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Financial Update

Fiscal Year 2022 wrap-up

Zone 7’s overall financial outlook remains positive with net increases in assets due to major investments in infrastructure. Additionally, our financial team continues to win awards for outstanding work in transparency and reporting, maintaining the highest commitment to responsible fiscal management.

Significant Achievements in Responsible Fiscal Management

Excellence in Financial Reporting

Zone 7 earned a Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting for its FY 2020-21 Annual Comprehensive Financial Report.

Zone 7’s reporting is evidence of the award’s spirit of transparency and full disclosure.

Continued AA+ Bond Rating

In June 2022, Fitch conducted a surveillance review and as a result Fitch Ratings affirmed Zone 7’s bond rating of AA+ with a stable outlook.  In affirming the rating, Fitch Rating states, “the ‘AA+’ bond rating and Issuer Default Rating reflect the agency’s very low leverage, measured as net adjusted debt to adjusted funds available for debt service, within the framework of very strong revenue defensibility and low operating risk profile”.

Two-Year Budget

On June 15, 2022, the Board adopted the Two-Year Budget for Fiscal Years 2022-23 and 2023-24, reflecting the Board’s commitment to provide flood protection and high-quality, life sustaining water for those who live and work in the Livermore-Amador Valley.  The budget includes the projects, services and activities to be carried out during the two fiscal years and the estimated revenue available to fund these operating and capital costs.

Planning for Future Pension Needs 

The Board authorized the establishment of an IRS Section 115 Trust to help prefund future pension liabilities. The IRS Section 115 Trust will address long-term pension liabilities by prefunding future pension payments. The Board is committed to funding the trust on an annually basis. 

Effectively Manage Financial Resources 

Through prudent financial management, all Agency reserves were funded at or above target levels during FY 2021-22.  

Clean External Audit  

For FY 2021-22, the Agency’s external auditors expressed an unmodified “clean” opinion that the Agency’s financial statements are fairly stated in conformity with accounting principles generally accepted in the United States. 

FY 2022 Financial Highlights

Net Position $567m
+$12.5 million (+2.3%) ⬆

Net position increased by $12.5 million or 2.3% from $554.5 million to $567 million. 

Total Revenue $120.1m

+$1.7 million (+1.4%)

$120.1M Agency-wide Audited Actual Revenue FY 2022 

 86% Charges for Services
 9% Property Taxes
 6% Grants + other contributions
 -1% Investment Earnings
 < 1% Other
 < 1% Capital grants + contributions

Total revenues increased by $1.7 million, or 1.4 percent, from $118.4 million to $120.1 million mainly due to increase in charges for services of $5.4 million from the previous year as a result of improved construction and development activities in the service area and an increase in property tax during the fiscal year due to increased property assessed valuations. The increase in development activities is offset by a decrease in water sales due to a decrease in residential water demand mainly due to a 15 percent mandatory state of drought emergency declared by the Board on September 1, 2021.

Total Expenses $107.6m
+$7.8 million (+7.8%) ⬆

$107.6M Agency-wide Audited Actual Expenses FY 2022

65% Water Enterprise Operations
23% State Water Project
11% Flood Protection Operations
< 1% Flood Protection Grants
< 1% Flood Protection Development Impact Fee

Total expenses increased by $7.8 million, or 7.8 percent, from $99.8 to $107.6 million mainly due to increases of $7.7 million for the Water Enterprise water purchases due to the state of drought emergency declared by the Board, Flood Protection Operations projects, and the State Water Project pass-through payments to California State Department of Water Resources during the fiscal year. 

Capital Assets $356.1m

+$25.6 million (+7.7%) ⬆

Capital assets increased by $25.6 million, or 7.7 percent, from $330.5 million to $356.1 million mainly due to the construction of the Patterson Pass Water Treatment Plant ozone and upgrade projects. 

Watershed

Infrastructure