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03-03-10 Board Packet (Part 2)
5TAFF REPORT AGENDA ITEM 7a TYPE MEETING: SUBMITTED BY: Regul~3~~~eetingJOSep7~hem, Chief Financial Officer MEETING DATE: W.O.lG.F.NO: March 3,2010 DIV.NO.All APPROVED BY: (Chief) APPROVED BY: (Ass!.GM): SUBJECT: ?/~tidI. German Alvarez,Assistant General Manager,Administration and Finance Information Concerning Long-Term Debt Financing GENERAL MANAGER'S RECOMMENDATION: This is an informational item only. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To inform the Board of the details related to the proposed debt issuance to finance the District's capital infrastructure. ANALYSIS: This staff report will review why this debt issuance is recommended at this time,for this amount,how it differs from prior bond issuances,and what actions are required by the Otay Board and the Otay Water District Financing Authority's governing board. Staff recommends the issuance of debt to finance approximately $47 million of the capital projects,allocated as follows: •$24,000,000 in Expansion Projects •$22,000,000 in Betterment Projects •$1,000,000 in Replacement Projects After additional borrowing to cover $550,000 of estimated issuance costs and the $3,750,000 funding of a reserve,the total issuance is expected to be approximately $51.3 million. Timing of the Debt Issuance The last debt issuance was in 2007 and was expected to fund two years of the Capital Improvement Program (CIP).Due to the economic slowdown,this debt issuance has been moved out by one year.At the May 2009 budget workshop,where the Board approved the 2010 budget,staff highlighted the need for a debt issuance in Fiscal Year 2010.Staff had targeted an issuance around March of 2010.Staff has reconfirmed,using the latest information available,the need to issue additional debt as the District's reserve balances are expected to drop below the reserve fund target levels by year-end absent the borrowing. The proposed debt issuance will replenish the District's reserves and fund the capital projects for an expected two to three years before the District will again approach the reserve target levels. Build America Bonds Due to the availability of the special financing structure "Build America Bonds"(BABs),authorized by the American Recovery and Reinvestment Act,financing costs can be locked In today at a low cost to the District.The lower overall financing cost of the BABs results from a federal government reimbursement to issuers of 35%of interest costs over the life of the issue.Currently,that brings the cost of issuing long- term BABs bonds approximately 50 basis points below comparable term tax-exempt bonds on the longer maturities.The special financing structure is currently only available to issuers until December 31,2010.While President Obama has recommended making these provisions permanent in his 2011 budget proposal,the benefit as compared to the regular tax-exempt bonds is expected to be eliminated. As described below,staff expects the District will benefit from issuing a portion of the debt as BABs. Capital Improvement Funding The latest refinement of the proposed Capital Improvement Prog~am has a total three-year CIP of $107.9 million.In 2011 through 2013 approximately $26M is anticipated to be funded from water rates and $30M from grants,capacity and other restricted fees.This is approximately 52%of the necessary funding over the next three years leaving approximately $51.9M to be funded through debt or increased water revenues.This would result in a debt issuance of approximately $57M after taking into account costs and debt reserve funding.This amount of debt,as discussed below can not be supported currently and also meet the other financial objectives of the District. Amount of the Debt Issuance In May of 2009,at the budget workshop,the projected amount of the debt issuance was $41 million.Over the past year,staff has revised the rate model multiple times as updated or new information became available.Using the current version of the District's rate model,staff is presented with a range of options for debt financing. At the higher end,the debt issuance is sized at approximately $57 million to cover all capital facilities over the next three years,as well as costs and the funding of a debt reserve.At the lower end of possible debt issuances is an issue of approximately $36.1 million to cover only two years of capital infrastructure needs.A smaller debt issuance would cause unnecessary issuance costs resulting from back-to-back debt issuances. There are a number of factors in determining the recommended option among this range of sizing options.In the general sense,the preferred option is to select the amount of debt that best meets the overall goals of the District.All options m~et the reserve requirements and fund the capital infrastructure,as presented in the most recent projected CIP,discussed below. The differences center around how the options manage debt coverage ratios,interest rate risk,and their effect on customer rates.These factors are discussed immediately below. Debt Coverage In order to issue debt at a low cost the District must demonstrate a strong ability to pay the annual debt service. This ability is measured by the debt coverage ratio which is calculated by dividing net water revenues by annual debt payments.For many years the District has used the rate model to monitor the debt coverage ratio and set rates so that this ratio is at or above 150%.Historically,this level of debt coverage has been considered strong,and this along with many other factors has warranted the high AA credit rating given to the District by Standard &Poor's. This year has presented a number of challenges which have negatively affected the debt coverage ratio.Economic pressures and conservation have reduced the District's sales to a projected 8%below budget.This,as well as the CWA and MWD rate increases,has directly affected the debt coverage ratio. The amount of debt the District is able to issue in this year is limited to an amount less than $57M if the District is to maintain its high credit rating. Historically,a coverage ratio of 150%has been considered strong.With the changes in the market and the special challenges that face California,it is important that the District continue to meet this target.A debt coverage of at least 150%at the current time,is the most prudent way of satisfying the rating agencies potential concerns over the effect of the recession and water supply on District finances. Certain debt coverage levels are established as a means to offset potential revenue declines resulting from further water sales reductions,both as a result of conservation efforts during the water supply crisis and from the consumer's need to reduce household expenses,as well as a decline in new development fees. In consultation with the District's Financial Advisor,staff has determined that an acceptable amount of debt is $51.3 million, which will bring the District's debt coverage ratio to approximately 151%.Staff and the Financial Advisor are confident that this new level will maintain the District's high credit ratings.This determination is only possible due to the Board's long standing support of financial strength and excellent management. Interest Rate Risk Issuing $51.3 million in debt takes the maximum advantage of low interest rates,and based on the rate model projections, produces the lowest overall financing costs.This is after taking into account the negative arbitrage,which is the net cost of holding additional debt.Issuing a larger amount of debt has a cost and benefit.The cost,or negative arbitrage, results from borrowing funds at a higher interest rate than they can be reinvested.The benefit of issuing a larger amount of debt in the current year is the expectation of avoiding higher issuance costs or interest rates in the future. The cost,or negative arbitrage,is realized only for the first two years as compared to 28 years of benefit realized over the remaining life of the bonds.Staff compared the issuance of $51.3M in debt today compared to a $36.1M issue today and a $15.2M in debt issued two years from now.It is projected that an increase of only 13 basis points in interest rates over the next two years is the threshold over which it is financially beneficial to issue the larger amount of debt in the current year.This projection assumes that the Build America Bonds (BABs)option will not be available or that it will have been cut back to eliminate their benefit over tax-exempt bonds. The current interest rates are at low levels which make the timing for a debt issuance one of the best since September 2008. Interest rates were relatively stable from January 2006 to March 2007.Leading up to September 2008 and since that time,rates have been unusually volatile,with numerous interest rate swings of over 50 basis points.Four of those swings exceeded one full percent,each occurring in a very short period.By issuing a larger amount of debt at this time the interest rates are locked in and the District is not susceptible to the variability of interest rates for at least three years. There are a number of factors that can affect interest rates. Long-term treasuries are expected by many economists to increase between 50 and 60 basis points over the next year.While municipal bond interest rates do not track closely to treasury bonds,they are both affected by general inflationary factors. This level of anticipated inflation in the treasury rates over just one year is supportive of the assumption that municipal bonds will increase more than 13 basis points over the next two years. Both the increase in interest rates and the elimination of the benefit of BABs are reasonable assumptions to build into this analysis.Based on this evaluation,staff will recommend a larger debt issuance at this time. Customer Rates With the issuance of the larger amount of debt,$51.3M,net revenues must increase proportionately in order to maintain the debt coverage ratio to acceptable levels.The option of issuing $36.1M in debt would have a two year effect of lowering rates by approximately 1.7%in each year;however with the higher priced 2012 debt,which would accompany a 2010 lower debt issuance, there would be a net increase in customer rates of approximately 2%beginning in 2013 and beyond. Consistent with the District's Debt Policy,Policy No.45,the recommended financing strategy is expected to reduce the overall cost to customers by maintaining a strong credit rating and by minimizing the District's overall debt service. Bond Structuring In order to obtain the most favorable interest rates,staff recommends that the financing be split into two components,a long-term taxable portion of Build America Bonds,and a short- term tax-exempt portion.While the initial interest rate on BABs is higher than traditional tax-exempt bonds,the effective rate after taking into account the federal reimbursement is lower than traditional tax-exempt bonds for certain longer term maturities.The break-even point is usually about 12-15 years, and BABs are more cost effective for debt maturing from 2025 through 2040. It is recommended that the financing be structured as one series of BABs,maturing from approximately 2025 through 2040,and one series of traditional tax-exempt bonds maturing from approximately 2011 to 2024,to take the best advantage of the financing options available to the District and incur the lowest overall effective interest costs.Most bond sales utilizing a BAB component are structured in a similar fashion to take advantage of lowest cost of two different types of bonds. At this time,the estimated overall true interest cost is 4.25%, net of the BABs interest reimbursement.The estimated true interest cost without using BABs would be approximately 4.75%, or .5%higher than with the use of BABs.The use of BABs will save the District approximately $275,000 annually in debt service costs.Final rates will not be determined until the bonds are actually offered for sale,which is expected to occur on March 17,2010. Revenue Bonds/JPA The investors in Build America Bonds generally prefer the bonds to be issued in a ~revenue bond"structure,rather than the traditional ~Certificates of Participation"(COPs)that the District has issued in the past.Substantively,there is no difference between a revenue-secured COPs and a revenue bond issued by the District;the security for both forms of debt is identical.However,there is a difference in investor perception, and that could lead to higher interest costs on this financing if the BABs are issued as COPs. In order to issue revenue bonds instead of COPs,the District needed to partner with another public agency to form a Joint Powers Authority (JPA)to act as a conduit issuer of the revenue bonds.In February 2010,the Board became a member of the California Municipal Finance Authority (CMFA).Membership in CMFA was the first step in the process of forming a JPA between the District and CMFA.The JPA,to be known as the "Otay Water District Financing Authority,"is a single purpose entity controlled by the District for the sole purpose of issuing revenue bonds for the benefit of the District.CMFA will have a very limited role in the bond transaction,and all financial decisions regarding the bonds will be made solely by the District.In the recent CWA debt financing this exact structure was used. The Board of the CMFA will consider approving the JPA agreement at its February 19,2010 meeting.If CMFA approves the formation of the Otay Water District Financing Authority ("Authority")and approves the form of JPA agreement,as anticipated,the JPA agreement will be presented to this Board for approval on March 3,2010. In addition,the first regular meeting of the Authority will be noticed for March 3,2010,as required under the Brown Act. This Board will be designated to serve as the Authority Commission for the Authority and,after approving the Bylaws and appointing officers for the Authority,the Authority Commission will consider a resolution to authorize the issuance of debt and approve the form of the bond documents. Negotiated Sale of Bonds The District used a competitive bidding process for sale of its COPs in 2004 and 2007 and for the recent sale of its General Obligation Refunding Bonds in 2009.These transactions were standard,tax-exempt financings with typical call provisions with no major change in maturity or structure required once the bids were received. In general,Build America Bonds are not sold through a competitive bidding process.The desire to move maturities of the bonds between taxable BABs and tax-exempt bonds in response to market conditions (the break-even point between effective rates on the two series of bonds)on the day of the bond sale requires flexibility to implement.This flexibility can only be achieved by selecting one underwriter to negotiate for the sale of bonds.In a negotiated sale,the underwriter is better able to canvass their investor base and gauge response to a change in maturity.In addition,optional redemption provisions are not standard for taxable bonds like BABs.The underwriter needs to work with investors to accept the most liberal provisions it can to provide the District cost effective call options. The District solicited proposals from six firms with the most experience in marketing California BABs.Citigroup Global Markets,Inc.("Citi")was selected for this issue,based on their ability to market both the BABs and the tax-exempt bonds at the lowest possible cost to the District,as well as a competitive fee structure.The Financial Advisor will assist the District in determining that the bonds sold by Citi are sold at competitive interest rates. In selecting Citi,staff and the Financial Advisor assessed three factors: l.the demonstrated ability to market BABs at the lowest costs; 2 .the demonstrated ability to market tax-exempt bonds at the lowest cost;and 3.proposed fees. Financing Participants In addition to the underwriter,who will purchase the bonds from the JPA and sell them to investors,the District has selected the following firms to assist in the financing: GCR,LLP is acting as Bond Counsel and will prepare all legal documents required to provide valid pledge of revenue to the bonds,as well as provide an opinion as to the tax treatment of interest on either series of bonds. Harrell &Company Advisors,LLC was selected as Financial Advisor and will assist with structuring the bonds,negotiating fees and interest rates with the underwriter and preparing the Official Statement. Stradling Yocca Carlson &Rauth is acting as Disclosure Counsel and will review the Official Statement to make sure all information material to an investor's decision to purchase the bonds is included in the document. Union Bank is acting as Trustee,receiving debt service payments from the District and transmitting them to bond owners. 1 t:I', Fees for the professionals involved in the financing .are all contingent on the bond closing and will be paid from the proceeds of the bonds.In addition,fees charged by CMFA to assist in the creation of the JPA and the issuance of the bonds will be paid from proceeds of the bonds. Actions Several actions are required to accomplish the financing as described. 1.The District will be asked to consider Resolution No.4154 approving the Joint Powers Agreement by and between the District and CMFA which will create the Otay Water District Financing Authority (Authority)and allows the District's financing to be structured as revenue bonds. The CMFA board approved the Joint Powers Agreement on February 19,2010. 2.The District will be asked to consider Resolution No.4155 approving the form of the following financing documents: •Installment Purchase Agreement by and between the District and the Authority; •Trust Agreement; •Continuing Disclosure Agreement; •Official Statement relating to the Bonds;and •Bond Purchase Agreement. The resolution also provides the designated District officials and staff with the authorization to approve changes to the form of,and to execute and deliver the various financing documents in connection with the bonds,circulate a Preliminary Official Statement and an Official Statement and execute a Bond Purchase Agreement with the underwriter,Citigroup Global Markets,Inc. The resolution provides that the bonds may be issued in two series,with a combined maximum amount not-to-exceed $52,000,000,at a true interest cost not-to-exceed 7.0%with respect to BABs and not-to-exceed 5.0%with respect to the series of bonds that will be tax-exempt.The underwriter's discount or takedown will not exceed $4.41 per $1,000 for the tax exempt bonds and $6.26 per $1,000 for the BABs. 3.The Authority,in a special Board meeting,will be asked to consider Resolution No.2010-01 approving the Authority's bylaws and appointing its officers. 4.The Authority,in a regular Board meeting,will be asked to consider Resolution No.2010-02 approving the form of the following financing documents: •Trust Agreement by and between the Authority and the Trustee; •Installment Purchase Agreement by and between the District and the Authority; •Continuing Disclosure Agreement; •Official Statement relating to the Bonds;and •Bond Purchase Agreement. The resolution also provides the designated Authority officials and staff with the authorization to execute the various financing documents in connection with the bonds,circulate a Preliminary Official Statement and an Official Statement and execute a Bond Purchase Agreement with the underwriter, Citigroup Global Markets,Inc.The resolution provides that the bonds may be issued in two series,with a combined maximum amount not-to-exceed $52,000,000,at a true interest cost not- to-exceed 7.0%with respect to BABs and not-to-exceed 5.0%with respect to the series of Bonds that will be tax-exempt.The underwriter's discount or takedown will not exceed $4 41 per $1,000 for the tax exempt bonds and $6.26 per $1,000 for the BABs. FISCAL IMPACT The sale of the $51.3M in bonds will provide debt funding for approximately three of the District's Six-Year CIP,while maintaining operating and capital reserve levels in accordance with the Board's Reserve Policy.The bonds will have a 30-year maturity and may be issued in two series,one series of BABs and one series of traditional tax-exempt bonds.Final determination of the size and maturity of each series will be based on market conditions at the time of sale and the combination that provides the lowest overall net interest cost to the District.At the estimated true interest cost of 4.25%,net of the BABs interest reimbursement,the annual debt service on the bonds is projected to be approximately $2.92 million,net of the BABs interest reimbursement. 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)Presentation SUBJECT/PROJECT: ATTACHMENT A Information Concerning Long-Term Debt Financing COMMITTEE ACTION: The Finance,Administration and Communications Committee reviewed this item in detail at a meeting held on February 19, 2010.The following comments were made: •Staff is proposing that the District issue debt to fund a portion of the District's Capital Improvement Program totaling $107.9 million over the next three (3)years. •In May 2009 the board approved the 2010 budget wherein staff highlighted the need for a debt issuance in Fiscal Year 2010.As anticipated,reserve balances are expected to drop below the reserve fund target levels by year-end as the District continues to fund capital expenditures.The proposed debt issuance will replenish the District's reserves and fund the next three years of capital projects. •In 2011 through 2013,the $107.9 million Capital Improvement Budget will be funded as follows: $26 million through water rates $30 million through grants,capacity and other restricted fees;and $51.9 million through debt or increased water revenues. •It was discussed that the District could issue $57 million to obtain the needed $51.9 million to cover three years of capital facilities expenditures,fund the debt reserves and fund financing costs. •The other option is to issue $36.1 million in debt to cover two years of capital facilities expenditures,fund the debt reserves and fund financing costs.If the District were to issue debt to cover only one year of capital facilities then "this would compound the cost of issuance with back to back debt issuances.A two year Y:\Board\CurBdPkg\FINANCE\CommMtgLongTerm Debt Financing 3-3-10.doc debt issuance is the minimum recommended to avoid these unnecessary costs. •It was discussed that staff reviewed how the District's credit rating would be negatively impacted if it issued $57 million in debt.It was determined that a debt issuance of $51.3 million would keep the District's debt coverage ratio above 150%.By keeping the District's debt coverage ratio above 150%,it will help satisfy the rating agencies potential concerns over the effect of the recession and water supply on the District's finances. •Staff also evaluated Negative Arbitrage versus Future Costs if the District were to issue debt to cover three years of capital facilities expenditures (cost to carry the funds for three years versus the cost if interest rates increased).It was discussed that current interest rates are at low levels and by locking in at a fixed rate on a larger amount of debt,the District would not be susceptible to the variability of interest rates for at least three years.Also,by locking in on a low interest rate,the District will minimize the overall cost of financing. •Staff indicated that if the District issued $51.3 million in debt as opposed to $36.1 million,the impact to rates would be as follows: +1.7%increase in 2011 +1.7%increase in 2012 -5.6%decrease in 2013 The overall impact is a net reduction of rates by approximately 3%after the first two years. •For this debt issuance,staff is proposing that the District issue $51.3 million with a combination of Build America Bonds (BABs)and tax exempt bonds.The split between the two will be determined at the time of sale based on relative benefits of each at that time.BABs were created to entice the taxable investors to invest in municipal bonds and issuers of these bonds receive a subsidy of 35%of the interest cost from the Federal Government.The estimated interest cost of the debt issuance,net of the BABs interest reimbursement,is 4.25%.This is 0.50%lower then if the District did not issue BABs (an approximate savings of $275,000 annually). •The committee inquired if issuing $36.1 million would cover the District's financial needs.It was discussed that if the District issued $36.1 million in debt this year,it would need to issue $50 million again in two years.It was further shared that this may be the last year that the Federal government will reimburse the BABs issuers 35%of the interest cost. •It was discussed that investors in BABs generally prefer bonds issued in a "revenue bond"structure,rather than the traditional "Certificates of Participation"(COPs) that the District has issued in the past. Substantively,there is no difference between a revenue- secured COPs and a revenue bond issued by the District. The security for both forms of debt is identical. However,investor's perception differ and interest cost on the issuance could be higher if the BABs are issued as COPs. •In order to issue revenue bonds,a Joint Powers Authority (JPA)must be created to act as a conduit issuer of the revenue bonds similar to the District's Otay Service Corporation which is the conduit to issue COPs.The District will partner with the California Municipal Finance Authority (CMFA)and form a JPA to be known as the "Otay Water District Financing Authority." The JPA will be controlled by the District for the sole purpose of issuing revenue bonds for the benefit of the District.It was noted that the District started the process for the formation of the JPA when the board approved the District becoming a member of the CMFA at the February 3,2010 board meeting. •The CMFA board will be considering the approval of the JPA agreement at its February 19,2010 board meeting. If the CMFA approves the formation of the "Otay Water District Financing Authority"and approves the form of the JPA agreement,the JPA agreement will be presented to the District's board for approval at the March 3, 2010 board meeting.(Note:CMFA has approved the formation of the Otay Water District Financing Authority.) •The first regular meeting of the JPA will also be noticed for March 3,2010.The Otay board will be designated to serve as the JPA's Commission and will be presented the JPA's bylaws for approval and appoint officers for the authority. •The committee discussed that,in general,BABs are not sold through a competitive bidding process.On the day of the bond sale,it will be necessary to move maturities of the bonds between taxable BABs and tax- exempt bonds in response to market conditions (the break-even point between effective rates on the two series of bonds)which will require flexibility to implement.To achieve this flexibility,the District will require an underwriter to negotiate the sale of the bonds.In a negotiated sale,the underwriter is better able to canvas their investor base and gauge response to a change in bond maturity. •The District solicited proposals from six (6)firms with the most experience in marketing California BABs. Citigroup Global Markets,Inc.(Citi)was selected to underwrite this issuance based on their ability to market both the BABs and tax-exempt bonds.The District's Financial Advisor will assist the District in determining that the bonds sold by Citi are sold at competitive interest rates. •It was discussed that CWA had also issued bonds with an identical structure using both tax-exempt bonds and BABs bonds in their most recent debt issuance. Following the discussion,the committee supported staffs' recommendation and presentation to the full board as an action item. lI.,~~:I,rI I rf~I t f~i: I, ! t; Attachment B March 3,2010 .. 2 .. IP 3 .. 4 .. 5 .. 6 .. 7 .. 8 .. 9 .. 10 .. ;; 11 .. 12 .. 13 .. 14 .. 15 .. 16 .. 17 .. 18 AGENDA ITEM 7b STAFF REPORT General Manager,Administration and DIV.NO.All March 3,2010MEETINGDATE: W.O.lG.F.NO: Regulc:.~~ JOs.~p·~~hem, Chie.f ~inacial Officer German A z,Assistant Finance Authorizing the Otay Water District to Execute a Joint Exercise of Powers Agreement with the California Municipal Finance Authority to Establish the Otay Water District Financing Authority;Authorizing the Execution and Delivery of an Installment Purchase Agreement,a Bond Purchase Agreement,a Continuing Disclosure Agreement and an Official Statement and Approving a Trust Agreement and the Distribution of a Preliminary Official statement in Connection with Water Revenue Bonds and Approving and Authorizing Certain Other Actions in Connection Therewith;Approving the Selection of an Underwriter for the Bonds APPROVED BY: (Ass!. GM): SUBJECT: TYPE MEETING: SUBMITTED BY: GENERAL MANAGER'S RECOMMENDATIONS: That the Board (i)adopt Resolution No.4154 authorizing the General Manager to execute a Joint Exercise of Powers Agreement (JPA)with the California Municipal Finance Authority (CMFA)to establish the Otay Water District Financing Authority (Authority); (ii)adopt Resolution No.4155 Authorizing the Execution and Delivery of an Installment Purchase Agreement,A Bond Purchase Agreement,A Continuing Disclosure Agreement and an Official Statement and Approving a Trust Agreement and the Distribution of a Preliminary Official Statement in Connection with Water Revenue Bonds and Approving and Authorizing Certain Other Actions in Connection Therewith;and (iii)approve the selection of an Underwriter for the Bonds. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To facilitate the issuance of debt to finance certain projects in the District's Capital Improvement Program (CIP.) BACKGROUND: The Otay Water District ("District")has previously executed an installment sale agreement dated as of June 1,1996 (the "1996 Installment Sale Agreement")securing the District's outstanding Variable Rate Demand Certificates of Participation (1996 Capital Projects)(the "1996 Certificates"),an installment purchase agreement dated as of July 1,2004 (the "2004 Installment Purchase Agreement")securing the District's outstanding Revenue Refunding Certificates of Participation (1993 Water Facilities Project), Series 2004 (the "2004 Certificates")and an installment purchase agreement dated as of March 1,2007 (the "2007 Installment Purchase Agreement")securing the District's outstanding Revenue Certificates of Participation (2007 Water System Project),Series 2007 (the "2007 Certificates"). The District now needs to finance the acquisition,construction, rehabilitation and installation of approximately $35 million of its CIP over the next three years.In addition,the District expects to reimburse approximately $12 million of certain District expenditures from proceeds of the water revenue bonds.The actual amount of reimbursement will be determined following the closing. ANALYSIS: The Authority Staff is proposing the formation of the Otay Water District Financing Authority (the "Authority")pursuant to a Joint Exercise of Powers Agreement between the District and California Municipal Finance Authority ("CMFA").CMFA is a joint exercise of powers authority that was created in 2004 by various local agencies to facilitate tax-exempt financings. The Authority will be empowered under the California Government Code to issue revenue bonds,cause the proceeds to be used for the purchase of certain components of the CIP.Pursuant to an Installment Purchase Agreement,the District will purchase those components from the Authority and will pay installment payments to the Authority comprised of Net Revenues.Once formed,the Authority can be used for all future issuances of long-term debt as water revenue bonds.Under the agreement forming the Authority,the District has control over all matters of the Authority. The governing body of the Authority,to be known as the Authority Commission,will be comprised of the members of the Board of Directors of the District.The staff of the District will also serve as the staff of the Authority. The formation of the Authority has required several actions by the District.On February 3,2010,the District took the first step by becoming a member of the CMFA.On February 19,2010,the CMFA Board authorized the execution and delivery of a joint powers agreement with the District,which once executed,will form the Authori ty.Now,similarly,the District Board must authorize the execution and delivery of a j oint powers agreement to form the Authority. A Board Resolution authorizing the execution and delivery joint powers agreement and other matters related to establishment of the Authority is provided as Attachment B. of a the The Bond Documents Proceeds from the 2007 COPs have been fully spent.The District's next long-term debt issuance was scheduled to occur in FY 2009,but the District staff postponed the issuance due to the economic slowdown and management's ability to temporarily fund crp costs from other sources.For reasons presented to this Board pursuant to a separate informational item,the District's staff and its Financial Advisor are recommending that the District issue debt as soon as possible.The maximum issue size of $52 million is a not- to-exceed number as specified in the authorizing resolution (Attachment C).The proposed use of proceeds will be substantially as follows: 2010 Project Fund.The 2010 Project Fund is sized to provide approximately 36 months of crp funding and is based on the most current Finance and Engineering staff projections. Debt Service Reserve Fund (DSRF).The District and the Financial Advisor are currently sizing the issue anticipating that a DSRF for all or a portion of the Bonds might be established. Delivery Costs .Delivery Costs are the costs the District will incur to issue the Bonds.These costs include the underwriter discount,professional fees for bond counsel,disclosure counsel and financial advisor,and other costs such as credit rating agency fees,CMFA fees,printing costs and other costs related to the issuance of the Bonds. Parity Debt and Structure of Debt.The 2010 Bonds will be payable as to principal and interest from pledged revenues under the Trust Agreement.The pledged revenues will be in the form of installment i <-J payments and other moneys to be paid by the District to the Authority pursuant to the Installment Purchase Agreement.The installment purchase payments will be made on a parity basis with the installment purchase payments being made by the District,from Net Revenues of the District,in connection with the District's outstanding COPs. The 2010 Bonds are anticipated to be issued as a mix of taxable Build America Bonds ("BABs")and traditional tax-exempt bonds to obtain the most beneficial blend of debt.Unlike traditional tax- exempt debt,interest on BABs is taxable to investors.Rather than a tax exemption to investors,the federal government provides a cash subsidy to issuers on each interest payment date in the amount of 35%of the interest.BABs are issued with an extraordinary call feature that can be exercised in the event of a change in federal law affecting the cash subsidy.The risk of this is considered to be small,but it is borne by the issuer rather than the investors. BABs investors generally favor debt in the middle and long end of the yield curve.As a result,certain early and middle maturities may be more cost effective to issue as tax-exempt debt. Accordingly,the decision as to how much BABs is issued versus tax- exempt debt will be made at the time of pricing,with advice and input from the Financial Advisor and Underwriter. Note:The use of proceeds of BABs is more restricted than those of traditional tax-exempt debt.For example,only up to 2% of the sale proceeds may be used for cost of issuance.In addition,all sale proceeds not used to fund a reasonably required reserve fund or costs of issuance must be used for capital expenditures.Although it is not anticipated at this time,if any costs are incurred that can not be funded with proceeds of the BABs,such costs will be funded with the proceeds of traditional tax-exempt debt to the extent possible. Timing for Issuance.The 2010 Bonds will be issued at the earliest practical date if the Board approves the proposed issuance. of the Bonds requires Board documents described below. attachments to this Staff the District Secretary and Documents to be Approved.Issuance approval of various resolutions and Certain key documents are provided as Report and others are on file with available for review: Resolution Approving JPA Formation (Attachment B)approves the agreement forming the JPA. The Joint Exercise of Powers Agreement,on file with the District Secretary,creates the Authority. Purchase Agreement,on file with the provides for payments to be made to the Authorizing Resolution (Attachment C)Authorizes the execution and delivery of an Installment Purchase Agreement,a Bond Purchase Agreement,a Continuing Disclosure Agreement and an Official Statement and approves a Trust Agreement and the distribution of a Preliminary Official Statement in connection with Water Revenue Bonds and approves and authorizes certain other actions in connection therewith and delegates to District officers the authority to finalize,execute and deliver the documents and to do any and all things necessary to complete the transaction. Form the Preliminary Official Statement (Attachment D) as the primary disclosure document for the transaction,the POS contains information necessary for investors to make informed buying decisions regarding the Bonds.It contains information on the debt issue,District water supplies, operations,CIP,finances,and the regional economy. The Installment District Secretary, Authority. The Trust Agreement,on file with the District Secretary,provides for the issuance of the Bonds. •The Continuing prescribes ongoing of the District. Disclosure information Agreement disclosure (Attachment E) responsibilities The Bond Purchase Agreement,on file with the District Secretary,establishes final conditions of the sale of the Bonds to the Underwriter. Approval of the recommended actions position District staff and its financing team to move forward with the issuance of the Bonds. After the Bonds are priced and issued,staff will report back to the Board with results at the next scheduled meeting. The Underwriters -Method of Sale In a competitive sale,the underwriters for the debt are not involved in either the debt structuring process or in pre-sale marketing efforts.They submit a bid on the date of sale.In a negotiated sale,the issuer selects its underwriter(s)in advance. Information concerning the method of sale is being provided separately in an informational report. The District has traditionally caused its debt to be sold on a competitive basis.The District's finance policy provides that debt shall be issued on a competitive basis unless special circumstances warrant a negotiated sale.The District staff and the Financial Advisor recommend a negotiated sale for the Bonds due to:(i)volatile market conditions;(ii)the need to tap a new investor base for the sale of the BABs;and (iii)the need for FISCAL IMPACT: flexibility at the time of sale to determine the most cost effective mix of BABs and traditional tax exempt bonds at the time of pricing. The District staff and the Financial Advisor forwarded requests for proposals to several underwriters and received and evaluated five proposals.The District staff,with input from the Financial Advisor,selected Citigroup Global Markets,Inc.to serve as the Underwriter for the Bonds.The Resolution authorizing the issuance of the bonds,ratifies this selection,authorizes the District to execute and deliver a bond purchase agreement with the Underwriter and sets forth certain terms and conditions for the bond purchase agreement,including the condition that the underwriter discount or takedown does not exceed $5.00 per $1,000 for the tax exempt bonds and $6.75 per $1,000 for the BABs. ~~7~ As further described in the informational item separately presented to this Board,the District anticipates that savings will be realized by establishing the Authority and authorizing the issuance of the Bonds.The District estimates that the benefit of establishing the authority and issuing revenue bonds instead of Certificates of Participation is about $50,000 per year The estimated benefit of issuing a mix of taxable and tax exempt bonds is $275,000 per year. STRATEGIC GOAL: To fund the District's ClP to continue ensuring reliability of service and provide for expansion. LEGAL IMPACT: The issuance of debt will be authorized. ·~·1ArMfuJ I Genera1 Manager ~<Lr~~v~------ Attachments: A)Committee Action Form B)Resolution No.4154 Approving Authority Formation and JPA Agreement C)Resolution No.4155 Approving the Bond Issuance D)Preliminary Official Statement E)Continuing Disclosure Agreement !sUsJEcrjpRoJECT: N/A ATTACHMENT A !Authorizing the Otay Water District to Execute a Joint I Exercise of Powers Agreement with the California Municipal i Finance Authority to Establish the Otay Water District Financing Authority;Authorizing the Execution and Delivery of an Installment Purchase Agreement,A Bond Purchase Agreement,A Continuing Disclosure Agreement and an Official Statement and Approving a Trust Agreement and the Distribution of a Preliminary Official statement in i Connection with Water Revenue Bonds and Approving and iAuthorizing Certain Other Actions in Connection Therewith; I Approving the Selection of an Underwriter for the Bonds COMMITTEE ACTION: The Finance,Administration and Communications Committee and the Engineering,Operations,and Water Resources Committee reviewed this item at meetings held on February 19 and February 22,2010 respectively and the following comments were made: • A brief overview of the proposed bond financing was provided by Assistant General Counsel Aerobel Banuelos. The District is requesting that the Board:1)Adopt Resolution No.4154 authorizing the joint exercise of powers agreement with the California Municipal Finance Authority (CMFA)to establish the Otay Water District Financing Authority (Authority);2)Adopt Resolution No. 4155 Authorizing the Execution and Delivery of an Installment Purchase Agreement,A Bond Purchase Agreement,A Continuing Disclosure Agreement and an Official Statement and Approving a Trust Agreement and the Distribution of a Preliminary Official Statement in Connection with Water Revenue Bonds and Approving and Authorizing Certain Other Actions in Connection Therewith;and 3)Approve the selection of an underwriter for the Bonds. •It was indicated that the Board authorized the District to become a member of the California Municipal Finance Authority (CMFA)at its February 3,2010 Board meeting. On February 19,2010,the CMFA Board authorized the execution and delivery of a joint powers agreement with the District,and once executed,will form the Authority. •It was discussed that the District wishes to issue debt to finance approximately $52 million dollars of its capital improvement projects over the next three years. The District wishes to issue a portion of the debt as revenue bonds.To issue revenue bonds,the District would need to form a new entity that would become the Otay Water District Financing Authority (Authority)which will be empowered to issue revenue bonds.District staff will request that the Board authorize the formation of the Authority at the March 3,2010 Board meeting. •Once the Otay Board approves the formation of the Authority and resolutions,a meeting of the Authority will be convened.The Otay Board will be designated to serve as the Authority Commission and the Commission will approve bylaws and appoint officers. •In addition,the District itself will need to approve bond documents in order to enter into an agreement with the Authority.The bond documents include an Installment Purchase Agreement,a Bond Purchase Agreement,and a Continuing Disclosure Agreement. •The Committee suggested that the bylaws be amended to reflect that the Authority would hold two (2)meetings annually. Following the discussion,the Finance,Administration and Communications Committee supported staffs recommendation and presentation to the full Board as an action item.The Engineering,Operations and Water Resources Committee received this item as an informational report. Attachment B RESOLUTION NO.4154 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY OF A JOINT EXERCISE OF POWERS AGREEMENT BY AND BETWEEN THE OTAY WATER DISTRICT AND CALIFORNIA MUNICIPAL FINANCE AUTHORITY WHEREAS,the Otay Water District (the "District")is a municipal water district organized and existing under the laws ofthe State ofCalifornia;and WHEREAS,the District,upon authorization by this Board of Directors (the "Board"), acting pursuant to Article 1 (commencing with Section 6500)ofChapter 5 ofDivision 7 ofTitle 1 of the Government Code of the State of California (the "JPA Law"),may enter into a joint exercise of powers agreement with one or more other public agencies pursuant to which such contracting parties mayjointly exercise any power common to them;and WHEREAS,pursuant to the JPA Law,certain public agencies (the "CMFA Members") have entered into a Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority,dated as of January 1,2004 (the "CMFA Agreement")in order to form the California Municipal Finance Authority ("CMFA")for the purpose of promoting economic, cultural and community development and in order to exercise any powers common to the CMFA Members,including the issuance ofbonds,notes or other evidences ofindebtedness;and WHEREAS,the District and CMFA desire to create and establish the Otay Water District Financing Authority (the "Authority")pursuant to the JPA Law and a joint exercise of powers agreement (the "Authority Agreement")to,among other things,finance and refinance various Public Capital Improvements and Working Capital,both as defined in the Marks-Roos Local Bond Pooling Act of 1985 constituting Article 4 (commencing with Section 6584)of Chapter 5 ofDivision 7 ofTitle 1 of the California Government Code (the "Bond Pooling Act"); and WHEREAS,under the JPA Law and the Authority Agreement,the Authority will be a public entity separate and apart from the parties to the Authority Agreement,and the debts, liabilities and obligations of the Authority will not be the debts,liabilities or obligations of the District or any representative ofthe District serving on the governing body ofthe Authority;and WHEREAS,the Authority is authorized under the Bond Pooling Act to assist its members in the financing and refinancing of public capital improvements,including,but not limited to,the purchase at public or negotiated sale of certain obligations (the "Obligations") issued by members ofthe Authority and otherpublic agencies and the sale at public or negotiated sale of such Obligations or the issuance and sale at public or negotiated sale ofbonds secured in whole or in part by such Obligations or by other revenues ofthe Authority;and WHEREAS,all acts,conditions and things required by the Constitution and laws of the State of California to exist,to have happened and to have been perfonned precedent to and in connection with the consummation of the transactions authorized hereby do exist,have happened and have been perfonned in regular and due time,fonn and manner as required by law,and the District is now duly authorized and empowered,pursuant to each and every requirement of law, to consummate such transactions for the purpose,in the manner and upon the tenns herein provided. NOW,THEREFORE,BE IT RESOLVED BY THE BOARD OF DIRECTORS OF OTAY WATER DISTRICT AS FOLLOWS: SECTION 1.Declaration of Board.This Board hereby specifically finds and declares that the actions authorized hereby constitute public affairs of the District,and that the statements,findings and detenninations ofthe District set forth in the preambles above and ofthe document approved herein are true and correct. SECTION 2.Joint Exercise ofPowers Agreement.The fonn ofJoint Exercise of Powers Agreement,dated as of March 3,2010,presented to this meeting and on file with the Secretary of the Board (the "Secretary"),is hereby approved.The General Manager or Chief Financial Officer of the District or their respective authorized designee is hereby authorized to execute and deliver said Joint Exercise of Powers Agreement in substantially said fonn,with such changes therein as General Counsel may require or approve,such approval to be conClusively evidenced by the execution and delivery thereof. SECTION 3.Further Actions.The President and Vice President of the Board of Directors,the General Manager,Chief Financial Officer,and the Secretary ofthe District or their respective authorized designees are hereby authorized and directed,jointly and severally,to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to consummate,carry out,give effect to and comply with the tenns and intent of this resolution and the Joint Exercise of Powers Agreement.Such actions heretofore taken by such officers are hereby ratified,confinned and approved. SECTION 4.The District Secretary shall forward a certified copy of this Resolution and an originally executed copy ofthe Authority Agreement to CMFA in care of its counsel,as follows: Harriet M.Welch,Esq. Squire,Sanders &Dempsey LLP 555 South Flower St.,Suite 3100 Los Angeles,CA 90071-2300 2 SECTION 5.Effective Date.This resolution shall take effect immediately upon its adoption. PASSED,APPROVED AND ADOPTED this 3rd day ofMarch,2010,by the following vote: AYES: NOES: ABSTAIN: ABSENT: Jaime Bonilla,President ofthe Board ofDirectors ofthe Otay Water District Attest: Susan Cruz,Secretary to the Board ofDirectors ofthe Otay Water District 3 Attachment C RESOLUTION NO.4155 RESOLUTION OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY OF AN INSTALLMENT PURCHASE AGREEMENT,A BOND PURCHASE AGREEMENT,A CONTINUING DISCLOSURE AGREEMENT,AND AN OFFICIAL STATEMENT AND APPROVING A TRUST AGREEMENT AND THE DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT IN CONNECTION WITH WATER REVENUE BONDS;AND APPROVING AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS,the Otay Water District,a municipal water district duly formed and existing under and by virtue of the laws of the State of California (the "District"),owns and operates a water system (the "Water System")to provide for the production,acquisition,treatment and distribution ofpotable and reclaimed water;and WHEREAS,the District proposes to finance the acquisition and construction of improvements,betterments,renovations,and expansions of certain facilities within its Water System (the "Project");and WHEREAS,the District and the California Municipal Finance Authority ("CMFA") executed a Joint Exercise of Powers Agreement,dated as of February 19,2010 (the "Agreement"),by and between the District and the CMFA,which Agreement creates and establishes the Otay Water District Financing Authority (the "Authority")a joint exercise of powers authority duly organized and operating pursuant to Article 1 of Chapter 5 ofDivision 7 ofTitle 1 ofthe Government Code ofthe State of California (hereinafter,the "Act");and WHEREAS,Article 4 of the Act authorizes and empowers the Authority to issue bonds to assist local agencies in financing and refinancing projects and programs consisting of certain public capital improvements whenever a local agency determines that there are significant public benefits from so doing;and WHEREAS,the District has determined that there are significant public benefits and it furthers a public purpose to finance the Project and for the Authority to assist in such financing; and WHEREAS,ifapproved by the Authority,such financing will occur through the issuance and sale of Otay Water District Financing Authority Water Revenue Bonds,in one or more series,at fixed rates and bearing interest that is tax-exempt and/or taxable to the holders thereof (the "Bonds");and WHEREAS,GCR,LLP has been selected to serve as Bond Counsel to the District, Stradling Yocca Carlson &Rauth,a Professional Corporation has been selected to serve as Disclosure Counsel to the District,Harrell &Company Advisors has been selected to serve as the Financial Advisor to the District,and Citigroup Global Markets Inc.has been selected to act as the underwriter (the "Underwriter")for the Bonds,and each of those entities is hereby confirmed to serve the Authority in those capacities in connection with th~J30nds,pursuant to the terms ofany contract or agreement entered into with the District;and WHEREAS,pursuant to an Installment Purchase Agreement,dated as of March 3,2010 (the "Installment Purchase Agreement"),between the Authority and the District,the District will be obligated to make installment payments (the "Installment Payments")to the Authority as the purchase price ofthe Project and the Installment Purchase Agreement provides for the pledge of water system revenues and establishes covenants to secure the payment of obligations from net revenues ofthe District;and WHEREAS,pursuant to a Trust Agreement,dated as of March 3,2010 (the "Trust Agreement"),the Authority will assign its right to receive Installment Payments and other payments to be made by the District thereunder to Union Bank,N.A,as Trustee,and all revenues under the Trust Agreement will be pledged to the repayment ofthe Bonds;and WHEREAS, the proceeds of the Bonds are to be applied to,among other things,the Costs of the Project,as provided in the Trust Agreement and the Installment Purchase Agreement;and WHEREAS,for this proposed financing,there has been presented to the District the following documents for approval: 1.The Installment Purchase Agreement; 2.The Trust Agreement; 3.An Official Statement for the Bonds,currently in the form of a Preliminary Official Statement (the "Official Statement"); 4.A Bond Purchase Agreement;and 5.A Continuing Disclosure Agreement by and between the District and Union Bank, N.A.,as Dissemination Agent (the "Continuing Disclosure Agreement"). WHEREAS,the Installment Purchase Agreement,Trust Agreement,Preliminary Official Statement,Continuing Disclosure Agreement and other related documents and certificates are necessary to carry out the financing ofthe Project;and WHEREAS,all acts,conditions and things required by the Constitution and laws of the State of California to exist,to have happened and to have been performed precedent to and in connection with the making ofthe agreements and the consummation ofthe financing authorized by this resolution do exist,have happened and have been performed in regular and due time, form and manner,and the District is duly authorized and empowered,pursuant to each and every requirement oflaw,to consummate such financing as provided in this resolution. ND:4826-5891-3797,Y.3 2 NOW,THEREFORE,BE IT RESOLVED,ORDERED AND DETERMINED BY THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT,AS FOLLOWS: Section 1.Each of the above recitals is true and correct and is adopted by the Board of Directors ofthe District. Section 2.The fonns of the Installment Purchase Agreement and the Continuing Disclosure Agreement,each in the fonn presented at this meeting or on file with the District Secretary,and the perfonnance by the District ofits obligations thereunder are hereby approved. Subject to the conditions precedent listed on Section 6 hereof,each ofthe President of the Board of Directors,the General Manager or the Chief Financial Officer of the District,and their designees (each,an "Authorized Officer"and,collectively,the "Authorized Officers")is hereby authorized and directed,for and in the name and on behalf of the District,to execute and deliver the same in substantially said fonn,with such changes therein as the Authorized Officer executing such document may approve,such approval to be conclusively evidenced by the execution and delivery thereof. Section 3.The District hereby approves the appointment of Union Bank,N.A.(the "Tmstee")to act as tmstee for the Bonds.The fonn ofTmst Agreement between the Authority and the Tmstee, on file with the District Secretary,is hereby approved.Subject to the conditions precedent listed on Section 6 hereof,each Authorized Officer is hereby authorized and directed, on behalf of the District,to approve the delivery of the Tmst Agreement in substantially said fonn,with such changes therein as such officer may require or approve,such approval to be conclusively evidenced by the execution and delivery thereofby the Authority. Section 4.The fonn of the Preliminary Official Statement relating to the Bonds presented at this meeting is hereby approved,and the District's Financial Advisor and Underwriter are hereby authorized to distribute the Preliminary Official Statement to prospective purchasers of the Bonds in the fonn hereby approved,together with such additions thereto and changes therein as are detennined necessary by the General Manager or the Chief Financial Officer or their designees to make such Preliminary Official Statement final as of its date for purposes ofRule 15c2-12 of the Securities and Exchange Commission,including but not limited to,such additions and changes as are necessary to make all infonnation set forth therein accurate and not misleading.The General Manager and the ChiefFinancial Officer,each,individually,is hereby authorized to certify that such Preliminary Official Statement is,as of its date,"deemed final"by the District for purposes of said Rule 15c2-12.The General Manger and the Chief Financial Officer,each,individually,is hereby authorized to execute,approve and deliver the final Official Statement in the fonn of the Preliminary Official Statement with such changes as detennined necessary by any Authorized Officer to make such Official Statement complete and accurate as of its date,and to certify that such Official Statement is,as of its date,"final and complete"for purposes ofsaid Rule 15c2-12. Section 5.The District hereby affinns the appointment of Citigroup Global Markets Inc. as the Underwriter for the Bonds.The fonn of Bond Purchase Agreement substantially in the fonn on file with the Secretary is hereby approved.Subject to the conditions precedent listed on Section 6 hereof,each of the General Manager and the Chief Financial Officer and their respective designees is authorized,on behalf of the District,to execute and deliver the Bond ND:4826-5891-3797,v.3 3 Purchase Agreement in substantially said form,with such changes therein as such officer may require or approve,such approval to be conclusively evidenced by the execution and delivery thereofby the Authority. Section 6.The authorization of the execution ofthe Installment Purchase Agreement,the Bond Purchase Agreement and the Continuing Disclosure Agreement and of the approval ofthe Trust Agreement set forth in Sections 2,3 and 5 of this resolution is subject to the following conditions precedent: (1)The Bonds shall have a final Maturity Date not later than September 1,2040; (2)The Bonds shall be issued in an aggregate principal amount not to exceed $52,000,000; (3)The underwriters'discount or takedown in the Bond Purchase Agreement shall not exceed $5.00 per $1,000 for the Series A Bonds and $6.75 per $1,000 for the Series B Bonds;and (4)The true interest cost of the Bonds shall not exceed 5.5%for the Series A Bonds and 7.0%for the Series B Bonds. Section 7.The Chief Financial Officer is hereby authorized,upon a determination by such officer that the establishment of a reserve fund is in the best interest of the District and/or necessary or beneficial for the marketability of one or more maturities or one or more series of the Bonds,to direct that a reserve fund for all or any portion ofthe Bonds or series of the Bonds be established and funded.The reserve fund may be funded,at the discretion of the Chief Financial Officer,with the concurrence ofBond Counsel,with proceeds ofthe Bonds,with cash from the District or byprocuring a surety bond or policy or from any other available source. Section 8.The Chief Financial Officer is hereby authorized,upon a determination by such officer,with the concurrence ofthe Financial Advisor,that the procurement ofa municipal bond insurance policy is in the best interest of the District,to procure and maintain a policy of municipal bond insurance for the benefit of the registered owners of one or more maturities of the Bonds,in such form or forms and on such terms and conditions as such officer shall,with the concurrence of the General Manager and the Financial Advisor,require or approve,such approval to be conclusively evidenced by the execution and delivery ofa commitment letter for and on behalfofthe Authority to the issuer ofsuch municipal bond insurance policy. Section 9.The General Manager and the Chief Financial Officer,each,are hereby authorized to enter into a contract for Bond Counsel services with GCR,LLP,a contract for Disclosure Counsel services with Stradling Yocca Carlson &Rauth,a Professional Corporation and a contract for financial advisor services with Harrell &Company Advisors,in such form or forms and on such terms and conditions as such officer shall,require or approve,such approval to be conclusively evidenced by the execution and delivery of a contract with such party and/or pursuant to a request to the Trustee or the Underwriter to pay their fees and costs out of the proceeds ofthe Bonds. ND:4826-5891-3797,v.3 4 Section 10.Each Authorized Officer is hereby authorized and directed,acting singly,to do any and all things and to execute and deliver any and all documents which he or she may deem necessary or desirable in order to consummate the transactions authorized hereby and to consummate the sale,execution and delivery ofthe Bonds and otherwise to carry out,give effect to and comply with the terms and intent of this Resolution,each of the documents hereby authorized and the Bonds;and all such actions heretofore taken by such officers are hereby ratified,confirmed and approved. Section 11.This Resolution shall take effect immediately upon its passage. PASSED,APPROVED AND ADOPTED this 3rd day ofMarch,2010. Jaime Bonilla,President ofthe Board ofDirectors ofthe Otay Water District Attest: Susan Cruz,Secretary to the Board ofDirectors ofthe Otay Water District STATE OF CALIFORNIA ) )ss COUNTY OF SAN DIEGO ) I,Susan Cruz,Secretary to the Board ofDirectors ofthe Otay Water District,do hereby certify that the foregoing Resolution No.4155 was duly adopted by the Board ofDirectors of the Otay Water District at a regular meeting thereof held on the 3rd day of March,20 Ia by the following vote: Ayes: Noes: Abstain: Absent: Susan Cruz,Secretary to the Board of Directors ofthe Otay Water District (SEAL) ND:4826-5891-3797,Y.3 5 STATE OF CALIFORNIA ) )ss COUNTY OF SAN DIEGO ) I,Susan Cruz,Secretary to the Board of Directors of the Otay Water District,do hereby certify that the foregoing is a full,true and correct copy of Resolution No.4155 of said Board, and that the same has not been amended or repealed. DATE:,2010 Susan Cruz,Secretary to the Board of Directors ofthe Otay Water District (SEAL) 4826-5891-3797,v.3 ND:4826-5891-3797,v.3 6 Attachment D DRAFT AS OF FEBRUARY 25,2010 *Preliminary,subject to change. The date ofthe OfficialStatement is ~,2010. Citi RATINGS S&P: STATE OF CALIFORNIA Due:September 1,as shown on the inside f!'Ont cover. OTAY WATER DISTRICT FINANCING AUTHORITY $=~=-=:-::*WATER REVENUE BONDS, SERIES 2010B (Taxable Build America Bonds) $----* WATER REVENUE BONDS, SERIES 2010A (Non-AMT Tax-Exempt) Dated:Date ofDelivery SAN DIEGO COUNTY NEW ISSUE -BOOK-ENTRY-ONLY The cover page contains certain information for genel'al reference only.It is not a summary of the issue.Potential investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision.See "RISK FACTORS"herein for a discussion ofspecial risk factors that should be considered in evaluating the investment quality of the Bonds. The atay Water District Financing Authority Water Revenue Bonds,Series 20 lOA (Non-AMTTax-Exempt)("20IOA Bonds")and the atay Water District Financing Authority Water Revenue Bonds,Series 20lOB (Taxable Build America Bonds)("201OB Bonds"and together with the 20IOA Bonds,the "Bonds")are payable from Installment Payments to be made by the atay Water District (the "District")to the atay Water District Financing Authority (the "Authority")as payment for certain real property and improvements (the "Project")pursuant to an Installment Purchase Agreement,as described herein and from certain funds held under the Trust Agreement.The Bonds will be issued pursuant to a Trust Agreement,dated as of March I,2010 (the "Trust Agreement"),by and between the atay Water District Financing Authority (the "Authority")and Union Bank,N.A.,as trustee (the "Trustee").The Bonds are being issued to provide funds for construction ofcertain storage and distribution facilities.See "THE FINANCING PLAN"herein.The Bonds are secured by Pledged Revenues,consisting of Installment Payments to be paid by the District to the Authority as payment for the purchase ofcertain real property and improvements thereto pursuant to an Installment Purchase Agreement between the District and the Authority as described herein and from certain funds held under the Trust Agreement.The District is required under the Installment Purchase Agreement to make payments in each fiscal year from Taxes and from Net Revenues ofthe District's water system (the "Water System")in an amount sufficient to pay the annual principal and interest due on the Bonds,as described herein.(See "SOURCES OF PAYMENT FORTHE BONDS"and "RISK FACTORS"herein). Interest on the Bonds is payable on September I,20 I0,and semiannually thereafter on March I and September I ofeach year until maturity or earlier prepayment.The Bonds are subject to optional,sinking fund and mandatory redemption as more fully described herein (see "THE BONDS -General Provisions"and "THE BONDS -Redemption"herein). The Bonds are limited obligations of the Authority and are payable solely from and secured solely by Pledged Revenues and other moneys held under the Trust Agreement.The District's obligation to make the Installment Payments is a limited obligation of the District payable solely from Taxes and Net Revenues of the Wate.·System,and neither the full faith and credit nor the taxing power of the District,the State of California or any of its political subdivisions is pledged for the payment of the Bonds,other than the Taxes.The obligation of the District to make the Installment Payments under the Installment Purchase Agreement does not constitute a debt of the District,the Authority,the State of California or any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction. The Bonds are offered,when,as and if issued,subject to the approval as to the legality of the Installment Purchase Agreement by GCR, LLP,San Diego,California,Bond Counsel,and certain other conditions.Certain legal matters will be passed on for the District by GCR, LLP,San Diego,California,as General Counsel to the District,and by Stradling Yocca Carlson &Rauth,a Professional Corporation, Newport Beach,California,as Disclosure Counsel.Certain legal matters will be passed on for the Underwriter by its counsel,Orrick, Herrington &Sutcliffe LLP,San Francisco,California.It is anticipated that the Bonds,in book-entry fonn,will be available for delivery through the facilities ofThe Depository Trust Company in NewYork,New York on or about ,2010 (see "THE BONDS -General Provisions -Book-Entry Only System"herein). Fitch: (See"CONCLUDING INFORMATION -Ratings on the Bonds"herein) In the opinion ofGCR,LLP,San Diego,California ("Bond Counsel"),based upon an analysis ofexisting statutes,regulations,rulings,and court decisions and assuming,among other things,the accuracy ofcertain representations andcompliance with certain covenants,interest on the 201OA Bonds is excludable from gross income for federal income tax purposes and is exempt from State ofCalifornia personal income taxes.In the opinion of Bond Counsel,interest on the 201OB Bonds is not excluded from gross income for federal income tax purposes and is exemptfrom State ofCalifornia personal income taxes.In the opinion ofBond Counsel,interest on the 20lOA Bonds is not an item oftax preference for pUlposes ofthe alternative minimum tax imposed on individuals and corporations,and such interest is not taken into account in determining adjusted current earningsfor the purpose ofcomputing the alternative minimum tax imposed on certain corporations.Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership 01'disposition oj 01'the accrual 01'receipt ofinterest on,theBonds.See "LEGAL MAITERS -Tax Matters"herein. .$* OTAY WATER DISTRICT FINANCING AUTHORITY WATER REVENUE BONDS,SERIES 2010A (Non-AMT Tax-Exempt) MATURITY SCHEDULE (Base CUSIP®t ) $Serial Bonds Maturity Date September1 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Principal Amount Interest Rate $* Reoffering Yield CUSIP®t OTAY WATER DISTRICT FINANCING AUTHORITY WATER REVENUE BONDS,SERIES 2010B (Taxable Build America Bonds) MATURITY SCHEDULE $_%Term Bond maturing September 1,__,Yield _%CUSIP®t_ $_%Term Bond maturing September 1,__,Yield _0/0 CUSIP®t_ *Preliminary,subject to change. t CUSIP®A registered trademark of the American Bankers Association.Copyright ©1999-2010 Standard & Poor's,a Division ofThe McGraw-Hill Companies,Inc.CUSIP®data herein is provided by Standard &Poor's CUSIP®Service Bureau.This data in not intended to create a database and does not serve in any way as a substitute for the CUSIP®Service Bureau.CUSIP®numbers are provided for convenience of reference only. Neither the District nor the Underwriter takes any responsibility for the accuracy ofsuch numbers. GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement.This Official Statement is submitted in connection with the offer and sale of the Bonds referred to herein and may not be reproduced or used,in whole or in part,for any other purpose.This Official Statement is not to be construed as a contract with the purchasers ofthe Bonds. Estimates and Forecasts.When used in this Official Statement and in any continuing disclosure by the District in any press release and in any oral statement made with the approval ofan authorized officer of the District or any other entity described or referenced herein,the words or phrases "will likely result," "are expected to,""will continue,""is anticipated,""estimate,""project,""forecast,""expect,""intend" and similar expressions identify "forward-looking statements"within the meaning of the Private Securities Litigation Reform Act of 1995.Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements.Any forecast is subject to such uncertainties.Inevitably,some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur.Therefore,there are likely to be differences between forecasts and actual results,and those differences may be material. Such forward-looking statements include,but are not limited to,certain statements contained in the information under the caption "THE WATER SYSTEM." Limit ofOffering.No dealer,broker,salesperson or other person has been authorized by the District to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and if given or made,such other information or representation must not be relied upon as having been authorized by the District,the Financial Advisor or the Underwriter.This Official Statement does not constitute an offer to sell or the solicitation ofan offer to buy nor shall there be any sale ofthe Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,solicitation or sale. Involvement ofUnderwriter.The Underwriter has submitted the following sentence for inclusion in this Official Statement:The Underwriter has reviewed the information in this Official Statement in accordance with,and as a part of,its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction,but the Underwriter does not guarantee the accuracy or completeness ofsuch information. Information Subject to Change.The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances,create any implication that there has been no change in the affairs ofthe District or any other entity described or referenced herein since the date hereof.All summaries ofthe documents referred to in this Official Statement are made subject to the provisions of such documents,respectively, and do not purport to be complete statements ofany or all ofsuch provisions. Stabilization of Prices.In connection with this offering,the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market.Such stabilizing,ifcommenced,may be discontinued at any time. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside front cover page hereof and said public offering prices may be changed from time to time by the Underwriter. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,AS AMENDED,IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT.THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. OTAY WATER DISTRICT SAN DIEGO COUNTY,CALIFORNIA BOARD OF DIRECTORS Jaime Bonilla,President -Division 2 Jose Lopez,Vice President -Division 4 Gary D.Croucher,Treasurer -Division 3 Larry Breitfelder,Division 1 Mark Robak,Division 5 MANAGEMENT TEAM Mark Watton,General Manager German Alvarez,Assistant General Manager Finance &Administration Manny Magana,Assistant General Manager Engineering &Operations Joseph R.Beachem,ChiefFinancial Officer Rom Sarno,Jr.,ChiefofAdministrative Services GeoffStevens,ChiefInformation Officer Rod Posada,ChiefofEngineering Pedro Porras,ChiefofWater Operations PROFESSIONALSERVICES Bond Counsel GCR,LLP San Diego,California Disclosure Counsel Stradling Yocca Carlson &Rauth,a Professional Corporation Newport Beach,California General Counsel to the District GCR,LLP San Diego,California Financial Advisor Harrell &Company Advisors,LLC Orange,California Trustee Union Bank,N.A. Los Angeles,California TABLE OF CONTENTS INTRODUCTION 1 The District 1 The Authority 1 Security and Sources ofPayment 2 Build America Bonds 3 Tax Matters .4 Professional Services .4 Offering ofthe Bonds .4 Information Concerning this Official Statement..5 THE BONDS 5 General Provisions 5 Redemption 6 Scheduled Debt Service 10 THE FINANCING PLAN 12 The 2010 Project.12 Estimated Sources and Uses ofFunds 12 THE AUTHORITY 13 OTAY WATER DISTRICT 13 THE WATER SYSTEM 14 Existing Facilities 14 Water Storage 15 Water Supply 16 Capital Improvement Program 26 Water Service 28 Water Charges 29 Taxes 35 Personnel 36 Insurance 37 District Reserves and Investment Policy 38 Outstanding Indebtedness ofthe District..39 Historical Operating Results .41 Historical Debt Service Coverage .43 Projected Debt Service Coverage .44 SOURCES OF PAYMENT FOR THE BONDS 47 General.47 Installment Payments 47 Interest Subsidy Payment..48 Rates and Charges .49 Parity Debt .49 Reserve Fund 51 Additional Obligations Payable from Taxes and Net Revenues 53 Risks Relating to Water Supplies 53 Environmental Regulation 54 Proposition 218 54 Casualty Risk;Earthquakes 54 Early Redemption Risk 54 Limited Recourse on Default 55 Bankruptcy Risks 55 No Obligation to Tax 55 Change in Law 55 Loss ofTax Exemption 55 Risks Relating to Build America Bonds 56 Secondary Market 56 LEGAL MATTERS 57 Enforceability ofRemedies 57 Approval ofLegal Proceedings 57 Tax Matters 57 Litigation 62 CONCLUDING INFORMATION 62 Ratings on the Bonds 62 Underwriting 62 The Financial Advisor 63 Continuing Disclosure 63 Additional Information 63 References 64 Execution 64 APPENDIXA-SUMMARY OF PRINCIPALLEGAL DOCUMENTS APPENDIX B -DISTRICTAUDITED FINANCIAL STATEMENTS APPENDIX C -ECONOMIC PROFILE FOR THE COUNTY OF SAN DIEGO APPENDIX D -FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX E -PROPOSED FORM OF LEGAL OPINION OF BOND COUNSEL APPENDIX F -DTC AND THE BOOK-ENTRY- ONLY SYSTEM RISK FACTORS 53 APPENDIX G -NATIONAL PUBLIC FINANCE System Demand 53 GUARANTEE CORPORATE DISCLOSURE Increased Operation and Maintenance Costs 53 OFFICIAL STATEMENT OTAY WATER DISTRICT FINANCING AUTHORITY $*$* WATER REVENUE BONDS,WATER REVENUE BONDS, SERIES 2010A SERIES 2010B (Non-AMT Tax-Exempt)(Taxable Build America Bonds) This Official Statement which includes the cover page and appendices (the "Official Statement")is provided to furnish certain information concerning the sale and delivery of the following bonds (collectively,the "Bonds"): •Otay Water District Financing Authority Water Revenue Bonds,Series 2010A (Non-AMT Tax- Exempt)(the "2010A Bonds")and •Otay Water District Financing Authority Water Revenue Bonds,Series 2010B (Taxable Build America Bonds)(the "2010B Bonds"). INTRODUCTION This Introduction contains only a briefdescription ofthis issue and does not purport to be complete.The Introduction is subject in all respects to more complete information in the entire Official Statement and the offering ofthe Bonds to potential investors is made only by means ofthe entire Official Statement and the documents summarized herein.Potential investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision (see "RISK FACTORS" herein). The District The Otay Water District (the "District")was established in 1956.The District is a municipal water district organized and existing under and in accordance with Division 20 of the Water Code of the State of California,commencing with Section 71000,as amended (the "Law").The District's boundaries currently encompass an area of approximately 125 square miles in San Diego County,lying immediately east of the San Diego metropolitan area and running from the City of EI Cajon south to the Mexican border,abutting the cities ofEl Cajon and La Mesa and encompassing most ofthe City ofChula Vista and a small portion of the City of San Diego.The District currently serves a population of approximately 195,000 and expects the service area to experience continued growth in the next ten years (see "OTAY WATER DISTRICT"and "APPENDIX C -ECONOMIC PROFILE FOR THE COUNTY OF SAN DIEGO" herein). The Authority The Otay Water District Financing Authority (the "Authority")is a joint exercise of powers authority organized and existing under and by virtue of the Joint Exercise of Powers Act,constituting Articles 1 through 4 (commencing with Section 6500)of Chapter 5,Division 7,Title 1 ofthe Government Code of the State of California (the "Joint Powers Act").The District and the California Municipal Finance Authority,a joint exercise of powers agency,formed the Authority by the execution of a joint exercise of powers agreement on ,2010.The Authority functions as an independent entity and was formed to assist the District in the financing ifpublic capital improvements.Pursuant to the Joint Powers Act,the Authority is authorized to issue revenue bonds to provide funds to acquire or construct public capital improvements,such revenue bonds to be repaid from the installment payments for such improvements, such as the installment payments described herein. *Preliminary,subject to change. The Authority is governed by a five-member Board which consists ofall members ofthe District's Board ofDirectors.The Board President serves as the Chairman ofthe Authority.The General Manager acts as the Executive Director, the District Secretary acts as the Secretary,and the Chief Financial Officer acts as the Treasurer ofthe Authority. Security and Sources of Payment The Bonds are being issued pursuant to the Joint Powers Act and a Trust Agreement,dated as ofMarch 1, 2010 (the "Trust Agreement"),by and among the Authority and Union Bank,N.A.,Los Angeles, California,as trustee (the "Trustee"). The Bonds are secured by Pledged Revenues,consisting of Installment Payments (the "Installment Payments")to be paid by the District to the Authority as the payment for the 2010 Project,as described herein,pursuant to an Installment Purchase Agreement,dated as ofMarch 1,2010,between the Authority and the District (the "Installment Purchase Agreement")and from certain amounts held under the Trust Agreement.The Installment Payments are scheduled to be sufficient to pay,when due,the annual principal and interest due on the Bonds.Pursuant to the Trust Agreement,the Authority has assigned to the Trustee,for the benefit of the Owners of the Bonds,all if its rights to receive and collect the Installment Payments due from the District to the Authority under the Installment Purchase Agreement and other amounts payable by the District to the Authority thereunder.For a summary of the Trust Agreement and the Installment Purchase Agreement see "APPENDIX A -SUMMARY OF PRINCIPAL LEGAL DOCUMENTS"herein.Certain capitalized terms used in this Official Statement and not otherwise defined have the meaning given them in "APPENDIX A." The Installment Payments are secured by a charge and lien on Taxes and Revenues of the Water System and are payable from Taxes and Net Revenues,on a parity with the payments required to be made by the District under an installment sale agreement dated as of June 1,1996 (the "1996 Installment Sale Agreement")securing the District's outstanding Variable Rate Demand Certificates ofParticipation (1996 Capital Projects)(the "1996 Certificates"),the payments required to be made by the District under an installment purchase agreement dated as of July 1,2004 (the "2004 Installment Purchase Agreement") securing the District's outstanding Revenue Refunding Certificates ofParticipation (1993 Water Facilities Project),Series 2004 (the "2004 Certificates")and the payments required to be made by the District under an installment purchase agreement dated as of March 1,2007 (the "2007 Installment Purchase Agreement")securing the District's outstanding Revenue Certificates of Participation (2007 Water System Project),Series 2007 (the "2007 Certificates").The Interest Subsidy Payment to be received by the District from the United States Treasury as cash subsidy payments in connection with the 2010B Bonds will be pledged by the District as security for its obligation to make the Installment Payments allocable to the 201 OB Bonds.See "Build America Bonds"below. •"Taxes"means all taxes,including ad valorem taxes of the District,other than taxes imposed pursuant to Chapter 1 ofPart 9 ofthe Law to secure general obligation bonds of the District or any improvement district thereof. •"Net Revenues"means,for any Fiscal Year or other 12-month period,the Revenues for such Fiscal Year or other 12-month period less the Operation and Maintenance Costs for such Fiscal Year or other 12-month period. •"Revenues"means (i)all water availability charges imposed pursuant to Chapter 2 ofPart 5 of the Law not exceeding $10 per acre per year;(ii)all income,rents,rates,fees, charges and other moneys derived by the District from the ownership or operation ofthe Water System,including,without limiting the generality of the foregoing,(a)all income, rents,rates,fees,charges or other moneys derived from the sale,furnishing,and supplying of water and other services,facilities and commodities sold,furnished or supplied through the facilities of the Water System,including connection fees,(b)the earnings on and income derived from the investment of such income,rents,rates,fees 2 • and charges or other moneys,and (c)the proceeds derived by the District directly or indirectly from the sale,lease or other disposition of a part of the Water System as permitted under the Installment Purchase Agreement;provided that the term "Revenues" shall not include customers'deposits or any other deposits subject to refund until such deposits have become the property of the District,but shall include the Interest Subsidy Payment. "Operation and Maintenance Costs"means (i)costs spent or incurred for maintenance and operation of the Water System calculated in accordance with generally accepted accounting principles,including (among other things)the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Water System in good repair and working order,and including administrative costs of the District that are charged directly or apportioned to the Water System,including but not limited to salaries and wages of employees,payments to the Public Employees Retirement System,overhead,insurance,taxes (if any),fees of auditors,accountants, attorneys or engineers and insurance premiums,and including all other reasonable and necessary costs of the District or charges (other than debt service payments)required to be paid by it to comply with the terms of the Installment Purchase Agreement or any Contract or of any resolution or indenture authorizing the issuance of any Bonds or of such Bonds;and (ii)costs spent or incurred in the purchase of water for the Water System;but excluding in all cases depreciation,replacement and obsolescence charges or reserves therefor and amortization ofintangibles or other bookkeeping entries ofa similar nature and all capital charges. See "THE WATER SYSTEM"and "SOURCES OF PAYMENT FORTHE BONDS"herein. The District's obligation to make the Installment Payments is a limited obligation of the District payable solely from Taxes and Net Revenues of the Water System (including,with respect to the Installment Payments allocable to the 2010B Bonds only,the Interest Subsidy Payment).The obligation of the District to make the Installment Payments is an irrevocable obligation of the District payable solely from Taxes and Net Revenues (including,with respect to the Installment Payments allocable to the 2010B Bonds only,the Interest Subsidy Payment)but does not constitute an obligation ofthe District for which the District is obligated to levy or pledge any form of taxation or for which the District has levied or pledged any form of taxation other than the Taxes.The obligation of the District to make the Installment Payments under the Installment Purchase Agreement does not constitute a debt of the District,the Authority,the State of California or any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction. Build America Bonds Section 1531 (relating to "Build America Bonds")of the American Recovery and Reinvestment Act, which was signed into law by President Obama on February 17,2009,added Section 54AA and Section 6431 to the Internal Revenue Code of 1986,as amended (the "Code").The Authority intends to elect to designate the 2010B Bonds as "Build America Bonds"under Section 54AA ofthe Code,and intends that the 2010B Bonds be "qualified bonds"under Section 54AA(g)(2)of the Code.The District,designated by the Authority as the party to receive interest subsidy payments,expects to receive a cash subsidy payment from the United States Treasury equal to 35%ofthe interest payable with respect to the 201 OB Bonds.Such cash subsidy payments received by the District are referred to in the Trust Agreement as "Interest Subsidy Payment."The Interest Subsidy Payment received by the District from the United States Treasury as cash subsidy payments in connection with the 201 OB Bonds are included in the District's Revenues.See "RISK FACTORS -Build America Bonds." 3 Tax Matters In the opinion of GCR,LLP,San Diego,California,Bond Counsel,based on an analysis of existing statutes,regulations,rulings and court decisions,and in reliance on certain certificates,opinions,and other things,interest on the 201 OA Bonds is excludable from gross income for federal income tax purposes and is exempt from State of California personal income taxes.Bond Counsel is also of the opinion that interest on the 201 OA Bonds is not an item of tax preference for purposes ofthe alternative minimum tax imposed on individuals and corporations,and such interest is not taken into account in determining adjusted current earnings for the purpose ofcomputing the alternative minimum tax imposed on certain corporations.Bond Counsel is also of the opinion that interest on the 2010B Bonds is not excludable from gross income for federal income tax purposes and is exempt from State of California personal income taxes.See "LEGAL MATTERS -Tax Matters"and "APPENDIX A"herein. Professional Services The legal proceedings relating to the execution and delivery of the Bonds are subject to the approving opinion ofGCR,LLP,San Diego,California,Bond Counsel.Celtain legal matters will be passed on for the District by GCR,LLP,as General Counsel for the District,and by Stradling Yocca Carlson &Rauth,a Professional Corporation,Newport Beach,California,as Disclosure Counsel.Certain legal matters will be passed on for the Underwriter by Orrick,Herrington &Sutcliffe LLP,San Francisco,California. Union Bank,N.A.,Los Angeles,California,serves as Trustee under the Trust Agreement.The Trustee will act on behalfof the Bond Owners for the purpose ofreceiving all moneys required to be paid to the Trustee,to allocate,use and apply the same,to hold,receive and disburse the Installment Payments and other funds held under the Trust Agreement,and otherwise to hold all the offices and perform all the functions and duties provided in the Trust Agreement to be held and performed by the Trustee. Harrell &Company Advisors,LLC (the "Financial Advisor")has advised the District as to the financial structure and certain other financial matters relating to the Bonds. Fees payable to Bond Counsel,Disclosure Counsel and the Financial Advisor are contingent upon the sale and delivery ofthe Bonds. The District's financial statements for the fiscal year ended June 30,2009,attached hereto as "APPENDIX B"have been audited by Diehl Evans and Company,LLP,Escondido,California.The District's audited financial statements are included within this Official Statement without the prior approval ofthe auditor. Offering ofthe Bonds Authority for Issuance and Delivery.The Bonds are to be issued pursuant to the Trust Agreement, authorized by Resolution No.__ofthe Authority adopted on ,2010. Offering and Delivery of the Bonds.The Bonds were sold to Citigroup Global Markets Inc.(the "Underwriter")on ,2010.The Bonds are offered,when,as and if issued,subject to the approval as to their legality by Bond Counsel.It is anticipated that the Bonds,in book-entry form,will be available for delivery in New York,New York on or about ,2010 through the facilities of The Depository Trust Company. 4 Information Concerning this OffiCial Statement This Official Statement speaks only as of its date.The information set forth herein has been obtained by the District with the assistance of the Financial Advisor from sources which are believed to be accurate and complete,but such information is not guaranteed as to accuracy or completeness,nor has it been independently verified and is not to be construed as a representation by the Financial Advisor,Disclosure Counselor the Underwriter.Statements contained in this Official Statement which involve estimates, forecasts or matters ofopinion,whether or not expressly so described herein,are intended as such and are not to be construed as representations offact. Preliminary Official Statement Deemed Final.The information set forth herein is in a form deemed final,as of its date,by the District for the purpose of Rule 15c2-12 under the Securities Exchange Act of 1934,as amended (except for the omission ofcertain information permitted to be omitted under the RUle). The information herein is subject to revision,amendment and completion in a Final Official Statement. The information and expressions of opinion herein are subject to change without notice and the delivery ofthis Official Statement shall not,under any circumstances,create any implication that there has been no change in the information or opinions set forth herein or in the affairs ofthe District since the date hereof. Availability of Legal Documents.The summaries and references contained herein with respect to the Trust Agreement,the Installment Purchase Agreement,the Bonds and other statutes or documents do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute, and references to the Bonds are qualified in their entirety by reference to the form thereof included in the Trust Agreement.Definitions of certain terms used herein are set forth in "APPENDIX A"hereto. Copies ofthe documents described herein are available for inspection during the period ofinitial offering of the Bonds at the offices of the Financial Advisor.Copies of these documents may be obtained after delivery of the Bonds at the corporate trust office of the Trustee,Union Bank,N.A.,Los Angeles, California or from the District,2554 Sweetwater Springs Blvd.,Spring Valley,California 91978. THE BONDS General Provisions Payment of the Bonds.The Bonds will be issued in the form of fully registered Bonds in the principal amount of $5,000 each or any integral multiple thereof.Interest on the Bonds is payable at the rates per annum set forth on the inside front cover page hereof,on September I,20 I0 and semiannually on March 1 and September 1 of each year to and including the date ofmaturity or redemption,whichever is earlier (each,a "Payment Date").Interest on the Bonds will be computed on the basis ofa year consisting of360 days and twelve 30-day months.Principal with respect to the Bonds is payable on September I in each of the years and in the amounts set forth on the inside front cover page hereof. The principal and Redemption Price (as defined herein)with respect to all Bonds will be payable in lawful money ofthe United States of America upon presentation and surrender thereof at the corporate trust office of the Trustee.Interest with respect to Bonds shall be payable from the Payment Date next preceding their date ofauthentication,unless such date shall be after a Record Date (see "APPENDIX A- SUMMARY OF PRINCIPAL LEGAL DOCUMENTS -CERTAIN DEFINITIONS"herein)and on or before the succeeding Payment Date,in which case interest shall be payable from such Payment Date or unless such date shall be on or before August 15,20 I0,in which case interest shall be payable from the Closing Date, provided,however,that if,as shown by the records of the Trustee,interest on the Bonds shall be in default,Bonds executed in exchange for Bonds surrendered for transfer or exchange shall represent interest from the last date to which interest has been paid in full or duly provided for with respect to the Bonds,or,if no interest has been paid or duly provided for with respect to the Bonds,from the Closing Date.Payment ofinterest on the Bonds shall be made to the person appearing on the registration books of the Trustee as the Owner thereof as ofthe close of business on the Record Date in lawful money ofthe 5 United States by check or draft of the Trustee mailed on the Payment Date by first class mail to such Owner at his address as it appears on such registration books,or by wire transfer made on a Payment Date to an account in the United States upon written instructions of any Owner of $1,000,000 or more in aggregate principal amount of Bonds designated by such Owner prior to the applicable Record Date. Such written notice shall remain in effect until changed by subsequent written notice by Owners who have requested wire transfer. Book-Entry Only System.The Depository Trust Company ("DTC"),New York,New York,will act as securities depository for the Bonds.The Bonds will be issued as fully registered securities registered in the name of Cede &Co.(DTC's partnership nominee)or such other name as may be requested by an authorized representative ofDTC.Interest and principal on the Bonds will be payable when due by wire ofthe Trustee to DTC which will in turn remit such interest and principal to DTC Participants (as defined herein),which is obligated in turn remit such interest and principal to Beneficial Owners (as defined herein)ofthe Bonds (see "APPENDIX G -BOOK-ENTRY ONLY SYSTEM"herein).As long as DTC is the registered owner ofthe Bonds and DTC's book-entry method is used for the Bonds,the Trustee will send any notices to Bond Owners only to DTC. Discontinuance ofBook-Entry-Only System.DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the District or the Trustee. Under such circumstances,in the event that a successor securities depository is not obtained,Bonds are required to be printed and delivered as described in the Trust Agreement.The Authority may decide to discontinue use ofthe system ofbook-entry transfers through DTC (or a successor securities depository). In that event,the Bonds will be printed and delivered as described in the Trust Agreement. Transfer or Exchange of Bonds.Any Bond may,in accordance with its terms,be transferred or exchanged,pursuant to the provisions of the Trust Agreement,upon surrender of such Bond for cancellation at the principal corporate trust office of the Trustee.Whenever any Bond or Bonds shall be surrendered for transfer or exchange,the Trustee shall execute and deliver a new Bond or Bonds for an aggregate principal amount ofBonds ofauthorized denominations ofthe same maturity.The Trustee may require the payment by the Bond Owner requesting such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange.The Trustee is not required to transfer or exchange any Bonds (i)within 15 days preceding selection of Bonds for redemption or (ii)selected for redemption. Redemption Optional Redemption of 2010A Bonds.The 2010A Bonds maturing on or after September 1,_are subject to redemption prior to maturity as a whole or in part in the order of maturity as directed by the Authority in a Written Request provided to the Trustee and by lot within each maturity in integral multiples of$5,000 on any date on or after September 1,__,from the proceeds of optional prepayments of Installment Payments made by the District pursuant to the Installment Purchase Agreement at a redemption price equal to the principal amount thereof to be redeemed plus accrued interest to the date fixed for redemption,without premium. Optional Redemption of2010B Bonds.The 2010B Bonds shall be subject to redemption prior to their stated maturity date,at the option of the Authority to be exercised only upon the request of the District, from any source of available funds,as a whole or in part on any date,at a redemption price equal to 100% of the principal amount of 201 OB Bonds called for redemption plus the Make-Whole Premium,if any, together with accrued interest to the date fixed for redemption. 6 For purposes ofthis redemption provision,and for the purposes ofthe extraordinary optional redemption provision described below,the following defined terms have the following meanings: "Calculation Agent"means a commercial bank or an investment banking institution of national standing that is a primary United States government securities dealer designated by the District (which may be one ofthe institutions that served as underwriters for the 2010B Bonds). "Comparable Treasury Issue"means the United States Treasury security selected by the Calculation Agent as having a maturity comparable to the remaining term to maturity of the 2010B Bonds being redeemed that would be utilized,at the time of selection and in accordance with customary financial practice,in pricing new issues of corporate debt securities of comparable maturity to the remaining term to maturity ofthe 2010B Bonds being redeemed. "Comparable Treasury Price"means,with respect to any date on which a 201 OB Bonds or portion thereofis being redeemed,either (a)the average offive Reference Treasury Dealer quotations for the date fixed for redemption,after excluding the highest and lowest such quotations,and (b)if the Calculation Agent is unable to obtain five such quotations,the average ofthe quotations that are obtained.The quotations will be the average,as determined by the Calculation Agent,ofthe bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage ofprincipal amount)quoted in writing to the Calculation Agent,at 5:00 p.m.New York City time on the third Business Day preceding the date fixed for redemption. "Comparable Treasury Yield"means the yield that represents the weekly average yield to maturity for the preceding week appearing in the most recently published statistical release designated "H.15(519)Selected Interest Rates"under the heading "Treasury Constant Maturities,"or any successor publication selected by the Calculation Agent that is published weekly by the Board of Governors ofthe Federal Reserve System and that establishes yields on actively traded United States Treasury securities adjusted to constant maturity,for the maturity corresponding to the remaining term to maturity of the 20 IOB Bonds being redeemed.The Comparable Treasury Yield will be determined as of the third Business Day immediately preceding the applicable date fixed for redemption.Ifthe H.15(519)statistical release sets forth a weekly average yield for United States Treasury securities that have a constant maturity that is the same as the remaining term to maturity of the 2010B Bonds being redeemed,then the Comparable Treasury Yield will be equal to such weekly average yield.In all other cases,the Comparable Treasury Yield will be calculated by interpolation on a straight-line basis,between the weekly average yields on the United States Treasury securities that have a constant maturity (i)closest to and greater than the remaining term to maturity of the 2010B Bonds being redeemed;and (ii)closest to and less than the remaining term to maturity of the 20 IOB Bonds being redeemed.Any weekly average yields calculated by interpolation will be rounded to the nearest 1I100th of 1%,with any figure of 1I200th of 1%or above being rounded upward.If,and only if,weekly average yields for United States Treasury securities for the preceding week are not available in the H,15(519)statistical release or any successor publication,then the Comparable Treasury Yield will be the rate of interest per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount)equal to the Comparable Treasury Price (each as defined herein)as ofthe date fixed for redemption. "Interest Subsidy Payments"means payments from the United States Treasury to or upon the order ofthe Authority with respect to the 201 OB Bonds pursuant to Sections 54AA and 6431 of the Code in an amount equal to 35%ofthe interest due thereon on each Interest Payment Date. "Make-Whole Premium"means,with respect to any 2010B Bonds to be redeemed,an amount calculated by the Calculation Agent equal to the positive difference,ifany,between: 7 (a)The sum ofthe present values,calculated as ofthe date fixed for redemption of: (1)Each interest payment that,but for the redemption,would have been payable on the 201 OB Bonds or portion thereof being redeemed on each regularly scheduled Interest Payment Date occurring after the date fixed for redemption through the maturity date of such 2010B Bonds (excluding any accrued interest for the period prior to the date fixed for redemption);provided,that if the date fixed for redemption is not a regularly scheduled Interest Payment Date with respect to such 201 OB Bonds,the amount of the next regularly scheduled interest payment will be reduced by the amount of interest accrued on such 201 OB Bonds to the date fixed for redemption;plus (2)The principal amount that,but for such redemption,would have been payable on the maturity date ofthe 2010B Bonds or portion thereof being redeemed;minus (b)The principal amount ofthe 2010B Bonds or portion thereofbeing redeemed. The present values of the interest and principal payments referred to in (a)above will be determined by discounting the amount of each such interest and principal payment from the date that each such payment would have been payable but for the redemption to the date fixed for redemption on a semiannual basis (assuming a 360-day year consisting of twelve (12)30-day months)at a discount rate equal to the Comparable Treasury Yield,plus the Spread. "Reference Treasury Dealer"means a primary United States Government securities dealer in the United States (which may be one of the institutions that served as underwriters for the 20l0B Bonds)appointed by the District and reasonably acceptable to the Calculation Agent. "Spread"means for optional redemptions _%and for extraordinary optional redemptions %. "Tax Law Change"means legislation has been enacted by the Congress of the United States or passed by either House of the Congress,or a decision has been rendered by a court ofthe United States,or an order,ruling,regulation (final,temporary or proposed)or official statement has been made by or on behalf of the Treasury Department of the United States,the Internal Revenue Service or other governmental Authority of appropriate jurisdiction,the effect of which,as reasonably determined by the District,would be to suspend,reduce or terminate the Interest Subsidy Payments or any similar payments to state or local government issuers generally with respect to obligations of the general character of the 201 OB Bonds;provided,that such suspension,reduction or termination ofthe Interest Subsidy Payments is not due to a failure by the Authority or the District to comply with the requirements under the Code to receive such Interest Subsidy Payments. Extraordinary Optional Redemption of 2010B Bonds.The 2010B Bonds shall be subject to redemption prior to their stated maturity date,at the option ofthe Authority to be exercised only upon the request ofthe District upon the occurrence ofa Tax Law Change,from any source ofavailable funds,as a whole or in part on any date,at a redemption price equal to 100%of the principal amount of 2010B Bonds called for redemption plus the Make-Whole Premium,ifany,plus accrued interest to the date fixed for redemption. Mandatory Sinking Fund Redemption.The 2010A Bonds maturing on September 1,__are subject to redemption in part by lot,commencing on September 1,__,and on each September 1 thereafter,in integral numbers of $5,000 at a redemption price of the principal amount thereofplus accrued interest to the date ofredemption,without premium in accordance with the following schedule: 8 2010ABONDS MATURING ON SEPTEMBER 1,_ Redemption Date (September 1)Principal Amount The 201 OB Bonds maturing on September 1,__are subject to redemption in part by lot,commencing on September 1,__,and on each September 1 thereafter,in integral numbers of$5,000 at a redemption price ofthe principal amount thereof plus accrued interest to the date ofredemption,without premium in accordance with the following schedule: 2010B BONDS MATURING ON SEPTEMBER 1, Redemption Date (September 1)Principal Amount If some but not all of the Bonds maturing on September 1,__or September 1,__have been redeemed pursuant to an optional redemption or a mandatory redemption from net proceeds of insurance or condemnation,the total amount ofall future sinking fund payments will be reduced pro rata,in integral multiples of$5,000,by the aggregate principal amount ofsuch Bonds so redeemed. Notice of Redemption.When redemption is authorized or required,the notice is required to be mailed, first class postage prepaid,to the respective Owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books and to the Information Services and by registered or certified or overnight mail to the Securities Depositories at least 30 days but not more than 60 days prior to the redemption date.With respect to any notice of optional redemption of Bonds,such notice may state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of,premium,if any,and interest with respect to such Bonds to be prepaid and that,if such moneys shall not have been so received,said notice shall be of no force and effect and the Trustee shall not be required to prepay such Bonds.In the event that such notice of redemption contains such a condition and such moneys are not so received,the redemption shall not be made,and the Trustee shall within a reasonable time thereafter give notice,in the manner in which the notice of redemption was given,that such moneys were not so received.Neither failure to receive such notice nor any defect in the notice so mailed will affect the validity of the proceedings for redemption of such Bonds or the cessation of accrual of interest from and after the redemption date. Effect of Redemption.When notice ofredemption has been duly given,and moneys for payment of the Redemption Price of,together with interest accrued to the redemption date with respect to,the Bonds (or portions thereof)so called for redemption are held by the Trustee,the Bonds (or portions thereof)so called for redemption shall,on the redemption date designated in such notice,become due and payable at the Redemption Price specified in such notice and interest accrued thereon to the redemption date;and from and after the redemption date interest on the Bonds so called for redemption shall cease to accrue, said Bonds (or portions thereof)shall cease to be entitled to any benefit or security under the Trust Agreement,and the Owners of said Bonds shall have no rights in respect thereof except to receive payment ofsaid Redemption Price and accrued interest. 9 Partial Redemption.Upon surrender of any Bond redeemed in part only,the Trustee shall execute and deliver to the Owner thereof,at the expense of the District,a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered and ofthe same interest rate and maturity. Scheduled Debt Service The following presents the scheduled Annual Debt Service on the Bonds,assuming no optional prepayments. Fiscal Year Ending June 30 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 Total 2010A Bonds Principal 2010A Bonds Interest 2010A Bonds Debt Service 2010B Bonds Principal 10 2010B Bonds Interest 2010B Bonds Debt Service Grand Total Estimated annual Installment Payments,along with expected annual debt service on the Installment Payments for outstanding parity obligations,are set forth in the following table. Otay Water District Aggregate Parity Debt Service 1996 2004 2007 2010 Total Installment Installment Installment Installment Parity Payments (1)Payments Payments Payments Debt Service $988,820 $932,634 $2,501,410 968,860 931,236 2,505,395 948,900 933,608 2,507,864 1,025,198 929,566 2,509,020 1,000,248 928,906 2,508,864 975,297 931,388 2,512,301 1,046,605 931,994 2,514,239 1,016,665 930,819 2,514,408 986,725 928,319 2,512,798 1,053,042 924,094 2,509,234 1,018,113 922,825 2,508,456 983,182 924,500 2,510,056 1,044,510 923,656 2,509,056 1,004,590 920,744 2,510,279 1,060,928 915,697 2,508,596 1,016,018 2,509,373 1,067,365 2,506,924 1,113,723 2,505,900 2,506,625 2,504,375 2,504,044 2,505,419 2,503,394 2,501,578 2,504,594 2,503,453 2,498,156 2,498,484 Fiscal Year Ending June 30 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 Total $18,318,787 $13,909,985 $70,194,294 (I)Using 4.99%variable rate interest. 11 THE FINANCING PLAN The 2010 Project The District will use a portion ofthe proceeds ofthe Bonds to provide funds for the construction of water transmission facilities (the "2010 Project").The District anticipates that the 2010 Project will be comprised ofthe following improvements to the District's Water System. Jamacha Road Pipeline Project.The first and main component ofthe Jamacha Road Pipeline Project consists of the construction of a 36-inch tape wrapped cement mortar lined and coated steel pipeline which will transfer water from the Otay 14 Flow Control Facility.The second component consists ofthe replacement of concrete cylinder pipe with approximately 4,500 feet of 12-inch and 8-inch polyvinyl chloride pipe along Jamacha Road.The construction contract was awarded in June 2009.The total project cost is estimated at $21 million,of which $3.77 million has already been funded from other sources.The project is expected to be completed in August 2010. Conveyance System.The District is anticipating the ability to purchase additional water from a desalination plant to be constructed outside the District boundaries.The conveyance system includes 3.2 miles of pipeline,a pump station and a treatment facility.The cost to construct the conveyance system for such purchased water is approximately $30 million.The project is expected to be completed in late 2013.See ''THE DISTRICT -Water Supply -Historic and Projected Water Supply"herein. The District may substitute other projects for the Jamacha Road Pipeline Project and Conveyance System components ofthe 2010 Project. Additional Capital Projects.In addition to the Jamacha Road Pipeline projects and the desalinated water conveyance system,the District has approximately 19 additional capital projects totaling over $89 million that it may include in the 2010 Project.Such additional projects include pipeline projects,well systems and pump station projects. Estimated Sources and Uses of Funds Under the provisions of the Trust Agreement,the Trustee will receive the proceeds from the sale of the Bonds and will apply them as follows: Sources: Principal Amount of Bonds New Premium/Discount Total Sources Uses: 2010 Project Fund Reserve Fund Underwriter's Discount Costs ofIssuance Fund (I) Total 2010ABonds 2010B Bonds (I)Expenses include fees of Bond Counsel,the Financial Advisor,Disclosure Counsel,the Trustee,rating fees, costs of printing the Official Statement,and other costs ofdelivery ofthe Bonds. 12 THE AUTHORITY The Otay Water District Financing Authority was formed pursuant to the provisions ofArticles 1and 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State and a Joint Exercise of Powers Agreement,dated ,2010 (the "Joint Powers Agreement")by and between the District and the California Municipal Finance Authority,a joint exercise of powers agency.The Authority was formed to assist the District in the financing of public capital improvements.The Authority functions as an independent entity and its policies are determined by a governing board that consists of the [board of directors ofthe District].The Authority has no employees and all staff work is done by the District staff. Pursuant to the Act,the Authority is authorized to issue bonds for the purpose of financing,refinancing or providing reimbursement for costs incurred in connection with the construction,expansion,remodeling, renovation,furnishing,equipping or acquisition of public capital improvements of public entities.The Act provides for the issuance of revenue bonds of joint exercise of powers authorities,such as the Authority,to be repaid from the proceeds ofcertain public obligations,such as the Installment Purchase Agreement.The intent of the California legislature,as stated in the Act,is to assist in the reduction of local borrowing costs,help accelerate the construction,repair and maintenance of public capital improvements,and promote greater use of existing and new financial instruments and mechanisms such as bond pooling by local agencies. OTAY WATER DISTRICT The District was formed in January 1956 pursuant to Section 7100 et seq.,of the California Water Code, and joined the San Diego County Water Authority (which is a member ofthe Metropolitan Water District ofSouthern California)in September 1956 to acquire the right to purchase and distribute imported water throughout its service area.The District's boundaries currently encompass an area ofapproximately 125 square miles in San Diego County,lying immediately east of the San Diego metropolitan area and running from the City of El Cajon south to the Mexican border,abutting the cities of El Cajon and La Mesa,and encompassing most of the City of Chula Vista and a small portion ofthe City of San Diego ("Service Area").The District is the sole provider of water in the Service Area.Approximately 39 percent of the geographic Service Area is currently developed,and this percentage will continue to increase as the District's Service Area continues to develop and grow.The District's water sales by volume increased by 7.5%per year from 2004 to 2007.Since 2007,new residential construction has declined significantly and there has been little or no growth in residential connections.However,the District continues to add connections to its reclaimed water system.As ofJune 30,2009,the District had nearly 48,000 potable and 700 recycled service accounts representing a population of approximately 195,000,with an average daily demand of33.2 million gallons per day (mgd).Ultimately,the District is projected to serve 277,000 people,creating an average daily demand of56.3 mgd. Most potable water delivered by the District is purchased from the San Diego County Water Authority ("SDCWA")who in tum purchases water from the region's water importer,the Metropolitan Water District of Southern California.A smaller amount ofpotable water had also been purchased from the City ofSan Diego in prior years,but in the future, the District only expects to purchase potable water from the City of San Diego ifneeded on a temporary basis.In Fiscal Year 2007,the District began purchasing raw water from the SDCWA and entered into an agreement with the City of San Diego to treat the water to potable level before being introduced to the District's Water System.By taking raw water through SDCWA's system at a different connection,there is increased reliability of water supplied to the District. A 5.l-mile,36"pipeline project currently under construction will,when complete,add another connection to the Helix Water District's system,where the District expects to establish an additional delivery point for treated water.Water delivered through the new pipeline will be stored in two recently constructed 10 million gallon reservoirs. The District owns and operates a recycled water distribution network.Recycled water from the District's Ralph W.Chapman Water Recycling Facility ("RWCWRF")is used to irrigate golfcourses,landscaping 13 at schools,public parks,roadway landscapes,and various other approved uses in eastern Chula Vista. The RWCWRF is cable ofreclaiming wastewater at a rate ofapproximately 1.2 million gallons per day. The District is also in a partnership with the City of San Diego to beneficially reuse an additional six million gallons per day of recycled water from the City of San Diego's South Bay Reclamation Plant (since Spring of 2007),which required the District to construct over six miles ofconnecting pipeline,a pump station and a 12 million gallon reservoir.Using this new resource to meet recycled water demands on the Water System has resulted in the District being able to allocate approximately 3,000 acre-feet per year ofpotable water to other uses. The District also owns and operates a wastewater collection and reclamation system,providing public sewer service to approximately 4,627 customers within the Jamacha drainage basin.This wastewater system is not a part ofthe Water System. The District is administered by a Board of Directors consisting of five members who are elected to four- year alternating tenns by the voters residing within the District's boundaries.The District is divided into five divisions,with each Director representing a specific division within which he or she must reside. The current members ofthe Board and key administrative personnel are: DIRECTORS Jaime Bonilla,President -Division 2 Jose Lopez,Vice President -Division 4 Gary D.Croucher,Treasurer -Division 3 Larry Breit/elder,Division 1 Mark Robak,Division 5 MANAGEMENT TEAM Mark Watton,General Manager GermanAlvarez,Assistant General Manager Finance &Administration Manny Magana,Assistant General Manager Engineering &Operations Joseph R.Beachem,ChiefFinancial Officer Rom Sarno,Jr.,ChiefofAdministrative Services GeoffStevens,ChiefInformation Officer Rod Posada,ChiefofEngineering Pedro Porras,ChiefofWater Operations Under direction ofthe General Manager,the District has 166 employees. THE WATER SYSTEM The following information concerning the Water System was obtained from District officials except where otherwise indicated.The audited financial statements ofthe District for the Fiscal Year ended June 30,2009 are attached hereto as "APPENDIX B"and should be read in their entirety. Existing Facilities Potable Water Facilities -The principal facilities ofthe existing potable water system consist ofsix water supply connections with SDCWA,one water supply connection with the City of San Diego,27 pump stations,over 660 miles ofpipelines,and 37 storage reservoirs. The District currently receives treated potable water from the SDCWA through four connections to one of the pipelines owned and operated by the SDCWA.This water is treated by the Metropolitan Water District of Southern California at its Skinner Water Treatment Plant.In addition,the District currently receives treated potable water from the SDCWA through two connections to its La Mesa Sweetwater 14 Extension.If purchased,this water would be treated by the Helix Water District at its R.M.Levy Water Treatment Plant pursuant to an agreement with the SDCWA.The District may also purchase treated potable water,if available,from the City ofSan Diego.This water is sold by the SDCWA to the District in raw form and delivered to the City of San Diego's Otay Water Treatment Plant pursuant to an agreement among the SDCWA,the District and the City of San Diego.These supply sources and connecting transmission mains deliver water to terminal storage reservoirs that provide water service to customers within the Service Area. Reclaimed Water Facilities -The principal facilities of the existing reclaimed or recycled water system consist of one recycled water supply source,2 pump stations,79 miles of pipelines,and 3 storage reservoirs. The District currently produces recycled water at the RWCWRF,which is owned and operated by the District.Reclaimed water from the RWCWRF and some ofthe District's treated potable water supply are delivered into storage reservoirs that provide recycled water service to reclaimed water customers. The District is divided into five geographic areas.These five areas contain five potable water systems and two recycled water systems.The systems are called Hillsdale,Regulatory,La Presa,Central Area,and Otay Mesa.The Hillsdale,Regulatory,and La Presa systems are collectively referred to as the North District,while the Central Area,and Otay Mesa systems are collectively referred to as the South District. Recycled water service is currently limited to the South District.There are multiple pressure zones within each system,except Otay Mesa. North District.The Hillsdale system includes the extreme north part ofthe District's Service Area.The Regulatory system is located between the Hillsdale and La Presa systems.The Regulatory system reservoirs are considered to provide terminal storage for the entire North District as well as some operational storage for the 520 Pressure Zone.Two new 10 million gallon reservoirs are located within the Regulatory system and will provide storage for the treated water to be delivered through the 36"inch pipeline under construction,which will be connected to the Helix Water District system.The La Presa system is generally located north and east of the Sweetwater reservoir and is the southernmost system of the North District. South District.The Central Area system is roughly bounded by Interstate 805 on the west,Otay River on the south,the Lower Otay Reservoir on the east,and the Regulatory System on the north.Two Central Area system reservoirs provide terminal storage for the entire Central Area system and also provide operational storage for the 624 Pressure Zone.Additional reservoirs provide operational storage for other pressure zones throughout the Central Area.The Otay Mesa system includes the extreme south portion of the District Service Area and is generally located between the Otay River on the north and the Mexico border on the south.The South District has and will experience the most growth in the District's Service Area. Water Storage The District currently operates 39 reservoirs as shown below with a total capacity of 216.1 mg.The District estimates that the reservoirs are between 75%and 80%full on a typical day.. System Hillsdale Regulatory La Presa Central Area Otay Mesa Reservoirs 6 14 6 II --.2 39 IS Capacity (mg) 13.9 58.4 10.5 85.6 47.7 216.1 Water Supply Service Area Water Supply -Potable.The District does not have a local source of ground or surface water,but purchases a significant amount of its potable water from the SDCWA.Under a contractual arrangement with the SDCWA,the District also receives potable water from the Helix Water District's Levy Water Treatment Plant and,beginning in Fiscal Year 2007,from the City ofSan Diego. The SDCWA implemented a water rate increase on September I,2009,which will result in an approximate 10%increase for the District's cost ofpurchased potable water from SDCWA. Service Area Water Supply -Recycled.The District produces approximately 1.2 million gallons a day ofreclaimed water at the RWCWRF.The District has contracted with the City of San Diego to purchase at least six million gallons per day (mgd)ofreclaimed water produced by the City of San Diego's South Bay Water Reclamation Plant and an additional 3.5 mgd if available.Construction on the required pump station,reservoir,and the 6-mile delivery system allowing the District to connect to the City of San Diego's reclaimed water pipeline was completed in 2007.This contract with the City of San Diego has resulted in the District reducing its potable water use by approximately 3,000 acre-feet per year thereby increasing the availability ofpotable water for higher quality purposes. SDCWA Water Supply.Currently,approximately 85%ofthe SDCWA's water supply is purchased,with 76%of total supply purchased from the Metropolitan Water District of Southern California ("MWD"). For the fiscal year ended June 30,2009,the SDCWA supplied the District 35,557 acre-feet of water (quantities ofwater are expressed in terms ofacre-feet which is the amount ofwater which will cover one acre to a depth of one foot and is equivalent to approximately 326,000 gallons and approximately the average annual water usage oftwo households). As an alternative to purchasing all of its imported water from MWD,the SDCWA has begun to diversify its purchases through core and spot water transfers with other agencies.Since 2003,the SDCWA has been receiving a portion of its imported water pursuant to the terms of the Quantification Settlement Agreement ("QSA")among the State of California acting by and through the Department of Fish and Game,the Coachella Valley Water District ("CVWD"),the Imperial Irrigation District ("lID")and the SDCWA,executed on October 10,2003,the Water Transfer Agreement (defined below)and other QSA related agreements.Water that the SDCWA receives from lID is conveyed through the Colorado River Aqueduct pursuant to an exchange agreement with MWD.The SDCWA began receiving transfer water from 110 in December 2003.Starting with the initial delivery of 10,000 acre-feet,the amount ofwater to be delivered is increasing according to an agreed-upon schedule until the maximum transfer yield of 200,000 acre-feet per year is achieved.In addition,the SDCWA will receive approximately 77,000 acre- feet of imported water per year from water conserved through the lining of the All-American Canal Lining Project and the Coachella Canal Lining Project.The SDCWA began receiving water from the Coachella Canal Lining Project in 2007 and in 2010 will receive its full allotment from the All-American Canal Lining Project.The SDCWA is also pursuing spot water transfers to provide supplemental supplies to the region during times ofsupply shortages.Spot transfers are short-term transfers or leases,typically agreed to and completed within one to three years. The SDCWA continues to pursue supply diversification efforts for itself and the region,including long- term planning,recycling of local surface water,groundwater,recycled water,local seawater desalination and conservation efforts. Water Storage facilities are also critical to assuring consistent water availability notwithstanding fluctuation in available supply.The SDCWA has recently entered into agreements to expand available storage capacity.The SDCWA recently issued over $600 million in water bonds to finance its Capital Improvement Program.One of the purposes ofthe Capital Improvement Program is to interconnect a number ofmember agency storage facilities.Another purpose is to enhance the SDCWA's own storage capacity. 16 The SDCWA faces various challenges in the continued supply ofwater to the District and other member agencies.A description of these challenges as well as a variety of other operating information with respect to the SDCWA is included in certain disclosure documents prepared by SDCWA.The SDCWA has entered into certain continuing disclosure agreements pursuant to which SDCWA is contractually obligated for the benefit of owners ofcertain ofits outstanding obligations,to file certain annual reports, notices ofcertain material events as defined under Rule 15c2-12 ofthe Exchange Act ("Rule 15c2-12") and annual audited financial statements (the "SDCWA Information")with certain the Municipal Securities Rulemaking Board. SDCWA HAS NOT REVIEWED THIS OFFICIAL STATEMENT AND HAS MADE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED OR INCORPORATED HEREIN,INCLUDING INFORMATION WITH REGARD TO SDCWA.SDCWA IS NOT CONTRACTUALLY OBLIGATED,AND HAS NOT UNDERTAKEN,TO UPDATE SUCH SDCWA INFORMATION,FOR THE BENEFIT OF THE DISTRICT OR THE OWNERS OFTHE BONDS UNDER RULE 15c2-12. MWD Water Supply.The SDCWA currently purchases all of its imported water from MWD and lID. SDCWA is MWD's largest member agency,purchasing approximately 24 percent ofMWD's supplies in fiscal year 2008/09.MWD obtains its water supply from two primary sources:the Colorado River,via MWD's Colorado River Aqueduct,and the State of California Department of Water Resources'State Water Project ("SWP"),via the Edmund G Brown California Aqueduct. As MWD continues to face unprecedented supply challenges resulting from a combination of drought conditions and regulatory restrictions on the operations ofthe SWP,MWD is augmenting the partial cuts to its SWP supplies by continuing withdrawals from storage accounts,encouraging fast-tracking of local resource development and purchasing spot water transfer supplies to meet its member agency supply needs. It is MWD's declared policy to meet all the supplemental needs ofeach of its member agencies,including the Water Authority.However,MWD's Board adopted a shortage allocation method in February 2008 (the "Water Supply Allocation Plan").The method allows MWD,in the event of shortages,to allocate water based on uniform reduction by class of water service,with adjustments made for growth,loss of local supply,demand hardening due to implementation of water conservation,and the amount a member agency's dependence on MWD for its total water supply,as well as other water supply related factors. MWD implemented the second stage of the shortage allocation method on July 1,2009 and began allocating supplies among its member agencies pursuant to the plan.Any extended curtailment could be accompanied by an increase in MWD water charges to its member agencies and consequently could necessitate an increase in water rates to the member agencies ofthe Water Authority. Colorado River Water.Under applicable laws,agreements and treaties governing the use of water from the Colorado River,California is entitled to use 4.4 million acre-feet of Colorado River water annually, plus one-half of any surplus that may be available for use collectively in Arizona,California and Nevada as declared on an annual basis by the United States Secretary of the Interior.Under the priority system that governs the distribution ofColorado River water made available to California,MWD holds the fourth priority right of550,000 acre-feet per year and a fifth priority right of 662,000 acre-feet per year.MWD's fourth priority right is within California's basic annual apportionment of 4.4 million acre-feet;however, the fifth priority right is outside ofthis entitlement and therefore is not considered a firm supply of water. Until 2003,MWD had been able to take full advantage of its fifth priority right as a result of the availability of surplus water and apportioned but unused water.However,Arizona and Nevada have increased their use of water from the Colorado River,leaving no unused apportionment available for California.In addition,a severe drought in the Colorado River Basin reduced storage in system reservoirs,such that MWD stopped taking surplus deliveries in 2003 in an effort to mitigate the effects of the drought.Prior to 2003,MWD could divert over 1.2 million acre-feet in any year,but since that time, MWD's net diversions of Colorado River water have been limited to a low of approximately 633,000 17 acre-feet in 2006 and a high of approximately 905,000 acre-feet in 2008.Average annual net deliveries for 2003 through 2008 were approximately 762,000 acre-feet,with annual volumes dependent primarily on availability ofunused higher priority agricultural water and increasing transfers ofconserved water.In 2009,MWD's Colorado River Aqueduct deliveries exceeded 1 million acre-feet for the first time since 2002.These deliveries include the SDCWA QSA water supplies conveyed by MWD in accordance with the SDCWA's Exchange Agreement with MWD. Colorado River Aqueduct.The Colorado River Aqueduct is owned and operated by MWD.Work on the Colorado River Aqueduct commenced in 1933 and water deliveries started in 1941.Additional facilities were completed by 1961 to meet additional requirements of MWD's member agencies.The Colorado River Aqueduct is 242 miles long,starting at Lake Havasu and terminating at Lake Mathews in Riverside County.After deducting evaporation and seepage losses in transporting and storing the water and considering maintenance requirements,the maximum capacity available for delivery by MWD to its member agencies is approximately 1.2 million acre-feet per year. California s Colorado River Water Use Plan.In response to Arizona and Nevada increasing use oftheir respective apportionments in the late 1990s and the uncertainty of continued surpluses on the Colorado River,the Colorado River Board ofCalifornia,in consultation with MWD,nD,CVWD,and the SDCWA, has developed and released a plan for reducing California's use of Colorado River water to its basic annual apportionment of 4.4 million acre-feet when necessary (the "California Plan").The May 2000 California Plan optimizes the use of the available Colorado River supply through water conservation, transfers from higher priority agricultural users to the SDCWA's and MWD's service area,and storage programs. Other MWD Colorado River Supply Programs.MWD has taken steps to enhance its share of Colorado River water through agreements with other agencies that have rights to use such water such as 110,the Palo Verde Irrigation District and the Central Arizona Water Conservation District. Colorado River Operations,Shortage,and Surplus Guidelines.in December 2007,the Secretary of the Interior executed a Record of Decision ("ROD")for guidelines that determine potential shortage allocations among the Lower Basin states and revise reservoir operations (Colorado River Interim Guidelines for Lower Basin Shortages and the Coordinated Operations for Lake Powell and Lake Mead). Under the guidelines,California would not have to share in any of the potential annual shortages identified by the Secretary up to 500,000 acre-feet.The ROD extended existing interim Surplus Guidelines ("ISG")until 2026,which determine when surplus water is available for California,Arizona and Nevada.Availability of ISG surplus water depends upon whether drought conditions continue and how fast storage in the Colorado River Basin can recover from present conditions.The ROD also provided a way for Lower Basin Colorado River water contractors and others to create a storage account, under a program called Intentionally Created Surplus ("ICS").Under ICS provisions,MWD can implement water conservation programs to create a storage account in Lake Mead of up to 1,450,000 acre-feet.When other surplus is not available and the Colorado River is not in shortage condition,MWD could call for the delivery of375,000 acre-feet ofthis stored water in any year (400,000 acre-feet ifwater were needed to avoid shortages within the MWD service area). Environmental Considerations.Several fish species and other wildlife species either directly or indirectly have the potential to affect Colorado River operations,thus changing power operations and the amount of water deliveries to the Colorado River Aqueduct.A number ofspecies that are on either "endangered"or "threatened"lists under the federal and/or California endangered species acts ("ESAs")are present in the area of the Lower Colorado River.To address this issue,a broad-based state/federal/tribal private regional partnership,which includes water,hydroelectric power and wildlife management agencies in Arizona,California and Nevada,developed a multi-species conservation plan for the main stem of the Lower Colorado River (the Lower Colorado River Multi-Species Conservation Program or "MSCP"). The MSCP allows MWD to obtain federal and state permits for any incidental take of protected species 18 resulting from current and future water and power operations and diversions on the Colorado River.The MSCP also covers operations offederal dams and power plants on the Colorado River. Seismic Considerations.Portions of the Colorado River Aqueduct are located near earthquake faults, including the San Andreas Fault.On October 16,1999,a magnitude 7.1 earthquake centered 45 miles from the Colorado River Aqueduct occurred.When it occurred,the aqueduct was running at capacity. Inspections following the earthquake revealed no structural damage.There were no interruptions in operations.No assurance can be made that a significant seismic event would not cause damage to project structures,which could thereby interrupt the supply ofwater from the Colorado River Aqueduct. State Water Project.MWD's other major source ofwater is the State Water Project ("SWP").The SWP is owned by the State ofCalifornia and operated by the State Department of Water Resources ("DWR"). The SWP transports Feather River water stored in and released from Oroville Dam and unregulated flows diverted directly from the San Francisco Bay Sacramento-San Joaquin Delta Estuary ("Bay-Delta")south via the California Aqueduct to four delivery points near the northern and eastern boundaries of MWD. The total length ofthe California Aqueduct is 444 miles. MWD is one of 29 agencies that have long-term contracts for water service from DWR,but is the largest agency in terms of the number of people it serves (more than 18 million),the share of SWP water to which it is entitled,and the total amount of annual payments made to DWR.MWD's contract with DWR provides for the ultimate delivery of 1,911,400 acre-feet per year (46 percent of the total SWP entitlement).MWD also retains a "call"on 100,000 acre-feet per year on water transferred to CVWD and the Desert Water Agency,if needed,so long as it pays for the financial obligations associated with the water during the call period. The SWP was originally intended to meet demands of4.2 million acre-feet per year.Initial SWP facilities were completed in the early 1 970s,and it was envisioned that additional facilities would be constructed as contractor demands increased.Several factors,including public opposition,increased costs,and increased non-SWP demands for limited water supplies,combined to delay the construction ofadditional facilities.The quantity ofSWP water available for delivery each year is controlled by both hydrology and operational considerations.Water received from the State Water Project by MWD from 2002 through 2008,including water from water transfer,groundwater banking and exchange programs varied from a low of 1,040,000 acre-feet in calendar year 2008 to a high of 1,794,000 acre-feet in calendar year 2004. MWD's allocation from the State Water Project for calendar year 2008 was 35 percent of its contracted amount,or 669,000 acre-feet.MWD received approximately 1,040,000 acre-feet ofwater using the State Water Project's California Aqueduct in 2008,including the allocation from the State Water Project and deliveries from water transfers,groundwater banking and exchange programs. For calendar year 2009,DWR's October 2008 initial allocation estimate was set at 15 percent of contracted amounts.This estimate was adjusted upwards to 20 percent,30 percent and 40 percent of contracted amounts as ofMarch 18,2009,April 15,2009 and May 20,2009,respectively.Since May 20, 2009,the State Water Project allocation has remained at 40 percent of contracted amounts.This allocation reflects that water storage in the State's major reservoirs and runoff projections remain below average and regulatory restrictions on water exports from the Bay-Delta to protect listed fish species have also reduced water deliveries from the State Water Project.Under the 40 percent allocation of contracted amounts,MWD will receive approximately 765,000 acre-feet from its basic allocation and approximately 923,000 acre-feet of total water from the State Water Project,including supplies from water transfers, exchanges and related Five-Year Supply Plan actions that will be delivered through the California Aqueduct. Following three dry years,DWR's calendar year 2010 initial allocation estimate ofwater from the State Water Project was announced on November 30,2009 as five percent of SWP contractors'contractual amounts.For MWD,the initial allocation is 95.575 acre-feet,or five percent of its 1,911.500-acre-foot contractual amount.DWR stated that its initial allocation is a very conservative estimate of what DWR 19 expects it can deliver as a percentage of deliveries requested by SWP contractors for 2010.This initial allocation figure reflects the low carryover storage levels in the State's major reservoirs,three years of drought conditions and federally mandated environmental restrictions on water deliveries from the Sacramento-San Joaquin Delta.Actual deliveries and revised allocations for 2010 are expected to increase during the year once actual hydrologic and water supply conditions are known. According to DWR,the five percent initial allocation is the lowest initial allocation percentage since SWP deliveries began in 1967.The previous low initial allocation was ten percent in 1993.The 1993 allocation was increased to 100 percent as supply conditions improved that year;however,federally mandated environmental restrictions on water deliveries from the Sacramento-San Joaquin Delta were not in place at that time.See "Endangered Species Act Consideration"and "State Water Project Operational Constrains"below.If the initial allocation of five percent for 2010 remains in effect throughout 2010, MWD expects to meet regional demands with Colorado River Aqueduct deliveries,storage reserves, supplemental water transfers and purchases and,if necessary,continuation of MWD's Water Supply Allocation Plan (see "Integrated Water Resources Plan and Five-Year Supply Plan"below). Due to drought conditions and the court-ordered restrictions described under "Endangered Species Act Considerations"below,California Governor Arnold Schwarzenegger issued a proclamation on February 27,2009 declaring a statewide drought emergency.The proclamation requests that all urban water users in California increase water conservation and directs that various state agencies take action to address impacts of the drought.These actions include expediting approvals for water transfers (provided that such transfers do not injure other legal users ofwater or unreasonably affect fish and wildlife);pursuing short-term efforts,such as installation of temporary barriers in the Bay-Delta,to protect water quality and water supply;and expediting regulatory consideration of proposed modifications to Bay-Delta water quality standards.DWR's drought status update issued on September 30,2009 (the end ofthe water year, which runs from October 1 to September 30 ofeach year),stated that DWR is preparing for the likelihood of a fourth year of drought in 2010.The Governor may issue additional orders,including rationing,if drought conditions are not sufficiently mitigated.However,MWD has stated it is unable at this time to assess impacts ofthe emergency declaration on its State Water Project supplies. Bay-Delta Regulatory and Planning Activities.The supply and reliability issues affecting the SWP are largely a result of longstanding environmental problems in the Bay-Delta estuary.In addition to its importance to urban and agricultural water users,the Bay-Delta is of critical ecological importance.The Bay-Delta is the largest estuary on the West Coast ofthe United States and provides habitat for more than 750 plant and animal species.One hundred fifty years of human activity have contributed to the destruction ofhabitat,the decline of several estuarine and anadromous fish species,and the deterioration of water quality.These activities include increasing water demands from urban and agricultural uses,the dredging and filling of tidal marshes,the construction of levees,urban runoff,agricultural drainage, runoff from abandoned mines,and the introduction ofnon-native species. The State Water Resources Control Board ("SWRCB")is the agency responsible for setting water quality standards and administering water rights throughout California.Decisions of SWRCB can affect the availability of water to MWD and other users of SWP water.SWRCB exercises its regulatory authority over the Bay-Delta by means of public proceedings leading to regulations and decisions.These include the Bay Delta Water Quality Control Plan ("WQCP"),which establishes the water quality standards and proposed flow regime of the estuary,and water rights decisions which assign responsibility for implementing the objectives ofthe WQCP to users throughout the system by adjusting their respective water rights.Since 2000,SWRCB's Water Rights Decision 1641 has governed the SWP's ability to export water from the Bay-Delta for delivery to MWD and other SWP contractors. The CALFED Bay-Delta Program is a collaborative effort among state and federal agencies to develop a long-term solution to improve water supplies in California and the health ofthe Bay-Delta watershed.In August 2000,the federal government and the State of California issued a Record of Decision ("ROD") and related documents approving the final programmatic environmental documentation for the CALFED 20 Bay-Delta Program.Implementing the CALFED Bay-Delta Program during the first seven years has resulted in investment of $3 billion on a variety of projects and programs to begin addressing the Bay- Delta's water supply,water quality,ecosystem,and levee stability problems.To guide future development ofthe CALFED Bay-Delta Program and identify a strategy for managing the Bay-Delta as a sustainable resource,Governor Schwarzenegger in September 2006 established,by Executive Order,a Delta Vision process.The Delta Vision process is tied to legislation that created a cabinet-level committee tasked with developing a strategic vision for the Delta.The 41-member Delta Vision Blue Ribbon Task Force issued its Delta Vision Strategic Plan (the "Strategic Plan")on October 17,2008, providing its recommendations for long-term sustainable management of the Bay-Delta.The Strategic Plan was reviewed by the Delta Vision Committee,chaired by the State Secretary for Resources.The Implementation Report summarizing the Delta Vision Committees recommendations was submitted to Governor Schwarzenegger on December 31,2008.These recommendations include completing the BDCP and associated environmental assessments to permit ecosystem revitalization and conveyance water improvements,identifying and reducing stressors to the Bay-Delta ecosystem,strengthening levees, increasing emergency preparedness,continuing finding for the CALFED ecosystem restoration program, updating Bay-Delta regulatory flow and water quality standards to protect beneficial uses of water and working with the State Legislature on a comprehensive water bond package to fund Bay-Delta infrastructure projects. On November 4,2009,the State Legislature passed a comprehensive package of water legislation that included five bills (four of which have subsequently been signed by Governor Schwarzenegger)(the "2009 State Water Legislation")addressing California's statewide water situation,with particular emphasis on the Bay-Delta.The 2009 State Water Legislation includes,among other things,a 20 percent water conservation mandate for most localities in the State by 2020,new regulations regarding voluntary monitoring of groundwater levels by localities,and an $11.1 billion State general obligation bond measure,to be presented to the voters for their approval in 2010,that would provide funding for projects and programs throughout the State and in the Bay-Delta.Major categories of bond funding would include statewide water system operational improvements,Bay-Delta sustainability,water supply reliability, conservation and watershed protection,groundwater protection and water quality improvements,and water recycling and water conservation.The 2009 State Water Legislation also creates two new governmental agencies -the Delta Stewardship Council and the Sacramento-San Joaquin Delta Conservancy. The Delta Stewardship Council is charged with developing and implementing a Delta Plan, which would include the Bay Delta Conservation Plan upon meeting certain conditions.The Sacramento- San Joaquin Delta Conservancy will implement ecosystem restoration activities in the Bay-Delta.In addition the 2009 State Water Legislation includes legislation addressing unauthorized Bay-Delta water diversions.At this time,the District cannot predict what effect the 2009 State Water Legislation will have on the operations and finances ofthe SDCWA. Endangered Species Act Considerations.The listing ofseveral fish species as threatened or endangered under the federal or California Endangered Species Acts (respectively,the "Federal ESA"and the "California ESA"and,collectively,the "ESAs")have adversely impacted State Water Project operations and limited the flexibility ofthe State Water Project.An annual environmental water account established under the CALFED Bay-Delta Program as a means of meeting environmental flow requirements and export limitations has helped to mitigate these impacts.Currently,five species (the winter-run and spring- run Chinook salmon,Delta smelt,North American green sturgeon and Central Valley steelhead)are listed under the ESAs.In addition,on June 25,2009,the California Fish and Game Commission declared the longfin smelt a threatened species under the California ESA.The Federal ESA requires that before any federal agency authorizes finds or carries out an action it must consult with the appropriate federal fishery agency to determine whether the action would jeopardize the continued existence of any threatened or endangered species,or adversely modifY habitat critical to the species'needs.The result of the consultation is known as a "biological opinion."In the biological opinion the federal fishery agency determines whether the action would cause jeopardy to a threatened or endangered species or adverse modification to critical habitat and recommends reasonable and prudent alternatives or measures that would allow the action to proceed without causing jeopardy or adverse modification.The biological 21 opinion also includes an "incidental take statement."The incidental take statement allows the action to go forward even though it will result in some level of"take,"including harming or killing some members of the species,incidental to the agency action,provided that the agency action does not jeopardize the continued existence ofany threatened or endangered species and complies with reasonable mitigation and minimization measures recommended by the federal fishery agency.In 2004 and 2005,the USFWS and National Marine Fisheries Service ("NMFS")issued biological opinions and incidental take statements that govern operations ofthe SWP and the federal Central Valley Project (the "CVP")with respect to the Delta smelt,the winter-run and spring-run Chinook salmon and the Central Valley steelhead.In a separate action on May 21,2009,the National Marine Fisheries Service proposed to adopt a rule under the Federal ESA,applying Federal ESA "take"prohibitions to the North American green sturgeon. Existing restrictions on project operations for the benefit ofother listed species will also protect the North American green sturgeon and it is unclear whether additional restrictions and impacts on project operations could result from the proposed rule. Under the Federal ESA,critical habitat also must be designated for each listed species.Critical habitat has been designated for each ofthe currently listed species,including the North American green sturgeon. The National Marine Fisheries Service issued critical habitat designation for the North American green sturgeon on October 9,2009.The habitat designated as critical for the sturgeon includes the lower Feather River,which could have an adverse impact on State Water Project operations. Rulings by SWRCQ,USFWS and NMFS can result in significant restrictions on the amount of water available to DWR for delivery through the SWP.An analysis by DWR ofthe biological opinion on the impact ofthe SWP and the CVP on Delta smelt,released by USFWS on December 15,2008,for example, suggested that SWP export restrictions could reduce deliveries to MWD by 300,000 to 700,000 acre-feet in 2009.Further,the decisions of the SWRCB,USFWS,the activities of DWR and various SWP contractors,the CALFED Bay-Delta Program,the operations of the SWP and the various biological opinions have been the subject ofongoing environmental and other litigation.Such litigation has had and may continue to have a significant impact on the operation of the SWP and the amount of SWP water available to MWD.An Interim Remedial Order issued in NRDC v.Kempthorne,for example,resulted in reductions of approximately 250,000 acre-feet in SWP deliveries to MWD during winter and spring of 2007-08. State Water Project Operational Constraints.DWR has altered the operations of the State Water Project to accommodate species of fish listed under the ESAs.These changes in project operations have adversely affected State Water Project deliveries.Restrictions on Bay-Delta pumping under the Interim Remedial Order in NRDC v.Kempthorne reduced deliveries of State Water Project water to MWD by approximately 250,000 acre-feet in 2008.The initial allocation to State Water Project contractors for 2009 was only 15 percent of their contracted amounts,based on below-average precipitation and regulatory agency restrictions on water exports from the Bay-Delta to protect listed fish species.DWR revisited this allocation as conditions changed through early 2009 and,on May 20,2009,announced an allocation of 40 percent (approximately 765,000 acre-feet).MWD anticipates receiving approximately 923,000 acre-feet of total water from the SWP in 2009,including its basic allocation and supplies from water transfers, exchanges and related Five-Year Supply Plan actions that will be delivered through the CaliforniaAqueduct. Operational constraints likely will continue until a long-term solution to the problems in the Bay-Delta is identified and implemented.The Delta Vision process, established by Governor Schwarzenegger,is aimed at identifYing long-term solutions to the conflicts in the Bay-Delta,including natural resource, infrastructure,land use and governance issues.In addition,State and federal resource agencies and various environmental and water user entities are currently engaged in the development ofthe Bay-Delta Conservation Plan (the "BDCP"),which is aimed at addressing ecosystem needs and securing long-term operating permits for the SWP. 22 Other issues,such as the recent decline of some fish populations in the Bay-Delta and surrounding regions and certain operational actions in the Bay-Delta,may significantly reduce MWD's water supply from the Bay-Delta.State Water Project operational requirements may be further modified under new biological opinions for listed species under the Federal ESA or by the California Department of Fish and Game's issuance of incidental take authorizations under the California ESA.Biological opinions or incidental take authorizations under the Federal ESA and California ESA might further adversely affect State Water Project and Central Valley Project operations.Additionally,new litigation,listings of additional species or new regulatory requirements could further adversely affect State Water Project operations in the future by requiring additional export reductions,releases of additional water from storage or other operational changes impacting water supply operations.The Water Authority cannot predict the ultimate outcome of any ofthe litigation or regulatory processes described above but believes they could have a materially adverse impact on the operation ofthe SWP pumps,MWD's SWP supplies and MWD's water reserves. Seismic Considerations.Major portions of the California Aqueduct are located parallel to and near the San Andreas and other faults.All major faults are crossed either by canal at ground level or by pipeline at very shallow depths to ease repair in case of damage from movement along a fault.SWP facilities are designed to withstand earthquakes without major damage.Dams,for example,are designed to accommodate movement along their foundations and to resist earthquake forces on their embankments. Earthquake loads have been taken into consideration in the design of project structures such as pumping and power plants.The location of check structures on the canal allows for hydraulic isolation ofthe fault- crossing repair.No assurance can be made that a significant seismic event would not cause damage to project structures,which could thereby interrupt the supply ofwater from the California Aqueduct. Integrated Water Resources Plan and Five-Year Supply Plan.MWD,its member agencies,sub-agencies and groundwater basin managers developed the MWD IRP that was adopted by the Board in January 1996 as a long-term planning guideline for resources and capital investments.The purpose ofthe MWD IRP was the development of a preferred resource mix to meet the water supply reliability and water quality needs for the region in a cost effective and environmentally sound manner.In 2004,the Board adopted an updated MWD IRP that reviewed the goals and achievements of the original MWD IRP, identified changed conditions for water resource development and updated the resource targets through 2025.A key component ofthe updated plan was the addition of a planning buffer.The planning buffer provided for the identification of additional supplies,both imported and locally developed,to address uncertainty in future supplies and demands from factors such as the level of population and economic growth which directly drive water demands,water quality regulations,new chemicals found to be unhealthful,endangered species affecting sources of supplies,and periodic and new changes in climate and hydrology.MWD is currently working on the next MWD lRP update,to evaluate supply reliability while incorporating changed conditions and new trends and managing uncertainties.It is expected to be completed in April 2010. In anticipation of ongoing and future water supply challenges resulting from a combination of drought conditions and regulatory restrictions on the operations of the SWP,MWD and its member agencies initiated the Five-Year Supply Plan (the "Plan")in April 2008.The Plan's objective is to identify implementable resources and conservation actions that would help the region manage water deliveries under regulatory restrictions on operations ofthe SWP and possible continued drought conditions for the next five years.The specific resources are divided into six areas:1)extraordinary conservation;2)local resources;3)Colorado River transactions;4)near-term Delta actions;5)State Water Project transactions; and 6)groundwater recovery.Since the Plan was initiated,the MWD Board approved the implementation ofthe Water Supply Allocation Plan (the "WSAP")at a Regional Shortage Level 2,which is intended to reduce total water deliveries to approximately 1.98 million acre-feet to the member agencies from July 2009 through June 2010.MWD has evaluated a set of potential resource options for the next five years. These options are estimated to yield 404,000 acre-feet ofadditional resources in 2009 and from 481,000 acre-feet to approximately 1.0 million acre-feet per year,inclusive ofconservation,such as the continued implementation ofWSAP,in future years ifsuccessfully implemented. 23 Additional MWD Water Supply Enhancements.MWD is currently pursuing voluntary water transfer and storage and exchange programs with the State,federal,public and private water districts and individuals. In November 2007,the MWD Board authorized purchases of up to 200,000 acre-feet of northern or central California transfer options.In addition MWD has entered into groundwater basin storage agreements with the Arvin-Edison Water Storage District and the Semitropic Water Storage District,an agreement with San Bernardino Valley Municipal Water District to coordinate the use of facilities and SWP supplies and groundwater banking and exchange transfer agreements with the Kern Delta Water District and the Mojave Water Agency. MWD faces various challenges in the continued supply of imported water to SDCWA and other member agencies.A description of these challenges as well as a variety of other operating information with respect to MWD is included in certain disclosure documents prepared by MWD.MWD has entered into certain continuing disclosure agreements pursuant to which MWD is contractually obligated for the benefit ofowners ofcertain ofits outstanding obligations,to file certain annual reports,notices ofcertain material events as defined under Rule 15c2-l2 and annual audited financial statements (the "MWD Information")with the Municipal Securities Rulemaking Board. MWD HAS NOT REVIEWED THIS OFFICIAL STATEMENT AND HAS MADE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED OR INCORPORATED HEREIN,INCLUDING INFORMATION WITH REGARD TO MWD.MWD IS NOT CONTRACTUALLY OBLIGATED,AND HAS NOT UNDERTAKEN,TO UPDATE SUCH MWD INFORMATION,FOR THE BENEFIT OF THE DISTRICT OR THE OWNERS OFTHE BONDS UNDER RULE 15c2-12. Historic and Projected Water Supply.As noted,the State of California has experienced drought conditions for several years,which have impacted the SDCWA's base allocation ofwater to the District. The District's base allocation ofpotable water is 43,162 acre feet.In 2009,SDCWA implemented an 8% reduction in the base allocation to its customers,resulting in an allocation to the District of 39,832 acre feet. At its peak in Fiscal Year 2007,the District purchased 41,909 acre feet of potable water from SDCWA. Of this amount,3,073 acre feet of potable water was used to provide water to the customers of the District's recycled water system.However,the District has developed additional sources of recycled water and no longer needs to purchase potable water to supplement the recycled system.This has resulted in a reduction ofpurchased water from SDCWA from a high of41 ,909 acre feet in fiscal year 2006/07 to 34,971 acre feet in fiscal year 2008/09,well below the current reduced allocation of 39,832 acre feet. Purchased water from SDCWA is expected to be maintained at approximately 18%below the reduced allocation and 22%below its highest demand year for the next several years. 24 Set forth below is a summary ofthe District's sources ofwater supply for the last seven Fiscal Years. (I) HISTORIC WATER SUPPLY IN ACRE-FEET PERYEAR Fiscal Year Produced Purchased Purchased Ending Reclaimed Reclaimed Potable June 30 Water Water Water Total 2003 1,117 0 34,539 35,656 2004 1,305 0 38,918 40,223 2005 (I)1,150 0 37,678 38,828 2006 1,234 0 40,946 42,180 2007 (2)1,263 653 41,909 43,825 2008 1,235 3,595 38,045 42,875 2009 844 (3)3,686 34,971 39,501 Rainfall in 2005 was significantly above average,resulting in decreased purchases of potable water and production ofreclaimed water. (2)After the District began purchasing reclaimed water from the City of San Diego in May of 2007,it was no longer necessary to purchase potable water for the reclaimed system to supplement the amount of produced reclaimed water.See "Water Supply -Service Area Water Supply -Recycled"above. (3)The treatment plant was not in operation for a total of74 days in fiscal year 2008/09 for planned maintenance. Source:Otay Water District. The District currently expects that demand for potable water may reach as high as 60,000 acre feet per year at buildout,potentially by the year 2040. In order to provide enough water to meet expected demand at buildout,the District continues to develop additional sources ofwater. Currently,the District is negotiating a long term purchase contract for a high quality potable supply from a private company that is developing an exclusive right with the Mexican government to install and operate a desalinization plant to be built in Rosarito,Baja California,Mexico.The plant is scheduled to be complete by late 2013 and initially produce 50,000 acre feet ofdesalinated water annually.In order to take delivery ofsuch water supply,the District will need to construct a conveyance system of3.2 miles of pipeline commencing at the international border,a pump station and a water treatment plant.The District expects that the conveyance system will take 3 years to construct.If constructed,it is expected that 24,000 acre feet of demand could be supplied by this source initially,as soon as late 2013.The supply could increase over time to meet expected growth in demand as additional development occurs in the District. Numerous permits will be required from the Federal and State government to transport the desalinated water across the international border and allow distribution in the Water System.The level of treatment after the water is delivered to the District's pipeline will be regulated by the California Department of Public Health. The District also continues to convert existing potable connections to the recycled water system when possible.In addition,the District anticipates converting a significant number of potable connections in the Otay Mesa area to the recycled system once the required pipelines are put in place,estimated to occur in 2012/13. 25 Set forth below is a summary of the District's projection of water sources for the current and five succeeding Fiscal Years and includes expected desalinated water purchases in the "Purchased Potable Water"column. PROJECTED WATER SUPPLY IN ACRE-FEET PERYEAR Fiscal Year Produced Purchased Purchased Ending Reclaimed Reclaimed Potable June 30 Water (1)Water Water (2)Total 2010 1,202 3,301 32,701 37,204 2011 1,202 3,373 32,117 36,692 2012 1,202 3,592 31,607 36,401 2013 1,202 3,834 32,287 37,323 2014 1,202 4,209 33,155 38,566 2015 1,202 4,596 34,157 39,955 (1)Maximum capacity for the treatment plant is 1,456 acre feet,but the District bases its projection of 1,202 acre feet on normal (efficient)capacity. (2)Purchases from SDCWA,includes raw water treated to potable level by the City of San Diego and the Helix Water District. Source:Otay Water District. The District makes no guarantee that the desalination plant will be constructed and if so,constructed in accordance with the timelines described herein.The District also provides no assurance that the transaction with the private company developing the facility will be completed as described herein. Capital Improvement Program The District boundaries encompass areas of San Diego County that experienced rapid growth between 2001 and 2007,and significant growth is expected in future years.The District currently serves a population of approximately 195,000.Ultimately,the District is projected to serve 277,000 people and it estimates an additional $350 million investment in capital assets will be required through ultimate buildout,over 20 years. The District has developed a six-year Capital Improvement Program (the "CIP")based on future water demands in its Service Area.The District reviews and updates the CIP at least annually based on an analysis ofthe potable and recycled water demands most recently projected by developers,demographics, and population estimates by the San Diego Association of Governments.Major capital improvements within the next six years are planned in order to provide facilities to deliver water to new customers and to acquire additional water and recycled water capacity.These facilities are categorized by the District into those improvements relating to the Water System (which includes reclaimed water)and the sewer system.Within each segregated operational area,the CIP is further separated into improvement categories -Expansion,Betterment and Replacement. 26 The table below summarizes the current six-year $174 million Capital Improvement Program for the Water System and the categories ofwork to be completed. Fiscal Year Ending June 30 ($OOO's) 2010 2011 2012 2013 2014 2015 Total Expansion $11,814,500 $15,188,600 $16,550,900 $20,826,000 $12,536,000 $5,329,000 $82,245,000 Betterment 12,016,100 5,902,900 14,323,100 19,908,000 14,244,000 1,740,000 68,134,100 Replacement 6,830,500 5,930,620 3,978,000 3,175,000 2,660,000 1,171,000 23,745,120 Total $30,661,100 $27,022,120 $34,852,000 $43,909,000 $29,440,000 $8,240,000 $174,124,220 The District has identified the timing and method of funding the capital improvements over the next six years.Each category of improvements is designed to be funded with operational net cashflow,bond proceeds,transfers between operational areas,other capital related charges,reserves or a combination of these sources.The District expects to fund these improvements with reserves,operating income, investment income,capacity fees and other fees,grants and additional financing.The District expects that additional financing may occur in 2013.In order to implement the Capital Improvement Program, the District anticipates that it will need to increase its rates as described herein (see "Water Charges" below).However,there is no guarantee that the District will implement such rate increases at the amount and at the time anticipated in its planning documents.See "Water Charges -Proposition 218." 27 Water Service Historical Water Use.Table No.1 shows the amount ofwater usage,connections and revenue generated from water and reclaimed water sales in the last five Fiscal Years,with estimates for 2009110.There have been over 1,372 new residential connections between Fiscal Years 2004/05 and 2008/09,an increase of 3%.Population has increased over 32%during this period from 148,000 to over 195,000,accounting for the significant increase in the amount ofwater usage. TABLE NO.1 CONNECTIONS AND WATER SALES VOLUME AND REVENUE Fiscal Years 2004/05 through 2009110 Estimate 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 (5) Potable Residential -Volume (ccf)(I)8,478,645 9,228,713 9,713,112 9,402,189 8,881,191 8,713,200 Residential -Connections 42,059 42,763 43,292 43,342 43,431 43,441 Residential-Sales Revenue (2)$13,705 $16,784 $18,695 $17,775 $17,853 $22,318 All Others -Volume (ccf)5,727,645 5,875,415 6,346,352 6,173,480 6,042,570 5,791,700 All Others -Connections 3,983 4,088 4,168 4,249 4,257 4,260 All Others -Sales Revenue (2)$11,041 $11,191 $12,002 $12,261 $12,523 $15,552 Total Potable Connections 46,042 46,851 47,460 47,591 47,688 47,701 Annual Increase In Connections 1,459 809 609 131 97 13 Reclaimed (3) Reclaimed -Volume (ccf)1,453,271 1,729,000 1,920,287 2,001,137 1,991,682 1,985,500 Reclaimed -Connections 483 558 588 626 671 683 Reclaimed -Sales Revenue (2)$2,655 $3,066 $3,886 $5,182 $5,499 $6,909 Annual Increase in Connections 135 75 30 38 45 12 Total Total Volume (ccf)15,659,561 16,830,128 17,979,751 17,576,806 16,915,448 16,490,400 Total Connections 46,525 47,409 48,048 48,217 48,359 48,384 Total Sales (2)$27,401 $31,041 $34,583 $35,218 $35,875 $44,388 Fixed Charges (4)$11,947 $12,715 $14,023 $15,535 $16,524 $19,298 Total Revenue $39,348 $43,756 $48,606 $50,753 $52,399 $64,077 (I)ccfrefers to a measurement of 100 cubic feet (1 cubic foot =7.48 gallons). (2)Revenue in $Thousands. (3)The District receives a credit from SDCWA and MWD for every acre-foot ofreclaimed water sold.Beginning in May 2007,the District stopped purchasing potable water to supplement the reclaimed water purchases for the reclaimed system and since that time the credit has been received on all reclaimed water sold. (4)Includes fixed charges,energy charges and delinquency collections on both potable and reclaimed water sales. (5)Based on Fiscal Year 2009/10 Budget.The District projects that actual potable sales volume in 2009110 will be 8.4%less than budgeted,and actual recycled water sales volume will be 1.2%less than budgeted. Source:Otay Water District. 28 Table No.2 shows the 10 largest water users for Fiscal Year 2008/09. TABLENO.2 TEN LARGEST CUSTOMERS BY WATER SALES REVENUES (I) Year ended June 30,2009 %of Usage Water %ofTotal in Hundred System Water Sales Water Sales Customer Business Type Cubic Feet Consumption Revenues Revenues City ofChula Vista Public 769,396 4.5%$2,083,668 4.0% Otay River Const! Southbay Expressway (2)Construction 261,338 1.5 1,044,277 2.0 County ofSan Diego Public (3)403,858 2.4 1,023,342 2.0 State ofCalifornia Public (4)342,056 2.0 864,858 1.6 Eastlake 111 Business/ Community Association Irrigation (5)214,865 1.3 539,324 1.0 Sweetwater School District Public 163,519 1.2 477,150 0.9 Eastlake County Club Irrigation (5)204,961 1.0 458,259 0.9 Steele Canyon Irrigation 156,090 1.0 370,516 0.7 Salt Creek Partners LLC Irrigation 173,839 0.9 357,528 0.7 Chula Vista School District Public 113,525 0.7 329,847 0.6 2,803,447 16.5%$7,548,770 14.4% (I)Includes both potable and reclaimed water sales and excludes fixed charges. (2)During construction of the 125 Southbay Expressway,water usage was categorized as "construction"use. Construction use is being replaced by landscape irrigation and the District expects that usage will remain constant with the amounts shown above. (3)George F.Bailey Detention Facility. (4)Richard 1.Donavan Correctional Facility. (5)Reclaimed water use. Source:Otay Water District. Water Charges Water Service Rates.The District held a noticed public hearing on August 24,2009 and approved a 19.9%rate increase that took effect for water usage beginning September 1,2009.This approval includes authorization to raise rates by up to 10%per year for the next five years for costs other than SDCWA and MWD rate increases.The approval includes authorization to pass through all such SDCWA and MWD increases without limitation during the five year period.The Otay Board of Directors will continue to take action each year to set rates,however they are not expected to need to hold another Proposition 218 hearing for four years.See "Proposition 218"below. The District,based on its internal rate model and the need to fund the CIP,anticipates that it will need to increase its rates by approximately 12.2%in each of the next two years and 3%in each of the following three years.The largest component ofthe required rate increases is related to the increase in purchased water costs from SDCWA. 29 The water rate structure uses both fixed and variable charges.All customer classes are charged the "monthly fixed charge"based on the meter size as shown on Table No.3.The commodity or consumption rates as outlined in Table No.4 are variable in that they are charges per unit.The District also uses an inclining block rate structure for the commodity rate.As a result,each class of customer has a range of rates and for certain classes -commercial,irrigation,and recycled -rates are further differentiated based on meter size.Residential customers (also called domestic customers)have a range of rates beginning at $2.10 and up to $4.21 based on the number of units used.The average residential customer uses 15 units of water.One unit ofwater is equal to 100 cubic feet ofwater (one cubic foot of water equals 7.48 gallons).Customers outside the District and tanker trucks are charged two times the commodity rate. TABLENO.3 MONTHLY FIXED CHARGES As of October 1,2009 Meter Size 3/4" I" 1-1/2" 2" 3" 4" 6" 8" 10" Fire Source:Otay Water District. Domestic Service Monthly Fixed Charge $14.58 18.52 28.37 40.18 71.68 107.13 205.59 323.73 461.57 30.11 TABLE NO.4 COMMODITY RATES As of October 1,2009 MWD/SDCWA Additional Monthly Fixed Charge $9.77 16.28 32.61 52.15 104.30 162.98 325.92 521.51 749.61 Customer Class:Domestic Customer Class:Multi Residential Units (I)Charge Per Unit Units (I)Charge Per Unit 1-10*$2.10 0-4 $2.08 11-22 2.73 Over 5-8 2.70 Over 23 4.21 Over 9 4.15 •Customers whose total consumption is 10 units or less per month shall receive a benefit ofa lower rate for units 1-5.These units will be billed at a rate of$1.35 per unit. 30 Less Than 10"Meter: 1-173 Units 174-831 Units Over 832 Units Customer Class:Commercial 10"Meter or Greater: 0-7,426 Units 7,427-14,616 Units Over 14,617 Units Customer Class:Irrigation Charge Per Unit $2.22 2.27 2.31 3/4"-1"Meter: 1-49 Units 50-132 Units Over 133 Units 1-1/2"-2"Meter: 1-144 Units 145-355 Units Over 356 Units 3"and Up Meter: 1-1,044 Units 1,045-8,067 Units Over 8,068 Units Charge Per Unit $3.02 3.08 3.14 3/4"-1"Meter: 1-42 Units 43-97 Units Over 98 Units 1-1/2"-2"Meter: 1-168 Units 169-402 Units Over 403 Units Customer Class:Recycled 3"-4"Meter: 1-403 Units 404-820 Units Over 821 Units 6"Meter: 1-7,916 7,917-16,357 Over 16,358 Charge Per Unit $2.58 2.62 2.67 (I)1unit equals 100 cubic feet ofwater. Source:Otay Water District. Additionally,commercial agriculture users participating in MWD or SDCWA conservation programs are eligible to receive discounts from the base agriculture rate.As noted above,the District has estimated that future rate increases will be necessary to implement the current six-year CIP.Additionally,the rates, charges and fees may be increased each year to pass-through increases in costs imposed by SDCWA or MWD not already estimated to occur (approximately 84%of the projected rate increases over the next five years relate to estimated increases in SDCWA and MWD charges to the District). 31 Table No.5 compares average residential water rates charged by the District with surrounding cities and other water agencies in San Diego County. TABLE NO.5 COMPARISON OF AVERAGE RESIDENTIALWATER RATES AS OF JANUARY 1,2010 City/Water Agency Oceanside Lakeside San Dieguito Water District Helix WD Olivenhain Water District Vallecitos Water District D Poway Otay Water District Yuima Water District Padre Dam Water District -West Carlsbad Valley Center Santa Fe Padre Dam Water District -East San Diego Sweetwater Water District Vista Escondido Rincon Ramona Rainbow Water District Fallbrook Del Mar Average Rates (I) $48.63 53.07 57.27 59.9 60.10 60.60 62.15 63.79 64.06 65.50 67.27 67.38 68.98 71.23 71.28 73.15 74.37 76.35 77.81 78.20 80.48 82.66 89.97 (1)Average rates based on assumed residential use of15 ccfofwater monthly. Source:Otay Water District. Delinquencies.Accounts receivable that have not been paid in over 60 days represent less than 0.6%of the District's annual water sales.Accounts receivable between 30 to 60 days delinquent in payment have averaged 0.9%of the District's annual water sales for the last two years.In the last three years,the District has written offless than $200,000 a year in uncollectible accounts. The District has implemented a number of changes over the past few years which are significant in improving the management ofthe accounts receivables.The collection process is more efficient with the introduction of automatic dialers making it possible to address collections of smaller balances.The District has improved the collection process related to properties in foreclosure by collecting deposits and locking all vacant properties.The District has also provided new convenient payment options by introducing payments by phone and web.The District has increased the availability of account information by introducing 24/7 Interactive Voice Response.In addition,with the improvements in online banking systems,the turnaround time on payment processing has decreased from 10 to 2 days. 32 These improvements implemented over the last few years have all assisted the District in better managing its accounts receivables.The District continues to be focused on finding new ways to assist customers in managing their accounts.Some of the improvements currently being implemented are electronic bill presentation,recurring payments via credit card,and the ability to make water payments at any retailer using the same electronic network used by the District's bank. Other Charges.The District charges an energy charge of $0.038 per 100 feet of elevation for all connections over a 450 foot elevation.Betterment charges in certain areas ranging from $.07 to $.26 per unit to pay for reservoirs,pump stations and other infrastructure.The District also applies additional water development charges in some areas in the NOlih District. Capacity Fees and Meter Fees.The District charges capacity fees to connect to the Water System. Current capacity fees are $5,432 for a single family residential connection,increased quarterly according to the Engineering News-Record index.The District also charges a meter fee for the materials and installation cost ofa meter.The meter fees range from $264 for a single family residence to $5,507 for a 10"meter. Availability Fees.The District levies and collects annual standby availability charges.Current legislation provides that any availability charge in excess of $10 per acre shall be used only for the purpose of the improvement district for which it was assessed.Therefore,availability fees shown in Table No.9 and Table No.10 include only the first $10 of availability fees.To the extent the availability fees in excess of $10 per acre are authorized for operational purposes,they are included in Table No.9 in "Connection and Other Fees"and in Table No.10 in "Other Income." Annexation Fees.When service is requested outside the boundaries of an improvement district,the land to be serviced is annexed and an annexation fee is charged by the District.Current annexation fees are $1,60 1 for single family residential connections and are adjusted quarterly according to the Engineering News-Record index. Fee Updates.The District is in the process of updating its capacity and annexation fees.The new fee schedule may be effective in July 2010.The District is considering adding a New Water Supply fee component to the capacity fee,as well adjusting the fee for current facilities costs.The capacity fee is expected to increase significantly as a result. Annexation fees are currently charged for new service that may be within the District boundaries,but outside ofan improvement district within the District boundaries.The new annexation fees are expected to apply only to properties outside the District boundaries. As a result ofthe change in fee structure,future capacity fees and annexation fees may not be comparable to amounts shown in prior years. Proposition 218.On November 5,1996,California voters approved Proposition 218,the "Right to Vote on Taxes Act."Proposition 218 added Articles XIIIC and XIIID to the State Constitution,which contain a number ofprovisions affecting the ability ofthe District to levy and collect both existing and future taxes, assessments,fees and charges.Proposition 218 also extends the initiative power to reducing or repealing any local taxes,assessments,fees and charges.This extension of the initiative power is not limited to taxes,assessments,fees and charges imposed on or after November 6,1996,the effective date of Proposition 218,and could result in retroactive repeal or reduction in any existing taxes,assessments,fees or charges,except those which are pledged to the repayment of debt.If such provisions were held to apply to the District's fees or charges and a repeal or reduction in District fees or charges were to occur, and it was held that any such taxes,assessments,fees or charges were not pledged to any debt repayment, the District's ability to pay debt service on the Bonds could be adversely affected. 33 Article XmD conditions the imposition or increase of any "fee"or "charge"upon there being no written majority protest after a required public hearing and,for fees and charges other than for sewer,water or refuse collection services,voter approval.Article xmD defines "fee"or "charge"to mean levies (other than ad valorem or special taxes or assessments)imposed by a local government upon a parcel or upon a person as an incident of the ownership or tenancy of real property,including a user fee or charge for a "property-related service."One ofthe requirements ofArticle xmD is that before a property related fee or charge may be imposed or increased,a public hearing upon the proposed fee or charge must be held and a mailed notice sent to the record owner of each identified parcel of land upon which the fee 01' charge is proposed for imposition.In the public hearing if written protests ofthe proposed fee 01'charge are presented by a majority of the owners of affected identified parcel(s),an agency may not impose the fee or charge. Following the enactment of Proposition 218 in 1996,appellate court cases and an Attorney General opinion initially indicated that fees and charges levied for water and wastewater services are not property- related fees and charges and thus are not subject to the above described requirements of Proposition 218 regarding notice,hearing and protests in connection with any increase in the fees and charges being imposed. In a decision rendered in February,2004,the California Supreme Court in Richmond et at.v.Shasta Community Services District,32 Cal.4th 409,upheld a Court of Appeals decision that water and wastewater connection fees were not property related fees or charges subject to Article XmD,while at the same time stating in dicta that fees for ongoing water and wastewater service through an existing connection were property related fees and charges. On March 23,2005,the California Fifth District Court of Appeal published Howard Jarvis Taxpayers Association v.City of Fresno,concluding that in lieu fees charged as a component of water and wastewater utility service charges are subject to the requirements of Proposition 218.The ruling in City of Fresno relies in part on the Richmond decision's dicta and appears to conflict with Apartment Association ofLos Angeles County,Inc.v.City of Los Angeles,24 Cal.4th 830 (2001),in which the California Supreme Court ruled that the property-related fee provisions ofProposition 218 apply only to fees triggered by property ownership alone and not by voluntary conduct of the property owner,such as consuming utility services.The City of Fresno decision is final,as review has been denied by the California Supreme Court. On July 24,2006,the California Supreme Court stated in Bighorn-Desert View Water Agency v.Beringson that charges for ongoing water delivery are property related fees and charges within the meaning of Article XIIID and are further subject to the provisions of Section 3 of Article Xmc.This decision reversed the July 2004 California Appellate Court decision (Bighorn-Desert View Water Agency v. Beringson (180 Cal.App 4th 890))which opined that the costs ofwater services are not property related or incidents of property ownership because they are based on consumption and not on property ownership. The California Supreme Court held that such water service charges may be reduced or repealed through a local voter initiative pursuant to Article XIIIC of the California Constitution.The Supreme Court stated that it was not holding that the initiative power is free ofall limitations and was not determining whether the initiative power is subject to the statutory provision requiring that water service charges be set at a level that will pay debt service on bonded debt and operating expenses.However,the Supreme Court stated in its opinion that water providers may determine rates and charges upon proper action by the governing body and that the legislative body may increase a charge which was not affected by initiative or impose an entirely new charge. As a result of this case,there can be no assurance that Proposition 218 will not limit the ability of the District to impose,levy,charge and collect increased fees and charges for water services. On August 24,2009,the District approved rate increases effective for water usage beginning September 1,2009 following mailing of notice and a public hearing held pursuant to Article xmD of the 34 Constitution.This approval includes authorization to raise rates by up to 10%per year for the next five years for costs other than SDCWA and MWD rate increases.The approval includes authorization to pass through all such SDCWA and MWD increases without limitation during the five year period.The Otay Board of Directors will continue to take action each year to set rates,however they are not expected to need to hold another Proposition 218 hearing for four years. Taxes The County levies a 1%ad valorem tax on behalf of all taxing agencies in the County,including the District.All property is assessed using full cash value as defined by Article XIIIA of the State Constitution.State law provides exemptions from ad valorem property taxation for certain classes of property such as churches,colleges,non-profit hospitals and charitable institutions. The taxes collected are allocated to taxing agencies within the County,including the District,on the basis of a formula established by State law enacted in 1979 and modified from time to time.Under this formula,the County and all other taxing entities receive a base year allocation plus an allocation on the basis of"situs"growth in assessed value (due to new construction,change ofownership,or a 2%inflation allowance allowed under Article XIIIA of the State Constitution)prorated among the jurisdictions which serve the tax rate area within which the growth occurs.Tax rate areas are groups of parcels which are taxed by the same taxing entities.Cities,counties,special districts and school districts share the growth of "base"revenues from each tax rate area.Assessed valuation growth is cumulative,Le.,each year's growth in property value becomes part ofeach District's allocation in the following year. The availability of revenue from growth in the tax base may be affected by the establishment of redevelopment agencies which,under certain circumstances,may be entitled to revenues resulting from the increase in certain property values.As ofthe date ofthis Official Statement,a portion ofthe District's tax base is within a redevelopment plan area. California law exempts $7,000 of the assessed valuation of an owner-occupied dwelling but this exemption does not result in any loss ofrevenue to local agencies since an amount equivalent to the taxes which would have been payable on such exempt values is made up by the State. Under AB 454 (Statutes of 1987,Chapter 921),the State reports to each county auditor-controller only the county-wide unitary taxable value of State-assessed utility property,without an indication of the distribution of the value among tax rate areas.The provisions of AB 454 apply to all State-assessed property except railroads and non-unitary properties,and do not constitute an elimination of a revision of the method of assessing utilities by the State Board of Equalization.AB 454 allows generally valuation growth or decline ofState-assessed unitary property to be shared by all jurisdictions within a county. From time to time,legislation has been considered as part ofthe State budget to shift the share ofthe 1% ad valorem property tax collected by counties from special districts to school districts or other governmental entities (the "ERAF Shift").While legislation enacted in connection with the Fiscal Year 1992/93 State budget shifted approximately 35%of many special districts'shares of the countywide 1% ad valorem tax,the share ofthe countywide 1%ad valorem tax pledged to debt service by special districts was exempted.None of the State budgets enacted since Fiscal Year 1992/93 have permanently reallocated additional portions ofthe special districts'shares ofthe countywide 1%ad valorem tax. However,the State Budgets for Fiscal Years 2003/04 through 2005/06 reallocated approximately $1.30 billion of the 1%ad valorem property tax from local government to schools.Of that amount, approximately $350 million was reallocated from special districts.The District estimates that this resulted in a reduction of approximately 40%in Taxes as a result of the ERAF Shift in those years.On July 24,2009,the California legislature approved amendments to the 2009/10 Budget involving 30 separate pieces oflegislation to close the $26.3 billion shortfall.The Governor signed the budget plan on July 28,2009.Total general fund spending in fiscal year 2009/10 will be more than $84 billion,down 35 from nearly $91.7 billion in fiscal year 2008/09 and nearly $103 billion in fiscal year 2007/08.The budget amendments combined deep spending cuts,borrowing from local governments and accounting maneuvers. The approved amendments include borrowing from local governments and various accounting maneuvers to generate additional revenues in the 200911 0,including (among many others)$2 billion borrowed from cities',counties'and special districts'property tax collections under provisions of Proposition lA (approved by the voters in 2004),which the State must repay with interest within three years. The accounting shifts rely on the assumption that an economic recovery will be well underway in the next fiscal year and some economists believe that they produce a significant budget shortfall next year. Additionally,borrowing or taking ofcertain revenues from local governments has resulted in litigation. The declaration by the State of California of a fiscal emergency under Proposition lA,as a part of the State's 2009-10 budget adoption,authorized the State to withhold the equivalent of 8%of fiscal 200911 0 property related tax revenues from cities,counties and special districts.The tax revenues are required to be repaid by the State with interest within three years.The District's Proposition lA receivable was $267,197.As a part of the budget package,local governments were given the oppOltunity to sell their Proposition lA receivable through financing offered by California Communities,a joint powers authority sponsored by the League of California Cities and California State Association of Counties.California Communities issued bonds in November 2009,securitizing the future payments by the State and remitting the proceeds of the bonds to the local governments who opted to participate in the securitization.The District opted to participate in the securitization program and has received 50%of Proposition lA receivable as ofJanuary 15,2010.The remaining half will be received on May 3,2010. There can be no assurance that the share ofthe 1%ad valorem property tax the District currently receives will not be reduced further or deferred or delayed pursuant to State legislation enacted in the future to address future budget deficits.See "Historical and Projected Taxes,Net Revenues and Debt Service Coverage"herein for historic and projected receipts ofTaxes. Personnel The District currently has 166 full-time budgeted positions.The OWD Employee Association (the "Union")represents 124 full-time and 1 part-time employees as a collective bargaining unit.The District has not experienced any strikes and continues to have positive labor relations which includes a negotiated five-year Collective Bargaining Agreement that ends on June 30,2013. The District provides retirement benefits for its employees through a contractual agreement with the California Public Employees'Retirement System ("CaIPERS").Active members in the District's benefit pension plan are required to contribute 8%of their annual covered salary.The District has elected to contribute 7%on behalfof its employees.The District is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members.The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration.The required employer contribution rate for the fiscal year ended June 30,2009 was 19.369%.The contribution requirements of the plan members are established by State statute,and the employer contribution rate is established and may be amended by CaIPERS.Due to significant investment losses,CalPERS will be significantly increasing contribution rates over the next several years.For the Fiscal Year ended June 30,2009,the District's annual pension costs and actual contribution was $2,150,579,and,for Fiscal Year ending June 30,2010,the District's annual pension cost and actual contribution is expected to be $2,240,538,a 4.18% increase.An increase ofO.674%is expected for 2010111 and a 1.311%increase is expected for 2011/12. The required contribution for Fiscal Year 2009110 was determined as part ofthe June 30,2007 actuarial valuation,pursuant to which the District had an unfunded actuarial accrued liability of approximately $14.5 million as of June 30,2007.As patt ofthe June 30,2008 actuarial valuation,CalPERS estimates the District's unfunded actuarial accrued liability will not change significantly as ofJune 30,2009 or June 36 30,2010.Unfunded liabilities are amortized as a level percentage of pay over a closed 20-year period. Gains and losses that occur in the operation ofthe plan are amortized over a rolling period,which results in an amortization of 10%of unamortized gains and losses each year.If the plan's accrued liability exceeds the actuarial value of plan assets,then the amortization payment of the total unfunded liability may not be lower than the payment calculated over a 30-year amortization period. In addition to the pension benefits described above,it is the District's practice and policy to provide certain life insurance and health care benefits ("Other Post Employment Benefits,or OPEB")for eligible retired employees,directors and eligible dependents.These benefits vary based on the hire date of the employee.As of the last actuarial projection,dated June 30,2009,the District's Actuarial Accrued Liability for OPEB benefits was $10,070,000. The District has chosen to fund this liability by investing funds with the California Employers'Retiree Benefit Trust Fund (CERBT),an agent multiple-employer plan administered by California Public Employees'Retirement System (CaIPERS),which acts as a common investment and administrative agent for participating public employers within the State of California.The District's annual OPEB cost (expense)is calculated based on the annual required contribution of the employer (ARC),an amount actuarially determined in accordance with the parameters ofGASB Statement 45.The ARC represents a level of funding that,if paid on an ongoing basis,is projected to cover the normal annual cost.Any unfunded actuarial liability (or funding excess)is amortized over a period not to exceed thirty years.The current ARC rate is 2.9%ofthe annual covered payroll. Based on the District's financial statements at June 30,2009,the amount actually contributed to the CERBT and changes in the District's net OPEB obligation total $6.2 million.In addition,the District's Board has designated approximately $3.9 million of its reserves towards the remaining liabilities.In accordance with GASB Statement 45,and the requirements of the CERBT,the District will periodically update the actuarial projections and continue to fund the resulting ARC on an annual basis. Insurance General Liability and Property Damage The District is exposed to various risks of loss related to torts,theft,damage and destruction of assets, errors and omissions,and natural disasters.Beginning in July 2003,the District began participation in an insurance pool through Special Districts Risk Management Authority (SDRMA).Coverages through SDRMA are as follows:property coverage -$350 million/occurrence with replacement cost for scheduled property;$100 million for boiler and machinery;$200 million for workers'comp.;$500,000 for personal liability coverage for board members;$400,000 for employee dishonesty coverage;$750,000 for uninsured/underinsured motorists;and $10 million per occurrence for each of the following types of coverage,auto liability,public officials and employees errors,employment practices liability,employee benefits liability,and general liability. Separate financial statements for SDRMA may be obtained at:Special District Risk Management Authority,1112 I Street,Suite 300,Sacramento,California 95814. Workers'Compensation Through SDRMA,the District is insured up to $200 million Statutory Workers'Compensation and $5 million in Employer's Liability with a Zero Member Deductible.SDRMA currently has a pool of 328 agencies in the Workers Compensation Program. 37 Health insurance Prior to 2008,the District maintained a self-insurance program for health claims.Beginning in January 2008,the District began providing health insurance through SDRMA covering all of its employees, retirees,and other dependents.Prior estimated accrued claims outstanding at June 30,2008 amounted to $137,029,and all remaining claims were paid as ofDecember 31,2008.SDRMA is a self-funded pooled medical program administered in conjunction with the California State Association ofCounties (CSAC). District Reserves and Investment Policy As of June 30,2009,the District had approximately $78.7 million in cash and investments,of which the Board has designated $47.9 million for capital projects and $8.4 million for insurance.The District's reserves are not pledged to and do not secure the District's obligation to make Installment Payments. In accordance with State of California law,the District Board of Directors has approved an investment policy (the "Investment Policy")which complies with Sections 53601 through 53630 ofthe Government Code of the State of California providing legal authorization for the investment or deposit of funds of local agencies.All investments of the District conform to the restrictions of those laws.The District's investments by category and their respective market value and book value as of December 31,2009 are set forth in Table 5 below.For additional information relating to the District's investments,see "APPENDIX B -DISTRICT AUDITED FINANCIAL STATEMENTS,"Note 2. TABLE NO.6 SUMMARY OF INVESTMENTS As of December 31,2009 Investments Federal Agency Issues -Callable Corporate Notes Certificates ofDeposit -Bank Local Agency Investment Fund (LAIF) San Diego County Pool Source:Otay Water District. Market Value $31,999,380 4,150,580 3,079,108 8,832,213 22,749,327 Book Value $31,998,003 4,029,129 3,079,108 8,823,849 22,757,180 %ofPortfolio 45.27% 5.70 4.36 12.48 32.69 The Investment Policy may be changed at any time at the discretion of the District (subject to the State law provisions relating to authorized investments)and as the California Government Code is amended. Any exception to the Investment Policy must,however,be formally approved by the Board of Directors of the District.There can be no assurance the State law or the Investment Policy will not be amended in the future to allow for investments which are currently not permitted under such State law or the Investment Policy,or that the objectives ofthe District with respect to investments will not change. 38 Outstanding Indebtedness of the District The District had outstanding indebtedness as ofDecember 31,2009 as shown in Table No.7. TABLE NO.7 OTAY WATER DISTRICT OUTSTANDING INDEBTEDNESS As ofDecember 31,2009 Category of Original Amount Final Indebtedness Issue Outstanding Maturity (1)1996 Certificates ofParticipation $15,400,000 $11,700,000 2026 (2)2004 Refunding Certificates ofParticipation 12,270,000 9,790,000 2023 (3)2007 Certificates ofParticipation 42,000,000 40,400,000 2036 (4)2009 General Obligation Refunding Bonds 7,780,000 7,780,000 2022 (5)State Water Resources Control Board Note 701,516 2012 (l)In June 1996,the District issued its 1996 Variable Rate Demand Certificates of Participation to provide funds for the design,acquisition,construction and equipping of various water and water- related facilities and an administration building for use in connection with the administration of the District.The 1996 Certificates are payable from Installment Payments which are secured by a pledge ofand lien on Net Revenues and Taxes on a parity with the Installment Payments securing the Certificates.Interest is payable at a variable rate of interest,and the interest rate at February I,2010 was 0.25%and was 0.15%at December 31,2009.At current rates,debt service is expected to be $400,000 to $450,000 each year for the next several years.However,the annual installment payments are estimated in the projections at approximately $980,000 based on the current 25-Year Revenue Bond Index of4.99%. (2)In August 2004,the District issued its 2004 Revenue Refunding Certificates of Participation to defease its outstanding 1993 Certificates ofParticipation.The 2004 Certificates are payable from Installment Payments which are secured by a pledge ofand lien on Net Revenues and Taxes on a parity with the Installment Payments securing the Certificates.Annual installment payments are approximately $933,000. (3)In March 2007,the District issued its 2007 Revenue Certificates ofParticipation to provide funds for the design,construction and equipping oftwo 10 million gallon reservoirs and various water- related facilities.The 2007 Certificates are payable from Installment Payments which are secured by a pledge of and lien on Net Revenues and Taxes on a parity with the Installment Payments securing the Certificates.Annual installment payments are approximately $2,501,000. 39 (4)Voters within Improvement District No.27 of the District authorized $100 million general obligation bonds in 1989.The District issued $11 ,500,000 general obligation bonds in 1992 and refinanced the bonds in 1998 and again in 2009.Annual debt service is approximately $764,000. The District also has approximately $29 million in general obligation bonds authorized between 1960 and 1978 for various Improvement Districts throughout the District,but unissued.The general obligation bonds are payable from ad valorem property tax revenues,which are not a part ofTaxes which secure the Installment Payments.The District has no current plans to issue any of the authorized but unissued general obligation bonds. (5)The State Water Resources Control Board Note bears interest at 3.5%and is payable in annual installments of$366,325.This note has no lien on Net Revenues and Taxes but is payable by the District from any available source. Source:Otay Water District. 40 Historical Operating Results The following table summarizes the Statement of Net Assets included in the District's audited financial statements for the last five Fiscal Years.The audited financial statements of the District for the Fiscal Year ended June 30,2009 are attached hereto as "APPENDIX B"and should be read in their entirety. TABLE NO.8 OTAY WATER DISTRICT NET ASSETS For the Fiscal Year Ended June 30 2005 2006 2007 2008 2009 ASSETS Current Assets: Cash and Cash Equivalents $3,473,662 $13,755,907 $8,048,633 $23,351,911 $50,823,237 Restricted Cash and Cash Equivalents 21,053,829 11,191,213 3,753,983 1,760,631 Investments 73,376,529 62,596,513 68,912,864 60,682,507 26,169,080 Restricted Investments 19,975,538 Accounts Receivable 7,105,484 6,808,999 8,675,458 7,689,720 8,029,609 Accrued Interest Receivable 82,483 818,798 1,559,081 715,900 319,186 Restricted Accrued Interest Receivable 506,678 Taxes andAvailability Charges Receivable 362,976 413,000 Restricted Taxes and Availability Charges Receivable 322,438 318,090 443,854 174,219 190,151 Inventories 620,119 592,426 633,697 711,240 816,865 Prepaid Expenses and Other Current Assets 341,686 664,133 1.164,300 1,908028 976,045 Total Current Assets $106882908 $85554866 $120604638 $99350484 $89497 804 Non-Current Assets: Restricted Assets: Net OPEB Obligation $$$$5,649008 $6.204,876 Total Restricted Assets:$$$$5,649008 $6.204,876 Deferred Bond Issuance Costs $586,950 $555,550 $1,254,821 $1,240,166 $1.142,762 Capital Assets: Land $12,215,546 $12,494,062 $12,971,479 $13,025,364 $13,402,840 Construction in Progress 45,144,448 58,869,241 40,300,055 42,338,220 18,280,278 Capital Assets,Net ofDepreciation 305,120,717 325,624281 370989434 391.350,813 422,369 157 Total Capital Assets,Net of Depreciation $362.480711 $396987584 $424,260,968 $446,714,397 $454,052,275 Other Non-Current Assets 307,795 283,440 235,694 Total Non-CurrentAssets $363375456 $397826574 $425751483 $453,603571 $461399913 Total Assets $470258364 $483381440 $546356121 $552954055 $550 897717 Continued on next page. 41 Source:Otay Water District Financial Statements. 42 Historical Debt Service Coverage Table No.9 below sets forth historical Taxes and Net Revenues and Debt Service Coverage for the last five fiscal years. TABLE NO.9 HISTORICALTAXES AND NET REVENUES (in 'OOO's)AND DEBT SERVICE COVERAGE for the fiscal year ended June 30 2005 2006 2007 2008 2009 Number ofNew Connections 1,594 884 639 171 141 Revenues: Water Sales $39,348 $43,756 $48,606 $50,809 $52,399 Connection Fees 6 1,358 1,540 1,481 1,522 Other Income 821 784 874 1,855 1,938 Availability Fees (I)219 558 706 688 575 Annexation Fees 2,545 1,257 2,120 526 392 Capacity Fees 9,131 6,715 8,028 1,962 1,851 Investment Earnings 2,052 3,174 4.349 3,947 --.2..,ill Total Revenue $54,122 $57,602 $66,223 $61,268 $60,834 Operation and Maintenance Costs: Water Purchases $21,988 $25,460 $27,494 $28,187 $29,310 Utilities 2,012 2,114 2,419 2,550 2,842 Payroll 12,067 12,885 13,980 16,488 16,391 Administrative 4,411 4,797 6,156 6,815 6,866 Materials and Maintenance 2,863 2,264 2,365 2,381 1,792 Repairs and Replacement (2)124 Total Operation and Maintenance Costs $43,465 $47,520 $52,413 $56,421 $57,201 Net Revenues $10,657 $10,082 $13,810 $4,847 $3,633 Taxes $1,332 $1,338 $2,930 um $3,430 Taxes and Net Revenues $11,989 $11,420 $16,740 $8,127 $7,063 Debt Service 1996 Installment Payments $890 $760 $757 $651 $542 2004 Installment Payments 946 948 923 929 928 2007 Installment Payments 558 1,721 2,491 Letter ofCredit 67 67 66 ---XL __6_3 Total Debt Service $1,903 $1,775 $2,304 $3,368 $4,024 Coverage Ratio 630%643%727%241%176% (1)Includes only water availability charges not exceeding $10 per acre per year.To the extent such fees over $10 per acre are authorized for operational purposes,they are included in "Other Income," (2)In prior years,certain repair and replacement costs had been capitalized,but the District does not expect that practice to continue.These costs in prior years have been included in Table No,9 for comparison purposes with future years shown in Table No.10. Source:Otay Water District. 43 "l Projected Debt Service Coverage The projections of Revenues and the corresponding Taxes and Net Revenues shown in Table No.10 are based on the assumptions shown below.The District believes the assumptions upon which the projections are based are reasonable;however,some assumptions may not materialize and unanticipated events and circumstances may occur (see "RISK FACTORS").To the extent that the assumptions are not actually realized,the Agency's ability to timely make the Installment Payments may be adversely affected. Following is a discussion ofassumptions used in the projection ofRevenues,Net Revenues and Taxes: (a)Potable connections in equivalent dwelling units are projected to increase as follows for an overall 9%increase during the next six year period and recycled connections are also projected to increase 29.3%during the next six year period as follows. Potable System Recycled System Number ofMeters (EDU)%Increase Number ofMeters (EDU)%Increase ( 2010 154 0.2%110 3.0% 2011 155 0.2%82 2.2% 2012 289 0.4%124 3.2% 2013 1,505 2.2%150 3.8% 2014 1,920 2.7%261 6.4% 2015 2,210 3.0%343 7.8% (b)Water sales volume (in acre feet)is projected as follows.The District is projecting an 8.4% decrease in potable water sales from originally budgeted amounts for 200911 0 due to conservation efforts and economic conditions and a 1.2%decrease in recycled water sales from originally budgeted amounts for 200911 O.The District is also projecting some future decreases in potable water sales as a result offurther conservation. Potable System Recycled System Total 2010 30,499 4,503 35,002 2011 30,302 4,503 34,805 2012 29,283 4,602 33,885 2013 29,927 4,930 34,857 2014 30,735 5,246 35,981 2015 31,657 5,655 37,312 (c)Water rates are projected to increase 12.2%on September 1,2010 and January I,2012 and 3% annually thereafter,(see "Water Charges -Proposition 218"herein). (d)Capacity and annexation fee rates are estimated to increase 3%in each year from existing rates based on the projected Engineering News-Record index increases.Revenue from these fees will also increase as the number of connections increase as shown in (a)above.The amounts shown do not reflect changes that may result from the update of these fees.See "OTAY WATER DISTRICT -Water Charges -Fee Updates." (e)Water availability charges included in Availability Fees are limited to an amount not exceeding $10 per acre per year.To the extent the water availability charges exceeding $10 per acre are authorized for operational purposes,such fees are included in Other Income. 44 (f)Taxes do not include ad valorem taxes levied for the purpose of paying debt service on the District's 1998 General Obligation Refunding Bonds.Taxes are projected to decrease for 2010 by $254,000 based on a reduction in assessed value,and then slowly increase by approximately 2%, annually.No additional ERAF deductions or Proposition lA borrowing are assumed (see "Taxes" herein). (g)Non-operating income is excluded from the projection.Non-operating revenues within "Miscellaneous Revenues"shown in the District's financial statements consists ofproperty rental and golfcourse income. (h)Water Supply costs are anticipated to increase annually as a result of increases III cost of purchased water and usage by new customers as follows: 2011 2012 2013 2014 2015 10.6% 13.7% 11.9% 9.6% 6.8% The District receives a credit of $185 per acre foot and $200 per acre foot from MWD and SDCWA,respectively,for each acre foot ofrecycled water. (i)Operating costs shown in fiscal year 200911 0 are based on current year estimates.Costs for subsequent fiscal years are based on the 200911 0 estimates with the annual inflationary factors shown below. Utilities 3.5% Materials and Maintenance 4.0% Administrative Costs 3.0% Salaries 5.1 % Medical Benefits 8.4% Workers Comp 8.2% Other Benefits 3.0% Base operating costs are also increased based on the projected growth in District operations,similar to the growth rates shown for connections in (a)above. G)The debt service on the 1996 Certificates is calculated based on the existing principal repayment schedule and the Bond Buyer 25 Year Revenue Bond Index as ofJanuary 27,2010 of4.99%.The current letter of credit expires in June 2011.Further annual letter of credit fees are estimated beginning at 85 basis points of the outstanding par amount of the 1996 Certificates,declining to 50 basis points by 2012113. 45 TABLE NO.10 PROJECTED TAXES AND NET REVENUES (in 'OOO's)AND DEBT SERVICE COVERAGE Forthe fiscal year ended June 30 2010 (1)2011 2012 2013 2014 2015 Revenues: Water Sales $60,658 $67,227 $73,016 $80,374 $85,268 $90,843 Availability Fees 627 628 632 648 668 692 Capacity Fees 1,516 657 1,706 9,169 12,655 15,433 Annexation Fees 258 194 444 2,578 3,506 4,154 Other Income 1,232 1,250 1,310 1,670 1,861 1,987 Connection Fees 1,398 1,405 1,419 1,433 1,433 1,433 Investment Earnings 1,261 1,915 1,939 1,941 1,957 2,409 Interest Subsidy Payment*767 835 ~835 835 Total Revenue 66,950 74,044 81,301 98,649 108,182 117,786 Operation and Maintenance Costs: Water Purchases 33,344 37,080 41,072 45,849 50,961 55,310 Utilities 2,365 2,428 2,341 2,485 2,664 2,874 Payroll 16,420 17,397 18,450 19,177 19,797 20,650 Administrative 4,873 4,984 5,098 5,228 5,366 5,500 Materials and Maintenance 2,460 2,553 2,651 2,757 2,867 2,982 Total Operation and Maintenance Costs 59,463 64,442 69,613 75,495 81,655 87,315 I·- Net Revenues 7,487 9,602 11,688 23,153 26,527 30,470 Taxes 3,176 3,176 3,239 3.304 3,470 3,647 Taxes and Net Revenues 10,663 12,777 14,927 26,457 29,997 34,117 Debt Service: 1996 Installment Payments (2)1,088 1,065 1,025 1,088 1,050 1,022 2004 Installment Payments 927 927 926 928 923 922 2007 Installment Payments 2,491 2,491 2,495 2,497 2,498 2,497 2010 Installment Payments *2,650 3,750 --..J..,lli 3,750 3,750 Total Debt Service 4,507 7,134 8,195 8,262 8,221 8,191 Coverage Ratio 237%179% 182%320%365%417% (1)2009/2010 Budget,after adjustment for estimated water usage reduction and the 19.9%rate increase effective September 1,2010. (2)Based on 25-Year Revenue Bond Index of4.99%plus LOC fees. *Preliminary,subject to change. Source:Otay Water District. The projected Revenues,Taxes and Operation and Maintenance Costs shown above are subject to several variables as described on the previous pages.The District provides no assurance that the projected Taxes and NetRevenues will be achieved (see "RISK FACTORS"herein). 46 SOURCES OF PAYMENT FOR THE BONDS General The Bonds are secured by a pledge of Revenues,consisting of the Installment Payments and other payments paid by the District and received by the Authority pursuant to the 2010 Installment Purchase Agreement and all interest or other income from any investment of any money in any find or account established pursuant to the Trust Agreement (other than the Rebate Fund),and any other amounts held by the Trustee in any fund or account established under the Trust Agreement (other than amounts on deposit in the Rebate Fund). The Bonds are limited obligations of the Authority and are payable solely from Revenues and the other assets pledged therefor under the Trust Agreement.The Installment Payments are sufficient to pay,when due,the annual principal and interest represented by the Bonds. Installment Payments Installment Payments are secured by a pledge ofand lien on Taxes and Revenues ofthe Water System and are payable from Taxes and Net Revenues in the manner described herein.Under the Installment Purchase Agreement,the District has agreed to deposit all Revenues in the Revenue Fund and all Taxes in the Tax Fund which are irrevocably pledged to the payment ofthe Installment Payments as provided in the Installment Purchase Agreement.The Revenues and Taxes will not be used for any other purpose while any ofthe Installment Payments remain unpaid except as described below.Under the terms ofthe Installment Purchase Agreement,Revenues are applied first to pay Operation and Maintenance Costs.The pledge ofTaxes and Revenues constitutes a lien thereon and,subject to application of amounts on deposit therein as permitted in the Installment Purchase Agreement,on the Revenue Fund,the Tax Fund and the other funds and accounts created under the Installment Purchase Agreement for the payment of the Installment Payments and all other Contracts and Bonds,including,but not limited to,the 2004 Installment Payments,the 2007 Installment Payments and the 1996 Installment Payments,in accordance with the terms of the Installment Purchase Agreement and the Trust Agreement.The Installment Payments securing the Bonds are payable from Taxes and Net Revenues on a parity with installment payments securing the District's 1996 Certificates,2004 Certificates and the 2007 Certificates.The 1996 Cettificates bear interest at a variable rate.In addition,as set forth in "Interest Subsidy Payment"below, the Interest Subsidy Payment (defined below)received by the District from the United States Treasury as cash subsidy payments in connection with the 2010B Bonds is included in the District's Revenues. "Taxes"means all taxes,including ad valorem taxes ofthe District,other than taxes imposed pursuant to Chapter 1 of Part 9 of the Law to secure general obligation bonds of the District or any improvement district thereof. "Net Revenues"means,for any Fiscal Year or other 12-month period,the Revenues for such Fiscal Year or other 12-month period less the Operation and Maintenance Costs for such Fiscal Year or other 12- month period. "Revenues"means (i)all water availability charges imposed pursuant to Chapter 2 of Part 5 ofthe Law not exceeding $10 per acre per year;(ii)all income,rents,rates,fees,charges and other moneys derived by the District from the ownership or operation of the Water System,including,without limiting the generality of the foregoing,(a)all income,rents,rates,fees,charges or other moneys derived from the sale,furnishing,and supplying ofwater and other services,facilities and commodities sold,furnished or supplied through the facilities of the Water System,including connection fees,(b)the earnings on and income derived from the investment of such income,rents,rates,fees and charges or other moneys,and (c)the proceeds derived by the District directly or indirectly from the sale,lease or other disposition of a part ofthe Water System as permitted under the Installment Purchase Agreement;provided that the term 47 "Revenues"shall not include customers'deposits or any other deposits subject to refund until such deposits have become the property ofthe District but will include the Interest Subsidy Payment. "Operation and Maintenance Costs"means (i)costs spent or incurred for maintenance and operation of the Water System calculated in accordance with generally accepted accounting principles,including (among other things)the reasonable expenses ofmanagement and repair and other expenses necessary to maintain and preserve the Water System in good repair and working order,and including administrative costs ofthe District that are charged directly or apportioned to the Water System,including but not limited to salaries and wages of employees,payments to the Public Employees Retirement System,overhead, insurance,taxes (if any),fees of auditors,accountants,attorneys or engineers and insurance premiums, and including all other reasonable and necessary costs ofthe District or charges (other than debt service payments)required to be paid by it to comply with the terms of the Bonds or ofthe Installment Purchase Agreement or any Contract or of any resolution or indenture authorizing the issuance of any Bonds or of such Bonds;and (ii)costs spent or incurred in the purchase ofwater for the Water System;but excluding in all cases depreciation,replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries ofa similar nature and all capital charges. Moneys in the Tax Fund and Revenue Fund will be used and applied by the District as provided in the Installment Purchase Agreement.Pursuant to the Installment Purchase Agreement,the District will pay from the moneys in the Revenue Fund all Operation and Maintenance Costs (including amounts reasonably required to be set aside in contingency reserves for Operation and Maintenance Costs,the payment ofwhich is not then immediately required)as they become due and payable.All moneys in the Tax Fund,and to the extent such moneys are insufficient,all remaining moneys in the Revenue Fund,will be used and applied ratably to pay Debt Service,including the Installment Payments,the 1996 Installment Payments,the 2004 Installment Payments,the 2007 Installment Payments and any Contracts or Bonds secured on a parity with the Installment Payments,then to replenish all reserve funds established for the Bonds and such Bonds or Contracts,including the Reserve Fund,and thereafter for any purpose permitted by law. The Installment Payments are payable only from Taxes and Net Revenues and are not secured by,and the Bond Owners have no security interest in or mortgage on the property ofthe Water System or any other assets of the District.Default by the District will not result in loss of the 2010 Project or the Water System or any other assets of the District.Should the District default,the Trustee,as assignee of the Authority,shall,declare the entire principal amount of the unpaid Installment Payments and the accrued interest thereon to be due and payable immediately,and upon any such declaration the same shall become immediately due and payable,and by mandamus or other action or proceeding or suit at law or in equity enforce its rights against the District,compel the District to perform and carry out its duties under the law and the agreements and covenants required to be performed by it contained in the Installment Purchase Agreement or by suit in equity enjoin any acts or things which are unlawful or violate the rights of the Authority.See "APPENDIX A -SUMMARY OF PRINCIPAL LEGAL DOCUMENTS -THE TRUST AGREEMENT -Default and Limitation of Liability"and "THE INSTALLMENT PURCHASE AGREEMENT -Events ofDefault andAcceleration ofMaturities." Interest Subsidy Payment "Interest Subsidy Payment"means,with respect to the 201 OB Bonds,the amounts which are payable by the Federal government under Section 6431 of the Code,which the District has elected to receive under Section 54AA(g)(1)ofthe Code.The District agrees in the Installment Purchase Agreement to submit all documentation,and take all actions,as may be required to receive and collect the Interest Subsidy Payment when due,as provided in the Trust Agreement.The Interest Subsidy Payment received by the District from the United States Treasury as cash subsidy payments in connection with the 20lOB Bonds is included in the District's Revenues. 48 Rates and Charges Pursuant to the Installment Purchase Agreement,the District shall fix,prescribe,revise and collect rates, fees and charges for the Water Service which will be at least sufficient to yield during each Fiscal Year Taxes and Net Revenues equal to one hundred twenty-five percent (125%)of the Debt Service (including for purposes ofsuch calculation the obligation ofthe District to repay Policy Costs,if any,to any Insurer) on the Bonds,the 1996 Certificates,the 2004 Certificates,the 2007 Certificates and Additional Contracts or Bonds for such Fiscal Year.The District may make adjustments from time to time in such rates and charges and may make such classification thereofas it deems necessary,but shall not reduce the rates and charges then in effect unless the Taxes and Net Revenues from such reduced rates and charges will at all times be sufficient to meet the requirements ofthe Installment Purchase Agreement. For purposes of the rate covenants described above,the Installment Payments that are allocable to the 20l0B Bonds in any fiscal year will be reduced by the amount of Interest Subsidy Payment that the District or the Trustee is entitled to receive in such fiscal year. Parity Debt (A)Pursuant to the 2004 Installment Purchase Agreement,the 2007 Installment Purchase Agreement and the Installment Purchase Agreement,the District may at any time execute any Contract or issue any Bonds the payments under or of which are on a parity with the Installment Payments ("Contracts or Bonds"),as the case may be,provided an Independent Financial Consultant or Certified Public Accountant shall render to and file with the District and the Trustee a written report certifying that Taxes and Net Revenues for any twelve (12)consecutive calendar months in the eighteen (18)calendar months immediately preceding the issuance ofthe additional Contracts or Bonds adjusted as set forth below are at least equal to 125%of Debt Service (including for purposes of such calculation the obligation of the District to repay Policy Costs,if any,to the Insurer),assuming such additional Contracts had been executed or additional Bonds had been issued at the beginning ofsuch twelve-month period. For purposes ofcalculating Net Revenues as set forth in the preceding paragraph,adjustments to the computations ofNet Revenues may be made for the following: (1)any change in service charges which has been adopted subsequent to the commencement ofthe twelve-month period but prior to the date of issuance or execution ofthe additional Bonds or Contracts; (2)customers added to the Water System subsequent to the commencement of the twelve- month period but prior to the date of issuance or execution of the additional Bonds or Contracts; (3)the estimated change in Net Revenues which will result from the connection of existing residences or businesses to the Water System within one year following completion of any project to be funded or system to be acquired from the proceeds of such additional Bonds or Contracts;and (4)the estimated change in Net Revenues which will result from services provided under any long-term,guaranteed contract that extends for the life of the additional Bonds or Contracts if entered into subsequent to the commencement of the twelve-month period but prior to the date ofissuance or execution ofthe additional Bonds or Contracts. 49 So long as the 1996 Certificates,the 2004 Certificates and the 2007 Certificates are outstanding, the Interest Subsidy Payment will be included in Revenues.Once the 1996 Certificates,the 2004 Certificates and the 2007 Celtificates are no longer outstanding,the Interest Subsidy Payment will be treated as a reduction in Debt Service for the purpose ofparagraph (A)above. Notwithstanding the foregoing,Bonds issued or Contracts executed to refund Bonds or Contracts may be delivered without satisfying the conditions set forth above if Debt Service in each Fiscal Year after the Fiscal Year in which such Bonds are issued or Contracts executed is not greater than Debt Service would have been in each such Fiscal Year prior to the issuance of such Bonds or execution of such Contracts.Further,it shall be assumed that,for the purpose of calculating Debt Service for any Parity Debt which bears a variable interest rate,a fixed rate shall be used equal to 110%of the greater of (i)the then current variable interest rate borne by such Bonds or Contracts plus 2%,and (ii)the highest variable rate borne over the preceding 12 months by outstanding variable rate debt issued by the District or,if no such variable rate debt is at the time outstanding,by variable rate debt ofwhich the interest rate is computed by reference to an index comparable to that to be utilized in determining the interest rate for the debt then proposed to be issued. In addition to the foregoing,in the event any Policy Costs are past due and owing to the Insurer, the Insurer must provide written consent to the issuance of any Bonds or the execution of any Contracts. (B)In addition,pursuant to the 1996 Installment Sale Agreement,the District may issue or incur additional obligations secured by a pledge ofand lien on Taxes and/or Net Revenues on a parity with the installment payments under the 1996 Installment Sale Agreement ("Parity Debt subject to the following provisions: (1)an Independent Financial Consultant shall render to and file with the District and the Trustee a written opinion that Taxes and Net Revenues for any twelve (12)consecutive calendar months in the eighteen (18)calendar months immediately preceding the issuance of the Parity Debt adjusted as set forth below,are at least equal to 125%of maximum total annual amount of Outstanding Installment Payments and on the additional Parity Debt to be issued; (2)an Independent Financial Consultant having a favorable reputation for special skill, knowledge and experience in analyzing the operations of water systems shall render to and file with the District and the Trustee a written opinion that Taxes and Net Revenues in each ofthe three (3)Fiscal Years succeeding the issuance ofthe Parity Debt will equal at least 125%of the maximum amount of the sum of (1)the aggregate amount of the Installment Payments,and (2)the aggregate amount of annual debt service or other payments with respect to outstanding Parity Debt,including Parity Debt to be issued,and all other obligations constituting a lien on Net Revenues which will be due in any Fiscal Year succeeding the issuance of the Parity Debt other than reimbursement obligations with respect to any Facility relating to the Bonds or any Parity Debt; (3)with respect to any indebtedness ofthe District to be issued or incurred on a subordinate and junior basis to Parity Debt ("Junior Debt"),Net Revenues for any twelve consecutive months in the eighteen calendar months immediately preceding the Junior Debt to be issued,after the payment of all Installment Payments and Parity Debt,are at least equal to 100%of the maximum total annual amount owing and outstanding Junior Debt to be issued;and 50 (4)money (or a reserve credit facility)shall be deposited in a separate reserve fund established for such Parity Debt in an amount necessary to increase the amount in the reserve fund established for such Parity Debt to the Reserve Requirements for the outstanding Bonds and taking into account the issuance ofsuch Parity Debt. For the purposes of calculating Net Revenues as set forth in subparagraph (1)above, adjustment to the computations ofNet Revenues may be made for the following: (a)any change in service charges which has been adopted subsequent to the commencement of the twelve-month period but prior to the date of issuance of the additional Parity Debt; (b)customers added to the Water System subsequent to the commencement of the twelve-month period but prior to the date of issuance of the additional Parity Debt; (c)the estimated change in Net Revenues which will result from the connection of existing residences or businesses to the Water System within one year following completion of any project to be funded or system to be acquired from the proceeds ofsuch additional Parity Debt;and (d)the estimated change in Net Revenues which will result from services provided under any long-term,guaranteed contract which extends the life of additional Parity Debt if entered into subsequent to the commencement of the twelve-month period but prior to the date ofissuance ofthe additional Parity Debt. For the purposes of the preceding sentence,it shall be assumed that the Installment Payments and any Parity Debt which bears a variable interest rate bears interest at a fixed rate equal to the greater of(i)the most recently published Bond Buyer 25 Bond Revenue Index (or comparable index if no longer published)or (ii)the average variable rate of interest borne by such Parity Debt during the preceding thirty-six (36)months or,ifno such variable rate Parity Debt is at the time outstanding,the highest interest rate borne by variable rate debt for which the interest rate is computed by reference to an index comparable to that to be utilized in determining the interest rate for such Parity Debt. Concurrently with the delivery ofthe Bonds,the District will cause to be delivered written reports ofan Independent Financial Consultant evidencing compliance with both ofthe foregoing provisions. Reserve Fund A Reserve Fund has been established under the Trust Agreement to be held by the Trustee to further secure the timely payment of principal and interest with respect to the Bonds and within such Reserve Fund,a "20IOA Account"and a "20IOB Account."The Reserve Fund is required to be funded in an amount equal to the least of (1)maximum annual Installment Payments allocable to each Series of the Bonds,(2)10%ofthe initial principal amount of each Series ofthe Bonds or (3)125%of average annual Installment Payments allocable to each Series of the Bonds,initially,an amount equal to $.Amounts in the respective accounts ofthe Reserve Fund are to be used only to make Installment Payments with respect to the respective Series of Bonds to the extent the amounts in the Bonds Payment Fund are insufficient for such purpose. There is no reserve account required for the 1996 Certificates. 51 The Trust Agreement provides that in lieu ofa cash deposit,the District may satisfy all or a portion ofa Reserve Requirement by means of a Debt Service Reserve Fund Policy (see "APPENDIX A-SUMMARY OF PRINCIPAL LEGAL DOCUMENTS"herein).With respect to the reserve requirement attributable to the 2004 Certificates,the District has previously deposited a Debt Service Reserve Fund Policy in the 2004 Certificates reserve account (the "2004 Surety Bond")in the amount of $945,733.76.The 2004 Surety Bond was initially provided by Financial Guaranty Insurance Corporation ("FGIC").With respect to the reserve requirement attributable to the 2007 Certificates,the District has previously deposited a Debt Service Reserve Fund Policy in the 2007 Certificates reserve account (the "2007 Surety Bond")in the amount of $2,552,562.50.The 2007 Surety Bond was provided by Ambac Assurance Corporation ("Ambac"). Events Concerning FGIC: On October 22,2008,MBIA Insurance Corp.("MBIA Corp.")and FGIC entered into a Reinsurance Agreement (the "FGIC Reinsurance Agreement"),effective September 30,2008,and a Trust Agreement (the "FGIC Trust Agreement"),dated October 22,2008,by and among FGIC,MBIA Corp.and the Bank of New York Mellon,as trustee,pursuant to which MBIA Corp.reinsured a portion of the U.S.public finance portfolio of FGIC (the "FGIC Covered Policies").The 2004 Surety Bond for the 2004 Certificates is one ofthe FGIC Covered Policies which was reinsured by MBIA Corp. Events Concerning MBIA and National: Moody's Investors Service currently rates MBIA Corp.B3 with a negative outlook.Standard &Poor's currently rates MBlA Corp.BB+with a negative outlook.Fitch Ratings withdrew its rating at the request ofMBIA Corp. On February 18,2009,MBIA Corp.ceded its entire public finance business to a subsidiary,MBIA Insurance Corp ofIllinois.MBIA Insurance Corp of Illinois has been renamed National Public Financial Guarantee Corp.("National").The 2004 Surety Bond reinsured by MBIA is now reinsured by National. National's current ratings are as follows: Rating Agency Moody's Investors Service Standard &Poor's Baal,Developing Outlook A,Developing Outlook For a complete discussion ofthe reinsurance transaction and additional information provided by National, see "APPENDIX G-NATIONAL PUBLIC FINANCE GUARANTEE CORPORATE DISCLOSURE." Events Concerning Ambac: Moody's Investors Service currently rates Ambac Assurance Corporation Caa2 with a developing outlook.Standard &Poor's currently rates Ambac Assurance Corporation CC with a developing outlook. Fitch Ratings withdrew its rating at the request ofAmbac Assurance Corporation. Under the trust agreement for the 2007 Certificates,[describe reserve fund deposit requirements ifAmbac files for bankruptcy protection] 52 RISK FACTORS The following information should be considered by prospective investors in evaluating the Bonds. However,the following does not purport to be an exhaustive listing ofrisks and other considerations which may be relevant to investing in the Bonds.In addition,the order in which the following information is presented is not intended to reflect the relative importance ofany such risks. System Demand There can be no assurance that the local demand for service provided by the Water System will increase to levels described in this Official Statement under the heading "THE WATER SYSTEM."Reduction in the level ofnew connections could require an increase in rates or charges in order to produce Taxes and Net Revenues sufficient to comply with the District's rate covenant in the Trust Agreement.Such rate increases could increase the likelihood of nonpayment,and could also further decrease demand. Furthermore,there can be no assurance that any other entity with regulatory authority over the Water System will not adopt further restrictions on operation ofthe Water System. Increased Operation and Maintenance Costs There can be no assurance that operation and maintenance costs of the Water System will be consistent with the levels contemplated in this Official Statement.Changes in technology,increases in the cost of operation,increased water treatment requirements or other costs mandated by regulatory agencies or other expenses could require increases in rates or charges in order to comply with the rate covenant described herein and in the Trust Agreement,and could increase the possibility ofnonpayment ofthe Bonds. Additional Obligations Payable from Taxes and Net Revenues The District may issue additional Bonds or enter into other obligations payable from Taxes and Net Revenues pledged for payment ofthe Bonds on a parity with its pledge of such Taxes and Net Revenues to the Installment Payments relating to the Bonds,the 2007 Certificates,the 2004 Certificates and the 1996 Certificates.The ability of the District to enter into such Parity Debt is subject to certain requirements set forth in the Installment Purchase Agreement.See "SOURCES OF PAYMENT FOR THE BONDS -Parity Debt." The District may also issue bonds or enter into obligations payable from Taxes and Net Revenues which are subordinate to the Bonds. Risks Relating to Water Supplies The District's current potable water supply comes entirely from purchases from the San Diego County Water Authority,which in turn currently purchases approximately 85%of its water supply from the Metropolitan Water District.This source of water could become limited due to possible events that include prolonged droughts or similar changes in State-wide weather patterns,earthquakes or other natural disasters,contamination by environmental hazards,or acts ofterrorism or civil unrest.There can be no assurance that currently available water supplies would be sufficient to meet demand under current conditions in the event of a prolonged drought or other interruption of the District's source of water supply,or that the District would be able to secure alternate sources of water to meet its customer demand.See "THE WATER SYSTEM -Water Supply"herein for a discussions ofthe water supply in the region and the District's sources ofwater in particular. 53 Environmental Regulation The kind and degree of water treatment effected through the water system is regulated,to a large extent, by the federal government and the State of California.Treatment standards set forth in federal and state law control the operations ofthe water system and mandate the use ofwater treatment technology.If the federal government,acting through the Environmental Protection Agency,or the State of California, acting through the Department of Health Services,or additional federal or state agencies,should impose stricter water quality standards upon the water system,the District's expenses could increase accordingly and rates and charges would have to be increased to offset those expenses.It is not possible to predict the direction federal or state regulation will take with respect to water quality standards,although it is likely that,over time,both will impose more stringent standards with attendant higher costs. Proposition 218 On November 5,1996,California voters approved Proposition 218-VoterApproval for Local Government Taxes-Limitation on Fees,Assessments,and Charges-Initiative Constitutional Amendment.Proposition 218 added Articles xmc and xmD to the California Constitution,imposing certain vote requirements and other limitations on the imposition of new or increased taxes,assessments and property-related fees and charges.See ''THE WATER SYSTEM -Water Charges -Proposition 218"for a discussion of specific issues and risks raised by Proposition 218.The District's current projections assume future rate increases which will be subject to the Proposition 218 notice process.The opinion of Bond Counsel will state that the enforceability ofthe Installment Purchase Agreement is subject to the limitations on the imposition by the District ofcertain fees and charges relating to the Water System under Articles xmc and xmD ofthe California Constitution. Casualty Risk;Earthquakes Any natural disaster or other physical calamity,including earthquake,may have the effect of reducing Revenues and Taxes through damage to the Water System and/or adversely affecting the economy ofthe surrounding area.The Installment Purchase Agreement requires the District to maintain insurance or self- insurance,but only if and to the extent available at a reasonable cost from reputable insurers,and the District is not expressly required to provide earthquake insurance.The District is located in a seismically active region and structures in the District could be impacted by a major earthquake originating from the numerous faults in the area.Seismic hazards encompass both potential surface rupture and ground shaking.In the event oftotal loss ofthe Water System,there can be no assurance that insurance proceeds will be adequate to prepay all Outstanding Bonds or that losses in excess of the insured amount will not occur. Early Redemption Risk Early redemption ofthe 20 lOA Bonds may occur in whole or in part without premium,on any date on or after September I,__,if the Authority exercises its right to prepay the Bonds in whole or in part pursuant to the provisions of the Trust Agreement.Early prepayment ofthe 201 OB Bonds may occur on any date,at the option of the Authority or upon the occurrence ofa Tax Law change (see "THE BONDS- Redemption -Extraordinary Optional Prepayment -201 OB Bonds. 54 Limited Recourse on Default If the District defaults on its obligation to pay debt service on the Bonds,the Trustee has the right to accelerate the total unpaid principal amount ofthe Bonds.However,in the event of a default and such acceleration there can be no assurance that the District will have sufficient Taxes and Net Revenues to pay the accelerated principal.So long as the Bonds are in book-entry form,DTC (or its nominee)will be the sole registered owner of the Bonds and the rights and remedies of the Bond Owners will be exercised through the procedures ofDTC. Bankruptcy Risks The enforceability of the rights and remedies of the owners of the Bonds and the obligations of the District may become subject to the following:the federal bankruptcy code and applicable bankruptcy, insolvency,reorganization,moratorium,or similar laws relating to or affecting the enforcement of creditors'rights generally,now or hereafter in effect;usual equitable principles which may limit the specific enforcement under state law ofcertain remedies:the exercise by the United States ofAmerica of the powers delegated to it by the federal Constitution;and the reasonable and necessary exercise,in certain exceptional situations ofthe police power inherent in the sovereignty ofthe State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings,or the exercise of powers by the federal or state government,if initiated,could subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks ofdelay,limitation,or modification oftheir rights. No Obligation to Tax The obligation of the District to pay debt service on the Bonds does not constitute an obligation of the District for which the District is obligated to levy or pledge any form oftaxation or for which the District has levied or pledged any form of taxation,except the taxes.The obligation of the District to pay debt service on the Bonds does not constitute a debt or indebtedness ofthe District,the State of California or any of its political subdivisions,within the meaning of any constitutional or statutory debt limitation or restriction. Change in Law In addition to the other limitations described herein,the California electorate or Legislature could adopt a constitutional or legislative initiative with the effect of reducing revenues payable to or collected by the District.There is no assurance that the California electorate or Legislature will not at some future time approve additional limitations that could have the effect of reducing the Taxes and Net Revenues and adversely affecting the security ofthe Bonds. Loss ofTax Exemption In order to maintain the exclusion from gross income for federal income tax purposes of the interest on the 201 OA Bonds,the District has covenanted in the Trust Agreement to comply with each applicable requirement ofSection 103 and Sections 141 through 150 of the Internal Revenue Code.The interest on the 201OA Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance ofthe 20 IOA Bonds,as a result of acts or omissions of the District in violation ofthis or other covenants in the Trust Agreement.Should such an event oftaxability occur,the 20lOA Bonds are not subject to redemption or any increase in interest rates and will remain outstanding until maturity or until redeemed under one of the redemption provisions contained in the Trust Agreement.See "LEGAL MATTERS -Tax Matters"herein. 55 II Risks Relating to Build America Bonds The District must comply with certain requirements of the Code in order for the 201 OB Bonds to be treated as qualified bonds and to continue to be eligible for the Interest Subsidy Payment.The District has covenanted to comply with each ofthese requirements.However,failure by the District to comply with these requirements may result in a delay or forfeiture of all or a portion of the Interest Subsidy Payment and may cause the 2010B Bonds to cease to be treated as qualified bonds either prospectively from the date ofdetermination of a failure to comply with the requirements or retroactively to the date of execution and delivery ofthe 2010B Bonds.Should such an event occur,the 2010B Bonds are subject to extraordinary prepayment.Ifthe District is obligated to provide for the issuance ofrefunding obligations in order to prepay the 20 IOB Bonds prior to their maturity,the District would be subject to the various risks attendant to issuance of refunding obligations,including higher-than-desired interest rates and duplicative transaction costs.In addition,it is important to note that Build America Bonds are a new product introduced by the American Recovery and Reinvestment Act,which was signed into law on February 17,2009.The Interest Subsidy Payments do not constitute a full faith and credit guarantee of the United States government,but are required to be paid by the Treasury under the American Recovery and Reinvestment Act.As such,the District can provide no assurance that future legislation or clarifications or amendments to the Code,ifenacted into law,or future court decisions will not reduce or eliminate the Interest Subsidy Payment with respect to the 2010B Bonds.The Treasury may offset any Interest Subsidy Payments to which the Authority is otherwise entitled against any other tax liability of the Authority payable to the Treasury,such as withholding or payroll taxes,or other penalties or interest that may be owed at any time to the Treasury.The District is obligated under the Installment Purchase Agreement to make Installment Payments without regard to the receipt or deposit of Interest Subsidy Payments. Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or,if a secondary market exists,that such Bonds can be sold for any particular price.Occasionally,because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally,prices of issues for which a market is being made will depend upon then prevailing circumstances.Such prices could be substantially different from the original purchase price. 56 LEGAL MATTERS Enforceability of Remedies The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the Trust Agreement,the Installment Purchase Agreement or any other document described herein are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay.Under existing law and judicial decisions,the remedies provided for under such documents may not be readily available or may be limited.The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Trust Agreement and Installment Purchase Agreement are subject to limitations imposed by bankruptcy,reorganization,insolvency or other similar laws affecting the rights ofcreditors generally and by equitable remedies and proceedings generally. Approval ofLegal Proceedings The legality and enforceability of the Trust Agreement and the Installment Purchase Agreement and certain other legal matters are subject to the approval of GCR,LLP,San Diego,California,acting as Bond Counsel.The legality and enforceability of the Trust Agreement and the Installment Sale Agreement and certain other legal matters are subject to the approval of GCR,LLP,San Diego, California,acting as Bond Counsel.See "APPENDIX E"for the proposed fonn of Bond Counsel's Opinion. Certain legal matters will be passed on for the District by its General Counsel,and by Stradling Yocca Carlson &Rauth,a Professional Corporation,Newport Beach,California,as Disclosure Counsel.Fees payable to Bond Counsel and Disclosure Counsel are contingent upon the sale and delivery ofthe Bonds. Neither the District nor the Authority has knowledge of any fact or other information which would indicate that the Trust Agreement or the Installment Purchase Agreement are not so enforceable against the District or the Authority,as applicable,except to the extent such enforcement is limited by principles of equity and by state and federal laws relating to bankruptcy,reorganization,moratorium or creditors' rights generally. Tax Matters 2010A Bonds (Tax-Exempt) General.In the opinion of GCR,LLP,San Diego,California,Bond Counsel,based on existing statutes, regulations,rulings and court decisions,interest on the 201 OA Bonds is excludable from gross income for federal income tax purposes and is exempt from State of California personal income taxes.A copy ofthe proposed opinion ofBond Counsel is set forth in "APPENDIX E"hereto. The Code imposes various restrictions,conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 20IOA Bonds.The Authority and the District have covenanted to comply with certain restrictions designed to assure that interest on the 20lOA Bonds will not be includable in federal gross income.Failure to comply with these covenants may result in interest on the 201OA Bonds being includable in federal gross income,possibly from the date of issuance ofthe 201 OA Bonds.The opinion ofBond Counsel assumes compliance with these covenants.Bond Counsel has not undertaken to determine (or to infonn any person)whether any actions taken (or not taken)or events occurring (or not occurring)after the date of issuance ofthe 201OA Bonds may affect the value of,or the tax status of interest on the 2010A Bonds.Further,no assurance can be given that pending or future legislation or amendments to the Code,will not adversely affect the 57 value of,or the tax status of interest on,the 201 OA Bonds.Prospective owners are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. Bond Counsel is further ofthe opinion that interest on the 201 OA Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes,and the interest on the 2010A Bonds is not included in adjusted current earnings in calculating corporate alternative minimum taxable income. Prospective purchasers ofthe 20lOA Bonds should be aware that (i)with respect to insurance companies subject to the tax imposed by Section 831 ofthe Code,Section 832(b)(5)(B)(i)reduces the deduction for loss reserves by 15 percent of the sum of certain items,including interest with respect to the 201 OA Bonds,(ii)interest with respect to the 201 OA Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 ofthe Code, (iii)passive investment income,including interest with respect to the 201 OA Bonds,may be subject to federal income taxation under Section 1375 ofthe Code for subchapter S corporations having subchapter C earnings and profits at the close of the taxable year and gross receipts more than 25%of which constitute passive investment income,and (iv)Section 86 ofthe Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account,in determining gross income, receipts or accruals ofinterest on the 201 OA Bonds. Certain agreements,requirements and procedures contained or referred to in the Indenture and other relevant documents may be changed and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth in those documents,upon the advice or with the approving opinion of nationally recognized bond counsel.Bond Counsel expresses no opinion as to any 2010A Bond or the interest payable with respect thereto ifany change occurs or action is taken or omitted upon the advice or approval ofcounsel other than Bond Counsel. Although Bond Counsel has rendered an opinion that interest on the 201 OA Bonds is excludable from federal gross income,and is exempt from State of California personal income taxes,the ownership or disposition ofthe 20IOA Bonds,and the accrual or receipt ofinterest on the 20 lOA Bonds may otherwise affect an Owner's state or federal tax liability.The nature and extent ofthese other tax consequences will depend upon each Owner's particular tax status and the Owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Future rulings,court decisions,legislative proposals,ifenacted into law,or clarification ofthe Code may cause interest on the 2010A Bonds to be subject,directly or indirectly,to federal income taxation,or otherwise prevent Owners from realizing the full current benefit of the tax status ofsuch interest.There can be no assurance that such future rulings,court decisions,legislative proposals,ifenacted into law,or clarification ofthe Code enacted or proposed after the date ofissuance ofthe 201 OA Bonds will not have an adverse effect on the tax exempt status or market price ofthe 2010A Bonds. Original Issue Discount.Ifthe initial offering price to the public (excluding bond houses and brokers)at which a 2010A Bond is sold is less than the amount payable at maturity thereof,then such difference constitutes "original issue discount"for purposes offederal income taxes and State ofCalifornia personal income taxes.If the initial offering price to the public (excluding bond houses and brokers)at which a 201 OA Bond is sold is greater than the amount payable at maturity thereof,then the excess ofthe tax basis of a purchaser of such 20lOA Bond (other than a purchaser who holds such 2010A Bond as inventory, stock in trade or for sale to customers in the ordinary course of business)over the principal amount of such 201 OA Bond constitutes "original issue premium"for purposes of federal income taxes and State of California personal income taxes.De minimis original issue discount is disregarded. 58 Under the Code,original issue discount is exCludable from gross income for federal income tax purposes to the same extent as [the Interest Portion/interest on the 2010A Bonds].Further,such original issue discount accrues actuarially on a constant interest rate basis over the term of each such 201 OA Bond and the basis of such 201 OA Bond acquired at such initial offering price by an initial purchaser ofeach such 2010A Bond will be increased by the amount of such accrued discount.The Code contains certain provisions relating to the accrual oforiginal issue discount in the case ofpurchasers ofsuch 201 OA Bonds who purchase such 201 OA Bonds after the initial offering of a substantial amount thereof.Owners who do not purchase such 201 OA Bonds in the initial offering at the initial offering prices should consult their own tax advisors with respect to the tax consequences ofownership of such 201 OA Bonds.All holders of such 201 OA Bonds should consult their own tax advisors with respect to the allowance ofa deduction for any loss on a sale or other disposition to the extent that calculation of such loss is based on accrued original issue discount. Original Issue Premium.Under the Code,original issue premium is amortized for federal income tax purposes over the term of such a 2010A Bond based on the purchaser's yield to maturity in such 2010A Bonds,except that in the case ofsuch a 201 OA Bond callable prior to its stated maturity,the amortization period and the yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such 20IOA Bond.A purchaser of such a 201 OA Bond is required to decrease his or her adjusted basis in such 201 OA Bond by the amount of bond premium attributable to each taxable year in which such purchaser holds such 201OA Bond.The amount of bond premium attributable to a taxable year is not deductible for federal income tax purposes.Purchasers of such 201 OA Bonds should consult their tax advisors with respect to the precise determination for federal income tax purposes ofthe amount of bond premium attributable to each taxable year and the effect of bond premium on the sale or other disposition ofsuch a 201 OA Bond,and with respect to the state and local tax consequences ofowning and disposing ofsuch a 2010A Bond.] Internal Revenue Service Audit ofTax-Exempt Issues.The IRS has initiated an expanded program for the auditing of tax-exempt issues,including both random and targeted audits.It is possible that the 20 lOA Bonds will be selected for audit by the IRS.It is also possible that the market value ofthe 2010A Bonds might be affected as a result of such an audit of the 20 lOA Bonds (or by an audit of similar obligations). Information Reporting and Backup Withholding.Information reporting requirements apply to interest (including original issue discount)paid after March 31,2007 on tax-exempt obligations,including the 2010A Bonds.In general,such requirements are satisfied ifthe interest recipient completes,and provides the payor with,a Form W-9,"Request for Taxpayer Identification Number and Certification,"or unless the recipient is one of a limited class of exempt recipients,including corporations.A recipient not otherwise exempt from information reporting who fails to satisfY the information reporting requirements will be subject to "backup withholding,"which means that the payor is required to deduct and withhold a tax from the interest payment,calculated in the manner set forth in the Code.For the foregoing purpose, a "payor"generally refers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalf ofthe recipient. If an owner purchasing a 201 OA Bond through a brokerage account has executed a Form W-9 in connection with the establishment ofsuch account,as generally can be expected,no backup withholding should occur.In any event,backup withholding does not affect the excludability of the interest on the Bonds from gross income for Federal income tax purposes.Any amounts withheld pursuant to backup withholding would be allowed as a refund or a credit against the owner's Federal income tax once the required information is furnished to the IRS. 59 2010B Bonds (Federally Taxable) The following is a summary of certain material federal income tax consequences of the purchase, ownership and disposition of the 20 IOB Bonds.This summary is based upon laws,regulations,rulings and decisions currently in effect,all of which are subject to change.The discussion does not address all federal tax consequences applicable to all categories of investors,some of which may be subject to special rules,including but not limited to,partnerships or entities treated as partnerships for federal income tax purposes,pension plans and foreign investors,except as otherwise indicated.In addition,this summary is generally limited to investors that are "U.S.holders"(as defined below)who will hold the 2010B Bonds as "capital assets"(generally,property held for investment)within the meaning of Section 1221 ofthe Internal Revenue Code of 1986,as amended (the "Code"). Investors should consult their own tax advisors to determine the federal,state,local and other tax consequences ofthe purchase,ownership and disposition ofthe 2010B Bonds. As used herein,a "U.S.holder"is a "U.S.person"that is a beneficial owner ofa 2010B Bond.A "non U.S.holder"is a holder (or beneficial owner)of a 2010B Bond that is not a U.S.person.For these purposes,a "U.S.person"is a citizen or resident ofthe United States,a corporation or partnership created or organized in or under the laws ofthe United States or any political subdivision thereof (except,in the case ofa partnership,to the extent otherwise provided in the Treasury Regulations),an estate the income of which is subject to United States federal income taxation regardless of its source or a trust if (i)a United States court is able to exercise primary supervision over the trust's administration and (ii)one or more United States persons have the authority to control all ofthe trust's substantial decisions. General.In the opinion of GCR,LLP,San Diego,California,Bond Counsel,interest on the 2010B Bonds (including original issue discount,as discussed below)is not excludable from gross income for federal income tax purposes.Payments of interest with respect to the 201 OB Bonds will be includible as ordinary income when received or accrued by the holders thereof in accordance with their respective methods of accounting and applicable provisions of the Code.Interest on the 201 OB Bonds is exempt from State of California personal income taxes.A copy ofthe proposed opinion of Bond Counsel is set forth in "APPENDIX E"hereto. From time to time,there are legislative proposals in the Congress and in the various state legislatures that, if enacted,could alter or amend federal and state tax matters referred to above or adversely affect the market value of the 20 I OB Bonds.It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment.In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which,ifimplemented or concluded in a particular manner,could adversely affect the market value of the 201 OB Bonds.It cannot be predicted whether any such regulatory action will be implemented,how any particular litigation or judicial action will be resolved,or whether the 2010B Bonds or the market value thereof would be impacted thereby.Purchasers of the 201 OB Bonds should consult their tax advisors regarding any pending or proposed legislation,regulatory initiatives or litigation.The opinion expressed by Bond Counsel is based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the 2010B Bonds.Bond Counsel expresses no opinion as of any date subsequent thereto or with respect to any pending legislation,regulatory initiatives or litigation. Characterization of the 2010B Bonds as Indebtedness.For federal income tax purposes,the 20 lOB Bonds will be treated as indebtedness of the Authority.The owners ofthe 201 OB Bonds,by purchasing the 20 IOB Bonds,will be deemed to have agreed to treat the 201 OB Bonds as indebtedness of the Authority for federal income tax purposes.The Authority intends to treat the 201 OB Bonds as its indebtedness for tax and financial accounting purposes. 60 Disposition and Defeasance of 2010B Bonds.Upon the sale,exchange,retirement or other taxable disposition (collectively,a "disposition")ofa 20IOB Bond,a Bondholder will generally recognize gain or loss equal to the difference between the amount realized on such disposition (less any accrued interest, which will be taxable as ordinary income in the manner described above under "General")and the Bondholder's adjusted tax basis in such 2010B Bond.The Authority may deposit moneys or securities with the Trustee in escrow in such amount and manner as to cause the 20 lOB Bonds to be deemed to be no longer outstanding under the Trust Agreement (a "defeasance").A defeasance of the 2010B Bonds may result in a reissuance thereof,in which event a Bondholder will also recognize gain or loss as described in the first sentence of this paragraph.Ordinarily,upon the disposition or defeasance of the 2010B Bonds,such gain or loss will be treated as a capital gain or loss.At the present time,the maximum capital gain rate for certain assets held for more than twelve months is 15%.However,if a 2010B Bond was subject to its initial issuance at a discount,a portion of such gain will be re- characterized as interest and therefore ordinary income.In February of 2009,the President proposed increasing the long-term capital gains rate to 20%.Neither the Authority,the District nor Bond Counsel can predict whether this increase will receive Congressional approval. Original Issue Discount.If the 2010B Bonds are deemed to be issued with original issue discount, Section 1272 of the Code requires the current ratable inclusion in income of original issue discount greater than a specified de minimis amount using a constant yield method of accounting.In general, original issue discount is calculated,with regard to any accrual period,by applying the instrument's yield to its adjusted issue price at the beginning ofthe accrual period,reduced by any qualified stated interest allocable to the period.The aggregate original issue discount allocable to an accrual period is allocated to each day included in such period.The holder of a debt instrument must include in income the sum ofthe daily portions oforiginal issue discount attributable to the number of days he owned the instrument.The legislative history of the original issue discount provisions indicates that the calculation and accrual of original issue discount should be based on the prepayment assumptions used by the parties in pricing the transaction. A purchaser (other than a person who purchases a 2010B Bond upon issuance at the issue price)who buys a 20 IOB Bond at a discount from its principal amount (or its adjusted issue price if issued with original issue discount greater than a specified de minimis amount)will be subject to the market discount rules of the Code.In general,the market discount rules of the Code treat principal payments and gain on disposition of a debt instrument as ordinary income to the extent of accrued market discount.Although the accrued market discount on debt instruments such as the 2010B Bonds which are subject to prepayment based on the prepayment of other debt instruments is to be determined under regulations yet to be issued,the legislative history of the market discount provisions ofthe Code indicate that the same prepayment assumption used to calculate original issue discount should be utilized. Owners of 2010B Bonds purchased at a discount should consult their tax advisors with respect to the determination and treatment oforiginal issue discount accrued as ofany date and with respect to the state and local tax consequences of owning such 20 IOB Bonds. Backup Withholding.Certain purchasers may be subject to backup withholding at the application rate determined by statute with respect to interest paid with respect to the 2010B Bonds if the purchasers, upon issuance,fail to supply the applicable party or their brokers with their taxpayer identification numbers,furnish incorrect taxpayer identification numbers,fail to report interest,dividends or other "reportable payments"(as defined in the Code)properly,or,under certain circumstances,fail to provide the applicable party with a certified statement,under penalty of perjury,that they are not subject to backup withholding.Information returns will be sent annually to the Internal Revenue Service ("IRS") and to each purchaser setting forth the amount of interest paid with respect to the 20 IOB Bonds and the amount oftax withheld thereon. 61 State,Local or Foreign Taxation.No representations are made regarding the tax consequences of purchase,ownership or disposition ofthe 201 OB Bonds under the tax laws of any other state,locality or foreign jurisdiction (except as provided with respect to California law under "TAX MATTERS -2010B Bonds (Federally Taxable)-General"above). Circular 230.To ensure compliance with requirements imposed by the IRS,Bond Counsel informs Owners of the 2010B Bonds that any U.S.federal tax advice contained in this Official Statement (including any attachments)is not intended or written to be used,and cannot be used,for the purpose of (i)avoiding penalties under the Code or (ii)promoting,marketing,or recommending to another party any transaction or matter addressed in this Official Statement.Each taxpayer should seek advice based on its particular circumstances from an independent tax advisor. A copy ofthe proposed form ofopinion ofBond Counsel is attached hereto as Appendix E. Litigation At any given time,including the present,there are certain claims,disputes and litigation actions that arise in the normal course of the District's activities.Such matters could,if determined adversely to the District,affect the expenditures of the District and in some cases its revenues.The District will furnish a certificate dated as of the date of delivery of the Bonds that there is not now known to be pending or threatened any litigation restraining or enjoining the execution or delivery of the Trust Agreement,the Installment Purchase Agreement or the sale or delivery of the Bonds or in any manner questioning the proceedings and authority under which the Trust Agreement and the Installment Purchase Agreement are to be executed or delivered or the Bonds are to be delivered or affecting the validity thereof or which if decided adversely to the District would have a material adverse effect on the District's financial condition and its ability to make Installment Payments. CONCLUDING INFORMATION Ratings on the Bonds Standard &Poor's and Fitch have assigned their ratings of"_"and "_,"respectively,to the Bonds. Such rating reflects only the views ofthe rating agencies and any desired explanation of the significance ofsuch rating should be obtained from the rating agencies.Generally,a rating agency bases its rating on the information and materials furnished to it and on investigations,studies and assumptions of its own. There is no assurance such rating will continue for any given period oftime or that such rating will not be revised downward or withdrawn entirely by the rating agency,if in the judgment of such rating agency, circumstances so warrant.Any such downward revision or withdrawal of such rating may have an adverse effect on the market price ofthe Bonds. Underwriting The Bonds were sold to Citigroup Global Markets Inc.,(the "Underwriter").The Underwriter is offering the Bonds at the prices set forth on the inside front cover page hereof.The initial offering prices may be changed from time to time and concessions from the offering prices may be allowed to dealers,banks and others.The Underwriter has purchased the 201OA Bonds at a price equal to $ ,which amount represents the principal amount of the 201 OA Bonds,less a net original issue (premium/discount)of $and less an Underwriter's discount of $.The Underwriter has purchased the 2010B Bonds at a price equal to $ ,which amount represents the principal amount of the 2010B Bonds ($),plus an original issue (premium/discount)of $ ,and less an Underwriter's discount of $.The Underwriter will pay certain of its expenses relating to the offering. 62 Citigroup Inc.,parent company of Citigroup Global Markets Inc.,the Underwriter of the Bonds,has entered into a retail brokerage joint venture with Morgan Stanley.As part ofthe joint venture,Citigroup Global Markets Inc.will distribute municipal securities to retail investors through the financial advisor network of a new broker-dealer,Morgan Stanley Smith Barney LLC.This distribution arrangement became effective on June 1,2009.As part of this arrangement,Citigroup Global Markets Inc.will compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the Bonds. The Financial Advisor The material contained in this Official Statement was prepared by the District with the assistance of the Financial Advisor,who advised the District as to the financial structure and certain other financial matters relating to the Bonds.The information set forth herein has been obtained from sources which are believed to be reliable,but such information is not guaranteed by the Financial Advisor as to accuracy or completeness,nor has it been independently verified.Fees paid to the Financial Advisor are contingent upon the sale and delivery ofthe Bonds. Continuing Disclosure The District will covenant to provide annually certain financial information and operating data relating to the District by not later than nine months after the end ofthe District's fiscal year,each year commencing March 31,2011 and to provide the audited General Purpose Financial Statements of the District for the fiscal year ending June 30,2010 and for each subsequent fiscal year when they are available (together,the "Annual Report"),and to provide notices ofthe occurrence of certain other enumerated events ifdeemed by the District to be material.The Annual Report and notices ofmaterial events can be accessed from the Electronic Municipal Market Access Website ("EMMA")operated by the Municipal Securities Rulemaking Board (www.emma.msrb.org).These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5).The specific nature of the information to be contained in the Annual Report or the notices of material events and certain other terms of the continuing disclosure obligation are summarized in "APPENDIX E -FORM OF CONTINUING DISCLOSURE CERTIFICATE."Failure of the District to provide the required ongoing information may have a negative impact on the value ofthe Bonds in the secondary market. The District has entered into three previous continuing disclosure undertakings with respect to the (i) 1998 Bonds,(ii)2004 Certificates of Participation and (iii)2007 Certificates of Participation to provide continuing disclosure pursuant to Rule 15c2-12.With respect to the undertaking for the 1998 Bonds, since 2004,the District filed its Comprehensive Annual Financial Report on a timely basis.However,the supplemental information required by the undertaking regarding the tax base for ID 27 was not timely filed.As ofSeptember 16,2009 the District was current with all filing requirements. Additional Information The summaries and references contained herein with respect to the Trust Agreement,the Installment Purchase Agreement,the Assignment Agreement,the Bonds,statutes and other documents,do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute and references to the Bonds are qualified in their entirety by reference to the form thereof included in the Trust Agreement.Definitions ofcertain terms used herein are set forth in "APPENDIX A."Copies ofthe Trust Agreement,the Installment Purchase Agreement and the Assignment Agreement,are available for inspection during the period of initial offering on the Bonds at the offices of the Financial Advisor. Copies of these documents may be obtained after delivery of the Bonds from the District,2554 Sweetwater Springs Blvd.,Spring Valley,California 91978. 63 References Any statements in this Official Statement involving matters of opinion,whether or not expressly so stated, are intended as such and not as representations offact.This Official Statement is not to be construed as a contract or agreement between the District and the purchasers or Owners ofany ofthe Bonds. Execution The execution of this Official Statement has been duly authorized by the Otay Water District Financing Authority and the Otay Water District. OTAY WATER DISTRICT FINANCING AUTHORITY By: Treasurer OTAY WATER DISTRICT By: Chief Financial Officer 64 APPENDIX A SUMMARY OF PRINCIPAL LEGAL DOCUMENTS A-I APPENDIXB DISTRICT AUDITED FINANCIAL STATEMENTS B-1 APPENDIXC ECONOMIC PROFILE FOR COUNTY OF SAN DIEGO Introduction The County of San Diego is the southernmost major metropolitan area in the State of California.The County covers 4,255 square miles,extending 70 miles along the Pacific Coast from the Mexican border to Orange County,and inland 75 miles to Imperial County.Riverside and Orange Counties form the northern boundary.The County is approximately the size ofthe State ofConnecticut. The County possesses a diverse economic base consisting of a significant manufacturing presence in the fields of electronics and shipbuilding,a large tourist industry attracted by the favorable climate of the region,and a considerable defense-related presence which contributes approximately $10 billion into the retail and service businesses ofthe area. The County is also growing as a major center for culture and education.Over 30 recognized art organizations including the San Diego Opera,the Old Globe Theater productions,the La Jolla Chamber Orchestra,as well as museums and art galleries,are located in the County.Higher education is provided through five two-year colleges and six four-year colleges and universities. The San Diego Convention Center contains 361,000 square feet ofexhibit space and over 100,000 square feet of meeting/banquet rooms.The Convention Center can accommodate events for 30,000-40,000 people. C-l Population The County ofSan Diego has experienced rapid growth and development in the past decade.The County has become the nineteenth most populous metropolitan area in the United States.The City of San Diego is the sixth most populous city in the United States.Total population for the County is expected to be over 3.63 million by the year 2015. The following table shows the January 1 State of California Department of Finance estimates of total population in the County of San Diego and the State of California for each year since 2000,and the increase from the previous year. TABLE NO.C-l COUNTY OFSAN DIEGO AND STATE OF CALIFORNIA POPULATION COUNTY OF SAN DIEGO STATE OF CALIFORNIA Percentage Percentage Year Population Change Population Change 2000 2,813,833 33,873,086 2001 2,864,539 1.8%34,430,970 1.6% 2002 2,920,806 2.0%35,063,959 1.8% 2003 2,970,899 1.7%35,652,700 1.7% 2004 3,007,285 1.2%36,199,342 1.5% 2005 3,034,388 0.9%36,676,931 1.3% 2006 3,058,413 0.8%37,086,191 1.1% 2007 3,088,891 1.0%37,472,074 1.0% 2008 3,131,552 1.4%37,883,992 1.1% 2009 3,173,407 1.3%38,292,687 1.1% %Increase Between 2000 -2009 12.8%13.0% Source:State ofCalifornia,Department ofFinance,"E-4 Population Estimates for Cities,Counties and the State, 2001-2009,with 2000 Benchmark." C-2 Per Capita Income Per capita income information for San Diego County,the State of California and the United States are summarized in the following table. TABLE NO.C-2 PERCAPITA INCOME SAN DIEGO COUNTY,STATE OF CALIFORNIAAND UNITED STATES 2003-2007 Year San Diego County State ofCalifornia United States 2003 $35,810 $33,469 $31,466 2004 38,536 35,313 33,072 2005 40,383 37,183 34,685 2006 42,801 39,358 36,629 2007 44,832 41,571 38,615 Source:County ofSan Diego,Comprehensive Annual Financial Report for the Year Ended June 30,2008 and State ofCalifornia Department ofFinance;State ofCalifornia Employment Development Department. C-3 The District is located in the San Diego-Carlsbad-San Marcos Metropolitan Statistical Area (MSA).Six major job categories constitute 79.1%ofthe work force.They are government (18.0%),professional and business services (16.5%),service producing (14.2%),leisure and hospitality (12.1%),educational and health services (10.9%),and manufacturing (7.4%).The December 2009 unemployment rate in the San Diego-Carlsbad-San Marcos MSA was 10.1%.The State of California December 2009 unemployment rate (unadjusted)was 12.1%. TABLE NO.C-3 SAN DIEGO-CARLSBAD-SAN MARCOS MSA WAGE AND SALARY WORKERS BY INDUSTRY (1) (in thousands) Industry 2005 2006 2007 2008 2009 Government 217.5 223.1 227.1 227.6 226.2 Other Services 48.9 48.9 48.5 48.8 49.0 Leisure and Hospitality 150.7 158.1 162.4 159.4 152.3 Educational and Health Services 124.6 127.6 134.0 137.8 137.2 Professional and Business Services 212.4 213.9 218.3 217.0 207.7 Financial Activities 84.4 82.6 77.8 74.9 72.9 Information 37.5 37.9 38.2 39.5 37.3 Transportation,Warehousing and Utilities 28.7 29.8 29.8 30.1 28.3 Service Producing Retail Trade 158.1 157.7 155.2 142.8 137.2 Wholesale Trade 44.5 45.3 45.5 42.6 41.5 Manufacturing Nondurable Goods 24.9 25.4 25.1 23.3 21.9 Durable Goods 78.9 78.0 78.5 76.6 71.5 Goods Producing Construction 92.4 90.7 81.3 70.8 65.1 Mining and Logging -ill:---.Qd -ill:-----.QJ.--.QJ. Total Nonfarm 1,303.9 1,319.5 1,322.1 1,291.5 1,248.4 Farm --.l.Q.d ----.22 --...liU ----.22 --2.,2 Total (all industries)~1.329.4 1.332.3 1.301.4 ~ (I)Annually,as ofDecember 2009. State of California Employment Development Department,Labor Market Information Division,"Industry Employment &LaborForce -by month,March 2008 Benchmark." C-4 Major Employers The major employers operating within the County of San Diego as of June 30,2009 are shown in Table No.C-4. TABLE NO.C-4 COUNTYOFSAN DIEGO MAJOR EMPLOYERS Employer Federal Government United States Navy State ofCalifornia University ofCalifornia,San Diego County ofSan Diego City ofSan Diego San Diego Unified School District Sharp Healthcare Scripps Health Scripps Mercy Hospital (Combined with Scripps Mercy Chula Vista) Source:' Number of Employees 43,500 42,000 40,900 26,000 20,500 19,500 15,881 14,390 12,700 11,000 Percent ofTotal Employment "Total Employment"as used above represents the total employment of all employers located within the City ofChula Vista city limits. C-5 Transportation Excellent surface,sea and air transportation facilities service San Diego County residents and businesses. Interstate 5 parallels the coast from Mexico to the Los Angeles area and points north.Interstate 15 runs inland,leading to Riverside-San Bernardino,Las Vegas and Salt Lake City.Interstate 8 runs eastward through the southern United States. San Diego's International Airport (Lindbergh Field)is located approximately one mile west of the downtown San Diego at the edge ofthe San Diego Bay.The facilities are owned and maintained by the San Diego Unified Port District and are leased to commercial airlines and other tenants.The airport is the third most active commercial airport in California,served by 18 major airlines.In addition to San Diego International Airport,there are two naval air stations and seven general aviation airports located in the county. San Diego is the terminus of the Santa Fe Railway's main line from Los Angeles.Amtrak passenger service is available at San Diego with stops at Del Mar and Oceanside in the north county.San Diego's harbor is one ofthe world's largest natural harbors.The harbor,a busy commercial port,has also become an extremely popular destination for cruise ships.The Port of San Diego is administered by the San Diego Unified Port District,which includes the cities of San Diego,National City,Chula Vista,Imperial Beach and Coronado. Research and Development Research and development activity plays an important role in the area's economy.The County is a leading health sciences and biomedical center.Approximately 35,000 persons are engaged in life sciences-related activities in the metropolitan area,with over 28,000 employed directly in health services. In addition to the University of California San Diego,other established research institutions include the Salk Institute for Biological Studies,the Scripps Clinic and Research Foundation,and the Scripps Institution ofOceanography. Visitor and Convention Activity An excellent climate,proximity to Mexico,extensive maritime facilities,and such attractions as the San Diego Zoo and Wild Animal Park,Sea World,Cabrillo National Monument,and Palomar Observatory allow San Diego to attract visitor and convention business each year.The development ofthe 4,600-acre Mission Bay Park at San Diego and the construction ofmeeting and convention facilities at the San Diego community concourse have contributed to the growth in tourism.The visitor and convention business is expected to continue to increase steadily. C-6 ,,'ii "~:III APPENDIXD FORM OF CONTINUING DISCLOSURE AGREEMENT D-l APPENDIXE PROPOSED FORM OF LEGAL OPINION OF BOND COUNSEL E-l APPENDIXF DTC AND THE BOOK-ENTRY-ONLY SYSTEM The following description ofthe Depository Trust Company ("DTC"),the procedures and record keeping with respect to beneficial ownership interests in the Bonds,payment ofprincipal,interest and other payments on the Bonds to DTC Participants or Beneficial Owners,corifirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC,the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.Accordingly,no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters,but should instead confirm the same with DTC or the DTC Participants,as the case may be. Neither the issuer of the Bonds (the "Issuer '')nor the trustee,fiscal agent or paying agent appointed with respect to the Bonds (the "Agent'')take any responsibility for the information contained in this Appendix. No assurances can be given that DTC,DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a)payments ofinterest,principal or premium,ifany,with respect to the Bonds, (b)certificates representing ownership interest in or other confirmation or ownership interest in the Bonds,or (c)redemption or other notices sent to DTC or Cede &Co.,its nominee,as the registered owner ofthe Bonds,or that they will so do on a timely basis,or that DTC,DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix.The current "Rules"applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures"ofDTC to befollowed in dealing with DTC Participants are on file with DTC. 1.The Depository Trust Company ("DTC"),New York,NY,will act as securities depository for the securities (the "Securities").The Securities will be issued as fully-registered securities registered in the name ofCede &Co.(DTC's partnership nominee)or such other name as may be requested by an authorized representative of DTC.One fully-registered Security certificate will be issued for each issue of the Securities,each in the aggregate principal amount ofsuch issue,and will be deposited with DTC. If,however,the aggregate principal amount of any issue exceeds $500 million,one certificate will be issued with respect to each $500 million ofprincipal amount,and an additional certificate will be issued with respect to any remaining principal amount ofsuch issue. 2.DTC,the world's largest securities depository,is a limited-purpose trust company organized under the New York Banking Law,a "banking organization"within the meaning ofthe New York Banking Law,a member of the Federal Reserve System,a "clearing corporation"within the meaning ofthe New York Uniform Commercial Code,and a "clearing agency"registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.DTC holds and provides asset servicing for over 3.5 million issues of U.S.and non-U.S.equity issues,corporate and municipal debt issues,and money market instruments (from over 100 countries)that DTC's participants ("Direct Participants")deposit with DTC.DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities,through electronic computerized book- entry transfers and pledges between Direct Participants'accounts.This eliminates the need for physical movement ofsecurities certificates.Direct Participants include both U.S.and non-U.S.securities brokers and dealers,banks,trust companies,clearing corporations,and certain other organizations.DTC is a wholly-owned subsidiary of The Depository Trust &Clearing Corporation ("DTCC").DTCC is the holding company for DTC,National Securities Clearing Corporation and Fixed Income Clearing Corporation,all of which are registered clearing agencies.OTCC is owned by the users of its regulated subsidiaries.Access to the DTC system is also available to others such as both U.S.and non-U.S. securities brokers and dealers,banks,trust companies,and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant,either directly or indirectly ("Indirect F-l Participants").DTC has Standard &Poor's highest rating:AAA.The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.More information about DTC can be found at www.dtcc.com and www.dtc.org.The information contained on these Internet sites is not incorporated herein by reference. 3.Purchases of Securities under the DTC system must be made by or through Direct Participants,which will receive a credit for the Securities on DTC's records.The ownership interest of each actual purchaser of each Security ("Beneficial Owner")is in turn to be recorded on the Direct and Indirect Participants'records.Beneficial Owners will not receive written confirmation from DTC oftheir purchase.Beneficial Owners are,however,expected to receive written confirmations providing details of the transaction,as well as periodic statements of their holdings,from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction.Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.Beneficial Owners will not receive certificates representing their ownership interests in Securities,except in the event that use ofthe book-entry system for the Securities is discontinued. 4.To facilitate subsequent transfers,all Securities deposited by Direct Participants with DTC are registered in the name ofDTC's partnership nominee,Cede &Co.,or such other name as may be requested by an authorized representative of DTC.The deposit of Securities with DTC and their registration in the name of Cede &Co.or such other DTC nominee do not effect any change in beneficial ownership.DTC has no knowledge of the actual Beneficial Owners of the Securities;DTC's records reflect only the identity ofthe Direct Participants to whose accounts such Securities are credited,which mayor may not be the Beneficial Owners.The Direct and Indirect Participants will remain responsible for keeping account oftheir holdings on behalfoftheir customers. 5.Conveyance of notices and other communications by DTC to Direct Participants,by Direct Participants to Indirect Participants,and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them,subject to any statutory or regulatory requirements as may be in effect from time to time.Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities,such as redemptions,tenders,defaults,and proposed amendments to the Security documents. For example,Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners.In the alternative,Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies ofnotices be provided directly to them. 6.Redemption notices shall be sent to DTC.If less than all ofthe Securities within an issue are being redeemed,DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7.Neither DTC nor Cede &Co.(nor any other DTC nominee)will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures.Under its usual procedures,DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date.The Omnibus Proxy assigns Cede &Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8.Redemption proceeds,distributions,and dividend payments on the Securities will be made to Cede &Co.,or such other nominee as may be requested by an authorized representative ofDTC. DTC's practice is to credit Direct Participants'accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent,on payable date in accordance with their respective holdings shown on DTC's records.Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,as is the case with securities held for the accounts of customers in F-2 bearer fonn or registered in "street name,"and will be the responsibility of such Participant and not of DTC,Agent,or Issuer,subject to any statutory or regulatory requirements as may be in effect from time to time.Payment ofredemption proceeds,distributions,and dividend payments to Cede &Co.(or such other nominee as may be requested by an authorized representative ofDTC)is the responsibility of Issuer or Agent,disbursement of such payments to Direct Participants will be the responsibility of DTC,and disbursement ofsuch payments to the Beneficial Owners will be the responsibility ofDirect and Indirect Participants. 9.DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent.Under such circumstances,in the event that a successor depository is not obtained,Security certificates are required to be printed and delivered. 10.Issuer may decide to discontinue use ofthe system ofbook-entry-only transfers through DTC (or a successor securities depository).In that event,Security certificates will be printed and delivered to DTC. 11.The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes to be reliable,but Issuer takes no responsibility for the accuracy thereof. F-3 APPENDIXG NATIONAL PUBLIC FINANCE GUARANTEE CORPORATE DISCLOSURE 0-1 AttachmentE Stradling Yocca Carlson &Rauth Draft of2/9/10 CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement,dated as of ,2010 (the "Disclosure Agreement")is executed and delivered by the Otay Water District (the "District")and Union Bank, N.A.(the "Dissemination Agent")in connection with the execution and delivery of $ _ Otay Water District Water Revenue Bonds,Series 2010A (Non-AMT Tax Exempt Bonds)(2010 Water System Project)and $Otay Water District Water Revenue Bonds,Series 2010B (Taxable Build America Bonds)(2010 Water System Project)(collectively,the "Bonds").The Bonds are being executed pursuant to a Trust Agreement,dated as ofMarch 1,2010,by and between Union Bank,N.A.,as trustee (the "Trustee")and the Otay Water District Financing Authority (the "Authority").The District covenants as follows: SECTION 1.Purpose of the Disclosure Agreement.This Disclosure Agreement is being executed and delivered by the District for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule. SECTION 2.Definitions.In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized tenn used in this Disclosure Agreement unless otherwise defined in this Section,the following capitalized tenns shall have the following meanings: "Annual Report"shall mean any Comprehensive Annual Financial Report provided by the District pursuant to,and as described in,Sections 3 and 4 ofthis Disclosure Agreement. "Beneficial Owner"shall mean any person which (a)has the power,directly or indirectly,to vote or consent with respect to,or to dispose of ownership of,any Bonds (including persons holding Bonds through nominees,depositories or other intennediaries),or (b)is treated as the owner of any Bonds for federal income tax purposes. "Disclosure Representative"shall mean the General Manager of the District and the Chief Financial Officer,or their designee,or such other officer or employee as the District shall designate in writing from time to time. "Dissemination Agent"shall mean Union Bank,N.A.,or any successor Dissemination Agent designated in writing by the District and which has filed with the District a written acceptance of such designation. "EMMA"shall mean the Electronic Municipal Market Access system ofthe MSRB. "Holder"shall mean the registered owner ofany Bond. "Listed Events"shall mean any of the events listed III Section 5(a)of this Disclosure Agreement. "MSRB"shall mean the Municipal Securities Rulemaking Board. "Official Statement"shall mean the Official Statement relating to the Bonds,dated ___,2010. DOCSOC/1390964v2/200077-0003 "Participating Underwriter"shall mean the original underwriter of the Bonds required to comply with the Rule in connection with the offering ofthe Bonds. "Repository"shall mean the EMMA system of the MSRB or any other entity designated under the Rule as the repository for filings made pursuant to the Rule. "Rule"shall mean Rule 15c2-12(b)(5)adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934,as the same may be amended from time to time. "State"shall mean the State ofCalifornia. SECTION 3.Provision ofAnnual Reports. (a)The District shall,or,upon delivery of the Annual Report to the Dissemination Agent,shall cause the Dissemination Agent to,not later than March 31 of each year, commencing March 31,2010,provide to the Repository an Annual Report which is consistent with the requirements ofSection 4 ofthis Disclosure Agreement.The Annual Report shall be provided to the Repository in an electronic format as prescribed by the Repository and shall be accompanied by identifying information as prescribed by the Repository.The Annual Report may be submitted as a single document or as separate documents comprising a package,and may cross-reference other information as provided in Section 4 of this Disclosure Agreement;provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date.If the District's fiscal year changes,it shall give notice ofsuch change in the same manner as for a Listed Event under Section 5(c). (b)Not later than fifteen (15)business days prior to the date specified in subsection (a)for providing the Annual Report to the Repository,the District shall provide the Annual Report to the Dissemination Agent (if other than the District).If the District is unable to provide to the Repository an Annual Report by the date required in subsection (a),the Dissemination Agent shall send a notice to the Repository in substantially the form attached as Exhibit A. (c)The Dissemination Agent shall: (i)confirm the electronic filing requirements of the Repository for the Annual Reports;and (ii)ifthe Dissemination Agent is other than the District,file a report with the District certifying that the Annual Report has been provided pursuant to this Disclosure Agreement,stating the date it was provided to the Repository. (d)Notwithstanding any other provision ofthis Disclosure Agreement,all filings shall be made in accordance with the MSRB's EMMA system,or in another manner approved under the Rule. 2 DOCSOC/1390964v2/200077-0003 SECTION 4.Content of Annual Reports.The Annual Report due as of March 31,2010 shall consist of the Official Statement.Thereafter,the District's Annual Report shall contain or include by reference the following: (a)The District's audited financial statements,prepared in accordance with generally accepted auditing standards for municipalities in the State of California.If the District's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a),the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement,and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b)To the extent not contained in the audited financial statements filed pursuant to the preceding subsection (a)by the date required by Section 3 hereof,updates of Tables 1 through 9 under the caption "THE WATER SYSTEM." Any or all of the items listed above may be included by specific reference to other documents,including official statements ofdebt issues ofthe District or related public entities,which have been submitted to the Repository or the Securities and Exchange Commission.Ifthe document included by reference is a final official statement,it must be available from the MSRB.The District shall clearly identify each such other document so included by reference. SECTION 5.Reporting ofSignificant Events. (a)Pursuant to the provisions ofthis Section 5,the District shall give,or cause to be given,notice of the occurrence of any of the following events with respect to the Bonds,if material: (i)Principal and interest payment delinquencies. (ii)Non-payment related defaults. (iii)Modifications to rights ofHolders. (iv)Optional,contingent or unscheduled Bond calls. (v)Defeasances. (vi)Rating changes. (vii)Adverse tax opinions or events affecting the tax-exempt status ofthe interest on the Bonds. (viii)Unscheduled draws on the debt service reserves reflecting financial difficulties. (ix)Unscheduled draws on the credit enhancements reflecting financial difficulties. (x)Substitution of the credit or liquidity providers or their failure to perform. 3 DOCSOC/1390964v2/200077-0003 (xi)Release,substitution or sale of property securing repayment of the Bonds. (b)Whenever the District obtains knowledge ofthe occurrence ofa Listed Event, the District shall as soon as possible determine if such event would be material under applicable federal securities laws. (c)If the District determines that knowledge ofthe occurrence of a Listed Event would be material under applicable federal securities laws,the District shall promptly file a notice of such occurrence with the Repository or provide the notice to the Dissemination Agent for filing with the Repository.If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event,the Dissemination Agent shall file a notice ofsuch occurrence with the Repository.Notwithstanding the foregoing,notice of Listed Events described in subsections (a)(iv) and (v)need not be given under this subsection any earlier than the notice (ifany)ofthe underlying event is given to Holders ofaffected Bonds pursuant to the Trust Agreement. (d)The District hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the District and that the Dissemination Agent shall not be responsible for determining whether the District's instructions to the Dissemination Agent under this Section 5 comply with the requirements ofthe Rule. (e)Any of the filings required to be made under this Section 5 shall be made in accordance with the MSRB's EMMA system or in another manner approved under the Rule. SECTION 6.Termination of Reporting Obligation.The District's obligations under this Disclosure Agreement shall terminate upon the legal defeasance,prior redemption or payment in full of all ofthe Bonds.If such termination occurs prior to the final maturity of the Bonds,the District shall give notice ofsuch termination in the same manner as for a Listed Event under Section 5(c). SECTION 7.Dissemination Agent.The District may,from time to time,appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent,with or without appointing a successor Dissemination Agent.The Dissemination Agent shall not be responsible in any manner for the form or content of any notice or report prepared by the District pursuant to this Disclosure Agreement. The Dissemination Agent may resign by providing thirty days written notice to the District and the Trustee.The Dissemination Agent shall not be responsible for the content of any report or notice prepared by the District and shall have no duty to review any information provided to it by the District.The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the District in a timely manner and in a form suitable for filing. SECTION 8.Amendment;Waiver.Notwithstanding any other provision ofthis Disclosure Agreement,the District may amend this Disclosure Agreement,and any provision of this Disclosure Agreement may be waived,provided that,in the opinion ofnationally recognized bond counsel,such amendment or waiver is permitted by the Rule;provided,the Dissemination Agent shall have first consented to any amendment that modifies or increases its duties or obligations hereunder.In the event of any amendment or waiver of a provision of this Disclosure Agreement,the District shall describe such amendment in the next Annual Report,and shall include,as applicable,a narrative explanation ofthe reason for the amendment or waiver and its impact on the type (or in the case of a 4 DOCSOC11390964v2/200077-0003 change of accounting principles,on the presentation)offinancial information or operating data being presented by the District.In addition,if the amendment relates to the accounting principles to be followed in preparing financial statements,(i)notice of such change shall be given in the same manner as for a Listed Event under Section 5(c),and (ii)the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also,if feasible,in quantitative form)between the financial statements as prepared on the basis ofthe new accounting principles and those prepared on the basis ofthe former accounting principles. SECTION 9.Additional Information.Nothing in this Disclosure Agreement shall be deemed to prevent the District from disseminating any other information,using the means of dissemination set forth in this Disclosure Agreement or any other means of communication,or including any other information in any Annual Report or notice of occurrence of a Listed Event,in addition to that which is required by this Disclosure Agreement.If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement,the District shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice ofoccurrence of a Listed Event. SECTION 10.Default.In the event ofa failure ofthe District to comply with any provision ofthis Disclosure Agreement,any Holder or Beneficial Owner ofthe Bonds may take such actions as may be necessary and appropriate,including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Agreement.A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement,and the sole remedy under this Disclosure Agreement in the event of any failure of the District or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. No Bondholder or Beneficial Owner may institute such action,suit or proceeding to compel performance unless they shall have first delivered to the District satisfactory written evidence ofsuch Holder's or Beneficial Owner's status as such,and a written notice of and request to cure such failure,and the District shall have refused to comply therewith within a reasonable time. SECTION 11.Duties,Immunities and Liabilities of Dissemination Agent.The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement,and the District agrees,to the extent permitted by law,to indemnify and save the Dissemination Agent,its officers,directors,employees and agents,harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder,including the costs and expenses (including attorney's fees)of defending against any claim of liability,but excluding liabilities due to the Dissemination Agent's, its officers',directors',employees'and agents'negligence or willful misconduct.The Dissemination Agent shall be paid compensation by the District for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses,legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.In performing its duties hereunder,the Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the District,the Holders,or any other party.The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. 5 DOCSOC/1390964v2/200077-0003 SECTION 12.Notices.Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows: District: Dissemination Agent: Otay Water District 2554 Sweetwater Springs Boulevard Spring Valley,CA 91978 Attention:General Manager Union Bank,N.A. 120 South San Pedro Street,4th Floor Los Angeles,CA 90012 Attention:Corporate Trust SECTION 13.Beneficiaries.This Disclosure Agreement solely to the benefit ofthe District, the Dissemination Agent,the Participating Underwriter and Holders and Beneficial Owners from time to time ofthe Bonds,and shall create no rights in any other person or entity. 6 DOCSOC/1390964v2/200077-0003 SECTION 14.Signature.This Disclosure Agreement has been executed by the undersigned on the date hereof,and such signature binds the District to the undertaking herein provided. OTAY WATER DISTRICT By:_ Its:Chief Financial Officer UNION BANK,N.A.,as Dissemination Agent By:._ Its:Authorized Officer 7 DOCSOC/1390964v2/200077-0003 EXHIBIT A NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT i NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement by and between the District and Union Bank,N.A.,as dissemination agent,dated as ofMarch 1,2010.The District anticipates that the Annual Report will be filed by _ Name ofIssuer: Name ofBond Issues: Date ofIssuance: Dated: cc:Issuer DOCSOC/1390964v21200077-0003 Otay Water District $Otay Water District Water Revenue Bonds,Series 2010A (Non-AMT Tax Exempt Bonds)(2010 Water System Project) and $Otay Water District Water Revenue Bonds,Series 2010B (Taxable Build America Bonds)(2010 Water System Project) ____,2010 Dissemination Agent By:_ A-I I !! r I AGENDA ITEM 9c OTAY WATER DISTRICT FINANCING AUTHORITY ORGANIZATIONAL MEETING Action: Purpose: Meeting: Recommendation: Organizational;Adopt Resolution No.2010-01 Approving Bylaws,Appointing Commissioners and Officers for the Authority,Ratifying Certain Actions,and Adopting a Schedule for Regular Meetings To designate the Commissioners and Officers ofthe Otay Water District Financing Authority March 3,2010 That the Authority Commission adopt Resolution No.2010-01 approving the Bylaws of the Authority,appointing commissioners and officers,approving and ratifying all actions heretofore taken in connection with the establishment of the Authority,and establishing regular meetings ofthe Authority to be held on the first Wednesday of each January and March,commencing with March 3,2010. Background: The Otay Water District,a municipal water district (the "District"),requested that the California Municipal Financing Authority ("CMFA"),a joint exercise of powers authority created under the Joint Exercise of Powers Act (California Government Code Sections 6500 et seq.)and a joint exercise of powers agreement relating to CMFA dated as of January 1,2004 (the "JPA Agreement"),assist the District with a proposed financing ofcapital improvement proj ects ofthe District.The CMFA agreed to assist in the financing and requested that the District become a member of the CMFA.The District approved a Resolution at its February 3,2010 meeting and soon thereafter, signed and delivered the JPA Agreement,thereby becoming a member of CMFA.Now, the District and CMFA desire to create a new joint exercise ofpowers entity to be known as the Otay Water District Financing Authority ("Authority"),a single purpose entity controlled by the District,with the sole purpose of issuing revenue bonds for the benefit ofthe District.CMFA and the District will be the only members ofthe Authority. Historically,the District has issued its debt as certificates of participation through its own non-profit corporation.However,several factors,including changes in the municipal market currently support the issuance of revenue bonds instead of certificates ofparticipation.The Authority is authorized to issue bonds pursuant to the provisions of Articles 1 and 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State ofCalifornia. Analysis: The Board ofDirectors ofthe District ("Board")will serve as the governing board ofthe Authority ("Authority Commission").Each member of the Board will serve on the Authority Commission in the same capacity as on the Board. The officers of the Authority will be staff members of the District.The General Manager of the District will serve as the Executive Director ofthe Authority,the District Secretary will serve as the Secretary of the Authority and the District's Chief Financial Officer will serve as the Treasurer/Auditor ofthe Authority. The Resolution also approves and ratifies certain actions previously taken in connection with the formation of the Authority,including but not limited to the execution and delivery of the Joint Powers Agreement,the posting of the Agenda for this meeting and the notice given regarding the same.The Resolution also authorizes and directs the Executive Director,Treasurer/Auditor and Secretary of the Authority file,execute and deliver any documents or certificates and take any and all actions necessary or desirable to consummate the transactions therein contemplated. Since the law requires that the Authority authorize the issuance of debt at a regularly scheduled meeting,it is recommended that the Authority Commission establish regular meetings ofthe Authority to be held each year on the first Wednesday of March. In addition,it is recommended that the Authority Commission establish a regular meeting on the first Wednesday of each January,concurrently with its annual organizational meeting for the District and the District's financing corporation. Attachments: A)Resolution No.2010-01 B)Bylaws 2 Attachment A RESOLUTION NO.2010-01 A RESOLUTION OF THE AUTHORITY COMMISSION OF THE OTAY WATER DISTRICT FINANCING AUTHORITY APPOINTING OFFICERS OF THE AUTHORITY,ADOPTING BYLAWS AND PROVIDING FOR A FILING WITH THE CALIFORNIA SECRETARY OF STATE WHEREAS,the Otay Water District Financing Authority (the "Authority")has been formed pursuant to a Joint Exercise ofPowers Agreement (the "Agreement")between the Otay Water District (the "District")and the California Municipal Finance Authority ("CMFA"),dated as ofMarch 3,2010, between the District and CMFA;and WHEREAS,the Authority Commission,as the governing board of the Authority,desires to appoint officers,adopt bylaws,and approve a filing with the California Secretary of State,as provided for in the Government Code ofthe State of California;and WHEREAS,the Authority has determined that it is desirable and furthers its public purpose to assist in the financing of certain projects in the District's Capital hnprovement Program (the "2010 Project"),and that the District will benefit from demonstrable savings in the costs of financing the 2010 Project as a result ofthe Authority's participation;and WHEREAS,the Authority proposes to issue its Water Revenue Bonds,2010 Series A and its Water Revenue Bonds,2010 Series B (collectively,the "Bonds")for the purpose offinancing the 201a Project; NOW,THEREFORE,BE IT RESOLVED by the Authority Commission as follows: Section 1.The Authority Commission hereby adopts the Bylaws of the Authority,on file with the Secretary ofthe Authority and incorporated herein by reference. Section 2.The Authority Commission hereby appoints the members ofthe Board ofDirectors ofthe District to serve in the same capacity for the Authority Commission as they serve in the Board of Directors ofthe District,initially,the following persons shall serve as the President and Vice-President ofthe Authority Commission: President: Vice-President: Jaime Bonilla Jose Lopez Section 3.The Authority Commission hereby appoints the Officers of the Authority in accordance with the Agreement and the Bylaws ofthe Authority: Executive Director: Treasurer/Auditor: Secretary to the Authority Commission: Mark Watton Joseph Beachem Susan Cruz Section 4.The Authority Commission hereby authorizes the Secretary ofthe Authority to cause a notice of the Agreement to be prepared and filed with the Office of the California Secretary of State, which notice shall contain the following information: ,.: ~: "~ (a) (b) (c) the name of each party to the Joint Exercise of Powers Agreement creating the Authority; the date upon which the Joint Exercise ofPowers Agreement became effective; a statement of the purpose of the Joint Exercise of Powers Agreement and the power or powers to be exercised by the Authority;and (d)a description of any amendments made to the Joint Exercise of Powers Agreement prior to such filing. The Secretary of the Authority is hereby directed to file such notice within 30 days ofMarch 3,2010, the effective date ofthe Agreement. Section 5.Pursuant to the Bylaws,regular meetings of the Authority Commission will be held on the first Wednesday of January and March in each calendar year. Section 6.All ofthe recitals herein set forth are true and correct and the Authority Commission so finds and determines. Section 7.The Authority Commission hereby approves and ratifies all actions heretofore taken in connection with the establishment of the Authority,including but not limited to the execution and delivery of the Joint Powers Agreement,the posting of the Agenda for this meeting and the notice given regarding the same.The Executive Director,Treasurer/Auditor and Secretary of the Authority, each acting alone,are hereby authorized and directed to do any and all things,file,execute and deliver any documents or certificates and take any and all actions necessary or desirable to consummate, document and carry out the transactions herein contemplated. Section 8.This Resolution shall take effect immediately upon passage. PASSED,APPROVED AND ADOPTED this 3rd day ofMarch,2010. Jaime Bonilla,President ofthe Commission Otay Water District Financing Authority Attest: Susan Cruz,Secretary to the Otay Water District Financing Authority 2 STATE OF CALIFORNIA ) )ss COUNTY OF SAN DIEGO ) I,Susan Cruz,Secretary to the Commission of the Otay Water District Financing Authority,do hereby certify that the foregoing Resolution No.2010-01 was duly adopted by the Commission of the Otay Water District Financing Authority at a regular meeting thereof held on the 3rd day of March,2010 by the following vote: Ayes: Noes: Abstain: Absent: I further certify that the foregoing is a full,true and correct copy ofResolution No.2010-01,and that the same has not been modified,amended or repealed. DATE:_ Susan Cruz,Secretary to the Otay Water District Financing Authority 3 ;:1 !i Attachment B BYLAWS OF THE OTAY WATER DISTRICT FINANCING AUTHORITY ARTICLE I -THE AUTHORITY Section 1. shall be the "Authority"). Name of Authority. "Otay Water District The name of the Authority Financing Authority"(the Section 2.Office of Authority.The office of the Authority shall be at the offices of Otay Water District (the "District"),2554 Sweetwater Springs Blvd.,Spring Valley,CA 91978. Section 3.Governing Body.The members of the Board of Directors of Otay Water District shall constitute the governing body of the Authority,which governing body shall be known as the Authori ty Commission.The members of the Authority Commission shall serve in the same capacity for the Authority as they serve for the Otay Water District.The President and Vice President of the Authority Commission shall be as follows: President.The President shall be the member of the Authority Commission who is the then current President of the Board of Directors of the District.The President shall preside at all meetings of the Authority Commission. Vice-President.The Vice-President shall be the member of the Authority Commission who is the then current Vice-President of the Board of Directors of the District.The Vice-President shall perform the duties of the President in the absence or incapacity of the President. ARTICLE II -OFFICERS Section 1.Officers.The officers of the Authority,in addition to the President and the Vice-President of the Authority Commission,shall be an Executive Director,a Secretary and a Treasurer/Auditor.An officer is authorized to sign for and in the name of the Authority all contracts,deeds and other instruments approved by the Authority Commission to be made by the Authority. Section 2 .Executive Director.The Executive Director of the Authority shall be the General Manager of the Otay Water District.The Executive Director shall conduct day-to-day administration of the Authority's business and affairs,subj ect to the direction of the Authority Commission. Section 3.Treasurer/Auditor.The Treasurer/Auditor shall be the then current or acting Chief Financial Officer of the Otay Water District.The Treasurer/Auditor shall keep regular books of accounts showing receipts and expenditures and shall render to the Authority Commission,as requested,an account of the transactions of the Authority and shall perform the duties required by the Joint Exercise of Powers Act,being California Government Code Section 6500 et seq.(the "Act")and any other duties that are designated from time to time by the Authority.The Treasurer/Auditor or in the absence of the Treasurer/Auditor,a person appointed by the Treasurer/Auditor or the Authority Commission,shall have the care and custody of all funds of the Authority.The Treasurer/Auditor may enter into agreements on behalf of the Authority with any financial institution authorized to accept deposits of public funds, providing for the transfer of funds between accounts maintained therein by the Authority upon request by telephone.Such agreements may also provide for the investment upon request by telephone of funds maintained in such accounts,in property or securities in which public agencies may legally invest money subj ect to their control.Such agreements shall designate the accounts maintained by the Authority which are subject thereto, and the persons who may,from time to time,make such transfers and direct such investments by telephone request. Section 4.Secretary.The Secretary shall be the then current or acting Secretary of Otay Water District.The Secretary shall keep the records of the Authority,shall act as Secretary of the meetings of the Authority Commission and record all votes,and shall keep a record of the proceedings of the Authority Commission in the form of minutes to be kept for such purpose,and shall perform all duties incident to the office of Secretary. :1 1 IirI'~: Section 5. Counsel of the Authority. General Counsel. District shall serve The then current as General Counsel General to the Section 6.Duties.The officers of the Authority shall perform such other duties and functions as may from time to time be required by the Authority or these Bylaws or by resolution, rules and regulations or by motion of the Authority Commission. Any officer of the Authority may sign,with the countersignature of one other officer,deputy officer or member of the Authority, all orders and checks for the payment of money under the direction of the Authority. Section 7.Assistants and Deputies ;Additional Personnel. Whenever an officer of the Otay Water District is designated an officer of the Authority,the assistants and deputies of such officers from time to time shall also be,ex officio,officers of 2 the Authority;and whenever a power is granted to,or a duty imposed upon,such officer,the power may be exercised,or a duty performed,by such assistant or deputy.The Authority Commission may from time to time employ such other personnel as it deems necessary to exercise its powers,duties and functions.The selection and compensation of such officers and other personnel shall be determined by the Authority Commission. ARTICLE III -MEETINGS Section 1.Regular Meetings.Regular meetings shall be held at least once a year at the business office of the Authority,or at such other place as the President may designate, on dates and at a time as fixed by the President of the Authority Commission.If at any time any regular meeting falls on a legal holiday,such regular meeting shall be held on the next business day at the same time .Initially,regular meetings will be held on the first Wednesday of January and March in each calendar year. Section 2.Special Meetings.A special meeting may be called at any time by the President or upon the request of a majority of the members of the Authority Commission as permitted by law. Section 3.Closed Sessions.Nothing contained in these Bylaws shall be construed to prevent the Authority Commission from holding closed sessions during a regular or special meeting concerning any matter permitted by law to be considered in a closed session. Section 4.Public Hearing.All public hearings held by the Authority Commission shall be held during regular or special meetings of the Authority Commission. Section 5.Adjourning Meetings and Continuing Public Hearings to Other Times or Places.The Authority Commission may adjourn any meeting to a time and place specified in the order of adj ournment.Less than a quorum may so adj ourn from time-to- time.If all members are absent from any regular meeting or adjourned regular meeting,the Secretary or Acting Secretary of the Authority may declare the meeting adjourned to a stated time and place and shall cause a written notice of the adjournment to be given in the manner permitted by law. Any public hearing being held,or any hearing noticed or ordered to be held at any meeting may by order or notice of continuance be continued,or recontinued to any subsequent meeting in the same manner and to the same extent set forth herein for the adjournment of the meetings;provided,that if the 3 hearing is continued to a time less than 24 hours after the time specified in the order or notice of hearing a copy of the order or notice of continuance shall be posted immediately following the meeting at which the order or declaration of continuance was adopted or made. Section 6.Applicability of Ralph M.Brown Act. Meetings of the Authority shall be held,notice given and the business of the Authority conducted,all as provided in the Ralph M.Brown Act,being California Government Code Section 54950 et seq. Section 7.Quorum.A majority of the members of the Authority Commission shall constitute a quorum for the purpose of conducting its business and exercising its powers and for all other purposes,but a smaller number may adj ourn from time-to- time until a quorum is obtained.Action may be taken by the Authority Commission upon a vote of a maj ority of a quorum, unless a higher vote is required by law or by these Bylaws. Section 8. resolutions and President. Manner of Voting.The manner of voting on on other matters shall be as prescribed by the ARTICLE IV -AMENDMENTS Section 1.Amendments to Bylaws.The Bylaws may be amended by the Authority at any regular or special meeting by the affirmative vote of a majority of the members of the Authority Commission. 4 AGENDA ITEM 9d OTAY WATER DISTRICT FINANCING AUTHORITY REGULAR MEETING Action: Purpose: Meeting: Adopt Resolution 2010-02 Authorizing the Issuance of Water Revenue Bonds and Approving the Execution and Delivery of Documents Related Thereto and Authorizing Related Actions To obtain authorization for the issuance of revenue bonds to finance certain capital improvement projects of the Otay Water District March 3,2010 Recommendation: It is recommended that the Authority Commission adopt Resolution No.2010-02 authorizing the issuance of revenue bonds in a principal amount not to exceed $52,000,000 to finance the acquisition,construction,improvement,renovation and equipping of facilities of the Otay Water District and approving documents and matters relating thereto. Background: The Otay Water District (the "District")approached the California Municipal Financing Authority ("CMFA")in connection with a proposed financing of capital improvement projects of the District.The CMFA agreed to create a new joint powers authority with the District,to be known as the Otay Water District Financing Authority ("Authority").Both CMFA and the District approved the formation of the Authority and approved a form ofjoint exercise of powers agreement for that purpose.The initial and immediate purpose of the Authority is to facilitate the issuance ofrevenue bonds for the benefit ofthe District. Analysis: The District has adopted a Resolution authorizing the issuance ofcertain taxable and tax-exempt bonds (collectively,the "2010 Bonds"),and the execution and delivery of related documents by the District.The Authority is now being asked to approve and authorize the issuance of the 2010 Bonds,the execution and delivery of required documents and certain actions deemed necessary or advisable in connection therewith. The 20 I0 Bonds will be issued as a mix of taxable Build America Bonds, pursuant to the provisions of the American Recovery and Reinvestment Act of2009 (the "BABs"),and traditional tax-exempt bonds to obtain the most beneficial blend ofdebt for the District.The 2010 Bonds will be payable as to principal and interest from pledged revenues under the Trust Agreement (described below).The pledged revenues will be in the fonn of installment payments and other payments to be made by the District to the Authority pursuant to the Installment Purchase Agreement (described below).The installment purchase payments will be made on a parity basis with certain installment purchase payments being made by the District,from Net Revenues of the District,in connection with outstanding certificates of participation of the District,as more specifically described in the Installment Purchase Agreement and the Official Statement. The Authorizing Resolution (Attachment A)approves the Bond issuance subject to certain preconditions,approves the fonn of the documents discussed below,and delegates authority to the President of the Authority Commission and to the Officers of the Authority to finalize,execute and deliver the documents and to do any and all things necessary to complete the transaction.Pursuant to the Authorizing Resolution,the following documents are being authorized in substantially the fonn on file with the Secretary of the Authority,and the President and the Officers of the Authority are being authorized and directed to execute and deliver the same,with such changes thereto as deemed necessary or advisable: •The Trust Agreement provides for the issuance ofthe Bonds. •The Official Statement is the primary disclosure document for the transaction.The preliminary Official Statement is on file with the Secretary and contains infonnation necessary for investors to make infonned buying decisions regarding the Bonds.It also contains infonnation on the District water supplies,operations,CIP,finances,and the regional economy.The Resolution authorizes the Underwriter to distribute the preliminary Official Statement and to deliver the final Official Statement. •The Installment Purchase Agreement provides for payments to be made to the Authority by the District from Net Revenues of the District's water system. •The Continuing Disclosure Agreement,attached to the Preliminary Official Statement,prescribes ongoing infonnation disclosure responsibilities ofthe District. •The Bond Purchase Agreement establishes final conditions of the sale of the Bonds to the Underwriter. The District has traditionally caused its debt to be sold on a competitive basis. The District's finance policy provides that debt shall be issued on a competitive basis unless special circumstances warrant a negotiated sale.The District staff and the Financial Advisor recommend a negotiated sale for the Bonds due to:(i)volatile market conditions;(ii)the need to tap a new investor base for the sale ofthe BABs;and (iii)the need for flexibility at the time of sale to determine the most cost effective mix of BABs and traditional tax-exempt bonds at the time ofpricing. 2 The District staff and the Financial Advisor forwarded requests for proposals to several underwriters and received and evaluated five proposals.The District staff,with input from the Financial Advisor,selected Citigroup Global Markets,Inc.to serve as the Underwriter for the Bonds.The Resolution authorizing the issuance ofthe bonds,ratifies this selection,authorizes the District to execute and deliver a bond purchase agreement with the Underwriter and sets forth certain terms and conditions for the bond purchase agreement,including the condition that the underwriter discount or takedown does not exceed $5.00 per $1,000 for the tax-exempt bonds and $6.75 per $1,000 for the BABs. In connection with the BABs,the Authority will be entitled to receive cash subsidy payments from the United States Treasury (the "Interest Subsidy Payments"). The Authority wishes to designate the District as the recipient of any such Interest Subsidy Payments pursuant to the Resolution and pursuant to the Installment Purchase Agreement. Attachments: A)Resolution No.2010-02 3 Attachment A RESOLUTION NO.2010-02 OTAY WATER DISTRICT FINANCING AUTHORITY A RESOLUTION AUTHORIZING THE ISSUANCE OF REVENUE BONDS IN A PRINCIPAL AMOUNT NOT TO EXCEED $52,000,000 TO FINANCE THE ACQUISITION,CONSTRUCTION,IMPROVEMENT,RENOVATION AND EQUIPPING OF FACILITIES OF THE OTAY WATER DISTRICT; APPROVING THE EXECUTION AND DELIVERY OF AN INSTALLMENT PURCHASE AGREEMENT,A TRUST AGREEMENT,A BOND PURCHASE AGREEMENT,AN OFFICIAL STATEMENT AND OTHER DOCUMENTS AND CERTIFICATES RELATING TO THE TRANSACTION AND APPROVING OTHER ACTIONS RELATING THERETO WHEREAS,pursuant to the provisions of the Joint Exercise of Powers Act,compnsmg Articles 1,2,3 and 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6500)of the Government Code of the State of California (the "JPA Act"),the Otay Water District (the "District") and the California Municipal Finance Authority ("CMFA")entered into a joint exercise of powers agreement (the "Agreement")pursuant to which the Otay Water District Financing Authority (the "Authority")was organized;and WHEREAS,the Authority is authorized by its Agreement and the JPA Act to issue bonds, notes or other evidences of indebtedness,or certificates of participation in leases or other agreements for all purposes permitted by the JPA Act and described in the Agreement;and WHEREAS,pursuant to the provisions of the JPA Act,the parties comprising the Authority are authorized to jointly exercise any power common to such contracting parties,including,without limitation,the power to finance the acquisition,construction,rehabilitation,equipping,disposition property,both real and personal;and WHEREAS,the District is a municipal water district and wishes to finance the acquisition and construction ofimprovements,betterments,renovations,and expansions ofcertain facilities owned and operated by the District for its water system to provide for the production,acquisition,treatment and distribution ofpotable and reclaimed water (the "2010 Project");and WHEREAS,the District has requested that the Authority issue and sell the Bonds (hereinafter defined)for the purpose of making a loan to the District to finance the 2010 Project;and WHEREAS,the District is empowered to acquire,own and operate the water and reclaimed water facilities it intends to finance;and WHEREAS,pursuant to a Trust Agreement,dated March 1,2010 (or such other date as approved by the Authority)(the "Trust Agreement"),between the Authority and Union Bank of California,N.A.(the "Trustee"),the Authority will issue the OTAY WATER DISTRICT FINANCING AUTHORITY,WATER REVENUE BONDS,SERIES 2010A (NON-AMT TAX-EXEMPT BONDS) (2010 WATER SYSTEM PROJECT)(the "Series A Bonds")and the OTAY WATER DISTRICT FINANCING AUTHORITY WATER REVENUE BONDS,SERIES 2010B (TAXABLE BUILD AMERICA BONDS)(2010 WATER SYSTEM PROJECT)(the "Series B Bonds"and,together with the Series A Bonds,the "Bonds")for the purpose,among others,offinancing the 2010 Project;and WHEREAS,pursuant to the Installment Purchase Agreement,dated as of March 1,2010 (or such other date as approved by the Authority)(the "Installment Purchase Agreement"),between the Authority and the District,the Authority will loan the proceeds of the Bonds to the District for the purpose,among others,of financing the 2010 Project;and WHEREAS,pursuant to a Bond Purchase Agreement,to be dated the date of sale ofthe Bonds (the "Bond Purchase Agreement"),among Citigroup Global Markets Inc.,as underwriter (the "Underwriter"),the Authority and the District,the Bonds will be sold to the Underwriter,and the proceeds of such sale will be used as set forth in the Trust Agreement to finance the 2010 Project, to fund a debt service reserve account,ifone is established,and to pay costs incurred in connection with the issuance ofthe Bonds;and WHEREAS,the Bonds will be offered for sale through an official statement,and a preliminary form ofthe Official Statement is being presented to this Authority Commission for approval;and WHEREAS,some of the Bonds may be issued as taxable "Build America Bonds"under the provisions of the American Recovery and Reinvestment Act of 2009,such that the Authority will be entitled to receive cash subsidy payments from the United States Treasury (the "Interest Subsidy Payments"),and the Authority wishes to designate the District as the recipient of any such Interest Subsidy Payments pursuant to this Resolution and pursuant to the Installment Purchase Agreement; and WHEREAS,there have been placed on file with the Authority prior to this meeting the following documents and agreements: (1)A proposed form ofthe Trust Agreement; (2)A proposed form ofthe Installment Purchase Agreement; (3)A proposed form ofthe Bond Purchase Agreement;and (4)A proposed form of official statement (the "Official Statement")to be used by the Underwriter in connection with the offering and sale ofthe Bonds;and WHEREAS,GCR,LLP has been selected to serve as Bond Counsel to the Authority,Stradling Yocca Carlson &Rauth,a Professional Corporation,has been selected to serve as Disclosure Counsel to the Authority,Harrell &Company Advisors has been selected to serve as the Financial Advisor to the Authority,and Citigroup Global Markets,Inc.has been selected to act as the underwriter (the "Underwriter")for the Bonds,and each ofthose entities is hereby confirmed to serve the Authority in those capacities in connection with the Bonds,pursuant to the terms of any contract or agreement entered into with the District;and WHEREAS,all acts,conditions and things required by the Constitution and laws of the State of California to exist,to have happened and to have been performed precedent to and in connection with the making ofthe agreements and the consummation ofthe financing authorized by this resolution do exist,have happened and have been performed in regular and due time,form and manner,and the 2 Authority is duly authorized and empowered,pursuant to each and every requirement of law,to consummate such financing as provided in this resolution. NOW THEREFORE,BE IT RESOLVED by the Authority Commission of the Otay Water District Financing Authority (the "Board"),as follows: Section 1.The Authority Commission hereby finds and determines that the foregoing recitals are true and correct. Section 2.Pursuant to the JPA Act and the Trust Agreement,the Authority is hereby authorized to issue its revenue bonds designated as the OTAY WATER DISTRICT FINANCING AUTHORITY,WATER REVENUE BONDS,SERIES 2010A (NON-AMT TAX-EXEMPT BONDS) (2010 WATER SYSTEM PROJECT)(the "Series A Bonds")and the OTAY WATER DISTRICT FINANCING AUTHORITY WATER REVENUE BONDS,SERIES 2010B (TAXABLE BUILD AMERICA BONDS)(2010 WATER SYSTEM PROJECT)(the "Series B Bonds"and,together with the Series A Bonds,the "Bonds")in an aggregate principal amount not to exceed $52,000,000.The Bonds shall be issued and secured in accordance with the terms ofand shall be in the form or forms set forth in the Trust Agreement,with such changes,deletions or insertions as may be approved by any member of the Authority Commission and legal counsel to the Authority,such approvals being conclusively evidenced by the execution and delivery thereof,provided that the Underwriters'discount or takedown shall not exceed not exceed $5.00 per $1,000 for the Series A Bonds and $6.75 per $1,000 for the Series B Bonds and the true interest cost for the Bonds shall not exceed shall not exceed 5.5% for the Series A Bonds and 7.0%for the Series B Bonds.The Bonds shall be executed by the manual or facsimile signature ofa member ofthe Authority Commission or an Authorized Officer. Section 3.The Trust Agreement,in substantially the form placed on file with the Authority, is hereby approved.The President of the Authority Commission,or the Executive Director or the Treasurer/Auditor of the Authority,and their written designees (each,an "Authorized Officer"and, collectively,the "Authorized Officers"),is hereby authorized and directed,on behalf of the Authority, to approve the delivery ofthe Trust Agreement in substantially said form,with such changes therein as such officer may require or approve,such approval to be conclusively evidenced by the execution and delivery thereof by the Authority.The Trustee,the dated date,maturity dates or dates,interest rate or rates,interest payment dates,denominations,forms,registration privileges,manner ofexecution,place or places of payment,terms of redemption and other terms of the Bonds shall be as provided in the Trust Agreement,as finally executed. Section 4.The Installment Purchase Agreement,in substantially the form placed on file with the Secretary of the Authority,is hereby approved.Any Authorized Officer is hereby authorized and directed,for and on behalf of the Authority,to execute and deliver the Installment Purchase Agreement in substantially said form,with such changes and insertions therein as such officer may approve,such approval to be conclusively evidenced by the execution and delivery thereof. The Authority hereby designates the District as the recipient of any Interest Subsidy Payments which the Authority may be entitled to receive in connection with all or any of the Bonds.Any Authorized Officer is hereby authorized and directed,for and on behalf of the Authority, to approve language reflecting this designation to be included in the Installment Purchase Agreement or the Trust Agreement and to execute and deliver any certificate,written request or any other document necessary or desirable to ensure that the District is entitled to receive said Interest Subsidy Payments. 3 Section 5.The Bond Purchase Agreement,in substantially the form placed on file with the Authority,is hereby approved.Each Authorized Officer is hereby authorized and directed,for and on behalf of the Authority,to execute and deliver the Bond Purchase Agreement in substantially said form,with such changes therein as such officer may require or approve,such approval to be conclusively evidenced by the execution and delivery thereof by the Authority. Section 6.The form of Preliminary Official Statement relating to the Bonds,in substantially the form placed on file with the Authority,is hereby approved.The Underwriter is hereby authorized to distribute a Preliminary Official Statement,in substantially the form placed on file with the Authority,to persons who may be interested in the purchase ofthe Bonds and to deliver the Official Statement in final form to the purchaser(s)of the Bonds,in each case with such changes as any Authorized Officer deems desirable,necessary or appropriate.Each Authorized Officer,acting alone, is hereby authorized to certify that the Preliminary Official Statement is,as ofits date,"deemed final" by the Authority for purposes of Rule 15c2-12 of the Securities and Exchange Commission,and to certify that the Official Statement is,as of its date,"final and complete"for purposes of said Rule 15c2-12. Section 7.The Bonds,when executed as provided in Section 1,shall be delivered to the Trustee for authentication by the Trustee.The Trustee is hereby requested and directed to authenticate the Bonds by executing the Trustee's Certificate ofAuthentication appearing thereon,and to deliver the Bonds,when duly executed and authenticated,to the purchaser or purchasers thereof in accordance with written instructions executed on behalf of the Authority by any Authorized Officer.Such instructions shall provide for the delivery of the Bonds to the purchaser or purchasers thereof,upon payment ofthe purchase price thereof. Section 8.Each Authorized Officer,acting alone,is hereby authorized and directed,jointly and severally,for and in the name and on behalf of the Authority,to execute and deliver any and all documents,including,without limitation,any and all documents and certificates to be executed in connection with securing credit support,ifany,for the Bonds,and to do any and all things and take any and all actions which may be necessary or advisable,in their discretion,to effectuate the actions which the Authority has approved in this Resolution;provided that no such documents or certificates shall create any obligation or liability of the Authority other than with respect to the revenues and assets derived from the proceeds of the Bonds or otherwise securing the Bonds under the financing documents described and authorized herein. Section 9.Each Authorized Officer,acting alone,is hereby authorized to execute and deliver future amendments to the documents authorized to be executed and delivered pursuant to this Resolution ("Authorized Documents"),without further action of the Authority,for the purpose of (i) adding to the covenants and agreements ofthe District or ofthe provider ofany credit enhancement or liquidity facility;(ii)assigning or pledging additional security for any of the Bonds,which security shall be provided by the District;(iii)curing any ambiguity,inconsistency or omission or supplementing any defective provisions of the Authorized Documents;(iv)permitting the qualification of the Trust Agreement or any supplemental indenture under the Trust Indenture Act of 1939 or any similar federal statutes hereafter in effect;(v)providing for any additional procedures,covenants or agreements necessary to maintain the tax-exempt status of interest on the Bonds,or,if the Bonds are taxable and federally subsidized,allow the Authority and/or the District to provide evidence of compliance with any procedures or covenants required to maintain eligibility for the subsidy;(vi) modifying or eliminating the book-entry registration system for the Bonds,if any;or (vii)providing for the appointment of a co-trusteelbondowner representative or the succession of a new 4 trusteelbondowner representative authorized pursuant to the tenns of the Trust Agreement;provided such amendments are (1)made pursuant to a written request of the District,(2)made pursuant to the tenns ofsuch documents,(3)are consistent with such documents,(4)do not require the consent of the holders of the Bonds and (5)do not provide for any additional duties or costs with respect to the Authority for which the District does not agree in advance to reimburse or indemnify the Authority therefor. Section 10.All actions heretofore taken by any Authorized Officer,consultant and agent ofthe Authority with respect to the issuance ofthe Bonds are hereby ratified,confinned and approved. Section 11.This Resolution shall take effect from and after its adoption. PASSED AND ADOPTED by the Otay Water District Financing Authority this 3rd day of March, 2010 by the following vote: Ayes: Noes: Abstain: Absent: I,the undersigned,a duly appointed and qualified Member of the Authority Commission ofthe Otay Water District Financing Authority,DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Authority Commission of said Authority at a duly called meeting of the Authority Commission ofsaid Authority held in accordance with law on March 3,2010. Jaime Bonilla,President ofthe Authority Commission Otay Water District Financing Authority Attest: Susan Cruz,Secretary to the Otay Water District Financing Authority 5 STATE OF CALIFORNIA ) )ss COUNTY OF SAN DIEGO ) I,Susan Cruz,Secretary to the Otay Water District Financing Authority,do hereby certify that the foregoing Resolution No.2010-02 was duly adopted by the Commission of the Otay Water District Financing Authority at a regular meeting thereof held on the day of March,2010,that the foregoing is a full,true and correct copy of Resolution No.2010-02,and that the same has not been modified,amended or repealed. DATE:,2010 Susan Cruz,Secretary to the Otay Water District Financing Authority 6 AGENDA ITEM 12a 5TAFF REPORT DIV.NO.ALL March 3,2010 N/A MEETING DATE: PROJECT/ SUBPROJECT: SUBJECT: APPROVED BY: (Ass!.GM): APPROVED BY: (Chief) TYPE MEETING:Regular Board SUBMITIED BY:Daniel Kay 01- Associate Civil Engineer Ron Ripperger .~ Engineering Manager Rod posada~~~- Chief,Engineering Manny Magana~~ Assistant General ~nager,Engineering and Operations Award of As-Needed Construction Management and Inspection Services Contract to Valley Construction Management for Fiscal Years 2010, 2011,and 2012 GENERAL MANAGER'S RECOMMENDATION: That the Otay Water District (District)Board of Directors (Board) awards a professional As-Needed Construction Management and Inspection Services contract to Valley Construction Management (Valley)and to authorize the General Manager to execute an agreement with Valley in an amount not-to-exceed $175,000. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to enter into a professional As-Needed Construction Management and Inspection Services agreement with Valley in an amount-not-exceed $175,000 for Fiscal Years 2010,2011,and 2012.(The contract ends on June 30, 2012). ANALYSIS: The District will require professional construction management (CM) and inspection services from an engineering consultant on an as- needed basis to support the District's Capital Improvement Program CIP).The As-Needed CM and inspection services contract will provide the District with the ability to obtain consulting services in a timely and efficient manner and on an as-needed basis.The District will require the expertise of an engineering consultant to augment Staff for CM and inspection of several projects that will begin construction in Fiscal Year 2010.Existing Staff will provide CM and inspection where possible,but will require additional expertise to inspect reservoir coating,welding,and other disciplines on a continuous basis. The District incurs expenses in requesting,reviewing,and ranking proposals,checking references,and preparing staff reports for Committee and Board approval.Having consultants prepare proposals for several Requests for Proposals versus just one becomes expensive and these costs are passed on to the District.For this reason,the District began using similar contracts for as-needed environmental consulting services,as-needed geotechnical services,and as-needed design services to help eliminate the preparation costs. The District will issue task orders to Valley for specific projects during the contract period.The Consultant will then prepare a detailed scope of work,schedule,and cost estimate for each task order assigned under the contract.Upon written task order authorization from the District,the Consultant shall then proceed with the project,as described in the Scope of Work. The CIP projects that are estimated to require CM and inspection services for Fiscal Years 2010, 2011,and 2012 are listed below: ESTIMATED CIP DESCRIPTION COST P2488 Del Dio Road Helix &Otay Interconnection $15,000 P2489 Gillespie Drive Helix &Otay Interconnection $15,000 P2490 1296-1 Reservoir Int./Ext.Coating &Upgrades $20,000 P2492 1296-2 Reservoir Int./Ext.Coating &Upgrades $20,000 S2019 Avocado Blvd.8-Inch Sewer Replacement $40,000 S2020 Calavo Dr.8-Inch Sewer Replacement $25,000 S2021 Jamacha Rd.8-Inch Sewer Replacement $15,000 S2022 Hidden Mesa Dr.8-Inch Sewer Replacement $15,000 TOTAL:$165,000 The various scopes of work for the above projects,including CM and inspection,are estimated from preliminary information and past projects.Therefore,Staff believes that a $175,000 cap on the As- Needed CM and inspection services contract is adequate.The additional $10,000 budget will be used for other related miscellaneous inspection tasks and contingencies. 2 This As-Needed CM and inspection services contract does not commit the District to any expenditure until a task order is approved to perform work on a CIP Project.The District does not guarantee work to the consultant,nor does the District guarantee to the consultant that it will expend all of the funds authorized by the contract on professional services. The District solicited As-Needed CM and inspection services from engineering consultant firms by placing an advertisement on the District's website and with various other publications including the San Diego Union Tribune and San Diego Daily Transcript. Thirty (30)firms submitted a letter of interest and a statement of qualifications.The Request for Proposal (RFP)for As-Needed CM and inspection services was sent to all thirty (30)firms resulting in eleven (11)proposals received on January 8,2010.They are as follows: •PBS&J •Valley CM •Professional Service Industries (PSI) •Parsons Brinkerhoff (PB) •URS •Dudek •Malcom Pirnie •Kaufman Consultation •J.T.Kruer &Company •Nolte Associates •Richard Brady Associates The nineteen (19)firms that chose not to propose are Red Zonei RBFi Southern California Soil &Testingi Christian Wheeleri Consolidated Building System Inc.i MTGLi Lee &ROi KDG Development and Construction Consultingi JAS Consultantsi Harris &Associatesi Entech Consulting Groupi G Forcei Butieri Aecomi Gafcon Inc.i HDRi CPM Partnersi R.W.Becki and Ninyo and Moore. In accordance with the District's Policy 21,Staff evaluated and scored all written proposals.Valley received the highest score for their services based on their experience,understanding of the scope, and their proposed method to accomplish the work.Valley was the most qualified consultant with the best overall proposal.A summary of the complete evaluation is shown in Attachment B. The District has worked with Valley on the previous As-Needed Construction Management contract for Fiscal Years 2008-2009.Valley provided excellent service to the District and staff worked well with 3 Valley.Therefore,staff recommends Valley for the As-Needed Construction Management 8ervices contract for Fiscal Years 2010, 2011,and 2012. FISCAL IMPACT: The funds for this contract will be expended from the following CIP projects:P2488, P2489, P2490, P2492,82019,82020, 82021,and 82022 The fees for professional services requested herein are available in the authorized CIP project budgets.This contract is for professional services based on the District's need and schedule, and expenditures will not be made until a task order is approved by the District for the consultant's professional services on a specific CIP project. Based on a review of the financial budget,the Project Manager has determined that the budget will be sufficient to support the professional services required for the specific CIP projects previously noted. STRATEGIC GOAL: This project supports the District's Mission statement,"To provide safe,reliable water,recycled water,and wastewater services to our community in an innovative,cost efficient water wise and environmentally responsible manner,"as well as the General Manager's vision,"...prepared for the future..."by guaranteeing that the District will always be able to meet future water supply obligations and plan, design,and construct new facilities. LEGAL IMPACT: None. P:\WORKING\AS Needed Services\Construction Management\As Needed eM &Inspection Svcs FYlO,FYi1,FY12\Staff Report\SD 3-03-10,As-Needed Construction Management and Inspection Services.doc DK/RR:j f Attachments: QA/QC Approved: Attachment A Attachment B NAME:DATE: 4 2...t;-10 N/A ATTACHMENT A ,sUBjECT/PRojECT:[Award of As-Needed Construction Management and Inspection Services Contract to Valley Construction Management for Fiscal Years 2010, 2011,and 2012 COMMITTEE ACTION: The Engineering,Operations,and Water Resources Committee reviewed this item at a meeting held on February 22,2010 and the following comments were made: •Staff is requesting that the Board award a professional As-Needed Construction Management and Inspection Services contract to Valley Construction Management (Valley)in an amount not-to-exceed $175,000 for Fiscal Years 2010, 2011,and 2012. •Staff indicated that a table on page 2 of the staff report lists the CIP projects that are estimated to require CM and inspection services for Fiscal Years 2010, 2011,and 2012. •Staff stated that on December 1,2009,the District solicited As-Needed CM and inspection services from engineering consultant firms.Staff indicated that thirty (30)firms submitted a letter of interest.The District received eleven (11)proposals. •In accordance with the District's Policy 21,five staff members evaluated and scored all written proposals. Staff indicated that Attachment B of the staff report provides the result of the evaluation and scores for each firm. •The Committee inquired about the methodology used to determine the final scores and if possibly one panel member's score could sway the results.The Committee 5 asked staff to re-evaluate the scores and consider removing the high and low scores . •Staff took the Committee's recommendation and used two additional methods to re-evaluate the scores. • • Method 1:Remove the highest total score and the lowest total score from each panel member and take the average from the remaining scores.The results showed that Valley scored the highest with 93 points out of 100. Method 2:Staff re-evaluated the top three proposals with three new panel members using the original scoring system.The panel members were the Engineering Manager,Chief of Engineering,and Chief of Operations.The top three consultants were PBS&J,Valley CM,and Dudek.The results showed Valley CM with the highest score at 91,PBS&J with a score of 90,and Dudek with a score of 87. •Considering the two additional methods,staff is recommending Valley CM for the As-Needed Construction Management and Inspection Services contract for $175,000. •The Committee indicated that it would provide its recommendation to the board at the Board meeting following receipt of the information from staff's re- evaluation. Following the discussion,the Committee recommended that this item be presented to the full Board as an action item. ATTACHMENT B SUMMARY OF PROPOSAL RANKINGS BY PANEL MEMBERS Professional As-Needed Construction Management and Inspection Services WRITTEN Understanding Soundness Consultant'sQualificationsofscope,and Viabilityof Composite TOTAL AVERAGE References of Staff schedule,Proposed Hourly Rate'commitment SCORE SCOREtoDBEresourcesProlectPlan ::I\,;I,/'(1:20 20 25 35 YIN 100 Pass/Fail RickAcuna 19 18 22 35 94 Bob Kannady 17 17 21 35 90 PBS&J Brandon DiPiatro 15 10 12 35 Y 72 90 Steve Dobrawa 20 20 21 35 96 DanielKav 19 19 23 35 96 Rick Acuna 17 18 21 33 89 Bob Kennedv 19 19 24 33 95 Valley CM BrandonDiPietro 16 19 23 33 Y 91 93 PASS Steve Dobrawa 20 20 23 33 96 Daniel Kay 19 19 24 33 95 Rick Acuna 16 17 20 25 78 Bob Kennedv 13 15 19 25 72 PSI Brandon DiPietro 16 11 15 25 Y 67 74 Steve Dobrawa 20 20 23 25 88 DanielKay 13 13 15 25 66 RickAcuna 19 19 22 29 89 Bob Kennedy 17 17 22 29 85Parsonsy 86BrinkerhoffBrandonDiPietro14 13 18 29 74 SteveDobrawa 20 20 21 29 ~ DanielKav 18 19 24 29 90 RickAcuna 20 19 22 33 94- Bob Kennedy 14 15 20 33 82-URS Brandon DiPietro 14 11 13 33 y 71 87 Steve Dobrawa 20 20 25 33 98 DanlalKav 18 18 23 33 92 RickAcuna 19 20 20 32 91 Bob Kannedv 18 17 21 32 88 Dudek Brandon DIPietro 16 13 16 32 y 77 89 Steve Dobrawa 20 20 24 32 96 Danie/Kav 19 18 23 32 92 Rick Acuna 18 17 22 31 88 Malcom Bob Kennedy 15 17 21 31 ~- Pirnie Brandon DiPietro 13 12 13 31 y ~L 85 Steve Qobrawa 20 20 22 31 93 Dania/Kav 19 18 23 31 91 Rick Acuna 15 15 17 33 -80 Kaufman Bob Kennedy 13 15 19 33 80- Consultation Brandon DiPietro 13 12 9 ~~y 67 81--- Steve Dobrawa 19 ~-20 I-33_92------- DanialKav 16 17 20 33 86 P:\WORKING\AsNeededServlC6S\C01IStfuclionManagement\AsNee<tedeM&InspecoorlSvcoFY10\SelectionProce$s\RFPEvaluationVllithNames.lels WRITIEN Understanding Soundness Consultant'sQualificationsofscope,and Viability 0 Composite TOTAL AVERAGE References of Staff schedule,Proposed Hourly Rate'commitment SCORE SCORE resources 'Proiect Plan to OBE SCI lRE 20 20 25 35 YIN 100 Pass/Fail Rick Acuna ~§.--(---_..16 20 33 ~..------- ~Kennedv 14 15 1--_20 33 ~2_J.T.Kruer &-----. Company ~andonDiPietro 15 13 13 33._Y 74 851---.-._---- Steve Dobrawa 19 20 21 __f--~93 Daniel Kav 17 18 24 33 92 ~Acuna 18 .__1_8__e--.....lL.....31 ~------ f-Bob Kennedy -14 15 20 31 80Nolte Associates Brandon DiPietro 15 15 20 31 Y 1-__8_1_88----- SteveDobrawa 1-----.2_0__20 1--_25___31 96-----_-••••0 .._-------- DanielKav 18 19 24 31 92 RickAcuna 18 19 23 ~--~-1--------------- Richard ~9bKennedy 14 15 20 25 ~-- Brady Brandon DiPietro ~~13 16 25 Y ~--80 Associates - Steve Dobrawa 20 20 I-----~L_25 I-_Jl~_-----_._._--_.,,~ DanielKav 17 18 23 25 83 Engineering Manager: t.Hourly Rale CalculationFormula =35-(Consul/anIRale •Min.Ralel'1Q (Max.Rale •Min.Rale)PM Signature:-......7::hb.c:Ji---~:F---4V'--=----- ¥:4 Mf#7I= P;\WORKING\AsNeeded Services\ConstroctionM;tnageITlent\AsNeededeM &InspectionSvcsFY10\SelectionProcess\RFPEvaluationv.i!hNames.xls ATTACHMENT B (Cont.) Professional As-Needed Construction Management and Inspection Services Fee Evaluation Parsons Brinkerhoff Kaufman Consultation Rate $160.00 $175.00 $$190.00 $115.00 $125.00 $$180.00 $95.00 $95.00 $$140.00 $105.00 $95.00 $$140.00 $60.00 $45.00 $$85.00 600.00 $535.00 $535.00 $597.00 $735.00 30.6 33.1 33.1 30.7 25.4 635.67 $531.00 $555.00 $ 29.2 33.2 32.3 Rate $171.81 $146.81 $111.04 $111.04 $94.97 Total:$485.00 $545.00 $744.97 $ Score:35.0 32.7 25.0 Design Principal Construction Manager Project Construction Manager Field Inspector SpeicaltyInspector Administrative/Clerical Score =35 -!Total Rate -Min Rate)'10 (Max Rate -Min Rate) Notes: 1.Thescore for proposed fee is weighted betweentihe minimum and maximum fees with aminimum of 17.5 pointsforthe highest fee and amaximum of35 points for the lowest fee. PM Signature:----~-::::z'-:...::::!""'-;;e::......-_7f_'-------------- QC:_~~==b~~:=:::=====:=..-_ Engineering Manager:_Ltkvt-=....:=--~_~..!..7_-I-.·'---jV-~_ STAFF REPORT AGENDA ITEM 13a TYPE MEETING:Regular Board Meeting SUBMITTED BY:Mark Watton, General Manager MEETING DATE: W.O./G.F.NO: March 3,2010 DIV.NO. SUBJECT:Board of Directors 2010 Calendar of Meetings GENERAL MANAGER'S RECOMMENDATION: At the request of the Board,the attached Board of Director's meeting calendar for 2010 is being presented for discussion. PURPOSE: This staff report is being presented to provide the Board the opportunity to review the 2010 Board of Director's meeting calendars and amend the schedules 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 2010 G,lUserDatalDis'SeclWINWORDISTAFRPTSlBoard Mee(in~Calendar3-3-1O.doc Regular Board Meetings: January 6,2010 February 3,2010 March 3,2010 April 7,2010 May 5,2010 June 2,2010 July 7,2010 August 4,2010 September 1,2010 October 6,2010 November 3,2010 December 1,2010 Board Workshops: Board of Directors,Workshops and Committee Meetings 2010 Special Board or Committee Meetings (3 rd Wednesday of Each Month or as Noted) January 20,2010 February 17,2010 March 17,2010 April 21,2010 May 19,2010 June 16,2010 July 21,2010 August 18,2010 September 15,2010 October 20,2010 November 17,2010 December 15,2010 Budget Workshop,TBD Board Retreat Workshop,TBD G:\UserData\DistSec\WINWORD\STAFRPTS\Board Meeting CalendarAttach A for 20 I03-3-IO.doc Page 1 of 1 AGENDA ITEM 14a TYPE MEETING:Regular Board STAFF REPORT MEETING DATE:March 3 I 2010 SUBMITTED BY: APPROVED BY: (Chief) Ron Ripperger ~ Engineering Manager Rod posada~~oJ Chief l Engineering PROJECT:Various DIV.NO.ALL APPROVED BY: (Asst GM) SUBJECT: Manny Magafi~~ Assistant Generalcranagerl Informational Item -Second Improvement Program Report Engineering and Operations Quarter Fiscal Year 2010 Capital GENERAL MANAGER'S RECOMMENDATION: That the Otay Water District (District)Board of Directors (Board)\ accepts the Second Quarter Fiscal Year 2010 Capital Improvement Program (CIP)Report for review and receives a summary via PowerPoint presentation. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To update the Board about the status of all CIP project expenditure highlights l significant issuesl progress I and milestones on major projects ANALYSIS: To keep up with growth and to meet our ratepayers'expectations to adequately deliver safe l reliable,cost-effective,and quality water, each year the District Staff prepares a six-year CIP Plan that identifies the District infrastructure needs.The CIP is comprised of four categories consisting of backbone capital facilities, replacement/renewal projects l developer's reimbursement projects,and capital purchases. The Second Quarter Fiscal Year 2010 update is intended to provide a detailed analysis of progress in completing these projects within the allotted time and budget.Expenditures through the Second Quarter totaled approximately $12.1 million.Approximately 32%of the Fiscal Year 2010 expenditure budget was spent. FISCAL IMPACT,.;¢l .7 None. STRATEGIC GOAL: The CIP supports the District's Mission statement,"To provide the best quality of water and wastewater service to the customers of the Otay Water District,in a professional,effective,and efficient manner,"and the District's Strategic Goal,in planning for infrastructure and supply to meet current and future potable water demands. LEGAL IMPACT: None P,\ClP\ClP Quarterly Reports\2010\Q2 FY2010\Staff Reports\BD 03-03-10,Second Quarter FY 2010 ClP Report,(RR-RP).doc RR/RP:jf Attachments:Attachment A Presentation QA/QC Approved: Name:~~.\!5~Date:z..~,10 2 ~IIR d JECT: Various ATTACHMENT A Informational Item Second Quarter Fiscal Year 2010 Capital Improvement Program Report COMMITTEE ACTION: The Engineering,Operations,and Water Resources Committee reviewed this item at a meeting held on February 22,2010 and the following comments were made: •Staff provided a PowerPoint presentation with an update and status of all CIP project expenditure highlights, significant issues,progress,and milestones on major projects. •Staff indicated that the approved FY 2010 CIP budget consists of 87 projects totaling $37.3 million.The projects are broken down into four categories consisting of backbone capital facilities ($28,73 M), replacement/renewal projects ($6.72 M),developer's reimbursement projects ($0.00 M),and capital purchases ($1.83 M). •Staff indicated that expenditures for the Second Quarter totaled approximately $12.1 million,which is approximately 32%of the Fiscal Year 2010 budget. •Staff presented progress photos of three Flagship projects currently in construction including the 36-Inch Pipeline Project (project completion is anticipated for August 2010),1296-3 Reservoir 2.9 MG (project completion is expected to be substantially completed in March 2010), and the 1485-1 Pump Station Replacement (due to some delays,project completion is anticipated for April 2010. •Staff indicated that the presentation also includes the status on Consultant Contracts and Construction Contracts,and information of the District's expenditures for capital facility projects,replacement/renewal projects,capital purchase projects,and developer reimbursement projects. Following the discussion,the Committee supported staffs' recommendation and presentation to the full Board as an information item. CAPITAL IMPROVEMENT PROG.RAM Second Quarter Fiscal Year 201 0 (through December 31,2009) 36-lnch Pipeline From FCF No.14 to Regulatory Site Background The approved CIP budget for Fiscal Year 2010 consists of 87 projects that total $37.3 million.These projects are broken down into four categories: $28.73 million1.Capital Facilities: 2.Replacement/Renewal: 3.Capital Purchases: $6.72 million $1.83 million 4.Developer Reimbursement:$0.00 million Overall expenditures through the Second Quarter Fiscal Year 2010 totaled $12.1 million which is 320/0 of the Fiscal Year 2010 budget. 2 Fiscal Year 2009 Report (through December 31,2009) %0/0 CIP FY 2010 FY 2010 FY 2010 Total Life-to-Total Life-to- CAT Description Budget Expenditures Budget Date Budget Life-to-Date Date Expenditures BudgetSpentSpent 1 Capital Facilities $28,728,000 $9,384,000 33%$181,692,000 $55,606,000 31% 2 Replacement! Renewal $6,716,000 $2,076,000 31%$37,203,000 $14,451,000 39% 3 Capital Purchases $1,827,000 $617,000 34%$11,726,000 $5,808,000 50% 4 Developer Reimbursement $1,000 $0 0%$50,000 $0 0% Total: $37,272,000 $12,077,000 32%$230,671,000 $75,866,000 33% 3 Major CIP Projects LEMONGROVE 4i L~OTAY IIIUJ:R'JOUt N ."t"w~~£ s N.T.S. PROJECT STATUSoPLANNING·6eDESIGN·8oCONSTRUCTION·4eCOMPLETEDINUSE - 4 ~District Boundary MEXICO MAJOR CIP PROJECTS fA'.P2010 &P2391 Purdue Water Treatment Plant~Pump Station and 36"Pipeline ®P2434 Rancho Del Rey Groundwater Well @ P2451 Rosarito Desalination Facility Conveyance System ®P2481 Middle Sweetwater River Basin Groundwater Well ®P2482 Otay Mesa Lot 7 Groundwater WelloR2093MBRCityofChulaVista CD P2490 &P2492 1296-1 &2 Reservoir CoatingoP2496OtayLakesRoadUtilityRelocationsoR2058AirwayRdRecycledWaterPipelineeR2077AhaRdRecycledWaterPipelineoR2087WuesteRdRecycledWaterPipeline G S2019. S2020.S2022 Sewer Main RehabilitationeS2021JamaehaRdSewerMainReplacementeR2091944·1 Recyded Water PS Upgrade @ P2009 PL·36"SDCWA Otay FCF No.14 to OWO Regulatory Site ®P2143 Res -1296-3 Reservoir 2.0 MG @ P21721485·1 Pump Station Replacement ®P2440 SR905 Utility RelocationsoP2009OtayFCFNo.14 Temporary ConnectionoP2191Res-850-4 Reservoir 2.2 MG G P2487 Agency Inter-Connections 8 R2092450-1 Reservoir Disinfection Facility 4 CIP Pro·ect in Constructionr::--':"'""':.".........-.:'~-.....,......,.....-----l..'-----...,,,.......,=-'~--:::,........,,...-,",...,.__---.,-,....-"'="'''it: 5 Flagship CIP Project in Construction Approximately 5 miles of 36-inch pipeline for potable water from Otay's FCF No.14 to the Regulatory Site. A construction contract was awarded to CCl Contracting (CCl)on June 3,2009.Project completion is anticipated for August 2010. Schedule: D 36-lnch Pipeline From FCF No.14 to Regulatory Site Proiect: Key Component: Cost:The FY 2010 project budget is $15.0 million,of which $4.9 million,or 32%has been spent.The life-to-date project budget is $22.2 million,of which $8.6 million,or 39%,has been spent. Significant Issues:None. Highlights:The bore and jack operation within the college property has begun and is progressing well.CCl continues to install 36- inch pipe within Jamacha Road.Tie-ins for the new 8-inch and 12-inch are scheduled for April/May timeframe. 6 r--_~Flagshi~CIP Project in Construction e 7 Flagship CIP Project in Construction CJ 1296-3 Reservoir 2.0 MG Key Component:A new 2.0 MG Concrete Reservoir will provide additional storage in the 1296 Pressure Zone. Schedule:Notice to Proceed was issued to Natgun Corporation on February 10,2009.Project is on schedule and is expected to be substantially complete in March 2010. Cost:The FY 2010 project budget is $2.0 million,of which $1.2 million,or 57%has been spent.The life-to-date project budget is $3.6 million,of which $2.9 million,or 78%,has been spent. Sig nificant Issues:None. Highlights:The design of this reservoir is a Type III concrete reservoir. The lifecycle cost of building a concrete reservoir is lower than a welded steel reservoir. A solar power generating system was added to this project which includes a 75 square-foot photovoltaic panel for generating power,which is tied to the SDG&E power grid. 8 Flagship CIP Project in Construction 1485·1 Pum Station Re lacement P2172 This project was awarded to SCW Contracting and was started in January 2009. This project consists of construction of a new pump station to replace the existing pump station and to expand capacity as projected within the Water Resources Master Plan.9 Flagship CIP Project in Construction The existing pump station is near capacity and has reached the end of its useful life.The improved pump station systems and additional capacity are required to meet projected demands of the 1485 and higher pressure zones as projected within the Water Resources Master Plan. CJ 1485-1 Pump Station Replacement Key Component: Schedule:Notice to Proceed was issued to SCW Contracting on January 5,2009.Construction started in January 2009. Project is approximately 72%complete.The project is scheduled for completion in March 2010. Cost:The FY 2010 project budget is $1.6 million,of which $0.9 million,or 56%,has been spent.The life-to-date project budget is $2.5 million,of which $2.1 million,or 830/0,has been spent. Significant Issues:None. 10 Highlights:The new pump station will include SCADA equipment and will protect the existing equipment from the elements. Consultant Contract Status (through December 31,2009) Purchase Order Number Original Total Revised Approved %%Date of Contract Change Contract PaymentTo Change Expenditures Signed End Date of Consultant CIPNo.Proiect Title Amount Orders Amount Date Orders to Date Contract Contract PLANNING 7127J2009 709962 ~C HEDEN ANDASSOCIATES INC Varies TEMPORARy LABOR SERVICES 5 150.000.00 5 5 150.000.OC 5 111.118.OC 0.0%74.1%111/2009 (COMPLETE) NORTHoSOUTH SERVICESAREA 711553 MWH AMERICASINC.P2010 INTERilESTUDY 5 119.505.OC 5 5 119.505.OC $28,870.75 0.0%24.2%1012212009 6/3012010 707070 PBS&J P1210 2009MASTER PLAN UPDATE S 499.748.OC S 46.222.00 S 545.970.00 S 544.917.94 92%99.8%Bn/2007 212812010 DESIGN 1213112009 705134 ENGINEERING PARTNERS INC.THE P2172 14a5-'PUMPSTATIONREPLACEMENT 5 24,120.00 $$24,'20.OC $18,542.5C 0.0%76.9%11/3/2006 (COMPLETE) 706951.711714 ENGINEERING PAI'lTNERS INC,THE Varies ELECTRICAL SERVICES 5 100.000,0 S 5 100.000.00 S 70.795.0.0%70,8%311912007 613012011 AS-NEEDED ELECTRICAL DESIGN 711649 ENGINEERINGPARTNERS INC.THE Varies SERVICES 5 100.000.00 S S 100,000.00 S 0.0%O.OOJ.1017/2009 613012011 711324 'lOR VarIes TEMPORARY LABORSERVICES S 50.000.00 5 5 150,000,00 S 61.n5.00 0.0%412/.811412009 613012010 12131/2009 706174 LEE &ROINC Varies AS-NEEDED ENGDESIGNSVCS 5 175,000.00 5 15,000.00 5 190.000.00 5 190.000.00 8.6%100.0%312912007 (COMPLETE) 709237 LEE &ROINC P2OO9 DESIGNOF 36·INCH PIPELINE 5 580.183.00 5 61.629.00 5 641.812.00 S 600.013.7 10.6%93.5%911112008 12131/2010 AS·NEEDED ENGINEERINGDESIGN 711650 LEE &ROINC Varies SERVICES S 175.000.00 $24.000.00 S 199.000.00 5 59.018.65 13.7%29.7%10/812009 6130/2011 R2096. R2095. 711676 MWH AMERICAS INC.S2018 RWCWRF UPGRADE PROJECT S 458.813.00 5 5 458.813'<)(S 15.416.31 0.0%3.4%10/1412009 1011412011 711657 PBS&J Varies HYDRAULIC MODELINGSERVICES S 45.000.00 S S 45.OOO.OC 5 2.706.5C 0.0%6.0%11120/2009 613012011 8/512009 SAN·LOAERIAL R20n 20-lnch RecPI·ALTAlOTAY MESAISANYO 5 8.000.00 5 5 B.OOO.OO 5 8.OOO.OC 0.0%100.0"'<'6124/2009 (COMPLETE) 919/2009 SAN·LOAERIAL R2058 2O~lllChRecPI A AIRWAY/LA MEDIA $3.100.OC 5 $3,loo.OC 5 3.100.0<0.0%100.0%8/17/2009 (COMPLETE) 711880 CHIFF&ASSOCIATES Varies PROFESSIONALCORROSION SERVICES $250.ooo.OC 5 $250.000.00 $0.0%O'O'*/llo 11/20/2009 6130,12011 705883.706619 SOUTHERNCAliFORNIASOIL Varies ON·CAllGEOTECHNICALSERVICES $150.000.0 5 5 150,000,00 5 144,721.3 0.0%96.5-1.12161<006 1/31.12011 711655 SOUTHERNCAliFORNIASOIL Varies AS·NEEDEDGEOTECHNICALSERVICES S 175.000.00 S 5 176.000.DC $4.101.5 0.0%2.3%1Of7/2009 613012011 CONSTRUCTION SERVICES 710093 MWHCONSTRUCTORS INC I Varies ITEMPORARY LABOR SERVICES 5 150.000.0015 130,000.00 S 280.000.001 S 148.225.0 86.7%52.9%1/112009 6130/2010 707935 RBFCONSULTING I P2009 36--lNCHPIPELINE 5 1.088.785.0015 $1.088.785.ool S 6$6,578.75 0.0%60.3%1/26/2008 3/1/'2010 AS-NEEDEDCONSTRUCTION 708005.71'043 VALLEYCONSTRUCTIONMANAGEMENT Varies MANAGEMENTSVCS 5 175.000.00 $23.897.50 5 198,897.50 $168,187.5C 13.7%84.6%1/16/2008 6/30/2010 ENVIRONMENTAL 703828.708897 BRGCONSULTINGINC P2143 1296-3RESERVOIRENVSVCS 5 125.000.00 5 $125.000.00 5 108.38029 0.0%86.7%4/1112006 6130/2010 707071.709114.PROFESSIONALON-CALL 710920 JONES &STOKESASSOCIATES Varies ENVIRONMENTAL SVCS S 300.000.00 $25.000.00 5 325,000.00 5 275,924.63 8.3%54.9%711312007 613012010 SANMIGUEL HABITATMANAGEMENT 709963 JONES &STOKESASSOCIATES P1253 AREA $987.807.00 $5 987.807.00 5 227.400.8 0.0%23.0%21312009 12/31/2011 R20581 R20771 OTAY MESA RECyCLED WATER 710733 ONES &STOKES ASSOCIATES R2087 SUPPLY LINK PIPELINES $2'3,087.00 5 5 213.087,00 5 71,239,96 0.0%33.4%5/1/2009 6130/2010 708348 RECON PI253 PREPARATION OFTHE SUBAREAPLAN 5 270.853.0 5 $270,853.00 $50,310.11 0.0%18.6%312812008 312812011 WATER RESOURCES MIDDLESWEETWATER RIVER BASIN 710906 AECOM P2481 GROUNDWATER WELLPILOT PROJECT 5 1,065,037.0<5 5 1.065,037.0<S 82.941.63 0.0<'10 7.8%5121/2009 5131/2011 BI·NATIONAlDESALINAilON 708381 CAMPDRESSER &McKEE INC P2451 FEASIBILITYSTUDY 5 94,552.00 5 18.005.00 5 112.557.OC $92.548.3<19.0%82.2%3119/2008 6/3012010 710471 MICHAEL R.WELCH P2481 ENGINEERING PLANNINGSVCS.5 40,000.0 5 5 40.000.0(5 11.340.0(0.0%28.4%312512009 312512010 707939 WESTINENGINEERINGINC P1210 ASSETMANAGEMENT PLAN 5 194,280.OC $140,000.00 S 334280.00 5 201.365.01 72.1%60.2'"/"1/2912008 6130/2010 PUBLIC SERVICES 707178.710211 AECOM USAINC P1438 PLAN CHECKS60 INSPECilONSERVICE I 5 300.000.00 S 5 300.000.001 5 217.108.81 0.0%72.4%I 9/412007 I 317/2010 707604.711287 AECOM USAINC P1438 AS·NEEOEDPLANCHECK SERVICES S 150,000.0015 $150.000.00(S 43.829·641 D.oo/ll I 292%I 11113/2007 I 9/3012010 I ITola\S:I 5 8,31,7.870·001 $483,753.50 I 5 8.801.623.501 5 4,218.477.901 5.8%I I QA/QC~,II.. Name:-l_~=....c::_::-_~-'---I-_Date:Z \H_\I to 11 NEWest Const $342,865 $59,483 $402,348 $402,348 17.35%100%Complete Natgun Corp $2,373,220 $5,373 $2,378,593 $1,818,706 0.23%76%March 2010 SCW $1,530,000 $26,690 $1,556,690 $526,325 1.74%34%March 2010 CCl Contracting $16,189,243 $0 $16,189,243 $0 0.00%0%August 2010 Construction Contract Status (through December 31,2009) ORIGINAL TOTAL REVISED TOTAL %%EST. CONSTRUCTION CONTRACT CHANGE CONTRACT EARNED OF CHANGE PROJECT COMPo CONTRACTOR AMOUNT ORDERS AMOUNT TO DATE ORDERS·COMPLETE DATE Spiess Const Co $2,566,300 ($250,778)$2,315,522 $2,315,513 -9.77%100%Complete ARB $660,256 $79,907 $740,163 $740,163 12.10%100%Complete Jose Pereira Eng $129,542 $32,753 $162,295 $162,295 25.28%100%Complete Complete0%0.00% -0.20% $0 $5,965,350 $14,000$0 ($46,572)$23,758,854 $14,000 $23,805,426 TC Construction ClP NO.PROJECT TITLE P2191 850-4 Reservoir R2081 20-lnch lane Avenue Conversion P2422 Interagency Water Meter Connection R2092 450-1 Reservoir Disinfection Facility 1296-3 Reservoir P2143 2.0 MG Water Storage Facility '2172 1485-1 Pump Station Replacement Jamacha Rd. P20091 36-lnch Pipeline & P2038 12-lnch Pipeline Re lacement Olay FCF No.14 P2009 Temporary Reconnection TOTALS: QAlQC Approved:J NAME:O-Q.\L-.('DATE:~tlo \'\0 12 Expenditures (through December 31 ,2009) ($000) FISCAL YEAR-To-DATE.12131109 LIFE·To-DATE Project FY 2010 Expense to CIPNo.Description Manager Budget Expenses Budget %Budget Batance Commenls CAPITAL FACILITY PROJECTS P2009 PL •36·lnch.SDCWA Olav FCF No.14to Reoulatorv Site Riooeraer $15000 S 4.859 32%S 22200 S 13.576 ProiPct underconstruction. StattreceNed a proposal trom MWHAmericas toaccomplish the scope of work for development alternatives and to prepare cost eSlimates for South District to North District connection and potential supply from the SWA Perdue WTP.The Board approved of a professional services agreement in October P2010 PL 24-lnch.Sweetwarer Authoritv Perdue WTP to 36-lnch Main PeaSley 135 59 44%4000 3917 2009. P2038 Pl-12-lnch,978 Zone Jamacha,Hidden Mesa,and Chase Unsizeand Reolacements Ka 1100 912 83%2500 384 Pro",ct underconstruClion P2040 Res·1655·1 Reservoir 0.5 MG Riooeroer 1 0°'2055 1.577 Pro'eclcomoleted.'"P2143 Res -1296-3 Reservoir 2 MG Kav 2,000 1.148 57%3640 790 Pro'eelunder conslruction P2172 PS -1485-1 Pumo Stalion Reolacement Kav 1.550 861 56%2475 411 Pro"eet under construction This CIP project is apan of the scope of work being accomplished P2181 Pl-3CHoch.1296Zone ProctorVallev Road -ProctorVallev PSlMillar Ranch Peaslev 100 0%4.200 4.200 underCIP Pro'ect No.P2010. Pump station modifications to P2185 Res·640-1 Reservoir 20.0MG Rleoeroer 550 15 3%28750 635 beainafter P2009 is comolele. P2191 Res -850·4 Reservoir 2.2 MG Kav 435 196 45%34'35 97 Pro'ect comolele This CIP project is apan of the scope of work being accomplished P2203 Pl-36-lnch.1296 Zone.Proctor VallevRoad,Millar Ranch/Pioneer Peaslev 120 0%1.500 1500 under CiP Prolect No.P2010. This CIP project is a panofthe scope ofwork being accomplished P2204 PL -24-lnch 1296 Zone PioneerWav -Proctor Vallev/1296 Reservoirs Peaslev 100 0%2000 2000 under CIP Pro'ecl No.P2010, P2318 PL -2G-lnch.657 Zone Summil Cross-Tie and 36-lnch MainConnections Kennedv 1 0%600 530 Pro'ectlo slar,desion next FY. P2387 PL •12-lnch 832 Zone Steele Canvon Road,Via CalienteiCamoo Kav 15 1 7%440 8 Pro-ect comolete This CIP project IS a panofthe scope of work being accomplished P2391 PS •PerdueWTPPumo Stalion (5 MGDl Peaslev 200 9 5%5200 5191 underCIP Pro'ectNo.P2010. This CIP project is a partofthe scope of work being accomplished P2430 Pl•30-lnch 980 Zone Proctor Vallev Road·PB Bndv/PrOCtor Vallev PS Peaslev t50 0%5.?OO 5.200 under elP Pro'eci No.P2010. Staff received three proposals from consultants toaccomplish the scope of work ferdevelopment of a groundwaterwell at the Rancho del Rey Well site.Staff plans to request Board approval ofa professional services agreement in P2434 Rancho Del Rev GroundwaterWell Develooment PeaSlev 1,450 59 4%3650 2488 JanUary 2010. Pending the outcome of the jOint SWAlOtay study(CIP Number P2467)and environmental review.1 lhe planning work may begin to P2450 Otav R;verGroundwater Well Demineralization Proiect Peaslev 20 2 10%11030 11023 occurin about 2 to 3 vears. 3 Expenditures (Continued) FISCAl YEAR·TG-DATE,12/31109 L1FE·TO·DATE Project FY 2010 Expenseto CIPNo.Description ~'.nager Budget Expenses Budget %Budget Balance Comments CAPITAlFACILITY PROJECTS COM completed the revision ofthe leasibilitystudy which includes three technical memorandums on the Rosarito Desai concept.Afinal draft scope of workfor arequest for proposal for a preliminary design report and environmental P2451 Rosarito DesalinationFaCilltv Conveyance System Peaslev 500 75 15%:m.OQO 29.753 documentation has been preoared. P2465 ReoulatorvShe Materiat Storaoe Bins Ka"10 2 20%'"310 11 Proiecl comolete Environmental compliance in progress.project will be completed P2466 Reoio,,"1 Trainino Facilitv Coburn-Boyd 90 35 39%.252 60 In FY10. hiS proJect IS JOintly unded by SWA and Otay.The SDCWA awarded a LISA grantto SWAto lund up to 50%of the cost of the eHort.Monitoring wells in the Otay River have been completed by USGS.Data gatheringon well information within the San Diego Formation continues.Olay River participation agreement between SWA and Otay has been P2467 San Dieco Formation Groundwaler Feasibilitv Study PeasIe 600 1 0%1800 1,189 aporoved. P2471 8501657 PRSatLa Presa Pumo Sta~on Kennedv 80 16 20%310 265 Pro'ect desion is at90& This projectis for water supply feasibility study efforts.MWH completed the preparation 01 a brie'study including cost estimates for supplyIrom the SWA Perdue WTP and the Nonh District to P2472 Water SuoolvFeasibililV Studies Peaslev 150 0%17-5 153 Soulh District Interconnection. P2473 PS -711·1 Pumo Station Imorovement Kennedv 325 0°,4 425 422 Proiect tostart desion next FY P2474 Fuel StoraceCoversand Containment Kennedv 100 1 1%125 109 PDR comolete. P2475 Pump Stalion Fire Hvdrant Installations Kennedv 40 3 8%50 40 PDR comolete. Groundwater developmenl planning efforts continue on the Middle Sweetwater River Basin Groundwaier Well Pilot Project includingpreparationofadraft community outreach plan and analysis 01 imported water supplied into the basin.Meetings with SWA are planned to come to an ag,eemen1 on the quantity of Imported watercontributed to the P24B1 Middle Sweetwater River Basin Groundwater WellSvstem Peaslev 1000 104 10%8.000 7818 oroundwaler sunnlv. Groundwaterdevelopment planning efforts continue on the Otay Mesa Lot 7 Well with preparation of CEQA P2482 Olav Mesa Lot 7 Groundwater Well Svstem Peaslev 150 0%3.200 3.200 documenlatlol1_ 14 Expenditures (Continued) FISCAL YEAR-To-DATE,12131/09 L1FE·To-OATE Project FY 2010 Expense to CIPNo.Description Manager Budget Expenses Budget %BUdget Balance Comments CAPITAL fACILITY PROJECTS P2487 Sir francis Helix and Otav Vallev Cal American Aoencv Interconnecllons Kav 200 110 55%250 1 Proiect complete P2488 Del Rio Road Helix and Olav Aoencv Interconnection Kav 25 13 52%150 137 Proiect in desion P2489 Gillespie Drive Helix and Olav AQenev Interconnection Kav 25 4 16%150 146 Pro'eel in desion P2497 SolarPower Feasibilltv Study Kennedv 50 1 2"10 150 128 PDR comolete The Cityof Chula Vista and Otay WD have developed a final scope of work.RFP,and a participation agreement to focus on the treatment facility and related requirements.The brine line is a part of thatstudyeffort (CIP P2498 Brine Disoosal Pipeline Otav River Demineralization Plant 10 South Bav Outfall Peaslev 5 0%5.600 5.600 NumberR20931. R2048 RecPL -Olav Mesa Distribution Pipelines andConversions RipperQer 150 6 4%2.000 1,985 In plannlnQ. R2053 RWCWRF -A.O.Buildino Remodel and Office Furniture Kav 15 0%59Q 21 Project complete A2058 RecPL·16·lnch 860 Zone.Airwav Road -Olav Mesa/Alta Kennedv 350 182 52"10 3.000 2.415 Pro'ect in desion R2077 RecPL -24·fnch.861)Zone Alta Road·Alia Gate/Airwav Kennedv 295 178 60%4.100.3.726 Pro'ect In dllsJan A2081 RecPL·2()-ln~l1.944 Zone.Lane Avenue -ProctorValievlPond No.I Kav 70 0%1210 52 Pro'ect comolele A2087 RecPi..•2Q..lnch,944 Zone.Wueste Road -Olvmpic/OlavWTP Kennedv 350 210 60'-0 4.500 4.118 Proiect in desion Project is in planning stage.Design R2088 RecPL -20-lnch.860 Zone.County Jail Aoll Reservoir/860-1 Reservoir Kennedv 5 0%3.500 3.444 tostart in FY 2011. Project iscomplete."Oil notuse additional budgeted amount this R2089 North District Reevcled Water ReoulalOry COmoliance COburn·Bovd 20 0%220 20 FY. R2091 RecPS·944-1 Pumo Stalion Uoorade Kennedv 500 71 14%550 424 PDR comolete. R2092 Dis -450-1 ReservoirDisinfection Facilitv Kav 70 131 187%830 114 Pro'ect underconstruction The City ofChula Vista City counsel and theOtay WD Board of Directors have approved the MBR participation agreement to focus on the treatment facility and related requirements_The City of Chula Vista and Olay WD staff have interviewed and selected RMC to accomplish the scope of work A2093 MBACitvof Chula Vista Peaslev 50 21 42%5,000 4.971 which should start eartv in 2010. R2094 Potable Irriaallon Metersto Recvcled Water Conversions Kennedy 500 72 14%2.000 1.928 Proiectto start desiQn next FY. Project will slart in second hallof A2097 RWCWRF •Sail Creek Live Stream Discharae Coburn-BoYd 26 0%320 287 FY. Cos1 increase due to change in scopeof work after bucjget approval;budget will be adjusted next fiscal yearto cover increased S2018 RWCWAF·Secondary Process Automalion Coburn·Boyd 50 27 54%50 23 scope. Tolal Capital Facilily Projects Total:28.728 9.384 33%181,692 126.086 15 Expenditures (Continued) FISCAl YEAR-TQ-DATE,12/31/09 UFE-TO-DATE Project FY 2010 Expense to CIP No.Description Manager Bud!let Expenses Budget%Budget Balance Comments REPLACEMENTffiENEWAlPROVECTS P2356 PL -12-lnch.803 Zone.Jamul Drive Permaslran Pipeline Reolacement Kav 15 3 20%765 12 Proieel complete Anticipating 100%expenditure pending CARB approval 01 current devicebeing testedlor use in on- P2366 APCD Enaine Reolacements and Retrolns Rahders 180 2 1%2.834 1.185 road f1eel. This CIP was underbudgeted lor the scope 01 work that was needed P2382 Saletv and Securitv Improvements Munoz 70 87 124%1539 308 lorIhisfiscal vear. P2416 SR-125 UWilv Relocalions Kennedv 40 45 113%900 (11 Reimbursement is in ore-litiaation. P2440 1-905 Utilitv Relocations Ripperaer 200 65 33"1<3.016 1.554 Canrans driven. Caltrans isin the preliminary design and will not select an option P2453 SR-ll Utility Relocations Kennedv 75 0°'500 497 unl~lalerthis vear.'0 P2456 Air and Vacuum Valve Uoarades Acuna 500 258 52%2624 856 We will uselorecasledbudoel, P2458 AMR Manual MeIer Reolacement Keeran 1,400 1.125 80%10,447 6.626 This oroiect ison'track, Expect $50K to be spent this FV to repair the existing cover.Testing completed this yearindicatesthe lull replacement can be delayed a P2477 Res·624-1 Reservoir CoverReolacement Kennedy 325 20 6%450 423 cauolevears. P2483 PS -870-1Pumo Motorand Switch Gear Reolacement Anderson 130 2 2%,130 128 Has not beoun vel. Activity starting.expenses to lollow P2484 LaraeWater Meter Reolacement Proaram Keeran 135 27 20%535 508 soon. P2485 SCADA Communication Svstem and Software Reolacement Stalker 265 67 25%915 848 Proiect onaoina, P2486 Asset Manaoement Ptan Condillon Assessment and Data Acauisition Stevens 300 28 9%800 772 Staffiscontinuinatomeel. P2490 1296-1 Reservoir InteriorlExteriorCoatina and Uparades Kav 340 22 6%350 328 Pro'ect in desian P2491 850-3 Reservoir ExteriorCoatinc Kay 290 0%300 300 Delaved lorP24901P2492 P2492 129&-2 Reservoir Inlerior/Ex1eriar Coatina and Uoarades Kav 30 13 43%600 587 Pro'ect in desinn P2493 624-2 Reservoir InteriorCoatinoand Uoarades Kav 30 0%950 950 Delaved lorP2490/P2492 P2494 Muiliple Soooes Conservation Plan Coburn·Bovd 141 53 38%;226 173 Proiect onaoino. P24e'i San Miouel Habilat ManaoementlMilioalion Area Ccburn·Bovd 225 75 33%1.000 925 Proiect onaoina. P2496 Olav Lakes RoadUtility Relocations Riooeraer 75 15 200/0 100 85 Pro'ect in desian R2086 RWCWRF Force Main AirVac Replacements and Road Improvements Kay 40 3 8%1:325 23 Pro'ect comolete Consultant contract awarded to R2095 RWCWRF·FilterStoraae Reservoir CoverReplacement Riooeraer 75 1 10;0 75 74 MWH, Ccnsunant contract awarded to R2096 RWCWRF .Blower Svstem RehabilitafionlReolacemenl Kennedv 800 33 4%1000 967 MWH, The expenditures are typically billed bySVSD and paid within the $2012 SVSD Oullall and RSD ReDlacement andOM Reimbursement Peaslev 300 1 0%3.030 2.532 lourthouarter 01 theliscal vear. S2015 Calavo un Station Reolacemenl Kay 10 0%560 1 Pro'eel complete S2019 Avocado Boulevard 8-lnch Sewer Main ImDrovement Kav 600 85 14%·1652 1,547 Pro'eelin desian S2020 CalilVo Drive 8-lnch Sewer Main Replacement KaV 40 15 38%350 335 Proiectin desian S2021 JamaCha Road 8--lnch SewerMain Replacement Kav 30 17 57%HiO 133 Pmiect in desian 16 Expend itu res (Continued) I I ASCAl YEAR-TO-DATE,12131/09 UEE-TO-DATE Project FY 2010 Expenseto CIP No.Description Manager Budget Expenses BUdget%Budget Balance Comments REPLACEMENT/RENEWAL PROJECTS 52022 Hidden Mesa Drive 8·lnch SewerMain RehabilitatiM Kay 5 8 1600/0 50 42 Project in desian S2023 Calavo Drive$ewer Main Utililv Relocation Kay 50 6 12%50 44 Proiect in desiQn Total Replacement/Renewal Projects Total:6.716 2.076 31'll.37;203 22.752 CAPITALPURCHASE PROJECTS Staffanticipates $41 OK to be used P2282 Vehicle Caoital Purchases Rahders 484 1 0%4.311 2.504 for Vehicle Reolacementsin FY10. Purchase of2 copiers is expected P2285 Office EQuloment and Furniture Caoital Purchases Dobrawa 40 0%532 121 this art.$40.000 Staff anticipates $83Kto be used forequipment replacements in P2286 Reid Equipment Caoltal Purchases Rahders 183 4 2%1.075 410 FY10. P2443 Informat'..n Tealmoloay Mobile Services Jenkins 150 158 105%1.352 532 Exoect to soend 100% P2461 Records Manaoemenl System Uoarade Jenkins 100 0%256 100 Exoect \0 soend 100% P2469 Information Technoloav Network and Hardware Jenkins 300 180 60%1.900 1,342 Exoect to soend 100% P2470 Application SYStems Develooment and Inteqration Jenkins 430 161 37%1.810 1.269 Exoect to soend $510K in FY10 P2478 Administration BuildinQ EnQineiGeneratorSel Anderson 120 108 90%:t2Q 4 Genset installed. Noadditional expenses are P2479 OoeratlonsYard Praoerty Acauisition Dobrawa 20 5 25%370 anticioated durina this fiscal year. Total Capital Purchase Projects Total:1,827 617 .~11.726 6.282 DEVELOPER REIMBURSEMENT PROJECTS P2325 PL·to-to 12"Oversize.1296Zone,PB Road·Rollina Hills HydraPS/PB Bndy Chartes 1 0%50 50 Total DevelooerReimbursement Projects Total:1 'In'50 50 GRAND TOTAL S 37.272 S 12,On ~S 230,671 S 155,170 QA/QC APprove\-.A Name:f::z~Date: 17 AGENDA ITEM 15 STAFF REPORT Update on the design,construction,and environmental of the 36-Inch Potable Water Pipeline from FCF #14 to Regulatory Site (CIP P2009) for the month of January 2010: •The bore and jack operation within the college property is almost complete.All work within College will be complete by February 15.CCL continues to install 36-inch pipe within Jamacha Road and Via Rancho San Diego.Tie-ins for the new 8-inch and 12-inch are scheduled for March/April timeframe. GENERAL MANAGER: N/A March 3,2010 N/A DIV. NO. MEETING DATE: W.O./G.F. NO: General Manager's Report Mark Watton, General Manager Regular Board Meeting SUBJECT: TYPE MEETING: SUBMITTED BY: ADMINISTRATIVE SERVICES,INFORMATION TECHNOLOGY AND FINANCE: Administrative Services: Human Resources: •Otay Activities Committee Haiti Fundraiser -The Otay Water District Activities Committee held a fundraiser during the month of February.Employees joined together to help get clean water to Haitians through the United Methodist Committee on Relief (UMCOR).The fundraiser started on February 3,2010,with a fundraiser lunch and the opportunity to meet the Haitian singing group,Loange a'Dieu.Employees donated a total of $2,233 towards the Water Purification Program through UMCOR. •New Hires -There were no new hires in the month of February. Purchasing and Facilities: •Purchase Orders -There were 86 purchase orders processed In February 2010 for a total of $314,726.22. Water Conservation and School Education: •Water Waste Reporting -In February (through were a total of five reports of water waste, or reported through the District's website. report listing the activity is attached. the 22nd) ,there either phoned in The water waste •School Education Update -Two tours are scheduled in late February,involving 100 third graders and 16 parents from Eastlake Elementary School.Five more tours are scheduled to be conducted before the end of the 2010 school year and seventeen have been completed to date.Follow-up is planned with the schools to promote both the school poster contest and the photo contest,and staff is working with local high school guidance counselors to promote the District's own special district scholarship. •Large Landscape Program -As part of the District's outreach to its potable irrigation accounts,letters were sent to all of the potable irrigation accounts providing them with their theoretical water budget for the calendar year and information on how they did last year.This mailing is part of the District's large landscape program outreach and will be included in the FY 09 &FY 10 report submitted to the California Urban Water Conservation Council in December. •Commercial Program Update -Chula Vista Elementary School has asked for funding toward the installation of 102 waterless urinals at ten school sites within the District's service area.They have already tested the technology at a number of their sites and expect to complete the project by the end of March.Also,the District is very close to signing agreements with two of its larger commercial water users to participate in our pilot Commercial Process Improvement Program.This program involves providing partial funding toward the installation of a water saving process. •Water Conservation Program Outreach -Staff sent out another thousand letters this month to our top water users (summer of (2009),promoting our residential survey programs,"Cash for Water Smart Plants"program,and the upcoming "Water Smart Plant Fair"on March 20th •We are also working to translate the "Water Smart Plant Fair"into Spanish and will be 2 distributing it wherever possible.To date,this fiscal year,we have sent out over 3,400 letters to our top residential customers.Letters are also mailed out to our commercial and large landscape customers.In February,the District's Customer Pipeline newsletter highlighted the rebates available to our residential customers,and District staff distributed flyers and postcards highlighting the upcoming Plant Fair.Staff also worked on a bill insert (to be distributed in early March),translated into both English and Spanish,that highlights the upcoming "Spring Garden Festival"on April 24 th . INFORMATION TECHNOLOGY AND STRATEGIC PLANNING: •Telephones -Staff is examining options for replacement of the District's telephone systems.The NEC 2000 PBX is at end of life and a joint team from Customer Service and IT are drafting the appropriate RFP.Quite likely,this change will also involve upgrading to a now standard Voice over IP technology. •Asset Management -On February 16th ,an executive steering committee reviewed progress regarding our asset management program.Approximately 85%of the required asset related information was successfully collected for our first pilot site (Copps Lane).On average,utilities are able to collect around 70%on a first effort,which is a positive first step in asset data collection for Otay.Next steps involve looking at business processes that maintain assets and the technology aspects of asset management. •Staff continues to work on the implementation of improved software for the District's Treatment Plant.The "OPS 32" product is being installed and will be operational before the end of the fiscal year. •ToughBooks -A user survey of staff using the new ToughBooks in the field,yielded positive results and indicates a significant improvement over the first generation of field equipment deployed five years ago. •Staff continues to evaluate meter reading technology in order to stay abreast of industry trends.Currently,we are watching carefully to see what issues Padre Dam is encountering rolling out a fixed based network,and have met with the vendor of the Padre system,Datamatic,to keep us informed. 3 •On February 23rd,Geoff Stevens was a speaker at Utility Management Conference in San Francisco. was "Performance Management and Measurement". the AWWA The topic FINANCE: •Internal Controls Audit -As part of the Strategic Plan,a financial objective is to perform an in-depth review of internal controls of sensitive District operations.District staff has always been focused on insuring that appropriate controls are installed and performed to protect District assets.While the auditors perform a high level review of internal controls each year,an in-depth review has never been a part of the audit scope of work.As part of the strategic planning process,this type of review was recommended as a way to improve existing controls and/or improve the confidence in existing controls.Staff reviewed proposals from qualified firms and,under the General Manager's authority,have selected the District's current auditors to perform this work.Diehl,Evans &Co.has extensive experience in these special types of engagements and will review two specific areas under the current 2010 budget.The remaining areas for review will be performed in Fiscal Year 2011,assuming budget approval. •Update on Web Payments Options and Electronic Bill Presentation -Staff is preparing the first phase of outreach to inform customers of the upcoming web payment and bill presentation service enhancements.Throughout the month of March,stuffers will be included in all customer bills and an announcement will be placed on the District's web page.The go-live date is planned for sometime in April when additional notifications will be made bye-mail to existing users of the District's web payment system.Over the next few months, staff will continue to explore additional methods to communicate and encourage the use of this much anticipated service to customers. •The Otay Water District has been presented with the "Distinguished Budget Presentation Award"from the Government Finance Officers Association (GFOA)for the Fiscal Year 2009- 2010 Operating and Capital Budget.The GFOA says,"This award is the highest form of recognition in governmental budgeting and represents a significant achievement by your organization".In addition,the California Society of Municipal Finance Officers (CSMFO)has awarded the "Excellence in Budgeting Award"to both the Operating and Capital Budgets for Fiscal Year 2009-2010. 4 •The financial reporting for January 31,2010 is as follows: For the seven months ended January 31,2010,there are total revenues of $42,586,437 and total expenses of $41,245,783. The revenues exceeded expenses by $1,340,654 . •The financial reporting for investments for January 31,2010 is as follows:The market value shown in the Portfolio Summary and in the Investment Portfolio Details as of January 31,2010 total $68,464,717.43 with an average yield to maturity of 1.293%.The total earnings year-to-date are $650,619.26. ENGINEERING AND WATER OPERATIONS: Engineering: •East County Regional Treated Water Improvement Program: The San Diego County Water Authority (Water Authority) staff has initially concurred with the Otay Water District request to revise the take or pay beginning date related to the East County Regional Treated Water Improvement Program (ECRTWIP)for flows from the Helix Water District Levy Water Treatment Plant.The original date is March 2010 and the revised date is planned to be January 1, 2011.The ECRTWIP Agreement and the Otay Flow Control Facility Number 14 Improvement Agreement with the Water Authority will require modification.Draft amendments to both of the agreements have been developed,and are pending agreed upon terms. •The City of San Diego (City)-District Legal Counsel is discussing the Community Plan Update and the City's desire to have the District do a Water Supply Assessment (WSA). The Community Plan Update has several options including the "No Change"option.The District's position is,a WSA is not required until a project has been defined. •1296-3 Reservoir -Natgun's subcontractor,RSH,continues the construction of the site work facilities such as the inlet/outlet piping,drainage,surface improvements,and retaining walls.This reservoir is for increased capacity in the 1296 Pressure Zone,as required by the 2009 Master Plan.This project is on budget and expected to be completed in March 2010.(P2143) •1485-1 Pump Station Replacement -SCW Contracting continues to work on the construction of the pump station building.The pumps have been delivered and installed for 5 ~. [ I the new station.The existing pump station is exposed to the outside elements and is at the end of its useful life. The new pump station will be enclosed,provide more efficient pumps,and provide for future expansion when demands increase in the 1485 Zone.This project is on budget and expected to be completed in April 2010.(P2172) •Otay Mesa Recycled Water Supply Link -Staff met with the County,City of San Diego,City of Chula Vista,and Caltrans to discuss the traffic control with each agency. The project includes installation of approximately 18,700 linear feet of 24-inch steel recycled water pipeline, 16,300 linear feet of 16-inch PVC recycled water pipeline, 900 linear feet of 8-inch PVC recycled water pipeline,and the installation a pressure reducing station.These projects will supply recycled water to Otay Mesa and start the conversion of irrigation services currently using potable water to recycled water.These projects are on budget and on schedule for construction award in late spring 2010.(R2034,R2058,R2077,R2087,R2088) •For the month of January 2010,the District sold 9 meters (21.5 EDUs)generating $121,030 in revenue.Projection for this period was 8.25 meters (21.9 EDUs)with budgeted revenue of $134,950.Projected revenue from July 1,2009 through June 30,2010 is $1,619,400. •Approximately 21 linear feet of both ClP and developer project pipeline was installed in January 2010.The Construction Division performed quality control for these pipelines. •The following table summarizes Engineering's Project purchases and change orders issued during the period of January 1 through January 31,2010 that were within Staff signatory authority: Date Action Amount Contractor/ProjectConsultant Annual O&M estimate for Check Sweetwater multi-depth monitoring 01-05-10 Request $8,251.24 Authority wells (aaOOO) Check $1,113.00 San Diego Gas &La Presa Pump Station 01-11-10 Request Electric (P2471) Otay 14 FCF connection Check Helix Water at Lexington Avenue 01-21-10 Request $2,612.87 District (P2009) 6 Water qperations: •Total number of potable water meters is 47,957 . •The purchases for the month of January were 1,905.2 AF compared to January 2009 of 1,793.6 AF or 6.2%more than this month last year. Potable Water Purchases 45,000 40,000 35,000 30,000-CD 25,000CDu. CD..20,000~ 15,000 _Purchases 10,000 _Budget -.-Allocation5,000 0 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 •Recycled water consumption for the month of January is as follows: Total consumption was 122.9 acre-feet or 40,036,700 gallons and the average daily consumption was 1,291,506 gallons per day. Total number of recycled water meters is 689. Total recycled water consumption to date for FY 2010 is 3059.5 acre-feet . •Wastewater flows for the month of January were as follows: •Total basin flow,gallons per day:2,105,000 •Spring Valley Sanitation District Flow to Metro,gallons per day:699,000 7 •Total Otay flow,gallons per day:1,406,000. •Flow Processed at the Ralph W.Chapman Water Recycling Facility,gallons per day:665,000. •Flow to Metro from Otay Water District,gallons per day: 741,000. For the month of January there were no new wastewater connectionS;total EDUs is 6,070. II In (l~1Pt5--=---~anager G:\UserData\DistSec\WINWORD\STAFRPTS\GM Report 3-3-10 doc 8 Broken Sprinklers Leak Water Waste Report Washing Over$pray Runoff due to Down Paved Qverwatering Surfaces Washing VehIcles without a bucket and hose nozzle Watering after lOam and before 6pm Total ----~priJ 2009 May 29Q9 June 2009 JUJY4Qg~ August2Q09 ~eptelT'lber 20()9 October 2009 November 2009 December 2009 Janui:}ry 2010.,~~" February 2019 Total 6 4 4 1 2 17 7 23 9 6 1 1 47 13 35 5 8 10 1 7 79 6 24 9 17 4 4 6 70 11 15 7 8 1 1 9 52 6 17 5 7 2 1 3 41 4 6 2 6 1 1 20 1 6 7 11 1 26 1 15 1 4 1 22 1 2 1 4 1 9 1 1 3 5 57 143 51 78 21 7 31 388 OTAY WATER DISTRICT COMPARATIVE BUDGET SUMMARY FOR SEVEN MONTHS ENDED JANUARY 31,2010 Exhibit A REVENUE: Water Sales * Energy Charges System Charges Penalties MWD &CWA Fixed Charges Total Water Sales Reclamation Sales Sewer Charges Meter Fees Capacity Fee Revenues Betterment Fees for Maintenance Annexation Fees Non-Operating Revenues Tax Revenues Interest General Fund Draw Down Transfer from OPEB Total Revenue EXPENSES: Potable Water Purchases Recycled Water Purchases CWA-Infrastructure Access Charg 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 Betterment Reserve Replacement Reserve Transfer to Sewer General Fund Transfer Out/In Prop IA Transfer to General Fund Reserve Total Expenses Annual Budget $37,870,000 1,981,200 9,408,000 704,100 6,511,200 56,474,500 7,602,500 2,244,800 45,600 1,397,000 571,400 120,500 1,585,600 3,852,600 322,900 469,100 1,030,000 $75,716,500 $28,033,700 1,312,000 e 1,344,900 1,148,800 2,246,600 628,800 1,140,700 35,855,500 2,637,100 17,212,800 3,801,600 4,874,900 454,300 1,610,000 3,810,000 3,660,000 200,000 270,300 1,330,000 $75,716,500 $- YTD YTD YTD Actual Budget Variance Var% $19,926,994 $23,958,800 $(4,031,806)(16.8%) 1,126,374 1,252,300 (125,926)(10.1%) 5,355,221 5,445,000 (89,779)(1.6%) 487,626 459,900 27,726 6.0% 3,536,598 3,662,700 (126,102)(3.4%) 30,432,814 34,778,700 (4,345,886)(12.5%) 4,581,045 4,948,800 (367,755)(7.4%) 1,291,749 1,285,800 5,949 0.5% 38,251 26,500 11,751 44.3% 635,404 814,900 (179,496)(22.0%) 341,460 333,300 8,160 2.4% 254,835 70,500 184,335 261.5% 2,026,875 887,800 1,139,075 128.3% 1,990,701 2,128,900 (138,199)(6.5%) 118,904 188,400 (69,496)(36.9%) 273,600 273,600 0.0% 600,800 600,800 0.0% $42,586,437 $46,338,000 $(3,751,563)(8.1%) $15,376,404 $17,729,500 $2,353,096 13.3% 749,429 792,526 43,097 5.4% 768,088 768,148 60 0.0% 638,356 641,963 3,607 0.6% 1,121,586 1,129,926 8,340 0.7% 360,654 359,300 (1,354)(0.4%) 555,464 665,457 109,993 16.5% 19,569,981 22,086,819 2,516,838 11.4% 1,505,129 1,578,308 73,180 4.6% 9,546,558 9,734,806 188,248 1.9% 1,880,254 1,979,600 99,346 5.0% 2,173,117 2,457,557 284,440 11.6% 223,844 265,008 41,164 15.5% 939,200 939,200 0.0% 2,222,500 2,222,500 0.0% 2,135,000 2,135,000 0.0% 116,700 116,700 0.0% 157,700 157,700 0.0% 775,800 775,800 0.0% $41,245,783 $44,448,999 $3,203,216 7.2% $1,340,654 $1,889,001 $(548,347) *September Water Sales reflect prorated customer credits paid in October. F:/MORPTIFS2009-0110 2122/2010 9:19 AM OTAY WATER DISTRICT INVESTMENT PORTFOLIO REVIEW JANUARY 31,2010 INVESTMENT OVERVIEW &MARKET STATUS: The federal funds rate has remained constant now for over 13-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 January 27,2010. They went on to say:"The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels ofthe federal funds ratefor an extended period." Despite the large drop in available interest rates,the District's overall effective rate of return at January 31 st was 1.36%,which was a decrease of 11 basis points (0.11%)from the prior month.At the same time the LAIF return on deposits has dropped over the last several months,reaching an average effective yield of 0.56%for the month of January 2010.Based on our success at maintaining a competitive rate of return on our portfolio during this extended period ofinterest 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,ofsafety,liquidity,and return on investment. PORTFOLIO COMPLIANCE:January 31,2010 Investment 8.01:Treasury Securities 8.02:Local Agency Investment Fund (Operations) 8.02:Local Agency Investment Fund (Bonds) 8.03:Federal Agency Issues 8.04:Certificates ofDeposit 8.05:Short-Term Commercial Notes 8.06:Medium-Term Commercial Debt 8.07:Money Market Mutual Funds 8.08:San Diego County Pool 12.0:Maximum Single Financial Institution State Limit 100% $40 Million 100% 100% 30% 25% 30% 20% 100% 100% Otay Limit 100% $40 Million 100% 100% 15% 15% 15% 15% 100% 50% OtayActual o $7.58 Million o 43.86% 4.50% o 5.84% o 33.37% 1.34% 49.72% Otay Water District Investment Portfolio:01/31/10 5.84% o Banks (Passboak/Checking/CPJ •Pools (LAIF &County)DAgel1cies &Corporate Notes Performance Measure F-12 Return on Investment Target:Meet or Exceed 100%of LAIF 3.50 -- tn 3.00....r:: CD E 2.50 -....tnCD 2.00 -->r::-r::1.50 - 0 r::1.00:r...- ::J....CD 0.50a:--- 0.00 I D I 2ndAugSep[1st Qtr Oct Nov ec Qtr Jan FYlO FYlO FYlO FYlO FYlO FYlO FYlO FYlO LAIF 2.54 1.91 1.50 1.04 0~93 0.75 0.90 0.65 0.61 0.57 0.61 0.56 t~~~ence l~~-~:~~1;~~::~t~~r~:~:~~i ~~;:,_~_::_~----,---~_:~_~---,---~_:~_~-----, Month l LAIF.Otay D Difference j OTAY Portfolio Management Portfolio Summary January 31,2010 Investments Corporate Notes Federal Agency Issues-Callable Certificates of Deposit -Bank Local Agency Investment Fund (LAIF) San Diego County Pool Investments Par Market Book %of Days to YTM YTM Value Value Value Portfolio Term Maturity 360 Equiv.365 Equiv. 4,000,000.00 4,142,520.00 4,026,550.93 5.96 878 310 1.973 2.000 30,000,000.00 30,035,460.00 29,998,086.11 44.43 840 676 1.537 1.558 3,079,108.00 3,079,108.00 3,079,108.00 4.56 373 121 2.179 2.209 7,584,020.70 7,591,209.02 7,584,020.70 11.23 1 1 0.550 0.558 22,824,323.33 22,700,224.89 22,824,323.33 33.81 1 1 0.978 0.992 67,487,452.03 67,548,521.91 67,512,089.07 100.00%443 325 1.293 1.310 Cash Passbook/Checking (not included in yield calculations) Total Cash and Investments Total Earnings Current Year Average Daily Balance Effective Rate of Return 916,195.52 68,403,647.55 January 31 Month Ending 82,343.20 71,367,765.72 1.36% 916,195.52 68,464,717.43 Fiscal Year To Date 650,619.26 73,356,138.78 1.51% 916,195.52 68,428,284.59 443 325 0.057 1.293 0.058 1.310 I hereby certify that the investments contained in this report are made in accordance with the District Investment Policy Number27 adopted bythe Board of Directors on September 6,2006.The market value information provided b Int r . e Data Corporation.The investments provide sufficient liquidity to meet the cash flow requirements of the District for the next six months ofexpenditures. '2-/7-;2.0 1 0 Run Date:02/16/2010-16:20 Portfolio OTAY AP PM (PRF_PM1)SymRepl 6.41.200 Report Ver.5.00 OTAY Portfolio Management Page 2 Portfolio Details -Investments January 31,2010 Average Purchase Stated YTM Days to Maturity CUSIP Investment#Issuer Balance Date ParValue Market Value BookValue Rate Moody's 360 Maturity Date Corporate Notes 084664AF8 2094 Berkshire Hathaway Fin 03/10/2009 2,000,000.00 2,067,000.00 2,017,307.09 4.200 1.973 317 12115/2010 36962G2S2 2044 General ElectricCapital 11/16/2007 2,000,000.00 2,075,520.00 2,009,243.84 5.000 Aaa 1.973 303 12/01/2010 Subtotal and Average 4,027,756.73 4,000,000.00 4,142,520.00 4,026,550.93 1.973 310 Federal Agency Issues-Callable 31398AWJ7 2097 Fannie Mae 04/08/2009 2,000,000.00 2,004,380.00 2,000,000.00 1.875 1.849 431 04/08/2011 3136FHYA7 2101 Fannie Mae 06/08/2009 2,000,000.00 2,006,260.00 2,000,000.00 1.150 1.164 492 06/08/2011 3133XVBWO 2112 Federal Home Loan Bank 10/29/2009 2,000,000.00 2,003,120.00 2,000,000.00 1.500 1.479 1,183 04/29/2013 3133XVCD1 2113 Federal Home Loan Bank 10/27/2009 2,000,000.00 2,001,260.00 2,000,000.00 1.000 0.986 816 04/27/2012 3133XW4CO 2115 Federal Home Loan Bank 12/30/2009 2,000,000.00 1,993,760.00 1,998,086.11 1.250 1.299 697 12/30/2011 3133XWCZO 2116 Federal Home Loan Bank 12/28/2009 2,000,000.00 2,003,120.00 2,000,000.00 1.000 0.986 1,061 12/28/2012 3128X8QH8 2095 Federal Home Loan Mortgage 03/16/2009 2,000,000.00 2,003,080.00 2,000,000.00 2.000 1.973 408 03/16/2011 3128X8WC2 2098 Federal Home Loan Mortgage 04/20/2009 2,000,000.00 2,005,180.00 2,000,000.00 1.750 1.726 443 04/20/2011 3128X9CG3 2109 Federal Home Loan Mortgage 09/0212009 2,000,000.00 2,002,080.00 2,000,000.00 1.750 1.726 578 09/0212011 3128X9GW4 2110 Federal Home Loan Mortgage 10/13/2009 2,000,000.00 2,003,740.00 2,000,000.00 1.750 1.726 802 04/13/2012 3128X9LJ7 2114 Federal Home Loan Mortgage 11/18/2009 2,000,000.00 2,000,720.00 2,000,000.00 1.500 1.479 655 11/18/2011 3136FHAA3 2091 Federal National MortageAssoc 02/11/2009 2,000,000.00 2,001,260.00 2,000,000.00 2.000 1.973 375 02111/2011 31398AVL3 2093 Federal National MortageAssoc 03/02/2009 2,000,000.00 2,003,120.00 2,000,000.00 2.000 1.973 394 03/0212011 31398AC91 2117 Federal National MortageAssoc 01/20/2010 2,000,000.00 2,001,260.00 2,000,000.00 1.500 1.479 718 01/20/2012 3136FJR45 2118 Federal National MortageAssoc 01/25/2010 2,000,000.00 2,003,120.00 2,000,000.00 1.250 1.233 1,089 01/25/2013 Subtotaland Average 30,836,756.72 30,000,000.00 30,035,460.00 29,998,086.11 1.537 676 Certificates of Deposit -Bank 2050003183-4 2121 California Bank &Trust 01/22/2010 79,108.00 79,108.00 79,108.00 1.380 1.380 720 01/22/2012 1006200563 2096 Neighborhood National Bank 02/05/2009 2,000,000.00 2,000,000.00 2,000,000.00 2.600 2.600 3 02104/2010 1008995288 2119 Neighborhood National Bank 12110/2009 1,000,000.00 1,000,000.00 1,000,000.00 1.400 1.400 311 12109/2010 Subtotal and Average 3,079,108.00 3,079,108.00 3,079,108.00 3,079,108.00 2.179 121 Local Agency Investment Fund (LAIF) LAIF 9001 STATE OF CALIFORNIA 07/01/2004 7,584,020.70 7,591,209.02 7,584,020.70 0.558 0.550 LAIF COPS07 9009 STATE OF CALIFORNIA 03/07/2007 0.00 0.00 0.00 1.530 1.509 Subtotal and Average 9,337,491.75 7,584,020.70 7,591,209.02 7,584,020.70 0.550 Run Date:02116/2010 -16:20 Portfolio OTAY AP PM (PRF_PM2)SymRept 6.41.200 ReportVer.5.00 OTAY Portfolio Management Portfolio Details -Investments January 31,2010 Page 3 Stated YTM Days to Maturity BookValue Rate Moody's 360 Maturity Date 22,824,323.33 0.992 0.978 22,824,323.33 0.978 67,512,089.07 1.293 325 MarketValue 22,700,224.89 22,700,224.89 67,548,521.91 ParValue 22,824,323.33 22,824,323.33 67,487,452.03 Purchase Date 07/01/2004 Average Balance 22,783,171.19 71,367,765.72 Issuer Total and Average San Diego County _ SubtotalandAverage Investment #CUSIP San Diego County Pool SD COUNTY POOL 9007 Run Date:02/16/2010 -16:20 Portfolio OTAY AP PM (PRF_PM2)SymRept6.41.200 OTAY Portfolio Management Portfolio Details -Cash January 31,2010 Average Purchase CUSIP Investment#Issuer Balance Date ParValue Union Bank UNION MONEY 9002 STATE OF CALIFORNIA 07/01/2004 17.501.60 PETTYCASH 9003 STATE OF CALIFORNIA 07/01/2004 2.800.00 UNION OPERATING 9004 STATE OF CALIFORNIA 07/01/2004 868,491.48 PAYROLL 9005 STATE OF CALIFORNIA 07/01/2004 27,402.44 UNION IOC 9008 STATE OF CALIFORNIA 05/01/2006 0.00 Average Balance 0.00 Total Cash and Investmentss 71,367,765.72 68,403,647.55 Run Date:0211612010 -16:20 MarketValue 17,501.60 2,800.00 868,491.48 27,402.44 0.00 68,464,717.43 Page 4 Stated YTM Days to Book Value Rate Moody's 360 Maturity 17,501.60 0.050 0.049 2,800.00 0.000 868,491.48 0.060 0.059 27,402.44 0.000 0.00 4.500 4.438 68,428,284.59 1.293 325 Portfolio OTAY AP PM (PRF_PM2)SymRept 6.41.200 OTAY Activity Report Sorted By Issuer July 1,2009·January 31,2010 ParValue ParValue CUSIP Investment #Issuer Percent of Portfolio Beginning Balance Current Transaction Rate Date Purchases or Deposits Redemptions or Withdrawals Ending Balance Issuer:Berkshire Hathaway Fin Corporate Notes Subtotaland Balance IssuerSubtotal Issuer:STATE OF CALIFORNIA 2.924% 2,000,000.00 2,000,000.00 0.00 0.00 2,000,000.00 2,000,000.00 Local Agency Investment Fund (LAIF) LAIF 9001 STATE OF CALIFORNIA Subtotal and Balance Issuer Subtotal Union Bank UNION MONEY UNION OPERATING PAYROLL 9002 9004 9005 STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA Subtotal and Balance 12.427% 0.050 50,657,695.40 52,650,207.62 0.060 6,058,639.31 5,777,173.90 2,414,353.12 2,411,927.94 2,624,817.15 59,130,687.83 60,839,309.46 0.558 34,029,282.49 33,925,445.24 7,480,183.45 34,029,282.49 33,925,445.24 10,105,000.60 93,159,970.32 94,764,754.70 916,195.52 7,584,020.70 8,500,216.22 Issuer:California Bank &Trust Certificates ofDeposit -Bank 205003183 2050003183-4 2066 2121 California Bank &Trust California Bank &Trust Subtotal and Balance 79,108.00 3.180 1.380 01/2212010 01/2212010 0.00 79,108.00 79,108.00 79,108.00 0.00 79,108.00 79,108.00 Issuer:Fannie Mae IssuerSubtotal 0.116%79,108.00 79,108.00 79,108.00 79,108.00 Federal Agency Issues-Callable Subtotal and Balance Run Date:02116/2010 -16:19 4,000,000.00 4,000,000.00 Portfolio OTAY AP DA (PRF_DA)SymRept6.41.200 Report Ver.5.00 OTAY Activity Report July 1,2009 -January 31,2010 Par Value ParValue Page 2 CUSIP Investment #Issuer Percent ofPortfolio Beginning Balance Current Transaction Rate Date Purchases or Deposits Redemptions or Withdrawals Ending Balance Issuer Subtotal Issuer:Federal Fann Credit Bank Federal Agency Issues-Callable 5.848%4,000,000.00 0.00 0.00 4,000,000.00 31331GWK1 2100 Federal Fann Credit Bank Subtotal and Balance 2,000,000.00 1.100 09/25/2009 0.00 0.00 2,000,000.00 2,000,000.00 0.00 IssuerSubtotal 0.000%2,000,000.00 0.00 2,000,000.00 0.00 Issuer:Federal Home Loan Bank Federal Agency Issues-Callable 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 3133XTLP9 3133XTLP9 3133XTLP9 3133XTQM1 3133XTQ58 3133XUEM1 3133XUEM1 3133XUGD9 3133XUGD9 3133XUKD4 3133XUKD4 3133XVAN1 3133XVAN1 3133XVBWO 3133XVCD1 3133XW4CO 3133XWCZO 2099 2099 2099 2102 2103 2106 2106 2107 2107 2108 2108 2111 2111 2112 2113 2115 2116 Subtotal and Balance IssuerSubtotal 11.695% 1.525 09/04/2009 0.00 222,222.22 09/2212009 0.00 444,444.44 09/28/2009 0.00 1,333,333.34 1.180 12118/2009 0.00 2,000,000.00 1.240 01/25/2010 0.00 2,000,000.00 1.350 08/10/2009 2,000,000.00 0.00 11130/2009 0.00 2,000,000.00 1.500 08/17/2009 2,000,000.00 0.00 11/17/2009 0.00 2,000,000.00 1.625 08/25/2009 2,000,000.00 0.00 11/25/2009 0.00 2,000,000.00 1.500 10/28/2009 2,000,000.00 0.00 01/28/2010 0.00 2,000,000.00 1.500 10/29/2009 2,000,000.00 0.00 1.000 10/27/2009 2,000,000.00 0.00 1.250 12130/2009 2,000,000.00 0.00 1.000 12128/2009 2,000,000.00 0.00 6,000,000.00 16,000,000.00 14,000,000.00 8,000,000.00 6,000,000.00 16,000,000.00 14,000,000.00 8,000,000.00 Issuer:Federal Home Loan Mortgage Federal Agency Issues-Callable 3128X8V33 3128X8V33 3128X9CG3 Run Date:02116/2010 -16:19 2105 2105 2109 Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Mortgage 1.850 1.750 07/06/2009 01/06/2010 09/0212009 2,000,000.00 0.00 2,000,000.00 0.00 2,000,000.00 0.00 Portfolio OTAY AP DA (PRF_DA)SymRept 6.41.200 Report Ver.5.00 OTAY Activity Report Page 3 July 1,2009.January 31,2010 Par Value ParValue Percent Beginning Current Transaction Purchases or Redemptions or Ending CUSIP Investment#Issuer of Portfolio Balance Rate Date Deposits Withdrawals Balance Issuer:Federal Home Loan Mortgage Federal Agency Issues-Callable 3128X9GW4 2110 Federal Home Loan Mortgage 1.750 10/13/2009 2,000,000.00 0.00 3128X9LJ7 2114 Federal Home Loan Mortgage 1.500 11/18/2009 2,000,000.00 0.00 Subtotal and Balance 4,000,000.00 8,000,000.00 2,000,000.00 10,000,000.00 Issuer Subtotal 14.619%4,000,000.00 8,000,000.00 2,000,000.00 10,000,000.00 Issuer:Federal National Mortage Assoc Federal Agency Issues-Callable 3136F9WV1 2085 Federal National Mortage Assoc 4.000 0710212009 0.00 2,000,000.00 3136FHE43 2104 Federal National Mortage Assoc 1.500 07101/2009 2,000,000.00 0.00 3136FHE43 2104 Federal National Mortage Assoc 10101/2009 0.00 2,000,000.00 31398AC91 2117 Federal National Mortage Assoc 1.500 01/20/2010 2,000,000.00 0.00 3136FJR45 2118 Federal National Mortage Assoc 1.250 01/25/2010 2,000,000.00 0.00 Subtotal and Balance 6,000,000.00 6,000,000.00 4,000,000.00 8,000,000.00 IssuerSubtotal 11.695%6,000,000.00 6,000,000.00 4,000,000.00 8,000,000.00 Issuer:General Electric Capital Corporate Notes Subtotal and Balance 2,000,000.00 2,000,000.00 Issuer Subtotal 2.924%2,000,000.00 0.00 0.00 2,000,000.00 Issuer:Neighborhood National Bank Certificates of Deposit.Bank 1005581024 2090 Neighborhood National Bank 3.150 12110/2009 0.00 1,000,000.00 1008995288 2119 Neighborhood National Bank 1.400 12110/2009 1,000,000.00 0.00 Subtotal and Balance 3,000,000.00 1,000,000.00 1,000,000.00 3,000,000.00 IssuerSubtotal 4.386%3,000,000.00 1,000,000.00 1,000,000.00 3,000,000.00 Issuer:San Diego County Run Date:0211612010 -16:19 Portfolio OTAY AP DA (PRF_DA)SymRept 6.41.200 Report Ver.5.00 OTAY Activity Report July 1,2009 -January 31,2010 Par Value Par Value Page 4 CUSIP Investment #Issuer Percent ofPortfolio Beginning Balance Current Transaction Rate Date Purchases or Deposits Redemptions or Withdrawals Ending Balance Issuer:San Diego County San Diego County Pool SD COUNTY POOL Run Date:02116/2010 -16:19 9007 San Diego County Subtotal and Balance IssuerSubtotal 33.367% Total 100.000% 39,534,302.21 39,534,302.21 78,718,410.81 0.992 301,583.07 301,583.07 301,583.07 124,540,661.39 17,011,561.95 17,011,561.95 17,011,561.95 134,855,424.65 22,824,323.33 22,824,323.33 68,403,647.55 Portfolio OTAY AP DA (PRF_DA)SymRept 6.41.200 Report Ver.5.00 OTAY GASS 31 Compliance Detail Sorted by Fund -Fund July 1,2009 -January 31,2010 Adjustment in Value Investment Maturity Beginning Purchase Addition Redemption Amortization Change in Ending CUSIP Investment#Fund Class Date Invested Value of Principal to Principal ofPrincipal Adjustment MarketValue Invested Value Fund:Treasury Fund LAIF 9001 99 FairValue 7,489,943.17 0.00 79,282.49 79,282.49 0.00 -2,571.39 7,591,209.02 UNION MONEY 9002 99 Amortized 2,010,013.82 0.00 114.48 1,992,626.70 0.00 0.00 17,501.60 PETTY CASH 9003 99 Amortized 2,800.00 0.00 0.00 0.00 0.00 0.00 2,800.00 UNION OPERATING 9004 99 Amortized 587,026.07 0.00 1,946.56 1,946.56 0.00 0.00 868,491.48 PAYROLL 9005 99 Amortized 24,977.26 0.00 0.00 0.00 0.00 0.00 27,402.44 SD COUNTY POOL 9007 99 Fair Value 39,756,639.66 0.00 301,583.07 17,011,561.95 0.00 -346,435.89 22,700,224.89 UNION IOC 9008 99 Amortized 0.00 0.00 0.00 0.00 0.00 0.00 0.00 LAIFCOPS07 9009 99 FairValue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 36962G2S2 2044 99 FairValue 12101/2010 2,058,720.00 0.00 0.00 0.00 0.00 16,800.00 2,075,520.00 205003183 2066 99 Amortized 01/2212010 79,108.00 0.00 0.00 79,108.00 0.00 0.00 0.00 3136F9WV1 2085 99 Fair Value 0710212010 2,000,000.00 0.00 0.00 2,000,000.00 0.00 0.00 0.00 1005581024 2090 99 Amortized 12110/2009 1,000,000.00 0.00 0.00 1,000,000.00 0.00 0.00 0.00 3136FHAA3 2091 99 Fair Value 02111/2011 2,013,760.00 0.00 0.00 0.00 0.00 -12,500.00 2,001,260.00 31398AVL3 2093 99 Fair Value 03/0212011 2,014,380.00 0.00 0.00 0.00 0.00 -11,260.00 2,003,120.00 084664AF8 2094 99 Fair Value 12115/2010 2,061,960.00 0.00 0.00 0.00 0.00 5,040.00 2,067,000.00 3128X8QH8 2095 99 Fair Value 03/16/2011 2,012,300.00 0.00 0.00 0.00 0.00 -9,220.00 2,003,080.00 1006200563 2096 99 Amortized 02104/2010 2,000,000.00 0.00 0.00 0.00 0.00 0.00 2,000,000.00 31398AWJ7 2097 99 FairValue 04/08/2011 2,009,380.00 0.00 0.00 0.00 0.00 -5,000.00 2,004,380.00 3128X8WC2 2098 99 Fair Value 04/20/2011 2,009,800.00 0.00 0.00 0.00 0.00 -4,620.00 2,005,180.00 3133XTLP9 2099 99 FairValue 05/18/2011 2,001,880.00 0.00 0.00 2,000,000.00 0.00 -1,880.00 0.00 31331GWK1 2100 99 FairValue 02128/2011 1,996,260.00 0.00 0.00 2,000,000.00 0.00 3,740.00 0.00 3136FHYA7 2101 99 FairValue 06/08/2011 1,996,260.00 0.00 0.00 0.00 0.00 10,000.00 2,006,260.00 3133XTQM1 2102 99 FairValue 06/10/2011 1,996,260.00 0.00 0.00 2,000,000.00 0.00 3,740.00 0.00 3133XTQ58 2103 99 FairValue 06/10/2011 1,998,120.00 0.00 0.00 2,000,000.00 0.00 1,880.00 0.00 3136FHE43 2104 99 Fair Value 07/01/2011 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3128X8V33 2105 99 Fair Value 07/06/2011 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3133XUEM1 2106 99 Fair Value 08/10/2011 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3133XUGD9 2107 99 Fair Value 08/17/2011 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3133XUKD4 2108 99 Fair Value 08/25/2011 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3128X9CG3 2109 99 Fair Value 09/0212011 0.00 2,000,000.00 0.00 0.00 0.00 2,080.00 2,002,080.00 3128X9GW4 2110 99 Fair Value 04/13/2012 0.00 2,000,000.00 0.00 0.00 0.00 3,740.00 2,003,740.00 Portfolio aTAY AP Run Date:02/16/2010 -16:19 GO (PRF_GO)SymRept 6.41.200 ReportVer.5.00 OTAY GASS 31 Compliance Detail Page 2 Sorted by Fund -Fund Adjustment in Value Investment Maturity Beginning Purchase Addition Redemption Amortization Change in Ending CUSIP Investment #Fund Class Date Invested Value ofPrincipal to Principal of Principal Adjustment Market Value Invested Value Fund:Treasury Fund 3133XVAN1 2111 99 Fair Value 10/28/2011 0.00 2,000,000.00 0.00 2,000,000.00 0.00 0.00 0.00 3133XVBWO 2112 99 Fair Value 04/29/2013 0.00 2,000,000.00 0.00 0.00 0.00 3,120.00 2,003,120.00 3133XVCD1 2113 99 FairValue 04/27/2012 0.00 2,000,000.00 0.00 0.00 0.00 1,260.00 2,001,260.00 3128X9LJ7 2114 99 FairValue 11/18/2011 0.00 2,000,000.00 0.00 0.00 0.00 720.00 2,000,720.00 3133XW4CO 2115 99 Fair Value 12130/2011 0.00 1,998,000.00 0.00 0.00 0.00 -4,240.00 1,993,760.00 3133XWCZO 2116 99 Fair Value 12128/2012 0.00 2,000,000.00 0.00 0.00 0.00 3,120.00 2,003,120.00 31398AC91 2117 99 FairValue 01/20/2012 0.00 2,000,000.00 0.00 0.00 0.00 1,260.00 2,001,260.00 3136FJR45 2118 99 Fair Value 01/25/2013 0.00 2,000,000.00 0.00 0.00 0.00 3,120.00 2,003,120.00 1008995288 2119 99 Amortized 12109/2010 0.00 1,000,000.00 0.00 0.00 0.00 0.00 1,000,000.00 2050003183-4 2121 99 Amortized 01/2212012 0.00 79,108.00 0.00 0.00 0.00 0.00 79,108.00 Subtotal 79,119,587.98 31,077,108.00 382,926.60 42,164,525.70 0.00 -338,107.28 68,464,717.43 Total 79,119,587.98 31,077,108.00 382,926.60 42,164,525.70 0.00 -338,107.28 68,464,717.43 Portfolio OTAY AP Run Date:02/16/2010 -16:19 GO (PRF_GO)SymRept 6.41.200 Report Ver.5.00 STAFF REPORT March 3,2010 DIV.NO. MEETING DATE: W.O./G.F.NO: TYPE MEETING: SUBMITTED BY: Regular Board dOL Sean Prendergast,Financel} Supervisor,Payroll &AP APPROVED BY:Joseph Beachem,Chief Financial Officer (Chief) APPROVED BY:German Alvarez,Assistant General Manager {Asst.GM}: SUBJECT:Accounts Payable Demand List PURPOSE: Attached is the list of demands for the Board's information. FISCAL IMPACT: SUMMARY NET DEMANDS CHECKS (2022099-2022468) VOID CHECKS: CHECK #2021307 CHECK #2021419 CHECK #2021678 CHECK #2021907 CHECK #2022315 WIRE TO: DELTA HEALTH SYSTEMS -DENTAL &COBRA CLAIMS JP MORGAN -REMARKETING FEE -1ST QTR LANDES BANK -CERTIFICATES OF PARTICIPATION SAN DIEGO COUNTY WATER CAP FEES -2ND QTR SAN DIEGO COUNTY WATER WATER DELIVERIES SPECIAL DIST RISK MGMT AUTH -INSURANCE PREMIUM UNION BANK -PAYROLL TAXES UNION BANK -CERT OF PARTICIPATION -SERIES 2007 UNION BANK -'93 CERTIFICATE OF PARTICIPATION UNION BANK -GENERAL OBLIGATION BOND -ID 27 WAGEWORKS -FLEXIBLE SPENDING ACCOUNT $1,941,346.33 ($2,467.52) ($266.44) ($12,120.05) ($15,000.00) ($43,820.00) $6,126.28 $2,654.14 $1,788.63 $242,568.00 $1,747,793.30 $193,104.40 $299,259.77 $835,666.26 $197,341.88 $89,314.06 TOTAL CASH DISBURSEMENTS $5,483,289.04 RECOMMENDED ACTION: That the Board receive the attached list of demands. Jb/Attachment OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 2/3/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022112 02103/10 08488 ABLEFORCE INC 2102 01/26/10 EMPLOYEE SERVICES 3,995.00 3,995.00 2022207 02/10/10 08488 ABLEFORCE INC 2117 02/02/10 EMPLOYEESERVICES 3,230.00 3,230.00 2022298 02117110 08488 ABLEFORCE INC 2128 02/09/10 EMPLOYEESERVICES 3,740.00 3,740.00 2022374 02124/10 08488 ABLEFORCE INC 2140 02/16/10 EMPLOYEE SERVICES 3,825.00 3,825.00 2022299 02117110 05136 ADVANCED COMMUNICATIONS 2933 01/26/10 CABLING FOR EXIT FOB AT TP 4,875.00 2920 01/26/10 CABLING PROJECT 364.71 5,239.71 2022300 02/17/10 11507 ADVANTAGE TITLE INC 060081549REF 02111110 UB REFUND 206.89 206.89 2022375 02/24/10 10821 AECOM INC 37017611 02/04/10 PROFESSIONAL ENGINEERING SERVICES 29,172.54 29,172.54 2022301 02117110 10090 AECOM USA INC 7071627 01/25/10 PLAN CHECKS &INSPECTION SERVICE 5,621.55 5,621.55 2022208 02/10/10 07732 AIRGAS SPECIALTY PRODUCTS INC 131147308 01/21/10 BULKAQUA AMMONIA 19%2,180.99 131147307 01121110 BULKAQUA AMMONIA 19%1,707.16 131147310 01/21/10 BULKAQUA AMMONIA 19%948.64 131147309 01/21/10 BULKAQUA AMMONIA 19%379.75 5,216.54 2022376 02/24/10 00132 AIRGAS WEST INC 103216213 01/31/10 BREATHING AIR TREATMENT PLANT 26.93 26.93 2022209 02110110 01463 ALLIED ELECTRONICS INC 19726UOO 01113/10 ELECTRICAL PARTS 807.60 807.60 2022302 02117/10 01463 ALLIED ELECTRONICS INC 21071XOO 01/28/10 UPS 2,240.75 2,240.75 2022303 02117110 02362 ALLIED WASTE SERVICES #509 0509003851898 01/25/10 TRASH REMOVAL SERVICES 827.72 0509003853219 01/25/10 ASBESTOS DISPOSAL CONTAINER RENTAL 205.19 0509003853960 01/25/10 TRASH REMOVAL SERVICES TP 132.61 1,165.52 2022113 02/03/10 02966 AMERICAN INDUSTRIAL SUPPLY INC 119798 01/08/10 DEGREASERCHEMICAL 474.99 474.99 2022210 02/10/10 06166 AMERICAN MESSAGING Lll09570KB 02/01/10 PAGER SERVICES 235.95 235.95 2022377 02/24/10 00315 AMERICAN SOCIETY OF CIVIL 1040852894 02111110 MEMBERSHIPRENEWAL 245.00 1040793082 02116/10 MEMBERSHIP DUES 245.00 490.00 2022211 02/10/10 00107 AMERICAN WATER WORKS 7000173685 11/05/09 MEMBERSHIP DUES 5,213.00 005803080210 02/08/10 MEMBERSHIP RENEWAL 28.00 5,241.00 2022378 02124/10 00107 AMERICAN WATER WORKS 7000192866 01/15/10 BOOK&DVD 91.90 91.90 2022212 02/10/10 02518 AMERICAN WATER WORKS ASSN 001868 02/03/10 REGISTRATION FEES 1,120.00 1,120.00 2022379 02124/10 00002 ANSWER INC 2651 02122110 TELEPHONE ANSWERING SERVICES 1,000.00 1,000.00 Page 1of19 OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 2/3/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022213 02/10/10 08967 ANTHEM BLUE CROSS EAP 40846 01/25/10 EMPLOYEE ASSISTANCE PROGRAM SERVICES 368.00 368.00 2022114 02103/10 00108 ASSOCIATION OF CALIFORNIA 2203451370 01/22110 REGISTRATION FEE 73.00 73.00 2022380 02/24/10 05758 AT&T 082164572801251C 01/25/10 OPTE MAN INTERNET BANDWIDTH 1,985.34 33784130450210 02/07/10 PHONE SERVICE (HI HEAD P/S-SCADA)32.34 2,017.68 2022381 02/24/10 05758 AT&T 61942256050110 01/20/10 PHONE SVC (INTERAGENCYWTR MTR CONN)33.64 33.64 2022382 02124/10 07785 AT&T 000001143687 02/22/10 PHONE SERVICES 5,849.60 5,849.60 2022383 02/24/10 08330 AT&T INTERNET SERVICES 8547826250110 01/22/10 OPTE MAN INTERNET BANDWIDTH 1,200.00 1,200.00 2022175 02/10/10 11488 AVIV BADER Ref002403178 02/09/10 UB Refund Cst #0000153934 13.62 13.62 2022176 02/10/10 11496 BANCROFT REALTY Ref002403188 02/09/10 UB Refund Cst #0000157546 75.00 75.00 2022115 02/03/10 00145 BARRETT ENGINEERED PUMPS 069502 01111110 MARCH PUMP 541.03 541.03 2022116 02103/10 06285 BARTEL ASSOCIATES LLC 10024 01/13/10 PROFESSIONAL CONSULTING SERVICES 10,025.00 10,025.00 2022214 02/10/10 08144 BEST BUY 001902 02/08/10 COMPUTER LOAN PROGRAM 614.10 614.10 2022215 02110/10 06307 BIG SKY CONTRACTORS 001873 02/05/10 WIO REFUND D0013-XX9688 885.42 885.42 2022117 02/03/10 04806 BJ'S RENTALS 264080 01/12/10 CONCRETE 166.39 166.39 2022118 02/03/10 03458 BREITFELDER,LARRY 70131109 11/30109 MILEAGE REIMBURSEMENT 112.20 70131209 12/31/09 MILEAGE REIMBURSEMENT 46.20 158.40 2022119 02/03/10 10970 BRENNTAG PACIFIC INC BPI963143 01/14/10 SODIUM HYPOCHLORITE 587.62 587.62 2022216 02/10/10 10970 BRENNTAG PACIFIC INC BP1964177 01/19/10 SODIUM HYPOCHLORITE 1,429.23 1,429.23 2022304 02117110 10970 BRENNTAG PACIFIC INC BPI965711 01/25/10 SODIUM HYPOCHLORITE 1,326.88 BPI967324 01/25/10 SODIUM HYPOCHLORITE 1,263.69 2,590.57 2022384 02/24/10 10970 BRENNTAG PACIFIC INC BPI967698 02/01/10 SODIUM HYPOCHLORITE 1,778.01 BPI967697 02/01/10 SODIUM HYPOCHLORITE 298.23 2,076.24 2022385 02/24/10 03679 BRG CONSULTING INC 10013214 01/31/10 CONSULTANTCONTRACT FOR ENVSVCS 660.00 660.00 2022217 02/10/10 01232 BRODING'S BATTERY 14601 01/20/10 REPAIR PARTS 41.27 41.27 2022386 02/24/10 08156 BROWNSTEIN HYATT FARBER 431226 11/30/09 LEGISLATIVE ADVOCACY 4,813.75 431736 12131/09 LEGISLATIVE ADVOCACY 2,492.55 7,306.30 2022120 02103/10 00223 C W MCGRATH INC 35278 01/08/10 CRUSHED ROCK 201.88 Page 2 of 19 ~.""....~~~.•_-""-=....-_.;'C.},.<"".<SJiii t OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 213/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 35319 01/13/10 CRUSHED ROCK 57.70 259.58 2022305 02117110 00223 C W MCGRATH INC 35390 01/26/10 CRUSHED ROCK 205.46 35414 01/28110 CRUSHED ROCK 104.22 35402 01127110 CRUSHED ROCK 83.97 35371 01/25/10 CRUSHED ROCK 45.98 439.63 2022387 02/24/10 00223 C W MCGRATH INC 35476 02103110 CRUSHED ROCK 89.98 89.98 2022388 02124/10 00693 CALIFORNIA SPECIAL DISTRICTS 001928 02/16/10 QUARTERLY MEETING 78.00 78.00 2022218 02/10/10 00192 CALIFORNIAWATER ENVIRONMENT 310290110 02/04/10 CERTIFICATE RENEWAL 206.00 206.00 2022306 02117110 00192 CALIFORNIAWATER ENVIRONMENT 001911 02/10/10 CONFERENCE REGISTRATION 357.00 357.00 2022219 02/10/10 01243 CALIFORNIA-NEVADASECTION 103950210 02108/10 CERTIFICATE RENEWAL 180.00 180.00 2022307 02117110 01243 CALIFORNIA-NEVADA SECTION 001910 02/08/10 CERTIFICATION RENEWAL 80.00 80.00 2022121 02/03/10 01004 CALOLYMPIC SAFETY 065309 01/14/10 02 SENSOR 193.41 193.41 2022389 02/24/10 04071 CAPITOL WEBWORKS LLC 22561 01/31/10 ELECTRONIC FILING FEE 45.00 45.00 2022390 02/24/10 02758 CARMEL BUSINESS SYSTEMS INC 7115 02/01/10 SCANNING ENGINEERING DRAWINGS 398.76 398.76 2022308 02117110 03232 CDW GOVERNMENT INC RNG2592 01/26/10 HARD DRIVE 6,805.87 6,805.87 2022309 02117110 09801 CENTERBEAMINC 13562 02/11/10 NETWORKMONITORING 11,879.00 11,879.00 2022177 02/10/10 11494 CENTURY 21 ALLREAL ESTATE Ref002403186 02/09/10 UB Refund Cst #0000156233 11.71 11.71 2022220 02/10/10 04349 CHAMBERS,JONATHAN 001901 02/09/10 TUITION REIMBURSEMENT 61.04 61.04 2022310 02117110 01828 CHICAGO TITLE COMPANY 204010485REF 02111110 UB REFUND 127.26 127.26 2022178 02/10/10 11481 CHRISTOPHER GOZE Ref002403170 02109110 UB Refund Cst #0000126119 22.22 22.22 2022221 02/10/10 02026 CHULA VISTAELEMENTARY SCHOOL 001874 02/08/10 WIO REFUND D0026-010256 13,074.57 13,074.57 2022222 02/10/10 04985 CITY OF CHULA VISTA 001875 02108/10 WIO REFUND D0028-010005 2,065.03 2,065.03 2022311 02117110 03811 CITY OF EL CAJON 0000005544 01/25/10 FINALIZED PERMITS 1,071.32 1,071.32 2022122 02/03/10 03795 CITY TREASURER 001854 01/31/10 PAYMENT REFUND 230.00 230.00 2022391 02/24/10 04119 CLARKSON LAB &SUPPLY INC 1 01/31/10 BACTERIOLOGICALSERVICES 1,353.00 48649 02/02/10 LABORATORY COMPLIANCE 80.00 1,433.00 Page 3 of 19 OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS2022099 THROUGH 2022468 RUN DATES2/3/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022123 02/03/10 08160 COMPLETE OFFICE 11812060 01112110 BINDERS 132.02 11812061 01/13/10 BINDERS 40.72 172.74 2022223 02110110 08160 COMPLETE OFFICE 11833030 01/20/10 COpy PAPER 770.03 770.03 2022392 02/24/10 08160 COMPLETE OFFICE 11854930 01/29/10 OFFICE SUPPLIES 67.99 67.99 2022124 02/03/10 11056 CONCHAS,FREDERICK 001856 02102/10 TUITION REIMBURSEMENT 171.00 171.00 2022393 02/24/10 11510 CONFERENCECALL.COM 2000111399 01/31/10 CONFERENCE CALLING 61.91 61.91 2022312 02117110 11370 CONNECTZONE 42454 01/25/10 WIFI CABLE 74.00 74.00 2022125 02/03/10 04398 CONSTRUCTION MANAGEMENT 001853 01/29/10 REGISTRATION FEES 60.00 60.00 2022224 02/10/10 03307 CONSTRUCTION MANAGEMENT 001903 02/04/10 CERT APPLICATION FEE 275.00 275.00 2022313 02117110 04398 CONSTRUCTION MANAGEMENT 001909 02/09/10 REGISTRATION FEES 1,250.00 1,250.00 2022225 02/10/10 03706 CONSUMERS PIPE &SUPPLY CO S1121077001 01/15/10 METER PARTS 374.21 374.21 2022226 02/10/10 08346 COPART 001889 02/08/10 WIO REFUND D0051-XX9699 17,039.21 17,039.21 2022394 02/24/10 02643 CORE-ROSION PRODUCTS 201000034 01/29/10 NAOCL TANK 3,082.44 3,082.44 2022227 02/10/10 06518 CORKY MCMILLIN CONSTRUCTION 001869 02105/10 REFUND MTR-06-133 50,270.00 50,270.00 2022228 02/10/10 06518 CORKY MCMILLIN CONSTRUCTION 001882 02/08/10 WIO REFUND D0032-XX9482 16,350.28 001884 02/08/10 WIO REFUND D0032-010056 15,912.72 001881 02/08/10 WIO REFUND D0032-XX9444 10,555.78 001883 02/08/10 WIO REFUND D0032-010054 3,204.54 001885 02/08/10 WIO REFUND D0032-010092 1,608.84 001880 02/08/10 WIO REFUND D0032-XX6420 1,238.44 001886 02/08/10 WIO REFUND D0032-010263 1,030.03 49,900.63 2022229 02/10/10 05559 CORNERSTONE 001887 02/08/10 WIO REFUND D0033-XX6345 640.18 640.18 2022395 02/24/10 02612 COUNCIL OF WATER UTILITIES 001930 02111110 MONTHLYMEETING 125.00 125.00 2022173 02/04/10 00193 COUNTY OF SAN DIEGO 001862 02/04/10 FILING FEE 2,842.25 2,842.25 2022126 02/03/10 00099 COUNTY OF SAN DIEGO -DPW 120411 01/06/10 EXCAVATION PERMITS 5,083.76 5,083.76 2022396 02/24/10 00099 COUNTY OF SAN DIEGO -DPW 121737 02/02110 EXCAVATION PERMITS 3,358.08 3,358.08 2022397 02124/10 11286 CPM PARTNERS INC 1003 02/01/10 PROFESSIONALSERVICES 5,000.00 5,000.00 2022314 02117/10 06827 CUYAMACA COLLEGE BOTANICAL 001912 02/10/10 SEMINAR REGISTRATION 85.00 85.00 Page 4 of 19 ---""~~,~~..-_..-=-~,,...-'~,---·,-H·.."'.....·,~--,_····-.-·. OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 2/3/2010 TO 2/24/2010 Check #Date Vendor Vendornmne Invoice Inv Date Description Amount Paid Check Total 2022315 02117110 11150 DARNELL &ASSOCIATES INC 023964 01/15/10 TRAFFIC SERVICES 18,690.00 023967 01/15/10 TRAFFIC SERVICES 17,130.00 023963 01/15/10 TRAFFIC SERVICES 8,000.00 43,820.00 2022398 02/24/10 11150 DARNELL&ASSOCIATES INC 023964 01/15/10 TRAFFIC SERVICES 18,690.00 023967 01/15/10 TRAFFIC SERVICES 17,130.00 023963 01/15/10 TRAFFIC SERVICES 8,000.00 43,820.00 2022230 02/10/10 07680 DELTA HEALTH SYSTEMS P100121 01/21/10 EMPLOYEE HEALTH 1,685.60 1,685.60 2022127 02103/10 02733 DEPARTMENTOF CONSUMER AFFAIRS 808380110 01/27/10 LICENSE RENEWAL 200.00 200.00 2022128 02/03/10 03417 DIRECTV 1178309659 01/19/10 SATELLITE TV SERVICE 498.88 498.88 2022316 02/17/10 03417 DIRECTV 1189218188 02/05/10 SATELLITE TV SERVICE 513.88 513.88 2022399 02/24/10 10976 DRAKE CONTROLS -WEST LLC 51424 11/12109 REPAIR PART 2,467.52 2,467.52 2022317 02117110 03152 DRIES,ROSEMARY F 001908 02/10/10 COMPUTER LOAN PROGRAM 1,504.84 1,504.84 2022400 02/24/10 11369 E S BABCOCK&SONS INC AB003777150 02/04/10 LABORATORYSERVICES 618.00 AB002467150 02/02/10 LABORATORYSERVICES 468.00 1,086.00 2022231 02/10/10 06971 EASTLAKE COMPANY LLC 001895 02/08/10 WIO REFUND D0224-XX6273 921.60 001893 02/08/10 WIO REFUND D0182-XX6432 506.51 001894 02/08/10 WIO REFUND D0182-XX6433 377.28 1,805.39 2022232 02/10/10 11467 EASTLAKE MED CONDO DEV LLC 001888 02108/10 WIO REFUND D0044-010077 133.93 133.93 2022179 02/10/10 11490 ED PREHODEN Ref002403180 02/09/10 UB Refund Cst#0000154288 75.00 75.00 2022233 02110/10 02447 EDCO DISPOSAL CORPORATION 1554580110 01/31/10 RECYCLING SERVICES 90.00 90.00 2022234 02/10/10 01012 EL CAJON FORD C40259 01/20/10 KEYS MADE 130.01 130.01 2022235 02/10/10 07661 ELI RESEARCH INC 881228501109 02/04/10 SUBSCRIPTION FEE 400.00 400.00 2022318 02117110 08023 EMPLOYEE BENEFIT SPECIALISTS 00487341N 01/31/10 ADMINISTRATION FEES FOR COBRA 555.00 555.00 2022319 02117110 03765 ENGINEERING PARTNERS INC,THE 0310023 01/26/10 1485-1 PUMP STATION IMPROVEMENTS(P2172)2,057.50 2,057.50 2022129 02/03/10 03227 ENVIROMATRIX ANALYTICAL INC 0010231 01/11/10 LABORATORYSERVICES 45.00 45.00 2022236 02/10/10 03227 ENVIROMATRIX ANALYTICAL INC 0010366 01/18/10 LABORATORYSERVICES 955.00 955.00 2022320 02117110 03227 ENVIROMATRIX ANALYTICAL INC 0010516 01/25/10 LABORATORYSERVICES 295.00 295.00 Page5 of 19 OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 2/3/2010 TO 2/24/2010 Check#Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022401 02/24/10 03227 ENVIROMATRIXANALYTICAL INC 0020054 02/02/10 LABORATORY SERVICES 635.00 635.00 2022237 02/10/10 02259 ENVIRONMENTAL RESOURCE 566225 01/11/10 LABORATORY SUPPLIES 527.10 527.10 2022238 02110/10 03725 ENVIRONMENTAL SYSTEMS RESEARC~92114653 01/15/10 GIS CONSULTANT SERVICES 7,703.84 7,703.84 2022239 02/10/10 11231 EQUIPCO SALES &SERVICE S41532 12/23/09 EQUIPMENT RENTAL 301.60 301.60 2022321 02117110 11231 EQUIPCO SALES &SERVICE 01658750 01/19/10 EQUIPMENT RENTAL 1,200.00 S41548 12/28/09 EQUIPMENT RENTAL 131.91 1,331.91 2022402 02/24110 11231 EQUIPCO SALES &SERVICE 01660090 01/29/10 EQUIPMENTRENTAL 2,146.48 2,146.48 2022130 02/03/10 02639 EW TRUCK &EQUIPMENT 245950 01/08/10 REPAIR PART 18.64 18.64 2022131 02/03/10 03757 FANDEL ENTERPRISES INC 1378 01112110 CONSULTING SERVICES 4,710.00 4,710.00 2022403 02/24/10 03757 FANDEL ENTERPRISES INC 1382 02/03/10 CONSULTING SERVICES 1,800.00 1,800.00 2022322 02117110 00645 FEDEX 949054325 02/05/10 OVERNIGHT PICK-UP &DELIVERY MAIL SVCS 7.45 7.45 2022132 02/03/10 03546 FERGUSON WATERWORKS#1082 03357292 01/14110 INVENTORY 411.08 411.08 2022240 02/10/10 03546 FERGUSON WATERWORKS #1082 0327568 01/05/10 8'GATE CAPS 3,371.25 0337764 01121110 INVENTORY 837.38 0337813 01/21/10 UNIT TOOLS 351.26 4,559.89 2022404 02124/10 03546 FERGUSON WATERWORKS #1082 0338561 01/29/10 INVENTORY 4,078.87 0338415 01/29/10 INVENTORY 3,925.17 0338834 01/29/10 INVENTORY 2,705.27 0338836 01/29/10 INVENTORY 2,675.25 0338074 01/29/10 VALVE EXTENSIONS 112.56 03368121 01/29/10 INVENTORY 79.01 13,576.13 2022180 02/10/10 11498 FIELD ASSET SERVICES Ref002403191 02/09/10 UB Refund Cst#0000158298 75.00 75.00 2022405 02/24/10 08893 FIRSTAMERICAN DATA TREE 90034010 01/31/10 ONLINE MAP PURCHASING SERVICE 99.00 99.00 2022323 02117110 11505 FIRSTAMERICAN TITLE COMPANY 625511705REF 02111110 UB REFUND 368.25 368.25 2022241 02/10/10 04066 FIRST CHOICE SERVICES -SD 034505 01/19/10 COFFEE SUPPLIES 333.45 333.45 2022406 02/24/10 04066 FIRST CHOICE SERVICES -SD 043698 02/01/10 COFFEE SUPPLIES 264.59 264.59 2022242 02/10/10 00035 FISHER SCIENTIFIC 0320579 01/19/10 LABORATORYSUPPLIES 151.50 151.50 2022407 02/24/10 00035 FISHERSCIENTIFIC 9331844 01/04/10 LABORATORYSUPPLIES 675.26 675.26 Page 6 of19 OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS2022099THROUGH 2022468 RUN DATES 2/3/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022408 02/24/10 02591 FITNESS TECH INC 6333 02101/10 MAINTENANCE FOR FITNESS EQUIPMENT 125.00 125.00 2022099 02/03/10 01612 FRANCHISE TAX BOARD Ben2402891 02104/10 PAYROLL DEDUCTION 75.00 75.00 2022100 02/03/10 02344 FRANCHISE TAX BOARD Ben2402893 02104/10 PAYROLL DEDUCTION 50.00 50.00 2022324 02117110 01612 FRANCHISE TAX BOARD Ben2403300 02/18/10 PAYROLL DEDUCTION 75.00 75.00 2022325 02117110 02344 FRANCHISE TAX BOARD Ben2403302 02/18/10 PAYROLL DEDUCTION 50.00 50.00 2022133 02/03/10 06291 GARCIA CALDERON &RUIZ LLP 3284 01/28/10 LEGAL SERVICES 36,077.65 36,077.65 2022181 02/10/10 11495 GARY KENT AND ASSOC Ref002403187 02/09/10 UB Refund Cst #0000157357 68.91 68.91 2022409 02/24/10 06276 GIFFORD ENGINEERING INC 50564 02/02/10 INSTALL RADIO 380.00 380.00 2022134 02/03/10 11288 GOOD PEOPLEEMPLOYMENT 00035279 01/24/10 TEMPORARYSERVICES 1,540.70 1,540.70 2022326 02117/10 11288 GOOD PEOPLE EMPLOYMENT 00035537 02/07/10 TEMPORARYSERVICES 1,736.00 00035407 01/31/10 TEMPORARY SERVICES 1,736.00 3,472.00 2022182 02/10/10 11478 GRACE COTHERN Ref002403167 02/09/10 UB Refund Cst#0000068771 13.75 13.75 2022135 02103/10 00101 GRAINGER INC 9158894601 01/13/10 METER PARTS 1,182.00 9158106170 01/12110 UNIT TOOLS 934.52 2,116.52 2022327 02117110 00101 GRAINGER INC 9168282003 01/26/10 MISC HARDWARE 78.30 78.30 2022410 02/24/10 00101 GRAINGER INC 9155384663 01/08/10 LOCKS 579.77 9175163683 02103/10 REPAIR MATERIAL 220.64 9153283537 01/05/10 TOOLS 159.52 9174024324 02102/10 MAINTENANCE ITEMS 148.84 9180436322 02/24/10 BATTERIES 146.00 9171900120 01/31/10 MISC HARDWARE 140.85 9163628259 01/20/10 REPAIR ITEMS 89.47 9153702627 01/06/10 FIBER OPTICS 38.76 9153702635 01/06/10 FIBER OPTICS 21.14 9163628267 01/20/10 REPAIR ITEMS 18.24 9153076832 01/05/10 TOOLS 5.88 1,569.11 2022243 02/10110 03289 GRANGER,WILLIAM E 15710210 02102/10 TRAVEL EXPENSE 392.36 392.36 2022244 02/10/10 01576 GRAYBAR ELECTRIC CO INC 945714394 01/20/10 VULCANIZING TAPE 237.39 945714393 01/20/10 VULCANIZING TAPE 235.84 473.23 2022411 02/24/10 02187 GREENSCAPE 2325 02/01/10 LANDSCAPING SERVICES 6,090.00 2339 02/04/10 TREE REPAIR 546.00 6,636.00 Page 7 of19 OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES2/3/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022251 02/10/10 08969 INFOSEND INC 41255 01/20/10 EBPP SET-UP 5,995.00 5,995.00 2022332 02/17/10 08969 INFOSEND INC 41308 01/25/10 EBPPSET-UP 5,000.00 5,000.00 2022420 02/24/10 11515 INFRASTRUCTURE RESOURCES LLC CGA1804 02/17/10 REGISTRATION FEES 1,500.00 1,500.00 2022421 02/24/10 02372 INTERIOR PLANT SERVICE INC 33427 01/31/10 PLANTSERVICES 169.00 169.00 2022333 02117110 03812 INTERNATIONAL DIARIES 100976 01/27/10 POCKET DIARY/PLANNER 19.90 19.90 2022252 02110/10 03250 INTERNATIONAL PUBLIC MGMT 001864 02/04/10 REGISTRATION FEES 65.00 65.00 2022422 02/24/10 11514 INTERNATIONAL RIGHTOF WAY 001901 02/16/10 MEMBERSHIP APPLICATION 240.00 240.00 2022253 02/10/10 11469 JACKSON PENDO DEVELOPMENT 001896 02/08/10 WIO REFUND D0273-XX9698 173.53 173.53 2022423 02/24/10 03077 JANI-KING OFCALIFORNIA INC SD002100235 02/01/10 OFF-SITE JANITORIAL SERVICES 1,042.00 1,042.00 2022254 02/10/10 10563 JCI JONES CHEMICALS INC 458284 CREDITMEMO (3,000.00) 458245 02/04/10 CHLORINE FORTREATMENT PLANT 4,651.65 1,651.65 2022334 02/17/10 10563 JCI JONES CHEMICALS INC 457323 CREDIT MEMO (3,000.00) 454533 12/23109 CHLORINE FOR TREATMENT PLANT 4,684.65 1,684.65 2022424 02/24/10 10991 JEFFGARDNER 200160686REF 02117110 CUSTOMER REFUND 267.14 267.14 2022184 02/10/10 11449 JEFF JENKEL Ref002403189 02/09/10 UB Refund Cst #0000157617 34.35 34.35 2022255 02/10/10 06849 JEYCO PRODUCTS INC 474255 01/13/10 WAREHOUSE SUPPLIES 881.15 474389 01/20/10 WAREHOUSE SUPPLIES 150.06 1,031.21 2022137 02/03/10 11465 JIM BENWAY 001857 02102/10 PROPERTY DAMAGE CLAIM 133.50 133.50 2022185 02110/10 11493 JOE SOUTHWICK Ref002403185 02/09/10 UB Refund Cst#0000155392 9.79 9.79 2022186 02/10/10 11499 JOHANNA ILOG Ref002403192 02/09/10 UB Refund Cst#0000158706 75.00 75.00 2022187 02/10/10 11473 JOHN YOUNG Ref002403162 02/09/10 UB Refund Cst#0000021376 70.93 70.93 2022425 02/24/10 01735 JOHNSON,PAMELAA 001927 02117110 SAFETYBOOTS 65.83 65.83 2022256 02/10/10 03172 JONES &STOKES ASSOCIATES 0068184 01/19/10 ON-CALL ENVIRONMENTAL SVCS 2,757.50 68354 01/21/10 ON-CALL ENVIRONMENTAL SVCS 2,123.96 0068178 01119/10 ON-CALL ENVIRONMENTAL SVCS 960.00 0068183 01/19/10 ON-CALL ENVIRONMENTAL SVCS 543.10 6,384.56 2022335 0211711 0 03172 JONES &STOKES ASSOCIATES 0068355 01/21/10 P1253 SAN MIGUEL HABITAT MGMT AREA 37,555.41 Page 9 of 19 ~,~'.';s....,J";';h:&~,::~; OTAY WATER DISTRICT CHECK REGISTER FORCHECKS 2022099 THROUGH 2022468 RUN DATES 213/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 0068180 01/19/10 ENVIRONMENTAL CONSULTING SERVICES 18,302.15 0068177 01/19/10 ON-CALL ENVIRONMENTAL SVCS 957.50 56,815.06 2022138 02/03/10 02449 JOSEPH G POLLARD CO INC 12652481N 01/13/10 UNITTOOLS 753.98 12653091N 01/14/10 DECHLOR TABLETS 566.85 1,320.83 2022257 02/10/10 10416 KINGSCOTE CHEMICALS INC 300170 01/21/10 DYE TESTING 128.89 128.89 2022139 02/03/10 05840 KIRKPAVING INC 4488 01/11/10 ANNUAL AS NEEDED PAVING SERVICES 9,917.60 4487 01111110 ANNUAL AS NEEDED PAVING SERVICES 2,546.60 12,464.20 2022426 02/24/10 05840 KIRK PAVING INC 4499 02/03/10 ANNUALAS NEEDED PAVING SERVICES 4,774.38 4,774.38 2022258 02/10/10 04996 KNOXATTORNEY SERVICE INC 526370 01/20/10 DELIVERYOF BOARD &COMMITTEE PACKETS 28.60 526371 01/20/10 DELIVERYOF BOARD &COMMITTEE PACKETS 28.60 526369 01/20/10 DELIVERYOF BOARD &COMMITTEE PACKETS 28.60 526372 01/20/10 DELIVERYOF BOARD &COMMITTEE PACKETS 28.60 526373 01/20/10 DELIVERY OF BOARD &COMMITTEE PACKETS 28.60 526772 01/21/10 DELIVERY OF BOARD &COMMITTEE PACKETS 28.60 526771 01/21/10 DELIVERY OF BOARD &COMMITTEE PACKETS 28.60 200.20 2022427 02/24/10 04996 KNOX ATTORNEYSERVICE INC 528502 01/29/10 DELIVERY OF BOARD &COMMITTEE PACKETS 28.60 528506 01/29/10 DELIVERY OFBOARD &COMMITTEE PACKETS 28.60 528503 01/29/10 DELIVERY OF BOARD &COMMITTEE PACKETS 28.60 85.80 2022140 02/03/10 06497 LAKESIDE LAND COMPANY 234234 01/13/10 ASPHALT 47.24 234184 01112110 ASPHALT 29.08 76.32 2022336 0211711 0 06497 LAKESIDE LAND COMPANY 234463 01/26/10 ASPHALT 113.96 234419 01/25/10 ASPHALT 29.15 234512 01127110 ASPHALT 25.55 168.66 2022141 02/03/10 05632 LARSON,BRAD 001847 01/26/10 TUITION REIMBURSEMENT 256.00 256.00 2022188 02/10/10 11427 LAUREN WALTON Ref002403183 02/09/10 UB Refund Cst #0000155001 28.40 28.40 2022337 02117110 11506 LAWYERS TITLE COMPANY 209156314REF 02111110 UB REFUND 303.46 303.46 2022259 02/10/10 06490 LEONEL GURROLA 001897 02/08/10 WIO REFUND D0579-010229 2,893.91 2,893.91 2022428 02/24/10 11513 LUIS CARRILLO 250369543REF 02/18/10 CUSTOMER REFUND 536.20 536.20 2022189 02/10/10 11475 LYDIA JEFFERSON Ref002403164 02/09/10 UB Refund Cst #0000048881 23.83 23.83 2022190 02/10/10 11487 MAGNOLIA WATERMAN Ref002403177 02/09/10 UB Refund Cst #0000147644 67.10 67.10 2022338 02117110 00628 MANHATTAN NATIONAL LIFE 001922 02117110 VOLUNTARY LIFE INSURANCE 343.42 343.42 Page 10 of19 OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 2/3/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022191 02/10/10 11480 MARIAGUADALUPE RINCON Ref002403169 02/09/10 UB Refund Cst #0000094128 26.39 26.39 2022429 02124/10 02902 MARSTON+MARSTONINC 201021 02/01/10 PUBLIC &COMMUNITY OUTREACH RELATIONS 1,720.00 1,720.00 2022142 02/03/10 02882 MAYER REPROGRAPHICS INC 00515661N 01/13110 REPROGRAPHIC SERVICES 715.38 715.38 2022260 02110110 02882 MAYER REPROGRAPHICS INC 00517681N 01121110 REPROGRAPHIC SERVICES 912.44 912.44 2022143 02/03/10 05212 MC CORMICK,MARINELLI 001846 01/26/10 COMPUTER LOAN PROGRAM 1,471.03 1,471.03 2022261 02110110 01183 MCMASTER-CARR SUPPLY CO 44571004 01/06/10 PLUMBING SUPPLIES 115.92 115.92 2022339 02117110 01183 MCMASTER-CARR SUPPLYCO 45770463 01/25/10 REPAIR PARTS RECYCLED 1,152.00 45770457 01/25/10 RECYCLED PARTS 178.54 1,330.54 2022430 02/24/10 01183 MCMASTER-CARR SUPPLYCO 46511937 02/02/10 AIR-VAC STRAINER 314.08 46250522 01/29/10 PARTS FOR RECLAIMED VALVE 261.55 575.63 2022262 02/10/10 09990 MCMILLIN LAND DEVELOPMENT INC 001877 02/08/10 W/O REFUND D0031-XX9208 18,624.36 001878 02/08/10 W/O REFUND D0031-XX9287 774.31 001879 02/08/10 W/O REFUND D0032-XX6267 551.79 19,950.46 2022192 02/10/10 11477 MICHAEL STEINMAN Ref002403166 02109/10 UB Refund Cst #0000063838 33.79 33.79 2022340 02117110 01577 MINARIKCORPORATION 10730908DD 01127110 PLC MODULE 406.83 406.83 2022431 02/24/10 00887 MIRAMAR TRUCK CENTER-SAN DIEGO CM259173A CREDIT MEMO (100.05) CM259173 CREDIT MEMO (52.18) 8823 01/28/10 STERLING TRUCK 107,582.13 260018 01/06/10 REPAIR PARTS 112.71 107,542.61 2022193 02/10/10 11491 MIRANDA STAPLES Ref002403182 02/09/10 UB Refund Cst #0000154976 25.22 25.22 2022263 02/10/10 00237 MISSIONJANITORIAL &ABRASIVE 18988300 01/21/10 JANITORIAL SUPPLIES 911.97 911.97 2022432 02/24/10 00237 MISSION JANITORIAL &ABRASIVE 19096000 01/29/10 JANITORIALSUPPLIES 313.72 18988301 01/29/10 JANITORIALSUPPlES 68.84 382.56 2022433 02124/10 02619 MITCHELL1 RL4164734 01/28/10 PROGRAM RENEWAL ACCT#805673 1,499.00 1,499.00 2022144 02/03/10 07348 MSASYSTEMS INC 16440 01111110 RFID-TAGS 1,440.28 1,440.28 2022434 02/24/10 03623 MWH AMERICAS INC 1319105 01/31/10 PROFESSIONAL SERVICES 26,002.84 1319096 01/31/10 RWCWRF UPGRADE 6,587.32 32,590.16 2022264 02110/10 10202 MWH CONSTRUCTORS INC 1316066 01/19/10 TEMPORARY LABOR SERVICES 18,550.00 18,550.00 2022341 02117110 02293 MWH SOFT INC 000012556 01/25/10 TRAINING REGISTRATION FEE 1,600.00 1,600.00 Page 11 of19 ""..,.~.~~,~..".--.----,.•...••=,.,."",...',._-••-,--"'"'.,......~--••7..".=C.....,.·-~··,--- OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 2/3/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022194 02/10/10 11474 MYRON COOK Ref002403163 02/09/10 UB Refund Cst #0000046889 27.19 27.19 2022342 02117110 09881 NATGUN CORPORATION 08C5512 01/28/10 P2143 1296-3 RESERVOIR 2.0 MG 23,696.10 23,696.10 2022102 02/03/10 03523 NATIONALDEFERRED COMPENSATION Ben2402877 02/04/10 DEFERRED COMP PLAN 9,761.12 9,761.12 2022343 02117110 03523 NATIONALDEFERRED COMPENSATION Ben2403286 02/18/10 DEFERRED COMP PLAN 9,507.94 9,507.94 2022435 02/24/10 09884 NATIONAL SAFETY COMPLIANCE INC 45288 01/31/10 RANDOM DRUG TESTING 1,045.32 1,045.32 2022436 02/24/10 05494 NEXTEL OF CALIFORNIA INC 901500243041 02112110 GIS (AIR-TRAK)CELLULAR SERVICE 3,916.27 3,916.27 2022145 02/03/10 00510 OFFICE DEPOT INC 504375205001 01112110 OFFICE SUPPLIES 121.35 504378170001 01/12/10 OFFICE SUPPLIES 3.46 124.81 2022265 02110/10 00510 OFFICE DEPOT INC 505761153001 01/21/10 DISHWASHING SOAP 139.37 505079990001 01/15/10 OFFICE SUPPLIES 60.49 505548935001 01/20/10 WIRE TAGS 38.43 238.29 2022344 02117110 00510 OFFICE DEPOT INC 505956149001 01/22110 OFFICE SUPPLIES 168.46 506817195001 01/28/10 OFFICE SUPPLIES 119.59 505956877001 01/22/10 OFFICE SUPPLIES 35.69 506475453001 01/26/10 OFFICE SUPPLIES 7.61 506819985001 01/28/10 OFFICE SUPPLIES 2.78 334.13 2022437 02/24/10 00510 OFFICE DEPOT INC 507501488001 02/02/10 CALCULATORS 185.42 507454988001 02/02/10 OFFICE SUPPLIES 25.99 211.41 2022146 02103/10 00496 ONESOURCE DISTRIBUTORS LLC S3234455001 01/13/10 WIRE MARKERS 116.18 116.18 2022266 02/10/10 00496 ONESOURCE DISTRIBUTORS LLC S3244571001 01/20/10 CH HEATERS 67.61 67.61 2022345 02117110 00496 ONESOURCE DISTRIBUTORS LLC S3244571002 01/25/10 CH HEATERS 67.14 67.14 2022147 02/03/10 10508 ORANGE COUNTY WATER ASSN INC 001852 01/25/10 MEMBERSHIP RENEWAL 50.00 50.00 2022267 02/10/10 11468 OTAY INVESTORS LLC 001890 02/08/10 WIO REFUND D0097-XX9471 53,013.66 001891 02/08/10 WIO REFUND 00097-000001 774.02 53,787.68 2022268 02/10/10 02334 OTAY LANDFILL 009057 01/31/10 WASTE DISPOSAL SERVICES 692.40 692.40 2022269 02/10/10 10038 OTAY MESA PROPERTY LP 001892 02/08/10 WIO REFUND D0098-XX6454 53.51 53.51 2022103 02/03/10 03101 OTAY WATER DISTRICT Ben2402879 02/04/10 PAYROLL DEDUCTION -ASSN DUES 770.00 770.00 2022346 02117110 03101 OTAY WATER DISTRICT Ben2403288 02/18/10 PAYROLL DEDUCTION -ASSN DUES 763.00 763.00 Page 12 of 19 OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 213/2010 TO 2/24/2010 Check#Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 30065298 12/23/09 ADMIN/OPS MATS,TOWELS AND SUPPLIES 94.96 30070733 01/14/10 ADMINIOPS UNIFORMS 57.78 30070368 01/13/10 ADMINIOPS UNIFORMS 52.49 30065297 12/23/09 ADMINIOPS UNIFORMS 52.49 942.90 2022276 02110/10 06641 PRUDENTIAL OVERALL SUPPLY 30072351 01/21/10 ADMINIOPS UNIFORMS 326.55 30072350 01/21/10 ADMINIOPS MATS,TOWELS AND SUPPLIES 154.74 30072352 01121110 ADMIN/OPS MATS,TOWELS AND SUPPLIES 112.93 30072353 01/21/10 ADMINIOPS UNIFORMS 65.20 659.42 2022350 0211711 0 06641 PRUDENTIAL OVERALL SUPPLY 30074005 01/28/10 ADMINIOPS UNIFORMS 332.03 30074004 01/28/10 ADMINIOPS MATS,TOWELS AND SUPPLIES 154.74 30074006 01/28/10 ADMIN/OPS MATS,TOWELS AND SUPPLIES 124.16 30073640 01/27/10 ADMIN/OPS MATS,TOWELS AND SUPPLIES 94.96 30074007 01/28/10 ADMINIOPS UNIFORMS 57.78 30073639 01/27/10 ADMINIOPS UNIFORMS 47.13 810.80 2022443 02/24/10 06641 PRUDENTIAL OVERALL SUPPLY 30075641 02/04/10 ADMIN/OPS UNIFORMS 334.88 30075640 02/04/10 ADMIN/OPS MATS,TOWELS AND SUPPLIES 158.16 30075642 02/04/10 ADMINIOPS MATS,TOWELS AND SUPPLIES 123.43 30075294 02/03/10 ADMINIOPS MATS,TOWELS AND SUPPLIES 99.89 30072007 01/20/10 ADMINIOPS MATS,TOWELSAND SUPPLIES 94.96 30075643 02/04/10 ADMINIOPS UNIFORMS 63.71 30072006 01/20/10 ADMINIOPS UNIFORMS 56.49 30075293 02/03/10 ADMINIOPS UNIFORMS 49.10 980.62 2022277 02/10/10 00078 PUBLIC EMPLOYEES RETIREMENT Ben2402873 02/04/10 PERS CONTRIBUTION 131,956.22 131,956.22 2022444 02/24/10 00078 PUBLIC EMPLOYEES RETIREMENT Ben2403282 02118/10 PERS CONTRIBUTION 131,062.11 131,062.11 2022152 02103/10 09804 PUBLICIAPRESS LTD 201010023 01111110 BUSINESS CARDS 38.06 38.06 2022153 02103/10 02041 RBF CONSULTING 9120020 01/08/10 CIP P2009 -36 INCH PIPELINE 72,215.00 72,215.00 2022445 02/24/10 02041 RBF CONSULTING 10010007 02/01/10 CIP P2009 -36 INCH PIPELINE 60,530.00 60,530.00 2022446 02/24/10 04552 REA&PARKER RESEARCH 001872 02/02/10 CUSTOMER SURVEYS 7,250.00 7,250.00 2022198 02/10/10 11489 REAL HOME SERVICES &SOLUTIONS Ref002403179 02/09/10 UB Refund Cst #0000153942 6.16 6.16 2022154 02103/10 01890 RECON 40092 01/08/10 P1253 -PREPARATION OF THE SUBAREA PLAN 656.12 656.12 2022447 02/24/10 06645 RELIABLE ELEVATOR INC 20396 02/01/10 ELEVATOR SERVICE &MAINTENANCE 430.00 430.00 2022448 02/24/10 00164 REXEL 800899193 02/03/10 ELECTRICAL SUPPLIES 64.81 800897483 02/02110 ELECTRICAL SUPPLIES 42.47 107.28 2022199 02/10/10 11497 ROLLING HILLS RANCH LLC Ref002403190 02/09/10 UB Refund Cst #0000157775 836.08 836.08 Page 14 of19 -'...,-"'~...,.-~._._._-~..."':';'~., OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 2/3/2010 TO 2/24/2010 Check#Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022155 02/03/10 02142 RUPE'S HYDRAULICS Pl18818 01/14/10 REBUILD CYLINDER 2,198.43 2,198.43 2022156 02/03/10 00217 RW LITTLE CO INC 95483 01/12110 METER SPOOL 300.00 300.00 2022157 02/03/10 05130 SAFARI MICRO INC 182385 01/08/10 HEADSET 235.99 235.99 2022278 02/10/10 05130 SAFARI MICRO INC 182792 01/21/10 HEADSET 471.98 471.98 2022449 02/24/10 05130 SAFARI MICRO INC 183064 01/29/10 BACKUP TAPES 2,827.50 183273 01/30/10 WIRELESS MOUSES 174.00 183272 01/30/10 HP PRINTER ADAPTER 50.03 3,051.53 2022351 02117110 02683 SAFECHECKSINC 0512487 01/08/10 CHECK STOCK 815.42 815.42 2022450 02124/10 03687 SAFETY-KLEEN SYSTEMS INC 0040629911 01/27/10 TANK SERVICE 171.42 171.42 2022158 02/03/10 10930 SAGE DESIGNS INC 09125493 01/14/10 FIRETIDE RADIOS 32.63 32.63 2022279 02110/10 10930 SAGE DESIGNS INC 1001013 01/20/10 850-4 RADIOS 16,331.14 1001029 01/20/10 WIRELESS RADIO 4,969.01 10010012 01/14/10 RADIO ANTENNA 3,095.97 10010011 01/08/10 RADIO ANTENNA 1,085.73 25,481.85 2022352 02117110 06286 SAN DIEGO ASSOCIATION OF AR163283 01/26/10 DEMOGRAPHICS ESTIMATES 100.00 100.00 2022280 02/10/10 02586 SAN DIEGO COUNTYASSESSOR 2009197 02/09/10 COUNTY ASSESSOR DATA 125.00 125.00 2022281 02/10/10 02680 SAN DIEGO COUNTYTREASURER 6480102701 02104/10 PROPERTY TAX 96.36 96.36 2022451 02/24/10 04661 SAN DIEGO COUNTYWATER 001924 02111110 MEMBERSHIP RENEWAL 30.00 30.00 2022159 02/03/10 00121 SAN DIEGO GAS &ELECTRIC 001850 01/26/10 UTILITY EXPENSES 28,308.22 001845 01/28/10 UTILITY EXPENSES 26,133.84 001849 01/25/10 UTILITY EXPENSES 542.73 54,984.79 2022282 02/10/10 00121 SAN DIEGO GAS &ELECTRIC 001870 02/04/10 UTILITY EXPENSES 47,000.96 001871 01/27/10 UTILITYEXPENSES 34,317.19 81,318.15 2022452 02/24/10 00121 SAN DIEGO GAS &ELECTRIC 001936 02118/10 UTILITY EXPENSES 8,286.41 8,286.41 2022283 02110110 05335 SANTAANA RIVER BASIN SECTION 001867 02/03/10 REGISTRATION FEE 25.00 25.00 2022284 02110/10 11470 SANYIKA LLC 001898 02/08/10 WIO REFUND D0716-090046 47.95 47.95 2022453 02124110 07442 SCHULTZ,ALEXANDER 001926 02/19/10 TRAVEL REIMBURSEMENT 337.02 337.02 2022285 02/10/10 07783 SCRIPPS CENTER FOR EXECUTIVE 18855 01/15/10 EXECUTIVE PHYSICAL 3,456.06 3,456.06 Page 15 of19 OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 21312010 TO 212412010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022200 02/10/10 11492 SDREO Ref002403184 02109/10 UB Refund Cst#0000155322 6.37 6.37 2022353 02117110 05983 SIEMENS WATER TECHNOLOGIES 7828779 01/22110 BIOXIDE FOR TREATMENT PLANT 1,060.31 2983423 01/28/10 COLUMN EXCHANGES 199.08 1,259.39 2022286 02/10/10 00258 SLOAN ELECTRIC COMPANY 0056829 12/21/09 PUMP REPAIR 800.00 800.00 2022354 02117110 03592 SOFTCHOICE CORPORATION 2261048 01/25/10 NETWORK SECURITY 5,360.00 5,360.00 2022201 02110/10 11500 SOUTHBAY YMCA Ref002403193 02109/10 UB Refund Cst #0000158800 563.57 563.57 2022287 02110110 03103 SOUTHCOAST HEATING &C42362 01/14/10 AIR CONDITIONING MAINTENANCE 1,013.00 1,013.00 2022160 02/03/10 06853 SOUTHERN CALIFORNIA SOIL 353140 12/31/09 ON CALL GEOTECHNICAL SERVICES 3,443.07 3,443.07 2022288 02110110 06853 SOUTHERN CALIFORNIA SOIL 353286 01/15/10 ON CALL GEOTECHNICAL SERVICES 581.46 581.46 2022355 02/17/10 06853 SOUTHERN CALIFORNIA SOIL 353291 01115/10 GEOTECHNICAL SERIVCES 11,125.72 11,125.72 2022161 02103/10 04404 SOUTHERN CALIFORNIA WATER 001851 01121110 MEMBERSHIP DUES 25.00 25.00 2022289 02110/10 03760 SPANKY'S PORTABLE SERVICES INC 833223 01115/10 PORTABLE TOILET RENTAL 80.06 833291 01118/10 PORTABLE TOILET RENTAL 80.06 833221 01/15/10 PORTABLE TOILET RENTAL 80.06 833222 01/15/10 PORTABLE TOILET RENTAL 80.06 320.24 2022356 02117110 03760 SPANKY'S PORTABLE SERVICES INC 834052 01127110 PORTABLE TOILET RENTAL 80.06 80.06 2022357 02117110 03516 SPECIAL DISTRICT RISK 31700 01/28/10 LIABILITYINSURANCE 609.51 609.51 2022454 02/24/10 03516 SPECIAL DISTRICT RISK GC4005 02124110 INSURANCE DEDUCTIBLE 500.00 500.00 2022358 02117110 10343 SPECIALTY DOORS AND AUTOMATION 33887SD 01/27/10 REPLACEMENT DOOR 1,087.50 1,087.50 2022290 02/10/10 02354 STANDARD ELECTRONICS 13465 01/13/10 SECURITY SERVICE &REPAIRS 639.06 13464 01/13/10 SECURITY SERVICE &REPAIRS 392.94 13466 01/13/10 SECURITY SERVICE &REPAIRS 127.50 1,159.50 2022291 02/10/10 05968 STAPLES BUSINESS ADVANTAGE 3130630977 01/16/10 TONERCARTRIDGES 218.87 3130630976 01/16/10 TONER CARTRIDGE 96.70 315.57 2022105 02/03/10 06299 STATE DISBURSEMENT UNIT Ben2402883 02/04/10 PAYROLL DEDUCTION 237.69 237.69 2022106 02/03/10 06303 STATE DISBURSEMENT UNIT Ben2402887 02/04/10 PAYROLL DEDUCTION 836.30 836.30 2022107 02/03/10 08533 STATE DISBURSEMENT UNIT Ben2402885 02/04/10 PAYROLL DEDUCTION 841.01 841.01 Page 16 of19 OTAYWATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 2/3/2010 TO 2124/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022359 02117110 06299 STATE DISBURSEMENT UNIT Ben2403292 02/18/10 PAYROLLDEDUCTION 237.69 237.69 2022360 02/17110 06303 STATE DISBURSEMENT UNIT Ben2403296 02/18/10 PAYROLL DEDUCTION 836.30 836.30 2022361 02/17/10 08533 STATE DISBURSEMENT UNIT Ben2403294 02/18/10 PAYROLL DEDUCTION 841.01 841.01 2022108 02/03/10 02261 STATE STREET BANK &TRUST CO Ben2402875 02/04/10 DEFERRED COMP PLAN 6,061.31 6,061.31 2022362 02117110 02261 STATE STREET BANK &TRUST CO Ben2403284 02/18/10 DEFERRED COMP PLAN 6,061.31 6,061.31 2022202 02/10/10 11483 STEVEN FISCHER Ref002403172 02/09/10 UB Refund Cst #0000143667 30.06 30.06 2022292 02/10/10 06841 SUPERIOR ENVIRONMENTAL 1001034 01/20/10 DATA CENTER CLEANING SERVICES 725.00 725.00 2022293 02/10/10 10339 SUPREME OIL COMPANY 345556 01/15/10 DIESEL FUEL 9,770.08 345555 01/15/10 UNLEADED FUEL 9,347.92 19,118.00 2022203 02/10/10 11476 SUSAN DAY Ref002403165 02/09/10 UB Refund Cst#0000061584 44.79 44.79 2022162 02103/10 00408 SWEETWATERAUTHORITY 0516E4 01/14/10 OTAY RIVER GROUNDWATER DESALINATION 146,843.50 146,843.50 2022163 02/03/10 02799 TARULLI TIRE INC -SAN DIEGO 20042112 01111110 TIRE SERVICE 228.81 20042114 01/11/10 TIRE SERVICE 142.31 20042113 01111110 TIRE SERVICE 21.49 20042151 01/13/10 TIRE SERVICE 21.49 20042152 01/13/10 TIRE SERVICE 21.49 435.59 2022455 02/24/10 02799 TARULLI TIRE INC -SAN DIEGO 20042415 01/29/10 TIRE SERVICE 467.59 20042351 01/27/10 TIRE SERVICE 210.09 20042414 01/29/10 TIRE SERVICE 182.01 859.69 2022174 02/04/10 03374 TEK-COLLECT INC 110385 12/31/09 COLLECTION SERVICES 15,000.00 15,000.00 2022363 02117110 03374 TEK-COLLECT INC 113013 01/27/10 SOFTWARE MAINTENANCE 75.00 75.00 2022164 02/03/10 11464 THOMAS W LUBIC 050032812REF 02/02/10 CUSTOMER REFUND 4,213.44 4,213.44 2022204 02/10/10 11484 TIM WATSON Ref002403174 02/09/10 UB Refund Cst #0000144698 20.25 20.25 2022294 02/10/10 11289 TLCSTAFFING IVC050000040784 01/29/10 CWAINTERN 270.00 270.00 2022456 02/24/10 11289 TLC STAFFING IVC050000040960 02112110 CWAINTERN 270.00 270.00 2022457 02124/10 04977 T-MOBILE 4150860450210 02/01/10 CELL PHONE SERVICES 384.42 384.42 2022165 02103/10 08159 TORRES,LEONEL G 001858 01/29/10 TRAVEL EXPENSE 496.40 496.40 2022364 02117110 03074 TRAFFIC CONTROL SERVICE INC 957591 01/27/10 TRAFFIC CONES 220.38 220.38 Page 17 of 19 ,.~..,.,-~----- OTAY WATER DISTRICT CHECK REGISTER FORCHECKS 2022099 THROUGH 2022468 RUN DATES 2/3/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022458 02/24/10 00427 UNDERGROUND SERVICE ALERT OF 120100447 02/01/10 UNDERGROUND TRENCH SERVICEALERTS 202.50 202.50 2022166 02/03/10 00075 UNION TRIBUNE PUBLISHING CO 0010339638 01/14/10 NOTICE OF INTENT AD 675.75 675.75 2022365 02117110 00075 UNION TRIBUNE PUBLISHING CO 0010343932 01/27/10 AVAILABILITY NOTICE 358.40 358.40 2022167 02/03/10 08262 UNITED RENTALS NORTHWEST INC 85596347001 01112110 CONCRETE 182.87 85633830001 01/14/10 CONCRETE 179.44 85567468001 01111110 CONCRETE 140.29 502.60 2022366 02117110 08262 UNITED RENTALS NORTHWEST INC 85781603001 01/25/10 CONCRETE 179.44 179.44 2022459 02/24/10 08262 UNITED RENTALS NORTHWESTINC 85925953001 02/03/10 CONCRETE 231.10 81594519001 12/21/09 CONCRETE 119.63 350.73 2022109 02/03/10 05417 UNITED STATES DEPARTMENT Ben2402889 02/04/10 PAYROLL DEDUCTION 100.00 100.00 2022367 02/17/10 05417 UNITED STATES DEPARTMENT Ben2403298 02/18/10 PAYROLL DEDUCTION 100.00 100.00 2022168 02/03/10 00350 UNITED STATES POSTAL SERVICE 104339510110 01/22/10 REIMBURSE POSTAGE MACHINE 2,100.00 2,100.00 2022460 02/24/10 00350 UNITED STATES POSTAL SERVICE 104339510210 02/18/10 REIMBURSE POSTAGE MACHINE 2,100.00 2,100.00 2022368 02117110 07662 UNITEDHEALTHCARE SPECIALTY 100480000028 02117110 BASIC L1FE/AD&D &SUPP LIFE INS 5,856.55 5,856.55 2022369 02/17/10 03212 UNUM LIFE INSURANCE Ben2403278 02/18/10 LONG TERM DISABILITY 5,661.16 5,661.16 2022169 02/03/10 07674 US BANK CORPORATE PAYMENT 001859 11/23/09 DISTRICT EXPENSES 84.28 001860 01/22/10 DISTRICT EXPENSES 30.00 114.28 2022295 02/10/10 07674 US BANK CORPORATE PAYMENT 001866 12/22/09 DISTRICT EXPENSES 3,724.56 001905 01/22/10 DISTRICT EXPENSES 2,597.32 001904 01/22/10 DISTRICT EXPENSES 432.36 001865 01/22/10 DISTRICT EXPENSES 195.09 6,949.33 2022370 02117110 07674 US BANK CORPORATE PAYMENT 001919 01/22/10 DISTRICT EXPENSES 6,476.95 6,476.95 2022461 02/24/10 07674 US BANK CORPORATE PAYMENT 001925 01/22/10 DISTRICT EXPENSES 1,024.30 1,024.30 2022462 02/24/10 06829 US SECURITYASSOCIATES INC 771966 01/31/10 AFTER HOURS SECURITY SVCS 197.80 197.80 2022371 02117110 02674 USA BLUE BOOK 977095 01/25/10 TRANSDUCERS 1,076.80 1,076.80 2022463 02/24/10 08028 VALLEY CONSTRUCTION MANAGEMEN-SD080216 01/31/10 AS-NEEDED CONSTRUCTION MGMTSVCS 8,390.00 8,390.00 2022205 02/10/10 11485 VANESSA RHODES Ref002403175 02109/10 UB Refund Cst #0000144701 154.63 154.63 Page 18 of 19 ~~~-----.. OTAY WATER DISTRICT CHECK REGISTER FOR CHECKS 2022099 THROUGH 2022468 RUN DATES 2/3/2010 TO 2/24/2010 Check #Date Vendor Vendor name Invoice Inv Date Description Amount Paid Check Total 2022110 02/03/10 01095 VANTAGEPOINTTRANSFERAGENTS Ben2402881 02/04/10 DEFERRED COMP PLAN 6,470.12 6,470.12 2022111 02103/10 06414 VANTAGEPOINTTRANSFER AGENTS Ben2402871 02/04/10 401A PLAN 13,399.78 13,399.78 2022372 02117110 01095 VANTAGEPOINTTRANSFER AGENTS Ben2403290 02/18/10 DEFERRED COMP PLAN 6,470.12 6,470.12 2022373 02/17/10 06414 VANTAGEPOINT TRANSFER AGENTS Ben2403280 02118/10 401A PLAN 11,261.34 11,261.34 2022464 02/24/10 03329 VERIZON WIRELESS 0836537890 01/21/10 AIR-CARD SERVICES 10,933.74 10,933.74 2022465 02/24/10 01994 VORTEX 16843 01/25/10 FILTER DISPOSAL 50.00 50.00 2022170 02/03/10 10340 WAGEWORKS INC 81297 01/01/10 FLEXIBLE SPENDING 638.00 638.00 2022466 02124/10 10340 WAGEWORKS INC 82194 02/01/10 FLEXIBLE SPENDING 633.75 633.75 2022467 02/24/10 00190 WEST PAYMENT CENTER 819652046 12/04/09 SUBSCRIPTION FEE 129.42 129:42 2022171 02/03/10 03131 WESTERN HOSE &GASKET 212778 01/14/10 HOSE 175.60 175.60 2022296 02/10/10 00125 WESTERN PUMP INC 00838741N 01/15/10 APCD TESTING 400.00 400.00 2022297 02/10/10 03692 WESTIN ENGINEERING INC 34574 12101/09 CIP P1210 -ASSET MANAGEMENTPLAN 9,772.29 9,772.29 2022468 02/24/10 03692 WESTIN ENGINEERING INC 34992 02102110 CIP P1210 -ASSET MANAGEMENTPLAN 28,049.06 28,049.06 2022172 02/03/10 04574 WRA&ASSOCIATES INC 01/14/10 RISK ANALYSIS 2,581.25 2,581.25 2022206 02110110 11406 YVONNE WAYMIRE Ref002403173 02/09/10 UB Refund Cst#0000144115 53.19 53.19 GRAND TOTAL 1,941,346.33 1,941,346.33 Page 19 of 19