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OID ‘Very Good’ Financially

POSTED June 17, 2014 5:40 p.m.

The financial condition of the Oakdale Irrigation District is in “very good” shape, according to the district’s auditor Brian Nash of Richardson and Company.

He delivered an overview of OID’s comprehensive annual financial report for the year end Dec. 31, 2013 to the OID Board of Directors at the June 17 regular meeting. The board approved the annual report. Director Al Bairos was absent. The annual report, which was formatted using guidelines set by the Government Finance Officer’s Association, is available to the public upon request.

Nash reported a “clean opinion” and said the scope of the audit was consistent and everything was in line. He later said that there were no significant deficiencies or material findings. He noted that there was one audit adjustment and said that the OID finance department did a “really good job.” He also said that a footnote was added to the report due to the drought and its impact on revenues to the district.

“The district is in a very good financial position,” Nash said. “Many governments would love to be in that position.”

He noted that the district’s large net income for 2013 was mainly due to the “significant transaction” of the Trinitas annexation at $19 million and also a $4 million water transfer (sale) to the San Luis and Delta Mendota Water Authority.

Kathy Cook, OID’s Chief Financial Officer, reported to the board that the net position of the district exceeded its liabilities by just over $156 million. Of that, $103 million is unrestricted, $51 million is invested in capital assets (net of related debt), and $2.3 million is restricted for specific purpose.

The total net position of the district increased by nearly $20 million in 2013, again, mainly because of the Trinitas annexation. Operating revenues increased by $4.3 million because of the aforementioned water sale. Non-operating revenues increased by $19 million also as a result of the Trinitas annexation. Non-current liabilities decreased by $586,000 mainly due to the pay down of bond debt.

Operating expenses, excluding depreciation, increased by just over $100,000 bringing the total to $10.4 million. Non-operating expenses decreased by $55,000 bringing the total to $1.5 million due to reduced bond interest expense.

The district ended 2013 with $50.4 million in cash and investments. Of that, $35.8 million is in designated reserves, $9 million in operating cash, $4.8 million in bond proceeds and reserves, and $800,000 in improvement district cash.

In other business, the board approved extending the contract with public relations firm Marcia Herrmann Design to the end of the year, at an estimated maximum of $15,000. As some of the reasons for needing to extend the contract, OID General Manager Steve Knell referred to the State Water Resources Control Board’s (SWRCB) aggressive campaign to define how water rights are to be managed in a drought and said that it’s important for OID’s position on the matter to be dispersed to the public in a clear and timely manner. He also noted the current drought situation and being able to get information out quickly and responsibly to address changes and direction OID may take to address yet another year of drought.

In discussion items, Knell said that to better inform and educate the public on the types of water transfers and their benefits to the district a “water transfer 101” presentation was compiled. He noted that there are a number of nuances to the subject matter and a lot of complex issues surrounding water transfers and OID would like the public to be well informed. He said that the presentations will be slated for a Tuesday, a Thursday, and a Saturday.

Also in discussion items, Knell mentioned funding options for the next phase of the district’s modernization projects. He said that OID needs $3 million per year just to fix and maintain what’s already in place, but needs more to modernize. There are three different ways to finance modernization and system improvements in order to conserve water. They have included some long-term water transfers that brought in revenues of about $2 million to $3 million per year from 1998-2011, which incrementally funded capital improvements. There was also bonding for $32 million in 2007 to get over the “camel hump” of critical projects, which was spent over a five-year period. Finally, there was the pay-as-you-go financing of projects, which has been necessary since 2011 due to the lack of long-term water transfer contracts. These revenues over the past couple of years have averaged just over $1 million.

Knell added that there are a lot of opportunities with the drought for receiving grant monies from state and/or federal entities, and public/private financing. OID staff are working on a “conservation package” for a specific project of expanding the Rubicon Systems Total Channel Control (TCC) district wide. It is currently in place on OID canals and a few farmer turnouts. Staff believes that the expansion of the TCC system could conservatively save 15,000 acre feet of water, which could then could be used for revenues for the district.

From the audience, Tom Orvis commented that the Turlock Irrigation District is now investing heavily in the TCC system. He noted it’s very eye-opening on the measurements and a good educational tool. He also noted that it’s more challenging for the older farmers who aren’t familiar with computer systems.

In the general manager’s report, Knell talked about pending water curtailment actions by the SWRCB. A fair amount of time is being spent to prepare for what may be released from the state. Emergency Rules and Regulations scheduled for release on June 11 and adoption on June 18 have been rescheduled for board review on July 1. The ERRs are expected to be out on June 24 to meet noticing requirements.

Knell said the state is unprepared for the drought and that the state is great at passing regulations but not great at enforcing. He referred to the Deer Creek Irrigation District that had its water taken away by the state and gave it to fish uses. Knell said the state said Deer Creek’s water use alone was waste and unreasonable use. He said it’s the first time that something like this has happened and it’s cause for great concern. He said the five-person SWRCB wants total control. He called it a new ploy and said there will be others but OID just has to keep fighting.

The next regular meeting of the OID Board of Directors will be at 9 a.m. on Tuesday, July 1 in the OID boardroom, 1205 East F. The next regular joint board meeting for the Tri-Dam Project is at 9 a.m. on Thursday, June 19, also in the OID boardroom.

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