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Home My WebLink About08. Comprehensive Annual Financial Report (CAFR) as of June 30, 2016 Central San 8' ' BOARD OF DIRECTORS D d POSITION PAPER Board Meeting Date: January 12, 2017 Subject: APPROVE THE COMPREHENSIVE ANNUAL FINANCIAL REPORT AS OF JUNE 30, 2016 FOR SUBMISSION TO THE GOVERNMENT FINANCE OFFICERS ASSOCIATION Submitted By: Initiating Dept./Div.: Thea Vassallo, CPA, CMA Administrative / Finance & Accounting Finance Manager REVIEWED AND RECOMMENDED FOR BOARD ACTION: Phil Leiber— Director of Finance and Administration Roger S. Bailey General Manager ISSUE: Board approval is requested to submit a Comprehensive Annual Financial Report (CAFR) to the Government Finance Officers Association of United States and Canada (GFOA) for review. BACKGROUND: The GFOA is a professional association of state/provincial and local finance officers in the United States and Canada, and has served the public finance profession since 1906. The GFOA established the Certificate of Achievement for Excellence in Financial Reporting Program in 1945 to encourage and assist state and local governments to go beyond the minimum requirements of generally accepted accounting principles (GAAP) and to prepare comprehensive annual financial reports that provide transparency and full disclosure, and then recognize individual governments that succeed in achieving that goal. Central San was awarded a Certificate of Achievement for Excellence in Financial Reporting by the GFOA for the report submitted for the Fiscal Year 2014-15. The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. In order to be awarded a Certificate of Achievement, a government agency must publish an easily readable report in a prescribed format report that complies with GAAP, Governmental Accounting Standards Board (GASB) and GFOA program policy and requirements. The CAFR includes ten years of District historical, financial, and statistical data. The CAFR provides a concise document for internal management use, as well as external use with other agencies, and is posted on Central San's website for the general public. A Certificate of Achievement is valid for a period of one year. The Finance and Accounting Division has prepared Central San's CAFR as of June 30, 2016. It is believed that the current CAFR continues to meet the Certificate of Achievement Program requirements and staff is asking for Board approval to submit it to the GFOA to determine its eligibility for another certificate. C:\Users\CGranzella\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.0ut1ook\IFG8EC11\1-12-17 CAFR Posi Paper(3).doc Page 1 of 2 POSITION PAPER Board Meeting Date: January 12, 2017 subject: APPROVE THE COMPREHENSIVE ANNUAL FINANCIAL REPORT AS OF JUNE 30, 2016 FOR SUBMISSION TO THE GOVERNMENT FINANCE OFFICERS ASSOCIATION A draft of the June 30, 2016 CAFR was provided to the full Board as part of the agenda packet for the December 27, 2016 Finance Committee meeting. No changes were suggested by the Committee. The final CAFR is included as Attachment 1 . ALTERNATIVES/CONSIDERATIONS: None. FINANCIAL IMPACTS: There is an application fee for submission of a CAFR for review based on total revenues of the entity applying. Based on this sliding fee schedule, Central San's fee is $580. COMMITTEE RECOMMENDATION: On December 27, 2016, the Finance Committee reviewed the draft June 30, 2016 CAFR and recommended no changes. The Committee recommended Board approval at this meeting. RECOMMENDED BOARD ACTION: Review and approve the June 30, 2016 CAFR for submission to the GFOA. Attached Supporting Documents: 1. CAFR for the Fiscal Year ended June 30, 2016 C:\Users\CGranzella\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.0utlook\IFG8EC11\1-12-17 CAFR Posi Paper(3).doc Gastro Costa Sonifor \ (�GSo =do� � O/Sf^i cf 5019 Imhoff Place, Martinez, CA 94553 OMPREHENSIVE ANNUAL FINANCIAL REPOR r 1000 f i f / 1 R / • '�cid� 'i FOR THE FiSCAL EARS ENDED UNE 01 20 1 6 AND 20 1 S CENTRAL CONTRA COSTA SANITARY DISTRICT MARTINEZ, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 Prepared By: Finance & Accounting Division CENTRAL CONTRA COSTA SANITARY DISTRICT Comprehensive Annual Financial Report Table of Contents For the Years Ended June 30, 2016 and 2015 INTRODUCTORY SECTION: Letterof Transmittal............................................................................................... i Board of Directors................................................................................................vii MissionStatement................................................................................................ix OrganizationChart ............................................................................................... x Mapof Service Area .............................................................................................xi Certificate of Achievement...................................................................................xii FINANCIAL SECTION: Independent Auditors' Report............................................................................... 1 Management's Discussion and Analysis .............................................................. 3 Basic Financial Statements Statement of Net Position ........................................................................ 10 Statement of Revenues, Expenses and Changes in Net Position ........... 13 Statement of Cash Flows.................................................................... 14-15 Notes to Financial Statements - The accompanying notes are an integral part of the basic financial statements.................................... 17-43 Required Supplementary Information Schedule of Changes in the Net Pension Liability and Related Ratios - Last10 Years......................................................................................... 46 Schedule of Contributions — Last 10 years .............................................. 47 Post Retirement Health Care Defined Benefit Plan - Schedule of Funding Progress — Last Three Valuations........................................ 48 Supplementary Information Combining Schedule of Statement of Net Position .................................. 50 Combining Schedule of Statement of Revenues, Expenses and Changes in Net Position - Enterprise Sub-Funds .................................. 51 Schedule of Running Expenses - Comparison of Budget and Actual Expenses by Department....................................................................... 52 Running Expense - Schedule of Supplemental Net Position Analysis ..... 53 STATISTICAL SECTION (Unaudited): Changes in Net Position and Statement of Net Position - LastTen Fiscal Years.....................................................................................S-1 Revenue by Type - Last Ten Fiscal Years.........................................................S-2 Operating Expenses by Type - Last Ten Fiscal Years.......................................S-3 Major Revenue Base and Rates - Historical and Current Fees - LastTen Fiscal Years.....................................................................................S-4 Assessed and Estimated Actual Valuation of Taxable Property - Last Ten Fiscal Years.....................................................................................S-5 Property Tax and Sewer Service Charge Fees Levied and Collected - Last Ten Fiscal Years.....................................................................................S-5 Sewer Service Charge - List of Ten Largest Customers - Last Ten Fiscal Years.....................................................................................S-6 Summary of Debt Service - Type, Debt Service Coverage, Debt Ratio - Last Ten Fiscal Years.....................................................................................S-7 Demographic and Economic Data - Population Served - Last Ten Calendar Years................................................................................S-8 List of Nine Largest Employers in Contra Costa County - Last Year and Eight Years Ago ......................................................................S-8 Demographic and Economic Statistics - Contra Costa County - Last Ten Fiscal Years.....................................................................................S-9 Full-time Equivalent Employees by Department - Last Ten Fiscal Years ........S-10 Number of Retirees and Surviving Spouses - Last Ten Fiscal Years ..............S-10 Capital Asset and Operating Statistics - Last Ten Calendar or Fiscal Years ...S-11 Miscellaneous Statistics ..................................................................................S-11 - M � kE w NTRODUCTIC", 1 IL "Y - e ' Central Contra Costa SanitaryDistrict NA 2016 Protecting public health and the environmentI 94553-4392 December 8, 2016 Central Contra Costa Sanitary District Customers and The Honorable Board of Directors, Martinez, California: State law requires that every general-purpose local government publish within six months of the close of each fiscal year a complete set of audited financial statements. This report is published to fulfill that requirement for the fiscal year ended June 30, 2016. Management of Central Contra Costa Sanitary District (the District) assumes full responsibility for the completeness and reliability of the information in these financial statements, based upon a comprehensive system of internal controls that is established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Maze & Associates has issued an unqualified ("clean") opinion on the District's financial statements for the year ended June 30, 2016. The independent auditor's report is located at the front of the financial section of this report. Management's Discussion and Analysis report (MD&A) immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. PROFILE OF THE GOVERNMENT History and Services Provided The District was established in 1946 under the Sanitary District Act of 1923 and is located about 30 miles east of San Francisco. The District builds, operates and maintains the facilities required to collect and process wastewater for approximately 341,000 residents of Danville, Lafayette, Martinez, Moraga, Orinda, Pleasant Hill, San Ramon, Walnut Creek and some of the unincorporated communities within Central Contra Costa County. The District also treats wastewater for 141,000 residents of the Cities of Concord and Clayton under a 1974 contract with the City of Concord. ®Recycled Paper The District is committed to protecting the public health and preserving the environment while minimizing facility and operating costs. The District has approximately 1,500 miles of sewer pipeline, ranging in size from 4 inches to 102 inches in diameter, and 19 sewage-pumping stations (three of which are privately owned) in the District's sewage collection system. The District is the sole provider of wastewater service within the District limits (see map of service area). Residents make up the largest segment of the District's customer base representing approximately 80% of the Sewer Service Charge revenue. The District's treatment capacity has grown from 4.5 million gallons per day (mgd) initiated in 1948 to 53.8 mgd currently. Bonds, state grants, federal grants, and pay-as-you-go resources of the District have financed expansions. The District also operates a small Recycled Water Program that provides high-quality recycled water for landscape irrigation at parks, school ballfields, and commercial businesses near the District's treatment plant. Due to customer demand, and continued water shortages in California, the District maintained operation of its residential recycled water fill station, which allows residential customers to obtain a maximum of 300 gallons of recycled water per trip for use in hand watering lawns, landscaping, and gardens. The District is also pursuing new recycled water projects to take advantage of the potential water supply that highly-treated wastewater represents, and to expand recycled water availability to District customers. In addition to its wastewater responsibility, the District also operates and maintains a permanent Household Hazardous Waste (HHW) Collection Facility in partnership with Mt. View Sanitary District and other local governments. The HHW Collection Facility is located adjacent to the District's wastewater treatment plant and seeks to keep pollutants out of the sewer system, making this facility an important part of our overall Pollution Prevention Program. Completing its nineteenth year of operation, the HHW currently serves over 30,000 residential and small business customers, from which over 2 million pounds of hazardous waste is collected and properly disposed of each year. Organization, Accounting and Budgetary Controls A five-member Board of Directors governs the District. Board members are elected on a non-partisan basis and serve a four-year term. The Board appoints the General Manager, who in accordance with policies established by the Board of Directors, manages District affairs. The District employs 278 regular employees organized in three departments led by Managers responsible for their budgets and expenses. The three departments are: Administrative, Engineering, and Operations. The District, by law, uses an enterprise fund to account for its operations and is run in a manner similar to private industry. The District currently has one enterprise fund which is comprised of four internal sub-funds: ■ Running Expense - accounts for the general operations of the District. Substantially all operating revenues and expenses are accounted for in this fund (also referred to as Operations & Maintenance or O&M). ii ■ Sewer Construction - accounts for non-operating revenues that are to be used for acquisition or construction of plant, property, and equipment (also referred to as the Capital Fund). ■ Self-Insurance - accounts for interest earnings on cash balances in this sub-fund and cash allocations from other funds, as well as costs of insurance premiums and claims not covered by the District's insurance policies. ■ Debt Service — accounts for activity associated with the payment of the District's long term bonds and loans. Each year, the Board adopts the following four budgets: Operations and Maintenance, Capital Improvement and Sewer Construction, Self-Insurance, and Debt-Service. The Board Finance Committee reviews disbursements prior to each regular Board meeting, and disbursements are then approved by the full Board. Monthly financial statements are issued to management and the Board. A detailed mid-year and annual budget analysis are prepared and presented to the Board. District management is accountable for variances and adhering to budget constraints. The District also has several documented financial policies that are reviewed and updated as appropriate. ASSESSING THE DISTRICT'S ECONOMIC CONDITION Local Economy and Outlook Nationally, the country continues its economic expansion, as most large metropolitan areas have recovered from the recession of 2008. According to the Legislative Analyst's Office (LAO), personal incomes are projected to increase and unemployment should continue to decrease in California through fiscal year 2018. The state's revenues will be about $1.7 billion lower than the previous fiscal year due to the state's main source of revenue coming from personal income tax which is highly volatile. This decrease in revenues will be met with decreased spending of $1.2 billion. Reserves should increase to $6.2 billion, which would allow little to no new spending commitments in the near future. The state's priorities continue to be to pay off existing debts and to build up the rainy-day fund to help minimize the effects of boom and bust cycles. According to the UCLA Anderson forecast, the U.S. should see slow but steady job growth through 2018 led mostly by increases in consumer spending and housing. With an increase in GDP, a strong labor market, increase in payrolls, and a steady unemployment rate around 5%, there is increasing evidence of rising interest rates and inflation in the near future. Employment in California is now at record levels, the number of people employed, including farm labor and the self-employed, is at over 18 million which is 6.2% above its previous peak. Increased home values have led to growth and new connections in the service area which continue to benefit the District. Concord and Walnut Creek continue to expand their commercial and residential projects which have increased sewer service charges and connections fees. The District and the bargaining units have agreed on a five-year contract that will go to December 2017. The current labor contract progressively eliminates employee retirement costs being paid for by the District. Payment of the iii unfunded liability is a major concern for the District as it is for many public entities. An additional payment for the unfunded actuarial accrued liability is included as part of the financial plan for the District to alleviate future fiscal obligation of the unfunded liability. The District has an excellent reputation in all areas of public service, which include finance, collection, treatment, training, safety, technology, capital projects, construction and customer service. The District has balanced revenue sources, adequate reserves, and a moderate debt obligation. The District reviews its rate and other charges annually. The District can increase its sewer service charge rates when needed to make up revenue shortfalls by providing public notice to all customers, holding a Public Hearing, and obtaining approval by the Board of Directors. The District is also able to obtain bond financing, as needed, due to the District's AAA bond rating. The District anticipates that it will continue to meet its mission and goals, continue to provide excellent customer service and reasonable rates to its customers, and meet compliance requirements given the current economic conditions. Long-Term Financial Planning District management analyzes and updates their strategic plan every two years, with the six goals being: provide exceptional customer service, strive to meet regulatory requirements, be a fiscally sound and effective water sector utility, develop and retrain a highly trained and innovative workforce, maintain a reliable infrastructure, embrace technology, innovation and environmental sustainability. Strategies to achieve each of the goals are developed, as well as metrics to evaluate success. The District performs a 10-year long-term cash flow forecast each year shortly before the budget process begins. The main economic factors considered in long-range forecasting are: the impact of state legislation and mandates, regulatory compliance, Governmental Accounting Standards Board (GASB) requirements, negotiated salary increases and employee benefits (including significant increases in retirement and health care costs), energy costs and interpreting the energy market, housing growth, and infrastructure renewal and replacement needs. The District has a significant amount of unfunded actuarial liability for both pension and other post employment costs (OPEB) and various options for managing these liabilities are revisited annually in the financial planning process. Relevant Financial Policies Investment Policy: The District's investment policies for District assets and GASB 45 Trust are reviewed and approved annually by the Board of Directors in accordance with District investment policy. Section 53646 of the California Government Code governs our investment practices, and is reviewed annually by staff, legal counsel and the Board. No required changes were necessary. The Board receives monthly financial statements that include District investment performance. Since 2008, the GASB 45 Trust investments are in a moderate investment strategy fund. The Board Finance Committee reviews GASB 45 Trust quarterly financial statements to monitor the District's investment strategy. Major Initiatives The District's vision is to be a high-performance organization that provides exceptional customer service and regulatory compliance at responsible rates. Regulatory iv compliance is provided through utilizing best management practices in our operation of our collection system and treatment facilities, as well as through continued investment in our infrastructure. The District has received the Platinum award from the National Association of Clean Water Agencies (NACWA) for 18 straight years in recognition of 100% compliance with our National Pollutant Discharge Elimination System (NPDES) permit. It has also reduced the number of sanitary sewer overflows by more than 60% in the past 11 years by improved sewer cleaning and a robust sewer rehabilitation program. The District adopted a two year Strategic Business Plan for FY 16 -17 through FY 17- 18. The Strategic Business Plan establishes policy direction and identifies six goals with key performance indicators that provide a roadmap for achieving increased effectiveness and efficiencies. Continuing to be a fiscally sound and effective water sector utility is one of the six goals in the strategic plan and the District's strategies for achieving this goal are to conduct long range financial planning and to manage costs. The District continues to analyze current and future rates, costs, and cash flows to ensure that they remain consistent with the cost of service study that was completed in FY 2014-15. The District is seeking out new revenues and funding sources, such as interagency agreements and possible state loan and grant opportunities. In order to effectively manage assets to meet future state and federal regulatory requirements, the District initiated an Asset Management Program and the preparation of a Comprehensive Wastewater Master Plan to evaluate options for addressing future regulatory requirements. The Master Plan will be completed in FY 2016-17. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Central Contra Costa Sanitary District for its comprehensive annual financial report for the fiscal year ended June 30, 2015. This was the sixteenth consecutive year that the District has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. This report could not have been accomplished without the dedication and commitment provided by District staff. I would like to express my appreciation to the following employees who assisted in its preparation: V ■ The Finance and Accounting staff who compiled the information contained in this document with a special thanks to Chris Thomas, Finance Administrator, Jamie King, Accountant, and Amal Lyon, Accountant. ■ The Reproduction and Graphics Team who creatively and professionally prepared this finished document. ■ Engineering and Operations staff who provided much of the statistical information included in this document. ■ The District's Board of Directors and Management Team for their support in preparing this document as well as their day-to-day support in conducting the financial operations of the District in a prudent and responsible manner. Respectfully submitt , LY Thea Vassallo Finance Manager Vi CENTRAL CONTRA COSTA SANITARY DISTRICT BOARD OF DIRECTORS June 30, 2016 Tad J. Pilecki ....................................................President Paul H. Causey..................................President Pro-Tem James A. Nejedly................................................Member David R. Williams................................................Member Michael R. McGill................................................Member Vii (THIS PAGE INTENTIONALLY LEFT BLANK) viii ' Central Contra Costa - Sanitary District VISION , MISSION , VALUES OUR VISION To be a high-performance organization that provides exceptional customer service and regulatory compliance at responsible rates OUR MISSION To protect public health and the environment OUR VALUES People Community Principles Leadership and •Value customers and •Value water sector •Be truthful and honest Commitment employees partners .Be fair, kind and •Work effectively and •Respect each other •Foster excellent friendly efficiently •Work as a team community relationships .Take ownership and • Promote a passionate •Celebrate our •Be open,transparent responsibility and empowered workforce successes and learn and accessible • Encourage continuous ur,chaUenge rowth and development Understand service ire dedication and level expectations top-quality results ix CENTRAL CONTRA COSTA SANITARY DISTRICT Organization Chart - Composite Electorate Board Members General Manager Secretary of the Engineering& Counsel for the District Administration Operations Technical District Services Information Collection Capital Projects Technology System Division Operations Plant Environmental& Finance Maintenance Regulatory Compliance Purchasing& Plant Planning& Materials Operations Development Services Services Communication &Intergov. Relations Risk Management x Central Contra Costa Sanitary District Map of Service Area June 30, 2016 Benicia San Pablo Suisun Bay Bay 2 Hercules a 5 4O Pittsburg o ,Martinez 0 6 I 7J Antioch Concord Pleasant Hill Clayton ® Walnut Creek '© 9 14 ■ 10 11 12 Lafayette 13 Berkeleyorinda Alamo 4 Moraga 15 Danville Oakland San Ramon San �' ,• , A Francisco N Bay \ 0 2 4 Miles Pumping Station 40 CCCSD's Headquarters Office Building, Privately Owned Pumping Station Treatment Plant, and HHW Collection Facility ■ CCCSD's Collection System Operations CCCSD Pumping Stations Department(sewer maintenance) 1. Martinez 11. Lower Orinda 2. Fairview 12. Bates Blvd. -Orinda Wastewater collection and treatment and 3. Maltby 13. Orinda Crossroads HHW collection for 340,700 people 4. Clyde 14. Via Robles Wastewater treatment and HHW collection 5. Concord Industrial 15. Moraga for 140,900 residents in Concord and Clayton 6. Buchanan Field North 16. San Ramon o contract 7. Buchanan Field South PRIVATELY OWNED: 8. Sleepy Hollow 17. Wagner Ranch HHW disposal services only 9. Acacia 18. Lower Wilder 10. Flush Kleen 19. Upper Wilder xi Milli Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Central Contra Costa Sanitary District California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2015 Executive Director/CEO xii 1�1 FINANCIALS 7 • FN/A� M A Z E & ASSOCIATES INDEPENDENT AUDITORS' REPORT To the Board of Directors Central Contra Costa Sanitary District Martinez, California Report on Financial Statements We have audited the accompanying financial statements of the Central Contra Costa Sanitary District(District)as of and for the years ended June 30, 2016 and 2015, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the Table of Contents. 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 the financial statements that are free from material misstatement,whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits 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 District'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 District's internal control. Accordingly, we 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion,the financial statements referred to above present fairly,in all material respects,the financial position of the Central Contra Costa Sanitary District as of June 30,2016 and 2015, and the changes in financial position and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. T 925.930.0902 Accountancy Corporation F 925.930.0135 3478 Buskirk Avenue,Suite 215 a maze@mazeassociates.com Pleasant Hill,CA 94523 w mazeassociates.com Emphasis of a Matter Management adopted the provisions of Governmental Accounting Standards Board Statement No. 72-Fair Value Measurement and Application, which became effective during the year ended June 30, 2016 as discussed in Note 1 to the financial statements. The emphasis of this matter does not constitute a modification to our opinion. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management's Discussion and Analysis and Required Supplementary Information 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 financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We 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 our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements as a whole. The Introductory Section, Supplemental Information and Statistical Section, as listed in the Table of Contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. The Supplemental Information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with generally accepted auditing standards in the United States of America. In our opinion, the Supplemental Information is fairly stated in all material respects in relation to the basic financial statements as a whole. The Introductory and Supplemental Sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and,accordingly,we do not express an opinion or provide any assurance on them. 3V��d- 4 4 Pleasant Hill, California November 28,2016 2 ` Central Contra Costa Sanitary District Protecting public 94553-4392 MANAGEMENT'S DISCUSSION AND ANALYSIS This section of the Central Contra Costa Sanitary District's annual financial report presents an analysis of the District's financial performance during the fiscal year ended June 30, 2016. This information is presented in conjunction with the audited financial statements, which follow this report. FINANCIAL HIGHLIGHTS The District's 2015-16 financial highlights are listed below. These results are discussed in more detail later in the report. • The District's total ending net position increased by $30.0 million or 5.32% in 2015-16. This is mainly due to increases in operating revenues, capital contributions, and a decrease in operating expenses. • Total revenues in 2015-16 increased by $4.3 million or 4.17%. The total Sewer Service Charge (SSC) rate increased for single family homes by 7.29% to $471 and 5.47% for multi-family homes to $463. Increased development in the service area lead to an increase in permit and inspection fees. • Total 2015-16 expenses decreased by $6.7 million or -5.28%. This is mainly due to a reduction in sewage treatment costs and pension expense. • Capital Contributions increased in 2015-16 by $8.1 million or 56.70%. The increase is mainly due to an increase in connection fees and a higher allocation of SSC to Capital Contributions from Operating Revenues. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report includes the Management's Discussion and Analysis report, the independent auditor's report and the basic financial statements of the District. The financial statements also include notes that explain information in the financial statements in more detail. This report also contains other supplementary information in addition to the basic financial statements. REQUIRED FINANCIAL STATEMENTS The District's financial statements report information utilizing methods similar to those used by private sector companies. These statements offer short and long-term financial information about the District's activities. • Statement of Net Position — reports the District's current financial resources (short-term spendable resources) with capital assets, deferred outflows of resources, long-term obligations, and deferred inflows of resources. 3 • Statement of Revenues, Expenses and Changes in Net Position - reports the District's operating and non-operating revenues by major source along with operating and non-operating expenses and capital contributions. • Statement of Cash Flows - reports the District's cash flows from operating activities, non- capital financing activities, capital and related financing activities, investing activities, and non- cash activities. STATEMENT OF NET POSITION The following table shows the condensed statement of net position of the Central Contra Costa Sanitary District for the past three fiscal years: Table 1 - Condensed Statement of Net Position % Increase Fiscal Year Ended June 30 (Decrease) FY 15-16 FY 15-16 vs. vs. 2015-16 2014-15 2013-14 FY 14-15 FY 13-14 Current Assets $ 95,584,553 $ 82,554,355 $ 79,291,642 15.78% 20.55% Capital Assets 616,005,037 609,718,479 608,583,268 1.03% 1.22% Other Non-current Assets 7,580,512 7,832,901 8,621,042 -3.22% -12.07% Total Assets 719,170,102 700,105,735 696,495,952 2.72% 3.26% Deferred Outflows of Resources-Pension Related 34,464,472 12,420,138 - 177.49% 100.00% Current Liabilities 10,986,379 10,029,487 12,145,509 9.54% -9.54% Non-Current Liabilities 127,458,808 127,324,915 40,004,777 0.11% 218.61% Total Liabilities 138,445,187 137,354,402 52,150,286 0.79% 165.47% Deferred Inflows of Resources - Pension related 21,618,960 11,564,393 - 86.94% 100.00% Net Investment in Capital Assets 581,844,903 573,175,094 568,006,023 1.51% 2.44% Restricted - Debt Service 4,363,251 4,288,008 4,809,248 1.75% -9.27% Unrestricted 7,362,273 (13,856,024) 71,530,395 -153.13% -89.71% Total Net Position $ 593,570,427 $ 563,607,078 $ 644,345,666 5.32% -7.88% The total net position of the District decreased from. $644.3 million in 2013-14 to $563.6 million in 2014-15 and increased to $593.6 million in 2015-16. The District's total assets have increased by $19.1 million or 2.72% compared to 2014-15, and $22.7 million or 3.26% compared to 2013-14. The total liabilities increased $1.1 million or 0.79% compared to 2014-15, and increased $86.3 million or 165.47% compared to 2013-14. The decrease in net position over the three-year period totals $50.8 million or -7.88% and is the result of the combination of net income, capital contributions, and the implementation of GASB 68 and GASB 71 which required the District to record the Net Pension Liability. By far the largest portion of the District's net position (98.02% percent) reflects its investment in capital assets (e.g. land, buildings, machinery, equipment, intangible assets, and sewer line infrastructure), less 4 any related debt used to acquire those assets that are still outstanding. The District uses these capital assets to provide services to its ratepayers; consequently, these assets are not available for future spending. Although the District's investment in its capital assets is reported net of debt, it should be noted that the funds needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. There is currently $4.4 million restricted for debt service. The remaining balance of$7.4 million in unrestricted net position increased by $21.2 million from 2014-15 and decreased by $64.2 million from 2013-14 due to the implementation of GASB 68 and 71 which required the District to record its Net Pension Liability. REVIEW OF REVENUES, EXPENSES AND CHANGES IN NET POSITION The table below shows the condensed statement of revenues, expenses, and changes in net position for the District for the past three fiscal years: Table 2 - Condensed Statement of Revenues, Expenses, and Changes in Net Position % Increase Fiscal Year Ended June 30 (Decrease) FY 15-16 FY 15-16 vs. vs. 2015-16 2014-15 2013-14 FY 14-15 FY 13-14 Sewer Service Charges SSC $ 86,147,863 $ 82,916,457 $ 72,422,285 3.90% 18.95% Other Service Charges and Miscellaneous 1,586,673 1,599,997 1,579,723 -0.83% 0.44% Total Operating Revenue 87,734,536 84,516,434 74,002,008 3.81% 18.56% Property Tax 14,835,167 14,083,331 13,093,841 5.34% 13.30% Permit& Inspection Fees 2,546,723 1,843,922 1,575,251 38.11% 61.67% Interest and All Other 1,757,403 2,147,005 1,291,752 -18.15% 36.05% Total Non-Operating Revenues 19,139,293 18,074,278 15,960,844 5.89% 19.91% Total Revenues 106,873,829 102,590,712 89,962,852 4.17% 18.80% Total Labor and Benefits 63,988,158 66,104,630 58,954,453 -3.20% 8.54% Chemicals & Utilities 5,053,263 5,532,237 6,002,514 -8.66% -15.81% Repairs and Maintenance 4,891,062 3,873,557 3,126,617 26.27% 56.43% Professional, Legal and Outside Services 4,196,302 3,322,881 3,995,861 26.29% 5.02% Materials & Supplies 2,251,356 1,934,253 2,060,796 16.39% 9.25% Hauling and Disposal 889,471 884,703 914,739 0.54% -2.76% Self-Insurance Expense 1,600,617 1,333,518 858,738 20.03% 86.39% Pension Expense 9,778,389) (3,012,757) - 224.57% 100.00% All Other 1,815,647 1,636,826 1,702,131 10.92% 6.67% Depreciation Expense 22,885,030 22,740,942 21,892,545 0.63% 4.53% Total Operating Expenses 97,792,517 104,350,790 99,508,394 -6.28% -1.72% Non-Operating Expense - Interest Expense 1,427,641 1,523,127 1,996,689 -6.27% -28.50% Total Expenses 99,220,158 105,873,917 101,505,083 -6.28% -2.25% 5 Table 2 - Condensed Statement of Revenues, Expenses, and Changes in Net Position (Continued) % Increase Fiscal Year Ended June 30 (Decrease) FY 15-16 FY 15-16 vs. vs. 2015-16 2014-15 2013-14 FY 14-15 FY 13-14 Income Before Capital Contributions 7,653,671 (3,283,205) (11,542,231) 333.12% 166.31% Customer Contributions (SSC) 11,991,752 6,769,623 10,486,067 77.14% 14.36% Contributed Sewer Lines 1,774,168 794,218 1,462,316 123.39% 21.33% Capital Contributions - Connection Fees 8,543,758 6,673,298 8,224,517 28.03% 3.88% Total Capital Contributions 22,309,678 14,237,139 20,172,900 56.70% 10.59% Change in Net Position 29,963,349 10,953,934 8,630,669 173.54% 247.17% Beginning Net Position 563,607,078 644,345,666 635,714,997 -12.53% -11.34% Restatement- Implementation of GASB 68 and GASB 71 - (91,692,522) - 100.00% - Ending Net Position $ 593,570,427 $ 563,607,078 $ 644,345,666 5.32% -7.88% Revenue Total operating revenues increased from $74.0 million in 2013-14 to $84.5 million in 2014-15 and to $87.7 million in 2015-16. Operating revenues increased by $3.2 million or 3.81% compared to 2014-15, and increased by $13.7 million or 18.56%comparing 2015-16 to 2013-14. Total non-operating revenue increased from $16.0 million in 2013-14 to $18.1 million in 2014-15 and to $19.1 million in 2015-16. An increase compared to 2014-15 by $1.1 million or 5.89%, and increased by $3.2 million or 19.91% comparing 2015-16 to 2013-14. Total revenues increased from $90.0 million in 2013-14 to $102.6 million in 2014-15 to $106.9 million in 2015-16. The change in total revenue resulted in an increase of $4.3 million or 4.17% comparing 2015-16 to 2014-15, and increased by $16.9 million or 18.80% comparing 2015-16 to 2013-14. There was a 7.29% rate increase for single family homes and a 5.47% rate increase for multi-family homes in 2015-16, an 8.40% SSC general rate increase in 2014-15, and a 9.16% SSC general rate increase in 2013-14. Property tax revenue increased by $0.75 million or 5.34% from 2015-16 to 2014-15, and $1.7 million or 13.30% comparing 2015-16 to 2013-2014 due to the recovery of housing values. Expenses Total expenses increased from $101.5 million in 2013-14 to $105.9 million in 2014-15 and decreased to $99.2 million in 2015-16. In 2015-16, total expenses decreased by $6.7 million or -6.28% compared to 2014-15. Comparing 2015-16 to 2013-14, total expenses were $2.3 million or-2.25% lower. Decreases were mainly due to a reduction in sewage treatment costs and pension expense. Depreciation expense increased due to new capital additions. Non-operating expense is mainly driven by debt service interest expense. Total income before capital contributions went from -$11.5 million in 2013-14, to -$3.3 million in 2014- 15, and $7.7 million in 201516. 6 Total capital contributions in 2015-16 were $22.3 million compared to $14.2 million in 2014-15 and $20.2 million in 2013-14. This was mainly due to higher customer contributions SSC in 2015-16 due to the rate increase, a shift of the internal SSC revenue allocation, and volatility in connection fees due to the fluctuation of the housing and construction markets. The total change in net position increased by $19.0 million or 173.54% when comparing 2015-16 to 2014-15 and increased $21.3 million or 247.17% when comparing 2015-16 to 2013-14. CAPITAL ASSETS Capital assets for fiscal years 2015-16, 2014-15 and 2013-14 totaled $616.0 million, $609.7 million, and $608.6 million, respectively. Capital assets include the District's entire major infrastructure including wastewater treatment facilities, sewers, land, buildings, pumping stations, vehicles, intangible assets and furniture and equipment exceeding our capitalization policy limit of$5,000, net of depreciation. As of June 30, 2016, the District's investment in capital assets totaled $616.0 million, an increase of $6.3 million or 1.03% over the capital asset balance of $609.7 million at June 30, 2015. Capital assets increased by $7.4 million or 1.22% comparing 2015-16 to 2013-14. A comparison of the District's capital assets over the past three fiscal years is presented below: Table 3 - Capital Assets % Increase Fiscal Year Ended June 30 (Decrease) FY 15-16 FY 15-16 vs. vs. 2015-16 2014-15 2013-14 FY 14-15 FY 13-14 Land $ 17,320,570 $ 17,320,570 $ 17,320,570 0.00% 0.00% Sewage Collection System 341,412,320 331,167,382 318,206,017 3.09% 7.29% Contributed Sewer Lines 154,863,632 153,091,464 152,297,246 1.16% 1.69% Outfall Sewers 11,371,574 11,339,298 11,339,298 0.28% 0.28% Sewage Treatment Plant 323,360,945 320,717,418 303,606,835 0.82% 6.51% Recycled Water Infrastructure 19,215,350 19,065,139 17,127,656 0.79% 12.19% Pumping Stations 56,270,149 56,046,563 54,956,574 0.40% 2.39% Buildings 42,412,648 42,412,648 42,196,085 0.00% 0.51% Intangible Assets 4,936,407 4,875,507 4,812,127 1.25% 2.58% Furniture & Equipment 12,627,569 10,886,007 10,025,826 16.00% 25.95% Motor Vehicles 7,378,730 6,883,134 6,721,031 7.20% 9.79% Construction In Progress 24,480,982 13,958,646 27,508,158 75.38% -11.00% Subtotal 1,015,650,876 987,763,776 966,117,423 2.82% 5.13% Less Accumulated Depreciation 399,645,839 378,045,297 357,534,155 5.71% 11.78% Total Capital Assets (net of depreciation) $ 616,005,037 $ 609,718,479 $ 608,583,268 1.03% 1.22% The major reasons for the increase in capital assets, net of depreciation, of$6.3 million from 2014-15 to 2015-16 and $7.4 million from 2013-14 to 2015-16, are as follows: Sewer pipe ongoing renovations, upgrades, expansion, pumping station improvements, and contributed sewer lines increased by $12.2 million comparing 2015-16 to 2014-15 and $27.1 million comparing 2015-16 to 2013-14. 7 • Treatment plant infrastructure renovations, upgrades, equipment, and improvements increased by $2.6 million comparing 2015-16 to 2014-15 and $19.8 million comparing 2015-16 to 2014-15. • All other asset categories, including construction in progress, increased by $13.0 million comparing 2015-16 to 2014-15 and increased by $2.5 million comparing 2015-16 to 2013-14. • Capital asset increases are offset by an increased subtraction of accumulated depreciation of $21.6 million comparing 2015-16 to 2014-15 and $42.1 million comparing 2015-16 to 2013-14 due to increasing capital asset investment and its associated depreciation expense. See Note 5 in the audited financial statements. DEBT ADMINISTRATION The total debt obligations for fiscal years 2015-16, 2014-15 and 2013-14 totaled $34.2 million, $36.5 million, and $40.6 million, respectively. As of .lune 30, 2016, the District's outstanding debt totaled $34.2 million, which is a decrease of$2.4 million or -6.52% over the debt balance of$36.5 million at June 30, 2015. Debt decreased by $6.4 million or -15.81% comparing 2015-16 to 2013-14. The 2009 certificates of participation and the 1999 State Water Resources Control Board Water Reclamation Loan principal and related interest for both decrease annually due to the scheduled principal payments. The District did not issue any new debt this fiscal year. The source of funds for repayment of debt issued for expansion purposes is the state property taxes received. A comparison of the District's debt service for the past three fiscal years is presented below: Table 4— Debt Outstanding Outstanding Balance-Fiscal Year Ended June 30 % Increase (Decrease) FY 15-16 FY 15-16 vs. vs. 2015-16 2014-15 2013-14 FY 14-15 13-14 Revenue Bonds $ 33,800,000 $ 36,010,000 $ 39,875,000 -6.14% -15.24% Water Reclamation Loan 360,134 533,385 702,245 -32.48% -48.72% Total Debt Service $ 34,160,134 $ 36,543,385 $ 40,577,245 -6.52% -15.81% See Note 6 in the audited financial statements. ECONOMIC AND OTHER FACTORS The Federal and State of California economies continue to recover from the 2008 recession. The Federal economic challenges have resulted in budget sequestration. The State Budget Act reflects California achieving a solid balanced budget, however, there remain a number of major risks that threaten the state's fiscal stability, including the overhang of fiscal debts, growing long-term liabilities, and lingering uncertainties regarding the cost of the federal Affordable Care Act. The recent agreement between the Governor and legislative leaders to create a Rainy Day Fund will help the state minimize future boom and bust cycles. Changes in the state budget have a significant impact on the District. Federal and State economic challenges will continue into the future and will have a trickle-down effect on local government. 8 Items impacting the District are: • Current Employee Memorandum of Understanding contracts end as of December 17, 2017. • Current and future legislation impacting public employee pensions is still being litigated, currently requiring higher employee contributions and lower pensions by eliminating spiking. • Increased cost of employee benefits, mainly due to pension costs and healthcare. • The necessary replacement and upgrading of existing infrastructure. • Strong demand for recycled water from District customers as a result of mandatory water restrictions due to the current drought conditions in the state. • Housing market continues to show improvement which impacts the District's property tax revenues, and development and user fees. • Regulatory requirements becoming more stringent, causing the District to spend more on compliance, both for operations and maintenance costs and capital projects. This may require debt financing for large capital projects. • Continued low interest rates negatively impact interest earnings for District temporary investments as well as OPEB trust and pension plan assets. In addition to making efforts to reduce spending and improve process efficiencies, the District has the ability to raise the SSC to meet its long-term commitments. The District has a Standard and Poor's AAA rating, and can obtain bond financing if necessary. FINANCIAL CONTACT The financial report is designed to provide the District's customers and creditors with a general overview of District finances and to demonstrate the District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact: Finance Manager Thea Vassallo, Central Contra Costa Sanitary District, 5019 Imhoff Place, Martinez, CA 94553. 9 CENTRAL CONTRA COSTA SANITARY DISTRICT STATEMENTS OF NET POSITION JUNE 30, 2016 AND 2015 ASSETS 2016 2015 CURRENT ASSETS Cash and cash equivalents(Note 2) $32,451,718 $45,218,013 Short term investments(Note 2) 39,000,000 15,498,572 Accounts receivable,net(Note 3) 19,018,549 17,141,474 Interest receivable 181,707 60,067 Parts and supplies 2,146,172 2,079,435 Prepaid expenses 2,786,407 2,556,794 Total current assets 95,584,553 82,554,355 NON-CURRENT ASSETS Restricted cash and cash equivalents(Notes I.F. and 2) 100,000 100,000 Restricted investments(Note 2) 4,856,450 4,856,450 Assessment Districts receivable(Note 4) 1,515,818 1,669,686 Net OPEB asset(Note 10) 1,108,244 1,206,765 Capital assets: Nondepreciable(Note 5) 46,737,959 36,154,723 Depreciable,net of accumulated depreciation(Note 5) 569,267,078 573,563,756 Total capital assets,net 616,005,037 609,718,479 Total non-current assets 623,585,549 617,551,380 TOTAL ASSETS 719,170,102 700,105,735 DEFERRED OUTFLOWS OF RESOURCES Pension related(Note 9) 534,464,472 $12,420,138 (Continued) 10 CENTRAL CONTRA COSTA SANITARY DISTRICT STATEMENTS OF NET POSITION JUNE 30, 2016 AND 2015 LIABILITIES 2016 2015 CURRENT LIABILITIES Accounts payable and accrued expenses $6,174,225 $5,374,441 Interest payable 592,380 621,847 Refunding Water Revenue Bonds-current portion(Note 6) 2,300,000 2,210,000 Water Reclamation Loan Contract-current portion(Note 6) 177,756 173,251 Accrued compensated absences-current portion(Note 1.J.) 448,000 403,000 Provision for uninsured claims(Note 7) 1,000,000 1,000,000 Refundable deposits 294,018 246,948 Total current liabilities 10,986,379 10,029,487 NON-CURRENT LIABILITIES Refunding Water Revenue Bonds,noncurrent portion(Note 6) 31,500,000 33,800,000 Water Reclamation Loan Contract,noncurrent portion(Note 6) 182,378 360,134 Accrued compensated absences,noncurrent portion(Note 1.J) 4,029,542 3,629,271 Collective net pension liability(Note 9) 91,746,888 89,535,510 Total non-current liabilities 127,458,808 127,324,915 TOTAL LIABILITIES 138,445,187 137,354,402 DEFERRED INFLOWS OF RESOURCES Pension related(Note 9) 21,618,960 11,564,393 NET POSITION(Note 1 l) Net investment in capital assets 581,844,903 573,175,094 Restricted for debt service 4,363,251 4,288,008 Unrestricted 7,362,273 (13,856,024) TOTAL NET POSITION $593,570,427 $563,607,078 See accompanying notes to financial statements 11 This Page Left Intentionally Blank CENTRAL CONTRA COSTA SANITARY DISTRICT STATEMENTS OF REVENUES,EXPENSES AND CHANGES IN NET POSITION FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 2016 2015 OPERATING REVENUES Sewer service charges(SSC) $72,233,903 $70,023,512 Service charges-City of Concord(Note 8) 13,913,960 12,892,945 Other services charges 963,014 1,006,197 Miscellaneous charges 623,659 593,780 Total operating revenues 87,734,536 84,516,434 OPERATING EXPENSES Sewage collection and pumping stations 16,977,612 18,200,513 Sewage treatment 25,959,525 29,507,722 Engineering 16,301,976 13,200,972 Recycled water 559,272 - Administrative and general 24,887,491 23,713,398 Pension expense(Note 9) (9,778,389) (3,012,757) Depreciation(Note 5) 22,885,030 22,740,942 Total operating expenses 97,792,517 104,350,790 OPERATING(LOSS) 10,057,981 (19,834,3561 NONOPERATING REVENUES(EXPENSES) Taxes 14,835,167 14,083,331 Permit and inspection fees 2,546,723 1,843,942 Interest earnings 562,308 318,475 Interest expense (1,427,641) (1,523,127) Other income(expense),net 1,195,095 1,828,530 Total nonoperating revenues(expenses),net 17,711,652 16,551,151 INCOME(LOSS)BEFORE CAPITAL CONTRIBUTIONS 7,653,671 (3,283,205) CAPITAL CONTRIBUTIONS City of Concord contributions to capital costs(Note 8) 3,671,892 2,897,491 Customer contributions to capital cost(SSC) 8,319,860 3,872,132 Contributed sewer lines 1,774,168 794,218 Capital contributions-connection fees 8,543,758 6,673,298 Total capital contributions 22,309,678 14,237,139 CHANGE IN NET POSITION 29,963,349 10,953,934 NET POSITION,BEGINNING OF YEAR 563,607,078 644,345,666 Prior period adjustment for implementation of GASB Statements 68 and 71 (Note 9) - (91,692,522) NET POSITION,END OF YEAR _ $593,570,427 $563,607,078 See accompanying notes to financial statements 13 CENTRAL CONTRA COSTA SANITARY DISTRICT STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED NNE 30,2016 AND 2015 2016 2015 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers $86,011,329 $84,488,757 Payments to suppliers (42,386,633) (48,383,516) Payments to employees and related benefits (41,204,947) (36,727,579) Net Cash Provided(Used)by Operating Activities 2,419,749 (622,338) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Receipt of taxes 14,835,167 14,083,331 Inspection/permit fees and other non-operating income 3,741,818 3,672,472 Cash Flows from Noncapital Financing Activities 18,576,985 17,755,803 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital contributions 13,765,920 7,563,841 Connection fees 8,543,758 6,673,298 Acquisition and construction of capital assets (29,535,660) (23,887,364) Proceeds from sale of capital assets 364,072 11,211 Interest paid on long-term debt (1,457,108) (1,574,660) Principal payments on long-term debt (21383,251) (4,033,860) Cash Flows(Used for)Capital and Related Financing Activities (10,702,269) (15,247,534) CASH FLOWS FROM INVESTING ACTIVITIES Redemption of investments 15,498,572 10,613,063 Acquisition of investments (39,000,000) (15,500,000) Interest received 440,668 289,489 Cash Flows from(Used for)Investing Activities (23,060,760) (4,597,448) NET INCREASE(DECREASE)IN CASH (12,766,295) (2,711,517) Cash,beginning of year 45,318,013 48,029,530 Cash,end of year $32,551,718 $45,318,013 (Continued) See accompanying notes to financial statements 14 CENTRAL CONTRA COSTA SANITARY DISTRICT STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30,2016 AND 2015 2016 2015 Reconciliation of operating(loss)to net cash provided by operating activities: Operating(loss) ($10,057,981) ($19,834,356) Adjustments to reconcile operating loss to cash flows from operating activities: Depreciation 22,885,030 22,740,942 Change in assets and liabilities: Receivables,net (1,723,207) (27,677) Parts and supplies (66,737) 9,450 Prepaid expenses (229,613) (252,852) Net OPEB asset 98,521 913 Accounts payable and accrued expenses 799,784 (467,989) Accrued payroll and related expenses 445,271 185,878 Refundable deposits 47,070 36,110 Net pension liability (9,778,389) (3,012,757) Net cash provided(used)by operating activities $2,419,749 ($622,338) SCHEDULE OF NON CASH ACTIVITY Change in fair value of investments $440,668 $289,489 Capital asset donations 1,774,168 633,208 Total non cash activity $2,214,836 $922,697 CASH AND CASH EQUIVALENTS,AS PRESENTED ON STATEMENT OF NET POSITION: Unrestricted cash and cash equivalents $32,451,718 $45,218,013 Restricted cash and cash equivalents 100,000 100,000 Total cash and cash equivalents at end of year $32,551,718 $45,318,013 See accompanying notes to financial statements 15 This Page Left Intentionally Blank CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 1—DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Central Contra Costa Sanitary District (District), a special district and a public entity established under the Sanitary District Act of 1923, provides sewer service for the incorporated and unincorporated areas under its jurisdiction. A Board of Directors comprised of five elected members governs the District. As required by accounting principles generally accepted in the United States of America, these basic financial statements present the financial statements of Central Contra Costa Sanitary District and its component unit. The component unit discussed in the following paragraph is blended in the District's reporting entity because of the significance of its operational and financial relationship with the District. Blended Component Unit - Component units are legally separate organizations for which the District is financially accountable. Component units may also include organizations that are fiscally dependent on the District, in that the District approves their budget, the issuance of their debt or the levying of their taxes. In addition, component units are other legally separate organizations for which the District is not financially accountable but the nature and significance of organization's relationship with the District is such that exclusion would cause the District's financial statements to be misleading or incomplete. For financial reporting purposes, the component unit discussed below is reported in the District's financial statements because of the significance of its relationship with the District. The component unit, although a legally separate entity, is reported in the financial statements using the blended presentation method as if it were part of the District's operations because the Governing Board of the component unit is the same as of Governing Board of the District and because its purpose is to finance facilities to be used for the direct benefit of the District. The Central Contra Costa Sanitary District Facilities Financing Authority (Authority) was organized solely for the purpose of providing financial assistance to the District. The Authority does this by acquiring, constructing, improving and financing various facilities, land and equipment purchases, and by leasing or selling certain facilities, land and equipment for the use, benefit and enjoyment of the public served by the District. The Authority has no employees and the Board of Directors of the Authority consists of the same persons who are serving as the Board of Directors of the District. There are no separate basic financial statements prepared for the Authority. B. Basis of Accounting The District's financial statements are prepared on the accrual basis of accounting. The District applies all applicable Governmental Accounting Standards Board (GASB) pronouncements for certain accounting and financial reporting guidance. 17 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended.lune 30,2016 and 2015 NOTE 1 —DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The District is a proprietary entity; it uses an enterprise fund format to report its activities for financial statement purposes. Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the cost and expenses, including depreciation, of providing goods or services to its customers be financed or recovered primarily through user charges; or where the governing body has decided that periodic determination of revenues earned, expense incurred, and net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Enterprise funds are used to account for activities similar to those in the private sector, where the proper matching of revenues and costs is important and the full accrual basis of accounting is required. With this measurement focus, all assets and liabilities of the enterprise are recorded on its statement of net position, all revenues are recognized when earned and all expenses, including depreciation, are recognized when incurred. Enterprise funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with an enterprise fund's principal ongoing operations. The principal operating revenues of the District are charges to customers for services. Operating expenses for the District include the costs of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. For internal operating purposes, the District's Board of Directors has established four separate sub-funds, each of which 'includes a separate self-balancing set of accounts and a separate Board approved budget for revenues and expenses. These sub-funds are combined into the single enterprise fund presented in the accompanying financial statements. The nature and purpose of these sub-funds are as follows: Running Expense - Running Expense accounts for the general operations of the District. Substantially all operating revenues and expenses are accounted for in this sub-fund. Sewer Construction - Sewer Construction accounts for non-operating revenues, which are to be used for acquisition or construction of plant, property and equipment. Self-Insurance - Self-Insurance accounts for interest earnings on cash balances in this sub-fund and cash allocations from other sub-funds, as well as for costs of insurance premiums and claims not covered by the District's insurance coverage. Debt Service - Debt Service accounts for activity associated with the payment of the District's long term bonds and loans. That portion of the District's net position which is allocable to each of these sub-funds has been shown separately in the accompanying supplementary information to the financial statements. The District's Board of Directors adopts annual budgets on a basis consistent with accounting principles generally accepted in the United States of America. 18 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 1 —DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Investments Investments held at June 30, 2016 and 2015 with original maturities greater than one year, are stated at fair value. Fair value is estimated based on quoted market prices at year-end. All investments not required to be reported at fair value are stated at cost or amortized cost. D. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Level 1 .inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs -- other than quoted prices included within level 1 — that are observable for an asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for an asset or liability. If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement. E. Prepaid Expenses Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the financial statements. F. Bank Escrow Deposit An escrow agreement was formed between the District and the National Park Service for the right-of-way through the John Muir National Historic Site, in lieu of issuing a performance bond. The current right-of-way permit is 10 years, but is renewable and must remain in effect so long as there is sewage running through the area; therefore, it is unlikely that the escrow funds will ever be released to the District. These funds are listed as restricted cash in the financial statements. G. Parts and Supplies Parts and supplies are valued at average cost and are used primarily for internal purposes. 19 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE I --DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) H. Property,Plant, and Equipment Purchased capital assets are stated at historical cost. Capital assets contributed to the District are stated at estimated fair value at the time of contribution. The capitalization threshold for capital assets is $5,000. Expenditures which materially increase the value or life of capital assets are capitalized and depreciated over the remaining useful life of the asset. Depreciation of exhaustible capital assets has been provided using the straight-line method over the asset's useful life as follows: Years Sewage Collection Facilities 75 Intangible Assets 75 Sewage Treatment Plant and Pumping Plants 40 Buildings 50 Furniture and Equipment 5— 15 Motor Vehicles 7- 15 L Property Taxes Property tax revenue is recognized in the fiscal year for which the tax is levied. The County of Contra Costa levies, bills and collects property taxes for the District; all material amounts are collected by June 30. General County taxes collected are the same as the amount levied since the County participates in California's alternative method of apportionment called the Teeter Plan. The Teeter Plan as provided in Section 4701 at seq. of the State of Revenue and Taxation Code establishes a mechanism for the County to advance the full amount of property tax and other levies to taxing agencies based on the tax levy, rather than on the basis of actual tax collections. Although this system is a simpler method to administer, the County assumes the risk of delinquencies. The County in return retains the penalties and accrued interest thereon. Secured property tax bills are mailed once a year, during the month of October on the current secured tax roll, to the owner of the property as of the lien date (January 1). Payments can be made in two installments, and are due on November 1 and February 1. Delinquent accounts are assessed a penalty of 10 percent. Accounts which remain unpaid on June 30 are charged an additional 1'/z percent per month. Unsecured property tax is due on July 1 and becomes delinquent on August 31. The penalty percentage rates are the same as secured property tax. i Compensated Absenees The liability for vested vacation, compensatory time, and sick pay is recorded as an expense when earned. District employees have a vested interest in 100 percent of accrued vacation time and 85 percent of accrued sick time for employees hired before May 1, 1985. Employees hired after May 1, 1985 have a vested interest in up to 40 percent of their sick time, based upon length of employment with the District. 20 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE I--DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The changes in compensated absences were as follows for fiscal years ended June 30: 2016 2015 Beginning Balance $4,032,271 $3,846,393 Additions 558,479 413,745 Payments (113,208) (227,867) Ending Balance $4,477,542 $4,032,271 Current Portion $448,000 $403,000 The current portion of the liability to be used within the next year is estimated by management to be approximately 10% of the ending balance. K Statement of Cash Flows For purposes of the statement of cash flows, all highly liquid investments, including restricted assets, with maturities of three months or less when purchased, are considered to be cash equivalents. Included therein are petty cash, bank accounts, and the State of California Local Agency Investment Fund (LAIF). Restricted assets are debt service amounts maintained by fiduciaries and not available for general expenses. L. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. M. Implementation of Governmental Accounting Standards Board(GASB)Pronouncements GASB Statement No. 72 — In 2015, the GASB issued Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements. The Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The requirements of this Statement are effective for financial statements for period beginning after June 15, 2015, therefore, the District implemented this Statement in fiscal year ending June 30,2016. GASB Statement No. 76— The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this statement is to reduce the GAAP hierchy to two categories of authoritative GAAP from the four categories under GASB Statement No. 55. The statement is effective for the periods beginnings after June 15, 2015, or the 2015-2016 fiscal year. 21 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 1 —DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) GASB Statement No. 79 — Certain External Investment Pools and Pool Participants. The objective of this Statement is to address for certain external investment pool and their participants the accounting and financial reporting implications that result from changes in the regulatory provisions referenced by previous accounting and financial reporting standards. This statement is effective for the periods beginning after December 15,2015, or the 2015-2016 fiscal year. NOTE 2--CASH AND INVESTMENTS A. Summary of Cash and Investments Cash and investments as of June 30, are classified in the accompanying financial statements as follows: 2016 2015 Cash and cash equivalents $32,451,718 $45,218,013 Short term investments 39,000.000 15,498,572 Restricted cash and cash equivalents 100;000 100,000 Restricted investments 4,856.450 4,856,450 Total Cash and Investments $76,408,168 $65,673,035 B. Policies and Practices The District is authorized under California Government Code to make direct investments in local agency bonds, notes, or warrants within the State: U.S. Treasury instruments, registered State warrants or treasury notes, securities of the U.S. Governments, or its agencies, commercial paper, certificates of deposit placed with commercial banks and/or savings with loan companies, and certificates of participation. State code and the District's investment policy prohibit the District from investing in investments with a rating of less than A or equivalent. C. General Authorizations Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in the schedules below: 22 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 2--CASH AND INVESTMENTS (Continued) District District California State Limits Policy Policy Maximum Maximum Maximum Maximum Percentage Minimum Remaining Percentage Investment of Portfolio Legal Authorized Investment Type Maturity of Portfolio In One Issuer (Per Issuer) Quality U.S. Treasury Obligations 5 years None None 100% N/A U.S. Government Agency Issues 5 years None None 100% N/A Money Market Funds 5 years 30% 10% 20% A Negotiable Certificates of Deposit 5 years 30% 30% 30% AA Banker's Acceptances 180 40% 40% 10% N/A Commercial Paper(1) 270 25% 10% 10% A-1 Medium Term Notes 5 years 30% 5% 5% AA Collateralized Certificates of Deposit(2) 5 years 30% None 10% Aaa Supranationals 5 years 30% 5% 5% AA County Pooled Investment Funds N/A None None 100% N/A Local Agency Investment Fund(LAIF) N/A None None 100% N/A (1)Prime quality; limited to corporations with assets over$500,000,000 (2)Prior approval of the Board of Directors must be obtained to acquire maturities beyond one year,excluding Treasury Notes and LAIF. 23 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 2—CASH AND INVESTMENTS (Continued) A Fair Value Hierarchy The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The following is a summary of the fair value hierarchy of the fair value of investments of the District as of June 30,2016: 2016 Investment Type Level 2 Total Commercial Paper-ABBEY $4,000,000 $4,000,000 Commercial Paper-Credit Agricole 5,000,000 5,000,000 Commercial Paper-Toyota Motor Credit 5,000,000 5,000,000 Commercial Paper-JP Morgan 5,000,000 5,000,000 Commercial Paper- Standard Charter 5,000,000 5,000,000 California Local Agency Investment Fund 32,300,000 32,300,000 Total Investments $56,300,000 56,300,000 Cash in bank 20,108,168 Total Cash and Investments $76,408,168 The following is a summary of the fair value hierarchy of the fair value of investments of the District as of June 30, 2015: 2015 Investment Type Level 2 Total Commercial Paper-Toyota Motor Credit $5,000,000 $5,000,000 Commercial Paper-Toyota Motor Corp 2,250,000 2,250,000 Commercial Paper-General Electric 2,500,000 2,500,000 U.S Federal Agency Securities-FHLB 2,500,000 2,500,000 U.S Federal Agency Securities-FNMA 1,000,000 1,000,000 California Local Agency Investment Fund 43,000,000 43,000,000 Total Investments $56,250,000 56,250,000 Cash in bank 9,423,035 Total Cash and Investments $65,673,035 24 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 2—CASH AND INVESTMENTS (Continued) Investments classified in Level 1 of the fair value hierarchy, valued at $19.9 million in 2016 and $7.1 million in 2015, respectively, are valued using quoted prices in active markets. Commercial paper totaling$24 million in 2016 and $9.8 million in 2015, respectively, classified in Level 2 of the fair value hierarchy, is valued using matrix pricing techniques maintained by various pricing vendors. Matrix pricing is used to value securities based on the securities' relationship to benchmark quoted prices. The California Local Agency Investment Fund, classified in Level 2 of the fair value hierarchy, is valued based on the fair value factor provided by the Treasurer of the State of California, which is calculated as the fair value divided by the amortized cost of the investment pool. E. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment; generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. It is the District's policy to manage exposure to interest rate risk by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. District policy is that investment maturities do not exceed one year, with the exception of Treasury Notes or Local Agency Investment Fund; however, investments can be held longer with Board approval. Information about the sensitivity of the fair values of the District's investments to market interest rate fluctuation is provided by the following schedule that shows the distribution of the District's investments by maturity,as of June 30: 2016 2015 12 Months 12 Months Investment Type or less Maturity or less Maturity Certificates of Deposit-Debt Reserve $4,856,450 4,28/17 $4;856,450 4/28/17 Certificates of Deposit 21250,000 7/24/15 Certificates of Deposit-ABBEY 5,000,000 4,27/17 Certificates of Deposit-Union Bank 5,000,000 7/22/16 Certificates of Deposit-BNP Panbas 5,000,000 10/26/16 Commercial Paper -ABBEY 4,000,000 7,22/16 Commercial Paper-Credit Agricole 5,000,000 10/25/16 Commercial Paper-Toyota Motor Credit 5,000,000 7,22/16 5,000,000 7/24/15 Commercial Paper-JP Morgan 5,000,000 1/20/17 Commercial Paper-Standard Charter 5,000,000 1126/17 Commercial Paper-Toyota Motor Corp 2,250,000 7/24/15 Commercial Paper-General Electric 2,500,000 7/24/15 U.S Federal Agency Securities-FHLB 2,500,000 7/22/15 U.S Federal Agency Securities-FNMA 1,000,000 8/12/15 California Local Agency Investment Fund 32,300,000 Not applicable 43,000,000 Not applicable Total Investments 76,156,450 63,356,450 Cash in bank 251,718 2,316,585 Total Cash and Investments $76,408,168 $65,673,035 25 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 2—CASH AND INVESTMENTS (Continued) F. Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of June 30, of each investment type: Totals Investment Type 2016 2015 Rated Aaa: Certificates of Deposit $19,856,450 $7,106,450 U.S. Federal Agency Securities 3,500,000 Commercial Paper 24,000,000 9,750,000 Totals 43,856,450 20,356,450 Not rated.- California ated:California Local Agency Investment Fund 32,300,000 43,000,000 Cash in Bank 251,718 2,316,585 Total Cash and Investments $76,408,168 $65,673,035 G. Concentration of Credit Risk Investments in LAIF— The District is a voluntary participant in LAIF which is regulated by the California Government Code under the oversight of the Treasurer of the State of California. LAIF is not registered with the Securities and Exchange Commission. The fair value of the District's investment in this pool is reported in the accompanying financial statements at amounts based upon the District's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. At June 30, 2016 and 2015, these investments matured in an average of 167 and 191 days,respectively. Investments in County Treasury — The District is considered to be a voluntary participant in an external investment pool. The fair value of the District's investment in the pool is reported in the financial statements in cash and cash equivalents at amounts based upon the District's pro-rata share of the fair value provided by the County Treasurer for the entire portfolio (in relation to amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by the County Treasurer, which is recorded on the amortized cost basis. 26 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 2—CASH AND INVESTMENTS (Continued) K Custodial Credit Risk-Investments Custodial risk for investments is the risk that, in the event of the failure of the counterparty (e.g. the broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code does not contain legal or policy requirements that would limit the exposure to custodial credit risk. The District's policy is to use the services of the Treasurer's Office of the County of Contra Costa, which will transact the District's investment decisions in compliance with the requirements of the District's policy. The County Treasurer's Office will execute the District's investments through such broker-dealers and financial institutions as are approved by the County Treasurer, and through the State Treasurer's Office for investment in the Local Agency Investment Fund. NOTE 3—ACCOUNTS RECEIVABLE Accounts receivable for the years ended June 30 are comprised of the following: 2016 2015 City of Concord(see Note 8) $17,585,852 $15,790,436 Household Hazardous Waste Partners 727,513 749,827 All Other 705,184 601,211 Total Accounts Receivable $19,018,549 $17,141,474 NOTE 4--ASSESSMENT DISTRICTS RECEIVABLE The District established the Contractual Assessment District(CAD) program to help homeowners finance the cost of connecting to the District. The construction costs associated with the project within the program are capitalized and depreciated. Individual homeowners are assessed at an amount equal to their share of the construction costs and connection fee. The assessments, plus interest, are generally payable over 10 years. The CAD receivable balance at June 30, 2016 and 2015 was $257,159 and$289,505, respectively. The District also established the Alhambra Valley Assessment District (AVAD) to provided services to residents in the Alhambra Valley in Martinez. Residents have the choice to pay cash or finance the construction costs and connection fees. The AVAD receivable balance at June 30, 2016 and 2015 was$1,258,659 and $1,380,181,respectively. The total receivable balance at June 30, 2016 and 2015 for CAD and AVAD was $1,515,818 and $1,669,686, respectively, and is shown as a non-current asset on the Statement of Net Position. 27 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 5—CAPITAL ASSETS Property, plant and equipment; and construction in progress are summarized below for the year ended June 30, 2016: Balance at Transfers& Balance at June 30,2015 Additions Retirements Adjustments June 30,2016 Capital assets not being depreciated: Land $17,320,570 $17,320,570 Basements(intangible) 4,875,507 $60,900 4,936,407 Construction in Progress 13,958,646 $27,713,804 ($364,072) (16,827,396) 24,480,982 Total nondepreciated assets 36,154,723 27,713,804 (364,072) (16,766,496) 46,737,959 Capital assets being depreciated: Sewage collection system 331,167,382 (1,105,003) 11,349,941 341,412,320 Contributed sewer lines 153,091,464 1,774,168 (2,000) 154,863,632 Outfall sewers 11,339,298 32,276 11,371,574 Sewage treatment plant 320,717,418 (100,000) 2,743,527 323,360,945 Recycled water infrastructure 19,065,139 150,211 19,215,350 Pump ing stations 56,046,563 (5,000) 228,586 56,270,149 Buildings 42,412,648 42,412,648 Furniture and equipment 10,886,007 47,688 1,693,874 12,627,569 Motor vehicles 6,883,134 (72,485) 568,081 7,378,730 Total depreciated assets 951,609,053 11821,856 (1,284,488) 16,766,496 968,912,917 Less accumulated depreciation: Sewage collection system 61,147,639 4,544,975 (1,105,003) 64,587,611 Contributed sewer lines 55,204,677 2,066,190 (2,000) 57,268,867 Outfall sewers 3,314,407 151,179 3,465,586 Sewage treatment plant 200,602,861 10363,847 (100,000) 210,866,708 Recycled water infrastructure 7,276,987 783,824 8,060,811 Pumping stations 28,643,263 2,245,841 (5,000) 30,884,104 Buildings 10,387,226 L230,599 11,617,825 Furniture and equipment 7,049,851 1,139,039 8,188,890 Motor vehicles 4,418,386 359,536 (72,485) 4,705,437 Total accumulated depreciation 378,045,297 22,885,030 (1,284,488) 399.645,839 Total capital assets being depreciated,net 573,563,756 (21,063,174) 16,766,496 569,267,078 Capital assets,net $609,718,479 $6,650,630 ($364,072) - $616,005,037 28 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 5—CAPITAL ASSETS (Continued) Property, plant and equipment, and construction in progress are summarized below for the year ended June 30, 2015: Balance at Transfers& Balance at June 30,2014 Additions Retirements Adjustments June 30,2015 Capital assets not being depreciated: Land $17,320,570 $17,320,570 Easements(intangible) 4,812,127 $63,380 4,875,507 Construction in Progress 27,508,158 $23,254,156 ($5,629) (36,798,039) 13,958,646 Total nondepreciated assets 49,640,855 23,254,156 (5,629) (36,734,659) 36,154,723 Capital assets being depreciated: Sewage collection system 318,206,017 (580,000) 13,541,365 331,167,382 Contributed sewer lines 152,297,246 633,208 (5,582) 166,592 153,091,464 Outfall sewers 11,339,298 11,339,298 Sewage treatment plant 303,606,835 (850,000) 17,960,583 320,717,418 Recycled water infrastructure 17,127,656 1,937,483 19,065,139 Pumping stations 54,956,574 (80,000) 1,169,989 56,046,563 Buildings 42,196,085 216,563 42,412,648 Furniture and equipment 10,025,826 (450,000) 1,310,181 10,886,007 Motor vehicles 6,721,031 (269,800) 431,903 6,883,134 Total depreciated assets 916,476,568 633,208 (2,235,382) 36,734,659 951,609,053 Less accumulated depreciation: Sewage collection system 57,348,606 4,379,033 (580,000) 61,147,639 Contributed sewer lines 53,161,229 2,043,448 55,204,677 Outfall sewers 3,163,443 150,964 3,314,407 Sewage treatment plant 190,858,122 10,594,739 (850,000) 200,602,861 Recycled water infrastructure 6,527,311 749,676 7,276,987 Pumping stations 26,503,493 2,219,770 (80,000) 28,643,263 Building, 9,158,948 1,228,278 10,387,226 Furniture and equipment 6,473,327 1,026,524 (450,000) 7,049,851 Motor vehicles 4,339,676 348,510 (269,800) 4,418,386 Total accumulated depreciation 357,534,155 22,740,942 (2,229,800) 378,045,297 Total capital assets being depreciated,net 558,942,413 (22,107,734) (5,582) 36,734,659 573,563,756 Capital assets,net $608,583,268 $1,146,422 ($11,211) - $609,718,479 29 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 6—LONG-TERM DEBT A. Summary of Activity The changes in the District's long-term obligations during the year ended June 30, 2016 consisted of the following: Original Amount Issue Balance Balance due within Amount June 30,2015 Retirements June 30,2016 one year 2009 Series A Certificates of Participation Wastewater Revenue 3.45-3.78%,due 9/1/2029 $19,635,000 $19,635,000 $19,635,000 2009 Series B Certificates of Participation Wastewater Revenue .40-3.79%,due 9/1/2029 34,490,000 16,375,000 $2,210,000 14,165,000 $2,300,000 1999 State Water Resources Control Board Water Reclamation Loan 2.60%,due 3/31/2018 2,916,872 533,385 173251 360,134 177,756 Total Long-Term Debt 36,543,385 $2,383,251 34,160,134 $2,477,756 Less current portion (2,383,251) (2,477,756) $34,160,134 $31,682,378 The changes in the District's long-term obligations during the year ended June 30,2015 consisted of the following: Original Amount Issue Balance Balance due within Amount June 30,2014 Retirements Jame 30,2015 one year 2009 Series A Certificates of Participation Wastewater Revenue 3.45-3.78%,due 9/1/2029 $19,635,000 $19,635000 $19,635,000 2009 Series B Certificates of Participation Wastewater Revenue .40-3.79%,due 9/1/2029 34,490,000 20240,000 $3,865,000 16,375,000 $2.210,000 1999 State Water Resources Control Board Water Reclamation Loan 2.60%,due 3/31/2018 2,916,872 702245 168,860 533,385 173,251 Total Long-Term Debt 40,577245 $4,033,860 36,543,385 S2383,251 Less current portion (4,033,861) (2,383,251) $36,543,384 $34,160,134 30 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 201.5 NOTE 6--LONG-TERM DEBT (Continued) B. Debt Service Requirements The 2009 Revenue COP debt service requirements are as follows: Fiscal Year Series A Ending Series A Series B Total 35%Tax Net June 30, Principal Interest Principal Interest Principal Interest Subsidy Total 2017 $1,190,840 $2,300,000 $501,300 $2,300,000 $1,692,140 ($416,794) $3,575,346 2018 1190,840 2,405,000 424,175 2,405,000 1,615,015 (416,794) 3,603,221 2019 1,190,840 2,480,000 329,483 2,480,000 1,520,323 (416,794) 3,583,529 2020 1,190,840 2,580,000 226,950 2,580,000 1,417,790 (416,794) 3,580,996 2021 1,118,907 1,025,000 175,583 1,025,000 13294,490 (391,617) 1,927,873 2022-2026 $8,890,000 4,106,872 3,375,000 202,375 12,265,000 4,309,247 (1,437,405) 15,136,842 2027-2030 10,745,000 986,867 10,745,000 986,867 (345,404) 11,386,463 Total $19,635,000 $10,976,006 $14,165,000 $1,859,866 $33,800,000 $12,835,872 ($3,841,602) $42,794,270 As part of the Federal budget sequestration, the Internal Revenue Service (IRS) has announced that, as of March 1, 2016, credit payments claimed by issuers of certain tax credit bonds, including Build America Bonds, may be subject to a reduction of 6.8%. C. 2009 Wastewater Revenue Certificates of Participation On November 12,2009 and December 3, 2009 the District issued two Certificates of Participation (COP). The 2009 Wastewater Revenue Certificates of Participation, Series A and Series B were issued for $19,635,000 and $34,490,000, respectively. The Series A COP are federally taxable "Build America Bonds" which have a direct 35% interest rate subsidy from the Federal Government. Yields on this series range from 3.45% to 3.78%, net of the subsidy_ The Series B COP are tax exempt bonds that were used to refund the 1998 and 2002 bond issues and fraise an additional $30 million in new proceeds with yields ranging from .40%to 3.79%. The two bonds total $54,125,000, and are secured by a pledge of tax and net revenues of the wastewater system. Principal payments began annually on September 1, 2010 with semi-annual payments due on September 1 and March 1 of each year. Both bonds will be fully amortized as of September 1, 2029. The refunded portion of the original bonds will be paid off based on the original amortization schedule. D. Water Reclamation Loan Contract The District entered into a contract with the State of California State Water Resources Control Board (Board), which advanced the District $2,916,872 for design and construction costs for projects related to recycled water treatment programs. 31 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 6—LONG-TERM DEBT (Continued) The District must repay advances from the Board over a 20-year period beginning March 31, 1999, with an interest rate of 2.60%. Debt service requirements are as follows: Fiscal Year Ending June 30 Principal Interest Total 2017 $177,756 $9,363 $187,119 2018 182,378 4,742 187,120 Total $360,134 $14,105 $374,239 NOTE 7---RISK MANAGEMENT The District is exposed to various risks of loss including torts, theft of, damage to, and destruction of assets, errors and omissions, injuries to employees, and natural disasters. To manage these risks, the District joined with other entities to form the California Sanitation Risk Management Authority(CSRMA), a public entity risk pool currently operating as a common risk management and insurance program for the member entities. The purpose of CSRMA is to spread the adverse effects of losses among the member entities and to purchase excess insurance as a group, thereby reducing its cost. Through CSRMA, the District purchases property insurance and workers' compensation insurance. A. Insurance Coverage The District's insurance coverage is as follows: Self Insured Deductible Per Type of Coverage Insurer Limits Occurrence All-Risk Property. Fire/Boiler&Machinery Public Entity Property Insurance Program(PEPIP) $532,743,577 $250,000 Crime Alliant 1,000,000 2,500 Liability: Fiduciary Liability Board RLI Insurance Company 1,000,000 0 Commercial General Liability and Environmental Exposure Aspen Specialty Ins. Co. 1,000,000 5,000 Pollution Liability Aspen Specialty Ins. Co. 9,000,000 50,000 Commercial/Excess Liability Chartis Specialty Ins. Co. 15,000,000 500,000 Employment Practice Liability Hiscox Insurance Co. 1,000,000 35,000 Workers' Compensation: Excess Workers' Compensation CSRMA Statutory 0 32 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 7-..RISK MANAGEMENT (Continued) R Provision for Uninsured Claims The Governmental Accounting Standard Board (GASB) requires state and local governments to record their liability for uninsured claims in their financial statements. The District's policy is to maintain a reserve for claims of$1,500,000 which is equivalent to three claims at $500,000 per occurrence. The District's actuary has calculated its potential liability as of June 30, 2016 to be $559,000. The District has recorded a liability of$1,000,000 which is the District's Self-Insured Retention. The District's uninsured claims activity and exposure relates primarily to its general and automobile liability program. The District records its estimated liability for uninsured claims in this area based on the results of periodic actuarial evaluations. The actuarial evaluations are typically performed every two years. For intervening years, the liability for uninsured claims is reviewed for adequacy based on claims activity during the intervening period. For fiscal years ended June 30, 2016, 2015, and 2014, settlements have not exceeded insurance coverage. Changes in the District's estimated liability for retained losses are summarized as follows as of June 30: 2016 2015 2014 Beginning balance $1,000,000 $1,000,000 $1,000,000 Provisions for claims incurred in the current year and changes in the liability for retained- losses incurred in prioryears 888,745 499,956 171,806 Claims paid and/or adjustments (888,745) (499,956) (171,806) Ending balance $1,000,000 $1,000,000 $1,000,000 NOTE 8—AGREEMENT WITH THE CITY OF CONCORD In 1974, the District and the City of Concord (the City) entered into a cost-sharing agreement under which the District became responsible for providing sewage treatment facilities and services to the City. Under this agreement, the City pays a service charge for its share of operating, maintenance and administrative costs and makes a contribution for its share of facilities and makes a contribution for its share of facilities capital costs expended. Service charges and contributions to capital costs from the City totaled $13,913,960 and $3,671,892, respectively, for the year ended June 30, 2016, for a total of$17,585,852. Service charges and contributions to capital costs from the City totaled $12,892,945 and $2,897,491, respectively, for the year ended June 30,2015, for a total of$15,790,436. 33 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 9—PENSION PLANS A. Contra Costa County Employees'Retirement Association Pension Plan Plan Descriptions— Substantially all District permanent employees are required to participate in the Contra Costa County Employees' Retirement Association (CCCERA), a cost-sharing multiple employer public defined benefit retirement plan (Plan), governed by the County Employee's Retirement Law of 1937, as amended, and the California Public Employees' Pension Reform Act of 2013 (PEPRA). The latest available actuarial and financial information for the Plan is for the year ended December 31, 2015. CCCERA issues a publicly available financial report that includes financial statements and supplemental information of the Plan. That report is available by writing to Contra Costa County Employees' Retirement Association, 1355 Willow Way, Suite 221, Concord, CA 94520-5728 or by calling(925) 521-3960. Benefits Provided—The Plan provides for retirement, disability, and death and survivor benefits. Annual cost of living (COL) adjustments to retirement allowances can be granted by the Retirement Board as provided by State statutes. Retirement benefits are based on age, length of service, date of membership and final average salary. Subject to vested status, employees can withdraw contributions plus interests credited, or leave them as a deferred retirement when they terminate, or transfer to a reciprocal retirement system. The Plans' provisions and benefits in effect at June 30, 2016, are summarized as follows: Miscellaneous On or after Hire date Prior to January 1,2013 January 1,2013 Benefit formula 2%at 55 2%at 62 Benefit vesting schedule 10 years service 5 years service Benefit payments monthly for life monthly for life Retirement age 50 52 Monthly benefits,as a%of eligible compensation 0%to 100% No limit Required employee contribution rates 9.08% 8.42% Required employer contribution rates 61.41% 58.67% Contributions—The Plan requires employees to pay a portion of the basic retirement benefit and a portion of future COL costs. However, the District has paid the majority of the employees' basic contributions in accordance with the Memorandum of Understanding (MOU). Employees must pay the COL portion of the employee rate. .For the year ended June 30, 2016, the contributions to the Plan were $18,330,143. 34 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 9—PENSION PLANS(Continued) Pension Liabilities,Pension Expenses and Deferred Oatlows/Inflows of Resources Related to Pensions-As of June 30, 2016,the District reported net pension liabilities for its proportionate share of the net pension liability of the Plan as follows: Proportionate Share of Net Pension Liability Miscellaneous $91,746,888 Total Net Pension Liability $91,746,888 The District's net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of December 31, 2015, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2014 rolled forward to December 31, 2015 using standard update procedures. The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of at] participating employers, actuarially determined. The District's proportionate share of the net pension liability for the Plan as of December 31, 2013, 2014, and 2015 were as follows: Proportionate share of the Plan Fiduciary Net Reporting Date for Proportion of the Proportionate share Covered- Net Pension Liability as a Pension as a Employer under GASB 68 Net Pension of Net Pension employee percentage of its covered- percentage of the Total as of December 31 Liability Liability payroll employee payroll Pension Liability 2013 7.488% $110,183,830 $25,791,346 427.21% 67.22% 2014 7.488% 89,535,510 26,906,131 332.77% 73.86% 2015 6.088% 91,746,888 29,061,743 315.70% 74.14% For the year ended June 30,2016,the District recognized negative pension expense of$9,778,389. At June 30,2016,the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date $9,349,978 Differences between expected and actual experience $9,262,284 Changes of assumptions or other inputs 3,422,162 2,601 Change in proportion and differences between employer contributions and proportionate share of contributions 1,387,107 12,354,075 Net difference between projected and actual earnings on pension plan investments 20,305,225 Total $34,464,472 $21,618,960 35 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 9—PENSION PLANS(Continued) The $9,349,978 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Year Ended Annual June 30 Amortization 2017 ($235,715) 2018 (235,715) 2019 523,197 2020 3,443,767 2021 - Actuarial Assumptions --- The total pension liabilities in the December 31, 2014 actuarial valuations were determined using the following actuarial assumptions: Miscellaneous Valuation Date December 31,2014 Measurement Date December 31,2015 Actuarial Cost Method Entry Age Actuarial Cost Method Amortization Method Level percent of payroll Actuarial Assumptions: Discount Rate 7.00% Inflation Rate 2.75% Payroll Growth 2.75%(1) Projected Salary Increase 4.00%- 13.25%(2) Cost of Living Adjustments 2.75% Investment Rate of Return 7.00%(3) Mortality RP-2014 Healthy Annuitant Mortality Table (1) Plus "across the board"real salary increases of 0.5%per year (2) Vary by service,including inflation (3) Net of pension plan investment expenses,including inflation 36 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 9—PENSION PLANS (Continued) Discount Rate—The discount rate used to measure the total pension liability was 7%for the Plan. The projection of cash flows used to determine the discount rate assumed plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the actuarially determined contribution rates. For this purpose, only employee and employer contributions that are intended to fund benefits for current plan members and their beneficiaries are included. Projected employer contributions that are intended to fund the service costs for future plan members and their beneficiaries, as well as projected contributions from future plan members, are not included. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments for current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability as December 31, 2015. The long-term expected rate of return on pension plan investments was determined in 2016 using a building-block method in which expected future real rates of return (expected returns, net of inflation) are developed for each major asset class. The target allocation and projected arithmetic real rates of return for each major asset class, after deducting inflation, but before investment expenses, used in the derivation of the long-term expected investment rate of return assumption are summarized in the following table: Long-Term Target Expected Real Asset Class Allocation Rate of Return Large Cap U.S.Equity 6% 5.75% Developed International Equity 10% 6.99% Emerging Markets Equity 14% 8.95% Short-Term Govt/Credit 24% 0.20% U.S.Treasury 2% 0.30% Real Estate 7% 4.45% Cash&Equivalents 1% -0.46% Risk Diversifying Strategies 2% 4.30% Private Credit 171/16 6.30% Private Equity 1711/6 8.10% Total 100% 37 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 9—PENSION PLANS (Continued) A change in the discount rate would affect the measurement of the Total Pension Liability(TPL). A lower discount rate results in a higher TPL and higher discount rates results in a lower TPL. Because the discount rate does not affect the measurement of assets,the percentage change in the Net Pension Liability (NPL) can be very significant for a relatively small change in the discount rate.The table below shows the sensitivity of the NPL to a one percent decrease and a one percent increase in the discount rate: Miscellaneous 1%Decrease 6.00% Net Pension Liability $140,696,391 Current Discount Rate 7.00% Net Pension Liability $91,746,888 1%Increase 8.00% Net Pension Liability $51,886,697 B. Deferred Compensation Plan District employees may defer a portion of their compensation under a District sponsored Deferred Compensation Plan created in accordance with Internal Revenue Code Section 457. The plan was established by the District's Board of Directors and any amendments to the plan must be authorized by the Board of Directors. Under this plan, participants are not taxed on the deferred portion of their compensation until it is distributed to them; distributions may be made only at termination, retirement, death, or in an emergency as defined by the plan. The District does not make contributions to the plan. The plan's 457 assets are held in trust with ICMA Retirement Corporation for the exclusive benefit of the participants and are not included in the District's financial statements. C. 401 (a)Defined Contribution Plan The District also contributes to a money purchase plan created in accordance with Internal Revenue Code section 401(a). The plan was established by the District's Board of Directors and any amendments to the plan must be authorized by the Board. Contributions to the plan are made in accordance with a memorandum of understanding stating that in lieu of making payments to Social Security, the District contributes to the 401(a) Plan an amount equal to that which would have been contributed to Social Security on behalf of its employees as long as the District is not required to participate in Social Security. The District contributed $1,856,025 and $1,740,604 to the Plan during the years ended June 30,2016 and 2015,respectively. The 401(a) money purchase plan assets are held in trust with ICMA Retirement Corporation for the exclusive benefit of the participants and are not included in the District's financial statements. 38 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 10—POST EMPLOYMENT HEALTHCARE BENEFITS A. Plan Description The District's defined benefit post employment healthcare plan (DPBP) provides medical benefits to eligible retired District employees and beneficiaries. DPHP is part of the Public Agency portion of the Public Agency Retirement System (PARS), an agent multiple-employer plan administered by PARS, which acts as a common investment and administrative agent for participating public employees within the State of California. A menu of benefit provisions as well as other requirements is established by the State statute with the Public Employees' Retirement Law. DPHP selects optional benefit provisions from the benefit menu by contract with PARS and adopts those benefits through District resolution. PARS issues a separate Comprehensive Annual Financial Report. Copies of the PARS annual financial report may be obtained from PARS, 4350 Von Karman Ave., Suite 100, Newport Beach, CA 92660, by calling 1(800) 540-6369, or by emailing info@pars.org. B. Funding Policy GASB Statement No. 45 set rules for computing the employer's expense for retiree benefits other than pension, called OPEB. The expense, called the annual OPEB Cost (AOC), is determined similarly to pensions. The annual required contribution(ARC) of the employer, represents a level of funding that, if paid on an ongoing basis, is projected to cover normal annual costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. When an agency contributes more than the ARC, there is a net OPEB asset (NOA); when the contribution is less than the ARC, a net OPEB obligation (NOO) results. The District had a net OPEB asset of$1,108,244 and $1,206,765 as of June 30, 2016 and 2015, respectively. Because of the volatility of the investment market, the District Board voted to make monthly installments into the OPEB Trust to take advantage of dollar-cost-averaging. C. Annual OPER Cost and Net OPEB Asset For 2016, the District's annual OPEB cost (expense) was equal to the ARC of$7,890,000. The District contributed $5,159,879 for retiree health care premiums and $2,631,600 to the PARS trust for a total of$7,791,479. The following table summarizes the changes in the District's net OPEB (Asset) at June 30, 2016: 39 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 10—POST EMPLOYMENT HEALTH CARE BENEFITS (Continued) Net OPEB Obligation(Asset)at June 30,2014 ($1,207,678) Annual Required Contribution(ARC) $8,103,000 Interest on Net OPEB Asset (75,000) Adjustment to ARC 97,000 Annual OPEB Cost(AOC) 8,125,000 Contributions Made: Health care premiums paid (5,314,087) Contributions to PARS trust (2,810,000) Increase(decrease)in net OPEB obligation 913 Net OPEB Obligation(Asset)at June 30,2015 (1,206,765) Annual Required Contribution(ARC) 7,866,000 Interest on Net OPEB Asset (79,000) Adjustment to ARC 103,000 Annual OPEB Cost(AOC) 7,890,000 Contributions Made: Health care premiums paid (5,159,879) Contributions to PARS trust (2,631,600) Increase(decrease)in net OPEB obligation 98,521 Net OPEB Obligation(Asset)at June 30,2016 ($1,108,244) The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the OPEB asset for the past three years are presented below: Percentage of Annual OPEB Actual AOC Current Net OPEB Fiscal Year Cost(AOC) Contribution Contributed Year AOC Obligation(Asset) June 30,2014 $8,128,000 $7,798,040 96% $329,960 ($1,207,678) June 30,2015 8,125,000 8,124,087 1000/0 913 (1,206,765) June 30,2016 7,890,000 7,791,479 99% 98,521 (1,108,244) 40 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 10—POST EMPLOYMENT HEALTH CARE BENEFITS(Continued) D. Funded Status and Funding Progress Per PARS, trust assets as of June 30, 2016 and 2015, including trust contributions and interest, total $42,703,154 and $39,917,736,respectively. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about fixture employment, mortality, and the health care cost trend. The funded status of the plan and the annual required contributions of the employer are subject to continual revision, as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress information below and the required supplementary information immediately following the notes to the financial statements presents multiyear trend information that shows whether the actuarial value of the plan assets is increasing or decreasing over time, relative to the actuarial liabilities for benefits. Trend data from the most recent actuarial study is presented below: Unfunded Unfunded (Overfunded) Cost Method (Overfunded) Actuarial Actuarial Actuarial Actuarial Covered Payroll Liability as Actuarial Value of Accrued Accrued Funded (Active Plan Percentage of Valuation Assets Liability Liability Ratio Members) Covered Payroll Date (A) (B) (B-A)UAAL (A/B) (C) [(A—B)/Cl July 1,2014 $39,220,000 $107,181,000 $67,961,000 36.59% $30,552,659 222% E. Actuarial Methods and Assumptions Projections for benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation as well as the historical pattern of sharing benefit costs between the employer and plan members. The actuarial methods and assumptions used include tecbmques that are designed to reduce short-term volatility in actuarial accrued liabilities and actuarial value of assets, consistent with the long-term perspective of the calculations. The District's most recent actuarial valuation was prepared as of July 1, 2014 and was finalized on April 6, 2015. The July 1, 2012 actuarial valuation results are budgeted in fiscal year 2015- 16. 41 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30,2016 and 2015 NOTE 10—POST EMPLOYMENT HEALTH CARE BENEFITS(Continued) The following is a summary of the actuarial assumptions and methods: Valuation Date July 1,2014 Actuarial Cost Method Entry Age Normal Cost Method Amortization Method Level Dollar/Closed Average Remaining Period 24 Years fixed Actuarial Assumptions: Inflation Rate 3,00% Investment Rate of Return 6.25% Projected Salary Increases 3.25% Post-Retirement Benefit Increases No planned changes Health Care Cost Trend Rates Medical- 8.3%grading to 5%in 2021 -22 Medicare Part B-same as medical trend Dental-4% NOTE 11—NET POSITION Net Position is the excess of all the District's assets over all its liabilities,regardless of fund. Net Position is divided into three captions: Net Investment in Capital Assets describes the portion of Net Position which is represented by the current net book value of the District's capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted describes the portion of Net Position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the District cannot unilaterally alter. Unrestricted describes the portion of Net Position which is not restricted as to use. NOTE 12—LEASE COMMITMENTS The District leases various facilities and equipment under operating leases. Following is a summary of operating lease commitments as of June 30, 2016: Fiscal Year Office Ending Equipment Facilities Total 2017 $248,212 $63,610 $311,822 2018 248,212 33,922 282,134 Total $496,424 $97,532 $593,956 Total rental expense for the fiscal years ended June 30, 2016 and 2015 was $279,636 and $308,484,respectively. 42 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended Mune 30,2016 and 2015 NOTE 13—COMMITMENTS AND CONTINGENCIES Commitments and contingencies, undeterminable in amount, include normal recurring pending claims and litigation. In the opinion of management, based upon discussion with legal counsel, there is no pending litigation which is likely to have a material adverse effect on the financial position of the District. Claims and losses are recorded when they are reasonably probable of being incurred and the amount is estimable. Insurance proceeds and settlements are recorded when received. The District has a number of purchase commitments for ongoing operating and capital projects that involve multi-year contracts. Purchase commitments related to these multi-year contracts are approximately$21,187,890 and$9,493,695 as of June 30, 2016 and 2015, respectively. 43 This Page Left Intentionally Blank REQUIRED SUPPLEMENTARY INFORMATION CENTRAL CONTRA COSTA SANITARY DISTRICT Cost-Sharing Multiple Employer Defined Benefit Retirement Plan As of fiscal year ended June 30,2016 SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS Last 10 Years* 2016 2015 Net Change in Total Pension Liability Service Cost $ 11,744,271 $ 14,396,402 Interest on the Total Pension Liability 35,450,291 42,024,521 Expensed portion of current-period changes in proportion and difference between employer's contributions and proportionate share of contributions (3,509,681) 533,503 Expensed portion of current-period benefit changes - - Fxpensed portion of current-period difference between expected and actual experience in the Total Pension Liability (836,604) (2,988,813) Expensed portion of current-period changes of assumptions or other inputs 972,205 (1,231) Member contributions (5,196,358) (5,860,025) Projected earnings on plan investments (30,472,528) (34,980,271) Expensed portion of current-period differences between actual and projected earnings on plan investments 5,198,286 (200,059) Administrative expense 494,025 522,670 Other 40,685 - Recognition ofbeginning ofyear deferred outflows ofresources as pension expense - Recognition ofbeginning of year deferred inflows of resources as pension expense (2,593,424) Net amortization of deferred amounts from changes in proportion and differences between employer's contributions and proportionate share of contributions 533,503 - Net change in total pension liability $ 11,824,671 $ 13,446,697 Reconciliation of Net Pension Liability Beginning Net Pension Liability $ 89,535,510 $ 110,183,830 Pension expense 11,824,671 13,446,697 Employer contributions (22,752,611) (24,451,234) Newnet deferred inflows/outflows 21,270,461 (11,564,393) Change in allocation of prior deferred inflows/outflows 2,163,011 - New net deferred flows due to change in proportion (12,354,075) 1,920,610 Recognition of prior deferred inflows/outflows 2,593,424 - Recognition of prior deferred flows due to change in proportion (533,503) - Netpensionliability-ending $ 91,746,888 $ 89,535,510 Plan fiduciary net position as apercentage of the total pension liability 74.14% 73.86% Covered-employee payroll $ 29,061,743 $ 26,906,131 Net pension liability as percentage of covered-employee payroll 315.70% 332.77% Notes to Schedule: Changes in assumptions.- In 2016,amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement ages of general employees. *Fis cal year 2015 was the 1st year of implementation,therefore only two years are shown. 46 CENTRAL CONTRA COSTA SANITARY DISTRICT Cost-Sharing Multiple Employer Defined Benefit Retirement Plan As of fiscal year ending June 30, 2016 SCHEDULE OF CONTRIBUTIONS Last 10 Years* 2016 2015 Actuarially deterniined contribution $ 22,752,611 $ 24,451,234 Contributions in relation to the actuarially determined contributions 22,752,611 24,451,234 Contribution deficiency(excess) - - Covered-employee payroll $ 29,061,743 $ 26,906,131 Contributions as a percentage of covered-employee payroll 78.29% 90.88% Notes to Schedule Measurement Date: 12//31/2015 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age Amortization method Level percentage of payroll,closed Remaining amortization period 8 years ** Asset valuation method 5-year semi-annually Inflation 2.75% Salary increases 4%-13.25% Investment rate of return 7,0%,net of pension plan investment expense,including inflation Retirement age 50 years Classic,52 years PEPRA Mortality RP-2014 Healthy Annuitant Mortality Table with setbacks and forwards * Fiscal year 2015 was the 1st year of implementation,therefore only two years are shown. **Remaining balance of December 31,2007 UAAL is amortized over a fixed(decreasing or closed)period with 8 years remaining as of December 31,2014. Any changes in UAAL after December 31,2007 will be separately amortized over a fixed 18-year period effective with that valuation. Any changes in UAAL due to plan amendments will be amortized over a 10-year fixed period effective with that valuation. 47 CENTRAL CONTRA COSTA SANITARY DISTRICT Post Retirement Health Care Defined Benefit Plan Schedule of Funding Progress As of fiscal year ended June 30,2016 Last Three Valuations Unfunded Unfunded (Overfunded) Cost Method (Overfunded) Actuarial Actuarial Actuarial Actuarial Covered Payroll Liability as Actuarial Value of Accrued Accrued Funded (Active Plan Percentage of Valuation Assets Liability Liability Ratio Members) Covered Payroll Date (A) (B) (13—A)UAAL (AB) (C) [(A—B)/C] June 30,2010 $9,404,000 $90,337,000 $80,933,000 10.41% $25,080,233 323% July 1,2012 22,481,000 100,498,000 78,017,000 22.37% 24,305,548 321% July 1,2014 33,695,000 103,904,000 70,209,000 32.43% 27,930,233 251% 48 SUPPLEMENTARY INFORMATION CENTRAL CONTRA COSTA SANITARY DISTRICT COMBINING SCHEDULE OF NET POSITION ENTERPRISE SUB-FUNDS JUNE 30,2016 Running Sewer Self Debt Expense Construction Insurance Service Elimination Total ASSETS CURRENT ASSETS: Cash and cash equivalents $76,496 $26,038,953 $6,336,269 $32,451,718 Short term investments 38,000,000 1,000,000 39,000,000 Accounts receivable 15,156,849 3,861,700 19,018,549 Interest receivable 74,038 8,488 $99,181 181,707 Parts and supplies 2,146,172 2,146,172 Prepaid expenses 2,786,407 2,786,407 Total current assets 58,165,924 30,974,691 6,344,757 99,181 - 95,584,553 NON-CURRENT ASSETS: Restricted cash and equivalents 100,000 100,000 Restricted investments 4,856,450 4,856,450 Assessment Districts receivable 1,515,818 1,515,818 Net OPEB asset 1,108,244 1,108,244 CAPITAL ASSETS Nondepreciable 46,737,959 46,737,959 Depreciable,net of accumulated depreciation 569,267,078 569,267,078 Total capital assets,net 616,005,037 - - 616,005,037 Total non-current assets 617,213,281 1,515,818 - 4,856,450 623,585,549 TOTAL ASSETS 675,379,205 32,490,509 6,344,757 4,955,631 719,170,102 DEFERRED OUTFLOWS OF RESOURCES Pension related 34,464,472 - - - 34,464,472 LIABILITIES CURRENT LIABILITIES: Accounts payable and accrued expenses 2,821,413 3,346,993 5,819 6,174,225 Interest payable 592,380 592,380 Refunding Water Revenue Bonds-current portion 2,300,000 2,300,000 Water Reclamation Loan Contract-current portion 177,756 177,756 Accrued compensated absences-current portion 448,000 448,000 Liability for uninsured claims 1,000,000 1,000,000 Refundable deposits 142,319 151,699 294,018 Total current liabilities 3,411,732 3,498,692 1,005,819 3,070,136 10,986,379 NON-CURRENT LIABILITIES: Refunding Water Revenue Bonds,noncurrent portion 31,500,000 31,500,000 Water Reclamation Loan Contract,noncurrent portion 182,378 182,378 Accrued compensated absences,noncurrent portion 4,029,542 4,029,542 Net pension liability 91,746,888 91,746,888 Total noncurrent liabilities 95,776,430 - - 31,682,378 127,458,808 TOTAL LIABILITIES 99,188,162 3,498,692 1,005,819 34,752,514 138,445,187 DEFERRED INFLOWS OF RESOURCES Pension related 21,618,960 - 21,618,960 NET POSITION Net investment in capital assets 616,005,037 (34,160,134) 581,844,903 Restricted for debt service 4,363,251 4,363,251 Unrestricted (26,968,482) 28,991,817 5,338,938 7,362273 TOTAL NET POSITION $589,036,555 $28,991,817 $5,338,938 ($29,796,883) $593,570,427 50 CENTRAL CONTRA COSTA SANITARY DISTRICT COMBINING SCHEDULE OF REVENUES,EXPENSES,AND CHANGES IN NET POSITION ENTERPRISE SUB-FUNDS FOR THE YEAR ENDING JUNE 30,2016 Running Sewer Self Debt Expense Construction Insurance Service Elimination Total OPERATING REVENUES Sewer service charges(SSC) $72,233,903 $72,233,903 Service charges-City of Concord 13,913,960 13,913,960 Other services charges 963,014 963,014 Miscellaneous charges 623,659 623,659 Total operating revenues 87,734,536 87,734,536 OPERATING EXPENSES Sewage collection and pumping stations 16,977,612 16,977,612 Sewage treatment 25,959,525 25,959,525 Engineering 16,301,976 16,301,976 Recycled water 559,272 559,272 Administrative and general 24,815,005 $1,600,617 ($1,528,131) 24,887,491 Pension expense (9,778,389) (9,778,389) Depreciation 22,885,030 22,885,030 Total operating expenses 97,720,031 1,600,617 (1,528,131) 97,792,517 OPERATING INCOME(LOSS) (9,985,495) (1,600,617) 1,528,131 (10,057,981) NONOPERATING REVENUES(EXPENSES) Taxes $11,067,302 $3,767,865 14,835,167 Permit and inspection fees 2,267,520 279,203 2,546,723 Interest earnings 321,519 169,350 28,413 43,026 562,308 Interest expense (1,427,641) (1,427,641) Other income(expense),net 945,947 249,148 1,528,131 (1,528,131) 1,195,095 Total nonoperating revenues 3,534,986 11,765,003 1,556,544 2,383,250 (1,528,131) 17,711,652 NET INCOME(LOSS)BEFORE CAPITAL (6,450,509) 11,765,003 (44,073) 2,383,250 7,653,671 CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTIONS AND TRANSFERS City of Concord contributions to capital costs 3,671,892 3,671,892 Customer contributions to capital cost(SSC) 8,319,860 8,319,860 Contributed sewer lines 1,774,168 1,774,168 Capital contributions-connection fees 8,543,758 8,543,758 Transfers In(Out) 23,247,614 (23,297,147) (25,711) 75,244 Total capital contributions and transfers 25,021,782 (2,761,637) (25,711) 75,244 22,309,678 CHANGE IN NET POSITION 18,571,273 9,003,366 (69:784) 2,458,494 29,963,349 NET POSITION,BEGINNING OF YEAR 570,465,282 19,988,451 5,408,722 (32,255,377) 563,607,078 NET POSITION,END OF YEAR $589,036,555 $28,991,817 $5,338,938 ($29,796,883) $593,570,427 51 CENTRAL CONTRA COSTA SANITARY DISTRICT Schedule of Running Expenses Comparison of Budget and Actual Expenses by Department June 30,2016 Sewage Variance Sewage Treatment Pumping Recycled Favorable Administration Engineering Collection Plant Station Water Total Budget (Unfavorable) Salaries and Wages $5,880,017 $8,175,196 $5,793,321 $9,240,968 $891,793 $201,555 $30,182,850 $30,943,085 $760,235 Employee Benefits 13,679,196 7,459,960 5,856,307 8,884,577 781,452 97,984 36,759,476 37,036,228 276,752 Less Capitalized Overhead and Benefits (20,910) (2,785,412) (33,155) (114,691) - - (2,954,168) (3,812,007) (857,839) Total Salaries and Benefits 19,538,303 12,849,744 11,616,473 18,010,854 1,673,245 299,539 63,988,158 64,167,306 179,148 Directors'Fees and Expense 135,512 - - - - - 135,512 132,177 (3,335) Chemicals - - - 902,592 454,968 62,009 1,419,569 1,655,000 235,431 Utilities 92,297 174,774 139,223 2,756,293 471,107 - 3,633,694 4,780,250 1,146,556 Repairs and Maintenance 590,182 108,055 1,242,048 2,706,770 239,154 4,853 4,891,062 5,369,900 478,838 Hauling and Disposal - 415,746 88,982 375,691 9,052 - 889,471 998,550 109,079 Professional and Legal Services 469,371 156,201 9,294 5,161 - 2,048 642,075 640,300 (1,775) Outside Services 1,708,086 1,362,972 57,472 218,274 65,457 141,966 3,554,227 3,883,115 328,888 SclfInsurance 1,500,000 - - - - - 1,500,000 1,500,000 - Materials and Supplies 344,278 320,430 747,559 809,968 23,629 5,492 2,251,356 2,210,045 (41,311) Other 437,117 914,054 115,881 173,922 23,927 43,365 1,708,266 2,128,221 419,955 Total $24,815,146 $16,301,976 $14,016,932 $25,959,525 $2,960,539 $559,272 $84,613,390 $87,464,864 $2,851,474 52 CENTRAL CONTRA COSTA SANITARY DISTRICT RUNNING EXPENSE SCHEDULE OF SUPPLEMENTAL NET POSITION ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2016 Prior Year Balance $17,079,944 2015-2016 Revenue $91,269,522 2015 -2016 Expense (97,720,031) Add Back Depreciation Expense 22,885,030 16,434,521 Net Position Attributed to General Operations 33,514,465 Net Position Attributed to All Other 555,522,090 Running Expense Net Position $589,036,555 53 This Page Left Intentionally Blank 6-L )TAT I ST I CS V `� �LCLEAVlN NNO"n +,n ,r � lu ;a y i 1/ - ; 1 F,TIF sz � Vo I. \ iJ 1F� ' Central Contra Costa Sanitary District Central Contra Costa Sanitary District Statistical Section Table of Contents Financial Trends These schedules contain trend information to help the reader understand how the District's financial performance has changed over time. Changes in Net Position and Statement of Net Position - Last Ten Fiscal Years......................................................................................S-1 Revenue by Type - Last Ten Fiscal Years.........................................................S-2 Operating Expenses by Type - Last Ten Fiscal Years ......................................S-3 Revenue Capacity These schedules contain information to help the reader assess the District's most significant revenue sources. Major Revenue Base and Rates - Historical and Current Fees - Last Ten Fiscal Years......................................................................................S-4 Assessed and Estimated Actual Valuation of Taxable Property - Last Ten Fiscal Years......................................................................................S-5 Property Tax and Sewer Service Charge Fees Levied and Collected - Last Ten Fiscal Years......................................................................................S-5 Sewer Service Charge - List of Ten Largest Customers - Last Ten Fiscal Years......................................................................................S-6 Debt Capacity This schedule contains information to help the reader assess the affordability of the District's current levels of outstanding debt and the District's ability to issue additional debt in the future. Summary of Debt Service - Type, Debt Service Coverage, Debt Ratio - Last Ten Fiscal Years......................................................................................S-7 Demographic and Economic Information This schedule offers demographic and economic indicators to help the reader understand the environment within which the District's financial activities take place. Demographic and Economic Data - Population Served - Last Ten Calendar Years ................................................................................S-8 List of Ten Largest Employers in Contra Costa County - Last Year and Eight Years Ago ......................................................................S-8 Demographic and Economic Statistics - Contra Costa County - Last Ten Fiscal Years......................................................................................S-9 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the District's financial report relates to the services the District provides and the activities it performs. Full-time Equivalent Employees by Department - Last Ten Fiscal Years ........S-10 Number of Retirees and Surviving Spouses - Last Ten Fiscal Years ..............S-10 Capital Asset and Operating Statistics - Last Ten Calendar or Fiscal Years ...S-11 Miscellaneous Statistics ..................................................................................S-11 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. Central Contra Costa Sanitary District Changes in Net Position and Statement of Net Position Last Ten Fiscal Years Changes in Net Position 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 Operating Revenues: Sewer Service Charges(SSC) $35,057,668 $40,207,157 $43,087,454 $48,692,520 $49,095,870 $49,123,848 $56,770,984 $60,796,421 $70,023,512 $72,233,903 City of Concord 9,043,215 8,206,860 8,755,857 8,664,668 9,224,952 10,647,389 10,483,421 11,625,864 12,892,945 13,913,960 Other Service Charges 793,395 869,589 872,978 824,022 913,017 915,485 1,076,401 1,035,134 1,006,197 963,014 Miscellaneous Charges 863,843 595,980 667,855 650,876 662,721 929,917 751,880 544,589 593,780 623,659 Total Operating Revenue 45,758,121 49,879,586 53,384,144 58,832,086 59,896,560 61,616,639 69,082,686 74,002,008 84,516,434 87,734,536 Operating Expenses: Salaries&Benefits 34,678,665 37,312,472 39,440,034 39,986,763 41,705,131 45,562,430 49,811,218 58,954,452 66,104,630 63,988,158 Chemicals,Utilities&Supplies 8,759,490 8,952,840 9,368,755 7,973,992 7,609,127 8,121,809 7,401,103 8,063,309 7,466,490 7,304,619 Professional&Outside Services 2,298,712 2,613,658 2,832,001 2,129,552 2,425,615 4,099,876 2,836,638 3,995,860 3,322,881 4,196,302 Hauling,Disposal,Repairs&Maintenance 4,105,082 3,863,555 3,938,129 3,808,635 3,916,789 4,077,741 4,239,421 4,041,355 4,758,260 5,780,533 Self-Insurance(net of transfers) (180,716) (215,004) 90,876 (688,859) 119,051 (65,688) 159,961 214,290 496,381 72,486 Pension Expense - - - - - - - - (3,012,757) (9,778,389) Depreciation 17,714,714 18,615,747 19,417,941 20,969,429 20,580,061 21,190,059 21,596,266 21,892,545 22,740,942 22,885,030 All Other 2,144,082 2,378,941 2,305,459 2,658,662 2,459,966 2,489,019 2,693,135 2,346,583 2,473,963 3,343,778 Total Operating Expenses 69,520,029 73,522,209 77,393,195 76,838,174 78,815,740 85,475,246 88,737,742 99,508,394 104,350,790 97,792,517 Operating Loss (23,761,908) (23,642,623) (24,009,051) (18,006,088) (18,919,180) (23,858,607) (19,655,056) (25,506,386) (19,834,356) (10,057,981) Non-Operating Revenues(Expenses): Property Taxes* 11,762,731 12,254,168 12,539,375 12,260,123 12,213,624 12,047,169 13,010,477 13,093,841 14,083,331 14,835,167 Connection&Other Fees 1,615,308 1,335,160 1,093,756 776,348 895,825 903,810 1,169,809 1,575,251 1,843,942 2,546,723 Interest Income 3,257,773 2,527,621 1,033,095 570,024 673,990 294,938 405,474 359,288 318,475 562,308 Interest Expense (1,609,104) (1,518,142) (1,421,686) (1,553,467) (2,061,903) (1,919,375) (1,802,084) (1,996,689) (1,523,127) (1,427,641) All Other* 1,316,383 1,243,817 639,523 12,295 (523,209) 931,660 951,100 932,464 1,828,530 1,195,095 Total Non-Operating 16,343,091 15,842,624 13,884,063 12,065,323 11,198,327 12,258,202 13,734,776 13,964,155 16,551,151 17,711,652 Income Before Contributions and Transfers (7,418,817) (7,799,999) (10,124,988) (5,940,765) (7,720,853) (11,600,405) (5,920,280) (11,542,231) (3,283,205) 7,653,671 Customer Contributions** 15,945,915 14,970,637 13,938,421 6,793,040 5,018,092 8,888,663 8,001,147 10,486,067 6,769,623 11,991,752 Contributed Sewer Lines 3,521,704 1,444,420 1,231,022 1,840,259 533,616 792,011 939,628 1,462,316 794,218 1,774,168 Capital Contributions-ConnectionFees 8,917,658 9,259,160 5,025,493 7,078,635 3,515,804 5,724,833 6,091,529 8,224,517 6,673,298 8,543,758 CHANGE IN NET POSITION 20,966,460 17,874,218 10,069,948 9,771,169 1,346,659 3,805,102 9,112,024 8,630,669 10,953,934 29,963,349 Total Net Position-Beginning 562,769,417 583,735,877 601,610,095 611,680,043 621,451,212 622,797,871 626,602,973 635,714,997 644,345,666 563,607,078 Prior Period Adjustment-GASB 68 and 71 - - - - - - - - (91,692,522) - Total Net Position-Ending $583,735,877 $601,610,095 $611,680,043 $621,451,212 $622,797,871 $626,602,973 $635,714,997 $644,345,666 $563,607,078 $593,570,427 Statement of Net Position 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 Investments in Capital Assets,Net of Related Debt $513,580,658 $531,119,639 $552,165,498 $531,324,187 $541,613,208 $549,462,506 $559,523,642 $568,006,023 $573,175,094 $581,844,903 Restricted for Debt Service 3,216,163 3,185,416 3,163,956 4,565,970 4,612,103 4,663,601 4,730,837 4,809,248 4,288,008 4,363,251 Unrestricted 66,939,056 67,305,040 56,350,589 85,561,055 76,572,560 72,476,866 71,460,518 71,530,395 (13,856,024) 7,362,273 Total Net Position $583,735,877 $601,610,095 $611,680,043 $621,451,212 $622,797,871 $626,602,973 $635,714,997 $644,345,666 $563,607,078 $593,570,427 '2009-2010 property fazes includes Prop 1A loan receivable revenue and offset of$985,916.The revenue is offset by the provision for losses categorized in other. "Classification reclassed 2010-11,prior years reclassed for consistency.Previously included in Non-Operating. Includes capital cost contributions from the City of Concord and customer contributions(SSC). Source:Central Contra Costa Sanitary District Audited Financial Statements S-1 Central Contra Costa Sanitary District Revenue By Type Last Ten Fiscal Years $140,000,000 $120,000,000 $100,000,000 $80,000,000 t6 G $60,000,000 $40,000,000 $20,000,000 $- 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 Fiscal Year oOperating Revenue oNon-Operating Revenue Operating Revenue Fiscal Sewer Service City of Other Service Miscellaneous Total Year Charges* Concord Charges Charges Operating 2006-2007 $35,057,668 $9,043,215 $793,395 $863,843 $45,758,121 2007-2008 40,207,157 8,206,860 869,589 595,980 49,879,586 2008-2009 43,087,454 8,755,857 872,978 667,855 53,384,144 2009-2010 48,692,520 8,664,668 824,022 650,876 58,832,086 2010-2011 49,095,870 9,224,952 913,017 662,721 59,896,560 2011-2012 49,123,848 10,647,389 915,485 929,917 61,616,639 2012-2013 56,770,984 10,483,421 1,076,401 751,880 69,082,686 2013-2014 60,796,421 11,625,864 1,035,134 544,589 74,002,008 2014-2015 70,023,512 12,892,945 1,006,197 593,780 84,516,434 2015-2016 72,233,903 13,913,960 963,014 623,659 87,734,536 Non-Operating Revenue Fiscal Property Customer Connections All Total Non-Operating Year Taxes*1 Contributions*2 &Other Fees*3 Interest Other &Contributions 2006-2007 $11,762,731 $19,467,619 $10,532,966 $3,257,773 $1,316,383 $46,337,472 2007-2008 12,254,168 16,415,057 10,594,320 2,527,621 1,243,817 43,034,983 2008-2009 12,539,375 15,169,443 6,119,249 1,033,095 639,523 35,500,685 2009-2010 12,260,123 8,633,299 7,854,983 570,024 998,211 30,316,640 2010-2011 12,213,624 5,551,708 4,411,629 673,990 - 22,850,951 2011-2012 12,047,169 9,680,674 6,628,643 294,938 931,660 29,583,084 2012-2013 13,010,477 8,940,775 7,261,338 405,474 951,100 30,569,164 2013-2014 13,093,841 11,948,383 9,799,768 359,288 932,464 36,133,744 2014-2015 14,083,331 7,563,841 8,517,240 318,475 1,828,530 32,311,417 2015-2016 14,835,167 13,765,920 11,090,481 562,308 1,195,095 41,448,971 Sewer Service Charge(SSC)represents the Running Expense Fund portion of SSC County collections along with District direct billings and counter collections. *1 2009-2010 property taxes include Prop 1A loan receivable revenue of$985,916. *2 Customer Contributions include the portion of SSC that is allocated to Sewer Construction Fund,City of Concord reimbursement of capital costs,and developer contributed sewer lines beginning in 2000-2001,due to changes in GASB 33 reporting requirements. *3 Includes connection fees,non-operating permit,inspection,and other fees. S-2 Source:Central Contra Costa Sanitary District Audited Financial Statements Central Contra Costa Sanitary District Operating Expenses by Type Last Ten Fiscal Years $110,000,000 $100,000,000 $90,000,000 $80,000,000 $70,000,000 N $60,000,000 $50,000,000 o $40,000,000 $30,000,000 $20,000,000 $10,000,000 $- $(10,000,000) $(20,000,000) 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 Fiscal Year ❑Salaries and Benefits ❑Chemicals,Utilities&Supplies ❑Professional&Outside Services ❑Hauling,Disposal,Repairs&Maintenance ❑Self-Insurance ❑Depreciation ❑Pension Expense* Li All Other OPERATING EXPENSES Fiscal Salaries Chemicals,Utilities Professional& Hauling,Disposal, Self-Insurance Depreciation Pension All Total Operating Non-Operating Year and Benefits &Supplies Outside Services Repairs&Maintenance Expense* Other Expenses Expenses* 2006-2007 $34,678,665 $8,759,490 $2,298,712 $4,105,082 $519,284 $17,714,714 - $1,444,082 $69,520,029 $1,609,104 2007-2008 37,312,472 8,952,840 2,613,658 3,863,555 916,639 18,615,747 - 1,247,298 73,522,209 1,518,142 2008-2009 39,440,034 9,368,755 2,832,001 3,938,129 958,906 19,417,941 - 1,437,429 77,393,195 1,421,686 2009-2010 39,986,763 7,973,992 2,129,552 3,808,635 746,612 20,969,429 - 1,223,191 76,838,174 2,539,383 2010-2011 41,705,131 7,609,127 2,425,615 3,916,789 1,003,115 20,580,061 - 1,575,902 78,815,740 2,585,112 2011-2012 45,562,430 8,121,809 4,099,876 4,077,741 810,849 21,190,059 - 1,612,482 85,475,246 1,919,375 2012-2013 49,811,218 7,401,103 2,836,638 4,239,421 2,380,466 21,596,266 - 472,630 88,737,742 1,802,084 2013-2014 58,954,453 8,063,310 3,995,861 4,041,356 858,738 21,892,545 - 1,702,131 99,508,394 1,996,689 2014-2015 66,104,630 7,466,490 3,322,881 4,758,260 1,146,381 22,740,942 (3,012,757) 1,823,963 104,350,790 1,523,127 2015-2016 63,988,158 7,304,619 4,196,302 5,780,533 1,572,486 22,885,030 (9,778,389) 1,843,778 97,792,517 1,427,641 Informational-not graphed 2014-15 pension expense is a result of the implementation of GASB 68&71. ** 2009-2010 non-operating expenses includes Prop 1A loan receivable revenue offset of$985,916. Source:Central Contra Costa Sanitary District Audited Financial Statements S-3 Central Contra Costa Sanitary District Major Revenue Base and Rates Historical and Current Fees Last Ten Fiscal Years Single Family Annual Sewer Service Charge (SSC)"1 Facility Fiscal Year Operations Capital Total Capacity Fee`2 2006-2007 $213 $76 $289 $4,263 2007-2008 242 58 300 4,524 2008-2009 260 51 311 4,923 2009-2010 292 19 311 5,298 2010-2011 300 11 311 5,451 2011-2012 302 39 341 5,465 2012-2013 344 27 371 5,797 2013-2014 365 40 405 5,930 2014-2015 416 23 439 5,995 2015-2016 422 49 471 6,005 Multi-Family Annual Sewer Service Charge (SSC)*1 Pump Fiscal Year Operations Capital Total Zone Fee*3 2006-2007 $213 $76 $289 $1,404 2007-2008 242 58 300 1,466 2008-2009 260 51 311 1,586 2009-2010 292 19 311 1,651 2010-2011 300 11 311 1,641 2011-2012 302 39 341 1,606 2012-2013 344 27 371 1,625 2013-2014 365 40 405 1,587 2014-2015 416 23 439 1,585 2015-2016 415 48 463 1,650 '1 All residential accounts paid a flat annual sewer service charge shown above per household through 2014-15. In 2015-16,as a result of a cost of service study,the District changed to a two tier single family and multi family rate structure. The charge for commercial users consists of an annual rate based on a measured volume of water usage per 100 cubic feet(HCF). '2 New users who are connected to the Wastewater System are charged Capital Improvement Fees called Facility Capacity Fees.Fee is per connection. '3 New customers in areas where wastewater pumping stations are needed to reach the District's gravity fed sewers are charged a Pump Zone Fee. Fee is per connection. Source: Central Contra Costa Sanitary District Environmental Services Division S-4 Central Contra Costa Sanitary District Assessed and Estimated Actual Valuation of Taxable Property Last Ten Fiscal Years Fiscal Year Local Secured Unsecured Total % Change 2006-2007 $61,409,513,246 $1,533,076,135 $62,942,589,381 10.3% 2007-2008 66,416,736,187 1,583,187,663 67,999,923,850 8.0% 2008-2009 68,888,723,534 1,738,606,038 70,627,329,572 3.9% 2009-2010 68,640,287,188 1,723,710,536 70,363,997,724 -0.4% 2010-2011 67,889,370,916 1,647,537,385 69,536,908,301 -1.2% 2011-2012 67,486,938,247 1,591,574,852 69,078,513,099 -0.7% 2012-2013 67,538,246,870 1,604,518,295 69,142,765,165 0.1% 2013-2014 74,400,356,922 1,742,364,655 76,142,721,577 10.1% 2014-2015 80,431,132,956 1,739,342,301 82,170,475,257 7.9% 2015-2016 86,701,930,276 1,645,712,628 88,347,642,904 7.5% Property Tax and Sewer Service Charge Fees Levied and Collected Last Ten Fiscal Years Property Tax* Sewer Service Charges* Fiscal Year Levied &Collected % Change Levied &Collected % Change 2006-2007 $11,860,961 144.2% $46,694,671 5.5% 2007-2008 12,092,637 2.0% 48,883,932 4.7% 2008-2009 12,492,502 3.3% 50,743,258 3.8% 2009-2010 11,253,233 ** -9.9% 50,896,210 0.3% 2010-2011 12,171,725 8.2% 50,196,629 -1.4% 2011-2012 12,032,525 -1.1% 54,586,208 8.7% 2012-2013 13,185,988 *** 9.6% 60,068,807 10.0% 2013-2014 13,108,176 -0.6% 66,604,323 10.9% 2014-2015 14,195,300 8.3% 72,622,738 9.0% 2015-2016 15,323,818 7.9% 78,930,977 8.7% General County taxes collected are the same as the amount levied since the County participates in California's alternative method of apportionment called the Teeter Plan. The Teeter Plan as provided in Section 4701 et seq.of the State Revenue and Taxation Code, establishes a mechanism for the County to advance the full amount of property tax and other levies to taxing agencies based on the tax levy,rather than on the basis of actual tax collections. Although this system is a simpler method to administer,the County assumes the risk of delinquencies. The County in return retains the penalties and accrued interest thereon. Actual amount received from the County. Net of Prop 1A loan to state of$985,916. Includes repayment of Prop 1A loan in June,2013. The repayment amount includes$985,916 of principal and $65,545 of interest for a total of$1,051,461. Source: Contra Costa County Auditor-Controller's Office S-5 Central Contra Costa Sanitary District Sewer Service Charge List Of Ten Largest Customers Ten Fiscal Years 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Percentage of Percentage of Percentage of Percentage of Percentage of Operating Operating Operating Operating Operating Operating Operating Operating Operating Operating Customer Revenue Rank Revenue Revenue Rank Revenue Revenue Rank Revenue Revenue Rank Revenue Revenue Rank Revenue City of Concord 1. $9,043,215 1 19.76% $8,206,860 1 16.45% $8,755,857 1 16.40% $8,664,668 1 14.73% $9,224,952 1 15.40% Contra Costa County General Services 3. 322,351 2 0.70% 316,854 3 0.64% 320,866 3 0.60% 305,880 2 0.52% 301,430 2 0.50% First Walnut Creek Mutual 274,550 3 0.60% 285,000 4 0.57% 295,450 4 0.55% 295,450 3 0.50% 295,450 3 0.49% Park Regency Apartments 257,788 4 0.56% 267,600 5 0.54% 277,412 5 0.52% 277,412 4 0.47% 277,412 4 0.46% Second Walnut Creek Mutual Apts 216,750 5 0.47% 225,000 6 0.45% 233,250 6 0.44% 233,250 5 0.40% 233,250 5 0.39% Sun Valley Mall 176,293 6 0.39% 183,380 8 0.37% 190,734 7 0.36% 197,566 6 0.34% 193,957 6 0.32% Willows Shopping Center 3. 128,303 7 0.28% - - - - - - - - St.Mary's College Contract 127,355 8 0.28% 136,016 9 0.27% 126,222 8 0.24% John Muir Health 3. 121,613 9 0.27% 223,775 7 0.45% 125,292 9 0.23% - - Bay Landing Apartments 104,040 10 0.23% - - - - 111,960 10 0.19% Chevron Offices&Office Park 2. - - 340,389 2 0.68% 363,739 2 0.68% 165,561 7 0.28% - - Bay Landing Apartments - - - - - - 111,960 8 0.19% Archstone Apartments - - - - 108,850 9-10 0.18% Kaiser Foundation Hospital 3. 118,809 10 0.24% - - 136,753 8 0.23% - - Branch Creek Vista Apartmenst - - 124,400 10 0.23% 124,400 9 0.21% 124,400 7 0.21% Muirland @ Windemere Apartments - - - - - - 108,850 9-10 0.18% Total $10,772,258 23.54% $10,303,683 20.66% $10,813,222 20.26% $10,512,900 17.87% $10,980,511 18.33% 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 Percentage of Percentage of Percentage of Percentage of Percentage of Operating Operating Operating Operating Operating Operating Operating Operating Operating Operating Customer Revenue Rank Revenue Revenue Rank Revenue Revenue Rank Revenue Revenue Rank Revenue Revenue Rank Revenue City of Concord 1. $10,647,389 1 17.28% $10,483,421 1 15.18% $11,625,864 1 15.71% $12,892,945 1 15.25% $13,913,960 1 15.86% Contra Costa County General Services 3. 292,384 4 0.47% 321,803 4 0.47% 419,590 2 0.57% 451,567 2 0.53% 638,608 2 0.73% First Walnut Creek Mutual 323,950 2 0.53% 352,450 2 0.51% 384,750 3 0.52% 417,050 3 0.49% 439,850 3 0.50% Park Regency Apartments 304,172 3 0.49% 330,932 3 0.48% 361,260 4 0.49% 391,588 4 0.46% 412,996 4 0.47% Second Walnut Creek Mutual Apts 255,750 5 0.42% 278,250 5 0.40% 303,750 5 0.41% 329,250 5 0.39% 347,250 5 0.40% Sun Valley Mall 203,037 6 0.33% 174,038 7 0.25% 211,866 6 0.29% 299,697 6 0.35% 283,613 6 0.32% John Muir Health 3. - - 176,381 6 0.26% 148,374 8 0.20% - - 218,919 7 0.25% San Ramon Unified School District - - - 215,044 8 0.25% Willows Shopping Center 3. 145,091 10 0.20% - - 206,210 9 0.24% Kaiser Foundation Hospital 3. - - - - - - 158,848 8 0.19% 186,232 10 0.21% Branch Creek Vista Apartments 136,400 7 0.22% 148,400 9 0.21% 162,000 7 0.22% 175,600 7 0.21% - - Bay Landing Apartments 122,760 8 0.20% 133,560 10 0.19% 145,800 9 0.20% 158,040 9 0.19% Archstone Apartments 119,350 10 0.19% - - - - 153,650 10 0.18% Muirland @ Windemere Apartments 119,350 10 0.19% - - 153,650 10 0.18% - St.Mary's College Contract 119,407 9 0.19% 158,480 8 0.23% - - - - Total $12,643,949 20.52% $12,557,715 18.18% $13,908,345 18.79% $15,581,885 18.44% $16,862,681 19.22% 1. Contract with the City of Concord to treat and dispose of wastewater for Concord and Clayton. 2. Charges included irrigation in years 07-08 and 08-09. 3. Kaiser,John Muir Health,Willows Shopping Center,and County hospital are permitted industries. Source: Central Contra Costa Sanitary District Environmental Services Division S-6 Summary Of Debt Service Last Ten Fiscal Years Debt Service Paid Each Fiscal Year Outstanding Debt Each Fiscal Year $6,000,000 $60,000,000 In 2009,the District issued Bonds which retired the 2002 and 1998 bond debt and gained$30 million in net proceeds dedicated to fund Capital Improvements. $5,000,000 $4,000,000 $45,000,000 2 W -° $3,000,000 a c - $30,000,000 p O 0 $2,000,000 $15,000,000 $1,000,000 $0 $0-tr 6,L0 '1,v0 O,LO 9,v0 �,Lp ^,LO ry,Lp O,Lp �ryp y,Lp O`dt0 01,yo OO,yo ^M,yo NW ry00 ry00 ry00 ry00 ry0^ �O� ry0^ �O� ry0^ ry0� ryo ,yo ,yo ,yo ,yo ry0 ,�o 10 Summary By Type Of Debt Revenue Bonds(2009,2002&1998 Total Debt Service Annual Ex ense • • = • Fiscal Interest& Total Interest& Total Interest& Total evenue . . . Year Principal Amortization Debt Service Principal Amortization Debt Service Principal Amortization Debt Service7$27(95,750,000 Bonds .. 2006-2007 $2,135,000 $1,559,500 $3,694,500 $137,515 $49,604 $187,119 $2,272,515 $1,609,104 $3,881,619 $1,770,340 $31,520,340 2007-2008 2,210,000 1,472,113 3,682,113 141,090 46,029 187,119 2,351,090 1,518,142 3,869,232 ,540,000 1,629,250 29,169,250 2008-2009 2,300,000 1,379,326 3,679,326 144,759 42,360 187,119 2,444,759 1,421,686 3,866,445 ,240,000 1,484,491 26,724,491 2009-2010 2,390,000 1,514,871 3,904,871 148,523 38,596 187,119 2,538,523 1,553,467 4,091,990 54,125,000 1,335,968 55,460,968 2010-2011 3,460,000 2,027,168 5,487,168 152,385 34,734 187,119 3,612,385 2,061,903 5,674,288 50,665,000 1,183,583 51,848,583 2011-2012 3,465,000 1,888,601 5,353,601 156,346 30,773 187,119 3,621,346 1,919,375 5,540,721 47,200,000 1,027,237 48,227,237 2012-2013 3,605,000 1,775,376 5,380,376 160,411 26,708 187,119 3,765,411 1,802,084 5,567,495 43,595,000 866,826 44,461,826 2013-2014 3,720,000 1,974,151 5,694,151 164,581 22,537 187,118 3,884,581 1,996,688 5,881,269 39,875,000 702,245 40,577,245 2014-2015 3,865,000 1,504,939 5,369,939 168,860 18,258 187,118 4,033,860 1,523,197 5,557,057 36,010,000 533,385 36,543,385 2015-2016 1 2,210,000 1 1,413,772 1 3,623,772 1 173,251 1 13,869 1 187,120 1 2,383,251 1 1,427,641 1 3,810,892 1 33,800,000 360,134 1 34,160,134 Debt Service Coverage Summary Debt Ratios Total Total Operating Non-Operating Debt Service Capital Debt Service Annual Debt Annual Debt Total Debt Fiscal Debt Operating Expenses less Revenue& Net Coverage Improvement Adjusted Net Coverage Service to Service per Outstanding Year Service Revenue Depreciation*1 Contributions Revenue*2 (Net Revenue)*3 Fees/Concord Revenue*4 (Adj.Net Revenue)*5 Operating Exp. Customer Per Customer 2006-2007 $3,881,619 $45,758,121 $51,805,315 $46,337,472 $40,290,278 10.38 $12,353,170 $27,937,108 7.20 7.49% 23.58 191.51 2007-2008 3,869,232 49,879,586 54,906,462 43,034,983 38,008,107 9.82 14,595,433 23,412,674 6.05 7.05% 23.29 175.56 2008-2009 3,866,445 53,384,144 57,975,254 35,500,685 30,909,575 7.99 10,511,351 20,398,224 5.28 6.67% 23.33 161.26 2009-2010 4,091,990 58,832,086 55,868,745 30,316,640 33,279,981 8.13 10,707,584 22,572,397 5.52 7.32% 24.47 331.68 2010-2011 5,674,288 59,896,560 58,235,679 22,850,951 24,511,832 4.32 6,731,994 17,779,838 3.13 9.74% 34.67 316.81 2011-2012 5,540,721 61,616,639 64,285,187 29,583,084 26,914,536 4.86 8,266,521 18,648,015 3.37 8.62% 34.06 296.47 2012-2013 5,567,495 69,082,686 67,141,476 30,569,164 32,510,374 5.84 9,708,300 22,802,074 4.10 8.29% 33.78 269.73 2013-2014 5,881,269 74,002,008 77,615,849 36,133,744 32,519,903 5.53 12,045,375 20,474,528 3.48 7.58% 35.31 243.60 2014-2015 5,557,057 84,516,434 81,609,848 32,311,417 35,218,003 6.34 9,570,789 25,647,214 4.62 6.81% 33.01 217.10 2015-2016 1 3,810,892 1 87,734,536 1 74,907,487 1 41,448,971 1 54,276,020 1 14.241 12,215,650 1 42,060,370 1 11.04 1 5.09%1 22.281 199.74 Note: Details regarding the District's outstanding debt can be found in the notes to the financial statements. <a>GASB Statement No.65 required that bond issuance costs of$315,287,previously being amoritized annually,be expensed in FY 2013-14. Debt Restrictions: *1 2014-15 includes implementaion of pension expense reporting changes for GASB 68&71. Revenue Pledge&Covenant: The District pledges *2 Net Revenue=Operating Revenue,less Total Operating Expenses less Depreciation,plus Non-Operating Revenue&Contributions. Property Tax Revenue along with its ability to raise Sewer *3 This ratio must be above 1.00 to meet the Debt Rate Covenant(Net Revenue/Total Debt Service). Service Charge(SSC)rates. Debt Coverage requirements *4 Adjusted Net Revenue=Net Revenue less Capital Improvement Fees(Connection Fees)and City of Concord Capital Charges. are discussed in the footnotes to the left. *5 This ratio must be above 1.25 to meet the Debt Rate Covenant(Adjusted Net Revenue/Total Debt Service). S-7 Central Contra Costa Sanitary District Demographic and Economic Data Population Served Last Ten Calendar Years Inside District Concord/ Total % As Of January 1 Boundaries Clayton Served Change 2007 314,400 134,300 448,700 0.8% 2008 317,340 134,560 451,900 0.7% 2009 322,200 134,000 456,200 1.0% 2010 326,600 135,400 462,000 1.3% 2011 321,800 133,600 455,400 -1.4% 2012 326,900 134,200 461,100 1.3% 2013 332,600 134,900 467,500 1.4% 2014 335,009 135,856 470,865 0.7% 2015 339,029 137,357 476,386 1.2% 2016 340,667 140,916 481,583 1.1% Source: Central Contra Costa Sanitary District Environmental Services Division List of Ten Largest Employers in Contra Costa County Last Year and Eight Years Ago* 2007 2015' Estimated %of Total County Estimated %of Total County Employers Employees Rank Employment Employees Rank Employment Chevron Corporation 7,100 1 1.30% 10,000 1 1.92% Bayer Healthcare Pharmaceuticals - - 500-999 T-2 0.14% Bio-Rad Laboratories 1,100 8 0.20% 500-999 T-2 0.14% C&H Sugar Co., Inc. - - 500-999 T-2 0.14% Conoco Phillips Rodeo Refinery - - 500-999 T-2 0.14% Macy's - - 500-999 T-2 0.14% Nordstrom - - 500-999 T-2 0.14% Safeway Inc. - - 500-999 T-2 0.14% Shell Oil Products - - 500-999 T-2 0.14% Tesoro Golden Eagle Refinery - - 500-999 T-2 0.14% Kaiser Permanente 5,000 2 1.00% - - AT&T 3,150 3 0.60% - - Kaiser Foundation Hospital 2,300 4 0.50% - - John Muir Medical Center 1,900 5 0.40% - - John Muir/Mt. Diablo Medical Center 1,500 6 0.30% - - 24-Hour Fitness 1,200 7 0.20% - - Doctors Medical Center 1,000 9 0.20% - - Uss Posco Industries 975 10 0.20% All Others 489,925 95.10% 504,950 96.82% Total 515,150 100.0% 521,700 100.0% Source: * County of Contra Costa,California,Comprehensive Annual Financial Report for 6/30/15,Statistical Section,principal employers excludes government employers. S-8 Central Contra Costa Sanitary District Demographic and Economic Statistics Contra Costa County Last Ten Fiscal Years Fiscal Year Per Capita Average Annual Ended Personal Personal Unemployment June 30 Population* Income* Income* Rate** 2006 1,000,834 58,545,550,000 58,497 4.5% 2007 1,009,152 59,823,135,000 59,281 4.7% 2008 1,023,344 61,470,268,000 60,068 6.3% 2009 1,037,890 56,442,667,000 54,382 10.8% 2010 1,052,921 56,594,058,000 53,750 11.3% 2011 1,066,636 61,156,431,000 57,336 10.4% 2012 1,079,290 66,344,299,000 61,470 9.0% 2013 1,095,959 66,607,757,000 60,776 7.4% 2014 1,111,710 69,526,509,000 62,540 6.2% 2015 1,126,745 74,756,916,000 66,348 5.0% N/A-Information not available at this time. U.S.Department of Commerce,Bureau of Economic Analysis. Estimates for 2010-2015 reflect county population estimates available as of March 2016. State of California,Employment Development Department(EDD),annual calendar figure. S-9 Central Contra Costa Sanitary District Full-time Equivalent Employees by Department Last Ten Fiscal Years Full-time Equivalent Employees as of June 30 Department 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Administration 42 45 45 45 44 39 39 44 46 49 Engineering 75 76 80 76 75 71 75 73 72 88 Operations Collection Systems 50 50 52 47 44 47 56 55 56 55 Plant 83 77 82 78 74 71 76 81 88 79 Pumping Station 10 11 10 10 8 7 8 8 8 7 Operations Total 143 138 144 135 126 125 140 144 152 141 District Total 260 259 269 256 245 235 254 261 270 278 Number of Retirees and Surviving Spouses as of June 30 Last Ten Fiscal Years District Total 177 178 187 201 215 237 244 243 244 249 Source: Central Contra Costa Sanitary District Finance and Human Resources Divisions S-10 Central Contra Costa Sanitary District Capital Asset and Operating Statistics Last Ten Calendar or Fiscal Years Millions of Gallons per Day(mgd) Treatment Plant Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Treatment Plant Permitted Capacity Calendar 53.8 53.8 53.8 53.8 53.8 53.8 53.8 53.8 53.8 53.8 Average Dry Weather Flow(ADWF) Calendar 41.6 38.6 36.6 32.5 38.9 37.2 33.2 33.8 30.4 29.1 Wastewater Treated per day Calendar 50.4 41.2 41.0 37.0 40.6 41.9 39.8 36.8 35.6 31.8 Tons per Year Sludge to Furnace(Dry)*1 Fiscal 15,341 15,340 15,212 15,299 15,056 15,790 15,097 14,590 16,789 16,623 Ash to Reuse Site(Wet)*2 Fiscal 4,418 4,418 4,177 4,082 3,814 3,850 3,667 3,618 3,811 3,651 *1 In the multi-hearth furnace,the wet sludge is converted to dry ash. Water is added to the dry ash as it is loaded into trucks(ratio of 60 percent ash to 40 percent water)to prevent the ash from blowing out of the truck during transport. *2 Wet sludge,which at 19 to 27 percent solids,is pumped to the multiple-hearth furnace for incineration. The table above shows the dry tons per year of sludge to the furnace,excluding the 73 to 81 percent water in the wet sludge. Collection Systems/Pumping Stations/Outfall Sewers Other Data Pipeline Miles Calendar 1,500 1,500 1,500 1,500 1,500 1,500 1,526 1,526 1,519 1,519 Number of pumping stations(owned) Calendar 17 17 17 17 16 16 16 16 16 16 Recycled Water Recycled Water Pipeline Calendar 10.5 miles 10.5 miles 10.5 miles 10.5 miles 10.5 miles 10.5 miles 10.5 miles 10.5 miles 13 miles 13 miles Recycled Water Produced per day Calendar 1.6 mgd 1.6 mgd 1.5 mgd 1.6 mgd 1.5 mgd 1.6 mgd 1.6 mgd 1.6 mgd 1.6 mgd 1.6 mgd Number of Recycled Water Customers Calendar 30 30 31 30 33 35 35 35 37 43 Residential Recycled Water Fill Station Customers Calendar N/A N/A N/A N/A N/A N/A N/A N/A N/A 1,020 Household Hazardous Waste(HHW)-Inception 1997/1998 Program Participation(Number of cars) Fiscal 26,392 27,940 28,210 29,347 29,441 29,112 29,119 30,379 31,779 33,468 Percentage of Households in Service Area Fiscal 13.6% 14.5% 14.4% 15.0% 15.6% 15.4% 15.4% 15.9% 16.6% 16.8% Operating Cost per Car Fiscal $64 $61 $76 $76 $82 $87 $93 $83 $78 $72 Pounds of HHW per Car Fiscal 80 71 67 65 68 67 68 66 63 64 Miscellaneous Statistics Governing Body: Elected 5-Member Board of Directors Governmental Structure: Established in 1946 under the Sanitary District Act of 1923 Staff: 278 full-time equivalent employees Authority: California Health and Safety Code Section 4700 et.Seq. Services: Wastewater collection,treatment,and disposal Household Hazardous Waste Facility Recycled Water Residential Recycled Water Fill Station Type Of Treatment: Discharge-Secondary;Reclamation-Tertiary Service Area: 144 square miles Total Population Served: 481,583 Sewer Service Charge: $471 for single family homes and$463 for multi family homes. Source: Central Contra Costa Sanitary District records S-11