Clark County Water Reclamation District A Component Unit of Clark County, Nevada
Comprehensive Annual Financial Report For The Years Ended June 30, 2020 and 2019
Clark County Water Reclamation District A Component Unit of Clark County, Nevada
COMPREHENSIVE ANNUAL FINANCIAL REPORT
CLARK COUNTY WATER RECLAMATION DISTRICT 5857 East Flamingo Road Las Vegas, Nevada 89122 (702) 434-6600 www.cleanwaterteam.com
FOR THE YEARS ENDED
JUNE 30, 2020 AND 2019
Prepared by the Financial Services Group Under the Supervision of Susan Heltsley, Assistant General Manager, Financial Services
COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Years Ended June 30, 2020 and 2019 Table of Contents
Introductory Section District Officials...... I Letter of Transmittal ...... II District Organizational Chart ...... VI Sources and Uses of District Funds ...... VII Metropolitan Service Area Map ...... VIII Wastewater Treatment Process Diagram ...... IX Certificate of Achievement for Excellence in Financial Reporting ...... X Financial Section Independent Auditors’ Report on Financial Statements and Supplementary Information ...... 1 Management’s Discussion and Analysis ...... 4 Basic Financial Statements ...... 11 Statement of Net Position ...... 12 Statement of Revenues, Expenses and Changes in Net Position ...... 14 Statement of Cash Flows ...... 15 Notes to Financial Statements ...... 17 Required Supplementary Information ...... 43 Schedule of Changes in Total OPEB Liability - PEBP ...... 44 Schedule of Changes in Total OPEB Liability – Self-Funded/HPN...... 45 Schedule of Proportionate Share of Contractually Required OPEB Contributions – PEBP ...... 46 Schedule of Proportionate Share of Net Pension Liability ...... 47 Schedule of Proportionate Share of Statutorily Required Pension Contribution Information ...... 48 Supplementary Information ...... 49 Schedule of Capital Assets...... 50 Schedule of Revenues and Expenses Compared to Budget ...... 51 Schedule of Cash Flows Compared to Budget ...... 52 Statistical Section (Unaudited) Summary of Net Position ...... 55 Changes in Net Position ...... 56 Operating Expense by Function ...... 57 Operating Revenue by Source...... 58 Non-Operating Revenue by Source ...... 59 Ten Largest Customers ...... 60 Ratios of Outstanding Debt ...... 61 Average Daily Flows ...... 62 Schedule of Insurance Policies in Force ...... 63 Budget Approved Full-Time Positions by Service Center ...... 64 Capital Asset Statistics by Function...... 65 Demographic Statistics ...... 66 Clark County Principal Industries ...... 68 Technical Terms ...... 70 Comments of Independent Auditors Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...... 72
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Introductory Section
Clark County Water Reclamation District Flamingo Water Resource Center
District Officials CLARK COUNTY WATER RECLAMATION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT Years Ended June 30, 2020 and 2019
Clark County Water Reclamation District Officials
A Board of Trustees, consisting of seven members, governs the Clark County Water Reclamation District (the District). Each member also sits on the seven-member Clark County Commission. Current Trustees of the District Board are as follows:
(L-R) Lawrence Brown III - Chair, Justin Jones, Michael Naft, Marilyn Kirkpatrick, Lawrence Weekly, James B. Gibson, Tick Segerblom - Vice Chair
Other Elected Officials
Laura Fitzpatrick Treasurer
Lynn Goya County Clerk
District Administrative Officials
Thomas A. Minwegen General Manager Daniel Fischer Deputy General Manager, Plant Operations and Laboratory Shawn Mollus Deputy General Manager, Engineering and Construction Richard Donahue Assistant General Manager, Collection System Marty Flynn Assistant General Manager, Strategic Services Susan Heltsley Assistant General Manager, Financial Services Brenda Pappas Assistant General Manager, Customer Care Jay Polack Chief Information Officer David Stoft General Counsel
I
Letter of Transmittal Clark County Water Reclamation District
October 20, 2020
Ex Officio Board of Trustees Board of County Commissioners Clark County Water Reclamation District 500 South Grand Central Parkway Las Vegas, Nevada 89155-1601
Honorable Trustees and Rate Payers of the Clark County Water Reclamation District:
We wish to express our appreciation to the Board for their leadership and support in planning and coordinating the operations of the Clark County Water Reclamation District (the District). We are pleased to present the District’s Comprehensive Annual Financial Report (CAFR) for the fiscal years (FY) ended June 30, 2020 and 2019.
This report was prepared by the District’s Financial Services Group following guidelines set forth by the Governmental Accounting Standards Board (GASB) with financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) in the United States.
Management assumes full responsibility for both the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control 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.
BDO USA, LLP, a firm of Certified Public Accountants, has performed an independent audit of the District’s basic financial statements for the FYs ended June 30, 2020 and 2019, and issued an unmodified (“clean”) report thereof. The independent auditor’s report is located in the financial section of this report.
Management’s discussion and analysis (MD&A) immediately follows the independent auditors’ report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A and the financial statements complement this letter of transmittal and should be read in conjunction with it.
District Information The purpose of the District is to ensure the collection, treatment, and reclamation of wastewater so it can be safely returned to the environment. The District was established as a General Improvement District under Nevada Revised Statute (NRS) 318 in 1954 and, as such, is a political subdivision of the State. The District has been granted the authority to levy taxes, sell bonds, create assessment districts, and the right of eminent domain. The District’s bond covenants provide that rates and charges be sufficient to cover operation and maintenance costs and general expenses, including principal and interest payments on outstanding bonds.
The District is governed by a seven-member ex officio Board of Trustees (the Board) comprised of the members of the Clark County Commission. The Commissioners are elected to the Clark County Commission from geographical districts for staggered four-year terms. The Board elects a chairperson and a vice-chairperson to serve as the Board’s presiding officers. The Board has the power to set the District’s rates and charges. Currently, the District’s Chairperson is Commissioner Lawrence Brown III, and the Vice-Chairperson is Commissioner Tick Segerblom.
II
Board of County Commissioners October 20, 2020
As a General Improvement District, the District’s cost of providing goods and services on a continuing basis is financed primarily through user charges. To that end, rates and charges should be sufficient to meet all the District’s revenue requirements (both operating and capital). The District follows the customer User Charge System guidelines set forth in Code of Federal Regulations Section 40 Part 35, which are requirements imposed on the District as an Environmental Protection Agency grant-assisted wastewater facility.
The District employs the accrual basis for recording and reporting financial transactions. Therefore, revenues and expenses are recorded in the period in which they are earned and incurred, respectively. During the year, funds will be encumbered upon approval of individual purchase orders. At year end, encumbrances lapse on unfilled orders for operations and maintenance items. Items or services received after year end are charged to the next fiscal year. The acquisition, repairs and improvement of the wastewater facilities required to provide services may be financed from existing cash resources, the issuance of bonds, state revolving loans, the receipt of grants, and other financing mechanisms.
The District’s facilities consist of a network of over 2,258 miles of pipelines for the conveyance of wastewater to facilities for treatment in the unincorporated areas of Clark County including the resort destinations on the Las Vegas Strip. The District also operates facilities in service areas outside of the Las Vegas Valley, including Laughlin, Searchlight, Moapa Valley, Blue Diamond, and Indian Springs as shown on the Page VIII Service Area Map. Wastewater is conveyed to the treatment facilities, where it undergoes a series of physical, biological and chemical processes that produce effluent that meets or exceeds federal, state and local discharge standards.
All major sewer lines within the system were constructed after 1954. Approximately 60% of the District’s sewer lines have been installed since 1988. The District’s wastewater treatment systems service 243,404 active accounts: 234,161 are residential accounts and 9,243 are commercial accounts. A total of 239,284 accounts are in the Las Vegas Valley, 2,821 are in Laughlin, and 1,299 are accounts in all other service areas.
Local Economy On January 30, 2020, the World Health Organization (WHO) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the COVID-19 outbreak). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic. Subsequently, Governor Steve Sisolak issued a Declaration of Emergency on March 12, 2020, and ordered a shutdown of all nonessential businesses for 30 days on March 18, 2020, with the majority of them extended through May 31, 2020. Casinos, the lifeblood of Clark County’s economic engine, began reopening in early June. Year- over-year numbers are shown for visitor volume and airport passengers, and unemployment rates from February to June 2020. Feb Mar Apr May Jun 2020 2020 2020 2020 2020 Clark County Visitor Volume 4.1% (58.7%) (97.0%) (95.9%) (68.5%) McCarran International Airport Passengers 6.5% (53.1%) (96.4%) (91.5%) (76.6%) Unemployment Rates 3.7% 7.1% 34.2% 29.1% 17.7%
While the numbers were starting to recover in June, it is unclear when, if it all, the economy will return to pre-COVID-19 levels.
Long-Term Financial Planning and Major Initiatives The District maintains both a Five-Year and a Long-Term Comprehensive Financial Plan. Included in both plans are the current and projected capital improvement program (CIP) costs, revenue and expense projections, and rate modeling. The District’s CIP includes rehabilitation and replacement of existing infrastructure, new infrastructure, and expansion of existing infrastructure due to service area growth or capacity requirements.
These comprehensive plans link the District’s physical development planning with the fiscal planning. The Five-Year and Long-Term Financial Plans allow for adjustments to be made based on changes in activity, requirements, and needs, while providing the District with the ability to maintain strong and stable cash reserves.
III
Board of County Commissioners October 20, 2020
The District’s annual sewer service charges pay for services, supplies, personnel, annual replacement and rehabilitation debt service, and capital rehabilitation and replacement. The District uses a universal rate system, where all service areas are charged the same annual amount for sewer service fees per Equivalent Residential Unit (ERU). A single-family residence has a billing value of 1.0 ERU; all other residential and commercial accounts are derived from that base value. The District’s annual sewer service rate on July 1, 2019 was $227.16 per ERU.
System Development Approval (SDA) fees are connection fees the District charges for each ERU that connects to the wastewater facilities. SDA fees are due and payable in advance of connection to the District’s facilities. It is the practice of the District to apply SDA revenues to the District’s capital expansion program, capital equipment related to expansion of existing infrastructure due to service area growth or capacity requirements, and expansion related debt. Page VII provides an overview of the District’s Sources and uses of Funds.
As of June 30, 2020, the Five-Year Capital Improvement Plan (FY 2020/21 through FY 2024/25) totaled $838 million. This estimated amount reflects the various capital projects that are expected to be designed and/or constructed over the next five years to rehabilitate existing infrastructure and to meet expansion needs. Of the total amount, the District plans to spend $740 million in the Las Vegas Valley - $266 million for replacement or rehabilitation and $474 million on capacity expansion projects. Outside the Las Vegas Valley, the District plans to spend $36 million for capacity expansion and rehabilitation projects. Management of the CIP is budgeted at $39 million. Capital equipment is budgeted at $22.5 million for various new and replacement equipment.
Relevant Financial Policies Debt Administration In accordance with Subsection (1)(c) of NRS 350.013, the District annually submits its Debt Management Policy to the State Department of Taxation and the Debt Management Commission. The purpose of the policy is to manage the issuance of the District’s debt obligations and to maintain the District’s ability to incur debt and other long-term obligations at favorable interest rates for capital improvements, facilities, and equipment.
It is the general intent of the District that revenue from rates and charges are adequate to cover all its costs and that ad valorem taxes be avoided. Historically, ad valorem taxes have not been relied on to support the District’s operations or debt service. No plan or intention to call upon ad valorem taxes is in place to support the District’s debt or other financial requirements. The District’s Debt Management Policy can be viewed on the District’s web site at http://www.cleanwaterteam.com.
Credit ratings indicate to potential investors whether an entity is considered a good credit risk. Credit ratings issued by the bond rating agencies are a major factor in determining the cost of borrowed funds in the municipal bond market and other debt financing mechanisms. The District currently holds a AAA bond rating with a stable outlook from Standard and Poor’s and an Aa1 rating from Moody’s Investor Services. These ratings reflect the District’s strong financial position, stable revenues, and effective financial planning.
Each time the District issues bonds through a competitive sale, a Continuing Disclosure Certificate must be executed. The Continuing Disclosure Certificate outlines the District’s responsibilities with regard to complying with Securities and Exchange Commission (SEC) Rule 15c2-12(b)(5). As of July 1, 2009, the Municipal Securities Rulemaking Board (MSRB) requires all municipal issuers to electronically file Annual Reports and Material Event Notices through the Electronic Municipal Market Access (EMMA) System which are available at http://emma.msrb.org. The District continues to be in compliance with this requirement.
Designated Unrestricted Reserves Pursuant to current policy, the District maintains several designated unrestricted reserves. Designated unrestricted reserves are available for appropriation, but the funds have been earmarked for a particular purpose. Designated unrestricted funds are designated to reflect the District’s management priorities, such as completion of capital improvement projects or providing for unknown contingent liabilities.
IV
District Organizational Chart
VI
Sources and Uses of District Funds
VII
Metropolitan Service Area Map
Clark County Water Reclamation District Service Area Map
VIII
Wastewater Treatment Process Diagram
IX
Wastewater Treatment
Certificate of Achievement for Excellence in Financial Reporting
Financial Reporting
X
Financial Section
Clark County Water Reclamation District Flamingo Water Resource Center
Tel: 702-384-1120 6100 Elton Avenue, #1000 Fax: 702-870-2474 Las Vegas, NV 89107 www.bdo.com
Independent Auditor’s Report on Financial Statements and Supplementary Information
Honorable Clark County Water Reclamation District Board of Trustees Clark County Water Reclamation District, Nevada
We have audited the accompanying financial statements of the Clark County Water Reclamation District (the District), a component unit of Clark County, Nevada, as of and for the year ended June 30, 2020 and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements.
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit performed in accordance with applicable professional standards is a process designed to obtain reasonable assurance about whether the District's basic financial statements are free from material misstatement. This process involves performing procedures to obtain audit evidence about the amounts and disclosures in the basic financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the basic financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District's preparation and fair presentation of the basic financial statements to enable the design of audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management, as well as the overall presentation of the basic financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.
1 Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the District as of June 30, 2020, and the changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter, COVID-19 Pandemic
As more fully described in Note N to the basic financial statements, the District discusses the impact of the novel coronavirus (COVID-19), which was declared a global pandemic by the World Health Organization in March 2020. Our opinion is not modified with respect to this matter.
Emphasis of Matter, Reclassification
As more fully described in Note L to the basic financial statements, the District reclassified the deferred loss on bond refunding from unrestricted net position to net investment in capital assets. The reclassification had no effect on the total net position. Our opinion has not been modified with respect to this matter.
Other Matter – Prior Period Basic Financial Statements
The basic financial statements of the Clark County Water Reclamation District (the District), a component unit of Clark County, Nevada, as of and for the year ended June 30, 2019 were audited by Piercy Bowler Taylor & Kern (“PBTK”), whose partners and professional staff joined BDO USA, LLP as of July 1, 2020, and has subsequently ceased operations. PBTK expressed an unmodified opinion on those statements in their report dated October 4, 2019.
Other Matters
Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and schedules of changes in total OPEB liability, proportionate share of contractually required OPEB contributions, proportionate share of net pension liability information, proportionate and share of statutorily required pension contribution information on pages 42-46 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
2 Other Information
Our audit was conducted for the purpose of forming our opinion on the financial statements that collectively comprise the District's basic financial statements. The introductory section, other supplementary information, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The supplementary information on pages 48-50 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. Such 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.
The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 20, 2020 on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
Las Vegas, Nevada October 20, 2020
3 CLARK COUNTY WATER RECLAMATION DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Management’s Discussion and Analysis As management of the Clark County Water Reclamation District (the District), we offer readers of the District’s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal years ended June 30, 2020 and 2019. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our financial statements which follow this analysis.
Financial Highlights . Total Net Position increased by $85.1 million (4.6%) to $1.92 billion at June 30, 2020. During fiscal year ended 2019, total net position increased by $79.7 million (4.5%) for a total of $1.84 billion.
. Change in Net Position increased by $5.4 million (6.8%) to $85.1 million for fiscal year 2020. During fiscal year ended 2019 change in net position increased by $54.3 million (214.4%) for a total of $79.7 million.
. Capital Assets, Net of Accumulated Depreciation increased by $16.0 million (0.8%) to $1.91 billion at June 30, 2020. During fiscal year ended 2019 capital assets, net of accumulated depreciation, decreased by $24.7 million (-1.3%) for a total of $1.89 billion.
Overview of the Financial Statements The District uses accrual basis accounting and accounts for all assets used in the production of services offered. The financial statements of the District are self-contained and may be used by its Board of Trustees, rate payers, creditors, investors, legislators or the general public to evaluate the performance of the District in a manner similar to that used to evaluate private sector businesses.
The District is required to present three basic financial statements – The Statement of Net Position; The Statement of Revenues, Expenses and Changes in Net Position; and The Statement of Cash Flows.
The Statement of Net Position, which outlines the District’s financial and capital resources, serves as the District’s statement of financial position or balance sheet. Net Position equals assets, plus deferred outflows of resources, minus liabilities, minus deferred inflows of resources.
The Statement of Revenues, Expenses and Changes in Net Position presents basic information regarding the District’s financial activities and provides insight to the user regarding the sources of funding for the District’s operations.
The Statement of Cash Flows reports cash receipts and disbursements during the reporting year for operating activities, capital and related financing activities, and investing activities.
All statements are prepared in accordance with accounting principles generally accepted in the United States.
Notes to the Financial Statements The notes to the financial statements provide additional information that is necessary to acquire a full understanding of the data provided in the District’s financial statements. The notes to the financial statements can be found on pages 17-42 of this report.
Other Information In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the District’s progress in funding its obligation to provide Postemployment Benefits Other Than Pensions (OPEB) to its employees and its proportionate share of net pension liability and schedule of contributions related to pension. Required supplementary information can be found beginning on page 44 of this report.
4
CLARK COUNTY WATER RECLAMATION DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Financial Analysis Net position over time may serve as a useful indicator of a government’s financial condition. In the case of the District, assets and deferred outflows exceeded liabilities and deferred inflows by $1.92 and $1.84 billion in fiscal years 2020 and 2019, respectively. Net position increased 4.6% in fiscal year 2020 and increased 4.5% in fiscal year 2019. See Net Position (Table 1), for a summary of the District’s net position over the last three years.
Table 1 - Net Position Year Ended Year Ended Increase Year Ended Increase June 30, 2020 June 30, 2019 (Decrease) June 30, 2018 (Decrease) Current and other assets $ 564,838,781 $ 507,291,683 $ 57,547,098 11.3% $ 417,266,053 $ 90,025,630 21.6% Capital assets 1,905,354,375 1,889,400,018 15,954,357 0.8% 1,914,064,837 (24,664,819) (1.3%) Total Assets 2,470,193,156 2,396,691,701 73,501,455 3.1% 2,331,330,890 65,360,811 2.8%
Deferred Loss on Bond Refunding 35,906,858 37,901,690 (1,994,832) (5.3%) 39,896,522 (1,994,832) (5.0%) Deferred Outflows/OPEB 2,274,864 737,191 1,537,673 208.6% 636,213 100,978 15.9% Deferred Outflows/Pension Plan 10,840,514 11,611,007 (770,493) (6.6%) 10,440,542 1,170,465 11.2%
Current liabilities 45,081,453 41,198,034 3,883,419 9.4% 40,672,654 525,380 1.3% Non-Current liabilities 525,274,149 541,776,823 (16,502,674) (3.0%) 575,852,706 (34,075,883) (5.9%) Total Liabilities 570,355,602 582,974,857 (12,619,255) (2.2%) 616,525,360 (33,550,503) (5.4%)
Deferred Inflows/OPEB 21,365,361 23,575,527 (2,210,166) (9.4%) 4,327,511 19,248,016 444.8% Deferred Inflows/Pension Plan 5,255,806 3,234,212 2,021,594 62.5% 3,979,582 (745,370) (18.7%)
Net Position: Net investment in capital assets 1,477,040,054 1,448,733,351 28,306,703 2.0% 1,459,503,457 (10,770,106) (0.7%) Restricted 24,063,952 22,840,446 1,223,506 5.4% 20,548,092 2,292,354 11.2% Unrestricted 421,134,617 365,583,196 55,551,421 15.2% 277,420,165 88,163,031 31.8% Total Net Position $ 1,922,238,623 $ 1,837,156,993 $ 85,081,630 4.6% $ 1,757,471,714 $ 79,685,279 4.5%
As outlined in the above table, total net position is comprised of three distinct components: net investment in capital assets, restricted and unrestricted. By far, the largest portion of the District’s net position of $1.92 billion reflects its investment in capital assets. This portion, $1.48 billion, represents the capital assets net of any outstanding debt that is directly attributable to the acquisition, construction or improvement of those assets. The District uses those capital assets to provide services to rate payers; consequently, those assets are not available for future spending.
An additional portion of the District’s net position, approximately $24.1 million, represents resources that are subject to constraints due to legislative restrictions or other external restrictions. The remaining balance of $421.1 million is unrestricted and may be used to meet ongoing obligations to rate payers and creditors that are not funded by restricted resources or for use in the event of a facility emergency.
At the end of the current fiscal year, the District was able to report positive balances in all three categories of net position. The same situation held true for the two previous fiscal years.
5
CLARK COUNTY WATER RECLAMATION DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Fiscal Year Ended 2020 Summary: • Total assets increased $73.5 million (3.1%) over fiscal year ended 2019 as a result of an increase in investments and capital assets. • Total liabilities decreased $12.6 million (-2.2%) over fiscal year ended 2019 primarily due to a decrease in the non- current liability bond debt.
Fiscal Year Ended 2019 Summary: • Total assets increased $65.4 million (2.8%) over fiscal year ended 2018 as a result of an increase in investments, which were offset by a decrease in capital assets and cash and cash equivalents. • Total liabilities decreased $33.6 million (-5.4%) over fiscal year ended 2018 primarily due to decreases in the liability for accrued other postemployment benefits (OPEB).
Changes in the District’s net position can be determined by a review of the following condensed Statements of Revenues, Expenses and Change in Net Position (Table 2).
Table 2 - Change in Net Position Year Ended Year Ended Increase Year Ended Increase June 30, 2020 June 30, 2019 (Decrease) June 30, 2018 (Decrease) Operating Revenues: Sewer service charges $ 159,171,820 $ 151,779,428 $ 7,392,392 4.9% $ 147,311,016 $ 4,468,412 3.0% Other 1,875,003 9,075,866 (7,200,863) (79.3%) 1,914,492 7,161,374 374.1% Total Operating Revenues 161,046,823 160,855,294 191,529 0.1% 149,225,508 11,629,786 7.8%
Non-Operating Revenues (Expenses): Connection fees 24,942,388 30,463,343 (5,520,955) (18.1%) 26,788,540 3,674,803 13.7% Sales tax apportionment 20,167,397 20,802,775 (635,378) (3.1%) 19,623,239 1,179,536 6.0% Investment income 26,534,511 19,321,200 7,213,311 37.3% 560,284 18,760,916 3348.5% Other (15,257,838) (15,661,284) 403,446 (2.6%) (13,912,008) (1,749,276) 12.6% Total Non-Operating Revenues (Expenses) 56,386,458 54,926,034 1,460,424 2.7% 33,060,055 21,865,979 66.1%
Total Revenues, Net 217,433,281 215,781,328 1,651,953 0.8% 182,285,563 33,495,765 18.4%
Operating Expenses: Personnel 41,971,025 38,914,896 3,056,129 7.9% 39,824,957 (910,061) (2.3%) Other 40,140,515 38,998,457 1,142,058 2.9% 51,262,762 (12,264,305) (23.9%) Depreciation 97,699,050 100,262,055 (2,563,005) (2.6%) 99,673,167 588,888 0.6% Total Expenses 179,810,590 178,175,408 1,635,182 0.9% 190,760,886 (12,585,478) (6.6%)
Income (Loss) Before Capital Contributions 37,622,691 37,605,920 16,771 0.0% (8,475,323) 46,081,243 (543.7%) Capital Contributions: Contributed assets 47,458,939 42,079,359 5,379,580 12.8% 33,821,746 8,257,613 24.4%
Change in Net Position 85,081,630 79,685,279 5,396,351 6.8% 25,346,423 54,338,856 214.4%
Net Position, Beginning of the Year 1,837,156,993 1,757,471,714 79,685,279 4.5% 1,732,125,291 25,346,423 1.5%
Net Position, End of Year $ 1,922,238,623 $ 1,837,156,993 $ 85,081,630 4.6% $ 1,757,471,714 $ 79,685,279 4.5%
The primary source of operating revenues, sewer service charges, totaled $159.2 million. Operating revenues also include reclaimed water sales, pretreatment inspection fees, septage waste processing fees and miscellaneous fees. Operating revenues fund all operational expenses including repair and maintenance, rehabilitation and replacement of the District’s infrastructure and equipment, and debt service.
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CLARK COUNTY WATER RECLAMATION DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
The primary source of non-operating revenues, connection fees, was $24.9 million. Non-operating revenues are used to fund the expansion of capital infrastructure and equipment related to service area growth and capacity requirements and debt service. The other major sources of non-operating revenues are sales tax apportionment of $20.2 million and investment income of $26.5 million.
Depreciation expense decreased $2.6 million (-2.6%) because Desert Breeze Water Resource Center was in idle status for the full year. Contributed assets totaled approximately $47.5 million and $42.1 million for fiscal years ended 2020 and 2019, respectively.
Fiscal Year Ended 2020 Summary: • Total operating revenues increased $0.2 million (0.1%) over fiscal year ended 2019. Sewer service charges increased $7.3 million (4.9%) and were offset by a decrease in reclaimed water sales of $7.4 million (-79.3%). • Total non-operating revenues/expenses increased $1.5 million (2.7%) over fiscal year ended 2019 as a result of an increase in investment income offset by a decrease to connection fees. • Total net revenues increased $1.7 million (0.8%) over fiscal year ended 2019. • Total operating expenses excluding depreciation of $97.7 million, increased $4.2 million (5.4%) over fiscal year ended 2019. • Total expenses increased $1.6 million (0.9%) over fiscal year ended 2019.
Fiscal Year Ended 2019 Summary: • Total operating revenues increased $11.6 million (7.8%) over fiscal year ended 2018 as a result of increases in sewer service revenue and reclaimed water sales. Reclaimed water sales increased due to the agreement with Las Vegas Valley Water District for reimbursement of costs for the Desert Breeze Water Resource Center. • Total non-operating revenues/expenses increased $21.9 million (66.1%) over fiscal year ended 2018 as a result of an increase in connection fees and investment income. • Total net revenues increased $33.5 million (18.4%) over fiscal year ended 2018. • Total operating expenses excluding depreciation of $100.3 million, decreased $13.2 million (-14.5%) over fiscal year ended 2018. • Total expenses decreased $12.6 million (-6.6%) over fiscal year ended 2018.
Capital Assets and Debt Administration The following represents the District’s investment in capital assets, net of depreciation as of June 30 for each fiscal year:
Table 3 - Capital Assets, Net of Accumulated Depreciation Year Ended Year Ended Increase Year Ended Increase June 30, 2020 June 30, 2019 (Decrease) June 30, 2018 (Decrease) Land and rights of way $ 7,958,177 $ 7,958,177 $ - 0.0% $ 7,958,177 $ - 0.0% Land improvements 9,147,991 10,094,466 (946,475) (9.4%) 11,040,941 (946,475) (8.6%) Buildings and wastewater treatment facilities 596,464,735 633,231,040 (36,766,305) (5.8%) 675,197,608 (41,966,568) (6.2%) Wastewater conveyance lines 1,053,126,063 1,028,846,994 24,279,069 2.4% 1,005,175,068 23,671,926 2.4% Equipment 148,142,199 158,778,078 (10,635,879) (6.7%) 177,625,918 (18,847,840) (10.6%) Work in progress 90,515,210 50,491,263 40,023,947 79.3% 37,067,125 13,424,138 36.2% Total $ 1,905,354,375 $ 1,889,400,018 $ 15,954,357 0.8% $ 1,914,064,837 $ (24,664,819) (1.3%)
The District’s investment in capital assets as of June 30, 2020 was $1.91 billion, net of accumulated depreciation. This represents an increase of $16.0 million (0.8%) over the prior year. This investment in capital assets includes land, buildings, treatment facilities, wastewater conveyance lines, equipment, and construction in progress. See further analysis in Note D to the basic financial statements in this report.
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CLARK COUNTY WATER RECLAMATION DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Major capital asset events during fiscal year 2020 included the following: • Completion of Laughlin water resource center’s process equipment rehabilitation and replacement ($11.2 million) • Completion of Laughlin lift station number two rehabilitation ($5.5 million) • Completion of phase one of Whitney lift station rehabilitation ($883 thousand)
The District’s investment in capital assets as of June 30, 2019 was $1.89 billion, net of accumulated depreciation. This investment in capital assets includes land, buildings, treatment facilities, wastewater conveyance lines, equipment, and construction in progress. This represents a decrease of $24.7 million (-1.3%) and is directly attributable to an increase in capital assets being depreciated.
Major capital asset events during fiscal year 2019 included the following: • Completion of package 5 of the collection system capacity upgrade ($6.4 million) • Completion of phase 1 of the Jones Boulevard capacity upgrade ($1.8 million) • Completion of Flamingo and Laughlin water resource centers’ electrical systems rehabilitation ($2.8 million)
Long-Term Debt The acquisition, construction and rehabilitation of the District’s infrastructure and facilities required to provide services are financed from existing cash resources, State Revolving Loans, grants, and the issuance of bonds. The District’s General Obligation/Revenue backed bonds constitute direct and general obligations of the District. The full faith and credit of the District is pledged to the payment of principal and interest thereon. Principal and interest are paid from net pledged revenues of the District and are secured by the District’s ability to access ad valorem taxes. Net pledged revenues are defined as gross revenues of the District less operation and maintenance expenses. Historically, taxes have not been relied on to support the District’s operations or debt service. No change in this practice is contemplated at this time.
The District currently holds a AAA bond rating with a stable outlook from Standard and Poor’s and an Aa1 rating from Moody’s Investor Services. Neither of these ratings has changed in the past fiscal year.
The District assesses its financial plan on an annual basis. The District’s bond covenants provide that rates and charges be sufficient to cover operation and maintenance costs and general expenses, which include debt service (principal and interest). Debt proceeds, connection fees and sales tax revenues are spent first when funding capital projects. The District has the following outstanding debt that was used to finance the capital projects:
Year Ended Year Ended Year Ended June 30, 2020 June 30, 2019 June 30, 2018 2008 Series $ - $ - $ 3,005,000 2009A Series - 3,085,000 6,000,000 2009B Series - 3,090,000 6,030,000 State Revolving Loan - ARRA (2009C) 2,950,022 3,260,550 3,571,079 State Revolving Loan (2011A) 27,650,917 29,719,838 31,724,354 State Revolving Loan (2012A) 23,264,047 24,847,360 26,394,016 2015 Series Refunding 100,095,000 103,625,000 103,625,000 2016 Series Refunding 265,375,000 267,470,000 269,465,000 Total $ 419,334,986 $ 435,097,748 $ 449,814,449
Additional information on the District’s long-term debt can be found in Note J to the basic financial statements in this report.
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CLARK COUNTY WATER RECLAMATION DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Economic Factors and Next Year’s Budget and Rates On January 30, 2020, the World Health Organization (WHO) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the COVID-19 outbreak). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic. Subsequently, Governor Steve Sisolak issued a Declaration of Emergency on March 12, 2020, and ordered a shutdown of all nonessential businesses for 30 days on March 18, 2020, with the majority of them extended through May 31, 2020. Nonessential businesses, including casinos, restaurants and retail stores, have opened and remain at 50 percent capacity and must require facial masks and social distancing. The government shutdown had an immediate effect on unemployment throughout the local economy. It was important to recognize the financial challenges many of our customers may face and we sought out measures to ease the economic burden of our rates and fees on our customers. The Board approved the following on June 16, 2020:
• Postponed from July 1, 2020 to January 1, 2021 an increase to the annual sewer service charge and connection fee; and • Waived basic penalties and interest on delinquent accounts for the fourth quarter of fiscal year 2020 and first quarter of fiscal year 2021.
In addition, the Board opted to not send fiscal year 2020 delinquent accounts to the Clark County tax roll, where they would be due with the September 2020 property taxes. Instead the delinquent balances were rolled into the July 1, 2020 fiscal year sewer service bills, affecting our short-term cash flow and not our sewer service revenue per se.
The District’s FY 2020-2021 Operations & Maintenance (O&M) and Capital Budgets provides funding to support the collection, treatment, and reclamation of commercial and residential wastewater for the service area. As an industrial operation, the District continues to have greater expenses for capital infrastructure, power and chemicals. The FY 2020- 2021 budgets addresses the needs of the District’s rate payers and the general public and allows the District to meet its obligation in protecting the public health and providing reliable collection and treatment systems. With continued teamwork and sound fiscal management, the District will continue to be in a position to proactively, effectively and responsibly plan and prepare for the future. The goal for the O&M budget is to maintain current service levels while continuing to develop a budget that better reflects actual expense activity. The rates charged by the District are among the lowest in the western region. Because the District depends on the rates for almost all of its income, the budget is linked to the rates charged. A community advisory board (CAB) was convened in the summer of 2018 to determine annual sewer rates for the next 10 years. They proposed a 2.75% rate increase, which was approved by the Board on February 5, 2019. The 2019-2020 annual sewer service rates were raised to $227.16 per ERU. The July 1, 2020 annual sewer rate remained at $227.16 per ERU, and will be raised to $233.40 on January 1, 2021, and to $239.84 on July 1, 2021.
Contacting the District’s Financial Management This financial report is designed to provide users, including our rate payers and creditors, with a general overview of the District’s finances and to demonstrate the District’s financial accountability for the money it receives from its rate payers. If you have any questions about this report or need additional financial information, contact the Clark County Water Reclamation District, Attention: Susan Heltsley, Assistant General Manager, Financial Services, 5857 E. Flamingo Road, Las Vegas, NV 89122. E-mail: [email protected] Telephone: (702) 668-8064.
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Basic Financial Statements
Statement of Net Position Clark County Water Reclamation District Statement of Net Position June 30, 2020 and 2019
Assets 2020 2019 Current Assets: Cash and cash equivalents $ 14,172,638 $ 13,329,129 Accounts receivable, net of allowance for doubtful accounts of 5,588,158 10,769,375 $128,672 and $402,783 Supply inventories 2,949,472 2,524,174 Interest receivable, net of allowance for doubtful accounts of 2,191,819 1,886,052 $0 and $677,178 Investments 491,881,993 437,573,866 Prepaid items 1,980,958 1,870,312 Total Unrestricted Current Assets 518,765,038 467,952,908
Restricted Current Assets: Cash and cash equivalents 29,586,088 28,486,366 Sales tax receivable 2,982,550 3,652,869 Total Restricted Current Assets 32,568,638 32,139,235
Total Current Assets 551,333,676 500,092,143
Non-Current Assets Capital Assets: Property, plant and equipment 3,080,876,972 3,010,044,248 Less accumulated depreciation and amortization 1,273,995,984 1,179,093,670 1,806,880,988 1,830,950,578 Land and rights of way 7,958,177 7,958,177 Construction in progress 90,515,210 50,491,263 Total Capital Assets, Net 1,905,354,375 1,889,400,018 Other long-term receivables, 13,505,105 7,199,540 net of reserve for reclaimed water sales of $0 and $2,350,523 Total Non-Current Assets 1,918,859,480 1,896,599,558
Total Assets 2,470,193,156 2,396,691,701
Deferred Outflows of Resources: Deferred loss on bond refunding 35,906,858 37,901,690 Deferred amounts related to OPEB 2,274,864 737,191 Deferred amounts related to pension plan 10,840,514 11,611,007 Total Deferred Outflows of Resources 49,022,236 50,249,888
See accompanying notes to the basic financial statements 12 (continued)
Clark County Water Reclamation District Statement of Net Position (continued) June 30, 2020 and 2019
Liabilities 2020 2019 Current Liabilities: Payable from Unrestricted Assets Accounts payable $ 3,149,799 $ 3,490,471 Construction contracts payable 8,918,971 5,505,207 Accrued expenses 2,356,799 2,193,142 Accumulated compensated absences 998,678 1,052,871 Other liabilities 4,604,268 4,270,776 Total Payable from Unrestricted Assets 20,028,515 16,512,467
Payable from Restricted Assets Accrued debt interest payable 8,057,210 8,403,837 Current maturities of debt payable 16,476,759 15,762,761 Other liabilities 518,969 518,969 Total Payable from Restricted Assets 25,052,938 24,685,567
Total Current Liabilities 45,081,453 41,198,034
Non-Current Liabilities: Long-term portion of accumulated compensated absences 6,161,289 5,291,291 Accrued other post employment benefits 21,992,376 19,811,230 Net pension liability 58,295,035 58,926,437 Debt payable, net of current maturities 438,825,449 457,300,389 Other liabilities - 447,476 Total Non-Current Liabilities 525,274,149 541,776,823
Total Liabilities 570,355,602 582,974,857
Deferred Inflows of Resources: Deferred amounts related to OPEB 21,365,361 23,575,527 Deferred amounts related to pension plan 5,255,806 3,234,212 Total Deferred Inflows of Resources 26,621,167 26,809,739
Net Position: Net investment in capital assets 1,477,040,054 1,448,733,351 Restricted: Debt service 21,528,878 20,082,529 Capital projects 2,535,074 2,757,917 Unrestricted 421,134,617 365,583,196
Total Net Position $ 1,922,238,623 $ 1,837,156,993
See accompanying notes to the basic financial statements
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Statement of Revenues, Expenses and Changes in Net Position Clark County Water Reclamation District Statement of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2020 and 2019
2020 2019 Operating Revenues Sewer service charges $ 159,171,820 $ 151,779,428 Reclaimed water sales 539,510 8,020,378 Pretreatment fees 633,813 523,000 Septage fees 510,512 406,586 Other 191,168 125,902 Total Operating Revenues 161,046,823 160,855,294
Operating Expenses Salaries 27,534,544 26,521,049 Benefits 14,436,481 12,393,847 Utilities 9,905,705 10,562,923 Outside services 7,878,695 8,193,959 Chemicals 5,767,417 5,426,854 Maintenance 8,397,330 6,106,445 Other expenses 2,738,015 2,579,808 Supplies 5,282,847 5,103,413 Other losses 170,506 1,025,055 Depreciation 97,699,050 100,262,055 Total Operating Expenses 179,810,590 178,175,408
Loss From Operations (18,763,767) (17,320,114)
Non-Operating Revenues (Expenses): Investment income 26,534,511 19,321,200 Restricted investment gain 732,119 755,892 Connection fee revenue, net of refunds and allowances of 24,942,388 30,463,343 $172,994 and $504,758 Sales tax apportionment 20,167,397 20,802,775 Interest expense (16,140,419) (16,832,937) Other non-operating revenue, net 150,462 415,761 Total Non-Operating Revenue (Expenses) 56,386,458 54,926,034
Income Before Capital Contributions 37,622,691 37,605,920
Capital Contributions Contributed assets 47,458,939 42,079,359
Change in Net Position 85,081,630 79,685,279 Net Position, Beginning of the Year 1,837,156,993 1,757,471,714
Net Position, End of Year $ 1,922,238,623 $ 1,837,156,993
See accompanying notes to the basic financial statements State
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Clark County Water Reclamation District Statement of Cash Flows Years Ended June 30, 2020 and 2019
2020 2019 Cash Flows From Operating Activities: Cash flows from customers $ 158,662,759 $ 167,432,111 Payments to employees (40,561,230) (37,648,520) Payments for services and supplies (40,519,981) (40,252,662) Net Cash Provided by Operating Activities 77,581,548 89,530,929
Cash Flows from Non Capital Financing Activities: Repayment of notes receivables from Clark County 1,259,715 371,457
Cash Flows from Capital and Related Financing Activities: Sales tax apportionment - restricted to capital expenditure by statute 20,390,240 20,145,958 Connection fees received 24,942,387 31,773,705 Acquisition, construction or improvement of capital assets (62,780,703) (32,692,542) Principal payments on debt for capital assets (15,762,761) (14,716,701) Interest payments on debt for capital assets (16,490,393) (17,165,341) Net Cash Used in Capital and Related Financing Activities (49,701,230) (12,654,921)
Cash Flows from Investing Activities: Proceeds from sale of investments 337,099,704 361,674,616 Interest on investments 11,327,696 8,335,759 Purchases of investments (375,774,664) (514,548,603) Workers compensation certificate of deposit - 116,693 Other financing fees 150,462 415,761 Net Cash Provided by Investing Activities (27,196,802) (144,005,774)
Net increase (decrease) in cash and cash equivalents 1,943,231 (66,758,309) Cash and cash equivalents, beginning of year 41,815,495 108,573,804 Cash and cash equivalents, end of year $ 43,758,726 $ 41,815,495
Cash and Cash Equivalent Balances: Unrestricted cash and cash equivalents 14,172,638 13,329,129 Restricted cash and cash equivalents 29,586,088 28,486,366 Cash and Cash Equivalents, End of Year $ 43,758,726 $ 41,815,495
See accompanying notes to the basic financial statements
Statement of Cash Flows 15 (continued)
Clark County Water Reclamation District Statement of Cash Flows (continued) Years Ended June 30, 2020 and 2019
2020 2019 Reconciliation of Loss from Operations to Net Cash Provided by Operating Activities: Loss from operations $ (18,763,767) $ (17,320,114) Adjustments: Depreciation 97,699,050 100,262,055 (Increase) decrease in receivables (2,384,065) 6,576,816 (Increase) in supply inventories (425,298) (478,333) (Increase) decrease in prepaid items (110,646) 143,727 Decrease (increase) in deferred outflows of resources for pensions 770,493 (1,170,465) Decrease (increase) in deferred inflows of resources for pensions 2,021,594 (745,370) (Decrease) increase in net pension liability (631,402) 2,368,418 (Decrease) in deferred outflows of resources for OPEB (1,537,673) (100,978) (Decrease) increase in deferred inflows of resources for OBEP (2,210,166) 19,248,017 Increase (decrease) in post employment benefits 2,181,146 (18,791,952) Increase in accounts payable and accrued expenses 638,790 499,126 Increase (decrease) in other liabilities 333,492 (960,018) Net Cash Provided by Operating Activities $ 77,581,548 $ 89,530,929
Non Cash Investing and Capital and Related Financing Activities: Contributed assets $ 47,458,939 $ 42,079,359 Adjustment of investments to carrying value 20,368,268 4,735,100
See accompanying notes to the basic financial statements
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Notes to Financial Statements I. Summary of Significant Accounting Policies
The accounting policies of the Clark County Water Reclamation District (the District) conform to generally accepted accounting principles (GAAP) in the United States of America as applicable to governments and as defined by the Governmental Accounting Standards Board (GASB), the independent and ultimate authoritative accounting and financial reporting standard-setting body for state and local governments. The significant accounting and reporting policies for the District are discussed below.
A. Reporting Entity
GASB Statement No. 61, The Financial Reporting Entity: Omnibus an Amendment of GASB Statements No. 14, The Financial Reporting Entity and No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments, defines the reporting entity as the primary government and organizations for which the primary government is financially accountable. Financial accountability is defined as: the appointment of a voting majority of the component units governing body by the primary government and whether the primary government has the ability to impose its will or the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government. The primary government is financially accountable if an organization is fiscally dependent on and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government regardless of whether the organization has (1) a separately elected governing board, (2) a governing board appointed by a higher level of government, or (3) a jointly appointed board. Since the Clark County (the County) Board of County Commissioners is the ex officio Board of Trustees of the District, they have the ability to influence and control operations. The County reports the District as a component unit and the financial statements of the District have been included in the County’s Comprehensive Annual Financial Report (CAFR). However, because the District provides sewer services to the public for a fee and is fiscally independent of the County, it is a self-supporting entity. The District also receives separate Board approval for these financial statements and files them separately with the State of Nevada Department of Taxation; therefore, the District is the reporting entity. No entities were determined to be component units of the District.
B. Measurement Focus and Basis of Accounting
The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The economic resource measurement focus and the accrual basis of accounting are used by the District. Under this basis of accounting, all assets and liabilities associated with District operations are included on the Statements of Net Position. Revenues are recognized as soon as they are both measurable and earned and expenses are recognized when a liability is incurred, regardless of the timing of related cash flows. Earned but unbilled receivables are recorded as revenue. The District considers revenues earned through user charges to be operating revenues. Revenues earned from connection fees, sales taxes, capital and investing activities are considered non-operating revenue. Expenses associated with operating the physical facilities are considered operating expenses. When both restricted and unrestricted resources are available for a particular use, it is the District’s practice to use restricted resources first, and then unrestricted resources as they are needed.
C. Budgetary Information
1. Budgetary Basis of Accounting
Prior to April 15, the County Manager submits to the Nevada State Department of Taxation the tentative budget for the next fiscal year, commencing on July 1. The budget, as submitted, contains the proposed expenses and means of financing them. The Nevada State Department of Taxation notifies the County of its acceptance of the budget. A special public hearing is set, per Nevada Revised Statute (NRS), for the third Monday in May. After all changes have been noted and hearings
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019 closed, the Board of County Commissioners, ex officio Board of Trustees for the District, adopts the budget on or before June 1. The County reports the District as a component unit of the County and the District’s annual budget is included in the County’s annual budget. Increases to the budget (augmentations) are accomplished through a letter of adjustment submitted to the County Budget Director, to be included in the next quarterly economic condition survey. This process is revenue driven; therefore, total expenses cannot be increased without additional previously unbudgeted resources being clearly identified. The letter must be filed prior to fiscal year end. The NRS requires budget controls to be exercised at the function level. Encumbrance accounting is utilized to the extent necessary to assure effective budgetary control and accountability and to facilitate effective cash planning and control. All operating appropriations lapse at the end of the fiscal year. Budgets are adopted on a basis consistent with GAAP.
D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position
1. Cash and Cash Equivalents
The District’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.
2. Inventories and Prepaid Items
Supply inventories consist primarily of materials and supplies and are valued at average cost. Certain payments to vendors reflect cost applicable to future accounting periods and are recorded as prepaid items.
3. Investments
The District’s formal investment policy is designed to ensure conformity with NRS 355 and to limit exposure to investment risks. When investing monies, the Clark County Treasurer, ex officio Treasurer of the District, is required to be in conformity with NRS 355 and written policies adopted by the Board of County Commissioners dictate allowable investments and the safeguarding of those investments. The District’s investments are held in the District’s name and are reported at fair value regardless of the length of time remaining to maturity. Investment revenue is increased or decreased in relation to this adjustment for unrealized gains or losses.
4. Capital Assets
Connection fee revenues are used to fund capital expansion and related debt service. The Capital Improvement and Capital Expansion plans are projected for a minimum of a five-year period. The District’s five-year Capital Improvement Plan and Debt Management Policy along with a statement of current and contemplated debt (Indebtedness Report) are submitted to the Nevada State Department of Taxation and the Clark County Debt Management Commission annually in accordance with NRS 350.013(1)(c). Capital acquisitions are recorded at historical cost. Contributed capital is valued at its estimated acquisition cost on the date donated. Labor and supporting benefit costs expenses to support capital projects may be capitalized as part of the project cost. Capital assets with an infinite useful life, such as land, are not depreciated. Equipment with a historical cost of less than $5,000 is not capitalized. The cost of normal maintenance and repairs of District assets that does not increase the functionality of an asset or materially extend the asset’s life are not capitalized. Betterments that extend the useful life of assets are capitalized and depreciated over the remaining useful lives of the related assets, as applicable.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
District assets including infrastructure and wastewater conveyance lines are depreciated using the straight-line method over the following estimated useful lives:
Capital Asset Classifications Lives (in years) Buildings 10-50 Land Improvements 10-20 Machinery and Equipment 1-10 Vehicles 5-10 Wastewater Conveyance Lines 50
5. Deferred Outflows/Inflows of Resources
In addition to assets, the statements of financial position will sometimes report a separate section for deferred outflows of resources. This represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then. For this reporting period, the District has three items in this category. The first is the deferred loss on bond refunding. The loss is deferred and amortized over the life of the bonds. The second is the deferred amounts related to the pension plan. This amount is deferred and amortized over the average expected remaining service life of all employees that are provided with pension benefits. The third is the deferred amounts related to the other postemployment benefits (OPEB) plan. This amount is deferred and amortized over the average expected remaining service life of all employees that are provided with OPEB.
In addition to liabilities, the statements of financial position will sometimes report a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. For this reporting period, the District has several items that qualify for reporting in this category, relating to pensions and OPEB: 1) the differences between expected and actual experience and changes of assumptions, which are deferred and amortized over the average expected remaining service life, of all employees that are provided with pension and OPEB benefits, 2) the net difference between projected and actual earnings on investments, which are deferred and amortized over five years, and 3) contributions made subsequent to the measurement date, which are deferred for one year.
6. Net Position Flow Assumption
In the current reporting period, net position represents the difference between assets and liabilities, and deferred inflows and outflows in the following categories: net investment in capital assets, restricted and unrestricted. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by any outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets, and adjusted by any deferred loss or gain on bond refunding. Restricted net position is reported when limitations are imposed on their use through external restrictions imposed by creditors, grantors or laws and regulations of the State or Federal governments. To calculate the amounts to report as restricted net position and unrestricted net position, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s practice to consider restricted net position to have been depleted before unrestricted net position is applied. Funds set aside for payment of bond principal and interest are classified as restricted, due to debt service requirements. The unspent portion of bond proceeds are classified as restricted to payment of capital expenses per bond resolutions. Amounts accrued for sales tax receipts not received at year end are classified as restricted in accordance with Nevada statutes or NRS. Funds received during the year are used for capital expenses.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
E. Revenues and Expenses
1. Revenues/Tax Roll
Sewer services are billed in advance on July 1 for the upcoming fiscal year ending June 30. In accordance with NRS 318.201, Procedure for Collection of Service Charges on Tax Roll, the District may elect to have accounts receivable that are delinquent collected on the Clark County tax roll. Due to the COVID-19 pandemic, it was decided to not put 2020 delinquent accounts on the Clark County tax roll, and instead carry them as prior year sewer service (PYSS) on the District’s books. $10,562,275 was transferred to PYSS on June 16, 2020. Therefore, for fiscal years ended 2020 and 2019, $0 and $6,800,935 of the delinquent accounts receivable were placed on the tax roll. As of June 30, 2020, the outstanding tax rolled balances, which includes all previous years’ balances, totaled $632,678.
2. Compensated Absences
The District’s policy permits employees to accumulate earned but unused vacation and sick leave benefits, which are eligible for payment upon separation from the District. Such benefits are accrued when incurred.
3. Pensions
The District uses the same basis used in the Public Employees’ Retirement System of Nevada’s (PERS) Comprehensive Annual Financial Report, for reporting its proportionate share of the PERS collective net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, including information related PERS fiduciary net position and related additions/deductions. Benefit payments (including refunds of employee contributions) are recognized by PERS when due and payable in accordance with the benefit terms. PERS investments are reported at fair value.
II. Detailed Note Disclosures
A. Cash and Cash Equivalents
Balance as of Balance as of Cash and Cash Equivalents June 30, 2020 June 30, 2019 Book Balance – Cash $ 10,857,941 $ 12,400,494 Commercial Paper - - Money Market Funds 3,314,697 928,635 Total Reported Cash and Cash Equivalents $ 14,172,638 $ 13,329,129
Bank Balance – Cash $ 12,376,912 $ 13,926,673
The bank balance is fully insured or collateralized by the Office of the State Treasurer’s Nevada Collateral Pool.
The underlying securities are held by the investment’s counterparty, not in the name of the District. Semiannually, the District transfers funds to the Clark County Treasurer for principal and interest payments on the District’s debt service. At June 30, 2020, and June 30, 2019, there was $29,586,088 and $28,486,366 held by the Clark County Treasurer on our behalf, respectively. These funds are considered restricted on the statement of net position.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
B. Investments
The Clark County Treasurer, as ex officio Treasurer for the District, performs the District’s investment function as outlined in an inter-local agreement. The types of investments utilized for the District’s portfolio are various federal agency securities, commercial paper, certificates of deposit, and money market funds. Nevada Revised Statute 682A-Investments, authorizes the County Treasurer to invest in obligations of the U.S. Treasury and U.S. agencies having maturity dates that do not extend more than 10 years from the date of purchase, negotiable notes or short term negotiable bonds issued by other local governments in the State of Nevada and bankers acceptances not exceeding 180 days maturity and eligible by law for rediscount with the Federal Reserve Banks (purchases are subject to 10% of the funds available for local government investment). All District investments have maturity dates that do not extend more than 10 years from the date of purchase. Certain bond covenants require the County and its component units to invest with security dealers who are primary dealers when investing in repurchase agreements. Primary dealers are dealers that submit daily reports of market and positions and monthly financial statements to the Federal Reserve of New York and are subject to its formal oversight. Securities purchased by the County and its component units are delivered against payment and held in a custodial safekeeping account with the trust department of a bank designated by the County.
At June 30, 2020, the District had the following investments (rating is based on Moody’s index):
Reported US Amount/ Government Investments Fair Value Obligations Aaa Aa1 Aa2 Aa3 A1 A2 NR U.S. Treasuries $ 132,589,200 $ 132,589,200 $ - $ - $ - $ - $ - $ - $ - U.S. Agencies 188,751,326 188,751,326 ------Corporate Notes 102,000,350 - - 14,750,320 4,191,720 5,019,300 43,472,330 34,566,680 - Asset-Backed Securities 68,541,117 - 34,728,332 - - - - - 33,812,785 Reported as Investments 491,881,993 321,340,526 34,728,332 14,750,320 4,191,720 5,019,300 43,472,330 34,566,680 33,812,785 Money Market Funds 3,314,697 ------3,314,697 Reported as Cash Equivalents 3,314,697 ------3,314,697
Total Investments $ 495,196,690 $ 321,340,526 $ 34,728,332 $ 14,750,320 $ 4,191,720 $ 5,019,300 $ 43,472,330 $ 34,566,680 $ 37,127,482
At June 30, 2019, the District had the following investments (rating is based on Moody’s index):
Reported US Amount/ Government Investments Fair Value Obligations Aaa Aa1 Aa2 Aa3 A1 A2 NR U.S. Treasuries $ 159,466,100 $ 159,466,100 $ - $ - $ - $ - $ - $ - $ - U.S. Agencies 131,899,509 131,899,509 ------Corporate Notes 81,489,710 - - 14,187,220 4,044,880 24,995,650 20,161,100 18,100,860 - Asset-Backed Securities 64,718,547 - 41,124,977 - - - - - 23,593,570 Reported as Investments 437,573,866 291,365,609 41,124,977 14,187,220 4,044,880 24,995,650 20,161,100 18,100,860 23,593,570 Money Market Funds 928,635 - 928,635 ------Reported as Cash Equivalents 928,635 - 928,635 ------Total Investments $ 438,502,501 $ 291,365,609 $ 42,053,612 $ 14,187,220 $ 4,044,880 $ 24,995,650 $ 20,161,100 $ 18,100,860 $ 23,593,570
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
GASB Statement No. 72, Fair Value Measurement and Application, defines fair value, establishes a framework for measuring fair value and provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of fair value hierarchy are as follows:
Level 1. Inputs are unadjusted quoted prices for identical assets and liabilities in active markets. Level 2. Inputs are other observable inputs. Level 3. Inputs are unobservable.
The fair value measurement level within the hierarchy is based on the lowest of any input that is deemed significant to the fair value measurement. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs.
At year end, the District’s Level 1 investments (comprised of U.S. Treasury obligations) were valued based on quoted market prices provided by recognized broker dealers and Level 2 investments (comprised of U.S. Agency obligations, Money Market Funds, Corporate Notes, and Asset-Backed Securities) were valued, by recognized broker dealers, based on a matrix pricing model that maximizes the use of observable inputs for similar securities.
At June 30, 2020, the fair values of the District’s investments were categorized by maturity as follows:
2020 Investment Maturities in Years Investment Type Fair Value Less than 1 1 to 3 3 to 5 Greater than 5 U.S. Treasuries (Level 1) $ 132,589,200 $ 60,414,400 $ 72,174,800 $ - $ - U.S. Agency Obligations (Level 2) 188,751,326 10,151,000 46,338,750 79,894,950 52,366,626 Corporate Notes (Level 2) 102,000,350 15,133,900 74,002,670 12,863,780 - Asset-Backed Securities (Level 2) 68,541,117 - 25,100,171 22,859,396 20,581,550 Reported as Investments 491,881,993 85,699,300 217,616,391 115,618,126 72,948,176 Money Market Funds (Level 2) 3,314,697 3,314,697 - - - Reported as Cash Equivalents 3,314,697 3,314,697 - - - Total Investments $ 495,196,690 $ 89,013,997 $ 217,616,391 $ 115,618,126 $ 72,948,176
At June 30, 2019, the fair values of the District’s investments were categorized by maturity as follows:
2019 Investment Maturities in Years Investment Type Fair Value Less than 1 1 to 3 3 to 5 Greater than 5 U.S. Treasuries (Level 1) $ 159,466,100 $ 39,798,900 $ 89,773,000 $ 29,894,200 $ - U.S. Agency Obligations (Level 2) 131,899,509 29,939,000 9,997,600 46,293,500 45,669,409 Corporate Notes (Level 2) 81,489,710 19,989,950 25,152,500 36,347,260 - Asset-Backed Securities (Level 2) 64,718,547 - 16,643,622 32,875,875 15,199,050 Reported as Investments 437,573,866 89,727,850 141,566,722 145,410,835 60,868,459 Money Market Funds (Level 2) 928,635 928,635 - - - Reported as Cash Equivalents 928,635 928,635 - - - Total Investments $ 438,502,501 $ 90,656,485 $ 141,566,722 $ 145,410,835 $ 60,868,459
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Interest Rate Risk Interest rate risk is defined as the risk that the fair value of an investment will be adversely affected by changes in market interest rates. Through its investment policy, the County Treasurer’s office manages its exposure to fair value losses arising from increasing rates by limiting the average weighted duration of its investment pool portfolio to less than 2.5 years. This strategy provides the cash flow and liquidity needed for operations.
Credit Risk Credit risk is defined as the risk that another party to a deposit or investment transaction (counterparty) will fail to fulfill its obligation. Credit risk can be associated with the issuer of a security, with a financial institution holding deposits or with a party holding securities or collateral. Credit risk exposure can be affected by a concentration of deposits or investments into a single investment type or with any single counterparty.
Concentration of Credit Risk The District places no limits on the amount that can be invested in any one issuer beyond that stipulated by the NRS. Investments in any one issuer that represent 5% or more of the District’s total investments at June 30 were as follows:
Reported Amount/ % of Reported Amount/ % of Fair Value Total Fair Value Total Issuer Investment Type June 30, 2020 June 30, 2020 June 30, 2019 June 30, 2019 U.S. Treasury Notes Treasury Note $ 132,589,200 26.8% $ 159,466,100 36.4% Federal Farm Credit Bank U.S. Agencies 95,464,146 19.3% 65,872,409 15.0% Federal Home Loan Bank U.S. Agencies 62,167,580 12.6% 56,029,500 12.8% Totals $ 290,220,926 $ 281,368,009
Custodial Credit Risk Custodial credit risk is the risk that, in the event of the failure of the counterparty to a transaction, the District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Consistent with the County’s Investment policy, $495,196,689 was held on behalf of the District in 2020 and $438,502,501 in 2019.
C. Restricted Current Assets
The District’s bond fund maintains periodic deposits sufficient to provide for payments of principal and interest on debt, as such obligations mature, per NRS 350.660. The bond fund is required by the various bond covenants. Any unspent bond proceeds are restricted to payment of capital expenses per bond resolutions, and at this time, all bond proceeds have been spent.
Sales tax revenue, ¼ of 1% sales tax allocation, is restricted by statute to capital expenses for the expansion of existing plant infrastructure. The District received $20.2 million in sales tax revenue during fiscal year 2020 and $20.8 million during fiscal year 2019. Sales tax receivable is identified as a restricted current asset.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
D. Capital Assets
Capital Assets are summarized as follows at June 30, 2020:
Beginning Balance Ending Balance June 30, 2019 Increases Decreases June 30, 2020 Capital Assets, Being Depreciated: Buildings and wastewater treatment facilities $ 1,302,103,519 $ 5,671,008 $ (1,840,828) $ 1,305,933,699 Land improvements 13,985,327 - - 13,985,327 Wastewater conveyance lines 1,337,169,624 52,297,531 (284,638) 1,389,182,517 Equipment 356,785,778 15,907,732 (918,081) 371,775,429 Total Capital Assets Being Depreciated 3,010,044,248 73,876,271 (3,043,547) 3,080,876,972
Less Accumulated Depreciation for: Buildings and wastewater treatment facilities (668,872,479) (42,437,313) 1,840,828 (709,468,964) Land improvements (3,890,861) (946,475) - (4,837,336) Wastewater conveyance lines (308,322,630) (27,804,527) 70,703 (336,056,454) Equipment (198,007,700) (26,510,734) 885,204 (223,633,230) Total Accumulated Depreciation (1,179,093,670) (97,699,049) 2,796,735 (1,273,995,984)
Net Capital Assets Being Depreciated 1,830,950,578 (23,822,778) (246,812) 1,806,880,988
Capital Assets Not Being Depreciated: Land and rights of way 7,958,177 - - 7,958,177 Work in progress 50,491,263 58,902,152 (18,878,205) 90,515,210 Total Capital Assets, Not Being Depreciated 58,449,440 58,902,152 (18,878,205) 98,473,387
Total Capital Assets, Net $ 1,889,400,018 $ 35,079,374 $ (19,125,017) $ 1,905,354,375
Capital Assets are summarized as follows at June 30, 2019:
Beginning Balance Ending Balance June 30, 2018 Increases Decreases June 30, 2019 Capital Assets, Being Depreciated: Buildings and wastewater treatment facilities $ 1,300,432,699 $ 3,750,811 $ (2,079,991) $ 1,302,103,519 Land improvements 13,985,327 - - 13,985,327 Wastewater conveyance lines 1,287,216,800 52,078,683 (2,125,859) 1,337,169,624 Equipment 350,356,433 7,616,883 (1,187,538) 356,785,778 Total Capital Assets Being Depreciated 2,951,991,259 63,446,377 (5,393,388) 3,010,044,248
Less Accumulated Depreciation for: Buildings and wastewater treatment facilities (625,235,091) (45,250,934) 1,613,546 (668,872,479) Land improvements (2,944,386) (946,475) - (3,890,861) Wastewater conveyance lines (282,041,732) (27,711,166) 1,430,268 (308,322,630) Equipment (172,730,515) (26,353,484) 1,076,299 (198,007,700) Total Accumulated Depreciation (1,082,951,724) (100,262,059) 4,120,113 (1,179,093,670)
Net Capital Assets Being Depreciated 1,869,039,535 (36,815,682) (1,273,275) 1,830,950,578
Capital Assets Not Being Depreciated: Land and rights of way 7,958,177 - - 7,958,177 Work in progress 37,067,125 33,182,093 (19,757,955) 50,491,263 Total Capital Assets, Not Being Depreciated 45,025,302 33,182,093 (19,757,955) 58,449,440
Total Capital Assets, Net $ 1,914,064,837 $ (3,633,589) $ (21,031,230) $ 1,889,400,018
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
E. Long-Term Receivables
On January 19, 2010, the District entered into an agreement with the United States Air Force (USAF) for the purpose of connecting the Creech Air Force Base (CAFB) sewer system to the District’s collection and treatment system. As agreed, the District is responsible for sewage collection and treatment for the community of Indian Springs. Compensation due to the District consists of two components: a sewer service charge and an initial service charge. On September 1, 2013 the District began receiving sewage flows from the CAFB sewer system. The initial service charge recovers the capital costs associated with the design and construction of the CAFB facilities as well as the capital recovery for 0.25 million gallons per day of capacity and is to be repaid on a monthly basis over a twenty-year term at an annual interest rate of 5.42% beginning September 1, 2013, as a note receivable (the Note). The final contract amount exceeded the initial contract amount of $9.4 million related to the initial service charge by $2.4 million. The USAF refuted the additional $2.4 million and made scheduled payments on the $9.4 million initial service charge. Although management intended to pursue collection of the Note in its entirety, it was determined that an allowance was necessary for the $2.4 million including related interest at the end of the fiscal year. On August 6, 2019, CCWRD sent USAF/CAFB written communication to initiate a formal dispute resolution process regarding the amount owed. As a result, it was agreed to settle the dispute for $2,350,524.05. The Board approved the agreement on January 7, 2020, and payment in full was received from the USAF on February 10, 2020. The allowance has been relieved, and the billing has resumed on the $9.4 million amortization schedule instead of the $11.8 million amortization schedule.
The note receivable as of June 30 was as follows:
2020 2019 Long-term receivable $ 6,915,150 $ 9,550,063 Plus short-term portion 454,226 537,003 Total receivable 7,369,376 10,087,066 Less allowance - (2,350,523) Net receivable $ 7,369,376 $ 7,736,543
As of June 30, 2020, and June 30, 2019, accrued interest recorded on the receivable was $66,428 and $746,930 respectively.
Due to the COVID-19 pandemic, the Board opted to not send delinquent fiscal year 2020 sewer service bills to the County tax roll and rolled them into the July 1, 2020 sewer service bills. The delinquent bills are recorded as prior year sewer service. It is expected that any that are still delinquent at the end of fiscal year 2021 will be sent to tax roll, so all are considered collectible, and thus no allowance is provided. Management estimated how much of the total receivable would be collected this fiscal year.
2020 2019 Long-term receivable $ 6,589,955 $ - Plus short-term portion 3,506,967 620,244 Total receivable $ 10,096,922 $ 620,244
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
The District previously entered into an interlocal agreement with Clark County to provide funding for construction with the Sloan Channel. The note was paid in full on July 23, 2019.
The Clark County note receivable as of June 30 was as follows:
2020 2019 Long-term receivable $ - $ - Plus short-term portion - 1,259,715 Total receivable $ - $ 1,259,715
The total long-term receivables were as follows:
2020 2019 Creech Airforce Base $ 6,915,150 $ 7,199,540 Prior year sewer service 6,589,955 - Clark County interlocal agreement - - Total long-term receivables $ 13,505,105 $ 7,199,540
F. Construction Commitments
As of June 30, 2020, the remaining obligated balance of construction contracts in progress was $123,091,604.
Construction contracts payable were as follows at June 30:
2020 2019 Construction contracts retention $ 2,712,670 $ 1,374,844 Construction contracts payable 6,206,301 4,130,363 Total construction payables $ 8,918,971 $ 5,505,207
G. Risk Management and Worker's Compensation Coverage - Self-Funded Program
The District is exposed to various risks of loss related to torts; theft of, or damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The District maintains a risk management program to assess coverage of potential risks of loss.
Under this program, the District believes it is more economical to manage risks internally with regard to its workers’ compensation coverage. The District hires a third-party to act as claims administrator of the worker’s compensation program. The self-insurance coverage includes the purchase of an insurance policy to cover workers’ compensation claims for the District that exceed $750,000 per person. As of June 30, 2020, a liability of $2,459,097 was accrued to provide for unpaid claims. The accrued liability represents the approximate maximum number of claims expected for the year. For the last four fiscal years, no settlement amounts have exceeded insurance coverage.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Changes in the District's claims liability amount in fiscal years 2020, 2019 and 2018 are as follows:
Beginning of Claims Prior Period Current Year End of Fiscal Year Incurred Changes in Payments on Fiscal Year Liability During Period Estimates Claims Liability 2020 $ 1,581,295 $ 138,464 $ 1,028,455 $ (289,117) $ 2,459,097 2019 1,707,785 113,360 66,848 (306,698) 1,581,295 2018 1,064,767 141,371 774,417 (272,770) 1,707,785
The District has designated and set aside $287,891 and $282,476 in its investment balances at June 30, 2020, and June 30, 2019, respectively for future workers’ compensation losses. The District provides a surety bond to the Nevada Department of Insurance (NDI) in the amount of $291,000.
For all other risks, such as general, automobile and excess liabilities the District purchases insurance coverage subject to specified deductibles.
The District completed an update of the annual appraisal of District structures in May 2020. The valuation provided a thorough inventory of above-ground structures and replacement costs. The District’s property insurance policy was revised to reflect these valuations, establishing a blanket valuation of $1,284,219,500.
H. Postemployment Benefits Other than Pensions (OPEB)
Plan Information In accordance with NRS, retirees of the District may continue insurance through the Clark County Retiree Health Program (County Plan), if enrolled in PERS and an active employee at the time of retirement. Within the County Plan retirees may choose between the Clark County Self-Funded Group Medical and Dental Benefits Plan (Self-Funded Plan), and Health Plan of Nevada (HPN), a fully insured health maintenance organization (HMO) plan. This plan is a single-employer defined benefit OPEB plan.
The Public Employee Benefit Program (PEBP), a multiple-employer cost-sharing defined benefit OPEB plan, was closed to enrollment for active employees as of September 1, 2008.
Each plan provides medical, dental and vision benefits to eligible active and retired employees and beneficiaries. Except for the PEBP, benefit provisions are established and amended through negotiations between the District and the employee union. PEBP benefit provisions are established and may be amended by the Nevada State Legislature. The Self- Funded/HPN plans are not administered as a qualifying trust or equivalent arrangement and are included in the Clark County CAFR as an internal service fund (the Self-Funded Group Insurance Fund), as required by the NRS.
The PEBP issues a publicly available financial report that includes financial statements and required supplementary information. The Self-Funded/HPN and PEBP reports may be obtained by writing or calling the plans at the following addresses or numbers:
Clark County, Nevada Public Employee Benefit Plan PO Box 551210 901 South Stewart Street, Suite 101 500 S. Grand Central Parkway Carson City, Nevada 89701 Las Vegas, NV 89155-1210 (800) 326-5496 (702) 455-0000
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Employees Covered by Benefit Terms At June 30, 2018, OPEB plan membership consisted of the following:
Self-Funded PEBP /HPN Total Retired members currently receiving benefits 26 95 121 Married spoused of retired members currently receiving benefits - 46 46 Active members - 344 344 Total 26 485 511
Contribution Requirements For the Self-Funded/HPN plans, contribution requirements of plan members and the District are established and may be amended through negotiations between the District Board of Trustees and the Service Employees International Union. The District pays approximately 90% of monthly premiums for active employee coverage, an average of $825 per active employee for the years ended June 30, 2020, and June 30, 2019. Retirees in the Self-Funded/HPN plans receive no direct subsidy from the District. Under state law, retiree loss experience is pooled with active loss experience for the purpose of setting rates. The difference between the true claims cost and the blended premium is an implicit rate subsidy that creates an OPEB cost for the District.
The District is required to pay the PEBP an explicit subsidy, based on years of service, for retirees who have enrolled in this plan. In 2019, retirees with less than fifteen years of service were required to pay an additional monthly premium up to $348 per month. Retirees were eligible for a monthly subsidy ranging from a minimum of $34 after five years of service to a maximum of $174 for twenty or more years of service with a Nevada state or local government entity. The subsidy is set by the Nevada State Legislature and can only be amended through legislation.
Actuarial Methods and Assumptions Projections of benefits are based on the substantive plans (the plans as understood by the employer and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the District and the plan members at that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets.
The total OPEB liability for the Self-Funded/HPN, and PEBP plans was determined using the following actuarial assumptions (based on the results of an experience review completed in 2020), applied to all periods included in the measurement:
Actuarial valuation date June 30, 2019 Measurement date June 30, 2019 Reporting date June 30, 2020 Inflation Rate 2.0% per annum Salary changes 3.0% per annum Discount rate 3.50% per annum as of June 30, 2019
Discount rate source 20-Bond GO tax-exempt AA or higher Postemployment benefit None changes
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Benefit-related costs shared Required to contribute 100% of premium equivalent rates with inactive employees Actuarial cost method Entry Age Normal based on level percentage of salary Healthcare cost trend rates 6.50% per annum, decreasing 0.50%/1.0% (Self-Funded/HPN plans/PEBP) per year to an ultimate rate of 4.5%
Mortality rates were based on the RP-2014 generational table, back-projected to 2006, then scaled using MP-2018, applied on a gender-specific basis.
Changes in the assumptions and other inputs that affected the measurement of the District's total OPEB liability during the period ended June 30, 20120, were as follows:
Discount rates for the year ended June 30, 2019 was 3.50%.
No changes in the OPEB benefit terms affected the measurement of the District's total OPEB liability during the period ended June 30, 2020.
The District holds no assets in the OPEB trust and has no assumed asset allocations or expected real rate of return.
Discount Rate As of June 30, 2020, the sensitivity of the chosen discount rate (3.50%) used to estimate the District’s OPEB liability is illustrated as follows:
Current 1% Decrease Discount Rate 1% Increase PEBP $ 1,929,000 $ 1,685,000 $ 1,486,000 Self-Funded/HPN 24,657,000 20,307,000 16,938,000
Total OPEB Liability $ 26,586,000 $ 21,992,000 $ 18,424,000
Healthcare Trend Rate The District’s total OPEB liability at June 30, 2019, calculated using the healthcare trend rate of 6.50%, as well as what the District’s total OPEB liability would be if it were calculated using a healthcare trend rate that is 1% lower (5.50%) or 1% higher (7.50%) than the current healthcare trend rate was as follows:
Current 1% Decrease Trend Rate 1% Increase PEBP $ 1,493,000 $ 1,685,000 $ 1,915,000 Self-Funded/HPN 16,525,000 20,307,000 25,368,000
Total OPEB Liability $ 18,018,000 $ 21,992,000 $ 27,283,000
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
OPEB Liability As of June 30, 2020, the District reported a total OPEB liability of $21,992,376.
Because the District holds no assets in the OPEB trust, it has no fiduciary net position to report, and thus, the total OPEB liability equals the net OPEB liability.
At June 30, 2020, changes in the District’s OPEB liability were as follows:
PEBP Self-Funded/HPN Total 2019 Total OPEB Liability $ 1,618,893 $ 18,192,337 $ 19,811,230 Service Cost - 765,312 765,312 Interest 61,208 720,839 782,047 Change of Benefit Terms - - - Differences between Expected and Actual Experience - - - Changes of Assumptions 79,594 1,291,384 1,370,978 Benefit Payments (74,580) (662,611) (737,191) Net Change in Total OPEB Liability 66,222 2,114,924 2,181,146
2020 Total OPEB Liability $ 1,685,115 $ 20,307,261 $ 21,992,376
For the years ended June 30, 2020, and June 30, 2019, the District’s OPEB expense was ($1,566,693) and $355,086, respectively.
The District reported deferred outflows and inflows of resources related to OPEB as of June 30, 2020, were as follows:
PEBP Self-Funded/HPN Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources Changes in proportion and differences between employer contributions and proportionate share of contributions $ - $ - $ - $ - Changes of assumptions or other inputs - - 1,197,805 6,123,469 Net difference between projected and actual earnings on OPEB plan investments - - - - Net difference between expected and actual experience in the Total OPEB Liability - - - 15,241,892 Employer contributions subsequent to the measurement date - - 1,077,059 - Total $ - $ - $ 2,274,864 $ 21,365,361
Deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date totaling $1,077,059 will be recognized as a reduction of the total OPEB liability in the year ended June 30, 2021.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:
Year Ended June 30: PEBP Self-Funded/HPN 2020 $ - $ (2,116,588) 2021 - (2,116,588) 2022 - (2,116,588) 2023 - (2,116,588) 2024 - (1,845,148) Thereafter - (9,856,056) Total $ - $ (20,167,556)
I. Pension Plans
State of Nevada Public Employees’ Retirements System The District's employees are covered by the State of Nevada Public Employees' Retirement System (PERS). PERS was established on July 1, 1947, by the Nevada Legislature and is governed by the Public Employees Retirement Board whose seven members are appointed by the Governor. All public employees who meet certain eligibility requirements participate in PERS, which is a cost sharing multiple-employer defined benefit retirement plan. The District does not exercise any control over PERS. NRS 286.110 states that: "Respective participating public employers are not liable for any obligation of PERS." Benefits, as required by statute, are determined by the number of years of accredited service at the time of retirement and the participant's highest average compensation in any 36 consecutive months with special provisions for members entering PERS on or after January 1, 2010. Benefit payments to which participants or their beneficiaries may be entitled to under the plan include pension benefits, disability benefits, and survivor benefits. Monthly benefit allowances for members are computed as 2.5% of average compensation for each accredited year of service prior to July 1, 2001. For service earned on and after July 1, 2001, this multiplier is 2.67% of average compensation. For members entering PERS on or after January 1, 2010, there is a 2.5% multiplier and for members entering PERS on or after January 1, 2015, there is a 2.25% multiplier. PERS offers several alternatives to the unmodified service retirement allowance which, in general, allow the retired employee to accept a reduced service retirement allowance payable monthly during his or her lifetime and various optional monthly payments to a named beneficiary after his or her death.
Post-retirement increases are provided by authority of NRS 286.575-.579 is equal to the lesser of the chart below or the average percentage increase in the Consumer Price Index (or other PERS Board approved index) for the three preceding years.
Percent of Benefit Increase Following the Benefit Anniversary Date Entered System Year 3 Year 6 Year 9 Year 12 Year 14 Prior to January 1, 2010 2% 3% 3.5% 4% 5%
On or after January 1, 2010, and 2% 3% 3.5% 4% 4% before July 1, 2015
On or after July 1, 2015 2% 2.5% 3% 3% 3%
In any event, a member’s benefit must be increased by the percentages in the table above if the benefit of a member has not been increased at a rate greater than or equal to the average of the Consumer Price Index (All Items) or other PERS Board approved index, for the period between retirement and the date of increase.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Regular members entering PERS prior to January 1, 2010, are eligible for retirement at age 65 with five years of service, at age 60 with 10 years of service, or at any age with 30 years of service. Regular members entering PERS on or after January 1, 2010, are eligible for retirement at age 65 with five years of service, or age 62 with 10 years of service, or any age with 30 years of service. Regular members entering PERS on or after January 1, 2015, are eligible for retirement at age 65 with five years of service, or age 62 with 10 years of service, or at age 55 with 30 years of service, or at any age with 33 1/3 years of service.
The normal ceiling limitation on monthly benefits allowances is 75% of average compensation. However, a member who has an effective date of membership before July 1, 1985, is entitled to a benefit of up to 90% of average compensation. Members become fully vested as to benefits upon completion of five years of service.
The authority for establishing and amending the obligation to make contributions and member contribution rates rests with NRS and the Nevada Legislature. New hires, in agencies that did not elect the Employer-Pay Contribution (EPC) plan prior to July 1, 1983, have the option of selecting one of two contribution plans. Contributions are shared equally by employer and employee. Employees can take a reduced salary and have contributions made by the employer or can make contributions by a payroll deduction matched by the employer.
PERS’s basic funding policy provides for periodic contributions at a level pattern of cost as a percentage of salary throughout an employee’s working lifetime in order to accumulate sufficient assets to pay benefits when due. PERS receives an actuarial valuation on an annual basis indicating the contribution rates required to fund PERS on an actuarial reserve basis. Actual contributions are made in accordance with the required rates established by the Nevada Legislature. These statutory rates are increased/decreased pursuant to NRS 286.421 and 286.450. The actuarial funding method used is the Entry Age Normal Cost Method. It is intended to meet the funding objective and result in a relatively level long-term contribution requirement as a percentage of salary.
For the fiscal year ended June 30, 2020, the Statutory employer/employee matching rate was 15.25% and the EPC rate was 29.25%, and for the fiscal year ended June 30, 2019, the Statutory employer/employee matching rate was 14.5% and the EPC rate was 28.0%.
PERS issues a publicly available Comprehensive Annual Financial Report that includes financial statements and required supplemental information. This report is available on the PERS website, www.nvpers.org under publications.
PERS collective net pension liability was measured as of June 30, 2019, and June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of those dates. For this purpose, certain actuarial valuation assumptions are stipulated by GASB and may vary from those used to determine the prospective funding contribution rates.
Actuarial Methods and Assumptions The PERS pension liability was determined using the following actuarial assumptions for both the 2019 and 2020 fiscal years (based on the results of an experience study for the period from July 1, 2012, through June 30, 2016), applied to all periods included in the measurement:
Actuarial valuation and measurement date June 30, 2019
Inflation rate 2.75%
Discount rate 7.50%
Payroll growth 5.50%, including inflation
Investment rate of return 7.50%
Productivity pay increase 0.50%
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Projected salary increases Regular: 4.25% to 9.15%, depending on service Rates include inflation and productivity increases
Consumer Price Index 2.75%
Actuarial cost method Entry age normal and level percentage of payroll
At June 30, 2019, and June 30, 2018, assumed mortality rates and projected life expectancies for selected ages were as follows: Regular Members Expected Years of Mortality Rates Life Remaining Age Males Females Males Females 40 0.20% 0.14% 40.4 43.6 50 0.49% 0.38% 31.4 34.5 60 0.90% 0.59% 23.2 25.9 70 1.81% 1.26% 15.6 17.7 80 4.55% 3.42% 9.1 10.5
The mortality rates and projected life expectancies are based on the following:
• For non-disabled regular members: Headcount-Weighted RP-2014 Healthy Annuity Table projected to 2020 with Scale MP-2016 • For all disabled regular members: Headcount-Weighted RP-2014-Disabled Retiree Table, set forward four years
The policies which determine the investment portfolio target asset allocation are established by the PERS Board. The asset allocation is reviewed annually and is designed to meet the future risk and return needs of the PERS system.
The following target asset allocation policy was adopted by the PERS Board as of June 30, 2019:
Long-Term Geometric Expected Real Target Rate of Asset Class Allocation Return* Domestic Stocks 42% 5.50% International Stocks 18% 5.50% U.S. Bonds 28% 0.75% Private Markets 12% 6.65% 100%
Discount Rate The discount rate used to measure the total pension liability was 7.5% as of June 30, 2019, and June 30, 2018. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rate specified by statute. Based on that assumption, the PERS fiduciary net position at June 30, 2019, and June 30, 2018, was projected to be available to make all projected future benefit payments of current active and inactive employees. 33
CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Therefore, the long-term expected rate of return on pension plan investments (7.5%) was applied to all periods of projected benefit payments to determine the total pension liability as of June 30, 2019, and June 30, 2018.
The following presents the District’s proportionate share of the net pension liability calculated using the discount rates for June 30, 2019, and June 30, 2018, as well as the District’s proportionate share of what the net pension liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate:
1% Decrease Current Discount Rate 1% Increase (6.5%) (7.5%) (8.5%)
Net Pension Liability (2020) $90,262,807 $58,295,035 $31,721,705 Net Pension Liability (2019) 89,860,432 58,926,437 33,222,089
Detailed information about PERS fiduciary net position is available in the PERS Comprehensive Annual Financial Report (CAFR), available on the PERS website, www.nvpers.org under publications. PERS fiduciary net position and addition to/deductions from it have been determined on the same basis used in the PERS CAFR. PERS financial statements are prepared in accordance with accounting principles generally accepted in the United States of America applicable to governmental accounting for fiduciary funds. PERS investments are reported at fair value. Benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms.
Net Pension Liability At the measurement dates of June 30, 2019, and June 30, 2018, the District’s proportionate share of the collective net pension liability was $58,295,035 and $58,926,437, which represents 0.42751% and 0.43208% of the collective net pension liability, respectively. Contributions for employer pay dates within the fiscal years ending June 30, 2019, and June 30, 2018, were used as the basis for determining each employer’s proportionate share. Each employer’s proportion of the net pension liability is based on their combined employer and member contributions relative to the total combined employer and member contributions for all employers.
For the years ended June 30, 2020, and June 30, 2019, the District’s pension expense was $6,577,160 and $4,576,674, respectively, and its reported deferred outflows and inflows of resources related to pensions were as follows:
June 30, 2020 June 30, 2019 Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources Difference between expected and actual experience $ 2,185,997 $ 1,681,446 $ 1,846,000 $ 2,735,198 Net differences between projected and actual investment earnings on pension plan investments - 2,899,969 - 280,547 Changes in assumptions 2,372,367 - 3,105,050 - Changes in proportion and differences between employer contributions and proportionate share of contributions 1,865,675 674,391 2,544,473 218,467 Contributions subsequent to the measurement date 4,416,475 - 4,115,484 - Total $10,840,514 $ 5,255,806 $11,611,007 $ 3,234,212
At June 30, 2019, and June 30, 2018, the average expected remaining service life is 6.18 and 6.22 years, respectively.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date totaling $4,416,475 will be recognized as a reduction of the net pension liability in the year ended June 30, 2021. 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 June 30: 2021 $ (8,320,471) 2022 56,059,288 2023 (15,400,869) 2024 (19,078,018) 2025 (10,842,307) Thereafter (1,249,390) Total $ 1,168,233
Changes in the District’s net pension liability were as follows: 2020 2019 Beginning Net Pension Liability $ 58,926,437 $ 56,558,019 Pension Expense 6,577,160 4,576,674 Employer Contributions (4,115,484) (4,008,437) Net Change in Deferred Outflows and Inflows (3,093,078) 1,800,181 Ending Net Pension Liability $ 58,295,035 $ 58,926,437
At June 30, 2020, and June 30, 2019, $676,713 and $633,608, respectively, was payable to PERS equal to the June 30, 2020 and June 30, 2019, required contributions, which were included in accounts payable.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
J. Long-Term Liabilities
General Obligation Bonds Outstanding District general obligation bonds (additionally secured by pledged revenue) are rated an “AAA” by Standard & Poor’s Corporation and “Aa1” by Moody’s. The net proceeds of all bond issuances have been used to finance portions of one or more capital improvement projects.
At June 30, 2020, outstanding debt payable was as follows:
Due Within 2019 Payments 2020 One Year 2009A Series 4.00% - 5.25% general obligation bonds, originally due in 2038, partially refunded with series 2015 refunding $ 3,085,000 $ 3,085,000 $ - $ - Original issue amount $135,000,000 on 04/01/2009
2009B Series 4.00% - 5.75% general obligation bonds, originally due in 2038, partially refunded with series 2015 refunding 3,090,000 3,090,000 - - Original issue amount $125,000,000 on 04/01/2009
State Revolving Loan - ARRA (2009C) 0.00% , due in semi-annual installments from 2012 through 2029 3,260,550 310,528 2,950,022 310,528 Original issue amount $5,744,780 on 10/16/2009
State Revolving Loan (2011A) 3.1875% , due in semi-annual installments from 2014 through 2031 29,719,838 2,068,921 27,650,917 (1) 2,135,392 Original issue amount $40,000,000 on 03/25/2011
State Revolving Loan (2012A) 2.3562% , due in semi-annual installments from 01/01/2016 through 2032 24,847,360 1,583,313 23,264,047 (2) 1,620,839 Original issue amount $30,000,000 on 07/13/2012
2015 Series Refunding 3.25% - 5.00% general obligation bonds, due in annual installments from 2019 through 2038 103,625,000 3,530,000 100,095,000 3,695,000 Original issue amount $103,625,000 on 08/04/2015
2016 Series Refunding 3.00% - 5.00% general obligation bonds, due in annual installments from 2019 through 2038 267,470,000 2,095,000 265,375,000 8,715,000 Original issue amount $269,465,000 on 08/31/2016
Total $ 435,097,748 $ 15,762,762 $ 419,334,986 $ 16,476,759
(1) The 2011A bond was issued to the State of Nevada as collateral for a low interest loan through the State Revolving Loan Fund. (2) The 2012A bond was issued to the State of Nevada as collateral for a low interest loan through the State Revolving Loan Fund. The original issue amount represents the total amount of authorization for the loan.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Pledged Revenues The District’s General Obligation/Revenue Supported Bonds constitute direct and general obligations of the District, and the full faith and credit of the District is pledged to the payment of principal and interest thereon, subject to Nevada constitutional and statutory limitations on the aggregate amount of ad valorem taxes. The bonds are backed by the District’s ability to levy general ad valorem taxes on all taxable property serviced by the District. The bonds are additionally secured by certain pledged revenues derived by the District after operation and maintenance expenses are deducted (Net Pledged Revenues). Historically, the District has not levied an ad valorem tax because the District’s revenues have always been sufficient to pay debt service on all of the District’s bonds and obligations; however, in any year in which those revenues are insufficient to pay debt service, the District is obligated to levy ad valorem taxes to pay debt service. The total remaining principal and interest payments for the District’s bonds was $575,213,844 as of June 30, 2020. In fiscal year 2020, Net Pledged Revenues received totaled $131,144,300 and the required debt service totaled $32,249,806.
The following table outlines the total amount of annual debt service for years 2021 through 2025 and provides total debt service in five-year increments for year 2026 through final maturity.
Year Ending June 30 Principal Interest Total 2021 $ 16,476,759 $ 15,777,797 $ 32,254,556 2022 17,223,783 15,034,274 32,258,057 2023 18,003,920 14,254,886 32,258,806 2024 18,827,266 13,437,790 32,265,056 2025 19,678,913 12,581,268 32,260,181 2026-2030 112,276,630 49,263,725 161,540,355 2031-2035 114,672,715 28,648,143 143,320,858 2036-2039 102,175,000 6,880,975 109,055,975 Total $ 419,334,986 $ 155,878,858 $ 575,213,844
The District holds no unused lines of credit, direct placements or direct borrowings.
None of the debt is collateralized by physical assets. The bond documents do not contain terms related to significant events of default with finance-related consequences, termination events with finance-related consequences or subjective acceleration clauses.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
Changes in Long-Term Liabilities Long-term liability activity for the year ended June 30, 2020, was as follows:
Beginning Balance Ending Balance Due Within June 30, 2019 Additions Reductions June 30, 2020 One Year Bonds Payable: General obligation bonds $ 435,097,748 $ - $ (15,762,762) $ 419,334,986 $ 16,476,759 Plus Deferred Amounts: For Issuance premiums 37,965,402 - (1,998,180) 35,967,222 -
Total Bonds Payable 473,063,150 - (17,760,942) 455,302,208 16,476,759
Net pension liability 58,926,437 6,577,160 (7,208,562) 58,295,035 -
Accrued OPEB 19,811,230 2,918,337 (737,191) 21,992,376 -
Compensated absences 6,328,409 872,992 (53,934) 7,147,467 998,678
Catastrophic leave 15,753 32,788 (36,041) 12,500 -
Long-Term liabilities $ 558,144,979 $ 10,401,277 $ (25,796,670) $ 542,749,586 $ 17,475,437
Long-term liability activity for the year ended June 30, 2019, was as follows:
Beginning Ending Balance Balance Due Within June 30, 2018 Additions Reductions June 30, 2019 One Year Bonds Payable: General obligation bonds $ 449,814,449 $ - $ (14,716,701) $ 435,097,748 $ 15,762,761 Plus Deferred Amounts: For Issuance premiums 39,963,582 - (1,998,180) 37,965,402 -
Total Bonds Payable 489,778,031 - (16,714,881) 473,063,150 15,762,761
Net pension liability 56,558,019 6,376,855 (4,008,437) 58,926,437 -
Accrued OPEB 38,603,182 3,390,926 (22,182,878) 19,811,230 -
Compensated absences 5,883,353 628,662 (183,606) 6,328,409 1,052,871
Catastrophic leave 2,102 44,870 (31,219) 15,753 -
Long-Term liabilities $ 590,824,687 $ 10,441,313 $ (43,121,021) $ 558,144,979 $ 16,815,632
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
K. Reserve Policies
Designated Unrestricted Reserves The District currently maintains a single fund for all sewer revenues, expenses, and cash balances. However, financial obligations are separated into operating and capital cost centers. This segregation reflects the differing activities of the cost centers and allows for a clear picture of the District’s operating and capital requirements and the funding sources available for each. Further, separately identifying operating and capital needs assists in establishing appropriate levels of operating and capital reserves, which are a necessary and appropriate part of fiscal prudent management for the District. Operating reserves are designed to provide a liquidity cushion against variability and timing of expenses and receipts, unanticipated cash operating expenses or less than expected revenues. The District’s Operating and Maintenance Reserve is equal to 120 days of prior year actual O&M expenses.
The repair and replacement of the District’s conveyance and treatment facilities is critical to the ongoing operation of the District and the safety of the community and environment. A capital contingency reserve is set aside in case of emergency, should a piece of equipment or a portion of the District’s infrastructure fail unexpectedly. This reserve amount is set at the lesser of: (1) two percent (2.0%) of the value of total asset original cost; or (2) $50 million.
The District established a capital expansion reserve in the event of an unanticipated need for capital expansion to an existing conveyance system or treatment facility or the possible need for an additional system or facility due to unexpected service area growth or need. The reserve will equal the lesser of: (1) the average of the next ten years budgeted expansion capital; or (2) $25 million.
NRS 354.6115 provides for the creation of reserves to stabilize the operations of local governments, including public utilities. Monies the District transfers to this reserve may only be used if the total actual revenues of the District fall short of the total anticipated revenues or expenses incurred by the District to mitigate the effects of natural disaster. The District’s budget stabilization reserve also provides resources that allow for rate stability. The District’s Budget Stabilization Reserve is equal to 10% of actual operations and maintenance expenses from the previous fiscal year.
As required by GASB statement 75, the District began to record a liability for OPEB obligations in fiscal year 2018. GASB standards do not require employers to advance fund OPEB; however, the District initiated this reserve fund allowing for the opportunity to begin advance funding in the future. The reserve fund amount will be equal to the total OPEB liability from the previous year.
Funds are set aside in the worker’s compensation insurance reserve for potential losses. The reserve is classified as designated unrestricted funds since their use is limited (but not mandated) to the payment of any claims. Annual worker’s compensation insurance reserves are equal to the amount of the annual maximum out-of-pocket expense, per event in any given year, less the amount of the workers’ compensation insurance security deposit.
Restricted Reserves Funds set aside for payment of general obligation debt and revenue bonds are classified as restricted assets since their use is limited by applicable bond covenants. A bond reserve account was established in compliance with the District’s bond resolutions to meet possible deficiencies in debt service. The annual bond debt service reserve is equal to the largest annual principal and interest amount due for the remaining outstanding life of the bonds.
Pursuant to NRS 616B.330(2), each self-insured employer must deposit with the Commissioner of the State of Nevada, Division of Insurance, a bond, or other security, executed by the employer as principal, and by a corporation qualified under the laws of this State, payable to the State of Nevada, and conditioned upon the payment of compensation for injuries and occupational diseases to employees. The security amount and related reserve may change as directed by the Commissioner.
In accordance with the cooperative agreement between the District and the Clean Water Coalition (CWC) dated October 1, 2011, the CWC paid the District $100,000 to be held in trust and used to pay any direct expenses that may be incurred by
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019 the Trustee Agency upon termination of the CWC agency. The District has been designated as the Trustee Agency. The amount of this reserve is all unspent CWC funds at the beginning of any fiscal year.
L. Reclassification
It was determined that the deferred loss on bond refunding account had been classified as unrestricted instead of net investment in capital assets. While it has no effect on the total net position, the 2018 and 2019 financial statements have been reclassed.
The effect of the reclassification on the 2018 financial statements are:
As Previously As Reported Reclassification Reclassed Statement of Net Position Net investment in capital assets $ 1,419,606,935 $ 39,896,522 $ 1,459,503,457 Unrestricted 317,316,687 (39,896,522) 277,420,165
The effect of the reclassification on the 2019 financial statements are:
As Previously As Reported Reclassification Reclassed Statement of Net Position Net investment in capital assets $ 1,410,831,661 $ 37,901,690 $ 1,448,733,351 Unrestricted 403,484,886 (37,901,690) 365,583,196
Certain minor reclassifications have been made to the prior year period amounts to conform to the current presentation.
M. Contingencies
In the ordinary course of its operations, claims may be filed against the District. Although unable to estimate the amount of likely losses, if any, it is the opinion of management that because of its insurance and other risk management practices these claims will not result in any material adverse effect on the District’s financial position or operations. Historically, no provision has been made for any such losses in these matters. The District does not accrue for estimated future legal and defense costs, if any, to be incurred in connection with outstanding or threatened litigation and other disputed matters, but rather, records such as period costs when the services are rendered.
N. COVID-19 and CARES Act
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. Subsequently, Governor Steve Sisolak issued a Declaration of Emergency on March 12, 2020, and ordered a shutdown of all nonessential businesses for 30 days on March 18, 2020, with the majority of them extended through May 31, 2020. Nonessential businesses, including casinos, restaurants and retail stores, have opened and remain at 50 percent capacity and must require facial masks and social distancing. The government shutdown had an immediate effect on unemployment throughout the local economy.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
It was important to recognize the financial challenges many of our customers may face and we sought out measures to ease the economic burden of our rates and fees on our customers. The Board approved the following on June 16, 2020:
• Postponed from July 1, 2020 to January 1, 2021 an increase to the annual sewer service charge and connection fee; and • Waived basic penalties and interest on delinquent accounts for the fourth quarter of fiscal year 2020 and first quarter of fiscal year 2021.
In addition, the Board opted to not send fiscal year 2020 delinquent accounts to the Clark County tax roll, where they would be due with the September 2020 property taxes. Instead the delinquent balances were rolled into the July 1, 2020 fiscal year sewer service bills, affecting our short-term cash flow and not our sewer service revenue per se.
The District does receive a portion of the Clark County Water and Wastewater Infrastructure Sales Tax. Due to the shutdown and economic crisis, fiscal year 2020 was about $635,000 less than fiscal year 2019. It was originally forecasted to be $2.5 million less. Fiscal year 2021 is budgeted at $15 million. Because of the uncertainty in the real estate market, connection fees are budgeted at $13 million in fiscal year 2021, which is about $12 million less than received in fiscal year 2020. Both of these revenue sources fund the “pay as you go” portion of the CIP, and we will be reevaluating the timing of upcoming projects as we receive these funds and customer sewer service payments. Cash flow, as opposed to operating revenues, are our biggest concern, but, as of the date of these financial statements, they are comparable to last year.
The District implemented a 4-day, 38-hour workweek on July 27, 2020, reducing salaries and PERS contributions for fiscal year 2021 by five percent, which is not reflected in the fiscal year 2021 budget. It is to be in effect through July 26, 2021.
The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. The District actively monitors the impact of the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the District is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021. Although the District cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have an adverse effect on the District’s results of future operations, financial position, and liquidity in fiscal year 2021.
On March 27, 2020, President Donald J. Trump signed into law the “Coronavirus Aid, Relief and Economic Security (CARES) Act.” The CARES Act, among other things, appropriated funds for the Coronavirus Relief Fund to be used to make payments for specified uses to States and certain local governments. The District has no assurance that it is eligible for these funds or will be able to obtain them. The District continues to examine the impact that the CARES act may have. Currently, the District is unable to determine the impact that the CARES Act will have on the District’s financial condition, results of operations, or liquidity.
O. New Pronouncements
The GASB has recently issued the following pronouncements which are applicable to the District for which management is assessing the impact of the implementation, if any, to its basic financial statements as of June 30, 2020.
In March 2020, the GASB issued Statement No. 93, Replacement of Interbank Offered Rates, effective for periods beginning after June 15, 2020. This statement addresses the accounting and financial reporting effects that result from replacement of interbank offered rates with other reference rates. Management has completed its assessment of this statement and determined that it will not have a material effect on financial position or changes therein.
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CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
In March 2020, the GASB issued Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, effective for periods beginning after June 15, 2022. The primary objective of this statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements. Management has completed its assessment of this statement and determined that it will not have a material effect on financial position or changes therein.
In May 2020, the GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements, effective for periods beginning after June 15, 2022. This statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). Management has not yet completed its assessment of this statement.
In June 2020, the GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – an Amendment of GASB Statements No. 14 and No. 84, and a Supersession of GASB Statement No.32, effective for periods beginning after June 15, 2021. This statement primarily addresses the reporting of fiduciary component units. Management has completed its assessment of this statement and determined that it will not have a material effect on financial position or changes therein.
P. Subsequent Events
Events through October 20, 2020 were evaluated by the management of the District who determined that no events, except for those discussed in Note N, occurred that require additional recognition or disclosure in these financial statements.
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Required Supplementary Information
Schedule of Changes in Total OPEB Liability - PEBP
Clark County Water Reclamation District Required Supplementary Information Postemployment Benefits Other than Pensions Schedule of Changes in Total OPEB Liability PEBP Last Ten Fiscal Years *
Total OPEB Liability, End Differences of Year as a between Net Change Ending Percentage Plan Year Beginning Change of Expected and in Total Total Covered of Covered- Ended Total OPEB Service Benefit Actual Changes of Benefit OPEB OPEB Employee Employee June 30 Liability Cost Interest Terms Experience Assumptions Payments Liability Liability Payroll ** Payroll
2020 $ 1,618,893 $ - $ 61,208 $ - $ - $ 79,594 $ (74,580) $ 66,222 $ 1,685,115 N/A N/A
2019 1,879,552 - 68,038 - (402) (250,919) (77,376) (260,659) 1,618,893 N/A N/A
2018 2,075,432 - 58,058 - 6,322 (180,776) (79,484) (195,880) 1,879,552 N/A N/A
* Fiscal year 2018 was the first year of implementation; therefore, as information becomes available this schedule will ultimately present information for the ten most recent fiscal years. **PEBP is closed to new employees and thus has no covered payroll
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Schedule of Changes in Total OPEB Liability – Self-Funded/HPN Clark County Water Reclamation District Required Supplementary Information Postemployment Benefits Other than Pensions Schedule of Changes in Total OPEB Liability Self-Funded/HPN Last Ten Fiscal Years *
Total OPEB Liability, End of Differences Year as a between Percentage Plan Year Beginning Change of Expected and Net Change in Ending Covered of Covered- Ended Total OPEB Benefit Actual Changes of Benefit Total OPEB Total OPEB Employee Employee June 30 Liability Service Cost Interest Terms Experience Assumptions Payments Liability Liability Payroll Payroll
2020 $ 18,192,337 $ 765,312 $ 720,839 $ - $ - $ 1,291,384 $ (662,611) $ 2,114,924 $ 20,307,261 $ 27,787,860 73.08%
2019 36,723,630 1,945,617 1,377,271 - (17,775,013) (3,683,170) (395,998) (18,531,293) 18,192,337 27,787,860 65.47%
2018 38,947,630 2,063,444 1,162,967 - (71,011) (4,911,726) (467,674) (2,224,000) 36,723,630 26,631,154 137.90%
* Fiscal year 2018 was the first year of implementation; therefore, as information becomes available this schedule will ultimately present information for the ten most recent fiscal years.
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Clark County Water Reclamation District Required Supplementary Information Postemployment Benefits Other than Pensions Proportionate Share of Contractually Required OPEB Contribution Information - PEBP Last Ten Fiscal Years *
Contributions in relation to Contributions as the a percentage of Contractually contractually Contribution Covered covered Plan Year Ended required determined deficiency employee employee June 30 contribution contributions (excess) payroll ** payroll
2020 $ 74,580 $ 74,580 $ - N/A N/A
2019 77,376 77,376 - N/A N/A
2018 79,484 79,484 - N/A N/A
* Fiscal year 2018 was the first year of implementation; therefore, as information becomes available this schedule will ultimately present information for the ten most recent fiscal years.
**PEBP is closed to new employees and thus has no covered payroll
Schedule of Proportionate Share of Contractually Required OPEB Contributions – PEBP
46
Schedule of Proportionate Share of Net Pension Liability Clark County Water Reclamation District Required Supplementary Information Schedule of Proportionate Share of Net Pension Liability Last Ten Fiscal Years *
Proportionate Plan fiduciary share of the net net position as Proportion of pension liability a percentage the net Proportionate as a percentage Plan's fiduciary net of the total Plan Year Ended pension share of the net of covered position pension June 30 liability pension liability Covered payroll payroll (in millions) liability 2020 0.42751% $ 58,295,035 $ 29,396,311 198.31% $ 44,284,300 76.46% 2019 0.43208% 58,926,437 28,570,227 206.25% 41,431,700 75.24% 2018 0.42525% 56,558,019 27,155,077 208.28% 38,686,300 74.42% 2017 0.42768% 57,553,380 26,805,607 214.71% 35,002,100 72.23% 2016 0.40472% 46,378,911 24,779,783 187.16% 34,610,700 75.13% 2015 0.40096% 41,788,009 23,947,775 174.50% 33,575,100 76.31%
* Fiscal year 2015 was the first year of implementation; therefore, as information becomes available this schedule will ultimately present information for the ten most recent fiscal years.
47
Schedule of Proportionate Share of Statutorily Required Pension Contribution Information
Clark County Water Reclamation District Required Supplementary Information Proportionate Share of Statutorily Required Pension Contribution Information Last Ten Fiscal Years *
Contributions in relation to Statutorily the statutorily Contribution Contributions as Plan Year Ended required determined deficiency Covered a percentage of June 30 contribution contributions (excess) payroll covered payroll 2020 $ 8,832,949 $ 8,832,949 - $ 30,324,054 29.13% 2019 8,230,968 8,230,968 - 29,396,311 28.00% 2018 7,999,660 7,999,660 - 28,570,227 28.00% 2017 7,598,614 7,598,614 - 27,155,077 27.98% 2016 7,171,104 7,171,104 - 26,805,607 26.75% 2015 6,246,929 6,246,929 - 24,779,783 25.21%
* Fiscal year 2015 was the first year of implementation; therefore, as information becomes available this schedule will ultimately present information for the ten most recent fiscal years.
48
Supplementary Information
49
Schedule of Capital Assets Clark County Water Reclamation District Schedule of Capital Assets Years Ended June 30, 2020 and 2019
Capital Current Year Current Year Capital Accumulated Accumulated Net Capital Assets Cost Cost Assets Depreciation Depreciation Depreciation Depreciation Assets June 30, 2019 Increases Decreases June 30, 2020 June 30, 2019 Increases Decreases June 30, 2020 June 30, 2020 Land and Rights of Way $ 7,958,177 $ - $ - $ 7,958,177 $ - $ - $ - $ - $ 7,958,177 Land Improvements 13,985,327 - - 13,985,327 3,890,861 946,475 - 4,837,336 9,147,991 Total Land and Improvements 21,943,504 - - 21,943,504 3,890,861 946,475 - 4,837,336 17,106,168
Buildings and Wastewater Treatment Facilities: Flamingo Water Resource Center 1,172,952,978 210,219 (257,201) 1,172,905,996 590,097,391 39,513,959 (257,201) 629,354,149 543,551,847 Laughlin Water Resource Center 82,676,777 5,460,789 (1,583,627) 86,553,939 63,018,909 1,203,682 (1,583,627) 62,638,964 23,914,975 Blue Diamond Treatment Ponds 2,168,226 - - 2,168,226 797,459 48,502 - 845,961 1,322,265 Indian Springs Treatment Facility 19,115,950 - - 19,115,950 5,273,367 833,537 - 6,106,904 13,009,046 Moapa Valley Treatment Facility 22,101,471 - - 22,101,471 8,542,340 694,573 - 9,236,913 12,864,558 Searchlight Treatment Ponds 3,088,117 - 3,088,117 1,143,013 143,060 - 1,286,073 1,802,044 Total Buildings and Wastewater Treatment Facilities: 1,302,103,519 5,671,008 (1,840,828) 1,305,933,699 668,872,479 42,437,313 (1,840,828) 709,468,964 596,464,735
Wastewater Conveyance Lines: Flamingo Water Resource Center 767,875,220 856,168 (1,850) 768,729,538 174,595,537 15,736,643 (1,233) 190,330,947 578,398,591 Laughlin Water Resource Center 15,068,512 - - 15,068,512 3,799,038 310,286 - 4,109,324 10,959,188 Indian Springs Treatment Facility 12,062,308 - - 12,062,308 2,264,927 218,613 - 2,483,540 9,578,768 Moapa Valley Treatment Facility 32,583,294 - - 32,583,294 5,545,933 651,663 - 6,197,596 26,385,698 Searchlight Treatment Ponds 3,671,226 - - 3,671,226 2,150,909 302,422 - 2,453,331 1,217,895 Contributed Wastewater Lines 505,909,064 51,441,363 (282,788) 557,067,639 119,966,286 10,584,900 (69,470) 130,481,716 426,585,923 Total Wastewater Conveyance Lines: 1,337,169,624 52,297,531 (284,638) 1,389,182,517 308,322,630 27,804,527 (70,703) 336,056,454 1,053,126,063
Equipment 356,785,778 15,907,732 (918,081) 371,775,429 198,007,700 26,510,734 (885,204) 223,633,230 148,142,199
Work in Progress 50,491,263 58,902,152 (18,878,205) 90,515,210 - - - - 90,515,210
Total $ 3,068,493,688 $ 132,778,423 $ (21,921,752) $ 3,179,350,359 $ 1,179,093,670 $ 97,699,049 $ (2,796,735) $ 1,273,995,984 $ 1,905,354,375
50
Schedule of Revenues and Expenses Compared to Budget Clark County Water Reclamation District Schedule of Revenues and Expenses Compared to Budget Year Ended June 30, 2020 (with Comparative Actual Amounts for Year Ended June 30, 2019)
2020 2020 Variance to 2019 Budget Actual Budget Actual Operating Revenues: Sewer service charges $ 157,347,955 $ 159,171,820 $ 1,823,865 $ 151,779,428 Reclaimed water sales 927,285 539,510 (387,775) 8,020,378 Pretreatment fees 570,841 633,813 62,972 523,000 Septage fees 429,988 510,512 80,524 406,586 Other 174,177 191,168 16,991 125,902 Total Operating Revenues 159,450,246 161,046,823 1,596,577 160,855,294
Operating Expenses: Salaries 27,396,761 27,534,544 137,783 26,521,049 Benefits 14,519,485 14,436,481 (83,004) 12,393,847 Utilities 11,204,430 9,905,705 (1,298,725) 10,562,923 Outside services 11,587,672 7,878,695 (3,708,977) 8,193,959 Chemicals 6,905,247 5,767,417 (1,137,830) 5,426,854 Maintenance 6,409,250 8,397,330 1,988,080 6,106,445 Other expenses 3,290,325 2,738,015 (552,310) 2,579,808 Supplies 6,520,901 5,282,847 (1,238,054) 5,103,413 Impairments and other losses - 170,506 170,506 1,025,055 Depreciation 103,879,476 97,699,050 (6,180,426) 100,262,055 Total Operating Expenses 191,713,547 179,810,590 (11,902,957) 178,175,408
Loss from Operations (32,263,301) (18,763,767) 13,499,534 (17,320,114)
Non-Operating Revenue (Expense): Investment income 2,092,850 26,534,511 24,441,661 19,321,200 Restricted investment earnings - 732,119 732,119 755,892 Connection fees, net of refunds and allowances 20,000,000 24,942,388 4,942,388 30,463,343 Sales tax apportionment 22,545,749 20,167,397 (2,378,352) 20,802,775 Interest expense, net of capitalized interest (16,487,045) (16,140,419) 346,626 (16,832,937) Grant revenue 25,000 - (25,000) - Other non-operating revenue (expense), net - 150,462 150,462 415,761 Total Non-Operating Revenue (Expense) 28,176,554 56,386,458 28,209,904 54,926,034
Income Before Capital Contributions (4,086,747) 37,622,691 41,709,438 37,605,920
Capital Contributions Contributed assets 26,860,928 47,458,939 20,598,011 42,079,359
Change in Net Position 22,774,181 85,081,630 62,307,449 79,685,279
Net Position, Beginning of the Year 1,837,156,993 1,837,156,993 - 1,757,471,714
Net Position, End of Year $ 1,859,931,174 $ 1,922,238,623 $ 62,307,449 $ 1,837,156,993
51
Schedule of Cash Flows Compared to Budget
Clark County Water Reclamation District Schedule of Cash Flows Compared to Budget Years Ended June 30, 2020 and 2019 2020 2020 Variance 2019 Budget Actual to Budget Actual Cash Flows from Operating Activities: Cash flows from customers $ 159,450,246 $ 158,662,759 $ (787,487) $ 167,432,111 Payments to employees for services and benefits (41,916,246) (40,561,230) 1,355,016 (37,648,520) Payments for services and supplies (45,917,825) (40,519,981) 5,397,844 (40,252,662) Net Cash Provided by Operating Activities 71,616,175 77,581,548 5,965,373 89,530,929
Cash Flows from Noncapital Financing Activities: Repayment of notes receivable from Clark County 401,308 1,259,715 858,407 371,457
Cash Flows from Capital and Related Financing Activities: Grant revenue 25,000 - (25,000) - Sales tax apportionment 22,545,749 20,390,240 (2,155,509) 20,145,958 Connection fees received 20,000,000 24,942,387 4,942,387 31,773,705 Acquisition, construction or improvement of capital assets (92,710,346) (62,780,703) 29,929,643 (32,692,542) Principal payment on debt for capital assets (15,762,761) (15,762,761) - (14,716,701) Interest payment on debt for capital assets (16,487,045) (16,490,393) (3,348) (17,165,341) Net Cash Used in Capital and Related Financing Activities (82,389,403) (49,701,230) 32,688,173 (12,654,921)
Cash Flows from Investing Activities: Proceeds from sale of investments 184,210,816 337,099,704 152,888,888 361,674,616 Interest on investments 2,092,850 11,327,696 9,234,846 8,335,759 Purchases of investments (164,923,335) (375,774,664) (210,851,329) (514,548,603) Workers compensation certificate of deposit - - - 116,693 Other financing fees - 150,462 150,462 415,761 Net Cash Provided by Investing Activities 21,380,331 (27,196,802) (48,577,133) (144,005,774)
Net Increase in Cash and Cash Equivalents 11,008,411 1,943,231 (9,923,586) (66,758,309) Cash and Cash Equivalents, Beginning of Year 41,815,495 41,815,495 - 108,573,804
Cash and Cash Equivalents, End of Year $ 52,823,906 $ 43,758,726 $ (9,923,586) $ 41,815,495
Cash and Cash Equivalents Balances: Unrestricted cash and cash equivalents $ 17,108,682 $ 14,172,638 $ (2,936,044) $ 13,329,129 Restricted cash and cash equivalents 35,715,226 29,586,088 (6,129,138) 28,486,366 Cash and Cash Equivalents, End of Year $ 52,823,906 $ 43,758,726 $ (9,065,180) $ 41,815,495
52
Statistical Section (Unaudited)
53
STATISTICAL SECTION
This section of the Clark County Water Reclamation District's comprehensive annual 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 Page
Financial Trends 55 These schedules contain trend information to help the reader understand how the District's financial performance and well-being have changed over time.
Revenue Capacity 58 These schedules contain information to help the reader assess the District's most significant local revenue sources.
Debt Capacity 61 This schedule presents 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.
Operating Information 62 These schedules contain service and infrastructure data to help the reader understand how the information in the District's financial report relates to the services the District provides and the activities it performs.
Demographic and Economic Information 66 These schedules offer demographic and economic indicators to help the reader understand the environment within which the District's financial
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.
54 Summary of Net Position
Clark County Water Reclamation District Summary of Net Position Last Ten Fiscal Years
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Net investment in capital assets $ 1,066,697,040 $ 1,021,883,382 $ 1,012,588,221 $ 1,057,541,097 $ 1,152,486,134 $ 1,350,781,565 $ 1,415,191,745 $ 1,459,503,457 $ 1,448,733,351 $ 1,477,040,054 Restricted for debt service and capital projects 6,280,245 9,104,043 10,592,125 11,981,142 12,882,961 18,101,174 19,010,619 20,548,092 22,840,446 24,063,952 Unrestricted 451,145,151 503,574,724 535,979,881 512,708,509 482,682,569 317,912,961 297,922,927 277,420,165 365,583,196 421,134,617 Total Net Position $ 1,524,122,436 $ 1,534,562,149 $ 1,559,160,227 $ 1,582,230,748 $ 1,648,051,664 $ 1,686,795,700 $ 1,732,125,291 $ 1,757,471,714 $ 1,837,156,993 $ 1,922,238,623
$2,000,000,000
$1,800,000,000
Restricted for debt service and capital projects $1,600,000,000
Unrestricted $1,400,000,000
$1,200,000,000 Net investment in capital assets
$1,000,000,000 Total Net Position
$800,000,000
$600,000,000
$400,000,000
$200,000,000
$- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
55
Changes in Net Position Clark County Water Reclamation District Changes in Net Position Last Ten Fiscal Years
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Operating Revenues: Service Fees $ 130,974,469 $ 133,122,260 $ 143,275,939 $ 139,716,364 $ 142,374,180 $ 143,142,433 $ 145,560,887 $ 147,311,016 $ 151,779,428 $ 159,171,820 Other 3,780,073 3,229,158 4,344,636 3,793,279 2,454,643 2,441,918 2,327,450 1,914,492 9,075,866 1,875,003 Total Operating Revenues 134,754,542 136,351,418 147,620,575 143,509,643 144,828,823 145,584,351 147,888,337 149,225,508 160,855,294 161,046,823 Non-Operating Revenues: Connection Fees 9,218,329 10,549,916 18,972,735 31,461,511 24,013,884 19,481,062 23,329,406 26,788,540 30,463,343 24,942,388 Sales tax apportionment 13,134,404 14,055,242 14,870,001 15,911,706 17,078,167 17,717,754 18,544,504 19,623,239 20,802,775 20,167,397 Investment income (loss) 6,440,537 5,708,943 (1,232,446) 8,110,767 8,570,225 7,433,893 1,157,152 560,284 19,321,200 26,534,511 Other 236,323 (71,874) 399,758 1,882,969 301,798 (1,247,980) (1,245,427) (97,694) 1,171,653 882,581 Total Non-Operating Revenues 29,029,593 30,242,227 33,010,048 57,366,953 49,964,074 43,384,729 41,785,634 46,874,369 71,758,971 72,526,877 Total Revenues 163,784,135 166,593,645 180,630,623 200,876,596 194,792,898 188,969,080 189,673,971 196,099,877 232,614,265 233,573,700 Operating Expenses: Salaries 22,490,527 20,967,989 21,730,773 22,280,786 22,345,906 24,504,234 25,990,677 26,020,723 26,521,049 27,534,544 Benefits 10,045,553 10,581,699 10,565,994 11,209,667 10,747,789 10,628,886 14,182,150 13,804,234 12,393,847 14,436,481 Utilities 12,629,495 10,239,274 9,749,587 10,440,207 11,265,489 10,830,647 10,945,924 10,922,926 10,562,923 9,905,705 Outside services 6,351,481 4,690,745 5,218,462 6,585,336 7,053,570 7,597,305 7,806,781 8,716,571 8,193,959 7,878,695 Chemicals 5,039,405 5,443,455 5,738,662 6,115,822 5,186,742 4,870,869 4,899,456 4,685,017 5,426,854 5,767,417 Maintenance 4,870,339 4,812,371 5,375,121 5,893,990 5,383,928 4,750,373 4,691,915 4,847,207 6,106,445 8,397,330 Other expenses 2,015,994 2,086,233 2,519,369 6,376,168 6,160,644 2,195,097 5,004,245 2,318,255 2,579,808 2,738,015 Supplies 1,403,353 2,025,589 2,040,399 1,380,948 2,777,022 4,158,204 6,179,214 4,608,702 5,103,413 5,282,847 Bad debt expense ------Impairment and other losses - - 1,126,222 2,744,934 2,997,433 7,579,236 15,671,195 15,164,084 1,025,055 170,506 Depreciation 63,893,458 70,999,964 74,793,101 75,643,760 79,492,040 87,181,087 89,755,508 99,673,167 100,262,055 97,699,050 Total Operating Expenses 128,739,605 131,847,319 138,857,690 148,671,619 153,410,563 164,295,938 185,127,065 190,760,886 178,175,408 179,810,590 Interest expense-bonds, net of capitalized interest 24,133,089 21,235,841 15,800,402 10,578,550 12,089,946 9,500,993 4,023,588 13,814,314 16,832,937 16,140,419 Total Expenses 152,872,694 153,083,160 154,658,092 159,250,169 165,500,509 173,796,931 189,150,653 204,575,200 195,008,345 195,951,009
Income (Loss) Before Capital Contributions 10,911,441 13,510,485 25,972,531 41,626,427 29,292,388 15,172,149 523,318 (8,475,323) 37,605,920 37,622,691 Capital Contributions: Contributed assets 14,595,621 9,987,987 11,547,824 28,130,054 36,528,528 51,375,748 44,806,273 33,821,746 42,079,359 47,458,939 Total Change in Net Position $ 25,507,062 $ 23,498,472 $ 37,520,355 $ 69,756,481 $ 65,820,916 $ 66,547,897 $ 45,329,591 $ 25,346,423 $ 79,685,279 $ 85,081,630
56
Operating Expense by Function
Clark County Water Reclamation District Operating Expense by Function Last Ten Fiscal Years
% of Supplies and % of Depreciation % of Fiscal Year Personnel Annual Services Annual Amortization Annual Total
2011 $ 32,536,080 21.28% $ 32,310,067 21.14% $ 88,026,547 57.58% $ 152,872,694 2012 31,549,688 23.93% 29,297,667 22.22% 70,999,964 53.85% 131,847,319 2013 32,296,767 23.26% 30,641,600 22.07% 75,919,323 54.67% 138,857,690 2014 33,490,453 22.53% 36,792,472 24.75% 78,388,694 52.73% 148,671,619 2015 33,093,695 21.57% 40,824,828 26.61% 79,492,040 51.82% 153,410,563 2016 35,133,120 21.38% 34,402,495 20.94% 94,760,323 57.68% 164,295,938 2017 40,172,827 21.70% 39,527,535 21.35% 105,426,703 56.95% 185,127,065 2018 39,824,957 20.88% 41,749,539 21.89% 109,186,390 57.24% 190,760,886 2019 38,914,896 21.84% 38,998,457 21.89% 100,262,055 56.27% 178,175,408 2020 41,971,025 23.34% 40,140,515 22.32% 97,699,050 54.33% 179,810,590
$200,000,000 $150,000,000 $100,000,000 $50,000,000 $- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Personn el Supplies & Services Depreciation Amortization To ta l
57
Operating Revenue by Source Clark County Water Reclamation District Operating Revenue by Source Last Ten Fiscal Years
Reclaimed Sewer % of Wate r % of % of Total Fiscal Year Se rvice Annual Sales Annual Other Other Revenue
2011 $ 132,095,603 98.03% $ 2,085,156 1.55% $ 573,783 0.43% $ 134,754,542 2012 133,786,521 98.12% 2,274,004 1.67% 290,893 0.21% 136,351,418 2013 143,275,939 97.06% 2,195,074 1.49% 2,149,562 1.46% 147,620,575 2014 139,716,364 97.36% 2,357,845 1.64% 1,435,434 1.00% 143,509,643 2015 142,374,180 98.31% 1,121,695 0.77% 1,332,948 0.92% 144,828,823 2016 143,142,433 98.32% 938,717 0.64% 1,503,201 1.03% 145,584,351 2017 145,560,887 98.43% 1,273,879 0.86% 1,053,571 0.71% 147,888,337 2018 147,311,016 98.72% 872,361 0.58% 1,042,131 0.70% 149,225,508 2019 151,779,428 94.36% 8,020,378 4.99% 1,055,488 0.66% 160,855,294 2020 159,171,820 98.84% 539,510 0.34% 1,335,493 0.83% 161,046,823
$180,250,000 $160,250,000
$140,250,000 $120,250,000 $100,250,000 $80,250,000 $60,250,000 $40,250,000 $20,250,000 $250,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
O th er Reclaimed Water Sewer Serv ice Total Revenue
58
Non-Operating Revenue by Source Clark County Water Reclamation District Non-Operating Revenue by Source Last Ten Fiscal Years
Connection Interest Sales Tax Other Total Fiscal Year Fees Collected Income Collected Income Revenue
2011 $ 9,218,330 $ 6,440,537 $ 13,134,404 $ 236,323 $ 29,029,594 2012 10,549,916 5,708,943 14,055,242 (71,874) 30,242,227 2013 18,972,734 (1,232,446) 14,870,001 399,758 33,010,047 2014 31,461,511 8,110,767 15,911,706 1,882,969 57,366,953 2015 24,013,884 8,570,225 17,078,167 301,798 49,964,074 2016 19,481,062 7,433,893 17,717,754 (1,247,980) 43,384,729 2017 23,329,406 1,157,151 18,544,504 (1,245,427) 41,785,634 2018 26,788,540 389,193 19,623,239 73,397 46,874,369 2019 30,463,343 20,077,092 20,802,775 415,761 71,758,971 2020 24,942,388 27,266,630 20,167,397 150,462 72,526,877
$75,000,000 $65,000,000 $55,000,000
$45,000,000 $35,000,000 $25,000,000 $15,000,000 $5,000,000 $(5,000,000) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Other Income Sales Tax Collected Interest Income SDA Connection Fees Collected Total Revenue
59
Ten Largest Customers
Clark County Water Reclamation District Ten Largest Customers Current Year and Ten Years Ago
2020 2011
ERU's Billed Percentage of Dollar Amount ERU's Billed Percentage of Dollar Amount Customer Rank 7/1/2020 Total ERU's Billed 7/1/2020 Rank 7/1/2011 Total ERU's Billed 7/1/2011
MANDALAY BAY RESORT CASINO 1 10,146.480 1.51% $ 2,306,730 2 8,369.735 1.56% $ 1,788,612 CITY CENTER 2 9,800.760 1.46% 2,230,296 1 9,642.415 1.79% 2,060,584 MGM GRAND HOTEL 3 8,203.470 1.22% 1,866,454 3 7,693.440 1.43% 1,644,088 VENETIAN HOTEL CASINO 4 7,876.340 1.17% 1,790,593 4 7,308.415 1.36% 1,561,808 CAESARS PALACE 5 7,295.140 1.09% 2,077,713 5 6,936.755 1.29% 1,482,385 BELLAGIO 6 6,973.250 1.04% 1,586,849 6 5,733.555 1.07% 1,225,261 WYNN LAS VEGAS HOTEL CASINO 7 6,529.250 0.97% 1,485,088 7 5,581.822 1.04% 1,192,835 NELLIS AIR FORCE BASE 8 5,580.070 0.83% 1,267,569 8 4,953.805 0.92% 1,058,628 COSMOPOLITAN LAS VEGAS 9 5,467.270 0.81% 1,245,999 - - - - MIRAGE HOTEL & CASINO 10 4,975.100 0.74% 1,130,105 9 4,721.985 0.88% 1,009,088 LUXOR - - - - 10 4,700.985 0.87% 1,008,016
Source: District Finance Service Group
60
Ratios of Outstanding Debt
Clark County Water Reclamation District Ratios of Outstanding Debt Last Ten Fiscal Years
General Issuance Percentage Fiscal Obligation Premiums / Revenue Total of Personal Per Year Bonds Discounts Bonds Debt Income * Capita
2010 $ 456,784,780 $ 3,495,428 $ - $ 460,280,208 66% $ 229.41 2011 452,008,449 3,161,731 - 455,170,180 63% 231.37 2012 456,767,672 2,937,240 - 459,704,912 60% 230.06 2013 480,558,254 2,827,212 - 483,385,466 63% 238.31 2014 471,160,284 2,717,184 - 473,877,468 57% 225.42 2015 464,961,090 2,607,155 - 467,568,245 52% 217.71 2016 478,124,759 11,973,606 - 490,098,365 53% 222.25 2017 463,437,944 41,961,762 - 505,399,706 51% 224.78 2018 449,814,449 39,963,582 - 489,778,031 47% 214.38 2019* 435,097,748 37,965,402 - 473,063,150 45% 203.40 2020* 419,334,986 35,967,222 - 455,302,208 43% 195.76
* Total Personal Income and Population are not available; therefore, numbers from 2018 are used as estimates. Details regarding the District's outstanding debt can be found in the notes to the financial statements.
Source: District Finance Service Group
61
Clark County Water Reclamation District Flamingo Water Resource Center Average Daily Flows (Per Million Gallons) Last Ten Fiscal Years
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 July 93.53 98.81 96.50 99.99 102.19 102.01 106.49 108.04 111.17 109.74 August 94.71 98.53 98.06 98.44 102.46 102.79 105.37 108.94 113.39 109.74 September 93.87 97.79 96.75 98.93 102.86 100.98 103.39 107.38 110.11 108.48 October 94.02 99.58 95.50 97.47 102.04 101.85 102.70 106.37 107.70 105.63 November 91.90 96.06 93.21 97.28 101.48 100.75 101.31 103.75 102.86 105.45 December 91.68 94.95 93.45 96.56 98.66 98.69 100.58 101.86 101.31 104.93 January 91.91 95.78 92.58 96.51 99.55 98.82 101.50 102.07 102.48 104.74 Fe bruary 91.06 96.42 92.44 95.97 99.77 98.45 100.91 101.52 101.90 104.72 March 91.49 94.93 93.65 97.59 101.36 98.93 102.93 102.61 104.00 98.35 April 91.11 94.24 95.26 97.99 98.42 100.04 102.69 104.73 105.63 89.42 May 90.37 95.06 90.18 97.89 100.52 100.52 103.96 106.20 106.42 92.00 June 92.19 96.20 94.85 99.90 100.09 102.83 105.98 106.46 107.84 98.74 Annual Average 92.32 96.53 94.37 97.88 100.78 100.56 103.15 104.99 106.23 102.66
113
108
103
98
93
88 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Mar Jun
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Average Daily Flows
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Clark County Water Reclamation District Schedule of Insurance Policies in Force Year Ended June 30, 2020
Amount of Policy Description of Risk Covered Insure r Expiration Date
Statutory Limit Excess Workmen's Compensation Safety National Casualty Corporation September 1, 2021 ($750,000 SIR) $1,000,000 Employer's Liability
$50,000,000 Course of Construction Great American Ins. Co of New York September 1, 2020 any one site ($20,000 deductible)
$11,000,000 Each Event Comprehensive General Argonaut Insurance Company September 1, 2020 $11,000,000 General Total Liability $12,000,000 Products & Completed work ($50,000 SIR) $11,000,000 Personal Injury $11,000,000 Advertising Injury Med Exp Excluded $1,000,000 Sewer Backup
$1,000,000 CSL Comprehensive Business Argonaut Insurance Company September 1, 2020 Automobile ($50,000 SIR)
$100,000 Comprehensive Crime Argonaut Insurance Company September 1, 2020 ($50,000 Deductible)
$1,000,000,000 Property Damage (Fire) Travelers Indemnity Company September 1, 2020 $1,000,000 Blanket Earnings & Exp ($50,000 deductible)
$11,000,000 Commercial Umbrella Argonaut Insurance Company September 1, 2020 Coverage
$3,809,576 Scheduled Equipment Travelers Indemnity Company September 1, 2020 ($2,500 deductible)
$1,000,000 Each wrongful act Employee Benefits Liability Argonaut Insurance Company September 1, 2020 ($50,000 SIR)
$5,000,000 Accounts Receivable Travelers Indemnity Company September 1, 2020 ($50,000 Deductible)
$10,000,000 EDP - Computer System Travelers Indemnity Company September 1, 2020 ($50,000 Deductible)
$6,000,000 Utility Deposit Bond Great American Insurance Company December 20, 2020 Southern Nevada Water Authority
$1,000,000 Cyber Liability Aggregate Limit Beazley Insurance Company September 1, 2020 ($50,000 Retention)
$2,000,000 Employed Lawyers Professional Liability Atlantic Specialty Insurance Company September 1, 2020
Schedule of Insurance Policies in Force
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Budget Approved Full-Time Positions by Service Center
Clark County Water Reclamation District Budget Approved Full -Time Positions by Service Center Last Ten Fiscal Years
Service Centers 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 General Management 2 3 3 3 3 3 7 6 5 5 Financial Services 23 23 23 23 23 22 25 26 26 26 Technology Services 19 19 19 19 19 20 21 25 25 26 Customer Care 37 38 38 36 36 36 34 34 38 36 Plant Operations & Laboratory 96 96 96 96 96 96 93 95 138 136 Engineering & Construction 47 47 47 48 48 51 69 69 74 74 Water Quality, Research & Technical 3 3 3 3 3 3 3 4 4 4 Collection System 109 127 131 136 136 136 122 122 77 77 Total 336 356 360 364 364 367 374 381 387 384
160 140 120 100 80 60 40 20 - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
General Management Financial Services Customer Care & Strategic Services Plant Operations & Laboratory
Engineering & Construction Water Quality, Research & Technical Collection System
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Capital Asset Statistics by Function Clark County Water Reclamation District Capital Asset Statistics by Function Last Ten Fiscal Years
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sewer Lift/Pump Station Total 29 29 31 29 26 25 22 23 23 24 Miles of Sewer Pipelines 2,032 2,045 2,059 2,078 2,091 2,067 2,087 2,209 2,225 2,258 Sewer Manhole Total 43,031 43,531 42,424 42,294 43,716 43,822 45,578 46,532 47,308 48,234
Sewer Lift/Pump Station Total Miles of Sewer Pipelines
35 2,300 30 2,250 25 2,200 20 2,150 15 2,100 10 2,050 5 2,000 0 1,950 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1,900 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sewer Manhole Total
60000 50000 40000 30000 20000 10000 0 2003 2004 2005 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: District Engineering & Construction Service Group
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Demographic Statistics Clark County Water Reclamation District Clark County Demographic Statistics Last Ten Fiscal Years
Per Capita School Unemployment 2 Year Population 1 Personal Income Income 2 Enrollment 3 Rate 4
2011 1,967,290 71,830,557,000 36,512 309,893 13.4% 2012 1,998,204 76,962,088,000 38,516 308,377 11.4% 2013 2,028,421 77,011,227,000 37,966 307,574 10.0% 2014 2,102,238 83,258,481,000 40,530 311,029 8.2% 2015 2,147,641 89,737,000,000 42,771 314,636 7.1% 2016 2,205,207 93,269,102,000 43,573 325,990 6.1% 2017 2,248,390 98,439,211,000 45,087 326,952 5.5% 2018 2,284,616 105,087,856,000 47,090 334,900 4.7% 2019 2,325,798 not available not available 335,333 4.2% 2020 not available not available not available 331,921 17.7%
Source: (1) University of Nevada, Las Vegas Center For Business & Economic Research (Las Vegas/Clark County Economic Data) (2) University of Nevada, Las Vegas Center For Business & Economic Research (Las Vegas/Clark County Economic Data) (3) Nevada Department of Education/DataCenter/Enrollment Student counts as of first school day in October (4) University of Nevada, Las Vegas Center For Business & Economic Research (Las Vegas/Clark County Economic Data)
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Clark County Demographic Statistics Charts
School Enrollment vs. Population Unemployment Rate 2,500,000 20% 2,000,000 15% 1,500,000
1,000,000 10%
500,000 5% - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0% School Enrollment Population 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Personal Income Per Capita Income $120,000,000,000 $50,000 $45,000 $100,000,000,000 $40,000 $35,000 $80,000,000,000 $30,000 $25,000 $60,000,000,000 $20,000 $40,000,000,000 $15,000 $10,000 $20,000,000,000 $5,000 $- $- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Population-Clark County Department of Comprehensive Planning Personal Income-University of Nevada, Las Vegas (data revisions per Bureau of Economic Analysis) Per Capita Income-University of Nevada, Las Vegas (data revisions per Bureau of Economic Analysis) School Enrollment-Clark County School District Unemployment Rate-University of Nevada, Las Vegas *2020 Population information is not yet available * 2019 and 2020 Personal Income and Per Capita Income information are not yet available 67
Clark County Principal Industries Clark County Water Reclamation District Clark County Principal Industries Current Year and Ten Years Ago
2020 2011 Percentage of Percentage of Total County Total County Industry Employees Rank Employment Employees Rank Employment
Accommodation and food services 277,707 1 21.40% 239,901 1 22.19% Retail Trade 133,694 2 10.30% 109,982 2 10.17% Health care and social assistance 107,276 3 8.27% 72,850 4 6.74% Administrative, support, waste management and 103,376 4 7.97% 70,066 5 6.48% remediation services Transportation and warehousing 89,471 5 6.89% - - - Real estate, rental and leasing 77,460 6 5.97% 68,187 7 6.31% Construction 76,335 7 5.88% 75,609 3 6.99% Professional, scientific and technical services 73,782 8 5.69% 57,037 9 5.27% Local government 70,412 9 5.43% 69,841 6 6.46% Finance and insurance 66,932 10 5.16% 66,630 8 6.16% Other services (except government) - - - 46,264 10 4.28% Total for Principal Industries 1,076,445 82.95% 876,367 81.05%
Source: United States Bureau of Economic Analysis; CAEMP25N Total Full-Time and Part-Time Employment by NAICS Industry 1 for Clark County 2020 data is from 2018 and 2011 data is from 2009 as this is the most recent data available.
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Principal Industries Charts
2020 Clark County Principal Industries
Accommodation and food services
Retail Trade
5% Health care and social assistance 5% 21% Administrative, support, waste management and 6% remediation services Transportation and warehousing
6% Real estate, rental and leasing
Construction 6% 10% Professional, scientific and technical services 7% Local government 8% 8% Finance and insurance
2011 Clark County Principal Industries Accommodation and food services
Retail Trade 4% 6% Health care and social assistance
22% Administrative, support, waste management and 6% remediation services Real estate, rental and leasing
5% Construction
Professional, scientific and technical services 7% 10% Local government
Finance and insurance 6% 7% Other services (except government) 6%
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Technical Terms Technical Terms
AAL Actuarial Accrued Liability ARC Annual Required Contribution ARRA American Reinvestment and Recovery Act CAFB Creech Air Force Base CAFR Comprehensive Annual Financial Report CBER Center for Business and Economic Research COUNTY PLAN Clark County Retiree Health Program CWC Clean Water Coalition DBWRC Desert Breeze Water Resource Center EMMA Electronic Municipal Market Access EPC Employer-Pay Contribution ERU Equivalent Residential Unit FASB Financial Accounting Standards Board FY Fiscal Year GAAP Generally Accepted Accounting Principles GASB Governmental Accounting Standards Board GFOA Government Finance Officers Association HMO Health Maintenance Organization HPN Health Plan of Nevada LVVWD Las Vegas Valley Water District MD&A Management Discussion and Analysis MGD Million Gallons per Day N/A Not Applicable NDI Nevada Department of Insurance NRS Nevada Revised Statute O&M Operations and Maintenance OPEB Other Postemployment Benefits PEBP Public Employee Benefit Program PERS Public Employees Retirement System SDA System Development Approval Self-Funded Plan Clark County Self-Funded Group Medical and Dental Benefits Plan The Board Board of Trustees The County Clark County, Nevada The District Clark County Water Reclamation District The System State of Nevada Public Employees’ Retirement System UAAL Unfunded Actuarial Accrued Liability UNLV University of Nevada Las Vegas USAF United States Air Force WHO World Health Organization
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Comments of Independent Auditors
Tel: 702-384-1120 6100 Elton Avenue, #1000 Fax: 702-870-2474 Las Vegas, NV 89107 www.bdo.com
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards
Honorable Clark County Water Reclamation District Board of Trustees Clark County Water Reclamation District, Nevada
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the basic financial statements of Clark County Water Reclamation District (the “District”), a component unit of Clark County, Nevada, as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents, and have issued our report theron dated October 20, 2020.
Internal Control Over Financial Reporting
In planning and performing our audit of the basic financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the basic 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 entity’s basic financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. 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.
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.
72 Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s basic financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of basic financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Las Vegas, Nevada October 20, 2020
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