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HomeMy WebLinkAbout10-04-17 Board Packet 1 OTAY WATER DISTRICT BOARD OF DIRECTORS MEETING DISTRICT BOARDROOM 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA WEDNESDAY October 4, 2017 3:30 P.M. AGENDA 1. ROLL CALL 2. PLEDGE OF ALLEGIANCE 3. APPROVAL OF AGENDA 4. APPROVE THE MINUTES OF THE REGULAR BOARD MEETINGS OF JUNE 7, 2017 AND JULY 5, 2017 5. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA PUBLIC HEARING 6. PUBLIC HEARING ON RATES AND CHARGES THE BOARD WILL BE HOLDING A PUBLIC HEARING TO CONSIDER THE PROPOSED RATES AND CHARGES TO BE IMPLEMENTED IN THE FISCAL YEAR 2017-2018 OPERATING AND CAPITAL BUDGET AND TO AUTHORIZE, FOR A PERIOD OF FIVE YEARS, THE PASS-THROUGH OF COST IN- CREASES FROM WATER WHOLESALERS AND DISTRICT RATE IN- CREASES NOT-TO-EXCEED 10 PERCENT ANNUALLY FOR ALL COSTS OTHER THAN PASS-THROUGH COSTS. THE BOARD INVITES THE PUBLIC TO PROVIDE COMMENTS ON THE PROPOSED RATES AND CHARGES. a) APPROVE THE PROPOSED RATES AND CHARGES TO BE IMPLE- MENTED IN THE FISCAL YEAR 2017-2018 OPERATING AND CAPITAL BUDGET; ADOPT ORDINANCE NO. 566 AMENDING SECTION 25, CONDITIONS FOR WATER SERVICE; SECTION 38, SERVICE FOR FIRE PROTECTION SYSTEMS, AND APPENDIX A, SCHEDULE OF FEES OF THE DISTRICT’S CODE OF ORDINANCES; AUTHORIZE, 2 FOR A PERIOD OF FIVE-YEARS, THE PASS-THROUGH OF COST IN- CREASES FROM WATER WHOLESALERS; AND AUTHORIZE, FOR A PERIOD OF FIVE-YEARS, DISTRICT RATE INCREASES NOT-TO-EX-CEED 10 PERCENT ANNUALLY, FOR ALL COSTS OTHER THAN PASS-TROUGH COSTS. (KOEPPEN) CONSENT CALENDAR 7. ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: a) AWARD TWO (2) PROFESSIONAL AS-NEEDED ENGINEERING DE- SIGN SERVICES CONTRACTS WITH NV5, INC. AND MICHAEL BAKER INTERNATIONAL, INC., EACH IN THE AMOUNT NOT-TO-EXCEED $600,000 DURING FISCAL YEARS 2018 AND 2019 (ENDING JUNE 30, 2019) b) AWARD TWO (2) AS-NEEDED GEOTECHNICAL ENGINEERING SER-VICES CONTRACTS WITH GEOCON, INC. AND NINYO & MOORE GE- OTECHNICAL AND ENVIRONMENTAL SCIENCES CONSULTANTS, INC., EACH IN AN AMOUNT NOT-TO-EXCEED $175,000. THE TOTAL AMOUNT OF THE TWO (2) CONTRACTS WILL NOT EXCEED $175,000 DURING FISCAL YEARS 2018, 2019, AND 2020 c) AWARD A CONSTRUCTION CONTRACT TO SIMPSON SANDBLAST- ING AND SPECIAL COATINGS, INC. FOR THE 980-2 RESERVOIR IN- TERIOR/EXTERIOR COATINGS AND UPGRADES PROJECT IN AN AMOUNT NOT-TO-EXCEED $1,146,327 d) ADOPT ORDINANCE NO. 565 AMENDING SECTION 31, TEMPORARY WATER SERVICE, OF THE DISTRICT’S CODE OF ORDINANCES ACTION ITEMS 8. BOARD a) DISCUSSION OF THE 2017 BOARD MEETING CALENDAR INFORMATIONAL ITEM 9. THE FOLLOWING ITEMS ARE PROVIDED TO THE BOARD FOR INFORMA- TIONAL PURPOSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEMS: a) BOARD OF DIRECTORS’ EXPENSES FOR FISCAL YEAR 2017 (BENHAM) b) LEGISLATIVE UPDATE (OTTERO) 3 c) FISCAL YEAR 2017 YEAR-END REPORT FOR THE DISTRICT’S FIS- CAL YEARS 2015-2018 STRATEGIC PLAN (SEGURA) REPORTS 10. GENERAL MANAGER’S REPORT 11. SAN DIEGO COUNTY WATER AUTHORITY UPDATE 12. DIRECTORS' REPORTS/REQUESTS 13. PRESIDENT’S REPORT/REQUESTS RECESS TO CLOSED SESSION 14. CLOSED SESSION a) CONFERENCE WITH LEGAL COUNSEL – PENDING LITIGATION [GOVERNMENT CODE §54956.9] BLALOCK vs. OTAY WATER DISTRICT; CASE NO. 37-2016-00013542- CU-OR-CTL b) CONFERENCE WITH LABOR NEGOTIATORS [GOVERNMENT CODE §54957.6] AGENCY DESIGNATED REPRESENTATIVES: MARK ROBAK AND TIM SMITH EMPLOYEE ORGANIZATION: OTAY WATER DISTRICT EMPLOYEES’ ASSOCIATION AND ALL REPRESENTED AND UNREPRESENTED PERSONNEL INCLUD- ING MANAGEMENT AND CONFIDENTIAL EMPLOYEES c) CONFERENCE WITH REAL PROPERTY NEGOTIATORS [GOVERN-MENT CODE §54956.8] PROPERTY: SALT CREEK GOLF COURSE 525 HUNTE PARKWAY CHULA VISTA, CA 91914 AGENCY NEGOTIATOR: MARK WATTON, GENERAL MANAGER NEGOTIATING PARTIES: BILL McWETHY, PACIFIC HOSPITALITY GROUP 4 UNDER NEGOTIATIONS: INSTRUCT NEGOTIATOR CONCERNING PRICE, TERMS OF PAYMENT, OR BOTH, FOR THE PURCHASE, SALE AND/OR LEASE OF THE PROPERTY. RETURN TO OPEN SESSION 15. REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION 16. ADJOURNMENT All items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the Board. The Agenda, and any attachments containing written information, are available at the District’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 all attachments are also available through the District Secretary by contacting her at (619) 670-2280. If you have any disability which would require accommodation in order to enable you to participate in this meeting, please call the District Secretary at (619) 670-2280 at least 24 hours prior to the meeting. Certification of Posting I certify that on September 29, 2017, 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 72 hours in advance of the regular meeting of the Board of Directors (Government Code Section §54954.2). Executed at Spring Valley, California on September 29, 2017. /s/ Susan Cruz, District Secretary 1 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT June 7, 2017 1. The meeting was called to order by President Robak at 3:34 p.m. 2. ROLL CALL Directors Present: Croucher, Gastelum, Robak, Smith and Thompson Staff Present: General Manager Mark Watton, General Counsel Daniel Shinoff, Asst. General Manager German Alvarez, Chief of Engineering Rod Posada, Chief Financial Officer Joe Beachem, Chief of Administration Adolfo Segura, Chief of Operations Pedro Porras, Asst. Chief of Operations Jose Martinez, District Secretary Susan Cruz and others per attached list. 3. PLEDGE OF ALLEGIANCE 4. APPROVAL OF AGENDA A motion was made by Director Croucher, and seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the agenda. 5. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA Mr. Fayaz Nawabi indicated that he is with the Trustee Advisory Council for the San Diego Community College District. He stated that the committee that will handle the recall of Director Gastelum is anticipated to be chartered by the end of the week. He indicated that the chair of the Committee will be Reverend Jason Prater and stated that he was looking forward to recalling Director Gastelum in the next couple months. 6. PRESENTATION ON THE SAN DIEGO COUNTY WATER AUTHORITY vs. METROPOLITAN WATER DISTRICT LAWSUIT 2 Ms. Meena Westford, Special Projects Manager for the Metropolitan Water District (MWD), presented on achievements that San Diego County Water Authority (CWA) and her agency have accomplished together and updates on some of the most important water challenges that our agencies are facing. She reviewed MWD’s background as a regional water wholesaler with 26 member agencies and governed by 38 board members. MWD provides services to six (6) counties covering 5200 square miles. She reviewed their water supply and storage strategy and presented MWD’s viewpoint on information concerning the lawsuit between CWA and MWD (see attached presentation). There were questions from the members of the board and Ms. Westford responded to the inquiries. Director Thompson indicated that he did not agree with many of the things that Ms. Westford indicated was misinformation concerning CWA’s lawsuit with MWD. He stated that he felt there are significant issues with our whole system of governance with MWD in general. He indicated the fact there is litigation between the two agencies is an example of that. He stated he hoped Ms. Westford’s statement that MWD wanted the agencies to work together will become a reality as opposed to the current situation where we have to fight out issues. He thanked her for coming to the District’s meeting as he agrees that we need to keep the dialogue between the agencies open. Ms. Maureen Stapleton, General Manager of the CWA, reviewed CWA’s background and its strategy to diversify supplies to increase water supply reliability to assure that the County of San Diego would be able to sustain water deliveries even through drought. She stated by 2016, following the drought in 1991, CWA was able to diversify its supplies to where less than half of its water supply was coming from MWD (41% in 2016 versus 95% in 1991). She stated that it is expected that the County of San Diego will diversify its supplies further and by 2035 only 13% of its water supplies will come from MWD. She also reviewed the historical rainfall in California and indicated that 2017 was a record rainfall year which allowed Governor Brown to rescind his January 2014 “Drought State of Emergency” and eliminated the mandatory conservation for all counties except for four. She noted that during the mandated conservation, the County of San Diego was able to disregard the conservation requirement due to the County’s diversification of its water supplies. Ms Stapleton then reviewed the issues in their lawsuit with MWD (see attached presentation). She noted that MWD has overcharged San Diego County for water deliveries (please reference slide 26 of the presentation noting the overcharges to all 24 CWA member agencies) and the impact to the Otay Water District’s ratepayers alone is an overcharge of $18.9 million from 2011 to 2014 and $38.1 million from 2011 to 2018. She stated these monies are coming out of the Otay Water District’s ratepayers’ pocket and subsidizing MWD’s water sales to their other 25 member agencies. Ms. Stapleton also reviewed MWD’s financial practices and its impacts to Southern California ratepayers and their continued practice of overcharging their 3 member agencies. She stated that MWD is a critical water agency for California and our region needs a financially sound organization for the long run. She stated that CWA wishes to engage public officials and opinion leaders to ask questions about MWD’s practices:  Why are they draining their reserves?  Why are they borrowing nearly one billion dollars unexpectedly and unplanned?  Why have they not done a long range financing plan?  Why are they buying property without doing appraisals? CWA is putting these issues in the spotlight so that solutions can be found. CWA wishes to resolve its dispute with MWD and wants a sustainable MWD. They are requesting that Otay Water District support its efforts as it means billions of dollars to California ratepayers. Director Croucher suggested that the District consider adopting a resolution showing its support of CWA’s lawsuit. The Board had comments and asked questions. Ms. Stapleton responded to the inquiries. The board recessed at 5:20 p.m. and reconvened 5:31 p.m. CONSENT CALENDAR 7. ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: A motion was made by Director Smith, seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the following consent calendar items: a) AWARD TWO (2) PROFESSIONAL AS-NEEDED CORROSION ENGINEERING SERVICES CONTRACTS WITH RFYEAGER ENGINEERING, LLC AND CORRPRO COMPANIES, INC., AN AGEGION COMPANY, EACH IN AN AMOUNT NOT-TO-EXCEED $577,276 FOR FISCAL YEARS 2018 AND 2019 [ENDING JUNE 30, 2019] b) AWARD TWO (2) PROFESSIONAL AS-NEEDED HYDRAULIC MODELING SERVICES CONTRACTS WITH WATER SYSTEMS CONSULTING, INC. AND HAZEN AND SAWYER, EACH IN AN 4 AMOUNT NOT-TO-EXCEED $175,000 FOR FISCAL YEARS 2018 AND 2019 [ENDING JUNE 30, 2019] c) ADOPT RESOLUTION NO. 4334 TO CONTINUE WATER AND SEWER AVAILABILITY CHARGES FOR THE DISTRICT’S CUSTOMERS FOR FISCAL YEAR 2017-2018 TO BE COLLECTED THROUGH PROPERTY TAX BILLS d) ADOPT RESOLUTION NO. 4335 TO ESTABLISH THE TAX RATE FOR IMPROVEMENT DISTRICT NO. 27 AT $0.004 FOR FISCAL YEAR 2017-2018 e) APPROVE THE ADDENDUM TO THE FINAL ENVIRONMENTAL IMPACT REPORT FOR THE OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM PROJECT ACTION ITEMS 8. FINANCE AND ADMINISTRATION a) APPROVE A SECOND AMENDMENT TO THE JOINT POWERS AGENCY WATER CONSERVATION GARDEN OPERATION AGREEMENT TO EXTEND THE EXPIRATION DATE AND THE FUNDING AGREEMENT IN THE AMOUNT OF $96,450 FOR AN ADDITIONAL 12 MONTHS FROM JUNE 30, 2017 TO JUNE 30, 2018 Communications Officer Tenille Otero indicated that staff is requesting that the Board approve the second amendment to the Joint Powers Agency Water Conservation Garden Operation Agreement. Please reference the Committee Action notes attached to staff’s report (Attachment A) for the details of Ms. Otero’s report. The board members made comments supporting the Water Conservation Garden (WCG). Director Gastelum indicated he was not aware of the existence of the WCG. He stated, as a condo owner, he does not receive a water bill from the Otay Water District directly and, thus, does not receive the District’s customer newsletter. He suggested that the District publish information about the WCG in all the different developments Homeowners Association newsletters as it would be a good way to publicize the WCG and their events to both single residential and multi-residential homeowners. A motion was made by Director Croucher, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None 5 to approve staffs’ recommendation. b) APPROVE THE WATER SYSTEM FEES FROM JULY 1, 2016 THROUGH JUNE 30, 2017 AND AMEND THE DISTRICT’S PURCHASING MANUAL SECTION 7.2.8.a TO ADD “REGULATORY FEES” TO STREAMLINE THE DISTRICT’S PROCUREMENT OF GOODS AND SERVICES Chief of Water Operations Pedro Porras indicated that staff is requesting that the board authorize payment of the water system fee to the State Water Resources Control Board which currently exceeds the General Manager’s authorization level and amend the District’s Purchasing Manual to add “Regulatory Fees” in Section 7.2.8, Board Authorized Purchases Exceeding the General Manager’s Authority. Please reference the Committee Action notes attached to staff’s report (Attachment A) for the details of Mr. Porras’ report. There was discussion by the board of the State Water Resources Control Board’s rational for increasing their water system fee by 510%. Following the discussion a motion was made by Director Thompson, seconded by Director Croucher and carried with the following vote: Ayes: Directors Croucher, Robak, Smith and Thompson Noes: Director Gastelum Abstain: None Absent: None to approve staff’s recommendation and to delegate to the Board President the forwarding of a letter to the State Water Resources Control Board making them aware of the District’s concerns with regard to their 510% water system fee increase. c) ADOPT ORDINANCE NO. 563 AMENDING SECTION 9, ANNEXATIONS AND DETACHMENTS; SECTION 28 CONNECTION FEES AND CHARGES FOR POTABLE OR RECYCLED WATER SERVICE; SECTION 53, CONDITIONS FOR SEWER SERVICE; AND APPENDIX A OF THE CODE OF ORDINANCES TO ADJUST THE DISTRICT’S WATER CAPACITY FEE, NEW WATER SUPPLY FEE, AND ANNEXATION FEE; CREATE A SEWER CAPACITY FEE AND MODIFY THE SEWER ANNEXATION FEE, WITH ALL CHANGES TO BE EFFECTIVE JUNE 7, 2017 Finance Manager Kevin Koeppen requested that the Board adopt Ordinance No. 563 amending Section 9.04.B and 9.04.C.4, Annexations and Detachments; Sections 28.01.A and 28.01.B, Connection Fees and charges for Potable or Recycled Water Service; Section 53.03.A.1, conditions for Sewer Service; and Appendix A of the Code of Ordinances which will update five (5) water fee charges as noted in staffs’ report. Mr. Tom Gould, HDR Engineering, Inc. was in 6 attendance of the meeting to present on the findings of the District’s Rate Study. Please reference the Committee Action notes attached to staff’s report (Attachment A) for the details of Mssrs. Koeppen and Gould’s reports. The board asked questions and staff and Mr. Gould responded to the board’s inquiries. Mr. Curt Smith of the HomeFed Corporation indicated that his organization owns quite a bit of real estate in Otay Ranch and they currently have several developments that will provide for approximately 13,000 dwelling units plus other land uses. It is expected that these units will be built over the next 20 years. He stated that HomeFed Corporation is in support of the meter fee reduction and that he was in attendance of today’s meeting to discuss the larger homes in their developments. He indicated that the fixture count in these homes are a little beyond the Otay Water District’s threshold for a ¾” meter and, thus, require a 1” meter. Mr. Smith asked if the District could work with his organization and other developers (the industry) on ways to handle these increments without having to move to a 1” meter as the cost difference between a ¾” and 1” meter is so great. General Manager Watton explained that the capacity fee is different than the calculation of the meter size based on fixture count. He stated that staff would work and discuss this issue with HomeFed Corporation. A motion was made by Director Croucher, seconded by Director Smith and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve staffs’ recommendation. 9. BOARD a) ADOPT RESOLUTION NO. 4337 OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT SUPPORTING EFFORTS TO KEEP THE TIJUANA RIVER NATIONAL ESTUARINE RESEARCH RESERVE OPEN In response to an inquiry from Director Smith, Director Thompson clarified that the funding referenced in the resolution is funding from the Federal government. The resolution is supporting the continuing of Federal funding for the Tijuana River National Estuarine Research Reserve. A motion was made by Director Smith, seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Robak, Smith and Thompson 7 Noes: Director Gastelum Abstain: None Absent: None to adopt Resolution No. 4337 supporting efforts to keep the Tijuana River National Estuarine Research Reserve open. b) DISCUSSION OF 2017 BOARD MEETING CALENDAR There were no changes to the board meeting calendar. INFORMATIONAL ITEMS 10. THIS ITEM IS PROVIDED TO THE BOARD FOR INFORMATIONAL PURPOSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEM. a) THIRD QUARTER UPDATE ON THE FISCAL YEAR 2017 CAPITAL IMPROVEMENT PROGRAM Engineering Manager Dan Martin provided an update on the District’s third quarter of FY 2017 Capital Improvement Program. He indicated that the FY 2017 budget is divided into 90 projects totaling $11.8 million. The overall expenditures through the third quarter is $7.3 million which is approximately 62% of the FY 2017 budget. Please reference the Committee Action notes attached to staff’s report (Attachment A) for the details of Mr. Martin’s report. The board asked questions and staff responded to the board’s inquiries. REPORTS 11. GENERAL MANAGER’S REPORT General Manager’s Report General Manager Watton presented information from his report which included an update on Cal-Card rebate, SDRMA credit incentive program, 2017 Top Tech Executive Awards, State Route 94 Campo Road at Melody Road project, school lead testing program, conservation and water purchases. The board had comments and questions concerning a few items in the General Manager’s report and staff responded to the inquiries and comments. CWA Report Director Smith reported that CWA is moving water around in their aqueducts in the north to combat bad water quality. He also noted that CWA’s reservoirs are filled so they can provide emergency storage for up to six (6) months. He indicated in an effort to maximize storage, as the State has a large issue with 8 storage capacity, CWA has discussed with MWD the possibility of moving water from northern California to southern California to store the water in all the various agencies’ reservoirs. MWD declined the offer as they felt it was too hard. He indicated that it is possible that the State could get involved. He lastly shared that CWA is presenting its proposed budget for FY 2018 and they indicated that they will be absorbing some of their cost increases to keep their rate increase to 3.7% for the upcoming fiscal year and is expected the rate increase will be from 3% to 5% in the following fiscal year. Director Croucher added that CWA will continue with the outreach to Sacramento and Washington DC in an effort to push this shared storage idea forward in a positive direction and that he will be traveling to Washington, DC with CWA representatives. They will be meeting with the Bureau of Reclamation and the Army Corp of Engineers to review the plans for water storage for both Los Angeles and San Diego Counties. He also commented on MWD’s budget and their rebate program. He lastly shared that he, along with other officers of CWA, attended the ACWA conference in May and CWA won the Clair A. Hill Water Agency Award of Excellence for their Desalination Project. Along with this award, a $5000 scholarship with be awarded to a qualified undergraduate student in San Diego that can be applied to his/her tuition and fees for the upcoming academic year. 12. DIRECTORS' REPORTS/REQUESTS Director Smith reported that he attended the District’s regular board meeting, Engineering Operations and Water Resources Committee meeting, Budget Workshop/Special Board meeting, Ad Hoc City of San Diego Matters Committee and the Desalination Project Committee meeting in May. He stated the Desalination Project Committee reviewed an analysis of the project’s viability based on different assumptions that were input into a spreadsheet. The assumptions could be changed in the spreadsheet to see how they impact the projects feasibility. He noted that a contract still needs to be negotiated, but the spreadsheet allows the District to determine the range that would make the project viable. Director Gastelum indicated that he attended the ACWA Conference in May and the Joint Powers Insurance Authority (JPIA) made a presentation that seemed to provide a “win win” situation for the agency, employees and its ratepayers. He stated that he would like to have the JPIA contact the District to share the information. 13. PRESIDENT’S REPORT President Robak reported on meetings he attended during the month of May 2017 (his report is attached). He shared that he met with the lease owners of the Salt Creek Golf Course and the District’s committee will be meeting to discuss the status of negotiations with the lease owners. He also shared that General Manager Watton and he met with San Diego County Supervisor Dianne Jacob 9 regarding potential opportunities to share efforts on sewer services and the County indicated that they had no interest at this time. 14. CLOSED SESSION The board recessed to closed session at 7:23 p.m. to discuss the following matters: a) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [GOVERNMENT CODE §54956.9] OTAY WATER DISTRICT v. CITY OF SAN DIEGO; CASE NO. 37-2017- 00019348-CU-WM-CTL The board reconvened at 7:46 p.m. and General Counsel Shinoff reported that the board met in closed session and took no reportable actions. 15. ADJOURNMENT With no further business to come before the Board, President Robak adjourned the meeting at 7:46 p.m. ___________________________________ President ATTEST: District Secretary 10 President’s Report Mark Robak June 7, 2017 Board Meeting # Date Meeting Purpose 1 2-May Water Conservation Garden Ad Hoc Governence Committee 2 3-May OWD Regular Board Meeting Monthly board meeting 3 4-May Metro JPA Meeting Monthly commission meeting 4 4-5 May P3 Water Summit Discussion of Private Public Partnerships 5 12-May Meeting with Salt Creek Golf Course ownership Discuss ownership concerns 6 15-May Committee Agenda Briefing Met with General Manager Watton to review items that will be presented at the May committee meetings. 7 17-May Finance, Administration and Communications Committee Reviewed items that will be presented at the June board meeting. 8 18-May 12th Annual Kiwanis Safety Officer Appreciation Scholarship Dinner Represent District at the Event 9 22-May Water Conservation Garden Ad Hoc Governence Committee 10 23-May Desalination Project Committee Reviewed items that will be presented at the June board meeting. 11 25-May San Diego County Taxpayers Association Golden Watchdog & Fleece Annual Dinner 11 12 24-May OWD Special Board Meeting/Budget Workshop Discussed proposed budget for FY 2018 13 26-May Interview on KUSI TV Discuss Desalination Project/Presidential Permit 14 30-May Interview with La Prensa reporter Discuss Desalination Project/Presidential Permit 15 31-May Interview with Newsweek reporter Discuss Desalination Project/Presidential Permit 16 31-May Interview with Union Tribune Reporter Discuss City of San Diego lawsuit 1 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT July 5, 2017 1. The meeting was called to order by President Robak at 3:44 p.m. 2. ROLL CALL Directors Present: Gastelum, Robak Smith and Thompson Directors Absent: Director Croucher (called to respond to a fire emergency) Staff Present: General Manager Mark Watton, Attorney Jeanne Blumenfeld, Chief of Engineering Rod Posada, Chief Financial Officer Joe Beachem, Chief of Administration Adolfo Segura, Chief of Operations Pedro Porras, Asst. Chief of Operations Jose Martinez, District Secretary Susan Cruz and others per attached list. 3. PLEDGE OF ALLEGIANCE 4. APPROVAL OF AGENDA A motion was made by Director Smith, and seconded by Director Thompson and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve the agenda. 5. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA Mr. Dan Teague of Chula Vista indicated that the District owns a four (4) to five (5) acre parcel of land adjacent to his neighborhood which is filled with dry brush and weeds. He requested that the District clear the land of the brush as he is concerned that a fire could start on the District’s land and threaten the homes close by. He asked if the District could address this issue now. President Robak noted that District staff will be addressing this issue and the outcome will be reported back to the board. He thanked Mr. Teague for attending the District’s meeting. 2 6. LEGISLATIVE UPDATE Ms. Rosanna Carvacho of Brownstein, Hyatt, Farber and Schreck (BHFS) provided an update on legislative matters of interest to the District. She reviewed the bills that the District has taken support and oppose positions on, additional bills that her firm is monitoring on the District’s behalf, and the new water/park bond that was filed on July 3, 2017 titled the “Safe Drinking Water/Water Quality and Supply Natural Resources Protection and Park Improvement Act 2018.” In response to an inquiry from Director Gastelum, Ms. Carvacho indicated that the District could work with Senators Hueso and Anderson to sponsor a bill, similar to the proposed bill for the Santa Clara Valley Water District concerning their design-build procurement process (SB 851). The District would just need to indicate why it would need the authority. She stated that bill would need to go to both the Assembly and Senate houses. Director Smith inquired about bills for dams and reservoirs and Ms. Carvacho indicated that she would do some research and provide the information to the District. President Robak inquired what the cost savings would be from SB 851. Ms. Carvacho indicated that she did not have that information, but would provide the information following the meeting. Director Robak also requested a spreadsheet with an update on the bills that BHFS is tracking on behalf of the District on a bimonthly basis. 7. APPROVE THE MINUTES OF THE REGULAR BOARD MEETING OF MARCH 1, 2017 AND SPECIAL BOARD MEETING OF APRIL 17, 2017 District Secretary Susan Cruz indicated that she wished to note a correction on page 8 of the March 1, 2017 minutes. She stated that at the bottom of the page, the motion to approve the consent calendar was seconded by President Robak as opposed to Director Croucher. She stated she wished to present the minutes for adoption with this change. A motion was made by Director Smith, and seconded by Director Thompson and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve the minutes of the regular meeting of March 1, 2017 with the proposed change as noted above and the special board meeting of April 17, 2017. CONSENT CALENDAR 3 8. ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: A motion was made by Director Smith, seconded by Director Thompson and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve the following consent calendar items: a) APPROVE A FOURTH AMENDMENT WITH CAROLLO ENGINEERS, INC. FOR DESIGN AND CONSTRUCTION SUPPORT OF THE 870-2 PUMP STATION PROJECT IN AN AMOUNT NOT-TO-EXCEED $209,418 b) AWARD TWO (2) PROFESSIONAL AS-NEEDED ENVIRONMENTAL SER-VICES CONTRACTS TO HELIX ENVIRONMENTAL AND ICF, EACH IN AN AMOUNT NOT-TO-EXCEED $400,000. THE TOTAL AMOUNT OF THE TWO CONTRACTS WILL NOT EXCEED $400,000 DURING FISCAL YEARS 2018, 2019, AND 2020 (ENDING JUNE 30, 2020) ACTION ITEMS 9. ENGINEERING AND WATER OPERATIONS c) AWARD A CONSTRUCTION CONTRACT TO PACIFIC HYDROTECH CORPORATION FOR THE 870-2 PUMP STATION REPLACEMENT PRO-JECT AND THE FLOATING COVER AND LINER REPLACEMENT AT THE 571-1 RESERVOIR IN AN AMOUNT NOT-TO-EXCEED $16,925,900 Engineering Manager Dan Martin indicated that staff is requesting the Board’s authorization for the General Manager to enter into a construction contract with Pacific Hydrotech Corporation for the 870-2 Pump Station Replacement Project and the floating cover and liner replacement at the 571-1 Reservoir in an amount not-to-exceed $16,925,900. Please reference the Committee Action notes attached to staff’s report (Attachment A) for the details of Mr. Martin’s report. Director Smith indicated that the Engineering, Operations and Water Resources Committee supported staffs’ recommendation. He stated because of the size and cost of the project and the 3-D imaging model of the pump station’s design, 4 the committee felt it would be appropriate to bring this project to full the board as an action item. Mr. Martin responded to additional questions from the board. Following the discussion, a motion was made by Director Smith, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve staffs’ recommendation. 10. BOARD a) ADOPT RESOLUTION NO. 4338 OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT SUPPORTING SAN DIEGO COUNTY WA-TER AUTHORITY’S LONG-TERM SUPPLY PLAN AND LITIGATION AGAINST THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA Director Thompson made a motion to approve Resolution No. 4338 and include the following additional language: “Be it further resolved that the Board of Directors of the Otay Water District encourage members of our State Legislature to work with the San Diego County Water Authority (CWA) to review possible State Legislation that would better protect the CWA and its member agencies from possible future unfair practices by Metropolitan Water District (MWD) similar to its past historic pattern of behavior.” Director Smith seconded the motion and it failed with the following vote: Ayes: Directors Smith and Thompson Noes: Director Gastelum, Abstain: Director Robak Absent: Director Croucher A motion was made by Director Smith, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve Resolution No. 4338 as it is presented. 5 b) DISCUSSION OF 2017 BOARD MEETING CALENDAR Director Smith noted that he will be out-of-town and will be unable to attend the District’s August 2, 2017 board meeting. There were no changes to the board meeting calendar. REPORTS 11. GENERAL MANAGER’S REPORT General Manager Watton presented information from his report which included an update on the fuel island annual inspection, the status of the Proposition 218 water and sewer rate notices, implementation of “text messaging” to contact customers, the 36-inch main pumpouts and air/vacuum ventilation installations, the administration and operations buildings parking lot improvements and charging station, the regional training facility, and potable and recycled water sales and purchases. The board had comments and questions concerning a few items in the General Manager’s report and staff responded to the questions and comments. Director Gastelum requested that staff review adding guard rails along the right hand side of the driveway to the District’s administration building. General Manager Watton indicated that staff would access the need to add the guard rail. 12. CWA Report Director Smith reported that CWA approved a two (2) year budget of $1.6 billion. He noted that many of their capital projects have been reduced now that many of the emergency storage projects have been completed. He stated the capital budget is approximately $80 million this upcoming fiscal year versus $300-$350 million in past fiscal years. He noted that CWA has also been reducing staff, similar to Otay WD, and indicated that their water rate increase for FY 2018 is 3.7% (the first year of the budget). CWA did not identify the proposed second year budget rate increase, but estimated that it will be between 3 and 5%. With an increase of 3.7%, the District’s cost to purchase water next fiscal year from CWA will be approximately $1600/acre foot (AF) for treated water and $1300/AF for raw water. He also noted that he attended committee meetings at CWA and shared information on CWA’s Aqueduct Operations Plan (facility shutdowns) and the CWA vs. MWD Lawsuit. He noted that the details of the lawsuit can be found on CWA’s website. 13. DIRECTORS' REPORTS/REQUESTS 6 Director Thompson reported that he attended the June Council of Water Utilities meeting and the chair of MWD’s board, Mr. Randy Record, was the guest presenter. Director Smith reported that he attended the District’s regular board meeting and Engineering, Operations and Water Resources Committee this past month. 14. PRESIDENT’S REPORT President Robak reported on the meetings he attended during the month of June 2017 (his report is attached). He shared with regard to the Water Conservation Garden (WCG) that Helix Water District has voted to continue to support the WCG and they also will not file a one year notice to withdraw from the Garden. He lastly indicated that he had booked two meetings on May 12, 2017 inadvertently (Southwestern College luncheon and with the lessees of the Salt Creek Golf Couse). He stated that he is working with the District’s Information Technology Department to find solutions to his calendar issues. He requested that the board excuse him from the Southwestern College luncheon and waive the reimbursement of the $40 registration fee as, per District policy, he cannot excuse himself. A motion was made by Director Thompson, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to excuse President Robak from the Southwestern College luncheon and waive the registration fee of $40. 15. ADJOURNMENT With no further business to come before the Board, President Robak adjourned the meeting at 5:36 p.m. ___________________________________ President ATTEST: District Secretary 7 President’s Report Mark Robak July 5, 2017 Board Meeting # Date Meeting Purpose 1 1-Jun Metro JPA Meeting Monthly commission meeting 2 2-Jun Board Agenda Briefing Met with General Manager Watton and General Counsel Dan Shinoff to review items that will be presented at the June Board Meeting. 3 5-Jun WCG Ad Hoc Committee Discussed WCG Operating Agreement 4 6-Jun Met with Fred Grande and Bill McWethy Discussed the Salt Creek Golf Course. 5 7-Jun OWD Regular Board Meeting Monthly board meeting 6 9-Jun Interview with Televisa Interview regarding Presidential Permit and the Rosarito Desalination Project 7 14-Jun Chula Vista Chamber of Commerce Meeting Presented on the Presidential Permit and the Rosarito Desalination Project 8 16-Jun Committee Agenda Briefing Conference call with General Manager Watton to review items that will be presented at the June committee meetings. 9 21-Jun Ad Hoc Salt Creek Golf Course Development Committee Discussed terms for the purchase, sale and/or lease of the golf course property. 10 27-Jun Lunch with Star News Reporter Discussion with reporter, Robert Moreno 11 28-Jun WCG Ad Hoc Committee Discussed WCG Operating Agreement STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: October 4, 2017 SUBMITTED BY: Kevin Koeppen, Finance Manager PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Mark Watton, General Manager SUBJECT: Public Hearing Concerning the Implementation of Rate Changes as Proposed for the Fiscal Year 2017-2018 Operating and Capital Budget; Adoption of Ordinance No. 566 Approving the Rate Changes; and Authorization of Five-year Pass-through Increases and District Increases for Fiscal Years 2019 through 2023 Not-to-Exceed 10 Percent Annually, for all Costs Other than Pass-through Costs GENERAL MANAGER’S RECOMMENDATION: That the Board hold a public hearing on the proposed rates and charges; and if no majority protest is received 1)approve the implementation of rate changes as proposed for the Fiscal Year 2017- 2018 Operating and Capital Budget; 2) adopt Ordinance No. 566 amending Section 25, Conditions for Water Service; Section 38, Service for Fire Protection Systems, and Appendix A, Schedule of Fees of the District’s Code of Ordinances; 3) authorize, for a period of five-years, the pass-through of cost increases from water wholesalers; and 4) authorize, for a period of five-years, District rate increases not-to-exceed 10 percent annually, for all costs other than pass-through costs. PURPOSE: That the Board adopt Ordinance No. 566 to establish water rates and charges, authorize, for a period of five years, all pass-through increases or decreases to cover changes to rates, fees, and charges from the District’s water suppliers. In addition, authorize for a period of five years, overall average District increases to rates, fees, and charges, not to exceed 10 percent per year, for all costs other than pass-through costs. The following are the sections requiring amendments due to changes in rates and rate structures: Section 25.01 Service Area Section 25.03 Definitions of Water Service Categories, Water Rates, Charges and Fees Section 25.04 Deposits by Lessees or Non-Owners of Property Section 38.02 Rules and Regulations for Fire Hydrant and/or Fire Sprinkler Service for Commercial or Industrial Purposes on Private Property Section 38.03 Services for Individually Metered Residential Fire Protection ANALYSIS: On April 17, 2017, staff presented to the Board the results of the Water Cost of Service Study. On May 24, 2017, the Fiscal Year 2017- 2018 Budget containing the changes in rates and rate structures was approved and Ordinance No. 564 was adopted. In addition, the Board directed staff to prepare and mail the Proposition 218 notices to customers. The approved budget does not have an overall water rate increase on January 1, 2018; however, it does reflect the changes to water rates and water rate structures presented to the Board on April 17, 2017. In compliance with the Proposition 218 requirements, notices were sent to all customers to inform them of their option to protest rate changes. The required public hearing was set for the October 4, 2017 Board Meeting where the Board will be considering protests. As of September 22, 2017, the protest letters that have been received are attached and any letters received after this date will be delivered to the Board of Directors at the meeting. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The Fiscal Year 2017-2018 Budget covers increases from water wholesalers, supports the CIP plan, and improves the District’s financial position. The FY 2017-2018 adopted budget outlines the recommended changes in the rate structure with no overall water rate increase on January 1, 2018. STRATEGIC GOAL: Through well-established financial policies and wise management of funds, the District will continue to guarantee fiscal responsibility to its ratepayers and the community at large. LEGAL IMPACT: None. Attachments: A) Ordinance No. 566 Exhibit 1 - Section 25 Strike-through Exhibit 2 – Section 25 Proposed Exhibit 3 – Section 38 Strike-through Exhibit 4 – Section 38 Proposed Exhibit 5 – Appendix A Strike-through Exhibit 6 – Appendix A Proposed B) Protest Letters C) Presentation D) Proposition 218 Notices E) Review of District’s Water Rates by HDR 1 ORDINANCE NO. 566 AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT SETTING RATES AND CHARGES AND AMENDING SECTION 25 - CONDITIONS FOR WATER SERVICE; SECTION 38 – SERVICE FOR FIRE PROTECTION SYSTEMS; AND APPENDIX A - SCHEDULE OF FEES OF THE DISTRICT’S CODE OF ORDINANCES WHEREAS, the Board of Directors of the Otay Water District is empowered by the provisions of the Water Code and other applicable provisions of law to establish rates, fees and charges for the provision of water and sewer services, including the adoption of rates, fees and charges for said services for a period of five years; and WHEREAS, in compliance with the provisions of the Water Code; and WHEREAS, in compliance with the provisions of Article XIIID of the California Constitution, the District has calculated the amount of the rate, fee or charge proposed to be imposed upon each parcel. WHEREAS, in compliance with the provisions of Article XIIID of the California Constitution, the District provided written notice by mail of the proposed rate, fee or charge to the record owner of each identified parcel within the District upon which the rate, fee or charge is proposed for imposition, the amount of the rate, fee or charge proposed to be imposed, the basis Attachment A 2 upon which the amount of the proposed rate, fee or charge was calculated, the reason for the fee or charge, together with the date, time, and location of a public hearing on the proposed rate, fee or charge. WHEREAS, having held a public hearing, having considered all protests against the proposed rate, fee or charge, and not having received a majority protest, the Board of Directors has reviewed and considered the projected expenses and revenues of the District, and has found and determined that revenues derived from the changes to the rate, fee or charge are not projected to exceed either the funds required to provide water and sewer services or the proportional cost of the service attributable to the parcel, and that therefore approval of the changes to the rates, fees and charges for water and sewer services as outlined in the rate notices is necessary and in the best interests of the District. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Otay Water District as follows: Section 1. The foregoing recitals are true and correct and are incorporated herein by reference. Section 2. The 2018 proposed schedules of rates, fees and charges reflected on the notices that were mailed to the record owner of each identified parcel within the District, and 3 presented to this Board of Directors are hereby approved and adopted. Section 3. For a period of five-years, the pass-through of cost increases from the District’s water wholesalers is hereby approved. Section 4 For a period of five years, average increases in the District’s rates, fees, and charges not-to-exceed 10 percent per year, for all costs related to labor, benefits, materials, energy, maintenance, administrative expenses, and other operational costs of providing water service including, but not limited to, amounts required to meet bond covenants and to maintain adequate reserves is hereby approved. Section 5. The language of the District’s Code of Ordinances contained in Section 25 - Conditions for Water Service; Section 38 – Service for Fire Protection Systems; and Appendix A – Schedule of Fees, is hereby amended, as set forth in the attached copies of those sections, to reflect the revised rates, fees and charges hereby approved. Section 6. All ordinances, resolutions, or administrative procedures of the District, or parts thereof that are inconsistent with any provision of this Ordinance are hereby superseded, but only to the extent of such inconsistency. 4 Section 7. If any section, subsection, clause or phrase in this Ordinance is for any reason held invalid, the validity of the remainder of this Ordinance shall not be affected thereby. Section 8. This Ordinance and the amendments approved to Sections 25, 38, and Appendix A of the Code of Ordinances shall become effective upon the adoption of this Ordinance. Section 9. The General Manager, the District Secretary, the Chief Financial Officer and their designees shall take all action required to carry out the purpose of this resolution including, but not limited to, replacing the amended sections of the Code of Ordinances. Section 10. The amendments to the Code of Ordinances being incorporated into Sections 25, 38, and Appendix A concerning water rates, charges and fees, shall become effective on January 1, 2018. PASSED, APPROVED AND ADOPTED by the Board of Directors of the Otay Water District at a regular meeting duly held this 4th day of October 2017, by the following roll call vote: AYES: NOES: ABSENT: ABSTAIN: ________________________________ President 5 ATTEST: _____________________________ Secretary 25-1 25 SECTION 25 CONDITIONS FOR WATER SERVICE 25.01 SERVICE AREA Water service shall be furnished by the District only to property within (annexed to) a water improvement district within the District’s service area. Water service to property located outside an improvement district may be furnished only upon prior approval of the Board of Directors. Temporary water service to property located outside an improvement district may be furnished, in accordance with Section 25.03 ED.12., upon the approval of the General Manager. 25.02 DEFINITION OF "HCF" AND "UNIT OF WATER" As used in the Code the terms "HCF" and "unit of water" are interchangeable and each shall mean 100 cubic feet or 748 gallons of water. 25.03 DEFINITIONS OF WATER SERVICE CATAGORIES, WATER RATES, CHARGES AND FEES Water service furnished by the District shall be under the categories of services and at the rates, charges and fees as set forth in Appendix A, Section 25. All District water rates, charges and fees are subject to Board approval of rate increases beginning January 1, 2014 2018 and periodically thereafter through December 31, 20182022. The increases shall be the amount sufficient to cover cost increases related to operations and maintenance, but not to exceed 10% per year. Five-year Periodic Pass–through Rate Increases or Decreases from District Wholesalers – All District water rates, charges and fees are subject to periodic rate changes from the District’s public agency wholesalers for a five-year period beginning January 1, 2014 2018 through December 31, 20182022. A. Set-up Fees for Accounts A set-up fee shall be charged for each account transferred to another customer. See Appendix A, 25.03 A. for charges. A deposit will be required of all customers who do not own the property to be served. See Appendix A, 25.04 A. for deposit amounts. B. Monthly Fixed MWD & CWA Charges Each potable water service customer shall pay a monthly MWD and CWA fixed system charge, as set forth in Appendix A, 25.03 CB. Proceeds of the charge will be used to pay for operating and maintenance costs, including the following: MWD Readiness- to-Serve Charge and Capacity Reservation Charge; CWA Infrastructure Access Charge, Customer Service Charge, Emergency Storage Charge, and Supply Reliability Charge. Exhibit 1 25-2 The MWD & CWA charge is based on the size of the water meter(s) in service with the exception of upsizing the meter for individually metered residential fire service, as described in Section 38.03 of the Code. The MWD & CWA charge shall start upon installation of the meter. C. Monthly Fixed System Charges Each water service customer shall pay a monthly fixed system charge, as set forth in Appendix A, 25.03 C. Proceeds of the charge will be used to pay for water system replacement, maintenance, and operation expenses. The system charge is based on the customer class and the size of the water meter(s) in service. For individually metered residential fire service, as outlined in Section 38.03 of the Code, the size and fee would be set based on water use requirements without additional fire capacity. The system charge shall start upon installation of the meter. D. Water Conservation Drought Pricing To promote conservation, base tiered water rates for all water services are subject to percentage increases during drought stages, as shown in the table below: Drought Stage Pricing Stage 2 Stage 3 Stage 4 Tier 1* 0%0%0% Tier 2 Up to 5%Up to 10%Up to 15% Tier 3 Up to 30%Up to 60%Up to 90% *Domestic residential water service has four tiered base rates as outlined in Appendix A, 25.03 E.1.(b). Tier 1 of the above table applies to the first two tiered base rates. Tier 2 of the above table applies to the third tiered base rate. Tier 3 of the above table applies to the fourth tiered base rate. ED. Categories of Water Service The definitions and rates and charges for water service furnished by the District shall be as follows: 1. DOMESTIC RESIDENTIAL WATER (a) Defined as: Water service for single residential and individually metered attached households as well as other domestic uses (other than that provided for in Paragraph 2.(a) below). (b) Base Rate: The tiered base rates of water furnished under this category shall be set forth in Appendix A, 25.03 DE.1.(b). 25-3 (c) Monthly system charge: The monthly system charge for recycled water service is set forth in Appendix A, 25.03 C.1. 1. 2. The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. MULTIPLE RESIDENTIAL WATER (a) Defined as: Master metered water service for multiple residential households, for example, duplexes, townhomes, apartments and mobile homes. (b) Base Rate: The tiered base rates of water furnished for each dwelling unit under each block of service in this category shall be as set forth in Appendix A, 25.03 ED.2.(b). (c) Monthly system charge: The monthly system charge for recycled water service is set forth in Appendix A, 25.03 C.2. The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. 3. BUSINESS AND PUBLICLY-OWNED WATER (a) Defined as: Potable water service for commercial, industrial and publicly-owned establishments. (b) Base Rate: The tiered base rate for water furnished under this category shall be determined by meter size and usage block as set forth in Appendix A, 25.03 ED.3.(b). (c) Monthly system charge: The monthly system charge for recycled wwater service is set forth in Appendix A, 25.03 C.3. The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. 25-4 4. IRRIGATION AND COMMERCIAL AGRICULTURAL USING POTABLE WATER (a) Irrigation is potable water service provided solely for irrigation of landscape or landscaping, as defined in Section 0.02 A. (b) Commercial agricultural engaged in the growing or raising of live stock, in conformity with recognized practices of husbandry, for the purpose of commerce, trade or industry, or for the use by public educational or correctional institutions or agricultural horticultural or floricultural products and produced, (i) for human consumption or for the market, or (ii) for the feeding of fowl or livestock produced for human consumption or for the market, or (iii) for feeding fowl or livestock for the purpose of obtaining their products for human consumption or for the market, such products to be grown or raised on a parcel of land having an area of not less than one acre utilized exclusively therefore. (c) Base Rate: The tiered base rate for water furnished under this category shall be determined by meter size and usage block as set forth in Appendix A, 25.03 ED.4.(c). (d) Monthly system charge: The monthly system charge for recycled water service is set forth in Appendix A, 25.03 C.4. The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. 5. RECYCLED WATER – LANDSCAPE IRRIGATION AND CERTAIN NON- IRRIGATION PURPOSES (a) Defined as: Non-potable and recycled water service provided for irrigation of landscaping, as defined in Section 0.02 A. of the Code, and certain non- irrigation purposes, other than domestic use, in compliance with federal, state and local laws and regulations regarding use of recycled water. 25-5 (b) The provisions of this Code, relating to use of recycled water, set forth in Section 26 of the Code, including but not limited to cross-connections and backflow protective devices, shall be strictly enforced in connection with the use of recycled water. (c) Base Rate: The tiered base rate for water furnished under this category shall be determined by meter size and usage block as set forth in Appendix A, 25.03 ED.5.(c). The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. (d) Monthly system charge: The monthly system charge for recycled water service is set forth in Appendix A, 25.03 C.5. 6. RECYCLED WATER - COMMERCIAL (a) Defined as: Non-potable and recycled water service provided for commercial customers, as defined in Section 0.02 A. of the Code, and certain non- irrigation purposes, other than domestic use, in compliance with federal, state and local laws and regulations regarding use of recycled water. (b) The provisions of this Code, relating to use of recycled water, set forth in Section 26 of the Code, including but not limited to cross-connections and backflow protective devices, shall be strictly enforced in connection with the use of recycled water. (c) Base Rate: The tiered base rate for water furnished under this category shall be determined by meter size and usage block as set forth in Appendix A, 25.03 ED.6.(c). The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. (d) Monthly system charge: The monthly system charge for recycled commercial water service is set forth in Appendix A, 25.03 C.6. 25-6 7. POTABLE TEMPORARY AND CONSTRUCTION WATER SERVICE (a) Defined as: Potable water service provided by the District on a temporary basis, pursuant to Section 31 of this Code. (b) If capacity fees have not been paid by the customer, the rates for water furnished under this category is set forth in Appendix A, 25.03 ED.7.(b). (c) If the customer has paid capacity and annexation fees, the base rate for water furnished under this category shall be the base rate charged customers in the same category of service on a permanent meter basis. (d) The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. (ed) The applicable monthly system and MWD & CWA charge shall be the same rates charged to customers in the same category of service on a permanent meter basis per Appendix A, 25.03 C.54. 8. RECYCLED TEMPORARY AND CONSTRUCTION WATER SERVICE (a) Defined as: Recycled water service provided by the District on a temporary basis, pursuant to Section 31 of this Code. (b) If capacity fees have not been paid by the customer, the rates for water furnished under this category is set forth in Appendix A, 25.03 ED.8(b). (c) If the customer has paid capacity and annexation fees, the base rate for water furnished under this category shall be the base rate charged customers in the same category of service on a permanent meter basis. (d) The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. (ed) The applicable monthly system charge shall be the same rates charged to customers in the same category of service on a permanent meter basis per Appendix A, 25.03 C.53 9. WATER SERVICE UNDER SPECIAL AGREEMENTS (a) Defined as: Water service provided under express agreements approved by the Board of Directors for 25-7 service to golf courses and other entities, which service may be curtailed or interrupted by the District under conditions provided in such agreements. (b) For water service under this category the base rate shall be determined on a case-by-case basis. Unless otherwise specified in the particular agreement, the tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. 10. TANK TRUCKS (a) Defined as: Water service provided for the filling of tanks on motor vehicles transporting water used for other than earth grading purposes, which service shall be made only through a portable meter issued by the District to a customer specifically for use in accordance with the provisions herein for such service. (b) The rate for metered water furnished under this category is reflected in Appendix A, 25.03. ED.10. (b), plus a monthly system charge at the rate set forth in Appendix A, 25.03 C.34. (c) The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. (d)(c) (c) Requirements for Use of Water Meter (1) To receive such service, the customer must make a deposit for the use a water meter furnished by the District. The fee is set forth in Appendix A, 31.03 A.1. (2) Upon termination of the service, the Dis- trict will refund the amount of deposit remaining after making the following deductions: (i) Cost of repairing or replacing the meter, fire hydrant and/or any fittings damaged or lost while in use; and (ii) Unpaid charges for water or other applicable charges. (3) Prior to the end of each six month period following issuance of a meter under this section, or at the request of the District, whichever is earlier, the customer shall return the meter to the District for 25-8 inspection, repair, or calibration as deemed necessary by the District. (4) Payment for water service under this cate- gory shall be made as follows: (i) The bill shall be based on the amount of water actually used, which shall be determined by the District’s reading of the meter or by a report made by the customer to the District in the manner prescribed by the District. (ii) Where the actual amount of water used cannot be determined as provided in (i), the District will issue a bill based on a District estimate of the amount of water used, as determined by the District. Such estimates shall be reconciled with actual amounts used when the customer returns the meter to the District as provided in paragraph 3 above. (iii)Payments shall be made as specified on the bill. 11. WATER SERVICE OUTSIDE DISTRICT BOUNDARIES (a) Defined as: Water service for real property outside the service area of the District. (b) This service will be provided only upon prior approval of the General Manager when there is a surplus of water over and above the existing needs for service in the District. This service is temporary and may be terminated upon written notice from the District. Customers for this service are sometimes referred to as "outside users." (c) Customers applying for this category of service shall pay an application fee as set forth in Appendix A, 25.03 ED.11.(c). (d) The rate for metered water furnished under this category shall be charged the rate as described in Appendix A, 25.03 ED.11.(d), plus a monthly system charge at the rate set forth in Appendix A, 25.03 C.4. (d) (e) 25-9 The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. (e) (e) Customers requesting only fire service or a fire hydrant under this category shall be charged a capacity fee based on one (1) EDU for a permanent meter in the improvement district from which the fire service derives its flow, plus a monthly system charge at the rate set forth in Appendix A, 25.03 DE.13.(c). 12. WATER SERVICE OUTSIDE AN IMPROVEMENT DISTRICT (a) Defined as: Water service for property located within the boundaries of the District, but not within a water improvement district. Customers for this service are sometimes referred to as "outside users." (b) Customers applying for this service shall pay an application fee as set forth in Appendix A, 25.03 ED.12.(b). The District will review the application to determine whether the land to be served should be annexed to an improvement district. If it is determined that annexation is not practical, the Board of Directors may authorize service as an outside user. This service will be reviewed periodically until it is determined that the property must be annexed to an improvement district or that service must be terminated. (c) The rate for metered water furnished under this category is as set forth in Appendix A, 25.03 ED.12.(c), plus a monthly system charge as set forth in Appendix A, 25.03 .C.4. The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. ((d) Upon approval of the Board of Directors, a cus- tomer, who has paid all construction costs for facilities necessary to serve the customer's property in lieu of annexation to a water improvement district, shall be exempt from the provision for this category of service. 13. SERVICE FOR FIRE PROTECTION 25-10 (a) Defined as: Water service provided by the Dis- trict solely to feed fire hydrants or fire sprinkler systems from lines or laterals con- nected to District water mains. (b) The District will not make a charge for the quantity of water used for fire protection purposes. (c) The monthly system charge for this category of service is set forth in Appendix A, 25.03 DE.13.(c) for each connection to a District water main made for fire protection service. 14. WATER SERVICE TO PROPERTY NOT SUBJECT TO DISTRICT TAXES (a) Pursuant to Section 71613 of the California Water Code, the District may furnish water to property, not subject to District taxes, at special rates, terms and conditions as are determined by the Board of Directors for such service. Such rates, terms and conditions shall be uniformly applied to like classes and conditions of service in the same improvement district or geographical area. (b) Customers in this category, such as publicly- owned establishments, shall pay an additional fee as outlined in Appendix A, 25.03 DE.14.(b). 15. INTERIM WATER SERVICE IN IMPROVEMENT DISTRICT 7 (a) Definition of Interim Service. This is water Service furnished to a customer in Improvement District 7 (ID 7) for temporary use. (b) Rates for Interim Service. Customers applying for interim service in ID 7 shall not be required to pay the ID 7 water capacity fee and San Diego County Water Authority fee, as required under Section 28.01 of this Code. The water rate is set forth in Appendix A, 25.03 ED.15.(b). (c) The rate for metered water furnished under this category is as set forth in Appendix A, 25.03 D.12 (c), plus a monthly system charge as set forth in Appendix A, 25.03 C.4. (d) Conversion to Permanent Service. At such time as use expires, the customer shall be required to 25-11 pay all fees in effect at the time the permanent use is implemented. FE. Energy Charges for Pumping Water In addition to water rates and other charges provided for in this Section 25.03, customers shall be charged an energy pumping charge based on the quantity of water used and the elevation to which the water has been lifted to provide service. The energy pumping charge shall be made at the rate set forth in Appendix A, 25.03 FE. 25.04 DEPOSITS BY LESSEES OR NON-OWNERS OF PROPERTY 8. RECYCLED TEMPORARY AND CONSTRUCTION WATER SERVICE (a) Defined as: Recycled water service provided by the District on a temporary basis, pursuant to Section 31 of this Code. (b) If capacity fees have not been paid by the customer, the rates for water furnished under this category is set forth in Appendix A, 25.03 DE.8(b). (c) If the customer has paid capacity and annexation fees, the base rate for water furnished under this category shall be the base rate charged customers in the same category of service on a permanent meter basis. (d) The tiered base rates for this category of service are subject to the increased drought pricing outlined in Section 25.03 D. (ed) The applicable monthly system charge shall be the same rates charged to customers in the same category of service on a permanent meter basis per Appendix A, 25.03 C.5. A. AMOUNT OF DEPOSIT The customer's deposit shall be applied to reduce or satisfy any delinquent payment or other amount due the District at the time of termination of water service to the customer. Any portion of the deposit remaining, after satisfaction of the amount due, shall be refunded to the customer that made the deposit. The deposits listed per Appendix A, 25.04 A. above may be waived for a new residential applicant where the applicant demonstrates credit worthiness based upon prior utility 25-12 payments or a non-delinquent water account for one year or other similar evidence of credit. B. REFUND OF DEPOSIT Where funds have been on deposit for twelve months in a domestic service account and there has been no more than one delinquent payment on that account during that period, the District will apply a credit to the water account in the amount of the deposit. C. LETTER OF CREDIT A letter of credit, in a form approved by the General Manager or Department Head of Finance, may be submitted to the District to satisfy the deposit requirements. 25.05 SERVICE TO SUBSEQUENT CUSTOMERS After a water meter has been installed for a customer and all fees and charges have been paid, water service may be furnished to a subsequent customer through the water meter installed without payment of further charges, except for the set-up fee for transferred accounts, payment of delinquent charges for the applicant's service or other deposits that may be required by this Code.   25-1 25 SECTION 25 CONDITIONS FOR WATER SERVICE 25.01 SERVICE AREA Water service shall be furnished by the District only to property within (annexed to) a water improvement district within the District’s service area. Water service to property located outside an improvement district may be furnished only upon prior approval of the Board of Directors. Temporary water service to property located outside an improvement district may be furnished, in accordance with Section 25.03 D.12., upon the approval of the General Manager. 25.02 DEFINITION OF "HCF" AND "UNIT OF WATER" As used in the Code the terms "HCF" and "unit of water" are interchangeable and each shall mean 100 cubic feet or 748 gallons of water. 25.03 DEFINITIONS OF WATER SERVICE CATAGORIES, WATER RATES, CHARGES AND FEES Water service furnished by the District shall be under the categories of services and at the rates, charges and fees as set forth in Appendix A, Section 25. All District water rates, charges and fees are subject to Board approval of rate increases beginning January 1, 2018 and periodically thereafter through December 31, 2022. The increases shall be the amount sufficient to cover cost increases related to operations and maintenance, but not to exceed 10% per year. Five-year Periodic Pass–through Rate Increases or Decreases from District Wholesalers – All District water rates, charges and fees are subject to periodic rate changes from the District’s public agency wholesalers for a five-year period beginning January 1, 2018 through December 31, 2022. A. Set-up Fees for Accounts A set-up fee shall be charged for each account transferred to another customer. See Appendix A, 25.03 A. for charges. A deposit will be required of all customers who do not own the property to be served. See Appendix A, 25.04 A. for deposit amounts. B. Monthly Fixed MWD & CWA Charges Each potable water service customer shall pay a monthly MWD and CWA fixed system charge, as set forth in Appendix A, 25.03 B. Proceeds of the charge will be used to pay for operating and maintenance costs, including the following: MWD Readiness- to-Serve Charge and Capacity Reservation Charge; CWA Infrastructure Access Charge, Customer Service Charge, Emergency Storage Charge, and Supply Reliability Charge. Exhibit 2 25-2 The MWD & CWA charge is based on the size of the water meter(s) in service with the exception of upsizing the meter for individually metered residential fire service, as described in Section 38.03 of the Code. The MWD & CWA charge shall start upon installation of the meter. C. Monthly Fixed System Charges Each water service customer shall pay a monthly fixed system charge, as set forth in Appendix A, 25.03 C. Proceeds of the charge will be used to pay for water system replacement, maintenance, and operation expenses. The system charge is based on the customer class and the size of the water meter(s) in service. For individually metered residential fire service, as outlined in Section 38.03 of the Code, the size and fee would be set based on water use requirements without additional fire capacity. The system charge shall start upon installation of the meter. D. Categories of Water Service The definitions and rates and charges for water service furnished by the District shall be as follows: 1. DOMESTIC RESIDENTIAL WATER (a) Defined as: Water service for single residential and individually metered attached households as well as other domestic uses (other than that provided for in Paragraph 2.(a). (b) Base Rate: The tiered base rates of water furnished under this category shall be set forth in Appendix A, 25.03 D.1.(b). (c) Monthly system charge: The monthly system charge for water service is set forth in Appendix A, 25.03 C.1. 2. MULTIPLE RESIDENTIAL WATER (a) Defined as: Master metered water service for multiple residential households, for example, duplexes, townhomes, apartments and mobile homes. (b) Base Rate: The tiered base rates of water furnished for each dwelling unit under each block of service in this category shall be as set forth in Appendix A, 25.03 D.2.(b). (c) Monthly system charge: The monthly system charge for water service is set forth in Appendix A, 25.03 C.2. 25-3 3. BUSINESS AND PUBLICLY-OWNED WATER (a) Defined as: Potable water service for commercial, industrial and publicly-owned establishments. (b) Base Rate: The base rate for water furnished under this category shall be determined as set forth in Appendix A, 25.03 D.3.(b). (c) Monthly system charge: The monthly system charge for water service is set forth in Appendix A, 25.03 C.3. 4. IRRIGATION AND COMMERCIAL AGRICULTURAL USING POTABLE WATER (a) Irrigation is potable water service provided solely for irrigation of landscape or landscaping, as defined in Section 0.02 A. (b) Commercial agricultural engaged in the growing or raising of livestock, in conformity with recognized practices of husbandry, for the purpose of commerce, trade or industry, or for the use by public educational or correctional institutions or agricultural horticultural or floricultural products and produced, (i) for human consumption or for the market, or (ii) for the feeding of fowl or livestock produced for human consumption or for the market, or (iii) for feeding fowl or livestock for the purpose of obtaining their products for human consumption or for the market, such products to be grown or raised on a parcel of land having an area of not less than one acre utilized exclusively therefore. (c) Base Rate: The base rate for water furnished under this category shall be determined as set forth in Appendix A, 25.03 D.4.(c). (d) Monthly system charge: The monthly system charge for water service is set forth in Appendix A, 25.03 C.4. 25-4 5. RECYCLED WATER – LANDSCAPE IRRIGATION AND CERTAIN NON- IRRIGATION PURPOSES (a) Defined as: Non-potable and recycled water service provided for irrigation of landscaping, as defined in Section 0.02 A. of the Code, and certain non- irrigation purposes, other than domestic use, in compliance with federal, state and local laws and regulations regarding use of recycled water. (b) The provisions of this Code, relating to use of recycled water, set forth in Section 26 of the Code, including but not limited to cross-connections and backflow protective devices, shall be strictly enforced in connection with the use of recycled water. (c) Base Rate: The base rate for water furnished under this category shall be determined as set forth in Appendix A, 25.03 D.5.(c). (d) Monthly system charge: The monthly system charge for recycled water service is set forth in Appendix A, 25.03 C.5. 6. RECYCLED WATER - COMMERCIAL (a) Defined as: Non-potable and recycled water service provided for commercial customers, as defined in Section 0.02 A. of the Code, and certain non- irrigation purposes, other than domestic use, in compliance with federal, state and local laws and regulations regarding use of recycled water. (b) The provisions of this Code, relating to use of recycled water, set forth in Section 26 of the Code, including but not limited to cross-connections and backflow protective devices, shall be strictly enforced in connection with the use of recycled water. (c) Base Rate: The base rate for water furnished under this category shall be determined as set forth in Appendix A, 25.03 D.6.(c). (d) Monthly system charge: The monthly system charge for recycled commercial water service is set forth in Appendix A, 25.03 C.6. 25-5 7. POTABLE TEMPORARY AND CONSTRUCTION WATER SERVICE (a) Defined as: Potable water service provided by the District on a temporary basis, pursuant to Section 31 of this Code. (b) If capacity fees have not been paid by the customer, the rates for water furnished under this category is set forth in Appendix A, 25.03 D.7.(b). (c) If the customer has paid capacity and annexation fees, the base rate for water furnished under this category shall be the base rate charged customers in the same category of service on a permanent meter basis. (d) The applicable monthly system charge shall be the same rates charged to customers in the same category of service on a permanent meter basis per Appendix A, 25.03 C.5. 8. RECYCLED TEMPORARY AND CONSTRUCTION WATER SERVICE (a) Defined as: Recycled water service provided by the District on a temporary basis, pursuant to Section 31 of this Code. (b) If capacity fees have not been paid by the customer, the rates for water furnished under this category is set forth in Appendix A, 25.03 D.8(b). (c) If the customer has paid capacity and annexation fees, the base rate for water furnished under this category shall be the base rate charged customers in the same category of service on a permanent meter basis. (d) The applicable monthly system charge shall be the same rates charged to customers in the same category of service on a permanent meter basis per Appendix A, 25.03 C.5 9. WATER SERVICE UNDER SPECIAL AGREEMENTS (a) Defined as: Water service provided under express agreements approved by the Board of Directors for service to golf courses and other entities, which service may be curtailed or interrupted by the District under conditions provided in such agreements. (b) For water service under this category the base rate shall be determined on a case-by-case basis. 25-6 10. TANK TRUCKS (a) Defined as: Water service provided for the filling of tanks on motor vehicles transporting water used for other than earth grading purposes, which service shall be made only through a portable meter issued by the District to a customer specifically for use in accordance with the provisions herein for such service. (b) The rate for metered water furnished under this category is reflected in Appendix A, 25.03.D.10. (b), plus a monthly system charge at the rate set forth in Appendix A, 25.03 C.4. (c) Requirements for Use of Water Meter (1) To receive such service, the customer must make a deposit for the use a water meter furnished by the District. The fee is set forth in Appendix A, 31.03 A.1. (2) Upon termination of the service, the Dis- trict will refund the amount of deposit remaining after making the following deductions: (i) Cost of repairing or replacing the meter, fire hydrant and/or any fittings damaged or lost while in use; and (ii) Unpaid charges for water or other applicable charges. (3) Prior to the end of each six month period following issuance of a meter under this section, or at the request of the District, whichever is earlier, the customer shall return the meter to the District for inspection, repair, or calibration as deemed necessary by the District. (4) Payment for water service under this cate- gory shall be made as follows: (i) The bill shall be based on the amount of water actually used, which shall be determined by the District’s reading of the meter or by a report made by the customer to the District in the manner prescribed by the District. (ii) Where the actual amount of water used cannot be determined as provided in (i), the District will issue a bill based on a District estimate of the 25-7 amount of water used, as determined by the District. Such estimates shall be reconciled with actual amounts used when the customer returns the meter to the District as provided in paragraph 3 above. (iii)Payments shall be made as specified on the bill. 11. WATER SERVICE OUTSIDE DISTRICT BOUNDARIES (a) Defined as: Water service for real property outside the service area of the District. (b) This service will be provided only upon prior approval of the General Manager when there is a surplus of water over and above the existing needs for service in the District. This service is temporary and may be terminated upon written notice from the District. Customers for this service are sometimes referred to as "outside users." (c) Customers applying for this category of service shall pay an application fee as set forth in Appendix A, 25.03 D.11.(c). (d) The rate for metered water furnished under this category shall be charged the rate as described in Appendix A, 25.03 D.11.(d), plus a monthly system charge at the rate set forth in Appendix A, 25.03 C.4. (e) Customers requesting only fire service or a fire hydrant under this category shall be charged a capacity fee based on one (1) EDU for a permanent meter in the improvement district from which the fire service derives its flow, plus a monthly system charge at the rate set forth in Appendix A, 25.03 D.13.(c). 12. WATER SERVICE OUTSIDE AN IMPROVEMENT DISTRICT (a) Defined as: Water service for property located within the boundaries of the District, but not within a water improvement district. Customers for this service are sometimes referred to as "outside users." (b) Customers applying for this service shall pay an application fee as set forth in Appendix A, 25.03 D.12.(b). The District will review the application to determine whether the land to be served should be annexed to an improvement 25-8 district. If it is determined that annexation is not practical, the Board of Directors may authorize service as an outside user. This service will be reviewed periodically until it is determined that the property must be annexed to an improvement district or that service must be terminated. (c) The rate for metered water furnished under this category is as set forth in Appendix A, 25.03 D.12.(c), plus a monthly system charge as set forth in Appendix A, 25.03 C.4. (d) Upon approval of the Board of Directors, a cus- tomer, who has paid all construction costs for facilities necessary to serve the customer's property in lieu of annexation to a water improvement district, shall be exempt from the provision for this category of service. 13. SERVICE FOR FIRE PROTECTION (a) Defined as: Water service provided by the Dis- trict solely to feed fire hydrants or fire sprinkler systems from lines or laterals con- nected to District water mains. (b) The District will not make a charge for the quantity of water used for fire protection purposes. (c) The monthly system charge for this category of service is set forth in Appendix A, 25.03 D.13.(c) for each connection to a District water main made for fire protection service. 14. WATER SERVICE TO PROPERTY NOT SUBJECT TO DISTRICT TAXES (a) Pursuant to Section 71613 of the California Water Code, the District may furnish water to property, not subject to District taxes, at special rates, terms and conditions as are determined by the Board of Directors for such service. Such rates, terms and conditions shall be uniformly applied to like classes and conditions of service in the same improvement district or geographical area. (b) Customers in this category, such as publicly- owned establishments, shall pay an additional fee as outlined in Appendix A, 25.03 D.14.(b). 25-9 15. INTERIM WATER SERVICE IN IMPROVEMENT DISTRICT 7 (a) Definition of Interim Service. This is water Service furnished to a customer in Improvement District 7 (ID 7) for temporary use. (b) Rates for Interim Service. Customers applying for interim service in ID 7 shall not be required to pay the ID 7 water capacity fee and San Diego County Water Authority fee, as required under Section 28.01 of this Code. The water rate is set forth in Appendix A, 25.03D.15.(b). (c) The rate for metered water furnished under this category is as set forth in Appendix A, 25.03 D.12 (c), plus a monthly system charge as set forth in Appendix A, 25.03 C.4. (d) Conversion to Permanent Service. At such time as use expires, the customer shall be required to pay all fees in effect at the time the permanent use is implemented. E. Energy Charges for Pumping Water In addition to water rates and other charges provided for in this Section 25.03, customers shall be charged an energy pumping charge based on the quantity of water used and the elevation to which the water has been lifted to provide service. The energy pumping charge shall be made at the rate set forth in Appendix A, 25.03 E. 25.04 DEPOSITS BY LESSEES OR NON-OWNERS OF PROPERTY 8. RECYCLED TEMPORARY AND CONSTRUCTION WATER SERVICE (a) Defined as: Recycled water service provided by the District on a temporary basis, pursuant to Section 31 of this Code. (b) If capacity fees have not been paid by the customer, the rates for water furnished under this category is set forth in Appendix A, 25.03 D.8(b). (c) If the customer has paid capacity and annexation fees, the base rate for water furnished under this category shall be the base rate charged customers in the same category of service on a permanent meter basis. 25-10 (d) The applicable monthly system charge shall be the same rates charged to customers in the same category of service on a permanent meter basis per Appendix A, 25.03 C.5. A. AMOUNT OF DEPOSIT The customer's deposit shall be applied to reduce or satisfy any delinquent payment or other amount due the District at the time of termination of water service to the customer. Any portion of the deposit remaining, after satisfaction of the amount due, shall be refunded to the customer that made the deposit. The deposits listed per Appendix A, 25.04 A. may be waived for a new residential applicant where the applicant demonstrates credit worthiness based upon prior utility payments or a non-delinquent water account for one year or other similar evidence of credit. B. REFUND OF DEPOSIT Where funds have been on deposit for twelve months in a domestic service account and there has been no more than one delinquent payment on that account during that period, the District will apply a credit to the water account in the amount of the deposit. C. LETTER OF CREDIT A letter of credit, in a form approved by the General Manager or Department Head of Finance, may be submitted to the District to satisfy the deposit requirements. 25.05 SERVICE TO SUBSEQUENT CUSTOMERS After a water meter has been installed for a customer and all fees and charges have been paid, water service may be furnished to a subsequent customer through the water meter installed without payment of further charges, except for the set-up fee for transferred accounts, payment of delinquent charges for the applicant's service or other deposits that may be required by this Code.   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 ON PRIVATE PROPERTY A. All fire hydrant and/or fire sprinkler service mains installed for commercial or industrial pur- poses 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 assembly backflow device installed in accordance with District specifica- tions on the fire main 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, busi- ness, commercial or irrigation purposes shall be furnished only after a meter or meters have been installed on 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 Exhibit 3 38-2 work. At the time of application for the instal- lation, 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 cus- tomer shall reimburse the District for the addi- tional 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 E.11 D.13.(c) of this Code. F. The District shall have no responsibility for the proper function of the fire service system nor 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 ade- quate supplies available in its system for ordi- nary 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 nor be subject to any damages resulting from a failure or 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 38-3 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, Wwater for fire protection services shall be provided in accordance with District fees and charges set forth in Section 25.03 ED.13.(c) of this Code. 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 ON PRIVATE PROPERTY A. All fire hydrant and/or fire sprinkler service mains installed for commercial or industrial pur- poses 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 assembly backflow device installed in accordance with District specifica- tions on the fire main 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, busi- ness, commercial or irrigation purposes shall be furnished only after a meter or meters have been installed on 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 Exhibit 4 38-2 work. At the time of application for the instal- lation, 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 cus- tomer shall reimburse the District for the addi- tional 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.13.(c) of this Code. F. The District shall have no responsibility for the proper function of the fire service system nor 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 ade- quate supplies available in its system for ordi- nary 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 nor be subject to any damages resulting from a failure or 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 38-3 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.13.(c) of this Code. Section #Code #Fee Description Meter Size 9 9.04 A.1.District Annexation Processing Fee $795.26 9.04 B. Annexation Fees for Water Annexations into Otay Water District Boundaries Districtwide Annexation Fee 3/4" $2,035.65 1" $5,089.13 1-1/2" $10,178.25 2" $16,285.20 3" $32,570.40 4 $50,891.25 6" $101,782.50 8" $162,852.00 10" $234,099.75 9.04 C.4. Annexation Fees for Annexations to Sewer Improvement Districts per EDU $1,113.59 10 10.01 Waiver Request $50.00 23 23.04 Backflow Certification - Second Notification $10.00 - Third Notification $25.00 - Third Notification (hand delivered)$45.00 - Reconnection $50.00 - Reconnection (if test performed with technician present)$150.00 - Initial Filing Fee (New applicants for addition to the list of approved backflow prevention device testers)$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 $10.00 25 25.03 C. Monthly Fixed System Charges, MWD & CWA Charges Meter Size System Charge MWD & CWA Fixed Charge Total Fixed Charge 3/4"$15.91 $15.00 $30.91 1"$22.47 $27.84 $50.31 (1) All Water used in December and billed in January 2017. Otay Water District Appendix A Charges Exhibit 5 Section #Code #Fee Description Meter Size Charges 25 25.03 C. Monthly Fixed System Charges, MWD & CWA Charges (continued)(1)1-1/2"$38.88 $62.96 $101.84 2"$58.55 $107.08 $165.63 3"$111.04 $227.75 $338.79 4"$170.10 $364.72 $534.82 6"$334.18 $746.59 $1,080.77 8"$531.05 $1,205.65 $1,736.70 10"$760.72 $1,735.39 $2,496.11 25 25.03 E.1.(b) Domestic Residential Water Rates (1)Unit Charge (The Conservation Tier discount applies Conservation Tier 0 - 5 $2.53 toward the first five units of water when 6-10 $3.95 overall consumption is ten units or less.) 11-22 $5.13 23 or more $7.90 25 25.03 E.2.(b) Multiple Residential Water Rates - Per Dwelling Unit (1) 0-4 $3.90 5-9 $5.05 10 or more $7.80 25 25.03 E.3.(b) Business and Publicly-Owned Water Rates (1)under 10"0-185 $4.17 186-1,400 $4.23 1,401 or more $4.30 10" & larger 0-7,426 $4.17 7,427-14,616 $4.23 14,617 or more $4.30 25 25.03 E.4.(c) Irrigation and Commercial Agricultural Using Potable Water Rates (1)1" & smaller 0-54 $5.68 55-199 $5.74 200 or more $5.81 1.5" & 2"0-144 $5.68 145-355 $5.74 356 or more $5.81 3" & larger 0-550 $5.68 551-1,200 $5.74 1,201 or more $5.81 (1) All Water used in December and billed in January 2017. Section #Code #Fee Description Meter Size Charges 25 25.03 E.5.(c) Recycled Water (1)3/4" - 1" 0-32 $4.85 (Landscape Irrigation and Certain 33-75 $4.92 Non-Irrigation Purposes Rates)76 or more $4.99 1.5" & 2"0-130 $4.85 131-325 $4.92 326 or more $4.99 3" & 4"0-440 $4.85 441-1,050 $4.92 1,051 or more $4.99 6" & larger 0-4,000 $4.85 4,001-10,000 $4.92 10,001 or more $4.99 25 25.03 E.6.(c) Recycled Commercial (1)under 10"0-173 $3.53 174-831 $3.60 832 or more $3.65 10" & larger 0-7,426 $3.53 7,427-14,616 $3.60 14,617 or more $3.65 25 25.03 E.7.(b) Potable Temporary and Construction Water Service Rates (1)1" & smaller 0-54 $11.36 55-199 $11.48 200 or more $11.62 1.5" & 2"0-144 $11.36 145-355 $11.48 356 or more $11.62 3" & larger 0-550 $11.36 551-1,200 $11.48 1,201 or more $11.62 25 25.03 E.8.(b) Recycled Temporary and Construction Water Service Rates (1)3/4" - 1" 0-32 $9.70 33-75 $9.84 76 or more $9.98 (1) All Water used in December and billed in January 2017. Section #Code #Fee Description Meter Size Charges 25 25.03 E.8.(b) Recycled Temporary and Construction Water Service Rates (continued) (1)1.5" & 2"0-130 $9.70 131-325 $9.84 326 or more $9.98 3" & 4"0-440 $9.70 441-1,050 $9.84 1,051 or more $9.98 6" & larger 0-4,000 $9.70 4,001-10,000 $9.84 10,001 or more $9.98 25 25.03 E.10.(b) Tank Trucks Water Rates (1)1" & smaller 0-54 $11.36 55-199 $11.48 200 or more $11.62 1.5" & 2" 0-144 $11.36 145-355 $11.48 356 or more $11.62 3" & larger 0-550 $11.36 551-1,200 $11.48 1,201 or more $11.62 25 25.03 E.11.(c) Application Fee for Water Service Outside District Boundaries $500.00 25 25.03 E.11.(d) Water Rate for Service Outside District Boundaries (1)1" & smaller 0-54 $11.36 55-199 $11.48 200 or more $11.62 1.5" & 2"0-144 $11.36 145-355 $11.48 356 or more $11.62 3" & larger 0-550 $11.36 551-1,200 $11.48 1,201 or more $11.62 25 25.03 E.12.(b) Application Fee for Water Service Outside an Improvement District $275.00 (1) All Water used in December and billed in January 2017. Section #Code #Fee Description Meter Size Charges 25 25.03 E.12.(c) Water Rate for Service Outside Improvement District (1)1" & smaller 0-54 $11.36 55-199 $11.48 200 or more $11.62 1.5" & 2"0-144 $11.36 145-355 $11.48 356 or more $11.62 3" & larger 0-550 $11.36 551-1,200 $11.48 1,201 or more $11.62 25 25.03 E.13.(c) Fire Service Monthly Charge 3" or less $20.77 more than 4"$27.98 25 25.03 E.14.(b) Additional Water Service for Property Not Subject to District Taxes per unit $0.41 25 25.03 E.15.(b) Interim Service Water Rate in Improvement District 7 (1)1" & smaller 0-54 $11.36 55-199 $11.48 200 or more $11.62 1.5" & 2"0-144 $11.36 145-355 $11.48 356 or more $11.62 3" & larger 0-550 $11.36 551-1,200 $11.48 1,201 or more $11.62 25 25.03 F.Energy Charges for Pumping Water (1) Per 100 ft of lift over 450 ft per unit $0.044 25 25.04 A.Deposits for Non-Property Owners 3/4"$75.00 1"$150.00 1-1/2"$200.00(1) All Water used in December and billed in January 2017. Section #Code #Fee Description Meter Size Charges 25 25.04 A.Deposits for Non-Property Owner (continued)2"$360.00 3"$800.00 4"$1,350.00 6"$3,300.00 8"$4,400.00 10"$5,500.00 28 28.01 B.1. Capacity Fees and Zone Charge Districtwide Capacity Fee - All IDs excluding Triad 3/4" $7,411.09 1" $18,527.73 1-1/2" $37,055.45 2" $59,288.72 3" $118,577.44 4 $185,277.25 6" $370,554.50 8" $592,887.20 10" $852,275.35 - TRIAD 3/4" $5,559.80 1" $13,899.50 1 -1/2" $27,799.00 2" $44,478.40 3" $88,956.80 4 $138,995.00 6" $277,990.00 8" $444,784.00 10" $639,377.00 28 28.01 B.2. New Water Supply Fee - All IDs including Triad 3/4" $804.47 1" $2,011.18 1-1/2" $4,022.35 2" $6,435.76 3" $12,871.52 4" $20,111.75 6" $40,223.50 8" $64,357.60 10" $92,514.05 Section #Code #Fee Description Meter Size Charges 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"$228.56 $108.46 $337.02 $92.08 3/4" x 9"$243.35 $108.46 $351.81 $92.08 1"$294.94 $108.46 $403.40 $92.08 1.5"$479.39 $108.46 $587.85 $208.74 2"$686.91 $108.46 $795.37 $208.74 3"$2,140.69 $653.03 $2,793.72 $3,723.62 4"$3,718.03 $653.03 $4,371.06 $3,723.62 6"$6,422.05 $1,031.51 $7,453.56 $3,723.62 8"$8,023.88 $1,581.73 $9,605.61 $5,341.80 10"$11,539.84 $1,581.73 $13,121.57 $5,341.80 - Potable/Recycled Irrigation 3/4" x 7.5"$228.56 $108.46 $337.02 $234.66 3/4" x 9"$243.35 $108.46 $351.81 $234.66 1"$294.94 $108.46 $403.40 $234.66 1.5"$479.39 $108.46 $587.85 $234.66 2"$686.91 $108.46 $795.37 $234.66 3"$1,481.57 $653.03 $2,134.60 $3,723.62 4"$2,884.39 $653.03 $3,537.42 $3,723.62 6"$5,192.85 $1,031.51 $6,224.36 $3,723.62 8"$6,917.80 $1,581.73 $8,499.53 $5,341.80 10"$9,816.88 $1,581.73 $11,398.61 $5,341.80 - Combined Fire and Domestic 4"$8,845.53 $653.03 $9,498.56 $3,723.62 6"$11,772.63 $1,031.51 $12,804.14 $3,723.62 8"$17,116.56 $1,581.73 $18,698.29 $5,341.80 10"$23,358.44 $1,581.73 $24,940.17 $5,341.80 31 31.03 A.1. Requirement of Deposit for Temporary Meters 3/4"$156.85 1"$184.78 1-1/2"$379.62 2"$2,046.00 4"$1,986.00 6"$2,465.00 Section #Code #Fee Description Meter Size Charges 31 31.03 A.1. Requirement of Deposit for Temporary Meters (continued) - Construction Trailer Temporary Meter 2" $2,046.00 - Tank Truck Temporary Meter (Ordinance No. 372)2" $850.00 31 31.03 A.4. Temporary Meter Install & Removal 3/4" - 4" (on hydrant) $150.00 4" - 6"$806.00 8" - 10"Actual Cost 31 31.03 A.5. Temporary Meter Move Fee (includes backflow certification)3/4" - 4" (on hydrant) $150.00 4" - 6" $806.00 8" - 10"Actual Cost 33 33.07 A. Customer Request for Meter Test (Deposit)5/8", 3/4" & 1"$25.00 1-1/2" & 2 "$50.00 3" & Larger $125.00 34 34.01 D.2. Returned Check Charges $25.00 34 34.02 B.Late Payment Charge 5% of Delinquent Balance 34 34.02 G.1.(d) Delinquency Tag $15.00 34 34.02 G.3. Meter "Turn-On" Charge $50.00 53 53.03 A.1.Sewer Capacity Fee per EDU for parcels within a Sewer ID $3,269.28 53 53.03 A.2.Sewer Capacity Fee per EDU for parcels not within a Sewer ID $5,593.55 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 $10.00 Section #Code #Fee Description Meter Size Charges 53 53.10 Residential Sewer Usage Fee Rate multiplied by winter average units $2.77 53 53.10 Residential Sewer System Fee 5/8", 3/4" & larger $17.08 53 53.10 A. Residential Sewer Without Consumption History (2)5/8", 3/4" & larger $39.45 53 53.10 B. Multi-Residential Usage Fee - Sewer Without Consumption History $22.37 53 53.10 B.2.Multi-Residential Usage Fee - Sewer Rate multiplied by winter average units $2.77 53 53.10 B.2.Multi-Residential System Fee - Sewer .75"$30.50 1"$44.94 1.5"$80.92 2"$124.12 3"$224.93 4"$368.97 6"$729.04 8" $1,161.15 10"$1,665.25 53 53.11 Commercial and Institutional Sewer Strength Factors Low Strength 1 Medium Strength 2 High Strength 4 53 53.11 Monthly Usage Fee for Commercial and Institutional Sewer Rate multiplied by Low Strength $2.77 annual avg.Medium Strength $3.98 units High Strength $6.34 53 53.11 Monthly System Fee for Commercial and Institutional Sewer .75"$30.50 1"$44.94 1.5"$80.92 2"$124.12 3"$224.93 Section #Code #Fee Description Meter Size Charges 53 53.11 Monthly System Fee for Commercial and Institutional Sewer (continued)4"$368.97 6"$729.04 8" $1,161.1510"$1,665.25 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"$200.00 - 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"$68.00 - 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. A.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 Type II Fine $5,000.00 Type III Fine $500.00 Type IV Fine $500.00 Fine up to amount specified per each day the violation is identified or continues. 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. Section #Code #Fee Description Meter Size Charges State Water Code #71630 & Annual Board Resolution #4142 Water Availability/Standby Annual Special Assessment Charge $10.00 $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 5 Copies of Identifiable Public Records $0.10/page Cassette Tape Duplication $2.00/tape Yearly Subscription Service for Agendas and Ratified Minutes Yearly Subscription Service for Board Packet and Ratified Minutes Per acre for outside I.D. & greater than one mile from District facilities. Less than one acre I.D. 4, 14, & 18 Per acre I.D. 4, 14, & 18 Per $1000 of assessed value for I.D. 27 $20.00/year or $0.50/meeting $100.00/year for first copy and $200.00/year for each copy thereafter Less than one-acre all I.D.s & Outside an I.D. Per acre in I.D. 1, 5, & Outside an I.D. Per acre in I.D. 2,3,7,9,10,19,20,22,25, & 27 Less than one-acre Outside I.D. and greater than one mile from District facilities. Section #Code #Fee Description Meter Size 9 9.04 A.1.District Annexation Processing Fee $795.26 9.04 B. Annexation Fees for Water Annexations into Otay Water District Boundaries Districtwide Annexation Fee 3/4" $2,035.65 1" $5,089.13 1-1/2" $10,178.25 2" $16,285.20 3" $32,570.40 4 $50,891.25 6" $101,782.50 8" $162,852.00 10" $234,099.75 9.04 C.4. Annexation Fees for Annexations to Sewer Improvement Districts per EDU $1,113.59 10 10.01 Waiver Request $50.00 23 23.04 Backflow Certification - Second Notification $10.00 - Third Notification $25.00 - Third Notification (hand delivered)$45.00 - Reconnection $50.00 - Reconnection (if test performed with technician present)$150.00 - Initial Filing Fee (New applicants for addition to the list of approved backflow prevention device testers)$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 $10.00 25 25.03 B. Monthly MWD & CWA Fixed System Charges (1)3/4" $15.45 1" $28.68 1-1/2" $64.85 2" $110.30 3" $234.60 Otay Water District Appendix A Charges (1) All Water used in December and billed in January 2018. Exhibit 6 Section #Code #Fee Description Meter Size Charges 25 25.03 B. Monthly MWD & CWA Fixed System Charges (1) (continued)4" $375.68 6" $769.02 8" $1,241.89 10" $1,787.55 25 25.03 C.1. Domestic Residential Monthly Fixed System Charges (1)3/4" $17.38 1" $24.56 1-1/2" $42.49 2" $64.00 25 25.03 C.2. Multi-Residential Monthly Fixed System Charges (1)3/4" $38.21 1" $53.97 1-1/2" $93.37 2" $140.61 3" $266.66 4" $408.50 6" $802.55 8" $1,275.34 10" $1,826.91 25 25.03 C.3. Business and Publicly-Owned Monthly Fixed System Charges (1)3/4" $35.99 1" $50.83 1-1/2" $87.95 2" $132.45 3" $251.19 4" $384.79 6" $755.97 8" $1,201.32 10" $1,720.86 25 25.03 C.4.3/4" $30.40 1" $42.93 1-1/2" $74.28 2" $111.85 3" $212.13 4" $324.98 6" $638.44 8" $1,014.56 10" $1,453.33 Irrigation and Commercial Agricultural Monthly Fixed System Charges (1) (1) All Water used in December and billed in January 2018. Section #Code #Fee Description Meter Size Charges 25 25.03 C.5. - Irrigation 3/4" $31.11 1" $43.94 1-1/2" $76.04 2" $114.50 3" $217.15 4" $332.67 6" $653.54 8" $1,038.56 10" $1,487.72 25 25.03 C.6. - Commercial 3/4" $36.85 1" $52.04 1-1/2" $90.06 2" $135.63 3" $257.21 4" $394.01 6" $774.07 8" $1,230.08 10" $1,762.08 25 25.03 D.1.(b) Domestic Residential Water Rates (1)Unit Charge 1-10 $3.05 11-22 $5.44 23 or more $7.03 25 25.03 D.2.(b) Multiple Residential Water Rates - Per Dwelling Unit (1)0-4 $2.85 5-9 $5.17 10 or more $6.35 25 25.03 D.3.(b) Business and Publicly-Owned Water Rates (1)All Units $3.61 25 25.03 D.4.(c) Irrigation and Commercial Agricultural Using Potable Water Rates (1)All Units $5.27 25 25.03 D.5.(c)Recycled Irrigation (1)All Units $4.26 25 25.03 D.6.(c)Recycled Commercial (1)All Units $3.01 25 25.03 D.7.(b) Potable Temporary and Construction Water Service Rates (1)All Units $10.54 (1) All Water used in December and billed in January 2018. Recyled Monthly Fixed System Charges (1) Recyled Monthly Fixed System Charges (1) Section #Code #Fee Description Meter Size Charges 25 25.03 D.8.(b) Recycled Temporary and Construction Water Service Rates (1)All Units $8.52 25 25.03 D.10.(b) Tank Trucks Water Rates (1)All Units $10.54 25 25.03 D.11.(c) Application Fee for Water Service Outside District Boundaries $500.00 25 25.03 D.11.(d) Water Rate for Service Outside District Boundaries (1)All Units $10.54 25 25.03 D.12.(b) Application Fee for Water Service Outside an Improvement District $275.00 25 25.03 D.12.(c) Water Rate for Service Outside Improvement District (1)All Units $10.54 25 25.03 D.13.(c) Fire Service Monthly Charge 3" or less $20.77 more than 4"$27.98 25 25.03 D.14.(b)Government Fee Per Unit $0.41 25 25.03 D.15.(b)Interim Service Water Rate(1)All Units $10.54 25 25.03 E.Energy Charges for Pumping Water (1) Per 100 ft of lift over 450 ft per unit $0.053 25 25.04 A. Deposits for Non-Property Owners 3/4"$75.00 1"$150.00 1-1/2"$200.00 2"$360.00 3"$800.00 4"$1,350.00 6"$3,300.00 8"$4,400.00 10"$5,500.00 (1) All Water used in December and billed in January 2018. Section #Code #Fee Description Meter Size Charges 28 28.01 B.1. Capacity Fees and Zone Charge Districtwide Capacity Fee - All IDs excluding Triad 3/4" $7,411.09 1" $18,527.73 1-1/2" $37,055.45 2" $59,288.72 3" $118,577.44 4 $185,277.25 6" $370,554.50 8" $592,887.20 10" $852,275.35 - TRIAD 3/4" $5,559.80 1" $13,899.50 1 -1/2" $27,799.00 2" $44,478.40 3" $88,956.80 4 $138,995.00 6" $277,990.00 8" $444,784.00 10" $639,377.00 28 28.01 B.2. New Water Supply Fee - All IDs including Triad 3/4" $804.47 1" $2,011.18 1-1/2" $4,022.35 2" $6,435.76 3" $12,871.52 4" $20,111.75 6" $40,223.50 8" $64,357.60 10" $92,514.05 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"$228.56 $108.46 $337.02 $92.08 3/4" x 9"$243.35 $108.46 $351.81 $92.08 1"$294.94 $108.46 $403.40 $92.08 1.5"$479.39 $108.46 $587.85 $208.74 2"$686.91 $108.46 $795.37 $208.74 3"$2,140.69 $653.03 $2,793.72 $3,723.62 4"$3,718.03 $653.03 $4,371.06 $3,723.62 6"$6,422.05 $1,031.51 $7,453.56 $3,723.62 8"$8,023.88 $1,581.73 $9,605.61 $5,341.80 10"$11,539.84 $1,581.73 $13,121.57 $5,341.80 Section #Code #Fee Description Meter Size Charges 28 28.02 - Potable/Recycled Irrigation 3/4" x 7.5"$228.56 $108.46 $337.02 $234.66 3/4" x 9"$243.35 $108.46 $351.81 $234.66 1"$294.94 $108.46 $403.40 $234.66 1.5"$479.39 $108.46 $587.85 $234.66 2"$686.91 $108.46 $795.37 $234.66 3"$1,481.57 $653.03 $2,134.60 $3,723.62 4"$2,884.39 $653.03 $3,537.42 $3,723.62 6"$5,192.85 $1,031.51 $6,224.36 $3,723.62 8"$6,917.80 $1,581.73 $8,499.53 $5,341.80 10"$9,816.88 $1,581.73 $11,398.61 $5,341.80 - Combined Fire and Domestic 4"$8,845.53 $653.03 $9,498.56 $3,723.62 6"$11,772.63 $1,031.51 $12,804.14 $3,723.62 8"$17,116.56 $1,581.73 $18,698.29 $5,341.80 10"$23,358.44 $1,581.73 $24,940.17 $5,341.80 31 31.03 A.1. Requirement of Deposit for Temporary Meters 3/4"$156.85 1"$184.78 1-1/2"$379.62 2"$2,046.00 4"$1,986.00 6"$2,465.00 31 31.03 A.1. Requirement of Deposit for Temporary Meters (continued) - Construction Trailer Temporary Meter 2" $2,046.00 - Tank Truck Temporary Meter (Ordinance No. 372)2" $850.00 31 31.03 A.4. Temporary Meter Install & Removal 3/4" - 4" (on hydrant) $150.00 4" - 6"$806.00 8" - 10"Actual Cost 31 31.03 A.5. Temporary Meter Move Fee (includes backflow certification)3/4" - 4" (on hydrant) $150.00 4" - 6" $806.00 8" - 10"Actual Cost 33 33.07 A. Customer Request for Meter Test (Deposit)5/8", 3/4" & 1"$25.00 1-1/2" & 2 "$50.00 3" & Larger $125.00 34 34.01 D.2. Returned Check Charges $25.00 Installation and Water Meter Charges (continued) Section #Code #Fee Description Meter Size Charges 34 34.02 B.Late Payment Charge 5% of Delinquent Balance 34 34.02 G.1.(d) Delinquency Tag $15.00 34 34.02 G.3. Meter "Turn-On" Charge $50.00 53 53.03 A.1.Sewer Capacity Fee per EDU for parcels within a Sewer ID $3,269.28 53 53.03 A.2.Sewer Capacity Fee per EDU for parcels not within a Sewer ID $5,593.55 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 $10.00 53 53.10 Residential Sewer Usage Fee Rate multiplied by winter average units $2.77 53 53.10 Residential Sewer System Fee 5/8", 3/4" & larger $17.08 53 53.10 A.4. Residential Sewer Without Consumption History (2)5/8", 3/4" & larger $39.45 53 53.10 B.3. Multi-Residential Usage Fee - Sewer Without Consumption History $22.37 53 53.10 B.2.Multi-Residential Usage Fee - Sewer Rate multiplied by winter average units $2.77 53 53.10 B.2.Multi-Residential System Fee - Sewer .75"$30.50 1"$44.94 1.5"$80.92 2"$124.12 3"$224.93 4"$368.97 6"$729.04 8" $1,161.15 10"$1,665.25 Section #Code #Fee Description Meter Size Charges 53 53.11 Commercial and Institutional Sewer Strength Factors Low Strength 1 Medium Strength 2 High Strength 4 53 53.11 Monthly Usage Fee for Commercial and Institutional Sewer Rate multiplied by Low Strength $2.77 annual avg.Medium Strength $3.98 units High Strength $6.34 53 53.11 Monthly System Fee for Commercial and Institutional Sewer .75"$30.50 1"$44.94 1.5"$80.92 2"$124.12 3"$224.93 53 53.11 Monthly System Fee for Commercial and Institutional Sewer (continued)4"$368.97 6"$729.04 8" $1,161.1510"$1,665.25 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"$200.00 - 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"$68.00 - 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 Section #Code #Fee Description Meter Size Charges 72 72.05 D. A.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 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 $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 Will not exceed per each day the violation is identified or continues. Fine up to amount specified per each day the violation is identified or continues. Fine up to amount specified per each day the violation is identified or continues. Less than one-acre all I.D.s & Outside an I.D. Per acre in I.D. 1, 5, & Outside an I.D. Per acre in I.D. 2,3,7,9,10,19,20,22,25, & 27 Less than one-acre Outside I.D. and greater than one mile from District facilities. Per acre for outside I.D. & greater than one mile from District facilities. Less than one acre I.D. 4, 14, & 18 Per acre I.D. 4, 14, & 18 Section #Code #Fee Description Meter Size Charges Annual Board Resolution General Obligation Bond Annual Tax Assessment $0.005 Policies 5 Copies of Identifiable Public Records $0.10/page Cassette Tape Duplication $2.00/tape Yearly Subscription Service for Agendas and Ratified Minutes Yearly Subscription Service for Board Packet and Ratified Minutes $20.00/year or $0.50/meeting Per $1000 of assessed value for I.D. 27 $100.00/year for first copy and $200.00/year for each copy thereafter Otay Water District Proposition 218 Hearing on Water Rates Attachment C October 4, 2017 Today’sAgenda Review changes in the water rate structure Hear public comments After close of public hearing •Approve Ordinance No. 566 to adopt rate, fee, and charge increases to water billed beginning January 1, 2018 and may apply to usage as early as the beginning of December 2017. •Authorize for a period of 5 years, all future pass‐through increases or decreases to cover changes to water rates, fees or charges from the District’s suppliers. •Authorize for a period of 5 years, overall average water rate increases in addition to the pass-through increases, not to exceed 10% per year of all costs other than pass‐through costs. 2 Proposition 218 and Rate Setting Proposition 218 is a constitutional amendment designed to protect taxpayers by limiting the methods by which local governments can create or increase taxes, fees, and charges without taxpayer consent Proposition 218 is not prescriptive in defining a “cost-based” rate In part, Proposition 218 requires that Fees shall not exceed the reasonable cost of providing the service Fees shall not exceed the proportional cost of providing the service 3 Timeline 4/17/2017 Staff presented the Water Cost of Service Study results to the Board 5/24/2017 FY 2017-2018 Budget approved and direction to mail 218 notices Board approved the 2018 budget prepared using the rate structure recommended in the cost of service study 10/4/2017 Proposition 218 hearing 1/1/2018 Rate structure changes effective for water billed beginning January 1, 2018 and may apply to usage as early as the beginning of December 2017 4 No overall proposed rate increase on January 1, 2018 Average residential customer monthly volume increased from 11 units to 12 units Reduce residential tiers from 4 to 3 by eliminating the conservation tier Commercial, public, and irrigation customers will change from a tiered variable rate to a unitary variable rate System fees to be based on customer class and meter size 5 Water Rate and Structure Highlights 6 Potable Water Rates Current Rate Proposed Rate Residential Conservation $ 2.53 $ - Tier 1 3.95 3.05 Tier 2 5.13 5.44Tier 3 7.90 7.03 Multi-Residential Tier 1 $ 3.90 $ 2.85 Tier 2 5.05 5.17 Tier 3 7.80 6.35 Business and Publicly Owned Tier 1 $ 4.17 $ 3.61 Tier 2 4.23 Tier 3 4.30 Irrigation and Commercial AgriculturalTier 1 $ 5.68 $ 5.27 Tier 2 5.74 Tier 3 5.81 7 Potable System Fees Meter Size Current Rate Residential Multi- Residential Business & Publicly Owned Irrigation and Commercial & Agricultural 0.75 15.91$ 17.38$ 38.21$ 35.99$ 30.40$ 1.00 22.47 24.56 53.97 50.83 42.93 1.50 38.88 42.49 93.37 87.95 74.28 2.00 58.55 64.00 140.61 132.45 111.85 3.00 111.04 266.66 251.19 212.13 4.00 170.10 408.50 384.79 324.98 6.00 334.18 802.55 755.97 638.44 8.00 531.05 1,275.34 1,201.32 1,014.56 10.00 760.72 1,826.91 1,720.86 1,453.33 Proposed Rate 8 Other Fees Meter Size Current Rate Proposed Rate CWA/MWD Fees 0.75 15.00$ 15.45$ 1.00 27.84 28.68 1.50 62.96 64.85 2.00 107.08 110.30 3.00 227.75 234.60 4.00 364.72 375.68 6.00 746.59 769.02 8.00 1,205.65 1,241.89 10.00 1,735.39 1,787.55 Fire Services Less than 3"20.77$ 20.77$ More than 4"27.98 27.98 Energy Fee 0.044 0.053 Government Fee 0.41$ 0.41$ Average Monthly Bill - Residential 9 51218 Units Units Units Current Rates: Variable Bill $13.32 $51.66 $83.39 Fixed Bill 30.91 30.91 30.91 Total Current 44.23 82.57 114.30 Proposed Rates: Variable Bill 16.07 43.72 77.52 Fixed Bill 32.83 32.83 32.83 Total Proposed 48.90 76.55 110.35 Increase(Decrease) $4.68 ($6.02) ($3.95) 10 * At the time of the survey in May 2017, the member agency’s FY 2018 rate was unavailable. The estimated increase is equal to the District’s FY 2018 average rate increase. Survey of Member Agency Water Rates 11 Recycled Water Rates Current Rate Proposed Rate Recycled - Irrigation and Temporary Meters Tier 1 $ 4.85 $ 4.26 Tier 2 4.92 Tier 3 4.99 Recycled - Commercial Tier 1 $ 3.53 $ 3.01 Tier 2 3.60 Tier 3 3.65 12 Recycled System Fees Meter Size Current Rate Irrigation Commercial 0.75 15.91$ 31.11$ 36.85$ 1.00 22.47 43.94 52.04 1.50 38.88 76.04 90.06 2.00 58.55 114.50 135.63 3.00 111.04 217.15 257.21 4.00 170.10 332.67 394.01 6.00 334.18 653.54 774.07 8.00 531.05 1,038.56 1,230.08 10.00 760.72 1,487.72 1,762.08 Proposed Rate Recommendations Approve Ordinance No. 566 to adopt the rate, fee, and charge changes to water billed beginning January 1, 2018 and may apply to usage as early as the beginning of December 2017. Authorize for a period of 5 years, all future pass‐through increases or decreases to cover changes to water rates, fees or charges from the District’s suppliers. Authorize for a period of 5 years, overall average water rate increases in addition to the pass-through increases, not to exceed 10% per year of all costs other than pass‐through costs.13 NOTICE OF PUBLIC HEARING In Connection with Proposed CHANGES TO RATES, FEES, AND CHARGES FOR RESIDENTIAL WATER SERVICE   NOTICE IS HEREBY GIVEN that the Otay Water District (the “District”) will hold a Public Hearing on October 4, 2017, at 3:30 p.m. in  the Board of Directors MeeƟng Room located at 2554 Sweetwater  Springs Blvd., Spring Valley, CA 91978, to consider: (1) the adopƟon for rates, fees, and charges that apply to water billed beginning January 1, 2018; (2) the authorizaƟon, for a period of five years, for all future pass‐through increases or decreases to cover changes to rates, fees, and charges from the District’s water suppliers; and, (3) the authorizaƟon, for a period of five years, overall average increases to rates, fees, and charges, in addiƟon to the pass‐through increases, not to exceed 10 percent per year, for all costs other than pass‐through costs. These rates, fees, and charges apply to property for which you are shown as the record owner or customer of record. The purpose of the hearing is to consider all wriƩen protests against the proposed rates, fees, and charges that, if approved, will be imposed on properƟes served by the District. The changes in the proposed rates, fees, and charges and the basis upon which they were determined is described in more detail as follows. PROPOSED RATE CHANGES As part of the annual budget review process, the District’s Board of Directors typically proposes an overall rate increase to be implemented for January. This year the Board of Directors is proposing no overall rate increase on January 1, 2018. Even though there is no proposed overall rate increase for January 1, 2018, the District is proposing changes to the rate structure, rates, fees, and charges based on a comprehensive cost of service study completed in April 2017. These changes may cause your bill to change. The changes are reflected on page 3 of this noƟce. If adopted aŌer the public hearing noƟced above: for a typical single‐family residenƟal water customer using 12 units per month, your water bill will decrease by ($6.08) per month; for a single‐family residenƟal water customer using five units per month, your water bill will increase by $4.65 per month; and for a single‐family residenƟal water customer using 18 units per month, your water bill will decrease ($4.03) per month. This study was conducted by an independent firm and proposes changes that reflect the District’s esƟmated cost of providing water service. If adopted, the proposed changes to rates, fees, and charges would take effect for water billed on or aŌer January 1, 2018, and may apply to water used as early as the beginning of December 2017. The rate structure has two basic components: (1) fixed monthly charges and (2) variable monthly rates, fees, and charges which are based on water consumpƟon. The fixed fees and charges are calculated to recover the cost of operaƟng and maintaining the public water system and are based on the customer class and size of the water meter serving the record owner or customer of record. Fixed charges include the Metropolitan Water District of Southern California (MWD) and San Diego County Water Authority (CWA), and the District’s System charges. The variable rates, fees, and charges are consumpƟon based and include, but are not limited to, supply, treatment, and transportaƟon costs. Variable rates, fees, and charges generally impose greater charges as the level of consumpƟon increases. Variable components of the bill include the Water Rate and Energy Charge. The fixed and variable components are calculated to recover the proporƟonate cost of providing the service aƩributable to each class of customer. The District will also consider authorizing, for a period of five years, passing through to customers the increased or decreased costs imposed by the District’s water suppliers including, but not limited to, MWD, CWA, and the City of San Diego. If adopted, the average customer’s water rates, fees, and charges will be adjusted annually for all increased or decreased costs and charges from the District’s wholesale water suppliers. The purpose of the hearing is to consider all wriƩen protests against the proposed rates, fees, and charges that, if approved, will be imposed on properƟes served by the District. Any changes to rates, fees, and charges subsequently imposed by the District will be subject to a 30‐day prior wriƩen noƟce, but will not be subject to addiƟonal hearings or protests. In addiƟon to the wholesale pass‐through costs, the District will consider authorizing, for a period of five years, average increases in rates, fees, and charges not to exceed 10 percent per year, for all costs related to labor, benefits, materials, energy, maintenance, administraƟve expenses, and other operaƟonal costs of providing water service including, but not limited to, amounts required to meet bond covenants and to maintain adequate reserves. WHY ARE YOU RECEIVING THIS NOTICE?  As the record owner or customer of record of a property idenƟfied to be subject to the imposiƟon of proposed rate, fee, or charge increases, you may submit a wriƩen protest against the proposed acƟons. Provided, however, if the idenƟfied property has more than one record owner and/or customer of record, only one wriƩen protest for the property will be counted. Each protest must be in wriƟng and include: (1) the specific rate, fee, and/or charge for which the protest is being submiƩed in opposiƟon; (2) the locaƟon of the idenƟfied property (by assessor’s parcel number or street address); and, (3) the original signature of the record owner or customer of record submiƫng the protest. Protests submiƩed by email, facsimile, or other electronic means will not be accepted. WriƩen protests may be submiƩed by mail to the Board Secretary, Otay Water District, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978, or in person at the public hearing, as long as they are received prior to the conclusion of the public hearing.  Please idenƟfy on the front of the envelope for any protest, whether  mailed or submiƩed in person to the Board Secretary, that the  enclosed leƩer is for the Public Hearing on the Proposed Changes to  Rates, Fees, and Charges for ResidenƟal Water Service. At the conclusion of the public hearing, the Board of Directors will consider adopƟng the proposed acƟons as described in this noƟce. Oral comments at the public hearing will not qualify as formal protests unless accompanied by a wriƩen protest. If, at the close of the public hearing, wriƩen protests against the proposed rates, fees, and charges are not presented by a majority of the record owners or customers of record of the idenƟfied properƟes upon which they are to be imposed, the Board of Directors will be authorized to adopt the proposed acƟons. If adopted, the rates, fees, and charges will apply to water billed on or aŌer January 1, 2018 and may apply to water used as early as the beginning of December 2017. This leƩer serves as a 45‐day noƟce of  the hearing on the proposed rate changes, and as noƟce of the  changes for water billed on or aŌer January 1, 2018, if adopted.      This noƟce is being provided to you by the District pursuant to the California ConsƟtuƟon ArƟcle XIII D (known as “ProposiƟon 218”). Under terms of ProposiƟon 218, the District is required to noƟfy the record owner or customer of record of proposed changes to property‐ related fees such as water services. This leƩer serves as noƟce that the District will hold a public hearing to consider changes to its current water rates, fees, and charges. WHY ARE WATER RATE CHANGES NECESSARY?  The proposed rate structure will provide water service at rates, fees, and charges that are equal to the reasonable cost of providing water (Continued on page 2) Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. service. Recent California law suggests that Ɵered water rates, fees, and charges designed solely to encourage water conservaƟon, may violate the California ConsƟtuƟon as amended by ProposiƟon 218. The new structure is designed to meet all applicable legal requirements and to fairly and equitably spread the District’s costs to provide water service among all customer classes based on the costs to serve those customers. The major proposed changes to the rate structure are: (1) eliminaƟng the residenƟal conservaƟon Ɵer; (2) eliminaƟng Ɵered rates for all rate classes except residenƟal and mulƟ‐residenƟal water service; and (3) modifying the system fee from one based solely on meter size to one based on meter size and customer type. AddiƟonally, the District is a revenue‐neutral public agency that provides water service to your community. “Revenue‐neutral” means that water bills reflect only those rates, fees, and charges sufficient to support water service. WHAT DO WATER RATES FUND?  In the District, each end user pays his or her fair share of the cost of purchasing water, energy or pumping costs, labor and benefits, materials, chemicals used in water treatment, administraƟve expenses, operaƟons, construcƟon and maintenance of the public water system and faciliƟes. This also includes amounts required to meet bond covenants and to maintain adequate reserves and rate stability. The District is a non‐profit public agency, it does not make a profit from providing water service and it cannot operate at a loss. WHY ARE WHOLESALER WATER SUPPLIERS RAISING THEIR RATES? Wholesale suppliers raise their rates as they work to obtain new and more reliable supplies of water. This includes more reliable emergency supplies, agricultural to urban water transfers, expansion of exisƟng reservoirs, pipeline relining projects, new water treatment plants, and new supplies. In addiƟon, rate increases cover the cost of acquiring water from the Colorado River, northern California, and desalinaƟon. In 2016, for instance, the CWA increased rates, fees, and charges in anƟcipaƟon of the Carlsbad Seawater DesalinaƟon Project becoming operaƟonal. The Carlsbad project, while providing San Diego County with a new locally controlled, drought‐proof supply of water, increased water rates for all San Diego County water customers. The District works conƟnually to reduce internal costs to absorb rate increases from suppliers. The District recognizes and is sensiƟve to the impact the higher cost of water has on its customers. In its effort to minimize the impact of these costs increases the District has reduced its number of full‐Ɵme equivalent (FTE) employees by 23 percent since 2007. The District is commiƩed to becoming as efficient as possible, providing the services its customers expect and rely upon, while conƟnuing to be one of the lower cost water service providers in San Diego County. RELIABILITY AND SUPPLY DIVERSIFICATION  Water is essenƟal to our region’s quality of life. Our economy depends on it. Families and businesses cannot survive without it. Unfortunately for San Diego County residents, our region does not benefit from an abundant natural supply of water. The county receives an average of 10 inches of rainfall per year, meeƟng only five percent of local demand. Because of our semi‐arid climate, approximately 85 percent of the water used locally is imported from Northern California and the Colorado River. Not only is the cost of imporƟng water becoming increasingly costly, but populaƟon growth, drought, environmental regulaƟons, liƟgaƟon, compeƟƟon for a scarce resource, and increased power costs are driving the price we pay higher. San Diego County’s wholesale and retail water agencies recognized the region was highly dependent on imported water during a severe drought that occurred in the late 1980s and early 1990s. They have conƟnued to diversify the region’s water supply and ensure a reliable system, increasing water independence, providing for future populaƟon and economic needs, and reducing the likelihood of a future water shortage. Since then, major iniƟaƟves have been undertaken to develop both new supplies and improved reliability. At the regional level, in 2003, the CWA signed a milestone agreement to address decades of water disputes over the allocaƟon of water from the Colorado River. As part of that agreement, San Diego County residents paid to have old, leaky earthen canals in Imperial County lined to save water. This “saved water” is now used by customers in the San Diego region. The CWA also started producing desalinated seawater from the Carlsbad DesalinaƟon Plant in late 2015, producing approximately 50 million gallons per day, enough to serve seven to 10 percent of the region’s demand. AddiƟonally, the District is acƟvely supporƟng the development of a seawater desalinaƟon facility in Rosarito Beach, Mexico. If completed, the water from this facility could replace up to two‐thirds of the water the District receives from Northern California and the Colorado River. A result of these major projects, such as the canal linings, water transfers, seawater desalinaƟon, and reservoir construcƟon and expansion efforts, is that the wholesale cost of water has gone up dramaƟcally in recent years, and it is an expense being borne by all water users. Rising costs are financially difficult for everyone, but having made these investments in new supply and improved reliability, the region is beƩer able to ensure that families, businesses, and the local economy will have the water they need. WHAT CAN I DO TO SAVE MONEY? Customers interested in learning ways in which they can reduce their water usage and therefore minimize the effects of the rising cost of wholesalers’ water supplies on their family’s budget, can visit the District’s conservaƟon web page at otaywater.gov. AddiƟonally, the Water ConservaƟon Garden located on the campus of Cuyamaca Community College in Rancho San Diego is open to the public and offers various conservaƟon exhibits, programs and classes. For more about the Garden, visit thegarden.org. For informaƟon about the District, please visit otaywater.gov , contact us via email at info@otaywater.gov, or call us at 619‐670‐2222. (Continued from page 1) Page 2 SURVEY OF MEMBER AGENCY WATER RATES Projected water bill—12 unit water use and 3/4” meter EffecƟve Fiscal Year 2017‐2018 *At the Ɵme of the survey in May 2017, the member agency’s FY 2018 rate was unavailable. The esƟmated increase is an average of the agencies FY 2018 rate increases. Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. Page 3 Footnotes  1. The Fixed System Charges, based on meter size and customer class, ensure that customers pay their proporƟonate share of the water system replacement, maintenance, and operaƟng expenses. The MWD & CWA Charges are based on meter size and match, in total, the cost charged by wholesale water suppliers. The changes in the fixed charges are based on the results of the cost of service study. 2. This cost varies based on water usage and can be calculated using the consumpƟon block tables. One unit of consumpƟon equals 748 gallons of water or one HCF (hundred cubic feet). The changes in the Water Charges and Water Rates are based on the results of the cost of service study. 3. The ConservaƟon Tier discount applies toward the first five units of water when overall consumpƟon is 10 units or less. 4. The Energy Charges represent the cost of the energy required to pump or liŌ each unit of water 100 feet in elevaƟon. This is charged proporƟonately for every foot of elevaƟon over 450 feet. The increase is due to increased power costs charged by the District’s power supplier. 5. Charges collected through the property tax role (availability fees and general obligaƟon debt) are not included in this total. 6. There is no proposed overall rate increase for January 1, 2018. However, based on a comprehensive cost of service study, there are changes in the rate structure, rates, fees, and charges. Projected rates (2019‐2022) are for informaƟonal purposes only, and use an inflator factor of four percent. 7. Your bill will vary based on meter size, water consumpƟon in units, and geographic locaƟon. 8. Fire Service requires a separate meter and is a monthly charge based on meter size. There is no proposed rate increase for fire service on January 1, 2018. This informaƟon reflects changes to the rate structure, rates, fees, and charges. For a comprehensive lisƟng of rates, fees, and charges please see the Otay Water District’s Code of Ordinances at otaywater.gov. ConsumpƟon Blocks in Units2 and Water Rates2 ‐ 2018 Proposed and 2019‐2022 Projected6  ConsumpƟon Blocks  (in Units)  2018  Proposed Current 2018  Proposed  2019  Projected  2020  Projected  2021  Projected  2022  Projected  ConservaƟon Tier3 ‐ $2.53 6 ‐ 10 1 – 10 $3.95 $3.05 $3.17 $3.30 $3.43 $3.57 11 ‐ 22 11—22 $5.13 $5.44 $5.66 $5.88 $6.12 $6.36 23 or more 23+ $7.90 $7.03 $7.31 $7.60 $7.91 $8.22 Otay Fixed System Charges1 ‐ 2018 Proposed and 2019‐2022 Projected6  Meter  Size Current 2018  Proposed  2019  Projected  2020  Projected  2021  Projected  2022  Projected  3/4" $15.91 $17.38 $18.08 $18.80 $19.55 $20.33 1" $22.47 $24.56 $25.54 $26.56 $27.63 $28.73 1 1/2" $38.88 $42.49 $44.19 $45.96 $47.80 $49.71 2" $58.55 $64.00 $66.56 $69.22 $71.99 $74.87 MWD & CWA Charges1 ‐ 2018 Proposed and 2019‐2022 Projected6  Meter  Size Current 2018  Proposed  2019  Projected  2020  Projected  2021  Projected  2022  Projected  3/4" $15.00 $15.45 $16.07 $16.71 $17.38 $18.07 1" $27.84 $28.68 $29.83 $31.02 $32.26 $33.55 1 1/2" $62.96 $64.85 $67.44 $70.14 $72.95 $75.87 2" $107.08 $110.30 $114.71 $119.30 $124.07 $129.04 Other Charges7 ‐ 2018 Proposed and 2019‐2022 Projected6  Other Charges Current 2018  Proposed 2019 Projected 2020 Projected 2021 Projected 2022 Projected  Energy Charges4 $0.044 $0.053 $0.055 $0.057 $0.060 $0.062 Fire Service Monthly Charge8 ≤3” Meter $20.77 ≤3” Meter $20.77 ≤3” Meter $21.60 ≤3” Meter $22.47 ≤3” Meter $23.36 ≤3” Meter $24.30 ≥4” Meter $27.98 ≥4” Meter $29.10 ≥4” Meter $30.26 ≥4” Meter $31.47 ≥4” Meter $32.73 ≥4” Meter $27.98 5 Units 12 Units 18 Units  Current Rates:  MWD/CWA Fixed Charges1 $15.00 $15.00 $ 15.00 Otay System Charges1 $15.91 $15.91 $ 15.91 Water Charges2 $12.65 $49.76 $ 80.54 Energy Charges4 $ 0.67 $ 1.90 $ 2.85 Total Current Bill5 $44.23 $82.57 $114.30  Proposed Rates: 6  MWD/CWA Fixed Charges1 $15.45 $15.45 $ 15.45 Otay System Charges1 $17.38 $17.38 $ 17.38 Water Charges2 $15.25 $41.38 $ 74.02 Energy Charges4 $ 0.80 $ 2.28 $ 3.43 Total Proposed Bill5 $48.88 $76.49 $110.28  Increase (Decrease) $  4.65 ($6.08) ($  4.03)  TYPICAL BILL IN HCF (OR WATER UNITS) PER MONTH  Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT   WATER SERVICE  Dedicated to Community Service OTAYWATER.GOV PRESORT STD U.S. POSTAGE PAID  PERMIT 700 SAN DIEGO, CA Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91978‐2004 otaywater.gov NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT   WATER SERVICE  NOTICE OF PUBLIC HEARING In Connection with Proposed CHANGES TO RATES, FEES, AND CHARGES FOR MULTI-RESIDENTIAL WATER SERVICE   NOTICE IS HEREBY GIVEN that the Otay Water District (the “District”) will hold a Public Hearing on October 4, 2017, at 3:30  p.m. in the Board of Directors MeeƟng Room located at 2554  Sweetwater Springs Blvd., Spring Valley, CA 91978, to consider: (1) the adopƟon of rates, fees, and charges that apply to water billed beginning January 1, 2018; (2) the authorizaƟon, for a period of five years, for all future pass‐through increases or decreases to cover changes to rates, fees, and charges from the District’s water suppliers; and, (3) the authorizaƟon, for a period of five years, overall average increases to rates, fees, and charges, in addiƟon to the pass‐through increases, not to exceed 10 percent per year, for all costs other than pass‐through costs. These rates, fees, and charges apply to property for which you are shown as the record owner or customer of record. The purpose of the hearing is to consider all wriƩen protests against the proposed rates, fees, and charges that, if approved, will be imposed on properƟes served by the District. The changes in the proposed rates, fees, and charges and the basis upon which they were determined is described in more detail as follows. PROPOSED RATE CHANGES  As part of the annual budget review process, the District’s Board of Directors typically proposes an overall rate increase to be implemented for January. This year the Board of Directors is proposing no overall rate increase on January 1, 2018. Even though there is no proposed overall rate increase for January 1, 2018, the District is proposing changes to the rate structure, rates, fees, and charges based on a comprehensive cost of service study completed April 2017. These changes may cause your bill to change. The changes are reflected on page 3 of this noƟce. This study was conducted by an independent firm and proposes changes that reflect the District’s esƟmated cost of providing water service. If adopted, the proposed changes to rates, fees, and charges would take effect for water billed on or aŌer January 1, 2018, and may apply to water used as early as the beginning of December 2017. The rate structure has two basic components: (1) fixed monthly charges and (2) variable monthly rates, fees, and charges, which are based on water consumpƟon. The fixed fees and charges are calculated to recover the cost of operaƟng and maintaining the public water system and are based on the customer class and size of the water meter serving the record owner or customer of record. Fixed Charges include the Metropolitan Water District of Southern California (MWD) and San Diego County Water Authority (CWA) fee, and the District’s System Charges. The variable rates, fees, and charges are consumpƟon based and include, but are not limited to, supply, treatment, and transportaƟon costs. Variable rates, fees, and charges generally impose greater charges as the level of consumpƟon increases. Variable components of the bill include the Water Rate and Energy Charge. The fixed and variable components are calculated to recover the proporƟonate cost of providing the service aƩributable to each class of customer. The District will also consider authorizing, for a period of five years, passing through to customers the increased or decreased costs imposed by the District’s water suppliers including, but not limited to, MWD, CWA, and the City of San Diego. If adopted, the average customer’s water rates, fees, and charges will be adjusted annually for all increased or decreased costs and charges from the District’s wholesale water suppliers. The purpose of the hearing is to consider all wriƩen protests against the proposed rates, fees, and charges that, if approved, will be imposed on properƟes served by the District. Any changes to rates, fees, and charges subsequently imposed by the District will be subject to a 30‐day prior wriƩen noƟce, but will not be subject to addiƟonal hearings or protests. In addiƟon to the wholesale pass‐through costs, the District will consider authorizing, for a period of five years, average increases to rates, fees, and charges not to exceed 10 percent per year, for all costs related to labor, benefits, materials, energy, maintenance, administraƟve expenses, and other operaƟonal costs of providing water service including, but not limited to, amounts required to meet bond covenants and to maintain adequate reserves and rate stability. WHY ARE YOU RECEIVING THIS NOTICE?  As the record owner or customer of record of a property idenƟfied to be subject to the imposiƟon of proposed rate, fee, or charge increases, you may submit a wriƩen protest against the proposed acƟons. Provided, however, if the idenƟfied property has more than one record owner and/or customer of record, only one wriƩen protest for the property will be counted. Each protest must be in wriƟng and include: (1) the specific rate, fee, and/or charge for which the protest is being submiƩed in opposiƟon; (2) the locaƟon of the idenƟfied property (by assessor’s parcel number or street address); and, (3) the original signature of the record owner or customer of record submiƫng the protest. Protests submiƩed by email, facsimile, or other electronic means will not be accepted. WriƩen protests may be submiƩed by mail to the Board Secretary, Otay Water District, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978, or in person at the public hearing, as long as they are received prior to the conclusion of the public hearing. Please  idenƟfy on the front of the envelope for any protest, whether  mailed or submiƩed in person to the Board Secretary, that the  enclosed leƩer is for the Public Hearing on the Proposed Changes  to Rates, Fees, and Charges for MulƟ‐ResidenƟal Water Service.   At the conclusion of the public hearing, the Board of Directors will consider adopƟng the proposed acƟons as described in this noƟce. Oral comments at the public hearing will not qualify as formal protests unless accompanied by a wriƩen protest. If, at the close of the public hearing, wriƩen protests against the proposed rate increase, fees, and charges are not presented by a majority of the record owners or customers of record of the idenƟfied properƟes upon which they are to be imposed, the Board of Directors will be authorized to adopt the proposed acƟons. If adopted, the rates, fees, and charges will apply to water billed on or aŌer January 1, 2018 and may apply to water used as early as the beginning of December 2017. This leƩer serves as a 45‐day  noƟce of the hearing on the proposed rate changes, and as noƟce  of the changes for water billed on or aŌer January 1, 2018, if  adopted.      This noƟce is being provided to you by the District pursuant to (Continued on page 2) Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. Page 2 the California ConsƟtuƟon ArƟcle XIII D (known as “ProposiƟon 218”). Under terms of ProposiƟon 218, the District is required to noƟfy the record owner or customer of record of proposed changes to property‐related fees such as water services. This leƩer serves as noƟce that the District will hold a public hearing to consider changes to its current water rates, fees, and charges. WHY ARE WATER RATE CHANGES NECESSARY?  The proposed rate structure will provide water service at rates, fees, and charges that are equal to the reasonable cost of providing water service. Recent California law suggests that Ɵered water rates, fees, and charges designed solely to encourage water conservaƟon, may violate the California ConsƟtuƟon as amended by ProposiƟon 218. The new structure is designed to meet all applicable legal requirements and to fairly and equitably spread the District’s costs to provide water service among all customer classes based on the costs to serve those customers. The major proposed changes to the rate structure are: (1) eliminaƟng the residenƟal conservaƟon Ɵer; (2) eliminaƟng Ɵered rates for all rate classes except residenƟal and mulƟ‐residenƟal water service; and (3) modifying the system fee from one based solely on meter size to one based on meter size and customer type. AddiƟonally, the District is a revenue‐neutral public agency that provides water service to your community. “Revenue‐neutral” means that water bills reflect only those rates, fees, and charges sufficient to support water service. WHAT DO WATER RATES FUND?  In the District, each end user pays his or her fair share of the cost of purchasing water, energy or pumping costs, labor and benefits, materials, chemicals used in water treatment, administraƟve expenses, operaƟons, construcƟon and maintenance of the public water system and faciliƟes. This also includes amounts required to meet bond covenants and to maintain adequate reserves and rate stability. The District is a non‐profit public agency, it does not make a profit from providing water service and it cannot operate at a loss. WHY ARE WHOLESALER WATER SUPPLIERS RAISING THEIR RATES? Wholesale suppliers raise their rates as they work to obtain new and more reliable supplies of water. This includes more reliable emergency supplies, agricultural to urban water transfers, expansion of exisƟng reservoirs, pipeline relining projects, new water treatment plants, and new supplies. In addiƟon, rate increases cover the cost of acquiring water from the Colorado River, northern California, and desalinaƟon. In 2016, for instance, the CWA increased rates, fees, and charges in anƟcipaƟon of the Carlsbad Seawater DesalinaƟon Project becoming operaƟonal. The Carlsbad project, while providing San Diego County with a new locally controlled, drought‐proof supply of water, increased water rates for all San Diego County water customers. The District works conƟnually to reduce internal costs to absorb rate increases from suppliers. The District recognizes and is sensiƟve to the impact the higher cost of water has on its customers. In its effort to minimize the impact of these cost increases the District has reduced its number of full‐Ɵme equivalent (FTE) employees by 23 percent since 2007. The District is commiƩed to becoming as efficient as possible, providing the services its customers expect and rely upon, while conƟnuing to be one of the lower cost water service providers in San Diego County.     RELIABILITY AND SUPPLY DIVERSIFICATION  Water is essenƟal to our region’s quality of life. Our economy depends on it. Families and businesses cannot survive without it. Unfortunately for San Diego County residents, our region does not benefit from an abundant natural supply of water. The county receives an average of 10 inches of rainfall per year, meeƟng only five percent of local demand. Because of our semi‐arid climate, approximately 85 percent of the water used locally is imported from Northern California and the Colorado River. Not only is the cost of imporƟng water becoming increasingly costly, but populaƟon growth, drought, environmental regulaƟons, liƟgaƟon, compeƟƟon for a scarce resource, and increased power costs are driving the price we pay higher. San Diego County’s wholesale and retail water agencies recognized the region was highly dependent on imported water during a severe drought that occurred in the late 1980s and early 1990s. They have conƟnued to diversify the region’s water supply and ensure a reliable system, increasing water independence, providing for future populaƟon and economic needs, and reducing the likelihood of a future water shortage. Since then, major iniƟaƟves have been undertaken to develop both new supplies and improved reliability. At the regional level, in 2003, the CWA signed a milestone agreement to address decades of water disputes over the allocaƟon of water from the Colorado River. As part of that agreement, San Diego County residents paid to have old, leaky earthen canals in Imperial County lined to save water. This “saved water” is now used by customers in the San Diego region. The CWA also started producing desalinated seawater from the Carlsbad DesalinaƟon Plant in late 2015, producing approximately 50 million gallons per day, enough to serve seven to 10 percent of the region’s demand. AddiƟonally, the District is acƟvely supporƟng the development of a seawater desalinaƟon facility in Rosarito Beach, Mexico. If completed, the water from this facility could replace up to two‐ thirds of the water the District receives from Northern California and the Colorado River. A result of these major projects, such as the canal linings, water transfers, seawater desalinaƟon, and reservoir construcƟon and expansion efforts, is that the wholesale cost of water has gone up dramaƟcally in recent years, and it is an expense being borne by all water users. Rising costs are financially difficult for everyone, but having made these investments in new supply and improved reliability, the region is beƩer able to ensure that families, businesses, and the local economy will have the water they need. WHAT CAN I DO TO SAVE MONEY? Customers interested in learning ways in which they can reduce their water usage and therefore minimize the effects of the rising cost of wholesalers’ water supplies on their family’s budget, can visit the District’s conservaƟon web page at otaywater.gov. AddiƟonally, the Water ConservaƟon Garden located on the campus of Cuyamaca Community College in Rancho San Diego is open to the public and offers various conservaƟon exhibits, programs and classes. For more about the Garden, visit thegarden.org. For informaƟon about the District, please visit otaywater.gov, contact us via email at info@otaywater.gov, or call us at 619‐670‐2222. (Continued from page 1) Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. Footnotes  1. ConsumpƟon is the water usage divided by the number of dwellings served. This cost varies based on water usage and can be calculated using the consumpƟon block tables. One unit of consumpƟon equals 748 gallons of water or one HCF (hundred cubic feet). The changes in the Water Rates are based on the results of the cost of service study. 2. There is no proposed overall rate increase for January 1, 2018. However, based on a comprehensive cost of service study, there are changes in the rate structure, rates, fees, and charges. Projected rates (2019‐2022) are for informaƟonal purposes only, and use an inflator factor of four percent. 3. The Fixed System Charges, based on meter size and customer class, ensure that customers pay their proporƟonate share of the water system replacement, maintenance, and operaƟng expenses. The MWD & CWA Charges are based on meter size and match, in total, the cost charged by wholesale water suppliers. The changes in the fixed charges are based on the results of the cost of service study. 4. Your bill will vary based on meter size, water consumpƟon in units, and geographic locaƟon. 5. The Energy Charges represent the cost of energy required to pump each unit of water 100 feet in elevaƟon. This is charged proporƟonately for every foot of elevaƟon over 450 feet. This increase is due to increased power costs to the District. 6. The Government Fee is a per unit charge and your bill will vary based on water consumpƟon. This charge is in lieu of tax revenues paid by non‐ government customers. 7. Fire Service requires a separate meter and is a monthly charge based on meter size. There is no proposed rate increase for fire service on January 1, 2018. This informaƟon reflects changes in the rate structure, rates, fees, and charges. For a comprehensive lisƟng of rates, fees, and charges please see the Otay Water District’s Code of Ordinances at otaywater.gov. MulƟ‐ResidenƟal Water Rates1 ConsumpƟon Blocks by Unit ‐ 2018 Proposed and 2019‐2022 Projected2  ConsumpƟon Blocks1 Current  2018  Proposed  2019  Projected  2020  Projected  2021  Projected  2022  Projected  0 ‐ 4 $3.90 $2.85 $2.96 $3.08 $3.20 $3.33 5 ‐ 9 $5.05 $5.17 $5.38 $5.59 $5.82 $6.05 10+ $7.80 $6.35 $6.60 $6.87 $7.14 $7.43 Meter   Size Current  2018  Proposed  2019  Projected  2020  Projected  2021  Projected  2022  Projected  3/4" $15.91 $38.21 $39.74 $41.33 $42.98 $44.70 1" $22.47 $53.97 $56.13 $58.38 $60.71 $63.14 1 1/2" $38.88 $93.37 $97.10 $100.99 $105.03 $109.23 2" $58.55 $140.61 $146.23 $152.08 $158.17 $164.49 3" $111.04 $266.66 $277.33 $288.42 $299.96 $311.95 4" $170.10 $408.50 $424.84 $441.83 $459.51 $477.89 6" $334.18 $802.55 $834.65 $868.04 $902.76 $938.87 8" $531.05 $1,275.34 $1,326.35 $1,379.41 $1,434.58 $1,491.97 10" $760.72 $1,826.91 $1,899.99 $1,975.99 $2,055.03 $2,137.23 Otay Fixed System Charges3 by Meter Size ‐ 2018 Proposed and 2019‐2022 Projected2  Page 3 Other Charges4  Current 2018  Proposed  2019  Projected2  2020  Projected2  2021  Projected2  2022  Projected2  Energy Charges5 $0.044 $0.053 $0.055 $0.057 $0.059 $0.062 Government Fee6 $0.41 $0.41 $0.43 $0.44 $0.46 $0.48 Fire Service Monthly Charge7 ≤3” Meter $20.77 ≤3” Meter $20.77 ≤3” Meter $21.60 ≤3” Meter $22.46 ≤3” Meter $23.36 ≤3” Meter $24.30 ≥4” Meter $27.98 ≥4” Meter $29.10 ≥4” Meter $30.26 ≥4” Meter $31.47 ≥4” Meter $32.73 ≥4” Meter $27.98 MWD & CWA Charges3 by Meter Size ‐ 2018 Proposed and 2019‐2022 Projected2  Meter   Size Current 2018  Proposed  2019  Projected  2020  Projected  2021  Projected  2022  Projected  3/4" $15.00 $15.45 $16.07 $16.71 $17.38 $18.07 1" $27.84 $28.68 $29.83 $31.02 $32.26 $33.55 1 1/2" $62.96 $64.85 $67.44 $70.14 $72.95 $75.87 2" $107.08 $110.30 $114.71 $119.30 $124.07 $129.04 3" $227.75 $234.60 $243.98 $253.74 $263.89 $274.45 4" $364.72 $375.68 $390.71 $406.34 $422.59 $439.49 6" $746.59 $769.02 $799.78 $831.77 $865.04 $899.64 8" $1,205.65 $1,241.89 $1,291.57 $1,343.23 $1,396.96 $1,452.84 10" $1,735.39 $1,787.55 $1,859.05 $1,933.41 $2,010.75 $2,091.18 Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT    MULTI‐RESIDENTIAL WATER SERVICE  Dedicated to Community Service OTAYWATER.GOV NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT    MULTI‐RESIDENTIAL WATER SERVICE  PRESORT STD U.S. POSTAGE PAID  PERMIT 700 SAN DIEGO, CA Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91978‐2004 otaywater.gov NOTICE OF PUBLIC HEARING In Connection with Proposed CHANGES TO RATES, FEES, AND CHARGES FOR BUSINESS AND PUBLICLY-OWNED WATER SERVICE   NOTICE IS HEREBY GIVEN that the Otay Water District (the “District”) will hold a Public Hearing on October 4, 2017, at 3:30  p.m. in the Board of Directors MeeƟng Room located at 2554  Sweetwater Springs Blvd., Spring Valley, CA 91978, to consider: (1) the adopƟon of rates, fees, and charges that apply to water billed beginning January 1, 2018; (2) the authorizaƟon, for a period of five years, for all future pass‐through increases or decreases to cover changes to rates, fees, and charges from the District’s water suppliers; and, (3) the authorizaƟon, for a period of five years, overall average increases to rates, fees, and charges, in addiƟon to the pass‐through increases, not to exceed 10 percent per year, for all costs other than pass‐through costs. These rates, fees, and charges apply to property for which you are shown as the record owner or customer of record. The purpose of the hearing is to consider all wriƩen protests against the proposed rates, fees, and charges that, if approved, will be imposed on properƟes served by the District. The changes in the proposed rates, fees, and charges and the basis upon which they were determined is described in more detail as follows. PROPOSED RATE CHANGES  As part of the annual budget review process, the District’s Board of Directors typically proposes an overall rate increase to be implemented for January. This year the Board of Directors is proposing no overall rate increase on January 1, 2018. Even though there is no proposed overall rate increase for January 1, 2018, the District is proposing changes to the rate structure, rates, fees, and charges based on a comprehensive cost of service study completed in April 2017. These changes may cause your bill to change. The changes are reflected on page 3 of this noƟce. This study was conducted by an independent firm and proposes changes that reflect the District’s esƟmated cost of providing water service. If adopted, the proposed changes to rates, fees, and charges would take effect for water billed on or aŌer January 1, 2018, and may apply to water used as early as the beginning of December 2017. The rate structure has two basic components: (1) fixed monthly charges and (2) variable monthly rates, fees, and charges, which are based on water consumpƟon. The fixed fees and charges are calculated to recover the cost of operaƟng and maintaining the public water system and are based on the customer class and size of the water meter serving the record owner or customer of record. Fixed Charges include the Metropolitan Water District of Southern California (MWD) and San Diego County Water Authority (CWA) fee, and the District’s System Charges. The variable rates, fees, and charges are consumpƟon based and include, but are not limited to, supply, treatment, and transportaƟon costs. Variable rates, fees, and charges generally impose greater charges as the level of consumpƟon increases. Variable components of the bill include the Water Rate and Energy Charge. The fixed and variable components are calculated to recover the proporƟonate cost of providing the service aƩributable to each class of customer. The District will also consider authorizing, for a period of five years, passing through to customers the increased or decreased costs imposed by the District’s water suppliers including, but not limited to, MWD, CWA and the City of San Diego. If adopted, the average customer’s water rates, fees, and charges will be adjusted annually for all increased or decreased costs and charges from the District’s wholesale water suppliers. The purpose of the hearing is to consider all wriƩen protests against the proposed rates, fees, and charges that, if approved, will be imposed on properƟes served by the District. Any changes to rates, fees, and charges subsequently imposed by the District will be subject to a 30‐day prior wriƩen noƟce, but will not be subject to addiƟonal hearings or protests. In addiƟon to the wholesale pass‐through costs, the District will consider authorizing, for a period of five years, average increases in rates, fees, and charges not to exceed 10 percent per year, for all costs related to labor, benefits, materials, energy, maintenance, administraƟve expenses, and other operaƟonal costs of providing water service including, but not limited to, amounts required to meet bond covenants and to maintain adequate reserves and rate stability. WHY ARE YOU RECEIVING THIS NOTICE?  As the record owner or customer of record of a property idenƟfied to be subject to the imposiƟon of proposed rate, fee, or charge increases, you may submit a wriƩen protest against the proposed acƟons. Provided, however, if the idenƟfied property has more than one record owner and/or customer of record, only one wriƩen protest for the property will be counted. Each protest must be in wriƟng and include: (1) the specific rate, fee and/or charge for which the protest is being submiƩed in opposiƟon; (2) the locaƟon of the idenƟfied property (by assessor’s parcel number or street address); and, (3) the original signature of the record owner or customer of record submiƫng the protest. Protests submiƩed by email, facsimile, or other electronic means will not be accepted. WriƩen protests may be submiƩed by mail to the Board Secretary, Otay Water District, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978, or in person at the public hearing, as long as they are received prior to the conclusion of the public hearing. Please  idenƟfy on the front of the envelope for any protest, whether  mailed or submiƩed in person to the Board Secretary, that the  enclosed leƩer is for the Public Hearing on the Proposed Changes  to Rates, Fees, and Charges for Business and Publicly‐Owned  Water  Service.    At the conclusion of the public hearing, the Board of Directors will consider adopƟng the proposed acƟons as described in this noƟce. Oral comments at the public hearing will not qualify as formal protests unless accompanied by a wriƩen protest. If, at the close of the public hearing, wriƩen protests against the proposed rate increase, fees, and charges are not presented by a majority of the record owners or customers of record of the idenƟfied properƟes upon which they are to be imposed, the Board of Directors will be authorized to adopt the proposed acƟons. If adopted, the rates, fees, and charges will apply to water billed on or aŌer January 1, 2018 and may apply to water used as early as the beginning of December 2017. This leƩer serves as a 45‐day noƟce of the hearing  on the proposed rate changes, and as noƟce of the changes for  water billed on or aŌer January 1, 2018, if adopted. Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. (Continued on page 2) Page 2  This noƟce is being provided to you by the District pursuant to California ConsƟtuƟon ArƟcle XIII D (known as “ProposiƟon 218”). Under terms of ProposiƟon 218, the District is required to noƟfy the record owner or customer of record of proposed changes to property‐related fees such as water services. This leƩer serves as noƟce that the District will hold a public hearing to consider changes to its current water rates, fees, and charges. WHY ARE WATER RATE CHANGES NECESSARY?  The proposed rate structure will provide water service at rates, fees, and charges that are equal to the reasonable cost of providing water service. Recent California law suggests that Ɵered water rates, fees, and charges designed solely to encourage water conservaƟon, may violate the California ConsƟtuƟon as amended by ProposiƟon 218. The new structure is designed to meet all applicable legal requirements and to fairly and equitably spread the District’s costs to provide water service among all customer classes based on the costs to serve those customers. The major proposed changes to the rate structure are: (1) eliminaƟng the residenƟal conservaƟon Ɵer; (2) eliminaƟng Ɵered rates for all rate classes except residenƟal and mulƟ‐residenƟal water service; and (3) modifying the system fee from one based solely on meter size to one based on meter size and customer type. AddiƟonally, the District is a revenue‐neutral public agency that provides water service to your community. “Revenue‐neutral” means that water bills reflect only those rates, fees, and charges sufficient to support water service. WHAT DO WATER RATES FUND?  In the District, each end user pays his or her fair share of the cost of purchasing water, energy or pumping costs, labor and benefits, materials, chemicals used in water treatment, administraƟve expenses, operaƟons, construcƟon and maintenance of the public water system and faciliƟes. This also includes amounts required to meet bond covenants and to maintain adequate reserves and rate stability. The District is a non‐profit public agency, it does not make a profit from providing water service and it cannot operate at a loss. WHY ARE WHOLESALER WATER SUPPLIERS RAISING THEIR RATES? Wholesale suppliers raise their rates as they work to obtain new and more reliable supplies of water. This includes more reliable emergency supplies, agricultural to urban water transfers, expansion of exisƟng reservoirs, pipeline relining projects, new water treatment plants, and new supplies. In addiƟon, rate increases cover the cost of acquiring water from the Colorado River, northern California, and desalinaƟon. In 2016, for instance, the CWA increased rates, fees, and charges in anƟcipaƟon of the Carlsbad Seawater DesalinaƟon Project becoming operaƟonal. The Carlsbad project, while providing San Diego County with a new locally controlled, drought‐proof supply of water, increased water rates for all San Diego County water customers. The District works conƟnually to reduce internal costs to absorb rate increases from suppliers. The District recognizes and is sensiƟve to the impact the higher cost of water has on its customers. In its effort to minimize the impact of these cost increases the District has reduced its number of full‐Ɵme equivalent (FTE) employees by 23 percent since 2007. The District is commiƩed to becoming as efficient as possible, providing the services its customers expect and rely upon, while conƟnuing to be one of the lower cost water service providers in San Diego County. RELIABILITY AND SUPPLY DIVERSIFICATION  Water is essenƟal to our region’s quality of life. Our economy depends on it. Families and businesses cannot survive without it. Unfortunately for San Diego County residents, our region does not benefit from an abundant natural supply of water. The county receives an average of 10 inches of rainfall per year, meeƟng only five percent of local demand. Because of our semi‐arid climate, approximately 85 percent of the water used locally is imported from Northern California and the Colorado River. Not only is the cost of imporƟng water becoming increasingly costly, but populaƟon growth, drought, environmental regulaƟons, liƟgaƟon, compeƟƟon for a scarce resource, and increased power costs are driving the price we pay higher. San Diego County’s wholesale and retail water agencies recognized the region was highly dependent on imported water during a severe drought that occurred in the late 1980s and early 1990s. They have conƟnued to diversify the region’s water supply and ensure a reliable system, increasing water independence, providing for future populaƟon and economic needs, and reducing the likelihood of a future water shortage. Since then, major iniƟaƟves have been undertaken to develop both new supplies and improved reliability. At the regional level, in 2003, the CWA signed a milestone agreement to address decades of water disputes over the allocaƟon of water from the Colorado River. As part of that agreement, San Diego County residents paid to have old, leaky earthen canals in Imperial County lined to save water. This “saved water” is now used by customers in the San Diego region. The CWA also started producing desalinated seawater from the Carlsbad DesalinaƟon Plant in late 2015, producing approximately 50 million gallons per day, enough to serve seven to 10 percent of the region’s demand. AddiƟonally, the District is acƟvely supporƟng the development of a seawater desalinaƟon facility in Rosarito Beach, Mexico. If completed, the water from this facility could replace up to two‐ thirds of the water the District receives from Northern California and the Colorado River. A result of these major projects, such as the canal linings, water transfers, seawater desalinaƟon, and reservoir construcƟon and expansion efforts, is that the wholesale cost of water has gone up dramaƟcally in recent years, and it is an expense being borne by all water users. Rising costs are financially difficult for everyone, but having made these investments in new supply and improved reliability, the region is beƩer able to ensure that families, businesses, and the local economy will have the water they need. WHAT CAN I DO TO SAVE MONEY? Customers interested in learning ways in which they can reduce their water usage and therefore minimize the effects of the rising cost of wholesalers’ water supplies on their family’s budget, can visit the District’s conservaƟon web page at otaywater.gov. AddiƟonally, the Water ConservaƟon Garden located on the campus of Cuyamaca Community College in Rancho San Diego is open to the public and offers various conservaƟon exhibits, programs and classes. For more about the Garden, visit thegarden.org. For informaƟon about the District, please visit otaywater.gov, contact us via email at info@otaywater.gov, or call us at 619‐670‐2222. (Continued from page 1) Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. Footnotes  1. This cost varies based on water usage and can be calculated using the consumpƟon block tables. One unit of consumpƟon equals 748 gallons of water or one HCF (hundred cubic feet). The changes in the Water Charges and Water Rates are based on the results of the cost of service study. 2. There is no proposed overall rate increase for January 1, 2018. However, based on a comprehensive cost of service study, there are changes in the rate structure, rates, fees, and charges. Projected rates (2019‐2022) are for informaƟonal purposes only, and use an inflator factor of four percent. 3. The Fixed System Charges, based on meter size and customer class, ensure that customers pay their proporƟonate share of the water system replacement, maintenance, and operaƟng expenses. The MWD & CWA Charges are based on meter size and match, in total, the cost charged by wholesale water suppliers. The changes in the fixed charges are based on the results of the cost of service study. 4. Your bill will vary based on meter size, water consumpƟon in units, and geographic locaƟon. 5. The Energy Charges represent the cost of energy required to pump each unit of water 100 feet in elevaƟon. This is charged proporƟonately for every foot of elevaƟon over 450 feet. This increase is due to increased power costs to the District. 6. The Government Fee is a per unit charge and your bill will vary based on water consumpƟon. This charge is in lieu of tax revenues paid by non‐ government customers. 7. Fire Service requires a separate meter and is a monthly charge based on meter size. There is no proposed rate increase for fire service on January 1, 2018. ConsumpƟon Block1 2018  Proposed Current Rate 2018  Proposed  2019  Projected  2020  Projected  2021  Projected  2022  Projected  0 ‐ 185 $4.17 186 ‐ 1,400 $4.23 1,401 or more $4.30 Business and Publicly‐Owned Water Rates1 (<10” Meter) ‐ 2018 Proposed and 2019‐2022 Projected2  All units ‐ $3.61 $3.75 $3.90 $4.06 $4.22 Business and Publicly‐Owned Water Rates1 (≥10” Meter) ‐ 2018 Proposed and 2019‐2022 Projected2  0 ‐ 7,426 $4.17 7,427–14,616 $4.23 14,617 or more $4.30 All units ‐ $3.61 $3.75 $3.90 $4.06 $4.22 ConsumpƟon Block1 2018 Proposed Current Rate 2018 Proposed 2019 Projected 2020 Projected 2021 Projected 2022 Projected  MWD & CWA Charges3 by Meter Size ‐ 2018 Proposed and 2019‐2022 Projected2  Meter   Size Current 2018  Proposed  2019  Projected  2020  Projected  2021  Projected  2022  Projected  3/4" $15.00 $15.45 $16.07 $16.71 $17.38 $18.07 1" $27.84 $28.68 $29.83 $31.02 $32.26 $33.55 1 1/2" $62.96 $64.85 $67.44 $70.14 $72.95 $75.87 2" $107.08 $110.30 $114.71 $119.30 $124.07 $129.04 3" $227.75 $234.60 $243.98 $253.74 $263.89 $274.45 4" $364.72 $375.68 $390.71 $406.34 $422.59 $439.49 6" $746.59 $769.02 $799.78 $831.77 $865.04 $899.64 8" $1,205.65 $1,241.89 $1,291.57 $1,343.23 $1,396.96 $1,452.84 10" $1,735.39 $1,787.55 $1,859.05 $1,933.41 $2,010.75 $2,091.18 Meter   Size Current 2018  Proposed  2019  Projected  2020  Projected  2021  Projected  2022  Projected  3/4" $15.91 $35.99 $37.43 $38.93 $40.48 $42.10 1" $22.47 $50.83 $52.86 $54.98 $57.18 $59.46 1 1/2" $38.88 $87.95 $91.47 $95.13 $98.93 $102.89 2" $58.55 $132.45 $137.75 $143.26 $148.99 $154.95 3" $111.04 $251.19 $261.24 $271.69 $282.55 $293.86 4" $170.10 $384.79 $400.18 $416.19 $432.84 $450.15 6" $334.18 $755.97 $786.21 $817.66 $850.36 $884.38 8" $531.05 $1,201.32 $1,249.37 $1,299.35 $1,351.32 $1,405.37 10" $760.72 $1,720.86 $1,789.69 $1,861.28 $1,935.73 $2,013.16 Otay Fixed System Charges3 by Meter Size ‐ 2018 Proposed and 2019‐2022 Projected2  Other Charges4  Current 2018 Proposed 2019 Projected2 2020 Projected2 2021 Projected2 2022 Projected2  Energy Charges5 $0.044 $0.053 $0.055 $0.057 $0.059 $0.062 Government Fee6 $0.41 $0.41 $0.43 $0.44 $0.46 $0.48 Fire Service Monthly Charge7 ≤3” Meter $20.77 ≤3” Meter $20.77 ≤3” Meter $21.60 ≤3” Meter $22.46 ≤3” Meter $23.36 ≤3” Meter $24.30 ≥4” Meter $27.98 ≥4” Meter $29.10 ≥4” Meter $30.26 ≥4” Meter $31.47 ≥4” Meter $32.73 ≥4” Meter $27.98 Page 3  This informaƟon reflects changes to the rate structure, rates, fees, and charges. For a comprehensive lisƟng of rates,  fees, and charges please see the Otay Water District’s Code of Ordinances at otaywater.gov.  Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT  BUSINESS AND PUBLICLY‐OWNED WATER SERVICE  Dedicated to Community  Service  OTAYWATER.GOV PRESORT STD U.S. POSTAGE PAID  PERMIT 700 SAN DIEGO, CA Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91978‐2004 otaywater.gov NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT   BUSINESS AND PUBLICY‐OWNED WATER SERVICE  NOTICE OF PUBLIC HEARING In Connection with Proposed CHANGES TO RATES, FEES, AND CHARGES FOR IRRIGATION AND COMMERCIAL AGRICULTURAL WATER SERVICE  NOTICE IS HEREBY GIVEN that the Otay Water District (the “District”) will hold a Public Hearing on October 4, 2017, at 3:30  p.m. in the Board of Directors MeeƟng Room located at 2554  Sweetwater Springs Blvd., Spring Valley, CA 91978, to consider: (1) the adopƟon of rates, fees, and charges that apply to water billed beginning January 1, 2018; (2) the authorizaƟon, for a period of five years, for all future pass‐through increases or decreases to cover changes to rates, fees, and charges from the District’s water suppliers; and, (3) the authorizaƟon, for a period of five years, overall average increases to rates, fees, and charges, in addiƟon to the pass‐through increases, not to exceed 10 percent per year, for all costs other than pass‐through costs. These rates, fees, and charges apply to property for which you are shown as the record owner or customer of record. The purpose of the hearing is to consider all wriƩen protests against the proposed rates, fees, and charges that, if approved, will be imposed on properƟes served by the District. The changes in the proposed rates, fees, and charges and the basis upon which they were determined is described in more detail as follows. PROPOSED RATE CHANGES  As part of the annual budget review process, the District’s Board of Directors typically proposes an overall rate increase to be implemented for January. This year the Board of Directors is proposing no overall rate increase on January 1, 2018. Even though there is no proposed overall rate increase for January 1, 2018, the District is proposing changes to the rate structure, rates, fees, and charges based on a comprehensive cost of service study completed in April 2017. These changes may cause your bill to change. The changes are reflected on page 3 of this noƟce. This study was conducted by an independent firm and proposes changes that reflect the District’s esƟmated cost of providing water service. If adopted, the proposed changes to rates, fees, and charges would take effect for water billed on or aŌer January 1, 2018, and may apply to water used as early as the beginning of December 2017. The rate structure has two basic components: (1) fixed monthly charges and (2) variable monthly rates, fees, and charges which are based on water consumpƟon. The fixed fees and charges are calculated to recover the cost of operaƟng and maintaining the public water system and are based on the customer class and size of the water meter serving the record owner or customer of record. Fixed Charges include the Metropolitan Water District of Southern California (MWD) and San Diego County Water Authority (CWA) fee, and the District’s System Charges. The variable rates, fees, and charges are consumpƟon based and include, but are not limited to, supply, treatment, and transportaƟon costs. Variable rates, fees, and charges generally impose greater charges as the level of consumpƟon increases. Variable components of the bill include the Water Rate and Energy Charge. The fixed and variable components are calculated to recover the proporƟonate cost of providing the service aƩributable to each class of customer. The District will also consider authorizing, for a period of five years, passing through to customers the increased or decreased costs imposed by the District’s water suppliers including, but not limited to, MWD, CWA, and the City of San Diego. If adopted, the average customer’s water rates, fees, and charges will be adjusted annually for all increased or decreased costs and charges from the District’s wholesale water suppliers. The purpose of the hearing is to consider all wriƩen protests against the proposed rates, fees, and charges that, if approved, will be imposed on properƟes served by the District. Any changes to rates, fees, and charges subsequently imposed by the District will be subject to a 30‐day prior wriƩen noƟce, but will not be subject to addiƟonal hearings or protests. In addiƟon to the wholesale pass‐through costs, the District will consider authorizing, for a period of five years, average increases in rates, fees, and charges not to exceed 10 percent per year, for all costs related to labor, benefits, materials, energy, maintenance, administraƟve expenses, and other operaƟonal costs of providing water service including, but not limited to, amounts required to meet bond covenants and to maintain adequate reserves and rate stability. WHY ARE YOU RECEIVING THIS NOTICE?  As the record owner or customer of record of a property idenƟfied to be subject to the imposiƟon of proposed rate, fee, or charge increases, you may submit a wriƩen protest against the proposed acƟons. Provided, however, if the idenƟfied property has more than one record owner and/or customer of record, only one wriƩen protest for the property will be counted. Each protest must be in wriƟng and include: (1) the specific rate, fee, and/or charge for which the protest is being submiƩed in opposiƟon; (2) the locaƟon of the idenƟfied property (by assessor’s parcel number or street address); and, (3) the original signature of the record owner or customer of record submiƫng the protest. Protests submiƩed by email, facsimile, or other electronic means will not be accepted. WriƩen protests may be submiƩed by mail to the Board Secretary, Otay Water District, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978, or in person at the public hearing, as long as they are received prior to the conclusion of the public hearing. Please  idenƟfy on the front of the envelope for any protest, whether  mailed or submiƩed in person to the Board Secretary, that the  enclosed leƩer is for the Public Hearing on the Proposed Changes  to Rates, Fees, and Charges for IrrigaƟon and Commercial  Agricultural Water Service. At the conclusion of the public hearing, the Board of Directors will consider adopƟng the proposed acƟons as described in this noƟce. Oral comments at the public hearing will not qualify as formal protests unless accompanied by a wriƩen protest. If, at the close of the public hearing, wriƩen protests against the proposed rate increase, fees, and charges are not presented by a majority of the record owners or customers of record of the idenƟfied properƟes upon which they are to be imposed, the Board of Directors will be authorized to adopt the proposed acƟons. If adopted, the rates, fees, and charges will apply to water billed on or aŌer January 1, 2018 and may apply to water used as early as the beginning of December 2017. This leƩer serves as a 45‐day noƟce of the hearing  on the proposed rate changes, and as noƟce of the changes for  water billed on or aŌer January 1, 2018, if adopted.  (Continued on page 2) Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. Page 2  This noƟce is being provided to you by the District pursuant to the California ConsƟtuƟon ArƟcle XIII D (known as “ProposiƟon 218”). Under terms of ProposiƟon 218, the District is required to noƟfy the record owner or customer of record of proposed changes to property‐related fees such as water services. This leƩer serves as noƟce that the District will hold a public hearing to consider changes to its current water rates, fees, and charges. WHY ARE WATER RATE CHANGES NECESSARY? The proposed rate structure will provide water service at rates, fees, and charges that are equal to the reasonable cost of providing water service. Recent California law suggests that Ɵered water rates, fees, and charges designed solely to encourage water conservaƟon, may violate the California ConsƟtuƟon as amended by ProposiƟon 218. The new structure is designed to meet all applicable legal requirements and to fairly and equitably spread the District’s costs to provide water service among all customer classes based on the costs to serve those customers. The major proposed changes to the rate structure are: (1) eliminaƟng the residenƟal conservaƟon Ɵer; (2) eliminaƟng Ɵered rates for all rate classes except residenƟal and mulƟ‐residenƟal water service; and (3) modifying the system fee from one based solely on meter size to one based on meter size and customer type. AddiƟonally, the District is a revenue‐neutral public agency that provides water service to your community. “Revenue‐neutral” means that water bills reflect only those rates, fees, and charges sufficient to support water service. WHAT DO WATER RATES FUND?  In the District, each end user pays his or her fair share of the cost of purchasing water, energy or pumping costs, labor and benefits, materials, chemicals used in water treatment, administraƟve expenses, operaƟons, construcƟon and maintenance of the public water system and faciliƟes. This also includes amounts required to meet bond covenants and to maintain adequate reserves and rate stability. The District is a non‐profit public agency, it does not make a profit from providing water service and it cannot operate at a loss. WHY ARE WHOLESALER WATER SUPPLIERS RAISING THEIR RATES? Wholesale suppliers raise their rates as they work to obtain new and more reliable supplies of water. This includes more reliable emergency supplies, agricultural to urban water transfers, expansion of exisƟng reservoirs, pipeline relining projects, new water treatment plants, and new supplies. In addiƟon, rate increases cover the cost of acquiring water from the Colorado River, northern California, and desalinaƟon. In 2016, for instance, the CWA increased rates, fees, and charges in anƟcipaƟon of the Carlsbad Seawater DesalinaƟon Project becoming operaƟonal. The Carlsbad project, while providing San Diego County with a new locally controlled, drought‐proof supply of water, increased water rates for all San Diego County water customers. The District works conƟnually to reduce internal costs to absorb rate increases from suppliers. The District recognizes and is sensiƟve to the impact the higher cost of water has on its customers. In its effort to minimize the impact of these cost increases the District has reduced its number of full‐Ɵme equivalent (FTE) employees by 23 percent since 2007. The District is commiƩed to becoming as efficient as possible, providing the services its customers expect and rely upon, while conƟnuing to be one of the lower cost water service providers in San Diego County.   RELIABILITY AND SUPPLY DIVERSIFICATION  Water is essenƟal to our region’s quality of life. Our economy depends on it. Families and businesses cannot survive without it. Unfortunately for San Diego County residents, our region does not benefit from an abundant natural supply of water. The county receives an average of 10 inches of rainfall per year, meeƟng only five percent of local demand. Because of our semi‐arid climate, approximately 85 percent of the water used locally is imported from Northern California and the Colorado River. Not only is the cost of imporƟng water becoming increasingly costly, but populaƟon growth, drought, environmental regulaƟons, liƟgaƟon, compeƟƟon for a scarce resource, and increased power costs are driving the price we pay higher. San Diego County’s wholesale and retail water agencies recognized the region was highly dependent on imported water during a severe drought that occurred in the late 1980s and early 1990s. They have conƟnued to diversify the region’s water supply and ensure a reliable system, increasing water independence, providing for future populaƟon and economic needs, and reducing the likelihood of a future water shortage. Since then, major iniƟaƟves have been undertaken to develop both new supplies and improved reliability. At the regional level, in 2003, the CWA signed a milestone agreement to address decades of water disputes over the allocaƟon of water from the Colorado River. As part of that agreement, San Diego County residents paid to have old, leaky earthen canals in Imperial County lined to save water. This “saved water” is now used by customers in the San Diego region. The CWA also started producing desalinated seawater from the Carlsbad DesalinaƟon Plant in late 2015, producing approximately 50 million gallons per day, enough to serve seven to 10 percent of the region’s demand. AddiƟonally, the District is acƟvely supporƟng the development of a seawater desalinaƟon facility in Rosarito Beach, Mexico. If completed, the water from this facility could replace up to two‐ thirds of the water the District receives from Northern California and the Colorado River. A result of these major projects, such as the canal linings, water transfers, seawater desalinaƟon, and reservoir construcƟon and expansion efforts, is that the wholesale cost of water has gone up dramaƟcally in recent years, and it is an expense being borne by all water users. Rising costs are financially difficult for everyone, but having made these investments in new supply and improved reliability, the region is beƩer able to ensure that families, businesses, and the local economy will have the water they need. WHAT CAN I DO TO SAVE MONEY? Customers interested in learning ways in which they can reduce their water usage and therefore minimize the effects of the rising cost of wholesalers’ water supplies on their family’s budget, can visit the District’s conservaƟon web page at otaywater.gov. AddiƟonally, the Water ConservaƟon Garden located on the campus of Cuyamaca Community College in Rancho San Diego is open to the public and offers various conservaƟon exhibits, programs and classes. For more about the Garden, visit thegarden.org. For informaƟon about the District, please visit otaywater.gov, contact us via email at info@otaywater.gov, or call us at 619‐670‐2222. (Continued from page 1) Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. Footnotes  1. This cost varies based on water usage and can be calculated using the consumpƟon block tables. One unit of consumpƟon equals 748 gallons of water or one HCF (hundred cubic feet). The changes in the Water Charges and Water Rates are based on the results of the cost of service study. Customers outside the Otay Water District, outside an Improvement District, or using temporary potable meters pay two Ɵmes this rate. 2. There is no proposed overall rate increase for January 1, 2018. However, based on a comprehensive cost of service study, there are changes in the rate structure, rates, fees, and charges. Projected rates (2019‐ 2022) are for informaƟonal purposes only, and use an inflator factor of four percent. 3. The Fixed System Charges, based on meter size and customer class, ensure that customers pay their proporƟonate share of the water system replacement, maintenance, and operaƟng expenses. The MWD & CWA Charges are based on meter size and match, in total, the cost charged by wholesale water suppliers. The changes in the fixed charges are based on the results of the cost of service study. 4. Your bill will vary based on meter size, water consumpƟon in units, and geographic locaƟon. 5. The Energy Charges represent the cost of energy required to pump each unit of water 100 feet in elevaƟon. This is charged proporƟonately for every foot of elevaƟon over 450 feet. This increase is due to increased power costs to the District. 6. The Government Fee is a per unit charge and your bill will vary based on water consumpƟon. This charge is in lieu of tax revenues paid by non-government customers. 7. Fire Service requires a separate meter and is a monthly charge based on meter size. There is no proposed rate increase for fire service on January 1, 2018. This informaƟon reflects changes to the rate structure, rates, fees, and charges. For a comprehensive lisƟng of rates, fees, and charges, please see the Otay Water District’s Code of Ordinances at otaywater.gov. MWD & CWA Charges3 by Meter Size ‐ 2018 Proposed and 2019‐2022 Projected2  Meter   Size Current 2018   Proposed  2019   Projected  2020   Projected  2021  Projected  2022   Projected  3/4" $15.00 $15.45 $16.07 $16.71 $17.38 $18.07 1" $27.84 $28.68 $29.83 $31.02 $32.26 $33.55 1 1/2" $62.96 $64.85 $67.44 $70.14 $72.95 $75.87 2" $107.08 $110.30 $114.71 $119.30 $124.07 $129.04 3" $227.75 $234.60 $243.98 $253.74 $263.89 $274.45 4" $364.72 $375.68 $390.71 $406.34 $422.59 $439.49 6" $746.59 $769.02 $799.78 $831.77 $865.04 $899.64 8" $1,205.65 $1,241.89 $1,291.57 $1,343.23 $1,396.96 $1,452.84 10" $1,735.39 $1,787.55 $1,859.05 $1,933.41 $2,010.75 $2,091.18 Meter   Size Current 2018   Proposed  2019   Projected  2020   Projected  2021  Projected  2022   Projected  3/4" $15.91 $30.40 $31.62 $32.88 $34.20 $35.56 1" $22.47 $42.93 $44.65 $46.43 $48.29 $50.22 1 1/2" $38.88 $74.28 $77.25 $80.34 $83.55 $86.90 2" $58.55 $111.85 $116.32 $120.98 $125.82 $130.85 3" $111.04 $212.13 $220.62 $229.44 $238.62 $248.16 4" $170.10 $324.98 $337.98 $351.50 $365.56 $380.18 6" $334.18 $638.44 $663.98 $690.54 $718.16 $746.88 8" $531.05 $1,014.56 $1,055.14 $1,097.35 $1,141.24 $1,186.89 10" $760.72 $1,453.33 $1,511.46 $1,571.92 $1,634.80 $1,700.19 Otay Fixed System Charges3 by Meter Size ‐ 2018 Proposed and 2019‐2022 Projected2  Other   Charges  Current 2018   Proposed  2019   Projected  2020   Projected  2021  Projected  2022   Projected  Energy Charges5 $0.44 $0.053 $0.055 $0.057 $0.059 $0.062 Government Fee6 $0.41 $0.41 $0.43 $0.44 $0.46 $0.48 Fire Service Monthly Charge7 ≤3” Meter $20.77 ≤3” Meter $20.77 ≤3” Meter $21.60 ≤3” Meter $22.60 ≤3” Meter $23.36 ≤3” Meter $24.30 ≥4” Meter $27.98 ≥4” Meter $27.98 ≥4” Meter $29.10 ≥4” Meter $30.26 ≥4” Meter $31.47 ≥4” Meter $32.73 Other Charges4Size ‐ 2018 Proposed and 2019‐2022 Projected2  ConsumpƟon   Block  2018  Proposed Current 2018   Proposed  2019   Projected  2020   Projected  2021  Projected  2022   Projected  0 ‐ 54 $5.68 55—199 $5.74 200 or more $5.81 IrrigaƟon and Commercial Agricultural Water Rates for 3/4”‐1” Meters ‐ 2018 Proposed and 2019‐2022 Projected1,2  All units $5.27 $5.48 $5.70 $5.93 $6.17 IrrigaƟon and Commercial Agricultural Water Rates for 3” Meters and larger ‐ 2018 Proposed and 2019‐2022 Projected1,2  0 ‐ 550 $5.68 551 ‐ 1,200 $5.74 1,201 or more $5.81 All units $5.27 $5.48 $5.70 $5.93 $6.17 ConsumpƟon   Block  2018  Proposed Current 2018   Proposed  2019   Projected  2020   Projected  2021  Projected  2022   Projected  IrrigaƟon and Commercial Agricultural Water Rates for 1‐1/2‐2” Meters ‐ 2018 Proposed and 2019‐2022 Projected1,2  0 ‐ 144 $5.68 145 ‐ 355 $5.74 356 or more $5.81 All units $5.27 $5.48 $5.70 $5.93 $6.17 ConsumpƟon   Block  2018  Proposed Current 2018   Proposed  2019   Projected  2020   Projected  2021  Projected  2022   Projected  Page 3 Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT IRRIGATION AND COMMERCIAL  AGRICULTURAL WATER SERVICE  Dedicated to Community Service OTAYWATER.GOV PRESORT STD U.S. POSTAGE PAID  PERMIT 700 SAN DIEGO, CA NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT IRRIGATION AND COMMERCIAL   AGRICULTURAL  WATER SERVICE  Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91978‐2004 otaywater.gov NOTICE OF PUBLIC HEARING In Connection with Proposed CHANGES TO RATES, FEES, AND CHARGES FOR RECYCLED WATER SERVICE  NOTICE IS HEREBY GIVEN that the Otay Water District (the “District”) will hold a Public Hearing on October 4, 2017, at 3:30  p.m. in the Board of Directors MeeƟng Room located at 2554  Sweetwater Springs Blvd., Spring Valley, CA 91978, to consider: (1) the adopƟon of rates, fees, and charges that apply to water billed beginning January 1, 2018; (2) the authorizaƟon, for a period of five years, for all future pass‐through increases or decreases to cover changes to rates, fees, and charges from the District’s water suppliers; and, (3) the authorizaƟon for a period of five years, overall average increases to rates, fees, and charges, in addiƟon to the pass‐through increases, not to exceed 10 percent per year, for of all costs other than pass‐through costs. These rates, fees, and charges apply to property for which you are shown as the record owner or customer of record. The purpose of the hearing is to consider all wriƩen protests against the proposed rates, fees, and charges that, if approved, will be imposed on the properƟes served by the District. The changes in the proposed rates, fees, and charges and the basis upon which it was determined is described in more detail as follows. PROPOSED RATE CHANGES  As part of the annual budget review process, the District’s Board of Directors typically proposes an overall rate increase to be implemented for January. This year the Board of Directors is proposing no overall rate increase on January 1, 2018. Even though there is no proposed overall rate increase for January 1, 2018, the District is proposing changes to the rate structure, rates, fees, and charges based on a comprehensive cost of service study completed in April 2017. These changes may cause your bill to change. The changes are reflected on page 3 of this noƟce. This study was conducted by an independent firm and proposes changes that reflect the District’s esƟmated cost of providing water service. If adopted, the proposed changes to rates, fees, and charges would take effect for water billed on or aŌer January 1, 2018, and may apply to water used as early as the beginning of December 2017. Recycled water rates, fees, and charges are based on the cost of providing water to recycled customers. To conƟnue providing reliable high quality service, the District must implement rate changes and pass‐through to its customers higher costs from its water wholesaler. Producing and distribuƟng recycled water is also costly. To help offset the costs of supplying alternaƟve water sources, the District receives financial incenƟves from its wholesale potable water suppliers, which include the Metropolitan Water District of Southern California (MWD) and the San Diego County Water Authority (CWA). Today, approximately 13 percent of the District’s water supply is made up of recycled water. The rate structure has two basic components: (1) fixed monthly charges and (2) variable monthly rates, fees, and charges which are based on water consumpƟon. Fixed fees and charges are calculated to recover the cost of operaƟng and maintaining the public system and are based on the customer class and size of the water meter serving the record owner or customer of record. The District’s System Charges is an example of a fixed charge. The variable rates, fees, and charges are consumpƟon based and include, but are not limited to, supply, treatment, and transportaƟon costs. Variable components of the bill include the Water Rate and Energy Charge. The fixed and variable components are calculated to recover the proporƟonate cost of providing the service aƩributable to each class of customer. The District will also consider authorizing, for a period of five years, passing through to customers the increased or decreased costs imposed by the District’s water suppliers including, but not limited to, MWD, CWA, and the City. If adopted, the average customer’s water rates, fees, and charges will be adjusted annually for all increased or decreased costs and charges from the District’s wholesale water suppliers. The purpose of the hearing is to consider all wriƩen protests against the proposed rates, fees, and charges that, if approved, will be imposed on properƟes served by the District. Any changes to rates, fees, and charges subsequently imposed by the District will be subject to a 30‐day prior wriƩen noƟce, but will not be subject to addiƟonal hearings or protests. In addiƟon to the wholesale pass‐through costs, the District will consider authorizing, for a period of five years, average increases in rates, fees, and charges not to exceed 10 percent per year, for all costs related to labor, benefits, materials, energy, maintenance, administraƟve expenses, as well as other operaƟonal costs of providing water service including, but not limited to, amounts required to meet bond covenants and to maintain adequate reserves and rate stability. WHY ARE YOU RECEIVING THIS NOTICE?  As the record owner or customer of record of a property idenƟfied to be subject to the imposiƟon of proposed rate, fee, or charge increases, you may submit a wriƩen protest against the proposed acƟons. Provided, however, if the idenƟfied property has more than one record owner and/or customer of record, only one wriƩen protest for the property will be counted. Each protest must be in wriƟng and include: (1) the specific rate, fee, and/or charge for which the protest is being submiƩed in opposiƟon; (2) the locaƟon of the idenƟfied property (by assessor’s parcel number or street address); and, (3) the original signature of the record owner or customer of record submiƫng the protest. Protests submiƩed by email, facsimile, or other electronic means will not be accepted. WriƩen protests may be submiƩed by mail to the Board Secretary, Otay Water District, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978, or in person at the public hearing, as long as they are received prior to the conclusion of the public hearing.  Please  idenƟfy on the front of the envelope for any protest, whether  mailed or submiƩed in person to the Board Secretary, that the  enclosed leƩer is for the Public Hearing on the Proposed Changes  to Rates, Fees, and Charges for Recycled Water Service.    At the conclusion of the public hearing, the Board of Directors will consider adopƟng the proposed acƟons as described in this noƟce. Oral comments at the public hearing will not qualify as formal protests unless accompanied by a wriƩen protest. If, at the close of the public hearing, wriƩen protests against the proposed rate increase, fees, and charges are not presented by a majority of the record owners or customers of record of the idenƟfied properƟes upon which they are to be imposed, the Board of Directors will be (Continued on page 2) Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. Page 2 authorized to adopt the proposed acƟons. If adopted, the rates, fees, and charges will apply to water billed on or aŌer January 1, 2018 and may apply to water used as early as the beginning of December 2017. This leƩer serves as a 45‐day noƟce of the hearing  on the proposed rate changes, and as noƟce of the changes for  water billed on or aŌer January 1, 2018, if adopted.   This noƟce is being provided to you by the District pursuant to the California ConsƟtuƟon ArƟcle XIII D (known as “ProposiƟon 218”). Under terms of ProposiƟon 218, the District is required to noƟfy the record owner or customer of record of proposed changes to property‐related fees such as water services. This leƩer serves as noƟce that the District will hold a public hearing to consider changes to its current water rates, fees and charges. WHY ARE WATER RATE CHANGES NECESSARY?  The proposed rate structure will provide water service at a rates, fees, and charges that are equal to the reasonable cost of providing water service. Recent California law suggests that Ɵered water rates, fees, and charges designed solely to encourage water conservaƟon, may violate the California ConsƟtuƟon as amended by ProposiƟon 218. The new structure is designed to meet all applicable legal requirements and to fairly and equitably spread the District’s costs to provide water service among all customer classes based on the costs to serve those customers. The major proposed changes to the rate structure are: (1) eliminaƟng the residenƟal conservaƟon Ɵer; (2) eliminaƟng Ɵered rates for all rate classes except residenƟal and mulƟ‐residenƟal water service; and (3) modifying the system fee from one based solely on meter size to one based on meter size and customer type. AddiƟonally, the District is a revenue‐neutral public agency that provides water service to your community. “Revenue‐neutral” means that water bills reflect only those rates, fees, and charges sufficient to support water service. WHAT DO WATER RATES FUND?  In the District, each end user pays his or her fair share of the cost of purchasing water, energy or pumping costs, labor and benefits, materials, chemicals used in water treatment, administraƟve expenses, operaƟons, construcƟon and maintenance of the public water system and faciliƟes. This also includes amounts required to meet bond covenants and to maintain adequate reserves and rate stability. The District is a non‐profit public agency, it does not make a profit from providing water service and it cannot operate at a loss. WHY ARE WHOLESALER WATER SUPPLIERS RAISING THEIR RATES? Wholesale suppliers raise their rates as they work to obtain new and more reliable supplies of water. This includes more reliable emergency supplies, agricultural to urban water transfers, expansion of existing reservoirs, pipeline relining projects, new water treatment plants, and alternative supplies including seawater desalination and recycled water. In 2016, for instance, the City of San Diego (the “City”) increased the price of recycled water 116 percent. The District buys two‐thirds of its recycled water supplies from the City and this cost had to be passed along to the District’s recycled water customers. At times potable water is used to supplement recycled water demand, therefore the cost of potable water is included as a factor in the setting of recycled rates as well. The District works continually to reduce internal costs to absorb rate increases from suppliers. The District recognizes and is sensitive to the impact the higher cost of water has on its customers. In an effort to minimize the impact of these cost increases the District has reduced its number of full‐time equivalent (FTE) employees by 23 percent since 2007. The District is committed to becoming as efficient as possible, providing the services its customers expect and rely upon, while continuing to be one of the lower cost water service providers in San Diego County. RELIABILITY AND SUPPLY DIVERSIFICATION  Water is essential to our region’s quality of life. Our economy depends on it. Families and businesses cannot survive without it. Unfortunately for San Diego County residents, our region does not benefit from an abundant natural supply of water. The county receives an average of 10 inches of rainfall per year, meeting only five percent of local demand. Because of our semi‐arid climate, approximately 85 percent of the water used locally is imported from Northern California and the Colorado River. Not only is the cost of importing water becoming increasingly costly, but population growth, drought, environmental regulations, litigation, competition for a scarce resource, and increased power costs are driving the price we pay higher. San Diego County’s wholesale and retail water agencies recognized the region was highly dependent on imported water during a severe drought that occurred in the late 1980s and early 1990s. They have continued to diversify the region’s water supply and ensure a reliable system, increasing water independence, providing for future population and economic needs, and reducing the likelihood of a future water shortage. Since then, major initiatives have been undertaken to develop both new supplies and improved reliability. At the regional level, recycled water plays an important part in the water portfolio. For every acre foot of recycled water used, an acre foot of water does not have to be imported from Northern California and the Colorado River, or purchased from the CWA’s Carlsbad Desalination plant, creating more water for everyone. For the District, nearly 13 percent of all water sold is recycled water. WHAT CAN I DO TO SAVE MONEY? Customers interested in learning ways in which they can reduce their water usage and therefore minimize the effects of the rising cost of wholesalers’ water supplies on their family’s budget, can visit the District’s conservaƟon web page at otaywater.gov. AddiƟonally, the Water ConservaƟon Garden located on the campus of Cuyamaca Community College in Rancho San Diego is open to the public and offers various conservaƟon exhibits, programs and classes. For more about the Garden, visit thegarden.org. For informaƟon about the District, please visit otaywater.gov, contact us via email at info@otaywater.gov, or call us at 619‐670‐2222. (Continued from page 1) Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. Page 3 This informaƟon reflects changes to the rate structure, rates, fees, and charges. For a comprehensive lisƟng of rates, fees, and charges please see the Otay Water District’s Code of Ordinances at otaywater.gov. Meter  Size Current 2018  Proposed  2019  Projected  2020  Projected  2021  Projected  2022  Projected  3/4" $15.91 $31.11 $32.36 $33.65 $35.00 $36.40 1" $22.47 $43.94 $45.70 $47.53 $49.43 $51.41 1 1/2" $38.88 $76.04 $79.08 $82.24 $85.53 $88.95 2" $58.55 $114.50 $119.08 $123.84 $128.80 $133.95 3" $111.04 $217.15 $225.84 $234.87 $244.27 $254.04 4" $170.10 $332.67 $345.97 $359.81 $374.20 $389.17 6" $334.18 $653.54 $679.69 $706.87 $735.15 $764.56 8" $531.05 $1,038.56 $1,080.11 $1,123.31 $1,168.24 $1,214.97 10" $760.72 $1,487.72 $1,547.23 $1,609.12 $1,673.48 $1,740.42 Otay Fixed System Charge2,3 - IrrigaƟon by Meter Size  Recycled IrrigaƟon (3/4” ‐ 1” Meter)7  ConsumpƟon Block1 2018 Proposed1 Current 2018 Proposed 2019 Projected 2020 Projected 2021 Projected 2022 Projected  0 ‐ 32 $4.85 33— 75 $4.92 76 or more $4.99 Recycled IrrigaƟon (1.5” ‐ 2” Meter)7  0 ‐ 130 $4.85 131—325 $4.92 326 or more $4.99 Recycled IrrigaƟon (3” ‐ 4” Meter)7  0 ‐ 440 $4.85 441 ‐ 1,050 $4.92 1,051 or more $4.99 Recycled IrrigaƟon (6” or Larger Meter)7   0 ‐ 4,000 $4.85 4,001 ‐ 10,000 $4.92 10,001 or more $4.99 Recycled Commercial (<10” Meter)  0 ‐ 173 $3.53 174 ‐ 831 $3.60 832 or more $3.65 0 – 7,426 $3.53 7,427 ‐ 14,616 $3.60 14,617 or more $3.65 Recycled Commercial (10” or Larger Meter)  All units ‐ $4.26 $4.43 $4.60 $4.79 $4.98 All units ‐ $4.26 $4.43 $4.60 $4.79 $4.98 All units ‐ $4.26 $4.43 $4.60 $4.79 $4.98 All units ‐ $4.26 $4.43 $4.60 $4.79 $4.98 All units ‐ $3.01 $3.13 $3.25 $3.38 $3.52 All units ‐ $3.01 $3.13 $3.25 $3.38 $3.52 2018 Proposed and 2019‐2022 Projected Water Rates1,2  Other Charges  Current 2018 Proposed 2019 Projected 2020 Projected 2021 Projected 2022 Projected  Energy Charges5 $0.044 $0.053 $0.055 $0.057 $0.059 $0.062 Government Fee6 $0.41 $0.41 $0.43 $0.44 $0.46 $0.48 Other Charges4 - 2018 Proposed and 2019‐2022 Projected2  Footnotes  1. Recycled water rates are based on meter size, customer type, and the number of recycled water units used each month. One unit of recycled water equals 748 gallons of water or one HCF (hundred cubic feet). The changes in the Water Charges and Water Rates are based on the results of the cost of service study. 2. There is no proposed overall rate increase for January 1, 2018. However, based on a comprehensive cost of service study, there are changes in the rate structure, rates, fees, and charges. Projected rates (2019‐2022) are for informaƟonal purposes only, and use an inflator factor of four percent. 3. The Fixed System Charges, based on meter size and customer class, ensure that customers pay their proporƟonate share of the water system replacement, maintenance, and operaƟng expenses. The changes in the fixed charges are based on the results of the cost of service study. 4. Your bill will vary based on meter size, water consumpƟon in units, and geographic locaƟon. 5. The Energy Charges represent the cost of energy required to pump each unit of water 100 feet in elevaƟon. This is charged proporƟonately for every foot of elevaƟon over 450 feet. The increase is due to increased power costs charged by the District’s power supplier. 6. The Government Fee is a per unit charge and your bill will vary based on water consumpƟon. This charge is a per unit charge in lieu of tax revenues paid by non‐government customers. 7. Customers outside the Otay Water District, outside an Improvement District, or using temporary recycled meters pay two Ɵmes this rate. Meter Size Current 2018 Proposed 2019 Projected 2020 Projected 2021 Projected 2022 Projected  3/4" $15.91 $36.85 $38.33 $39.86 $41.45 $43.11 1" $22.47 $52.04 $54.13 $56.29 $58.54 $60.88 1 1/2" $38.88 $90.06 $93.67 $97.41 $101.31 $105.36 2" $58.55 $135.63 $141.05 $146.69 $152.56 $158.66 3" $111.04 $257.21 $267.49 $278.19 $289.32 $300.89 4" $170.10 $394.01 $409.77 $426.16 $443.20 $460.93 6" $334.18 $774.07 $805.04 $837.24 $870.73 $905.56 8" $531.05 $1,230.08 $1,279.29 $1,330.46 $1,383.68 $1,439.02 10" $760.72 $1,762.08 $1,832.56 $1,905.86 $1,982.10 $2,061.38 Otay Fixed System Charge2,3 - Commercial by Meter Size  Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT   RECYCLED WATER SERVICE  Dedicated to Community Service OTAYWATER.GOV PRESORT STD U.S. POSTAGE PAID  PERMIT 700 SAN DIEGO, CA Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91978‐2004 otaywater.gov NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT   RECYCLED WATER SERVICE  NOTICE OF PUBLIC HEARING In Connection with Proposed CHANGES TO RATES, FEES, AND CHARGES FOR WATER SERVICE  This noƟce contains important informaƟon about water rates.  Otay Water District (the “District”) is noƟfying all property owners  within the District’s service area of a public hearing in connecƟon  with changes to rates, fees, and charges for water service. The  District is a public agency that can provide water service to your  property.   NOTICE IS HEREBY GIVEN that the Otay Water District (the  “District”) will hold a Public Hearing on October 4, 2017, at 3:30  p.m. in the Board of Directors MeeƟng Room located at 2554  Sweetwater Springs Blvd., Spring Valley, CA 91978, to consider: (1)  the adopƟon of rates, fees, and charges that apply to water billed  beginning January 1, 2018; (2) the authorizaƟon, for a period of five  years, for all future pass‐through increases or decreases to cover  changes to rates, fees, and charges from the District’s water  suppliers; and, (3) the authorizaƟon, for a period of five years,  overall average increases to rates, fees, and charges, in addiƟon to  the pass‐through increases, not to exceed 10 percent per year, for  all costs other than pass‐through costs. These rates, fees, and  charges apply to property for which you are shown as the record  owner or customer of record. The purpose of the hearing is to  consider all wriƩen protests against the proposed rates, fees, and  charges that, if approved, will be imposed on properƟes served by  the District. The changes in the proposed rates, fees, and charges   and the basis upon which they were determined is described in  more detail as follows.  PROPOSED RATE CHANGES   As part of the annual budget review process, the District’s Board  of Directors typically proposes an overall rate increase to be  implemented for January. This year the Board of Directors is  proposing no overall rate increase on January 1, 2018.    Even though there is no proposed overall rate increase for  January 1, 2018, the District is proposing changes to the rate  structure, rates, fees, and charges based on a comprehensive cost  of service study completed in April 2017. The study was conducted  by an independent firm and proposes changes that reflect the  District’s esƟmated cost of providing water service.  If adopted, the  proposed changes to rates, fees, and charges would  take effect for  water billed on or aŌer January 1, 2018, and may apply to water  used as early as the beginning of December 2017.       The rate structure has two basic components: (1) fixed monthly  charges and (2) variable monthly rates, fees, and charges, which are  based on water consumpƟon. The fixed fees and charges are  calculated to recover the cost of operaƟng and maintaining the  public water system and are based on the customer class and size of  the water meter serving the record owner or customer of record.  Fixed charges include the Metropolitan Water District of Southern  California (MWD) and San Diego County Water Authority (CWA) fee,  and the District’s System Charge. The variable rates, fees, and  charges are consumpƟon based and include, but are not limited to,  supply, treatment, and transportaƟon costs. Variable rates, fees,  and charges generally impose greater charges as the level of  consumpƟon increases. Variable components of the bill include the  Water Rate and Energy Charge. The fixed and variable components  are calculated to recover the proporƟonate cost of providing the  service aƩributable to each class of customer.   The District will also consider authorizing, for a period of five  years, passing through to customers the increased or decreased  costs imposed by the District’s water suppliers including, but not  limited to MWD, CWA, and the City of San Diego. If adopted, the  average customer’s water rates, fees, and charges will be adjusted  annually for all increased or decreased costs and charges from the  District’s wholesale water suppliers. The purpose of the hearing is  to consider all wriƩen protests against the proposed rates, fees, and  charges that, if approved, will be imposed on properƟes served by  the District. Any changes to rates, fees, and charges subsequently  imposed by the District will be subject to a 30‐day prior wriƩen  noƟce, but will not be subject to addiƟonal hearings or protests.   In addiƟon to the wholesale pass‐through costs, the District will  consider authorizing, for a period of five years, average increases in  rates, fees, and charges not to exceed 10 percent per year, for all  costs related to labor, benefits, materials, energy, maintenance,  administraƟve expenses, and other operaƟonal costs of providing  water service including, but not limited to, amounts required to  meet bond covenants and to maintain adequate reserves and rate  stability.  WHY ARE YOU RECEIVING THIS NOTICE?    As the record owner of a property idenƟfied to be subject to the  imposiƟon of proposed rate, fee, or charge increases, you may  submit a wriƩen protest against the proposed acƟons. Provided,  however, if the idenƟfied property has more than one record  owner, only one wriƩen protest for the property will be counted.  Each protest must be in wriƟng and include: (1) the specific rate,  fee, and/or charge for which the protest is being submiƩed in  opposiƟon; (2) the locaƟon of the idenƟfied property (by assessor’s  parcel number or street address); and, (3) the original signature of  the record owner submiƫng the protest. Protests submiƩed by  email, facsimile, or other electronic means will not be accepted.  WriƩen protests may be submiƩed by mail to the Board Secretary,  Otay Water District, 2554 Sweetwater Springs Blvd., Spring Valley,  CA 91978, or in person at the public hearing, as long as they are  received prior to the conclusion of the public hearing. Please  idenƟfy on the front of the envelope for any protest, whether  mailed or submiƩed in person to the Board Secretary, that the  enclosed leƩer is for the Public Hearing on the Proposed Rates,  Fees, and Charges for Water Service.     At the conclusion of the public hearing, the Board of Directors will  consider adopƟng the proposed acƟons as described in this noƟce.  Oral comments at the public hearing will not qualify as formal  protests unless accompanied by a wriƩen protest. If, at the close of  the public hearing, wriƩen protests against the proposed rate  increase, fees, and charges are not presented by a majority of the  record owners of the idenƟfied properƟes upon which they are to  be imposed, the Board of Directors will be authorized to adopt the  proposed acƟons. If adopted, the rates, fees, and charges will apply  to water service billed on or aŌer January 1, 2018 and may apply to  water service used as early as the beginning of December 2017. This  leƩer serves as a 45‐day noƟce of the hearing on the proposed  rate changes, and as noƟce of the changes for water service billed  on or aŌer January 1, 2018, if adopted.   This noƟce is being provided to you by the District pursuant to  the California ConsƟtuƟon ArƟcle XIII D (known as “ProposiƟon  218”). Under terms of ProposiƟon 218, the District is required to  noƟfy the record owner of proposed changes to property‐related  rates, fees, and charges such as water service. This leƩer serves as  noƟce that the District will hold a public hearing to consider  changes to its current water rates, fees, and charges.  Si requiere asistencia en español con referencia a esta notificación, favor de llamar al 619-670-2222. NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT   WATER SERVICE  Dedicated to Community Service OTAYWATER.GOV  PRESORT STD  U.S. POSTAGE  PAID  PERMIT 700  SAN DIEGO, CA Otay Water District  2554 Sweetwater Springs Blvd.  Spring Valley, CA 91978‐2004  otaywater.gov  NOTICE OF PUBLIC HEARING  IMPORTANT INFORMATION ABOUT   WATER SERVICE  DRAFT FINAL REPORT Otay Water District Review of the District’s Water Rates September 2017 hdrinc.com 500 108th Ave NE, Suite 1200, Bellevue, WA 98004 T 425-450-6200 September 6, 2017 Mr. Kevin Koeppen Controller and Budgetary Services Finance Manager Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, California 91978-2004 Subject: Review of Otay Water District’s Potable and Non-Potable Water Rates Dear Mr. Koeppen: HDR Engineering, Inc. (HDR) is pleased to present to the Otay Water District (District) the draft final report of HDR’s review of the District’s potable and non-potable (recycled) water rates. The objective in conducting this report was to review and update the District’s current potable and recycled water rates. To that end, HDR has developed a technical analysis to support cost- based water rates for the District. As you are aware, the District is legally required under Proposition 218 to establish cost-based rates. This study was developed utilizing industry recognized water rate setting principles and methodologies. This report provides the basis for developing and implementing potable and non-potable/recycled water rates which are cost-based, equitable and defensible to the District’s customers. We appreciate the assistance provided by the District’s management team in the development of this study. More importantly, HDR appreciates the opportunity to provide these technical and professional services to the District. Sincerely yours, HDR Engineering, Inc. Tom Gould Vice President HDR Business Leader for Finance and Rates i Table of Contents i Otay Water District – Review of the District’s Water Rates Executive Summary Introduction .................................................................................................................. 1 Overview of the District’s Current Rates ........................................................................ 1 Overview of the Rate Study Process .............................................................................. 2 Development of the Revenue Requirement ................................................................... 2 Allocation to Potable and Non-Potable Costs ................................................................. 3 Potable Water Cost of Service Analysis .......................................................................... 4 Development of Cost-Based Potable Water Rates ......................................................... 6 Residential Potable Water Rate Design ................................................................ 7 Development of Cost-Based Recycled Water Rates........................................................ 9 Proposition 218 and the District’s Potable and Recycled Water Rates ......................... 10 1 Introduction and Overview 1.1 Introduction ...................................................................................................... 11 1.2 Tiered Pricing, Conservation and Efficient Use ................................................... 11 1.3 Overview of the District’s Current Rates ............................................................ 12 1.4 Overview of the Rate Study Process .................................................................. 12 1.5 Organization of the Study .................................................................................. 13 1.6 Summary ........................................................................................................... 13 2 Overview of Water Rate Setting Principles 2.1 Introduction ...................................................................................................... 14 2.2 Generally Accepted Rate Setting Principles ........................................................ 14 2.3 Revenue Requirements ..................................................................................... 14 2.4 Analyzing Cost of Service ................................................................................... 15 2.5 Designing Water Rates ...................................................................................... 16 2.6 Economic Theory and Rate Setting .................................................................... 17 2.7 Summary ........................................................................................................... 17 3 Development of the Revenue Requirement Analysis 3.1 Introduction ...................................................................................................... 18 3.2 Development of the Revenue Requirement ....................................................... 18 3.3 Allocation to Potable and Non-Potable Costs ..................................................... 21 3.4 Summary ........................................................................................................... 23 Table of Contents ii Table of Contents ii Otay Water District – Review of the District’s Water Rates 4 Potable Water Cost of Service Analysis 4.1 Introduction ...................................................................................................... 24 4.2 Objectives of a Cost of Service Study ................................................................. 24 4.3 Determining the Customer Classes of Service .................................................... 25 4.4 General Cost of Service Procedures ................................................................... 25 4.4.1 Functionalization of Costs ..................................................................... 25 4.4.2 Classification of Costs ........................................................................... 25 4.4.3 Development of Allocation Factors ....................................................... 27 4.5 Functionalization and Classification of Plant in Service ...................................... 28 4.6 Functionalization and Classification of Potable Operating Expenses .................. 30 4.7 Major Assumptions of the Cost of Service Study ................................................ 31 4.8 Summary Results of the Cost of Service Analysis ............................................... 32 4.9 Summary of the Potable Average Unit Costs...................................................... 33 4.10 Summary ........................................................................................................... 36 5 Development of Potable Water Rate Designs 5.1 Introduction ...................................................................................................... 37 5.2 Rate Design Criteria and Considerations ............................................................ 37 5.3 Development of Cost-Based Water Rates .......................................................... 38 5.4 Development of the Potable Water Rate Designs .............................................. 39 5.4.1 Determination of Sizing and Number of Tiers ........................................... 39 5.4.2 Establishing the Cost-Basis for the Pricing Tiers ........................................ 40 5.5 Development of the Unit Costs for Potable Water Rate Designs ........................ 41 5.5.1 Base Allocation Factor .............................................................................. 42 5.5.2 Peak Day Extra-Capacity Allocation Factor ............................................... 45 5.5.3 Fixed Monthly Meter Charges .................................................................. 48 5.5.4 CWA/MWD Charges ................................................................................. 50 5.5.5 Energy Charges ........................................................................................ 50 5.6 Review of the Potable Rate Design Structures ................................................... 51 5.6.1 Residential Rate Design Structure ............................................................ 51 5.6.2 Multi-Residential Rate Design Structure ................................................... 54 5.6.3 Commercial Rate Design Structure ........................................................... 56 5.6.4 Irrigation Rate Design Structure ............................................................... 58 5.7 Energy Fees ....................................................................................................... 60 5.8 Summary of the Level of the Rate Revenues ...................................................... 60 5.9 Summary of the Potable Rate Study .................................................................. 61 iii Table of Contents iii Otay Water District – Review of the District’s Water Rates 6 Development of Recycled Water Rate Designs 6.1 Introduction ...................................................................................................... 62 6.2 Recycled Water Revenue Requirement.............................................................. 62 6.3 Recycled Water Cost of Service Analysis ............................................................ 63 6.4 Recycled Water Rate Designs ............................................................................ 64 6.4.1 Recycled Commercial Water Rates ........................................................... 64 6.4.2 Recycled Irrigation Water Rates ............................................................... 66 6.5 Summary ........................................................................................................... 67 Technical Appendix A – Potable Water Rate Analysis Technical Appendix B – Recycled Water Rate Analyses Executive Summary 1 Otay Water District – Review of the District’s Water Rates Introduction HDR Engineering, Inc. (HDR) was retained by the Otay Water District (District) to review the District’s potable and non-potable (i.e., recycled) water rates and provide cost-based rates for adoption by the District. More specifically, the District requested that HDR review the District’s tiered rates in the context of the recent court decisions interpreting Proposition 218 and the need to continue to maintain cost-based water rates. The State of California has certain well established legal constraints regarding utility ratemaking, of which California Constitution article XIII D, section 6 (commonly referred to as “Proposition 218”) is at the forefront. At its very core, Proposition 218 requires a water (and sewer) utility to establish cost-based rates for the services provided. At the time of the last comprehensive water rate study conducted for the District in 2013, the technical analysis was structured and developed to comply with the requirements of Proposition 218, as they were known and understood at that time. However, since the completion and adoption of the District’s rates in 2013, additional court cases within California have further clarified the issue of defining a “cost-based” rate structure which meets the legal requirements of Proposition 218. Overview of the District’s Current Rates The District currently has in place potable and recycled water rates. The potable water rates are segregated by customer classes of service; residential, multi-residential, commercial and irrigation. Each of these rates is a tiered rate structure (increasing price per unit with increasing consumptive use) and the size of each tier (volume of water included within the tier) varies by class of service and by meter size. The current structure for irrigation and commercial customers has very little difference in the pricing of tiers, which more closely resembles a uniform rate structure (i.e., the same price per unit, regardless of level of consumption). The use of a tiered rate structure in this manner adds a level of complexity to the District’s rates with no discernible benefit from a customer equity or conservation perspective. Given that, this study has been developed to consider a more simplified approach to the District’s rate structures, while still maintaining equity and the cost-basis for each rate structure. The District’s recycled water rates, for recycled irrigation and recycled commercial customers, are similar in structure to the potable water rates for irrigation and commercial customers. Similar to the potable water rate structures, HDR concluded that the recycled water rates could also be simplified by collapsing the tiers with little impact to equity, while enhancing the cost- basis for the rates. Executive Summary “At its very core, Proposition 218 requires a water (and sewer) utility to establish cost-based rates for the services provided.” Executive Summary 2 Otay Water District – Review of the District’s Water Rates Overview of the Rate Study Process A comprehensive water rate study uses three interrelated analyses to address the adequacy and equity of a utility’s rates. These three analyses are a revenue requirement analysis, a cost of service analysis, and a rate design analysis. These three analyses are illustrated below in Figure ES-1. Figure ES–1 Overview of the Comprehensive Water Rate Analyses The above framework for reviewing and evaluating the District’s water rates was utilized in the development of this study. Development of the Revenue Requirement The revenue requirement analysis establishes the total overall costs of the water utility, and takes into consideration both the utility’s operating and capital costs, along with any other prudent financial planning criteria (e.g. debt service coverage, adequate reserve levels, etc.). For this study, the revenue requirement was developed for the FY 2016/17 time period (i.e., FY 2017 budget). The revenue requirement analysis was derived from the District’s financial planning/rate model. For purposes of budgeting, the District uses a separate and distinct financial planning/rate model. Given that, the FY 2017 revenue and expenses, as shown within this report, were developed by the District and provided to HDR. Provided below in Table ES – 1 is a summary of the District’s revenue requirement analysis. Revenue Requirement Analysis Cost of Service Analysis Rate Design Analysis Compares the sources of funds (revenues) to the expenses of the utility to determine the overall adjustment to rates Allocates the total revenue requirements to the various customer classes of service in a “fair and equitable" manner Design cost-based rates using the results of the revenue requirement and cost of service analyses “The revenue requirement analysis establishes the total overall costs of the water utility, and takes into consideration both the utility’s operating and capital costs, along with any other prudent financial planning criteria.” Executive Summary 3 Otay Water District – Review of the District’s Water Rates Table ES – 1 Summary of the District’s FY 2016/17 Revenue Requirement Analysis ($1,000) [1] Revenue Requirement Components Total ($1,000) Revenues - Total Rate Revenues [2] $77,430 Miscellaneous Revenues 9,777 Total Revenues $87,207 Expenses - O&M Expenses (including water costs) $77,441 Rate Funded Capital 3,347 Debt Service 7,288 Change in Working Capital (868) Total Revenue Requirement $87,207 Balance/Deficiency of Funds $0 [1] – The detailed revenue requirement analysis can be found on Table 3-2 and Exhibit 1 of the Technical Appendix [2] – Rate Revenues are a blend of the rates implemented March 1, 2016 and those implemented January 1, 2017; final rate designs are based on allocated costs The major expense item for the District is the cost of purchased water supply which is approximately 57% of the District’s total revenue requirement. A more detailed discussion of the development of the revenue requirements can be found in Section 3 of this report. It should also be understood that the total revenue requirement shown in Table ES-1 contains both potable and non-potable costs. Given that, the next step of the analysis was to allocate the total revenue requirement between potable and non-potable costs. Allocation to Potable and Non-Potable Costs The total revenue requirements shown in Table ES-1 contain revenues and expenses which are related to potable and non-potable (recycled) water service. In order to analyze the cost-basis of the potable and non-potable rates, the revenues and expenses for each type of water service must be segregated or allocated accordingly. The allocation of the total revenue requirement between potable and non-potable costs was generally provided within the District’s accounting system, along with the District’s financial planning and rate model. The vast majority of the costs are accounted for between these two types of services. A more detailed discussion of this allocation process can be found in Section 3.3 of this report. Provided below in Table ES-2 is a summary of the allocation of the total revenue requirement for FY 2016/17 between the potable and non-potable (recycled) utilities. Executive Summary 4 Otay Water District – Review of the District’s Water Rates Table ES – 2 Summary of the District’s FY 2016/17 Revenue Requirement Analysis Allocated Between Potable and Non-Potable Utilities ($1,000) [1] Revenue Requirement Components Total ($1,000) Potable ($1,000) Non-Potable ($1,000) Revenues - Total Rate Revenues [2] $77,430 $70,153 $7,277 Miscellaneous Revenues 9,777 8,145 1,632 Total Revenues $87,207 $78,298 $8,909 Expenses - O&M Expenses $77,441 $71,281 $6,160 Rate Funded Capital 3,347 2,745 602 Debt Service 7,288 6,095 1,192 Change in Working Capital (868) (1,822) 954 Total Revenue Requirement $87,207 $78,298 $8,909 Balance/Deficiency of Funds $0 $0 $0 [1] – The detailed revenue requirement analysis can be found on Table 3-3 and Exhibit 1 of the Technical Appendix [2] – Rate Revenues are a blend of the rates implemented March 1, 2016 and those implemented January 1, 2017; final rate designs are based on allocated costs Within the cost of service analysis, each of the individual cost totals (potable and non-potable) will be allocated to the various customer classes of service. For the potable water system the total potable water costs of $78.3 million will be equitably allocated to the potable water customers. Similar to the potable water analysis, the non-potable (recycled) water costs will also be equitably allocated to the non-potable water customers. Potable Water Cost of Service Analysis The potable water cost of service analysis is concerned with the equitable allocation of the total potable water revenue requirement between the various potable water customer classes of service (e.g., residential, multi-residential, commercial and irrigation). In keeping with generally accepted cost of service principles, the previously developed potable water revenue requirement was utilized in the potable water cost of service analysis. There are two primary objectives in conducting a potable water cost of service analysis: Executive Summary 5 Otay Water District – Review of the District’s Water Rates x Equitably allocate the District’s potable water revenue requirement among the customer classes of service, and x Derive average unit costs (i.e., cost-based rates) for subsequent rate designs The objectives of the cost of service analysis are different from determining a revenue requirement. As noted in the previous section, a revenue requirement analysis determines the utility’s overall financial needs, while the cost of service analysis determines the fair and equitable manner to collect the revenue requirement. The results of the potable water cost of service analysis determines the average unit costs which are used in the development of the revised cost-based potable water rate designs. A cost of service analysis utilizes a three-step approach to review costs. These steps take the form of functionalization, classification, and allocation. The approach used for the District’s study reflects generally accepted cost of service methodologies as outlined in the American Water Works Association (AWWA) M1 manual. Functionalization is the arrangement of expenses and plant assets data by major operating functions (e.g., supply, transmission, storage, distribution). Within this study, there was a limited amount of functionalization of the cost data since the District’s cost data was already functionalized within the District’s system of accounts. The second analytical task performed in a water cost of service study is the classification of the costs. The classification of costs examines why the expenses were incurred or what type of need is being met (e.g. average flow, peak use flow, customer-related, etc.)1. Once the classification process is complete, and the customer groups have been defined, the various classified costs were equitably allocated to each customer group in a proportional manner. In developing the District’s potable water cost of service analysis, the District’s data and information were the primary inputs. Table ES – 3 provides a summary of the level of potable revenues to be collected from potable water rates. Table ES - 3 Summary of the District’s FY 2016/17 Revenue Requirement to be Collected From Potable Rate Revenues ($1,000) Revenue Requirement Components Total ($1,000) Total Revenue Requirement $78,298 Less: Miscellaneous Potable Water Revenues (8,145) Balance to be Collected From Potable Water Rates $70,153 1 A more detailed discussion of the classification process can be found in Section 4.4.2 “The results of the potable water cost of service analysis determines the average unit costs which are used in the development of the revised cost-based potable water rate designs.” Executive Summary 6 Otay Water District – Review of the District’s Water Rates For the District’s potable cost of service analysis, the revenue requirement for FY 2016/17 was functionalized, classified, and then equitably allocated. Provided below in Table ES – 4 is a summary of the potable water cost of service analysis. Table ES – 4 Summary of the Potable Revenue Requirement Allocated to the Various Potable Water Customer Classes of Service ($1,000) [1] Customer Class of Service Present Rate Revenues ($1,000) [1] Allocated Revenue Requirement ($1,000) Bal./(Defic.) of Funds ($1,000) % Change in Rates Residential $40,665 $40,408 $258 0.6% Multi-Residential 7,832 7,706 127 1.6% Commercial 9,145 9,152 (8) 0.1% Irrigation 10,347 10,693 (346) 3.3% Energy Fees 2,164 2,195 (31) 1.4% Total Net Revenue Requirement $70,153 $70,153 $0 0.0% [1] – Rate Revenues are a blend of the rates implemented March 1, 2016 and those implemented January 1, 2017; final rate designs are based on allocated costs (i.e., allocated revenue requirement) The above results indicate that the customer classes of service are at or near their cost of service. This means that the District’s overall revenues collected from each customer class of service is as close to their “cost of service” as reasonably possible. In making this statement, it is important to note that a cost of service study is an analysis of a point in time and the District’s costs, customer consumption patterns and total usage change over time. In that respect, a cost of service is a static analysis of a dynamic and ever-changing situation. The recent drought in California has clearly pointed this fact out. While Table ES–4 summarized the results of the cost of service analysis by customer class of service, the cost of service also contains sufficient detail to understand costs by fixed charges and by consumptive pricing tier. Contained within Section 4.9 of this report is a detailed table (Table 4-4) which summarizes the potable cost of service average unit costs (i.e., $/CCF, $/customer/month). The study, as developed herein, has also equitably allocated costs to consumption tiers for residential and multi-residential customers. This will provide the cost- basis for the tiered residential and multi-residential rate designs. The development of the average unit costs also provides the cost-basis for the fixed monthly charges of the District. Development of Cost-Based Potable Water Rates Developing cost-based and equitable rates is of paramount importance in developing the revised and restructured water rates. While always a key consideration in developing rates, meeting the legal requirements, and documenting the steps taken to meet the requirements, has been in the forefront with the recent legal challenges in the State of California on water rates. Given this, the District’s revised water rates have been developed to meet the legal Executive Summary 7 Otay Water District – Review of the District’s Water Rates requirements of California constitution article XIII D, section 6 (Article XIII D). A key component of Article XIII D is the development of rates which reflect the cost of providing service and are proportionally allocated among the various customer classes of service. HDR would point out that there is no single prescribed methodology for equitably assigning costs to the various customer groups. The American Water Works Association (AWWA) M1 Manual clearly delineates various methodologies which may be used to establish cost-based rates. Article XIII D does not prescribe a particular methodology for establishing cost-based rates. Consequently, HDR developed the District’s revised water rates based on the methodologies provided in the AWWA M1 Manual to meet the requirements of Article XIII D, along with recent legal decisions to provide an administrative record of the steps taken to establish the District’s water rates. Section 5 of this report provides a detailed discussion of the development of the cost-based potable water rate designs for the residential, non-residential, commercial, and irrigation customers. The District currently has increasing block or tiered rate structures for each of their potable water customer classes of service (i.e., rate schedules). Increasing block rates or tiered rates charge increasing volumetric rates for increasing consumption. In order to establish a tiered rate structure one must define the number and size of the consumption blocks and then the pricing of each block. This study is primarily focused on the pricing associated with the blocks, but a limited review was undertaken of the number and size of the consumption blocks for each of the District’s rate schedules. In providing this review, it was determined that the District should eliminate the residential “conservation tier” and move to a three (3) tier structure. For the commercial and irrigation customers, movement to a uniform rate structure was determined to be a more appropriate rate structure. Section 5.4.1 of this report provides a more detailed discussion of reasoning and basis for these changes. Finally, Section 5.5 of this report has provided a detailed discussion of the development of the average unit costs which provided the cost-basis for the revised cost-based rate designs contained herein. Residential Potable Water Rate Design The District’s current residential rate structure contains a fixed monthly system fee, a CWA/MWD fee, and usage (consumption) charges. The current residential rate’s usage charges contains four pricing tiers, with the first tier specifically designed to encourage conservation of water. Provided below in Table ES-5 is a summary of the present and the revised cost-based residential potable water rate structure. “A key component of Article XIII D is the development of rates which reflect the cost of providing service and are proportionally allocated among the various customer classes of service.” Executive Summary 8 Otay Water District – Review of the District’s Water Rates Table ES–5 Review of the District’s Residential Rate Design Current Residential Rate Revised Cost-Based Residential Rate Monthly System Fee [1] - Monthly System Fee - 3/4” $15.91 3/4” $17.24 1” 22.47 1” 24.36 1-1/2” 38.88 1-1/2” 42.15 2” 58.55 2” 63.48 Plus: CWA/MWD Fee [1] - Plus: CWA/MWD Fee - 3/4” $15.00 3/4” $15.20 1” 27.84 1” 28.21 1-1/2” 62.96 1-1/2” 63.80 2” 107.08 2” 108.51 Plus: Usage Charges Plus: Usage Charges 1 – 5 [2] $2.53/CCF 1 – 10 $3.03/CCF 6 – 10 $3.95/CCF 11 – 22 $5.40/CCF 11 – 22 $5.13/CCF 23 – Over $6.97/CCF 23 – up $7.90/CCF [1] – Current rate schedule has fees for 3” through 10” meters. Largest residential meter currently installed is a 2” meter. [2] – Customers whose total consumption is 10 units or less per month shall receive a benefit of a lower rate for units 1 – 5. One unit (CCF) equals 748 gallons. The revised cost-based residential rate has simplified the rate structure and used the average unit pricing from the cost of service analysis to establish cost-based pricing. The consumptive units (usage charges) have eliminated the “conservation tier” (1 – 5 CCF at $2.53/CCF) in the existing rate structure and simplified the rate structure to three tiers, using the pricing from the cost of service average unit cost analysis. The revised cost-based rate structure has also reduced the highest residential tier price from $7.90/CCF to $6.97/CCF. The recent Capistrano decision did not find that tiered rates were illegal under Proposition 218, but that each pricing tier must have a cost-basis. Given that, the District’s revised cost-based residential rate utilizes the cost-based pricing developed within the average unit costs. “The recent Capistrano decision did not find that tiered rates were illegal under Proposition 218, but that each pricing tier must have a cost-basis.” Executive Summary 9 Otay Water District – Review of the District’s Water Rates Understanding the impact to residential customers from these changes can be determined within a bill comparison. Shown to the left is the residential bill comparison for the current and revised cost-based rates. The bill comparison is used to compare the present residential bill to the revised residential bills at various levels of consumption. This particular bill comparison assumes a residential customer with a 3/4” meter. The bill impact for a customer will vary somewhat if the customer has a larger meter size than a 3/4” meter. The bill comparison clearly illustrates that the bill impacts to residential customers will vary as a result of the movement to the revised residential rates. Low-use customers will see a small increase in their monthly bill as a result of the increase in the fixed charges and the elimination of the “conservation tier”. Average use customers may see little change in their total annual bill. In reviewing the residential bill comparisons, the blue bar is the average residential use. Finally, high-use customers will see a reduction in their bill, primarily as a result of the reduction of the tail block price to a cost-based level. The graph below the bill comparison and to the right is the information in the residential bill comparison presented in a graphical format. Potable water rates were also developed in Section 5 of this report for multi- residential, commercial and irrigation customers in a manner similar to that of the residential customers. Development of Cost-Based Recycled Water Rates Section 6 of this study provides a detailed discussion of the development of cost-based recycled water rates. The approach used to establish the cost-based recycled water rates was very similar to that used to develop the potable water rates. The recycled water system is limited and serves a limited number of recycled commercial and recycled irrigation customers. The revised recycled rates developed as a part of this study utilized the same rate structure as the Consumption Present (CCF)Rates $ % 0 $30.91 $32.44 $1.53 4.9% 1 33.44 35.47 2.03 6.1% 2 35.97 38.50 2.53 7.0% 3 38.50 41.53 3.03 7.9% 4 41.03 44.56 3.53 8.6% 5 43.56 47.59 4.03 9.3% 6 47.51 50.62 3.11 6.5% 7 51.46 53.65 2.19 4.3% 8 55.41 56.68 1.27 2.3% 9 59.36 59.71 0.35 0.6% 10 63.31 62.74 (0.57) -0.9% 25 148.57 148.45 (0.12) -0.1% 45 306.57 287.85 (18.72) -6.1% Fixed Charge $/Acct.Fixed Charge $/Acct. 3/4"$15.91 3/4"$17.24 CWA / MWD Fees $/Acct.CWA / MWD Fees $/Acct. 3/4"$15.00 3/4"$15.20 Consumption Charge $/CCF Consumption Charge $/CCF 1 - 5*$2.53 0 - 10 $3.03 5 - 10 3.95 10 - 22 5.40 10 - 22 5.13 22 +6.97 22 +7.90 *Customers must use < 10 CCF to be eligible for tier 1 pricing Present Rates Cost-Based Rates Cost-Based Rates Residential Rates - 3/4" Difference Executive Summary 10 Otay Water District – Review of the District’s Water Rates potable commercial and potable irrigation rates, but priced the services at cost-based levels to be consistent and compliant with the legal requirements of Proposition 218. Proposition 218 and the District’s Potable and Recycled Water Rates HDR is of the opinion that the revised cost-based rates developed herein comply with the legal requirements of Article XIII D. HDR reaches this conclusion based upon the following: x The revenue derived from water rates does not exceed the funds required to provide the property related service (i.e., water service). The revised cost-based rates are designed to collect the overall revenue requirement of the District’s water utility. x The revenues derived from water rates shall not be used for any purpose other than that for which the fee or charge is imposed. The revenues derived from the District’s water rates are used exclusively to operate and maintain the District’s water system. x The amount of a fee or charge imposed upon a parcel or person as an incident of property ownership shall not exceed the proportional costs of the service attributable to the parcel. This study has focused almost exclusively on the issue of proportional assignment of costs to customer classes of service and tiers for the District’s customers. The potable water rates developed herein have appropriately grouped customers into customer classes of service (e.g., residential, multi-residential, commercial and irrigation) that reflect the varying consumption patterns and system requirements of each customer class of service. The grouping of customers and rates into these classes of service creates the equity and fairness expected under Article XIII D by having differing rates by customer classes of service which reflect both the level of revenue to be collected by the utility, but also the manner in which these costs are incurred and equitably assigned to customer classes of service based upon their proportional impacts and burdens on the District’s water system and water resources. The methodology and analysis, developed as a part of this study, is based upon HDR’s understanding of the requirements of Proposition 218, as they are currently known and understood. Introduction and Overview 11 Otay Water District – Review of the District’s Water Rates 1.1 Introduction HDR Engineering, Inc. (HDR) was retained by the Otay Water District (District) to review the District’s potable and non-potable (i.e., recycled) water rates and provide cost-based rates for adoption by the District. More specifically, the District requested that HDR review the District’s tiered rates in the context of the recent court decisions interpreting Proposition 218 and the need to continue to maintain cost-based water rates. The State of California has certain well established legal constraints regarding utility ratemaking, of which California Constitution article XIII D, section 6 (commonly referred to as “Proposition 218”)2 is at the forefront. At its very core, Proposition 218 requires a water (and sewer) utility to establish cost-based rates for the services provided. At the time of the last comprehensive water rate study conducted for the District in 2013, the technical analysis was structured and developed to comply with the requirements of Proposition 218, as they were known and understood at that time. However, since the completion and adoption of the District’s rates in 2013, additional court cases within California have further clarified the issue of defining a “cost-based” rate structure which meets the legal requirements of Proposition 218. 1.2 Tiered Pricing, Conservation and Efficient Use California has always recognized the importance and value of water supply. Efficient water use, and discouragement of inefficient or wasteful use, has been at the heart of many water utility conservation programs. In particular, one of the important conservation tools historically used by water utilities is conservation pricing and conservation-oriented rate structures to encourage efficient use through price signals3. Tiered rate structures impose progressively higher rates for water service as the relative level of consumption increases. They are designed to allocate a greater proportional share of the cost of providing service to those customers whose water usage creates greater demands and burdens on the water system and water resources and therefore generates additional costs to a local agency for providing water service. Tiered rates also have the incidental effect of encouraging conservation. It is a well-recognized economic principle that as the price of a commodity increases; the demand for the commodity will go down. By creating water rate structures which increase in per unit price, as consumption 2 Proposition 218, enacted by California's voters in 1996, imposes certain procedures, requirements and voter approval mechanisms for local government assessments, fees and charges. 3 The California Urban Water Conservation Council (CUWCC) has best management practices (BMP) as they relate to conservation pricing. The 2013 Atkins report discussed the conservation rate design BMPs (Section 2.0, p. 9). 1. Introduction and Overview “At its very core, Proposition 218 requires a water (and sewer) utility to establish cost-based rates for the services provided.” Introduction and Overview 12 Otay Water District – Review of the District’s Water Rates becomes less efficient, the high use or inefficient water user is provided with a “price signal” to be more efficient in their usage. Since the District’s last rate study, the Capistrano Taxpayers Association vs. City of San Juan Capistrano has provided greater clarity with regard to tiered rate structures and the need to demonstrate the cost-basis for the pricing of the tiers. The study undertaken herein was designed to review the District’s existing potable and recycled water rates and, in all cases, provide rate designs which are is intended to be compliant with the requirements of Proposition 218, as it is currently understood. In those instances where a tiered rate was to be maintained, this study was designed to provide a clear cost-basis for the tiered rate structures. 1.3 Overview of the District’s Current Rates The District currently has in place potable and recycled water rates. It is important to gain an understanding of the District’s current water rates since the cost of service analysis, undertaken as a part of this study, is designed and structured to provide the cost information needed to develop cost-based rates, which includes the pricing of any tiered (increasing block price) rate structures. The potable water rates are segregated by customer classes of service; residential, multi- residential, commercial, and irrigation. Each of these rates has a tiered rate structure (increasing price per unit with increasing consumptive use) and the size of each tier (volume of water included within the tier) varies by class of service and by meter size. The current structure for irrigation and commercial customers has very little differential in the pricing of tiers, which more closely resembles a uniform rate structure (i.e., the same price per unit, regardless of level of consumption). The use of a tiered rate structure in this manner adds a level of complexity to the District’s rates with no discernible benefit from a customer equity or conservation perspective. Given that, this study has been developed to consider a more simplified approach to the District’s rate structures, while still maintaining equity and the cost- basis for each. The District’s recycled water rates, for recycled irrigation and recycled commercial customers, are similar in structure to the potable water rates for irrigation and commercial customers in that they also utilize a tiered rate structure. The tier sizes for each rate varies by meter size with very little difference in the pricing of the tiers. Similar to the potable water rate structures, HDR concluded that the recycled water rates could also be simplified by collapsing the tiers with little impact to equity and the cost-basis for the rates. 1.4 Overview of the Rate Study Process User rates must be set at a level where a utility’s operating and capital expenses are met with the revenues received from customers. This is an important point, as failure to achieve this objective may lead to insufficient funds to maintain system integrity. To evaluate the adequacy of the existing rates, and their cost-basis, a comprehensive rate study is often performed. A comprehensive water rate study consists of three interrelated analyses. Figure 1-1 provides an overview of these analyses. Introduction and Overview 13 Otay Water District – Review of the District’s Water Rates Figure 1–1 Overview of the Comprehensive Water Rate Analyses The study conducted by HDR included the three technical analyses discussed above. In establishing cost-based rates, the revenue requirement analysis determines the overall revenue needs of the utility. Next, the cost of service analysis provides an equitable allocation of the costs to the different types of customers served, while also providing per unit costs which become the cost-basis for the final rate designs. Finally, the rate design analysis utilizes the average unit costs from the cost of service analysis to establish the revised cost-based rates. Each of these elements of the technical analysis is discussed in more detail within this report. 1.5 Organization of the Study This report is organized in a sequential manner that first provides an overview of utility rate setting principles, followed by sections that detail the specific steps and technical analyses used to review the District’s potable and recycled water rates. The following sections comprise the District’s water rate study report: x Section 2 – Overview of Water Rate Setting Principles x Section 3 – Development of the Revenue Requirement Analysis x Section 4 – Potable Water Cost of Service Analysis x Section 5 – Development of the Potable Water Rate Designs x Section 6 – Development of the Recycled Water Rate Designs A Technical Appendices is attached at the end of this report, which details the various technical analyses that were undertaken in the preparation of this report. 1.6 Summary This report will review the various technical analyses undertaken by HDR and the District to review their current potable and recycled water rates. The objective of this study is to develop cost-based water rates which are compliant with the legal requirements of Proposition 218, as it is currently understood. Revenue Requirement Analysis Cost of Service Analysis Rate Design Analysis Compares the sources of funds (revenues) to the expenses of the utility to determine the overall adjustment to rates Allocates the total revenue requirements to the various customer classes of service in a “fair and equitable" manner Design cost-based rates using the results of the revenue requirement and cost of service analyses Overview of Water Rate Setting Principles 14 Otay Water District – Review of the District’s Water Rates 2.1 Introduction This section of the report provides background information about the water rate setting process, including descriptions of generally accepted principles, types of utilities, methods of determining a revenue requirement, the cost of service analysis, and rate design. This information is useful for gaining a better understanding of the details presented in the following sections of the report. 2.2 Generally Accepted Rate Setting Principles As a practical matter, all utilities should consider setting their rates around some generally accepted or global principles and guidelines. Utility rates should be: x Cost-based, equitable, and set at a level that meets the utility’s full revenue requirement. x Easy to understand and administer. x Designed to conform with “generally accepted”4 rate setting techniques. x Stable in their ability to provide adequate revenues for meeting the utility’s financial, operating, and regulatory requirements. x Established at a level that is stable from year-to-year from a customer’s perspective. 2.3 Revenue Requirements Most public utilities use the “cash basis” approach for establishing their revenue requirement and setting rates. This approach conforms to most public utility budgetary requirements and the calculation is easy to understand. A public utility totals its cash expenditures for a period of time to determine required revenues. The revenue requirement for a public utility is usually comprised of the following costs or expenses: x Total Operating Expenses: This includes a utility’s operation and maintenance (O&M) expenses, plus any applicable taxes or transfer payments. Operation and maintenance expenses include the materials, electricity, labor, supplies, etc., needed to keep the utility functioning. x Total Capital Expenses: Capital expenses are calculated by adding debt service payments (principal and interest) to capital improvements financed with rate revenues. In lieu of including capital improvements financed with rate revenues, a utility sometimes includes depreciation expense to stabilize the annual revenue requirement. Under the “cash basis” approach, the sum of the total O&M expenses plus the total capital expenses equals the utility’s revenue requirement during any selected period of time (historical or projected). 4 “Generally accepted” ratemaking methodologies are defined and reviewed within the American Water Works Association M-1 Manual, Principles of Water Rates, Fees and Charges. 2. Overview of Water Rate Setting Principles Overview of Water Rate Setting Principles 15 Otay Water District – Review of the District’s Water Rates Note that the two portions of the capital expense component (debt service and capital improvements financed from rates) are necessary under the cash basis approach because utilities generally cannot finance all their capital facilities with long-term debt. At the same time, it is often difficult to pay for capital expenditures on a “pay-as-you-go” basis given that some major capital projects may have significant rate impacts upon a utility, even when financed with long-term debt. Many utilities have found that some combination of pay-as-you- go funding and long-term financing will often lead to minimization of rate increases over time. Public utilities typically use the “cash basis”5 approach to establish their revenue requirements. An exception occurs if a public utility provides service to a wholesale or a contract customer. In this situation, a public utility could use the “utility basis” approach (see Table 2 - 1) regarding earning a fair return on its investment. Table 2 – 1 Cash versus Utility Basis Comparison Cash Basis Utility Basis (Accrual) + O&M Expenses + O&M Expenses + Taxes/Transfer Payments + Taxes/Transfer Payments + Capital Improv. Funded From Rates ;ш Depreciation Expense) + Depreciation Expense + Debt Service (Principal + Interest) + Return on Investment = Total Revenue Requirement = Total Revenue Requirement For purposes of this discussion, the District has utilized the cash basis methodology for the establishment of their total revenue requirements. Of these two generally accepted methodologies, the use of the cash basis methodology for the District is the most appropriate. 2.4 Analyzing Cost of Service After the total revenue requirement is determined, it is equitably allocated to the users of the service. The allocation, usually analyzed through a cost of service analysis, reflects the cost relationships for producing and delivering water services. A cost of service analysis requires three analytical steps: 1. Costs are functionalized or grouped into the various cost categories related to providing service (supply, distribution, pumping, etc.). This step is largely accomplished within the utility’s accounting system (chart of accounts). 5 “Cash basis” as used in the context of rate setting is not the same as the terminology used for accounting purposes and recognition of revenues and expenses. As used for rate setting, “cash basis” simply refers to the specific cost components to be included within the revenue requirement analysis. Overview of Water Rate Setting Principles 16 Otay Water District – Review of the District’s Water Rates 2. The functionalized costs are then classified to specific cost components. Classification refers to the arrangement of the functionalized data into cost components. For example, a water utility’s costs are typically classified as average day, peak day, or customer-related. 3. Once the costs are classified into cost components, they are proportionally allocated to the customer classes of service (e.g., residential, non-residential, irrigation). The allocation is based on each customer class’ relative contribution to the cost component (i.e., benefits received from and burdens placed on the system and its resources). For example, customer-related costs are proportionally allocated to each class of service based on the total number of customers in that class of service. Once costs are equitably and proportionally allocated, the revenues from each customer class of service required to achieve cost-based rates can be determined. At the conclusion of the cost of service analysis, two key pieces of information are provided. First, the cost of service provides an understanding of the total revenues to be collected from each class of service. In other words the potable water revenue requirement is $78.3 million and the cost of service provides an equitable method to assign that total cost between the various potable customer classes of service (e.g., residential, multi-residential, commercial, etc.). The other important piece of information provided by the cost of service analysis is the average unit costs. Average unit costs are the allocated costs divided by the appropriate consumption (billing) units. This provides an understanding of the cost on a $/customer/month and $/hundred cubic feet (CCF)6 basis. These average unit costs are essentially the cost-based water rates. Within this study, a cost of service analysis was conducted for both the potable and non- potable water systems. 2.5 Designing Water Rates Rates that meet the utility’s objectives are designed based on both the revenue requirement and the cost of service analysis. This approach results in rates that are strictly cost-based and does not consider other non-cost based goals and objectives (conservation, economic development, ability to pay, revenue stability, etc.). In designing water rates, factors such as ability to pay, continuity of past rate philosophy, economic development, ease of administration, and customer understanding may typically be taken into consideration. However, in order to meet the legal requirements of Proposition 218, the rates must take into consideration each customer class’s proportional share of costs allocated through the cost of service analysis. In the design of the revised water rates, the question arises as to the cost-basis for tiered rates. In other words, why does it cost more on a per unit basis to serve the customer consuming water in Tier 3 as opposed to Tier 1? The answer to this question and the cost-basis for a tiered rate is provided within the cost of service analysis. The major cost difference associated with serving a customer in Tier 3 versus Tier 1 is primarily driven around peak use demands. A 6 A CCF = one-hundred cubic feet. One (1) CCF of water = 748 gallons of water Overview of Water Rate Setting Principles 17 Otay Water District – Review of the District’s Water Rates customer in Tier 3 will generally place a greater demand on the system, compared to their average annual use, than a Tier 1 customer, and their average annual use. This usage characteristic is called a “peaking factor” and a Tier 3 customer will have a higher peaking factor than a Tier 1 customer. For example, a Tier 3 customer may have high summer use creating large demands on the District’s system. In response to large demands, the District must over- size facilities to meet these peak use demands, and incur greater capital costs to construct these over-sized facilities. A basic economic principle states that those who create the peak demand costs should pay for the peak demand costs. By following this basic cost principle, those customers creating the peak demands on the system in the summer, pay an equitable and proportional share of the cost of those facilities. Stated in an alternative way, the District’s system would be considerably different (i.e., smaller and less expensive capital investment) if all customers consumed water in a manner similar to Tier 1 customers. 2.6 Economic Theory and Rate Setting One of the major justifications for a comprehensive water rate study is founded in economic theory. Economic theory suggests that the price of a commodity must roughly equal its cost if equity among customers is to be maintained. This statement’s implications on utility rate designs is significant. For example, a water utility usually incurs capacity-related costs to meet summer lawn watering needs. It follows that the customers who create excessive peak demands on the system and create the need for upsizing of the distribution system should pay for those over-sized facilities in proportion to their contribution to total peaking requirements. When costing and pricing techniques are refined, consumers have a more accurate understanding of what the commodity costs to produce and deliver. This price-equals-cost concept provides the basis for the subsequent analysis and comments. 2.7 Summary This section of the report has provided a brief introduction to the general principles, techniques, and economic theory used to set cost-based water rates. These principles and techniques will become the foundation and basis for the District’s comprehensive water rate study. “Economic theory suggests that the price of a commodity must roughly equal its cost if equity among customers is to be maintained.” Development of the Revenue Requirement Analysis 18 Otay Water District – Review of the District’s Water Rates 3.1 Introduction This section describes the development of the District’s total revenue requirements. The revenue requirement contained herein was assembled based upon the District’s financial planning/rate model. The revenue requirement was developed using a “cash basis” methodology which is a generally accepted rate making practice. Under this methodology, the District’s operation and maintenance expenses, rate funded capital, debt service, and any change in working capital are summed to equal the total revenue requirement. Within the study, the intent was not to project future costs and rate adjustments, but rather, to utilize a revenue neutral (i.e., no rate adjustments) time period. This total revenue requirement would then be equitably allocated between potable and recycled water customers. Provided below is a more detailed discussion of the development of the District’s revenue requirements and the allocation or assignment of costs between potable and recycled water customers. 3.2 Development of the Revenue Requirement The revenue requirement analysis establishes the total overall costs of the water utility. As was noted in Section 2, the revenue requirement considers both the utility’s operating and capital costs, along with any other prudent financial planning criteria. The first step in calculating the revenue requirement for the District’s water utility was to establish a time frame for the revenue requirement analysis. For this study, the revenue requirement was developed for the FY 2016/17 time period (i.e., FY 2017 budget). The second step in determining the revenue requirement was to decide on the basis of accumulating costs. In this particular case, for the revenue requirement analysis a “cash basis” approach was utilized. This is the basic methodology that the District uses to develop their budget, but it is also consistent with their past water rate studies. Table 3-1 provides a summary of the “cash basis” approach and cost components used to develop the District’s potable water revenue requirement. 3. Development of the Revenue Requirement Analysis “The revenue requirement analysis establishes the total overall costs of the water utility.” Development of the Revenue Requirement Analysis 19 Otay Water District – Review of the District’s Water Rates Table 3 – 1 Overview of the District’s “Cash Basis” Revenue Requirements + Water Operation and Maintenance Expenses 9 Water Costs y Water Purchases y CWA and MWD Charges y Power Expenses 9 Administrative Expenses 9 Materials and Maintenance 9 Labor and Benefits + Rate Funded Capital + Debt Service (P + I) ± Change in Working Capital . = Total Water Revenue Requirement The above framework for the revenue requirements is a condensed summary of the entire revenue requirement model. There are multiple accounts under the O&M categories and Table 3-1 has summarized those accounts by major category. The above framework and the account categories contained within the revenue requirement analysis was derived from the District’s financial planning/rate model. For purposes of budgeting, the District uses a separate and distinct financial planning/rate model. Given that, the FY 2017 revenue and expenses, as shown within this report, were developed by the District and provided to HDR. Provided below in Table 3-2 is a summary of the District’s revenue requirement analysis. Development of the Revenue Requirement Analysis 20 Otay Water District – Review of the District’s Water Rates Table 3 – 2 Summary of the District’s FY 2016/17 Revenue Requirement Analysis ($1,000) [1] Revenue Requirement Components Total ($1,000) Revenues - Total Rate Revenues [2] $77,430 Miscellaneous Revenues 9,777 Total Revenues $87,207 Expenses - O&M Expenses Water Costs $50,186 Administrative Expenses 4,921 Materials and Maintenance 2,413 Labor and Benefits 19,921 Subtotal O&M Expenses $77,441 Rate Funded Capital $3,347 Debt Service 7,288 Change in Working Capital (868) Total Revenue Requirement $87,207 Balance/Deficiency of Funds $0 [1] – The detailed revenue requirement analysis can be found on Exhibit 1 of the Technical Appendix [2] – Rate Revenues are a blend of the rates implemented March 1, 2016 and those implemented January 1, 2017; final rate designs are based on allocated costs In viewing Table 3-2, a few items should be noted. First, as was discussed previously, the revenues and expenses within this table were derived from the District’s financial planning/rate model which was based on the District’s FY 2016/17 budget. HDR utilized the data and information within that planning model to assemble the revenue requirements shown above. Next, in developing the revenue requirements it was presumed that they would be set at a revenue neutral level (i.e., the revenues balance to the expenses of the utility). Next, the rate revenues shown within this table incorporate (i.e., include) the recently adopted January 1, 2017 water rates. This revenue requirement is based on the FY 2016/17 budget and related financial assumptions including a 5.0% rate increase, which was effective January 1, 2017. On the expense side of the analysis, the major expense item for the District is the cost of purchased water supply which is approximately 57% of the District’s total revenue requirement. The District does incur significant costs associated with the operation and maintenance of their Development of the Revenue Requirement Analysis 21 Otay Water District – Review of the District’s Water Rates distribution system and the capital costs associated with infrastructure renewal and replacement. Next, the component of “Change in Working Capital” is the use or addition of reserves and the level of targeted reserves are established in accordance with Board policy. In this particular test period, the District’s cash reserves of approximately $878,000 are utilized within the revenue requirement. Finally, it should also be understood that the total revenue requirement shown in Table 3-2 contains both potable and non-potable costs. Given that, the next step of the analysis was to equitably allocate the total revenue requirement between potable and non-potable costs. 3.3 Allocation to Potable and Non-Potable Costs As was noted above, the total revenue requirements shown in Table 3-2 contains revenues and expenses which are related to potable and non-potable (recycled) water service. In order to analyze the cost-basis of the potable and non-potable rates, the revenues and expenses for each type of water service must be segregated or allocated accordingly. The allocation of the total revenue requirement between potable and non-potable costs was generally provided within the District’s accounting system (i.e., chart of accounts) and their financial planning/ rate model. The vast majority of the costs are separately accounted for between these two types of services. In particular, the assignment of the O&M expenses and debt service payments between potable and non-potable was based upon the allocation contained within the District’s rate model. The allocation of the rate funded capital was based upon the District’s approved transfers within the rate model for replacements and betterments. Provided below in Table 3-3 is a summary of the allocation of the total revenue requirement for FY 2016/17 between the potable and non-potable (recycled) utilities. “ . . . the major expense item for the District is the cost of purchased water supply which is approximately 57% of the District’s total revenue requirement” Development of the Revenue Requirement Analysis 22 Otay Water District – Review of the District’s Water Rates Table 3 – 3 Summary of the District’s FY 2016/17 Revenue Requirement Analysis Allocated Between Potable and Non-Potable Utilities ($1,000) [1] Revenue Requirement Components Total ($1,000) Potable ($1,000) Non-Potable ($1,000) Revenues - Total Rate Revenues [2] $77,430 $70,153 $7,277 Miscellaneous Revenues 9,777 8,145 1,632 Total Revenues $87,207 $78,298 $8,909 Expenses - O&M Expenses Water Costs $50,186 $46,001 $4,185 Administrative Expenses 4,921 4,590 331 Materials and Maintenance 2,413 2,109 305 Labor and Benefits 19,921 18,581 1,339 Subtotal O&M Expenses $77,441 $71,281 $6,160 Rate Funded Capital $3,347 $2,745 $602 Debt Service 7,288 6,095 1,192 Change in Working Capital (868) (1,822) 954 Total Revenue Requirement $87,207 $78,298 $8,909 Balance/Deficiency of Funds $0 $0 $0 [1] – The detailed revenue requirement analysis can be found on Exhibit 1 of the Technical Appendix [2] – Rate Revenues are a blend of the rates implemented March 1, 2016 and those implemented January 1, 2017; final rate designs are based on allocated costs Table 3-3 provides in summary form the total water revenue requirements (i.e., costs) equitably assigned or allocated between potable and non-potable water services. Within the cost of service analysis, each of the individual cost totals (potable and non-potable) will be allocated to the various customer classes of service. For the potable water system the total potable water costs of $78.3 million will be equitably allocated to the potable water customers. Similar to the potable water analysis, the non- potable (recycled) water costs will be equitably allocated to the non-potable water customers. The cost of service analysis for the potable water costs is discussed in the next section of the report. Development of the Revenue Requirement Analysis 23 Otay Water District – Review of the District’s Water Rates 3.4 Summary This section of the report has discussed the development of the revenue requirements for the District. The District has utilized their budget for FY 2016/17 to establish their total revenue requirements (i.e., operating and capital costs). In addition, the total revenue requirement was allocated between the potable and non-potable water systems. This section of the report has established the total costs associated with the potable and non-potable water system. Potable Water Cost of Service Analysis 24 Otay Water District– Review of the District’s Water Rates 4.1 Introduction In the previous section, the revenue requirement analysis focused on the total sources and application of funds required to adequately fund the District’s water system. At the conclusion of that analysis, the total revenue requirement was equitably allocated between the potable and non- potable water services. This section of the report will provide an overview of the potable water cost of service analysis developed for the District. The potable water cost of service analysis is concerned with the equitable allocation of the total potable water revenue requirement between the various potable water customer classes of service (e.g., residential, multi-residential, commercial, and irrigation). The potable water revenue requirement developed in Section 3 was utilized in the development of the potable water cost of service analysis. 4.2 Objectives of a Cost of Service Study There are two primary objectives in conducting a potable water cost of service analysis: x Equitably allocate the District’s potable water revenue requirement among the customer classes of service, and x Derive average unit costs (i.e., cost-based rates) for future rate designs The objectives of the cost of service analysis are different from determining a revenue requirement. As noted in the previous section, a revenue requirement analysis determines the utility’s overall financial needs, while the cost of service analysis determines the fair and equitable manner to collect the revenue requirement. The results of the potable water cost of service analysis determine the average unit costs which are used in the development of the revised cost-based potable water rate designs. The cost of service analysis provides a per unit cost of water consumption based on each customer class’s equitable (proportional) share of costs. A water utility incurs costs related to meeting average day, peak day, fire protection, and customer-related cost components and must build sufficient capacity7 to meet their system’s peak capacity needs. Therefore, those customers contributing 7 System capacity is the system’s ability to supply water to all delivery points at the time when demanded. Coincident peaking factors are calculated for each customer class at the time of greatest system demand. The time of greatest demand is known as peak demand. Both the operating costs and capital asset-related costs incurred to accommodate the peak demands are generally allocated to each customer class based upon the class’s contribution to the peak month, peak day and/or peak hour event. 4. Potable Water Cost of Service Analysis “The potable water cost of service analysis is concerned with the equitable allocation of the total potable water revenue requirement between the various potable water customer classes of service (e.g., residential, multi-family, etc.). Potable Water Cost of Service Analysis 25 Otay Water District – Review of the District’s Water Rates to those peak demands on the system should pay a proportionately greater share of the costs associated with providing the peak capacity in the system. The calculated average unit costs provide the relationship between these components which are then used to set cost-based rates. 4.3 Determining the Customer Classes of Service The first step in a cost of service analysis is to determine the customer classes of service. Based on the current potable water rates, the customer classes of service used within the potable water cost of service analysis were: x Residential x Multi-Family x Commercial x Irrigation In determining classes of service for cost of service purposes, the objective is to group customers together into similar or homogeneous groups based upon facility requirements and/or flow characteristics. HDR reviewed the current customer classes of service used by the District and found them consistent with typical industry practices. 4.4 General Cost of Service Procedures In order to determine the cost to serve each customer class of service on the District’s potable water system, a cost of service analysis is conducted. A cost of service analysis utilizes a three- step approach to review costs. These steps take the form of functionalization, classification, and allocation. Provided below is a detailed discussion of the potable water cost of service study conducted for the District, and the specific steps taken within the analysis. The approach used for the District’s study reflects generally accepted cost of service methodologies as outlined in the American Water Works Association (AWWA) M1 manual. 4.4.1 Functionalization of Costs The first analytical step in the cost of service process is called functionalization. Functionalization is the arrangement of expenses and plant assets data by major operating functions (e.g., supply, transmission, storage, distribution). The District’s cost data is functionalized within the District’s system of accounts and the District’s system of accounts was used as the basis for the functionalization of costs. 4.4.2 Classification of Costs The second analytical task performed in a water cost of service study is the classification of the costs. The classification of costs examines why the expenses were incurred or what type of need is being met. The following cost classifiers were used to develop the potable water cost of service analysis: Potable Water Cost of Service Analysis 26 Otay Water District – Review of the District’s Water Rates Water Cost of Service Analysis Terminology Functionalization – The arrangement of the cost data by functional category (e.g., source of supply, treatment, etc.). Classification – The assignment of functionalized costs to cost components (e.g., commodity, capacity, customer and fire protection related). Allocation – Allocating the classified costs to each class of service based upon each class’s proportional contribution to that specific cost component. Commodity Costs – Costs that are classified as commodity related vary with the total flow of water (e.g., chemical use at a treatment plant). Capacity Costs – Costs classified as capacity related vary with peak day or peak hour usage. Facilities are often designed and sized around meeting peak demands. Fire Protection Costs – Costs that are related to fire protection services (e.g., hydrants, oversizing of storage and distribution mains). Customer Costs – Costs classified as customer related vary with the number of customers on the system (e.g., metering costs). Terminology of a Water Cost of Service Analysis Functionalization – The arrangement of the cost data by functional category (e.g. source of supply, treatment, transmission, etc.). Classification – The assignment of functionalized costs to cost components (e.g., base, extra-capacity, customer and fire protection related). Allocation – Allocating the classified costs to each class of service based upon each class’s proportional contribution to that specific cost component. Base Costs – Costs that are classified as base-related vary with the total flow of water (e.g. chemical use at a treatment plant). Base costs meet average demand (load) conditions. Extra-Capacity Costs – Costs classified as extra-capacity related vary with peak day or peak hour usage and are the demands over and above average (base) demands. Facilities are often designed and sized around meeting demands above average demands. Fire Protection Costs – Costs that are related to fire protection services (e.g. hydrants, over-sizing of reservoirs/mains). Customer Costs – Costs classified as customer related vary with the number of customers on the system (e.g., metering costs). Direct Assignment – Costs that can be clearly identified as belonging to a specific customer group or group of customers. x Base-Related Costs: Base costs are those costs which tend to vary with the total quantity of water consumed by a customer. Base costs are those incurred under average demand (load) conditions and are generally specified for a period of time such as a month or year. Chemicals or electricity used in the treatment of water is an example of a base-related cost, since these costs tend to vary based upon the total flow of water. x Extra-Capacity Related Costs: Extra capacity costs are those that are associated with meeting excess capacity which is over and above average (base) use. Sufficient system capacity is required when there are large demands for water placed upon the system (e.g., summer outdoor use). For water utilities, capacity related costs are generally related to the over-sizing of facilities needed to meet a customer’s maximum water demands. For example, portions of distribution storage reservoirs and mains (pipes) must be adequately sized for this particular type of requirement. x Customer Related Costs: Customer costs are those costs which vary with the number of customers on the water system. They do not vary with system output or consumption levels. These costs are also sometimes referred to as readiness to serve or availability costs. Customer costs may also sometimes be further classified as either actual or weighted. Actual customer costs vary proportionally, from customer to customer, with the addition or deletion of a customer regardless of the size of the customer. In contrast, a weighted customer cost reflects a disproportionate cost, from customer to customer, with the addition or deletion of a customer. An example of an actual customer cost is postage for mailing bills. This cost does not vary from customer to customer, regardless of the size or consumption characteristics of the customer. Examples of weighted customer costs are items such as meter maintenance expenses, where a large industrial customer requires a significantly more expensive meter than a residential customer. x Fire Protection Related Costs: Fire protection costs are those costs related to the public fire protection functions. Usually, such costs are related to public fire hydrants and the over-sizing of mains and distribution storage reservoirs for fire protection purposes. Potable Water Cost of Service Analysis 27 Otay Water District – Review of the District’s Water Rates x Revenue Related Costs: Certain costs associated with the utility may vary with the amount of revenue received. An example of a revenue related cost would be a utility tax which is based upon the gross revenues of the utility. x Direct Assignments: Certain costs associated with operating the system may be directly traced to a specific customer or class of service (e.g., bad debt expenses). In this case, these costs may then be “directly assigned” to that specific class of service. 4.4.3 Development of Allocation Factors Once the classification process is complete, and the customer groups have been defined, the various classified costs were allocated to each customer group. The District’s potable water classified costs were allocated to the various customer groups using the following allocation factors. x Base Allocation Factor: As noted earlier, base-related costs vary with the total flow of water under average demand (load) conditions. Therefore, the base allocation factor was developed using FY 2015 consumption, plus losses, for each class of service. The total consumption was stated as a total flow and converted to “base” consumption and stated in millions of gallons per day (MGD) of use (demand). For example, the base consumption for residential was determined to be 12.49 MGD. FY 2015 was selected for the development of the base allocation factor since it appeared to provide a reasonable level of consumption given the recent drought and water use restrictions. Exhibit 2 of the Technical Appendix provides the detail of the development of the base allocation factor. x Extra-Capacity Allocation Factor: Two extra-capacity allocation factors were developed for the District’s study. The District incurs peak demands related to both peak day and peak hour demands. Peak day use by customer class of service was estimated using assumed peaking factors for each customer group. In this particular case, the peaking factor was defined as the relationship between peak day contribution and average day (base) use and determined for each customer group based on a review of the average month to peak month usage. Specific or measured data was not available to determine the actual peaking factor for each class of service. Given that, the average month to peak month data was used as a reasonable surrogate (estimate) for the peak day characteristics of each class of service. Given an estimated peaking factor, the peak day contribution for each class of service was developed. The difference between the peak day and average day use was the extra-capacity contribution of each class of service. The development of the peak day extra-capacity allocation factor can be found on Exhibit 3 of the Technical Appendix. A similar approach was used in the development of the peak-hour extra-capacity allocation factor. In this particular allocation factor, the extra-capacity is the difference between the peak hour demand of each class of service and their peak day demand. Exhibit 4 of the Technical Appendix provides the detail of the development of the peak hour extra-capacity allocation factor. x Customer Allocation Factor: Customer costs vary with the number of customers on the system. Two basic types of customer allocation factors were identified – actual and weighted. The allocation factors for actual customers were based on the current (January 2017) number of meters by customer class of service. The weighted customer allocation factors is also broken down further into two factors which attempt to reflect the disproportionate costs associated with serving different types of customers. The first Potable Water Cost of Service Analysis 28 Otay Water District – Review of the District’s Water Rates weighted customer allocation factor is for customer service and accounting. This weighted customer allocation factor takes into account the fact that it may take more time to read a meter and process a bill for various customers. The second weighted customer allocation factor is for meters and services. This factor attempts to reflect the different costs associated with providing larger sized meters. This allocation factor uses a weighted approach based upon the differences in the equivalencies of the meters. These customer allocation factors can be seen on Exhibit 5a. Exhibit 5b is the information on the meters by class of service and by size. This exhibit also provides the conversion of the different sized meters to an equivalent 3/4” meter using the District’s current equivalency ratios. x Public Fire Protection Allocation Factor: The development of the allocation factor for public fire protection expenses involved an analysis of each class of service and their fire flow requirements. The analysis took into account the gallon per minute fire flow requirements in the event of a fire, along with the duration of the required flow. The fire flow rates used within the allocation factor were based on information contained within the District’s Water Facilities Master Plan. The minimum fire flow requirements are then multiplied by the number of customers in each class of service, and the assumed duration of the fire, to determine the class’ prorated fire flow requirements. Irrigation is not allocated any fire protection related costs. The development of the public fire protection allocation factor can be found on Exhibit 6 of the Technical Appendix. x Revenue Related Allocation Factor: The revenue related allocation factor was developed from the present rate revenues (before any proposed rate adjustment) for each customer class of service. These same revenues were used within the revenue requirement analysis discussed previously. As mentioned before, in a typical cost of service study, an allocation factor will generally be reflective of the entire group of similar customers (e.g. total usage of residential customers). In this particular study, additional cost detail was needed in order to justify the cost-basis for the District’s tiered (increasing) block rate structures. From a cost of service perspective, this meant that the base and extra- capacity allocation factors were further subdivided for a class of service to be able to allocate a proportional share of the base and extra-capacity costs to the first tier, second tier, etc. For residential and multi- residential customers, each allocation factor assigns costs to three (3) pricing tiers. This level of detail is required to provide the cost-basis for tiered rates and meet Proposition 218 legal requirements. Further discussion related to the allocation of costs to a greater cost level is discussed in more detail in the rate design analysis provided in Section 5 of this report. 4.5 Functionalization and Classification of Plant in Service One of the first steps of the cost of service is the functionalization and classification of plant in service. In performing the functionalization of plant in service, HDR utilized the District’s historical plant (asset) records. The plant in service was based upon the asset values as of June “In this particular study, additional cost detail was needed in order to justify the cost-basis for the District’s tiered (increasing) block rate structures. . . . This level of detail is required to provide the cost-basis for tiered rates and meet Proposition 218 legal requirements. Potable Water Cost of Service Analysis 29 Otay Water District – Review of the District’s Water Rates 30, 2016. Once the plant assets were functionalized, the analysis shifted to the classification of the asset. The classification process included reviewing each group of assets and determining which cost classifiers the assets were related to. For example, the District’s assets were classified as: base-related, extra-capacity-related (peak day and peak hour), customer-related, revenue-related, public fire protection-related, or a direct assignment. Provided below is a summary of the allocation process. The following approach is based on the methodology as described in the AWWA M1 Manual. Source of supply – The District has a very small amount of assets related to source of supply. Based on the operation of the system, the source of supply assets were classified as 66.4% to base related costs (average day) and 33.6% to extra-capacity peak day related costs. This classification reflects the District’s system peak day demand (capacity needs) in relation to the system average day use (base needs). The system peak day demand for the District was 34.29 MGD and the average day demand was 22.76 MGD. Treatment – Similar to source of supply, the District has a limited amount of assets related to treatment. The treatment plant assets were classified in the same manner as the source of supply; 66.4% to base related costs (average day) and 33.6% to extra-capacity peak day related costs. This classification reflects the operational relationship of the District’s average day use to its peak day use. Reservoirs – Reservoirs are typically designed to meet at least two types of needs – capacity (peak use) demands and fire protection. To determine an appropriate classification between these two cost components, the District’s reservoirs were reviewed. The total storage capacity of the District’s reservoirs were examined and consideration given to the proportion of storage capacity required for fire protection under a fire event scenario. This amount of capacity, in relation to the total storage capacity, is considered fire protection related. The balance of storage capacity is considered to be in place to meet peak day extra-capacity demands. This resulted in 94.5% of the reservoir assets being assigned to peak day extra-capacity and the remaining 5.5% assigned to the public fire protection component. Transmission & Distribution Mains – Transmission and distribution mains (lines/pipes) are required to deliver water throughout the District’s service area. At the same time, these facilities must be sized to be able to deliver water under peak use and fire flow conditions. Given that, the transmission and distribution mains were analyzed and classified between four components; actual customer, base-related, peak day extra-capacity and fire protection. First, a distribution system must be in place to meet a customer’s minimum use requirements for water. In other words, a portion of the distribution system is a function of the number of customers since mains must be built to extend to all customers and where they are located. This portion of the distribution main plant investment is considered to be a customer-related cost, or a function of the number of customers on the system. At the same time, that customer-related component also provides the ability to address the physical delivery of water and meet base-related needs. However, this portion of the investment is not sufficient to meet peak flow requirements on the system. Given that, distribution mains must be sized to adequately meet the maximum (peak) flows demanded by customers. This portion of the distribution main plant investment is considered peak day extra-capacity related. Finally, distribution mains must also be over-sized for public fire flow demands. This final portion of over-sizing for distribution plant investment is classified as public fire protection-related. Even Potable Water Cost of Service Analysis 30 Otay Water District – Review of the District’s Water Rates on the hottest day of the year when peak demands are the highest, the system must still have sufficient excess capacity to meet fire flow requirements. Based upon an analysis of the District’s mains, for this study, the assignment of the distribution mains were classified as 5% actual customer, 15% base-related, 59.2% peak day extra-capacity related and 20.8% fire protection related. Meters – Meters are a function of the number of customers on the system, but they are not a proportional cost in that the meter investment for a customer varies based upon the meter size. Given that, meters were classified as weighted customer for meters and services. The allocation factor for this cost classifier takes the disproportionality of investment into account to equitably assign these costs across the different customer classes of service. Hydrants – Hydrants are related to the public fire protection component and were classified as 100% public fire protection related. General Plant – General plant is in place to support the total operations of the water system. As a result, it is classified in a proportional manner that reflects the classification of all of the above discussed assets. Exhibit 8 of the Technical Appendices provides the approach used to determine the classification splits for the assets. Table 4 - 1 provides a summary of the basic functionalization and classification of the District’s major water plant items. A more detailed exhibit of the District’s functionalization and classification of plant investment can be found on Exhibit 9.1 of the Technical Appendix. Table 4 - 1 Summary of the Classification of the District’s Water Plant in Service Asset Category Base Related Peak Day Extra-Cap. Related Actual Customer Related Weighted Customer Meters Public Fire Protection Source of Supply 66.4% 33.6% 0.0% 0.0% 0.0% Treatment 66.4% 33.6% 0.0% 0.0% 0.0% Reservoirs 0.0% 94.5% 0.0% 0.0% 5.5% Trans. & Dist. Mains 15.0% 59.2% 5.0% 0.0% 20.8% Meters 0.0% 0.0% 0.0% 100.0% 0.0% Hydrants 0.0% 0.0% 0.0% 0.0% 100.0% General Plant 7.2% 75.4% 2.3% 3.5% 11.6% Total Net Plant In Service 7.2% 75.2% 2.6% 3.5% 11.5% 4.6 Functionalization and Classification of Potable Operating Expenses The potable cost of service analysis utilizes the potable costs contained in Table 3-3 to determine the total costs to be collected from potable water rates. Table 4-2 provides a summary of the amount of the total revenue requirement to be collected from potable water rates. Potable Water Cost of Service Analysis 31 Otay Water District – Review of the District’s Water Rates Table 4 - 2 Summary of the District’s FY 2016/17 Revenue Requirement to be Collected From Potable Rate Revenues ($1,000) Revenue Requirement Components Total ($1,000) Total Potable Revenue Requirement $78,298 Less: Miscellaneous Potable Water Revenues (8,145) Balance to be Collected From Potable Water Rates $70,153 Given the target level of potable rate revenue to be collected, the focus shifted to the classification of the functionalized costs. As noted in the AWWA M1 Manual, operating expenses are generally functionalized and classified in a manner similar to the corresponding plant account. For example, maintenance of distribution mains is typically classified in the same manner (classification percentages) as the corresponding plant asset account for distribution mains. This approach to classification of the District’s operating expenses was used for this analysis. For the District’s potable water cost of service analysis, the revenue requirement for FY 2016/17 was functionalized, classified, and then allocated. As noted in Section 3, the District utilized a cash basis revenue requirement, which was comprised of operation and maintenance expenses, rate funded capital, debt service, and change in working capital. In classifying the O&M expenses, portions of the purchased water costs of the District were classified to the CWA/MWD-related and energy related cost components. The CWA/MWD costs are charged separately within the District’s rates and assigning that portion of the purchased water costs which are CWA/MWD related is a form of a direct assignment to the District’s CWA/MWD charge. The same is true with the power for pumping. The District has energy charges and the cost of service directly assigned those power costs to the energy- related component. Those costs will be converted to the District’s pass-through energy charges. A more detailed review of the functionalization and classification of the revenue requirement can be found on Exhibit 10.1 in the Technical Appendix. 4.7 Major Assumptions of the Cost of Service Study A number of key assumptions were used within the District’s potable water cost of service study. Below is a brief discussion of the major assumptions used. „ The test period used for the cost of service analysis was FY 2016/17. The potable water revenue and expense data was previously developed within the revenue requirement study. Potable Water Cost of Service Analysis 32 Otay Water District – Review of the District’s Water Rates „ A cash basis approach was utilized which conforms to generally accepted water cost of service approaches and methodologies. „ The classification of plant in service was developed based upon generally accepted cost allocation techniques. Furthermore, they were developed using the District’s specific data. „ Consumption by cost or class of service used within this study was developed for each class of service from historical usage information provided by the District. „ Peak day extra-capacity allocation factors were estimated based upon each customer group’s average to peak month relationship. HDR spent considerable time reviewing individual customer data and information to estimate and determine reasonable peaking factors by customer class of service. 4.8 Summary Results of the Cost of Service Analysis In summary form, the cost of service analysis began by functionalizing the District’s revenue requirement. The functionalized revenue requirement was then classified into their various cost components. The individual classification totals were then allocated to the various customer classes of service based on the appropriate allocation factors. The allocated expenses for each customer class were then aggregated to determine each customer class’s overall revenue responsibility. Provided below in Table 4–3 is a summary of the potable water cost of service analysis. Table 4 – 3 Summary of the Potable Revenue Requirement Allocated to the Various Potable Water Customer Classes of Service ($1,000) [1] Customer Class of Service Present Rate Revenues ($1,000) [1] Allocated Revenue Requirement ($1,000) [2] Bal./(Defic.) of Funds ($1,000) % Change in Rates Residential $40,665 $40,408 $258 0.6% Multi-Residential 7,832 7,706 127 1.6% Commercial 9,145 9,152 (8) 0.1% Irrigation 10,347 10,693 (346) 3.3% Energy Fees 2,164 2,195 (31) 1.4% Total Net Revenue Requirement $70,153 $70,153 $0 0.0% [1] – Rate Revenues are a blend of the rates implemented March 1, 2016 and those implemented January 1, 2017; final rate designs are based on allocated costs (i.e., allocated revenue requirement) [2] – See Exhibit 12 for detailed exhibit by cost component The above results indicate that the customer classes of service are at or near their cost of service. This means that the District’s overall potable water rate revenues collected from each customer class of service is reasonably close to their “cost of service.” In making this statement, it is important to note that a cost of service study is an analysis of a point in time Potable Water Cost of Service Analysis 33 Otay Water District – Review of the District’s Water Rates and the District’s costs, customer consumption patterns and total usage change over time. In that respect, a cost of service is a static analysis of a dynamic and ever-changing situation. The recent drought in California has clearly pointed this fact out. 4.9 Summary of the Potable Average Unit Costs As discussed previously, the cost of service also provides average unit costs, or the starting point for the design of final cost-based potable water rates. Average unit costs are simply the classified cost (base, extra-capacity, customer, etc.) divided by the appropriate consumption units (CCF annual usage or number of customers/meters). While Table 4–3 summarized the results of the cost of service analysis by customer class of service, the cost of service also contains sufficient detail to understand costs by pricing tier. Table 4–4 provides a summary of the calculated average unit costs for the potable cost of service analysis. Potable Water Cost of Service Analysis 34 Otay Water District – Review of the District’s Water Rates Table 4 – 4 Summary of the Potable Cost of Service Average Unit Costs System Cost Component Average Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Consumption Calculated Cost $3.98 $3.03 $5.40 $6.97 $2.83 $5.13 $6.30 $3.58 $3.58 $3.58 $5.23 $5.23 $5.23 Current Tiered Rates (1.1.17)$3.95 $5.13 $7.90 $3.90 $5.05 $7.80 $4.17 $4.23 $4.30 $5.68 $5.74 $5.81 $ / CCF Difference ($0.92) $0.27 ($0.93) ($1.07) $0.08 ($1.50) ($0.59) ($0.65) ($0.72) ($0.45) ($0.51) ($0.58) Fixed Charge ($/Mth - 3/4" Mtr) Calculated Cost $20.63 $17.24 $37.91 $35.71 $30.15 Current Tiered Rates (1.1.17) $15.91 $15.91 $15.91 $15.91 $15.91 $ / CCF Difference $4.72 $1.33 $22.00 $19.80 $14.24 CWA / MWD Charge Calculated Cost $15.18 $15.18 $15.18 $15.18 $15.18 Current Tiered Rates (1.1.17) $15.00 $15.00 $15.00 $15.00 $15.00 $ / CCF Difference $0.18 $0.18 $0.18 $0.18 $0.18 Energy Fee / Charge ($/CCF) Calculated Cost $0.064 Current Tiered Rates (1.1.17)$0.044 $ / CCF Difference $0.020 Irrigation Energy Residential Multi-Residential Commercial Potable Water Cost of Service Analysis 35 Otay Water District – Review of the District’s Water Rates In viewing Table 4–4, it can be seen that there are differences in the per unit rates which are currently in effect (effective January 1, 2017) and the calculated average unit costs. While Table 4–3 demonstrated that each class of service appears to be paying their relative cost of service (total dollars), the average unit costs illustrates cost differences in the various cost (rate structure) components. One of the main focuses of this study is on the tiered rates for residential and multi-residential customers. The top portion of Table 4–4 compares the calculated per unit cost to the current rates8. For residential, the analysis indicates that the current 1st and 3rd tier pricing is too high, and the 2nd tier is below cost. This result is not particularly surprising since, as noted above, consumption and usage patterns have dramatically changed over time and in more recent years. The current rates were originally developed in 2013 and the consumption and usage patterns of residential customers have changed in recent years as a result of the drought. Total consumption has declined almost 25% over this time period and peak summer use has also declined, resulting in lower peaking factors for the third tier and lower per unit costs. The reduction in the cost of the first tier can be primarily explained in conjunction with the fixed charge. The calculated fixed charge has increased for residential which is off-set by the lower per unit consumption charge for Tier 1. Interestingly, multi-residential has a similar profile in terms of the pricing between Tiers 1, 2 and 3. For commercial and irrigation customers it was concluded that a uniform consumption charge would be appropriate. The present rates have tiered pricing, but the price differential between the tiers results in essentially a uniform rate. For that reason, along with a desire for simplification in the overall rate structure, a uniform consumption charge approach is used. The fixed charges, based upon meter size, are the other major component of the District’s potable water rate structure. At the present time, the District has a single schedule of meter charges which vary by meter size (3/4” – 10”). In calculating the average unit costs for fixed charges, they were calculated on an individual class of service basis and by the overall system average total. The overall system average total is $20.63/month for a 3/4” meter. This compares to the current fixed meter charge of $15.91/month for a 3/4” meter. The analysis also calculated fixed meter charges for each class of service and these range from $17.24/month for a 3/4” meter to $37.91/month for a 3/4” meter. The obvious question is why do the fixed meter charges vary for the different classes of service? The answer is that certain costs which are collected within the fixed meter charges are not allocated within the cost of service analysis on the basis of the number of meters, but they are collected within the fixed meter charge on a per meter basis. A simple example will illustrate this issue. Public fire protection costs are related to fire hydrants, along with the over-sizing of distribution mains and storage to provide public fire protection. These costs are classified as being public fire protection-related and then equitably and proportionally allocated to each customer class of service on the basis of each group’s fire protection requirements (gallons per minute of fire 8 Residential currently has four (4) pricing tiers, with the first tier being a “conservation tier.” This initial “conservation tier” was eliminated, since by definition, it is a below-cost tier to encourage conservation from low users, while also addressing affordability concerns for low-use customers. Potable Water Cost of Service Analysis 36 Otay Water District – Review of the District’s Water Rates flow and the duration of flow). A residential customer does not have the same fire flow requirements as a large multi-residential or commercial building. A large multi-residential or commercial building requires a greater gallon per minute fire flow and for a longer duration. Given that, those customers are equitably allocated a greater proportion of the public fire protection costs. How these costs, and other similar costs, are recouped within the rates is what creates the differential in the monthly fixed meter charge. While it may appear that the fixed meter charge is increasing significantly for some customer classes of service, it should be pointed out that the fixed meter charge is a relatively smaller portion of the multi-residential and commercial customer’s total water bill, compared to a residential customer. This aspect of the analysis will be discussed in more detail in the potable water rate design section of the report (Section 5). The other fixed meter charge is the CWA/MWD Charge. This is essentially a “pass-through” cost within the cost of service analysis. In this case, the District incurs the cost on a per meter basis and it is allocated on a per meter basis. Given that, the meter charge is the same for all customer classes of service. Finally, the energy charges are also a cost which is segregated in the cost of service and passed directly through and charged on a $/CCF basis. 4.10 Summary This section of the report has discussed the development of the potable water cost of service analysis. This portion of the analysis takes the potable revenue requirement and equitably allocates the total costs to the various customer classes of service, using generally accepted cost of service principles and methodologies. The allocated costs were then converted to average unit costs which will form the basis for the development of the District’s potable water rate designs. Development of the Potable Water Rate Designs 37 Otay Water District – Review of the District’s Water Rates 5.1 Introduction The final step of the District’s water rate study is the design of rates to collect the desired levels of revenues, based on the results of the revenue requirement and cost of service analyses. In reviewing the District’s rates, consideration is given to both the level of the rates as well as the structure of the rates. The level of the rates reflects the amount of total revenues that should be collected from the rate, while the structure of the rates is how it is collected from (assessed to) the customers. The overall revenue level for the District was established in the revenue requirement analysis (Section 3) while the equitable allocation of costs between the various customer classes was developed in the cost of service analysis (Section 4) which provided the revenue levels to be collected from each class of service. The cost of service also calculated average unit costs (Table 4–4) which provides the basis for establishing the cost-based components of the water rate structures. A more detailed discussion of the development of the average unit costs is provided within this section of the report. 5.2 Rate Design Criteria and Considerations Prudent rate administration dictates that several criteria must be considered when setting utility rates. Some of these rate design criteria are listed below: x Equitable and non-discriminatory (cost-based) x Legally defensible x Rates which are easy to understand from the customer’s perspective x Rates which are easy for the District to administer x Consideration of the customer’s ability to pay x Continuity, over time, of the rate making philosophy x Policy considerations (encourage efficient use, economic development, etc.) x Provide revenue stability from month to month and year to year x Promote efficient allocation of the resource It is important that the District provide its customers with a proper price signal as to what their consumption and peaking (demand) requirements are costing. This goal may be approached through rate level and structure. When developing the potable water rate designs, all the above listed criteria were taken into consideration. However, it should be noted that it is difficult, if not impossible, to design a rate that meets all the goals and objectives listed above. For example, it may be difficult to design a rate that takes into consideration the customer’s ability to pay (e.g., a low-income subsidized rate structure), and one which is cost-based. In designing rates, there are always trade-offs between these various goals and objectives. 5. Development of Potable Water Rate Designs Development of the Potable Water Rate Designs 38 Otay Water District – Review of the District’s Water Rates 5.3 Development of Cost-Based Water Rates Developing cost-based and equitable rates is of paramount importance in developing water rates. While always a key consideration in developing rates, meeting the legal requirements, and documenting the steps taken to meet the requirements, has been in the forefront with the recent legal challenges in the State of California on water rates. Given this, the District’s revised cost-based water rates have been developed to make it easier to document the effort to meet the legal requirements of California constitution Article XIII D. A key component of Article XIII D is the development of rates which reflect the cost of providing service and are proportionally allocated among the various customer classes of service. HDR would point out that there is no single prescribed methodology for equitably assigning costs to the various customer groups. The American Water Works Association (AWWA) M1 Manual clearly delineates various methodologies which may be used to establish cost-based rates. Article XIII D does not prescribe a particular methodology for establishing cost-based rates. Consequently, HDR developed the District’s revised cost-based water rates based on the methodologies provided in the AWWA M1 Manual to meet the requirements of Article XIII D, along with recent legal decisions to provide an administrative record of the steps taken to establish the District’s water rates. HDR is of the opinion that the revised cost-based rates comply with legal requirements of Article XIII D. HDR reaches this conclusion based upon the following: x The revenue derived from water rates does not exceed the funds required to provide the property related service (i.e., water service). The revised cost-based rates are designed to collect the overall revenue requirement of the District’s water utility. x The revenues derived from water rates shall not be used for any purpose other than that for which the fee or charge is imposed. The revenues derived from the District’s water rates are used exclusively to operate and maintain the District’s water system. x The amount of a fee or charge imposed upon a parcel or person as an incident of property ownership shall not exceed the proportional costs of the service attributable to the parcel. This study has focused almost exclusively on the issue of proportional assignment of costs to customer classes of service and tiers for the District’s customers. The potable water rates developed herein have appropriately grouped customers into customer classes of service (e.g., residential, multi-residential, commercial and irrigation) that reflect the varying consumption patterns and system requirements of each customer class of service. The grouping of customers and rates into these classes of service creates the equity and fairness expected under Article XIII D by having differing rates by customer classes of service which reflect both the level of revenue to be collected by the utility, but also the manner in which these costs are incurred and equitably assigned to customer classes of service based upon their proportional impacts and burdens on the District’s water system and water resources. The District currently has established customer classes of service that were developed as a part of the previous rate studies completed by the District. Those studies provide the basis for the classes of service and tier sizing. Given the above discussion on the California legal requirements for setting rates, the District’s cost of service analysis and the calculated average Development of the Potable Water Rate Designs 39 Otay Water District – Review of the District’s Water Rates unit costs from the analysis will be used to provide the cost-basis for the development of the District’s potable water rates. 5.4 Development of the Potable Water Rate Designs As a part of this study, HDR developed the following water rate design discussion to clearly demonstrate and support the development of the revised water rates and their tiered pricing. The following discussion provides a more detailed analysis of the costing techniques and methodologies used to support the District’s revised cost-based rate designs. 5.4.1 Determination of Sizing and Number of Tiers The District currently has increasing block or tiered rate structures for each of their potable water customer classes of service (i.e., rate schedules). Increasing block rates or tiered rates charge increasing volumetric rates for increasing consumption. In order to establish a tiered rate structure one must define the number and size of the consumption blocks and then the pricing of each block. The District’s current study is primarily focused on the pricing associated with the blocks. In 2013, the District conducted a comprehensive water and sewer rate study.9 As a part of that comprehensive study, the number and size of consumption tiers was reviewed in detail. In particular, the residential tiers and tier sizes were reviewed. The study included a review of the residential “conservation tier”. The “conservation tier” was established by the District prior to the 2013 rate study conducted by Atkins, and was intended to encourage efficient use by low- use customers. As this study will detail, each pricing tier must be cost-based. Subsidized or non-cost based pricing tiers were recently found (ruled) to be illegal under Proposition 218. To address this recent court ruling, the conservation tier was eliminated and the residential rate restructured to three tiers (0 – 10 CCF, 11 – 22 CCF and over 22 CCF). Based upon the current study’s review of consumption data by customer class of service, it was concluded that the tier sizes, as determined and established in the 2013 Atkins analysis, remained relevant and appropriate. In part, HDR reached this conclusion based upon the review of the consumption patterns in the most recent residential consumption data (see graph). More importantly, the recent and severe drought has impacted residential (and other customer classes of service) consumption patterns. The Atkins study of the District’s consumption patterns provides the most reasonable and recent set of data related to water consumption under more “normal” water conditions. While the graph shown illustrates the seasonal nature of residential water consumption, when compared to the comparison in the 9 Final Report, Water and Sewer Cost of Service Study, Otay Water District, Atkins, September 13, 2013 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 CC F Residential [Potable] Consumption by Tier Tier 1 Tier 2 Tier 3 Development of the Potable Water Rate Designs 40 Otay Water District – Review of the District’s Water Rates 2013 analysis, the overall consumption levels have declined and the amount of Tier 3 usage has declined. For those reasons, it is recommended that the District’s residential tier sizes remain intact, with the exception of the elimination of “conservation tier” pricing subsidy. The comments noted above for residential are similar to multi-family. The 2013 Atkins study also extensively reviewed the tiers and tier sizes for multi-family and this study has concluded that the multi-family tiers (0 – 4 CCF, 5 – 9 CCF, and 10+ CCF) should remain intact and continue going forward. The District has a number of different tiers and tier sizes for commercial and irrigation customers. The tier sizes are even more complex in that they have been established by meter size (larger meters received larger tier block sizes). Upon reviewing these rate structures, it was concluded that movement to a uniform rate structure would be a significant improvement to the structure. As is discussed later in this section of the report, the current rate structure for commercial and irrigation has many tiers, but little difference in the pricing of the tiers. Essentially, the current pricing of the tiers is a uniform rate. In addition, the consumption patterns for the commercial customers are relatively stable (see commercial consumption graph). Movement to a uniform rate structure for commercial and irrigation would seem to offer a number of benefits including ease of customer understanding, ease of rate administration, and a greater ability to legally defend the rates, particularly as it relates to the pricing of the tiers. Given this review of the number and size of tiers by customer class of service, the focus of the technical analysis can shift to the equitable allocation of costs and the pricing of the tiers. 5.4.2 Establishing the Cost-Basis for the Pricing Tiers While there remains much discussion in the legal and rate community as to the impacts and stricter technical (legal) requirements as a result of the Capistrano decision, HDR has concluded that utilities have available to them at least three technical approaches to be able to demonstrate (i.e., cost justify) the individual pricing of the tiers. These technical approaches encompass the following areas: 1. Cost differences in water supply (i.e., stacking of water supply resources to tiers). 2. Cost differences from high peak use consumers (relationship of average use to peak use). 3. Direct assignment of costs to specific tiers (e.g., conservation program costs, etc.). In certain cases, the cost differences may be related to the cost of water supply when a utility has more than one source of water supply. Additionally, this water supply approach may also include the cost of alternative water supplies (i.e., recycled or reuse water). For example, reuse Development of the Potable Water Rate Designs 41 Otay Water District – Review of the District’s Water Rates water may be assigned to higher tiers to reflect outdoor use or the need for additional/alternative water supply to meet the demands of the high use customers. The second possible source of cost differences for the pricing of tiers is related to high-peak use (peak demand) customers. Customers who use more water typically create greater demands and costs on the system. A water supply and distribution system must be sized to meet these peak use requirements. In other words, on the hottest day of the year when everyone is watering their lawn, the supply and distribution system must be sized to meet those peak use demands. Economic theory clearly states that equity is achieved when those that create the demand event, pay for the demand event. In this particular case, this has implications upon the equitable allocation of extra-capacity related costs to the different usage tiers (low use vs. high peak use). Finally, certain costs may be directly assigned to specific tiers. For example, a conservation program which focuses on outdoor water use may be directly assigned to the water tiers, or seasons, which are most directly related to outdoor use. The direct assignment to a specific price tier will create a price differential for that tier. For the District’s study, the focus of the analysis was on the second method of determining the cost impacts and cost differences associated with high peak use customers. The pricing of the tiers was developed to provide the cost-basis and meet the requirements of Proposition 218. 5.5 Development of the Unit Costs for Potable Water Rate Designs To begin the assignment of costs related to specific tiers, the results of the cost of service analysis is utilized. As noted in Section 4, the cost of service analysis classifies the revenue requirement between the various cost components of average use (base), peak use (extra- capacity), and customer (actual and weighted). However, the results previously shown in Table 4-2 which allocated the totals to the various customer classes of service, and 4-3 unit costs, are further allocated between the rate structure components (e.g., fixed charge, consumption tiers). Provided in Table 5 – 1 is a summary of the classification of the FY 2016/17 revenue requirement from the cost of service analysis. Development of the Potable Water Rate Designs 42 Otay Water District – Review of the District’s Water Rates Table 5 - 1 Summary of the Classification of the Net Revenue Requirement ($000) Cost Components Total ($000) [2] Base-Related $23,382 Capacity-Related – Peak Day Extra-Capacity 17,854 Peak Hour Extra-Capacity 0 Customer Related – Actual Customer 2,257 Weighted for Customer Accounting 0 Weighted for Meters and Services 980 Public Fire Protection 1,388 Energy Fee Related 2,195 CWA/MWD Related 12,535 Revenue Related 10,466 Direct Assignment (884) Total Net Revenue Requirements [1] $70,153 [1] – See Tables 3-3 and 4-2 for the cost basis of the net revenue requirement of $70,153,400 [2] – See Exhibit 10.1, page 2 of 2 for details of classification The total of the above classified net revenue requirements (costs), approximately $70.2 million, is the same as the total costs allocated in Table 4-3 of the cost of service analysis. This classification of the total revenue requirement for FY 2016/17 is then allocated to the various customer classes of service. Given the legal requirement to provide the cost-basis for tiered pricing, the classified costs are further allocated between the various rate structure components based on the appropriate and proportional allocation factors. The development of the allocation factors used within the cost of service analysis were reviewed and discussed in Section 4 of this report. Provided below is a more detailed discussion of the specific approach used to allocate the revenue requirement between the various customer classes of service, as established in Sections 3 and 4, to the various rate components for each customer class of service. 5.5.1 Base Allocation Factor The base allocation factor is based on the average day demands of each of the customer classes of service, and more importantly by tier. For the development of the pricing of the revised cost- based rates the following customer class components were used: Development of the Potable Water Rate Designs 43 Otay Water District – Review of the District’s Water Rates x Residential 9 Tier 1 9 Tier 2 9 Tier 3 x Multi-Family 9 Tier 1 9 Tier 2 9 Tier 3 x Commercial – All consumption x Irrigation – All consumption To develop the base allocation factor for each customer class, the usage for each class was divided by the total usage of the system. This produces the percent of the base-related costs that each class is responsible for (i.e., their proportion of base-related costs). Shown below in Table 5 – 2 is a summary of the base allocation factor. Table 5 - 2 Summary of the Base Allocation Factor Reference Calculation A B C C= A + B [1] D Class of Service FY 15/16 Consumption (CCF) Est. System Losses (4.5%) (CCF) Total Annual Use (CCF) Base Use (Average Day Use) MGD % of Total Residential Tier 1 4,108,558 184,885 4,293,443 8.80 39.7% Tier 2 1,265,732 56,958 1,322,690 2.71 12.2% Tier 3 457,593 20,592 478,185 0.98 4.4% Subtotal Residential 5,831,883 262,435 6,094,318 12.49 56.3% Multi-Residential Tier 1 884,366 39,796 924,162 1.89 8.5% Tier 2 442,488 19,912 462,400 0.95 4.3% Tier 3 89,241 4,016 93,257 0.19 0.9% Subtotal Multi-Resid. 1,416,095 63,724 1,479,819 3.03 13.7% Commercial All Consumption 1,727,472 77,736 1,805,208 3.70 16.7% Irrigation All Consumption 1,365,082 62,374 1,448,457 2.97 13.4% Total 10,361,533 466,269 10,827,802 22.19 100.0% [1] – Conversion of annual CCF to millions of gallons per day = Step 1 - Annual CCF x 748 = total gallons. Step 2 - Total gallons ÷ 1,000,000 = Millions of gallons. Step 3 - Millions of gallons ÷ 365 days = millions of gallons per day (MGD) Development of the Potable Water Rate Designs 44 Otay Water District – Review of the District’s Water Rates It is important to note that the development of the base allocation factor is primarily based on metered water consumption for each class, including a proportional share of the system losses. As an example, Residential Tier 1 consumption represents 39.7% of the total base consumption on the system. As a result, 39.7% of the total base-related costs are equitably (i.e., proportionally) allocated to Residential Tier 1. This approach is used for each of the customer classes of service for each rate component, either by tier (residential and multi-residential) or for all consumption (commercial and irrigation). The allocated base-related costs and resulting per unit costs are shown below in Table 5 – 3. Table 5 - 3 Summary of the Allocated Base Costs and Calculated Average Unit Costs Reference Calculation A B C D D = B / C Class of Service % of Total [1] Base Costs [2] Water Sales (CCF) [1] Unit Cost ($/CCF) [3] Residential Tier 1 39.7% $9,271,480 4,108,558 $2.26 Tier 2 12.2% 2,856,284 1,265,732 2.26 Tier 3 4.4% 1,032,616 457,593 2.26 Residential Total 56.3% $13,160,380 5,831,883 Multi-Residential Tier 1 8.5% 1,995,684 884,366 $2.26 Tier 2 4.3% 998,530 442,488 2.26 Tier 3 0.9% 201,384 89,241 2.26 Multi-Residential Total 13.7% $3,195597 1,416,095 Commercial All Consumption 16.7% $3,898,259 1,727,472 $2.26 Irrigation All Consumption 13.4% $3,127,871 1,365,082 $2.26 Total 100.0% $23,382,107 10,361,533 [1] – Source: Table 5-2 [2] – See Exhibit 11 and Exhibit 12 of the Potable Water Technical Appendix for additional details [3] – See Exhibit 14 of the Potable Water Technical Appendix for the full detailed calculations The figures in column A are from column D in Table 5 – 2. The costs shown in column B are based on the total base-related costs from Table 5 – 1. Column C is referenced from column A in Table 5 – 2. This is the actual metered consumption that is billed to the customers. From the unit costs developed in Table 5 – 3 above, the per unit cost basis of the tiered and uniform rates can be determined for the base-related costs (Column D). Development of the Potable Water Rate Designs 45 Otay Water District – Review of the District’s Water Rates 5.5.2 Peak Day Extra-Capacity Allocation Factor While the cost of service provided the opportunity to classify costs to peak day and peak hour extra-capacity costs, only the peak day extra-capacity cost classifier was utilized. Given that, the focus of this portion of the discussion will be on the development of the peak day extra- capacity allocation factor, the equitable allocation of the peak day extra-capacity related costs, and the resulting average unit costs. The peak day extra-capacity allocation factor utilizes the same customer classes of service as in the development of the base-related allocation factor discussed above. Whereas base-related costs are related to the average day use (i.e., volume of water used) by each class of service by tier or in total, peak day extra-capacity is related to the peak use demands each class places upon the system, by usage tier or in total. Customers demand water in different ways and at different times, thus creating different usage patterns and resulting in different peak demands and peaking factors. These usage patterns drive how the District must design/size, construct and operate the system to meet the demands of customers regardless of when they occur. To determine the allocation by tier, peaking factors need to be developed for each customer class of service by tier or for a class’ total consumption. The peaking factors for a class of service must be reasonably estimated due to a lack of specific metered data related to peak day usage for each class of service. The method used to estimate a class’s peaking factor is to review the average monthly volume of water consumed and compare it to the maximum monthly usage of water. By dividing the maximum month by the average month, a reasonable surrogate for a peak-day factor is calculated10. For example, if a customer uses an average of 10.0 CCF per month and in the peak month uses 15.0 CCF, then the peaking factor would be 1.50 (15.0 CCF / 10.0 CCF = 1.50 P.F.). In this example, the peaking factor is stating that the maximum usage in a month is 1.50 times higher than the average usage per month. Using this same approach for each customer class tier, the peaking factors can be reasonably estimated and the peak day extra-capacity allocation factor developed. In the case of the District’s study, HDR used the individual monthly customer consumption records for FY 2015 to analyze usage. The data and information was sorted to determine the consumption by tier, but also the peak month usage by tier. By sorting the data in this manner, peaking factors for peak month to average month could be calculated. In calculating a peaking factor for a class of service, the overall class average of peak month to average month is examined. In this case, a similar but slightly different approach was used to determine the peaking factors by tier. In this case, the average month is not the average of all customers, but rather, the average of the Tier 1 customer. The key assumption is that the distribution system must be built to accommodate and meet the demands of higher use customers. The distribution system would be considerably different (smaller in capacity) if all customers consumed water in a manner similar to the all Tier 1 customers. It is from that perspective that the peaking factors were calculated. Once those peaking factors were calculated, they were 10 This method of using monthly consumption data to develop an estimate of a peak day peaking factor is discussed in the AWWA M-1 manual. Development of the Potable Water Rate Designs 46 Otay Water District – Review of the District’s Water Rates then adjusted to reasonably tie to the District’s actual system peak demand (34.29 MGD). It is important to note that the average month to peak month peaking factor is not the same as the actual peak day peaking factor and given that, the adjustment to the peaking factors to reasonably tie to the District’s actual system peak demand is appropriate. Shown below in Table 5–4 is a summary of the development of the peak day extra-capacity allocation factor. Table 5 - 4 Summary of the Peak Day Extra-Capacity Allocation Factor Reference Calculation A B C C= A x B D D = C  A E Base Consumption (MGD) [1] Peak Day Peaking Factors Peak Day Use (MGD) Extra Capacity (MGD) % of Total Residential Tier 1 8.80 1.25 10.98 2.19 17.8% Tier 2 2.71 2.01 5.44 2.73 22.3% Tier 3 0.98 2.51 2.46 1.48 12.1% Subtotal Residential 12.49 18.88 6.39 52.2% Multi-Residential Tier 1 1.89 1.18 2.24 0.35 2.9% Tier 2 0.95 1.92 1.82 0.87 7.1% Tier 3 0.19 2.29 0.44 0.25 2.0% Subtotal Multi-Resid. 3.03 4.50 1.47 12.0% Commercial All Consumption 3.70 1.42 5.26 1.56 12.8% Irrigation All Consumption 2.97 1.95 5.79 2.83 23.1% Total 22.19 34.44 12.25 100.0% [1] – Source: Table 5-2 Table 5–4 summarizes the development of the peak-day extra-capacity allocation factor by customer class of service and by tier for the residential and multi-residential customer classes of service. Similar to the allocation of base costs, the peak day extra-capacity related costs are allocated in the same manner. For example, 17.8% of the peak day extra-capacity costs are allocated to Residential Tier 1 based on column E (i.e., the extra capacity, or the difference between the Residential Tier 1 peak day use and Tier 1 average day use). Table 5–5 provides a summary of the allocated peak day extra-capacity costs and the calculated average unit costs for each class of service. Development of the Potable Water Rate Designs 47 Otay Water District – Review of the District’s Water Rates Table 5 - 5 Summary of the Allocated Peak Day Extra-Capacity Costs and Reference Calculation A B C D D= B / C % of Total [1] Peak Day Extra Cap. Costs [2] Water Sales (CCF) [3] Unit Cost ($/CCF) [4] Residential Tier 1 17.8% $3,186,325 4,108,558 $0.78 Tier 2 22.3% 3,974,150 1,265,732 3.14 Tier 3 12.1% 2,154,947 457,593 4.71 Residential Total 52.2% $9,315,422 5,831,883 Multi-Residential Tier 1 2.9% $510,042 884,366 $0.58 Tier 2 7.1% 1,269,763 442,488 2.87 Tier 3 2.0% 360,758 89,241 4.04 Multi-Residential Total 12.0% $2,140,563 1,416,095 Commercial All Consumption 12.8% $2,278,042 1,727,472 $1.32 Irrigation All Consumption 23.1% $4,120,125 1,365,082 $2.97 Total 100.0% $17,854,152 10,361,533 [1] – Source: Table 5-4 [2] – See Exhibit 11 and Exhibit 12 of the Potable Technical Appendix for additional details [3] – Source: Table 5-2 [4] – See Exhibit 14 of the Potable Water Technical Appendix for the full detailed calculations The figures in column A are from column E in Table 5 – 4. The peak day extra capacity costs shown in column B are referenced from the peak day extra-capacity costs shown on Table 5 – 1. Finally, Column C is referenced from Table 5 – 2 and is reflective of metered water sales. Combining the unit costs from the base and peak day extra-capacity average unit costs results in the basis for the tiered pricing. It is important to note that these are not the total costs associated with each class of service, but the costs related to the volumetric (usage) portion of the rate structure. Table 5–6, shown below, provides the summation of the volumetric base and peak day extra- capacity unit costs. This table sums the costs from Table 5 – 3, column D and Table 5 – 5 column D. Development of the Potable Water Rate Designs 48 Otay Water District – Review of the District’s Water Rates Table 5 - 6 Summary of the Cost-Basis for the Volumetric Rate Components Reference A B C A + B Classes of Service Base Costs ($/CCF) [1] Peak Day Extra- Capacity Costs ($/CCF) {2] Total Unit Cost ($/CCF) Residential Tier 1 $2.26 $0.78 $3.03 Tier 2 2.26 3.14 5.40 Tier 3 2.26 4.71 6.97 Multi-Residential Tier 1 $2.26 $0.58 $2.83 Tier 2 2.26 2.87 5.13 Tier 3 2.26 4.04 6.30 Commercial All Consumption $2.26 $1.32 $3.58 Irrigation All Consumption $2.26 $2.97 $5.23 [1] – Source: Table 5-3, Column D. [2] – Source: Table 5-5, Column D. The results shown in Table 5–6 above are the basis for the District’s volumetric (consumption/usage) pricing for the revised cost-based tiered rates and uniform rate structures. The analysis and costs shown above have been developed to comply with the recent legal decisions related to developing cost-based water rates. 5.5.3 Fixed Monthly Meter Charges The District’s existing rate structure has a fixed monthly meter charge, and it is a single schedule of meter charges which vary by meter size (3/4” – 10”). The District’s current fixed charge was based, in part, upon the California Urban Water Conservation Council’s Best Management Practices (BMP 1.4)11. BMP 1.4 addressed conservation-based rate structures and one portion of the BMP provided the guideline that no more than 30% of the total revenue be derived from fixed charges. The District has historically established their rates to comply with this BMP and in FY 2017, the District lowered their proposed fixed monthly meter charges to remain compliant with this BMP. Since that time, BMP 1.4 has been reviewed in the context of drought and revised/updated such that the 30% limitation no longer is relevant. This allows the District to return their fixed monthly meter charge to cost-based levels. The cost of service analysis developed herein provides the cost-basis for establishing the fixed monthly meter charges by customer class of service. 11 The California Urban Water Conservation Council is now the California Water Efficiency Partnership. Development of the Potable Water Rate Designs 49 Otay Water District – Review of the District’s Water Rates The fixed monthly meter charges collect a number of different cost components within the District’s cost of service study. These include customer related costs, fire protection and revenue related cost components. In summary form, the total costs related to the fixed monthly meter charges which were equitably allocated to each class of service were then divided by the number of equivalent 3/4” meters within each customer class of service to determine the $/equivalent meter/month. This process is summarized below in Table 5-7. Table 5 - 7 Summary of the Determination of the Fixed Monthly Meter Charges ($/Equivalent 3/4” Meter/Month) Cost Components [1] Total Residential Multi- Residential Commercial Irrigation Customer Related – Actual Customer $2,257,033 $2,092,153 $37,727 $65,626 $61,527 Customer Acctg. 0 0 0 0 0 Meters / Services 979,633 781,176 49,891 66,670 81,895 Subtotal $3,236,665 $2,873,329 $87,618 $132,296 $143,422 Pub. Fire Protection $1,388,270 $1,217,951 $36,604 $133,715 $0 Revenue Related 10,446,406 6,248,156 1,203,403 1,405,078 1,589,770 Direct Assignment (884,100) (884,100) 0 0 0 Total Costs $14,187,242 $9,455,335 $1,327,625 $1,671,089 $1,733,192 Equivalent Meters [2] 57,303 45,694 2,918 3,900 4,790 $/Equiv. Meter/Mth [3] $20.63 $17.24 $37.91 $35.71 $30.15 [1] – See Exhibit 12 of the Potable Water Technical Appendices for details of the costs by component and class of service. [2] – Equivalent meters are developed on Exhibit 5b of the Potable Water Technical Appendices [3] – Calculation = Total costs ÷ number of equivalent meters ÷ 12 months In calculating the average unit costs for fixed monthly charges, they were calculated on an individual class of service basis and by the overall system average total. The overall system average total is $20.63/month for a 3/4” meter. This compares to the current fixed meter charge of $15.91/month for a 3/4” meter. The analysis also calculated fixed meter charges for each class of service and these range from $17.24/month for a residential 3/4” meter to $37.91/month for a multi-family 3/4” meter. The obvious question is why do the fixed meter charges vary for the different classes of service? The answer is that certain costs which are collected within the fixed meter charges are not allocated within the cost of service study on the basis of the number of meters, but they are collected within the fixed monthly meter charge on a per meter basis. A simple example will illustrate this issue. Public fire protection costs are related to fire hydrants, along with the over-sizing of distribution mains and reservoir storage to provide public fire protection. These costs are classified as being public fire protection-related and then equitably and proportionally allocated to each customer class of service on the basis of each group’s fire protection requirements (gallons per minute of fire flow and the duration of fire flow). A residential customer does not have the same fire flow Development of the Potable Water Rate Designs 50 Otay Water District – Review of the District’s Water Rates requirements as a large multi-residential or commercial building. A large multi-residential or commercial building requires a greater gallon per minute flow and for a longer duration. Given that, those customers are equitably allocated a greater proportion of the public fire protection costs. How these costs, and other similar costs, are recouped within the rates is what creates the differential in the monthly fixed meter charge. While it may appear that the fixed meter charge is increasing significantly for some customer classes of service, it should be pointed out that the fixed meter charge is a relatively smaller portion of the multi-residential and commercial customer’s total water bill, compared to a residential customer. This aspect of the rate design analysis can be seen with the individual bill comparisons. 5.5.4 CWA/MWD Charges The other fixed meter charge is the CWA/MWD Charge. This is essentially treated as a “pass- through” cost within the cost of service study. As will be recalled from Table 5-1, the District annually incurs approximately $12.5 million in CWA/MWD charges. The cost of service developed herein has segregated those costs and they are analyzed separately. Provided below in Table 5-8 is a summary overview of the CWA/MWD charges and average unit costs. Table 5 - 8 Summary of the Determination of the Fixed Monthly CWA/MWD Meter Charges ($/Equivalent 3/4” Meter/Month) Cost Components Total Residential Multi- Residential Commercial Irrigation CWA/MWD Charges [1] – $12,535,200 $8,476,376 $1,041,762 $1,305,068 $1,711,994 Equivalent Meters 68,817 46,534 5,719 7,165 9,399 $/Equiv. Meter/Mth [2] $15.18 $15.18 $15.18 $15.18 $15.18 [1] – See Exhibit 12 of the Potable Water Technical Appendices for details of the CWA/MWD charges. [2] – Calculation = Total costs ÷ number of equivalent meters ÷ 12 months In this particular case, the District incurs the cost on a per meter basis and it is allocated on a per meter basis. Given that, the equivalent CWA/MWD meter charge is the same for all customer classes of service. 5.5.5 Energy Charges The District’s energy charges are essentially a pass-through cost. Similar to the CWA/MWD charges, the District’s energy costs are segregated in the cost of service analysis and then divided by the appropriate billing units to establish a $/CCF energy charge. This rate is separate and distinct from the consumptive charges developed above. The total energy charge related costs were equal to $2,194,700 (Exhibit 12 of the Potable Water Technical Appendix). The total billable energy charge volumes were 10,232,000 CCF and resulted in an energy charge rate of $0.064/CCF (6.4ൔ/CCF). It is important to note that energy charges are a pass-through cost and are adjusted from time-to-time, as appropriate, to reflect the current costs being incurred by the District. For that reason, the energy charge is simply calculated to demonstrate its reasonableness to the current energy charge levels. Development of the Potable Water Rate Designs 51 Otay Water District – Review of the District’s Water Rates Given the development of the various average unit costs, the focus can shift to the development of the actual rate structures and the recommended changes. 5.6 Review of the Potable Rate Design Structures The District currently has four potable water rate schedules (structures). These are as follows: x Residential x Multi-Residential x Commercial x Irrigation Provided below is a detailed discussion of the rate designs associated with each class of service. In developing these rate designs, HDR developed a structure that uses the individual fixed monthly meter charges for each customer class of service, along with the calculated average unit costs for the consumption charges. These unit costs were previously developed in Table 4- 4 and discussed in detail in Section 5.5. 5.6.1 Residential Rate Design Structure The District’s current residential rate structure contains a fixed monthly system fee, a MWD/CWA fee and usage (consumption) charges. The current rate’s usage charges contain four pricing tiers which are specifically designed to encourage conservation of water. Provided below in Table 5-9 is a summary of the present and the revised cost-based residential rate structure. Development of the Potable Water Rate Designs 52 Otay Water District – Review of the District’s Water Rates Table 5-9 Review of the District’s Residential Rate Design Current Residential Rate Revised Cost-Based Residential Rate Monthly System Fee [1] - Monthly System Fee - 3/4” $15.91 3/4” $17.24 1” 22.47 1” 24.36 1-1/2” 38.88 1-1/2” 42.15 2” 58.55 2” 63.48 Plus: CWA/MWD Fee [1] - Plus: CWA/MWD Fee - 3/4” $15.00 3/4” $15.20 1” 27.84 1” 28.21 1-1/2” 62.96 1-1/2” 63.80 2” 107.08 2” 108.51 Plus: Usage Charges Plus: Usage Charges 1 – 5 [2] $2.53/CCF 1 – 10 $3.03/CCF 6 – 10 $3.95/CCF 11 – 22 $5.40/CCF 11 – 22 $5.13/CCF 23 – Over $6.97/CCF 23 – up $7.90/CCF [1] – Current rate schedule has fees for 3” through 10” meters. Largest residential meter currently installed is a 2” meter. [2] – Customers whose total consumption is 10 units or less per month shall receive a benefit of a lower rate for units 1 – 5. One unit (CCF) equals 748 gallons. As can be seen in Table 5-9, the revised cost-based residential rate has simplified the rate structure and used the average unit pricing from the cost of service analysis. The revised cost- based residential rate also uses the residential monthly system fee of $17.24/month. The CWA/MWD fee has also been adjusted to the cost of service levels. Finally, the consumptive units have eliminated the “conservation tier” in the existing rate structure and simplified the rate structure to three tiers, using the pricing from the cost of service average unit cost analysis. The block sizes, or pricing tiers for residential and multi-residential, have essentially been maintained, with the exception of the “conservation tier”. As a part of the District’s 2013 comprehensive water rate study, the size of the blocks used in the District’s rate structure were reviewed, analyzed and adjusted at that time.12 It is important to understand the reasoning behind the elimination of the “conservation tier”. This tier was put in place to encourage efficient use, but it also addressed affordability concerns for low-users by providing a low-cost tier. Past and more recent court decisions related to Proposition 218 have made it clear that there must be a cost-basis for the pricing of each consumption tier. At the same time, a rate cannot be subsidized to the detriment of other ratepayers. In this particular case, the cost of service did not indicate a cost-basis for the 12 Atkins, Otay Water District, Final Report, Water and Sewer Cost of Service Study, September 25, 2013. Development of the Potable Water Rate Designs 53 Otay Water District – Review of the District’s Water Rates current first tier price of $2.53/CCF, but in order to maintain it, other ratepayers would need to subsidize the low-use customers, which would seem to violate the legal requirements of Proposition 218. At the same time, the customer who is eligible for the conservation tier paid $2.53/CCF for their first five (5) CCF of water. An ineligible customer would pay $3.95/CCF for their first five (5) CCF of water. This created two different prices for essentially the same volume of water, which was deemed problematic under Proposition 218, post Capistrano. Those same comments and observations can be made for the high-use customers. In this case, the revised cost-based rate structure has reduced the tail-block price from $7.90/CCF to $6.97/CCF. Historically, the common utility perspective with regard to the tail block was to provide a “price signal” or incentive to encourage more efficient outdoor water use. At some utilities, the tail block price was not established at a cost-based level, but rather, at some level which would gain the customer’s attention and provide a price incentive to modify the customer’s water consumption behavior. The recent Capistrano decision clearly ruled that establishing the tail block absent any cost-basis was illegal under the requirements of Proposition 218. The Capistrano decision did not find that tiered rates were illegal under Proposition 218, but that each pricing tier must have a cost-basis. Given that, the District’s revised cost-based residential rate is compliant with Proposition 218 in that it utilizes the cost-based pricing developed within the average unit costs. Understanding the impacts to customers from these changes can be determined within a bill comparison. Shown to the right is the residential bill comparison for the current and revised cost-based residential rates. The bill comparison is used to compare the present residential bill to the revised cost-based residential bills at various levels of consumption. The bill comparison assumes a residential customer with a 3/4” meter. In viewing this bill comparison, it is important to understand that the bill impacts for a customer will vary if the customer has a larger meter size than a 3/4” meter. The bill comparison clearly illustrates that the bill impacts to residential customers will vary as a result of the movement to the revised Consumption Present (CCF)Rates $ % 0 $30.91 $32.44 $1.53 4.9% 1 33.44 35.47 2.03 6.1% 2 35.97 38.50 2.53 7.0% 3 38.50 41.53 3.03 7.9% 4 41.03 44.56 3.53 8.6% 5 43.56 47.59 4.03 9.3% 6 47.51 50.62 3.11 6.5% 7 51.46 53.65 2.19 4.3% 8 55.41 56.68 1.27 2.3% 9 59.36 59.71 0.35 0.6% 10 63.31 62.74 (0.57) -0.9% 25 148.57 148.45 (0.12) -0.1% 45 306.57 287.85 (18.72) -6.1% Fixed Charge $/Acct.Fixed Charge $/Acct. 3/4"$15.91 3/4"$17.24 CWA / MWD Fees $/Acct.CWA / MWD Fees $/Acct. 3/4"$15.00 3/4"$15.20 Consumption Charge $/CCF Consumption Charge $/CCF 1 - 5*$2.53 0 - 10 $3.03 5 - 10 3.95 10 - 22 5.40 10 - 22 5.13 22 +6.97 22 +7.90 *Customers must use < 10 CCF to be eligible for tier 1 pricing Present Rates Cost-Based Rates Cost-Based Rates Residential Rates - 3/4" Difference “The recent Capistrano decision clearly ruled that establishing the tail block absent any cost-basis was illegal under the requirements of Proposition 218. The Capistrano decision did not find that tiered rates were illegal under Proposition 218, but that each pricing tier, including the tail block, must have a cost-basis.” Development of the Potable Water Rate Designs 54 Otay Water District – Review of the District’s Water Rates residential rates. Low-use customers will see a relatively small dollar increase in their monthly bill as a result of the increase in the fixed charges and the elimination of the “conservation tier”. Average use customers may see little change in their total annual bill. In reviewing the residential bill comparisons, the blue bar is the average residential use. Finally, high-use customers will see a reduction in their bill, primarily as a result of the reduction of the tail block price to a cost-based level. The graph below the bill comparison and to the right is the information in the residential bill comparison presented in a graphical format. 5.6.2 Multi-Residential Rate Design Structure The District’s present multi-residential rate structure is similar to the residential rate structure but has slightly different tiered block sizes. Provided below in Table 5-10 is a summary of the present multi-residential rate and the revised cost-based multi-residential rate design structure. Development of the Potable Water Rate Designs 55 Otay Water District – Review of the District’s Water Rates Table 5-10 Review of the District’s Multi-Residential Rate Design Current Multi-Residential Rate Revised Cost-Based Multi-Residential Rate Monthly System Fee - Monthly System Fee - 3/4” $15.91 3/4” $37.90 1” 22.47 1” 53.53 1-1/2” 38.88 1-1/2” 92.62 2” 58.55 2” 139.47 3” 111.04 3” 264.51 4” 170.10 4” 405.20 6” 334.18 6” 796.07 8” 531.05 8” 1,265.04 10” 760.72 10” 1,812.15 Plus: CWA/MWD Fee - Plus: CWA/MWD Fee - 3/4” $15.00 3/4” $15.20 1” 27.84 1” 28.21 1-1/2” 62.96 1-1/2” 63.80 2” 107.08 2” 108.51 3” 227.75 3” 230.79 4” 364.72 4” 369.58 6” 746.59 6” 756.54 8” 1,205.65 8” 1,221.73 10” 1,735.39 10” 1,758.53 Plus: Usage Charges [1] Plus: Usage Charges [1] 1 – 4 CCF $3.90/CCF 1 – 4 CCF $2.83/CCF 5 – 9 CCF $5.05/CCF 5 – 9 CCF $5.13/CCF 10 – up CCF $7.80/CCF 10 – up CCF $6.30/CCF [1] – Units per living unit While the present multi-residential rate appears to be very similar to the District’s residential rate, there are subtle differences. First, the multi-residential usage charges do not contain a “conservation tier” and the three tier sizes are slightly different block sizes to better reflect the usage characteristics of this customer group.13 The revised cost-based multi-residential rate design is similar to the residential design rate in structure. The weighting of the larger sized meters is consistent with the District’s current weighting approach which is appropriate, equitable and reflective of costs. The size of tiers (block sizes) have been maintained under the revised rate structure. In viewing the pricing of the usage charges it can be seen that the pricing is flattening to a certain extent. The peaking characteristics of this class of service are lower (i.e., flatter) than 13 Tier (block) sizes were reviewed in detail as a part of the 2013 comprehensive rate review conducted by Atkins. Development of the Potable Water Rate Designs 56 Otay Water District – Review of the District’s Water Rates the residential customer class. As a result, a small proportion of peak day extra-capacity costs are allocated to the multi-residential class of service. This results in lower charges for the first and third pricing blocks. Provided below is the bill comparison for the revised cost-based multi-residential rate design. In viewing the multi-residential bill comparison it is important to note that the bill comparison assumes a multi-residential customer with a 3” meter and 30 living units. For multi-family customers, the average use per living unit is approximately 4.5 CCF. The bill impacts will vary between multi- residential customers based upon meter size and the average use per dwelling unit. In other words, the total bill and the bill impacts for a customer with a 1” meter and an average dwelling unit usage of 5 CCF per dwelling unit will be different than customer with a 2” meter and 5 CCF of usage per dwelling unit. It should also be noted that the revised monthly system fees and CWA/MWD fees are based upon the customer class specific costs for these fees. In this case, compared to residential customers, the monthly system fixed fees are higher, for a comparable sized meter. While it was relatively easy to understand the bill impacts to a residential customer, understanding the bill impacts to multi-residential customers is far more complex given the range of meter sizes, living units associated with the meter, and the average use per living unit. 5.6.3 Commercial Rate Design Structure The present commercial rate is similar, but different, from the previous rate designs reviewed. In this case, the usage tiers (block sizes) are differentiated by meter size, however, the pricing for each tier is the same. Provided below in Table 5-11 is a summary of the present and revised cost-based commercial rate design structure. Consumption Avg CCF Use Present (CCF)Per DW Rates $ % 0 0.0 $338.79 $495.30 $156.51 46.2% 15 0.5 397.29 537.75 140.46 35.4% 25 0.8 436.29 566.05 129.76 29.7% 35 1.2 475.29 594.35 119.06 25.1% 45 1.5 514.29 622.65 108.36 21.1% 55 1.8 553.29 650.95 97.66 17.7% 75 2.5 631.29 707.55 76.26 12.1% 90 3.0 689.79 750.00 60.21 8.7% 105 3.5 748.29 792.45 44.16 5.9% 120 4.0 806.79 834.90 28.11 3.5% 135 4.5 865.29 877.35 12.06 1.4% 150 5.0 923.79 919.80 (3.99) -0.4% 165 5.5 999.54 996.75 (2.79) -0.3% 185 6.2 1,100.54 1,099.35 (1.19) -0.1% 205 6.8 1,201.54 1,201.95 0.41 0.0% 225 7.5 1,302.54 1,304.55 2.01 0.2% 245 8.2 1,403.54 1,407.15 3.61 0.3% 265 8.8 1,504.54 1,509.75 5.21 0.3% Fixed Charge $/Acct.Fixed Charge $/Acct. 3"$111.04 3"$264.51 CWA/MWD Fees $/Acct.CWA/MWD Fees $/Acct. 3"$227.75 3"$230.79 Consumption Charge $/CCF Consumption Charge $/CCF 0 - 4 $3.90 0 - 4 $2.83 5 - 9 5.05 5 - 9 5.13 10 +7.80 10 +6.30 Multi-Family Rates - 3" (Assumes 30 Units) Difference Present Rates Cost-Based Rates Cost-Based Rates Development of the Potable Water Rate Designs 57 Otay Water District – Review of the District’s Water Rates Table 5-11 Review of the District’s Commercial Rate Design Current Commercial Rate Revised Cost-Based Commercial Rate Monthly System Fee - Monthly System Fee - 3/4” $15.91 3/4” $35.70 1” 22.47 1” 50.42 1-1/2” 38.88 1-1/2” 87.24 2” 58.55 2” 131.38 3” 111.04 3” 249.16 4” 170.10 4” 381.68 6” 334.18 6” 749.86 8 531.05 8 1,191.61 10” 760.72 10” 1,706.96 Plus: CWA/MWD Fee - Plus: CWA/MWD Fee - 3/4” $15.00 3/4” $15.20 1” 27.84 1” 28.21 1-1/2” 62.96 1-1/2” 63.80 2” 107.08 2” 108.51 3” 227.75 3” 230.79 4” 364.72 4” 369.58 6” 746.59 6” 756.54 8 1,205.65 8 1,221.73 10” 1,735.39 10” 1,758.53 Plus: Usage Charges Plus: Usage Charges Less than a 10” Meter All Usage $3.58/CCF 1 – 185 $4.17/CCF 186 – 1,400 $4.23/CCF 1,401 – up $4.30CCF 10” Meter and Greater 0 – 7,426 $4.17/CCF 7,427– 14,616 $4.23/CCF 14,617 - up $4.30CCF Similar to the prior rate designs discussed, the revised cost-based commercial rate uses the customer class specific unit costs to establish the monthly system fee. It also utilizes the average unit costs from Table 4-4 to establish the cost-basis for the MWD/CWA fees and the consumptive charges. As can be seen in the above table, the present commercial rate is somewhat complicated in that the tier sizes vary by meter size, yet the pricing of each comparable tier is the same. At the same time, the price differential between the tiers is relatively minor, thus, movement to a uniform rate structure appeared to be reasonable and appropriate. Development of the Potable Water Rate Designs 58 Otay Water District – Review of the District’s Water Rates Provided below is the bill comparison for a commercial customer, assuming a customer with a 2” meter. The bill impacts will vary by meter size and the specific consumption characteristics of the customer. The basis for movement to a uniform consumption charge is two-fold. First, as noted previously, the pricing under the current rate structure has very little differentiation between the first block price and the tail block price (13ൔ/CCF). For all practical purposes, the current consumption charge is essentially a uniform charge. The other key perspective regarding the basis for movement to a uniform consumption charge for commercial customers is that commercial customers are a diverse group of customers with significantly more diverse and different consumption patterns than residential customers. Residential customers, as a group, tend to have fairly similar consumption patterns, and given that, a tiered residential rate structure can be designed to target specific segments of usage (i.e., indoor usage, outdoor usage, inefficient usage, etc.). In contrast to this, a commercial customer’s usage can vary significantly, but more importantly, high volumes of use do not necessarily signify inefficient or wasteful use. 5.6.4 Irrigation Rate Design Structure The final potable water rate is the irrigation rate. The current irrigation rate structure is similar to the commercial rate structure in that it uses a tiered rate structure, but the tier sizes vary by meter size. The pricing of the tiers is consistent between the variations based upon meter size. Similar to the commercial rate structure, while there is a tiered rate structure in place, the pricing of the tiers does not vary significantly. The difference between the first tier and the tail block price is only 13ൔ/CCF. Provided below in Table 5-12 is the current and revised cost-based irrigation rate design. Consumption Present (CCF)Rates $ % 0 $165.63 $239.89 $74.26 44.8% 5 186.48 257.79 71.31 38.2% 10 207.33 275.69 68.36 33.0% 25 269.88 329.39 59.51 22.0% 50 374.13 418.89 44.76 12.0% 75 478.38 508.39 30.01 6.3% 100 582.63 597.89 15.26 2.6% 135 728.58 723.19 (5.39) -0.7% 170 874.53 848.49 (26.04) -3.0% 205 1,021.68 973.79 (47.89) -4.7% 240 1,169.73 1,099.09 (70.64) -6.0% 275 1,317.78 1,224.39 (93.39) -7.1% 310 1,465.83 1,349.69 (116.14) -7.9% 345 1,613.88 1,474.99 (138.89) -8.6% 380 1,761.93 1,600.29 (161.64) -9.2% 415 1,909.98 1,725.59 (184.39) -9.7% 450 2,058.03 1,850.89 (207.14) -10.1% 485 2,206.08 1,976.19 (229.89) -10.4% Fixed Charge $/Acct.Fixed Charge $/Acct. 2"$58.55 2"$131.38 CWA / MWD Fees $/Acct.CWA / MWD Fees $/Acct. 2"$107.08 2"$108.51 Consumption Charge $/CCF Consumption Charge $/CCF 0 - 185 $4.17 All Usage $3.58 186 - 1,400 4.23 Over 1,400 4.30 Commercial Rates - 2" Difference Present Rates Cost-Based Rates Cost-Based Rates Development of the Potable Water Rate Designs 59 Otay Water District – Review of the District’s Water Rates Table 5-11 Review of the District’s Irrigation Rate Design Current Irrigation Rate Revised Cost-Based Irrigation Rate Monthly System Fee - Monthly System Fee - 3/4” $15.91 3/4” $30.15 1” 22.47 1” 42.58 1-1/2” 38.88 1-1/2” 73.68 2” 58.55 2” 110.95 3” 111.04 3” 210.42 4” 170.10 4” 322.35 6” 334.18 6” 633.28 8 531.05 8 1,006.36 10” 760.72 10” 1,441.59 Plus: CWA/MWD Fee - Plus: CWA/MWD Fee - 3/4” $15.00 3/4” $15.20 1” 27.84 1” 28.21 1-1/2” 62.96 1-1/2” 63.80 2” 107.08 2” 108.51 3” 227.75 3” 230.79 4” 364.72 4” 369.58 6” 746.59 6” 756.54 8 1,205.65 8 1,221.73 10” 1,735.39 10” 1,758.53 Plus: Usage Charges Plus: Usage Charges 3/4” to 1” Meter All Usage $5.23/CCF 0 – 54 $5.68/CCF 55 – 199 $5.74/CCF 200 – up $5.81/CCF 1-1/2” to 2” Meter 0 – 144 $5.68/CCF 145 – 355 $5.74/CCF 356 - up $5.81/CCF 3” Meter and Greater 0 – 550 $5.68/CCF 551 – 1,200 $5.74/CCF 1,201 - up $5.81/CCF The revised cost-based irrigation rate has utilized the average unit cost information from the cost of service analysis to establish the rate. Provided below is the irrigation bill comparison for the irrigation rate structure. Development of the Potable Water Rate Designs 60 Otay Water District – Review of the District’s Water Rates The bill comparison shown to the right is for an irrigation customer with a 2” meter. The bill impacts will certainly vary for customers with different meter sizes and consumptive use. In other words, the bill impacts for a customer with a 1” meter will be different than customer using the same amount of water, but a larger meter. The basis for the movement to a uniform rate structure for this particular class of service is similar to the perspective provided for the commercial customers. That is, the current irrigation rate has very little price differential and is essentially a uniform rate (price). The other reason is related to the pricing of the tiers. In the case of irrigation, there certainly can be inefficient or wasteful use, but most large irrigation customers manage their usage carefully and there are other means (other than pricing/rates) to encourage and achieve more efficient usage by these customers. Finally, the elimination of the complicated consumption charges has greatly simplified the customer understanding and administration of the irrigation rate structure. 5.7 Energy Fees For the District, energy fees are a pass-through cost and not a rate, per se. Energy charges are contained in District Code 25.03F and the charge is per 100 feet of lift over 450 feet. Given that the cost of electricity for pumping is segregated by the District, the cost of service demonstrated that these fees are a cost-based pass-through cost. 5.8 Summary of the Level of the Rate Revenues The rates for each customer class of service meet the results of the revenue requirement and cost of service results. Provided in Table 5-12 is a summary of the revenue targets based on the revenue requirement and cost of service analyses, compared to the revised cost-based rate designs presented herein. Consumption Present (CCF)Rates $ % 0 $165.63 $219.46 $53.83 32.5% 15 250.83 297.91 47.08 18.8% 30 336.03 376.36 40.33 12.0% 45 421.23 454.81 33.58 8.0% 60 506.43 533.26 26.83 5.3% 75 591.63 611.71 20.08 3.4% 90 676.83 690.16 13.33 2.0% 105 762.03 768.61 6.58 0.9% 120 847.23 847.06 (0.17) 0.0% 135 932.43 925.51 (6.92) -0.7% 150 1,017.99 1,003.96 (14.03) -1.4% 165 1,104.09 1,082.41 (21.68) -2.0% 180 1,190.19 1,160.86 (29.33) -2.5% 195 1,276.29 1,239.31 (36.98) -2.9% 210 1,362.39 1,317.76 (44.63) -3.3% 225 1,448.49 1,396.21 (52.28) -3.6% 240 1,534.59 1,474.66 (59.93) -3.9% 255 1,620.69 1,553.11 (67.58) -4.2% Fixed Charge $/Acct.Fixed Charge $/Acct. 2"$58.55 2"$110.95 CWA/MWD Fees $/Acct.CWA/MWD Fees $/Acct. 2"$107.08 2"$108.51 Consumption Charge $/CCF Consumption Charge $/CCF 0 - 144 $5.68 All Usage $5.23 144 - 355 5.74 355 +5.81 Irrigation Rates - 2" Difference Present Rate Cost-Based Rates Cost-Based Rates Development of the Potable Water Rate Designs 61 Otay Water District – Review of the District’s Water Rates Table 5 - 12 Comparison of the FY 2016/17 Allocated Costs and Revised Cost-Based Rate Revenues ($000’s) Present Revenues Cost of Service Adjustment Target Revenues Revised Cost-Based Revenues [1] $ Difference Residential $40,665 0.6% $40,408 $40,411 $3 Multi-Residential 7,832 1.6% 7,706 7,705 (1) Commercial 9,145 0.1% 9,152 9,162 10 Irrigation 10,347 3.3% 10,693 10,697 4 Subtotal Rates $67,989 0.0% $67,959 $67,975 $16 Energy Fees $2,164 1.4% $2,195 $2,187 ($8) Total Net. Rev. Require. $70,153 0.0% $70,153 $70,162 $8 As can be seen, the revenues to be generated by the revised cost-based rates closely reflect the proportional allocation of costs to the various customer classes of service. The revised cost- based rates utilized the average unit costs derived from the cost of service analysis. A more detailed revenue proof of the revised cost-based rates can be found in the Potable Water Technical Appendix of this report. This concludes the discussion of the revised potable water rates. Detailed exhibits for the various rate designs are included within the potable water technical appendices. 5.9 Summary of the Potable Rate Study HDR has developed a comprehensive review of the District’s potable water rates. This included the establishment of a revenue requirement to determine the District’s overall revenue needs. Next, a potable water cost of service analysis was developed to equitably allocate the revenue requirements to the customer classes of service, and finally, revised cost- based potable water rate structures were developed to collect the appropriate level of revenue using the average unit costs derived from the cost of service analysis. The resulting cost-based potable water rates, as developed herein, are in the opinion of HDR, cost- based and equitable and compliant with the requirements of Proposition 218, as they are currently known and understood. “The resulting cost-based potable water rates, as developed herein, are in the opinion of HDR, cost-based and equitable and compliant with the requirements of Proposition 218, as they are currently known and understood.” Development of the Recycled Water Rate Designs 62 Otay Water District – Review of the District’s Water Rates 6.1 Introduction The previous section of the report reviewed the potable water rates for the District. The District also provides non-potable or recycled water to a limited number of customers. Recycled water currently has two rates; a rate for recycled commercial and recycled irrigation customers. The process used to evaluate the District’s recycled water rates is similar to the general approach used to evaluate the potable water rates; a revenue requirement analysis, a cost of service analysis and the design of cost-based recycled water rates. While the approach is similar to the potable water study, the recycled rate study is greatly simplified. Provided below is a discussion of each of these elements. 6.2 Recycled Water Revenue Requirement Section 3 of this report provided a detailed discussion of the District’s revenue requirement analysis. The District’s total revenue requirement was summarized in Table 3-2. In Section 3.3, the total revenue requirement was equitably allocated between potable and non-potable costs. This allocation of costs between potable and non-potable was previously summarized on Table 3-3. In summary form, the non-potable customers were allocated a total of $8.9 million of costs. From Table 3-3, the target level of recycled (non-potable) rate revenues to be collected can be determined. This is summarized below in Table 6-1. Table 6 – 1 Summary of the District’s FY 2016/17 Revenue Requirement to be Collected From Recycled Rate Revenues ($1,000) Revenue Requirement Components Total ($1,000) Total Recycled Revenue Requirement $8,909 Less: Miscellaneous Recycled Water Revenues (1,632) Balance to be Collected From Recycled Water Rates $7,277 In summary form, the total revenue requirement of the recycled water utility is approximately $8.9 million. The District receives approximately $1.6 million14 in miscellaneous revenues to off-set the total recycled water revenue requirement. The balance, or approximately $7.3 million, will need to be collected from recycled water rate revenues. Given the recycled revenue requirement, the next step is the equitable allocation of the recycled water revenue requirement. 14 This is primarily composed of CWA/MWD Rebates which total approximately $1.35 million. 6. Development of Recycled Water Rate Designs Development of the Recycled Water Rate Designs 63 Otay Water District – Review of the District’s Water Rates 6.3 Recycled Water Cost of Service Analysis As discussed above, the District currently has two different recycled water rates; commercial and irrigation. Given that, the recycled water cost of service analysis will allocate the total recycled water revenue requirement between the recycled commercial and recycled irrigation customers using a cost of service analysis framework. The recycled water cost of service is not as complex as the potable water cost of service analysis, but uses many of the same cost of service principles as was used in the potable water cost of service analysis. The recycled water cost of service analysis began by reviewing the total plant assets of the recycled water system. The plant assets were assigned between “Common to All” and “Direct Assignment – Recycled Irrigation”. This distinction was made since much of the recycled water plant assets are shared by all recycled water customers, whereas other facilities appear to be primarily benefiting only the recycled irrigation customers. Recycled commercial customers have provided their own recycled storage facilities and, therefore, are not assigned a portion of the District’s recycled water storage facilities. In this case, of the approximate $69.5 million in recycled water assets, approximately 78% or $54.3 million are classified as “Common to All” and the balance, or 22% ($15.3 million) are directly assigned to recycled irrigation customers. The $15.3 million reflects the value of the District’s current recycled water storage facilities. A more detailed exhibit of the functionalization and classification of the District’s recycled water plant can be found on Exhibit 16 of the Technical Appendices. Given the classification of the plant assets, the recycled water revenue requirement can be functionalized and classified. Similar to the potable water cost of service analysis, the classified recycled plant assets were used to equitably assign the recycled water costs (i.e., the revenue requirements). First, the recycled water revenue requirements were segregated between “common to all” and the direct assignment to recycled irrigation. The vast majority of costs were assigned in this manner. The exception to this approach was water costs, which were assigned 100% “common to all” and the power (energy) costs included within the water costs. The energy costs were directly assigned to energy fees. This is similar to the approach used in the potable water cost of service analysis. Next, the “common to all” costs were classified between base (volumetric use) and capacity (peak use). This classification was based on the District’s average use (base) to peak use characteristics. It was presumed that recycled water is a substitute for potable irrigation and that a reasonable classification would be reflective of the District’s average use to peak use relationship. In this case, it was presumed to be 40% base and 60% capacity. A detailed exhibit of the functionalization and classification of the recycled water revenue requirements can be found on Exhibit 17 of the Technical Appendices. Given the classification of the recycled water revenue requirements, the final step of the recycled water cost of service is to equitably allocate the classified cost components of the recycled water revenue requirement between recycled commercial and recycled irrigation based upon their volumetric use and peak use. In analyzing peak use and developing the recycled water capacity allocation factor, the District had detailed daily metered information for the recycled commercial customers. The peak use for the recycled irrigation was developed Development of the Recycled Water Rate Designs 64 Otay Water District – Review of the District’s Water Rates in a manner similar to the potable water peaking analysis which used average month and peak month data to establish reasonable estimates. The results of the analysis clearly indicated that recycled commercial customers have a lower peaking factor (i.e. peak use impact on the system) than recycled irrigation customers. This result was not surprising since recycled commercial customer have their own recycled storage which allows them to manage their demands and minimize their peak use on the District’s system. A summary of the recycled water cost of service analysis is shown below in Table 6 – 2. Table 6 – 2 Summary of the Recycled Water Cost of Service Analysis ($1,000) Customer Class of Service Present Rate Revenues ($1,000)[1] Allocated Revenue Require. ($1,000) Bal./(Defic.) of Funds ($1,000) % Change in Rates Ave. Unit Cost ($/CCF) Recycled Commercial $745 $692 $53 7.1% $2.89 Recycled Irrigation 6,153 6,016 137 2.2% $4.09 Energy Fees 379 569 (190) 50.1% $0.093 Total Net Revenue Requir. $7,277 $7,277 $0 0.0% $4.27 [1] – Rate Revenues are a blend of the rates implemented March 1, 2016 and those implemented January 1, 2017; final rate designs are based on allocated costs As can be seen, the cost of service analysis indicates cost differences between recycled commercial and recycled irrigation customers on a per unit basis (i.e., $/CCF). These cost differences will be reflected in the development of the recycled water rates. 6.4 Recycled Water Rate Designs There currently are two recycled water rate designs. Each recycled water rate design is structured in a manner similar to the corresponding potable water rate. There is a difference in the tier block sizes between the potable commercial and recycled commercial rate. Given the similarities between the current rates, the recycled water rate structures developed as part of this study are similar to the potable water rates for commercial and irrigation. 6.4.1 Recycled Commercial Water Rates Provided below in Table 6 – 3 is a summary of the recycled commercial water rate design structure. Development of the Recycled Water Rate Designs 65 Otay Water District – Review of the District’s Water Rates Table 6 – 3 Review of the Recycled Commercial Rate Design Current Recycled Comm. Rate Revised Cost-Based Recycled Comm. Rate Monthly System Fee - Monthly System Fee - 3/4” $15.91 3/4” $35.70 1” 22.47 1” 50.42 1-1/2” 38.88 1-1/2” 87.24 2” 58.55 2” 131.38 3” 111.04 3” 249.16 4” 170.10 4” 381.68 6” 334.18 6” 749.86 8 531.05 8 1,191.61 10” 760.72 10” 1,706.96 Plus: Usage Charges Plus: Usage Charges Less than a 10” Meter All Usage $2.89/CCF 1 – 173 $3.53/CCF 174 – 831 $3.60/CCF 832 – up $3.65/CCF 10” Meter and Greater 0 – 7,426 $3.53/CCF 7,427– 14,616 $3.60/CCF 14,617 - up $3.65/CCF As can be seen, this rate design utilizes the same monthly system fee (meter charge) design as the potable commercial rates. Recycled water customers are not assessed the CWA/MWD fee. The usage charge utilizes a uniform rate structure which is the same as the revised potable water rate structure. The revised recycled commercial water rate is designed to collect the appropriate level of revenue for this particular customer class of service. Based upon the cost of service analysis, this is equal to approximately $692,000. Provided to the right is a bill comparison for the recycled commercial water customers. This bill comparison assumes a recycled commercial customer with a 1” meter. There are only two customers currently associated with this recycled water rate schedule. The bill impacts will vary between customers by meter size. In other words, the bill impacts for a customer Development of the Recycled Water Rate Designs 66 Otay Water District – Review of the District’s Water Rates with a 4” or 6” meter will be different than customer using the same amount of water, but a larger meter. 6.4.2 Recycled Irrigation Water Rates Provided below in Table 6 – 4 is a summary of the recycled commercial water rate design structure. Table 6 – 4 Review of the District’s Recycled Irrigation Rate Design Current Recycled Irrigation Rate Revised Cost-Based Recycled Irrigation Rate Monthly System Fee - Monthly System Fee - 3/4” $15.91 3/4” $30.15 1” 22.47 1” 42.58 1-1/2” 38.88 1-1/2” 73.68 2” 58.55 2” 110.95 3” 111.04 3” 210.42 4” 170.10 4” 322.35 6” 334.18 6” 633.28 8 531.05 8 1,006.36 10” 760.72 10” 1,441.59 Plus: Usage Charges Plus: Usage Charges 3/4” to 1” Meter All Usage $4.09/CCF 1 – 32 $4.85/CCF 33 – 75 $4.92/CCF 76 – up $4.99/CCF 1-1/2” to 2” Meter 0 – 130 $4.85/CCF 131 – 325 $4.92/CCF 326 - up $4.00/CCF 3” – 4” Meter 0 – 440 $4.85/CCF 441 – 1,050 $4.92/CCF 1,051 – up $4.99/CCF 6” Meter and Greater 0 – 4,000 $4.85/CCF 4,001 – 10,000 $4.92/CCF 10,001 - up $4.99/CCF Similar to the recycled commercial rate structure, this rate design utilizes the same monthly system fee (meter charge) design as the potable irrigation rates. As noted previously, recycled water customers are not assessed the CWA/MWD fee. The usage charge utilizes a uniform rate structure which is the same as the revised potable irrigation water rate structure. The revised recycled irrigation water rate is designed to collect the appropriate level of revenue for this particular customer class of service. Based upon the cost of service analysis, this is equal to approximately $6.0 million. Development of the Recycled Water Rate Designs 67 Otay Water District – Review of the District’s Water Rates Provided to the right is a bill comparison for the recycled irrigation water customers. This bill comparison assumes a recycled irrigation customer with a 1- 1/2” meter. In viewing this bill comparison it is important to understand that the bill impacts will vary between customers by meter size. In other words, the bill impacts for a customer with a 1” meter will be different than customer using the same amount of water, but a larger meter. 6.5 Summary This section of the report has provided a discussion of the development of the District’s recycled water rates. This portion of the study is intended to develop cost-based recycled water rates using the same general analytical framework as was used to develop the cost-based potable water rates. Consumption Present (CCF)Rates $ % 0 $38.88 $73.68 $34.80 89.5% 5 63.13 94.13 31.00 49.1% 10 87.38 114.58 27.20 31.1% 15 111.63 135.03 23.40 21.0% 20 135.88 155.48 19.60 14.4% 25 160.13 175.93 15.80 9.9% 30 184.38 196.38 12.00 6.5% 35 208.63 216.83 8.20 3.9% 40 232.88 237.28 4.40 1.9% 45 257.13 257.73 0.60 0.2% 50 281.38 278.18 (3.20) -1.1% 55 305.63 298.63 (7.00) -2.3% 60 329.88 319.08 (10.80) -3.3% 65 354.13 339.53 (14.60) -4.1% 70 378.38 359.98 (18.40) -4.9% 75 402.63 380.43 (22.20) -5.5% 80 426.88 400.88 (26.00) -6.1% 85 451.13 421.33 (29.80) -6.6% Fixed Charge $/Acct.Fixed Charge $/Acct. 1 1/2"$38.88 1 1/2"$73.68 Consumption Charge $/CCF Consumption Charge $/CCF 0 - 144 $4.85 All Usage $4.09 144 - 355 4.92 355 +4.99 Recycled Irrigation Rates - 1 1/2" Difference Present Rates Cost-Based Rates Cost-Based Rates Technical Appendix A – Potable Water Rate Analysis Otay Water District Water Cost of Service Study Page 1 of 2 Exhibit 1 Revenue Requirement FY 2017 Potable Non-Pot Notes Revenues Rate Revenues Water Rates $43,249,400 $43,249,400 $0 From Otay Rate Model Recycled Rates 6,464,800 0 6,464,800 From Otay Rate Model System Fees 12,637,400 12,204,600 432,800 From Otay Rate Model CWA & MWD Fees 12,535,200 12,535,200 0 100.0% 10.8%From Otay Rate Model Energy Fees 2,543,300 2,164,200 379,100 85.1% 14.9%From Otay Rate Model Additional Revenue from Rate Adj.0 0 0 - ----------------------------------------------Total Rate RevenuesTotal Rate Revenues $77,430,100 $70,153,400 $7,276,700 90.6% 9.4% Miscellaneous Revenues Tax Revenues $3,354,800 $3,354,800 $0 100.0% 0.0%From Otay Rate Model Interest 152,600 144,300 8,300 94.6% 5.4%From Otay Budget CWA & MWD Rebates 1,351,000 0 1,351,000 0.0% - From Otay Rate Model Temp Meter Fees 795,000 795,000 0 100.0% 0.0%From Otay Rate Model Government Fees 643,700 406,200 237,500 63.1% 36.9%From Otay Rate Model Late Penalties 919,200 884,100 35,100 96.2% 3.8%From Otay Rate Model Availability 626,700 626,700 0 100.0% 0.0%From Otay Rate Model Backflow Maint Fees 1,400 1,400 0 100.0% 0.0%From Otay Rate Model Warranty Fees 3,100 3,100 0 100.0% 0.0%From Otay Rate Model Billable Work Orders 139,300 139,300 0 100.0% 0.0%From Otay Rate Model Rents and Leases 1,310,300 1,310,300 0 100.0% 0.0%From Otay Rate Model Chula Vista Sewer Collection Fee 383,100 383,100 0 100.0% 0.0%From Otay Rate Model Miscellaneous 97,000 96,600 400 99.6% 0.4%From Otay Rate Model---------------------------------------------Total Miscellaneous Revenues $9,777,200 $8,144,900 $1,632,300 83.3% 16.7% Total Revenues $87,207,300 $78,298,300 $8,909,000 89.8% 10.2% Expenses Water Costs Water Purchases $33,130,600 $31,271,300 $1,859,300 94.4% 5.6%From Otay Rate Model Water Purchases - Meter Fees 16,000 0 16,000 0.0% 100.0%From Otay Rate Model Take or Pay 1,740,600 0 1,740,600 0.0% 100.0%From Otay Rate Model CWA - Infrastructure Access 1,976,400 1,976,400 0 100.0% 0.0%From Otay Rate Model CWA - Customer Service 1,714,200 1,714,200 0 100.0% 0.0%From Otay Rate Model CWA - Reliability 1,848,000 1,848,000 0 100.0% 0.0%From Otay Rate Model CWA - Emergency Storage 4,579,800 4,579,800 0 100.0% 0.0%From Otay Rate Model MWD - Capacity Reservation 988,800 988,800 0 100.0% 0.0%From Otay Rate Model MWD - Net RTS & Standby 1,428,000 1,428,000 0 100.0% 0.0%From Otay Rate Model Power - Admin 220,600 220,600 0 100.0% 0.0%From Otay Rate Model Power - Pumping 2,543,000 1,974,100 568,900 77.6% 22.4%From Otay Rate Model------------------------------------------------Total Water Costs $50,186,000 $46,001,200 $4,184,800 91.7% 8.3% Administrative Expenses Directors Fees $33,000 $33,000 $0 100.0% 0.0%From Otay Rate Model Travel and Meetings 208,600 208,600 0 100.0% 0.0%From Otay Rate Model Conservation and Outreach 177,400 177,400 0 100.0% 0.0%From Otay Rate Model General Office Expense 265,500 265,500 0 100.0% 0.0%From Otay Rate Model Equipment 1,112,600 1,109,300 3,300 99.7% 0.3%From Otay Rate Model Fees 1,451,100 1,425,600 25,500 98.2% 1.8%From Otay Rate Model Services 2,039,700 1,952,500 87,200 95.7% 4.3%From Otay Rate Model Training 126,000 126,000 0 100.0% 0.0%From Otay Rate Model Utilities 14,900 14,900 0 100.0% 0.0%From Otay Rate Model Bad Debt Expense 99,800 99,800 0 100.0% 0.0%From Otay Rate Model Interest Expense 0 0 0 - - From Otay Rate Model Less: WO Allocation - Other Funds (449,600)(449,600)0 100.0% 0.0%From Otay Rate Model Less: WO Allocation - Recycled 0 (215,200) 215,200 - - From Otay Rate Model Less: WO Allocation - Sewer (158,000)(158,000)0 100.0% 0.0%From Otay Rate Model------------------------------------------Total Administrative Expenses $4,921,000 $4,589,800 $331,200 93.3% 6.7% Potable Non-Potable Allocation % 1 of 20 DR A F T F I N A L Otay Water District Water Cost of Service Study Page 2 of 2 Exhibit 1 Revenue Requirement FY 2017 Potable Non-Pot NotesPotableNon-Potable Allocation % Materials & Maintenance Fuel & Oil $242,300 $207,500 $34,800 85.6%14.4% From Otay Rate Model Meters & Materials 159,200 156,700 2,500 98.4%1.6% From Otay Rate Model Fleet Parts & Equipment 124,800 124,800 0 100.0%0.0% From Otay Rate Model Communication Equipment 0 0 0 - -From Otay Rate Model Landscaping Materials 0 0 0 - -From Otay Rate Model Infrastructure Equipment & Supplies 521,100 445,700 75,400 85.5%14.5% From Otay Rate Model Chemicals 359,800 199,600 160,200 55.5%44.5% From Otay Rate Model Safety Equipment 52,500 51,000 1,500 97.1%2.9% From Otay Rate Model Laboratory Equipment & Supplies 40,300 36,300 4,000 90.1%9.9% From Otay Rate Model Other Materials & Supplies 182,200 177,200 5,000 97.3%2.7% From Otay Rate Model Building & Grounds Materials 56,000 56,000 0 100.0%0.0% From Otay Rate Model Contracted Services 675,400 653,800 21,600 96.8%3.2% From Otay Rate Model------------------------------------------Total Materials & Maintenance $2,413,600 $2,108,600 $305,000 87.4% 12.6% Labor & Benefits Labor $10,211,200 $9,703,500 $507,700 95.0%5.0% From Otay Rate Model Less: WO Allocation - Other Funds (770,300)(770,300)100.0%0.0% From Otay Rate Model Less: WO Allocation - Recycled 0 (368,700)368,700 - -From Otay Rate Model Less: WO Allocation - Sewer (271,000)(271,000)100.0%0.0% From Otay Rate Model Vacation/Sick/Holidays 2,106,800 2,049,600 57,200 97.3%2.7% From Otay Rate Model FICA (Soc Sec/Medicare)857,000 819,900 37,100 95.7%4.3% From Otay Rate Model Pension 3,705,200 3,546,300 158,900 95.7%4.3% From Otay Rate Model Health/Dental/Life Insurance 2,536,600 2,409,500 127,100 95.0%5.0% From Otay Rate Model Worker's Compensation 234,400 221,700 12,700 94.6%5.4% From Otay Rate Model Salary Continuation Insurance 80,000 76,500 3,500 95.6%4.4% From Otay Rate Model Employee Awards 0 0 0 - -From Otay Rate Model OPEB 1,196,500 1,130,200 66,300 94.5%5.5% From Otay Rate Model State Unemployment Insurance 30,000 30,000 0 100.0%0.0% From Otay Rate Model Employee Assistance Program 4,200 4,200 0 100.0%0.0% From Otay Rate Model Employee Programs 0 0 0 - -From Otay Rate Model---------------------------------------------Total Labor & Benefits $19,920,600 $18,581,400 $1,339,200 93.3% 6.7% Total O&M Expenses $77,441,200 $71,281,000 $6,160,200 92.0% 8.0% Rate Funded Capital $3,346,800 $2,744,500 $602,300 82.0% 18.0%Replace/Better xfrs. Debt Service (P + I)$7,287,500 $6,095,200 $1,192,300 From Otay Rate Model Change in Working Capital ($868,200)($1,822,400) $954,200 To Balance to Revenue Total Revenue Requirement $87,207,300 $78,298,300 $8,909,000 89.8% 10.2% Bal. / Def. of Funds $0 $0 $0 Less: Misc Reveneus ($9,777,200) ($8,144,900) ($1,632,300) Net Rev Req $77,430,100 $70,153,400 $7,276,700 Consumption (CCF)11,963,344 10,361,533 1,601,811 Unit Cost - $ / CCF $6.47 $6.77 $4.54 2 of 20 DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 2 Base Allocation Factor FY 2015-16 Net Water Base Component Class Total Consumption 4.5%Delivered Consumption % of % of (CCF)Losses [1](Flow + Losses)(MGD)Total Total Residential [2]56.3% ResidentialTier 1Tier 1 4,108,558 184,885 4,293,443 8.80 39.7% ResidentialTier 2Tier 2 1,265,732 56,958 1,322,690 2.71 12.2% ResidentialTier 3Tier 3 457,593 20,592 478,185 0.98 4.4% Total 5,831,883 262,435 6,094,318 12.49 Multi-Family 13.7% Multi-FamilyTier 1Tier 1 884,366 39,796 924,162 1.89 8.5% Multi-FamilyTier 2Tier 2 442,488 19,912 462,400 0.95 4.3% Multi-FamilyTier 3Tier 3 89,241 4,016 93,257 0.19 0.9% Total 1,416,095 63,724 1,479,819 3.03 Commercial 1,727,472 77,736 1,805,208 3.70 16.7% 16.7% Irrigation 1,386,083 62,374 1,448,457 2.97 13.4% 13.4% Total 10,361,533 466,269 10,827,802 22.19 100.0% 100.0% Purchased Water Report [3]11,108,105 22.76 (BASE) Notes [1] - Estimated based on District's "Water Loss Analysis" for FY 2015-16 [2] - Customers with monthly usage < 10 ccf receive the first 5 ccf at the tier 1 rate [3] - Water Supply provided by District (Based on FY 2015-16) 3 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 3 Peak Day Allocation Factor Base Peak Day Peak Extra Cap Consumption Peaking Day Use Peak Day Component Class (MGD)Factors [1] [2](MGD) (MGD)% of Total % of Total Residential 52.2% ResidentialTier 1Tier 1 8.80 1.25 10.98 2.19 17.8% ResidentialTier 2Tier 2 2.71 2.01 5.44 2.73 22.3% ResidentialTier 3Tier 3 0.98 2.51 2.46 1.48 12.1% Total 12.49 18.88 6.39 Multi-Family 12.0% Multi-FamilyTier 1Tier 1 1.89 1.18 2.24 0.35 2.9% Multi-FamilyTier 2Tier 2 0.95 1.92 1.82 0.87 7.1% Multi-FamilyTier 3Tier 3 0.19 2.29 0.44 0.25 2.0% Total 3.03 4.50 1.47 Commercial 3.70 1.42 5.26 1.56 12.8% 12.8% Irrigation 2.97 1.95 5.79 2.83 23.1% 23.1% Total 22.19 34.44 12.25 100.0% 100.0% Historical Peak Day [2]34.29 (X-CAP - PD) Notes [1] - Relationship based on peak to average month usage * peak day factor ( 1.16 ) [2] - Peaking Factors are based on FY 2015-16 customer data [3] - Water System Peak Day Data Provided by District (August 4th, 2015) 4 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 4 Peak Hour Allocation Factor Base Peak Hour Peak Peak Extra Cap Consumption Peaking Hour Use Day Use Peak Hour Component Class (MGD)Factors [1](MGD) (MGD) (MGD)% of Total % of Total Residential 54.8% ResidentialTier 1Tier 1 8.80 2.26 19.88 10.98 8.90 31.9% ResidentialTier 2Tier 2 2.71 3.63 9.84 5.44 4.40 15.8% ResidentialTier 3Tier 3 0.98 4.54 4.45 2.46 1.99 7.1% Total 12.49 34.17 18.88 15.29 Multi-Family 13.1% Multi-FamilyTier 1Tier 1 1.89 2.14 4.06 2.24 1.82 6.5% Multi-FamilyTier 2Tier 2 0.95 3.47 3.29 1.82 1.47 5.3% Multi-FamilyTier 3Tier 3 0.19 4.15 0.79 0.44 0.36 1.3% Total 3.03 8.15 4.50 3.65 Commercial 3.70 2.57 9.52 5.26 4.26 15.3% 15.3% 0 Irrigation 2.97 3.53 10.49 5.79 4.69 16.8% 16.8% 0 Total 22.19 62.33 34.44 27.89 100.0% 100.0% Historical Peak Hour [2]62.60 (X-CAP - PH) Notes [1] - Based on peak day usage * peak hour factor ( 1.81 ) [2] - Provided by District; based on Water Agencies' Design Guidelines, "Curve 2" (approx. 2.75 @ 22.75 MGD avg day) 5 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 5a Customer Allocation Factors Number of % of Weighting Number of % of Equivalent % of Meters Total Factor Wt. Meters Total Meters Total Residential 44,919 92.7%1.00 44,919 90.2%45,694 79.7% Multi-Family 810 1.7%1.00 810 1.6%2,918 5.1% Commercial 1,409 2.9%1.50 2,114 4.2%3,900 6.8% Irrigation 1,321 2.7%1.50 1,982 4.0%4,790 8.4%------------------------------------------------------------Total 48,459 100.0%49,824 100.0%57,303 100.0% (AC)(WCA)(WCMS) Notes [1] - Based on number of equivalent meters for a 3/4" meter using current District meter equivalency factors; see Exhibit 5b Meters & ServicesActual Customer Customer Service & Acctng. 6 of 20DR A F T F I N A L Otay Water District Development of Equivalent Meter Allocation Factor Exhibit 5b 3/4"1"1 1/2"2"3"4" 6" 8" 10"Total % of Total Residential 43,103 1,795 17 4 0 0 0 0 0 44,919 92.7% Multi-Family 35 192 243 231 37 62 7 3 0 810 1.7% Commercial 308 351 288 387 33 27 10 0 5 1,409 2.9% Irrigation 94 255 366 438 2 162 4 0 0 1,321 2.7%----------------------------------------------------------------------------------------------------Total Meters 43,540 2,593 914 1,060 72 251 21 3 5 48,459 Current District Equivalency 1.00 1.41 2.44 3.68 6.98 10.69 21.00 33.38 47.81 Residential 43,103 2,535 42 15 0 0 0 0 0 45,694 Multi-Family 35 271 594 850 258 663 147 100 0 2,918 Commercial 308 496 704 1,424 230 289 210 0 239 3,900 Irrigation 94 360 894 1,612 14 1,732 84 0 0 4,790----------------------------------------------------------------------------------------------------Total Equivalent Meters 43,540 3,662 2,234 3,901 503 2,684 441 100 239 57,303 Notes [1] - Customer count as of January 2017 Equivalent Meters (3/4" Equivalencies) Number of Meters [1] 7 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 6 Public Fire Allocation Factor Fire Prot.Total FP Number of Requirements Duration Requirements % of Meters (gals/min) [1] (minutes) [1] (1,000 g/min)Total Residential 44,919 1,500 120 8,085,420 87.7% Multi-Family 810 2,500 120 243,000 2.6% Commercial 1,409 3,500 180 887,670 9.6% Irrigation 1,321 0 0 0 0.0%---------------------------------------Total 48,459 9,216,090 100.0% (FP) Notes [1] - Based on Table 2-1 in the Draft Water Facilities Master Plan 8 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 7 Revenue Related Allocation Factor Projected % of Rate Revenue [1]Total Residential $40,665,386 59.8% Multi-Family 7,832,204 11.5% Commercial 9,144,781 13.5% Irrigation 10,346,829 15.2% Energy Fees 2,164,200 0.0%-------------------------Total Rate Revenues $70,153,400 100.0% (RR) Notes [1] - Rate revenues at present rates (before any proposed rate adjustment) 9 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 8 Classification Analysis Total (gal) # of Tanks Adj. Total hrs.gal/min (1) (2)(1 * 2) Fire Flow Requirements 2 2,500 300,000 40 12,000,000 Storage Capacity (1) - 218,000,000 218,000,000 % Public Fire Protection 5.5% % Capacity 94.5% (1) - Draft Water Facilities Master Plan, page 5-10 MGD Base/PD Base/PD/PH Base/PH PD/PH/FP PD / PH Base 22.76 66.4% 36.4% 36.4% Peak Day 34.29 33.6% 18.4%54.8% 54.8% Peak Hour 62.60 45.2% 63.6% 24.4% 45.2% Fire Protection 20.8% Main Size Length (ft.) Replcmt $Total 1"97 $25.00 $2,425 2"1,613 50.00 $80,650 4"24,048 100.00 2,404,800 6"225,456 150.00 33,818,400 8"1,541,313 200.00 308,262,600 10"473,300 250.00 118,325,000 12"753,696 300.00 226,108,800 13"50 325.00 16,250 14"42,589 350.00 14,906,150 16"328,657 400.00 131,462,800----------------------Total 1" - 16"3,390,819 $835,387,875 (4) Customer% (1) Total @ 2" Equiv $169,540,950 15.0% BASE /Total Cost 20.0%5.0% AC Capacity (2) Cost for 1"-8"$344,568,875 (3) 10"-16" @ 8" Cost $319,658,400 (2 + 3 - 1) / 4 59.2% Fire Protection 1-cust-cap 20.8% Source of Supply Distribution Main Analysis Fire Protection 10 of 20 DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 9.1 Classification of Net Plant In Service Actual Cust.Meters &Public Fire Energy CWA / MWD Revenue Direct Net Plant Base Peak Day Peak Hour Customer Acctg.Services Protection Fee Related Related Related Non-Potable Assign. 06/30/16 (BASE)(ExCAP-PD)(ExCAP-PH)(AC)(WCA)(WCMS)(FP)(EF)(CWA/MWD)(RR)(NP)(DA) Source of Supply Source of Supply $677 $449 $228 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 66.4% BASE 33.6% ExCap-PD---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Source of Supply $677 $449 $228 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Treatment Chlorination $1,215,756 $807,101 $408,656 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 66.4% BASE 33.6% ExCap-PD---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Treatment $1,215,756 $807,101 $408,656 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Reservoirs Reservoirs $75,496,610 $0 $71,340,833 $0 $0 $0 $0 $4,155,777 $0 $0 $0 $0 $0 94.5% ExCap-PH 5.5% FP---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Reservoirs $75,496,610 $0 $71,340,833 $0 $0 $0 $0 $4,155,777 $0 $0 $0 $0 $0 Pump Stations Pump Stations $20,516,663 $0 $20,516,663 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 100.0%ExCap-PD---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Pump Stations $20,516,663 $0 $20,516,663 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Transmission & Distribution Mains $85,345,796 $12,801,869 $50,538,677 $0 $4,267,290 $0 $0 $17,737,960 $0 $0 $0 $0 $0 5.0%AC 59.2% ExCap-PD 15.0%BASE 20.8% PF Meters 6,700,339 0 0 0 0 0 6,700,339 0 0 0 0 0 0 100.0%WCMS Hydrants 14,473 0 0 0 0 0 0 14,473 0 0 0 0 0 100.0%FP---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Transmission & Distribution $92,060,608 $12,801,869 $50,538,677 $0 $4,267,290 $0 $6,700,339 $17,752,432 $0 $0 $0 $0 $0 Plant Before General Plant $189,290,314 $13,609,420 $142,805,056 $0 $4,267,290 $0 $6,700,339 $21,908,209 $0 $0 $0 $0 $0 Percent Plant Before General Plant 100.0%7.2%75.4%0.0% 2.3% 0.0% 3.5%11.6%0.0% 0.0% 0.0% 0.0% 0.0%Factor PBG General Plant Land $13,207,313 $949,567 $9,963,907 $0 $297,741 $0 $467,501 $1,528,597 $0 $0 $0 $0 $0 As Factor PBG Buildings 8,796,081 632,412 6,635,970 0 198,296 0 311,356 1,018,047 0 0 0 0 0 As Factor PBG Field Equipment 5,179,610 372,399 3,907,619 0 116,767 0 183,343 599,481 0 0 0 0 0 As Factor PBG Finance 10,790,475 775,804 8,140,587 0 243,256 0 381,952 1,248,875 0 0 0 0 0 As Factor PBG Maps & Plans 1,094,982 0 0 0 1,094,982 0 0 0 0 0 0 0 0 100.0%AC Power 0 0 0 0 0 0 0 0 0 0 0 0 0 As Factor PBG Repairs 4,880,471 350,892 3,681,942 0 110,023 0 172,755 564,859 0 0 0 0 0 As Factor PBG Security 421,937 30,336 318,320 0 9,512 0 14,935 48,834 0 0 0 0 0 As Factor PBG Water System 93,688,570 6,735,934 70,680,856 0 2,112,080 0 3,316,309 10,843,390 0 0 0 0 0 As Factor PBG---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total General Plant $138,059,439 $9,847,344 $103,329,201 $0 $4,182,657 $0 $4,848,152 $15,852,084 $0 $0 $0 $0 $0 Total Net Plant in Service $327,349,752 $23,456,763 $246,134,258 $0 $8,449,947 $0 $11,548,491 $37,760,293 $0 $0 $0 $0 $0 Extra Capacity Basis of Classification Customer Related 11 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Page 1 of 2 Exhibit 10.1 Classification of the Potable Revenue Requirement Actual Cust.Meters &Public Fire Energy CWA / MWD Revenue Direct Base Peak Day Peak Hour Customer Acctg.Services Protection Fee Related Related Related Assign. FY 2017 (BASE)(X-CAP - PD)(X-CAP - PH)(AC)(WCA)(WCMS)(FP)(EF)(CWA/MWD)(RR)(DA) Expenses Water Costs Water Purchases $31,271,300 $21,889,910 $9,381,390 $0 $0 $0 $0 $0 $0 $0 $0 $0 70.0%BASE 30.0%ExCap-PD Water Purchases - Meter Fees 0 0 0 0 0 0 0 0 0 0 0 0 66.4%BASE 33.6%ExCap-PD Take or Pay 0 0 0 0 0 0 0 0 0 0 0 0 66.4%BASE 33.6%ExCap-PD CWA - Infrastructure Access 1,976,400 0 0 0 0 0 0 0 0 1,976,400 0 0 100.0%CWA / MWD CWA - Customer Service 1,714,200 0 0 0 0 0 0 0 0 1,714,200 0 0 100.0%CWA / MWD CWA - Reliability 1,848,000 0 0 0 0 0 0 0 0 1,848,000 0 0 100.0%CWA / MWD CWA - Emergency Storage 4,579,800 0 0 0 0 0 0 0 0 4,579,800 0 0 100.0%CWA / MWD MWD - Capacity Reservation 988,800 0 0 0 0 0 0 0 0 988,800 0 0 100.0%CWA / MWD MWD - Net RTS & Standby 1,428,000 0 0 0 0 0 0 0 0 1,428,000 0 0 100.0%CWA / MWD Power - Admin 220,600 0 0 0 0 0 0 0 220,600 0 0 0 100.0%EF Power - Pumping 1,974,100 0 0 0 0 0 0 0 1,974,100 0 0 0 100.0%EF------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Water Costs $46,001,200 $21,889,910 $9,381,390 $0 $0 $0 $0 $0 $2,194,700 $12,535,200 $0 $0 Administrative Expenses Directors Fees $33,000 $0 $0 $0 $33,000 $0 $0 $0 $0 $0 $0 $0 100.0%AC Travel and Meetings 208,600 0 0 0 208,600 0 0 0 0 0 0 0 100.0%AC Conservation and Outreach 177,400 177,400 0 0 0 0 0 0 0 0 0 0 54.8%ExCap-PD 45.2%ExCap-PH General Office Expense 265,500 0 0 0 265,500 0 0 0 0 0 0 0 100.0%AC Equipment 1,109,300 79,489 834,083 0 28,635 0 39,135 127,959 0 0 0 0 As Net Plant In Service Fees 1,425,600 0 0 0 0 0 0 0 0 0 1,425,600 0 100.0%RR Services 1,952,500 0 0 0 0 0 0 0 0 0 1,952,500 0 100.0%RR Training 126,000 0 0 0 126,000 0 0 0 0 0 0 0 100.0%AC Utilities 14,900 0 0 0 14,900 0 0 0 0 0 0 0 100.0%AC Bad Debt Expense 99,800 0 0 0 0 0 0 0 0 0 99,800 0 100.0%RR Interest Expense 0 0 0 0 0 0 0 0 0 0 0 0 100.0%RR Less: WO Allocation - Other Funds (449,600)(21,339)(69,283)0 (56,205)0 (3,251)(10,629)0 0 (288,893)0 As Other Admin. Exp. Less: WO Allocation - Recycled (215,200)(10,214)(33,162)0 (26,902)0 (1,556)(5,088)0 0 (138,278)0 As Other Admin. Exp. Less: WO Allocation - Sewer (158,000)(7,499)(24,348)0 (19,752)0 (1,142)(3,735)0 0 (101,524)0 As Other Admin. Exp.------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Administrative Expenses $4,589,800 $217,838 $707,289 $0 $573,776 $0 $33,186 $108,508 $0 $0 $2,949,205 $0 Materials & Maintenance Fuel & Oil $207,500 $207,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 100.0%BASE Meters & Materials 156,700 0 0 0 0 0 156,700 0 0 0 0 0 100.0%WCMS Fleet Parts & Equipment 124,800 8,943 93,837 0 3,221 0 4,403 14,396 0 0 0 0 As Net Plant In Service Communication Equipment 0 0 0 0 0 0 0 0 0 0 0 0 As Net Plant In Service Landscaping Materials 0 0 0 0 0 0 0 0 0 0 0 0 As Net Plant In Service Infrastructure Equipment & Supplies 445,700 31,937 335,122 0 11,505 0 15,724 51,412 0 0 0 0 As Net Plant In Service Chemicals 199,600 199,600 0 0 0 0 0 0 0 0 0 0 100.0%BASE Safety Equipment 51,000 3,654 38,347 0 1,316 0 1,799 5,883 0 0 0 0 As Net Plant In Service Laboratory Equipment & Supplies 36,300 2,601 27,294 0 937 0 1,281 4,187 0 0 0 0 As Net Plant In Service Other Materials & Supplies 177,200 12,698 133,237 0 4,574 0 6,251 20,440 0 0 0 0 As Net Plant In Service Building & Grounds Materials 56,000 4,013 42,106 0 1,446 0 1,976 6,460 0 0 0 0 As Net Plant In Service Contracted Services 653,800 46,849 491,592 0 16,877 0 23,065 75,417 0 0 0 0 As Net Plant In Service------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Materials & Maintenance $2,108,600 $517,795 $1,161,535 $0 $39,876 $0 $211,199 $178,195 $0 $0 $0 $0 Customer Related Basis of Classification Weighted for: Extra Capacity 12 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Page 2 of 2 Exhibit 10.1 Classification of the Potable Revenue Requirement Actual Cust.Meters &Public Fire Energy CWA / MWD Revenue Direct Base Peak Day Peak Hour Customer Acctg.Services Protection Fee Related Related Related Assign. FY 2017 (BASE)(X-CAP - PD)(X-CAP - PH)(AC)(WCA)(WCMS)(FP)(EF)(CWA/MWD)(RR)(DA) Customer Related Basis of Classification Weighted for: Extra Capacity Labor & Benefits Labor $9,703,500 $1,065,659 $2,707,234 $0 $888,954 $0 $354,022 $415,326 $0 $0 $4,272,305 $0 As All Other O&M less Water Costs Less: WO Allocation - Other Funds (770,300)(84,596)(214,910)0 (70,568)0 (28,104)(32,970)0 0 (339,151)0 As All Other O&M less Water Costs Less: WO Allocation - Recycled (368,700)(40,491)(102,866)0 (33,777)0 (13,452)(15,781)0 0 (162,333)0 As All Other O&M less Water Costs Less: WO Allocation - Sewer (271,000)(29,762)(75,608)0 (24,827)0 (9,887)(11,599)0 0 (119,317)0 As All Other O&M less Water Costs Vacation/Sick/Holidays 2,049,600 225,091 571,829 0 187,767 0 74,778 87,726 0 0 902,408 0 As All Other O&M less Water Costs FICA (Soc Sec/Medicare)819,900 90,043 228,748 0 75,112 0 29,913 35,093 0 0 360,990 0 As All Other O&M less Water Costs Pension 3,546,300 389,462 989,402 0 324,883 0 129,383 151,788 0 0 1,561,383 0 As All Other O&M less Water Costs Health/Dental/Life Insurance 2,409,500 264,616 672,240 0 220,738 0 87,908 103,131 0 0 1,060,867 0 As All Other O&M less Water Costs Worker's Compensation 221,700 24,348 61,853 0 20,310 0 8,088 9,489 0 0 97,611 0 As All Other O&M less Water Costs Salary Continuation Insurance 76,500 8,401 21,343 0 7,008 0 2,791 3,274 0 0 33,682 0 As All Other O&M less Water Costs Employee Awards 0 0 0 0 0 0 0 0 0 0 0 0 As All Other O&M less Water Costs OPEB 1,130,200 124,121 315,321 0 103,540 0 41,234 48,374 0 0 497,610 0 As All Other O&M less Water Costs State Unemployment Insurance 30,000 3,295 8,370 0 2,748 0 1,095 1,284 0 0 13,209 0 As All Other O&M less Water Costs Employee Assistance Program 4,200 461 1,172 0 385 0 153 180 0 0 1,849 0 As All Other O&M less Water Costs Employee Programs 0 0 0 0 0 0 0 0 0 0 0 0 As All Other O&M less Water Costs------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Labor & Benefits $18,581,400 $2,040,649 $5,184,128 $0 $1,702,274 $0 $677,923 $795,315 $0 $0 $8,181,111 $0 Total O&M Expenses $71,281,000 $24,666,192 $16,434,342 $0 $2,315,925 $0 $922,308 $1,082,017 $2,194,700 $12,535,200 $11,130,315 $0 Rate Funded Capital $2,744,500 $196,661 $2,063,589 $0 $70,844 $0 $96,823 $316,582 $0 $0 $0 $0 As Net Plant In Service Debt Service (P + I)$6,095,200 $436,761 $4,582,980 $0 $157,337 $0 $215,031 $703,091 $0 $0 $0 $0 As Net Plant In Service Change in Working Capital ($1,822,400)($130,587)($1,370,262)$0 ($47,042)$0 ($64,292)($210,217)$0 $0 $0 $0 As Net Plant In Service Total Revenue Requirement $78,298,300 $25,169,027 $21,710,650 $0 $2,497,064 $0 $1,169,869 $1,891,474 $2,194,700 $12,535,200 $11,130,315 $0 Less: Miscellaneous Revenue Tax Revenues $3,354,800 $240,393 $2,522,474 $0 $86,598 $0 $118,353 $386,981 $0 $0 $0 $0 As Net Plant In Service Interest 144,300 57,134 49,283 0 5,668 0 2,656 4,294 0 0 25,266 0 As Rev Req CWA & MWD Rebates 0 0 0 0 0 0 0 0 0 0 0 0 As Rev Req Temp Meter Fees 795,000 314,769 271,518 0 31,229 0 14,631 23,655 0 0 139,198 0 As Rev Req Government Fees 406,200 160,829 138,730 0 15,956 0 7,475 12,086 0 0 71,122 0 As Rev Req Late Penalties 884,100 0 0 0 0 0 0 0 0 0 0 884,100 100.0%DA Availability 626,700 248,133 214,038 0 24,618 0 11,533 18,647 0 0 109,730 0 As Rev Req Backflow Maint Fees 1,400 554 478 0 55 0 26 42 0 0 245 0 As Rev Req Warranty Fees 3,100 1,227 1,059 0 122 0 57 92 0 0 543 0 As Rev Req Billable Work Orders 139,300 55,154 47,575 0 5,472 0 2,564 4,145 0 0 24,390 0 As Rev Req Rents and Leases 1,310,300 518,795 447,510 0 51,471 0 24,114 38,988 0 0 229,423 0 As Rev Req Chula Vista Sewer Collection Fee 383,100 151,683 130,841 0 15,049 0 7,050 11,399 0 0 67,078 0 As Rev Req Miscellaneous 96,600 38,247 32,992 0 3,795 0 1,778 2,874 0 0 16,914 0 As Rev Req------------------------------------------------------------------------------------------------------------------------------------------------------------Total Less: Miscellaneous Revenue $8,144,900 $1,786,920 $3,856,498 $0 $240,032 $0 $190,237 $503,204 $0 $0 $683,909 $884,100 Net Revenue Requirement $70,153,400 $23,382,107 $17,854,152 $0 $2,257,033 $0 $979,633 $1,388,270 $2,194,700 $12,535,200 $10,446,406 ($884,100) 13 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 10.2 Page 1 of 2 Direct Assignment of Expenses FY 2017 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Expenses Water Costs Water Purchases $0 $0 $0 $0 $0 $0 $0 $0 $0 Water Purchases - Meter Fees 0 0 0 0 0 0 0 0 0 Take or Pay 0 0 0 0 0 0 0 0 0 CWA - Infrastructure Access 0 0 0 0 0 0 0 0 0 CWA - Customer Service 0 0 0 0 0 0 0 0 0 CWA - Reliability 0 0 0 0 0 0 0 0 0 CWA - Emergency Storage 0 0 0 0 0 0 0 0 0 MWD - Capacity Reservation 0 0 0 0 0 0 0 0 0 MWD - Net RTS & Standby 0 0 0 0 0 0 0 0 0 Power - Admin 0 0 0 0 0 0 0 0 0 Power - Pumping 0 0 0 0 0 0 0 0 0------------------------------------------------------------------------------------------------------------------------------------------------Total Water Costs $0 $0 $0 $0 $0 $0 $0 $0 $0 Administrative Expenses Directors Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 Travel and Meetings 0 0 0 0 0 0 0 0 0 Conservation and Outreach 0 0 0 0 0 0 0 0 0 General Office Expense 0 0 0 0 0 0 0 0 0 Equipment 0 0 0 0 0 0 0 0 0 Fees 0 0 0 0 0 0 0 0 0 Services 0 0 0 0 0 0 0 0 0 Training 0 0 0 0 0 0 0 0 0 Utilities 0 0 0 0 0 0 0 0 0 Bad Debt Expense 0 0 0 0 0 0 0 0 0 Interest Expense 0 0 0 0 0 0 0 0 0 Less: WO Allocation - Other Funds 0 0 0 0 0 0 0 0 0 Less: WO Allocation - Recycled 0 0 0 0 0 0 0 0 0 Less: WO Allocation - Sewer 0 0 0 0 0 0 0 0 0------------------------------------------------------------------------------------------------------------------------------Total Administrative Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 Materials & Maintenance Fuel & Oil $0 $0 $0 $0 $0 $0 $0 $0 $0 Meters & Materials 0 0 0 0 0 0 0 0 0 Fleet Parts & Equipment 0 0 0 0 0 0 0 0 0 Communication Equipment 0 0 0 0 0 0 0 0 0 Landscaping Materials 0 0 0 0 0 0 0 0 0 Infrastructure Equipment & Supplies 0 0 0 0 0 0 0 0 0 Chemicals 0 0 0 0 0 0 0 0 0 Safety Equipment 0 0 0 0 0 0 0 0 0 Laboratory Equipment & Supplies 0 0 0 0 0 0 0 0 0 Other Materials & Supplies 0 0 0 0 0 0 0 0 0 Building & Grounds Materials 0 0 0 0 0 0 0 0 0 Contracted Services 0 0 0 0 0 0 0 0 0------------------------------------------------------------------------------------------------------------------------------Total Materials & Maintenance $0 $0 $0 $0 $0 $0 $0 $0 $0 IrrigationCommercialResidentialMulti-Family 14 of 20 DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 10.2 Page 2 of 2 Direct Assignment of Expenses FY 2017 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 IrrigationCommercialResidentialMulti-Family Labor & Benefits Labor $0 $0 $0 $0 $0 $0 $0 $0 $0 Less: WO Allocation - Other Funds 0 0 0 0 0 0 0 0 0 Less: WO Allocation - Recycled 0 0 0 0 0 0 0 0 0 Less: WO Allocation - Sewer 0 0 0 0 0 0 0 0 0 Vacation/Sick/Holidays 0 0 0 0 0 0 0 0 0 FICA (Soc Sec/Medicare)0 0 0 0 0 0 0 0 0 Pension 0 0 0 0 0 0 0 0 0 Health/Dental/Life Insurance 0 0 0 0 0 0 0 0 0 Worker's Compensation 0 0 0 0 0 0 0 0 0 Salary Continuation Insurance 0 0 0 0 0 0 0 0 0 Employee Awards 0 0 0 0 0 0 0 0 0 OPEB 0 0 0 0 0 0 0 0 0 State Unemployment Insurance 0 0 0 0 0 0 0 0 0 Employee Assistance Program 0 0 0 0 0 0 0 0 0 Employee Programs 0 0 0 0 0 0 0 0 0---------------------------------------------------------------------------------------------------------------------------------------Total Labor & Benefits $0 $0 $0 $0 $0 $0 $0 $0 $0 Total O&M Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 Rate Funded Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 Debt Service (P + I)$0 $0 $0 $0 $0 $0 $0 $0 $0 Change in Working Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Revenue Requirement $0 $0 $0 $0 $0 $0 $0 $0 $0 Less: Miscellaneous Revenue Tax Revenues $0 $0 $0 $0 $0 $0 $0 $0 $0 Interest 0 0 0 0 0 0 0 0 0 CWA & MWD Rebates 0 0 0 0 0 0 0 0 0 Temp Meter Fees 0 0 0 0 0 0 0 0 0 Government Fees 0 0 0 0 0 0 0 0 0 Late Penalties 884,100 294,700 294,700 294,700 0 0 0 0 0 Availability 0 0 0 0 0 0 0 0 0 Backflow Maint Fees 0 0 0 0 0 0 0 0 0 Warranty Fees 0 0 0 0 0 0 0 0 0 Billable Work Orders 0 0 0 0 0 0 0 0 0 Rents and Leases 0 0 0 0 0 0 0 0 0 Chula Vista Sewer Collection Fee 0 0 0 0 0 0 0 0 0 Miscellaneous 0 0 0 0 0 0 0 0 0---------------------------------------------------------------------------------------------------------------------Total Less: Miscellaneous Revenue $884,100 $294,700 $294,700 $294,700 $0 $0 $0 $0 $0 Net Revenue Requirement ($884,100) ($294,700) ($294,700) ($294,700)$0 $0 $0 $0 $0 15 of 20 DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 11 Allocation of Revenue Requirement - COM, CAP, & DA ResidentialTier 1ResidentialTier 2ResidentialTier 3Multi-FamilyTier 1Multi-FamilyTier 2Multi-FamilyTier 3 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Base $23,382,107 $9,271,480 $2,856,284 $1,032,616 $1,995,684 $998,530 $201,384 $3,898,259 $3,127,871 (BASE) Peak Day $17,854,152 $3,186,325 $3,974,150 $2,154,947 $510,042 $1,269,763 $360,758 $2,278,042 $4,120,125 (X-CAP - PD) Peak Hour $0 $0 $0 $0 $0 $0 $0 $0 $0 (X-CAP - PH) Net Revenue Requirement $41,236,259 $12,457,805 $6,830,434 $3,187,563 $2,505,726 $2,268,293 $562,142 $6,176,300 $7,247,996 Irrigation Factor Residential Multi-Family Commercial 16 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 12 Allocation of Revenue Requirement Residential [2] Multi-Family Total Residential Multi-Family Commercial Irrigation Energy Fees Base $23,382,107 $13,160,380 $3,195,597 $3,898,259 $3,127,871 $0 From Exhibit 9 Peak Day $17,854,152 $9,315,422 $2,140,563 $2,278,042 $4,120,125 $0 From Exhibit 9 Peak Hour $0 $0 $0 $0 $0 $0 From Exhibit 9 Customer Actual Customer $2,257,033 $2,092,153 $37,727 $65,626 $61,527 $0 (AC) Cust. Acctg.0 0 0 0 0 0 (WCA) Meters & Services 979,633 781,176 49,891 66,670 81,895 0 (WCMS)------------------------------------------------------------------------------Total Customer $3,236,665 $2,873,329 $87,618 $132,296 $143,422 $0 Public Fire Protection $1,388,270 $1,217,951 $36,604 $133,715 $0 $0 (FP) Energy Fee Related $2,194,700 $0 $0 $0 $0 $2,194,700 CWA / MWD Related $12,535,200 $8,476,376 $1,041,762 $1,305,068 $1,711,994 $0 (WCMS) Revenue Related $10,446,406 $6,248,156 $1,203,403 $1,405,078 $1,589,770 $0 (RR) Direct Assign.($884,100) ($884,100)$0 $0 $0 $0 From Exhibit 14 Net Revenue Requirement $70,153,400 $40,407,514 $7,705,548 $9,152,456 $10,693,182 $2,194,700 Factor 17 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 13 Summary of Cost of Service Total Residential Multi-Family Commercial Irrigation Energy Fees Revenues at Present Rates $70,153,400 $40,665,386 $7,832,204 $9,144,781 $10,346,829 $2,164,200 Net Revenue Requirement $70,153,400 $40,407,514 $7,705,548 $9,152,456 $10,693,182 $2,194,700-------------------------------------------------------------------------------------------Bal/Def of Funds $0 $257,872 $126,656 ($7,675)($346,354) ($30,500) Required % Change in Rates 0.0%-0.6%-1.6%0.1%3.3%1.4% Notes: 18 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 14 Summary of Unit Costs Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Consumption Related Base - $/CCF $2.26 $2.26 $2.26 $2.26 $2.26 $2.26 $2.26 $2.26 $2.26 Extra Capacity-Peak Day - $/CCF 1.72 0.78 3.14 4.71 0.58 2.87 4.04 1.32 2.97 Extra Capacity-Peak Hour - $/CCF 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00------------------------------------------------------------------------------------------Total $3.98 $3.03 $5.40 $6.97 $2.83 $5.13 $6.30 $3.58 $5.23 Current Rates (Jan 2017)$3.95 $5.13 $7.90 $3.90 $5.05 $7.80 Differenence ($0.92)$0.27 ($0.93) ($1.07)$0.08 ($1.50) Energy Fee Related $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.064 Customer Related Actual Customer - $/Eq. Meter/Mo $3.28 $3.82 $1.08 $1.40 $1.07 Cust Acctg. - $/Eq. Meter/Mo 0.00 0.00 0.00 0.00 0.00 Meters & Srvcs. - $/Eq. Meter/Mo 1.42 1.42 1.42 1.42 1.42 RR/FP/DA - $/Eq. Meter/Mo 15.92 12.00 35.41 32.88 27.66--------------------------------------------------Total Fixed Fee for 3/4" Eq. Meter $20.63 $17.24 $37.91 $35.71 $30.15 Current Rates $15.91 CWA / MWD Related CWA/MWD - $/Eq. Meter/Mo $15.18 $15.18 $15.18 $15.18 $15.18 Current Rates $15.00 Basic Data Consumption 10,361,533 4,108,558 1,265,732 457,593 884,366 442,488 89,241 1,727,472 1,386,083 10,232,312 # of Meters 48,459 44,919 810 1,409 1,321 # of Equiv. Meters 57,303 45,694 2,918 3,900 4,790 # of Equiv. Meters - CWA / MWD 68,817 46,534 5,719 7,165 9,399 # of Living Units 49,824 44,919 810 2,114 1,982 Energy FeesResidentialMulti-Family Commercial Irrigation 19 of 20DR A F T F I N A L Otay Water District Water Cost of Service Study Rate Summary Residential Multi-Fam Commercial Irrigation Fixed Charge - District 3/4"$15.91 $17.24 $37.90 $35.70 $30.15 1"22.47 24.36 53.53 50.42 42.58 1 1/2"38.88 42.15 92.62 87.24 73.68 2"58.55 63.48 139.47 131.38 110.95 3"111.04 120.39 264.51 249.16 210.42 4"170.10 184.43 405.20 381.68 322.35 6"334.18 362.33 796.07 749.86 633.28 8"531.05 575.78 1,265.04 1,191.61 1,006.36 10"760.72 824.79 1,812.15 1,706.96 1,441.59 Fixed Charge - CWA / MWD 3/4"$15.00 $15.20 $15.20 $15.20 $15.20 1"27.84 28.21 28.21 28.21 28.21 1 1/2"62.96 63.80 63.80 63.80 63.80 2"107.08 108.51 108.51 108.51 108.51 3"227.75 230.79 230.79 230.79 230.79 4"364.72 369.58 369.58 369.58 369.58 6"746.59 756.54 756.54 756.54 756.54 8"1,205.65 1,221.73 1,221.73 1,221.73 1,221.73 10"1,735.39 1,758.53 1,758.53 1,758.53 1,758.53 Consumption Charge Residential 1 - 5*$2.53 5 - 10 3.95 10 - 22 5.13 22 +7.90 0 - 10 N/A $3.03 10 - 22 N/A 5.40 22 +N/A 6.97 Multi-Family 0 - 4 $3.90 $2.83 5 - 9 5.05 5.13 10 +7.80 6.30 Commercial Tier 1 $4.17 Tier 2 4.23 Tier 3 4.30 All Usage N/A $3.58 Irrigation Tier 1 $5.68 Tier 2 5.74 Tier 3 5.81 All Usage N/A $5.23 *Customers must use < 10 CCF to be eligible for tier 1 pricing* Present Rates Cost-Based Rates 20 of 20 DR A F T F I N A L Technical Appendix B – Non-Potable Rate Analysis Otay Water District Water Cost of Service Study Page 1 of 2 Exhibit 1 Revenue Requirement FY 2017 Potable Non-Pot Notes Revenues Rate Revenues Water Rates $43,249,400 $43,249,400 $0 From Otay Rate Model Recycled Rates 6,464,800 0 6,464,800 From Otay Rate Model System Fees 12,637,400 12,204,600 432,800 From Otay Rate Model CWA & MWD Fees 12,535,200 12,535,200 0 100.0% 10.8%From Otay Rate Model Energy Fees 2,543,300 2,164,200 379,100 85.1% 14.9%From Otay Rate Model Additional Revenue from Rate Adj.0 0 0 - ----------------------------------------------Total Rate RevenuesTotal Rate Revenues $77,430,100 $70,153,400 $7,276,700 90.6% 9.4% Miscellaneous Revenues Tax Revenues $3,354,800 $3,354,800 $0 100.0% 0.0%From Otay Rate Model Interest 152,600 144,300 8,300 94.6% 5.4%From Otay Budget CWA & MWD Rebates 1,351,000 0 1,351,000 0.0% - From Otay Rate Model Temp Meter Fees 795,000 795,000 0 100.0% 0.0%From Otay Rate Model Government Fees 643,700 406,200 237,500 63.1% 36.9%From Otay Rate Model Late Penalties 919,200 884,100 35,100 96.2% 3.8%From Otay Rate Model Availability 626,700 626,700 0 100.0% 0.0%From Otay Rate Model Backflow Maint Fees 1,400 1,400 0 100.0% 0.0%From Otay Rate Model Warranty Fees 3,100 3,100 0 100.0% 0.0%From Otay Rate Model Billable Work Orders 139,300 139,300 0 100.0% 0.0%From Otay Rate Model Rents and Leases 1,310,300 1,310,300 0 100.0% 0.0%From Otay Rate Model Chula Vista Sewer Collection Fee 383,100 383,100 0 100.0% 0.0%From Otay Rate Model Miscellaneous 97,000 96,600 400 99.6% 0.4%From Otay Rate Model---------------------------------------------Total Miscellaneous Revenues $9,777,200 $8,144,900 $1,632,300 83.3% 16.7% Total Revenues $87,207,300 $78,298,300 $8,909,000 89.8% 10.2% Expenses Water Costs Water Purchases $33,130,600 $31,271,300 $1,859,300 94.4% 5.6%From Otay Rate Model Water Purchases - Meter Fees 16,000 0 16,000 0.0% 100.0%From Otay Rate Model Take or Pay 1,740,600 0 1,740,600 0.0% 100.0%From Otay Rate Model CWA - Infrastructure Access 1,976,400 1,976,400 0 100.0% 0.0%From Otay Rate Model CWA - Customer Service 1,714,200 1,714,200 0 100.0% 0.0%From Otay Rate Model CWA - Reliability 1,848,000 1,848,000 0 100.0% 0.0%From Otay Rate Model CWA - Emergency Storage 4,579,800 4,579,800 0 100.0% 0.0%From Otay Rate Model MWD - Capacity Reservation 988,800 988,800 0 100.0% 0.0%From Otay Rate Model MWD - Net RTS & Standby 1,428,000 1,428,000 0 100.0% 0.0%From Otay Rate Model Power - Admin 220,600 220,600 0 100.0% 0.0%From Otay Rate Model Power - Pumping 2,543,000 1,974,100 568,900 77.6% 22.4%From Otay Rate Model------------------------------------------------Total Water Costs $50,186,000 $46,001,200 $4,184,800 91.7% 8.3% Administrative Expenses Directors Fees $33,000 $33,000 $0 100.0% 0.0%From Otay Rate Model Travel and Meetings 208,600 208,600 0 100.0% 0.0%From Otay Rate Model Conservation and Outreach 177,400 177,400 0 100.0% 0.0%From Otay Rate Model General Office Expense 265,500 265,500 0 100.0% 0.0%From Otay Rate Model Equipment 1,112,600 1,109,300 3,300 99.7% 0.3%From Otay Rate Model Fees 1,451,100 1,425,600 25,500 98.2% 1.8%From Otay Rate Model Services 2,039,700 1,952,500 87,200 95.7% 4.3%From Otay Rate Model Training 126,000 126,000 0 100.0% 0.0%From Otay Rate Model Utilities 14,900 14,900 0 100.0% 0.0%From Otay Rate Model Bad Debt Expense 99,800 99,800 0 100.0% 0.0%From Otay Rate Model Interest Expense 0 0 0 - - From Otay Rate Model Less: WO Allocation - Other Funds (449,600)(449,600)0 100.0% 0.0%From Otay Rate Model Less: WO Allocation - Recycled 0 (215,200) 215,200 - - From Otay Rate Model Less: WO Allocation - Sewer (158,000)(158,000)0 100.0% 0.0%From Otay Rate Model------------------------------------------Total Administrative Expenses $4,921,000 $4,589,800 $331,200 93.3% 6.7% Potable Non-Potable Allocation % 1 of 5 DR A F T F I N A L Otay Water District Water Cost of Service Study Page 2 of 2 Exhibit 1 Revenue Requirement FY 2017 Potable Non-Pot NotesPotableNon-Potable Allocation % Materials & Maintenance Fuel & Oil $242,300 $207,500 $34,800 85.6%14.4% From Otay Rate Model Meters & Materials 159,200 156,700 2,500 98.4%1.6% From Otay Rate Model Fleet Parts & Equipment 124,800 124,800 0 100.0%0.0% From Otay Rate Model Communication Equipment 0 0 0 - -From Otay Rate Model Landscaping Materials 0 0 0 - -From Otay Rate Model Infrastructure Equipment & Supplies 521,100 445,700 75,400 85.5%14.5% From Otay Rate Model Chemicals 359,800 199,600 160,200 55.5%44.5% From Otay Rate Model Safety Equipment 52,500 51,000 1,500 97.1%2.9% From Otay Rate Model Laboratory Equipment & Supplies 40,300 36,300 4,000 90.1%9.9% From Otay Rate Model Other Materials & Supplies 182,200 177,200 5,000 97.3%2.7% From Otay Rate Model Building & Grounds Materials 56,000 56,000 0 100.0%0.0% From Otay Rate Model Contracted Services 675,400 653,800 21,600 96.8%3.2% From Otay Rate Model------------------------------------------Total Materials & Maintenance $2,413,600 $2,108,600 $305,000 87.4% 12.6% Labor & Benefits Labor $10,211,200 $9,703,500 $507,700 95.0%5.0% From Otay Rate Model Less: WO Allocation - Other Funds (770,300)(770,300)100.0%0.0% From Otay Rate Model Less: WO Allocation - Recycled 0 (368,700)368,700 - -From Otay Rate Model Less: WO Allocation - Sewer (271,000)(271,000)100.0%0.0% From Otay Rate Model Vacation/Sick/Holidays 2,106,800 2,049,600 57,200 97.3%2.7% From Otay Rate Model FICA (Soc Sec/Medicare)857,000 819,900 37,100 95.7%4.3% From Otay Rate Model Pension 3,705,200 3,546,300 158,900 95.7%4.3% From Otay Rate Model Health/Dental/Life Insurance 2,536,600 2,409,500 127,100 95.0%5.0% From Otay Rate Model Worker's Compensation 234,400 221,700 12,700 94.6%5.4% From Otay Rate Model Salary Continuation Insurance 80,000 76,500 3,500 95.6%4.4% From Otay Rate Model Employee Awards 0 0 0 - -From Otay Rate Model OPEB 1,196,500 1,130,200 66,300 94.5%5.5% From Otay Rate Model State Unemployment Insurance 30,000 30,000 0 100.0%0.0% From Otay Rate Model Employee Assistance Program 4,200 4,200 0 100.0%0.0% From Otay Rate Model Employee Programs 0 0 0 - -From Otay Rate Model---------------------------------------------Total Labor & Benefits $19,920,600 $18,581,400 $1,339,200 93.3% 6.7% Total O&M Expenses $77,441,200 $71,281,000 $6,160,200 92.0% 8.0% Rate Funded Capital $3,346,800 $2,744,500 $602,300 82.0% 18.0%Replace/Better xfrs. Debt Service (P + I)$7,287,500 $6,095,200 $1,192,300 From Otay Rate Model Change in Working Capital ($868,200)($1,822,400) $954,200 To Balance to Revenue Total Revenue Requirement $87,207,300 $78,298,300 $8,909,000 89.8% 10.2% Bal. / Def. of Funds $0 $0 $0 Less: Misc Reveneus ($9,777,200) ($8,144,900) ($1,632,300) Net Rev Req $77,430,100 $70,153,400 $7,276,700 Consumption (CCF)11,963,344 10,361,533 1,601,811 Unit Cost - $ / CCF $6.47 $6.77 $4.54 2 of 5 DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 15 Recycled Water - Plant in Service Summary Asset Class Book Value Common To All D.A. Recy. Irr Chlorination (chlr)$550,720 $550,720 $0 Equipment (EQUIP)0 0 0 JBS 4,819,051 4,819,051 0 M/P 6,884 6,884 0 Mains (MAIN)38,780,445 38,780,445 0 Pump Station (PMP/S)8,459,819 8,459,819 0 Pump 1,260,861 1,260,861 0 PWR 738 738 0 rep 358,041 358,041 0 Reserviors (RESV)15,323,914 0 15,323,914 sfty 26,100 26,100 0 study 0 0 0-----------------------------------------------Total $69,586,573 $54,262,659 $15,323,914 % of Total Plant in Service 78.0%22.0% 3 of 5DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 16 Recycled Water Revenue Reqirement Summary DA DA Total Base Capacity Energy Fee Recy. Irr Water Costs $4,184,800 $1,446,360 $2,169,540 $568,900 $0 40.0%Base 60.0%Cap Administrative Expenses 331,200 104,908 153,357 0 72,935 31.7%Base 46.3%Cap 22.0%Storage Materials & Maintenance 305,000 96,609 141,226 0 67,165 31.7%Base 46.3%Cap 22.0%Storage Labor & Benefits 1,339,200 424,192 620,098 0 294,910 31.7%Base 46.3%Cap 22.0%Storage Rate Funded Capital 602,300 190,779 278,886 0 132,635 31.7%Base 46.3%Cap 22.0%Storage Debt Service (P + I)1,192,300 377,662 552,078 0 262,561 31.7%Base 46.3%Cap 22.0%Storage Change in Working Capital 954,200 302,243 441,829 0 210,128 31.7%Base 46.3%Cap 22.0%Storage---------------------------------------------------------------------------Revenue Requirement $8,909,000 $2,942,753 $4,357,014 $568,900 $1,040,333 Less: Misc Revenues ($1,632,300)($1,632,300)$0 $0 $0 100.0%Base Net Revenue Requirement $7,276,700 $1,310,453 $4,357,014 $568,900 $1,040,333 Notes [1] - Split between Base and Capacity based on average to peak use relationship Allocation [1] Common to All 4 of 5DR A F T F I N A L Otay Water District Water Cost of Service Study Exhibit 17 Recycled Water Cost of Service Summary Commercial Irrigation Common to All Base Base $1,310,453 $191,707 $1,118,746 $0 As Consumption % Capacity 4,357,014 499,899 3,857,115 0 PF Relationship DA Energy Fee 568,900 0 0 568,900 DA Recycled Irrigation $1,040,333 0 1,040,333 0----------------------------------------------------------------Total $7,276,700 $691,606 $6,016,194 $568,900 Less Fixed Revenue ($432,800)($14,472)($418,328)$0 Total Net Rev Req $6,843,900 $677,134 $5,597,866 $568,900 Unit Cost $4.27 $2.89 $4.09 $0.093 Basic Data Consumption 1,601,811 234,330 1,367,481 1,601,837 Percent 14.6%85.4% Peaking Factors 1.25 1.65 Irr adj to peak day (PF * 1.16 ) Peak Use 2,552,964 292,913 2,260,051 Percent 11.5%88.5% AllocationEnergy FeeRecycled 5 of 5DR A F T F I N A L STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: October 4, 2017 SUBMITTED BY: Kevin Cameron Associate Civil Engineer Bob Kennedy Engineering Manager PROJECT: Various DIV. NO. All APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Award of Two (2) As-Needed Engineering Design Services Contracts for Fiscal Years 2018 and 2019 GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) award two (2) professional As-Needed Engineering Design Services contracts and to authorize the General Manager to execute two agreements with NV5, Inc. (NV5) and Michael Baker International, Inc. (Michael Baker), each in an amount not-to-exceed $600,000. The total amount of the two contracts will not exceed $600,000 during Fiscal Years 2018 and 2019 (ending June 30, 2019). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to enter into two (2) professional As-Needed Engineering Design Services contracts with NV5 and Michael Baker, with each contract in an amount not-to- exceed $600,000 for Fiscal Years 2018 and 2019. The total amount of the two contracts will not exceed $600,000 during Fiscal Years 2018 and 2019. 2 ANALYSIS: The District will require the services of two professional engineering design consultants on an as-needed basis in support of Capital Improvement Program (CIP) projects for Fiscal Years 2018 and 2019. It is more efficient and cost effective to issue as-needed contracts for engineering design which will provide the District with the ability to obtain consulting services in a timely and efficient manner. This concept has also been used in the past for other disciplines, such as construction management, geotechnical, electrical, and environmental services. The District staff will identify tasks and request cost proposals from the two consultants during the contract period. Each consultant will prepare a detailed scope of work, schedule, and fee for each task order, with the District evaluating the proposals based upon qualifications and cost. The District will enter into negotiations with the consultants, selecting the proposal that has the best value for the District. Upon written task order authorization from the District, the selected consultant shall then proceed with the project as described in the scope of work. The CIP projects that are estimated to require engineering design services for Fiscal Years 2018 and 2019, at this time, are listed below: CIP DESCRIPTION ESTIMATED COST P2453 SR-11 Utility Relocations – Enrico Fermi & Alta Road Bridge Crossing $150,000 P2405/ P2554 624/340 PRSs at Energy Way/Nirvana Avenue and Heritage Road/Hard Rock Road $25,000 P2559 Pressure Vessel Repair and Replacement Program $25,000 P2553 Heritage Road Bridge Replacement and Utility Relocation $100,000 P2615 PL - 12-Inch Pipeline Replacement, 803 PZ, Vista Grande $85,000 R2110 944-1 Recycled Water Pump Station Optimization and Pressure Zone Modifications $50,000 R2116 14-inch Recycled Force Main Assessment and Repair $75,000 S2049 Calavo Basin Sewer Rehabilitation - Phase 2 $65,000 TOTAL: $575,000 3 Staff believes that a $600,000 cap on each of the As-Needed Engineering Design Services contracts is adequate, while still providing a buffer for any unforeseen tasks. Fees for professional services will be charged to the CIP projects. The As-Needed Engineering Design Services contracts do not commit the District to any expenditure until a task order is approved to perform the work. The District does not guarantee work to the consultants, nor does the District guarantee to the consultants that it will expend all of the funds authorized by the contract on professional services. The District solicited engineering design services by placing an advertisement on the Otay Water District’s website and using BidSync, the District’s online bid solicitation website on June 27, 2017. The advertisement was also placed in the Daily Transcript. Ten (10) firms submitted a Letter of Interest and a Statement of Qualifications. The Request for Proposal (RFP) for Engineering Design Services was sent to all ten (10) firms resulting in eight (8) proposals received on August 2, 2017. They are as follows: • Atkins (San Diego, CA) • Brady (San Diego, CA) • Hazen and Sawyer (San Diego, CA) • Hunsaker and Associates (San Diego, CA) • Michael Baker International (San Diego, CA) • NV5 (San Diego, CA) • Psomas (San Diego, CA) • Rick Engineering (San Diego, CA) Firms that submitted Letters of Interest, but did not propose, were Carollo (San Diego, CA) and Harris and Associates (San Diego, CA). In accordance with the District’s Policy 21, Staff evaluated and scored all written proposals and interviewed the top six (6) firms on August 22 and August 29, 2017. NV5 and Michael Baker received the highest scores based on their experience, understanding of the scope of work, proposed method to accomplish the work, and their composite hourly rate. NV5 and Michael Baker were the most qualified consultants with the best overall proposal. Both consultants provide similar services to other local agencies and are readily available to provide the services required. A summary of the complete evaluation is shown in Attachment B. 4 NV5 and Michael Baker submitted the Company Background Questionnaire, as required by the RFP, and staff did not find any significant issues. In addition, staff checked their references and performed an internet search on the company. Staff found the references to be excellent and did not find any outstanding issues with the internet search. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The funds for these contracts will be expended on a variety of projects, as previously noted above. These contracts are for as- needed professional services based on the District's need and schedule, and expenditures will not be made until a task order is approved by the District for the consultant's services on a specific CIP project. Based on a review of the financial budget, the Project Manager anticipates that the budgets will be sufficient to support the professional as-needed consulting services required for the CIP projects noted above. The Finance Department has determined that the funds to cover these contracts will be available as budgeted for these projects. STRATEGIC GOAL: This Project supports the District’s Mission statement, “To provide high value water and wastewater services to the customers of the Otay Water District, in a professional, effective and efficient manner” and the General Manager’s Vision, "A District that is at the forefront in innovations to provide water services at affordable rates, with a reputation for outstanding customer service." LEGAL IMPACT: None. KC/BK:jf P:\WORKING\As Needed Services\Engineering Design\FY 2018-2019\Staff Report\BD_10-04-17_Staff Report_Award of As-Needed Engineering Design Services (KC-BK).docx Attachments: Attachment A – Committee Action Attachment B – Summary of Proposal Rankings ATTACHMENT A SUBJECT/PROJECT: Various Award of Two (2) As-Needed Engineering Design Services Contracts for Fiscal Years 2018 and 2019 COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on September 20, 2017, and the following comments were made:  Staff recommended that the Board award two (2) professional As- Needed Engineering Design Services contracts and to authorize the General Manager to execute two agreements with NV5, Inc. (NV5) and Michael Baker International, Inc. (Michael Baker), each in an amount not-to-exceed $600,000. The total amount of the two contracts will not exceed $600,000 during Fiscal Years 2018 and 2019 (ending June 30, 2019).  Staff stated that the engineering design agreement is one of several As-Needed agreements actively administered by District Staff. It was indicated that the current amount under the existing agreements with Rick Engineering and Psomas is 93% committed ($500,000).  Staff noted that an As-Needed Engineering Design consultant will be needed for upcoming CIP projects in FY 2018 and 2019. A detailed list of anticipated projects is included on Page 2 of the staff report.  Staff discussed the selection process and indicated that NV5 and Michael Baker received the highest scores. Staff checked references, reviewed their Company Background Questionnaire form, and performed an internet search on each company and did not find any significant issues.  The Committee inquired about the purpose of having two different contractors for as-needed engineering design services. Staff stated that it would allow the District to obtain quotes from both consultants and choose the most cost effective quote. Having two different consultants also gives the District the ability to negotiate pricing. 6  In response to another question from the Committee, staff stated that candidates who were not selected were given the opportunity for a debrief after the selection process. They were also given the opportunity to review all candidates’ proposals. Following the discussion, the committee supported staff’s recommendation and presentation to the full board on the consent calendar. Qualifications of Team Responsiveness and Project Understanding Technical and Management Approach INDIVIDUAL SUBTOTAL - WRITTEN AVERAGE SUBTOTAL - WRITTEN Proposed Rates* Consultant's Commitment to DBE TOTAL - WRITTEN Additional Creativity and Insight Strength of Project Manager Presentation and Communication Skills Responses to Questions INDIVIDUAL TOTAL - ORAL AVERAGE TOTAL ORAL TOTAL SCORE 30 25 30 85 85 15 Y/N 100 15 15 10 10 50 50 150 Poor/Good/ Excellent Dan Martin 25 23 25 73 13 12 8 8 41 Brandon DiPietro 25 23 26 74 12 12 7 7 38 Steve Beppler 18 23 27 68 10 10 6 7 33 Jeff Marchioro 21 21 24 66 12 12 8 6 38 Jake Vaclavek 26 23 25 74 13 6 7 7 33 Dan Martin 28 20 24 72 10 9 7 7 33 Brandon DiPietro 24 22 25 71 12 11 7 6 36 Steve Beppler 23 20 22 65 10 8 7 6 31 Jeff Marchioro 26 21 26 73 12 10 8 7 37 Jake Vaclavek 22 23 26 71 8105 629 Dan Martin 26 20 24 70 Brandon DiPietro 22 21 22 65 Steve Beppler 21 19 22 62 Jeff Marchioro 24 20 24 68 Jake Vaclavek 23 22 24 69 Dan Martin 23 20 20 63 10 9 7 7 33 Brandon DiPietro 22 20 21 63 10 11 7 6 34 Steve Beppler 20 18 18 56 896528 Jeff Marchioro 19 17 19 55 11 10 8 5 34 Jake Vaclavek 22 19 22 63 778729 Dan Martin 28 23 28 79 13 14 9 9 45 Brandon DiPietro 27 23 26 76 14 14 10 9 47 Steve Beppler 25 22 26 73 12 12 9 8 41 Jeff Marchioro 28 23 28 79 14 13 10 10 47 Jake Vaclavek 26 23 27 76 13 12 10 9 44 Dan Martin 26 20 24 70 14 14 9 10 47 Brandon DiPietro 24 20 24 68 14 14 10 10 48 Steve Beppler 25 21 25 71 14 13 9 9 45 Jeff Marchioro 24 20 24 68 15 14 9 9 47 Jake Vaclavek 25 22 25 72 13 13 9 9 44 Dan Martin 26 20 24 70 Brandon DiPietro 22 20 22 64 Steve Beppler 23 20 24 67 Jeff Marchioro 22 19 22 63 Jake Vaclavek 25 20 25 70 Dan Martin 26 23 26 75 12 12 8 7 39 Brandon DiPietro 27 23 26 76 12 12 7 7 38 Steve Beppler 26 21 25 72 10 11 7 7 35 Jeff Marchioro 27 22 27 76 12 13 7 6 38 Jake Vaclavek 26 22 26 74 11 11 8 7 37 Consultant Weighted Rate Score Atkins $151 3 *The fees were evaluated by comparing rates for seven positions. The sum of these rates are noted on the table to the left. Brady $133 8 Note: Review Panel does not see or consider rates when scoring other categories. Rates are scored by the PM, who is not on Review Panel. Hazen and Sawyer $158 1 Hunsaker & Associates $105 15 Michael Baker International $152 3 NV5 $130 8 Psomas $145 4 Rick Engineering $129 9 RATES SCORING CHART Rick Engineering 8 Y 78 ATTACHMENT B SUMMARY OF PROPOSAL RANKINGS As-Needed Engineering Design - Fiscal Years 2018 and 2019 WRITTEN ORAL Hazen and Sawyer Brady 70 78 MAXIMUM POINTS 3Atkins Y Y 32 4 Michael Baker International REFERENCES 67 Y 68 8 71 Y 74 71 75 12184 Psomas Y 71 Hunsaker & Associates 67 Y 60 15 Y Excellent 379 77 3 37 111 33 111 FIRM NOT INTERVIEWED 125 46 124 Excellent 75 NV5 70 45 1 80 68 107 FIRM NOT INTERVIEWED STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: October 4, 2017 SUBMITTED BY: Kevin Cameron Associate Civil Engineer Bob Kennedy Engineering Manager PROJECT: Various DIV. NO. All APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Award of Two (2) As-Needed Geotechnical Engineering Services Contracts for Fiscal Years 2018, 2019, and 2020 GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) award two (2) professional As-Needed Geotechnical Engineering Services contracts and to authorize the General Manager to execute two agreements with Geocon, Inc. (Geocon) and Ninyo & Moore Geotechnical and Environmental Sciences Consultants, Inc. (Ninyo & Moore), each in an amount not-to-exceed $175,000. The total amount of the two contracts will not exceed $175,000 during Fiscal Years 2018, 2019, and 2020 (ending June 30, 2020). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to enter into two (2) professional As-Needed Geotechnical Engineering Services contracts with Geocon and Ninyo & Moore, with each contract in an amount not-to-exceed $175,000 for Fiscal Years 2018, 2019, and 2020. The total amount of the two contracts will not exceed $175,000 during Fiscal Years 2018, 2019, and 2020. 2 ANALYSIS: The District will require the services of two professional Geotechnical Engineering consultants on an as-needed basis in support of Capital Improvement Program (CIP) projects for Fiscal Years 2018, 2019, and 2020. It is more efficient and cost effective to issue as- needed contracts for Geotechnical Engineering Services which will provide the District with the ability to obtain consulting services in a timely and efficient manner. This concept has also been used in the past for other disciplines, such as construction management, engineering design, land surveying, and environmental services. The District staff will identify tasks and request cost proposals from the two consultants during the contract period. Each consultant will prepare a detailed scope of work, schedule, and fee for each task order, with the District evaluating the proposals based upon qualifications and cost. The District will enter into negotiations with the consultants, selecting the proposal that has the best value for the District. Upon written task order authorization from the District, the selected consultant shall then proceed with the project as described in the scope of work. The CIP projects that are estimated to require Geotechnical Engineering Services for Fiscal Years 2018, 2019, and 2020, at this time, are listed below: CIP DESCRIPTION ESTIMATED COST P2040 Res - 1655-1 Reservoir 0.5 MG $15,000 P2453 SR-11 Utility Relocations – Enrico Fermi & Alta Road Bridge Crossing $30,000 P2405/ P2554 624/340 PRSs at Energy Way/Nirvana Avenue and Heritage Road/Hard Rock Road $5,000 P2559 Pressure Vessel Repair and Replacement Program $5,000 P2553 Heritage Road Bridge Replacement and Utility Relocation $20,000 P2615 Quarry Road Bridge Replacement and Utility Relocation $20,000 P2615 PL - 12-Inch Pipeline Replacement, 803 PZ, Vista Grande $25,000 S2049 Calavo Basin Sewer Rehabilitation - Phase 2 $25,000 Various Steel Reservoir Rehabilitation – Welding Inspection $10,000 TOTAL: $155,000 3 Staff believes that a $175,000 cap on each of the As-Needed Geotechnical Engineering Services contracts is adequate, while still providing a buffer for any unforeseen tasks. Fees for professional services will be charged to the CIP projects. The As-Needed Geotechnical Engineering Services contracts do not commit the District to any expenditure until a task order is approved to perform the work. The District does not guarantee work to the consultants, nor does the District guarantee to the consultants that it will expend all of the funds authorized by the contract on professional services. The District solicited Geotechnical Engineering Services by placing an advertisement on the Otay Water District’s website and using BidSync, the District’s online bid solicitation website on July 24, 2017. The advertisement was also placed in the Daily Transcript. Seven (7) firms submitted a Letter of Interest and a Statement of Qualifications. The Request for Proposal (RFP) for Geotechnical Engineering Services was sent to all seven (7) firms resulting in six (6) proposals received by August 24, 2017. They are as follows: • Construction Testing & Engineering (Escondido, CA) • Geocon (San Diego, CA) • MTGL (Anaheim, CA) • Ninyo & Moore (San Diego, CA) • RMA Group (San Diego, CA) • SCST (San Diego, CA) Leighton Consulting (San Diego, CA) submitted a Letter of Interest, but did not submit a proposal. In accordance with the District’s Policy 21, Staff evaluated and scored all written proposals. Geocon and Ninyo & Moore received the highest scores based on their experience, understanding of the scope of work, proposed method to accomplish the work, and their composite hourly rate. Geocon and Ninyo & Moore were the most qualified consultants with the best overall proposal. Both consultants provided similar services to other local agencies and are readily available to provide the services required. A summary of the complete evaluation is shown in Attachment B. Geocon and Ninyo & Moore submitted the Company Background Questionnaire, as required by the RFP, and staff did not find any significant issues. In addition, staff checked their references and performed an internet search on the company. Staff found the references to be excellent and did not find any outstanding issues with the internet search. 4 FISCAL IMPACT: Joe Beachem, Chief Financial Officer The funds for these contracts will be expended on a variety of projects, as previously noted above. These contracts are for as- needed professional services based on the District's need and schedule, and expenditures will not be made until a task order is approved by the District for the consultant's services on a specific CIP project. Based on a review of the financial budget, the Project Manager anticipates that the budgets will be sufficient to support the professional as-needed consulting services required for the CIP projects noted above. The Finance Department has determined that the funds to cover these contracts will be available as budgeted for these projects. STRATEGIC GOAL: This Project supports the District’s Mission statement, “To provide high value water and wastewater services to the customers of the Otay Water District, in a professional, effective and efficient manner” and the General Manager’s Vision, "A District that is at the forefront in innovations to provide water services at affordable rates, with a reputation for outstanding customer service." LEGAL IMPACT: None. KC/BK:jf P:\WORKING\As Needed Services\Geotechnical Engineering\FY 2018-2019\Staff Report\BD_10-04-17_Staff Report_Award of As-Needed Geotechnical Engineering Services (KC-BK).docx Attachments: Attachment A – Committee Action Attachment B – Summary of Proposal Rankings ATTACHMENT A SUBJECT/PROJECT: Various Award of Two (2) As-Needed Geotechnical Engineering Services Contracts for Fiscal Years 2018, 2019, and 2020 COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on September 20, 2017, and the following comments were made:  Staff recommended that the Board award two (2) professional As- Needed Geotechnical Engineering Services contracts and to authorize the General Manager to execute two agreements with Geocon, Inc. (Geocon) and Ninyo & Moore Geotechnical and Environmental Sciences Consultants, Inc. (Ninyo & Moore), each in an amount not-to-exceed $175,000. The total amount of the two contracts will not exceed $175,000 during Fiscal Years 2018, 2019, and 2020 (ending June 30, 2020).  Staff indicated that the current amount under the existing agreement with Ninyo and Moore is 85% committed.  It was noted that a detailed list of anticipated projects is included on Page 2 of the staff report.  Staff discussed the selection process and indicated that interviews were not applicable as the contract amount is under the $200,000 threshold, per Policy 21. Staff stated that Geocon and Ninyo and Moore received the highest scores. Staff checked their references, reviewed their Company Background Questionnaire form, and performed an internet search on each company and did not find any significant issues. Following the discussion, the Committee supported staffs’ recommendation and presentation to the full board as a consent item. Qualifications of Team Responsiveness and Project Understanding Technical and Management Approach INDIVIDUAL SUBTOTAL - WRITTEN AVERAGE SUBTOTAL - WRITTEN Proposed Rates* Consultant's Commitment to DBE TOTAL SCORE 30 25 30 85 85 15 Y/N 100 Poor/Good/ Excellent Bob Kennedy 25 22 24 71 Jose Martinez 23 22 23 68 Lisa Colburn-Boyd 26 19 25 70 Mike O'Donnell 25 23 26 74 Jon Chambers 23 20 25 68 Bob Kennedy 27 24 26 77 Jose Martinez 25 23 24 72 Lisa Colburn-Boyd 27 24 27 78 Mike O'Donnell 26 25 27 78 Jon Chambers 26 22 26 74 Bob Kennedy 26 22 25 73 Jose Martinez 25 20 26 71 Lisa Colburn-Boyd 27 18 23 68 Mike O'Donnell 26 20 25 71 Jon Chambers 25 21 26 72 Bob Kennedy 27 24 27 78 Jose Martinez 25 23 25 73 Lisa Colburn-Boyd 28 24 27 79 Mike O'Donnell 27 25 27 79 Jon Chambers 27 24 26 77 Bob Kennedy 25 22 25 72 Jose Martinez 21 21 26 68 Lisa Colburn-Boyd 26 23 26 75 Mike O'Donnell 25 21 25 71 Jon Chambers 27 23 25 75 Bob Kennedy 25 22 25 72 Jose Martinez 24 23 24 71 Lisa Colburn-Boyd 27 20 25 72 Mike O'Donnell 25 22 25 72 Jon Chambers 25 20 25 70 Firm CT & E Geocon MTGL Ninyo & Moore RMA Group SCSTFee$183 $196 $181 $160 $240 $205Score 11 9 11 15 1 7*Note: Review Panel does not see or consider proposed fee when scoring other categories. The proposed fee is scored by the PM, who is not on the Review Panel. 78 RATES SCORING CHART 15 Y SCST 71 7 Y 92 MTGL, Inc.71 11 Y 82 SUMMARY OF PROPOSAL RANKINGS As-Needed Geotechnical Engineering Services Geocon, Inc.76 9 Y 85 Excellent ATTACHMENT B WRITTEN REFERENCES MAXIMUM POINTS Construction Testing & Engineering, Inc.70 11 Y 81 Excellent RMA Group 72 1 Y 73 Ninyo & Moore 77 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: October 4, 2017 SUBMITTED BY: Dan Martin Engineering Manager PROJECT: P2546-001103 DIV. NO. 5 APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Award of a Construction Contract to Simpson Sandblasting and Special Coatings, Inc. for the 980-2 Reservoir Interior/ Exterior Coatings & Upgrades Project GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) award a construction contract to Simpson Sandblasting and Special Coatings, Inc. (Simpson) and to authorize the General Manager to execute a construction contract with Simpson for the 980-2 Reservoir Interior/Exterior Coatings & Upgrades Project in an amount not-to- exceed $1,146,327.00 (see Exhibit A for Project location). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to enter into a construction contract with Simpson for the 980-2 Reservoir Interior/Exterior Coatings & Upgrades Project in an amount not-to- exceed $1,146,327.00. 2 ANALYSIS: The 980-2 Reservoir is one of two 5.0 million gallon potable water storage facilities in the 980 pressure zone that serve the central area of the District. The 980-2 Reservoir was originally constructed in 1988. The 980-2 was last recoated on the interior surface in 2001, and the coating on the exterior is original to the tank. The District’s corrosion consultant, HDR, Inc., maintains a Corrosion Control Program (CCP) that addresses the installation, maintenance, and monitoring of corrosion protection systems for the District’s steel reservoirs and buried metallic piping. The CCP included a reservoir maintenance schedule that showed the 980-2 Reservoir was due to be recoated on both the interior and exterior surfaces in 2019. An in-service internal and external inspection was performed by Dive/Corr, Inc. which illustrated the interior roof coating was in fair to poor condition, and there were areas of interior blistering on the shell and floor beneath the waterline. Although the blistering paint is still protecting the steel, blisters in the paint are the beginning signs of failure. The coating on the reservoir exterior has never been completely replaced. Over the life of the reservoir, only spot repairs to the exterior have been performed as needed. The external inspection showed the exterior coating is beginning to lose adhesion and has exceeded its useful life. Given the condition of the interior coating, the age of the exterior coating, and the need for a number of structural upgrades, the reservoir recoating was accelerated. In addition to replacing the coatings and structural upgrades, safety items will be installed to comply with current safety and health requirements. During construction, service in the 980 pressure zone will be provided by the 980-1 Reservoir. In addition to the interior and exterior coating removal/replacement, the recommended structural upgrades are as follows: replace the existing level indicator, install new fall prevention devices on the exterior ladder, modify anode access ports, replace all cathodic anodes, replace all five (5) roof vents, install new safety cable lanyards for roof access, and add multiple tank penetrations for chlorination and sampling. These upgrades will ensure compliance with American Water Works Association (AWWA) and the Occupational Safety and Health Administration Standards for both Federal (OSHA) and State (Cal-OSHA) as well as upgrade antiquated equipment on the tank. The Project was advertised on August 2, 2017 using BidSync, the District’s online bid solicitation website, on the Otay Water District’s website, and in the Daily Transcript. A Pre-Bid Meeting 3 was held on August 15, 2017, which was attended by ten (10) contractors and vendors. One (1) addendum was sent out to all bidders and plan houses to address questions and clarifications to the contract documents during the bidding period. Bids were publicly opened on August 24, 2017, with the following results: CONTRACTOR TOTAL BID AMOUNT 1 Simpson Sandblasting & Special Coatings, Inc. Fontana, CA $1,146,377.00 2 Advanced Industrial Services, Inc. Los Alamitos, CA $1,169,900.00 3 Bilbro Construction Company, Inc. Escondido, CA $1,425,107.00 4 West Coast Industrial Coatings, Inc. Hemet, CA $1,573,940.00 The Engineer's Estimate is $1,192,000. A review of the bids was performed by District staff for conformance with the contract requirements. During the review of the bids, staff noted a discrepancy between the unit price and extended total amounts for one of the items associated with the bid submitted by Simpson. Staff corrected the bid amount in accordance with the requirements included in Section 00400, “Bid List Requirements and Understanding” of the contract documents. Staff also noted that unit pricing, as required by the contract documents, was missing from West Coast Industrial Coatings, Inc.’s (West Coast) bid and only the extended total amounts were provided. Staff determined that West Coast’s bid is non-responsive. The corrected bid amounts are shown in the table below: CONTRACTOR TOTAL BID AMOUNT 1 Simpson Sandblasting & Special Coatings, Inc. Fontana, CA $1,146,327.00 2 Advanced Industrial Services, Inc. Los Alamitos, CA $1,169,900.00 3 Bilbro Construction Company, Inc. Escondido, CA $1,425,107.00 4 West Coast Industrial Coatings, Inc. Hemet, CA Non-Responsive 4 Staff determined that Simpson is the lowest responsive and responsible bidder. Simpson holds a Class C-33 Contractor’s license which expires on May 31, 2018. Simpson also holds a current QP-1 certification from the Society for Protective Coatings, which was also a requirement. Staff checked references, and the response from other agencies indicated Simpson has an excellent performance rating on similar projects. The proposed Project Manager has experience in California on similar projects and received excellent recommendations. A background search of the company was performed on the internet and revealed one issue associated with an OSHA safety violation where a $250.00 penalty was issued on March 30, 2012. The issue, which was related to an employee’s exposure to airborne contaminants, was abated by Simpson May 2, 2012 according to the OSHA website. Simpson submitted the Company Background and Company Safety Questionnaires, as required by the Contract Documents. Staff confirmed that Simpson is registered with the Department of Industrial Relations, as required by Senate Bill SB 854. Staff has verified that the bid bond provided by The Ohio Casualty Insurance Company is valid. Once Simpson signs the contract, they will furnish the performance bond and labor and materials bond. Staff will verify both bonds prior to executing the contract. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The total budget for CIP P2546, as approved in the FY 2018 budget, is $1,450,000. Total expenditures, plus outstanding commitments and forecast, are $1,444,303. See Attachment B for the budget detail. Based on a review of the financial budget, the Project Manager anticipates that the budget is sufficient to support the Project. The Finance Department has determined that, under the current rate model, 100% of the funding will be available from the Replacement Fund. STRATEGIC GOAL: This Project supports the District’s Mission statement, “To provide high value water and wastewater services to the customers of the Otay Water District in a professional, effective, and efficient manner” and the General Manager’s Vision, “A District that is at the forefront in innovations to provide water services at affordable rates, with a reputation for outstanding customer service.” 5 LEGAL IMPACT: None. DM:jf P:\WORKING\CIP P2546 - 980-2 Reservoir Int-Ext Coating\Staff Reports\10-4-17, Staff Report 980-2 Reservoir Coating.docx Attachments: Attachment A – Committee Action Attachment B – Budget Detail Exhibit A – Project Location for 980-2 ATTACHMENT A SUBJECT/PROJECT: P2546-001103 Award of a Construction Contract to Simpson Sandblasting and Special Coatings, Inc. for the 980-2 Reservoir Interior/Exterior Coatings & Upgrades Project COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on September 20, 2017, and the following comments were made:  Staff recommended that the Board award a construction contract to Simpson Sandblasting and Special Coatings, Inc. (Simpson) and to authorize the General Manager to execute a construction contract with Simpson for the 980-2 Reservoir Interior/Exterior Coatings & Upgrades Project in an amount not-to-exceed $1,146,327.00.  Staff stated that the 980-2 Reservoir, which was originally constructed in 1988, is one of two 5.0 million gallon potable water storage facilities in the 980 pressure zone that serve the central area of the District.  It was indicated that the 980-2 reservoir was last recoated on the interior surface in 2001, and the coating on the exterior is original to the reservoir.  Staff noted that the reservoir was scheduled to be recoated in 2019. A dive inspection was conducted and the results showed the interior coating was beginning to blister, which is the beginning signs of coating failure. The exterior coating is 29 years old and at the end of its useful life.  As part of the recoating project, structural upgrades will be made to bring the reservoir up to current Federal State OSHA standards as well as AWWA Standards.  Details of the structural upgrades are provided on Page 2 of the staff report. The 980-1 Reservoir will provide service to the 980 pressure zone while the construction work is being completed at the 980-2 Reservoir. Recoating of the 980-1 Reservoir was completed in October 2016.  Staff discussed the selection process and indicated that Simpson Sandblasting & Special Coatings, Inc. submitted the lowest bid. Staff reviewed the bid for conformance and checked references which showed a good overall performance record. As noted in the staff report, an internet search revealed an OSHA safety violation that was abated by Simpson in 2012. After the review, it was determined that Simpson submitted a responsive and responsible bid.  The Committee inquired about the OSHA violation. Staff stated that there was a safety violation related to an employee’s exposure to airborne contaminants, which resulted in a $250 penalty issued on March 30, 2012.  In response to a question from the Committee, staff stated that West Coast’s bid was non-responsive as several of their unit prices were missing for items of work; only their extended total amounts were provided. Following the discussion, the Committee supported staffs’ recommendation and presentation to the full board as a consent item. ATTACHMENT B – Budget Detail SUBJECT/PROJECT: P2546-001103 Award of a Construction Contract to Simpson Sandblasting and Special Coatings, Inc. for the 980-2 Reservoir Interior/Exterior Coatings & Upgrades Project 8/28/2017 Budget 1,450,000 Planning Standard Salaries 4,200 4,042 158 4,200 Consultant Contracts - - - - Service Contracts 2,310 2,310 - 2,310 HDR ENGINEERING INC Regulatory Agency Fees 100 - 100 100 PETTY CASH CUSTODIAN Total Planning 6,610 6,352 258 6,610 Design Standard Salaries 15,000 10,201 4,799 15,000 Service Contracts 2,000 - 2,000 2,000 MAYER 1,000 - 1,000 1,000 DAILY TRIBUNE Equipment Charge 50 - 50 50 EQUIPMENT Total Design 18,050 10,201 7,849 18,050 Construction Standard Salaries 120,000 - 120,000 120,000 Construcion Contract 1,146,327 - 1,146,327 1,146,327 SIMPSON SANDBLASTING - CONTRACTOR Service Contracts 25,000 - 25,000 25,000 CONSTRUCTION MANAGEMENT 50,000 - 50,000 50,000 COATING INSPECTION 1,500 - 1,500 1,500 WELDING INSPECTION 10,000 - 10,000 10,000 SECURITY 2,000 - 2,000 2,000 CHEMICAL TESTING Equipment Charge 2,000 - 2,000 2,000 EQUIPMENT CHARGE Standard Materials 500 - 500 500 STANDARD MATERIALS Project Closeout 5,000 - 5,000 5,000 CLOSEOUT Project Contingency 57,316 - 57,316 57,316 5% OF CONSTRUCTION CONTRACT Total Construction 1,419,643 - 1,419,643 1,419,643 Grand Total 1,444,303 16,553 1,427,750 1,444,303 Vendor/Comments Otay Water District P2546-980-2 Reservoir Interior/Exterior Coating Committed Expenditures Outstanding Commitment & Forecast Projected Final Cost OTAY WATER DISTRICT980-2 Reservoir Interior/Exterior Coating & UpgradesLocation Map EXHIBIT A F P: \ \ W O R K I N G \ C I P P 2 5 4 6 - 9 8 0 - 2 R e s e r v o i r I n t - E x t C o a t i n g \ G r a p h i c s \ E x h i b i t s - F i g u r e s \ R e s e r v o i r L o c a t i o n M a p E x h i b i t 0 750375 Feet CIP P2546 980-2 Reservoir ACC E S S R D SALT CREEK GOLF CLUB HU N T E !\ VICINITY MAP PROJECT SITE NTS DIV 5 DIV 1 DIV 2 DIV 4 DIV 3 ?ò Aä%&s ?p ?Ë F 944-1R 980-1 927-1R PROCTOR VALLEY RD P K W Y ACCESS RD STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: October 4, 2017 SUBMITTED BY: Brandon DiPietro Field Services Manager Dan Martin Engineering Manager PROJECT: Various DIV. NO. ALL APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Adopt Ordinance No. 565 Amending Section 31 Temporary Water Service of the District’s Code of Ordinances GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) adopt Ordinance No. 565 (Attachment B) amending Section 31 Temporary Water Service of the District’s Code of Ordinances. COMMITTEE ACTION: Please see Attachment A. PURPOSE: The purpose of the proposed amendments to Section 31 of the District’s Code of Ordinances is to provide clarification on requirements for the use of recycled water for temporary purposes. ANALYSIS: Section 31 of the District’s Code of Ordinances provides the definitions of approved uses of temporary water service, requirements of temporary meters for service, and the fees and charges for temporary meters. Within Section 31.02, “Requirement of Temporary Meter for Service,” the Code is silent on the requirements and use of recycled water for temporary purposes. As new areas of the District develop adjacent to the District’s recycled water network, temporary use of recycled water for dust 2 control and soil hydration during construction have been identified as an approved beneficial use for the District and the developer; other benefits to the District include reducing the demand on the potable system during large construction projects. Amending the Code of Ordinances will also bring greater visibility to the use of recycled water for construction. Staff is recommending language that codifies the requirements for obtaining recycled water through a temporary meter (see (Attachment B- Exhibit 1). The proposed changes to the District’s Code of Ordinances include the following:  Section 31.02 o E & F – Correct subparagraph lettering to D & E. o F - Language is added to describe how temporary recycled water service is provided and uses allowed for temporary recycled water. The draft language included in the proposed Section 31 of the Code of Ordinances (Attachment C) was transmitted to the development community on August 21, 2017 for comments; as of September 12, 2017 no comments have been received. FISCAL IMPACT: Joe Beachem, Chief Financial Officer None. STRATEGIC GOAL: Adoption of Ordinance No. 565 supports the District’s Mission statement, “To provide high quality and reliable water and wastewater services to the customers of the Otay Water District, in a professional, effective, and efficient manner” and the General Manager’s Vision, "A District that is innovative in providing water services at competitive rates, with a reputation for outstanding customer service." LEGAL IMPACT: None. BD/DM/RP:jf P:\Field Services\Staff Reports\Section 31\BD 10-04-2017 Staff Report Code Section 31_djm.docx Attachments: Attachment A – Committee Action Attachment B - Ordinance No. 565 Exhibit 1 – Strike-through Section 31 Attachment C – Proposed Section 31 ATTACHMENT A SUBJECT/PROJECT: VARIOUS Adopt Ordinance No. 565 Amending Section 31 Temporary Water Service of the District’s Code of Ordinances COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a Committee Meeting held on September 20, 2017, and the following comments were made:  Staff recommended that the Board adopt Ordinance No. 565 (Attachment B) amending Section 31 Temporary Water Service of the District’s Code of Ordinances.  Staff indicated that Section 31 of the District’s Code of Ordinances provides the requirements and limitations for obtaining temporary water service. However, as noted in the staff report, the Code is silent on the requirements and use of recycled water for temporary purposes.  In accordance with the District’s Strategic Plan to influence developers to use practical water efficient practices in new construction, staff recommended the adoption of proposed amendments to Section 31.02 “Requirements of Temporary Meter for Service”, sub-paragraph F. The amendment will provide clear direction as to the requirements to obtain a temporary recycled water meter.  The primary reasons for amending Section 31 includes the following: o To further encourage the use of recycled water and add clarity to the Code to obtain a temporary recycled water meter. o By adding requirements within Section 31.02 “Requirements of Temporary Meter for Service”, sub-paragraph F, with respect to the temporary use of recycled water, potable system demands will be lessened during large construction projects. 4 o Use of recycled water for construction purposes, i.e. dust control and soil hydration (grading and compaction) is an approved use of recycled water. o Apply minor language and sub-paragraph designation cleanup within this proposed section of the Code.  Staff indicated that the draft language included in the proposed Section 31 of the Code of Ordinances was transmitted to the development community on August 21, 2017 with a request to receive comments. To date, no letters have been received regarding the proposed changes as shown in the staff report.  In response to a question from the Committee, staff stated that 9 temporary recycled water meters have been issued since FY 2008 and the District’s contractors/developers have used approximately 468 AF of recycled water. In FY 2016, they used approximately 240 AF of recycled water just for grading purposes as there was an increase in development. Following the discussion, the committee supported staff’s recommendation and presentation to the full board on the consent calendar. Attachment B ORDINANCE NO. 565 AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT AMENDING SECTION 31 TEMPORARY WATER SERVICE 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 31 TEMPORARY WATER SERVICE be amended as per Exhibit 1 (attached). NOW, THEREFORE, BE IT RESOLVED that the new proposed Section 31 (Attachment C) of the Code of Ordinances shall become effective October 4, 2017. PASSED, APPROVED, AND ADOPTED by the Board of Directors of the Otay Water District at a regular meeting duly held this 4th day of October, 2017, by the following roll call vote: AYES: NOES: ABSENT: ABSTAIN: ________________________________ President ATTEST: _____________________________ District Secretary Attachment B -- Exhibit 1 Revised by Ordinance 539 9/4/13 SECTION 31 TEMPORARY WATER SERVICE 31.01 DEFINITION OF TEMPORARY SERVICE Temporary water service is water service provided for a limited period of time not to exceed 365 days, and used for temporary purposes such as construction, hydrotesting water systems, vegetation of slopes, and other uses noted in this section. Temporary water service shall not be provided to residential dwellings or commercial business enterprises, which are covered under Section 60 of this Code. 31.02 REQUIREMENT OF TEMPORARY METER FOR SERVICE Temporary service may be provided after installation of a temporary meter pursuant to a customer's written application for such service. Temporary service by means of a "jumper" or other unauthorized connection to the District water system is prohibited and subject to penalties as set forth in Section 72. A. Size and Location. 1. The size and location of temporary meters will be determined solely by the District. 2. For temporary service from a fire hydrant, a meter of at least 4-inch" in size will be required. Only one 2½-inch" fire hydrant port per fire hydrant shall be occupied by a temporary meter at one time. B. Temporary water service from a fire hydrant shall be limited to the following applications: 1. Filling of water trucks and drop tanks. 2. General construction requirements, such as backfill and compaction, guniting and stuccoing, and block wall building. 3. Flushing of storm drains and sewer lines. 4. Filling, hydrotesting, chlorination, and flushing of newly constructed potable and reclaimed water lines. 5. Filling, flushing, hydrotesting, and the initial operational coverage testing of reclaimed water irrigation systems. Temporary service provided for this application shall be limited to a maximum of 60 days. 6. Operation of landscape irrigation for the establishment of vegetation on slopes or other planted areas. 31-2 Temporary service provided for this application shall be limited to a maximum of 180 days. Item 5 and 6 above shall require the installation by the customer of a District approved and tested reduced pressure backflow device prior to the temporary service being established. The backflow device shall be installed in plain view and within 3 feet of the temporary hydrant meter. C. Temporary service to construction trailers or other temporary construction buildings may be provided as follows: 1. Through a temporary meter connected to the 1 or 2- inch service lateral for the lot the trailer is placed on. 2. Where Item 1 above is not possible, through a temporary meter connected to appurtenances other than a fire hydrant, such as a blow off. 3. Where either Item 1 or 2 above is not possible, from a temporary 4- inch meter connected to a fire hydrant. Service to construction trailers or other temporary construction buildings shall require the installation by the customer of a District approved and tested reduced pressure backflow device prior to the temporary service being established. The backflow device shall be installed in accordance with District requirements. DE. If any unauthorized connection, disconnection or relocation of a temporary meter, or other connection device is made by other than District employees, District may discontinue fur- ther water service to the entire project and impose penalties as set forth in Section 72. EF. Extensions to the time limits referenced in this section may be made by the General Manager. Requests for time extensions shall be made by the customer in writing. F. Temporary Recycled Water Service may be provided as follows: 1. Through a temporary meter connection to a 2- inch recycled service lateral for the lot the work is to take place on.parcel proposed to be irrigated with recycled water. 2. Through a 3- inch or larger meter connected to an appropriate recycled appurtenance as approved by Otay Water District. 31-3 3. Permitted use of temporary recycled water shall be limited to construction site dust control and soil hydration as approved by Otay Water District. 4. Use of temporary recycled water shall be in accordance with the requirements of Section 26 ‘‘Water Recycling Plan and Implementing Procedures’’ of the Code of Ordiances. 31.03 FEES AND CHARGES FOR TEMPORARY METERS A. Temporary Service. Temporary water service shall be furnished to the property owner or the owner’s authorized agent only and shall be provided under the following conditions: 1. Requirement of Deposit. At the time application is made for temporary service, the customer shall deposit with the District the amount set forth in Appendix A, 31.03 A.1. 2. Delinquency. No temporary meters shall be furnished to any person with a delinquent account with the District. 3. Refund of Deposit or Additional Payment. Upon cancellation or termination of the temporary service, the District will refund the amount of deposit remaining after making the following deductions: a) cost of installing, moving, and removing the meter; b) cost of repairing or replacing the meter, fire hydrant, and/or any fittings damaged or lost while in use; and c) unpaid charges for water used or other applicable charges. 4. Temporary Meter Set-up & Removal. The charges to set- up and remove a temporary meter are set forth in Appendix A, 31.03 A.4. 5. Temporary Meter Move Fee. If a meter needs to be moved from one location to another see Appendix A., 31.03 A.5. B. Rates for Temporary Service. The minimum category of service for Temporary Water Service from a hydrant shall be a meter size of 4- inches. Payment for temporary water service shall be in accordance with rates and charges set forth in Section 25.03. 31-4 31.04 PAYMENT OF CAPACITY, NEW WATER SUPPLY, AND ANNEXATION FEES FOR TEMPORARY METERS A. Customers, whose property has been annexed into an Improvement District, may elect to pay the capacity, new water supply and annexation fees in addition to the deposit amount shown in Appendix A, 31.03.A.1. B. Capacity, new water supply and annexation fees for this type of temporary service shall be calculated in accordance with Sections 9 and 28. C. Payment for this type of temporary service shall be in accordance with the rates and charges set forth in Section 25.03 and based on water use type. D. Customers electing this type of temporary service shall be credited the number of equivalent dwelling units they have previously purchased when the meter(s) is returned to the District. The credit shall be applicable to permanent meters purchased within the same subdivision or development where the temporary meter was used. Attacment C Revised by Ordinance 539 9/4/13 SECTION 31 TEMPORARY WATER SERVICE 31.01 DEFINITION OF TEMPORARY SERVICE Temporary water service is water service provided for a limited period of time not to exceed 365 days, and used for temporary purposes such as construction, hydrotesting water systems, vegetation of slopes, and other uses noted in this section. Temporary water service shall not be provided to residential dwellings or commercial business enterprises, which are covered under Section 60 of this Code. 31.02 REQUIREMENT OF TEMPORARY METER FOR SERVICE Temporary service may be provided after installation of a temporary meter pursuant to a customer's written application for such service. Temporary service by means of a "jumper" or other unauthorized connection to the District water system is prohibited and subject to penalties as set forth in Section 72. A. Size and Location. 1. The size and location of temporary meters will be determined solely by the District. 2. For temporary service from a fire hydrant, a meter of at least 4-inch in size will be required. Only one 2½- inch fire hydrant port per fire hydrant shall be occupied by a temporary meter at one time. B. Temporary water service from a fire hydrant shall be limited to the following applications: 1. Filling of water trucks and drop tanks. 2. General construction requirements, such as backfill and compaction, guniting and stuccoing, and block wall building. 3. Flushing of storm drains and sewer lines. 4. Filling, hydrotesting, chlorination, and flushing of newly constructed potable and reclaimed water lines. 5. Filling, flushing, hydrotesting, and the initial operational coverage testing of reclaimed water irrigation systems. Temporary service provided for this application shall be limited to a maximum of 60 days. 6. Operation of landscape irrigation for the establishment of vegetation on slopes or other planted areas. 31-2 Temporary service provided for this application shall be limited to a maximum of 180 days. Item 5 and 6 above shall require the installation by the customer of a District approved and tested reduced pressure backflow device prior to the temporary service being established. The backflow device shall be installed in plain view and within 3 feet of the temporary hydrant meter. C. Temporary service to construction trailers or other temporary construction buildings may be provided as follows: 1. Through a temporary meter connected to the 1 or 2-inch service lateral for the lot the trailer is placed on. 2. Where Item 1 above is not possible, through a temporary meter connected to appurtenances other than a fire hydrant, such as a blow off. 3. Where either Item 1 or 2 above is not possible, from a temporary 4-inch meter connected to a fire hydrant. Service to construction trailers or other temporary construction buildings shall require the installation by the customer of a District approved and tested reduced pressure backflow device prior to the temporary service being established. The backflow device shall be installed in accordance with District requirements. D. If any unauthorized connection, disconnection or relocation of a temporary meter, or other connection device is made by other than District employees, District may discontinue fur- ther water service to the entire project and impose penalties as set forth in Section 72. E. Extensions to the time limits referenced in this section may be made by the General Manager. Requests for time extensions shall be made by the customer in writing. F. Temporary Recycled Water Service may be provided as follows: 1. Through a temporary meter connection to a 2-inch recycled service lateral for the parcel proposed to be irrigated with recycled water. 2. Through a 3-inch or larger meter connected to an appropriate recycled appurtenance as approved by Otay Water District. 3. Permitted use of temporary recycled water shall be limited to construction site dust control and soil hydration as approved by Otay Water District. 31-3 4. Use of temporary recycled water shall be in accordance with the requirements of Section 26 ‘‘Water Recycling Plan and Implementing Procedures’’ of the Code of Ordiances. 31.03 FEES AND CHARGES FOR TEMPORARY METERS A. Temporary Service. Temporary water service shall be furnished to the property owner or the owner’s authorized agent only and shall be provided under the following conditions: 1. Requirement of Deposit. At the time application is made for temporary service, the customer shall deposit with the District the amount set forth in Appendix A, 31.03 A.1. 2. Delinquency. No temporary meters shall be furnished to any person with a delinquent account with the District. 3. Refund of Deposit or Additional Payment. Upon cancellation or termination of the temporary service, the District will refund the amount of deposit remaining after making the following deductions: a) cost of installing, moving, and removing the meter; b) cost of repairing or replacing the meter, fire hydrant, and/or any fittings damaged or lost while in use; and c) unpaid charges for water used or other applicable charges. 4. Temporary Meter Set-up & Removal. The charges to set- up and remove a temporary meter are set forth in Appendix A, 31.03 A.4. 5. Temporary Meter Move Fee. If a meter needs to be moved from one location to another see Appendix A., 31.03 A.5. B. Rates for Temporary Service. The minimum category of service for Temporary Water Service from a hydrant shall be a meter size of 4-inches. Payment for temporary water service shall be in accordance with rates and charges set forth in Section 25.03. 31.04 PAYMENT OF CAPACITY, NEW WATER SUPPLY, AND ANNEXATION FEES FOR TEMPORARY METERS 31-4 A. Customers, whose property has been annexed into an Improvement District, may elect to pay the capacity, new water supply and annexation fees in addition to the deposit amount shown in Appendix A, 31.03.A.1. B. Capacity, new water supply and annexation fees for this type of temporary service shall be calculated in accordance with Sections 9 and 28. C. Payment for this type of temporary service shall be in accordance with the rates and charges set forth in Section 25.03 and based on water use type. D. Customers electing this type of temporary service shall be credited the number of equivalent dwelling units they have previously purchased when the meter(s) is returned to the District. The credit shall be applicable to permanent meters purchased within the same subdivision or development where the temporary meter was used. STAFF REPORT TYPE MEETING: Regular Board Meeting MEETING DATE: October 4, 2017 SUBMITTED BY: Mark Watton, General Manager W.O./G.F. NO: DIV. NO. APPROVED BY: Susan Cruz, District Secretary Mark Watton, General Manager SUBJECT: Board of Directors 2017 Calendar of Meetings GENERAL MANAGER’S RECOMMENDATION: At the request of the Board, the attached Board of Director’s meeting calendar for 2017 is being presented for discussion. PURPOSE: This staff report is being presented to provide the Board the opportunity to review the 2017 Board of Director’s meeting calendar and amend the schedule as needed. COMMITTEE ACTION: N/A ANALYSIS: The Board requested that this item be presented at each meeting so they may have an opportunity to review the Board meeting calendar schedule and amend it as needed. STRATEGIC GOAL: N/A FISCAL IMPACT: None. LEGAL IMPACT: None. Attachment: Calendar of Meetings for 2017 G:\UserData\DistSec\WINWORD\STAFRPTS\Board Meeting Calendar 10-4-17.doc Board of Directors, Workshops and Committee Meetings 2017 Regular Board Meetings: Special Board or Committee Meetings (3rd Wednesday of Each Month or as Noted) January 4, 2017 February 1, 2017 March 1, 2017 April 5, 2017 May 3, 2017 June 7, 2017 July 5, 2017 August 2, 2017 September 6, 2017 October 4, 2017 November 1, 2017 December 6, 2017 January 18, 2017 February 15, 2017 March 15, 2017 April 19, 2017 May 17, 2017 June 21, 2017 July 19, 2017 August 16, 2017 September 20, 2017 October 18, 2017 November 15, 2017 December 20, 2017 SPECIAL BOARD MEETINGS: BOARD WORKSHOPS: STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: October 4, 2017 SUBMITTED BY: Wales Benham Senior Accountant PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Mark Watton, General Manager SUBJECT: Fiscal Year 2017 Board of Directors’ Expenses GENERAL MANAGER’S RECOMMENDATION: This is an informational item only. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To present the Board of the Directors’ expenses for Fiscal Year 2017. ANALYSIS: The California Government Code Section 53065.5 requires special districts, at least annually, to disclose any reimbursement paid by a district within the immediately preceding fiscal year. This Staff Report and attached documentation fulfills this requirement. (See Attachment B for the Summary and C-H for Details.) FISCAL IMPACT: None. 2 STRATEGIC GOAL: Prudently manage District funds. LEGAL IMPACT: Compliance with state law. Attachments: Attachment A Committee Action Attachment B Director’s Expenses and per Diems Attachment C-I Director’s Expenses Detail ATTACHMENT A SUBJECT/PROJECT: Fiscal Year 2017 Board of Directors’ Expenses COMMITTEE ACTION: This item was presented to the Finance, Administration and Communications Committee at a meeting held on September 19, 2017. The following comments were made:  Staff presented the expenses for each director from July 1, 2016 thru June 30, 2017. It was indicated that the total expenditures for the fiscal year was $35,412.76.  The committee felt that the board is very cost conscious. The committee inquired about Director Gastelum’s expenses for the seven months he has been on the board as it is higher than the one year expenses for other members of the board. It was noted that Director Gastelum has been attending training seminars and conferences and this is the reason for his expenses being higher. Following the discussion, the committee accepted the report and recommended that it be presented to the full board as an informational item. STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: October 4, 2017 SUBMITTED BY: Tenille M. Otero Communications Officer PROJECT: VARIOUS DIV. NO. ALL APPROVED BY: Mark Watton, General Manager SUBJECT: Informational Item – 2017 Legislative Session Update GENERAL MANAGER’S RECOMMENDATION: No recommendation. This is an informational item only. COMMITTEE ACTION: N/A PURPOSE: To provide the Otay Water District Board (Board) with an update on the 2017 legislative session. ANALYSIS: To support the Otay Water District’s commitment to a safe, reliable, diversified, and cost-effective supply for its ratepayers, the District manages a legislative program that establishes guidelines and policy direction that can be used by staff and legislative advocates on issues important to the District. The guidelines continue to provide a useful framework for staff when evaluating the potential impact on the District of state or federal legislation or other policy decisions. The Board adopted the 2017 Legislative Policy Guidelines at the February 1, 2017 Board meeting. These guidelines were particularly helpful throughout the year when a timely response was necessary to address a last minute amendment to legislation and when calls or letters of support or opposition were needed. Examples of this are listed in Attachment A, which includes the 2017 Legislative Update from the District’s legislative consultant, Brownstein Hyatt Farber Schreck. 2 The Legislature adjourned its 2017 legislative session on September 16, 2017. The Governor will have 30 days (until October 16, 2017) to act on measures passed by the Legislature and sent to him for final action during the last weeks of the legislative session. All bills that were introduced in 2017, but did not get passed by the Legislature, remain to be considered during 2018, pursuant to a number of specific legislative deadlines that will apply. The Legislature is scheduled to convene the second year of its 2017-2018 two-year legislative session on January 3, 2018. The District’s 2017 Legislative Program Guidelines were comprised of the following categories: • Sacramento-San Joaquin Bay Delta • Recycled Water • Water Services and Facilities • Financial • Governance/Local Autonomy • Conservation • Safety • Security and Information Technology • Optimization of District Effectiveness • Binational Issues • State Water Bonds It is evident in the legislative update document that the District engaged in most, if not all, of these areas during this year’s legislative session. Staff would like to highlight a few of these issues. The first one is related to long-term water use efficiency. The Legislature adjourned its 2017 session without taking action on AB 1668 (Friedman) and SB 606 (Hertzberg/Skinner), making them both two- year bills. A substantial advocacy effort during the final weeks of the 2017 session focused on a number of policy areas that remain problematic and unresolved, including: • Legislature’s role in establishing targets • Recycled water variances and potable reuse credit • CII performance measures • Single path to compliance for retail water suppliers • State enforcement authorities ACWA and a large coalition of water interests (including the District, the Water Authority, and many of its member agencies) actively advocated for a package of amendments to address the concerns presented in both measures, within the context of an oppose unless amended position. 3 It was clear that the Administration was not addressing the major policy issues advanced by the water community coalition, so the coalition shifted its proposed amendment focus. Rather than pursue substantive policy amendments, the coalition attempted to amend the measures to extract all of the provisions relating to urban water use standards and targets out of the bills. That amendment approach would have allowed the provisions relating to water shortage contingency planning, agricultural water management planning, and small community drought planning to proceed successfully to passage during the 2017 legislative session, while allowing the stakeholders to continue working on the more controversial water use standards and targets provisions over the fall and winter. There appeared to be some traction for the approach to remove the water use standards and targets provisions from AB 1668 and SB 606 during the final days of the legislative session, but the legislative clock ran out on amendments, and the coalition was left to advocate turning AB 1668 and SB 606 into two-year bills. During a very intense advocacy effort during the final week of the legislative session, the authors decided to not bring AB 1668 and SB 606 to Floor votes in their respective houses as the measures did not have sufficient votes for passage. It is widely expected that AB 1668 and SB 606 will be the subject of discussions and negotiations over the interim recess of the Legislature, and is a near certainty that the measures will again be considered for passage when the Legislature convenes its 2018 legislative session. The Water Authority, member agencies, and San Diego regional organizations were all very active in advocating for protection of the San Diego region’s interests relative to long-term water use efficiency standard setting and water shortage contingency planning. The second item staff would like to emphasize is the resources bonds and the Salton Sea. During the final weeks of the 2017 legislative session, SB 5 (De Leon) gained significant traction within the Legislature and was passed and sent to the Governor’s desk prior to adjournment of the session. In its final version, SB 5 will place a $4 billion parks, resources, and water bond on the June 2018 primary election ballot (if signed by the Governor). The measure includes $200 million for Salton Sea restoration and implementation of the 10-year Salton Sea management plan (for which the Water Authority was a strong advocate), and the following funding allocations for water-related projects: 4 • $250 million for safe drinking water programs, predominantly in disadvantaged communities • $80 million for groundwater contamination cleanup projects (disadvantaged community focus) • $550 million for flood protection and repair • $290 million for groundwater and water recycling projects The Governor will have until October 16 to take action on SB 5, although there are indications that the measure will potentially be signed for placement on the June 2018 primary election ballot. It is unclear what the passage of SB 5 will mean for the two ballot initiative resources bond measures that are currently in play. The Caves initiative ($7.5 billion) was recently issued a ballot title and summary by the Attorney General and was cleared for circulation to collect signatures. The Meral initiative ($8.3 billion) is still pending issuance of ballot title and summary. Presumably, the ballot initiative measures will not continue to proceed given the Legislature’s action on SB 5. However, there have not yet been any formal announcements made. Last, but not least, is the public goods charge on water issue. The Legislature adjourned its 2017 session without taking action on SB 623 (Monning), making it a two-year bill. On September 1, 2017, the Assembly Appropriations Committee referred SB 623 to the Assembly Rules Committee to make it a two-year bill. Rumors filled the halls of the Capitol from September 1 through the last week of the legislative session that the measure’s proponents – the production agriculture and environmental justice communities – were working to withdraw SB 623 from the Assembly Rules Committee and have it referred to the Assembly Floor for a vote. The opponents – which included most of the statewide water community and major business interests – continued to advocate for holding SB 623 in the Assembly Rules Committee, and ultimately the bill was held in committee to make it a two-year bill. As it was crafted, SB 623 would have imposed a fertilizer fee, a dairy fee, and a water charge on ratepayers of retail water suppliers, using the following structure: • A charge of $0.95 per month per account for customers with a water meter less than one inch in size • $4/month for customers with meter sizes greater than one inch and less than or equal to 2 inches • $6/month for customers with meter sizes greater than 2 inches and less than or equal to 4 inches 5 • $10/month for customers with meter sizes greater than 4 inches • A charge of $0.95 per month for customers with no meters The $0.95 charge per account would impact the District’s customers with an increase on the average residential water bill using 12 units of water by approximately 1.2 percent and a 2.4 percent increase for customers using five units of water. As structured, SB 623 would raise approximately $195 million of annual revenue in the following manner: • Water tax = $175 million/year – 90 percent of revenue • Fertilizer tax = $14 million/year – 7 percent of revenue • Dairy tax = $5.6 million/year – 3 percent of revenue As a result of the disproportionate revenue collection from ratepayers of urban retail water agencies, as compared with the funding contribution apportioned to the agricultural community (fertilizer and dairy taxes), SB 623 would contradict the fundamental California policy principle of “polluter pays.” While SB 623 would require the agriculture and dairy industries to contribute towards clean-up of drinking water pollution through industry assessments, the total contribution of both is approximately 10 percent of the total revenue generated, even though much of the legacy contamination of groundwater sources – particularly within the Central Valley, San Joaquin Valley, and Salinas Valley – can be attributed significantly to agricultural and dairy operations. Although SB 623 was not further considered during the 2017 session once it was referred to the Assembly Rules Committee, it is very clear that the proponents will once again make a major push to advance SB 623 during the 2018 session. Their efforts have already begun, as evidenced by the very active social media campaign that the proponents have launched in support of SB 623. The District took an oppose unless amended position on SB 623. Staff coordinated with the Association of California Water Agencies to ensure that a strong coalition was engaged in opposition to the public goods charge and was activated once the amendments were placed into SB 623 when the Legislature returned from its summer recess. The San Diego region as whole including chambers of commerce, economic development corporations, and other business organizations, was very active in opposing the water tax component of SB 623. FISCAL IMPACT: Joe Beachem, Chief Financial Officer No fiscal impact as this is an informational item only. 6 STRATEGIC GOAL: The Legislative Program supports the District’s Mission statement, “To provide high value water and wastewater services to the to the customers of the Otay Water District, in a professional, effective, and efficient manner” and the General Manager’s Vision, “A District that is at the forefront in innovations to provide water services at affordable rates, with a reputation for outstanding customer service.” LEGAL IMPACT: None. Attachments: Attachment A – 2017 Legislative Update by Rosanna Carvacho, Brownstein Hyatt Farber Schreck Memorandum DATE:September 28, 2017 TO:Board of Directors and General Manager, Mark Watton Otay Water District FROM:Rosanna Carvacho RE:2017 Legislative Update The Legislature adjourned for Interim Recess in the early morning hours of Saturday, September 16, and will not return until January 3, 2018. All bills that did not pass out of the Legislature prior to adjournment became 2-year bills, and will have a second chance to be acted on again next year. Since the Legislature went into the early morning hours of the 16th, the Governor now has until October 16 to sign or veto all bills that were passed by the Legislature, prior to adjournment. This year, first order of business in the Legislature, was passing a transportation funding measure to address the state’s crumbling roads and transportation infrastructure, through SB 1 (Beall). The measure was passed by the Legislature on the evening before Spring Recess, and signed by the Governor on April 28. The measure will generate $5.2 billion per year in new revenue and allocates $3 billion per year to be split evenly between state and local governments for highway and road maintenance and repair. Another significant accomplishment of the Legislature this year was extending the state’s cap and trade program through 2030, strengthening the state’s air pollution and climate change goals. A key element of the cap and trade deal, the program’s $1.5 billion expenditure plan, was passed by the Legislature on the last day before Interim Recess and signed by the Governor shortly thereafter. Passing a comprehensive housing package that addresses the state’s affordable housing crisis, also took priority this year. After months of strenuous negotiations, the Legislature finally passed several bills that hone in on key housing issues – generating funding for low-income housing development through $4 billion in bonds, funding critical housing programs through real estate document fees, and streamlining the approval process for new housing projects, to name a few. The housing package is still awaiting the Governor’s action. Due to Governor Brown’s fiscal prudence, and his stated unwillingness to authorize bonds in excess of $8 billion this year, Senator Beall’s housing bond and Senate President pro Tempore Kevin de León’s parks and water bond, went head to head for the money – each coming out with roughly the same amount. The parks and water bond, SB 5 (de León), if signed by the Governor, will place a $4 billion bond on the June 2018 ballot. The California Drought, Water, Parks, Climate, Coastal Protection, and Outdoor Access for All Act of 2018 will provide funding for parks, water conservation, flood protection, and wildlife conservation. The last true parks bond in California, Proposition 40, passed 15 years ago. While this measure provides significant funding for parks, the measure will also provide essential funding for water related needs, including maintenance and construction for water supply, storm water, flood control, sewers Attachment A 2 and more. This measure includes $767 million to the Salton Sea Authority, state conservancies and Wildlife Conservation Board, including $170 million for the implementation of the Salton Sea Management Program 10-year plan and $30 million to the Salton Sea Authority for capital outlay projects that provide air quality and habitat benefits and that implement the Salton Sea Management Program – $200 million in total. The 10-year plan provides for the preservation of California’s ecological health and water supply through projects related to Salton Sea restoration. SB 5 is currently on the Governor’s desk awaiting action. While the Administration and democratic leadership held climate change as one of the state’s largest threats, major threats from the Trump Administration regarding state immigration matters also caused great concern and was a persistent matter of contention in the Legislature this year. Although addressing California’s transportation funding needs, the state’s affordable housing crisis, extending the cap and trade program and immigration took the bulk of the Legislature’s attention this year, water remained a significant topic of discussion. The severe drought of 2016 and unprecedented rainfall and snow in 2017, led the Governor to push for ongoing water conservation and sustainability – leading efforts in “Making Water Conservation a California Way of Life.” In May of 2016, Governor Brown signed Executive Order B-37-16, which instructed state agencies to build upon water conservation efforts in recent years and establish long-term water conservation measures. The Executive Order laid out four key implementation objectives: using water more wisely, eliminating water waste, strengthening local drought resiliency, and improving agricultural water use efficiency and drought planning. Five state agencies were tasked with implementing the Executive Order: the Department of Water Resources, the State Water Resources Control Board, the California Public Utilities Commission, the California Department of Food and Agriculture, and the California Energy Commission. In April 2017, the Administration published its final framework for implementing the Executive Order. While the drought emergency was lifted in early April by Executive Order B-40-17 after water conservation efforts and unprecedented rainfall, the order continued to prohibit wasteful water use practices set forth by B-37-16, warning that the next drought may be around the order. During the legislative session, multiple bills surfaced that were aimed at putting the Administration’s water conservation recommendations into statute in order to solidify California’s efforts to make water conservation a state priority. While none of the water conservation bills listed below moved forward this year, it is expected that either these bills or other bills will move forward next year to advance the Administration’s long-term water conservation goals. In late August, SB 623 (Monning) became a vehicle for what would have been the first ever tax on drinking water in California. SB 623 proposes to create an ongoing funding stream to fund safe drinking water programs. According to the Assembly Appropriations Committee analysis, the bill would have raised approximately $100 million per year from the water fee, approximately $17 million from a fertilizer mill fee, and approximately $5.3 million from a dairy fee. While the measure did not move forward this year, it is likely to resurface in 2018, and will decidedly be a major topic in the water community. The unprecedented rainfall and snow, and both natural and manmade disasters, also triggered discussions surrounding dam safety, flood control, and water capture. In February 2017, the Oroville Dam spillway was damaged, causing the evacuation of over 180,000 residents living near the dam. Following the disaster, the California Department of Water Resources was ordered to create a task force comprised of experts to assess the dam and present recommendations to the department. The incident shed light on the state’s need for investment in existing dam and flood infrastructure. Another significant topic of discussion in Sacramento remains the “California WaterFix.” On June 26, the U.S. Department of Fish and Wildlife and the National Marine Fisheries Service found, in a biological opinion, that the California WaterFix will not jeopardize Delta Smelt, Chinook Salmon and other imperiled 3 species. Environmental groups strongly oppose the project and have filed multiple lawsuits in effort to stop it from moving forward, on grounds that it violates the federal Endangered Species Act. Digging of the tunnels would not begin until 2021, and the construction is expected to take 10 years. The project is estimated to cost $17.1 billion dollars, paid by ratepayers whose water districts receive water from the tunnels. At the urging of the Governor’s office, water agencies across the state are deciding whether or not to support the California WaterFix. Just last week, Westlands Water District voted to not sign on to the project. The Administration quickly sent out a press release that this does not signal the end of the project and highlighted other agencies that have voted to support the project. Otay Water District took several positions on bills in 2017, which we closely monitored and provided updates to your staff as they moved through the Legislature this year. Below is a list of those bills and their current status. Any bill that is now a 2-year bill may be acted on in 2018. • AB 851 (Caballero) – This measure would extend the sunset date on the authority of counties to use construction manager at-risk contracting, extends the authority to the City of San Diego, and allows the Santa Clara Valley Water District to use the design-build procurement. Otay Water District took a support as proposed to be amended position on the measure, requesting that pump stations and transmission pipeline facilities be able to use the design-build project delivery method. Unfortunately, as discussed in person at the July Board meeting, the bill was only narrowed due to opposition. This bill is currently on the Governor’s desk awaiting action. • AB 869 (Rubio) – This measure, regarding sustainable water use and demand reduction, was substantially amended on July 3. AB 869, as amended, would have required the State Water Resources Control Board (SWRCB), in consultation with the Department of Water Resources (DWR), to adopt long-term standards for urban water conservation and water use, and would require DWR to conduct studies and investigations, and recommend standards for indoor residential use and outdoor irrigation use, to the SWRCB for adoption. Otay Water District took a support position on an earlier version of this bill that would have excluded recycled water from future water use reduction calculations. The measure was held in the Senate is now a 2-year bill. • AB 968 (Rubio) – This measure would set new water efficiency targets for water suppliers to achieve by 2025, building upon the progress made under the existing "20% by 2020" law. The bill makes water use efficiency a way of life in California in a manner that accounts for local conditions, while also recognizing and incentivizing sustainable, balanced approaches to water management. AB 968 would also establish a collaborative stakeholder process to continue improvement in water use efficiency beyond 2025 and preserve the Legislature's authority and oversight over long-term water use target setting. Otay Water District took a support position on the measure. The measure was held in the Assembly and is now a 2-year bill. • AB 1000 (Friedman) – This measure, strongly opposed by the water community, sought to create a new certification process for water conveyance in California. Specifically, the measure would have imposed a duplicative environmental review of the Cadiz Valley Water Conservation, Recovery and Storage Project. The proposed creation of a new regulatory layer to block the Cadiz Project would have set a dangerous precedent, putting future water conveyance projects at risk of similar regulatory abuse. Otay Water District took an oppose position on the measure. The measure was held in the Senate and is now a 2-year bill. • AB 1323 (Weber) – This measure would require DWR to convene a stakeholder group involving a wide variety of stakeholder interests by February 1, 2018, and would require the stakeholder workgroup to develop, evaluate, and recommend proposals for establishing new water use targets for urban water suppliers and to report to the Governor and Legislature by December 31, 2018. Otay Water District took a support position on the measure. The measure was held in the Senate and is now a 2-year bill. 4 • AB 1654 (Rubio) – The current version of this measure states that it is the intent of the Legislature to enact legislation necessary to help make water conservation a California way of life. Otay Water District took a support position on a previous version of the measure that would have required an urban retail water suppliers to report annually to DWR on the status of their water supplies for that year and if supplies are not adequate to meet demand, the water supplier would be required to implement the appropriate responses as described in their water shortage contingency analysis. The previous measure would have also prohibited a water supplier from being required to reduce its use or reliance on any water supply available beyond the steps specified in its water shortage contingency analysis, protecting water suppliers' and their customers' investments in resilient water supply sources. The measure was held in the Senate is now a 2-year bill. • AB 1667 (Friedman) – This measure would require the SWRCB, in consultation with DWR, to adopt long-term standards for urban water conservation and water use on or before May 20, 2021. The bill would also require the board, in consultation with the department, to adopt performance measures for commercial, industrial, and institutional water use on or before that date. Otay Water District took an oppose position on the measure. The measure was held in the Senate and is now a 2-year bill. • AB 1668 (Friedman)/SB 606 (Skinner/Hertzberg) – In July, both of these bills were stripped down to intent language regarding making conservation a California way of life. The bills were subsequently gutted and amended to relate to urban water plans and water efficiency standards. As amended, the bills sought to establish permanent water efficiency standards and goals to be met by 2026. Additionally, the bills would require all urban water agencies to submit water contingency plans and to update urban water management plans related to the new state goals. Agricultural water suppliers would also be required to quantify water savings, improve system management, and reduce water loss. The bills would grant one-time authority to the SWRCB to adopt regulations for water use efficiency. Otay Water District took an oppose unless amended position on the bills. AB 1668 was held in the Senate and SB 606 was held in the Assembly. Both bills are now 2-year bills. • SB 496 (Canella) – This measure provides that engineers and architects have no duty to defend claims against public works project owners, even in cases where the design professional is at fault. The bill eliminates the ability of a public agency to contract with design professionals for upfront legal defense costs against claims related to a project’s design work and instead prohibits a public agency from requiring the design professional to defend a claim directly connected to the work of the design professional. This forces taxpayers to front the legal costs for the private sector, even for claims where the design professional is ultimately deemed to be 100 percent at fault. Otay Water District took an oppose position on the measure. The bill was signed by the Governor on April 28, 2017, and its provisions will become effective on January 1, 2018. • SB 623 (Monning) – On August 21, the measure was gutted and amended to establish a public goods charge on water to create an ongoing funding stream for safe and affordable drinking water – the first ever tax on drinking water in California. Otay Water District took an oppose position on the measure. The measure was held in the Assembly and is now a 2-year bill. • SB 649 (Hueso) – This measure, if signed into law, would replace local government permitting authority for small cell wireless facilities with statewide permitting requirements and rates, which represents a major shift in telecommunications policy. Otay Water District has been monitoring the measure. The bill is currently on the Governor’s desk awaiting action. STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: October 4, 2017 PROJECT: Various DIV. NO. ALL SUBMITTED BY: Adolfo Segura, Chief of Administrative Services APPROVED BY: Mark Watton, General Manager SUBJECT: FY17 YEAR-END REPORT FOR THE DISTRICT’S FY15-18 STRATEGIC PLAN GENERAL MANAGER’S RECOMMENDATION: No recommendation. This is an informational item only. COMMITTEE ACTION: Please see “Attachment A”. PURPOSE: To provide a year-end report on the District’s FY15-18 Strategic Performance Plan for FY17. ANALYSIS: Summary The current Otay Water District Strategic Plan is a four-year plan ranging from the start of FY15 through the end of FY18. This report details the year-end results for the third year of our four-year plan. Strategic Plan Objectives – Target 90% Strategic Plan objectives are designed to ensure the District is executing mission designed objectives and making the appropriate high- level changes necessary to guide the agency’s efforts to meet new challenges and positively adapt to change. Objective results for FY17 year-end are above target at 94%, with 29 of 31 active items completed or on schedule. One objective is behind schedule and one is on hold. The following objective has been reported to be behind schedule: 1. Streamline Input of Operations Data – Staff identified business processes and forms that could be automated for enhanced efficiencies. Due to the delay of the SCADA project closeout, a roadmap project list could not be completed on schedule, however, an action list will be presented during FY19. It’s important to note that as part of this objective, during the last three (3) years, approximately 20 paper-based forms and legacy processes, ranging from asset management maintenance work order creation to water systems daily journal logs, have been streamlined and automated. These forms and processes can be accessed via the District’s SharePoint work portal, or mobile application. The following objective has been put on hold: 1. Evaluate Requirements for Future Emergency Communication System – The existing radio communication system is expected to be vendor supported for an additional three (3) years. Staff will continue to explore new technologies in this area and during the new strategic plan, will conduct a needs-analysis in order to develop an RFP to replace the existing radio communication system. Performance Measures – Target 75% Performance measures are designed to track the District’s day-to-day performance. These items measure the effectiveness and efficiency of daily operations and essential services. The overall goal is that at least 75% of these measures be rated “on target”. FY17 year-end results are well above target with 38 of 43 (88%) items achieving the desired level or better. 0 2 4 6 8 10 12 14 16 18 COMPLETED ON SCHEDULE BEHIND ON HOLD 12 17 1 1 Completed On Schedule Behind On Hold 29 of 31 Active Objectives are Completed or On Schedule (94%) Items Not On Target 1. CIP Project Expenditures vs. Budget – Year-to-date CIP expenditures amounted to $12,964,000 vs. the budgeted amount of $11,883,000. 2. Project Closeout – Quarter four results were highly influenced by the S2033 project (203 days). Liquidated damages for this construction project were assessed due to delivery beyond the contract time. 3. Overtime Percentage – Year-to-date expenditures amounted to $145,928 vs. the budgeted amount of $123,900. Overtime exceeded the budget due to after-hour field repairs. 4. Direct Cost of Treatment per MGD – The year-to-date result is $1,095.70 vs. the year-to-date target of $1,050.00. The Reclamation Plant experienced process upsets and more material was used to improve effluent quality to meet regulatory compliance. 5. Sewer Overflow Rate – As reported to the Board during mid-year, staff responded to a sanitary sewer overflow in November 2016, near Fair Glen Road in Rancho San Diego. The blockage was a result of root overgrowth inside a sewer manhole. Staff has reported this event to the State Water Resources Control Board as a Category 2 Sanitary Sewer Overflow and the sewer manhole has been placed on a three-month inspection cycle. 0 2 4 6 8 10 12 14 16 18 ON TARGET NOT ON TARGET 38 5 On Target Not on Target 38 of 43 Performance Measures are On Target (88%) Next Steps – FY17-18 The completion of Phase 3 emphasized the adoption and leveraging of next generation technology solutions and process improvement, resulting in gained efficiencies with departmental functions across the District, and an effective sustainment of a growing customer base with a reduced workforce. During FY18, which is the last phase of the plan, staff will focus on the completion of remaining objectives, prioritization of a project action list from a recently developed multi-year SCADA roadmap, and improvement to our asset management decision analysis and development of CIP framework. Lastly, staff will also be working on the development of the District’s new 3-5 year Strategic Plan. Committee Reports – Slideshow The Strategic Plan results are presented to both the Finance, Administration, and Communications Committee and the Engineering, Operations, and Water Resources Committee with a specific focus on the most relevant information for each Committee (see “Attachment B”). Strategic Plan is available on the Board VPN All of the Strategic Plan results and associated details are provided in a real-time, interactive web-based application available to the Board via secured remote access, VPN. The District Secretary can facilitate any password or access issues. FISCAL IMPACT: Joe Beachem, Chief Financial Officer Informational item only; no fiscal impact. STRATEGIC GOAL: Strategic Plan and Performance Measure reporting is a critical element in providing performance reporting to the Board and staff. LEGAL IMPACT: None. ATTACHMENTS: Attachment A – Committee Action Report Attachment B – PowerPoint Presentation 5 ATTACHMENT A SUBJECT/PROJECT: FY17 YEAR-END REPORT FOR THE DISTRICT’S FY15-18 STRATEGIC PLAN COMMITTEE ACTION: This item was presented to the Finance, Administration and Communications Committee at a meeting held on September 19, 2017. The following comments were made:  Staff presented the Strategic Plan’s year-end update and indicated that the District is currently completing its third year of the 4- year Plan (FY15-18).  Staff reviewed information from the staff report and presented a powerpoint that provided the year-end results of each of the objectives and performance measures.  It was noted that the focus of the Strategic Plan for next fiscal year is to complete remaining objectives.  The Committee inquired about the Strategic Plan’s objective to address dependency on imported water. Staff stated that the objective is related to advance water resources planning that includes the District’s Water Facilities Master Plan, Urban Water Management Plan, and the Integrated Resource Plan that looks into additional water supply sources for the District.  Staff shared that over 20 legacy processes, forms, etc., have been automated through the implemented work order system, which has saved many work hours and enhanced efficiency.  In response to an inquiry from the Committee, staff indicated that the District based its Direct Cost of Treatment per MGD measure on AWWA’s survey for the western area of the United States (Region 5). Staff indicated that the District has met the target for this measure in the past. In this particular year there were two major incidents which contributed to the District not meeting the target. The first was the repair of the force main was delayed due to the heavy rains that occurred this past winter. The second 6 was when the treatment plant enhancements were started, there were some issues at the plant that required correction. This was reported in every quarter. These two incidents were the reason the District did not meet the Direct Cost of Treatment per MGD measure.  Staff indicated in the development of the next four (4) year Strategic Plan, they will be evaluating each measure and determining if the measures are still valid and if they require some fine tuning.  It was discussed that the measures invoke discussion for staff to explore the reasons why measures are not on target.  It was noted that the measure Construction Change Order Incidence (w/o allowances) of 1.5% is notable as it is much below the target of 5%. The industry average is approximately 10%.  It was discussed that the District’s measure for Distribution System Loss of 4.1% is below the District’s target of 5%. Staff noted that the State Water Resources Control Board requires that the District perform an audit on its water loss and the District’s 2017 score was 74-75. The State indicated that the District is in the upper end of the chart with regard to reliability compared to other agencies (generally they score between 50 and 70). Staff indicated that the District is realizing benefits from its leak detection program. It was also indicated that the leak detection program is a programmatic effort.  Staff indicated that the System Valve Exercising Program is also a programmatic effort that requires critical valves be exercised once a year and all other valves be exercised at least once every seven years. This  Staff presented an additional powerpoint that reviewed the District’s access and security program, pressure vessel program, the streamlining of work processes, and the meter change out program (see attached copy of presentation). Following the discussion, the committee accepted the report and recommended that it be presented to the full board as an informational item. 1 STRATEGIC PLAN FY17 YEAR-END REPORT 2 Introduction 3OWDStrategicPlanFY15–FY18 The District’s Strategic Plan is developed with the Balanced Scorecard (BSC)strategic planning and management methodology.The model has evolved over time and is now in its fourth-generation.In brief,the BSC emphasizes alignment of business activities to the vision and strategy of the organization with goals and measures in four basic areas or “perspectives”:financial,customer,business processes, and learning and growth. The District’s Strategic Plan is designed to track key organizational project objectives,and essential day-to-day performance measures.During FY17,staff continued to execute the completion of targeted projects and evaluate the potential to further streamline work-group processes and elevate performance metrics if warranted.As we go into the last year of our Strategic Plan,focus will be on the completion of remaining objectives,prioritization of a project action list from a recently developed multi-year SCADA roadmap,and improvement to our asset management decision analysis and development of CIP framework.Lastly,staff will also be working on the development of the District’s new 3-5 year Strategic Plan. 4 Deliver high quality services to meet and increase confidence of the customer 1.Increase customer confidence in the District 2.Improve and expand communications 3.Provide effective water services Manage the financial issues that are critical to the District 1.Improve financial information and systems 2.Maintain District financial strength Maximize efficiency and effectiveness 1.Actively manage water supply as well as support for water and sewer services 2.Identify and evaluate improvements to enterprise and departmental business processes Provide leadership and management expertise 1.Reinforce a results-oriented and accountable culture 2.Focus on achieving a lean flexible workforce Balanced Scorecard Strategies and Goals Customer Financial Business Processes Learning & Growth $$ 5AWWA Benchmarks 1 Technical Quality Complaint Potable Water Compliance Rate Collection System Integrity Sewer Overflow Rate 2 3 4 6Objectives 94% are Completed or On Schedule 0 2 4 6 8 10 12 14 16 18 Completed On Schedule Behind On Hold 12 17 1 1 Completed On Schedule Behind On Hold Objective Report31 Total 7 COMPLETED Objectives 1.Optimize SCADA program 2.Streamline procurement and contractor on-boarding process via web-based eProcurement technology 3.Advance business processes and operational efficiencies through implementation of next generation information technology 4.Evaluate opportunities to combine or transfer similar work functions 5.Evaluate training and development programs for new and existing supervisors/managers 6.Address dependency of imported water 7.Sewer system business analysis 8.Evaluate the viability of implementing an indirect potable reuse program (IPRP) 9.Streamline work processes in four strategic areas including departmental synergies, technologies, procurements, and alignment of business processes 10.Revise master recycle water permit practice/process 11.Implement a habitat conservation plan that will streamline O&M with District easements 12.Improve and streamline meter related processes 8 ON HOLD Objectives 1.Evaluate Requirements for Future Emergency Communication System 9Objectives 1.Streamline Input of Operations Data BEHIND SCHEDULE 10Performance Measures 88% On Target Measure Report43 Total 0 5 10 15 20 25 30 35 40 On Target Not on Target 38 5 On Target Not on Target 11Performance Measures 1.Overtime Percentage 2.CIP Project Expenditures vs. Budget 3.Project Closeout Time 4.Direct Cost of Treatment per MGD 5.Sewer Overflow Rate NOT ON TARGET 12 Year-End Results Administrative Services 13Enterprise Technology Services Availability Target: No less than 99.5%availability per quarter in a year Annual Average:99.5% = 3.60 hours of downtime per month/1.83 days of downtime in a year 99.5 99.5 99.5 99.5 99.5 98 98.5 99 99.5 100 100.5 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 Measurement Method 14Employee Turnover Rate Target: Less than 5%turnover in a year # of voluntary resignations (not including retirements)/average # of employees 0 0 0 0.75 0.75 0 1 2 3 4 5 6 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 Measurement Method 15Training Hours Per Employee Target: 12 hours or more general formal training per employee in a year (excludes safety training) Total qualified training hours for all employees/average # of FTEs 6.35 6.55 4.77 5.19 22.89 0 5 10 15 20 25 Q1 Q2 Q3 Q4 YTD/AVG Target 2015 2016 2017 Measurement Method 16Safety Training Program Target: 24 hours or more safety training per field employee in a year # of safety training hours for the quarter/ # of field employees 6.64 6.75 6.31 11.09 30.83 0 5 10 15 20 25 30 35 40 45 50 Q1 Q2 Q3 Q4 YTD/AVG Target 2015 2016 2017 Measurement Method 17Injury Incident Rate Target: Be at or below the National Average for Utilities-Water Sewage and other SystemsA rate of 6.60 or less work-related injuries and illnesses 4.9 4.9 0 1 2 3 4 5 6 7 Q4 AVG Target 2017 Annual Average:6.60 = Number of injuries and illnesses (200,000) / Employee hours workedMeasurement Method 18 Engineering 19CIP Project Expenditures vs. Budget Target: 95% of budget but not to exceed 100%in a year Being below target gives the measure a “not on target” status Actual quarterly expenditures/Annual budget 18.9 19.8 26.8 47.4 109.1 0 20 40 60 80 100 120 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 Measurement Method 20Construction Change Order Incidence (w/o allowances) Target: No more than 5%per quarter in a year 1.2 2.1 3.1 1.5 1.5 0 1 2 3 4 5 6 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 Measurement Method Total cost of Change Orders (not including allowances)/Total original construction contract amount (not including allowances) 21Mark-Out Accuracy Target: No less than 100%mark-out accuracy per quarter in a year 100 100 100 100 100 0 20 40 60 80 100 120 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 # of mark-outs performed without an at-fault hit, which is damage to a District facility that results from a missing or erroneous mark- out/Total # of mark-outs performed Measurement Method *FY15 –FY17 results are 100% 22Project Closeout Time Target: No more than a 45 day average per quarter in a year 0 48.5 2 128.5 71.2 0 20 40 60 80 100 120 140 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 # of days between NOSC and NOC for all construction projects within the quarter/# of construction projects within the quarter Measurement Method 23Annual Recycled Water Site Inspections Target: 100%of recycled sites inspected in a year (There are 147 recycled water use sites scheduled for FY17) Cumulative % of recycled sites inspected per quarter of those required by DEH 31.2 58.5 86.4 100 100 0 20 40 60 80 100 120 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 Measurement Method 24Recycled Water Shutdown Testing Target: No less than 90%of recycled site shut down tests in a year (There are 45 recycled water use sites due for shutdown in FY17) Cumulative % of recycled site shutdown tests performed per year compared to those scheduled 24 51 71 90 90 0 20 40 60 80 100 120 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 Measurement Method 25 Finance 26 # of all calls answered/ # of all calls received during a quarter Answer Rate Target: No less than 97%average answer rate per quarter in a year 98.09 98.19 97.9 98.1 98.12 95 95.5 96 96.5 97 97.5 98 98.5 99 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 Measurement Method 27 Total operations O&M costs/ # of accounts O&M Cost Per Account Target: Less than $540.00 per account in a single year (Target is based on Operating Budget) Measurement Method 117 254 246 517 517 100 150 200 250 300 350 400 450 500 550 600 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 28 # of correct bills during the reporting period/ # of total bills during the reporting period Billing Accuracy Target: No less than 99.8%billing accuracy per quarter in a year 99.99 99.99 99.99 99.99 99.99 98 98.5 99 99.5 100 100.5 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 Measurement Method 29Overtime Percentage Target: Less than 100%of budgeted overtime per quarter in a year (Target is based on Operating Budget; FY17 Overtime Budget is $123,900) Actual overtime costs (including comp time)/ Budgeted overtime costs 97.64 124 183 69 118 0 20 40 60 80 100 120 140 160 180 200 Q1 Q2 Q3 Q4 YTD Target 2014 2015 2016 2017 Measurement Method 30Sewer Rate Ranking Target: Bottom 50 percentile for the 28 sewer service providers in San Diego (Otay ranks 5 out of 28 sewer service providers) 5 5 0 5 10 15 20 25 Q4 YTD Target 2015 2016 2017 Otay ranking for the average bill for sewer/ # of sewer agenciesMeasurement Method 31Water Rate Ranking Target: Bottom 50 percentile for the 22 member agencies in San Diego (Otay ranks 11 out of 22 member agencies) Otay ranking for the average water bill among CWA member agencies 11 11 0 2 4 6 8 10 12 14 Q4 YTD Target 2015 2016 2017 Measurement Method 32Debt Coverage Ratio Target: Above 150%to have sufficient debt coverage (This is measured at year end) Qualified net operating revenues/debt service requirements (measured at year end) 200 200 0 50 100 150 200 250 300 Q4 YTD Target 2015 2016 2017 Measurement Method 33Reserve Level Target: Equal or exceed 85% (This is measured at year end) # of reserve funds that meet or exceed fund target levels/ Total # of reserve funds 85 85 0 20 40 60 80 100 120 140 Q4 YTD Target 2015 2016 2017 Measurement Method 34Percent of Customers Paying Bills Electronically Target: In development (No set targets in FY17; a baseline will be established in FY16 & 17 and appropriate targets will be recommended for the FY18 Strategic Plan) # of customers paying bills electronically/ Total # of customersMeasurement Method 75.17 75.64 75.77 76 75.64 0 10 20 30 40 50 60 70 80 90 100 Q1 Q2 Q3 Q4 YTD Target 2016 2017 35Distribution System Loss Target: Less than 5%of unaccounted water loss per quarter in a year 100 [volume purchased (from CWA) –(volume sold (to customers) + volume used District usage)] / volume purchased (from CWA))Measurement Method 4.3 4 3.6 4.1 4.1 0 1 2 3 4 5 6 7 8 9 10 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 36 Operations 37Technical Quality Complaint (AWWA) Target: No more than 9 complaints per 1000 customer accounts in a year 1000 (# of technical quality complaints per quarter)/# of active customer accounts per reporting period AW W A B e n c h m a r k Measurement Method 1.15 0.81 0.58 1.4 3.94 0 1 2 3 4 5 6 7 8 9 10 Q1 Q2 Q3 Q4 YTD Target AWWA 2015 2016 2017 AW W A B e n c h m a r k 38Planned Potable Water Maintenance Ratio in $ Target: 66% or greater of all labor dollars spent on preventative maintenance per quarter in a year Total planned maintenance cost/ Total maintenance costMeasurement Method 72 71 63 77 70 50 55 60 65 70 75 80 85 90 95 100 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 39 Total planned maintenance costs/Total maintenance costs Planned Recycled Water Maintenance Ratio in $ Target: 70%or greater of all labor spent on preventative maintenance per quarter in a year Measurement Method 59 97.1 94 97 91 0 20 40 60 80 100 120 Q1 Q2 Q3 Q4 YTD Target 2014 2015 2016 2017 40Planned Wastewater Maintenance Ratio in $ Target: 77% or greater of all labor dollars spent on preventative maintenance per quarter in a year Total planned maintenance cost/Total maintenance costMeasurement Method 88.95 89.75 92.06 91.38 90.64 50 55 60 65 70 75 80 85 90 95 100 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 41Direct Cost of Treatment Per MGD Target: No more than $1050 per MG spent on wastewater treatment per quarter in a single year (Targets each quarter will vary based on high and low demand times) Total O&M costs directly attributable to sewer treatment/ Total volume in MGMeasurement Method 769.4 0 1675.53 875.2 1095.7 0 200 400 600 800 1000 1200 1400 1600 1800 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 42O&M Cost Per MG Processed of Wastewater Target: No more than $1925 per MG spent on O&M for wastewater treatment in a year (Targets each quarter will vary based on high and low demand times) Total O&M cost/ MGP FYTD O&M Cost = (Power Cost) + (Staff Cost) + (Equipment Cost) / FYTP MGP Measurement Method 1098.14 0 2419.59 1151.95 1482.6 0 500 1000 1500 2000 2500 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 43Leak Detection Program Target: Perform leak detection on 20%of potable distribution system %of potable distribution pipelines surveyed. The calculation is miles of pipe surveyed divided by total miles of pipe times 100. 33 33 0 10 20 30 40 50 60 70 80 90 100 Q3 YTD Target 2015 2016 2017 Measurement Method *FY15 –FY16 results are 20% 44Percent of PMs Completed –Fleet Maintenance Target: No less than 90%of scheduled PM’s completed per quarter in a year # of PM’s completed/ # of PM’s scheduled to be completed Measurement Method 100 100 100 100 100 0 20 40 60 80 100 Q1 Q2 Q3 Q4 Annual Target 2015 2016 2017 *FY16 &FY17 results are 100% 45Percent of PMs Completed –Reclamation Plant Target: No less than 90%of scheduled PM’s completed per quarter in a year # of PM’s completed/ # of PM’s scheduled to be completed in a reporting period Measurement Method 97 98 100 100 99 75 80 85 90 95 100 105 110 Q1 Q2 Q3 Q4 YTD Target 2014 2015 2016 2017 46Percent of PMs Completed –Pump/Electric Section Target: No less than 90%of scheduled PM’s completed per quarter in a year # of PM’s completed/ # of PM’s scheduled to be completed in a reporting periodMeasurement Method 100 100 100 100 100 75 80 85 90 95 100 105 110 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 *FY15 –FY17 results are 100% 47System Valve Exercising Program Target: Exercise 770 valves per quarter or 3080 valves by the end of fiscal year Actual number of valves exercised in the reporting periodMeasurement Method 793 787 814 834 3228 0 1000 2000 3000 4000 5000 6000 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 48Potable Water Distribution System Integrity Target: No more than 16 leaks and breaks per 100 miles of distribution piping in a year 100 (annual total number of leaks + annual total number of breaks) / total miles of distribution pipingMeasurement Method 2.4 2.97 3.55 1.34 10.28 0 2 4 6 8 10 12 14 16 18 20 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 49Potable Water Compliance Rate (AWWA) Target: No less than 100%of all health related drinking water standards each quarter in a year 100 (# of days the primary health regulations are met)/ # of days in the reporting periodMeasurement Method 100 100 100 100 100 50 60 70 80 90 100 110 Q1 Q2 Q3 Q4 YTD Target AWWA 2015 2016 2017 AW W A B e n c h m a r k *FY15 –FY17 results are 100% 50Collection System Integrity (AWWA) Target: No more than 3.6 system failures per 100 miles of collection system pipeline in a year 100 (total number of collection system failures during the year) / total miles of collection system pipingMeasurement Method 0 1 0 0 1 0 1 2 3 4 5 6 7 8 Q1 Q2 Q3 Q4 YTD Target AWWA 2015 2016 2017 *FY15 –FY16 had 0 system failures AW W A B e n c h m a r k 51Recycled Water System Integrity Target: No more than 6.6 leaks or breaks per 100 miles of recycled distribution system in a year (100 x # of leaks or breaks)/ # of miles of distribution systemMeasurement Method 0 0 0 0.9 0.9 0 1 2 3 4 5 6 7 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 52Sewer Overflow Rate (AWWA) Target: 0 overflows per quarter in a year 100 (total number of sewer overflows during the reporting period) / total miles of pipe in the sewage collection systemMeasurement Method 0 1 0 0 1 0 1 2 3 4 5 6 7 8 Q1 Q2 Q3 Q4 YTD Target AWWA 2015 2016 2017 AW W A B e n c h m a r k *FY 15 –FY 16 results are 0 overflows 53Emergency Facility Power Testing Target: 100%of the District’s facilities tested per year (The District currently has 34 powered ready facilities) Number of facilities tested / total facilities Measurement Method 29 47 79 105 105 0 20 40 60 80 100 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 54Tank Inspection and Cleaning Annual Target: Clean and inspect 8 tanks or more per year Number of tanks cleaned and inspectedMeasurement Method 4 3 1 0 8 0 2 4 6 8 10 12 14 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 55Main Flushing and Fire Hydrant Maintenance Target: 215 or more mains flushed and fire hydrants maintained in a single year (The target of 215 is comprised of 165 hydrants and 50 mains) Number of mains flushed and hydrants maintainedMeasurement Method 11 45 256 355 355 0 100 200 300 400 500 600 700 800 900 1000 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 56Critical Valve Exercising Target: Exercise 631 identified critical valves in a year Number of critical valves exercised in a reporting periodMeasurement Method 585 631 631 631 631 0 100 200 300 400 500 600 700 800 900 1000 Q1 Q2 Q3 Q4 YTD Target 2015 2016 2017 57 Questions? 1 1. Security Infrastructure 2. Real-time Management Industry Standards Entré Management Software Admin: Access and Security Program 2 657‐1, 2 RES  850‐1‐RES; POINTE HYDRO STATION (1050 HS)  1004‐2 PS  1004‐2 RES  SUMMIT CHLORINE STATION  ADMINISTRATION OFFICES  OPERATIONS OFFICES AND WAREHOUSE  520‐2, 3, 4 RES; 640‐1, 2 RES  803‐1 PS; 850‐2 PS (Regulatory)  832‐1 PS  832‐1, 2 RES  1090‐1 RES  1090‐1 PS  803‐2 RES  803‐3 RES  803‐4 RES: 978‐1 PS  978‐1 RES; 1200‐1 PS  978‐2 RES  1200‐1 RES   COTTONWOOD HYDRO STATION PS (860‐1)  944‐1 PS  944‐1, 2 RES; 1296‐1 PS  1296‐1, 2, 3 RES  VISTA DIEGO HYDRO STATION (1530 HS)  1485‐1, 2 RES  1485‐2 PS  1655‐1 HYDRO STATION  CALAVO PS  RUSSELL SQUARE SEWER PS  STEELE CANYON PS  HIDDEN MOUNTAIN SEWER LIFT STATION  RALPH W. CHAPMAN WASTEWATER  RECLAMATION PLANT  COTTONWOOD MEADOWS SEWER LIFT  STATION  850‐2, 4 RES  850‐3 RES  711‐1 PS (Central Area)  624‐1 RES (Patzig) 571‐1 RES  870‐1 PS  LOW HEAD PS  870‐1 RES  450‐1 RECY ‐ RES; 680‐1 RECY ‐ PS  458‐1, 2 RES  GREG ROGERS PRV STATION  485‐1 RES  624‐1 PS (LOPS)  624‐3 RES; 980‐2 PS (30 Million)  680‐1 RECY ‐ RES; 944 RECY ‐ PS  711‐1, 2 RES  711‐3 RES  980‐1 PS  624‐2 RES (recoat)  927‐2 RECY ‐ RES  980‐1, 2 RES; 927‐1 RECY ‐ RES  1100‐1 HYDRO STATION  Otay Water District Access and Security Program 3 4Entré Management Software Event Logs 5Virtual Keypad iPhone App with Push Notification 6 • 13 pressure vessels, 5 hydro pneumatic & 8 surge tanks • First ever systematic inspections by a certified pressure vessel inspector. Inspections started in April 2015, and were completed in June 2017. Result, all pressure vessels are in good working condition. Next recommended inspection, 5 -10 yrs. • These inspections required the close planning and coordination between Pump Electric and Water Systems staff in order to isolate, drain, de-energize, clean, inspect and restore the tanks to operational status without impacting the delivery of water services. Op’s: Asset Management – Pressure Vessel Program 7 • Developed procedures to address water loss, water theft, and easement encroachments. • Use of 3D modeling on 870-2 pump station to aid in future project/construction management activities including scheduling, risk management, and budgeting. Engineering: Streamline Work Processes and Alignment of Business Practices and Evaluate Efficiencies for Delivering Capital Assets 8 • Creation of an interactive cost benefit model used to evaluate the Rosarito Desalination project. Significant given the many risk factors, cost variables, and OWD/rate payer fiscal commitment. • Completion of FY17 scheduled change outs of 8,050 registers and 380 meters. Change outs where completed on schedule, budget, and with little to no service interruption. Finance: Cost Benefit Program – Meter Change Out 9 • Recently attended a Balance Scorecard training with strategic planning professionals from Hunter Industries, IBM, Kern County, Saudi Kingdom, Bank of Bahamas, and Bank of Indonesia. • Typical challenges revolve around board/executive reactive initiatives, lack of objective/operational alignment, and organizational culture. When people get frustrated, scared, unhappy, they do not perform to their potential = “Dysfunctional Culture”. • The alignment of vision/mission via board direction, strategic planning, and CEO execution continues to be true and sound. Alignment & focus on the mission = “High Performing Culture”. Validation of OWD Strategic Planning STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: October 4, 2017 SUBMITTED BY: Mark Watton General Manager W.O./G.F. NO: N/A DIV. NO. N/A APPROVED BY: Mark Watton, General Manager SUBJECT: General Manager’s Report ADMINISTRATIVE SERVICES: Human Resources:  Upcoming Employee Recognition Luncheon and Holiday Party - The District’s Recognition Luncheon is scheduled for Thursday, October 12th at 11:30 am at the Operations Center, and the Holiday Party will be at the Stone Brewery in Liberty Station on December 2nd from 6:00 pm – 9:00 pm.  Open Enrollment – To be held October 12th through December 31st. HR is working with Alliant, our benefit consultant, and IT in preparation.  Recruitments/New Hires: o There are currently no recruitments. o Kevin Koeppen was recently appointed as Assistant Chief of Finance. Kevin will continue to directly manage his current division (Controller and Budgetary Services) and will also begin to assist Joe Beachem, Chief Financial Officer, in managing the rest of the Finance Department to include Treasury and Accounting Services, Customer Service, and Meter Maintenance. GIS:  Visit from Helix Water District – On September 12th, GIS staff from the Helix Water District visited Otay. Recognized by the GIS community as a practice “leader”, Otay GIS staff shared their enterprise deployment and operational experiences and lessons learned. Helix staff was very appreciative. 2 IT Operations:  District-Wide Work Order Management System, Cityworks - Staff will be recognized in the upcoming Cityworks’ ‘InPrint’ Magazine. The article, scheduled for circulation next month, will feature the District’s successful project plan and development. During the interview with Cityworks, staff discussed the planning process and the alignment focus to meet the District’s operational needs. Purchasing & Facilities:  Steele Canyon and Willow Glen Access Road Clearing – Due to an exceptional growing season last spring, the access roads from Steele Canyon to the 832 Reservoirs and Willow Glen Drive to the 803-2 Reservoir have become overgrown hampering staff’s access to these sites. Clearing has been on hold until the end of nesting season this month and, in addition, these areas contain sensitive habitat that requires the attention of a company specializing in such maintenance. Therefore, staff employed D&D Wildlife Habitat Restoration, Inc. (D&D) at a cost of $5,056, which includes equipment, labor, materials, and disposal fees. D&D will clear the brush and debris along these access roads with an anticipated completion date of September 29.  Surplus Auction Results – On August 23, the District completed an online auction of surplus materials through Cal Auctions of San Diego. The number of online views for the event exceeded 95,000 and included 311 registered bidders actively participating in the auction. The gross proceeds totaled $79,433. The top items included a Vactor truck at $39,900 and three vehicles averaging $7,000 each. Two diesel portable pumps and two diesel generators, which are no longer certified to operate in California, were purchased for use in Mexico.  General Manager’s Surplus Authority Exceeded - At the August 23 vehicle auction, Unit 163, a 2006 Diesel Ford F550 dump truck, sold for $13,000, which was above the estimate developed by staff of $6,600. The amount is also above the General Manager’s authority to declare an item surplus, which exceeded the threshold as stated in Section 12.1, b of the Purchasing Manual, “Where the residual value of an item exceeds $10,000.00, only the Board of Directors may declare the property surplus and authorize its disposal.” The residual value estimate was developed utilizing the last sale of a similar vehicle (Unit 154). That vehicle sold at a local auction for $6,600 which was under the $10,000 threshold. This auction resulted in the selling of Unit 163 (a comparable vehicle to Unit 154) over the estimated residual value by $7,400. At the time the vehicle was auctioned, staff did not expect that it would sell over the $10,000 threshold. 3 Safety & Security:  Update on Cal/OSHA Inspection of Treatment Plant (TP) – As a follow-up to the inspection on May 25, 2017, the District received a request for documentation (copies of procedures, training, and certification records, among others) on August 3, 2017 from the Department of Occupational Safety and Health (DOSH). The response was completed on August 31, 2017, and delivered the same day to Nimal Diunugala, Associate Safety Inspector at the San Diego DOSH office. o Next steps in the process: 1. DOSH Inspector, Nimal Diunugala, will be doing a follow-up site visit in 2-3 weeks after reviewing the response documentation. During the visit, he will be going over the response documentation and interviewing two plant operators. Safety staff worked with Operations and TP staff to prepare the documentation and response request. 2. DOSH has five months to complete this inspection and provide their final report.  Emergency Preparedness - Staff completed the August monthly WebEOC exercise, which consisted of: Assume a 6.8 earthquake has struck the Rose Canyon fault. Fill out a Situation Status Report Water form, include exercise in the title, and post both to your agency events log and the Water Hub. This exercise was succesfully completed. The District participates in these monthly exercises to assist in keeping emergency response skills keen, refresh training, and lead to a more efficient and effective emergency response when the need to respond to an emergency arises. FINANCE:  FY2018 Budget – Staff is completing the preparation of the FY2018 budget book, which will be submitted to the GFOA for its award program.  Sewer Cost of Service Study – Staff has engaged with HDR Engineering to perform a sewer cost of service study. The study is scheduled to be completed by January.  AMR Change Out - Staff has scheduled the next round of AMR change outs to begin on October 9th. The contractor, Concord Utility Services, Inc., will be changing out 3,800 registers and 800 meters. Affected customers will be sent an automated phone message and email approximately 7-14 days before the work is performed at their home. Register changes do not entail any interruption of water service. Meter changes will involve a 4 short interruption of water service and Concord staff will knock on the customer’s door prior to their water being turned off.  Financial Reporting: o For the second month ending August 31, 2017, there are total revenues of $19,343,520 and total expenses of $17,563,290. The revenues exceeded expenses by $1,780,230. o The market value shown in the Portfolio Summary and in the Investment Portfolio Details as of August 31, 2017 total $79,085,853 with an average yield to maturity of 1.146%. The total earnings year-to-date are $161,553. ENGINEERING AND WATER SYSTEM OPERATIONS: Engineering:  870-2 Pump Station Replacement: This project consists of a new pump station to replace the existing Low Head 571-1 and High Head 870-1 Pump Stations. The project also includes the replacement of the existing liner and cover for the 571-1 Reservoir (36.7 MG). A Notice to Procced was issued to Pacific Hydrotech on July 26, 2017. Current work on the project consists of submittal approvals for the contract work. The project is scheduled to begin on-site construction in October 2017 and complete in October 2019. Staff is working with the San Diego Regional Water Quality Control Board (RWQCB) to attain the project’s final environmental permit. A mitigation requirement that includes a proposal to develop wetlands at the District’s Habitat Management Area (HMA) for project impacts to wetlands at the site has been presented to the RWQCB. (P2083 & P2562)  SR-11 Utility Relocations: This project consists of relocating several District potable water pipelines located in Otay Mesa Road, Sanyo Avenue, Enrico Fermi Drive, Alta Road, and within District easements. The first two rounds of relocations (Caltrans Utility Agreement Numbers 33592 and 33622) were completed in FY 2016. Staff held meetings with Caltrans in August and September 2017 to discuss the relocations from Enrico Fermi Drive to the future Mexico/USA international border crossing. As part of the SR-11 project, Caltrans will need to acquire a portion of the District’s fee-owned right-of-way that is located in the Alta Road alignment south of Otay Mesa Road. Caltrans has submitted an appraisal of the District’s property they intend to acquire which is currently under review. Caltrans has communicated to the District that their project is scheduled to advertise for construction bid in April 2018 and start construction in April 2019. (P2453) 5  978-1 & 850-2 Reservoir Interior/Exterior Coatings & Upgrades: This project consists of removing and replacing the interior and exterior coatings of the 978-1 (0.5 MG) Reservoir and the 850-2 (3.1 MG) Reservoir, along with providing structural upgrades, to ensure the tanks comply with both state and federal OSHA standards as well as the American Water Works Association and the County Health Department standards. Work at the 978-1 Reservoir is substantially complete and the reservoir was placed back in service in July 2017. During the month of September 2017, Blastco, Inc., the District’s contractor, continued the removal of the 850-2 Reservoir’s existing interior coating and began the application of the new interior coating to the ceiling and walls of the reservoir. The contractor is currently behind schedule due to contractor coordination. The contractor has been notified that liquidated damages will be assessed for late delivery of the project. The project is within budget. It is estimated that work on the 850-2 Reservoir will complete in December 2017. (P2534 & P2544)  Campo Road Sewer Replacement: The existing sanitary sewer from Avocado Road to Singer Drive is undersized and located in environmentally sensitive areas that are difficult to access. The Campo Road Sewer Replacement project will install approximately 7,420 linear feet of new 15-inch gravity sewer and include abandonment of the existing sewer main. Work in September 2017 included the installation of the new sewer main in the Rancho San Diego Towne Center near the intersection of Campo Road (SR 94) and Jamacha Road (SR 54). It is anticipated that construction of the new sewer main within Campo Road will start in October 2017. The work in Campo Road within the Caltrans right-of-way will be performed at night. Activities near environmentally sensitive areas will be halted during the breeding season of endangered species, between February and September. The overall project is scheduled for completion in April 2019. (S2024)  Hillsdale Road Water and Sewer Replacement: The existing water line in Hillsdale Road between Jamacha Road and Vista Grande Road has experienced several leaks and is nearing the end of its useful life. This project consists of replacing approximately 4,050 linear feet of 12-inch Polyvinyl Chloride (PVC) water line. The project also includes the replacement of approximately 760 linear feet of 8-inch PVC sewer within Hillsdale Road. At the September 6, 2017 Board meeting, a construction contract was awarded to T C Construction Company, Inc. It is anticipated that a Notice to Proceed will be issued in October 2017. The project is within budget and on schedule to complete in spring 2018. (P2573 & S2048)  Fuerte Drive Sewer Relocation: The County of San Diego is realigning Fuerte Drive as part of a safety improvement project. The County has requested that the District relocate the existing 6 sewer within the County’s project. The District’s sewer project consists of relocating approximately 255 linear feet of 8-inch PVC sewer. At the September 6, 2017 Board meeting, a construction contract was awarded to Ortiz Corporation. The District’s work included in this contract is being coordinated by the County of San Diego with relocation work by SDG&E and the Helix Water District. It is anticipated that the District’s work will begin in late January 2018. The project is within budget and on schedule to complete in winter 2017/2018. (S2045)  Vista Vereda Water Replacement: The existing 1950’s steel water line along Vista Vereda between Vista Grande Road and Hidden Mesa Trail in the Hillsdale area has experienced several leaks and is nearing the end of its useful life. The existing water main is located primarily within easements, many of which have significant improvements performed over the years since the water line was constructed. Through the District’s As-Needed Engineering Design contract, a Task Order was issued on May 2, 2017 to Rick Engineering to design the project. A preliminary design report (PDR) is in progress, with surveying and subsurface utility investigation performed in June 2017. Several alternatives for the replacement will be evaluated in the PDR for consideration, including the changing of the Vista Vereda water line from transmission main to local distribution only and upgrading the water lines in Hidden Mesa Road to become a transmission main. A site walk of the project with President Robak, Director Smith and staff took place in September 2017. Based upon a preliminary assessment of the challenges of reconstructing a transmission main along the same current alignment, it is evident that the Hidden Mesa Road water line upgrade will be required. A new CIP project for this pipeline will be brought before the Board later this year for consideration. The initial design budget approved for the Vista Vereda project was based upon replacing the existing water line in place, but an alternative fee was included in Rick Engineering’s proposal for including the design in Hidden Mesa Road. The additional design fee is projected at $65,000 above the limits of the As-Needed Engineering Design Services FY 2017-2018 Program which is not to exceed $500,000. Engineering staff is requesting the General Manager to increase the As-Needed Engineering Design Services FY 2017-2018 Program budget to $565,000, which is within his signatory authority. The project is on schedule for completion of the design in June 2018. (P2574)  Trenchless Sewer Rehabilitation: The District issued a construction contract to complete sewer repairs for 60 locations within the Calavo and Rancho San Diego Basins using trenchless technologies. During the month of September 2017, the contractor substantially completed the contract work and began punch list work 7 in preparation for contract acceptance. The project is within budget. (S2044)  OWD Administration and Operations Parking Lot Improvements, Phase I – Lighting and Vehicle Charging Station: This project consists of replacing the existing parking lot light fixtures in both the Administration and Operations lots with high efficiency LED fixtures. The project also includes constructing an electric vehicle charging station in the employee Administration parking lot. During the month of September 2017, the contractor substantially completed the project. The next phase of improvements will include repairs to the AC paving, slurry sealing of the parking lots, and repainting of parking spaces and curbs. The lighting project is within budget and scheduled for completion on October 10, 2017. (P2555 & P2547)  624-2 Reservoir Interior/Exterior Coatings & Upgrades: This project consists of removing and replacing the interior and exterior coatings of the 624-2 (8.0 MG) Reservoir. The construction contract was awarded to Advanced Industrial Services (AIS). They completed the project in 2014, however, a warranty dive inspection in 2016 found the coating near the center roof vent was cracking and blistering. The reservoir was taken out of service to allow for a closer inspection by AIS and the District’s Coating Inspector. District staff has directed AIS to do the repairs now. The interior ceiling coating has been removed, and AIS has completed applying the new coating. Current work by AIS includes repairs to the reservoir floor coating. The project is scheduled to complete in October 2017. (P2493)  980-2 Reservoir Interior/Exterior Coating and Upgrades: This project consists of removing and replacing the interior and exterior coatings of the 980-2 (5.0 MG) Reservoir, along with providing structural upgrades, to ensure the tank complies with both state and federal OSHA standards as well as the American Water Works Association and the County Health Department standards. The project was publically advertised for construction bids on August 2, 2017. Award of the construction contract is scheduled for the October 4, 2017 Board Meeting. The project is on schedule. (P2546)  Rancho San Diego Pump Station Rehabilitation: On April 30, 2014, the District and the San Diego County Sanitation District (Sanitation District) executed a reimbursement agreement for the improvements to the Rancho San Diego Pump Station that were expected to be completed on or about March 2016. The Sanitation District awarded a construction contract to T C Construction Company Inc. on September 14, 2016. Start-up and testing of the pump station is scheduled to begin in April of 2018. (S2027) 8  For the month of August 2017, the District sold 10 meters (42.5 EDUs), generating $356,727 in revenue. Projection for this period was 23.6 meters (30.8 EDUs), with budgeted revenue of $270,083. Total revenue for Fiscal Year 2018 is $559,078 against the annual budget of $3,241,000. Water System Operations (reporting for August):  Out of 66 K-12 schools in the District, 45 (one school requested testing then later opted out so no samples were taken) requested to be tested; 44 have a sampling plan completed; 44 have collected samples and; 44 have received results. The District, however, cannot provide test results to the public for 60 days after receiving the laboratory results. Staff time for the school lead sampling is being tracked. It takes staff approximately 12 hours to complete lead testing from the initial contact from the school up until the reviewing of the Lab reports and discussing the results with the school.  On August 1, an emergency shutdown was performed on Paseo del Norte in Chula Vista. Sixteen residential meters were affected and a water trailer was on site. This was due to a poly service that split in half. The shutdown lasted for 5 hours.  August 3, a Cal-OSHA inspector, who conducted an unscheduled inspection for the chlorine system at the Treatment Plant, requested documents which were hand delivered to him on August 30 at their field office. Staff is waiting for the Cal-OSHA inspector to schedule another on-site inspection after they complete the document review process. Staff expects to be notified in 2-3 weeks.  On August 8, the County of San Diego conducted a Cal-ARP inspection at Central Area and 624-3 Reservoir sites with no noted violations.  On August 8, staff assisted the Inspection Department with a planned shutdown for a developer project on Camino Maquiladora in Otay Mesa. One customer was affected. A water trailer was provided. The shutdown lasted for 13 hours.  On August 15, The County of San Diego performed a Cal-ARP inspection at the Regulatory site. There was one minor violation identified. The County has required that the District conduct a hazardous review on the ammonia-injection vault, prior to the replacement of injection lines. This is considered a Class 2 Violation (a no-fee violation). The violation can be mitigated if staff corrects it and responds within 90-days. Staff is currently working on scheduling a hazard analysis report with an 9 environmental consultant. Once recommendations are received from the report, the recommendations will then be forwarded to the County before the 90-day deadline.  On Friday, August 18, Sweetwater Authority requested that the emergency interconnection on Douglas Street in Chula Vista to be opened due to water quality in their distribution system. The interconnection was closed on the same day with a usage of 35,680 gallons. Purchases and Change Orders:  The following table summarizes purchases and Change Orders issued during the period of August 17, 2017 through September 14, 2017 that were within staff signatory authority: Date Action Amount Contractor/ Consultant Project 8/17/2017 P.O. $1,000.00 EQUIPMENT MAINTENANCE FITNESS TECH 8/23/2017 P.O. $5,995.00 SOFTWARE LICENSE JEFFREY OLIVER CONSULTING 8/25/2017 P.O. $9,600.00 EMPLOYEE BENEFITS EMPLOYEE BENEFIT SPECIALISTS 8/28/2017 P.O. $625.00 OUTSIDE SERVICES SUPERIOR ENVIRONMENTAL 8/31/2017 P.O. $13,560.00 DATA SERVICES CORELOGIC SOLUTIONS LLC 9/07/2017 P.O. $1,625.00 ASSESSOR DATA SAN DIEGO COUNTY ASSESSOR 9/07/2017 P.O. $19,806.52 IMAGERY PROJECT SANGIS / COUNTY OF SAN DIEGO 9/08/2017 P.O. $42,900.00 TEGILE EQUIP SUPPORT 1903 SOLUTIONS LLC 9/13/2017 P.O. $4,114.93 MAILING SERVICES MAIL MANAGEMENT GROUP INC 9/13/2017 P.O. $3,800.50 VERITAS SUPPORT GHA TECHNOLOGIES INC 9/13/2017 P.O. $2,747.63 SOUTHLAND PIPE CORP. 14-INCH FM ASSESSMENT & REPAIR(R2116) 9/14/2017 P.O. $9,873.72 WORKERS' COMP RECONCILIATION SPECIAL DISTRICT RISK 10 Water Conservation and Sales:  Water Conservation - August 2017 usage was 14% lower than August 2013 usage. Since August 2016, customers have saved an average of 15% over 2013 levels.  The August potable water purchases were 2,967.9 acre-feet which is 9.4% above the budget of 2,712.3 acre-feet. The cumulative purchases through August were 5,903.1 acre-feet which is 8.0% above the cumulative budget of 5,466.0 acre-feet. 11  The August recycled water purchases and production were 549.9 acre- feet which is 19.5% above the budget of 460.0 acre-feet. The cumulative production and purchases through August were 1,034.7 acre-feet which is 10.2% above the cumulative budget of 938.6 acre- feet. Potable, Recycled, and Sewer (Reporting up to the month of August):  Total number of potable water meters: 49,704.  Recycled water consumption for the month of August: o Total consumption: 498 acre-feet or 162,204,548 gallons. o Average daily consumption: 5,232,405 gallons per day. o Total cumulative recycled water consumption since July 1, 2017: 1008.0 acre-feet. o Total number of recycled water meters: 720.  Wastewater flows for the month of August: o Total basin flow: 1,464,745 gallons per day. This is a decrease of 5.82% from August 2016. o Spring Valley Sanitation District Flow to Metro: 483,976 gallons per day. o Total Otay flow: 980,774 gallons per day. 12 o Flow Processed at the Ralph W. Chapman Water Recycling Facility: 709,226 gallons per day. The Treatment Plant’s August 2017 flows continue to be lower because there was scheduled maintenance in the aeration basins, thus, reducing plant treatment capacity. There are only two of the three aeration basins online. Staff is waiting for replacement equipment before all three aeration basins can be placed back in service. The equipment is expected to arrive from Germany in late October. o Flow to Metro from Otay Water District: 271,583 gallons per day.  By the end of August there were 6,108 wastewater EDUs. Check Total 8,381.81 2,334.84 10,598.52 4,961.50 12,125.00 960.35 SAFETY BOOTS 150.00 150.00 2048837 08/30/17 18121 APPLUS RTD USA INC 107PIN0506329 08/09/17 INSPECT 711-1 TANK CM201752 08/08/17 MGMT/INSP (7/1/17-7/31/17)825.00 2048874 09/06/17 03088 ANDERSON, LINCOLN 082217 08/24/17 4,950.00 CM201749 08/08/17 MGMT/INSP (7/1/17-7/31/17)3,800.00 CM201751 08/08/17 MGMT/INSP (7/1/17-7/31/17)2,550.00 UTILITY LOCATING SERVICES (7/1/17-7/31/17)12,771.50 12,771.50 2048836 08/30/17 14462 ALYSON CONSULTING CM201750 08/03/17 MGMT/INSP (7/1/17-7/31/17) 131504105 08/22/17 AQUA AMMONIA 704.50 2048835 08/30/17 15024 AIRX UTILITY SURVEYORS INC 1907312017 08/08/17 AQUA AMMONIA 2,384.00 131504103 08/22/17 AQUA AMMONIA 1,873.00 2048919 09/13/17 07732 AIRGAS SPECIALTY PRODUCTS INC 131504104 08/22/17 194,313.00 2048960 09/20/17 18313 ADRIANA HARRISON Ref002489751 09/14/17 UB Refund Cst #0000012666 47.61 47.61 29,440.50 29,440.50 2048959 09/20/17 18048 ACE ELECTRIC INC 208312017 08/22/17 PARKING IMPROVEMENT (ENDING 8/31/17)194,313.00 SHAREPOINT SERVICES (7/5/17-7/28/17)900.00 900.00 2048834 08/30/17 18048 ACE ELECTRIC INC 107312017 08/08/17 PARKING IMPROVEMENT (ENDING 7/31/17) 2048833 08/30/17 08488 ABLEFORCE INC 7562 08/01/17 1012895 08/24/17 SODIUM HYPOCHLORITE 485.99 1012784 08/23/17 SODIUM HYPOCHLORITE 412.99 1013114 08/28/17 SODIUM HYPOCHLORITE 636.78 1012377 08/17/17 SODIUM HYPOCHLORITE 599.32 1012306 08/16/17 SODIUM HYPOCHLORITE 912.42 1012652 08/20/17 SODIUM HYPOCHLORITE 683.84 1012894 08/24/17 SODIUM HYPOCHLORITE 1,565.53 1013113 08/28/17 SODIUM HYPOCHLORITE 1,261.06 SODIUM HYPOCHLORITE 2,023.66 1012376 08/17/17 SODIUM HYPOCHLORITE 2,016.93 2048918 09/13/17 01910 ABCANA INDUSTRIES INC 1012651 08/20/17 SODIUM HYPOCHLORITE 1,877.67 1011401 08/03/17 SODIUM HYPOCHLORITE 457.17 1011922 08/10/17 SODIUM HYPOCHLORITE 468.70 2048873 09/06/17 01910 ABCANA INDUSTRIES INC 1011400 08/03/17 1011602 08/07/17 SODIUM HYPOCHLORITE 568.58 1011775 08/09/17 SODIUM HYPOCHLORITE 484.06 1011923 08/10/17 SODIUM HYPOCHLORITE 745.31 1012135 08/14/17 SODIUM HYPOCHLORITE 736.66 1011601 08/07/17 SODIUM HYPOCHLORITE 1,761.46 1011921 08/10/17 SODIUM HYPOCHLORITE 1,465.64 Amount 2048832 08/30/17 01910 ABCANA INDUSTRIES INC 1012134 08/14/17 SODIUM HYPOCHLORITE 2,151.40 CHECK REGISTER Otay Water District Date Range: 8/24/2017 - 9/20/2017 Check #Date Vendor Vendor Name Invoice Inv. Date Description Page 1 of 8 Check Total Amount CHECK REGISTER Otay Water District Date Range: 8/24/2017 - 9/20/2017 Check #Date Vendor Vendor Name Invoice Inv. Date Description 3,841.40 3,929.60 3,929.60 13,560.00 1,130.00 16,915.00 EXCAVATION PERMITS (JULY 2017)4,784.20 4,784.20 09/13/17 COUNCIL OF WATER UTILITIES MTG (9/19/17)50.00 50.00 2048847 08/30/17 00099 COUNTY OF SAN DIEGO DPWAROTAYMWD071708/10/17 14,243.00 450975 08/11/17 COATING INSPECTION (7/1/17-7/31/17)2,672.00 2048964 09/20/17 02612 COUNCIL OF WATER UTILITIES COWU09132017 UB Refund Cst #0000084942 252.03 252.03 2048923 09/13/17 05622 CORRPRO COMPANIES INC 450646 08/09/17 COATING INSPECTION (6/1/17-6/30/17) 2048877 09/06/17 18268 CORPUS CHRISTI PARISH Ref002487871 08/31/17 DATA SERVICES (JULY 2017)605.00 81821872 07/31/17 DATA SERVICES (JULY 2017)525.00 50020047 08/03/17 DATA SERVICES (AUG 2017)6,300.00 2048963 09/20/17 15049 CORELOGIC SOLUTIONS LLC 81821140 07/31/17 2,664.65 2048876 09/06/17 15049 CORELOGIC SOLUTIONS LLC 50020046 08/03/17 DATA SERVICES (AUG 2017)7,260.00 72,282.18 72,282.18 2048846 08/30/17 18260 CONTESSA V6 LLC WOD0906 08/25/17 W/O REFUND D0906-090170 2,664.65 INTERNET CIRCUITS (SEPT 2017)1,333.00 1,333.00 2048845 08/30/17 03288 COMPUTER PROTECTION 22555CPT 05/24/17 POWER SUPPLY (UPS) 2048962 09/20/17 15616 COGENT COMMUNICATIONS INC 0002090117 09/01/17 2,000.00 2048961 09/20/17 15256 CIGNA GROUP INSURANCE / LINA 9267091517 09/10/17 AD&D AND SUPPLEMENTAL LIFE INSURANCE 4,343.98 4,343.98 4,539.41 4,539.41 2048922 09/13/17 18311 CAROLYN MCKINNEY 090117 09/01/17 EASEMENT ACCESS 2,000.00 DAILY WRITE UPS 320.08 320.08 2048844 08/30/17 14855 BROWN FIELD TECHNOLOGY PRK LLC WOD0192 08/25/17 W/O REFUND D0192-090134 2048843 08/30/17 06304 BROADWAY PRINTING 1780 05/27/17 6.76 2048921 09/13/17 12577 BLASTCO INC 907312017 07/31/17 978-1 & 850-2 RESERVOIRS (ENDING 7/31/17)69,074.50 69,074.50 1,635.00 1,635.00 2048875 09/06/17 18263 BILL SMITH Ref002487866 08/31/17 UB Refund Cst #0000000464 6.76 TELEPHONE SERVICES (7/12/17 - 8/11/17)9,588.07 9,588.07 2048842 08/30/17 06285 BARTEL ASSOCIATES LLC 17492 08/14/17 ACTUARIAL SERVICES (JULY 2017) 2048841 08/30/17 07785 AT&T 000010083140 08/12/17 TEMPORARY EMPLOYMENT (7/31/17-8/4/17)1,964.80 TS00191713 08/24/17 TEMPORARY EMPLOYMENT (8/7/17-8/11/17)1,964.80 TS00188953 08/10/17 TEMPORARY EMPLOYMENT (7/24/17-7/28/17)1,964.80 2048920 09/13/17 17922 ASTON CARTER INC TS00190341 08/17/17 34,517.08 34,517.08 2048840 08/30/17 17922 ASTON CARTER INC TS00187582 08/03/17 TEMPORARY EMPLOYMENT (7/17/17-7/21/17)1,964.80 CISCO SMARTNET RENEWAL (7/1/17-6/30/18)16,236.00 16,236.00 2048839 08/30/17 17264 ARTIANO SHINOFF 216166 08/17/17 LEGAL SERVICES (JULY 2017) 107PIN0506330 08/09/17 VESSEL INSPECTION 960.35 2048838 08/30/17 18195 ARCHIVE DATA SOLUTIONS LLC 4665401 08/01/17 960.35 107PIN0506328 08/09/17 INSPECT 980-2 TANK 960.35 107PIN0506327 08/09/17 VESSEL INSPECTION 960.35 2048837 08/30/17 18121 APPLUS RTD USA INC 107PIN0506329 08/09/17 INSPECT 711-1 TANK Page 2 of 8 Check Total Amount CHECK REGISTER Otay Water District Date Range: 8/24/2017 - 9/20/2017 Check #Date Vendor Vendor Name Invoice Inv. Date Description 1,186.00 1,178.00 579.56 7,712.13 374.46 8,631.83 3,803.57 BI-WEEKLY PAYROLL DEDUCTION 100.00 100.00204888609/06/17 01612 FRANCHISE TAX BOARD Ben2489669 09/07/17 1,128.45 2048966 09/20/17 01612 FRANCHISE TAX BOARD Ben2489849 09/21/17 BI-WEEKLY PAYROLL DEDUCTION 100.00 100.00 135.00 135.00 2048965 09/20/17 18324 FJ WILLER CONTRACTING CO Ref002489762 09/14/17 UB Refund Cst #0000240380 1,128.45 INVENTORY 5,378.99 5,378.99 2048853 08/30/17 02591 FITNESS TECH 10573 08/01/17 EQUIPMENT MAINTENANCE (AUG 2017) 0602433 08/02/17 INVENTORY 871.05 2048927 09/13/17 03546 FERGUSON WATERWORKS # 1083 0605935 08/21/17 184.55 2048852 08/30/17 03546 FERGUSON WATERWORKS # 1083 0604518 08/07/17 INVENTORY 2,932.52 795.00 795.00 2048885 09/06/17 13825 ENRIQUEZ, LUIS 082317082417 08/24/17 TRAVEL EXPENSE REIMB (8/23/17-8/24/17)184.55 UB Refund Cst #0000230095 36.95 36.95 2048884 09/06/17 08023 EMPLOYEE BENEFIT SPECIALISTS 0083341IN 07/31/17 EMPLOYEE BENEFITS (JULY 2017) WOD0945a 08/25/17 W/O REFUND D0945-090267 2,470.97 2048883 09/06/17 18279 ELIZABETH EARLEY Ref002487882 08/31/17 121.04 121.04 2048851 08/30/17 11697 EASTLAKE COUNTRY CLUB WOD0945 08/25/17 W/O REFUND D0945-060163 6,160.86 UB Refund Cst #0000205327 1,807.24 1,807.24 2048882 09/06/17 18266 DOROTHY DEFRATE Ref002487869 08/31/17 UB Refund Cst #0000043034 2048881 09/06/17 18274 DICTIONARY HILL DEVELOPER LP Ref002487877 08/31/17 15.61 2048850 08/30/17 18262 DAVID N FLEMING REVOCABLE TR WOD0971 08/25/17 W/O REFUND D0971-090270 1,325.68 1,325.68 2,981.86 2,981.86 2048880 09/06/17 18275 DANETTE PITOAU Ref002487878 08/31/17 UB Refund Cst #0000207636 15.61 UB Refund Cst #0000232566 6.77 6.77 2048849 08/30/17 16506 CUBE-AIRE 3021 08/08/17 ICE MACHINE 2048879 09/06/17 18283 CRYSTAL MORENO Ref002487886 08/31/17 TELECOM SVCS / METRO-E (8/12/17-9/11/17)240.72 6701081417 08/14/17 TELECOM SVCS / METRO-E (8/14/17-9/13/17)133.74 0301082817 08/28/17 TELECOM SVCS / METRO-E (8/28/17-9/27/17)133.74 2048878 09/06/17 17770 COX BUSINESS 6801081217 08/12/17 TELECOM SVCS / METRO-E (8/24/17-9/23/17)7,444.65 9601082617 08/26/17 TELECOM SVCS / METRO-E (8/25/17-9/24/17)133.74 2048926 09/13/17 17770 COX BUSINESS 6702082517 08/25/17 PERMIT FEES # 002858 (MAR 2018-DEC 2018)289.78 2452176 08/17/17 PERMIT FEES # 002857 (MAR 2018-DEC 2018)289.78 2048848 08/30/17 02122 COUNTY OF SAN DIEGO 2452177 08/17/17 06/23/17 PERMIT FEES # 05714 (SEPT 2017-SEPT 2018)668.00 057742005RI2017 06/23/17 PERMIT FEES # 05774 (SEPT 2017-SEPT 2018)510.00 717.00 2785071717 07/17/17 UPFP PERMIT RENEWAL (9/30/17-9/30/18)469.00 2048925 09/13/17 02122 COUNTY OF SAN DIEGO 057142005RI2017 EXCAVATION PERMITS (JULY 2017)4,784.20 4,784.20 2048924 09/13/17 00184 COUNTY OF SAN DIEGO 1352071717 07/17/17 UPFP PERMIT RENEWAL (9/30/17-9/30/18) 2048847 08/30/17 00099 COUNTY OF SAN DIEGO DPWAROTAYMWD071708/10/17 Page 3 of 8 Check Total Amount CHECK REGISTER Otay Water District Date Range: 8/24/2017 - 9/20/2017 Check #Date Vendor Vendor Name Invoice Inv. Date Description 12,445.44 19,771.10 64.70 64.70 UB Refund Cst #0000233306 31.58 31.58 2048893 09/06/17 18281 JENN DORSEY Ref002487884 08/31/17 UB Refund Cst #0000230790 2048892 09/06/17 18284 JEFFREY WERKHISER Ref002487887 08/31/17 15.51 2048936 09/13/17 10563 JCI JONES CHEMICALS INC 731384 08/16/17 CHLORINE GAS 1,837.80 1,837.80 46.71 46.71 2048891 09/06/17 18278 JANICE CARRUTH Ref002487881 08/31/17 UB Refund Cst #0000218086 15.51 ANTENNA SUBLEASE (SEPT 2017)1,673.00 1,673.00 2048970 09/20/17 18317 JAMES MCGEE Ref002489755 09/14/17 UB Refund Cst #0000185315 2048935 09/13/17 17106 IWG TOWERS ASSETS II LLC 411818 09/01/17 78.34 2048890 09/06/17 18267 ISABEL DUBAY Ref002487870 08/31/17 UB Refund Cst #0000063929 33.48 33.48 1,162.89 1,162.89 2048889 09/06/17 18289 IRMA CLARK Ref002487892 08/31/17 UB Refund Cst #0000239622 78.34 UB Refund Cst #0000239295 850.00 850.00 2048858 08/30/17 13467 INTERNATIONAL IND'L PARK INC WOD0720 08/25/17 W/O REFUND D0720-090089 124326 08/02/17 BILL PROCESSING SVCS (JULY 2017)2,196.33 2048888 09/06/17 18286 INSITUFORM TECHNOLOGIES LLC Ref002487889 08/31/17 BILL PROCESSING SVCS (JULY 2017)11,485.85 124892 07/31/17 BILL PROCESSING SVCS (JULY 2017)6,088.92 0124399 08/22/17 ENVIRONMENTAL SERVICES (7/1/17-7/28/17)1,920.44 2048857 08/30/17 08969 INFOSEND INC 124893 07/31/17 9,954.00 9,954.00 2048934 09/13/17 15622 ICF JONES & STOKES INC 0124403 08/22/17 ENVIRONMENTAL SERVICES (7/1/17-7/28/17)10,525.00 LAND SURVEYING (ENDING 6/30/17)13,254.00 13,254.00 2048933 09/13/17 13349 HUNSAKER & ASSOCIATES 2017070039 08/24/17 LAND SURVEYING (7/1/17-7/28/17) 2048856 08/30/17 13349 HUNSAKER & ASSOCIATES 2017050004 08/10/17 5,587.83 2048969 09/20/17 16769 HEWLETT PACKARD ENTERPRISE CO 60266838 07/04/17 MAINTENANCE AGREEMENT 2,538.96 2,538.96 9,598.00 9,598.00 2048932 09/13/17 02008 HELIX ENVIRONMNTL PLANNING INC 61912 08/17/17 ENVIRONMENTAL SERVICES (7/1/17-7/23/17)5,587.83 RECEIVER & ANTENNA 9,324.86 9,324.86 2048855 08/30/17 10973 HDR ENGINEERING INC 27 08/14/17 CORROSION SERVICES (4/30/17-8/5/17) 2048931 09/13/17 06640 HD SUPPLY WATERWORKS LTD H563115 08/18/17 17,170.44 2048968 09/20/17 18321 HAROLD HARP Ref002489759 09/14/17 UB Refund Cst #0000231598 62.80 62.80 8,909.50 8,909.50 2048930 09/13/17 00174 HACH COMPANY 10603505 08/24/17 OXYGEN INSTRUMENTATION 17,170.44 LANDSCAPING SERVICES (AUG 2017)8,909.50 8,909.50 2048854 08/30/17 12907 GREENRIDGE LANDSCAPE INC 15803 07/26/17 LANDSCAPING SERVICES (JULY 2017) 2048929 09/13/17 12907 GREENRIDGE LANDSCAPE INC 15908 08/18/17 100.00 2048928 09/13/17 03094 FULLCOURT PRESS 32087 08/21/17 PIPELINE NEWSLETTER 2,857.41 2,857.41 100.00 100.00 2048967 09/20/17 02344 FRANCHISE TAX BOARD Ben2489851 09/21/17 BI-WEEKLY PAYROLL DEDUCTION 100.00 BI-WEEKLY PAYROLL DEDUCTION 100.00 100.00 2048887 09/06/17 02344 FRANCHISE TAX BOARD Ben2489671 09/07/17 BI-WEEKLY PAYROLL DEDUCTION 2048886 09/06/17 01612 FRANCHISE TAX BOARD Ben2489669 09/07/17 Page 4 of 8 Check Total Amount CHECK REGISTER Otay Water District Date Range: 8/24/2017 - 9/20/2017 Check #Date Vendor Vendor Name Invoice Inv. Date Description ACTUARIAL SERVICES (7/24/17-8/20/17)5,848.00 5,848.00204894109/13/17 18064 NYHART 0132554 08/23/17 10,014.20 2048902 09/06/17 16255 NATIONWIDE RETIREMENT Ben2489659 09/07/17 BI-WEEKLY DEFERRED COMP PLAN 10,014.20 10,014.20 57.36 57.36 2048981 09/20/17 16255 NATIONWIDE RETIREMENT Ben2489839 09/21/17 BI-WEEKLY DEFERRED COMP PLAN 10,014.20 W/O REFUND D0736-090218 777.83 777.83 2048901 09/06/17 18287 NANCY FOSTER Ref002487890 08/31/17 UB Refund Cst #0000239471 2048860 08/30/17 11458 MOUNT MIGUEL COVENANT VILLAGE WOD0736 08/25/17 3,312.00 2048980 09/20/17 16613 MISSION RESOURCE CONSERVATION 380 09/01/17 HOME WATER USE EVAL (AUG 2017)125.00 125.00 7,275.60 7,275.60 2048940 09/13/17 00805 METRO WASTEWATER JPA 259 09/07/17 MEMBERSHIP DUES 3,312.00 UB Refund Cst #0000198181 12.08 12.08 2048939 09/13/17 06648 MEASUREMENT CONTROL 195438 08/17/17 METER PARTS 2048979 09/20/17 18318 MC EXPRESS TRUCKING LLC Ref002489756 09/14/17 11.99 2048900 09/06/17 18288 MARY CASSELMAN Ref002487891 08/31/17 UB Refund Cst #0000239521 1,647.07 1,647.07 87.19 87.19 2048899 09/06/17 18276 MARLA BLACKMAN Ref002487879 08/31/17 UB Refund Cst #0000207981 11.99 UB Refund Cst #0000240238 596.84 596.84 2048898 09/06/17 18264 MANUEL DELA PENA Ref002487867 08/31/17 UB Refund Cst #0000009447 2048978 09/20/17 18323 MANOLI STATHORAKIS Ref002489761 09/14/17 112.95 2048977 09/20/17 10512 MAIL MANAGEMENT GROUP INC OWD10566 07/24/17 MAILING SERVICES 4,114.93 4,114.93 15,300.00 15,300.00 2048897 09/06/17 18273 LORRAINE BENNET Ref002487876 08/31/17 UB Refund Cst #0000188941 112.95 CUSTOMER REFUND 3,007.62 3,007.62 2048938 09/13/17 17969 LONDON MOEDER ADVISORS 1400 09/07/17 OUTSIDE SERVICES - CONSULTANT 2048896 09/06/17 18291 LEILANI HIGLEY 9704083117 08/31/17 14,923.30 2048937 09/13/17 05840 KIRK PAVING INC 6571 08/25/17 PAVING SERVICE 1,171.50 1,171.50 610.00 610.00 2048859 08/30/17 05840 KIRK PAVING INC 6561 08/04/17 PAVING SERVICE 14,923.30 UB Refund Cst #0000023264 53.95 53.95 2048976 09/20/17 18328 KIM CORONADO 2591091817 09/18/17 CUSTOMER REFUND 2048895 09/06/17 18265 KENNETH VESTEAL Ref002487868 08/31/17 273.79 2048894 09/06/17 18272 KELLY SVENSEN Ref002487875 08/31/17 UB Refund Cst #0000187808 22.31 22.31 28.43 28.43 2048975 09/20/17 18314 KELLY ODEN-PRASSER Ref002489752 09/14/17 UB Refund Cst #0000142863 273.79 UB Refund Cst #0000230618 7.49 7.49 2048974 09/20/17 18316 KALPANA NATRAJAN Ref002489754 09/14/17 UB Refund Cst #0000176926 2048973 09/20/17 18319 JUSTIN DOSSER Ref002489757 09/14/17 31.13 2048972 09/20/17 18315 JOSE ESQUEDA Ref002489753 09/14/17 UB Refund Cst #0000163566 75.00 75.00 64.70 64.70 2048971 09/20/17 18320 JOHN HODGE Ref002489758 09/14/17 UB Refund Cst #0000230948 31.13 2048893 09/06/17 18281 JENN DORSEY Ref002487884 08/31/17 UB Refund Cst #0000230790 Page 5 of 8 Check Total Amount CHECK REGISTER Otay Water District Date Range: 8/24/2017 - 9/20/2017 Check #Date Vendor Vendor Name Invoice Inv. Date Description 1,300.22 250.00 59,305.63 103,256.49 117,995.09 UTILITY EXPENSES (MONTHLY)2,552.48 2,552.48204898609/20/17 00121 SAN DIEGO GAS & ELECTRIC 083117 08/31/17 UTILITY EXPENSES (MONTHLY)99,842.99 082317a 08/23/17 UTILITY EXPENSES (MONTHLY)18,152.10 2048946 09/13/17 00121 SAN DIEGO GAS & ELECTRIC 090417 09/04/17 UTILITY EXPENSES (MONTHLY)81,048.59 082417 08/24/17 UTILITY EXPENSES (MONTHLY)22,207.90 081617a 08/16/17 UTILITY EXPENSES (MONTHLY)14.42 2048909 09/06/17 00121 SAN DIEGO GAS & ELECTRIC 082717 08/27/17 46,417.03 082317 08/23/17 UTILITY EXPENSES (MONTHLY)12,069.69 082217 08/22/17 UTILITY EXPENSES (MONTHLY)804.49 MWD SCWS - HEWS (AUG 2017)200.00 200.00 2048865 08/30/17 00121 SAN DIEGO GAS & ELECTRIC 081717 08/17/17 UTILITY EXPENSES (MONTHLY) 201700414 08/01/17 ASSESSOR DATA (JULY 2017)125.00 2048864 08/30/17 00003 SAN DIEGO COUNTY WATER AUTH 1563 08/01/17 49,165.63 49,165.63 2048985 09/20/17 02586 SAN DIEGO COUNTY ASSESSOR 201700498 09/01/17 ASSESSOR DATA (AUG 2017)125.00 HAZWOPER TRAINING 1,000.00 1,000.00 2048945 09/13/17 06286 SAN DIEGO ASSOCIATION OF MTR16034 08/24/17 REFUND METER 2048863 08/30/17 18033 SAFETY-R-US LLC 2017089139 08/09/17 132.60 2048984 09/20/17 18322 ROSSANA ALFONSO Ref002489760 09/14/17 UB Refund Cst #0000239356 91.41 91.41 850.00 850.00 2048908 09/06/17 18285 ROBYN WESTMORLAND Ref002487888 08/31/17 UB Refund Cst #0000238972 132.60 DESIGN SERVICES (7/1/17-7/28/17)12,395.00 12,395.00 2048907 09/06/17 18290 ROBOTIC SEWER SOLUTIONS INC Ref002487893 08/31/17 UB Refund Cst #0000239625 2048944 09/13/17 08972 RICK ENGINEERING COMPANY 17829D3 08/24/17 20.25 2048906 09/06/17 18270 RICHARD HANDLOSER Ref002487873 08/31/17 UB Refund Cst #0000145044 42.32 42.32 519.93 519.93 2048905 09/06/17 18280 RASHEED SWINDELL Ref002487883 08/31/17 UB Refund Cst #0000230135 20.25 AS-NEEDED DESIGN (ENDING 6/30/17)5,820.00 5,820.00 2048983 09/20/17 03613 PSOMAS 132855 08/24/17 DESIGN SERVICES (ENDING 7/27/17) 102217102617 08/24/17 TRAVEL EXPENSE REIMB (10/22/17-10/26/17)642.97 2048943 09/13/17 03613 PSOMAS 132780 08/17/17 1,043.55 1,043.55 2048862 08/30/17 01715 PORRAS, PEDRO 102317102617 08/24/17 TRAVEL EXPENSE REIMB (10/23/17-10/26/17)657.25 UB Refund Cst #0000182211 33.61 33.61 2048982 09/20/17 00137 PETTY CASH CUSTODIAN 091917 09/19/17 PETTY CASH REIMBURSEMENT 2048904 09/06/17 18271 PATRICIA TYLER Ref002487874 08/31/17 1,507.80 2048942 09/13/17 01002 PACIFIC PIPELINE SUPPLY INC 315558 08/24/17 INVENTORY 4,385.69 4,385.69 7,767.75 7,767.75 2048861 08/30/17 06856 ORPAK USA INC 50030 08/01/17 GPS TRACKING SYSTEM 1,507.80 ACTUARIAL SERVICES (7/24/17-8/20/17)5,848.00 5,848.00 2048903 09/06/17 18269 OAKWOOD DEVELOPMENT Ref002487872 08/31/17 UB Refund Cst #0000121934 2048941 09/13/17 18064 NYHART 0132554 08/23/17 Page 6 of 8 Check Total Amount CHECK REGISTER Otay Water District Date Range: 8/24/2017 - 9/20/2017 Check #Date Vendor Vendor Name Invoice Inv. Date Description 3,912.91 13,297.45 285.66 572.45 138,226.13 13,981.60 2,086.00 2,086.00 2048991 09/20/17 01095 VANTAGEPOINT TRANSFER AGENTS Ben2489845 09/21/17 BI-WEEKLY DEFERRED COMP PLAN 13,981.60 PATROLLING SERVICES (AUG 2017)110.00 110.00 2048869 08/30/17 08028 VALLEY CONSTRUCTION MANAGEMENT SD177602 08/01/17 MGMT/INSP (7/1/17-7/31/17) 2048953 09/13/17 06829 US SECURITY ASSOCIATES INC 1850430 08/24/17 CAL CARD EXPENSES (MONTHLY)138,226.13204891409/06/17 07674 US BANK CC20170822096 08/22/17 38783 08/01/17 PORT. TOILET RENTAL (8/1/17-8/28/17)79.18 38786 08/01/17 PORT. TOILET RENTAL (8/1/17-8/28/17)79.18 38781 08/01/17 PORT. TOILET RENTAL (8/1/17-8/28/17)79.18 38780 08/01/17 PORT. TOILET RENTAL (8/1/17-8/28/17)79.18 97.37 38784 08/01/17 PORT. TOILET RENTAL (8/1/17-8/28/17)79.18 38782 08/01/17 PORT. TOILET RENTAL (8/1/17-8/28/17)79.18 UNDERGROUND ALERTS (MONTHLY)465.40 465.40 2048990 09/20/17 15675 UNITED SITE SERVICES INC 38785 08/01/17 PORT. TOILET RENTAL (8/1/17-8/28/17) 2048868 08/30/17 00427 UNDERGROUND SERVICE ALERT OF 720170489 08/01/17 MILEAGE REIMBURSEMENT (AUG 2017)254.66 060117063017a 09/06/17 EXPENSE REIMBURSEMENT (JUNE 2017)31.00 2048952 09/13/17 14177 THOMPSON, MITCHELL 080117083117 08/25/17 4,498.00 2048912 09/06/17 14177 THOMPSON, MITCHELL 050117053117 07/28/17 MILEAGE REIMBURSEMENT (MAY 2017)35.85 35.85 10,000.00 10,000.00 2048989 09/20/17 03236 THE CENTRE FOR ORGANIZATION TCFOE1980 09/15/17 MANAGEMENT TRAINING 4,498.00 JANITORIAL SERVICES (JULY 2017)4,780.00 4,780.00 2048988 09/20/17 03770 TEAMAN RAMIREZ & SMITH INC 81798 09/11/17 AUDITING SERVICES FY17 (THRU 8/31/17) 441165 08/24/17 DIESEL FUEL 4,476.07 2048951 09/13/17 17704 T&T JANITORIAL INC 20114019 07/31/17 5,150.81 5,150.81 2048950 09/13/17 10339 SUPREME OIL COMPANY 441164 08/24/17 UNLEADED FUEL 8,821.38 UB Refund Cst #0000230852 29.89 29.89 2048987 09/20/17 15974 SUN LIFE FINANCIAL Ben2489837 09/21/17 MONTHLY CONTRIBUTION TO LTD 2048911 09/06/17 18282 STEVEN MYERS Ref002487885 08/31/17 60.00 2048910 09/06/17 05755 STATE WATER RESOURCES 0382082417 08/24/17 CERTIFICATION RENEWAL 70.00 70.00 1,651.97 1,651.97 2048949 09/13/17 05755 STATE WATER RESOURCES 09122017FC 09/12/17 CERTIFICATION RENEWAL 60.00 MILEAGE REIMBURSEMENT (8/1/17-8/31/17)16.05 16.05 2048867 08/30/17 18259 ST PAUL'S EPISCOPAL HOME INC WOD0905 08/25/17 W/O REFUND D0905-090169 07/07/17 PUMP REPAIR 14,647.48 14,647.48 2048948 09/13/17 16229 SMITH, TIMOTHY 080117083117 09/08/17 2,506.54 WOD917a 08/25/17 W/O REFUND D0917-090220 1,406.37 2048947 09/13/17 00258 SLOAN ELECTRIC COMPANY 0068600 UTILITY EXPENSES (MONTHLY)2,552.48 2,552.48 2048866 08/30/17 18261 SDE LLC WOD0917 08/25/17 W/O REFUND D0917-090184 2048986 09/20/17 00121 SAN DIEGO GAS & ELECTRIC 083117 08/31/17 Page 7 of 8 Check Total Amount CHECK REGISTER Otay Water District Date Range: 8/24/2017 - 9/20/2017 Check #Date Vendor Vendor Name Invoice Inv. Date Description 38,601.72 750.00 250.00 129.39 Amount Pd Total:1,642,702.62 Check Grand Total:1,642,702.62 180,390.75 180,390.75 2048994 09/20/17 18325 WILLIAM MCELREE 0977080517 09/14/17 CUSTOMER REFUND 129.39 RETENTION/WEIR (7/1/17-7/31/17)9,494.25 9,494.25 2048872 08/30/17 18101 WIER CONSTRUCTION CORP 107312017 08/07/17 SEWER REPLACEMENT (7/1/17-7/31/17) 2048871 08/30/17 18173 WESTERN ALLIANCE BANK 107312017 08/07/17 BEE REMOVAL 125.00 116490 08/24/17 BEE REMOVAL 125.00 114681 06/15/17 BEE REMOVAL 125.00 2048958 09/13/17 01343 WE GOT YA PEST CONTROL INC 116300 08/17/17 115644 07/24/17 BEE REMOVAL 125.00 114140 05/25/17 BEE REMOVAL 125.00 115376 07/12/17 BEE REMOVAL 125.00 115250 07/06/17 BEE REMOVAL 125.00 24,112.50 24,112.50 2048870 08/30/17 01343 WE GOT YA PEST CONTROL INC 115502 07/19/17 BEE REMOVAL 125.00 ALARM MONITORING (SEPT 2017)1,845.92 1,845.92 2048957 09/13/17 14879 WATER CONSERVATION GARDEN 1185 06/20/17 GARDEN COSTS (1ST QTR FY2018) 2048956 09/13/17 15807 WATCHLIGHT CORPORATION 536690 08/15/17 20,771.57 3911091817 08/08/17 HARDWARE INSTALLATION 9,921.41 2310091817 08/18/17 ALARM SERVICES 7,908.74 UB Refund Cst #0000022918 42.05 42.05 2048993 09/20/17 15807 WATCHLIGHT CORPORATION 3988091817 08/08/17 ALARM EQUIPMENT 2048955 09/13/17 17329 WALLACE GOLDIE Ref002461974 06/27/16 122.38 2048954 09/13/17 10340 WAGEWORKS INC INV274919 08/23/17 FLEXIBLE SPENDING ACCT 386.00 386.00 879.27 879.27 2048917 09/06/17 18277 VIRGINIE HENDERSON Ref002487880 08/31/17 UB Refund Cst #0000213344 122.38 BI-WEEKLY 401A PLAN 879.27 879.27 2048992 09/20/17 06414 VANTAGEPOINT TRANSFER AGENTS Ben2489847 09/21/17 BI-WEEKLY 401A PLAN 2048916 09/06/17 06414 VANTAGEPOINT TRANSFER AGENTS Ben2489667 09/07/17 2048915 09/06/17 01095 VANTAGEPOINT TRANSFER AGENTS Ben2489665 09/07/17 BI-WEEKLY DEFERRED COMP PLAN 14,876.90 14,876.90 Page 8 of 8