HomeMy WebLinkAbout12/16/2021 - Meeting Materials Combined Financial Statements
�» June 30, 2021
Salt Lake City Water, Sewer
Stormwater, and Street Lighting
Utilities
(Enterprise Funds of Salt Lake City Corporation)
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SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
INDEPENDENT AUDITOR'S REPORT
AND COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
Table of Contents
Page
Independent Auditor's Report 1
Management's Discussion and Analysis 4
Combined Financial Statements
Combined Statement of Net Position as of June 30,2021 14
Combined Statement of Revenues, Expenses and Changes in Net Position
for the Year Ended June 30,2021 16
Combined Statement of Cash Flows for the Year Ended June 30, 2021 17
Notes to Combined Financial Statements 19
Required Supplementary Information
Required Supplementary Schedule of the Proportionate Share of the
Net Pension Liability as of June 30, 2021 41
Required Supplementary Schedule of Pension
Contributions as of June 30, 2021 42
Notes to Required Supplementary Information 43
Supplemental Information
Supplemental Schedule of Net Revenues to Aggregate Debt Service for
Water, Sewer and Stormwater Utility Funds for the
Year Ended June 30,2021 45
Supplemental Schedule of Investment Balances Controlled by
Trustee for Water, Sewer and Stormwater Utility Funds
as of June 30,2021 46
Supplemental Schedule of Consumer Information as of June 30,2021 47
Supplemental Schedule of Insurance Policies as of June 30,2021 48
Independent Auditor's Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 49
Independent Auditor's Report on Utility Revenue Bond Compliance 51
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CPAs&BUSINESS ADVISORS
Independent Auditor's Report
Salt Lake City Public Utilities Advisory Committee
Salt Lake City Water, Sewer, Stormwater and Street Lighting Utilities
Report on the Financial Statements
We have audited the accompanying combined statement of net position of the Water Utility Fund,the
Sewer Utility Fund, the Stormwater Utility Fund and the Street Lighting Utility Fund (the "Salt Lake City
Water, Sewer, Stormwater, and Street Lighting Utilities" or the "Utilities"), enterprise funds of Salt Lake City
Corporation (the City), Utah, as of June 30, 2021, and the related combined statements of revenues,
expenses, and changes in net position, and cash flows for the year then ended, and the related notes to the
fund financial statements.
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 entity'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 entity'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.
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Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,the
respective combined financial position of the Water Utility Fund, the Sewer Utility Fund, the Stormwater
Utility Fund and the Street Lighting Utility Fund, enterprise funds of Salt Lake City, Utah, as of June 30, 2021,
and the changes in financial position and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
Emphasis of Matters
As discussed in Note 1 to the combined financial statements, the combined financial statements referred to
above present only four enterprise funds of the City—the Water Utility Fund, the Sewer Utility Fund, the
Stormwater Utility Fund, and the Street Lighting Utility Fund and are not intended to present fairly the net
position, changes in financial position, and cash flows of the City 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 the management's
discussion and analysis and the required supplementary information identified in the table of contents be
presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about the methods of preparing the information and
comparing the information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do not
express an opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a
whole.The supplemental information is presented for purposes of additional analysis and are not a required
part of the financial statements.
The supplemental schedules of net revenues to aggregate debt service and investment balances controlled
by trustee are the responsibility of management and were derived from and relate directly to the underlying
accounting and other records used to prepare the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial statements and certain
additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic financial
statements themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the supplemental schedules of net revenues to
aggregate debt service and investment balances controlled by trustee are fairly stated, in all material
respects, in relation to the basic financial statements as a whole.The supplemental schedules of consumer
information and insurance policies have not been subjected to the auditing procedures applied in the audit
of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on
them.
2
Report on Summarized Comparative Information
We have previously audited the 2020 combined financial statements of the Water Utility Fund, the Sewer
Utility Fund, the Stormwater Utility Fund and the Street Lighting Utility Fund, enterprise funds of Salt Lake
City, Utah, and we expressed an unmodified audit opinion on those audited financial statements in our
report dated November 17, 2020. In our opinion, the summarized comparative information presented
herein as of and for the year ended June 30, 2020, is consistent, in all material respects, with the audited
combined financial statements from which it has been derived.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 17,
2021 on our consideration of the Salt Lake City Water, Sewer, Stormwater, and Street Lighting Utilities'
internal control over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements and other matters.The purpose of that report is solely to
describe the scope of our testing of internal control over financial reporting and compliance and the results
of that testing, and not to provide an opinion on the effectiveness of the Salt Lake City Water, Sewer,
Stormwater, and Street Lighting Utilities' 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 Salt Lake City Water, Sewer, Stormwater, and Street Lighting Utilities' internal control over
financial reporting and compliance.
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Salt Lake City, Utah
November 17, 2021
3
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
The management for the Department of Public Utilities of Salt Lake City Corporation (referred hereafter
as the Department, Public Utilities, or the Utilities) offers readers of the Utilities' combined financial
statements the following Management's Discussion and Analysis(MD&A)as an overview to the combined
financial statements and as a discussion of the financial results of the Department's operations for the fiscal
year ended June 30,2021.
This MD&A has been prepared by Public Utilities' finance team along with the accompanying combined
financial statements, including the notes to the combined financial statements and required supplementary
information, and supplemental information to help the reader obtain a comprehensive understanding of the
Utilities' finances.
GENERAL BACKGROUND
The Salt Lake City Department of Public Utilities operates as four separate service enterprises under one
administrative management structure of Salt Lake City,Utah, and provides water, sewer, stormwater, and
street lighting services to residential, commercial, industrial, institutional, and municipal customers. Each
of the four enterprises is organized under a separate Utility called an enterprise fund. Accordingly, the
financial transactions of each utility remain within its fund. Financial statements of each utility are
presented separately. The four utility enterprise funds use an accounting approach like businesses in the
private sector yet remain tax exempt. The Department's work within each utility is vital to public health,
environment, economy, and quality of life. Stormwater, Sewer, and Street Lighting utilities serve
approximately 49,000 accounts within Salt Lake City's incorporated boundaries while the Water Utility
serves over 90,000 accounts in Salt Lake City and in Salt Lake County combined.The water system covers
about 36 square miles of service area in Salt Lake County and about 105 square miles within Salt Lake City
or about 141 square miles in combination. The department employs 440 authorized full-time employees
and operates, manages, and maintains critical infrastructure, including three water treatment plants, one
water reclamation facility, thousands of miles of conveyance systems for water, stormwater, and
wastewater, and all City owned streetlights.
FINANCIAL AND OPERATING HIGHLIGHTS
During fiscal year 2021, the following events or considerations had significant impacts on the financial
position of the Utilities:
• Water, Stormwater, and Streetlighting rates remained unchanged from fiscal year 2020. Sewer
rates were increased 18 percent.
• Three percent increase in volume of water delivered to customers—from 24,423 million gallons
in fiscal year 2020 to 25,127 million gallons in fiscal year 2021.
• Additional investment of$141,709,426 in the infrastructure and capital assets of the Utilities.
• Issuance of 2020 Series Bond with par amount of$157,390,000 and net proceeds of
$197,554,482 after issuance cost and premium.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are presented as an introduction to both the combined financial statements and
notes to the combined financial statements of the Salt Lake City Department of Public Utilities. This
4
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
discussion report contains additional information to help the reader better understand Salt Lake City
Department of Public Utilities, its activities and financial performance.
The combined statements of net position (balance sheet) show the Utilities' total assets and deferred
outflows, and liabilities and deferred inflows with the difference between them as net position.
Over time, increases or decreases in net position may serve as an indicator as to whether the financial
conditions of the Utilities are improving or declining.
The combined statements of revenues, expenses, and changes in net position show the components of
changes to net position. These changes are recorded when the underlying event that causes the change
occurs regardless of when the cash transaction takes place. Thus,some revenues and expenses are recorded
in the statement of revenues, expenses, and changes in net position for some items even when the resulting
cash flow may occur in a future period. One such example is water that has been used but remains unbilled
at year end.The revenue is accrued or recorded although the actual billing for services and subsequent cash
receipt do not occur until the next fiscal year.
The combined statements of cash flows show sources and uses of cash that cause changes in the cash
balances related to three types of activities: operating activities, capital and related financing activities, and
investing activities. The statement of cash flows provides a reader a map of where the Utilities' cash stems
from and how cash was used in the fiscal year. While the statements of revenues, expenses, and changes
in net position report transactions when the goods and services are delivered, the statements of cash flows
report inflows and outflows of cash in the period the cash outflows and inflows occur. For example,
amounts owed at the end of the year for services received from a consultant will show as expenses accrued
in the current period on the statement of revenue, expense and change in net position,but the cash payment
for the services would occur after year end and would not be reflected in the statement of cash flows until
the next year.
Notes to the combined financial statements contain additional information important for understanding
the information contained in the combined financial statements.
Required supplementary information including this MD&A and required supplementary schedules
found after the notes to the combined financial statements are not part of the basic financial statements but
are required by the Governmental Accounting Standards Board (GASB) and are also important for
understanding the Department's finances.
The purpose of the condensed financial information on subsequent pages is to help provide the reader with
a broad understanding of Public Utilities' finances. Detailed information can be obtained from the basic
combined financial statements, the notes to the combined financial statements, and the supplementary
information.
5
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
STATEMENT OF NET POSITION
The statement of net position included below is a condensed presentation of all the Utilities'assets including
deferred outflows and liabilities including deferred inflows with the difference between assets and liabilities
reported as net position.
ASSETS AND DEFERRED OUTFLOWS 2021 2020
Current assets and restricted cash $ 238,026,811 $ 106,972,599
Capital assets 991,207,254 871,321,366
Other non-current assets 3,782,564 3,164,987
Deferred outflows 3,416,354 3,515,039
Total assets and deferred outflows $ 1,236,432,983 $ 984,973,991
LIABILITIES AND DEFERRED INFLOWS
Current portion of bonds outstanding $ 7,455,000 $ 7,235,000
Bonds outstanding, net of current portion 284,650,069 95,814,082
Current portion of note payable - 2,125,000
Other liabilities 57,541,268 48,572,943
Deferred inflows 8,002,132 4,368,454
Total liabilities and deferred inflows 357,648,469 158,115,479
NET POSITION
Net Investment in Capital Assets 820,195,767 766,233,744
Restricted or reserved 22,414,407 24,544,310
Unrestricted 36,174,340 36,080,458
Total net position 878,784,514 826,858,512
Total liabilities, deferred inflows & net position $ 1,236,432,983 $ 984,973,991
As presented in the table above the net financial position of the Utilities' increased $51,926,002 in fiscal
year 2021. The largest component of net position,net investment in capital assets increased $53,962,023.
The net investment in capital assets represents the Utilities capital assets—all of the land, buildings,
improvements,and equipment used by the Utilities to provide water, sewer, stormwater, and street lighting
services to the Utilities'customers—net of accumulated depreciation and net of the outstanding debt issued
to acquire the capital assets. Total assets and deferred outflows increased $251,458,992; capital assets
increased $119,885,888; and total cash increased $131,054,212. Most of the cash increase, $121,030,702,
is unspent bond proceeds which are restricted for capital improvements. The condensed statement of net
position presented above also shows a $199,532,990 increase in liabilities and deferred inflows almost
entirely from the issuance of the Series 2020 Bond. Approximately 3 percent of the Utilities net position
or$22,414,407 represents the value of resources restricted for use on limited purposes specified by external
parties or the Salt Lake City Council.
Capital asset investment and debt administration contributed significantly to the financial position of the
Utilities on June 30, 2021.
Capital Asset Investment—Water,Sewer,Stormwater,and Street Lighting capital improvement programs
are managed by the Department's engineering division to coordinate the needs of each fund. Yearly goals
6
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
for infrastructure replacement in each utility are necessary to keep the facilities functioning properly. The
Department continues to invest in infrastructure repairing and upgrading water, sewer, storm drain and
street lighting facilities in our 141 square mile service area.
A breakdown of major investments in capital assets during fiscal year 2021 is presented below:
Category 2021
Reclamation Plant Improvements $ 57,717,692
Water Mains and Hydrants 20,006,784
Sewer Collection Lines 16,455,306
Sewer Lift Stations 9,882,425
Water Service Connections & Meters 6,594,268
Treatment Plant Improvements 6,087,601
Stormwater Drainage Lines 3,646,482
Water Distribution Reservoirs 2,641,065
Deep Pump Wells 2,567,362
Water Pump Stations 1,591,844
Culverts, Flumes, &Bridges 1,547,586
Water Storage Reservoirs. 1,443,740
Street Lighting Infrastructure 1,037,034
Watershed Property 414,906
Rights Of Way 299,325
Maintenance And Repair Shops 182,930
Land 153,951
Water Rights 79,800
Stormwater Lift Stations 57,171
Landscaping 56,775
Debt Administration—On August 12,2020,the Utilities issued bonds with a par amount of$157,390,000
and received net proceeds of$197,554,482 after issuance costs and bond premium. The 2020 Bond will
primarily be used to finance water and sewer treatment projects. Bond debt for the Utilities increased
$189,055,987 to $292,105,069 from $103,049,082 last year and the Utilities' Note Payable decreased
$2,125,000 and has been repaid in full.
The Utilities complied with bond requirements and made payments as scheduled of outstanding debt during
fiscal year 2021. The Utilities debt service coverage ratio remains strong at 4.32. The minimum ratio
required on June 30, 2021 was 1.25; the Utilities' coverage is well above the minimum requirement.
On September 15, 2020, the Utilities' administration secured funding from the EPA under the Water
Infrastructure Finance and Innovation Act(WIFIA)program of up to $348,635,000. This funding will be
provided on a reimbursement basis and will be used for the construction of a water reclamation facility to
replace the fully depreciated facility that is still in use. Under the agreement with the EPA the Utilities will
begin repaying the amounts reimbursed by the program in 2029 with interest of 1.34 percent. As of June
30, 2021,the Utilities have requested and received no reimbursement under the WIFIA loan.
7
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
The Utilities anticipate issuing bonds in fiscal year 2022 and subsequent years to finance treatment plant
and reclamation plant improvements.
The Statement of Net Position considered in the preceding discussion presents the financial position of the
Utilities, including its capital assets and outstanding debt, as of June 30, 2021 and 2020. Comparison of
the financial position for the two years presented provided insights discussed above;however,the Statement
of Revenues, Expenses, and Changes in Net Position shows revenues (inflows of resources) and expenses
(outflows of resources)that changed net position during fiscal year 2021 and 2020.
STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN NET POSITION
The change in net position is the amount by which total revenues exceeded total expenses. Public Utilities'
combined change in net position totaled $51,926,002 for fiscal year 2021. A condensed summary of the
related revenues and expenses resulting in the change in net position is presented below.
SUMMARY OF CHANGES IN NET POSITION 2021 2020
Operating revenues $ 153,570,339 $ 145,114,448
Operating expenses before depreciation (88,218,448) (85,607,229)
Operating income before depreciation 65,351,891 59,507,219
Depreciation (20,987,238) (19,877,591)
Operating income 44,364,653 39,629,628
Non-operating revenue(expense)
Interest and financial expense (8,932,886) (3,240,546)
Investment income 1,240,824 2,254,167
Gain on disposition of property and equipment 733,946 224,931
Net non-operating expense (6,958,116) (761,448)
Transfers in 846,809 -
Contributions and grants 13,672,656 12,793,781
Change in net position $ 51,926,002 $ 51,661,961
Total operating revenue increased $8,455,891 in fiscal year 2021 to $153,570,339 from $145,144,448;
however, interest and financial expense also increased $5,692,340 offsetting 67 percent of the increase in
operating revenue. Overall net operating income increased $4,735,025 and total change in net position
increased$264,041 to $51,926,002 in fiscal year 2021 from$51,661,961 in fiscal year 2020.
During fiscal year 2021,water sales accounted for the 49.0 percent of revenue compared with 5 0.1 percent
of total revenue in the prior year. The Utilities different revenue sources and their percentage of total
revenue for fiscal year 2021 and 2020 are presented below for informational purposes and for reader
comparison.
8
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
Percent Percent
2021 Amount of Total 2020 Amount of Total
Operating revenue
Water sales $ 83,177,848 49.0% $ 81,253,393 50.6%
Charges for sewer services 50,708,746 29.8% $ 45,040,074 28.1%
Stormwater fees 10,696,303 6.3% $ 10,719,864 6.7%
Street lighting fees 4,230,395 2.5% $ 4,258,440 2.7%
Other revenues 4,757,047 2.8% 3,842,677 2.4%
Total operating revenue 153,570,339 90.4% 145,114,448 90.5%
Non-operating revenue,transfers-in,and
capital contribution
Investment income 1,240,824 0.7% 2,254,167 1.4%
Gain on disposition of property and equipment 733,946 0.4% 224,931 0.1%
Transfers in 846,809 0.5% - 0.0%
Contributions and grants 13,672,656 8.0% 12,793,781 8.0%
Total non-operating revenue 16,494,235 9.6% 15,272,879 9.5%
Total revenue $ 170,064,574 100.0% $ 160,387,327 100.0%
For illustrative purposes the following chart is offered as a breakdown of major revenue sources and
percentages for Public Utilities for the fiscal year ending June 30,2021.
Revenue Comparison 2021
Water Sales Sewer Charges
49% 30%
.ormwater Fees
6%
Street Lighting Fees
II � 2%
Other Revenues
Gain on disposition of 3%
Contributions and property and
grants Transfers in equipment Investment income
8% 1% 0% 1%
The following table provides a summary of expenses for the year ended June 30, 2021. The
following schedule is a comparison between fiscal year 2021 and 2020 actual and budgeted
expenditures.
9
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
Budget Budget FY 2020 Budget Budget
FY2021 Actual 2021 Variance Actual 2020 Variance
Operating Expense:
Compensation and benefits $ 34,728,167 $ 43,214,618 $ 8,486,451 $ 35,034,727 $ 38,021,063 $ 2,986,336
Operating and maintenance 5,970,675 7,622,463 1,651,788 5,882,570 6,676,929 794,359
Charges and services 47,519,606 59,510,449 11,990,843 44,689,932 52,737,587 8,047,655
Total operating expense excludes deprec. 88,218,448 110,347,530 22,129,082 85,607,229 97,435,579 11,828,350
Principal paid on debt service 9,360,000 9,451,667 91,667 10,900,000 10,900,000 -
Interest and financial charges paid 7,226,495 8,800,047 1,573,552 3,240,546 5,746,000 2,505,454
Total operating and debt service expenditure $ 104,804,943 $ 128,599,244 $ 23,794,301 $ 99,747,775 $ 114,081,579 $ 14,333,804
Operating expense includes the cost of compensation and benefits for the Utilities' personnel, operating
and maintenance supplies and services, and charges by vendors for other goods and services. Charges and
services of$47,519,606 representing 45.3 percent of total expenditures includes$32,018,777 paid to related
parties: $23,534,777 paid to Metropolitan Water District of Salt Lake City and Sandy City for a capital
assessment and wholesale water purchases; $8,484,000 paid to the City for administration fees, fleet
maintenance, information management services, risk management, payment in lieu of taxes, the franchise
fees, and street sweeping. The remaining $15,500,829 was paid to third parties and includes technical
services such as consulting engineers and chemical analysis of$6,045,503; utilities, such as telephone,
power,natural gas,and sludge and waste management of$4,138,435;professional services including public
relations,legal,banking, and auditing fees of$3,187,875; and other various small expenses of$2,129,016.
STATEMENT OF CASH FLOWS
Public Utilities' cash and cash equivalents increased by $131,461,998 in fiscal year 2021. The increase in
cash is the result of$197,554,482 in net proceeds from the issuance of bonds. Operating activities—receipts
from customers for the Utilities' services and the associated cash outflows to Salt Lake City, suppliers,and
employees is usually the primary source of cash and generated$65,306,069 in net cash, $6,229,049 more
than fiscal year 2020. Payments for the improvement or acquisition of capital assets totaled$124,401,166
in fiscal year 2021. A summary of cash transactions for fiscal year 2021 and 2020 follows:
10
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
SUMMARY OF CASH FLOWS 2021 2020
Receipts from customers $ 153,782,051 $ 139,394,105
Payments to Salt Lake City (8,484,000) (8,394,576)
Pay to suppliers (42,994,985) (37,612,708)
Payments to employees (36,996,997) (34,309,801)
Net cash provided by operating activities 65,306,069 59,077,020
Net cash provided by non-capital
and related financing activities 846,809 -
Payments for capital assets (124,401,166) (98,501,761)
Net proceeds from debt issuance 197,554,482 -
Bond principal, interest, and financial charges (16,586,495) (14,708,698)
Capital contributions and other related receipts 7,648,616 6,309,095
Net cash provided by(used in) capital
and related financing activities 64,215,437 (106,901,364)
Net cash provided by investing activities 1,093,683 1,867,054
Change in Cash and Cash Equivalents $ 131,461,998 $ (45,957,290)
PUBLIC UTILITIES RATE STRUCTURE
Listed below is the general rate structure for Water, Sewer, and Stormwater and Street Lighting services
that was in effect during fiscal year 2021. Bills are sent to customers monthly unless by special agreement.
See the following chart.
BASIC RESII)ENTfAL RATE STRUCTURE Fffectiw 7/01/2020
*Alinimmn
Salt Lake City Customers Salt Lake County Customers
First Tier Second Tier Third Tier Forth Tier First Tierl-10 Second Tierll Third Tier31- Forth Tierowr
Per Units 1-10 units 11-30 units 31-70 units over 71 units units 30 units 70 units 71 units FlxedMonthly Charge
$1.37 $1.87 $2.59 $2.76 $1.84 $2.52 $3.50 $3.73 $9.28 City,$12.53 County
Water Rates
1 Unit=748 gallons
Sewer Rates@ $4.34 perunit of Winter water use
Stormwater $5.43 per month residential depending on size ofpmperty and pervious or impervious property
Street Lighting $3.73 per ERU or Equivalent Residential Unit determined by front footage ofpmperty.
*Fixed monthly charge increases by line size up to 10"size.
@ 1Mnimum s ewer charge is 8.68 per month
Visitourwebsiteat (http://www.slcgov.conVutilities/)
ECONOMIC OUTLOOK
The Department continued to focus on infrastructure needs in fiscal year 2021. Compliance with
regulations necessitates significant changes. The new state prison on the south shore of the Great Salt Lake
11
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
could impact growth in a quadrant of the Utilities service area that lacks Utility infrastructure. The sewer
system will have the largest financial impact for the Utilities as a new water reclamation facility with an
estimated cost of$711 million is being constructed on the existing plant property by 2024. The new facility
will utilize treatment methods to meet existing and anticipated State requirements. The new facility will
encourage new technology,increase flow, and decrease odors. The capacity of the sewer collection system
along the west side of the city could be impacted by the anticipated increase in development in the area
associated with the airport expansion and the State's construction of a new prison scheduled to be completed
in Spring 2021. Water plant upgrades are planned in the coming years. The Department also anticipates
moving to a new administration facility or an entirely new campus as the 50-year-old administration facility
is no longer sustainable for the Utilities.
The Department continues to have a large diverse service area with a stable customer base and a manageable
capital improvement program. The Department has completed a study of water, sewer, and stormwater
rates to ensure rates meet the values of the Utilities' community and generate revenue required to provide
for the financial sustainability of the Utilities; these rates went into effect July 1, 2019. As mentioned
above, the Utilities will need to borrow significant additional funds to meet identified capital improvement
needs.With the capital acquisitions and improvements under consideration,an entirely undeveloped service
area could open to development which would significantly increase the size of the Utilities' customer base.
An 8 percent increase in water rates, an 18 percent increase in sewer rates, and a 10 percent increase in
stormwater rates was effective as of July 1, 2021, anticipating continued demand on resources needed for
the capital needs of the Utilities.The Utilities' water rates are structured to incentivize conservation efforts
as designed with the help of rate studies approved by a nine-member Public Utilities Advisory Committee,
City Council and Mayor. Units of water are measured in 100 cubic foot units. One unit is 748 gallons of
water. The following table shows approved rates effective July 1,2021.
BASIC RESIDENTIAL RATE STRUCTURE Effective 7/01/2021
*Minimum
Salt Lake City Customers Salt Lake County Customers
First Tier Second Tier Thirdrier Forth Tier First Tierl-10 Second Tierll Third Tier31- Forth Tierowr
Per Units 1-10 units 11-30 units 31-70 units over 71 units units 30 units 70 units 71 units Fixed Monthly Charge
Water Rates $1.48 $2.02 $2.80 $2.99 $2.00 $2.73 $3.78 $4.04 $10.03 City,$13.54 County
1 Unit=748 gallons
Sewer Rates@ $5.13 perunit of Winter water use
Stormw ter $5.98 per month residential depending on size ofproperty and pervious or impervious property
Street Lighting $3.73 per ERU or Equivalent Residential Unit detemvned by front footage ofproperty.
*Fixed monthly charge increases by line size upto 10"size.
@ Minimum sewer charge is$10.26 per month
Visitourwebsiteat (http://w .slcgovconVutilities/)
Revenue relies in part on the weather. We conservatively anticipate a normal water year, but actual sales
will depend partly on precipitation and temperature. Economic conditions within the service area also
impact water use, sewer flows, and the active accounts related to the Utilities commercial customers.
Current levels of business activity within the utilities service area indicate stable economic conditions and
even growth with certain areas of the City under development. Sales information based on several years of
past customer use remains our greatest tool to predict the effects of varying weather and economic
conditions, but weather and economic variations can greatly impact actual results. The Department
12
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
anticipates enough water resources for the future needs. The Department will continue to follow fiscal
policy that allows the Utilities flexibility to adjust to economic changes or environmental concerns.
REQUEST FOR INFORMATION
Questions concerning any of the information provided in this report or requests for additional financial
information should be addressed to the Salt Lake City Public Utilities, 1530 South West Temple, Salt Lake
City,Utah 84115.
Public Utilities Management
13
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
COMBINED STATEMENT OF NET POSITION
JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
Water Sewer Stormwater Street Lighting Combined
Utility Utility Utility Utility 2021 2020
ASSETS AND DEFERRED OUTFLOWS
CURRENT ASSETS:
Cash and cash equivalents $ 70,444 $ 32,338,362 $ 7,479,429 $ 6,182,401 $ 46,070,636 $ 38,645,615
Investments 14,859,452 - - - 14,859,452 14,792,111
Accounts receivable,less allowance for
doubtful accounts of$369,199,$109,753,$11,228
and$11,083,respectively,totaling$501,263 12,061,558 4,963,160 1,131,481 376,340 18,532,539 19,889,140
Other receivables 365,574 68,353 2,463 - 436,390 307,848
Prepaids 338,730 134,364 41,707 2,522 517,323 510,460
Supplies inventories 4,211,396 601,586 4,812,982 4,066,913
Total current assets 31,907,154 38,105,825 8,655,080 6,561,263 85,229,322 78,212,087
NONCURRENT ASSETS:
Restricted and reserved cash and cash equivalents,
amounts restricted or reserved for:
Revenue bond debt service 1,648,767 5,225,970 647,877 80,626 7,603,240 4,558,927
Capital improvements 66,122,075 43,240,334 11,668,293 - 121,030,702 -
Constmction bonds 3,032,694 87,434 542,080 - 3,662,208 2,104,365
Customer deposits 564,206 - - 564,206 567,493
Watershed 9,617,008 - 9,617,008 8,611,714
Impact fees 8,472,434 1,847,691 10,320,125 12,918,013
Total restricted and reserved
cash and cash equivalents 89,457,184 48,553,738 14,705,941 80,626 152,797,489 28,760,512
Capital assets,at cost:
Land 25,447,255 7,545,739 3,185,611 - 36,178,605 34,735,251
Water rights 32,363,285 - - 32,363,285 32,363,285
Buildings 70,482,153 128,692,190 10,108,791 209,283,134 194,793,412
Improvements other than buildings 391,107,646 208,771,057 152,103,288 12,903,275 764,885,266 714,930,062
Machinery and equipment 33,332,601 36,753,648 4,648,796 - 74,735,045 73,810,594
Construction in progress 63,061,083 166,188,484 9,207,313 238,456,880 167,800,040
615,794,023 547,951,118 179,253,799 12,903,275 1,355,902,215 1,218,432,644
Less accumulated depreciation (171,339,845) (125,573,942) (64,090,653) (3,690,521) (364,694,961) (347,111,278)
Net capital assets 444,454,178 422,377,176 115,163,146 9,212,754 991,207,254 871,321,366
Other assets:
Long term deposit - - - - - 50,000
Net Pension Asset 491,740 56,016 40,021 587,777 -
Investments m water company stock,at cost 3,194,787 3,194,787 3,114,987
Total other assets 3,686,527 56,016 40,021 3,782,564 3,164,987
Total noncurrent assets 537,597,889 470,986,930 129,909,108 9,293,380 1,147,787,307 903,246,865
DEFERRED OUTFLOWS OF RESOURCES:
Deferred outflows related to pensions 2,190,933 866,113 273,216 23,212 3,353,474 3,428,579
Deferred outflows on refunding of debt 62,880 62,880 86,460
Total deferred outflows of resources 2,253,813 866,113 273,216 23,212 3,416,354 3,515,039
TOTAL ASSETS AND DEFERRED OUTFLOWS $ 571,758,856 $ 509,958,868 $ 138,837,404 $ 15,877,855 $ 1,236,432,983 S 984,973,991
(Continued)
14
The accompanying notes are an integral part of these financial statements.
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
COMBINED STATEMENT OF NET POSITION
JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
Water Sewer Stormwater Street Lighting Combined
Utility Utility Utility Utility 2021 2020
LLABILITIES,DEFERRED INFLOWS AND NET POSITION
CURRENT LIABILITIES:
Accounts payable $ 13,014,576 $ 17,192,123 $ 831,192 $ 903,066 $ 31,940,957 $ 21,106,669
Accrued compensation 267,425 112,250 32,686 2,756 415,117 299,030
Current portion of long-term compensation liability 651,921 253,866 131,959 59,861 1,097,607 793,273
Current revenues collected in advance 1,664,345 385,112 80,328 31,411 2,161,196 2,151,663
Current portion of note payable - - - - - 2,125,000
Current maturities of revenue bonds 551,647 3,201,733 534,391 54,640 4,342,411 4,219,772
Total current liabilities 16,149,914 21,145,084 1,610,556 1,051,734 39,957,288 30,695,407
LIABILITIES PAYABLE FROM
RESTRICTED ASSETS:
Current maturities of long-tern obligations:
Revenue bonds 403,353 2,288,497 381,709 39,030 3,112,589 3,015,228
Accrued interest 1,245,414 2,937,473 266,168 41,597 4,490,652 1,544,344
Construction bonds 3,032,694 87,434 542,080 - 3,662,208 2,104,365
Customer deposits 564,206 - - - 564,206 567,493
Total liabilities payable from restricted assets 5,245,667 5,313,404 1,189,957 80,627 11,829,655 7,231,430
Long-term obligations:
Revenue bonds,less current maturities 79,091,402 184,928,610 18,342,557 2,287,500 284,650,069 95,814,082
Long-term compensation liability 2,109,134 815,472 284,087 36,262 3,244,955 2,938,889
Net pension liability 654,375 228,208 74,851 4,609 962,043 7,042,296
Revenues collected in advance 9,002,327 - - - 9,002,327 10,024,921
Total liabilities payable from restricted
assets and long-term liabilities 96,102,905 191,285,694 19,891,452 2,408,998 309,689,049 123,051,618
Total liabilities 112,252,819 212,430,778 21,502,008 3,460,732 349,646,337 153,747,025
DEFERRED INFLOWS OF RESOURCES:
Deferred inflows related to pensions 5,644,054 1,720,809 607,077 30,192 8,002,132 4,368,454
Total deferred inflows of resources 5,644,054 1,720,809 607,077 30,192 8,002,132 4,368,454
COMMITMENTS AND CONTINGENCIES(Note 8)
NET POSITION
Net investment in capital assets 430,592,731 275,198,670 107,572,782 6,831,584 820,195,767 766,233,744
Restricted 18,492,795 2,288,497 1,594,086 39,029 22,414,407 24,544,310
Unrestricted 4,776,457 18,320,114 7,561,451 5,516,318 36,174,340 36,080,458
Total net postion 453,861,983 295,807,281 116,728,319 12,386,931 878,784,514 826,858,512
LIABILITIES,DEFERRED INFLOWS
AND NET POSITION $ 571,758,856 $ 509,958,868 $ 138,837,404 $ 15,877,855 $ 1,236,432,983 $ 984,973,991
(Concluded)
15
The accompanying notes are an integral part of these financial statements.
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
COMBINED STATEMENT OF REVENUES,EXPENSES,AND NET POSTION
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
Water Sewer Stormwater Street Lighting Combined
Utility Utility Utility Utility 2021 2020
OPERATING REVENUES:
Water sales $ 83,177,848 $ - $ $ $ 83,177,848 $ 81,253,393
Charges for sewer services - 50,708,746 50,708,746 45,040,074
Stormwater fees - 10,696,303 10,696,303 10,719,864
Streethghting fees - - - 4,230,395 4,230,395 4,258,440
Other 4,081,804 596,965 78,078 200 4,757,047 3,842,677
Total operating revenues 87,259,652 51,305,711 10,774,381 4,230,595 153,570,339 145,114,448
OPERATING EXPENSES:
Cost of sales and services 49,459,410 14,082,872 3,998,002 3,283,275 70,823,559 67,631,714
General and administrative 11,365,429 3,869,816 1,801,687 357,957 17,394,889 17,975,515
Depreciation 9,415,356 7,934,124 2,971,839 665,919 20,987,238 19,877,591
Total operating expenses 70,240,195 25,886,812 8,771,528 4,307,151 109,205,686 105,484,820
OPERATING INCOME(LOSS) 17,019,457 25,418,899 2,002,853 (76,556) 44,364,653 39,629,628
NONOPERATING REVENUE(EXPENSE):
Interest and financial charges (2,341,702) (5,964,607) (539,536) (87,041) (8,932,886) (3,240,546)
Investment income,net 658,820 438,896 105,061 38,047 1,240,824 2,254,167
Gain on disposition of property and equipment 689,052 21,866 23,028 733,946 224,931
Net nonoperating expense (993,830) (5,503,845) (411,447) (48,994) (6,958,116) (761,448)
Transfers in 601,341 211,318 32,650 1,500 846,809 -
Capital contnbutions and grants 7,515,602 3,746,253 2,410,801 13,672,656 12,793,781
CHANGES IN NET POSITION 24,142,570 23,872,625 4,034,857 (124,050) 51,926,002 51,661,961
NET POSITION:
Beginning of the year 429,719,413 271,934,656 112,693,462 12,510,98 1 826,858,512 775,196,551
End of the year $ 453,861,983 $ 295,807,281 $ 116,728,319 $ 12,386,931 $ 878,784,514 $ 826,858,512
16
The accompanying notes are an integral part of these financial statements.
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
Water Sewer Stormwater Street Lighting Combined
Utility Utility Utility Utility 2021 2020
CASH FLOWS FROM OPERATING
ACTIVITIES:
Receipts from customers $ 86,562,052 $ 51,902,030 $ 10,967,653 $ 4,350,316 $ 153,782,051 $ 139,394,105
Payments for services provided by Salt Lake City (4,596,453) (2,549,640) (1,236,682) (101,225) (8,484,000) (8,394,576)
Payments to suppliers (34,892,423) (3,680,526) (1,452,080) (2,969,956) (42,994,985) (37,612,708)
Payments to employees (23,368,473) (10,317,141) (3,041,941) (269,442) (36,996,997) (34,309,801)
Net cash provided by operating activities 23,704,703 35,354,723 5,236,950 1,009,693 65,306,069 59,077,020
CASH FLOWS FROM NON-CAPITAL AND
RELATED FINANCING ACTIVITIES:
Transfers-in 601,341 211,318 32,650 1,500 846,809
Net cash provided by non-capital and
related financing activities 601,341 211,318 32,650 1,500 846,809
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Purchases of capital equipment (2,667,906) (924,777) (93,446) - (3,686,129) (3,348,931)
Payments for acquisition,construction,and
improvement of capital assets (34,622,531) (81,502,641) (3,925,293) (664,572) (120,715,037) (95,152,830)
Proceeds from issue ofbonds 77,004,650 106,048,923 14,500,909 197,554,482
Payment on note payable - (2,125,000) - (2,125,000) (6,375,000)
Principal paid on capital debt (910,000) (5,362,033) (894,300) (68,667) (7,235,000) (4,525,000)
Interest and financial charges paid (1,519,413) (5,229,730) (373,915) (103,437) (7,226,495) (3,808,698)
Capital contributions 3,532,817 3,094,964 928,384 7,556,165 6,008,986
Receipts from sale of capital assets 52,678 29,838 9,935 92,451 300,109
Net cash provided by(used in)capital
and related financing activities 40,870,295 14,029,544 10,152,274 (836,676) 64,215,437 (106,901,364)
CASH FLOWS FROM INVESTING ACTIVITIES:
Income received on investments 658,820 438,896 105,061 38,047 1,240,824 2,254,167
Sales of investments (67,341) - - - (67,341) (386,638)
Purchase of water stock (79,800) (79,800) (475)
Net cash provided by investing activities 511,679 438,896 105,061 38,047 1,093,683 1,867,054
CHANGE IN CASH AND CASH
EQUIVALENTS 65,688,018 50,034,481 15,526,935 212,564 131,461,998 (45,957,290)
CASH AND CASH EQUIVALENTS:
Beginning ofyear 23,839,610 30,857,619 6,658,435 6,050,463 67,406,127 113,363,417
End of year $ 89,527,628 $ 80,892,100 $ 22,185,370 $ 6,263,027 $ 198,868,125 $ 67,406,127
(Continued)
17
The accompanying notes are an integral part of these financial statements.
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30,2021(WITH COMPARATIVE TOTALS FOR 2020)
Water Sewer Stormwater Street Lighting Combined
Utility Utility Utility Utility 2021 2020
RECONCILIATION OF OPERATING INCOME
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
Operating income(loss) $ 17,019,457 $ 25,418,899 $ 2,002,853 $ (76,556) $ 44,364,653 $ 39,629,628
Adjustments to reconcile income from operations
to net cash:
Depreciation expense 9,415,356 7,934,124 2,971,839 665,919 20,987,238 19,877,591
Change in assets and liabilities:
Accounts receivable and other accounts
receivable 391,480 532,131 186,944 117,511 1,228,066 (4,775,920)
Prepaid expenses (2,000) 46,127 (713) (277) 43,137 (7,365)
Supplies mventones (708,819) (37,250) - - (746,069) 385,982
Accounts payable (1,060,660) 1,903,111 33,429 244,437 1,120,317 3,983,819
Accrued expenses 327,895 257,527 76,370 64,687 726,479 536,546
Customer deposits (3,287) - - - (3,287) 12,452
Current revenue collected in advance (63,197) 64,193 6,328 2,210 9,534 65,720
Revenue collected in advance (1,022,595) - - - (1,022,595) (1,022,595)
Deposits for construction bonds 1,538,555 (189,145) 208,433 1,557,843 140,476
Pension liabilities and assets (4,766,439) (1,377,849) (508,951) (14,791) (6,668,030) (8,315,389)
Change in deferred outflows and inflows
Pension 2,638,957 802,855 260,418 6,553 3,708,783 8,566,075
Net cash provided by operating activities $ 23,704,703 $ 35,354,723 S 5,236,950 $ 1,009,693 $ 65,306,069 $ 59,077,020
SUPPLEMENTAL SCHEDULE OF NONCASH
ACTIVITIES:
Donated water facilities-at cost $ 3,982,785 $ - $ - $ - $ 3,982,785 $ 1,602,256
Donated sewer facilities-at cost - 651,289 - 651,289 5,041,387
Donated stormwater facilities-at cost - - 1,482,417 1,482,417 141,153
Land received in non-monetary exchange 575,173 - - - 575,173 -
(Concluded)
18
The accompanying notes are an integral part of these financial statements.
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
1. SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in the preparation of the
accompanying combined financial statements follows.
Basis of Presentation—The Water Utility Fund, Sewer Utility Fund, Stormwater Utility Fund, and the
Street Lighting Utility Fund(the"Salt Lake City Water, Sewer, Stormwater, and Street Lighting Utilities"
or the"Utilities")are enterprise funds of Salt Lake City Corporation(the"City").The Street Lighting Utility
Fund was created in 2013 and the streetlights owned by Salt Lake City were transferred to the fund and
placed in control of the Utilities. The accompanying combined financial statements include only these four
enterprise funds of the City; however, the Utilities are an integral part of the City and are included in the
City's Comprehensive Annual Financial Report as enterprise funds.
The Utilities provide water, sewer, storm drain, and street lighting services to industrial, commercial, and
residential users in Salt Lake City,Utah.Two significant components of the Utilities'processes,power and
chemicals, are received from single source suppliers. Though not anticipated, significant future droughts
over the course of several years or contamination of a significant source of water could impede the Utilities
ability to provide services in the future.
Basis of Accounting—Revenues and expenses of the Utilities are recognized using the accrual basis of
accounting.
Proprietary funds distinguish operating revenues and expenses from non-operating 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
Utilities are charges to customers for sales and services. Operating expenses for enterprise funds and
internal service funds 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 non-operating revenues
and expenses.
When both restricted and unrestricted resources are available for use, it is the government's policy to use
restricted resources first, then unrestricted resources as they are needed.
Cash and Cash Equivalents—The Utilities consider investments in highly liquid debt instruments
purchased with an original maturity of three months or less to be cash equivalents.
Accounts Receivable—Due to the Utilities' cycle billing system,the accounts receivable balances at June
30, 2021 include an accrual for unbilled sales.
Supplies Inventories—Supplies inventories are stated at the lower of cost (determined on a first-in, first-
out or average-cost basis)or market.
Applicable Accounting Standards—The combined financial statements of the Utilities have been
prepared in conformity with generally accepted accounting principles("GAAP")as applied to government
units. The Governmental Accounting Standards Board("GASB")is the accepted standard-setting body for
establishing governmental accounting and financial reporting principles. With respect to proprietary
activities, the Utilities have adopted GASB Statement No. 62, Codification of Accounting and Financial
Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements which
supersedes Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other
Governmental Entities That Use Proprietary Fund Accounting.
Investments—Investments are recorded at fair value in accordance with GASB Statement No. 72, Fair
Value Measurement and Application.Accordingly,the change in fair value of investments is recognized as
an increase or decrease to investment assets and investment income.
19
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
Capital Assets—The capitalization threshold for property and equipment is$5,000.These assets are stated
at cost. A substantial portion of the property and equipment costs relating to the Stormwater Utility were
estimated in 1991 based on engineering records and current price levels adjusted to historical cost using a
consumer price index. Street Lighting assets were adopted at historical costs provided by the General Fund
in 2013.
Depreciation of property and equipment is computed using the straight-line method over the following
estimated useful lives:
Years
Buildings 35-60
Improvements other than buildings 15-100
Machinery and equipment 3-30
No depreciation is provided on construction in progress until construction is complete and the assets are
placed in service. When an asset is sold or otherwise disposed of, the related cost and accumulated
depreciation are removed from the accounts and any gain or loss is included in net earnings.
On June 30, 2021 the Water, Sewer, Stormwater, and Street Lighting Utilities' property and equipment
included fully depreciated assets with historical costs of $30,678,673, $36,554,070, $3,038,636, and
$358,949,respectively.
Risk Management—The Utilities are covered by insurance policies for property(all risk),excess workers
compensation, public liability, employee dishonesty, theft, forgery and alteration, and bond. The Utilities
are covered under the City's Risk Management Fund,which is self-insured, for general liability, workers
compensation, and automobile liability.
Amortization—Amortization of bond premiums and the deferred loss on refunding and defeasance of
revenue bonds is computed on the straight-line method(which approximates the amount determined using
the interest method)over the life of the related bonds.
Contributions—The Utilities have received contributions in aid of construction from various sources.
Consistent with GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange
Transactions,these contributions are recorded as revenue and are reflected in the Statements of Revenues,
Expenses, and Changes in Net Position.
Pensions—For purposes of measuring the net pension liability,deferred outflows of resources and deferred
inflows of resources related to pensions, and pension expense, information about the fiduciary net position
of the Utah Retirement Systems Pension Plan(URS)and additions to/deductions from the URS's fiduciary
net position have been determined on the same basis as they are reported by URS. For this purpose,benefit
payments (including refunds of employee contributions) are recognized when due and payable in
accordance with the benefit terms. Investments are reported at fair value.
Total Columns The total columns shown on the accompanying financial statements are mathematical
totals and do not eliminate interfund transactions or include other entries required to present consolidated
financial statements. Therefore, the accompanying financial statements are not intended to present
consolidated financial information.
Revenue and Expense Recognition—Revenue for services is recognized at the time the service is
performed. Revenues from services provided by the Utilities are reported as operating revenues.
Transactions which are capital, financing, or investing related are reported as non-operating revenues. All
expenses related to operating the Utilities are reported as operating expenses.Interest expense and financing
costs are reported as non-operating expenses.
20
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
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 reporting amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period.Actual amounts could differ from those estimates.
Deferred Outflows and Deferred InflowsIn addition to assets, financial statements will sometimes
report a separate section for deferred outflows of resources. This separate financial statement element,
deferred ou flows of resources, represents a consumption of net position that applies to a future period(s)
and will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to
liabilities, the financial statements will sometimes report a separate section for deferred inflows of
resources. This separate financial statement element, deferred inflows of resources, represents an
acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of
resources (revenue)until that time.
Recent Accounting PronouncementsIn June 2017, the GASB issued Statement No. 87, Leases. The
statement is meant to better meet the information needs of financial statement users by improving
accounting and financial reporting for leases by governments. This statement increases the usefulness of
governments' financial statements by requiring recognition of certain lease assets and liabilities for leases
that previously were classified as operating leases and recognized as inflows of resources or outflows of
resources based on the payment provisions of the contract. It establishes a single model for lease accounting
based on the foundational principle that leases are financings of the right to use an underlying asset.Under
this statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset,
and a lessor is required to recognize a lease receivable and a deferred inflow resources, thereby enhancing
the relevance and consistency of information. This statement is effective for reporting periods beginning
after June 15, 2021 and early adoption is encouraged. The Utilities are currently evaluating the impact of
this statement on the financial statements when implemented.
2. CASH, CASH EQUIVALENTS AND INVESTMENTS
Fair value of cash, cash equivalents, and investments consist of the following:
Water Sewer Stormwater Street Lighting
Utility Utility Utility Utility Total
Held by state treasurer-unrestricted $ 69,244 $ 4,381,963 $ 1,242,324 $ 270 $ 5,693,801
Held by state treasurer-restricted 19,601,327 87,434 - - 19,688,761
Restricted cash equivalents held by trustee 69,855,857 48,466,304 12,316,170 80,626 130,718,957
Unrestricted cash equivalents held by trustee - 7,149,312 307,641 - 7,456,953
Restricted cash in the City's pooled cash account - - 2,389,771 - 2,389,771
Unrestricted cash in the City's pooled cash accoun - 20,806,787 5,929,464 6,182,131 32,918,382
Unrestricted investments held by third party 14,859,452 - - - 14,859,452
Petty cash 1,200 300 - - 1,500
Total $104,387,080 $ 80,892,100 $ 22,185,370 $ 6,263,027 $ 213,727,577
21
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
Investments presented in the table above consist of the following:
Fair Water Sewer Stormwater Street Lighting
Market Value Utility Utility Utility Utility Total
Securities:
Less than 1 year $ 6,575,256 $ 6,575,256 $ - $ $ $ 6,575,256
1-2 years 3,985,319 3,985,319 - 3,985,319
2-5 years 4,298,877 4,298,877 - - 4,298,877
over 5 years - - - - -
Held by Trustee 138,175,910 69,855,857 55,615,616 12,623,811 80,626 138,175,910
State Treasurer's Pool 25,382,562 19,670,571 4,469,397 1,242,324 270 25,382,562
Total Investments by Fund $178,417,924 $104,385,880 $ 60,085,013 $ 13,866,135 $ 80,896 $ 178,417,924
The Utilities maintain funds in the City's pooled cash account. On occasion, cash automatically invested
may exceed pooled cash currently available, resulting in a temporary deficit of over purchased State
Treasurer's Funds. The Utilities pay the City or receive from the City an allocation of interest expense or
income based upon their balance in the pooled cash account.
Deposits in the Water and Sewer Utility Revenue Fund and Principal and Interest Fund are held by an
appointed trustee in accordance with the Revenue Bond Resolutions(see Note 3).
All funds invested with the Utah State Treasurer's Investment Pool("State Treasurer's Pool")must comply
with the Utah Money Management Act and Rules of the Money Management Council. The State
Treasurer's Pool invests primarily in money market securities, including time certificates of deposit and
top-rated domestic commercial paper. The maximum final maturity of any security purchased by the State
Treasurer's Pool is limited to five years. The maximum weighted average life of the portfolio does not
exceed 180 days.
Cash on Deposit with Banks and Pooled Cash—State law requires that City funds,of which the Utilities
are a part, be deposited with a "qualified depository" as defined by the Utah Money Management Act.
"Qualified depository" includes any depository institution which has been certified by the Utah State
Commissioner of Financial Institutions as having met the requirements as defined in Rule 11 of the Utah
Money Management Act.Rule 11 establishes the formula for determining the amount of public funds which
a qualified institution can accept. City policy provides that not more than 25 percent of total City funds or
25 percent of the qualified depository's allotment, whichever is less, can be invested in any one qualified
depository. Not more than 20 percent of total City funds may be invested in any one certified out-of-state
financial institution.
The bank balance of the Utilities' cash on deposit with banks was $0 on June 30, 2021.
Fair Value of Investments—The Utilities measure and record its investments using fair value
measurement guidelines established by generally accepted accounting principles. These guidelines
recognize a three-tiered fair value hierarchy, as follows:
• Level 1: Quoted prices for identical investments in active markets;
• Level 2: Observable inputs other than quoted market prices; and,
• Level 3: Unobservable inputs.
On June 30, 2021, the Utilities had$14,859,452 in a professionally managed account of U.S. Instruments,
Federal Agency Notes, and municipal bonds for which there are quoted prices in active markets. Such
valuation is considered a Level 1 valuation according to generally accepted accounting standards.
22
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
On June 30, 2021, the Utilities had $23,382,562 in the Utah State Public Treasurers' Investment Fund.
These investments were valued by applying the fair value factor, as calculated by the Utah State Treasurer,
to the Agency's average daily balance in the Fund on June 30,2021. Such valuation is considered a Level
2 valuation according to generally accepted accounting standards.
Custodial Credit Risk—Custodial credit risk for investments is the risk that, in the event of a failure of
the counter party, the Utilities or City will not be able to recover the value of the investment or collateral
securities that are in the possession of an outside party. Of the total $40,242,014 invested by Utilities,
$14,859,452 was exposed to custodial credit risk. The entire amount exposed was held in the Water Fund's
name by the counterparty. Fifty-eight percent of this custodial amount is given an AAA rating,3 percent is
given a AA+rating, 31 percent is given a rating in the AA-to A range, 7 percent is given a rating of A,and
1 percent was not rated. The amount exposed to custodial credit risk has a weighted investment life
remaining of 1.72 years.Of these investments 39 percent are U.S.Instruments(Treasury Notes), 12 percent
are Federal Agency Notes, 43 percent are Corporate Notes, 1 percent are municipal bonds and 5 percent
are in a money market fund.
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 interest rates.
Credit Risk—Credit risk is the risk that the counterparty to an investment will not fulfill its obligations.
The City's policy for limiting the credit risk of investments is to comply with the Utah Money Management
Act. The Act requires investment transactions to be conducted only through qualified depositories,certified
dealers, or directly with issuers of the investment securities.
Concentration of Credit Risk—Concentration of credit risk is the risk of loss attributed to the magnitude
of a government's investment in a single issuer. Salt Lake City's policy is to follow the Rules of the Money
Management Council. Rule 17 of the Money Management Council limits investments in a single issuer of
commercial paper and corporate obligations to between 5% and 10% depending upon the total dollar
amount held in the portfolio. The City had no debt securities investments as of June 30, 2021 with more
than 10%of total investments.
Cash Equivalents—The City's investment policies are governed by state statutes. In addition,the City has
its own written investment policies. City funds, of which the Utilities' funds are a part, are invested only in
the following: (1)negotiable or non-negotiable deposits of qualified depositories(see definition of qualified
depository in "Cash on Deposit with Banks and Pooled Cash" above); (2)repurchase agreements with
qualified depositories or certified dealers acting as principal for securities of the United States Treasury or
other authorized investments, only if these securities are delivered to the custody of the City Treasurer or
the City's safekeeping bank, or the investment activities are conducted with a qualified depository;
(3)commercial paper which is rated P-1 by Moody's Investor Services or A-1 by Standard and Poor's,Inc.,
having a remaining term to maturity of 270 days or less(commercial paper can be purchased directly from
the issuer provided proper delivery and safekeeping procedures are followed with a qualified depository or
the City Treasurer's safekeeping bank or trust company); (4)banker's acceptances that are eligible for
discount at a federal reserve bank and which have a remaining term to maturity of 270 days or less;
(5)negotiable certificates of deposit of $100,000 or less which have a remaining term to maturity of
365 days or less;(6)obligations of the United States Treasury included United States Treasury Bills,United
States Treasury Notes, and United States Treasury Bonds; (7)top-rated corporate notes having a remaining
term of one year or less; (8)certain no-load money market mutual funds; or(9)the Utah State Treasurer's
Investment Pool.
23
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
3. RESTRICTED CASH AND CASH EQUIVALENTS
Certain cash and cash equivalents are restricted by legislation, by contract, or by provisions of the
Improvement and Refunding Bond Resolutions ("Bond Resolutions") adopted by the City (see Note 5.
Long-Term Obligations)as follows:
Amounts Restricted for Revenue Bond Debt Service—The Bond Resolutions require that a debt service
account be maintained in the Principal and Interest Fund that is equal to the "average aggregate debt
service,"as defined, on outstanding revenue bonds and that a sinking fund be established for the"accrued
aggregate debt service," as defined, on outstanding revenue bonds. The assets which have been restricted
for revenue bond debt service came from earnings rather than bond proceeds. As of June 30, 2021, the
Utilities have restricted cash and cash equivalents of$7,603,240 for revenue bond debt service.
Amounts Restricted for Capital Improvements—The Utilities have issued revenue bonds exclusively to
finance existing and future capital improvements. The$121,030,702 restricted for capital improvements is
the remaining cash available from the issuance of bonds for specific capital improvements at June 30,2021.
Amounts Restricted for Cash Construction Bonds—The Utilities require developers to pay a cash bond
as assurance that the developer will fulfill the terms of the contract. A cash construction bond is refunded
when a contract has been completed and the developers warranty period has expired. As of June 30, 2021,
the Utilities have restricted cash and cash equivalents in the amount of $3,662,208 to remit these
construction bonds.
Amounts Restricted for Customer Deposits—The Utilities' customers living in apartments, duplexes,
and fourplexes are required to provide the Utilities with deposits designed to protect the Utilities from loss
associated with non-payment. The balance of a customer's deposit is refunded when service has been
discontinued and the account is paid in full.As of June 30,2021,the Utilities have restricted cash and cash
equivalents in the amount of$564,206 for these customer deposits.
Amounts Restricted for Watershed—The Utilities' Advisory Committee and the City Council approved
rate increase for watershed land purchases. As of June 30, 2021,the Utilities have restricted cash and cash
equivalents in the amount of$9,617,008,representing the amount of unspent funds collected as a result of
the rate increase to purchase watershed.
Amounts Restricted for Impact Fees Collected—To comply with the Utah Impact Fee Act (Chapter 36
of the Utah Code),funds collected from land developers and private individuals are required to be restricted
until contractual requirements have been satisfied and the funds are spent on appropriate projects. Such
impact fees are recognized as capital contributions when received. As of June 30, 2021, the Utilities have
restricted cash and cash equivalents in the amount of$10,320,125 from impact fees.
24
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
4. CAPITAL ASSETS
Major classifications of capital assets are summarized as follows on June 30, 2021:
Water Sewer Stormwater Street Lighting
Utility Utility Utility Utility Total
Capital assets,not being depreciated:
Land $ 25,447,255 $ 7,545,739 $ 3,185,611 $ $ 36,178,605
Water rights 32,363,285 - - 32,363,285
Construction in progress 63,061,083 166,188,484 9,207,313 - 238,456,880
Total capital assets not being depreciated 120,871,623 173,734,223 12,392,924 - 306,998,770
Capital assets being depreciated:
Buildings 70,482,153 128,692,190 10,108,791 - 209,283,134
Improvements other than buildings,
principally water and sewer
lines,and stormwater and
streetlighting facilities 391,107,646 208,771,057 152,103,288 12,903,275 764,885,266
Machinery and equipment 33,332,601 36,753,648 4,648,796 - 74,735,045
Total capital assets being depreciated 494,922,400 374,216,895 166,860,875 12,903,275 1,048,903,445
Less accumulated depreciation:
Buildings (22,026,626) (36,778,069) (4,593,959) - (63,398,654)
Improvements other than buildings,
principally water and sewer
lines,and stormwater and
streetlighting facilities (122,206,923) (57,000,886) (55,698,480) (3,690,521) (238,596,810)
Machinery and equipment (27,106,296) (31,794,987) (3,798,214) - (62,699,497)
Total accumulated depreciation (171,339,845) (125,573,942) (64,090,653) (3,690,521) (364,694,961)
Total capital assets,being depreciated net 323,582,555 248,642,953 102,770,222 9,212,754 684,208,484
Total capital assets,net $444,454,178 $422,377,176 $115,163,146 $ 9,212,754 $ 991,207,254
25
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
The following is a summary of transactions affecting the combined total of capital assets for the year ended
June 30,2021:
Balance Balance
June 30,2020 Additions Transfers Retirements June 30,2021
Capital assets,not being depreciated:
Land $ 34,735,251 $ 1,443,354 $ - $ - $ 36,178,605
Water rights 32,363,285 - - - 32,363,285
Construction in progress 167,800,040 135,938,753 (65,281,913) 238,456,880
Total capital assets not being depreciated 234,898,576 137,382,107 (65,281,913) - 306,998,770
Buildings 194,793,412 - 14,489,722 - 209,283,134
Improvements other than buildings,
principally water and sewer
lines,and stormwater and
streetlighting facilities 714,930,062 1,688,851 50,209,507 (1,943,154) 764,885,266
Machinery and equipment 73,810,594 2,638,468 582,684 (2,296,701) 74,735,045
Total capital assets being depreciated 983,534,068 4,327,319 65,281,913 (4,239,855) 1,048,903,445
Less accumulated depreciation:
Buildings (59,892,882) (3,505,772) - (63,398,654)
Improvements other than buildings,
principally water and sewer
lines,and stormwater and
strectlighting facilities (225,829,979) (14,709,985) 1,943,154 (238,596,810)
Machinery and equipment (61,388,417) (2,771,481) 1,460,401 (62,699,497)
Total accumulated depreciation (347,111,278) (20,987,238) - 3,403,555 (364,694,961)
Total capital assets,being depreciated net 636,422,790 (16,659,919) 65,281,913 (836,300) 684,208,484
Total capital assets,net $871,321,366 $120,722,188 $ - $ (836,300) $ 991,207,254
26
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
5. LONG-TERM OBLIGATIONS
The following is a summary of outstanding long-term obligations on June 30, 2021:
Interest Maturity Water Sewer Stormwater Street Lighting
Rate Years Utility Utility Utility Utility Total
Direct Placement Revenue Bonds:
2009 Series Revenue
Stimulus Bonds 0.00% 2012-2031 $ $ 3,150,000 $ $ $ 3,150,000
2010 Series Revenue
Bonds 2.73% 2011-2031 6,545,000 6,545,000
2011 Series Revenue
Bonds 2.37% 2011-2027 - 3,300,000 3,300,000
2012 Series Revenue
Bonds 1.73% 2012-2027 7,357,950 1,507,050 8,865,000
Revenue Bonds:
2017 Series Revenue
Refunding Bonds 3.15% 2018-2037 3,010,000 60,988,410 - 2,146,590 66,145,000
plus unamortized
premium 293,761 6,731,623 - 234,580 7,259,964
2020 Series Revenue
Refunding Bonds 4-5% 2020-2050 61,362,111 84,472,630 11,555,259 - 157,390,000
plus unamortized
premium 15,380,530 21,173,227 2,896,348 - 39,450,105
Total Revenue Bonds 80,046,402 190,418,840 19,258,657 2,381,170 292,105,069
Other Long Term Obligations:
Net pension liability 654,375 228,208 74,851 4,609 962,043
Long-term compensation liability 2,761,055 1,069,338 416,046 96,123 4,342,562
Total Other Long Term Obligations 3,415,430 1,297,546 490,897 100,732 5,304,605
Total Long-Term Obligations $ 83,461,832 $ 191,716,386 $ 19,749,554 $ 2,481,902 $ 297,409,674
27
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
The following is a summary of the financial statement classification of long-term obligations on June 30,
2021:
Water Sewer Stormwater Street Lighting
Utility Utility Utility Utility Total
Financial statement classification:
Current maturities revenue bonds $ 551,647 $ 3,201,733 $ 534,391 $ 54,640 $ 4,342,411
Current maturities of long-term obligations 403,353 2,288,497 381,709 39,030 3,112,589
Long-term obligations,less current maturities 79,091,402 184,928,610 18,342,557 2,287,500 284,650,069
Total long-term debt 80,046,402 190,418,840 19,258,657 2,381,170 292,105,069
Current portion of long-term compensation 651,921 253,866 131,959 59,861 1,097,607
Long-term compensation liability,less current 2,109,134 815,472 284,087 36,262 3,244,955
Net pension liability 654,375 228,208 74,851 4,609 962,043
Total Long-Term Obligations $ 83,461,832 $ 191,716,386 $ 19,749,554 $ 2,481,902 $ 297,409,674
The following is a summary of revenue bond activity during the year ended June 30,2021:
Direct Placement Original Issue Balance Balance Due Within One
Revenue Bonds: (Debt Only) June 30,2020 Additions Reductions June 30,2021 Year
2009 Series Revenue
Stimulus Bonds $ 6,300,000 $ 3,465,000 $ $ 315,000 $ 3,150,000 $ 315,000
2010 Series Revenue
Bonds 12,000,000 7,110,000 565,000 6,545,000 580,000
2011 Series Revenue
Bonds 8,000,000 3,805,000 505,000 3,300,000 520,000
2012 Series Revenue
Bonds 28,565,000 11,155,000 2,290,000 8,865,000 2,330,000
Revenue Bonds:
2017 Series Revenue
and Refunding Bonds 72,185,000 69,705,000 3,560,000 66,145,000 3,710,000
plus unamorlized
premium 9,593,680 7,809,082 549,118 7,259,964 549,118
2020 Series Revenue
Bonds 157,390,000 157,390,000 - 157,390,000 -
plus unamortized
premium 40,810,454 - 40,810,454 1,360,349 39,450,105 1,360,349
Total Revenue Bonds $ 103,049,082 $ 198,200,454 $ 9,144,467 $ 292,105,069 $ 9,364,467
Other Long Term Obligations:
Net pension liability 7,042,296 6,080,253 962,043
Note payable 8,500,000 2,125,000 2,125,000 - -
Long-term compensation liability 3,732,162 610,400 4,342,562 1,097,607
Total Other Long Term Obligations $ 12,899,458 $ 610,400 $ 8,205,253 $ 5,304,605 $ 1,097,607
Total Long-Term Obligations $ 115,948,540 $ 198,810,854 $ 17,349,720 $ 297,409,674 $ 10,462,074
On November 17,2009,the Sewer Utility issued$6,300,000 in Revenue Bonds. The 2009 Stimulus Bonds
were issued as part of economic stimulus funding through the State of Utah. The Sewer Utility used the
funds to replace the digester cover and walls at the reclamation plant facility. These bonds mature 2012
through 2031 with annual principal payments of$315,000 beginning February 2012 and the average interest
of 0 percent. The Sewer Utility incurred issuance costs of$69,740 related to the 2009 series bonds. The
issuance cost is being amortized commensurate with the debt service payments beginning February 2012.
On September 14,2010,the Sewer Utility issued$12,000,000 in Revenue Bonds at an interest rate of 2.73
percent. The 2010 Series Bonds were issued by direct purchase through JPMorgan Chase Bank as
authorized by City Council resolution for the purchase, acquisition and construction of improvements,
facilities and properties including the sewer Orange Street trunk line or other various improvements. This
issue matures February 1,2031.
28
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
On October 19, 2011, the Utilities issued$8,000,000 in Revenue Bonds at an interest rate of 2.37 percent.
The Series 2011 Bonds were issued by direct purchase through JPMorgan Chase Bank as authorized by
City Council resolution for the purchase, acquisition and construction of improvements, facilities and
properties including the Folsom Avenue stormwater project or other various stormwater improvements.
This issue matures February 1,2027.
On December 11, 2012, the Sewer and Stormwater Utilities issued $28,565,000 ($23,708,950 Sewer and
$4,856,050 Stormwater)in Revenue Bonds at an interest rate of 1.73 percent. The Series 2012 Bonds were
issued by direct purchase through JPMorgan Chase Bank as authorized by City Council resolution. The
principal purpose of the Series 2012 Bonds was to defease a portion of the Series 2004 Bonds; $20,490,662
was placed in escrow that, when combined with related interest earnings, will be necessary to make
principal and interest payments totaling $19,145,000 and $1,384,181, respectively. This issue matures
February 1, 2027.
On April 5, 2017, the Water, Sewer and Street Lighting Utilities issued $72,185,000 ($6,400,000 Water,
$63,569,743 Sewer and $2,215,257 Street Lighting) in Revenue Bonds at an interest rate of 3.2 percent.
The principal purpose of the Series 2017 Bonds was to finance a new water reclamation facility and a
necessary sewer collection system expansion. The Series 2017 bonds will help finance improvements to
the City's street lighting.The 2017 bond also fully defeased the Series 2008 Bonds; $7,417,319 was placed
in escrow that, when combined with related interest earnings, will be used to make principal and interest
payments totaling$7,145,000 and $272,319, respectively. The net carrying amount of the refunded bonds
was $7,173,449. The 2017 refunding transaction resulted in a$163,096 deferred outflow of resources and
premiums totaling$9,593,680. This issue matures February 1, 2037.
On August 12,2020,the Water, Sewer and Stormwater Utilities issued$157,390,000($61,362,110 Water,
$84,472,630 Sewer and $11,555,260 Stormwater) in Revenue Bonds at an average interest rate of 4.6
percent. The principal purpose of the Series 2020 Bonds was to finance a new water reclamation facility
and water treatment plant updates. The Series 2020 bonds will also help finance improvements to the City's
storm drainage system. The issuance resulted in net proceeds of $197,500,000 after premium of
$40,810,454 and$700,454 cost of issuance. This issue fully matures February 1, 2050.
On September 15,2020,the Utilities' secured funding from the EPA under the Water Infrastructure Finance
and Innovation Act (WIFIA) program of up to $348,635,000. This funding will be provided on a
reimbursement basis and will be used for the construction of a water reclamation facility to replace the fully
depreciated facility that is still in use. Under the agreement with the EPA the Utilities will begin repaying
the amounts reimbursed by the program in 2029 with interest of 1.34 percent. The Sewer incurred financial
charges of$102,255 related this agreement.
29
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
Maturities of the Revenue Bonds by Bond Series are as follows:
Principle
2009 Series 2010 Series 2011 Series 2012 Series 2017 Series 2020 Series Total
2022 $ 315,000 $ 580,000 $ 520,000 $ 2,330,000 $ 3,710,000 $ $ 7,455,000
2023 315,000 595,000 530,000 2,375,000 3,900,000 7,715,000
2024 315,000 610,000 545,000 2,415,000 4,090,000 7,975,000
2025 315,000 625,000 555,000 575,000 3,190,000 3,175,000 8,435,000
2026 315,000 645,000 570,000 580,000 3,350,000 3,335,000 8,795,000
2027-2031 1,575,000 3,490,000 580,000 590,000 19,020,000 19,340,000 44,595,000
2032-2036 - - - - 23,465,000 24,680,000 48,145,000
2037-2041 5,420,000 31,115,000 36,535,000
2042-2046 - 38,595,000 38,595,000
2047-2050 - - - - - 37,150,000 37,150,000
$ 3,150,000 $ 6,545,000 $ 3,300,000 $ 8,865,000 $ 66,145,000 $ 157,390,000 $ 245,395,000
Interest
2009 Series 2010 Series 2011 Series 2012 Series 2017 Series 2020 Series Total
2022 $ $ 178,679 $ 78,210 $ 153,367 $ 3,086,763 $ 7,280,550 $ 10,777,569
2023 162,845 65,886 113,057 2,901,263 7,280,550 10,523,601
2024 146,601 53,325 71,968 2,706,263 7,280,550 10,258,707
2025 129,948 40,408 30,188 2,501,763 7,280,550 9,982,857
2026 112,886 27,255 20,241 2,342,263 7,121,800 9,624,445
2027-2031 315,335 13,746 25,518 9,434,387 32,935,500 42,724,486
2032-2036 - - - 4,989,000 27,592,750 32,581,750
2037-2041 271,000 21,155,050 21,426,050
2042-2046 - 13,681,950 13,681,950
2047-2050 - - - - 4,663,400 4,663,400
$ $ 1,046,294 $ 278,830 $ 414,339 $ 28,232,702 $ 136,272,650 $ 166,244,815
Maturities of the Revenue Bonds by Utility are as follows:
Principle
Water Sewer Stormwater Street Lighting Total
2022 $ 955,000 $ 5,490,230 $ 916,100 $ 93,670 $ 7,455,000
2023 1,005,000 5,677,820 933,750 98,430 7,715,000
2024 1,050,000 5,866,090 955,550 103,360 7,975,000
2025 1,237,847 6,202,841 885,852 108,460 8,435,000
2026 1,300,226 6,467,425 913,449 113,900 8,795,000
2027-2031 7,540,144 34,307,972 2,100,204 646,680 44,595,000
2032-2036 9,622,066 35,913,168 1,811,956 797,810 48,145,000
2037-2041 12,130,898 21,935,421 2,284,401 184,280 36,535,000
2042-2046 15,047,148 20,714,284 2,833,568 - 38,595,000
2047-2050 14,483,782 19,938,739 2,727,479 - 37,150,000
$ 64,372,111 $ 162,513,990 $ 16,362,309 $ 2,146,590 $ 245,395,000
Interest
Water Sewer Stormwater Street Lighting Total
2022 $ 2,988,990 $ 7,049,940 $ 638,806 $ 99,833 $ 10,777,569
2023 2,941,240 6,867,582 619,629 95,150 10,523,601
2024 2,890,990 6,677,406 600,083 90,228 10,258,707
2025 2,838,490 6,479,244 580,063 85,060 9,982,857
2026 2,776,598 6,214,646 553,564 79,637 9,624,445
2027-2031 12,840,661 27,126,912 2,436,144 320,769 42,724,486
2032-2036 10,757,668 19,628,651 2,025,805 169,626 32,581,750
2037-2041 8,247,783 11,615,892 1,553,161 9,214 21,426,050
2042-2046 5,334,223 7,343,226 1,004,501 - 13,681,950
2047-2050 1,818,134 2,502,888 342,378 - 4,663,400
$ 53,434,777 $ 101,506,387 $ 10,354,134 $ 949,517 $ 166,244,815
30
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
The Bond Resolutions as amended and approved in conjunction with the issuance of the Improvement and
Refunding Revenue Bonds provide,among other things,regarding the Water, Sewer, Stormwater, and
Street Lighting Utilities that:
• All revenues derived from providing utility services by each Utility shall be deposited into the
Revenue Fund.
• The operating and maintenance costs of each Utility shall be paid as a first charge to the Revenue
Fund.
• Monthly transfers are made from the Revenue Fund to the Principal and Interest Fund.The required
monthly transfers to the Principal and Interest Fund equal one-twelfth of the next year's debt
service.
• Any remaining amounts in the Revenue Fund may be applied to any lawful Utility purpose.
• The Bond Resolutions constitute a contractual agreement between the City and the bondholders,
under which the City has irrevocably pledged the net revenues of the Water, Sewer, Stormwater
and Street Lighting Utilities for the payment of the bonds.Net revenues are defined as the revenues
derived by the City from or attributable to the Water, Sewer, Stormwater and Street Lighting
Utilities, less all operating and maintenance costs. Under the terms of the Bond Resolutions, the
City covenanted that rates will be established to yield aggregate net revenues equal to at least
1.25 times the aggregate debt service to become due in the next fiscal year. If the aggregate
revenues fall below 1.25 times the aggregate debt service,the Water, Sewer, Stormwater and Street
Lighting Utilities must make quarterly payments to a debt service reserve account.
• In an event of default, the Bond Trustee shall apply pledged revenues, 1) to the payment of
reasonable and proper changes and expenses of the Trustee, 2) to the payment of Operation and
Maintenance Costs due and payable as certified by the City,and 3)to the payment of principal and
interested due on the bonds.
6. INTERFUND AND RELATED PARTY TRANSACTIONS
Operating expenses include the following amounts charged by other funds of the City for the year ended
June 30,2021:
Water Sewer Stormwater Street Lighting Combined
Utility Utility Utility Utility Total
Administrative services 841,922 457,351 147,607 27,055 1,473,935
Fleet maintenance 1,033,140 332,753 191,101 - 1,556,994
Information Management Services 1,433,206 647,925 460,634 - 2,541,765
Risk management 733,756 120,524 39,255 - 893,535
Payment in lieu of taxes 385,780 809,149 124,259 74,170 1,393,358
Franchise fees 168,649 181,938 37,826 - 388,413
Street sweeping - - 236,000 - 236,000
Total S 4,596,453 $ 2,549,640 $ 1,236,682 $ 101,225 $ 8,484,000
31
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
The following amounts are included in revenues and expenses in the financial statements of the
corresponding utility:
Water Sewer Stormwater Street Lighting
Utility Utility Utility Utility Total
Charges between Water,Sewer,
Stormwater and Streetlighting
Utilities for various services $ (95,794) $ 185,386 $ (89,592) $ $
Billing costs charged by
the Water Utility 1,864,810 (949,872) (674,938) (240,000)
Billing system costs charged by
Water Utilityfor Refuse
Collection Fund of the City
and for the City's Hive pass 1,057,019 - - - 1,057,019
Revenues from Utility sales and
services charged to other City funds 2,688,495 68,111 219,198 127,471 3,103,275
Revenues from the City Fire Depart-
-ment for fire hydrant rentals 108,000 - - - 108,000
During the year ended June 30, 2021, the Water Utility paid $15,668,662 for water purchased from and
treated by the Metropolitan Water District of Salt Lake City and Sandy City (the "District"). The Water
utility also paid a capital assessment or$7,866,115 to the District.The District is considered a related party
because some of its board members are appointed by the Mayor and approved by the City Council.
7. PENSION PLANS
Plan Description—Eligible plan participants are provided with pensions through the Utah Retirement
Systems. The Utah Retirement Systems following pension trust funds are relevant to the Utilities:
• Public Employees Noncontributory Retirement System(Noncontributory System)
• Public Employees Contributory Retirement System(Contributory System)
• Tier 2 Public Employees Contributory Retirement System (Tier 2 Public Employees System) is a
multiple employer cost sharing public employee retirement system
The Tier 2 Public Employees System became effective July 1, 2011. All eligible employees beginning on
or after July 1, 2011, who have no previous service credit with any of the Utah Retirement Systems, are
members of the Tier 2 Retirement System.
The Utah Retirement Systems(URS)are established and governed by the respective sections of Title 49 of
the Utah Code Annotated 1953, as amended. The URS' defined benefit plans are amended statutorily by
the State Legislature. The Utah State Retirement Office Act in Title 49 provides for the administration of
the URS under the direction of the Utah State Retirement Board whose members are appointed by the
Governor. The URS are fiduciary funds defined as pension(and other employee benefit) trust funds. URS
is a component unit of the State of Utah. Title 49 of the Utah Code grants the authority to establish and
amend the benefit terms. URS issues a publicly available financial report that can be obtained by writing
Utah Retirement Systems, 540 E. 200 S, Salt Lake City,Utah 84102 or visiting the website: www.urs.org.
32
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
Benefits provided: URS provides retirement, disability, and death benefits. Retirement benefits are as
follows:
Years of Service
Final Average Required and/or Age Benefit Percent per
System Salary Elibigility for Benefits Year of Service COLA*
30 years any age
25 years any age* 2.0%per year all
Noncontributory System Highest 3 years 20 years age 60* years Up to 4%
10 years age 62*
4 years age 65
30 years any age 1.25%per year to
20 years age 60* June 1975;2.00%per
Contributory System Highest 5 years 10 years age 62* year July 1975 to Up to 4%
4 years age 65 present
35 years any age
Tier 2 Public Employees Highest 5 20 years any age 60* 1.5%per year all
System g years 10 years age 62* years Up to 2.5%
4 years age 65
*With actuarial reductions.
**All post-retirement cost-of-living adjustments are non-compounding and are based on the original benefit.
The cost-of-living adjustments are also limited to the actual Consumer Price Index(CPI)increase for the year,
although unused CPI increases not met may be carried forward to subsequent years.
Contributions—As a condition of participation in URS, employers and/or employees are required to
contribute certain percentages of salary and wages as authorized by statute and specified by the Utah State
Retirement Board. Contributions are actuarially determined as an amount that, when combined with
employee contributions(where applicable),is expected to finance the costs of benefits earned by employees
during the year,with an additional amount to finance any unfunded actuarial accrued liability.Contributions
rates are as follows:
33
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
Employer Employer
Employee Contribution Rate for
Paid Rates 401(k)Plan
Contributory System:
11 Local Government Division Tier 1 6.00% 14.46% N/A
111 Local Government Division Tier 2 N/A 15.80% 0.89%
Noncontributory System:
15 Local Government division Tier 1 N/A 18.47% N/A
Tier 2 Defined Contribution Only:
211 Local Government N/A 6.69% 10.00%
Tier 2 rates include a statutory required contribution to finance the unfunded actuarial accrued liability of
the Tier 1 plans.
For fiscal year ended June 30,2021,the employer and employee contributions to the URS were as follows:
Employer Employee
System Contributions Contributions
Noncontributory System $ 3,212,261 N/A
Contributory System 78,227 -
Tier 2 Public Employees Contributory Retirement System 655,937 -
Total Contributions $ 3,946,425 $ -
Contributions reported are the URS Board approved required contributions by the Systems.
Contributions in the Tier 2 Systems are used to finance the unfunded liabilities of the Tier 1 Systems.
Pension Liabilities,Pension Expense, and Deferred Outflows of Resources and Deferred Inflow of
Resources Related to Pensions
The Utilities report a net pension asset of$587,777 and a net pension liability of$962,043 on June 30,
2021.
Proportionate Net Pension Net Pension
Share Liability(Asset) Liability
Noncontributory System 1.7494% - 897,355
Contributory System 3.2796% 587,777 -
Tier 2 Public Employees Sysl 0.1090% - 64,688
$ 587,777 $ 962,043
The net pension asset and liability were measured as of December 31, 2020, and the total pension liability
used to calculate the net pension asset and liability was determined by an actuarial valuation as of January
1, 2020 and rolled forward using generally accepted actuarial procedures. The proportion of the net
pension asset and liability is equal to the ratio of the employer's actual contributions to URS during the
plan year over the total of all employer contributions to URS during the plan year.
For the year ended June 30, 2021,the Utilities recognized net pension expenses of$1,235,914.
34
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
On June 30, 2021,the Utilities reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual $ 1,263,412 $ 29,621
Changes in assumptions 81,822 119,732
Net difference between projected and actual
earnings on pension plan investment - 7,738,767
Changes in proportion and differences between contributions
and proportionate share of contributions 98,349 114,012
Contributions subsequent to measurement 1,909,891 -
$ 3,353,474 $ 8,002,132
Contributions of$1,909,891 reported as deferred outflows of resources related to pensions results from
contributions made by the Utilities prior to fiscal year end, but subsequent to the measurement date of
December 31, 2020.
These contributions will be recognized as a reduction of the net pension liability in the upcoming fiscal
year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related
to pensions will be recognized in pension expense as follows:
Net Deferred
Outflows (Inflows)
Year Ended December 31, of Resources
2021 (1,909,891)
2022 (885,110)
2023 (2,686,461)
2024 (1,252,697)
2025 15,633
Thereafter 159,977
Actuarial assumptions: The total pension liability in the December 31, 2020 actuarial valuation was
determined using the following actuarial assumptions applied to all periods included in the measurement:
Inflation 2.50 percent
Salary increases 3.25—9.75 percent,average, including inflation
Investment rate of return 6.95 percent,net of pension plan investment expenses,
including inflation.
Mortality rates were adopted from an actuarial experience study dated January 1, 2020. The retired
mortality tables are developed using URS retiree experience and are based upon gender, occupation, and
age as appropriate with projected improvement using 80% of the ultimate rates from the MP-2019
improvement assumption using a base year of 2020. The mortality assumption for active members is the
PUB-2010 Employees Mortality Table for public employees, teachers, and public safety members,
respectively.
The actuarial assumptions used in the January 1, 2020 valuation were based on the results of an actuarial
experience study for the five-year period ending December 31,2019.
35
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
The long-term expected rate of return on pension plan investments was determined using a building-block
method, in which best-estimate ranges of expected future real rates of return (expected returns, net of
pension plan investment expense and inflation) are developed for each major asset class and is applied
consistently to each defined benefit pension plan. These ranges are combined to produce the long-term
expected rate of return by weighting the expected future real rates of return by the target asset allocation
percentage and by adding expected inflation.The target allocation and best estimates of arithmetic real rates
of return for each major asset class are summarized in the following table:
Expected Return Arithmetic Basis
Long-Term
Expected
Real Portfolio
Target Asset Arithmetic Real Rate of
Asset Class Allocation Basis Return
Equity securities 37.00% 6.30% 2.33%
Debt securities 20.00% 0.00% 0.00%
Real assets 15.00% 6.19% 0.93%
Private equity 12.00% 9.50% 1.14%
Absolute return 16.00% 2.75% 0.44%
Cash and cash equivalents 0.00% 0.00% 0.00%
Totals 100.00% 4.84%
Inflation 2.50%
Expected arithmetic nominal return 7.34%
The 6.95 percent assumed investment rate of return is comprised of an inflation rate of 2.50 percent, a real
return of 4.45 percent that is net of investment expense.
Discount Rate—The discount rate used to measure the total pension liability was 6.95 percent. The
projection of cash flows used to determine the discount rate assumed that employee contributions will be
made at the current contribution rate and that contributions from all participating employers will be made
at contractually required rates that are actuarially determined and certified by the URS Board. Based on
those assumptions,the pension plan's fiduciary net position was projected to be available to make all
projected future benefits payments of current active and inactive employees. Therefore, the long-term
expected rate of return on pension plan investments was applied to all periods of projected benefit
payments to determine the total pension liability. The discount rate does not use the Municipal Bond
Index Rate. The discount rate remained unchanged at 6.95 percent.
Sensitivity of the proportionate share of the net pension asset and liability to changes in the discount rate:
The following presents the proportionate share of the net pension liability calculated using the discount rate
of 6.95 percent, as well as what the proportionate share of the net pension liability would be if it were
calculated using a discount rate that is I-percentage-point lower(5.95 percent)or 1-percentage-point higher
(7.95 percent)than the current rate.
36
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
1%Decrease Discount Rate 1%Increase
System 5.95% (6.95%) (7.95%)
Noncontributory System $ 15,557,493 $ 897,356 $(11,324,073)
Contributory System 874,214 (587,777) (132,519)
Tier 2 Public Employees Sys1 1,088,506 64,688 (718,505)
Total $ 17,520,213 $ 374,266 $(12,175,097)
Pension Plan Fiduciary Net Position—Detailed information about the pension plan's fiduciary net
position is available in the separately issued URS financial report.
Defined Contribution Savings Plans—The Defined Contribution Savings Plans are administered by the
URS Board and are generally supplemental plans to the basic retirement benefits of URS but may also be
used as a primary retirement plan. These plans are voluntary tax-advantaged retirement savings programs
authorized under sections 401(k), 457(b), and 408 of the Internal Revenue Code. Detailed information
regarding plan provisions is available in the separately issued URS financial report.
The Utilities participates in the following Defined Contribution Savings Plans with Utah Retirement
Systems:
• 401(k)Plan
• 457(b)Plan
• Roth IRA Plan
• Traditional IRA Plan
Employee and employer contributions to the Utah Retirement Defined Contribution Savings Plans for the
fiscal year ended June 30 were as follows:
401(k) Plan 2021
Employer Contributions $ 275,984
Employee Contributions 511,231
457 Plan
Employer Contributions -
Employee Contributions 56,349
Roth IRA Plan
Employer Contributions N/A
Employee Contributions 172,542
Traditional IRA Plan
Employer Contributions N/A
Employee Contributions 2,650
37
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
8. COMMITMENTS AND CONTINGENCIES
As of June 30, 2021, the Utilities had outstanding commitments for the construction and acquisition of
property and equipment. Commitments of the Water Utility totaled $46,265,653, of the Sewer Utility
totaled$108,199,417,of the Stormwater Utility totaled$4,908,968,and of the Street Lighting Utility totaled
$16,884.
Metropolitan Water District—To meet the water supply needs of Salt Lake City and Sandy through the
year 2035, the Metropolitan Water District Board completed a new treatment plant. The new treatment
plant is located at the Point of the Mountain in Draper City and includes a conveyance pipeline connecting
the new plant to the District's Little Cottonwood Water Treatment Plant. The cost of the treatment plant
and conveyance system totaled over$300 million, and the Utilities' share of the cost is over$200 million.
The 70 million gallon per day plant is funded by an assessment paid by the two cities. Salt Lake City has
62.5 percent of the capacity and cost assessment in the treatment plant.
Following are the future minimum payments due from the Water Utility through 2035:
Year Ending June 30,
2022 $ 7,021,892
2023 7,021,892
2024 7,021,892
2025 7,021,892
2026 7,021,892
2027-2031 35,109,460
2032-2035 24,576,622
Total $ 94,795,542
Water Right Purchase—In 2009, the City purchased water rights connected to Big Cottonwood Canyon
stream flows from one of its water exchange customers called Big Cottonwood Tanner Ditch Irrigation
Company in the amount of $22,764,010. Under this new agreement the City will continue to provide
culinary water to the customers of the Big Cottonwood Tanner Ditch Irrigation Company and will provide
them with water vouchers which will entitle them to a set amount of water at no charge in return for their
ownership in the water rights to the canyon stream. The City also agreed to upgrade the water system to
meet current water system standards and to take ownership of the system. The financial statements show
the increase in water rights and the value of the system purchased. Revenue collected in advance includes
the value of the water vouchers issued in the amount of$9,002,327 long term and $1,022,595 in current
liabilities.
Contingent Liabilities—The Utilities are involved in legal proceedings, primarily related to property
damages and personal injury arising in the ordinary course of business. Based on the facts currently
available, management accrued liabilities totaling $1,935,264 which is the estimated amount of litigation
probable to have a negative outcome.Of this potential liability$1,670,264 is Water Fund related, $132,000
is Sewer Fund related,and$133,000 is Stormwater Fund related.
Of the $1,670,264 related to the Water Fund $250,000 is related to a potential future environmental
remediation of soils contaminated with lead as a result of shooting range activities operated by the Police
Mutual Aid Association on property owned by the Water Fund. Multiple parties could be responsible. The
current estimated loss could vary depending on future decisions related to the possible remediation,
38
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2021
regulatory requirements, and cost-sharing by other responsible parties, if any. The Utilities are currently
investigating the extent of lead contamination and potential remediation alternatives.
Environmental Remediation—The Utilities are participating in two environmental remediation sites.
In 2003 the Utilities began an environmental remediation process on the Sewer's Northwest Oil Drain
(NWOD) Canal under a US Environmental Protection Agency (US EPA) administrative order and with a
cost-sharing agreement between the Utilities,British Petroleum(BP),and Chevron. The two oil companies
contribute 2/3 of the project costs of the remediation, and the Utilities contributes 1/3.
Over the life of the process, as of June 30, 2021, the oil companies have contributed approximately $21.8
million, and the Utilities have capitalized as construction in progress a total of$33,497,580 in remediation
costs. The Utilities estimate that the remaining remediation activities will generate about $200,000 in
contributions from the oil companies,will cost about$300,000, and will continue through fiscal year 2021.
The Utilities have budgeted accordingly.
The Utilities is the owner of many acres of property in Parley's Canyon that are held for watershed purposes.
Located within this area was an active shooting range that was operated by the Police Mutual Aid
Association("PMAA") for the past 50 years. PMAA recently decided to stop operating the shooting range
and control of the property has been turned back to the Utilities. An environmental assessment has been
started to determine the extent of lead present at the site. The extent and manner of clean-up of the lead is
not yet known,but it is anticipated that impacted soils will be stabilized and removed for proper disposal.
There are multiple potentially responsible parties who operated and used the shooting range who may be
required to share in the cost of the ultimate clean-up of the site. Currently,the estimate of professional fees
and basic efforts to clean-up the site is$1,500,000. The clean-up costs are anticipated to be divided between
the Water Enterprise Fund and Salt Lake City's General Fund,with the General Fund paying approximately
85% of the cost. This estimate could change depending on future decisions related to the clean-up along
with the value of contributions toward the clean-up received from third parties. Salt Lake City is entering
into a Voluntary Cleanup Program through the Utah Department of Environmental Quality to conduct the
remediation.
9. SUBSEQUENT EVENTS
On September 7, 2021, the Utilities settled a claim for$250,000 more than was originally estimated. The
Utilities determined that this settlement is a Type 1 subsequent event, and accordingly, the additional
amount was recognized as an administrative expense and a liability as of June 30, 2021. The Utilities
allocated the$250,000 between the Water Utility,Sewer Utility and Stormwater Utility: $150,000,$67,000,
and$33,000; respectively.
39
REQUIRED SUPPLEMENTARY INFORMATION
40
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
REQUIRED SUPPLEMENTARY INFORMATION
PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
YEAR ENDED JUNE 30,2021(LAST 10 FISCAL YEARS)
Proportionate
share of the net
Proportionate pension liability Plan fiduciary net
Proportion of the share of the net (asset)as a position as a
net pension pension liability percentage of its percentage of its
liability(asset) (asset) Covered payroll covered payroll covered payroll
Noncontributory System
2021 1.7494% $ 897,356 $ 13,711,302 6.54% 99.20%
2020 1.7773% $ 6,698,445 $ 13,995,285 83.86% 98.60%
2019 1.8178% $ 13,385,962 $ 14,793,842 90.48% 87.00%
2018 1.9813% $ 8,698,591 $ 16,167,965 53.80% 91.90%
2017 2.1359% $ 13,703,968 $ 17,726,536 77.31% 87.80%
2016 2.1249% $ 12,021,564 $ 17,512,085 68.65% 87.80%
Contributory System
2021 3.2796% $ (587,777) $ 540,992 -108.65% 103.90%
2020 3.6260% $ 237,636 $ 618,458 111.00% 98.60%
2019 4.3528% $ 1,766,386 $ 814,726 216.81% 91.20%
2018 4.5462% $ 370,025 $ 922,502 40.11% 98.20%
2017 4.4791% $ 1,471,933 $ 1,076,401 136.75% 92.90%
2016 2.8342% $ 1,992,129 $ 1,207,692 164.95% 85.70%
Tier 2 Public Employees System
2021 0.1090% $ 64,688 $ 1,742,617 3.71% 98.30%
2020 0.4723% $ 106,215 $ 7,226,733 9.46% 96.50%
2019 0.4794% $ 205,337 $ 5,597,092 3.67% 90.80%
2018 0.4529% $ 39,994 $ 4,429,777 0.90% 97.40%
2017 0.3644% $ 40,633 $ 2,989,537 1.36% 95.10%
2016 0.4029% $ (879) $ 2,603,661 -0.03% 100.20%
*In accordance with paragraph 81.a of GASB 68,employers will need to disclose a 10-year history of their
proportionate share of the Net Pension Liability(Asset)in their RSI.The 10-year schedule will need to be
built prospectively.The schedule above is for the five years currently available.
41
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS
YEAR ENDED JUNE 30,2021(LAST 10 FISCAL YEARS)
Noncontributory System 2021 2020 2019 2018 2017 2016
Actuarial determined contributions $3,212,261 $3,202,173 $3,181,791 $3,403,548 $3,643,288 $3,495,253
Contributions in relation to the contractually required contribution (3,212,261) (3,202,173) (3,181,791) (3,403,548) (3,643,288) (3,495,253)
Contribution deficiency - - - - - -
Covered payroll 17,505,510 14,164,299 14,507,827 16,607,909 16,889,332 17,370,860
Contributions as a percentage of covered payroll 18.35% 22.61% 21.93% 20.49% 21.57% 20.12%
Contributory System 2021 2020 2019 2018 2017 2016
Actuarial determined contributions $ 78,227 $ 93,955 $ 117,808 $ 133,422 $ 154,748 $ 174,630
Contributions in relation to the contractually required contribution (78,227) (93,955) (117,808) (133,422) (154,748) (174,630)
Contribution deficiency - - - - - -
Covered payroll 540,989 649,764 738,229 872,550 963,222 1,077,525
Contributions as a percentage of covered payroll 14.46% 14.46% 15.96% 15.29% 16.07% 16.21%
Tier 2 Public Employees System— 2021 2020 2019 2018 2017 2016
Actuarial determined contributions $ 655,937 $ 590,223 $ 488,477 $ 373,210 $ 216,458 $ 216,458
Contributions in relation to the contractually required contribution (655,937) (590,223) (488,477) (373,210) (216,458) (216,458)
Contribution deficiency - - - - - -
Covered payroll 4,151,500 6,562,958 1,801,870 5,056,344 3,001,565 3,001,565
Contributions as a percentage of covered payroll 15.80% 8.99% 27.11% 7.38% 7.21% 7.21%
*In accordance with paragraph 8 La of GASB 68,employers will need to disclose a 10-year history of their contributions in their RSI.The
10-year schedule will need to be built prospectively.The schedule above is for the five years currently available.
**Contributions in Tier 2 include an amortization rate to help fund the unfunded liabilities in the Tier 1 systems.Tier 2 systems were
created effective July 1,2011
42
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
REQUIRED SUPPLEMENTARY INFORMATION
NOTES
YEAR ENDED JUNE 30,2021
CHANGES IN ASSUMPTIONS:
There were a number of demographic assumptions(e.g.rates of termination, disability,retirement, as well
as an updated mortality and salary increase assumption) updated for use in the January 1, 2021 actuarial
valuation. These assumption updates were adopted by the Utah State Retirement Board as a result of an
Actuarial Experience Study performed for the Utah Retirement Systems. In aggregate, those assumption
changes resulted in a$201 million increase in the Total Pension Liability,which is about 0.50%of the Total
Pension Liability of as December 31,2019 for all systems combined.The Actuarial Experience Study report
as of December 31,2019 provides detailed information regarding those assumption changes,which may be
accessed online at newsroom.urs.org under the"Retirement Office"column using the"Reports and Stats"
tab.
43
SUPPLEMENTAL INFORMATION
44
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
SUPPLEMENTAL SCHEDULE OF NET REVENUES TO AGGREGATE DEBT SERVICE
YEAR ENDED JUNE 30,2021
NET REVENUES:
Total Operating Income $ 44,364,653
ADD:
Investment income 1,240,824
Depreciation and amortization 20,987,238
$ 66,592,715
AGGREGATE DEBT SERVICE:
Interest and financial charges, as shown in the June 30, 2021 financial statements 8,932,886
LESS:
Cost of debt issuance (748,226)
Total Improvement and Refunding Bond interest incurred during fiscal year 2021 8,184,660
ADD:
Total required principal payments on Improvement and Refunding Revenue
Bonds during fiscal year 2021 7,235,000
$ 15,419,660
RATIO OF NET REVENUES TO AGGREGATE DEBT SERVICE 4.32
MINIMUM RATIO 1.25
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SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
SUPPLEMENTAL SCHEDULE OF INVESTMENT BALANCES CONTROLLED BY TRUSTEE
YEAR ENDED JUNE 30,2021
Cash
Equivalents
Unspent bond proceeds, Series 2020 $ 130,572,670
Revenue bond debt service reserve 7,603,240
TOTAL INVESTMENT CONTROLLED BY TRUSTEE $ 138,175,910
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SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
SUPPLEMENTAL SCHEDULE OF CONSUMER INFORMATION
YEAR ENDED JUNE 30,2021
WATER UTILITY
Number of metered water accounts as of June 30, 2021 92,374
Number of unmetered water accounts as of June 30, 2021 92
Billed charges by the Water Utility:
Residential $43,511,624
Industrial 17,098,769
Commercial 300,188
Miscellaneous 8,802,223
Special agreements 9,494,676
$79,207,480
Average monthly billing $ 71.46
SEWER UTILITY
Number of sewer accounts as of June 30, 2021 50,310
Billed charges by the Sewer Utility:
Residential $22,806,617
Commercial and industrial 17,498,720
Special agreements 9,471,389
$49,776,727
Average monthly billing $ 82.45
STORMWATER UTILITY
Number of storm water accounts as of June 30, 2021 46,315
Billed charges by the Stormwater Utility $10,457,532
Average monthly billing $ 18.82
STREET LIGHTING UTILITY
Number of street lighting accounts as of June 30, 2021 49,530
Billed charges by the Street Lighting Utility $ 4,129,256
Average monthly billing $ 6.95
* Total charges are based on internally generated reports by the Department and not audited financial information
47
SALT LAKE CITY WATER, SEWER, STORMWATER,AND STREET LIGHTING UTILITIES
(Enterprise Funds of Salt Lake City Corporation)
SUPPLEMENTAL SCHEDULE OF INSURANCE POLICIES
YEAR ENDED JUNE 30,2021
Type Policy Limits Deductible Description
Commercial Property(all risk) FM Global $500,000,000 $ 100,000 Sublimit and deductibles apply.
Governmental Immunity Act of Utah and
General and Auto Liability Self-Insured Statutory n/a Limitation of Judgments apply.Refer to
Utah Code§63G-7 et seq.
Deductible is$1 million self insured
retention(SIR)per claim.General Liability,
Excess Liability Safety Specialty $ 2,000,000 $ 1,000,000 Employment Practices Liability,Auto
Liability,Law Enforcement Liability,and
Public Officials Errors and Omissions
Liability.
Deductible SIR per occurrence except
Workers'Compensation Self-insured* Statutory $ 750,000 firefighters and police officers which is
$1,000,000 SIR per occurrence
Deductible is SIR.Excess coverage is
Workers'Compensation Excess Safety National $ 30,000,000 $ 750,000 $30,000,000 per occurrence and aggregate:
$1,000,000 employers liability aggregate
limit.
$ 1,000,000 $ 20,000 Employee Theft
$ 1,000,000 $ 20,000 Computer Fraud
Government Crimes National Union Fire Ins. $ 1,000,000 $ 20,000 Funds Transfer Fraud
$ 50,000 $ 2,500 Robbery Or Safe Burglary
$ 50,000 $ 2,500 Money Orders And Counterfeit Currency
$ 25,000 $ 1,000 Forgery Or Alteration
Cyber liability,data recovery,cyber
Cyber and Technology Liability AXA XL $ 5,000,000 $ 50,000 extortion and ransomware. Data breach
response and crisis management coverage.
$ 10,000,000 na City Treasurer
Public Officials Bonds Hartford Insurance $ 10,000,000 na City Deputy Treasure
$ 10,000,000 na City Finance Director
*Through the City's Risk Management Fund
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EideBailly.
CPAs&BUSINESS ADVISORS
Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards
Salt Lake City Public Utilities Advisory Committee
Salt Lake City Water, Sewer, Stormwater and Street Lighting Utilities
We have audited, 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, the combined statement of net position for the Water Utility
Fund, the Sewer Utility Fund, the Stormwater Utility Fund and the Street Lighting Utility Fund (the "Salt Lake
City Water, Sewer, Stormwater, and Street Lighting Utilities" or the "Utilities"), enterprise funds of Salt Lake
City Corporation (the City) as of and for the year ended June 30, 2021, and the related combined statement
of revenues, expenses and changes in net position, and cash flows for the year then ended, and the notes to
the financial statements, which collectively comprise Salt Lake City Water, Sewer, Stormwater, and Street
Lighting Utilities' basic financial statements, and have issued our report thereon dated November 17, 2021.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered Salt Lake City Water, Sewer,
Stormwater, and Street Lighting Utilities' internal control over financial reporting (internal control) as a basis
for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our
opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness
of Salt Lake City Water, Sewer, Stormwater, and Street Lighting Utilities' internal control. Accordingly, we do
not express an opinion on the effectiveness of Salt Lake City Water, Sewer, Stormwater, and Street Lighting
Utilities' internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and
correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of
deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of
the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe
than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
financial reporting that might be material weaknesses or significant deficiencies. Given these limitations,
during our audit we did not identify any deficiencies in internal control that we consider to be material
weaknesses. However, material weaknesses may exist that have not been identified.
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5929 Fashion Point Dr.,Ste.300 Ogden,UT 84403-4684 T 801.621.1575 F 801.627.2911 EOE
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Salt Lake City Water, Sewer, Stormwater, and
Street Lighting Utilities'financial statements are free from material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance
with which could have a direct and material effect on the financial statements. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not
express such an opinion.The results of our tests disclosed no instances of noncompliance or other matters
that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal
control or on compliance.This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this
communication is not suitable for any other purpose.
G
Salt Lake City, Utah
November 17, 2021
50
EideBailly.
CPAs&BUSINESS ADVISORS
INDEPENDENT AUDITOR'S REPORT
ON UTILITY REVENUE BOND COMPLIANCE
Salt Lake City Public Utilities Advisory Committee
Salt Lake City Water, Sewer, Stormwater and Street Lighting Utilities
We have audited, in accordance with auditing standards generally accepted in the United States of America,
the combined statement of net position of the Water Utility Fund, the Sewer Utility Fund, the Stormwater
Utility Fund, and the Street Lighting Fund (the "Salt Lake City Water, Sewer, and Stormwater, and Street
Lighting" or the "Utilities"), enterprise funds of Salt Lake City Corporation (the "City"), as of June 30, 2021,
and the related combined statements of revenues, expenses, and changes in net position and cash flows for
the year then ended, and have issued our report thereon dated November 17, 2021.
In connection with our audit, nothing came to our attention that caused us to believe that the Utilities failed
to comply with the terms, covenants, provisions, or conditions of the Master Trust Indenture Resolution No.
100 as approved on January 1, 2004 and by Resolution No. 3-2004 authorizing the issuance of the 2004
Water and Sewer bonds or the terms, covenants, provisions, or conditions of Resolution No. 100 as
amended providing for the issuance of Water and Sewer Revenue Bonds or the terms, covenants,
provisions, or conditions of Resolution No.25-2005, Resolution No. 5-2008, Resolution No. 36-2009,
Resolution No. 43-2010, Resolution No. 35-2011, Resolution No. 2-2017, and Resolution No. 19-2020, which
are supplementary and amendatory resolutions authorizing the issuance of the 2005 Series Water and
Sewer Revenue Bonds, the 2008 Water Revenue bonds, 2009 Taxable Water and Sewer Revenue Bonds,
2010 Series Water and Sewer Revenue Bonds, 2011 Series Water and Sewer Revenue Bonds, and 2012
Series Sewer and Stormwater Revenue Bonds, the 2017 Public Utilities Revenue and Refunding Bonds, and
the 2020 Public Utilities Revenue Bonds (the Indenture) insofar as they relate to financial and accounting
matters. However, our audit was not directed primarily toward obtaining knowledge of such
noncompliance.
In connection with our audit, nothing came to our attention that caused us to believe that the Utilities failed
to carry out the requirements of the Indenture for the year ended June 30, 2021, and we have no
recommendations for changes or improvements to the accounting operations of Utilities related to the
Indenture. However, our audit was not directed primarily toward obtaining knowledge of such requirements
or providing such recommendations.
The Net Revenues (as defined in the Indenture)were equal or at least 1.25 times the aggregate Debt Service
(as defined in the Indenture)for the year ended June 30, 2021, as shown in the supplemental schedules of
net revenues to aggregate debt service. Our opinion over the supplemental schedules of net revenues to
aggregate debt service is included in the Independent Auditor's Report.
What inspires you,inspires us. eidebailly.com 51
5 Triad Center,Ste.600 Salt Lake City,UT 841 80-1 1 06 T 801.532.2200 F 801.532.7944 EOE
This report is intended solely for the information and use of the Advisory Committee, management of the
Salt Lake City Water, Sewer, Stormwater, and Street Lighting Utilities, management of the City, and US Bank
Trust and is not intended to be and should not be used by anyone other than these specified parties.
.CGT
Salt Lake City, Utah
November 17, 2021
52