Startex-Jackson-Wellford-Duncan Water District, South Carolina

Transcription

SUPPLEMENT TO THE
PRELIMINARY OFFICIAL STATEMENT FOR THE
$2,915,000*
STARTEX-JACKSON-WELLFORD-DUNCAN
WATER DISTRICT, SOUTH CAROLINA
GENERAL OBLIGATION BONDS
SERIES 2016
The second paragraph under “STARTEX-JACKSON-WELLFORD-DUNCAN WATER DISTRICT -- GASB 68” is
deleted and replaced by the paragraph below:
The adoption of these Statements has resulted in the restatement of the District’s net position as of August 1, 2014
for its financial statements to reflect the reporting of a net pension liability, deferred outflows of resources and
deferred inflows of resources for its qualified plan in accordance with the provisions of these Statements. Net
position of the District’s financial statements as of August 1, 2014 was decreased by approximately $4,972,480
reflecting the cumulative change in accounting principle related to the adoption of these Statements related to the
SCRS retirement plan. The District’s financial statements continue to report retirement expenditures in the amount
of the contractually required contributions, as required by the District’s Pension Plan and by the South Carolina
Public Employee Benefit Authority who administers the SCRS retirement plans.
______________
*Preliminary, subject to change
January 5, 2016
These securities may not be sold nor may offers to buy be accepted prior to the time the Preliminary Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement
constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction.
PRELIMINARY OFFICIAL STATEMENT DATED JANUARY 4, 2016
NEW ISSUE
Ratings: Moody’s Investors Service: Aa3
BANK QUALIFIED
Standard & Poor’s Rating Services: AAIn the opinion of Bond Counsel, assuming continuing compliance by the District with certain covenants, interest on the Bonds
is excludable from gross income for federal income tax purposes under existing statutes, regulations and judicial decisions.
Interest on the Bonds is not an item of tax preference in computing the alternative minimum taxable income of individuals or
corporations; however, interest on the Bonds will be included in the computation of adjusted current earnings of corporation
for purposes of alternative minimum tax for corporations. See “TAX EXEMPTION” for a brief description of alternative
minimum tax treatment and certain other federal income tax consequences to certain recipients of interest on the Bonds. The
Bonds and the interest thereon will also be exempt from all State, county, municipal and school district and other taxes or
assessments imposed within the State of South Carolina, except estate, transfer and certain franchise taxes. The Bonds have
been designated as “qualified tax-exempt obligations” for purposes of Section 265(b)(3)(B) of the Internal Revenue Code of
1986, as amended.
$2,915,000*
SERIES 2016
Dated: January 26, 2016
Due: April 1, as shown below
The Bonds will be general obligation bonds of Startex-Jackson-Wellford-Duncan Water District, South Carolina (the “District”)
and as such the full faith, credit, resources and taxing power of the District will be irrevocably pledged for the payment thereof.
The Bonds will be issued only as fully registered bonds and initially will be registered in the name of Cede & Co., as nominee
for The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Bonds.
Purchases of beneficial interests in the Bonds will be made in book-entry only form (without certificates) in denominations of
$5,000 or any integral multiple thereof. Principal shall be paid on the maturity date to the registered owner upon presentation
and surrender of each Bond at the office of the Spartanburg County Treasurer, as paying agent (the “Paying Agent”). So long
as DTC or its nominee, Cede & Co., is the registered owner of the Bonds, payment of the principal and interest on such Bonds
will be made directly to Cede & Co. Disbursements of such payments to Beneficial Owners will be the responsibility of Direct
Participants or Indirect Participants described herein, and the District shall not be responsible for such disbursements. See
“THE BONDS - Book-Entry Only System”.
The Bonds will be dated as of January 26, 2016, and will mature on April 1 in each of the years and in the principal amounts and
bear interest at the rates shown below. Interest on the Bonds is first payable on October 1, 2016, and semiannually thereafter on
each April 1 and October 1. The Bonds will not be subject to optional redemption prior to their stated maturities..
MATURITY SCHEDULE
Due
April 1
2017
2018
2019
2020
2021
Principal
Amount
$735,000
240,000
825,000
835,000
280,000
Interest
Rate
Yield
Price
CUSIP
Sealed bids will be received until 12:00 noon (local time), on January 12, 2016 in the Office of the Chief Executive Officer
of the District, 307 Spartanburg Highway, Wellford, South Carolina 29385. The Bonds are offered when, as and if issued and
subject to the approving opinion as to legality of Haynsworth Sinkler Boyd, P.A., Greenville, South Carolina. James W. Seeley,
Esq. serves as counsel to the District. Southern Municipal Advisors, Inc. serves as Independent Registered Municipal Advisor
to the District. It is expected that the Bonds in definitive form will be available for delivery on or about January 26, 2016,
through the facilities of DTC, against payment therefor
This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors should read the
entire Official Statement to obtain information essential to the making of an informed investment decision. The District deems
the Preliminary Official Statement to be final as of its date for purposes of S.E.C. Rule 15c2-12, except for information which
may be omitted therefrom pursuant to Rule 15c2-12.
Dated: _________, 2016
*Throughout this Preliminary Official Statement, the asterisk as it relates to the principal amount of the Bond indicates such amount is
preliminary and subject to change.
For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the
same may be supplemented or corrected by Startex-Jackson-Wellford-Duncan Water District, South Carolina (the
“Issuer”) from time to time (collectively, the “Official Statement”), may be treated as an Official Statement with
respect to the Bonds described herein that is deemed final as of the date hereof (or of any such supplement or
correction) by the Issuer, except for the omission of certain information referred to in the succeeding paragraph.
The Official Statement, when further supplemented by an addendum or addenda or final official statement
specifying the interest rates of the Bonds, together with any other information required by law, shall constitute a
“Final Official Statement” of the Issuer with respect to the Bonds, as that term is defined in Rule 15c2-12. Any such
addendum shall, on and after the date thereof, be fully incorporated herein and made a part hereof by reference.
By awarding the Bonds to any underwriting syndicate submitting a bid pursuant to the terms of the Official Notice
of Sale, the Issuer agrees that, no more than seven (7) business days after the date of such award, it shall provide
without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded copies of the
Official Statement and the addendum or addenda or the Final Official Statement described in the preceding
paragraph in the amount and manner specified in the Official Notice of Sale.
This Official Statement does not constitute an offer to sell the Bonds to any person in any state in which it is
unlawful to make such offer to such person. Neither the delivery of this Preliminary Official Statement nor the sale
of any of the Bonds implies that the information herein is correct as of any time subsequent to the date hereof.
Southern Municipal Advisors, Inc. (the “Independent Registered Municipal Advisor”), is not obligated to
undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy,
completeness or fairness of the information contained in this Official Statement. The Independent Registered
Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or
distributing municipal securities or other public securities.
The Spartanburg County Treasurer, as Paying Agent, has not provided or undertaken to determine the accuracy of
any of the information contained in this Official Statement and makes no representation or warranty, express or
implied, as to (i) the accuracy or completeness of such information, (ii) the validity of the Bonds, or (iii) the taxexempt status of the interest on the Bonds.
Holcombe, Holtzclaw & Ravan, LLC, the District’s independent auditor, has not been engaged to perform, and has
not performed, since the date of its report included herein as part of Appendix A, any procedures on the Audited
Financial Statements of the District for the fiscal year ended July 31, 2014. Holcombe, Holtzclaw & Ravan, LLC
has not performed any procedures relating to this Preliminary Official Statement.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No dealer, broker, salesperson or other person has been authorized by the District to give any information or to make
any representations with respect to the Bonds other than as contained in this Preliminary Official Statement or the
Final Official Statement, and, if given or made, such other information or representations must not be relied upon as
having been authorized by the District. Certain information contained in this Preliminary Official Statement and the
Final Official Statement may have been obtained from sources other than records of the District and, while believed
to be reliable, is not guaranteed as to completeness or accuracy.
THE INFORMATION AND EXPRESSIONS OF OPINION IN THIS PRELIMINARY OFFICIAL STATEMENT
AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY
OF THIS PRELIMINARY OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY
SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE THEREOF.
Reference herein to laws, rules, regulations, ordinances, resolutions, agreements, reports and other documents do
not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by
reference to the particular document, the full text of which may contain qualifications of and exceptions to
statements made herein. Where full texts have not been included as appendices to this Preliminary Official
Statement or the Final Official Statement, they will be furnished on request.
COMMISSION
Sanford E. Carlton, Chairman
Wanda Fowler
Tom A. Lomax
Frank Nutt
John L. Sexton
DISTRICT OFFICERS
Stephen M. Caston, Chief Executive Officer
Larry G. Christopher, Jr., Chief Financial Officer
BOND COUNSEL
Haynsworth Sinkler Boyd, P.A.
Greenville, South Carolina
INDEPENDENT REGISTERED MUNICIPAL ADVISOR
Southern Municipal Advisors, Inc.
TABLE OF CONTENTS
OFFICIAL NOTICE OF SALE AND BID FORM .................... I
INTRODUCTION .......................................................................... 1
THE BONDS ................................................................................... 1
DESCRIPTION OF THE BONDS....................................................... 1
NO OPTIONAL REDEMPTION........................................................ 1
PURCHASE OF BONDS .................................................................. 1
CONDITIONS AS TO NAMING RATES OF INTEREST ...................... 1
AUTHORIZATION FOR THE BONDS ............................................... 2
BOOK-ENTRY ONLY SYSTEM ...................................................... 2
SECURITY ..................................................................................... 4
PLAN OF FINANCING AND USE OF BOND PROCEEDS................... 4
DEBT LIMIT.................................................................................. 5
STARTEX-JACKSON-WELLFORD-DUNCAN WATER
DISTRICT ....................................................................................... 5
DESCRIPTION OF THE DISTRICT ................................................... 5
DISTRICT MANAGEMENT............................................................. 5
BUDGET ....................................................................................... 6
GASB 45 ..................................................................................... 6
GASB 68 ..................................................................................... 6
RETIREMENT PLAN ...................................................................... 7
INSURANCE .................................................................................. 7
SUMMARY OF DISTRICT OPERATING BUDGET, FISCAL YEAR
2015-16 ........................................................................................ 8
REVENUES AND EXPENSES OF THE DISTRICT .............................. 8
LOCATION OF THE SYSTEM ......................................................... 8
COMPARATIVE GENERAL STATISTICS ......................................... 9
REVENUES OF THE SYSTEM ......................................................... 9
CUSTOMERS ................................................................................. 9
SUPPLY AND USAGE DATA .......................................................... 9
WATER RATES AND FEES .......................................................... 10
HISTORICAL WATER RATES ...................................................... 11
AVERAGE DAILY WATER USAGE (ALL PURPOSES) .................. 12
WATER BILLING AND COLLECTION POLICIES ........................... 12
LARGEST CUSTOMERS ............................................................... 12
REGULATION AND PERMITS ...................................................... 12
CERTAIN FISCAL MATTERS ................................................. 13
PROPERTY TAXATION AND ASSESSMENT ................................. 13
HOMESTEAD EXEMPTIONS – PROPERTY TAX RELIEF ............... 14
NEW HOMESTEAD EXEMPTION ................................................. 14
CHANGE IN MILLAGE LEVY AUTHORITY .................................. 15
PAYMENTS IN LIEU OF TAXES ................................................... 16
MOTOR VEHICLE TAX RELIEF ................................................... 16
ASSESSED VALUES OF STARTEX-JACKSON-WELLFORDDUNCAN WATER DISTRICT ....................................................... 17
FISCAL YEAR 2015 MARKET VALUE/ASSESSMENT SUMMARY 17
METHOD BY WHICH TAX LEVY IS MADE ................................. 17
TAX COLLECTION RECORD ....................................................... 18
MILLAGE HISTORY .................................................................... 18
LARGEST TAXPAYERS IN THE DISTRICT .................................... 19
DEBT STRUCTURE ................................................................... 19
LEGAL DEBT LIMIT OF THE DISTRICT ....................................... 19
OUTSTANDING DEBT ................................................................. 19
REVENUE BONDS ....................................................................... 20
OVERLAPPING DEBT .................................................................. 20
ECONOMIC CHARACTERISTICS AND DATA................... 21
POPULATION .............................................................................. 21
PER CAPITA PERSONAL INCOME ............................................... 21
UNEMPLOYMENT ....................................................................... 21
RETAIL SALES ........................................................................... 22
MAJOR EMPLOYERS .................................................................. 22
BUILDING PERMITS ................................................................... 22
FACILITIES LOCATED WITHIN THE COUNTY............................. 23
TAX MATTERS .......................................................................... 25
FEDERAL INCOME TAX GENERALLY......................................... 25
COLLATERAL FEDERAL TAX CONSIDERATIONS ....................... 26
[ORIGINAL ISSUE DISCOUNT ..................................................... 27
[ORIGINAL ISSUE PREMIUM ...................................................... 27
STATE TAX EXEMPTION ............................................................ 27
CERTAIN LEGAL MATTERS ................................................. 27
OPINIONS ................................................................................... 27
LITIGATION................................................................................ 28
UNITED STATES BANKRUPTCY CODE ....................................... 28
CLOSING CERTIFICATIONS ........................................................ 28
CONTINUING DISCLOSURE .................................................. 28
RATINGS ..................................................................................... 29
UNDERWRITING ....................................................................... 29
INDEPENDENT REGISTERED MUNICIPAL ADVISOR... 29
REGISTRAR & PAYING AGENT ........................................... 29
CERTIFICATION ....................................................................... 29
MISCELLANEOUS .................................................................... 30
APPENDIX A –
APPENDIX B –
APPENDIX C –
Audited Financial Statement for the Fiscal
Year Ended July 31, 2014
Form of Bond Counsel Opinion
Form of Continuing Disclosure
Undertaking
OFFICIAL NOTICE OF SALE
$2,915,000*
SERIES 2016
Notice is hereby given that sealed bids will be received by Startex-Jackson-Wellford-Duncan Water District, South
Carolina (the “District”), for the purchase of all, but not a part, of the District’s $2,915,000 General Obligation Bonds,
Series 2016 (the “Bonds”), as more fully described herein. The bids will be received at the place and until the time
specified below (unless postponed as described herein):
Time:
January 12, 2016
12:00 Noon
Place:
Startex-Jackson-Wellford-Duncan Water District
307 Spartanburg Highway
Wellford, South Carolina 29385
Delivery of Bids: Proposals may be delivered by hand, by mail or by facsimile or electronic transmission, but no
proposal shall be considered which is not actually received by the District at the place, date and time appointed, and
the District shall not be responsible for any failure, misdirection, delay or error resulting from the selection by any
bidder of any particular means of delivery of bids. The District will take reasonable steps to ensure the
confidentiality of all bids transmitted to it by facsimile transmission, but cannot guarantee the confidentiality of all
bids transmitted by such means.
Mailed Bids:
All mailed bids should be enclosed in a sealed envelope marked on the outside “Proposal
for $2,915,000 General Obligation Bonds, Series 2016” addressed to:
Attention: Chief Executive Officer
Telephone: (864) 949-2805
Bids Sent by
Hand Delivery:
Bids Sent by
Facsimile:
Bids Sent By
Electronic
Delivery:
Hand delivery of bids will be accepted at the addresses set forth above.
Bids may be sent by facsimile received at (864) 949-3511. Bids sent by facsimile
transmission will be considered timely only if transmission and printing are complete by
12:00 Noon (local time) on January 12, 2016. (Please be advised that there is a single fax
machine connected to the number provided above. It is highly recommended that bidders
call the District to confirm receipt of a bid sent via facsimile.)
Electronic proposals will be received via PARITY®, in the manner described below, until
12:00 Noon, local time, on January 12, 2016. Bids may be submitted electronically via
PARITY® pursuant to this Notice until 12:00 Noon, local time, but no bid will be received
after the time for receiving bids specified above. To the extent any instructions or directions
set forth in PARITY® conflict with this Notice, the terms of this Notice shall control. For
further information about PARITY®, potential bidders may contact Bond Counsel – Brad
Love, Haynsworth Sinkler Boyd, P.A., ONE North Main Street, 2nd Floor, Greenville,
South Carolina 29601, telephone (864) 240-3388 or i-Deal at 395 Hudson Street, New
York, New York 10014, telephone (212) 807-3800.
Either the Chief Executive Officer (the “Chief Executive Officer”) of the District or his designee will publicly open
and read the bids at the time, place and date set forth above. Unless all bids are rejected, the Bonds will be awarded
to the bidder offering the lowest net interest cost to the District.
Bonds: The Bonds will be issued under the DTC Book-Entry Only System. The Bonds will be dated the date of their
delivery; will be in denominations of $5,000 each or any integral multiple thereof not exceeding the principal amount
of Bonds maturing each year; and will mature in successive annual installments on April 1 in each of the years and in
the principal amounts as follows:
Principal
Amount
Due
April 1
2017
2018
2019
2020
2021
$735,000
240,000
825,000
835,000
280,000
The aggregate principal amount and the principal amount of each maturity of the Bonds described above are subject to
adjustment, both before and after the receipt and opening of sealed bids for their purchase. Changes to be made prior to
the sale may be made in any amount not violating the District’s constitutional debt limitation. Such changes prior to the
sale will be announced through the Bloomberg Wire or the Bond Buyer Wire not later than 9:00 a.m. prevailing local
time on the date of sale and will be used to compare bids and select a winning bidder. As promptly as reasonably
practicable after the bids are opened, the District will notify the bidder to whom the Bonds will be awarded, if and when
such award is made, and such bidder, upon such notice, shall advise the District of the initial reoffering prices and yields
to the public of each maturity of the Bonds. Such reoffering prices and yields, among other things, will be used by the
District to calculate the final aggregate principal amount of the Bonds and the final principal amount of each maturity. It
is anticipated that the final aggregate principal amount of the Bonds and the final principal amount for each maturity of
the Bonds will be communicated to the successful bidder within 24 hours of the bond sale. The dollar amount bid for
principal by the successful bidder will be adjusted proportionately to reflect any reduction or increase in the aggregate
principal amount of the Bonds, but the coupon rates specified by the successful bidder for all maturities will not change.
The successful bidder may not withdraw its bid as a result of any changes made within these limits.
The Bonds will bear interest from the date thereof payable October 1, 2016 and semiannually on April 1 and October 1
of each year thereafter.
Qualified Bonds: The District has designated the Series 2016 Bonds as “qualified tax-exempt obligations” as
defined in Section 265 of the Internal Revenue Code of 1986, as amended (the “Code”).
Purpose: The proceeds of the Bonds will be used for the following purposes of (a) constructing new water lines for
line extensions to unserved areas of the District; (b) conducting engineering reports concerning the current and
future water supply of the District; (c) constructing water supply projects and make improvements to reservoir dams;
(d) constructing additional high rated filter capacity; (e) purchasing certain real property; (f) constructing pump
stations and elevated storage tanks as identified in the engineering master plan; (g) making other improvements to
the District’s existing water system and (c) paying costs of issuance related to such general obligation bonds.
Security: The Bonds will constitute a binding general obligation of the District. For the payment of the principal and
interest thereof, as they respectively mature, and to create such sinking fund to aid in the retirement and payment
thereof, the full faith, credit and taxing power of the District will be irrevocably pledged, and there will be levied and
collected annually upon all taxable property in the District an ad valorem tax, without limitation as to rate or amount,
sufficient for such purposes.
Redemption Provisions: The Bonds are not subject to optional redemption prior to maturity.
Term Bonds: Bidders may combine two or more consecutive maturities of Bonds to create one or more term
maturities, each of which will be subject to annual mandatory sinking fund redemption at par plus accrued interest to
the redemption date (to the extent not previously purchased) in the principal amounts for the years shown above on
April 1 of such year. To the extent Bonds subject to mandatory sinking fund redemption in a given year have been
purchased by the District the amount of mandatory sinking fund redemption in such year shall be reduced in such
manner as the District shall direct, or, absent such direction, on a pro rata basis.
Registrar/Paying Agent: The Spartanburg County Treasurer will serve as the initial Registrar/Paying Agent.
ii
Bid Requirements: Bidders shall specify the rate or rates of interest per annum which the Bonds are to bear, to be
expressed in multiples of 1/20 or 1/8 of 1% with no greater difference than two (2%) percent between the highest and
lowest rates of interest named by a bidder. Bidders are not limited as to the number of rates of interest named, but the
rate of interest on each separate maturity must be the same single rate for all Bonds of that maturity from their date to
such maturity date. A bid for less than all the Bonds will not be considered. The Chief Executive Officer reserves the
right to reject any and all bids or to waive irregularities in any bid.
Reoffering Price: To provide the District with information to enable it to comply with certain conditions of the
Internal Revenue Code of 1986, as amended, relating to the exclusion of interest on the Bonds from gross income
for federal income tax purposes, the successful bidder will be required to complete, execute, and deliver to the
District, at the time that the Bonds are delivered, a “Certificate of Reoffering Price” for each Series of Bonds. If the
successful bidder will not reoffer the Bonds for sale or has not sold a substantial amount of either Series of Bonds of
any maturity by the date of delivery, such certificates may be modified in the manner approved by the District. In no
event will the District fail to deliver the Bonds as a result of the successful bidder’s inability to certify actual sales of
Bonds at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and
deliver such certificates by the date of the delivery of the Bonds if its bid is accepted by the District. It will be the
responsibility of the successful bidder to institute such syndicate reporting requirements, to make such investigation,
or otherwise to ascertain the facts necessary to enable it to make such certifications with reasonable certainty.
Form of Bid; Sealed Envelopes: Each bid must be on the Official Bid Form included with the Preliminary Official
Statement if not submitted through PARITY®. Every bid must be unconditional and irrevocable and must be enclosed in
a sealed envelope addressed to the Startex-Jackson-Wellford-Duncan Water District, South Carolina, Attention: Chief
Executive Officer, or if by facsimile with a cover page and endorsed “Bid for Not Exceeding $2,915,000 General
Obligation Bonds, Series 2016”. Each bid must be in accordance with the terms and conditions set forth in this
Official Notice of Sale.
Basis for Award: If satisfactory bids are received, the Bonds will be awarded to the lowest responsible bidder by the
District not later than 24 hours after the time established for the receipt of bids. The lowest bidder shall be the bidder
offering to purchase the Bonds at the lowest net interest cost to the District. For the purpose of determining lowest net
interest cost, the aggregate of interest on all Bonds from the dated date of the Bonds, which is the original issue date,
until their respective maturities, less any sum named by way of premium, shall be determined on each bid and the
smallest amount to be paid by the District shall reflect the lowest net interest cost. In the event that two or more bidders
have bid the same net interest cost, the award shall be made by lot. The determination by the District of the net interest
cost of each bid and the District’s award of the bid will be final.
CUSIP Numbers: CUSIP identification numbers and CUSIP Service Bureau charges for assignment of the numbers
will be the responsibility of the successful bidder and should be provided to the District within five (5) days of being
selected as the winning bidder, but any delay, error or omission with respect thereto shall not constitute cause for a
failure or refusal by the successful bidder to accept delivery of and pay for the Bonds in accordance with the terms of
this Official Notice of Sale. The successful bidder shall also be responsible for securing DTC eligibility.
Preliminary and Final Official Statements: The District has distributed an Official Statement in connection with the
sale of the Bonds in preliminary form (the “Preliminary Official Statement”). The District, by accepting the bid of the
successful bidder, (a) certifies to such successful bidder as of the date of acceptance of such bid that the Preliminary
Official Statement furnished prior to the date of such acceptance has been “deemed final” as of its date by the District
within the meaning of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule
15c2-12”), although subject to revision, amendment and completion; and (b) agrees to provide such successful bidder,
in order to permit such successful bidder to comply with Rule 15c2-12, with up to 50 printed copies of the final Official
Statement approved by the District in relation to the sale by the District of the Bonds within the period of time allowed
under Rule 15c2-12, at the sole cost and expense of the District, with any additional printed copies which such
successful bidder shall reasonably request to be provided at the sole cost and expense of the successful bidder. Such
successful bidder, by executing its bid, agrees to provide two copies of the final Official Statement to the Electronic
Municipal Market Access system within the meaning of Rule 15c2-12 (a “EMMA”) upon receipt of the final Official
Statement from the District and two copies of the final Official Statement (with any required forms) to the Municipal
Securities Rulemaking Board (the “MSRB”) or its designee pursuant to MSRB Rule G-36 no later than ten (10)
business days following the date of acceptance of its bid, and such successful bidder further agrees to comply with all
other applicable provisions of Rule 15c2-12 and MSRB Rule G-36. Such successful bidder shall notify the District of
iii
(i) the date which is the “end of the underwriting period” within the meaning of Rule 15c2-12 and (ii) the date on which
the final Official Statement is filed with EMMA. Copies of the Preliminary Official Statement may be obtained at the
offices listed in this Official Notice of Sale under the caption “Additional Information.”
In the Resolution, the District has committed to provide certain annual information and notices of material events as
required by Rule 15c2-12 as promulgated by the Securities and Exchange Commission and as described in the Official
Statement.
The successful bidder’s obligation to purchase the Bonds shall be conditioned upon its receiving, at or prior to the
delivery of the Bonds, in form and substance reasonably satisfactory to the successful bidder, a copy of the continuing
disclosure undertaking set forth above, which shall constitute a written agreement for the benefit of the Holders of the
Bonds as required by Rule 15c2-12.
Blue Sky Laws: The District has not undertaken to register the Bonds under the securities laws of any state, nor has
the District investigated the eligibility of any institution or person to purchase or participate in the underwriting of the
Bonds under any applicable legal investment, insurance, banking or other laws. By submitting a bid for the Bonds, the
Purchaser represents that the sale of the Bonds in states other than South Carolina will be made only under exemptions
from registration or, wherever necessary, the Purchaser will register the Bonds in accordance with the securities laws of
the state in which Bonds are offered or sold. The District agrees to cooperate with the Purchaser, at the Purchaser’s
written request and expense, in registering the Bonds or obtaining an exemption from registration in any state where
such action is necessary, but shall not be required to consent to service of process in any such state.
Legal Opinion: The District shall furnish upon delivery of the Bonds the final approving opinion of Haynsworth
Sinkler Boyd, P.A., Greenville, South Carolina, which opinion shall be attached to the back of each Bond, together
with the usual closing documents, including a certificate that no litigation is pending affecting the Bonds.
Delivery: The Bonds will be delivered on or about January 12, 2016, in New York, New York through the facilities of
The Depository Trust Company, at the expense of the District. The purchase price then due must be paid in federal
funds or other immediately available funds.
Postponement: The District reserves the right to postpone from time to time the date established for receipt of bids.
The District will communicate any such change in the sale date through the Bloomberg Wire or the Bond Buyer Wire
prior to the time bids are to be received. If any date fixed for the receipt of bids and the sale of the Bonds is postponed,
any alternative sale date will be announced through the Bloomberg Wire or the Bond Buyer Wire at least 48 hours prior
to such alternative sale date. On any such alternative sale date, any bidder may submit a sealed bid for the purchase of
the Bonds in conformity in all respects with the provisions of this Official Notice of Sale, except for the date of sale and
except for the changes announced through the Bloomberg Wire or the Bond Buyer Wire at the time the sale date and
time are announced.
Continuing Disclosure: A description of the District’s undertaking with respect to the Continuing Disclosure
Undertaking is set forth in the Preliminary Official Statement.
Additional Information: For copies of the Preliminary Official Statement, Official Notice of Sale and the Official Bid
Form, please go to www.munios.com.
Chief Executive Officer,
Startex-Jackson-Wellford-Duncan
Water District, South Carolina
Dated: January 4, 2016
iv
OFFICIAL BID FORM
Mr. Stephen M. Caston, Chief Executive Officer
Ladies/Gentlemen:
For all, but not a part, of the $2,915,000* Startex-Jackson-Wellford-Duncan Water District, South Carolina General Obligation
Bonds, Series 2016, (the “Bonds”) as more fully described in the attached Official Notice of Sale, which is hereby made part of this
bid, we will pay $2,915,000* and a cash premium of $_____________.
The members of our syndicate are as follows (please list all Syndicate Members):
Syndicate Manager:
Members:
Interest on the Bonds will be payable semiannually on April 1 and October 1, commencing October 1, 2016. The Bonds shall
mature on April 1 in the years and in the amounts, and bear interest at the respective rates per annum, all as stated below:
Due April 1
2017
2018
2019
2020
2021
Principal Amount
$735,000
240,000
825,000
835,000
280,000
Interest Rate
Reoffering Price
_______%
_______%
_______%
_______%
_______%
__________
__________
__________
__________
__________
We acknowledge that the District may reject any and all bids and to the extent permitted by law may waive any irregularity or
informality in any bid. We hereby acknowledge that we may not alter, modify or withdraw our bid after we have submitted the
Official Bid Form to the District.
Respectfully submitted,
By:
Title:
Financial Institution:
Telephone Number:
The following is our computation made in accordance with the Notice of Sale of the net interest cost to the District under the
terms of our bid, which is for informational purposes only and is subject to verification prior to award:
Net Interest Cost (in dollars to the nearest penny):________________
Accepted this 12th day of January, 2016.
STARTEX-JACKSON-WELLFORD-DUNCAN WATER DISTRICT, SOUTH CAROLINA
By:
Chief Executive Officer
v
[THIS PAGE INTENTIONALLY LEFT BLANK]
INTRODUCTION
This Introduction briefly describes the contents of this Official Statement and is expressly qualified by reference to
the entire contents hereof, including appendices, as well as of the documents summarized or described herein.
The Issuer
The $2,915,000* General Obligation Bonds, Series 2016 (the “Bonds”) are being
issued by Startex-Jackson-Wellford-Duncan Water District, South Carolina (the
“District”), a body politic and corporate and a political subdivision of the State of
South Carolina.
Security
For the payment of the principal of and interest on the Bonds, the full faith, credit,
resources and taxing power of the District are irrevocably pledged. See “THE
BONDS - Security” herein.
Purpose of the Bonds
The Bonds is being issued by the District for the purpose of financing certain
projects and reimbursing the Commission for certain expenditures related to (a)
constructing new water lines for line extensions to unserved areas of the District; (b)
conducting engineering reports concerning the current and future water supply of the
District; (c) constructing water supply projects and making improvements to
reservoir dams; (d) constructing additional high rated filter capacity; (e) purchasing
certain real property; (f) constructing pump stations and elevated storage tanks as
identified in the engineering master plan; (g) making other improvements to the
District’s existing water system; and (h) paying costs of issuance of the Bonds.
Details of the Bond
The Bonds will be general obligation bonds of the District; will be issuable in fully
registered form and, when issued will be registered to Cede & Co. as nominee for
The Depository Trust Company, New York, New York (“DTC”); will be dated as
of January 26, 2016; and will bear interest from their date at the rates shown on the
cover hereof payable initially on October 1, 2016, and semiannually thereafter on
April 1 and October 1 of each year until they mature. The Bonds will mature in
successive annual installments on April 1 in each of the years and in the principal
amounts set forth on the cover hereof. The Bonds are not subject to optional
redemption prior to their stated maturities.
Tax Status of Interest on the
Bonds
Assuming the District’s continued compliance with certain covenants, in the opinion
of Bond Counsel, interest on the Bonds is excludable from gross income for federal
income tax purposes under existing statutes, regulations and court decisions. Interest
on the Bonds is not a specific item of tax preference for purposes of an individual’s
or corporation’s alternative minimum tax; however, such interest will be included in
the computation of alternative minimum tax for corporations. Under the present laws
of the State of South Carolina, the Bonds and the interest thereon will also be exempt
from all taxes in the State of South Carolina, except estate or other transfer taxes and
certain franchise taxes. Such opinion is subject to certain limitations and conditions
described in the form of opinion of Bond Counsel, set forth in Appendix B, and under
the caption “TAX MATTERS”.
Professionals Involved in the
Offering
The Spartanburg Treasurer is serving as Registrar and Paying Agent for the Bonds.
Haynsworth Sinkler Boyd, P.A., Greenville, South Carolina, is acting as Bond
Counsel. Southern Municipal Advisors, Inc. is serving as Independent Financial
Advisor.
Authorization
Pursuant to Title 6, Chapter 11, Article 5, of the Code of Laws of South Carolina,
1976, as amended, the District is authorized to issue general obligation bonds for
any authorized purpose of the District. The Bonds are being issued pursuant to the
Constitution and laws of the State of South Carolina, a resolution (the
“Resolution”) duly adopted by the Startex-Jackson-Wellford-Duncan Water
Commission (the “Commission”), the governing body of the District, on December
15, 2015 and an ordinance duly enacted by the County Council of Spartanburg
County, South Carolina on October 15, 2012.
Information Concerning
Terms of the Offering
The Bonds are being issued in book-entry only form. It is expected that the Bonds
will be delivered to Cede & Co., at the offices of DTC, on or about January 26,
2016, and will be available for credit to the accounts of the participants and,
through them, the Beneficial Owners on such date. Information on limitations on
transfer of ownership is set forth in “THE BONDS - Book-Entry Only System”.
General
This Preliminary Official Statement speaks only as of its date, and the information
contained herein is subject to change. Copies of the Official Statement will be
uploaded to the Municipal Securities Rulemaking Board’s Electronic Municipal
Market Access System at www.emma.msrb.org. Copies of this Preliminary Official
Statement, the Official Statement, the Resolution and other relevant documents and
information are available by contacting Larry G. Christopher, Jr., Chief Financial
Officer, 307 Spartanburg Highway, Wellford, South Carolina 29385, (864) 9492805.
The Preliminary Official Statement, including the cover page and the attached
Appendices, contains specific information relating to the Bonds and the District and
other information pertinent to this issue.
All information included herein has been provided by the District except where
attributed to other sources. The summaries and references to all documents, statutes,
reports and other instruments referred to herein do not purport to be complete,
comprehensive or definitive, and each such reference or summary is qualified in its
entirety by reference to each such document, statute, report or other instrument.
ii
$2,915,000*
SERIES 2016
INTRODUCTION
This Introduction briefly describes the contents of this Official Statement and is expressly qualified by reference to
the entire contents hereof, including appendices, as well as of the documents summarized or described herein.
This Official Statement is provided for the purpose of furnishing certain information in connection with the public
invitation for bids for the purchase of $2,915,000* Startex-Jackson-Wellford-Duncan Water District, South Carolina
General Obligation Bonds, Series 2016 (the “Bonds”). This Official Statement has been prepared under the
supervision of Startex-Jackson-Wellford-Duncan Water District, South Carolina (the “District”). The information
furnished herein includes a brief description of the Bonds, the District and its indebtedness, tax information,
economic data, financial information and other matters. Also included are certain information and data pertaining to
the Spartanburg County, South Carolina (the “County”) and to the State of South Carolina (the “State”).
THE BONDS
Description of the Bonds
The Bonds here offered constitute an issue of general obligation bonds of the District. The Bonds shall be issued as
registered Bonds, book-entry system. The Bonds will be dated January 26, 2016, shall mature in annual series and
shall bear interest at the rates and shall be initially priced as shown on the cover hereof. Interest on the Bonds shall
be payable on October 1, 2016 and semiannually thereafter on April 1 and October 1 of each year (the “Bond
Payment Dates”) until payment of the principal thereof.
The Bonds will be issued in denominations of $5,000 or any whole multiple thereof, not exceeding the principal
amount of the Bonds maturing in each year. The Bonds shall be numbered from R-1 upwards in such a fashion as to
maintain a proper record thereof. All Bonds will be registered upon the registration books of the District which are
to be kept for this purpose at the office of the Paying Agent/Registrar. The Paying Agent/Registrar for the Bonds is
the County Treasurer.
No Optional Redemption
The Bonds will not be subject to optional redemption prior to maturity.
Purchase of Bonds
The Bonds are subject to purchase by the District. Purchases of Bonds Outstanding may be made by the District at any
time with money available to it from any source. Upon any such purchase the District shall deliver such Bonds to the
Registrar for cancellation.
Conditions as to Naming Rates of Interest
The Bonds shall bear such rate or rates of interest as shall at the sale of such Bonds reflect the lowest net interest cost to
the District calculated in the manner hereinafter prescribed below at a price of not less than par, but:
(a)
all Bonds of the same maturity shall bear the same rate of interest;
(b)
no rate of interest named shall be more than two percent (2%) higher than the lowest rate of interest
named;
(c)
each interest rate named shall be a multiple of 1/8th or 1/20th of one percent (1%); and
(d)
any premium offered must be paid in cash as a part of the purchase price.
For the purpose of determining lowest net interest cost, the aggregate of interest on all Bonds from the original issue
date until their respective maturities, less any sum named by way of premium, shall be determined on each bid and the
smallest amount to be paid by the District shall reflect lowest net interest cost.
Authorization for the Bonds
The Bonds are being issued pursuant to and in accordance with the Constitution and laws of the State, including
Title 6, Chapter 11, Article 5 of the Code of Laws of South Carolina, 1976, as amended, and Section 11-27-40 of the
Code of Laws of South Carolina, 1976, as amended (collectively, the “Enabling Act”); an Ordinance enacted by the
County Council of the County on October 15, 2012 and a Bond Resolution adopted by the Startex-JacksonWellford-Duncan Water Commission (the “Commission”), the governing body of the District, on December 15,
2015.
Book-Entry Only System
The Bonds will, when issued, be registered in the name of Cede & Co., as nominee of DTC, which will initially act
as securities depository for the Bonds. THE DESCRIPTION WHICH FOLLOWS OF THE PROCEDURES AND
RECORDKEEPING WITH RESPECT TO BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS,
PAYMENT OF INTEREST AND PRINCIPAL ON THE BONDS TO DIRECT AND INDIRECT PARTICIPANTS
(AS HEREINAFTER DEFINED) OR BENEFICIAL OWNERS OF THE BONDS, CONFIRMATION AND
TRANSFER OF BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS, AND OTHER RELATED
TRANSACTIONS BY AND BETWEEN DTC, THE DIRECT AND INDIRECT PARTICIPANTS AND
BENEFICIAL OWNERS OF THE BONDS IS BASED SOLELY ON INFORMATION FURNISHED BY DTC TO
THE DISTRICT FOR INCLUSION IN THIS OFFICIAL STATEMENT. ACCORDINGLY, THE DISTRICT
NEITHER MAKES NOR CAN MAKE ANY REPRESENTATIONS CONCERNING THESE MATTERS.
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered Bonds registered in
the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized
representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, in the
aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking
Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing
agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity, corporate and municipal debt
issues, and money market instrument (from over 100 countries) that DTC’s participants (“Direct Participants”)
deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other
securities transactions in deposited securities through electronic computerized book-entry transfers and pledges
between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates.
Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust &
Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation
and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users
of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S.
securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has
Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and
Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a
credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial
Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not
receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive
written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect
2
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of
DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of
DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee
do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the
Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited,
which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant
events with respect to the Bonds, such as redemptions, defaults, and proposed amendments to the Resolution (as
defined herein). For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the
Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial
Owners may wish to provide their names and addresses to the Registrar/Paying Agent and request that copies of the
notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s
practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless
authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC
mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede
& Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Principal, redemption premium, if any, and interest payments on the Bonds will be made to Cede & Co., or such
other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct
Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from the District on
payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of
such Participant and not of DTC nor its nominee, or the District, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of principal, redemption premium, if any, and interest payments to
Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the District, disbursement of such payments to Direct Participants will be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving
reasonable notice to the District. Under such circumstances, in the event that a successor securities depository is not
obtained, Bond certificates are required to be printed and delivered.
The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor
securities depository). In that event, Bond certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that
the District believes to be reliable, but the District takes no responsibility for the accuracy thereof.
SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE SOLE BONDHOLDER, THE DISTRICT
SHALL TREAT CEDE & CO. AS THE ONLY BONDHOLDER FOR ALL PURPOSES, INCLUDING RECEIPT
OF ALL PRINCIPAL AND PREMIUM OF AND INTEREST ON THE BONDS, RECEIPT OF NOTICES,
VOTING, AND REQUESTING OR DIRECTING THE DISTRICT AND THE REGISTRAR/PAYING AGENT
(IF NOT THE DISTRICT) TO TAKE OR NOT TO TAKE, OR CONSENT TO, CERTAIN ACTIONS. THE
DISTRICT HAS NO RESPONSIBILITY OR OBLIGATION TO THE DIRECT OR INDIRECT PARTICIPANTS
3
OR THE BENEFICIAL OWNERS WITH RESPECT TO (A) THE ACCURACY OF ANY RECORDS
MAINTAINED BY DTC OR ANY DIRECT OR INDIRECT PARTICIPANT; (B) THE PAYMENT BY ANY
DIRECT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN
RESPECT OF THE PRINCIPAL AND PREMIUM OF AND INTEREST ON THE BONDS; (C) THE DELIVERY
OR TIMELINESS OF DELIVERY BY ANY DIRECT OR INDIRECT PARTICIPANT OF ANY NOTICE TO
ANY BENEFICIAL OWNER THAT IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE
RESOLUTION TO BE GIVEN TO BONDHOLDERS; OR (D) OTHER ACTION TAKEN BY DTC OR CEDE &
CO. AS BONDHOLDER.
Beneficial Owners of the Bonds may experience some delay in their receipt of distributions of principal and interest
on the Bonds since such distributions will be forwarded by the County Treasurer, as Registrar/Paying Agent, to DTC
and DTC will credit such distributions to the accounts of Direct Participants, which will thereafter credit them to the
accounts of Beneficial Owners either directly or indirectly through Indirect Participants. Issuance of the Bonds in
book-entry form may reduce the liquidity of the Bonds in the secondary trading market since investors may be
unwilling to purchase Bonds for which they cannot obtain physical certificates. In addition, since transactions in the
Bonds can be effected only through DTC, Direct Participants, Indirect Participants, and certain banks, the ability of
a Beneficial Owner to pledge Bonds to persons or entities that do not participate in the DTC system, or otherwise to
take action in respect of such Bonds, may be limited due to lack of a physical certificate. Beneficial Owners will not
be recognized by the County Treasurer, as Registrar/Paying Agent, as registered owners for purposes of the
Resolution, and Beneficial Owners will be permitted to exercise the rights of registered owners only indirectly
through DTC and the Direct or Indirect Participants.
Security
The Bonds are general obligations of the District and the full faith, credit and taxing power of the District are
irrevocably pledged to the payment of the principal of and interest thereof. Pursuant to Article X, Section 14 of the
Constitution of the State of South Carolina 1895, as amended (the “State Constitution”), the Bonds are payable
from an ad valorem tax to be levied upon all taxable property in the District without limitation as to rate or amount.
The Resolution adopted by the Commission of the District authorizing the Bonds has directed the levy and
collection of such tax. The Enabling Act provides in substance that the County Auditor shall levy annually and the
County Treasurer shall collect, in the same manner as county taxes are levied and collected, a tax without limit on
all taxable property located within the District sufficient to pay the principal of and interest on the Bonds as they
respectively mature and to create such sinking fund as may be necessary therefor. The obligation to levy and collect
ad valorem taxes is an essential obligation of the contract between the District and its bondholders and, if necessary,
could be enforced by mandamus or other equitable remedies.
Plan of Financing and Use of Bond Proceeds
The Commission has determined to raise the sum of $2,915,000* through the issuance of the Bonds in order to
finance certain projects and reimburse the Commission for certain expenditures related to:
(a)
constructing new water lines for line extensions to unserved areas of the District;
(b)
conducting engineering reports concerning the current and future water supply of the District;
(c)
constructing water supply projects and making improvements to reservoir dams;
(d)
constructing additional high rated filter capacity;
(e)
purchasing certain real property;
(f)
constructing pump stations and elevated storage tanks as identified in the engineering master plan;
(g)
making other improvements to the District’s existing water system (collectively, the
“Improvements”); and
(h)
paying costs of issuance of the Bonds.
4
Debt Limit
Section 14 of Article X of the State Constitution, provides that subsequent to November 30, 1977, the special
purpose districts of the State may issue bonded indebtedness in an amount not exceeding 8% of the assessed value of
all taxable property within such districts, and provides further that no bonded indebtedness incurred on or prior to
November 30, 1977 shall be charged against such 8% debt limitation. The assessed value of all taxable property
located within the District for tax year 2015, which is the last completed assessment thereof, is not less than the sum
of $169,880,718 (excluding fee-in-lie-of-tax property of $28,323,116) and thus the 8% debt limit of the District is
not less than $13,590,457. The District presently has outstanding general obligation indebtedness in the amount of
$8,695,000 chargeable against this limit. Thus, the Commission may issue the sum of up to $4,895,457 in general
obligation debt at the present time without a referendum.
STARTEX-JACKSON-WELLFORD-DUNCAN WATER DISTRICT
Description of the District
The District is a special purpose district located in the County. Special purpose districts are limited purpose local
governments created by or pursuant to Acts of the General Assembly of the State. The District is a body corporate
and politic and is a political subdivision of the State.
The County is located in the northwest piedmont section of the State on the I-85 corridor between Atlanta, Georgia
and Charlotte, North Carolina. The County has an area of 813 square miles and is bordered on the north by the State
of North Carolina, on the east by Cherokee and Union Counties, on the west by Greenville County and on the south
by Laurens County. The County includes the City of Spartanburg, South Carolina, which is the county seat and the
eighth largest city in the State, and is located approximately 180 miles northeast of Atlanta, Georgia and
approximately 60 miles southwest of Charlotte, North Carolina.
The District was created and established as a body politic and corporate, pursuant to Act No. 1105 of the Acts of the
General Assembly of the State of South Carolina of 1956, as amended. It is located wholly within the County, and
inter alia was established for the purpose of building, constructing, operating and maintaining water lines and water
mains throughout the District, and all apparatus necessary for the proper functioning of the same, and from time to
time to enlarge the same (collectively, the “System”). The District contains approximately 128 square miles.
District Management
The Commission serves as the governing body of the District. This Commission consists of five members which are
recommended by the County legislative delegation and appointed by the Governor of the State. The current
members of the Commission and terms of office are shown in the following table:
Expiration of Term
March 2018
March 2020
March 2016
March 2020
March 2016
Name
Wanda Fowler
Tom A. Lomax
Frank Nutt
John L. Sexton
The Chief Executive Officer of the District is responsible for the overall functioning of the District which includes
operational, maintenance, administration, planning and technical aspects. The Chief Executive Officer is assisted by
the Chief Financial Officer.
Stephen M. “Mike” Caston was appointed Chief Executive Officer of the District in July, 1997. Mr. Caston earned
both a Bachelor of Science degree in Civil Engineering and a Master of Public Administration degree from Clemson
University. Before coming to the District in November, 1991, Mr. Caston had thirteen years of experience working
for consulting engineering firms.
Larry G. Christopher, Jr. was employed as the Chief Financial Officer of the District in May, 2003. Mr. Christopher
earned his Bachelor of Science degree in Business Administration from the University of South Carolina – Upstate
5
and his Master of Public Administration degree from Clemson University. Mr. Christopher is a Certified Public
Accountant and had fifteen years of accounting and finance experience before coming to the District.
Currently, the District has approximately 41 full-time employees.
Budget
The District’s budget process is coordinated annually by the Chief Financial Officer. The District’s fiscal year
begins August 1 and ends July 31 of the following year. The key steps in the budget process are as follows:
•
Coordinate department budget requests, including updating of staffing plans, preparation of depreciation
schedules, and preparation of line-item budgets.
•
Completion of District-wide budget information, including revenues, flow estimates, cost allocations, etc.
•
Revenue and Expenditure data are inputted into a computerized financial planning model and a review of the
capital improvement program is conducted by the District’s management.
•
Rates and multi-year projections of revenues and expenses are derived from prior year performance and
adjusted accordingly to provide for sufficient funding of the District’s Capital Reserve Fund from net operating
revenues.
•
The Budget is presented to the Commission for review three months prior to adoption to allow sufficient time to
make adjustments. The month before adoption, the Commission approves the budget for the public hearing.
•
A public hearing is advertised and held prior to final approval of the budget, tax levy and user charges.
GASB 45
The District was required to implement GASB 45 during the fiscal year ending July 31, 2010 for proper financial
statement recognition of other post-employment benefits (“OPEB”). District management utilized actuarial services
to determine the Annual Required Contribution for retiree health insurance costs. The District has implemented the
required financial reporting and funding methods to provide for GASB 45 compliance. The District is self-insured
and maintains an Insurance Reserve Fund to cover claims that exceed the stop loss and fund claims for postemployment benefits.
GASB 68
The District implemented GASB Statement No. 68 “Accounting and Financial Reporting for Pensions – an
amendment of GASB Statement No. 27” (“GASB 68”) and GASB Statement No. 71 “Pension Transition for
Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68” (“GASB
71” and collectively, the “Statements”) for the year ended July 31, 2015. The primary objective of these Statements
is to improve accounting and financial reporting by state and local governments for pensions. In addition, state and
local governments that participate in single-employer or cost-sharing multiple employer plans are now required to
recognize a net pension liability for their single-employer plan or their proportionate share of the net pension
liability of cost-sharing multiple employer plans. It is GASB’s intention that these Statements will provide citizens
and other users of the financial statements with a clearer picture of the size and nature of the District’s financial
obligations to current and former employees for past services rendered. In particular, these Statements require the
District to recognize a net pension liability, deferred outflows of resources, and deferred inflows of resources for the
District’s Pension Plan (“District Pension Plan”), single-employer plan, and for their participation in the South
Carolina Retirement System (the “SCRS”), cost-sharing multiple-employer defined benefit pension plans, on
financial statements prepared on the economic resources measurement focus and accrual basis of accounting (i.e.,
the Statement of Net Position) and present more extensive note disclosures.
The adoption of these Statements had no impact on the District’s financial statements, which continue to report
expenditures in the amount of the contractually required contributions, as required by the District’s Pension Plan and
by the South Carolina Public Employee Benefit Authority who administers the SCRS retirement plans. However, the
adoption has resulted in the restatement of the District’s net position as of August 1, 2014 for its financial statements
6
to reflect the reporting of a net pension liability, deferred outflows of resources and deferred inflows of resources for
its qualified plan in accordance with the provisions of these Statements. Net position of the District’s financial
statements as of August 1, 2014 was decreased by approximately $4,972,480 reflecting the cumulative change in
accounting principle related to the adoption of these Statements related to the SCRS retirement plan.
Retirement Plan
The District is a member of the SCRS, which is one of four defined benefit retirement systems maintained by the
Retirement Division of the State Fiscal Accountability Authority. Each system publishes its own component unit
financial report. SCRS is a cost-sharing, multiple-employer pension system providing retirement, death and
disability benefits to State employees, public school employees and employees of counties, municipalities and
certain other State political subdivisions including the District. Each system is independent. Assets may not be
transferred from one system to another or used for any purpose other than to benefit each system’s participants.
Membership is required as a condition of employment. Employees contribute at 8.16% and employers at 10.91%. In
addition to those rates, participating employers of SCRS contribute 0.15% of payroll to provide a group life
insurance benefit for their participants.
The District’s and its employees’ contributions to the SCRS for the last five fiscal years are as follows:
Contributions
District
Employee
2011
$218,528
151,096
Fiscal Year
2013
$256,887
170,753
2012
$232,894
158,062
2014
$448,804
189,200
2015
$248,759
185,192
The District has paid all required contributions for fringe benefits as they have come due and there are no liabilities
for underfunding of such fringe benefits. In July 2014, the District purchased service credits with SCRS for three
long-term employees in a move to reduce future employment costs. These positions were eliminated from the
District’s long range staffing plan.
Insurance
Subject to specific immunity set forth in the State Tort Claims Act, local governments including the District are
liable for damages not to exceed $300,000 per incident/person and $600,000 per occurrence/aggregate. No punitive
or exemplary damages are permitted under the State Tort Claims Act. Insurance protection to units of local
government is provided from either the State Insurance Reserve Fund established by the State Fiscal Accountability
Authority, private carriers, self-insurance or pooled self-insurance funds. The District currently maintains liability
insurance coverage by private carrier. In the opinion of the Chief Executive Officer, the amount of liability coverage
maintained by the District is sufficient to provide protection against any loss arising under the State Tort Claims Act.
In the opinion of local legal counsel for the District, there is no litigation pending or threatened against the District
which is not adequately insured by such coverage.
7
Summary of District Operating Budget, Fiscal Year 2015-16
Revenues
Water Sales
Ad Valorem Taxes
Customer Service Charges
Tap Revenue and Impact Fees
Net Investment Income
Other Revenue
Transfer from Principal and Interest Fund
Total Revenues
$7,647,000
1,848,000
517,000
486,000
175,000
337,000
-$11,010,000
Expenses and Transfers
Operations Cost
Administrative Cost
Salaries and Fringes
Small Equipment and Fixtures
Transfers to Capital Reserve
Transfers to Insurance Reserve Fund
Revenue Bond Payments
General Obligation Bond Payments
Total Expenses and Transfers
$2,007,000
1,220,000
3,945,000
27,000
1,381,000
300,000
282,000
1,848,000
$11,010,000
Revenues and Expenses of the District
A five-year summary of the revenues and expenses of the District appears below. The audited financial statements
of the District for the years ended July 31, 2011 through July 31, 2014 were prepared by Holcombe, Holtzclaw &
Ravan, LLC, Spartanburg, South Carolina. Financial Statements for the year ended July 31, 2015 are unaudited. A
copy of the audited financial statements for the year ended July 31, 2014 is included as Appendix A hereto.
Statement of Revenues and Expenses of the System of Fiscal Years Ending July 31
Operating Revenues
Operating Expenses Before Depreciation
& Amortization
Operating Income Before Depreciation
& Amortization
Depreciation
Amortization of Bond Cost
Operating Income (Loss)
Non-operating Revenues
Ad Valorem Taxes
Other Non-operating Revenues
Non-operating Expenses
Capital Contributions
Increase in net position before cumulative
effect of change in accounting principle
Cumulative effect of change in accounting
principle-GASB 68
Increase (decrease) in net position
*Unaudited
2011
$8,568,689
2012
$8,551,110
2013
$8,380,554
2014
$8,402,740
2015*
$9,018,993
(6,547,017)
(7,218,082)
(7,472,664)
(7,690,026)
(7,234,592)
2,021,672
(1,574,563)
(19,887)
427,222
1,333,028
(1,484,018)
0
(150,990)
907,890
(1,637,168)
0
(729,278)
712,714
(1,869,324)
0
(1,156,610)
1,784,401
(1,863,280)
0
(78,879)
2,271,183
337,915
(343,410)
88,026
2,106,655
365,863
(241,101)
368,773
2,140,649
82,080
(394,965)
291,704
2,244,173
194,234
(259,839)
223,303
2,275,256
219,414
(316,367)
700,282
$2,780,936
$2,449,200
$1,390,190
$1,245,261
$2,799,706
0
$2,780,936
0
$2,449,200
0
$1,390,190
0
$1,245,261
(4,972,480)
($2,172,774)
Location of the System
The current boundaries of the District encompass 128 square miles in the western part of the County. The service
area stretches from Highway 417 in the South, to Highway 11 in the North and from I-26 in the East to the
Greenville County, South Carolina line in the West. As of July 31, 2015, the District served approximately 21,900
accounts and had a service area population of approximately 55,000 people.
8
The District also includes within its boundaries portions of the Middle Tyger River (Lyman Lake) and the North
Tyger River (Lake Cooley and North Tiger Reservoir). The District treats water from these rivers at its filtration
plant on Groce Road in Lyman. The District also includes within its boundaries the South Tyger River (Berry’s
Pond) but does not treat water from this source.
Comparative General Statistics
The District has improved and expanded the System over the years. The following table depicts the trend in miles of
water lines and annual amount of user revenue charges over the past five fiscal years:
Miles of Water Lines
Total Annual Amount of Billing
2011
673
$7,551,984
2012
678
$7,448,359
2013
687
6,996,566
2014
691
7,107,192
2015
696
7,448,516
Revenues of the System
Ad valorem taxes are used exclusively to pay debt service on the District’s general obligation indebtedness. The
Commission imposes water rates and charges on the customers of the District in order to meet the operational needs
of the District. It has been and continues to be the policy of the Commission to annually review rates and charges to
ensure that the District generates sufficient funds to meet budget expenditures.
Customers
The following table shows the number of customers of the District for the years shown:
Total Number
of Accounts
20,600
21,000
21,500
21,800
21,900
Fiscal Year
Ended July 31
2011
2012
2013
2014
2015
Supply and Usage Data
The following table shows dependable supply and usage statistics for fiscal year ended July 31, 2015. The
dependable supply provides the minimum supply of water even in times of drought and it is based on the most
recent drought.
Million Gallons Per Day
Supply Available, Years of Drought:
North Tiger Reservoir
Lake Cooley
Lake Lyman
Total Supply Available, Years of Drought
1.00
3.92
14.99
19.91
Combined Transmission Capacity, Pumping
High Service pumps (at WTP)
Distribution pumps (at Booster pump station)
Average Water Withdrawals:
WTP (winter raw water withdrawal)
WTP (summer raw water withdrawal)
Total System, Average Daily Usage
Winter
Summer
Reservoir Supply During Drought Years
at Average User Rate (300 Days)
9
24.90
10.00
5.15
6.77
5.17
6.70
Water Rates and Fees
Water revenues, operation and maintenance expenses and net income are reviewed each year during the budgeting
process to gauge the adequacy of water rates and to ensure that sufficient funds are always available to meet the
various revenue requirements of the System.
Retail Rates. On April 1, 2010, the Commission adopted a change to the rate structure for meters under 1” in size.
The structure is comprised of a base fee according to meter size plus an inclining block schedule for residential and
irrigation monthly consumption. Commercial and industrial rates did not change from the declining block.
Base Fee. The base fee listed below is increased 25% for those customers who are outside of the District’s legal
boundaries. Current fees, effective April 1, 2010, are as follows:
Meter Size
(Inches)
5/8”
1”
1.5”
2”
3”
4”
6”
8”
10”
Gallons
Allowed
2,500
7,000
20,000
60,000
180,000
450,000
800,000
1,500,000
2,000,000
Inside
District
$ 12.00
25.55
68.28
166.68
466.58
963.08
1,542.08
2,676.08
3,486.08
Outside
District
$ 15.00
31.92
85.34
208.54
558.79
1,205.49
1,930.99
3,351.99
4,366.99
Source: Startex-Jackson-Wellford Duncan Water District
Monthly Consumption Charges. Monthly consumption charges listed below are increased 25% for those customers
outside of the District’s legal boundaries. The District’s current rates, effective April 1, 2010, are as follows:
Residential and Irrigation. Residential and Irrigation Water Rates (under 1” in size) are as follows:
Usage Block
1
2
3
Monthly Usage
Gallons
2,500 – 15,000
15,001 – 25,000
Over 25,000
Rate per 1,000 Gallons
Inside District
$3.01
3.20
4.00
Outside District
$3.76
4.00
5.00
Commercial and Industrial. Commercial and Industrial Water Rates are as follows:
Usage Block
1
2
3
4
5
Monthly Usage
Gallons
2,500 – 15,000
15,001 – 135,000
135,001 – 235,000
235,001 – 500,000
Over 500,000
Inside District
$3.01
2.46
2.12
1.86
1.62
Outside District
$3.76
3.08
2.65
2.33
2.03
Wholesale Rates. The District does not currently sell water on a wholesale basis except on an as-needed, limited,
short term basis. The wholesale rate is $1.00 per 1,000 gallons.
Capacity Fee. The capacity fee is a one-time charge implemented as a means to recover the costs associated with
capital improvements to provide service to future users of the System. The capacity fees are designed to mitigate the
need for existing customers to pay for growth-related expansion.
10
The following is a schedule of fees related to meter size.
Tapping/Meter Fees
Connection Size
5/8” Domestic(1)
5/8” Irrigation(1)
1”(1)
1 1/2”(2)
2” – 12”(2)
Fee
$500.00
500.00
775.00
100.00
50.00 per inch
(1) Meter cost included
(2) Tapping cost only. Meter cost to be determined at time of purchase.
System Improvement Fees
Tap Size
3/4”
1”
1.5”
2”
3”
4”
6”
8”
10”
12”
Inside District
$ 300
420
540
870
3,300
4,200
6,300
8,700
10,800
12,900
Outside District
$ 600
840
1,180
1,740
6,600
7,350
9,400
13,050
16,200
19,350
Private Fire Protection Charge. Application for private fire protection systems require that three sets of plans be
submitted to the District’s Engineering Department for approval of plans. It is recommended that the District’s
Engineering Department be contacted concerning specific requirements prior to the preparation of plans. The
supplying tap will not be made until plans are approved and specific pit construction and valving requirements are
met. The monthly fees for the private fire protection charge are as follows:
Fire Line Size
2”
3”
6”
8”
10”
12”
Inside District
$ 4.85
14.70
80.60
168.72
290.07
458.80
Outside District
$ 6.06
18.38
100.75
210.90
362.59
573.50
Other Charges. The District imposes tap fees, installation fees and service fees for the System. Tap fees are charged
to customers for material and labor use to make a physical connection to the water distribution line (excavation of
the line is the responsibility of the customer). Meter installation fees are imposed upon customers.
Historical Water Rates
Prior to April 1, 2010, the District’s base fees and consumption charges remained unchanged since November, 1997.
On April 1, 2010, consumption charges were changed from a declining block to an inclining block rate for
residential and irrigation customers only (under 1” in size). However, monthly charges for residential and irrigation
customers remained unchanged for usage up to 15,000 gallons per month. The rate structure change only affected
those customers who use more than 15,000 in any month.
11
Average Daily Water Usage (All Purposes)
The following table shows combined quantities of finished water supplied by the District’s treatment plant, in
million gallons per day, for the past five fiscal years.
Fiscal Year
Ended July 31
2011
2012
2013
2014
2015
Million
Gallons Per Day
6.0
5.8
5.4
6.1
6.3
Water Billing and Collection Policies
Water bills are mailed to customers on a monthly basis. One-fourth (1/4) of the customers are billed each week.
Payment is due 20 days after the date of the bill. If the bill is not paid, a late payment penalty of $5.00 is added to
the next month’s bill. If the next month’s bill is not paid by the due date, the customer is charged an additional
$25.00 and the water service is scheduled for disconnection. A $35.00 reconnection fee is required to restore service
after disconnections.
Largest Customers
The following table is a list of the District’s ten largest customers for the Fiscal Year ended July 31, 2015. No single
customer accounted for more than 4.34% of total revenues.
Total
Customer
Springfield, LLC
Starchem, LLC
Leigh Fibers, Inc.
Huntington Foam, LLC
Chartwell Berry Shoals
Coyne Textile Services
Cryovac Plant
River Falls Apartment Homes
Autolite
Upstate Culpepper
Total
$317,098
44,076
33,778
32,999
32,113
24,299
22,555
18,505
17,407
16,605
$559,435
% Gross
Revenues
4.34%
0.60
0.46
0.45
0.44
0.33
0.31
0.25
0.24
0.23
7.65%
Regulation and Permits
Federal Regulation: The System is subject to regulation by the U.S. Environmental Protection Agency (“EPA”).
EPA involvement is primarily in the areas of approving funds for projects under EPA grants and establishing and
interpreting policies for executing federal water quality and water treatment facilities construction grant programs.
State Regulation: The System is subject to regulation by South Carolina Department of Health and Environmental
Control (“DHEC”). DHEC is responsible for ensuring compliance with federal and State water quality standards,
approving plans and specifications for water projects within the State, issuing operating and construction permits, in
addition to other administrative functions which have been delegated to DHEC by EPA. From time to time, DHEC
has entered into administrative consent orders with the District to resolve issues of alleged permit non-compliance
and other compliance issues. The District is in compliance with requirements for payment of civil penalties or
corrective measures under such consent orders.
12
CERTAIN FISCAL MATTERS
Property Taxation and Assessment
Article X, Section 1, of the State Constitution requires equal and uniform assessments of property throughout the
State for the following classes of property and at the following ratios:
(1)
Real and personal property owned by or leased to manufacturers, utilities and mining operations and used
in the conduct of such business – 10.5% of fair market value;
(2)
Real and personal property owned by or leased to companies primarily engaged in transportation for hire of
persons or property and used in the conduct of such business – 9.5% of fair market value;
(3)
Legal residence and not more than five contiguous acres – 4% of fair market value (if the property owner
makes proper application and qualifies);
(4)
Agricultural real property used for such purposes owned by individuals and certain corporations – 4% of
use value (if property owner makes proper application and qualifies);
(5)
Agricultural property and timberlands belonging to corporations having more than ten shareholders – 6% of
use value (if property owner makes proper application and qualifies);
(6)
All other real property – 6% of fair market value;
(7)
Business inventories – 6% of fair market value (as of 1988, there is available an exemption from taxation of
property in this category, except that the assessed value of business inventory as of tax year 1987 is taken
into account in calculating an entity’s bonded debt limit);
(8)
Motor vehicles – 6% of fair market value; and
(9)
All other personal property – 10.5% of fair market value.
The South Carolina Department of Revenue (“DOR”) has been charged with the responsibility of taking steps
necessary to ensure equalization of assessments statewide in order that all property is assessed uniformly and
equitably throughout the State, and may require reassessment of any part or all of the property within a county.
Under law enacted by the South Carolina General Assembly in 2000, every fifth year counties and the State are
required by law to effect an appraisal of all property within such counties and to implement that appraisal as a new
assessment in the following year. Thereafter reassessments will occur on the schedule described above. Section 1243-217(B) of the Code of Laws of South Carolina 1976, as amended, authorizes a county by ordinance to postpone
its reassessment program for not more than one tax year. Regulations adopted by the DOR also require that a
reappraisal program must be instituted by a county if the median appraisal for all property in such county (as a
whole or for any class of property) is higher than 105% or lower than 80% of fair market value. The County last
completed and implemented a reassessment program for the 2013 tax year (which corresponds to the County’s
2013-14 fiscal year).
In addition to the appraisal and reassessment procedures enacted in 1995, the General Assembly imposed a
limitation on millage rate for the year in which the reassessment is implemented referred to as the “rollback
millage,” which is that millage rate which, following reassessment, will produce the same revenues as were
produced in the year preceding reassessment. The rollback millage may only be increased pursuant to the provisions
of Act No. 388, which was adopted by the South Carolina General Assembly on June 1, 2006 and signed into law by
the Governor on June 10, 2006 (“Act No. 388”).
Act No. 388 provided that, beginning July 1, 2007, the growth in valuation of real property attributable to
reassessment may not exceed 15% for each five year reassessment cycle. Growth in valuation resulting from
improvements to real property are exempt from this restriction. Moreover, upon the sale of any parcel of real
property or other “assessable transfer of interest,” including long-term leases, conveyances out of trusts, and other
defined events, but excluding transfers between spouses, such parcel will be reassessed to its then-current market
value. The foregoing limitation on increases in assessed value may materially effect the growth in the District’s
13
assessed value, and, thus, debt limit, over time. Limitations on increases in assessed value were further modified by
the South Carolina General Assembly in its 2011 session (the “2011 Amendments”).
The 2011 Amendments further limits the reassessment of property assessed at six percent (6%) of market value, e.g.
commercial property and non-owner occupied homes. Upon an assessable transfer of interest of such property, the
new assessed value for tax purposes is the greater of (a) 75% of the fair market value of the property at the time of
sale or (b) 100% of the fair market value of the property according to the most recently completed county-wide
reassessment.
The County Assessor appraises and assesses all the real property and mobile homes located within the County and
certifies the results to the County Auditor. The County Auditor appraises and assesses all motor vehicles, marine
equipment, business personal property and airplanes. The DOR furnishes guides for use by the counties in the
assessment of automobiles, automotive equipment, and certain other classes of property and directly assesses the
real and personal property of public utilities, manufacturers and business equipment.
Each year the DOR certifies its assessments to the County Auditor who prepares assessment summaries from the
respective certifications, determines the appropriate millage levies, prepares tax bills and then in September charges
the County Treasurer with the collection. South Carolina has no statewide property tax.
Homestead Exemptions – Property Tax Relief
The State provides, among other exemptions, three exemptions for homesteads. The first is a general exemption
from all ad valorem property taxes and applies to the first $50,000 of value of the dwelling place of persons who are
over 65 years of age, totally and permanently disabled or legally blind (the “Homestead Exemption”). The second
exemption (the “Property Tax Relief Exemption”) applies only to ad valorem taxes levied for school operating
budgets (exclusive of amounts in those budgets for the payment of lease-purchase agreements for capital
construction) (the “School Taxes”). The Property Tax Relief Exemption applies to property classified as the legal
residence and up to five contiguous acres of land contiguous thereto when owned by the occupant of such residence.
The value of the property exempted pursuant to the Property Tax Relief Exemption is determined each year by a
formula which takes into account the amount made available by the General Assembly for such purpose in a State
Property Tax Relief Fund and the total School Taxes but for such exemption. In both cases, the revenues that would
have been received by various taxing entities but for the exemptions are replaced by funds from the State. In the case
of the Homestead Exemption, the State pays each taxing entity the amount to which it is entitled by April 15 of each
year from the State’s general fund. In the case of the Property Tax Relief Exemption, the payments are to be made
from the State Property Tax Relief Fund and are due by April 15 of each year, but an amount equal to 90% of such
payments is required to be paid to the school districts during the last calendar quarter of the calendar year ending
prior to such April 15. The third exemption, the New Homestead Exemption (defined below) is discussed below
under “CERTAIN FISCAL MATTERS – New Homestead Exemption.”
New Homestead Exemption
Pursuant to Act No. 388, an additional one percent sales tax was imposed State-wide beginning July 1, 2007. The
additional tax does not apply to certain items, including certain accommodations (e.g., hotels, motels, campgrounds
and the like), items taxed at a defined maximum tax (e.g., automobiles, taxed at a maximum of $300, regardless of
sales price), and unprepared food. Receipts from the one percent sales tax must be credited to the “Homestead
Exemption Fund” created pursuant to Act No. 388.
Beginning in Fiscal Year 2007-08, all owner-occupied real property in the State was exempted from ad valorem
property taxes levied for school district operations (the “New Homestead Exemption”). Proceeds of the sales tax
deposited in the Homestead Exemption Fund is distributed to the school districts of the State in substitution for the
ad valorem property taxes not collected as a consequence of the New Homestead Exemption, provided, however,
that in no event shall the amount of sales taxes distributed to the school district or districts within any county be less
than $2,500,000 in the aggregate. Act No. 388 contains provisions for distribution to multiple school districts within
a single county of any amounts made available under the preceding sentence.
Act No. 388 provides that reimbursements in Fiscal Year 2007-08 for amounts not collected by reason of the New
Homestead Exemption shall be equal to the amount estimated to be otherwise collected in Fiscal Year 2007-08 by
the school district from school operating millage imposed on owner occupied residential property therein. Beginning
14
in Fiscal Year 2008-09 and continuing each year thereafter, the aggregate reimbursement to the school districts of
the State will increase by an amount equal to the percentage increase in the previous year of the Consumer Price
Index, Southeast Region, as published by the United States Department of Labor, Bureau of Labor Statistics plus the
percentage increase in the previous year in the population of the State as determined by the Office of Research and
Statistics of the State Fiscal Accountability Authority.
Any amounts remaining in the Homestead Exemption Fund after the distribution of moneys as described in the
preceding paragraphs must be distributed to the 46 counties of the State, proportionately based upon population, and
applied as a credit against ad valorem property taxes levied against, first, owner-occupied real property, and,
thereafter, to all other classes of taxable property, for county operating purposes.
To the extent revenues in the Homestead Exemption Fund are insufficient to pay all reimbursements to the school
districts of the State as described above, the difference must be paid from the State’s general fund. Enforcement of
the requirement described in the preceding sentence is not self-executing, and will in each applicable year be subject
to the appropriation of the necessary amounts by the General Assembly.
Change in Millage Levy Authority
Act No. 388 and the 2011 Amendments limited future increases in millage levied for operational purposes by all
political subdivisions and school districts. The annual millage rate for operations may increase only at a rate equal to
the sum of (a) the increase in the consumer price index, plus (b) the rate of population growth of the political
subdivision or school district, plus (c) the operating millage increase allowed by operation of clauses (a) and (b)
above, but not imposed, for the three property tax years preceding the year to which the current limit applies. This
limitation may be overridden by a vote of two-thirds of the governing body of the political subdivision or school
district, but only for the following purposes and only in a year in which such condition exists:
(1)
a deficiency of the preceding year;
(2)
any catastrophic event outside the control of the governing body such as a natural disaster, severe weather
event, act of God, or act of terrorism, fire, war, or riot;
(3)
compliance with a court order or decree;
(4)
taxpayer closure due to circumstances outside the control of the governing body that decreases by ten
percent or more the amount of revenue payable to the taxing jurisdiction in the preceding year; or
(5)
compliance with a regulation promulgated or statute enacted by the federal or state government after
January 1, 2007 for which an appropriation or a method for obtaining an appropriation is not provided by
the federal or state government.
(6)
purchase by the local governing body of undeveloped real property or of the residential development rights
in undeveloped real property near an operating United States military base which property has been
identified as suitable for residential development but which residential development would constitute
undesirable residential encroachment upon the United States military base as determined by the local
governing body (provided certain other criteria are met as described in Section 6-1-320(B)(6) of the Code
of Laws of South Carolina, 1976, as amended); or
(7)
to purchase capital equipment (as defined in Section 6-1-320(B)(7) of the Code of Laws of South Carolina,
1976, as amended) and make expenditures related to the installation, operation, and purchase of the capital
equipment including, but not limited to, taxes, duty, transportation, delivery, and transit insurance, in a
county having a population of less than one hundred thousand persons and having at least forty thousand
acres of state forest land.
If a tax is levied to pay for items (1) through (5) above, then the amount of tax for each taxpayer must be listed on
the tax statement as a separate surcharge for each applicable item. Each separate surcharge must have an explanation
of the reason for the surcharge. The surcharge must be continued only for the years necessary to pay for the
applicable item.
15
The limitation on operating millage increases does not affect millage that is levied to pay bonded indebtedness or
payments for real property purchased using a lease-purchase agreement or used to maintain a reserve account. The
limitation on operating millage increases does not affect millage imposed to pay bonded indebtedness or operating
expenses of a special tax district established pursuant to Section 4-9-30(5) of the Code of Laws of South Carolina,
1976, as amended.
Payments in Lieu of Taxes
The State has adopted an array of property tax inducements and incentives to promote investment in the State.
Qualifying investments of $2.5 million ($1 million in some counties and for certain “Brownfield” sites) or more may
negotiate for payments in lieu of taxes for a period of up to 30 years (with the possibility of an additional 10-year
extension at the option of the county) based on assessment ratios of as little as 6% and using millage rates that are
either fixed for up to 30 years (with the possibility of an additional 10-year extension at the option of the county) or
adjusted every fifth year. Certain of those projects may also design a payment schedule so long as the present value
of the payments under the schedule are equal to the present value of the payments that would have been made
without the schedule. The State also provides an even more generous inducement for projects creating at least 125
new jobs and new investment of not less than $150 million or for projects which have total investment of not less
than $400 million within the State. These projects may negotiate for payments based on assessment ratios of as low
as 4% and for a term of up to 40 years.
The State provides alternative provisions respecting the distribution of payments in lieu of taxes to entities having
taxing jurisdiction at the location of the investment: (i) revenues received in respect of property that is not included
in a multicounty park are allocated in proportion to the amounts that would have been received by the taxing entities
if the payments were taxes and (ii) revenues received from property that is in a multicounty park, however, is
distributed in accordance with the agreement creating the park; the amount of the distribution to each taxing entity
is, for all practical purposes, controlled by the County. Property may be included in a multicounty park under terms
of agreements between two or more counties with individual sites being determined primarily by the county in
which they are located. Payments in lieu of taxes may be diverted from taxing entities in the sole discretion of the
County to fund projects which support economic development activities, including projects that are used solely by a
single enterprise and such other uses as directed by the County.
In addition to the above-described incentives, under State law a county may issue special source revenue bonds or
grant equivalent credits against payments in lieu of taxes in order to pay for certain infrastructure costs to support
economic development activities. Such bonds or credits are payable from, and effectively allow for the capturing of,
portions of the payments in lieu of taxes payable by industry.
The effect of the above-described incentives, is that, notwithstanding the fixed payments by the industry, the
District’s share of these payments will vary in each year in accordance with the ratio its millage rate for that year
bears to the total millage that would otherwise apply to the property. Projects on which these payments in lieu of
taxes are made are considered taxable property at the level of the negotiated payment for purposes of calculating
bonded indebtedness limits and for purposes of computing the index of taxpaying ability pursuant to the South
Carolina Education Financing Act. If the property is situated in a multicounty park, the calculation of assessed value
for debt limit purposes is based upon the relative share of payments received by all taxing entities which overlap the
multicounty park. Accordingly, a recipient of payments from a multicounty park is able to include only a fraction of
the assessed value of property therein in calculating its debt limit.
The County has to date entered into numerous payment in lieu of tax arrangements with respect to industrial and
other investments in the County.
Motor Vehicle Tax Relief
State Constitutional amendments adopted by referendum in the November, 2000 general election may have a
material impact on the levy and collection of ad valorem property taxes within the District. One amendment phased
in over six years a reduction in assessment ratios (from 10.5% to 6.0%) for motor vehicles and other titled personal
property. The second amendment allows county governing bodies to impose a one percent sales tax, the proceeds of
which must be applied to the reduction in ad valorem taxes levied against motor vehicles. The County has to date
taken no action to impose a sales tax as provided by the amendment. The first amendment reduced tax collections by
all local taxing entities, including the District, over time at current millage levels, thus necessitating additional
16
millage or a reduction in expenditures. The first amendment, by effectively reducing the assessed value of motor
vehicles and titled personal property, caused a reduction in available debt limit for local taxing entities, including the
District.
Assessed Values of Startex-Jackson-Wellford-Duncan Water District
Fiscal
Year
2011
2012
2013
2014
2015
Real
Property
$96,035,133
97,233,373
98,300,372
102,074,255
103,839,407
Personal
Property(1)
$59,823,652
57,496,190
59,392,777
64,058,773
66,041,311
Total(2)
$155,858,785
154,729,563
157,693,149
166,133,028
169,880,718
(1) Includes manufacturers’ real and personal property
(2) The Assessed Value figures do not include fee in lieu of tax property which was $28,323,116 for 2014
Source: Spartanburg County Auditor
Fiscal Year 2015 Market Value/Assessment Summary
Classification
Real Estate
Mobile Homes
SCTC
Utilities
Corporations
Transportation
Vehicles
Boats
Airplanes
Furniture
Fee in lieu of tax property
Totals
Assessed
Value
$102,552,919
1,286,488
10,158,350
5,231,950
33,600,320
605,268
15,326,253
292,520
4,830
821,820
28,323,116
$198,203,834
Assessment
Ratio
4&6
4&6
10.5
10.5
10.5
9.5
6
10.5
4
10.5
6 - 10.5
Market
Value
$2,063,037,597.00
28,934,082.00
96,748,190.48
49,828,095.24
320,003,047.62
6,371,242.11
255,437,550.00
2,785,904.77
120,750.00
7,826,857.15
396,000,866.67
$3,227,094,183.04
Source: Spartanburg County Auditor and Spartanburg County Assessor
Method by Which Tax Levy is Made
In the State, local taxes for counties, schools and special purpose districts are levied as a single tax bill which each
taxpayer must pay in full. Taxes are levied by the auditors of the various counties. In the County, current and
delinquent tax collections are made through the County’s Delinquent Tax Office. County taxes are payable without
penalty until January 15th. On January 16th, a 3% penalty is added on all unpaid taxes; on February 2nd, an
additional 7% penalty is added; and on April 17th, an additional 5% penalty is added, at which time property in the
County goes into execution.
17
Tax Collection Record
County: The following shows taxes levied by the County Auditor and collected by the County Treasurer, including
County, school district, municipality and special purpose district taxes, for the past five Fiscal Years:
Original
Current
Fiscal
Amount
Tax
Year
Levied
Collections
2011
$359,821,541
$335,278,387
2012
357,722,870
336,851,721
2013
363,824,502
343,668,625
2014
388,243,689
366,074,975
2015
393,718,474
372,002,503
______________________________
Percentage of
Current Taxes
Collected
93.18%
94.17
94.46
94.29
94.49
Delinquent
Tax
Collections
$19,790,837
13,711,560
14,711,569
15,851,722
16,008,069
Total
Tax
Collections
$355,069,224
350,563,281
358,380,194
381,926,697
388,010,572
Total
Percentage
Collected
98.68%
98.00
98.50
98.37
98.55
Source: Spartanburg County Treasurer and Delinquent Tax Office
District: The following shows taxes levied by the County Auditor and collected by the County Treasurer for the
District for the past five fiscal years:
Fiscal
Year
2011
2012
2013
2014
2015
Original
Amount
Levied
$2,202,386
1,936,761
2,030,064
2,176,355
2,067,674
Current
Tax
Collections
$2,016,621
1,830,531
1,917,599
2,052,086
1,961,877
Percentage of
Current Taxes
Collected
91.57%
94.52
94.46
94.29
94.89
Delinquent
Tax
Collections
$ 99,760
102,802
58,260
54,008
95,953
Total
Tax
Collections
$2,116,381
1,933,333
1,975,859
2,106,094
2,057,830
Source: Spartanburg County Treasurer and Delinquent Tax Office
Millage History
The following table shows the number of mills levied by the District for the past five fiscal years:
Mills
Levied
11.8
12.0
12.0
11.5
10.0
Year
2012
2013
2014
2015
2016
18
Total
Percentage
Collected
96.09%
99.82
97.33
96.77
99.53
Largest Taxpayers in the District
The following table shows the calendar year 2014 assessed values and District property taxes or fee in lieu of taxes
paid in calendar year 2014 by the ten largest taxpayers in the District.
Assessed
Value
$5,377,910
3,161,836
2,918,240
2,750,011
3,265,530
2,260,498
2,104,161
2,235,830
1,940,830
1,809,909
Taxpayer
Sew Eurodrive Inc.
Cryovac, Inc.
Duke Energy Corp.
American Fund US Investments
General Motors LLC
DSI Draexlmaier Service Inc.
DAA Draexlmaier Automotive
CBRE Operating Partnership LP
BMW Manufacutring Co LLC
AFL Telecommunications LLC
2014
Amounts Paid
$1,811,578.07
1,103,977.41
1,044,217.58
968,004.00
961,074.84
797,956.00
742,769.00
734,431.20
671,398.92
622,719.47
DEBT STRUCTURE
Legal Debt Limit of the District
Article X, Section 14, of the State Constitution provides that special purpose districts have the power to incur bonded
indebtedness in such manner and upon such terms and conditions as the General Assembly shall prescribe by general
law. General obligation debt may be incurred only for a public and corporate purpose in an amount not exceeding 8%
of the assessed value of all taxable property of such special purpose district. Under provisions of the Enabling Act, the
governing body of the special purpose district may issue general obligation bonds to defray the cost of any authorized
purpose and for any amount not exceeding its applicable constitutional debt limit. Under Article X, Section 14, of the
State Constitution, bonded indebtedness of the District existing on November 30, 1977, is not considered in
determining the District’s 8% debt limitation. General obligation debt authorized by a majority vote of the qualified
electors of the District voting in a referendum may be incurred without limitation as to amount.
The District’s debt limitation is computed below:
Assessed Value – as of June 30, 2015(1)
Constitutional Debt Limit
Total
Current Outstanding Debt Subject to Limit
Legal Debt Limit without a Referendum
$169,880,718
x 8%
13,590,457
(8,695,000)
$4,895,457
(1) Excludes assessed value related to fee in lieu of taxes property of $28,323,116
Outstanding Debt
As of July 31, 2015, the outstanding general obligation indebtedness of the District was $8,695,000 and includes the
following issue:
(1)
$1,085,000 outstanding principal amount of $7,500,000 original principal amount General Obligation
Bonds, Series 2010, dated November 30, 2010;
(2)
$3,025,000 outstanding principal amount of $4,080,000 original principal amount General Obligation
Bond, Series 2012, dated November 20, 2012; and
(3)
$4,585,000 outstanding principal amount of $4,585,000 General Obligation Bond, Series 2015, dated
January 21, 2015.
19
The following table shows the annual debt service requirements (principal and interest) on the District’s outstanding
general obligation bonds for the following fiscal years:
Fiscal Year
Ending
July 31
2016
2017
2018
2019
2020
2021
2022
Series 2010
Bonds
$1,117,550
-------
Series 2012
Bonds
$ 602,934
1,250,848
1,255,550
-----
Series 2015
Bonds
$ 127,767
384,397
389,853
1,065,167
1,080,825
1,091,057
780,934
Revenue Bonds
As of December 31, 2015, the District also has outstanding revenue bond indebtedness in the principal amount of
$1,245,992.45 secured by the revenues of the System; such revenues do not include ad valorem taxes levied by the
District.
Overlapping Debt
The following table sets forth the assessed value as of June 30, 2015, of all taxable property in each political
subdivision having outstanding general obligation debt which overlaps the District, either in whole or in part and the
total amount of general obligation indebtedness of each such political subdivision which was outstanding as of June
30, 2015:
Outstanding General
Obligation Debt
as of June 30, 2015
County
Spartanburg
Assessed Value as of
June 30, 2015
$18,929,834
$1,036,263,239
Municipalities
Duncan
Greer
248,876
1,545,000
8,134,241
104,011,520
School Districts
District 1
District 6
64,570,000
13,120,000
95,441,255
244,812,500
Special Purpose Districts
Spartanburg Sanitary Sewer District
Westview-Fairforest Fire District
31,287,000
568,966
623,173,269
90,463,435
20
ECONOMIC CHARACTERISTICS AND DATA
Population
The following table shows population information for the County for the last four decades for which census figures
are available:
Percent Increase
Population
from Prior Census
Year
1980
202,700
16.7%
1990
226,793
11.9
2000
253,791
11.9
2010
284,307
12.0
2014*
293,542
3.2
______________________________
*Estimated
Source: U.S. Census Bureau
Per Capita Personal Income
The per capita personal income for each of the last five (5) years for which information is available is shown below:
Year
2009
2010
2011
2012
2013
______________________________
County
$30,972
31,190
32,273
34,024
34,482
State
$33,347
33,628
34,079
35,347
35,831
United States
$40,816
41,603
42,332
44,200
44,765
Source: U.S. Department of Commerce, Bureau of Economic Analysis
Unemployment
The average employment rates in the County, the State and the United States, for each of the last twelve months for
which information is available are shown on the following page:
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
County
4.9%
5.3
5.5
5.9
6.4
6.7
6.4
6.0
6.0
6.5
6.5
5.5
State
5.3%
5.8
5.8
6.1
6.4
6.7
6.5
6.1
6.2
6.8
6.9
6.4
__________________________
Source: South Carolina Department of Employment & Workforce, Labor Market Information
21
U.S.
4.8%
4.8
4.9
5.2
5.6
5.5
5.3
5.1
5.6
5.8
6.1
5.4
Retail Sales
The State imposes a 6% sales tax on all retail sales. The following table shows the level of gross retail sales over the
last five calendar years for businesses located in the County:
Year
2010
2011
2012
2013
2014
______________________________
Source:
Retail Sales
$ 7,835,806,620
8,747,450,950
11,683,685,428
11,198,351,528
11,009,268,837
Increase/(Decrease)
Over Previous Year
3.8%
11.6
33.6
(4.1)
(1.7)
S. C. Department of Revenue
Major Employers
The top ten employers located in the County, their products/services and estimated number of employees are shown
below:
Product/Service
Industry
BMW Manufacturing Corporation
Spartanburg County Schools
Spartanburg Regional Medical Center
State of South Carolina
Spartanburg County
Milliken & Company
Mary Black Health System
Michelin Tire Company
Sealed Air
BI-LO
Automotive Manufacturer
Seven Public School Districts
Hospital
State Government
County Government
Research & development of yarns, chemicals
Hospital
Radial Truck Tire Manufacturer
Plastic Packaging Material Manufacturer
Retail Grocery
Employees
8,000
6,351
5,992
2,164
1,508
1,320
1,075
1,060
1,044
804
________________________________
Source: Spartanburg County Comprehensive Annual Financial Report June 30, 2014
Building Permits
The following table shows the number of residential and non-residential building permits issued by the County for
the calendar years shown, as well as data for the current calendar year as of October 12, 2015.
RESIDENTIAL
Year
# of Permits
Cost
2010
512
$ 56,411,190
2011
506
52,954,184
2012
700
83,516,901
2013
915
129,553,495
2014
1040
176,673,160
2015*
1079
180,856,225
______________________________
*As of October 12, 2015
Source: Spartanburg County Building Official
22
COMMERCIAL
# of Permits
Cost
219
$ 31,920,907
260
47,294,608
288
274,252,032
261
107,950,718
271
117,939,699
273
362,635,217
Facilities Located Within the County
Education: The County is home to seven public school districts comprised of more than 44,000 students. The
combined school districts consist of 44 elementary schools, 18 middle schools, 5 junior high school, 9 high schools
and 4 career centers or vocational schools. Approximately seventeen fully accredited private and parochial schools
also are located in the County. The school districts are independent political entities and receive no funding from
County government.
The South Carolina School for the Deaf and the Blind offers programs for preschool, elementary, middle and high
schools, sensory multidisabled vocational and postsecondary education students in addition to a vast array of
outreach services. The Charles Lea Center, a comprehensive facility for evaluation, training, education and
rehabilitation of exceptional children, also assists the area schools through therapeutic programs for learning or
emotional disorders.
Higher Education: The University of South Carolina – Upstate had a Fall 2014 enrollment of approximately 5,500
students, and is one of the largest campuses of the University of South Carolina System. The four-year institution
offers undergraduate degree programs in 11 fields of study in business administration and economics, education,
humanities and sciences and nursing. Several graduate programs are also offered. Wofford College, a four-year
liberal arts college with a Fall 2014 enrollment of approximately 1,608 students, and Converse College, a four-year
liberal arts college for women with a Fall 2014 enrollment of approximately 1,389 undergraduate and graduate
students, are also located in the County. Spartanburg Community College, a public two-year college offering
associate degrees and certificates in a variety of fields, had a Fall 2014 enrollment of approximately 5,462 creditseeking students. Sherman College of Straight Chiropractic had a Fall 2014 enrollment of approximately 300
students. Spartanburg Methodist College, a fully-accredited private junior college, had a Fall 2014 enrollment of
approximately 800 students and offers associate degrees in liberal arts and science and several career tracks. The
Edward Via College of Osteopathic Medicine (“VCOM”) is a private, nonprofit osteopathic medical school. VCOM
established this campus in 2010 and had a Fall 2014 enrollment of approximately 1,400 students.
Health Care: The County is served by numerous state-of-the-art healthcare facilities. The Spartanburg Regional
Health Services District, Inc. is an integrated-delivery healthcare system, comprising a variety of health services and
facilities which include Spartanburg Medical Center, a 540-bed research and teaching hospital; Spartanburg Hospital
for Restorative Care, a 97-bed long-term acute-care hospital with a 25-bed skilled nursing facility; Pelham Medical
Center, a 48-bed, acute-care facility, including and emergency center, a medical office building, and numerous
amenities and practices; Medical Group of the Carolinas, a network of physician practices; Regional HealthPlus, a
network of physicians and hospitals offering a variety of services; Gibbs Cancer Center & Research Institute, which
includes five locations across the Upstate; AccessHealth, a collaborative enterprise to connect uninsured individuals
with community health care providers; and the Spartanburg Regional Foundation, which has reverted more than $30
million to support health and wellness to community.
Mary Black Health System LLC consists of the Mary Black Memorial Hospital, Mary Black Physicians Group and
Mary Black Health Network, Inc., with more than 330 doctors and allied healthcare professionals. Mary Black
Memorial Hospital is a 207-bed facility with surgical suites, a Family Birthing Center, a Breast Health Center,
inpatient rehabilitation and outpatient therapy, a 24-bed Emergency Department, Imaging Services, a Wound Center,
Geriatric Psychiatric Services, an Intensive Care Unit, and a Sleep Center.
Ernest Health, Inc. constructed a 40-bed rehabilitation hospital, the Spartanburg Rehabilitation Institute (“SRI”),
which is the only freestanding acute rehabilitation hospital in the County. SRI provides comprehensive physical
medicine and rehabilitation services to patients with functional deficits resulting from injury or illness. Inpatient
services include acute rehabilitation, nursing care and medical management for patients suffering from stroke, spinal
cord injury, brain injury, and amputation to name a few.
Also within the County is the Carolina Center for Behavioral Health, a 130-bed private behavioral health system
which specializes in psychiatric and chemical dependency treatment and provides inpatient, partial hospitalization
and intensive outpatient programs.
23
Financial Institutions: County residents are presently served by 67 branches of all major state and local commercial
banks. The top ten financial institutions as of June 30, 2015 in the County are as follows:
Institution
# of Branches
Deposits Share
6
8
11
7
6
1
7
2
2
3
$893,145,000
748,408,000
472,137,000
471,600,000
435,043,000
231,643,000
182,247,000
172,210,000
169,319,000
147,716,000
% Market
Rank
1
SunTrust Bank
2
Branch Banking and Trust Company
3
First-Citizens Bank & Trust Company
4
Wells Fargo Bank, National Association
5
Bank of America, National Association
6
Carolina Alliance Bank
7
Arthur State Bank
8
Synovus Bank
9
First South Bank
10
Capital Bank, National Association
______________________________
19.89
16.67
10.51
10.50
9.69
5.16
4.06
3.84
3.77
3.29
Source: Federal Deposit Insurance Corporation
Transportation: Air. The Greenville-Spartanburg International Airport (“GSP”), which is located approximately 20
miles from the City of Spartanburg, serves more than 1.8 million passengers per year by 5 major airlines offering 49
nonstop daily departures to 15 major cities and 18 airports across the United States. The GSP terminal building has
more than 226,000 square feet and consists of two Federal Inspections Stations consisting of Customs, Immigrations
and Agriculture. At 11,001 feet long, GSP can accommodate any aircraft currently in operation today. A 120,000
square-foot Federal Express facility and rental car service facilities are adjacent to GSP.
In 2010, GSP announced a terminal expansion estimated to cost around $115 million in order to increase capacity
and improve efficiency, which it intends to construct in in three phases. Phase I consisted of moving the rental car
customer care center, updating Concourse A and B restrooms and concessions, constructing a north wing to
temporarily relocate airline facilities, moving utility infrastructure, installing new baggage carousels, adding
canopies over passenger loading and unloading areas, constructing a covered walkway to Garage A and B, and
installing new glass on the terminal front. Phase II includes adding a new food, beverage and retail concessions area,
renovating the existing ticketing lobby, creating new customer service booths, adding a landside garden, installing
baggage screening equipment and facilities, consolidating security areas, and renovating Concourse A and B. Phase
III includes adding administrative offices and a conference center.
In addition, the County has access to general aviation services through the Spartanburg Downtown Memorial
Airport which hosts business executives, government officials and tourists traveling by private aircraft and charter
services. The Spartanburg Downtown Memorial Airport has nearly 80,000 operations annually and serves more than
100 local aircraft with a 5,203 foot by 100 foot runway.
Bus. Spartanburg Area Regional Transit Agency (“SPARTA”) provides public transit in and around the City. The
bus system has eight fixed routes which serve employment sites, education centers, medical facilities and retail
areas. All SPARTA buses are handicapped accessible. Intercity bus service is provided by Greyhound Bus Lines. As
the hub of a modern highway system and served by interstate highways I-85, I-26, and three U.S. highways, the
County is easily accessible to major metropolitan areas by car, truck and bus.
Railway and Trucking. CSX Transportation Company and Norfolk-Southern Corporation offer rail service within
the County. Piggyback service is available through Norfolk-Southern Corporation. Trucking facilities in the County
include 25 major common carrier terminals and over 50 freight lines.
Inland Port. The South Carolina Inland Port (“SCIP”), owned and operated by the South Carolina Ports Authority,
opened in October 2013 as an intermodal facility located near GSP in the County. SCIP extended the Port of
Charleston’s reach by providing shippers with access to more than 95 million consumers within a one-day drive.
SCIP boosts efficiency for international freight movements between the Port of Charleston and companies located
across the Southeast. SCIP currently has capacity for 120,000 lifts per year. Norfolk Southern serves SCIP through
its main rail line, and the facility is positioned along the Interstate 85 corridor between Charlotte and Atlanta, where
Norfolk Southern operates additional rail yards.
24
Utilities: Electric power is provided by Duke Energy, which serves most of the County. Broad River Electric
Cooperative, Laurens Electric Cooperative, Lockhart Power Company and the Greer Commission of Public Works
also serve consumers in the County. Natural gas is supplied and distributed by Piedmont Natural Gas Company and
the Greer Commission of Public Works. The Spartanburg Water System supplies water to approximately 80% of the
County’s population. Other waterworks service is provided by Woodruff-Roebuck Water District, Startex-JacksonWellford-Duncan Water District, Inman-Campobello Water District and the Greer Commission of Public Works.
Several not-for-profit water companies also provide water service in the County. The Spartanburg Sanitary Sewer
District owns and operates several sewage treatment facilities which serve the County. The Greer Commission of
Public Works and the Town of Lyman also provide sewage treatment facilities.
Recreation: The County is the summer home of the Carolina Panthers National Football League. The summer
training camp is held on the campus of Wofford College and was held July 31 through August 20 this year. The
County oversees 26 County parks along with numerous organized team sports. One of these parks is the Tyger River
Park which is a 137 acre youth baseball and softball regional sports complex which includes twelve lighted fields, a
lighted championship stadium, meeting space, concession stands, multiple restrooms, a playground and an
observation tower.
Tourists and residents also are drawn to the Zentrum, a visitor’s center operated by BMW Manufacturing Corp. The
Zentrum houses a museum, an auditorium and other special attractions and draws approximately 60,000 visitors
annually. Located in the County are Cowpens National Battlefield, which is the site of a major battle of the
Revolutionary War, and Walnut Grove Plantation, which is a restored estate with authentic furnishings and a
number of restored outbuildings.
Also located in the County is the Upward Star Center, which is a private, nonprofit sports complex owned and
operated by Upward Sports. It features six full-sized basketball courts, twelve regulation indoor volleyball courts,
four batting cages, a running track, a strength and conditioning area with trainers, weights and cardio machines, a
speed and agility area, team rooms, players’ lounge, meeting rooms, a café, a retail shop, four lighted sand
volleyball courts, two lighted artificial turf and four grass fields.
Library: The Spartanburg County Library System has eleven branches and one mobile unit. The library serves over
100,000 people annually with a variety of services, including computer internet services, audio-visual materials and
equipment, story hours, film programs, talking books for the disabled, government documents, tours and talks.
TAX MATTERS
Federal Income Tax Generally
On the date of issuance of the Bonds, Haynsworth Sinkler Boyd, P.A., Greenville, South Carolina (“Bond
Counsel”), will render an opinion that, assuming continuing compliance by the District with the requirements of the
Internal Revenue Code of 1986, as amended ( the “Code”), and the applicable regulations promulgated thereunder
(the “Regulations”) and further subject to certain considerations described in “Collateral Federal Tax
Considerations” below, under existing statutes, regulations and judicial decisions, interest on the Bonds is
excludable from the gross income of the registered owners thereof for federal income tax purposes. Interest on the
Bonds will not be treated as an item of tax preference in calculating the alternative minimum taxable income of
individuals or corporations; however, interest on the Bonds will be included in the calculation of adjusted current
earnings in determining the alternative minimum tax liability of corporations. The Code contains other provisions
that could result in tax consequences, upon which no opinion will be rendered by Bond Counsel, as a result of (i)
ownership of the Bonds or (ii) the inclusion in certain computations of interest that is excluded from gross income.
The District has designated the Bonds as “qualified tax-exempt obligations” within the meaning of Section
265(b)(3)(B) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5)
of the Code), a deduction is allowed for 80% of that portion of such financial institution’s interest expense allocable
to interest on the Bonds.
The opinion of Bond Counsel will be limited to matters relating to the authorization and validity of the Bonds and
the tax-exempt status of interest on the Bonds as described herein. Bond Counsel makes no statement regarding the
accuracy and completeness of this Official Statement.
25
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by
such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income
tax purposes. Bond Counsel’s opinions are based upon existing law, which is subject to change. Such opinions are
further based on factual representations made to Bond Counsel as of the date thereof. Bond Counsel assumes no
duty to update or supplement its opinions to reflect any facts or circumstances that may thereafter come to Bond
Counsel’s attention or to reflect any changes in law that may thereafter occur or become effective. Moreover, Bond
Counsel’s opinions are not a guarantee of a particular result, and are not binding on the Internal Revenue Service
(the “IRS”) or the courts; rather, such opinions represent Bond Counsel’s professional judgment based on its review
of existing law, and in reliance on the representations and covenants that it deems relevant to such opinions.
The opinion of Bond Counsel described above is subject to the condition that the District comply with all
requirements of the Code and the Regulations, including, without limitation, certain restrictions on the use,
expenditure and investment of the gross proceeds of the Bonds and the obligation to rebate certain earnings on
investments of such gross proceeds to the United States Government, that must be satisfied subsequent to the
issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal
income tax purposes. The District has covenanted to comply with each such requirement. Failure to comply with
certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax
purposes retroactive to the date of issuance of the Bonds. The opinion of Bond Counsel delivered on the date of
issuance of the Bonds is conditioned on compliance by the District with such requirements, and Bond Counsel has
not been retained to monitor compliance with the requirements subsequent to the issuance of such Bonds.
Collateral Federal Tax Considerations
Prospective purchasers of the Bonds should be aware that ownership of tax-exempt obligations may result in
collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions,
property and casualty insurance companies, life insurance companies, certain foreign corporations, certain S
corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be
deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Bond Counsel
expresses no opinion concerning such collateral income tax consequences and prospective purchasers of the Bonds
should consult their tax advisors as to the applicability thereof.
Future legislation, if enacted into law, or clarification of the Code may cause interest on the Bonds to be subject,
directly or indirectly, to federal income taxation, or otherwise prevent owners from realizing the full current benefit
of the tax status of such interest. The introduction or enactment of any such future legislation or clarification of the
Code may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds
should consult their own tax advisers regarding any pending or proposed federal tax legislation, as to which Bond
Counsel expresses no opinion.
The IRS has established an ongoing program to audit tax-exempt obligations to determine whether interest on such
obligations is includable in gross income for federal income tax purposes. Bond Counsel cannot predict whether the
IRS will commence an audit of the Bonds. Bond Counsel’s engagement with respect to the Bonds ends with the
issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the District or the
Owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. The IRS has
taken the position that, under the standards of practice before the IRS, Bond Counsel must obtain a waiver of a
conflict of interest to represent an issuer in an examination of tax exempt bonds for which Bond Counsel had issued
an approving opinion. Under current procedures, parties other than the Issuer and their appointed counsel, including
the Owners, would have little, if any, right to participate in the audit examination process. Moreover, because
achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an
independent review of IRS positions with which the District legitimately disagrees may not be practicable. Any
action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit,
or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds,
and may cause the District or the Owners to incur significant expense, regardless of the ultimate outcome. Under
certain circumstances, the District may be obligated to disclose the commencement of an audit under the Continuing
Disclosure Undertaking. See, CONTINUING DISCLOSURE UNDERTAKING, herein.
26
[Original Issue Discount
The Bonds maturing in the years ______________ have been sold at initial public offering prices which are less
than the amount payable at maturity (the “Discount Bonds”). The difference between the initial public offering
prices to the public (excluding bond houses and brokers) at which price a substantial amount of each maturity of the
Discount Bonds is sold and the amount payable at maturity constitutes original issue discount, which will be treated
as interest on such Discount Bonds and to the extent properly allocable to particular owners who acquire such
Discount Bonds at the initial offering thereof, will be excludable from gross income for federal income tax purposes
to the same extent as other interest on the Bonds. As discount is accrued, the purchaser’s basis in such Discount
Bond is increased by a corresponding amount, resulting in a decrease in the gain (or an increase in the loss) to be
recognized for federal income tax purposes upon a sale or disposition of such Discount Bond prior to its maturity.
A portion of the original issue discount that accrues in each year to an owner of a Discount Bond that is a
corporation will be included in the calculation of the corporation’s federal alternative minimum tax liability.
Consequently, an owner of any Discount Bond that is a corporation should be aware that the accrual of original issue
discount in each year may result in an alternative minimum tax liability although the owner of such Discount Bond
has not received cash attributable to such original issue discount in such year.
The Code contains certain provisions relating to the accrual of original issue discount in the case of subsequent
purchasers of obligations such as the Discount Bonds. Owners who do not purchase Discount Bonds in the initial
offering at the initial offering price at which a substantial amount of such Discount Bonds were sold should consult
their own tax advisors with respect to the tax consequences of the ownership of the Discount Bonds.
Owners who may acquire Bonds that are Discount Bonds should consult their tax advisors with respect to the
determination for federal income tax purposes of the amount of original issue discount or interest properly accruable
with respect to such Bonds, other tax consequences of owning Discount Bonds and the state and local tax
consequences of owning Discount Bonds.]
[Original Issue Premium
The Bonds maturing in the years __________ have been sold at an initial public offering price which is greater than
the amount payable at maturity (the “Premium Bonds”). An amount equal to the excess of the purchase price of the
Premium Bonds over their stated redemption prices at maturity constitutes premium on such Bonds. A purchaser of
a Premium Bond must amortize any premium over such Bond’s term using constant yield principles, based on the
purchaser’s yield to maturity. As premium is amortized, the purchaser’s basis in such Premium Bond is reduced by a
corresponding amount, resulting in an increase in the gain (or decrease in the loss) to be recognized for federal
income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the
purchaser’s basis is reduced, no federal income tax deduction is allowed. Purchasers of any Bonds at a premium,
whether at the time of initial issuance or subsequent thereto, should consult with their own tax advisors with respect
to the determination and treatment of premium for federal income tax purposes and with respect to state and local
tax consequences of owning such Bonds.]
State Tax Exemption
Bond Counsel is of the further opinion that the Bonds and the interest thereon are exempt from all taxation by the
State, its counties, municipalities and school districts except estate, transfer or certain franchise taxes. Interest paid
on the Bonds is currently subject to the tax imposed on banks by Section 12-11-20, Code of Laws of South Carolina
1976, as amended, which is enforced by the South Carolina Department of Revenue as a franchise tax. The opinion
of Bond Counsel is limited to the laws of the State and federal tax laws. No opinion is rendered by Bond Counsel
concerning the taxation of the Bonds or the interest thereon under the laws of any other jurisdiction.
CERTAIN LEGAL MATTERS
Opinions
The issuance of the Bonds is subject to the favorable opinion of Bond Counsel as to the validity of the issuance of
the Bonds under the State Constitution and laws of the State and as to the exemption thereof from federal income
27
and State taxation. The form of Bond Counsel’s opinion appears as Appendix B to this Preliminary Official
Statement.
Bond Counsel has assisted the District by compiling certain information supplied to it by the District and others and
included in this Preliminary Official Statement, but said firm has not made an independent investigation or
verification of the accuracy, completeness or fairness of such information. The opinion of Bond Counsel will be
limited solely to the legality and enforceability of the Bonds, and no opinion will be given with respect to this
Preliminary Official Statement.
Litigation
There is no litigation presently pending or threatened challenging the validity of any general obligation debt issued
or proposed to be issued by the District.
United States Bankruptcy Code
The undertakings of the District should be considered with reference to Chapter 9 of the Bankruptcy Code, 11
U.S.C. 901, et seq., as amended, and other laws affecting creditors’ rights and municipalities generally. Chapter 9
permits a municipality, political subdivision, public agency, or other instrumentality of a state that is insolvent or
unable to meet its debts as such debts mature to file a petition in the United States Bankruptcy Court for the purpose
of effecting a plan to adjust its debts; directs such a petitioner to file with the court a list of its creditors; provides
that the filing of the petition under that Chapter operates as a stay of the commencement or continuation of any
judicial or other proceeding against the petitioner; directs a petitioner to file a plan for the adjustment of its debts;
permits the petitioner in its plan to modify the rights to payment of its creditors; and provides that the plan must be
accepted in writing by or on behalf of creditors of each impaired class of claims holding at least two-thirds in
amount and more than one-half in number of the creditors which have accepted or rejected the plan. The plan may
be confirmed notwithstanding the negative vote of one or more classes of claims if the court finds that the plan is in
the best interest of creditors, is feasible, and is fair and equitable with respect to the dissenting classes of creditors. A
petitioner has the right to reinstate indebtedness under its plan according to the original maturity schedule of such
indebtedness notwithstanding any provision in the documents under which the indebtedness arose relating to the
insolvency or financial condition of the debtor before the confirmation of the plan, the commencement of a case
under the Bankruptcy Code, or the appointment of or taking possession by a trustee in a case under the Bankruptcy
Code or by a receiver or other custodian prior to the commencement of a case under the Bankruptcy Code.
Closing Certifications
The District will furnish, without cost to the successful bidder for the Bonds, certifications by appropriate officials
that this Preliminary Official Statement as of its date and as of the date of delivery of the Bonds, does not contain an
untrue statement of a material fact and does not omit to state a material fact which should be included therein for the
purpose for which the Preliminary Official Statement is intended to be used or which is necessary to make the
statements contained therein, in light of the circumstances in which they were made, not misleading.
Appropriate certification will be given by District officials to establish that the Bonds are not “arbitrage bonds”
within the meaning of Section 148 of the Code, and applicable regulations thereunder in effect on the occasion of
the delivery of the Bonds.
CONTINUING DISCLOSURE
In accordance with Section 11-1-85 of the Code of Laws of South Carolina 1976, as amended, the District has
covenanted in the Resolution that it will file or cause to be filed with a central repository for availability in the
secondary bond market when requested (1) an annual independent audit, within thirty days of the District’s receipt
of the audit; and (2) event specific information, within thirty days of an event adversely affecting more than five
percent of the District’s revenue or tax base. The only remedy for failure by the District to comply with this
covenant shall be an action for specific performance. Moreover, the District specifically reserves the right to amend
the covenant to reflect any change in (or repeal of) Section 11-1-85 without the consent of any bondholder.
In accordance with Securities and Exchange Commission Rule 15c2-12(b)(5) (“Rule 15c2-12” or the “Rule”), the
District will execute and deliver prior to closing a Continuing Disclosure Undertaking. The form of the Continuing
28
Disclosure Undertaking appears as Appendix C to this Official Statement. Currently such disclosure is filed by the
District with the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access
(“EMMA”) system.
In order to meet its annual financial information reporting requirements for its $7,500,000 original principal amount
General Obligation Bonds, Series 2010 (the “Series 2010 Bonds”) which are subject to the Rule, the District files its
financial statements and budget. With respect to compliance with its previous continuing disclosure undertaking for
the Series 2010 Bonds, the District notes as follows:
Timeliness of Annual Reports. The District’s filing deadline with respect to annual reports for the Series 2010 Bonds
is January 31 (which is six months after the close of its fiscal year at July 31) (the “Annual Report Filing Date”).
The District’s financial statements were filed late for the fiscal year ended July 31, 2011, such filing being done in
October 2012. The District’s budget was filed late for each of the fiscal year ended July 31, 2012, such filing being
done in October 2012.
The District’s staff has undertaken and implemented procedures, which it believes will better ensure timely and
complete annual report and event notice filings in the future.
RATINGS
Applications have been made to Moody’s Investors Service (“Moody’s”) and Standard & Poor’s Rating Services, a
Standard & Poor’s Financial Services LLC business (“S&P”) (collectively, the “Rating Agencies”) for rating of the
Bonds. The Bonds received ratings of “Aa3” by Moody’s and “AA-” by S&P with a stable outlook. Such ratings
reflect only the views of the Rating Agencies, and an explanation of the significance of such ratings may be obtained
from the Rating Agencies. The District has furnished to the Rating Agencies certain information and materials
respecting the District and the Bonds. Generally, the Rating Agencies base their ratings on such information and
materials and on investigations, studies and assumptions furnished to and obtained and made by them. There is no
assurance that such ratings will remain unchanged for any period of time or that they may not be lowered or
withdrawn entirely by the Rating Agencies, if in their judgment circumstances so warrant. Any such downward
revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds.
UNDERWRITING
The Bonds have been purchased at a competitive sale from the District for resale by ____________ (the
“Purchaser”). The Purchaser has agreed, subject to certain conditions, to purchase the Bonds at a price of not less
than par. The initial public offering prices shown on the cover of this Official Statement may be changed from time
to time by the Purchaser. The Purchaser may also allow a concession from the public offering prices to certain
dealers. If all of the Bonds are sold at the public offering yield or price as set forth on the cover page of this Official
Statement, the Purchaser anticipates total selling compensation of $___________. The Purchaser has received no fee
from the District for underwriting the Bonds.
INDEPENDENT REGISTERED MUNICIPAL ADVISOR
Southern Municipal Advisors, Inc. serves as the Independent Registered Municipal Advisor to the District. The
Independent Registered Municipal Advisor is not obligated to undertake, and has not undertaken to make, an
independent verification or to assume responsibility for the accuracy, completeness or fairness of the information
contained in this Preliminary Official Statement. The Financial Advisor is an independent advisory firm and is not
engaged in the business of underwriting, trading or distributing municipal securities or other securities.
REGISTRAR & PAYING AGENT
The County Treasurer will be the initial Registrar and Paying Agent with respect to the Bonds.
CERTIFICATION
All quotations from and summaries and explanations of provisions of laws of the State herein do not purport to be
complete and are qualified in their entirety by reference to the official compilations thereof. All references to the
Bonds and the determinations of the District relating thereto are qualified in their entirety by reference to the
29
definitive forms of the Bonds and the authorizing resolutions and to such determinations. All such summaries,
explanations and references are further qualified in their entirety by reference to the exercise of sovereign police
powers of the State and the constitutional powers of the United States of America, and to valid bankruptcy,
insolvency, reorganization, moratorium and other laws for the relief of debtors.
Certain information set forth in this Preliminary Official Statement and in the appendices hereto has been obtained
from sources other than the District that are believed to be reliable, but such information is not guaranteed as to
accuracy or completeness by the District. The information and expressions of opinion in this Preliminary Official
Statement are subject to change, and neither the delivery of this Preliminary Official Statement nor any sale made
under such document shall create any implication that there has been no change in the affairs of the District.
MISCELLANEOUS
Any statements in this Preliminary Official Statement involving matters of opinion or estimates, whether or not
expressly so stated, are intended as such and not as representations of fact.
Reference herein to the State Constitution and legislative enactments are only brief outlines of certain provisions
thereof and do not purport to summarize or describe all provisions thereof.
It is hoped that the above information will be of assistance. If there are further inquiries or requests for additional
copies of this Preliminary Official Statement, please address them to the County’s Independent Registered
Municipal Advisor, Southern Municipal Advisors, Inc., Telephone (864) 269-5196 or the County’s Bond Counsel,
Bradford L. Love, Esq., Haynsworth Sinkler Boyd, P.A., Telephone (864) 240 3388.
The delivery of this Official Statement and its use in connection with the sale of the Bonds have been duly
authorized by the District.
___________________________________________
Chairman, Startex-Jackson-Wellford-Duncan
Water Commission
30
APPENDIX A
AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR
ENDED JULY 31, 2014
WATER DISTRICT
FINANCIAL STATEMENTS
AND SUPPLEMENTARY SCHEDULES
YEARS ENDED JULY 31, 2014 AND 2013
TABLE OF CONTENTS
EXHIBIT
PAGE
INDEPENDENT AUDITOR'S REPORT
1-3
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis
4-8
BASIC FINANCIAL STATEMENTS
Statements of Net Position
Statements of Revenues, Expenses and
Changes in Net Position
Statements of Cash Flows
Notes to Financial Statements
A
9-10
c
B
11
12-13
14-34
Schedule of Funding Progress For Retiree Health Plan
SCHEDULE
1
PAGE
35
SUPPLEMENTARY INFORMATION
Schedules of Direct Operating Expenses
Schedules of General and Administrative Expenses
Schedules of Nonoperating Revenues and Expenses
Principal and Interest Fund Receipts and Disbursements
Schedule of Property Tax Information
Commissioners, Senior Management Staff, and Other Information
SCHEDULE
2
3
4
5
6
7
PAGE
36
37
38
39
40-41
42
INDEPENDENT AUDITOR'S REPORT ON OTHER MATTERS
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
PAGE
43-44
-llTI -llTI
HOLCOMBE
HOLTZCLAW
RAVAN LLC
lllJ
-
lllJ
-
CERTIFIED PUBLIC ACCOUNTANTS &ADVISORS
INDEPENDENT AUDITOR'S REPORT
Commissioners and Management
Startex-Jackson-Wellford-Duncan
Water District
Lyman, South Carolina
Report on the Financial Statements
We have audited the accompanying financial statements of Startex-Jackson-Wellford-Duncan Water
District (the "District") as of and for the years ended July 31, 2014 and 2013, and the related notes to the
financial statements, which collectively comprise the Districts' basic financial statements as listed in the
table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of finaneial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits 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.
Members of the American Institute of Certified Public Accountants
Members of the South Carolina Association of Certified Public Accountants
- 1-
Auditor's Responsibility (continued)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Startex-Jackson-Wellford-Duncan Water District as of July 31, 2014 and 2013, and
the respective changes in financial position and the cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1, the District implemented Governmental Accounting Standards Board (GASB)
Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of
Resources, and Net Position. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information:
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis on pages 4 through 8 and the Schedule of Funding Progress For Retiree Health
Plan on page 35 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 audits were conducted for the purpose of forming an opinion on the basic financial statements taken
as a whole. The supplementary data on pages 36-42 is presented for purposes of additional analysis
and is not a required part of the financial statements. The supplementary information is the responsibility
of management and was derived from and relates directly to the underlying accounting and other records
used to prepare the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audits 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 financial statements or to the basic financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the United
States of America. In our opinion, the supplementary information is fairly stated, in all material respects,
in relation to the basic financial statements as a whole.
-2-
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 25,
2014, on our consideration of Startex-Jackson-Wellford-Duncan Water District's internal control over
financial reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the scope
of our testing of internal control over financial reporting and compliance and the results of that testing, and
not to provide an opinion on the internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in considering
the District's internal control over financial reporting and compliance.
Spartanburg, South Carolina
November 25, 2014
-3-
Management's Discussion and Analysis
The following discussion and analysis is offered by the Commission of the Startex-Jackson-Wellford-Duncan Water
District (the District) as a narrative overview of its financial activities for the fiscal year ended July 31, 2014 as
compared to the prior fiscal year. This information is intended to be considered in conjunction with the audited
financial statements and related notes following this section. Dollar amounts in the condensed financial information
contained in this section are rounded up to the nearest fraction of a million; percentages are expressed using actual
amounts prior to rounding.
Fiscal Year 2014 Financial Highlights
Net Position rose to $61. 7 million, an increase of $1.2 million (2. 0%) over the prior year as a result of current year
operations.
The District continues to maintain strong cash reserves. At July 31, 2014, unrestricted cash and investments provide
for over 417 days of operating expenses.
Increases in tap fee income, system improvement fee income, and water line extensions donated by developers point
to a growing customer base. Plans for 10 subdivisions were submitted for approval during the past year.
The District entered into a wholesale agreement to sell water to the Woodruff Roebuck Water District (WRWD) to
help WRWD meet the future demands of a major industrial customer. The District has made significant
improvements to the existing infrastructure in the area in advance of the increased demand.
The District is required to maintain a debt service coverage ratio of 110% for its Revenue Bonds. The actual debt
service coverage was 13 8%.
Overview of the Annual Financial Report
The District has prepared and is responsible for the financial statements and related information included in this
report. Such information has been subjected to the District's system of internal control and audited by independent
external auditors.
The following management's discussion and analysis (MD&A) serves as an introduction to the financial statements.
The MD&A represents management's examination and analysis of the District's financial condition and
performance and should be read in conjunction with the independent auditor's report, the basic financial statements,
and supplemental information. Summary financial statement data, key financial and operational indicators, budgets,
bond resolutions, and other management tools were used for this analysis.
The Statements of Net Position (formerly titled Balance Sheets) present the fmancial position of the District on a full
accrual, historical basis as of July 31. The statements present information on all of the District's assets and
liabilities, with the difference reported as net position. The statements may serve as a useful indicator of the
District's financial condition, capital structure and liquidity, and future fmancial viability.
The Statements of Revenues, Expenses and Changes in Net Position present the business activity and results of
operations for the fiscal year. The statements measure the success of the District's operations and can be used to
evaluate the profitability and credit worthiness of the District.
The Statements of Cash Flows present the changes in cash and cash equivalents, resulting from operational, capital
financing, and investing activities. The statements provide information as to the sources and uses of cash, where the
cash was derived from and what the cash was used for, and the overall change in the cash balance during the fiscal
year.
-4-
Notes to the Financial Statement provide required disclosures and other information that is essential to a full
understanding of data provided in the statements. The notes present information about the District's accounting
policies, significant account balances and activities, material risks, obligations, commitments, contingencies, and
subsequent events, if any. Supplementary information includes detail schedules of operations and other required
supplementary information useful to the understanding of the financial statements as a whole.
Summarized Financial Information
The following information provides a summary of the financial activities of the District for the fiscal years of2014
and 2013 (rounded to millions; change% is actual):
Condensed Statements of Net Position
Current assets
Cap ital assets
Other noncurrent assets
Total assets
Current liabilities (unrestricted)
Current liabilities (restricted)
N oncurrent liabilities
Total liabilities
Net position:
Invested in capital assets (net)
Unrestricted
Restricted
Total net position
Total liabilities and net position
2014
9.0
$
57.0
6.2
72.2
$
2013
$
8.2
57.1
7.9
$
73.2
Change
%
9.1%
-0.2%
-20.8%
-1.4%
$
1.9
2.2
6.4
10.5
$
1.9
2.1
8.7
12.7
-1.1%
2.1%
-26.3%
-17.3%
$
48.5
8.1
5.1
61.7
$
46.2
9.2
5.1
60.5
4.9%
-11.6%
-0.1%
2.0%
$
72.2
$
73.2
-1.4%
Total assets of the District decreased 1.4% to $72.2 million. This is a result of assets generated by the increase in net
position for the current year offset by cash used to reduce bonded indebtedness (See Investment in Capital Assets
and Debt Administration).
Total liabilities decreased 17.3% to $10.5 million primarily due to bond principal payments made in excess of bond
proceeds received.
Total net position increased 2% or $1.2 million as a result of net income and capital contributions.
-5-
Condensed Statements of Revenues 2 Exuensesi and Changes in Net Position
2014
Operating Revenues:
Water Sales
Miscellaneous operating revenues
Total Operating Revenues
2013
Change
%
7.4
1.0
8.4
-0.5%
3.9%
0.0%
2.1
5.6
1.9
9.6
(1.2)
2.0
5.5
1.6
9.1
(0.7)
3.1%
2.3%
14.2%
5.2%
-64.8%
Non operating Revenues (including property taxes)
Non operating Exp ens es
Net Nonoperatingincome
2.4
0.2
2.2
2.2
0.4
1.8
9.7%
-49.4%
19.2%
Net Income
Cap ital Contributions
1.0
0.2
1.1
0.3
-11.1%
-23.4%
1.2
60.5
61.7
1.4
59.1
60.5
-13.7%
2.4%
2.0%
$
Operating Expenses:
Direct operating exp ens es
General and administrative exp ens es
Depreciation Expense
Total Operating Expenses
Net OperatingLoss
Increase in Net Position
Net Position, beginning of year
Net Position, end of year
$
7.4
1.0
8.4
$
$
The District derives 64% of its operating revenues from residential water sales. Average residential water usage in
fiscal year 2014 remained relatively unchanged compared to 2013. Miscellaneous operating revenues include tap
revenue and contract billing income from sewer providers. These items increased slightly in 2013.
Direct operating expenses increased 3 .1 % primarily because of the amount spent on materials in 2014 as compared
to 2013. The District set 411 new taps, 19% more than in 2013. The District also increased expenditures to replace
transponders, the device that sits on top of a meter so the meter can be read electronically. These new transponders
will allow the District to migrate to a fixed network system in the future which will make it possible to read meters
within a certain range of an antenna, requiring less driving time (see Economic Outlook for the District).
General and administrative expenses increased with the increase in personnel costs, which include wages, taxes,
health insurance, and retirement. Retirement expense increased as the District purchased service credits with the
South Carolina Retirement System for three long-term employees in a move to reduce future employment costs.
These positions were removed from the District's long range staffing plan.
Depreciation expense increased as a full year of depreciation was recorded for the new membrane treatment plant
that was placed in service in fiscal year 2013.
Net non-operating income increased as net investment income increased and interest expense decreased. The rate of
decline in the market value of investments owned by the District decreased in 2014 in response to changes in interest
rates and market conditions. In accordance with the District's investment policy, the District intends to hold these
investments to maturity. Interest expense on the District's debt portfolio decreased as the outstanding principal
balance decreased.
-6-
Investment in Capital Assets and Debt Administration
The District's investment in capital assets is presented in conjunction with its debt administration because the
District issues debt solely to fund a portion of its capital improvement projects (CIP) plan. Investment in capital
assets and debt administration is presented as follows (rounded to millions; change % is actual):
Land
Buildings
Distribution System
Reservoirs
Vehicles
Equipment and Furnishings
Filter Plants
Construction in Progress
Total Capital Assets
Less: Accumulated Depreciation
Net Capital Assets
2014
1.0
$
2.0
38.l
9.6
0.7
1.8
24.1
1.1
$
78.4
(21.4)
57.0
2013
$
0.9
1.9
37.2
9.5
0.8
1.9
24.1
0.6
76.9
(19.8)
57.1
$
Change
%
15.1%
4.6%
2.5%
1.0%
-3.3%
-6.5%
0.1%
101.8%
2.0%
8.1%
-0.2%
Net capital assets decreased slightly during fiscal year 2014 as current year depreciation expense of $1,869,324
exceeded net fixed asset additions. Net fixed asset additions for 2014 included the following expenditures:
•
•
•
•
•
A water line extension to tie in with the Woodruff Roebuck Water District (WRWD) along SC Highway 290 to allow
WRWD to provide service to a major industrial customer;
A pilot study of a fixed network metering system (approximately 400 meters) that will allow the District to read meters
from a fixed antenna mounted on a water tank (see Economic Outlook for the District);
Completion of a project partially funded by a grant from the SC State Revolving Fund for the Startex area;
Commencement of a $5,900,000 project to construct a new raw water pump station and intake structure on the Middle
Tyger River; and
A new SCADA system.
Capital asset expenditures were made in accordance with the District's 5-year capital improvements plan, and the
District's engineering master plan. The engineering master plan, updated in fiscal year 2008, analyzed the District's
current condition, considered future projections, and presented recommendations for improvements. The District
expects to update its engineering master plan in fiscal year 2015.
The District funds its CIP plan with capital reserves and bonded indebtedness. At July 31, 2014, the total
outstanding indebtedness consisted of revenue bonds to be repaid from the net revenues of the District and general
obligation bonds to be repaid from property taxes collected by Spartanburg County on behalf of the District. The
outstanding indebtedness by issue date is as follows (rounded millions):
Issue Date
2014 General Obligation
2011 Revenue Bond
2010 Revenue Bond
Total indebtedness
2014
$ 0.4
3.6
2.2
1.5
0.6
$ 8.3
2013
$
3.8
4.0
1.8
1.2
$ 10.8
Change
$ 0.4
(0.2)
(1.8)
(0.3)
(0.6)
$ (2.5)
In 2015, the District will make principal and interest payments of $929,817 to service revenue bond indebtedness
and $2,146,016 to service general obligation bond indebtedness.
In July 2014, the District issued a general obligation bond in the amount $420,000 at 0.77% interest in a private
bank placement to be retired in April 2015. The proceeds will be used to secure a future tank site.
-7-
Economic Outlook for the District
The number of new customers grew by 2.4% during fiscal year 2013. The District projects continued modest
customer growth in fiscal year 2014. Average annual residential water usage stabilized after 2 years of decline. The
District does not expect this average to increase in the new budget year. The budgeted operating revenue for the
fiscal year ending July 31, 2015 is $8,187,000; budgeted operating expense, excluding depreciation, is $6,824,000.
With the adoption of the budget, the District plans to exceed its debt service ratio of 110%, increase cash reserves
for future health care costs, and increase cash reserves for future capital projects.
Ad valorem property taxes in the amount of 12.0 mils will be levied in fiscal year 2015 for general obligation bond
debt service, which is within the historical average of 11.0 mils to 13.0 mils. The District's operating budget
contains no rate increase for its customers. However, management will continue to review the current rate structure
for its commercial and industrial customers, especially those who have separate irrigation meters. In addition,
management will continue to evaluate the possibility of annexing customers situated outside of the District's taxing
authority, eliminating dual rate structures as much as possible.
Through the shifting of duties, training, and the effective use of technology, the District plans to operate with the
same or fewer full-time employees over the next 5-7 years.
The District is currently pilot testing Automated Metering Infrastructure (AMI). This technology will allow the
District to read meters from a fixed antenna mounted on a water tank. Initial test results have been very favorable
and have exceeded the range originally expected. Over the next 3-5 years, the District expects to have the necessary
infrastructure in place to cover a significant portion of its service area. This will help reduce the future operating
costs for meter reading.
In September 2014, the District was awarded a matching $2,000,000 grant from the Economic Development
Administration to expand the capacity of its new membrane treatment facility, increasing its membrane capacity to
8,000,000 gallons per day. The award was precipitated by the District's agreement to provide wholesale water
supply to the Woodruff Roebuck Water District to meet the demands of a major industrial customer. When the
membrane treatment facility was originally constructed in 2012, the project included the necessary design and
infrastructure to accomplish the increased capacity with only the additional cost of equipment and installation. The
District will continue to utilize its current conventional water treatment facility. Other significant improvements and
maintenance projects at the conventional treatment plant will occur as planned once the membrane plant expansion
is complete.
The District continues to maintain an excellent bond rating from Standard and Poor's (AA-) and Moody's (Aa3). In
July 2014, the District issued a $420,000 general obligation bond to purchase property for a future tank site on SC
Highway 290 in Duncan. This bond will be retired in April 2015. In January 2015, the District will issue a
$4,580,000 general obligation bond to finish the Middle Tyger raw water pump station and intake, provide the
District's matching portion of the funding for the membrane plant expansion, and complete the engineering master
plan update. This bond, which will be retired in 2020, is wrapped around the existing outstanding general obligation
bonds so that the District can stay within its established debt limit and maintain its current low millage rate.
In April 2015, the District will make the last payment on the 2010 revenue bond that was originally executed in
April 2000 and later refinanced in April 2010 at a lower interest rate. The District has no plans to issue new revenue
bonds in the future. Funds dedicated to the retirement of this revenue bond will be allocated to the Capital Reserve
Fund after April 2015.
Requests for Information
Questions concerning any of the information contained in this report should be directed to Mike Caston, Chief
Executive Officer, SJWD Water District, P.O. Box 607, Lyman, SC 29365.
- 8-
Exhibit A
STATEMENTS OF NET POSITION
JULY 31, 2014 AND 2013
ASSETS
2014
CURRENT ASSETS
Cash-undesignated
Cash-unexpended bond proceeds - restricted
Cash-designated
Funds held by fiscal agents-cash equivalents
- restricted
Other designated investments-cash equivalents
Funds held by Spartanburg County Treasurer
Accounts receivable customers, net of an allowance
for doubtful accounts of $145,000 and $186,000
Inventories
Accrued interest receivable
Other current assets
$
NONCURRENTASSETS
Other designated funds:
Certificates .of deposit
Investments
Capital assets-net of accumulated depreciation
TOTAL ASSETS
$
526,276
3,514,310
1, 136,977
$
431,423
4,011,122
1,005,469
1, 102,055
701,505
441,995
1,031,976
160,965
22, 174
900,956
501,312
52,003
92, 129
8,969,518
854,547
600,509
57,827
42,148
8,218, 160
550,295
5,667,877
57,022,361
63,240,533
547,945
7,306,297
57, 128,096
64,982,338
72,210,051
See accompanying notes to financial statements.
-9-
2013
$
73,200,498
Exhibit A (Continued)
STATEMENTS OF NET POSITION
JULY31, 2014AND2013
LIABILITIES AND NET POSITION
2014
CURRENT LIABILITIES (PAYABLE FROM OPERATING FUND)
Current portion of revenue bonds payable
Accounts payable
Accrued salaries and wages
Accrued compensated absences-current portion
Accrued interest expense-revenue bonds
State retirement payable
Customer meter and tap deposits
Other accrued expenses
Sewer collections payable to others
CURRENT LIABILITIES (PAYABLE FROM RESTRICTED ASSETS)
Current portion of general obligation bonds
Accounts payable-construction
Accrued interest expense-general obligation bonds
NONCURRENT LABILITIES
General obligation bonds
Revenue bonds
Compensated absences
Accrued post-employment benefits
TOTAL LIABILITIES
NET POSITION
Invested in capital assets (Net of related debt)
Restricted for:
Capital projects
Debt service
Unrestricted
TOTAL NET POSITION
TOTAL LIABILITIES AND NET POSITION
$
868,732
200,980
104,761
88,273
9,702
44, 171
207,195
102,697
266,943
1,893,454
$
826,702
204,584
110,502
86,958
15,761
40,264
218,179
122,611
269,656
1,895,217
2,057,082
70,927
41,081
2,169,090
2,060, 114
6,455
57,267
2, 123,836
4, 117,306
1,306,798
15, 124
959,500
6,398,728
5,754,388
2, 175,530
15,009
733,000
8,677,927
10,461,272
12,696,980
48,550,734
46,231,879
3,934,310
1, 124,050
8, 139,685
4,011,122
1,054, 150
9,206,367
61,748,779
60,503,518
$ 72,210,051
$ 73,200,498
- 10 -
2013
Exhibit B
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
2014
OPERATING REVENUES
Water Sales
Metered rates
Flat rates
$
Miscellaneous operating revenues
Tap and meter revenues
Customer service charges
Reconnect and late payment charges
Sewer billing charges
Other
TOTAL OPERATING REVENUES
OPERATING EXPENSES
Direct operating expenses (page 36)
General and administrative expenses (page 37)
Depreciation
TOTAL OPERATING EXPENSES
NET OPERATING LOSS
7,042,418
349,860
7,392,278
INCOME BEFORE CAPITAL
CONTRIBUTIONS
CONTRIBUTED CAPITAL
CHANGE IN NET POSITION
NET POSITION, BEGINNING OF YEAR
NET POSITION, END OF YEAR
8,402,740
8,380,554
2,087,433
5,602,593
1,869,324
2,024,742
5,447,922
1,637, 168
9,559,350
9,109,832
(65,605)
(729,278)
2,140,649
(312,885)
1,021,958
1,098,486
223,303
291,704
1,245,261
1,390, 190
60,503,518
59, 113,328
$ 61,748,779
$ 60,503,518
- 11 -
7,078,217
349,566
7,427,783
201,700
55,887
453,103
216,313
25,768
2,244, 173
NONOPERATING REVENUES AND EXPENSES, NET
(PAGE 38)
$
237,775
59,450
452,276
238,317
22,644
(1, 156,610)
PROPERTY TAX REVENUE
2013
Exhibit C
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 2014AND 2013
2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers
Payments to suppliers
Payments to employees
NET CASH PROVIDED BY OPERATING
ACTIVITIES
$
(1,572,507)
2,244,352
96,692
(2,040,000)
(826,702)
4,080,000
(2,696,662)
2, 145, 150
228,753
(1,995,000)
(784,879)
(152,702)
(86,433)
(212,619)
(108,415)
(2,385)
1, 125
(2,261,111)
NET INCREASE IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
$
8,357,284
(4,743,368)
{2,528,423}
1,085,493
36,889
39,300
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest and dividends
Investment fees
Sale of investments
Purchase of investments
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES
655,068
232,400
(8,310)
2,066,197
(593,412}
242,241
(15,644)
2,612,368
{4,287,655}
1,696,875
{1,448,690)
340, 168
291,871
6,640,955
6,349,084
6,981, 123
- 12 -
$
904,404
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Proceeds from general obligation bond
Acquisition and construction of capital assets
Property tax collections
Contributed capital
Principal paid on general obligation bonds
Principal paid on revenue bonds
General obligation bond interest, paying
agent's fees and legal fees
Revenue bond interest, paying agent's fees and legal fees
Other nonoperating expenses in excess of
nonoperating revenues
Sale of assets
NET CASH PROVIDED BY (USED FOR)
CAPITAL AND RELATED FINANCING
ACTIVITIES
CASH AND CASH EQUIVALENTS AT END
OF YEAR
8,344,994
(4,835,255)
{2,605,335}
2013
$
6,640,955
Exhibit C (Continued)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 2014 AND 2013
RECONCILIATION OF NET OPERATING LOSS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
2014
$
NET OPERATING LOSS
(1,156,610)
2013
$
(729,278)
ADJUSTMENTS TO RECONCILE NET OPERATING
LOSS TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
NON-CASH EXPENSES
Depreciation
Provision for doubtful accounts
(INCREASE) DECREASE IN CURRENT ASSETS
Accounts receivable
Inventories
Other current assets
INCREASE (DECREASE) IN CURRENT LIABILITIES
Accounts payable
Accrued wages
Accrued compensated absences
State retirement payable
Meter and tap deposits
Accrued post employment benefits
Other accrued expenses
NET CASH PROVIDED BY OPERATING
ACTIVITIES
1,869,324
(41,000)
1,637, 168
9,000
(5,409)
99, 198
(49,981)
(32,270)
4,043
(5,154)
(6,316)
(5,741)
1,430
3,908
(10,984)
226,500
(19,915)
(79,286)
14,760
(3,462)
1,405
3,275
177,700
87,592
$
904,404
$
Change in fair value of investments
$
(163,285)
$
(237,114)
Contributed Capital Assets
$
126,611
$
62,951
Amortization of Bond Premium
$
20, 114
$
27,970
Bond proceeds held by Spartanburg County
$
420,000
$
1,085,493
SUPPLEMENTAL NONCASH DISCLOSURE:
- 13 -
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2014 AND 2013
NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
The Startex-Jackson-Wellford-Duncan Water District ("The District") is a special purpose district
created in the year 1956 by the General Assembly of the State of South Carolina. The District
was established for the purpose of building, constructing, operating and maintaining water lines
and water mains throughout the District. The District is governed by a five member commission
appointed by the Governor upon recommendation of the legislative delegation of Spartanburg
County. The commissioners serve six year terms.
Basis of Accounting
The Startex-Jackson-Wellford-Duncan Water District operates as an enterprise fund. Enterprise
funds are used to account for operations which are financed and operated in a manner similar to
private business enterprises-where the intent of the governing body is that the cost (expenses,
including depreciation) of providing goods or services to the general public on a continuing basis
be financed or recovered primarily through user charges. The basis of accounting employed is
the accrual method whereby revenues are recognized when earned and expenses are
recognized when they are incurred.
Adopted GASB Statements
GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred
Inflows of Resources, and Net Position (GASBS No. 63) - For the year ended July 31, 2014, the
District implemented GASB Statement No. 63. This standard establishes a new statement of
net position format that reports separately all assets, deferred outflows of resources, liabilities,
deferred inflows of resources, and net position (which is the residual amount of the other
elements). This Statement requires deferred outflows of resources and deferred inflows of
resources to be reported separately from assets and liabilities. In addition, the terminology used
in the financial statements changed from "Net Assets" to "Net Position", including changing the
name of the financial statement from "Statement of Net Assets" to "Statement of Net Position".
GASB Statement No. 65, Items Previously Reported as Assets and Liabilities (GASBS No. 65) For the year ended July 31, 2013, the District early implemented GASB Statement No. 65. This
standard amends or supersedes the accounting and financial reporting guidance for certain
items previously required to be reported as assets or liabilities. The objective is to either
properly classify certain items that were previously reported as assets and liabilities as deferred
outflows of resources or deferred inflows of resources or recognize certain items that were
previously reported as assets and liabilities as outflows of resources (expenses) or inflows of
resources (revenues). Under GASBS No. 65, bond issuance costs will now be expensed when
incurred, instead of being amortized over the term of the bond. As such, the implementation of
GASBS No. 65 resulted in a reduction of beginning net position at August 1, 2013 of $161, 153.
- 14 -
STARTEX-JACKSON·WELLFORD-DUNCAN WATER DISTRICT
JULY 31, 2014 AND 2013
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Adopted GASB Statements (continued)
In addition to assets, the statement of financial position will sometimes report a separate section
for deferred outflows of resources. This separate financial statement element, deferred outflows
of resources, represents a consumption of net position that applies to a future period and so will
not be recognized as an expense or expenditure until then. In addition to liabilities, the
statement of financial position 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 and will not be recognized as
revenue until then. The District did not have any items that met either of these criteria.
Pending GASB Statements
The following GASS statement has been issued but not adopted by the District as of July 31,
2014:
GASB Statement No. 68, Accounting and Financial Reporting for Pensions - GASS Statement
No. 68 is effective for financial statements for periods beginning after June 15, 2014. The
statement replaces GASS Statement No. 27, Accounting for Pensions by State and Local
Government Employers and GASS Statement No. 50, Pension Disclosures as they related to
governments that provide pension through pension plans administered as trusts or similar
arrangements that meet certain criteria. GASS Statement No. 68 requires governments
providing defined benefit pensions to recognize their long-term obligations for pension benefits
as a liability for the first time, and to more comprehensively and comparably measure the annual
cost of pension benefits.
Government employers participating in a cost-sharing plan will also be required to report a net
pension liability, pension expense, and pension-related assets and liabilities based on their
proportionate share of the collective amounts for all governments in the plan. All governments
participating in the defined benefit pension plan would also have the following in their note
disclosures:
1. Description of the plan and benefits provided
2. Significant assumptions employed in the measurement of the net pension liability
3. Description of the benefit changes and changes in assumptions
4. Assumptions related to the discount rate and impact of the total pension liability of a
1 percentage point increase and decrease in the discount rate
5. Net pension assets and liabilities
The District is currently evaluating the effects of this statement on its financial statements.
Accounting Estimates
Management uses estimates and assumptions in preparing financial statements. Those
estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure
of contingent assets and liabilities, and reported revenues and expenses.
- 15 -
JULY 31, 2014 AND 2013
Revenues and Expenses
Operating revenues and expenses consist of those revenues and expenses that result from the
ongoing principal operations of the District. Operating revenues consist primarily of charges for
services. Non-operating revenues and expenses consist of those revenues and expenses that
are related to financing and investing types of activities and result from nonexchange
transactions and ancillary activities.
Cash and Cash Equivalents
For purposes of reporting cash flows, all highly liquid investments (including restricted assets)
with a maturity of three months or less are considered to be cash equivalents.
Receivables and Allowance for Doubtful Accounts
Accounts receivable are stated net of their allowance for uncollectible accounts. Unbilled
revenue, in the amount of $494,000 and $477,000 at July 31, 2014 and 2013, respectively, are
included in the Accounts Receivable Customers.
Inventories
Inventories are valued at cost, using the average cost method. Inventories consist of
expendable materials and supplies held for consumption and materials to be used to expand or
improve the distribution system.
Investments
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain
Investments and for External Investment Pools, the District reports all equity and debt securities
at fair value in the Statements of Net Positions and all changes in fair value as income or loss in
the Statements of Revenues, Expenses, and Changes in Net Positions. Such fair values are
based on quoted market prices.
Contributed Capital
The District periodically receives donations of distribution systems, principally water lines, from
developers as well as contributions from individual residents for the construction of certain water
lines. The System accounts for these contributions under GASB Statement No. 33, Accounting
This statement requires that
and Financial Reporting for Nonexchange Transactions.
contributions be reported in the Statements of Revenues, Expenses, and Changes in Net
Positions.
Income Taxes
The District is recognized as a public utility for federal income tax purposes. Income is excluded
from federal income taxes under Code Section 115 of the Internal Revenue Code.
- 16 -
JULY 31, 2014 AND 2013
NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Capital Assets
Capital assets purchased or constructed by the District are carried at cost. Donated assets are
recorded at estimated fair market value on the date donated. Capital assets are defined as
assets with an initial individual cost of more than $1,500 and an estimated useful life of more
than one year. Depreciation is provided by the straight-line method over the estimated useful
lives of the respective assets. In general, estimated useful lives range as follows:
Distribution system
Reservoirs
Vehicles
Office equipment and furnishings
Heavy equipment
Maintenance equipment
Buildings and related improvements
Laboratory equipment
Lyman filter plant
Lyman filter plant-membrane system
10-66 2/3
10-100
5
5-10
5
5
5-40
5
5-25
5-50
Years
Years
Years
Years
Years
Years
Years
Years
Years
Years
The District records impairment losses, if any, on long lived assets used in operations when
events and circumstances indicate that the assets might be impaired and the undiscounted cash
flows estimated to be generated by these assets are less than the carrying amounts of these
assets.
Capitalized Interest
Interest costs, less related interest income, are capitalized into construction in progress during
an extended period of construction. As of July 31, 2014 and 2013, the District did not record any
capitalized interest. Interest incurred and charged to expense totaled $179,918 and $218,208
for the years ended July 31, 2014 and 2013, respectively.
Accrued Compensated Absences
The District provides eligible employees annual leave based on the number of years of service.
When an employee separates from employment, he/she is compensated for any unused annual
leave. At July 31, 2014 and 2013, accrued annual leave amounted to $88,273 and $86,958,
respectively. Accrued annual leave is included in current liabilities.
Employees also accumulate sick leave based upon months of service. Sick leave does not vest
and is lost upon termination of employment. A portion of accumulated sick leave, not to exceed
thirty days, is included in compensation at the time of eligible retirement. This liability is
estimated to be $15,124 and $15,009 as of July 31, 2014 and 2013, respectively, and is
included in long-term liabilities.
-17 -
JULY 31, 2014 AND 2013
Net Positions
Net Position is the difference between assets and liabilities. Net position comprises the various
net earnings from operating and non-operating revenues, expenses and contributions of capital.
Net position is classified in the following three components: net investment in capital assets;
restricted for capital activity, debt service; and unrestricted net position. Net investment in
capital assets consist of all capital assets, net of accumulated depreciation and reduced by
outstanding debt and other liabilities that is attributable to the acquisition, construction and
improvement of those assets; unspent debt proceeds or other restricted cash and investments
is excluded from the determination. Restricted for capital projects and debt service consists of
net position for which constraints are placed thereon by external parties, such as lenders,
granters, contributions, laws, regulations and enabling legislation less any related liabilities.
Unrestricted net position consists of all other net position not included in the above categories.
NOTE B - CASH DEPOSITS AND INVESTMENTS
Cash deposits are maintained within guidelines that require that all cash deposits either be
secured by the Federal Deposit Insurance Corporation or be collaterally secured by obligations
of the United States and agencies or by general obligations of the State of South Carolina or
any of its political units. As of July 31, 2014 and 2013, all cash deposits were insured or
collateralized as required by the District's policy.
The District i:ilso has an investment policy that requires that investments be limited to:
a. Obligations of the United States and agencies thereof;
b. General obligations or revenue obligations of the State of South Carolina or any of its
political units;
c. Savings and loan associations to the extent that the same are secured by the Federal
Deposit Insurance Corporation;
d. Certificates of deposit where the certificates are collaterally secured by securities of the
type described in (a) and (b) above held by a third party as escrow agent or custodian, of
a market value not less than the amount of the certificates of deposit, so secured,
including interest;
e. Deposit accounts with banking institutions with maturities consistent with the time or
times when the invested monies will be needed in cash;
f. A common trust fund known as the South Carolina Pooled Investment Fund in which
public monies may be deposited;
- 18 -
JULY 31, 2014 AND 2013
NOTE B - CASH DEPOSITS AND INVESTMENTS (continued)
g. No load open-end or closed-end management type investment companies or investment
trusts registered under the Investment Company Act of 1940, as amended, where
investment is made by a bank or trust company or savings and loan association or other
financial institution when acting as trustee or agent for a bond or other debt issue of that
local government unit, political subdivision, or county treasurer if the particular portfolio
of the investment company or investment trust in which the investment is made (i) is
limited to obligations described in items (a), (b), (c), and (f) of this subsection, and (ii)
has among its objectives the attempt to maintain a constant net asset value of one dollar
a share and to that end, value its assets by the amortized cost.method.
As of July 31, 2014 and 2013, the District had the following investments, all of which were held
by custodians in the District's name. This schedule does not reflect investments that mature in
three months or less. They are considered cash equivalents.
Investment
Maturities
Certificates of Deposits
Certificates of Deposits
U.S. Treasury Obligations
U.S. Treasury Mutual Funds
U.S. Agency Obligations
Municipal Bonds
Municipal Bonds
Municipal Bonds
Municipal Bonds
Municipal Bonds
Municipal Bonds
Total Investments
1 Year
2 Years
1 Year
Fair Value
Jul;t 31, 2014
Fair Value
Jul;t 31, 2013
$
$
550,295
287,994
2 Years
3 Years
4 Years
5 Years
6 Years
7 Years
10 Years
11 Years
Various
1 Year
2 Years
3 Years
4 Years
5 Years
6 Years
16 Years
17 Years
1 Year
2 Years
3 Years
4 Years
6 Years
24 Years
211,000
262,502
84,038
58,242
215,376
265,151
85,927
58,083
52,425
151,153
664,355
958,721
1,167,805
584,727
96,539
524,030
510,872
53,474
$ 6,218, 172
- 19 -
547,945
72,521
298,284
53,112
67,755
1, 158,617
154,747
687,915
1,229,029
1,055,159
109,844
80,019
40,281
98,684
538,385
518,401
467,976
51 ,031
$ 7,854,242
JULY 31, 2014 AND 2013
NOTE B - CASH DEPOSITS AND INVESTMENTS (continued)
As of July 31, 2014 and 2013, cash and cash equivalents consisted of:
July 31, 2014
July 31, 2013
Cash deposits maintained in insured or
$ 1,661,253
collateralized bank accounts
$ 1,434,892
Petty Cash
2,000
2,000
U.S. Treasuries with maturities of less
than ninety days
862,724
798,837
U. S. Treasury money market accounts
940,836
394,104
S.C. Local Investment Pool
3,514,310
4,011,122
Total Cash and Equivalents
$ 6,981, 123
$ 6,640,955
All cash and cash equivalents are noted as such on the Statements of Net Position.
Interest Rate Risk: The Commissioners amended the District's investment policy effective
January 15, 2013. The new policy states that unless matched to a specific cash flow, the
District will have a maturity duration target for investments of 10 years or less. Prior to January
15, 2013, the District's investment policy did not limit investment maturities as a means of its
exposure to fair value losses arising from increasing interest rates.
Credit Risk: State law and District policy limits investments to securities of the type A through G
described above. As of July 31, 2014 and 2013, all investments were either in FDIC insured
certificates of deposit, U.S. Treasury notes, U.S. Agency notes, or S.C. municipal bonds. The
U.S. Agency securities were issued by the following agencies:
Federal Home Loan Mortgage Corporation
Federal Farm Credit Bank
Federal Home Loan Bank
Federal National Mortgage Association
Tennessee Valley Authority
Concentrations of credit risk: The District places no limit on the amount the District may invest in
any issuer. As of July 31, 2014 and 2013, the investments were as follows:
U.S. Treasuries
U.S. Agencies
Certificate of deposit-FDIC insured
S.C. Municipal Bonds
- 20-
2014
15%
57%
9%
19%
100%
2013
14%
58%
7%
21%
100%
JULY 31, 2014 AND 2013
NOTE C - PROPERTY TAXES
Property taxes are levied against all real and tangible personal property located within the
District. Taxes are levied on real estate and personal property, other than vehicles, on
assessed values as of December 31 of the preceding year. Tax bills are mailed as soon after
October 1st of each year as possible. Taxes are payable without penalty until January 15th.
Property goes into execution after March 15th. Taxes are levied on motor vehicles throughout
the year in the month designated by the South Carolina Highway Department for annual license
renewal. Tax bills on vehicles are normally mailed during the month prior to the month
designated for vehicle license renewal. Payment of the vehicle taxes must be made before the
annual vehicle license renewal process can be completed.
The County Treasurer collects the property taxes on behalf of the District. The County
Treasurer periodically remits the amounts collected to the District's designated agent for the
principal and interest fund. Taxes receivable (current and delinquent) represent property taxes
that have been collected and remitted to County Treasurer's office for its distribution to the
District. At July 31, 2014 and 2013 taxes receivable amounted to $21,995 and $22,174,
respectively, and is included in Funds held by Spartanburg County Treasurer.
The District's uncollected assessed taxes that have been transferred to the County Delinquent
Tax Collector were $128,805 and $ 115,633 at July 31, 2014 and 2013, respectively. The
District has established an offsetting allowance for uncollectible taxes of the same amount.
NOTE D - DEBT SERVICE FUNDS
The Bank of New York Mellon Trust Company, N. A., has been designated as the District's
agent for its principal and interest fund. Allfunds derived from property taxes levied on behalf of
the District are deposited to this account. The funds are used for the payment of principal and
interest on the District's general obligation bonds. As of July 31, 2014 and 2013, the total value
of the account amounted to $862, 724 and $798,837, respectively.
U.S. Bank has been designated as the District's agent for its revenue bond payment funds. The
District is required to fund these accounts from the operating revenues of the District to insure
that funds are available when principal and interest payments are due. As of July 31, 2014 and
2013, the total value of these accounts amounted to $239,331 and $233, 139, respectively.
- 21-
JULY 31, 2014 AND 2013
NOTE E - UNRESTRICTED NET POSITION - OTHER DESIGNATED ASSETS
Unrestricted net positions consists of undesignated and designated assets. Designated assets
of the District as of July 31, 2014 and 2013 consisted of the following:
2014
Capital improvement funds
Waterline extension reserve
Insurance reserve fund
2013
$ 6,603,548
$ 7,711,806
497,712
1,007,398
$ 8, 108,658
475,145
891,551
$ 9,078,502
Designations of the assets represent tentative plans that are subject to change based upon the
Commissioners' approval.
NOTE F- CHANGES IN CAPITAL ASSETS
A summary of changes in capital assets is as follows for the year ended July 31, 2014:
Balance
7/31/2013
Additions
Balance
7/31/2014
Disposals
CAPITAL ASSETS
Land
Buildings and related
improvements
Distribution system
Lake Cooley Reservoir
Vehicles
Heavy equipment
Office equipment and
furnishings
Lyman Reservoir
Lyman Filter Plant
Lyman Filter Plant
Membrane System
North Tyger Reservoir
Apalache Reservoir
Berry's Pond
Construction in
progress
$
864,990
$
130,661
$
$
1,959,867
37,257,079
952,582
764,203
700,650
27,300
858,385
102,769
22,036
(128,323)
(54,200)
676,544
456,808
15,852
7,738
(113,868)
55,150
953,265
10,537,757
37,130
14,350
1,987,167
38, 115,464
952,582
738,649
668,486
578,528
464,546
55,150
990,395
10,552,107
13,559,199
6,057,075
88,193
1,454,193
13,559,199
6,057,075
88,193
1,454,193
551,043
$ 76,888,598
995,651
$
- 22 -
1,027,753
2,243,974
$
{458,344}
{754,735}
1, 120,452
$ 78,377,837
JULY 31, 2014 AND 2013
NOTE F- CHANGES IN CAPITAL ASSETS (continued)
Balance
7/31/2013
ACCUMULATED
DEPRECIATION
improvements
Distribution system
Vehicles
Heavy equipment
furnishings
$
Lyman Reservoir
Lyman Filter Plant
Lyman Filter Plant
Membrane System
Apalache Reservoir
Berry's Pond
$
NET BOOK VALUE OF
CAPITAL ASSETS
1, 131,874
10,134,368
388,155
687,052
696,268
Additions
$
Balance
7/31/2014
Dis12osals
62,726
641,528
13,421
23,134
21,047
$
$
(106,282)
(54,200)
1,194,600
10,775,896
401,576
603,904
663, 115
511,007
361,901
49,989
78,642
27,149
2,778
469,286
4,081,159
39,805
379,802
509,091
4,460,961
294,761
867,809
46,301
40,572
19,760,502
511,782
59,236
4,410
3,864
1,869,324
806,543
927,045
50,711
44,436
$ 21,355,476
$
(113,868)
$
(274,350)
$ 57,128,096
475,781
389,050
52,767
$ 57,022,361
Construction in progress at July 31, 2014 consisted of the following:
Expended as of
7/31/2014
Hwy 290 - lower transmission main and
tie-in with Woodruff Roebuck Water District
Middle Tyger raw water intake and membrane
plant expansion cost study
Middle Tyger raw water intake and pump station
Hwy 290 - tank site property
Advanced metering infrastructure
Hwy 29 - Maple to Alma Street
Snow Road
Country Club Estates
Total construction in progress
- 23 -
$
574,974
$
41,475
276,843
1,360
130,750
1,343
57,938
35,769
1,120,452
Projected
Budget
$
647,700
$
58,500
5,300,000
400,000
146,000
28,600
90,000
301,900
6,972,700
JULY31, 2014AND 2013
NOTE F- CHANGES IN CAPITAL ASSETS (continued)
A summary of changes in capital assets is as follows for the year ended July 31, 2013:
Balance
7/31/2012
Additions
Balance
7/31/2013
Diseosals
CAPITAL ASSETS
Land
improvements
Distribution system
Vehicles
Heavy equipment
furnishings
Lyman Reservoir
Lyman Filter Plant
Lyman Filter Plant
Membrane System
Apalache Reservoir
Berry's Pond
Construction in
progress
$
489,190
$
375,800
1,936,417
36,676,586
952,582
778,787
700,650
23,450
633,731
770, 142
438,117
81,764
953,265
10,833,815
19,715
37,356
242,940
6,057,075
88,193
1,454, 193
13,316,259
$
$
(53,238)
(14,584)
(113,313)
(18,665)
(26,614)
(296,058)
864,990
1,959,867
37,257,079
952,582
764,203
700,650
676,544
456,808
55,150
953,265
10,537,757
13,559,199
6,057,075
88,193
1,454, 193
12,715,168
2,242,301
{ 14,406,426}
551,043
$ 75,168,884
$ 16,648,612
$ {14,928,898}
$ 76,888,598
- 24-
JULY 31, 2014 AND 2013
NOTE F - CHANGES IN CAPITAL ASSETS (continued)
Balance
7/31/2012
ACCUMULATED
DEPRECIATION
improvements
Distribution system
Vehicles
Heavy equipment
furnishings
$
Lyman Reservoir
Lyman Filter Plant
Lyman Filter Plant
Membrane System
Apalache Reservoir
Berry's Pond
$
NET BOOK VALUE OF
CAPITAL ASSETS
1,070,487
9,555,754
373,943
653,949
687,330
Additions
$
61,387
631,851
14,212
47,688
8,938
Balance
7/31/2013
Dis~osals
$
$
(53,237)
(14,585)
1,131,874
10,134,368
388,155
687,052
696,268
538,897
85,423
(113,313)
511,007
353,046
72,715
431,079
3,988,056
27,520
3,888
38,207
389,161
(18,665)
(26,614)
(296,058)
361,901
49,989
469,286
4,081,159
34,011
807,939
41,892
36,708
18,645,806
260,750
59,870
4,409
3,864
1,637,168
(522,472)
294,761
867,809
46,301
40,572
19,760,502
$
$
$ 56,523,078
$
$ 57,128,096
Construction in progress at July 31, 2013 consisted of the following:
Startex upgrade
Hwy 29 - Maple to Alma Street
Employee safety study
Right of way - Town of Lyman
Cochran Road - line extension
Country Club Estates
Hwy 290 - lower transmission main and tie in
New Cut Road 6" to Inman Mills
Total construction in progress
- 25 -
Expended as of
7/31/2013
326,673
$
1,344
1,180
3,549
11,040
35,769
150,834
20,654
551,043
$
Projected
Budget
451,500
$
28,600
12,000
65,000
41,730
301,900
347,700
29,200
1,277,630
$
JULY 31, 2014 AND 2013
NOTE G - GENERAL OBLIGATION BONDS
The following is a summary of general obligation bond transactions of the District for the fiscal
years ended July 31, 2014 and 2013:
Bonds payable beginning of year
Bond proceeds
Payment on bonds
Bonds payable end of year
2014
2013
$ 7,814,502
420,000
(2,060, 114)
$ 6,174,388
$5,757,472
4,080,000
(2,022,970)
$7,814,502
Bonds payable at July 31, 2014 and 2013 were comprised of the following issues:
2014
$420,000 General Obligation Bond dated July 25, 2014.
One maturity of $420,000 on April 1, 2015 with interest
of 0.77% per annum. As of July 31, 2014, these proceeds
were held by the Spartanburg County Treasurer.
$
2013
420,000
$
$4,080,000 General Obligation Bond dated
November 20, 2012. Annual maturities of $245,000 to
$1,240,000 and semi-annual interest of 1.254%
per annum.
3,585,000
3,835,000
$7,500,000 General Obligation Bond dated
November 30, 2010. Annual maturities of $590,000 to
$1,790,000 and semi-annual interest of 2% and 3%.
The bond payable includes an original issue
premium of $110,033.
2, 169,388
3,979,502
Total
Less current maturities
Long-term liabilities
6,174,388
(2,057,082)
$ 4,117,306
7,814,502
(2,060,114)
$ 5,754,388
Debt service requirements to maturity including interest on all outstanding general obligation
bonds as of July 31, 2014 are as follows:
Year Ended
Jul:t 31
2015
2016
2017
2018
$
$
Princieal
2,045,000
1,650,000
1,220,000
1,240,000
6, 155,000
$
$
Interest
101,016
70,484
30,848
15,550
217,898
- 26 -
Unamortized
Original
Issue
Premium
12,082
$
7,306
$
19,388
$
$
Total
2, 158,098
1,727,790
1,250,848
1,255,550
6,392,286
JULY 31, 2014 AND 2013
NOTE H - REVENUE BONDS
The following is a summary of revenue bond transactions of the District for the fiscal years
ended July 31, 2014 and 2013. The bonds are collateralized by the net revenues of the District.
2014
2013
Bonds payable beginning of year
Payment on bonds
$3,002,232
(826,702)
$3,787, 111
(784,879)
Bonds payable end of year
$2,175,530
$3,002,232
Bonds payable at July 31, 2014 and 2013 were comprised of the following issues:
$2,873,000 Waterworks System Revenue Bond dated
April 21, 2010. Annual maturities of $525,000 to $630,000
and semi-annual interest of 2.76% per annum.
$2,272,615 Waterworks System Revenue Refunding Bond
dated May 13, 2011. Payments of principal and interest at
3.0% per annum are due quarterly with annual maturities of
$218,258 to $277,212.
Total
2014
2013
$ 630,000
$1,225,000
1,545,530
1,777,232
2,175,530
3,002,232
(868,732) .
(826,702)
$1,306,798
$2,175,530
Less current maturities
Long-term liabilities
Debt service requirements to maturity, including interest, on the outstanding revenue bonds as
of July 31, 2014 are as follows:
Year Ended
July 31
2015
2016
2017
2018
2019
2020
Principal
868,732
245,975
253,437
261, 126
269,049
277,211
$2,175,530
$
- 27 -
Interest
$ 61,085
36,454
28,991
21,302
13,380
5,217
$166,429
Total
929,817
282,429
282,428
282,428
282,429
282,428
$2,341,959
'$
JULY 31, 2014 AND 2013
NOTE I - CONTRIBUTED CAPITAL
Donated assets, grants and participation fees provided to finance capital expenditures are
accounted for as contributed capital. During the years ended July 31, 2014 and 2013, the
following were received by the District to partially finance plant extensions or additions:
2014
2013
System improvement fees
$ 143,470
$ 128,753
SC State Revolving Fund Grant - Startex Project - refund
(52,028)
Payments from industries
5,250
100,000
Donated line extensions
126,611
62,951
$ 223,303
$ 291,704
NOTE J - RETIREMENT PLAN
Plan Description. The District is a member of the South Carolina Retirement System (SCRS),
one of four defined benefit retirement systems maintained by the Retirement Division of the
State Budget and Control Board of South Carolina. Each system publishes its own component
unit financial report.
The systems provide retirement, disability, and survivor death benefits to State employees,
public school employees, and employees of counties, municipalities, and certain other State
political subdivisions. Each system is independent. Assets may not be transferred from one
system to another or used for any purpose other than to benefit each system's participants.
Under SCRS, employees who retire at or after age 65 or have 28 years of service are entitled to
a retirement benefit, payable monthly for life, equal to 1.82% of average final compensation
times years of credited service. Final average compensation is the employee's salary over the
twelve highest consecutive quarters. All full-time employees are required to participate in
SCRS.
Benefits are fully vested after five years of service. Vested employees may retire at or after age
55 or 25 years of credited service and receive reduced retirement benefits. SCRS also provides
death and disability benefits. Benefits are established by state statute.
Funding and Benefit Policies: Title 9 of the South Carolina Code of Laws of 1976 (as amended)
prescribes requirements relating to membership, benefits, and employee/employer contributions
for each system. The following paragraphs summarize the requirements for the SCRS.
SCRS is a cost-sharing, multiple-employer defined pension benefit plan that benefits employees
of public schools, the State, and its political subdivisions including the District. Both employees
and employers are required to contribute to the Plan at rates established under authority of Title
9 of the S.C. Code of Laws. All employers contribute at the actuarially required contribution
rates.
- 28 -
JULY 31, 2014 AND 2013
NOTE J - RETIREMENT PLAN (continued)
Funding and Benefit Policies (continued): Participating District employees are required to
contribute a percentage of their eligible wages.
The employee percentage was 7.0% for
compensation earned prior to July 1, 2013. Effective July 1, 2013 and 2014, the employee
contribution rate increased to 7.5% and 8.0%, respectively. The District's contribution rate
increased to 10.45% and 9.385% at July 1, 2014 and 2013, respectively. In addition to the
above rates, participating employers of the South Carolina Retirement System contribute .15%
of payroll to provide a group life insurance benefit for their participants. The following provides a
summary of the District's Retirement Plan funding for the years ended July 31, 2014, 2013, and
2012:
Year Ended
July 31
2014
2013
2012
Employee
Contributions
$ 189,200
170,753
158,063
Employer
Contributions
$ 448,804
256,887
232,894
Total
Contributions
$ 638,004
427,640
390,957
The District purchased service credits for three employees who retired during the year ended
July 31, 2014 in the amount of $182,350. This contribution has been included in the employer
contributions amount stated above.
Additional information: A Comprehensive Annual Financial Report containing financial
statements and required supplementary information for the South Carolina Retirement System
is issued and publicly available by writing the South Carolina Retirement System, P. 0. Box
11960, Columbia, South Carolina 29211-1960. The report is also available on the SCRS
website at www.retirement.sc.gov.
NOTE K - OTHER POST-EMPLOYMENT BENEFITS
Plan Description: The District sponsors a single-employer defined benefit health care plan (the
Plan) that provides post-retirement health, dental and life insurance premium benefits for eligible
employees and Commissioners. Eligible employees are defined as a retired employee who is
participating in the District's medical program and who is eligible to retire under the South
Carolina Retirement System. Eligible employees must have 15 years of continuous service with
the District. Eligible commissioners must have 10 years of service with the District. Prior to
age 65, retirees can stay on the District's plan free of charge. Spouses of eligible retirees can
stay on the District's plan for an annual fee of $1,983. For retirees 65 and above, the District
pays the full cost of Medicare Supplement. During the fiscal year 2014, twenty-one individuals
met these eligibility requirements.
- 29 -
JULY 31, 2014 AND 2013
NOTE K- OTHER POST-EMPLOYMENT BENEFITS (continued)
Funding policy: The contribution requirements of the Plan are established and may be amended
by the District. The required contribution is based on projected pay-as-you-go financial
requirements with no additional amounts to prefund benefits. For fiscal year 2014, the District
contributed $72,994 to the Plan for current year premiums and claims. Plan members receiving
benefits contributed $7, 195, or approximately 10 percent of the premiums and claims.
Annual OPEB and Net OPEB Obligation: The District's annual other post-employment benefits
(OPEB) cost (expense) is calculated based on the required annual required contribution (ARC),
an amount actuarially determined in accordance with the parameters of GASB Statement No.
45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to
cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to
exceed 30 years.
The following table shows the components of the District's annual OPEB cost for the year ended
July 31, 2014 and the two preceding two years including the amounts actually contributed to the
Plan and changes in the District's net OPEB obligation:
Annual Requirement Contribution
Normal costs
30 year amortization
Interest on obligation
Total annual required contributions
Less: direct payments for Retirees
2014
2013
2012
$ 186,000
112,900
4,700
$ 178,800
105,700
4,700
$ 138,700
81 ,600
11 ,000
303,600
. (77, 100)
Net OPEB Obligation, end of year
Percentage of annual OPEB contributed to plan
289,200
(111,500)
231,300
(39,500)
$ 226,500
$ 177,700
$ 191.800
25.4%
38.6%
17.1%
Funding status and funding progress: As of August 1, 2011, the most recent actuarial valuation
date, the Plan was unfunded. The actuarial accrued liability (AAL) and the unfunded actuarial
accrued liability (UAAL) are as follows:
Actuarial accrued liability (AAL)
Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL)
Funded ratio (actuarial value of assets/ML)
$2,357,000
$2,357,000
0%
Covered payroll (annual payroll of active employees
covered by the plan)
UAAL as a percentage of covered payroll
- 30 -
$2,601,024
90.61%
JULY 31, 2014 AND 2013
NOTE K - OTHER POST-EMPLOYMENT BENEFITS (continued)
Funding status and funding progress (continued): The schedule of funding progress for retiree
health plan, presented as Required Supplementary Information following the notes to the
financial statements, presents multi-year trend information about whether the actuarial value of
the Plan assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits.
Actuarial methods and assumptions: Actuarial valuation of an ongoing Plan involves the
estimates of the value of reported amounts and assumptions about the probability of occurrence
of events far into the future. The assumptions include employee turnover, mortality and health
care trend rate, etc. The amounts determined regarding the funded status of the Plan and the
ARC of the System are subject to continued revision as actual results are compared with past
expectations and new estimates are made about the future.
The amount of funding is based on an actuarial valuation based on the population of the existing
employee base to include demographics, further employment, age of the population, length of
service, mortality, and healthcare costs and trends. The actuarial valuations will be performed
every three years to ensure an adequate contribution to the plan. The actuarial methods and
assumptions used are designed to reduce short-term volatility in actuarial accrued liabilities and
the actuarial value of assets, consistent with the long-term perspective of the calculations.
The ARC was determined as part of the August 1, 2011 actuarial valuation using the following
methods and assumptions:
August 1, 2011
Projected Unit Credit
2.5% annual inflation of payroll
amount
30 years open funded
25 years
Not applicable - no assets
Valuation date:
Actuarial cost method:
Amortization method:
Amortization period:
Remaining amortization period:
Asset valuation method:
Actuarial assumptions:
Investment rate of return
Medical cost trend rate
Pre-Medicare trend rate
Post-Medicare trend rate
Ultimate trend rate
10.0%
7.5%
4.0%
Inflation rate:
Payroll growth:
2.5% per year
2.5% per year
Not applicable - no assets
-31-
JULY 31, 2014 AND 2013
NOTE L - DEFERRED COMPENSATION PLANS
Two deferred compensation plans are available to District employees. The multiple-employer
plans, created under Internal Revenue Code Sections 401 (k) and 457, are administered and
accounted for by the State of South Carolina. Employees may withdraw the current year value
of their contributions prior to termination of employment if they meet certain requirements.
These requirements differ between the two plans. The plans, available to all District employees,
permit them to defer a portion of their salary until future years. Participation in the plans is
optional and participants elect how their salary deferrals are invested. The District matches
401 (k) contributions for all participating employees. The match is 50% of the employee
contribution up to a maximum of 3% of base pay. The District's deferred compensation match is
included in retirement expense. Deferred compensation expense for the years ended July 31,
2014 and 2013 was $29,201 and $27,687, respectively.
Contributions deferred under the Section 401 (k) and 457 plans are placed in trust for the
contributing employees. The District has no liability for losses under the plans.
NOTE M - CONCENTRATIONS OF CREDIT RISK
The District's financial instruments subject to credit risk are primarily trade receivables and cash
equivalents. Concentrations of credit risk with respect to trade receivables are limited due to the
large number of customers comprising the customer base. The District requires collateral to be
pledged by those banks in which the District has funds on deposit in excess of $250,000.
NOTE N - RISK MANAGEMENT
The District is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters. The
District is insured under policies with commercial insurance companies. The District did not
have settled claims that exceeded the District's insurance coverage during the past three years.
- 32 -
JULY 31, 2014 AND 2013
NOTE N - RISK MANAGEMENT (continued)
The District established a self-funded health insurance program effective December 1, 1989.
Specific stop loss coverage for each claim in excess of $40,000 as of July 31, 2014 and 2013
and minimum annual aggregate stop loss coverage for claims in excess of $1,000,000 as of
July 31, 2014 and 2013 is provided by a commercial insurance company. Total expenses
incurred for claims and stop loss coverage, net of any refunds for claims paid in excess of stop
loss amounts, for the years ended July 31, 2014 and 2013 amounted to $695,328 and
$823,493, respectively. Total cumulative funds set aside by the District and designated to meet
future claims amounted to $1,004,750 and $889,443 as of July 31, 2014 and 2013, respectively.
The following represents the change in unfiled, unpaid claims from August 1, 2012 to July 31,
2013 and August 1, 2013 to July 31, 2014:
2014
2013
Liability, beginning of the year
Claims
Claim payments, net of refunds
$
Liability, end of the year
$
115,000 $
680,615
(698,615)
97,000
$
33,000
661,591
(579,591)
115,000
====~==
NOTE 0 - SUMMARY OF DISCLOSURE OF SIGNIFICANT CONTINGENCIES
AND COMMITMENTS
Sick pay
As described more fully in Note A, no estimate of any potential liability has been made except
for those employees eligible to retire.
Federal and State Assisted Programs
The District has received proceeds from Federal loans and State Grants. Periodic audits of
these loans and grants are required and certain costs may be questioned as not being
appropriate expenditures under the loan and grant agreements. Such audits could result in the
refund of loan or grant monies to the granter agencies. Management believes that any required
refunds will be immaterial. No provision has been made in the accompanying financial
statements for the refund of any loan or grant monies.
Other Contingencies
The District is routinely involved in various legal actions arising in the normal course of
business. In the opinion of management, such matters will not have a material effect upon the
financial position of the District.
- 33 -
JULY 31, 2014 AND 2013
NOTE 0 - SUMMARY OF DISCLOSURE OF SIGNIFICANT CONTINGENCIES
AND COMMITMENTS (continued)
Arbitrage Rebate Liabilities
Arbitrage represents the difference of "spread" between lower interest rates on tax-exempt
government securities and the higher interest on taxable investment securities. The Internal
Revenue Code requires local governments to rebate arbitrage earnings to the federal
government every five years for those bonds that do not meet the spend down exception. The
District does not believe an estimate of potential liability, if any, is required in the accompanying
financial statements.
NOTE P- REPORT CLASSIFICATIONS
Certain previously reported amounts have been reclassified to conform to 2014 report
classifications.
NOTE Q - SUBSEQUENT EVENTS
Subsequent events have been reviewed through November 25, 2014 which is the date of the
independent auditor's report.
On September 22, 2014, the District was awarded a matching grant in the amount of
$2,000,000 from the Economic Development Administration for the expansion of the existing
membrane treatment facility. The total cost of the project is estimated to be $4, 132,000. The
District will issue a general obligation bond in January, 2015 to cover its matching portion.
On November 11, 2014, the District entered into a contract with State Utility Contractors, Inc. for
the construction of the Middle Tyger River intake and pump station in an amount not to exceed
$5,375,000.
- 34-
Schedule 1
SCHEDULE OF FUNDING PROGRESS FOR RETIREE HEAL TH PLAN
Actuarial
Valuation
Date
8/1/2011
7/1/2008
Actuarial
Accrued
Liability
(AAL)
Actuarial
Value of
Assets
$
$
2,357,000
1,646,300
Unfunded
Actuarial
Accrued
Liability
(UAAL)
Ratio
of
Funded
Obligation
$ 2,357,000
1,646,300
See independent auditor's report
- 35 -
0%
0%
Covered
Payroll
$ 2,411,485
2,255,628
UAAL
as a%
of Covered
Payroll
97.74%
72.99%
SUPPLEMENTARY INFORMATION
Schedule 2
SCHEDULES OF DIRECT OPERATING EXPENSES
2013
2014
Water purchased
Cost of meters, materials and fittings
Automobile and truck expense
Power-distribution and filter plant
Maintenance and repairs of equipment
Maintenance and repairs-system infrastructure
Maintenance of water tanks
Equipment rental
Chemicals and sludge removal
Lab expense
Less construction equipment cost capitalized
$
$
- 36 -
672
635,234
134,409
423,569
58,949
284, 184
128,024
5,779
381,629
84,286
(49,302)
2,087,433
$
$
632
536,220
109,348
378,708
60,483
333,872
116,730
5,596
402,549
108,336
(27,732)
2,024,742
Schedule 3
SCHEDULES OF GENERAL AND ADMINISTRATIVE EXPENSES
Salaries and wages
Insurance-employees
Retirement expense
Payroll taxes
Data processing
Postage
Office expense and supplies
Bank charges
Dues and subscriptions
Consultants' fees
Legal and accounting fees
Commissioners' fees
Public relations
Telephone
Utilities-office and maintenance facility
Insurance-general
Maintenance expense
Miscellaneous expense
Small tools
Permits
Collection expense
Travel and related expenses
Training
Bad debts
Safety supplies
Cash (over) and short
Uniform expense
Less salaries and fringes capitalized
$
$
- 37 -
2014
2,601,024
1,076, 188
478,005
195,678
79,032
103,020
29,911
93,225
21,940
108,205
136,820
21,600
9,995
118,588
53,669
147,484
231,329
34,377
13,916
9,076
2,608
44,836
31,939
27,492
14,784
525
22,982
(105,655)
5,602,593
$
$
2013
2,539,721
1,034,302
284,574
193,697
64,438
95,305
40,029
85,280
25, 124
245,929
125,198
22, 100
13,971
127,756
49,905
141,454
253,228
33,352
13,253
45,202
2,937
41,698
42,699
24,932
15,797
368
20,696
(135,023)
5,447,922
Schedule 4
SCHEDULES OF NONOPERATING REVENUES AND EXPENSES
NONOPERATING REVENUES
Interest earned on investments
Principal and interest funds
General obligation bond proceeds
Designated funds
Decrease in fair value of investments
Other miscellaneous income
Lake Cooley income
Lake Lyman income
Rents
Gain from sale of assets
2014
$
TOTAL NONOPERATING REVENUES
NONOPERATING EXPENSES
Bonded debt interest expense
Less: interest capitalized
Agents' fees
Bonded debt issue expenses
Investment fees
Lake Cooley expenses
Lake Lyman expenses
Other lake expenses
TOTAL NONOPERATING EXPENSES
NONOPERATING REVENUES
AND EXPENSES, NET
- 38 -
$
8
5,688
220,880
(163,285)
1,217
24,980
36,950
28,496
39,300
2013
$
10
6,811
227,735
(237,114)
3,893
23,440
30,720
25,460
1, 125
194,234
82,080
179,918
218,208
4,807
12,051
8,310
23,534
26,963
4,256
3,465
71,750
15,644
36,606
32,618
16,674
259,839
394,965
{65,605}
$
{312,885}
Schedule 5
PRINCIPAL AND INTEREST FUND RECEIPTS AND DISBURSEMENTS
2014
RECEIPTS
Property tax revenue
Investment income
$
DISBURSEMENTS
Bonded debt principal
Bonded debt interest
Paying agent's fees
Investment fees
Excess Receipts Over Disbursements
TOTAL ASSETS, BEGINNING OF YEAR
2,244, 173
195
2013
$
2,140,649
901
2,244,368
2,141,550
2,040,000
137,741
2,911
8
2, 180,660
1,995,000
139,004
1,865
10
2, 135,879
63,708
5,671
821,011
815,340
TOTAL ASSETS, END OF YEAR
$
884,719
$
821,011
SCHEDULE OF NET ASSETS
Investments (P & I Fund)-Cash Equivalents
Property taxes receivable
$
862,724
21,995
$
798,837
22, 174
$
884,719
-$
821,011
- 39 -
Schedule 6
SCHEDULE OF PROPERTY TAX INFORMATION
JULY 31, 2014 AND 2013
Assessment
Year
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Assessed Values
As of
December 31
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
Assessed
Value
$ 187,556, 773
177,039,881
173,695,943
175,512,601
176, 709,484
168,213,698
150,905,006
146,624, 130
135,500,174
130,890,174
Millage
12.0
12.0
11.8
11.9
13.2
11.6
10.2
12.9
11.6
12.2
Fiscal Year
Ended
July 31
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Current
Year
Collections
2,187,814
2,090,232
1,999,239
2, 173,400
1,944,440
1,685,931
1,852,769
1,596, 199
1,639,580
1,766,218
Delinquent
Tax
Collections
$
56,359
50,417
107,416
97,783
83,279
87,464
136, 791
159,621
111,915
77,098
Total
Collections
$ 2,244, 173
2, 140,649
2, 106,655
-2,271, 183
2,027,719
1,773,395
1,989,560
1,755,820
1,751,495
1,843,316
$
- 40 -
Schedule 6 (Continued)
SCHEDULE OF PROPERTY TAX INFORMATION
JULY 31, 2014 AND 2013
2013/2014 Market Value Assessment Summary
Classification
Real Estate
Mobile homes
Retail
Utilities
Manufacturing
Transportation
Vehicles
Boats
Aircraft
Furniture
Fee in lieu of
property tax
Totals
$
$
Assessed
Value
100, 778, 735
1,295,520
10,372,830
5,029,540
33,302,070
771,904
13,551,299
289,020
6,560
735,550
Assessment
Ratio
4% &6%
4% &6%
10.5%
10.5%
10.5%
9.5%
6.0%
10.5%
4.0%
10.5%
Market
Value
$ 2,026,703,968
29,308,002
98,788,857
47,900,380
317,162,571
8,125,305
225,854,983
2,752,571
164,000
7,005,238
21,423,745
6.0%
357,062,416
$ 3, 120,828,291
187,556, 773
2012/2013 Market Value Assessment Summary
Classification
Real Estate
Mobile homes
Retail
Utilities
Manufacturing
Transportation
Vehicles
Boats
Aircraft
Furniture
Fee in lieu of
property tax
Totals
$
$
Assessed
Value
97,012,340
1,288,032
9,812,280
4,945,520
30, 182,440
735,429
12,797,188
239,080
7,280
673,560
Assessment
Ratio
4%&6%
4%&6%
10.5%
10.5%
10.5%
9.5%
6.0%
10.5%
4.0%
10.5%
Market
Value
$ 2,271,035,652
31,967,862
93,450,286
47,100,190
287,451,809
7,741,358
213,286,467
2,276,952
182,000
6,414,857
19,346,732
6.0%
322,445,533
177,039,881
- 41 -
$ 3,289,352,966
Schedule 7
COMMISSIONERS, SENIOR MANAGEMENT STAFF, AND OTHER INFORMATION
JULY 31, 2014
COMMISSIONERS
TERMS EXPIRE
Reidville, South Carolina
March 30, 2018
Frank Nutt, Vice Chairman
Moore, South Carolina
March 30, 2020
Wanda Fowler, Secretary
Duncan, South Carolina
March 30, 2020
Tom A. Lomax
Moore, South Carolina
March 30, 2016
John L. Sexton
March 30, 2016
SENIOR MANAGEMENT STAFF
Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
Director of Projects -and Construction
Chief Information Officer
S. Michael Caston, PE, MPA
Larry G. Christopher, CPA, MPA
Billy Y. Cothran, PE
Michael G. Frost
Jeffrey J. Diaz, MBA
OTHER INFORMATION
Number of Customers (Active Accounts)
July 31, 2014
July 31, 2013
July31, 2012
Number of Full-Time Employees
July 31, 2014
July 31, 2013
July31,2012
- 42 -
21,800
21,500
21,000
44
45
44
-l1TI -l1TI
HOLCOMBE
HOLTZCLAW
RAVAN LLC
lllJ
-
lllJ
-
CERTIFIEO PUBLIC ACCOUNTANTS &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
Commissioners and Management
We have audited, in accordance with the auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States, the financial
statements of Startex-Jackson-Wellford-Duncan Water District (the "District"), as of and for the
years ended July 31, 2014 and 2013, and the related notes to the financial statements, which
collectively comprise Startex-Jackson-Wellford-Duncan Water District's basic financial
statements, and have issued our report thereon dated November 25, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District's
internal control over financial reporting ("internal control") to determine tne auditprocedures 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 the District's
internal control. Accordingly, we do not express an opinion on the effectiveness of the District's
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the. normal course of performing their assigned functions, to
prevent, or detect and correct, misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented,
or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of
this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
Members of the American Institute of Certified Public Accountants
Members of the South Carolina Association of Certified Public Accountants
- 43 -
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Startex-Jackson-Wellford-Duncan
Water District's financial statements are free of material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the determination offinancial
statement amounts. However, providing an opinion on compliance with those provisions was not
an objective of our audit, and accordingly, we do not express such an opinion. The results of our
tests disclosed no instances of noncompliance or other matters that are required to be reported
under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the District'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 District's
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
Spartanburg, South Carolina
November 25, 2014
- 44 -
APPENDIX B
FORM OF BOND COUNSEL OPINION
FORM OF BOND COUNSEL OPINION
[Date of delivery]
Wellford, South Carolina
Re:
$__________ Startex-Jackson-Wellford-Duncan Water District, South Carolina General Obligation
Bonds, Series 2016
Ladies and Gentlemen:
We have acted as bond counsel to Startex-Jackson-Wellford-Duncan Water District, South Carolina (the
“District”) in connection with the issuance by the District of a its $__________ General Obligation Bonds, Series 2016
(the “Bonds”). We have examined a certified copy of the Transcript of Proceedings and other proofs submitted to us,
including the Constitution and statutes of the State of South Carolina (the “State”), in connection with the issuance of
the Bonds. The Bonds are in fully registered form, dated __________, 2016, numbered from R-1 upward, in
denominations of $5,000 or any integral multiple thereof not exceeding the principal amount of the Bonds maturing
or subject to mandatory redemption in each year, bear interest from their date payable semiannually thereafter on
April 1 and October 1 of each year, commencing October 1, 2016 and will mature or are subject to mandatory
redemption in successive annual installments on April 1 in each of the years and in the principal amounts as stated in
the Transcript of Proceedings.
The Bonds recite that they are issued pursuant to and for the purposes authorized by and in accordance with
the Constitution and laws of the State, including Article X, Section 14 of the Constitution of the State of South
Carolina, 1895, as amended; Title 6, Chapter 11, Article 5 of the Code of Laws of South Carolina, 1976, as amended;
Section 11-27-40 of the Code of Laws of South Carolina 1976, as amended; a resolution duly adopted by the StartexJackson-Wellford-Duncan Water Commission, the governing body of the District, on December 15, 2015 (the
“Resolution”), and an ordinance duly enacted by the County Council of Spartanburg County, South Carolina on
October 15, 2012.
As to questions of fact material to our opinion, we have relied upon the Transcript of Proceedings and other
certifications of public officials furnished to us without undertaking to verify the same by independent investigation.
Based on the foregoing, we are of the opinion, under existing law, as follows:
1.
The District is a duly created and validly existing special purpose district, body corporate and
politic, and political subdivision of the State. The proceedings are regular and in due form of law, and the Bonds
constitute valid and binding obligations of the District, secured by an irrevocable pledge of the full faith, credit and
taxing power of the District and are payable, both principal and interest, from a direct ad valorem tax upon all
taxable property of the District, without limit as to rate or amount. The District is required by law to include in its
annual tax levy the principal and interest coming due on the Bonds to the extent the necessary funds are not
provided from other sources.
2.
Interest on the Bonds (including any original issue discount properly allocable to an owner
thereof) is excludable from gross income of the registered owners thereof for federal income tax purposes and is not
an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and
corporations. The opinion set forth in the preceding sentence is subject to the condition that the District comply with
all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent
to the issuance of the Bonds in order that interest thereon be (or continue to be) excludable from gross income for
federal income tax purposes. Failure to comply with certain of such requirements may cause interest on the Bonds to
be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The
District has covenanted to comply with all such requirements. It should be noted, however, that for the purpose of
computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax
purposes), interest on the Bonds is taken into account in determining adjusted current earnings. We express no
opinion regarding other federal tax consequences arising with respect to the Bonds except as set forth below.
B-1
3.
In the Resolution, the District represented that neither it nor any entity subordinate to it intends to
issue, in the aggregate, more than $10,000,000 in tax-exempt obligations (other than private activity bonds which
are not qualified 501(c)(3) bonds as defined in Section 145 of the Code) in calendar year 2016 and has designated
the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3)(B) of the Code.
4.
The Bonds and the interest thereon (including any original issue discount properly allocable to an
owner thereof) are exempt from all State, county, school district, municipal and all other taxes or assessments of the
State, except inheritance, estate, transfer or certain franchise taxes. Furthermore, it should be noted that Section 1211-20 of the Code of Laws of South Carolina 1976, as amended, imposes upon every bank engaged in business in
the State a fee or franchise tax computed on the entire net income of such bank which includes interest paid on the
Bonds.
It is to be understood that the rights of the holders of the Bonds and the enforceability thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights
heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement may also be
subject to the exercise of judicial discretion in appropriate cases.
We have examined the executed Bonds and, in our opinion, their form and execution are in due form of
law.
We express no opinion herein regarding the accuracy, adequacy or completeness of the Official Statement
dated ___________, 2016 relating to the Bonds. This opinion is given as of the date hereof, and we assume no
obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our
attention or any changes in law that may hereafter occur. Our advice did not include financial or non-legal advice.
Very truly yours,
HAYNSWORTH SINKLER BOYD, P.A.
B-2
APPENDIX C
FORM OF CONTINUING DISCLOSURE UNDERTAKING
CONTINUING DISCLOSURE UNDERTAKING
This Continuing Disclosure Undertaking (the “Disclosure Undertaking”) is executed and delivered by
Startex-Jackson-Wellford-Duncan Water District, South Carolina (the “Issuer”) pursuant to Securities and Exchange
Commission Rule 15c2-12 (the “Rule”) and in connection with the issuance of the $2,915,000 General Obligation
Bonds, Series 2016, of the Issuer (the “Bonds”). The Bonds are being issued pursuant to a Resolution adopted
December 15, 2015 (the “Resolution”) by the Startex-Jackson-Wellford-Duncan Water Commission, the governing
body of the Issuer. The Issuer represents, covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Undertaking. This Disclosure Undertaking is being executed and
delivered by the Issuer for the benefit of the Holders and Beneficial Owners and in order to assist the Participating
Underwriter (defined below) in complying with the Rule.
SECTION 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any
capitalized term used in this Disclosure Undertaking unless otherwise defined in this Section, the following
capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the Issuer pursuant to, and as described in,
Sections 3 and 4 hereof.
“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax
purposes.
“Dissemination Agent” shall mean the Issuer or any successor Dissemination Agent designated in writing
by the Issuer and which has filed with the Issuer a written acceptance of such designation.
“Holders” or “Holders of the Bonds” shall mean the registered owners of the Bonds.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Undertaking.
“National Repository” shall mean the Municipal Securities Rulemaking Board through its Electronic
Municipal Market Access (“EMMA”) system at www.emma.msrb.org or any successor National Repositories as
determined by the Securities and Exchange Commission.
“Official Statement” shall mean the official statement of the Issuer dated _______, 2016, prepared in
connection with the issuance of the Bonds.
“Participating Underwriter” shall mean any of the original underwriters of the Bonds required to comply
with the Rule in connection with the offering of the Bonds.
“Repository” shall mean each National Repository and each State Depository, if any.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as the same may be amended from time to time.
“State” shall mean the State of South Carolina.
“State Depository” shall mean any public or private repository or entity designated by the State as a state
information depository for the purpose of the Rule and recognized as such by the Securities and Exchange
Commission. As of the date of this Disclosure Undertaking, there is no State Depository.
SECTION 3. Provision of Annual Reports.
(a)
The Issuer shall, or shall cause the Dissemination Agent to, not later than seven (7) months after
the end of the Issuer’s fiscal year (currently, July 31) commencing with the report for the fiscal year ending July 31,
2015, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 hereof.
C-1
The Annual Report may be submitted as a single document or as separate documents comprising a package, and
may include by cross-reference other information as provided in Section 4 hereof; provided that the audited financial
statements of the Issuer may be submitted separately from the balance of the Annual Report and later than the date
required above for the filing of the Annual Report if they are not available by that date. If the Issuer’s fiscal year
changes, the Issuer shall give notice of such change in the same manner as for a Listed Event under Section 5(c).
(b)
Not later than fifteen (15) business days prior to the date specified in subsection (a) above for
providing the Annual Report to Repositories, the Issuer shall provide the Annual Report to the Dissemination Agent,
if such is appointed. If the Issuer is unable to provide to the Repositories an Annual Report by the date required in
subsection (a) above, the Issuer shall send a notice to the National Repository and the State Depository, if any, in
substantially the form attached hereto as Schedule I.
(c)
The Dissemination Agent, if any, shall:
(i)
determine each year prior to the date for providing the Annual Report the name and
address of the National Repository and the State Depository, if any; and
(ii)
(if the Dissemination Agent is other than the Issuer) file a report with the Issuer certifying
that the Annual Report has been provided pursuant to this Disclosure Undertaking, stating the date it was
provided and listing all the Repositories to which it was provided.
SECTION 4. Content of Annual Reports. The Issuer’s Annual Report shall contain or include by reference
the Issuer’s complete audited financial statements for the prior fiscal year prepared in accordance with generally
accepted accounting principles as promulgated to apply to governmental entities from time to time by the
Governmental Accounting Standards Board. If the Issuer’s audited financial statements are not available by the time
the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited
financial statements in a format similar to the financial statements contained in the final Official Statement and the
audited financial statements shall be filed in the same manner as the Annual Report when they become available.
The following shall also be filed as part of the Annual Report:
1.
2.
3.
Ad valorem property tax collections for the preceding fiscal year;
Assessed values of property for the preceding fiscal year; and
The amount of any general obligation indebtedness incurred in the preceding fiscal year.
Any or all of the items listed above may be included by specific reference to other documents, including
official statements of debt issues of the Issuer or related public entities which have been submitted to each of the
Repositories or filed with the Securities and Exchange Commission. If the document included by reference is a final
official statement, it must be available from the Municipal Securities Rulemaking Board. The Issuer shall clearly
identify each such other document so included by reference.
The Issuer may discharge its undertaking described above by transmitting the documents referred to above
to any entity and by any method authorized by the Securities and Exchange Commission.
SECTION 5. Reporting of Significant Events.
Unless otherwise required by the Securities and Exchange Commission pursuant to the provisions of this
Section 5, the Issuer shall give or cause to be given, to the Repositories, notice of the occurrence of any of the
following events with respect to the Bonds, within ten (10) business days of the occurrence thereof:
1.
2.
3.
4.
5.
6.
principal and interest payment delinquencies;
non-payment related defaults, if material;
unscheduled draws on debt service reserves reflecting financial difficulties;
unscheduled draws on credit enhancements reflecting financial difficulties;
substitution of credit or liquidity providers or their failure to perform;
adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material
notices or determinations with respect to the tax status of the Bonds, or other material events
affecting the tax status of the Bonds;
C-2
7.
8.
9.
10.
11.
12.
13.
14.
15.
modifications to rights of Holders of the Bonds, if material;
bond calls, if material;
defeasances;
release, substitution or sale of property securing repayment of the Bonds, if material;
rating changes;
tender offers;
bankruptcy, insolvency, receivership or similar event of the obligated person;
merger, consolidation, or acquisition of the obligated person, if material; or
appointment of a successor or additional trustee, or the change of name of a trustee, if material.
SECTION 6. Termination of Reporting Obligation. The Issuer’s obligations under this Disclosure
Undertaking shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds.
SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination
Agent to assist it in carrying out its obligations under this Disclosure Undertaking, and may discharge any such
Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be
responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure
Undertaking. The initial Dissemination Agent shall be the Issuer.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Undertaking,
the Issuer may amend this Disclosure Undertaking, and any provision of this Disclosure Undertaking may be
waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws, to the
effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if
such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in
or official interpretation of the Rule.
SECTION 9. Additional Information. Nothing in this Disclosure Undertaking shall be deemed to prevent
the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure
Undertaking or any other means of communication, or including any other information in any Annual Report or
notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Undertaking. If the
Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition
to that which is specifically required by this Disclosure Undertaking, the Issuer shall have no obligation under this
Disclosure Undertaking to update such information or include it in any future Annual Report or notice of occurrence
of a Listed Event.
SECTION 10. Default. In the event of a failure of the Issuer to comply with any provision of this
Disclosure Undertaking, any Bondholder or Beneficial Owner may take such actions as may be necessary and
appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer to comply with
its obligations under this Disclosure Undertaking. A default under this Disclosure Undertaking shall not be deemed
an event of default under the Resolution, and the sole remedy under this Disclosure Undertaking in the event of any
failure of the Issuer to comply with this Disclosure Undertaking shall be an action to compel performance.
SECTION 11. Beneficiaries. This Disclosure Undertaking shall inure solely to the benefit of the Issuer, the
Dissemination Agent, if any, the Participating Underwriter, Holders and Beneficial Owners from time to time of the
Bonds, and shall create no rights in any other person or entity.
By:__________________________________________
Chairman, Startex-Jackson-Wellford-Duncan
Water Commission
Date:_______________
C-3
SCHEDULE I
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer:
Name of Bond Issue:
$2,915,000 GENERAL OBLIGATION BONDS, SERIES 2016
Date of Issuance:
________ ___, 2016
CUSIP Base:
855685
NOTICE IS HEREBY GIVEN that the above-named Issuer has not provided an Annual Report with respect to the
above-named Bonds as required by Section 3 of the Continuing Disclosure Undertaking dated _____________,
2016. The Issuer anticipates that the Annual Report will be filed by ___________________.
By:___________________________________________
Chief Financial Officer
Date: _______________
C-4

Startex-Jackson-Wellford-Duncan Water District, South Carolina

Transcription

Similar documents

confidential great lengths price for hair

Welcome to the RCCAQ`s 39th Annual Convention

Do liry o:`i fHn rssuE A$tD sAtE 0F COVUtitliiNT rcIiDs

RADICALES LIBRES

Peptide Structure-1 - UCLA Chemistry and Biochemistry

Corporate bonds a good bet amid global volatility in equities

Patriots At Work

TNT is a molecule. Molecules are made up of different types of

(Harrisburg Area Community College Project), Series of 2016 Sta

Laddered Municipal Bond