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Home My WebLink About08-01-12 Board Packet 1 OTAY WATER DISTRICT BOARD OF DIRECTORS MEETING DISTRICT BOARDROOM 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA WEDNESDAY August 1, 2012 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 JULY 11, 2012 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 CONSENT CALENDAR 6. 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) ADOPT ORDINANCE NO. 534 AMENDING THE DISTRICT’S CODE OF ORDINANCES SECTION 28, CONNECTION FEES AND CHARGES FOR POTABLE OR RECLAIMED WATER SERVICE; APPENDIX A, SCHED- ULE OF FEES AND CHARGES, SECTION 28.02; AND SECTION 27, REQUIREMENTS AND LIMITATIONS FOR OBTAINING WATER SER- VICE, EFFECTIVE SEPTEMBER 1, 2012 b) APPROVE CHANGE ORDER NO. 2 TO THE EXISTING CONTRACT WITH NEWest CONSTRUCTION, INC. FOR THE RALPH W. CHAPMAN WATER RECLAMATION FACILITY UPGRADE PROJECT, IN AN AMOUNT NOT-TO-EXCEED $87 2 c) APPROVE THE ISSUANCE OF A PURCHASE ORDER TO RDO EQUIPMENT COMPANY, INC. IN THE AMOUNT OF $102,515.50 FOR THE PURCHASE OF ONE (1) JOHN DEERE BACKHOE d) ADOPT RESOLUTION NO. 4201 OF THE DISTRICT’S CODE OF ORDI- NANCE AMENDING POLICY NO. 25, THE RESERVE POLICY, WHICH INCLUDES UPDATED GLOSSARY DEFINITIONS e) RECEIVE THE DISTRICT’S INVESTMENT POLICY (POLICY NO. 27) FOR REVIEW AND TO RE-DELEGATE AUTHORITY FOR ALL INVEST- MENT RELATED ACTIVITIES TO THE CHIEF FINANCIAL OFFICER IN ACCORDANCE WITH GOVERNMENT CODE SECTION 53607 ACTION ITEMS 7. BOARD a) DISCUSSION OF 2012 BOARD MEETING CALENDAR REPORTS 8. GENERAL MANAGER’S REPORT a) SAN DIEGO COUNTY WATER AUTHORITY UPDATE 9. DIRECTORS' REPORTS/REQUESTS 10. PRESIDENT’S REPORT/REQUESTS 11. ADJOURNMENT 3 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 July 27, 2012, 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 July 27, 2012. /s/ Susan Cruz, District Secretary AGENDA ITEM 4 1 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT July 11, 2012 1. The meeting was called to order by President Lopez at 3:32 p.m. 2. ROLL CALL Directors Present: Gonzalez, Lopez and Robak Directors Absent: Croucher (due to a work commitment) and Thompson (out-of- town on pre-scheduled vacation) Staff Present: General Manager Mark Watton, Asst. General Manager German Alvarez, General Counsel Daniel Shinoff, Chief Financial Officer Joe Beachem, Chief of Engineering Rod Posada, Chief of Information Technology Geoff Stevens, Chief of Administration Rom Sarno, Chief of Water Operations Pedro Porras and District Secretary Susan Cruz and others per attached list. 3. PLEDGE OF ALLEGIANCE 4. APPROVAL OF AGENDA A motion was made by Director Gonzalez, seconded by Director Robak and carried with the following vote: Ayes: Directors Gonzalez, Lopez and Robak Noes: None Abstain: None Absent: Directors Croucher and Thompson to approve the agenda. 5. APPROVE THE MINUTES OF THE REGULAR BOARD MEETINGS OF MAY 2 AND JUNE 6, 2012, AND SPECIAL BOARD MEETING OF MAY 15, 2012 A motion was made by Director Robak, seconded by Director Gonzalez and carried with the following vote: Ayes: Directors Gonzalez, Lopez and Robak Noes: None Abstain: None Absent: Directors Croucher and Thompson 2 to approve the minutes of the regular board meetings of May 2 and June 6, 2012 and special board meeting of May 15, 2012. 6. 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 No one wished to be heard. General Manager Watton introduced new employees to the District, Mr. Daniel Martin, Engineering Manager, who joins the District from SANDAG and Mr. Jose Martinez, Utilities Services Manager, who comes to the District from SAIC and the U.S. Navy. CONSENT ITEMS 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: Director Robak requested that item 6d be pulled for discussion. Upon a motion by Director Robak, seconded by President Lopez and carried with the following vote: Ayes: Directors Gonzalez, Lopez and Robak Noes: None Abstain: None Absent: Directors Croucher and Thompson to approve the following remaining consent calendar items: a) APPROVE CHANGE ORDER NO. 2 TO THE EXISTING CONTRACT WITH TC CONSTRUCTION, INC. IN AN AMOUNT NOT-TO-EXCEED $42,412.96 FOR THE LA PRESA SYSTEM IMPROVEMENTS PROJECT b) ADOPT RESOLUTION NO. 4200 TO CONTINUE WATER AND SEWER AVAILABILITY CHARGES FOR DISTRICT CUSTOMERS FOR FISCAL YEAR 2012-2013 TO BE COLLECTED THROUGH PROPERTY TAX BILLS c) ADOPT RESOLUTION NO. 4202 TO ESTABLISH THE TAX RATE FOR IMPROVEMENT DISTRICT NO. 27 FOR FISCAL YEAR 2012-2013 3 e) CAST VOTES TO ELECT REPRESENTATIVES TO THE CALIFORNIA SPECIAL DISTRICTS ASSOCIATION BOARD OF DIRECTORS, REGION 6, SEATS A AND C President Lopez presented Item 6d for discussion. d) APPROVE AGREEMENTS WITH THE FOLLOWING:  ABLEFORCE, INC., IN THE AMOUNT OF $170,000 FOR PROGRAMMING SERVICES FOR FINANCIAL AND REPORTING SYSTEMS ENHANCEMENTS  ONE YEAR O&M SERVICE AGREEMENTS FOR FY 2013 WITH: i. GTC SYSTEMS, INC., IN THE AMOUNT OF $78,000 FOR NETWORK MANAGEMENT AND MONITORING SERVICES ii. AT&T IN THE AMOUNT OF $99,000 FOR LOCAL AND LONG DISTANCE TELEPHONE AND INTERNET SERVICE iii. VERIZON WIRELESS IN THE AMOUNT OF $81,000 FOR CELL PHONE DEVICE CONVERSION AND WIRELESS SERVICES iv. SOFT CHOICE IN THE AMOUNT OF $83,546 FOR SOFTWARE LICENSES UNDER THE MICROSOFT ENTERPRISE AGREEMENT v. TYLER TECHNOLOGIES IN THE AMOUNT OF $139,710 TO COVER THE COSTS OF A SOFTWARE MAINTENANCE AGREEMENT, ANNUAL SUPPORT, AND CONSULTING SERVICES (O&M $119,710/CIP P2470 $20,000) Director Robak indicated that he recalled that the District had approved internet services and inquired which company was selected and if AT&T was providing the same service. General Manager Watton indicated that the contract was with Cox Communications for two years of service. Cox Communications would provide redundancy services to back-up AT&T. The two services are separate (AT&T and Cox Communications). Because the Cox Communications contract was already approved, it was not listed in staffs’ report. It was noted that AT&T also provides telephone services. A motion was made by Director Robak, seconded by Director Gonzalez and carried with the following vote: Ayes: Directors Gonzalez, Lopez and Robak Noes: None 4 Abstain: None Absent: Directors Croucher and Thompson to approve staffs’ recommendation. ACTION ITEMS 8. BOARD a) DISCUSSION OF 2012 BOARD MEETING CALENDAR District Secretary Cruz indicated that dates for a joint agency board meeting with Helix WD, Padre Dam MWD and Sweetwater Authority are currently being considered in October. She also noted that the District’s Special Board Meeting for a Board Workshop has been scheduled on Tuesday, September 11, 2012. President Lopez indicated that if members of the board have any items they wished discussed at the joint agency board meeting, to please share them with him. INFORMATIONAL ITEMS 9. THE FOLLOWING ITEMS ARE PROVIDED TO THE BOARD FOR INFORMATIONAL PURPOSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEMS: a) REPORT ON THE FINDINGS OF THE 2012 CUSTOMER AWARENESS AND OPINION SURVEY Communications Officer Armando Buelna indicated that an objective within the District’s Strategic Business Plan is the conducting of customer opinion surveys so the District may gain a better understanding of customer attitudes, awareness and opinions, specifically, as they are related to the District’s programs and services. He stated the ultimate goal of the surveys is to improve customer service. In March 2012 the board was presented the draft questionnaires for the General Customer Satisfaction and Opinion and the Call Center Surveys. At that meeting, the board directed staff to reduce the margin of error for the General Customer Satisfaction and Opinion Survey from +/- 5.7% to +/-4.5%. He noted, in order to reduce the margin of error to +/-4.5%, the number of respondents to the General Customer Satisfaction and Opinion Survey was increased from 300 (number of respondents to the 2011 survey) to 480 in this year’s survey. He stated that the Call Center Survey differs from the General Customer Satisfaction and Opinion Survey in that respondents were from a list of customers who have had contact with the District’s call center within the past six (6) months. The margin of error for this survey is +/-5.4%. He indicated that the General Customer Satisfaction and Opinion Survey was conducted from March 14 to 23 and the Call Center Survey was conducted from late March through early April by Rea & 5 Parker Research. He stated that Drs. Rea and Parker would present the findings of both surveys. Dr. Parker presented the findings of the General Customer Satisfaction and Opinion Survey and indicated that his presentation will include graphs and charts which represent the statistics from the surveys. He stated the basic finding of the survey is that there is, and always has been, a high level of satisfaction with the Otay WD and it is even better in 2012. He stated that 92% of the respondents are very confident or somewhat confident that there will be enough water and this has been holding steady for many years now. Dr. Parker reviewed the findings in detail (reference attached copies of presentation and Attachment A to staffs’ reports which provides notes from the District’s Finance, Administration and Communications Committee’s discussion regarding the findings of the survey). Director Gonzalez inquired if the District could develop a mobile application for customers to pay their water bill. Communications Officer Buelna indicated that staff is working with the District’s billing vendor, InfoSend, to try and develop an ‘App.’ It is possible, however, it is still new technology. InfoSend is looking into developing the ‘App’. b) REPORT ON THE FINDINGS OF THE 2012 CUSTOMER AWARENESS AND OPINION SURVEY Dr. Louis Rea presented the findings of the Call Center Customer Satisfaction Survey. He noted the differences in the characteristics of the respondents to the call center survey versus the general customer survey. He indicated the respondents were more Hispanic, had a lower median income and were a little younger in age than the respondents to the General Customer Survey. He stated that the percentage of customers who place a call to the Call Center is declining and the main purpose customers contact the call center is for billing issues as opposed to repair issues as was the main reason in the last survey. He noted that the average number of calls customers must make to achieve a resolution to their issue has been declining since 2006. Dr. Rea reviewed the findings in detail (reference attached copies of presentation and Attachment A to staffs’ reports which provides notes from the District’s Finance, Administration and Communications Committee’s discussion regarding the findings of the survey). Director Robak inquired how the respondents’ characteristics compare to the District’s service area demographics. Dr. Parker indicated that, in theory, the random selection of respondents should represent the demographics of the District’s service area. He noted that, however, there is likely differences as respondents are screened, in that, they must be a customer of the District for at least one (1) year, must have a telephone number in the system so they may be contacted by phone, must be at least 18 years of age and the survey excludes renters who do not receive a water bill from the District directly (they are billed through their HOA’s). 6 Director Robak also inquired about respondents’ opinion/confidence in automated meters. Dr. Parker indicated that the survey did not include questions concerning customers opinions regarding automated meters. General Manager Watton noted that there were a couple of customers who opposed the automated meters as they felt the radio frequency associated with reading the meter impacted their health. It was discussed that over 99% of the District’s customers have been converted to the automated read meters. There is approximately 200 meters of 49,000 that still need to be replaced. General Counsel Dan Shinoff left at 4:41 p.m. and the District’s Attorney, Richard Romero, sat in for Mr. Shinoff. President Lopez indicated that continuing the customer surveys are very important to the District and he commended Drs. Rea and Parker for their good work on the surveys. c) INFORMATIONAL FOLLOW-UP REPORT TO FISCAL YEAR 2013 BUDGET WORKSHOP Chief Financial Officer Beachem indicated that this item is being presented as a follow-up to the board’s request for additional information at the Board Budget Workshop held on May 15, 2012. He presented information responding to the board’s requests (reference Attachment A to staffs’ report which provides notes from the District’s Finance, Administration and Communications Committee’s discussion regarding this item). Directors Robak and Gonzalez thanked staff for providing the additional information. Director Gonzalez indicated that the information shows that the District is working to benefit its constituents and is trying to find ways to improve services. President Lopez commended staff and thanked them for following up on the board’s requests. REPORTS 10. GENERAL MANAGER’S REPORT SAN DIEGO COUNTY WATER AUTHORITY (CWA) UPDATE General Manager Watton indicated with regard to the Poseiden Desalination Project that it is projected that an acre foot of water will cost approximately $2,300+. CWA is currently reviewing the project and Otay staff has been asked to provide feedback on CWA’s assumptions concerning the project. He indicated that staff would be providing an update on the Poseiden project for the board in the next meeting or two. He noted that CWA’s rate increase has been published at 7%, but it likely will be 10% to 11%. He also shared that CWA discussions have included the lawsuit with Metropolitan Water District (MWD) and the IID matters. CWA has continued to 7 prevail in court on procedural issues with MWD. MWD is still trying to attribute the IID transfer for some of the water cost. He indicated that, however, the IID water transfer has nothing to do with CWA’s lawsuit. CWA’s lawsuit is with regard to how MWD’s rates are structured. MWD’s rate structure is not configured properly Under Propositions 26 and 218. He indicated that if members of the board hear comments about the lawsuits or have questions, to please feel free to call either Director Croucher or himself. General Manager Watton also highlighted information from his report that included an update on the District’s sewer treatment plant, Water-Smart Plants Program, the employee recognition luncheon, that District forms are being made available on-line, that Chief of Information Technology Geoff Stevens and GIS Manager Ming Zhou will be presenting at the ESRI conference later this month, the transitioning of meter reading staff members to the Operations Department, and an update on water purchases and sales. He indicated if members of the board have an interest in touring the District’s newly upgraded treatment plant, to please let him know and staff will schedule a tour. He also indicated that the District received a letter from the California Department of Public Health wherein they commended the District’s staff for their “continued diligence and conscientiousness placed in generating quality data from the laboratory.” He stated that the District does not get such comments from the regulatory agencies very often and when they are received, he liked to share them with the board. 11. DIRECTORS' REPORTS/REQUESTS Director Robak indicated that he had read an article that SANDAG had purchased a large property in Jamul for $18 million (SANDAG paid $10 million and Homeland Security provided $8 million). He stated that the land is not developable and felt that the public did not receive a good investment. Director Gonzalez indicated that he had attended a Hispanic Chamber event and a Latino Community Breakfast. He also shared that he completed the installation of a water conserving landscape at his residence which included the removal of grass from his front and back yards. 12. PRESIDENT’S REPORT President Lopez reported on meetings he attended during the month of June 2012 (a list of meetings he attended is attached). He shared that the Water Conservation Garden will be presenting a film, “Watershed,” in their amphitheatre on Saturday, July 28, at 8:15 p.m. He stated that Robert Redford is the executive producer of the film and he encouraged the board and staff to attend. He indicated that the Water Conservation Garden is also hosting other concerts and that a list is available on their website. He indicated that it is hoped that the Garden would become self- sufficient and that he was pleased with the new personnel hired by the Garden. 8 He also shared that he attended a couple of CSDA sponsored webinars (“What every Public Agency Should Know about Prevailing Wage” and “Proposition 218, Proposition 26 and Rate Setting”). He stated they were very informative and it was very worthwhile to take some of these seminars. 13. ADJOURNMENT With no further business to come before the Board, President Lopez adjourned the meeting at 5:18 p.m. ___________________________________ President ATTEST: District Secretary 9 President’s Report July 11, 2012 Board Meeting A) Meetings attended during the Month of June 2012: 1) June 1: Board Agenda Briefing. Met with General Manager Watton and General Counsel Daniel Shinoff to review items that will be presented at the June Board meeting. 2) June 6: Attended the District’s Regular Board Meeting 3) June 7: Attended a meeting of the Metro Commission. a) Discussed various Metro Commission matters that included the consideration to approve the San Diego Recycled Water Study and the FY 2011-2012 Budget (Metro Commission agenda attached). 4) June 13: Attended the Water Conservation Garden Board Meeting. a) Discussed the Garden’s FY 2012-2013 Budget and the Garden Operating Agreement (Water Conservation Garden agenda attached). 5) June 14: Participated in a CSDA sponsored Webinar titled, “What every Public Agency should know about Prevailing Wage.” 6) June 15: Committee Agenda Briefing. Met with General Manager Watton to review items that will be presented at the June Committee meetings. 7) June 19: Participated in a CSDA sponsored Webinar titled, “Proposition 218, Proposition 26 and Rate Setting.” 8) June 20: Attended a meeting of the Engineering, Operations and Water Resources Committee. a) Reviewed, discussed, and made recommendation on items that will be presented at the July board meeting. 9) June 21: Attended a meeting of the Finance, Administration and Communications Committee. a) Reviewed, discussed, and made recommendation on items that will be presented at the July board meeting. 10) June 29: a) Agenda Briefing Meeting. Attendees: Mark Watton and Jeff Morris (i) Discussed items to be presented at the July 2012 board meeting. 1 STAFF REPORT TYPE MEETING: Regular Board Meeting MEETING DATE: August 1, 2012 SUBMITTED BY: Rita Bell, Finance Manager Bob Kennedy, Senior Civil Engineer PROJECT: DIV. NO. All APPROVED BY: (Chief) Joseph R. Beachem, Chief Financial Officer Rod Posada, Chief, Engineering German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Adopt Ordinance No. 534 Amending the District’s Code of Ordinances Section 28, Connection Fees and Charges for Potable or Reclaimed Water Service; Appendix A, Schedule of Fees and Charges, Section 28.02; and Section 27, Requirements and Limitations for Obtaining Water Service, Effective September 1, 2012 GENERAL MANAGER’S RECOMMENDATION: That the Board adopt Ordinance No. 534 to amend the District’s Code of Ordinances Section 28, Connection Fees and Charges for Potable or Reclaimed Water Service; Appendix A, Schedule of Fees and Charges, Section 28.02; and Section 27, Requirements and Limitations for Obtaining Water Service, effective September 1, 2012. PURPOSE: To present to the Board revisions to the District’s Code of Ordinances Section 28, Connection Fees and Charges for Potable or Reclaimed Water Service; Appendix A, Section 28.02, Installation Charges for Water Meter and Water Service Laterals, to update the District’s meter fees and installation charges due to changes in material and labor costs; and to update Section 27, Requirements and Limitations for Obtaining Water Service. AGENDA ITEM 6a 2 ANALYSIS: Background Water meter fees and installation charges have not been updated since January 2002, when the automated meter reading (AMR) program was implemented. At this time, an AMR fee of $147 was created to cover the higher cost of the AMR meters. Currently, about 48,200 of the approximately 48,500 District customer accounts have AMR water meters. These numbers reflect meters that were either replaced over the past ten years with an AMR meter or installed as a new AMR meter. Having a separate AMR fee is no longer necessary since all new meters sold are AMR. By the end of Fiscal Year 2013, it is anticipated that all of the District’s water meters will be AMR with some exceptions, such as temporary and fire service meters. Since January 2002, meter technology regulations such as no-lead meters and installation methods have changed, making this an appropriate time to reexamine the method and cost involved with purchasing and installing meters. In addition, staff evaluated Section 27, “Requirements for Obtaining Water Service,” and is proposing changes. It is proposed to add Section 27.02G Phased Projects. This change will provide a developer option to phase the delivery of water meters based on the project implementation to build-out. It is also proposed to revise Section 27.03 “Manufacturers Recommended Maximum Flow Rate for District Meters.” This change reflects advancements in equipment implemented by the District to capture volumes through the meters at both the high and low end of the meter spectrum. Proposed Fees and Installation Charges Historic meter costs, including additional parts, were based on the technology of the day and meters were priced by size only. Since many things have changed over the years, a review and update of these meters and fees was necessary. The proposed meter fees are based on the actual purchase costs of the meters and the ancillary parts needed to install these meters. The meters and materials are based on size and service type which is categorized as Potable Non-Irrigation, Potable/Recycled Irrigation, and Combined Fire and Domestic. 3 The proposed installation charges are based on the District’s standard labor rates (including fringe and overhead charges) for the salaries of Meter Maintenance Workers or Utility Crew as of July 1, 2012. The weight and configuration of current meters from ¾” up to 2” require the same amount of time to install, based on the Meter Shop’s most recent experience. Therefore, the proposed installation charge of $96 will be the same for ¾” to 2” meters. Meters that are 3” to 4” require an installation fee of $578, based on two hours of labor for two Meter Maintenance Workers. The installation for a 6” meter is $913, based on two hours of labor for three Meter Maintenance Workers. Lastly, the 8” and 10” meter installation fee of $1,400 is based on a Utility Crew’s average cost to install these meters. The following table shows the existing and proposed installation fees and the elimination of the AMR fees: Current Installation Fees Meter Size Install Fee AMR Fee Total Proposed Fee Change 3/4" $ 60.00 $ 147.00 $ 207.00 $ 96.00 $ (111.00) 1" 60.00 147.00 207.00 96.00 (111.00) 1.5" 103.00 147.00 250.00 96.00 (154.00) 2" 240.00 147.00 387.00 96.00 (291.00) 3" 300.00 147.00 447.00 578.00 131.00 4" 300.00 147.00 447.00 578.00 131.00 6" 300.00 147.00 447.00 913.00 466.00 8" 300.00 147.00 447.00 1,400.00 953.00 10" 300.00 147.00 447.00 1,400.00 953.00 All fees within the Code of Ordinances are listed in Appendix A. Proposed meter fees and installation charges are listed in Exhibit IV of the Attachments, which reflects the pending changes to Appendix A. Additionally, similar to Capacity and Annexation Fees, the recommendation is to increase meter fees on a quarterly basis, using the Engineering News Record (ENR) Construction Cost Index for the Los Angeles Region, to ensure fees keep up with current costs. The benefit of increasing the fees on a quarterly basis, tied to this index, is that they will maintain a more up-to-date full cost recovery in the interim periods between another fee review, which should be conducted at least every five years to keep up with changes in meter and installation costs and technologies. 4 FISCAL IMPACT: Joseph R. Beachem, Chief Financial Officer Based on projected potable and recycled water meter sales, the fiscal impact for Fiscal Year 2013 is an increase in meter fee revenues of approximately $16,700. There is no fiscal impact for Section 27. STRATEGIC GOAL: To ensure that the costs of service are kept current, this revenue source will help the District meet its fiscal responsibility to its ratepayers. LEGAL IMPACT: None. Attachments: A) Committee Action Form B) Ordinance No. 534 Exhibit I Strike-through Section 28 Exhibit II Proposed Section 28 Exhibit III Strike-through Appendix A Exhibit IV Proposed Appendix A Exhibit V Strike-through Section 27 Exhibit VI Proposed Section 27 ATTACHMENT A SUBJECT/PROJECT: Adopt Ordinance No. 534 Amending the District’s Code of Ordinances Section 28, Connection Fees and Charges for Potable or Reclaimed Water Service; Appendix A, Schedule of Fees and Charges, Section 28.02; and Section 27, Requirements and Limitations for Obtaining Water Service, Effective September 1, 2012 COMMITTEE ACTION: The Engineering, Operations, and Water Resources and the Finance, Administration and Communications Committees reviewed this item at meetings held on July 17 and 19, respectively, and the following comments were made:  Staff requested that the Board adopt Ordinance No. 534 amending the District’s Code of Ordinances Section 28, Connection Fees and Charges for Potable or Reclaimed Water Service; Appendix A, Schedule of Fees and Charges, Section 28.02; and Section 27, Requirements and Limitations for obtaining Water Services effective September 1, 2012.  Staff is proposing to update the District’s meter and installation fees. It was indicated that water meter fees and installation charges have not been updated since the implementation of the District’s automated meter reading (AMR) program in January 2002. As the AMR project will be completed this fiscal year it was felt that it was a good time to update the fees.  In discussion with meter shop staff, the cost to install meters has changed quite a bit. A few of the new meters are much lighter in weight now and require only one (1) staff person to install instead of two (2). Staff also found that meter costs have changed and felt a review and update of these fees are necessary. The historic meter costs, including additional parts, were based on the technology of the day and many things have changed. There is also a new requirement that new installed meters be lead free. The new proposed meter fees are based on the actual purchase cost of meters.  Staff noted that all fees within the Code of Ordinances are listed in Appendix A. Proposed meter fees and installation charges are listed in Exhibit IV.  Staff recommended that the meter fees be adjusted on a quarterly basis using the Engineering News Record (ENR) Construction Cost Index for the Los Angeles Region, similar to capacity and annexation fees, to ensure fees keep up with current costs. In response to an inquiry by the Committee, staff indicated that the District refers to the ENR because it is reliable and tracks labor and construction costs.  A change to Section 27, “Requirements for Obtaining Water Service,” was proposed to add subsection G to section 27.02, entitled “Phased Projects,” that would provide an option for developers to phase in the delivery of water meters to their projects. The Engineering Operations and Water Resources Committee suggested that staff modify the language in the new proposed subsection to delete reference to “multi-family” allowing all projects to utilize this option. It was indicated that the District received feedback from developers requesting to buy meters one at a time as they receive funds.  Staff also recommended changes to Section 27.03 entitled “Manufactures Recommended Maximum Flow Rate for District Meters” as follows: o Update the recommended maximum rate of flow for meters 3-inch and larger o Delete compound meters as the District no longer installs these types of meters due to advancement in meter technology  In response to a question by the committee, staff stated that the District utilizes one supplier for small meters (3/4” and 1”), Master Meter, as the District receives a very good price on the meters through its contract for the Automatic Meter Reading program. Large meters are sourced from several suppliers depending on the application.  The committee noted that staff had updated any references to “Reclaimed” to “Recycled” in the proposed changes and inquired if the change would be reflected throughout the District’s Code of Ordinances or if the change would be presented as each Section is presented with proposed updates. Staff indicated that staff would update the Code to reflect “recycled” as each section is presented for proposed changes. Recycled has become the standard term in the industry and the District is updating the Code to reflect this.  The Finance Administration and Communications Committee (FA&C Committee) indicated, as the Engineering Operations and Water Resource Committee (EO&WR Committee) had also reviewed this item and made recommendation, the FA&C Committee would received this item as informational and leave the recommendation of this item as proposed by the EO&WR Committee. Following the discussion, the EO&WR Committee supported staffs’ recommendation and presentation to the full board as a consent item. 1 ORDINANCE NO. 534 AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT AMENDING SECTION 28, CONNECTION FEES AND CHARGES FOR POTABLE OR RECLAIMED WATER SERVICE; APPENDIX A, SCHEDULE OF FEES AND CHARGES, SECTION 28.02; AND SECTION 27, REQUIREMENTS AND LIMITATIONS FOR OBTAINING WATER SERVICE BE IT ORDAINED by the Board of Directors of Otay Water District that the District’s Code of Ordinances, Section 28, Connection Fees and Charges for Potable or Reclaimed Water Service; and Appendix A, Section 28.02, Installation Charges for Water Meter and Water Service Laterals; and Section 27, Requirements and Limitations for Obtaining Water Service (per Exhibits II, IV and VI) be replaced. NOW, THEREFORE, BE IT RESOLVED that the new proposed Section 28, Connection Fees and Charges for Potable or Recycled Water Service; Appendix A, Section 28.02, Installation Charges for Water Meter and Water Service Laterals; and Section 27, Requirements and Limitations for Obtaining Water Service of the Code of Ordinances shall become effective September 1, 2012. Attachment B 2 PASSED, APPROVED AND ADOPTED by the Board of Directors of the Otay Water District at a regular meeting duly held this 1st day of August 2012, by the following roll call vote: AYES: NOES: ABSENT: ABSTAIN: ________________________________ President ATTEST: _____________________________ District Secretary 28-1 SECTION 28 CONNECTION FEES AND CHARGES FOR POTABLE OR RECLAIMED RECYCLED WATER SERVICE 28.01 COLLECTION OF FEES AND CHARGES A. Fees and Charges to be paid by the Customer. The following fees and charges shall be paid by the customer to connect to a District water system for potable water or reclaimed recycled water service; these are in addition to the fees and charges in Section 9 and 25. Fees and charges shall include, but not be limited to, District fees, San Diego County Water Authority fees, applicable zone charge and charges for work performed by District personnel on behalf of the customer. These charges may include the installation by District personnel of a water service lateral, and inspections required due to the requirement of a back flow device. These charges may also include a meter fee, installation fee (where laterals exist), lateral fee, meter box fee, and excavation permit fee. B. Basis for Determination of Connection Fees and Charges. The fees and charges shall be determined as follows: For permanent water meters, including potable or recycled irrigation service, the total water connection fee shall be determined on the basis of the demand to be placed on the District water system. The extent of demand will be determined on the basis of the size of the water meter, as set forth in Section 27 of the Code. For 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 water connection fee will be determined by multiplying the demand factor for the meter size, as set forth below, by the total of the District-wide capacity fee and applicable zone charge. Meter Size Demand Factor 3/4" 1 1 2-1/2 1-1/2" 5 2" 8 3" 16 4" 25 6" 50 8" 80 10" 115 Exhibit I Formatted: Font color: Red, Strikethrough Formatted: Font color: Red Formatted: Font color: Red, Strikethrough Formatted: Font color: Red 28-2 1. The District-wide capacity fee and the applicable zone charge shall constitute the "base rate." For fees or charges after July 1, 2010, the base rate shall be adjusted quarterly for fluctuations in construction costs, as measured by the Engineering News Record Construction Cost Index for the Los Angeles Region. The ENR Construction Cost Index of 9777.19(as of July 1, 2009) shall be deemed the "base index." The adjustment shall be in an amount equal to the percent- age change in the ENR Construction Cost Index from the base index for the period from June 10, 2009 to the date of payment. (See Appendix A, 28.01 B.1. for fees.) 2. The District-wide new water supply fee shall constitute the “base rate.” For fees or charges after July 1, 2010, the base rate shall be adjusted quarterly for fluctuations in construction costs, as measured by the Engineering News Record Construction Cost Index for the Los Angeles Region. The ENR Construction Cost Index of 9777.19 (as of July 1, 2009) shall be deemed the “base index.” The adjustment shall be in an amount equal to the percentage change in the ENR Construction Cost Index from the base index for the period from June 10, 2009 to the date of payment. (See Appendix A, 28.01 B.2. for fees.) 28.02 INSTALLATION CHARGES FOR WATER METER AND WATER SERVICE LATERALS The determination of the water meter or service lateral size shall be based upon the information provided by the customer as detailed in Section 27 of the Code. The meter fees and installation charges are set forth in Appendix A, 28.02. Where a water meter larger than 2-inch or a new water lateral is required, a customized, written estimate of the District's costs will be prepared. The customer shall deposit the estimated costs with the District prior to commencement of the work. If actual costs incurred by the District are less than the amount deposited, the District shall refund the excess to the customer. If the actual costs incurred exceed the amount deposited, the customer shall reimburse the District for the additional costs. Formatted: Font color: Red Formatted: Font color: Red, Strikethrough 28-3 A. The meter fees and installation charges shall be set effective AugustSeptember 1, 2012, and then adjusted in the same manner as capacity fees as described in Section 28.01 B.1 above (See Appendix A, 28.01 B.2. for fees). 28.03 METER FEE REFUND A. If a water meter/service has been paid for but not installed, a customer may receive a refund of the District’s capacity fee and charges. If San Diego County Water Authority capacity fees have been paid to San Diego County Water Authority, the customer shall request a refund from San Diego County Water Authority. B. If the customer wants to change the meter/service size, they will be credited with the number of equivalent dwelling units they have previously purchased and will be refunded any balance per Section 28.03 A, above. If additional equivalent dwelling units are required, the customer will be charged based on 28.01 and 28.02. C. If a water meter/service has been previously paid and installed, and the customer requests a different meter size, the customer shall pay for the new meter and installation fees, plus any differential in capacity and new water supply fees as described in Section 28.03 B above. Formatted: Font color: Red Formatted: List Paragraph, Indent: Left: 1", Hanging: 0.5", Numbered + Level: 1 +Numbering Style: A, B, C, … + Start at: 1 + Alignment: Left + Aligned at: 1" + Indent at: 1.25" Formatted: Font color: Red Formatted: Font color: Red Formatted: Indent: Left: 1", Hanging: 0.5" Formatted: Font: (Default) Courier New, Fontcolor: Red Formatted: Font color: Red 28-1 SECTION 28 CONNECTION FEES AND CHARGES FOR POTABLE OR RECYCLED WATER SERVICE 28.01 COLLECTION OF FEES AND CHARGES A. Fees and Charges to be paid by the Customer. The following fees and charges shall be paid by the customer to connect to a District water system for potable water or recycled water service; these are in addition to the fees and charges in Section 9 and 25. Fees and charges shall include, but not be limited to, District fees, San Diego County Water Authority fees, applicable zone charge and charges for work performed by District personnel on behalf of the customer. These charges may include the installation by District personnel of a water service lateral, and inspections required due to the requirement of a back flow device. These charges may also include a meter fee, installation fee (where laterals exist), lateral fee, meter box fee, and excavation permit fee. B. Basis for Determination of Connection Fees and Charges. The fees and charges shall be determined as follows: For permanent water meters, including potable or recycled irrigation service, the total water connection fee shall be determined on the basis of the demand to be placed on the District water system. The extent of demand will be determined on the basis of the size of the water meter, as set forth in Section 27 of the Code. For 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 water connection fee will be determined by multiplying the demand factor for the meter size, as set forth below, by the total of the District-wide capacity fee and applicable zone charge. Meter Size Demand Factor 3/4" 1 1 2-1/2 1-1/2" 5 2" 8 3" 16 4" 25 6" 50 8" 80 10" 115 Exhibit II 28-2 1. The District-wide capacity fee and the applicable zone charge shall constitute the "base rate." For fees or charges after July 1, 2010, the base rate shall be adjusted quarterly for fluctuations in construction costs, as measured by the Engineering News Record Construction Cost Index for the Los Angeles Region. The ENR Construction Cost Index of 9777.19(as of July 1, 2009) shall be deemed the "base index." The adjustment shall be in an amount equal to the percent- age change in the ENR Construction Cost Index from the base index for the period from June 10, 2009 to the date of payment. (See Appendix A, 28.01 B.1. for fees.) 2. The District-wide new water supply fee shall constitute the “base rate.” For fees or charges after July 1, 2010, the base rate shall be adjusted quarterly for fluctuations in construction costs, as measured by the Engineering News Record Construction Cost Index for the Los Angeles Region. The ENR Construction Cost Index of 9777.19 (as of July 1, 2009) shall be deemed the “base index.” The adjustment shall be in an amount equal to the percentage change in the ENR Construction Cost Index from the base index for the period from June 10, 2009 to the date of payment. (See Appendix A, 28.01 B.2. for fees.) 28.02 INSTALLATION CHARGES FOR WATER METER AND WATER SERVICE LATERALS The determination of the water meter or service lateral size shall be based upon the information provided by the customer as detailed in Section 27 of the Code. The meter fees and installation charges are set forth in Appendix A, 28.02. Where a new water lateral is required, a customized, written estimate of the District's costs will be prepared. The customer shall deposit the estimated costs with the District prior to commencement of the work. If actual costs incurred by the District are less than the amount deposited, the District shall refund the excess to the customer. If the actual costs incurred exceed the amount deposited, the customer shall reimburse the District for the additional costs. 28-3 A. The meter fees and installation charges shall be set effective September 1, 2012, and then adjusted in the same manner as capacity fees as described in Section 28.01 B.1 above (See Appendix A, 28.01 B.2. for fees). 28.03 METER FEE REFUND A. If a water meter/service has been paid for but not installed, a customer may receive a refund of the District’s capacity fee and charges. If San Diego County Water Authority capacity fees have been paid to San Diego County Water Authority, the customer shall request a refund from San Diego County Water Authority. B. If the customer wants to change the meter/service size, they will be credited with the number of equivalent dwelling units they have previously purchased and will be refunded any balance per Section 28.03 A, above. If additional equivalent dwelling units are required, the customer will be charged based on 28.01 and 28.02. C. If a water meter/service has been previously paid and installed, and the customer requests a different meter size, the customer shall pay for the new meter and installation fees, plus any differential in capacity and new water supply fees as described in Section 28.03 B above. Section #Code #Fee Description Meter Size 9 9.04 A.1.District Annexation Processing Fee $744.00 9.04 B. Annexation Fees for Water Annexations into Otay Water District Boundaries District-wide Annexation Fee 3/4" $1,556.00 1" $3,890.00 1-1/2" $7,780.00 2" $12,448.00 3" $24,896.00 4 $38,900.00 6" $77,800.00 8" $124,480.00 10" $178,940.00 9.04 C.4. Annexation Fees for Annexations to Sewer Improvement Districts $5,741.00 10 10.01 Filing of Petition $50.00 23 23.04 Backflow Certification - Second Notification $10.00 - Third Notification $25.00 - Reconnection (service resumed)$50.00 - 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 Otay Water District Appendix A Charges Appendix A 1 of 12 EXHIBIT III Section #Code #Fee Description Meter Size Charges 25 25.03 C. Monthly Fixed System Charges, MWD & CWA Charges (1)Meter Size System Charge MWD & CWA Fixed Charge Total Fixed Charge 3/4"$14.58 $14.01 $28.59 1"$18.52 $23.33 $41.85 1-1/2"$28.37 $46.74 $75.11 2"$40.18 $74.74 $114.92 3"$71.68 $149.48 $221.16 4"$107.13 $233.58 $340.71 6"$205.59 $467.09 $672.68 8"$323.73 $747.39 $1,071.12 10"$461.57 $1,070.74 $1,532.31 25 25.03 E.1.(b) Domestic Residential Water Rates (1)Unit Charge 0 - 5 $1.58 6-10 $2.45 11-22 $3.19 23 or more $4.92 25 25.03 E.2.(b) Multiple Residential Water Rates - Per Dwelling Unit (1) 0-4 $2.43 5-9 $3.15 10 or more $4.85 25 25.03 E.3.(b) Business and Publicly-Owned Water Rates (1)under 10"0-173 $2.59 174-831 $2.66 832 or more $2.70 10" & larger 0-7,426 $2.59 7,427-14,616 $2.66 14,617 or more $2.70 25 25.03 E.4.(c) Irrigation and Commercial Agricultural Using Potable Water Rates (1)1" & smaller 0-49 $3.53 50-132 $3.60 133 or more $3.66 (1) Water rates on all billing cycles beginning in calendar year 2012 Appendix A 2 of 12 EXHIBIT III Section #Code #Fee Description Meter Size Charges 25 25.03 E.4.(c) Irrigation and Commercial Agricultural Using Potable Water Rates (continued) (1)1.5" & 2"0-144 $3.53 145-355 $3.60 356 or more $3.66 3" & larger 0-1,044 $3.53 1,045-8,067 $3.60 8,068 or more $3.66 25 25.03 E.5.(c) Recycled Water Rates (1)3/4" - 1" 0-42 $3.02 43-97 $3.06 98 or more $3.12 1.5" & 2"0-168 $3.02 169-402 $3.06 403 or more $3.12 3" & 4"0-403 $3.02 404-820 $3.06 821 or more $3.12 6" & larger 0-7,916 $3.02 7,917-16,357 $3.06 16,358 or more $3.12 25 25.03 E.6.(b) Temporary and Construction Water Service Rates (1)1" & smaller 0-49 $7.06 50-132 $7.20 133 or more $7.32 1.5" & 2"0-144 $7.06 145-355 $7.20 356 or more $7.32 3" & larger 0-1,044 $7.06 1,045-8,067 $7.20 8,068 or more $7.32 (1) Water rates on all billing cycles beginning in calendar year 2012 Appendix A 3 of 12 EXHIBIT III Section #Code #Fee Description Meter Size Charges 25 25.03 E.8.(b) Tank Trucks Water Rates (1)1" & smaller 0-49 $7.06 50-132 $7.20 133 or more $7.32 1.5" & 2"0-144 $7.06 145-355 $7.20 356 or more $7.32 3" & larger 0-1,044 $7.06 1,045-8,067 $7.20 8,068 or more $7.32 25 25.03 E.9.(c) Application Fee for Water Service Outside District Boundaries $500.00 25 25.03 E.9.(d) Water Rate for Service Outside District Boundaries (1)1" & smaller 0-49 $7.06 50-132 $7.20 133 or more $7.32 1.5" & 2"0-144 $7.06 145-355 $7.20 356 or more $7.32 3" & larger 0-1,044 $7.06 1,045-8,067 $7.20 8,068 or more $7.32 25 25.03 E.10.(b) Application Fee for Water Service Outside an Improvement District $275.00 25 25.03 E.10.(c) Water Rate for Service Outside Improvement District (1)1" & smaller 0-49 $7.06 50-132 $7.20 133 or more $7.32 (1) Water rates on all billing cycles beginning in calendar year 2012 Appendix A 4 of 12 EXHIBIT III Section #Code #Fee Description Meter Size Charges 25 25.03 E.10.(c) Water Rate for Service Outside Improvement District (continued) (1)1.5" & 2"0-144 $7.06 145-355 $7.20 356 or more $7.32 3" & larger 0-1,044 $7.06 1,045-8,067 $7.20 8,068 or more $7.32 25 25.03 E.11.(c) Fire Service Monthly Charge $30.11 25 25.03 E.12.(b) Additional Water Service for Property Not Subject to District Taxes per unit $0.293 25 25.03 E.13.(b) Interim Service Water Rate in Improvement District 7 (1)1" & smaller 0-49 $7.06 50-132 $7.20 133 or more $7.32 1.5" & 2"0-144 $7.06 145-355 $7.20 356 or more $7.32 3" & larger 0-1,044 $7.06 1,045-8,067 $7.20 8,068 or more $7.32 25 25.03 F.Energy Charges for Pumping Water (1) Per 100 ft of lift over 450 ft per unit $0.045 25 25.03 G.1. Additional Water Charge for Service in the North District Per unit charge except for the first 5 units of residential $0.08 (1) Water rates on all billing cycles beginning in calendar year 2012 Appendix A 5 of 12 EXHIBIT III Section #Code #Fee Description Meter Size Charges 25 25.03 H.1. Additional Water Charges for Service in the Improvement District 9 Water Service Zone Per unit charge except for the first 5 units of residential $0.27 25 25.03 H.2. Additional Monthly System Fee for Improvement District 9 $2.00 25 25.03 I.1.(a) Additional Water Charges for Services in Improvement District 3 Per unit charge except for the first 5 units of residential 0.19 per H.C.F. Effective Jan 1, 2011 "0.20 per H.C.F. Effective Jan 1, 2012 "0.21 per H.C.F. Effective Jan 1, 2013 25 25.03 I.1.(b) Additional Water Charges for Services in Improvement District 10 Per unit charge except for the first 5 units of residential 0.27 per H.C.F. Effective Jan 1st 2011-2018 25 25.03 I.1.(c) Additional Water Charges for Services in La Presa Per unit charge except for the first 5 units of residential 0.08 per H.C.F. Effective Jan 1st 2011-2013 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 Appendix A 6 of 12 EXHIBIT III Section #Code #Fee Description Meter Size Charges 28 28.01 B.1.Capacity Fees and Zone Charge District-wide Capacity Fee 3/4" $7,900.00 1" $19,750.00 1-1/2" $39,500.00 2" $63,200.00 3" $126,400.00 4 $197,500.00 6" $395,000.00 8" $632,000.00 10" $908,500.00 - 22/27 TRIAD 3/4" $5,912.00 1" $14,780.00 1 -1/2" $29,560.00 2" $47,296.00 3" $94,592.00 4 $147,800.00 6" $295,600.00 8" $472,960.00 10" $679,880.00 28 28.01 B.2.New Water Supply Fee - All IDs including Triad 3/4" $910.00 1" $2,275.00 1-1/2" $4,550.00 2" $7,280.00 3" $14,560.00 4" $22,750.00 6" $45,500.00 8" $72,800.00 10" $104,650.00 28 28.02 Installation Charges for Water Meter and Water Service Laterals Meter Size Meter Fee Meter Box Installation Total Fee 3/4"$59.00 $47.00 $60.00 $166.00 1"$117.00 $47.00 $60.00 $224.00 1-1/2"$250.00 $61.00 $103.00 $414.00 - I.D.'s 1,2,3,5,7,9,10,19,20,22,22/27 (excluding Triad), and 25 (only I.D.'s 5,7,10,19,22, and 22/27 require reclaimed irrigation meters). Appendix A 7 of 12 EXHIBIT III Section #Code #Fee Description Meter Size Charges 28 28.02 Installation Charges for Water Meter and Water Service Laterals (continued)Meter Size 2"$475.00 $61.00 $240.00 $776.00 3" $653.00 $1,770.00 $300.00 $2,723.00 4"$1,370.00 $1,770.00 $300.00 $3,440.00 6"$2,500.00 $1,770.00 $300.00 $4,570.00 8"$3,737.00 $2,760.00 $300.00 $6,797.00 10"$5,060.00 $2,760.00 $300.00 $8,120.00 31 31.02 D.1. Requirement of Temporary Meter for Service minimum/per day $25.00 31 31.03 A.1.Requirement of Deposit for Temporary Meters 3/4"$150.00 1"$180.00 1-1/2"$330.00 2"$2,046.00 3"$850.00 4"$1,986.00 6"$2,465.00 - 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 $128.00 31 31.03 A.5. Temporary Meter Move Fee (includes backflow certification)3/4" - 2"$64.00 3" and larger No backflow test $64.00 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 Appendix A 8 of 12 EXHIBIT III 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 $10.00 34 34.02 G.3.(a)Meter "Turn-On" Charge During regular business hours $35.00 34 34.02 G.3.(b)Meter "Turn-On" Charge After regular business hours $65.00 53 53.04 C.1.Sewer Connection Fee - Russell Square $7,500.00 53 53.04 C.2.Monthly Sewer Service Charge - Russell Square $200.00 53 53.11 A.Set-up Fees for Accounts $10.00 53 53.11 B.2.Residential Sewer Charges (2) Rate multiplied by winter average units $1.77 53 53.11 B.3.Residential Sewer Charges Base Fee (2)5/8" & 3/4"$12.26 1" & larger $17.88 53 53.11 B.4. Monthly Residential Sewer Rate Without Consumption History (2)5/8" & 3/4"$34.83 1" & larger $40.45 53 53.11.C.4.Winter Averaging - Sewer - Single Residential 15 units - 15% discount = 12.75 units - Multi-Residential 6 units - 15% discount = 5.1 units (2) Sewer rates on all billing cycles beginning in calendar year 2012 Appendix A 9 of 12 EXHIBIT III Section #Code #Fee Description Meter Size Charges 53 53.11 D.2.Multi-Residential Rate Charges - Sewer (2) Rate multiplied by winter average units $1.77 53 53.11 E.6.Public Schools Sewer Rate (2) Per ASU (Based on Student Count)$41.75 53 53.11 F.1. Monthly Service Charge for Commercial and Institutional Sewer (2)Per ASU $41.75 60 60.03 Issuance of Availability Letters for Water and/or Sewer Service $75.00 72 72.04 A.1. - To Pull and Reset Meter 3/4" - 2"$170.00 - Broken Curbstop or Tabs 3/4" - 1"$192.00 - If Customer uses Jumper 3/4" - 1"$149.00 - Broken Lock/Locking Device 3/4" - 1"$56.00 - Cap Lock (Welded)3/4" - 1"$158.00 - Broken Curbstop or Tabs 1.5" - 2"$265.00 - To Pull and Reset Meter 3"$351.00 - To Pull and Reset Meter 4"$454.00 - To Pull and Reset Meter 6"$454.00 - To Pull and Reset Meter 8"$600.00 - To Pull and Reset Meter 10"$600.00 72 72.05 D. A. - First Violation $100.00 - Second Violations $200.00 $500.00 Type I Fine - Third or each additional violation of that same ordinance or requirement within a twelve-month period Locking or Removing Damaged or Tampered Meters (2) Sewer rates on all billing cycles beginning in calendar year 2012 Appendix A 10 of 12 EXHIBIT III Section #Code #Fee Description Meter Size Charges 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 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 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 Appendix A 11 of 12 EXHIBIT III 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 $20.00/year or $0.50/meeting Yearly Subscription Service for Board Packet and Ratified Minutes $100.00/year for first copy and $200.00/year for each copy thereafter Per $1000 of assessed value for I.D. 27 Appendix A 12 of 12 EXHIBIT III Section #Code #Fee Description Meter Size 9 9.04 A.1.District Annexation Processing Fee $744.00 9.04 B. Annexation Fees for Water Annexations into Otay Water District Boundaries District-wide Annexation Fee 3/4" $1,556.00 1" $3,890.00 1-1/2" $7,780.00 2" $12,448.00 3" $24,896.00 4 $38,900.00 6" $77,800.00 8" $124,480.00 10" $178,940.00 9.04 C.4. Annexation Fees for Annexations to Sewer Improvement Districts $5,741.00 10 10.01 Filing of Petition $50.00 23 23.04 Backflow Certification - Second Notification $10.00 - Third Notification $25.00 - Reconnection (service resumed)$50.00 - 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 Otay Water District Appendix A Charges Appendix A 1 of 11 EXHIBIT IV Section #Code #Fee Description Meter Size Charges 25 25.03 C. Monthly Fixed System Charges, MWD & CWA Charges (1)Meter Size System Charge MWD & CWA Fixed Charge Total Fixed Charge 3/4"$14.58 $14.01 $28.59 1"$18.52 $23.33 $41.85 1-1/2"$28.37 $46.74 $75.11 2"$40.18 $74.74 $114.92 3"$71.68 $149.48 $221.16 4"$107.13 $233.58 $340.71 6"$205.59 $467.09 $672.68 8"$323.73 $747.39 $1,071.12 10"$461.57 $1,070.74 $1,532.31 25 25.03 E.1.(b) Domestic Residential Water Rates (1)Unit Charge 0 - 5 $1.58 6-10 $2.45 11-22 $3.19 23 or more $4.92 25 25.03 E.2.(b) Multiple Residential Water Rates - Per Dwelling Unit (1) 0-4 $2.43 5-9 $3.15 10 or more $4.85 25 25.03 E.3.(b) Business and Publicly-Owned Water Rates (1)under 10"0-173 $2.59 174-831 $2.66 832 or more $2.70 10" & larger 0-7,426 $2.59 7,427-14,616 $2.66 14,617 or more $2.70 25 25.03 E.4.(c) Irrigation and Commercial Agricultural Using Potable Water Rates (1)1" & smaller 0-49 $3.53 50-132 $3.60 133 or more $3.66 (1) Water rates on all billing cycles beginning in calendar year 2012 Appendix A 2 of 11 EXHIBIT IV Section #Code #Fee Description Meter Size Charges 25 25.03 E.4.(c) Irrigation and Commercial Agricultural Using Potable Water Rates (continued) (1) 1.5" & 2"0-144 $3.53 145-355 $3.60 356 or more $3.66 3" & larger 0-1,044 $3.53 1,045-8,067 $3.60 8,068 or more $3.66 25 25.03 E.5.(c) Recycled Water Rates (1)3/4" - 1" 0-42 $3.02 43-97 $3.06 98 or more $3.12 1.5" & 2"0-168 $3.02 169-402 $3.06 403 or more $3.12 3" & 4"0-403 $3.02 404-820 $3.06 821 or more $3.12 6" & larger 0-7,916 $3.02 7,917-16,357 $3.06 16,358 or more $3.12 25 25.03 E.6.(b) Temporary and Construction Water Service Rates (1)1" & smaller 0-49 $7.06 50-132 $7.20 133 or more $7.32 1.5" & 2"0-144 $7.06 145-355 $7.20 356 or more $7.32 3" & larger 0-1,044 $7.06 1,045-8,067 $7.20 8,068 or more $7.32 (1) Water rates on all billing cycles beginning in calendar year 2012 Appendix A 3 of 11 EXHIBIT IV Section #Code #Fee Description Meter Size Charges 25 25.03 E.8.(b) Tank Trucks Water Rates (1)1" & smaller 0-49 $7.06 50-132 $7.20 133 or more $7.32 1.5" & 2"0-144 $7.06 145-355 $7.20 356 or more $7.32 3" & larger 0-1,044 $7.06 1,045-8,067 $7.20 8,068 or more $7.32 25 25.03 E.9.(c) Application Fee for Water Service Outside District Boundaries $500.00 25 25.03 E.9.(d) Water Rate for Service Outside District Boundaries (1)1" & smaller 0-49 $7.06 50-132 $7.20 133 or more $7.32 1.5" & 2"0-144 $7.06 145-355 $7.20 356 or more $7.32 3" & larger 0-1,044 $7.06 1,045-8,067 $7.20 8,068 or more $7.32 25 25.03 E.10.(b) Application Fee for Water Service Outside an Improvement District $275.00 25 25.03 E.10.(c) Water Rate for Service Outside Improvement District (1)1" & smaller 0-49 $7.06 50-132 $7.20 133 or more $7.32 1.5" & 2"0-144 $7.06 145-355 $7.20 356 or more $7.32 (1) Water rates on all billing cycles beginning in calendar year 2012 Appendix A 4 of 11 EXHIBIT IV Section #Code #Fee Description Meter Size Charges 25 25.03 E.10.(c) Water Rate for Service Outside Improvement District (continued) (1) 3" & larger 0-1,044 $7.06 1,045-8,067 $7.20 8,068 or more $7.32 25 25.03 E.11.(c) Fire Service Monthly Charge $30.11 25 25.03 E.12.(b) Additional Water Service for Property Not Subject to District Taxes per unit $0.293 25 25.03 E.13.(b) Interim Service Water Rate in Improvement District 7 (1)1" & smaller 0-49 $7.06 50-132 $7.20 133 or more $7.32 1.5" & 2"0-144 $7.06 145-355 $7.20 356 or more $7.32 3" & larger 0-1,044 $7.06 1,045-8,067 $7.20 8,068 or more $7.32 25 25.03 F.Energy Charges for Pumping Water (1) Per 100 ft of lift over 450 ft per unit $0.045 25 25.03 G.1. Additional Water Charge for Service in the North District Per unit charge except for the first 5 units of residential $0.08 25 25.03 H.1. Additional Water Charges for Service in the Improvement District 9 Water Service Zone Per unit charge except for the first 5 units of residential $0.27 25 25.03 H.2. Additional Monthly System Fee for Improvement District 9 $2.00 (1) Water rates on all billing cycles beginning in calendar year 2012 Appendix A 5 of 11 EXHIBIT IV Section #Code #Fee Description Meter Size Charges 25 25.03 I.1.(a) Additional Water Charges for Services in Improvement District 3 Per unit charge except for the first 5 units of residential 0.19 per H.C.F. Effective Jan 1, 2011 "0.20 per H.C.F. Effective Jan 1, 2012 "0.21 per H.C.F. Effective Jan 1, 2013 25 25.03 I.1.(b) Additional Water Charges for Services in Improvement District 10 Per unit charge except for the first 5 units of residential 0.27 per H.C.F. Effective Jan 1st 2011-2018 25 25.03 I.1.(c) Additional Water Charges for Services in La Presa Per unit charge except for the first 5 units of residential 0.08 per H.C.F. Effective Jan 1st 2011-2013 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 28 28.01 B.1.Capacity Fees and Zone Charge District-wide Capacity Fee 3/4" $7,900.00 1" $19,750.00 1-1/2" $39,500.00 2" $63,200.00 3" $126,400.00 4 $197,500.00 6" $395,000.00 8" $632,000.00 10" $908,500.00 - I.D.'s 1,2,3,5,7,9,10,19,20,22,22/27 (excluding Triad), and 25 (only I.D.'s 5,7,10,19,22, and 22/27 require reclaimed irrigation meters). Appendix A 6 of 11 EXHIBIT IV Section #Code #Fee Description Meter Size Charges 28 28.01 B.1. - 22/27 TRIAD 3/4" $5,912.00 1" $14,780.00 1 -1/2" $29,560.00 2" $47,296.00 3" $94,592.00 4 $147,800.00 6" $295,600.00 8" $472,960.00 10" $679,880.00 28 28.01 B.2.New Water Supply Fee 3/4" $910.00 - All IDs including Triad 1" $2,275.00 1-1/2" $4,550.00 2" $7,280.00 3" $14,560.00 4" $22,750.00 6" $45,500.00 8" $72,800.00 10" $104,650.00 28 28.02 Installation Charges for Water Meter and Water Service Laterals Meter Size Meter Cost Installation Total Meter Box/Vault (if Needed) Potable (Non-Irrigation)3/4" x 7.5"$202.30 $96.00 $298.30 $81.50 3/4" x 9"$215.39 $96.00 $311.39 $81.50 1"$261.05 $96.00 $357.05 $81.50 1.5"$424.31 $96.00 $520.31 $184.76 2"$607.99 $96.00 $703.99 $184.76 3"$1,894.74 $578.00 $2,472.74 $3,295.81 4"$3,290.86 $578.00 $3,868.86 $3,295.81 6"$5,684.21 $913.00 $6,597.21 $3,295.81 8"$7,102.00 $1,400.00 $8,502.00 $4,728.07 10"$10,214.00 $1,400.00 $11,614.00 $4,728.07 Potable/Recycled Irrigation 3/4" x 7.5"$202.30 $96.00 $298.30 $207.70 3/4" x 9"$215.39 $96.00 $311.39 $207.70 1"$261.05 $96.00 $357.05 $207.70 1.5"$424.31 $96.00 $520.31 $207.70 2"$607.99 $96.00 $703.99 $207.70 3"$1,311.35 $578.00 $1,889.35 $3,295.81 4"$2,553.00 $578.00 $3,131.00 $3,295.81 Appendix A 7 of 11 EXHIBIT IV Section #Code #Fee Description Meter Size Charges Potable/Recycled Irrigation (continued)6"$4,596.23 $913.00 $5,509.23 $3,295.81 8"$6,123.00 $1,400.00 $7,523.00 $4,728.07 10"$8,689.00 $1,400.00 $10,089.00 $4,728.07 Combined Fire and Domestic 4"$7,829.25 $578.00 $8,407.25 $3,295.81 6"$10,420.05 $913.00 $11,333.05 $3,295.81 8"$15,150.00 $1,400.00 $16,550.00 $4,728.07 10"$20,674.74 $1,400.00 $22,074.74 $4,728.07 31 31.02 D.1. Requirement of Temporary Meter for Service minimum/per day $25.00 31 31.03 A.1.Requirement of Deposit for Temporary Meters 2"$2,046.00 4"$1,986.00 6"$2,465.00 - 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 $128.00 31 31.03 A.5. Temporary Meter Move Fee (includes backflow certification)3/4" - 2"$64.00 3" and larger No backflow test $64.00 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 $10.00 Appendix A 8 of 11 EXHIBIT IV Section #Code #Fee Description Meter Size Charges 34 34.02 G.3.(a)Meter "Turn-On" Charge During regular business hours $35.00 34 34.02 G.3.(b)Meter "Turn-On" Charge After regular business hours $65.00 53 53.04 C.1.Sewer Connection Fee - Russell Square $7,500.00 53 53.04 C.2.Monthly Sewer Service Charge - Russell Square $200.00 53 53.11 A.Set-up Fees for Accounts $10.00 53 53.11 B.2.Residential Sewer Charges (2) Rate multiplied by winter average units $1.77 53 53.11 B.3.Residential Sewer Charges Base Fee (2)5/8" & 3/4"$12.26 1" & larger $17.88 53 53.11 B.4. Monthly Residential Sewer Rate Without Consumption History (2)5/8" & 3/4"$34.83 1" & larger $40.45 53 53.11.C.4.Winter Averaging - Sewer - Single Residential 15 units - 15% discount = 12.75 units - Multi-Residential 6 units - 15% discount = 5.1 units 53 53.11 D.2.Multi-Residential Rate Charges - Sewer (2) Rate multiplied by winter average units $1.77 53 53.11 E.6.Public Schools Sewer Rate (2) Per ASU (Based on Student Count)$41.75 53 53.11 F.1. Monthly Service Charge for Commercial and Institutional Sewer (2)Per ASU $41.75 (2) Sewer rates on all billing cycles beginning in calendar year 2012 Appendix A 9 of 11 EXHIBIT IV Section #Code #Fee Description Meter Size Charges 60 60.03 Issuance of Availability Letters for Water and/or Sewer Service $75.00 72 72.04 A.1. - To Pull and Reset Meter 3/4" - 2"$170.00 - Broken Curbstop or Tabs 3/4" - 1"$192.00 - If Customer uses Jumper 3/4" - 1"$149.00 - Broken Lock/Locking Device 3/4" - 1"$56.00 - Cap Lock (Welded)3/4" - 1"$158.00 - Broken Curbstop or Tabs 1.5" - 2"$265.00 - To Pull and Reset Meter 3"$351.00 - To Pull and Reset Meter 4"$454.00 - To Pull and Reset Meter 6"$454.00 - To Pull and Reset Meter 8"$600.00 - To Pull and Reset Meter 10"$600.00 72 72.05 D. A. - First Violation $100.00 - Second Violations $200.00 $500.00 Type II Fine $5,000.00 Type III Fine $500.00 Type IV Fine $500.00 Locking or Removing Damaged or Tampered Meters Type I Fine - Third or each additional violation of that same ordinance or requirement within a twelve-month period 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. (2) Sewer rates on all billing cycles beginning in calendar year 2012 Fine up to amount specified per each day the violation is identified or continues. Appendix A 10 of 11 EXHIBIT IV 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 $20.00/year or $0.50/meeting Yearly Subscription Service for Board Packet and Ratified Minutes $100.00/year for first copy and $200.00/year for each copy thereafter 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 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 all I.D.s & Outside an I.D. Per acre in I.D. 1, 5, & Outside an I.D. Appendix A 11 of 11 EXHIBIT IV EXHIBIT V Formatted: Right SECTION 27 REQUIREMENTS AND LIMITATIONS FOR OBTAINING WATER SERVICE 27.01 REQUIREMENT FOR WATER/SEWER PERMIT AND PAYMENT OF FEES, CHARGES, AND DEPOSITS A. Requirement for Water/Sewer Permits. Water meters shall not be installed nor water service furnished until an application, in the form of a water/sewer permit, has been executed by the customer at the District office. B. Requirement for Payment of Fees, Charges and Deposits. Payment of all required fees, charges and depos- its shall be made by the customer at the time the water meter is purchased. A customer requesting water service shall pay the fees, charges, and deposits as set forth in Section 28 of this Code. C. Requirement for a Building Permit. A customer requesting permanent water service shall be required to present a valid building permit for the property issued by the appropriate governmental agency, except that a building permit is not required by a customer requesting permanent water service to: 1) install and maintain landscaping prior to the construction of a building; 2) perform mass grading operations; or 3) to satisfy conditions imposed by other government agencies, including a single meter for grading for four lots or less which are part of the same parcel map. Government agencies shall be exempt from the requirement of presenting a valid building permit. D. Requirement for a Service Lateral. The customer requesting water service shall either have an existing service lateral or purchase a new lateral installation at the time of the meter purchase. E. Commercial Parcels – 5,000 square feet or Larger Irrigated Landscape. When a customer requests water service on a parcel of land with irrigated landscape equal to 5,000 square feet or more, a separate meter will be required for irrigation purposes on the site. F. ReclaimedRecycled Water Service Areas. In areas designated as reclaimedrecycled water service areas, the customer shall be required to install a separate reclaimedrecycled water service lateral and meter to supply irrigation to the parcel. G. Second Meter For Indoor Use. Any customer who obtained a single meter prior to October 17, 1990, a second meter for indoor use may be obtained, without paying water capacity fees, San Diego County Water Authority fees and applicable zone charges on the second meter, if the following criteria are met: Formatted: Different first page header 27-2 1. The additional meter is solely for the purpose of isolating current domestic (indoor) water use from that used for outdoor landscaping. The additional meter shall be on a separate lateral. 2. All costs of on-site plumbing changes, including approved back-flow prevention devices, will be the responsibility of the customer. 3. The customer acknowledges that adding a second meter will result in a second water bill and associated monthly system fee. 4. The customer will be required to pay all fees and charges prior to meter installation. 27.02 SIZE OF WATER METER A water meter shall be sized to ensure that the maximum demand (in gallons per minute) will not exceed 80% of the manufacturer's recommended maximum flow rate, as shown in Section 27.03. In no case shall the water meter size be less than ¾-inch. The size of the water meter and service lateral required for water service shall be determined by the General Manager as follows: A. Detached Single-Family Residential Dwelling Unit. The customer may submit calculated maximum demand (in gallons per minute), provided that maximum demand must be no more than twenty four (24) gallons per minute for a ¾-inch meter. B. Apartments, Condominiums, Mobile Home Parks and other Multiple Family Residential Dwelling Units with Individual Meters. The calculated maximum demand shall be per Section 27.02A. C. Business, Commercial, Industrial, Apartments, Condominiums, Mobile Home Parks and other Multiple-Family Residential Dwelling Units. The customer shall submit building plans signed by a licensed building architect. The plans shall list the number of fixture units, the parcel size (in acres), and the calculated maximum demand (in gallons per minute) to be placed on each water meter. D. Irrigation. The customer shall submit irrigation plans signed by a licensed landscape architect. The plans shall indicate the calculated maximum demand (in gallons per minute) to be placed on each water meter and the total area to be irrigated (in square feet). The plans must also be in compliance with the requirements of Section 27.05. 27-3 E. Other. In the case of other types of service not included above, the customer shall submit information as requested by the General Manager. Any customer may request and purchase a separate meter to isolate landscaping from indoor use. F. Requirement for Multiple Meters. The General Manager may require multiple meters when it is in the best interest of the District. G. Phased Projects. Should the developer choose to phase a project and determines the use of a smaller meter is practical within the initial phase, they must provide fixture unit calculations for review and approval by the District for each phase of development including the build- out of the project. The developer shall provide a letter to the District stating they acknowledge the initial meter is temporary and that they understand that they must purchase a larger meter, paying all applicable meter upsize fees when they connect future phases to this system. At Plan Review and Submittal the developer shall show fixture count and meter size for each of the phases to final build- out. 27.03 MANUFACTURERS RECOMMENDED MAXIMUM FLOW RATE FOR DISTRICT METERS Customers are cautioned to control the rates of flow of water through District meters. Operation of a meter at flows in excess of the manufacturer's recommendations will cause severe damage to operating parts. Rated capacities for meters used in this District are as follows: ORDINARY METERS Meter Size Manufacturer's Recommended In Inches Maximum Rate in U. S. Gallons per Minute 3/4 30 1 50 1-1/2 100 2 160 3 530500 4 13501000 6 27002000 8 35003400 10 65005000 COMPOUND METERS (Multi-family, Apartments etc.) 2 285 3 480 Formatted: Font: Italic, Strikethrough, Doublestrikethrough 27-4 4 750 6 1700 27.04 RESALE OR DISTRIBUTION OF WATER No customer may resell or redistribute any portion of the water furnished by the District except as provided below: A. Use of Submeters for Resale or Redistribution of water. Owners or operators of mobile home parks, apartments, condominium complexes, industrial complexes and land used for agricultural purposes may resell water furnished by the District through the use of a submetering system under the following conditions: (1) owners and operators shall comply with State law (California Code of Regulations Section 4090) prohibiting any surcharge on the water rate; (2) the water system on the private property side of the master meter, including the submeters, shall be solely the responsibility of the owner or operator; and (3) the owner or operator shall clearly delineate on the bill that any cost associated with the submeters is a cost imposed by the property owner or operator and not by Otay Water District. B. Ratio Utility Billing Systems. To the extent permitted under law, owners or operators of multi-unit structures where submeters have not been installed may elect to implement a Ratio Utility Billing System (RUBS) or alternative billing system to determine proportionate shares of water charges and bill tenants accordingly. 27.05 CONSERVATION AND LOCAL SUPPLY USE REQUIREMENTS The requirements below apply to all new residential and commercial developments or redevelopments. The landscape requirements also apply to any re-landscaping that is subject to review by the District, the County of San Diego, City of Chula Vista or the City of San Diego. 1. Indoor Fixtures and Appliances. All water fixtures and appliances installed, including the ones in the following list, must be high-efficiency: • Toilets and urinals • Faucets • Showerheads • Clothes Washers • Dishwashers 27-5 “High-efficiency” means fixtures and appliances that comply with the most efficient specifications under the EPA WaterSense® or Energy Star programs,1 as in effect at the time installation commences. 2. Landscape requirements. Only “Smart” irrigation controllers2 may be installed and only low-water use plants may be used in non recreational landscapes. All landscapes must also be designed and managed consistent with requirements of the local agency within which the property is located, be it the County of San Diego, the City of Chula Vista or the City of San Diego. a. Installed smart irrigation controllers shall be properly programmed/scheduled according to the manufacturer’s instructions and/or site specific conditions based on soil type, plant type, irrigation type, weather and/or reference evapotranspiration data. b. Two irrigation schedules shall be prepared, one for the initial establishment period of three months or until summer hardened, and one for the established landscape, which incorporates the specific water needs of the plants and turf throughout the calendar year. The schedules shall be continuously available on site to those responsible for the landscape maintenance and posted at the smart controller. c. Any Covenants, Conditions, and Restrictions (CC&Rs) pertaining to a new subdivision/development shall not limit or prohibit the use and maintenance of low water use plant materials and the use of artificial turf, and shall require property owners to design and maintain their landscapes consistent with the applicable City and County’s regulations. d. Dedicated irrigation meters shall be installed in: • All parks and common areas with 5,000 square feet or more of irrigated landscape 1 Certified EPA WaterSense® products, and Energy Star products, are at least 20% more efficient than the applicable federal standards. 2 Smart Irrigation Controller means a controller that uses real time, soil moisture or weather data to automatically adjust irrigation run- times. Furthermore, to qualify as a Smart Irrigation Controller, the device must be certified by the Irrigation Association and/or the EPA WaterSense® program. 27-6 • Commercial sites with 5,000 square feet or more of irrigated landscape e. In compliance with Section 23.03 of this Code of Ordinance, pressure regulators must be installed when and where appropriate to maximize the life expectancy and efficiency of the irrigation system. 5. New commercial developments must install separate, dual-distribution systems for potable and recycled water. 6. The requirements of this Section shall not be interpreted in any way to limit the owner’s obligation to comply with any other applicable federal, state, or local laws or regulations. EXHIBIT VI SECTION 27 REQUIREMENTS AND LIMITATIONS FOR OBTAINING WATER SERVICE 27.01 REQUIREMENT FOR WATER/SEWER PERMIT AND PAYMENT OF FEES, CHARGES, AND DEPOSITS A. Requirement for Water/Sewer Permits. Water meters shall not be installed nor water service furnished until an application, in the form of a water/sewer permit, has been executed by the customer at the District office. B. Requirement for Payment of Fees, Charges and Deposits. Payment of all required fees, charges and depos- its shall be made by the customer at the time the water meter is purchased. A customer requesting water service shall pay the fees, charges, and deposits as set forth in Section 28 of this Code. C. Requirement for a Building Permit. A customer requesting permanent water service shall be required to present a valid building permit for the property issued by the appropriate governmental agency, except that a building permit is not required by a customer requesting permanent water service to: 1) install and maintain landscaping prior to the construction of a building; 2) perform mass grading operations; or 3) to satisfy conditions imposed by other government agencies, including a single meter for grading for four lots or less which are part of the same parcel map. Government agencies shall be exempt from the requirement of presenting a valid building permit. D. Requirement for a Service Lateral. The customer requesting water service shall either have an existing service lateral or purchase a new lateral installation at the time of the meter purchase. E. Commercial Parcels – 5,000 square feet or Larger Irrigated Landscape. When a customer requests water service on a parcel of land with irrigated landscape equal to 5,000 square feet or more, a separate meter will be required for irrigation purposes on the site. F. Recycled Water Service Areas. In areas designated as recycled water service areas, the customer shall be required to install a separate recycled water service lateral and meter to supply irrigation to the parcel. G. Second Meter for Indoor Use. Any customer who obtained a single meter prior to October 17, 1990, a second meter for indoor use may be obtained, without paying water capacity fees, San Diego County Water Authority fees and applicable zone charges on the second meter, if the following criteria are met: 27-2 1. The additional meter is solely for the purpose of isolating current domestic (indoor) water use from that used for outdoor landscaping. The additional meter shall be on a separate lateral. 2. All costs of on-site plumbing changes, including approved back-flow prevention devices, will be the responsibility of the customer. 3. The customer acknowledges that adding a second meter will result in a second water bill and associated monthly system fee. 4. The customer will be required to pay all fees and charges prior to meter installation. 27.02 SIZE OF WATER METER A water meter shall be sized to ensure that the maximum demand (in gallons per minute) will not exceed 80% of the manufacturer's recommended maximum flow rate, as shown in Section 27.03. In no case shall the water meter size be less than ¾-inch. The size of the water meter and service lateral required for water service shall be determined by the General Manager as follows: A. Detached Single-Family Residential Dwelling Unit. The customer may submit calculated maximum demand (in gallons per minute), provided that maximum demand must be no more than twenty four (24) gallons per minute for a ¾- inch meter. B. Apartments, Condominiums, Mobile Home Parks and other Multiple Family Residential Dwelling Units with Individual Meters. The calculated maximum demand shall be per Section 27.02A. C. Business, Commercial, Industrial, Apartments, Condominiums, Mobile Home Parks and other Multiple-Family Residential Dwelling Units. The customer shall submit building plans signed by a licensed building architect. The plans shall list the number of fixture units, the parcel size (in acres), and the calculated maximum demand (in gallons per minute) to be placed on each water meter. D. Irrigation. The customer shall submit irrigation plans signed by a licensed landscape architect. The plans shall indicate the calculated maximum demand (in gallons per minute) to be placed on each water meter and the total area to be irrigated (in square feet). The plans must also be in compliance with the requirements of Section 27.05. E. Other. In the case of other types of service not included above, the customer shall submit information as 27-3 requested by the General Manager. Any customer may request and purchase a separate meter to isolate landscaping from indoor use. F. Requirement for Multiple Meters. The General Manager may require multiple meters when it is in the best interest of the District. G. Phased Projects. Should the developer choose to phase a multi-family project and determines the use of a smaller meter is practical within the initial phase, they must provide fixture unit calculations for review and approval by the District for each phase of development including the build-out of the project. The developer shall provide a letter to the District stating they acknowledge the initial meter is temporary and that they understand that they must purchase a larger meter, paying all applicable meter upsize fees when they connect future phases to this system. At Plan Review and Submittal the developer shall show fixture count and meter size for each of the phases to final build-out. 27.03 MANUFACTURERS RECOMMENDED MAXIMUM FLOW RATE FOR DISTRICT METERS Customers are cautioned to control the rates of flow of water through District meters. Operation of a meter at flows in excess of the manufacturer's recommendations will cause severe damage to operating parts. Rated capacities for meters used in this District are as follows: ORDINARY METERS Meter Size Manufacturer's Recommended In Inches Maximum Rate in U. S. Gallons per Minute 3/4 30 1 50 1-1/2 100 2 160 3 500 4 1000 6 2000 8 3400 10 5000 27-4 27.04 RESALE OR DISTRIBUTION OF WATER No customer may resell or redistribute any portion of the water furnished by the District except as provided below: A. Use of Submeters for Resale or Redistribution of water. Owners or operators of mobile home parks, apartments, condominium complexes, industrial complexes and land used for agricultural purposes may resell water furnished by the District through the use of a submetering system under the following conditions: (1) owners and operators shall comply with State law (California Code of Regulations Section 4090) prohibiting any surcharge on the water rate; (2) the water system on the private property side of the master meter, including the submeters, shall be solely the responsibility of the owner or operator; and (3) the owner or operator shall clearly delineate on the bill that any cost associated with the submeters is a cost imposed by the property owner or operator and not by Otay Water District. B. Ratio Utility Billing Systems. To the extent permitted under law, owners or operators of multi-unit structures where submeters have not been installed may elect to implement a Ratio Utility Billing System (RUBS) or alternative billing system to determine proportionate shares of water charges and bill tenants accordingly. 27.05 CONSERVATION AND LOCAL SUPPLY USE REQUIREMENTS The requirements below apply to all new residential and commercial developments or redevelopments. The landscape requirements also apply to any re-landscaping that is subject to review by the District, the County of San Diego, City of Chula Vista or the City of San Diego. 1. Indoor Fixtures and Appliances. All water fixtures and appliances installed, including the ones in the following list, must be high-efficiency: • Toilets and urinals • Faucets • Showerheads • Clothes Washers • Dishwashers “High-efficiency” means fixtures and appliances that comply with the most efficient specifications under the EPA 27-5 WaterSense® or Energy Star programs,1 as in effect at the time installation commences. 2. Landscape requirements. Only “Smart” irrigation controllers2 may be installed and only low-water use plants may be used in non recreational landscapes. All landscapes must also be designed and managed consistent with requirements of the local agency within which the property is located, be it the County of San Diego, the City of Chula Vista or the City of San Diego. a. Installed smart irrigation controllers shall be properly programmed/scheduled according to the manufacturer’s instructions and/or site specific conditions based on soil type, plant type, irrigation type, weather and/or reference evapotranspiration data. b. Two irrigation schedules shall be prepared, one for the initial establishment period of three months or until summer hardened, and one for the established landscape, which incorporates the specific water needs of the plants and turf throughout the calendar year. The schedules shall be continuously available on site to those responsible for the landscape maintenance and posted at the smart controller. c. Any Covenants, Conditions, and Restrictions (CC&Rs) pertaining to a new subdivision/development shall not limit or prohibit the use and maintenance of low water use plant materials and the use of artificial turf, and shall require property owners to design and maintain their landscapes consistent with the applicable City and County’s regulations. d. Dedicated irrigation meters shall be installed in: • All parks and common areas with 5,000 square feet or more of irrigated landscape • Commercial sites with 5,000 square feet or more of irrigated landscape 1 Certified EPA WaterSense® products, and Energy Star products, are at least 20% more efficient than the applicable federal standards. 2 Smart Irrigation Controller means a controller that uses real time, soil moisture or weather data to automatically adjust irrigation run- times. Furthermore, to qualify as a Smart Irrigation Controller, the device must be certified by the Irrigation Association and/or the EPA WaterSense® program. 27-6 e. In compliance with Section 23.03 of this Code of Ordinance, pressure regulators must be installed when and where appropriate to maximize the life expectancy and efficiency of the irrigation system. 5. New commercial developments must install separate, dual-distribution systems for potable and recycled water. 6. The requirements of this Section shall not be interpreted in any way to limit the owner’s obligation to comply with any other applicable federal, state, or local laws or regulations. STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2012 SUBMITTED BY: Daniel Kay Associate Civil Engineer Dan Martin Engineering Manager Ron Ripperger Engineering Manager PROJECT: R2096- 001103 DIV. NO. 3 APPROVED BY: Rod Posada, Chief of Engineering German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Change Order No. 2 to the Contract with NEWest Construction, Inc. for the Ralph W. Chapman Water Reclamation Facility Upgrades Project GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) approve Change Order No. 2 to the existing contract with NEWest Construction, Inc. (NEWest) for the Ralph W. Chapman Water Reclamation Facility (RWCWRF) Upgrade Project, in an amount not-to- exceed $87 (see Exhibit A for Project location). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to execute Change Order No. 2 in an amount not-to-exceed $87 to the contract with NEWest for the RWCWRF Upgrade Project. AGENDA ITEM 6b 2 ANALYSIS: At the July 15, 2011 Board Meeting the Board awarded a construction contract to NEWest Construction for the RWCWRF Upgrades Project. The RWCWRF Upgrades Project consists of several main components. The first is the modification of the treatment process at the facility to improve the reduction of total nitrogen in the treatment plant effluent. The second component is the upgrade of the facility’s blowers and aeration piping. The third component is the enhancement of the level of automation at the facility. The fourth and final component of the Project is the replacement of the damaged filter backwash storage reservoir floating cover at the facility. At the March 7, 2012 Board Meeting, the Board approved Change Order No. 1 (Exhibit B) to the contract for a net increase of $17,896. Change Order No. 2 (Exhibit C) includes a variety of items including relocation of the heat exchangers, repairing the leaks on the existing air piping, and credits for unused allowances. Staff and the District’s construction manager, SAIC, reviewed, negotiated, and agreed to the costs included in this Change Order pending Board approval. The following is a table summarizing the value of each item. The “General Location” (Exhibit A) column depicts the general location for each item as shown in Exhibit A: Item Description General Location (Exhibit A) Amount 1 Heat Exchangers Relocation 2 $17,265 2 Relocate Floating Mixers for Better Maintenance 4 & 5 $6,832 3 Repair Leaking Gaskets on Existing Air Piping 4 & 5 $42,007 4 Cable Substitution 2 <$24,500> 5 Unused Allowance for Bid Item 17, Unknown Utilities N/A <$601> 6 Unused Allowance for Bid Item 18, Agency Permit Fees N/A <$12,438> 7 Increase Allowance for Bid Item 19, Patching Aeration Basin N/A $5,194 8 Unused Allowance for Bid Item 20, Electrical and Controls N/A <$31,785> 9 Unused Allowance for Bid Item 22, Disposal of Regulated Waste N/A <$5,000> 10 Increase Allowance for Bid Item 23, Misc. Structural Repairs N/A $3,113 TOTAL $87 Change Order No. 2 is a net increase to NEWests’ contract of $87. 3 NEWest is approximately 95% complete with the Project. There are punch list items, clean up, and programming left to complete, but NEWest’s contract is expected to be substantially complete in late July. This change order will reconcile the contract with NEWest and will be the closeout change order for the Project. The treatment plant is on line with staff adjusting the processes to operate the plant as designed. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The total budget for CIP R2096, as approved in the FY 2013 budget, is $4,995,000. Total expenditures, plus outstanding commitments and forecast, are $4,989,582. Based on a review of the financial budget, the Project Manager anticipates that the budget is sufficient to support the Project. See Attachment B for budget detail. Finance has determined that 100% of the funding is available from the Replacement Fund for CIP R2096. STRATEGIC GOAL: This Project supports the District’s Mission statement, “To provide customers with the best quality water, wastewater, and recycled water service in a professional, effective, and efficient manner.” LEGAL IMPACT: None. DK/RR:jf P:\WORKING\CIP R2096 - RWCWRF Upgrade Project\Staff Reports\NEWest Change Order No. 2 Staff Report\BD 08-01-2012, Change Order, No. 2 to NEWest Construction, (DK-RR).docx Attachments: Attachment A – Committee Action Attachment B – Budget Detail Exhibit A – Location Map Exhibit B – Change Order No. 1 Exhibit C – Change Order No. 2 ATTACHMENT A SUBJECT/PROJECT: R2096-001103 Change Order No. 2 to the Contract with NEWest Construction, Inc. for the Ralph W. Chapman Water Reclamation Facility Upgrades Project COMMITTEE ACTION: The Engineering, Operations, and Water Resources reviewed this item at a meeting held on July 17, 2012 and the following comments were made:  Staff requested that the Board approve Change Order No. 2 to the existing contract with NEWest Construction, Inc. (NEWest) for the Ralph W. Chapman Water Reclamation Facility (RWCWRF) Upgrade Project, in an amount not-to-exceed $87.  Staff stated that at the July 15, 2011 Board meeting, the Board awarded a contract to NEWest in the amount of $3,499,000 for the Upgrade Project that consisted of several components to upgrade and increase efficiency of the treatment processes at the plant. Staff noted the Project’s four (4) main components which are provided on page 2 of the staff report and indicated that the treatment plant is currently on line with staff adjusting the processes to operate the plant as designed.  It was noted that Change Order No. 1 was approved at the March 7, 2012 Board meeting for a net increase of $17,896.  Staff indicated that Change Order No. 2 consists of ten (10) items including relocation of heat exchangers for the blower room, repairing leaks on the existing air piping, and credits for unused allowances. The table on page 2 of the staff report summarizes the items and Exhibit A indicates each of the items’ general location.  It was noted that in total, Change Order No. 2 represents a net $87 increase to NEWest’s contract. Staff noted that this change order will reconcile the contract and be the closeout change order for the Project.  The Committee commended staff and stated that it was very impressive that the large project had only two (2) change orders and came in on budget.  In response to the Committee’s inquiry regarding Item 4 in Change Order No. 2, Cable Substitution, staff indicated that the Project’s original contract specified for the use of a belden cable which is a proprietary communications cable that meets high signal tolerances over long distances, but is costly. Staff indicated that a cable substitution was included in the change order to switch from belden cables to the use of lake cables that cost less and would satisfy the needs of the project.  The Committee inquired about Item 3 in Change Order No. 2, Repair Leaking Gaskets on Existing Air Piping. Staff indicated that the District installed an all new underground aeration piping system as part of the project and when it was tested, staff recognized that the above ground piping had significant leaks especially in the gasket and valve areas. It is believed that the leaks were caused by the pressure created in the new aeration system by the new blowers. NEWest rectified the problem by replacing joints that would be able to hold pressure for the new aeration system. Staff stated that the cost of Item 3 was based on materials and the number of laborers and hours that it would take to complete the work.  During the discussion, the Committee asked staff to report on how the Otay Water District’s incidence of project contract change orders compares with the industry. Staff agreed to research the item and report back to the Board. The following is provided in response to the Committee’s inquiry regarding the industry standard for change orders: At the national level articles published in 2002 by the American Society of Civil Engineers (ASCE) titled “Benchmarking in Construction Industry” and by McGraw-Hill titled “Mitigation of Risk in Construction: Strategies for Reducing Risk and Maximizing Profitability” surveyed the infrastructure industry regarding change orders for infrastructure projects. In these articles, they respectively reported an average range of 9 to 11 percent for change orders on projects. At the water industry level, the American Water Works Association (AWWA), Pacific North West Section, presented information that was more specific towards the projects that the Otay Water District implements. In May 2008, the AWWA presented anticipated change order incident rates for the construction of above ground water facilities such as pump stations, reservoirs, and treatment plants and below ground water facilities such as pipelines. The following table compares the AWWA reported range of change order incidence in these two categories to the Otay Water District’s change order incident rate in the same categories over the last three fiscal years (FY 2010 to FY 2012): Description AWWA Change Order Incident Rate Otay Water District Change Order Incident Rate Above Ground Water Facilities 1.5% to 5% 1.4% Below Ground Water Facilities 5% to 10% 1.9% At the local level, staff worked with the local water agencies to determine their overall incidence of change orders over the last three fiscal years. The change order incidence reported by the responding agencies fell in a range of 4 to 5 percent over this time period. The District’s overall change order incidence rate, excluding allowances over this same time period, was 1.7%. The District’s change order incident rate is well within the industry standard for all the categories listed above as well as the local water agencies that were surveyed. Following the discussion, the EO&WR Committee supported staffs’ recommendation and presentation to the full board as a consent item. ATTACHMENT B SUBJECT/PROJECT: R2096-001103 Change Order No. 2 to the Contract with NEWest Construction, Inc. for the Ralph W. Chapman Water Reclamation Facility Upgrades Project Date Updated: July 02, 2012 Budget 4,995,000 Planning 001101 000000 Addl subprojects 000000 x02102 x30136 Labor 76,056 76,056 - 76,056 Professional Legal Fees 4,916 4,916 - 4,916 STUTZ ARTIANO SHINOFF Professional Legal Fees 603 603 - 603 GARCIA CALDERON & RUIZ LLP Regulatory Agency Fees 50 50 - 50 PETTY CASH CUSTODIAN Consultant Contracts 325,846 325,846 - 325,846 MWH AMERICAS INC Consultant Contracts 12,775 12,775 - 12,775 MWH CONSTRUCTORS INC Consultant Contracts 678 678 - 678 US BANK CORPORATE PAYMENT Service Contracts 10,860 10,860 - 10,860 E S BABCOCK & SONS INC Service Contracts 250 250 - 250 UNION TRIBUNE PUBLISHING CO Service Contracts 68 68 - 68 SAN DIEGO DAILY TRANSCRIPT Infrastructure Equipment 2,984 2,984 - 2,984 WALTERS WHOLESALE ELECTRIC CO Total Planning 435,088 435,088 - 435,088 Design 001102 Labor 101,398 101,398 - 101,398 Mileage Reimbursement 16 16 - 16 PETTY CASH CUSTODIAN Consultant Contracts 267,163 246,688 20,475 267,163 MWH AMERICAS INC Consultant Contracts 3,500 3,500 - 3,500 MWH CONSTRUCTORS INC Consultant Contracts 8,470 8,470 - 8,470 MTGL INC Consultant Contracts 4,209 4,209 - 4,209 WRA & ASSOCIATES INC Consultant Contracts 580 580 - 580 VALLEY CONSTRUCTION MANAGEMENT Consultant Contracts 499 499 - 499 SCHIFF ASSOCIATES Service Contracts 4,395 4,395 - 4,395 MAYER REPROGRAPHICS INC Service Contracts 2,400 2,400 - 2,400 PHOTO GEODETIC CORPORATION Service Contracts 708 708 - 708 SAN DIEGO UNION-TRIBUNE LLC Service Contracts 227 227 - 227 SAN DIEGO DAILY TRANSCRIPT Infrastructure Equipment 331 - 331 331 MATERIALS Total Design 393,564 373,089 20,475 393,895 Vendor/Comments r2096 - RWCWRF - Upgrades and Modifications Committed Expenditures Outstanding Commitment & Forecast Projected Final Cost Construction 001103 Labor 91,253 91,253 50,000 141,253 Rents and Leases 5,557 5,557 - 5,557 EQUIPCO SALES & SERVICE Professional legal fees 395 395 - 395 STUTZ ARTIANO SHINOFF Consultant Contracts 359,013 355,725 3,288 359,013 SAIC ENERGY ENVIRONMENT Consultant Contracts 4,060 4,060 - 4,060 VALLEY CONSTRUCTION MANAGEMENT Construction Contracts 3,149,100 2,970,353 178,747 3,149,100 NEWEST CONSTRUCTION Construction Contracts 17,896 17,896 - 17,896 CO#1 Construction Contracts 87 87 - 87 CO #2 Construction Contracts 349,900 330,039 19,861 349,900 CALIFORNIA BANK & TRUST Service Contracts 13,039 13,039 - 13,039 MWH AMERICAS, PENHALL, SOUTHERN CAL TELECOM Service Contracts 4,272 4,272 - 4,272 BARRETT ENGINEERED PUMPS Service Contracts 230 230 - 230 RW LITTLE CO INC Service Contracts 10,620 10,620 - 10,620 DIAMOND ENVIRONMENTAL SERVICES Service Contracts 11,826 - 11,826 11,826 TECHKNOWSION INC Infrastructure Equipment 21,480 21,480 - 21,480 D & H WATER SYSTEMS INC Infrastructure Equipment 13,548 13,548 - 13,548 FERGUSON WATERWORKS Infrastructure Equipment 10,444 10,444 - 10,444 FLOMAX PRODUCTS INC Infrastructure Equipment 8,586 8,586 - 8,586 MOORE INDUSTRIES-INTRNTL INC Infrastructure Equipment 7,907 7,907 - 7,907 MOVE EXP FR S2018 TO R2096 Infrastructure Equipment 3,863 3,863 - 3,863 GRAINGER INC Infrastructure Equipment 3,441 3,441 - 3,441 WALTERS WHOLESALE ELECTRIC CO Infrastructure Equipment 3,705 3,393 311 3,705 KELLER AMERICA INC Infrastructure Equipment 3,150 3,150 - 3,150 MCCROMETER INC Infrastructure Equipment 1,834 1,834 - 1,834 F & L INDUSTRIAL SOLUTIONS INC Infrastructure Equipment 1,681 1,681 - 1,681 MCMASTER-CARR SUPPLY CO Infrastructure Equipment 1,300 1,300 - 1,300 RW LITTLE CO INC Infrastructure Equipment 842 842 - 842 ONESOURCE DISTRIBUTORS LLC Infrastructure Equipment 626 626 - 626 PACIFIC PIPELINE SUPPLY Infrastructure Equipment 434 434 - 434 EQUIPCO SALES & SERVICE Infrastructure Equipment 225 225 - 225 NEWARK Infrastructure Equipment 566 566 - 566 HD SUPPLY WATERWORKS LTD Infrastructure Equipment 179 179 - 179 UNITED RENTALS NORTHWEST INC Infrastructure Equipment 2,860 - 2,860 2,860 PROCESS MEASUREMENT Inventory 5,575 5,575 - 5,575 INVENTORY Contracted Services 1,105 1,105 - 1,105 RW LITTLE CO INC Total Construction 4,110,600 3,893,707 266,893 4,160,600 Grand Total 4,939,582 4,701,884 287,699 4,989,582 EXHIBIT B EXHIBIT C STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2012 SUBMITTED BY: Jose Martinez, Utility Services Manager PROJECT: Various DIV. NO. ALL APPROVED BY: Pedro Porras, Chief of Water Operations German Alvarez, Asst. General Manager Mark Watton, General Manager SUBJECT: Approval to Purchase Replacement Backhoe GENERAL MANAGER’S RECOMMENDATION: That the Board authorize the General Manager to issue a purchase order to RDO Equipment Company Inc. in the amount of $102,515.50 for the purchase of one (1) John Deere Backhoe. COMMITTEE ACTION: See Attachment “A”. PURPOSE: To obtain Board authorization to purchase a John Deere Backhoe. ANALYSIS: Included in the approved FY 2013 budget is one (1) new Backhoe. The Backhoe is a replacement scheduled to be utilized by the Utility Maintenance Staff. Currently, the District’s essential equipment includes six (6) backhoes, the oldest being unit #1565, a model year 1987 680 Case Backhoe. Due to the age of this machine this unit is to be replaced with a new APCD emissions compliant machine. Funding for this purchase has been included in the CIP P2366. AGENDA ITEM 6c 2 Based on system operation evaluations of work flow by the Construction/Maintenance supervision and management, it is recommended that 1 new John Deer model 330 Backhoe be purchased and the older Case Backhoe be declared surplus. It should be noted that the existing backhoe is 25 years old. This replacement will noticeably reduce the District’s diesel emissions output and will be in compliance with APCD regulations. Purchase price includes the John Deere Backhoe ($81,389.00), an Okada Breaker ($13,753.00) and applicable taxes ($7,373.51) for a total purchase price of $102,515.51. In accordance with District policy, bids were solicited for the backhoe. Three (3) bids were received. Prices received include all applicable fees and taxes and delivery. Dealer Bid Bid Price RDO Equipment Company 2012 John Deere 310SJ $102,515.51 Pape Machinery 2012 John Deere 310SJ $110,676.49 Blaine Equipment Co. 2012 John Deere 310SJ $112,045.99 FISCAL IMPACT: Joe Beachem, Chief Financial Officer The original projected cost for the purchase of this equipment is $105,000. The actual cost of the vehicle will be $102,515.51, to be charged against the APCD Replacement and Retrofits CIP P2366. The total cost in this equipment will not exceed budgeted funding. The total FY13 project budget for the CIP P2366 APCD Replacement and Retrofits is $120,000. Existing expenditures and current encumbrances for the CIP, including the vehicle purchased under this request if approved, is $117,515.51. Based on the Utility Service Manager’s evaluation, the CIP P2366 budget is sufficient to complete the budgeted purchase. The Finance Department has determined that 100% of the funds are available in the replacement fund. Expenditure Summary: For FY-13, two items are proposed for purchased under this CIP. FY13 Equipment Replacement CIP P2366 Budget: $120,000.00 1. Proposed Equipment Purchase: Backhoe $102,515.51 2. Proposed Replacement Light Tower $15,000.00 Total, Projected Expenditures of Equipment Replacements FY13, P2366 Budget: $117,515.51 3 STRATEGIC GOAL: Have adequate equipment to operate the system to meet demand twenty- four hours a day, seven days a week. LEGAL IMPACT: None. Attachments: Attachment A – Committee Action ATTACHMENT A SUBJECT/PROJECT: COMMITTEE ACTION: The Finance, Administration and Communications Committee reviewed this item at a meeting held on May 16, 2012 and the following comments were made:  The purchase of a backhoe is included in the approved Fiscal Year 2013 budget.  Currently, the District has six (6) backhoes. The requested backhoe will replace a 25 year old backhoe which will be surplused. An Okada breaker has been added to the purchase as it was recognized during a recent water main break, that a breaker was needed onsite during emergencies should staff need to break additional concrete or cobble.  Per the District’s policy, bids were solicited and three (3) bids were received. Staff recommends that RDO Equipment Company be selected as the lowest responsive bidder.  It was discussed that the breaker would enhance the safety of the staff as it could be utilized, as opposed to the crews climbing into trenches, to break concrete, thrust blocks, etc.  It was noted that, each year, APCD implements new regulations and it is likely that more trucks and equipment will need to be surplused because they do not meet the new regulations.  The committee inquired if there was a reason that a specific John Deer backhoe was identified as opposed to opening the bid to different manufacturers of backhoes. It was indicated that the five other District backhoes are John Deer and the controls on a Case backhoe are opposite to the John Deer. Because the District’s employees are trained and familiar with the John Deer backhoe, the District preferred to stay with the John Deer brand to keep it consistent.  In response to an inquiry from the committee, staff indicated that the vendors solicited to bid were all local to the southwest region. RDO Equipment Company is the only John Deer dealer in San Diego County and in the majority of the southwest region. It was noted that the District did purchase in the recent past a utility truck from a vendor located in the Midwest. Following the discussion, the committee supported staffs’ recommendation and presentation to the full board as a consent item. STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2012 SUBMITTED BY: Rita Bell, Finance Manager PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Adopt Resolution No. 4201 of the District’s Code of Ordinances Amending Policy No. 25, the Reserve Policy, which Includes Updated Glossary Definitions GENERAL MANAGER’S RECOMMENDATION: That the Board adopt Resolution No. 4201 of the District’s Code of Ordinances amending Policy No. 25, the Reserve Policy, which includes updated glossary definitions. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To present to the Board three revisions of the Reserve Policy. First, to remove the State Loan Assessment wording in Section 2.2, c. as the loan has been paid in full. Second, to modify the definition of Late Charges/Penalties. Lastly, to modify the definition of Water Rates. The two definitions are in the Reserve Policy Glossary and are changed to reflect current practices. BACKGROUND: In March 2006, the Reserve Policy was updated to reflect industry best practices, clearly defining the sources and uses of the District’s funds and establishing the minimums, maximums, and targets for each of the funds. In May 2010, the Board adopted a new capacity fee and annexation fee methodology, as well as a new water supply fee. As a result of these Board approved changes, the new sources and uses of fees were incorporated into the Reserve Policy. ANALYSIS: In October 2010, the District made the final payment on the Sewer State Loan. Accordingly, the District no longer collects a fee on AGENDA ITEM 6d the county tax roll to pay for this debt. Therefore, it is being proposed that paragraph 2.2.c. “State Loan Assessment (Restricted)” be removed from the Reserve Policy. As part of continuous quality assurance review performed by staff, some necessary changes to the glossary definitions were identified and are being recommended for Board approval. In 2008, the Board approved the elimination of charges for contacting customers and notifying them of past due status. The definition of “Late Charges/Penalties” in the Glossary was not updated at that time to reflect this change. The proposed definition has been modified to delete the phone contact charges and also modified to add other penalties for infringements. The District charges penalties for infringements such as broken curb stops, and meter reset fees. This modification is necessary for completeness of the definition. The proposed definition of “Late Charges/Penalties” in the Glossary states that charges and penalties are imposed on customer accounts for late payments, returned payments, and other infringements of the District’s Code of Ordinances. In 2009, the Board approved moving from a flat rate structure for non-residential customers to a tiered rate structure. In this structure, water rates are based on meter size and amount of Units consumed. The glossary’s definition of “Water Rates” for non- residential customers was not updated at that time to reflect this change. This update to the Reserve Policy modifies the Glossary definition to reflect the current inclining block rate structure. The proposed policy is in alignment with the District’s financial plan and is an integral part of the annual rate model update which impacts the District’s rates and fees. FISCAL IMPACT: None. STRATEGIC GOAL: The District ensures its continued financial health through long-term financial planning and debt planning. LEGAL IMPACT: None. Attachments: A) Committee Action Form B) Resolution No. 4201 Exhibit I Strike-through Policy No. 25 Exhibit II Proposed Policy No. 25 ATTACHMENT A SUBJECT/PROJECT: Adopt Resolution No. 4201 of the District’s Code of Ordinances Amending Policy No. 25, the Reserve Policy, which Includes Updated Glossary Definitions COMMITTEE ACTION: The Finance, Administration and Communications Committees reviewed this item at meetings held on July 19, 2012 and the following comments were made:  Staff indicated that Board of Directors Policy 25, Reserve Policy, was implemented in 2006 and, at that time, staff looked at industry practices and created a policy that established the uses of District funds and the minimums, maximums and targets for each of the funds.  The policy was updated in May 2010 when the board adopted new capacity and annexation fee methodologies, and a new water supply fee. These changes were reflected in the Reserve Policy at that time.  Staff is proposing additional revisions to the policy as follows: o Remove the sewer State loan from the policy as it has been paid off. o Update the definition of “Late Charges/Penalties” in the Reserve Policy glossary to match current practice.  In 2008 the District changed how late and penalty fees are collected and these changes are being reflected in the policy. o Update the definition of “Water Rate” in the glossary to reflect the current tiered rate structure for all customer types.  In 2009 the District changed its rate structure so that all customer types are billed using a tiered rate structure. The glossary is being updated to reflect this change.  The committee inquired about the change in the capacity and annexation fee methodologies. Staff indicated that the capacity fee and annexation fee methodologies were changed from the Buy-In Methodology, where the District considers future customers and future expansion costs, to the Combined Methodology where all existing assets, all future assets, all existing customers and all future customers are considered. This change in methodology required a change in how the District accounts for the money placed in the reserve funds. The Reserve Policy was updated in 2009 to match this change.  The committee suggested that staff strike the last sentence in the definition of “Water Rates” on page 48 of the strike-thru copy of the policy which states: “A unit of water is 100 cubic feet or 748 gallons of water.” and add “Unit” as a glossary term with the definition as stated in the sentence. The term “Unit” should then be capitalized thoughout the policy. Staff indicated that this was a good suggestion and would make the changes as suggested.  The committee commended staff on their work on the policy and felt that it was very thorough and a good governance document. Following the discussion, the committee supported staffs’ recommendation and presentation to the full board as a consent item. Attachment B Page 1 of 2 RESOLUTION NO.4201 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT AMENDING RESERVE POLICY NO.25 OF THE DISTRICT’S CODE OF ORDINANCES WHEREAS, the Otay Water District Board of Directors have been presented with an amended Reserve Policy No. 25 of the District’s Code of Ordinances for the financial management of the Otay Water District; and WHEREAS, the amended Reserve Policy has been reviewed and considered by the Board, and it is in the interest of the District to adopt the amended Reserve Policy; and WHEREAS, the strike-through copy of the proposed policy is attached as Exhibit 1 to this resolution; and NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the Board of Directors of the Otay Water District that the amended Reserve Policy, incorporated herein as an attachment, is hereby adopted. PASSED, APPROVED AND ADOPTED by the Board of Directors of Otay Water District at a board meeting held this 1st day of August 2012, by the following vote: Ayes: Noes: Abstain: Absent: ________________________ President Attachment B Page 2 of 2 ATTEST: ____________________________ District Secretary OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 1 of 49 1.0 The District The Otay Water District is a California municipal water district, authorized in 1956 by the State Legislature under the provisions of the Municipal Water District Act of 1911. The District is a "revenue neutral" public agency; meaning each end user pays their fair share of the District's costs of water acquisition, construction of infrastructure, and the operation and maintenance of the public water facilities. The District provides water service within its boundaries, and provides sewer and recycled water service within certain portions of the District. As such, the District operates three distinct business segments:  Potable water  Recycled water  Sewer Each of these business segments has an identifiable customer base. In addition, the developer community, large and small, makes up a significant class of customer for each business segment. As a result, the District has four distinct customer service types:  Developers  Potable water users  Recycled water users  Sewer users The District has established practices and developed computer systems that have enabled the District to maintain a clear separation between the service costs relating to each of its four customer service types. Regardless of customer class, financial principles regarding cost allocation and fund accounting are fundamental to the District’s Reserve Policy. These principles are derived from the statements of the Governmental Accounting Standards Board (GASB), and from oversight and advisory bodies such as the California State Auditor, the Little Hoover Commission, and the Government Finance Officers Association (GFOA). These have significant impacts on how the finances of Exhibit I OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 2 of 49 the District are organized and how financial processes work within the organization. 1.1 The District’s Use of Financial Resources All of the District’s expenditures fall into two broad categories: operating costs and capital expenditures. The operating costs include costs relating to the purchase and delivery of potable and recycled water, and the transportation and treatment of sewage. The capital expenditures support the construction of infrastructure necessary to deliver services. The District uses various funds to support the operating and capital efforts. Operations and maintenance is financed only by rates and charges, also called pay-as-you-go, while capital infrastructure is financed using two financing methods: pay-as-you-go and debt issuance (requiring annual debt service). The Capital Improvement Program (CIP) and the two funding methods support the construction, betterment, and replacement of infrastructure in all three business areas: potable, recycled, and sewer. The District establishes different funds to track revenues allocated to different activities. Once established, each fund receives financial resources up to the levels defined in this policy. Every year, as a part of the annual budget process, the District’s rate model is updated for each fund with the current fund balances and the estimated revenues and expenditures for the next six years. The expenditure requirements and financial resources are then evaluated to ensure that the existing fund balances and additional revenues are sufficient within the current budget cycle and for the next five years to maintain target fund levels. If a deficit is identified, then options for transfers, shifting CIP projects, debt, cost saving measures, and/or rate increases are evaluated. 1.2 The District’s Capital Improvement Program (CIP) The planning, design, and construction costs of all capital facilities within the three business segments are allocated to four cost types and corresponding fund categories: New Water Supply, Expansion, Replacement, and/or Betterment. The allocation to these four cost types is defined in the District’s Capital Improvement Program (CIP) and is determined by an engineering analysis that identifies which type of customer will benefit from each facility, planned or existing. The costs of the capital OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 3 of 49 improvements are borne by either existing users or by the developing areas, or by a combination of the two, as applicable. This Reserve Policy protects both the existing users and the developing areas from incurring unwarranted costs. Developing areas are not required to finance facilities that are replacement or betterment and established areas are not required to replace facilities before they are worn out because of new development. However, to ensure a fair allocation of costs, each facility has the potential to be classified into any or all of the four cost types. In addition to these cost types there are occasional CIPs that may be billable to a third party, if for example a third party requires a District facility be relocated. Paragraphs a through d below, describe how the costs of capital facilities are financed through various fees. a. New Water Supply The portion of a new supply project that benefits new users is financed from the reserves in the New Water Supply Fund category. These reserves are primarily derived from proceeds of the new water supply fee. The New Water Supply Fund is restricted, meaning the amounts credited to this fund are accounted for separately and are used solely for the planning, design, and construction of the new water supply expansion facilities. Debt financing may also be a temporary financial resource to finance new water supply projects. The District has a Debt Policy (Policy No. 45) that guides the debt issuance process. Any debt proceeds used for this purpose would be restricted in nature and tracked separately. General use reserves may also be placed in the Designated New Water Supply Fund and used for water supply projects. b. Expansion The portion of a CIP project that benefits new users is financed from the reserves in the Expansion Fund category. These reserves are primarily derived from proceeds of the “incremental” portion of the capacity fees collected within developing areas. Capacity fees are accounted for separately and used for the planning, design, and construction of expansion facilities. Additionally, expansion may be financed by annexation fees or the “buy-in” portion of the capacity fee. Both of these fees are restricted for CIP purposes, but not specifically for expansion. Debt financing may also be a temporary financial resource for expansion OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 4 of 49 projects. General use reserves may also be placed in the Designated Expansion Fund and used for expansion projects. c. Replacement The portion of a CIP project that benefits existing users by replacing an existing facility is financed from the reserves in the Replacement Fund category. Replacement of facilities may be financed with proceeds of annexation fees, the “buy- in” portion of the capacity fees, general use reserves held in the Designated Replacement Fund and debt proceeds. The various funding sources available for replacement projects is anticipated to provide the necessary flexibility to begin projects while any necessary debt financing is being obtained. d. Betterment Facilities that improve reliability, meet new regulations, or create increased levels of service are considered betterment facilities that benefit existing users. The reserves in the Better Fund category are used to finance these projects or portions of projects. Certain user rates, charges, and betterment fees are restricted geographically for betterment of facilities, but may also be used for general maintenance of facilities in that area. Proceeds of the annexation fee and the “buy-in” portion of the capacity fees may also be used to finance betterment projects. General use reserves may be placed in the Designated Betterment Fund and used for betterment projects. 1.21 Relocations Occasionally, relocation of a District facility is required by a third party. If the District has a superior easement the relocation cost will be paid by the third party, but only to the extent that the District does not benefit from the relocation. When relocation is required, a CIP project may be created which is wholly or partially financed by a third party. On occasion, the District will require that its own facilities be relocated. Depending on the nature of the facilities, the financial resources for these projects could be from new water supply, expansion, replacement, betterment or third party financing. Each project is individually negotiated with the third party based on the facts and circumstances of the relocation. Occasionally, the District will improve the facilities that are being relocated. When determining how to allocate costs to various funds the following OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 5 of 49 guideline is suggested: if a project has more than five years of useful life remaining, an incremental cost view should be considered; if the project has less than five years of useful life remaining, a pro-rata cost approach should be considered. Also, the likelihood the District will benefit from an asset’s life extension should be evaluated prior to allocating costs. 1.22 Oversizing If deemed reasonable by the District, in connection with the construction of backbone facilities, a developer may be required to oversize new facilities for future development. The developer is reimbursed for incremental oversizing costs as per Policy No. 26. These reimbursements are not available for the distribution system within a development which is an obligation of the developer. 1.23 Exclusion of Developed Areas from Expansion Costs Developed areas are assumed to have sufficient supply and capacity to meet their current requirements as provided by the developers. In addition, they are considered to have borne capital financial costs that are at least proportionate to the benefits they have received from capital facilities. Accordingly, no regional capital financing costs are allocated to these areas so that they will not incur any costs for newly developing areas, except for capital projects that produce district-wide benefit or cost savings. 1.24 Improvement Districts (IDs) Improvement Districts (IDs) are established to facilitate the financing of particular improvements by the specific beneficiaries. The District has a number of improvement districts that were established for General Obligation (GO) debt repayment. Most GO debt has been paid off and it is unlikely that the District will issue additional GO debt. Improvement districts continue to be used for other purposes: 1) to distinguish sewer customers from water customers on the county tax roll; 2) to place parcels on the county tax roll for the collection of availability fees; or 3) for charging special water rates. Over the years, the District moved to a district-wide perspective of financing improvements. This philosophy is evident by the district-wide capacity and annexation fees. The District also uses district-wide water rates. As time goes on, it is expected OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 6 of 49 that IDs will continue to outgrow their purpose and their use will diminish. 1.3 The Purpose of the Policy Public entities accumulate and maintain reserves to ensure both financial stability and continuous availability of services. Financial stability and the resulting improved credit quality allow the public entity to weather times of uncertainty and the impact of negative events, both major and minor. Reserves allow for the ongoing maintenance of property and timely payment of expenses even when such expenses exceed money available from a single fiscal period. In the final analysis, the type and level of reserves are driven by the type and magnitude of uncertainty faced by the public entity. A “reserve” has a number of meanings, as follows:  Working capital is required to insure timely payment of obligations.  A buffer against volatility in revenues.  Liquidity is required to obtain other goods and services (e.g., bank services).  Designated money to protect creditors.  Money set aside to replace assets at the end of their useful lives.  Money set aside to repair or replace assets damaged or destroyed at unanticipated times. It is important to note that reserves, fund balance, and net assets are not the same. Fund balance and net assets are accounting terms and may not always be in the form of cash or liquid investments. Fund balances and net assets may not always be reserves unless a designation of all or a portion of fund balance is made. In addition, the term fund balance was replaced by net assets as codified by the Governmental Accounting Standards Board (GASB). In short, reserves are the liquid assets of the District, accumulated and maintained for application to finance contingent future activities, whether known or unanticipated, operating or OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 7 of 49 capital in nature. The District’s Reserve Policy governs the management and use of these financial resources. Few policies have a more significant impact on the financial health and stability of the District. This policy explains several key financial concepts used by the District and provides some background information to the overall strategies and practices utilized. The District has a fiduciary obligation to its customers, to manage and direct the use of public funds for the purpose of providing water and sewer services in an efficient and financially sound manner. 1.4 Policy Guidelines In 2000, the Little Hoover Commission reviewed the levels of reserve funds for special districts in California and prepared a report reflecting that special districts were accumulating unreasonable levels of funds. As a proactive response, the California Special Districts Association (CSDA) prepared Reserve Guidelines for its members. The Reserve Guidelines were significant in noting that reserve levels need to be in context of the organization’s overall business model and capital improvement plan. There are a number of potential events which the District should consider in the development of reserves:  Economic Uncertainty - performance of the regional economy and the impact of that performance on demand for water.  Weather - the amount of rainfall and the impact of weather on the availability and the cost of water as well as the demand for water.  Government Mandates - the impact of federal and state regulation, particularly environmental regulation.  Tax Changes - limitations on the District’s taxing and spending powers through the passage of a voter referendum, the impound of District property taxes or the removal of the District’s power to levy property taxes, further increases to Educational Revenue Augmentation Fund (ERAF) contributions or changes in calculation methodology. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 8 of 49  Operating Costs - increases in operating and maintenance costs because of inflation, labor agreement or other modification.  Force Majeure - unanticipated expenditures resulting from natural disasters or intentional acts.  Emergency Maintenance - unanticipated expenditures resulting from unexpected failure of assets (e.g., rupture in the primary transmission system).  Unexpected Variation in Cash Flow - the incidence of additional costs or decreased revenues that require short- term borrowing in the absence of sufficient financial resources. The California State Auditor has, in its oversight role, offered a number of quality recommendations for the development of reserve policies as outlined in its report entitled, “California’s Independent Water Districts: Reserve Amounts Are Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004, Report No. 2003-137. All of these recommendations have been incorporated into this policy in an effort to address key issues surrounding the management and use of District reserves. The detailed objectives as identified by the State Auditor are as follows:  Distinguish between restricted and unrestricted reserves.  Establish distinct purposes for all reserves.  Set target levels, including minimums and maximums, for the accumulation of reserves.  Identify the events or conditions that prompt the use of reserves.  Conform to plans to acquire or build capital assets.  Receive Board approval and that it is in writing.  Require periodic review of reserve balances and rationale for maintaining them. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 9 of 49 Yet, the State Auditor’s report acknowledges that the California Constitution (Article XIII B, Section 5) is vague in its provisions governing the accumulation and use of reserves.1 1 California State Auditor, Bureau of State Audits, “California’s Independent Water Districts: Reserve Amounts Are Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004, 2003-137; p. 8. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 10 of 49 Specifically, the Constitution states that “each entity of the government can establish contingency, emergency, unemployment, reserve, sinking fund…or similar funds as it shall deem reasonable and proper.”2 Similarly, the State’s Water Code does not impose any requirements as to specific or recommended reserve fund levels. As a result, the public finance community as a whole has yet to settle on any real objective standards for the level of reserve funds appropriate for governmental enterprises. This lack of consensus as to specific standards is indicative of the wide variance of the financial and operations context for different districts and different contingencies justifying reserves. The Government Finance Officers Association (GFOA) in its “Recommended Practice on Appropriate Level of Unreserved Fund Balance in the General Fund” (2002) states that in establishing a policy governing the level of unreserved fund balance in the general fund, a government should consider a variety of factors. These include:  The predictability of its revenues and the volatility of its expenditures (i.e., higher levels of the unreserved fund balances may be needed if significant revenue sources are subject to unpredictable fluctuations or if operating expenditures are highly volatile).  The availability of resources in other funds as well as the potential drain upon general fund resources from other funds (i.e., the availability of resources in other funds may reduce the amount of the unreserved fund balance needed in the general fund, just as deficits in other funds may require that a higher level of unreserved fund balance be maintained in the general fund).  Liquidity (i.e., a disparity between when financial resources actually become available to make payments and the average maturity of related liabilities may require that a higher level of resources be maintained).  Designations (i.e., governments may wish to maintain higher levels of the unreserved fund balance to 2 California Constitution, Article XIII B, Section 5. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 11 of 49 compensate for any portion of unreserved fund balance already designated for a specific purpose). In the preparation of this policy, each of the CSDA guidelines and the GFOA recommendations has been considered. In addition, all seven objectives provided by the State Auditor are specifically addressed for each reserve. The District wholly supports the State Auditor’s efforts to bring a high-level of quality to reserve governance and establishing a standard of performance. The District recognizes that the customer pays for services provided. Quality management requires that periodic valuations be performed so that fees and charges can be set at appropriate levels to recover the cost of service. The District’s Reserve Policy has been drafted with consideration of the GFOA, CSDA, and State Auditor’s general guidelines as provided above. In addition, the District has adopted the following principles in the management of its financial resources:  Reserves are held and used only for the purpose for which they are collected. This is done to maintain equity among customers.  Each of the service types is tracked separately so that expenditures and revenues can be monitored and evaluated for each customer type. This provides the District with the necessary information to appropriately charge for each of the services.  Separation of operations and maintenance from capital expenditures occurs within each of the service types. This is done because the financing of these expenditures is often on different timelines or use different reserves.  The District will hold its reserves at responsible and prudent levels. This policy sets minimum, maximum, and target levels for each of the various funds. This has been done so that the District can maintain reserves to meet the purpose for which the funds were established. The levels are set by reference to line items in the District’s financial statements and approved budgets. This allows reserve levels to adjust to the District’s changing financial circumstances.  Debt financing of facilities provides intergenerational equity and maintains rates at reasonable levels. This equity OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 12 of 49 is accomplished with long-term financing which spreads the cost of facilities over the life of the facilities. The burden to pay for facilities is then paid by those who use them. The District could amass significant reserves by pre- collecting financial resources in a Replacement Reserve Fund allowing the District to cash finance all replacements. However, this would require significant rate increases burdening the current customers and creating reserve levels difficult to defend to the ratepayers or other oversight entities. These concepts are fundamental to the way the District manages its funds and have a direct impact on the way rates and charges are set. The District performs annual budget evaluations and updates its rate model on an annual basis to monitor and adjust the various funds and revenue sources. The separation, tracking, and projecting of the various funds and expenditures create the essential information necessary for the equitable rate structure maintained by the District. The annual review preserves the balance between services provided and the fees charged. This review also insures that reserves will be available to continue to serve the District’s customers. Financial Sources 2.0 Developers a. Meter Installation Charges (General Use) Meter fees are charges collected for new water service connections. Fees vary depending upon meter size and type of service. The costs associated with meter installations are included in the Operating Expenses section of the budget. These charges are financed by developers. b. Developer Deposits (General Use) These deposits are for the engineering and operations services provided to developers. They are tracked separately for each developer and any excess amount is returned to the developer. c. Annexation Fees (Restricted) OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 13 of 49 Annexation fees3 are collected as a condition of annexing into the District’s potable and recycled water facilities. Since the existing facilities have been built and maintained by developers or customers within the District, the annexation fee is calculated based on the present value of all property taxes (1% property tax and availability fees) paid by existing and prior customers. The annexation fee insures that future users finance a portion of facilities that were sized, built, and maintained for both existing and future users. Proceeds of annexation fees are restricted and can be used for expansion, replacement, or betterment projects. These reserves may be shifted back and forth as financing needs change. d. Annexation Fees (Unrestricted) A sewer annexation fee is collected when property is annexed into an improvement district. This fee is calculated using the “buy-in” basis and therefore is unrestricted. e. New Water Supply Fee (Restricted) New water supply fees4 are based on the cost of the expansion portion of new water supply projects divided by the number of future equivalent dwelling units (EDU). The new water supply fee covers the cost of planning, design, construction, and financing associated with facilities for the District’s new supply needs. These fees are paid by developers. The proceeds of this fee may be used only for new potable or recycled water supply projects. Although the fees collected are not restricted separately, one portion for potable and the other for recycled, they are tracked separately. f. Capacity Fees (Restricted) Capacity fees4 are based on the value of existing and future facilities divided by the number of existing and future equivalent dwelling units. This method of calculating capacity fees is called the combined method, where the “buy- in” portion of the capacity fee covers costs to repay existing customers for the facilities that they have built, and where the “incremental” portion of the capacity fee covers the cost of future expansion facilities. The “buy-in” 3 Code of Ordinances, Section 9. 4 Code of Ordinances, Section 28 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 14 of 49 portion of the capacity fee is restricted to pay for planning, design, construction, and financing associated with expansion, replacement or betterment facilities. The “buy- in” portion may be shifted back and forth between expansion, betterment or replacement as the financing needs change. The “incremental” portion of the capacity fee is limited to planning, design, construction, and financing exclusively for expansion facilities (excluding new water supply expansion). Facility needs are based on projected land use planning. Changes in anticipated future land use occur and can alter projected facility requirements. Thus, both the anticipated facilities needs and their projected costs change over time as regulatory agencies make changes to land use. The District periodically reviews the capacity fee calculation to accommodate such variations. These fees are paid by developers. The District’s construction of infrastructure occurs prior to the addition of EDUs. This sequence serves two purposes: one it ensures that the District can serve the pending construction as it is completed; and two, it is more efficient to oversize many facilities at the outset rather than build for the current need and then reconstruct when the future need is realized. As a result of this strategy, the District has financed construction with bond financing as the existing expansion reserves are depleted. The capacity fee is calculated based on the combined recycled and potable water systems needs. This methodology is used because the two water systems work hand-in-hand. All capacity fees can be used for either potable or recycled but must be tracked to distinguish between the “buy-in” and “incremental” portions as described above. So, while capacity fees are not restricted separately by potable and recycled, they are tracked separately. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 15 of 49 2.1 Customers/Users a. Uniform Rates and Charges (General Use) Charges to users for water, sewer, and recycled water are uniform throughout the District for similar customer types. b. Monthly System Fees (General Use) This is a fixed revenue source that is charged monthly. The amount of the charge is based on the meter size. c. Energy Charges (General Use) The energy pumping fee is a charge per uUnit of water for each 100 feet of lift, or fraction thereof, above the base elevation of 450 feet. This charge is placed on the monthly water bills of all water customers. d. Penalties (General Use) Penalties are added to the monthly water and sewer bills for late charges, locks, etc. e. Pass-through Fixed Charges (General Use) A fixed monthly charge to the District’s customers intended to collect sufficient funds to pass-through the increased DEVELOPERS Diagram 2.0: Flow of Funds - Developer Sources Unrestricted and Undesignated (General Use) Funds Meter Installation Charges Developer Deposits Restricted Funds Annexation Fees Capacity Fees New Water Supply Fees OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 16 of 49 fixed costs from the County Water Authority (CWA) and the Metropolitan Water District (MWD). f. Special Rates and Charges (Restricted) In addition to the uniform water charges, the District currently has five special water rates and one sewer rate. The five water rates are for construction, installation, and maintenance of water storage reservoirs, pump stations, and water lines. Each of these rates and charges must be used within the respective geographic areas from which they are collected. These special charges are listed below:  North District water charge (Code section 25.03G)  ID 9 water charge (Code section 25.03H)  ID 3 water charge (Code section 25.03I)  ID 10 water charge (Code section 25.03I)  La Presa water charge (Code section 25.03I)  Russell Square sewer charge (Code section 53.04C) When these rates were established they were for the specific purpose of constructing, installing, and maintaining the water and sewer systems in the areas in which the fees were collected. Therefore, these are restricted reserves by geographic area as well as by purpose. These rates and charges can also be used for maintenance; unlike the availability fees (discussed in 2.2 B.). These six special rates and charges along with availability fees are tracked separately, by geographic area, so they can be individually evaluated to maintain the targeted reserve levels. To meet this need, each special rate and charge is accounted for in a “sub-fund” of the Betterment Fund. g. Temporary Meter Fees (General Use/Restricted) Water charges, in lieu of capacity fees, are charged on temporary meters. This is done because temporary meters use system capacity but they are not charged a capacity fee. Temporary water use is charged at two times the water rate with the added charge placed in the Restricted Expansion Fund. The primary users of these temporary meters are developers; however, general customers also use these for various purposes. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 17 of 49 2.2 County-Collected Taxes and Fees a. General Levy Property Tax Receipts (1% Property Tax) (General Use) In 1978, Proposition 13 limited the levy of ad valorem property taxes on real property to one percent of the assessed value of such property. Subsequent legislation, AB 8, established that the receipts from the one percent levy were to be distributed to taxing agencies proportionate to each agency’s general levy receipts prior to Proposition 13. Taxes received are for general use. b. Availability Charges (General Use/Restricted) The District levies availability charges each year in developed and undeveloped areas. Current legislation provides that any amount up to $10 per parcel is general use and any amount over $10 per parcel is restricted to be expended in and for the improvement district (ID) within which it is collected. Accordingly, the District may use availability charges in excess of $10 toward costs of water CUSTOMERS / USERS Diagram 2.1: Flow of Funds - Customer Sources Unrestricted and Undesignated (General Use) Funds Monthly System Fees Restricted Funds Energy Charges Penalties Pass –Through Fixed Charges 2x Water Rate Special Rates and Charges Uniform Rates and Charges OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 18 of 49 and sewer facilities which are either, expansion, betterment, or replacement of facilities consistent with the purpose of the ID in which they are collected. This portion of the proceeds of availability charges is geographically restricted and restricted by purpose. As costs are incurred on these projects the respective IDs are charged, reducing the reserves. To the extent that availability charges are not used for the purpose for which they are collected, they must be returned to the property owners that paid them. The District has historically used these reserves for betterment capital facilities thus, the restricted reserves are accounted for in “sub-funds” of the Betterment Fund (see 2.1 f.). c. State Loan Assessment (Restricted) The District assesses a charge per unit of sewer service each year on the sewer customers. This is collected via the county tax roll and is specifically collected for the repayment of the state loan. When this loan is paid off the charge will be removed. d. c. Improvement District General Obligation (GO) Bond Assessments (Restricted) The District has historically issued general obligation (GO) debt and establishes an improvement district for the repayment of that debt. When this financing method is used, the county tax roll can be used to collect special taxes or assessments within the ID to pay the debt obligation. The proceeds of the debt are restricted for the purpose as defined in the bond documents. Formatted: Indent: Left: 0.5", Hanging: 0.5", No bullets or numbering OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 19 of 49 COUNTY COLLECTED TAXES AND FEES Unrestricted and Undesignated (General Use) Funds General Levy Property Tax Receipts Availability Charges Restricted Funds State Loan Assessments General Obligation Bond Assessments Diagram 2.2: Flow of Funds – County Collection Sources OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 20 of 49 2.3 Miscellaneous Income a. Miscellaneous Rents and Leases (General Use) Revenues received from the rental and lease of District property are general use revenues. Not only are they periodic revenues, but there is also a one-time fee charged with the setup of each new lease. The District incurs expenses related to these rents and leases. The one-time fees are calculated to recover the costs to setup the leases. b. Sewer Billing Fees (General Use) Sewer billing fees are general use revenues. The District provides processing and billing services to the City of Chula Vista to bill and collect from their customers for sewer service. These fees are to recover the cost the District incurs to provide this service. c. Interest Income or Expense Allocation (General Use, Designated, and Restricted) Interest income (expense) will be allocated every month based upon each fund's month-ending balance. In this way, each fund receives credit for interest earned by that fund and each fund with a negative balance is charged for the use of the other fund’s reserves. MISCELLANEOUS INCOME Unrestricted and Undesignated (General Use) Funds Miscellaneous Rents and Leases Sewer Billing Fees Restricted Funds Interest Income or Expense Allocation Diagram 2.3: Flow of Funds – Miscellaneous Income Sources Designated Funds OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 21 of 49 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 22 of 49 2.4 Debt Issuance a. Loans (General/Restricted Use) As the District determines that additional financing is required for a particular purpose, the option of borrowing is considered. The determination to borrow is made as a part of the annual rate model update and is evaluated in accordance with the Debt Policy before it is recommended to the Board for action. As an option to bond indebtedness, loans are available to satisfy short-term financing needs. These loans may or may not be contractually restricted for a particular purpose. b. General Obligation (GO) Bonds (Restricted) As the District becomes more developed it becomes less likely that general obligation debt will be used as it requires a vote of the public to be approved. Bond proceeds are restricted for the construction of those facilities identified in the GO bond issuance. Occasionally, specific portions of bond proceeds may be allocated for the repayment of the principal and interest, also called debt service, on these bonds. As the District determines that additional financing is required for a particular purpose, the option of debt issuance is considered. The determination to issue debt is made as a part of the annual rate model update and is evaluated in accordance with the Debt Policy before it is recommended to the Board for action. c. Certificates of Participation (COPs) (Restricted) General revenues of the District are pledged as security for Certificates of Participation (COPs) indebtedness. If the District determines that additional financing is required for a particular purpose, the option of debt issuance is considered. The determination to issue debt is made as a part of the annual rate model update and is evaluated in accordance with the Debt Policy before it is recommended to the Board for action. This form of financing has become the industry’s preferred form of financing as it does not require a vote of the general public. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 23 of 49 DEBT PROCEEDS Unrestricted and Undesignated (General Use) Funds Loans General Obligation Bonds Restricted Funds Certificates of Participation Diagram 2.4: Flow of Funds – Debt Issuance Sources OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 24 of 49 2.5 Inter-fund Transfers Each year in the budgeting process, future fund levels are projected for the next six years. Based on these projections transfers are recommended. Reserves may be transferred between Unrestricted or Designated Funds and the General Fund (see 4.0 “Funding Levels” and 4.1 “Fund Transfers”). Reserves may not be transferred to or from any of the restricted funds unless it is between two restricted funds with a shared purpose. Fund Types and Categories 3.0 General Funds a. Purpose The General Fund is neither restricted nor designated. The District maintains one General Fund for each business segment (water, sewer, and recycled). This fund holds the working capital and emergency operating reserves. While the General Fund has a short-term focus to finance the District’s annual operations, it is supported by the six-year rate model. This fund is primarily used to finance the operations of the District; however, it can be used for any District purpose. This fund can be used to supplement the District’s rates and charges and be a temporary source of revenue to balance the Operating Budget. This fund can also be used to avoid spikes in the rates or significant and abrupt increases. It is an industry practice to have a fund that can be used to stabilize rates. This would only occur if there was a temporary need for reserves that would smooth out a rate spike or to ramp up what would otherwise be a dramatic rate increase. The General Fund also plays a role in the debt planning of the District. This fund is viewed by the debt markets as a commitment by the District to ensure financial stability of the rates and charges of the District. The District is anticipated to need a number of debt issuances over the years and this fund will help the District not only to stabilize OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 25 of 49 rate fluctuations but also to access low cost financing for future projects. b. Sources Meter installation charges, temporary meter fees, uniform rates and charges, monthly system fees, energy charges, penalties, pass-through fixed charges, general levy property tax receipts, availability charges, miscellaneous rents and leases, sewer billing fees, interest income or expense allocation, loans, and a portion of the temporary water sales. The sewer general fund receives sewer charges, penalties, availability charges, sewer annexation fees (calculated on the “buy-in” basis), and interest income or expense allocation. c. Funding Levels I. Minimum Level – The minimum reserve level for each business segment of the General Fund is three months of operating budget expenses (evaluated separately for each segment). OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 26 of 49 II. Maximum Level – The maximum reserve level for the General Fund is nine months of operating budget expenses. In the event that this fund exceeds the seven month level, the excess will be evaluated or transferred to one or more of the designated funds. III. Target Level – The target level of reserves is three months of operating budget expenses. In the event that the fund drops below the target level, rate increases or fund transfers would be considered. 3.1 Designated Other Post Employment Benefits (OPEB) Fund a. Purpose Designated Other Post Employment Benefits (OPEB) reserves are “general use” reserves that have been set apart by Board action to finance the medical benefits of qualified retirees as outlined in the District’s benefits plan. This District fund holds only a portion of the total OPEB reserves. The other portion is held in a trust at CalPERS and is restricted for the purpose of financing the OPEB liability. The two portions are considered jointly when looking at target reserve levels. Every two years, the fund is evaluated by an actuary to update the annual financing requirements. Changes in the actuarial valuation may result from changes in benefit levels, employee population, health insurance costs, or general market conditions. The reserves held by the District are currently designated and may be placed into the CalPERS trust to legally restrict the funds, removing the District’s legal access to these reserves. b. Sources The OPEB liability may be financed by general use reserves coming from user rates and charges, either from an operating budget expenditure or from interfund transfers. Transfers of unrestricted reserves may come from the various designated funds or from the General Fund. As a part of the normal budget process, annual operating revenues have been sufficient to finance the ongoing needs of this designated fund. While debt financing is also an option, the District has only used user rates and charges to finance this fund. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 27 of 49 c. Funding Levels I. Minimum Level – The minimum reserve level for this fund is equal to the District’s OPEB liability as determined by the actuarial study. When considering the reserve level of this fund, both the District held OPEB reserves and CalPERS held OPEB reserves must be considered jointly. II. Maximum Level – The maximum reserve level for this fund is equal to the District’s OPEB liability as determined by the actuarial study. In the event that the two funds, as described above, exceed the OPEB liability, the District will reduce the annual funding levels as defined by the actuarial study. III. Target Level – The target reserve level for this fund is equal to the District’s OPEB liability as determined by the actuarial study. In the event that the two funds, as described above, fall below the OPEB liability, the District will increase the annual funding levels as defined by the actuarial study. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 28 of 49 3.2 New Water Supply Fund Category a. Purpose The New Water Supply Fund category is to finance the expansion portion of new water supply projects and is therefore to be paid by developers. When considering the reserve level of the New Water Supply category; the New Water Supply Fund, the New Water Supply Debt Fund, and the Designated New Water Supply Fund all work in concert and must be considered jointly. b. Sources The New Water Supply Fund receives reserves only from the new water supply fee. Other funds within the new water supply category of funds receive debt proceeds and general use reserves through a designation to this category. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 29 of 49 c. Funding Levels I. Minimum Level – As the District matures the CIP will move to purely replacement projects. As the District moves through its lifecycle the need for new water supply reserves will decrease and may be reduced to zero. II. Maximum Level – The maximum reserve level for the new water supply category of funds is limited to five years of the unfinanced new water supply facilities as described in the District’s CIP Budget. To determine the unfinanced amount, the total new water supply financing needs must be reduced by the projected new water supply revenues, general fund designations, and bond financing. If the combined new water supply reserves exceed the target level, the District should consider transferring designated reserves to meet other purposes, reduce the new water supply fee, or change the timing of the new water supply projects. III. Target Level – In order to facilitate debt financing of the new water supply, it is important that the various new water supply funds retain an overall reserve level of six months, prior to any attempt to obtain debt financing. This reserve level allows the District the time necessary to issue additional debt without depleting new water supply reserves. If the combined new water supply reserve levels drop below six months of expenditures, this would trigger a transfer of general use reserves, a bond sale, or a change in the timing of new water supply projects. Bond proceeds would be placed in the Restricted New Water Supply Debt Fund while transfers would be placed in the Designated New Water Supply Fund. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 30 of 49 Restricted Funds Unrestricted and Undesignated Funding Sources Funding Source New Water Supply Fees Debt Proceeds Restricted Funds Restricted Funds Designated Funds New Water Supply Fund Expansion New Water Supply Fund Designated New Water Supply Fund Debt Fund General Fund – Rates and Charges New Water Supply Fund Category New Water Supply Debt Fund Diagram 3.2: New Water Supply Fund Category OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 31 of 49 3.3 Expansion Fund Category a. Purpose The Expansion Fund category is to finance the expansion portion of capital projects and therefore is to be paid for by developers. When considering the reserve levels of the expansion category, the following funds work in concert and must be considered jointly: the Expansion Fund, Expansion Debt Fund, Annexation Fund (potable and recycled only), Capital Improvement Fund, and the Designated Expansion Fund. Potable and recycled reserves are considered jointly while sewer is evaluated separately. b. Sources The Expansion Fund is financed by water charges in lieu of capacity fees (for temporary meters) and the “incremental” portion of the capacity fee. The other funds in this category may also be financed by debt proceeds, annexation fees, the “buy-in” portion of the capacity fee, and the general fund through a designation of reserves. c. Funding Levels I. Minimum Level – As the District matures the CIP will move to purely replacement and betterment projects. As the District moves through this lifecycle the need for expansion reserves will decrease and may be reduced to zero. II. Maximum Level – The maximum reserve level for the expansion category of funds is limited to five years of unfinanced expansion facilities as described in the District’s CIP Budget. To determine the unfinanced amount, the total financing needs must be reduced by the projected expansion revenues, bond financing, and any restricted or general fund revenues allocated to this fund category. If the combined expansion reserves exceed target levels, the District should consider reducing capacity fees, reallocating Formatted: Font: 10 pt OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 32 of 49 restricted or designated funds to meet other purposes, or shifting the timing of expansion projects. III. Target Level – The target level is six months of expansion expenditures. It is important that the expansion reserves remain at a minimum of six months of expansion expenditures. This reserve level allows the District the time necessary to issue additional debt without depleting expansion reserves. If the combined expansion reserves drop below six months of expenditures this would trigger a transfer of general use reserves, a bond sale, an adjustment to the timing of expansion projects, or a reallocation of restricted reserves. Bond proceeds would be placed in the Restricted Bond Fund, transfers of general use reserves would be placed in the Designated Expansion Fund, and transfers of restricted reserves would be placed in either the Expansion Annexation Fund or the Expansion Capital Improvement Fund. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 33 of 49 Unrestricted and Undesignated Funding Sources Diagram 3.3: Expansion Fund Category Funding Source 2x Water Rates Capacity Fees Restricted Funds Restricted Funds Designated Funds Expansion Fund Expansion Debt Fund Annexation Fund General Fund – Rates and Charges Annexation Fees Restricted Funds Expansion Capital Improvement Fund Debt Proceeds Restricted Funds Capital Improvement Fund Bond Debt Expansion Fund Designated Expansion Fund 59.4% Expansion Fund Category Restricted Funds Expansion Annexation Fund 40.6% %%% OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 34 of 49 3.4 Replacement Fund Category a. Purpose The Replacement Fund category is to finance replacement projects. When considering the reserve levels of the replacement category of funds, the following funds work in concert and must be considered jointly: the Annexation Fund, Debt Fund, Capital Improvement Fund, and the Designated Replacement Fund. The purpose of these reserves is to pay for the replacement of capital infrastructure and capital purchases. These reserves are not to be used for the replacement of non-capital items. With the District’s development of its financial systems and the greater need and ability to separate and track reserves, the replacement reserves have been separated into three funds: water, recycled, and sewer. Projects undertaken solely for the purpose of replacing major capital equipment or facilities, i.e., where the cost exceeds $10,000 for capital purchases or $20,000 for infrastructure items, generally these are not considered normal maintenance. When the cost is below $10,000, the costs are financed annually as operational maintenance. As charges are incurred on replacement projects the reserves are deducted from the respective Replacement Funds on a monthly basis. b. Sources The various funds in this category are financed by debt proceeds, annexation fees, the “buy-in” portion of the capacity fee, and general fund designations. c. Funding Levels I. Minimum Level – The minimum reserve level of this category of funds is 3% of the historical value of existing assets as identified in the District’s current financial statements. Potable, recycled, and sewer replacement are evaluated separately. II. Maximum Level – The maximum reserve level of this category of funds is 6% of existing assets. If the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 35 of 49 combined replacement reserves exceed target levels, the District should consider transferring annexation fees or the “buy-in” portion of the capacity fee to meet other purposes. Another consideration would be to shift the timing of replacement projects. III. Target Level – The target reserve level of this category of funds is 4% of existing assets. In the event that the reserves fall below the recommended target level, the District should consider transferring annexation fees or the “buy-in” portion of the capacity fee. The District should also consider shifting the timing of replacement projects or issuing debt to support the planned level of facility replacement. The District will act based on the annual six-year rate model, to insure that at the end of that planning horizon the reserves exceed the minimum level and is approaching the target level. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 36 of 49 Funding Source Unrestricted and Undesignated Funding Sources Capacity Fees Diagram 3.4: Replacement Fund Category Annexation Fees Restricted Funds Restricted Funds Designated Funds Capital Improvement Fund Replacement Debt Fund Designated Replacement Fund Annexation Fund General Fund – Rates and Charges Debt Proceeds Restricted Funds Debt Fund Replacement Annexation Fund Restricted Funds Replacement Capital Improvement Fund 59.4% Replacement Fund Category OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 37 of 49 3.5 Betterment Fund Category a. Purpose The Betterment Fund category is to finance the betterment portion of capital projects with a portion going to maintenance of the potable, recycled, and sewer systems. The District maintains separate Betterment Fund categories, one for each improvement district. An improvement district is a legally defined geographic area usually established for the purpose of bond financing of facilities. The betterment reserves within these funds are restricted by law for use within the improvement district in which the fees were collected (Water Code 71631.6). However, the legal restriction of this reserve depends upon the particular revenue source. (See Section 2.1 f. for a review of the special rates and availability fees). When considering the reserve levels of the betterment category of funds, the following funds work in concert and must be considered jointly: the Betterment Fund, Annexation Fund, Debt Fund, Capital Improvement Fund, and Designated Betterment Fund. b. Sources The Betterment Fund category receives restricted revenues by improvement district via special water rates and from availability fees collected through the county tax roll. Betterment may also be financed by debt proceeds, annexation fees, the “buy-in” portion of the capacity fee, as well as the general fund through a designation of reserves. c. Funding Levels I. Minimum Level – As the District matures the CIP will move to purely replacement projects. As the District moves through this lifecycle the need for betterment reserves will decrease and may be reduced to zero. II. Maximum Level – The maximum reserve level for the betterment category of funds is limited to five years of unfinanced betterment facilities as OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 38 of 49 described in the District’s CIP Budget. To determine the unfinanced amount, the total financing need must be reduced by the projected betterment revenues, bond financing, annexation, and general fund designations. If this maximum is exceeded, then the District should evaluate reductions in the special water rates and availability fees, transferring designated reserves to meet other purposes, or shifting the timing of betterment projects. III. Target Level – The target is six months of betterment expenditures. It is important that the betterment reserves remain at a minimum of six months of betterment expenditures. This reserve level allows the District the time necessary to issue additional debt without depleting betterment reserves. If the combined betterment reserves drop below six months of expenditures this would trigger a transfer of general use reserves, a bond sale, or an adjustment to the timing of betterment projects. Bond proceeds would be placed in the Betterment Bond Fund while transfers would be placed in the Designated Betterment Fund. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 39 of 49 Fund Diagram 3.6: Fund Targets Restricted Funds Unrestricted and Undesignated Funding Sources Diagram 3.5: Betterment Fund Category Funding Source Capacity Fees Annexation Fees Restricted Funds Restricted Funds Designated Funds Capital Improvement Fund Betterment Debt Fund Betterment Fund General Fund – Rates and Charges Special Rates and Availability Charges Restricted Funds Betterment Annexation Fund Debt Proceeds Restricted Funds Annexation Fund Bond Debt Designated Betterment Fund Betterment Fund Betterment Capital Improvement Fund 59.4% Betterment Fund Category OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 40 of 49 Diagram 3.6: Fund Targets Fund or Fund Category Actions to Consider if below Target Target Maximum New Supply Fund Category New supply fee increase, bond financing, or transfer to designation or to CIF or Annexation Fund Total of all funds in fund category = six months of capital expenditures Nexus of cost to fee Expansion Fund Category Capacity fee increase, bond financing, or transfer to designation or to CIF or Annexation Fund Total of all funds in fund category = six months of capital expenditures Nexus of cost to fee Replacement Fund Category Bond financing, or transfer to designation or to CIF or Annexation Fund Total of all funds in fund category = 4% of infrastructure Nexus of cost to fee Betterment Fund Category Bond financing, or transfer to designation or to CIF or Annexation Fund Total of all funds in fund category = six months of capital expenditures 5 years unfunded needs Debt Reserve Fund Increase tax collection or rates One semi-annual payment Two semi-annual payments OPEB Fund Fund transfers Full funding Full funding General Fund Rate increase or fund transfers Three months of operating budget expenses Nine months of operating budget expenses Note: The annexation fee for sewer is a general fund revenue. Additional Restricted Funds 4.0 Capital Improvement Fund a. Purpose The “Capital Improvement Fund’s sole purpose is to track the “buy-in” portion of the capacity fee and to ensure these fees are expended solely for the purpose for which they were OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 41 of 49 collected. In this case it is to pay for facilities that were in existence at the time this fee was established. These fees may be used for expansion, replacement, or betterment projects or any debt related to these categories. These fees may also be used for either the potable or the recycled systems. As capacity fees are collected, the “buy- in” portion of the fee is allocated as needed to one of three capital improvement funds, one in each of the Expansion, Replacement, and Betterment Fund categories. These reserves are used to pay debt or offset any negative balance within these three categories of funds. These fees may not be used to finance the New Water Supply category, as there were no new water supply facilities in existence at the time the new methodology for capacity fees was established. b. Sources The “buy-in” portion of the capacity fee collected after June 30, 2010. c. Funding Levels There are no minimums, maximums, or target levels for these reserves on an individual basis. The allocation of this fee to the various capital improvement funds is dependent on the overall reserve levels within each fund category. 4.1 Annexation Fund a. Purpose The Annexation Fund’s sole purpose is to track the potable and recycled annexation fees collected and to ensure these fees are expended solely for the purpose for which they were collected. The annexation fees may be used for expansion, replacement, or betterment projects or any debt related to these categories. These fees may be used for either the potable or recycled systems. These reserves may not be used to finance the New Water Supply category, as it was not in existence at the time the fee was established. As these fees are collected they are allocated as needed to one of three capital improvement funds, one in each of the Expansion, Replacement, and Better Fund categories. b. Sources Potable and recycled annexation fees collected after OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 42 of 49 June 30, 2010. c. Uses There are no minimums, maximums, or target levels for these reserves on an individual basis. The allocation of this fee to the various Annexation Funds is dependent on the overall reserve levels within each fund category. 4.2 Debt Reserve Fund a. Purpose The Debt Reserve Fund is established to hold the proceeds from the various debt issuances. There are two types of debt, General Obligation bonds and Certificates of Participation bonds. The proceeds are transferred to the New Water Supply, Expansion, Replacement, or Betterment Debt Funds as they are expended for various facilities within those fund categories. As repayment of the debt occurs, the balances within these individual funds are reduced so that the financial impact of issuing debt is tracked within the category for which the debt was issued. b. Sources Debt proceeds. c. Uses There are no minimums, maximums, or target levels for this fund on an individual basis. This fund is available on an as needed basis to fund CIP projects for new water supply, expansion, replacement, or betterment. From a funding level perspective, these reserves are evaluated in the context of all the various funds within each fund category. Fund Transfers 5.0 Funding Levels As described in the preceding sections, the District maintains reserves for its operating and capital activities. These reserves can be of three types: 1) undesignated or general use reserves, 2) designated, and 3) restricted for a specific purpose. The restricted reserves can be restricted geographically and/or by purpose. The District maintains various funds to track the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 43 of 49 various designations and restrictions. The source of the money for each fund was discussed along with the purpose, source of funds, and levels. Key characteristics of these funds are the target levels, minimums, and maximums. The funding levels must be viewed in the context of the economic environment, political environment, and in light of the District’s rate model. The District’s six-year rate model not only shows the current balance but also shows the trend of the fund balances. Often the trend of the fund is a greater indicator of financial stability than is the current balance. The rate model is updated each year with the budget process and evaluates each fund over the next six years. The rate model will take into account the general economic environment, looking at the development rate, supply rate increases, the possibility of raising rates, capital infrastructure spending, and strategic plan initiatives. The fund balances may at times be over or under the target amount. This is not only acceptable but expected. The rate model provides an empirical estimate of the conformance between the projected District’s financial activities and the guidelines of this policy. 5.1 Fund Transfers Reserves within the District’s various designated funds come from interfund transfers of unrestricted general use reserves. It is important to note that the District has the ability to use general use reserves for any business purpose. General use reserves may be transferred to and from any unrestricted fund for any business need. Designated reserves are general use reserves which have been set aside for a specific purpose by Board action. These reserves can only be used for the purpose they were designated, or with Board action they may be used for any other business purpose. While general use reserves may be used for any restricted purpose they may not be transferred to Restricted Funds due to the sensitivity of the tracking of restricted reserves. If reserves are needed for a restricted purpose they are transferred to a Designated Fund within the fund category with that particular purpose. Reserves restricted to a fund category may only be used within that category and may not be transferred to another category. For example, the new water supply fee and the “incremental” portion of the capacity fee are restricted reserves for a specific purpose, and may not be transferred to another OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 44 of 49 category as no other category has the same purpose. However, the “buy-in” portion of the capacity fees and annexation fees are restricted for purposes that are shared by more than one category of funds and may therefore be transferred to a restricted fund within another fund category as long as it shares the same purpose. In many situations reserve transfers are expected as some fund categories will exceed their maximums or drop below their minimums. Only fund categories that are below the stated target are eligible to receive transferred reserves. Fund categories that exceed their maximums are first to be considered for transfers out, followed by funds that exceed their targets. Funds that exceed their minimums are also available for reserve transfers out, but only when other options are not available. The rationale for prioritizing reserve transfers is based on the immediacy of the need and the availability of reserves from other funding sources. For example, the General Fund is first to receive reserves when it drops below its target or minimum levels. This is because of the immediate and ongoing nature of the expenditures that are served by this fund. The operation of the District is first and foremost of the objectives of the District. On the other end of the spectrum, the Replacement Fund has a long- term perspective and will be used to partially finance replacement assets for many years to come. Debt financing is available to respond to this long term, foreseeable, and planned cash flow. This fund is less likely to have immediate needs and has other financing options. When making the determination of when transfers are necessary, all funds within a fund category work as a group. The combined balance of the restricted and designated funds is looked at when determining whether the fund category requires additional funding from the Restricted Capital Improvement Fund, Restricted Annexation Fund, Restricted Debt Fund, or the General Fund. Because the Capital Improvement Fund and Annexation Fund may finance expansion, replacement or betterment reserves may be transferred between these fund categories, but only back and forth within its own type of restricted fund. As an example, if during the rate model update process it was determined that the Expansion Funds (designated and restricted) OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 45 of 49 would drop and stay below the minimum during the six-year planning horizon, this would trigger a bond sale, a transfer of general use reserves, and/or a transfer of restricted reserves. If in the cash planning process, it was anticipated that the General Fund would remain above target during the planning horizon and that the trend did not present a problematic underfunded status, then General Fund reserves would be considered available for transfer prior to making proceeds available from a bond sale. Also, if during this period the Betterment Fund category was anticipated to exceed its maximum, then reserves from either the Designated Betterment Fund, the Annexation Fund, or the Capital Improvement Fund would be transferred to the corresponding Expansion Fund prior to a bond sale. All funds are evaluated to determine which has the greatest need or availability of reserves before any reserve transfer recommendation is presented to the Board. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 46 of 49 GLOSSARY The Reserve Policy contains terminology that is unique to public finance and budgeting. The following glossary provides assistance in understanding these terms. Annexation Fees: When water service is requested for land outside the boundaries of the District, the land to be serviced must first be annexed. For sewer service the land must be annexed into an improvement district within the District. Assets: Resources owned or held by Otay Water District that has monetary value. Availability Fees: The District levies charges each year in developed areas to be used for upgrades, betterment, or replacement and in undeveloped areas to provide a source of funding for planning, mapping, and preliminary design of facilities to meet future development. Current legislation provides that any availability charge in excess of $10.00 per acre shall be used only for the purpose of the improvement district for which it was assessed. Betterment Fees: In addition to other applicable water rates and charges, water customers pay a fee based on water service zone or Improvement District. These fees are restricted for use in the area where they are collected and may be used for the construction and maintenance of facilities. Bond: A written promise to pay a sum of money on a specific date at a specified interest rate. The interest payments and the repayment of the principal are authorized in a District bond resolution. The most common types of bonds are General Obligation (GO) bonds and Certificates of Participation (COPs). These are frequently used for construction of large capital projects such as buildings, reservoirs, pipelines and pump stations. Capital Equipment: Fixed assets such as vehicles, marine equipment, computers, furniture, technical instruments, etc. which have a life expectancy of more than two years and a value over $10,000. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 47 of 49 Capital Improvement Program: A long-range plan of the District for the construction, rehabilitation and modernization of the District-owned and operated infrastructure. CWA: The County Water Authority was organized in 1944 under the State County Water Authority Act for the primary purpose of importing Colorado River water to augment the local water supplies of the Authority's member agencies. The Authority purchases water from the Metropolitan Water District of Southern California (MWD) which imports water from the Colorado River and the State Water Project. Debt Service: The District's obligation to pay the principal and interest of bonds and other debt instruments according to a predetermined payment schedule. Expenditures/Expenses: These terms refer to the outflow of funds paid or to be paid for an asset, goods, or services obtained regardless of when actually paid for. (Note: An encumbrance is not an expenditure). An encumbrance reserves funds to be expended in a future period. Fund: An account used to track the collection and use of monies for a specifically defined purpose. Fund Balance: The current funds on hand resulting from the historical collection and use of monies. The difference between assets and liabilities reported in the District’s Operating Fund plus residual equities or balances and changes therein, from the results of operations. Interest Income: Earnings from the investment portfolio. Per District Policy Number 25, interest income will be allocated to the various funds each month based upon each fund’s prior month- ending balance. Late Charges/Penalties: Charges and penalties are imposed on customer accounts for late payments, returned checkspayments, and related telephone contacts other infringements of the District’s Code of Ordinances. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 48 of 49 1% Property Tax: In 1978, Proposition 13 limited general levy property tax rates for all taxing authorities to a total rate of 1% of full cash value. Subsequent legislation, AB 8, established that the receipts from the 1% levy were to be distributed to taxing agencies according to approximately the same proportions received prior to Proposition 13. Funds received are to be used for facilities construction or debt service on bonds sold to build facilities. Operating Budget: The portion of the budget that pertains to daily operations that provide basic governmental services. The operating budget contains appropriations for such expenditures as personnel, supplies, utilities, materials, travel and fuel, and does not include purchases of major capital plant or equipment which is budgeted for separately in the Capital Budget. The Operating Budget also identifies planned non-operating revenues and expenses. Revenue: Monies that the District receives as income. It includes such items as water sales and sewer fees. Estimated revenues are those expected to be collected during the fiscal year. System Fees: Each water service customer pays a monthly system charge for water system replacement, maintenance, and operation expenses. The charge is based on the size of the meter and class of service. Taxes: California Water Code Section 72091 authorizes the District, as a municipal water district, to levy ad valorem property taxes which are equal to the amount required to make annual payments for principal and interest on General Obligation bonds approved by the voters prior to July 1, 1978. Unit: A Unit of water is 100 cubic feet or 748 gallons of water. Water Rates: Rates vary among classes of service and are measured in uUnits. The water rates for residential customers are based on an accelerated block structure. As more uUnits are consumed, a higher uUnit rate is charged. Effective in 2009, all non- residential customers are charged for water based on a tiered rate structure in which water rates are based on meter size and amount of Units consumed. All non-residential customers are charged a OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 11/3/10 8/1/12 Page 49 of 49 flat rate per unit. A unit of water is 100 cubic feet or 748 gallons of water. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 1 of 44 1.0 The District The Otay Water District is a California municipal water district, authorized in 1956 by the State Legislature under the provisions of the Municipal Water District Act of 1911. The District is a "revenue neutral" public agency; meaning each end user pays their fair share of the District's costs of water acquisition, construction of infrastructure, and the operation and maintenance of the public water facilities. The District provides water service within its boundaries, and provides sewer and recycled water service within certain portions of the District. As such, the District operates three distinct business segments:  Potable water  Recycled water  Sewer Each of these business segments has an identifiable customer base. In addition, the developer community, large and small, makes up a significant class of customer for each business segment. As a result, the District has four distinct customer service types:  Developers  Potable water users  Recycled water users  Sewer users The District has established practices and developed computer systems that have enabled the District to maintain a clear separation between the service costs relating to each of its four customer service types. Regardless of customer class, financial principles regarding cost allocation and fund accounting are fundamental to the District’s Reserve Policy. These principles are derived from the statements of the Governmental Accounting Standards Board (GASB), and from oversight and advisory bodies such as the California State Auditor, the Little Hoover Commission, and the Government Finance Officers Association (GFOA). These have significant impacts on how the finances of the District are organized and how financial processes work within the organization. Exhibit II OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 2 of 44 1.1 The District’s Use of Financial Resources All of the District’s expenditures fall into two broad categories: operating costs and capital expenditures. The operating costs include costs relating to the purchase and delivery of potable and recycled water, and the transportation and treatment of sewage. The capital expenditures support the construction of infrastructure necessary to deliver services. The District uses various funds to support the operating and capital efforts. Operations and maintenance is financed only by rates and charges, also called pay-as-you-go, while capital infrastructure is financed using two financing methods: pay-as-you-go and debt issuance (requiring annual debt service). The Capital Improvement Program (CIP) and the two funding methods support the construction, betterment, and replacement of infrastructure in all three business areas: potable, recycled, and sewer. The District establishes different funds to track revenues allocated to different activities. Once established, each fund receives financial resources up to the levels defined in this policy. Every year, as a part of the annual budget process, the District’s rate model is updated for each fund with the current fund balances and the estimated revenues and expenditures for the next six years. The expenditure requirements and financial resources are then evaluated to ensure that the existing fund balances and additional revenues are sufficient within the current budget cycle and for the next five years to maintain target fund levels. If a deficit is identified, then options for transfers, shifting CIP projects, debt, cost saving measures, and/or rate increases are evaluated. 1.2 The District’s Capital Improvement Program (CIP) The planning, design, and construction costs of all capital facilities within the three business segments are allocated to four cost types and corresponding fund categories: New Water Supply, Expansion, Replacement, and/or Betterment. The allocation to these four cost types is defined in the District’s Capital Improvement Program (CIP) and is determined by an engineering analysis that identifies which type of customer will benefit from each facility, planned or existing. The costs of the capital improvements are borne by either existing users or by the developing areas, or by a combination of the two, as applicable. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 3 of 44 This Reserve Policy protects both the existing users and the developing areas from incurring unwarranted costs. Developing areas are not required to finance facilities that are replacement or betterment and established areas are not required to replace facilities before they are worn out because of new development. However, to ensure a fair allocation of costs, each facility has the potential to be classified into any or all of the four cost types. In addition to these cost types there are occasional CIPs that may be billable to a third party, if for example a third party requires a District facility be relocated. Paragraphs a through d below, describe how the costs of capital facilities are financed through various fees. a. New Water Supply The portion of a new supply project that benefits new users is financed from the reserves in the New Water Supply Fund category. These reserves are primarily derived from proceeds of the new water supply fee. The New Water Supply Fund is restricted, meaning the amounts credited to this fund are accounted for separately and are used solely for the planning, design, and construction of the new water supply expansion facilities. Debt financing may also be a temporary financial resource to finance new water supply projects. The District has a Debt Policy (Policy No. 45) that guides the debt issuance process. Any debt proceeds used for this purpose would be restricted in nature and tracked separately. General use reserves may also be placed in the Designated New Water Supply Fund and used for water supply projects. b. Expansion The portion of a CIP project that benefits new users is financed from the reserves in the Expansion Fund category. These reserves are primarily derived from proceeds of the “incremental” portion of the capacity fees collected within developing areas. Capacity fees are accounted for separately and used for the planning, design, and construction of expansion facilities. Additionally, expansion may be financed by annexation fees or the “buy-in” portion of the capacity fee. Both of these fees are restricted for CIP purposes, but not specifically for expansion. Debt financing may also be a temporary financial resource for expansion projects. General use reserves may also be placed in the Designated Expansion Fund and used for expansion projects. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 4 of 44 c. Replacement The portion of a CIP project that benefits existing users by replacing an existing facility is financed from the reserves in the Replacement Fund category. Replacement of facilities may be financed with proceeds of annexation fees, the “buy- in” portion of the capacity fees, general use reserves held in the Designated Replacement Fund and debt proceeds. The various funding sources available for replacement projects is anticipated to provide the necessary flexibility to begin projects while any necessary debt financing is being obtained. d. Betterment Facilities that improve reliability, meet new regulations, or create increased levels of service are considered betterment facilities that benefit existing users. The reserves in the Better Fund category are used to finance these projects or portions of projects. Certain user rates, charges, and betterment fees are restricted geographically for betterment of facilities, but may also be used for general maintenance of facilities in that area. Proceeds of the annexation fee and the “buy-in” portion of the capacity fees may also be used to finance betterment projects. General use reserves may be placed in the Designated Betterment Fund and used for betterment projects. 1.21 Relocations Occasionally, relocation of a District facility is required by a third party. If the District has a superior easement the relocation cost will be paid by the third party, but only to the extent that the District does not benefit from the relocation. When relocation is required, a CIP project may be created which is wholly or partially financed by a third party. On occasion, the District will require that its own facilities be relocated. Depending on the nature of the facilities, the financial resources for these projects could be from new water supply, expansion, replacement, betterment or third party financing. Each project is individually negotiated with the third party based on the facts and circumstances of the relocation. Occasionally, the District will improve the facilities that are being relocated. When determining how to allocate costs to various funds the following guideline is suggested: if a project has more than five years of useful life remaining, an incremental cost view should be OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 5 of 44 considered; if the project has less than five years of useful life remaining, a pro-rata cost approach should be considered. Also, the likelihood the District will benefit from an asset’s life extension should be evaluated prior to allocating costs. 1.22 Oversizing If deemed reasonable by the District, in connection with the construction of backbone facilities, a developer may be required to oversize new facilities for future development. The developer is reimbursed for incremental oversizing costs as per Policy No. 26. These reimbursements are not available for the distribution system within a development which is an obligation of the developer. 1.23 Exclusion of Developed Areas from Expansion Costs Developed areas are assumed to have sufficient supply and capacity to meet their current requirements as provided by the developers. In addition, they are considered to have borne capital financial costs that are at least proportionate to the benefits they have received from capital facilities. Accordingly, no regional capital financing costs are allocated to these areas so that they will not incur any costs for newly developing areas, except for capital projects that produce district-wide benefit or cost savings. 1.24 Improvement Districts (IDs) Improvement Districts (IDs) are established to facilitate the financing of particular improvements by the specific beneficiaries. The District has a number of improvement districts that were established for General Obligation (GO) debt repayment. Most GO debt has been paid off and it is unlikely that the District will issue additional GO debt. Improvement districts continue to be used for other purposes: 1) to distinguish sewer customers from water customers on the county tax roll; 2) to place parcels on the county tax roll for the collection of availability fees; or 3) for charging special water rates. Over the years, the District moved to a district-wide perspective of financing improvements. This philosophy is evident by the district-wide capacity and annexation fees. The District also uses district-wide water rates. As time goes on, it is expected that IDs will continue to outgrow their purpose and their use will diminish. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 6 of 44 1.3 The Purpose of the Policy Public entities accumulate and maintain reserves to ensure both financial stability and continuous availability of services. Financial stability and the resulting improved credit quality allow the public entity to weather times of uncertainty and the impact of negative events, both major and minor. Reserves allow for the ongoing maintenance of property and timely payment of expenses even when such expenses exceed money available from a single fiscal period. In the final analysis, the type and level of reserves are driven by the type and magnitude of uncertainty faced by the public entity. A “reserve” has a number of meanings, as follows:  Working capital is required to insure timely payment of obligations.  A buffer against volatility in revenues.  Liquidity is required to obtain other goods and services (e.g., bank services).  Designated money to protect creditors.  Money set aside to replace assets at the end of their useful lives.  Money set aside to repair or replace assets damaged or destroyed at unanticipated times. It is important to note that reserves, fund balance, and net assets are not the same. Fund balance and net assets are accounting terms and may not always be in the form of cash or liquid investments. Fund balances and net assets may not always be reserves unless a designation of all or a portion of fund balance is made. In addition, the term fund balance was replaced by net assets as codified by the Governmental Accounting Standards Board (GASB). In short, reserves are the liquid assets of the District, accumulated and maintained for application to finance contingent future activities, whether known or unanticipated, operating or capital in nature. The District’s Reserve Policy governs the management and use of these financial resources. Few policies OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 7 of 44 have a more significant impact on the financial health and stability of the District. This policy explains several key financial concepts used by the District and provides some background information to the overall strategies and practices utilized. The District has a fiduciary obligation to its customers, to manage and direct the use of public funds for the purpose of providing water and sewer services in an efficient and financially sound manner. 1.4 Policy Guidelines In 2000, the Little Hoover Commission reviewed the levels of reserve funds for special districts in California and prepared a report reflecting that special districts were accumulating unreasonable levels of funds. As a proactive response, the California Special Districts Association (CSDA) prepared Reserve Guidelines for its members. The Reserve Guidelines were significant in noting that reserve levels need to be in context of the organization’s overall business model and capital improvement plan. There are a number of potential events which the District should consider in the development of reserves:  Economic Uncertainty - performance of the regional economy and the impact of that performance on demand for water.  Weather - the amount of rainfall and the impact of weather on the availability and the cost of water as well as the demand for water.  Government Mandates - the impact of federal and state regulation, particularly environmental regulation.  Tax Changes - limitations on the District’s taxing and spending powers through the passage of a voter referendum, the impound of District property taxes or the removal of the District’s power to levy property taxes, further increases to Educational Revenue Augmentation Fund (ERAF) contributions or changes in calculation methodology.  Operating Costs - increases in operating and maintenance costs because of inflation, labor agreement or other modification. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 8 of 44  Force Majeure - unanticipated expenditures resulting from natural disasters or intentional acts.  Emergency Maintenance - unanticipated expenditures resulting from unexpected failure of assets (e.g., rupture in the primary transmission system).  Unexpected Variation in Cash Flow - the incidence of additional costs or decreased revenues that require short- term borrowing in the absence of sufficient financial resources. The California State Auditor has, in its oversight role, offered a number of quality recommendations for the development of reserve policies as outlined in its report entitled, “California’s Independent Water Districts: Reserve Amounts Are Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004, Report No. 2003-137. All of these recommendations have been incorporated into this policy in an effort to address key issues surrounding the management and use of District reserves. The detailed objectives as identified by the State Auditor are as follows:  Distinguish between restricted and unrestricted reserves.  Establish distinct purposes for all reserves.  Set target levels, including minimums and maximums, for the accumulation of reserves.  Identify the events or conditions that prompt the use of reserves.  Conform to plans to acquire or build capital assets.  Receive Board approval and that it is in writing.  Require periodic review of reserve balances and rationale for maintaining them. Yet, the State Auditor’s report acknowledges that the California Constitution (Article XIII B, Section 5) is vague in its provisions governing the accumulation and use of reserves.1 1 California State Auditor, Bureau of State Audits, “California’s Independent Water Districts: Reserve Amounts Are Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004, 2003-137; p. 8. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 9 of 44 Specifically, the Constitution states that “each entity of the government can establish contingency, emergency, unemployment, reserve, sinking fund…or similar funds as it shall deem reasonable and proper.”2 Similarly, the State’s Water Code does not impose any requirements as to specific or recommended reserve fund levels. As a result, the public finance community as a whole has yet to settle on any real objective standards for the level of reserve funds appropriate for governmental enterprises. This lack of consensus as to specific standards is indicative of the wide variance of the financial and operations context for different districts and different contingencies justifying reserves. The Government Finance Officers Association (GFOA) in its “Recommended Practice on Appropriate Level of Unreserved Fund Balance in the General Fund” (2002) states that in establishing a policy governing the level of unreserved fund balance in the general fund, a government should consider a variety of factors. These include:  The predictability of its revenues and the volatility of its expenditures (i.e., higher levels of the unreserved fund balances may be needed if significant revenue sources are subject to unpredictable fluctuations or if operating expenditures are highly volatile).  The availability of resources in other funds as well as the potential drain upon general fund resources from other funds (i.e., the availability of resources in other funds may reduce the amount of the unreserved fund balance needed in the general fund, just as deficits in other funds may require that a higher level of unreserved fund balance be maintained in the general fund).  Liquidity (i.e., a disparity between when financial resources actually become available to make payments and the average maturity of related liabilities may require that a higher level of resources be maintained).  Designations (i.e., governments may wish to maintain higher levels of the unreserved fund balance to compensate for any portion of unreserved fund balance already designated for a specific purpose). 2 California Constitution, Article XIII B, Section 5. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 10 of 44 In the preparation of this policy, each of the CSDA guidelines and the GFOA recommendations has been considered. In addition, all seven objectives provided by the State Auditor are specifically addressed for each reserve. The District wholly supports the State Auditor’s efforts to bring a high-level of quality to reserve governance and establishing a standard of performance. The District recognizes that the customer pays for services provided. Quality management requires that periodic valuations be performed so that fees and charges can be set at appropriate levels to recover the cost of service. The District’s Reserve Policy has been drafted with consideration of the GFOA, CSDA, and State Auditor’s general guidelines as provided above. In addition, the District has adopted the following principles in the management of its financial resources:  Reserves are held and used only for the purpose for which they are collected. This is done to maintain equity among customers.  Each of the service types is tracked separately so that expenditures and revenues can be monitored and evaluated for each customer type. This provides the District with the necessary information to appropriately charge for each of the services.  Separation of operations and maintenance from capital expenditures occurs within each of the service types. This is done because the financing of these expenditures is often on different timelines or use different reserves.  The District will hold its reserves at responsible and prudent levels. This policy sets minimum, maximum, and target levels for each of the various funds. This has been done so that the District can maintain reserves to meet the purpose for which the funds were established. The levels are set by reference to line items in the District’s financial statements and approved budgets. This allows reserve levels to adjust to the District’s changing financial circumstances.  Debt financing of facilities provides intergenerational equity and maintains rates at reasonable levels. This equity is accomplished with long-term financing which spreads the cost of facilities over the life of the facilities. The burden to pay for facilities is then paid by those who use OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 11 of 44 them. The District could amass significant reserves by pre- collecting financial resources in a Replacement Reserve Fund allowing the District to cash finance all replacements. However, this would require significant rate increases burdening the current customers and creating reserve levels difficult to defend to the ratepayers or other oversight entities. These concepts are fundamental to the way the District manages its funds and have a direct impact on the way rates and charges are set. The District performs annual budget evaluations and updates its rate model on an annual basis to monitor and adjust the various funds and revenue sources. The separation, tracking, and projecting of the various funds and expenditures create the essential information necessary for the equitable rate structure maintained by the District. The annual review preserves the balance between services provided and the fees charged. This review also insures that reserves will be available to continue to serve the District’s customers. Financial Sources 2.0 Developers a. Meter Installation Charges (General Use) Meter fees are charges collected for new water service connections. Fees vary depending upon meter size and type of service. The costs associated with meter installations are included in the Operating Expenses section of the budget. These charges are financed by developers. b. Developer Deposits (General Use) These deposits are for the engineering and operations services provided to developers. They are tracked separately for each developer and any excess amount is returned to the developer. c. Annexation Fees (Restricted) Annexation fees3 are collected as a condition of annexing into the District’s potable and recycled water facilities. Since the existing facilities have been built and maintained by developers or customers within the District, the 3 Code of Ordinances, Section 9. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 12 of 44 annexation fee is calculated based on the present value of all property taxes (1% property tax and availability fees) paid by existing and prior customers. The annexation fee insures that future users finance a portion of facilities that were sized, built, and maintained for both existing and future users. Proceeds of annexation fees are restricted and can be used for expansion, replacement, or betterment projects. These reserves may be shifted back and forth as financing needs change. d. Annexation Fees (Unrestricted) A sewer annexation fee is collected when property is annexed into an improvement district. This fee is calculated using the “buy-in” basis and therefore is unrestricted. e. New Water Supply Fee (Restricted) New water supply fees4 are based on the cost of the expansion portion of new water supply projects divided by the number of future equivalent dwelling units (EDU). The new water supply fee covers the cost of planning, design, construction, and financing associated with facilities for the District’s new supply needs. These fees are paid by developers. The proceeds of this fee may be used only for new potable or recycled water supply projects. Although the fees collected are not restricted separately, one portion for potable and the other for recycled, they are tracked separately. f. Capacity Fees (Restricted) Capacity fees4 are based on the value of existing and future facilities divided by the number of existing and future equivalent dwelling units. This method of calculating capacity fees is called the combined method, where the “buy- in” portion of the capacity fee covers costs to repay existing customers for the facilities that they have built, and where the “incremental” portion of the capacity fee covers the cost of future expansion facilities. The “buy-in” portion of the capacity fee is restricted to pay for planning, design, construction, and financing associated with expansion, replacement or betterment facilities. The “buy- in” portion may be shifted back and forth between expansion, betterment or replacement as the financing needs change. The 4 Code of Ordinances, Section 28 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 13 of 44 “incremental” portion of the capacity fee is limited to planning, design, construction, and financing exclusively for expansion facilities (excluding new water supply expansion). Facility needs are based on projected land use planning. Changes in anticipated future land use occur and can alter projected facility requirements. Thus, both the anticipated facilities needs and their projected costs change over time as regulatory agencies make changes to land use. The District periodically reviews the capacity fee calculation to accommodate such variations. These fees are paid by developers. The District’s construction of infrastructure occurs prior to the addition of EDUs. This sequence serves two purposes: one it ensures that the District can serve the pending construction as it is completed; and two, it is more efficient to oversize many facilities at the outset rather than build for the current need and then reconstruct when the future need is realized. As a result of this strategy, the District has financed construction with bond financing as the existing expansion reserves are depleted. The capacity fee is calculated based on the combined recycled and potable water systems needs. This methodology is used because the two water systems work hand-in-hand. All capacity fees can be used for either potable or recycled but must be tracked to distinguish between the “buy-in” and “incremental” portions as described above. So, while capacity fees are not restricted separately by potable and recycled, they are tracked separately. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 14 of 44 2.1 Customers/Users a. Uniform Rates and Charges (General Use) Charges to users for water, sewer, and recycled water are uniform throughout the District for similar customer types. b. Monthly System Fees (General Use) This is a fixed revenue source that is charged monthly. The amount of the charge is based on the meter size. c. Energy Charges (General Use) The energy pumping fee is a charge per Unit of water for each 100 feet of lift, or fraction thereof, above the base elevation of 450 feet. This charge is placed on the monthly water bills of all water customers. d. Penalties (General Use) Penalties are added to the monthly water and sewer bills for late charges, locks, etc. e. Pass-through Fixed Charges (General Use) A fixed monthly charge to the District’s customers intended to collect sufficient funds to pass-through the increased DEVELOPERS Diagram 2.0: Flow of Funds - Developer Sources Unrestricted and Undesignated (General Use) Funds Meter Installation Charges Developer Deposits Restricted Funds Annexation Fees Capacity Fees New Water Supply Fees OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 15 of 44 fixed costs from the County Water Authority (CWA) and the Metropolitan Water District (MWD). f. Special Rates and Charges (Restricted) In addition to the uniform water charges, the District currently has five special water rates and one sewer rate. The five water rates are for construction, installation, and maintenance of water storage reservoirs, pump stations, and water lines. Each of these rates and charges must be used within the respective geographic areas from which they are collected. These special charges are listed below:  North District water charge (Code section 25.03G)  ID 9 water charge (Code section 25.03H)  ID 3 water charge (Code section 25.03I)  ID 10 water charge (Code section 25.03I)  La Presa water charge (Code section 25.03I)  Russell Square sewer charge (Code section 53.04C) When these rates were established they were for the specific purpose of constructing, installing, and maintaining the water and sewer systems in the areas in which the fees were collected. Therefore, these are restricted reserves by geographic area as well as by purpose. These rates and charges can also be used for maintenance; unlike the availability fees (discussed in 2.2 B.). These six special rates and charges along with availability fees are tracked separately, by geographic area, so they can be individually evaluated to maintain the targeted reserve levels. To meet this need, each special rate and charge is accounted for in a “sub-fund” of the Betterment Fund. g. Temporary Meter Fees (General Use/Restricted) Water charges, in lieu of capacity fees, are charged on temporary meters. This is done because temporary meters use system capacity but they are not charged a capacity fee. Temporary water use is charged at two times the water rate with the added charge placed in the Restricted Expansion Fund. The primary users of these temporary meters are developers; however, general customers also use these for various purposes. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 16 of 44 2.2 County-Collected Taxes and Fees a. General Levy Property Tax Receipts (1% Property Tax) (General Use) In 1978, Proposition 13 limited the levy of ad valorem property taxes on real property to one percent of the assessed value of such property. Subsequent legislation, AB 8, established that the receipts from the one percent levy were to be distributed to taxing agencies proportionate to each agency’s general levy receipts prior to Proposition 13. Taxes received are for general use. b. Availability Charges (General Use/Restricted) The District levies availability charges each year in developed and undeveloped areas. Current legislation provides that any amount up to $10 per parcel is general use and any amount over $10 per parcel is restricted to be expended in and for the improvement district (ID) within which it is collected. Accordingly, the District may use availability charges in excess of $10 toward costs of water CUSTOMERS / USERS Diagram 2.1: Flow of Funds - Customer Sources Unrestricted and Undesignated (General Use) Funds Monthly System Fees Restricted Funds Energy Charges Penalties Pass –Through Fixed Charges 2x Water Rate Special Rates and Charges Uniform Rates and Charges OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 17 of 44 and sewer facilities which are either, expansion, betterment, or replacement of facilities consistent with the purpose of the ID in which they are collected. This portion of the proceeds of availability charges is geographically restricted and restricted by purpose. As costs are incurred on these projects the respective IDs are charged, reducing the reserves. To the extent that availability charges are not used for the purpose for which they are collected, they must be returned to the property owners that paid them. The District has historically used these reserves for betterment capital facilities thus, the restricted reserves are accounted for in “sub-funds” of the Betterment Fund (see 2.1 f.). c. Improvement District General Obligation (GO) Bond Assessments (Restricted) The District has historically issued general obligation (GO) debt and establishes an improvement district for the repayment of that debt. When this financing method is used, the county tax roll can be used to collect special taxes or assessments within the ID to pay the debt obligation. The proceeds of the debt are restricted for the purpose as defined in the bond documents. COUNTY COLLECTED TAXES AND FEES Unrestricted and Undesignated (General Use) Funds General Levy Property Tax Receipts Availability Charges Restricted Funds General Obligation Bond Assessments Diagram 2.2: Flow of Funds – County Collection Sources OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 18 of 44 2.3 Miscellaneous Income a. Miscellaneous Rents and Leases (General Use) Revenues received from the rental and lease of District property are general use revenues. Not only are they periodic revenues, but there is also a one-time fee charged with the setup of each new lease. The District incurs expenses related to these rents and leases. The one-time fees are calculated to recover the costs to setup the leases. b. Sewer Billing Fees (General Use) Sewer billing fees are general use revenues. The District provides processing and billing services to the City of Chula Vista to bill and collect from their customers for sewer service. These fees are to recover the cost the District incurs to provide this service. c. Interest Income or Expense Allocation (General Use, Designated, and Restricted) Interest income (expense) will be allocated every month based upon each fund's month-ending balance. In this way, each fund receives credit for interest earned by that fund and each fund with a negative balance is charged for the use of the other fund’s reserves. MISCELLANEOUS INCOME Unrestricted and Undesignated (General Use) Funds Miscellaneous Rents and Leases Sewer Billing Fees Restricted Funds Interest Income or Expense Allocation Diagram 2.3: Flow of Funds – Miscellaneous Income Sources Designated Funds OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 19 of 44 2.4 Debt Issuance a. Loans (General/Restricted Use) As the District determines that additional financing is required for a particular purpose, the option of borrowing is considered. The determination to borrow is made as a part of the annual rate model update and is evaluated in accordance with the Debt Policy before it is recommended to the Board for action. As an option to bond indebtedness, loans are available to satisfy short-term financing needs. These loans may or may not be contractually restricted for a particular purpose. b. General Obligation (GO) Bonds (Restricted) As the District becomes more developed it becomes less likely that general obligation debt will be used as it requires a vote of the public to be approved. Bond proceeds are restricted for the construction of those facilities identified in the GO bond issuance. Occasionally, specific portions of bond proceeds may be allocated for the repayment of the principal and interest, also called debt service, on these bonds. As the District determines that additional financing is required for a particular purpose, the option of debt issuance is considered. The determination to issue debt is made as a part of the annual rate model update and is evaluated in accordance with the Debt Policy before it is recommended to the Board for action. c. Certificates of Participation (COPs) (Restricted) General revenues of the District are pledged as security for Certificates of Participation (COPs) indebtedness. If the District determines that additional financing is required for a particular purpose, the option of debt issuance is considered. The determination to issue debt is made as a part of the annual rate model update and is evaluated in accordance with the Debt Policy before it is recommended to the Board for action. This form of financing has become the industry’s preferred form of financing as it does not require a vote of the general public. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 20 of 44 2.5 Inter-fund Transfers Each year in the budgeting process, future fund levels are projected for the next six years. Based on these projections transfers are recommended. Reserves may be transferred between Unrestricted or Designated Funds and the General Fund (see 4.0 “Funding Levels” and 4.1 “Fund Transfers”). Reserves may not be transferred to or from any of the restricted funds unless it is between two restricted funds with a shared purpose. Fund Types and Categories 3.0 General Funds a. Purpose The General Fund is neither restricted nor designated. The District maintains one General Fund for each business segment (water, sewer, and recycled). This fund holds the working capital and emergency operating reserves. While the General Fund has a short-term focus to finance the District’s annual operations, it is supported by the six-year rate model. This DEBT PROCEEDS Unrestricted and Undesignated (General Use) Funds Loans General Obligation Bonds Restricted Funds Certificates of Participation Diagram 2.4: Flow of Funds – Debt Issuance Sources OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 21 of 44 fund is primarily used to finance the operations of the District; however, it can be used for any District purpose. This fund can be used to supplement the District’s rates and charges and be a temporary source of revenue to balance the Operating Budget. This fund can also be used to avoid spikes in the rates or significant and abrupt increases. It is an industry practice to have a fund that can be used to stabilize rates. This would only occur if there was a temporary need for reserves that would smooth out a rate spike or to ramp up what would otherwise be a dramatic rate increase. The General Fund also plays a role in the debt planning of the District. This fund is viewed by the debt markets as a commitment by the District to ensure financial stability of the rates and charges of the District. The District is anticipated to need a number of debt issuances over the years and this fund will help the District not only to stabilize rate fluctuations but also to access low cost financing for future projects. b. Sources Meter installation charges, temporary meter fees, uniform rates and charges, monthly system fees, energy charges, penalties, pass-through fixed charges, general levy property tax receipts, availability charges, miscellaneous rents and leases, sewer billing fees, interest income or expense allocation, loans, and a portion of the temporary water sales. The sewer general fund receives sewer charges, penalties, availability charges, sewer annexation fees (calculated on the “buy-in” basis), and interest income or expense allocation. c. Funding Levels I. Minimum Level – The minimum reserve level for each business segment of the General Fund is three months of operating budget expenses (evaluated separately for each segment). OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 22 of 44 II. Maximum Level – The maximum reserve level for the General Fund is nine months of operating budget expenses. In the event that this fund exceeds the seven month level, the excess will be evaluated or transferred to one or more of the designated funds. III. Target Level – The target level of reserves is three months of operating budget expenses. In the event that the fund drops below the target level, rate increases or fund transfers would be considered. 3.1 Designated Other Post Employment Benefits (OPEB) Fund a. Purpose Designated Other Post Employment Benefits (OPEB) reserves are “general use” reserves that have been set apart by Board action to finance the medical benefits of qualified retirees as outlined in the District’s benefits plan. This District fund holds only a portion of the total OPEB reserves. The other portion is held in a trust at CalPERS and is restricted for the purpose of financing the OPEB liability. The two portions are considered jointly when looking at target reserve levels. Every two years, the fund is evaluated by an actuary to update the annual financing requirements. Changes in the actuarial valuation may result from changes in benefit levels, employee population, health insurance costs, or general market conditions. The reserves held by the District are currently designated and may be placed into the CalPERS trust to legally restrict the funds, removing the District’s legal access to these reserves. b. Sources The OPEB liability may be financed by general use reserves coming from user rates and charges, either from an operating budget expenditure or from interfund transfers. Transfers of unrestricted reserves may come from the various designated funds or from the General Fund. As a part of the normal budget process, annual operating revenues have been sufficient to finance the ongoing needs of this designated fund. While debt financing is also an option, the District has only used user rates and charges to finance this fund. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 23 of 44 c. Funding Levels I. Minimum Level – The minimum reserve level for this fund is equal to the District’s OPEB liability as determined by the actuarial study. When considering the reserve level of this fund, both the District held OPEB reserves and CalPERS held OPEB reserves must be considered jointly. II. Maximum Level – The maximum reserve level for this fund is equal to the District’s OPEB liability as determined by the actuarial study. In the event that the two funds, as described above, exceed the OPEB liability, the District will reduce the annual funding levels as defined by the actuarial study. III. Target Level – The target reserve level for this fund is equal to the District’s OPEB liability as determined by the actuarial study. In the event that the two funds, as described above, fall below the OPEB liability, the District will increase the annual funding levels as defined by the actuarial study. 3.2 New Water Supply Fund Category a. Purpose The New Water Supply Fund category is to finance the expansion portion of new water supply projects and is therefore to be paid by developers. When considering the reserve level of the New Water Supply category; the New Water Supply Fund, the New Water Supply Debt Fund, and the Designated New Water Supply Fund all work in concert and must be considered jointly. b. Sources The New Water Supply Fund receives reserves only from the new water supply fee. Other funds within the new water supply category of funds receive debt proceeds and general use reserves through a designation to this category. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 24 of 44 c. Funding Levels I. Minimum Level – As the District matures the CIP will move to purely replacement projects. As the District moves through its lifecycle the need for new water supply reserves will decrease and may be reduced to zero. II. Maximum Level – The maximum reserve level for the new water supply category of funds is limited to five years of the unfinanced new water supply facilities as described in the District’s CIP Budget. To determine the unfinanced amount, the total new water supply financing needs must be reduced by the projected new water supply revenues, general fund designations, and bond financing. If the combined new water supply reserves exceed the target level, the District should consider transferring designated reserves to meet other purposes, reduce the new water supply fee, or change the timing of the new water supply projects. III. Target Level – In order to facilitate debt financing of the new water supply, it is important that the various new water supply funds retain an overall reserve level of six months, prior to any attempt to obtain debt financing. This reserve level allows the District the time necessary to issue additional debt without depleting new water supply reserves. If the combined new water supply reserve levels drop below six months of expenditures, this would trigger a transfer of general use reserves, a bond sale, or a change in the timing of new water supply projects. Bond proceeds would be placed in the Restricted New Water Supply Debt Fund while transfers would be placed in the Designated New Water Supply Fund. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 25 of 44 3.3 Expansion Fund Category a. Purpose The Expansion Fund category is to finance the expansion portion of capital projects and therefore is to be paid for by developers. When considering the reserve levels of the expansion category, the following funds work in concert and must be considered jointly: the Expansion Fund, Expansion Debt Fund, Annexation Fund (potable and recycled only), Restricted Funds Unrestricted and Undesignated Funding Sources Funding Source New Water Supply Fees Debt Proceeds Restricted Funds Restricted Funds Designated Funds New Water Supply Fund Expansion New Water Supply Fund Designated New Water Supply Fund Debt Fund General Fund – Rates and Charges New Water Supply Fund Category New Water Supply Debt Fund Diagram 3.2: New Water Supply Fund Category OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 26 of 44 Capital Improvement Fund, and the Designated Expansion Fund. Potable and recycled reserves are considered jointly while sewer is evaluated separately. b. Sources The Expansion Fund is financed by water charges in lieu of capacity fees (for temporary meters) and the “incremental” portion of the capacity fee. The other funds in this category may also be financed by debt proceeds, annexation fees, the “buy-in” portion of the capacity fee, and the general fund through a designation of reserves. c. Funding Levels I. Minimum Level – As the District matures the CIP will move to purely replacement and betterment projects. As the District moves through this lifecycle the need for expansion reserves will decrease and may be reduced to zero. II. Maximum Level – The maximum reserve level for the expansion category of funds is limited to five years of unfinanced expansion facilities as described in the District’s CIP Budget. To determine the unfinanced amount, the total financing needs must be reduced by the projected expansion revenues, bond financing, and any restricted or general fund revenues allocated to this fund category. If the combined expansion reserves exceed target levels, the District should consider reducing capacity fees, reallocating restricted or designated funds to meet other purposes, or shifting the timing of expansion projects. III. Target Level – The target level is six months of expansion expenditures. It is important that the expansion reserves remain at a minimum of six months of expansion expenditures. This reserve level allows the District the time necessary to issue additional debt without depleting expansion reserves. If the combined expansion reserves drop below six months of expenditures this would trigger a transfer of general use reserves, a bond sale, an OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 27 of 44 adjustment to the timing of expansion projects, or a reallocation of restricted reserves. Bond proceeds would be placed in the Restricted Bond Fund, transfers of general use reserves would be placed in the Designated Expansion Fund, and transfers of restricted reserves would be placed in either the Expansion Annexation Fund or the Expansion Capital Improvement Fund. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 28 of 44 Unrestricted and Undesignated Funding Sources Diagram 3.3: Expansion Fund Category Funding Source 2x Water Rates Capacity Fees Restricted Funds Restricted Funds Designated Funds Expansion Fund Expansion Debt Fund Annexation Fund General Fund – Rates and Charges Annexation Fees Restricted Funds Expansion Capital Improvement Fund Debt Proceeds Restricted Funds Capital Improvement Fund Bond Debt Expansion Fund Designated Expansion Fund 59.4% Expansion Fund Category Restricted Funds Expansion Annexation Fund 40.6% %%% OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 29 of 44 3.4 Replacement Fund Category a. Purpose The Replacement Fund category is to finance replacement projects. When considering the reserve levels of the replacement category of funds, the following funds work in concert and must be considered jointly: the Annexation Fund, Debt Fund, Capital Improvement Fund, and the Designated Replacement Fund. The purpose of these reserves is to pay for the replacement of capital infrastructure and capital purchases. These reserves are not to be used for the replacement of non-capital items. With the District’s development of its financial systems and the greater need and ability to separate and track reserves, the replacement reserves have been separated into three funds: water, recycled, and sewer. Projects undertaken solely for the purpose of replacing major capital equipment or facilities, i.e., where the cost exceeds $10,000 for capital purchases or $20,000 for infrastructure items, generally these are not considered normal maintenance. When the cost is below $10,000, the costs are financed annually as operational maintenance. As charges are incurred on replacement projects the reserves are deducted from the respective Replacement Funds on a monthly basis. b. Sources The various funds in this category are financed by debt proceeds, annexation fees, the “buy-in” portion of the capacity fee, and general fund designations. c. Funding Levels I. Minimum Level – The minimum reserve level of this category of funds is 3% of the historical value of existing assets as identified in the District’s current financial statements. Potable, recycled, and sewer replacement are evaluated separately. II. Maximum Level – The maximum reserve level of this category of funds is 6% of existing assets. If the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 30 of 44 combined replacement reserves exceed target levels, the District should consider transferring annexation fees or the “buy-in” portion of the capacity fee to meet other purposes. Another consideration would be to shift the timing of replacement projects. III. Target Level – The target reserve level of this category of funds is 4% of existing assets. In the event that the reserves fall below the recommended target level, the District should consider transferring annexation fees or the “buy-in” portion of the capacity fee. The District should also consider shifting the timing of replacement projects or issuing debt to support the planned level of facility replacement. The District will act based on the annual six-year rate model, to insure that at the end of that planning horizon the reserves exceed the minimum level and is approaching the target level. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 31 of 44 Funding Source Unrestricted and Undesignated Funding Sources Capacity Fees Diagram 3.4: Replacement Fund Category Annexation Fees Restricted Funds Restricted Funds Designated Funds Capital Improvement Fund Replacement Debt Fund Designated Replacement Fund Annexation Fund General Fund – Rates and Charges Debt Proceeds Restricted Funds Debt Fund Replacement Annexation Fund Restricted Funds Replacement Capital Improvement Fund 59.4% Replacement Fund Category OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 32 of 44 3.5 Betterment Fund Category a. Purpose The Betterment Fund category is to finance the betterment portion of capital projects with a portion going to maintenance of the potable, recycled, and sewer systems. The District maintains separate Betterment Fund categories, one for each improvement district. An improvement district is a legally defined geographic area usually established for the purpose of bond financing of facilities. The betterment reserves within these funds are restricted by law for use within the improvement district in which the fees were collected (Water Code 71631.6). However, the legal restriction of this reserve depends upon the particular revenue source. (See Section 2.1 f. for a review of the special rates and availability fees). When considering the reserve levels of the betterment category of funds, the following funds work in concert and must be considered jointly: the Betterment Fund, Annexation Fund, Debt Fund, Capital Improvement Fund, and Designated Betterment Fund. b. Sources The Betterment Fund category receives restricted revenues by improvement district via special water rates and from availability fees collected through the county tax roll. Betterment may also be financed by debt proceeds, annexation fees, the “buy-in” portion of the capacity fee, as well as the general fund through a designation of reserves. c. Funding Levels I. Minimum Level – As the District matures the CIP will move to purely replacement projects. As the District moves through this lifecycle the need for betterment reserves will decrease and may be reduced to zero. II. Maximum Level – The maximum reserve level for the betterment category of funds is limited to five years of unfinanced betterment facilities as OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 33 of 44 described in the District’s CIP Budget. To determine the unfinanced amount, the total financing need must be reduced by the projected betterment revenues, bond financing, annexation, and general fund designations. If this maximum is exceeded, then the District should evaluate reductions in the special water rates and availability fees, transferring designated reserves to meet other purposes, or shifting the timing of betterment projects. III. Target Level – The target is six months of betterment expenditures. It is important that the betterment reserves remain at a minimum of six months of betterment expenditures. This reserve level allows the District the time necessary to issue additional debt without depleting betterment reserves. If the combined betterment reserves drop below six months of expenditures this would trigger a transfer of general use reserves, a bond sale, or an adjustment to the timing of betterment projects. Bond proceeds would be placed in the Betterment Bond Fund while transfers would be placed in the Designated Betterment Fund. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 34 of 44 Fund Diagram 3.6: Fund Targets Restricted Funds Unrestricted and Undesignated Funding Sources Diagram 3.5: Betterment Fund Category Funding Source Capacity Fees Annexation Fees Restricted Funds Restricted Funds Designated Funds Capital Improvement Fund Betterment Debt Fund Betterment Fund General Fund – Rates and Charges Special Rates and Availability Charges Restricted Funds Betterment Annexation Fund Debt Proceeds Restricted Funds Annexation Fund Bond Debt Designated Betterment Fund Betterment Fund Betterment Capital Improvement Fund 59.4% Betterment Fund Category OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 35 of 44 Diagram 3.6: Fund Targets Fund or Fund Category Actions to Consider if below Target Target Maximum New Supply Fund Category New supply fee increase, bond financing, or transfer to designation or to CIF or Annexation Fund Total of all funds in fund category = six months of capital expenditures Nexus of cost to fee Expansion Fund Category Capacity fee increase, bond financing, or transfer to designation or to CIF or Annexation Fund Total of all funds in fund category = six months of capital expenditures Nexus of cost to fee Replacement Fund Category Bond financing, or transfer to designation or to CIF or Annexation Fund Total of all funds in fund category = 4% of infrastructure Nexus of cost to fee Betterment Fund Category Bond financing, or transfer to designation or to CIF or Annexation Fund Total of all funds in fund category = six months of capital expenditures 5 years unfunded needs Debt Reserve Fund Increase tax collection or rates One semi-annual payment Two semi-annual payments OPEB Fund Fund transfers Full funding Full funding General Fund Rate increase or fund transfers Three months of operating budget expenses Nine months of operating budget expenses Note: The annexation fee for sewer is a general fund revenue. Additional Restricted Funds 4.0 Capital Improvement Fund a. Purpose The “Capital Improvement Fund’s sole purpose is to track the “buy-in” portion of the capacity fee and to ensure these fees are expended solely for the purpose for which they were OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 36 of 44 collected. In this case it is to pay for facilities that were in existence at the time this fee was established. These fees may be used for expansion, replacement, or betterment projects or any debt related to these categories. These fees may also be used for either the potable or the recycled systems. As capacity fees are collected, the “buy- in” portion of the fee is allocated as needed to one of three capital improvement funds, one in each of the Expansion, Replacement, and Betterment Fund categories. These reserves are used to pay debt or offset any negative balance within these three categories of funds. These fees may not be used to finance the New Water Supply category, as there were no new water supply facilities in existence at the time the new methodology for capacity fees was established. b. Sources The “buy-in” portion of the capacity fee collected after June 30, 2010. c. Funding Levels There are no minimums, maximums, or target levels for these reserves on an individual basis. The allocation of this fee to the various capital improvement funds is dependent on the overall reserve levels within each fund category. 4.1 Annexation Fund a. Purpose The Annexation Fund’s sole purpose is to track the potable and recycled annexation fees collected and to ensure these fees are expended solely for the purpose for which they were collected. The annexation fees may be used for expansion, replacement, or betterment projects or any debt related to these categories. These fees may be used for either the potable or recycled systems. These reserves may not be used to finance the New Water Supply category, as it was not in existence at the time the fee was established. As these fees are collected they are allocated as needed to one of three capital improvement funds, one in each of the Expansion, Replacement, and Better Fund categories. b. Sources Potable and recycled annexation fees collected after June 30, 2010. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 37 of 44 c. Uses There are no minimums, maximums, or target levels for these reserves on an individual basis. The allocation of this fee to the various Annexation Funds is dependent on the overall reserve levels within each fund category. 4.2 Debt Reserve Fund a. Purpose The Debt Reserve Fund is established to hold the proceeds from the various debt issuances. There are two types of debt, General Obligation bonds and Certificates of Participation bonds. The proceeds are transferred to the New Water Supply, Expansion, Replacement, or Betterment Debt Funds as they are expended for various facilities within those fund categories. As repayment of the debt occurs, the balances within these individual funds are reduced so that the financial impact of issuing debt is tracked within the category for which the debt was issued. b. Sources Debt proceeds. c. Uses There are no minimums, maximums, or target levels for this fund on an individual basis. This fund is available on an as needed basis to fund CIP projects for new water supply, expansion, replacement, or betterment. From a funding level perspective, these reserves are evaluated in the context of all the various funds within each fund category. Fund Transfers 5.0 Funding Levels As described in the preceding sections, the District maintains reserves for its operating and capital activities. These reserves can be of three types: 1) undesignated or general use reserves, 2) designated, and 3) restricted for a specific purpose. The restricted reserves can be restricted geographically and/or by purpose. The District maintains various funds to track the various designations and restrictions. The source of the money OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 38 of 44 for each fund was discussed along with the purpose, source of funds, and levels. Key characteristics of these funds are the target levels, minimums, and maximums. The funding levels must be viewed in the context of the economic environment, political environment, and in light of the District’s rate model. The District’s six-year rate model not only shows the current balance but also shows the trend of the fund balances. Often the trend of the fund is a greater indicator of financial stability than is the current balance. The rate model is updated each year with the budget process and evaluates each fund over the next six years. The rate model will take into account the general economic environment, looking at the development rate, supply rate increases, the possibility of raising rates, capital infrastructure spending, and strategic plan initiatives. The fund balances may at times be over or under the target amount. This is not only acceptable but expected. The rate model provides an empirical estimate of the conformance between the projected District’s financial activities and the guidelines of this policy. 5.1 Fund Transfers Reserves within the District’s various designated funds come from interfund transfers of unrestricted general use reserves. It is important to note that the District has the ability to use general use reserves for any business purpose. General use reserves may be transferred to and from any unrestricted fund for any business need. Designated reserves are general use reserves which have been set aside for a specific purpose by Board action. These reserves can only be used for the purpose they were designated, or with Board action they may be used for any other business purpose. While general use reserves may be used for any restricted purpose they may not be transferred to Restricted Funds due to the sensitivity of the tracking of restricted reserves. If reserves are needed for a restricted purpose they are transferred to a Designated Fund within the fund category with that particular purpose. Reserves restricted to a fund category may only be used within that category and may not be transferred to another category. For example, the new water supply fee and the “incremental” portion of the capacity fee are restricted reserves for a specific purpose, and may not be transferred to another category as no other category has the same purpose. However, the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 39 of 44 “buy-in” portion of the capacity fees and annexation fees are restricted for purposes that are shared by more than one category of funds and may therefore be transferred to a restricted fund within another fund category as long as it shares the same purpose. In many situations reserve transfers are expected as some fund categories will exceed their maximums or drop below their minimums. Only fund categories that are below the stated target are eligible to receive transferred reserves. Fund categories that exceed their maximums are first to be considered for transfers out, followed by funds that exceed their targets. Funds that exceed their minimums are also available for reserve transfers out, but only when other options are not available. The rationale for prioritizing reserve transfers is based on the immediacy of the need and the availability of reserves from other funding sources. For example, the General Fund is first to receive reserves when it drops below its target or minimum levels. This is because of the immediate and ongoing nature of the expenditures that are served by this fund. The operation of the District is first and foremost of the objectives of the District. On the other end of the spectrum, the Replacement Fund has a long- term perspective and will be used to partially finance replacement assets for many years to come. Debt financing is available to respond to this long term, foreseeable, and planned cash flow. This fund is less likely to have immediate needs and has other financing options. When making the determination of when transfers are necessary, all funds within a fund category work as a group. The combined balance of the restricted and designated funds is looked at when determining whether the fund category requires additional funding from the Restricted Capital Improvement Fund, Restricted Annexation Fund, Restricted Debt Fund, or the General Fund. Because the Capital Improvement Fund and Annexation Fund may finance expansion, replacement or betterment reserves may be transferred between these fund categories, but only back and forth within its own type of restricted fund. As an example, if during the rate model update process it was determined that the Expansion Funds (designated and restricted) would drop and stay below the minimum during the six-year planning OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 40 of 44 horizon, this would trigger a bond sale, a transfer of general use reserves, and/or a transfer of restricted reserves. If in the cash planning process, it was anticipated that the General Fund would remain above target during the planning horizon and that the trend did not present a problematic underfunded status, then General Fund reserves would be considered available for transfer prior to making proceeds available from a bond sale. Also, if during this period the Betterment Fund category was anticipated to exceed its maximum, then reserves from either the Designated Betterment Fund, the Annexation Fund, or the Capital Improvement Fund would be transferred to the corresponding Expansion Fund prior to a bond sale. All funds are evaluated to determine which has the greatest need or availability of reserves before any reserve transfer recommendation is presented to the Board. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 41 of 44 GLOSSARY The Reserve Policy contains terminology that is unique to public finance and budgeting. The following glossary provides assistance in understanding these terms. Annexation Fees: When water service is requested for land outside the boundaries of the District, the land to be serviced must first be annexed. For sewer service the land must be annexed into an improvement district within the District. Assets: Resources owned or held by Otay Water District that has monetary value. Availability Fees: The District levies charges each year in developed areas to be used for upgrades, betterment, or replacement and in undeveloped areas to provide a source of funding for planning, mapping, and preliminary design of facilities to meet future development. Current legislation provides that any availability charge in excess of $10.00 per acre shall be used only for the purpose of the improvement district for which it was assessed. Betterment Fees: In addition to other applicable water rates and charges, water customers pay a fee based on water service zone or Improvement District. These fees are restricted for use in the area where they are collected and may be used for the construction and maintenance of facilities. Bond: A written promise to pay a sum of money on a specific date at a specified interest rate. The interest payments and the repayment of the principal are authorized in a District bond resolution. The most common types of bonds are General Obligation (GO) bonds and Certificates of Participation (COPs). These are frequently used for construction of large capital projects such as buildings, reservoirs, pipelines and pump stations. Capital Equipment: Fixed assets such as vehicles, marine equipment, computers, furniture, technical instruments, etc. which have a life expectancy of more than two years and a value over $10,000. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 42 of 44 Capital Improvement Program: A long-range plan of the District for the construction, rehabilitation and modernization of the District-owned and operated infrastructure. CWA: The County Water Authority was organized in 1944 under the State County Water Authority Act for the primary purpose of importing Colorado River water to augment the local water supplies of the Authority's member agencies. The Authority purchases water from the Metropolitan Water District of Southern California (MWD) which imports water from the Colorado River and the State Water Project. Debt Service: The District's obligation to pay the principal and interest of bonds and other debt instruments according to a predetermined payment schedule. Expenditures/Expenses: These terms refer to the outflow of funds paid or to be paid for an asset, goods, or services obtained regardless of when actually paid for. (Note: An encumbrance is not an expenditure). An encumbrance reserves funds to be expended in a future period. Fund: An account used to track the collection and use of monies for a specifically defined purpose. Fund Balance: The current funds on hand resulting from the historical collection and use of monies. The difference between assets and liabilities reported in the District’s Operating Fund plus residual equities or balances and changes therein, from the results of operations. Interest Income: Earnings from the investment portfolio. Per District Policy Number 25, interest income will be allocated to the various funds each month based upon each fund’s prior month- ending balance. Late Charges/Penalties: Charges and penalties are imposed on customer accounts for late payments, returned payments, and other infringements of the District’s Code of Ordinances. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 43 of 44 1% Property Tax: In 1978, Proposition 13 limited general levy property tax rates for all taxing authorities to a total rate of 1% of full cash value. Subsequent legislation, AB 8, established that the receipts from the 1% levy were to be distributed to taxing agencies according to approximately the same proportions received prior to Proposition 13. Funds received are to be used for facilities construction or debt service on bonds sold to build facilities. Operating Budget: The portion of the budget that pertains to daily operations that provide basic governmental services. The operating budget contains appropriations for such expenditures as personnel, supplies, utilities, materials, travel and fuel, and does not include purchases of major capital plant or equipment which is budgeted for separately in the Capital Budget. The Operating Budget also identifies planned non-operating revenues and expenses. Revenue: Monies that the District receives as income. It includes such items as water sales and sewer fees. Estimated revenues are those expected to be collected during the fiscal year. System Fees: Each water service customer pays a monthly system charge for water system replacement, maintenance, and operation expenses. The charge is based on the size of the meter and class of service. Taxes: California Water Code Section 72091 authorizes the District, as a municipal water district, to levy ad valorem property taxes which are equal to the amount required to make annual payments for principal and interest on General Obligation bonds approved by the voters prior to July 1, 1978. Unit: A Unit of water is 100 cubic feet or 748 gallons of water. Water Rates: Rates vary among classes of service and are measured in Units. The water rates for residential customers are based on an accelerated block structure. As more Units are consumed, a higher Unit rate is charged. Effective in 2009, all non- residential customers are charged for water based on a tiered rate structure in which water rates are based on meter size and amount of Units consumed. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised RESERVE POLICY 25 2/10/93 8/1/12 Page 44 of 44 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2012 SUBMITTED BY: Rita Bell, Finance Manager PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Annual Review of the District’s Investment Policy (Policy No. 27) and Re-Delegation of Authority for All Investment Related Activities to the Chief Financial Officer GENERAL MANAGER’S RECOMMENDATION: That the Board receive the District’s Investment Policy (Policy No. 27) for review and to re-delegate authority for all investment related activities to the Chief Financial Officer (CFO), in accordance with Government Code Section 53607. COMMITTEE ACTION: See Attachment A. PURPOSE: Government Code Section 53646 recommends that the District’s Investment Policy be rendered to the Board on an annual basis for review. In addition, Government Code Section 53607 requires that for the CFO’s delegation of authority to remain effective, the governing board must re-delegate authority over investment activities on an annual basis. There are no recommended changes to the Investment Policy and staff is requesting that the Board re-delegate authority to the CFO. ANALYSIS: The primary goals of the investment policy are to assure compliance with the California Government Code, Sections 53600 et seq, and to protect the principal of the funds. The code provides a broad range of investment options for local agencies, including Federal Treasuries, Federal Agencies, Callable Federal Agencies, the State Pool, the County Pool, high-grade corporate debt, and others. Over the past years, the size of the District’s portfolio has fluctuated between $103 million and $88 million due to planned outlays for construction projects. AGENDA ITEM 6e Because of the District’s adherence to a conservative range of authorized investments, we have been able to maintain a healthy and diversified portfolio with no investment losses despite an extended period of turmoil and instability in the national financial markets. The policy is consistent with the current law and the overall objectives of the policy are being met. FISCAL IMPACT: None. STRATEGIC GOAL: Demonstrate financial health through formalized policies, prudent investing, and efficient operations. LEGAL IMPACT: None. Attachments: A) Committee Action Form B) Investment Policy No. 27 C) Portfolio Management: Portfolio Summary D) Investment Policy Presentation ATTACHMENT A SUBJECT/PROJECT: Annual Review of Investment Policy (Policy No. 27) and Re- delegation of Authority for All Investment Related Activities to the Chief Financial Officer COMMITTEE ACTION: The Finance, Administration and Communications Committees reviewed this item at meetings held on July 19, 2012 and the following comments were made:  Staff is presenting the District’s Investment Policy for the board’s annual review and to request the re-delegation of all investment related authority to the Chief Financial Officer as required by Government Code.  It was noted that the District’s Investment Policy has received certification from the Association of Public Treasurers of the United States and Canada.  Staff presented an updated Summary of the District’s Investment portfolio as of June 30, 2012. It was indicated that the bulk of the District’s investments is in Agency and Corporate notes. Staff reviewed the District’s current investments, the percentage that the District’s investment policy authorizes in each investment, and the actual percentage the District has invested in the vehicle (please reference the attached powerpoint presentation). The District has a total of approximately $88,333,000 in its investment portfolio.  The objectives of the District’s Investment Policy is to keep the District’s invested funds in safe investments that are liquid and provide the best interest return. The District’s fund performance for FY 2012 is 0.60% return on Otay funds and 0.40% return on LAIF funds compared to 1.25% and 0.50% respectively in FY 2011. Staff noted that interest rates have significantly dropped so returns have dropped as well.  It was discussed that the Government Code also requires that the board be provided a quarterly report on the status of the District’s investments. A “Portfolio Summary” report is provided the board monthly. Staff indicated that a copy of the report has been attached to staffs’ report and an updated copy has been provided at today’s committee meeting as a figure required for an item within the report is not available until the 15th of each month. The new report reflects the updated figure for the item.  The State’s code limits what investments agencies may invest in. Staff indicated that the District is much more restrictive/conservative than the investment restrictions identified in the State’s code. The District’s policy does not allow some investments or does not allow as high of a percentage investment in a vehicle that is allowed by the State’s code.  It was indicated that the District has a laddered portfolio wherein investments are timed so that approximately $3 million matures every month to assure the District has funds available when it is needed. The District’s strategy is to buy and hold investments which is a very common practice.  The committee indicated that the board is delegating the authority for the investments to one person, Chief Financial Officer, and inquired what checks and balances are in place to protect against possible bad investments. Staff indicated that the most significant check is that the District is restricted in what it may invest in, not only by its own policy, but by the State code and it also is restricted with regard to the brokers that may be utilized to purchase investments. The brokers are required to know the District’s investment policy and are very knowledgeable in the State’s code. There are also internal controls. Staff members in the Finance Department monitor the investments and make recommendation to the Chief Financial Officers on what investments should be made and the term of the investment so that it meets the District’s laddered maturity terms. The District’s bank, Union Bank, is then requested to transfer the funds for the purchase and will hold the actual investment (third party custodian). The transfer of funds is very controlled and requires authorization from various levels within the District. It was noted that the District’s auditors have reviewed this internal control process and have verified that the controls are solid.  The committee indicated that they felt that there is a good practice in place and would like to see the practice documented in a formal procedure. The committee would also like to see the procedure require that two individuals sign to authorize an investment purchase in order to provide “checks and balances.” It was noted that the board, however, must delegate the investment authority to one individual per State code. Following the discussion, the committee supported staffs’ recommendation with a request that a procedure be drafted to formalize current investment process/practice and that it be presented for discussion to the committee within 90 days of today’s date. The committee supported presentation to the full board as a consent item. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 1 of 19 1.0: POLICY It is the policy of the Otay Water District to invest public funds in a manner which will provide maximum security with the best interest return, while meeting the daily cash flow demands of the entity and conforming to all state statues governing the investment of public funds. 2.0: SCOPE This investment policy applies to all financial assets of the Otay Water District. The District pools all cash for investment purposes. These funds are accounted for in the District’s audited Comprehensive Annual Financial Report (CAFR) and include: 2.1) General Fund 2.2) Capital Project Funds 2.2.1) Designated Expansion Fund 2.2.2) Restricted Expansion Fund 2.2.3) Designated Betterment Fund 2.2.4) Restricted Betterment Fund 2.2.5) Designated Replacement Fund 2.3) Other Post Employment Fund (OPEB) 2.4) Debt Reserve Fund Exceptions to the pooling of funds do exist for tax-exempt debt proceeds and deferred compensation funds. Funds received from the sale of general obligation bonds, certificates of participation or other tax-exempt financing vehicles are segregated from pooled investments and the investment of such funds are guided by the legal documents that govern the terms of such debt issuances. 3.0: PRUDENCE Investments should be made with judgment and care, under current prevailing circumstances, which persons of prudence, discretion and intelligent exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The standard of prudence to be used by investment officials shall be the “Prudent Person” and/or "Prudent Investor" standard (California Attachment B OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 2 of 19 Government Code 53600.3) and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. 4.0: OBJECTIVE As specified in the California Government Code 53600.5, when investing, reinvesting, purchasing, acquiring, exchanging, selling and managing public funds, the primary objectives, in priority order, of the investment activities shall be: 4.1) Safety: Safety of principal is the foremost objective of the investment program. Investments of the Otay Water District shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective, the District will diversify its investments by investing funds among a variety of securities offering independent returns and financial institutions. 4.2) Liquidity: The Otay Water District’s investment portfolio will remain sufficiently liquid to enable the District to meet all operating requirements which might be reasonably anticipated. 4.3) Return on Investment: The Otay Water District’s investment portfolio shall be designed with the objective of attaining a benchmark rate of return throughout budgetary and economic cycles, commensurate with the District’s investment risk constraints and the cash flow characteristics of the portfolio. 5.0 DELEGATION OF AUTHORITY Authority to manage the Otay Water District’s investment program is derived from the California Government Code, Sections 53600 through 53692. Management responsibility for the investment program is hereby delegated to the Chief Financial Officer (CFO), who shall be responsible for all transactions undertaken and shall establish a OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 3 of 19 system of controls to regulate the activities of subordinate officials and their procedures in the absence of the CFO. The CFO shall establish written investment policy procedures for the operation of the investment program consistent with this policy. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the CFO. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 4 of 19 6.0: ETHICS AND CONFLICTS OF INTEREST Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the General Manager any material financial interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the District. 7.0: AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The Chief Financial Officer shall maintain a list of financial institutions authorized to provide investment services. In addition, a list will also be maintained of approved security broker/dealers who are authorized to provide investment services in the State of California. These may include “primary” dealers or regional dealers that qualify under Securities & Exchange Commission Rule 15C3-1 (Uniform Net Capital Rule). No public deposit shall be made except in a qualified public depository as established by state laws. All financial institutions and broker/dealers who desire to become qualified bidders for investment transactions must supply the District with the following, as appropriate:  Audited Financial Statements.  Proof of National Association of Security Dealers (NASD) certification.  Proof of state registration.  Completed broker/dealer questionnaire.  Certification of having read the District’s Investment Policy.  Evidence of adequate insurance coverage. As annual review of the financial condition and registrations of qualified bidders will be conducted by the CFO. A current audited OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 5 of 19 financial statement is required to be on file for each financial institution and broker/dealer in which the District invests. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 6 of 19 8.0: AUTHORIZED AND SUITABLE INVESTMENTS From the governing body perspective, special care must be taken to ensure that the list of instruments includes only those allowed by law and those that local investment managers are trained and competent to handle. The District is governed by the California Government Code, Sections 53600 through 53692, to invest in the following types of securities, as further limited herein: 8.01) United States Treasury Bills, Bonds, Notes or those instruments for which the full faith and credit of the United States are pledged for payment of principal and interest. There is no percentage limitation of the portfolio which can be invested in this category, although a five-year maturity limitation is applicable. 8.02) Local Agency Investment Fund (LAIF), which is a State of California managed investment pool, may be used up to the maximum permitted by State Law (currently $40 million). The District may also invest bond proceeds in LAIF with the same but independent maximum limitation. 8.03) Bonds, debentures, notes and other evidence of indebtedness issued by any of the following government agency issuers:  Federal Home Loan Bank (FHLB)  Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac")  Federal National Mortgage Association (FNMA or "Fannie Mae")  Government National Mortgage Association (GNMA or “Ginnie Mae”)  Student Loan Marketing Association (SLMA or "Sallie Mae")  Federal Farm Credit Bank (FFCB) There is no percentage limitation of the portfolio which can be invested in this category, although a five-year maturity limitation is applicable. 8.04) Interest-bearing demand deposit accounts and Certificates of Deposit (CD) will be made only in Federal Deposit OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 7 of 19 Insurance Corporation (FDIC) insured accounts. For deposits in excess of the insured maximum of $100,000, approved collateral shall be required in accordance with California Government Code, Section 53652. Investments in CD’s are limited to 15 percent of the District’s portfolio. 8.05) Commercial paper, which is short-term, unsecured promissory notes of corporate and public entities. Purchases of eligible commercial paper may not exceed 10 percent of the outstanding paper of an issuing corporation, and maximum investment maturity will be restricted to 270 days. Investment is further limited as described in California Government Code, Section 53601(g). Purchases of commercial paper may not exceed 15 percent of the District’s portfolio. 8.06) Medium-term notes defined as all corporate debt securities with a maximum remaining maturity of five years or less, and that meet the further requirements of California Government Code, Section 53601(j). Investments in medium-term notes are limited to 15 percent of the District’s portfolio. 8.07) Money market mutual funds that invest only in Treasury securities and repurchase agreements collateralized with Treasury securities, and that meet the further requirements of California Government Code, Section 53601(k). Investments in money market mutual funds are limited to 15 percent of the District's portfolio. 8.08) The San Diego County Treasurer’s Pooled Money Fund, which is a County managed investment pool, may be used by the Otay Water District to invest excess funds. There is no percentage limitation of the portfolio which can be invested in this category. 8.09) Under the provisions of California Government Code 53601.6, the Otay Water District shall not invest any funds covered by this Investment Policy in inverse floaters, range notes, interest-only strips derived from mortgage pools, or any investment that may result in a zero interest accrual if held to maturity. Also, the borrowing of funds for investment purposes, known a leveraging, is prohibited. 9.0: INVESTMENT POOLS/MUTUAL FUNDS OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 8 of 19 A thorough investigation of the pool/fund is required prior to investing, and on a continual basis. There shall be a questionnaire developed which will answer the following general questions:  A description of eligible investment securities, and a written statement of investment policy and objectives.  A description of interest calculations and how it is distributed, and how gains and losses are treated.  A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited.  A description of who may invest in the program, how often, and what size deposits and withdrawals are allowed.  A schedule for receiving statements and portfolio listings.  Are reserves, retained earnings, etc., utilized by the pool/fund?  A fee schedule, and when and how is it assessed.  Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? 10.0 COLLATERALIZATION Collateralization will be required on certificates of deposit. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 102% of market value of principal and accrued interest. Collateral will always be held by an independent third party with whom the entity has a current custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the entity and retained. The right of collateral substitution is granted. 11.0: SAFEKEEPING AND CUSTODY All security transactions entered into by the Otay Water District shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by a third party custodian designated by the District and evidenced by safekeeping receipts. 12.0: DIVERSIFICATION OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 9 of 19 The Otay Water District will diversify its investments by security type and institution, with limitations on the total amounts invested in each security type as detailed in Paragraph 8.0, above, so as to reduce overall portfolio risks while attaining benchmark average rate of return. With the exception of U.S. Treasury securities, government agencies, and authorized pools, no more than 50% of the District’s total investment portfolio will be invested with a single financial institution. 13.0: MAXIMUM MATURITIES To the extent possible, the Otay Water District will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the District will not directly invest in securities maturing more than five years from the date of purchase. However, for time deposits with banks or savings and loan associations, investment maturities will not exceed two years. Investments in commercial paper will be restricted to 270 days. 14.0: INTERNAL CONTROL The Chief Financial Officer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures. 15.0: PERFORMANCE STANDARDS The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs. The Otay Water District’s investment strategy is passive. Given this strategy, the basis used by the CFO to determine whether market yields are being achieved shall be the State of California Local Agency Investment Fund (LAIF) as a comparable benchmark. 16.0: REPORTING The Chief Financial Officer shall provide the Board of Directors monthly investment reports which provide a clear picture of the status of the current investment portfolio. The management report should OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 10 of 19 include comments on the fixed income markets and economic conditions, discussions regarding restrictions on percentage of investment by categories, possible changes in the portfolio structure going forward and thoughts on investment strategies. Schedules in the quarterly report should include the following:  A listing of individual securities held at the end of the reporting period by authorized investment category.  Average life and final maturity of all investments listed.  Coupon, discount or earnings rate.  Par value, amortized book value, and market value.  Percentage of the portfolio represented by each investment category. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 11 of 19 17.0: INVESTMENT POLICY ADOPTION The Otay Water District’s investment policy shall be adopted by resolution of the District’s Board of Directors. The policy shall be reviewed annually by the Board and any modifications made thereto must be approved by the Board. 18.0: GLOSSARY See Appendix A. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 12 of 19 APPENDIX A: GLOSSARY ACTIVE INVESTING: Active investors will purchase investments and continuously monitor their activity, often looking at the price movements of their stocks many times a day, in order to exploit profitable conditions. Typically, active investors are seeking short term profits. AGENCIES: Federal agency securities and/or Government-sponsored enterprises. BANKERS’ ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments. BROKER/DEALER: Any individual or firm in the business of buying and selling securities for itself and others. Broker/dealers must register with the SEC. When acting as a broker, a broker/dealer executes orders on behalf of his/her client. When acting as a dealer, a broker/dealer executes trades for his/her firm's own account. Securities bought for the firm's own account may be sold to clients or other firms, or become a part of the firm's holdings. CERTIFICATE OF DEPOSIT (CD): A short or medium term, interest bearing, FDIC insured debt instrument offered by banks and savings and loans. Money removed before maturity is subject to a penalty. CDs are a low risk, low return investment, and are also known as “time deposits”, because the account holder has agreed to keep the money in the account for a specified amount of time, anywhere from a few months to several years. COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMMERCIAL PAPER: An unsecured short-term promissory note, issued by corporations, with maturities ranging from 2 to 270 days. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 13 of 19 COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the Otay Water District. It includes detailed financial information prepared in conformity with generally accepted accounting principles (GAAP). It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed statistical section. COUPON: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a set date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities). DISCOUNT: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued at a discount and redeemed at maturity for full face value, e.g., U.S. Treasury Bills. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 14 of 19 FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S&L’s, small business firms, students, farmers, farm cooperatives, and exporters. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures deposits in member banks and thrifts, currently up to $100,000 per deposit. FEDERAL FARM CREDIT BANK (FFCB): The Federal Farm Credit Bank system supports agricultural loans and issues securities and bonds in financial markets backed by these loans. It has consolidated the financing programs of several related farm credit agencies and corporations. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations. FEDERAL HOME LOAN BANK (FHLB): Government sponsored wholesale banks (currently 12 regional banks), which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions and insurance companies. FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC or Freddie Mac): A stockholder owned, publicly traded company chartered by the United States federal government in 1970 to purchase mortgages and related securities, and then issue securities and bonds in financial markets backed by those mortgages in secondary markets. Freddie Mac, like its competitor Fannie Mae, is regulated by the United States Department of Housing and Urban Development (HUD). FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA or Fannie Mae): FNMA, like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae is a private stockholder-owned corporation. The corporation’s purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 15 of 19 guarantees that all security holders will receive timely payment of principal and interest. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): A government owned agency which buys mortgages from lending institutions, securitizes them, and then sells them to investors. Because the payments to investors are guaranteed by the full faith and credit of the U.S. Government, they return slightly less interest than other mortgage-backed securities. INTEREST-ONLY STRIPS: A mortgage backed instrument where the investor receives only the interest, no principal, from a pool of mortgages. Issues are highly interest rate sensitive, and cash flows vary between interest periods. Also, the maturity date may occur earlier than that stated if all loans within the pool are pre-paid. High prepayments on underlying mortgages can return less to the holder than the dollar amount invested. INVERSE FLOATER: A bond or note that does not earn a fixed rate of interest. Rather, the interest rate is tied to a specific interest rate index identified in the bond/note structure. The interest rate earned by the bond/note will move in the opposite direction of the index. An inverse floater increases the market rate risk and modified duration of the investment. LEVERAGE: Investing with borrowed money with the expectation that the interest earned on the investment will exceed the interest paid on the borrowed money. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 16 of 19 LOCAL AGENCY INVESTMENT FUND (LAIF): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase/reverse repurchase agreements that establish each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. MUTUAL FUNDS: An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual funds raise money by selling shares of the fund to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds, and money market instruments. MONEY MARKET MUTUAL FUNDS: An open-end mutual fund which invests only in money markets. These funds invest in short term (one day to one year) debt obligations such as Treasury bills, certificates of deposit, and commercial paper. NATIONAL ASSOCIATION OF SECURITIES DEALERS (NASD): A self-regulatory organization of the securities industry responsible for the operation and regulation of the NASDAQ stock market and over-the-counter markets. Its regulatory mandate includes authority over firms that distribute mutual fund shares as well as other securities. PASSIVE INVESTING: An investment strategy involving limited ongoing buying and selling actions. Passive investors will purchase OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 17 of 19 investments with the intention of long term appreciation and limited maintenance, and typically don’t actively attempt to profit from short term price fluctuations. Also known as a buy-and-hold strategy. PRIMARY DEALER: A designation given by the Federal Reserve System to commercial banks or broker/dealers who meet specific criteria, including capital requirements and participation in Treasury auctions. These dealers submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission registered securities broker/dealers, banks, and a few unregulated firms. PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state—the so-called legal list. In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital. PUBLIC SECURITIES ASSOCIATION (PSA): A trade organization of dealers, brokers, and bankers who underwrite and trade securities offerings. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. RANGE NOTE: An investment whose coupon payment varies and is dependent on whether the current benchmark falls within a pre-determined range. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. REGIONAL DEALER: A securities broker/dealer, registered with the Securities & Exchange Commission (SEC), who meets all of the licensing requirements for buying and selling securities. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 18 of 19 REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money that is increasing bank reserves. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding securities issues following their initial distribution. SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. SEC RULE 15C3-1: See Uniform Net Capital Rule. STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, SLMA, etc.), and Corporations, which have imbedded options (e.g., call features, step-up coupons, floating rate coupons, derivative-based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve. STUDENT LOAN MARKETING ASSOCIATION (SLMA or Sallie Mae): A federally established, publicly traded corporation which buys student loans from colleges and other lenders, pools them, and sells them to investors. TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year. TREASURY BONDS: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DISTRICT INVESTMENT POLICY 27 9/15/93 9/6/06 Page 19 of 19 TREASURY NOTES: Medium-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. DISTRICT INVESTMENT POLICY Policy No. 27 August 1, 2012 Attachment D POLICY REVIEW Purpose: Annual Review Delegation of Investment Authority INVESTMENT POLICY GUIDELINES A. California Government Code: Sections 53600 through 53692 B. Investment Policy Certification: Association of Public Treasurers of the United States & Canada (APT US&C) INVESTMENT PORTFOLIO: 6/30/12 Authorized $(‘000s) $ / % Actual % LAIF (Operating) $7,533 $50 M 8.52% LAIF (Bonds) $4,068 100% 4.61% Govt. Agency Bonds $53,097 100% 60.11% Bank Deposits & CDs $1,526 15% 1.73% San Diego County Pool $22,109 50% 25.03% TOTAL: $88,333 INVESTMENT PORTFOLIO: 6/30/12 $1,525,799 1.73% $33,710,052 38.16% $53,095,134 60.11% Otay Water District Investment Portfolio: 06/30/12 Banks (Passbook/Checking/CD)Pools (LAIF & County)Agencies & Corporate Notes INVESTMENT PERFORMANCE Fund Objectives Safety Liquidity Return on Investment Fund Performance: FY-12 FY-11 OTAY: 0.60% 1.25% LAIF: 0.40% 0.50% REQUESTED BOARD ACTION Re-delegate authority for all investment related activities to the Chief Financial Officer (CFO), in accordance with Government Code Section 53607. STAFF REPORT TYPE MEETING: Regular Board Meeting MEETING DATE: August 1, 2012 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 2012 Calendar of Meetings GENERAL MANAGER’S RECOMMENDATION: At the request of the Board, the attached Board of Director’s meeting calendar for 2012 is being presented for discussion. PURPOSE: This staff report is being presented to provide the Board the opportunity to review the 2012 Board of Director’s meeting calendars 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. Attachments: Calendar of Meetings for 2012 G:\UserData\DistSec\WINWORD\STAFRPTS\Board Meeting Calendar 8-1-12.doc AGENDA ITEM 7a Page 1 of 1 Board of Directors, Workshops and Committee Meetings 2012 Regular Board Meetings: Special Board or Committee Meetings (3rd Wednesday of Each Month or as Noted) January 4, 2012 February 1, 2012 March 7, 2012 April 4, 2012 May 2, 2012 June 6, 2012 July 11, 2012 August 1, 2012 September 5, 2012 October 3, 2012` November 7, 2012 December 5, 2012 January 18, 2012 February 15, 2012 March 21, 2012 April 18, 2012 May 16, 2012 June 20, 2012 July 18, 2012 August 15, 2012 September 19, 2012 October 17, 2012 November 21, 2012 SPECIAL BOARD MEETINGS: BOARD WORKSHOPS: Budget Workshops: March 19, 2012 at 3:00 p.m. May 15, 2012 at 4:00 p.m. Board Workshop: September 11, 2012 at 3:30 p.m. G:\UserData\DistSec\WINWORD\STAFRPTS\Board Meeting Calendar Attach A for 2012 7-11-12.doc STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2012 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 GENERAL MANAGER: Carlsbad Desalination Project Update:  A presentation was given on July 24, 2012 to the San Diego County Water Authority (see attached PowerPoint). ADMINISTRATIVE SERVICES: Water Conservation and School Education:  Cash-for-Plants Program Last FY - In FY 12, over 109,000 sq ft of turfgrass was replaced with water-smart plants through our program. MWD is reimbursing us at $.70 per square foot this FY for up to 72,002 sq ft, or $50,401.40, so the District replaced 109,000 sq ft at a cost of $18,063.60 or $.17/sq ft. We have received payment for invoices submitted for activity through the end of March 2012.  MET and CWA’s Cash-for-Plants Program Next FY - MET is in the process of reconciling its FY 12 totals and has delayed the start of this year’s program to about the end of July. CWA’s consultant, WaterWise Consulting, was selected to administer their $1.50/sq ft rebate program, but it is not expected to start until the fall. In the interim, the District will be administering a $1.50 rebate with the $20,000 it budgeted in FY 13. The District hopes to be able to fund 40,000 sq ft of turfgrass and make it a near seamless transition to the CWA administered program, but is awaiting word on its allocation and the official start date. AGENDA ITEM 8a 2  Outsourcing of WaterSmart Field Services - Beginning July 1st, Mission Resources Conservation District was able to start conducting residential and large landscape surveys on behalf of the District.  Upcoming Events: o Crestwood HOA Water Conservation and Water Rates Presentation, August 11, 11:30 to 2:00 p.m.; William Granger and Rita Bell will present o Landscape Water Conservation Presentation at Chula Vista’s CLEAN Business Group, August 16 o Bonita Festival, September 29 o WaterSmart Plant Fair at the Eastlake Home Depot, October 6 o Fall Garden Festival, November 10 Human Resources:  Employee Picnic – The Employee Picnic has been scheduled for September 22nd at Santee Lakes.  Recognition Luncheon – The District’s Recognition Luncheon and BBQ was held on Wednesday, July 18th. Awards were presented as follows: o Employee Excellence Award: Wales Benham -- for his diligent work with EDEN and CALPERs in successfully developing a report that could be run and uploaded for reporting funds due to CALPERS changing their computer system. This yielded savings of time and money for the District (saves 4 hours per pay period, which is approximately $9,355 annually). o Team of Excellence Award: Team comprised of Pat Ashton, Shannon Coffin, Stephen Martinez, and Allan Raymundo -- for the last leg of the AMR change-out program, which will be closing one year early due to the team's great efforts in working together. This retrofit project will improve the way meters are read and make significant improvements in how staff utilizes their time.  Employee Survey - The District conducts an Employee Survey every few years as a part of the District’s Strategic Plan. The last survey was conducted in 2010 and the District will be sending out the survey within the next month or so to all District employees.  Recruitments – HR is currently recruiting for a Safety and Security Administrator, Finance Manager, Reclamation Plant Operator, Senior Utility Worker, and Utility Crew Leader.  New Hires – The District hired one employee during the month of July: Utility Worker I. 3 Safety & Security  Inspection of Hazardous Materials Business Plans & Spill Prevention, Control and Countermeasure Plans - The County of San Diego conducted an inspection of the Admin and Operations’ plans on June 27th. The inspection went well. The County inspector was very impressed overall, but was especially impressed with our recordkeeping and the changes staff has made to reduce/dispose of waste. Several staff members assisted in these efforts and it was great to be acknowledged by the County. Purchasing and Facilities:  Purchase Orders – There were 163 purchase orders processed in July 2012 for a total of $18,860,987.40. INFORMATION TECHNOLOGY AND STRATEGIC PLANNING:  Two IT staff members attended the “CityWorks Azteca Systems, Inc. 2012 Conference” in Park City, Utah, on June 25th - June 28th and also attended the two-day pre-conference training to learn and understand the features of the system that will enhance the District’s efficiency and management of both physical infrastructure and land-focused asset management.  IT staff, along with Finance and Engineering, successfully completed a new integrated capital budgeting application. Several reports were created from this application for the budget book preparation and for rate model development. In addition, data was passed easily into our existing financial systems saving time and increasing accuracy.  GIS staff is modifying our GPS application to provide more useful and accurate reports on vehicle location and driver behavior. These reports will assist Operations in fleet management and pinpoint potential safety issues.  IT staff successfully tested software to manage video surveillance data from cameras, which makes it easier and more efficient. Staff piloted the new software at the Treatment Plant and will expand the software to additional sites next month. FINANCE:  Call Center Enhancements - Staff is working with the District’s phone vendor, ATI, to analyze current business processes and develop enhancements utilizing the District’s phone system. Examples of these enhancements include looking at ways to streamline common customer requests through the automated phone tree and to enhance communications between Customer Service 4 staff and Field staff with regard to the lock and unlock process.  Rate Study - Staff will be preparing a Request for Proposal to perform a cost of service study for water and sewer rates. Every four to five years the rate structure is reviewed to ensure equity in the rates among customers. Upon completion, the study will be brought to the Board in early 2013 for consideration. If approved, the new structure will be entered into the Rate Model and incorporated in the FY 2014 Budget, Proposition 218 notices, and the rates that become effective January 1, 2014.  Financial Reporting: o For the twelve months ended June 30, 2012, there are total revenues of $76,242,482 and total expenses of $76,337,211. The expenses exceeded revenues by $94,729 due to the lower than budgeted water sales, especially in the first quarter of the year when the District experienced cooler weather than normal and earlier rainfall than normal. Some of the shortfall was made up by savings in payroll, Materials and administrative expenses. o The market value shown in the Portfolio Summary and in the Investment Portfolio Details as of June 30, 2012 total $88,326,431.54 with an average yield to maturity of 0.531%. The total earnings year-to-date are $573,535.14. ENGINEERING AND WATER OPERATIONS: Engineering:  Rancho del Rey Groundwater Well Development: A separate internal review meeting and a debriefing meeting with the value engineering and constructability consultant (Arcadis) to discuss Tetra Tech’s 90% design submittal was held on June 27th and July 16th, respectively. The City of Chula Vista provided comments on July 13th in response to the District’s draft sewer agreement that was submitted several months ago. The Sweetwater Authority provided a letter dated July 6th in follow up to a meeting with Sweetwater Authority and District staff held the previous month. Additional activities are underway to secure an Industrial User Discharge Permit from the City of San Diego, a Hazardous Materials Business Plan from the County, a power supply from SDG&E, and a storm drain connection for discharges into the storm drain system. Staff is preparing a request for a grant from the United States Bureau of Reclamation. Potentially, 25% of the cost of the project could be offset if the funds are granted. (P2434) 5  Otay Interconnect Pipeline: This project consists of installing approximately 5.2 miles of 30-inch diameter pipe from H Street in Chula Vista to Paradise Valley Road in Spring Valley. The project currently has two preferred alignments (Proctor Valley Road and Corral Canyon Road). San Diego County Water Authority (SDCWA) staff verbally commented that the District’s parallel encroachment study did not sufficiently demonstrate “good cause” for the parallel encroachment along the Proctor Valley Road during a meeting held at SDCWA offices on June 27th. Staff, in consultation with SDCWA, evaluated several Proctor Valley Road alternative alignments and found them infeasible. Pending upper level management concurrence, Staff will begin the process of Community Outreach with elected officials and community groups to use the Corral Canyon Road alternative. (P2511)  La Presa System Improvements: This project consists of demolishing the facilities at the La Presa Pump Station Site, constructing an 850/657 Pressure Reducing Station, demolishing the Dorchester Reservoir site, and installing several interconnections in the 640 Zone. In addition, sixty-three (63) homes surrounding the Dorchester Reservoir site will incur a pressure increase due to the demolition of the reservoir. Staff created a rebate program, which the Board of Directors approved on February 1, 2012, for the installation of new and upgraded water pressure regulators for the 63 homeowners associated with the Dorchester Project and the program is complete. The pressure has been increased and the tie-in is complete. The contractor, TC Construction, has completed the demolition of the Dorchester Reservoir. Project is on budget and anticipated to be completed in August 2012. (P2370)  944-1R Recycled Water Pump Station Upgrades & Enhancements: This project consists of upgrading the 944-1R Pump Station with one (1) new pump, new pipe configurations, and electrical upgrades to keep up with current and future recycled water demands. The contractor, Sepulveda Construction, Inc., continues to install the instrumentation, pump station piping, and construction of three (3) pressure reducing stations. Project is on budget and anticipated to be completed in August 2012. (R2091)  Ralph W. Chapman Water Reclamation Facility Upgrade: This project consists of an upgrade to the treatment plant to reduce the nitrogen levels in the plant effluent. The upgrade includes modifications to the aeration basins, the addition of energy- efficient turbo blowers and replacement of corroded air piping, a new cover for the filter backwash storage tank, a new filter air scour system, and automation enhancements. Newest has completed all the major components of construction. The plant 6 is on line and treating wastewater. Staff and the Design Consultant, MWH, are working on the programming and communication processes to operate the plant as designed. Project is on budget and the project is anticipated to be completed in August 2012. (R2096)  30-Inch, 980 Zone, Hunte Parkway – Proctor Valley/Use Area: This project consists of the installation of approximately 2,399 linear-feet of 30-inch steel pipe and appurtenances on Hunte Parkway at Proctor Valley Road, at the entrance to the Salt Creek Golf Course, in the City of Chula Vista. Care will be exercised to not interfere with the Salt Creek Golf Course business access. The pipeline will increase total water delivery to reduce pressure losses experienced during periods of high demand. The Contractor, Sepulveda Construction Inc., completed the potholing of connection points and conflicts. The alignment has been revised to accommodate the actual elevations of utility conflicts as well as the connection points. Northwest Pipe will begin manufacturing the pipe in July with completion expected in October. Project is on budget and due to the additional potholing and revised alignments construction is anticipated to be completed in December 2012. (P2514)  Avocado, Louisa, Calavo, Challenge, Hidden Mesa Sanitary Sewer Replacement: This project consists of replacing approximately 4,500 feet of sewer pipeline in Avocado Blvd. and neighboring residential streets. The contractor, Garcia Juarez, completed sewer replacement on Calavo, Challenge, and Louisa and continues the sewer replacement on Louisa Dr. Project is on budget and construction is anticipated to be completed in May 2013. (S2019, S2020, S2022, S2026)  850-3 Reservoir Exterior Coating & Upgrades: This project consists of replacing the exterior coating of the 3.0 MG 850-3 Reservoir, along with providing structural upgrades to ensure the tank complies with both State and Federal OSHA standards, as well as American Water Works Association and County Health Department standards. The contractor, Advanced Industrial Services, Inc., has completed the structural modifications, and removed the exterior coating. The application of the new exterior coating is currently underway. Project is under budget and anticipated to be completed early August 2012. (P2491)  24-Inch, 860 Zone, Alta Road – Alta Gate/Airway Road: This project consists of the installation of 1,510 feet of recycled water pipeline in Alta Road south of Calzada de la Fuente in the County of San Diego through a reimbursement agreement with International Industrial Park, Inc., the owner of this development. On June 21st, the District held a preconstruction meeting with the owner and their contractor to kick-off this 7 project. The contractor, Basile Construction, Inc., has initiated potholing the alignment for conflicts and pipe fabrication submittals. Mobilization for pipe construction is expected in late August or early September due to the long lead time for valve and pipe delivery. Project is on budget and construction is anticipated to be completed in December 2012. (R2077)  For the month of June 2012, the District sold 28 meters (28 EDUs) generating $257,744 in revenue. Projection for this period was 23 meters (36.7 EDUs) with budgeted revenue of $320,596. Total revenue for Fiscal Year 2012 was $3,974,340 against a budget of $3,847,160.  The following table summarizes Engineering's project purchases issued during the period of June 13 through July 24, 2012 that were within staff signatory authority: Date Action Amount Contractor/ Consultant Project 6/22/12 P.O. $15,000 Clarkson Lab Various Water Operations:  On Wednesday, June 6 an unannounced chlorine leak drill was performed at the Treatment Plant. The pretend “leak” happened a few minutes after 8:00 AM. All eight active team members responded and the drill was successful.  The Treatment Plant started up on June 11 after being out of service since January 11 for upgrades. Plant production was highly variable during the month due to issues with the new treatment process. Staff is working with Engineering and the designer, MWH, to correct the problems and stabilize the treatment process.  Nitrification levels in CWA’s pipeline remain in the .028 to .035 range. CWA has increased their flushing efforts at the Otay 13 surge relief, and have increased pH levels and chloraminate beyond a 5:1 ratio to combat this condition. Staff continues to monitor these nitrite levels on a daily basis to ensure there are no water quality issues for customers.  On Sunday, June 24 an on-call crew responded to an emergency call to repair a 12-inch AC pipe. It was a potable main break at the intersection of Jamacha Blvd. and Kempton St. in Spring Valley. The County is now asking to include a preliminary geotechnical report which will increase the cost of the repair. 8  The completion of the 944-1 recycled pump station CIP project has been delayed from the end of June until September. This could impact our ability to provide recycled water supplied from the South Bay plant if one of the existing pumps/motors fails.  Total number of potable water meters is 48,792.  The June potable water purchases were 3,158.2 acre feet which is 13.0% above the budget of 2,795.7 acre feet. The cumulative purchases through June is 30,614.0 acre feet which is 0.6% above the cumulative budget of 30,438.1 acre feet.  The June recycled water purchases and production was 379.2 acre feet which is 18.7% above the budget of 319.3 acre feet. The cumulative production and purchases through March is 3,290.9 acre feet which is 6.3% below the cumulative budget of 3,510.9 acre feet. 9  Recycled water consumption for the month of June is as follows: Total consumption was 495.1 acre-feet or 161,257,580 gallons and the average daily consumption was 5,375,253 gallons per day. Total number of recycled water meters is 701. Total recycled water consumption as of June for FY 2012 is 3,798.9 acre-feet.  Wastewater flows for the month of June were as follows:  Total basin flow, gallons per day: 1,777,861.  Spring Valley Sanitation District Flow to Metro, gallons per day: 588,977.  Total Otay flow, gallons per day: 1,188,701.  Flow Processed at the Ralph W. Chapman Water Recycling Facility, gallons per day: 630,804.  Flow to Metro from Otay Water District, gallons per day: 558,080. By the end of June there were 6,083 wastewater connections/EDUs. Carlsbad Desalination Project Update Mark Watton General Manager OTAY WATER DISTRICT July 24, 2012 •Treatment sources included •MWD Skinner Filtration Plant •Twin Oaks Valley WTP (Min. Contract 25 cfs) •Member Agency Contracts including HWD, City of San Diego, Oceanside, and Otay Water District. •Treated water is ~ 40% of total CWA deliveries (180,000 – 200,000 AFY) •Plant designed for 56,000 AFY •Water purchase commitment to take 48,000 AFY •CWA will own and operate 54‐inch ~ 10.5 mile pipeline from Carlsbad to Pipeline 3 •Capital cost of relining 5 miles of CWA raw water Pipeline No. 3 •Pumping costs to Twin Oaks (15.5 miles in length with 1,100 feet of head) •Cost range: $2,100 ‐$2,350 per AF •Amortization of Capital Costs (25% of Capital Budget) •Debt service charge •Negotiated equity return charge •Variable (back loaded) to reduce initial costs •Fixed Operating Costs •Fixed O & M charge •Fixed Electricity charge •Variable Costs •Variable O & M charge •Variable Electricity charge •Currently CWA has 5 rates based on service function •Supply ~ Water Purchase price including debt service •Treatment ~ Existing facilities including debt service •Customer Service ~ Operational costs including debt service •Transportation ~ Operational costs including debt service •Storage ~ Capital facilities including debt service •Other rates and charges •Non‐Commodity Charges •Property Tax ~ Unrestricted use of funds •Stand‐by Charges ‐$10 per acre or parcel ~ Capital facilities •Capacity Charges –New meters system charge: $4,326/ME ~ Capital facilities ‐New meters treatment charge: $166/ME ~ Capital facilities •Infrastructure Access Charge (IAC) ‐$2.65/ME ~ Unrestricted (Otay Water District is $1.8 M for CY2013) •New Category for Carlsbad Desalination Project: Reliability •Proposed to be financed by adding $2.20 to existing IAC •Scenario #1 assumes cost at $2,350 AF •Currently 5 rates based on service function •Supply ~ $1,210 AF •Treatment ~ $250 AF •Customer Service ~ Neutral •Transportation ~ $300 AF •Storage ~ $90 AF •Other rates and charges •Non‐Commodity Charges •Property Tax ~ Neutral •Stand‐by Charges ‐Neutral •Capacity Charges –New meters system charge: Neutral •‐New meters treatment charge: Neutral •Infrastructure Access Charge (IAC) ‐$2.65/ME plus an increase of $500 AF (estimated at $2.20/ME per month). For Otay Water District, this is estimated to be $1.5 M each year. •Scenario #2 assumes cost at $2,350 AF •Currently 5 rates based on service function •Supply ~ $1,300 AF ($975+$1.10/ME Reliability Charge or $1,050+$1.10/ME Reliability Charge) •Treatment ~ $250 AF •Customer Service ~ Neutral •Transportation ~ $300 AF •Storage ~ Neutral •Other rates and charges •Non‐Commodity Charges •Property Tax ~ Neutral •Stand‐by Charges ‐Neutral •Capacity Charges –New meters system charge: Neutral •‐New meters treatment charge: Neutral •Infrastructure Access Charge (IAC) ‐$2.65/ME plus an increase of $500 AF (estimated at $2.20/ME per month). For Otay Water District, this is estimated to be $1.5 M each year. •New Category for Carlsbad Desalination Project: Reliability •Based on meter size. Proposed to be financed by adding $1.10/ME to $1.50/ME to existing IAC. For Otay Water District, this is estimated to be $0.8 M to $1.0 M increase each year. REVENUES: Water Sales Energy Charges System Charges MWD & CWA Fixed Charges Penalties Total Water Sales Reclamation Sales Sewer Charges Meter Fees Capacity Fee Revenues Betterment Fees for Maintenance Non-Operating Revenues Tax Revenues Interest Transfer from OPEB Transfer from Betterment Reserve Transfer from Replacement General Fund Draw Down Transfer from General Fund Tolal Revenues EXPENSES: Potable Water Purchases Recycled Water Purchases CWA-Infrastructure Access Charge CWA-Customer Service Charge CWA-Emergency Storage Charge MWD-Capacity Res Charge MWD-Readiness to Serve Charge Subtotal Water Purchases Power Charges Payroll & Related Costs Material & Maintenance Administrative Expenses Legal Fees Expansion Reserve Replacement Reserve Transfer to Sewer Fund Reserve Transfer to General Fund Reserve Transfer to Sewer Replacement Transfer to New Supply Reserve Total Expenses EXCESS REVENUES(EXPENSE) F:IMORPT/FS2012-0612 Exhibit A OTAY WATERDISTRlCT PRELIMINARY COMPARATIVE BUDGET SUMMARY FOR TWELVE MONTHS ENDED JUNE 30,2012 Annual YTD YTD YTD Budget Actual Budget Variance Var% $ 36,598,100 $ 35,353,161 $ 36,598,100 $ (1,244,939) (3.4%) 1,874,000 1,881,776 1,874,000 7,776 0.4% 9,542,100 9,583,563 9,542,100 41,463 0.4% 8,981,500 9,000,267 8,981,500 18,767 0.2% 913,100 703,081 913,100 (210,019) (23.0%) 57,908,800 56,521,848 57,908,800 (1,386,952) (2.4%) 7,395,500 6,940,135 7,357,900 (417,765) (5.7%) 2,336,000 2,425,986 2,336,000 89,986 3,9% 82,000 131,904 82,000 49,904 60.9% 1,044,000 1,159,884 1,044,000 115,884 11.1% 628,600 690,885 628,600 62,285 9.9% 2,021,600 2,056,359 2,021,600 34,759 1.7% 3,839,600 3,587,019 3,839,600 (252,581) (6.6%) 158,300 80,663 158,300 (77,637) (49.0%) 1,380,000 1,380,000 1,380,000 0.0% 30,000 30,000 30,000 0.0% 120,000 120,000 120,000 0.0% 522,800 522,800 522,800 0.0% 595,000 595,000 595,000 0.0% $ 78,062,200 $ 76,242,482 $ 78,024,600 $ (1,782,118) (2.3%) $ 27,793,100 $ 27,957,571 $ 27,793,100 $ (164,471) (0.6%) 1,452,800 1,605,734 1,452,800 (152,934) (10.5%) 1,756,900 1,756,656 1,756,900 244 0.0% 1,562,600 1,553,756 1,562,600 8,844 0.6% 3,585,800 3,505,590 3,585,800 80,210 2.2% 603,900 599,146 603,900 4,754 0.8% 1,488,600 1,481,211 1,488,600 7,389 0.5% 38,243,700 38,459,664 38,243,700 (215,964) (0.6%) 2,440,900 2,198,675 2,440,900 242,225 9,9% 18,119,600 17,229,381 18,119,600 890,219 4.9% 4,300,000 3,764,549 4,300,000 535,451 12.5% 4,180,700 3,916,184 4,180,700 264,516 6.3% 380,000 371,459 380,000 8,541 2.2% 555,000 555,000 555,000 0.0% 3,330,000 3,330,000 3,330,000 0.0% 786,800 786,800 786,800 0.0% 2,420,500 2,420,500 2,420,500 0.0% 1,720,000 1,720,000 1,720,000 0.0% 1,585,000 1,585,000 1,585,000 0.0% $ 78,062,200 $ 76,337,211 $ 78,062,200 $ 1,724,989 2.2% $ $ (94,729) $ (37,600) $ (57,129) 7126/2012 2:06 PM OTAY WATER DISTRICT INVESTMENT PORTFOLIO REVIEW JUNE 30,2012 INVESTMENT OVERVIEW & MARKET STATUS: The federal funds rate has remained constant now for over 42-months. On December 16,2008, at the Federal Reserve Board's regular scheduled meeting, the federal funds rate was lowered from 1.00% to "a target range ofbetween Zero and 0.25%" in response to the nation's ongoing financial crisis, as well as banking industry pressure to ease credit and stimulate the economy. This marked the ninth reduction in a row since September 18,2007, when the rate was 5.25%. There have been no further changes made to the federal funds rate at the Federal Reserve Board's subsequent regular scheduled meetings, the most recent of which was held on June 20, 2012. They went on to say: "The Committee currently anticipates that economic conditions--including low rates ofresource utilization and a subdued outlookfor inflation over the medium run--are likely to warrant exceptionally low levelsfor the federal funds rate at least through late-2014. Despite the large drop in available interest rates, the District's overall effective rate of return at June 30th was 0.52%, which was an increase of3 basis points (0.03%) from the prior month. At the same time the LAIF return on deposits has fluctuated slightly over the last several months,reaching an average effective yield of 0.36%for the month ofJune 20 I2. Based on our success at maintaining a competitive rate of return on our portfolio during this extended period of interest rate declines, no changes in investment strategy are being considered at this time. In accordance with the District's Investment Policy, all District funds continue to be managed based on the objectives, in priority order, of safety, liquidity, and return on investment. PORTFOLIO COMPLIANCE: June 30, 2012 Investment State Limit Otar Limit Otar Actual 8.01: Treasury Securities 100% 100% o 8.02: Local Agency Investment Fund (Operations) $50 Million $50 Million $7.53 Million 8.02: Local Agency Investment Fund (Bonds) 100% 100% 4.60% 8.03: Federal Agency Issues 100% 100% 61.11 % &,04-: -Certificates·of Deposit 30% -15% 0.09% 8.05: Short-Term Commercial Notes 25% 15% o 8.06: Medium-Term Commercial Debt 30% 15% o 8.07: Money Market Mutual Funds 20% 15% o 8.08: San Diego County Pool 100% 100% 25.03% 12.0: Maximum Single Financial Institution 100% 50% 1.63% ( , $53,095,134 Otay Water District 60.11 % Investment Portfolio: 06/30/12 $1,525,799 ..r1.73 % ~---- // $33,710,052 38.16% Cllallk., (f'assbuoklChcekinglCDJ .Pools (LAIF & County) CAgencies & Corporale NOles J~Qtr 2nd Qlr 3l'd Qtr Apr FYI2 May FY12 June FY 12 41'hQI'f FYl2 FYI2 FYl2 FYl2 0.39 0.39 0.38 0.37 0.36 0.36 0.36 0.71 0.64 0.56 0.52 0.49 0.52 0.51 0.32 0.25 0.18 0.15 0.13 0.16 0.15 Performance Measure F·12 Return on Investment Target: Meet or Exceed 100% of LAlF !l 1.20 i c ~ Ui ~ .E c o E i ~ II: , IstQlr 2nd Qlr JnlQlr 4rhQlr FYII FYII FYllFYll _LAIF 0.48 _Otay 0.84 ODiff<:rcnce 0.37 0.350.62 0.45 0.60 0.40 0.20 0.00 0.51 0.47 0.52 J.l3 o.n 0.89 i 1.00 Month • LAIF .Otay 0 Difference OTAY Portfolio Management Portfolio Summary June 30, 2012 Par Market Book %of Days to YTM YTM Investments Value Value Value Portfolio TemJ Maturity 360 Equiv. 365 Equiv. Federal Agency Issues-Callable 53,097.000.00 53,096,651.05 53,095.133.70 61.11 831 669 0.593 0.602 Certificates of Deposit -Bank 81,326.80 81.32680 81,326.80 0.09 731 570 0.280 0.284 Local Agency Investment Fund (tAlF) 11,600,832.35 11,614,981.22 11,600,832.35 13.35 1 1 0.353 0.358 San Diego County Pool 22,1 09,219.22 22.089,000.00 22,109,219.22 25,45 1 1 0,475 0,482 Investments 86,888,378.37 86,881,959.07 86,886,512.07 100.00% 509 410 0.531 0.538 Cash Passbook/Checking (not included in yield calculations) 1,444,472 47 1,444,472.47 1.444,472.47 0.227 0.231 Total Cash and Investments 88,332,850.84 88,326,431.54 88.330,984.54 509 410 0.531 0.538 Total Earnings June 30 Month Ending Fiscal Year To Date Fiscal Year Ending Current Year 38,266.53 573,535.14 573,535.14 Average Daily Balance 88,995,983.19 95,882,423.36 Effective Rate of Return 0.52% 0.60% I hereby certify that the investments contained in this report are made in accordance with the District Investment Policy Number 27 adopted by the Board of Directors on September 6, 2006. The market value information provided by Interactive Data Corporation. The investments provide sufficient liqUidity to meet the cash flow requirements of the District for the next six months of G6 expendit Reporting period 06101/2012-06/3012012 Portfolio OTAY AP Run Dale. 07/1812012 -11'44 PM (PRF_PM1) 7.3.0 Report Ver. 7 3 3b OTAY Portfolio Management Page 1 Interest Earnings Summary June 30,2012 June 30 Month Ending Fiscal Year To Date CD/Coupon/Discount Investments: Interest Collected Plus Accrued Interest at End of Period Less Accrued Interest at Beginning of Period Less Accrued Interest at Purchase During Period Interest Earned during Period Adjusted by Premiums and Discounts Adjusted by Capital Gains or Losses Earnings during Periods 23,750.00 58,130.60 57,952.64) 0.00) 23,927.96 114.75 0.00 24,042.71 434,809.58 57,832.13 123,435.54) 0.00) 369,20617 859.39 400.00 370,465.56 Pass Through Securities: Interest Collected Plus Accrued Interest at End of Period Less Accrued Interest at Beginning of Period Less Accrued Interest at Purchase During Period Interest Earned during Period Adjusted by Premiums and Discounts Adjusted by Capital Gains or Losses Earnings during Periods 0.00 000 0.00) 0.00) 0.00 0.00 0.00 0.00 0.00 0.00 000) 0.00) 0.00 0.00 0.00 0.00 Cash/Checking Accounts: Interest Collected 433.53 211,098.11 Plus Accrued Interest at End of Period 465,405.53 465,405.98 Less Accrued Interest at Beginning of Period 451,615.24) 473,434.51) Interest Earned during Period 14,223.82 203,069.58 iotallnterest Earned during Period 38,151.78 572,275.75 Total Adjustments from Premiums and Discounts 114.75 859.39 Total Capital Gains or Losses 0.00 400.00 Total Earnings during Period 38,266.53 573,535.14 Portfolio OlAY AP Run Date: 0711612012 -11:44 PM (PRF_PM6) 7.3.0 Report Ver. 7.3.3b OTAY Portfolio Management Page 1 Portfolio Details -Investments June 30, 2012 Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Mari(et Value Book Value Rate S&P 360 Maturity Date Federal Agency Issues-Callable 31331KZFO 2219 Federal Farm Credit Bank 09123/2011 3,000,000.00 3,000,030.00 2,999,507.41 0.481 AA 0.486 540 12123/2013 3133EAEG9 2241 Federal Farm Credit Bank 05/09/2012 1,360,000.00 1,361,632.00 1,360,000 00 0.550 0.542 971 0212712015 313378KU4 2233 Federal Home loan Bank 0311212012 3,000,000.00 3,001,350 00 3,000.000.00 0.500 0.493 803 0911212014 3133794G1 2239 Federal Home loan Bank 05/1512012 3,000,000.00 2,998,560.00 3,000,000.00 0.500 0.493 683 0511512014 313379JC4 2243 Federal Home loan Bank 06/0512012 3,000,000.00 3,000,060.00 3,000,000.00 0.500 0.493 704 0610512014 313379R84 2245 Federal Home loan Bank 06/13/2012 3,000,000.00 2,996,460.00 3,000,000.00 0.500 0.493 712 06/13/2014 313379SP5 2246 Federal Home loan Bank 06/19/2012 3,000,000.00 2,996,610.00 3.000,000.00 0.450 0.444 536 12119/2013 313379UT4 2247 Federal Home loan Bank 06/2712012 3,000,00000 2.998,23000 3,000,000.00 0.500 0.493 726 06/27/2014 3137EACK3 2146 Federal Home loan Mortgage 05/28/2010 2,000,000.00 2,001,300.00 1,999,967.96 1.125 AM 1.154 26 07/27/2012 3137EACK3A 2148 Federal Home loan Mortgage 05/2812010 1,030,00000 1,030,669.50 1,030,000.00 1.125 AM 1.108 26 07/27/2012 3137EACK3B 2149 Federal Home loan Mortgage 05/28/2010 2,707,000.00 2,708,759.55 2,707,000 00 1.125 AM 1.109 26 0712712012 3134G3AC4 2226 Federal Home loan Mortgage 1210612011 3,000,000.00 3,000,600.00 3,000,000.00 0.600 0.592 523 1210612013 3134G3AQ3 2227 Federal Home loan Mortgage 11/3012011 2,000,000.00 2,001,980.00 2,000,00000 0.710 AA 0.700 698 05/3012014 3134G3BN9 2228 Federal Home loan Mortgage 12105/2011 2,000,000.00 2,003,140.00 2,000,000 00 0.770 AA 0.759 704 06/0512014 3134G3SS0 2232 Federal Home loan Mortgage 0312212012 3,000,000.00 3,003,870.00 3,000,000.00 0.540 0.533 813 09/2212014 3135GOJG9 2234 Federal National Mortage Assoc 03/26/2012 3,000,000.00 3,003,000.00 2,998,658.33 0.520 0.533 817 09/2612014 3135GOKl6 2238 Federal National Mortage Assoc 04130/2012 3,000,000.00 2,993,970.00 3,000,000.00 0.500 0493 851 10/30/2014 3135GOKSl 2240 Federal National Mortage Assoc 05/10/2012 3,000,000.00 2,997,450.00 3,000,000.00 0560 0.552 954 02110/2015 3135GOlF8 2242 Federal National Mortage Assoc 0512412012 3,000,000.00 2,999,640.00 3,000,000.00 0.500 0.493 876 11/24/2014 3135GOll5 2244 Federal National Mortage Assoc 0610412012 3,000,000.00 2.999,340.00 3,000,000.00 0.550 0.542 886 12104/2014-------- Subtotal and Average 46,795,07,8.24 53,097,000.00 53,096,651.05 53,095,133.70 0,593 669 Certificates of Deposit Bank 2050003183-5 2229 Califomia Bank & Trusl 0112212012 81,326.80 81,326.80 81,326.80 --0.280 0.280 570 01/2212014-------- Subtotal and Average 81,326.80 81,326.80 81,326.80 81,326.80 0.280 570 Local Agency Investment Fund (LAIF) LAIF 9001 STATE OF CALIFORNIA LAIF BASS 2010 9012 STATE OF CALIFORNIA Subtotal and Average 17,070,832.35 07/0112004 04/2112010 7,533,255.74 4,067,576.61 11,600,832.35 7,542,443.62 4,072,537.60 11,614,981.22 7,533,255.74 4,067,576.61 11,600,832.35 0.358 0.353 0.358 0.353 -------- 0.353 San-ole-go-County-Po'ol- SO COUNTY POOL 9007 San Diego County SUbtotal and Average 22,109,219.22 07101/2004 22,109,219.22 22,109,219.22 22,089,000.00 22,089,000.00 22.109,219.22 22,109,219.22 0482 0.475 -------- 0.475 Portfolio OTAY AP Run Date' 0711612012 • , 1:44 PM (PRF_PM2) 7.3.0 Report Ver. 73.3b OTAY Portfolio Management Page 2 Portfolio Details" Investments June 30, 2012 Average Purchase Stated YTM Days to CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 360 Maturity Total and Average 88,995,983.19 86,888,378.37 86,881,959.07 86,866,512.07 0.531 410 Portfolio OTAY AP Run Dale. 07/1812012 -1144 PM (PRF_PM2) 7.3.0 OTAY Portfolio Management Portfolio Details -Cash Page 3 June 30, 2012 CUSlP Investment # Issuer Average Balance Purchase Date Par Value Mar1o:et Value Book Value Stated Rate S&P YTM 360 Days to Maturity Union Bank UNION MONEY PETIYCASH UNION OPERATING PAYROLL RESERVE-10 COPS RESERVE-10 BABS UBNA-2010 BOND UBNA-FLEX ACCT 9002 9003 9004 9005 9010 9011 9013 9014 STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA 07/01/2004 07/01/2004 07/0112004 07/0112004 04/20/2010 04/20/2010 04/20/2010 0110112011 10,005,91 2,950.00 1,290,324.98 27,971.06 688.02 417.23 70,015.05 42.100.22 10,005.91 2,950.00 1,290,324.98 27.971.06 688.02 417.23 70,015.05 42.100.22 10,005.91 2,950.00 1,290,324.98 27.971.06 688.02 41723 70.015.05 42,100.22 0.010 0.250 0.001 0.147 0.010 0.000 0.247 0.000 0.000 0.001 0.145 0.000 Average Balance 0.00 Total Cash and Investments 88,995,983.19 88,332,850.84 88,326,431.54 88,330,984.54 0.531 410 Portfolio OTAY AP Run Datec 07/1812012 -11:44 PM (PRF]M2) 7.3.0 OTAY Activity Report Sorted By Issuer JUly 1, 2011 -June 30, 2012 ParV~ Par Value CUSIP Investment # Issuer Percent of Portfolio Beginning Balance Current Rate Transaction Date Purchases or Deposits Redemptions or Withdrawals Ending Balance Issuer: STATE OF CALIFORNIA Union Bank Subtotal and Balance Local Agency Investment Fund (LAtF) LAIF 9001 STATE OF CALIFORNIA LAIF BABS 2010 9012 STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA UNION MONEY 9002 UNION OPERATING 9004 PAYROLL 9005 RESERVE-10 COPS 9010 RESERVE-10 BABS 9011 UBNA-2010 BOND 9013 UBNA-FLEXACCT 9014 964,254.08 0.010 0.250 0.001 0.147 0.358 0358 165.035,129.49 9.834,096.12 1.006.223.32 5.793.75 15.228.09 69.963.16 150,215.38 176,116,649.31 74.664,942.35 16.500.97 165.035.180.07 9,430.412.84 1.002.036.97 13.489.32 35.453.80 0.00 119.857.92 175,636,430.92 98.900.67273 88.59 1,444,472.47 Subtotal and Balance 35,820,150.35 74,681,443.32 98,900,761.32 11,600,832.35 Issuer Subtotal 14.768% 36,784,404.43 250,798,092.63 274,537,192.24 13,045,304.82 Issuer: California Bank & Trust Certificates of Deposit -Bank 2050003183-4 2050003183-5 2121 2229 Cahfomia Bank & Trust California Bank & Trust 1.380 0.280 01/2212012 0112212012 0.00 81.326.80 79.108.00 0.00 Subtotal and Balance 79,108.00 81,326.80 79,108.00 81,326.80 Issuer Subtotal 0.092% 79,108.00 81,326.80 79,108.00 81,326.80 Issuer: Federal Fann Credit Bank Federal Agency Issues-Callable 31331 KZFO 2-21'9·Federal ·Fann·Gredit Bank" OA8'1091-23/2011' 3.000.'000,00 0,00" 31331KG79 2222 Federal Fann Credit Bank 0.625 10/24/2011 2.000.000.00 0.00 31331KG79 2222 Federal Fann Credit Bank 0210212012 0.00 2.000,000.00 Portfolio OTAY AP Run Date' 0711812012 -11 51 DA (PRF_DA) 7.2.0 Report Ve, 7 :l.:lb OTAY Activity Report July 1, 2011 -June 30, 2012 Page 2 Par Value Par Value CUSIP Investment (I Issuer Percent of Portfolio Beginning Balance Current Rate TransacUon Date Purchases or Deposits Redemptions or Withdrawals Ending Balance Issuer: Federal Fann Credit Bank Federal Agency Issues-Callable 3133EAEG9 2241 Federal Farm Credit Bank 0.550 05/09/2012 1,360,000.00 0.00 Subtotal and Balance 0.00 6,360,000.00 2,000,000,00 4,360,000,00 Issuer Subtotal 4.936% 0.00 6,360,000.00 2,000,000.00 4,360,000,00 Issuer: Federal Home Loan Bank Federal Agency Issues-Callable 313371MR4 313373CWO 3133731<27 313373MC3 313373QJ4 313373UD2 313373V25 313373WVO 313374ELO 3133747H7 313374G46 313374G46 313374T83 313374T83 313374ZW3 313374ZW3 3133755W3 3133755W3 313375E29 313375E29 313375H59 313375H59 313375HZ3 313375HZ3 313375Z59 313375ZS9 313378BR1 2174 2193 2194 2195 2196 2197 2198 2199 2201 2202 2203 2203 2208 2208 2209 2209 2210 2210 2212 2212 2213 2213 2216 2216 2224 2224 2230 Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank 0.700 1.375 1.200 1.200 1.125 1.050 0.875 1.100 0875 0.875 1.000 0.900 0.650 0.700 0.625 0.550 0.650 0.625 0.500 08/2212011 07/25/2011 08/1212011 08/12/2011 11/25/2011 1211212011 09/06/2011 07/06/2011 03/30/2012 09/2712011 07/08/2011 08/08/2011 07/28/2011 10/28/2011 08/08/2011 01/3012012 08/2312011 0212312012 09/0712011 02/1412012 09/16/2011 02/1312012 09/19/2011 02/14/2012 11107/2011 02107/2012 02128/2012 0.00 000 0.00 0.00 0.00 0.00 000 0.00 0.00 0.00 2,000,000.00 000 2,000,000.00 0.00 2,000,000.00 0.00 2,000,00000 0.00 2,000,000.00 000 2,000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 3,000,000.00 2,000,000.00 2,000,00000 2,000,000.00 1,775,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 0.00 2,000,000 00 0.00 2,000,000.00 0.00 2.000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 Portfolio OTAY Run Dale. 0711812012 -11:51 AP oA (P RF_oAl 7.2.0 Rapon Ver 7 3 3b OTAY Activity Report July 1,2011 -June 30,2012 Page 3 CUSIP Investment # Issuer Percent of Portfolio Par Value Beginning Balance Current Rate Transaction Date Purchases or Deposits Par Value Redemptions or Withdrawals Ending Balance Issuer: Federal Home Loan Bank Federal Agency Issues-Callable 313378BR1 313378DB4 313378DB4 313378KU4 313378R45 313378R45 313378VT5 313378VT5 313378YGO 313378YGO 3133794G1 313379JC4 313379R84 313379SP5 313379UT4 2230 2231 2231 2233 2235 2235 2236 2236 2237 2237 2239 2243 2245 2246 2247 Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Horne Loan Bank Federal Home Loan Bank Federal Horne Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank 0.500 0.500 0.550 0.600 0.500 0.500 0.500 0.500 0.450 0500 04130/2012 03/1212012 04/1212012 03/1212012 04/04/2012 05/04/2012 04/23/2012 05/23/2012 04/24/2012 05/24/2012 05/15/2012 06/05/2012 06/13/2012 06119/2012 06/27/2012 0.00 3,000,000.00 0.00 3,000,000.00 3,000,000.00 000 3,000,000.00 0.00 3,000,000.00 0.00 3,000,000.00 3,000,000.00 3,000,000.00 3,000,000.00 3,000,000.00 3.000.000.00 0.00 3,000,000.00 0.00 0.00 3,000,000.00 0.00 3,000,000.00 0.00 3,000,000.00 0.00 0.00 0.00 0.00 0.00 Subtotal and Balance 19,775,000.00 49,000,000.00 50,775,000.00 18,000,000.00 Issuer Subtotal 20,377% 19,775,000.00 49,000,000.00 50,775,000.00 18,000,000.00 Issuer: Federal Home Loan Mortgage Federal Agency Issues-Callable 3134G1MD3 3134G1PK4 3134G1Y40 3134G13K8 3134G12U7 3134G14B7 3134G15C4 3134G17L2 3134G2MC3 3134G2PE6 3134G2PE6 3134G2QPO 3134G2QPO 2153 2158 2183 2185 2186 2187 2188 2190 2200 2204 2204 2205 2205 Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage FederaI Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage -Federal Home loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage 1.100 1.000 1.100 1.000 0.750 1.350 1.250 1.350 0.800 1.000 1.000 0712212011 08/11/2011 02115/2012 08/24/2011 08/23/2011 08/23/2011 09/07/2011 09/23/2011 09/27/2011 07/08/2011 09/0-872011 07/27/2011 01/27/2012 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,000.000.00 0.00 2,000,000.00 0.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 Portfolio OTAY Run Data 0711812012 -1151 AP DA (PRF_DA) 7.2.0 Report Var 7 3.3b OTAY Activity Report July 1,2011 -June 30, 2012 Page 4 Par Value Par Value CUSIP Investment # Issuer Percent of Portfolio Beginning Balance Current Rate Transaction Date Purchases or Deposits Redemptions or Wrlhdrawals Ending Balance Issuer: Federal Home Loan Mortgage Federal Agency Issues-Callable 3134G2RKO 3134G2RKO 3134G2NR9 3134G2NR9 3134G2VD1 3134G2VD1 3134G2B92 3134G2B92 3134G22H4 3134G22H4 3134G23NO 3134G23NO 3134G3AC4 3134G3AQ3 3134G3BN9 3134G3SS0 2206 2206 2207 2207 2211 2211 2217 2217 2223 2223 2225 2225 2226 2227 2228 2232 Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Irlome Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage 1000 0.750 0.750 0.500 0.700 0.700 0600 0.710 0.770 0.540 07/28/2011 10/28/2011 0711312011 09/06/2011 08/24/2011 02124/2012 09/13/2011 03/13/2012 11/04/2011 05/04/2012 11/0212011 05/01/2012 12106/2011 11/30/2011 12105/2011 03/2212012 2,000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 3,000,000.00 0.00 3,000,000.00 2,000,000.00 2,000,000.00 3,000,000.00 0.00 2,000,000.00 0.00 2.000.000.00 0.00 2,000,000.00 0.00 2,000,00000 0.00 2.000,000.00 0.00 3.000,000.00 0.00 0.00 0.00 0.00 Subtotal and Balance 23,737,000.00 27,000,0 00 .00 35,000,000.00 15,737,000.00 Issuer Subtotal 17.816% 23,737,000.00 27,000,0 00 .00 35,000,000.00 15,737,000.00 Issuer: Federal National Mortage Assoc Federal Agency lssues-Callable 3136FPQG5 3136FPSK4 3136FP5X1 3136FRFMO 3135GOCW1 3135GOCW1 3135GODB6 3135GODB6 3135GODK6 3135GODI<6 3135GODNO 3135GODNO 2171 2172 2182 2192 2214 2214 2215 2215 2218 2218 2220 2220 Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc 'Federal Iilational Monage Assoc Federal National Mortage Assoc Federal National Mortage Assoc 0.850 0.675 0.860 2.000 0.500 0.600 0.600 0.500 10/26/2011 07/29/2011 07/28/2011 10/27/2011 09/06/2011 03/06/2012 09/1212011 03/1212012 09/27/2011 0312712m2 09/26/2011 03/26/2012 0.00 0.00 0.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 2.000,000.00 O~UO 3,000.000.00 0.00 635,000.00 2,000.000.00 2,000,000.00 1,000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 2,000:000'.00 0.00 3,000,000.00 Portfolio OTAY Run Dale' 07/1812012 -1 1.51 AP DA (PRF_DA) 7 2.0 Report Ver. 7.3.3b OTAY Actlvlty Report JUly 1, 2011 • June 30, 2012 Page 5 CUSIP Investment 1# Issuer Percent of Portfolio Par Value Beginning Balance Current Rate Transaction Date Purchases or Deposits Par Value Redemptions or Withdrawals Ending Balance Issuer: Federal National Mortage Assoc Federal Agency Issues-Callable 3135GODRl 3135GODRl 3135GOJG9 3135GOKL6 3135GOKS1 3135GOLF8 3135GOLL5 3135GODV2 3135GODV2 2221 2221 2234 2238 2240 2242 2244 2275 2275 Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc 0.500 0.520 0.500 0.560 0.500 0.550 0.550 10103/2011 04/03/2012 03/26/2012 04/30/2012 05/10/2012 05/24/2012 06/04/2012 10/18/2011 04/18/2012 3,000,000.00 0.00 3,000,000.00 3,000.000.00 3,000.000.00 3.000.000.00 3,000,000.00 3,000,000.00 0.00 0.00 3,000,000.00 0.00 0.00 0.00 0.00 0.00 0.00 3,000,000.00 Subtotal and Balance 5,635,000.00 30,000,000.00 20,635,000,00 15,000,000.00 Issuer Subtotal 16.981% 5,635,000.00 30,000,000.00 20,635,000.00 15,000,000.00 Issuer: San Diego County San Diego County Pool SD COUNlY POOL 9007 San Diego County 0.482 5,101.330.48 5,282.83 Subtotal and Balance 17,013,171.57 5,101,330.48 5,282.83 22,109,219.22 Issuer Subtotal 25.029% 17,013,171.57 5,101,330.48 5,282.83 22,109,219.22 Total 100.000% 103,023,684.00 368,340,749.91 383,031,583.07 88,332,850.84 Portfolio OTAY AP Run Date: 07118/2012 -1 "51 DA (PRF_DA) 7.2.0 Repon Ver. 7 3.3b OTAY GASS 31 Compliance Detail Sorted by Fund -Fund July 1, 2011 -June 30, 2012 Adjustment In Value CUSIP Investment # Fund Investment Class Maturity Date Beginning Invested Value Purchase of Prlnclpal Addition to Principal Redemption of Prin cipal Amortization Adjustment Change In Market Value Ending Invested Value Fund: Treasury Fund LAIF 9001 99 Fair Value 31,819,068.97 0.00 74,664,942.35 98,900,672.73 0.00 -40,894.97 7,542,443.62 UNION MONEY 9002 99 Amortized 10,056.49 0.00 165,035,129.49 165,035.180.07 0.00 0.00 10,005.91 PETTY CASH 9003 99 Amortized 2,950.00 0.00 0.00 0.00 0.00 0.00 2,950.00 UNION OPERATING 9004 99 Amortized 886,641.70 0.00 9,834,096.12 9,430,412.84 0.00 0.00 1.290.324.98 PAYROLL 9005 99 Amortized 23,784.71 0.00 1,006.223.32 1,002,036.97 0.00 0.00 27,971.06 SO COUNTY POOL 9007 99 Fair Value 16,992,478.65 0.00 5,101,330.48 5,282.83 0.00 473.70 22.089,000.00 2050003183-4 2121 99 Amortized 0112212012 79,108.00 0.00 0.00 79,108.00 0.00 0.00 0.00 RESERVE-lO COPS 9010 99 Amortized 8.383.59 0.00 5,793.75 13,489.32 000 0.00 688.02 RESERVE-10 BABS 9011 99 Amortized 20,642.94 0.00 15,228.09 35,453.80 0.00 0.00 417.23 LAIF BABS 2010 9012 99 Fair Value 4,057,550.77 0.00 16,500.97 88.59 0.00 -1,425.55 4,072,537.60 UBNA-2010 BOND 9013 99 Amortized 51.89 000 69,963.16 0.00 0.00 0.00 70.015.05 3137EACK3 2146 99 Fair Value 0712712012 2,015,920.00 0.00 0.00 0.00 0.00 -14,620.00 2.001.300.00 3137EACK3A 2148 99 Fair Value 0712712012 1,038,198.80 0.00 0.00 0.00 0.00 -7,529.30 1,030,669.50 3137EACK3B 2149 99 Fair Value 0712712012 2.728.547.72 0.00 0.00 0.00 000 -19,788.17 2.708.759.55 3134G1MD3 2153 99 Fair Value 01/2212013 2.000,960.00 0.00 0.00 2.000.000.00 0.00 -960.00 0.00 3134G1PK4 2158 99 Fair Value 02111/2013 2.001.820.00 0.00 0.00 2,000,000.00 0.00 -1,820.00 0.00 3136FPQG5 2171 99 Fair Value 0712612013 636,270.00 000 000 635.000.00 0.00 -1.270.00 0.00 3136FPSK4 2172 99 Fair Value 04129/2013 2,000,780.00 0.00 0.00 2,000,000.00 0.00 -780.00 0.00 313371MR4 2174 99 Fair Value 05/2212013 1,998,980.00 0.00 0.00 2,000,000.00 0.00 1.020.00 0.00 3136FP5X1 2182 99 Fair Value 01/28/2013 2,000,760.00 0.00 0.00 2.000.000.00 0.00 -760.00 0.00 3134G1Y40 2183 99 Fair Value 08/15/2013 2,009,100.00 0.00 0.00 2.000,000.00 0.00 -9.100.00 0.00 3134G13K8 2185 99 FairValue 05/24/2013 2,002,200.00 0.00 0.00 2,000.000.00 0.00 -2.200.00 0.00 3134G12U7 2186 99 Fair Value 11123/2012 2,001,040.00 0.00 0.00 2,000.000.00 0.00 -1.040.00 0.00 3134G14B7 2187 99 Fair Value 08/23/2013 2,002.820.00 0.00 0.00 2,000.000.00 0.00 -2.820.00 0.00 3134G15C4 2188 99 Fair Value 06/0712013 2,003,600.00 000 0.00 2,000,000.00 0.00 -3,600.00 0.00 UBNA-FLEX ACCT 9014 99 Amortized 11,742.76 0.00 150,215.38 119,857.92 0.00 0.00 42,100.22 3134G17L2 2190 99 Fair Value 09/23/2013 2,004,420.00 0.00 0.00 2,000,000.00 0.00 -4,420.00 0.00 3138FRFMO 2192 99 Fair Value 04/27/2016 1.006,570.00 0.00 0.00 1,000,000.00 0.00 -6,570.00 0.00 313313CWO ··2193 -99Fal~Value. .10/.25/2013 .2,001,520,00 0..00... .0.00 4,000,000,00 .0,00 -1,520.00 ...{l.00 313373K27 2194 99 Fair Value 0811212013 2,001,920.00 0.00 0.00 2,000,000.00 0.00 -1,920.00 0.00 Portfolio OTAY AP Run Date: 07/1812012 -11'52 GO (PRF_GO) 7.1.1 Report Ver 7 3.3b OTAY GASB 31 Compliance Detail Page 2 Sorted by Fund -Fund Adjustment in Value CUSIP Investment # Fund Investment Class Maturity Date Beginning Invested Value Purchase or Principal Addition to Prlnclpal Redemption of Principal Amortization Adjustment Change in Maritet Value Ending Invested Value Fund: Treasury Fund 313373MC3 2195 99 Fair Value 11/1212013 1,776,810.50 0.00 0.00 1,775,000.00 0.00 -1,810.50 0.00 313373QJ4 2196 99 Fair Value 11/2512013 2,006,360.00 0.00 0.00 2,000,000.00 0.00 -6,360.00 0.00 313373UD2 2197 99 Fair Value 12109/2013 2,005,440.00 0.00 0.00 2,000,000.00 0.00 -5,440.00 0.00 313373V25 2198 99 Fair Value 09/06/2013 2,002,080.00 0.00 0.00 2,000,000.00 0.00 -2,080.00 0.00 313373WVO 2199 99 Fair Value 12106/2013 2,000,220.00 0.00 0.00 2,000,000.00 0.00 -220.00 0.00 3134G2MC3 2200 99 Fair Value 09/27/2013 1,996,780.00 0.00 0.00 2,000,000.00 0.00 3,220.00 0.00 313374ELO 2201 99 FairValue 12130/2013 1,993,300.00 0.00 0.00 2,000,000.00 0.00 6,700.00 0.00 313374G46 2203 99 Fair Value 01/08/2014 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3134G2PE6 2204 99 Fair Value 01/08/2014 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3134G2QPO 2205 99 Fair Value 01/27/2014 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3134G2RKO 2206 99 FairValue 01/2712014 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 313374T83 2208 99 Fair Value 01/28/2014 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 313374ZW3 2209 99 Fair Value 08/08/2013 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3133755W3 2210 99 Fair Value 0812312013 0.00 2,000,000.00 0.00 2.000,000.00 0.00 0.00 0.00 3134G2VD1 2211 99 Fair Value 0212412014 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 313315E29 2212 99 FairVaJue 03/07/2014 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 313375H59 2213 99 Fair Value 09/16/2013 000 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3135GOCWl 2214 99 FairValue 09/06/2013 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3135GODB6 2215 99 Fair Value 09/1212013 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 000 313375HZ3 2216 99 Fair Value 03/19/2014 0.00 2,000,000.00 0.00 2.000.000.00 0.00 0.00 0.00 3134G2892 2217 99 Fair Value 03/1312013 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3135GODK6 2218 99 Fair Value 09/27/2013 0.00 2,000.000.00 0.00 2,000,000.00 0.00 0.00 0.00 31331 KZFO 2219 99 Fair Value 12123/2013 0.00 2,999,250.00 0.00 0.00 000 780.00 3,000,030.00 3135GODNO 2220 99 Fair Value 09/26/2013 0.00 3,000,000.00 0.00 3,000,000.00 0.00 0.00 0.00 313'5GODR1 2221 99 FairValue 10103/2013 0.00 3,000,000.00 0.00 3,000,000 00 0.00 0.00 0.00 3135GODV2 2275 99 Fair Value 10/18/2013 0.00 3,000,000.00 0.00 3,000,000.00 0.00 0.00 0.00 31331KG79 2222 99 Fair Value 01124/2014 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3134G22H4 2223 99 Fair Value 11/04/2013 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 313375ZS9 2224 99 Fair Value 11/07/2013 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3133747H7 2202 99 Fair Value 12127/2013 2,000,000.00 0.00 0.00 2,000,000.00 0.00 0.00 0.00 3134G2NR9 2207 99 Fair Value 07/0512013 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0..00 3134G23NO 2225 99 Fair Value 05/0112014 0.00 3,000,000.00 0.00 3,000.000.00 0.00 0.00 0.00 3134G3AC4 2226 99 Fair Value 1210612013 0.00 3,000,000.00 0.00 0.00 0.00 600.00 3,000,600.00 3134G3AQ3 2227 99 Fair Value 05/3012014 0.00 2,000,000.00 0.00 0.00 0.00 1,980.00 2,001,980..00 3l34G3BN9 2228 '99 FairValue 06/0'512014 0.00 -2;000;000:00 "0'00' 0'.00 0.00 -3;140.00 2;003;140:00' 2050003183-5 2229 99 Amortized 01/2212014 000 81,326.80 0.00 0.00 0.00 0.00 81,326.80 Portfolio OTAY AP Run Date: 0711812012 -11:52 GO (PRF_GO) 71.1 Report Va' 7 3 3b OTAY GASS 31 Complianee Detail Page 3 Sorted 'by Fund -Fund Adjustment in Value CUSIP Investment # Fund Investment Class Maturity Date Beginning Invested Value Purchase of Principal AdditJon to Principal Redemption of Principal Amortization Adjustment Change In Mar1let Value Ending Invested Value Fund: Treasury Fund 313378BR1 2230 99 Fair Value 08/28/2014 0.00 3.000,000.00 000 3,000,000.00 0.00 0.00 0.00 313378DB4 2231 99 Fair Value 03/1212014 0.00 3,000,000.00 0.00 3,000,000.00 0.00 0.00 0.00 3134G3SS0 2232 99 FairValue 09/2212014 0.00 3,000,000.00 0.00 0.00 0.00 3,870.00 3,003,870.00 313378KU4 2233 99 Fair Value 09/1212014 0,00 3,000,000.00 0.00 0.00 0.00 1,350.00 3,001,350.00 3135GOJG9 2234 99 Fair Value 09/26/2014 0.00 2.998,500.00 0.00 0.00 0.00 4,500.00 3,003,000.00 313378R45 2235 99 Fair Value 04/0412014 0.00 3,000.000.00 0.00 3.000,000.00 0.00 0.00 0.00 313378VT5 2236 99 Fair Value 01/23/2015 0.00 3,000,000.00 000 3,000,000.00 0.00 0.00 0.00 313378YGO 2237 99 Fair Value 04124/2014 0.00 3,000,000.00 0.00 3,000,000.00 0.00 0.00 0.00 3135GOKL6 2238 99 Fair Value 1013012014 0.00 3,000,000.00 0.00 0.00 0.00 ~,030.00 2,993,970.00 3133794G1 2239 99 Fair Value 05115/2014 0.00 3,000,000.00 0.00 0.00 0.00 -1,440.00 2,998,560.00 3135GOKS1 2240 99 Fair Value 02110/2015 0.00 3,000,000.00 0.00 0.00 0.00 -2,550.00 2,997.450.00 3133EAEG9 2241 99 Fair Value 02127/2015 0.00 1,360,000.00 0.00 000 0.00 1,632.00 1,361.632.00 3135GOLF8 2242 99 Fair Value 11124/2014 0.00 3.000.000.00 0.00 0.00 0.00 ·360.00 2,999.640.00 313379JC4 2243 99 Fair Value 06105/2014 0.00 3,000.000.00 0.00 0.00 0.00 60.00 3,000,060.00 3135GOLL5 2244 99 Fair Value 12104/2014 0.00 3,000,000.00 0.00 0.00 0.00 -660.00 2.999.340.00 313379R84 2245 99 Fair Value 0611312014 0.00 3,000,000.00 0.00 0.00 0.00 .3,540.00 2,996,460.00 313379SP5 2246 99 Fair Value 1211912013 0.00 3,000,000.00 0.00 0.00 0.00 ·3.390.00 2.996,610.00 313379UT4 2247 99 Fair Value 06127/2014 0.00 3,000,000.00 0.00 0.00 0.00 -1,770.00 2.998,230.00 Subtotal 103,148,877.49 112,439,076.80 255,899,423.11 383,031,583.07 0.00 -129,362.79 88,326,431.54 Total 103,148,877.49 112,439,076.80 255,899,423.11 383,031,583.07 0.00 -129,362.79 88,326,431.54 Portfolio OTAY AP Run Dale. 07/11312012 -11 :52 GD(PRF_GD)711 Report Ver 7 3.3b OTAY Duration Report Sorted by Investment Type -Investment Type Through 06/30/2012 Investment Book Par Market Current YTM Current Maturityl Modified Security 10 Investment II Fund Issuer Class Value Value Value Rate 360 Yield Call Date Duration 3137EACK3A 2148 99 Federal Home Loan Mortgage Fair 1,030,000.00 1,030,000.00 1,030,669.50 1.125000 1.108 0.994 0712712012 0.071 3134G3BN9 2228 99 Federal Home Loan Mortgage Fair 2,000,000.00 2,000,000.00 2,003,140.00 .7700000 0.759 0.688 06105/2014 1.909 3137EACK3B 2149 99 Federal Home Loan Mortgage Fair 2,707,000.00 2,707,000.00 2,708,759.55 1.125000 1.109 0.994 0712712012 0.071 3134G3SS0 2232 99 Federal Home Loan Mortgage Fair 3,000,000.00 3,000,000.00 3,003,870.00 .5400000 0.533 0.482 0912212014 2.206 3137EACK3 2146 99 Federal Home Loan Mortgage Fair 1,999,967.96 2,000,000.00 2,001,300.00 1.125000 1.154 0.994 0712712012 0.071 3134G3AC4 2226 99 Federal Home Loan Mortgage Fair 3,000,000.00 3,000,000.00 3,000,600.00 .6000000 0.592 0.586 1210612013 1.422 3134G3AQ3 2227 99 Federal Home Loan Mortgage Fair 2,000,000.00 2,000,000.00 2,001,980.00 .7100000 0.700 0.658 0513012014 1.897 3135GOLF8 2242 99 Federal National Mortage Assoc Fair 3,000,000.00 3,000,000.00 2,999,640.00 .5000000 0.493 0.505 1112412014 2378 3135GOKL6 2238 99 Federal Na~onal Mor1age Assoc Fair 3.000,000.00 3,000,000.00 2,993,970.00 .5000000 0.493 0.587 1013012014 2311 3135GOLL5 2244 99 Federal National Mor1age Assoc Fair 3,000,000.00 3,000,000.00 2,999,34000 5500000 0.542 0.559 12104/2014 2.404 3135GOKS1 2240 99 Federal National Mortage Assoc Fair 3,000,000.00 3,000,000.00 2,997,450.00 .5600000 0.552 0.593 02110/2015 2.582 3135GOJG9 2234 99 Federal National Mortage Assoc Fair 2,998,658.33 3,000,000.00 3,003,000.00 .5200000 0.533 0.475 09126/2014 2.218 313379R84 2245 99 Federal Home Loan Bank Fair 3,000,000.00 3,000,000.00 2,996,46000 .5000000 0.493 0.561 06113/2014 1.937 313378KU4 2233 99 Federal Home Loan Bank Fair 3,000,000.00 3,000,000.00 3,001,350.00 .5000000 0.493 0.479 09/1212014 2179 313379SP5 2246 99 Federal Home Loan Bank Fair 3,000,000.00 3,000,000.00 2,996,610.00 .4500000 0.444 0.527 12119/2013 1.459 313379UT4 2247 99 Federal Home Loan Bank Fair 3,000,000.00 3,000,000.00 2,998,230.00 .5000000 0.493 0.530 06127/2014 1.976 313379JC4 2243 99 Federal Home Loan Bank Fair 3,000,000.00 3,000,000.00 3,000,060.00 .5000000 0.493 0.499 0610512014 1.041 3133794G1 2239 99 Federal Home Loan Bank Fair 3,000,000.00 3,000,000.00 2,998,560.00 .5000000 0.493 0.526 05115/2014 1.859 31331KZFO 2219 99 Federal Farm Credit Bank Fair 2,999,507.41 3,000,000.00 3,000,030.00 .4812160 0.486 0.481 12123/2013 1.470 3133EAEG9 2241 99 Federal Farm Credil Bank Fair 1,360,000.00 1,360,000.00 1,361,632.00 .5500000 0.542 0.504 02127/2015 2.628 2050003183-5 2229 99 California Bank & Trust Amort 81,326.80 81,326.80 81,326.80 .2800000 0.280 0.280 0112212014 1.555 t LAIF COPS07 9009 99 STATE OF CALIFORNIA Fair 0.00 0.00 0.00 1.530000 1.509 1.530 0.000 LAIF BABS 2010 9012 99 STATE OF CALIFORNIA Fair 4,067,576.61 4,067,576.61 4,072,537.60 .3580000 0.353 0.358 0.000 LAIF 9001 99 STATE OF CALIFORNIA Fair 7,533,255.74 7.533,255.74 7,542,443.62 .3580000 0.353 0.358 0.000 Portfolio OTAY AP Run Date. 0711612012 -11.52 Page 1 DU (PRF_DU) 7 1 1 Report Ver 7 3 3b OTAY Duration Report Sorted by Investment Type -Investment Type Through 06/30/2012 Security 10 Investment # Fund Issuer Investment Class Book Value Par Value Market Value Current Rate YTM 360 Current Yield Maturityl Call Date Modified Duration SDCQUNTY 9007 99 San Diego County Fair 22,109,219.22 22,109,219.22 22,089,000,00 .4820000 0.475 0.482 0.000 Report Total 86,886,512.07 86,888,378.37 86,881,959.07 0.530 1.082t t =Duration can not be calculated on these investments due to incomplete Market pnce data. Portfolio OTAY AP Run Date: 07/1812012 -11 52 Page 2 ou (PRF_DU) 71.1 Report Ver 7 3.3b OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033797 07/03/12 01910 ABCANA INDUSTRIES 902374 06/11/12 SODIUM HYPOCHLORITE 716.47 902373 06/11/12 SODIUM HYPOCHLORITE 394.68 1,111.15 2033878 07/11/12 01910 ABCANA INDUSTRIES 902579 06/14/12 SODIUM HYPOCHLORITE 3,444.43 903334 06/25/12 SODIUM HYPOCHLORITE 3,438.83 903074 06/21/12 SODIUM HYPOCHLORITE 2,396.08 902580 06/14/12 SODIUM HYPOCHLORITE 1,518.15 903333 06/25/12 SODIUM HYPOCHLORITE 883.53 902825 06/18/12 SODIUM HYPOCHLORITE 866.72 903331 06/25/12 SODIUM HYPOCHLORITE 278.06 903332 06/25/12 SODIUM HYPOCHLORITE 829.72 902824 06/18/12 SODIUM HYPOCHLORITE 821.86 903330 06/25/12 SODIUM HYPOCHLORITE 722.08 903075 06/21/12 SODIUM HYPOCHLORITE 700.78 902581 06/14/12 SODIUM HYPOCHLORITE 633.49 902503 06/13/12 SODIUM HYPOCHLORITE 560.62 17,094.35 2034045 07/25/12 01910 ABCANA INDUSTRIES 904133 07/05/12 SODIUM HYPOCHLORITE 3,648.50 903546 06/28/12 SODIUM HYPOCHLORITE 1,860.12 903918 07/02/12 SODIUM HYPOCHLORITE 921.66 903547 06/28/12 SODIUM HYPOCHLORITE 852.14 904132 07/05/12 SODIUM HYPOCHLORITE 643.58 903919 07/02/12 SODIUM HYPOCHLORITE 551 6590391907/02/12 SODIUM HYPOCHLORITE 551.65 903545 06/28/12 SODIUM HYPOCHLORITE 506.80 8,984.45 2033798 07/03/12 08488 ABLEFORCE INC 3262 05/15/12 PROGRAMMING SERVICES (4/30/12-5/11/12) 7,560.00 7,560.00 2033879 07/11/12 08488 ABLEFORCE INC 3302 06/12/12 PROGRAMMING SERVICES (5/28/12-6/9/12) 7,920.00 7,920.00 2034046 07/25/12 08488 ABLEFORCE INC 3324 06/26/12 PROGRAMMING SERVICES (6/11/12-6/22/12) 7,200.00 7,200.00 2033880 07/11/12 12006 ADVANCED WEB OFFSET INC 122028 06/25/12 CONSUMER CONFIDENCE REPORT 6,955.26 6,955.26 2033881 07/11/12 11462 AEGIS ENGINEERING MGMT INC 1118 06/11/12 DEVELOPER PLANCHECKS (5/5/12-6/1/12) 14,353.48 14,353.48 2033882 07/11/12 11803 AEROTEK ENVIRONMENTAL OE00831090 06/21/12 TEMPORARY EMPLOYMENT (6/4/12-6/8/12) 2,178.00 OE00835032 06/23/12 TEMPORARY EMPLOYMENT (6/18/12-6/22/12) 2,178.00 OE00829182 06/14/12 TEMPORARY EMPLOYMENT (5/29/12-6/1/12) 1,742.40 6,098.40 2034047 07/25/12 11803 AEROTEK ENVIRONMENTAL OE00833061 06/28/12 TEMPORARY EMPLOYMENT (6/11/12-6/15/12) 2,178.00 2,178.00 2034048 07/25/12 07732 AIRGAS SPECIALTY PRODUCTS INC 131248345 06/26/12 AQUA AMMONIA 2,774.24 131248344 06/26/12 AQUA AMMONIA 2,167.20 4,941.44 2034049 07/25/12 13753 AIRGAS USA LLC 9903092832 06/30/12 BREATHING AIR 34.49 34.49 2033969 07/18/12 02934 ALLEN INSTRUMENTS & SUPPLIES 0116733IN 06/11/12 SURVEY SOFTWARE 809.45 809.45 Page 1 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033883 07/11/12 01463 ALLIED ELECTRONICS INC 9000610227 06/21/12 HOA SWITCHES 1,693.13 1,693.13 2033799 07/03/12 14169 ALTISOURCE SOLUTIONS INC Ref002422495 07/02/12 UB Refund Cst #0000186915 101.73 101.73 2033884 07/11/12 06166 AMERICAN MESSAGING L1109570MG 07/01/12 PAGER SERVICES (JUNE 2012) 205.93 205.93 2033800 07/03/12 14159 ANDRE CHANCELLOR Ref002422485 07/02/12 UB Refund Cst #0000182670 50.66 50.66 2033885 07/11/12 06165 ANITA FIRE HOSE COMPANY ETC 17120 06/25/12 EXTINGUISHER MAINTENANCE 2,374.54 2,374.54 2034050 07/25/12 06165 ANITA FIRE HOSE COMPANY ETC 17125 06/28/12 EXTINGUISHER MAINTENANCE 113.40 113.40 2033801 07/03/12 14163 ANN AMARAL Ref002422489 07/02/12 UB Refund Cst #0000184632 12.28 12.28 2033802 07/03/12 14162 ANNEKE SCHIEBERL Ref002422488 07/02/12 UB Refund Cst #0000183970 18.64 18.64 2033803 07/03/12 00002 ANSWER INC 6846 06/22/12 ANSWERING SERVICES (MONTHLY) 1,000.00 1,000.00 2033970 07/18/12 08967 ANTHEM BLUE CROSS EAP 41061 06/22/12 EMPLOYEE ASSISTANCE PROG (JULY 2012) 323.35 323.35 2033971 07/18/12 14194 ANTHONY W STEWART Ref002422845 07/16/12 UB Refund Cst #0000147484 9.28 9.28 2034051 07/25/12 03357 APEX ADVERTISING INC 114321 06/26/12 ANNUAL T SHIRTS 3 855 05203405107/25/12 03357 APEX ADVERTISING INC 114321 06/26/12 ANNUAL T-SHIRTS 3,855.05 113881 06/26/12 UNIFORM SWEATSHIRTS 2,667.85 6,522.90 2034052 07/25/12 12175 APPLE INC 003819 07/24/12 COMPUTER LOAN 3,000.00 3,000.00 2033886 07/11/12 01509 ARC ERGONOMICS 35246 06/25/12 MOUSE & KEYBOARD 502.01 502.01 2033804 07/03/12 14175 ARTHURO O HERRERA Ref002422501 07/02/12 UB Refund Cst #0000188310 50.92 50.92 2033887 07/11/12 03364 ASCO SERVICES INC 775923 06/12/12 ASCO SERVICE 989.82 989.82 2033888 07/11/12 05758 AT&T 61969851400612 06/24/12 PHONE SERVICE (MONTHLY) 32.65 32.65 2033972 07/18/12 05758 AT&T 082164572806251206/25/12 INTERNET BANDWIDTH (6/25/12-7/24/12) 2,312.78 61942256050612 06/20/12 PHONE SERVICE (6/20/12-7/19/12) 45.54 2,358.32 2033973 07/18/12 07785 AT&T 0000033421321 06/02/12 PHONE SERVICES (5/2/12-6/1/12) 5,714.58 000003423539 06/02/12 PHONE SERVICES (5/2/12-6/1/12) 15.41 5,729.99 2034053 07/25/12 05758 AT&T 61967053090612 06/15/12 PHONE SERVICE (MONTHLY) 32.65 32.65 2034054 07/25/12 07785 AT&T 000003501449 07/02/12 PHONE SERVICES (6/2/12-7/1/12) 6,134.94 6,134.94 2034055 07/25/12 08330 AT&T INTERNET SERVICES 8547826250612 06/22/12 INTERNET BANDWIDTH (6/21/12-7/20/12) 2,028.00 2,028.00 2033974 07/18/12 13392 AZTECA SYSTEMS INC 7468 06/18/12 AMS SOFTWARE LIC & INSTALL (FY12) 5,625.00 5,625.00 Page 2 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033975 07/18/12 08024 BACKGROUND PROFILES INC 4312 06/30/12 BACKGROUND CHECK (6/12/12-6/25/12) 149.00 149.00 2033976 07/18/12 14185 BALBINA CRUZ Ref002422835 07/16/12 UB Refund Cst #0000039523 40.53 40.53 2033805 07/03/12 14170 BANCROFT REALTY INC Ref002422496 07/02/12 UB Refund Cst #0000187097 19.27 19.27 2033889 07/11/12 07446 BANK OF NEW YORK MELLON, THE 2521638719 07/02/12 ADM FEES-1996 COPS (7/1/12-6/30/13) 2,782.50 2,782.50 2033890 07/11/12 01630 BEARCOM 4109592 04/25/12 RADIOS 4,414.63 4,414.63 2033891 07/11/12 04806 BJ'S RENTALS 413743 06/12/12 CONCRETE 161.63 161.63 2033863 07/03/12 10823 BONITAFEST 003739 06/29/12 BONITAFEST BOOTH APPLICATION 100.00 100.00 2033977 07/18/12 13824 BUSINESS MANAGEMENT DAILY REN1R08 06/25/12 SUBSCRIPTION 131.32 131.32 2033892 07/11/12 00223 C W MCGRATH INC 42428 06/25/12 CRUSHED ROCK 156.20 156.20 2034056 07/25/12 00223 C W MCGRATH INC 42499 07/03/12 CRUSHED ROCK 531.53 42490 07/02/12 CRUSHED ROCK 301.33 832.86 2033893 07/11/12 10725 CABLES PLUS LLC 66462 06/04/12 CABLES COUPLERS 76 55 76 55203389307/11/12 10725 CABLES PLUS LLC 66462 06/04/12 CABLES COUPLERS 76.55 76.55 2034057 07/25/12 11044 CALIFORNIA BANK & TRUST 10 06/30/12 RETENTION/NEWEST CONST (ENDING 6/30/12) 18,781.40 18,781.40 2034058 07/25/12 02920 CALIFORNIA COMMERCIAL 117260 07/02/12 ASPHALT 795.54 795.54 2033894 07/11/12 01004 CALOLYMPIC SAFETY 303106 06/21/12 ZERO CAL-GAS 121.09 121.09 2033978 07/18/12 14201 CARLTON EAKES Ref002422852 07/16/12 UB Refund Cst #0000186859 29.18 29.18 2033806 07/03/12 02758 CARMEL BUSINESS SYSTEMS INC 7521 06/01/12 SCANNING SERVICES (4/2/12 & 5/3/12) 63.03 63.03 2033895 07/11/12 02758 CARMEL BUSINESS SYSTEMS INC 7531 06/22/12 RECORD SCANNING SVCS (6/4/12-6/21/12) 5,570.17 5,570.17 2034059 07/25/12 02758 CARMEL BUSINESS SYSTEMS INC 7533 06/29/12 RECORDS SUPPORT (6/22/12-6/28/12) 2,448.84 7532 06/29/12 RECORDS SUPPORT (6/22/12-6/28/12) 1,837.82 7536 07/01/12 RECORDS MGMT SERVICES (6/6/12-6/20/12) 300.00 4,586.66 2033807 07/03/12 14164 CARRINGTON PROP SERVICES Ref002422490 07/02/12 UB Refund Cst #0000184766 37.43 37.43 2034060 07/25/12 13953 CARSON TRAILER INC 225270 06/05/12 TRAILER 3,807.63 3,807.63 2033808 07/03/12 14160 CASSANDRA SHEFFILED Ref002422486 07/02/12 UB Refund Cst #0000183012 13.78 13.78 2033979 07/18/12 14200 CENTURY 21 FIRST CHOICE Ref002422851 07/16/12 UB Refund Cst #0000186818 53.31 53.31 Page 3 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033809 07/03/12 14147 CHARLENE LAW Ref002422472 07/02/12 UB Refund Cst #0000142678 36.72 36.72 2033980 07/18/12 14197 CHRISTINA PETH Ref002422848 07/16/12 UB Refund Cst #0000177984 60.06 60.06 2033864 07/03/12 00446 CITY OF CHULA VISTA 003790 07/02/12 PLAN CK/INSP FEES FOR ORANGE AVE PROJ 3,000.00 3,000.00 2034061 07/25/12 14207 CITY TREASURER 003821 07/23/12 CERTIFICATION TRAINING 60.00 60.00 2034062 07/25/12 04119 CLARKSON LAB & SUPPLY INC 62264 06/30/12 BACTERIOLOGICAL TEST (5/29/12-5/30/12) 1,218.00 62268 06/30/12 BACTERIOLOGICAL TEST (6/20/12-6/23/12) 923.00 62266 06/30/12 BACTERIOLOGICAL TEST (6/6/12-6/9/12) 898.00 62023 06/30/12 BACTERIOLOGICAL TEST (6/12/12-6/13/12) 718.00 62265 06/30/12 BACTERIOLOGICAL TEST (6/5/12-6/6/12) 412.00 62267 06/30/12 BACTERIOLOGICAL TEST (6/13/12-6/14/12) 367.00 4,536.00 2033896 07/11/12 11520 CLINICAL LABORATORY OF 921741 06/12/12 OUTSIDE LAB SERVICES 1,088.00 1,088.00 2034063 07/25/12 11520 CLINICAL LABORATORY OF 922140 07/05/12 OUTSIDE LAB SERVICES (6/6/12-6/28/12) 3,377.50 3,377.50 2034064 07/25/12 12854 COMMERCIAL TRANSPORTATION SVCS1155 07/04/12 DRIVER TRAINING 1,367.00 1,367.00 2034065 07/25/12 13900 COMMUNITY BANK 5 07/05/12 RETENTION/GARCIA JUAREZ (ENDING 6/30/12) 10,721.41 10,721.41 2033897 07/11/12 08160 COMPLETE OFFICE 13952640 06/13/12 COPY PAPER 1,001.75 13956190 06/13/12 TRIM POCKET FOLDERS 411.51 13956191 06/14/12 TRIM POCKET FOLDERS 34.47 1,447.73 2034066 07/25/12 03288 COMPUTER PROTECTION 16777PMA 06/22/12 UPS POWER SYSTEMS MAINT (ANNUAL) 3,933.00 3,933.00 2033898 07/11/12 11510 CONFERENCE CALL.COM 2670896269 06/30/12 CONFERENCE CALLING SERVICE (JUNE 2012) 49.61 49.61 2034067 07/25/12 03706 CONSUMERS PIPE & SUPPLY S1200598003 06/26/12 PVC SUPPLIES 421.81 421.81 2033981 07/18/12 12334 CORODATA MEDIA STORAGE INC DS1250928 05/31/12 BACKUP TAPE STORAGE (MAY 2012) 311.38 311.38 2033982 07/18/12 00184 COUNTY OF SAN DIEGO DEH120568D11 06/29/12 SHUT DOWN TEST (5/3/12) 1,171.50 DEH120566D11 06/29/12 SHUT DOWN TEST (5/11/12) 1,171.50 DEH120581D11 06/29/12 SHUT DOWN TEST (5/15/12) 994.00 DEH120567D11 06/29/12 SHUT DOWN TEST (5/7/12) 852.00 DEH120583D11 07/18/12 SHUT DOWN TEST (5/24/12) 781.00 4,970.00 2034068 07/25/12 02756 COX COMMUNICATIONS SAN DIEGO 28810612 06/30/12 INTERNET SERVICES (6/29/12-7/28/12) 1,500.00 27170612 06/30/12 INTERNET SERVICES (6/29/12-7/28/12) 1,500.00 3,000.00 2033865 07/03/12 11871 CS-AMSCO 6414A 06/28/12 RE-ISSUE CHECK 777.96 777.96 2033866 07/03/12 09485 DANIEL CACHO Ref002422469 07/02/12 UB Refund Cst #0000064687 16.83 16.83 Page 4 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033810 07/03/12 14141 DANIEL KINCADE Ref002422464 07/02/12 UB Refund Cst #0000027576 147.62 147.62 2034069 07/25/12 11150 DARNELL & ASSOCIATES INC 024278 07/03/12 TRAFFIC SERVICES (5/4/12-7/3/12) 3,535.00 3,535.00 2034070 07/25/12 03744 DEPARTMENT OF JUSTICE 918851 06/30/12 FINGERPRINTING SERVICES (JUNE 2012) 196.00 196.00 2033899 07/11/12 00319 DEPARTMENT OF PUBLIC HEALTH 243630712 07/02/12 CERTIFICATE RENEWAL 80.00 80.00 2033811 07/03/12 03417 DIRECTV 18046225388 06/19/12 SATELLITE TV (6/18/12-7/17/12) 6.00 6.00 2033983 07/18/12 03417 DIRECTV 18164521355 07/05/12 SATELLITE TV (7/4/12-8/3/12) 18.00 18.00 2033900 07/11/12 02366 DLT SOLUTIONS INC SI190805 06/13/12 AUTOCAD RENEWAL 11,299.48 11,299.48 2033984 07/18/12 11371 DOCUFLOW SOLUTIONS INC 6992 05/30/12 FAX MAINTENANCE 1,398.00 1,398.00 2033867 07/03/12 12015 EASTLAKE III COMMUNITY ASSN 003783 06/28/12 LANDSCAPE PROGRAM 10,000.00 10,000.00 2033985 07/18/12 02447 EDCO DISPOSAL CORPORATION 1554580612 06/30/12 RECYCLING SERVICES (JUNE 2012) 90.00 90.00 2033812 07/03/12 14154 ELLINA CEVZNER Ref002422480 07/02/12 UB Refund Cst #0000175581 40.44 40.44 2033868 07/03/12 14051 EMMA GALVAN Ref002422477 07/02/12 UB Refund Cst #0000160363 123 00 123 00203386807/03/12 14051 EMMA GALVAN Ref002422477 07/02/12 UB Refund Cst #0000160363 123.00 123.00 2033813 07/03/12 08023 EMPLOYEE BENEFIT SPECIALISTS 0056890IN 05/31/12 EMPLOYEE BENEFITS (MAY 2012) 672.50 0056602IN 04/30/12 EMPLOYEE BENEFITS (APR 2012) 665.00 1,337.50 2033814 07/03/12 14173 ENCORE REALTY Ref002422499 07/02/12 UB Refund Cst #0000187622 49.18 49.18 2033901 07/11/12 03227 ENVIROMATRIX ANALYTICAL INC 2060486 06/25/12 LABORATORY SERVICES (6/12/12-6/14/12) 340.00 340.00 2034071 07/25/12 03227 ENVIROMATRIX ANALYTICAL INC 2060612 06/29/12 LABORATORY SERVICES (6/15/12-6/20/12) 475.00 475.00 2033902 07/11/12 07596 ENVIRONMENTAL EXPRESS INC 1000279796 06/25/12 LABORATORY SUPPLIES 1,023.03 1,023.03 2034072 07/25/12 12134 ENVIRONMENTAL LAB ACCR PROG BR 10121658 07/05/12 ANNUAL FEE RENEWAL 2,359.00 2,359.00 2033815 07/03/12 14145 ERICA ESTRADA Ref002422470 07/02/12 UB Refund Cst #0000088169 7.33 7.33 2034073 07/25/12 11287 ESCONDIDO LIVE SCAN 1116062012 06/30/12 FINGERPRINTING SERVICE (6/15/12) 20.00 20.00 2034074 07/25/12 06528 ESTES EXPRESS LINES 2920321517 06/18/12 RMA RETURN 223.59 223.59 2033816 07/03/12 14144 EVELYN ANGOTTA Ref002422468 07/02/12 UB Refund Cst #0000052613 87.12 87.12 2034075 07/25/12 13123 FAVELA PRINTING INC 673 07/02/12 COVERS & TABS 549.53 549.53 2033903 07/11/12 03546 FERGUSON WATERWORKS # 1083 0409519 06/21/12 3" CLMC PIPE 1,233.20 Page 5 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 04061912 06/14/12 D-5 BITS 815.45 0409332 06/19/12 INVENTORY 439.20 04089731 06/25/12 HYDRANT PARTS 122.84 2,610.69 2033986 07/18/12 03546 FERGUSON WATERWORKS # 1083 0405900 05/04/12 REDI CLAMP 494.01 0409707 06/19/12 INVENTORY 134.69 628.70 2034076 07/25/12 03546 FERGUSON WATERWORKS # 1083 04024821 05/14/12 REPAIR TAPPING MACHINE 8,857.27 04089732 06/28/12 HYDRANT PARTS 523.67 04081361 06/28/12 ADAPTER 448.24 0409624 07/05/12 SPACER FLANGE 371.74 10,200.92 2033817 07/03/12 14156 FERNANDO GARCIA Ref002422482 07/02/12 UB Refund Cst #0000177269 39.15 39.15 2034077 07/25/12 12187 FIRST AMERICAN DATA TREE LLC 90034062 06/30/12 ONLINE DOCUMENTS (6/1/12-6/30/12) 99.00 99.00 2033904 07/11/12 04066 FIRST CHOICE SERVICES - SD 183455 06/13/12 COFFEE SUPPLIES 919.90 919.90 2033905 07/11/12 00035 FISHER SCIENTIFIC 9360777 06/21/12 LABORATORY SUPPLIES 357.61 9714675 06/25/12 LABORATORY SUPPLIES 298.96 656.57 2034078 07/25/12 00035 FISHER SCIENTIFIC 0292401 07/02/12 LABORATORY SUPPLIES 144.16 144.16 2033906 07/11/12 11962 FLEETWASH INC 3889727 06/15/12 VEHICLE WASH 273.75 3894021 06/22/12 VEHICLE WASH 146.73 420.48 2033818 07/03/12 01612 FRANCHISE TAX BOARD Ben2422446 07/05/12 BI-WEEKLY PAYROLL DEDUCTION 190.00 190.00 2033819 07/03/12 02344 FRANCHISE TAX BOARD Ben2422456 07/05/12 BI-WEEKLY PAYROLL DEDUCTION 366.56 366.56 2033987 07/18/12 01612 FRANCHISE TAX BOARD Ben2422985 07/19/12 BI-WEEKLY PAYROLL DEDUCTION 90.00 90.00 2034079 07/25/12 13563 FRIENDS OF THE WATER 129 07/03/12 GARDEN COSTS (1ST QTR FY 2013) 25,521.00 25,521.00 2033869 07/03/12 02254 FRY'S ELECTRONICS INC 003787 06/27/12 COMPUTER LOAN 1,848.49 1,848.49 2033907 07/11/12 03094 FULLCOURT PRESS 24159 06/11/12 BILL INSERT 1,409.64 1,409.64 2034080 07/25/12 13716 GARCIA JUAREZ CONSTRUCTION INC 5 07/05/12 CALAVO GARDENS (ENDING 6/30/12) 203,706.77 203,706.77 2033908 07/11/12 10817 GEXPRO 580325204 06/18/12 PME DEVELOPER 3,256.67 580184930 06/22/12 COLOR DISPLAY INTERMEDIATE 2,021.39 580184931 06/25/12 COLOR DISPLAY INTERMEDIATE 161.63 5,439.69 2034081 07/25/12 10817 GEXPRO 580325640 06/27/12 VIEWER 1,868.02 1,868.02 2033820 07/03/12 00101 GRAINGER INC 9847337640 06/07/12 TOOLS 661.75 9847156982 06/07/12 TOOLS 21.23 682.98 Page 6 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033909 07/11/12 00101 GRAINGER INC 9854708824 06/15/12 TOOLS 1,128.80 9851775016 06/13/12 FLATFORM TRUCK 345.75 9830128972 05/16/12 RAS/AERATION PIPING 303.72 9852661561 06/13/12 BATTERIES 212.56 9857035597 06/19/12 WET/DRY VAC 178.01 9855901121 06/18/12 LOAD CENTER 164.41 9853192764 06/14/12 FOOT VALVE 103.27 9847337657 06/07/12 TOOLS 6.24 2,442.76 2034082 07/25/12 00101 GRAINGER INC 9868345159 07/03/12 MAINTENANCE SUPPLIES 658.39 9868222721 07/03/12 DEWATERING PUMP 332.62 9867240567 07/02/12 CLAMP ON KIT 264.24 9868499295 07/05/12 MAINTENANCE SUPPLIES 130.57 1,385.82 2034083 07/25/12 12907 GREENRIDGE LANDSCAPE INC 9424 06/25/12 LANDSCAPING SERVICES (JUNE 2012) 8,650.00 9503 06/26/12 LANDSCAPING SERVICES 238.79 8,888.79 2033988 07/18/12 03773 GTC SYSTEMS INC 33568 06/12/12 DATA CENTER SERVICES (JUNE 2012) 3,024.00 3,024.00 2034084 07/25/12 03773 GTC SYSTEMS INC 33690 06/29/12 DATA CENTER SERVICES (JUNE 2012) 1,570.25 1,570.25 2033821 07/03/12 14146 GUILLERMO PEREZ ORDUNA Ref002422471 07/02/12 UB Refund Cst #0000122082 64 09 64 09203382107/03/12 14146 GUILLERMO PEREZ ORDUNA Ref002422471 07/02/12 UB Refund Cst #0000122082 64.09 64.09 2033989 07/18/12 14189 GWENDOLYN WILLS Ref002422839 07/16/12 UB Refund Cst #0000066781 90.39 90.39 2033910 07/11/12 00174 HACH COMPANY 7801345 06/15/12 SOFTWARE SUPPORT (6/15/12-6/14/13) 2,682.00 7811581 06/21/12 DO SENSOR PROBES 247.76 2,929.76 2034085 07/25/12 00174 HACH COMPANY 7825644 06/29/12 HACH ANLYZERS 2,453.73 2,453.73 2034086 07/25/12 02795 HARTFORD INSURANCE CO, THE Ben2422971 07/19/12 MONTHLY CONTRIBUTION TO LTD 5,428.92 5,428.92 2033911 07/11/12 06640 HD SUPPLY WATERWORKS LTD 4790949 06/19/12 VALMATIC 202C. 531.86 4855200 06/07/12 COUPLINGS 321.98 853.84 2033990 07/18/12 06640 HD SUPPLY WATERWORKS LTD 4755972 06/11/12 G-10 METER GASKETS 584.55 584.55 2033991 07/18/12 04472 HECTOR I MARES-COSSIO 87 05/31/12 CONSULTANT SERVICES (MAY 2012) 3,600.00 88 06/30/12 CONSULTANT SERVICES (JUNE 2012) 3,600.00 7,200.00 2033992 07/18/12 02096 HELIX WATER DISTRICT 0000292400612 07/09/12 TEMPORARY METER (5/24/12-6/27/12) 343.74 343.74 2033993 07/18/12 00713 HEWLETT-PACKARD COMPANY 51370780 06/14/12 HP PROLIANT 48,321.35 48,321.35 2033822 07/03/12 14158 HOME REALTY USA Ref002422484 07/02/12 UB Refund Cst #0000177971 72.50 72.50 2033823 07/03/12 12335 HP ENTERPRISE SERVICES LLC U2950460 06/08/12 CREDIT CARD SERVICES (MAY 2012) 2,545.20 2,545.20 Page 7 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033994 07/18/12 03743 HYDROTEX 120149 06/20/12 OIL 3,310.92 120148 06/20/12 ENGINE OIL 3,273.05 6,583.97 2033995 07/18/12 14193 HYUNAH KOH Ref002422844 07/16/12 UB Refund Cst #0000144830 15.13 15.13 2033824 07/03/12 14153 ILIANA E MAGANA Ref002422479 07/02/12 UB Refund Cst #0000175024 196.21 196.21 2033996 07/18/12 07485 INFO-HOLD INC 3531 07/20/12 ANNUAL LICENSE 595.00 595.00 2034087 07/25/12 08969 INFOSEND INC 60077 06/29/12 POSTAGE - JUNE 2012 12,084.53 60167 07/02/12 BILL PRINTING SERVICES (JUNE 2012) 5,011.60 60076 06/29/12 BILL PRINTING SERVICES (JUNE 2012) 4,995.60 22,091.73 2034088 07/25/12 02372 INTERIOR PLANT SERVICE INC 1095 06/30/12 PLANT SERVICES (JUNE 2012) 186.00 186.00 2033912 07/11/12 03250 INTERNATIONAL PUBLIC MGMT 003807 07/09/12 MEMBERSHIP RENEWALS 165.00 165.00 2033825 07/03/12 14176 IRISH CONSTRUCTION UNDERGROUNDRef002422502 07/02/12 UB Refund Cst #0000188637 1,834.91 1,834.91 2033997 07/18/12 02263 ITRON INC 248315 06/11/12 SOFTWARE MAINTENANCE 4,685.21 4,685.21 2033870 07/03/12 14178 JAMACHA PARK HOA 003782 06/28/12 LANDSCAPE PROGRAM 20 000 00 20 000 00203387007/03/12 14178 JAMACHA PARK HOA 003782 06/28/12 LANDSCAPE PROGRAM 20,000.00 20,000.00 2033913 07/11/12 10563 JCI JONES CHEMICALS INC 548456 06/04/12 CHLORINE TP 8,063.00 8,063.00 2033826 07/03/12 14165 JEFF JENKEL Ref002422491 07/02/12 UB Refund Cst #0000185789 30.80 30.80 2033914 07/11/12 01010 JOBS AVAILABLE INC 1213025 06/19/12 JOB POSTING 367.50 367.50 2034089 07/25/12 01010 JOBS AVAILABLE INC 1214024 07/03/12 JOB POSTING 455.00 455.00 2033998 07/18/12 14191 JOYCELYN FRONDARINA Ref002422841 07/16/12 UB Refund Cst #0000081980 40.00 40.00 2033915 07/11/12 12639 KAPISH NORTH AMERICA LLC 3054 06/15/12 TRIM IMPLEMENTATION 2,880.00 2,880.00 2033827 07/03/12 01804 KEERAN, TIMOTHY 003788 06/04/12 EMPLOYEE PROGRAM 117.90 117.90 2034090 07/25/12 05840 KIRK PAVING INC 5118 06/29/12 PAVING SERVICES 5,997.60 5119 06/29/12 PAVING SERVICES 4,998.00 10,995.60 2034091 07/25/12 04996 KNOX ATTORNEY SERVICE INC 692846 06/30/12 DELIVERY SERVICES (JUNE 2012) 181.50 181.50 2033916 07/11/12 14036 KRATOS / HBE 180102122 06/21/12 SECURITY CAMERAS 21,080.27 21,080.27 2033917 07/11/12 03336 KREINBRING, THERESA 003808 07/03/12 TRAVEL EXPENSES (6/24/12-6/28/12) 689.60 689.60 2033999 07/18/12 03336 KREINBRING, THERESA 003811 07/11/12 COMPUTER LOAN 1,211.03 1,211.03 Page 8 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033918 07/11/12 01859 LA PRENSA SAN DIEGO 23773 06/12/12 JOB POSTING 48.00 48.00 2034092 07/25/12 06497 LAKESIDE LAND COMPANY 263958 06/29/12 LANDFILL 1,628.80 264001 07/02/12 LANDFILL 696.15 263836 06/26/12 LANDFILL 193.40 264048 07/03/12 LANDFILL 53.20 2,571.55 2033828 07/03/12 14149 LARA JOA Ref002422474 07/02/12 UB Refund Cst #0000143133 66.78 66.78 2034093 07/25/12 09511 LAYFIELD ENVIRONMENTAL SYSTEMS E04010 06/26/12 COVER MAINTENANCE (6/1/12-6/26/12) 46,475.00 46,475.00 2033829 07/03/12 05220 LOGICALIS INTEGRATION SOLUTION IN078229 05/29/12 SMARTNET SUPPORT 396.00 IN078228 05/29/12 SMARTNET SUPPORT 2911 244.80 640.80 2033919 07/11/12 05220 LOGICALIS INTEGRATION SOLUTION IN078847 06/12/12 HP HARD DRIVE 19,133.63 IN078848 06/12/12 HP SUPPORT 1,728.64 20,862.27 2034000 07/18/12 05220 LOGICALIS INTEGRATION SOLUTION S239120 05/31/12 2010 EXCHANGE UPGRADE 350.00 350.00 2034094 07/25/12 05220 LOGICALIS INTEGRATION SOLUTION S239583 06/30/12 SUPPORT SERVICES (2/27/12-3/19/12) 630.70 630.70 2034001 07/18/12 03019 LOPEZ JOSE 70100612 07/11/12 MILEAGE REIMBURSEMENT (JUNE 2012)22 20203400107/18/12 03019 LOPEZ, JOSE 70100612 07/11/12 MILEAGE REIMBURSEMENT (JUNE 2012)22.20 70100512 07/11/12 MILEAGE REIMBURSEMENT (MAY 2012) 2.78 24.98 2033830 07/03/12 14148 LOYAL THOMPSON Ref002422473 07/02/12 UB Refund Cst #0000142800 12.46 12.46 2033871 07/03/12 11475 LYDIA JEFFERSON Ref002422466 07/02/12 UB Refund Cst #0000048881 71.03 71.03 2033920 07/11/12 01054 LYNN'S LOCKSMITH SERVICE 277961 06/06/12 LOCKSMITH SERVICES 1,031.69 277438 06/22/12 LOCKSMITH SERVICES 62.80 1,094.49 2033872 07/03/12 10512 MAIL MANAGEMENT GROUP INC OWD7629 06/29/12 DATA ENTRY 75.00 75.00 2034002 07/18/12 10512 MAIL MANAGEMENT GROUP INC OWD7611 05/30/12 POSTCARDS 304.81 304.81 2034095 07/25/12 10512 MAIL MANAGEMENT GROUP INC OWD7667 06/28/12 CONSUMER CONFIDENCE REPORT 2,360.20 2,360.20 2033873 07/03/12 14179 MARK JACKSON 003784 06/28/12 LANDSCAPE PROGRAM 346.00 346.00 2034003 07/18/12 14198 MARK TORRES Ref002422849 07/16/12 UB Refund Cst #0000183780 111.66 111.66 2034096 07/25/12 02902 MARSTON+MARSTON INC 201271 07/02/12 COMMUNITY OUTREACH (JUNE 2012) 5,000.00 5,000.00 2033874 07/03/12 14180 MARY LYNN REICHELT 003786 06/27/12 LANDSCAPE PROGRAM 736.00 736.00 2033921 07/11/12 05329 MASTER METER INC 0203158IN 06/21/12 INVENTORY 12,893.37 0203219IN 06/22/12 AMR REGISTERS 2,033.13 14,926.50 Page 9 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033831 07/03/12 14161 MATTHEW MASI Ref002422487 07/02/12 UB Refund Cst #0000183752 18.11 18.11 2033922 07/11/12 01183 MCMASTER-CARR SUPPLY CO 29137944 06/13/12 HAND TRUCK 168.93 168.93 2033923 07/11/12 01824 MERKEL & ASSOCIATES INC 12061301 06/13/12 ENVIRONMENTAL SERVICES (5/1/12-5/31/12) 13,558.37 13,558.37 2034004 07/18/12 14188 MICHAEL JESSE PEREZ Ref002422838 07/16/12 UB Refund Cst #0000063697 114.55 114.55 2033924 07/11/12 14182 MIKE CUNNINGHAM 003800 07/05/12 W/O REFUND D0874-090126 3,694.22 3,694.22 2033925 07/11/12 02835 MIL-RAM TECHNOLOGY INC 985559 05/25/12 CHLORINE SENSORS 1,220.00 1,220.00 2034097 07/25/12 02835 MIL-RAM TECHNOLOGY INC 185559 07/13/12 SALES TAX FOR PO 716159 93.00 93.00 2033926 07/11/12 00237 MISSION JANITORIAL & ABRASIVE 31436900 06/13/12 JANITORIAL SUPPLIES 920.73 920.73 2033832 07/03/12 14155 MJ LUPIAN Ref002422481 07/02/12 UB Refund Cst #0000175588 15.73 15.73 2033927 07/11/12 09227 MOORE INDUSTRIES-INTRNTL INC 573158 06/25/12 PID CONTROLLER 1,092.26 1,092.26 2034098 07/25/12 03623 MWH AMERICAS INC 1471172 07/05/12 RWCWRF UPGRADE (5/26/12-6/29/12) 6,532.37 1466326 06/28/12 RWCWRF UPGRADE (3/31/12 5/25/12)1 608 06 8 140 43146632606/28/12 RWCWRF UPGRADE (3/31/12-5/25/12)1,608.06 8,140.43 2033928 07/11/12 02764 MYRON L COMPANY 333454 06/14/12 INSTRUMENTS REPAIR 500.62 500.62 2033929 07/11/12 04676 NAPA AUTO PARTS 283272 06/19/12 SHOP TOOL 69.50 69.50 2034005 07/18/12 04676 NAPA AUTO PARTS 283376 06/20/12 REPAIR PART 680.02 283261 06/19/12 SHOP TOOL 121.49 801.51 2033833 07/03/12 03523 NATIONAL DEFERRED COMPENSATION Ben2422442 07/05/12 BI-WEEKLY DEFERRED COMP PLAN 8,838.15 8,838.15 2034006 07/18/12 03523 NATIONAL DEFERRED COMPENSATION Ben2422981 07/19/12 BI-WEEKLY DEFERRED COMP PLAN 8,838.15 8,838.15 2034099 07/25/12 09884 NATIONAL SAFETY COMPLIANCE INC 53665 06/30/12 RANDOM DRUG TESTING (JUNE 2012) 707.87 707.87 2034007 07/18/12 14203 NEW VISTA REALTY Ref002422854 07/16/12 UB Refund Cst #0000186993 28.75 28.75 2034100 07/25/12 08531 NEWEST CONSTRUCTION 10 06/30/12 RWCWR UPGRADE (ENDING 6/30/12) 169,032.60 169,032.60 2033875 07/03/12 10251 NOJAN TALEBZADEH Ref002422463 07/02/12 UB Refund Cst #0000005810 98.43 98.43 2033876 07/03/12 08777 NORMAN KNIGHT 003785 06/28/12 LANDSCAPE PROGRAM 1,194.00 1,194.00 2034101 07/25/12 08656 NORTH STATE ENVIRONMENTAL 203227 06/30/12 HAZARDOUS WASTE DISPOSAL 1,377.70 1,377.70 2034008 07/18/12 14204 OAK TREE REALTY Ref002422855 07/16/12 UB Refund Cst #0000187637 67.11 67.11 Page 10 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033834 07/03/12 14150 OBDULIA GALVAN Ref002422475 07/02/12 UB Refund Cst #0000155482 36.31 36.31 2033930 07/11/12 00510 OFFICE DEPOT INC 614482931001 06/15/12 OFFICE SUPPLIES 293.22 614874008001 06/25/12 INK CARTRIDGES 261.81 614874183001 06/25/12 TONER CARTRIDGE 199.53 614185450001 06/14/12 PHONE HEADSET 107.70 614375193001 06/14/12 OFFICE SUPPLIES 95.79 613421813001 06/19/12 OFFICE SUPPLIES 66.18 613424700001 06/19/12 OFFICE SUPPLIES 57.05 614079145001 06/12/12 SUPPLIES 51.13 613827162001 06/20/12 OFFICE SUPPLIES 44.79 1,177.20 2034102 07/25/12 00510 OFFICE DEPOT INC 615122957001 06/27/12 OFFICE SUPPLIES 70.22 615981961001 07/05/12 OFFICE SUPPLIES 51.11 121.33 2034009 07/18/12 05203 OIL FILTER SERVICE 54051 06/20/12 REPAIR PART 1,575.77 1,575.77 2033931 07/11/12 03149 ON SITE LASER LLC 46840 06/25/12 PRINTER SERVICES 193.95 193.95 2033932 07/11/12 13115 ONESOURCE DISTRIBUTORS LLC S3779815001 05/24/12 LADDER LOCK 258.54 258.54 2033933 07/11/12 07496 ORTEGA CARRILLO ALMA PATRICIA 003804 07/06/12 TUITION REIMBURSEMENT 150 00 150 00203393307/11/12 07496 ORTEGA-CARRILLO, ALMA PATRICIA 003804 07/06/12 TUITION REIMBURSEMENT 150.00 150.00 2033934 07/11/12 02334 OTAY LANDFILL - 4531 0000012507 06/15/12 WASTE DISPOSAL 143.25 143.25 2034103 07/25/12 02334 OTAY LANDFILL - 4531 0000012585 06/30/12 WASTE DISPOSAL (6/22/12-6/30/12) 683.62 683.62 2033835 07/03/12 03101 OTAY WATER DISTRICT Ben2422438 07/05/12 BI-WEEKLY PAYROLL DEDUCTION 693.00 693.00 2034010 07/18/12 03101 OTAY WATER DISTRICT Ben2422977 07/19/12 BI-WEEKLY PAYROLL DEDUCTION 693.00 693.00 2034104 07/25/12 05118 OTIS ELEVATOR COMPANY SD04041612 05/21/12 ELEVATOR MAINTENANCE (JUNE 2012) 458.58 458.58 2034105 07/25/12 03780 OWEN, DOUGLAS WESTLEY 003820 07/24/12 TUITION REIMBURSEMENT 3,000.00 3,000.00 2033836 07/03/12 01002 PACIFIC PIPELINE SUPPLY 153684 06/11/12 HYDRANT CAPS 1,996.61 1,996.61 2033935 07/11/12 01002 PACIFIC PIPELINE SUPPLY 154005 06/27/12 INVENTORY 4,945.34 153993 06/22/12 INVENTORY 2,223.79 153967 06/18/12 STEM VALVES 95.34 153973 06/22/12 INVENTORY 74.93 7,339.40 2034106 07/25/12 01002 PACIFIC PIPELINE SUPPLY 153966 07/03/12 STEM VALVES 2,976.00 2,976.00 2034011 07/18/12 14183 PACIFIC SAFETY CENTER 69188 05/31/12 MEMBERSHIP RENEWAL (8/1/12-7/31/13) 380.00 380.00 2033837 07/03/12 14174 PATRICIA MCKELVEY Ref002422500 07/02/12 UB Refund Cst #0000188155 183.06 183.06 Page 11 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2034012 07/18/12 14202 PATRICIA MCKELVEY Ref002422853 07/16/12 UB Refund Cst #0000186976 124.14 124.14 2033838 07/03/12 14152 PATRICIA ZUNIGA Ref002422478 07/02/12 UB Refund Cst #0000174734 75.00 75.00 2034107 07/25/12 05497 PAYPAL INC 17985013 06/30/12 PHONE PAYMENT SERVICES (JUNE 2012) 54.10 54.10 2033936 07/11/12 03790 PENHALL COMPANY 31043 06/18/12 SAW CUTTING SERVICES 200.00 200.00 2034013 07/18/12 03790 PENHALL COMPANY 30861 05/22/12 CORE HOLE 12 INCH 303.75 303.75 2034108 07/25/12 03790 PENHALL COMPANY 31199 06/30/12 SAW CUTTING SERVICES (6/25/12) 432.50 432.50 2033937 07/11/12 00137 PETTY CASH CUSTODIAN 003806 07/09/12 PETTY CASH 524.58 524.58 2033938 07/11/12 00053 PITNEY BOWES INC 794703 06/23/12 E-Z SEAL 54.03 54.03 2033939 07/11/12 03351 POSADA, ROD 003802 07/06/12 COMPUTER LOAN 630.00 630.00 2033940 07/11/12 05499 PRAXAIR DISTRIBUTION INC 43232340 06/18/12 WELDING SUPPLIES 1,235.52 1,235.52 2033941 07/11/12 01733 PRICE TRONCONE & 12526 05/14/12 ANTENNA SUBLEASE (1ST QTR FY 2013) 4,128.00 4,128.00 2034109 07/25/12 13059 PRIORITY BUILDING SERVICES 31097 06/01/12 JANITORIAL SERVICES (JUNE 2012) 3,504.00 3,504.00 2033839 07/03/12 06844 PROCESS MEASUREMENT & 076150 05/24/12 SUBMERSIBLE TRANSMITTERS 2,627.88 2,627.88 2034014 07/18/12 03237 PROGRESSIVE MAPPING 4765 04/16/12 CIVIL3D UPDATE (5/1/12-5/1/13) 1,137.50 1,137.50 2033942 07/11/12 06641 PRUDENTIAL OVERALL SUPPLY 30268571 06/21/12 UNIFORMS, TOWELS & MATS 366.04 30268570 06/21/12 UNIFORMS, TOWELS & MATS 207.95 30267044 06/14/12 UNIFORMS, TOWELS & MATS 173.33 30268572 06/21/12 UNIFORMS, TOWELS & MATS 173.33 30266404 06/12/12 UNIFORMS, TOWELS & MATS 124.04 30267949 06/19/12 UNIFORMS, TOWELS & MATS 124.04 30267045 06/14/12 UNIFORMS, TOWELS & MATS 55.65 30268573 06/21/12 UNIFORMS, TOWELS & MATS 55.65 30266403 06/12/12 UNIFORMS, TOWELS & MATS 38.12 30267948 06/19/12 UNIFORMS, TOWELS & MATS 38.12 1,356.27 2034015 07/18/12 06641 PRUDENTIAL OVERALL SUPPLY 30267043 06/14/12 UNIFORMS, TOWELS & MATS 374.04 30267042 06/14/12 UNIFORMS, TOWELS & MATS 207.95 581.99 2034110 07/25/12 06641 PRUDENTIAL OVERALL SUPPLY 30270095 06/28/12 UNIFORMS, TOWELS & MATS 452.36 30270094 06/28/12 UNIFORMS, TOWELS & MATS 207.95 30270096 06/28/12 UNIFORMS, TOWELS & MATS 173.33 30269491 06/26/12 UNIFORMS, TOWELS & MATS 124.04 30270097 06/28/12 UNIFORMS, TOWELS & MATS 55.65 Page 12 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 30269490 06/26/12 UNIFORMS, TOWELS & MATS 38.12 31004228 06/28/12 UNIFORM JACKET 37.00 1,088.45 2033943 07/11/12 00078 PUBLIC EMPLOYEES RET SYSTEM Ben2422436 07/05/12 BI-WEEKLY PERS CONTRIBUTION 151,302.72 151,302.72 2034111 07/25/12 00078 PUBLIC EMPLOYEES RET SYSTEM Ben2422975 07/19/12 BI-WEEKLY PERS CONTRIBUTION 159,850.54 159,850.54 2034112 07/25/12 04065 PURCHASE POWER 800090001116750307/05/12 POSTAGE METER REFILL 6,060.00 6,060.00 2034113 07/25/12 10294 QWIKPRINTS 121841048 07/02/12 FINGERPRINTING SVCS (6/11/12-6/25/12) 60.00 60.00 2033944 07/11/12 01342 R J SAFETY SUPPLY CO INC 30175900 06/15/12 SAFETY EQUIPMENT 8,902.52 30175901 06/20/12 SAFETY EQUIPMENT 206.88 30138402 06/20/12 SAFETY SUPPLIES 33.89 9,143.29 2033840 07/03/12 14151 RACQUEL EBALO Ref002422476 07/02/12 UB Refund Cst #0000155576 30.67 30.67 2033841 07/03/12 14142 RANDLE MOYERS Ref002422465 07/02/12 UB Refund Cst #0000044001 92.50 92.50 2034016 07/18/12 14187 RAUL DELGADILLO Ref002422837 07/16/12 UB Refund Cst #0000056460 150.00 150.00 2034114 07/25/12 02041 RBF CONSULTING 12060015 07/02/12 CONSTRUCTION MGMT (6/12/12-6/30/12) 800.00 800.00 2034017 07/18/12 01722 RDO EQUIPMENT CO P08115 05/31/12 FREIGHT 91.59 91.59 2033842 07/03/12 04552 REA & PARKER RESEARCH 003780 05/07/12 CUSTOMER SURVEYS 9,312.50 003781 05/07/12 CUSTOMER SURVEYS 7,125.00 16,437.50 2033945 07/11/12 11969 RELIANCE SAFETY CONSULTANTS 1215 06/15/12 CPR TRAINING 1,280.00 1,280.00 2034115 07/25/12 11969 RELIANCE SAFETY CONSULTANTS 1216 06/27/12 CPR TRAINING 880.00 880.00 2034018 07/18/12 14122 REMEDIOS RICHARDSON Ref002422842 07/16/12 UB Refund Cst #0000091849 36.16 36.16 2033843 07/03/12 14143 RICARDO CANALES Ref002422467 07/02/12 UB Refund Cst #0000050419 33.08 33.08 2033844 07/03/12 14157 RICARDO QUINTERO Ref002422483 07/02/12 UB Refund Cst #0000177885 59.12 59.12 2033946 07/11/12 00521 RICK POST WELDING & 9280 06/12/12 WELDING 380.00 380.00 2034019 07/18/12 14186 ROBERT FILNER Ref002422836 07/16/12 UB Refund Cst #0000045551 81.02 81.02 2034116 07/25/12 06412 ROMERO, TANYA 003818 07/24/12 TUITION REIMBURSEMENT 352.00 352.00 2034020 07/18/12 14190 RONALD MONTEHERMOSO Ref002422840 07/16/12 UB Refund Cst #0000073453 306.84 306.84 2034021 07/18/12 14195 RONNE PADILLA Ref002422846 07/16/12 UB Refund Cst #0000155617 22.66 22.66 Page 13 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2034022 07/18/12 02620 ROTORK CONTROLS INC CI05084 06/20/12 ROTORK-FILTER INF 1,185.25 1,185.25 2034023 07/18/12 14192 ROXANNE MONTEMAYOR Ref002422843 07/16/12 UB Refund Cst #0000124928 37.23 37.23 2033947 07/11/12 00217 RW LITTLE CO INC 108396 06/20/12 POWDER COAT 200.00 200.00 2034117 07/25/12 00217 RW LITTLE CO INC 108560 07/02/12 POWDER COAT GORMANN RUPP AIR VAC.~ 100.00 100.00 2033948 07/11/12 05130 SAFARI MICRO INC 216458 05/25/12 Adobe Illustrator CS6 648.19 648.19 2034118 07/25/12 02683 SAFECHECKS INC 0518742 06/27/12 CHECK STOCK 843.73 843.73 2033949 07/11/12 13204 SAIC ENERGY ENVIR & INFRAS LLC 05784 06/13/12 CONSTRUCTION MGMT (ENDING 6/1/12) 36,185.74 36,185.74 2033950 07/11/12 11596 SAN DIEGO CONSTRUCTION WELDING 8439 06/25/12 WELDING SERVICES (6/13/12-6/19/12) 722.50 8427 06/12/12 WELDING SERVICES (6/8/12) 255.00 977.50 2034024 07/18/12 11596 SAN DIEGO CONSTRUCTION WELDING 8361 05/02/12 WELDING SERVICES (4/18/12-4/20/12) 3,060.00 3,060.00 2033951 07/11/12 00247 SAN DIEGO DAILY TRANSCRIPT 313353 06/18/12 BID ADVERTISEMENT 111.70 111.70 2034119 07/25/12 13712 SAN DIEGO FREIGHT LINER W31416 06/29/12 DUMP TRUCK 75,418.26 75,418.26 2033845 07/03/12 00121 SAN DIEGO GAS & ELECTRIC 003777 06/19/12 UTILITY EXPENSES (MONTHLY) 36,204.81 36,204.81 2033952 07/11/12 00121 SAN DIEGO GAS & ELECTRIC 003699 06/27/12 UTILITY EXPENSES (MONTHLY) 56,228.65 003698 06/25/12 UTILITY EXPENSES (MONTHLY) 41,554.71 003797 06/22/12 UTILITY EXPENSES (MONTHLY) 106.42 97,889.78 2034025 07/18/12 00121 SAN DIEGO GAS & ELECTRIC 003809 07/17/12 UTILITY EXPENSES (MONTHLY) 72,306.76 72,306.76 2033953 07/11/12 03273 SAN DIEGO READER 158620 06/14/12 JOB POSTING 69.22 69.22 2033846 07/03/12 14172 SAN DIEGO REALTY Ref002422498 07/02/12 UB Refund Cst #0000187203 16.07 16.07 2033847 07/03/12 14166 SAN DIEGO REALTY INC Ref002422492 07/02/12 UB Refund Cst #0000186023 43.81 43.81 2033848 07/03/12 14168 SAN DIEGO REALTY INC Ref002422494 07/02/12 UB Refund Cst #0000186763 31.22 31.22 2034026 07/18/12 10665 SAN DIEGO STAGE & LIGHTING JOBRTL1215861 07/01/12 CHOIR RISERS RENTAL 235.00 235.00 2033954 07/11/12 03590 SAN JOSE, DELIA 003801 07/06/12 COMPUTER LOAN 873.98 873.98 2034027 07/18/12 06280 SANCHEZ, OMAR 003815 07/03/12 LICENSE RENEWAL 125.50 125.50 2034120 07/25/12 00419 SHAPE PRODUCTS 157028 07/06/12 DISTRIBUTION SUPPLIES 1,172.77 1,172.77 2034028 07/18/12 14205 SHERMAN TRUST/LINCOLN BANKS Ref002422856 07/16/12 UB Refund Cst #0000187688 33.87 33.87 Page 14 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2034121 07/25/12 11516 SIEMENS INDUSTRY INC 900810040 07/06/12 AMMONIA SENSOR 480.61 480.61 2034122 07/25/12 13327 SILVA SILVA INTERNATIONAL 1207 07/10/12 PROJECT CONSULTANT (JUNE 2012) 4,000.00 4,000.00 2033955 07/11/12 12281 SIR SPEEDY PRINTING 3092 06/21/12 BUSINESS CARDS 41.63 41.63 2034123 07/25/12 03592 SOFTCHOICE CORPORATION 3074340 06/26/12 ADOBE UPGRADE 10,670.16 10,670.16 2033849 07/03/12 14167 SONYA FLORES Ref002422493 07/02/12 UB Refund Cst #0000186505 37.12 37.12 2034029 07/18/12 02963 SOUTH COUNTY ECONOMIC 111712 06/09/12 MEMBERSHIP RENEWAL (7/1/12-6/30/12) 750.00 750.00 2033956 07/11/12 03103 SOUTHCOAST HEATING & C48936 06/12/12 AC MAINTENANCE (JUNE 2012) 1,068.00 1,068.00 2033957 07/11/12 01669 SOUTHLAND ENVELOPE CO INC 116583 06/13/12 REPLY ENVELOPES 257.85 257.85 2033958 07/11/12 03760 SPANKY'S PORTABLE SERVICES INC 917410 06/13/12 PORTABLE TOILET RENTAL (6/13/12-7/10/12) 79.96 79.96 2034030 07/18/12 03760 SPANKY'S PORTABLE SERVICES INC 917856 06/22/12 PORTABLE TOILET RENTAL (6/21/12-7/18/12) 98.15 98.15 2034124 07/25/12 03760 SPANKY'S PORTABLE SERVICES INC 919251 07/02/12 PORTABLE TOILET RENTAL (6/30/12-7/27/12) 79.96 918856 06/29/12 PORTABLE TOILET RENTAL (6/29/12 7/26/12)79 9691885606/29/12 PORTABLE TOILET RENTAL (6/29/12-7/26/12)79.96 918855 06/29/12 PORTABLE TOILET RENTAL (6/29/12-7/26/12) 79.96 918854 06/29/12 PORTABLE TOILET RENTAL (6/29/12-7/26/12) 79.96 319.84 2033959 07/11/12 03516 SPECIAL DISTRICT RISK 39548 05/11/12 PROPERTY & LIABILITY PROGRAM (ANNUAL) 563,165.54 563,165.54 2034125 07/25/12 03516 SPECIAL DISTRICT RISK 40027 06/04/12 WORKERS' COMPENSATION (7/1/12-9/30/12) 56,877.00 56,877.00 2034031 07/18/12 10343 SPECIALTY DOORS AND AUTOMATION 37712SD 06/19/12 GATE REPAIR 716.39 716.39 2034126 07/25/12 10343 SPECIALTY DOORS AND AUTOMATION 37821SD 06/30/12 GATE REPAIR 2,992.50 2,992.50 2033850 07/03/12 06510 SPRINT NEXTEL 901500243069 06/12/12 WIRELESS SERVICES (5/9/12-6/8/12) 3,525.00 3,525.00 2034127 07/25/12 10670 STANDARD & POOR'S FINANCIAL 10299999 07/10/12 ANALYTICAL SERVICES (7/1/12-6/30/13) 3,500.00 3,500.00 2033851 07/03/12 13564 STAR-NEWS PUBLISHING CO, THE 00008412 05/25/12 JOB POSTING 126.50 126.50 2034032 07/18/12 13564 STAR-NEWS PUBLISHING CO, THE 00008977 06/15/12 JOB POSTING 138.00 138.00 2033852 07/03/12 06281 STATE DISBURSEMENT UNIT Ben2422454 07/05/12 BI-WEEKLY PAYROLL DEDUCTION 415.38 415.38 2033853 07/03/12 06299 STATE DISBURSEMENT UNIT Ben2422444 07/05/12 BI-WEEKLY PAYROLL DEDUCTION 237.69 237.69 2033854 07/03/12 06303 STATE DISBURSEMENT UNIT Ben2422448 07/05/12 BI-WEEKLY PAYROLL DEDUCTION 802.15 802.15 Page 15 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033855 07/03/12 08533 STATE DISBURSEMENT UNIT Ben2422458 07/05/12 BI-WEEKLY PAYROLL DEDUCTION 253.85 253.85 2034033 07/18/12 06281 STATE DISBURSEMENT UNIT Ben2422989 07/19/12 BI-WEEKLY PAYROLL DEDUCTION 415.38 415.38 2034034 07/18/12 06299 STATE DISBURSEMENT UNIT Ben2422983 07/19/12 BI-WEEKLY PAYROLL DEDUCTION 237.69 237.69 2034035 07/18/12 06303 STATE DISBURSEMENT UNIT Ben2422987 07/19/12 BI-WEEKLY PAYROLL DEDUCTION 802.15 802.15 2034036 07/18/12 08533 STATE DISBURSEMENT UNIT Ben2422991 07/19/12 BI-WEEKLY PAYROLL DEDUCTION 253.85 253.85 2033856 07/03/12 14171 STEPHANIE MACKEY Ref002422497 07/02/12 UB Refund Cst #0000187110 16.82 16.82 2033960 07/11/12 03738 STEVEN ENTERPRISES INC 0287781IN 06/15/12 INK CARTRIDGES 193.95 193.95 2033961 07/11/12 03263 STRUNKS JR, DALE 003803 07/06/12 COMPUTER LOAN 707.30 707.30 2033962 07/11/12 06841 SUPERIOR ENVIRONMENTAL 1206034 06/19/12 CLEANING SERVICES 600.00 600.00 2033963 07/11/12 10339 SUPREME OIL COMPANY 373840 06/20/12 UNLEADED FUEL 13,910.95 373860 06/21/12 DIESEL FUEL 12,390.75 373839 06/20/12 DIESEL FUEL 6,914.36 373837 06/20/12 DIESEL FUEL 4,089.21 37,305.27 2034037 07/18/12 14199 SVSC HOLDINGS LP Ref002422850 07/16/12 UB Refund Cst #0000186749 2,000.77 2,000.77 2033857 07/03/12 01554 SWANSON INSURANCE AGENCY 22546 06/21/12 NOTARY BOND RENEWAL 50.00 22547 06/21/12 E&O NOTARY BOND 35.00 85.00 2034038 07/18/12 00408 SWEETWATER AUTHORITY 003816 07/06/12 PHOTO EXHIBIT POSTCARDS 211.46 211.46 2033964 07/11/12 02188 TALLEY COMMUNICATIONS 10093575 06/12/12 CABLE ADAPTERS 71.50 71.50 2034128 07/25/12 02376 TECHKNOWSION INC 2398 06/30/12 TECHKNOWSION SECONDARY 15,000.00 2400 06/30/12 TECHKNOWSION FILTER 6,683.00 21,683.00 2033877 07/03/12 14177 THOMPSON, MITCHELL 18070612 06/26/12 MILEAGE REIMBURSEMENT (5/30/12-6/30/12) 5.55 5.55 2034039 07/18/12 14196 TSUTOMU ISHIZAWA Ref002422847 07/16/12 UB Refund Cst #0000169139 111.33 111.33 2034129 07/25/12 00427 UNDERGROUND SERVICE ALERT OF 620120468 07/01/12 UNDERGROUND ALERTS (JUNE 2012) 280.50 280.50 2033965 07/11/12 13047 UNION BANK NA 8479 06/18/12 ADM FEES-BONDS 2,963.62 8604 06/22/12 ADM FEES FOR 1993/2004 COPS (ANNUAL) 2,097.00 8605 06/22/12 ADM FEES FOR ID NO 27 (ANNUAL) 825.00 5,885.62 2033966 07/11/12 14181 UNITED RENTALS (NORTH AMERICA)103488506001 06/20/12 CONCRETE 179.44 103415203001 06/18/12 CONCRETE 177.79 103431841001 06/18/12 CONCRETE 159.47 516.70 Page 16 of 17 OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2033797 THROUGH 2034134 RUN DATES 7/3/2012 TO 7/25/2012 Check # Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2033858 07/03/12 05417 UNITED STATES DEPARTMENT Ben2422450 07/05/12 BI-WEEKLY PAYROLL DEDUCTION 100.00 100.00 2034040 07/18/12 07662 UNITEDHEALTHCARE SPECIALTY 1004800000 07/18/12 AD&D & SUPP LIFE INS (SEPT 2011) 5,471.52 5,471.52 2033967 07/11/12 03212 UNUM LIFE INSURANCE 003805 07/10/12 FICA CONTRIBUTION 119.72 119.72 2034041 07/18/12 07674 US BANK CORPORATE PAYMENT 003812 06/22/12 CAL CARD EXPENSES (MONTHLY) 868.71 003810 06/22/12 CAL CARD EXPENSES (MONTHLY) 404.78 003813 06/22/12 CAL CARD EXPENSES (MONTHLY) 45.43 1,318.92 2034130 07/25/12 06829 US SECURITY ASSOCIATES INC 728154 06/28/12 SECURITY SERVICES 110.00 110.00 2034131 07/25/12 13048 V & A CONSULTING ENGINEERS 13462R 06/29/12 CORROSION SERVICES (5/26/12-6/29/12) 13,191.00 13,191.00 2034132 07/25/12 08028 VALLEY CONSTRUCTION MANAGEMENTSD100123 06/30/12 CONSTRUCTION MGMT (6/1/12-6/30/12) 13,755.00 SD100124 06/30/12 INSPECTION SERVICES (6/1/12-6/30/12) 4,845.00 18,600.00 2033859 07/03/12 01095 VANTAGEPOINT TRANSFER AGENTS Ben2422434 07/05/12 BI-WEEKLY DEFERRED COMP PLAN 12,684.66 12,684.66 2033860 07/03/12 06414 VANTAGEPOINT TRANSFER AGENTS Ben2422440 07/05/12 BI-WEEKLY 401A PLAN 1,815.58 1,815.58 2033861 07/03/12 12686 VANTAGEPOINT TRANSFER AGENTS Ben2422452 07/05/12 401A TERMINAL PAY 7 157 63 7 157 63203386107/03/12 12686 VANTAGEPOINT TRANSFER AGENTS Ben2422452 07/05/12 401A TERMINAL PAY 7,157.63 7,157.63 2034042 07/18/12 01095 VANTAGEPOINT TRANSFER AGENTS Ben2422973 07/19/12 BI-WEEKLY DEFERRED COMP PLAN 11,896.55 11,896.55 2034043 07/18/12 06414 VANTAGEPOINT TRANSFER AGENTS Ben2422979 07/19/12 BI-WEEKLY 401A PLAN 1,815.58 1,815.58 2033862 07/03/12 07595 WALTERS WHOLESALE ELECTRIC CO 326432201 05/25/12 ELECTRICAL PARTS 3,340.25 326432202 05/25/12 ELECTRICAL PARTS 405.14 3,745.39 2034133 07/25/12 01343 WE GOT YA PEST CONTROL 76395 07/03/12 BEE REMOVAL 115.00 115.00 2034044 07/18/12 00517 WESCO DISTRIBUTION INC 610832 05/30/12 TRANSFER SWITCH 6,798.82 6,798.82 2034134 07/25/12 00125 WESTERN PUMP INC 0118302IN 06/30/12 FEUL ISLAND TESTING 1,537.50 0118298IN 06/30/12 LEAK CERTIFICATION 963.36 0117819IN 06/27/12 DUSTO INSPECTIONS 400.00 2,900.86 2033968 07/11/12 01112 ZEP SALES & SERVICE 53507118 06/14/12 JANITORIAL SUPPIES 125.51 125.51 GRAND TOTAL 2,529,502.18 2,529,502.18 Page 17 of 17