Financial matters dominated the latest meeting of the Pine Cove Water District’s directors. The board heard from its auditor and accepted the 2013-14 audit, reviewed its first quarter 2014-15 financial report, and approved a new proposal for the renewal of two cell tower site leases.
Past: 2013-14 audit
“The district is in good financial shape. There are no significant audit findings,” reported Terry Shea, partner at Rogers, Anderson, Malody & Scott, LLP, the district’s auditor. PCWD’s ratio of current assets to liabilities is 4:1, which is very good since most districts are about 2:1, according to Shea.
However, he did advise the board to look at ways, including rate changes, to raise more cash over the next three to five years.
“Consider cutting costs or loans or raising revenue to get cash [balance] up,” he recommended. His warning was because PCWD had a cash balance of about $200,000 at the end of the fiscal year (June 30, 2014). Annual expenditures are about $600,000 or $50,000 monthly, and he recommends that his clients maintain a cash availability of about four to six months of expenses.
“If a fire or earthquake occurred, you need to build cash,” Shea said. Emphasizing his admonition, Shea noted that PCWD’s cash balance declined about $45,000 this past year, which was largely attributable to greater investments in infrastructure and a land purchase.
The last rate increase was approved in January 2011 and implemented a $3 increase in the bi-monthly minimum level on Feb. 1, 2011 and again each of the next two years to the current level of $53 bi-monthly. PCWD General Manager Jerry Holldber indicated that he will evaluate PCWD’s financial condition over the next few months and may recommend a rate increase to the board then.
Present: 2014-15 budget
At the end of the first quarter of the current fiscal year (Sept. 30), PCWD had received about 18 percent of expected revenues. There are normal collections since property tax revenue is not received until mid-December.
“Everything is on target for this time of year,” reported Holldber.
Expenses for the first three months were about 29 percent of projected costs. Salaries and benefits were about 27 percent, while other categories were slightly higher because full annual costs of some items, such as insurance, were paid in the first quarter.
PCWD has already expended about 60 percent of its projected overtime costs. Holldber explained that was caused by one employee on extended sick leave and another, Jerry Johnson, resigning last month.
“More overtime, but less salary,” noted President Michael Esnard.
Director Lou Padula noted that PCWD had awarded several customers $25 each for identifying and reporting water leaks.
“It’s the best program,” responded Office Manager Becky Smith. “We have spent about $400 in the three years since it began and it’s saved a lot of water.”
The board also reviewed and approved a proposed extension of the current tower contracts with AT&T and T-Mobile.
The new terms include a 15-percent rental increase for AT&T. Both companies will reimburse PCWD for maintenance of the sites, extend the leases to October 2049, guarantee the rental payments for 10 years and provide potentially $7,500 in bonus payments if the amended leases are signed within 60 days.
Also, Holldber said he has approached a firm to research the status of the district’s property tax revenue from the county. For several years, there have been questions about its accuracy.
“For some time, how little property tax [revenue PCWD receives] bugs us,” Holldber said. After discussing the subject with legal counsel, he is investigating the possibility of using a firm to research the collection and allocation of these tax payments.
After Shea advised the board to look at alternatives to increase its cash, Holldber agreed and said he plans to review the options of possible future rate increases. Revenue changes may occur once the district has revised Ordinance 4, which addresses its rules and procedures. PCWD’s legal counsel is currently reviewing this ordinance from the 1950s and subsequent amendments.