HomeMy WebLinkAbout10-22-25 F&A Committee Packet 1
OTAY WATER DISTRICT
FINANCE AND ADMINISTRATION
COMMITTEE MEETING
and
SPECIAL MEETING OF THE BOARD OF DIRECTORS
2554 SWEETWATER SPRINGS BOULEVARD
SPRING VALLEY, CALIFORNIA
BOARDROOM
WEDNESDAY
OCTOBER 22, 2025
12:00 P.M.
This is a District Committee meeting. This meeting is being posted as a special meeting
in order to comply with the Brown Act (Government Code Section §54954.2) in the event that
a quorum of the Board is present. Items will be deliberated, however, no formal board actions
will be taken at this meeting. The committee makes recommendations
to the full board for its consideration and formal action.
AGENDA
1. ROLL CALL
2. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO
SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD’S JU-
RISDICTION INCLUDING AN ITEM ON TODAY’S AGENDA
DISCUSSION ITEMS
3. APPROVE THE AUDITED FINANCIAL STATEMENTS, INCLUDING THE INDE-
PENDENT AUDITORS’ UNQUALIFIED OPINION, FOR THE FISCAL YEAR ENDING
JUNE 30, 2025 (MARISSA DYCHITAN) [5 MINUTES]
4. ADOPT ORDINANCE NO. 602 TO ADD A FIRE FLOW FEE AND APPROVE THE
PROPOSED CHANGES TO VARIOUS FEES AND CHARGES BY AMENDING AP-
PENDIX A AND SECTION 38, SERVICES FOR FIRE PROTECTION SYSTEMS, OF
THE DISTRICT’S CODE OF ORDINANCES TO BE EFFECTIVE JANUARY 1, 2026
(ANDREA CAREY) [5 MINUTES]
5. UPDATE ON THE CUSTOMER COMMUNICATION PLAN FOR THE UPCOMING
DISTRICT-WIDE METER CHANGEOUT PROJECT (ANDREA CAREY)
[5 MINUTES]
6. ADJOURNMENT
2
BOARD MEMBERS ATTENDING:
Jose Lopez, Chair
Delfina Gonzalez
All items appearing on this agenda, whether or not expressly listed for action, may be delib-
erated and may be subject to action by the Board.
The agenda, and any attachments containing written information, are available at the Dis-
trict’s website at www.otaywater.gov. Written changes to any items to be considered at the
open meeting, or to any attachments, will be posted on the District’s website. Copies of the
agenda and attachments are also available by contacting the District Secretary at (619) 670-
2253.
If you have any disability which would require accommodations to enable you to participate in
this meeting, please call the District Secretary at 670-2253 at least 24 hours prior to the
meeting.
Certification of Posting
I certify that on October 20, 2025, I posted a copy of the foregoing agenda near the
regular meeting place of the Board of Directors of Otay Water District, said time being at least
24 hours in advance of the meeting of the Board of Directors (Government Code Section
§54954.2).
Executed at Spring Valley, California on October 20, 2025.
/s/ Tita Ramos-Krogman, District Secretary
STAFF REPORT
TYPE MEETING: Regular Board MEETING DATE: November 5, 2025
SUBMITTED BY: Marissa Dychitan
Senior Accountant
PROJECT: DIV. NO. All
APPROVED BY: Jon Ravaglioli, Finance Manager
Kevin Koeppen, Assistant Chief of Finance
Joseph R. Beachem, Chief Financial Officer
Jose Martinez, General Manager
SUBJECT: Approve the Audited Financial Statements for the Fiscal Year Ended June 30, 2025
GENERAL MANAGER'S RECOMMENDATION:
That the Board approve the Audited Financial Statements (Attachment
B), including the Independent Auditors' unqualified opinion, for the fiscal year ending June 30, 2025.
COMMITTEE ACTION:
See Attachment A.
PURPOSE:
To inform the Board of the significant financial events which
occurred during the fiscal year ended June 30, 2025, as reflected in the audited financial statements.
ANALYSIS:
Davis Farr LLP performed the audit and found that, in all material respects, the financial statements correctly represent the District's
AGENDA ITEM 3
2
financial position. They found no material errors in the financial
records or statements (Attachment D). Total Assets:
Total assets increased by $10.0 million, or 1.60%, during Fiscal Year
2025, to $634.8 million, due to increases in capital assets, prepaid assets, and receivables, partially offset by decreases in cash and cash equivalents and investments.
Deferred Outflows & Deferred Inflows:
Deferred outflows decreased by $9.0 million, or 35.41%, in Fiscal Year 2025 due to decreases in pension and OPEB actuarial costs.
Deferred inflows increased by $5.4 million, or 12.27%, due to increases
in deferred investment income for the OPEB and pension plans and deferred inflows from leases.
Total Liabilities & Net Positions:
Total liabilities decreased by $15.5 million, or 7.67%, from the previous fiscal year to $186.2 million. The decrease is attributable to the decreases in net pension and OPEB liabilities and debt service payments.
The net position increased by $11.0 million, or 2.72%, to $415.3 million as of June 30, 2025.
Capital Contributions:
Capital contributions for Fiscal Year 2025 totaled $14.2 million. Capital contributions consist of developers contributing $4.0 million
in capacity fees and $9.7 million in contributed fixed assets. Ratepayers also paid $0.5 million in availability fees, which are collected on the tax roll and considered a part of capital
contributions.
Results of Operations: Operating revenues increased by $16.3 million, or 14.49%, due to
increases in water sales volume due to dryer weather and water rates.
The cost of water sales increased by $11.8 million, or 15.15%, due to increased unit purchase costs and volumes purchased.
3
Non-Operating Revenues & Expenses:
Non-operating revenues increased by $0.2 million, or 1.04%, for Fiscal Year 2025 due primarily to an increase in tax revenues
partially offset by the decrease in investment income.
Non-operating expenses decreased by $27.7 million, or 85.29%, in Fiscal Year 2025 due primarily to the decrease in miscellaneous expenses.
Conclusion:
In summary, the overall audit process was successful, and the auditors found no material errors or misstatements in the District's
financial statements.
Additional Audit Correspondence:
As a part of completing the audit engagement, Davis Farr LLP also provided the following letters summarizing their observations and conclusions concerning the District's overall financial processes:
•Management Letter: The auditors did not identify any internalcontrol deficiencies that they considered material weaknesses.
(Attachment C).
•Audit Committee Letter: This letter describes the overallaspects of the audit, including audit principles, performance,dealings with management, and significant findings or issues.
There were no disagreements with management concerning
financial accounting, reporting, or auditing matters, andthere were no significant difficulties in dealing withmanagement in performing the audit. (Attachment D).
•Report on Applying Agreed-Upon Procedures: A review of the
District's investment portfolio at year-end and a sample ofspecific investment transactions completed throughout thefiscal year were performed. There were no exceptions to
compliance from the District's Investment Policy. (AttachmentE).
FISCAL IMPACT:
None.
4
STRATEGIC GOAL:
The District ensures its continued financial health through long-term financial planning, formalized financial policies, enhanced budget
controls, fair pricing, debt planning, and improved financial reporting.
LEGAL IMPACT:
None.
Attachments:
A) Committee ActionB) Audited Annual Financial Statements
C) Management LetterD) Audit Committee Letter
E) Report on Applying Agreed-Upon Procedures
ATTACHMENT A
SUBJECT/PROJECT: Approve the Audited Financial Statements for the Fiscal Year Ended June 30, 2025
COMMITTEE ACTION:
NOTE:
OTAY WATER DISTRICT
FINANCIAL STATEMENTS
WITH
REPORT ON AUDIT BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
YEAR ENDED JUNE 30, 2025
Attachment B
Table of Contents
Year Ended June 30, 2025
Page
Number
Independent Auditor’s Report 1
Management’s Discussion & Analysis 4
Basic Financial Statements:
Statement of Net Position 14
Statement of Revenues, Expenses, and Changes in Net Position 16
Statement of Cash Flows 17
Notes to Financial Statements 19
Required Supplementary Information:
Schedule of Changes in the Net OPEB Liability and Related Ratios 65
Schedule of Contributions 66
Schedule of Changes in the Net Pension Liability and Related Ratios 67
Schedule of Plan Contributions 68
Independent Auditor’s Report
Board of Directors
Otay Water District
Spring Valley, California
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of the Otay Water District (District), as of and for
the year ended June 30, 2025 and the related notes to the financial statements, which
collectively comprise the District’s basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the respective financial position of the District as of June 30, 2025, and the respective changes
in financial position and cash flows thereof for the year then ended in accordance with
accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America (GAAS) and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report. We are required to be
independent of the District and to meet our other ethical responsibilities, in accordance with
the relevant ethical requirements relating to our audit. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As described further in note 1 to the financial statements, during the year ended June 30,
2025, the District implemented Governmental Accounting Standards Board (GASB) Statement
No. 101: Compensated Absences. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
The District’s management is responsible for the preparation and fair presentation of the
financial statements in accordance with accounting principles generally accepted in the United
States of America, and for the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the
District’s ability to continue as a going concern for one year after the date that the financial
statements are issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS will always detect a material misstatement when it exists. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control. Misstatements are considered material if there is a
substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the
audit.
Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, and design and perform audit procedures responsive to
those risks. Such procedures include examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the District’s internal control.
Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the District’s ability to continue as a
going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain
internal control–related matters that we identified during the audit.
Report on Summarized Comparative Information
We have previously audited the District’s 2024 financial statements, and we expressed an
unmodified audit opinion on those audited financial statements in our report dated October
25, 2024. In our opinion, the summarized comparative information presented herein as of
and for the year ended June 30, 2024, is consistent, in all material respects, with the audited
financial statements from which it has been derived.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis, Schedule of Changes in the Net OPEB Liability and
Related Ratios, Schedule of Contributions, Schedule of Changes in the Net Pension Liability
and Related Ratios, and Schedule of Plan Contributions, be presented to supplement the basic
financial statements.Such information is the responsibility of management and, 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 Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
October 29, 2025 on our consideration of the District’s internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements and other matters. The purpose of that report is solely to describe the
scope of our testing of internal control over financial reporting and compliance and the results
of that testing, and not to provide an opinion on the effectiveness of 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.
Irvine, California
October 29, 2025
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Management’s Discussion and Analysis
3
As the management of the Otay Water District (the "District"), we offer readers of the District's financial
statements this narrative overview and an analysis of the District's financial performance during the fiscal
year ending June 30, 2025.Please read it in conjunction with the District's financial statements that follow
Management's Discussion and Analysis.All amounts, unless otherwise indicated, are expressed in millions
of dollars.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the District's basic financial
statements, which are comprised of the following: 1) Statement of Net Position, 2) Statement of Revenues,
Expenses,and Changes in Net Position, 3) Statement of Cash Flows, and 4) Notes to the Financial
Statements.This report also contains supplementary information in addition to the basic financial
statements.
The Statement of Net Position presents information on the District's assets,deferred outflows of resources,
liabilities,and deferred inflows of resources, with the difference reported as Total Net Position.Over time,
increases or decreases in net position may serve as a valuable indicator of whether the District's financial
position is improving or weakening.
The Statement of Revenues, Expenses,and Changes in Net Position presents information showing how
the District's net position changed during the most recent fiscal year.All changes in net position are
reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
related cash flows.Thus, revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation
leave).
The Statement of Cash Flows presents information on cash receipts and payments for the fiscal year.The
Notes to the Financial Statements provide additional information essential to a complete understanding of
the data supplied in the specific financial statements listed above.
Financial Highlights
The assets and deferred outflows of resources of the District exceeded its liabilities and deferred inflows of resources at
the close of the most recent fiscal year by $415.3 million (net position). Of this amount, $56.5 million (unrestricted net
position)may be used to meet the District’s ongoing obligations to residents and creditors.
Total assets increased by $10.0 million,or 1.6%,during Fiscal Year 2025 to $634.8 million, due to increases in capital and
prepaid assets and receivables,which were partially offset by decreases in cash and cash equivalents and investments.
Management’s Discussion and Analysis
4
In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information concerning the District's progress in funding its obligation to provide
retirement benefits to its employees.
Financial Analysis:
As noted, net position may serve,over time,as a valuable indicator of an entity's financial position.In the
case of the District, assets and deferred outflows of resources exceeded liabilities and deferred inflows of
resources by $415.3 million at the close of Fiscal Year 2025.
The most significant portion of the District's net position, $351.8 million (84.7%), reflects its investment in
capital assets,less any remaining outstanding debt used to acquire those capital assets.The District uses
these capital assets to provide services to customers; consequently, these assets are not available for
future spending.Although the District's investment in its capital assets is reported effectively as a resource,
it should be noted that the resources needed to repay the debt must be provided from other sources since
the capital assets themselves cannot be used to liquidate these liabilities.
Management’s Discussion and Analysis
5
Statement of Net Position
(In Millions of Dollars)
2025 2024
Assets
Current and Other Assets $ 187.5 $ 187.9
Capital Assets 447.3 436.9
Total Assets 634.8 624.8
Deferred Outflows of Resources
Deferred Actuarial Pension Costs 7.2 13.3
Deferred Actuarial OPEB Costs 9.3 12.2
Total Deferred Outflows of Resources 16.5 25.5
Liabilities
Current Liabilities 37.8 36.4
Long-Term Debt Outstanding 89.6 95.0
Net Pension Liability 25.4 28.6
Net OPEB Liability 2.3 11.2
Other Liabilities 31.1 30.5
Total Liabilities 186.2 201.7
Deferred Inflows of Resources
Deferred Inflows from Leases 46.4 43.4
Deferred Inflows Pension Costs 0.1 0.0
Deferred Actuarial OPEB Costs 3.2 0.9
Total Deferred Inflows of Resources 49.7 44.3
Net Position
Net Investment in Capital Assets 351.8 336.1
Restricted for Debt Service 3.8 3.6
Restricted for Capital Assets 3.2 3.1
Unrestricted 56.5 61.5
Total Net Position $ 415.3 $ 404.3
The District's operations and population are growing.Much of this expansion has occurred in the
residential sector, particularly in multi-family dwellings.The District’s commercial base is also expanding,
largely due to commercial development in the Otay Mesa area of the District’s service area, which borders
Mexico. By 2055, the District's service area population is expected to increase by 12% to 271,500 residents.
Management’s Discussion and Analysis
6
The District has created several future planning documents to ensure a reliable water supply and sewer
system in the future, including the maintenance of current infrastructure.
In FY 2025,the District's Capital Assets increased by $28.0 million before accumulated depreciation (see
Note 4 in the Notes to Financial Statements).The District’s long-term debt (excluding current maturities)
decreased by $5.4 million due to the annual debt service payments (see Note 5 in the Notes to Financial
Statements).
Total liabilities decreased by $15.5 million in FY 2025,primarily due to decreases in Net Pension and OPEB
liabilities, and long-term debt.
In FY 2025, deferred outflows of resources decreased by $9.0 million due to decreases in the actuarial
pension and OPEB costs.
Deferred inflows of resources increased by $5.4 million in FY 2025 due to increases in the actuarial OPEB
and pension costs and deferred inflows from leases.
At the end of FY 2025,the District reports positive balances in all net position categories. This situation also
applied to the prior fiscal year.
Management’s Discussion and Analysis
7
Statement of Revenues, Expenses, and Changes in Net Position
(In Millions of Dollars)
2025 2024
Water Sales $ 121.5 $105.7
Wastewater Revenue 3.5 3.5
Connection and Other Fees 3.8 3.3
Non-operating Revenues 17.1 16.9
Total Revenues 145.9 129.4
Depreciation Expense 18.4 18.3
Other Operating Expenses 125.6 113.0
Non-operating Expenses 4.9 32.4
Total Expenses 148.9 163.7
Income (Loss) Before Capital
Contributions (3.0)(34.3)
Capital Contributions 14.2 7.5
Change in Net Position 11.2 (26.8)
Beginning Net Position, As Previously Stated 404.3 431.1
Prior Period Adjustment (0.2)0.0
Beginning Net Position, As Restated 404.1 404.3
Ending Net Position $ 415.3 $ 404.3
Water Sales increased by $15.8 million in FY 2025 due to increase in sales volume brought about by dryer
weather and the increase in water rates necessary to pass through increasing costs placed on the District.
Other Operating Expenses increased by $12.6 million in FY 2025, predominantly due to increase in the cost
of water caused by increased in water purchases and pass-through charges from the District’s water
suppliers.Non-operating expenses decreased by $27.5 million due to the decrease in miscellaneous
expenses.
Specific planning and environmental study costs associated with capital projects do not qualify as capital
miscellaneous (non-operating) expenses. For FY 2025,those expenses were $0.4 million.
Management’s Discussion and Analysis
8
Connection and Other Fees increased by $0.5 million in FY 2025 due to an increase in expansion-related
operating costs, which are funded by capacity fees.
Capital Contributions increased by $6.7 million in FY2025 due to more developer-built facilities.
Non-operating Revenues
Non-operating Revenues by Major Source
(In Millions of Dollars)
2025 2024
Taxes and Assessments $6.2 $5.8
Rents and Leases 2.1 2.1
Other Non-operating Revenue 8.8 9.0
Total Non-operating Revenues $17.1 $16.9
The District's total non-operating revenues increased by $0.2 million in FY 2025 due primarily to the
increase in taxes and assessments partially offset by the decrease in investment earnings.
Capital Assets and Debt Administration
The District's capital assets (net of accumulated depreciation) as of June 30, 2025, totaled $447.3 million.
Included in this amount is land, which is a non-depreciable asset.The District's net capital assets
increased by 2.4% in FY 2025.
Management’s Discussion and Analysis
9
Capital Assets
(In Millions of Dollars)
As indicated by the figures in the table above, most capital assets added during the current fiscal year are
related to the water systems.Additionally,most of the construction-in-progress cost is associated with
water systems.Additional information on the District's capital assets can be found in Note 4 of the Notes to
Financial Statements.
On June 30, 2025 the District had $89.6 million in outstanding debt (net of $5.4 million of maturities
occurring in FY 2026), which consisted of the following:
Lease Payable $ 0.6
Subscription-Based IT Payable 4.6
Revenue Bonds 84.4
Total Long-Term Debt $ 89.6
2025 2024
Land $14.5 $14.5
Construction in Progress 20.8 10.7
Potable Water System 560.5 547.4
Recycled Water System 123.7 119.2
Wastewater System 59.3 59.3
Field Equipment 5.6 6.6
Buildings 19.3 19.3
Transportation Equipment 6.1 5.0
Communication Equipment 2.5 2.5
Office Equipment 8.0 8.0
Right to Use Assets –Leases 0.7 0.7
Right to Use Assets -SBITA 5.8 5.6
Total Capital Assets 826.8 798.8
Less Accumulated
Depreciation (379.5)(361.9)
Net Capital Assets $447.3 $436.9
Management’s Discussion and Analysis
10
Additional information on the District's long-term debt can be found in Note 5 of the Notes to Financial
Statements.
Fiscal Year 2025-2026 Budget
Economic Factors
The San Diego region imports 67.0% of its potable supply;therefore, factors such as local rainfall and
weather conditions elsewhere in the western portion of the nation can affect the region. San Diego
received below-average rainfall of 4.68 inches in FY 2025.The 4.68 inches in 2025 is indicative of drought
conditions. 10-year average of 10.22 inches for San Diego rainfall reflects the long-term drought conditions
for our area.San Diego's rainfall average over 20 years is 9.0 inches,the 30-year average is 9.1 inches,and
the 40-year average is 9.8 inches.
Climate change poses a significant challenge for the District, with projections indicating longer droughts
and more intense, though less frequent, rainfall. These extended droughts necessitate increased
conservation efforts, leading to permanent reductions in water consumption. Consequently, water sales
volumes are affected by both weather conditions and ongoing conservation measures. Although the
impact is less pronounced than the measures implemented between 2008 and 2016, there has been a
lasting change in usage patterns. For the fiscal year 2026, budgeted water sales volumes, based on actual
data from 2021 to 2025, reflect a 0.5% decrease compared to the previous year's budgeted volume.
The District continues to respond to the challenges presented by growth, State mandates,and drought,by
creating new opportunities and new organizational efficiencies.Utilizing and refining its Strategic Business
Plan has captured the Board of Directors'vision and united its staff in a joint mission.The District has
achieved several significant accomplishments due to its successful adherence to its Strategic Business
Plan. The District is poised to continue successfully providing an affordable, safe, and reliable water supply
for the people of its service area, while also passing through the benefits of greater efficiencies and
economies of scale.
The District is currently at about 87.0%of its projected ultimate population, serving approximately 242,155
people. Long-term, this percentage should continue to increase as the District's service area develops and
grows. By 2055,the District is projected to serve approximately 271,500 people.Currently, the District
services the needs of this growing population by purchasing water from the San Diego County Water
Authority (CWA), which in turn purchases its water from the Metropolitan Water District (MWD) and the
Imperial Irrigation District (IID).
Otay takes delivery of water through several connections of large-diameter pipelines owned and operated
by CWA. The District receives treated water from CWA directly and from the Helix Water District via a CWA
Management’s Discussion and Analysis
11
contract. Additionally, the District has an emergency agreement with the City of San Diego to purchase
water in the case of a shutdown of the primary treated water source. The City of San Diego also has a
contract with the District to provide recycled water for landscape and irrigation usage. Through innovative
agreements like these, both parties can benefit by using another agency's excess capacity and diversifying
local supply, thereby increasing reliability.
Financial
The District is budgeted to deliver approximately 27,141.8 acre-feet of potable water to 52,070 potable
customer accounts during FY 2026.The FY 2026 budget was prepared with the continuing challenges of
potable water wholesale supplier rate increases, inflation, Proposition 218-related litigation defense, risk
management challenges, additional CIP projects, and legislative initiatives. Additional challenges are the
City of San Diego’s Pure Water program costs, and the County of San Diego’s rehabilitation of shared
facilities.
Inflation and increased regulation continue to impact the District’s financial position. The District’s
wholesale water supplier has approved of a 10.4% overall rate increase in FY 2026 due to the high cost of
supply programs, higher energy costs, and increasing operating costs. The FY 2026 material and
administrative expenses are budgeted to increase by $2.2 million, while the CIP projects incorporate a
4.0% annual inflation rate from FY 2027 to FY 2031.SDG&E rate increases are expected to increase energy
costs by 7.0%. Newly enacted regulatory requirements governing cross-connection are also putting
pressure on the District’s operational costs, which include adding two new full-time equivalents to the staff
in FY 2026.
The District partially mitigates inflationary impacts through increasing returns on investments and long-
term contracts with pricing structures that are fixed for the duration of the contract or include pricing
structures whereby annual price increases are for fixed dollar amounts that are less than CPI levels.
The District is addressing these challenges through careful financial planning, strategic prioritization of
capital projects, and ongoing efforts to enhance efficiency and regulatory compliance, ensuring reliable
service and long-term infrastructure sustainability.
District staff projects that the District will sell another 496 water meters over the next six years,translating to
2,396 equivalent dwelling units (EDUs).This growth is estimated to increase sales volumes by an average
of less than 1.0% per year over the next five years.While all these factors impact on the region's water
usage, people's water needs remain an underlying constant.
Certain claims, suits,and complaints arising in the ordinary course of operation have been filed or are
pending against the District.There is one case that could potentially have a significant effect on the
Management’s Discussion and Analysis
12
District’s financial position.In November 2015, a District ratepayer filed a class-action lawsuit against the
District (Coziahr v. Otay Water District, Superior Court of the State of California, County of San Diego),
contending that the District’s tiered residential water rates from mid-2014 through 2022 violated Article XIIID
of the California Constitution (“Proposition 218”). On March 4, 2021, the court issued a decision in favor of
the plaintiffs, the District appealed the trial court’s decision to the Court of Appeal, and in July of 2024, the
Court of Appeal issued its decision upholding much of the trial court’s decision, but remanding the issue of
the allocation of refunds back to the trial court for a new trial. The matter has been remanded to the trial
court for further proceedings as to the allocation of any refunds and for an award of attorneys’fees. See
footnote 10 for additional details.
Management is unaware of any other conditions that are likely to have a significant impact on the District's
current financial position, net position,or operating results.
Contacting the District's Financial Management
This financial report provides a general overview of the Otay Water District's finances for the Board of
Directors, customers, creditors, and other interested parties.Questions concerning any information
provided in the report or requests for additional information should be addressed to the District's Finance
Department, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978-2004.
STATEMENT OF NET POSITION
June 30, 2025
(with comparative totals as of June 30, 2024)
2025 2024
ASSETS
Current Assets:
Cash and Cash Equivalents (Notes 1 and 2)70,242,774$ 77,264,706$
Restricted Cash and Cash Equivalents (Notes 1 and 2)6,964,548 3,132,285
Investments (Notes 1 and 2)26,949,645 35,691,622
Restricted Investments (Notes 1 and 2)- 3,587,676
Accounts Receivable, Net 18,918,678 16,570,788
Accrued Interest Receivable 871,220 1,126,759
Taxes and Availability Charges Receivable, Net 331,528 287,785
Restricted Taxes and Availability Charges Receivable, Net - 4,884
Lease Receivable (Note 12)1,099,360 1,041,530
Inventories 1,956,892 2,073,038
Prepaid Items and Other Receivables 10,892,943 1,885,417
Total Current Assets 138,227,588 142,666,490
Non-current Assets:
Capital Assets (Note 4):
Land 14,479,573 14,479,573
Construction in Progress 20,767,290 10,712,815
Capital Assets, Net of Depreciation 412,021,645 411,694,772
Lease Receivable (Note 12)49,270,573 45,228,436
Total Non-current Assets 496,539,081 482,115,596
Total Assets 634,766,669 624,782,086
DEFERRED OUTFLOWS OF RESOURCES
Deferred Actuarial Pension Costs (Note 7)7,180,263 13,279,616
Deferred Actuarial OPEB Costs (Note 8)9,280,373 12,206,112
Total Deferred Outflows of Resources 16,460,636 25,485,728
Continued
The accompanying notes are an integral part of this statement.
STATEMENT OF NET POSITION
Continued
June 30, 2025
(with comparative totals as of June 30, 2024)
2025 2024
LIABILITIES
Current Liabilities:
Accounts Payable 17,517,895$ 16,842,486$
Accrued Payroll Liabilities 1,353,567 1,095,145
Other Accrued Liabilities 7,048,375 6,247,354
Customer and Developer Deposits 5,087,873 5,490,122
Accrued Interest 1,415,093 1,491,005
Current Maturities of Long-term Debt (Note 5)5,417,783 5,224,677
Total Current Liabilities 37,840,586 36,390,789
Non-current Liabilities:
Long-term Debt (Note 5):
Revenue Bonds 84,383,503 89,430,762
Lease Payable 651,289 671,758
Subscription-Based IT Payable 4,564,337 4,914,393
Net Pension Liability (Note 7)25,428,994 28,553,945
Net OPEB Liability (Note 8)2,324,974 11,202,346
Other Non-current Liabilities (Note 9)31,049,281 30,548,589
Total Non-current Liabilities 148,402,378 165,321,793
Total Liabilities 186,242,964 201,712,582
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows from Leases (Note 12)46,429,877 43,410,817
Deferred Actuarial Pension Costs (Note 7)37,848 -
Deferred Actuarial OPEB Costs (Note 8)3,248,114 870,274
Total Deferred Inflows of Resources 49,715,839 44,281,091
NET POSITION
Net Investment in Capital Assets 351,783,163 336,050,508
Restricted for Debt Service 3,826,616 3,636,078
Restricted for Capital Assets 3,137,932 3,083,883
Unrestricted (Note 6)56,520,791 61,503,672
Total Net Position 415,268,502$ 404,274,141$
The accompanying notes are an integral part of this statement.
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Year Ended June 30, 2025
(with comparative totals for the year ended June 30, 2024)
2025 2024
OPERATING REVENUES
Water Sales 121,483,491$ 105,736,843$
Wastewater Revenue 3,500,945 3,494,312
Connection and Other Fees 3,802,203 3,253,978
Total Operating Revenues 128,786,639 112,485,133
OPERATING EXPENSES
Cost of Water Sales 89,595,836 77,807,009
Wastewater 2,578,457 2,400,881
Administrative and General 33,449,222 32,717,662
Depreciation 18,417,174 18,276,492
Total Operating Expenses 144,040,689 131,202,044
Operating Income (Loss)(15,254,050)(18,716,911)
NON-OPERATING REVENUES (EXPENSES)
Investment Earnings 5,998,937 6,393,523
Taxes and Assessments 6,171,087 5,777,012
Availability Charges 717,191 741,705
Gain (Loss) on Disposal of Capital Assets (228,041)(725,060)
Rents and Leases 2,083,057 2,083,669
Miscellaneous Revenues 2,097,575 1,896,115
Donations (97,105)(103,200)
Interest Expense (4,054,293)(4,137,615)
Miscellaneous Expenses (394,535)(27,478,412)
Total Non-operating Revenues (Expenses)12,293,873 (15,552,263)
Income (Loss) Before Capital Contributions (2,960,177)(34,269,174)
CAPITAL CONTRIBUTIONS:
Capacity and Betterment Fees 4,489,090 7,221,234
Developer Contributions 9,698,540 247,052
Total Capital Contributions 14,187,630 7,468,286
Change in Net Position 11,227,453 (26,800,888)
Total Net Position, Beginning, as Previously Reported 404,274,141 431,075,029
Restatement (Note 13)(233,092)-
Total Net Position, Beginning, as Restated 404,041,049 431,075,029
Total Net Position, Ending 415,268,502$ 404,274,141$
The accompanying notes are an integral part of this statement.
STATEMENT OF CASH FLOWS
Year Ended June 30, 2025
(with comparative totals for the year ended June 30, 2024)
2025 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers 122,234,297$ 106,875,559$
Receipts from Connections and Other Fees 3,802,203 3,253,978
Receipts from Property Rents and Leases - 52,127
Other Receipts 1,309,747 1,128,578
Payments to Suppliers (102,806,270) (53,512,056)
Payments to Employees (30,267,716) (25,474,256)
Other Payments (491,640) (27,581,612)
Net Cash Provided By (Used For) Operating Activities (6,219,379) 4,742,318
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Receipts from Taxes and Assessments 6,848,824 6,530,074
Net Cash Provided By (Used For) Noncapital and Related
Financing Activities 6,848,824 6,530,074
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Proceeds from Capital Contributions 4,489,090 7,221,234
Proceeds from Sale of Capital Assets 88,011 -
Proceeds from Property Rents and Leases 1,682,954 1,630,303
Proceeds from Debt Related Taxes and Assessments 595 7,250
Principal Payments on Long-Term Debt (4,918,819) (5,452,872)
Interest Payments and Fees (3,648,236) (3,814,672)
Acquisition and Construction of Capital Assets (19,416,034) (6,690,118)
Net Cash Provided By (Used For) Capital and Related
Financing Activities (21,722,439) (7,098,875)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest Received on Investments 4,870,493 4,146,000
Proceeds from Sale and Maturities of Investments 36,045,141 40,339,069
Purchase of Investments (23,012,309) (15,093,366)
Net Cash Provided By (Used For) Investing Activities 17,903,325 29,391,703
Net Increase (Decrease) in Cash and Cash Equivalents (3,189,669) 33,565,220
Cash and Cash Equivalents - Beginning 80,396,991 46,831,771
Cash and Cash Equivalents - Ending 77,207,322$ 80,396,991$
Continued
The accompanying notes are an integral part of this statement.
STATEMENT OF CASH FLOWS
Continued
Year Ended June 30, 2025
(with comparative totals for the year ended June 30, 2024)
2025 2024
Reconciliation of Operating Income (Loss) to Net Cash Flows
Provided By (Used For) Operating Activities:
Operating Income (Loss)(15,254,050)$ (18,716,911)$
Adjustments to Reconcile Operating Income to
Net Cash Provided By (Used For) Operating Activities:
Depreciation 18,417,174 18,276,492
Receipts from Property Rents and Leases - 52,127
Miscellaneous Revenues 1,309,747 1,128,578
Miscellaneous Expenses and Donations (491,640) (27,581,612)
(Increase) Decrease in Accounts Receivable (2,347,890) (2,257,124)
(Increase) Decrease in Inventory 116,146 (19,645)
(Increase) Decrease in Prepaid Items and Other Receivables (9,007,526) (384,165)
(Increase) Decrease in Deferred Actuarial Pension Costs 6,099,353 2,671,458
(Increase) Decrease in Deferred Actuarial OPEB Costs 2,925,739 (5,526,881)
Increase (Decrease) in Accounts Payable 675,409 1,857,268
Increase (Decrease) in Accrued Payroll and Related Expenses 25,330 (7,063)
Increase (Decrease) in Other Accrued Liabilities 801,021 518,076
Increase (Decrease) in Customer and Developer Deposits (402,249) (98,472)
Increase (Decrease) in Other Non-current Liabilities 500,692 26,780,121
Increase (Decrease) in Net OPEB Liability (8,877,372) 6,151,085
Increase (Decrease) in Net Pension Liability (3,124,951) 2,602,850
Increase (Decrease) in Deferred Actuarial Pension Costs 37,848 -
Increase (Decrease) in Deferred Actuarial OPEB Costs 2,377,840 (703,864)
Net Cash Provided By (Used For) Operating Activities (6,219,379)$ 4,742,318$
Schedule of Cash and Cash Equivalents:
Current Assets:
Cash and Cash Equivalents 70,242,774$ 77,264,706$
Restricted Cash and Cash Equivalents 6,964,548 3,132,285
Total Cash and Cash Equivalents 77,207,322$ 80,396,991$
Supplemental Disclosures
Non-Cash Investing and Financing Activities Consisted of the Following:
Contributed Capital for Water and Sewer System 9,698,540$ 247,052$
Change in Fair Value of Investments (703,179) (1,299,473)
Amortization Related to Long-term Debt 305,859 377,676
The accompanying notes are an integral part of this statement.
Notes To Financial Statements
Year Ended June 30, 2025
1)REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A)Reporting Entity
The reporting entity Otay Water District (the “District”) includes the accounts of the District and the
Otay Water District Financing Authority (the “Financing Authority”).
The District is a public entity established in 1956 pursuant to the Municipal Water District Law of 1911
(Section 711 et. Seq. of the California Water Code) for the purpose of providing water and wastewater
services to the properties in the District.The District is governed by a Board of Directors consisting
of five directors elected by geographical divisions based on District population for a four-year
alternating term.
The District formed the Financing Authority on March 3, 2010 under the Joint Exercise of Powers Act,
constituting Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of
the California Government Code. The Financing Authority was formed to assist the District in the
financing of public capital improvements.
The financial statements present the District and its component unit. The District is the primary
government unit.Component units are those entities which are financially accountable to the
primary government, either because the District appoints a voting majority of the component unit’s
board, or because the component units will provide a financial benefit or impose a financial burden
on the District. The District has accounted for the Financing Authority as a “blended” component
unit. Despite being legally separate, the Financing Authority is so intertwined with the District that it
is in substance, part of the District’s operations. Accordingly, the balances and transactions of this
component unit are reported within the funds of the District. Separate financial statements are not
issued for the Financing Authority.
B)Measurement Focus, Basis of Accounting and Financial Statement Presentation
Measurement focus is a term used to describe “which” transactions are recorded within the various
financial statements. Basis of accounting refers to “when” transactions are recorded regardless of
the measurement focus applied. The accompanying financial statements are reported using the
economic resources measurement focus, and the accrual basis of accounting. Under the economic
measurement focus all assets and liabilities (whether current or noncurrent) associated with these
activities are included in the Statement of Net Position.
Notes To Financial Statements
Year Ended June 30, 2025
1)REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –Continued
B)Measurement Focus, Basis of Accounting and Financial Statement Presentation -Continued
The Statement of Revenues, Expenses and Changes in Net Position present increases (revenues)
and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the
timing of related cash flows.
The District reports its activities as an enterprise fund, which is used to account for operations that are
financed and operated in a manner similar to a private business enterprise, where the intent of the
District is that the costs (including depreciation) of providing goods or services to the general public
on a continuing basis be financed or recovered primarily through user charges.
The basic financial statements of the Otay Water District have been prepared in conformity with
accounting principles generally accepted in the United States of America. The Governmental
Accounting Standards Board (GASB) is the accepted standard setting body for governmental
accounting financial reporting purposes.
Net position of the District is classified into three components: (1) net investment in capital assets,
(2) restricted net position, and (3) unrestricted net position. These classifications are defined as
follows:
Net Investment in Capital Assets
This component of net position consists of capital assets, net of accumulated depreciation and
reduced by the outstanding balances of notes or borrowing that are attributable to the acquisition of
the assets, construction, or improvement of those assets. If there are significant unspent related debt
proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in
the calculation of the net investment in capital assets.
Restricted Net Position
This component of net position consists of net position with constrained use through external
constraints imposed by creditors (such as through debt covenants), grantors, contributions, or laws or
regulations of other governments or constraints imposed by law through constitutional provisions or
enabling legislation.
Notes To Financial Statements
Year Ended June 30, 2025
1)REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -Continued
B)Measurement Focus, Basis of Accounting and Financial Statement Presentation -Continued
Unrestricted Net Position
This component of net position consists of net position that do not meet the definition of “net investment
in capital assets” or “restricted net position”.
The District distinguishes operating revenues and expenses from those revenues and expenses that
are non-operating. Operating revenues are those revenues that are generated by water sales and
wastewater services while operating expenses pertain directly to the furnishing of those services. Non-
operating revenues and expenses are those revenues and expenses generated that are not associated
with the normal business of supplying water and wastewater treatment services.
The District recognizes revenues from water sales, wastewater revenues, and meter fees as they are
earned. Taxes and assessments are recognized as revenues based upon amounts reported to the
District by the County of San Diego, net of allowance for delinquencies of $36,837 at June 30, 2025.
Additionally, capacity fee contributions received which are related to specific operating expenses are
offset against those expenses and included in Cost of Water Sales in the Statement of Revenues and
Expenses and Changes in Net Position.
Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted
bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as
restricted -net position and unrestricted -net position, a flow assumption must be made about the
order in which the resources are considered to be applied.It is the District’s practice to consider
restricted -net position to have been depleted before unrestricted -net position is applied, however it
is at the Board’s discretion.
Notes To Financial Statements
Year Ended June 30, 2025
1)REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -Continued
C)Implementation of New and Pending Accounting Pronouncements
During the year ended June 30, 2025, the District adopted new accounting guidance by
implementing the provisions of Governmental Accounting Standards Board (GASB) Statement No.
101, Compensated Absences, which seeks to better meet the information needs of financial
statement users by updating the recognition and measurement guidance for compensated
absences. See Note 13.
GASB has issued the following statements which may impact the District’s financial reporting
requirements in the future:
i.GASB Statement 103 -“Financial Reporting Model Improvements”, effective for reporting
periods beginning after June 15, 2025.
ii.GASB Statement 104 –“Disclosure of Certain Capital Assets”, effective for reporting periods
beginning after June 15, 2025.
D)Deferred Outflows/Deferred Inflows
In addition to assets, the Statement of Net 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 assets that applies to a future period(s) and so will not be
recognized as an outflow of resources (expense/expenditure) until then. The District has two items
that qualify for reporting in this category: deferred actuarial pension costs and deferred actuarial OPEB
costs. These are items that are deferred and recognized as an outflow of resources in the period the
amounts become available.
In addition to liabilities, the Statement of Net 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 assets that applies to a future period(s) and will not be recognized as
an inflow of resources (revenue) until that time. The District has three items that qualify for reporting in
this category. Accordingly, the items (deferred actuarial pension costs, deferred actuarial OPEB costs
and deferred lease revenue)are deferred and recognized as an inflow of resources in the period that
the amounts become available.
Notes To Financial Statements
Year Ended June 30, 2025
1)REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –Continued
E)Statement of Cash Flows
For purposes of the Statement of Cash Flows, the District considers all highly liquid investments
(including restricted assets) with a maturity period, at purchase, of three months or less to be cash
equivalents.
F)Investments
Investments are stated at their fair value, which represents the quoted or stated market value.
Investments that are not traded on a market, such as investments in external pools, are valued based
on the stated fair value as presented by the external pool.
G)Inventory and Prepaid Items
Inventory consists primarily of materials used in the construction and maintenance of the water and
wastewater system and is valued at weighted average cost. Both inventory and prepaid items use the
consumption method whereby they are reported as an asset and expensed as they are consumed.
In Fiscal Year 2025, the District made an advance payment to the San Diego County Water Authority
(SDCWA) covering 12 months of fixed charges for the calendar year 2025. The total gross amount of
the charges was $18,727,944. In recognition of the early payment, the District received a 4% discount
totaling $749,118, resulting in a net payment of $17,978,826. As of June 30, 2025, the remaining balance
related to this advance payment was $8,989,409, which is included in prepaid expenses. This balance
represents a portion of the prepaid charges applicable to the second half of the calendar year 2025.
H)Capital Assets
Capital assets are recorded at cost, where historical records are available, and at an estimated
historical cost where no historical records exist.
Right-to-use assets for leases and subscription-based information technology arrangements are
recorded at net present value at the time of inception.Infrastructure assets in excess of $20,000 and
other capital assets in excess of $10,000 are capitalized if they have an expected useful life of two years
or more.
Notes To Financial Statements
Year Ended June 30, 2025
1)REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –Continued
H)Capital Assets –Continued
The District will also capitalize individual purchases under the capitalization threshold if they are part
of a new capital program. The cost of purchased and self-constructed additions to utility plant and
major replacements of property are capitalized.Costs include materials, direct labor, transportation,
and such indirect items as engineering, supervision, employee fringe benefits and overhead. Repairs,
maintenance, and minor replacements of property are charged to expense. Donated assets are
capitalized at their acquisition value on the date contributed.
Depreciation is calculated using the straight-line method over the following estimated useful lives:
Building and Improvements 5-50 Years
Water System (Pot & Rec)7-75 Years
Field Equipment 3-25 Years
Fleet Equipment 3-10 Years
Communication Equipment 5-10 Years
Office Equipment 3-10 Years
Sewer System 7-75 Years
Right to Use Asset/SBITA Based on the terms of underlying
lease/subscription contracts, whichever is
shorter.
I)Other Non-Current Liabilities
For compensated absences, the District’s policy is to record vested and accumulated vacation and
sick leave as an expense and liability as benefits accrue to employees.The current portion is reflected
in accrued payroll liabilities and remainder in other non-current liabilities on the Statement of Net
Position. The liability is calculated using current pay rates and includes employer-paid fringe benefits.
J)Classification of Liabilities
Certain current liabilities have been classified as current liabilities payable from restricted assets as
they will be funded from restricted assets.
Notes To Financial Statements
Year Ended June 30, 2025
1)REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -Continued
K)Allowance for Doubtful Accounts
The District charges doubtful accounts arising from water sales receivable to bad debt expense when
it is probable that the accounts will be uncollectible. Uncollectible accounts are determined by the
allowance method based upon prior experience and management’s assessment of the collectability
of existing specific accounts. The allowance for doubtful accounts was $232,454 for 2025.
L)Property Taxes
Tax levies are limited to 1% of full market value (at time of purchase) which results in a tax rate of
$1.00 per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for voter-
approved indebtedness are excluded from this limitation.
The County of San Diego (the “County”) bills and collects property taxes on behalf of the District. The
County’s tax calendar year is July 1 to June 30. Property taxes attach as a lien on property on January
1. Taxes are levied on July 1 and are payable in two equal installments on November 1 and February
1, and become delinquent after December 10 and April 10, respectively.
M)Pensions
For purposes of measuring the net pension liability,deferred outflows of resources, and deferred
inflows of resources related to pensions, and pension expense, information about the fiduciary net
position of the Plan and additions to/deductions from the Plans’ fiduciary net position have been
determined on the same basis.For this purpose, benefit payments (including refunds of employee
contributions) are recognized when currently due and payable in accordance with the benefit terms.
Investments are reported at fair value.
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
Notes To Financial Statements
Year Ended June 30, 2025
1)REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -Continued
N)Other Post-Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability(asset), deferred outflows/inflows of resources related
to OPEB, and OPEB expense, information about the fiduciary net position of the District’s plan (OPEB
Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined
on the same basis. For this purpose, benefit payments are recognized when currently due and payable
in accordance with the benefit terms. Investments are reported at fair value.
Generally accepted accounting principles require that the reported results must pertain to liability and
asset information within certain defined timeframes. For this report, the following timeframes are used:
Valuation Date June 30, 2024
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
O)Leases
The District is a lessor and lessee for leases as detailed in Footnotes 5 and 12. The District recognizes
a lease receivable, a deferred inflow of resources, right to use capital assets, and a lease payable in
the financial statements.
At the commencement of the lease, the District initially measures the lease receivable at the present
value of payments expected to be received and paid during the lease term. Subsequently, the lease
receivable is reduced by the principal portion of lease payments received and the lease payable is
reduced by the principal portion of lease payments made. The deferred inflow of resources is initially
measured as the initial amount of the lease receivable, adjusted for lease payments received at or
before the lease commencement date.Subsequently, the deferred inflows of resources are
recognized as revenue over the life of the lease term.
Key estimates and judgments include how the district determines the discount rate it uses to
discount the expected lease receipts and payments to present value, lease term and lease receipts.
The District used the weighted average cost of capital rate as the discount rate for leases.
The lease term includes the non-cancellable period of the lease.
The District monitors changes in circumstances that would require a remeasurement of its leases
and will remeasure the lease receivable and deferred inflows of resources if certain changes occur
that are expected to significantly affect the amount of the lease receivable.
Notes To Financial Statements
Year Ended June 30, 2025
1)REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -Continued
P)Subscription Based Information Technology Arrangements (SBITAs)
The District is a participant in subscription-based IT arrangements as detailed in Footnote 5.The
District recognizes a subscription-based IT payable and the right to use IT assets in the financial
statements.At the commencement of the arrangement, the District initially measures the payable at
the present value of payments expected to be paid during the arrangement term.Subsequently, the
payable is reduced by the principal portion of payments made. The right to use assets are initially
measured at the initial amount of the subscription-based IT payable. Subsequently, the right to use
assets are amortized over the life of the arrangement term.
Q)Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in
the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of
resources, and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
R)Prior Year Comparative Information
Selected information regarding the prior year has been included in the accompanying financial
statements. This information has been included for comparison purposes only and does not represent
a complete presentation in accordance with generally accepted accounting principles. Accordingly,
such information should be read in conjunction with the government’s prior year financial statements,
from which this selected financial data was derived. In addition, certain minor reclassifications of the
prior year data have been made to enhance their comparability to the current year.
2)CASH AND INVESTMENTS
The primary goals of the District’s Investment Policy are to assure compliance with all Federal, State, and
Local laws governing the investment of funds under the control of the organization, protect the principal of
investments entrusted, remain sufficiently liquid to enable the District to meet all operating requirements
and generate income at a market rate of return under the parameters of such policies.
Notes To Financial Statements
Year Ended June 30, 2025
2)CASH AND INVESTMENTS -Continued
Cash and Investments are classified in the accompanying financial statements as follows:
Cash and Investments consist of the following:
Cash and investments are restricted for the cost of the following District projects and debt service:
Investments Authorized by the California Government Code and the District’s Investment Policy
The table on the following page identifies the investment types that are authorized for the District by the
California Government Code (or the District’s Investment Policy, where more restrictive). The table also
identifies certain provisions of the California Government Code (or the District’s Investment Policy, where
more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does
not address investments of debt proceeds held by bond trustees that are governed by the provisions of
debt agreements of the District, rather than the general provisions of the California Government Code or
the District’s Investment Policy.
Statement of Net Position:
Cash and Cash Equivalents 70,242,774$
Restricted Cash and Cash Equivalents 6,964,548
Investments 26,949,645
Total Cash and Investments 104,156,967$
Cash on Hand 3,100$
Deposits with Financial Institutions 1,358,505
Investments 102,795,362
Total Cash and Investments 104,156,967$
Cash and Cash Equivalents:
New Water Supply 3,137,931$
Debt Service:
Water Revenue Bond Series 2010A 1,055,200
Water Revenue Bond Series 2010B 2,771,417
6,964,548$
Notes To Financial Statements
Year Ended June 30, 2025
2)CASH AND INVESTMENTS -Continued
Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity Of Portfolio(1)In One Issuer
U.S. Treasury Obligations 5 years 100%100%
U.S. Government Sponsored Entities 5 years 100%100%
Certificates of Deposit 5 years 15%100%
Corporate Medium-Term Notes 5 years 10%2%
Commercial Paper 270 days 10%2%
Money Market Mutual Funds N/A 10%100%
County Pooled Investment Funds N/A 100%N/A
Local Agency Investment Fund (LAIF)N/A $75 Million N/A
(1)Excluding amounts held by bond trustee that are not subject to California Government Code
restrictions.
Investments Authorized by Debt Agreements
Investments of debt proceeds held by the bond trustee are governed by provisions of the debt agreements,
rather than the general provisions of the California Government Code or the District’s Investment Policy.
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally,the longer the maturity of an investment, the greater the sensitivity of its fair value
to changes in market interest rates.
One of the ways that the District manages its exposure to interest rate risk is by purchasing investments
with shorter durations than the maximum allowable under the District’s Investment Policy and by timing
cash flows from maturities,so that a portion of the portfolio is maturing or coming close to maturity evenly
over time,as necessary,to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the District’s investments to market interest rate
fluctuations are provided by the following tables that show the distribution of the District’s investments by
maturity as of June 30, 2025.
Notes To Financial Statements
Year Ended June 30, 2025
2)CASH AND INVESTMENTS –Continued
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of
the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating
organization. Presented below is the minimum rating required by (where applicable) the California
Government Code or the District’s Investment Policy, or debt agreements, and the Moody’s ratings as of
June 30, 2025.
Concentration of Credit Risk
The investment policy of the District contains various limitations on the amounts that can be invested in
any one type or group of investments and in any issuer, beyond that stipulated by the California
Government Code, Sections 53600 through 53692. All the investments for fiscal year 2025 are within the
limitations of the District’s investment policy.
12 Months 13 to 36 More than
Investment Type Total Or Less Months 36 Months
U.S. Government Sponsored Entities $ 24,243,998 12,737,878$ 11,506,120$ -$
U.S. Treasury Obligations 15,467,575 13,475,115 1,992,460 -
Local Agency Investment Fund (LAIF) 62,459,916 62,459,916 - -
San Diego County Pool 114,000 114,000 - -
Money Market Funds 509,873 509,873 - -
Total $ 102,795,362 $ 89,296,782 $ 13,498,580 -$
Remaining Maturity (in Months)
Legal
Minimum Not
Investment Type Total Rating AAA Aa1 Rated
U.S. Government Sponsored Entities $ 24,243,998 A -$ 24,243,998$ -$
U.S. Treasury Obligations 15,467,575 N/A - 15,467,575 -
Local Agency Investment Fund (LAIF) 62,459,916 N/A - - 62,459,916
San Diego County Pool 114,000 N/A - - 114,000
Money Market Funds 509,873 N/A 509,873 - -
Total $ 102,795,362 $ 509,873 $ 39,711,573 $ 62,573,916
Rating as of Year End
Notes To Financial Statements
Year Ended June 30, 2025
2)CASH AND INVESTMENTS –Continued
The investments listed below disclose the concentration of risk within the District’s investment portfolio.
Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment
pools) that represent 5% or more of total District investments as of June 30, 2025:
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution,
the District will not be able to recover its deposits or will not be able to recover collateral securities that are
in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event
of the failure of the counterparty (e.g., broker-dealer) to a transaction, the District will not be able to recover
the value of its investment or collateral securities that are in the possession of another party. The California
Government Code and the District’s Investment Policy do not contain legal or policy requirements that
would limit the exposure to custodial credit risk for deposits or investments, other than the following
provision for deposits: The California Government Code requires that a financial institution secure deposits
made by state or local government units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The fair value of the
pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the
District. California law also allows financial institutions to secure deposits by pledging first trust deed
mortgage notes having a value of 150% of the secured public deposits.As of June 30, 2025, $2,649,374 of
the District’s deposits with financial institutions in excess of federal depository insurance limits, were held
in collateralized accounts.
Local Agency Investment Fund (LAIF)
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by
California Government Code Section 16429 under the oversight of the Treasurer of the State of California.
Reported
Issuer Investment Type Amount
Federal Home Loan Bank U.S. Government Sponsored Entities 8,484,600$
Federal Farm Credit Bank U.S. Government Sponsored Entities 10,024,380
Notes To Financial Statements
Year Ended June 30, 2025
2)CASH AND INVESTMENTS –Continued
The fair value of the District’s investment in this pool is reported in the accompanying financial statements
at amounts based upon District’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio
(in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the
accounting records maintained by LAIF, which are recorded on an amortized cost basis.
The LAIF is a special fund of the California State Treasury through which local governments may pool
investments. The District may invest up to $75,000,000 in the fund. Investments in LAIF are highly liquid,
as deposits can be converted to cash within twenty-four hours without loss of interest. Investments with
LAIF are secured by the full faith and credit of the State of California. The annualized yield of LAIF for the
quarter ended June 30, 2025 was 4.27%. The estimated amortized cost and fair value of the LAIF pool at
June 30, 2025 was $62,459,916.
San Diego County Pooled Fund
The San Diego County Pooled Investment Fund (SDCPIF) is a pooled investment fund program governed
by the County of San Diego Board of Supervisors and administered by the County of San Diego Treasurer
and Tax Collector. Investments in SDCPIF are highly liquid as deposits and withdrawals can be made at
any time without penalty, determined on an amortized cash basis, the same as the fair value of the District’s
position in the pool.The estimated amortized cost and fair value of the County pool at June 30, 2025 was
$114,000.
The County of San Diego’s bank deposits are either federally insured or collateralized in accordance with
the California Government Code. Pool detail is included in the County of San Diego Annual Comprehensive
Financial Report (“Annual Report”). Copies of the Annual Report may be obtained from the County of San
Diego Auditor-Controller’s Office –1600 Pacific Coast Highway, San Diego California 92101.
Notes To Financial Statements
Year Ended June 30, 2025
3)FAIR VALUE MEASUREMENTS
Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurements and
Application, provides the framework for measuring fair value. The framework provides a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value with Level 1 given
the highest priority and Level 3 the lowest priority. The three levels of the fair value hierarchy are as
follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
organization has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly. Level 2 inputs include the following:
a.Quoted prices for similar assets or liabilities in active markets.
b.Quoted prices for identical or similar assets or liabilities in markets that are not active.
c.Inputs other than quoted prices that are observable for the asset or liability (for example, interest
rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds,
loss severities, credit risks, and default rates).
d.Inputs that are derived principally from or corroborated by observable market data by correlation
or other means (market-corroborated inputs).
Level 3 inputs are unobservable inputs for the asset or liability.
Notes To Financial Statements
Year Ended June 30, 2025
3)FAIR VALUE MEASUREMENTS -Continued
Fair value of assets measured on a recurring basis at June 30, 2025 are as follows:
Investments classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique.
Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted
prices. Investments not measured at fair value do not fall under the fair value hierarchy as there is no
active market for the investments.
Quoted Prices in Significant Other
Active Markets Observable Inputs Not Measured
Total (Level 1)(Level 2)at Fair Value
U.S. Government Sponsored Entities 24,243,998$ -$ 24,243,998$ -$
U.S. Treasury Obligations 15,467,575 15,467,575 - -
Local Agency Investment Fund (LAIF) 62,459,916 - - 62,459,916
San Diego County Pool 114,000 - - 114,000
Money Market Funds 509,873 - - 509,873
Total $102,795,362 $ 15,467,575 $ 24,243,998 $ 63,083,789
Notes To Financial Statements
Year Ended June 30, 2025
4)CAPITAL ASSETS
The following is a summary of changes in Capital Assets for the year ended June 30, 2025:
Depreciation expense for the year ended June 30, 2025 was $18,417,174.
Beginning Ending
Balance Additions Deletions Balance
Capital Assets, Not Depreciated:
Land $ 14,479,573 $ - $ - $ 14,479,573
Construction in Progress 10,712,815 19,416,035 (9,361,560) 20,767,290
Total Capital Assets, Not Depreciated 25,192,388 19,416,035 (9,361,560) 35,246,863
Capital Assets, Being Depreciated:
Infrastructure 725,898,078 18,277,862 (644,404) 743,531,536
Field Equipment 6,641,125 180,301 (1,200,573) 5,620,853
Buildings 19,259,406 46,938 (8,126) 19,298,218
Transportation Equipment 4,971,706 1,424,280 (346,506) 6,049,480
Communication Equipment 2,505,474 - - 2,505,474
Office Equipment 7,977,045 - - 7,977,045
Right to Use Assets - Antenna Site 738,501 - - 738,501
Right to Use Assets - SBITA 5,622,806 208,122 (16,611) 5,814,317
Total Capital Assets, Being Depreciated 773,614,141 20,137,503 (2,216,220) 791,535,424
Less Accumulated Depreciation:
Infrastructure 332,211,316 16,517,546 (333,493) 348,395,369
Field Equipment 5,152,864 224,482 (123,171) 5,254,175
Buildings 11,109,324 474,726 (2,983) 11,581,067
Transportation Equipment 3,184,435 480,210 (346,506) 3,318,139
Communication Equipment 2,259,444 84,527 - 2,343,971
Office Equipment 7,564,951 133,025 - 7,697,976
Right to Use Assets - Antenna Site 105,500 35,167 - 140,667
Right to Use Assets - SBITA 331,535 467,491 (16,611) 782,415
Total Accumulated Depreciation 361,919,369 18,417,174 (822,764) 379,513,779
Total Capital Assets, Being Depreciated, Net 411,694,772 1,720,329 (1,393,456) 412,021,645
Total Capital Assets, Net $ 436,887,160 $ 21,136,364 $ (10,755,016) $ 447,268,508
Notes To Financial Statements
Year Ended June 30, 2025
5) LONG-TERM DEBT
Long-term liabilities for the year ended June 30, 2025 are as follows:
Water Revenue Bonds
In April 2010, Water Revenue Bonds with a face value of $50,195,000 were sold by the Otay Water District
Financing Authority to provide funds for the construction of water storage and transmission facilities. The
bond issue consisted of two series; Water Revenue Bonds, Series 2010A (Non-AMT Tax Exempt) with a
face value of $13,840,000 plus a $1,078,824 original issue premium, and Water Revenue Bonds,Series
2010B (Taxable Build America Bonds) with a face value of $36,355,000. The Series 2010A bonds are due
in annual installments of $785,000 to $1,295,000 from September 1, 2012 through September 1, 2024;
bearing interest at 2% to 5.25%. The Series 2010B bonds are due in annual installments of $1,365,000 to
$3,505,000 from September 1, 2025 through September 1, 2040; bearing interest at 6.377% to 6.577%.
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Revenue Bonds:
2010 Water Revenue Bonds Series A 1,295,000$ -$ (1,295,000)$ -$ -$
2010 Water Revenue Bonds Series B 36,355,000 - - 36,355,000 1,365,000
2016 Water Revenue Refunding Bonds 24,020,000 - (1,420,000) 22,600,000 1,495,000
2018 Water Revenue Bonds 25,405,000 - (1,730,000) 23,675,000 1,820,000
2019 Wastewater Revenue Bonds 2,910,000 - (75,000) 2,835,000 80,000
2010 Series A Unamortized Premium 18,600 - (18,600) - -
2016 Bonds Unamortized Premium 2,172,619 - (178,572) 1,994,047 178,571
2018 Bonds Unamortized Premium 2,092,006 - (109,148) 1,982,858 109,148
2019 Bonds Unamortized Discount (11,605) - 461 (11,144) (461)
Net Revenue Bonds 94,256,620 - (4,825,859) 89,430,761 5,047,258
Lease Payable 690,539 - (18,781) 671,758 20,469
Subscription-Based IT Payable 5,294,431 - (380,038) 4,914,393 350,056
Total Long-Term Liabilities 100,241,590$ -$ (5,224,678)$ 95,016,912$ 5,417,783$
Notes To Financial Statements
Year Ended June 30, 2025
5)LONG-TERM DEBT –Continued
Water Revenue Bonds –Continued
Interest on both Series is payable on September 1, 2010 and semiannually thereafter on March 1st and
September 1st of each year until maturity or earlier redemption. The installment payments are to be made
from taxes and net revenues of the Water System as described in the installment purchase agreement, on
parity with the payments required to be made by the District for the 2010, 2016 Water Revenue Refunding
Bonds and 2018 Water Revenue Bonds described below.
The 2010 Water Revenue Bonds contains various covenants and restrictions, principally that the District fix,
prescribe, revise and collect rates, fees and charges for the Water System which will at least be sufficient
to yield, during each fiscal year, taxes and net revenues equal to one hundred twenty-five percent (125%)
of the debt service for such fiscal year. The District was in compliance with these rate covenants for the
fiscal year ended June 30, 2025.
In May 2016, Water Revenue Refunding Bonds were issued to defease the 2007 Revenue Certificates of
Participation. The bonds are due in annual installments of $1,200,000 to $2,235,000 from September 1,
2016 through September 1, 2036; bearing interest of 2%to 5%. The bonds were issued with a face value
of $33,385,000 plus $3,630,950 original issue premium.
The original issue premium is being amortized over the 20-year life of the Series 2016 bonds. Amortization
for the year ending June 30, 2025 was $178,572. The amortization is included in interest expense. The
unamortized premium at June 30, 2025 is $1,994,047.
In November 2018, Water Revenue Bonds were issued by the Otay Water District Financing Authority to
provide funds for construction of water storage, treatment and transmission facilities and to refinance the
1996 Certificates of Participation. The bonds are due in annual installments of $775,000 to $1,915,000 from
September 1, 2019 through September 1, 2043; bearing interest of 3% to 5%. The bonds were issued with
a face value of $32,435,000 plus $2,710,512 original issue premium.
The original issue premium is being amortized over the 25-year life of the Series 2018 bonds. Amortization
for the year ending June 30, 2025 was $109,148. The amortization expense is included in interest expense.
The unamortized premium at June 30, 2025 is $1,982,858.
Notes To Financial Statements
Year Ended June 30, 2025
5)LONG-TERM DEBT –Continued
Water Revenue Bonds –Continued
The total amount outstanding at June 30, 2025 and aggregate maturities of the revenue bonds for the fiscal
years subsequent to June 30, 2025, are as follows:
For the Year
Ended June 30,Principal Interest
2026 1,365,000$ 2,328,345$
2027 1,450,000 2,238,589
2028 1,545,000 2,143,093
2029 1,640,000 2,041,540
2030 1,745,000 1,933,609
2031-2035 10,570,000 7,756,703
2036-2040 14,535,000 3,664,211
2041 3,505,000 115,262
36,355,000$ 22,221,352$
2010 Water Revenue Bond
Series B
For the Year
Ended June 30,Principal Interest Principal Interest
2026 1,495,000$ 733,706$ 1,820,000$ 972,538$
2027 1,570,000 657,081 1,915,000 879,163
2028 1,645,000 584,931 1,030,000 805,538
2029 1,715,000 517,731 1,080,000 752,788
2030 1,785,000 447,731 1,135,000 697,413
2031-2035 9,985,000 1,319,884 6,485,000 2,663,513
2036-2040 4,405,000 130,413 6,360,000 1,346,744
2041-2044 - - 3,850,000 274,400
22,600,000$ 4,391,477$ 23,675,000$ 8,392,097$
Refunding Bonds Revenue Bonds
2016 Water Revenue 2018 Water
Notes To Financial Statements
Year Ended June 30, 2025
5)LONG-TERM DEBT –Continued
Wastewater Revenue Bonds
In December 2019, Wastewater Revenue Bonds were issued by the Otay Water District Financing Authority
to provide funds to pay for certain capital improvements to the District’s wastewater system. The bonds
are due in annual installments of $65,000 to $160,000 from September 1, 2021 through September 1, 2049;
bearing interest of 2% to 3.125%. The bonds were issued with a face value of $3,120,000 less a $13,680
original issue discount.
The original issue discount is being amortized over the 30-year life of the Series 2019 bonds. Amortization
for the year ending June 30, 2025 was $461. The amortization expense is included in interest expense. The
unamortized discount at June 30,2025 is $11,144.
The 2019 Wastewater Revenue Bonds contains various covenants and restrictions, principally that the
District fix, prescribe, revise and collect rates, fees and charges for the Wastewater System which will at
least be sufficient to yield, during each fiscal year, net revenues equal to one hundred fifteen percent
(115%) of the debt service for such fiscal year. The District was in compliance with these rate covenants
for the fiscal year ended June 30, 2025.
Future debt service requirements for the bonds are as follows:
For the Year
Ended June 30,Principal Interest
2026 80,000$ 83,091$
2027 80,000 80,691
2028 85,000 78,216
2029 85,000 75,666
2030 90,000 73,041
2031-2035 480,000 326,394
2036-2040 550,000 255,095
2041-2045 635,000 167,191
2046-2050 750,000 60,156
2,835,000$ 1,199,541$
2019 Wastewater
Revenue Bonds
Notes To Financial Statements
Year Ended June 30, 2025
5)LONG-TERM DEBT –Continued
Revenues Pledged
The District has pledged a portion of future water sales revenues to repay its Water Revenue and Water
Revenue Refunding Bonds. The total principal and interest remaining on the water revenue bonds and
water revenue refunding bonds is $117,634,926 payable through fiscal year 2044. For June 30, 2025,
principal and interest paid by the water sales revenues were $4,445,000 and $4,273,731 respectively.
The District has pledged a portion of future wastewater sales revenues to repay its Wastewater Revenue
Bonds. The total principal and interest remaining on the wastewater revenue bonds is $4,034,541 payable
through fiscal year 2050. For June 30, 2025, principal and interest paid by the wastewater sales revenues
were $75,000 and $85,416, respectively.
Lease Payable
Antenna Site Lease
The District has one antenna site sublease payable with a lease term of forty-eight years. The District is
required to make annual fixed payments ranging from $15,100 to $64,303, with a discount rate of 1.39%.
The lease has three extension options of five years each. As of June 30, 2025, the value of the lease
payable is $671,758. Future lease payable requirements are as follows:
For the Year
Ended June 30,Principal Interest
2026 20,469$ 9,207$
2027 22,253 8,911
2028 24,134 8,590
2029 26,114 8,242
2030 28,206 7,866
2031-2035 176,710 32,582
2036-2040 249,214 17,930
2041-2042 124,658 1,834
671,758$ 95,162$
Notes To Financial Statements
Year Ended June 30, 2025
5)LONG-TERM DEBT –Continued
Subscription-Based Information Technology Arrangements
Fracta AI-Based Condition Assessment Software
On July 20, 2022, the District entered into a 36-month subscription for the use of Fracta AI-Based Condition
Assessment Software.An initial subscription liability was recorded in the amount of $35,494. As of June
30, 2025, the value of the subscription liability is $0.The value of the right to use asset as of June 30, 2025
is $35,494 with accumulated amortization of $35,494 is included in note 4 with right to use assets.
Samsara Networks, Inc.
On July 5, 2022, the District entered into a 36-month subscription for the use of GPS fleet management
system software.An initial subscription liability was recorded in the amount of $70,934. As of June 30,
2025, the value of the subscription liability is $0. The value of the right to use asset as of June 30, 2025 of
$70,934 with accumulated amortization of $70,934 is included in note 4 with right to use assets.
Tyler Software SAAS
On January 1, 2024, the District entered into a 15-year subscription for the use of SaaS Services to access
Tyler Software. An initial subscription liability was recorded in the amount of $5,270,119. As of June 30,
2025, the value of the subscription liability is $4,834,692. The District is required to make annual variable
payments ranging from $168,779 to $467,260. The subscription has an interest rate of 1.39%. The value
of the right to use asset as of June 30, 2025 is $5,270,119 with accumulated amortization of $527,012 is
included in note 4 with right to use assets.
Planet Bids
On December 1, 2023, the District entered into a 30-month subscription for the use of Planet Bids software.
An initial subscription liability was recorded in the amount of $61,870. As of June 30, 2025, the value of
the subscription liability is $23,778. The District is required to make annual variable payments ranging
from $15,331 to $24,109. The subscription has an interest rate of 1.39%. The value of the right to use asset
as of June 30, 2025 is $61,870 with accumulated amortization of $32,997 is included in note 4 with right to
use assets.
Notes To Financial Statements
Year Ended June 30, 2025
5)LONG-TERM DEBT –Continued
Subscription-Based Information Technology Arrangements –Continued
ESRI
On June 26, 2023, the District entered into a 36-month subscription for the use of ESRI software. An initial
subscription liability was recorded in the amount of $167,779. As of June 30, 2025, the value of the
subscription liability is $55,923. The District is required to make annual fixed payments of $56,700. The
subscription has an interest rate of 1.39%. The value of the right to use asset as of June 30, 2025 is
$167,779 with accumulated amortization of $111,852 is included in note 4 with right to use assets.
Future SBITA payable requirements are as follows:
6) NET POSITION
Designations of Net Position
In addition to the restricted net position, a portion of unrestricted net position has been designated by the
Board of Directors for the following purposes as of June 30, 2025:
For the Year
Ended June 30,Principal Interest
2026 350,056$ 68,310$
2027 274,113 63,444
2028 288,050 59,634
2029 302,485 55,630
2030 317,432 51,426
2031-2035 1,830,546 186,525
2036-2039 1,551,711 50,274
4,914,393$ 535,243$
Designated Betterment 350,588$
Replacement Reserve 38,015,690
Designated New Supply Fund 6,661
Undesignated 18,147,852
Total $ 56,520,791
Notes To Financial Statements
Year Ended June 30, 2025
7)DEFINED BENEFIT PENSION PLAN
A)General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the District’s Plan,
agent multiple-employer defined benefit pension plans administered by the California Public
Employees’ Retirement System (CalPERS), which acts as a common investment and administrative
agent for its participating member employers. Benefit provisions under the Plans are established by
State statute and District resolution.
CalPERS issues publicly available reports that include a full description of the pension plans
regarding provisions, assumptions and membership information that can be found on the CalPERS
website.
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and
death benefits to plan members, who must be public employees and beneficiaries. Benefits are
based on years of credited service, equal to one year of full-time employment. Members with five
years of total service are eligible to retire at age 50 (52 if new PERS member)with statutorily reduced
benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death
benefit is one of the following: the Basic Death Benefit, the 1959 Survivor Benefit, or the Optional
Settlement 2W Death Benefit. The cost-of-living adjustments for the plan are applied as specified by
the Public Employees’ Retirement Law.
Notes To Financial Statements
Year Ended June 30, 2025
7) DEFINED BENEFIT PENSION PLAN –Continued
Benefits Provided
The Plans’ provisions and benefits in effect at June 30, 2025 are summarized as follows:
Prior to On or After
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 2.7% at 55 2% at 62
Benefit Vesting Schedule 5 years’ service 5 years’ service
Benefit Payments Monthly for life Monthly for life
Retirement Age 50 –55+52 –67+
Monthly Benefits, as a % of Eligible Compensation 2.0% to 2.7%1.0% to 2.5%
Required Employee Contribution Rates
2025 8.00%7.50%
Required Employer Contribution Rates
2025 24.94%24.94%
Employees Covered
The following employees were covered by the benefit terms for the Plan:
Inactive Employees or Beneficiaries Currently Receiving Benefits 227
Inactive Employees Entitled to But Not Yet Receiving Benefits 130
Active Employees 137
Total 494
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer
contribution rates for all public employers be determined on an annual basis by the actuary and shall
be effective on the July 1 following notice of a change in the rate. The total plan contributions for the
Plan are determined through CalPERS’ annual actuarial valuation process. The actuarially
determined rate is the estimated amount necessary to finance the costs of benefits earned by
employees during the year, with an additional amount to finance any unfunded accrued liability.
Notes To Financial Statements
Year Ended June 30, 2025
7)DEFINED BENEFIT PENSION PLAN –Continued
The employer is required to contribute the difference between the actuarially determined rate and
the contribution rate of employees. Employer contribution rates may change if plan contracts are
amended.
B)Net Pension Liability
The District’s net pension liability for the Plan is measured as the total pension liability, less the
pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30,
2024 rolled forward to June 30, 2025 using standard update procedures. A summary of actuarial
assumptions and methods used to determine the net pension liability is shown below:
Actuarial Assumptions
The total pension liabilities in the June 30, 2024 actuarial valuations were determined using the
following actuarial assumptions:
Actuarial Cost Method Entry-Age Actuarial Cost Method
Actuarial Assumptions:
Discount Rate 6.90%
Inflation 2.30%
Salaries Increases Varies by entry age and service
Mortality Rate Table Derived using CalPERS
membership data for all funds(1)
Post Retirement Benefit Increase See Footnote(2)
(1)The mortality table used was developed based on CalPERS-specific data. The probabilities of
mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions.
Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020
published by the Society of Actuaries. For more details on this table, please refer to the 2021
experience study report from November 2021 that can be found on the CalPERS website.
(2)The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on
purchasing power applies, 2.30% thereafter.
Notes To Financial Statements
Year Ended June 30, 2025
7)DEFINED BENEFIT PENSION PLAN –Continued
Discount Rate
The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows
used to determine the discount rate assumed that contributions from plan members will be made at
the current member contribution rates and that contributions from employers will be made at
statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary
net position was projected to be available to make all projected future benefit payments of current
plan members. Therefore, the long-term expected rate of return on plan investments was applied to
all periods of projected benefit payments to determine the total pension liability.
Long-term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-
block method in which future real rates of return (expected returns, net of pension plan investment
expense and inflation) are developed for each major asset class. In determining the long-term
expected rate of return, CalPERS took into account both short-term and long-term market return
expectations. Using historical returns of all the funds’ asset classes, expected compound
(geometric) returns were calculated over the next 20 years using a building block approach. The
expected rate of return was then adjusted to account for assumed administrative expenses of 10
Basis points. The expected real rates of return by asset class are as follows:
(a)An expected inflation of 2.30% used for this period.
(b)Figures are based on the 2021 Asset Liability Management study.
Assumed
Asset Class(a)Asset Allocation Real Return(b)
Global Equity - Cap-weighted 30.00%4.54%
Global Equity - Non-Cap-weighted 12.00 3.84
Private Equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-backed Securities 5.00 0.50
Investment Grade Corporates 10.00 1.56
High Yield 5.00 2.27
Emerging Market Debt 5.00 2.48
Private Debt 5.00 3.57
Real Assets 15.00 3.21
Leverage (5.00) (0.59)
Notes To Financial Statements
Year Ended June 30, 2025
7)DEFINED BENEFIT PENSION PLAN –Continued
C)Changes in the Net Pension Liability (Asset)
The changes in the Net Pension Liability (Asset) for the Plan for the year ending June 30, 2025:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability (Asset)
Beginning Balance 174,580,366$146,026,421$ 28,553,945$
Changes in the Year:
Service Cost 3,111,192 - 3,111,192
Interest on the Total Pension Liability 11,829,614 - 11,829,614
Difference Between Expected and Actual Experience (58,875) - (58,875)
Net Plan to Plan Resource Movement - - -
Contributions - Employer 3,156,662 (3,156,662)
Contributions - Employees 1,203,583 (1,203,583)
Net Investment Income 13,765,459 (13,765,459)
Benefit Payments, Including Refunds of Employee Contributions (9,266,810) (9,266,810) -
Administrative Expense - (118,822) 118,822
Net Changes 5,615,121 8,740,072 (3,124,951)
Ending Balance 180,195,487$154,766,493$ 25,428,994$
Increase ( Decrease)
Notes To Financial Statements
Year Ended June 30, 2025
7)DEFINED BENEFIT PENSION PLAN –Continued
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the District for the Plan, calculated using the
discount rate for the Plan, as well as what the District’s net pension liability would be if it were
calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than
the current rate:
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately
issued CalPERS financial reports.
D) Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2025, the District recognized pension expense of $6,903,416.At June 30,
2025, the District reported deferred outflows of resources and deferred inflows of resources related
to pensions from the following services:
2025
1% Decrease 5.90%
Net Pension Liability 47,764,034$
Current Discount Rate 6.90%
Net Pension Liability 25,428,994$
1% Increase 7.90%
Net Pension Liability/(Asset)6,761,301$
Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to measurement date 3,891,166$ -$
Differences between actual and expected experience 883,663 (37,848)
Net difference between projected and actual earnings
on pension plan investments 2,405,434 -
Total 7,180,263$ (37,848)$
Notes To Financial Statements
Year Ended June 30, 2025
7)DEFINED BENEFIT PENSION PLAN –Continued
D)Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions -Continued
$3,891,166 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the fiscal year
ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred
inflows of resources related to pensions will be recognized as pension expense as follows:
Gains and losses related to changes in total pension liability and fiduciary net position are recognized
in pension expense systematically over time. The first amortized amounts are recognized in pension
expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred
outflows and deferred inflows of resources related to pensions and are to be recognized in future
pension expense.The amortization period differs depending on the source of the gain or loss:
Net difference between projected and actual
earnings on pension plan investments
5-year straight-line amortization
All other amounts Straight-line amortization over the expected
average remaining service lifetime (EARSL) of
all members that are provided with benefits
(active, inactive, and retired) as of the
beginning of the measurement period
Fiscal Deferred
Year Ended Outflow/(Inflows)
June 30 of Resources
2026 780,150$
2027 3,827,111
2028 (582,687)
2029 (773,325)
2030 -
Thereafter -
Notes To Financial Statements
Year Ended June 30, 2025
7)DEFINED BENEFIT PENSION PLAN –Continued
E)Payable to the Pension Plan
At June 30, 2025, the District reported a payable of $179,091 for the outstanding amount of
contributions to the pension plan required for the year ended June 30, 2025. These payables are
reflected in the accrued payroll liabilities on the Statement of Net Position.
F)Subsequent Events
There were no subsequent events that would materially affect the results presented in this disclosure.
8)OTHER POST EMPLOYMENT BENEFITS (OPEB)
Plan Description
The District’s defined benefit postemployment healthcare plan, (DPHP), provides medical benefits to
eligible retired District employees and beneficiaries. DPHP is part of the Public Agency portion of the
California Employers’ Retiree Benefit Trust Fund (CERBT), an agent multiple-employer plan administered
by California Public Employees’ Retirement System (CalPERS), which acts as a common investment and
administrative agent for participating public employers within the State of California. CalPERS issues a
separate Annual Comprehensive Financial Report. Copies of the CalPERS’ annual financial report may
be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, California 95814.
Prior to the plan agreements signed in 2011, the eligibility in the plan was broken into three tiers,
employees hired before January 1, 1981, employees hired on or after January 1, 1981 but before July 1,
1993 and employees hired on or after July 1, 1993. Board members elected before January 1, 1995 are
also eligible for the plan. Eligibility also includes age and years of service requirements which vary by
tier. Benefits include up to 100% medical and/or dental premiums for life for the retiree for Tier I or II
employees, and up to 100% spouse premium until death of retiree or age 65 whichever is greater and
dependent premium up to age 19.Tier III employees received up to 50% medical (no dental coverage)
up to age 65 and did not include dependent coverage.
Subsequent to the agreements in 2011 and 2012 all employees are eligible for the plan after 20 years of
consecutive service and unrepresented employees hired before January 1, 2013 are eligible after 15
years. Survivor benefits are covered beyond Medicare.
Notes To Financial Statements
Year Ended June 30, 2025
8)OTHER POST EMPLOYMENT BENEFITS (OPEB) -Continued
Employees Covered
As of June 30, 2024 actuarial valuation, the following current and former employees were covered by the
benefit terms under the Plan:
Contributions
The annual contribution is based on the actuarially determined contribution. For the fiscal year ended
June 30, 2025, the District made cash contributions to the trust of $2,537,706 and had an estimated
implied subsidy of $235,798, resulting in total payments of $2,773,504.
Net OPEB Liability
The District’s net OPEB liability was measured as of June 30, 2024 and the total OPEB liability used to
calculate the net OPEB liability was determined by actuarial valuations dated June 30, 2024 based on
the following actuarial methods and assumptions:
Actuarial Assumptions
Discount Rate 6.75%
Inflation 2.50%
Salary Increases 2.75%
Investment Rate of Return 6.75%
Mortality Rate(1)Derived using CalPERS Membership Data for all funds
Pre-Retirement Turnover(2)Derived using CalPERS Membership Data for all funds
Healthcare Trend Rate 4.50% PPO
Notes:
(1)The mortality assumptions are based on the 2021 CalPERS Mortality for Miscellaneous and Schools
Employees table created by CalPERS. CalPERS periodically studies mortality for participating agencies
and established mortality tables that are modified versions of commonly used tables. This table
incorporates mortality projection as deemed appropriate based on CalPERS analysis.
(2)The retirement assumptions are based on the 2021 CalPERS 2.0%@62 and 2.7%@55. Rates for
Miscellaneous Employees tables created by CalPERS. CalPERS periodically studies the experience for
participating agencies and establishes tables that are appropriate for each pool.
Active Employees 78
Inactive Employees or Beneficiaries Currently Receiving Benefits 85
Inactive Employees Entitled to But Not Yet Received Benefits -
Total 163
Notes To Financial Statements
Year Ended June 30, 2025
8)OTHER POST EMPLOYMENT BENEFITS (OPEB) -Continued
Net OPEB Liability (Continued)
The long-term expected rate of return on OPEB plan investments was determined using a building block
method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB
plan investment expense and inflation) are developed for each major asset class. These ranges are
combined to produce the long-term expected rate of return by weighting the expected future real rates of
return by the target asset allocation percentage and by adding expected inflation. Best estimates of
arithmetic real rates of return for each major asset class included in the OPEB plan’s target asset are
summarized in the following table for the June 30, 2024 actuarial valuation:
Discount Rate
The discount rate used to measure the total OPEB liability was 6.75% for the June 30, 2024 measurement
period. The projection of cash flows used to determine the discount rate assumed that District
contributions will be made at rates equal to the actuarially determined contribution rates. Based on those
assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected
OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term
expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments
to determine the total OPEB liability.
Percentage Assumed
Asset Class of Portfolio Gross Return
All Equities 49.00%7.25%
All Fixed Income 23.00%4.25%
Real Estate Investment Trust 20.00%7.25%
All Commodities 3.00%7.25%
Treasury Inflation Protected Securities (TIPS)5.00%3.00%
Notes To Financial Statements
Year Ended June 30, 2025
8)OTHER POST EMPLOYMENT BENEFITS (OPEB) -Continued
Changes in the OPEB Liability (Asset)
The changes in the net OPEB liability (asset) for the Plan for the year ending June 30, 2025:
Sensitivity of the Net OPEB Liability (Asset) to Changes in the Discount Rate
The following presents the net OPEB liability (asset) of the District if it were calculated using a discount
rate that is one percentage point lower or one percentage point higher than the current rate, for the
measurement period ended June 30, 2024:
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability (Asset)
Beginning Balance 42,648,870$ 31,446,524$ 11,202,346$
Changes in the year:
Service Cost 1,310,461 - 1,310,461
Interest on TOL/Return on FNP 2,867,289 3,532,940 (665,651)
Difference Between Expected and Actual Experience (3,292,876) - (3,292,876)
Changes in Benefit Terms (3,464,001) - (3,464,001)
Contributions - Employer - 2,775,728 (2,775,728)
Benefit Payments (1,637,067) (1,637,067) -
Administrative Expenses - (10,423) 10,423
Net Changes (4,216,194) 4,661,178 (8,877,372)
Ending Balance 38,432,676$ 36,107,702$ 2,324,974$
Increase ( Decrease)
Current
1% Decrease Discount Rate 1% Increase
5.75%6.75%7.75%
2025 Net OPEB Liability (Asset)
(2024 Measurement Date)7,082,330$ 2,324,974$ (1,639,180)$
Notes To Financial Statements
Year Ended June 30, 2025
8)OTHER POST EMPLOYMENT BENEFITS (OPEB) -Continued
Sensitivity of the Net OPEB Liability (Asset) to Changes in the Healthcare Cost Trend Rates
The following presents the net OPEB liability of the District if it were calculated using health care cost
trend rates that are one percentage point lower or one percentage point higher than the current rate, for
measurement period ended June 30, 2024:
OPEB Plan Fiduciary Net Position
CERBT issues a publicly available financial report that may be obtained from the California Public
Employees Retirement System Executive Office, 400 P Street, Sacramento, California 95814.
Recognition of Deferred Outflows and Deferred Inflows of Resources
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in
OPEB expense systematically over time.
Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining
amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and
are to be recognized in future OPEB expense.
The recognition period differs depending on the source of the gain or loss:
Net difference between projected and
actual earnings on OPEB plan investments
5 years
All other amounts Expected average remaining service lifetime
(EARSL)
Current Healthcare Cost
1% Decrease Trend Rates 1% Increase
2025 Net OPEB Liability (Asset)
(2024 Measurement Date)(2,150,733)$ 2,324,974$ 7,771,156$
Notes To Financial Statements
Year Ended June 30, 2025
8)OTHER POST EMPLOYMENT BENEFITS (OPEB) -Continued
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the fiscal year ended June 30, 2025, the District recognized OPEB expense (income)of ($2,408,150).
As of the fiscal year ended June 30, 2025, the District reported deferred outflows and inflows of resources
related to OPEB from the following sources:
$2,773,504 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net OPEB liability in the fiscal year ended
June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to pensions will be recognized as pension expense as follows:
Effective September 1, 2024, the District created a Health Reimbursement Arrangement (HRA)plan (a
defined contribution plan) and closed the District’s current OPEB plan. Employees hired on or after
September 1, 2024 are no longer eligible to enter the District’s OPEB plan. However,they are required to
join the HRA plan. Employees hired prior to September 1,2024 had the option to remain in the current
OPEB plan or opt in to the HRA plan.
Deferred Outflows Deferred Inflows
of Resources of Resources
OPEB contributions subsequent to measurement date 2,773,504$ -$
Differences between expected and actual experience 5,911,486 (2,606,860)
Changes in assumptions 29,480 (641,254)
Net difference between projected and actual earnings
on OPEB plan investments 565,903 -
Total 9,280,373$ (3,248,114)$
Fiscal Deferred
Year Ended Outflows/(Inflows)
June 30, of Resources
2026 453,097$
2027 1,639,271
2028 190,027
2029 49,413
2030 842,683
Thereafter 84,264
Notes To Financial Statements
Year Ended June 30, 2025
9) OTHER NON-CURRENT LIABILITIES
Other non-current liabilities for the year ended June 30, 2025, are as follows:
* Compensated absences as of June 30, 2024 were restated as a result of the implementation of
Governmental Accounting Standards Board (GASB) Statement No. 101 Compensated Absences.
10) COMMITMENTS AND CONTINGENCIES
Construction Commitments
The District has commitments related to capital projects under construction with an estimated cost to
complete of $19,009,944 at June 30, 2025.
Litigation
Certain claims, suits, and complaints arising in the ordinary course of operation have been filed or are
pending against the District. In the opinion of the staff and counsel, most of those matters are adequately
covered by insurance, or if not so covered,are without merit or are of such kind, or involved such amounts,
as would not have significant effect on the financial position or results of operations of the District if
disposed of unfavorably. There is one case, see below, that could have a significant effect on the District’s
financial position.
In November 2015, a District ratepayer filed a class-action lawsuit against the District (Coziahr v. Otay Water
District, Superior Court of the State of California, County of San Diego), contending that the District’s tiered
residential water rates from mid-2014 through 2022 violated Article XIIID of the California Constitution
(“Proposition 218”).
On March 4, 2021, the court issued a decision in favor of the plaintiffs, holding that Otay’s tiered water rates
adopted in 2013 and 2017 were not proportionate to the cost of service attributable to each customer’s
parcel, as required by Proposition 218.
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Compensated absences *3,486,190$ 1,887,312$ (1,568,719)$ 3,804,783$ 380,478$
Customer credits 264,156 4,176 - 268,332 -
Reimbursement agreements 356,644 - - 356,644 -
Accrued liability 27,000,000 - - 27,000,000 -
Total 31,106,990$ 1,891,488$ (1,568,719)$ 31,429,759$ 380,478$
Notes To Financial Statements
Year Ended June 30, 2025
10) COMMITMENTS AND CONTINGENCIES -Continued
On June 15, 2022, the court issued a Statement of Decision in the case. Applying and adjusting plaintiffs’
calculations, the court ordered refunds to ratepayers through June 2021 in the amount of $18,105,256, plus
approximately $208,762 plus interest each month from June 2021 until the District changed its rates to be
consistent with Proposition 218. The District appealed the decision to the Court of Appeal, and changed its
rates effective January 2023.
The Court of Appeal upheld the trial court’s determination that a refund was owed, but the amount was
found to be calculated in error and the case was remanded to the trial court for further proceedings. The
remand action is currently pending in San Diego Superior Court, with an estimated trial date of February
2026. The District is aggressively litigating the matter, including by challenging the plaintiffs’ calculations,
and by arguing for the application of newly-enacted statutes and newly-decided case law.
Since the time of the remand, state law has changed to clarify both that rates based on peaking factors
like Otay’s rates are valid (AB 1824) and that challengers are not entitled to refunds for Proposition 218 rate
challenges, but instead that rate credits may be available in the next rate-setting procedure (SB 1072). In
addition, SB 1072 was upheld by the Court of Appeal in a published companion case, Patz v. City of San
Diego, in Summer 2025. There, the court ruled that under SB 1072, challengers in Proposition 218 cases
are not entitled to refunds. The City of San Diego has petitioned for review of that case to the California
Supreme Court.
Refundable Terminal Storage Fees
The District has entered into an agreement with several developers whereby the developers prepaid the
terminal storage fee in order to provide the District with the funds necessary to build additional storage
capacity. The agreement further allows the developers to relinquish all or a portion of such water storage
capacity. If the District grants to another property owner the relinquished storage capacity, the District shall
refund to the applicable developer $746 per equivalent dwelling unit (EDU). There were 17,867 EDUs that
were subject to this agreement. At June 30, 2025, 1,750 EDUs had been relinquished and refunded, 15,105
EDUs had been connected, and 1,012 EDUs have neither been relinquished nor connected.
Notes To Financial Statements
Year Ended June 30, 2025
10)COMMITMENTS AND CONTINGENCIES –Continued
Developer Agreements
The District has entered into various Developer Agreements with developers towards the expansion of
District facilities. The developers agree to make certain improvements and after the completion of the
projects,the District agrees to reimburse such improvements with a maximum reimbursement amount for
each developer. Contractually, the District does not incur a liability for the work until the work is accepted
by the District.
As of June 30, 2025, none of the outstanding developer projects had been completed. It is anticipated that
the District will be liable for an amount not to exceed $1,725,000 at the point of acceptance. Accordingly,
the District has accrued this amount as of year-end.
11)RISK MANAGEMENT
General Liability and Property
The District is exposed to various risks of loss related to torts, theft, damage and destruction of assets, errors
and omissions, and natural disasters. The District is a member in an insurance pool through the
Association of California Water Agencies Joint Powers Insurance Authority (ACWA JPIA). ACWA JPIA is a
not-for-profit public agency formed under California Government Code Sections 6500 et. Seq.
ACWA JPIA is governed by a board composed of members from participating agencies. The District pays
an annual premium for commercial insurance covering general liability, excess liability, property,
automobile, public employee dishonesty, and various other claims. Separate financial statements of
ACWA JPIA may be obtained at ACWA JPIA 2100 Professional Drive, Roseville, CA 95661-3700.
General and Auto Liability, Public Officials’ Errors and Omissions and Employment Practices Liability: JPIA
pools for the first $5 million and purchases excess coverage up to $55 million. No deductible for losses
arising out of liability or imposed by law or assumed by contract.
Notes To Financial Statements
Year Ended June 30, 2025
11)RISK MANAGEMENT –Continued
Excess Crime Coverage: Total of $1 million per loss includes Public Employee Dishonesty, Forgery or
Alteration,Computer Fraud, Faithful Performance of Duty and Impersonation Fraud subject to $1,000
deductible effective July 1, 2024.
Property Loss: Replacement cost up to scheduled value total of $372 million with program aggregates up
to $150 million, subject to $25,000 basic deductible (5% total insured value for earthquake, $100,000 for
flood) effective July 1, 2024.
Boiler and Machinery: Replacement costs up to $100 million per occurrence, subject to a $25,000
deductible, $50,000 for turbine or power generation equipment) effective July 1, 2024.
Comprehensive and Collision: For scheduled vehicles and mobile equipment, subject to $1,000 deductible
effective July 1, 2024.
Workers’ Compensation Coverage and Employer’s Liability: Statutory limits per occurrence for Workers’
Compensation and $2.0 million for Employer’s Liability Coverage, subject to the terms, conditions and
exclusions as provided in the Memorandum of Coverage, effective July 1, 2024.
Cyber Coverage: $5 million Annual Program-Wide Aggregate Limit of Liability and $3 million maximum for
each Insured/Member for Information Security & Privacy Liability subject to $100,000 deductible.
Fiduciary Coverage: Otay Water District Deferred Compensation Plan $2 million aggregate limit of liability,
per incident limits of $1.5 million for HIPPA/HITECH fines and $250,000 for all else. Retention: $10,000 each
claim and $50,000 per claim due to Class Action and Derivative Claims
During the past three fiscal years, none of the above programs of protection experienced settlements or
judgments that exceeded pooled or insured covered. There were also no significant reductions in pooled
or insured liability coverage in fiscal year 2024-25.
12) LEASES RECEIVABLE
The District has entered into 30 cell site leases with lease terms ranging from less than one year to sixty
years. The lessees are required to make annual fixed payments ranging from $29,532 to $60,503, with
discount rates of 1.39%. As of June 30,2025, the lease receivable is $50,369,933 and deferred inflows of
resources is $46,429,877. The District recognized $2,083,057 of lease revenue during the fiscal year.
Notes To Financial Statements
Year Ended June 30, 2025
13)RESTATEMENT
During the year ended June 30, 2025, the District adopted new accounting guidance by implementing
the provisions of GASB 101. As a result of this implementation, additional compensated absences
resulted from the addition of payroll-related taxes and benefits associated with the accrued leave. The
following summarizes the net effects on beginning net position:
14)SEGMENT INFORMATION
The District has issued Water and Wastewater Revenue Bonds in the previous fiscal years to finance
certain capital improvements. While water and wastewater services are accounted for jointly in these
financial statements, the investors in the Water Revenue Bonds rely solely on the revenues of the water
services for repayment and the Wastewater Revenue Bonds solely on the revenues of the wastewater
services for repayment.
Summary of financial information for the water and wastewater services is presented for June 30, 2025
on the following pages:
Total Net Position, Beginning, as Previously Reported 404,274,141$
Restatement for Implementation of GASB 101 (233,092)
Total Net Position, Beginning, as Restated 404,041,049$
Notes To Financial Statements
Year Ended June 30, 2025
14)SEGMENT INFORMATION –Continued
Water Wastewater
Services Services Total
Assets
Cash and Investments 95,223,198$ 8,933,769$ 104,156,967$
Accounts Receivable, Net 18,693,448 225,230 18,918,678
Other Current Assets 13,926,691 125,892 14,052,583
Leases Receivable 50,369,933 - 50,369,933
Capital Assets 420,858,927 26,409,581 447,268,508
Total Assets 599,072,197 35,694,472 634,766,669
Deferred Outflows of Resources
Deferred Actuarial Pension Costs 6,944,979 235,284 7,180,263
Deferred Actuarial OPEB Costs 8,870,720 409,653 9,280,373
Total Deferred Outflows of Resources 15,815,699 644,937 16,460,636
Liabilities
Accounts Payable 17,138,271 379,624 17,517,895
Other Miscellaneous Liabilities 6,931,553 1,470,389 8,401,942
Other Current Liabilities 11,813,113 107,636 11,920,749
Revenue Bonds 81,639,186 2,744,317 84,383,503
Lease Payable 651,289 - 651,289
Subscription-Based IT Payable 4,564,337 - 4,564,337
Net Pension Liability 24,594,827 834,167 25,428,994
Net OPEB Liability 2,182,633 142,341 2,324,974
Other Non-current Liabilities 31,049,281 - 31,049,281
Total Liabilities 180,564,490 5,678,474 186,242,964
Deferred Inflows of Resources
Deferred Actuarial OPEB Costs 3,131,294 116,820 3,248,114
Deferred Actuarial Pension Costs 36,410 1,438 37,848
Deferred Inflows from Leases 46,429,877 - 46,429,877
Total Deferred Inflows of Resources 49,597,581 118,258 49,715,839
Net Position
Net Investment in Capital Assets 328,197,438 23,585,725 351,783,163
Restricted for Debt Service 3,826,616 - 3,826,616
Restricted for Capital Assets 3,137,932 - 3,137,932
Unrestricted 49,563,839 6,956,952 56,520,791
Total Net Position 384,725,825$ 30,542,677$ 415,268,502$
June 30, 2025
Condensed Statement of Net Position
Notes To Financial Statements
Year Ended June 30, 2025
14)SEGMENT INFORMATION –Continued
Water Wastewater
Services Services Total
Operating Revenues
Water Sales 121,483,491$ -$ 121,483,491$
Wastewater Revenue - 3,500,945 3,500,945
Connection and Other Fees 3,764,046 38,157 3,802,203
Total Operating Revenues 125,247,537 3,539,102 128,786,639
Operating Expenses
Cost of Water Sales 89,595,836 - 89,595,836
Wastewater - 2,578,457 2,578,457
Administrative and General 33,449,222 - 33,449,222
Depreciation 17,362,542 1,054,632 18,417,174
Total Operating Expenses 140,407,600 3,633,089 144,040,689
Operating Income (Loss)(15,160,063) (93,987) (15,254,050)
Non-Operating Revenues (Expenses)
Investment Earnings (Losses)5,811,145 187,792 5,998,937
Taxes and Assessments 6,171,087 - 6,171,087
Availability Charges 665,683 51,508 717,191
Gain (Loss) on Sale of Capital Assets (228,041) - (228,041)
Rents and Leases 2,083,057 - 2,083,057
Miscellaneous Revenues 2,097,575 - 2,097,575
Donations (97,105) - (97,105)
Interest Expense (3,969,268) (85,025) (4,054,293)
Miscellaneous Expenses (382,042) (12,493) (394,535)
Total Non-operating Revenues (Expenses)12,152,091 141,782 12,293,873
Income (Loss) Before Capital Contributions
and Transfers (3,007,972) 47,795 (2,960,177)
Capital Contributions 13,885,347 302,283 14,187,630
Change in Net Position 10,877,375 350,078 11,227,453
Total Net Position, Beginning, as Previously Reported 374,081,542 30,192,599 404,274,141
Restatement (Note 13)(233,092) - (233,092)
Total Net Position, Beginning, as Restated 373,848,450 30,192,599 404,041,049
Total Net Position, Ending 384,725,825$ 30,542,677$ 415,268,502$
Condensed Statement of Revenues, Expenses and Changes in Net Pension
Year Ended June 30, 2025
Notes To Financial Statements
Year Ended June 30, 2025
14)SEGMENT INFORMATION –Continued
Cash and Cash Equivalents consist of the following:
Water Wastewater
Services Services Total
Net Cash Provided/(Used) by:
Operating Activities (7,919,593)$ 1,700,214$ (6,219,379)$
Non-capital and Related Financing Activities 6,797,316 51,508 6,848,824
Capital and Related Financing Activities (21,584,698) (137,741) (21,722,439)
Investing Activities 17,715,533 187,792 17,903,325
Net Increase(Decrease) in
Cash and Cash Equivalents (4,991,442) 1,801,773 (3,189,669)
Cash and Cash Equivalents, Beginning 73,264,995 7,131,996 80,396,991
Cash and Cash Equivalents, Ending 68,273,553$ 8,933,769$ 77,207,322$
For the Year Ended June 30, 2025
Condensed Statement of Cash Flows
Cash and Cash Equivalents 70,242,774$
Restricted Cash and Cash Equivalents 6,964,548
Total Cash and Investments 77,207,322$
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Schedule of Changes in the Net OPEB Liability and Related Ratios
Last Ten Years (1)
June 30, 2025
Measurement Period: June 30 2024 2023 2022 2021
Total OPEB Liability
Service Cost 1,310,461$ 1,018,363$ 991,108$ 755,756$
Interest on the Total OPEB Liability 2,867,289 2,324,644 2,189,619 2,077,446
Actual and Expected Experience Difference (3,292,876) 5,942,003 254,888 2,595,855
Changes in Assumptions - 41,042 - (1,557,334)
Changes in Benefit Terms (3,464,001) - - -
Benefit Payment (1,637,067) (1,214,348) (1,428,491) (1,201,678)
Net Change in Total OPEB Liability (4,216,194) 8,111,704 2,007,124 2,670,045
Total OPEB Liability - Beginning 42,648,870 34,537,166 32,530,042 29,859,997
Total OPEB Liability - Ending (a)38,432,676$ 42,648,870$ 34,537,166$ 32,530,042$
Plan Fiduciary Net Position
Contributions - Employer 2,775,728$ 1,214,348$ 127,444$ 807,867$
Net Investment Income 3,532,940 1,969,238 (4,739,093) 7,880,863
Benefit Payments (1,637,067) (1,214,348) (1,428,491) (1,201,678)
Administrative Expenses (10,423) (8,619) (9,034) (10,811)
Other Expenses - - - -
Net Change in Plan Fiduciary Net Position 4,661,178 1,960,619 (6,049,174) 7,476,241
Plan Fiduciary Net Position - Beginning 31,446,524 29,485,905 35,535,079 28,058,838
Plan Fiduciary Net Position - Ending (b)36,107,702 31,446,524 29,485,905 35,535,079
Net OPEB Liability/(Asset) - Ending (a)-(b)2,324,974$ 11,202,346$ 5,051,261$ (3,005,037)$
Plan Fiduciary Net Position as a Percentage of
the Total OPEB Liability 93.95%73.73%85.37%109.24%
Covered-Employee Payroll 14,757,192$ 14,393,757$ 14,054,264$ 14,006,918$
Net OPEB Liability/(Asset) as a Percentage of
Covered-Employee Payroll 15.75%77.83%35.94%-21.45%
Notes to Schedule
(1)Historical information is required only for measurement periods for which GASB 75 is applicable.Future
years’information will be displayed up to 10 years as information becomes available.Contributions are
determined by an actuarial valuation based on eligible participants’ estimated medical and dental benefits.
Schedule of Changes in the Net OPEB Liability and Related Ratios
Last Ten Years (1)
June 30, 2025
Measurement Period: June 30 2020 2019 2018 2017
Total OPEB Liability
Service Cost 735,529$ 757,725$ 735,655$ 687,528$
Interest on the Total OPEB Liability 1,915,358 1,970,613 1,864,967 1,764,343
Actual and Expected Experience Difference 1,151,927 (2,029,118) --
Changes in Assumptions -(345,110)--
Changes in Benefit Terms ----
Benefit Payment (1,120,146) (1,141,344) (1,085,586) (1,039,420)
Net Change in Total OPEB Liability 2,682,668 (787,234) 1,515,036 1,412,451
Total OPEB Liability - Beginning 27,177,329 27,964,563 26,449,527 25,037,076
Total OPEB Liability - Ending (a)29,859,997$ 27,177,329$ 27,964,563$ 26,449,527$
Plan Fiduciary Net Position
Contributions - Employer 1,011,358$ 2,206,363$ 2,202,004$ 2,284,420$
Net Investment Income 983,790 1,595,092 1,734,626 2,011,985
Benefit Payments (1,120,146) (1,141,344) (1,085,586) (1,039,420)
Administrative Expenses (13,514) (12,299) (11,784) (10,167)
Other Expenses ----
Net Change in Plan Fiduciary Net Position 861,488 2,647,812 2,839,260 3,246,818
Plan Fiduciary Net Position - Beginning 27,197,350 24,549,538 21,739,035 18,492,217
Plan Fiduciary Net Position - Ending (b)28,058,838 27,197,350 24,578,295 21,739,035$
Net OPEB Liability/(Asset) - Ending (a)-(b)1,801,159$ (20,021)$ 3,386,268$ 4,710,492$
Plan Fiduciary Net Position as a Percentage of
the Total OPEB Liability 94.00%100.10%87.80%82.20%
Covered-Employee Payroll 13,538,959$ 13,176,602$ 12,677,000$ 12,513,000$
Net OPEB Liability/(Asset) as a Percentage of
Covered-Employee Payroll 13.30%-0.20%26.90%37.60%
Notes to Schedule
(1)Historical information is required only for measurement periods for which GASB 75 is applicable.Future
years’information will be displayed up to 10 years as information becomes available.Contributions are
determined by an actuarial valuation based on eligible participants’ estimated medical and dental
Schedule of Contributions
Last Ten Years (1)
June 30, 2025
Actuarially
Determined Contributions in Contribution Contributions as a
Fiscal Contribution Relation to the Deficiency Covered-Percentage of Covered-
Year (ADC)ADC (Excess)Payroll Payroll
2018 1,116,418$ (2,202,004)$ (1,085,586)$ 12,677,000$ 17.37%
2019 1,149,911 (2,206,363) (1,056,452) 13,176,602 16.74%
2020 1,011,358 (1,011,358) - 13,538,959 7.47%
2021 807,867 (807,867) - 14,006,918 5.77%
2022 127,444 (127,444) - 14,054,264 0.91%
2023 1,214,348 (1,214,348) - 14,393,757 8.44%
2024 2,775,728 (2,775,728) - 14,757,192 18.81%
2025 2,773,504 (2,773,504) - 15,982,606 17.35%
Notes to Schedule:
Methods and assumptions used to determine contributions:
Actuarial Cost Method Entry Age Actuarial Cost Method
Amortization Method/Period Level percent of payroll over a closed rolling 15-year period
Asset Valuation Method Fair value
Inflation 2.50%
Payroll Growth 2.75%
Investment Rate of Return 6.75%
Healthcare Cost-trend Rates 4.50% HMO/4.50% PPO
Retirement Age
Mortality
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2025 were
from the June 30,2024 actuarial valuation.Also note,that some of the data from prior years were updated with the
most current available information.
Tier 1 employees -2.7%at 55 and Tier 2 employees -2.0%at 62.The probabilities
of Retirement are based on the 2021 CalPERS Experience Study.
The mortality assumptions are based on the 2021 CalPERS Mortality for
Miscellaneous and Schools Employees table created by CalPERS.
(1)Historical information is required only for measurement periods for which GASB 75 is applicable.Future years’
information will be displayed up to 10 years as information becomes available.Contributions are determined by an
actuarial valuation based on eligible participants’ medical and dental benefits.
Schedule of Changes in the Net Pension Liability and Related Ratios
Last Ten Years
June 30, 2025
Measurement Period: June 30 2024 2023 2022 2021 2020
Total Pension Liability
Service Cost 3,111,192$ 2,989,611$ 2,994,291$ 2,662,845$ 2,623,208$
Interest 11,829,614 11,457,149 10,864,205 10,489,284 10,043,778
Changes in Benefit Terms -137,177 ---
Changes in Assumptions --4,984,447 --
Difference Between Expected and actual Experience (58,875) 3,092,819 174,717 705,426 260,337
Benefit Payments, including Refunds of
Employee Contributions (9,266,810) (8,834,436) (8,151,116) (7,304,947) (7,017,816)
Net Change in Total Pension Liability 5,615,121 8,842,320 10,866,544 6,552,608 5,909,507
Total Pension Liability - Beginning 174,580,366 165,738,046 154,871,502 148,318,894 142,409,387
Total Pension Liability - Ending (a)180,195,487$ 174,580,366$ 165,738,046$ 154,871,502$ 148,318,894$
Plan Fiduciary Net Position
Net Plan to Plan Resource Movement -$-$-$-$-$
Contributions - Employer 3,156,662 5,458,992 3,928,187 3,945,147 2,437,119
Contributions - Employee 1,203,583 1,112,562 1,099,592 1,095,898 1,055,769
Net Investment Income 13,765,459 8,605,145 (11,584,615) 28,707,870 6,185,108
Benefit Payments, Including Refunds of
Employee Contributions (9,266,810) (8,834,436) (8,151,116) (7,304,947) (7,017,816)
Administrative Expenses (118,822) (102,793) (96,301) (128,139) (177,337)
Other Changes in Fiduciary Net Position -----
Net Change in Plan Fiduciary Net Position 8,740,072 6,239,470 (14,804,253) 26,315,829 2,482,843
Plan Fiduciary Net Position - Beginning 146,026,421 139,786,951 154,591,204 128,275,375 125,792,532
Plan Fiduciary Net Position - Ending (b)154,766,493 146,026,421 139,786,951 154,591,204 128,275,375
Plan Net Pension Liability/(Asset) - Ending (a)-(b)25,428,994$ 28,553,945$ 25,951,095$ 280,298$ 20,043,519$
Plan Fiduciary Net Position as a Percentage of the
Total Pension Liability 85.89%83.64%84.34%99.82%86.49%
Covered Payroll 14,893,185$ 14,539,529$ 14,148,052$ 13,768,586$ 13,383,715$
Plan Net Pension Liability/(Asset) as a
Percentage of Covered Payroll 170.74%196.39%183.43%2.04%149.76%
Notes to Schedule:
Changes in Benefit Terms:The figures above generally include any liability impact that may have resulted from voluntary benefit changes
that occurred on or before the Measurement Date.However,offers of Two Years Additional Service Credit (a.k.a.Golden Handshakes)that
occurred after the Valuation Date are not included in the figures above,unless the liability impact is deemed to be material by the plan
actuary.
Changes in Assumptions:There were no assumption changes in 2023 or 2024.Effective with the June 30, 2021 valuation date (June 30,
2022 measurement date),the accounting discount rate was reduced from 7.15%to 6.90%.In determining the long-term expected rate of
return,CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows.In addition,
demographic assumptions and the price inflation assumption were changed in accordance with the 2021 CalPERS Experience Study and
Review of Actuarial Assumptions.The accounting discount rate was 7.15%for measurement date June 30, 2017 through June 30, 2021,and
7.65% for measurement dates June 30, 2015 through June 30, 2016.
Schedule of Changes in the Net Pension Liability and Related Ratios
Last Ten Years
June 30, 2025
Measurement Period: June 30 2019 2018 2017 2016 2015
Total Pension Liability
Service Cost 2,586,911$ 2,528,271$ 2,556,902$ 2,298,617$ 2,250,860$
Interest 9,638,674 9,168,092 8,836,284 8,575,275 8,229,312
Changes in Benefit Terms -----
Changes in Assumptions -(1,312,634)7,308,486 -(1,996,819)
Difference Between Expected and actual Experience 1,183,213 461,917 (1,208,593) (613,440) (981,200)
Benefit Payments, including Refunds of
Employee Contributions (6,658,719) (5,995,949) (5,779,040) (5,448,218) (5,288,251)
Net Change in Total Pension Liability 6,750,079 4,849,697 11,714,039 4,812,234 2,213,902
Total Pension Liability - Beginning 135,659,308 130,809,611 119,095,572 114,283,338 112,069,436
Total Pension Liability - Ending (a)142,409,387$ 135,659,308$ 130,809,611$ 119,095,572$ 114,283,338$
Plan Fiduciary Net Position
Net Plan to Plan Resource Movement -$(203)$-$-$-$
Contributions - Employer 36,706,983 4,441,517 4,105,810 3,819,770 3,557,098
Contributions - Employee 1,019,255 1,015,008 1,014,329 1,010,337 1,007,023
Net Investment Income 7,516,686 6,949,676 8,149,097 369,214 1,601,760
Benefit Payments, Including Refunds of
Employee Contributions (6,658,719) (5,995,949) (5,779,040) (5,448,218) (5,288,251)
Administrative Expenses (62,278) (126,575) (109,029) (45,185) (83,511)
Other Changes in Fiduciary Net Position 203 (240,367) ---
Net Change in Plan Fiduciary Net Position 38,522,130 6,043,107 7,381,167 (294,082) 794,119
Plan Fiduciary Net Position - Beginning 87,270,402 81,227,295 73,846,128 74,140,210 73,346,091
Plan Fiduciary Net Position - Ending (b)125,792,532 87,270,402 81,227,295 73,846,128 74,140,210
Plan Net Pension Liability/(Asset) - Ending (a)-(b)16,616,855$ 48,388,906$ 49,582,316$ 45,249,444$ 40,143,128$
Plan Fiduciary Net Position as a Percentage of the
Total Pension Liability 88.33%64.33%62.10%62.01%64.87%
Covered Payroll 12,892,655$ 12,969,485$ 12,829,415$ 12,767,963$ 12,451,513$
Plan Net Pension Liability/(Asset) as a
Percentage of Covered Payroll 128.89%373.10%386.47%354.40%322.40%
Notes to Schedule:
Changes in Assumptions:There were no assumption changes in 2023 or 2024.Effective with the June 30, 2021 valuation date (June 30,
2022 measurement date),the accounting discount rate was reduced from 7.15%to 6.90%.In determining the long-term expected rate of
return,CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows.In addition,
demographic assumptions and the price inflation assumption were changed in accordance with the 2021 CalPERS Experience Study
and Review of Actuarial Assumptions.The accounting discount rate was 7.15%for measurement date June 30, 2017 through June 30,
2021, and 7.65% for measurement dates June 30, 2015 through June 30, 2016.
Changes in Benefit Terms:The figures abovegenerally include any liability impact that may have resulted from voluntary benefit changes
that occurred on or before the Measurement Date.However,offers of Two Years Additional Service Credit (a.k.a.Golden Handshakes)
that occurred after the Valuation Date are not included in the figures above,unless the liability impact is deemed to be material by the
plan actuary.
Schedule of Plan Contributions
Last Ten Years
June 30, 2025
Actuarially
Determined Contributions in Contribution Covered-Contributions as a
Fiscal Contribution Relation to the Deficiency Employee Percentage of Covered-
Year (ADC)(1)ADC(1)(Excess)Payroll(2)Employee Payroll(2)
2016 3,819,770$ (3,819,770)$ -$12,767,963$ 29.92%
2017 4,105,810 (4,105,810)-12,829,415 32.00%
2018 4,441,517 (4,441,517)-12,969,485 34.25%
2019 4,906,983 (36,706,983) (31,800,000) 12,892,655 284.71%
2020 2,437,119 (2,437,119)-13,383,715 18.21%
2021 2,765,952 (3,965,952)(1,200,000)13,768,586 28.80%
2022 2,971,785 (3,960,785)(989,000)14,148,052 28.00%
2023 3,163,698 (5,477,698)(2,314,000)14,539,529 37.67%
2024 3,095,172 (3,095,172)-14,893,185 20.78%
2025 3,891,166 -3,891,166 16,088,022 0.00%
Notes to Schedule:
Actuarial Cost Method Entry Age Actuarial Cost Method
Amortization Method/Period Varies by date established and source. May be level dollar or level percent of pay
and may include direct rate smoothing.
Asset Valuation Method Fair value of assets
Discount Rate 6.80% (net of investment and administrative expenses)
Inflation 2.30%
Salary Increases Varies by category, entry age, and duration of service.
Payroll Growth 2.80%
(1)Employers are assumed to make contributions equal to the actuarially determined contributions.However,some employers may choose
to make additional contributions toward their unfunded liability.Employer contributions for such plans exceed the actuarially determined
contributions.
(2)Includes three year’s payroll growth assumption using 2.80% payroll growth assumption for fiscal year 2024; 2.75% payroll growth
assumption for fiscal years 2018-2023; and 3.00% payroll growth assumption for fiscal years 2015-2017.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2024-25 were from the June 30,
2022 public agency valuations. Also note, that some of the data from prior years were updated with the most current available information.
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
Board of Directors
Otay Water District
Spring Valley, California
Independent Auditor’s Report
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 Otay Water District (“the District”), as of and for the year ended June 30, 2025,
and the related notes to the financial statements, which collectively comprise the District’s
basic financial statements, and have issued our report thereon dated October 29, 2025.
Report on 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion 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 or significant deficiencies may exist that have not been identified.
Attachment C
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's financial statements
are free from material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements, noncompliance with which
could have a direct and material effect on the financial statements. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances
of noncompliance or other matters that are required to be reported under Government
Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness
of the 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.
Irvine, California October 29, 2025
To the Board of Directors
Otay Water District
Spring Valley, California
We have audited the financial statements of the Otay Water District (“the District”)as of and
for the year ended June 30, 2025 and have issued our report thereon dated October 29, 2025.
Professional standards require that we advise you of the following matters relating to our
audit.
Our Responsibility in Relation to the Financial Statement Audit
As communicated in our engagement letter dated March 26, 2025, our responsibility, as
described by professional standards, is to form and express an opinion about whether the
financial statements that have been prepared by management with your oversight are
presented fairly, in all material respects, in accordance with accounting principles generally
accepted in the United States of America. Our audit of the financial statements does not
relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit
to obtain reasonable, rather than absolute, assurance about whether the financial statements
are free of material misstatement. An audit of financial statements includes consideration of
internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, as part of
our audit, we considered the internal control of the District solely for the purpose of
determining our audit procedures and not to provide any assurance concerning such internal
control.
We are also responsible for communicating significant matters related to the audit that are,
in our professional judgment, relevant to your responsibilities in overseeing the financial
reporting process. However, we are not required to design procedures for the purpose of
identifying other matters to communicate to you.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously
communicated to you.
Compliance with All Ethics Requirements Regarding Independence
The engagement team, others in our firm, as appropriate and our firm, have complied with
all relevant ethical requirements regarding independence under the American Institute of
Certified Public Accountants (“AICPA”) independence standards, contained in the Code of
Professional Conduct.
We identified self-review threats to independence as a result of non-attest services provided.
Those non-attest services included the preparation of the financial statements. To mitigate
the risk, management has compared the draft financial statements and footnotes to the
underlying accounting records to verify accuracy and has reviewed a disclosure checklist to
ensure footnotes are complete and accurate.
Attachment D
Additionally, we utilize a quality control reviewer to perform a second review of the financial
statements. We believe these safeguards are sufficient to reduce the independence threats to
an acceptable level.
Significant Risks Identified
We have identified the following significant risks:
Other Post Employment Benefits (OPEB) and Health Reimbursement
Arrangement
Implementation of GASB Statement No. 101: Compensated Absences
Qualitative Aspects of the Entity’s Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A
summary of the significant accounting policies adopted by the District is included in Note 1 to
the financial statements. As described in Note 1 to the financial statements, during the year,
the entity changed its method of accounting for compensated absences by adopting
Government Accounting Standards Board (GASB) Statement No. 101. No matters have come
to our attention that would require us, under professional standards, to inform you about (1)
the methods used to account for significant unusual transactions and (2) the effect of
significant accounting policies in controversial or emerging areas for which there is a lack of
authoritative guidance or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by
management and are based on management’s current judgments. Those judgments are
normally based on knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the financial statements and because of the possibility that future events
affecting them may differ markedly from management’s current judgments.
The most sensitive accounting estimates affecting the financial statements are:
Management’s estimate of which capital projects represent ordinary maintenance
activities necessary to keep an asset operational for its originally intended useful life
versus significant improvement, replacement, and life extending projects that should
be capitalized as additions to capital assets is based on management’s knowledge of
the assets and their useful lives. We evaluated the key factors and assumptions used
to develop the amounts added to capital assets in determining that it is reasonable in
relation to the financial statements taken as a whole.
Management’s estimate of transactions related to net pension liabilities based on
actuarial information. We evaluated the key factors and assumptions used to develop
the amounts by the actuary and determined that it is reasonable in relation to the
financial statements taken as a whole.
Management’s estimate of transactions related to net OPEB liabilities based on
actuarial information. We evaluated the key factors and assumptions used to develop
the amounts by the actuary and determined that it is reasonable in relation to the
financial statements taken as a whole.
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly
sensitive because of their significance to financial statement users. The most sensitive
disclosures affecting the District’s financial statements were:
The disclosure of pensions in note 7 of the financial statements.
The disclosure of OPEB in note 8 to the financial statements.
The financial statement disclosures are neutral, consistent, and clear.
Significant Unusual Transactions
For purposes of this communication, professional standards require us to communicate to you
significant unusual transactions identified during our audit.There were no significant unusual
transactions identified as a result of our audit procedures.
Identified or Suspected Fraud
We have not identified or have obtained information that indicates that fraud may have
occurred.
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the
performance of the audit.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards also require us to accumulate all
known and likely misstatements identified during the audit, other than those that we believe
are trivial, and communicate them to the appropriate level of management. Further,
professional standards require us to also communicate the effect of uncorrected
misstatements related to prior periods on the relevant classes of transactions, account
balances or disclosures, and the financial statements as a whole and each applicable opinion
unit.There were no uncorrected misstatements that we identified as a result of our audit
procedures.
In addition, professional standards require us to communicate to you all material, corrected
misstatements that were brought to the attention of management as a result of our audit
procedures. There were no material misstatements that we identified as a result of our audit
procedures.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management
as a matter, whether or not resolved to our satisfaction, concerning a financial accounting,
reporting, or auditing matter, which could be significant to the District’s financial statements
or the auditor’s report. No such disagreements arose during the course of the audit.
Circumstances that Affect the Form and Content of the Auditor’s Report
For purposes of this letter, professional standards require that we communicate any
circumstances that affect the form and content of our auditor’s report. There were none.
Representations Requested from Management
We have requested certain written representations from management dated October 24,
2025.
Management’s Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing
and accounting matters. Management informed us that, and to our knowledge, there were no
consultations with other accountants regarding auditing and accounting matters.
Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the District, we generally discuss a
variety of matters, including the application of accounting principles and auditing standards,
significant events or transactions that occurred during the year,operating and regulatory
conditions affecting the entity, and operational plans and strategies that may affect the risks
of material misstatement. None of the matters discussed resulted in a condition to our
retention as the District’s auditors.
Restriction on Use
This report is intended solely for the information and use of the Board of Directors and
management of the District and is not intended to be and should not be used by anyone other
than these specified parties.
Irvine, California
October 29, 2025
Otay Water District
Spring Valley, California
INDEPENDENT ACCOUNTANT’S REPORT
We have performed the procedures enumerated below, in reviewing the Otay Water District’s
(“the District”) compliance with the requirements of the Investment Policy as such
requirements apply to the Investments of the District for the period July 1, 2024, through
June 30, 2025. The District is responsible for compliance with the requirements as noted in
the referenced Investment Policies.
The District has agreed to acknowledge that the procedures performed are appropriate to
meet the intended purpose of determining compliance by the District with respect to the
Investment Policy for the period July 1, 2024, through June 30, 2025.This report may not be
suitable for any other purpose. The procedures performed may not address all the items of
interest to a user of this report and may not meet the needs of all users of this report and, as
such, users are responsible for determining whether the procedures performed are
appropriate for their purposes.
The procedures performed, and the results of those procedures are as follows:
1.Obtain a copy of the District’s investment policy and determine that it is in effect for the
fiscal year ended June 30, 2025.
Results:No exceptions were noted as a result of applying the above procedure.
2.Select 4 investments held at year end and determine if they are allowable investments
under the District’s Investment Policy.
Results:No exceptions were noted as a result of applying the above procedure.
3.For the four investments selected in #2 above, determine if they are held by a third-party
custodian designated by the District.
Results:No exceptions were noted as a result of applying the above procedure.
4.Confirm the par or original investment amount and market value for the four investments
selected above with the custodian or issuer of the investments.
Results:No exceptions were noted as a result of applying the above procedure.
Attachment E
Otay Water District
Spring Valley, California
Page 2
5.Select two investment earnings transactions that took place during the year and recompute
the earnings to determine if the proper amount was received.
Results:No exceptions were noted as a result of applying the above procedure.
6.Trace amounts received for transactions selected at #5 above into the District’s bank
accounts.
Results:No exceptions were noted as a result of applying the above procedure.
7.Select five investment transactions (buy, sell, trade or maturity) occurring during the year
under review and determine that the transactions are permissible under the District’s
investment policy.
Results:No exceptions were noted as a result of applying the above procedure.
8.Review the supporting documents for the five investments selected at #7 above to
determine if the transactions were appropriately recorded into the District’s general ledger.
Results:No exceptions were noted as a result of applying the above procedure.
We were engaged by Otay Water District to perform this agreed-upon procedures engagement
and conducted our engagement in accordance with attestation standards established by the
American Institute of Certified Public Accountants. We were not engaged to and did not
conduct an examination or review engagement, the objective of which would be the
expression of an opinion or conclusion, respectively, on the District’s accounting records.
Accordingly, we do not express such an opinion or conclusion. Had we performed additional
procedures other matters might have come to our attention that would have been reported
to you.
We are required to be independent of the District and to meet our other ethical responsibilities
in accordance with the relevant ethical requirement related to our agreed-upon procedures
engagement.
This report is intended solely for the information and use of management of Otay Water
District and is not intended to be and should not be used by anyone other than those specified
parties.
Irvine, California
October 29, 2025
STAFF REPORT
TYPE MEETING: Regular Board MEETING DATE: November 5, 2025
SUBMITTED BY: Andrea Carey,
Customer Service Manager
PROJECT: DIV. NO. All
APPROVED BY: Joseph R. Beachem, Chief Financial Officer
Jose Martinez, General Manager
SUBJECT: Adopt Ordinance No. 602 to Approve the Addition of a Fire Flow
Fee and the Proposed Changes to Various Fees and Charges by
Amending Appendix A and Section 38, Service for Fire
Protection Systems, of the District’s Code of Ordinances to be
Effective January 1, 2026
GENERAL MANAGER’S RECOMMENDATION:
That the Board adopt Ordinance No. 602 to add a fire flow fee and
approve the proposed changes to various fees and charges by amending
Appendix A and Section 38, Service for Fire Protection Systems, of
the District’s Code of Ordinances to be effective January 1, 2026.
COMMITTEE ACTION:
See Attachment A.
PURPOSE:
To present to the Board, for consideration, the addition of a fire
flow fee and proposed changes to various fees and charges listed in
Appendix A, and to request that the Board approve these changes by
adopting Ordinance No. 602, amending Section 38, Service for Fire
Protection Systems, and Appendix A of the District’s Code of
Ordinances.
ANALYSIS:
Periodically, the District analyzes fees to ensure all costs are
recovered from the individual(s) benefiting from the service
performed. In addition, staff reviews common deposits required by
AGENDA ITEM 4
customers to verify if they are appropriate for the current period.
The previous review was completed in 2023, therefore, sufficient time
has passed to warrant another evaluation. Staff has prepared a cost
analysis of various District fees and charges as outlined in Appendix
A, and updates are recommended. The following sections will further
explain these recommendations.
Proposed Fee and Charge Changes
For each fee, the amount of staff time spent on the activity was
determined. Pertinent staff members were consulted to establish the
average time spent completing each task in the field as well as any
time spent in the office that was directly related to completing each
task. Additionally, payroll personnel were asked to provide fully
loaded labor rates. Using these labor rates and the average time
spent completing a specific task, staff then determined the overall
cost required to perform each service. To ensure financial equity to
all rate payers, staff is recommending changes to the following fees
and charges effective January 1, 2026, as shown in the table below.
Code
Numbers Item Current
Fees
Proposed
Fees
23.04 Backflow Certification
Second Notification $10.00 Remove
Third Notification $25.00 $60.00
Third Notification ( hand delivered) $60.00 $110.00
Reconnection $60.00 Remove
Reconnection (if technician present) $180.00 $230.00
Initial Filing Fee (New applicants for addition to the list of
approve backflow prevention device testers) $25.00 $40.00
Renewal Filing Fee (to remain on the list of approved
backflow prevention device testers) $10.00 Remove
31.03
A.4. Temporary Meter Install & Removal
.75"-4" (on hydrant) $240.00 $280.00
4"-6" $960.00 $1,200.00
31.03
A.5. Temporary Meter Move Fee - includes backflow certification
.75"-4" (on hydrant) $180.00 $210.00
4"-6" $960.00 $1,200.00
34.02 C Meter Lock Charge $60.00 $70.00
38.06 A Fire Flow Fee New $600.00
72.04
A.1. Locking or Removing Damaged or Tampered Meters
Pull and Reset Meter .75"-2" $250.00 $310.00
Broken Lock/Locking Device .75"-1" $80.00 $95.00
Policy 54 Lien Processing Fee $55.00 $60.00
Policy 54 Delinquent Tax Roll Fee $45.00 $50.00
The fees and charges above are assessed to the customer’s water
account after the work is performed. Staff has consulted with the
District’s General Counsel who confirmed these fees are not subject
to Proposition 218 noticing requirements. Most of the proposed fee
changes are directly related to the increase in labor costs that have
occurred since these fees were last updated. Changes to District
practices, which are explained further in this document, also
contributed to some of the proposed changes to fees. Additional
information regarding the fees and charges is discussed below.
Backflow Fees
Staff are proposing the removal of the second notification fee.
Backflow devices must be tested annually, and test reports must be
submitted by the due date provided to the customer. Customers are
notified of the due date 30 days in advance via mailed notice. If the
test result is not submitted by the due date, a second notice is
mailed, granting an additional 14 days to complete the test. This
notice is mailed through the District’s third-party bill print
vendor, Infosend. The cost associated with printing and mailing this
notice is de minimis, therefore, staff proposes eliminating the
second notification fee.
If, after the 14-day extension, the District has still not received a
passing test report, a third notice is mailed notifying the customer
of impending disconnection. Staff is proposing an increase to the fee
assessed for the mailing of this third notice to reflect higher labor
costs and the additional time required to manage these accounts. In
addition to the mailed notice, staff follow up with an email and
phone call. The average time spent managing these delinquent accounts
was used to calculate the proposed revised fee.
As a final step prior to disconnection, staff hand-deliver a notice
to the site to ensure the on-site manager is aware of the impending
disconnection and can take the necessary steps to bring the backflow
device into compliance. Although this can be time-consuming for
District staff, this process has proven highly effective in
minimizing disconnections. The proposed increase for this action
reflects updated calculations of staff time and labor costs.
If a customer fails to respond after these notifications, meter
service is disconnected. Based on current District practices, staff
recommend removing the existing reconnection fee of $60 because it is
not applicable in reconnection of backflow as this process is not
handled in the same manner as non-payment. Instead, staff recommends
only listing one reconnection fee that is applicable for all backflow
reconnections and updating the fee from $180 to $230. When a service
is disconnected for backflow non-compliance, a Meter Services
representative will lock the service and must return to the property
to meet the tester and observe a passing test before reconnection.
Given the total time spent on this process and the staff involved,
the updated fee ensures full cost recovery of this effort.
The last fee updates in this section are related to the approved
backflow testers list. The District requires customers to use a
District-approved backflow tester to test their backflow devices. The
District recently transitioned to an online backflow reporting
portal, SwiftComply. With this transition, the District no longer
manually tracks backflow tester certifications or gauge calibrations;
therefore, an official renewal requirement for testers is no longer
necessary. Staff propose eliminating this fee. New testers who wish
to perform testing within the District will still be required to
apply, and the initial filing fee has been updated to reflect current
labor costs.
Temporary Meter Fees
Temporary meters are meters used for construction purposes. The
majority of these are 2½” meters attached to District fire hydrants
(see photo below). Each temporary meter requires a backflow device to
be tested and installed at the time the meter is set. District staff
installs and removes all temporary meters and backflow devices for
these 2½” meters. Staff is proposing an increase to the installation
fee from $240 to $280 and to the move fee for the hydrant meters from
$180 to $210, directly related to the increase in labor costs. On
occasion, developers require a larger flow of water and must use a
regular 4” or 6” meter (see photo on page 5). The installation of
these larger meters is much more complex and requires two staff
members but does not include backflow testing, as the customer is
responsible for installing and testing the backflow device for these
larger meters. The proposed fee increase from $960 to $1200 for these
larger temporary meters is directly related to labor cost increases.
Standard 2½” temporary meter/backflow device attached to hydrant for
construction purposes.
Larger 6” temporary meter installed for construction purposes.
Lock Fees
The meter lock charge is billed to customers whose service has been
disconnected for non-payment. The District locks approximately 150-
200 meters per month. To determine the appropriate fee for
disconnection and reconnection due to non-payment, staff analyzed the
costs associated with locking and unlocking an account.
Prior to locking a meter, Customer Service staff review each account
on the day’s lock list. The final list is sent to the meter reading
team. A meter reader then visits each property to turn off service
and place a lock on the meter, along with a tag notifying the
customer that the service has been interrupted and instructing them
to call the District. The lock process takes approximately 15 minutes
per account.
To unlock the meter, the customer must pay the past-due amount. A
Customer Service Representative verifies payments made throughout the
day to locked accounts and creates service orders to unlock the
meters for accounts that were paid. The meter reading team then
returns to the property to unlock the meter. The unlock process takes
approximately 20 minutes per account.
Based on the average time of 35 minutes per account and the
associated labor costs, staff is proposing an increase from $60 to
$70. Staff completed a survey of neighboring agencies’ lock fees and
the results are shown in the table on the following page.
Water Agency Lock Fee
Padre Dam Municipal Water District $60
Helix Water District $64
Sweetwater Authority $85
Although not required by law, the District will be notifying all
customers in December, via a message on their water bill, of the lock
fee increase.
Pull Meter and Broken Lock Fees
If a customer has been disconnected and tampers with the lock on
their meter, staff will relock the meter and charge a broken lock
fee. This fee recovers the cost of the broken lock and staff time
associated with investigating the incident and relocking the meter.
The proposed increase is only associated with increased labor costs
as the cost of the lock remains the same. If a customer breaks the
lock more than once, staff will pull the meter and install a locking
device at the service line. The customer must pay the pull and reset
meter fee and all past due charges to have the meter reinstalled.
When a meter is pulled, a letter is mailed to the property and the
property owner (if different from the account holder) explaining the
meter has been pulled, the amount that must be paid for it to be
reinstalled, and that any further tampering of the service could
result in additional fines and possible prosecution. The increased
cost to pull and reset the meter is due to increased labor costs.
Lien Processing and Delinquent Tax Roll Fees
California Water Code 72102 allows water districts to file liens with
the County for unpaid water and sewer charges. In 2024, the District
filed 17 liens. Staff is required to send an intent to lien letter 30
days prior to filing the lien with the County. The lien processing
fee offsets staff time associated with this process. In addition to
filing liens on the delinquent owner, staff sends delinquent owner
account balances to the County of San Diego’s tax roll annually.
These balances are then collected through the property’s tax bill and
reimbursed to Otay. In 2025, the District sent $49,529 from 104
delinquent accounts to the County for collection. The delinquent tax
roll fee covers the costs associated with identifying, noticing, and
submitting these accounts to the County. The proposed increases to
both of these fees are directly related to labor cost increases.
Fire Flow Fee
Currently, fire flow analysis is provided upon request at no cost to
the requester. The District’s calibrated hydraulic model is used to
provide fire flow pressure data; however, the work required to
provide specific data is not currently recovered from the individual
requester, even though the requester is the beneficiary of the
information. The District model is used for internal purposes such as
facility outages, planning for growth, and emergency scenarios. The
cost of maintaining the model is excluded from the fire flow fee.
The proposed fee of $600 is based on the average cost to provide the
information. This fee is non-refundable. Fire flow analysis requiring
the addition of new infrastructure to the model will be charged at
actual costs incurred. No fee will be charged for fire flow requests
submitted by another public agency.
Neighboring agencies do charge a fee for this service summarized in
the table below.
Water Agency Fire Flow
Fee
Padre Dam Municipal Water District $150
Helix Water District $297
Sweetwater Authority $600
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
Based on the average number of occurrences for each fee, staff
estimates an increase of approximately $98,000 in annual revenue,
which includes an estimated $33,000 of cost recovery from the fire
flow fee. The proposed fee and charge changes reflect the current
labor rates and time involved for each task. Updating these fees help
to ensure the financial equity of all rate payers as the fees are
only charged to those customers that require these services.
STRATEGIC GOAL:
This revenue source will help the District meet its fiscal
responsibility to its ratepayers.
LEGAL IMPACT:
None.
Attachments:
A) Committee Action Form
B) Ordinance No. 602
Exhibit 1 - Section 38 Strike-through
Exhibit 2 – Section 38 Proposed
Exhibit 3 - Appendix A Strike-through
Exhibit 4 - Appendix A Proposed
ATTACHMENT A
SUBJECT/PROJECT:
Adopt Ordinance No. 602 to Approve the Addition of a Fire
Flow Fee and the Proposed Changes to Various Fees and
Charges by Amending Appendix A and Section 38, Service for
Fire Protection Systems, of the District’s Code of
Ordinances to be Effective January 1, 2026
COMMITTEE ACTION:
1
ORDINANCE NO. 602
AN ORDINANCE OF THE BOARD OF DIRECTORS OF
THE OTAY WATER DISTRICT
AMENDING SECTION 38, SERVICE FOR FIRE PROTECTION SYSTEMS; AND
APPENDIX A OF THE DISTRICT’S CODE OF ORDINANCES
BE IT ORDAINED by the Board of Directors of Otay Water
District that the District’s Code of Ordinances Section 38,
Service for Fire Protection Systems; and Appendix A be amended
as per Exhibits 1 and 3 (attached).
NOW, THEREFORE, BE IT RESOLVED that the new proposed
Section 38, Service for Fire Protection Systems (Exhibit 2) and
Appendix A (Exhibit 4) of the Code of Ordinances shall become
effective on January 1, 2026.
PASSED, APPROVED AND ADOPTED by the Board of Directors of
the Otay Water District at a regular meeting duly held this 5th
day of November 2025, by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
________________________________
President
ATTEST:
________________________
District Secretary
Attachment B
38-1
SECTION 38 SERVICE FOR FIRE PROTECTION SYSTEMS
38.01 SERVICE FOR COMMERCIAL OR INDUSTRIAL PURPOSES
The District will provide water service for fire pro-
tection systems for commercial or industrial developments
within the District. Such service shall be available only
in accordance with the rules and regulations provided in
this Code.
38.02 RULES AND REGULATIONS FOR FIRE HYDRANT AND/OR
FIRE SPRINKLER SERVICE FOR COMMERCIAL OR
INDUSTRIAL PURPOSES, OR MULTI-FAMILY RESIDENCES,
ON PRIVATE PROPERTY
A.All fire hydrant and/or fire sprinkler service
mains installed for commercial or industrial
purposes, or multi-family residences, on
privately-owned land shall be owned and
maintained by the land owner; except for fire
hydrants installed for developments where the
District has accepted an easement for such
service mains.
B.Where service is provided for fire hydrant or
fire sprinkler service on privately-owned land
under Paragraph A above, the service shall be
provided by the District at the property line of
the land to be served. The property owner or
developer shall be responsible to construct and
maintain the remainder of the facilities to pro-
vide fire protection to the property. Each such
facilities installation shall include a reduced
pressure principle detector backflow prevention
assembly (RPDA) device installed in accordance
with District specifications, and tested
annually in accordance with Section 23.04.G. of
this code. The RPDA device shall be installed
on the fire main located on the customer side of
the property line.
C.Water furnished for fire hydrant or fire sprin-
kler service shall be used only for fire protec-
tion purposes. Water service for domestic,
business, commercial or irrigation purposes, or
multi-family residences, shall be furnished only
after a meter or meters have been installed on
Exhibit 1
38-2
laterals connected to the District main in the
street pursuant to requirements of this Code.
D.Upon application for installation of one or more
fire service connections to an existing District
water main, the customer shall pay such charges
as shall be determined on the basis of actual
costs incurred by the District in performing the
work. At the time of application for the
installation, the District will estimate the
total costs to be incurred in performing the
work. The customer shall deposit the estimated
amount with the District prior to commencement
of the work. The work shall be performed by the
District under a District Water/Sewer Order. If
actual costs incurred by the District are less
than the amount deposited, the District shall
refund the balance of the deposit to the
customer. If the costs incurred exceed the
amount deposited, the customer shall reimburse
the District for the additional costs. Where
the fire service connection is to be made to a
water main to be constructed in a street by the
owner or developer, the costs for such
connection shall be covered under the standard
developer's agreement with the District for
installation of the water facilities for the
development project.
E.Water for fire protection services shall be pro-
vided in accordance with District fees and
charges set forth in Section 25.03 D.16.(c) of
this Code.
F.The District shall have no responsibility for
the proper function of the fire service system
or for the availability of water from its mains
for fire protection in the event of emergency.
While the District undertakes at all times to
have adequate supplies available in its system
for ordinary uses, it is not a guarantor of
continual service in quantities adequate for all
purposes however, and each customer shall
specifically agree that as a condition of the
fire service connection contracted for that the
District shall incur no liability or be subject
to any damages resulting from a failure or
38-3
malfunctioning of the fire sprinkler lateral or
fire sprinkler system or from a lack of water in
adequate quantity or pressure to make it fully
effective.
38.03 SERVICES FOR INDIVIDUALLY METERED RESIDENTIAL
FIRE PROTECTION
When a single-family residential water meter is
required to provide standby capacity for a fire
sprinkler system, the capacity charge may be
determined according to the size of the meter
necessary to meet the water use requirements for
the property. Additional capacity fees for
upsizing the single-family residential meter to
meet fire flow requirements will be waived.
Standby capacity to provide water for a fire
sprinkler system is required when (1) the fire
sprinkler system is required by law, including
any requirement imposed as a condition of
development, permit, or occupancy, and (2) the
fire chief, fire marshal, or building official
of the city, county, or special district
responsible for fire protection service to the
property has a requirement for additional meter
size due to fire protection. The determination,
under this section, shall be made at the time
the meter is first obtained, or at the time a
meter is replaced with one of greater size due
to the later installation of a fire protection
system.
When a separate meter is required, water for
fire protection services shall be provided in
accordance with District fees and charges set
forth in Section 25.03 D.16.(c) of this Code.
38.04 FIRE SPRINKLER SERVICE FOR COMBINED MULTI &
SINGLE FAMILY SITES
A.Master metered residential sites that contain
both multi-family and single-family units, as
designated by the fire department with
jurisdiction, shall design and install the
multi-family portion of the project in
accordance with Section 38.02 (A through F).
Portions of the site designated as single-family
38-4
shall design and install fire sprinklers as
required by the fire agency with jurisdiction.
The District requires all single-family
residential homes to abide by the rules set
forth in Section 38.05.
38.05 RULES AND REGULATIONS FOR SINGLE-FAMILY
RESIDENTIAL PROPERTIES WITH FIRE PROTECTION
SYSTEMS
A.The District requires single-family residential
homes with fire sprinklers to include an above-
grade double check valve backflow prevention
assembly unless all the following criteria are
met:
1.The user premises has only one service
connection to the PWS;
2.A single service line onto the user premises
exists that subsequently splits on the property
for domestic flow and fire protection system
flow, such that the fire protection system may
be isolated from the rest of the user premises;
3.A single, water industry standard, water
meter is provided to measure combined domestic
flow and fire protection system flow;
4.The fire protection system is constructed of
piping materials certified as meeting NSF/ANSI
Standard 61; and
5.The fire protection system’s piping is looped
within the structure and is connected to one or
more routinely used fixtures (such as a water
closet) to prevent stagnant water.
B.The District highly encourages the use of a
passive purge system, as described in section
38.05, for all new single-family residential
sites.
38.06 FIRE FLOW TESTS
A.The District’s calibrated hydraulic model is
used to provide fire flow pressure data when
Formatted: Indent: Hanging: 0.5"
38-5
requested by customers. Each request for fire
flow letter shall be charged a Fire Flow Fee, as
set forth in Appendix A, 38.06 A. This fee is
non-refundable. Fire flow analysis requiring
new infrastructure to be added to the model will
be charged at actual costs incurred. No fee will
be charged for a fire flow requested by another
public agency.
38-1
SECTION 38 SERVICE FOR FIRE PROTECTION SYSTEMS
38.01 SERVICE FOR COMMERCIAL OR INDUSTRIAL PURPOSES
The District will provide water service for fire pro-
tection systems for commercial or industrial developments
within the District. Such service shall be available only
in accordance with the rules and regulations provided in
this Code.
38.02 RULES AND REGULATIONS FOR FIRE HYDRANT AND/OR
FIRE SPRINKLER SERVICE FOR COMMERCIAL OR
INDUSTRIAL PURPOSES, OR MULTI-FAMILY RESIDENCES,
ON PRIVATE PROPERTY
A.All fire hydrant and/or fire sprinkler service
mains installed for commercial or industrial
purposes, or multi-family residences, on
privately-owned land shall be owned and
maintained by the land owner; except for fire
hydrants installed for developments where the
District has accepted an easement for such
service mains.
B.Where service is provided for fire hydrant or
fire sprinkler service on privately-owned land
under Paragraph A above, the service shall be
provided by the District at the property line of
the land to be served. The property owner or
developer shall be responsible to construct and
maintain the remainder of the facilities to pro-
vide fire protection to the property. Each such
facilities installation shall include a reduced
pressure principle detector backflow prevention
assembly (RPDA) device installed in accordance
with District specifications, and tested
annually in accordance with Section 23.04.G. of
this code. The RPDA device shall be installed
on the fire main located on the customer side of
the property line.
C.Water furnished for fire hydrant or fire sprin-
kler service shall be used only for fire protec-
tion purposes. Water service for domestic,
business, commercial or irrigation purposes, or
multi-family residences, shall be furnished only
after a meter or meters have been installed on
Exhibit 2
38-2
laterals connected to the District main in the
street pursuant to requirements of this Code.
D. Upon application for installation of one or more
fire service connections to an existing District
water main, the customer shall pay such charges
as shall be determined on the basis of actual
costs incurred by the District in performing the
work. At the time of application for the
installation, the District will estimate the
total costs to be incurred in performing the
work. The customer shall deposit the estimated
amount with the District prior to commencement
of the work. The work shall be performed by the
District under a District Water/Sewer Order. If
actual costs incurred by the District are less
than the amount deposited, the District shall
refund the balance of the deposit to the
customer. If the costs incurred exceed the
amount deposited, the customer shall reimburse
the District for the additional costs. Where
the fire service connection is to be made to a
water main to be constructed in a street by the
owner or developer, the costs for such
connection shall be covered under the standard
developer's agreement with the District for
installation of the water facilities for the
development project.
E. Water for fire protection services shall be pro-
vided in accordance with District fees and
charges set forth in Section 25.03 D.16.(c) of
this Code.
F. The District shall have no responsibility for
the proper function of the fire service system
or for the availability of water from its mains
for fire protection in the event of emergency.
While the District undertakes at all times to
have adequate supplies available in its system
for ordinary uses, it is not a guarantor of
continual service in quantities adequate for all
purposes however, and each customer shall
specifically agree that as a condition of the
fire service connection contracted for that the
District shall incur no liability or be subject
to any damages resulting from a failure or
38-3
malfunctioning of the fire sprinkler lateral or
fire sprinkler system or from a lack of water in
adequate quantity or pressure to make it fully
effective.
38.03 SERVICES FOR INDIVIDUALLY METERED RESIDENTIAL
FIRE PROTECTION
When a single-family residential water meter is
required to provide standby capacity for a fire
sprinkler system, the capacity charge may be
determined according to the size of the meter
necessary to meet the water use requirements for
the property. Additional capacity fees for
upsizing the single-family residential meter to
meet fire flow requirements will be waived.
Standby capacity to provide water for a fire
sprinkler system is required when (1) the fire
sprinkler system is required by law, including
any requirement imposed as a condition of
development, permit, or occupancy, and (2) the
fire chief, fire marshal, or building official
of the city, county, or special district
responsible for fire protection service to the
property has a requirement for additional meter
size due to fire protection. The determination,
under this section, shall be made at the time
the meter is first obtained, or at the time a
meter is replaced with one of greater size due
to the later installation of a fire protection
system.
When a separate meter is required, water for
fire protection services shall be provided in
accordance with District fees and charges set
forth in Section 25.03 D.16.(c) of this Code.
38.04 FIRE SPRINKLER SERVICE FOR COMBINED MULTI &
SINGLE FAMILY SITES
A. Master metered residential sites that contain
both multi-family and single-family units, as
designated by the fire department with
jurisdiction, shall design and install the
multi-family portion of the project in
accordance with Section 38.02 (A through F).
Portions of the site designated as single-family
38-4
shall design and install fire sprinklers as
required by the fire agency with jurisdiction.
The District requires all single-family
residential homes to abide by the rules set
forth in Section 38.05.
38.05 RULES AND REGULATIONS FOR SINGLE-FAMILY
RESIDENTIAL PROPERTIES WITH FIRE PROTECTION
SYSTEMS
A. The District requires single-family residential
homes with fire sprinklers to include an above-
grade double check valve backflow prevention
assembly unless all the following criteria are
met:
1. The user premises has only one service
connection to the PWS;
2. A single service line onto the user premises
exists that subsequently splits on the property
for domestic flow and fire protection system
flow, such that the fire protection system may
be isolated from the rest of the user premises;
3. A single, water industry standard, water
meter is provided to measure combined domestic
flow and fire protection system flow;
4. The fire protection system is constructed of
piping materials certified as meeting NSF/ANSI
Standard 61; and
5. The fire protection system’s piping is looped
within the structure and is connected to one or
more routinely used fixtures (such as a water
closet) to prevent stagnant water.
B. The District highly encourages the use of a
passive purge system, as described in section
38.05, for all new single-family residential
sites.
38.06 FIRE FLOW TESTS
A. The District’s calibrated hydraulic model is
used to provide fire flow pressure data when
38-5
requested by customers. Each request for fire
flow letter shall be charged a Fire Flow Fee, as
set forth in Appendix A, 38.06 A. This fee is
non-refundable. Fire flow analysis requiring
new infrastructure to be added to the model will
be charged at actual costs incurred. No fee will
be charged for a fire flow requested by another
public agency.
Section #Code #Fee Description Meter Size
9 9.04 A.1.District Annexation Processing Fee $1,068.96
9.04 B.
Annexation Fees for Water Annexations into Otay
Water District Boundaries
Districtwide
Annexation Fee
3/4"$2,797.94
1"$6,994.85
1-1/2"$13,989.70
2"$22,383.52
3"$44,767.04
4"$69,948.50
6"$139,897.00
8"$223,835.20
10"$321,763.10
9.04 C.4.
Annexation Fees for Annexations to Sewer
Improvement Districts per EDU $1,530.59
10 10.01 Waiver Request $50.00
23 23.04 Backflow Certification
- Second Notification $10.00
- Third Notification $25.00
- Third Notification (hand delivered)$60.00
- Reconnection $60.00
- Reconnection (if test performed with technician present)$180.00
$25.00
- Renewal Filing Fee (to remain on list of
approved backflow prevention device testers)Annually $10.00
25 25.03 A. Set-up Fees for Accounts $15.00
25 25.03 B.
Monthly MWD & CWA Fixed System
Charges (1)3/4"$23.89
1"$39.82
1-1/2"$79.60
2"$127.34
3"$278.58
4"$501.45
6"$1,114.34
8"$1,910.26
10"$3,024.59
(1)Water billed beginning January 1, 2026, which may include water used December 2025.
Charges
- Initial Filing Fee (New applicants for addition to the list of
approved backflow prevention device testers)
Appendix A
Otay Water District
Exhibit 3
Section #Code #Fee Description Meter Size Charges
25 25.03 C.1.
Domestic Residential Monthly Fixed System
Charges (1)3/4" $22.88
1" $28.45
1-1/2" $42.70
2" $59.55
25 25.03 C.2.
Multi-Residential Monthly Fixed System
Charges (1)3/4" $21.11
1" $25.50
1-1/2" $36.79
2" $50.11
3" $105.83
4" $178.32
6" $349.92
8" $540.25
10" $828.43
25 25.03 C.3.
Business and Commercial Monthly Fixed System
Charges (1)3/4" $23.08
1" $28.77
1-1/2" $43.33
2" $60.54
3" $128.65
4" $219.41
6" $441.22
8" $696.80
10" $1,076.28
25 25.03 C.4.3/4" $20.42
1" $24.35
1-1/2" $34.52
2" $46.46
3" $97.82
4" $163.93
6" $317.90
8" $485.42
10"$741.58
25 25.03 C.5.3/4" $21.48
1" $26.13
1-1/2" $38.05
2" $52.15
3" $110.25
4" $186.28
6" $367.61
8" $570.63
10"$876.51
Publicly Owned Monthly Fixed System
Charges (1)
Non-Public Irrigation and Commercial Agriculture
Monthly Fixed System Charges (1)
(1) Water billed beginning January 1, 2026, which may include water used December 2025.
Section #Code #Fee Description Meter Size Charges
25 25.03 C.6.Public Irrigation Monthly Fixed System Charges (1)3/4" $20.42
1" $24.35
1-1/2" $34.52
2" $46.46
3" $97.82
4" $163.93
25 25.03 C.7.3/4" $20.99
1" $25.29
1-1/2" $36.39
2" $49.48
3" $104.46
4" $175.87
6" $344.47
8" $530.95
10"$813.67
25 25.03 C.8.3/4" $42.75
1" $57.89
1-1/2" $96.30
2" $141.96
3" $311.13
4" $543.00
6" $1,130.33
8" $1,745.28
10" $2,859.05
25 25.03 D.1.(b) Domestic Residential Water Rates (1)Unit Charge
0-9 $6.66
10-12 $7.23
13 or more $8.03
25 25.03 D.2.(b)
Multi-Residential Water Rates - Per
Dwelling Unit (1)0-9 $6.61
10-12 $7.15
13 or more $7.41
25 25.03 D.3.(b) Business and Commercial Water Rates (1)All Units $7.00
25 25.03 D.4.(c)
Non-Public Irrigation and Commercial Agriculture
Using Potable Water Rates (1)All Units $8.06
25 25.03 D.5.(b) Publicly-Owned Water Rates (1)All Units $7.70
25 25.03 D.6.(b) Public Irrigation Water Rates (1)All Units $8.79
25 25.03 D.7.(b) Construction Water Rates (1)All Units $8.00
Construction Monthly Fixed System Charges (1)
Recycled Monthly Fixed System Charges (1)
(1) Water billed beginning January 1, 2026, which may include water used December 2025.
Section #Code #Fee Description Meter Size Charges
25 25.03 D.8.(c)Recycled Non-Public Irrigation Water Rates (1)All Units $6.36
25 25.03 D.9.(c)Recycled Commercial Water Rates (1)All Units $5.84
25 25.03 D.10.(c)Recycled Public Irrigation Water Rates (1)All Units $6.48
25 25.03 D.11.(b)
Potable Interim Business and Commercial Water
Rates (1)All Units $14.00
25 25.03 D.12.(b)
Potable Interim Non-Public Irrigation and
Commercial Agriculture Water Rates (1)All Units $16.12
25 25.03 D.13.(b) Tank Trucks Water Rates (1)All Units $8.00
25 25.03 D.14.(c)
Application Fee for Water Service Outside District
Boundaries $500.00
25 25.03 D.14.(d)
Water Rate for Service Outside District
Boundaries (1)All Units $15.40
25 25.03 D.15.(b)
Application Fee for Water Service Outside an
Improvement District $275.00
25 25.03 D.15.(c)
Water Rate for Service Outside Improvement
District (1)All Units $15.40
25 25.03 D.16.(c) Fire Service Monthly Charge 3/4"$3.30
1"$3.38
1-1/2"$3.72
2"$4.27
3"$6.32
4"$9.81
6"$22.40
8"$44.10
10"$76.73
25 25.03 E.1.Energy Charges for Pumping Potable Water (1)
Per 100 ft of lift
over 450 ft per unit $0.092
25 25.03 E.2.
Energy Charges for Pumping Recycled
Water (1)
Per 100 ft of lift
over 450 ft per unit $0.099
(1) Water billed beginning January 1, 2026, which may include water used December 2025.
Section #Code #Fee Description Meter Size Charges
25 25.04 A.Deposits for Non-Property Owners 3/4"$150.00
1"$250.00
1-1/2"$300.00
2"$450.00
3"$1,000.00
4"$1,350.00 6"$3,300.00
8"$7,000.00
10"$10,000.00
28 28.01 B.1.Capacity Fees and Zone Charge
Districtwide
Capacity Fee
- All IDs excluding Triad 3/4" $14,745.27
1" $36,863.18
1-1/2" $73,726.35
2" $117,962.16
3" $235,924.32
4" $368,631.75
6" $737,263.50
8" $1,179,621.60
10" $1,695,706.05
- TRIAD 3/4" $11,058.95
1" $27,647.38
1 -1/2" $55,294.75
2" $88,471.60
3" $176,943.20
4" $276,473.75
6" $552,947.50
8" $884,716.00
10" $1,271,779.25
28 28.02 Installation and Water Meter Charges Meter Size Meter Cost Installation Total
Meter Box/Vault
(if Needed)
- Potable (Non-Irrigation)3/4" x 7.5"$314.14 $149.08 $463.22 $126.56
3/4" x 9"$334.47 $149.08 $483.55 $126.56
1"$405.38 $149.08 $554.46 $126.56
1.5"$658.90 $149.08 $807.98 $286.91
2"$944.14 $149.08 $1,093.22 $286.91
3"$2,942.30 $897.57 $3,839.87 $5,117.99
4"$5,110.31 $897.57 $6,007.88 $5,117.99
6"$8,826.89 $1,417.78 $10,244.67 $5,117.99
8"$11,028.55 $2,174.03 $13,202.58 $7,342.12
10"$15,861.11 $2,174.03 $18,035.14 $7,342.12
Section #Code #Fee Description Meter Size Charges
28 28.02 Meter Cost Installation Total
Meter Box/Vault
(if Needed)
- Potable/Recycled Irrigation 3/4" x 7.5"$314.14 $149.08 $463.22 $322.54
3/4" x 9"$334.47 $149.08 $483.55 $322.54
1"$405.38 $149.08 $554.46 $322.54
1.5"$658.90 $149.08 $807.98 $322.54
2"$944.14 $149.08 $1,093.22 $322.54
3"$2,036.37 $897.57 $2,933.94 $5,117.99
4"$3,964.50 $897.57 $4,862.07 $5,117.99
6"$7,137.39 $1,417.78 $8,555.17 $5,117.99
8"$9,508.28 $2,174.03 $11,682.31 $7,342.12
10"$13,492.97 $2,174.03 $15,667.00 $7,342.12
- Combined Fire and Domestic 4"$12,157.88 $897.57 $13,055.45 $5,117.99
6"$16,181.08 $1,417.78 $17,598.86 $5,117.99
8"$23,526.12 $2,174.03 $25,700.15 $7,342.12
10"$32,105.39 $2,174.03 $34,279.42 $7,342.12
31 31.03 A.1.Requirement of Deposit for Temporary Meters 3/4"$156.85
1"$184.78
1-1/2"$379.62
2"$2,865.00
4"$1,986.00
6"$2,465.00
- Construction Trailer Temporary Meter 2"$2,685.00
- Tank Truck Temporary Meter
(Ordinance No. 372)2"$1,000.00
31 31.03 A.4.Temporary Meter Install & Removal 3/4" - 4" (on hydrant)$240.00
4" - 6"$960.00
8" - 10"Actual Cost
31 31.03 A.5.
Temporary Meter Move Fee
(includes backflow certification)3/4" - 4"(on hydrant)$180.00
4" - 6" $960.00
8" - 10"Actual Cost
33 33.07 A.Customer Request for Meter Test (Deposit)5/8", 3/4" & 1"$120.00
1-1/2" & 2 "$200.00
3" & Larger $400.00
34 34.01 D.2. Returned Check Charges $25.00
34 34.02 C Meter Lock Charge $60.00
38 38.06 A Fire Flow Fee $600.00
Installation and Water Meter Charges (continued)
Section #Code #Fee Description Meter Size Charges
53 53.03 A.1.Sewer Capacity Fee within an ID $7,788.97
53 53.03 A.2.Sewer Capacity Fee per EDU outside an ID $10,774.03
53 53.03 B.1.Sewer Connection Fee - Russell Square $7,500.00
53 53.03 B.2.Monthly Sewer Service Charge - Russell Square $200.00
53 53.10 & 11 Set-up Fees for Accounts $15.00
Effective 1/1/26 Effective 1/1/27 Effective 1/1/28 Effective 1/1/29 Effective 1/1/30
53 53.10 Residential Sewer Rates (2)
Rate multiplied by
3-year winter
average units $3.92 $4.12 $4.53 $4.97 $5.46
53 53.10
Residential Monthly Fixed Sewer System Charges
(2).75"$21.60 $22.72 $24.95 $27.40 $30.08 1"$33.32 $35.05 $38.49 $42.26 $46.40
53 53.10 A.4.Residential Sewer Without Consumption History .75"$51.04 $53.66 $58.97 $64.72 $71.08
53 53.10 B.2.Multi-Residential Sewer Rates (2)
Rate multiplied by
3-year winter
average units $3.92 $4.12 $4.53 $4.97 $5.46
53 53.10 B.2.
Multi-Residential Monthly Fixed Sewer System
Charges (2).75"$21.60 $22.72 $24.95 $27.40 $30.08
1"$33.32 $35.05 $38.49 $42.26 $46.40
1.5"$62.60 $65.86 $72.31 $79.40 $87.18
2"$97.74 $102.82 $112.90 $123.96 $136.11
3"$209.02 $219.89 $241.44 $265.10 $291.08
4"$373.02 $392.42 $430.87 $473.10 $519.46
6"$823.99 $866.84 $951.79 $1,045.06 $1,147.48
8" $1,409.68 $1,482.98 $1,628.32 $1,787.89 $1,963.10
10"$2,229.65 $2,345.59 $2,575.46 $2,827.85 $3,104.98(2) Sewer billed beginning January 1, 2026.
Section #Code #Fee Description Meter Size Charges
Effective 1/1/26 Effective 1/1/27 Effective 1/1/28 Effective 1/1/29 Effective 1/1/30
53 53.11 Commercial and Industrial Sewer Rates
Rate
multiplied by Low Strength $3.35 $3.52 $3.87 $4.25 $4.67
annual avg.Medium Strength $4.73 $4.98 $5.46 $6.00 $6.59
units High Strength $7.46 $7.85 $8.62 $9.46 $10.39
53 53.11
Commercial and Industrial Monthly Fixed Sewer
System Charges (2).75"$21.60 $22.72 $24.95 $27.40 $30.08
1"$33.32 $35.05 $38.49 $42.26 $46.40
1.5"$62.60 $65.86 $72.31 $79.40 $87.18
2"$97.74 $102.82 $112.90 $123.96 $136.11
3"$209.02 $219.89 $241.44 $265.10 $291.08
4"$373.02 $392.42 $430.87 $473.10 $519.46
6"$823.99 $866.84 $951.79 $1,045.06 $1,147.48
8" $1,409.68 $1,482.98 $1,628.32 $1,787.89 $1,963.10
10"$2,229.65 $2,345.59 $2,575.46 $2,827.85 $3,104.98
60 60.03
Issuance of Availability Letters for Water and/or
Sewer Service $75.00
72 72.04 A.1.
Locking or Removing Damaged or Tampered
Meters
- To Pull and Reset Meter 3/4" - 2"$250.00
- Broken Curbstop or Tabs 3/4" - 1"Actual Cost
- If Customer uses Jumper 3/4" - 1"Actual Cost
- Broken Lock/Locking Device 3/4" - 1"$80.00
- Broken Curbstop or Tabs 1.5" - 2"Actual Cost
- To Pull and Reset Meter 3"Actual Cost
- To Pull and Reset Meter 4"Actual Cost
- To Pull and Reset Meter 6"Actual Cost
- To Pull and Reset Meter 8"Actual Cost
- To Pull and Reset Meter 10"Actual Cost
72 72.05 D. Type I Fine
- First Violation $100.00
- Second Violations $200.00
- Third or each additional violation of that same
ordinance or requirement within a twelve-month
period $500.00
(2) Sewer billed beginning January 1, 2026.
Section #Code #Fee Description Meter Size Charges
72 72.05 D. Type II Fine $5,000.00
Type III Fine $500.00
Type IV Fine $500.00
State Water
Code
#71630 & Annual Board
Resolution #4142
Water Availability/Standby Annual Special
Assessment Charge $10.00
$30.00
$3.00
$3.00
State Water
Code
#71630 & Annual Board
Resolution #4142
Sewer Availability/Standby Annual Special
Assessment Charge $10.00
$30.00
Annual Board Resolution General Obligation Bond Annual Tax Assessment $0.005
Policies
5B Copies of Identifiable Public Records $0.20/page
54 Late Payment Charge
54 Lien Processing Fee $55.00
54 Delinquent Tax Roll Fee $45.00
54 Delinquency Mailed Notice $5.00
54 Delinquency Tag $25.00
Per acre for outside I.D. & greater
than one mile from District facilities.
Less than one acre
I.D. 18
Less than one-acre all I.D.s &
Outside an I.D.
Fine up to amount specified per
each day the violation is identified or
continues.
Will not exceed per each day the
violation is identified or continues.
5% of Delinquent Balance
Less than one-acre Outside I.D. and
greater than one mile from District
facilities.
Per acre in I.D. 22
Fine up to amount specified per
each day the violation is identified or
continues.
The cost for all other copy sizes is
the direct cost of duplication.
Per acre I.D. 18
8 1/2" x 11"
Per $1000 of assessed value for
I.D. 27
Section #Code #Fee Description Meter Size
9 9.04 A.1.District Annexation Processing Fee $1,068.96
9.04 B.
Annexation Fees for Water Annexations into Otay
Water District Boundaries
Districtwide
Annexation Fee
3/4"$2,797.94
1"$6,994.85
1-1/2"$13,989.70
2"$22,383.52
3"$44,767.04
4"$69,948.50
6"$139,897.00
8"$223,835.20
10"$321,763.10
9.04 C.4.
Annexation Fees for Annexations to Sewer
Improvement Districts per EDU $1,530.59
10 10.01 Waiver Request $50.00
23 23.04 Backflow Certification
- Third Notification $60.00
- Third Notification (hand delivered)$110.00
- Reconnection $230.00
$40.00
25 25.03 A. Set-up Fees for Accounts $15.00
25 25.03 B.
Monthly MWD & CWA Fixed System
Charges (1)3/4"$23.89
1"$39.82
1-1/2"$79.60
2"$127.34
3"$278.58
4"$501.45
6"$1,114.34
8"$1,910.26
10"$3,024.59
(1)Water billed beginning January 1, 2026, which may include water used December 2025.
Charges
- Initial Filing Fee (New applicants for addition to the list of
approved backflow prevention device testers)
Appendix A
Otay Water District Exhibit 4
Section #Code #Fee Description Meter Size Charges
25 25.03 C.1.
Domestic Residential Monthly Fixed System
Charges (1)3/4" $22.88
1" $28.45
1-1/2" $42.70
2" $59.55
25 25.03 C.2.
Multi-Residential Monthly Fixed System
Charges (1)3/4" $21.11
1" $25.50
1-1/2" $36.79
2" $50.11
3" $105.83
4" $178.32
6" $349.92
8" $540.25
10" $828.43
25 25.03 C.3.
Business and Commercial Monthly Fixed System
Charges (1)3/4" $23.08
1" $28.77
1-1/2" $43.33
2" $60.54
3" $128.65
4" $219.41
6" $441.22
8" $696.80
10" $1,076.28
25 25.03 C.4.3/4" $20.42
1" $24.35
1-1/2" $34.52
2" $46.46
3" $97.82
4" $163.93
6" $317.90
8" $485.42
10"$741.58
25 25.03 C.5.3/4" $21.48
1" $26.13
1-1/2" $38.05
2" $52.15
3" $110.25
4" $186.28
6" $367.61
8" $570.63
10"$876.51
(1) Water billed beginning January 1, 2026, which may include water used December 2025.
Publicly Owned Monthly Fixed System
Charges (1)
Non-Public Irrigation and Commercial Agriculture
Monthly Fixed System Charges (1)
Section #Code #Fee Description Meter Size Charges
25 25.03 C.6.Public Irrigation Monthly Fixed System Charges (1)3/4" $20.42
1" $24.35
1-1/2" $34.52
2" $46.46
3" $97.82
4" $163.93
25 25.03 C.7.3/4" $20.99
1" $25.29
1-1/2" $36.39
2" $49.48
3" $104.46
4" $175.87
6" $344.47
8" $530.95
10"$813.67
25 25.03 C.8.3/4" $42.75
1" $57.89
1-1/2" $96.30
2" $141.96
3" $311.13
4" $543.00
6" $1,130.33
8" $1,745.28
10" $2,859.05
25 25.03 D.1.(b) Domestic Residential Water Rates (1)Unit Charge
0-9 $6.66
10-12 $7.23
13 or more $8.03
25 25.03 D.2.(b)
Multi-Residential Water Rates - Per
Dwelling Unit (1)0-9 $6.61
10-12 $7.15
13 or more $7.41
25 25.03 D.3.(b) Business and Commercial Water Rates (1)All Units $7.00
25 25.03 D.4.(c)
Non-Public Irrigation and Commercial Agriculture
Using Potable Water Rates (1)All Units $8.06
25 25.03 D.5.(b) Publicly-Owned Water Rates (1)All Units $7.70
25 25.03 D.6.(b) Public Irrigation Water Rates (1)All Units $8.79
25 25.03 D.7.(b) Construction Water Rates (1)All Units $8.00
(1) Water billed beginning January 1, 2026, which may include water used December 2025.
Construction Monthly Fixed System Charges (1)
Recycled Monthly Fixed System Charges (1)
Section #Code #Fee Description Meter Size Charges
25 25.03 D.8.(c)Recycled Non-Public Irrigation Water Rates (1)All Units $6.36
25 25.03 D.9.(c)Recycled Commercial Water Rates (1)All Units $5.84
25 25.03 D.10.(c)Recycled Public Irrigation Water Rates (1)All Units $6.48
25 25.03 D.11.(b)
Potable Interim Business and Commercial Water
Rates (1)All Units $14.00
25 25.03 D.12.(b)
Potable Interim Non-Public Irrigation and
Commercial Agriculture Water Rates (1)All Units $16.12
25 25.03 D.13.(b) Tank Trucks Water Rates (1)All Units $8.00
25 25.03 D.14.(c)
Application Fee for Water Service Outside District
Boundaries $500.00
25 25.03 D.14.(d)
Water Rate for Service Outside District
Boundaries (1)All Units $15.40
25 25.03 D.15.(b)
Application Fee for Water Service Outside an
Improvement District $275.00
25 25.03 D.15.(c)
Water Rate for Service Outside Improvement
District (1)All Units $15.40
25 25.03 D.16.(c) Fire Service Monthly Charge 3/4"$3.30
1"$3.38
1-1/2"$3.72
2"$4.27
3"$6.32
4"$9.81
6"$22.40
8"$44.10
10"$76.73
25 25.03 E.1.Energy Charges for Pumping Potable Water (1)
Per 100 ft of lift
over 450 ft per unit $0.092
25 25.03 E.2.
Energy Charges for Pumping Recycled
Water (1)
Per 100 ft of lift
over 450 ft per unit $0.099
(1) Water billed beginning January 1, 2026, which may include water used December 2025.
Section #Code #Fee Description Meter Size Charges
25 25.04 A.Deposits for Non-Property Owners 3/4"$150.00
1"$250.00
1-1/2"$300.00
2"$450.00
3"$1,000.00
4"$1,350.00 6"$3,300.00
8"$7,000.00
10"$10,000.00
28 28.01 B.1.Capacity Fees and Zone Charge
Districtwide
Capacity Fee
- All IDs excluding Triad 3/4" $14,745.27
1" $36,863.18
1-1/2" $73,726.35
2" $117,962.16
3" $235,924.32
4" $368,631.75
6" $737,263.50
8" $1,179,621.60
10" $1,695,706.05
- TRIAD 3/4" $11,058.95
1" $27,647.38
1 -1/2" $55,294.75
2" $88,471.60
3" $176,943.20
4" $276,473.75
6" $552,947.50
8" $884,716.00
10" $1,271,779.25
28 28.02 Installation and Water Meter Charges Meter Size Meter Cost Installation Total
Meter Box/Vault
(if Needed)
- Potable (Non-Irrigation)3/4" x 7.5"$314.14 $149.08 $463.22 $126.56
3/4" x 9"$334.47 $149.08 $483.55 $126.56
1"$405.38 $149.08 $554.46 $126.56
1.5"$658.90 $149.08 $807.98 $286.91
2"$944.14 $149.08 $1,093.22 $286.91
3"$2,942.30 $897.57 $3,839.87 $5,117.99
4"$5,110.31 $897.57 $6,007.88 $5,117.99
6"$8,826.89 $1,417.78 $10,244.67 $5,117.99
8"$11,028.55 $2,174.03 $13,202.58 $7,342.12
10"$15,861.11 $2,174.03 $18,035.14 $7,342.12
Section #Code #Fee Description Meter Size Charges
28 28.02 Meter Cost Installation Total
Meter Box/Vault
(if Needed)
- Potable/Recycled Irrigation 3/4" x 7.5"$314.14 $149.08 $463.22 $322.54
3/4" x 9"$334.47 $149.08 $483.55 $322.54
1"$405.38 $149.08 $554.46 $322.54
1.5"$658.90 $149.08 $807.98 $322.54
2"$944.14 $149.08 $1,093.22 $322.54
3"$2,036.37 $897.57 $2,933.94 $5,117.99
4"$3,964.50 $897.57 $4,862.07 $5,117.99
6"$7,137.39 $1,417.78 $8,555.17 $5,117.99
8"$9,508.28 $2,174.03 $11,682.31 $7,342.12
10"$13,492.97 $2,174.03 $15,667.00 $7,342.12
- Combined Fire and Domestic 4"$12,157.88 $897.57 $13,055.45 $5,117.99
6"$16,181.08 $1,417.78 $17,598.86 $5,117.99
8"$23,526.12 $2,174.03 $25,700.15 $7,342.12
10"$32,105.39 $2,174.03 $34,279.42 $7,342.12
31 31.03 A.1.Requirement of Deposit for Temporary Meters 3/4"$156.85
1"$184.78
1-1/2"$379.62
2"$2,865.00
4"$1,986.00
6"$2,465.00
- Construction Trailer Temporary Meter 2"$2,685.00
- Tank Truck Temporary Meter
(Ordinance No. 372)2"$1,000.00
31 31.03 A.4.Temporary Meter Install & Removal 3/4" - 4" (on hydrant)$280.00
4" - 6"$1,200.00
8" - 10"Actual Cost
31 31.03 A.5.
Temporary Meter Move Fee
(includes backflow certification)3/4" - 4"(on hydrant)$210.00
4" - 6" $1,200.00
8" - 10"Actual Cost
33 33.07 A.Customer Request for Meter Test (Deposit)5/8", 3/4" & 1"$120.00
1-1/2" & 2 "$200.00
3" & Larger $400.00
34 34.01 D.2. Returned Check Charges $25.00
34 34.02 C Meter Lock Charge $70.00
38 38.06 A Fire Flow Fee $600.00
Installation and Water Meter Charges (continued)
Section #Code #Fee Description Meter Size Charges
53 53.03 A.1.Sewer Capacity Fee within an ID $7,985.23
53 53.03 A.2.Sewer Capacity Fee per EDU outside an ID $11,045.51
53 53.03 B.1.Sewer Connection Fee - Russell Square $7,500.00
53 53.03 B.2.Monthly Sewer Service Charge - Russell Square $200.00
53 53.10 & 11 Set-up Fees for Accounts $15.00
Effective 1/1/26 Effective 1/1/27 Effective 1/1/28 Effective 1/1/29 Effective 1/1/30
53 53.10 Residential Sewer Rates (2)
Rate multiplied by
3-year winter
average units $3.92 $4.12 $4.53 $4.97 $5.46
53 53.10
Residential Monthly Fixed Sewer System Charges
(2).75"$21.60 $22.72 $24.95 $27.40 $30.08 1"$33.32 $35.05 $38.49 $42.26 $46.40
53 53.10 A.4.Residential Sewer Without Consumption History .75"$51.04 $53.66 $58.97 $64.72 $71.08
53 53.10 B.2.Multi-Residential Sewer Rates (2)
Rate multiplied by
3-year winter
average units $3.92 $4.12 $4.53 $4.97 $5.46
53 53.10 B.2.
Multi-Residential Monthly Fixed Sewer System
Charges (2).75"$21.60 $22.72 $24.95 $27.40 $30.08
1"$33.32 $35.05 $38.49 $42.26 $46.40
1.5"$62.60 $65.86 $72.31 $79.40 $87.18
2"$97.74 $102.82 $112.90 $123.96 $136.11
3"$209.02 $219.89 $241.44 $265.10 $291.08
4"$373.02 $392.42 $430.87 $473.10 $519.46
6"$823.99 $866.84 $951.79 $1,045.06 $1,147.48
8" $1,409.68 $1,482.98 $1,628.32 $1,787.89 $1,963.10
10"$2,229.65 $2,345.59 $2,575.46 $2,827.85 $3,104.98
(2) Sewer billed beginning January 1, 2026.
Section #Code #Fee Description Meter Size Charges
Effective 1/1/26 Effective 1/1/27 Effective 1/1/28 Effective 1/1/29 Effective 1/1/30
53 53.11 Commercial and Industrial Sewer Rates
Rate
multiplied by Low Strength $3.35 $3.52 $3.87 $4.25 $4.67
annual avg.Medium Strength $4.73 $4.98 $5.46 $6.00 $6.59
units High Strength $7.46 $7.85 $8.62 $9.46 $10.39
53 53.11
Commercial and Industrial Monthly Fixed Sewer
System Charges (2).75"$21.60 $22.72 $24.95 $27.40 $30.08
1"$33.32 $35.05 $38.49 $42.26 $46.40
1.5"$62.60 $65.86 $72.31 $79.40 $87.18
2"$97.74 $102.82 $112.90 $123.96 $136.11
3"$209.02 $219.89 $241.44 $265.10 $291.08
4"$373.02 $392.42 $430.87 $473.10 $519.46
6"$823.99 $866.84 $951.79 $1,045.06 $1,147.48
8" $1,409.68 $1,482.98 $1,628.32 $1,787.89 $1,963.10
10"$2,229.65 $2,345.59 $2,575.46 $2,827.85 $3,104.98
60 60.03
Issuance of Availability Letters for Water and/or
Sewer Service $75.00
72 72.04 A.1.
Locking or Removing Damaged or Tampered
Meters
- To Pull and Reset Meter 3/4" - 2"$310.00
- Broken Curbstop or Tabs 3/4" - 1"Actual Cost
- If Customer uses Jumper 3/4" - 1"Actual Cost
- Broken Lock/Locking Device 3/4" - 1"$95.00
- Broken Curbstop or Tabs 1.5" - 2"Actual Cost
- To Pull and Reset Meter 3"Actual Cost
- To Pull and Reset Meter 4"Actual Cost
- To Pull and Reset Meter 6"Actual Cost
- To Pull and Reset Meter 8"Actual Cost
- To Pull and Reset Meter 10"Actual Cost
72 72.05 D. Type I Fine
- First Violation $100.00
- Second Violations $200.00
- Third or each additional violation of that same
ordinance or requirement within a twelve-month
period $500.00
(2) Sewer billed beginning January 1, 2026.
Section #Code #Fee Description Meter Size Charges
72 72.05 D. Type II Fine $5,000.00
Type III Fine $500.00
Type IV Fine $500.00
State Water
Code
#71630 & Annual Board
Resolution #4142
Water Availability/Standby Annual Special
Assessment Charge $10.00
$30.00
$3.00
$3.00
State Water
Code
#71630 & Annual Board
Resolution #4142
Sewer Availability/Standby Annual Special
Assessment Charge $10.00
$30.00
Annual Board Resolution General Obligation Bond Annual Tax Assessment $0.005
Policies
5B Copies of Identifiable Public Records $0.20/page
54 Late Payment Charge
54 Lien Processing Fee $60.00
54 Delinquent Tax Roll Fee $50.00
54 Delinquency Mailed Notice $5.00
54 Delinquency Tag $25.00
5% of Delinquent Balance
Less than one-acre Outside I.D. and
greater than one mile from District
facilities.
Per acre in I.D. 22
Fine up to amount specified per
each day the violation is identified or
continues.
The cost for all other copy sizes is
the direct cost of duplication.
Per acre I.D. 18
8 1/2" x 11"
Per $1000 of assessed value for
I.D. 27
Per acre for outside I.D. & greater
than one mile from District facilities.
Less than one acre
I.D. 18
Less than one-acre all I.D.s &
Outside an I.D.
Fine up to amount specified per
each day the violation is identified or
continues.
Will not exceed per each day the
violation is identified or continues.
STAFF REPORT
TYPE MEETING: Regular Board MEETING DATE: November 5, 2025
SUBMITTED BY: Andrea Carey,
Customer Service Manager
PROJECT:
P2662
DIV. NO.All
APPROVED BY: Joseph R. Beachem, Chief Financial Officer
Jose Martinez, General Manager
SUBJECT: Update on the Customer Communication Plan for the Upcoming
District-Wide Meter Changeout Project
GENERAL MANAGER’S RECOMMENDATION:
This is an informational item only.
COMMITTEE ACTION:
N/A
PURPOSE:
To provide the Board with an update on the customer communication
plan for the upcoming District-wide Meter Changeout Project.
BACKGROUND:
On January 8, 2025, the Board approved for the General Manager to
enter into an agreement with Badger Meter, Inc. for the purchase and
installation of water meters and cellular transponders as part of a
District-wide meter changeout program scheduled to span the next six
years. This project includes the changeout of ¾-inch to 2-inch water
meters and installation of cellular Automated Metering Infrastructure
(AMI). Following a comprehensive contracting process, a kickoff
meeting was held the week of September 1 between the District, Badger
Meter, Inc., their installation consultant, Professional Meters, Inc.
(PMI), and the District’s project management consultant, ESource
Companies LLC.
ANALYSIS:
The Meter Changeout Project is expected to span six years. The
current focus is on system design, establishing testing requirements,
AGENDA ITEM 5
and customer communication and outreach planning. In January 2026
approximately 500 meters will be installed to test workflow, field
quality control, and system readiness before proceeding to full
deployment.
District-Wide Communication and Outreach
The Meter Changeout Project will affect every District customer’s
meter over the course of six years. To ensure District customers are
informed about the project, a variety of communication methods will
be used as described below.
District Newsletter, Social Media, and Project Webpage
The District will use its newsletter and social media platforms to
provide periodic updates about the project and direct customers to
the project’s webpage. The project webpage will include an overview
of the following:
• Scope and timeline
• FAQ
• Project video
The District will be working with Badger Meter, Inc. to develop a
customized video that addresses common questions about the
installation and overall project. All of these items will be
available to District customers in both English and Spanish.
Customer-Specific Communication the Month Prior to Installation
Project Postcard and Email
As the meter changeout for a specific customer approaches, the
District will use a variety of communication methods to notify the
customer. Approximately one month before the customer’s scheduled
meter changeout, a postcard will be mailed to inform the customer of
the upcoming work. At this time, it is not yet known whether the
postcard will have sufficient space to include both English and
Spanish text. If a full Spanish translation is not possible, a brief
message in Spanish with a web link will be included to direct
customers to a Spanish translated postcard. The postcard will also
include a QR code linking the customer to the District’s project
webpage for additional information. In addition, the District will
send an email in both English and Spanish with the same message and a
link to the project video.
Email and Phone Call
Two weeks later, approximately two weeks before the changeout, an
automated phone message and an accompanying email, in both English
and Spanish, will be sent to all affected customers to remind them of
the upcoming changeout.
All District messaging will emphasize the following key points:
• The District is partnering with Professional Meters, Inc. to
complete this work, and all personnel and vehicles will be
clearly identified. Professional Meters, Inc. personnel will
have identification showing they are working with both Badger
Meters, Inc. and Otay Water District.
• The homeowner does not need to be home for the work to be
completed.
• The changeout process will only take approximately 30 minutes.
Day of Installation Communication
Door Knock and Door Hanger
Prior to the technician replacing the meter, they will attempt to
make contact with someone at the residence by knocking on their door.
If someone is home, the technician will explain that they are on site
to change their water meter and that water service will be
unavailable for approximately 30 minutes. If the customer cannot be
without water at that time, the technician will attempt to reschedule
later that day or the following day. If that is not possible, the
customer will be asked to contact the office for assistance
rescheduling. If there is no answer at the door, the technician will
confirm water is not currently being used and then will proceed with
the meter changeout.
After successful meter replacement, the installation contractor will
leave a door hanger at the property notifying the customer that the
work has been completed. The door hanger will include a Spanish
version on the reverse side. The door hanger will also provide tips
for customers in case their water appears cloudy or runs
inconsistently.
If the installer is unable to change the meter at the time of
arrival, and not able to make contact with the customer, the same
door hanger will be left with a box checked indicating that the meter
replacement could not be completed and instructing the customer to
please call the District’s office for additional information.
Internal Communication
In addition to communicating with District customers, it is also
important to inform and update District staff about the project. A
project overview will be presented to all staff at the next Employee
Information Meeting. In addition, Customer Service staff will be
given daily updates during meter deployment in order to be aware of
the areas where the contractor is working.
Meter Services staff will have access to PMI’s work order management.
The work order management system is used by PMI’s technicians to
record all data related to the meter changeout. When visiting a
location for changeout, PMI technicians will:
•Validate the meter being changed matches the identified meter
at the specific location,
•record the final meter read before changeout and enter all new
meter data.
•take photographs of: the site prior to installation, the old
meter prior to removal, the new meter installed, and the final
condition of the meter box after the installation process is
complete.
This Data will be uploaded to this system where District staff will
see this information and be provided real-time information on total
meters installed, those in-progress, and those that need additional
intervention by District staff before the installation can be
completed.
The project team who is made up of staff from Customer Service, Meter
Services, IT, Finance, and Communications will have biweekly progress
meetings to stay informed about all aspects of the project. The Board
of Directors will be regularly updated through the General Manager’s
Report and during the Directors’ Quarterly Meetings with the General
Manager.
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
This is an informational item only.
STRATEGIC GOAL:
Invest in technology infrastructure to enhance customer engagement
and satisfaction by implementing advanced metering solutions that
streamline service delivery and provide customers with timely,
accessible information about their water use.
LEGAL IMPACT:
This is an informational item only.
Attachments:
A)Committee Action
B)PowerPoint Presentation
ATTACHMENT A
SUBJECT/PROJECT: Update on the Customer Communication Plan for the Upcoming
District-Wide Meter Changeout Project
COMMITTEE ACTION:
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for board approval. This report will be sent
to the Board as a committee approved item, or modified to reflect any
discussion or changes as directed from the committee prior to
presentation to the full board.
Water Meter Changeout Project and Customer Communication Update
Attachment B
Meter
Changeout
•Meters are reaching the end of
their 20-year lifecycle
•District contracted with
Esource, Inc. to assist with the
procurement process
•Request for Proposal issued
mid-June 2024, to include
meters, installation, AMI, and
MDMS. Responses due July
31, 2024
•Six proposals received
•Staff from Finance,
Engineering, Water Operations,
and IT involved in evaluation
Meter
Changeout
•Otay Board of Directors
approved the General
Management to enter into an
agreement with Badger
Meter, Inc. for a District-wide
meter changeout program
•Contract was finalized in
August 2025
•Kickoff meeting took place in
early September between the
District, Badger Meters, Inc.,
their installer Professional
Meter, Inc. (PMI) and the
District’s program
management consultant,
ESource Companies LLC.
Project
Timeline
September 2025 - June 2026 July 2026 - June 2031
Planning & System Design Initial Meter Deployment
(500 meters)
System Integration & Testing Full Scale Deployment
Meter
Changeout
•Meters are reaching the end of
their 20-year lifecycle
•District contracted with
Esource, Inc. to assist with the
procurement process
•Request for Proposal issued
mid-June 2024, to include
meters, installation, AMI, and
MDMS. Responses due July
31, 2024
•Six proposals received
•Staff from Finance,
Engineering, Water Operations,
and IT involved in evaluation
Initial Meter
Deployment
•Installation of approx. 500
meters in January 2026
•Two full meter routes (604 &
1703) and additional meters
scattered throughout the
District
•The initial meter deployment
will allow staff to test
installation workflow, field
quality control, system
readiness and system
integrations.
Communication & Outreach
Communication
& Outreach
City of Hanford, CA
Customer Outreach
Customer Outreach
Internal Communication
Overview to all staff at Employee Information Meeting.
Customer Service staff updated daily once deployment begins.
Meter Services staff will have access to PMI’s work order management system.
Project Team will have biweekly project status meetings.
Board of Directors will have updates via the General Manager’s Report and Director’s Quarterly
Meetings.
Questions?