Carpinteria Sanitary Districtgfoa.net/cafr/COA2012/CarpinteriaSanitaryDistrictCA.pdfCARPINTERIA SANITARY DISTRICT Demographic & Economic Information District Overview The Carpinteria

Carpinteria Sanitary District COMPREHENSIVE ANNUAL

FINANCIAL REPORT

BOARD OF DIRECTORS Lin Graf — President

Jeff Moorhouse — President Pro-Tem Patricia Horwitz — Treasurer Mike Modugno — Secretary

Michael Damron — Secretary Pro-Tem

DISTRICT STAFF Craig Murray, P.E.— General Manager

Hamid Hosseini — Finance Director

FOR FISCAL YEAR ENDED JUNE 30, 2012

CARPINTERIA SANITARY DISTRICT

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Years Ended June 30, 2012 and 2011

Carpinteria, California

Prepared by:

Craig Murray, General Manager Hamid Hosseini, Finance Director

Carpinteria Sanitary District Comprehensive Annual Financial Report


TABLE OF CONTENTS PAGE I. INTRODUCTORY SECTION Letter of Transmittal i - v Demographic and Economic Information vi Organizational Chart vii Certificate of Achievement for Excellence in Financial Reporting viii II. FINANCIAL SECTION Independent Auditor’s Report 1 - 2 Management’s Discussion and Analysis 3 - 10 Basic Financial Statements Statements of Net Assets 11 - 12 Statements of Revenues, Expenses and Changes in Net Assets 13 Statements of Cash Flows 14 - 15 Statements of Fiduciary Assets and Liabilities - Agency Fund 16 Notes to the Financial Statements 17 - 29 Supplementary Information Schedule of Revenues and Expenses - Budget and Actual 30 III. STATISTICAL SECTION Statistical Section 31 Net Assets by Component 32 Revenue and Gross Capital Contributions 33 Changes in Net Assets 34 Sewer Service Charge Summary 35 Ten Highest Non-Residential Rate Payers 36 Ratio of Annual Debt Service to Total Expenditures 37 Debt Service Ratio 38 Ratio of Outstanding Debt 39 History of Residential Sewer Service Charges 40 Full-Time District Employees by Function 41 Fixed Assets Summary 42 Capital Improvement Projects Expenditures 43 Treatment Plant Flow Data 44 Collection System Statistics 45 Quality of Effluent 46 Bio-Solids Produced 47

Carpinteria Sanitary District Comprehensive Annual Financial Report


TABLE OF CONTENTS - Continued PAGE III. STATISTICAL SECTION - Continued Operating and Non-Operating Expenses 48 Operating Expenses by Department 49 Financial Trend Data 50 Demographic and Economic Statistics 51 Principal Employers 52

INTRODUCTORY SECTION

vi


Demographic & Economic Information

District Overview The Carpinteria Sanitary District was formed in April 1928 for the purpose of providing sewage facilities and related services to properties located within the District. The District is located in the southern part of Santa Barbara County. The District’s service area includes the City of Carpinteria and outlying unincorporated areas, including a small portion of unincorporated area in Ventura County. Nature of Services: The District provides wastewater collection and treatment for approximately 6,100 residential units and 530 non-residential customers. Miles of sewer: 38.5 miles excluding house laterals

Miles of Force Mains: 1.9

Miles of Pressure Sewage: 1.1

Number of Pumping Station: 7

Types of Terrain: Level along ocean sloping 2-3 degrees toward foothills

Treatment Plant Capacity 2.5 MGD

Fees: Per Ordinance 12 Residential units $515/year for FY 2011/12

Non-Residential:

Classified into six classes, Flow ranges between $6.58 – 12.17 per 100 gal with a minimum charge of $515.00

Population in 2012 13,076

Population Density 75/sq mile

Businesses in 2012 530

Median Household Income in 2011 $60,139

Rainfall in 2011/12 8.63 inches

Crime: The number of violent crimes recorded in 2011 was 24. The number of murders and homicides was 0.

Local Festival: Avocado Festival in October

CARPINTERIA SANITARY DISTRICTOrganization ChartFiscal Year 2011/12

Sanitary District Customers

Manager

Legal FinanceCounsel Director

Board of

Directors

General

Operations

Manager

Treatment Plant Collection

Safety Officer

Engineering

TechnicianOffice

Manager

Supervisor SystemSupervisor

Laboratory Mechanic Collection

CollectionOperator II Laborer SystemOperator I

Treatment Plant

Technician II SystemTechnician II Lead Operator

Treatment PlantOperator II

Treatment PlantOperator in Training

vii

FINANCIAL SECTION

3

Carpinteria Sanitary District Management Discussion and Analysis (MD&A)

Fiscal Year 2011/12 This section of the financial statements for the Carpinteria Sanitary District is a narrative overview of the financial activities during the 2011/12 fiscal year. The information presented here is to be considered in conjunction with additional information provided within the letter of transmittal located in the introductory section of this report. The Carpinteria Sanitary District provides wastewater collection, treatment and disposal for the City of Carpinteria and neighboring unincorporated portions of Santa Barbara County. The District was originally formed in 1928 and has grown to serve approximately 16,500 permanent residents and a large visiting population. Overview of the Basic Financial Statements This Management Discussion and Analysis (MD&A) is a key element of the District’s annual audited financial statements that are prepared in accordance with the Governmental Accounting Standards Board Statement 34 (GASB 34). The MD&A also includes other supplementary information to the basic financial statements.

The District’s accounting system is configured as an enterprise fund, similar to private sector accounting systems. Operating expenses are stated as expenses and capital expenses are capitalized and depreciated over the life of the item in accordance with District fiscal policy. In accordance with GASB 34, the District’s financial statements include a statement of net assets, a statement of revenues, expenses and changes in net assets, and a statement of cash flows. The statement of net assets includes all of the District’s assets and liabilities and provides information about the nature and amount of investments in resources (assets) and the obligations to creditors (liabilities). The statement of revenues, expenses, and changes in net assets provides comparative information with respect to the prior fiscal year and measures the success of the District’s operations during the reporting period. The District’s supplemental revenue, which includes property tax and other miscellaneous income, is also reported in this section. The financial statement also considers and presents cash flow information for the fiscal year. The statement reports cash receipts, cash payments, and net changes in cash resulting from operations and investments during the fiscal year. Financial Highlights

On June 30, 2012, the assets of the District exceeded its liabilities by $25,751,717. Of this amount $17,541,613 is restricted and $8,210,104 is unrestricted. On June 30, 2011, the assets of the District had exceeded its liabilities by $23,306,535 and of this amount $14,755,968 was restricted and $8,550,567 was unrestricted.

During FY 2011/12, the District’s net assets increased by $2,445,182 or about 10.5 percent. In the prior fiscal year, net assets increased by $422,951 or about 1.8 percent.

4

The District’s capital assets increased by $3,604,924 or 19.7 percent during the period. Capital assets in the prior year had decreased by $134,195 or 0.7 percent as of June 30, 2011.

The District’s current liabilities, which include upcoming debt service obligations, wages payables, and outstanding accounts payable, reflect an increase of $480,631 or 34.6 percent during 2011/12 fiscal year and had increased $102,790 or 8 percent during 2010/11 fiscal year.

Long term liabilities, which consist primarily of outstanding bond debt, decreased by $635,207 or 5.3 percent over the prior year. In FY 2010/11 the District’s long term liabilities decreased by $609,029 or 4.8 percent.

Debt service payments for the 2003 Refinancing Bonds totaled $1,225,778 for FY 2011/12. This obligation represents approximately 26.8 percent of the District’s regular revenue. The District met the ratio requirements set forth in the bond covenants.

Net Assets The District’s net assets increased by 10.5 percent during FY 2011/12 to a total of $25,751,717. This tops the 1.8 percent increase achieved in FY 2010/11, which ended with a net asset total of $23,306,535. Of the net assets on hand at the end of the current fiscal year, $17,541,613 is restricted and remaining $8,210,104 is unrestricted. The following table provides a summary of the District’s assets and liabilities as compared to the prior two fiscal years. June 30, June 30, June 30, Change Change 2012 2011 2010 2011/12 2010/11 ASSETS Current Assets $ 9,242,172 $ 8,834,241 $ 8,623,082 407,930 $211,159 Restricted Assets 7,497,500 9,199,802 9,339,866 (1,702,062) (140,064) Capital Assets 21,944,782 18,339,858 18,474,053 3,604,924 (134,195) Other Assets 262,435 282,622 302,810 (20,187) (20,188)

Total Assets 38,947,129 36,656,523

36,739,811

2,290,606

(83,288)

LIABILITIES

Current Liabilities 1,868,452 1,387,821 1,285,031 480,631 102,790 Long Term Liabilities 11,326,960 11,962,167 12,571,196 (635,207) (609,029)

Total Liabilities 13,195,412 13,349,988

13,856,227

(154,576)

(506,239)

NET ASSETS

Investment in Capital Assets Net of Related Debt 10,318,366 5,843,018

5,389,225

4,475,348

453,793

Assets Restricted for Debt Service 1,906,000 1,886,000 1,866,000 20,000 20,000 Assets Restricted for Construction 5,317,247 7,026,950 7,175,972 (1,709,703) (149,022) Unrestricted Net Assets 8,210,104 8,550,567 8,452,387 (340,463) 98,180

Total Net Assets $ 25,751,717 $ 23,306,535

$ 22,883,584

$ 2,445,182

$422,951

5

The District’s current unrestricted assets, which reflect the agency’s available cash and equivalent balance, increased by $407,930 or 4.6 percent during the fiscal year. In the prior year, the District’s unrestricted assets increased by $211,159, or 2.4 percent. The increases are attributable to positive cash flows resulting from the normal variance between operating revenues and operating expenses. The level of restricted assets declined during both FY 2011/12 and FY 2010/11 as funds were expended on construction activities and implementation of capital projects. The reduction of $20,187 in FY 2011/12 and $20,188 in FY 2010/11 in the District’s other assets resulted from amortization of the costs to issue and underwrite the 2003 Refinancing Bonds. The District’s capital assets increased by $3,604,924 or 19.7 percent during FY 2011/12. In the prior year, capital assets decreased by $134,195, or 0.7 percent. The balance of construction in progress had increased by $3,978,037 during FY 2011/12 and by $314,686 during the prior year. These increases were offset by an increase in accumulated depreciation during both years. The following table provides detail on the District’s net capital assets as of June 30, 2012 with comparative data for the prior years.

June 30, June 30, June 30, Change Change 2012 2011 2010 2011-12 2010-11 Assets Not Depreciated

Land $ 223,619 $ 233,619 $ 233,619 $ 0 $ 0

Capital Improvement Projects (in progress) 5,577,199 1,599,162 1,284,476

3,978,037 314,686

Assets Being Depreciated

Fixed Assets 31,995,605 31,531,449 31,169,413 464,156 362,036

Accumulated Depreciation (15,861,641) (15,024,372) (14,213,455) (837,289) (810,917)

Total Capital Assets, Net $ 21,944,782 $ 18,339,858 $ 18,474,053

$ 3,604,924 $ (134,195)

As noted above, the District has a number of capital improvement projects that are in progress. The table below provides list of ongoing projects. Note that several construction projects were completed and the project values have been transferred to fixed capital assets. The Lift Station No. 2 Force Main Realignment was removed from the list of ongoing projects and the costs incurred were expensed during the fiscal year. Additional information is available on page 25 and 26 of the financial statements.

Projects June 30,

2012 June 30,

2011

Lift Station No. 2 Force Main Realignment $ 0 $ 19,006

Bluffs Sewer Relocation Project 2,015,430 307,661

Solids Digestion Facilities Planning Completed 46,057

Rotary Screw Press Dewatering Unit Completed 186,825

Plum Street Sewer Replacement Project 63,978 0

Aerobic Digester Preliminary and Final Design 102,662 0

Rincon Point, Zone A 670,007 575,728

Sandyland Cove, Zone B 1,657,818 267,206

Sand Point Road, Zone C 1,067,304 196,679

Totals $ 5,577,199 $ 1, 599,162

6

Changes in Net Assets The District’s net assets as of the end of FY 2011/12 and 2010/11 had increased by $2,445,183 and $422,951 respectively. The following table provides detail on revenues and expenses during the year.

June 30, June 30, June 30 Change Change 2012 2011 2010 2011-2012 2010-2011 OPERATING REVENUES

Sewer Service Charge (SSC) $ 4,213,459 $ 3,973,417 $ 3,997,832

$ 240,042 $ (24,415) Development Impact Fee (DIF) 237,805 2,400 25,666 235,405 (23,266) Other Misc. Income 123,408 105,118 123,164 18,290 (18,046)

Total Operating Revenue 4,574,672 4,080,935 4,146,662

493,737 (65,727)

OPERATING EXPENSES

Salaries and Wages 1,270,199 1,288,896 1,240,897 (18,697) 47,999 Employees Benefits 543,318 531,018 477,341 12,300 53,677 General Operating Expenses 171,996 157,954 178,240 14,042 (20,286) Environment and Monitoring 37,878 26,861 40,055 11,017 (13,194) Utilities 196,309 218,500 211,723 (22,194) 6,777 Sludge Disposal 94,425 111,243 98,311 (16,818) 12,932 Supplies and Equipment 144,738 161,003 186,190 (16,265) 25,187 Repairs and Maintenance 142,639 125,308 137,413 17,331 (12,105)

Professional and Contract Services 109,114 74,368 86,294

34,746 (11,926)

Depreciation and Amortization 904,467 915,991 976,335 (11,524) (60,344) Other Expenses 11,896 14,366 14,117 (2,470) 249

Total Operating Expenses 3,626,979 3,625,508 3,646,916

1,471 (21,408)

NET OPERATING INCOME 947,693 455,427 499,746

492,266 (44,319)

NON-OPERATING REVENUES (EXPENSES)

Interest Income 56,996 79,890 117,068 (22,894) (37,178) Taxes and Assessments 455,737 454,875 451,651 862 3,224

Gain (Loss) on Disposal of Capital Assets 0 3,537 (16,883)

(3,537) 20,420

Interest Expense (548,508) (570,778) (592,368) 22,270 21,590 Grant Income 1,533,264 0 0 1,533,264 0 Total Non-Operating Revenue (Expense) 1,497,489 (32,476) (40,532) 1,529,965 8,056

Income (Loss) Before Capital Contributions 2,445,182 422,951 459,214

2,022,232 (36,263)

Contributions From Property Owners 0 0 623,000

0 (623,000)

Change in Net Assets 2,445,182 422,951 1,082,214

2,022,232 (659,263) Net Assets at Beginning Year 23,306,535 22,883,584 21,801,370 422,951 1,082,214 Net Assets at End of Year $ 25,751,717 $ 23,306,535 $ 22,883,584 $ 2,445,183 $ 422,951

7

The District receives revenue from four discrete sources each year, categorized in the above table as operating revenue and non-operating revenue. The figure below shows the breakdown of the District’s combined revenue on a percentage basis.

Source of Income

Sewer Service Charge

83%

Property Tax9%

Interest1%

Misc.7%

As previously mentioned, the District utilizes an enterprise system to account for the operations of the District. This allows the District to determine that the costs of providing service, including depreciation and amortization expenses, are being recovered through user charges and property tax revenue. The total revenue from Sewer Service Charges (SSC) collected in FY 2011/12 was $4,213,459, which represents an increase of $240,042 over the previous year. During FY 2010/11, the District engaged a financial consultant to conduct a comprehensive wastewater rates and fees study that could be utilized to evaluate the user charges for the District’s wastewater service to ensure that there is a proportionate recovery of costs from the various user classes. Based on the consultant recommendation, the District adopted Ordinance 12 which prescribes a 4.5 percent rate increase for following five years. SSC revenue represented about 83 percent of the District’s regular revenue for FY 2011/12. The District’s operating expenses for FY 2011/12 increased very slightly, by just $1,471. The following table provides additional detail on the District’s annual operating expenses, as compared to FY 2010/11.

8

Expense Category

FY 2011/12 Actual

Expenses

FY 2010/11 Actual

Expenses Increase

(Decrease) Percentage

Increase (Decrease)

Comments/Justification

Salaries & Wages $ 1,270,199 $ 1,288,896 ($ 18,697) (1.5%)

Vacancies and absences contributed to lower than projected annual cost.

Employee Benefits $ 543,318 $ 531,018 $ 12,300 2.3%

Moderate increase in PERS retirement and social security contribution rates. Workers’ compensation premiums increased modestly

General Expenses $ 171,996 $ 157,954 $ 14,042 8.2%

Higher costs for supplies, training expenses, equipment rental, and licenses/permits.

Environment & Monitoring $ 37,878 $ 26,861 $ 11,017 29.1%

Cost escalation for outside monitoring lab work and higher cost for supplies and equipment in the District laboratory.

Utilities $ 196,309 $ 218,500 ($22,191) (11.3%)

Significant cost savings for WWTP, lift stations and administration office due to implementation of energy efficiency projects.

Sludge Disposal $ 94,425 $ 111,243 ($ 16,818) (17.8%)

Tonnage of solids reduced through installation of high efficiency dewatering equipment.

Supplies & Equipment $ 144,738 $ 161,003 ($ 16,265) (11.2%)

Lower costs attributed to primarily to reductions in chemical costs and lower overall usage.

Repair & Maintenance $ 142,639 $ 125,308 $17,331 12.2%

Repair and maintenance activities at the wastewater treatment plant were increased with higher associated costs.

Professional Services $ 109,114 $ 74,368 $ 34,746 31.8%

Significant increase in legal and IT expenses. Higher legal costs and upgraded Finance Department computer and software.

Other Expenses $ 11,896 $ 14,366 ($2,470) (20.8%)

County of Santa Barbara administration fees marginally lower than prior year.

Depreciation $ 904,467 $ 915,991 ($ 11,524) (1.3%)

Certain assets now fully depreciated and not contributing to total in current year.

Totals $3,626,979 $3,625,508 $1,471 0.6% Total Increase (Decrease)

Non-operating revenue and expenses for FY 2011/12 reflect a net increase of $1,529,965. The District received a total of $1,533,264 in grant income from State of California for the Bluffs Sewer Relocation Project. Interest revenue was significantly lower than in the prior fiscal year, largely due to dramatically lower interest rates of return being earned in the Local Agency

9

Investment Fund (LAIF) pool. Overall cash balances were lower as the District expended funds during execution of several significant capital projects during the year. Revenue in the Taxes and Assessments category increased modestly in FY 2011/12. An increase of $862 was realized, as compared to an increase of $3,224 in this revenue category the prior fiscal year. Annual interest expenses for the 2003 Refinancing Revenue Bonds were lower by $22,270 in FY 2011/12 and by $21,590 in FY 2010/11. Debt Administration As of June 30, 2012, the District had an outstanding principal balance of $11,213,851 on the 2003 Wastewater Revenue Refunding Bonds. Bond payments total approximately $1.2M per annum with installments due each January and July. Bond interest rates ranges between 3.4 percent to 4.7 percent per year. The schedule of payments is available in the statistical section of the financial statements. In FY 2008/09 the District issued $6,053,439 in Limited Obligation Improvement Bonds to provide a long term funding mechanism for homeowners participating in a large septic to sewer conversion project. The District engaged NBS Local Government Solutions as the bond administrator for the Assessment District 2007-1. Administration fees are added to the yearly assessments and levied to properties participating in the financing. As of the end of FY 2011/12, the District has no other long or short term debt. The District Board of Directors has maintained a “pay-as-you-go” approach to fund capital improvements projects. In FY 2012/13, the District intends to refund the outstanding 2003 Revenue Bonds to take advantage of municipal bond interest rates that are at or near historic lows. Concurrently, the District will pursue issuance of new bond debt to fund a large capital improvement project within the District’s wastewater treatment facility. This project, which involves replacement of two existing digester tanks, is expected to cost approximately $4M. Economic Factors and Next Year’s Budgets and Rates

The unemployment rate within the City of Carpinteria is reported to be 8.2 percent, which reflects an increase of 2.4 percent from the prior year.

Interest income from the District’s investments remains low due to near zero interest rates of return paid by the Local Agency Investment Fund (LAIF). The interest rate environment is expected to remain at or near historical lows in the coming year.

While inflation is not rampant, the cost of goods and services is projected to increase modestly in the coming year based on economic forecasts.

FY 2011/12 represents the first year of a five-year program of structured rate increases, that were approved by the District’s Board of Directors based on a comprehensive rate and fee study. Sewer service charge revenue is expected to increase proportional to the 4.5 percent annual rate increases through FY 2015/16. The revenue adjustments were necessary to fund operating expenses, capital expenses and debt service obligations while meeting ratio requirements set forth in outstanding bond covenants.

10

Contacting the District’s Financial Management This financial report is designed to provide the District’s customers, creditors and other interested parties with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. Hamid Hosseini, the District’s Finance Director, in writing at 5300 Sixth Street, Carpinteria, CA 93013, or by telephone at (805) 684-7214, extension 11.

2012 2011ASSETSCurrent Assets:

Cash and Investments 7,809,920$ 8,717,634$ Interest Receivable 7,057 9,881 Accounts Receivable 1,371,335 49,061 Prepaid Expenses 45,041 50,836 Inventory 8,819 6,829

Total Current Assets 9,242,172 8,834,241

Restricted Assets:Cash and Investments 7,497,500 9,198,338 Interest Receivable 240 1,464

Total Restricted Assets 7,497,740 9,199,802

Capital Assets:Land 233,619 233,619 Construction in Progress 5,577,199 1,599,162 Property, Plant and Equipment 31,995,605 31,531,449

Less Accumulated Depreciation (15,861,641) (15,024,372)

Total Capital Assets 21,944,782 18,339,858

Other Assets:Bond Issuance Costs (Net of Accumulated Amortization of

$181,685 for 2012 and $161,498 for 2011) 262,435 282,622

Total Other Assets 262,435 282,622

Total Assets 38,947,129$ 36,656,523$

Carpinteria Sanitary DistrictStatements of Net Assets - Proprietary Fund

June 30, 2012 and 2011

The accompanying notes are an integral part of these financial statements.

11

2012 2011LIABILITIESCurrent Liabilities:

Accounts Payable 267,493$ 111,353$ Accrued Salaries 41,620 83,385 Payables to Other Districts - 2,488 Accrued Interest 274,254 285,389 Due to Property Owners 595,085 235,334 Current Portion of Compensated Absences 15,000 14,872 Current Portion of Bonds Payable 675,000 655,000

Total Current Liabilities 1,868,452 1,387,821

Long-Term LiabilitiesCompensated Absences 113,109 120,327 Revenue Bonds Payable 11,213,851 11,841,840

Total Noncurrent Liabilities 11,326,960 11,962,167

Total Liabilities 13,195,412 13,349,988

NET ASSETS Invested in Capital Assets, Net of Related Debt 10,318,366 5,843,018 Restricted for Debt Service 1,906,000 1,886,000 Restricted for Construction 5,317,247 7,026,950 Unrestricted 8,210,104 8,550,567

Total Net Assets 25,751,717$ 23,306,535$

Statements of Net Assets - Proprietary Fund - ContinuedJune 30, 2012 and 2011

Carpinteria Sanitary District


12

2012 2011OPERATING REVENUES

District Sewer Service Charges 4,213,459$ 3,973,417$ Development Impact Fees 237,805 2,400 Other Miscellaneous Income 123,408 105,118

Total Operating Revenues 4,574,672 4,080,935

OPERATING EXPENSESSalaries and Wages 1,270,199 1,288,896 Employee Benefits 543,318 531,018 General Operating Expenses 171,996 157,954 Environment and Monitoring 37,878 26,861 Utilities 196,309 218,500 Sludge Disposal 94,425 111,243 Supplies and Equipment 144,738 161,003 Repairs and Maintenance 142,639 125,308 Professional and Contract Services 109,114 74,368 Depreciation and Amortization 904,467 915,991 Other Expenses 11,896 14,366

Total Operating Expenses 3,626,979 3,625,508

Operating Income (Loss) 947,693 455,427

NONOPERATING REVENUES (EXPENSES)Investment Earnings 56,996 79,890 Taxes and Assessments 455,737 454,875 Grant Income 1,533,264 - Gain (Loss) on Disposal of Capital Assets - 3,537 Interest Expense (548,508) (570,778)

Total Nonoperating Revenues (Expenses) 1,497,489 (32,476)

Change in Net Assets 2,445,182 422,951

Net Assets at Beginning of Year 23,306,535 22,883,584

Net Assets at End of Year 25,751,717$ 23,306,535$

Years Ended June 30, 2012 and 2011

Carpinteria Sanitary DistrictStatements of Revenues, Expenses, and Changes in Net Assets - Proprietary Fund


13

2012 2011CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from Customers 4,458,149$ 4,032,479$ Payments to Suppliers (1,294,856) (1,420,157) Payments to Employees (1,319,054) (1,264,355) Other Income 483,159 176,810

Net Cash Provided (Used) by Operating Activities 2,327,398 1,524,777

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESProperty Taxes 455,737 454,875

Net Cash Provided (Used) by Noncapital Financing Activities 455,737 454,875

CASH FLOWS FROM CAPITAL AND RELATED FINANCINGACTIVITIES

Proceeds from Grants 204,105 - Proceeds from Sale of Capital Assets - 3,537 Purchases of Capital Assets (4,442,193) (714,596) Principal Paid on Long-Term Debt (655,000) (635,000) Interest Paid on Long-Term Debt (559,643) (581,573)

Net Cash Provided (Used) by Capital and Related

Financing Activities (5,452,731) (1,927,632)

CASH FLOWS FROM INVESTING ACTIVITIESInterest on Investments 61,044 82,297

Net Cash Provided (Used) by Investing Activities 61,044 82,297

Net Increase (Decrease) in Cash and Cash Equivalents (2,608,552) 134,317

Cash and Cash Equivalents - Beginning of the Year 17,915,972 17,781,655

Cash and Cash Equivalents - End of the Year 15,307,420$ 17,915,972$

Reconciliation to Statement of Net Assets:Cash and Investments 7,809,920$ 8,717,634$ Restricted Cash and Investments 7,497,500 9,198,338

15,307,420$ 17,915,972$

Carpinteria Sanitary DistrictStatements of Cash Flows - Proprietary Fund



14

2012 2011Reconciliation of Operating Income (Loss) to Net Cash

Provided (Used) by Operating Activities:Operating Income (Loss) 947,693$ 455,427$ Adjustments to Reconcile Operating Income toNet Cash Provided (Used) by Operating Activities:

Depreciation and Amortization 904,467 915,991Change in Assets and Liabilities:

Accounts Receivable 6,885 59,562Prepaids 5,795 3,481Inventory (1,990) (2,228)Due to Property Owners 359,751 68,949Accounts Payable 156,140 (789)Accrued Salaries (41,765) 10,710Payables to Other Districts (2,488) 343Accrued Vacation Leave (7,090) 13,831Customer Deposits - (500)

Net Cash Provided By Operating Activities 2,327,398$ 1,524,777$

Statements of Cash Flows - Proprietary Fund - ContinuedYears Ended June 30, 2012 and 2011



15

2012 2011ASSETS

Cash with Fiscal Agent 743,225$ 729,358$

Total Assets 743,225$ 729,358$

LIABILITIESDue to Bondholders 743,225$ 729,358$

Total Liabilities 743,225$ 729,358$

Carpinteria Sanitary DistrictStatements of Fiduciary Assets and Liabilities

June 30, 2012 and 2011Agency Fund


16

Carpinteria Sanitary District Notes to the Financial Statements


17

1) REPORTING ENTITY

The Carpinteria Sanitary District was formed in April 1928 for the purpose of providing sewage facilities and related services to properties located within the District. The District is located in the southern part of Santa Barbara County, California, and generally comprises the City of Carpinteria and adjoining areas. The District is governed by a board of directors consisting of five members elected at large. The directors serve without compensation except for nominal fees paid for attendance at District board and committee meetings.

The Board of Directors and officers of the District are as follows:

Name Title Lin Graf President Jeff Moorhouse President Pro-Tem Patricia Horwitz Treasurer Michael Damron Secretary Pro-Tem Mike Modugno Secretary Craig Murray General Manager Mark Bennett Wastewater Operations Manager Hamid Hosseini Finance Director

The Board of Directors meets the first and third Tuesday of each month. The District’s reporting entity is defined as follows: (a) the primary government (District), (b) organizations

for which the primary government is financially accountable, and (c) other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. The financial statements of the District include the financial activities of the District and Assessment District No. 2007-1.

2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A) Measurement Focus, Basis of Accounting, and Financial Statement Presentation

Separate financial statements are provided for the proprietary fund and the agency fund. The proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.



18

2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued A) Measurement Focus, Basis of Accounting, and Financial Statement Presentation - Continued

The District reports the following major enterprise fund: The Sewer Utility Fund accounts for the activities of the District’s sewer operations. Additionally, the District reports an agency fund to account for money received by the District as an agent for individuals, other governments and other entities. Specifically, the District accounts for activities of the Assessment District 2007-1 in the agency fund. The agency fund is reported using the accrual basis of accounting. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in the proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. The District also has the option of following subsequent private-sector guidance for the proprietary fund, subject to this same limitation. The District has elected not to follow subsequent private-sector guidance. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the District’s enterprise fund are charges to customers for sales and services. Operating expenses for the enterprise fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, then unrestricted resources as they are needed.

B) Deposits and Investments

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. Investments for the District are reported at fair value.

C) Budgetary information

Although not legally required, an annual budget is prepared, which includes estimates for the District’s principal income sources to be received during the fiscal year, as well as estimated expenses and cash reserves needed for operations.



19

2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

D) Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets, are reported in the District’s enterprise fund. Capital assets are defined by the District as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year.

As the District constructs or acquires additional capital assets each period, they are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or extend its useful life beyond the original estimate. In the case of donations the District values these capital assets at the estimated fair value of the item at the date of its donation. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed, if material. For the current fiscal year, no interest was capitalized. Capital assets are depreciated over their estimated useful lives (ranging from 5-75 years) under the straight-line method of depreciation according to the following schedule:

Office Furniture 5 years Pumping and Filters 15 years Motors 20 years Treatment Plant Structures 40 years Meters, Manholes, Trunk Lines 50 years Ocean Outfall Lines 75 years

E) Inventory and Prepaid Items

Inventory is valued at cost, using the first-in/first-out method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the financial statements.

F) Compensated Absences

Employees are entitled to accumulate up to 60 working days of sick leave, at the rate of eight hours per month. There is no liability for unpaid accumulated sick leave since the District does not have a policy to pay any amounts when employees separate from service with the District.



20


F) Compensated Absences - Continued

Employees are also entitled to accumulate vacation leave at a rate of two to four weeks per year,

depending on the number of years of service completed. Such accumulated leave cannot exceed two and one-half times the employees’ annual entitlement. All vacation pay is accrued when incurred in the financial statements.

G) Property Taxes - Property taxes in the State of California are administered for all local agencies at the

county level, and consist of secured, unsecured, and utility tax rolls. The following is a summary of major policies and practices relating to property taxes:

Property taxes are assessed and collected each fiscal year according to the following property tax

calendar:

Lien Date March 1 Levy Year July 1 to June 30 Due Dates November 1 1st Installment February 1 2nd Installment Delinquent Dates December 10 1st Installment April 10 2nd Installment

Under California law, property taxes are assessed and collection by counties up to 1% of assessed value,

plus other increases approved by voters. Property tax revenues are pooled and then allocated to cities and districts based on complex formulas prescribed by state statutes.

H) Sewer Service Charges

The District’s rate structure is set forth in the District’s Ordinance No. 10 and is based on a comprehensive rate and fee study completed in 2004. A sewer service charge (SSC) of $515 per year is assessed for each equivalent residential dwelling unit (EDU). SSCs for non-residential users include a fixed component and a variable component that is based on actual water usage and wastewater characteristics for specific user types. SSCs are collected via the Santa Barbara County assessor’s tax rolls. In June 2011, the Board approved a new rate structure through Ordinance No. 12, based on a rate and fee study completed during the 2010-11 fiscal year.

I) Long-term Liabilities In the proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.



21


J) Reclassification

Certain reclassifications have been made to prior fiscal year amounts to conform with the current fiscal year financial statement presentations.

K) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

L) Net Assets GASB No. 34 requires that the difference between assets and liabilities be reported as net assets. Net assets are classified as either invested in capital assets, net of related debt, restricted, or unrestricted. Net assets that are invested in capital assets, net of related debt, consist of capital assets, net of accumulated depreciation and reduced by the outstanding principal of related debt. Restricted net assets are those net assets that have external constraints placed on them by creditors, grantors, contributors, laws, or regulations of other governments, or through constitutional provisions, or enabling legislation. Unrestricted net assets consist of net assets that do not meet the definition of invested in capital assets, net of related debt, or restricted net assets.

3) CASH AND INVESTMENTS

Cash and Investments as of June 30, 2012 and June 30, 2011 are classified in the accompanying financial

statements as follows:

2012 2011 Statement of Net Assets: Cash and Investments $ 7,809,920 $ 8,717,634 Restricted Cash and Investments 7,497,500 9,198,338 Statement of Fiduciary Assets and Liabilities Restricted Cash and Investments 743,225 729,358 Total Cash and Investments $ 16,050,645 $ 18,645,330



22

3) CASH AND INVESTMENTS Cash and investments as of June 30, 2012 and June 30, 2011 consist of the following:

2012 2011 Cash on Hand $ 200 $ 200 Deposits with Financial Institutions 5,456,751 7,692,377 Investments 7,959,013 8,326,075 Cash and Investments with Fiscal Agent 2,634,681 2,626,678 Total Cash and Investments $ 16,050,645 $ 18,645,330

Investments Authorized by the District’s Investment Policy The District’s investment policy authorizes investment in the local government investment pool administrated by the State of California (LAIF). Investments Authorized by Debt Agreements Investment of debt proceeds held by bond trustees are governed by the provisions of the debt agreements, rather than the general provisions of the California Government Code or the District’s investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maximum

Authorized Maximum Percentage Investment Investment Type Maturity Of Portfolio In One Issuer

Local Agency Investment Fund (LAIF) N/A None None Santa Barbara County Investment Pool N/A None None Money Market Mutual Funds N/A None None

Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market rates. The District’s investment policy does not contain any specific provisions intended to limit the District’s exposure to interest rate risk, credit risk, and concentration of credit risk. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturing evenly over time as necessary to provide the cash flow and liquidity needed for operations.



23

3) CASH AND INVESTMENTS – Continued

Disclosures Relating to Interest Rate Risk - Continued Information about the sensitivity of the fair values of the District’s investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the District’s investments by maturity:

Remaining Maturity (in Months) 12 Months 13 to 24 25 to 60 More than or Less Months Months 60 Months LAIF $ 7,959,013 $ 7,959,013 $ $ $ Cash and Investments with Fiscal Agent:

Money Market Funds 946,912 946,912 LAIF 1,687,769 1,687,769 Total $ 10,593,694 $ 10,593,694 $ - $ - $ - Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the District’s investment policy, or debt agreements, and the actual rating as of year end for each investment type. Minimum Exempt Rating as of Year End Legal From Not

Investment Type Rating Disclosure AAA Aa Rated LAIF $ 7,959,013 N/A $ $ $ $ 7,959,013Cash and Investments with Fiscal Agent:

Money Market Funds 946,912 N/A 946,912 LAIF 1,687,769 N/A 1,687,769 Total $ 10,593,694 $ - $ - $ - $ 10,593,694 Concentration of Credit Risk The investment policy of the District contains no limitation on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. There are no investments in any one issuer that represent 5% or more of total District investments (other than U.S. Treasury securities, mutual funds and external investment pools).



24

3) CASH AND INVESTMENTS – Continued

Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The California Government Code and the Entity’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure District deposition by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2012 and June 30, 2011, the District had deposits with financial institutions in excess of federal depository insurance limits of $5,202,839 and $7,440,421, respectively, held in collateralized accounts. Investment in State Investment Pool The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the District’s investment in this pool is reported in the accompanying financial statements at the amounts based upon the District’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

All temporary investments are with the Local Agency Investment Fund (LAIF) administered by the State Treasurer's Office. The yield of LAIF for the quarter ended June 30, 2012 was 0.36%. The estimated amortized cost and fair value of the LAIF Pool at June 30, 2012 was $60,514,457,551 and $60,588,263,603, respectively. The District's share of the Pool at June 30, 2012 was approximately .016 percent.

The LAIF is a special fund of the California State Treasury through which local governments may pool investments. Each district may invest up to $50,000,000 in the Fund. Investments in LAIF are highly liquid, as deposits can be converted to cash within twenty-four hours without loss of interest. Investments in LAIF are secured by the full faith and credit of the State of California. Included in LAIF's investment portfolio are certain derivative securities or similar products in the form of structured notes totaling $800,000,000 and asset-backed securities totaling $1,297,405,000. LAIF's (and the District's) exposure to risk (credit, market or legal) is not currently available.



25

4) RESTRICTED ASSETS

Certain proceeds of the enterprise fund revenue bonds and Assessment District Bonds are classified as restricted assets on the statement of net assets because their uses are limited by applicable bond covenants. For the fiscal years ended June 30, 2012 and June 30, 2011, the following amounts are restricted:

2012 2011 Construction Fund: Cash, Investments, and Interest Receivable for the District’s Construction Activities $ 5,050,548 $ 7,000,140 Development Impact Fees: Cash, Investments, and Interest Receivable for Future Capital Improvements 266,938 28,273 2003 Refunding Bonds: Cash and Investments for Bond Principal and Interest Payments 2,180,254 2,171,389 Total Restricted Assets $ 7,497,740 $ 9,199,802

5) CAPITAL ASSETS

Capital asset activity for the year was as follows:

Beginning Ending Balance Increases Decreases Balance Capital Assets, Not Depreciated: Land $ 233,619 $ $ $ 233,619 Construction in Progress 1,599,162 4,462,008 (483,971) 5,577,199 Total Capital Assets, Not Depreciated

1,832,781

4,462,008

(483,971)

5,810,818

Capital Assets, Being Depreciated: Buildings 2,455,068 46,629 2,501,697 Laboratory Equipment 40,088 5,935 46,023 Transportation Equipment 676,937 676,937 Office Furniture 1,117,724 1,117,724 Plant Equipment 17,907,081 328,069 18,235,150 Safety Equipment 21,266 21,266 Ocean Outfall Lines 217,846 83,523 301,369 Underground Lines 9,095,439 9,095,439 Total Capital Assets Being Depreciated

31,531,449

464,156

-

31,995,605



26

5) CAPITAL ASSETS - Continued

Construction in Progress

Project 2012 2011 Aerobic Digester $ 102,662 $ Bluffs Sewer Relocation 2,015,430 307,661 Rincon Sewer Project 670,007 575,728 Sandyland Sewer Project 1,657,818 267,206 Sandpoint Road Sewer Project 1,067,304 196,679 Lift Station 2 Force Main 19,006 Plum Street Sewer Replacement 63,978 Solids Design Facilities 46,057 Rotary Screw Press Dewatering 186,825 Total Construction in Progress $ 5,577,199 $ 1,599,162

Beginning Ending Balance Increases Decreases Balance Less Accumulated Depreciation For: Buildings $ (851,771) $ (97,396) $ $ (949,167) Laboratory Equipment (40,087) (792) (40,879) Transportation Equipment (431,470) (51,465) (482,935) Office Furniture (965,109) (34,385) (999,494) Plant Equipment (7,594,505) (485,118) (8,079,623) Safety Equipment (21,265) (21,265) Ocean Outfall Lines (135,731) (3,188) (138,919) Underground Lines (4,984,434) (164,925) (5,149,359) Total Accumulated Depreciation (15,024,372) (837,269) - (15,861,641) Total Capital Assets Being Depreciated, Net 16,507,077 (373,113) - 16,133,964 Total Capital Assets, Net $ 18,339,858 $ 4,088,895 $ (483,971) $ 21,944,782



27

6) LONG-TERM LIABILITIES

The following table summarizes the changes in long-term liabilities for the year:

Beginning Additions/ Ending Due Within Long-Term Balance Amortization Retirement Balance One Year Portion 2003 Refunding Bonds $ 13,155,000 $ $ (655,000) $ 12,500,000 $ 675,000 $ 11,825,000 Less Deferred Loss (658,160) 47,011 (611,149) (611,149)

Total Revenue Bonds 12,496,840 47,011 (655,000) 11,888,851 675,000 11,213,851 Compensated Absences

135,199

16,345

(23,435)

128,109

15,000

113,109

Total Long-Term Liabilities $ 12,632,039 $ 63,356 $ (678,435) $ 12,016,960 $ 690,000 $ 11,326,960

2003 Wastewater Revenue Refunding Bonds

In January 2003, the District issued $17,520,000 2003 Wastewater Revenue Refunding Bonds due in annual installments of $275,000 to $1,175,000 beginning July 1, 2003 and continuing through July 1, 2025. The bonds bear interest varying from 2.25% to 4.70%. The bonds are reported on the financial statements net of the unamortized portion of deferred loss on refunding, in the amount of $611,149. The annual requirements to amortize the 2003 refunding bonds are as follows:

Year Ending June 30

Principal

Interest

Total

2013 $ 675,000 $ 536,358 $ 1,211,358 2014 700,000 511,083 1,211,083 2015 730,000 483,355 1,213,355 2016 755,000 453,280 1,208,280 2017 785,000 421,318 1,206,318

2018-2022 4,470,000 1,547,103 6,017,103 2023-2026 4,385,000 422,579 4,807,579

Total $ 12,500,000 $ 4,375,076 $ 16,875,076



28

7) DEFINED BENEFIT PENSION PLAN Plan Description

The Carpinteria Sanitary District (the District) contributes to the California Public Employees Retirement System (CalPERS), a cost-sharing multiple-employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute within the Public Employees’ Retirement Law. Copies of the CalPERS annual financial report may be obtained from their executive office: 400 P Street, Sacrament, California 95814. Funding Policy Participants are required to contribute 7% of their annual covered salary. The District makes the contributions required of District’s employees on their behalf and for their account. The District is also required to make an additional contribution at an actuarially determined rate. The rates for the fiscal years ended June 30, 2012 and June 30, 2011 were 10.763% and 9.776%, respectively, of annual covered payroll. The contribution requirements of plan members and the District are established and may be amended by CalPERs. The District’s contributions to CalPERS for the years ending June 30, 2012, 2011, and 2010 were $119,740, $116,530, and $106,165, respectively, and were equal to 100% of the required contribution for each year.

8) COMMITMENTS

The Carpinteria Unified School District pays sewer service charges for the Carpinteria High School and the Canalino School based on $1.00 per the average daily attendance for the school year. It is estimated that this is less than the amount that would normally be billed.

9) RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omission; injuries to employees; and natural disasters. The District participates in the liability insurance program organized by the California Sanitation Risk Management Authority (CSRMA). CSRMA is a Joint Powers Authority (JPA) created to provide a self-insurance program to wastewater agencies in the State of California.

CSRMA provides liability, property and workers’ compensation insurance for approximately 46 wastewater agencies for losses in excess of the member districts’ specified self-insurance retention levels. Individual claims (and aggregate public liability and property claims) in excess of specified levels are covered by excess insurance policies purchased from commercial carriers. CSRMA is governed by a board composed of members from participating districts. The board controls the operations of CSRMA, including selection of



29

9) RISK MANAGEMENT - Continued management and approval of operating budgets, independent of any influence by the members beyond their

representation on the board. Each member shares surpluses and deficiencies proportionately to its participation in CSRMA. Premiums paid to CSRMA include retrospective adjustments based on actual experience during the period of coverage. Settled claims have been immaterial and no claims liabilities have been reported in these financial statements as of June 30, 2012 and June 30, 2011.

10) ASSESSMENT DISTRICT BONDS In February 2009, the District issued $6,053,439 in Assessment District No. 2007-1 Limited Obligation Improvement Bonds to finance the acquisition and construction of public sanitary sewer improvements serving property within the Assessment District. The Bonds are secured by assessments levied on parcels within the Assessment District. The Bonds are not general obligations of the District. Neither the faith and credit of the District, nor of either County, nor the State or any related political subdivision, is pledged to the payment of the Bonds. Therefore, these Bonds are not reflected as debt in the District’s financial statements. As of June 30, 2012, the remaining balance on the bonds was $5,685,000. In July 2012 the Assessment District bonds were refinanced through the issuance of bonds.

11) SUBSEQUENT EVENT In November 2012, the District's Board adopted Resolution No. R-257 approving and authorizing issuance of the 2012 Wastewater Revenue Bonds. The purpose of the bonds will be to refund the 2003 Wastewater Revenue Refunding Bonds and to provide new funding for the Digester Replacement Project.

SUPPLEMENTARY INFORMATION

Variance withFinal Budget

Actual PositiveOriginal Final Amounts (Negative)

OPERATING REVENUESDistrict Sewer Service Charges 4,215,000$ 4,215,000$ 4,213,459$ (1,541)$ Development Impact Fees - - 237,805 237,805

Total Revenues 4,215,000 4,215,000 4,451,264 236,264

OPERATING EXPENSESSalaries and Wages 1,349,100 1,349,100 1,270,199 78,901 Employee Benefits 600,300 600,300 543,318 56,982 General Operating Expenses 217,200 217,200 171,996 45,204 Environment and Monitoring 51,500 51,500 37,878 13,622 Utilities 235,800 235,800 196,309 39,491 Sludge Disposal 135,000 135,000 94,425 40,575 Supplies and Equipment 209,300 209,300 144,738 64,562 Repairs and Maintenance 177,900 177,900 142,639 35,261 Professional and Contract Services 120,500 120,500 109,114 11,386 Other Expenses 22,000 22,000 11,896 10,104

Total Operating Expenses 3,118,600 3,118,600 2,722,512 396,088

Operating Income (Loss) 1,096,400 1,096,400 1,728,752 632,352

NON-OPERATING REVENUES (EXPENSES)Investment Earnings 32,000 32,000 56,996 24,996 Taxes and Assessments 450,400 450,400 455,737 5,337 Other District's Contribution/Safety Officer 87,200 87,200 85,565 (1,635) Other Miscellaneous Income 15,000 15,000 37,843 22,843 Grant Income 600,000 600,000 1,533,264 933,264 Debt Service (1,223,600) (1,223,600) (1,203,508) 20,092 Capital Improvements (3,484,200) (3,484,200) (4,442,193) (957,993)

Total Non-operating Revenues (Expenses) (3,523,200) (3,523,200) (3,476,296) 46,904

Change in Net Assets (2,426,800)$ (2,426,800)$ (1,747,544) 679,256$

Net Assets at Beginning of Year 23,306,535

Net Assets at End of Year 21,558,991

Reconciling Difference Between Budgetary Basis and AccountingPrinciples Generally Accepted in the United States of America (USGAAP)

Amortization on Loss From Defeasance (47,012) Principal Payments 655,000 Depreciation and Amortization Expenses (857,455) Capital Improvements 4,442,193

4,192,726

Net Assets at End of Fiscal Year (USGAAP Basis) 25,751,717$

Budget Amount


Budget and Actual Year Ended June 30, 2012

Schedule of Revenues and Expenses

30

STATISTICAL SECTION

31

CARPINTERIA SANITARY DISTRICT STATISTICAL SECTION

This part of the comprehensive annual financial report of the Carpinteria Sanitary District (CSD) presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about CSD’S overall financial health.

CONTENTS PAGE Financial Position and Trends These schedules contain current and trend information to help the reader understand CSD’s financial

performance and well-being have changed over time.

32 - 34

Revenue Capacity These schedules contain information to help the reader assess CSD’s most significant revenue source of sewer

service fees.

35 - 36

Debt Capacity These schedules present information to help the reader assess the affordability of CSD’s current levels of

outstanding debt and CSD’s ability to issue additional debt in the future. All CSD’s debt is recorded in a proprietary fund; consequently, many of the schedules which are applicable to governmental funds are not present.

37 - 39

Operating Information These schedules contain data to help the reader understand how the information in CSD’s financial report

relates to the services it provides and the activities it performs.

40 - 50

Demographic and Economic Information These schedules offer demographic information to help understand the environment within which CSD’s

financial activities take place.

51 - 52

Fiscal Year Ended June

30

Invested in Capital Assets, Net of Related Debt

Restricted for Debt Service & Capital

AcquisitionUnrestricted Total Net Assets

2003 $883,212 $2,713,999 $5,511,462 $9,108,673

2004 970,140 2,794,313 5,809,547 9,574,000

2005 1,198,107 4,438,566 4,725,622 10,362,295

2006 1,625,029 4,777,470 5,066,424 11,468,923

2007 1,938,839 5,005,782 5,626,745 12,571,366

2008 3,332,360 4,625,166 5,638,290 13,595,816

2009 4,100,377 10,624,221 7,076,772 21,801,370

2010 5,389,225 9,041,972 8,452,387 22,883,584

2011 5,843,018 8,912,950 8,550,567 23,306,535

2012 $10,318,366 $7,223,247 $8,210,104 $25,751,717

Source: Carpinteria Sanitary District Financial Management


Net Assets by Component

Last Ten Fiscal Years

Net Assets by Component

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

32

Fiscal Year Ended June 30


RevenuesTaxes &

AssessmentsOther Fees and Income

Interest Income

Other Sources of Fund/Grant

(Note 1) Totals

2003 3,128,433$ 363,803$ 16,491$ 181,682$ 139,564$ 3,829,973$

2004 3,125,820$ 407,805$ 24,001$ 86,442$ 225,221$ 3,869,289$

2005 3,993,230$ 123,941$ 24,252$ 181,891$ 39,232$ 4,362,546$

2006 3,980,602$ 243,768$ 20,576$ 367,024$ 237,537$ 4,849,507$

2007 3,978,589$ 461,856$ 37,363$ 511,937$ 12,845$ 5,002,590$

2008 3,974,938$ 540,836$ 472$ 437,223$ 64,649$ 5,018,118$

2009 3,993,503$ 489,244$ 110,128$ 254,840$ 7,673,297$ 12,521,012$

2010 3,997,832$ 477,317$ 106,281$ 117,068$ 623,000$ 5,321,498$

2011 3,973,417$ 454,875$ 111,055$ 79,890$ -$ 4,619,237$

2012 4,213,459$ 455,737$ 361,213$ 56,996$ 1,533,264$ 6,620,669$

Note 1:

In 2012, the District had a rate adjustments.


CARPINTERIA SANITARY DISTRICTRevenue and Gross Capital Contribution

In 2009, the District received $7,673,297 capital contribution from Assessment District 2007-1 bonds proceeds.

In 2010, the District received $623,000 capital contribution for dedication of infrastructure.


Revenue and Gross Capital Contribution

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Other Sources of Revenue

Interest Income

Other Fees and Income

Taxes & Assessments


33


30

Total Revenues

Total Expenses

Change in Net Assets

Beginning Net Assets

Ending Net Assets

2003 3,833,342$ 3,288,515$ 544,827$ 8,563,846$ 9,108,673$

2004 3,869,289 3,403,662 465,627 9,108,673 9,574,300

2005 4,362,546 3,574,551 787,995 9,574,300 10,362,295

2006 4,849,507 3,742,879 1,106,628 10,362,295 11,468,923

2007 5,002,590 3,900,147 1,102,443 11,468,923 12,571,366

2008 5,018,118 3,993,668 1,024,450 12,571,366 13,595,816

2009 12,521,012 4,315,458 8,205,554 13,595,816 21,801,370

2010 5,338,381 4,256,167 1,082,214 21,801,370 22,883,584

2011 4,619,237 4,196,286 422,951 22,883,584 23,306,535

2012 6,620,669$ 4,175,487$ 2,445,182$ 23,306,535$ 25,751,717$


Change in Net AssetsCARPINTERIA SANITARY DISTRICT


Change In Net Assets

$-$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,000$8,000,000$9,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

34


30

Number of Residential

UnitsResidential SSC

RevenueSSC Revenue

Percentage

No. of Non-Residential Customers

Non-Residential SSC Revenue

SSC Revenue Percentage

Total SSC Revenue

2003 5,891 2,333,230$ 74.6% 558 795,203$ 25.4% 3,128,433$

2004 5,900 2,320,537$ 74.2% 556 805,283$ 25.8% 3,125,820$

2005 5,916 3,035,662$ 76.0% 508 957,568$ 24.0% 3,993,230$

2006 5,926 3,038,121$ 76.3% 508 942,481$ 23.7% 3,980,602$

2007 5,936 3,044,905$ 76.5% 533 933,684$ 23.5% 3,978,589$

2008 5,947 3,050,872$ 76.8% 556 924,066$ 23.2% 3,974,938$

2009 5,965 3,073,464$ 77.0% 563 920,039$ 23.0% 3,993,503$

2010 5,980 3,080,168$ 77.0% 549 917,664$ 23.0% 3,997,832$

2011 6,002 3,073,024$ 77.3% 552 900,393$ 22.7% 3,973,417$

2012 6,013 3,096,695$ 73.5% 552 1,116,764$ 26.5% 4,213,459$

The District had a rate increase in 2004/05 Fiscal Year.



Sewer Service Charge (SSC) Summary

Residential Non-Residential

Sewer Service Charge (SSC)

$-$500,000

$1,000,000$1,500,000$2,000,000$2,500,000$3,000,000$3,500,000$4,000,000$4,500,000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Residential vs. Non-Residential SSC Revenue Percentage

0%10%20%30%40%50%60%70%80%90%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Non-Residential SSC

Residential SSC

35

Percentage of Percentage of Total Non-Residential Total Non-Residential

Parcel Number Property Address SSC Amount SSC Parcel Number Property Address SSC Amount SSC

004-105-007 5045 SIXTH STREET 111,547.93 9.55% 004-105-007 5045 SIXTH ST 67,697.52 7.02%

001-070-063 1000 CASITAS PASS RD. 55,991.46 4.80% 001-070-063 1000 CASITAS PASS RD. 56,772.41 5.89%

001-070-009 5606 CARPINTERIA AVE. 39,008.28 3.34% 004-036-024 4558 CARPINTERIA AVE. 31,791.19 3.30%


004-036-024 Vista De Santa Barbara MHP 36,811.16 3.15% 003-263-028 850 LINDEN AVE. 26,902.57 2.79%

001-070-60 1025 CASITAS PASS RD. 28,451.33 2.44% 001-070-009 5606 CARPINTERIA AVE. 25,748.75 2.67%

004-013-016 4200 VIA REAL 27,630.03 2.37% 001-070-060 1025 CASITAS PASS RD. 25,382.65 2.63%

003-520-003 STATE PARK 27,038.16 2.32% 004-013-016 4200 VIA REAL 20,683.89 2.14%

003-263-028 850 LINDEN AVE. 26,803.33 2.30% 001-190-038 1000 CINDY LN 18,110.85 1.88%

003-510-001 STATE PARK 26,122.93 2.24% 003-520-003 STATE PARK 17,817.72 1.85%

Totals 417,815.25 37.41% Totals 318,574.94 35.38%

Percentage of Percentage of Total Non-Residential Total Non-Residential

Parcel Number Property Address SSC Amount SSC Parcel Number Property Address SSC Amount SSC

004-105-007 5045 SIXTH ST 64,165.94 6.56% 004-105-007 5045 SIXTH ST 58,775.43 5.97%

001-070-063 1000 CASITAS PASS RD. 56,022.12 5.73% 001-070-063 1000 CASITAS PASS RD. 57,743.47 5.86%


003-263-028 850 LINDEN AVE. 28,767.69 2.94% 001-070-060 1025 CASITAS PASS RD. 29,721.31 3.02%

001-070-039 5550 CARPINTERIA AVE. 28,336.33 2.90% 003-263-028 850 LINDEN AVE. 29,555.86 3.00%

001-070-060 1025 CASITAS PASS RD. 26,500.43 2.71% 001-070-039 5550 CARPINTERIA AVE. 28,634.05 2.91%

001-070-009 5606 CARPINTERIA AVE. 25,033.86 2.56% 001-190-038 1000 CINDY LN. 26,053.47 2.65%

004-013-016 4200 VIA REAL 22,001.56 2.25% 001-070-009 5606 CARPINTERIA AVE 24,357.58 2.47%

001-190-038 1000 CINDY LN 20,858.76 2.13% 004-013-016 4200 VIA REAL 22,437.11 2.28%

001-190-095 6410 CINDY LN 18,515.18 1.59% 001-190-095 6410 CINDY LN 19,009.40 1.93%

Totals 323,393.98 35.24% Totals 330,621.68 35.94%


2009/2010 2008/2009

2010/20112011/2012

Carpinteria Sanitary DistrictTen Highest Non-Residential Rate Payers

Last Four Fiscal YearsSewer Service Charge (SSC)

36

Fiscal Year Ended June 30 Principal Interest Total Debt Service

Total Operating Expense

Ratio of Debt Service to

Total Operating Expense

2003 $275,000 $743,491 $1,018,491 $2,536,838 40.15%

2004 540,000 684,875 1,224,875 2,668,392 45.90%

2005 555,000 666,515 1,221,515 2,906,474 42.03%

2006 570,000 654,028 1,224,028 3,088,722 39.63%

2007 580,000 641,203 1,221,203 3,258,944 37.47%

2008 595,000 628,153 1,223,153 3,365,515 36.34%

2009 615,000 613,278 1,228,278 3,702,180 33.18%

2010 635,000 592,368 1,227,368 3,646,916 33.65%

2011 655,000 570,778 1,225,778 3,625,508 33.81%

2012 $675,000 $548,508 $1,223,508 $3,626,979 33.73%



Ratio of Annual Debt Service to Total Expenses

37

Description 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

1 Sewer Service Charge Revenues 3,128,433 3,125,820 3,993,230 3,980,602 3,978,589 3,974,938 3,993,503 3,997,832 3,973,417 4,213,4592 Taxes & Assessments 363,803 407,805 123,941 243,768 461,856 540,836 489,244 477,317 454,875 455,7373 Other Fees and Income 16,491 24,001 24,252 20,576 37,363 472 110,128 106,281 111,055 361,2134 Interest Income 181,682 86,442 181,891 367,024 511,937 437,223 254,840 117,068 79,890 56,996

5 Totals 3,690,409 3,644,068 4,323,314 4,611,970 4,989,745 4,953,469 4,847,715 4,698,498 4,619,237 5,087,405

6 Other Sources of Fund/Grant (1) 139,564 225,221 39,232 237,537 12,845 64,649 7,673,297 623,000 0 1,533,264

7 Total Revenues 3,829,973 3,869,289 4,362,546 4,849,507 5,002,590 5,018,118 12,521,012 5,321,498 4,619,237 6,620,669

8 Total Operating Expenses (2) 2,536,838 2,668,392 2,906,474 3,088,722 3,258,944 3,365,515 3,702,180 3,646,916 3,625,508 3,626,979

9 Operating Exp. Inc.(Dec.) 4.1% 5.2% 8.9% 6.3% 5.5% 3.3% 10.0% -1.5% -0.6% 0.0%

10 Revenue in Excess of Oper. Exp. 1,293,135 1,200,897 1,456,072 1,760,785 1,743,646 1,652,603 8,818,832 1,674,582 993,729 2,993,690

11 Scheduled Installment Payment 1,018,490 1,224,875 1,221,515 1,224,028 1,221,202 1,223,152 1,228,278 1,227,368 1,225,778 1,223,508

12 Capital Improvement Projects (CIP 295,392 587,878 538,722 611,321 678,814 1,809,516 1,712,500 1,023,877 714,596 4,442,194

13 Debt Services Ratio (>1.25%), (3) 1.88 1.42 1.88 2.01 2.18 2.06 1.75 1.65 1.56 1.93

(1) - Other Source of Fund/Grant is excluded from Debt Services Ratio calculation.(2) - Depreciation and amortization expenses are excluded from Debt Services Ratio calculation.(3) - Ratio is calculated according to the 2003 Wastewater Revenue Refinancing Bonds agreement.


Last Ten YearsDebt Service Ratio


0.00

0.50

1.00

1.50

2.00

2.50

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

38


30

Current Outstanding

Debt

Long Term Outstaning

Debt

Total Outstanding

Debt

Median Family Income

Debt as a Percentage of Median Family

Income

Population Debt per Capita Personal Income, Total

Debt Outstanding Percentage

Per Capita Personal Income

Unemployment Rate

2003 275,000$ 15,960,748$ 16,235,748$ n/a n/a 14,394 1,128 456,289,800$ 4% 31,700$ 3.5%

2004 540,000$ 15,177,760$ 15,717,760$ 55,350$ 0.352% 14,364 1,094 468,266,400$ 3% 32,600$ 3.4%

2005 555,000$ 14,654,771$ 15,209,771$ 57,610$ 0.379% 14,340 1,061 491,862,000$ 3% 34,300$ 4.0%

2006 570,000$ 14,116,782$ 14,686,782$ 56,812$ 0.387% 14,106 1,041 511,609,200$ 3% 36,100$ 3.5%

2007 580,000$ 13,573,794$ 14,153,794$ 59,316$ 0.419% 14,092 1,004 543,735,500$ 3% 38,500$ 3.8%

2008 595,000$ 13,010,806$ 13,605,806$ 61,170$ 0.450% 14,235 956 589,392,300$ 2% 41,300$ 5.2%

2009 615,000$ 12,422,817$ 13,037,817$ 64,716$ 0.496% 14,376 907 595,091,700$ 2% 41,300$ 5.2%

2010 635,000$ 11,814,828$ 12,449,828$ 69,143$ 0.555% 13,087 951 600,006,400$ 2% 45,848$ 5.2%

2011 655,000$ 11,186,840$ 11,841,840$ 72,235$ 0.610% 13,041 908 411,352,400$ 3% 31,543$ 5.8%

2012 675,000$ 10,538,851$ 11,213,851$ 72,297$ 0.645% 13,076 858 422,376,600$ 3% 32,302$ 8.2%

Source: American Community SurveyCalifornia Department of FinanceCity of CarpinteriaDistrict's Financial Data


Ratio of Outstanding Debt


39


History of Residential Sewer Service Charges

Residential Mobile Homes Ordinance Fiscal Year Ended Actual SSC Cost per

Annual SSC Annual SSC Number in June 30th Charged Month$40 $40 1978-1 1993 $232.75 $19.40$35 $25 1978-3 1994 $278.00 $23.17$35 $25 1979-1 1995 $300.00 $25.00$70 $50 1981-1 1996 $300.00 $25.00$70 $70 1987-2 1997 $310.00 $25.83

$161 $161 1989-5 1998 $359.95 $30.00$172 $165 Ord#3 1999 $398.00 $33.17$190 $183 Ord#4 2000 $398.00 $33.17$233 $226 Ord#5 (1992) 2001 $398.00 $33.17$398 $386 Ord#6 (1993) 2002 $398.00 $33.17$512 $512 Ord#10 (2004) 2003 $398.00 $33.17$515 $515 Ord#12 (20011) 2004 $398.00 $33.17

2005 $512.00 $42.672006 $512.00 $42.672007 $512.00 $42.672008 $512.00 $42.672009 $512.00 $42.672010 $512.00 $42.672011 $512.00 $42.672012 $515.00 $42.92


SSC History

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

40

Fiscal Year Ended June 30 Administration Plant Operation Collection Safety Totals

2003 4 8 3 0 15

2004 4 8 3 0 15

2005 4 8 3 0 15

2006 4 8 3 0 15

2007 4 8 3 1 16

2008 4 8 3 1 16

2009 4 8 3 1 16

2010 4 8 3 1 16

2011 4 8 3 1 16

2012 4 8 3 1 16


Full Time District Emlpoyees by Function


0

1

2

3

4

5

6

7

8

9

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Administration

Plant Operation

Collection

Safety & Training

41

Fiscal Year Ended June 30 Aquired Value

Accumulated Depreciation Net of Fixed Assets

2003 25,801,516 9,216,480 16,585,036

2004 25,983,312 9,904,466 16,078,846

2005 26,563,768 10,682,927 15,880,841

2006 27,400,047 11,486,298 15,913,749

2007 28,131,413 12,351,481 15,779,932

2008 28,369,683 12,788,293 15,581,390

2009 30,794,602 13,575,421 17,219,181

2010 31,403,031 14,213,455 17,189,576

2011 31,765,068 15,024,372 16,740,696

2012 32,229,224 15,861,641 16,367,583

CARPINTERIA SANITARY DISTRICTFixed Assets SummaryLast Ten Fiscal Years

Net of Fixed Assets

14,500,000

15,000,000

15,500,000

16,000,000

16,500,000

17,000,000

17,500,000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

42

Fiscal Year Ended June 30 CIP Expenditures

2003 295,3922004 587,8782005 538,7222006 611,3212007 678,8142008 1,809,5162009 1,712,5002010 1,023,8772011 714,5962012 4,442,194


Capital Improvement Projects Expenditures


Last Ten Years

CIP Expenditures

0500,000

1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,0005,000,000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

43

Annual Effluent Fiscal Year Rainfall Flow

Ended in June (Inchs) (MGD)

2003 14.77 1.4172004 4.92 1.4042005 22.85 1.5802006 16.15 1.4542007 4.17 1.3292008 14.26 1.3612009 12.99 1.3022010 18.37 1.4922011 24.1 1.4432012 8.63 1.253


CARPINTERIA SANITARY DISTRICTTreatment Plant Flow Data

Average Daily Flows (MGD)


Rainfall (Inches)

0

5

10

15

20

25

30

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Effluent Flow (MGD)

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

1.800

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

44

Fiscal Year Ended June 30 Total Cleaned (ft) Monthly Average (ft)

2003 33,295 2,775

2004 34,276 2,856

2005 55,609 4,634

2006 91,065 7,589

2007 89,335 7,445

2008 72,435 6,036

2009 85,055 7,088

2010 135,502 11,292

2011 140,241 11,687

2012 52,145 4,345



Collection System StatisticsPipeline Hydro Cleaning

Total Line Cleaned (ft)

020,000

40,00060,00080,000

100,000120,000

140,000160,000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

45

Effluent Effluent Effluent Effluent Fiscal Year TSS BOD TSS BOD

Ended in June (MG/L) (MG/L) (% Removal) (% Removal)2003 11 5.16 95 972004 10 5.21 96 982005 10 5.02 95 982006 11 5.27 96 982007 13 4.96 95 982008 9 5.57 96 972009 8 5.64 97 972010 8 5.25 98 982011 6 4.59 99 992012 8 5.79 98 98


Last Ten Fiscal Year

CARPINTERIA SANITARY DISTRICTQuality of Effluent

Final Effluent Monthly Average

Effluent TSS (MG/L)

0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Effluent BOD (MG/L)

0

1

2

3

4

5

6

7

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Effluent TSS (% Removal)

93

94

95

96

97

98

99

100

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Effluent BOD (%Removal)

96

96.5

97

97.5

98

98.5

99

99.5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

46

Fiscal Year Ended June 30 Biosolids Produce

Documents

Carpinteria Sanitary Districtgfoa.net/cafr/COA2012/CarpinteriaSanitaryDistrictCA.pdfCARPINTERIA SANITARY DISTRICT Demographic & Economic Information District Overview The Carpinteria