HomeMy WebLinkAbout03-19-12 Board PacketOTAY WATER DISTRICT
SPECIAL MEETING OF THE BOARD OF DIRECTORS
DISTRICT BOARDROOM
2554 SWEETWATER SPRINGS BOULEVARD
SPRING VALLEY, CALIFORNIA
MONDAY
March 19, 2012
3:00P.M.
AGENDA
1. ROLL CALL
2. PLEDGE OF ALLEGIANCE
3. APPROVAL OF AGENDA
4. PUBLIC PARTICIPATION-OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO
SPEAK TO THE BOARD ON ANY SUBJECT MATIER WITHIN THE BOARD'S
JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA
ACTION ITEMS
5. BOARD
a) RECEIVE NOMINATIONS AND APPOINT A MEMBER AND ALTERNATE
MEMBER TO THE CITY OF CHULA VISTA REDEVELOPMENT AGENCY'S
OVERSIGHT BOARD
WORKSHOP
6. REVIEW AND DISCUSS WATER SALES FORECASTING (BEACHEM/BELL)
a) PRESENTATION ON GROWTH AND THE ECONOMY (ALAN NEVIN ,
LONDON GROUP) [20 minutes]
b) PRESENTATION ON PRICE ELASTICITY (DR. STEVE PIPER, BUREAU
OF RECLAMATION) [20 minutes]
c) PRESENTATION ON WEATHER FORECASTING (ALEXANDER TARDY,
NATIONAL OCEANIC ATMOSPHERIC ADMINISTRATION) [20 minutes]
d) PRESENTATION ON METER SALES FORECASTING (KENNEDY) [5 mi-
nutes]
1
e) PRESENTATION ON WATER CONSERVATION FORECASTING (GRAN-
GER) [5 minutes]
RECESS TO CLOSED SESSION
7. CLOSED SESSION
a) CONFERENCE WITH LEGAL COUNSEL-ANTICIPATED LITIGATION
[GOVERNMENT CODE §54956.9]
(I) SALT CREEK GOLF, LLC, UNITED STATES BANKRUPTCY
COURT, CASE NO. 11 -13898-LA11
b) CONFERENCE WITH LEGAL COUNSEL-ANTICIPATED LITIGATION
[GOVERNMENT CODE §54956.9]
1 MATTERS
RETURN TO OPEN SESSION
8. REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY
ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION
9. ADJOURNMENT
2
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 670-2280 at least 24 hours
prior to the meeting.
Certification of Posting
I certify that on March 16, 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 24 hours in advance of the special meeting of the Board of Directors (Government
Code Section §54954.2).
Executed at Spring Valley, California on March 16, 2012.
/s/ Susan Cruz, District Secretary
3
AGENDA ITEM 6
STAFF REPORT
TYPE MEETING: Special Board MEETINGDATE: March 19, 201 2
Rita Bell, Finance Manager PROJECT: Various DIV. NO. ALL
SUBMITTED BY:
APPROVED BY: ~ Joseph R . Beachem, Chief Financial Officer
~ German Alvarez , Assistant General Manager
~ Mark Watton, General Manager
SUBJECT: Review and Discuss Water Sales Forecastin g
GENERAL MANAGER'S RECOMMENDATION:
This is an informatio nal item only .
PURPOSE :
To review and discuss with the Board water sales forecasting.
ANALYSIS:
At the February 14 , 2 012 Finance , Administration and Communications
Committee meeting , a request was made for staff t o prepare a
presentation discussing the factors used in budgeti ng water sales .
This staff report includes a presentation to explain how water sales
are budgeted. Three guest speakers along with staff will talk about
various subjects related to the presentations involved in this
process .
Alan Nevin from The London Group will discuss meter growth and the
economy . His presentation will include the national and San Diego
County economic fact ors including unemployment , earnings , sales tax
c ollections , and data on real estate . He will also discuss Otay
specific real estate growth in the areas of single-family , multi-
family and commercial properties .
Dr. Steve Piper from t he Bureau o f Reclamat ion will discuss the pric e
elasticity of water. Dr. Piper is currently working on a large
project that will produce a price elasticity formula for a number of
agencies in the Western United States. This is a work in progress
and it is hoped that the study will produce a number of useful tools
for the District . Variables in the study include the rate of
unemployment , inflation, rate tiering structure, bill layout,
rainfall, temperature, income levels, Otay's specific rate structure,
and other local community profile data.
Alexander Tardy from the National Oceanic and Atmospheric
Administration (NOAA ) will discuss water supply, temperature and
precipitation . This topic will include historical patterns of
rainfall and weather patterns such as El Nino and La Nina , and how
forecasts are developed.
In addition, staff will present how the budget for water sales is
developed and will include presentations from the following staff:
Finance Staff will present the topics of water sales budgeting
including the current methodology that looks at historical trends,
average usage per customer type , and the amount of water sold in each
tier. This topic will also discuss that staff "normalizes" the past
12 months of data to adjust for the prior weather if it was either
hot and dry or wet and cool.
Engineering Staff will discuss how the economist data is included in
the development of projected meter sales. This projection also
includes historical data of development within the service area,
communication with the developers, and master planning data . The data
is then converted to EDUs and a six-year projection is developed for
the purpose of budgeting capacity fees and meter growth.
The District's Water Co nservation Manager will discuss factors that
are influencing indoor and outdoor demand now and in the future.
Some of these factors are driven by code changes that lower both
indoor and outdoor demand , much of which are likely to be a permanent
decrease in demand . Customers outdoor water usage is being
increasingly influenced by the marketing of water smart landscapes
promoted at outreach events and the Water Conservation Garden.
The presentation will conclude with a discussion of options to
consider incorporating into the future water sales budgeting process
to further enhance the process .
FISCAL IMPACT: ~ Joe Beachem, Chief Financial Officer
None.
STRATEGIC GOAL :
Provide value by directing and managing the financial issues that are
critical to the District.
LEGAL IMPACT:
None.
Attachments :
Attachment A -Factors Used In Budgeting for Water Sales
Attachment B -Economic Update 2012 -2018
Attachment C -Reclamation -Managing Water in the West
Attachment D -Water Supply, Temperature and Precipitation
March 19, 2012
Attachment A
Major Factors
◦Historic Sales (Rita Bell)
◦Weather (Alexander Tardy, NOAA)
Other Factors
◦Price Elasticity (Dr. Steve Piper, Bureau of Reclamation)
◦Meter Sales (Alan Nevin, The London Group)
◦Economy (Alan Nevin, The London Group)
◦Conservation (William Granger)
Alan Nevin, The London Group
◦Growth and Economy
Steve Piper, Bureau of Reclamation
◦Price Elasticity
Alexander Tardy, National Oceanic and
Atmospheric Administration
◦Weather
Alan Nevin
The London Group
(20 Minutes)
Dr. Steve Piper
Bureau of Reclamation
(20 Minutes)
Alexander Tardy
National Oceanic and
Atmospheric Administration
(20 Minutes)
Create baseline by starting with most recent 12 months (April 2011 through March 2012)
◦Customer Class and Meter Count
◦Sales by Month
◦Sales by Tier
This baseline includes the factors of weather, the economy, growth,
conservation, and price elasticity as
experienced by the District.
FY09 Actual FY10 Actual FY11 Projections FY11 Budget FY12 Budget
SFR Single-Family 8,844,440 7,679,494 7,504,151 7,776,400 7,684,300
MM Master Meters 1,427,758 1,371,244 1,389,968 1,358,800 1,423,300
PC<10 Public and Commercial < 10" Meter 1,357,484 1,371,122 1,410,266 1,376,300 1,444,100
PC>10 Public and Commercial > 10" Meter 584,743 427,155 325,473 480,800 333,300
IRR 75&1 Agr, Lds and Comm .75" & 1" Meter 237,051 199,218 190,392 210,200 195,000
IRR 1.5&2 Agr, Lds and Comm 1.5" & 2" Meter 1,717,536 1,281,675 1,251,786 1,344,800 1,281,800
IRR >3 Agr, Lds and Comm > 3" Meter 229,167 163,237 70,655 184,700 72,400
REC75&1 Recycled .75" & 1.0" Meter 58,743 49,393 45,362 54,000 47,100
REC1.5&2 Recycled 1.5" & 2.0" Meter 1,435,274 1,295,264 1,207,536 1,384,300 1,253,900
REC3&4 Recycled 3.0" & 4.0" Meter 56,114 73,737 69,994 70,700 72,700
REC>6 Recycled > 6.0" Meter 441,258 355,567 339,637 362,200 352,700
TEMP75&1 Temporary .75" & 1.0" Meter 3,173 4,123 3,928 4,600 4,000
TEMP1.5&2 Temporary 1.5" & 2.0" Meter 7,012 2,436 2,290 3,200 2,300
TEMP>3 Temporary 1> 3.0" Meter 513,149 247,457 167,063 272,700 171,100
TOTAL TOTAL
16,912,902
14,521,122
13,978,501
14,883,700
14,338,000
Volume Change
(663,904)
(2,391,780)
(542,621)
905,199
359,499
Potable
14,921,513
12,747,161
12,315,972
13,012,500
12,611,600
Rainfall (Inches)
9.15
10.55
12.01
FY09 Actual FY10 Actual FY11 Projections FY11 Budget FY12 Budget
SFR Single-Family
17.0 14.7 14.3 14.8 14.8
MM Master Meters
155.1 143.4
145.0
140.7
140.7
PC<10 Public and Commercial < 10" Meter
76.8 80.2
82.4
76.0
76.0
PC>10 Public and Commercial > 10" Meter
8,121.4 5,932.7 5,424.6 8,013.3 8,013.3
IRR 75&1 Agr, Lds and Comm .75" & 1" Meter
55.8 62.2
43.8
49.2
49.2
IRR 1.5&2 Agr, Lds and Comm 1.5" & 2" Meter
166.6 126.3 123.0 133.1 133.1
IRR >3 Agr, Lds and Comm > 3" Meter
1,273.2 971.7
452.9
1,099.4
1,099.4
REC75&1 Recycled .75" & 1.0" Meter
51.5 42.9
41.1
45.0
45.0
REC1.5&2 Recycled 1.5" & 2.0" Meter
212.1 188.1 174.7 198.2 198.2
REC3&4 Recycled 3.0" & 4.0" Meter
519.6 614.5
583.3
589.2
589.2
REC>6 Recycled > 6.0" Meter
12,257.2 9,876.9 9,434.4 10,061.1 10,061.1
TEMP75&1 Temporary .75" & 1.0" Meter
16.5 21.5
20.5
24.0
24.0
TEMP1.5&2 Temporary 1.5" & 2.0" Meter
64.9 25.4
23.9
33.3
33.3
TEMP>3 Temporary 1> 3.0" Meter
411.2 229.1 143.5 249.7 249.7
TOTAL TOTAL
17.0 14.7
14.3
14.8
14.8
Single-Family Residential
Projected Units % Distribution Rate Amount
1 - 5 hcf 944,400 12.30% $1.49 $ 1,407,200
6 - 10 hcf 3,316,900 43.20% $2.31 7,662,000
11 - 22 hcf 2,165,200 28.20% $3.00 6,495,600
over 23 hcf 1,251,500 16.30% $4.63 5,794,400
7,678,100 100.00% $ 21,359,200
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
Budget FY 2012 Residential Unit Sales by Tier
Tier 1 Tier 2 Tier 3 Tier 4
Tier 1 Tier 2 Tier 3 Tier 4 Total
1 – 5 hcf 6 – 10 hcf 11 – 22 hcf > 23 hcf
July 7.80% 42.10% 30.90% 19.20% 100.00%
August 6.80% 40.80% 30.70% 21.70% 100.00%
September 5.00% 37.80% 31.20% 26.00% 100.00%
October 8.00% 41.60% 29.90% 20.50% 100.00%
November 10.90% 44.60% 29.20% 15.30% 100.00%
December 13.20% 46.30% 27.50% 13.00% 100.00%
January 19.40% 48.50% 24.60% 7.50% 100.00%
February 35.90% 44.40% 16.10% 3.60% 100.00%
March 41.90% 41.50% 13.70% 2.90% 100.00%
April 17.20% 47.70% 26.00% 9.10% 100.00%
May 14.90% 47.50% 27.50% 10.10% 100.00%
June 9.20% 43.30% 30.30% 17.20% 100.00%
Average 15.85% 43.84% 26.47% 13.84% 100.00%
Look at weather in past twelve months and 3
years prior rainfall and temperature
Adjust back to “normal” rainfall year
-
1.00
2.00
3.00
4.00
5.00
6.00
in
c
h
e
s
Jul-0
9
Aug-
09
Sep-
09
Oct-
09
Nov-
09
Dec-
09
Jan-
10
Feb-
10
Mar-
10
Apr-
10
May-
10
Jun-
10
Jul-
10
Aug-
10
Sep-
10
Oct-
10
Nov-
10
Dec-
10
Jan-
11
Feb-
11
Mar-
11
Apr-
11
May-
11
Jun-
11
Jul-
11
Aug-
11
Sep-
11
Oct-
11
Nov-
11
Dec-
11
Jan-
12
Feb-
12
Rainfall Monthly
(Inches) - - - - 0.12 2.28 3.38 2.28 0.68 1.78 0.01 0.02 0.02 - 0.03 2.18 0.88 5.00 0.31 2.13 1.46 0.26 0.36 0.03 - - 0.13 0.46 3.12 0.86 0.89 0.70
FY 2010-2012 Monthly Rainfall
18.2 18.0
17.0
14.7 14.2 14.4
0
2
4
6
8
10
12
14
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Inches Units
Average Sales per Meter for Single-Family Residential
Average Monthly Consumption Rainfall (Lindberg Field)
18.2 18.0
17.0
14.7 14.2 14.4
68.5
69
69.5
70
70.5
71
71.5
72
72.5
73
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Degrees Units
Average Sales per Meter for Single-Family Residential
Average Monthly Consumption Average Temperature
18.2 18.0
17.0
14.7 14.2 14.4
45
46
47
48
49
50
51
52
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
ET Rate Units
Average Sales per Meter for Single-Family Residential
Average Monthly Consumption ET Rate
18.2 18.0
17.0
14.7 14.2 14.4
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Cost Units
Average Sales per Meter for Single-Family Residential
Average Monthly Consumption Average Price/Unit
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2007 2008 2009 2010 2011 2012
Acre-Feet
CWA Budget vs. Actual Sales
CWA Budget CWA Sales
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2007 2008 2009 2010 2011 2012
Acre -Feet
Otay Budget vs. Actual Sales
Otay Budget Otay Sales
• Review historical data of development within service area, i.e., SAMPS, plans submitted, newspaper articles, etc.
• Communicate with Developers to confirm sales progress and anticipated new construction and timing of completion
• Compare information with Alan Nevin and supplement his research
• Develop a final “draft” of six-year projection for the entire District
• Numbers finalized for Budget workshop in May 2012
Methodology to Develop EDU’s
Projections FY 2013
2318
1768 1677
589 484 558.5
427 440
649 676
882 948 1,057
0
500
1,000
1,500
2,000
2,500
EDU Sales
Permanent Changes in Indoor Water Usage
◦Code changes influence indoor water use
Chula Vista’s Green Building Code went into effect October 2009 for new construction (500+ homes)
1/1/2014: only High Efficiency Toilets (HETs) will be sold in California; use 30% less water than standard 1.6 gallons/flush
1/1/2014: only HE Urinals (.5 gallons/flush) can be sold in California
◦Waterwise Landscapes
California Model Landscape Ordinance- new landscapes were required to be more efficient, effective 1/1/2010
18” setbacks from sprinklers to hardscape eliminates runoff
No overhead sprinklers for areas narrower than 8 feet
Maximum allowed water allowance for new and refurbished sites decreased by 10%
30,000
31,000
32,000
33,000
34,000
35,000
36,000
37,000
38,000
39,000
40,000
Ac
r
e
-Fe
e
t
Otay Service Area Demand Projection
Unadjusted Baseline Demand Baseline Demand Adjusted for Plumbing Code
WaterSense Program - products use 20% less water and have specific performance criteria
WaterSense Products currently include:
◦Toilets
◦Showerheads ◦Faucets
◦Urinals
Programs such as the Water Authority’s Water Smart and MET’s California Friendly® brand are beginning to have an impact in the region.
◦Home Depot’s Garden Friendly Plant Fairs
Increased visitation to the Water Conservation Garden - over 40,000 visitors per year
City of Chula Vista: no planned changes
Large HOAs: Eastlake I, III: continue to take out turfgrass
County of SD: continue to under irrigate
Golf Courses: shrinking the amount of irrigated area
Otay Customers:
◦Customer’s interest in saving water has grown steadily since 2005
◦50% of the District’s customers indicated that higher water rates motivated them to conserve water and took specific steps to conserve water during the past 6 months
Budget Growth by Customer Type
Reexamine Percentages within Tiers
Adjust Future Sales for Weather in Upcoming
Year
Adjust Future Sales for Price Elasticity
Adjust Future Sales for Continued
Conservation
Questions?
Economic Update (2012-2018)
Otay Water District
The London Group Realty Advisors
Consultants to Real Estate Investors and Portfolio Managers
Alan N. Nevin
Principal & Director
Litigation Support Practice
(619) 269-4010 x5
alan@londongroup.com
Attachment B
The National Picture
U.S. Unemployment Rate Pushes Downward
U.S. Monthly Payroll Rises – but Not Enough
First Time Claims for Unemployment Insurance
Oil Prices move Erratically Upward
New Vehicle Sales Looking Up
The San Diego Economy
Metropolitan Area
% Change
Rank 2010 2011 Change % Change
Salt Lake City 1 617 637 20 3.2%
Houston 2 2,567 2,643 76 3.0%
San Jose 3 864 889 25 2.9%
Tampa/St. Petersburg 4 1,122 1,150 28 2.5%
Seattle 5 1,650 1,688 38 2.3%
San Diego 6 1,234 1,261 27 2.2%
Austin 7 770 786 16 2.1%
Riverside/San Bernardino 8 1,119 1,142 23 2.1%
Jacksonville 9 587 597 10 1.7%
Raleigh 10 502 510 8 1.6%
Source: Bureau of Labor Statistics
London Group Realty Advisors 2.2012
Top Ten Metropolitan Areas
% Employment Change
2010-2011
2010-2011Employment
San Diego County Ranking in % Employment Change
Payroll Employment – San Diego County
Civilian Unemployment Rate – San Diego County
Annual Payroll Employment by Job Category
Visitor Spending on the Rise
Quarter 2010 2011 2010 2011
1st 1,098,527,221$ 1,182,935,803$ 97,070,512$ 104,479,532$
2nd 1,201,338,068$ 1,323,063,425$ 105,750,900$ 113,812,159$
3rd 1,224,547,750$ 1,335,561,436$ 106,952,810$ 115,244,572$
total 3,524,413,039$ 3,841,560,664$ 309,774,222$ 333,536,263$
Change 1st-3rd
Qtrs. 2010-2011 317,147,625$ 23,762,041$
% Change 9.0%7.7%
Source: HdL
The London Group Realty Advisors 2.2012
California San Diego Co.
Sales Tax Point of Sale
San Diego County & State of California
San Diego Residential
Real Estate
S.D. County Foreclosures – on a Downward Path
Residential Resales – South San Diego County
Year # Closings Avg. Sales Price
2005 7,527 $693,476
2006 5,501 $716,132
2007 4,283 $753,418
2008 6,206 $487,876
2009 7,668 $398,174
2010 6,761 $434,590
2011 6,392 $448,495
Source: SANDICOR
South San Diego County
Annual Residential Sales
2005-2011
Quarter SD Co.Total owd
OWD as % of
SD Co.
1/2009 6,039 783 13%
2/2009 7,971 808 10%
3/2009 8,131 862 11%
4/2009 7,161 662 9%
1/2010 6,400 617 10%
2/2110 7,029 712 10%
3/2010 6,313 630 10%
4/2010 5,987 544 9%
1/2011 5,220 444 9%
2/2011 4,858 416 9%
3/2011 4,474 383 9%
4/2011 4,966 443 9%
4/2011 as %
of 1/2009 57%
Foreclosures
San Diego County and Otay Water District Area
2009-2011
Commercial Real Estate
San Diego County
South County Commercial Not Doing Well
Property Type Sq.Ft. Vacant Vacancy Rate Sq.Ft. Vacant Vacancy Rate
Retail 901,384 5.0%6,946,036 5.1%
Office 960,673 17.7%15,430,672 13.7%
Industrial 3,627,671 13.8%13,011,164 8.0%
Source: CoStar
London Group Realty Advisors 3.2012
South S.D. County S D County
Direct Vacancy Rates
Commercial Real Estate
San Diego County and South County
4th Quarter 2011
Real Estate Development
Otay Water District Area
2012-2018
Style
Remaining
Units %
Detached 611 49.4%
Attached 627 50.6%
Total 1,238 100.0%
# Projects 28
Weeks of Supply (1)44.2
(1) at 1 Sale per Week per Project
Source: Steve Aranoff Consultants
The London Group Realty Advisors 2.2012
Unsold New Home Inventory Summary
Eastern Chula Vista
As of 2/12/2012
One-Year’s Inventory Remains in OWD Area
Otay Water District Area Total Units Annual Avg.
Single Family Detached 4,100 586
Condominium (1)3,450 493
Apartments 4,500 643
Total Multi-Family 7,950 1,136
Total Units 12,050 1,721
San Diego County
Single Family Detached 17,600 2,514
Condominium (1)8,300 1,186
Apartments 23,000 3,286
Total Multi-Family 31,300 4,471
Total Units 48,900 6,986
OWD as % of County
Single Family Detached 23.3%
Condominium (1)41.6%
Apartments 19.6%
Total Multi-Family 25.4%
Total Units 24.6%
Multi-Family as % of Total
OWD Area 66.0%
San Diego County 64.0%
The London Group Realty Advisors 2.2012
Summary: Projected Residential Construction Permits
Otay Water District Area and San Diego County
2012-2018
(1) Townhomes, Garden, Mid-Rise and High-Rise Condominiums (conversions omitted)
YEAR 2012 2013 2014 2015 2016 2017 2018 AVERAGE
2012-2018
Otay Water District Area
Single Family Detached 450 300 450 600 700 800 800 586
Condominium (1)350 350 350 600 600 600 600 493
Apartments 400 300 600 800 800 800 800 643
Total Multi-Family 750 650 950 1,400 1,400 1,400 1,400 1,136
Total Units 1,200 950 1,400 2,000 2,100 2,200 2,200 1,721
San Diego County
Single Family Detached 1,900 2,100 2,100 2,500 3,000 3,000 3,000 2,514
Condominium (1)500 600 800 1,200 1,600 1,800 1,800 1,186
Apartments 3,000 4,000 4,000 3,000 3,000 3,000 3,000 3,286
Total Multi-Family 3,500 4,600 4,800 4,200 4,600 4,800 4,800 4,471
Total Units 5,400 6,700 6,900 6,700 7,600 7,800 7,800 6,986
OWD as % of County
Single Family Detached 24%14%21%24%23%27%27%23%
Condominium (1)70%58%44%50%38%33%33%42%
Apartments 13%8%15%27%27%27%27%20%
Total Multi-Family 21%14%20%33%30%29%29%25%
Total Units 22%14%20%30%28%28%28%25%
(1) Townhomes, Garden, Mid-Rise and High-Rise Condominiums (conversions omitted)
The London Group Realty Advisors 2.2012
Projected Residential Construction Permits
Otay Water District Area & San Diego County
2012-2018
Comparison of Forecasts – 2011-2012
Single Family 2011 2012 2013 2014 2015 2016 2017 2018
2011 Forecast 250 375 375 450 450 450 450
2012 Forecast 450 300 450 600 700 800 800
Multi-Family
2011 Forecast 400 400 600 900 1,025 1,150 1,200
2012 Forecast 750 650 950 1,400 1,400 1,400 1,400
Total
2011 Forecast 650 775 975 1,350 1,475 1,600 1,650
2012 Forecast - 1,200 950 1,400 2,000 2,100 2,200 2,200
Total 2011-2014 2015-2017 2012-2015 2016-2018
22$ 26$ 52$ 54$
London Group Realty Advisors 3.2012
2011 2012
Residential (units)
Comparison: Residential and Non-Residential Permits Projections
Otay Water District
2011 and 2012 Forecast
Non-Residential ($ millions)
Year Office Retail Industrial Hotel Total
Average Annual
2001-2005 $181 $145 $128 $60 $514
2006-2011 $141 $85 $72 $60 $359
2012-2014 $103 $70 $28 $27 $228
2015-2018 $143 $63 $67 $60 $333
Average Annual
2012-2014 $10 $35 $5 $3 $53
+ 20% Miscellaneous $2 $7 $1 $1 $11
TOTAL $12 $42 $6 $3 $64
2015-2018 $14 $15 $10 $6 $45
+ 20% Miscellaneous $3 $3 $2 $1 $9
TOTAL $17 $18 $12 $7 $54
OWD as % of SD County
2012-2014 12%60%21%12%28%
2015-2018 12%28%18%12%16%
Note: Publically funded projects and remodeling excluded
Source of Historic Data: Construction Industry Research Board
London Group Realty Advisors 2.2012
San Diego County
Otay Water District
Non-Residential Permits (Historic and Projected)
(in $Millions)
Otay Water District and San Diego County
2001-2018
Annual Average ($ Millions)
We provide a full range
of advisory services for:
Developers
Investors
Lenders
Attorneys
Public Agencies
www.londongroup.com
The London Group Realty Advisors
Alan Nevin
(619) 417-1817
alan@londongroup.com
Bureau of Reclamation Rate
Study – The Effectiveness of
Conservation Pricing in
Reducing Water Demand
Attachment C
Participating entities
•Contra Costa Water District
•Eastern Municipal Water District
•San Juan Capistrano
•Irvine Ranch Water District
•Western Municipal Water District
•Carlsbad
•Los Angeles Department of Water and Power
•City of Henderson
•Otay Water District
•East Bay Municipal Utility District
•Las Vegas Water District
Residential data provided by
participants
•Over 600,000 total observations for single
family residences in over 150 zip codes
•Time period is 2000 through 2010
•Monthly use per connection
•Customer water rates per unit of use by tier
•Other charges and fees applied to bill
•Days included in billing period
•Service location
•Lot size for some participants
Additional obtained by Reclamation
by Zip Code or community
•Climate data – Precipitation, temperature,
evapotranspiration
•Median household income and per capita
income
•Unemployment rate
•Median age of population
•Median home value
•Percentage of occupied homes that are
single family detached
•Percentage with a B.S. degree or higher.
Basic Question to be evaluated
•What impact does the price of water and
various pricing structures have on the
amount of water used?
•The impact of price on the quantity of water
consumed can be evaluated by estimating
the price elasticity of demand.
–Price elasticity of demand measures the
percentage change in water use resulting from a
change in price, holding all other factors
constant.
–A typical demand curve has a negative slope (law
of demand), therefore an increase in price results
in a decrease in quantity demanded.
Basic Question to be evaluated
•Price elasticity of demand example:
–Suppose the price elasticity of demand for
residential water is estimated to be -0.50
–This says that a 10% increase in price would lead
to a 5% decrease in the quantity demanded for
residential water.
•Long run versus short run elasticity
–Consumers are less price elastic in the short run
because they need time to make adjustments
related to the water price change. These
adjustments could include investments in water
saving devices and technology.
–Short run elasticity < Long run elasticity
Variables the Affect Residential
Water Demand
•Price – Average, marginal, lagged, real,
nominal.
•Income – Real or nominal.
•Climate – Precipitation, temperature,
evapotranspiration.
•Macroeconomic factors – Affect of the
recession. Change in income over time and
change in unemployment over time.
Most Important Variables the Affect
Residential Water Demand
•Price – Higher price leads to decreased
quantity demanded.
•Income – Higher income leads to increased
demand.
•Precipitation – Higher precipitation leads to
decreased demand
•Appearance of water bill
What is the correct price to include
in modeling water demand?
What do individuals react to?
•Average price – Average for all water used
•Marginal price – Cost of last unit used
•Lagged price from previous water bill
•Preliminary regression results indicate that
the lagged average price per unit of water
was the best price variable
Real versus nominal dollars
•A nominal dollar value is a price that would
actually be observed at any given time.
•A real dollar value is a measure of
purchasing power after removing price
changes over time. Real dollars are
measured in base years.
•Most economists would argue that the real
value is more indicative of economic value
(Most of us know that prices increase over
time and adjust our expectations
accordingly). Models have been run using
both.
Unemployment as a macroeconomic
variable
•Unemployment is an indicator of recession
impacts
–Unemployment was included to account for the
effects of the recession beyond the income effect.
–In some cases unemployment was collinear with
income, creating potential estimation problems.
What are the climate variables to
include in modeling water demand?
–Precipitation
–Temperature
–Evapotranspiration
–Some of the datasets provided ET
–Data was also collected from the California
Irrigation Management Information System
–Precipitation was consistently the best
explanatory variable.
–Will look at using peak temperature rather that
average temperature.
Preliminary Otay Residential Results
Variable Coefficient t - statistic
Intercept
ln lagged cost
Per capita income
Precipitation
Median age
Unemployment
Adj. R-squared = .37
N = 17,764
-2.4854
-0.80355
0.000019
-0.21102
0.04211
-0.29906
-72.75
17.84
-44.01
26.34
-1.92
Caveats and Perspective
•Results are preliminary, modifications will be
made.
•The elasticity estimates should be
interpreted as long run elasticities.
•Long run elasticity > short run elasticity
•Therefore, cannot interpret the previous
elasticity estimates as “If we increase price
by X% we should expect to see a Y%
decrease in per capita water use next month
(or next year).
Caveats and Perspective
•Results are based on historical data that
corresponds with historical actions that may
not be repeated in the future.
•Past programs may be one-time events, so
future water use reductions may not be as
pronounced
•Uncertainty in the estimates from unknown
future conditions as well as unexplained
variance in the model.
Caveats and Perspective
•Results from a 1997 meta-analysis of
residential price elasticities of demand
(Espey, Espey, and Shaw; Water Resources
Research, June 1997) indicated:
–Studies between 1967 and 1993 had a range of
price elasticities between -0.02 and -3.33
–Average elasticity was -0.51
–Short run median was -0.38
–Long run median was -0.64
•More recent Land Economics study indicated
a mean of -0.41 for 300 studies.
Next Steps
•Modify current model:
–Include seasonality variable.
–Separate data into pre-recession and recession
time periods and evaluate potential change in
elasticity with recession.
–Estimate best individual demand model for use in
a meta-analysis.
Next Steps
•Meta-analysis would use price elasticity
results from individual models and estimate
a second model where:
•Estimated Elasticity = f(tier structure, region
alcharacteristics, bill format, others)
•Individual entities will use individual
elasticity estimates combined with the meta
analysis results to evaluate effect of
changing rate structures and other variables
on elasticities.
Questions and Discussion
THE END
spiper@usbr.gov
Otay Water District
Water Supply, Temperature and
Precipitation
March 19, 2012
Alex Tardy
Warning Coordination Meteorologist NOAA National Weather Service
Attachment D
Introduction – The National Weather Service organization
Climate
Prediction
Modeling
Centers
Hurricane
Center
Storm
Prediction
Aviation
Center
123 Weather Forecast Offices
13 River Forecast Centers Tsunami
Center
Western
Region HQ
Our service area
10 million people served
Statewide water supply
Snow Pack/Preciptiation
Local water supply
Local water supply
San Diego reservoirs
Capacity Storage Capacity PCT Change (AF
Seasonal Forecast
Challenges
In California
Current and past conditions
deep reservoir of cooler water
Jet Stream 2011-12
Current and past conditions
Departure from Normal Temperature and Percent of Normal Precipitation
October 1 to March 4
Percent of normal precipitation since October 1, 2011
Precipitation Events
October 4-5
November 4-5
November 12
November 20 (300 percent Nov)
December 1
December 12 and 16
January 21-23
February 11-15
February 27
Normals and so far
Monthly Normal
Month San Diego Santa Ana Riverside
February 2.27 3.39 2.51
March 1.81 2.14 1.66
April 0.78 0.87 0.77
May 0.12 0.21 0.15
Actual since July 1
Departure
6.16
-2.25
3.82
-7.71
3.72
-6.86
2011-12 climate
San Diego Big Monthly Rainfall
Winter October to April
Month Year Total
Precipitation
October-
April
ENSO ONI
January 1993 9.09 17.81 0.2 (neutral)
January 1995 8.06 16.63 1.3
February 1998 7.65 16.19 2.5
March 1991 6.96 11.77 0.4 (neutral)
March 1983 6.57 17.87 2.3
December 1965 6.60 14.74 1.5
January 1978 5.95 16.54 0.7
February 2005 5.83 22.35 0.7
January 1979 5.82 14.03 -0.1 (neutral)
November 1965 5.82 14.74 1.5
January 1980 5.58 14.96 0.5
December 2010 5.00 12.18 -1.4 2010-11
2011-12 climate
What does that mean?
All years (October to April) for San Diego
October to April normal is 9.94 inches
Normal for San Diego (10.33), Oceanside (9.82), Riverside
(9.82), Santa Ana (13.05), and Lake Arrowhead (37.37)
Normal
La Nina
El Nino
Last
Year
-4
-3
-2
-1
0
1
2
3
0 5 10 15 20 25
EN
S
O
Precipitation
ENSO (NDJ)
PDO DEC
DJF AO
Linear (ENSO (NDJ))
La Nina (ENSO) status
La Nina status
Circled is current
Moderate La Nina
ends and rapid
weakening
expected through
May
Last
Year
NOW
La Nina (ENSO) status
La Nina Warming
Circled is current
Subsurface ocean
is warming
Sea surface tempeatures
Depth of cool water
Warming
2010 to 2012 patterns
December 20-22, 2010
Deep moisture, waves of rain, high
snow levels
Dry and Cold
Cool Santa Ana
2010 to 2012 patterns
Extended Dry Periods Cool showers and
low snow levels
High Pressure/Cold Air Shallow Great Basin
Passing Weather System to East
2011-12 climate
Its more than La Nina, MJO!
Deep moisture plume pointed at Southern California
across the east Pacific poised to move onshore
Friday evening December 17
Jet Stream
highest moisture in yellow and red
BIG
storms
LAST YEAR WEATHER AND IMPACT
Precipitation Total
Heavy Rain and Flooding
Turn Around Don’t Drown
Flooding and Landslides
ENSO La Nina Comparison 2010-2011
This La Nina for California was much wetter
Subtropical Moisture in Purple L San
Diego
Hodges
February 28, 2011
2010-2011 La Nina
October to March
WET
DRY
Compared to new Normal (average)
2010-11
Compared to
1981-2010
ENSO years of the past combined (November to March)
Subtropical Moisture in Purple L San
Diego
Hodges
February 28, 2011 El Nino
La Nina
Drier Wetter
La Nina and 2010-11 Comparison
Prediction
Temperature TREND Temperature TREND
La Nina El Nino February – March - April
Prediction
Temperature TREND Temperature TREND
La Nina El Nino July-August-September
Prediction
Precipitation TREND Precipitation TREND
La Nina El Nino December-January-February
Prediction
Precipitation TREND Precipitation TREND
La Nina El Nino February-March-April
May to September Temperature
La Nina
Correlation for May to October
for ENSO
Correlation for Temperature June to
September with ENSO
May temperature anomaly
La Nina years
May to June Temperature Anomaly La Nina Years
June to July Temperature Anomaly
La Nina years
July to August Temperature Anomaly
La Nina
Using New
Normal
1981 to 2010
Compared to 1950 to 2007 average
Oct to Apr Dec to Feb
La Nina break down per CLIMATE ZONE and monthly periods
DRY WET
All La Nina years
La Nina
Precipitation
November December
January February
Outlook for March
Precipitation and Temperature Outlook for March
40 percent or
slightly greater
chance of
BELOW normal
Precipitation
for March
Temperature outlook
May-June-July
Temperature outlook
July –August- September
Temperature outlook
September-October-November
Precipitation outlook
May-June-July
Precipitation outlook
July-August-September
Precipitation outlook
September-October-November