HomeMy WebLinkAboutAgenda Truckee Donner Public Utility District
Post Office Box 309 • 11570 Donner Pass Road • Truckee, California 95734
(916) 587-3896
SPECIAL MEETING
Wednesday, June 24, 1987 - 3:00 P.M.
Truckee Donner Recreation & Park District Board Room
AGENDA
1. Call to order
2. Roll call
3. Audit workshop, discussion and possible direction:
a) Review of audit
b) REA management letter requirement
c) FmHA indenture conflict
d) New complex capitalization
e) Consolidation of reporting
f) Investments
4. Resolution approving specifications and issuing a call for bids for
electronic multi-button key telephone sets
5. Adjournment
C E R T I F I C A T I O N
I hereby certify that the foregoing agenda has been posted in the District
office and Government Center, provided to the U. S. Post Office and County
Library fot posting, and mailed to the Directors and interested parties on
June 22,,-/I987. f
i
Susan Macdonald, Deputy District Clerk
s^
0110 APR 91981
ARTHUR ANDERSEN & CO.
SPEAR STREET TOWER, SUITE 3500
ONE MARKET PLAZA
SAN FRANCISCO, CALIFORNIA 94105
(415) 546-8200
April 7, 1987
Mr. Peter Hol zmei ster `.,OPIES TO.
General Manager 'r BOARD:
Truckee-Donner Public Utility District "`ANFGER.��
P. 0. Box 309
Truckee, California 95734 -�
Dear Peter:
As we had discussed earlier, the Rural Electrification Adminis-
tration has requested that we prepare a management letter for the Board,
as required by REA 7 CFR 1789 (Revision and Quantification of REA policies
concerning audits of REA borrowers). After giving this matter more thought,
I have several suggestions for your discussion with the administrator if,
in fact, you believe that the District should request an exemption or ex-
ception to this particular requirement. These suggestions are as follows:
1. In as much as the intended purpose of the requirement is
to facilitate increased reliance upon the audit work performed
by the independent CPAs, the District is in a position where
an REA audit is not needed. The District has not received
any new funds since 1982, and, in fact, has undergone an
audit for those past construction expenditures. (REA audit
in 1986. ) There are no new borrowings intended. Further,
all payments to date have been timely.
2. The December 31, 1986 current financial position of this
District reflects only $200,000 in REA debt outstanding. This
is in contrast with $300,000 in total debt and over $8 million
in total assets. The District is highly unusual amongst
most borrowers in their very, very low leverage of debt.
3. The independent CPAs, Arthur Andersen & Co. , are a national
CPA firm with extensive experience in electric industry and
who participate in a peer review program as recommended by
the REA.
4. Given the small level of REA debt outstanding, the additional
cost in complying with this formal letter for REA purposes
is onerous and, in our view, in excess of the necessary benefit
intended.
A
ARTHUR ANDERSEN & CO.
MR. PETER HOLZMEISTER 2 APRIL 7, 1987
After you have had a chance to review these thoughts, please
give me a call . As we previously discussed, we would be able to comply
with this requirement if the District believes it is beneficial and
necessary. This additional letter would require approximately $1,000 in
additional fees above and beyond that previously arranged. This would
reflect the amount for the 1985 audit with a comparable amount that would
be necessary to complete the letter for the current 1986 audit.
Please call if you have any further questions.
Very truly yours,
ARTHUR ANDERSEN & CO.
By �� a.
Keith Fukui
/jdd
cc: Mr. John Korbett, President
t
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
ELECTRIC OPERATIONS
FINANCIAL STATEMENTS
AS OF DECEMBER 31 , 1986 AND 1985
TOGETHER WITH AUDITORS ' REPORT
7 1? Y 87 2 7
"Tentative & Preliminary"
For Discussion Purposes Only
To the Board of Directors of
Truckee-Donner Public Utility District:
We have examined the balance sheets of the TRUCKEE-DONNER
PUBLIC UTILITY DISTRICT ELECTRIC OPERATIONS (a political subdivision
of the State of California ) as of December 31 , 1986 and 1985 and the
related statements of revenues in excess of expenses and sources and
uses of cash for the years then ended . Our examinations were made
in accordance with generally accepted auditing standards and , accor-
dingly, included such tests of the accounting records and such other
auditing procedures as we considered necessary in the circumstances .
In our opinion , the financial statements referred to above
present fairly the financial position of the Truckee- Donner Public
Utility District Electric Operations as of December 31 , 1986 and
1985 and the results of its operations and sources and uses of cash
for the years then ended , in conformity with generally accepted
accounting principles applied on a consistent basis .
San Francisco , California ,
April 29 , 1987 .
"Tentative & Preliminary"
For Discussion Purposes Only
1 � �
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
ELECTRIC OPERATIONS
BALANCE SHEETS -- DECEMBER 31, 1986 AND 1985
ASSETS CAPITALIZATION AND LIABILITIES
1986 1985 1986 1985
UTILITY PROPERTY, at cost: CAPITALIZATION:
Plant serving consumers $ 6,133,590 $ 5,823,589 Consumers' funds employed in the business-
Less - Reserve for use and deterioration Balance, beginning of year $ 5,661,456 $5,113,787
of plant (1,808,612) (1,563,970) Revenues in excess of expenses for the year (92,989) 547,669
----------- ----------- ----------- ----------
Net plant serving consumers $ 4,324,979 $ 4,259,619 Total consumers' funds $ 5,568,467 $5,661,456
----------- ----------
Plant under construction 1,464,602 294,651 Long-term obligations (Note 4)-
000
Net utilityproperty $ 5 789,580 $ 4,554,270 Building loan $ 2,177,573 $ -
P P YLoan from REA 177,573 196,574
----------- ----------- Installment loan 54,835 95,330
Loan from Department of Energy -----16�181 ----22,500
CASH RESTRICTED BY THE BOARD FOR SPECIFIC USES
(Note 3) $ 3,005,458 $ 1,239,211 Total long-term obligation $ 2.627,589 $ 314,404
----------- ----------- ----------- ----------
Total capitalization $ 8,196,056 $5,975,860
CURRENT ASSETS: ----------- ----------
Cash $ 798,973 $ 1,364,089 CURRENT LIABILITIES:
Amounts due from consumers - less reserves Amounts due for power purchases $ 789,796 b 943,079
for uncollectible accounts of $88,929 and Amounts due for other purchases 269,210 123,825
$59,118 for 1986 and 1985, respectively 413,233 436,212 Standby fees collected for next year 35,362 34,131
O Amounts due from others - less reserves Deposits collected to ensure payment
R for uncollectible accounts of $8,155 and for services 300,756 321,729
•y $3,822 for 1986 and 1985, respectively 76,056 85,466 Interest due to creditors 73,269 2,241
O Refund of power purchases to be collected Other obligations 98,091 77,466
y (Note 7) 69,759 86,957 Long-term obligations due next year 63,471 54,148
n Materials and supplies, at average cost 158,108 134,2.12 ----------- ----------
C Interest receivable, prepaid insurance $ 1,629.955 $1,556,619
in and other 41,682 64,223 ----------- ----------
-
ti -
- ---
-------- FUNDS RECEIVED FOR CONSTRUCTION OF ELECTRIC
0 $ 1,557,711 $ 2,171,159 DISTRIBUTION FACILITIES (Note 3) $ 526,738 $ 432,161
----------- ----------- ----------- ----------
C $10_352_749 $ 7_964,640 $10_352_749 $7,964_640
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y �• The notes attached to these financial statements are important and should be read together with the statements.
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TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
ELECTRIC OPERATIONS
STATEMENTS OF REVENUES IN EXCESS OF EXPENSES
FOR THE YEARS ENDED DECEMBER 31 , 1986 AND 1985
1986 1985
REVENUES :
Sale of electricity $6 , 113 ,981 $6 , 186 ,628
Income from investments 188 , 151 218 , 615
-- -- ------ -------- --
$6 ,302 , 132 $6 ,405 ,243
------- --- ----------
EXPENSES :
Power purchased ( Note 7 ) $4 ,758 ,606 $4 ,237 ,406
Distribution to consumers 542 ,702 552 ,916
Consumer services 286 ,709 237 ,726
Interest 60 , 136 66 ,215
Administrative and general 520 ,701 535 ,509
Use and deterioration of property 210 ,228 195 ,408
Other , net 16 ,039 32 , 394
- --------- ----------
$6 ,395 , 121 $5 ,857 ,574
---------- ----------
Revenues in excess of expenses $ ( 92 ,989 ) $ 547 ,669
The notes attached to these financial
statements are important and should
be read together with the statements .
"Tentative & Preliminary"
For Discussion Purposes Only
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
ELECTRIC OPERATIONS
STATEMENTS OF SOURCES AND USES OF CASH
FOR THE YEARS ENDED DECEMBER 31 , 1986 AND 1985
1986 1985
SOURCES OF CASH :
Operations-
Revenues in excess of expense $ ( 92 , 989) $ 547 , 669
Depreciation expense not requiring
the use of cash 210 , 228 227 ,021
Other 34 ,414 -
Increase in current liabilities
in excess of current assets 121 ,568 498 ,036
Cash received for construction of
electric facilities 2 ,467 ,476 134 ,797
-------- -- ---- ------
Total sources of cash $2 ,740 ,697 $1 ,407 ,523
-- - - -- ---- ------ --- -
USES OF CASH :
Additions to electric utility property $1 ,479 , 952 $ 426 ,039
Repayment of loans 59 ,714 52 ,612
Additions to Board-restricted funds 1 , 766 , 247 353 ,237
-------- -- ----------
Total uses of cash $3 ,305 , 913 $ 831 ,888
Increase in cash $ ( 565 ,216 ) $ 575 ,635
CASH :
Beginning balance , January 1 $1 ,364 ,089 $ 788 , 454
Ending balance , December 31 798 ,873 1 , 364 ,089
-------- -- -- ------ --
Increase in cash $ ( 565 ,216 ) $ 575 ,635
The notes attached to these financial
statements are important and should
be read together with the statements .
"Tentative & Preliminary"
For Discussion Purposes Only
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
ELECTRIC OPERATIONS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31 , 1986 AND 1985
( 1 ) SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES :
Organization-
The Truckee- Donner Public Utility District (the District)
was formed and operates under the State of California Public Utility
District Act . The District provides electric and water service to a
portion of Nevada and Placer counties described as Truckee and
Donner Lake . The electric and water service operations are main-
tained and operated separately. These financial statements reflect
the electric operations of the District .
To the extent possible , assets , liabilities , equity, reve-
nues and expenses have been specifically identified as electric or
water operations . All amounts not specifically identified have been
allocated 85% electric and 15% water , reflecting the District ' s most
recent study on the allocated use of shared or common facilities or
functions .
Depreciation (Use and
Deterioration of Property)-
The District ' s utility property is recorded at the amounts
paid when it was purchased . To reflect the use , deterioration and
limited physical life of the plant , the District records a deprecia-
tion charge . This cost is paid by current customers who receive the
service and provide funds to be used for future additions to utility
property .
The District calculates depreciation using a straight- line
method and rates provided by the Rural Electrification Administration
( REA) in Bulletin 181 -1 . The average rates were 4 . 2% and 4 . 1% in
1986 and 1985 , respectively.
Retirements of electric utility property and the related
costs of removal and salvage are charged to the reserve for use and
deterioration . The costs of replacement of property are recorded as
,... new property. Repair and maintenance costs are recorded as expense .
"Tentative & Preliminary"
For Discussion Purposes Only
-2-
Revenues-
Revenues are recorded as consumers are billed . Billings
are prepared and mailed to consumers daily, using a rotating
system . Services that are provided to other public agencies at no
charge are not reflected in revenues .
Income that the District has earned through investing its
cash not needed currently is reflected as revenue when the District
has earned it .
Income Taxes-
The District is exempt from payment of federal and state
income taxes .
( 2 ) PENSION PLAN :
The District has a pension plan covering substantially all
employees who have at least one year of service . The pension plan
is based upon specific benefits to be provided at retirement . The
District pays for the pension plan , and the employee does not have
to pay a share . The District transfers cash to the plan trustee
each year for the current year cost . Contributions for 1986 and
1985 amounted to $13 , 626 and $13 , 122 , respectively, for the electric
operations . The present value of accumulated plan benefits for
employees and the net assets available to pay for these benefits is
not maintained by individual operations of the District . The
weighted average assumed rate of return used in determining the
present value of accumulated plan benefits for the District was
7% . The District employs pension consultants to provide needed
data . Their last report was as of December 31 , 1986 . It showed the
following key information for the whole District :
December 31
-- --- - - ---- -- -- --- -
1986 1985
Actuarial present value of
accumulated plan benefits-
Vested $197 ,118 $167 ,501
Nonvested 20 ,284 20 ,671
-------- - ------ -
$217 ,402 $188 ,172
Net assets available
for benefits $481 , 372 $430 , 032
------- - ------- -
-------- ------- -
"Tentative & Preliminary"
For Discussion Purposes Onlv
-3-
( 3 ) CASH RESTRICTED BY THE
BOARD FOR SPECIFIC USES :
Through the Board of Directors ' resolutions , the District
has restricted cash for specific uses as follows :
1986 1985
---------- ----------
Restricted Restricted
Funds Funds
Facilities fees collected from customers for
future procurement of electricity $ 410,479 $ 370,550
Loan principal and interest fund (in
accordance with loan agreements, principal
and interest payments are to be placed on
deposit until final payment is due REA) 19,000 19,000
Reserve for future storm damage costs 140,791 140,669
Building fund established for the
construction of the District's proposed
administration building 678,557 599,908
Cash proceeds from the building loan 1 ,603,855 -
Consumer deposits and other 152 ,776 109,084
,,.., ---------- ----------
$3,005,458 $1 ,239,21-1
---------- ----------
---------- ----------
( 4 ) LONG-TERM OBLIGATIONS :
follows : REA loans , secured by pledge of all assets , are as
1986 1985
First series at 2% interest, payments annually
in amounts varying from $13,000 to $14,000,
balance of $14,000 due July 1994 $107 ,000 $120,000
Second series at 2% interest, payments annually
in amounts varying from $3,000 to $5 ,000,
balance of $6,000 due May 2002 67,000 70,000
Third series at 2% interest, net of undrawn
funds of $65,426, payments annually in
amounts varying from $3,000 to $6,000,
balance of $8,000 due May 2004 22 ,573 25,574
Less - Amounts due in next year (19,000) (19,000)
-------- --------
Total REA loans $177 ,573 $196,574
The District renewed an installment loan relating to its
computer on December 1 , 1982 . Terms of the loan provide for monthly
payments of principal and interest of $2 ,570 . The interest rate is
"Tentative & Preliminary"
For Discussion Purnecpc only
-4-
r
10% , to be adjusted annually on December 1 based upon the bank ' s
current municipal rate . On December 1 , 1988 , the entire balance of
principal and interest is due . These financial statements reflect
the electric operations ' portion of the loan .
The District renewed an additional installment loan
relating to a line truck on April 1 , 1984 . Terms of the note
provide for monthly payments of principal and interest of $1 ,959 .
The interest rate is at the bank ' s prime lending rate . The note is
due on April 1 , 1989 .
The loan from the United States Department of Energy is
payable over a 10-year period at a rate of 7 -3 /8% . The annual
payment , with interest , is due December 1 . If certain conditions
are met by the District , the principal and/or interest may be
forgiven at the discretion of the Department of Energy.
Truckee Donner P .U . D . Financing Corporation (the Financing
Corporation ) issued Certificates of Participation ( building loan ) in
the amount of $3 ,050 ,000 to finance the construction of a building
complex . The Financing Corporation is organized to provide finan-
cial assistance to the District by providing public facilities land
and equipment.
The District has been assigned the responsibility of con-
structing the building complex . Further , the District has entered
into an agreement with the Finance Corporation to assume all pay-
ments of the building loan . As part of the agreement , the District
has an option to purchase the building in 2012 . Interest payments
are made semiannually at 7 . 75% beginning on February 1 , 1987 . Prin-
cipal payments are made annually beginning February 1 , 1988 , as
follows :
1987 $ -
1988 50 ,000
1989 50 ,000
1990 55 ,000
1991 55 ,000
Thereafter 2 ,840 ,000
Total $3 ,050 ,000
The new building is expected to be completed by July
1987 . Total costs incurred for construction as of December 31 , 1986
are $1 ,277 ,316 . These costs and the loan were allocated between the
electric and water operations of the District .
"Tentative & Preliminary"
For Discussion Purposes Only
c
-5 -
t
( 5 ) CHANGES IN CURRENT ASSETS
AND LIABILITIES :
The changes in accounts classified as current assets and
current liabilities are as follows :
1986 1985
Increase ( decrease ) in-
Amounts due to the District $ ( 49 ,587 ) $( 209 ,342)
Materials and supplies 23 ,896 ( 16 ,326 )
Other current assets (22 ,541 ) 33 ,461
Amounts due for purchases 7 ,898 (241 ,289)
Standby fees for next year ( 1 ,231 ) ( 305 )
Consumer deposits 20 ,973 (59 ,652 )
Interest due to creditors ( 71 , 028) 2 , 506
Other obligations ( 20 ,625 ) (8 ,435 )
Long-term debt due next year ( 9 , 323) 1 , 346
-------- - ---- ---- -
$ ( 121 ,568) $( 498 ,036)
( 6 ) SALES TO THE WATER DEPARTMENT :
The electric operations of the District sells electricity
to the water operations for use in the pumping stations for trans-
mission of water . Sales of electricity of $273 , 334 and $258 ,805 for
1986 and 1985 , respectively, are at commercial rates and are
included in operating revenues .
( 7 ) REFUNDS OF ENERGY CHARGES :
During the periods of October 1 , 1975 through August 31 ,
1979 and June 1 , 1983 through October 31 , 1984 , the District
purchased power at rates in effect subject to refund . Final rates
were subject to the review of the Federal Energy Regulatory
Commission ( FEP,C) . Amounts paid were reflected as power purchased
expense . In 1984 , the FERC reached a decision on these matters ,
resulting in the District receiving refunds of previously paid power
purchased costs .
In 1986 and 1985 , the District was told of additional
refunds due . The amounts were $1 ,676 and $12 ,621 , respectively.
These amounts reduced power purchased expense .
18 ) CONTINGENCIES :
Lawsuit-
A former general manager filed a lawsuit against the
District alleging wrongful termination of employment and defamation
and seeking damages of $600 , 000 .
"Tentative & Preliminary"
For Discussion Purposes Oniv
r
-6 -
The case was settled in January 1987 . The settlement was
made entirely from insurance proceeds , and most of the legal fees
were reimbursed by the District ' s insurance carrier .
"Tentative & Preliminary"
For Discussion Purposes Only
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
WATER OPERATIONS
FINANCIAL STATEMENTS
AS OF DECEMBER 31 , 1986 AND 1985
TOGETHER WITH AUDITORS ' REPORT
7 VA 87 i7�i 23
"Tentative & Preliminary"
For Discussion Purposes Only
To the Board of Directors of
Truckee-Donner Public Utility District:
We have examined the balance sheets of the TRUCKEE- DONNER
PUBLIC UTILITY DISTRICT WATER OPERATIONS (a political subdivision of
the State of California ) as of December 31 , 1986 and 1985 and the
related statements of revenues in excess of expenses and sources and
uses of cash for the years then ended . Our examinations were made
in accordance with generally accepted auditing standards and ,
accordingly, included such tests of the accounting records and such
other auditing procedures as we considered necessary in the
circumstances .
In our opinion , the financial statements referred to above
present fairly the financial position of the Truckee- Donner Public
Utility District Water Operations as of December 31 , 1986 and 1985
and the results of its operations and the changes in its financial
position for the years then ended , in conformity with generally
accepted accounting principles applied on a consistent basis .
San Francisco , California ,
April 29 , 1987 .
"Tentative & Preliminary"
For Discussion Purposes Only
TRUCKFE-OONNER PUBLIC UTILITY DISTRICT
WATER nPFRATIONS
BALANCE SHEETS -- DECEMIIER 31 1986 AND 1985
ASSETS CAPITALIZATION AND LIABILITIES 1986 1985 1986 1985
UTILITY PROPERTY, at cost: CAPITALIZATION:
Plant serving consumers $ 2,967,1379 $ 2,579,767 Consumers' funds employed in the business-
Less - Reserve for use and deterioration Balance, beginning of year $1.283,957 S 983,779
of plant (1,390,448) (1,289,151) Revenues in excess of expenses for the year 220,668 300,179
----------- -----------
Net plant serving consumers $ 1,487,431 $ 1,289,616 Total consumers' funds $1,504,625 $1,283,957
Plant under construction 478,249 109,673 Long-term, obligations (Note 4)-
---------- ----------
----------- ----------- Building loan $ 594,750 $
Net utility property $ 1,965,68n $ 1,398,239 Installment loan 4,820 9,225
----------- ----------- Sewer assessments loan
---------- ----------
Total long-term obligations $ 599,570 % 9,225
CASH RESTRICTED BY THE BOARD FOR SPECIFIC USE ---------- ---------
(Note 3) $ 1,858,132 $ 1,684.956 Total capitalization $2,104,195 $1,293.182
-----------
CURRENT LIABILITIES:
Promissory note (Note 5) $ 234,219 S 237,176
CURRENT ASSETS: Bonds payable (Note 5) 300,000 305,000
Cash, restricted (Note 3) $ 105,563 $ 186,037 Amounts due for other purchases 148,282 64,334
Amounts due from consumers - less reserves Standby fees collected for next year 14,718 14,611
for uncollectible accounts of $25,251 and Deposits collected to ensure payment for
$18,037 for 1986 and 1985, respectively 47,734 34.393 services 51.509 52,n22
Amounts due from others - less reserves Interest due to creditors 2.6,059 9,056
for uncollectible accounts of $2,902 and Other obligations 37,186 30,249
$1,303 for 1986 and 1985 36,411 32,988 Long-term obligations due next year 3,766 7 974
Materials and supplies, at average cost 39,437 29,742 ---------- _----_----
Interest receivable, prepaid insurance and $ 815,738 $ 715,482
other 21,184 25,417
---------- ----------
----------- ----------- FUNDS RECEIVED FOR CONSTRUCTION OF WATER
'In $---250,329 $---308,577 DISTRIBUTION FACILITIES (Note 4) $1,154,208 $1,383,108
,O R $ 4,074,141 $ 3,391,772 $4,074,141 $3,391.772
v fo
y
03
C „03' The notes attached to these financial statements are important and should be read together with the statements.
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TRUCKEE- DONNER PUBLIC UTILITY DISTRICT
WATER OPERATIONS
STATEMENTS OF REVENUES IN EXCESS OF EXPENSES
FOR THE YEARS ENDED DECEMBER 31 , 1986 AND 1985
1986 1985
REVENUES :
Sale of electricity $1 , 084 ,852 $1 ,010 , 260
Income from investments 139 , 179 161 ,026
- - ---- - --- - - - --- --- -
$1 , 224 , 031 $1 ,171 ,286
- - - - - - - -- - -- -- ----- -
EXPENSES :
Distribution to consumers 553 ,417 494 , 160
Consumer services 41 ,466 29 ,518
Interest 128 ,207 141 , 037
Administrative and general 186 , 107 128 ,228
Use and deterioration of property 91 ,825 85 , 289
Other , net 2 , 341 ( 7 , 125 )
--- - - -- -- - ---- -- - ---
$1 ,003 ,363 $ 871 , 107
---- - - --- - -- -- -- - ---
Revenues in excess of expenses $ 220 ,668 $ 300 ,179
The notes attached to these financial
statements are important and should
be read together with the statements .
"Tentative & Preliminary"
For Discussion Purposes Only
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
WATER OPERATIONS
STATEMENTS OF SOURCES AND USES OF CASH
FOR THE YEARS ENDED DECEMBER 31 , 1986 AND 1985
1986 1985
SOURCES OF CASH :
Operations-
Revenues in excess of expenses $ 220, 668 $300, 179
Depreciation expense not requiring
the use of cash 91 , 825 93, 223
Other ( 528) -
Increase in current liabilities in
excess of current assets 78,030 45, 304
�^ Cash received for construction of
electric facilities 601 , 917 182, 371
---------- --------
Total sources of cash $ 991 ,912 $621 ,077
---------- --------
USES OF CASH :
Additions to electric utility property $ 887 , 638 �491, 626
Repayment of loans 11 ,572 6 ,170
Additions to Board- restricted funds 173, 176 121 , 505
---------- --------
Total uses of cash $ 1 ,072 ,386 $619 ,301
---------- --------
Increase ( decrease) in cash $ (80 ,474) $ 1 ,776
---------- --------
CASH :
Beginning balance , January 1 $ 186, 037 $184, 261
Ending balance , December 31 105 ,563 186 ,037
---------- --------
Increase (decrease) in cash $ (80 ,474) $ 1 ,776
The notes attached to these financial
statements are important and should
,.., be read together with the statements .
"Tentative & Preliminary"
For Discussion Purposes Only
TRUCKEE- DONNER PUBLIC UTILITY DISTRICT
WATER OPERATIONS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31 , 1986 AND 1985
( 1 ) SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES ;
Organization-
The Truckee-Donner Public Utility District ( the District )
was formed and operates under the State of California Public Utility
District Act . The District provides electric and water service to a
portion of Nevada and Placer counties described as Truckee and
Donner Lake . These financial statements reflect the water opera-
tions of the District .
To the extent possible , assets , liabilities , equity,
revenues and expenses have been specifically identified as electric
or water operations . All amounts not specifically identified have
been allocated 85% electric and 15% water , reflecting the District ' s
most recent study on the allocated use of shared or common facili -
ties or functions .
Depreciation ( Use and
Deterioration of Property )-
Utility property is recorded at the amount paid when it
was purchased . To reflect the use , deterioration and limited
physical life of the plant , the District records a depreciation
charge . This charge is paid by current customers who receive the
service and provide funds to be used for future additions to utility
property.
The District calculates depreciation using a straight- line
method . The average annual composite rate was 4 .5% and 4 .7% in 1986
and 1985 , respectively.
Retirements of water utility property and the related
costs of removal and salvage are charged to the reserve for use and
deterioration . The costs of replacement of property are recorded as
new plant . Repair and maintenance costs are recorded as expense .
"Tentative & Preliminary"
For Discussion Purposes Only
-2-
Revenues-
Revenues are recorded as billed on a cycle basis through-
out each month . Billings are made on a flat rate or for actual
usage .
Income Taxes-
The District is exempt from payment of federal and state
income taxes .
( 2 ) PENSION PLAN :
The District has a pension plan covering substantially all
employees who have at least one year of service . The pension plan
is based upon specific benefits to be provided at retirement. The
District pays for the pension plan , and the employee does not have
to pay a share . The District transfers cash to the plan trustee
each year for the current year cost . Contributions for 1986 and
1985 amounted to $2 ,404 and $2 , 316 , respectively, for the water
operations . The present value of accumulated plan benefits for
employees and the net assets available to pay for these benefits is
not maintained by individual operations of the District . The
weighted average assumed rate of return used in determining the
present value of accumulated plan benefits for the District was 7% .
The District employs pension consultants to provide needed data .
Their last report was as of December 31 , 1986 . It showed the
following key information for the whole District :
1986 1985
Actuarial present value of
accumulated plan benefits-
Vested $197 , 118 $167 , 501
Nonvested 20 ,284 20,671
----- - - - - ----- - -
$217 ,402 $188 , 172
Net assets available for
benefits $481 , 372 $430 , 032
( 3 ) CASH RESTRICTED BY THE BOARD
FOR SPECIFIC USES :
Through the Board of Directors ' resolutions , the District
has restricted cash for specific uses . Cash collected in advance
for construction of water distribution facilities and due to
"Tentative & Preliminary"
For Discussion Purposes Only
-3-
contractors and customers is also shown with the associated
restricted cash .
1986
-------------------------
Restricted Construction
Funds Advances
Dart Industries Water Agreement - the
District has collected $40 per lot for
future water source and storage facili-
ties in the developers' project $ 20,345 $ 20,345
Dart Industries Water Services Settlement -
the District has collected funds for
anticipated future repairs of water lines
constructed by Dart Industries 367,724 367,724
Facilities fees collected from customers
for future procurement of source and
storage 422,584 422,584
Portion of connection fees collected from
customers for the future purchase of
water meters 343,555 343,555
Other restricted funds-
FMHA Revenue, Note and Reserve Funds -
�^ water operating margins plus
depreciation held in reserve in
accordance with the loan agreement 26,730 -
Building fund established for the
construction of the District' s
proposed Administration Building 231,220 -
Cash proceeds from the building loan 389,516 -
Consumer deposits and other 56,458 -
---------- ----------
$1,858,132 $1,154,208
The promissory note due to the United States of America ,
Farmers ' Home Administration contains certain commitments which
require the District to establish certain accounting funds . These
funds essentially encompass all of the cash flows of the water
operations . The indentures allow use of the funds for the necessary
and reasonable expense of management , operation , maintenance , repair
and other expenses necessary to maintain and preserve the water
operations , including improvements .
(4) LONG-TERM OBLIGATIONS :
The District renewed an installment loan relating to its
computer on December 1 , 1982. Terms of the loan provide for monthly
�. payments of principal and interest of $2, 570. The interest rate is
10%, to be adjusted annually on December 1 , based upon the bank ' s
current municipal rate . On December 1 , 1988, the entire balance of
"Tentative & Preliminary"
For Discussion Purposes Only
r
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principal and interest is due . These financial statements reflect
the water operations ' portion of the loan .
Truckee Donner P. U . D. Financing Corporation ( the Finance
Corporation ) issued Certificates of Participation ( building loan ) in
the amount of $3 ,050 ,000 to finance the construction of a building
complex . The Financing Corporation is organized to provide finan-
cial assistance to the District by providing public facilities , land
and equipment .
The District has been assigned the responsibility of
constructing the building complex . Further, the District has
entered into an agreement with the Finance Corporation to assume all
payments of the building loan . As part of this agreement , the
District has an option to purchase the building in 2012 . Interest
payments are made semiannually at 7 . 75% beginning on February 1 ,
1987 . Principal payments are made annually beginning February 1 ,
1988 , as follows :
1987 $ -
1988 50 ,000
1989 50 , 000
1990 55 ,000
�-- 1991 55 , 000
Thereafter 2 ,840 , 000
Total $3 , 050 ,000
The new building is expected to be completed by July 1987 .
Total costs incurred for construction as of December 31 , 1986 are
$1 ,277 , 316 . These costs and the loan were allocated between the
electric and water operations of the District .
( 5 ) OBLIGATIONS RECLASSIFIED AS CURRENT :
The promissory note due to the United States of America ,
Farmers ' Home Administration is due in 33 annual installments of
principal and interest of $ 14 ,800 . The interest rate is 5% per
year . The net revenues ( as defined ) of the District ' s water system
are pledged as security.
The bonds payable to the United States of America ,
Farmers ' Home Administration are due each October 1 as follows :
Years Amount
1987 through 2003 $ 5 , 000
r,... 2004 through 2013 10 ,000
2014 through 2018 15 , 000
2019 and 2020 20 , 000
"Tentative & Preliminary"
For Discussion PurnncPc only
-6 -
( 8) CONTINGENCIES :
Lawsuit-
A former general manager filed a lawsuit against the
District alleging wrongful termination of employment and defamation
and seeking damages of $600 ,000 . The case was settled in January
1987 . The settlement was made entirely from insurance proceeds , and
most legal fees were reimbursed by the District ' s insurance carrier .
"Tentative & Preliminary"
For Discussion Purposes Only