(this page has been intentionally left blank) continuing disclosure nov222019.pdfmetropolitan water...

Metropolitan Water District of Salt Lake & Sandy 3430 East Danish Road, Cottonwood Heights, UT 84093 Phone: 801-942-1391 Fax: 801-942-3674 www.mwdsls.org

November 22, 2019

Via electronic submission to Electronic Municipal Market Access ("EMMA"); emma.msrb.org

Re: Continuing disclosure undertaking of Metropolitan Water District of Salt Lake & Sandy (Utah) CICI: 549300WSGSDWQU727366

EMMA:

In accordance with the provisions of paragraph (b)(5)(i)(A) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Rule"), the Metropolitan Water District of Salt Lake & Sandy (Utah) (the "District") files the financial statements of the District for June 30, 2019 and 2018 (the "2019 FS") and the SupplementalContinuing Disclosure Memorandum of the District dated on or before December 27, 2019 (the "2019 SCDM"). This letter, the 2019 FS, and the 2019 SCDM constitute the annual financial information and operating data concerning the District to be filed in compliance with the District's obligation under those certain agreements entered into in connection with the offering of the followingsecurities (identified by CUSIP® number) described in the following Official Statements:

592657

Securities (CUSIP®) ________

AH3, AJ9, AK6, AL4, AM2 and ANO ..................................... .

592657 BE9, BF6, BG4; and BH2 ........................................................ .

592657 BN9, BP4, BQ2, BRO, BS8, BT6, BU3, BVl, BW9, BX7, BYS, BZ2, CA6, CB4 and CC2 ................................................ .

592657 CDO, CE8, CFS, CG3, CHI, en, CK4, CL2 ........................... .

Official Statement $107,645,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Project and Refunding Bonds, Series 2012A,dated March 1, 2012

$12,105,000 Metropolitan Water District of Salt Lake & SandyWater Revenue Refunding Bonds, Series 20128,dated March 1, 2012

$5,975,000 Metropolitan Water District of Salt Lake & Sandy (Utah)Water Revenue Bonds, Series 2015A,dated February 17, 2015

$59,200,000 Metropolitan Water District of Salt Lake & Sandy (Utah)Water Revenue Refunding Bonds, Series 2016A,dated May 12, 2016

From November 15, 2018 (the District's last annual filing date on EMMA) to the date of the 2019 SCDM submitted herewith, no event described in paragraph (b)(S)(i)(c) of the Rule has occurred that is required to be disclosed with respect to any of the abovedescribed securities. (The District did file a "defeasance" material event notice on a portion of its 2012A Bonds on April 1, 2019.)

Sincerely,

Metropolitan Water District of Salt Lake & Sandy

�I� Genera�!nager

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Supplemental

Continuing Disclosure Memorandum

For

Metropolitan Water District of Salt Lake & Sandy (Utah)

CICI: 549300WSGSDWQU727366

Filed with

Electronic Municipal Market Access (EMMA) http://www.emma.msrb.org

Submitted and dated as of November 22, 2019 (Annual submission required on or before December 27, 2019)

http://emma.msrb.org/default.aspx

iii

Table Of Contents Page GENERAL .......................................................................................................................................... 1

Metropolitan Water District Of Salt Lake & Sandy (Utah) ............................................................................................ 1 Contact Person For Metropolitan Water District............................................................................................................ 1 The Issues ...................................................................................................................................................................... 1

$107,645,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Project and Refunding Bonds, Series 2012A ...................................................................................................................................... 2

$12,105,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Refunding Bonds, Series 2012B .................................................................................................................................................. 3

$5,975,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Bonds, Series 2015A ................. 4

$59,200,000 Metropolitan Water District of Salt Lake & Sandy Water Revenue Refunding Bonds, Series 2016A .................................................................................................................................................. 5

Historical Results Of Operations And Debt Service Coverage ...................................................................................... 6 Five–Year Financial Summaries .................................................................................................................................... 7

Statements of Net Position ..................................................................................................................................... 8

Statements of Revenues, Expenses and Changes in Net Position .......................................................................... 9

Audited Financial Information For Fiscal Year 2019 And Fiscal Year 2018 ............................................................... 10

METROPOLITAN WATER DISTRICT’S FINANCIAL STATEMENTS JUNE 30, 2019

AND 2018 ...................................................................................................................................... 11

3

7

89189

189

89

15

80

80

215

80

189

80

80

15

15

11

10

98

12

4

1

2

40

40

265

13

52

114

73

74

92

68

5

16

6

17

13 POINT OF THE MOUNTAIN WATER TREATMENT PLANT

16 100 MG TERMINAL RESERVOIR

MWDSLS SERVICE AREA

Salt Lake City

Salt Lake City

7800 South

Jord

an R

iver

3300 South

4500 South

STA

TE

ST

RE

ET

Sandy City

Orem

12600 South

RE

DW

OO

D R

OA

D

Wel

by

Canal

Big Co

ttonwoo

d Cany

on

Wasatc

h B

lvd

Little Cottonwood Canyon

Fort Union Blvd

Park City

Wasatch County

Sum

mit C

ounty

Salt Lake C

ounty

GREAT SALT LAKE

Sal

t Lak

e Cou

nty

Uta

h Cou

nty

Pro

vo R

iver

Jaco

b C

anal

Olmsted Siphon

Pro

vo R

iver

UTAH LAKE

Prov

o Rive

r

Provo

Draper

2100 South

5400 South

800 North

Heber

Utah C

ounty

Wasatch C

ounty

Provo River

Provo River Aqueduct

Jord

an R

iver

Facilities

Metropolitan Water District

of Salt Lake & Sandy

SYSTEM FACILITIES

1

2

3

8

9

10

11

12

4

5

6

14

15

DEER CREEK DAM

MURDOCK DIVERSION

OLMSTED TUNNEL & SIPHON

MURRAY POWER PLANT INTAKE

LITTLE COTTONWOOD & BELL CANYON CREEK INTAKE

LITTLE COTTONWOOD WATER TREATMENT PLANT

10 MG RESERVOIR

TERMINAL RESERVOIR

POINT OF THE MOUNTAINAQUEDUCT UNTREATED WATER INTAKE

JORDAN NARROWS INTAKE & SIPHON

JORDAN NARROWS TURBINE & PUMPING PLANT

OLMSTED DIVERSION

JORDAN VALLEY WATER TREATMENT PLANT

7 ALPINE DRAPER TUNNEL (Salt Lake Aqueduct)

Provo River AqueductDESIGN CAPACITY:

626 CFS Maximum187 CFS MWDSLS

FACILITIES:(1) 21.5 miles of 126-inch and

120-inch diameter welded steel pipe

Murdock DiversionDESIGN CAPACITY: 550 CFSFACILITIES: (1) Diversion Dam

Jordan Aqueduct Reach No. DESIGN CAPACITY: 270 CFS (175 MGD)FACILITIES: (1) 72-inch & 66-inch Welded Steel Pipe

Deer Creek Dan & ReservoirDESIGN CAPACITY:

152,564 AC-FT149,700 AC-FT Active Pool2,864 AC-FT Dead Pool49,700 AC-FT Carry Over100,000 Association SharesNormal year yield to MWDSLS is 61,700 AC-FT

FACILITIES:(1) Dam(2) Land Around Reservoir(3) Outlet Works and Spillway(4) Salt Lake Aqueduct Intake (MWDSLS Facility)

RECREATION USE:Managed by Utah State Parks & Recreation

OUTLET WORKS CAPACITY:2 Tube Valves

SPILLWAY CAPACITY:12,000 CFS

Bureau of Reclamation Facility (Provo River Project)Operated by Provo River Water Users Association

Deer Creek PowerhouseDESIGN CAPACITY:

5 MWFACILITIES:

(1) 2-2,475 kW Generators

Rive

Rive

14

Salt Lake AqueductDESIGN CAPACITY:

175 CFS (113 MGD)FACILITIES:

(1) 69-inch Concrete Pipe(2) Alpine Tunnel(3) Various Welded Steel Siphons(4) 42 Miles Total Length(5) 33 Miles Untreated Water(6) 9 Miles Treated Water

Little Cottonwood Water Treatment PlantDESIGN CAPACITY:

143 MGD

Point of the MountainWater Treatment Plant

DESIGN CAPACITY:70 MGD

17 LITTLE DELL RESERVOIR

Jordan Aqueduct Reach No. 2DESIGN CAPACITY: 270 CFS (175 MGD)FACILITIES: (1) 78-inch Pipe


Point of the MountainAqueduct (Treated Water)DESIGN CAPACITY:

North to South (Gravity) - 100 MGDSouth to North (Pumped) - 80 MGD

FACILITIES:(1) 60-inch Welded Steel Pipe(2) 12 Miles in Length

Terminal ReservoirDESIGN CAPACITY:

40 MGFACILITIES:

(1) Two 20 MG Concrete Reservoirs

Little Dell DamDESIGN CAPACITY:

20,500 AC-FTFACILITIES:

(1) 224-foot High Dam(2) Outlet Spillway

Jordan Valley Water Treatment PlantDESIGN CAPACITY:

180 MGD2/7 MWDSLS 51 MGD

DESIGN CAPACITY:151 MGD

FACILITIES:(1) 84-inch Pipe(2) 2.5 Miles in Length

Point of the MountainAqueduct (Untreated Water)

15

Jord

an R

iver

DESIGN CAPACITY:33 MGD (Gravity)84 MGD (POMA Sleeve Valves)

50% MWDSLS

15000 South Pipeline


Terminal ReservoirDESIGN CAPACITY:

100 MGFACILITIES:

2/7 MWDSLS 28.6 MG

Jordanelle ReservoirDESIGN CAPACITY:

360,500 AC-FT314,006 AC-FT Active Pool3,026 AC-FT Dead PoolNormal year yield to MWDSLS is 20,000 AC-FT

FACILITIES:(1) Dam(2) Land Around Reservoir(3) Outlet Works and Spillway

RECREATION USE:Managed by Utah State Parks & Recreation

OUTLET WORKS CAPACITY:2,300 CFS

SPILLWAY CAPACITY:5,510 CFS

Bureau of Reclamation Facility (Central Utah Project)Operated by Central Utah Water Conservancy District

18

Utah Lake Pump StationDESIGN CAPACITY:

769 CFS Total135 CFS MWDSLS (17.6%)

FACILITIES:(1) 4 Vertical Propeller Pumps

@ 200 CFS Each(2) 1400 HP Total

18 UTAH LAKE PUMP STATION

P:\Metro Water District SLC\MWDSLC Master Plan PM\Graphics\Figures\Wall Display-System Facilities\4-2007_Wall Display\MWDSLS-System Facilities Wall Display 01-03-12.cdr

Provo River Project Watersheds and

Upper Basin Collection System

Olmsted Diversion

1

GENERAL

Metropolitan Water District Of Salt Lake & Sandy (Utah) Metropolitan Water District of Salt Lake & Sandy (the “Metropolitan Water District”) exists under,

and was organized in 1935 under Title 17B, Chapter 2a, Part 6, Utah Code Annotated 1953, as amended, and other applicable provisions of Title 17B, Chapter 2a Utah Code Annotated 1953, as amended. Metro-politan Water District functions as a supplemental wholesale provider of water to Salt Lake City, Utah (“Salt Lake”) and Sandy City, Utah (“Sandy”). Metropolitan Water District supplies approximately 35% to 50% of the treated water used by Salt Lake each year and approximately 50% to 75% of the treated water used by Sandy each year. Metropolitan Water District obtains its principal water supply through its ownership interest in the Provo River Water Users Association. Metropolitan Water District also has two accepted petitions for Central Utah Project Bonneville Unit water. Metropolitan Water District owns and operates two water treatment plants and owns a 2/7 undivided interest in a third water treatment plant. Metropolitan Water District owns or has rights to utilize capacity in various reservoirs and aqueducts and other water facilities. Metropolitan Water District also treats water that belongs to Salt Lake and Sandy.

Metropolitan Water District’s CICI number is 549300WSGSDWQU727366 and the base CUSIP

number is 592657. Metropolitan Water District maintains an office in Cottonwood Heights, Utah and its website may be

accessed at http://www.mwdsls.org. The information available at this website is provided by Metropolitan Water District and has not been reviewed for accuracy or completeness. Such information is not a part of this Supplemental Continuing Disclosure Memorandum.

When used herein the terms “Fiscal Year[s] 20YY” or “Fiscal Year[s] End[ed][ing] June 30, 20YY”

shall refer to the year beginning on July 1 of the year prior to the year indicated and ending on June 30 of the year indicated.

Contact Person For Metropolitan Water District

As of the date of this Supplemental Continuing Disclosure Memorandum, the chief contact person for

Metropolitan Water District is:

Michael J. DeVries, General Manager [email protected]

Metropolitan Water District of Salt Lake & Sandy 3430 E Danish Rd

Cottonwood Heights UT 84093 801.942.9662 | f 801.942.3674

The Issues

Metropolitan Water District is providing continuing disclosure on four bond issues issued by Metro-

politan Water District.

CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services is managed on

behalf of the American Bankers Association by S&P Capital IQ.

http://www.mwdsls.org/mailto:[email protected]

2

1. $107,645,000

Metropolitan Water District of Salt Lake & Sandy Water Revenue Project and Refunding Bonds, Series 2012A

Bonds dated and issued on: March 1, 2012 Background Information. The $107,645,000, Water Revenue Project and Refunding Bonds, Se-

ries 2012A, dated March 1, 2012 (the “2012A Bonds”) were awarded pursuant to negotiated sale on Feb-ruary 1, 2012 to Wells Fargo Securities, Charlotte, North Carolina and Citigroup, New York, New York at a “true interest rate” of 2.94%. Zions Public Finance, Inc., Salt Lake City, Utah, acted as Municipal Advisor.

The 2012A Bonds are fully–registered bonds in book–entry form only, registered in the name of Cede

& Co., as nominee for The Depository Trust Company, New York, New York (“DTC”) and DTC is act-ing as securities depository for the 2012A Bonds. Principal of and interest on the 2012A Bonds (interest payable January 1 and July 1 of each year) are payable by Zions Bancorporation, National Association, Corporate Trust Department, Salt Lake City, Utah (“Zions Bank”), to the registered owners thereof, cur-rently DTC.

Optional Redemption. The 2012A Bonds maturing on or after July 1, 2023 are subject to redemption

at the election of Metropolitan Water District on July 1, 2022, or on any date thereafter, from such maturi-ties or parts thereof as shall be selected by Metropolitan Water District, at the redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the redemption date. The 2012A Bonds maturing on and after July 1, 2026 were refunded by the 2019A Bonds (as described below).

Current Maturity Schedule.

Current principal outstanding: $39,920,000 Original issue amount: $107,645,000

Dated: March 1, 2012 Due: July 1, as shown below

$39,920,000 Serial Bonds

Due

July 1

CUSIP 592657

Principal Amount

Original Interest

Rate

Due

July 1

CUSIP 592657

Principal Amount

Original Interest

Rate 2020……… AH3 $6,850,000 5.00% 2027……… AQ3 $3,295,000 5.00% 2021……… AJ9 7,180,000 4.00 2028……… AR1 3,255,000 5.00 2022……… AK6 7,510,000 4.00 2029……… AS9 3,390,000 5.00 2023……… AL4 8,745,000 5.00 2030……… AT7 1,150,000 5.00 2024……… AM2 6,670,000 5.00 2031……… AU4 1,190,000 5.00 2025……… AN0 2,965,000 5.00 2032……… AV2 4,070,000 5.00 2026……… AP5 3,130,000 5.00

$23,615,000 5.00% Term Bond due July 1, 2037 (CUSIP592657 AW0)

(Strikethrough) These maturities were refunded by the 2019A Bonds (as defined herein). In March 2019, the District issued $47,135,000, Convertible Water Revenue Refunding Bonds, Series 2019A (the “2019A Bonds”) through a direct purchase. The 2019A Bonds were not rated (no rating was applied for). The 2019A Bonds were issued on a parity with the District’s outstanding revenue bonds as issued under the master resolution.

3

2. $12,105,000

Metropolitan Water District of Salt Lake & Sandy Water Revenue Refunding Bonds, Series 2012B

Bonds dated and issued on: April 3, 2012 Background Information. The $12,105,000, Water Revenue Refunding Bonds, Series 2012B, dated

April 3, 2012 (the “2012B Bonds”) were awarded pursuant to negotiated sale on March 6, 2012 to Wells Fargo Securities, Charlotte, North Carolina and Citigroup, New York, New York at a “true interest rate” of 1.69%. Zions Public Finance, Inc., Salt Lake City, Utah, acted as Municipal Advisor.

The 2012B Bonds are fully–registered bonds in book–entry form only, registered in the name of Cede

& Co., as nominee for DTC and DTC is acting as securities depository for the 2012B Bonds. Principal of and interest on the 2012B Bonds (interest payable January 1 and July 1 of each year) are payable by Zions Bank, to the registered owners thereof, currently DTC.

No Optional Redemption. The 2012B Bonds are not subject to redemption prior to maturity. Current Maturity Schedule.


Dated: April 3, 2012 Due: July 1, as shown below

Due

July 1

CUSIP 592657

Principal Amount

Original Interest

Rate 2020……… BE9 $1,225,000 2.00% 2021……… BF6 1,240,000 5.00 2022……… BG4 1,305,000 5.00 2023……… BH2 770,000 2.25

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4

3. $5,975,000

Metropolitan Water District of Salt Lake & Sandy Water Revenue Bonds, Series 2015A

Bonds dated and issued on: February 17, 2015 Background Information. The $5,975,000, Water Revenue Bonds, Series 2015A, dated Febru-

ary 17, 2015 (the “2015A Bonds”) were awarded pursuant to negotiated sale on February 3, 2015 to George K. Baum & Company, Kansas City, Missouri at a “true interest rate” of 2.55%. Zions Public Fi-nance, Inc., Salt Lake City, Utah, acted as Municipal Advisor.


& Co., as nominee for DTC and DTC is acting as securities depository for the 2015A Bonds. Principal of and interest on the 2015A Bonds (interest payable January 1 and July 1 of each year) are payable by Zi-ons Bank, to the registered owners thereof, currently DTC.

Optional Redemption. The 2015A Bonds maturing on or after July 1, 2025 are subject to redemption

at the election of Metropolitan Water District on July 1, 2024, or on any date thereafter, from such maturi-ties or parts thereof as shall be selected by Metropolitan Water District, at the redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the redemption date.



Dated: February 17, 2015 Due: July 1, as shown below

Due

July 1

CUSIP 592657

Principal Amount

Original Interest

Rate

Due

July 1

CUSIP 592657

Principal Amount

Original Interest

Rate 2020………. BN9 $255,000 3.00% 2028………. BW9 $340,000 4.00% 2021………. BP4 265,000 3.00 2029………. BX7 355,000 4.00 2022………. BQ2 270,000 4.00 2030………. BY5 370,000 4.00 2023………. BR0 280,000 4.00 2031………. BZ2 385,000 4.00 2024………. BS8 295,000 4.00 2032………. CA6 400,000 4.00 2025………. BT6 305,000 4.00 2033………. CB4 415,000 4.00 2026………. BU3 315,000 4.00 2034………. CC2 435,000 4.00 2027………. BV1 330,000 4.00


5

4. $59,200,000

Metropolitan Water District of Salt Lake & Sandy Water Revenue Refunding Bonds, Series 2016A

Bonds dated and issued on: May 12, 2016 Background Information. The $59,200,000, Water Revenue Refunding Bonds, Series 2016A, dated

May 12, 2016 (the “2016A Bonds”) were awarded pursuant to competitive bond sale held on the Parity electronic bid submission system on April 28, 2016 to J.P. Morgan Securities LLC, New York, New York at a “true interest rate” of 2.21%. Zions Public Finance, Inc., Salt Lake City, Utah, acted as Municipal Advisor.


& Co., as nominee for DTC and DTC is acting as securities depository for the 2016A Bonds. Principal of and interest on the 2016A Bonds (interest payable January 1 and July 1 of each year) are payable by Zi-ons Bank, to the registered owners thereof, currently DTC.

Optional Redemption. The 2016A Bonds maturing on or before July 1, 2025 are not subject to re-

demption prior to maturity. The 2016A Bonds maturing on or after July 1, 2026 are subject to redemption at the election of the Metropolitan Water District on January 1, 2026 or on any date thereafter, from such maturities or parts thereof as shall be selected by the Metropolitan Water District, at the redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the redemption date.



Dated: May 12, 2016 Due: July 1, as shown below

Due

July 1

CUSIP 592657

Principal Amount

Original Interest

Rate

Due

July 1

CUSIP 592657

Principal Amount

Original Interest

Rate 2024……… CD0 $3,925,000 5.00% 2028……… CH1 $9,250,000 2.30% 2025……… CE8 8,025,000 5.00 2029……… CJ7 9,475,000 2.55 2026……… CF5 8,425,000 5.00 2030……… CK4 5,425,000 2.65 2027……… CG3 9,025,000 2.10 2031……… CL2 5,650,000 2.70


6

Historical Results Of Operations And Debt Service Coverage The following table represents the historical operating results and debt service coverage of Metropoli-

tan Water District for the following Fiscal Years.


2019 2018 2017 2016 2015

Water deliveries (in acre–feet)………………… 86,763 82,697 86,706 71,195 70,142

Revenues: Water sales…………..…………………… 21,910,716$ 21,272,534$ 20,259,556$ 17,613,138$ 15,541,662$ Special assessment (1)…………………… 12,149,687 12,249,306 12,248,671 12,246,768 12,238,943Property tax revenues (2)………………… 12,321,378 11,873,646 11,717,539 11,645,715 11,094,954

Transfers from property taxes (3)……… (1,102,711) (1,066,577) (981,486) (1,054,434) (957,681)Other (4)…………………………………… 1,452,098 157,768 470,104 105,489 64,014Interest income…………………………… 1,121,236 587,712 439,376 346,536 242,483Water sales (nonmembers/treatment)……… 1,078,839 811,557 1,049,095 748,096 581,247

Total revenues………………………… 48,931,243 45,885,946 45,202,855 41,651,308 38,805,622Operating expenses (5):

Cost of sales and services………………… 11,328,996 10,675,838 11,141,747 10,948,959 10,887,426General and administrative………………… 2,507,493 1,831,853 1,851,563 2,060,071 1,832,579

Total operating expenses……………… 13,836,489 12,507,691 12,993,310 13,009,030 12,720,005

Available for debt service……………………… 35,094,754$ 33,378,255$ 32,209,545$ 28,642,278$ 26,085,617$

Debt service:Debt service (6)…………………………… 16,447,507$ 16,422,357$ 15,762,269$ 17,622,984$ 17,387,727$

Debt service coverage…………………… 2.13X 2.03X 2.04X 1.63X 1.50X

Rate coverage requirement……………… 1.15X 1.15X 1.15X 1.15X 1.15X

(1) Special assessments to Salt Lake City and Sandy City are not subject to water sales.(2)(3)(4)

(5) Does not include depreciation and amortization.(6)

(Source: Information extracted from the financial statements of the Metropolitan Water District by Zions Public Finance, Inc.)

Fiscal Year Ended June 30

Property tax revenues are not pledged to the payment of debt service, but may be used for operation and maintenance expenses.Contributions from District’s property tax revenues to other entities who have established redevelopment agencies.Includes aqueduct capacity rentals, laboratory fees, and other miscellaneous revenues from the District’s basic financialstatements (does not include gains or loss on sale of capital assets, investment in Provo River Water Users Association or value ofinvestments).

A portion of the existing debt service consists of variable rate debt. All of the variable rate bonds has been swapped into asynthetic fixed rate. (Source: Metropolitan Water District.)

7

Five–Year Financial Summaries The summaries contained herein were extracted from Metropolitan Water District’s annual Financial

Statements for Fiscal Years 2019 through 2015. The summaries have not been audited.



Statements of Net Position

(This summary has not been audited)

As of June 30 2019 2018 2017 2016 2015

Assets and deferred outflows of resources Current assets

Cash and cash equivalents………………………………… 19,350,105$ 15,620,545$ 10,921,196$ 6,916,947$ 5,405,260$ Accounts receivable……………………………………… 2,899,620 2,011,417 2,720,431 2,482,308 3,956,483Supplies…………………………………………………… 265,871 212,270 184,833 221,933 161,502Prepaid expenses and other receivables…………………… 54,388 81,275 85,788 603,192 138,920

Total current assets………………………………… 22,569,984 17,925,507 13,912,248 10,224,380 9,662,165Noncurrent assets

Restricted assetsCash and cash equivalents……………………………… 15,745,407 15,556,608 15,257,829 16,688,925 21,305,570Investments…………………………………………… – – 18,619,653 18,563,473 18,323,817

Total restricted assets………………………………… 15,745,407 15,556,608 33,877,482 35,252,398 39,629,387Capital assets, net……………………...………………… 341,143,996 347,387,933 351,170,501 348,522,700 349,854,920Investment in Provo River Water Users Association…… 149,368,278 146,844,315 147,606,881 149,273,382 150,421,878Investments……………………………………………… 19,401,459 18,706,103 – – – Investment in Utah Lake Water Users Association……… 2,372,689 2,372,689 2,372,689 2,372,689 2,372,689Net pension asset….……………………...……………… – – – 87 1,277

Total non current assets……………………………… 528,031,829 530,867,648 535,027,553 535,421,256 542,280,151Total assets………………………………………… 550,601,813 548,793,155 548,939,801 545,645,636 551,942,316

Deferred outflows of resources Deferred outflow on interest rate swap agreement……… 12,499,594 8,623,173 12,001,767 17,200,298 13,080,497Deferred charge on bond refundings……………………. 10,431,392 11,554,937 12,678,481 13,807,613 11,490,604Deferred outflows relating to pensions…………………… 1,469,950 1,452,536 1,397,387 1,193,850 393,746

Total assets and deferred outflows of resources…… 575,002,749$ 570,423,801$ 575,017,436$ 577,847,397$ 576,907,163$ Liabilities and net position

Current liabilities Bonds payable, current……………….…………………… 8,055,000$ 7,400,000$ 7,110,000$ 6,855,000$ 6,410,000$ Accrued interest payable………………………………… 2,973,759 3,667,223 3,807,315 3,299,047 4,609,413Accounts payable………………………………………… 1,437,862 2,476,747 4,353,382 3,191,299 1,868,100Accrued expenses……………………..………………… 639,538 599,052 604,358 665,645 770,659

Total current liabilities……………………………… 13,106,159 14,143,022 15,875,055 14,010,991 13,658,172Long–term liabilities

Bonds payable–net of current portion…………………… 214,230,000 218,245,000 225,645,000 232,755,000 240,730,000Unamortized bond premium, net of discounts…………… 17,160,115 22,626,305 24,026,848 25,427,392 25,208,170Interest rate swap agreement……………………………… 12,499,594 8,623,173 12,101,767 17,200,298 13,080,497Net pension liability…………………….………………… 3,019,607 1,795,051 2,672,780 2,402,950 1,815,618

Total long–term liabilities…………………………… 246,909,316 251,289,529 264,446,395 277,785,640 280,834,285Total liabilities……………………………………... 260,015,475 265,432,551 280,321,450 291,796,631 294,492,457

Deferred inflows of resources Deferred inflows relating to pensions…………………… 103,010 1,229,621 373,390 243,879 232,622

Total liabilities and deferred inflows of resources… 260,118,485 266,662,172 280,694,840 292,040,510 294,725,079Net position

Unrestricted………….…………………………………… 189,982,343 181,200,679 175,904,948 175,124,088 176,488,573Net invested in capital assets……………………………. 109,156,514 107,004,342 103,259,819 96,233,918 90,481,052Restricted………………………………………………… 15,745,407 15,556,608 15,257,829 14,448,881 15,212,459

Total net position…………………………………… 314,884,264 303,761,629 294,422,596 285,806,887 282,182,084 Total liabilities, deferred inflows of resources and

net position………………………………………… 575,002,749$ 570,423,801$ 575,117,436$ 577,847,397$ 576,907,163$

(Source: Information taken from Metropolitan Water District’s financial statements compiled by Zions Public Finance, Inc. This summary itself has notbeen audited.)

8


Statements of Revenues, Expenses, and Changes in Net Position

(This summary has not been audited)

Fiscal Year Ended June 302019 2018 2017 2016 2015

Operating revenues Water sales–member entities…………………………… 21,910,716$ 21,272,534$ 20,259,556$ 17,613,138$ 15,541,662$ Water sales–non member (treatment)…………………… 1,078,839 811,557 1,049,095 748,096 581,247

Total operating revenues…………………………… 22,989,555 22,084,091 21,308,651 18,361,234 16,122,909Operating expenses

Cost of sales and services...……………………………… 11,328,996 10,675,838 11,141,747 10,948,959 10,887,426Depreciation…………………………………………… 10,438,883 10,831,933 10,686,523 10,751,104 10,679,989General and administrative……………………………… 2,507,493 1,831,853 1,851,563 2,060,071 1,832,579

Total operating expenses…………………………… 24,275,372 23,339,624 23,679,833 23,760,134 23,399,994Operating loss……………………………………………… (1,285,817) (1,255,533) (2,371,182) (5,398,900) (7,277,085)Non–operating revenues (expenses)

Property tax revenues…………………………………… 12,321,378 11,873,646 11,717,539 11,645,715 11,094,954Special assessment revenue……………………………… 12,149,687 12,249,306 12,248,671 12,246,768 12,238,943Other revenue……………………….…………………… 1,452,098 157,768 470,104 105,489 64,014Interest income………………………………………… 1,121,236 587,712 439,376 346,536 242,483Unrealized gain (loss) on investments…………...……… 280,865 (153,951) (170,490) 47,096 28,403Gain (loss) on disposal of capital assets………………… (76,285) 42,664 622,381 17,300 – Gain (loss) on investment in Provo River Water Users

Association…………………………………………… (4,580,940) (4,636,813) (4,926,465) (4,407,656) 104,395,563Interest expense………………………………………… (7,423,255) (8,459,189) (8,432,739) (9,923,111) (10,258,442)

Total non–operating revenues (expenses), net…… 15,244,784 11,661,143 11,968,377 10,078,137 117,805,918Income before contributions……………………………… 13,958,967 10,405,610 9,597,195 4,679,237 110,528,833Obligations

Contributions to other governments…………………… (1,102,711) (1,066,577) (981,486) (1,054,434) (957,681)TRRP contractual obligations…………………………… (1,733,621) – – – –

Total obligations…………………………………… (2,836,332) (1,066,577) (981,486) (1,054,434) (957,681)Change in net position………..……..……………………… 11,122,635 9,339,033 8,615,709 3,624,803 109,571,152Net position, beginning of year………...………………… 303,761,629 294,422,596 285,806,887 282,182,084 172,610,932

Net position, end of year…………………………………… 314,884,264$ 303,761,629$ 294,422,596$ 285,806,887$ 282,182,084$

(Source: Information taken from Metropolitan Water District’s financial statements compiled by Zions Public Finance, Inc. This summary itself has not been audited.)

9

10

Audited Financial Information For Fiscal Year 2019 And Fiscal Year 2018 See “METROPOLITAN WATER DISTRICT’S FINANCIAL STATEMENTS JUNE 30, 2019 AND

2018” below (page 11).


11

METROPOLITAN WATER DISTRICT’S FINANCIAL STATEMENTS JUNE 30, 2019 AND 2018

Included with this supplement are Metropolitan Water District’s financial statements for Fiscal

Years 2019 and 2018.


METROPOLITAN WATER DISTRICT OF SALT LAKE & SANDY

FINANCIAL STATEMENTS

June 30, 2019 and 2018

3

78911

394041

Independent Auditor's Report on Compliance and Report on

42

44

45

State Compliance Audit Guide..........................................................................................................

Schedule of Findings - Compliance - State of Utah..............................................................................

Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial

C O N T E N T S

Statements Performed in Accordance with Government Auditing Standards...................................

Independent Auditor's Report................................................................................................................

Management's Discussion and Analysis................................................................................................

Financial Statements:

Statements of Net Position.................................................................................................................Statements of Revenues, Expenses, and Changes in Net Position....................................................Statements of Cash Flows..................................................................................................................Notes to Financial Statements............................................................................................................

Required Supplementary Information:

Schedule of the Proportionate Share of the Net Pension Liability....................................................Schedule of Contributions..................................................................................................................Notes to Required Supplementary Information.................................................................................

Internal Control over Compliance as Required by the

Telephone (801) 590-2600 1455 West 2200 South, Suite 201 Fax (801) 265-9405 Salt Lake City, Utah 84119

Keddington Christensen Certified Public Accountants, LLC

Gary K. Keddington, CPA Phyl R. Warnock, CPA Marcus Arbuckle, CPA

INDEPENDENT AUDITOR’S REPORT Board of Trustees Metropolitan Water District of Salt Lake & Sandy Cottonwood Heights, Utah Report on the Financial Statements We have audited the accompanying financial statements of Metropolitan Water District of Salt Lake & Sandy (the District) as of and for the fiscal years ended June 30, 2019 and 2018, 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 opinions 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the 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 financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the District as of June 30, 2019 and 2018, and the results of its operations and its cash flows for the fiscal years then ended in conformity with accounting principles generally accepted in the United States of America.

Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management’s Discussion and Analysis, Schedule of Proportionate Share of the Net Pension Liability, Schedule of Contributions and the related notes to the required supplementary information, as listed in the table of contents, are 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. Other Report Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 8, 2019, 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 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. Keddington & Christensen, LLC October 8, 2019

Overview of the Financial Statements

June 30, 2019 2018 2017

209,457,817$ 201,405,222$ 197,769,300$ 341,143,996 347,387,933 351,170,501 550,601,813 548,793,155 548,939,801

24,400,936 21,630,646 26,177,635

575,002,749 570,423,801 575,117,436

13,106,159 14,143,022 15,875,055 246,909,316 251,289,529 264,446,395

103,010 1,229,621 373,390 260,118,485 266,662,172 280,694,840

109,156,514 107,004,342 103,259,819 15,745,407 15,556,608 15,257,829

189,982,343 181,200,679 175,904,948 314,884,264$ 303,761,629$ 294,422,596$

Financial Analysis

·

·

·

· The District’s operating revenues increased by $905,464.


The management of the Metropolitan Water District of Salt Lake & Sandy (the "District") presents to the readerof the District's financial statements this discussion and analysis of the District's financial performance for thefiscal years ended June 30, 2019 and 2018.

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)

Metropolitan Water District of Salt Lake & Sandy's Net Position

The District's financial statements are prepared on the accrual basis of accounting in accordance with generallyaccepted accounting principles in the United States, promulgated by the Governmental Accounting StandardsBoard ("GASB"). The District reports as a single enterprise fund. Revenues are recognized when earned andexpenses are recognized in the period in which they are incurred. See the notes to the financial statements for asummary of the District's significant accounting policies (Note 1 and others).

The District’s total assets and deferred outflows exceeded its total liabilities as of the close of the mostrecent year by $314,884,264 (net position). Of this amount, $189,982,343 (unrestricted) may be used tomeet the District’s ongoing obligations.

The District’s net capital assets decreased by $6,243,937.

The District’s long-term liabilities decreased by $4,380,213.

June 30, 2019

Current and other assetsAssets

Capital assets

Deferred inflow of resourcesTotal liabilities and deferred inflow of resources

Net positionInvested in capital assets, net of related debtRestricted

Total assets

Deferred outflow of resources

Total assets and deferred outflow of resources

Current and other liabilitiesLong-term liabilities

UnrestrictedTotal net position

3

2019 2018 2017

22,989,555$ 22,084,091$ 21,308,651$ (24,275,372) (23,339,624) (23,679,833) (1,285,817) (1,255,533) (2,371,182)

26,968,114 24,911,096 25,498,071 (11,723,330) (13,249,953) (13,529,694) (1,102,711) (1,066,577) (981,486) (1,733,621) - - 12,408,452 10,594,566 10,986,891

11,122,635 9,339,033 8,615,709 303,761,629 294,422,596 285,806,887 314,884,264$ 303,761,629$ 294,422,596$

2019 2018 2017

21,910,716$ 21,272,534$ 20,259,556$ 1,078,839 811,557 1,049,095

22,989,555 22,084,091 21,308,651

12,321,378 11,873,646 11,717,539 12,149,687 12,249,306 12,248,671 1,121,236 587,712 439,376

(76,285) 42,664 622,381 1,452,098 157,768 470,104

26,968,114 24,911,096 25,498,071 49,957,669$ 46,995,187$ 46,806,722$

Metropolitan Water District of Salt Lake & Sandy's Summary of Revenues

Non-operating revenues Non-operating expenses

TRRP contractual obligationsTotal non-operating revenues (expenses), net

Change in net positionNet position - beginning of yearNet position - end of year

Operating revenues

Gain (loss) on disposal of capital assetsOther income

Total non-operating revenuesTotal revenues

Special assessment revenueInterest income

The District’s primary sources of revenue are made up from water sales, property taxes, and special assessmentrevenues. Each source of revenue is predictably stable with slight variations in property taxes due to changes inproperty values and/or certified tax rates. Special assessment revenues are based on each member city’sinvestment in new system capacity and/or new water supplies. Once the special assessments are established,they remain stable until the investment in system capacity or water supply has been paid.

Metropolitan Water District of Salt Lake & Sandy's Changes in Net Position

Water sales - member entitiesWater sales - nonmember entities

Total operating revenues

Non-operating revenuesProperty tax revenues

Operating revenuesOperating expenses

Operating loss

Contributions to other governments

4

2019 2018 2017

11,328,996$ 10,675,838$ 11,145,491$ 2,507,493 1,831,853 1,847,819

10,438,883 10,831,933 10,686,523 24,275,372 23,339,624 23,679,833

7,423,255 8,459,189 8,432,739 4,580,940 4,636,813 4,926,465 (280,865) 153,951 170,490

11,723,330 13,249,953 13,529,694 35,998,702$ 36,589,577$ 37,209,527$

Capital Asset Activity

Economic Factors and Budgetary Analysis

Request for Information

This financial report is designed to give its readers a general overview of the District's finances. Questionsregarding any information contained in this report or requests for additional information should be addressed tothe General Manager, 3430 East Danish Road, Cottonwood Heights, Utah 84093 or by calling 801-942-9662.

Metropolitan Water District of Salt Lake & Sandy's Summary of Expenses

The District's capital assets for its governmental activities, as of June 30, 2019 and 2018, amounted to$341,143,996 and $347,387,933, respectively (net of accumulated depreciation). This investment in capitalassets includes the water system, land, administrative buildings and equipment, aqueduct rights and privileges,and investments in surface water resources.

Operating expenses

The District continues to find its revenues and expenses to be following a predictable trend. Water salesrevenues are expected to increase an average of 3% per year over the next 5 years. This forecast has beencommunicated to the member cities and they anticipate the change. Operations and maintenance expenses arebudgeted at an inflationary index of 3% per year. Capital expenditures are planned using asset managementtechniques that evaluate the condition, criticality, and consequence of the asset. Long-term debt is reviewed onan ongoing basis in an effort to capitalize on any opportunities. As of June 30, 2019, the District's bond ratingsare AA+ and AA+ by S&P and Fitch, respectively. The anticipated revenue increases are necessary to meetfuture O&M, capital, and debt service costs.

The Terminal Reservoir Replacement Project received final completion on December 14, 2018. The cost of theproject was $42 million. Upon completion of the project per its contractual obligations, the District deeded toSalt Lake City certain improvements and facilities in the amount of $1.7 million.

Total expenses

Interest expenseLoss on investment in PRWUAUnrealized (gain) loss on investments

Total non-operating expenses

Cost of sales and servicesGeneral and administrative Depreciation

Total operating expenses

Non-operating expenses

5

FINANCIAL STATEMENTS

6

2019 2018ASSETS

CURRENT ASSETSCash and cash equivalents (Note 2) 19,350,105$ 15,620,545$ Accounts receivable 2,899,620 2,011,417 Prepaid expenses and other receivables 54,388 81,275 Supplies 265,871 212,270

TOTAL CURRENT ASSETS 22,569,984 17,925,507

NONCURRENT ASSETSRestricted assets (Note 2):

Cash and cash equivalents 15,745,407 15,556,608 TOTAL RESTRICTED ASSETS 15,745,407 15,556,608

Investments 19,401,459 18,706,103 Investment in Provo River Water Users Association (Note 5) 149,368,278 146,844,315 Investment in Utah Lake Water Users Association (Note 5) 2,372,689 2,372,689 Capital assets, net (Note 4) 341,143,996 347,387,933

TOTAL NONCURRENT ASSETS 528,031,829 530,867,648 TOTAL ASSETS 550,601,813 548,793,155

DEFERRED OUTFLOWS OF RESOURCESDeferred outflows relating to pensions (Note 8) 1,469,950 1,452,536 Deferred charge on bond refundings 10,431,392 11,554,937Deferred outflow on interest rate swap agreement (Note 7) 12,499,594 8,623,173 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 575,002,749$ 570,423,801$

LIABILITIES AND NET POSITIONCURRENT LIABILITIES

Accounts payable 1,437,862$ 2,476,747$ Accrued expenses 639,538 599,052 Accrued interest payable 2,973,759 3,667,223 Bonds payable, current (Note 6) 8,055,000 7,400,000

TOTAL CURRENT LIABILITIES 13,106,159 14,143,022

LONG-TERM LIABILITIESInterest rate swap agreement (Note 7) 12,499,594 8,623,173 Unamortized bond premium, net of discounts 17,160,115 22,626,305 Bonds payable, net of current portion (Note 6) 214,230,000 218,245,000 Net pension liability (Note 8) 3,019,607 1,795,051

TOTAL LONG-TERM LIABILITIES 246,909,316 251,289,529 TOTAL LIABILITIES 260,015,475 265,432,551

DEFERRED INFLOWS OF RESOURCESDeferred inflows relating to pensions (Note 8) 103,010 1,229,621

TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 260,118,485 266,662,172

NET POSITIONNet investment in capital assets 109,156,514 107,004,342 Restricted (Note 3) 15,745,407 15,556,608 Unrestricted (Note 3) 189,982,343 181,200,679

TOTAL NET POSITION 314,884,264$ 303,761,629$


June 30, 2019 and 2018STATEMENTS OF NET POSITION

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

7

2019 2018OPERATING REVENUES

Water sales - member entities 21,910,716$ 21,272,534$ Water sales - nonmember entities 1,078,839 811,557

TOTAL OPERATING REVENUES 22,989,555 22,084,091

OPERATING EXPENSESCost of sales and services 11,328,996 10,675,838 General and administrative 2,507,493 1,831,853 Depreciation 10,438,883 10,831,933

TOTAL OPERATING EXPENSES 24,275,372 23,339,624

OPERATING LOSS (1,285,817) (1,255,533)

NON-OPERATING REVENUES (EXPENSES)Property tax revenues 12,321,378 11,873,646 Special assessment revenue 12,149,687 12,249,306 Interest income 1,121,236 587,712 Interest expense (7,423,255) (8,459,189) Unrealized gain (loss) on investments 280,865 (153,951) Loss on investment in Provo River Water Users Association (4,580,940) (4,636,813) (Loss) gain on disposal of capital assets (76,285) 42,664 Other revenue 1,452,098 157,768

TOTAL NON-OPERATING REVENUES (EXPENSES), NET 15,244,784 11,661,143

INCOME BEFORE OBLIGATIONS 13,958,967 10,405,610

OBLIGATIONSCONTRIBUTIONS TO OTHER GOVERNMENTS 1,102,711 1,066,577 TRRP CONTRACTUAL OBLIGATIONS 1,733,621 -

TOTAL OBLIGATIONS 2,836,332 1,066,577

CHANGE IN NET POSITION 11,122,635 9,339,033

NET POSITION, BEGINNING OF YEAR 303,761,629 294,422,596

NET POSITION, END OF YEAR 314,884,264$ 303,761,629$


Years Ended June 30, 2019 and 2018STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION


8

2019 2018CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from water sales - member entities 21,022,513$ 21,981,548$ Receipts from water sales - nonmember entities 1,078,839 811,557 Payments to vendors (5,680,755) (5,977,682) Payments for general and administrative expenses (1,762,615) (1,439,160) Payments to employees (3,830,183) (3,771,077) Employee benefits paid (2,870,058) (2,836,457) Administrative expenses (637,460) (464,827)

NET CASH FLOWS FROM OPERATING ACTIVITIES 7,320,281 8,303,902

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES:Property tax revenue 11,218,667 10,807,069Other revenue 1,452,098 157,768

NET CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES 12,670,765 10,964,837

CASH FLOWS FROM CAPITAL AND RELATED: FINANCING ACTIVITIES

Special assessment revenue 12,149,687 12,249,306Payment to refunded escrow agent (47,004,182) - Principal paid on revenue bonds (7,400,000) (7,110,000) Proceeds from issuance of revenue bonds 47,135,000 - Proceeds from sales of capital assets 34,020 42,664 Acquisition and construction of capital assets (6,038,872) (7,049,365) Interest paid (8,550,182) (8,876,280)

NET CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIES (9,674,529) (10,743,675)

CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of investments (414,491) (240,401) Purchase of shares of PRWUA (3,500,000) - Contributions to PRWUA (3,604,903) (3,874,247) Interest on investments 1,121,236 587,712

NET CASH FLOWS FROM INVESTING ACTIVITIES (6,398,158) (3,526,936)

INCREASE IN CASH AND CASH EQUIVALENTS 3,918,359 4,998,128 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 31,177,153 26,179,025

CASH AND CASH EQUIVALENTS, END OF YEAR 35,095,512$ 31,177,153$


Years Ended June 30, 2019 and 2018STATEMENTS OF CASH FLOWS


9

2019 2018

RECONCILIATION OF OPERATING LOSS TO NET CASHUSED BY OPERATING ACTIVITIES

Operating loss (1,285,817)$ (1,255,533)$ Depreciation 10,438,883 10,831,933 Net pension obligation 80,531 (76,647) Decrease (increase) in accounts receivable (888,203) 709,014 Decrease in prepaid expenses 26,887 4,513 Increase in supplies (53,601) (27,437) Decrease in accounts payable (1,038,885) (1,876,635) (Decrease) in accrued expenses 40,486 (5,306)

NET CASH FLOWS FROM OPERATING ACTIVITIES 7,320,281$ 8,303,902$

REPRESENTED ON THE BALANCE SHEET ASUnrestricted cash and cash equivalents 19,350,105$ 15,620,545$ Restricted cash and cash equivalents 15,745,407 15,556,608

CASH AND CASH EQUIVALENTS, END OF YEAR 35,095,512$ 31,177,153$

NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIESLoss on investment in Provo River Water Users Association (4,580,940)$ (4,636,813)$ Unrealized gain (loss) on investments 280,865$ (153,951)$ TRRP contractual obligations - contributed assets 1,733,621$ -$

METROPOLITAN WATER DISTRICT OF SALT LAKE & SANDYSTATEMENTS OF CASH FLOWS (CONTINUED)

Years Ended June 30, 2019 and 2018


10

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIESReporting Entity

Basis of Presentation

Deposits and Investments

Accounts Receivable

Supplies


Years Ended June 30, 2019 and 2018NOTES TO FINANCIAL STATEMENTS

The Metropolitan Water District of Salt Lake & Sandy (the "District") is organized under the MetropolitanWater District Act. The District is a separate legal entity, with a seven member board, five of which areappointed by Salt Lake City and two of which are appointed by Sandy City. Board members serve for aspecified term and cannot be removed without cause. However, as the member cities are unable to imposetheir will and are not financially accountable for the District, the District is not reported as a component unitof the member cities. Substantially all of the water resources developed by the District are sold to Salt LakeCity and Sandy City.

The District is a governmental unit that is accounted for as a business-type activity. It is classified as aproprietary fund type and operates as an enterprise fund. The District's basic financial statements arepresented on the full accrual basis of accounting and conform to accounting principles generally accepted inthe United States of America. The District applies all relevant Governmental Accounting Standards Board(GASB) pronouncements.

The District reports its water production, storage, and distribution operations as a proprietary fund.Proprietary funds are used to account for operations that are financed and operated in a manner similar toprivate business enterprises where the intent of the governing body is that the costs (expenses, includingdepreciation) of providing goods or services to the general public on a continuing basis be financed orrecovered primarily through user charges.

The District's cash and cash equivalents are considered to be cash on hand, demand deposits and short-terminvestments with original maturities of three months or less from the date of acquisition.

State statutes authorize the government to invest in obligations of the U.S. Treasury, commercial paper,corporate bonds, repurchase agreements and the Public Treasurer’s Investment Fund (PTIF).

PTIF, managed by the Utah State Treasurer's Office, operates in accordance with appropriate state laws andregulations. The reported value of the PTIF is the same as the fair value of the pooled shares. Investments forthe District are reported at fair value.

Accounts receivable are generally comprised of receivables on water sales and special assessment revenues,which are expected to be paid by member cities and other wholesale customers. Accounts receivable arestated at the amount management expects to collect from outstanding balances. Management does not expectany uncollectible amounts as most payments are from governmental entities.

Inventories, consisting of chemicals for the purification of water and fuels are stated at the lower of cost (onthe first-in, first-out basis) or market.

11

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Capital Assets

5-503-203-73-205-75

Bond Issuance Costs, Bond Discounts, and Bond Premiums

Capitalization of Interest Costs

Deferred Charges

Capital Contributions

Use of Estimates in the Preparation of Financial Statements


Years Ended June 30, 2019 and 2018

No depreciation is provided on construction in progress until the asset is placed in service.

Costs of preliminary surveys, design and other investigations which are related to proposed construction aredeferred and included in construction in progress until the projects are placed in service, at which time theyare depreciated over their useful lives. The cost of discontinued projects is charged to expense in the year thedecision is made to discontinue the project.

In accordance with GASB Statement No. 33, Accounting and Financial Reporting for NonexchangeTransactions, capital contributions are recorded as revenues.

The preparation of financial statements in conformity with generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect certain reported amounts and disclosures.Accordingly, actual results could differ from those estimates.

Costs incurred for bond issuance are expensed as incurred. Costs incurred for bond discounts and bondpremiums are deferred and amortized over the term of the related bonds using a method approximating theeffective interest method.

The District capitalizes interest on borrowings which are used to finance construction. Capitalization ofinterest is net of interest earned on construction funds borrowed. Interest capitalization ceases when theconstruction project is substantially completed. Net interest capitalized was $504,253 and $436,319 and totalinterest expense was $7,423,255 and $8,459,189 for the fiscal years ended June 30, 2019 and 2018,respectively.

NOTES TO FINANCIAL STATEMENTS

Capital assets include property, plant, equipment, and intangible assets (i.e. investment in water sources), andare defined by the District as assets with an initial, individual cost of more than $5,000 and an estimateduseful life of more than three years. Property, plant and equipment purchased or acquired is carried athistorical cost or estimated historical cost. Water sources are recorded at their acquisition cost. Donated orcontributed capital assets are recorded at their estimated fair value on the date received. Depreciation ofcapital assets is computed using the straight-line method over the estimated useful lives of the assets asfollows:

Machinery and equipmentTransportation equipmentFurniture and fixturesAqueduct and appurtenances

Building and improvements

12



NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Hedging Activities

Deferred Outflows/Inflows of Resources

•

•

•

•

Operating revenues - Operating revenues include activities that have the characteristics of exchangetransactions such as water sales revenue.

Non-operating revenues - Non-operating revenues include activities that have the characteristics of non-exchange transactions and other revenue sources that are defined as non-operating revenues by GASBStatement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting and GASB Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments. Examples of non-operatingrevenues include property tax revenues, interest income, gain or loss on sale of assets, and equity earningsin the District's investment in Provo River Water Users Association.

Property tax revenue - Property tax revenue is collected and remitted by the Salt Lake County Treasurer asan agent for the District. Utah statutes establish the process by which taxes are levied and collected.Property values are assessed as of January 1 of the year in which they are due. September 1 is the levy datewith a due date of November 30. Delinquent taxes are subject to a two percent penalty, with a $10minimum penalty. If delinquent taxes and penalties are not paid by January 15 of the following year, thesedelinquent taxes, including penalties, are subject to an interest charge at a rate equal to the federal discountrate, and the interest period is from January 1 until the date paid. If on March 15 following the lapse of fiveyears from the date when the property taxes became delinquent, the taxes remain delinquent, the CountyTreasurer advertises and sells the property at a tax sale.

Water sales revenue - Revenue from water sales is recorded at the stated wholesale water rate. Waterusage is measured by flow meters located throughout the system.

Classification of Revenue

In addition to liabilities, the financial statements will sometimes report a separate section for deferred inflowsof resources. This separate financial statement element, deferred inflows of resources, represents anacquisition of net position that applies to a future period(s) and will not be recognized as an inflow ofresources (revenue) until that time.

The District accounts for hedging activities in accordance with GASB Statement No. 53, Accounting andFinancial Reporting for Derivative Instruments. This standard requires that derivative instruments bereported at fair value, and that changes in the fair value of instruments that are considered to be hedgingderivative instruments and found to be effective, be reported as either deferred inflows or deferred outflowsin the statements of net position. In addition, the District has implemented the provisions of GASB StatementNo. 64, Derivative Instruments: Application of Hedge Accounting Termination Provisions -- an amendmentof GASB Statement No. 53, which clarifies whether an effective hedging relationship continues after thereplacement of a swap counterparty.

In addition to assets, financial statements will sometimes report a separate section for deferred outflows ofresources. This separate financial statement element, deferred outflows of resources, represents aconsumption of net position that applies to a future period(s) and will not be recognized as an outflow ofresources (expense/expenditure) until then. The District reports deferred charges on bond refundings,pensions and deferred outflow on interest rate swaps as deferred outflows of resources on the accompanyingstatements of net position.

13



NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

•

•

•

•

•

•

Risk Management

Pensions

Net investment in capital assets - This component of net position consists of the District's total investmentin capital assets, net of accumulated depreciation, reduced by the outstanding debt obligations related tothose assets. To the extent debt has been incurred, but not yet expended for capital assets, such amounts arenot included as a component of invested in capital assets, net of related debt.

Restricted - This component of net position consists of assets with constraints placed on their use either by1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments, or2) law through constitutional provisions or enabling legislation.

Unrestricted - This component of net position consists of assets that do not meet the definition of"restricted" or "invested in capital assets, net of related debt".

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows ofresources related to pensions, and pension expense, information about the fiduciary net position of the UtahRetirement Systems Pension Plan (URS) including additions to and deductions from URS's fiduciary netposition, have been determined on the same basis as they are reported by URS. For this purpose, benefitpayments (including refunds of employee contributions) are recognized when due and payable in accordancewith the benefit terms. Investments are reported at fair value.

Fair Value Measurement

Corporate bonds of $8,562,024, government agency bonds of $6,238,758, and U.S. obligation bonds of$1,997,344 are valued using matrix pricing models and discounted cash flows (Level 2).

Interest rate swaps of $12,499,594 are valued by the swap provider under the terms and conditions of theswap agreement with unobservable inputs (Level 3). The unobservable input is the interest rate and internalcomputation of the market value of the swap as of June 30, 2019 which cannot be corroborated byobservable market data.

Classification of Net Position:

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;errors and omissions; injuries to employees; and natural disasters. All general liability, real property, andvehicles are insured through commercial policies. The District has established a self-insurance reserve($2,000,000) to fund deductibles on the commercial policies. In addition the District carries workers'compensation and requires employer's liability coverage. The amount of settlements did not exceed insurancecoverage for the past three years for all policies.

The District categorizes its fair value measurements within the fair value hierarchy established by generallyaccepted accounting principles and in accordance with GASB Statement No. 72, Fair Value Measurementand Application. The hierarchy is based on the valuation inputs used to measure the fair value of the asset.Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant otherobservable inputs; Level 3 inputs are significant unobservable inputs.

The District has the following recurring fair value measurements as of June 30, 2019:

Money market funds of $2,603,333 are valued using quoted market prices (Level 1 inputs).

14



NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NOTE 2 - CASH, CASH EQUIVALENTS, AND INVESTMENTS

2019 2018

Self insurance contingency 2,000,000$ 2,000,000$ Interest rate stabilization 3,284,866 3,284,866 Capital projects reserve 3,338,632 5,032,033 Aquifer storage and recovery 2,462,253 1,688,905 Operating and maintenance* 8,264,354 3,614,741

19,350,105$ 15,620,545$ Restricted:

Bond accounts 11,043,839$ 11,075,020$ Operating and maintenance 3,953,271 3,735,398 Renewal and replacement 650,000 650,000 150th South pipeline agreement 35,285 34,335 Jordan Valley WTP O&M agreement 20,000 20,000 Jordan aqueduct repayment contract 43,012 41,855

15,745,407 15,556,608 35,095,512$ 31,177,153$

Deposits

Custodial Credit Risk

There were no changes in the valuation techniques used to determine the fair value of these financialinstruments during the fiscal year ended June 30, 2019.

Cash and cash equivalents consisted of the following as of June 30, 2019 and 2018:

Total restricted cash and cash equivalents

Custodial credit risk for deposits is the risk that, in the event of a bank failure, the District's deposits may notbe returned to it. The District does not have a formal deposit policy for custodial credit risk. The Actrequires all deposits of local government to be in a qualified depository, defined as any financial institutionwhose deposits are insured by an agency of the Federal government and which has been certified by theCommissioner of Financial Institutions as meeting the requirements of the Act and adhering to the rules ofthe Council.

Deposits and investments for local governments are governed by the Utah Money Management Act (UtahCode Annotated, Title 51, Chapter 7, "the Act") and by rules of the Utah Money Management Council ("theCouncil"). Following are discussions of the District's exposure to various risks related to its cashmanagement activities.

Unrestricted:

Fair Value Measurement (Continued)

As of June 30, 2019 and 2018, the District's deposits had bank balances of $4,799,733 and $5,710,017,respectively, which are held in qualified depositories. Because these funds are held in a daily sweep account,they are not covered by federal depository insurance, and all balances are uncollateralized.

Total cash and cash equivalents

Total unrestricted cash and cash equivalents

* Reserves can be funded by amounts in investments.

15



NOTE 2 - CASH, CASH EQUIVALENTS, AND INVESTMENTS (CONTINUED)Credit Risk

Interest Rate Risk

Fair value Less than 1 1-5 6-108,562,024$ 1,729,860$ 6,832,164$ -$ 1,997,344 - 1,997,344 - 6,238,758 1,148,984 5,089,774 - 2,603,333 2,603,333 - -

19,401,459$ 5,482,177$ 13,919,282$ -$

The Act authorizes investments in both negotiable and nonnegotiable deposits of qualified depositories andpermitted negotiable depositories; repurchase and reverse repurchase agreements; commercial paper that isclassified as “first tier” by two nationally recognized statistical rating organizations, one of which must beMoody’s Investors Services or Standard & Poor’s; bankers’ acceptances; obligations of the United StatesTreasury including bills, notes, and bonds; obligations, other than mortgage derivative products, issued byU.S. government sponsored enterprises (U.S. Agencies) such as the Federal Home Loan Bank System,Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (FannieMae), and Student Loan Marketing Association (Sallie Mae); bonds, notes, and other evidence ofindebtedness of political subdivisions of the State; fixed rate corporate obligations and variable rate securitiesrated “A” or higher, or the equivalent of “A” or higher, by two nationally recognized statistical ratingorganizations; and shares or certificates in a money market mutual fund as defined in the Act.

Money Market Funds (PTIF)

U.S. Obligations

Total

The District's investments at June 30, 2019 are presented below:

Investment maturities (in years)Investment type

Government Agencies

Credit risk is the risk that the counterparty to an investment will not fulfill its obligations. The District'spolicy for limiting the credit risk of investments is to comply with the Money Management Act. The Districtis authorized to invest in the Utah Public Treasurer's Investment Fund (the "PTIF"), an external pooledinvestment fund managed by the Utah State Treasurer and subject to the Act and Council requirements. ThePTIF is not registered with the SEC as an investment company. The PTIF is authorized and regulated by theAct. The Act established the Money Management Council, which oversees the activities of the StateTreasurer and the PTIF and details the types of authorized investments. Deposits in the PTIF are not insuredor otherwise guaranteed by the State of Utah, and participants share proportionally in any realized gains orlosses on investments.

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment.The District manages its exposure to declines in fair value by adhering to the Money Management Act. TheAct requires that the remaining term to maturity of investments may not exceed the period of availability ofthe funds to be invested. The District's investment policy specifies that all investments will be sufficientlyliquid to enable the District to meet all operating requirements which might be reasonably anticipated.

The PTIF operates and reports to participants on an amortized cost basis. The income, gains, and losses - netof administration fees of the PTIF, are allocated based upon the participant's average daily balance. The fairvalue of the PTIF investment pool is approximately equal to the value of the pool shares. For the years endedJune 30, 2019 and 2018, the District had funds of $19,321,742 and $14,441,245, respectively, with the PTIF.The entire balance had a maturity of less than one year. The PTIF pool has not been rated.

Corporate Bonds

16



NOTE 2 - CASH, CASH EQUIVALENTS, AND INVESTMENTS (CONTINUED)Interest Rate Risk (Continued)

Fair value Quality ratings8,562,024$ AA- to BBB+

U.S. Obligations 1,997,344 AA+Government Agencies 6,238,758 AA+Money Market Funds (PTIF) 2,603,333 Unrated

19,401,459$

Fair value Less than 1 1-5 6-107,708,583$ 2,712,159$ 4,996,424$ -$ 2,929,990 998,086 1,931,904 - 6,563,314 496,419 6,066,895 -

513,796 513,796 - - 990,420 990,420 - -

18,706,103$ 5,710,880$ 12,995,223$ -$

Fair value Quality ratings7,708,583$ AA- to BBB+

U.S. Obligations 2,929,990 AA+Government Agencies 6,563,314 AA+

513,796 UnratedMunicipal Bonds 990,420 AAA

18,706,103$

The District had the following investments and quality ratings (S&P ratings) at June 30, 2018:

Corporate Bonds

Corporate Bonds

Investment maturities (in years)

Total

Investment type

The District had the following investments and quality ratings (S&P ratings) at June 30, 2019:

Corporate Bonds

Investment type

The District's investments at June 30, 2018 are presented below:

Total

U.S. ObligationsGovernment AgenciesMoney Market Funds (PTIF)Municipal Bonds

Money Market Funds (PTIF)

Total

Investment type

17



NOTE 3 - NET POSITION

2019 201811,043,839$ 11,075,020$

Operating and maintenance 3,953,271 3,735,398 Renewal and replacement 650,000 650,000 150th South pipeline agreement 35,285 34,335 Jordan Valley WTP O&M agreement 20,000 20,000 Jordan aqueduct repayment contract 43,012 41,855

$ 15,745,407 $ 15,556,608

2019 2018

Self insurance contingency 2,000,000$ 2,000,000$ Interest rate stabilization 3,284,866 3,284,866 Capital projects reserve 3,338,632 5,032,033 Aquifer storage and recovery reserve 2,462,253 1,688,905

178,896,592 169,194,875 $ 189,982,343 $ 181,200,679

Amounts restricted for revenue bond debt service - On April 29, 2002, the District adopted a masterresolution providing for the issuance of water revenue bonds ("2002 Bond Resolution") which requires that adebt service account ("Bond Fund") be maintained, at minimum, that is equal to the principal and interestinstallment due within the fiscal year on the outstanding revenue bonds.

Committed

As of June 30, 2019 and 2018, the unrestricted component of net position is as follows:

Net position is restricted by provisions of the bond resolutions adopted by the District (Note 6) as follows:

Total

As of June 30, 2019 and 2018, the restricted component of net position is as follows:

Total

Use of restricted assets - When both restricted and unrestricted resources are available for use, it is theDistrict’s practice to use unrestricted resources first, then restricted resources as they are needed.

Amounts restricted for costs of construction projects - The 2002 Bond Resolution requires that a reserve beestablished or bond proceeds restricted to the related construction projects. Any excess funds shall beapplied to the payment of principal and interest on the bonds when due.

Future debt service

Amounts restricted for renewal and replacement - The 2002 Bond Resolution requires that an initial renewaland replacement reserve of $650,000 be established but the reserve may be increased or decreased from timeto time by a supplemental resolution. In the event a deficiency arises in the amounts restricted for the BondFund, monies in the renewal and replacement reserve shall be transferred to satisfy the deficiency.

Uncommitted

18



NOTE 4 - CAPITAL ASSETS

Beginning Additions/ Disposals/ EndingBalance Transfers In Transfers Out Balance

49,436,084$ 2,971,200$ -$ 52,407,284$ 21,943,673 85,000 - 22,028,673 17,786,080 2,982,673

89,165,837 6,038,873 (19,892,673) 75,312,037

271,109,184 16,711,507 (230,328) 287,590,363 19,246,284 1,279,234

956,220 124,919 (49,688) 1,031,451 160,890 - - 160,890

112,423,040 43,391 - 112,466,431

403,895,618 18,159,051 (4,893,575) 417,161,094

(92,939,849) (7,741,538) 134,357 (100,547,030) (15,646,967) (323,132) 4,599,224 (11,370,875)

(736,923) (47,272) 49,689 (734,506) (160,890) - - (160,890)

(36,188,893) (2,326,941) - (38,515,834)

(145,673,522) (10,438,883) 4,783,270 (151,329,135)

258,222,096 7,720,168 (110,305) 265,831,959

347,387,933$ 13,759,041$ (20,002,978)$ 341,143,996$

Capital assets, not being depreciated:Water sources

Construction in progress

Total capital assets, being depreciated

Less accumulated depreciation/amortization for:

Machinery and equipment

Total capital assets being depreciated, net

Aqueduct and appurtenances

Aqueduct and appurtenances***

Land and right of way

Total capital assets, not being depreciated

Total accumulated depreciation/amortization

Transportation equipmentFurniture and fixtures

Capital assets, being depreciated:

Capital asset activity for the fiscal year ended June 30, 2019 is as follows:

Buildings and improvements

* This amount includes $13,217,319 of transfers out related to capitalized Terminal Reservoir assets andcontractual obligations; $5,061,093 transferred out related to capitalized assets for the Jordan AqueductSystem; $974,081 transferred out for information systems; the remaining $640,180 was for buildingimprovements and machinery/equipment.

** This amount includes $3,698,047 of disposals for process control and SCADA equipment that has beenfully depreciated and is in the process of being replaced. The remaining $915,512 was to dispose of variousinformation systems related items that are no longer in service.

(4,613,559)** $15,911,959

*** The Salt Lake Aqueduct, appurtenances and associated lands and right of way, are recorded in theAqueduct and Appurtenances group of assets.

(19,892,673)* 876,080

Machinery and equipment

Buildings and improvements

Transportation equipmentFurniture and fixtures

Total capital assets, net

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