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Home My WebLink About11. Accept (1) the audited Annual Comprehensive Financial Report (ACFR) for the Fiscal Year ended June 30, 2023, performed by Maze & Associates, and (2) the independent auditors’ memorandum on internal control and required communications Page 1 of 116 Item 11. CENTRAL SAN BOARD OF DIRECTORS POSITION PAPER MEETING DATE: DECEMBER 21, 2023 SUBJECT: ACCEPT (1) THE AUDITED ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) FOR THE FISCAL YEAR ENDED JUNE 30, 2023, PERFORMED BY MAZE &ASSOCIATES, AND (2) THE INDEPENDENT AUDITORS' MEMORANDUM ON INTERNAL CONTROL AND REQUIRED COMMUNICATIONS FOR THE FISCAL YEAR ENDED JUNE 30, 2023 SUBMITTED BY: INITIATING DEPARTMENT: KEVIN MIZUNO, FINANCE MANAGER ADMINISTRATION-FINANCE REVIEWED BY: PHILIP LEIBER, DEPUTYGENERAL MANAGER -ADMINISTRATION ROGER S. BAILEY, GENERAL MANAGER Roger S. Bailey General Manager ISSUE The audited ACFR of Central San for the Fiscal Year ended June 30, 2023, and the independent auditors' memorandum on internal control and required communications for the year ended June 30, 2023, are being submitted to the Board for acceptance. BACKGROUND Independent Audit Results The independent audit firm of Maze &Associates has completed their audit of Central San's annual financial statements for the Fiscal Year ended June 30, 2023, and has issued their audit opinion thereon. The objective of this annually required independent audit is the expression of an opinion as to whether the basic financial statements are fairly presented, in all material respects, in conformity with United States Generally Accepted Accounting Principles (GAAP) and to report on the fairness of the supplementary information in relation to the financial statements taken as a whole. The audit is conducted in accordance with Generally Accepted Auditing Standards in the United States (GAAS). GAAS requires the December 21, 2023 Regular Board Meeting Agenda Packet- Page 98 of 461 Page 2 of 116 independent auditor to plan and perform the audit to obtain reasonable, but not absolute, assurance about whether the financial statements are free from material misstatement. Procedures performed necessary to gather sufficient audit evidence supporting their opinion are based on a comprehensive assessment of Central San's financial risks and incorporate an element of both internal control risks and inherent business risks. Management is pleased to announce Central San's independent auditor's report for the fiscal year ended June 30, 2023, expresses an unmodified (clean) opinion. The Independent Auditors' Report including the audit opinion is included on Page 1 of the attached ACFR (Attachment 1). In accordance with California Government Code Section 53891, information from the audit is also used to prepare an annual report filed with the California State Controller's Office (SCO). This report is referred to as the Financial Transactions Report(FTR) and is prepared following the reporting guidelines published by the SCO annually. Now that the annual independent audit has been completed, the FTR for the Fiscal Year ended June 30, 2023, will be remitted electronically by the January 31, 2024, reporting deadline. The audited financial statements will also be sent to the Contra Costa County Auditor-Controller's Office, the Contra Costa County Board of Supervisors, the Bond Rating Agencies, and posted to the Electronic Municipal Market Access (EMMA)website as required by continuing disclosure requirements for Central San's bond and certificate debt issuances. I n accordance with GAAS, in the performance of their audit of the annual financial statements, the independent auditors evaluated Central San's internal controls over financial reporting. Based on their observations during the course of the audit, the independent auditors notify management of any significant deficiencies or material misstatements and any recommendations to improve the system of internal accounting controls. The independent auditors are required to communicate certain matters to those charged with governance at the conclusion of the audit, which is addressed by their"Memorandum on Internal Control and Required Communications" (Attachment 2). In addition to the clean audit opinion, management is pleased to report there were no significant deficiencies or material misstatements identified by the auditors as part of this year's audit. Financial Summary Pursuant to GAAP, as a stand-alone business-type governmental entity, Central San uses an enterprise fund format to report its activities for financial statement purposes. Under this enterprise fund format, all non-fiduciary sub-funds of the Central San (i.e., Running Expense, Sewer Construction, Self-Insurance, Debt Service) are consolidated into a single reporting unit and reported in a Statement of Net Position; Statement of Revenues, Expenses and Changes in Net Position; and a Statement of Cash Flows. This consolidated reporting unit is considered an "opinion unit" and is what Central San's independent auditors have rendered their(clean) opinion on. Accordingly, the emphasis of the annual audited financial statements is at the District-wide level pursuant to GAAP and not at the sub-fund level. Central San's total ending net position increased by$72.8 million or 8.17 percent in 2022-23. This increase is primarily due to the deferred inflows related to the pension plan decreasing by$126.8 million offset by a net pension asset of$53.5 million in the prior year transforming to a net pension liability of $37.8 million.Also, the deferred outflows related to the pension and OPEB plans decreased by a combined $49.8 million from the prior year. These large changes in pension and OPEB plan related deferred inflows, outflows, assets, and liabilities are attributable to Central San's plans being nearly fully funded, making them highly susceptible to the investment market volatility experienced over the past year. I n addition to market volatility considerations, timing also has an important impact on the performance of the post-retirement benefit trusts. For instance, while both plans reported significant investment losses for the calendar year ended December 31, 2022, they reported noteworthy returns for Fiscal Year ended June 30, 2023, which is reflected in the ACFR (reported on a fiscal year, not calendar year, basis). December 21, 2023 Regular Board Meeting Agenda Packet- Page 99 of 461 Page 3 of 116 GFOA Award Program The Government Finance Officers Association (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) issued by the Government Accounting Standards Board (GASB), and to prepare an ACFR that provides transparency and full disclosure, and then recognize individual governments that succeed in achieving that goal. On August 2, 2023, Central San was awarded a Certificate ofAchievement for Excellence in Financial Reporting by the GFOA for the report submitted for the Fiscal Year ended June 30, 2022, representing the 23rd consecutive year Central San has received the award. The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. I n 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, as well as the GFOA program requirements. The ACFR includes ten years of Central San's historical, financial, and statistical data. The ACFR 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 Division has prepared the Central San's ACFR as of June 30, 2023. Management is confident that the current ACFR continues to meet the Certificate of Achievement for Excellence in Financial Reporting Program requirements and intends to submit it to the GFOA to determine its eligibility for another certificate. ALTERNATIVES/CONSIDERATIONS Preparation of an audited ACFR is required by law for all California Special Districts. The Board's acceptance of the ACFR and the related independent auditors' memorandum on internal control and other required communications is a necessary formality to finalize and permanently record receipt of the report. The Board could direct staff not to pursue the GFOA award for the ACFR. However, pursuing the award is advised, a best practice, and consistent with Central San's strategic plan and goals to provide exceptional customer service and maintain an excellent reputation in the community. FINANCIAL IMPACTS The acceptance of the independently audited ACFR for the Fiscal Year ended June 30, 2023, does not have any direct fiscal impact on Central San. Staff intends to submit the attached ACFR to the GFOA for the Certificate ofAchievement for Excellence in Financial Reporting program, for which there is an application fee for submission of an ACFR for review based on total revenues of the entity applying. Based on this sliding fee schedule, Central San's fee is expected to be $560. Funding necessary to cover this cost was included in the adopted budget for the current Fiscal Year ending June 30, 2024. COMMITTEE RECOMMENDATION The Finance Committee reviewed this matter at its special meeting on November 27, 2023, and recommended approval. December 21, 2023 Regular Board Meeting Agenda Packet- Page 100 of 461 Page 4 of 116 RECOMMENDED BOARD ACTION Accept the independently audited ACFR and accompanying auditors' memorandum on internal control and required communications for the Fiscal Year ended June 30, 2023. Strategic Plan Tie-In GOAL FOUR: Governance and Fiscal Responsibility Strategy 1 - Promote and uphold ethical behavior, openness, and accessibility, Strategy 3- Maintain financial stability and sustainability ATTACHMENTS: 1.Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2023 2.Auditors Memo on Internal Control 3. Presentation December 21, 2023 Regular Board Meeting Agenda Packet- Page 101 of 461 Pa 11 = I f CENTRAL CONTRA COSTA SANITARY DISTRICT i AN N UAL COMPREHENSIVE FINANCIAL REPORT FORTH E FISCAL YEARS ENDED JUNE 3012023 AND 2022 s � OF lei rw a u w December 21, 2023 Regular Board Meeting Agenda Packet- g g g Page 102 of 461 Page 6 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT MARTINEZ, CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2023 WITH SUMMARIZED COMPARATIVE INFORMATION FOR THE YEAR ENDED JUNE 30, 2022 Prepared By: Finance Division December 21, 2023 Regular Board Meeting Agenda Packet- Page 103 of 461 Page 7 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT Annual Comprehensive Financial Report Table of Contents For the Year Ended June 30, 2023 INTRODUCTORY SECTION: Letterof Transmittal................................................................................................................................................i Boardof Directors................................................................................................................................................viii MissionStatement...................................................................................................................................................ix OrganizationChart...................................................................................................................................................x Mapof Service Area................................................................................................................................................xi Certificateof Achievement.................................................................................................................................xii FINANCIAL SECTION: IndependentAuditors' Report............................................................................................................................1 Management's Discussion and Analysis..........................................................................................................5 Basic Financial Statements Statement of Net Position............................................................................................................12-13 Statement of Revenues, Expenses and Changes in Net Position........................................15 Statementof Cash Flows..............................................................................................................16-17 Notes to Financial Statements- The accompanying notes are an integral part of the basic financial statements....................................................................19-51 Required Supplementary Information Cost-Sharing Multiple Employer Defined Benefit Retirement Plan- Schedule of Proportionate Share of Net Pension Liability(Asset).........................................................53 Scheduleof Contributions..............................................................................................................54 Post-Retirement Health Care Defined Benefit Plan- Schedule of Changes in the Net OPEB Liability and Related Ratios..............................55 Scheduleof Contributions..............................................................................................................56 Supplementary Information Combining Schedule of Net Position..............................................................................................58 Combining Schedule of Revenues, Expenses and Changes in Net Position - Enterprise Sub-Funds....................................................................59 STATISTICAL SECTION (Unaudited): Changes in Net Position and Statement of Net Position- LastTen Fiscal Years.........................................................................................................................................61 Revenue by Type - Last Ten Fiscal Years.....................................................................................................62 Operating Expenses by Type - Last Ten Fiscal Years..............................................................................63 Major Revenue Base and Rates- Historical and Current Fees - LastTen Fiscal Years.........................................................................................................................................64 Assessed and Estimated Actual Valuation of Taxable Property- LastTen Fiscal Years.........................................................................................................................................65 Property Tax and Sewer Service Charge Fees Levied and Collected- LastTen Fiscal Years.........................................................................................................................................65 Sewer Service Charge - List of Ten Largest Customers- LastTen Fiscal Years.........................................................................................................................................66 December 21, 2023 Regular Board Meeting Agenda Packet- Page 104 of 461 Page 8 of 116 Payments Under the Concord Agreement- LastTen Fiscal Years.........................................................................................................................................67 Active Service Accounts and Fiscal Year Billings- SewerService Charges.....................................................................................................................................67 Summary of Debt Service-Type, Debt Service Coverage,Debt Ratio- LastTen Fiscal Years.........................................................................................................................................68 Ratios of Outstanding Debt-Debt as a Percentage of Per Capita Personal Income- LastTen Calendar Years..................................................................................................................................69 Demographic and Economic Data- Population Served- LastTen Calendar Years..................................................................................................................................70 List of Nine Largest Employers in Contra Costa County- LastYear and Eight Years Ago.......................................................................................................................70 Demographic and Economic Statistics-Contra Costa County- LastTen Fiscal Years.........................................................................................................................................71 Full-time Equivalent Positions Filled by Department- LastTen Fiscal Years.........................................................................................................................................72 Number of Retirees and Surviving Spouses- LastTen Fiscal Years.........................................................................................................................................72 Capital Asset and Operating Statistics- Last Ten Calendar or Fiscal Years................................................................................................................73 MiscellaneousStatistics......................................................................................................................................73 December 21, 2023 Regular Board Meeting Agenda Packet- Page 105 of 461 f� Page 9 of 116 rRA OOJTq µMTAAYOFfTR/CT r r l a 4 ^O^ �W LL jr LL - 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Q �Q9cember 21, 2023 Regular Board Meeting Agenda Packet- Page 106 of 461 Page 10 of 116 AfWCENTRAL SAN CENTRAL CONTRA COSTA • November 29, 2023 Central Contra Costa Sanitary District Customers and The Honorable Board of Directors, Martinez, California: California Government Code section 26909 requires an audit to be completed and filed with the California State Controller's Office within twelve months after the close of the fiscal year. This report is published to fulfill that requirement for the fiscal year ended June 30, 2023 (FY 2022-23). 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. The District's independent auditors, Maze &Associates,has issued an unmodified ("clean") opinion on the District's financial statements for the year ended June 30, 2023. The independent auditors' 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 auditors' 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 approximately 30 miles east of San Francisco. The District builds, operates and maintains the facilities required to collect and clean wastewater for approximately 352,000 residents of Danville, Lafayette, Martinez, Moraga, Orinda, Pleasant Hill, San Ramon, Walnut Creek and some of the unincorporated communities within its District boundaries. The District also treats wastewater for approximately 133,000 residents of the Cities of Concord and Clayton under a 1974 (and as subsequently amended) contract with the City of Concord. The District is committed to protecting public health and preserving the environment at responsible rates, through conducting long-range financial planning and managing 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 i December 21, 2023 Regular Board Meeting Agenda Packet- Page 107 of 461 Page 11 of 116 District's sewage collection system. The District is the sole provider of wastewater collection and treatment service within the District limits (see map of service area). The residential segment makes up the largest segment of the District's customer base representing approximately 83% of the Sewer Service Charge operating revenue. The District's treatment capacity has grown significantly from a modest 4.5 million gallons per day(mgd) in 1948 to 53.8 mgd currently. Bonds, certificates of participation, state/federal grants, and pay-as-you-go local revenue sources of the District have traditionally financed capital expenditures and capacity expansions. While pay-as-you go local revenue sources have been the primary financing mechanism for the District's capital program over the past decade, debt financing is expected to gradually increase. This is demonstrated by the issuance of$50.6 million in certificates of participation in June 2021 and up to $98.5 million in approved California Water Board State Revolving Fund loan proceeds over the next few years (from an approved loan of$173 million). In addition to these approved debt issuances, the District's long-range financial plan also anticipates the use of additional debt financing for UV disinfection upgrades,solids handling,and nutrient removal infrastructure needs. The District also operates a Recycled Water Program, in collaboration with Contra Costa Water District, that provides high-quality recycled water for landscape irrigation at schools, parks, playgrounds, median strips and playing fields, as well as dust control and industrial process uses. Due to strong customer demand, 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 also actively pursues new recycled water expansion opportunities to take advantage of the potential water supply that highly-treated wastewater represents, particularly given California's limited water supply. The District has been collaborating with public water agency partners to jointly invest in a project that will enable the District to comply with future nutrient discharge regulations while producing a new water supply to help ease the region's water shortage. The District recently executed a Memorandum of Understanding with East Bay Municipal Utility District (EBMUD) that will evaluate several potential recycled water projects together, including an option for potable reuse - introducing highly-treated recycled water into EBMUD's drinking water supply. The District continues to actively promote water recycling,given the role this would have in addressing the statewide water shortage and the developing effects of climate change. In addition to its responsibility to collect and treat wastewater, the District also undertakes pollution prevention initiatives through the operation and maintenance of a permanent Household Hazardous Waste (HHW) Collection Facility in partnership with Mountain 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 a vital part of our overall Pollution Prevention Program. Having completed its 26th year of operation, the HHW Facility served over 30,000 residential and small business customers. On average, over two million pounds of hazardous waste is collected and properly disposed of annually, collecting over 1.8 million pounds of waste in FY 2022-23. In conjunction with its HHW program,the District's Pharmaceutical Collection Program further encourages pollution prevention having approximately 5,600 pounds of expired or unwanted medications between its seven collection sites in FY 2022-23. Organization.Accounting and Budgetary Controls A five-member Board of Directors governs the District. The Board sets policies, appoints officers, and hires and oversees the District's General Manager, Secretary of the District, and District Counsel. The Board positions are non-partisan and serve staggered four-year terms. The District began a transition from an "at-large" election system to an area-based"by-division" election system ii December 21, 2023 Regular Board Meeting Agenda Packet- Page 108 of 461 Page 12 of 116 under the California Voting Rights Act in 2020. Two Board members were elected in November 2022 and were the first to represent their respective division as part of the by-district election system (Divisions 2 and 3). Thereafter, the remaining three Board members shall be elected on a by-division basis in November 2024 (Divisions 1, 4 and 5) completing Central San's transition to a by-district election system. The Board appoints the General Manager, who in accordance with policies established by the Board, manages District affairs. The District employed 278 permanent regular full-time employees at fiscal year-end out of 294 authorized permanent regular full-time positions for that fiscal year. These employees are organized into three departments steered by an Executive Governance unit. Department Directors oversee and are responsible for the budgets and expenses of each department and their underlying divisions. The three departments are: Administration,Engineering and Technical Services,and Operations. The District charges fees to external users for providing sewer collection and treatment services, and these fees comprise the primary revenue source. Accordingly, pursuant to generally accepted accounting principles issued by the Governmental Accounting Standards Board (GASB), the District uses full accrual enterprise fund accounting to account for its operations, which is similar, though not identical, to private industry. The District currently has one enterprise fund for financial reporting purposes, which is comprised of the following four internal sub-funds for internal accounting purposes: ■ 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 the Operations&Maintenance or"O&M"Fund). ■ 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 (i.e. Sewer Construction), Self-Insurance, and Debt-Service. The Board and Finance Committee review interim financial reports on a quarterly basis for fiduciary purposes, with management receiving more detailed monthly budget-to-actual results for budget monitoring purposes. District management is accountable for monitoring variances and adhering to overall budget constraints. The Board has delegated various contracting and spending authority to the General Manager, as specified by an adopted Board policy. Additional limited contracting and spending authority is further delegated to certain staff classifications as specified by internal signature limits. The District also has several documented financial policies (i.e., debt management, investments, fiscal reserves, pension and OPEB funding, etc.) that are periodically reviewed and updated to ensure their consistency with best practices as well as changes in laws and regulations. iii December 21, 2023 Regular Board Meeting Agenda Packet- Page 109 of 461 Page 13 of 116 ASSESSING THE DISTRICT'S ECONOMIC CONDITION Local Economy and Outlook The District's service area is in Contra Costa County (County) in the State of California (State). According to the State's Employment Development Department (EDD), the County unemployment rate increased from 3.1% in September 2022 to 4.1% in September 2023. The combination of high interest rates and increasing unemployment could lead to slower than normal economic growth in the local economy. To put the County's unemployment rate into perspective, the County ranks as the 18th lowest in unemployment of the State's 58 counties. The County's annual population declined by 0.36%as of January 1, 2023 per the State's Department of Finance Population Research Unit. As of July 1, 2023,the County had an estimated population of 1,144,040. In twenty years, by July 1, 2023, the County's population is projected to grow to 1,302,043 million people. Regarding per capita income,in 2022 the County was ranked 19th among the state's 58 counties with a per capita income of $95,047 per the U.S. Bureau of Economic Analysis. Long-Term Financial Planning The District strives to maintain an excellent reputation in providing public service, which includes transparent and accessible governance, financial reporting and management, sewage collection and treatment,workforce safety, capital improvements and replacements,innovative use of technology, and customer service. The Board of Directors approved a four-year sewer service charge rate adjustment schedule in April 2019 spanning July 2019 through June 2023. The four-year sewer service charge rate increases ranged from 4.75% to 5.25% annually, subject to a Board review for continued necessity prior to the start of each fiscal year. The planned increases are a critical component of implementing the treatment plant and collection system capital improvement projects specified in the District's 20-year Master Plan adopted in 2017. In the spring of 2023,two years of rate adjustments were adopted for the upcoming two fiscal years, with overall Sewer Service Charge rates increasing by 1%and 4%,respectively. As noted previously, in conjunction with the approved sewer service charge rates, the District's latest 10-year financial plan anticipates some use of additional debt financing to address major capital spending projects including upgrades to the UV disinfection system, solids handling, and nutrient removal infrastructure needs. Despite this long-term ramping up in projected capital financing needs, the FY 2023-24 capital budget is decreasing by approximately $19.8 million (21.7%) from the prior year's adopted budget, largely attributable to project construction delays related to pandemic related global materials supply chains. In total, capital budget carryovers (unused spending authority carried forward to a subsequent year) into FY 2023-24 are approximately$78.8 million,which Management and the Board are taking into consideration while forecasting sewer service charge revenue needs for FY 2023-24 and beyond. District management analyzes and updates a strategic plan every two years,with the seven goals in effect during FY 2022-23 being: 1. Customer and Community- Provide exceptional customer service, 2. Environmental Stewardship - Meet regulatory requirements, promote sustainability, and identify and reduce contributions to climate change and mitigate its impacts, 3. Workforce Diversity&Development- Recruit, educate, empower,and retain a workforce from diverse backgrounds, iv December 21, 2023 Regular Board Meeting Agenda Packet- Page 110 of 461 Page 14 of 116 4. Governance & Fiscal Responsibility - Uphold integrity, transparency, and wise financial management in an effective governing model, 5. Safety & Security - Provide a safe, secure, and healthful workplace that foresees and addresses threats, 6. Infrastructure Reliability - Maintain facilities and equipment to be dependable resilient, and long lasting,and 7. Innovation & Agility - Optimize operations for continuous improvement and remain flexible and adaptable. Strategies to achieve each of these seven goals are developed, as well as metrics to evaluate success. Performance on achievement of the goals in the plan is reported quarterly to the Board. The District updates a 10-year financial plan each year prior to the completion, presentation, and adoption of the annual budget. The main economic factors considered in this long-term forecasting exercise are: the impact of state legislation and mandates, regulatory compliance, GASB reporting requirements, negotiated labor contract terms (including projected changes in retirement and health care costs), energy costs and interpreting the energy market, interest rates, housing growth, and infrastructure renewal and replacement needs. The unfunded actuarial accrued liabilities (UAAL) for the District's pension and other post-employment benefit (OPEB) plans are also considered in the financial planning process. Pursuant to the most recently issued independent actuarial reports, the District had a strong fiduciary net position in both plans of approximately 92.4%for its pension plan as of the December 31, 2022 measurement date and 100.2% for its OPEB plan as of the June 30, 2023 measurement date. Due to continued downturn in the markets since the December 31, 2022 measurement date, the District assumes the funded status of the pension plan is likely to remain below 100% in the next actuarial study, which will also be taken into account when developing future sewer service charge rates and allocations for FY 2024-25 and beyond. The District anticipates that it will continue to meet its mission and goals, continue to provide excellent customer service at responsible rates to its customers,and meet compliance requirements and other goals as specified in its strategic plan for the foreseeable future. Relevant Financial Policies Investment policies for the District's assets, the OPEB Trust, and the Pension Prefunding Trust are reviewed and approved at least biennially by the Board. During FY 2022-23 the District Board directed an additional $1,000,000 be contributed to the OPEB Trust as a mechanism to hedge against potential future employer OPEB contribution rate volatility. The Pension Prefunding Trust was utilized in June 2021 to pay off the balance of the pension plan's UAAL. Section 53646 of the California Government Code governs the District's investment practices, with changes in legislation being considered in the Board's annual review of District investment policies. Additionally, the Board receives quarterly financial statements that include District investment portfolio reports. The OPEB Trust and the Section 115 Pension Prefunding Trusts are governed by separate investment policies. Since 2008, the OPEB Trust has been invested with a moderate investment strategy, reflecting the relatively long-term horizon for use of the funds. The Section 115 Pension Prefunding trust funds are invested using a moderately conservative strategy, reflecting its relatively shorter-term needs. These two irrevocable trusts are managed by an outside investment advisor subject to investment policies adopted by the Board. The Board Finance Committee reviews the OPEB Trust and Section 115 Pension Trust performance on a quarterly basis. v December 21, 2023 Regular Board Meeting Agenda Packet- Page 111 of 461 Page 15 of 116 Major Initiatives The District's vision statement in effect during FY 2022-23 was to be an innovative industry leader in environmental stewardship and sustainability, while delivering exceptional service at responsible rates. The Board and Management strives to achieve this vision through the establishment of a Strategic Plan that establishes seven overarching goals (as outlined previously), each with their own specific underlying strategies,initiatives,and key success measures. The District has received the Platinum award from the National Association of Clean Water Agencies (NACWA) for 25 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 85% in the past 20 years by improved sewer cleaning and a robust sewer rehabilitation program. As described previously, the District reviews and adopts a Strategic Plan every two years. In FY 2021-22, the District Board and Management developed a new Strategic Plan for FY 2022-23 and FY 2023-24, which was completed and adopted by the Board in the Spring of 2022, immediately prior to the adoption of the FY 2022-23 budget.The District continues to analyze current and future rates, costs, and cash flows to ensure consistency with cost of service studies (initially adopted in FY 2014-15 and then updated in FY 2018-19 for the four-year rate plan extending through FY 2022- 23). 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 Management Plan to evaluate options for addressing future regulatory requirements. The latest Management Plan was completed in FY 2016-17 and is intended to be used as a roadmap for capital improvements over the next two decades. Individual projects are proposed in an annual capital improvement budget, and brought to the Board for approval above specified limits. Furthermore, in May 2018, the Board approved the adoption of the Uniform Construction Cost Accounting Act (UPCCA), which provides for a streamlined contracting and approval process for smaller capital projects. 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 District for its annual comprehensive financial report (ACFR) for the fiscal year ended June 30, 2022. This was the 23ra consecutive year that the District has achieved this prestigious award. In order to receive the award, a government must publish an easily readable and efficiently organized ACFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only. Management is confident the current ACFR continues to meet the program's requirements and intends to submit 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. Management would like to express sincere appreciation to the following employees who assisted in its preparation: vi December 21, 2023 Regular Board Meeting Agenda Packet- Page 112 of 461 Page 16 of 116 ■ The Finance Division who compiled the information contained in this document with a special thanks to: Christopher Thomas, Accounting Supervisor; Diana Diaz, Accounting Supervisor (Provisional) ;Amal Lyon,Accountant; and Tricia Cruz,Accountant. ■ The Reproduction and Graphics Team of the Communications & Intergovernmental Affairs Division who creatively and professionally edited this the ACFR for publication. ■ Engineering & Technical Services Department as well as Operations Department 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 overseeing the financial operations of the District in a prudent and responsible manner. Respectfully submitted, Philip Leiber,CPA T. Kevin Mizuno, CPA Deputy General Manager-Administration Finance Manager vii December 21, 2023 Regular Board Meeting Agenda Packet- Page 113 of 461 Page 17 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT BOARD OF DIRECTORS June 30, 2023 Barbara D. Hockett........................................................................President Mariah N. Lauritzen...................................................President Pro-Tem Michael R. McGill.............................................................................. Member TadJ. Pilecki....................................................................................... Member Florence T.Wedington..................................................................Member viii December 21, 2023 Regular Board Meeting Agenda Packet- Page 114 of 461 -6D CENTRAL SAN CENTRAL CONTRA COSTA SANITARY DISTRICT MISSION , VISION , & VALU ES OUR MISSION To protect public health and the environment OUR VISION To be an innovative industry leader in environmental stewardship and sustainability, while delivering exceptional service at responsible rates OUR VALUES Our core values guide our daily decisions and how we fulfill our mission, vision, and goals • CUSTOMER SERVICE • INNOVATION We are responsive to our customers, and we We continuously improve and optimize our deliver on our commitment to provide safe, operations. reliable, and cost-efficient services. ENVIRONMENTAL SUSTAINABILITY EMPLOYEES We conduct our business to safeguard and We empower our employees to do their best improve our planet. work. • Y, W7NT- EGRITY We hold ourselves accountable to a all backgrounds, high standard of honesty, reliability, and ctives, and we are transparency. o e principles of equity and - 4 Page ]g d 116 / § 3 76 ) \ ( E \ n) 2 ® 4 a) CO £ 2 \ — - SCE G M » g ! 2 & CL / $ } � / ( E _ \ z \ a /g jam \ 2ge ¥ C / E e0 \ E ( \ _ 2 \ / $ »§ ƒ 2 2 — — \� G CO � � U 0 � \ � \ < c (D in O N u ' ƒ _ - - { to / � / ) \ M E \\ CL \ } E06 / in } u - J 7 § k December 2 t 2023 Regular Board Meeting agenda Packet- Page116 G 461 Page 20 of 116 Central Contra Costa Sanitary District Service Area J u ne 30, 2023 Date: 10/25/2023 Benicia San Suisun Ba Pablo " Bay Hercules 4 Pittsburg 4) Martindi • j Antioch Concord Pleasant Hill Clayton Walnut Creek Lafayette 0, Orinda Berkeley Alamo 4 Moraga O Danville a Oakland San Ramon Sa Fra ORa ^ Ilk Legend en Central San's Headquarter,Treatment Plant, Pump and Lift Stations 1 Flush and HHW Collection Facility 1. Martinez 11.. Lower Orinda 2. Fairview 12. Bates Blvd. -Orinda Central San's Collection System Operations 3. Maltby 13. Orinda Crossroads Department(sewer maintenance)Building 4. Clyde 14. Moraga 5. Concord Industrial 15. San Ramon Wastewater collection and treatment and 6. Buchanan Field North 16. Wagner Ranch HHW collection for 352,183 people 7. Buchanan Field South 17. Lower Wilder 8. Sleepy Hollow 18. Upper Wilder Wastewater treatment and HHW collection 9.Acacia for 133,489 residents in Concord and Clayton by contract OPump or Lift Station 0 2 4 HHW disposal services only O Privately Owned Pump Station Miles ^� A December 21, 2023 Regular Board Meeting Agenda Packet- Page 117 of 461 Page 21 of 116 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Central Contra Costa Sanitary District California For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2022 P. Executive Director/CEO xii December 21, 2023 Regular Board Meeting Agenda Packet- Page 118 of 461 Page 22 of 116 a W Nrl- EL J Z - W UZ W --%' - W ^^ f k9cember 21, 2023 Regular Board Meeting Agenda Packet- Page 119 of 461 Page 23 of 116 M A Z E & ASSOCIATES INDEPENDENT AUDITORS' REPORT To the Board of Directors Central Contra Costa Sanitary District Martinez, California Opinions We have audited the accompanying financial statements of the business-type activities of the Central Contra Costa Sanitary District (District), California, as of and for the years ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the Table of Contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of the District as of June 30, 2023, and the change in financial positions and, cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirement relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Managementfor 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; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate,that raise substantial doubt about the District's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate,they would influence the judgment made by a reasonable user based on the financial statements. Accountancy Corporation r 925.228.2800 3478 Buskirk Avenue,Suite 217 a maze@mazeassociates.com Pleasant Hill,CA 94523 1 w mazeassociates.com December 21, 2023 Regular Board Meeting Agenda Packet- Page 120 of 461 Page 24 of 116 In performing an audit in accordance with generally accepted auditing standards,we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining,on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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,no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Report on Summarized Comparative Information We have previously audited the District's June 30,2022 financial statements, and we expressed an unmodified audit opinions on those audited financial statements in our report dated December 8, 2022. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30,2022 is consistent,in all material respects,with the audited financial statements from which it has been derived. Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management's Discussion and Analysis and other Required Supplementary Information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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. 2 December 21, 2023 Regular Board Meeting Agenda Packet- Page 121 of 461 Page 25 of 116 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements. The accompanying Supplementary Information, as listed in the Table of Contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section listed in the Table of Contents, but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information,and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists,we are required to describe it in our report. Pleasant Hill, California November 29,2023 3 December 21, 2023 Regular Board Meeting Agenda Packet- Page 122 of 461 Page 26 of 116 This Page Left Intentionally Blank December 21, 2023 Regular Board Meeting Agenda Packet- Page 123 of 461 Page 27 of 116 - - ` Central Contra Costa sanitary District Protectingpublic , the environment 5019Imhoff MANAGEMENT'S DISCUSSION AND ANALYSIS This section of the Central Contra Costa Sanitary District's (District) annual financial report presents an analysis of the District's financial performance during the fiscal year ended June 30, 2023 (2022-23). This information is presented in conjunction with the audited financial statements,which follow this report. FINANCIAL HIGHLIGHTS The District's 2022-23 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$72.8 million or 8.2%in 2022-23.This increase is primarily due to the deferred inflows related to the pension plan decreasing by $126.8 million offset by a net pension asset of$53.5 million in the prior year flipping to a net pension liability of $37.8 million. Also, the deferred outflows related to the pension and OPEB plans decreased by a combined $46.9 million from prior year. These large changes in pension and OPEB plan related deferred inflows, outflows, assets, and liabilities are attributable to the District's plans being nearly fully funded, making them susceptible to the investment market volatility experienced over the past year. • Total operating revenue, decreased by$48.9 million or 41.2% in 2022-23. This decrease is directly attributable to the portion of sewer service charges revenue allocated to operations decreasing from 66.9% in prior year to 41.1%in 2022-23,a decrease of$49.0 million. In the prior year, a significant increase to the operational share of the sewer service charge allocation was directed by the Board after 2021 Wastewater Certificates of Participation (2021 COPS) were issued generating $58.0 million in proceeds to help fund capital projects in lieu of sewer service charges. This decrease is partially offset by a large increase of$3.4 million in investment earnings when compared to the prior year due to multiple interest rate hikes from the Federal Reserve throughout 2022 and into 2023. • Total 2022-23 operating expenses other than depreciation increased by $7.3 million or 9.1%. This increase is largely attributable to an increase in pension-related expenses related to the increase in the net pension liability,described previously. • Capital Contributions increased in 2022-23 by$61.7 million or 255.3%. The increase is mainly due to a reduced allocation of sewer service charges allocated to finance capital projects by the Board following the issuance of the 2021 COPS, as noted previously. To a lesser extent, the increase was also caused by an increase in capacity fees and contributions from the City of Concord for its flow- based proportionate share of treatment plant and other eligible capital project costs. December 21, 2023 Regular Board Meeting Agenda PSacket- Page 124 of 461 Page 28 of 116 OVERVIEW OF THE FINANCIAL STATEMENTS The District operates as a utility enterprise and presents its financial statements using the economic resources measurement focus and the full accrual basis of accounting. As an enterprise fund,the District's basic financial statements are comprised of two components: financial statements and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. In accordance with the GASB Codification of Governmental Accounting and Financial Reporting Standards, the District's annual financial balances and transactions are summarized and reported in the following financial statements: • 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. • 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. 6 December 21, 2023 Regular Board Meeting Agenda Packet- Page 125 of 461 Page 29 of 116 STATEMENT OF NET POSITION The following table shows the condensed statement of net position of the District for the past three fiscal years: Table 1 - Condensed Statement of Net Position Year Ending June 30 2023 vs.2022 2023 vs.2021 $Increase %Increase $Increase %Increase 2023 2022 2021 (Decrease) (Decrease) (Decrease) (Decrease) Assets Current assets $ 219,378,496 $ 174,679,739 $ 136,391,239 $ 44,698,757 25.6% $ 82,987,257 60.8% Capital assets,net 849,413,151 812,744,909 760,567,573 36,668,242 4.5% 88,845,578 11.7% Other non-current assets 5,412,595 59,093,444 36,572,236 (53,680,8491 -90.8% (31,159,6411 -85.2% Total assets 1,074,204,242 1,046,518,092 933,531,048 27,686,150 2.6% 140,673,194 15.1% Deferred outflows Pension related 78,754,514 122,427,550 95,805,386 (43,673,036) -35.7% (17,050,872) -17.8% OPEB related 5,100,448 8,302,309 4,117,730 (3,201,861) -38.6% 982,718 23.9% Total deferred outflows 83,854,962 130,729,859 99,923,116 (46,874,897) -3S.9% (16,068,154) -16.1% Liabilities Current liabilities 25,281,001 27,956,046 28,102,111 (2,675,045) -9.6% (2,821,110) -10.0% Long-term liabilities 104,306,325 72,665,537 119,474,622 31,640,788 43.5% (15,168,2971 -12.7% Total liabilities 129,587,326 100,621,583 147,576,733 28,965,743 28.8% (17,989,407) -12.2% Deferred inflows Pension related 52,931,043 179,778,943 48,100,435 (126,847,900) -70.6% 4,830,608 10.0% OPEB related 8,555,091 2,087,946 12,287,769 6,467,145 309.7% (3,732,678) -30.4% Lease related 3,970,164 4,514,638 (544,4741 100.0% 3,970,164 100.0% Total deferred inflows 65,456,298 186,381,527 60,388,204 (120,925,229) -64.9% 5,068,094 8.4% Netposition Net investment in capital assets 781,637,137 747,646,783 684,834,242 33,990,354 4.5% 96,802,895 14.1% Restricted 1,527 14 34,929,105 1,513 10807.1% (34,927,578) -100.0% Unrestricted 181,376,916 142,598,044 105,725,880 38,778,872 27.2% 75,651,036 71.6% Total net position $ 963,015,580 $ 890,244,841 $ 825,489,227 $ 72,770,739 8.2% $ 137,526,353 16.7% The total net position of the District increased from$890.2 million in 2021-22 to$963.0 million in 2022-23, an increase of 8.2%.This is an increase of$137.5 million,or 16.7%when compared to 2020-21. Total assets increased $27.7 million or 2.6% compared to 2021-22 and increased $140.7 million or 15.1% compared to 2020-21. Total liabilities increased $29.0 million or 28.8% compared to 2021-22 and decreased $18.0 million or 12.2%compared to 2020-21. The increase in net position over the three-year period totals$137.5 million, or 16.7%, resulting mostly from pension-related actuarily determined deferred inflows decreasing from $179.8 million in 2021-22 to $52.9 million in 2022-23 and the prior year's net pension asset of$53.5 million flipping to a net pension liability of$37.8 million. As a public utility relying heavily on a complex infrastructure network, the largest portion of the District's net position by far (81.2%) reflects its investment in capital assets (e.g. land, buildings, machinery, equipment, intangible assets, and sewer line infrastructure), less any related debt used to acquire those assets that is still outstanding. The District uses these capital assets to provide wastewater treatment, collection, and other services to its customers; consequently, these assets are not available for future spending. Although the District's investment in its capital assets is reported net of related 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 generally be used to discharge these liabilities. The balance of $178.5 million in unrestricted net position reflects an increase of$35.9 million from 2021-22 and increased by$72.8 million from 2020-21. As noted previously, this increase was primarily a result of a decrease in pension related deferred inflows offset by an increase in the net pension liability. 7 December 21, 2023 Regular Board Meeting Agenda Packet- Page 126 of 461 Page 30 of 116 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 Year Ending June 30 2023 vs.2022 2023 vs.2021 $Increase %Increase $Increase %Increase 2023 2022 2021 (Decrease) (Decrease) (Decrease) (Decrease) Revenues Operating revenues Sewer service charges $ 67,758,217 $ 116,767,447 $ 87,327,907 $ (49,009,230) -42.0% $ (19,569,690) -22.4% Other 2,233,077 2,164,237 1,914,654 68,840 3.2% 318,423 16.6% Total operating revenue 69,991,294 118,931,684 89,242,561 (48,940,390) -41.2% (19,251,267) -21.6% Non-operating revenues Property taxes 22,933,224 21,239,420 20,516,826 1,693,804 8.0% 2,416,398 11.8% Permit and inspection fees 2,042,467 2,308,395 2,440,187 (265,928) -11.5% (397,720) -16.3% Investment earnings 4,125,473 772,909 1,678,028 3,352,564 433.8% 2,447,445 145.9% Other 1,203,563 2,053,331 3,193,569 (849,768) -41.4% (1,990,006) -62.3% Total non-operating revenue 30,304,727 26,374,055 27,828,610 3,930,672 14.9% 2,476,117 8.9% Total revenues 100,296,021 145,305,739 117,071,171 (45,009,718) -31.0% (16,775,150) -14.3% Expenses Operating expense other than depreciation 87,150,184 79,894,599 83,913,477 7,255,585 9.1% 3,236,707 3.9% Depreciation 25,003,263 22,853,140 21,531,302 2,150,123 9.4% 3,471,961 16.1% Non-operating expenses 1,177,471 1,950,841 542,226 (773,370) -39.6% 635,245 117.2% Total expenses 113,330,918 104,698,580 105,987,005 8,632,338 8.2% 7,343,913 6.9% Income before capital contributions (13,034,897) 40,607,159 11,084,166 (53,642,056) -132.1% (24,119,063) -217.6% Capital contributions 85,805,636 24,148,455 46,644,333 61,657,181 255.3% 39,161,303 84.0% Increase in net position 72,770,739 64,755,614 57,728,499 8,015,125 12.4% 15,042,240 26.1% Beginning net position 890,244,841 825,489,227 767,760,728 64,755,614 7.8% 122,484,113 16.0% Ending net position $ 963,015,580 $ 890,244,841 $ 825,489,227 $ 72,770,739 8.2% $ 137,526,353 16.7% Revenue Total operating revenues decreased from$118.9 million in 2021-22 to $70.0 million in 2022-23,a decrease of$48.9 million or 41.2%. This is a decrease of$19.3 million or 21.6% when compared to 2020-21. This decrease in operating revenues is primarily attributable to a large decrease in the proportion of sewer service charges authorized by the Board to fund operating and maintenance costs,and an offsetting increase in funding for capital improvement projects. Total non-operating revenue decreased from $27.8 million in 2020-21 to $26.4 million in 2021-22 and increased to $30.3 million in 2022-23. Total non-operating revenues in 2022-23 increased compared to 2021-22 by$3.9 million or 14.9%and increased by$2.5 million or 8.9%comparing 2022-23 to 2020-21. Total revenues increased from $117.1 million in 2020-21 to $145.3 million in 2021-22 and decreased to $100.3 million in 2022-23. The change in total revenue represented a decrease of$45.0 million or 31.0% comparing 2022-23 to 2021-22 and a decrease of$16.8 million or 14.3% comparing 2022-23 to 2020-21. Revenue attributable to secured property taxes grew over the prior year due to property value growth attributable to Prop 13 valuation growth, property sales, as well as development within the District. Accordingly, property tax revenue increased by $1.7 million or 8.0% from 2021-22 to 2022-23, and $2.4 million or 11.8%comparing 2022-23 to 2020-21. Sewer service charge rate collected in 2022-23 reflects an increase of 4.5% (to $690) for single family homes and 4.6% (to$654) for multi-family homes. 8 December 21, 2023 Regular Board Meeting Agenda Packet- Page 127 of 461 Page 31 of 116 Expenses Total expenses increased from $104.7 million in 2021-22 to $113.3 million in 2022-23, an increase of$8.6 million or 8.2%.This is an increase of$7.3 million or 6.9%when compared to 2020-21. As noted previously, this increase from prior year is largely attributable to the net pension liability and recognition of a $15.0 million pension expense adjustment(see Note 9 in the audited financial statements)due to decreased market performance of assets in the pension trust. Total income before capital contributions went from $11.1 million in 2020-21,to $40.6 million in 2021-22, and decreased to-$13.0 million in 2022-23. The significant decrease from 2021-22 to 2022-23 is attributable to a larger portion of sewer service charges being allocated to operations,as described previously. Total capital contributions in 2022-23 were $85.8 million compared to $24.1 million in 2021-22 and $46.6 million in 2020-21. As noted previously,this increase was mainly derived from an increase in the allocation of sewer service charges to the capital program. CAPITAL ASSETS Net capital assets for fiscal years 2022-23, 2021-22 and 2020-21 totaled$849.4 million,$812.7 million,and $760.6 million, respectively. Net 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 the District's capitalization policy limit of$5,000,less depreciation. As of June 30,2023,the District's investment in capital assets totaled$849.4 million,an increase of$36.7 million or 4.5%over the net capital asset balance of$812.7 million at June 30,2022. Net capital assets increased by $88.8 million or 11.7% comparing 2022-23 to 2020-21. A comparison of the District's capital assets,net of depreciation,over the past three fiscal years is presented below: Table 3 - Net Capital Assets Year Ending June 30 2023 vs.2022 2023 vs.2021 $Increase %Increase $Increase %Increase 2023 2022 2021 (Decrease) (Decrease) (Decrease) (Decrease) Structures,buildings,and equipment $ 700,065,619 $ 694,343,750 $ 631,932,004 $ 5,721,869 0.8% $ 68,133,615 10.8% Land and rights of way 22,585,007 22,582,507 22,290,077 2,500 0.0% 294,930 1.3% Construction in progress 126,762,525 95,818,652 106,345,492 30,943,873 32.3% 20,417,033 19.2% Total 849,413,151 812,744,909 760,567,573 36,668,242 4.5% 88,845,578 11.7% 9 December 21, 2023 Regular Board Meeting Agenda Packet- Page 128 of 461 Page 32 of 116 The increase in capital assets, net of depreciation, of $36.7 million from 2021-22 to 2022-23 and $88.8 million from 2020-21 to 2022-23 is a result of an expanding capital improvement program over these years to address the replacement of aging treatment plant and collection system infrastructure,address regulatory requirements,and improve the sustainability of operations and technology. In this timeframe,spending has exceeded annual depreciation with capital outlays largely financed by pay-as-you-go resources (i.e., new revenue and reserves) rather than debt. This year's major addition to construction-in-progress includes the following: Project Number Project Description Capital Outlay 7361 Filter Plant&Clearwell Improvements Ph. 1A $ 8,289,958 100015 Electric Blower Improvements 5,787,796 7348 Solids Handling Facility Improvements Ph. 1A 5,508,639 8457 Pump Station Upgrades-Ph.2 4,608,040 100023 Walnut Creek Renovation Ph. 16 4,330,621 8466 Danville Sewer Renovation Ph.4 3,451,855 8464 Martinez Sewer Renovation Ph. 7 2,573,435 7328 Influent Pump Electrical Improvements 2,315,449 7369 Piping Renovation-Ph. 10 1,697,440 100019 Aeration Basins Diffuser Replacement&Seismic Upgrades 1,570,664 Total $ 40,133,897 Refer to Note 5 in the audited financial statements for additional details on the District's capital assets. DEBT ADMINISTRATION Total long-term debt,excluding liabilities related to pension,OPEB and compensated absences liabilities,for fiscal years 2022-23, 2021-22 and 2020-21 totaled $67.8 million, $64.1 million, and $75.7 million, respectively. As of June 30, 2023,the District's outstanding debt totaled $67.8 million,which is an increase of$3.7 million or 5.7%over the debt balance of$64.1 million at June 30,2022. Debt decreased by$7.9 million or 10.5%comparing 2022-23 to 2020-21. The increase in debt obligations is due to$15.6 million in proceeds received from the Clean Water State Revolving Fund in the current year to reimburse eligible costs for the Solids Handling Facility Improvements capital project and are to be repaid after completion of the project, offset by the repayment of other outstanding debt. The primary source of funds pledged to and securing the repayment of debt issuances for the capital improvement program is property taxes. Refer to Note 6 for additional information on the District's outstanding debt obligations. ECONOMIC FACTORS, NEXT YEAR'S BUDGET,AND RATES The District operates as an enterprise fund primarily funded by fees charged to external customers for services.The District charges rates and fees to customers to cover the costs of operation and maintenance of the sewage collection and treatment system as well as costs associated with its capital improvement program. External factors that may affect the District's financial position include, but are not limited to the following: • Regulatory requirements becoming more stringent, causing the District to spend more on compliance, both for operations and maintenance costs as well as capital improvement and replacement projects. • The economic cycle, creating volatility with capacity/connection fee revenues as new development projects are highly sensitive to the economic cycle. 10 December 21, 2023 Regular Board Meeting Agenda Packet- Page 129 of 461 Page 33 of 116 • Interest rate and/or investment return, which directly impacts investment earnings, borrowing costs, and employer pension and OPEB contribution requirements. • Inflation, as measured using the consumer price index (CPI). The CPI for the San Francis co-Oakland- Hayward area directly impacts the cost-of-living adjustments provided in the employee MOUs. Higher than anticipated inflation may also adversely impact spending for contracted services,energy,chemicals, and other materials/supplies necessary for wastewater collection and treatment services. • Changes in assessed property values, which affect the District's non-operating ad valorem secured property tax revenue. When the housing market grows, overall assessed property values increase, thereby increasing the District's property tax revenues. Conversely, any decline in the housing market could decrease property values and correspondingly decrease ad valorem property tax receipts for the District. These factors, to the extent known, were considered in preparing the District's budget. In June 2023, the District's Board of Directors adopted an operating and maintenance budget of $90.9 million and sewer construction capital improvement budget of$71.2 million for the fiscal year ending June 30,2023. Following a cost of service study, customer outreach, public noticing, and a Public Hearing stipulated by Proposition 218,on June 30,2023 the District's Board of Directors approved new sewer service charges for the two-year timeframe spanning July 1, 2023 to June 30, 2025. The new sewer service charge rates reflect an overall modest rate increase of 1%for the year ending June 30, 2024 and 4%for the year ending June 30,2025. As designed in the District's financial model, steady but controlled sewer service charge rate increases help prevent spikes in revenue needs from customers in future years when annual capital spending is expected to significantly, but temporarily, outpace annual revenues. This pay-as-you-go approach, paired with necessary debt financing,is designed with the intent of achieving rate stability and avoid volatility,benefiting both the District and its customers. Primary drivers for the expansion of the capital improvement program include the need to enhance and modernize the District's ageing infrastructure to meet new regulatory requirements and ensure the sustainability of its infrastructure as the region's population grows driving an increased demand for service capacity. FINANCIAL CONTACT This financial report is designed to provide the District's customers, creditors, and other stakeholders with a general overview of the District's finances and to demonstrate accountability and transparency for user fee and tax payer revenues it receives. If you have questions about this report or need additional financial information, contact: Kevin Mizuno, Finance Manager, Central Contra Costa Sanitary District, 5019 Imhoff Place,Martinez, CA 94553. 11 December 21, 2023 Regular Board Meeting Agenda Packet- Page 130 of 461 Page 34 of 116 Central Contra Costa Sanitary District Statements of Net Position June 30,2023 and 2022 ASSETS 2023 2022 CURRENT ASSETS Cash and cash equivalents(Note 2) $23,058,319 $19,368,680 Restricted cash and investments(Note 2) 1,527 14 Unrestricted investments(Note 2) 158,640,000 123,540,000 Restricted investments(Note 2) 43,662 41,954 Accounts receivable,net(Note 3) 29,525,698 26,147,698 Current portion of lease receivable(Note 12) 605,747 502,430 Interest receivable 429,894 289,240 Prepaid assets 1,273,175 662,199 Supplies&material inventory 5,800,474 4,127,524 Total current assets 219,378,496 174,679,739 NON-CURRENT ASSETS Non-current portion of lease receivable(Note 12) 3,618,647 4,133,358 Assessment Districts receivable(Note 4) 1,642,035 1,416,297 Net pension asset(Note 9) - 53,543,789 Net OPEB asset(Note 10) 151,913 - Capital assets: Nondepreciable(Note5) 149,347,532 118,401,159 Depreciable,net of accumulated depreciation(Note5) 700,065,619 694,343,750 Total non-current assets 854,825,746 871,838,353 TOTAL ASSETS 1,074,204,242 1,046,518,092 DEFERRED OUTFLOWS OF RESOURCES Pension related(Note 9) 78,754,514 122,427,550 OPEB related(Note 10) 5,100,448 8,302,309 Total deferred outflows of resources 83,854,962 130,729,859 See accompanying notes to financial statements 12 December 21, 2023 Regular Board Meeting Agenda Packet- Page 131 of 461 Page 35 of 116 Central Contra Costa Sanitary District Statements of Net Position June 30,2023 and 2022 LIABILITIES 2023 2022 CURRENT LIABILITIES Accounts payable 11,872,513 10,952,960 Salaries&benefits payable 1,464,669 2,179,677 Interest payable 1,618,035 1,327,197 Provision for uninsured claims(Note 7) 1,719,986 1,504,476 Deposits payable 268,404 434,726 Compensated absences payable,current(Note 6F) 580,239 627,288 Current portion of long-term obligations(Note 6) 7,090,000 10,750,000 Current portion of lease payable(Note 12) 182,246 179,721 Current portion of SBITAs(Note 12) 484,909 Total current liabilities 25,281,001 27,956,046 NON-CURRENT LIABILITIES Net pension liability(Note 9) 37,772,326 - Net OPEB liability(Note 10) - 12,851,545 Non-current portion of long term obligations(Note 6) 60,686,014 53,360,320 Accrued compensated absences-non-current(Note 6F) 5,222,146 5,645,587 Non-current portion of lease payable(Note 12) 625,839 808,085 Total non-current liabilities 104,306,325 72,665,537 TOTAL LIABILITIES 129,587,326 100,621,583 DEFERRED INFLOWS OF RESOURCES Pension related(Note 9) 52,931,043 179,778,943 OPEB related(Note 10) 8,555,091 2,087,946 Lease receivable(Note 12) 3,970,164 4,514,638 Total deferred inflows of resources 65,456,298 186,381,527 NET POSITION(NOTE 11) Net investment in capital assets 781,637,137 747,646,783 Restricted net position 1,527 14 Unrestricted net position 181,376,916 142,598,044 TOTAL NET POSITION $963,015,580 $890,244,841 See accompanying notes to financial statements 13 December 21, 2023 Regular Board Meeting Agenda Packet- Page 132 of 461 Page 36 of 116 This Page Left Intentionally Blank December 21, 2023 Regular Board Meeting Agenda Packet- Page 133 of 461 Page 37 of 116 Central Contra Costa Sanitary District Statements of Revenues,Expenses and Changes in Net Position For the Fiscal Years Ended June 30,2023 and 2022 2023 2022 OPERATING REVENUES Sewer service charge(SSC) $50,109,215 $100,680,646 Sewage treatment cost sharing(Note 8) 17,649,002 16,086,801 Miscellaneous service charges 2,233,077 2,164,237 Total operating revenues 69,991,294 118,931,684 OPERATING EXPENSES Salaries&benefits 60,809,719 55,911,207 Contracted services 10,585,951 9,623,004 Utilities&fuel 8,174,185 6,524,066 Chemicals 2,175,040 1,820,344 General supplies 2,675,384 2,627,899 Other operating expenses 2,729,905 2,257,107 Depreciation and amortization expense 25,003,263 23,044,770 Total operating expenses 112,153,447 101,808,396 OPERATING INCOME(LOSS) (42,162,153) 17,123,289 NON-OPERATING REVENUES(EXPENSES) Taxes 22,933,224 21,239,420 Permit and inspection fees 2,042,467 2,308,395 Grants - 996,177 Investment income 4,125,473 772,909 Interest expense (1,177,471) (1,950,841) Gain(loss)on sale of asset 129,918 (939,343) Other non-operating income 1,073,645 1,057,154 Total non-operating revenues(expenses),net 29,127,256 23,483,871 INCOME(LOSS)BEFORE CAPITAL CONTRIBUTIONS (13,034,897) 40,607,159 CAPITAL CONTRIBUTIONS Other government revenue-Concord 9,956,648 7,799,702 Customer contributions to capital 67,227,158 10,267,767 Non-exchange capital contributions/donations 1,456,478 1,496,013 Capacity fees 7,165,352 4,584,973 Total capital contributions 85,805,636 24,148,455 CHANGE IN NET POSITION 72,770,739 64,755,614 NET POSITION,BEGINNING OF YEAR 890,244,841 825,489,227 NET POSITION,END OF YEAR $963,015,580 $890,244,841 See accompanying notes to financial statements 15 December 21, 2023 Regular Board Meeting Agenda Packet- Page 134 of 461 Page 38 of 116 Central Contra Costa Sanitary District Statements of Cash Flows For the Fiscal Years Ended June 30,2023 and 2022 CASH FLOWS FROM OPERATING ACTIVITIES 2023 2022 Receipts from customers $66,517,474 $118,944,502 Payments to suppliers (27,699,052) (25,220,586) Payments to employees and related benefits (56,257,900) (53,523,454) Net cash provided by operating activities (17,439,478) 40,200,462 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Receipt of taxes 22,933,224 21,239,420 Inspection/permit fees and other non-operating income 3,116,112 3,365,549 Net cash provided by noncapital financing activities 26,049,336 24,604,969 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital contributions 78,640,284 19,563,482 Capacity fees 7,165,352 4,584,973 Acquisition and construction of capital assets (61,720,324) (75,132,106) Interest paid on long-term debt (1,132,112) (864,539) Proceeds from direct borrowing 15,588,706 Principal payments on long-term debt (11,923,012) (11,623,011) Net cash used for capital and related financing activities 26,618,894 (63,471,201) CASH FLOWS FROM INVESTING ACTIVITIES Redemption of investments 191,500,000 30,000,000 Acquisition of investments (227,600,000) (97,000,000) Interest received 4,564,109 973,100 Net cash provided by investing activities (31,535,891) (66,026,900) NET INCREASE(DECREASE)IN CASH 3,692,860 (64,692,670) Cash,beginning of year 19,410,648 84,103,318 Cash,end of year $23,103,508 $19,410,648 See accompanying notes to financial statements 16 December 21, 2023 Regular Board Meeting Agenda Packet- Page 135 of 461 Page 39 of 116 Central Contra Costa Sanitary District Statements of Cash Flows For the Fiscal Years Ended June 30,2023 and 2022 Reconciliation of operating(loss)to net cash provided by 2023 2022 operating activities: Operating income(losses) ($42,162,153) $17,123,289 Adjustments to reconcile operating losses to cash flows from operating activities: Depreciation and amortization 25,003,263 23,044,769 Loss on disposal of asset 129,918 (939,343) Changes in assets and liabilities: Receivables,net (3,603,738) 952,161 Parts and supplies (1,672,950) (1,041,330) Prepaid expenses (610,976) 1,857,836 Accounts payable and accrued expenses 919,553 (4,208,797) Accrued payroll and related expenses (470,490) 1,178,783 Deposits payable (166,322) 157,469 Provision for uninsured claims 215,510 49,411 Net pension asset/liability 8,141,251 3,412,120 Net OPEB asset/liability (3,334,452) (2,252,561) Lease/SBITA related 172,107 866,656 Net cash provided(used)by operating activities ($17,439,478) $40,200,462 SCHEDULE OF NON CASH ACTIVITY Change in fair value of investments $4,564,109 $973,100 Capital contributions 85,805,636 24,148,455 Total non cash activity $90,369,745 $25,121,555 CASH AND CASH EQUIVALENTS,AS PRESENTED ON STATEMENT OF NET POSITION: Unrestricted cash and cash equivalents $23,058,319 $19,368,680 Restricted cash and cash equivalents 45,189 41,968 Total cash and cash equivalents at end of year $23,103,508 $19,410,648 See accompanying notes to financial statements 17 December 21, 2023 Regular Board Meeting Agenda Packet- Page 136 of 461 Page 40 of 116 This Page Left Intentionally Blank December 21, 2023 Regular Board Meeting Agenda Packet- Page 137 of 461 Page 41 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 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 the 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 Fin ancingAuthority(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 accounting and financial reporting guidance. 19 December 21, 2023 Regular Board Meeting Agenda Packet- Page 138 of 461 Page 42 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 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. Rate Stabilization Accounts (RSA) have been stablished by the Board and consist of book accounting in Running Expense and Serwer Construction Funds. Deposits and withdrawals to/from RSA require Board approval. 20 December 21, 2023 Regular Board Meeting Agenda Packet- Page 139 of 461 Page 43 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 1 - DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Investments Investments held at June 30, 2023 and 2022,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. Parts and Supplies Parts and supplies are valued at average cost and are used primarily for internal purposes. 21 December 21, 2023 Regular Board Meeting Agenda Packet- Page 140 of 461 Page 44 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 1 - DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Property,Plant, and Equipment Purchased capital assets are stated at historical cost. Capital assets contributed to the District are reported at acquisition value. 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 calculated 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 H. 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. Property tax revenue recognized is 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 11/2 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. 22 December 21, 2023 Regular Board Meeting Agenda Packet- Page 141 of 461 Page 45 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 1 - DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) L 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. J. 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. K. Lease A lease is defined as a contract that conveys control of the right to use another entity's nonfinancial asset(the underlying asset)as specified in the contract for a period of time in an exchange or exchange-like transaction. L. Prior Year Summarized Comparative Information The basic financial statements include certain prior-year summarized comparative information in total but not at the level of detail required for a presentation in accordance with generally accepted accounting principles. Accordingly,such information should be read in conjunction with the District's financial statements for the year ended June 30, 2022,from which the summarized information was derived. M. New Governmental Accounting Standards Board(GASB)Statement Pronouncement GASB Statement No. 96 - In May 2020, GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs) was issued. GASB Statement No. 96 (GASB 96) establishes uniform accounting and financial reporting requirements for SBITAs; improves the comparability of government's financial statements; and enhances the understandability,reliability,relevance,and consistency of information about SBITAs. GASB 96 applies to government agencies who are currently using information technology (IT) software such as Office 365,Adobe,Zoom,and others as specified in their contracts.GASB 96 applies to all contracts meeting the definition of a SBITA, unless specifically excluded. As defined in GASB Statement No. 96,paragraph 6, a SBITA is a contract that conveys control of the right to use another party's (a SBITA vendor's) IT software, alone or in combination with tangible capital assets (with underlying IT assets),as specified in the contract for a period of time in an exchange or exchange-like transaction. 23 December 21, 2023 Regular Board Meeting Agenda Packet- Page 142 of 461 Page 46 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 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: 2023 2022 Cash and cash equivalents $23,058,319 $19,368,680 Unrestricted investments, current 158,640,000 123,540,000 Restricted cash and investments 1,527 14 Total District Cash and Investments 181,699,846 142,908,694 Restricted prefunding pension trust assets 43,662 41,954 Total Cash and Investments $181,743,508 $142,950,648 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. Investments purchases and sales are coordinated by the District's Treasurer, Contra Costa County,at the request of the District. 24 December 21, 2023 Regular Board Meeting Agenda Packet- Page 143 of 461 Page 47 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 2 - CASH AND INVESTMENTS (Continued) C. General Authorizations Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in the schedules below: Maximum Maximum Maximum Percentage Minimum Remaining Percentage of Portfolio Credit Authorized Investment Type Maturity of Portfolio (Per Issuer) Quality U.S.Treasury Obligations 5 years None 100% N/A U.S.Government Agency Issues 5 years None 100% N/A Money Market Funds N/A 20% 10% A Negotiable Certificates of Deposit 5 years 30% 5% AA Banker's Acceptances 180 40% 5% N/A Commercial Paper(1) 270 25% 10% A-1 Medium Term Notes 5 years 30% 10% AA Collateralized Certficates of Deposit(2) 5 years None 20% Aaa Supranationals 5 years 30% 5% AA County Pooled Investment Funds N/A None 100% N/A Local Agency Investment Fund(LAIF) N/A None $75 million N/A Government Investment Pools(CAMP,CalTrust,etc) N/A None None N/A Municipal Investments 5 years None 5% AA (1)Prime quality;limited to corporations with assets over$500,000,000 25 December 21, 2023 Regular Board Meeting Agenda Packet- Page 144 of 461 Page 48 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 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: 2023 Investment Type Level 2 Total Investments Reported at Fair Value: U.S.Treasury Obligations $107,000,000 $107,000,000 U.S.Federal Agency Securities-FHLB 13,500,000 13,500,000 Total $120,500,000 120,500,000 External Investment Pool (Exempt): California Local Agency Investment Fund 45,600,000 Investments Exempt from Fair Value Hierarchy: Restricted Cash and Investments 1,527 Cash and Investments held with Pension Trust 43,662 Cash in bank and On Hand 15,598,319 Total Cash and Investments $181,743,508 U.S. Treasury Obligations totaling $107.0 million 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. U.S. Federal Agency Securities totaling $13.5 million 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. 26 December 21, 2023 Regular Board Meeting Agenda Packet- Page 145 of 461 Page 49 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 2 - CASH AND INVESTMENTS (Continued) The following is a summary of the fair value hierarchy of the fair value of investments of the District as of June 30: 2022 Investment Type Level 2 Total Investments Reported at Fair Value: U.S.Treasury Obligations $48,500,000 $48,500,000 U.S.Federal Agency Securities-FHLB 18,500,000 18,500,000 Total $67,000,000 67,000,000 External Investment Pool (Exempt): California Local Agency Investment Fund 64,000,000 Investments Exempt from Fair Value Hierarchy: Restricted Cash and Investments 14 Cash and Investments held with Pension Trust 41,954 Cash in bank and On Hand 11,908,680 Total Cash and Investments $142,950,648 U.S. Treasury Obligations totaling $48.5 million as well as U.S. Federal Agency Securities totaling $18.5 million are 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. 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 may not exceed five years, 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: 27 December 21, 2023 Regular Board Meeting Agenda Packet- Page 146 of 461 Page 50 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 2 - CASH AND INVESTMENTS (Continued) 2023 12 Months 13 to 24 Investment Type or Less Months Total U.S.Treasury Obligations $104,500,000 $2,500,000 $107,000,000 U.S.Federal Agency Securities-FHLB 13,500,000 13,500,000 California Local Agency Investment Fund 45,600,000 45,600,000 Total 163,600,000 2,500,000 166,100,000 Restricted Cash and Investments 1,527 Restricted Cash and Investments held with Pension Trust 43,662 Cash in bank 15,598,319 Total Cash and Investments $181,743,508 2022 12 Months 13 to 24 25 to 36 Investment Type or Less Months Months Total U.S.Treasury Obligations $42,000,000 $4,000,000 $2,500,000 $48,500,000 U.S.Federal Agency Securities-FHLB 18,500,000 18,500,000 California Local Agency Investment Fund 64,000,000 64,000,000 Total 124,500,000 4,000,000 2,500,000 131,000,000 Restricted Cash and Investments 14 Restricted Cash and Investments held with Pension Trust 41,954 Cash in bank 11,908,680 Total Cash and Investments $142,950,648 Investment 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, 2023 and 2022,these investments had weighted average maturities of 260 and 311 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. 28 December 21, 2023 Regular Board Meeting Agenda Packet- Page 147 of 461 Page 51 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 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 as provided by Moody's investment rating system, of which a P -1 rating is the top rating for short term investments. Totals Investment Type 2023 2022 Rated P-1: U.S.Federal Agency Securities- FHLB $13,500,000 $18,500,000 AAA Rated: U.S.Treasury Obligations 107,000,000 48,500,000 Total Rated Investments 120,500,000 67,000,000 Not Rated: California Local Agency Investment Fund 45,600,000 64,000,000 Restricted Cash and Investments 1,527 14 Cash and Investments held with Pension Trust 43,662 41,954 Cash in Bank 15,598,319 11,908,680 Total Cash and Investments $181,743,508 $142,950,648 G. Concentration of Credit Risk The investment policies of the District contain no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer(other than U.S.Treasury securities,mutual funds,and external investment pools) that represent 5 percent or more of total investments are as follows: Reported Percentage of Investment Type Amount Holdings U.S.Federal Agency Securities-FHLB $13,500,000 8.1% H. 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. As a voluntary pool participant,the County Treasurer's office transacts 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. 29 December 21, 2023 Regular Board Meeting Agenda Packet- Page 148 of 461 Page 52 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 3 -ACCOUNTS RECEIVABLE Accounts receivable for the years ended June 30,are comprised of the following: 2023 2022 City of Concord(see Note 8) $27,657,109 $23,934,463 Household Hazardous Waste Partners 948,222 877,608 All Other 920,367 1,335,627 Total Accounts Receivable $29,525,698 $26,147,698 Employee Computer Loans Receivable The District provides loans to its employees for the purchase of personal computers. These loans are payable through payroll deductions of$100 per month until the loan is paid off.The interest rate associated with the loan is based on the most current Local Agency Investment Fund(LAIF)rate in effect at the time of loan execution. The maximum amount each employee may borrow is $2,000.The loans receivable balance are as follows as of June 30: 2023 2022 Employee Computer Loans $10,212 $10,684 Additions 9,901 12,990 Payments (12,389) (13,462) Total Loan Receivable $7,724 $10,212 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 accounts receivable in the financial statements. 30 December 21, 2023 Regular Board Meeting Agenda Packet- Page 149 of 461 Page 53 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 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, 2023 and 2022 were$720,859 and$738,052,respectively. The District also established the Alhambra Valley Assessment District(AVAD) to provide 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, 2023 and 2022 were$265,204 and$429,201,respectively. The District also established Septic to Sewer Financing (S2S) to provide low-cost financing to help homeowners connect to the public sewer system and properly abandon their septic tank. The program is open to residential property owners with private septic systems located near existing sewer mains within Central San's service area. The S2S receivable balance at June 30,2023 and 2022, were$655,972 and $249,044,respectively. The total receivable balance at June 30,2023 and 2022,for CAD,AVAD and S2S were$1,642,035 and $1,416,297, respectively and are shown as a non-current asset on the Statement of Net Position. 31 December 21, 2023 Regular Board Meeting Agenda Packet- Page 150 of 461 Page 54 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 5- CAPITAL ASSETS Property, plant and equipment, and construction in progress are summarized below for the year ended June 30,2023: Balance at Transfers& Balance at July 1,2022 Additions Retirements Adjustments June 30,2023 Capital assets not being depreciated: Land $17,320,570 - $17,320,570 Easements(intangible) 5,261,937 $2,500 5,264,437 Construction in Progress 95,818,652 $59,097,479 (28,153,606) 126,762,525 Total nondepreciated assets 118,401,159 59,097,479 (28,151,106) 149,347,532 Capital assets being depreciated Sewage collection system 443,262,940 - ($26,000) 14,491,074 457,728,014 Contributed sewer lines 167,746,429 1,311,857 (89,683) - 168,968,603 Outfall sewers 16,872,714 - 1,136,534 18,009,248 Sewage treatment plant 392,167,194 9,190,613 401,357,807 Recycled water infrastructure 29,183,873 205,360 29,389,233 Pumpingstation 87,809,502 1,477,462 89,286,964 Buildings 44,819,817 7,694 44,827,511 Furniture and equipment 16,604,181 (5,105) 1,490,816 18,089,892 Motor vehicles 9,536,945 150,450 9,687,395 Enterprise software 3,682,802 - 1,103 3,683,905 Intangible right-to-use lease asset 1,165,199 1,310,988 - 2,476,187 Total depreciated assets 1,212,851,596 2,622,845 (120,788) 28,151,106 1,243,504,759 Less accumulated depreciation: Sewage collection system 94,898,440 6,079,504 (5,898) 100,972,046 Contributed sewer lines 70,113,115 2,215,679 (60,966) 72,267,828 Outfall sewers 4,408,945 231,478 4,640,423 Sewage treatment plant 254,124,018 8,795,392 262,919,410 Recycled water infrastructure 15,065,826 830,161 15,895,987 Pumping station 40,404,352 3,003,150 43,407,502 Buildings 19,282,241 1,294,559 20,576,800 Furniture and equipment 13,294,323 821,336 (5,105) 14,110,554 Motor vehicles 5,531,119 525,621 61056,740 Enterprise software 1,193,838 368,336 1,562,174 Intangible right-to-use lease asset 191,629 838,047 1,029,676 Total accumulated depreciation 518,507,846 25,003,263 71,969 - 543,439,140 Total capital assets being depreciated,net 694,343,750 (22,380,418) 48,819 28,151,106 700,065,619 Capital assets,net $812,744,909 $36,717,061 ($48,819) - $849,413,151 32 December 21, 2023 Regular Board Meeting Agenda Packet- Page 151 of 461 Page 55 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 5 - CAPITAL ASSETS (Continued) Property,plant and equipment, and construction in progress are summarized below for the year ended June 30, 2022: Balance at July 1,2021 Transfers& Balance at (restated) Additions Retirements Adjustments June 30,2022 Capital assets not being depreciated: Land $17,320,570 - $17,320,570 Easements(intangible) 4,969,507 $292,430 5,261,937 Construction in Progress 106,345,492 $73,636,093 (84,162,933) 95,818,652 Total nondepreciated assets 128,635,569 73,636,093 (83,870,503) 118,401,159 Capital assets being depreciated Sewage collection system 415,550,130 - ($151,800) 27,864,610 443,262,940 Contributed sewer lines 166,020,500 1,496,013 229,916 167,746,429 Outfall sewers 11,371,574 - 5,501,140 16,872,714 Sewage treatment plant 379,337,450 (930,600) 13,760,344 392,167,194 Recycled water infrastructure 27,372,848 1,811,025 29,183,873 Pumping station 57,529,109 (3,050,000) 33,330,393 87,809,502 Buildings 44,738,877 80,940 44,819,817 Furniture and equipment 16,344,229 (95,662) 355,614 16,604,181 Motor vehicles 9,470,782 (553,214) 619,377 9,536,945 Enterprise software 3,365,658 317,144 3,682,802 Intangible right-to-use lease asset 1,165,199 1,165,199 Total depreciated assets 1,132,266,356 1,496,013 (4,781,276) 83,870,503 1,212,851,596 Less accumulated depreciation: Sewage collection system 88,208,487 5,809,516 880,437 - 94,898,440 Contributed sewer lines 67,885,601 2,196,000 31,514 70,113,115 Outfall sewers 4,221,718 187,227 - 4,408,945 Sewage treatment plant 246,686,019 8,369,194 (931,195) 254,124,018 Recycled water infrastructure 14,278,072 787,754 15,065,826 Pumping station 41,033,139 2,421,213 (3,050,000) 40,404,352 Buildings 17,989,591 1,292,650 19,282,241 Furniture and equipment 12,517,312 872,673 (95,662) 13,294,323 Motor vehicles 5,507,799 564,490 (541,170) 5,531,119 Enterprise software 841,415 352,423 1,193,838 Intangible right-to-use lease asset - 191,629 191,629 Total accumulated depreciation 499,169,153 23,044,769 (3,706,076) 518,507,846 Total capital assets being depreciated,net 633,097,203 (21,548,756) (1,075,200) 83,870,503 694,343,750 Capital assets,net $761,732,772 $52,087,337 ($1,075,200) - $812,744,909 33 December 21, 2023 Regular Board Meeting Agenda Packet- Page 152 of 461 Page 56 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 6-LONG-TERM DEBT A. Summary of Activity The changes in the District's long-term obligations during the year ended June 30, 2023 consisted of the following: Original Amount Issue Balance Balance due within Amount July 1,2022 Additions Retirements June 30,2023 one year Bonds 2018 Series A Wastewater Revenue Refunding Bonds 1.39%-2.34%due 9/1/2029 $151,350,000 $12,640,000 $1,335,000 $11,305,000 $1,395,000 2018 Series B Wastewater Revenue Refunding Bonds 2.36%-3.12%due 9/1/2023 4,315,000 1,120,000 550,000 570,000 570,000 Certificates of Participation 0.05%-0.62%due 9/1/2028 50,570,000 41,925,000 8,865,000 33,060,000 5,125,000 Direct Borrowing Loan Loan 173,105,000 - $15,588,706 - 15,588,706 - Total long-term debt 55,685,000 15,588,706 10,750,000 60,523,706 7,090,000 Add:Unamortized Premium Revenue Bonds/Certificates 8,425,320 - 1,173,012 7,252,308 - Total long-term debt 64,110,320 $15,588,706 $11,923,012 67,776,014 $7,090,000 Less Current Portion (10,750,000) (7,090,000) Long Term Portion $53,360,320 $60,686,014 The changes in the District's long-term obligations during the year ended June 30, 2022 consisted of the following: Original Amount Issue Balance Balance due within Amount July 1,2021 Retirements June 30,2022 one year 2018 Series A Wastewater Revenue Refunding Bonds 1.39%-2.34%due 9/1/2029 $151,350,000 $13,910,000 $1,270,000 $12,640,000 $1,335,000 2018 Series B Wastewater Revenue Refunding Bonds 2.36%-3.12%due 9/1/2023 4,315,000 1,655,000 535,000 1,120,000 550,000 Certificates of Participation 0.05%-0.62%due 9/1/2028 50,570,000 50,570,000 8,645,000 41,925,000 8,865,000 Total long-term debt 66,135,000 10,450,000 55,685,000 10,750,000 Add:Unamortized Premium Revenue Bonds/Certificates 9,598,331 1,173,011 8,425,320 - Total long-term debt 75,733,331 $11,623,011 64,110,320 $10,750,000 Less Current Portion (10,450,000) (10,750,000) Long Term Portion $65,283,331 $53,360,320 34 December 21, 2023 Regular Board Meeting Agenda Packet- Page 153 of 461 Page 57 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 6- LONG-TERM DEBT (Continued) B. Debt Service Requirements The debt service requirements are as follows: Fiscal Year 2018 Wastewater Revenue 2021 Wastewater Revenue Ending Refunding Bonds Series A&B Certificates of Participation Direct Borrowings June 30 Principal Interest Principal Interest Principal Interest 2024 $1,965,000 $539,267 $5,125,000 $1,524,875 2025 1,465,000 458,875 5,630,000 1,256,000 2026 1,535,000 383,875 6,165,000 961,125 2027 1,610,000 305,250 6,740,000 638,500 $5,059,980 $1,512,405 2028 1,685,000 222,875 6,905,000 297,375 5,097,201 1,549,626 2029-2033 3,615,000 182,875 2,495,000 62,375 5,431,525 1,417,647 Total $11,875,000 $2,093,017 $33,060,000 $4,740,250 $15,588,706 $4,479,678 C. 2018 Series A and B Wastewater Revenue Refunding Bonds On September 13, 2018 the District issued two Wastewater Revenue Refunding Bonds (Bonds). The 2018 Wastewater Revenue Refunding Bonds, Series A (tax-exempt) and B (federally taxable) were issued for $15,135,000 and $4,315,000, respectively. The Bonds were issued to defease and refund all of the District's outstanding obligations with respect to the $19,635,000 original principal amount of 2009 Wastewater Revenue Certificates of Participation, Series A and all of the District's outstanding obligations with respect to the $34,490,000 original principal amount of 2009 Wastewater Revenue Certificates of Participation, Series B, and pay costs issuing the Bonds. The refunding resulted in an overall debt service savings of$7,455,312.The net present value of the debt service savings is called an economic gain and amounted to $2,603,897. The two bonds total $19,450,000 and are secured by a pledge of tax and net revenues of the wastewater system. The outstanding bonds from direct borrowings related to business-type activities of$19,450,000 contain a provision that in an event of default,the U.S.Bank National Association (Trustee) has the right to accelerate the total unpaid principal amounts of the bonds. The official statement contains an event of default clause that changes the timing of the repayments of outstanding amounts to become immediately due if the District is unbale to make payment. Principal payments begin annually on September 1,2020 and 2021 for the Series B and A Bonds,respectively,with semi-annual interest payments due on September 1 and March 1 of each year. Yields range from 1.39% to 2.34% and 2.62% to 3.12% for the Series A and Series B Bonds,respectively.The outstanding balance at June 30,2023 amounted to $11,875,000. 35 December 21, 2023 Regular Board Meeting Agenda Packet- Page 154 of 461 Page 58 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 6- LONG-TERM DEBT (Continued) D. 2021 Wastewater Revenue Certificates of Participation On June 1, 2021, the District issued new Wastewater Revenue Certificates of Participation. The 2021 Wastewater Revenue Certificates of Participation was issued for$50,570,000.The Certificates were issued to finance certain improvements to the Wastewater System which is owned and operated by the District. The repayment of the Certificates will come from the revenues derived from operation of the Wastewater System, tax revenues, consisting of the ad valorem property taxes received by the District. The first principal payment was due on March 1, 2022 and then September 1 of each year thereafter. Yield ranges from 0.05% to 0.62% for the Certificates. The outstanding balance at June 30, 2023 amounted to $33,060,000. E. Clean Water State Revolving Fund Loan The District entered into a contract in December 2021 to borrow funds from the State Water Resources Control Board. The funds are being used for the Solids Handling Improvement Project to rehabilitate and replace the sludge dewatering centrifuges, cake pumps, and furnace air pollution control equipment. The maximum loan amount is $173,105,000, of which the District has drawn$15,588,706.The loan bears interest at 0.9 percent per year for a term of 30 years. Repayments are schedule to commence in July 2027 following the completion of the project.As of June 30, 2023,the District owed$15,588,706 on the loan. F. Compensated Absences The liability for vested vacation, compensatory time, and sick pay is recorded as an expense when earned. 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. The time may be applied towards pension service time and/or cashed out upon retirement. The changes in compensated absences were as follows for fiscal years ended June 30: 2023 2022 Beginning Balance $6,272,875 $5,094,092 Adjustments (184,948) 1,364,591 Payments (285,542) (185,808) Ending Balance $5,802,385 $6,272,875 Current Portion $580,239 $627,288 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. 36 December 21, 2023 Regular Board Meeting Agenda Packet- Page 155 of 461 Page 59 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 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 Type of Coverage Insurer Limits Per Occurrence All-Risk Property: Special Form Property Alliant Property Insurance Program $659,500,809 $250,000 Crime National Union Fire Ins.Company 1,000,000 2,500 Liability: Fiduciary Liabiltiy Insurance Hudson Insurance Company 1,000,000 25,000 Pollution-General Liabilty Aspen Specialty Ins.Company 1,000,000 5,000-50,000 Commercial Environment Excess Aspen Specialty Ins.Company 1,000,000 5,000-50,000 Excess Liabiltiy Safety National Casualty Company 2,000,000 500,000 Excess Liabiltiy Safety National Casualty Company 3,000,000 - Excess Following Form Liability Policy Hallmark 5,000,000 Excess Following Form Liability Policy Evanston Insurance Company 5,000,000 - Employment Practice Liabilty Indian Harbor 500,000 35,000 Worker's Compensation: Excess Workers'Compensation CSRMA/Safety National Casualty Company Statutory - B. 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 independent actuary has calculated its potential liability as of June 30, 2023 to be$1,719,986. 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 latest report was dated December 23, 2022. For intervening years,the liability for uninsured claims is reviewed for adequacy based on claims activity during the intervening period. 37 December 21, 2023 Regular Board Meeting Agenda Packet- Page 156 of 461 Page 60 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 7- RISK MANAGEMENT (Continued) For fiscal years ended June 30, 2023, 2022, and 2021, settlements have not exceeded insurance coverage. Changes in the District's estimated liability for retained losses are summarized as follows as of June 30: 2023 2022 2021 Beginning Balance $1,504,476 $1,455,065 $1,221,293 Provisions for claims incurred in the current and changes in the liability for retained-losses incurred in prior years 516,226 202,162 596,645 Claims paid and/or adjustments (300,716) (152,751) (362,873) Ending Balance $1,719,986 $1,504,476 $1,455,065 The District's Self Insurance program also maintains a reserve of$7.5 million for catastrophic losses. 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 capital costs expended. Service charges and contributions to capital costs from the City totaled$17,700,461 and$9,956,648 respectively,for the year ended June 30,2023,for a total of$27,657,109. Service charges and contributions to capital costs from the City totaled $16,086,801 and $7,799,702 respectively, for the year ended June 30, 2022, for a total of $23,934,463. 38 December 21, 2023 Regular Board Meeting Agenda Packet- Page 157 of 461 Page 61 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 9- PENSION PLANS A. Contra Costa County Employees'RetirementAssociation 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, 2022 providing the plan funded status as of that date and contribution rates for the fiscal year ended June 30, 2023. 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, 1200 Concord Ave., Suite 300, Concord, CA 94523 or on their website at www.cccera.org. 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, 2023,are summarized as follows: Miscellaneous Membership date Prior to January 1,2013 On or after January 1,2013 Benefit vesting schedule 10 years service 5 years service Benefit payments monthly for life monthly for life Leave cash out pensionable? Yes No Benefit%per year of service 2% 2% Final pensionable salary formula Highest 12 consecutive months Annual average of highest 36 consecutive months Annual benefit cap Hired before 1/1/1996-None $175,250 Hired 1/1/1996-12/31/2012- $330,000 Minimum retirement age(with benefit reductions) 50 52 Normal retirement age(unreducted benefits) 55 62 Required employee contribution rates 8.47%-15.98% 11.52% Required employer contribution rates 17.04% 11.46% 39 December 21, 2023 Regular Board Meeting Agenda Packet- Page 158 of 461 Page 62 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 9- PENSION PLANS (Continued) Contributions-The Plan requires employees to pay a portion of the basic retirement benefit and a portion of future COL costs. For the year ended June 30, 2023, the District's contributions to the Plan were$6,812,146. Net Pension Liability,Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions-The District reported net pension liability for its proportionate share of the net liability of the Plan in the amount of$37,772,326 for the year ended June 30, 2023.The District reported net pension asset for its proportionate share of the net pension asset of the Plan in the amount of$53,543,789 for the year ended June 30, 2022. 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, 2022,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, 2021 rolled forward to December 31, 2022 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 all participating employers,actuarially determined. The District's proportionate share of the net pension liability for the Plan as of December 31, 2021, 2022 and 2023 were as follows: Proportionate Share of Plan Fiduciary Net Reporting Date for Proportion of Proportionate Share the Net Pension Liability Pension as a Employer under GASB the Net Pension of Net Pension Covered as a Percentage of its Percentage of the Total 68 as of June 30 Liability(Asset) Liability(Asset) Payroll Covered Payroll Pension Liability 2021 10.594% $48,886,895 $37,131,965 131.66% 89.10% 2022 22.039% (53,543,789) 37,667,972 -142.15% 111.27% 2023 2.224% 37,772,326 40,424,238 93.44% 92.35% 40 December 21, 2023 Regular Board Meeting Agenda Packet- Page 159 of 461 Page 63 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 9- PENSION PLANS (Continued) For the year ended June 30, 2023,the District recognized a pension expense of$14,964,370. At June 30, 2023, 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 $2,902,793 Differences between expected and actual experience 2,127,183 ($73,988) Changes of assumptions or other inputs 2,764,855 (129,972) Change in proportion and differences between employer contributions and proportionare share of contributions 48,567,158 (52,727,083) Net difference betweeen projected and actual earnings on pension plan investments 22,392,525 Total $78,754,514 ($52,931,043) The $2,902,793 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, 2024. 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 2024 $10,036,279 2025 10,164,138 2026 96,505 2027 2,623,756 Total $22,920,678 41 December 21, 2023 Regular Board Meeting Agenda Packet- Page 160 of 461 Page 64 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 9- PENSION PLANS (Continued) Actuarial Assumptions - The total pension liability in the December 31, 2022 actuarial valuations were determined using the following actuarial assumptions: Miscellaneous Valuation Date December 31,2022 Measurement Date December 31,2022 Actuarial Cost Method Entry Age Actuarial Cost Method Amortization Method Level percent of payroll Actuarial Assumptions: Discount Rate 6.75% Inflation Rate 2.50% Payroll Growth 2.50% (1) Projected Salary Increase 3.50%-14.00% Cost of Living Adjustments 2.75% Investment Rate of Return 6.75% Mortality Pub-2010 General Healthy Retiree Amount-Weighted Above-Median Mortality Table,projected generationally with the two-dimensional mortality improvement scale MP-2021 (1) Plus"across the board" real salary increases of 0.5%per year Discount Rate - The discount rate used to measure the Total Pension Liability (TPL) was 6.75%as of December 31,2022 and December 31,2 02 1.The projection of cash flows used to determine the discount rate assumed employer and employee contributions will be made at rates equal to the actuarially determined contribution rates. For this purpose,only employer and employee 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 Plan 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 TPL as of December 31, 2022 and December 31, 2021. 42 December 21, 2023 Regular Board Meeting Agenda Packet- Page 161 of 461 Page 65 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 9-PENSION PLANS (Continued) The long-term expected rate of return on pension plan investments was determined in 2023 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. These returns are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage, adding expected inflation and subtracting expected investment expenses and a risk margin. 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 Expected Target Arithmetic Real Asset Class Allocation Rate of Return Large Cap U.S.Equity 10% 5.40% Small Cap U.S.Equity 3% 6.17% Developed International Equi 10% 6.13% Emerging Markets Equity 9% 8.17% Core Fixed 4% 0.39% Short-Term Credit 14% -0.14% Cash and Equivalents 3% -0.73% Private Equity 15% 10.83% Private Credit 13% 5.93% Infrastructure 3% 6.30% Value Add Real Estate 5% 7.20% Opportunistic Real Estate 5% 8.SO% Risk Parity 3% 3.80% Hedge Funds 3% 2.40% Total 100% 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 at June 30, 2023: Miscellaneous 1%Decrease 5.75% Net Pension Liability(Asset) $103,941,595 Current Discount Rate 6.75% Net Pension Liability(Asset) $37,772,326 1%Increase 7.75% Net Pension Liability(Asset) ($16,442,222) 43 December 21, 2023 Regular Board Meeting Agenda Packet- Page 162 of 461 Page 66 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 9- PENSION PLANS (Continued) B. 457(h)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 (b). 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 (b) assets are held in trust with Mission Square Retirement (formerly ICMA- RC) for the exclusive benefit of the participants and are not included in the District's financial statements. C. 401 (a)Money Purchase 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 $2,776,729 and $2,675,230 to the Plan during the years ended June 30, 2023 and 2022, respectively. In addition to contributions made by the District as described previously, commencing this fiscal year, unrepresented employees elected to make mandatory irrevocable contributions to the plan. The 401(a) money purchase plan assets are held in trust with Mission Square Retirement (formerly ICMA-RC) for the exclusive benefit of the participants and are not included in the District's financial statements. NOTE 10 -OTHER POST EMPLOYMENT BENEFITS (OPEB) PLAN A. General Information about the District's OPEB Plan Plan Description - The District's defined benefit post-employment healthcare plan (DPHP) 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 through PARS, which acts as a common investment agent for participating public employees within the State of California. The District is the plan administrator.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 Annual Comprehensive 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. 44 December 21, 2023 Regular Board Meeting Agenda Packet- Page 163 of 461 Page 67 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 10 - OTHER POST EMPLOYMENT BENEFITS (OPEB) PLAN (Continued) Benefit Terms-Post-employment healthcare and similar benefit allowances are provided to eligible employees who retire from the District or to their surviving spouses. Employees Covered by Benefit Terms-Membership in the plan consisted of the following at the measurement date of June 30,2023: Active employees 273 Inactive employees or beneficiaries currently receiving benefit payments 275 Inactive employees entitled to but not yet receiving benefit payments - Total 548 B. Net OPEB Liability Actuarial Methods and Assumptions - The District's net OPEB liability was measured as of June 30, 2023 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated July 1,2022 that was rolled forward using standard update procedures to determine the$81,190,218 total OPEB liability as of June 30,2023,based on the following actuarial methods and assumptions: Miscellaneous Valuation Date July 1,2022 Measurement Date June 30,2023 Actuarial Cost Method Entry Age Normal,Level Percent of Pay Actuarial Assumptions: Contribution and Funding Policy District contributes full ADC Discount Rate and Long-Term 5.25%at June 30,2023 Expected Rate of Return on Assets 5.50%at June 30,2022 General Inflation 2.50%Annually Mortality,Disability,Termination, CCCERA 2018-20 Experience Study Retirement Mortality Improvement Mortality projected fully generational with Scale MP-2021 Medical Trend Non-Medicare-8.50%for 2024,decreasing to an ultimate rate Medicare(Non-Kaiser)-7.50%for 2024,decreasing to an ultimate rate of 3.45%in 2076 Medicate(Kaiser)-6.25%for 2024,decreasing to an ultimate rate of 3.45%in 2076 Dental and Vision Trend 3.50%annually Healthcare Participation for Future Currently Covered:100% Retirees Currently Waived Coverage:95% Self-Pay Board Members:50% Changes of assumptions General inflation changed to 2.50% Discount rate was updated based on more recent capital market assumptiopns and new inflation CCCERA demographic assumptions were updated based on a new experience study Healthcare trend rates were updated Medicare eligible implied subsidy assumptions were updated Mortaility improvement scale was updated to Scale MP-2021 45 December 21, 2023 Regular Board Meeting Agenda Packet- Page 164 of 461 Page 68 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 10 - OTHER POST EMPLOYMENT BENEFITS (OPEB) PLAN (Continued) The underlying mortality assumptions were based on the mortality improvement projected generationally with Scale MP-21 and all other actuarial assumptions used in the July 1, 2022 valuation were based on the results of a July 1,2022 actuarial experience study for the period of July 1, 2022 to June 30, 2023. The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Target Expected Real Rate Asset Class Component Allocation of Return Global Equity 50.0% 4.56% Fixed Income 45.0% 0.78% Cash 5.0% -0.50% Total 100% Assumed Long-Term Rate of Inflation 2.50% Expected Long-Term Net Rate of Return,Rounded 5.25% Discount Rate - The discount rate used to measure the total OPEB liability was 5.25%. The projection of cash flows used to determine the discount rate assumed that District contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries.Therefore,the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. 46 December 21, 2023 Regular Board Meeting Agenda Packet- Page 165 of 461 Page 69 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 10 - OTHER POST EMPLOYMENT BENEFITS (OPEB) PLAN (Continued) C. Changes in Net OPEB Liability The changes in the net OPEB liability follows: Increase(Decrease) Total OPEB Plan Fiduciary NetOPEB Liability Net Position Liability/(Asset) (a) (b) (a)-(b) Balance at July 1,2022 $87,991,154 $75,139,609 $12,851,545 Changes Recognized for the Measurement Period: Service Cost 2,215,263 2,215,263 Interest on the total OPEB liability 4,849,272 4,849,272 Changes in benefit terms - - Differences between expected and actual experience (5,519,185) (5,519,185) Changes of assumptions (4,270,646) - (4,270,646) Contributions from the employer 4,862,308 (4,862,308) Contributions from the employee - Net investment income 5,632,562 (5,632,562) Benefit payments (4,075,640) (4,075,640) - Administrative expenses (216,708) 216,708 Net Changes (6,800,936) 6,202,522 (13,003,458) Balance at June 30,2023 $81,190,218 $81,342,131 ($151,913) D. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate and Healthcare Cost Trend Rates The following presents the net OPEB liability of the District at June 30, 2023, as well as what the District's net OPEB liability would be if it were calculated using a discount rate that is 1- percentage-point lower (4.25%) or 1-percentage-point higher (6.25%) than the current discount rate: Net OPEB Liability (Asset) Discount Rate-1% Discount Rate Discount Rate+1% (4.25%) (5.25%) (6.25%) $9,930,924 ($151,913) ($8,517,509) The following presents the net OPEB liability of the District, as well as what the District's net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1- percentage-point lower or 1-percentage-point higher than the current healthcare cost trend rates: Net OPEB Liability (Asset) Current Healthcare Cost 1%Decrease Trend Rates 1%Increase ($8,445,000) ($151,913) $11,298,025 47 December 21, 2023 Regular Board Meeting Agenda Packet- Page 166 of 461 Page 70 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 10 - OTHER POST EMPLOYMENT BENEFITS (OPEB) PLAN (Continued) E. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2023,the District recognized an OPEB expense of$1,527,856. At June 30,2023,the District reported deferred outflows and inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience $1,362,299 ($4,893,694) Changes of assumptions 197,865 (3,661,397) Net difference betweeen projected and actual earnings 3,540,284 - Total $5,100,448 ($8,555,091) Amounts reported as deferred outflows and (inflows) of resources related to OPEB will be recognized as part of OPEB expense as follows: Year Ended Annual June 30 Amortization 2024 ($876,495) 2025 (821,647) 2026 943,965 2027 (2,146,325) 2028 (554,141) Total ($3,454,643) OPEB Liabilities, OPEB Expenses and Deferred Outflows/inflows of Resources Related to OPEB-For purposes of measuring the net OPEB liability,deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the District's OPEB Plan and additions to/deductions from the OPEB Plan's fiduciary net position have been determined on the same basis as they are reported by the District's defined benefit post-employment healthcare plan (DPHP). For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. 48 December 21, 2023 Regular Board Meeting Agenda Packet- Page 167 of 461 Page 71 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 11 - NET POSITION Net Position Net Position is the excess of all the District's assets and deferred outflows of resources over all its liabilities and deferred inflows of resources,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 - LEASES AND SUBSCRIPTION-BASED INFORMATION TECHNOLOGY AGREEMENTS A. Lease Receivable The District has entered into 10 multi-year leases agreements as the lessor for various parcels of land.The terms of these leases are between one and ten years and the District will receive monthly payments from each lessee. The District recognized $704,615 in lease revenue and $234,534 in interest revenue during the current fiscal year related to these leases.As of June 30, 2023 and 2022, the District receivable for lease payments were $4,224,394 and $4,635,788,respectively.Also,the District has a deferred inflow of resources associated with this lease that will be recognized as revenue over the lease term. As of June 30, 2023 and 2022, the balance of the deferred inflow of resources were $3,970,164 and $4,514,638, respectively. Balance Balance Leases Receivable July 1, 2022 Additions Retirements June 30, 2023 Land $4,635,788 - $411,394 $4,224,394 Less current portion (411,394) (605,747) Non-current portion $4,224,394 $3,618,647 Balance July 1, 2021 Balance Leases Receivable (as restated) Additions Retirements June 30, 2022 Land $5,092,905 - $457,117 $4,635,788 Less current portion (457,117) (502,430) Non-current portion $4,635,788 $4,133,358 49 December 21, 2023 Regular Board Meeting Agenda Packet- Page 168 of 461 Page 72 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 12 - LEASES (Continued) B. Lease Payable A summary of lease transactions for the fiscal years ended June 30, 2023 and 2022, are as follows: Balance Balance Leases Payable July 1,2022 Additions Retirements June 30,2023 Land $762,557 - $66,909 $695,648 Equipment 225,249 - 112,812 112,437 Total $987,806 - $179,721 $808,085 Less current portion (179,721) (182,246) Non-current portion $808,085 $625,839 Balance July 1,2021 Balance Leases Payable (as restated) Additions Retirements June 30,2022 Land $827,341 - $64,784 $762,557 Equipment 337,858 - 112,609 225,249 Total $1,165,199 - $177,393 $987,806 Less current portion (177,393) (179,721) Non-current portion $987,806 $808,085 The District has entered into three multi-year lease agreements as lessee for the use of land and office equipment. As of June 30, 2023 and 2022, the value of the lease liability were $808,085 and$987,806,respectively.The District is required to make monthly principal and interest payments of$15,524.The leases have a weighted average interest rate of 0.83%.The value of the right-to-use asset as of the end of the current fiscal year was$1,165,199 and had accumulated amortization of$383,257. The future principal and interest lease payments as of June 30, 2023,were as follows: For the Year Ended June 30 Principal Interest Total 2024 $182,246 $6,719 $188,965 2025 72,805 5,869 78,674 2026 75,900 5,134 81,034 2027 79,097 4,368 83,465 2028 82,399 3,570 85,969 2029-2032 315,638 5,724 321,362 $808,085 $31,384 $839,469 50 December 21, 2023 Regular Board Meeting Agenda Packet- Page 169 of 461 Page 73 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For the Years Ended June 30, 2023 and 2022 NOTE 12 - LEASES (Continued) C. Subscription-Based Information Technology Arrangements(SBITAs) A summary of SBITA transactions for the fiscal year ended June 30, 2023,are as follows: Balance Balance SBITA Payable July 1,2022 Additions Retirements June 30,2023 Subscriptions - $1,310,988 $826,079 $484,909 The District has entered into four multi-year SBITAs for the use of information technology software. An initial lease liability was recorded in the amount of $1,310,988 during the current fiscal year.As of June 30, 2023 the value of the SBITA current liability was $484,909. The value of the right-to-use asset as of the end of the current fiscal year was$1,310,988 and had accumulated amortization of$646,419. 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 capital projects that involve multi-year contracts. Purchase commitments related to these multi-year contracts are approximately$73,906,397 and$42,848,558 as of June 30, 2023 and 2022,respectively. 51 December 21, 2023 Regular Board Meeting Agenda Packet- Page 170 of 461 Page 74 of 116 REQUIRED SUPPLEMENTARY INFORMATION December 21, 2023 Regular Board Meeting Agenda Packet- Page 171 of 461 CENTRAL CONTRA COSTA SANITARY DISTRICT Cost-Sharing Multiple Employer Defined Benefit Retirement Plan As of Fiscal Year Ending June 30,2023 PROPORTIONATE SHARE OF NET PENSION LIABILITY(ASSET) Last 10 Fiscal Years 1 December 31, Measurement date 2022 2021 2020 2019 2018 2017 2016 2015 2014 Proportion of the net pension liability 2.22% 22.04% 10.59% 7.42% 6.33% 7.86% 6.27% 6.09% 7.49% Proportionate share of the net pension liability(asset) $37,772,326 ($53,543,789) $48,886,895 $64,117,450 $90,430,104 $63,806,000 $87,847,116 $91,746,888 $89,535,510 Covered payroll $40,424,238 $37,667,972 $37,131,965 $36,087,019 $33,793,159 $33,306,738 $31,584,169 $29,061,743 $29,647,993 Proportionate share of the net pension liability as a percentage of covered payroll 93.44% -142.15% 131.66% 177.67% 267.60% 191.57% 278.14% 315.70% 302.00% Fiduciary net position as a percentage of the total pension liability 92.35% 111.27'% 89.10% 85.05% 77.86% 83.58% 76.44% 74.14% 73.86% 1 The fiscal year ending June 30,2015 was the first year of implementation 2 Covered payroll represents compensation earnable and pensionable compensation for the measurement period ended December 31st.Only compensation earnable and pensionable compensation that would possibly go into the determination of retirement benefits are included. 53 December 21, 2023 Regular Board Meeting Agenda Packet- Page 172 of 461 CENTRAL CONTRA COSTA SANITARY DISTRICT Cost-Sharing Multiple Employer Defined Benefit Retirement Plan As of Fiscal Year Ending June 30,2023 SCHEDULE OF CONTRIBUTIONS Last 10 Years* 2023 2022 2021 2020 2019 2018 2017 2016 2015 Actuarially determined contribtuion $6,812,146 $7,001,200 $70,944,418 $18,046,778 $17,520,615 $17,880,152 $18,043,391 $22,752,611 $24,451,234 Contributions in relation to the actuarially determined contributions 6,812,146 7,001,200 70,944,418 18,046,778 17,520,615 17,880,152 18,043,391 22,752,611 24,451,234 Contributions deficiency(excess) Covered payroll $44,642,742 $40,916,867 $41,625,151 $40,356,579 $38,479,260 $36,638,935 $35,178,106 $32,675,243 $30,093,339 Contributions as a percentage of covered-employee payroll 15.26% 17.11% 170.44%*** 44.72% 45.53% 48.80% 51.29% 69.63% 81.25% Notes to Schedule Measurement Date: 12/31/22 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry Age Amortization method Level percentage of payroll,closed Remaining amortization period 3 years** Asset valuation method 5-year semi-annually Inflation 2.50% Salary increases 3.50%-14.00% Investment rate of return 6.75%,net of pension plan investment expense,including inflation Retirement age 50 years Classic,52 years PEPRA Mortality Pub-2010 General Healthy Retiree Amount-Weighted Above-Median Mortality Table *Fiscal year 2015 was the first year of implementation **Remaining balance of December 31,2007 UAAL is amortized over a fixed(decreasing or closed)period with 2 years remaining as of December 31,2020 and 3 years remaining as of December 31,2019.Any changes in UAAL after December 31,2007 will be separately amortized over a fixed 18-year period effective with thatvaluation.Effective December 31,2013,any changes in UAAL due to plan amendments(with the exception of a change due to retirement incentives)will be amortized over a 10-year fixed period effective with that valuation.The entire increase in UAAL resulting from a temporary retirement incentive will be funded in full upon adoption of the incentive. ***Includes one-time payment of$70.8 million to CCCERA to pay down the pension UAAL. 54 December 21, 2023 Regular Board Meeting Agenda Packet- Page 173 of 461 CENTRAL CONTRA COSTA SANITARY DISTRICT POST-RETIREMENT HEALTH CARE DEFINED BENEFIT PLAN SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS Single Employer Last 10 fiscal years* Measurement Date June 30,2023 June 30,2022 June 30,2021 June 30,2020 June 30,2019 June 30,2018 June 30,2017 Total OPEB Liability Service Cost $2,215,263 $2,150,741 $2,249,861 $2,184,331 $2,447,310 $2,370,276 $2,295,667 Interest 4,849,272 4,696,247 4,616,239 4,482,146 6,596,612 6,396,063 6,203,230 Changes in benefit terms (27,603,524) Differences between expected and actual experience (5,519,185) 3,219,980 (7,346,935) Changes of assumptions (4,270,646) (464,535) 3,495,645 Benefit payments (4,075,6401 (4,182,821) (4,654,2461 (4,145,6541 (5,697,440) (5,571,750) (5,404,627) Net change in total OPEB liability (6,800,936) 2,664,167 4,967,299 2,520,823 (28,108,332) 3,194,589 3,094,270 Total OPEB liability-beginning 87,991,154 85,326,987 80,359,688 77,838,865 105,947,197 102,752,608 99,658,338 Total OPEB liability-ending(a) $81,190,218 $87,991,154 $85,326,987 $80,359,688 $77,838,865 $105,947,197 $102,752,608 Plan fiduciary net position Contributions-employer $4,862,308 $5,168,000 $4,654,246 $5,395,654 $7,280,240 $9,649,750 $10,433,327 Contributions-employee Adjustment to Beginning Balance (138,800) Net investment income 5,632,562 (10,230,951) 14,958,207 2,994,909 4,920,923 3,354,822 4,735,576 Administrative expense (216,708) (221,902) (200,304) (182,833) (174,362) (164,446) (5,404,627) Benefit payments (4,075,640) (4,182,821) (4,654,2461 (4,145,6541 (5,697,4401 (5,571,750) (139,063) Net change in plan fiduciary net position 6,202,522 (9,467,674) 14,619,103 4,062,076 6,329,361 7,268,376 9,625,213 Plan fiduciary net position-beginning 75,139,609 84,607,283 69,988,180 65,926,104 59,596,743 52,328,367 42,703,154 Plan fiduciary net position-ending(b) $81,342,131 $75,139,609 $84,607,283 $69,988,180 $65,926,104 $59,596,743 $52,328,367 Net 0PEB liability-ending(a)-(b) ($151,913) $12,851,545 $719,704 $10,371,508 $11,912,761 $46,350,454 $50,424,241 Plan fiduciary net position as a percentage of the total OPEB liability 100.19% 85.39% 99.16% 87.09% 84.70% 56.25% 50.93% Covered-employee payroll 44,642,742 40,961,867 41,625,151 40,356,579 38,479,260 36,638,935 35,178,106 Net OPEB liability as a percentage of covered-employee payroll -0.34% 31.37% 1.73% 25.70% 30.96% 126.51% 143.34% Notes to schedule: *Fiscal year 2017 was the first year of implementation 55 December 21, 2023 Regular Board Meeting Agenda Packet- Page 174 of 461 CENTRAL CONTRA COSTA SANITARY DISTRICT POST-RETIREMENT HEALTH CARE DEFINED BENEFIT PLAN SCHEDULE OF CONTRIBUTIONS Single Employer Last 10 fiscal years* Fiscal Year Ended June 30, 2023 2022 2021 2020 2019 2018 2017 Actuarially determined contribution $3,331,000 $3,324,000 $3,917,000 $3,906,000 $7,524,000 $7,866,000 $7,866,000 Contributions in relation to the actuarially determined contribution 4,862,308 5,168,000 4,654,246 5,395,654 7,280,240 10,433,327 10,433,327 Contribution deficiency(excess) ($1,53L,308) ($1,844,000) ($737,246) ($1,489,654) $243,760 ($2,567,327) ($2,567,327) Covered-employee payroll $44,642,742 $40,961,867 $41,625,151 $40,356,579 $38,479,260 $36,638,935 $35,178,106 Contributions as a percentage of covered payroll 10.89% 12.62% 11.18% 13.37% 18.92% 28.48% 29.66% Notes to Schedule Methods and assumptions used to determine contribution rates: Valuation Date July 1,2022 Actuarial Cost Method Entry Age Normal,Level Percent of Pay Amortization Method Level dollar Asset Valuation Method Investment gains and losses spread over 5-year rolling period Actuarial Assumptions: Discount Rate 5.25%at June 30,2023 General Inflation 2.50%annually Medical Trend Non-Medicare-8.50%for 2024,decreasing to an ultimate rate of 3.45%in 2076 Medicare(Non-Kaiser)-7.50%for 2024,decreasing to an ultimate rate of 3.45%in 2076 Medicare(Kaiser)-6.25%for 2024,decreasing to an ultimate rate of 3.45%in 2076 Dental Trend 3.50%annually Mortality Rate CCCERA 2018-2020 Experience Study Mortality Improvement Mortality projected fully generationally with Scale MP-2021 *Fiscal year 2017 was the first year of implementation 56 December 21, 2023 Regular Board Meeting Agenda Packet- Page 175 of 461 Page 79 of 116 SUPPLEMENTARY INFORMATION December 21, 2023 Regular Board Meeting Agenda Packet- Page 176 of 461 Page 80 of 116 Central Contra Costa Sanitary District Combining Schedule of Net Position Enterprise Sub-Funds June 30,2023 Running Expense Sewer Construction Selflnsurance Debt Service Totals ASSETS CURRENT ASSETS Cash and cash equivalents $14,779,964 $7,544,294 $734,061 - $23,058,319 Restricted cash and investments - - - $1,527 1,527 Unrestricted investments 18,040,000 130,500,000 10,100,000 - 158,640,000 Restricted investments 43,662 - - - 43,662 Accounts receivable 19,500,717 10,024,981 29,525,698 Current portion of lease receivable 605,747 - - - 605,747 Interest receivable 180,671 173,520 75,703 429,894 Prepaid assets 1,253,175 20,000 - - 1,273,175 Supplies&material inventory 5,800,474 5,800,474 Total current assets 60,204,410 148,262,795 10,909,764 1,527 219,378,496 NON-CURRENT ASSETS Non-current portion of lease receivable 3,618,647 - - - 3,618,647 Assessment Districts receivable - 1,642,035 - - 1,642,035 Net OPEB asset 151,913 - - - 151,913 CAPITAL ASSETS Nondepreciable 149,347,532 149,347,532 Depreciable,net of accumulated depreciation 700,065,619 700,065,619 Total non-current assets 853,183,711 1,642,035 854,825,746 TOTAL ASSETS 913,388,121 149,904,830 10,909,764 1,527 1,074,204,242 DEFERRED OUTFLOWS OF RESOURCES Pension related 78,754,514 - - - 78,754,514 OPEB related 5,100,448 5,100,448 Total deferred outflows of resources 83,854,962 83,854,962 LIABILITIES CURRENT LIABILITIES Accounts payable 3,224,945 8,552,585 94,983 - 11,872,513 Salaries&benefits payable 1,404,696 59,973 - - 1,464,669 Interest payable 39,552 833,138 - 745,345 1,618,035 Provision for uninsured claims - - 1,719,986 - 1,719,986 Deposits payable 268,404 - - - 268,404 Compensated absences payable,current 580,239 - 580,239 Current portion of long-term obligations - - - 7,090,000 7,090,000 Current portion of lease payable 182,246 - - - 182,246 Current portion of SBITAs 484,909 484,909 Total current liabilities 6,184,991 9,445,696 1,814,969 7,835,345 25,281,001 NON-CURRENT LIABILITIES Net pension liability 37,772,326 - - - 37,772,326 Non-current portion of long term obligations - - - 60,686,014 60,686,014 Accrued compensated absences-non-current 5,222,146 - - - 5,222,146 Non-current portion of lease payable 625,839 625,839 Total non-current liabilities 43,620,311 60,686,014 104,306,325 TOTAL LIABILITIES 49,805,302 9,445,696 1,814,969 68,521,359 129,587,326 DEFERRED INFLOWS OF RESOURCES Pension related 52,931,043 52,931,043 OPEB related 8,555,091 - - - 8,555,091 Lease related 3,970,164 3,970,164 Total deferred inflows of resources 65,456,298 65,456,298 NET POSITION Net investment in capital assets 849,413,151 (67,776,014) 781,637,137 Restricted net position - - - 1,527 1,527 Unrestricted net position 32,568,332 140,459,134 9,094,795 (745,345) 181,376,916 TOTAL NET POSITION $881,981,483 $140,459,134 $9,094,795 ($68,519,832) $963,015,580 58 December 21, 2023 Regular Board Meeting Agenda Packet- Page 177 of 461 Page 81 of 116 Central Contra Costa Sanitary District Combining Schedule of Revenues,Expenses and Changes in Net Position Enterprise Sub-Funds For the Fiscal Year Ended June 30,2023 Running Expense Sewer Construction Self Insurance Debt Service Totals OPERATING REVENUES Sewer service charge(SSC) $48,447,114 - $1,662,101 - $50,109,215 Sewage treatment cost sharing 17,649,002 - - - 17,649,002 Miscellaneous service charges 2,233,077 2,233,077 Total operating revenues 68,329,193 1,662,101 69,991,294 OPERATING EXPENSES Salaries&benefits 60,809,719 - - 60,809,719 Contracted services 10,127,978 - 452,173 $5,800 10,585,951 Utilities&fuel 8,174,185 - - 8,174,185 Chemicals 2,175,040 - - - 2,175,040 General supplies 2,675,384 - 2,675,384 Other operating expenses 1,220,704 - 1,509,201 - 2,729,905 Asset purchases - - - - - Gain(loss)on sale of asset - - - - - Depreciation and amortization expense 25,003,263 25,003,263 Contra-expense capital outlays Total operating expenses 110,186,273 1,961,374 5,800 112,153,447 OPERATING INCOME(LOSS) (41,857,080) (299,273) (5,800) (42,162,153) NON-OPERATING REVENUES(EXPENSES) Taxes - $11,028,136 - 11,905,088 22,933,224 Permit and inspection fees 1,706,192 336,275 - 2,042,467 Grants - - - - - Investment income 959,893 2,940,938 224,642 4,125,473 Interest expense (28,183) - - (1,149,288) (1,177,471) Gain(loss)on sale of asset (48,819) 178,737 - 129,918 Other non-operating income 927,631 122,136 23,878 1,073,645 Total non-operating revenues(expenses),net 3,516,714 14,606,222 248,520 10,755,800 29,127,256 INCOME(LOSS)BEFORE CAPITAL (38,340,366) 14,606,222 (50,753) 10,750,000 (13,034,897) CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTIONS AND TRANSFERS Other government revenue-Concord 9,956,648 - 9,956,648 Customer contributions to capital - 67,227,158 - - 67,227,158 Non-exchange capital contributions/donations 1,456,478 - 1,456,478 Capacity fees 7,165,352 7,165,352 Total capital contributions 1,456,478 84,349,158 85,805,636 Interfund transfers in/out 59,097,480 (44,858,890) (14,238,590) CHANGE IN NET POSITION 22,213,592 54,096,490 (50,753) (3,488,590) 72,770,739 NET POSITION,BEGINNING OF YEAR 859,767,891 86,362,644 9,145,548 (65,031,242) 890,244,841 NET POTISION,END OF YEAR $881,981,483 $140,459,134 $9,094,795 ($68,519,832) $963,015,580 59 December 21, 2023 Regular Board Meeting Agenda Packet- Page 178 of 461 Page 82 of 116 r J , , Z j Q H LU ' 1 w i..j 00& Qt 0 �Q9cember 21, 2023 Regular Board Meeting Agenda Packet- Page 179 of 461 Page 83 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT STATISTICAL SECTION This part of the District's Annual Comprehensive Financial Report presents detailed information as a context for understanding what the information in the financial statements,note disclosures,and required supplementary information says about the District's overall financial health. Contents Pages Financial Position and Trends 61-63 These schedules contain current and trend information to help the reader understand the District's financial position and how the District's financial performance and well-being have changed over time. Revenue Capacity 64-67 These schedules contain information to help the reader assess the District's most significant revenue source of sewer service fees. Debt Capacity 68-69 These schedules present 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. Demographic and Economic Factors 70-71 These schedules offer demographic, economic,and District indicators to help the reader understand the environment within which the District's financial activities take place. Operating Information 72-73 These schedules contain data to help the reader understand how the information in the District's financial report relates to the services it provides and the activities it performs. 60 December 21, 2023 Regular Board Meeting Agenda Packet- Page 180 of 461 Central Contra Costa Sanitary District Changes in Net Position and Statement of Net Position Last Ten Fiscal Years Changes in Net Position 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 Operating Revenues: Sewer Service Charges(SSC) $60,796,421 $70,023,512 $72,233,903 $73,138,235 $75,824,221 $68,656,908 $70,408,903 $72,325,340 $100,680,646 $50,109,215 City of Concord 11,625,864 12,892,945 13,913,960 13,851,253 14,973,623 15,205,292 14,923,591 15,002,567 16,086,801 17,649,002 Other Service Charges 1,035,134 1,006,197 963,014 1,029,500 1,078,594 1,126,239 1,176,242 1,171,378 - - Miscellaneous Charges 544,589 593,780 623,659 606,453 619,997 689,727 714,043 743,276 2,164,237 2,233,077 Total Operating Revenue 74,002,008 84,516,434 87,734,536 88,625,441 92,496,435 85,678,166 87,222,779 89,242,561 118,931,684 69,991,294 Operating Expenses: Salaries&Benefits 58,954,452 66,104,630 63,988,158 62,342,392 68,862,484 65,071,382 62,672,096 134,167,829 55,538,097 56,002,920 Chemicals,Utilities&Supplies 8,063,309 7,466,490 7,304,619 8,115,004 7,477,602 8,093,144 8,088,750 8,738,404 10,972,308 13,024,609 Professional&Outside Services 3,995,860 3,322,881 4,196,302 3,891,224 2,988,280 3,276,763 2,684,034 4,160,807 5,404,618 4,456,818 Hauling,Disposal,Repairs&Maintenance 4,041,355 4,758,260 5,780,533 5,662,086 5,461,011 5,755,590 5,435,406 5,751,355 3,781,839 5,676,960 Self-Insurance(net of transfers) 214,290 496,381 72,486 (300,108) (332,483) 1,039,444 1,110,798 550,000 1,640,304 1,961,374 Pension/OPEB Expense - (3,012,757) (9,778,389) (4,080,558) 1,104,358 (33,307,168) (2,386,849) (70,933,999) 373,099 4,806,799 Depreciation 21,892,545 22,740,942 22,885,030 22,892,153 21,561,704 20,983,353 21,253,062 21,531,302 23,044,768 25,003,263 All Other 2,346,583 2,473,963 3,343,778 2,942,592 2,558,122 2,366,416 1,858,144 1,459,081 1,992,706 1,220,704 Total Operating Expenses 99,508,394 104,350,790 97,792,517 101,464,785 109,681,078 73,278,924 100,715,441 105,444,779 102,747,739 112,153,447 Operating Loss (25,506,386) (19,834,356) (10,057,961) (12,839,344) (17,184,643) 12,399,242 (13,492,662) (16,202,218) 16,183,945 (42,162,153) Non-Operating Revenues(Expenses): Property Taxes 13,093,841 14,083,331 14,835,167 16,318,874 17,650,741 18,251,794 18,876,886 20,516,826 21,239,420 22,933,224 Connection&Other Fees 1,575,251 1,843,942 2,546,723 2,600,888 2,592,137 2,648,708 2,251,245 2,440,187 2,308,395 2,042,467 Interest Income 359,288 316,475 562,308 761,838 1,223,349 2,573,964 2,310,269 1,678,028 772,909 4,125,473 Interest Expense (1,996,689) (1,523,127) (1,427,641) (1,313,398) (1,230,680) (1,025,006) (604,851) (542,226) (1,950,841) (1,177,471) All Other* 932,464 1,828,530 1,195,095 966,244 1,075,838 1,424,520 1,219,811 3,193,569 2,053,331 1,203,563 Total Non-Operating 13,964,155 16,551,151 17,711,652 19,334,446 21,311,385 23,873,980 24,053,360 27,286,384 24,423,214 29,127,256 Income Before Contributions and Transfers (11,542,231) (3,283,205) 7,653,671 6,495,102 4,126,742 36,273,222 10,560,698 11,084,166 40,607,159 (13,034,897) Customer Contributions* 10,486,067 6,769,623 11,991,752 16,628,105 20,425,514 36,562,141 44,222,958 4O,22O,S49 18,067,469 77,183,806 Contributed Sewer Lines 1,462,316 794,218 1,774,168 2,899,042 2,003,614 2,179,641 1,761,808 923,468 1,496,013 1,456,478 Capital Contributions-Connection Fees 8,224,517 6,673,298 8,543,758 7,044,340 9,331,420 8,145,068 7,083,702 5,500,316 4,584,973 7,165,352 CHANGE IN NET POSITION 8,630,669 10,953,934 29,963,349 33,066,589 35,887,290 83,160,072 63,629,166 57,728,499 64,755,614 72,770,739 Total Net Position-Beginning 635,714,997 644,345,666 563,607,078 S93,S7O,427 626,637,016 620,971,490 704,131,562 767,760,728 825,489,227 890,244,841 Prior Period Adjustment-GASH 68 and 71 - (91,692,522) - - - - - - - - Prior Period Adjustment-GASB 75 (41,552,816) Total Net Position-Ending $644,345,666 $563,607,078 $593,57O,427 $626,637,016 $620,971,490 $704,131,562 $767,760,728 $825,489,227 $890,244,841 $963,015,580 Statement of Net Position 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 Net Investment in Capital Assets $568,006,023 $573,175,094 $581,844,903 $600,770,254 $623,307,342 $655,586,304 $692,117,172 $684,834,242 $747,646,783 $781,637,137 Restricted 4,809,248 4,288,008 4,363,251 4,449,437 4,421,504 (271,370) 2,639 34,929,105 14 1,527 Unrestricted 71,530,395 (13,856,024) 7,362,273 21,417,325 (6,757,356) 48,816,628 75,640,917 105,725,880 142,598,044 181,376,916 Total Net Position $644,345,666 $563,607,078 $593,570,427 $626,637,016 $620,971,490 $704,131,562 $767,760,728 $825,489,227 $890,244,841 $963,015,580 Source:Central Contra Costa Sanitary District Audited Financial Statements 61 December 21, 2023 Regular Board Meeting Agenda Packet- Page 181 of 461 Central Contra Costa Sanitary District Revenue By Type Last Ten Fiscal Years $200,000,000 $180,000,000 $160,000,000 $140,000,000 sr $120,000,000 .^R. $100,000,000 O p $80,000,000 $60,000,000 $40,000,000 $20,000,000 $- 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 Fiscal Year 13 Operating Revenue ONon-Operating Revenue Operating Revenue Fiscal Sewer Service City of Other Service Miscellaneous Total Year Charges* Concord Charges Charges Operating 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 2016-2017 73,138,235 13,851,253 1,029,500 606,453 88,625,441 2017-2018 75,824,221 14,973,623 1,078,594 619,997 92,496,435 2018-2019 68,656,908 15,205,292 1,126,239 689,727 85,678,166 2019-2020 70,408,903 14,923,591 1,176,242 714,043 87,222,779 2020-2021 72,325,340 15,002,567 1,171,378 743,276 89,242,561 2021-2022 100,680,646 16,086,801 - 2,164,237 118,931,684 2022-2023 50,109,215 17,649,002 2,233,077 69,991,294 Non-Operating Revenue Fiscal Property Customer Connections All Total Non-Operating Year Taxes Contributions*1 &Other Fees*2 Interest Other &Contributions 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 2016-2017 16,318,874 19,527,147 9,645,228 761,838 966,244 47,219,331 2017-2018 17,650,741 22,429,128 11,923,557 1,223,349 1,075,838 54,302,613 2018-2019 18,251,794 38,741,782 10,793,776 2,573,964 1,424,520 71,785,836 2019-2020 18,876,886 45,984,766 9,334,947 2,310,269 1,219,811 77,726,679 2020-2021 20,516,826 41,144,017 7,940,503 1,678,028 3,193,569 74,472,943 2021-2022 21,239,420 19,563,482 6,893,368 772,909 2,053,331 50,522,510 2022-2023 22,933,224 78,640,284 9,207,819 4,125,473 1,203,563 116,110,363 * Sewer Service Charge(SSC)represents the Running Expense Fund portion of SSC County collections along with District direct billings and counter colh *1 Customer Contributions include the portion of SSC that is allocated to Sewer Construction Fund,City of Concord reimbursement of capital costs,an developer contributed sewer lines beginning in 2000-2001,due to changes in GASB 33 reporting requirements. *2 Includes connection fees,non-operating permit,inspection,and other fees. Source:Central Contra Costa Sanitary District Audited Financial Statements 62 December 21, 2023 Regular Board Meeting Agenda Packet- Page 182 of 461 Central Contra Costa Sanitary District Operating Expenses by Type Last Ten Fiscal Years $179,000,000 $129,000,000 s $79,000,000 ea 0 Ca $29,000,000 $(21,000,000) $(71,000,000) 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 Fiscal Year ■Salaries and Benefits ❑Chemicals,Utilities&Supplies ❑Professional&Outside Services ■Hauling,Disposal,Repairs&Maintenance ■Self-Insurance ■Depreciation ❑Pension/OPEB Expense* ■All Other OPERATING EXPENSES Fiscal Salaries Chemicals,Utilities Professional& Hauling,Disposal, Self-Insurance Depreciation Pension/OPEB Total Operating Non-Operating Year and Benefits &Supplies Outside Services epairs&Maintenance Expense* Expenses Expenses 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 2016-2017 62,342,392 8,115,004 3,891,224 5,662,086 619,892 22,892,153 (4,080,558) 2,022,592 101,464,785 1,313,398 2017-2018 68,862,484 7,477,602 2,988,280 5,461,011 252,517 21,561,704 1,104,358 1,973,122 109,681,078 1,230,680 2018-2019 65,071,382 8,093,144 3,276,763 5,755,590 1,039,444 20,983,353 (33,307,168) 2,366,416 73,278,924 1,025,006 2019-2020 62,672,096 8,088,750 2,684,034 5,435,406 1,110,798 21,253,062 (2,386,849) 1,858,144 100,715,441 604,851 2020-2021 134,187,829** 8,738,404 4,160,807 5,751,355 550,000 21,531,302 (70,933,999) 1,459,081 (28,743,050) 542,226 2021-2022 55,911,196 10,972,308 5,031,519 3,781,839 1,640,304 23,044,768 373,099 1,992,706 102,747,739 1,950,841 2022-2023 56,002,920 13,024,609 4,456,818 5,676,960 1,961,374 25,003,263 4,806,799 1,220,704 112,153,447 1,177,471 Informational-notgraphed Source:Central Contra Costa Sanitary District Audited Financial Statements *Reflects pension/OPEB adjuestment at year-end to comply with the provisions of GASB Statements No.68 and 75. Budgeted pension/OPEB emloyer contributions made during the year are reported under"Salaries and Benefits". **Reflects payment to CCCERA of$70.6 million for pension liability pay-down December 21, 2023 Regular Board Meeting Agenda Packet- Page 183 of 461 63 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 Self-Insurance Total Capacity Fee*2 2013-2014 $365 $40 - $405 $5,930 2014-2015 416 23 - 439 5,995 2015-2016 422 49 - 471 6,005 2016-2017 432 71 - 503 5,948 2017-2018 447 83 - 530 6,300 2018-2019 400 167 - 567 6,700 2019-2020 408 190 - 598 6,589 2020-2021 277 352 - 629 6,803 2021-2022 442 209 $10 660 6,803 2022-2023 $284 $396 $10 $690 $7,200 Multi-Family Annual Sewer Service Charge(SSC)*1 Pump Fiscal Year Operations Capital Self-Insurance Total Zone Fee*3 2013-2014 $365 $40 - $405 $1,587 2014-2015 416 23 - 439 1,585 2015-2016 415 48 - 463 1,650 2016-2017 418 69 - 487 1,608 2017-2018 432 81 - 513 1,639 2018-2019 388 161 - 549 1,636 2019-2020 386 180 - 566 1,586 2020-2021 262 334 - 596 1,585 2021-2022 418 198 $9 625 1,585 2022-2023 $269 $375 $9 $654 $2,011 *1 All residential accounts paid a flat annual sewer service charge shown above per household through 2014-2015. In 2015-2016,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 64 December 21, 2023 Regular Board Meeting Agenda Packet- Page 184 of 461 Central Contra Costa Sanitary District Assessed and Estimated Actual Valuation of Taxable Property Last Ten Fiscal Years Fiscal Year Local Secured Unsecured Total %Change 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% 2016-2017 92,006,863,080 1,704,263,642 93,711,126,722 6.1% 2017-2018 97,298,029,346 1,722,229,970 99,020,259,316 5.7% 2018-2019 102,984,718,407 1,801,374,862 104,786,093,269 5.8% 2019-2020 108,704,671,836 1,863,018,759 110,567,690,595 5.5% 2020-2021 110,795,231,142 1,848,644,910 112,643,876,052 1.9% 2021-2022 115,098,221,080 1,974,850,316 117,073,071,396 3.9% 2022-2023 123,119,257,816 1,855,761,569 124,975,019,385 6.7% Property Tax and Sewer Service Charge Fees Levied and Collected Last Ten Fiscal Years Property Tax* Collection Sewer Service Charges* Collection Fiscal Year Levied&Collected Percentage %Change Levied&Collected Percentage %Change 2013-2014 $13,108,176 100% -0.6% $66,604,323 100% 10.9% 2014-2015 14,195,300 100% 8.3% 72,622,738 100% 9.0% 2015-2016 15,323,818 100% 7.9% 78,930,977 100% 8.7% 2016-2017 16,428,089 100% 7.2% 83,601,971 100% 5.9% 2017-2018 17,300,475 100% 5.3% 87,944,554 100% 5.2% 2018-2019 18,352,620 100% 6.1% 95,298,869 100% 8.4% 2019-2020 19,348,103 100% 5.4% 100,863,356 100% 5.8% 2020-2021 20,233,423 100% 4.6% 100,603,114 100% -0.3% 2021-2022 22,323,425 100% 10.3% 108,725,443 100% 8.1% 2022-2023 22,947,184 100% 2.8% 114,989,889 100% 5.8% * 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. Source: Contra Costa County Auditor-Controller's Office 6 December 21, 2023 Regular Board Meeting Agenda Packet- Page 185 of461 Central Contra Costa Sanitary District Sewer Service Charge Ten Largest Customers Last Ten Fiscal Years 2013.2014 2014-2015 2015-2016 2016-2017 2017-2018 Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Charges Total Sewer Charges Total Sewer Charges Total Sewer Charges Total Sewer Charges Total Sewer Customer Collected Rank Service Charges Collected Rank Service Charges Collected Rank Service Charges Collected Rank Service Charges Collected Rank Service Charges City of Concord 1. $11,625,864 1 14.02% $12,892,945 1 14.38% $13,913,960 1 14.18% $13,851,253 1 13.37% °14,973,623 1 13.46/° Chevron Offices&Office Park 419,590 2 0.51% - - - Contra Costa County General Services 2. 384,750 3 0.46% 451,567 2 0.50% 638,608 2 0.65% 547,943 2 0.53% 556,782 2 0.50% First Walnut Creek Mutual 361,260 4 0.44% 417,050 3 0.47% 439,850 3 0.45% 462,650 3 0.45% 487,350 3 0.44% Park Regency Apartments 303,750 5 0.37% 391,588 4 0.44% 412,996 4 0.42% 434,404 4 0.42% 457,596 4 0.41% Second Walnut Creek Mutual Apts 211,866 6 0.26% 329,250 5 0.37% 347,250 5 0.35% 365,250 5 0.35% 387,750 5 0.35% Branch Creek Vista Apartments 162,000 7 0.20% 175,600 7 0.20% - - 194,800 9 0.19% 205,200 9 0.18% Sun Valley Mall 148,374 8 0.18% 299,697 6 0.33% 283,613 6 0.29% 298,005 7 0.29% 354,208 6 0.32% Bay Landing Apartments 145,800 9 0.18% 158,040 9 0.18% - - - - - - John Muir Health 2. 145,091 10 0.18% - - 218,919 7 0.22% 322,601 6 0.31% 278,589 7 0.25% St.Mary's College Contract - - - - - - - - - - Kaiser Foundation Hospital 2. 158,848 8 0.18% 186,232 10 0.19% 186,281 10 0.18% Archstone Apartments 153,650 10 0.17% - - - - Muirland @ Windemere Apartments - - 153,650 10 0.17% - - - - - - Willows Shopping Center 2. - - - - 206,210 9 0.21% - - 188,828 10 0.17% San Ramon Unified School District 215,044 8 0.22% 225,339 8 0.22% 247,766 8 0.22% Total $13,908,345 16.78% $15,581,885 17.37% $16,862,681 17.18% $16,888,526 16.30% °18,137,692 16.31/a 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Sewer Service Percentage of Charges Total Sewer Charges Total Sewer Charges Total Sewer Charges Total Sewer Charges Total Sewer Customer Collected Rank Service Charges Collected Rank Service Charge Collected Rank Service Charge Collected Rank Service Chargg Collected Rank Service Charges City of Concord 1. $15,205,292 1 12.63% $14,923,591 1 11.52% $15,048,782 1 11.80% $16,134,761 1 11.97% $17,700,461 1 12.21% First Walnut Creek Mutual 521,550 2 0.43% 537,700 3 0.42% 537,700 3 0.42% 593,750 2 0.44% 621,300 2 0.43% Park Regency Apartments 489,708 3 0.41% 504,872 4 0.39% 504,872 4 0.40% 557,500 3 0.41% 583,368 3 0.40% Second Walnut Creek Mutual Apts 411,750 6 0.34% 424,500 5 0.33% 424,500 5 0.33% 468,750 4 0.35% 490,500 4 0.34% John Muir Health 2. 413,900 5 0.34% 391,245 6 0.30% 362,718 6 0.28% 404,989 5 0.30% 434,624 5 0.30% Branch Creek Vista Apartments 219,600 10 0.18% 226,400 10 0.17% 226,400 9 0.18% 250,000 6 0.19% 261,600 6 0.18% Bay Landing Apartments - - - - - - 225,000 7 0.17% 235,440 7 0.16% Archstone Apartments 198,876 10 0.15% 228,900 8 0.16% Muirland @ Windemere Apartments - - 218,750 9 0.16% 228,900 9 0.16% Kaiser Foundation Hospital 2. 244,180 9 0.20% - - - - 222,277 8 0.16% 225,383 10 0.16% Contra Costa County General Services 2. - - 733,416 2 0.57% 740,223 2 0.58% Sun Valley Mall 453,512 4 0.38% 373,171 7 0.29% 339,061 7 0.27% St.Mary's College Contract - - - 242,777 8 0.19% San Ramon Unified School District 266,550 8 0.22% 283,631 9 0.22% 215,229 10 0.17% Bishop Ranch City Center 315,106 7 0.26% 335,017 8 0.26% Willows Shopping Center 2. - - - - - - - - - - Total $18,541,148 15.40% $18,733,543 14.46% $18,642,262 14.62% $19,274,654 14.30% $21,010,476 14.50% 1.Contract with the City of Concord to treat and dispose of wastewater for the cities of Concord and Clayton.The City of Clayton contracts with the City of Concord for the maintenance,operation,and capital replacement/improvement of its sewage collection system,which runs through the City of Concord. 2.Kaiser,John Muir Health,Willows Shopping Center,and County hospital are permitted industries. Source:Central Contra Costa Sanitary District Environmental Services Division 66 December 21, 2023 Regular Board Meeting Agenda Packet- Page 186 of 461 Central Contra Costa Sanitary District Payments Under the Concord Agreement Last 10 Fiscal Years Fiscal Year Discharge Volume (mg) Service Charges Capital Contributions Total 2013-14 3,914 $11,625,864 $3,820,858 $15,446,722 2014-15 3,826 12,892,945 2,897,491 15,790,436 2015-16 3,878 13,913,960 3,671,892 17,585,852 2016-17 4,800 13,851,253 4,476,961 18,328,214 2017-18 4,265 14,973,623 6,364,725 21,338,348 2018-19 4,512 15,205,292 7,973,516 23,178,808 2019-20 4,383 15,048,782 11,393,000 26,441,782 2020-21 3,922 15,048,782 10,064,155 25,112,937 2021-22 3,973 16,086,801 7,799,702 23,886,503 2022-23 4,754 17,700,461 9,965,648 27,666,109 Central Contra Costa Sanitary District Active Service Accounts and Fiscal Year Billings Sewer Service Charges Fiscal Year 2022-2023 2022-2023 Sewer Percentage of User Group No.of Parcels Service Charge Billings Residential Unit Equivalents Total Residential 115,821 $97,965,218 141,979 83% Office 1,071 3,441,896 4,988 3% Mixed Use 220 2,590,824 3,755 2% Food Service 268 2,438,666 3,534 2% Hotel/Motel 23 1,273,236 1,845 1% Businesses* 414 1,181,269 1,712 1% Market/Supermarket 52 1,040,959 1,509 1% Schools 161 1,021,637 1,481 1% Recreation/Entertainment 211 981,998 1,423 1% Industrial Permitted 13 970,623 1,407 1% Automotive/Car Wash 250 834,474 1,209 1% Skilled Nursing 44 767,413 1,112 1% All Other User Groups 549 3,261,534 4,727 3% Subtotal 119,097 $117,769,746 170,681 100% Partial Year Charges(Counter) $607,007 Prior Year Adjustments (1,040,380) Total FY 2022-2023 Sewer Service Charge Revenue $117,336,373 67 December 21, 2023 Regular Board Meeting Agenda Packet- Page 187 of 461 Summary Of Debt Service Last Ten Fiscal Years Debt Service Paid Each Fiscal Year Outstanding Debt Each Fiscal Year $14,000,000 In 2021,the District issued COP's for$58.OM,see Note 6 $12,000,000 $75,000,000 $10,000,000 $60,000,000 m $8,000,000 $45,000,000 0 $6,000,000 0 $30,000,000 $4,000,000 $2,000,000 $15,000,000 $0 $0 il 6 O '1 0 9 O ryp'. ryp^ ryp^ ryp^ ryp^ ryo^ ryory ryp�, ryp'y ryp`j. ryo ryo ryo ryo ryo ryo ryory ryory ryory ryory 'gyp^� 'Lp^d, `Lp^p, 'Lp^6• `LO^1' `Lp^a `LpNW `Vp`Lp `Lp`�^ `Lp`L�' ryo^A ryo^b ryo^o ,lo^o ryo^1 ryo^g ryo^o ryd�� ryory^ ryo'1�' Summary By Type Of Debt evenue Bonds 2018&2009 &COP Total Debt Service Annual Expense i Fiscal Interest& Total Interest& Total Interest& Total Rev.Bonds R Year 11'rincipal Amortization Debt Service Principal Amortization Debt Service Principal Amortization Debt Service &COP's 4. 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 $40,5771,245 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 2,210,000 1,413,772 3,623,772 173,251 13,868 187,119 2,383,251 1,427,640 3,810,891 33,800,000 360,134 34,160,134 2016-2017 2,300,000 1,304,036 3,604,036 177,757 9,362 187,119 2,477,757 1,313,398 3,791,155 31,500,000 182,377 31,682,377 2017-2018 2,405,000 1,225,938 3,630,938 182,377 4,742 187,119 2,587,377 1,230,680 3,818,057 29,095,000 - 29,095,000 2018-2019 - 1,025,006 1,025,006 - - - - 1,025,006 1,025,006 21,806,631 21,806,631 2019-2020 2,145,000 604,851 2,749,851 2,145,000 604,851 2,749,851 19,447,392 19,447,392 2020-2021 1,740,000 542,226 2,282,226 1,740,000 542,226 2,282,226 75,733,331 75,733,331 2021-2022 10,450,000 1,482,288 11,932,288 10,450,000 1,482,288 11,932,288 64,110,319 64,110,319 2022-2023 10,750,000 1,326,410 12,076,410 10,750,000 1,326,410 12,076,410 67,776,015 67,776,015 Debt Service Coverage S mmary M 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 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 3,810,891 87,734,536 74,907,487 41,448,971 54,276,020 14.24 12,215,650 42,060,370 11.04 5.09% 22.28 199.74 2016-2017 3,791,155 88,625,441 78,572,632 47,219,331 57,272,140 15.11 11,521,301 45,750,839 12.07 4.83% 22.36 186.85 2017-2018 3,818,057 92,496,435 88,119,374 51,841,253 56,218,314 14.72 15,696,145 40,522,169 10.61 4.33% 22.51 171.56 2018-2019 1,025,006 85,678,166 52,295,571 70,760,830 104,143,425 101.60 16,118,584 88,024,841 85.88 1.96% 5.98 127.15 2019-2020 2,749,851 87,222,779 79,462,379 77,121,828 84,882,228 30.87 18,476,702 63,795,526 23.20 3.46% 15.93 112.65 2020-2021 2,282,226 89,242,561 83,913,477 73,930,717 79,259,801 34.73 15,564,471 63,695,330 27.91 2.72% 13.32 441.92 2021-2022 11,932,288 118,931,684 80,231,165 50,522,510 89,223,029 7.48 12,384,675 76,838,354 6.44 14.87% 69.63 374.10 2022-2023 1 12,076,410 1 70,015,172 1 89,899,953 1 107,334,739 1 87,449,958 7.24 17,122,000 70,327,958 5.82 13.43% 70.47 395.49 Note:Details regarding the Districts 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 2013-2014. Debt Restrictions: *12014-2015 includes implementahm 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.In FY 2019-20 the Board, are discussed in the footnotes to the left by Resolution,adopted rate stabilization fund reserve accounts for the 0&M and Sewer Construction funds,contributing initial seed monies of$2.61 million. *5 This ratio must be above 1.25 to meet the Debt Rate Covenant(Adjusted Net Revenue/Total Debt Service). d �� ?��rt?�at?�so a nZ ryR nanS�al tn? A erns 0a Ptag eeCn ds Page 188 of 461 68 Central Contra Costa Sanitary District Ratios of Outstanding Debt Last Ten Fiscal Years Debt as a Fiscal Year Total Per Capita Percentage Debt Ended Outstanding Personal of Per Capita per June 30 Debt Income* Personal Income Population* Capita 2013 $44,461,826 $61,435 0.138% 1,095,310 40.59 2014 40,577,245 64,056 0.158% 1,110,971 36.52 2015 36,543,385 69,195 0.189% 1,126,027 32.45 2016 34,160,134 72,195 0.211% 1,138,645 30.00 2017 31,682,377 76,527 0.242% 1,147,439 27.61 2018 29,095,000 82,506 0.284% 1,150,215 25.30 2019 21,806,631 85,324 0.391% 1,153,526 18.90 2020 19,447,392 92,264 0.474% 1,152,333 16.88 2021 75,733,331 99,312 0.131% 1,161,413 65.21 2022 64,110,319 95,047 0.148% 1,156,966 55.41 * U.S.Department of Commerce,Bureau of Economic Analysis.Estimates for 2021-2022 reflect county population estimates available as of November 2023. 69 December 21, 2023 Regular Board Meeting Agenda Packet- Page 189 of 461 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 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% 2017 344,591 139,654 484,245 0.6% 2018 348,333 140,590 488,923 1.0% 2019 352,733 141,542 494,275 1.1% 2020 342,149 141,480 483,629 -1.1% 2021 344,254 140,541 484,795 -1.9% 2022 352,832 134,497 487,329 -1.4% 2023 352,183 133,489 485,672 0.4% Source: Central Contra Costa Sanitary District Environmental Services Division List of Ten Largest Employers in Contra Costa County Last Year and Nine Years Ago* 2022* 2013* Estimated %of Total County Estimated %of Total County Employers Employees Rank Employment Employees Rank Employment Chevron Corporation 10,000+ T-1 1.89% 1,329 3 0.24% Kaiser Permanente 10,000+ T-1 1.89% 2,000 2 0.36% Bio-Rad Laboratories 1,000-4,999 T-2 0.56% 900 9 0.16% John Muir Medical Center 1,000-4,999 T-2 0.56% 2,200 1 0.40% La Raza Market 1,000-4,999 T-2 0.56% - - USS-POSCOIndustries 1,000-4,999 T-2 0.56% - - Target Corporation - 1,262 4 0.23% Walmart Stores,Inc. 1,150 5 0.21% Contra Costa Newspaper,Inc. 937 6 0.21% Doctors Medical Center 1,140 7 0.17% Shell/Martinez Refinery 900 8 0.16% Texaco Inc. - 800 10 0.15% A110thers 499,600 93.98% 536,100 97.71% Total 531,600 100.0% 548,718 100.0% Source: * County of Contra Costa,California,Annual Comprehensive Financial Report for June 30,2022,Statistical Section,principal employers excludes government employers. 70 December 21, 2023 Regular Board Meeting Agenda Packet- Page 190 of 461 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** 2013 1,095,310 $67,290,115,000 $61,435 7.4% 2014 1,110,971 71,164,468,000 64,056 6.2% 2015 1,126,027 77,914,957,000 69,195 5.0% 2016 1,138,645 82,204,425,000 72,195 4.4% 2017 1,147,439 87,810,279,000 76,527 3.8% 2018 1,150,215 94,900,003,000 82,506 2.7% 2019 1,153,526 98,423,318,000 85,324 7.9% 2020 1,152,333 106,318,748,000 92,264 5.3% 2021 1,161,413 115,342,618,000 99,312 6.4% 2022 1,156,966 109,965,993,000 95,047 3.5% * U.S.Department of Commerce,Bureau of Economic Analysis. Estimates for 2021-2022 reflect county population estim; ** State of California,Employment Development Department(EDD),annual calendar figure. 71 December 21, 2023 Regular Board Meeting Agenda Packet- Page 191 of 461 Central Contra Costa Sanitary District Full-time Equivalent Positions Filled by Department Last Ten Fiscal Years Full-time Equivalent Positions Filled as of June 30 Department 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Administration 44 46 49 43 43 41 44 51 50 52 Engineering 73 72 88 88 89 90 89 90 92 83 Operations Collection Systems 55 56 55 55 54 54 53 55 55 54 Optimization - - - - - - - - - 8 Plant 81 88 79 83 81 77 81 75 73 74 Pumping Station 8 8 7 7 7 12 7 7 6 7 Operations Total 144 152 141 145 142 143 141 137 134 143 District Total 261 270 278 276 274 274 274 278 276 278 Number of Retirees and Surviving Spouses as of June 30 Last Ten Fiscal Years District Total 243 244 249 259 278 268 269 261 275 275 Source: Central Contra Costa Sanitary District Finance and Human Resources Divisions 72 December 21, 2023 Regular Board Meeting Agenda Packet- Page 192 of 461 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 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 33.8 30.4 29.1 30.8 33.3 31.8 34.1 33.2 29.5 30.9 Wastewater Treated per day Calendar 36.8 35.6 31.8 35.4 43.2 36.0 41.2 35.3 34.6 33.9 Tons per Year Sludge to Furnace(Dry)*i Fiscal 14,590 16,789 16,623 17,031 16,279 16,498 16,056 16,029 15,959 15,879 Ash to Reuse Site(Wet)*2 Fiscal 3,618 3,811 3,651 4,230 3,475 3,577 3,450 3,410 3,627 3,510 *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 1,526 1,519 1,519 1,519 1,535 1,535 1,535 1,535 1,535 1,541 Number of pumping stations(owned) Calendar 16 16 16 16 15 15 15 15 15 15 Recycled Water Recycled Water Distribution Pipeline(miles)-3 Calendar 14.3 14.3 14.6 14.6 14.6 14.6 14.6 14.6 13.5 13.8 Average Recycled Water Produced(million gallons per day) Calendar 1.7 1.6 1.7 1.5 1.6 1.6 1.6 1.4 1.5 1.7 Number of Recycled Water Customers Sites Calendar 29 29 43 47 47 49 50 58 53 57 Commercial Truck Fill Use(million gallons per year) Calendar <0.1 0.3 4.4 0.4 0.6 0.6 4.6 4.8 5.5 0.6 Commercial Truck Fill Customers Calendar 1 11 37 26 14 13 12 6 9 18 Estimated Residential Fill Station Use(million gallons per year) Calendar N/A N/A 11.8 6.5 2.5 2.3 1.3 1.0 5.1 6.7 Residential Fill Station Customer Visits Calendar N/A N/A 55,552 28,598 11,633 9,780 5,671 4,635 22,208 29,124 *3 In 2021,pipeline miles only include active pressurized recycled water mains and laterals. Household Hazardous Waste CHH -Inception 1997/1998 Program Participation(Number of cars) Fiscal 30,379 31,779 33,468 33,037 35,640 36,108 27,818 35,634 33,658 30,327 Percentage of Households in Service Area Fiscal 15.9% 16.6% 16.8% 16.7% 18.1% 18.4% 14.0% 17.9% 16.7% 14.9% Operating Cost per Car Fiscal $83 $78 $72 $80 $77 $78 $100 $95 $88 $105 Operating Cost per Hoursehold Fiscal $13.45 $13.25 $12.43 $13.64 $14.21 $14.59 $14.29 $17.24 $14.99 $16.00 Operating Cost per Pound Fiscal $1.25 $1.24 $1.13 $1.24 $1.21 $1.27 $1.64 $1.24 $1.36 $1.74 Pounds of HHW per Car Fiscal 66 63 64 65 64 61 61 76 65 61 Pharmaceutical Collection Program-Inception 2009 Number of Collection Sites Calendar 12 13 13 13 13 13 12 12 8 7 Pounds of Expired or Unwanted medications Collected Calendar 12,428 14,041 15,366 16,485 17,337 17,178 9,918 5,645 5,396 5,662 Miscellaneous Statistics Governing Body: 5-Member Board of Directors elected at large Governmental Structure: Established in 1946 under the Sanitary District Act of 1923 Staff: 278 full-time equivalent employees(294 budgeted/authorized) Authority: California Health and Safety Code Section 4700 et.Seq. Services: Wastewater collection,treatment,and disposal Household Hazardous Waste(HHW)Facility Recycled Water Residential and Truck Recycled Water Fill Station Pharmaceutical Collection Program(7-Collection Sites) Retail HHW Collection Program Type Of Treatment: Discharge-Secondary;Reclamation-Tertiary Service Area: 146 square miles Total Population Served: 487,329(HHW service area 523,600) Sewer Service Charge: $690 for single family homes and$654 for multi-family homes. Source:Central Contra Costa Sanitary District records 73 December 21, 2023 Regular Board Meeting Agenda Packet- Page 193 of 461 Page 97 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT MEMORANDUM ON INTERNAL CONTROL AND REQUIRED COMMUNICATIONS FOR THE YEAR ENDED JUNE 30,2023 December 21, 2023 Regular Board Meeting Agenda Packet- Page 194 of 461 Page 98 of 116 This Page Left Intentionally Blank December 21, 2023 Regular Board Meeting Agenda Packet- Page 195 of 461 Page 99 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT MEMORANDUM ON INTERNAL CONTROL AND REQUIRED COMMUNICATIONS For the Year Ended June 30,2023 Table of Contents Page Memorandum on Internal Control...................................................................................................1 Scheduleof Other Matters.......................................................................................................3 Required Communications...............................................................................................................7 SignificantAudit Matters..............................................................................................................7 Qualitative Aspects of Accounting Practices........................................................................7 Difficulties Encountered in performing the Audit................................................................8 Corrected and Uncorrected Misstatements............................................................................8 Disagreements with Management..........................................................................................8 Management Representations.................................................................................................8 Management Consultations with Other Independent Accountants......................................8 Other Audit Findings or Issues...............................................................................................9 OtherMatters.................................................................................................................................9 December 21, 2023 Regular Board Meeting Agenda Packet- Page 196 of 461 Page 100 of 116 This Page Left Intentionally Blank December 21, 2023 Regular Board Meeting Agenda Packet- Page 197 of 461 Page 101 of 116 JVA� M AZ E & ASSOCIATES MEMORANDUM ON INTERNAL CONTROL To the Board of Directors Central Contra Costa Sanitary District Martinez, California In planning and performing our audit of the basic financial statements of the Central Contra Costa Sanitary District (District) as of and for the year ended June 30, 2023, in accordance with auditing standards generally accepted in the United States of America, we considered the District's internal control over financial reporting (internal control) as a basis for designing our auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. In addition, because of inherent limitations in internal control, including the possibility of management override of controls, misstatements due to error or fraud may occur and not be detected by such controls. Given these limitations during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However,material weaknesses may exist that have not been identified. Included in the Schedule of Other Matters are recommendations not meeting the above definitions that we believe to be of potential benefit to the District. This communication is intended solely for the information and use of management, Board of Directors, others within the organization, and agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Pleasant Hill, California November 29,2023 Accountancy Corporation r 925.229.2800 3478 Buskirk Avenue,Suite 217 r maze@mazeassociates.com Pleasant Hill,CA 94523 1 w mazeassociates.com December 21, 2023 Regular Board Meeting Agenda Packet- Page 198 of 461 Page 102 of 116 This Page Left Intentionally Blank December 21, 2023 Regular Board Meeting Agenda Packet- Page 199 of 461 Page 103 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT SCHEDULE OF OTHER MATTERS FOR THE YEAR ENDED JUNE 30,2023 2023-01 New GASB Pronouncements Not Yet Effective NEW GASB PRONOUNCEMENTS OR PRONOUNCEMENTS NOT YET EFFECTIVE The following comment represents new pronouncements taking affect in the next few years. We cite them here to keep you informed of developments: EFFECTIVE FISCAL YEAR 2023/24: GASB 100—Accountinz for Chanzes and Error Corrections The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. This Statement defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes. As part of those descriptions, for(1) certain changes in accounting principles and (2) certain changes in accounting estimates that result from a change in measurement methodology, a new principle or methodology should be justified on the basis that it is preferable to the principle or methodology used before the change. That preferability should be based on the qualitative characteristics of financial reporting—understandability, reliability, relevance, timeliness, consistency, and comparability. This Statement also addresses corrections of errors in previously issued financial statements. This Statement prescribes the accounting and financial reporting for(1) each type of accounting change and(2) error corrections. This Statement requires that (a) changes in accounting principles and error corrections be reported retroactively by restating prior periods, (b) changes to or within the financial reporting entity be reported by adjusting beginning balances of the current period, and (c) changes in accounting estimates be reported prospectively by recognizing the change in the current period. The requirements of this Statement for changes in accounting principles apply to the implementation of a new pronouncement in absence of specific transition provisions in the new pronouncement. This Statement also requires that the aggregate amount of adjustments to and restatements of beginning net position, fund balance, or fund net position, as applicable, be displayed by reporting unit in the financial statements. This Statement requires disclosure in notes to financial statements of descriptive information about accounting changes and error corrections, such as their nature. In addition, information about the quantitative effects on beginning balances of each accounting change and error correction should be disclosed by reporting unit in a tabular format to reconcile beginning balances as previously reported to beginning balances as restated. Furthermore, this Statement addresses how information that is affected by a change in accounting principle or error correction should be presented in required supplementary information (RSI) and supplementary information (SI). For periods that are earlier than those included in the basic financial statements, information presented in RSI or SI should be restated for error corrections, if practicable, but not for changes in accounting principles. 3 December 21, 2023 Regular Board Meeting Agenda Packet- Page 200 of 461 Page 104 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT SCHEDULE OF OTHER MATTERS FOR THE YEAR ENDED JUNE 30,2023 EFFECTIVE FISCAL YEAR 2024/25: GASB 101—Compensated Absences The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. Recognition And Measurement This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if(a)the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already rendered when an employee has performed the services required to earn the leave. Leave that accumulates is carried forward from the reporting period in which it is earned to a future reporting period during which it may be used for time off or otherwise paid or settled. In estimating the leave that is more likely than not to be used or otherwise paid or settled, a government should consider relevant factors such as employment policies related to compensated absences and historical information about the use or payment of compensated absences. However, leave that is more likely than not to be settled through conversion to defined benefit postemployment benefits should not be included in a liability for compensated absences. This Statement requires that a liability for certain types of compensated absences—including parental leave, military leave, and jury duty leave—not be recognized until the leave commences. This Statement also requires that a liability for specific types of compensated absences not be recognized until the leave is used. This Statement also establishes guidance for measuring a liability for leave that has not been used, generally using an employee's pay rate as of the date of the financial statements. A liability for leave that has been used but not yet paid or settled should be measured at the amount of the cash payment or noncash settlement to be made. Certain salary-related payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities. With respect to financial statements prepared using the current financial resources measurement focus, this Statement requires that expenditures be recognized for the amount that normally would be liquidated with expendable available financial resources. Notes To Financial Statements This Statement amends the existing requirement to disclose the gross increases and decreases in a liability for compensated absences to allow governments to disclose only the net change in the liability (as long as they identify it as a net change). In addition, governments are no longer required to disclose which governmental funds typically have been used to liquidate the liability for compensated absences. 4 December 21, 2023 Regular Board Meeting Agenda Packet- Page 201 of 461 Page 105 of 116 CENTRAL CONTRA COSTA SANITARY DISTRICT SCHEDULE OF OTHER MATTERS FOR THE YEAR ENDED JUNE 30,2023 GASB 101—Compensated Absences(Continued) How the Changes in this Statement Will Improve Financial Reporting The unified recognition and measurement model in this Statement will result in a liability for compensated absences that more appropriately reflects when a government incurs an obligation. In addition,the model can be applied consistently to any type of compensated absence and will eliminate potential comparability issues between governments that offer different types of leave. The model also will result in a more robust estimate of the amount of compensated absences that a government will pay or settle, which will enhance the relevance and reliability of information about the liability for compensated absences. 5 December 21, 2023 Regular Board Meeting Agenda Packet- Page 202 of 461 Page 106 of 116 This Page Left Intentionally Blank December 21, 2023 Regular Board Meeting Agenda Packet- Page 203 of 461 Page 107 of 116 [V� MAZE & ASSOCIATES REQUIRED COMMUNICATIONS To the Board of Directors Central Contra Costa Sanitary District Martinez, California We have audited the basic financial statements of the Central Contra Costa Sanitary District (District) for the year ended June 30, 2023. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards as well as certain information related to the planned scope and timing of our audit. We have communicated such information orally during our discussion with the Audit Committee on July 7, 2023. Professional standards also require that we communicate to you the following information related to our audit Significant Audit Matters Qualitative Aspects of Accounting Practices Accounting Policies —Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the District are described in Note 1 to the financial statements. No new accounting policies were adopted, and the application of existing policies was not changed during the year, except as indicated below: The following pronouncements became effective,but did not have a material effect on the financial statements: GASB 91 — Conduit Debt Obligations GASB 94— Public-Private and Public-Public Partnerships and Availability Payment Arrangements GASB 96— Subscription-Based Information Technology Arrangements GASB 99— Omnibus 2022,paragraphs 11-25 Unusual Transactions, Controversial or Emerging Areas-We noted no transactions entered into by District during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the District's financial statements are depreciation, claims liability and actuarial estimates for net pension liability and net other post-employment benefits liability. Accountancy Corporation r 925.228.2800 3478 Buskirk Avenue,Suite 217 a maze@mazeassociates.Com Pleasant Hill,CA 94523 7 w mazeassociates.com December 21, 2023 Regular Board Meeting Agenda Packet- Page 204 of 461 Page 108 of 116 The value of the assets, liability and assumptions used to determine annual required contributions for other post-employment benefits is determined by an actuary study provided to the District as of June 30, 2023. The value of the District's net pension asset was obtained from an actuarial valuation provided by CCCERA. Management's estimate of depreciation is based on the estimated useful lives of the capital assets, and its estimate of claims is based on the District Attorney's estimates of current and potential litigation, as well as actuary studies provided for the District as of June 30, 2023. We evaluated the key factors and assumptions used to develop the depreciation expense and claims liability and reviewed the current actuary study and determined that they are reasonable in relation to the basic financial statements taken as a whole. Disclosures-The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We did not propose any audit adjustments that, in our judgement, could have a significant effect, either individually or in the aggregate, on the District's financial reporting process. Professional standards require us to accumulate all known and likely uncorrected misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. We have no such misstatements to report to the Board of Directors. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in a management representation letter dated November 29,2023. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge,there were no such consultations with other accountants. 8 December 21, 2023 Regular Board Meeting Agenda Packet- Page 205 of 461 Page 109 of 116 Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the District's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to the required supplementary information that accompanies and supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the required supplementary information and do not express an opinion or provide any assurance on the required supplementary information. We were engaged to report on the supplementary information,which accompany the financial statements but are not required supplementary information. With respect to this supplemental information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplemental information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. This information is intended solely for the use of the Board of Directors and management and is not intended to be, and should not be,used by anyone other than these specified parties. Pleasant Hill, California November 29,2023 9 December 21, 2023 Regular Board Meeting Agenda Packet- Page 206 of 461 Page 110 of 116 This Page Left Intentionally Blank December 21, 2023 Regular Board Meeting Agenda Packet- Page 207 of 461 Page 111 of 116 Attachment 3 December 21,2023 Accept Independently Audited - Annual Comprehensive Financial Report for FY 2022-23 Board of Directors T. Kevin Mizuno, CPA , Finance Manager 1 1 Table of Contents I Introduction Independent Audit ACFR Highlights z G FOA Award Recommendation 1 2 December 21, 2023 Regular Board Meeting Agenda Packet- Page 208 of 461 1 Page 112 of 116 Attachment 3 Introduction { Annual exercise to receive and accept Central San's annual financial statements For year ended June 30, 2023 Financial statements are presented in an Annual Comprehensive Financial Report (ACFR) format Independently audited " ' Acceptance has no direct fiscal impact 3 Independent Audit Independent Audit \ Results Independent audit required pursuant to California Government Code § 26909 Must be delivered to California State Controller's Office within 12 months of end of fiscal year Independent audit conducted by audit firm Maze &Associates Role of independent auditor versus Central San management. I'CENTRALSAN 4 December 21, 2023 Regular Board Meeting Agenda Packet- Page 209 of 461 2 Page 113 of 116 Attachment 3 Independent Audit Two Independent Audit Reports Audit Opinion Letter Memo on Internal Control (MOIC) Always 15Y page of ACFR Reports on any material weaknesses or Audit conducted in accordance with significant deficiencies identified during generally accepted audit standards(GAAS) independent audit issued by the American Institute of Not an opinion on effectiveness of Central Certified Public Accountants(AICPA) San's internal controls Ascertain whether audit is presented fairly Other significant audit matters, including: in accordance with generally accepted New accounting standards audit principles (GAAP) issued by the Government Accounting Standards Board Accounting estimates (GASB) Corrected and uncorrected misstatements Reference to materiality and disclaimers Disagreements with management This year's results: Unmodified ("clean") audit opinion MEMO 5 ACFR Highlights Annual Comprehensive Financial Report (ACFR) Provide financial condition and performance for j fiscal year ended June 30, 2023 Full accrual single enterprise fund format ,. � � compared to modified accrual "sub-fund" reporting in budget book ACFR goes above and beyond the typical "basic ' financial statements" Introductory nI,' Financial Statistical x Implementation of GASB 96:Subscription-Based .f Information Technology Arrangements (SBITAs) ,I 6 December 21, 2023 Regular Board Meeting Agenda Packet- Page 210 of 461 3 Page 114 of 116 Attachment 3 ACFR Highlights Statement of Net Position Two Year Comparison $Increase %Increase June 30,2023 June 30,2022 (Decrease) (Decrease) Total assets $1,074,204,242 $1,046,518,092 $ 27,686,150 2.6% Total deferred outflows 83,854,962 130,729,859 (46,874,897) -35.9% Total liabilities 129,587,326 100,621,583 28,965,743 28.8% Total deferred inflows 65,456,298 186,381,527 (120,925,229) -64.9% Net position Net investment in capital assets 781,637,137 747,646,783 33,990,354 4.5% Restricted 1,527 14 1,513 10807.1% Unrestricted 181,376,916 142,598,044 38,778,872 27.2% Total net position $ 963,015,580 $ 890,244,841 $ 72,770,739 8.2% 7 ACFR Highlights Net Position - 5 Year Trend $1,000,000,000 $900,000,000 — $850,000,000 $800,000,000 I �f $750,000,000 $700,000,000 Li $650,000,000 $600,000,000 F $550,000,000 $500,000,000 2019 2020 2021 2022 2023 g w ■Net Investment in Capital Assets ■Restricted i Unrestricted 8 December 21, 2023 Regular Board Meeting Agenda Packet- Page 211 of 461 4 Page 115 of 116 Attachment 3 ACFR Highlights Revenues, Expenses & Changes in Net Position - Two Year Comparison X . $Increase %Increase •� June 30,2023 June 30,2022 (Decrease) (Decrease) Total revenues $ 100,296,021 $ 145,305,739 $ (45,009,718) -31.0% Total expenses 113,330,918 104,698,580 8,632,338 8.2% f Income before capital contributions (13,034,897) 40,607,159 (53,642,056) -132.1% - Capital contributions 85,805,636 24,148,455 61,657,181 255.3% s' Increase in net position 72,770,739 64,755,614 8,015,125 12.4% Beginning net position 890,244,841 825,489,227 64,755,614 7.8% 4' Ending net position $ 963,015, 880 $890,244,841 $ 22,770,739 8.2% 9 ACFR Highlights Total Revenues & Expenses 5 Year Trend $200,000,000 $180,000,000 $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 i S, $40,000,000 i $20,000,000 I� A $- 2019 2020 2021 2022 2023 ®Total Revenue ■Total Expenses 10 December 21, 2023 Regular Board Meeting Agenda Packet- Page 212 of 461 5 Page 116 of 116 Attachment 3 V� G FOA Award Goariomeur Fm'^n Offxcas Associanoa Certificate of Achievement for Excellence in Certificate of Financial Reporting Achievement for Excellence Applied for annually with GFOA in Financial Reporting Received award for FY 2021-22 ACFR in August 2023 Central Contra Costa Sanitary District 23rd consecutive year receiving award California Intend to apply for award for FY 2022-23 F�. For tte Fi-I Yex Ended ACFR Iuve 30,2022 6W_ OD Exev¢ve pueemefEO — 1 11 Recommendation Accept the ACFR and accompanying auditors' memorandum on internal control and required communications for • -• June 30, 2023. e - 12 December 21, 2023 Regular Board Meeting Agenda Packet- Page 213 of 461 6