LAFCO

Bard Water District Service Area Plan

Local Agency Formation Commissions · imperial-msr-2016-bard-water-district-service-area-plan · Msr · 2016-01-01

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EXECUTIVE OFFICER'S REPORT To The Local Agency Formation Commission TO: Commissioner City MARIA NAVA-FROELICH Commissioner Supervisor MICHAEL KELLEY (Chair) JASON JACKSON City RAY CASTILLO Commissioner Commissioner Supervisor Commissioner DAVID WEST (Vice-Chair) Public Alt Commissioner JACK TERRAZAS [Supervisor] Alt Commissioner VACANT [City] Alt Commissioner RALPH MENVIELLE [Public] REPORT DATE: March 1, 2016 FROM: Jurg Heuberger, AICP, CEP, Executive Office PROJECT: Bard Water District SOI update and the matching Service Area Plan (SAP) Municipal Service Review (MSR) Update HEARING DATE: March 24, 2016 TIME: 8:45 AM AGENDA ITEM NO: 12 HEARING LOCATION: El Centro City Council Chambers, 1275 Main Street, El Centro, CA RECOMMENDATION(S) EXECUTIVE OFFICER BY THE (In Summary & Order) OPTION #1: Approve the proposed Sphere of Influence (SOI) and the Service Area Plan/MSR update as presented by the Executive Officer. OPTION #2: Approve the proposed Sphere of Influence (SOI) and Service Area Plan/MSR update as requested with modifications, following the hearing by the Commission. OPTION # 3: Continue the hearing not to exceed 70 days. OPTION # 4: Deny the Sphere of Influence and Service Area Plan update, and provide direction to the District for corrections. Project Data: DATA & FACTS: BWD 1-16 Project ID Project Name: Bard Water District Sphere of Influence and Service Area Plan Update (SAP)/MSR Applicant/Proponent: Bard Water District Application Type: LAFCO requested update Application Filed: N/A Certificate of Filing: N/A Area/Size: See Map Location/Legal: Maps of the SOI are included in this report. Population: NA Proposed Project: Service Area Plan (SAP) / Municipal Services Review (MSR) Update. The most recent version of the Bard Water District MSR/SAP is 2006. MSR/SAP: TAX AGREEMENT: Board of Supervisors Action: N/A N/A (will be required upon notification by LAFCO) City Resolution: Tax Split: N/A CEQA: Lead Agency: LAFCO Exempt Documentation: ANALYSIS Legal Requirements (Historical information): I: Cortese-Knox-Hertzberg Reorganization Act of 2000 (CKH), also referred to as Government Code 56000 et Seq., provides the legal basis for the requirement of the Sphere of Influence and the Service Area Plan or Municipal service Review (MSR) being considered within the scope of this hearing. G.C. § 56425 (a) states in part; "In order to carry out its purposes and responsibilities for planning and shaping the logical and orderly development and coordination of local governmental agencies so as to advantageously provide for the present and future needs of the county and its communities, the commission shall develop and determine the sphere of influence of each local governmental agency with the county and enact policies designed to promote the logical and orderly development of areas within the sphere." G.C. § 56425 (b - i) provide the frame work within which the Commission may approve the sphere of influence and the process that needs to be followed. G.C. § 56425 (e) states in part; "In determining the sphere of influence of each local agency, the commission shall consider and prepare a written statement of its determination with respect to each of the following: The present and planned land uses in the area. (1) The present and probable need for public facilities and services in the area. (2) The present capacity of public facilities and adequacy of public services that the agency provides (3) or is authorized to provide. The existence of any social or economic communities' of interest in the area if the commission (4) determines that they are relevant to the agency. G.C. § 56425 (f) is a critical new section that changed the parameters of the prior review insofar that this section now requires that; "Upon determination of a sphere of influence, the commission shall adopt that sphere, and shall review and update, as necessary, the adopted sphere not less than once every five years". There appears to be a misconception that the agencies will have to prepare a full new plan every five years, however the intent here is to "review" the prior plan and to amend it if necessary. If there have been significant changes, or if there has been explosive growth, then certainly the amendment will be much more comprehensive. G.C. § 56428 (a) provides the mechanism for anyone to file a request with the executive officer for an amendment to the sphere of influence. It states in part; "Any person or local agency may file a written request with the Executive Officer requesting amendments to a sphere of influence or urban service area adopted by the commission..." Again there may be some confusion in this area as there have been numerous questions about the "limitations" of the sphere and the process to amend. It appears clear that the mandate is to review the plan at least every five years but there is no apparent restriction on the number of times that it may be amended nor is there a restriction on who can request such an amendment, there is only a process that needs to be followed. It goes without saying however that for an amendment to work it need the consensus of the City/District, the County and the Commission. Just as there are provisions for the addition of areas to a sphere of influence there are provisions for a process to remove an area from an approved sphere boundary. This is found in G.C. 56429. In addition to the SOI process G.C. § 56430 (a - d) now addresses the requirement for the review of municipal services which in our case has been referred to for nearly a decade as the Service Area Plan (SAP). G.C. § 56430 (a) states; "In order to prepare and to update spheres of influence in accordance with Section 56425, the Commission shall conduct a service review of the municipal services provide in the county or other appropriate area designated by the commission. The commission shall include in the area designated for service review the county, the region, the sub region, or any other geographic area as its appropriate for an analysis of the service or service to be reviewed and shall prepare a written statement of its determination with respect to each of the following: 1) Infrastructure needs or deficiencies. 2) Growth and population projections for the affected area. 3) Financing constraints and opportunities. Cost avoidance opportunities. 4) Opportunities for rate restructuring. 5) 6) Opportunities for shared facilities 7) Governmental structure options, including advantages and disadvantages of consolidation or reorganization of service providers. Evaluation of management efficiencies 8) Local accountability and governance." 9) G.C. § 56430 (d) also required that the Office of Planning and Research of the State, in consultation with the commissions, and the California Association of LAFCO's and other governmental agencies, SHALL prepare a comprehensive set of guidelines for service reviews by July 1, 2001. Since these guidelines are voluminous a full text copy is not attached to the report however there is a PDF copy on the CD rom that has been provided to each commissioner and every interested party. Furthermore, the Executive Officer has urged the various entities to utilize the "draft final" version as a guide to preparing the SOI and SAP. II: The PLAN as submitted: The District is a very small water District that provides agricultural water similar to the IID for an area known as Bard Valley in eastern Imperial County. Approximately 48% covers the Bard Unit and 52% covers the Indian Unit. The District has not changed any of its services or operations since its last review in 2006, therefore this review essentially covered the financial information only. Services by the District have functioned adequately according to the Districts staff and other agencies. District Approvals: III: The District will need to accept the LAFCO approval of the SOI/MSR/SAP via a resolution to include any and all recommendations. IV: CEQA: It is argued and it is the Executive Officers opinion that the Service Area Plan fit within one or more "exemptions" under the provisions of CEQA, not the least of which is the possible determination that this process is "not a project". V: Analysis by the Executive Officer / Determinations by the COMMISSION: G.C. § 56425 (e) states in part; "In determining the sphere of influence of each local agency, the Commission shall consider and prepare a written statement of its determination with respect to each of the following: The present and planned land uses in the area. (1) The present and probable need for public facilities and services in the area. (2) The present capacity of public facilities and adequacy of public services that the agency provides (3) or is authorized to provide. The existence of any social or economic communities of interest in the area if the commission (4) determines that they are relevant to the agency. Proposed findings by the Commission: 1) The present land use within the boundaries of the proposed SOI/SAP includes residential, but remains predominately agricultural. The District provides only irrigation water and provides no treatment for potable systems. The District provides no other services and does cover both tribal as well as non-tribal lands. The present services provided by the District are simply the distribution of Colorado River 2) water for irrigation of agricultural lands. Currently the services provided are according to the audited financial information being 3) supplied in a financially stable and adequate manner. There are no known social or economic communities of interest relevant to this review. 4) VI: Public Notice: Public notice for the proposed project hearing before the Imperial County Local Agency Formation Commission has been given, according to Section § 56427. Notice was issued in the form of a publication in the IV Press at least twenty-one (21) days prior or said hearing, and posted on our webpage. VII: Report: In accordance with Section § 56665, the Executive Officer has prepared a report, and presented said report to your Commission and to any public member requesting such report. In addition, a copy of said report has been issued to the Bard Water District and any party requesting a copy. VIII: Conflict of Interest Statement: To date at the writing of this report (March 1, 2016) no Commissioner has indicated that there is any conflict of interest with regard to this project, nor has any Commissioner reported any communications with the Applicant, Proponent or Opponent. The Commissioners will be asked to declare that during and prior to the public hearing. The Executive Officer does not have any type of known conflict of interest or financial gain as a result of this project and owns no property in the vicinity. EXECUTIVE OFFICERS RECOMMENDATION RECOMMENDATION: It is the recommendation of the Executive Officer that LAFCO conduct a public hearing and consider all information presented in both written and oral form. The Executive Officer then recommends, assuming no significant public input warrants to the contrary, that LAFCO take the following action; 1: Certify that the Service Area Plan is exempt from CEQA. 11: Make the finding that this Sphere of Influence and Service Area Plan (SAP)/ Municipal Service Review (MSR) is in substantial compliance with the provisions of the Cortese-Knox-Hertzberg Reorganization Act of 2000 and the Imperial LAFCO Policy and Procedures. III: Make the findings pursuant to Government Code Section § 56425 that: a. The Service Area Plan has been reviewed by the Executive Officer and the Commission and the District has the capacity and ability to provide services within the area. b. The Service Area Plan for the District shows it to be operating its service in a financially sound manner. c. The Sphere of Influence currently adopted remains adequate for the District and no annexations or changes to the boundary have occurred since the prior SAP review. IV: The Commission finds that, the present land uses within the boundaries of the District are predominately agricultural and the services are strictly for providing irrigation water. The Commission finds that, there are no known social or economic communities of interest in the areas. V: Since there have been no protests received, the Commission adopts and approves the current Sphere of Influence Boundary as previously reviewed and approve LAFCO Policy: The proposed Sphere of Influence and Service Area Plan appears to be consistent with the Cortese-Knox- Hertzberg Reorganization Act of 2000, the Imperial LAFCO Policies and Procedures and the County of Imperial General Plan (Chapter IV. B. of LAFCO's Policies, Standards and Procedures). Furthermore, the City has (according to the Service Area Plan) the ability to supply the necessary public service, and has assured LAFCO that it has the capacity to service the areas. NOTE: All "cc" submittals are the Executive Officer's Report only. Attachments are generally too voluminous and are only supplied on CD. Information about the project may also be found on the LAFCO web page at www.iclafco.com. CC: Bard Water District ATTACHMENTS: EXHIBIT A - Audited Financial Information EXHIBIT B - Current Sphere of Influence Boundary Map S. EXHIBIT A Audited Financial Information BWD 1-16 BARD WATER DISTRICT Financial Statements With Independent Auditor's Report As of December 31, 2014 and for the year then ended * George J. Woo Certified Public Accountant INDEPENDENT AUDITOR'S REPORT To the Board of Directors Bard Water District Bard, California I have audited the accompanying financial statements of the Bard Water District (the "District"), as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively compromise the District's basic financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted the audit in accordance with auditing standards generally accepted in the United States of America and the State Controller's Minimum Audit Requirements for California Special Districts. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly I express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1085 State Street • El Centro, California 92243 • (760) 337-5555 • Fax 337-8796 E-mail address gjwcpa@sbcglobal.net I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the District as of December 31, 2014, and the changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America as well as accounting systems prescribed by the State Controller's Office and state regulations governing special districts. Other Matters Accounting principles generally accepted in the Unites States of America require that the management's discussion and analysis on pages 3 through 7 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. I have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to my inquiries, the basic financial statements, and other knowledge we obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. In I was July 15, 2015 . Bard Water District Management's Discussion and Analysis For the year ended December 31, 2014 This section of the Bard Water District's (District) financial statements presents an analysis of the District's financial performance during the year ended December 31, 2014. This information is presented in conjunction with the basic financial statements, which follow this section. Financial Highlights for year Total Assets decreased $ 24,845. Operating revenues increased $ 243,323. Unrestricted Net Assets increased $82,945. . Overview of the financial statements The financial statements consist of the following two parts: Management's Discussion and Analysis, and Financial Statements. The financial statements include notes to the financial statements that provide additional information that is essential to a full understanding of the data in the financial statements. The notes are an integral part of the financial statements. Required Financial Statements The financial statements of the District report information utilizing the full accrual basis of accounting. The financial statements conform to accounting principles which are generally accepted in the United States of America. The statements of Net Assets include information of the District's assets and liabilities and provide information about the nature and amounts of investments in resources (assets) and the obligations to District creditors (liabilities). The Statements of Activities and Changes in Net Assets identify the District's revenues and expenses for the year ended December 31, 2014. This statement provides information on the District's operation over the past year and can be used to determine whether the District has recovered all of its actual and projected costs through user fees and other charges. The third financial statement is the Statement of Cash Flows. This statement provides information on the District's cash receipts, cash payments and changes in cash resulting from operations, investments and financing activities. From the Statement of Cash Flows, the reader can obtain information on the source and use of cash and the change in the cash and cash equivalents balance for the year ended December 31, 2014. Bard Water District Management's Discussion and Analysis For the year ended December 31, 2014 Financial Analysis of the District The Statement of Net Assets and the Statement of Activities and Changes in Net Assets provide an indication of the District's financial condition and also indicate whether the financial condition of the District improved during the previous year. The District's net assets reflect the difference between assets and liabilities. An increase in net assets over time typically indicates and improvement in financial condition. Net Assets A summary of the District's Statements of Net Assets is presented below. Table 1 Condensed Statement of Net Assets Increase 2013 2014 (Decrease) Current and Other Assets 2,211,557 $ 2,224,561 13,004 Capital Assets 6,813,918 6,776,069 37,849) Total Assets 9.025.475 9,000,630 24,845) Long-term Debt 1,051,000 957,133 (93,867) Other Liabilities 43,063 162,462 119,399 Total Liabilities 1,094,063 1,119,595 25,532 Net Assets invested in capital Assets, net of related debt 5,762,918 5,698,498 (64,420) Restricted Reserves 381,049 312,147 (68,902) Unrestricted Reserves 1,787,445 1,870,390 82,945 Total Net Assets 7,931,412 $ 7,881,035 (50.377) As the above table indicates, total assets decreased $24,845 from $9,025,475 to $ 9,000,630 during the year ended December 31, 2014. This is comprised of a increase of $ 13,004 in current and other assets and a decrease of $ 37,849 in capital assets. The decrease in current and other assets and the decrease in capital assets reflect a period of moderate Capital Expenditures and an increase in accumulated depreciation by the current year depreciation expense. Total liabilities reflect an increase of $ 25,532. Bard Water District Management's Discussion and Analysis For the Year Ended December 31, 2014 Net Assets (Continued) Table 1 also indicates the total net assets decreased $50,377 from $7,931,412 to $ 7,881,035. This decrease is due to an decrease of $ 64,420 in net assets invested in capital assets, net of related debt; a decrease of $ 68,902 in net assets restricted and a increase of $82,945 in unrestricted net assets. These amounts reflect the effect of the current year results from the operation of its resources on the District's Total Net Assets. Table 2 Condensed Statement of Activities Increase 2013 2014 (Decrease) Operating Revenue $ 1,379,823 1,623,146 $ 243,323 Nonoperating Revenues 123,081 119,849 (3,232) Total Revenues 1,502,904 1,742,995 240,091 Depreciation Expense 158,290 165,289 6,999 Other Operating Expenses 1,322,118 1,562,280 240,162 Nonoperating Expenses 134,517 65,803 68,714 Total Expenses 1,614,925 1,793,372 178.447 Change in Net Assets $ (112,021) (50,377) 61,644 The Statement of Activities and Changes in Net Assets identify the various revenue and expense items that impact the change in net assets. As the information in Table 2 indicates, Total Revenue increased $ 240,091 between the year ended December 31, 2013 and the year ended December 31, 2014. Table 2 indicates that the District's total revenues increased $ 240,091 to $ 1,742,995 in the year ended December 31, 2014 from $ 1,502,904 from the year ended December 31, 2013. Total expenses increased $ 178,447 during the year ended December 31, 2014 and the year ended December 31, 2013. Bard Water District Management's Discussion and Analysis For the year ended December 31, 2014 Capital Assets A summary of the District's Capital Assets is presented below. Table 3 Capital Assets Increase 2013 2014 (Decrease) Buildings 136,843 $ 136,843 $ -0- Heavy Equipment 1,127,978 127,440 1,255,418 Office Equipment and Fixtures 35,420 35,420 -0- Vehicles 231,179 231,179 -0- Canals & Delivery Systems 7,932,854 7,932,854 -0- Subtotal 9,464,274 9,591,714 127,440 Less Accumulated Depreciation (2,650,356) (2,815,645) (165, 289) Total Capital Assets $ 6,813,918 $ 6,776,069 $ (37,849) As of December 31, 2014, the District's investment in capital assets totaled $ 9,591,714. This is an increase of $ 127,440 over the capital asset balance of $ 9,464,274 as of December 31, 2013. Capital assets include all of the District's major capital assets, including infrastructure assets, water mains, pipes and District headquarters and other structures, as well as vehicles and other equipment with a value of $ 5,000 or more. A comparison of the District's capital assets over the past two fiscal years is presented in Table 3. Long - Term Debt Revenue Certificates of Participation (Series 2004) in the amount of $ 1,800,000 issued in April 2004 to fund costs associated with the upgrade and replacement of the Reservation Main Canal Improvement Project. This debt was to be paid in annual installments through the year 2024. The District has covenanted that it will fix, prescribe and collect rates, fees and charges for use of the District's water system during each fiscal year which are at least sufficient to yield in each fiscal year net revenues equal to 125% of the debt service for such fiscal year, plus any amount necessary to restore the bond reserve fund to the reserve requirement. Bard Water District Management's Discussion and Analysis For the year ended December 31, 2014 On December 17, 2013 the District legally defeased $ 1,145,000 of the 2004 COPs. As of December 31, 2014, the outstanding debt was $ 955,000 compared to $ 1,051,000 as of December 31, 2013. The reduction of debt service with the defeasance is approximately $ 13,000 annually through 2024. Request for Information This financial report is designed to provide a general overview of the Bard Water District's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Administrative Assistant, Bard Water District, 1473 Ross Road, Winterhaven California, 92283. Bard Water District Statement of Net Assets As of December 31, 2014 ASSETS Current assets: Cash and investments $ 126,876 Accounts receivables 253,897 Inventory 33,146 Total current assets 413,919 Cash and Investments - restricted 312,147 Noncurrent assets: Property and equipment 9,591,715 Less accumulated for depreciation (2,815,646) Net Capital Assets 6,776,069 Other Non-Current assets: Investment in Siphon Drop Project 1,474,375 Unamortized bond issuance costs 11,045 Refundable deposits 13,075 Total Other Assets 1,498,495 TOTAL ASSETS $ 9,000,630 LIABILITIES AND NET ASSETS Current Liabilities: Accounts payable $ 35,977 Current portion of long-term debt 120,437 Accrued expenses 6,048 Total Current Liabilities 162,462 Non-Current Liabilities: Bonds Payable, net of current portion 862,000 S Contract payable, net of current portion 95,133 Total Non-Current Liabilities 957,133 TOTAL LIABILITIES 1,119,595 Net Assets: Invested in capital assets, net of related debt 5,698,498 Restricted net assets 312,147 Unrestricted net assets 1,870,390 TOTAL NET ASSETS 7,881,035 $ The accompanying notes are an integral part of these financial statements. Bard Water District Statement of Revenue, Expenses and Changes in Net Assets For the year ended December 31, 2014 OPERATING REVENUES Indian unit assessments $ 624,846 Agricultural water fees 578,467 RMIP agricultural water fees 131,403 Excess water fees 271,977 Reimbursable work 16,453 TOTAL REVENUE 1,623,146 OPERATING EXPENSES Payroll expenses 533,336 Insurance 215,024 Fees & dues 209,540 Legal Fees 218,209 Depreciation expense 165,289 Concrete lining 854 Employee drug testing 350 Office supplies 12,025 Payroll taxes 38,582 Rentals 14,015 Other expenses 11,689 Safety equipment 954 Light equipment repair 14,066 Irrigation structure improvements 49,725 Parts & supplies 7,802 Freight & shipping charges 291 Operational supplies 21,228 Telephone & communication 8,095 Large equipment repair 28,577 System maintenance 13,644 Weed control 43,057 Wood gate material 2,574 Metal gate material 8,265 Fuel & oil 74,939 Employee & cCustomer supplies 8,405 Utilities 4,957 Bank charges 278 Multi Species LCR MSCP 20,035 Building maintenance 972 Medical employee deductible 757 Dept. of Toxic Substance 35 TOTAL OPERATING EXPENSES 1,727,569 OPERATING NET INCOME (LOSS) (104,423) The accompanying notes are an integral part of these financial statements. Bard Water District Statement of Revenue, Expenses and Changes in Net Assets (Continued) For the year ended December 31, 2014 NON-OPERATING REVENUE (EXPENSE) 14,828 Property taxes Other income 21,957 Siphon drop power 83,006 Interest earned 58 (65,803) Interest expense / bond costs Total Non-Operating Revenue, Net 54,046 (50,377) Change in Net Assets Total Net Assets, Beginning of Year 7,931,412 Total Net Assets, End of Year $ 7,881,035 The accompanying notes are an integral part of these financial statements. . Bard Water District Statement of Cash Flows For the year ended December 31, 2014 Reconciliation of Change In Net Assets to Net Cash Provided by Operating Activities: Operating income (Loss) (104,423) S Adjustments to Reconcile Change In Net Assets to Net Cash Provided by Operating Activities: Depreciation Expense 165,290 (107,517) (Increase) Decrease in accounts receivables (Increase) Decrease in prepaid expenses 21,075 68,902 (Increase) Decrease in investments restricted (Increase) Decrease Investment in Siphon Drop (21,216) 1,233 (Increase) Decrease in other assets Increase (Decrease) in accounts payable (2,495) 1,456 Increase (Decrease) in accrued expenses 22,305 Net Cash Provided by Operating Activities Cash Flows from Non - Capital Financing Activities: Proceeds from property taxes 14,828 21,957 Other Income Net Cash Provided by Non-Capital Financing Activities 36,785 Cash Flows from Capital and Related Financing Activities: Proceeds from contract payable 127,440 Equipment & Property Improvements (127,441) Principal payments - Certificates of Participation (96,000) Interest payments / Bond Costs (65,803) Principal payments - Contract payable (4,869) Net Cash Provided by (Used) Capital and Related Financing Activities (166,673) Cash Flows from Investing Activities: Interest received on investments 58 Siphon Drop Power - Net Earnings 83,006 83,064 Net Cash provided by Investing activities Net Change in Cash and Cash Equivalents (24,519) Cash and Cash Equivalents, Beginning 151,395 Cash and Cash Equivalents, Ending $ 126,876 Supplemental information: Interest expense paid in current fiscal year was $ 61,518. The accompanying notes are an integral part of these financial statements. Bard Water District Notes to Financial Statements For the year ended December 31, 2014 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The Bard Irrigation District (The District) is a public entity established in 1927 pursuant to the Irrigation District Act of the California Water Code (Section 34000 et seq.) for the purpose of providing water services to the properties in the District. The District was reorganized into the "Bard Water District" the 29th day of November, 1973 as a Political Corporation of the State of California in accordance with Government Code (Section 56452). The District has the power under the law to among other things, provide irrigation within its geographic boundaries. In connection therewith, the District has the power of eminent domain to contract, to construct works, to fix rates and charges for commodities or services furnished, and to incur indebtedness. The District elected by the owners of irrigable land residing within the District's boundaries. The District's service area lies within the Bard Valley of southeastern California encompassing 14,676 acres. The District operates and maintains the Reservation Division of the U.S. Bureau of Reclamation's Yuma Project. The water for the project is diverted from the All-American Canal to the fore bay of the Siphon Drop Power-Plant on the Yuma Main Canal. Some Reservation Division lands are served directly from turnouts on the All-American Canal above Siphon Drop. Basis of Presentation The accounting records of the District are maintained on the accrual basis of accounting. Under this method, revenues are recognized when earned, regardless of when received, and expenses are recognized when incurred, regardless of when paid. These basic financial statements present the District and its component units, entities for which the District is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the District's operations and date from these units are combined with data of the District. Each blended component unit has a December 31 year end. The District had no discretely presented component units. Bard Water District Notes to Financial Statements For the year ended December 31, 2014 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Note 1. Blended Component Units The Bard Water District Financing Corporation, a non-profit public benefit corporation was established on April 1, 2004 for the purpose of providing assistance to the District in financing the acquisition, construction and improvement of the Reservation Main Canal for the District. Although legally separate from the District, the Corporation is reported as if it were part of the primary government because its sole purpose is to provide financing to the District under the debt issuance documents of the District. The District has continuing oversight responsibility or control over the corporation because the members of the Board of Directors of the Corporation are also members of the District's Board of Directors. Revenues Each landowner pays an annual water availability fee, based on acreage held within the District. Water revenues are recorded on a calendar year basis. The water availability fee is billed on a calendar year basis. Bard Water District landowners and lessees may pay the full amount of the annual charges due on or before January 10 or divide the annual charges into two equal installments. The first installment must be paid by January 10 of the current year and the second installment by July 10. The principal operation of the District is the sale of untreated canal water. Non-Operating Revenues and Expenses Non-Operating revenues and expenses consist of net income from the joint ventures, property taxes, interest income, and interest expense. Income Tax The Bard Irrigation District ("The District") is a public entity established in 1927 pursuant to the Irrigation District Act of the California Water Code (Section 34000 et seq. ) for the purpose of providing water services to the properties in the District. The District was reorganized into the "Bard Water District" on November 29, 1973 as a Political Sub Division of the State of California in accordance with Government Code (Section 56452). It is, therefore, exempt from the filing of Federal and State of California income tax returns. Bard Water District Notes to Financial Statements For the year ended December 31, 2014 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Restricted Assets Restricted assets represents investments relating to the Indian Unit Emergency Reserve Fund and the Indian Unit O & M Reserve Fund. The contract with the United States Government stipulates that a Reserve Fund is to be maintained by the District, and is to be used only in the event of an emergency. Withdrawals from this reserve fund may be made only upon receipt of approval by U.S. BOR. Investments are stated at cost. Interest earned on each fund is credited annually. Emergency Reserve Fund $ 107,203 O & M Reserve Fund 204,944 Balance as of December 31, 2014 $ 312,147 Compensated Absences Accrued vacation is payable upon retirement or termination. Accrued sick leave may be taken during employment but is not vested and is lost upon retirement or termination. The amount of vacation payable at year and was immaterial. Net Assets The differences between assets and liabilities are reported as net assets. Net assets are classified as either invested in capital assets, net of related debt, restricted, or unrestricted. Net assets that are invested in plant, net of related debt, consist of capital assets, net of accumulated depreciation and amortization. The District's capital assets include property, plant, and equipment. Restricted net assets are those net assets that have external constraints placed on them by creditors, grantors, contributors or laws or regulations of other governments, or imposed by law through constitutional provision of enabling legislation. Unrestricted net assets consist of net assets that do not meet the definition of "restricted" or invested in capital assets, net of related debt. Unlike the restricted net assets, the Board has discretion in determining the use and establishing minimum/maximum balance requirements for the unrestricted cash and investment portion of net assets. The board may, at any time, change or eliminate amounts established for these purposes. Bard Water District Notes to Financial Statements For the year ended December 31, 2014 CASH Note 2. Cash equivalents have been defined as short term, highly liquid investment which are readily convertible to known amounts of cash and have maturity dates within 90 days of the statement date. Cash balances are classified as to credit risk as uncollateralized. Cash reported on the balance sheet as of December 31, 2014: Book Bank Balance Balance $ 152,816 Wells Fargo Bank 116,168 10,358 National Bank of Arizona 10,358 350 -0- Petty Cash $ 163,174 Total 1 126,876 Note 3. ACCOUNTS & OTHER RECEIVABLES The majority of the accounts receivable of the District are generated by assessing its customers an annual fee per irrigable acre of land. The receivables are considered to be fully collectible by management of the District because the balances represent a perfected lien against the property that will ultimately be collected when the land is sold. No allowance for doubtful accounts is considered necessary. INVESTMENTS / RESTRICTED INVESTMENTS Note 4. Authorized deposits and investments of the District are governed by the California Government Code as well as policies set forth by the District's Board of Directors. All investments consist of money market accounts. Carrying amounts for all investments approximate fair value. Carrying amount of investments as of December 31, 2014, including restricted investments, is $ 439,023. BUSINESS AND CREDIT CONCENTRATION Note 5. The District's financial instrument that is exposed to concentration of credit risk is primarily cash. The District places its cash with a institution insured by the Federal Deposit Insurance Corporation (FDIC). Bard Water District Notes to Financial Statements For the year ended December 31, 2014 BUSINESS AND CREDIT CONCENTRATION (CONTINUED) Note 5. The District's revenues are generated from owners and lessees of irrigable land residing within the District's boundaries of Bard Valley. Therefore, the District's customer base is geographically limited and concentrated within approximately 14,676 acres in Bard Valley. Certain of the Board members are customers of the District. These Board members are charged the same rates as all other customers. PROPERTY AND EQUIMENT Note 6. The cost of additions to the utility plant and major replacements of retired units of property is capitalized. The cost and accumulated depreciation of property sold or retired is deducted from capital assets, and any profit or loss resulting from the disposal is credited or charged in the non-operation section of the statements of revenues, expenses and changes in net assets. The cost of current repairs, maintenance, and minor replacements is charged to expense. Construction in progress primarily relates to upgrades of existing facilities. Depreciation has been provided over estimated useful lives of the assets using the straight-line method. The estimated useful lives are as follows: Estimated Useful Lives Canals & Anciliary Systems 20 – 65 years Office furniture, fixtures and equipment <math>3-7</math> years 7 – 15 years Heavy Equipment Trucks & Utility Vehicles 5 – 10 years Additions for the fiscal year ended December 31, 2014 were $ 127,440. Depreciation expense amounted to $ 165,289. Asset groupings, at cost, are as follows: Balance Balance Classifications January 1, 2014 Additions Retirements December 31, 2014 $ Buildings 136,843 $ -0- $ -0- $ 136,843 Heavy Equipment 1,127,978 127,440 -0- 1,255,418 Office Equipment & Fixtures 35,420 -0- -0- 35,420 Trucks & Utility vehicles 231,179 -0- -0- 231,179 Canals & Ancillary Systems 7,932,854 -0- -0- 7,932,854 127,440 9,464,274 -0- 9,591,714 Less Accumulated Depreciation (2.650.356) (165, 289) -0- (2,815,645) Totals 6,813,918 $ (37,849) $ -0- 6,776,069 Bard Water District Notes to Financial Statements For the year ended December 31, 2014 Note 7. INVESTMENT IN SIPHON DROP PROJECT The District has an undivided 11.49% interest in the Siphon Drop Power Plant (energy generation stations and transmission systems). The Project is operated by the Yuma County Water Users located in Somerton Arizona generated at the plant is interconnected with the Parker-Davis power system for distribution and sale. The Association does not capitalize certain property and equipment and does not provide for depreciation expense. The District's share of current net earnings was $83,006. The following is a condensed Statement of Financial Position and a condensed Statement of Activities: Bard Water District Undivided Project Total Interest Statement of Financial Position Assets Total current assets 1,734,604 199,3056 $ S Operational reserves 382,211 43,916 233,971 Replacement reserve fund 26,883 Property and equipment, net 1,291,588 11,240,973 Total assets 13,591,759 1,561,693 Liabilities and Net Assets Total current liabilities 1,368,846 157,280 Total net assets $ 12,222,913 $ 1,404,413 Statement of Activities Total revenue 1,487,176 170,877 Total operating expenses 764,758 113,949 Change in net assets before Distribution 722,418 83,006 Distribution of excess revenue (608,893) (69,962) Change in net assets 113,525 13,044 12,109,388 Net assets, beginning of year 1,391,369 Net assets, end of year 12,222,913 1,404,413 Add accrued distribution 608,893 69,962 Net assets, end of year - Adjusted $ 12,831,806 $ 1,474,375 Bard Water District Notes to Financial Statements For the year ended December 31, 2014 LONG-TERM LIABILITES Note 8. Long-Term debt and related costs Long-term debt is reported at face value, net of applicable premium, discounts and deferred loss on refunding. Cost related to the issuance of debt are deferred and amortized over the lives of the various debt issues and are shown as a Other Non-Current Assets on the Statement of Net Assets. Certificates of Participation (Series 2004) On April 1, 2004, District issued $ 1,800,000 of Revenue Certificates of Participation (series 2004). The District used the net proceeds and reimbursed itself for these and related capital cost. The certificates had variable interest rates and were payable in installments of $ 75,000 payable solely from and secured by the revenues received from the operation of the District's water system. The District covenanted to fix, prescribe and collect rates, fees and charges for use of the District's water system during each fiscal year which are at least sufficient to yield in each fiscal year net revenues equal to 125% of the debt service for such fiscal year, plus any amount necessary to restore the bond reserve fund to the reserve requirement. 2014 Refunding of Series 2004 Certificates of Participation On December 17, 2014 the District issued $1,051,000 of 2014 refunding of Series 2004 COP's. The District legally defeased $ 1,145,000 of the 2004 COP's comprised of serial certificates maturing from May 1, 2014 through 2024. The proceeds were placed in an irrevocable trust to prepay all outstanding 2004 COP's as of May 1, 2014. These COP's are considered defeased and the liability has been removed from the accompanying Statements of Net Position. The reduction in debt service with the defeasance is approximately $ 13,000 annually through 2024. The certificates have variable interest rates and are payable in installments ranging from $ 96,000 to $ 120,000 payable solely from and secured by the revenues received from the operation of the District's water system. Bard Water District Notes to Financial Statements For the year ended December 31, 2014 LONG-TERM LIABILITES (CONTINUED) Note 8. The debt service requirements for the bonds as of December 31, 2014 were as follows: Outstanding Bonds Principal Total Debt Service Amounts Interest Years 127,523 2015 S 93,000 $ 34,523 $ 97,000 127,913 2016 30,913 2017 96,000 27,246 123,246 23,522 123,522 2018 100,000 2019 104,000 19,646 123,646 2021-2023 465,000 35,853 500,853 $ 955,000 $ 1,126,703 Total debt payments $ 171,703 Contract Payable Current Long-Term Portion Portion_ Total Note payable to the John Deere Credit, secured by equipment in monthly payments of $ 2,904 including interest at adjusted rate of 4.458% per annum on the unpaid balance. The original amount of the loan was $ 127,440. The loan matures on November 5, 2018. $ 27,437 $ 95,133 $ 122,570 Principal payments due on the note payable for the fiscal year ending June 30 are as follows: Total Principal Interest Amounts Debt Service Amount 2015 $ 27,437 $ $ 4,503 31,940 2016 3,608 31,236 34,844 2017 32,651 2,187 34,844 2018 31,240 700 31,940 Total debt payments $ 122,570 $ 10,998 133,568 Bard Water District Notes to Financial Statements For the year ended December 31, 2014 Note 8. LONG-TERM LIABILITES (CONTINUED) The combined aggregate maturity of all long-term debt obligations is detailed as of December 31, 2014 by the fiscal year of maturity as follows: Principal Total Interest Amounts Debt Service Amount 2015 $ 120,437 $ 39,026 159,463 $ 2016 128,236 34,521 162,757 2017 128,657 29,433 158,090 2018 131,240 24,222 155,462 2019 104,000 19,646 123,646 2021-2023 465.000 35,853 500,853 Total debt payments $1,077,570 $ 182,701 $ 1,260,271 Note 9. RETIREMENT PLAN The District contributes to the California Public Employees Retirement System (CalPERS), an agent multiple-employer defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustment, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and District resolution. For 2014, the District's annual pension cost for CalPERS was equal to the District's required and actual contributions, which were determined as part of the December 31, 2009 actuarial valuations, respectively, using the entry age actuarial cost method. Note 10. RISK OF LOSS The District is exposed to various risks of loss related to torts of, damages to. and destruction of assets, errors and omissions, injuries to employees, and natural disasters. The District is a member of the Association of California Water Agencies Joint Powers Insurance Authority (ACWA JPIA). The ACWA JPIA is a risk-pooling self-insurance authority, created under provision of the California Government Code Sections 6500 et. seq. The purpose of self-insured losses and to purchase excess insurance coverage. Bard Water District Notes to Financial Statements For the year ended December 31, 2014 Note 10. RISK OF LOSS (CONTINUED) The District pays an annual premium to ACWA JPIA for its liability, property, and workers compensation insurance coverage, the ACWA JPIA purchases specific occurrence excess insurance from commercial excess, reinsurance carriers, or other pooling agencies for the ACWA JPIA's liability, property, and workers compensation programs. The arrangement with ACWA JPIA is in substance a transfer of pooling (sharing) of risks among the participants in the ACWA JPIA's programs. For ACWA JPIA's public liability and workers compensation programs, premiums for coverage are based upon the experience of participating members. District liabilities for claims not covered by ACWA JPIA programs are reported when it is probably that a loss has occurred and the amount of the loss can be reasonably estimated. Because actual claim liabilities depend on complex factors such as changes in legal doctrines, damage, awards, and other factors, the process used in computing claim liabilities does not necessarily result in an exact amount. Such uncovered claim liabilities are reevaluated periodically to take into account recently settled claims, claim frequency, and other economic and social factors. Note 11. COMMITMENTS AND CONTINGENCIES Bonded Debt The debt issued December 17, 2013 in the amount of $ 1,051,000 of 2014 Refunding of Series 2004 Certificates of Participation as noted in Note 8. Budget and Budgeting Budget integration is employed as a management control device. Budgets are formally adopted by the Board of Directors and take effect the following January 1, the budgets are used as a management tool and are not a legal requirement. Contract with the United States Government – Bureau of Reclamation The Bard Water District ("District") entered into a contract with the United States of America-Bureau of Reclamation ("U.S. BOR") on March 10, 1981. A supplemental contract was made on January 19, 1983. This contract provides for the District to operate and maintain the Indian Unit works on behalf of the U.S. BOR. As stated in the contract, the District is to care for, operate, and maintain the Indian Unit works on behalf the U.S. BOR in full compliance with the terms of this Contract, and in such manner that the works will remain in good and efficient condition to perform the carriage and distribution of water. Bard Water District Notes to Financial Statements For the year ended December 31, 2014 COMMITMENTS AND CONTINGENCIES (CONTINUED) Note 11. On or before October 1 of each year, the District is to submit to the U.S. BOR for approval a proposed operation and maintenance program for the Indian Unit works for the following calendar year. The proposal is to be writing and shall include the estimated cost of the proposed operating and maintenance program. Following approval of the proposal and cost estimate by the U.S. BOR, the U.S. BOR shall pay the District one-half of the amount on or before December 31, with the remaining one-half to be paid on or before June 30. Due to the continuous late payments by the Bureau of Reclamation to Bard Water District the Operation and Maintenance Reserve was established. These funds may be used due to the late receipt of biannual payments and or for unforeseen normal operation or maintenance work on the Indian Unit. Operation and maintenance costs for the Indian Unit joint works used to deliver water to the lands of the District and the Indian Unit are to be allocated between the District and the U.S. BOR as specified in the contract. The agreement renews automatically each year and is in effect until cancelled by either party. The cancellation requires 1 year's advance written notice by the party requesting cancellation. If in the opinion of the District and the U.S. BOR the amounts advanced for any year are likely to be insufficient to pay the costs of operation and maintenance during the year, the District is to submit to the U.S. BOR a bill for additional sums of money to cover the insufficiency, and the U.S. BOR is to release said amounts within 60 days from the O & M Reserve Fund. The amount of the insufficiency has not been agreed upon and continues to be subject to negotiation. The operating budget for the year was $ 624,846, or 39% of the District's total revenues. Note 12. SUBSEQUENT EVENTS The management of The Bard Water District has reviewed the results of operations for the period of time from its year end December 31, 2014 through July 15, 2015, the date the financial statements were available to be issued, and has determined that no adjustments are necessary to the amounts reported in the accompanying financial statements nor have any subsequent events occurred, the nature of which would require disclosure. BARD WATER DISTRICT Financial Statements With Independent Auditor's Report As of December 31, 2013 and for the year then ended 10 â ž. • . George J. Woo Certified Public Accountant 🗕 INDEPENDENT AUDITOR'S REPORT To the Board of Directors Bard Water District Bard, California I have audited the accompanying financial statements of the Bard Water District (the "District"), as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively compromise the District's basic financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted the audit in accordance with auditing standards generally accepted in the United States of America and the State Controller's Minimum Audit Requirements for California Special Districts. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly I express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1085 State Street • El Centro, California 92243 • (760) 337-5555 • Fax 337-8796 E-mail address gjwcpa@sbcglobal.net I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the District as of December 31, 2013, and the changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America as well as accounting systems prescribed by the State Controller's Office and state regulations governing special districts. Other Matters Accounting principles generally accepted in the Unites States of America require that the management's discussion and analysis on pages 3 through 7 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. I have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to my inquiries, the basic financial statements, and other knowledge we obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. July 18, 2014 MANAGEMENT'S DISCUSSION AND ANALYSIS Bard Water District Management's Discussion and Analysis For the year ended December 31, 2013 This section of the Bard Water District's (District) financial statements presents an analysis of the District's financial performance during the year ended December 31, 2013. This information is presented in conjunction with the basic financial statements, which follow this section. Financial Highlights for year Total Assets decreased $ 273,968. Operating revenues decreased $ 561,108. Unrestricted Net Assets increased $ 192,093. Overview of the financial statements The financial statements consist of the following two parts: Management's Discussion and Analysis, and Financial Statements. The financial statements include notes to the financial statements that provide additional information that is essential to a full understanding of the data in the financial statements. The notes are an integral part of the financial statements. Required Financial Statements The financial statements of the District report information utilizing the full accrual basis of accounting. The financial statements conform to accounting principles which are generally accepted in the United States of America. The statements of Net Assets include information of the District's assets and liabilities and provide information about the nature and amounts of investments in resources (assets) and the obligations to District creditors (liabilities). The Statements of Activities and Changes in Net Assets identify the District's revenues and expenses for the year ended December 31, 2013. This statement provides information on the District's operation over the past year and can be used to determine whether the District has recovered all of its actual and projected costs through user fees and other charges. The third financial statement is the Statement of Cash Flows. This statement provides information on the District's cash receipts, cash payments and changes in cash resulting from operations, investments and financing activities. From the Statement of Cash Flows, the reader can obtain information on the source and use of cash and the change in the cash and cash equivalents balance for the year ended December 31, 2013. Bard Water District Management's Discussion and Analysis For the year ended December 31, 2013 Financial Analysis of the District The Statement of Net Assets and the Statement of Activities and Changes in Net Assets provide an indication of the District's financial condition and also indicate whether the financial condition of the District improved during the previous year. The District's net assets reflect the difference between assets and liabilities. An increase in net assets over time typically indicates and improvement in financial condition. Net Assets A summary of the District's Statements of Net Assets is presented below. Table 1 Condensed Statement of Net Assets Dollar 2013 2012 Change 2,370,511 $ 2,211,557 $(158,954) Current and Other Assets 6,928,932 6,813,918 115,014) Capital Assets 9,299,443 9,025,475 273,968) Total Assets 1,145,000 1,051,000 (94,000) Long-term Debt (67,947) 111,010 43,063 Other Liabilities 1,256,010 1.094.063 (161,947) Total Liabilities Net Assets invested in capital 5,762,918 53,986 Assets, net of related debt 5,708,932 381,049 (358,100) Restricted Reserves 739,149 192,093 Unrestricted Reserves 1,595,352 1,787,445 $ 7,931,412 $(112,021) Total Net Assets 8,043,433 As the above table indicates, total assets decreased by $ 273,968 from $ 9,299,443 to $ 9,025,475 during the year ended December 31, 2013. This is comprised of a decrease of $ 158,954 in current and other assets and a decrease of $ 115,014 in capital assets. The decrease in current and other assets and the decrease in capital assets reflect a period of moderate Capital Expenditures and an increase in accumulated depreciation by the current year depreciation expense. Total liabilities reflect a decrease of $ 161,947. This is mainly due to the refunding of the series 2004 certificates of participation and the scheduled principal payment of the existing debt. Bard Water District Management's Discussion and Analysis For the Year Ended December 31, 2013 Net Assets (Continued) Table 1 also indicates the total net assets decreased $ 112,021 from $ 8,043,433 to $ 7,931,412. This increase is due to an increase of $ 53,986 in net assets invested in capital assets, net of related debt; a decrease of $ 358,100 in net assets restricted and a increase of $ 192,093 in unrestricted net assets. These amounts reflect the affect of the current year results from the operation of its resources on the District's Total Net Assets. Table 2 Condensed Statement of Activities Six months Twelve months Ended Ended December 31, December 31, 2012 2013 Operating Revenue 818,715 1,379,823 104,893 123,081 Nonoperating Revenues Total Revenues 923,608 1,502,904 76,612 Depreciation Expense 158,290 Other Operating Expenses 715,953 1,322,118 47,370 Nonoperating Expenses 134,517 839,935 Total Expenses 1,614,925 83,673 (112,021) Change in Net Assets The Statement of Activities and Changes in Net Assets identify the various revenue and expense items that impact the change in net assets. As the information in Table 2 indicates, Total Revenue increased $ 579,296 between the six month period ended December 31, 2012 and the year ended December 31, 2013. Table 2 indicates that the District's total revenues increased by $ 579,296 to $ 1,502,904 in the year ended December 31, 2013 from $ 923,608 from the six month period ended December 31, 2012. Total expenses increased $ 774,990 during the year ended December 31, 2013 and six months ended December 31, 2012. Bard Water District Management's Discussion and Analysis For the year ended December 31, 2013 Capital Assets A summary of the District's Capital Assets is presented below. Table 3 Capital Assets Increase 2012 2013 (Decrease) 133,743 136,843 3,100 Buildings $ $ 1,127,978 1,127,978 -0- Heavy Equipment 7,500 27,920 35,420 Office Equipment and Fixtures 32,675 198,504 231,179 Vehicles 7,932,854 7,932,854 -0- Canals & Delivery Systems 43,275 9,420,999 9,464,274 Subtotal (158, 289) Less Accumulated Depreciation (2,415,455) (2,650,356) $ 6,813,918 $(115,014) Total Capital Assets $ 6,928,932 As of December 31, 2013, the District's investment in capital assets totaled $ 9,464,274 increased $ 43,275 over the capital asset balance of $ 9,420,999 as of December 31, 2012. Capital assets include all of the District's major capital assets, including infrastructure assets, water mains, pipes and District headquarters and other structures, as well as vehicles and other equipment with a value of $5,000 or more. A comparison of the District's capital assets over the past two fiscal years is presented in Table 3. Long – Term Debt Revenue Certificates of Participation (Series 2004) in the amount of $ 1,800,000 issued in April 2004 to fund costs associated with the upgrade and replacement of the Reservation Main Canal Improvement Project. This debt was to be paid in annual installments through the year 2024. The District has covenanted that it will fix, prescribe and collect rates, fees and charges for use of the District's water system during each fiscal year which are at least sufficient to yield in each fiscal year net revenues equal to 125% of the debt service for such fiscal year, plus any amount necessary to restore the bond reserve fund to the reserve requirement. Bard Water District Management's Discussion and Analysis For the year ended December 31, 2013 On December 17, 2013 the District legally defeased $ 1,145,000 of the 2004 COPs. As of December 31, 2013, the District had $ 1,051,000 in outstanding debt compared to $ 1,220,000 as of December 31, 2012. The reduction of debt service with the defeasance is approximately $ 13,000 annually through 2024. Request for Information This financial report is designed to provide a general overview of the Bard Water District's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Administrative Assistant, Bard Water District, 1473 Ross Road, Winterhaven California, 92283. FINANCIAL STATEMENTS BARD WATER DISTRICT Statement of Net Assets As of December 31, 2013 ASSETS Current assets: 151,395 $ Cash and investments 146,380 Accounts receivables 33,146 Inventory 21,075 Prepaid interest 351,996 Total current assets 381,049 Investments - restricted Noncurrent assets: 9,464,274 Property and equipment (2,650,356) Less allowance for depreciation 6,813,918 Net Capital Assets Other Non-Current assets: 1,453,159 Investment in Siphon Drop Project 12,278 Unamortized bond issuance costs 13,075 Refundable deposits 1,478,512 Total Other Assets $ 9,025,475 TOTAL ASSETS LIABILITIES AND NET ASSETS Current Liabilities: $ 38,471 Accounts payable 96,000 Current portion of long-term debt 4,592 Accrued expenses 139,063 Total Current Liabilities Non-Current Liabilities: 955,000 Bonds Payable, net of current portion 955,000 Total Non-Current Liabilities 1,094,063 TOTAL LIABILITIES Net Assets: 5,762,918 Invested in capital assets, net of related debt 381,049 Restricted net assets Unrestricted net assets 1,787,445 $ 7,931,412 TOTAL NET ASSETS The accompanying notes are an integral part of these financial statements. BARD WATER DISTRICT Statement of Revenue, Expenses and Changes in Net Assets For the year ended December 31, 2013 OPERATING REVENUES $ Indian Unit Assessments 586,130 Agricultural water fees 416,090 RMIP agricultural water fees 133,936 Excess water fees 166,221 Reimbursable work 77,446 TOTAL REVENUE 1,379,823 OPERATING EXPENSES Payroll Expenses 480,155 Insurance 176,241 Fees & Dues 165,453 Depreciation Expense 158,290 Concrete lining 18,695 Office structure improvements 5,246 Employee Drug Testing 130 Office Supplies 9,504 Payroll Taxes 34,429 Rentals 3,206 Other Expenses 24,976 Safety Equipment 992 Light Equipment Repair 16,779 Irrigation Structure Improvements 52,108 Parts & Supplies 6,236 Freight & Shipping Charges 844 Operational Supplies 17,984 Telephone & Communication 7,412 Large Equipment Repair 21,940 System Maintenance 25,283 Weed Control 48,287 Wood Gate Material 3,256 Metal Gate Material 9,411 Fuel & Oil 77,556 Employee & Customer Supplies 1,889 Utilities 4,886 Bank Charges 2,823 Water Conservation Cost 137 Multi Species LCR MSCP 18,191 Legal Fees 80,003 Building maintenance 6,759 Medical employee deductible 250 Dept. of Toxic Substance 1,057 TOTAL OPERATING EXPENSES 1,480,408 OPERATING NET INCOME (LOSS) (100,585) The accompanying notes are an integral part of these financial statements. BARD WATER DISTRICT Statement of Revenue, Expenses and Changes in Net Assets (Continued) For the year Ended December 31, 2013 NON-OPERATING REVENUE (EXPENSE) Property Taxes 13,831 Other Income 34,706 Siphon Drop Power 74,436 Interest Earned 108 Interest Expense / Bond Costs (134,517) Total Non-Operating Revenue, Net (11,436) Change in Net Assets (112,021) Total Net Assets, Beginning of Year 8,043,433 Total Net Assets, End of Year $ 7,931,412 The accompanying notes are an integral part of these financial statements. BARD WATER DISTRICT Statement of Cash Flows - (Continued) For the year Ended December 31, 2013 Reconciliation of Change In Net Assets to Net Cash Provided by Operating Activities: (100,585) Operating income (Loss) $ Adjustments to Reconcile Change In Net Assets to Net Cash Provided by Operating Activities: 158,290 Depreciation Expense 51,290 (Increase) Decrease in receivables (21,075) (Increase) Decrease in prepaid expenses 13,248 (Increase) Decrease in investments restricted 7,463 (Increase) Decrease Investment in Siphon Drop 46,561 (Increase) Decrease in other assets 24,749 Increase (Decrease) in accounts payable (17,696) Increase (Decrease) in accrued expenses 162,245 Net Cash Provided by Operating Activities Cash Flows from Non - Capital Financing Activities: 13,831 Proceeds from property taxes 34,706 Other Income Net Cash Provided by Non-Capital Financing Activities 48,537 Cash Flows from Capital and Related Financing Activities: Equipment & Property Improvements (43,276) Principal payments - Certificates of Participation (169,000) (134,517) Interest payments / Bond Costs Net Cash Provided by (Used) Capital and Related Financing Activities (346,793) Cash Flows from Investing Activities: Interest received on investments 108 74,436 Siphon Drop Power - Net Earnings Net Cash provided by Investing activities 74,544 (61,467) Net Change in Cash and Cash Equivalents 212,862 Cash and Cash Equivalents, Beginning 151,395 Cash and Cash Equivalents, Ending $ Supplemental information: Interest expense paid in current fiscal year was $59,234. The accompanying notes are an integral part of these financial statements. Bard Water District Notes to Financial Statements For the year ended December 31, 2013 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Note 1. Reporting Entity The Bard Irrigation District (The District) is a public entity established in 1927 pursuant to the Irrigation District Act of the California Water Code (Section 34000 et seq.) for the purpose of providing water services to the properties in the District. The District was reorganized into the "Bard Water District" the 29th day of November, 1973 as a Political Corporation of the State of California in accordance with Government Code (Section 56452). The District has the power under the law to among other things, provide irrigation within its geographic boundaries. In connection therewith, the District has the power of eminent domain to contract, to construct works, to fix rates and charges for commodities or services furnished, and to incur indebtedness. The District elected by the owners of irrigable land residing within the District's boundaries. The District's service area lies within the Bard Valley of southeastern California encompassing 14,676 acres. The District operates and maintains the Reservation Division of the U.S. Bureau of Reclamation's Yuma Project. The water for the project is diverted from the All-American Canal to the fore bay of the Siphon Drop Power-Plant on the Yuma Main Canal. Some Reservation Division lands are served directly from turnouts on the All-American Canal above Siphon Drop. Basis of Presentation The accounting records of the District are maintained on the accrual basis of accounting. Under this method, revenues are recognized when earned, regardless of when received, and expenses are recognized when incurred, regardless of when paid. These basic financial statements present the District and its component units, entities for which the District is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the District's operations and date from these units are combined with data of the District. Each blended component unit has a December 31 year end. The District had no discretely presented component units. Bard Water District Notes to Financial Statements For the year ended December 31, 2013 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Note 1. Blended Component Units The Bard Water District Financing Corporation, a non-profit public benefit corporation was established on April 1, 2004 for the purpose of providing assistance to the District in financing the acquisition, construction and improvement of the Reservation Main Canal for the District. Although legally separate from the District, the Corporation is reported as if it were part of the primary government because its sole purpose is to provide financing to the District under the debt issuance documents of the District. The District has continuing oversight responsibility or control over the corporation because the members of the Board of Directors of the Corporation are also members of the District's Board of Directors. Revenues Each landowner pays an annual water availability fee, based on acreage held within the District. Water revenues are recorded on a calendar year basis. The water availability fee is billed on a calendar year basis. Bard Water District landowners and lessees may pay the full amount of the annual charges due on or before January 10 or divide the annual charges into two equal installments. The first installment must be paid by January 10 of the current year and the second installment by July 10. The principal operation of the District is the sale of untreated canal water. Non-Operating Revenues and Expenses Non-Operating revenues and expenses consist of net income from the joint ventures, property taxes, interest income, and interest expense. Income Tax The Bard Irrigation District ("The District") is a public entity established in 1927 pursuant to the Irrigation District Act of the California Water Code (Section 34000 et seq. ) for the purpose of providing water services to the properties in the District. The District was reorganized into the "Bard Water District" on November 29, 1973 as a Political Sub Division of the State of California in accordance with Government Code (Section 56452). It is, therefore, exempt from the filing of Federal and State of California income tax returns. Bard Water District Notes to Financial Statements For the year ended December 31, 2013 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Note 1. Restricted Assets Restricted assets represents investments relating to the Indian Unit Emergency Reserve Fund and the Indian Unit O & M Reserve Fund. The contract with the United States Government stipulates that a Reserve Fund is to be maintained by the District, and is to be used only in the event of an emergency. Withdrawals from this reserve fund may be made only upon receipt of approval by U.S. BOR. Investments are stated at cost. Interest earned on each fund is credited annually. $ 150,088 Emergency Reserve Fund O & M Reserve Fund 230,961 $ 381,049 Balance December 31, 2013 Compensated Absences Accrued vacation is payable upon retirement or termination. Accrued sick leave may be taken during employment but is not vested and is lost upon retirement or termination. The amount of vacation payable at year and was immaterial. Net Assets The differences between assets and liabilities are reported as net assets. Net assets are classified as either invested in capital assets, net of related debt, restricted, or unrestricted. Net assets that are invested in plant, net of related debt, consist of capital assets, net of accumulated depreciation and amortization. The District's capital assets include property, plant, and equipment. Restricted net assets are those net assets that have external constraints placed on them by creditors, grantors, contributors or laws or regulations of other governments, or imposed by law through constitutional provision of enabling legislation. Unrestricted net assets consist of net assets that do not meet the definition of "restricted" or invested in capital assets, net of related debt. Unlike the restricted net assets, the Board has discretion in determining the use and establishing minimum/maximum balance requirements for the unrestricted cash and investment portion of net assets. The board may, at any time, change or eliminate amounts established for these purposes. Bard Water District Notes to Financial Statements For the year ended December 31, 2013 Note 2. CASH Cash equivalents have been defined as short term, highly liquid investment which are readily convertible to known amounts of cash and have maturity dates within 90 days of the statement date. Cash balances are classified as to credit risk as uncollateralized. Cash reported on the balance sheet as of December 31, 2013: Book Bank Balance Balance $ 135,719 National Bank of Arizona $ 125,018 National Bank of Arizona 26,027 26,027 Petty Cash 350 -0- Total $ 151,395 $ 161,746 ACCOUNTS & OTHER RECEIVABLES Note 3. The majority of the accounts receivable of the District are generated by assessing its customers an annual fee per irrigable acre of land. The receivables are considered to be fully collectible by management of the District because the balances represent a perfected lien against the property that will ultimately be collected when the land is sold. No allowance for doubtful accounts is considered necessary. INVESTMENTS / RESTRICTED INVESTMENTS Note 4. Authorized deposits and investments of the District are governed by the California Government Code as well as policies set forth by the District's Board of Directors. All investments consist of money market accounts. Carrying amounts for all investments approximate fair value. Carrying amount of investments as of December 31, 2013, including restricted investments, is $ 532,444. BUSINESS AND CREDI CONCENTRATION Note 5. The District's financial instrument that is exposed to concentration of credit risk is primarily cash. The District places its cash with a institution insured by the Federal Deposit Insurance Corporation (FDIC). Bard Water District Notes to Financial Statements For the year ended December 31, 2013 BUSINESS AND CREDI CONCENTRATION (CONTINUED) Note 5. The District's revenues are generated from owners of irrigable land residing within the District's boundaries of Bard Valley. Therefore, the District's customer base is geographically limited and concentrated within approximately 14,676 acres in Bard Valley. Certain of the Board members are customers of the District. These Board members are charged the same rates as all other customers. Note 6. PROPERTY AND EQUIMENT The cost of additions to the utility plant and major replacements of retired units of property is capitalized. The cost and accumulated depreciation of property sold or retired is deducted from capital assets, and any profit or loss resulting from the disposal is credited or charged in the non-operation section of the statements of revenues, expenses and changes in net assets. The cost of current repairs, maintenance, and minor replacements is charged to expense. Construction in progress primarily relates to upgrades of existing facilities. Depreciation has been provided over estimated useful lives of the assets using the straight-line method. The estimated useful lives are as follows: Estimated Useful Lives Canals & Anciliary Systems 20 – 65 years Office furniture, fixtures and equipment <math>3-7</math> years Heavy Equipment 7 – 15 years Trucks & Utility Vehicles 5 - 10 years Additions for the fiscal year ended December 31, 2013 were $ 43,275. Depreciation expense amounted to $ 158,289. Asset groupings, at cost, are as follows: Balance Balance January 1, 2013 Additions Retirements December 31, 2013 Classifications Buildings $ 133,743 $ $ 3,100 $ 136,843 -0- Heavy Equipment 1,127,978 -0- -0- 1,127,978 7,500 Office Equipment & Fixtures 27,920 -0- 35,420 Trucks & Utility vehicles 198,504 32,675 -0- 231,179 Canals & Ancillary Systems 7,932,854 -0- 7,932,854 -0- 43,275 9,420,999 -0- 9,464,274 (2.492.067) (158, 289) -0- Less Accumulated Depreciation (2,650,356) Totals -0- 6,928,932 $ (115,014) $ 6,813,918 Bard Water District Notes to Financial Statements For the year ended December 31, 2013 INVESTMENT IN SIPHON DROP PROJECT Note 7. The District has an undivided 11.49% interest in the Siphon Drop Power Plant (energy generation stations and transmission systems). The Project is operated by the Yuma County Water Users located in Somerton Arizona generated at the plant is interconnected with the Parker-Davis power system for distribution and sale. The Association does not capitalize certain property and equipment and does not provide for depreciation expense. The District's share of current net earnings was $ 74,436. The following is a condensed Statement of Financial Position and a condensed Statement of Activities: Bard Water District Undivided Project Total Interest Statement of Financial Position Assets $ 204,340 Total current assets $ 1,778,420 31,005 269,843 Operational reserves 26,613 Replacement reserve fund 231,615 1,291,588 11,240,973 Property and equipment, net 1,553,546 Total assets 13,520,851 Liabilities and Net Assets Total current liabilities 162,177 1,411,462 $ 12,109,389 $ 1,391,369 Total net assets Statement of Activities 1,459,376 167,682 Total revenue 811,542 93,246 Total operating expenses Change in net assets before 74,436 Distribution 647,174 (61,790) Distribution of excess revenue 537,775 12,646 Change in net assets 110,059 1,378,723 Net assets, beginning of year 11,999,330 1,391,369 Net assets, end of year 12,109,389 Add accrued distribution 537,775 61,790 Net assets, end of year - Adjusted $ 1,453,159 $ 12,647,164 Bard Water District Notes to Financial Statements For the year ended December 31, 2013 LONG-TERM LIABILITES Note 8. Long-Term debt and related costs Long-term debt is reported at face value, net of applicable premium, discounts and deferred loss on refunding. Cost related to the issuance of debt are deferred and amortized over the lives of the various debt issues and are shown as a Other Non-Current Assets on the Statement of Net Assets. Certificates of Participation (Series 2004) On April 1, 2004, District issued $ 1,800,000 of Revenue Certificates of Participation (series 2004). The District used the net proceeds and reimbursed itself for these and related capital cost. The certificates had variable interest rates and were payable in installments of $ 75,000 payable solely from and secured by the revenues received from the operation of the District's water system. The District covenanted to fix, prescribe and collect rates, fees and charges for use of the District's water system during each fiscal year which are at least sufficient to yield in each fiscal year net revenues equal to 125% of the debt service for such fiscal year, plus any amount necessary to restore the bond reserve fund to the reserve requirement. 2013 Refunding of Series 2004 Certificates of Participation On December 17, 2013 the District issued $ 1,051,000 of 2013 refunding of Series 2004 COP's. The District legally defeased $ 1,145,000 of the 2004 COP's comprised of serial certificates maturing from May 1, 2014 through 2024. The proceeds were placed in an irrevocable trust to prepay all outstanding 2004 COP's as of May 1, 2014. These COP's are considered defeased and the liability has been removed from the accompanying Statements of Net Position. The reduction in debt service with the defeasance is approximately $ 13,000 annually through 2024. The certificates have variable interest rates and are payable in installments ranging from $ 96,000 to $ 120,000 payable solely from and secured by the revenues received from the operation of the District's water system. Bard Water District Notes to Financial Statements For the year ended December 31, 2013 LONG-TERM LIABILITES (CONTINUED) Note 8. The debt service requirements for the bonds as of December 31, 2013 were as follows: Outstanding Bonds Total Principal Debt Service Amounts Interest Years $ 33,011 129,011 $ 96,000 $ 2014 127,523 93,000 34,523 2015 127,913 97,000 30,913 2016 123,246 27,246 96,000 2017 123,522 100,000 23,522 2018 624,499 569,000 55,499 2019-2023 $1,051,000 $ 204,714 $ 1,255,714 Total debt payments RETIREMENT PLAN Note 9. The District contributes to the California Public Employees Retirement System (CalPERS), an agent multiple-employer defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustment, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and District resolution. For 2013, the District's annual pension cost for CalPERS was equal to the District's required and actual contributions, which were determined as part of the December 31, 2009 actuarial valuations, respectively, using the entry age actuarial cost method. Note 10. RISK OF LOSS The District is exposed to various risks of loss related to torts of, damages to, and destruction of assets, errors and omissions, injuries to employees, and natural disasters. The District is a member of the Association of California Water Agencies Joint Powers Insurance Authority (ACWA JPIA). The ACWA JPIA is a risk-pooling self-insurance authority, created under provision of the California Government Code Sections 6500 et. seq. The purpose of self-insured losses and to purchase excess insurance coverage. Bard Water District Notes to Financial Statements For the year ended December 31, 2013 RISK OF LOSS (CONTINUED) Note 10. The District pays an annual premium to ACWA JPIA for its liability, property, and workers compensation insurance coverage, the ACWA JPIA purchases specific occurrence excess insurance from commercial excess, reinsurance carriers, or other pooling agencies for the ACWA JPIA's liability, property, and workers compensation programs. The arrangement with ACWA JPIA is in substance a transfer of pooling (sharing) of risks among the participants in the ACWA JPIA's programs. For ACWA JPIA's public liability and workers compensation programs, premiums for coverage are based upon the experience of participating members. District liabilities for claims not covered by ACWA JPIA programs are reported when it is probably that a loss has occurred and the amount of the loss can be reasonably estimated. Because actual claim liabilities depend on complex factors such as changes in legal doctrines, damage, awards, and other factors, the process used in computing claim liabilities does not necessarily result in an exact amount. Such uncovered claim liabilities are reevaluated periodically to take into account recently settled claims, claim frequency, and other economic and social factors. COMMITMENTS AND CONTINGENCIES Note 11. Bonded Debt The debt issued December 17, 2013 in the amount of $ 1,051,000 of 2013 Refunding of Series 2004 Certificates of Participation as noted in Note 7. Budget and Budgeting Budget integration is employed as a management control device. Budgets are formally adopted by the Board of Directors and take effect the following January 1, the budgets are used as a management tool and are not a legal requirement. Contract with the United States Government – Bureau of Reclamation The Bard Water District ("District") entered into a contract with the United States of America-Bureau of Reclamation ("U.S. BOR") on March 10, 1981. A supplemental contract was made on January 19, 1983. This contract provides for the District to operate and maintain the Indian Unit works on behalf of the U.S. BOR. Bard Water District Notes to Financial Statements For the year ended December 31, 2013 COMMITMENTS AND CONTINGENCIES (CONTINUED) Note 11. As stated in the contract, the District is to care for, operate, and maintain the Indian Unit works on behalf the U.S. BOR in full compliance with the terms of this contract, and in such manner that the works will remain in good and efficient condition to perform the carriage and distribution of water. On or before October 1 of each year, the District is to submit to the U.S. BOR for approval a proposed operation and maintenance program for the Indian Unit works for the following calendar year. The proposal is to be writing and shall include the estimated cost of the proposed operating and maintenance program. Following approval of the proposal and cost estimate by the U.S. BOR, the U.S. BOR shall pay the District one-half of the amount on or before December 31, with the remaining one-half to be paid on or before June 30. Operation and maintenance costs for the Indian Unit joint works used to deliver water to the lands of the District and the Indian Unit are to be allocated between the District and the U.S. BOR as specified in the contract. The agreement renews automatically each year and is in effect until cancelled by either party. The cancellation requires 1 year's advance written notice by the party requesting cancellation. If in the opinion of the District and the U.S. BOR the amounts advanced for any year are likely to be insufficient to pay the costs of operation and maintenance during the year, the District is to submit to the U.S. BOR a bill for additional sums of money to cover the insufficiency, and the U.S. BOR is to pay said amounts within 60 days, an amount has not been finalized as of July 7, 2014. The amount of the insufficiency has not been agreed upon and continues to be subject to negotiation. The operating budget for the year was $ 586,130, or 42% of the District's total revenues. SUBSEQUENT EVENTS Note 12. The management of The Bard Water District has reviewed the results of operations for the period of time from its year end December 31, 2013 through July 18, 2014, the date the financial statements were available to be issued, and has determined that no adjustments are necessary to the amounts reported in the accompanying financial statements nor have any subsequent events occurred, the nature of which would require disclosure. BARD WATER DISTRICT Financial Statements With Independent Auditor's Report As of December 31, 2012 and for the six months then ended - E. 9 . ....................................... . George J. Woo Certified Public Accountant . INDEPENDENT AUDITORS'S REPORT To the Board of Directors Bard Water District Bard, California I have audited the accompanying financial statements of the Bard Water District (the "District"), as of and for the six months ended December 31, 2012, and the related notes to the financial statements, which collectively compromise the District's basic financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted the audit in accordance with auditing standards generally accepted in the United States of America and the State Controller's Minimum Audit Requirements for California Special Districts. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly I express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1085 State Street • El Centro, California 92243 • (760) 337-5555 • Fax 337-8796 E-mail address gjwcpa@sbcglobal.net I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the District as of December 31, 2012, and the changes in financial position and cash flows thereof for the six months then ended in accordance with accounting principles generally accepted in the United States of America as well as accounting systems prescribed by the State Controller's Office and state regulations governing special districts. Other Matters Accounting principles generally accepted in the Unites States of America require that the management's discussion and analysis on pages 3 through 7 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. I have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to my inquiries, the basic financial statements, and other knowledge we obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. My audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information included on pages 21 through 23 is presented for purposes of additional analysis and is not a required part of the basic financial statements of the District. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in my opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. a finos July 2, 2013 MANAGEMENT'S DISCUSSION AND ANALYSIS 1,00 * 10 P., 100 Bard Water District Management's Discussion and Analysis For the six months ended December 31, 2012 This section of the Bard Water District's (District) financial statements presents an analysis of the District's financial performance during the six months ended December 31, 2012. This information is presented in conjunction with the basic financial statements, which follow this section. Financial Highlights for Fiscal year 2011/2012 Total Assets increased by $83,673 or 1%. Operating revenues decreased by $89,061 or 10%. Unrestricted Net Assets increased $ 130,288 or 9%. Overview of the financial statements The financial statements consist of the following three parts: Management's Discussion and Analysis, Financial Statements and other required supplementary information. The financial statements include notes that explain in detail some of the information included in the financial statements. Required Financial Statements The financial statements of the District report information utilizing the full accrual basis of accounting. The financial statements conform to accounting principles which are generally accepted in the United States of America. The statements of Net Assets include information of the District's assets and liabilities and provide information about the nature and amounts of investments in resources (assets) and the obligations to District creditors (liabilities). The Statements of Activities and Changes in Net Assets identify the District's revenues and expenses for the six months ended December 31, 2012. This statement provides information on the District's operation over the past fiscal year and can be used to determine whether the District has recovered all of its actual and projected costs through user fees and other charges. The third financial statement is the Statement of Cash Flows. This statement provides information on the District's cash receipts, cash payments and changes in cash resulting from operations, investments and financing activities. From the Statement of 1 Cash Flows, the reader can obtain information on the source and use of cash and the change in the cash and cash equivalents balance for the six month period ended December 31, 2012. Bard Water District Management's Discussion and Analysis For the six months ended December 31, 2012 Financial Analysis of the District The Statement of Net Assets and the Statement of Activities and Changes in Net Assets provide an indication of the District's financial condition and also indicate whether the financial condition of the District improved during the previous six months. The District's net assets reflect the difference between assets and liabilities. An increase in net assets over time typically indicates and improvement in financial condition. Net Assets A summary of the District's Statements of Net Assets is presented below. Table 1 Condensed Statement of Net Assets June 30, 2012 Dollar Percent December 31 Change Change (restated) 2012 $(152,841) <math>(.06\%)</math> Current and Other Assets $ 2,523,352 $ 2,370,511 (67, 113) <math>(1\%)</math> Capital Assets 6,996,045 6,928,932 <math>(2\%)</math> 9,519,397 9,299,443 (219,954) Total Assets -0- -0- 1,145,000 1,145,000 Long-term Debt <math>(73\%)</math> 414,637 111,010 (303,627) Other Liabilities 19% Total Liabilities 1.559.637 1,256,010 (303,627) Net Assets invested in capital 1% (67,113) Assets, net of related debt 5,776,045 5,708,932 20,498 3% 718,651 739,149 Restricted Reserves 9% 130,288 1.465.064 1,595,352 Unrestricted Reserves 1% $ 7 959 760 $ 8,043,433 $ 83.673 Total Net Assets As the above table indicates, total assets decreased by $ 219,954 or 2% from $ 9,519,397 to $ 9,299,443 during the six months ended December 31, 2012. This is comprised of a decrease of $ 152,841 in current and other assets and a decrease of $ 67,113 in capital assets. The decrease in current and other assets and the decrease in capital assets reflect a period of moderate Capital Expenditures and an increase in accumulated depreciation by the current year depreciation expense. Total liabilities reflect a decrease of $ 303,627 or 73% due mainly to a decrease in deferred revenue. Bard Water District Management's Discussion and Analysis For the Year Ended December 31, 2012 Net Assets (Continued) Table 1 also indicates the total net assets increased $ 83,673 from $ 7,959,760 to $ 8,043,433. This increase is due to a decrease of $ 67,113 in net assets invested in capital assets, net of related debt; an increase of $ 20,498 in net assets restricted and a increase of $ 130,288 in unrestricted net assets. These amounts reflect the affect of the current six month period results from the operation of its resources on the District's Total Net Assets. Table 2 Condensed Statement of Activities And changes in Net Assets Percent December 31, Dollar June 30 2012 2012 Change Change <math>(10\%)</math> 907,776 818,715 (89,061) Operating Revenue $ <math>(17\%)</math> 104,893 (21,315) Nonoperating Revenues 126,208 11% Total Revenues 1,033,984 923,608 (110,376) <math>(51\%)</math> 154,945 76,612 (78,333) Depreciation Expense <math>(38\%)</math> 715,953 (444,859) Other Operating Expenses 1,160,812 39% 47,370 (30,046) Nonoperating Expenses 77,416 839,935 <math>(40\%)</math> Total Expenses 1,393,173 (553,238) 123% 83,673 442,862 Changes in Net Assets (359, 189) 4% 7,959,760 359,189 Beginning Net Assets 8,318,949 1% 83,673 Ending Net Assets $ 7.959.760 $ 8,043,433 The Statement of Activities and Changes in Net Assets identify the various revenue and expense items that impact the change in net assets. As the information in Table 2 indicates, Total Revenue decreased $ 110,376 which was a factor relating to the increase of $ 83,673 in net assets by the end of the six month period ended December 31, 2012... Table 2 indicates that the District's total revenues decreased by $ 110,376 or 11% to $ 923,608 in the six months ended December 31, 2012 from $ 1,033,984 the prior year. This decrease in total revenues was due primarily to a decrease of Siphon Drop Distributions. Total expenses decreased $ 553,238 or 40% during the six month period ended December 31, 2012. The majority of the increase relates to a decrease in legal expenses. Bard Water District Management's Discussion and Analysis For the six months ended December 31, 2012 Capital Assets A summary of the District's Capital Assets is presented below. Table 3 Capital Assets Balance Balance Dollar June 30 December 31 2012 2012 Change $ -0- 133,743 133,743 Buildings -0- 1,127,978 1,127,978 Heavy Equipment -0- 27,920 27,920 Office Equipment and Fixtures 9,499 189,504 189,005 Vehicles 7,932,854 -0- Canals & Delivery Systems 7,932,854 9,499 9,411,500 9,420,999 Subtotal (76,612) Less Accumulated Depreciation (2,415,455) (2,492,067) (67.113) $ 6,996,045 $ 6,928,932 Total Capital Assets As of December 31, 2012, the District's investment in capital assets totaled $ 9,420,999 increased $ 9,499 over the capital asset balance of $ 9,411,500 as of December 31, 2012. Capital assets include all of the District's major capital assets, including infrastructure assets, water mains, pipes and District headquarters and other structures, as well as vehicles and other equipment with a value of $ 5,000 or more. A comparison of the District's capital assets over the past two fiscal years is presented in Table 3. Long - Term Debt Revenues Certificates of Participation (Series 2004) in the amount of $ 1,800,000 issued in April 2004 to fund costs associated with the upgrade and replacement of the Reservation Main Canal Improvement Project. This debt will be paid in annual installments through the year 2024. The District's has covenanted that it will fix, prescribe and collect rates, fees and charges for use of the District's water system during each fiscal year which are at least sufficient to yield in each fiscal year net revenues equal to 125% of the debt service for such fiscal year, plus any amount necessary to restore the bond reserve fund to the reserve requirement. Bard Water District Management's Discussion and Analysis For the six months ended December 31, 2012 As of December 31, 2012, the District had $ 1,220,000 in outstanding bond debt compared to $ 1,220,000 as of June 30, 2012. Request for Information This financial report is designed to provide a general overview of the Bard Water District's finances for all those with an interest in the district's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Administrative Assistant, Bard Water District, 1473 Ross Road, Winterhaven California, 92283. BARD WATER DISTRICT Statement of Net Assets As of December 31, 2012 ASSETS Current assets: $ 212,862 Cash and investments 197,670 Accounts receivables 33,146 Inventory 443,678 Total current assets 394,297 Investments - restricted Noncurrent assets: 9,420,999 Property, plant and equipment (2,492,067) Less allowance for depreciation 6,928,932 Net Capital Assets Other Non-Current assets: 1,460,622 Investment in Siphon Drop Project 58,839 Unamortized bond issuance costs 13,075 Refundable deposits 1,532,536 Total Other Assets $ 9,299,443 TOTAL ASSETS LIABILITIES AND NET ASSETS Current Liabilities: $ 13,722 Accounts payable 75,000 Current portion of long-term debt 22,288 Accrued expenses 111,010 Total Current Liabilities Non-Current Liabilities: 1,145,000 Bonds Payable, net of current portion Total Non-Current Liabilities 1,145,000 1,256,010 TOTAL LIABILITIES Net Assets: 5,708,932 Invested in capital assets, net of related debt 739,149 Restricted net assets 1,595,352 Unrestricted net assets 8,043,433 TOTAL NET ASSETS $ The accompanying notes are an integral part of these financial statements. BARD WATER DISTRICT Statement of Revenue, Expenses and Changes in Net Assets For the six months ended December 31, 2012 OPERATING REVENUES $ 277,555 Indian Unit Assessments 270,468 Agricultural water fees 65,930 RMIP agricultural water fees 147,956 Excess water fees 56,806 Reimbursable work 818,715 TOTAL REVENUE OPERATING EXPENSES 245,252 Payroll Expenses 25 Employee Drug Testing 6,306 Office Supplies 107,436 Insurance 17,939 Payroll Taxes 783 Rentals 12,199 Other Expenses 109,225 Fees / Dues / Finance Charges 636 Safety Equipment 4,004 Light Equipment Repair 42,806 Irrigation Structure Improve 4,758 Parts & Supplies 387 Freight / Shipping Charges 11,383 Operational Supplies 3,780 Telephone / Communication 23,317 Large Equipment Repair 4,310 System Maintenance 21,452 Weed Control 199 Wood Gate Material 2,574 Metal Gate Material 45,407 Fuel & Oil 1,907 Employee/ Customer Supplies 2,870 Utilities Bank Charges 651 52 Water Conservation Cost 13,245 Multi Species LCR MSCP 76,612 Depreciation Expense 33,050 Legal Fees 792,565 TOTAL OPERATING EXPENSES 26,150 OPERATING NET INCOME The accompanying notes are an integral part of these financial statements. BARD WATER DISTRICT Statement of Revenue, Expenses and Changes in Net Assets (Continued) For the six months Ended December 31, 2012 NON-OPERATING REVENUE (EXPENSE) 8,121 Property Taxes 2,450 Other Income Siphon Drop Power 94,263 59 Interest Earned (47,370) Interest Expense / Bond Costs 57,523 Total Non-Operating Revenue, Net 83,673 Change in Net Assets 8,237,314 Total Net Assets, Beginning of Year - as previously reported (277,554) Prior period Adjustment (Note 11) 7,959,760 Total Net Assets, Beginning of Year - Restated $ 8,043,433 Total Net Assets, End of Year The accompanying notes are an integral part of these financial statements. BARD WATER DISTRICT Statement of Cash Flows - (Continued) For the six months Ended December 31, 2012 Reconciliation of Change In Net Assets to Net Cash Provided by Operating Activities: 26,150 $ Operating income Adjustments to Reconcile Change In Net Assets to Net Cash Provided by Operating Activities: 76,612 Depreciation Expense 39,495 (Increase) Decrease in receivables 6,403 (Increase) Decrease in prepaid expenses 13,790 (Increase) Decrease in investments (94,263) (Increase) Decrease Investment in Siphon Drop 2,802 (Increase) Decrease in other assets (25,027) Increase (Decrease) in accounts payable 6,250 Increase (Decrease) in accrued expenses (284,850) Increase (Decrease) in deferred Income (232,638) Net Cash Provided by Operating Activities Cash Flows from Non - Capital Financing Activities: 8,121 Proceeds from property taxes 2,450 Other Income 10,571 Net Cash Provided by Non-Capital Financing Activities Cash Flows from Capital and Related Financing Activities: (9,499) Equipment & Property Improvements Principal payments - Certificates of Participation (47,370) Interest payments / Bond Costs Net Cash Provided by (Used) Capital and Related Financing (56,869) Activities Cash Flows from Investing Activities: 59 Interest received on investments 94,263 Siphon Drop Power - Net Earnings 94,322 Net Cash provided by Investing activities (184,614) Net Change in Cash and Cash Equivalents 397,476 Cash and Cash Equivalents, Beginning 212,862 Cash and Cash Equivalents, Ending Supplemental information: Interest expense paid in current fiscal year was $47,370. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS · · · · · · · · · · · · · · · · · · · Bard Water District Notes to Financial Statements For the six months ended December 31, 2012 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Note 1. Reporting Entity The Bard Irrigation District (The District) is a public entity established in 1927 pursuant to the Irrigation District Act of the California Water Code (Section 34000 et seq.) for the purpose of providing water services to the properties in the District. The District was reorganized into the "Bard Water District" the 29th day of November, 1973 as a Political Corporation of the State of California in accordance with Government Code (Section 56452). The District has the power under the law to among other things, provide irrigation within its geographic boundaries. In connection therewith, the District has the power of eminent domain to contract, to construct works, to fix rates and charges for commodities or services furnished, and to incur indebtedness. The District elected by the owners of irrigable land residing within the District's boundaries. The District's service area lies within the Bard Valley of southeastern California encompassing 14,676 acres. The District operates and maintains the Reservation Division of the U.S. Bureau of Reclamation's Yuma Project. The water for the project is diverted from the All-American Canal to the fore bay of the Siphon Drop Power-Plant on the Yuma Main Canal. Some Reservation Division lands are served directly from turnouts on the All-American Canal above Siphon Drop. Basis of Presentation The accounting records of the District are maintained on the accrual basis of accounting. Under this method, revenues are recognized when earned, regardless of when received, and expenses are recognized when incurred, regardless of when paid. These basic financial statements present the District and its component units, entities for which the District is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the District's operations and date from these units are combined with data of the District. Each blended component unit has a December 31 year end. The District had no discretely presented component units. Bard Water District Notes to Financial Statements For the six months ended December 31, 2012 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Note 1. Blended Component Units The Bard Water District Financing Corporation, a non-profit public benefit corporation was established on April 1, 2004 for the purpose of providing assistance to the District in financing the acquisition, construction and improvement of the Reservation Main Canal for the District. Although legally separate from the District, the Corporation is reported as if it were part of the primary government because its sole purpose is to provide financing to the District under the debt issuance documents of the District. The District has continuing oversight responsibility or control over the corporation because the members of the Board of Directors of the Corporation are also members of the District's Board of Directors. Revenues Each landowner pays an annual water availability fee, based on acreage held within the District. Water revenues are recorded on a calendar year basis. The water availability fee is billed on a calendar year basis. Bard Water District landowners and lessees may pay the full amount of the annual charges due on or before January 10 or divide the annual charges into two equal installments. The first installment must be paid by January 10 of the current year and the second installment by July 10. The principal operation of the District is the sale of untreated canal water. Non-Operating Revenues and Expenses Non-Operating revenues and expenses consist of net income from the joint ventures, property taxes, interest income, and interest expense. Income Tax The Bard Irrigation District (The District) is a public entity established in 1927 pursuant to the Irrigation District Act of the California Water Code (Section 34000 et seq. ) for the purpose of providing water services to the properties in the District. The District was reorganized into the "Bard Water District" the 29th day of November, 1973 as a Political Sub Division of the State of California in accordance with Government Code (Section 56452). It is, therefore, exempt from the filing of Federal and State of California income tax returns. Bard Water District Notes to Financial Statements For the six months ended December 31, 2012 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Note 1. Restricted Assets Restricted assets represents investments relating to the Bard Unit Reserve Fund, the Indian Unit Reserve Fund, the Indian Unit Special Reserve Fund, and the Siphon Drop Reserve Fund. Investments are stated at cost. Interest earned on each fund is credited annually. (Refer to additional financial details for Restricted Assets in the supplementary information.) Compensated Absences Accrued vacation is payable upon retirement or termination. Accrued sick leave may be taken during employment but is not vested and is lost upon retirement or termination. The amount of vacation payable at year and was immaterial. Net Assets The differences between assets and liabilities are reported as net assets. Net assets are classified as either invested in capital assets, net of related debt, restricted, or unrestricted. Net assets that are invested in plant, net of related debt, consist of capital assets, net of accumulated depreciation and amortization. The District's capital assets include property, plant, and equipment. Restricted net assets are those net assets that have external constraints placed on them by creditors, grantors, contributors or laws or regulations of other governments, or imposed by law through constitutional provision of enabling legislation. Unrestricted net assets consist of net assets that do not meet the definition of "restricted" or invested in capital assets, net of related debt. Unlike the restricted net assets, the Board has discretion in determining the use and establishing minimum/maximum balance requirements for the unrestricted cash and investment portion of net assets. The board may, at any time, change or eliminate amounts established for these purposes. Bard Water District Notes to Financial Statements For the six months ended December 31, 2012 CASH Note 2. Cash equivalents have been defined as short term, highly liquid investment which are readily convertible to known amounts of cash and have maturity dates within 90 days of the statement date. Cash balances are classified as to credit risk as uncollateralized. Cash reported on the balance sheet as of December 31, 2012: $ 30,044 National Bank of Arizona General 168,667 National Bank of Arizona Money Mkt 13,801 Wells Fargo - Money Market 350 Petty Cash $ 212,862 Total ACCOUNTS & OTHER RECEIVABLES Note 3. Accounts receivable are not written off as all water billings will be collected, if only when the land is sold. INVESTMENTS / RESTRICTED INVESTMENTS Note 4. Authorized deposits and investments of the District are governed by the California Government Code as well as policies set forth by the District's Board of Directors. All investments consist of money market accounts. Carrying amounts for all investments approximate fair value and are considered uninsured with securities held by the counterparty's trust department or agent in the entity's name. Carrying amount of investments as of December 31, 2012, including restricted investments, is $ 607,159 invested entirely in Money Market Accounts. Bard Water District Notes to Financial Statements For the six months ended December 31, 2012 PROPERTY AND EQUIMENT Note 5. The cost of additions to the utility plant and major replacements of retired units of property is capitalized. The cost and accumulated depreciation of property sold or retired is deducted from capital assets, and any profit or loss resulting from the disposal is credited or charged in the non-operation section of the statements of revenues, expenses and changes in net assets. The cost of current repairs, maintenance, and minor replacements is charged to expense. Construction in progress primarily relates to upgrades of existing facilities. Depreciation has been provided over estimated useful lives of the assets using the straight-line method. The estimated useful lives are as follows: Estimated Useful Lives 20 - 65 years Canals & Anciliary Systems <math>3-7</math> years Office furniture, fixtures and equipment 7 – 15 years Heavy Equipment 5 – 10 years Trucks & Utility Vehicles Additions for the fiscal year ended December 31, 2012 were $ 9,499. Depreciation expense amounted to $ 76,612. Asset groupings, at cost, are as follows: Balance Balance Retirements December 31, 2012 Additions Classifications July 1, 2012 -0- $ 133,743 $ $ 133,743 $ -0- Buildings 1,127,978 -0- 1,127,978 -0- Heavy Equipment 27,920 -0- 27,920 -0- Office Equipment & Fixtures 189,504 9,499 -0- 189,005 Trucks & Utility vehicles 7,932,854 7,932,854 -0- Canals & Ancillary Systems -0- 9,420,999 -0- 9,411,500 9,499 (2,492,067) (76,612) -0- Less Accumulated Depreciation (2,415,455) 6,928,932 -0- 6,996,045 $ (67,113) $ $ Totals Bard Water District Notes to Financial Statements For the six months ended December 31, 2012 INVESTMENT IN SIPHON DROP PROJECT Note 6. The District has an undivided 11.49% interest in the Siphon Drop Power Plant (energy generation stations and transmission systems). The Project is operated by the Yuma County Water Users located in Somerton Arizona. Generated at the plant is interconnected with the Parker-Davis power system for distribution and sale. The District's share of current net earnings was $ 94,263. (see financial information for the Siphon Drop Power Plant in supplementary information.) Note 7. LONG-TERM LIABILITES Long-Term debt and related costs Long-term debt is reported at face value, net of applicable premium, discounts and deferred loss on refunding. Cost related to the issuance of debt are deferred and amortized over the lives of the various debt issues and are shown as a Other Non-Current Assets on the Statement of Net Assets. Certificates of Participation (Series 2004) In April 1, 2004, District issued $ 1,800,000 of Revenue Certificates of Participation (2204 series). The District has used the net proceeds and reimbursed itself for these and related capital cost. The certificates have variable interest rates and they are payable in installments of $ 75,000 payable solely form and secured by the revenues received from the operation of the District's water system. As of December 31, 2012 the District has outstanding revenue bonds in the amount of $ 1,220,000. (see Note 10 for details). Bard Water District Notes to Financial Statements For the six months ended December 31, 2012 The debt service requirements for the bonds as of December 31, 2012 were as follows: Outstanding Bonds Total Principal Debt Service Amounts Payment Date Interest 75,000 141,863 66,863 December 31, 2013 5 S S 80,000 63,225 143,225 December 31, 2014 144,225 85,000 59,225 December 31, 2015 54,847 144,847 90,000 December 31, 2016 140,257 50,257 90,000 December 31, 2017 712,280 172,280 December 31, 2018- 2022 540,000 283,243 260,000 23,243 December 31, 2023- 2024 $ 1,709,940 $ 1,220,000 $ 489,940 Total debt payments Note 8. RETIREMENT PLAN The District contributes to the California Public Employees Retirement System (CalPERS), an agent multiple-employer defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustment, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and District resolution. For 2012, the District's annual pension cost for CalPERS was equal to the District's required and actual contributions, which were determined as part of the December 31, 2009 actuarial valuations, respectively, using the entry age actuarial cost method. RISK OF LOSS Note 9. The District is exposed to various risks of loss related to torts of, damages to, and destruction of assets, errors and omissions, injuries to employees, and natural disasters. The District is a member of the Association of California Water Agencies Joint Powers Insurance Authority (ACWA JPIA). The ACWA JPIA is a risk-pooling self-insurance authority, created under provision of the California Government Code Sections 6500 et. seq. The purpose of self-insured losses and to purchase excess insurance coverage. Bard Water District Notes to Financial Statements For the six months ended December 31, 2012 Note 9. RISK OF LOSS (CONTINUED) The District pays an annual premium to ACWA JPIA for its liability, property, and workers compensation insurance coverage, the ACWA JPIA purchases specific occurrence excess insurance from commercial excess, reinsurance carriers, or other pooling agencies for the ACWA JPIA's liability, property, and workers compensation programs. The arrangement with ACWA JPIA is in substance a transfer of pooling (sharing) of risks among the participants in the ACWA JPIA's programs. For ACWA JPIA's public liability and workers compensation programs, premiums for coverage are based upon the experience of participating members. District liabilities for claims not covered by ACWA JPIA programs are reported when it is probably that a loss has occurred and the amount of the loss can be reasonably estimated. Because actual claim liabilities depend on complex factors such as changes in legal doctrines, damage, awards, and other factors, the process used in computing claim liabilities does not necessarily result in an exact amount. Such uncovered claim liabilities are reevaluated periodically to take into account recently settled claims, claim frequency, and other economic and social factors. Note 10. COMMITMENTS AND CONTINGENCIES Bonded Debt The bonded debt issued in April 1, 2004 Certificates of participation (Reservation Main Canal Improvements Project) Series 2004 in the amount of $ 1,735,000 consisting of Bond Discounts of $ 8,737, Underwriter's Discount and Insurance Costs of $80,949, Reserves of $145,312 and Construction Costs of $ 1,500,000. Budget and Budgeting Budget integration is employed as a management control device. Budgets are formally adopted by the Board of Directors and take effect the following January 1, the budgets are used as a management tool and are not a legal requirement. Bard Water District Notes to Financial Statements For the six months ended December 31, 2012 Note 11. PRIOR PERIOD ADJUSTMENT To correct the amount of income from Indian Unit assessments reported in the prior year. Revenue was overstated $ 277,554. This increases net assets at the beginning of the period. CHANGE IN ACCOUNTING PERIOD Note 12. On August 2, 2012 the Board of the Bard Water District elected to change the accounting period from a fiscal year ended June 30 to a calendar year ended December 31. These financial statements are prepared as of December 31, 2012 and for the six months then ended. Note 13. SUBSEQUENT EVENTS The management of The Bard Water District has reviewed the results of operations for the period of time from its year end December 31, 2012 through July 2, 2013, the date the financial statements were available to be issued, and has determined that no adjustments are necessary to the amounts reported in the accompanying financial statements nor have any subsequent events occurred, the nature of which would require disclosure. SUPPLEMENTARY INFORMATION BARD WATER DISTRICT Statements of Changes Selected Reserve Funds As of December 31, 2012 THE BARD UNIT RESERVE FUND 205,493 $ Fund Balance - Beginning of Year 1,027 Interest Earned and Transferred 206,520 Fund Balance - End of Year $ THE INDIAN UNIT RESERVE FUND 182,378 $ Fund Balance - Beginning of Year 912 Interest Earned and Transferred 183,290 Fund Balance - End of Year $ THE INDIAN UNIT RESERVE FUND 330,780 $ Fund Balance - Beginning of Year 16,905 Additions to Reserve Fund 1,654 Interest Earned and Transferred 349,339 Fund Balance - End of Year S 739,149 BALANCE - END OF YEAR FOR ALL RESERVE FUNDS $ See Accountant's Report on Supplementary Information BARD WATER DISTRICT SIPHON DROP STATEMENT OF FINANCIAL POSITION As of December 31, 2012 ASSETS Bard Water District Undivided Interest Project Total Current assets: 170,491 $ 1,483,821 $ Cash and cash investments 29,582 257,462 Accounts receivables 9,127 79,434 Other Current Assets 10,329 89,896 Inventory 219,529 1,910,613 Total current assets Other Assets 18,435 160,445 Operational Reserves Restricted Funds 26,399 229,755 Replacement Reserve Fund 1,291,588 11,240,973 Property and Equipment, Net 1,555,951 $ $13,541,786 TOTAL ASSETS LIABILITIES AND NET ASSETS Current Liabilities: 95,194 828,495 $ $ Distribution Payable 81,899 712,785 Accounts payable 135 1,176 Accrued expenses 177,228 1,542,456 Total Current Liabilities Net Assets: 10,430,986 1,198,520 Unrestricted 18,435 160,445 Operational Reserves Permanently Restricted 26,399 229,755 Restricted 135,369 1,178,144 Net Investment in Plant 1,378,723 11,999,330 Total Net Assets 1,555,951 $ $ 13,541,786 TOTAL LIABILITIES AND NET ASSETS See Accountant's Report on Supplementary Information BARD WATER DISTRICT SIPHON DROP STATEMENT OF ACTIVITIES As of December 31, 2012 Bard Water District Undivided Interest Project Total REVENUES 5,264 $ 45,813 $ Public Authorities 172,370 1,500,172 Power Sales 5,641 49,097 Reimbursable Work 437 3,807 Interest 4 34 Miscellaneous income 183,716 1,598,923 TOTAL REVENUE EXPENSES 22,075 192,123 Materials 20,198 175,785 Salaries and Wages 15,852 137,963 Administrative & General Expenses 8,988 78,224 San Luis Rey Agreement 9,350 81,375 Salaries and Wages - Additives 6,894 60,000 Equipment Expense 1,629 14,178 Insurance 1,469 12,785 Miscellaneous Fees & Licenses 1,506 13,108 Contract Services 352 3,062 Wages - Vacation and Sick 276 2,402 Utilities 160 1,392 Operational Supplies 704 6,130 Miscellaneous Expenses 89,453 778,527 TOTAL OPERATING EXPENSES CHANGE IN NET ASSETS BEFORE OPERATING 94,263 820,396 TRANSFERS & DISTRIBUTIONS OPERATING TRANSFERS & DISTRIBUTIONS (81,899) (712,785) Distribution of Excess Revenue 12,364 107,611 CHANGE IN NET ASSETS 1,366,359 11,891,719 NET ASSETS, JANUARY 1 1,378,723 $ 11,999,330 NET ASSETS, DECEMBER 31 81,899 Add accrued distribution of excess revenue 1,460,622 Net assets December 31 - Adjusted See Accountant's Report on Supplementary Information 10 . . ů. EXHIBIT B Map BWD 1-16 HAGBERG RD PICACHO менатус $ 247 RD COLLINS RD LEATHERS #D 书 BAILEY RD STALNACKER YORK RD YUMA NORDHAL PARKMAN RD WHITE BD BARD RD 8 COLBY RD B HORPE RD % DANIEL PEREZ BOSCOVICA MILLER BOOMLIER Bord $ 24 Arizona ROSS Ross Corner RD RD LINE BD MIGUEL BERRYMAN RD LEV HORNE RD HAUGHTELIN FID ROCK RD INDIAN ROCK OBJICK RD RD INDIAN CORSE RD OSTER PEREZ RD RES ARNOLD FAS SWILKINS RD AD PASQUAL SCHOOL RD PICACHO EIRST AVE SAN $ 24 International Border Bard Water District local agency formation commission EXHIBIT 1