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HomeMy WebLinkAbout1978-07-24 Min - Board l SPECIAL MEETING JULY 24, 1978 The Special Meeting of the Board of Directors of the Truckee Donner Public Utility District was called to order by the President at 8:07 P.M. in the District office. ROLL CALL: Directors Huber, Kuttel , Maass, and Sutton were present; Director Hatch was absent. At 10: 13 P.M. , during discussion of the 1977 audit, Director Huber left the meeting. EMPLOYEES PRESENT: Susan Craig was present; A. Milton Seymour was absent. CONSULTANTS PRESENT: Bill Neeley and Matt Gomez of Arthur Young and Company arrived at approximately 8:20 P.M. ; District Counsel Grumer arrived shortly thereafter. District Engineer Cook was absent. OTHERS PRESENT: Mrs. Karl Kuttel and Rhonda Wilson. REQUEST OF RHONDA WILSON TO HOLD YARD SALE ON DISTRICT PROPERTY (1 .9 ACRES ACROSS FROM BANK OF AMERICA) ; DISCUSSION AND POSSIBLE ACTION Mr. Wilson requested that the District allow her and four or five other families to hold a yard sale for either one or two days on District land across from the Bank of America because of its good location. Director Sutton noted her belief that District land, which is owned by the public, could not be used for individual profit. Ms. Wilson advised this venture would be a profit-making enterprise. The improbability of being able to obtain a certificate of insurance and District liability were discussed. Thereafter, Director Sutton moved that the Board reject the request of Ms. Wilson to hold a yard sale on the 1 .9 acres of land owned by the Dis- trict (located across from the Bank of America) . The motion was seconded by Director Huber. ALL AYE BY VOICE VOTE. SO MOVED. The Board suggested that perhaps the Truckee Donner Recreation and Park District, because of their different function, would be in a better position to grant Ms. Wilson's request and advised her that their Board would be meeting on August 3rd. WORKSHOP SESSION WITH MATT GOMEZ OF ARTHUR YOUNG & COMPANY RESPECTING THE 1977 AUDIT; POSSIBLE BOARD DIRECTION It was noted that the purpose of this workshop session was for review of the draft financial statements for the year ended December 31 , 1977, to answer questions regarding the audit, and to give direction as to the prepara- tion of the final format of the financial statements. The draft documents have been attached. Regarding the Balance Sheet, Mr. Gomez generally explained the categories listed under assits and margins & liabilities. During discussion of deferred in- come, it was noted that Arthur Young & Company should make certain that standby fees have been properly allocated. Discussion ensued relating to the allowance for doubtful accounts listed under accounts receivable. Mr. Grumer advised of the amount the District was able to collect by way of letters mailed by his office in a previous year; he stated he felt perhaps this procedure should be followed on a regular basis. The suggestion was made that the Board review a listing of past due accounts on a monthly basis and direction given by the Board r--• concerning such delinquencies. The power of the District to lien through the County tax rolls was briefly discussed. i Mr. Gomez of Arthur Young & Company recommended that the District es- tablish a policy relating to collections, follow-up procedure, and write-offs. Lengthy discussion was had concerning the establishment of the worth of the District; the auditors noted it was not within their scope to make such a determination. Upon review of the Statement of Revenues and Expenses, Mr. Gomez ad- vised that part of the interest had been included in additions to restricted funds, and interest on long-term debts had decreased because there was less outstanding during the past year than the prior year. The interest rate with 7/25/78 pg. 1 1 the Local Agency Investment Fund if 7%; Director Kuttel requested that the auditors made an accompanying note regarding LAIF on the final documents. The differences in operating expenses between 1976 and 1977 were dis- cussed, with Mr. Gomez stating that the TDPUD Board would be the best judge of whether or not these expenses were justified. A brief interpretation of the Statement of Operating Margins, Non- operating Margins and Capital Gains was provided by Mr. Gomez; the Statement of Changes in Financial Position was also reviewed briefly. In relation to the Combined Statement of Departmental Operations, the ..� accumulation of Standby fees in Truckee Water rather than a distribution be- tween Truckee Water and Tahoe Donner Water was commented upon. It was noted that, since separate books are kept on Tahoe Donner Water, an accurate ac- counting of the actual revenues and expenses should reflect in the statement. Verification that a separate accounting is being maintained was requested by Director Sutton. Director Sutton mentioned correspondence recently exchanged by Martin McDonough and legal counsel for Sierra Pacific Power Company regarding the purchase agreement for the Donner Lake electric system. Mr. Gomez requested a copy for his review. Director Huber left the meeting at approximately 10: 15 P.M. Mr. Gomez stated that, as part of the examination provided by Arthur Young & Company, a study and evaluation of the District's system of internal accounting controls (to the extent they considered necessary in order to evaluate the system as required by generally accepted auditing standards) was completed. Items for review by the Board of Directors included the following: Accounts receivable - institution of procedures for the collection of delinquent accounts and the establishment of criteria whereby an account would be determined uncollectible and written off. Compliance with Sierra Pacific Loan agreement. Control over computer processing and record storage - contingency plan for alternative processing in the case of extended computer breakdown; offsite storage of one backup diskette for each file and one program diskette; maintenance of a program change file. The Directors agreed that Arthur Young & Company prepare the 1977 Financial Statements in final form for presentation at the August 21st meet- ing. The documents are to contain as much explanation as possible, perhaps a general glossary of terms. Mr. Gomez will provide the District with 20 copies for distribution to appropriate parties. EXECUTIVE SESSION The President convened to Executive Session at 10:35 P.M. for the purpose of discussing legal and personnel matters. RETURN TO PUBLIC SESSION The Board reconvened to Public Session at 11 : 12 P.M. There being no further business before the Board, Director Kuttel moved that the meeting be adjourned. The motion was seconded by Director Sutton. ALL AYE BY VOICE VOTE. SO MOVED. The meeting was adjourned at 11 : 13 P.M. TRUCKEE DONNER PUBLIC UTILITY DISTRICT By -�-r J s A. Maass, P esident Approved August 21 , 1978, with corrections to be incorporated Signed &�YL;-7/ZX' 4 Susan Craig, ExecutivW Secretary -7 ,n 1. 17A .... 7 TRUCKEE-DONNER PUBLIC UTILITY DISTRICT POST OFFICE BOX 309 TRUCKEE, CALIFORNIA 95734 TELEPHONE 587-3896 AUDIENCE ATTENDANCE FOR THE MEETING OF „t PLEASE PRINT YOUR NAME: iDl- 1 • F_non da W i l Son 2. VGf er,a. �lf}� L 3. 4. 5. 6. 7. 8. 9. 10. 11 . 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. Doll, The Board of Trustees Truckee-Donner Public Utility District We have examined the accompanying balance sheets of the Truckee-Donner Public Utility District at December 31 , 1977 and 1976, (as restated - Note 2) and the related statements of revenues and expenses , operating margins, non-operating margins and capital gains , and changes in financial position for the years then ended. Our examination was made in accordance with generally accepted auditing standards and, accordingly , included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our report dated April 1 , 1977 related to the financial statements at December 31 , 1976 and for the year then ended, our opinion was qualified with respect to the effects, if any , of two legal actions filed against the District. Subsequently , as described in Note 2 , one action has been resolved and the statements have been restated to reflect the resolution, there- fore, our qualification as to this matter is removed. As discussed in Note 6 to the financial statements, the District is a defendant in a legal action. The ultimate outcome of the claims pursuant to this action cannot presently be determined. In our opinion, subject to the effects, if any , on the financial statements of the ultimate resolution of the matter discussed in the preceding paragraph, the statements mentioned above present fairly the financial position of Truckee-Donner Public Utility District at December 31 , 1977 and 1976 , and the results of operations and changes in financial position for the years then ended, in conformity with generally accepted account- ing principles applied on a consistent basis during the period. Our examination has been made primarily for the purpose of expressing an opinion on the financial statements, taken as a whole. The accompanying supplementary information is presented for analysis purposes and is not necessary for a fair presenta- tion of the financial information referred to in the preceding paragraph. It has been subjected to the tests and other auditing procedures applied in the examination of the financial statements mentioned above and, in our opinion, subject to such adjustment, if any , as may :result from the outcome of the matter mentioned in the second preceding paragraph, is fairly stated in all respects material to the financial statements taken as a whole. D March 31 , 1978 TRUCKEE-DONNER PUBLIC UTILITY DISTRICT BALANCE, SHEET December 31, 1977 and 1976 ASSETS MARGINS AND LIABILITIES 1976 1977 1976 1977 (Restated Utility plant, at cost (Note 1): (Restated Margins: Note 2) Note 2) Plant in service: Operating margins $1,258,699 $1,018,091 Electric $ 2,175,495 $ 2,135,011 500 Non-operating margins and capital 874,628 929 Rater gains 635,276 627,278 General 348,523 344,472 1,893,965 1,645,369 3,398,646 3,408,983 Less accumulated depreciation (1,771,552) (1,655,153) Long-term debt (Note 4): Net.plant in service 1,627,094 1,753.830 REA bonds payable 367,574 396,574 Construction in progress 42,068 3,422 Note payable to Sierra Pacific Power Donner Lake Electric acquisition Company 74,055 88,510 adjustments 4,066 4,830 Sewer assessments payable 15,797 17,049 Net utility pl ant 1,673.228 1,762,082 Non-utility property 23,834 25,304 Equipment notes payable 26,279 _ 34,717 Restricted funds (Note 3) 368,470 344,501 483,705 526,850 Current assets: Current liabilities: Cash 649,699 78,891 Accounts payable 340,771 250,661 Notes receivable 1,600 1,500 Deferred income - standby fees 47,862 - Refund receivable - 42,168 Accounts receivable - consumer, less Consumer deposits 28,612 19,748 allowance for doubtful accounts of 115,143 - $34,800 ($22,000 in 1976) 153,860 230,963 Refund payable to consumers (Note 2) Accounts receivable - other, less Accrued liabilities 45,033 14,268 allowance for doubtful accounts j of $14,000 ($10,500 in 1976) 125,192 40,045 Total current liabilities 577,421 284,677 Inventory, at average cost 191.001 210,064 Customer advances for construction (Note 3) 243,281 285,115 Other current assets 11,588 6,495 Total current assets 1,132,840 610,124 Contingencies (Note 6) - - �3 198,372 2.742,011 $3,198.372 2.742.011 See accompanying notes. W • �3� TRUCKEE-DONNER PUBLIC UTILITY DISTRICT STATEMENT OF REVENUES AND EXPENSES Years Ended December 31 , 1977 and 1976 1977 1976 Restated D (Note 2) Operating revenues (Note 1) : Electric $2,013,601 $1,889,777 Water 246,455 189,690 2,260,056 2,079,467 Operating expenses: Power purchased 1 ,381 ,927 1 ,365 , 103 Transmission expense 50 , 891 25 ,914 Distribution expense 124,926 104,316 Consumer accounts expense 111,535 103,533 Administrative and general expenses 218 ,949 184,699 Depreciation expense 116,190 114, 148 Interest on long-term debt 15,040 23,873 2,019 ,458 1 ,921 ,586 ,.. Operating margins 240,598 157, 881 Non-operating revenue and expense: Interest income 8,426 15 ,522 Other income (expense) (428) 787 Non-operating margins 7,998 16 ,309 Net margins $ 248,596 174 .190 See accompanying notes. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT STATEMENT OF OPERATING MARGINS, NON-OPERATING MARGINS AND CAPITAL GAINS - Years Ended December 31 , 1977 and 1976 1 Other Equities Non- Operating operating Capital margins margins gains Total Balances at December 31 , 1975 $ 860,210 $126,048 $484,921 $610,969 Net margins for the year as restated (Note 2) 157 ,881 16,309 - 16,309 Balances at December 31 , 1976 $1 ,018,091 $142, 357 $484,921 $627 ,278 Net margins for the year 240,598 7,998 - 7,998 Balances at December 31 , 1977 11 ,258,689 150 355 lial.,921 $6353276 v-� See accompanying notes. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT �3 STATEMENT OF CHANGES IN FINANCIAL POSITION Years Ended December 31 , 1977 and 1976 1977 1976 D9(� Restated (Note 2) Funds were. provided by : Operations: Net margins $248,596 $174, 190 Depreciation expense not requiring current use of funds 116 , 190 114, 148 Net funds provided by operations 364,786 288,338 Construction and maintenance funds con- tributed to the District 16 ,808 - Customer advances utilized for construction 58,642 - Increase in long-term debt - 51 ,000 440,236 339 ,338 Funds were utilized for: Additions to utility plant 142 ,264 56,929 Payments on long-term debt 43 , 145 41 ,587 Additions to restricted funds 23 ,969 60,476 Excess of removal costs over (under) materials salvaged 886 (1 ,490) 210,264 157 ,502 Increase in working capital 1229 ,972 $181 ,836 Changes in components of working capital : Increase (decrease) in current assets: Cash $570, 808 $(49,422) Notes receivable - (5, 600) Refund receivable (42 , 166) 42 , 166 Accounts receivable 8 ,044 33, 535 Inventory (19,063) 2,263 Other current assets 5 ,093 1 ,289 522, 716 24,231 (Increase) decrease in current liabilities: Accounts payable (90, 110) 163,499 Deferred income - standby fee (47,862) - Consumer deposits (8 ,864) (9,604) Refund payable to consumers (115 , 143) - Accrued liabilities 30,765 3, 710 (292 , 744) 157 ,605 Increase in working capital $229 ,972 $181 ,836 See accompanying notes. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31 , 1977 and 1976 5V 0?,N 1 .' Organization and Accounting Policies ,s^ Organization The Truckee-Donner Public Utility District was orga- nized as a non-profit organization under the California Public Utility District Act to provide electric and water service to a portion of Nevada County described as Truckee and Donner Lake. Depreciation The provision for depreciation is provided using the straight-line method over the estimated useful lives of the utility plant in service. Average annual composite rates were 3.66% and 3.62% in 1977 and 1976 respectively. In general , retirements of utility plant and the cost of removal are charged to accumulated depreciation, which is also credited with any salvage value. The cost of renewals and betterments is charged to plant accounts. The cost of maintenance is charged to operating expense. Revenues The District does not accrue an estimate for the amount of revenues unbilled at the beginning or end of the period. Street lighting and hydrant service provided to various public departments without charge are not included in operating revenues. • f TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31 , 1977 and 1976 Or anization and Accounting Policies continued) Pension plan -contributory District maintains a non all employees benefit pension plan covering substantially It is the District' s who have at least one year of service. E policy to fund pension costs as accrued (See Note 5) • Utility Slant with Rural Utility plant is stated in conformity dministration Bulletin 181-1 under which: Electrification A . i a. No value is assigned to donated assets. b. Other assets are stated at cost less contributions in aid of construction. 2. Retroactive Ad ustment of Power Rates lier During 1977 the District' s electrical power supp electric rates by was denied an increase in its and wasle to refund the Federal Power Commission a eriod the unauthorized rates were in effect. T excess charges to consumers District received a cash refund of $166, 304 , including interest , of which $42 ,166 was applicable to 1976 expenses and $ 115 ,143 is refundable to consu mers. The 1976 financial statements have been restated to reflect this adjustment. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31 , 1977 and 1976 3 . Restricted Funds DRPF� r The District has collected and restrictively deposited funds for future uses as follows: Restricted Customer Advances Funds for Construction Dart Industries Water Agreement - the District has collected $40 per lot for future water source and storage facilities in the developers ' project. $167, 531 $167, 531 REA loan proceeds - placed in trust, to partially offset developers ' advances for future construction which were used for general operat- ing purposes. 34,618 Dart Industries water services settlement - the District has collected funds for anticipated future repairs of water lines f"^ constructed by Dart Industries 73,539 70 ,000 Facilities fees collected from customers for future instal- lation of services 5 ,750 5, 750 281 ,438 243,281 Other Restricted Funds: Loan principal and interest fund - in accordance with REA and Sierra Pacific Power Company loan agree- ments, principal and interest payments are to be placed on deposit until payment is due. 58,716 - Other 28 ,316 - $36 $243,281281 �" i TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31 , 1977 and 1976 DRAB- . 4 . Long-term Debt �.. REA bonds , secured by pledge of all assets: 1977 1976 First series 2% bonds, payable in annual amounts varying from $13,000 to $14,000 , in accord- ance with sinking fund require- ments, balance due July , 1994 $224,000 $237,000 Second series 2% bonds , payable in annual amounts varying from $3 ,000 to $5,000 , in accordance with sinking fund requirements, balance of $6 ,000 due May , 2002 94,000 97,000 Third series 2% bonds , net of undrawn funds of $65,426, payable in annual amounts varying from $3 ,000 to $5,000 , in accordance with sinking fund requirements, balance of $8,000 due May , 2004 49 ,574 52 ,574 367 574 1386,574 Note payable to Sierra Pacific Power Company is due in semi-annual installments of $9,213 including interest at a rate of 4.68%, with final payment due March , 1983. The net revenues (as defined) -of the Donner Lake Electric System are pledged as security . The agreement also requires the District to establish separate accounting records, bank accounts for the transactions of this system, and a trust fund for payments on the note. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31 , 1977 and 1976 4. Long-term Debt continued aP►�11 .� ,.. Assessment payable - sewer assessments payable over .a twenty year period plus interest at 6%, to Nevada County , California. Final payment due 1990. Equipment notes payable - notes payable to banks secured by computer equipment and a truck. Due in monthly installments including interest at 7% of $830 through September, 1980 and $356 thereafter through March, 1981. 5. Pension Plan The total pension expense for 1977 and 1976 was $17 ,227 and $8, 770 , respectively. In both years pension fund assets exceeded the actuari4lly computed present value of vested benefits. 6. Contingencies Dart Industries water agreement and related lawsuits In 1970 an agreement was signed between the District and Dart Industries for the purpose of providing water service to a Dart subdivision. The agreement required Dart to construct water source and storage facilities at Donner Lake. In December 1975 , subsequent to completion of the facilities, ownership was transferred to the District for future maintenance and operation. The Attorney General of the State of California has filed suit against the District and Dart to restrain them from using Donner Lake as a water source. Since this action claims no monetary damages, the District has no liability resulting from this action. Subsequent to the acceptance of the water system, a citizens TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31 , 1977 and 1976 6. Contingencies (continued) DWI. group has filed suit to have Dart reassume operation and maintenance of the water system. This action also claims no monetary damages to the District. In a related action a homeowners group filed suit against Dart claiming amounts in excess of $100,000,000 and Dart has in turn filed suit against the District and others seeking indemnity for all such claims. The outcome and potential impact on the District cannot presently be determined. TRUCKER-DONNER PUBLIC UTILITY DISTRICT COMBINED STATEMENT OF DEPARTMENTAL OPERATIONS For the year ended December 31, 1977 Electric Water Donner Tahoe Total Eliminations Truckee Lake Truckee Donner Operating revenues 22,260,056 $63,383 $1,631,657 $445,158 $188,559 $ 58,065 Operating expenses: Power purchased 1,381,927 1,161,004 220,923 - - Transmission expense 50,891 (54,699) 50,084 55,506 Distribution expense 124,926 66.499 48,551 6,448 3,428 Consumer accounts 111.535 56,430 32,139 17,244 5,722 expense Administrative and 218,949 (2,649) 82,574 57,610 46.949 34,465 general expense Depreciation expense 116,190 69,551 15,614 31,025 Interest on long-term 15,040 10,217 3,689 1,134 debt Other operating expenses (6,035) 6,035 2,019,456 63� ,383) 1,452,310 378,526 152,884 99,121•. Operating margins (loss) $2240�598 3 179,347 $ 66,632 35,675 41.056)