372
Total restricted assets 2,355,474 8.126 393 10.481 867 12,328.97
The accompanying notes are an integral part of these financial statements.
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Water Sewer Combined
Utility Utility Eliminations 1998 1997
LIABII.ITIES AND FUND EQUrrY
Current liabilities
Current portion of notes payable $'4,414,486 $ 1,414,486 $ 1,368,672
Current portion of obligations under
capital leases $ 84,694 84,694 80,339
Accounts payable 1,591,223 762,360 2,353,583 3,722,029
Interfund payable 4,820 112,714 $(117,534)
Related parties payable 683,958 411,006 1,094,964 1,000,842
Accrued expenses 9,539 193,479 203,018 199,193
Accrued compensation 1,438,084 599,666 2,037,750 1,814,210
Deposits for performance bonds and
other charges subject to refund 647 647 48
- Consumer deposits,advance payments,
and credit available 370,241 370,241 235,137
Deferred revenue 22,776
... Total current liabilities 4,183,206 3.493,711 (117,534) 7,559,383 8.443.246
Current liabilities payable from
restricted assets
Current portion of certificates of
participation 943,480 943,480 1,543,896
Current portion of bonds payable 811,085 811,085 455,000
Accounts payable 30,256 30,256 21,895
Accrued interest payable 62,112 996,891 1,059,003 1,204,335
Consumer deposits 871,886 871.886 818.237
Total current liabilities payable from
restricted assets 1775 339 1,940,371 3,715,710 4,043.363
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Balance Sheet
June 30, 1998
(With Comparative Information for June 30, 1997) as
Water Sewer Combined
Utility Utility Eliminations 1998 1997
Property, plant,and equipment,
and water rights
Property,plant,and equipment, and as
water rights $88,180,191 $162,483,435 $250,663,626 $749,821,903
Less accumulated depreciation
and amortization (33.979.349) (30.804,369) (64,783.718) (58,172,262)
54,200,842 131,679,066 - 185,879,908 191,649,641 r
Construction in progress 10,860,326 6.799.300 17.659 626 10,315,120
Total property,plant, and
equipment,and water rights,net 65,061,168 138,478.366 203.539.534 201.964 761
Other assets
Idle assets 254,860 254,860 266,721
Issuance costs of certificates of
participation and bonds, net of r
accumulated amortization 154,177 178,791 332,968 263.572
Total other assets 409,037 178.791 587.828 530.293
Total assets $ 79,780,650 $161,128.394 $(117,534) $240,791,510 $242 991 890 r
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The accompanying notes are an integral part of these financial statements. r
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Water Sewer Combined
Utility Utility Eliminations 1998 1997
Long-term debt
Notes payable $31,649,670 $31,649,670 $33,018,782
Obligations under capital leases _ $ 84,694 84,694 165,033
Certificates of participation 36,487,958 36,487,958 45,746,841
Bonds payable 8,173,584 8,173,584 1,080.000
8,258,278 68,137,628 76,395,906 80,010,656
Less current portion of notes payable (1,414,486) (1,414,486) (1,368,672)
Less current portion of obligations
under capital leases (84,694) (84,694) (80,339)
Less current portion payable from
restricted assets (811,085) (943,480) (1,754,565) (1,998,896)
Total long-term debt 7,362,499 65,779,662 73,142,161 76,562,749
Total liabilities 13,321,044 71,213,744 $(117,534) 84,417,254 89,049.358
Fund equity
Contributed capital 45,671,600 59,626,528 105,298,128 101,659,996
Retained earnings 20,788,006 30,288,122 51,076,128 52,282,536
tr
Total fund equity 66,459,606 89,914,650 - 156,374,256 153,942,532
Total liabilities and fund equity $79,780,650 $161,128,394 $(117,534) $240,791,510 $242,991,890
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Statement of Operations
For the Year Ended June 30, 1998
(With Comparative Information for the Year Ended June 30, 1997) w
Water Sewer Combined .,
Utility Utility Eliminations 1995 1997
Operating revenues
Charges for services $12,630,547--$16,558,904 $ (4,526) $29,184,925 $31,194,982
Other operating revenues 1,590,147 171,766 (730,704) 1,031,209 2,067 871
Total operating revenues 14,220,694 16,730,670 (735,230) 30,216,134 33,262.853
Operating expenses _
Administration and customer
service 3,427,523 (1,747) 3,425,776 3,342,182 w,
Engineering, operations, and
distribution administration 134,722 1,173,606 (588,042) 720,286 691,988
Plant operations 2,679,143 5,425,406 (17,641) 8,086,908 8,625,640
Maintenance 620,126 1,554,836 (17,326) 2,157,636 2,404,790
Environmental control 192,044 (56) 191,988 291,820
Distribution 2,232,631 (43,390) 2,189,241 2,117,541
Engineering 912,797 912,797 800,294
General administration and
overhead 2,207,458 2,906,497 (67,040) 5,046,915 5,983,007
Depreciation and amortization 2,376,301 4,518,957 6,895,258 6,744,977
Bad debt expense 45,486 40,335 12 85,833 132,936
Total operating expenses 14 636,187 15,811,681 (735,230) 29,712,638 31,135,175
Operating income(loss) (415,493) 918,989 - 503,496 2,127.678 ,a
Nonoperating revenues(expenses)
Investment income 586,469 1,343,132 1,929,601 1,955,454
Rental income 50,578 29,347 79,925 76,823
Net loss on capital assets
and inventory items (9,764) (440) (10,204) (65,802)
Interest expense and fiscal charges (493,361) (3,453,035) (3,946,396) (4,383,479)
Amortization of issuance costs (9,250) (9,623) (18,873) (18,873)
All other-net 247,896 8,147 256,043 36.184
Total nonoperating revenues
(expenses) 372,568 (2,082,472) - (1,709,904) (2,399,693)
Net loss $ (42,925) $(1,163,483) $ - $(1,206,408) $ (272.015)
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The accompanying notes are an integral part of these financial statements.
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Statement of Changes in Fund Equity
For the Year Ended June 30, 1998
(With Comparative Information for the Year Ended June 30, 1997)
Water Sewer Combined
Utility Utility 1998 1997
Contributed capital
Balance, beginning of year $43,089,079 $58,570,917 $101,659,996 $94,174,124
Add nonoperating credits and
adjustments
Charges to property owners
for capital purposes:
w_ Contributions in aid of
construction 182,946 182,946 274,536
Impact fees for service
connections 432,650 432,650 432,550
`. Impact fees for capacity
rights-net of repurchases,
refunds, and writeoffs 679,062 679,062 751,795
East trunk line fees 102,251 102,251 106,688
Grants from government
agencies for capital
improvements 1.966,925 274.298 2.241.223 5.920,303
Balance, end of year 45.671.600 59.626.528 105.298.128 101.659.996
Retained earnings
Balance, beginning of year 20,830,931 31,451,605 52,282,536 52,554,551
Net loss (42.925) (1.163.483) (1.206.408) (272.015)
Balance, end of year 20.788.006 30,288.122 51.076.128 52,282,536
Total equity, end of year $66.459.606 $89.914,650 $156.374,256 $153.942.532
The accompanying notes are an integral pan of these financial statements.
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Statement of Cash Flows
For the Year Ended June 30, 1998
(With Comparative Information for the Year Ended June 30, 1997)
Water Sewer Combined ••
Utility Utility Eliminations 1998 1997
Cash flows from operating activities
Operating income(loss) $ (415,493) $ 918,989 $ 503,496 $ 2,127,678
Adjustments to reconcile operating
income Doss)to net cash provided --,
by operating activities
Depreciation and amortization 2,376,301 4,518,957 6,895,258 6,744,977 NO
Bad debt expense 45,486 40,335 85,821 132,936 ..
(Increase)decrease in:
Accounts receivable 457,632 (160,595) 297,037 (51,428) .a
Interfund receivable 1,016,312 (4,298) $ 1,012,014
Related parties receivable (41,922) (1,814) (43,736) 132,715 r
Inventory 101,135 41,229 142,364 (160,979)
Prepaid expenses and other assets 19,827 40,673 60,500 8,767
Increase(decrease)in:
Accounts payable 66,835 (1,426,924) (1,360,089) 1,667,447
Interfund payable (960,090) (51,974) (1,012,014) 4
Related parties payable 23,852 70,271 94,123 (161,108)
Accrued expenses 8,027 (4,202) 3,825 135,296 ...
Accrued compensation 92,090 131,450 223,540 12,619
Deposits for performance bonds
and other charges subject to
refund 599 599 (163)
Consumer deposits, advance
payments, and credit available 188.754 188.754 (342.024)
Net cash provided by operating
activities 2.979.345 4.112.147 7.091.492 10.246.733
Cash flows from noncapital and
related financing activities
Other nonoperating revenues, net 231.789 8,147 239.936 36.184
Net cash provided by noncapital
and related financing activities 231.789 8.147 239.936 36.184
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Statement of Cash Flows
For the Year Ended June 30, 1998
(With Comparative Information for the Year Ended June 30, 1997)
Water Sewer Combined
Utility Utility Eliminations 1998 1997
Cash flows from capital and related
financing activities
Acquisition of property, plant, and
equipment $(4,616,929) $(3,851,447) $ - $ (8,468,376) $ (7,947,154)
Payments received on notes receivable 290,188 290,188 252,523
Charges to property owners for capital
purposes 615,596 781,313 1,396,909 1,565,568
Payments on contracts payable (120,788)
Grant proceeds from government
agencies 2,336,254 2,336,254 2,121,976
Principal payments on notes payable (1,369,111) (1,369,111) (2,069,708)
Proceeds from issuance of long-term
debt 8,018,023 8,018,023 924,244
Principal payments under capital leases (80,339) (80,339) (82,771)
Principal payments on certificates of
participation (8,443,606) (895,000) (9,338,606) (1,482,137)
Principal payments on bonds payable (5,000) (955,000 (960,000) (455,000)
Property taxes received 19,539
Interest paid (571,021) (3,493,690) (4,064,711) (4,407,196)
Rent payments received 50,578 29,347 79,925 76,823
Net cash used in capital and related
financing activities (2,696,444) (9,463,400) - (12,159,844) (11,604,081)
Cash flows from investing activities
Proceeds from sale of investments 5,733,757 11,805,757 17,539,514 5,072,619
Purchase of investments (5,233,188) (8,622,125) (13,855,313) (4,764,903)
Interest received 611.443 1,418,905 2,030,348 1.844,711
Net cash provided by investing activities 1.112.012 4,602,537 - 5,714,549 2,152,427
Net increase(decrease)in cash and
cash equivalents 1,626,702 (740,569) - 886,133 831,263
Cash and cash equivalents at
beginning of year 1,970,064 3,911,101 5,881 165 5,049 902
Cash and cash equivalents at
end of year $ 3.596,766 $ 3,170,532 $ $ 6,767,298 $ 5,881,165
The accompanying notes are an integral part of these financial statements.
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
1. Summary of Significant Accounting Policies
The Municipal Water Department of the City of San Bernardino, California(a component unit of the City
of San Bernardino)(the 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 Municipal Water Department of the City
of San Bernardino operated three enterprise funds up to the year ended June 30, 1997: the Water Utility
Enterprise Fund (Water Utility), the Sewer Utility Enterprise Fund(Sewer Utility), and the Geothermal
Utility Enterprise Fund (Geothermal Utility). On July 1, 1997, the operations, assets, and liabilities of
the Geothermal Utility were transferred to the Water 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:
Change in Method of Accounting and Reporting for
Certain Investments and for External Investment Pools
During the year ended June 30, 1998,the Department adopted Governmental Accounting Standards Board
Statement No. 31,Accounting and Financial Reporting for Certain Investments and for External Investment
Pools. GASB No. 31 establishes fair value standards for investments in(a)participating interest-earning
investment contracts, (b)external investment pools, (c)open-end mutual funds, (d)debt securities, and(e)
equity securities, option contracts, stock warrants, and stock rights that have readily determinable fair
values. All investment income, including changes in the fair value of investments, is reported as revenue
in the operating statement. This change had no effect on equity at June 30, 1997. The effect of this
change on net income for the year ended June 30, 1998 was an increase of$50,501 and $83,072 on the
Water Utility and Sewer Utility, respectively.
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Reporting Entity
Generally accepted accounting principles require that these financial statements present the accounts of the
Department and any of its component units. Component units are legally separate entities for which the
Department is considered to be financially accountable or otherwise has a relationship which is such that
the exclusion of the entity would cause the financial statements to be misleading. Blended component units
are considered, in substance, part of the Department's operations, so the accounts of these entities are to
be combined with the data of the Department. Component units which do not meet these requirements are
reported in the financial statements as discrete units to emphasize their separate legal status. The
Department has determined that it has three component units, all of which qualify to be treated as blended
component units as follows:
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.
In accordance with the joint powers agreement, title to the WEJPA constructed water facilities will
automatically vest with the Department in the Water Utility upon repayment of the certificates of
participation issued to fund the construction. The WEJPA is governed by a separate three-member board
consisting of one representative from each agency's governing body. The financial statements for the
WEJPA are available at the Department.
San Bernardino Public Safety Authority
On April 1, 1968, the City of San Bernardino and 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. PSA is governed by 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.
Effective with the transfer of the Sewer Utility to the Department, all the assets and activities of PSA
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 Sewer Utility. The financial statements of PSA are
available at the Department.
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
1. Summary of Significant Accounting Policies (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 (RDQ.
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 (SAWPA) 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
and is expected to occur during the fiscal year 1998-99. 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 activities related to the construction, administration and
operation of the RIX project are accounted for in the Sewer Utility.
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 r
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.
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Cash and 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
r investments (including restricted assets) with a 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.
v
Interfund Receivables and Payables
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 noncurrent 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.
Restricted Assets
Y
Various resources of the Department are limited as to their use by law or by bond covenants and are
classified on the balance sheet as restricted assets. Proceeds of the bonds are restricted for the construction
of water and sewer system improvements and for repayment of the bonds. 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 which benefit
the development projects.
-14-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Issuance Costs and Discount
Issuance costs and discounts for certificates of participation and bonds payable are being amortized using
the straight-line method over the term of the related certificate or bond which approximates the effective
interest method. Issuance costs,discount and deferred funding charges for the series 1998A bonds issued
by the Water Utility are being amortized over the term of the bond using the effective interest rate method.
Property, Plant, and Equipment and Water Rights
Property, plant, and equipment and water rights are recorded at cost. Major outlays for capital assets and
improvements are capitalized as projects are constructed. 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 24.75 percent of direct
construction cost and are reflected 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 8 to 50 years
Interceptor lines 50 years
Disposal plant 35 to 50 years
Leasehold improvements 5 to 25 years
Shops, offices, stores, and yards 10 to 20 years
Tools and equipment 4 to 20 years
Office equipment 5 to 20 years
Communication equipment 8 to 10 years
Computer equipment 5 to 10 years
Automotive equipment 3 to 8 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.
Idle Assets
Idle assets consist of water wells, pumping plants, reservoirs, and pipelines not in production.
-15-
_ MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
i
1. Summary of Significant Accounting Policies (Continued)
i
Compensated Absences
Employees gain a vested right to accumulated unpaid vacation based on years of service but cannot
T 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 one
�- week of accumulated unpaid vacation. Employees' vacation benefits are recognized as a liability of the
F Department.
i 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 and employees are entitled to
T 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.
Fund Equity
Reservations of retained earnings are limited to outside third-party restrictions. The Department currently
has no reserved retained earnings. The Department's contributed capital represents equity acquired
through capital grants and capital contributions from developers, customers, or other funds.
Comparative Data for Prior Year
Comparative data for the prior year has been presented in selected sections of the accompanying financial
statements for comparative purposes and is not intended to be a complete financial statement presentation.
For comparative purposes, the prior year data for the Water Utility includes the Geothermal Utility. In
addition, certain amounts presented in the prior year have been reclassified in order to be consistent with
the current year's presentation.
r
2. Cash and Investments
As of June 30, 1998, the carrying amount of the Department's deposits was $1,527,753 and the bank
balance was$1,454,633. Of the bank balance, $129,441 was covered by federal depository insurance and
$1,325,191 was collateralized with securities held by the pledging financial institution or its trust
department or agent, but not in the Department's name.
.. The Department maintains substantially all of its operating funds in the City of San Bernardino Treasury
(an internal investment pool). These funds are reported at market value as determined by quoted market
prices. Investment earnings are deposited quarterly into participating funds. Any investment losses are
proportionately shared by all funds in the internal investment pool.
-16-
w
w
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements w
2. Cash and Investments (Continued)
The Department's cash and investments include the following components: ~
Cash deposits $ 1,527,753
Internal investment pool with City of San Bernardino 21,510,604
Investments with fiscal agent 5.192.840
$28.231.197
The Department's investments are categorized as either(1)insured or registered or for which the securities
are held by the Department or its agent in the Department's name, (2) uninsured and unregistered for
which the securities are held by the broker's or dealer's trust department or agent in the Department's
name, or(3)uninsured and unregistered for which the securities are held by the broker or dealer or by its
trust department or agent but not in the Department's name. The Department's investments in the Local
Agency Investment Fund and money market funds have not been categorized because securities are not
used as evidence of the investments but are an ownership interest in pooled investment funds. Investments
are categorized at June 30, 1998 as follows:
Category Fair Value
l 2 3 Total
Investments
U.S. Treasury securities $ 3,349,022 $ 3,349,022
U.S. Government agencies 12,638,029 12,638,029
Other securities 5,476,848 5,476,848 -.
Local Agency Investment Fund 4,299,728
Money Market Funds 925.513
Total investments 26,689,140
Cash on hand and deposits 1.542.057 �*
Total cash and investments $28.231.197
Presented in the balance sheet as:
Cash and cash equivalents
Current assets $ 5,315,725
Restricted assets 1.451.573
Total cash and cash equivalents 6,767,298
Investments
Current assets 12,830,242
Restricted assets 8.633.657
$28.231.197
-17-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
3. Accounts Receivable
Accounts receivable consisted of the following at June 30, 1998:
Less Net
Amount Allowance Receivable
Water Utility
Consumer $2,516,977 $247,297 $2,269,680
Grant funding 664,986 664,986
Other 73.261 25.207 48.054
3.255.224 272.504 2,982,720
Sewer Utility
Consumer 2,013,227 158,308 1,854,919
Grant funding 251,522 251,522
Other 942.025 13.024 929.001
3.206.774 171,332 3.035.442
Totals $6.461,998 $443,836 $6.018,162
4. Notes Receivable
Notes receivable at June 30, 1998 consisted of the following:
Sewer Utility
Automated Health Systems Laundry/Medline Industries, Inc.
Interest rate: 6.25%
Repayment provision: $198,157 annual installments, including interest
Balances $186,500
Miscellaneous notes
Various parties (for collection of sewer capacity fees)
Interest rate: 12%
Repayment provision: Interest and principal due at
maturity in 1998
Balances 32.914
Total notes receivable $219.414
-18-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
S. Restricted Assets
Certain assets are classified as restricted assets because their use is completely restricted by the provisions _
of loan or grant agreements or bond covenants. The balances of restricted asset accounts at June 30,
1998 follow:
Water Utility �*
Customer deposits $ 871,886
Funds for debt service on South San Bernardino
Water District Waterworks Bonds, Series C 29,996
Set asides required under 1990 Water facilities certificates of
participation 8,861
Set asides required under series 1998A bonds, project fund 1,425,191 "
Set asides for the purchase of computer equipment, software,
and training 19.540
2.355.474
Sewer Utility
Advance sales of capacity rights to property owners
under Resolution 84-271, including any interest earnings,
restricted for capacity expansion expenditures 312,688
East Valley Water District connection fees, restricted for .�
additional interceptor capacity requirements of the District,
including any interest earnings 2,504,755
Construction and other reserves including set asides required
under the 1992 Sewer facilities certificates of participation 5.308.950
8.126,393
Total restricted assets $10.481,867
-19-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
.. Notes to Combining Financial Statements
6. Property, Plant, and Equipment and Water Rights
A summary of changes in property, plant, and equipment and water rights follows:
Additions Retirements
Balance, and and Balance,
T July 1. 1997 Transfers-in Transfers-out June 30. 1998
Water Utility
Sundry land, rights-of-way, service
areas, and easements $ 2,372,230 $ 2,372,230
Water rights, wells, pumping
plants, reservoirs, etc. 29,474,476 29,474,476
Distribution systems 48,414,275 $322,371 $208,272 48,528,374
Shops, office, and store yards 1,132,961 6,801 1,139,762
Tools and equipment 1,845,411 63,980 4,722 1,904,669
Automobiles and trucks 1,917,774 123,862 40,343 2,001,293
Office leasehold improvements 110,175 110,175
Office, computer, and engineering
equipment 1,990,300 82,989 16,496 2,056,793
"E" Street property 54,202 54,202
Radio and interoffice
" communications equipment 301,796 2,184 303,980
Telemetry systems and equipment 75,240 3,210 78,450
Miscellaneous capital items 155,789 2 155.787
87,844,629 $605.397 $269.835 88,180,191
Less accumulated depreciation
and amortization 31.870.448 33.979,349
55,974,181 54,200,842
Construction in progress 6.844.266 10.860.326
Total property, plant, and
equipment and water rights, net $62.818.447 $65.061.168
Details of changes in construction in progress in the Water Utility follow:
-- Balance Balance
July 1, 1997 Additions Transfers June 30, 1998
United States Environmental
•* Protection Agency Newmark
Groundwater Project $4,181,875 $2,570,649 $6,752,524
Other miscellaneous projects 2.662.391 1.666.579 $221.168 4.107.802
Totals $6.844.266 $4.237,228 $221.168 $10.860.326
-20-
w
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements w
6. Property, Plant, and Equipment and Water Rights (Continued)
During the year ended June 30, 1998, the Department capitalized interest costs of$19,875 in the Water
Utility.
Balance, Additions and Balance,
July I. 1997 Transfers-in Retirements June 30 1998
Sewer Utility r
Land, rights, and easements $ 12,162,672 $140,549 $ 12,303,221
Buildings and plants 143,133,301 119,097 143,252,398
Wells and lines 3,192,217 3,192,217 ..
Tools and equipment 2,471,316 118,034 $ 5,903 2,583,447
Automobiles and trucks 390,737 124,551 15,583 499,705 ^
Office and computer equipment 420,638 25,416 446,054
Miscellaneous capital items 206.393 206.393
m
161,977,274 $527.647 $21.486 162,483,435
Less accumulated depreciation w
and amortization 26.301.814 30.804.369
135,675,460 131,679,066
Construction in progress 3.470.854 6.799.300 ..
Total property, plant, and
equipment, net $139.146.314 $138.478.366 w,
Details of changes in construction in progress in the Sewer Utility follow:
Balance, Balance,
July 1. 1997 Additions Transfers June 30, 1998
Phase III expansion project $2,614,441 $2,614,441
Other miscellaneous projects 856.413 $3.328.446 4.184.859
Totals $3.470.854 $3.328.446 $6.799.300
During the year ended June 30, 1998, the Department capitalized interest costs of$139,765 in the Sewer
Utility.
-21-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
7. Operating Leases
The Department leases office space from the City of San Bernardino under a noncancellable operating lease
terminating in 2002. The following is a schedule of minimum lease payments as of June 30, 1998:
Office Space
Water Sewer Total
.. For the year ending June 30,
1999 $161,918 $21,802 $183,720
2000 161,918 21,802 183,720
r 2001 161,918 21,802 183,720
2002 121.439 16.351 137.790
^
,r $607193 $81.757 $688.950
Rental expense for the year ended June 30, 1998 amounted to $207,036.
8. Long-Term Debt
W The following is a summary of changes in long-term debt obligations for the year ended June 30, 1998:
,., Balance, Balance, June 30, 1998
July 1. 1997 Additions Reductions Total Current Lone-Term
Notes payable $33,018,781 $ 1,369,111 $31,649,670 $1,414,486 $30,235,184
Certificates of participation 45,746,842 9,258,884 36,487,958 943,480 35,544,478
_ Bonds payable 1,080,000 $8,053,584 960,000 8,173,584 811,085 7,362,499
Obligations under capital
leases 165.033 80.339 84.694 84.694
$80.010.656 $8.053.584 $11.668.334 $76.395,906 $3.253.745 $73.142.161
^
Notes Payable
Santa Ana Watershed Project Authority (SAWPA)
Maturity date: 2011
Interest rate: 3.3%
Repayment provisions: Annual principal and interest
payments of$279,293
Balances $ 2,914,077
.. -22-
A
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
8. Long-Term Debt (Continued)
San Bernardino Valley Municipal Water District
Maturity date: 2013
Interest rate: 7.25%
Repayment provisions: Annual principal and interest
payments of$456,250
Balances $ 4,090,657
Santa Ana Watershed Project Authority (SAWPA)
Maturity date: 2016
Interest rate: 2.8%
Repayment provisions: Annual principal and interest
payments of$1,761,739
Balances 24.644.936
31,649,670 w
Less current portion 1.414.486
Long-term portion $30.235.184
w
The loan through the Santa Ana Watershed Project Authority from the State Water Resources Control
Board had been provided for the construction of the San Bernardino/Colton Rapid Infiltration Extraction r
(RDQ Project. The loan requires 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 balance of the WCRF is $520,300 at ,
June 30, 1998.
The Department has decided to use the revenues of the Sewer Utility towards repayment of the loan.
23
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
8. Long-Term Debt (Continued)
Certificates of Participation
.. Annual
Interest Issue Maturity Original Principal
Rates Date Date Amount Installments Balance
1990 Water Facilities 6.10% 1991 2006 $11,463,581 $215,713
to to
7.00% $1,232,643 $ -0-
1992 Sewer Treatment Plant 6.25% 1992 2018 $41,300,000 $625,000
to to
9.25% $3,385,000 36.795.000
36,795,000
Less unamortized discount 307.042
M 36,487,958
Less current portion payable
from restricted assets 943.480
Long-term portion $35,544.478
The City of San Bernardino's independent bond council has determined that no amounts are currently due
under IRS Code Section 148(f)(4)(B) for the temporary investments of the 1992 Sewer Treatment Plant
Certificates of Participation for rebate arbitrage.
As of June 30, 1998, $7,765,652 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). Funds have been deposited in an escrow account and will provide for the debt
.. service of the certificates until they mature. The advance refunding met the requirements of an in-
substance defeasance, and were removed as a liability of the Department at June 30, 1998.
-24-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
8. Long-Term Debt (Continued)
Bonds Payable
Annual
Interest Issue Maturity Original Principal
Rates Date Date Amount Installments Balance
1998 Water and
Wastewater Revenue Bonds 3.75% 1998 2005 $8,610,000 $860,000
to to
4.40% $1,260,000 $8,610,000
Waterworks Bonds,
Series C 7.75% 1988 2013 $150,000 $5,000
to
$15,000 120,000
San Bernardino Public
Safety Authority
Refunding Revenue Bonds 5.60% 1973 1998 $5,790,000 $185,000
to
$475,000
Total bonds payable 8,730,000
Less unamortized discount
and deferred advance MM
refunding charge 556.416 -�
8,173,584
Less current portion payable
from restricted assets 811.085
Long-term portion $7.362.499
w
During the year, the Department joined in a pooled financing program of the Association of Bay Area
Governments, under which the Series 1998A Water and Wastewater Revenue Bonds were issued. The
Department's share of the principal amount of bonds at year-end was $8,610,000. The Department has
used$7,765,652 out of the proceeds to defease and prepay in full the principal outstanding on the 1990
Water Facilities Certificates of Participation. A portion of the proceeds has been used to pay the costs
incurred in issuing the Series 1998A Water and Wastewater Revenue Bonds and the remaining portion has
been set aside to finance a new computerized billing system and miscellaneous water improvement projects.
The refinancing is expected to result in aggregate savings of$1,725,342 which is the difference between
the amounts required to service the defeased certificates of participation and that required to service the
portion of the new bonds which has gone towards defeasement. The present value of these savings has
been computed as $304,820. r.
In addition, during the year, the Department paid in full the principal outstanding on the 1973 San
Bernardino Public Safety Authority Refunding Revenue Bonds ahead of maturity.
MR
-25-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
8. Long-Term Debt (Continued)
Capital Leases
All leases qualifying as capital leases for accounting purposes have been recorded at the present value of
the future minimum lease payments as of the date of their inception. The Department held office and
engineering equipment in the amount of$262,432 at June 30, 1998 under capital leases. There was no
amortization charged to depreciation expense for these assets during the year since they are currently not
in service. The following is a schedule of the future minimum lease payments under these capital lease
obligations and the present value of the net minimum lease payments at June 30, 1998:
r
For the year ending June 30, 1999 $89,284
Less amount representing interest .4,590
Present value of future minimum lease payments 84,694
Less current portion 84.69
Long-term portion of obligations under capital leases $
The annual requirements to amortize long-term debt subsequent to June 30, 1998 are as follows:
June 30, Principal Interest Total
Notes payable 1999 $ 1,414,486 $ 1,082,796 $ 2,497,282
2000 1,462,114 1,035,168 2,497,282
2001 1,511,620 985,662 2,497,282
2002 1,563,095 934,187 2,497,282
2003 1,616,637 880,645 2,497,282
Thereafter 24.081.718 5.617.746 29.699.464
31.649.670 10.536.204 42.185.874
Certificates of participation 1999 943,480 2,392,538 3,336,018
2000 1,013,480 2,303,738 3,317,218
2001 1,088,480 2,208,462 3,296,942
2002 1,168,480 2,106,250 3,274,730
2003 1,253,480 2,032,188 3,285,668
Thereafter 31.020.558 16.835.312 47.855.870
36.487.958 27.878.488 64.366.446
.. -26-
w
w
MUNICIPAL WATER DEPARTMENT _
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
■
Notes to Combining Financial Statements
8. Long-Term Debt (Continued)
June 30, Principal Interest Total
■
Bonds payable 1999 $ 811,085 $ 156,831 $ 967,916 _
2000 857,510 328,587 1,186,097
2001 915,852 291,825 1,207,677
2002 970,329 251,853 1,222,182
2003 1,025,984 208,737 1,234,721
Thereafter 3,592.824 363.148 3.955 972
8.173.584 1.600.981 9.774 565
$76.311,212 $40.015.673 $116.326.885
At June 30, 1998, $785,000 of the 1986 Revenue Refunding Bonds of the Sewer Facility are considered
defeased and are not included as a liability of the Department in these financial statements.
9. Deferred Compensation Plan
The Department offers its employees a deferred compensation plan, through the City of San Bernardino,
created in accordance with Internal Revenue Code Section 457. The Plan, available to all full-time
employees at their option, permits participants to defer a portion of their salary until future years. The �■
deferred compensation is not available to participants until termination,retirement,death,or unforeseeable
emergency.
All amounts of compensation deferred under the plan, all property, and rights purchased with these
amounts, property, or rights are(until paid or made available to the participant or beneficiary)solely the
property of the Department, subject only to the claims of the Department's general creditors. Participants'
rights under the plan are equal to those of general creditors of the Department in an amount equal to the
fair market value of the deferred account for each participant.
It is the opinion of the Department's legal counsel that the Department has no liability for losses under the
plan, but does have the duty of due care that would be required of an ordinary prudent investor. The
investment and related liabilities due to the employees are included in the City of San Bernardino's
Comprehensive Annual Financial Report and cannot be separately determined for the Department. The
Department believes it is unlikely that it will use the assets to satisfy the claims of general creditors in the
future.
-27-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
10. 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 contributes to PERS,a cost-sharing multiple-employer public employee retirement system
defined benefit pension plan administered by PERS. 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.
Funding Policv
Active plan members are required to contribute 7.0 percent of their salary (7.0 percent of monthly salary
over$133.33 if the member participates in Social Security) and the Department is required to contribute
- an actuarially determined rate. The actuarial methods and assumptions required employer contribution rate
for fiscal year 1997-98 was 6.172 percent of annual payroll (decreasing to 6.033 percent of pay under a
special funding provision effective with the January 1998 payroll period due to the state's direct
reimbursement to PERS of the cost of certain legislated benefit increases in the plan). The contribution
requirements of the plan members are established by state statute. The Department's contributions to
PERS for the years ended June 30, 1998, 1997 and 1996 were $278,035, $434,712, and $499,297,
,.. respectively, and equal 100 percent of the required contributions for each year.
11. Postretirement Health Care Benefits
In addition to the pension benefits described in Note 11, the Department provides postretirement health
care benefits to all employees who retire from the Department on or after attaining age 55 with a minimum
of 15 years of service. Retirees are allowed to continue on the health care plan at a set premium. Some
employees are eligible to have a portion of that premium reimbursed to them by the Water Department up
to $150 per month per retiree. Currently, eleven Water Utility and one Sewer Utility retirees meet those
eligibility requirements. The Department pays$16 per month per retiree to PERS for administrative costs
of this program and an additional one-half percent administrative charge to PERS for all retirees currently
covered under the health benefits plan. Expenditures for monthly premiums are recognized as incurred.
During the year ended June 30, 1998, expenditures of$22,137 were recognized for postretiremem health
care benefits and administrative costs for the Water and Sewer Utilities.
-28-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
12. 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 year ended June 30, 1998:
Revenues
City of San Bernardino
Revenue from water charges $ 92,721
Revenue from sewer charges 57,622
Revenue from geothermal energy 8,060
Billing and collections charges - refuse 121,544
Billing and collections charges - storm drain 4,607
New services and mains - installation 15,192
Reimbursement- consulting services 8,571
Interest income 1,567,874
Economic Development Agency
Revenue from geothermal energy 1,910
New services and mains - installation 59,699
Reimbursement - consulting services 7.425
Total revenues from related parties $1.945.225
Expenses
City of San Bernardino
10%a water revenue $1,385,355
Sewer collection system maintenance 1,284,585
Printing services 4,702
Purchases 701
City Hall rent 183,720 --
Telephone charges 79,491
Refuse disposal services 72,834
Civil Service 45,000
Legal services and Affirmative Action 105,000
Rideshare coordination 2,010
Permits and engineering services 11,568
Postage 6,763
Relocation of water services 45,600
Workers' compensation- administration charges 63,742 ,
Miscellaneous charges 2,705
w
Total expenses to related parties $3.293.776
-29-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
.. 12. Related Party Transactions (Continued)
Receivables
City of San Bernardino
Finance Department $287,373
Fire Department 395
Public Services 30,314
r. Public Works 5,520
Economic Redevelopment Agency 61,532
Animal Shelter 259
r
Total related parties receivable $385.393
Payables
Due to the City of San Bernardino Finance Department -
various terms for repayment $1.094.964
The Department collects and transmits to the City of San Bernardino ten percent of collections on gross
water revenue and sewer collection system maintenance charges from Sewer Utility customers. These
remittances are included in the related party expense shown above.
The City of San Bernardino is exempt from all water service charges as long as water usage does not
exceed 110 percent of the fiscal year 1994/1995 water usage. The value of the exempt water service
charges for the year ended June 30, 1998 was $215,093.
13. Contingencies
Grand Jury Investigation
.. The Department is under investigation for alleged violations of the Clean Water Act by the Grand Jury
of the United States District Court of the Central District of California. Although management denies any
material violations of the Act, the outcome of this investigation or any subsequent actions cannot be
determined at this time with any certainty. If the Department were to be found guilty of violations of the
Clean Water Act, it could be subject to fines, and those fines could be material to these financial
statements.
The Department is also a respondent in an administrative action brought by and before the California
Regional Water Quality Control Board, Santa Ana Region in connection with reporting of discharges of
sewage. The department has denied the allegations and the parties have engaged in mediation followed
by arbitration. Although the outcome of this dispute is not presently determinable, it is the opinion of
the Department's counsel that its resolution will not have a material adverse effect on the financial
condition of the Department.
�- -30-
w
■
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA rt
Notes to Combining Financial Statements
13. Contingencies (Continued)
Federal and State Grants
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor
agencies,principally the federal and state governments. Any disallowed claims,including amounts already
collected, may constitute a liability of the Department. The amount, if any, of expenditures which may
be disallowed by the grantor cannot be determined at this time although the Department expects such
amounts, if any, to be immaterial.
Litigation
The Department has filed a complaint against the United States of America, Department of Army, in
connection with alleged contamination of Camp Ono site. This lawsuit is in the discovery phase and an
estimate of recoveries, if any, arising out of this claim cannot be made at this time. w
The Department is a defendant in various other lawsuits. Although the outcome of these lawsuits is not
presently determinable, it is the opinion of the Department's counsel that resolution of these matters will
not have a material adverse effect on the financial condition of the Department.
Commitments
Commitments in the form of signed contracts for costs to complete construction projects or other
improvements amounted to $844,564 at June 30, 1998.
Risk Management
Description
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.
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.
-31-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
13. Contingencies (Continued)
Unpaid Claims Liabilities
The following represents the changes in approximate aggregate liabilities for the Department for the year
ended June 30, 1998:
Water Sewer Geothermal
Utility Utility Utility Total
Liability balance, June 30, 1997 $ 321,718 $ 180,888 $ 17,038 $ 519,644
Claims and changes in estimates 268,900 110,468 (17,038) 362,330
Claim payments (288.621) (186.103) (474,724)
Liability balance, June 30, 1998 $ 301,997 $ 105.253 $ - $ 407.250
14. Concentrations
Customers
The Department serves customers located primarily in the City of San Bernardino, the East Valley, and
Loma Linda.
Employee Contracts
The employees of the Water Department, except for certain management employees, are covered by
memorandums of understanding with the Water Department Employees Association and Association of
Water Department Mid-Managers as to wages, hours, and other terms and conditions of employment.
These agreements are for a two-year period ending in April 2000.
15. Subsequent Event
On June 2, 1998, the San Bernardino Public Safety Authority authorized the refunding of the 1992
Certificates of Participation, Sewer Treatment Plant, by issuing 1998 Cross-Over Refunding Sewer
Revenue Certificates of Participation. The issuance of the 1998 certificates and refunding of the 1992
certificates was funded on July 1, 1998. The 1998 Refunding Sewer Revenue Certificates have been
approved for an amount not to exceed $39,000,000.
-32-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
16. Noncash Operating, Investing, and Financing Activities
On July 1, 1997, the Water Utility received all of the assets and assumed all of the liabilities of the
Geothermal Utility. The assets transferred consisted of the following:
Assets transferred in, net of cash overdraft $ 3,577,914
Liabilities assumed (1,032,82
Net assets received $ 2.545.088
r
-33-
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SUPPLEMENTARY INFORMATION
r
r
r
r
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Board of Water Commissioners and Organization
.r June 30, 1998
IYI
MAYOR OF THE CITY OF SAN BERNARDINO
^ Tom Minor
BOARD OF WATER COMMISSIONERS
w_ Name Office
Mr. Harold W. Willis President
Mr. B. Warren Cocke Member
Mr. Alton L. Garrett, Jr. Member
Mr. Martin A. Matich Member
Mr. James H. Urata Member
ADMINISTRATION
Mr. Bernard C. Kersey
General Manager
Ms. Stacy Aldstadt
Deputy General Manager
r Mr. Joseph F. Stejskal
°- Director: Engineering Construction - Maintenance
Mr. John A. Perry, P.E.
Director: Water Reclamation
Vacant
Director of Finance
Mrs. Marjorie A. Hoverland
Director of Administrative Services
Mr. John K. Turnipseed
Safety Program Manager
ORGANIZATION
The City of San Bernardino 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 East Valley Water. Sewer Services encompass all of the City of San Bernardino, East Valley
Water, City of Loma Linda, the former Norton Air Force Base and Patton State Hospital.
-34-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 1998
Federal Receipts
Program Catalog Program or Revenue Program
Title Number Entitlements Recognized Expenditures
Federal financial assistance
received directly
Environmental Protection Agency
Superfund state site - specific
cooperative agreements (Newmark
groundwater contamination site) -
major program 66.802 $14.205.737 $1,966.925 $1,966.925
Total Environmental Protection Agency 14.205.737 1.966.925 1.966.925
Total federal awards $14.205.737 $1,966.925 $1.966.925
This schedule is presented on the accrual basis of accounting.
-35-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Insurance Coverage
Insurance coverage for the Department at June 30, 1998 is summarized below:
Reliance National Insurance Company, Policy#NCZC0146458; boiler and machinery
coverage- April 30, 1998 to April 30, 1999
Per occurrence lint $10,000,000
Multiple insurance companies and policies, all-risk property coverage, including
earthquake and flood - April 30, 1998 to April 30, 1999 as follows:
Primary lint -
AIG/Lexington Insurance Company, Policy#8522205 $2,500,000 ■
Excess lints - r
Commonwealth Insurance Company, Policy#US2019 $2,500,000
Travelers Insurance Company of Illinois, Policy#7XJPFF246Tt191698 $2,175,000
Allianz Underwriters Insurance Company, Policy#CLP 1031220 $2,825,000 -•
TIG Insurance Company, Policy#XPT37954044 $5,000,000
Essex Insurance Company, Policy#MSP2565 $5,000,000
Royal Indemnity Company, Policy#RHD403106 $5,000,000
TIG Insurance Company, Policy#XPT37954044 $4,500,000
Allianz Insurance Company, Policy#CLP 1031220 $3,000,000
Royal Indemnity Company, Policy#RHD 403126 $12,500,000 ..
Associated International Insurance Company, Policy#IM319858 $7,500,000
RLI Insurance Company, Policy#IMF 0029525 $5,000,000
Agricultural Insurance Company, Policy#CPP2626300 $5,000,000
Lloyds of London, Policy#F9824731000 $25,000,000
Allianz Underwriters Insurance Company, Policy#CLP1031220 $75,000,000
Reliance Insurance Company, Policy#JK2838890; general liability and personal
injury liability - October 30, 1997 to October 30, 1999 .,
Per occurrence lint $1,000,000
Personal and advertising injury limit $1,000,000
Fire damage limit $50,000 ..
Medical expense lint (any one person) $5,000
General aggregate lint $2,000,000
Products/completed operations aggregate limit $2,000,000 .a
Reliance Insurance Company, Policy#JK2838890; commercial automobile
coverage - October 30, 1997 to October 30, 1998
Bodily injury/property damage - combined single lint $1,000,000
Uninsured motorist $1,000,000
Medical expense $5,000 w
Mred/nonowned liability $1,000,000
-36-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Insurance Coverage (Continued)
Steadfast Insurance Company, Policy#SUO 2810874-00; commercial umbrella
liability policy - October 30, 1997 to October 30, 1998
Per occurrence limit $10,000,000
Products/completed operations aggregate $10,000,000
General aggregate $10,000,000
Each pollution incident $10,000,000
Retained limit- each occurrence $10,000
Agricultural Insurance Company, Policy#EXC2613987; commercial umbrella
liability policy - October 30, 1997 to October 31, 1998
Per occurrence limit $15,000,000
Aggregate where applicable $15,000,000
-- Western Brokers Insurance Services, Policy#POI 001356-1; public official
and employer's liability policy - October 30, 1997 to October 30, 1998 $5,000,000
-- American International Specialty Lines, #819 5815; pollution liability policy -
October 30, 1997 to October 30, 1998 $5,000,000
_. The Department is self-insured through the City of San Bernardino for workers'compensation liability and
material damage to rolling stock.
<.• -37-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Water System Demographics
Physical Changes in Water Utility System
1998
July 1, 1997 Added Removed .tune 30 1998
Miles of main in service 550.4499 .1178 0.0152 550.5525
Gate valves in system 14,136 99 2 14,233
Fire hydrants in system 4,105 9 4 4,110
Water meters in system 44,397 2,644 2,476 44,565
1997
July 1, 1996 Added Removed .tune 30 1997 '
Miles of main in service 549.4635 1.3264 0.3400 550.4499
Gate valves in system 14,040 107 11 14,136 t
Fire hydrants in system 4,088 17 0 4,105
Water meters in system 44,214 2,087 1,904 44,397
Water Production/Utilization (Cubic Feet)
1997-98 1996-97 1995-96 '
Water utilization (shown in cubic feet)
Water sold to direct customers 1,596,392,100 1,810,738,700 1,792,557,200 '
Water sold to other agencies 140,192,330 108,660,884 89,067,953
Water sold to or used by City* 79,698.816 91.775.960 102.447 897
1,816,283,246 2,011,175,544 1,984,073,050
Loss and other factors 133,365,478 112,450,699 107,919,218
Loss and other factors percentage 6.840% 5.295% 5.159%
Total water sold, used or lost 1,949.648 724 2.123.626.243 2.091.992.268
*Includes exempt water used by the City in the amount of 51,558,300 and 68,560,200 cubic feet for the
1997-98 and 1996-97 years, respectively. "
-38-
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Water Production
June 30, 1998
1997-98 1996-97 1995-96
Total Water Total Water Total Water
Per 1,000 Per 1,000 Per 1,000
Amount Cubic Feet Amount Cubic Feet Amount Cubic Feet
Summary of total water
production and purchased cost
Total production, purchases, and
supplemental 2,026,126 2,047,915 2,063,136
Production and pumping expenses* $2,526,300 $2,874,992 $2,753,253
Cost of purchased water(including
assessments) 2,944
Total expense before depreciation 2,526,300 $1.24686 2,874,992 $1.40558 2,756,197 $1.33593
Depreciation of plant facilities 870.338 0.42956 878.349 0.42890 854.399 0.41413
Totals $3,396,638 $1.67642 $3.753.341 $1.83448 $3,610,596 $1.75006
Summary of costs per acre foot
Acre feet 46,513.451 47,013.662 47,363.088
Cost per acre foot before
depreciation $54.31 $61.15 $58.19
Cost per acre foot(including
depreciation of plant facilities) $73.02 $79.84 $76.23
*Includes operations administration.
-39-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Water Rates
Water rates are summarized below:
Single Family Dwelling Unit
Minimum Montbly Charge
Meter Effective Dates Cubic Foot
Size April 1, 1991 November 1, 1989 Allowance
5/8" $6.60 $5.50 500
3/4" $8.80 $7.35 500
1" $10.55 $8.80 500
1-1/2" $18.90 $15.75 500
2" $26.40 $22.00 500
3" $44.90 $37.40 500
4" $76.25 $63.55 500
6" $137.30 $114.40 500
8" $205.90 $171.60 500
10" $257.40 $214.50 500
12" $308.90 $257.40 500
All water usage in excess of 500 cubic feet per month is at the rate of$32 and $.60 per 100 cubic feet
effective April 1, 1991 and November 1, 1989, respectively.
Commercial, Landscape, and Industrial Users
Minimum Monthly Charge
Meter Effective Dates
Size April 1, 1991 November 1, 1989
5/8" $6.60 $5.50
3/4" $8.80 $7.35
1" $10.55 $8.80
1-1/2" $18.90 $15.75
2" $26.40 $22.00
3" $44.90 $37.40
4" $76.25 $63.55
6" $137.30 $114.40
8" $205.90 $171.60
10" $257.40 $214.50
12" $308.90 $257.40
All water usage per month is at the rate of$32 and $.60 per 100 cubic feet effective April 1, 1991 and
November 1, 1989, respectively.
-40-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Water Rates (Continued)
Delmann Heights Users (Customers formerly
served by Southern California Water Company)
Minimum Monthly Charge
Meter Effective Dates
Size April 1. 1991 November 1, 1989
5/8" $4.60 $4.60
3/4" $5.50 $5.50
1" $8.80 $8.80
1-1/2" $13.80 $13.80
2" $14.90 $14.90
3" $26.60 $26.60
4" $35.00 $35.00
6" $58.50 $58.50
- . 8" $84.00 $84.00
-- Water usage charge on the first 300 cubic feet is at the rate of$30 per 100 cubic feet with water usage
over 300 cubic feet at the rate of$.844 per 100 cubic feet for the effective dates of April 1, 1991 and
November 1, 1989.
Effective July 1, 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 110 percent of the fiscal year 1994/1995
water usage. Water usage in excess of this amount is charged at $.288 per 100 cubic foot. Water
furnished for use by the City of San Bernardino for landscape assessment districts or funded from other
than the City's general fund is charged at$.288 per cubic foot. All other rates remained unchanged.
-41-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Sundry Water Statistical Data
1997-1998 1996-1997
Production Percent Production Percent
in Cubic Feet Production in Cubic Feet Production
Perris Hill 12,082,300 0.66% 5,952,100 0.29%
Sierra Way and 16th Street 108,345,300 5.90 106,958,600 5.22
Antil pumping 110,558,300 6.02 97,372,000 4.75
Waterman Avenue pumping 65,645,000 3.57 100,975,900 4.93
Mill and "D" Streets 24,489,400 1.33 29,290,900 1.43
Lytle Creek#1 and#2 211,407,612 11.51 249,683,913 12.20 ■
Secombe well - 7th Street plants 121,139,100 6.59 113,110,300 5.52
Cajon Pass and Vincent plant 107,585,000 5.86 109,452,800 5.34
Devils Canyon#1 - #7 114,549,050 6.23 131,031,430 6.40
Newmark#1 - #4 173,641,100 9.45 261,064,200 12.74
19th Street#1 and#2 148,340,400 8.07 165,472,100 8.08
Gilbert Street 60,684,800 3.30 97,630,100 4.77
Lynwood 83,322,600 4.53 39,860,900 1.95
27th Street 5,933,200 .32 28,083,800 1.37
Baseline and California plant 22,726,800 1.24 35,535,200 1.73 ■
Ellena Bros. well
Cajon#1, #2 and#3 159,063,000 8.66 175,541,300 8.57
Mallory well and reservoir 25,900,300 1.41 13,207,600 0.64 ■
30th and Mountain View 41,095,062 2.24 63,512,500 3.10
Olive and Garner well 45,237,800 2.46 65,816,600 3.21
LeRoy Street well 19,167,100 1.04 4,563,800 0.22 ■
10th and "Y Street 42,676,300 2.32 34,420,900 1.68
Kenwood well 129,339,300 7.04 115,529,600 5.64
40th Street well 4.508.800 0.25 4.491.800 0.22
1,837,437,624 100.00 2,048,558,343 100.00
Exchange water from East Valley
Water Department 112.211.100 75,067.900 w
Total produced water 1.949,648,724 100.00% 2,123,626.243 100.00%
42-
1995-19% 1994-1995 1993.1994
Production Percent Production Percent Production Percent
in Cubic Feet Production in Cubic Feet Production in Cubic Feet Production
14,056,300 0.71% 37,643,000 2.17% 29,805,300 1.72%
_- 133,142,700 6.75 139,819,300 8.07 155,636,900 8.88
85,263,000 4.32 95,007,700 5.48 73,317,200 4.18
56,160,500 2.85 56,777,000 3.27 79,189,400 4.52
17,000,700 0.86 19,770,300 1.14 23,157,100 1.32
196,365,448 9.95 87,336,700 5.04 62,383,100 3.56
r 93,492,100 4.74 104,208,096 6.01 140,632,000 8.02
M 112,502,300 5.71 81,299,500 4.69 98,572,200 5.62
128,098,120 6.50 92,209,070 5.32 121,258,501 6.92
.. 233,582,200 11.85 176,697,800 10.19 173,007,339 9.87
136,200,800 6.91 139,418,900 8.04 89,640,700 5.11
117,855,900 5.98 91,160,000 5.26 26,451,100 1.51
.. 136,705,700 6.93 87,714,100 5.06 72,098,600 4.11
9,015,400 0.46
19,434,900 .99 32,483,100 1.87 25,665,300 1.46
.- 18,605,160 1.06
155,425,400 7.88 151,949,400 8.76 151,083,500 8.62
9,292,800 0.47 5,207,400 0.30 5,736,100 0.33
74,113,000 3.76 94,234,800 5.44 103,165,400 5.89
87,164,300 4.42 64,071,600 3.70 80,857,900 4.61
5,903,700 0.30 4,300,200 0.25 19,324,000 1.10
12,346,200 0.63 35,202,900 2.03 44,761,200 2.55
132,997,600 6.75 134,547,300 7.76 154,721,600 8.83
5,552.200 0.28 2.590.700 0.15 3,619,100 0 21
1,971,671,268 100.00 1,733,648,866 100.00 1,752,688,700 100.00
120.321.000
2,091.992.268 100.00% 1,733,648,866 100 00% 1,752,688,700 100 00%
-43-
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, 1993 through June 30, 1998
m
User Tvce 1998 1997 1996 1995 1994 1993
w
Single family residential 31,692 32,105 32,202 32,219 32,355 32,181
Multiple family residential 2,830 2,870 2,900 2,931 2,967 2,960
Commercial/institutional 3,268 3,126 3,115 3,146 3,146 3,172 „
Other 1.345 1,267 1.200 1,152 1.106 1.106
Total all users, active 39,135 39.368 39.417 39.448 39,574 39.419 w
Revenue by Class of User
Fiscal Year 1997-98
w
Fiscal Year Percentage of
User Class Revenue Annual Revenue
w
Single family residential $ 6,815,362 54.0%
Multiple family residential 2,493,207 20.0%
Commercial/industrial 2,742,539 22.0% ■
Other and unmetered 579,439 4.0%
Total all users $12,630.547 100.0% �
■
s
Largest users: The System had no customer accounting for more than three percent of the revenues for
the fiscal year 1997-98.
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-44-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Sewer Rates and Statistics
Regional
Facilities
and Collection
Treatment System Total Monthly
Classification Charge Charge Citv Charge
Rates effective as of June 1, 1995:
W Residential $13.25 per month $1.35 per month $14.60
Commercial:
Multi-family, mobile home parks
(4 or more units) $0.75/HCF* $0.15/HCF $0.90/HCF*
Retail, commercial, light industrial
(non-office, bakeries, markets,
theaters, dry cleaners) $1.10/HCF* $0.15/HCF* $1.25/HCF*
Auto repair, car wash $1.20/liCF* $0.15/11CF* $1.35/HCF*
Offices, motels (without restaurants) $0.95/HCF* $0.15/HCF* $1.10/HCF*
Restaurants, hotels (hotels/motels
with restaurants) $1.70/HCF* $0.15/HCF* $1.85/HCF*
Laundromats $0.90/HCF* $0.15/HCF* $1.05/HCF*
Hospitals, convalescent homes $0.80/HCF* $0.15/HCF* $0.95/HCF*
Schools, churches, nursery schools,
daycares $0.50/HCF* $0.15/HCF* $0.65/HCF*
Industry $826.67/MG $264.22/1,000 LBS BOD
(Discharge flow) $324.28/1,000 LBS SS
Rates effective as of January 1, 1994:
Residential $13.55 per month $1.35 per month $14.90
Commercial:
Multi-family, mobile home parks
(4 or more units) $0.80/HCF* $0.15/HCF $0.95/HCF*
Retail, commercial, light industrial
(non-office, bakeries, markets,
theaters, dry cleaners) $1.15/HCF* $0.15/14CF* $1.30/HCF*
Auto repair, car wash $1.25/HCF* $0.15/HCF* $1.40/HCF*
Offices, motels (without restaurants) $1.00/HCF* $0.15/HCF* $1.15/HCF*
Restaurants, hotels (hotels/motels
_. with restaurants) $1.75/HCF* $0.15/HCF* $1.90/HCF*
Laundromats $0.95/HCF* $0.15/HCF* $1.10/HCF*
Hospitals, convalescent homes $0.85/HCF* $0.15/HCF* $1.00/HCF*
Schools, churches, nursery schools,
daycares $0.55/I-ICF* $0.15/HCF* $0.70/HCF*
Industry $908.33/MG $264.22/1,000 LBS BOD
(Discharge flow) $324.28/1,000 LBS SS
*HCF = Per 100 cubic feet of water usage.
-45-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Sewer Rates and Statistics (Continued)
w
.tune 30. 1998
Residential Nonresidential Total
Number of connections
City of San Bernardino 32,517 3,711 36,228
East Valley Water District 16,420 1,089 17,509
City of Loma Linda 3.438 545 3.983
■
52,375 5.345 57.720
Annual billings w
City of San Bernardino** $5,091,718 $4,505,248 $ 9,596,966 ■
East Valley Water District 2,588,101 1,402,504 3,990,605
City of Loma Linda 537.770 862.410 1.400.180
$8.217.589 $6.770.162 $14.987.751
w
Average monthly billings
City of San Bernardino $424,310 $375,437 $ 799,747
East Valley Water District 215,675 116,875 332,550 w
City of Loma Linda 44,814 71.867 116.681
$684,799 $564.179 $1,248.978 w
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**The billings to the City of San Bernardino are net of collection system costs.
w
-46-
w
June 30, 1997 dune 30, 1996
Residential Nonresidential Total Residential Nonresidential Total
32,693 3,723 36,416 32,790 3,719 36,509
15,526 1,106 16,632 15,278 1,116 16,394
3,119 554 3,673 3,245 428 3,673 _
51,338 5,383 56,721 51,313 5,263 56.576
$5,183,721 $4,919,644 $10,103,365 $5,187,316 $4,907,909 $10,095,225
2,571,861 1,457,114 4,028,975 2,428,930 1,528,957 3,957,887
491,122 790,874 1,281,996 526,411 820,232 1,346,643
$8,246,704 $7,167,632 $15,414,336 $8,142,657 $7,257,098 $15,399,755
$431,977 $409,970 $ 841,947 $432,276 $408,992 $ 841,268
214,322 121,426 335,748 202,411 127,413 329,824
40,927 65,906 106,833 43,868 68,353 112,221
$687,226 $597,302 $1,284,528 $678,555 $604,758 $1,283,313
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r -47-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Certificates of Participation Schedule
San Bernardino Public Safety Authority
Principal
Payments
(Net of
Principal Unamortized Unamortized Interest
Date Due Payments Discounts Discounts) Interest Total Rate
8-1-1998 $ 1,196,269 $ 1,196,269 9.25%
2-1-1999 $ 960,000 $ 16,520 $ 943,480 1,196,269 2,139,749 9.25%
8-1-1999 1,151,869 1,151,869 9.25%
2-1-2000 1,030,000 16,520 1,013,480 1,151,869 2,165,349 9.25%
8-1-2000 1,104,231 1,104,231 9.25%
2-1-2001 1,105,000 16,520 1,088,480 1,104,231 2,192,711 9.25%
8-1-2001 1,053,125 1,053,125 6.25%
2-1-2002 1,185,000 16,520 1,168,480 1,053,125 2,221,605 6.25%
8-1-2002 1,016,094 1,016,094 6.25%
2-1-2003 1,270,000 16,520 1,253,480 1,016,094 2,269,574 6.25%
8-1-2003 976,406 976,406 6.25%
2-1-2004 1,360,000 16,520 1,343,480 976,406 2,319,886 6.25%
8-1-2004 933,906 933,906 6.25%
2-1-2005 1,460,000 16,520 1,443,480 933,906 2,377,386 6.25%
8-1-2005 888,281 888,281 6.25%
2-1-2006 1,565,000 16,520 1,548,480 888,281 2,436,761 6.25%
8-1-2006 839,375 839,375 6.25%
2-1-2007 1,680,000 16,520 1,663,480 839,375 2,502,855 6.25%
8-1-2007 786,875 786,875 6.25%
2-1-2008 1,800,000 16,520 1,783,480 786,875 2,570,355 6.25%
8-1-2008 730,625 730,625 6.25%
2-1-2009 1,930,000 16,520 1,913,480 730,625 2,644,105 6.25%
8-1-2009 670,312 670,312 6.25%
2-1-2010 2,070,000 16,520 2,053,480 670,312 2,723,792 6.25%
8-1-2010 605,625 605,625 6.25%
2-1-2011 2,220,000 16,520 2,203,480 605,625 2,809,105 6.25%
8-1-2011 536,250 536,250 6.25%
2-1-2012 2,385,000 16,520 2,368,480 536,250 2,904,730 6.25%
8-1-2012 461,719 461,719 6.25%
2-1-2013 2,555,000 16,520 2,538,480 461,719 3,000,199 6.25%
8-1-2013 381,875 381,875 6.25%
2-1-2014 2,740,000 16,520 2,723,480 381,875 3,105,355 6.25%
8-1-2014 296,250 296,250 6.25%
-48-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Certificates of Participation Schedule
San Bernardino Public Safety Authority (Continued)
Principal
Payments
(Net of
Principal Unamortized Unamortized Interest
Date Due Payments Discounts Discounts) Interest Total Rate
2-1-2015 $ 2,940,000 $ 16,520 $ 2,923,480 $ 296,250 $ 3,219,730 6.25%
8-1-2015 204,374 204,374 6.25%
2-1-2016 3,155,000 16,520 3,138,480 204,375 3,342,855 6.25%
8-1-2016 105,781 105,781 6.25%
2-1-2017 3,385 000 9.682 3,375.318 105,784 3.481.102 6.25%
$36,795,000 $307.042 $36,487,958 $27,878.488 $64.366.446
Funds used for the Primary Hydraulic Reliability Project, remodel of the administration laboratory
building, and design of 3A secondary treatment.
�R -49-
1
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Series 1998A Water and Wastewater Revenue Bonds
Unamortized
Discounts
and Principal
Principal Deferred Payments Interest '
Date Due Pavments Charges (Net) Interest Total Rate
10-1-1998 $ 860,000 $ 53,915 $ 806,085 $ 147,531 $ 953,616 4.00% '
10-1-1999 970,000 117,490 852,510 319,675 1,172,185 3.75%
10-1-2000 1,015,000 104,149 910,851 283,300 1,194,151 3.90% 1
10-1-2001 1,055,000 89,671 965,329 243,715 1,209,044 4.05% '
10-1-2002 1,095,000 74,016 1,020,984 200,988 1,221,972 4.15%
10-1-2003 1,160,000 57,338 1,102,662 155,545 1,258,207 4.20% 1
10-1-2004 1,195,000 39,360 1,155,640 106,825 1,262,465 4.30% '
10-1-2005 1,260,000 20.477 1,239,523 55.440 1,294,963 4.40%
$8,610.000 $556.416 $8,053.584 $1,513,019 $9,566,603 '
1
Funds used to defease and prepay 1990 Certificates of Participation issued to finance construction of
reservoirs, wells and mains, and to finance future improvements of Water Facilities.
-50-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Bond Schedule - General Obligation Waterworks Bonds, Series C
Interest
Date Due Payments Interest Total Rate
m 9-1-1998 $ 4,650 $ 4,650 7.75%
r 3-1-1999 $ 5,000 4,650 9,650 7.75%
9-1-1999 4,456 4,456 7.75% -
3-1-2000 5,000 4,456 9,456 7.75%
9-1-2000 4,263 4,263 7.75%
3-1-2001 5,000 4,263 9,263 7.75%
9-1-2001 4,069 4,069 7.75%
3-1-2002 5,000 4,069 9,069 7.75%
_ 9-1-2002 3,875 3,875 7.75%
3-1-2003 5,000 3,875 8,875 7.75%
r 9-1-2003 3,681 3,681 7.75%
3-1-2004 5,000 3,681 8,681 7.75%
r 9-1-2004 3,488 3,488 7.75%
r 3-1-2005 5,000 3,488 8,488 7.75%
9-1-2005 3,294 3,294 7.75%
3-1-2006 10,000 3,294 13,294 7.75%
" 9-1-2006 2,906 2,906 7.75%
3-1-2007 10,000 2,906 12,906 7.75%
9-1-2007 2,519 2,519 7.75%
3-1-2008 10,000 2,519 12,519 7.75%
9-1-2008 2,131 2,131 7.75%
., 3-1-2009 10,000 2,131 12,131 7.75%
9-1-2009 1,744 1,744 7.75%
r 3-1-2010 10,000 1,744 11,744 7.75%
9-1-2010 1,356 1,356 7.75%
3-1-2011 10,000 1,356 11,356 7.75%
9-1-2011 969 969 7.75%
3-1-2012 10,000 969 10,969 7.75%
9-1-2012 580 580 7.75%
3-1-2013 15.000 580 15.580 7.75%
$120.000 $87.962 $207.962
r
W
Bonds related to water system improvements for South San Bernardino Water District,which was acquired
r
by the Department in 1991.
-51-
C�OpY
MUNICIPAL WATER DEPARTMENT
OF THE
CITY OF SAN BERNARDINO, CALIFORNIA
Financial Statements
And
Supplementary Information
With
Independent Auditors' Report
For the Year Ended June 30, 1998
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Combining Financial Statements
Combining Balance Sheet 3
Combining Statement of Operations 7
r Combining Statement of Changes in Fund Equity 8
Combining Statement of Cash Flows 9
y Notes to Combining Financial Statements 11
Supplementary Information
t Board of Water Comtnissioners and Organization 34
A Schedule of Expenditures of Federal Awards 35
Schedule of Insurance Coverage 36
a, Schedule of Water System Demographics 38
j Schedule of Water Production 39
Schedule of Water Rates 40
Schedule of Sundry Water Statistical Data 42
Schedule of Service Area and Customers 44
Schedule of Sewer Rates and Statistics 45
Certificates of Participation Schedule - San Bernardino Public Safety Authority 48
Bond Schedule- Series 1998A Water and Wastewater Revenue Bonds 50
Bond Schedule - General Obligation Waterworks Bonds, Series C 51
MICHAEL R.ADCOCK,C.P.A.
I THOMAS E.AHERN,C.P.A. MEMBERS
Em GARY L.CHRISTENSON.C.P.A.
LINDA S.DEVLIN,C.P.A.
KNEE ELIKER.C.P.A. ASSOCIATED REGIONAL
WING K.LAU.C.P.A.
DOUGLAS R.McADAM,C.P.A. ACCOUNTING FIRMS(AMP)
JESSIE C.PO WELL,C.P.A.
JAMES L.SOREN,C.P.A.
KIRK G.STITT,C.P.A. AMERICAN INSTITUTE OF
NOM L.TEASLEY,C.P.A.DAVID P.TATTLEUTTLE,C.P.A. SOREN • McADAM ♦ BARTELLS
CERTIFIED PUBLIC ACCOUNTANTS
CERTIFIED PUBLIC ACCOUNTANTS, INC. PRIVATE COMPANIES PRACTICE SECTION
Independent Auditors' Report
To the Board of Water Commissioners
Municipal Water Department of the
City of San Bernardino, California
We have audited the accompanying combining financial statements of the Municipal Water Department
of the City of San Bernardino, California as of and for the year ended June 30, 1998 as listed in the table
of contents. These financial statements are the responsibility of the Municipal Water Department's
management. Our responsibility is to express an opinion on these financial statements based on our audit.
We did not audit the financial statements of the West End Water Development, Treatment and
Conservation Joint Powers Authority, the San Bernardino Public Safety Authority, or the San
Bernardino/Colton Rapid Infiltration Extraction Project which represent 17.0 and 1.0 percent of the total
assets and operating revenues, respectively, of the Municipal Water Department. Those financial
statements were audited by other auditors whose reports have been furnished to us, and our opinion,
insofar as it relates to the amounts included for these organizations and project, is based on the reports of
the other auditors.
We conducted our audit in accordance with generally accepted auditing standards. 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 opinion.
As discussed in Note 1,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 fund types,in conformity with
generally accepted accounting principles.
-1-
2068 Orange Tree Lane,Suite 100 ♦ PDsT OB'ice Box 8010 ♦ Redlands,CA 92375-1210 ♦ (909)798-2222 ♦ (909)824-5110 ♦ Fax(909)798-9772
Riverside Office • B.R.Sharp Financial Center ♦ 2155 Chicago Avenue.Suite 100 ♦ Riverside.CA 92507 • (909)683-0672 ♦ Fax(909)686-7780
In our opinion, based on our audit and the reports of other auditors, 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, California as of June 30, 1998, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting principles.
As discussed in Note 1, the Municipal Water Department retroactively changed its method of accounting
for investments as of June 30, 1997.
Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a
whole. The supplementary information shown on pages 34 through 51 is presented for purposes of
additional analysis and is not a required part of the basic financial statements. The supplementary
information, except for management supplied data on pages 38 through 47 on which we express no
opinion, was-aubjected to the auditing procedures applied in the audit of the financial statements and, in
our opinion, based on our audit and the reports of other auditors, is fairly stated, in all material respects,
in relation to the basic financial statements taken as a whole.
SOREN ♦ McADAM ♦ BARTELLS
Certified -Public'Accountants, Inc.
Redlands, California
October 30, 1998 By: Jessie C. Powell, CPA
-2-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Balance Sheet
June 30, 1998
(With Comparative Information for June 30, 1997) m
Water Sewer Combined _
Utility Utility Eliminations 1998 1997
ASSETS
Current assets
Cash and cash equivalents $2,145.193 $ 3,170,532 5 5,315,725_ $ 5,881,165
Investments 5,177,721 7,652,521 12,830,242 13,525,470
Accounts receivable,net 2,962,720 3,035,442 6,018,162 6,518,822
Interfund receivable 112,714 4,820 $(117,534)
Related parties receivable 205,820 145,312 351,132 373,904
Inventory 1,214,920 160,537 1,375,457 1,517,820
Prepaid expenses 115,883 175.680 291.563 350.68
Total current assets 11,954.971 14.344.844 (117.534) 26.182 281 28,167.8
Restricted assets
Cash and cash equivalents 1,451,573 1,451,573
Investments 885,592 7,748,065 8,633,657 11,622,630
Notes receivable 219,414 219,414 509,602
Interest receivable 28 124,836 124,864 152,886
Related parties receivable 183 34,078 34,261 40,482
Taxes receivable 16,107 16,107
Other 1.991 1.991 3,372
Total restricted assets 2,355,474 8.126.393 10.481 867 12,328,972
The accompanying notes are an integral part of these financial statements.
-3-
s
Water Sewer Combined
UNity Utility Eliminations 1998 1997
LIABIUMS AND FUND EQUITY
Current liabilities
Current portion of notes payable $ 1,414,486 S 1,414,486 $ 1,368,672
Current portion of obligations under
capital leases $ 84,694 84,694 80,339
Accounts payable 1,591,223 762,360 2,353,583 3,722,029
Interfund payable 4,820 112,714 $(117,534)
Related parties payable 683,958 411,006 1,094,964 1,000,842
Accrued expenses 9,539 193,479 203,018 199,193
Accrued compensation 1,438,084 599,666 2,037,750 1,814,210
Deposits for performance bonds and
other charges subject to refund 647 647 48
Consumer deposits, advance payments,
and credit available 370,241 370,241 235,137
Deferred revenue 22.776
Total current liabilities 4.183.206 3.493.711 (117.534) 7.559.383 8.443.246
Current liabilities payable from
restricted assets
Current portion of certificates of
participation 943,480 943,480 1,543,896
Current portion of bonds payable 811,085 811,085 455,000
Accounts payable 30,256 30,256 21,895
Accrued interest payable 62,112 996,891 1,059,003 1,204,335
Consumer deposits 871.886 871.886 818.237
Total current liabilities payable from
restricted assets 1.775.339 1.940.371 3.715.710 4.043.363
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Balance Sheet
June 30, 1998
(With Comparative Information for June 30, 1997)
Water Sewer Combined
utility Utility Eliminations 1998 1997
Property,plant,and equipment,
and water rights
Property,plant,and equipment,and
water rights $88,180,191 $162,483,435 $250,663,626 $249,821,903
Less accumulated depreciation
and amortization (33,979.349) (30.804,369) (64.783 718) (58,172,26
54,200,842 131,679,066 - 185,879,908 191,649,641
Construction in progress 10,860,326 6.799.300 17.659.626 10.315.120
Total property,plain,and
equipment,and water rights,net 65,061,168 138.478.366 203.539.534 201,964,761
Other assets
Idle assets 254,860 254,860 266,721
Issuance costs of certificates of
participation and bonds,net of
accumulated amortization 154.177 178.791 332.968 263,572
Total other assets 409,037 178.791 587.828 530,293
Total assets $79.780.650 5161.128,394 $(117.534) $240,791,510 $242,991,890
The accompanying now are an integral part of these financial statements.
-5-
Water Sewer Combined
Utility Utility Eliminations 1998 1997
Long-term debt
Notes payable $31,649,670 $31,649,670 $33,018,782
Obligations under capital kases $ 84,694 84,694 165,033
Certificates of participation 36,487,958 36,487,958 45,746,841
Bonds payable 8,173,584 8,173,584 1,080,000
8,258,278 68,137,628 76,395,906 80,010,656
Less current portion of notes payable (1,414,486) (1,414,486) (1,368,672)
Less current portion of obligations
under capital leases (84,694) (84,694) (80,339)
Less current portion payable from
restricted assets (811,085) (943,480) (1,754565) (1,998,89
Total long-term debt 7,362,499 65,779,662 73,142,161 76,562749
Total liabilities 13,321,044 71,213 744 $(117,534) 84,417 254 89,049,358
Fund equity
Contributed capital 45,671,600 59,626,528 105,298,128 101,659,996
Retained earnings 20,788,006 30,288,122 51,076 128 52,282,536
Total fund equity 66,45906 89,914,650 156374 256 153,942,53
Total liabilities and food equity $79,780,650 $161,128394 $(117.534) $240,791,510 $242991890
-6-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Statement of Operations
For the Year Ended June 30, 1998
(With Comparative Information for the Year Ended June 30. 1997)
Water Sewer Combined
Utility Utility Eliminations 1998 1997
Operating revenues
Charges for services $12,630,547 $16,558,904 $ (4,526) 529,184,925 $31,194,982. _.
Other operating revenues 1,590.147 171.766 (730,704) 1,031,209 2.067,871
Total operating revenues 14.220.694 16,730.670 (735,230) 30.216.134 33.262.853
Operating expenses
Administration and customer
service 3,427,523 (1,747) 3,425,776 3,342,182 --
Engineering, operations, and
distribution administration 134,722 1,173,606 (588,042) 720,286 691,988
Plant operations 2,679,143 5,425,406 (17,641) 8,086,908 8,625,640 -
Maintenance 620,126 1,554,836 (17,326) 2,157,636 2,404,790
Environmental control 192,044 (56) 191,988 291,820
Distribution 2,232,631 (43,390) 2,189,241 2,117,541
Engineering 912,797 912,797 800,294
General administration and
overhead 2,207,458 2,906,497 (67,040) 5,046,915 5,983,007 _
Depreciation and amortization 2,376,301 4,518,957 6,895,258 6,744,977
Bad debt expense 45.486 40.335 12 85.833 132.936
Total operating expenses 14 636,187 _ 15,811,681 (735.230) 29.712.638 31,135.175
Operating income(loss) _ (415,493) 918.989 503.496 2,127,678
Nonoperating revenues(expenses)
Investment income 586,469 1,343,132 1,929,601 1,955,454
Rental income 50,578 29,347 79,925 76,823
Net loss on capital assets
and inventory items (9,764) (440) (10,204) (65,802)
Interest expense and fiscal charges (493,361) (3,453,035) (3,946,396) (4,383,479) -
Amortization of issuance costs (9,250) (9,623) (18,873) (18,873)
All other-net 247.896 8,147 256.043 36.184
Total nonoperating revenues
(expenses) 372.568 (2.082.472) (1.709,904) (2,399.693)
Net loss S (42,925) $(1.163.483) $ S(1.206,408) $ (272.015)
The accompanying notes are an integral part of these financial statements.
-7-
' MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Statement of Changes in Fund Equity
For the Year Ended June 30, 1998
(With Comparative Information for the Year Ended June 30, 1997)
Water Sewer Combined
Utility Utility 1998 1997
Contributed capital
Balance, beginning of year $43,089,079 $58,570,917 $101,659,996 S 94,174,124
Add nonoperating credits and
adjustments
Charges to property o%mers
for capital purposes:
Contributions in aid of
construction 182,946 182,946 274,536
Impact fees for service
connections 432,650 432,650 432,550
Impact fees for capacity
rights-net of repurchases,
refunds,and wraeoffs 679,062 679,062 751,795
East trunk line fees 102,251 102,251 106,688
Grants from government
agencies for capital
improvements 1,966,925 274,298 2,241,223 5,920.303
Balance, end of year 45,671,600 59,626,528 105,298,128 101,659.996
Retained earnings
Balance, beginning of year 20,830,931 31,451,605 52,282,536 52,554,551
Net loss (42.925) (1.163.483) (1.206,408) (272,015)
Balance, end of year 20,788.006 30.288.122 51.076.128 52,282.536
Total equity, end of year $66.459.606 589,914.650 $156.374,256 5153,942,532
The accompanying notes are an integral part of these financial statements.
-8-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Statement of Cash Flows
For the Year Ended June 30, 1998
(With Comparative Information for the Year Ended June 30, 1997)
Water Sewer Combined
Utility Utili Eliminations 1998 1997
Cash flows from operating adivities
Operating income(loss) $ (415,493) $ 918,989 $ 503,496 $ 2,127,678
Adjustments to reconcile operating
income(loss)to net cash provided
by operating activities
Depreciation and amortization 2,376,301 4,518,957 6,895,258 6,744,977
Bad debt expense 45,486 40,335 85,821 132,936
(Increase)decrease in:
Accounts receivable 457,632 (160,595) 297,037 (51,428)
Interfund receivable 1,016,312 (4,298) $ 1,012,014
Related parties receivable (41,922) (1,814) (43,736) 132,715
Inventory 101,135 41,229 142,364 (160,979)
Prepaid expenses and other assets 19,827 40,673 60,500 8,767
Increase(decrease)in:
Accounts payable 66,835 (1,426,924) (1,360,089) 1,667,447
htterfund payable (960,090) (51,924) (1,012,014)
Related parties payable 23,852 70,271 94,123 (161,108)
Accrued expenses 8,027 (4,202) 3,825 135,296
Accrued compensation 92,090 131,450 223,540 12,619
Deposits for performance bonds
and other charges subject to
refund 599 599 (163)
Consumer deposits, advance -
payments, and credit available 188,754 188 754 (342,024)
Net cash provided by operating
activities 2,979345 4,112 147 - 7,091,492 10 246 73
Cash flows from noncapital and
related financing activities
Other nonoperating revenues, net 231,789 8,147 - 239 936 36,194
Net cash provided by noncapiral
and related financing activities 231,789 8,147 - 239 936 36,184
-9-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Combining Statement of Cash Flows
For the Year Ended June 30, 1998
(With Comparative Information for the Year Ended June 30, 1997)
Water Sewer Combined
Utility Utility Eliminations 1998 1997
Cash flows from capital and related
financing activities
Acquisition of property, plant, and
equipment $(4,616,929) $(3,851,447) $ - $(8,468,376) S (7,947,154)
Payments received on notes receivable 290,188 290,188 252,523
Charges to property owners for capital
purposes 615,596 781,313 1,396,909 1,565,568
Payments on contracts payable (120,788)
Grant proceeds from government
agencies 2,336,254 2,336,254 2,121,976
Principal payments on notes payable (1,369,111) (1,369,111) (2,069,708)
Proceeds from issuance of long-term
debt 8,018,023 8,018,023 924,244
Principal payments under capital leases (80,339) (80,339) (82,771)
Principal payments on certificates of
participation (8,443,606) (895,000) (9,338,606) (1,482,137)
Principal payments on bonds payable (5,000) (955,000 (960,000) (455,000)
Property taxes received 19,539
Interest paid (571,021) (3,493,690) (4,064,711) (4,407,196)
Rent payments received 50.578 29.347 79.925 76.823
Net cash used in capital and related
financing activities (2.696.444) (9.463.400) (12.159.844) (11.604.081)
Cash flows from investing activities
Proceeds from sale of investments 5,733,757 11,805,757 17,539,514 5,072,619
Purchase of investments (5,233,188) (8,622,125) (13,855,313) (4,764,903)
Interest received 611.443 1.418.905 2.030 348 1.844.711
Net cash provided by investing activities 1.112.012 4.602.537 5.714,549 2.152.427
Net increase(decrease) in cash and
cash equivalents 1,626,702 (740,569) - 886,133 831,263
Cash and cash equivalents at
beginning of year 1.970.064 3.911.101 5.881 165 5.049.902
Cash and cash equivalents at
end of year $ 3,596.766 S3.170.532 $ $ 6.767 298 S 5,881.165
The accompanying notes are an integral part of these financial statements.
-10-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
1. Summary of Significant Accounting Policies
The Municipal Water Department of the City of San Bernardino, California(a component unit of the City
of San Bernardino)(the 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 Municipal Water Department of the City
of San Bernardino operated three enterprise funds up to the year ended June 30, 1997: the Water Utility
Enterprise Fund (Water Utility), the Sewer Utility Enterprise Fund(Sewer Utility), and the Geothermal
Utility Enterprise Fund (Geothermal Utility). On July 1, 1997, the operations, assets, and Liabilities of
the Geothermal Utility were transferred to the Water 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:
Change in Method of Accounting and Reporting for
Certain Investments and for External Investment Pools
During the year ended June 30, 1998,the Department adopted Governmental Accounting Standards Board
Statement No. 31,Accounting and Financial Reporting for Certain Investments and for External Investment
Pools. GASB No. 31 establishes fair value standards for investments in(a)participating interest-earning
investment contracts, (b)external investment pools, (c)open-end mutual funds, (d)debt securities, and(e)
equity securities, option contracts, stock warrants, and stock rights that have readily determinable fair
values. All investment income, including changes in the fair value of investments, is repotted as revenue
in the operating statement. This change had no effect on equity at June 30, 1997. The effect of this
change on net income for the year ended June 30, 1998 was an increase of$50,501 and 583,072 on the
Water Utility and Sewer Utility, respectively.
-11-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Reporting Entity
Generally accepted accounting principles require that these financial statements present the accounts of the
Department and any of its component units. Component units are legally separate entities for which the
Department is considered to be financially accountable or otherwise has a relationship which is such that
the exclusion of the entity would cause the financial statements to be misleading. Blended component units
are considered, in substance, part of the Department's operations, so the accounts of these entities are to
be combined with the data of the Department. Component units which do not meet these requirements are
reported in the financial statements as discrete units to emphasize their separate legal status. The
Department has determined that it has three component units, all of which qualify to be treated as blended
component gaits as follows:
West End Water Development. Treatment and Conservation Joint Powers Authori ty
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.
In accordance with the joint powers agreement, title to the WEJPA constructed water facilities will
automatically vest with the Department in the Water Utility upon repayment of the certificates of
participation issued to fund the construction. The WEJPA is governed by a separate three-member board
consisting of one representative from each agency's governing body. The financial statements for the
WEJPA are available at the Department.
San Bernardino Public Safety Authority
On April 1, 1968, the City of San Bernardino and 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. PSA is governed by 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.
Effective with the transfer of the Sewer Utility to the Department, all the assets and activities of PSA
7 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 Sewer Utility. The financial statements of PSA are
available at pie Department.
-12-
i
r
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
1. Summary of Significant Accounting Policies (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 (SAWPA) 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
and is expected to occur during the fiscal year 1998-99. 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 activities related to the construction, administration and
operation of the RIX project are accounted for in the Sewer Utility.
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.
-13-
z
15
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Cash and 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 a 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 Payables
_ 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 noncurrent 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.
Restricted Assets
Various resources of the Department are limited as to their use by law or by bond covenants and are
classified on the balance sheet as restricted assets. Proceeds of the bonds are restricted for the construction
of water and sewer system improvements and for repayment of the bonds. 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 which benefit
the development projects.
-14-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Issuance Costs and Discount
Issuance costs and discounts for certificates of participation and bonds payable are being amortized using
the straight-line method over the term of the related certificate or bond which approximates the effective
interest method. Issuance costs, discount and deferred finding charges for the series 1998A bonds issued
by the Water Utility are being amortized over the term of the bond using the effective interest rate method.
Property, Plant, and Equipment and Water Rights
Property, plant, and equipment and water rights are recorded at cost. Major outlays for capital assets and
improvements are capitalized as projects are constructed. 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 24.75 percent of direct
construction cost and are reflected 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 8 to 50 years
Interceptor lines 50 years
Disposal plant 35 to 50 years
Leasehold improvements 5 to 25 years
Shops, offices, stores, and yards 10 to 20 years
Tools and equipment 4 to 20 years
Office equipment 5 to 20 years
Communication equipment 8 to 10 years
Computer equipment 5 to 10 years
Automotive equipment 3 to 8 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.
Idle Assets
Idle assets consist of water wells, pumping plants, reservoirs, and pipelines not in production.
-15-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
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 one
week of accumulated unpaid 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 and 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.
Fund Equity
Reservations of retained earnings are limited to outside third-party restrictions. The Department currently
has no reserved retained earnings. The Department's contributed capital represents equity acquired
through capital grants and capital contributions from developers, customers, or other funds.
Comparative Data for Prior Year
Comparative data for the prior year has been presented in selected sections of the accompanying financial
statements for comparative purposes and is not intended to be a complete financial statement presentation.
For comparative purposes, the prior year data for the Water Utility includes the Geothermal Utility. In
addition, certain amounts presented in the prior year have been reclassified in order to be consistent with
the current year's presentation.
2. Cash and Investments
As of June 30, 1998, the carrying amount of the Department's deposits was S1,527,753 and the bank
balance was$1,454,633. Of the bank balance, $129,441 was covered by federal depository insurance and
$1,325,191 was collateralized with securities held by the pledging financial institution or its trust
department or agent, but not in the Department's name.
The Department maintains substantially all of its operating funds in the City of San Bernardino Treasury
(an internal investment pool). These funds are reported at market value as determined by quoted market
prices. Investment earnings are deposited quarterly into participating funds. Any investment losses are
proportionately shared by all funds in the internal investment pool.
-16-
MUNICIPAL WATER DEPARTMENT #
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
2. Cash and Investments (Continued)
The Department's cash and investments include the following components:
Cash deposits $ 1,527,753
Internal investment pool with City of San Bernardino 21,510,604
Investments with fiscal agent 5.192.840 _
$28.231.197
The Department's investments are categorized as either(1)insured or registered or for which the securities
are held by the Department or its agent in the Department's name, (2) uninsured and unregistered for
which the securities are held by the broker's or dealer's trust department or agent in the Department's
name, or(3)uninsured and unregistered for which the securities are held by the broker or dealer or by its
trust department or agent but not in the Department's name. The Department's investments in the Local
Agency Investment Fund and money market funds have not been categorized because securities are not
used as evidence of the investments but are an ownership interest in pooled investment funds. Investments
are categorized at June 30, 1998 as follows:
Cateeory Fair Value
1 2 3 Total
Investments
U.S. Treasury securities $ 3,349,022 $ 3,349,022
U.S. Government agencies 12,638,029 12,638,029
Other securities 5,476,848 5,476,848
Local Agency Investment Fund 4,299,728
Money Market Funds 925.513
Total investments 26,689,140
Cash on hand and deposits 1.542.057
Total cash and investments $28.231.197
Presented in the balance sheet as:
Cash and cash equivalents
Current assets $ 5,315,725
Restricted assets 1.451.573
Total cash and cash equivalents 6,767,298
Investments
Current assets 12,830,242
Restricted assets 8.633.657
$28.231.197
-17-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
3. Accounts Receivable
Accounts receivable consisted of the following at June 30, 1998:
Less Net
Amount Allowance Receivable
Water utility
Consumer $2,516,977 $247,297 $2,269,680
Grant funding 664,986 664,986
Other 73.261 25.207 48.054
3.255.224 272,504 2.982.720
Sewer Utility
Consumer 2,013,227 158,308 1,854,919
Grant funding 251,522 251,522
Other 942,025 13,024 929.001
3.206,774 171.332 3.035.442
Totals $6.461.998 $443,836 $6.018.162
4. Notes Receivable
Notes receivable at June 30, 1998 consisted of the following:
Sewer Utility
Automated Health Systems Laundry/Medline Industries, Inc.
Interest rate: 6.25%
Repayment provision: $198,157 annual installments, including interest
Balances $186,500
Miscellaneous notes
Various parties (for collection of sewer capacity fees)
Interest rate: 12%
Repayment provision: Interest and principal due at
maturity in 1998
Balances 32.914
Total notes receivable $219.414
-18-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
5. Restricted Assets
Certain assets are classified as restricted assets because their use is completely restricted by the provisions
of loan or grant agreements or bond covenants. The balances of restricted asset accounts at June 30,
1998 follow:
Water Utility
Customer deposits $ 871,886 A
Funds for debt service on South San Bernardino
Water District Waterworks Bonds, Series C 29,996
Set asides required under 1990 Water facilities certificates of *+
participation 8,861
Set asides required under series 1998A bonds, project fund 1,425,191 �!
Set asides for the purchase of computer equipment, software, i
and training 19.540
2,355.474
Sewer Utility
Advance sales of capacity rights to property owners
under Resolution 84-271, including any interest earnings,
restricted for capacity expansion expenditures 312,688
East Valley Water District connection fees, restricted for
additional interceptor capacity requirements of the District,
including any interest earnings 2,504,755
Construction and other reserves including set asides required
under the 1992 Sewer facilities certificates of participation 5.308.950
8.126.393
Total restricted assets $10.481.867
-19- __
' MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
rNotes to Combining Financial Statements
6. Property, Plant, and Equipment and Water Rights
A summary of changes in property, plant, and equipment and water rights follows:
Additions Retirements
Balance, and and Balance,
July 1. 1997 Transfers-in Transfers-out June 30, 1998
Water Utility
Sundry land, rights-of-way, service
areas, and easements $ 2,372,230 $ 2,372,230
Water rights, wells, pumping
plants, reservoirs, etc. 29,474,476 29,474,476
' Distribution systems 48,414,275 $322,371 $208,272 48,528,374
Shops, office, and store yards 1,132,961 6,801 1,139,762
Tools and equipment 1,845,411 63,980 4,722 1,904,669
Automobiles and trucks 1,917,774 123,862 40,343 2,001,293
Office leasehold improvements 110,175 110,175
Office, computer, and engineering
equipment 1,990,300 82,989 16,496 2,056,793
"E" Street property 54,202 54,202
Radio and interoffice
communications equipment 301,796 2,184 303,980
Telemetry systems and equipment 75,240 3,210 78,450
Miscellaneous capital items 155,789 2 155.787
87,844,629 $605,397 $269,835 88,180,191
Less accumulated depreciation
and amortization 31.870.448 33,979.349
55,974,181 54,200,842
Construction in progress 6.844.266 10.860.326
' Total property, plant, and
equipment and water rights, net $62.818.447 $65,061,168
Details of changes in construction in progress in the Water Utility follow:
Balance Balance
July 1 1997 Additions Transfers June 30, 1998
United States Environmental
Protection Agency Newmark
Groundwater Project $4,181,875 $2,570,649 $6,752,524
' Other miscellaneous projects 2,662,391 1 666 579 $221,168 4,107.802
Totals $6,844,266 $4,237,228 $221,168 $10.860.326
20
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
6. Property, Plant, and Equipment and Water Rights (Continued)
During the year ended June 30, 1998, the Department capitalized interest costs of$19,875 in the Water
Utility.
Balance, Additions and Balance,
July 1. 1997 Transfers-in Retirements June 30, 1998
Sewer Utility
Land, rights, and easements $ 12,162,672 $140,549 $ 12,303,221
Buildings and plants 143,133,301 119,097 143,252,398
Wells and lines 3,192,217 3,192,217
Tools and equipment 2,471,316 118,034 $ 5,903 2,583,447
Automobiles and trucks 390,737 124,551 15,583 499,705
Office and computer equipment 420,638 25,416 446,054
Miscellaneous capital items 206.393 206.393
161,977,274 $527.647 $21.486 162,483,435
Less accumulated depreciation
and amortization 26.301.814 30.804.369
135,675,460 131,679,066
Construction in progress 3.470.854 6.799.300
L
Total property, plant, and
equipment, net $139.146.314 $138.478.366
Details of changes in construction in progress in the Sewer Utility follow:
Balance, Balance,
July 1. 1997 Additions Transfers June 30, 1998
Phase DI expansion project $2,614,441 $2,614,441
Other miscellaneous projects 856.413 $3.328.446 4.184,859
Totals $3.470.854 $3.328.446 56.799,300
During the year ended June 30, 1998, the Department capitalized interest costs of$139,765 in the Sewer
Utility.
-21-
MUNICIPAL WATER DEPARTMENT
OF TEIE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
7. Operating Leases
The Department leases office space from the City of San Bernardino under a noncancellable operating lease
terminating in 2002. The following is a schedule of minimum lease payments as of June 30, 1998:
Office Space
Water Sewer Total
For the year ending June 30,
1999 $161,918 $21,802 $183,720
2000 161,918 21,802 183,720
2001 161,918 21,802 183,720
2002 121,439 16.351 137.790
$607,193 $81.757 $688.950
Rental expense for the year ended June 30, 1998 amounted to $207,036.
8. Long-Term Debt
The following is a summary of changes in long-term debt obligations for the year ended June 30, 1998:
Balance, Balance, June 30, 1998
July 1, 1997 Additions Reductions Total Current Lone-Term
Notes payable $33,018,781 $ 1,369,111 $31,649,670 $1,414,486 $30,235,184
Certificates of participation 45,746,842 9,258,884 36,487,958 943,480 35,544,478
Bonds payable 1,080,000 $8,053,584 960,000 8,173,584 811,085 7,362,499
Obligations under capital
leases 165.033 80.339 84.694 84.694
$,80.010.656 $8.053.584 $11.668.334 $76.395.906 $3.253.745 573.142,161
Notes Payable
Santa Ana Watershed Project Authority (SAWPA)
Maturity date: 2011
Interest rate: 3.3%
Repayment provisions: Annual principal and interest
payments of$279,293
Balances $ 2,914,077
-22-
R
F
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
8. Long-Term Debt (Continued)
San Bernardino Valley Municipal Water District
Maturity date: 2013
Interest rate: 7.25%
Repayment provisions: Annual principal and interest
payments of$456,250
Balances $ 4,090,657
Santa Ana Watershed Project Authority (SAWPA)
Maturity date: 2016
Interest rate: 2.8%
Repayment provisions: Annual principal and interest
payments of$1,761,739
Balances 24.644.936
31,649,670
Less current portion 1.414,486
Long-term portion $30.235.184
The loan through the Santa Ana Watershed Project Authority from the State Water Resources Control
Board had been provided for the construction of the San Bernardino/Colton Rapid Infiltration Extraction
(RIX) Project. The loan requires 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 balance of the WCRF is $520,300 at
June 30, 1998.
The Department has decided to use the revenues of the Sewer Utility towards repayment of the loan.
-23-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
S. Long-Term Debt (Continued)
Certificates of Participation
Annual
Interest Issue Maturity Original Principal
Rates Date Date Amount Installments Balance
c
.3
1990 Water Facilities 6.10% 1991 2006 $11,463,581 $215,713
to to
7.00% $1,232,643 $ -0-
1992 Sewer Treatment Plant 6.25% 1992 2018 $41,300,000 $625,000
to to
9.25% $3,385,000 36.795.000
36,795,000
Less unamortized discount 307.042
} 36,487,958
Less current portion payable
from restricted assets 943.480
Long-term portion $35.544.478
The City of San Bernardino's independent bond council has determined that no amounts are currently due
under IRS Code Section 148(f)(4xB) for the temporary investments of the 1992 Sewer Treatment Plant
Certificates of Participation for rebate arbitrage.
As of June 30, 1998, $7,765,652 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). Funds have been deposited in an escrow account and will provide for the debt
service of the certificates until they mature. The advance refunding met the requirements of an in-
substance defeasance, and were removed as a liability of the Department at June 30, 1998.
r
-24-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
8. Long-Tenn Debt (Continued)
Bonds Payable
Annual
Interest Issue Maturity Original Principal
Rates Date Date Amount Installments Balance
1998 Water and
Wastewater Revenue Bonds 3.75% 1998 2005 $8,610,000 $860,000
to to
4.40% $1,260,000 $8,610,000
Waterworks Bonds,
Series 7.75% 1988 2013 $150,000 $5,000
to
$15,000 120,000
San Bernardino Public
Safety Authority
Refunding Revenue Bonds 5.60% 1973 1998 55,790,000 $185,000
to
$475,000
Total bonds payable 8,730.000
Less unamortized discount
and deferred advance
refunding charge 556.416
8,173,584
Less current portion payable
from restricted assets 811.085
Long-term portion $7 36 499
During the year, the Department joined in a pooled financing program of the Association of Bay Area
Governments, under which the Series 1998A Water and Wastewater Revenue Bonds were issued. The
Department's share of the principal amount of bonds at year-end was $8,610,000. The Department has
used $7,765,652 out of the proceeds to defease and prepay in full the principal outstanding on the 1990
Water Facilities Certificates of Participation. A portion of the proceeds has been used to pay the costs
incurred in issuing the Series 1998A Water and Wastewater Revenue Bonds and the ruining portion has
been set aside to finance a new computerized billing system and miscellaneous water improvement projects.
The refinancing is expected to result in aggregate savings of$1,725,342 which is the difference between
the amounts required to service the defeased certificates of participation and that required to service the
portion of the new bonds which has gone towards defeasement. The present value of these savings has
been computed as $304,820.
In addition, during the year, the Department paid in full the principal outstanding on the 1973 San
Bernardino Public Safety Authority Refunding Revenue Bonds ahead of maturity.
-25-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
8. Long-Term Debt (Continued)
Capital Leases
All leases qualifying as capital leases for accounting purposes have been recorded at the present value of
the future minimum lease payments as of the date of their inception. The Department held office and
engineering equipment in the amount of$262,432 at June 30, 1998 under capital leases. There was no
amortization charged to depreciation expense for these assets during the year since they are currently not
in service. The following is a schedule of the future minimum lease payments under these capital lease
obligations and the present value of the net minimum lease payments at June 30, 1998:
For the year ending June 30, 1999 $89,284
Less amount representing interest 4590
Present value of future minimum lease payments 84,694
Less current portion 84.6
Long-term portion of obligations under capital leases $
The annual requirements to amortize long-term debt subsequent to June 30, 1998 are as follows:
June 30, Princinal Interest Total
Notes payable 1999 $ 1,414,486 $ 1,082,796 $ 2,497,282
2000 1,462,114 1,035,168 2,497,282
2001 1,511,620 985,662 2,497,282
2002 1,563,095 934,187 2,497,282
2003 1,616,637 880,645 2,497,282
Thereafter 24 081,718 5.617.746 29.699.464
31,649.670 10.536.204 42.185.874
Certificates of participation 1999 943,480 2,392,538 3,336,018
2000 1,013,480 2,303,738 3,317,218
2001 1,088,480 2,208,462 3,296,942
2002 1,168,480 2,106,250 3,274,730
2003 1,253,480 2,032,188 3,285,668
Thereafter 31.020.558 16.835.312 47.855,870
36.487.958 27.878.488 64.366.446
-26-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
8. Long-Term Debt (Continued)
June 30 Principal Interest Total
Bonds payable 1999 $ 811,085 $ 156,831 S 967,916
2000 857,510 328,587 1,186,097 _
2001 915,852 291,825 1,207,677
2002 970,329 251,853 1,222,182
2003 1,025,984 208,737 1,234,721
Thereafter 3.592.824 363.148 3.955,972
9,173,584 1.600.981 9.774.565
$76.311.212 $40,015,673 $116.326.885
At June 30, 1998, $785,000 of the 1986 Revenue Refunding Bonds of the Sewer Facility are considered .
defeased and are not included as a liability of the Department in these financial statements.
9. Deferred Compensation Plan
The Department offers its employees a deferred compensation plan, through the City of San Bernardino,
created in accordance with Internal Revenue Code Section 457. The Plan, available to all full-time
employees at their option, permits participants to defer a portion of their salary until future years. The
deferred compensation is not available to participants until termination,retirement,death,or unforeseeable c
emergency.
M
All amounts of compensation deferred under the plan, aB property, and rights purchased with these r
amounts, property, or rights are(until paid or made available to the participant or beneficiary)solely the
property of the Department,subject only to the claims of the Department's general creditors. Participants'
rights under the plan are equal to those of general creditors of the Department in an amount equal to the
fair market value of the deferred account for each participant.
It is the opinion of the Department's legal counsel that the Department has no liability for losses under the
plan, but does have the duty of due care that would be required of an ordinary prudent investor. The
investment and related liabilities due to the employees are included in the City of San Bernardino's
Comprehensive Annual Financial Report and cannot be separately determined for the Department. The
Department believes it is unlikely that it will use the assets to satisfy the claims of general creditors in the
future.
-27-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
10. Defined Benefit Pension Plan
1 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 contributes to PERS,a cost-sharing multiple-employer public employee retirement system
defined benefit pension plan administered by PERS. 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.
Funding Policv
Active plan members are required to contribute 7.0 percent of their salary (7.0 percent of monthly salary
over$133.33 if the member participates in Social Security) and the Department is required to contribute
an actuarially determined rate. The actuarial methods and assumptions required employer contribution rate
for fiscal year 1997-98 was 6.172 percent of annual payroll(decreasing to 6.033 percent of pay under a
special funding provision effective with the January 1998 payroll period due to the state's direct
reimbursement to PERS of the cost of certain legislated benefit increases in the plan). The contribution
requirements of the plan members are established by state statute. The Department's contributions to
PERS for the years ended June 30, 1998, 1997 and 1996 were $278,035, $434,712, and $499,297,
respectively, and equal 100 percent of the required contributions for each year.
11. Postretirement Health Care Benefits
In addition to the pension benefits described in Note 11, the Department provides postretirement health
care benefits to all employees who retire from the Department on or after attaining age 55 with a minimum
of 15 years of service. Retirees are allowed to continue on the health care plan at a set premium. Some
employees are eligible to have a portion of that premium reimbursed to them by the Water Department up
to $150 per month per retiree. Currently, eleven Water Utility and one Sewer Utility retirees meet those
eligibility requirements. The Department pays$16 per month per retiree to PERS for administrative costs
of this program and an additional one-half percent administrative charge to PERS for all retirees currently
covered under the health benefits plan. Expenditures for monthly premiums are recognized as incurred.
During the year ended June 30, 1998, expenditures of$22,137 were recognized for postretirement health
care benefits and administrative costs for the Water and Sewer Utilities.
-28-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
12. 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 year ended June 30, 1998:
Revenues
City of San Bernardino
Revenue from water charges $ 92,721
Revenue from sewer charges 57,622
Revenue from geothermal energy 8,060
Billing and collections charges - refuse 121,544
Billing and collections charges - storm drain 4,607
New services and mains -installation 15,192
Reimbursement - consulting services 8,571
Interest income 1,567,874
Economic Development Aeencv
Revenue from geothermal energy 1,910
New services and mains -installation 59,699
Reimbursement - consulting services 7.425
Total revenues from related parties $1.945.225
Expenses
City of San Bernardino
10% water revenue $1,385,355
Sewer collection system maintenance 1,284,585
Printing services 4,702
Purchases 701
City Hall rent 183,720
Telephone charges 79,491
Refuse disposal services 72,834
Civil Service 45,000
Legal services and Affirmative Action 105,000
Rideshare coordination 2,010
Permits and engineering services 11,568
Postage 6,763
Relocation of water services 45,600
Workers' compensation - administration charges 63,742
Miscellaneous charges 2.705
Total expenses to related parties $3.293.776
-29-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
12. Related Party Transactions (Continued)
Receivables
City of San Bernardino
Finance Department $287,373
Fire Department 395
Public Services 30,314
Public Works 5,520
Economic Redevelopment Agency 61,532
Animal Shelter 259
Total related parties receivable $385.393
Payables
Due to the City of San Bernardino Finance Department -
various terms for repayment $1,094,964
The Department collects and transmits to the City of San Bernardino ten percent of collections on gross
water revenue and sewer collection system maintenance charges from Sewer Utility customers. These
remittances are included in the related party expense shown above.
The City of San Bernardino is exempt from all water service charges as long as water usage does not
exceed 110 percent of the fiscal year 1994/1995 water usage. The value of the exempt water service
charges for the year ended June 30, 1998 was $215,093.
13. Contingencies
Grand Jury Investigation
The Department is under investigation for alleged violations of the Clean Water Act by the Grand Jury
of the United States District Court of the Central District of California. Although management denies any
material violations of the Act, the outcome of this investigation or any subsequent actions cannot be
determined at this time with any certainty. If the Department were to be found guilty of violations of the
Clean Water Act, it could be subject to fines, and those fines could be material to these financial
statements.
The Department is also a respondent in an administrative action brought by and before the California
Regional Water Quality Control Board, Santa Ana Region in connection with reporting of discharges of
sewage. The department has denied the allegations and the parties have engaged in mediation followed
by arbitration. Although the outcome of this dispute is not presently determinable, it is the opinion of
the Department's counsel that its resolution will not have a material adverse effect on the financial
condition of the Department.
-30-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
13. Contingencies (Continued)
Federal and State Grants
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor
agencies,principally the federal and state governments. Any disallowed claims,including amounts already
collected, may constitute a liability of the Department. The amount, if any, of expenditures which may
be disallowed by the grantor cannot be determined at this time although the Department expects such
amounts, if any, to he immaterial.
Litigation
The Department has filed a complaint against the United States of America, Department of Army, in
connection with alleged contamination of Camp Ono site. This lawsuit is in the discovery phase and an
estimate of recoveries, if any, arising out of this claim cannot be made at this time.
The Department is a defendant in various other lawsuits. Although the outcome of these lawsuits is not
presently determinable, it is the opinion of the Department's counsel that resolution of these matters will
not have a material adverse effect on the financial condition of the Department.
Commitments
Commitments in the form of signed contracts for costs to complete construction projects or other
improvements amounted to $844,564 at June 30, 1998.
Risk Management
Description
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.
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.
-31-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Notes to Combining Financial Statements
13. Contingencies (Continued)
Unpaid Claims liabilities
The following represents the changes in approximate aggregate liabilities for the Department for the year
ended June 30, 1998:
Water Sewer Geothermal
Utility Utility Utility Total
Liability balance, June 30, 1997 $ 321,718 $ 180,888 $ 17,038 $ 519,644
Claims and changes in estimates 268,900 110,468 (17,038) 362,330
Claim payments (288,621) (186.103) (474.724)
Liability balance, June 30, 1998 $ 301,997 $ 105.253 $ - $ 407.250
14. Concentrations
Customers
The Department serves customers located primarily in the City of San Bernardino, the East Valley, and
Loma Linda.
Employee Contracts
The employees of the Water Department, except for certain management employees, are covered by
memorandums of understanding with the Water Department Employees Association and Association of
Water Department Mid-Managers as to wages, hours, and other terms and conditions of employment.
These agreements are for a two-year period ending in April 2000.
15. Subsequent Event
On June 2, 1998, the San Bernardino Public Safety Authority authorized the refunding of the 1992
Certificates of Participation, Sewer Treatment Plant, by issuing 1998 Cross-Over Refunding Sewer
Revenue Certificates of Participation. The issuance of the 1998 certificates and refunding of the 1992
certificates was funded on July 1, 1998. The 1998 Refunding Sewer Revenue Certificates have been
approved for an amount not to exceed$39,000,000.
-32-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
r
Notes to Combining Financial Statements
16. Noncash Operating, Investing, and Financing Activities
On July 1, 1997, the Water Utility received all of the assets and assumed all of the liabilities of the
Geothermal Utility. The assets transferred consisted of the following:
Assets transferred in, net of cash overdraft $ 3,577,914 _
Liabilities assumed (1,032,826)
Net assets received $ 2,545.088
-33-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Board of Water Commissioners and Organization
June 30, 1998
MAYOR OF THE CITY OF SAN BERNARDINO
Tom Minor
BOARD OF WATER COMMISSIONERS
Name Office
Mr. Harold W. Willis President
Mr. B. Warren Cocke Member
Mr. Alton L. Garrett, Jr. Member
Mr. Martin A. Matich Member
Mr. James H. Urata Member
ADMINISTRATION
Mr. Berard C. Kersey
General Manager
Ms. Stacy Aldstadt
Deputy General Manager
Mr. Joseph F. Stejskal
Director: Engineering Construction- Maintenance
Mr. John A. Perry, P.E.
Director: Water Reclamation
Vacant
Director of Finance
Mrs. Marjorie A. Hoverland
Director of Administrative Services
Mr. John K. Turnipseed
Safety Program Manager
ORGANIZATION
The City of San Berardino 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 Berardino. 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 East Valley Water. Sewer Services encompass all of the City of San Bernardino, East Valley
Water, City of Loma Linda, the former Norton Air Force Base and Patton State Hospital.
-34-
,1
SUPPLEMENTARY INFORMATION
J
SA
J
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 1998
Federal Receipts
Program Catalog Program or Revenue Program
Title Number Entitlements Recognized Expenditures
Federal financial assistance
received directly
Environmental Protection Agency
Superfund state site- specific
cooperative agreements (Newmark
groundwater contamination site) -
major program 66.802 $14,205,737 $1,966,925 $1,966,925
Total Environmental Protection Agency 14,205,737 1,966,925 1,966,925
Total federal awards $14,205.737 $1,966,925 $1,966,925
This schedule is presented on the accrual basis of accounting.
-35-
w
ff
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Insurance Coverage
Insurance coverage for the Department at June 30, 1998 is summarized below:
Reliance National Insurance Company, Policy#NCZC0146458; boiler and machinery
coverage - April 30, 1998 to April 30, 1999
Per occurrence limit $10,000,000
Multiple insurance companies and policies, all-risk property coverage, including
earthquake and flood - April 30, 1998 to April 30, 1999 as follows:
Primary limit-
AIG/Lexington Insurance Company, Policy#8522205 $2,500,000
Excess limits - _
Commonwealth Insurance Company, Policy#US2019 $2,500,000
Travelers Insurance Company of Illinois, Policy#7XJPFF246TO91698 $2,175,000
Allianz Underwriters Insurance Company, Policy#CLP 1031220 $2,825,000
TIG Insurance Company, Policy#XPT37954044 $5,000,000
Essex Insurance Company, Policy#MSP2565 $5,000,000
Royal Indemnity Company, Policy#RHD403106 $5,000,000
TIG Insurance Company, Policy#XPT37954044 $4,500,000
Allianz Insurance Company, Policy#CLP 1031220 $3,000,000
Royal Indemnity Company, Policy#RHD 403126 $12,500,000
Associated International Insurance Company, Policy#IM319858 $7,500,000
RLI Insurance Company, Policy#IMF 0029525 $5,000,000
Agricultural Insurance Company, Policy#CPP2626300 $5,000,000
Lloyds of London, Policy#F98/2473/000 $25,000,000
Allianz Underwriters Insurance Company, Policy#CLP1031220 $75,000,000
Reliance Insurance Company, Policy#JK2838890; general liability and personal
injury liability - October 30, 1997 to October 30, 1999
Per occurrence limit $1,000,000
Personal and advertising injury limit $1,000,000
Fire damage limit $50,000
Medical expense limit(any one person) $5,000
General aggregate limit $2,000,000
Products/completed operations aggregate limit $2,000,000
Reliance Insurance Company, Policy#JK2838890; commercial automobile
coverage - October 30, 1997 to October 30, 1998
Bodily injury/property damage-combined single limit $1,000,000
Uninsured motorist $1,000,000
Medical expense $5,000
Hired/nonowned liability $1,000,000
-36-
z
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Insurance Coverage (Continued)
Steadfast Insurance Company, Policy#SUO 2810874-00; commercial umbrella
liability policy - October 30, 1997 to October 30, 1998
Per occurrence limit $10,000,000
Products/completed operations aggregate $10,000,000
General aggregate $10,000,000
Each pollution incident $10,000,000
Retained limit - each occurrence $10,000
Agricultural Insurance Company, Policy#EXC2613987; commercial umbrella
liability policy - October 30, 1997 to October 31, 1998
Per occurrence limit $15,000,000
Aggregate where applicable $15,000,000
` Western Brokers Insurance Services, Policy#POI 001356-1; public official
and employer's liability policy - October 30, 1997 to October 30, 1998 $5,000,000
American International Specialty Lines, #819 5815; pollution Liability policy -
October 30, 1997 to October 30, 1998 $5,000,000
The Department is self-insured through the City of San Bernardino for workers'compensation liability and
material damage to rolling stock.
-37-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Water System Demographics
Physical Changes in Water Utility System
1998
July 1. 1997 Added Removed .tune 30. 1998
Miles of main in service 550.4499 .1178 0.0152 550.5525
Gate valves in system 14,136 99 2 14,233
Fire hydrants in system 4,105 9 4 4,110
Water meters in system 44,397 2,644 2,476 44,565
1997
July 1, 1996 Added Removed June 30, 1997
Miles of main in service 549.4635 1.3264 0.3400 550.4499
Gate valves in system 14,040 107 11 14,136
Fire hydrants in system 4,088 17 0 4,105
Water meters in system 44,214 2,087 1,904 44,397
Water Production/Utilization (Cubic Feet)
1997-98 1996-97 1995-%
Water utilization (shown in cubic feet)
Water sold to direct customers 1,596,392,100 1,810,738,700 1,792,557,200
Water sold to other agencies 140,192,330 108,660,884 89,067,953
Water sold to or used by City* 79,698.816 91.775.960 102.447.897
1,816,283,246 2,011,175,544 1,984,073,050
Loss and other factors 133,365,478 112,450,699 107,919,218
Loss and other factors percentage 6.840% 5.295% 5.159%
Total water sold, used or lost 1.949.648 724 2.123.626.243 2.091 992 268
*Includes exempt water used by the City in the amount of 51,558,300 and 68,560,200 cubic feet for the
1997-98 and 1996-97 years, respectively.
-38-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Water Production
June 30, 1998
1997.98 1996-97 1995-96
Total Water Total Water Total Water
Per 1,000 Per 1,000 Per 1,000
Amount Cubic Feet Amount Cubic Feet Amount Cubic Feet
Summary of total water
production and purchased cost
Total production, purchases, and
supplemental 2,026,126 2,047,915 2,063,136
Production and pumping expenses* $2,526,300 $2,874,992 $2,753,253
Cost of purchased water(including
assessments) 2.944
Total expense before depreciation 2,526,300 $1.24686 2,874,992 $1.40558 2,756,197 $1.33593
Depreciation of plant facilities 870.338 0.42956 878.349 0.42890 854.399 0.41413
Totals $3.396.638 $1.67642 $3,753,341 $1.83448 $3.610.596 $1.75006
Summary of costs per acre foot
Acre feet 46,513.451 47,013.662 47,363.088
Cost per acre foot before
depreciation $54.31 $61.15 $58.19
Cost per acre foot(including
depreciation of plant facilities) $73.02 $79.84 $76.23
*Includes operations administration.
-39-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Water Rates
Water rates are summarized below:
s
Single Family Dwelling Unit
Minimum Monthly Charge
Meter Effective Dates Cubic Foot
Size April 1, 1991 November 1, 1989 Allowance
5/8" $6.60 $5.50 500
3/4" $8.80 $7.35 500
1" $10.55 $8.80 500
1-1/2" $18.90 $15.75 500 i
2" $26.40 $22.00 So0
3" $44.90 $37.40 500
4" $76.25 $63.55 500
6" $137.30 $114.40 500
8" $205.90 $171.60 500
10" $257.40 $214.50 500
12" $308.90 $257.40 500
T
All water usage in excess of 500 cubic feet per month is at the rate of$32 and $.60 per 100 cubic feet ,
effective April 1, 1991 and November 1, 1989, respectively.
:z
Commercial, Landscape, and Industrial Users
Minimum Monthly Char¢e
Meter Effective Dates a
Size April 1. 1991 November 1. 1989
5/8" $6.60 $5.50
3/4" $8.80 $7.35
1" $10.55 $8.80 i
1-1/2" $18.90 $15.75
2" $26.40 $22.00
3" $44.90 $37.40
4" $76.25 $63.55
6" $137.30 $114.40
8" $205.90 $171.60
10" $257.40 $214.50
12" $308.90 $257.40
All water usage per month is at the rate of$32 and $.60 per 100 cubic feet effective April 1, 1991 and
November 1, 1989, respectively.
-40- -
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Water Rates (Continued)
Delman Heights Users (Customers formerly
served by Southern California Water Company)
Minimum Monthly Charge
} Meter Effective Dates
Size April 1. 1991 November 1, 1989
518' $4.60 $4.60
3/4" $5.50 $5.50
1" $8.80 $8.80
�} 1-i/2" $13.80 $13.80
3 2" $14.90 $14.90
3" $26.60 $26.60
4" $35.00 $35.00
6" $58.50 $58.50
8" $84.00 $84.00
Z
Water usage charge on the first 300 cubic feet is at the rate of$30 per 100 cubic feet with water usage
over 300 cubic feet at the rate of$.844 per 100 cubic feet for the effective dates of April 1, 1991 and
November 1, 1989.
Effective July 1, 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 110 percent of the fiscal year 1994/1995
water usage. Water usage in excess of this amount is charged at $.288 per 100 cubic foot. Water
furnished for use by the City of San Bernardino for landscape assessment districts or funded from other
than the City's general fund is charged at$.288 per cubic foot. All other rates remained unchanged.
-41-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Sundry Water Statistical Data
1997-1998 1996-1997
Production Percent Production Percent
in Cubic Feet Production in Cubic Feet Production
Perris Bill 12,082,300 0.66% 5,952,100 0.29%
Sierra Way and 16th Street 108,345,300 5.90 106,958,600 5.22
Antil pumping 110,558,300 6.02 97,372,000 4.75
Waterman Avenue pumping 65,645,000 3.57 100,975,900 4.93
Mill and "D" Streets 24,489,400 1.33 29,290,900 1.43
Lytle Creek#1 and#2 211,407,612 11.51 249,683,913 12.20
Secwmbe well - 7th Street plants 121,139,100 6.59 113,110,300 5.52
Cajon Pass and Vincent plant 107,585,000 5.86 109,452,800 5.34
Devils Canyon#1 - #7 114,549,050 6.23 131,031,430 6.40
Newmark#1 -#4 173,641,100 9.45 261,064,200 12.74
19th Street#1 and#2 148,340,400 8.07 165,472,100 8.08
Gilbert Street 60,684,800 3.30 97,630,100 4.77
Lynwood 83,322,600 4.53 39,860,900 1.95
27th Street 5,933,200 .32 28,083,800 1.37
Baseline and California plant 22,726,800 1.24 35,535,200 1.73
Ellena Bros. well
Cajon#1, #2 and#3 159,063,000 8.66 175,541,300 8.57
Mallory well and reservoir 25,900,300 1.41 13,207,600 0.64
30th and Mountain View 41,095,062 2.24 63,512,500 3.10
Olive and Garner well 45,237,800 2.46 65,816,600 3.21
LeRoy Street well 19,167,100 1.04 4,563,800 0.22
10th and "J" Street 42,676,300 2.32 34,420,900 1.68
Kenwood well 129,339,300 7.04 115,529,600 5.64
40th Street well 4.508.800 0.25 4.491.800 0.22
1,837,437,624 100.00 2,048,558,343 100.00
Exchange water from East Valley
Water Department 112.211.100 75.067.900
Total produced water 1,949,648,724 100.00% 2,123.626.243 100.00%
-42-
1995-1996 1994-1995 1993-1994
Production Percent Production Percent Production Percent
in Cubic Feet Production in Cubic Feet Production in Cubic Feet Production
14,056,300 0.71% 37,643,000 2.17% 29,805,300 1.72%
133,142,700 6.75 139,819,300 8.07 155,636,900 8.88
85,263,000 4.32 95,007,700 5.48 73,317,200 4.18
56,160,500 2.85 56,777,000 3.27 79,189,400 4.52
17,000,700 0.86 19,770,300 1.14 23,157,100 1.32
196,365,448 9.95 87,336,700 5.04 62,383,100 3.56
93,492,100 4.74 104,208,096 6.01 140,632,000 8.02
112,502,300 5.71 81,299,500 4.69 98,572,200 5.62
128,098,120 6.50 92,209,070 5.32 121,258,501 6.92
233,582,200 11.85 176,697,800 10.19 173,007,339 9.87
136,200,800 6.91 139,418,900 8.04 89,640,700 5.11
117,855,900 5.98 91,160,000 5.26 26,451,100 1.51
136,705,700 6.93 87,714,100 5.06 72,098,600 4.11
9,015,400 0.46
19,434,900 .99 32,483,100 1.87 25,665,300 1.46
18,605,160 1.06
155,425,400 7.88 151,949,400 8.76 151,083,500 8.62
9,292,800 0.47 5,207,400 0.30 5,736,100 0.33
74,113,000 3.76 94,234,800 5.44 103,165,400 5.89
87,164,300 4.42 64,071,600 3.70 80,857,900 4.61
5,903,700 0.30 4,300,200 0.25 19,324,000 1.10
12,346,200 0.63 35,202,900 2.03 44,761,200 2.55
132,997,600 6.75 134,547,300 7.76 154,721,600 8.83
5.552.200 0.28 2.590.700 0.15 3.619.100 0.21
1,971,671,268 100.00 1,733,648,866 100.00 1,752,688,700 100.00
120,321.000
2.091.992,268 100.00% 1,733 648.866 100.00% 1.752.688.700 100.00%
-43-
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, 1993 through June 30, 1998
User TM 1998 1997 1996 1995 1994 1993
Single family residential 31,692 32,105 32,202 32,219 32,355 32,181
Multiple family residential 2,830 2,870 2,900 2,931 2,967 2,960
Commercial/institutional 3,268 3,126 3,115 3,146 3,146 3,172
Other 1.345 1.267 1.200 1.152 1,106 1,106
Total all users, active 39.135 39.368 39.417 39,448 39,574 39,419
Revenue by Class of User
Fiscal Year 1997-98
Fiscal Year Percentage of
User Class Revenue Annual Revenue
Single family residential $ 6,815,362 54.0%
Multiple family residential 2,493,207 20.0%
Commercial/industrial 2,742,539 22.0%
Other and unmetered 579.439 4.0%
Total all users $12.630.547 100.0%
Largest users: The System had no customer accounting for more than three percent of the revenues for
the fiscal year 1997-98.
-44-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Sewer Rates and Statistics
Regional
Facilities
and Collection
Treatment System Total Monthly
Classification Charge Charge City Charge
Rates effective as of June 1, 1995:
Residential $13.25 per month $1.35 per month $14.60
Commercial:
Multi-family, mobile home parks
(4 or more units) $0.75/HCF* $0.15/HCF $0.90/HCF*
Retail, commercial, light industrial
n on-office, bakeries, markets,
theaters, dry cleaners) $1.10/HCF* $0.15/HCF* $1.25/HCF*
Auto repair, car wash $1.20/HCF* $0.15/HCF* $1.35/HCF*
Offices, motels (without restaurants) $0.95/HCF* $0.15/HCF* $1.10/HCF*
Restaurants, hotels (hotels/motels
with restaurants) $1.70/HCF* $0.15/HCF* $1.85/HCF*
Laundromats $0.90/HCF* $0.15/HCF* $1.05/HCF*
Hospitals, convalescent homes $0.80/HCF* $0.15/HCF* $0.95/HCF*
Schools, churches, nursery schools,
daycares $0.50/HCF* $0.15/HCF* $0.65/HCF*
Industry $826.67/MG $264.22/1,000 LBS BOD
(Discharge flow) $324.28/1,000 LBS SS
Rates effective as of January 1, 1994:
Residential $13.55 per month $1.35 per month $14.90
Commercial:
Multi-family, mobile home parks
(4 or more units) $0.80/HCF* $0.15A-ICF $0.95/HCF*
Retail, commercial, light industrial
(nonoffice, bakeries, markets,
theaters, dry cleaners) $1.15/HCF* $0.15/HCF* $1.30/HCF*
Auto repair, car wash $1.25/HCF* $0.15/HCF* $1.40/HCF*
Offices, motels (without restaurants) $1.00/HCF* $0.15/HCF* $1.15/HCF*
Restaurants, hotels (hotels/motels
with restaurants) $1.75/HCF* $0.15/HCF* $1.90/HCF*
Laundromats $0.95/HCF* $0.15/HCF* $1.10/HCF*
Hospitals, convalescent homes $0.85/HCF* $0.15/HCF* $1.00/HCF*
Schools, churches, nursery schools,
daycares $0.55/HCF* $0.15/HCF* $0.70/HCF*
Industry $908.33/MG $264.22/1,000 LBS BOD
(Discharge flow) $324.28/1,000 LBS SS
*HCF = Per 100 cubic feet of water usage.
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Schedule of Sewer Rates and Statistics (Continued)
.tune 30. 1998
Residential Nonresidential Total
Number of connections
City of San Bernardino 32,517 3,711 36,228
East Valley Water District 16,420 1,089 17,509
City of Loma Linda 3.438 545 3.983
52.375 5.345 57.720
Annual billings
City of San Bernardino** $5,091,718 $4,505,248 $ 9,596,966
East Valley Water District 2,588,101 1,402,504 3,990,605
City of Loma Linda 537.770 862.410 1.400.180
$8.217.589 $6.770.162 $14.987.751
Average monthly billings
City of San Bernardino $424,310 $375,437 $ 799,747
East Valley Water District 215,675 116,875 332,550
City of Loma Linda 44.814 71.867 116.681
$684.799 $564.179 $1.248.978
**The billings to the City of San Bernardino are net of collection system costs.
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June 30, 1997 June 30, 1996
Residential Nonresidential Total Residential Nonresidential Total
32,693 3,723 36,416 32,790 3,719 36,509
15,526 1,106 16,632 15,278 1,116 16,394
3,119 554 3,673 3.245 428 3,673
51,338 5,383 56,721 51,313 5,263 56,576
$5,183,721 $4,919,644 $10,103,365 $5,187,316 $4,907,909 $10,095,225
2,571,861 1,457,114 4,028,975 2,428,930 1,528,957 3,957,887
491,122 790.874 1,281,996 526,411 820,232 1346,643,
$8,246,704 $7,167,632 $15,414,336 $8,142,657 $7,257,098 $15,399,755
$431,977 $409,970 $ 841,947 $432,276 $408,992 $ 841,268
214,322 121,426 335,748 202,411 127,413 329,824
40,927 65.906 106,833 43,868 68,353 112,221
$687,226 $597,302 $1,284,528 $678,555 $604,758 $1.283,313
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Certificates of Participation Schedule
San Bernardino Public Safety Authority
Principal
Payments
(Net of
Principal Unamortized Unamortized Interest
Date Due Payments Discounts Discounts) Interest Total-. Rate
8-1-1998 $ 1,196,269 $ 1,196,269 925%
2-1-1999 $ 960,000 $ 16,520 $ 943,480 1,196,269 2,139,749 9.25%
8-1-1999 1,151,869 1,151,869 9.25%
2-1-2000 1,030,000 16,520 1,013,480 1,151,869 2,165,349 925%
8-1-2000 1,104,231 1,104,231 9.25%
2-1-2001 1,105,000 16,520 1,088,480 1,104,231 2,192,711 9.25%
8-1-2001 1,053,125 1,053,125 6.25°
2-1-2002 1,185,000 16,520 1,168,480 1,053,125 2,221,605 625%
8-1-2002 1,016,094 1,016,094 625%
2-1-2003 1,270,000 16,520 1,253,480 1,016,094 2,269,574 6.25%
8-1-2003 976,406 976,406 6.25%
2-1-2004 1,360,000 16,520 1,343,480 976,406 2,319,886 6.25%
8-1-2004 933,906 933,906 6.25%
2-1-2005 1,460,000 16,520 1,443,480_ 933,906 2,377,386 6.25°
8-1-2005 888,281 888,281 625%
2-1-2006 1,565,000 16,520 1,548,480 888,281 2,436,761 625%
8-1-2006 839,375 839,375 625%
2-1-2007 1,680,000 16,520 1,663,480 839,375 2,502,855 6.25°
8-1-2007 786,875 786,875 625%
2-1-2008 1,800,000 16,520 1,783,480 786,875 2,570,355 6?5%
8-1-2008 730,625 730,625 6.25%
2-1-2009 1,930,000 16,520 1,913,480 730,625 2,644,105 6.25%
8-1-2009 670,312 670,312 6.15%
2-1-2010 2,070,000 16,520 2,053,480 670,312 2,723,792 6.25%
8-1-2010 605,625 605,625 6.15%
2-1-2011 2,220,000 16,520 2,203,480 605,625 2,809,105 6.25%
8-1-2011 536,250 536,250 6.25%
2-1-2012 2,385,000 16,520 2,368,480 536,250 2,904,730 675%
8-1-2012 461,719 461,719 6.25%
2-1-2013 2,555,000 16,520 2,538,480 461,719 3,000,199 6.25%
8-1-2013 381,875 381,875 6.25%
2-1-2014 2,740,000 16,520 2,723,480 381,875 3,105,355 6.25%
8-1-2014 296,250 296,250 6.25%
48-
MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Certificates of Participation Schedule
San Bernardino Public Safety Authority (Continued)
Principal
Payments
(Net of
Principal Unamortized Unamortized Interest
Date Due Payments Discounts Discounts) Interest Total Rate
2-1-2015 $ 2,940,000 $ 16,520 $ 2,923,480 $ 296,250 $ 3,219,730 6.25%
8-1-2015 204,374 204,374 6.25%
2-1-2016 3,155,000 16,520 3,138,480 204,375 3,342,855 6.25%
8-1-2016 105,781 105,781 6.25%
2-1-2017 3,385,000 9.682 3.375,318 105.784 3,481.102 6.25%
$36,795,000 $307.042 $36,487.958 $27.878,488 $64.366.446
Funds used for the Primary Hydraulic Reliability Project, remodel of the administration laboratory
building, and design of 3A secondary treatment.
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Series 1998A Water and Wastewater Revenue Bonds
Unamortized
Discounts
and Principal
Principal Deferred Payments Interest
Date Due Payments Char¢es (Net) Interest Total Rate
10-1-1998 $ 860,000 $ 53,915 $ 806,085 $ 147,531 $ 953,616 4.00%
10-1-1999 970,000 117,490 852,510 319,675 1,172,185 3.75%
10-1-2000 1,015,000 104,149 910,851 283,300 1,194,151 3.90%
10-1-2001 1,055,000 89,671 965,329 243,715 1,209,044 4.05%
10-1-2002 1,095,000 74,016 1,020,984 200,988 1,221,972 4.15%
10-1-2003 1,160,000 57,338 1,102,662 155,545 1.258,207 4.20%
10-1-2004 1,195,000 39,360 1,155,640 106,825 1,262,465 4.30%
10-1-2005 1,260,000 20 477 1,239,523 55.440 1.294.963 4.40%
$8,610,000 $556,416 $8.053.584 $1.513.019 $9.566.603
Funds used to defease and prepay 1990 Certificates of Participation issued to finance construction of
reservoirs, wells and mains, and to finance future improvements of Water Facilities.
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MUNICIPAL WATER DEPARTMENT
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
Bond Schedule - General Obligation Waterworks Bonds, Series C
Interest
Date Due Payments Interest Total Rate
9-1-1998 $ 4,650 $ 4,650 7.75%
3-1-1999 $ 5,000 4,650 9,650 7.75%
9-1-1999 - 4,456 4,456 7.75%
3-1-2000 5,000 4,456 9,456 7.75%
9-1-2000 4,263 4,263 7.75%
3-1-2001 5,000 4,263 9,263 7.75%
9-1-2001 4,069 4,069 7.75%
3-1-2002 5,000 4,069 9,069 7.75%
9-1-2002 3,875 3,875 7.75%
3-1-2003 5,000 3,875 8,875 7.75%
9-1-2003 3,681 3,681 7.75%
3-1-2004 5,000 3,681 8,681 7.75%
9-1-2004 3,488 3,488 7.75%
3-1-2005 5,000 3,488 8,488 7.75%
9-1-2005 3,294 3,294 7.75%
3-1-2006 10,000 3,294 13,294 7.75%
9-1-2006 2,906 2,906 7.75%
3-1-2007 10,000 2,906 12,906 7.75%
9-1-2007 2,519 2,519 7.75%
3-1-2008 10,000 2,519 12,519 7.75%
9-1-2008 2,131 2,131 7.75%
3-1-2009 10,000 2,131 12,131 7.75%
9-1-2009 1,744 1,744 7.75%
3-1-2010 10,000 1,744 11,744 7.75%
9-1-2010 1,356 1,356 7.75%
3-1-2011 10,000 1,356 11,356 7.75%
9-1-2011 969 969 7.75%
3-1-2012 10,000 969 10,969 7.75%
9-1-2012 580 580 7.75%
3-1-2013 15,000 580 15,580 7.75%
$120.000 $87,962 $207.962
Bonds related to water system improvements for South San Bernardino Water District,which was acquired
by the Department in 1991.
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