HomeMy WebLinkAbout2003-11-05 Agenda Packet - Board (18) AitA a vko
ANNUAL REPORT
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Water Operations
Summary Statement of Historical Operating Results
and Debt Service Coverage
Years Ending December 31, 1999 through 2002
1999 2000 2001 2002
Revenues S4,064,373 $4,542,516 $5,685,247 $T817,630
Maintenance and Operation Costs $2,439,953 $2,890,761 $3,736,379 $4,767,592
Net Revenues $1,624,420 $I,651,755 $1,948,868 $3,050,038
Debt Service (3) $1,098,158 $1,107,447 $1,121,1.93 $1,10%025
Debt Service Coverage 148% 149% 174% 27511/o
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Water Operations
Summary Statement of Projected Operating Results
and Debt Service Coverage
Years Ending December 31,2003 through 2006
2003 2004 2005 2006
Revenues (1) $7,209332 $7,353,518 $T500,588 $T650,588
Maintenance and Operation Costs (2) $5,533,405 $5,699,407 $5,870,389 $6,046,501
Net Revenues $L675,927 $1,654,111 $1,630,199 $1,604,087
Debt Service (3) $1,110,773 $1.110,021 $1,108,486 $1,111,161
Debt Service Coverage 150% 149% 147% 144%
(1) 2003 budget plus 2% annual increase thereafter
(2) 2003 budget plus 3% annual increase thereafter
(3) Includes the Series 1996 installment payments and Proposition 55 State loan repayments.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Water System Customers
Total Production Commercial Residential
Year (Million Gallons) Accounts Accounts
1998 1,280 439 6,784
1999 1,479 496 7,020
2000 1,672 500 7,186
2001 1,736 527 8,798
2002 2,198 555 10,896
The five largest water system customers in the District for the 12-month billing period ended
December 31,2002 are set forth below. The five largest users in the District accounted for 4.02%of
the Water System's gross revenues for 2002. The total amount of water sales in 2002 was
$5,661,064.50.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Five Largest Water System Customers
as of 12/31/02
% of Total
Customer/Account Total Usage/Gallons Total Sales Water Revenues
Tahoe Donner Association 48,458,950 $105,035.09 1.86%
Coyote Moon Golf Course 62,001,850 $ 44203.31 0.78%
Tahoe Truckee Unified
School District 20,009,350 $ 25,378.55 0.45%
Coachland Mobile Home Park 20,237,000 $ 31,310.69 0.55%o
Tahoe Forest Hospital 13,235,570 $ '-1,407.53 0.38%
Rates and Charges
The District currently recovers the cost of the Water System operation, maintenance and
replacement and capital expansion through a user fee system. The components of the user fees
currently imposed by the District are:
1. Water sales (charges which are divided into rates for residential and commercial
property).
2. Stand-by water availability charges.
3. Connection charges and facilities fees.
4. Miscellaneous fees and charges.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Financial Statements
December 31, 2002
(With Independent Auditors' Report Thereon)
Suite 2000
1211 South West Fifth Avenue
Portland, OR 97204
Independent Auditors' Report
The Board of Directors
Truckee Donner Public Utility District:
We have audited the accompanying balance sheet of Truckee Donner Public Utility District (the District)
as of December 31, 2002, and the related statements of revenues, expenses and changes in fund equity and
cash flows for the year then ended. These financial statements are the responsibility of the District's
management.Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America. 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.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the District as of December 31, 2002, and the results of its operations and its cash
flows for the year then ended in conformity with accounting principles generally accepted in the
United States of America.
As discussed in unaudited note 12 to the financial statements, fund equity as of the beginning of the year
has been restated.
The schedule of funding progress provided in note 9b is not a required part of the basic financial statements
but is supplementary information required by accounting principles generally accepted in the United States
of America. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a
whole. The supplementary information included in Exhibits I and II is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such information has not been
subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly,
we express no opinion on it.
April 11,2003
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TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Balance Sheet
December 31, 2002
Assets
Current assets:
Unrestricted funds(note 3):
General fund $ 2,113,904
Board designated funds 2,967,033
Accounts receivable(including unbilled amounts of
$1,292,068), less allowances for doubtful accounts of$36,237 2,813,778
Current portion of special assessment receivable(note 7) 438,947
Materials and supplies 530,659
Prepaid expenses and other current assets 418,507
Total current assets 9,282,828
Property,plant and equipment,net(note 2) 51,273,932
Land held for sale 610,000
Restricted funds(note 3) 3,949,206
Special assessment receivable, net of current portion(note 7) 11,286,211
Unamortized financing costs 753,510
Total assets $ 77,155,687
Liabilities and Fund Equity
Current liabilities:
Line of credit(note 4) $ 9,721,000
Current maturities of long-term debt(note 5) 944,183
Accounts payable 2,378,903
Customer deposits 234,075
Accrued interest 172,718
Accrued payroll 819,585
Accrued contract settlement(note 1) 26,000,000
Total current liabilities 40,270,464
Long-term debt(note 5) 18,851,345
Deferred revenue(note 6) 5,816,769
Total liabilities 64,938,578
Fund equity 12,217,109
Total liabilities and fund equity $ 77,155,687
See accompanying notes to financial statements.
2
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Statement of Revenues, Expenses and Changes in Fund Equity
Year ended December 31,2002
Operating revenues:
Sales to consumers $ 18,610,340
Standby fees 183,055
Connection fees 449,833
Other 439,048
Total operating revenues 19,682,276
Operating expenses:
Power purchases(note 1) 11,168,105
Contract settlement expense(note 1) 26,000,000
Operations and maintenance 4,089,026
Administrative and general 2,827,086
Consumer services 736,629
Depreciation 1,511,981
Total operating expenses 46,332,827
Net operating loss (26,650,551)
Nonoperating revenues(expenses):
Income from investments 690,824
Interest expense (954,800)
Contributed capital(note 1) 10,709,014
Net nonoperating revenues 10,445,038
Net loss (16,205,513)
Fund equity,beginning of year, as restated(see unaudited note 12) 28,422,622
Fund equity,end of year $ 12,217,109
See accompanying notes to financial statements.
3
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Statement of Cash Flows
Year ended December 31, 2002
Cash flows from operating activities:
Net operating loss $ (26,650,551)
Depreciation 1,511,981
Changes in operating assets and liabilities:
Accounts receivable (275,997)
Materials and supplies (73)
Prepaid expenses and other current assets (64,813)
Accounts payable 1,253,981
Accrued contract settlement 26,000,000
Customer deposits 5,325
Deferred revenue (116,106)
Accrued payroll 363,100
Net cash provided by operating activities 2,026,847
Cash flows from capital and related financing activities:
Additions to property, plant and equipment,and land held for sale (10,035,884)
Deposit on land sale 194,000
Principal payments on debt (821,928)
Proceeds from new debt 7,087,554
Interest payments on debt (885,066)
Contributed capital 2,322,121
Special assessment receipts 687,427
Net cash used in capital and related financing activities (1,451,776)
Cash flows from investing activities:
Proceeds from sale of investments 76,724
Interest received on investments 695,171
Net cash provided by investing activities 771,895
Net increase in cash and cash equivalents 1,346,966
Cash and cash equivalents,beginning of year 6,874,625
Cash and cash equivalents,end of year $ 8,221,591
Summary of significant non-cash activities:
Contributed capital assets $ 5,689 922
See accompanying notes to financial statements.
4
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31, 2002
(I) Organization and Summary of Significant Accounting Policies
(a) Organization
The Truckee Donner Public Utility District(the District)was formed and operates under the State of
California Public Utility District Act. The District is governed by a Board of Directors which
consists of five elected members. The District provides electric and water service to portions of
Nevada and Placer counties described as Truckee and Donner Lake. The electric and water service
operations are separately maintained and operated. These financial statements reflect the combined
electric and water operations of the District. All significant transactions between electric and water
operations have been eliminated. These eliminations include power purchases, rent for shared
facilities, and interest costs.
The District's blended component unit consists of an organization whose respective governing Board
is comprised entirely of the members of the District's Board of Directors. This entity is legally
separate, however financial support has been pledged and financial and operational policies may be
significantly influenced by the District. In accordance with Governmental Accounting Standards
Board Statement No. 14, The Financial Reporting Entity, this organization is reported as if it was a
part of the District's operations. Following is a description of the District's blended component unit:
Truckee Donner Public Utility District Financing Corporation: legal entity created to issue and
administrate Certificates of Participation on behalf of the District. See note 5.
Separate standalone financial statements are not available for the blended component unit described
above.
(b) Basis of Accounting and Revenue Recognition
The accounting policies of the District conform with accounting principles generally accepted in the
United States of America (GAA.P) as applied to government units. The Governmental Accounting
Standards Board (GASB) is the accepted standard-setting body for establishing governmental
accounting and financial reporting principles. The financial statements have been prepared using the
economic resources measurement focus and accrual basis of accounting.
The District applies accounting policies appropriate for a proprietary fund type. GASB Statement
No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental
Entities That Use Proprietary Fund Accounting, requires that governments' proprietary activities
apply all GASB pronouncements as well as the pronouncements of the Financial Accounting
Standards Board (FASB) and its predecessors issued on or before November 30, 1989, unless those
pronouncements conflict with or contradict GASB pronouncements. As allowed by GASB Statement
No. 20, the District has elected not to implement FASB Statements and Interpretations issued after
November 30, 1989.
5 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31, 2002
(c) Use of Estimates
The preparation of financial statements requires management of the District to make a number of
estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant items subject to such estimates and
assumptions include valuation allowances for receivables and adjustments to the carrying value of
inventories; recognition of environmental liabilities; and assets and obligations related to employee
benefits. Actual results could differ from those estimates.
(d) Property,Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation on plant and equipment is calculated
using the straight-line method over the estimated useful lives of the assets,which are as follows:
Distribution plant:
Water 2040 years
Electric 23-35 years
Computer software and hardware 4-5 years
Buildings and improvements 20-33 years
Equipment and furniture 10 years
It is the District's policy to capitalize interest related to significant construction projects. In 2002,
interest was capitalized in connection with the Donner Lake system improvements (see notes 2
and 7).
(e) Materials and Supplies
Materials and supplies are recorded at average cost.
(fl Unamortized Financing Costs
Certain costs related to borrowing funds are amortized over the term of the related borrowings using
the effective interest method.
(g) Operating Revenues
Revenues are recorded as meters are read on a cycle basis throughout each month for electric and
commercial water. Other water customers are billed on a flat-rate basis, and revenues are recorded as
billed. Also, the District records estimated revenues earned but not billed to customers as of the end
of the year. Revenues from connection fees are recognized upon completion of the connection.
Income that the District has earned through investing its excess cash is reflected within income from
investments when earned.
6 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31,2002
(h) Power Purchases
In 1999, the District entered into an agreement with Sierra Pacific Power Company(SPPC), whereby
SPPC will provide transmission services to the District through December 31, 2027. In addition, the
District purchases scheduling and dispatch services from Northern California Power Agency. These
purchases represented 6%of total purchased power costs in 2002.
From 1997 through 2001, the District entered into, and amended, various power purchase contracts
(collectively, the Contracts) with IDACORP Energy L.P., and its predecessors (collectively,
IDACORP). Through the Contracts, IDACORP provided substantially all of the power required by
the District. The latest amendment to the Contracts provided for the purchase of a 25 megawatt block
of power, at a rate of$72 per megawatt hour, through 2009. This amendment was approved during
the California power crisis of 2000 and 2001,a period of high prices and significant concern over the
long-term ability of utilities to secure adequate power resources. Subsequently, power prices have
experienced a substantial decline, making the Contracts economically undesirable for the District.
The District commenced legal action against IDACORP, arguing that the Contracts were not
executed in good faith due to the unusual circumstances of the California power crisis. In late 2002,
the District and IDACORP agreed in principle to settle their disputes and terminate the Contracts.
The settlement, which was formally executed on January 3, 2003, called for the District to pay
IDACORP a $26,000,000 contract settlement fee, to be paid by April4, 2003, plus interest. In
exchange, IDACORP agreed to terminate the Contracts, and also agreed to continue to provide
interim power to the District at a reduced rate of$42 per megawatt hour through March 31, 2003.
The provision of interim power will provide Truckee with sufficient time to secure replacement
power from a new provider. The management of the District believes that the terms of the settlement
will result in substantially reduced future purchased power costs for the District's ratepayers, as
compared to the terms of the original Contracts. The $26,000,000 contract settlement fee was fully
accrued as of December 31, 2002, with a corresponding charge to operating expenses for the year
then ended.
See note 11 for a discussion of the execution of an agreement in 2003 to secure a replacement power
supply.
(i) Contributed Capital
A portion of the District's property,plant and equipment has been obtained through amounts charged
to developers for plant constructed by the District; direct contributions of plant, equipment and
related property from developers and other parties(see Note 8, Glenshire Water Acquisition); as well
as assessments of local property owners (see Note 7, Donner Lake Water Company Purchase). These
items are recognized within property, plant and equipment as construction is completed for plant
constructed by the District based on the cost of the items, when received for contributed property,
plant and equipment based on the actual or estimated fair value of the contributed items, or upon
completion of the related project for development agreements. The District records amounts received
within nonoperating revenues when a legally enforceable claim is established. Until the District
meets the criteria to record the amounts described above as nonoperating revenue, any amounts
received are recorded within deferred revenue on the balance sheet.
7 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31, 2002
(j) Income Taxes
As a government agency,the District is exempt from payment of federal and state income taxes.
(k) Accounting Pronouncements Not Yet Implemented
In June 1999, the GASB issued Statement No. 34, Basic Financial Statements—and Management's
Discussion and Analysis —for State and Local Governments. Also, in June 2001, the GASB issued
Statement No. 37, Basic Financial Statements—and Management's Discussion and Analysis for
State and Local Governments: Omnibus, which amended certain provisions of GASB Statement
No. 34. These statements establish accounting and financial reporting standards for general purpose
external financial reports for governmental entities. The anticipated results of these statements will
be the inclusion of a Management's Discussion and Analysis section and certain formatting changes
to the basic structure of the financial statements. GASB Statements No. 34 and No. 37 are effective
for the District beginning fiscal year 2003.
In June 2001, the GASB issued Statement No. 38, Certain Financial Statement Note Disclosures.
This statement modifies,establishes and rescinds certain financial statement disclosure requirements.
GASB Statement No. 38 is effective for the District beginning fiscal year 2003. Given that this
statement primarily impacts financial statement disclosures, the District does not anticipate a
material impact to the financial position or operations of the District as a result of implementing this
standard.
h7 March 2003, the GASB issued Statement No. 40,Deposit and Investment Risk Disclosures, which
amended certain portions of GASB Statement No. 3. This statement establishes and modifies
disclosure requirements related to investment risks and is effective for the District beginning fiscal
year 2005. Given that this statement primarily impacts financial statement disclosures, the District
does not anticipate a material impact to the financial position or operations of the District as a result
of implementing this standard.
(1) Reclassifications
Certain amounts have been reclassified in the current year and are not reflected in the same accounts
as presented within the 2001 financial statements.
(m) Fund Equity
Fund equity is comprised of the cumulative capital contributed by third parties and the cumulative
net income(loss)retained by the District.
(n) Special Assessment Receivable
Special assessments represent amounts due from property owners within the Donner Lake
Assessment District for improvements made by the District pursuant to an agreement with the
property owners to improve their water quality. Amounts scheduled to be received within 12 months
of the balance sheet date are shown within current assets on the Balance Sheet. For additional
discussion of the Donner Lake Special Assessment, see Note 7, Donner Lake Water Company
Purchase.
8 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31, 2002
(2) Property,Plant and Equipment
Property,plant and equipment consists of the following at December 31, 2002:
Electric distribution facilities $ 14,968,740
Water distribution facilities 27,848,258
General plant 8,910,706
51,727,704
Less accumulated depreciation (16,460,809)
35,266,895
Construction work in progress 16,007,037
$ 51,273,932
A portion of the plant has been contributed to the District. When replacement is needed, the District
replaces the contributed plant with District-financed plant. Future rate increases may be necessary to pay
for these replacements.
During 2002, the District capitalized $223,962 of interest in connection with the Donner Lake system
improvements(see note 7).
9 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31,2002
(3) General,Board Designated and Restricted Funds
Cash and investments are recorded in funds as required by the District's certificates of participation
indentures. Restricted funds represent funds that are restricted by certificates of participation covenants or
third party contractual agreements. Funds that are allocated by resolution of the board of directors are
presented as board designated funds.Board designated funds are a component of unrestricted funds as their
use may be redirected at any time by approval of the Board. General funds are derived from the operations
of the District and are unrestricted. The December 31, 2002 balances of individual restricted and
unrestricted funds are as follows:
Electric Water Total
Unrestricted assets:
General fund $ 2,113,904 — 2,113,904
Board designated funds:
Building fund 1,431,358 465,466 1,896,824
Storm damage fund 311,522 — 311,522
Electric rate reserve 424,219 — 424,219
Reserve for future meters — 44,430 44,430
Prepaid connection fees — 74,180 74,180
Land sale trust fund — 215,858 215,858
Total board designated funds 2,167,099 799,934 2,967,033
Restricted funds:
Certificates of participation 271,333 824,484 1,095,817
Facilities fees 392,709 67,738 460,447
Revenue fund — 118,187 118,187
DWR-Prop 55 reserve fund — 216,392 216,392
Glenshire escrow accounts — 290,066 290,066
Bridge Street tank escrow account — 126,837 126,837
Donner Lake Assessment District
Improvement Fund — 1,483,360 1,483,360
Other(area improvement funds) — 158,100 158,100
Total restricted funds 664,042 3,285,164 3,949,206
Total general,board
designated and restricted
funds $ 4,945,045 4,085,098 9,030,143
10 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31,2002
The above funds are comprised of the following cash, cash equivalents and investments as of
December 31:
2002
Cash and cash equivalents $ 8,221,591
Investments-repurchase agreement 808,552
Total $ 9,030,143
Cash and cash equivalents of $8,221,591 at December 31, 2002 consist primarily of investments in the
state pooled fund and certificates of deposit. For purposes of the statements of cash flows, the District
considers all highly liquid instruments with original maturities of three months or less to be cash
equivalents.
The District follows GASB No. 31,Accounting and Financial Reporting for Certain Investments and for
External Investment Pools. This standard establishes fair value standards for investments. The cost of the
District's investments approximated their market values as of December 31, 2002.
The District's investments are categorized to provide an indication of the level of custodial credit risk
assumed by the District at December 31, 2002. Category 1 includes investments that are insured or
registered, or for which the securities are held by the District or its agent in the District's name. Category 2
includes uninsured and unregistered investments for which the securities are held by broker's or dealers,or
by their trust department agent, but not in the District's name. At December 31, 2002, cash, cash
equivalents and investments are considered to be risk category 1.
(a) General Funds
General funds are derived from the electric operations of the District and are unrestricted.
(b) Board Designated Funds
Building Fund
In compliance with Board rules,the District maintains a building fund to help pay for the interest and
principal of the borrowed funds used for the District office complex.
Storm Damage Fund
The District maintains a designated fund to provide for storm damages that may occur in the future.
Electric Rate Reserve
In compliance with Board rules, the District has created an electric rate stabilization fund in
anticipation of future costs. During 2002, approximately $2,067,000 was utilized to offset increased
power costs in lieu of raising electric rates.
11 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31, 2002
Reserve for Future Meters
Prior to 1992, connection fees charged to applicants for water service included an amount which was
maintained in a designated fund to offset the cost of future metering. As meters are installed, these
funds are used to pay for related costs.
Prepaid Connection Fees
In compliance with Board rules, the District has set aside prepaid connection fees to cover
installation costs of water services.
Land Sale Trust Fund
The District's Board has set aside certain funds from the sale of excess properties to pay for future
capital improvement projects.
(c) Restricted Funds
Revenue Fund: Water
The water revenue fund is derived from the operations of the water system, and is restricted as to use
by covenants of the District's certificates of participation.
Certificates of Participation: Electric
The terms of the Electric Division's Certificates of Participation require a reserve fund as security for
each principal and interest payment as they are due. A reserve fund is set aside for the highest annual
principal and interest payment over the life of the borrowed amount. All of these reserve funds are
held by BNY Western Trust Company.
Certificates of Participation: Water
The terms of the Water Division's Certificates of Participation require a restricted fund to provide for
payment of principal and interest as they are due. The Water Division's Certificates of Participation
debt funds are held by BNY Western Trust Company.
Department of Water Resources(DWR)Prop 55 Reserve Fund
Regulations relating to the Department of Water Resources loan require the accumulation of a
reserve fund as security for each principal and interest payment as they are due. Annual payments
into the fund are required for each of the first ten years beginning April 1, 1996. The total reserve
fund will equal two semi-annual payments. These funds will be set aside for the life of the borrowed
amount. All of the reserve funds are invested in the State of California Local Agency Investment
Fund.
Facilities Fees
The District charges facilities fees to applicants for new service to cover the costs of infrastructure
needed to meet their systems demand. The use of such funds is restricted by California state law.
12 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31, 2002
Glenshire Escrow Accounts
As described in more detail in Note 8, the District received cash as part of its acquisition of the
Glenshire water system. The terms of the acquisition agreement specify that the cash be utilized for
the construction of improvements to the Glenshire water system.
Bridge Street Tank Escrow Account
During 2002, the District borrowed $1,500,000 under an installment loan for the construction of the
Bridge Street tank. In accordance with the terms of the loan agreement, the loan proceeds were
deposited into an escrow account. The District is allowed to draw upon such funds as valid
construction costs are incurred.
Donner Lake Special Assessment District Improvement Fund
In 2001, the District established the Donner Lake Special Assessment District Improvement Fund to
account for all funds received from the Special Assessment Receivable, which will be used to pay
the debt service costs related to the Donner Lake Water System project.
Other(Area Improvement Funds)
The District receives funds from the County of Nevada which are to be used only for improvements
to specific areas within the District's boundaries in Nevada County. These areas include various
Nevada County assessment districts.
(4) Lines of Credit
Lines of credit consisted of the following at December 31, 2002:
US Bank Line of Credit—Water, interest rate of 62%of prime(2.635%at
December 31, 2002),due in full in September 2003, secured by the Special
Assessment Receivable. $ 6,980,000
US Bank Line of Credit—Water, interest rate of 66%of prime(2.805%at
December 31, 2002),due in full in July 2003, secured by the Special
Assessment Receivable. 2,741,000
Total $ 9,721,000
See discussion in note 7,regarding the intended refinancing of the lines of credit discussed above.
13 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31, 2002
(5) Long-Term Debt
Long-term debt consisted of the following at December 31, 2002:
Certificates of Participation—Electric, interest rates of
2.75%to 5375%,annual principal payments of
$125,000 beginning in 1994, increasing each year to
$250,000 when finally due in 2012. $ 2,030,000
Certificates of Participation—Water, interest rates of
5.25%to 5.4%, annual principal payments of$235,000
beginning in 1999, increasing each year to $745,000
when finally due in 2021. 9,410,000
Department of Water Resources, interest rate of 318%,
semiannual interest payments due through 2021, and
semiannual principal payments of$153,094 beginning
in 1996 and continuing through 2021, secured by real
and personal property. 4,262,175
histallment loans, interest rates ranging from 5.4%to
6.23%, various payment terms and due dates, secured
by equipment. 4,143,632
19,845,807
Less:
Current maturities (944,183)
Unamortized premium/discount on debt,net (50,279)
$ 18,851,345
During 1993, Truckee Donner Public Utility District Financing Corporation issued $3,245,000 of
Certificates of Participation to refund the construction loan for a new office and warehouse facility for the
District.The terms of the new Certificates call for lease payments to be made only from the net revenues of
the Electric Division. These revenues are required to be at least equal to 110% of the debt service for each
year. The outstanding balance on these Certificates was $2,030,000 at December 31, 2002. See note I 1 for
discussion of the subsequent payoff of these Certificates.
During 1996, Truckee Donner Public Utility District Financing Corporation issued $10,905,000 of
Certificates of Participation to refund Certificates issued in 1991.The 1991 Certificates were to finance the
repair and construction of various water system improvements for the District. The terms of the new
Certificates call for payments to be made only from the net revenues of the Water Division and the debt is
secured by this revenue. These revenues are required to be at least equal to 110% of the debt service for
each year. The outstanding balance on these Certificates was $9,410,000 at December 31, 2002.
14 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31, 2002
Under the Safe Drinking Water Bond Law of 1986, the Department of Water Resources provided a
$5,000,000 loan to the District in 1993. The loan was to finance capital improvements to the public water
supply and to reduce water quality hazards. The terms of the loan call for payments to be made only from
the net revenues of the Water Division,which are required to be sufficient to pay the debt service for each
year.The loan is secured by the net revenues of the Water Division.
As a normal part of its operations, the District finances the acquisition of certain assets through the use of
installments loans. As of December 31, 2002, installment loans of$4,143,632 were outstanding from the
purchase of vehicles and certain water system improvements.
Scheduled principal payments on debt are:
2003 $ 944,183
2004 984,672
2005 992,091
2006 983,173
2007 996,992
Thereafter 14,944,696
$ 19,845,807
(6) Deferred Revenue
For transactions that have not yet met revenue recognition requirements, revenues are deferred and
reflected in the accompanying balance sheets. As of December 31, 2002, deferred revenues consist of
unearned special assessment revenues (see note 7), development agreement deposits, connection fees and
other deposits as follows:
Unearned special assessments $ 3,144,043
Development agreement deposits 2,346,015
Connection fees and other deposits 326,711
$ 5,816,769
(7) Donner Lake Water Company Purchase
In 2001, the District took over Donner Lake Water Company by initiating an eminent domain lawsuit. As a
part of the takeover, the District agreed to replace the entire water system, which is estimated to cost
approximately$13,000,000. The District agreed to initially finance the replacement through obtaining third
party financing and the Donner Lake property owners have agreed to reimburse the District for the full
costs of the replacement. Therefore an assessment has been placed on each Donner Lake homeowner's
property for a pro-rata share of the $13,000,000 payable immediately, or, for those not paying the
assessment in full, over 20 years at approximately a 3.5% interest rate. One twentieth of the assessment,
plus interest, is added to each property owner's annual property tax bill, if they have not previously paid
the assessment in full, and is collected by Nevada and Placer Counties on behalf of the District. The
Donner Lake homeowner's property values secure the$13,000,000 assessment.
15 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31,2002
In the event that the project costs more than anticipated and consequently the amount collected through the
assessment is not enough to recover all of the District's costs, the District will recover any shortfall by
adding a surcharge to each property owner's bill until all costs are recovered. As of December 31, 2002,
the amount outstanding from the property owners was $11,725,158, of which $438,947 is due next year.
These amounts are shown in the caption Special Assessment Receivable in the accompanying balance
sheet. Per Board resolution, all funds received from property owners are set aside in the Donner Lake
Special Assessment District Improvement Fund until such time as the funds will be used to fund the debt
service on the District's initial third party debt. During 2001, the District obtained third party bridge
financing for the project in the form of a $7,000,000 line of credit, of which$6,980,000 was outstanding as
of December 31, 2002. Also, during 2002 the District obtained additional bridge financing for the project
in the form of a $3,000,000 line of credit of which $2,741,000 was outstanding as of December 31, 2002
(see note 4). The District is in the process of obtaining permanent financing in the form of a State
Revolving Fund Loan for approximately $12,000,000 at an anticipated rate of 2.5%. If this financing
arrangement does not go through, the District intends to issue Certificates of Participation to finance the
project costs.
As part of the take over, the District obtained a third party appraisal of the water system. Based upon the
appraisal, the District paid $750,000 for the system. The previous owner of Donner Lake Water Company
is asserting that the actual value of the water system is$7,000,000. The District is in the discovery phase of
litigation and is not able to determine if it will be liable for an additional amount at this time. The District
believes that it will prevail and will not have to make an additional payment. However, if the court rules in
favor of the previous owner, the District will assess the additional amount to the Donner Lake property
owners and account for the additional cost as an increase to plant.
(8) Glenshire Water System Acquisition
Prior to 2002, the residents of the Glenshire water service area in the eastern portion of the town of
Truckee were served by the Glenshire Mutual Water Company (GMWC), an independent nonprofit entity
originally created by the Glenshire residents. The Glenshire area had been experiencing problems with the
quality of its water, and thus the GMWC, on behalf of the residents, requested that the District assume
responsibility for the improvement of the Glenshire water system, and for its ongoing operations.
Therefore, in early 2002 the District agreed to accept the donation of the Glenshire water system assets
from the GMWC, in exchange for bringing the system up to the District's existing standards. The donated
assets were recorded as cash and fixed assets in the accompanying balance sheet and as contributed capital
in the statement of revenues, expenses and changes in fund equity. The improvements,originally estimated
to total$2,700,000,have been in process throughout 2002, and are anticipated to be completed in 2003.
16 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31, 2002
(9) Employee Benefit Plans
(a) .Pension Plan
The District contributes to its own pension plan for all District bargaining unit employees who have
at least one year of service. The plan is a single employer defined benefit plan, and provides specific
benefits to employees at retirement. Benefits vest to participants at the rate of 10% per year of
service for the first four years and 20% for years five through seven. Employees who retire at or after
age 65 with ten years of credited service' are entitled to receive monthly benefits equal to a set
percentage of the individual's average monthly compensation. Employees who retire with 20 years
of service will receive 40% of their average monthly compensation. Benefits are reduced pro rata for
less than 20 years of credited service, and increased by 0.5% of average monthly compensation for
each year of service in excess of 20 years. Employees are not required to make contributions to the
plan. The plan also provides for death, disability, and early retirement benefits. The Board of
Directors of the District retains full authority to establish and amend benefits under the Plan.
Separate financial statements of this plan are not available.
The plan requires the District to make adequate contributions so that enough funds are available to
pay benefits to employees when due. The actuarial valuations for the plan indicated that a
contribution of$277,141 was necessary for 2002 to meet the minimum funding requirements. The
projected unit credit method is used to determine the required contributions. Following is
information regarding the District's annual pension costs for the plan:
Percentage
of annual
Annual pension cost Net pension
Actuarial valuation date pension cost contributed obligation
December 31, 2000 $ — 100% $ —
December 31, 2001 167,611 100% —
December 31, 2002 277,141 100% —
The District follows GASB Statement No. 27, Accounting for Pensions by State and Local
Governmental Employers. The required contribution as of December 31, 2002 was computed as part
of an actuarial valuation. Significant actuarial assumptions include:
Rate of return on the investment of present and future assets 7.0°%
Annual salary increase 2.5%
Inflation rate 2.0%
Amortization method level dollar
Amortization period 5 years
The actuarial value of assets is equal to the fair value of such assets.
17 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31,2002
(b) Schedule of Funding Progress(unaudited, required supplementary information)
The following is a funding schedule for the Truckee Donner Public Utility District Defined Benefit
Plan:
Actuarial Unfunded
Actuarial accrued Annual AAL as a
Actuarial value liability Funded covered Unfunded percentage
valuation date of assets (AAL) ratio payroll AAL of payroll
12/31/00 $ 1,429,300 $ 1,660,900 86% $ 1,815,900 $ 231,600 13%
12/31/01 1,475,600 1,955,200 75% 2,106,300 479,600 23%
12/31/02 1,290,800 1,986,900 65% 2,083,900 696,100 33%
(c) Deferred Compensation Plan
The District maintains a deferred compensation plan (the Plan) for certain employees. The District
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. In accordance with GASB No. 32, the District has not reflected the
Plan's assets and corresponding liabilities(if any) on the accompanying balance sheets.
(d) 401(a)Plans
The District sponsors a 401(a) defined contribution plan (401(a) Plan) for District management
(effective August 1, 2000) and bargaining unit employees (effective January 1, 2000). Contributions
are made by the District on the employees' behalf and employees are immediately vested in the
401(a) Plan. The District contributes 10% of earnings on behalf of management and exempt
employees as part of the management 401(a) Plan, and 5% of earnings for employees in the
bargaining unit 401(a) Plan. Such contributions totaled$223,117 in 2002. The Board of Directors of
the District retains full authority to establish and amend benefits under the 401(a)Plan.
The District has no liability for losses under the 401(a) Plan but does have the duty of due care that
would be required of an ordinary prudent investor. The District has not reflected the 401(a) Plans'
assets and corresponding liability(if any)on the accompanying balance sheets.
(e) Post Employment Health Care
The District began providing Post Employment Health Care on January 1, 2000 to all employees,
and their qualified dependents who retire from the District on or after attaining age 60 with service of
at least 20 years.The Board of Directors of the District retains full authority to set the provisions and
contribution obligations related to this benefit. For years worked which are less than 20, the benefit
is reduced by 5% for each year. For retirement prior to age 60, the benefit is reduced by 2% for each
year. Currently four individuals meet those eligibility requirements. The District pays insurance
premiums for medical, dental, and prescription drugs. Expenditures for post employment health care
benefits are recognized when premiums are paid. The cost of post employment health care was
$17,673 for 2002.
18 (Continued)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Notes to Financial Statements
December 31,2002
(10) Contingencies
The District is one of a group of approximately 50 utilities involved in a matter relating to the disposal of
small amounts of PCB wastes at two sites. The clean up of the two sites falls under the federal EPA
Superfund Program. The District believes it has resolved this matter with the EPA, with the District
funding its portion of the cleanup expenses, as long as expenses do not exceed $60,000,000. If cleanup
expenses exceed $60,000,000, the District will be liable for their portion of the additional cost. The
District's management believes that it will not incur any additional liability.
(11) Subsequent Events
On March 3, 2003, the District paid in full all amounts due under the Electric department certificates of
participation.
On March 7, 2003, the District entered into a power purchase agreement with Constellation Power Source,
Ina (CPS), under which CPS will supply the District's power needs for a 5-year contractual term. This
power supply replaces the interim power being provided to the District by IDACORP under the terms of
the related settlement agreement (see note 1). The agreement with CPS provides for a block purchase of
power at $49.95 per megawatt hour that is designed to cover the District's projected monthly power
requirements. In addition, the agreement contains call and put options that provide the District with the
flexibility to buy additional power or sell excess power, depending upon the District's actual monthly
power needs.
On April 3, 2003, the District issued $26,265,000 of Certificates of Participation, the proceeds of which
were utilized to pay the amounts due to IDACORP for the contract settlement fees (see note 1), as well as
to cover the associated costs of issuance.
(12) Restatement(Unaudited)
During the year, the District determined that capital contributions related to the Donner Lake Water
Company purchase, which had previously been classified as nonexchange transactions and reported as
deferred revenue, should have been classified as exchange transactions and reported as contributed capital
(nonoperating revenues). Accordingly,beginning fund equity has been restated as follows:
Fund equity, beginning of year, as previously reported $ 22,175,137
Adjustment 6,247,485
Fund equity,beginning of year, as restated $ 28,422,622
19
Exhibit I
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Divisional Combining Balance Sheet
December 31,2002
(Unaudited-See accompanying independent auditors report)
Electric Water
Assets operations operations Eliminations Total
Current assets:
Unrestricted funds:
General fund $ 2,113,904 — — 2,113,904
Board designated funds 2,167,099 799,934 — 2,967,033
Accounts receivable 1,927,899 900,793 (14,914) 2,813,778
Current portion of special assessment receivable — 438,947 — 438,947
Materials and supplies 396,234 134,425 — 530,659
Prepaid expenses and other current assets 140,205 278,302 418,507
Total current assets 6,745,341 2,552,401 (14,914) 9,282,828
Property,plant and equipment,net 15,504,381 35,769,551 — 51,273,932
Land held for sale — 610,000 — 610,000
Restricted funds 664,046 3,285,160 — 3,949,206
Special assessment receivable,net of current portion — 11,286,211 -- 11,286,211
Unamortized financing costs 143,896 609,614 753,510
Total assets $ 23,057,664 54,112,937 (14,9t4) 77,155,687
Liabilities and Fund Equity
Current liabilities:
Line of credit $ — 9,721,000 — 9,721,000
Current maturities of long-term debt 264,214 679,969 — 944,183
Accounts payable 1,286,755 1,107,062 (14,914) 2,378,903
Customer deposits 184,612 49,463 — 234,075
Accrued interest 47,125 125,593 — 172,718
Accrued payroll 631,035 188,550 — 819,585
Accrued contract settlement 26,000,000 — 26,000,000
Total current liabilities 28,413,741 11,871,637 (14,914) 40,270,464
Long-term debt 2,455,028 16,396,317 — 18,851,345
Deferred revenue 2,129,921 3,686,848 5,816,769
Total liabilities 32,998,690 31,954,802 (14,914) _64,938,578
Fund equity (9,941,026) 22,158,135 — 12,217,109
Total liabilities and fund equity $ 23,057,664 54,112,937 (14,914) 77,155,687
20
Exhibit I1
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Divisional Combining Statement of Revenues, Expenses and Changes in Fund Equity
Year ended December 31, 2002
(Unaudited - See accompanying independent auditors'report)
Electric Water
operations operations Eliminations Total
Operating revenues:
Sales to consumers $ 12,891,095 5,719,245 — 18,610,340
Interdivisional sales 1,420,193 997 (1,421,190) —
Standby fees 24,015 159,040 — 183,055
Connection fees 242,282 207,551 — 449,833
Other 167,242 271,806 — 439,048
Total operating revenues 14,744,827 6,358,639 (1,421,190) 19,682,276
Operating expenses:
Power purchases 11,093,289 1,184,833 (1,110,017) 11,168,105
Contract settlement expense 26,000,000 — — 26,000,000
Operations and maintenance 1,955,759 2,133,267 — 4,089,026
Administrative and general 1,946,205 1,192,054 _ (311,173) 2,827,086
Consumer services 485,335 251,294 — 736,629
Depreciation 737,934 774,047 — 1,511,981
Total operating expenses 42,218,522 5,535,495 (1,421,190) 46,332,827
Net operating income (loss) (27,473,695) 823,144 — (26,650,551)
Nonoperating revenues (expenses):
Income from investments 174,472 516,352 — 690,824
Interest expense (173,127) (781,673) — (954,800)
Contributed capital 259,036 10,449,978 — 10,709,014
Total nonoperating income 260,381 10,184,657 — 10,445,038
Net income(loss) (27,213,314) 11,007,801 — (16,205,513)
Fund equity, beginning of year, as restated 17,272,288 11,150,334 — 28,422,622
Fund equity, end of year
$ (9,941,026) 22,158,135 — 12,217,109
21