May 10, 2011
Once again an independent auditor has given the Water District a clean opinion and indicated the District is financially strong.
The annual audit for Fiscal Year 2010 was presented to the Board of Directors by Allan Johnston, CPA, who conducted the detailed audit of financial statements.
2010 was a year of relatively high rainfall in the Coastal Bend region. The result was that residents purchased less water for irrigation and other outside uses. The Water District had total revenues of $16.2 million and expenses of $16.5 million for the year. In 2009, a very dry year, the Water District had total revenues of $19.8 million and total expenses of $18.5 million for the year.
At the end of 2010 the District had total assets of $74.5 million including land and easements, pipelines, plants and equipment, and $12 million in construction in progress.
At the end of 2010 the District had long-term bond debt of $47.1 million. Major construction projects were started in 2009 and are being financed with revenue bond debt to be paid off through future revenue from water sales. A total of $17.7 million in new water revenue bonds were sold by the District in 2009 to pay for construction of new treatment, storage, pumping, transmission and operations facilities.
Board members raised the topic of possible bond debt refinancing to save on interest costs. Jim Naismith, general manager, noted that the District successfully refunded bond debt in 2006, saving more than $1 million in interest. He said the District's financial advisors continuously evaluate debt refinancing opportunities.
The Water District is a "cost of service" entity, meaning that customers are charged water rates based on the total cost of operations, water purchases and debt service.
The District had a year-end unrestricted fund balance of $9 million. This balance is to be used for future projects, rate smoothing and any large unanticipated expense or catastrophe. Management notes that while it has been three decades since the last major hurricane hit the Water District service area, it is necessary to be prepared for the potential of major economic disruption, including reduced revenue from water sales, in the wake of a severe storm.
