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HomeMy WebLinkAbout2FINANCIAL STATEMENTS TRUCKEE DONNER PUBLIC UTILITY DISTRICT CONSOLIDATED STATEMENTS OF NET POSITION December 31, 2016 and 2015 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES CURRENT ASSETS Funds Operating Designated Restricted Total Funds Accounts receivable, net Unbilled revenues Accrued interest receivable Materials and supplies Prepaid expenses Other Total Current Assets NON -CURRENT ASSETS Other Non -Current Assets Restricted funds Special assessments receivable Other Total Other Non -Current Assets DEFERRED OUTFLOWS OF RESOURCES Pension Unamortized loss on refunding Unamortized redemption premium Total Deferred Outflows of Resources CAPITAL ASSETS Utility plant Accumulated depreciation Construction work in progress Total Capital Assets TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 2016 $ 71 8521130 10, 759, 538 43293,285 22, 904, 953 1, 820,173 2,9111201 5,044 6,981 459,264 96,365 28, 913, 981 1, 876, 032 3,692,876 925, 520 61494,428 4, 005, 050 609, 580 149,934 4,764,564 182,268,793 (63, 372, 738) 41706, 276 123, 602, 331 2015 $ 6,616,354 11, 914, 287 410611391 22, 592, 032 1, 639, 096 2, 76 31757 70,856 6391442 31902 85,715 28, 230, 800 1, 900, 036 4, 363,790 997,853 7,261,679 2, 632, 077 642,382 3, 274, 459 175, 615, 074 (58, 042, 448) 41844,042 122, 416, 668 $ 163, 775, 304 $ 161,183, 606 The accompanying notes are an integral part of these consolidated financial statements. Page 10 TRUCKEE DONNER PUBLIC UTILITY DISTRICT CONSOLIDATED STATEMENTS OF NET POSITION December 31, 2016 and 2015 NET POSITION, LIABILITIES, AND DEFERRED INFLOWS OF RESOURCES CURRENT LIABILITIES Other Liabilities Accounts payable Customer deposits Other Total Other Liabilities Current Liabilities Payable From Restricted Assets Current portion of long-term debt Accrued interest payable Total Current Liabilities Payable from Restricted Assets Total Current Liabilities NON -CURRENT LIABILITIES Long-term debt, net of discounts and premiums Net pension liability OPEB liability Installment loans Unearned revenues Total Non -Current Liabilities Total Liabilities DEFERRED INFLOWS OF RESOURCES Pension Total Deferred Inflows of Resources NET POSITION Net investment in capital assets Restricted for debt service Unrestricted Total Net Position TOTAL NET POSITION, LIABILITIES, AND DEFERRED INFLOWS OF RESOURCES 2016 2015 $ 2, 506, 514 $ 2, 983,101 468,168 918,577 31893,259 3,206,043 163,159 313691202 71262,4611 27, 584, 323 10, 250, 329 7191217 58,403 31073,507 4116851779 423, 502 7661699 4,173, 302 2, 935, 919 191.555 3,127,474 713009776 30,209,240 8, 0131400 374,530 014401 709 41, 823, 879 48,948,240 49,124,655 1.597.126 2.341.737 1,597,126 2,341,737 93, 421, 545 6,011,469 13, 796, 924 113, 229, 938 89, 271, 509 5, 762,124 3,581 109, 71214 $ 163,775,304 $ 161,183,606 The accompanying notes are an integral part of these consolidated financial statements. Page 11 THIS PAGE IS INTENTIONALLY LEFT BLANK TRUCKEE DONNER PUBLIC UTILITY DISTRICT CONSOLIDATED STATEMENTS OF REVENUES,EXPENSES, AND CHANGES IN NET POSITION December 31, 2016 and 2015 OPERATING REVENUES Sales to customers Standby fees Cap and trade proceeds Other Total Operating Revenues OPERATING EXPENSES Purchased power Operations and maintenance Consumer services Administration and general Pension expense OPEB expense Depreciation Total Operating Expenses Operating Income NON -OPERATING REVENUE (EXPENSES) Investment income Interest expense Amortization Other non -operating expenses Gain (loss) on disposition of assets Total Non -Operating Revenue (Expenses) Income Before Contributions CAPITAL &OTHER CONTRIBUTIONS CHANGE IN NET POSITION Net Position -Beginning of Year NET POSITION -END OF YEAR 2016 2015 $ 33,026,587 $ 30,818,856 160, 670 1,172,306 1, 244,146 35, 603, 709 11,511,308 679517273 251303422 4,331,827 11220,591 169, 010 9651402 1, 31729 327 976, 997 11, 348, 241 6, 041271 2,1591522 4,054,439 65,373 719,218 - 6,237,033 519607520 33,1011672 30, 892, 366 21502,037 21084,631 368, 761 (897, 993) (12,599) (1457078) (11514) (688,423) 1,813,614 385, 731 (943, 034) 15, 355 (251, 753) 30, 990 (762, 711) 1,321,920 1, 699,110 1, 0510 3,512,724 2,752,430 109, 71214 106, 964, 784 $1131229,938 $109,717,214 The accompanying notes are an integral part of these consolidated financial statements. Page 13 TRUCKEE DONNER PUBLIC UTILITY DISTRICT CONSOLIDATED STATEMENT OF CASH FLOWS December 31, 2016 and 2015 CASH FLOWS FROM OPERATING ACTIVITIES Received from customers Paid to suppliers for goods and services Paid to employees for services Net Cash Flows from Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Debt issuance costs Proceeds from refunding Principal payments on long-term debt Interest payments on long-term debt Net Cash Flows from Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital expenditures for utility plant Cost of disposal of property net of salvage Capital contributions, connection and facility fees Special assessments receipts Debt issuance costs Proceeds from refunding Principal payments on long-term debt Interest payments on long-term debt Cash Flows From Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Interest income received Cash Flows from Investing Activities Net Change in Cash and Cash Equivalents CASH AND CASH EQUIVALENTS —Beginning of Year CASH AND CASH EQUIVALENTS —END OF YEAR NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES 2016 2015 $ 35,177, 778 $ 32, 950, 562 (19,476,138) (181507,965) (6,432, 772) (61159, 526) 91268, 868 812831071 78, 838 5,353,413 - (6,102, 838) (593, 000) (250,584) (301,725) (921,171) (894, 725) (7, 421,152) (78,431) 11356,731 670,914 661240 3,128, 760 (51497,159) (648, 788) (8,422,885) 406, 993 406, 993 331,805 (9,014,992) (109,189) 117031180 6481531 251,754 1417811118 (1815531445) (11309, 070) (1116021113) 413, 723 413, 723 (3, 800, 044) 22, 593, 595 26, 393, 639 $ 22,925,400 $ 22,593,595 Developer and customer added capital assets $ 189,176 $ 167,277 Recognition of prior period unearned revenues $ 3,309,061 $ 3,014,152 The accompanying notes are an integral part of these consolidated financial statements. Page 14 TRUCKEE DONNER PUBLIC UTILITY DISTRICT CONSOLIDATED STATEMENT OF CASH FLOWS December 31, 2016 and 2015 RECONCILIATION OF OPERATING INCOME TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income Noncash items included in operating income Depreciation and amortization Depreciation charged to other accounts Pension expense -GASB 68 Deferred Pension Contributions - GASB 68 OPEB Changes in assets and liabilities Accounts receivable and unbilled revenues Materials and supplies Prepaid expenses and other current assets Accounts payable Customer deposits Other current liabilites NET CASH FLOWS FROM OPERATING ACTIVITES RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE BALANCE SHEET Operating Designated Restricted funds - current Restricted funds -non-current Total Cash and Investments Less: Long-term investments Mark to market adjustments TOTAL CASH AND CASH EQUIVALENTS 2016 $ 21502,037 6,237,033 2641368 80,590 (1,061,245) 719,218 (325, 520) (17, 539) (22, 362) (476, 588) 1668 2015 $ 21084,631 51960, 520 2671722 565,373 (721, 340) (236,166) (4, 625) (182, 620) 397, 822 2,152 224,208 149,602 $ 9, 268, 868 $ 8, 283, 071 $ 7, 852,130 $ 6, 616, 354 10, 759, 538 11, 914, 287 412931285 41061,391 11876,032 11900,036 241780,985 24,492,068 (1,698,880) (1,698,880) (156,705) (199,593) $ 22,925,400 $ 22,593,595 The accompanying notes are an integral part of these consolidated financial statements. Page 15 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 1 —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. 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 and rent for shared facilities. The District's blended component units consist of organizations whose respective governing boards are comprised entirely of the members of the District's Board of Directors. These organizations are reported as if they are a part of the District's operations. The entities are legally separate; however, in the case of the Truckee Donner Public Utility District Financing Corporation, financial support has been pledged and financial and operational policies may be significantly influenced by the District. The financial results of these blended component units are not included in this report. However, the District has issued an additional consolidated report that includes these component units. A copy of that report can be requested from the District. The following is a description of the District's blended component units: Truckee Donner Public Utility District Financing Corporation is a legal entity that was created to issue and administer Certificates of Participation on behalf of the District. (See note 5). Separate standalone financial statements are not available for the blended component units described above. Unless noted, disclosures relating to the component units are the same as for the District. 8. ACCOUNTING POLICIES The financial statements of the District have been prepared in conformity with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets and liabilities, that are a result of exchange and exchange like transactions, are recognized when the exchange takes place. The accompanying notes are an integral part of these consolidated financial statements. Page 16 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 1 —ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. USE OF ESTIMATES Preparation of financial statements inconformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Actual results could differ from those estimates. D. CASH AND CASH EQUIVALENTS For the purpose of the accompanying statement of cash flows, the District considers all highly liquid instruments with original maturities of three months or less when purchased to be cash equivalents. E. INVESTMENTS The District pools cash and investments. The District's investment policy allows for investments in instruments permitted by the California Government Code and/or the investments permitted by the trust agreements on District financing. The District's investment policy contains provisions intended to limit the District's exposure to interest rate risk, credit risk, and concentration of credit risk. Investment income from pooled investments is allocated to all funds in the pool. Interest is allocated on the basis of month end cash amounts for each fund as a percentage of the total balance. The District categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an assets fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The District does not have any investments that are measured using Level 3 inputs. F. DESIGNATED ASSETS The board has designated certain resources for future capital projects, replacements, and operational needs. G. RESTRICTED ASSETS Restricted assets are assets restricted by the covenants of long-term financial arrangements or other third party legal restrictions. Restricted assets are used in accordance with their requirements and where both restricted and unrestricted resources are available for use, restricted resources are used first and then unrestricted as they are needed. H. ACCOUNTS RECEIVABLE AND ALLOWANCES FOR DOUBTFUL ACCOUNTS Accounts receivable are recorded at the invoiced amount and are reported net of allowances for doubtful accounts of $34,300 and $51,000 for 2016 and 2015, respectively. 1. MATERIALS AND SUPPLIES Materials and supplies are recorded at average cost. The accompanying notes are an integral part of these consolidated financial statements. Page 17 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 1 —ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) J. DEBT PREMIUM, BOND ISSUANCE COSTS, AND DISCOUNTS Original issue and reacquired bond premiums and discounts relating to revenue bonds are amortized over the terms of the respective bond issues using the effective interest method. Bond issuance costs are expensed in the period incurred. K. SPECIAL ASSESSMENT RECEIVABLE Special assessment receivable 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 as discussed in note 7. L. AMORTIZED EXPENSES In 2003, the District entered into a broadband dark fiber maintenance agreement with Sierra Pacific Communications (SPC) which is included in the line item "other non -current assets" in the accompanying Statement of Net Position. SPC subsequently assigned the agreement to AT&T. The agreement is expected to provide benefit to the District over the estimated 20-year life of the agreement. (See note 4). M. CAPITAL ASSETS Capital assets are generally defined by the District as assets with an initial, individual cost of more than $10,000 and an estimated useful life of at least two years. Capital assets of the District are stated at the lower of cost or the fair market value at the time of contribution to the District. Major outlays for plant are capitalized as projects are constructed. Depreciation on capital assets is calculated using the straight-line method over the estimated useful lives of the assets, which are as follows: Distribution Plant Electric 23 — 35 years Water 15 — 40 years Computer software and hardware 3 — 7 years Building and improvements 20 — 33 years Equipment and furniture 4 — 10 years It is the District's policy to capitalize interest paid on debt incurred for significant construction projects while those projects are under construction, less any interest earned on related unspent debt proceeds. No new debt related to capital assets was issued in 2015 and 2014; no interest was capitalized in 2015 or in 2014. N. COMPENSATED ABSENCES Under terms of employment, employees are granted sick leave and vacations in varying amounts. Only benefits considered to be vested are disclosed in these statements. Vested vacation and sick leave pay is accrued when earned in the financial statements. The liability is liquidated from general operating revenues of the utility. The accompanying notes are an integral part of these consolidated financial statements. Page 18 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 1 —ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) O. REVENUE RECOGNITION The District records estimated revenues earned, but not billed to customers, as of the end of the year. Revenues are recorded as meters are read on a cycle basis throughout each month for electric and water customers. Unbilled revenues, representing estimated consumer usage for the period between the last meter reading and the end of the period, are accrued in the period of consumption. Water customers without meters are billed on a flat -rate basis, and revenues are recorded as billed. 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. P. REVENUE AND EXPENSE CLASSIFICATION The District distinguishes operating revenues and expenses from non -operating items in the preparation of its financial statements. Operating revenues and expenses generally result from providing electric and water services in connection with the District's principal ongoing operations. The principal operating revenues are sales to customers. The District's operating expenses include power purchases, labor, materials, services, and other expenses related to the delivery of electric and water services. All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses, or capital contributions and other. Q. POWER PURCHASES AND TRANSMISSION In 1999, the District entered into an agreement with Sierra Pacific Power Company dba NV Energy (SPPC), whereby SPPC will provide transmission services to the District through December 31, 2027. In addition, the District purchases scheduling services from Utah Municipal Power Systems and the scheduling services are included in the monthly power billings from UAMPS. The purchase of transmission services from NV Energy represented 5.1 % and 4.1 % of total purchased power costs in 2015 and 2016, respectively. In December of 2005, the District entered into an agreement with UAMPS. Subsequently, the District entered into many pooling appendices for power capacity and energy that relate to various time periods from January 2008 through March 2028. Also in 2009, the District signed an agreement with UAMPS for approximately 5 MW of the Nebo natural gas generation plant capacity. In August 2012, the Horse Butte Wind project began commercial operation and the District owns approximately 15 MW of nameplate capacity that generates about 5 MW on average. The District has also invested in the Veyo Heat Recovery project that came on line in mid-2016. The District will expect about 1.7 MW of carbon free generation from this generation source. In August of 2007, the District entered into an agreement with Western Area Power Administration (WAPA) for the delivery of Stampede Dam Hydro generation. In accordance with this agreement, the District is entitled to a portion of the power generated by the Stampede Dam Hydro generation. This generation is dependent upon the amount of water that is made available to the generator. This agreement is effective through 2024. In 2016 and 2015, the UAMPS contract, along with its appendices, and the WAPA contract for Stampede Dam Hydro comprised the majority of a diversified power portfolio that balanced risk and cost for the District. The accompanying notes are an integral part of these consolidated financial statements. Page 19 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) R. CAP AND TRADE PROGRAM PROCEEDS California Assembly Bill 32 (AB32) is an effort by the State of California to seta 2020 greenhouse gas (GHG) emissions reduction goal into law. AB32 requires California to lower greenhouse gas emissions to 1990 levels by 2020. Central to this initiative is the implementation of a cap and trade program, which covers major sources of GHG emissions in the State including power plants. The California Cap and Trade Program is designed to achieve cost-effective emissions reductions across the capped sectors. The program sets maximum statewide GHG emissions for all covered sectors each year ("cap"), and allows covered entities to sell off allowances ("trade"). An allowance is a tradable permit that allows the emission of one metric ton of COz that they do not need. The California carbon price is driven by allowance trading. The District is subject to AB32 and has excess allowances due to reducing carbon -based generation in its power portfolio. In 2016 and 2015, the District sold its excess allowances in the program auctions and the proceeds were recorded as $1,172,306 and $965,402 operating revenue for the respective years. The auction proceeds are held in a restricted fund and are used to purchase qualified renewable power. (See note 2). S. INCOME TAXES As a government agency, the District is exempt from payment of federal and state income taxes. T CONTRIBUTED CAPITAL ASSETS A portion of the District's capital assets have been obtained through amounts charged to developers for plant constructed by the District; direct contributions of capital assets from developers and other parties; as well as assessments of local property owners. These items are recognized within capital assets as construction is completed for plant constructed by the District based on the cost of the items, when received for contributed capital assets 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 capital contributions when a legally enforceable claim is established. Until the District meets the criteria to record the amounts described above as capital contributions, any amounts received are recorded within unearned revenues on the Statement of Net Position, U. OTHER -PENSION SIDEFUND As a result of implementing GASB Statement No. 68, the pension side -fund payoff that occurred in 2011 and which had been reported in the financial statements as an asset was written off due to the District's participation in CaIPERS cost -sharing multi -employer retirement benefit plan. However, the liability for the payoff remains until paid in full thru 2022. The intercompany fund transfers for the principal portion of the debt service between the electric and water utility is included as "other." V. PENSION For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the District's California Public Employee's Retirement System (CaIPERS) plans (Plans) and the additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CaIPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The accompanying notes are an integral part of these consolidated financial statements. Page 20 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 1 —ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) W. RECENTACCOUNTING PRONOUNCEMENTS IMPLEMENTED BYTHEDISTRICT In June 2012, GASB issued Statement No. 68, "Accounting and Financial Reporting for Pensions — An Amendment of GASB Statement No. 27." The primary objective of this statement is to improve accounting and financial reporting by state and local governments for pensions by requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense. This statement establishes standards for measuring and recognizing liabilities, deferred outflows and deferred inflows of resources, and expenses/expenditures. For defined benefit pensions, this statement identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. In November 2013, GASB issued Statement No. 71, "Pension Transition for Contributions Made Subsequent to the Measurement Date —an amendment of GASB Statement No. 68." This statement requires that at transition, the district recognize a beginning deferred outflow of resources for pension contributions, if any, made subsequent to the measurement date of the beginning net pension liability. The District implemented the statement effective December 31, 2014, In February 2015, GASB issued Statement No. 72, Fair Measurement and Application. This statement addresses accounting and financial reporting issues related to fair value measurements. This statement provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The District implemented the statement in the current year. In March 2016, GASB issued Statement No. 82, Pension Issues, an amendment of GASB Statements No. 67, No. 68, and No. 73. The primary objective of this statement is to address issues regarding (1) presentation of payroll -related measures in required supplementary information, (2) selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. The District implemented the statement in the current year. X. DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES Consists of deferrals for changes in the net pension liability as defined under GASB Statement No. 68. Y. UNAMORTIZED LOSS ON BOND REFUNDING For current and advanced refunding results in defeasance of debt, the difference between the reacquisition price and the net carrying amount of the old debt (Gain or loss) is deferred and amortized as a component of interest expense over the remaining life of the old debt or the new debt, whichever is shorter. These amounts are reported as deferred outflow on the statements of net position. Z. ACCOUNTING PRONOUNCEMENTS TO BE IMPLEMENTED /N UPCOMING YEARS GASB Statement No, 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, addresses accounting and financial reporting for OPEB that is provided to the employees of state and local governmental employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. This statement is effective for the District fiscal year ending December 31, 2017, The District has elected not to implement GASB Statement No. 75 early and has not determined its effect on the District's financial statements. The accompanying notes are an integral part of these consolidated financial statements. Page 21 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 1 —ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Z. ACCOUNTING PRONOUNCEMENTS TO BE IMPLEMENTED /N UPCOMING YEARS (CONTINUED) GASB Statement No. 83, Certain Asset Retirement Obligations, addresses accounting and financial reporting for certain asset retirement obligations (ARO's). The District has not determined what impact, if any, this pronouncement will have on the financial statements. Application of this statement is effective for the District's fiscal year ending December 31, 2018, NOTE 2 —CASH, CASH EQUIVALENTS, AND INVESTMENTS Cash, cash equivalents and investments are recorded in accounts as either restricted or unrestricted as required by the District's certificates of participation indentures or other third -party legal restrictions. Restricted assets represent funds that are restricted by certificates of participation covenants or third party contractual agreements. Assets that are allocated by resolution of the Board of Directors are considered to be Board designated assets. Board designated assets are a component of unrestricted assets as their use may be redirected at any time by approval of the Board. Upon Board approval, assets from board designated accounts may be used to pay for selected capital projects. Such accounts have been designated by the Board for the following purposes: Electric Capital Replacement Starting in 2009, the Board set aside funds designated for future electric infrastructure replacement. Electric Vehicle Reserve Beginning in 2009, the Board set aside funds designated for future electric utility vehicle replacements. Electric Rate Reserve Incompliance with Board rules, the District created an electric rate stabilization fund in anticipation of future costs. During both 2016 and 2015, there was no utilization of these funds to offset increased power costs in lieu of raising electric rates. 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. In 2008, the Board adopted an ordinance to charge a $5 monthly surcharge to all customers of treated water beginning January 2009 through December 2013. Water meters and automated meter reading devices are being installed, and customers will be billed volumetrically in accordance with California Assembly Bill 2572. As meters are installed, these funds are used to pay for related costs. Water Vehicle Reserve Beginning in 2009, the Board set aside funds designated for future water utility vehicle replacements. The accompanying notes are an integral part of these consolidated financial statements. Page 22 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 2 —CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) Prepaid Connection Fees In compliance with Board rules, the District has set aside prepaid connection fees to cover installation costs of water services. Debt Service Coverage and Operating Reserve Fund Effective 2007, the Board has voluntarily set aside funds to improve the District's cash -to -debt - service ratio. In 2016, funds were used for capital projects. Donner Lake Assessment District Surcharge Fund The District established a monthly billing surcharge in the amount of $6.65 applicable to customers in the Donner Lake area to provide revenue to pay the remainder of the cost of reconstruction effective October 2006. As of December 31, board designated accounts consisted of the following: Electric capital replacement fund Electric vehicle reserve Electric rate reserve Reserve for future meters Water vehicle reserve Prepaid connection fees Debt service & operating reserve fund Donner Lake Assessment District surcharge fund Totals 2016 $ 31428,129 378,880 414001251 5333777 79,181 17847,559 91.760 2015 $ 31364,783 351,761 41039,629 632,967 79, 352 1869 3, 1853 1073 $ 01759,537 914, 287 Certain assets have been restricted by bond covenants or third party contractual agreements for the following purposes: Certificates of Participation: Water In 2015, a portion of the 2006 Certificates of Participation were refunded. The new 2015 refunding did not require a reserve fund. The reserve fund was liquidated and applied towards reducing the debt principal remaining funds are for scheduled debt service. In 2016, the remaining 2006 Certificates of Participation were refunded. The accompanying notes are an integral part of these consolidated financial statements. Page 23 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 2 —CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) 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. 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 come due. Annual payments into the fund were required for each of the first ten years beginning April 1, 1996. The total reserve fund equals two semi-annual payments and was fully funded during 2006. These funds are 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. Glenshire Escrow Account The District received cash and other assets as part of its acquisition of the Glenshire Mutual Water Company. Also, the District will continue to receive a monthly water system upgrade surcharge from Glenshire residents until November 30, 2017. This cash is utilized to pay the installment loan related to the Glenshire water system improvements as specified in the terms of the acquisition agreement. In 2011, the District sold a parcel from the Glenshire Mutual Water Company assets. The net proceeds of $294,940 were transferred to the Glenshire Escrow Account and the monthly water system upgrade surcharge was reduced from $10.75 to $4.75. Donner Lake Special Assessment District Improvement and Reserve Fund The District established the Donner Lake Special Assessment District (DEAD) 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. The DLAD Improvement Fund also has a reserve fund as required by the California — Safe Drinking Water — State Revolving Fund (SRF). This fund is required to set aside $40,043 semi-annually for ten years beginning in 2006. Solar Initiative Fund The California Solar Initiative Senate Bill 1 (S61) was enacted in 2006, mandating that all publicly - owned electric utilities within the State of California, prepare, adopt and implement a solar rebate program by January 2008 to encourage its customers to install solar energy systems. In 2007, the Board adopted a rebate program effective January 2008, targeting $177,400 annually over ten years to be used as rebates for the installation of solar electricity systems and to raise these funds through a customer surcharge. In 2016 and 2015, the rebate program exceeded rebate collections eliminating the need to restrict rebate proceeds. In 2016, the required rebates were awarded ending the SB1 rebate program. The monthly 001 customer charge will continue through 2017 so the District electric utility will be reimbursed for advancing the rebates through 2017. The accompanying notes are an integral part of these consolidated financial statements. Page 24 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 2 — CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) AB32 Cap and Trade Auction Fund California Assembly Bill 32 (AB32) is an effort by the State of California to seta 2020 greenhouse gas (GHG) emissions reduction goal into law. AB32 requires California to lower greenhouse gas emissions to 1990 levels by 2020. Central to this initiative is the implementation of a cap and trade program, which covers major sources of GHG emissions in the State including power plants. The California Cap and Trade Program is designed to achieve cost-effective emissions reductions across the capped sectors. The program sets maximum statewide GHG emissions for all covered sectors each year ("cap"), and allows covered entities to sell off allowances ("trade"). An allowance is a tradable permit that allows the emission of one metric ton of CO2 that they do not need. The California carbon price is driven by allowance trading. The District is subject to AB32 and has excess allowances due to reducing carbon -based generation in its power portfolio. The District electric utility is identified as an "Electric Distribution Utilit�i' under the Cap and Trade regulations and is therefore eligible to receive a direct allocation of allowances that can be sold in an auction. The proceeds from quarterly allowance auctions are held in this restricted fund and are used to purchase qualified renewable power. These funds are intended to mitigate the burden on the consumer without impacting a carbon price signal. Other (Area Improvement Funds) The District received 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. As of December 31, restricted cash and cash equivalents and investments consisted of the following: Certificates of Participation Facilities fees Donner Lake Special Assessment District improvement Donner Lake Special Assessment District reserve fund AB 32 Cap and Trade Auction fund Other (area improvement funds) Total Restricted Cash and Cash Equivalents and Investments 2015 $ 6,169, 318 $ 51961,427 The accompanying notes are an integral part of these consolidated financial statements. Page 25 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 2 -CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) Cash and investments are comprised of the following cash and cash equivalents and investments as of December 31: Cash and cash equivalents Mark to market adjustment Investments - govemment bonds Totals 2016 $ 221881,498 156, 705 1,698, 880 $ 24,737,083 2015 $ 22,593,595 199, 593 1, 698, 880 $ 24,492,068 Cash and cash equivalents and investments were $24,737,083 and $24,492,068 at December 31, 2016 and 2015, respectively. Cash equivalents substantially consist of deposits in the state pooled fund, Placer County pooled fund, money market funds, and government bonds. 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. Adjustments necessary to record investments at market value are recorded in the operating statement as increases or decreases in investment income. Market values may have changed significantly after year and. FAIR VALUE MEASUREMENT The District applies the provisions of Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application, which requires governmental entities, to report certain investments at fair value on the Statements of Net Position. Investments are valued at fair value at December 31. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices for identical instruments in active markets. Level 2 inputs are quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which all significant inputs are observable. Level 3 inputs are valuations derived from valuation techniques in which significant inputs are unobservable. The District classifies its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The district as the following fair value measurements as of December 31, 2016: • US Government bonds and Money Market Funds are valued using observable inputs (Level 2 inputs). The accompanying notes are an integral part of these consolidated financial statements. Page 26 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES I FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 2 —CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) INVESTMENTS AUTHORIZED BY THE DISTRICT'S INVESTMENT POLICY The District adopted an investment policy in 2006 which allowed for investments in instruments permitted by the California Government Code and/or the investments permitted by the trust agreements on District financing, including investments in the local government investment fund pool administered by the State of California (LAIF), Placer County Treasurer's Investment Portfolio (PCTIP) pooled investment, and Utah Public Treasurers' Investment Fund (UPTIF). The District's investment policy contains provisions intended to limit the District's exposure to interest rate risk, credit risk, and concentration of credit risk. At December 311 2016 and 2017 the District's deposits and investments were held as follows: Cash on hand Deposits LAIF PCTIP UPTIF Money Market Funds Government Bonds Totals DISCLOSURES RELATING TO INTEREST RATE RISK 2016 $ 2,400 964,122 8, 61871 6, 31226 6, 41706 31628 1,876,032 $ 243780, 985 2015 $ 23400 765514 5, ,324 8, ,363 7,1571158 1273 1, 1036 $ 24,492,068 Interest rate risk is the risk that changes in the market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater is the sensitivity of its fair value to changes in market interest rates. Information about the sensitivity of the fair values of the District's investments to market interest rate fluctuations is provided by the following table that shows the District's investments by maturity for 2015 and 2014: Investment and Deposits Maturity LAIF 3 months or less PCTIP 3 months or less UPTIF 3 months or less Fidelity Money Market Government Portfolio 57 3 months or less Dreyfus Treasury Securities 3 months or less Federal Farm Credit Banks 03/02/2021 DISCLOSURES RELATING TO CREDIT RISK Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. LAIF, PCTIF and UPTIF do not have a rating provided by a nationally recognized statistical rating organization. Federal Farm Credit Banks is rated AA+ by S&P and Aaa by Moody's. The Dreyfus Treasury Securities is rated Aaa-mf by Moody's and AAAm by S&P. The Fidelity Money Market is rated AAA-mf by Moody's and AAAm by S&P. The accompanying notes are an integral part of these consolidated financial statements. Page 27 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 2 —CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) CUSTODIAL CREDIT RISK Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The District's investment policy does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits. However, the California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless waived by the government unit). The market value of pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. As of December 31, 2016 and 2015 all deposits were fully insured or collateralized. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker/dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the District's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government's indirect investment in securities through the use of mutual funds or governmental investment pools (such as LAIF). DEPOSIT IN STATE INVESTMENT POOL The District is a voluntary participant in the Local Agency Investment Fund (LAIF). This investment fund has an equity interest in the State of California's (State's) Pooled Money Investment Account (PMIA)I PMIA funds are on deposit with the State's Centralized Treasury System and are managed in compliance with the California Government Code according to a statement of investment policy which sets forth permitted investment vehicles, liquidity parameters, and maximum maturity of investments. The fair value of the District's investment in this pool is reported in the accompanying financial statements at amounts based upon the District's pro-rata share of the fair value provided by the LAIF for the entire LAIF portfolio (in relation to the amortized cost of the portfolio). The balance available for withdrawal is based on the accounting records maintained by the LAIF, which are recorded on an amortized cost basis. DEPOSIT IN PLACER COUNTY TREASURER INVESTMENT POOL The District is a voluntary participant in the Placer County Investment Portfolio (PCTIP). The District is eligible to participate in PCTIP because a portion of the District's service area is in Placer County. Investments are on deposit with the Placer County Treasurer and are managed in compliance with the California Government Code according to a statement of investment policy which sets forth permitted investment vehicles, liquidity parameters, and maximum maturity of investments. The fair value of the District's investment in this pool is reported in the accompanying financial statements at amounts based upon the District's pro -rats share of the fair value provided by Placer County Treasurer for the entire PCTIP in relation to the amortized cost of the portfolio). The balance available for withdrawal is based on the accounting records maintained by the Placer County Treasurer, which are recorded on an amortized cost basis. The accompanying notes are an integral part of these consolidated financial statements. Page 28 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 2 —CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) DEPOSIT IN UTAH PUBLIC TREASURERS' INVESTMENT FUND The District is a voluntary participant in the Utah Public Treasurers' Investment Fund (UPTIF). The District is eligible to participate in UPTIF through its membership with Utah Associated Municipal Power Systems (UAMPS). Investments are on deposit with State of Utah public treasury and investments are restricted to those authorized by the Utah Money Management Act and rules of the Money Management Council of Utah. The fair value of the District's investments in this pool is reported in the accompanying financial statements at amounts based upon the District's pro -rats share of the fair value provided by UPTIF through UAMPS Member Retention Fund, NOTE 3 —CAPITAL ASSETS Capital assets consist of the following at December 31, 2016 and 2015: Electric distribution facilities Water distribution facilities General plant Less: Accumulated depreciation Construction work in progress Totals January 1, December 31, 2016 Additions Reductions 2016 $ 541721,615 107,005,578 $ 4,391,867 21023,496 13, 887, 881 11332,733 175,615,074 71748,096 (58,042,448) (61485,285) 41844,042 71686,181 $ 122,416,668 $ 81948,992 $ (767,792) (168,249) (158,336) (13094,377) 11154,994 (71823,947) $ (7,763,330) $ 5893453690 108, 860, 825 15, 062, 278 182,268,793 (63,372,739) 4,706,276 123,602,331 $ 122,416,668 $ 81948,992 $ (767,792) (168,249) (158,336) (13094,377) 11154,994 (71823,947) $ (7,763,330) $ 5893453690 108, 860, 825 15, 062, 278 182,268,793 (63,372,739) 4,706,276 123,602,331 January 1, December 31, 2015 Additions Reductions 2015 Electric distribution facilities $ 51,524,863 $ 31777,881 $ (581,129) $ 54,721,615 Water distribution facilities 103,049,122 51653,380 (1,6961924) 107,005,578 General plant 12,816,635 11314,555 (243,308) 13,887,881 167,390,620 10,745,816 (2,5211362) 17536159074 Less: Accumulated depreciation (54,475,747) (61204,361) 21637,661 (589042,448) Construction work in progress 634073589 9/1883877 (10,7525425) 4,844,042 Totals $ 1191322,462 $ 13,730,332 $ (10,636,125) $ 1223416,668 As of December 31, 2016 and 2015, the plant in service included land and land rights of $3,318,346 and $2,622,946 respectively which are not being depreciated. 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. The accompanying notes are an integral part of these consolidated financial statements. Page 29 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 4 —TELECOMMUNICATION SERVICES In 1999, the District initiated a project to expand their basic service offerings to include Internet access, cable television and voice delivered over fiber optic networks (the broadband project). The District completed the broadband design project and obtained the necessary regulatory approvals and franchises needed to construct and launch the broadband project. A local cable television service provider filed an objection in September 2004 with the Nevada County Local Agency Formation Commission (LAFCO), the entity responsible for providing regulatory approval for the broadband project. After denying the cable television provider's request for a reconsideration of their approval of the District's project, the cable television provider filed a lawsuit against LAFCO. The District was not named in the lawsuit. A ruling on the lawsuit was received in January 2006. LAFCO prevailed on all portions of the cable television provider's claim. The cable television provider filed an appeal; however, in June of 2007, the Court ruled in favor of LAFCO, upholding the initial ruling. Since 2009, the District has been exploring options to sell or lease the existing infrastructure to provide a return on investment in the project. Expenses incurred by the District to date on the broadband project total $2,834,079, of which $496,990 was expensed in 2014 for legal fees and preliminary feasibility studies. In 2016 and 2015 there were no material expenditures for this project. The District is however investigating a Memorandum of Understanding with Plumas Sierra Telecommunications to potentially offer services utilizing these four fibers from Reno to Sacramento in future years. The accompanying notes are an integral part of these consolidated financial statements. Page 30 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 5 —LONG-TERM DEBT Long-term debt consisted of the following at December 31, 2016: Pension Obligation Bonds Electric, 5% due semi-annually refinanced in 2016 Pension Obligation Bonds Electric, 2.47% due semi-annually State RewlHng Fund Loan — Water, 2.34%, due semi-annually beginning in 2006 to 2026 Certificates of Participation — Water, 4,00% to 5.00%, due serially to 2021 refinanced in 2016 Certificates of Participation — Water, 1.54% due serially to 2021 Certificates of Participation — Water, 2.00% to 4.00%, due serially to 2035 (net premiums of $502,077) Department of Water Resources, 3.18%, due semiannually to 2021, secured by real and personal property. Installment loans, 5.4% to 6,23%, various payment terms and due dates, secured by equipment. Totals January 1, December 31, Due within 2016 Additions Reductions 2016 one year $ 51584,000 $ $ (5,584,000) $ 5,589,000 (440,000) 5,149,000 7,417,358 - (630,956) 6,786,402 3,765,000 - (3,765,000) - 3,266,000 - 3,266,000 14,544,095 - (547,018) 13,997,077 1,535,448 - (259,705) 1,275,743 809,000 6455807 632,000 5351000 2683092 673,789 (299,242) 374,548 316,144 $ 33,519,690 $ 8,855,000 $ (11,525,921) $ 30,848,770 $ 3,206,043 The accompanying notes are an integral part of these consolidated financial statements. Page 31 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 5 —LONG-TERM DEBT (Continued) Long-term debt consisted of the following at December 31, 2015: Pension Obligation Bonds Electric, 5% due semi-annually State Revolting Fund Loan — Water, 2340n, due semi-annually beginning in 2006 to 2026. Cerliflc ates of Participation — Water, 4.00 % to 5.00%, due serially to 2021 A portion was refunded in 2015 Certificates of Participation — Water, 200% to 4.00%, due serially to 2035 (net premiums of5529,09J) Department of W ater Resources, 3.18%, due semiannually to 2021, secured by real and personal property. Installment loans, 5.4% to 6230%, various payment terms and due dates, secured by equipment. Totals January 1, 2015 $ 6,177,000 8,033,804 20,427,202 1,787,132 December3l, Due within Additions Reductions 2015 one year $ - $ (593,000) S 5,584,000 - (616,446) 7,417,358 - (16,662,202) 3,765,000 15,120,352 (576,257) 14,544,095 - (251,685) 1,535,448 S 656,000 630, 956 5707000 5203000 259,705 957,385 - (283,596) 673,789 299,259 5 37,382,523 `� 15,120,352 $ (18,983,186) 3 33,519,690 S 2,935,920 During April 2004, the District obtained financing in the form of a State Revolving Fund Loan, the proceeds of which were utilized in the replacement of the Donner Lake water system. The District submitted expenditures to the State for reimbursement of $12,732,965, The semi-annual principal and interest payments are $400,426 and commenced in 2006, The District is also required to fund a reserve account by making semi-annual reserve payments in the amount of $40,043 for a 10-year period. In 2004, the remaining balance of $12,227,122 was used to pay off the temporary lines of credit obtained in 2001 and 2002 to fund the Donner Lake project. (See note 8). On October 12, 2006, Truckee Donner Public Utility District Financing Corporation issued $26,570,000 of Certificates of Participation to refund 100% of the outstanding balance of Certificates issued in 1996, complete the funding of the Donner Lake Assessment District water system, and fund water system capital improvements. The refunding portion of the 2006 COP's, totaling $8,465,000, has an average interest rate of 4.10%. The refunded 1996 COP's had an average interest rate of 5.41 %. The net proceeds of $7,500,557 (after payment of $63,733 in underwriting fees, insurance and other issuance costs) plus an additional $1,315,194 of reserve fund monies were used to prepay the outstanding debt service requirements on the 1996 COP's. The terms of the 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 125% of the debt service for each year. In 2015, a portion of the 2006 COP was refunded. Since a portion of the 2006 COP was used for advance refunding of previous COP, that portion could not be advance refunded. The new 2015 refunding did not The accompanying notes are an integral part of these consolidated financial statements. Page 32 TRUCKEE DONNER PUBLIC UTILITY DISTRICT NOTES I FINANCIAL STATEMENTS December 31, 2016 and 2015 NOTE 5 —LONG-TERM DEBT (Continued) require a reserve fund. The reserve fund was liquidated and applied towards reducing the debt principal. The estimated net present value savings are $1,600,000 or 10% over the remaining life of issuance. In 20161 the remaining portion of the 2006 COP was refunded. The estimated net present value savings is $222,000 or 5.8% over the remaining life of issuance. 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. In June 2011, the District refunded (refinanced) an existing $7.8 million pension side fund obligation for its participation in CalPERS. Prior to 2011, the annual side fund payments were expensed and described in the Notes to Financial Statements. The pension side fund liability was amortized through June 2022 with a 7.75% rate. This liability was not required to be reported on the District's Statement of Net Position, but the future pension expense was included in budget and rate calculations. The new refunding rate of 5% reduced the District's annual pension costs by almost $100,000 through 2022. In 2016, the District refunded the pension side fund again earning the District annual savings of $30,000 or $164,000 in total. As a normal part of its operations, the District finances the acquisition of certain assets through the use of installment loans. These loans have been used to finance the purchase of vehicles, equipment, and certain water system improvements. There were no additional installment loans in 2016 or in 2015. Scheduled payments on debt are: Principal Interest Total 2017 $ 3, 206, 043 $ 8841765 $ 41090, 808 2018 310061314 7971286 31803,600 2019 311171221 7241222 31841,443 2020 312281784 648,447 31877,231 2021 3,179, 833 5712195 317512028 2022-2026 7,363,498 11959,576 9, 323, 074 2027-2031 4,110, 000 1,0501625 5,160, 625 2032-2036 31135,000 270,175 314051175 $ 301346,693 $ 61906,291 $ 37,252,984 Plus: Unamortized premiums 5021077 $ 30,848,770 The accompanying notes are an integral part of these consolidated financial statements. Page 33