Loading...
HomeMy WebLinkAboutCorrespondence TRUCKEE-DONNER PUBLIC UTILITY DISTRICT STATEMENT OF CHANGES IN FINANCIAL POSITION (continued) Years Ended December 31 , 1975 and 1974 1975 1974 Restated Changes in components of working capital : (Note 2) Increase (decrease) in current assets : Cash $111 , 558 $(21 ,614) Notes receivable (7, 207) (440) Accounts receivable 93, 748 29, 347 '- Materials and supplies (6, 041 ) 77, 122 Other current assets 60 1 , 820 _ 192, 118 86, 235 ( Increase) decrease in current liabilities: Accounts payable (234, 530) (77,919) Consumer deposits (3,274) (660) Accrued liabilities 1 , 966 2,806 (235, 838) (75, 773) Increase (decrease) in working capital $(43, 720) $ 10,462 See accompanying notes. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 1975 and 1974 1. Organization and Accounting Policies Organization The Truckee-Donner Public Utility District was organized under the California Public Utility District Act to provide electric and water service to a portion of Nevada County described as Truckee and Donner Lake. Depreciation The provision for depreciation is computed on the straight- line method over the estimated useful lives of the utility plant in service. Average annual composite rates were 3. 70% and 3. 36% in 1975 and 1974 respectively. In general , retirements of utility plant and the cost of removal are charged to accumulated depreciation, which is also credited with any salvage value . The cost of renewals and betterments is charged to plant accounts. The cost of main- tenance is charged to operating expense. r-- Revenues The District does not accrue an estimate for the amount of revenues unbilled at the beginning or end of the period. Street lighting and hydrant service provided to various '— public departments without charge are not included in operating revenues. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 1975 and 1974 1. Organization and Accounting Policies (continued) Utility Plant Utility plant is stated in conformity with Rural Elec- trification Administration Bulletin 181-1 under which : 1 . No value is assigned to donated assets. _. 2. Other assets are stated at cost less contributions in aid of construction. 2. Retroactive Adjustment of Power Rates In February, 1976, the Federal Power Commission determined i -- that the rates charged by the District ' s electrical energy supplier were excessive and ordered a retroactive adjustment of those rates to January of 1974 . The District received a credit of $96,899 plus interest , of which $42,079 was applicable to 1974. The financial statements for 1974 have been restated to reflect this adjustment. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31 , 1975 and 1974 3. Restricted Funds The District has collected and restrictively deposited funds for future uses as follows : Restricted Customer Advances Funds for Construction Dart Industries Water Agreement - ._ the District has collected $40 per lot for future water source and storage facilities in the developers' project . (1) $ 93,296 $141 ,085 r Dart Industries, Prosser Lake Electric Agreement - the Dis- trict has collected $35 per lot for future electrical facilities in the development . 11 , 244 10, 885 Ponderosa Palisades - electrical agreement to provide line extensions to the project . (1) - 8 , 845 _. Under a general resolution of the District $50 per lot has been collected from developers and deposited for future water source and storage facilities. 41 ,834 41 ,870 r_ Loan principal and interest fund - in accordance with REA and Sierra Pacific Power Company loan agreements , principal and interest payments are to be placed on deposit until pay- ment is due. 34 ,427 - West River Street Assessment District Custodial Fund (2) 9, 277 9 , 277 Dart Industries water services settlement - the District has collected funds for anticipated future repairs of water lines constructed by . Dart Industries 70 ,000 70,000 Other 23, 534 - $283 ,612 $281 ,962 ... TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31 , 1975 and 1974 3. Restricted Funds (continued) (1) At December 31 , 1975 $56, 634 of the funds advanced by developers has been utilized for general operating purposes. By contract all monies received from developers for future construction of facilities in their project are to be placed in trust until such time as the facilities are required. As trustee, the District has a liability to the trust for the monies so utilized. The corresponding amount of such funds at December 31, 1974 was $60,440. (2) In January 1975, the District, acting as Trustee for the West River Street Assessment District (WRSAD) , received approxi- mately $101,000 from the issuance of bonds for the water system improvements on West River Street. Repayment will be financed by the residents of the WRSAD and collections will be made by Nevada County in conjunction with property tax collection. The District is holding the funds not utilized for construction for future improvements or repairs within WRSAD. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 1975 and 1974 4. Long-term Debt REA bonds, secured by pledge of all assets: 1975 1974 First series 2% bonds, payable in annual amounts varying from $13 , 000 to $14, 000, in accordance with sinking fund requirements, balance due July, 1994 $250, 000 $263, 000 Second series 2% bonds , payable in annual amounts varying from $3, 000 to $5, 000, in accordance with sinking fund requirements, balance of $6, 000 due May, 2002 100, 000 103, 000 Third series 2% bonds, net of undrawn funds of $98,426, payable in annual amounts varying from $3, 000 to $5, 000, in accordance ^- with sinking fund requirements, balance of $8, 000 due May, 2004 22, 574 25, 574 $372, 574 $391 , 574 Note payable to Sierra Pacific Power Company - due in semi-annual installments of $9, 213 including interest at a rate of 4. 68%, final payment due March, 1983. The net revenues ._. (as defined) of the Donner Lake Electric System are pledged as security. The agreement also requires the District to establish separate accounting records , bank accounts for the transactions of this system, and a trust fund for payments on the note. Since inception , the District has not generally complied with these provisions, but as of December 31 , 1975 a waiver of com- pliance was obtained from the lender . a-- TRUCKEE-DONNER PUBLIC UTILITY DISTRICT NOTES TO FINANCIAL STATEMENTS '- December 31, 1975 and 1974 4. Long-term Debt (continued) Assessment payable - sewer assessments payable over a twenty year period plus interest at 6%, to Nevada County, California. Final payment due 1990. Note payable to bank - due in monthly installments of $474 including interest at a rate of 7%, through September, 1980. 5. Contingencies Dart Industries water agreement and related lawsuits - In 1970 an agreement was signed between the District and Dart Industries for the purpose of providing water service to a _ Dart Industries subdivision. The agreement required Dart Indus- tries to construct water source and storage facilities at Donner Lake. Subsequent to completion of the facilities, ownership was transferred to the District for future maintenance and operation in December 1975. The Attorney General of the State of California has filed suit against the District and Dart Industries to restrain them from using Donner Lake as a water source. Since this action claims no monetary damages, the District has no liability resulting from this action. Subsequent to the acceptance of the water system, a citizens group has filed suit to have Dart Industries reassume operation and maintenance of the water system. This action also claims no monetary damages to the District. SUPPLEMENTARY INFORMATION TRUCKEE-DONNER PUBLIC UTILITY DISTRICT STATEMENT OF DEPARTMENTAL OPERATIONS For the Year Ended December 31 , 1975 Electric Donner Lake Truckee Water Total Operating revenues $373,631 $1 , 131 ,066 $96, 732 $1 ,601 ,429 Operating expenses : 173 ,685 991 ,655 - 1 , 165, 340 Power purchased 21 , 303 21 , 303 Transmission expense - _ Distribution expense 21 , 328 47 ,463 9, 594 78, 385 Consumer account expense 41 , 208 51 , 269 13, 833 106 ,310 Administrative and general expenses* 31,649 95, 809 8, 194 135, 652 Depreciation expense 15, 626 60,716 35 ,424 111 ,766 Interest on long-term - 9, 003 13,971 debt 4, 968 288 ,464 1 , 255,915 88, 348 1 ,632,727 Net operating margins 85,167 $ (124, 849) $ 8, 384 $ (31 , 298) (loss) $ * The District ' s accounting records do not departmentally segregate administrative and general expenses . For pur- poses of this analysis, such charges have been allocated on the basis of departmental revenue . STEVEN E. GRUMER ATTORNEY AT LAW LAKE TAHOE OFFICE: TRUGKEE OFFICE: 761 NORTHWOOD BOULEVARD KIELNOFER BUILDING - MAIN EAST POST OFFICE BOX 2455 POST OFFICE SOX 3068 TRVGKEE INCLINE VILLAGE, NEVADA 09450 . CA LIFO 95734 (702) 631-1 L74 IY 1 61 567-21 1 2 July 8 , 1976 Truckee-Donner Public Utility District Post Office Box 309 Truckee, California RE: Potential Litigation Concerning Defamation of District Manager Gentlemen: With reference to the recall statement signed by Director Craig, Marigrey Fish and Marge Adkerson, I would advise that as general counsel of the District, I would be unable to represent the manager in any potential defamation action due to the inherent conflict of interest. However, I would recommend that Mr. Hobensack consult outside counsel to pursue whatever legal rights he may have with respect to the same. Very tr ly yours, _ S even E. Grumer SEG: js PE (71 � �/ � ❑ ❑ ASSOCIATES 1 2 6 7, ENGINEERING CONSULTANTS C '7'Ru --_v DON'`riz 2060 PARK AVENUE P.U.0� OROVILLE. CALIFORNIA 95965 Ul� 3Y: PHONE (Die) 1533-GA57 PP L June 25, 1976 James Trout, Manager State Land Division 1807 13th Street Sacramento , California 95814 Re: Your File W20369 Truckee Donner P .U .D. Dear Mr. Trout : Please let this letter confirm the telephone discussions that I have had with Mr . Gerald Gordon of your office concerning the Truckee D.onner Public Utility District 's application to lease State land at -the east end of Donner Lake. Following the May 27 , 1976 Commission Hearing , the District . staff, Dart and Dart ' s hydrologist have discussed, refined and agreed on specific plan of action for the groundwater exploration of the Truckee region . The attached flow diagram details the specific actions that will be undertaken from this date until the pending application may be withdrawn. Groundwater supplies for the region may be assured (if everything goes according to the time table ) in the spring of 1977. " This Is the optimist data . The latest date at which time the groundwater supplies for the region may be assured is the fall of 1977 . This would be the pessimist date . The continuation of the current limbo status of the application Is justified for the following reasons . 1 . To the best of our knowledge there is no harm done to any person, group, district, county or the State by virtue of continuing the application . OR.LLOYO M-COOK ED.U.- JOKE GOOK M.-K. OAN J.COOK C-L. James Trout Sacramento, California June 25, 1976 Page 2. 2 . The District and Dart have agreed on a specific plan of action with definitive required actions . 3 . The District and Dart are each cognizant of the region 's water requirement and of each others special requirements and commitments . 4 . There is an inter-face of State Agencies that has existed between the Lands Division and the S.W.R .C.B. Water Rights Division that should be continued to the conclusion of this basic water supply matter. Unilateral action of the commission could, in my opinion ,"prejudice the water right issue . 5 . The lease of State land and the water right issue are securely integrated through the efforts of the Attorney General 's Office, the Lands Division and the Water Rights Division . The Draft E . I .R . speaks to the combined issues and proposes to resolve them collectively. 6. The preservation of' the District position in time is very important as a back stop should the groundwater exploration fail It is my personal opinion that the groundwater exploration has greater than an eighty percent chance of success. However-, it is also my strong opinion that 20% chance of failure should be guarded against with a maximum of effort and the cooperation of the commission . There are communities throughout the State that did not properly guard against the small percentage risk of water supply failure and are rationing and in a few cases without water. As the District ' s Engineer, I do not want the Truckee Donner P.U .D. to ever be in such a position . r._ 7. The exploration program will provide new information that .should increase the potential of groundwater supplies and decrease the need for surface supplies . 8 . The increasing probability of groundwater supplies as a result of the exploration will reduce the potential of bi-state litigation 4 over the surface water rights of the Truckee River. The reduction of potential litigation is - a benefit to the entire State. 9 . Continuation of the application ' s limbo status will save $60,000 to $90,000 in the preparation of. the Final E . I .R .; The Final E . I .R . must be prepared to satisfy other State Agency requirements even. if the Commission elects to void the District 's application. There will be staff timd (W.R .C .B. , Attorney General, and others) devoted to an effort that in all likelihood would be wasted. The redirection of the staff time will be a benefit to the entire State . James Trout • Sacramento, California June 25 , 1976 Page 3 . 10. The fundamental doctrine of cooperation between subdivision of the State Government would indicate that unless some demonstrated disservice would result, the Commission should honor the Truckee Donner Public Utility District 's request to keep the application in the limbo status while the District accomplishes what I feel is a mandatory exploration program. - Your long agenda lead ti;m.e has prompted this letter, rather than one properly presented :by the District . This letter represents my understanding of the District 's position . Please include this data with your agenda package.. Should the Board find that I have errored _ in presenting their position, you will be notified follow- ing the July 6, 1976- Board Meeting. Very truly yours, COOK ASSOCIATES ban J. Cook Civil Engineer DJC/cap Enclosure cc : Truckee Donner P.U .D. Board John Craig Pat Sutton 'Pput_ -(ov Ss�rp Roy Waters EuCIUSvnt�S AT?��u��9 M. Rex Anderson Bob Christensen Paul Hobensack Sid Karsh Don Strand Dr. John Sharp John DeHorn Steven Grumer Adolph Moskovitz ARTHUR YOUNG COMPANY S55 CAPITOL MALL SACRAMENTO, CALIF-pRNIA 9S814 October 6, 1975 Board of Directors :aruckee-Donner Public Utility District Gentlemen: Vie have examined the financial statements of the Truckee-Donner Public Utility District at December 31, 1974 and for the year then ended and have issued our report thereon dated May 9 , 1975. As a part of our examination, we reviewed and tested the District's system of internal accounting controls to the extent we considered necessary in order to Evaluate the system as required by generally accepted auditing standards. Under these standards , the purpose . of such evaluation is to establish a basis for reliance on the system in. determining the .nature, timing and extent of other auditing procedures that are necessary for expressing an opinion on the financial statements . ..._ The objective of internal accounting controls is to provide reasonable, but not absolute, assurance as to the safeguarding of assets against loss from unauthorized use or disposition and as to the re-I—J ability of financial records for preparing financial state- ments and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a system of internal_ accounting 4ontrol should not Exceed the benefits derived, and also recognizes that the evaluation of these factors necessarily requires estimates and Judgments by management. ARTHUR YOUNG $ COMPANY Board of Directors -2- October 6, 1975 There are inherent limitations that should be recognized in considering the potential effectiveness of any system of internal accounting controls. In the performance of most control procedures, errors can result from misunderstanding of instructions, mistakes of judgment, carelessness, or other personal factors .. Control r- procedures whose effectiveness depends upon segregation of duties can be circumvented by collusion. Similarly, control procedures can be circumvented intentionally by management with respect either to the execution and recording of transactions or with respect to the estimates and judgments required in the preparation of finan- cial statements. Further, projection of any evaluation of internal accounting controls to future periods is subject to the risk that the procedures may become inadequate because of changes in condi- tions, and that the degree Of compliance with the procedures 7aay deteriorate. Our study and evaluation of the District's system of internal accounting controls for the year ended December 31, 1974, which were made for the purpose set forth in the first paragraph above, were not designed for the purpose of expressing an opinion on internal accounting control and would not necessarily have disclosed all weaknesses in the system. Such study and evaluation disclosed the conditions described in the following report that we believe to be material weaknesses . These weaknesses were not of such a nature as to affect our ability to express an opinion on the District's financial statements, but they did require us to perform additional auditing procedures or to extend certain procedures. Very truly yours, SUM ARY OF INTERNAL CONTROL WEAKNESSES Property ledger out of balance _ The property ledger contains the detail of each plant account which, in the aggregate, equals the plant in service accounts on the District's balance sheet. At December 31, 1974, the property led- ger was out of balance with the general ledger. There had been no postings to the property ledger during the year, and no attempt had been made to agree this ledger to the general ledger. During the audit, . the necessary reconciliation of the property ledger to the general ledger was performed and appropriate adjust- ments were made to bring the ledgers into balance. These ledgers should be updated on a monthly basis to maintain proper control over the District's plant and equipment. Construction in process work orders Similar to the account described above, the summary of all active construction work orders should equal the construction in progress account in the general ledger. At December 31, 1974, the total of construction work orders did not equal the construc- tion in progress account in the general ledger. We also noted that work orders were not closed to the related plant in service account when the construction had been completed and the asset was. placed in service_ Effective control over construction cost may be lost when work orders are not balanced monthly, and failure to close work orders at the time of completion may cause an inaccurate calcu- lation of depreciation. As a result of the audit, at December 31, 1974 the construc- tion work orders were "balanced and completed work orders were closed. We recommend such procedures be performed by the District personnel on a monthly basis. Compliance with Sierra Pacific loan agreement The `District entered into an agreement with Sierra Pacific Power Company in 1967 for the purchase of the Donner Lake Electric System. Included in that agreement are the following provisions which have not been complied with by the District- 1. Revenues received from the Donner Lake System may - not be utilized for any purpose other than main- tenance and operation of the Donner Lake System and payments on the principal -and interest of the loan. 2. The District shall establish a separate fund for the receipt and disebum The District shall make prepayments on the loan sement of funds related to the Donner Lake Sy 3. the net ues balance to the extent that and interest ncostsXceeds . the expenses and principa 1 It appears from the District's financial statements for years f ted, that if these pro- prior to 1974, with which we were not associa ,,.._ visions had been complied with, the loan would have been liquidated. Pay off ent with Sierra the loan or, if this is not financially possible, To resolve the default on the loan, we recommend that either Y the District re-negotiate the agreem Pacific Power the District p Company. Restricted funds control Pursuant s with to vardeeuosl?tsirict r have beenlcollecteddandn held tby the developers , certain P District in interest bearing trust accounts. In several instances s and utilized, count funds have been withdraoseffor which these dthey swere ccollected. rom for other than the purp policy, the District should not release funds As an ongoing from restricted deposit accounts until compliance to the underlying arrangements has been assured. contractual Unrecorded assets our review of documents supporting the receipt t funds DuringPayable to the held in restricted deposit, we discovered notes cedadjustment were posted to the. books District had not been recorded andj collection of these notes was �. not being pursued. Appropriate and records to include these assets and, the District is now in the process of collecting these amounts. The complete effects of accounting transactions should be recog- nized when a contract is entered. If questions arise concerning nt accountant should be consulted. such transaction, your independe Contract �-nd correspondence file were encountered in During the audit considerable problems entation and information for accounting obtaining supporting docum District- transactions due to the poor condition of the files at the District. It is our opinion the Files of the District should be reorganized so that all documents are filed by contractor or primary party and by contractual event. r pertinent documents should be filed regularly be reviewed to chronologically and, such files should reg obligations are being determine that contractual complied with. Inadequate reporting �I The Board of Directors has been entrusted with the duty to i administer and determine the policy of the District. The financial information generated for the Board does not give them the proper { information to adequately fulfill these duties. We believe that adequate monthly reporting should include: Balance sheet Income statement Comparison of budget to actual Aged listing of accounts receivable Aged listing of accounts payable Statement of cash position Delinquent payments on sewer assessments During the year, the District paid past and current payments due on sewer assessments plus substantial late payment penalties The District should -prioritize its payments so that such penalties are not allowed to accrue.