HomeMy WebLinkAbout10-20-21 F&A Committee Packet 1
OTAY WATER DISTRICT
FINANCE AND ADMINISTRATION
COMMITTEE MEETING
and
SPECIAL MEETING OF THE BOARD OF DIRECTORS
BY TELECONFERENCE
2554 SWEETWATER SPRINGS BOULEVARD
SPRING VALLEY, CALIFORNIA
WEDNESDAY
October 20, 2021
12:00 P.M.
This is a District Committee meeting. This meeting is being posted as a special meeting
in order to comply with the Brown Act (Government Code Section §54954.2) in the event that
a quorum of the Board is present. Items will be deliberated, however, no formal board actions
will be taken at this meeting. The committee makes recommendations
to the full board for its consideration and formal action.
AGENDA
1. ROLL CALL
2. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO
SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURIS-
DICTION INCLUDING AN ITEM ON TODAY'S AGENDA
This meeting is being held via teleconference. Members of the public may submit their
comments on agendized and non-agendized items by either of the following two meth-
ods:
a) If you wish to provide public comment directly - that is, live during the “Public
Participation” portion of the meeting - please complete and submit a Request to
Speak Form via email to BoardSecretary@otaywater.gov before the start of the
meeting. Your request to speak will be acknowledged during the “Public Partic-
ipation” portion of the meeting when the Board will hear your comment. When
called to speak, please state your Name and the City in which you reside. You
will be provided three minutes to speak. The Board is not permitted to enter in-
to a dialogue with the speaker during this time.
OR
b) If you wish to have your comment read to the Board during the “Public Partici-
pation” portion of the meeting, please email your comment to BoardSecre-
tary@otaywater.gov at least thirty minutes prior to the start of the meeting, and
it will be read aloud during the “Public Participation” portion of the meeting.
Please provide your Name and the City in which you reside, with your com-
ment. Your comment must not take more than three minutes to read. The
Board is not permitted to respond to written public comment during this time.
2
The District’s meeting is live streamed. Information on how to watch and listen to the
District’s meeting can be found at this link: https://otaywater.gov/board-of-
directors/agenda-and-minutes/committee-meetings/
DISCUSSION ITEMS
3. ADOPT RESOLUTION NO. 4402 REQUIRED FOR A GRANT FUNDING
APPLICATION SUBMITTED TO THE UNITED STATES BUREAU OF
RECLAMATION’S WATERSMART: WATER AND ENERGY EFFICIENCY GRANT
FUNDING PROGRAM FOR FISCAL YEAR 2022 (CAREY/COBURN-BOYD)
[5 minutes]
4. APPROVE THE AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR
ENDED JUNE 30, 2021 (DYCHITAN) [5 minutes]
5. AUTHORIZE A TWO-YEAR FIXED AGREEMENT AND (3) THREE ONE-YEAR
OPTIONS WITH NATURESCAPE SERVICES, INC., FOR LANDSCAPE
MAINTENANCE SERVICES IN AN AMOUNT NOT-TO-EXCEED $617,724.00
(PAYNE) [5 minutes]
6. AUTHORIZE A TWO-YEAR FIXED AGREEMENT, PLUS (3) THREE ONE-YEAR
OPTIONS WITH AZTEC JANITORIAL SERVICES, FOR JANITORIAL SERVICES IN
AN AMOUNT NOT-TO-EXCEED $525,181.20 (PAYNE) [5 minutes]
7. ADJOURNMENT
BOARD MEMBERS ATTENDING:
Mark Robak, Chair
Jose Lopez
All items appearing on this agenda, whether or not expressly listed for action, may be delib-
erated and may be subject to action by the Board.
The Agenda, and any attachments containing written information, are available at the Dis-
trict’s website at www.otaywater.gov. Written changes to any items to be considered at the
open meeting, or to any attachments, will be posted on the District’s website. Copies of the
Agenda and all attachments are also available by contacting the District Secretary at (619)
670-2253.
If you have any disability which would require accommodation in order to enable you to par-
ticipate in this meeting, please call the District Secretary at 670-2253 at least 24 hours prior
to the meeting.
Certification of Posting
I certify that on October 15, 2021 I posted a copy of the foregoing agenda near the
regular meeting place of the Board of Directors of Otay Water District, said time being at least
3
24 hours in advance of the meeting of the Board of Directors (Government Code Section
§54954.2).
Executed at Spring Valley, California on October 15, 2021.
/s/ Tita Ramos-Krogman, District Secretary
STAFF REPORT
TYPE MEETING: Regular Board MEETING DATE: November 3, 2021
SUBMITTED BY: Andrea Carey,
Customer Service Manager
Lisa Coburn-Boyd,
Environmental Compliance
Specialist
PROJECT NO: DIV. NO.All
APPROVED BY: Joseph R. Beachem, Chief Financial Officer
Jose Martinez, General Manager
SUBJECT: Adopt Resolution No. 4402 as Required for a Grant Funding
Application for the United States Bureau of Reclamation’s
WaterSMART: Water and Energy Efficiency Grant Project Funding
for Fiscal Year 2022
GENERAL MANAGER’S RECOMMENDATION:
That the Board adopt Resolution No. 4402 (Attachment B) required for
a grant funding application to be submitted to the United States
Bureau of Reclamation’s WaterSMART: Water and Energy Efficiency Grant
(WEEG) funding program for Fiscal Year 2022. Resolution No. 4402
verifies that the Otay Water District (District) General Manager (GM)
is authorized to review the application and execute the agreement
that provides for the District to provide the minimum 50% funding
match, and that District staff will meet all deadlines for entering
into the grant agreement for the District’s Phase One Advanced Meter
Infrastructure (AMI) and Customer Engagement Portal Project.
COMMITTEE ACTION:
Please see Attachment A.
PURPOSE:
The Board’s adoption of Resolution No. 4402 is a requirement for an
application that will be submitted by District staff, no later than
AGENDA ITEM 3
2
the submittal deadline of November 3, 2021, for grant funds through
the United States Bureau of Reclamation’s WaterSMART: WEEG funding
program for Fiscal Year 2022. The Resolution verifies that the
District GM is authorized to enter into an agreement with the United
States Bureau of Reclamation (USBR), and review and support the
application. It also commits the District to providing the minimum
50% funding match specified in the funding plan for the application
and that District staff will work with USBR to meet all deadlines for
entering into the grant agreement. Although the application will be
submitted on or before the due date of November 3, 2021, the required
Board Resolution can be provided up to 30 days after submittal of the
application.
ANALYSIS:
In October 2021, District staff worked with an as-needed project
funding consultant, Hoch Consulting, to complete a grant application
for the Phase One AMI and Customer Engagement Portal Project for
submittal to the USBR’s WaterSMART: WEEG funding program opportunity
for Fiscal Year 2022.
The Phase One AMI and Customer Engagement Portal Project (Phase One
Project) will enhance the District’s existing meter program. In 2016,
the District began an Automated Meter Reading (AMR) Change Out CIP to
change out aging AMR registers for all ¾”-2” meters. From 2016-2020,
all District ¾”-2” meters had a register replacement. To take
advantage of warranty pricing, approximately 18,000 registers were
replaced with existing 3G technology which only allows meters to be
read by a meter reader driving by the meter and picking up the read
via a transponder in the register. However, a larger percentage
(approximately 32,000) were upgraded to 4G technology, which permits
reads by both driving by the meter and AMI. AMI allows the meters to
automatically upload meter reads to data collectors located on
District facilities and is relayed directly to the office. AMI uses
radio-based technology to read water meters, and this eliminates the
need for deploying a vehicle to collect the meter reads. Currently,
the District reads all meters via drive-by on a monthly basis as it
does not have infrastructure in place to read meters via AMI.
In June 2021, District staff met with Master Meter to discuss the
installation of AMI throughout the District. Master Meter produced a
propagation study and, based on the results, the General Manager
recommends that District staff move forward with the installation of
AMI throughout the District’s service area. The Phase One Project,
which is the scope of work in the current WEEG grant application,
will result in the ability to remotely read approximately 24,000
meters (45% of the District’s total meter count). The work to be
3
completed in this phase will consist of the installation of two base
stations and seven repeaters at existing District locations, as well
as the implementation of a customer engagement portal. A customer
engagement portal will allow customers whose meters are included in
the first phase to see their reads in real-time, get analytics on
their usage as it compares to others in the District, and sign up for
various alerts such as high usage or leak notifications. The Phase
One Project will begin in July 2022 with substantial completion by
December 2023. The cost of this first phase is approximately
$400,000.00. If awarded, the USBR would supply 50% of the money
needed with the District committed to supply the remainder. Funds for
AMI installation have been included in the current six-year Capital
Improvement Program (CIP). Additional costs for software licensing or
a customer portal will be budgeted in the Fiscal Year 2023 and 2024
Operating Budgets. The District intends to apply again to this
program for additional funding of future phases of the project.
FISCAL IMPACT: Joseph Beachem, Chief Financial Officer
The adoption of Resolution No. 4402 commits the District to providing
the minimum 50% funding match specified in the funding plan
application if the grant is awarded to the District by USBR. AMI
installation is included in the current six-year CIP budget, customer
engagement and software fees will be included in the proposed Fiscal
Year 2023 and 2024 Operating Budgets.
STRATEGIC GOAL:
This project supports the District’s Mission Statement, “To provide
exceptional water and wastewater service to its customers, and to
manage District resources in a transparent and fiscally responsible
manner” and the General Manager’s Vision, "To be a model water agency
by providing stellar service, achieving measurable results, and
continuously improving operational practices."
LEGAL IMPACT:
None.
Attachments: Attachment A – Committee Action
Attachment B – Resolution No. 4402
ATTACHMENT A
SUBJECT/PROJECT:
Adopt Resolution No. 4402 as Required for a Grant Funding
Application for the United States Bureau of Reclamation’s
WaterSMART: Water and Energy Efficiency Grant Project
Funding for Fiscal Year 2022
COMMITTEE ACTION:
The Finance & Administration Committee (Committee) reviewed this item
at a meeting held on October 20, 2021. The Committee supported
Staff's recommendation.
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for Board approval. This report will be sent
to the Board as a Committee approved item or modified to reflect any
discussion or changes as directed from the Committee prior to
presentation to the full Board.
RESOLUTION NO. 4402
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE OTAY WATER DISTRICT AUTHORIZING WATERSMART: WATER AND
ENERGY EFFICIENCY GRANT FOR FISCAL YEAR 2022
WHEREAS, the United States Bureau of Reclamation (USBR) is
soliciting applications for authorized projects for WaterSMART:
Water and Energy Efficiency Grant (Program) funding for Fiscal
Year 2022 per Funding Opportunity Announcement No. R22AS00023;
and
WHEREAS, the Otay Water District has 52,000 active water
meters in the system and desires to implement a project to
convert a portion of the meters to Advanced Meter
Infrastructure; and
WHEREAS, The Otay Water District has prepared and submitted
a grant application under this Program for Fiscal Year 2022 with
an application due date of November 3, 2021; and
WHERAS, USBR has directed applicants to include in its
application an official resolution adopted by the applicant’s
board of directors or governing body verifying 1) the identity
of the official with legal authority to enter into an agreement,
2) the board of directors, governing body, or appropriate
official who has reviewed and supports the application
submitted, 3) the capability of the applicant to provide the
amount of funding and/or in-kind contributions specified in the
Attachment B
funding plan, 4) that the applicant will work with USBR to meet
established deadlines for entering into a grant or cooperative
agreement.
NOW, THEREFORE, BE IT RESOLVED as follows:
1. The General Manager or his designee is authorized to
submit an application to the United States Bureau of Reclamation
(USBR) to obtain a WaterSMART: Water and Energy Efficiency Grant
(Program) funding for Fiscal Year 2022 per Funding Opportunity
Announcement No. R22AS00023; and
2. The General Manager has reviewed and supports the
application submitted on or about the 3rd day of November 2021;
and
3. The Otay Water District is able to provide the minimum
50% funding match specified in the funding plan for the
application; and
4. The Otay Water District’s Customer Service Manager is
hereby authorized and directed to prepare the necessary data,
conduct investigations, and facilitate the filing such
application.
5. The General Manager is authorized to execute a grant
agreement with the USBR in association with this application
process.
6. The Otay Water District will work with the USBR to
meet established deadlines required for entering into a
cooperative agreement to obtain the aforementioned grant
funding.
PASSED, APPROVED, AND ADOPTED by the Board of Directors of
the Otay Water District at a regular board meeting held this 3rd
day of November 2021, by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
________________________
President
ATTEST:
________________________
District Secretary
STAFF REPORT
TYPE MEETING: Regular Board MEETING DATE: November 3, 2021
SUBMITTED BY: Marissa Dychitan
Senior Accountant
PROJECT: DIV. NO. All
APPROVED BY: Eid Fakhouri, Finance Manager
Kevin Koeppen, Assistant Chief of Finance
Joseph R. Beachem, Chief Financial Officer
Jose Martinez, General Manager
SUBJECT: Approve the Audited Financial Statements for the Fiscal Year
Ended June 30, 2021
GENERAL MANAGER'S RECOMMENDATION:
That the Board approve the Audited Financial Statements (Attachment
B)including the Independent Auditors' unqualified opinion, for the
fiscal year ended June 30, 2021.
COMMITTEE ACTION:
See Attachment A.
PURPOSE:
To inform the Board of the significant financial events which
occurred during the fiscal year ended June 30, 2021, as reflected in
the audited financial statements.
ANALYSIS:
Teaman, Ramirez & Smith, Inc., performed the audit and found that, in
all material respects, the financial statements correctly represent
AGENDA ITEM 4
2
the District's financial position. They found no material errors in
the financial records or statements (Attachment D).
Total Assets:
Total assets increased by $11.9 million or 2.16% during Fiscal Year
2021, to $562.8 million, due to increases in cash and cash equivalents,
accounts receivable, and improved operating results which were
partially offset by depreciation.
Deferred Outflows & Deferred Inflows:
Deferred outflows increased by 3.4 million or 74.77% in Fiscal Year
2021 due primarily to the $1.2 million advance payment to CalPERS and
an increase in differences between expected and actuarial experience in
Other Post Employee Benefits (OPEB). Deferred inflows decreased by $2.2
million or 60.87% due to the amortization of the positive differences
between expected and actuarial experience in Pension and OPEB.
Total Liabilities & Net Positions:
Total liabilities decreased by approximately $0.3 million from the
previous fiscal year to $164.0 million. The decrease is attributable
to the annual debt payment of $5.0 million partially offset by
increases in the Net Pension and Net OPEB liabilities.
The net position increased by $17.8 million or 4.59% to $405.3
million as of June 30, 2021.
Capital Contributions:
Capital contributions for Fiscal Year 2021 were $11.8 million.
Capital contributions consist of developers contributing $7.8 million
in capacity fees and $3.2 million in contributed fixed assets; and
Caltrans contributes $0.3 million in reimbursements for utility
relocations. Ratepayers also paid $0.5 million in availability fees,
which are considered a part of capital contributions.
Results of Operations:
Operating revenues increased by $11.2 million or 11.68%, mainly due
to increased water rates and sales volume due to below-average
rainfall.
The cost of water sales increased by $4.3 million or 6.90% due to
increased unit purchase costs and water deliveries.
3
Non-Operating Revenues & Expenses:
Non-operating revenues increased by $2.0 million or 18.30% for Fiscal
Year 2021 due primarily to the $3.2 million settlement from
Metropolitan Water District (MWD) partially offset by a decrease in
investment income.
Non-operating expenses decreased by $1.6 million or 23.40% due to
decreases in the loss on capital asset retirement, interest expense,
and CIP expenses that did not qualify as a capital expense.
Conclusion:
In summary, the overall audit process was a success, and the auditors
found no material errors or misstatements in the District's financial
statements.
Additional Audit Correspondence:
As a part of completing the audit engagement, Teaman, Ramirez and
Smith, Inc., also provided the following letters summarizing their
observations and conclusions concerning the District's overall
financial processes:
• Management Letter: The auditors did not identify any internal
control deficiencies that they considered material weaknesses.
(Attachment C).
• Audit Committee Letter: This letter describes overall aspects
of the audit, including audit principles, performance,
dealings with management, and significant findings or issues.
There were no transactions entered into by the District during
the year for which there was a lack of authoritative guidance
or consensus. All significant transactions have been
recognized in the financial statements in the proper period.
There were no disagreements with management concerning
financial accounting, reporting, or auditing matters, and
there were no significant difficulties in dealing with
management in performing the audit. (Attachment D).
• Report on Applying Agreed-Upon Procedures: A review of the
District's investment portfolio at year-end and a sample of
specific investment transactions completed throughout the
fiscal year were performed. There were no exceptions to
4
compliance from the District's Investment Policy. (Attachment
E).
FISCAL IMPACT:
None.
STRATEGIC GOAL:
The District ensures its continued financial health through long-term
financial planning, formalized financial policies, enhanced budget
controls, fair pricing, debt planning, and improved financial
reporting.
LEGAL IMPACT:
None.
Attachments:
A) Committee Action
B) Audited Annual Financial Statements
C) Management Letter
D) Audit Committee Letter
E) Report on Applying Agreed-Upon Procedures
ATTACHMENT A
SUBJECT/PROJECT: Approve the Audited Financial Statements for the Fiscal
Year Ended June 30, 2021
COMMITTEE ACTION:
NOTE:
OTAY WATER DISTRICT
FINANCIAL STATEMENTS
WITH
REPORT ON AUDIT BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
JUNE 30, 2021 and 2020
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Attachment B
TABLE OF CONTENTS
Years Ended June 30, 2021 and 2020
Page
Number
Independent Auditors’ Report 1 - 2
Management’s Discussion & Analysis 3 - 10
Basic Financial Statements:
Statements of Net Position 11 - 12
Statements of Revenues, Expenses, and Changes in Net Position 13
Statements of Cash Flows 14 - 15
Notes to Financial Statements 16 - 55
Required Supplementary Information:
Schedule of Changes in the Net OPEB Liability and Related Ratios 56
Schedule of Contributions 57
Schedule of Changes in the Net Pension Liability and Related Ratios 58 - 59
Schedule of Plan Contributions 60
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
INDEPENDENT AUDITORS' REPORT
Board of Directors
Otay Water District
Spring Valley, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Otay Water District (the “District”), as of and for the years ended
June 30, 2021 and 2020, and the related notes to the financial statements, which collectively comprise the District’s basic
financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting
principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of
internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance
with auditing standards generally accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the United States and the State Controller’s
Minimum Audit Requirements for California Special Districts. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the District’s preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position
of the Otay Water District as of June 30, 2021 and 2020, and the respective changes in financial position and cash flows thereof
for the years then ended in accordance with accounting principles generally accepted in the United States of America, as well as
the accounting systems prescribed by the California State Controller’s Office and California regulations governing Special
Districts.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Emphasis of Matters
As described in Note 1 to the basic financial statements, as of June 30, 2020, the District adopted the provisions of
Governmental Accounting Standards Board Statement No. 95, Postponement of the Effective Dates of Certain Authoritative
Guidance. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion and analysis
and required supplementary information on pages 3-10 and 56-60 be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards
Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated ___, 2021, on our consideration of the
District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness
of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed
in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and
compliance.
Riverside, California
___, 2021
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Management’s Discussion and Analysis
3
As the management of the Otay Water District (the "District"), we offer readers of the District's financial statements,
this narrative overview, and an analysis of the District's financial performance during the fiscal year ending June
30, 2021. Please read it in conjunction with the District's financial statements that follow Management's Discussion
and Analysis. All amounts, unless otherwise indicated, are expressed in millions of dollars.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the District's basic financial statements, which
are comprised of the following: 1) Statements of Net Position, 2) Statements of Revenues, Expenses, and Changes
in Net Position, 3) Statements of Cash Flows, and 4) Notes to the Financial Statements. This report also contains
other supplementary information in addition to the basic financial statements.
The Statements of Net Position present information on the District's assets, deferred outflows of resources,
liabilities, and deferred inflows of resources, with the difference reported as Total Net Position. Over time, increases
or decreases in net positions may serve as a valuable indicator of whether the District's financial position is
improving or weakening.
The Statements of Revenues, Expenses, and Changes in Net Position present information showing how the District's
net position changed during the most recent fiscal year. All changes in net positions are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues
and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods
(e.g., uncollected taxes and earned but unused vacation leave).
The Statements of Cash Flows present information on cash receipts and payments for the fiscal year. The Notes to
the Financial Statements provides additional information essential to a complete understanding of the data supplied
in the specific financial statements listed above.
Financial Highlights
The assets and deferred outflows of resources of the District exceeded its liabilities and deferred inflows of
resources at the close of the most recent fiscal year by $405.3 million (net position). Of this amount, $60.7 million
(unrestricted net position) may be used to meet the District’s ongoing obligations to residents and creditors.
Total assets increased by $11.9 million or 2.16% during Fiscal Year 2021, to $562.8 million, due to increases in
cash and cash equivalents and receivables which were partially offset by a decrease in capital assets from
depreciation exceeding current year additions.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
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Management’s Discussion and Analysis
4
In addition to the basic financial statements and accompanying notes, this report also presents certain required
supplementary information concerning the District's progress in funding its obligation to provide retirement benefits
to its employees.
Financial Analysis:
As noted, net position may serve, over time, as a valuable indicator of an entity's financial position. In the case of
the District, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by
$405.3 million at the close of Fiscal Year 2021.
The largest portion of the District's net position, $340.4 million (84%), reflects its investment in capital assets, plus
unused debt proceeds, less any remaining outstanding debt used to acquire those capital assets. The District uses
these capital assets to provide services to customers; consequently, these assets are not available for future spending.
Although the District's investment in its capital assets is reported effectively as a resource, it should be noted that
the resources needed to repay the debt must be provided from other sources, since the capital assets themselves
cannot be used to liquidate these liabilities.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Management’s Discussion and Analysis
5
Statements of Net Position
(In Millions of Dollars)
2021 2020 2019
Assets
Current and Other Assets $ 111.2 $ 94.4 $ 89.7
Capital Assets 451.6 456.5 458.3
Total Assets 562.8 550.9 548.0
Deferred Outflows of Resources
Deferred Actuarial Pension Costs 5.4 3.4 39.0
Deferred Actuarial OPEB Costs 2.5 1.1 2.2
Total Deferred Outflows of Resources 7.9 4.5 41.2
Liabilities
Long-Term Debt Outstanding 106.2 112.0 114.3
Net Pension Liability 20.0 16.6 48.4
Net OPEB Liability 1.8 0.0 3.4
Other Liabilities 36.0 35.7 33.8
Total Liabilities 164.0 164.3 199.9
Deferred Inflows of Resources
Deferred Actuarial Pension Costs 0.0 1.3 1.2
Deferred Actuarial OPEB Costs 1.4 2.3 0.5
Total Deferred Inflows of Resources 1.4 3.6 1.7
Net Position
Net Investment in Capital Assets 340.4 345.2 354.6
Restricted for Debt Service 4.2 4.3 4.3
Unrestricted 60.7 38.0 28.7
Total Net Position $ 405.3 $ 387.5 $ 387.6
The District's operations and population are growing. Much of this expansion has occurred in the residential sector,
particularly in multi-family dwellings and commercial areas. By 2045, the District's service area population is
expected to increase by 21% to 272,350 residents. The District has created several future planning documents to
ensure a reliable water supply and sewer system in the future, including the maintenance of current infrastructure.
In FY 2021, the District's Capital Assets increased by $10.7 million before accumulated depreciation. (See Note 4
in the Notes to Financial Statements). The District also saw a decrease in long-term debt of $5.8 million (excluding
current maturities) due to annual debt service payments (See Note 5 in the Notes to Financial Statements).
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
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Management’s Discussion and Analysis
6
Deferred outflows of resources increased by $3.4 million in FY 2021 due to additional funding of $1.2 million to
CalPERS, an increase of $1.0 million on the net difference between projected and actual earnings for the pension,
a $1.0 million increase in the OPEB differences between expected and actual experience, and a $0.2 million increase
in FY 2021 PERS Unfunded Actuarial Liability (UAL). The $36.7 million decrease of deferred outflows in FY
2020 was due to the $31.8 million additional funding to CalPERS and the $2.4 million decrease in FY 2020 PERS
Unfunded Actuarial Liability (UAL).
At the end of FY 2021, the District can report positive balances in all net position categories. This situation also
applies to the prior two fiscal years.
Statements of Revenues, Expenses, and Changes in Net Position
(In Millions of Dollars)
2021 2020 2019
Water Sales $ 101.7 $ 90.4 $ 86.8
Wastewater Revenue 2.9 2.9 3.0
Connection and Other Fees 2.5 2.6 2.2
Non-operating Revenues 12.9 10.9 11.5
Total Revenues 120.0 106.8 103.5
Depreciation Expense 17.2 16.8 16.8
Other Operating Expenses 91.5 90.2 86.9
Non-operating Expenses 5.3 6.9 9.2
Total Expenses 114.0 113.9 112.9
Income (Loss) Before Capital
Contributions 6.0 (7.1) (9.4)
Capital Contributions 11.8 7.0 9.5
Change in Net Position 17.8 (0.1) 0.1
Beginning Net Position 387.5 387.6 387.5
Ending Net Position $ 405.3 $ 387.5 $ 387.6
Water Sales increased by $11.3 million and $3.6 million in FY 2021 and FY 2020, respectively, due to an increase
in units sold, as a result of below-average rainfall, and higher water rates.
Other Operating Expenses increased by $1.3 million and $3.3 million in FY 2021 and FY 2020, respectively,
predominantly due to the increases in water units purchased as a result of increases in water sales volumes. The
increase in FY 2021, is partially offset by the credit received from the City of San Diego as a result of a reduction
in the contractual recycled water volumes due to the City’s plant being shut down.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Management’s Discussion and Analysis
7
Specific planning and environmental study costs associated with capital projects do not qualify as capital costs
under Generally Accepted Accounting Principles. These costs are included in the District's miscellaneous (non-
operating) expenses. For FY 2021 and FY 2020, those expenses were $0.2 million and $0.4 million, respectively.
Connection and Other Fees decreased by $0.1 million in FY 2021 and increased by $0.4 million in FY 2020.
Capital Contributions increased by $4.8 million in FY 2021 due to high demand in the housing market and decreased
by $2.5 million in FY 2020 due to the slowdown in housing development.
Non-operating Revenues
Non-operating Revenues by Major Source
(In Millions of Dollars)
2021 2020 2019
Taxes and Assessments $ 5.3 $ 4.9 $ 4.7
Rents and Leases 1.6 1.5 1.4
Other Non-operating Revenue 6.0 4.5 5.5
Total Non-operating Revenues $ 12.9 $ 10.9 $ 11.6
The District's total non-operating revenues increased by $2.0 million in FY 2021 due primarily to the $3.2 million
settlement from Metropolitan Water District (MWD) partially offset by a decrease in investment earnings. Total
non-operating revenues decreased by $0.7 million in FY 2020 due primarily to decreases in investment earnings
and transfer of capacity revenue from capital contribution to fund project expenditures that do not qualify as capital
assets.
Capital Assets and Debt Administration
The District's capital assets (net of accumulated depreciation) as of June 30, 2021, totaled $451.6 million. Included
in this amount is land, which is a non-depreciable asset. The District's net capital assets decreased by 1.07% and
0.39% in FY 2021 and FY 2020, respectively.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
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Management’s Discussion and Analysis
8
Capital Assets
(In Millions of Dollars)
As indicated by the figures in the table above, most capital assets added during both fiscal years were related to the
water and wastewater systems. Additionally, the majority of the cost of construction-in-progress is also associated
with water systems. Additional information on the District's capital assets can be found in Note 4 of the Notes to
Financial Statements.
In November 2018, the District issued $32.4 million in Water Revenue Bonds, Series 2018 to provide funds for the
construction of water storage, treatment, transmission facilities, and advance refunded $6.9 million of the 1996
Certificates of Participation. As of June 30, 2021, approximately $0.3 million of the 2018 Water Revenue Bond
proceeds remain in Restricted Cash and Cash Equivalents.
In December 2019, the District issued $3.1 million in Wastewater Revenue Bonds to fund specific capital
improvements made to the District's wastewater system. As of June 30, 2020, all the bond proceeds were used to
pay for the construction cost of the wastewater main replacement at Campo Road.
On June 30, 2021, the District had $106.2 million in outstanding debt (net of $5.3 million of maturities occurring
in FY 2022), which consisted of the following:
General Obligation Bonds $ 0.7
Revenue Bonds 105.5
Total Long-Term Debt $ 106.2
Additional information on the District's long-term debt can be found in Note 5 of the Notes to Financial Statements.
2021 2020 2019
Land $ 14.4 $ 14.4 $ 14.4
Construction in Progress 25.8 24.7 33.2
Potable Water System 506.7 498.1 488.8
Recycled Water System 116.6 115.5 114.8
Wastewater System 59.1 59.1 48.5
Field Equipment 8.1 8.4 8.6
Buildings 19.6 19.5 19.2
Transportation Equipment 3.8 3.6 3.5
Communication Equipment 2.8 2.7 3.4
Office Equipment 16.3 16.5 16.8
Total Capital Assets 773.2 762.5 751.2
Less Accumulated
Depreciation (321.6) (306.0) (292.9)
Net Capital Assets $ 451.6 $ 456.5 $ 458.3
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Management’s Discussion and Analysis
9
Fiscal Year 2021-2022 Budget
Economic Factors
The San Diego region imports 80% of its potable supply, therefore, factors such as local rainfall and weather
conditions elsewhere in the western portion of the nation can affect the region. San Diego received below-average
rainfall of 4.93 inches in FY 2021. The 10-year average of 9.00 inches for San Diego rainfall reflects the long-term
drought conditions for our area. San Diego's rainfall average over 20 years is 9.01 inches; the 30-year average is
9.65 inches, and the 40-year average is 9.92 inches.
While water sales peaked around 2008, conservation has permanently impacted volumes. Prolonged droughts have
resulted in additional conservation, further impacting volumes. Below-average rainfall has led to potable water
sales volume increasing by 10.7% in FY 2021, while above-average rainfall has led to potable water sales volume
increasing by only 0.6% in FY 2020. The FY 2021 budget was prepared assuming that the pandemic would
adversely impact potable and recycled water sales volumes by 12% and 15%, respectively. In FY 2021, the actual
water volumes did not experience the pandemic-driven declines anticipated in the budget. Therefore, the FY 2022
budget was prepared assuming the water volumes would be consistent with actual historical volumes and excluding
the adverse impacts included in the FY 2021 budget. The FY 2022 sales volume is anticipated to increase 15.0%
compared to the previous year's budget and decrease 6.7% versus FY 2021 actual sales volume.
The District continues to respond to the challenges presented by growth, State mandates, and the potential of drought
by creating new opportunities and new organizational efficiencies. Utilizing and refining its Strategic Business
Plan has captured the Board of Director's vision and united its staff in a joint mission. The District has achieved
several significant accomplishments due to its successful adherence to its Strategic Business Plan. The District is
poised to continue successfully providing an affordable, safe, and reliable water supply for the people of its service
area, and set to reap the rewards of greater efficiencies and economies of scale.
The District is currently at about 69% of its projected ultimate population, serving approximately 226,000 people.
Long-term, this percentage should continue to increase as the District's service area develops and grows. By 2045,
the District is projected to serve approximately 272,400 people, with an average daily demand of 46 million gallons
per day (MGD) compared to the current average daily demand of 26.5 million gallons per day (MGD). Currently,
the District services the needs of this growing population by purchasing water from the San Diego County Water
Authority (CWA), who in turn purchases its water from the Metropolitan Water District (MWD) and the Imperial
Irrigation District (IID).
Otay takes delivery of the water through several connections of large diameter pipelines owned and operated by
CWA. The District currently receives treated water from CWA directly and from the Helix Water District via a
CWA contract. Also, the District has an emergency agreement with the City of San Diego to purchase water in the
case of a shutdown of the primary treated water source. The City of San Diego also has a long-term contract with
the District to provide recycled water for landscape and irrigation usage. Through innovative agreements like these,
both parties can benefit by using another agency's excess capacity and diversifying local supply, thereby increasing
reliability.
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PRELIMINARY & TENATIVE
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Management’s Discussion and Analysis
10
Financial
The District is budgeted to deliver approximately 27,002 acre-feet of potable water to 51,316 potable customer
accounts during FY 2021-2022. Management feels that these projections are realistic after accounting for low
growth, supply changes, conservation, and the economic impacts of COVID-19. A combination of factors,
including weather patterns and the economic uncertainty brought about by the COVID-19 pandemic, have created
challenges in developing projections for the current fiscal year. Unemployment is expected to fall by the end of the
year. The housing market is expected to be high. An increase in consumer goods demand is expected due to the
Federal government's assistance programs. District staff projects that the District will sell another 1,694 meters
over the next six years, translating to 2,905 equivalent dwelling units (EDUs). This growth is estimated to increase
sales volumes by an average of less than 1% per year over the next five years. While all these factors impact the
region's water usage, people's water needs remain an underlying constant.
Management is unaware of any other conditions that are likely to significantly impact the District's current financial
position, net position, or operating results.
Contacting the District's Financial Management
This financial report is designed to provide a general overview of the Otay Water District's finances for the Board
of Directors, customers, creditors, and other interested parties. Questions concerning any of the information
provided in the report or requests for additional information should be addressed to the District's Finance
Department, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978-2004.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
2021 2020
ASSETS
Current Assets:
Cash and Cash Equivalents (Notes 1 and 2)84,818,274$ 65,089,488$
Board Designated Cash and Cash Equivalents (Notes 1 and 2)3,092,512 2,598,569
Restricted Cash and Cash Equivalents (Notes 1 and 2)816,218 6,077,597
Restricted Investments (Notes 1 and 2)3,666,097 3,740,520
Accounts Receivable, Net 14,840,937 13,420,104
Accrued Interest Receivable 144,169 260,735
Taxes and Availability Charges Receivable, Net 252,183 178,777
Restricted Taxes and Availability Charges Receivable, Net 21,170 75,263
Inventories 855,563 942,564
Prepaid Items and Other Receivables 2,710,237 2,003,970
Total Current Assets 111,217,360 94,387,587
Non-current Assets:
Net OPEB Asset (Note 8)-20,021
Capital Assets (Note 4):
Land 14,423,773 14,423,773
Construction in Progress 25,786,352 24,711,844
Capital Assets, Net of Depreciation 411,352,279 417,367,132
Total Capital Assets, Net of Depreciation 451,562,404 456,502,749
Total Non-current Assets 451,562,404 456,522,770
Total Assets 562,779,764 550,910,357
DEFERRED OUTFLOWS OF RESOURCES
Deferred Actuarial Pension Costs (Note 7)5,421,523 3,358,365
Deferred Actuarial OPEB Costs (Note 8)2,439,632 1,139,535
Total Deferred Outflows of Resources 7,861,155$ 4,497,900$
Continued
STATEMENTS OF NET POSITION
JUNE 30, 2021 AND 2020
The accompanying notes are an integral part of this statement.
11 DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
2021 2020
LIABILITIES
Current Liabilities:
Current Maturities of Long-term Debt (Note 5)5,250,000$ 4,955,000$
Accounts Payable 14,735,726 16,224,117
Accrued Payroll Liabilities 910,173 811,521
Other Accrued Liabilities 4,985,693 4,644,505
Customer and Developer Deposits 4,480,951 3,673,975
Accrued Interest 1,722,189 1,790,955
Unearned Revenues -57,024
Liabilities Payable from Restricted Assets:
Restricted Accrued Interest 19,000 28,067
Total Current Liabilities 32,103,732 32,185,164
Non-current Liabilities:
Long-term Debt (Note 5):
General Obligation Bonds 739,080 1,460,435
Revenue Bonds 105,484,807 110,487,562
Net Pension Liability 20,043,519 16,616,855
Net OPEB Liability 1,801,159 -
Other Non-current Liabilities 3,793,011 3,550,571
Total Non-current Liabilities 131,861,576 132,115,423
Total Liabilities 163,965,308 164,300,587
DEFERRED INFLOWS OF RESOURCES
Deferred Actuarial Pension Costs (Note 7)-1,366,658
Deferred Actuarial OPEB Costs (Note 8)1,424,536 2,274,249
Total Deferred Inflows of Resources 1,424,536 3,640,907
NET POSITION
Net Investment in Capital Assets 340,383,389 345,156,470
Restricted for Debt Service 4,187,443 4,261,399
Unrestricted 60,680,243 38,048,894
Total Net Position 405,251,075$ 387,466,763$
STATEMENTS OF NET POSITION - CONTINUED
JUNE 30, 2021 AND 2020
The accompanying notes are an integral part of this statement.
12 DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
2021 2020
OPERATING REVENUES
Water Sales 101,742,970$ 90,435,148$
Wastewater Revenue 2,899,180 2,921,310
Connection and Other Fees 2,498,318 2,582,351
Total Operating Revenues 107,140,468 95,938,809
OPERATING EXPENSES
Cost of Water Sales 66,889,570 62,573,257
Wastewater 2,633,413 2,439,117
Administrative and General 21,948,435 25,196,555
Depreciation 17,212,905 16,778,967
Total Operating Expenses 108,684,323 106,987,896
Operating Income (Loss)(1,543,855)(11,049,087)
NON-OPERATING REVENUES (EXPENSES)
Investment Earnings 254,668 1,784,834
Taxes and Assessments 5,251,540 4,939,950
Availability Charges 686,697 694,768
Gain (Loss) on Disposal of Capital Assets (159,734)(1,243,742)
Rents and Leases 1,587,687 1,501,328
Miscellaneous Revenues 5,062,779 1,936,162
Donations (84,389)(121,600)
Interest Expense (4,782,490)(4,953,987)
Miscellaneous Expenses (241,379)(558,405)
Total Non-operating Revenues (Expenses)7,575,379 3,979,308
Income (Loss) Before Capital Contributions 6,031,524 (7,069,779)
Capital Contributions 11,752,788 6,941,932
Change in Net Position 17,784,312 (127,847)
Total Net Position, Beginning 387,466,763 387,594,610
Total Net Position, Ending 405,251,075$ 387,466,763$
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEARS ENDED JUNE 30, 2021 AND 2020
The accompanying notes are an integral part of this statement.
13 DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers 104,028,293$ 91,797,189$
Receipts from Connections and Other Fees 2,498,318 2,582,351
Receipts from Property Rents and Leases 1,587,687 1,501,328
Other Receipts 5,005,755 1,857,963
Payments to Suppliers (70,598,225)(64,513,739)
Payments to Employees (22,630,352)(21,233,287)
Other Payments (325,768)(680,005)
Net Cash Provided By (Used For) Operating Activities 19,565,708 11,311,800
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Receipts from Taxes and Assessments 5,170,067 4,890,815
Net Cash Provided By (Used For) Noncapital and Related
Financing Activities 5,170,067 4,890,815
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Proceeds from Capital Contributions 8,560,257 5,223,069
Proceeds from Sale of Capital Assets 24,748 139,965
Proceeds from Debt Related Taxes and Assessments 748,857 715,136
Proceeds from Long-Term Debt - 3,106,320
Principal Payments on Long-Term Debt (4,955,000)(4,725,000)
Interest Payments and Fees (5,334,433)(5,472,280)
Acquisition and Construction of Capital Assets (9,264,511)(14,637,213)
Net Cash Provided By (Used For) Capital and Related
Financing Activities (10,220,082)(15,650,003)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest Received on Investments 371,234 1,865,617
Proceeds from Sale and Maturities of Investments 170,315 25,918,767
Purchase of Investments (95,892)(7,709,647)
Net Cash Provided By (Used For) Investing Activities 445,657 20,074,737
Net Increase (Decrease) in Cash and Cash Equivalents 14,961,350 20,627,349
Cash and Cash Equivalents - Beginning 73,765,654 53,138,305
Cash and Cash Equivalents - Ending 88,727,004$ 73,765,654$
Continued
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2021 AND 2020
The accompanying notes are an integral part of this statement.14 DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
2021 2020
Reconciliation of Operating Income (Loss) to Net Cash Flows
Provided By (Used For) Operating Activities:
Operating Income (Loss)(1,543,855)$ (11,049,087)$
Adjustments to Reconcile Operating Income to
Net Cash Provided By (Used For) Operating Activities:
Depreciation 17,212,905 16,778,967
Receipts from Property Rents and Leases 1,587,687 1,501,328
Miscellaneous Revenues 5,005,755 1,857,963
Miscellaneous Expenses and Donations (325,768) (680,005)
(Increase) Decrease in Accounts Receivable (1,420,833) (1,632,150)
(Increase) Decrease in Inventory 87,001 (167,018)
(Increase) Decrease in Prepaid Items and Other Receivables (706,267) (510,139)
(Increase) Decrease in Net OPEB Asset 20,021 (20,021)
(Increase) Decrease in Deferred Actuarial Pension Costs (2,063,158) 35,664,453
(Increase) Decrease in Deferred Actuarial OPEB Costs (1,300,097) 1,070,039
Increase (Decrease) in Accounts Payable (1,488,391) 2,162,293
Increase (Decrease) in Accrued Payroll and Related Expenses 98,652 172,274
Increase (Decrease) in Other Accrued Liabilities 341,188 (874,754)
Increase (Decrease) in Customer and Developer Deposits 806,976 72,881
Increase (Decrease) in Other Non-current Liabilities 242,440 212,897
Increase (Decrease) in Net OPEB Liability 1,801,159 (3,415,025)
Increase (Decrease) in Net Pension Liability 3,426,664 (31,772,051)
Increase (Decrease) in Deferred Actuarial Pension Costs (1,366,658) 209,483
Increase (Decrease) in Deferred Actuarial OPEB Costs (849,713) 1,729,472
Net Cash Provided By (Used For) Operating Activities 19,565,708$ 11,311,800$
Schedule of Cash and Cash Equivalents:
Current Assets:
Cash and Cash Equivalents 84,818,274$ 65,089,488$
Board Designated Cash and Cash Equivalents 3,092,512 2,598,569
Restricted Cash and Cash Equivalents 816,218 6,077,597
Total Cash and Cash Equivalents 88,727,004$ 73,765,654$
Supplemental Disclosures
Non-Cash Investing and Financing Activities Consisted of the Following:
Contributed Capital for Water and Sewer System 3,192,531$ 1,718,863$
Change in Fair Value of Investments and Recognized Gains/Losses 360,636 (432,728)
Amortization Related to Long-term Debt 474,110 474,340
STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE YEARS ENDED JUNE 30, 2021 AND 2020
The accompanying notes are an integral part of this statement.15 DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
16
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
NOTE DESCRIPTION PAGE
1 Reporting Entity and Summary of Significant Accounting Policies..……….. 17 - 24
2 Cash and Investments………………………………………………………... 24 - 29
3 Fair Value Measurements…………………………………………..………... 29 - 30
4 Capital Assets…………………………………………………..……………. 31 - 32
5 Long-Term Debt………………………………………………….…………. 33 - 38
6 Net Position………………………………………………………………….. 38
7 Defined Benefit Pension Plan……………………………………………….. 38 - 45
8 Other Post Employment Benefits………………………..…………............... 45 - 50
9 Commitments and Contingencies……………………………………………. 50 - 51
10 Risk Management……………………………………………………………. 52
11 Segment Information………………………………………………..……….. 52 - 55
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
17
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) Reporting Entity
The reporting entity Otay Water District (the “District”) includes the accounts of the District, Otay Service
Corporation (the “Corporation”) and the Otay Water District Financing Authority (the “Financing Authority”).
The Otay Water District (the “District”) is a public entity established in 1956 pursuant to the Municipal Water
District Law of 1911 (Section 711 et. Seq. of the California Water Code) for the purpose of providing water and
wastewater services to the properties in the District. The District is governed by a Board of Directors consisting of
five directors elected by geographical divisions based on District population for a four-year alternating term.
The District formed the Otay Service Corporation on June 21, 1993, a nonprofit public benefit corporation duly
organized and existing under the laws of the State of California. The Service Corporation was formed to assist the
District in the financing of public capital improvements. On March 3, 2021, the Otay Service Corporation was
dissolved by the District.
The District formed the Financing Authority on March 3, 2010 under the Joint Exercise of Powers Act, constituting
Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the California
Government Code. The Financing Authority was formed to assist the District in the financing of public capital
improvements.
The financial statements present the District and its component units. The District is the primary government unit.
Component units are those entities which are financially accountable to the primary government, either because the
District appoints a voting majority of the component unit’s board, or because the component units will provide a
financial benefit or impose a financial burden on the District. The District has accounted for the Service
Corporation and Financing Authority as “blended” component units. Despite being legally separate, the Service
Corporation and Financing Authority are so intertwined with the District that they are in substance, part of the
District’s operations. Accordingly, the balances and transactions of these component units are reported within the
funds of the District. Separate financial statements are not issued for the Service Corporation and the Financing
Authority.
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation
Measurement focus is a term used to describe “which” transactions are recorded within the various financial
statements. Basis of accounting refers to “when” transactions are recorded regardless of the measurement focus
applied. The accompanying financial statements are reported using the economic resources measurement focus, and
the accrual basis of accounting. Under the economic measurement focus all assets and liabilities (whether current or
noncurrent) associated with these activities are included on the Statements of Net Position. The Statements of
Revenues, Expenses and Changes in Net Position present increases (revenues) and decreases (expenses) in total net
position. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded
when a liability is incurred, regardless of the timing of related cash flows.
The District reports its activities as an enterprise fund, which is used to account for operations that are financed and
operated in a manner similar to a private business enterprise, where the intent of the District is that the costs (including
depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered
primarily through user charges.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
18
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued
The basic financial statements of the Otay Water District have been prepared in conformity with accounting principles
generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the
accepted standard setting body for governmental accounting financial reporting purposes.
Net position of the District is classified into three components: (1) net investment in capital assets, (2) restricted net
position, and (3) unrestricted net position. These classifications are defined as follows:
Net Investment in Capital Assets
This component of net position consists of capital assets, net of accumulated depreciation and reduced by the
outstanding balances of notes or borrowing that are attributable to the acquisition of the assets, construction, or
improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt
attributable to the unspent proceeds are not included in the calculation of the net investment in capital assets.
Restricted Net Position
This component of net position consists of net position with constrained use through external constraints imposed by
creditors (such as through debt covenants), grantors, contributions, or laws or regulations of other governments or
constraints imposed by law through constitutional provisions or enabling legislation.
Unrestricted Net Position
This component of net position consists of net position that do not meet the definition of “net investment in capital
assets” or “restricted net position”.
The District distinguishes operating revenues and expenses from those revenues and expenses that are non-operating.
Operating revenues are those revenues that are generated by water sales and wastewater services while operating
expenses pertain directly to the furnishing of those services. Non-operating revenues and expenses are those revenues
and expenses generated that are not associated with the normal business of supplying water and wastewater treatment
services.
The District recognizes revenues from water sales, wastewater revenues, and meter fees as they are earned. Taxes and
assessments are recognized as revenues based upon amounts reported to the District by the County of San Diego, net of
allowance for delinquencies of $30,373 at June 30, 2021 and $28,227 at June 30, 2020.
Additionally, capacity fee contributions received which are related to specific operating expenses are offset against
those expenses and included in Cost of Water Sales in the Statements of Revenues and Expenses and Changes in Net
Position.
Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant
proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted - net position and
unrestricted - net position, a flow assumption must be made about the order in which the resources are considered to be
applied.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
19
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued
It is the District’s practice to consider restricted - net position to have been depleted before unrestricted - net position is
applied, however it is at the Board’s discretion.
C) New Accounting Pronouncements
Implemented as of June 30, 2021
Governmental Accounting Standard Board Statement No. 84
In January of 2017, GASB issued Statement No. 84, Fiduciary Activities. This Statement was issued to improve
guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes. This
Statement establishes the criteria for identifying fiduciary activities which should be reported in a fiduciary fund in
the basic financial statements. The fiduciary funds that should be reported, if applicable: a) pensions trust funds, b)
investment trust funds, c) private purpose trust funds, d) custodial funds. Statement No. 84 is effective for reporting
periods beginning after December 15, 2018. Due to the COVID-19 pandemic, GASB No. 95 delayed the
implementation of this GASB Statement by one year for reporting periods beginning after December 15, 2019.
Currently, this Statement has no effect on the District’s financial statements.
Governmental Accounting Standard Board Statement No. 90
In August of 2018, GASB issued Statement No. 90, Majority Equity Interests, an amendment of GASB Statements
No. 14 and No. 61. This Statement was issued to improve the consistency and comparability of reporting a
government's majority equity interest in a legally separate organization and to improve the relevance of financial
statement information for certain component units. This Statement defines a majority equity interest and specifies
that a majority equity interest in a legally separate organization should be reported as an investment if a
government's holding of the equity interest meets the definition of an investment. A majority equity interest that
meets the definition of an investment should be measured using the equity method, unless it is held by a special-
purpose government engaged only in fiduciary activities, a fiduciary fund, or an endowment (including permanent
and term endowments) or permanent fund. Those governments and funds should measure the majority equity
interest at fair value. Statement No. 90 is effective for fiscal years beginning after December 15, 2018. Due to the
COVID-19 pandemic, GASB No. 95 delayed the implementation of this Statement by one year for reporting periods
beginning after December 15, 2019. Currently, this Statement has no effect on the District’s financial statements.
Implemented as of June 30, 2020
Governmental Accounting Standard Board Statement No. 95
In May of 2020, GASB issued Statement No. 95, Postponement of the Effective Dates of Certain Authoritative
Guidance. The objective of this statement is to provide temporary relief to governments and other stakeholders in
light of the COVID-19 pandemic by postponing the effective dates of certain provisions in Statements and
Implementation Guides which are as follows:
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
20
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
1)REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
C)New Accounting Pronouncements - Continued
Implemented as of June 30, 2020 - Continued
Governmental Accounting Standard Board Statement No. 95 - Continued
a.GASB Statement 83 - Reporting periods beginning after June 15, 2019.
b.GASB Statement 84 and Implementation Guide 2019-2 - Reporting periods beginning after December 15,
2019.
c.GASB Statement 87 and Implementation Guide 2019-3 - Fiscal years beginning after June 15, 2021, and all
reporting periods thereafter.
d.GASB Statement 88 - Reporting periods beginning after June 15, 2019.
e.GASB Statement 89 - Reporting periods beginning after December 15, 2020.
f.GASB Statement 90 - Reporting periods beginning after December 15, 2019.
g.GASB Statement 91 - Reporting periods beginning after December 15, 2021.
h.GASB Statement 92, paragraphs 6 and 7 - Fiscal years beginning after June 15, 2021.
i.GASB Statement 92, paragraphs 8, 9, and 12 - Reporting periods beginning after June 15, 2021.
j.GASB Statement 92, paragraph 10 - Government acquisitions occurring in reporting periods beginning
after June 15, 2021.
k.GASB Statement 93, paragraphs 13 and 14 - Fiscal years beginning after June 15, 2021, and all reporting
periods thereafter.
l.Implementation Guide 2017-3, Questions 4.484 and 4.491 - The first reporting period in which the
measurement date of the (collective) net OPEB liability is on or after June 15, 2019.
m.Implementation Guide 2017-3, Questions 4.85, 4.103, 4.108, 4.109, 4.225, 4.239, 4.244, 4.245, and 5.1-5.4
- Actuarial valuations as of December 15, 2018, or later.
n.Implementation Guide 2018-1 - Reporting periods beginning after June 15, 2019.
o.Implementation Guide 2019-1- Reporting periods beginning after June 15, 2020.
GASB Statement No. 95 is effective immediately. The District has elected to delay certain provisions in the GASB
Statements as allowed by GASB Statement No. 95. GASB Statements Nos. 83, 88 and 89 were implemented by the
District in fiscal year 2019.
Pending Accounting Standards
GASB has issued the following statements which impact the District’s financial reporting requirements in the future:
i.GASB Statement 87 - “Leases”, effective for fiscal years beginning after June 15, 2021*.
ii.GASB Statement 91 - “Conduit Debt Obligations”, effective for fiscal years beginning after December 15,
2021*.
iii.GASB Statement 92 - “Omnibus 2020”, effective for reporting periods beginning after June 15, 2021*.
iv.GASB Statement 93 - “Replacement of Interbank Offered Rates”, effective for reporting periods beginning
after June 15, 2021*.
v.GASB Statement 94 - “Public-Private and Public-Public Partnerships and Availability Payment
Arrangements”, effective for reporting periods beginning after June 15, 2022.
vi.GASB Statement 96 - “Subscription-Based Information Technology Arrangements”, effective for reporting
periods beginning after June 15, 2022.
vii.GASB Statement 97 - “Certain Component Unit Criteria, and Accounting and Financial Reporting for
Internal Revenue Code Section 457 Deferred Compensation Plans”, effective for reporting periods
beginning after June 15, 2021.
*These GASB Statements original effective dates were postponed by GASB Statement No. 95.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
21
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
D) Deferred Outflows / Inflows of Resources
In addition to assets, the Statements of Net Position will sometimes report a separate section for deferred outflows of
resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The District has two items that qualify for reporting in this category, deferred
actuarial pension costs and deferred actuarial OPEB costs are items that are deferred and recognized as an outflow of
resources in the period the amounts become available.
In addition to liabilities, the Statements of Net Position will sometimes report a separate section for deferred inflows of
resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net
position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time.
The District has two items that qualify for reporting in this category. Accordingly, the items, deferred actuarial pension
costs and deferred actuarial OPEB costs, are deferred and recognized as an inflow of resources in the period that the
amounts become available.
E) Statements of Cash Flows
For purposes of the Statements of Cash Flows, the District considers all highly liquid investments (including
restricted assets) with a maturity period, at purchase, of three months or less to be cash equivalents.
F) Investments
Investments are stated at their fair value, which represents the quoted or stated market value. Investments that are
not traded on a market, such as investments in external pools, are valued based on the stated fair value as
represented by the external pool. All investments are stated at their fair value. The District has not elected to report
certain investments at amortized costs.
G) Inventory and Prepaid Items
Inventory consists primarily of materials used in the construction and maintenance of the water and wastewater system
and is valued at weighted average cost. Both inventory and prepaid items use the consumption method whereby they
are reported as an asset and expensed as they are consumed.
H) Capital Assets
Capital assets are recorded at cost, where historical records are available, and at an estimated historical cost where no
historical records exist. Infrastructure assets in excess of $20,000 and other capital assets in excess of $10,000 are
capitalized if they have an expected useful life of two years or more. The District will also capitalize individual
purchases under the capitalization threshold if they are part of a new capital program. The cost of purchased and self-
constructed additions to utility plant and major replacements of property are capitalized. Costs include materials, direct
labor, transportation, and such indirect items as engineering, supervision, employee fringe benefits and overhead.
Repairs, maintenance, and minor replacements of property are charged to expense. Donated assets are capitalized at
their acquisition value on the date contributed.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
22
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
H) Capital Assets - Continued
Depreciation is calculated using the straight-line method over the following estimated useful lives:
Water System 15-70 Years
Field Equipment 2-50 Years
Buildings 30-50 Years
Communication Equipment 2-10 Years
Transportation Equipment 2-7 Years
Office Equipment 2-10 Years
Recycled Water System 50-75 Years
Wastewater System 25-50 Years
I) Other Non-current Liabilities
For compensated absences, the District’s policy to record vested or accumulated vacation and sick leave as an expense
and liability as benefits accrue to employees.
June 30, 2021
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Compensated
Absences $ 3,246,272 $ 1,657,775 $ 1,394,886 $ 3,509,161 $ 350,916
Customer Credits 272,282 5,840 - 278,122 -
Reimbursement
Agreements
356,644
-
-
356,644
-
Total $ 3,875,198 $ 1,663,615 $ 1,394,886 $ 4,143,927 $ 350,916
Current portion is reflected in accrued payroll liabilities and remainder in other non-current liabilities on the
Statements of Net Position.
June 30, 2020
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Compensated
Absences $ 3,011,855 $ 1,644,010 $ 1,409,593 $ 3,246,272 $ 324,627
Customer Credits 270,360 1,922 - 272,282 -
Reimbursement
Agreements
356,644
-
-
356,644
-
Total $ 3,638,859 $ 1,645,932 $ 1,409,593 $ 3,875,198 $ 324,627
Current portion is reflected in accrued payroll liabilities and remainder in other non-current liabilities on the
Statements of Net Position.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
23
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
J) Classification of Liabilities
Certain current liabilities have been classified as current liabilities payable from restricted assets as they will be
funded from restricted assets.
K) Allowance for Doubtful Accounts
The District charges doubtful accounts arising from water sales receivable to bad debt expense when it is probable that
the accounts will be uncollectible. Uncollectible accounts are determined by the allowance method based upon prior
experience and management’s assessment of the collectability of existing specific accounts. The allowance for
doubtful accounts was $342,527 for 2021 and $201,152 for 2020.
L) Property Taxes
Tax levies are limited to 1% of full market value (at time of purchase) which results in a tax rate of $1.00 per $100
assessed valuation, under the provisions of Proposition 13. Tax rates for voter-approved indebtedness are excluded
from this limitation.
The County of San Diego (the “County”) bills and collects property taxes on behalf of the District. The County’s tax
calendar year is July 1 to June 30. Property taxes attach as a lien on property on January 1. Taxes are levied on July 1
and are payable in two equal installments on November 1 and February 1, and become delinquent after December 10
and April 10, respectively.
M) Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions,
and pension expense, information about the fiduciary net position of the District’s California Public Employees’
Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have
been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including
refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
N) Other Post-Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows/inflows of resources related to OPEB, and OPEB
expense, information about the fiduciary net position of the District’s plan (OPEB Plan) and additions to/deductions
from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit
payments are recognized when currently due and payable in accordance with the benefit terms. Investments are
reported at fair value.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
24
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
N) Other Post-Employment Benefits (OPEB) - Continued
Generally accepted accounting principles require that the reported results must pertain to liability and asset information
within certain defined timeframes. For this report, the following timeframes are used:
2021 2020
Valuation Date June 30, 2020 June 30, 2019
Measurement Date June 30, 2020 June 30, 2019
Measurement Period July 1, 2019 to June 30, 2020 July 1, 2018 to June 30, 2019
O) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets,
deferred outflows of resources, liabilities, and deferred inflows of resources, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
P) Reclassifications
Certain reclassifications have been made to prior year amounts to conform to the current year presentation.
2) CASH AND INVESTMENTS
The primary goals of the District’s Investment Policy are to assure compliance with all Federal, State, and Local laws
governing the investment of funds under the control of the organization, protect the principal of investments entrusted,
remain sufficiently liquid to enable the District to meet all operating requirements and generate income under the
parameters of such policies.
Cash and Investments are classified in the accompanying financial statements as follows:
2021 2020
Statements of Net Position:
Cash and Cash Equivalents $ 84,818,274 $ 65,089,488
Board Designated Cash and Cash Equivalents 3,092,512 2,598,569
Restricted Cash and Cash Equivalents 816,218 6,077,597
Restricted Investments 3,666,097 3,740,520
Total Cash and Investments $ 92,393,101 $ 77,506,174
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
25
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
2) CASH AND INVESTMENTS - Continued
Cash and Investments consist of the following:
2021 2020
Cash on Hand $ 2,950 $ 2,950
Deposits with Financial Institutions 2,614,972 2,775,114
Investments 89,775,179 74,728,110
Total Cash and Investments $ 92,393,101 $ 77,506,174
Investments Authorized by the California Government Code and the District’s Investment Policy
The table below identifies the investment types that are authorized for the District by the California Government Code
(or the District’s Investment Policy, where more restrictive). The table also identifies certain provisions of the California
Government Code (or the District’s Investment Policy, where more restrictive) that address interest rate risk, credit risk,
and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are
governed by the provisions of debt agreements of the District, rather than the general provisions of the California
Government Code or the District’s Investment Policy.
Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity Of Portfolio(1) In One Issuer
U.S. Treasury Obligations 5 years 100% 100%
U.S. Government Sponsored Entities 5 years 100% 100%
Certificates of Deposit 5 years 15% 100%
Corporate Medium-Term Notes 5 years 10% 2%
Commercial Paper 270 days 10% 2%
Money Market Mutual Funds N/A 10% 100%
County Pooled Investment Funds N/A 100% N/A
Local Agency Investment Fund (LAIF) N/A $75 Million N/A
(1) Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.
Investments Authorized by Debt Agreements
Investments of debt proceeds held by the bond trustee are governed by provisions of the debt agreements, rather than the
general provisions of the California Government Code or the District’s Investment Policy.
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.
Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest
rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing investments with shorter
durations than the maximum allowable under the District’s Investment Policy and by timing cash flows from maturities, so
that a portion of the portfolio is maturing or coming close to maturity evenly over time, as necessary, to provide the cash
flow and liquidity needed for operations.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
26
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
2) CASH AND INVESTMENTS - Continued
Disclosures Relating to Interest Rate Risk - Continued
Information about the sensitivity of the fair values of the District’s investments to market interest rate fluctuations are
provided by the following tables that show the distribution of the District’s investments by maturity as of June 30, 2021 and
2020.
June 30, 2021 Remaining Maturity (in Months)
12 Months 13 to 24 25 to 60 More Than
Investment Type Or Less Months Months 60 Months
U.S. Government Sponsored Entities $ 3,666,097 $ 3,666,097 $ - $ - $ -
Local Agency Investment Fund (LAIF) 29,610,369 29,610,369 - - -
San Diego County Pool 56,420,000 56,420,000 - - -
Money Market Funds 78,713 78,713 - - -
Total $ 89,775,179 $ 89,775,179 $ - $ - $ -
June 30, 2020 Remaining Maturity (in Months)
12 Months 13 to 24 25 to 60 More Than
Investment Type Or Less Months Months 60 Months
U.S. Government Sponsored Entities $ 3,740,520 $ - $ 3,740,520 $ - $ -
Local Agency Investment Fund (LAIF) 65,748,989 65,748,989 - - -
San Diego County Pool 5,155,000 5,155,000 - - -
Money Market Funds 83,601 83,601 - - -
Total $ 74,728,110 $ 70,987,590 $ 3,740,520 $ - $ -
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.
This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is
the minimum rating required by (where applicable) the California Government Code or the District’s Investment Policy, or
debt agreements, and the Moody’s ratings as of June 30, 2021 and 2020.
June 30, 2021 Minimum Rating as of Year End
Legal Not
Investment Type Rating AAA AA A-1 Rated
U.S. Government Sponsored Entities $ 3,666,097 N/A $ 3,666,097 $ - $ - $ -
Local Agency Investment Fund (LAIF) 29,610,369 N/A - - - 29,610,369
San Diego County Pool 56,420,000 N/A - - - 56,420,000
Money Market Funds 78,713 N/A - - 78,713 -
Total $ 89,775,179 $ 3,666,097 $ - $ 78,713 $ 86,030,369
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
27
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
2) CASH AND INVESTMENTS - Continued
Disclosures Relating to Credit Risk - Continued
June 30, 2020 Minimum Rating as of Year End
Legal Not
Investment Type Rating AAA AA A-1 Rated
U.S. Government Sponsored Entities $ 3,740,520 N/A $ 3,740,520 $ - $ - $ -
Local Agency Investment Fund (LAIF) 65,748,989 N/A - - - 65,748,989
San Diego County Pool 5,155,000 N/A - - - 5,155,000
Money Market Funds 83,601 N/A - - 83,601 -
Total $ 74,728,110 $ 3,740,520 $ - $ 83,601 $ 70,903,989
Concentration of Credit Risk
The investment policy of the District contains various limitations on the amounts that can be invested in any one type or
group of investments and in any issuer, beyond that stipulated by the California Government Code, Sections 53600 through
53692. All the investments for fiscal years 2021 and 2020 and within the limitations of the District’s investment policy.
The investments listed below disclose the concentration of risk within the District’s investment portfolio. Investments in
any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more
of total District investments as of June 30, 2021 and 2020:
June 30, 2021
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 3,666,097
June 30, 2020
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 3,740,520
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government
will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an
outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g.,
broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities
that are in the possession of another party. The California Government Code and the District’s Investment Policy do not
contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other
than the following provision for deposits: The California Government Code requires that a financial institution secure
deposits made by state or local government units by pledging securities in an undivided collateral pool held by a depository
regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the
collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows
financial institutions to secure deposits by pledging first trust deed mortgage notes having a value of 150% of the secured
public deposits.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
28
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
2)CASH AND INVESTMENTS - Continued
Custodial Credit Risk - Continued
As of June 30, 2021, $2,375,382 and as of June 30, 2020, $2,937,575 of the District’s deposits with financial institutions in
excess of federal depository insurance limits, were held in collateralized accounts.
Local Agency Investment Fund (LAIF)
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California
Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the
District’s investment in this pool is reported in the accompanying financial statements at amounts based upon District’s pro-
rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that
portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded
on an amortized cost-basis.
The LAIF is a special fund of the California State Treasury through which local governments may pool investments. The
District may invest up to $75,000,000 in the fund. Investments in LAIF are highly liquid, as deposits can be converted to
cash within twenty-four hours without loss of interest. Investments with LAIF are secured by the full faith and credit of the
State of California. The annualized yield of LAIF for the quarter ended June 30, 2021 was 0.33%. The estimated amortized
cost and fair value of the LAIF pool at June 30, 2021 was $193,304,977,285 and $193,321,015,759. The District’s share of
the pool at June 30, 2021 was approximately 0.01532%. The annualized yield of LAIF for the quarter ended June 30, 2020
was 1.47%. The estimated amortized cost and fair value of the LAIF pool at June 30, 2020 was $101,110,343,833 and
$101,607,078,218. The District’s share of the pool at June 30, 2020 was approximately 0.05895%.
San Diego County Pooled Fund
The San Diego County Pooled Investment Fund (SDCPIF) is a pooled investment fund program governed by the County of
San Diego Board of Supervisors, and administered by the County of San Diego Treasurer and Tax Collector. Investments
in SDCPIF are highly liquid as deposits and withdrawals can be made at anytime without penalty, determined on an
amortized cash basis, the same as the fair value of the District’s position in the pool.
The County of San Diego’s bank deposits are either federally insured or collateralized in accordance with the California
Government Code. Pool detail is included in the County of San Diego Comprehensive Annual Financial Report (“Annual
Report”). Copies of the Annual Report may be obtained from the County of San Diego Auditor-Controller’s Office – 1600
Pacific Coast Highway, San Diego California 92101.
Restricted Cash and Cash Equivalents
2021 2020
Debt Service:
General Obligation Bond ID No. 27-2009 $ 442,633 $ 437,278
Water Revenue Bond Series 2010A 23,102 24,452
Water Revenue Bond Series 2010B 55,611 59,149
Water Revenue Bond Series 2018 294,872 5,556,718
Total $ 816,218 $ 6,077,597
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
29
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
2)CASH AND INVESTMENTS - Continued
Board Designated Cash and Investments
Cash and investments are Board restricted for the cost of the following District projects:
2021 2020
Cash and Cash Equivalents:
New Water Supply $ 3,092,512 $ 2,598,569
Total $ 3,092,512 $ 2,598,569
Restricted Investments
2021 2020
Debt Service:
Water Revenue Bond Series 2010A $ 1,009,432 $ 1,029,924
Water Revenue Bond Series 2010B 2,656,665 2,710,596
Total $ 3,666,097 $ 3,740,520
3)FAIR VALUE MEASUREMENTS
Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurements and Application,
provides the framework for measuring fair value. The framework provides a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value with Level 1 given the highest priority and Level 3 the lowest
priority. The three levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the organization has
the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly. Level 2 inputs include the following:
a.Quoted prices for similar assets or liabilities in active markets.
b.Quoted prices for identical or similar assets or liabilities in markets that are not active.
c.Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield
curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks,
and default rates).
d.Inputs that are derived principally from or corroborated by observable market data by correlation or other means
(market-corroborated inputs).
Level 3 inputs are unobservable inputs for the asset or liability.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
30
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
3) FAIR VALUE MEASUREMENTS - Continued
Fair value of assets measured on a recurring basis at June 30, 2021 and 2020, are as follows:
June 30, 2021
Significant Other
Observable Inputs
Fair Value (Level 2) Uncategorized
U.S. Government Sponsored Entities $ 3,666,097 $ 3,666,097 $ -
Local Agency Investment Fund (LAIF) 29,610,369 -29,610,369
San Diego County Pool 56,420,000 -56,420,000
Money Market Funds 78,713 78,713 -
Total $ 89,775,179 $ 3,744,810 $ 86,030,369
June 30, 2020
Significant Other
Observable Inputs
Fair Value (Level 2) Uncategorized
U.S. Government Sponsored Entities $ 3,740,520 $ 3,740,520 $ -
Local Agency Investment Fund (LAIF) 65,748,989 -65,748,989
San Diego County Pool 5,155,000 -5,155,000
Money Market Funds 83,601 83,601 -
Total $ 74,728,110 $ 3,824,121 $ 70,903,989
Investments classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is
used to value securities based on the securities’ relationship to benchmark quoted prices. Uncategorized investments do
not fall under the fair value hierarchy as there is no active market for the investments.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
31
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
4) CAPITAL ASSETS
The following is a summary of changes in Capital Assets for the year ended June 30, 2021:
Beginning Ending
Balance Additions Deletions Balance
Capital Assets, Not Depreciated:
Land $ 14,423,773 $ -$-$ 14,423,773
Construction in Progress 24,711,844 9,264,511 (8,190,003) 25,786,352
Total Capital Assets,
Not Depreciated 39,135,617 9,264,511 (8,190,003) 40,210,125
Capital Assets, Being Depreciated:
Infrastructure 672,699,638 10,550,082 (795,764) 682,453,956
Field Equipment 8,398,722 35,777 (327,095) 8,107,404
Buildings 19,462,893 259,707 (140,800) 19,581,800
Transportation Equipment 3,616,452 280,694 (147,045) 3,750,101
Communication Equipment 2,703,459 73,706 - 2,777,165
Office Equipment 16,444,241 182,568 (312,871) 16,313,938
Total Capital Assets,
Being Depreciated 723,325,405 11,382,534 (1,723,575) 732,984,364
Less Accumulated Depreciation:
Infrastructure 270,267,410 15,458,219 (719,310) 285,006,319
Field Equipment 6,398,078 328,855 (327,095) 6,399,838
Buildings 9,440,450 549,332 (34,026) 9,955,756
Transportation Equipment 2,419,841 277,566 (147,045) 2,550,362
Communication Equipment 2,326,786 158,932 - 2,485,718
Office Equipment 15,105,708 440,001 (311,617) 15,234,092
Total Accumulated
Depreciation 305,958,273 17,212,905 (1,539,093) 321,632,085
Total Capital Assets,
Being Depreciated, Net 417,367,132 (5,830,371) (184,482) 411,352,279
Total Capital Assets, Net $ 456,502,749 $ 3,434,140 $ (8,374,485) $ 451,562,404
Depreciation expense for the year ended June 30, 2021 was $17,212,905.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
32
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
4)CAPITAL ASSETS - Continued
The following is a summary of changes in Capital Assets for the year ended June 30, 2020:
Beginning Ending
Balance Additions Deletions Balance
Capital Assets, Not Depreciated:
Land $ 14,403,823 $ 19,950 $ - $ 14,423,773
Construction in Progress 33,149,164 14,637,214 (23,074,534) 24,711,844
Total Capital Assets,
Not Depreciated 47,552,987 14,657,164 (23,074,534) 39,135,617
Capital Assets, Being Depreciated:
Infrastructure 652,066,029 23,561,440 (2,927,831) 672,699,638
Field Equipment 8,572,710 208,646 (382,634) 8,398,722
Buildings 19,242,739 220,154 -19,462,893
Transportation Equipment 3,525,948 504,210 (413,706) 3,616,452
Communication Equipment 3,417,918 64,066 (778,525) 2,703,459
Office Equipment 16,781,571 219,347 (556,677) 16,444,241
Total Capital Assets,
Being Depreciated 703,606,915 24,777,863 (5,059,373) 723,325,405
Less Accumulated Depreciation:
Infrastructure 256,979,110 14,846,658 (1,558,358) 270,267,410
Field Equipment 6,385,742 394,970 (382,634) 6,398,078
Buildings 8,915,004 525,446 - 9,440,450
Transportation Equipment 2,588,003 242,050 (410,212) 2,419,841
Communication Equipment 2,915,093 190,218 (778,525) 2,326,786
Office Equipment 15,067,603 579,625 (541,520) 15,105,708
Total Accumulated
Depreciation 292,850,555 16,778,967 (3,671,249) 305,958,273
Total Capital Assets,
Being Depreciated, Net 410,756,360 7,998,896 (1,388,124) 417,367,132
Total Capital Assets, Net $ 458,309,347 $ 22,656,060 $ (24,462,658) $ 456,502,749
Depreciation expense for the year ended June 30, 2020 was $16,778,967.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
33
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
5)LONG-TERM DEBT
Long-term liabilities for the year ended June 30, 2021 are as follows:
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
General Obligation Bonds:
Improvement District No. 27 – 2009 $ 2,105,000 $ - $ 680,000 $ 1,425,000 $ 705,000
Unamortized Bond Premium 35,435 -16,355 19,080 -
Net General Obligation Bonds 2,140,435 -696,355 1,444,080 705,000
Revenue Bonds:
2010 Water Revenue Bonds Series A 5,890,000 - 1,065,000 4,825,000 1,120,000
2010 Water Revenue Bonds Series B 36,355,000 -- 36,355,000 -
2013 Water Revenue Refunding Bonds 3,160,000 - 745,000 2,415,000 775,000
2016 Water Revenue Refunding Bonds 29,025,000 -1,155,000 27,870,000 1,215,000
2018 Water Revenue Bonds 31,190,000 - 1,310,000 29,880,000 1,370,000
2019 Wastewater Revenue Bonds 3,120,000 -- 3,120,000 65,000
2010 Series A Unamortized Premium 316,207 -74,402 241,805 -
2013 Bonds Unamortized Premium 304,301 - 96,095 208,206 -
2016 Bonds Unamortized Premium 2,886,904 - 178,571 2,708,333 -
2018 Bonds Unamortized Premium 2,528,599 - 109,148 2,419,451 -
2019 Bonds Unamortized Discount (13,449) -(461)(12,988) -
Net Revenue Bonds 114,762,562 -4,732,755 110,029,807 4,545,000
Total Long-Term Liabilities $ 116,902,997 $ - $ 5,429,110 $ 111,473,887 $ 5,250,000
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
34
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
5) LONG-TERM DEBT - Continued
Long-term liabilities for the year ended June 30, 2020 are as follows:
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
General Obligation Bonds:
Improvement District No. 27 – 2009 $ 2,755,000 $ - $ 650,000 $ 2,105,000 $ 680,000
Unamortized Bond Premium 51,789 - 16,354 35,435 -
Net General Obligation Bonds 2,806,789 - 666,354 2,140,435 680,000
Revenue Bonds:
2010 Water Revenue Bonds Series A 6,905,000 - 1,015,000 5,890,000 1,065,000
2010 Water Revenue Bonds Series B 36,355,000 - - 36,355,000 -
2013 Water Revenue Refunding Bonds 3,875,000 - 715,000 3,160,000 745,000
2016 Water Revenue Refunding Bonds 30,125,000 - 1,100,000 29,025,000 1,155,000
2018 Water Revenue Bonds 32,435,000 - 1,245,000 31,190,000 1,310,000
2019 Wastewater Revenue Bonds - 3,120,000 - 3,120,000 -
2010 Series A Unamortized Premium 390,609 - 74,402 316,207 -
2013 Bonds Unamortized Premium 400,396 - 96,095 304,301 -
2016 Bonds Unamortized Premium 3,065,476 - 178,572 2,886,904 -
2018 Bonds Unamortized Premium 2,637,747 - 109,148 2,528,599 -
2019 Bonds Unamortized Discount - (13,680) (231) (13,449) -
Net Revenue Bonds 116,189,228 3,106,320 4,532,986 114,762,562 4,275,000
Total Long-Term Liabilities $ 118,996,017 $ 3,106,320 $ 5,199,340 $ 116,902,997 $ 4,955,000
General Obligation Bonds
In June 1998, the District issued $11,835,000 of General Obligation Refunding Bonds. The proceeds of this issue, together
with other lawfully available monies, were to be used to establish an irrevocable escrow to advance refund and defease in
their entirety the District’s previous outstanding General Obligation Bond issue. In November 2009, the District issued
$7,780,000 of General Obligation Refunding Bonds Improvement District No. 27-2009 to refund the 1998 issue. The
proceeds from the bond issue were $7,989,884, which included an original issue premium of $209,884. An amount of
$7,824,647, which consisted of unpaid principal and accrued interest, was deposited into an escrow fund. Pursuant to an
optional redemption clause in the 1998 bonds, the District was able to redeem the 1998 bonds, without premium at any time
after September 1, 2009. On December 15, 2009 the 1998 bonds were refunded.
These bonds are general obligations of Improvement District No. 27 (ID 27) of the District. The Board of Directors has the
power and is obligated to levy annual ad valorem taxes without limitation, as to rate or amount for payment of the bonds
and the interest upon all property which is within ID 27 and subject to taxation. The General Obligation Bonds are payable
from District-wide tax revenues. The Board may utilize other sources for servicing the bond debt and interest.
The Improvement District No. 27-2009 General Obligation Refunding Bonds have interest rates from 3.00% to 4.00% with
maturities through Fiscal Year 2023.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
35
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
5) LONG-TERM DEBT - Continued
General Obligation Bonds - Continued
Future debt service requirements for the bonds are as follows:
For the Year Ended
June 30, Principal Interest
2022 $ 705,000 $ 42,900
2023 720,000 14,400
$ 1,425,000 $ 57,300
Water Revenue Bonds
In April 2010, Water Revenue Bonds with a face value of $50,195,000 were sold by the Otay Water District Financing
Authority to provide funds for the construction of water storage and transmission facilities. The bond issue consisted of two
series; Water Revenue Bonds, Series 2010A (Non-AMT Tax Exempt) with a face value of $13,840,000 plus a $1,078,824
original issue premium, and Water Revenue Bonds, Series 2010B (Taxable Build America Bonds) with a face value of
$36,355,000. The Series 2010A bonds are due in annual installments of $785,000 to $1,295,000 from September 1, 2012
through September 1, 2025; bearing interest at 2% to 5.25%. The Series 2010B bonds are due in annual installments of
$1,365,000 to $3,505,000 from September 1, 2026 through September 1, 2040; bearing interest at 6.377% to 6.577%.
Interest on both Series is payable on September 1, 2010 and semiannually thereafter on March 1st and September 1st of each
year until maturity or earlier redemption. The installment payments are to be made from taxes and net revenues of the
Water System as described in the installment purchase agreement, on parity with the payments required to be made by the
District for the 2013, 2016 Water Revenue Refunding Bonds and 2018 Water Revenue Bonds described below.
The proceeds of the bonds will be used to fund the project noted above as well as to fund reserve funds of $1,030,688
(Series 2010A) and $2,707,418 (Series 2010B). $542,666 was used to fund various costs of issuance.
The original issue premium is being amortized over the 14-year life of the Series 2010A bonds. Amortization for the year
ending June 30, 2021 was $74,402 and for June 30, 2020 was $74,402. The amortizations are included in interest expense.
The unamortized premium at June 30, 2021 is $241,805 and at June 30, 2020 is $316,207.
The 2010 Water Revenue Bonds contains various covenants and restrictions, principally that the District fix, prescribe,
revise and collect rates, fees and charges for the Water System which will at least be sufficient to yield, during each fiscal
year, taxes and net revenues equal to one hundred twenty-five percent (125%) of the debt service for such fiscal year. The
District was in compliance with these rate covenants for the fiscal years ended June 30, 2021 and 2020.
In June 2013, the 2013 Water Revenue Refunding Bonds were issued to defease the 2004 Refunding Certificates of
Participation. The bonds were issued with a face value of $7,735,000 plus a $984,975 original issue premium. The bonds
are due in annual installments of $660,000 to $835,000 from September 1, 2013 through September 1, 2023; bearing
interest at 1% to 4%. The installment payments are to be made from taxes and net revenues of the Water System, on parity
with the payments required to be made by the District for the 2016 Water Revenue Refunding Bonds, the 2010A, 2010B
and 2018 Water Revenue Bonds described above.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
36
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
5) LONG-TERM DEBT - Continued
Water Revenue Bonds - Continued
The original issue premium is being amortized over the 11 year life of the Series 2013 bonds. Amortization for the year
ending June 30, 2021 was $96,095 and for June 30, 2020 was $96,095. The amortizations are included in interest expense.
The unamortized premium at June 30, 2021 is $208,206 and at June 30, 2020 is $304,301.
In May 2016, Water Revenue Refunding Bonds were issued to defease the 2007 Revenue Certificates of Participation. The
bonds are due in annual installments of $1,200,000 to $2,235,000 from September 1, 2016 through September 1, 2036;
bearing interest of 2% to 5%. The bonds were issued with a face value of $33,385,000 plus $3,630,950 original issue
premium. The savings between the cash flow required to service, the old debt and the cash flow required to service the new
debt is $5,664,140 and represent an economic gain on refunding of $4,538,175.
The original issue premium is being amortized over the 20 year life of the Series 2016 bonds. Amortization for the year
ending June 30, 2021 was $178,572 and for June 30, 2020 was $178,572. The amortizations are included in interest
expense. The unamortized premium at June 30, 2021 is $2,708,333 and at June 30, 2020 is $2,886,904.
In November 2018, Water Revenue Bonds were issued to provide funds for construction of water storage, treatment and
transmission facilities and to refinance the 1996 Certificates of Participation. The bonds are due in annual installments of
$775,000 to $1,915,000 from September 1, 2019 through September 1, 2043; bearing interest of 3% to 5%. The bonds were
issued with a face value of $32,435,000 plus $2,710,512 original issue premium.
The original issue premium is being amortized over the 25 year life of the Series 2018 bonds. Amortization for the year
ending June 30, 2021 was $109,148 and for June 30, 2020 was $109,148. The amortization expense is included in interest
expense. The unamortized premium at June 30, 2021 is $2,419,451 and at June 30, 2020 is $2,528,599.
The total amount outstanding at June 30, 2021 and aggregate maturities of the revenue bonds for the fiscal years subsequent
to June 30, 2021, are as follows:
For the Year
2010 Water Revenue Bond
Series A
2010 Water Revenue Bond
Series B
2013 Water Revenue
Refunding Bonds
Ended June 30, Principal Interest Principal Interest Principal Interest
2022 $ 1,120,000 $ 216,488 $ - $ 2,371,868 $ 775,000 $ 81,100
2023 1,175,000 159,113 - 2,371,868 805,000 49,500
2024 1,235,000 98,862 - 2,371,868 835,000 16,700
2025 1,295,000 33,994 - 2,371,868 - -
2026 - - 1,365,000 2,328,345 - -
2027-2031 - - 8,235,000 10,175,654 - -
2032-2036 - - 11,265,000 7,040,514 - -
2037-2041 - - 15,490,000 2,676,839 - -
$ 4,825,000 $ 508,457 $ 36,355,000 $ 31,708,824 $ 2,415,000 $ 147,300
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
37
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
5)LONG-TERM DEBT - Continued
Water Revenue Bonds - Continued
For the Year
2016 Water Revenue
Refunding Bonds
2018 Water Revenue
Refunding Bonds
Ended June 30, Principal Interest Principal Interest
2022 $ 1,215,000 $ 1,004,206 $ 1,370,000 $ 1,294,038
2023 1,285,000 941,706 1,455,000 1,223,413
2024 1,350,000 875,831 1,650,000 1,145,787
2025 1,420,000 806,581 1,730,000 1,061,288
2026 1,495,000 733,706 1,820,000 972,537
2027-2031 8,570,000 2,582,407 6,355,000 3,774,062
2032-2036 10,300,000 1,041,841 6,750,000 2,392,838
2037-2041 2,235,000 33,525 6,190,000 1,106,456
2042-2044 - - 2,560,000 146,200
$ 27,870,000 $ 8,019,803 $ 29,880,000 $ 13,116,619
Wastewater Revenue Bonds
In December 2019, Wastewater Revenue Bonds were issued to provide funds to pay for certain capital improvements to the
District’s wastewater system. The bonds are due in annual installments of $65,000 to $160,000 from September 1, 2021
through September 1, 2049; bearing interest of 2% to 3.125%. The bonds were issued with a face value of $3,120,000 less
a $13,680 original issue discount.
The original issue discount is being amortized over the 50 year life of the Series 2019 bonds. Amortization for the year
ending June 30, 2021 was $461 and June 30, 2020 was $231. The amortization expense is included in interest expense.
The unamortized discount at June 20,2021 is $12,988 and at June 30, 2020 is $13,449.
The 2019 Wastewater Revenue Bonds contains various covenants and restrictions, principally that the District fix, prescribe,
revise and collect rates, fees and charges for the Wastewater System which will at least be sufficient to yield, during each
fiscal year, net revenues equal to one hundred fifteen percent (115%) of the debt service for such fiscal year. The District
was in compliance with these rate covenants for the fiscal years ended June 30, 2021 and 2020.
Future debt service requirements for the bonds are as follows:
For the Year
2019 Wastewater
Revenue Bonds
Ended June 30, Principal Interest
2022 $ 65,000 $ 90,091
2023 70,000 88,741
2024 75,000 87,291
2025 75,000 85,416
2026 80,000 83,091
2027-2031 430,000 377,957
2032-2036 495,000 313,279
2037-2041 565,000 238,888
2042-2046 655,000 147,422
2047-2050 610,000 38,906
$ 3,120,000 $ 1,551,082
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
38
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
5) LONG-TERM DEBT - Continued
Revenues Pledged
The District has pledged a portion of future water sales revenues to repay its Water Revenue and Water Revenue Refunding
Bonds. Total principal and interest remaining on the water revenue bonds and water revenue refunding bonds is
$154,846,003 payable through fiscal year 2044. For June 30, 2021, principal and interest paid by the water sales revenues
were $4,275,000 and $5,178,974, respectively. For June 30, 2020, principal and interest paid by the water sales revenues
were $4,075,000 and $5,380,424, respectively.
The District has pledged a portion of future wastewater sales revenues to repay its Wastewater Revenue Bonds. Total
principal and interest remaining on the wastewater revenue bonds is $4,671,082 payable through fiscal year 2050. For June
30, 2021, principal and interest paid by the wastewater sales revenues were $0 and $90,741, respectively. For June 30,
2021, principal and interest paid by the wastewater sales revenues were $0 and $90,713, respectively.
6) NET POSITION
Designations of Net Position
In addition to the restricted net position, a portion of unrestricted net position, have been designated by the Board of
Directors for the following purposes as of June 30, 2021 and 2020:
2021 2020
Designated Betterment $ 2,507,060 $ 4,208,271
Replacement Reserve 34,145,548 25,545,931
Designated Expansion 1,293,846 2,262,219
Designated New Supply Fund 5,922 240,764
Employee Benefits Reserve 463,890 386,907
Total $ 38,416,266 $ 32,644,092
7) DEFINED BENEFIT PENSION PLAN
A) General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the District’s Plan, agent multiple-
employer defined benefit pension plans administered by the California Public Employees’ Retirement System
(CalPERS), which acts as a common investment and administrative agent for its participating member employers.
Benefit provisions under the Plans are established by State statute and District resolution. CalPERS issues publicly
available reports that include a full description of the pension plans regarding provisions, assumptions and
membership information that can be found on the CalPERS website.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
39
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
7) DEFINED BENEFIT PENSION PLAN - Continued
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to
plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service,
equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50
with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service.
The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional
Settlement 2W Death Benefit. The cost of living adjustments for the plan are applied as specified by the Public
Employees’ Retirement Law.
The Plans’ provisions and benefits in effect at June 30, 2021 and 2020 are summarized as follows:
Prior to On or After
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 2.7% at 55 2% at 62
Benefit Vesting Schedule 5 years service 5 years service
Benefit Payments Monthly for life Monthly for life
Retirement Age 50 – 55+ 52 – 67+
Monthly Benefits, as a % of Eligible Compensation 2.0% to 2.7% 1.0% to 2.5%
Required Employee Contribution Rates
2021 8.00% 7.00%
2020 8.00% 6.25%
Required Employer Contribution Rates
2021 20.113% 20.113%
2020 40.689% 40.689%
Employees Covered
The following employees were covered by the benefit terms for the Plan:
2021 2020
Inactive Employees or Beneficiaries Currently Receiving Benefits 202 175
Inactive Employees Entitled to But Not Yet Receiving Benefits 128 140
Active Employees 134 134
Total 464 449
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
40
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
7)DEFINED BENEFIT PENSION PLAN - Continued
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates
for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1
following notice of a change in the rate. Funding contributions for the Plan are determined annually on an actuarial
basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the
costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued
liability. The District is required to contribute the difference between the actuarially determined rate and the
contribution rate of employees.
B)Net Pension Liability
The District’s net pension liability for the Plan is measured as the total pension liability, less the pension plan’s
fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2020 and 2019, using the
annual actuarial valuations as of June 30, 2019 and 2018, respectively, rolled forward to June 30, 2020 and 2019,
respectively, using standard update procedures. A summary of principal assumptions and methods used to
determine the net pension liability is shown below:
Actuarial Assumptions
The total pension liabilities in the June 30, 2021 and 2020 actuarial valuations were determined using the following
actuarial assumptions:
2021 2020
Valuation Date June 30, 2019 June 30, 2018
Measurement Date June 30, 2020 June 30, 2019
Actuarial Cost Method Entry-Age Normal Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.15% 7.15%
Inflation 2.5% 2.5%
Salaries Increases Varies(1) Varies(1)
Mortality Rate Table CalPERS Membership Data(2) CalPERS Membership Data(2)
Post Retirement Benefit Increase See Footnote(3) See Footnote(3)
(1)Depending on age, service and type of employment.
(2)The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are
based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pe-retirement and Post-
retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016
published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience
Study and Review of Actuarial Assumptions report form December 2017 that can be found on the CalPERS
website.
(3)The lesser of contract COLA or 2.5% until Purchasing Power Protection Allowance floor on purchasing power
applies, 2.5% thereafter.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
41
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
7) DEFINED BENEFIT PENSION PLAN - Continued
B)Net Pension Liability - Continued
Discount Rate
The discount rate used to measure the total pension liability at June 30, 2020 and 2019 measurement dates was
7.15% for the Plan. The projection of cash flows used to determine the discount rate assumed that contributions
from plan members will be made at the current member contribution rates and that contributions from employers
will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary
net position was projected to be available to make all projected future benefit payments of current plan members.
Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit
payments to determine the total pension liability.
Long-term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-block method in
which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment
expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term
market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’
asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the
long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and
long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by
calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as
the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the
single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The following table reflects the long-term expected real rate of return by asset class.
Asset Class(a)
Assumed
Asset Allocation
Real Return
Years 1 - 10(b)
Real Return
Years 11+(c)
2020 2019 2020 2019 2020 2019
Global Equity 50.0% 50.0% 4.80% 4.80% 5.98% 5.98%
Fixed Income 28.0% 28.0% 1.00% 1.00% 2.62% 2.62%
Inflation Assets/Sensitive - - 0.77% 0.77% 1.81% 1.81%
Private Equity 8.0% 8.0% 6.30% 6.30% 7.23% 7.23%
Real Assets 13.0% 13.0% 3.75% 3.75% 4.93% 4.93%
Liquidity 1.0% 1.0% - - -0.92% -0.92%
Total 100% 100%
(a) In the System’s Comprehensive Annual Financial Report, Fixed Income in included in Global Debt Securities;
Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities
and Global Debt Securities.
(b)An expected inflation of 2.00% used for this period.
(c)An expected inflation of 2.92% used for this period.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
42
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
7)DEFINED BENEFIT PENSION PLAN - Continued
C) Changes in the Net Pension Liability
The changes in the Net Pension Liability for the Plan for June 30, 2021:
Increase (Decrease)
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
Beginning Balance $ 142,409,387 $ 125,792,532 $ 16,616,855
Changes in the Year:
Service Cost 2,623,208 -2,623,208
Interest on the Total Pension Liability 10,043,778 -10,043,778
Changes in Benefit Terms - - -
Changes in Assumptions - - -
Differences Between Expected and Actual
Experience 260,337 -260,337
Net Plan to Plan Resource Movement - - -
Contributions - Employer -2,437,119 (2,437,119)
Contributions - Employees -1,055,769 (1,055,769)
Net Investment Income -6,185,108 (6,185,108)
Benefit Payments, Including Refunds of
Employee Contributions (7,017,816) (7,017,816)-
Administrative Expense -(177,337)177,337
Other Miscellaneous Income/(Expense) ---
Net Changes 5,909,507 2,482,843 3,426,664
Ending Balance $ 148,318,894 $ 128,275,375 $ 20,043,519
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
43
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
7) DEFINED BENEFIT PENSION PLAN - Continued
C) Changes in the Net Pension Liability - Continued
The changes in the Net Pension Liability for the Plan for June 30, 2020:
Increase (Decrease)
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
Beginning Balance $ 135,659,308 $ 87,270,402 $ 48,388,906
Changes in the Year:
Service Cost 2,586,911 - 2,586,911
Interest on the Total Pension Liability 9,638,674 - 9,638,674
Changes in Benefit Terms - - -
Changes in Assumptions - - -
Differences Between Expected and Actual
Experience
1,183,213
-
1,183,213
Net Plan to Plan Resource Movement - - -
Contributions - Employer - 36,706,983 (36,706,983)
Contributions - Employees - 1,019,255 (1,019,255)
Net Investment Income - 7,516,686 (7,516,686)
Benefit Payments, Including Refunds of
Employee Contributions
(6,658,719)
(6,658,719)
-
Administrative Expense - (62,278) 62,278
Other Miscellaneous Income/(Expense) - 203 (203)
Net Changes 6,750,079 38,522,130 (31,772,051)
Ending Balance $ 142,409,387 $ 125,792,532 $ 16,616,855
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the District for the Plan, calculated using the discount rate for the
Plan, as well as what the District’s net pension liability would be if it were calculated using a discount rate that is 1-
percentage point lower or 1-percentage point higher than the current rate:
2021 2020
1% Decrease 6.15% 6.15%
Net Pension Liability $ 38,999,382 $ 35,122,134
Current Discount Rate 7.15% 7.15%
Net Pension Liability $ 20,043,519 $ 16,616,855
1% Increase 8.15% 8.15%
Net Pension Liability $ 4,253,474 $ 1,228,256
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
44
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
7) DEFINED BENEFIT PENSION PLAN - Continued
C) Changes in the Net Pension Liability - Continued
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS
financial reports.
D) Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the years ended June 30, 2021 and 2020, the District recognized pension expense of $3,962,800 and $6,567,636.
At June 30, 2021 and 2020, the District reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following services:
Deferred Outflows
of Resources
Deferred Inflows of
Resources
2021 2020 2021 2020
Pension contributions subsequent to measurement date $ 3,965,952 $ 2,465,751 $ - $ -
Differences between actual and expected experience 501,977 892,614 - -
Changes in assumptions - - - (375,038)
Net difference between projected and actual earnings
on pension plan investments
953,594
-
-
(991,620)
Total $ 5,421,523 $ 3,358,365 $ - $ (1,366,658)
For fiscal year 2020, $2,465,751 reported as deferred outflows of resources related to contributions subsequent to
the measurement date was recognized as a reduction of the net pension liability during the year ended June 30, 2021.
For fiscal year 2021, $3,965,952 reported as deferred outflows of resources related to contributions subsequent to
the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2022.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will
be recognized as pension expense as follows:
Deferred
Year Ended Outflow/(Inflows)
June 30 of Resources
2022 $ 104,548
2023 323,029
2024 495,413
2025 532,581
2026 -
Thereafter -
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
45
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
7)DEFINED BENEFIT PENSION PLAN - Continued
E)Payable to the Pension Plan
At June 30, 2021 and 2020, the District reported a payable of $91,450 and $72,881, respectively, for the outstanding
amount of contributions to the pension plan required for the years ended June 30, 2021 and 2020. These payables
are reflected in the accrued payroll liabilities on the Statements of Net Position.
8)OTHER POST EMPLOYMENT BENEFITS (OPEB)
Plan Description
The District’s defined benefit postemployment healthcare plan, (DPHP), provides medical benefits to eligible retired
District employees and beneficiaries. DPHP is part of the Public Agency portion of the California Employers’ Retiree
Benefit Trust Fund (CERBT), an agent multiple-employer plan administered by California Public Employees’
Retirement System (CalPERS), which acts as a common investment and administrative agent for participating public
employers within the State of California. CalPERS issues a separate Comprehensive Annual Financial Report. Copies of
the CalPERS’ annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento,
California 95814.
Prior to the plan agreements signed in 2011, the eligibility in the plan was broken into 3 tiers, employees hired before
January 1, 1981, employees hired on or after January 1, 1981 but before July 1, 1993 and employees hired on or after
July 1, 1993. Board members elected before January 1, 1995 are also eligible for the plan. Eligibility also includes age
and years of service requirements which vary by tier. Benefits include up to 100% medical and/or dental premiums for
life for the retiree for Tier I, II or III employees, and up to 100% spouse premium until death of retiree or age 65
whichever is greater and dependent premium up to age 19 depending on the tier.
Subsequent to the agreements in 2011 and 2012 all employees are eligible for the plan after 20 years of consecutive
service and unrepresented employees hired before January 1, 2013 are eligible after 15 years. Survivor benefits are
covered beyond Medicare.
Employees Covered
As of June 30, 2020 and 2019 actuarial valuations, the following current and former employees were covered by the
benefit terms under the Plan:
2020 2019
Active employees 1 3 3 1 3 3
Inactive employees or beneficiaries currently receiving benefits 76 76
Inactive employees entitled to, but not yet receiving benefits - -
Total 209 209
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
46
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
8)OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
Contributions
The annual contribution is based on the actuarially determined contribution. For the fiscal years ended June 30, 2021
and 2020, the District’s cash contributions were $807,867 and $1,011,358, respectively, in payments to the trust.
Net OPEB Liability
The District’s net OPEB liability was measured as of June 30, 2020 and 2019 and the total OPEB liability used to
calculate the net OPEB liability was determined by actuarial valuations dated June 30, 2020 and 2019 based on the
following actuarial methods and assumptions:
Actuarial Assumptions
Discount Rate 7.00%
Inflation 2.75%
Salary Increases 2.75% plus merit
Investment Rate of Return 7.00%
Mortality Rate(1) Derived using CalPERS Membership Data for all funds
Pre-Retirement Turnover(2) Derived using CalPERS Membership Data for all funds
Healthcare Trend Rate 6.00% PPO decreasing to 5.00% PPO
Notes:
(1) Pre-retirement mortality information was derived from data collected during 1997 to 2011 CalPERS Experience Study
dated January 2014 and post-retirement mortality information was derived from the 2007 to 2011 CalPERS Experience
Study. The Experience Study Reports may be access on the CalPERS website www.calpers.ca.gov under Forms and
Publications.
(2) The pre-retirement turnover information was developed based on CalPERS specific data. For more details, please refer to
the 2007 to 2011 Experience Study Report. The Experience Study Report may be accessed on the CalPERS website
www.calpers.ca.gov under Forms and Publications.
The long-term expected rate of return on OPEB plan investments was determined using a building block method in which
best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and
inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of
return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected
inflation. Best estimates of arithmetic real rates of return for each major asset class included in the OPEB plan’s target asset
are summarized in the following table for the June 30, 2020 and 2019 actuarial valuations:
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
47
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
Long-term
Target Expected Real
Asset Class Allocation Rate of Return
2020 2019 2020 2019
Global Equity 59.0% 59.0% 5.5% 5.5%
Global Fixed Income 25.0% 25.0% 2.35% 2.35%
TIPS 5.0% 5.0% 1.50% 1.50%
Commodities 3.0% 3.0% 1.75% 1.75%
REITs 8.0% 8.0% 3.65% 3.65%
Total 100% 100%
Discount Rate
The discount rate used to measure the total OPEB liability was 7.00% for the June 30, 2020 and 2019 actuarial valuations.
The projection of cash flows used to determine the discount rate assumed that District contributions will be made at rates
equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position
was projected to be available to make all projected OPEB payments for current active and inactive employees and
beneficiaries. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of
projects benefit payments to determine the total OPEB liability.
Changes in the OPEB Liability (Asset)
The changes in the net OPEB liability (asset) for the Plan are as follows:
June 30, 2021 Increase (Decrease)
Total OPEB
Liability
(a)
Plan Fiduciary
Net Position
(b)
Net OPEB
Liability/(Asset)
(c) = (a) - (b)
Balance at June 30, 2020
(Valuation Date June 30, 2019) $ 27,177,329 $ 27,197,350 $ (20,021)
Changes Recognized for the Measurement Period:
Service Cost 735,529 - 735,529
Interest 1,915,358 - 1,915,358
Differences between expected and actual
experience
1,151,927
-
1,151,927
Changes of Assumptions - - -
Contributions - Employer - 1,011,358 (1,011,358)
Net Investment Income - 983,790 (983,790)
Benefit Payments (1,120,146) (1,120,146) -
Administrative Expenses - (13,514) 13,514
Other Expenses - - -
Net Changes 2,682,668 861,488 1,821,180
Balance at June 30, 2021
(Measurement Date June 30, 2020)
$ 29,859,997
$ 28,058,838
$ 1,801,159
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
48
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
Changes in the OPEB Liability (Asset) - Continued
June 30, 2020 Increase (Decrease)
Total OPEB
Liability
(a)
Plan Fiduciary
Net Position
(b)
Net OPEB
Liability/(Asset)
(c) = (a) - (b)
Balance at June 30, 2019
(Valuation Date June 30, 2018) $ 27,964,563 $ 24,549,538 $ 3,415,025
Changes Recognized for the Measurement Period:
Service Cost 757,725 - 757,725
Interest 1,970,613 - 1,970,613
Differences between expected and actual
experience
(2,029,118)
-
(2,029,118)
Changes of Assumptions (345,110) - (345,110)
Contributions - Employer - 2,206,363 (2,206,363)
Net Investment Income - 1,595,092 (1,595,092)
Benefit Payments (1,141,344) (1,141,344) -
Administrative Expenses - (12,299) 12,299
Other Expenses - - -
Net Changes (787,234) 2,647,812 (3,435,046)
Balance at June 30, 2020
(Measurement Date June 30, 2019)
$ 27,177,329
$ 27,197,350
$ (20,021)
Sensitivity of the Net OPEB Liability (Asset) to Changes in the Discount Rate
The following presents the net OPEB liability (asset) of the District if it were calculated using a discount rate that is one
percentage point lower or one percentage point higher than the current rate, for the measurement periods ended June 30,
2020 and 2019:
1% Decrease
Current
Discount Rate
1% Increase
2021 Net OPEB Liability (Asset) $ 6,374,570 $ 1,801,159 $ (1,912,135)
(2020 Measurement Period)
2020 Net OPEB Liability (Asset) $ 4,124,269 $ (20,021) $ (3,385,633)
(2019 Measurement Period)
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
49
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
8)OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates
The following presents the net OPEB liability of the District if it were calculated using health care cost trend rates that
are one percentage point lower or one percentage point higher than the current rate, for measurement periods ended June
30, 2020 and 2019:
1% Decrease
(5.00% HMO/5.00% PPO
Decreasing to
4.00% HMO/4.00% PPO)
Current Healthcare Cost
Trend Rates
(6.00% HMO/6.0% PPO
Decreasing to
5.00% HMO/5.00% PPO)
1% Increase
(7.00% HMO/7.00% PPO
Decreasing to
6.00% HMO/6.00% PPO)
2021 Net OPEB Liability (Asset) $ (2,525,323) $ 1,801,159 $ 7,256,118
(2020 Measurement Period)
2020 Net OPEB Liability (Asset) $ (3,730,121) $ (20,021) $ 4,639,466
(2019 Measurement Period)
OPEB Plan Fiduciary Net Position
CERBT issues a publicly available financial report that may be obtained from the California Public Employees
Retirement System Executive Office, 400 P Street, Sacramento, California 95814.
Recognition of Deferred Outflows and Deferred Inflows of Resources
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense
systematically over time.
Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are
categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future
OPEB expense.
The recognition period differs depending on the source of the gain or loss:
Net difference between projected and actual
earnings on OPEB plan investments 5 years
All other amounts Expected average remaining service lifetime (EARSL)
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
50
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the fiscal years ended June 30, 2021 and 2020, the District recognized OPEB expense of $(660,336) and $(692,893),
respectively. As of fiscal years ended June 30, 2021 and 2020, the District reported deferred outflows of resources
related to OPEB from the following sources:
Deferred Outflows
of Resources
Deferred Inflows of
Resources
2021 2020 2021 2020
OPEB contributions subsequent to measurement date $ 807,867 $ 1,011,358 $ - $ -
Differences between expected and actual experience 1,007,936 - (1,217,470) (1,623,294)
Changes in assumptions - - (207,066) (276,088)
Net difference between projected and actual earnings
on OPEB plan investments
623,829
128,177
-
(374,867)
Total $ 2,439,632 $ 1,139,535 $ (1,424,536) $ (2,274,249)
The $807,867 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2021
measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30,
2022. Other amounts reported as deferred outflows of resources related to OPEB will be recognized as expense as
follows:
Deferred
Year Ended Outflow/(Inflows)
June 30, of Resources
2022 (285,559)
2023 (150,694)
2024 (115,645)
2025 327,155
2026 143,991
Thereafter 287,981
9) COMMITMENTS AND CONTINGENCIES
Construction Commitments
The District had committed to capital projects under construction with an estimated cost to complete of $2,912,364 and
$2,706,350 at June 30, 2021 and 2020, respectively.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
51
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
9)COMMITMENTS AND CONTINGENCIES - Continued
Litigation
Certain claims, suits and complaints arising in the ordinary course of operation have been filed or are pending against the
District. In the opinion of the staff and counsel, most of those matters are adequately covered by insurance, or if not so
covered, are without merit or are of such kind, or involved such amounts, as would not have significant effect on the
financial position or results of operations of the District if disposed of unfavorably. There is one potential case, see below,
that could have a significant effect on the District’s financial position.
The District is involved in a class action lawsuit regarding its single-family residential tiered water rates between July 2014
and current which were based on industry standard cost-of-service studies. Although the District believes no significant
damages are involved, there is an uncertainty, due to recent cases, on the likelihood of a favorable decision to the District.
The amount of potential loss is currently unavailable due to the complex nature of the case and the uncertainty of the
outcome.
Refundable Terminal Storage Fees
The District has entered into an agreement with several developers whereby the developers prepaid the terminal storage fee
in order to provide the District with the funds necessary to build additional storage capacity. The agreement further allows
the developers to relinquish all or a portion of such water storage capacity. If the District grants to another property owner
the relinquished storage capacity, the District shall refund to the applicable developer $746 per equivalent dwelling unit
(EDU). There were 17,867 EDUs that were subject to this agreement. At June 30, 2021, 1,750 EDUs had been
relinquished and refunded, 15,091 EDUs had been connected, and 1,026 EDUs have neither been relinquished nor
connected. At June 30, 2020, 1,750 EDUs had been relinquished and refunded, 15,088 EDUs had been connected, and
1,029 EDUs have neither been relinquished nor connected.
Developer Agreements
The District has entered into various Developer Agreements with developers towards the expansion of District facilities.
The developers agree to make certain improvements and after the completion of the projects the District agrees to reimburse
such improvements with a maximum reimbursement amount for each developer. Contractually, the District does not incur
a liability for the work until the work is accepted by the District. As of June 30, 2021 and 2020, none of the outstanding
developer agreements had been accepted.
COVID-19 Pandemic
On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global
pandemic and recommended containment and mitigation measures worldwide. The pandemic continued subsequent to
year end with certain restrictions required by the Governor of California, as well as local governments, which may affect
revenue sources and also caused subsequent stock market volatility. The duration of the pandemic and the future impact
of COVID-19 on the District’s operational and financial performance is uncertain at this time.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
52
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
10)RISK MANAGEMENT
General Liability and Property
The District is exposed to various risks of loss related to torts, theft, damage and destruction of assets, errors and omissions,
and natural disasters. Beginning in July 2020, the District began participation as a member in an insurance pool through the
Association of California Water Agencies Joint Powers Insurance Authority (ACWA JPIA). ACWA JPIA is a not-for-
profit public agency formed under California Government Code Sections 6500 et. Seq. ACWA JPIA is governed by a
board composed of members from participating agencies. The District pays an annual premium for commercial insurance
covering general liability, excess liability, property, automobile, public employee dishonesty, and various other claims.
Separate financial statements of ACWA JPIA may be obtained at ACWA JPIA 2100 Professional Drive, Roseville, CA
95661-3700.
General and Auto Liability, Public Officials’ Errors and Omissions and Employment Practices Liability: Total limits of $5
million combined single limit at $5 million per occurrence, with excess aggregate coverage at $50 million subject to the
following deductibles:
$50,000 per occurrence for third party general liability property damage;
$50,000 per occurrence for third party auto liability property damage;
Employee Dishonesty Coverage: Total of $1,000,000 per loss includes Public Employee Dishonesty, Forgery or Alteration
and Theft and Faithful Performance of Duty effective July 1, 2020.
Property Loss: Replacement cost, for property on file, paid on an actual cash value basis, to a combined total of $500
million per occurrence, subject to a $1,000 deductible per occurrence, effective July 1, 2020.
Boiler and Machinery: Replacement cost up to $100 million per occurrence, subject to a $1,000 deductible, effective July
1, 2020.
Comprehensive and Collision: Deductibles of $1,000, as elected; ACV limits; fully self-funded by ACWA, effective July 1,
2020.
Workers’ Compensation Coverage and Employer’s Liability: Statutory limits per occurrence for Workers’ Compensation
and $2.0 million for Employer’s Liability Coverage, subject to the terms, conditions and exclusions as provided in the
Memorandum of Coverage, effective July 1, 2020.
Cyber Coverage: $5,000,000 Annual Aggregate Limit of Liability for each Insured/Member for Information Security &
Privacy Liability. Policy includes $50,000 deductible per claim.
11) SEGMENT INFORMATION
The District has issued Water and Wastewater Revenue Bonds in the current and previous fiscal years to finance certain
capital improvements. While water and wastewater services are accounted for jointly in these financial statements, the
investors in the Water Revenue Bonds rely solely on the revenues of the water services for repayment and the
Wastewater Revenue Bonds solely on the revenues of the wastewater services for repayment.
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
53
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
11) SEGMENT INFORMATION - Continued
Summary financial information for the water and wastewater services is presented for June 30, 2021 and 2020:
Condensed Statements of Net Position
June 30, 2021 and 2020
Water Services Wastewater Services
2021 2020 2021 2020
ASSETS
Cash and Investments $ 87,912,162 $ 73,048,806 $ 4,480,939 $ 4,457,368
Accounts Receivable, Net 14,646,890 13,244,367 194,047 175,737
Other Current Assets 3,914,774 3,365,177 68,548 96,132
Net OPEB Asset -19,191 -830
Capital Assets 422,067,977 426,126,556 29,494,427 30,376,193
Total Assets 528,541,803 515,804,097 34,237,961 35,106,260
DEFERRED OUTFLOWS OF RESOURCES
Deferred Actuarial Pension Costs 5,310,729 3,306,371 110,794 51,994
Deferred Actuarial OPEB Costs 2,357,742 1,094,697 81,890 44,838
Total Deferred Outflows of Resources 7,668,471 4,401,068 192,684 96,832
LIABILITIES
Accounts Payable 14,666,147 16,040,522 69,579 183,595
Other Miscellaneous Liabilities 5,163,174 4,970,208 732,692 485,818
Other Current Liabilities 11,376,893 10,474,774 95,247 30,247
General Obligation Bonds 739,080 1,460,435 - -
Revenue Bonds 102,442,795 107,381,011 3,042,012 3,106,551
Net Pension Liability 19,518,744 16,194,242 524,775 422,613
Net OPEB Liability 1,750,085 -51,074 -
Other Non-current Liabilities 3,793,011 3,550,571 - -
Total Liabilities 159,449,929 160,071,763 4,515,379 4,228,824
DEFERRED INFLOWS OF RESOURCES
Deferred Actuarial Pension Costs -1,323,207 -43,451
Deferred Actuarial OPEB Costs 1,365,120 2,190,616 59,416 83,633
Total Deferred Inflows of Resources 1,365,120 3,513,823 59,416 127,084
NET POSITION
Net Investment in Capital Assets 313,995,974 317,886,828 26,387,415 27,269,642
Restricted for Debt Service 4,187,443 4,261,399 - -
Unrestricted 57,211,808 34,471,352 3,468,435 3,577,542
Total Net Position $ 375,395,225 $ 356,619,579 $ 29,855,850 $ 30,847,184
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
54
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
11) SEGMENT INFORMATION - Continued
Condensed Statements of Revenues, Expenses and Changes in Net Position
For the Years Ended June 30, 2021 and 2020
Water Services Wastewater Services
2021 2020 2021 2020
Operating Revenues
Water Sales $ 101,742,970 $ 90,435,148 $ - $ -
Wastewater Revenue - - 2,899,180 2,921,310
Connection and Other Fees 2,495,491 2,570,891 2,827 11,460
Total Operating Revenues 104,238,461 93,006,039 2,902,007 2,932,770
Operating Expenses
Cost of Water Sales 66,889,570 62,573,257 - -
Wastewater - - 2,633,413 2,439,117
Administrative and General 21,948,435 25,196,555 - -
Depreciation 16,076,720 15,886,575 1,136,185 892,392
Total Operating Expenses 104,914,725 103,656,387 3,769,598 3,331,509
Operating Income (Loss) (676,264) (10,650,348) (867,591) (398,739)
Non-operating Revenues (Expenses)
Investment Earnings 246,906 1,734,364 7,762 50,470
Taxes and Assessments 5,249,898 4,939,950 1,642 -
Availability Charges 634,887 645,996 51,810 48,772
Gain (Loss) on Sale of Capital Assets (159,734) (1,243,742) - -
Rents and Leases 1,587,687 1,501,328 - -
Miscellaneous Revenues 5,057,827 1,750,411 4,952 185,751
Donations (84,389) (121,600) - -
Interest Expense (4,695,529) (4,903,602) (86,961) (50,385)
Miscellaneous Expenses (197,587) (453,971) (43,792) (104,434)
Total Non-operating Revenues (Expenses) 7,639,966 3,849,134 (64,587) 130,174
Income (Loss) Before Capital Contributions
and Transfers
6,963,702
(6,801,214)
(932,178)
(268,565)
Capital Contributions 11,644,043 6,825,909 108,745 116,023
Transfers In (Out) 167,901 193,829 (167,901) (193,829)
Change in Net Position 18,775,646 218,524 (991,334) (346,371)
Total Net Position, Beginning 356,619,579 356,401,055 30,847,184 31,193,555
Total Net Position, Ending $ 375,395,225 $ 356,619,579 $ 29,855,850 $ 30,847,184
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
55
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2021 and 2020
11) SEGMENT INFORMATION - Continued
Condensed Statements of Cash Flows
For the Years Ended June 30, 2021 and 2020
Water Services Wastewater Services
2021 2020 2021 2020
Net Cash Provided/(Used) by:
Operating Activities $ 19,202,814 $ 10,725,595 $ 362,894 $ 586,205
Non-capital and Related Financing Activities 5,286,158 5,035,871 (116,091) (145,056)
Capital and Related Financing Activities (9,989,088) (17,036,778) (230,994) 1,386,775
Investing Activities 437,895 17,445,293 7,762 2,629,444
Net Increase (Decrease) in
Cash and Cash Equivalents 14,937,779 16,169,981 23,571 4,457,368
Cash and Cash Equivalents, Beginning 69,308,286 53,138,305 4,457,368 -
Cash and Cash Equivalents, Ending $ 84,246,065 $ 69,308,286 $ 4,480,939 $ 4,457,368
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
CREQUIRED SUPPLEMENTARY INFORMATION
YEARS ENDED JUNE 30, 2021 and 2020
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
56
Schedule of Changes in the Net OPEB Liability and Related Ratios for
Measurement Periods Ended June 30,
Measurement Period 2020 2019 2018 2017
Total OPEB Liability
Service Cost $ 735,529 $ 757,725 $ 735,655 $ 687,528
Interest on the Total OPEB Liability 1,915,358 1,970,613 1,864,967 1,764,343
Actual and Expected Experience Difference 1,151,927 (2,029,118) - -
Changes in Assumptions -(345,110)- -
Changes in Benefit Terms -- - -
Benefit Payments (1,120,146) (1,141,344) (1,085,586) (1,039,420)
Net Change in Total OPEB Liability 2,682,668 (787,234) 1,515,036 1,412,451
Total OPEB Liability - Beginning 27,177,329 27,964,563 26,449,527 25,037,076
Total OPEB Liability - Ending (a) $ 29,859,997 $ 27,177,329 $ 27,964,563 $ 26,449,527
Plan Fiduciary Net Position
Contributions - Employer $ 1,011,358 $ 2,206,363 $ 2,202,004 $ 2,284,420
Net Investment Income 983,790 1,595,092 1,734,626 2,011,985
Benefit Payments (1,120,146) (1,141,344) (1,085,586) (1,039,420)
Administrative Expenses (13,514) (12,299) (11,784) (10,167)
Other Expenses - - (28,757) -
Net Change in Plan Fiduciary Net Position 861,488 2,647,812 2,810,503 3,246,818
Plan Fiduciary Net Position - Beginning 27,197,350 24,549,538 21,739,035 18,492,217
Plan Fiduciary Net Position - Ending (b) $ 28,058,838 $ 27,197,350 $ 24,549,538 $ 21,739,035
Net OPEB Liability/(Asset) - Ending (a)-(b) $ 1,801,159 $ (20,021) $ 3,415,025 $ 4,710,492
Plan Fiduciary Net Position as a Percentage of the
Total OPEB Liability 94.0% 100.1% 87.8% 82.2%
Covered-Employee Payroll $ 13,538,959 $ 13,176,602 $ 12,677,000 $ 12,513,000
Net OPEB Liability/(Asset) as a Percentage of
Covered- Employee Payroll 13.3% -0.2%26.9% 37.6%
Notes to Schedule:
Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information
will be displayed up to 10 years as information becomes available. Contributions are determined by an actuarial valuation based
on eligible participants’ estimated medical and dental benefits.
REQUIRED SUPPLEMENTARY INFORMATION
YEARS ENDED JUNE 30, 2021 and 2020
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PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
57
Schedule of Contributions
Last Ten Fiscal Years’
Actuarially Contributions as a
Determined Contributions in Percentage of
Fiscal Contribution Relation to the Contribution Covered-Employee Covered-Employee
Year (ADC) ADC Deficiency (Excess) Payroll Payroll
2018 $ 1,116,418 $ (2,202,004) $ (1,085,586) $ 12,677,000 17.37%
2019 $ 1,149,911 $ (2,206,363) $ (1,056,452) $ 13,176,602 16.74%
2020 $ 1,011,358 $ (1,011,358) $ -$ 13,538,959 7.47%
2021 $ 807,867 $ (807,867) $ - $13,917,932 5.80%
Notes to Schedule:
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2021 were from the
June 30, 2020 actuarial valuation. Also note, that some of the data from prior years were updated with the most current available
information.
Methods and assumptions used to determine contributions:
Actuarial Cost Method Entry Age Normal
Amortization Method/Period Level percent of payroll over a closed rolling 15-year period
Asset Valuation Method Market value
Inflation 2.75%
Payroll Growth 2.75% plus merit
Investment Rate of Return 7.00% per annum
Healthcare Cost-trend Rates 6.00% HMO/6.00% PPO decreasing to 5.00% HMO/5.00% PPO
Retirement Age Tier 1 employees - 2.7% at 55 and Tier 2 employees - 2.0% at 62.
The probabilities of Retirement are based on the 2014 CalPERS Experience
Study for the period from 1997 to 2011.
Mortality Pre-retirement mortality and post-retirement mortality probability based on
CalPERS Experience Study with mortality improvements using Mortality
Improvement Scale MP2018.
Historical information is required only for measurement periods for which GASB 75 is applicable.
Future years’ information will be displayed up to 10 years as information becomes available.
Contributions are determined by an actuarial valuation based on eligible participants’ medical and dental benefits.
REQUIRED SUPPLEMENTARY INFORMATION
YEARS ENDED JUNE 30, 2021 and 2020
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
58
Schedule of Changes in the Net Pension Liability and Related Ratios
Last 10 Years1
Measurement Period2 2019-2020 2018-2019 2017-2018 2016-2017
TOTAL PENSION LIABILITY
Service Cost $ 2,623,208 $ 2,586,911 $ 2,528,271 $ 2,556,902
Interest 10,043,778 9,638,674 9,168,092 8,836,284
Changes of Benefit Terms - - - -
Changes of Assumptions - - (1,312,634) 7,308,486
Difference Between Expected and Actual
Experience 260,337 1,183,213 461,917 (1,208,593)
Benefit Payments, Including Refunds of
Employee Contributions (7,017,816) (6,658,719) (5,995,949) (5,779,040)
Net Change in Total Pension Liability 5,909,507 6,750,079 4,849,697 11,714,039
Total Pension Liability - Beginning 142,409,387 135,659,308 130,809,611 119,095,572
Total Pension Liability - Ending (a) $ 148,318,894 $ 142,409,387 $ 135,659,308 $ 130,809,611
PLAN FIDUCIARY NET POSITION
Net Plan to Plan Resource Movement $ -$- $ (203) $-
Contributions - Employer 2,437,119 36,706,983 4,441,517 4,105,810
Contributions - Employee 1,055,769 1,019,255 1,015,008 1,014,329
Net Investment Income 6,185,108 7,516,686 6,949,676 8,149,097
Benefit Payments, Including Refunds of
Employee Contributions (7,017,816) (6,658,719) (5,995,949) (5,779,040)
Administrative Expense (177,337) (62,278) (126,575) (109,029)
Other Changes in Fiduciary Net Position -203 (240,367) -
Net Change in Fiduciary Net Position 2,482,843 38,522,130 6,043,107 7,381,167
Plan Fiduciary Net Position - Beginning 125,792,532 87,270,402 81,227,295 73,846,128
Plan Fiduciary Net Position - Ending (b) $ 128,275,375 $ 125,792,532 $ 87,270,402 $ 81,227,295
Plan Net Pension Liability/(Asset) -
Ending (a) - (b) $ 20,043,519 $ 16,616,855 $ 48,388,906 $ 49,582,316
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 86.49% 88.33% 64.33% 62.10%
Covered Payroll $ 13,383,715 $ 12,892,655 $ 12,969,485 $ 12,829,415
Plan Net Pension Liability/(Asset) as a
Percentage of Covered Payroll 149,76% 128.89% 373.10% 386.47%
Continued
1 Measurement period 2019-20 (fiscal year 2020-2021) was the seventh year of implementation; therefore, only seven years are shown.
2 Historical information is required only for measurement periods for which GASB 68 is applicable
Notes to Schedule:
Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which
occurred after June 30, 2016. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service
Credit (a.k.a. Golden Handshakes).
Changes of Assumptions: For the 2021, 2020, 2019 and 2017 fiscal years, there were no changes. For the 2018 fiscal year, the
accounting discount rate reduced from 7.65% to 7.15%. For the 2016 fiscal year, amounts reported reflect an adjustment the
discount rate of 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). In
2014, amounts reported were based on the 7.5% discount rate.
REQUIRED SUPPLEMENTARY INFORMATION
YEARS ENDED JUNE 30, 2021 and 2020
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
59
N
Schedule of Changes in the Net Pension Liability and Related Ratios - Continued
Last 10 Years1
DED JUNE 30, 2020 and 2019
Measurement Period2 2015-2016 2014-2015 2013-2014
TOTAL PENSION LIABILITY
Service Cost $ 2,298,617 $ 2,250,860 $ 2,330,709
Interest 8,575,275 8,229,312 7,907,915
Changes of Benefit Terms - - -
Changes of Assumptions -(1,996,819)-
Difference Between Expected and Actual
Experience (613,440) (981,200)-
Benefit Payments, Including Refunds of
Employee Contributions (5,448,218) (5,288,251) (4,885,406)
Net Change in Total Pension Liability 4,812,234 2,213,902 5,353,218
Total Pension Liability - Beginning 114,283,338 112,069,436 106,716,218
Total Pension Liability - Ending (a) $ 119,095,572 $ 114,283,338 $ 112,069,436
PLAN FIDUCIARY NET POSITION
Net Plan to Plan Resource Movement $ - $- $-
Contributions - Employer 3,819,770 3,557,098 3,137,174
Contributions - Employee 1,010,337 1,007,023 1,074,954
Net Investment Income 369,214 1,601,760 10,874,999
Benefit Payments, Including Refunds of
Employee Contributions (5,448,218) (5,288,251) (4,885,406)
Administrative Expense (45,185) (83,511) -
Other Changes in Fiduciary Net Position - - -
Net Change in Fiduciary Net Position (294,082) 794,119 10,201,721
Plan Fiduciary Net Position - Beginning 74,140,210 73,346,091 63,144,370
Plan Fiduciary Net Position - Ending (b) $ 73,846,128 $ 74,140,210 $ 73,346,091
Plan Net Pension Liability/(Asset) -
Ending (a) - (b) $ 45,249,444 $ 40,143,128 $ 38,723,345
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 62.01% 64.87% 65.45%
Covered Payroll $ 12,767,963 $ 12,451,513 $ 12,276,578
Plan Net Pension Liability/(Asset) as a
Percentage of Covered Payroll 354.40% 322.40% 315.42%
1 Measurement period 2019-20 (fiscal year 2020-2021) was the seventh year of implementation; therefore, only seven years are shown.
2 Historical information is required only for measurement periods for which GASB 68 is applicable
REQUIRED SUPPLEMENTARY INFORMATION
YEARS ENDED JUNE 30, 2021 and 2020
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for DISCUSSION PURPOSES ONLY
60
E 30, 2017 and 2016
Schedule of Plan Contributions1
Contributions in
Relation to the
Actuarially Actuarially Contributions as a
Fiscal Determined Determined Contribution Percentage of
Year Contribution2 Contribution2 Deficiency (Excess) Covered Payroll3 Covered Payroll3
2015 $ 3,557,098 $ (3,557,098) $ - $ 12,451,513 28.57%
2016 $ 3,819,770 $ (3,819,770) $ - $ 12,767,963 29.92%
2017 $ 4,105,810 $ (4,105,810) $ - $ 12,829,415 32.00%
2018 $ 4,441,517 $ (4,441,517) $ - $ 12,969,485 34.25%
2019 $ 4,906,983 $ (36,706,983) $ (31,800,000) $ 12,892,655 284.71%
2020 $ 2,437,119 $ (2,437,119) $ - $ 13,383,715 18.21%
2021 $ 2,765,952 $ (3,965,952) $ (1,200,000) $ 13,917,932 28.50%
1Historical information is required only for measurement periods for which GASB 68 is applicable.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers
may choose to make additional contributions toward their unfunded liability. Employer contributions for such plans exceed
the actuarially determined contributions.
3 Includes one year’s payroll growth assumption using 2.75% payroll growth assumption for fiscal years 2018-2020; 3.00%
payroll growth assumption for fiscal years 2015-2017.
Notes to Schedule:
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2020-21 were from
the June 30, 2018 public agency valuations. Also note, that some of the data from prior years were updated with the most
current available information.
Actuarial Cost Method Entry Age Normal
Amortization Method/Period For details see June 30, 2018 Funding Valuation Report
Asset Valuation Method Actuarial Value of Assets. For details, see June 30, 2018 Funding Valuation
Report
Discount Rate 7.00%
Inflation 2.50%
Salary Increases Varies by Entry Age and Service
Payroll Growth 2.75%
Investment Rate of Return 7.00% Net of Pension Plan Investment and Administrative Expenses; includes
Inflation
Retirement Age
The probabilities of Retirement are based on the 2017 CalPERS Experience
Study.
Mortality
The probabilities of mortality are based on the 2017 CalPERS Experience
Study.
REQUIRED SUPPLEMENTARY INFORMATION
YEARS ENDED JUNE 30, 2021 and 2020
DRAFT COPY – 10/13/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Independent Auditors’ Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
Board of Directors
Otay Water District
Spring Valley, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States, the financial statements of the Otay Water District (the “District”), as of
and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise
the District’s basic financial statements, and have issued our report thereon dated _____ __, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over
financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an
opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control, such that there is a reasonable possibility that a material misstatement of the District’s financial statements
will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and
was not designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal control that
we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements, noncompliance with which could have a direct and material effect on the financial statements.
However, providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing Standards.
DRAFT COPY – 10/11/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Attachment C
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the District’s internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
Riverside, California
_____ __, 2021
DRAFT COPY – 10/11/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
_______ __, 2021
Board of Directors
Otay Water District
Spring Valley, CA
We have audited the financial statements of the Otay Water District (the “District”) for the year ended June 30,
2021. Professional standards require that we provide you with information about our responsibilities under
generally accepted auditing standards and Government Auditing Standards, as well as certain information
related to the planned scope and timing of our audit. We have communicated such information in our letter to
you dated May 7, 2021. Professional standards also require that we communicate to you the following
information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the District are described in Note 1 to the financial statements. No new accounting
policies were adopted and the application of existing policies was not changed during the 2021 fiscal year. We
noted no transactions entered into by the District during the year for which there is a lack of authoritative guidance
or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on
management’s knowledge and experience about past and current events and assumptions about future events.
Certain accounting estimates are particularly sensitive because of their significance to the financial statements and
because of the possibility that future events affecting them may differ significantly from those expected. The most
sensitive estimates affecting the financial statements were:
Management’s estimate of the fair value of investments is based on information provided by financial
institutions. We evaluated the key factors and assumptions used to develop the fair value of investments
in determining that it is reasonable in relation to the financial statements taken as a whole.
Management’s estimate of capital assets depreciation is based on historical estimates of each capitalized
item’s useful life. We evaluated the key factors and assumptions used to develop the capital assets
depreciation in determining that it is reasonable in relation to the financial statements taken as a whole.
Management’s estimation of the net pension liability and related pension deferred outflows and
inflows of resources are based on an actuarial valuation. We evaluated the key factors and
assumptions used to develop the net pension liability and related pension deferred outflows and
inflows of resources in determining that it is reasonable in relation to the financial statements taken as
a whole.
DRAFT COPY – 10/11/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Attachment D
Management’s estimate of the net other post employment benefits (OPEB) liability and related OPEB
deferred outflows and inflows of resources are based on an actuarial valuation. We evaluated the key
factors and assumptions used to develop the net OPEB liability and related OPEB deferred outflows and
inflows or resources in determining that it is reasonable in relation to the financial statements taken as a
whole.
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement
users. The most sensitive disclosures affecting the financial statements were:
The disclosure of the fair value of investments in Notes 2 and 3 to the financial statements represents
amounts susceptible to market fluctuation.
The disclosure of capital assets in Note 4 to the financial statements is based on historical information
which could differ from actual useful lives of each capitalized item.
The disclosure of the defined benefit pension plan, the net pension liability and related pension
deferred outflows and inflows of resources in Note 7 to the financial statements represents
management’s estimate based on an actuarial valuation. Actual results could differ depending on
these key factors and assumptions used for the actuarial valuation.
The disclosure of other post employment benefits, the net OPEB liability and related OPEB deferred
outflows and inflows of resources in Note 8 to the financial statements represents management’s estimate
based on an actuarial valuation. Actual results could differ depending on these key factors and
assumptions used for the actuarial valuation.
The financial statement disclosures are neutral, consistent and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other
than those that are clearly trivial, and communicate them to the appropriate level of management. None of the
misstatements detected as of a result of audit procedures were material, either individually or in the aggregate, to the
financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter,
whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s
report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation
letter dated ______ __, 2021.
DRAFT COPY – 10/11/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters,
similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting
principle to the District’s financial statements or a determination of the type of auditor’s opinion that may be
expressed on those statements, our professional standards require the consulting accountant to check with us to
determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with
other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards,
with management each year prior to retention as the District’s auditors. However, these discussions occurred in the
normal course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to management’s discussion and analysis and the required supplementary
information section, which are required supplementary information (RSI) that supplements the basic financial
statements. Our procedures consisted of inquiries of management regarding the methods of preparing the
information and comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did
not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were not engaged to report on the introductory and statistical sections, which accompany the financial
statements but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit
of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
As part of the audit, we assisted with the preparation of the financial statements and related notes and State
Controller’s report preparation. However, these services, does not constitute an audit under Government Auditing
Standards and are considered nonaudit services. Management has reviewed, approved, and accepted responsibility
for the results of these services.
Restriction on Use
This information is intended solely for the use of the Board of Directors and management of the District and is not
intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
DRAFT COPY – 10/11/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
INDEPENDENT ACCOUNTANTS’ REPORT
ON APPLYING AGREED-UPON PROCEDURES
Mr. Joseph Beachem
Chief Financial Officer
Otay Water District
Spring Valley, CA
We have performed the procedures enumerated below on evaluating the investments of the District as of and for
the fiscal year ended June 30, 2021. The District’s management is responsible for evaluating the investments of
the District.
The Otay Water District (the “District”) has agreed to and acknowledged that the procedures performed are
appropriate to meet the intended purpose, which is solely to assist the District’s management in evaluating the
compliance with the District’s investment policy for the fiscal year ending June 30, 2021. This report may not be
suitable for any other purpose. The procedures performed may not address all the items of interest to a user of
this report and may not meet the needs of all users of this report and, as such, users are responsible for
determining whether the procedures performed are appropriate for their purposes.
Our procedures and associated findings are as follows:
1. Obtain a copy of the District’s investment policy and determine that it is in effect for the fiscal year
ended June 30, 2021.
Finding: At June 30, 2021, the current investment policy (Policy #27) is dated May 1, 2019.
This policy was reviewed and reapproved with no revisions on May 6, 2020 and was
last amended on May 1, 2019 at the regular board meeting. Therefore, the investment
policy is in effect for the time period under review.
2. Select 4 investments held at year end and determine if they are allowable investments under the
District’s Investment Policy.
Finding: We selected the following investments: FHLB - Maturity 9/10/2021, FHLB - Maturity
9/10/2021, Local Agency Investment Fund (LAIF), and San Diego County Pool. All
four investments are allowable and within maturity limits as stated in the District’s
investment policy at June 30, 2021. The first two investments (FHLB) are allowable
under the investment policy, however, since these two investments are reserve accounts
related to the 2010 Series A and B bonds, they are subject to the debt agreements and
not the District’s investment policy.
DRAFT COPY – 10/11/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
Attachment E
2
3. For the four investments selected in #2 above, determine if they are held by a third party custodian
designated by the District.
Finding: The four investments examined are held by third party custodians, Union Bank of
California, the State of California (LAIF) and the County of San Diego designated by
the District in compliance with the District’s investment policy. Per discussion with the
District’s management and evidenced by Union Bank of California’s statement, Union
Bank does not act as a broker dealer for the District but acts as a custodial agent of the
District holding the investments in a trust capacity. LAIF with the State of California
and the County of San Diego pooled investment funds are external investment pools
held by the respective governmental agency.
4. Confirm the par or original investment amount and market value for the four investments selected
above with the custodian or issuer of the investments.
Finding: No exceptions were noted as a result of our procedures except there was a variance
from the market value for the County of San Diego Pool. The confirmation for the
County of San Diego Pool had a market value of $56,463,691.34 while the District’s
investment report had a market value of $56,420,000.
5.Select two investment earnings transactions that took place during the year and recompute the earnings
to determine if the proper amount was received.
Finding: Selected the following investment earnings transactions: interest earned on FHLB Bond
on September 10, 2020 and interest earned on FHLB Bond on March 10, 2021. No
exceptions were noted as a result of our procedures.
6.Trace amounts received for transactions selected at #5 above into the District’s bank accounts.
Finding: No exceptions were noted as a result of our procedures.
7.Select five investment transactions (buy, sell, trade or maturity) occurring during the year under review
and determine that the transactions are permissible under the District’s investment policy.
Finding: We selected the following investment transactions: LAIF deposit/purchase of
$4,800,000 in August 2020, San Diego County Pool deposit/purchase of $5,001,581.57
in August 2020, LAIF withdrawal of $2,800,000 in December 2020, LAIF
deposit/purchase of $6,536,097.94 in April 2021, and San Diego Pool deposit/purchase
of $10,086,621.94 in April 2021. Those transactions were permissible under the
District’s investment policy. No exceptions were noted as result of our procedures.
8.Review the supporting documents for the five investments selected at #7 above to determine if the
transactions were appropriately recorded into the District’s general ledger.
Finding: No exceptions were noted as a result of our procedures.
DRAFT COPY – 10/11/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
3
We were engaged by the District to perform this agreed-upon procedures engagement and conducted our
engagement in accordance with attestation standards established by the American Institute of Certified Public
Accountants. We were not engaged to and did not conduct an audit or review engagement, the objective of which
would be the expression of an opinion or conclusion, respectively, on the investments of the District for the fiscal
year ending June 30, 2021. Accordingly, we do not express such an opinion or conclusion. Had we performed
additional procedures, other matters might have come to our attention that would have been reported to you.
We are required to be independent of the District and meet our ethical responsibilities, in accordance with the
relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the Board of Directors and senior management of the
Otay Water District and is not intended to be and should not be used by anyone other than these specified parties.
Riverside, California
_______ __, 2021
DRAFT COPY – 10/11/2021
PRELIMINARY & TENATIVE
for DISCUSSION PURPOSES ONLY
STAFF REPORT
TYPE MEETING: Regular Board MEETING DATE: November 3, 2021
PROJECT: Various DIV. NO. ALL
SUBMITTED BY: Kent Payne
Purchasing and Facilities Manager
APPROVED BY: Adolfo Segura, Chief, Administrative Services
Jose Martinez, General Manager
SUBJECT: AUTHORIZE A TWO-YEAR FIXED CONTRACT, PLUS THREE (3) ONE-YEAR
OPTIONS, WITH NATURESCAPE SERVICES, INC. FOR LANDSCAPE
MAINTENANCE SERVICES IN AN AMOUNT NOT-TO-EXCEED $617,724
GENERAL MANAGER’S RECOMMENDATION:
That the Otay Water District (District) Board of Directors (Board)
award a contract to NatureScape Services, Inc. (NatureScape) and
authorize the General Manager to execute a two-year fixed contract,
plus three (3) one-year options, with NatureScape of San Diego, CA,
for landscape maintenance services in an amount not-to-exceed
$617,724.
COMMITTEE ACTION:
See “Attachment A”.
PURPOSE:
To obtain Board authorization for the General Manager to enter into a
two-year fixed contract with NatureScape, plus three (3) one-year
options, for landscape maintenance services in an amount not-to-
exceed $617,724.
ANALYSIS:
The District utilizes a multi-year contract for landscape maintenance
AGENDA ITEM 5
2
services to maintain its Administrative, Operations, and Treatment
Plant facilities, as well as the remote pump stations, reservoirs,
hydro stations, and easements. A scope of work matrix is provided
(see “Attachment B”).
Staff issued a Request for Proposals through its online solicitation
portal, Periscope (formerly BidSync). Four (4) firms attended a
mandatory pre-proposal meeting and site walk held at the main campus
and at a number of remote facilities.
The District received three (3) proposals that were evaluated by a
three-person review panel that scored each submittal on Company
Background, Staff Qualifications, and Quality Assurance. Separately,
a score was assigned to each proposed contract fee, then added to the
review panel ratings for a final score (see “Attachment C”).
Firm 5-year Fee Hourly Rate Score
NatureScape Services, Inc. $617,724 $30.00 84
Greenridge Landscape, Inc.* $709,932 $45.00 58
Aztec Landscaping, Inc. $953,351 $35.00 67
Monthly and annual fees are as follows:
Calendar Year Monthly Fee Annual Fee
2022 $9,689 $116,268
2023 $9,789 $117,468
2024 Option 1 $9,999 $119,988
2025 Option 2 $10,750 $129,000
2026 Option 3 $11,250 $135,000
Contract Total $617,724
*Incumbent contract holder
NatureScape received the highest score at 84 and was also determined
to be the best overall value for the required scope of services.
NatureScape is a local family-owned and operated landscape
maintenance firm started in 1975 and incorporated in 2017. They
employ 34 full-time and 22 seasonal workers. An internet search
revealed no negative ratings or complaints. NatureScape is rated
highly by public agency clients, which include the City of San Diego,
City of Chula Vista, County of San Diego, San Diego County Water
3
Authority, and the San Diego Unified Port District.
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
The annual landscape maintenance operating budget is $130,000. Of
this amount, $116,268 will be utilized for calendar year 2022 of the
contract.
STRATEGIC GOAL:
Supports the Districts Strategy: Ensure financial health through
formalized policies, prudent investing, and efficient operations.
LEGAL IMPACT:
None.
ATTACHMENTS:
Attachment A – Committee Action Report
Attachment B – Scope of Work Matrix
Attachment C – Scoresheet
ATTACHMENT A
SUBJECT/PROJECT:
AUTHORIZE A TWO-YEAR FIXED CONTRACT, PLUS THREE (3) ONE-
YEAR OPTIONS, WITH NATURESCAPE SERVICES, INC. FOR
LANDSCAPE MAINTENANCE SERVICES IN AN AMOUNT NOT-TO-EXCEED
$617,724
COMMITTEE ACTION:
The Finance, Administration, and Communications Committee reviewed
this item at a meeting held on October 20, 2021. The Committee
supports presentation to the full Board for their consideration.
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for Board approval. This report will be sent
to the Board as a Committee approved item or modified to reflect any
discussion or changes as directed from the Committee prior to
presentation to the full Board.
ATTACHMENT B
SUBJECT/PROJECT:
AUTHORIZE A TWO-YEAR FIXED CONTRACT, PLUS THREE (3) ONE-
YEAR OPTIONS, WITH NATURESCAPE SERVICES, INC. FOR
LANDSCAPE MAINTENANCE SERVICES IN AN AMOUNT NOT-TO-EXCEED
$617,724
SCOPE OF WORK MATRIX
# Facility Name Location Landscape General Duties*
1 1655-1 Hydro-Station 14810 Presilla Drive
Jamul, CA
32.700722923410495, -
116.8387307638279
•Trim oleanders off the fence and top to fence line 2x a year.
•Spray herbicides (systemic and preemergent) twice a year before rainy season or as
needed.
•Clean all culverts from dirt and debris
•General clean-up of trash and debris. Haul away trimmings.
•Install/maintain and operate irrigation drip system.
•May need fire prevention natural growth removal.
2 Intentionally left blank
3 1485-1 Pump Station 14303 Lyons Valley
Road, Jamul, CA
32.728975123374376, -
116.86297652076674
•Trim plants twice a year.
•General clean-up of trash and debris as needed. Haul away trimmings.
•Install/maintain and operate irrigation as needed.
•Erosion controls install/maintain (including mud removal from asphalt).
4 1296-1-9 Tank (9-2 tank @
Bear Mt.)
13635 Bear Mountain
Way, Jamul, CA
32.7101889011776, -
116.89260418539448
•General clean-up of trash, debris, and landscaped areas.
•Clean all culverts from dirt and debris once a year before rainy season or as needed.
•Line trim as needed for weed abatement. Haul away trimmings.
•Spray herbicides for weed prevention twice a year or as needed.
•Install/maintain and operate irrigation drip system.
6
5 944-1-9 Pump Station (9-1
PS)
13255 Campo Road, Jamul,
CA
32.72874729563849, -
116.89861552488024
•Trim and clean all landscaped areas three times a year or as needed.
•Haul away all trimmings and debris.
•Clean all culverts from dirt and debris before rainy season or as needed.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention twice a year or as needed.
•Install/maintain and operate irrigation drip system.
6 944-1-9 Tank and 944-2-9
Tank (9-1 tanks)
3102 Vista Diego Road,
Jamul, CA
•Trim and clean all landscaped areas three times a year or as needed.
•Haul away all trimmings and debris.
•Clean all culverts and storm drains from dirt and debris before rainy season.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention twice a year or as needed.
•Install/maintain and operate irrigation drip system.
•Dirt removal from paved areas around tanks after rainy season.
•Install/maintain erosion control.
7 Vista Diego Hydro Station 3151 Vista Diego Road,
Jamul, CA
32.723259915929994, -
116.87881549967733
•Trim, clean and fertilize all landscaped areas twice a year or as needed.
•Haul away all trimmings and debris.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention twice a year or as needed.
8 832-1-2 Reservoir (2-1 Tank)12118 Campo Road, El Cajon,
CA
32.73396067514205, -
116.92881847188326
•Trim, clean and fertilize all landscaped areas twice a year or as needed.
•Haul away all trimmings and debris.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention twice a year or as needed.
•Install/maintain and operate irrigation drip system.
9 832-1-2 Pump Station (2-1
PS)
12176 Highway 94,
El Cajon, CA
32.73550561897947, -
116.93459247252014
•Trim, clean and fertilize all landscaped areas twice a year or as needed.
•Haul away all trimmings and debris.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention twice a year or as needed.
•Install/maintain and operate irrigation drip system.
•Removal of unwanted plant species among oleanders.
7
10 1090-1-2 Pump Station (2-2
PS)
3029 Millar Ranch Road,
Spring Valley, CA
32.722730628573615, -
116.92341523060547
•Trim, clean and fertilize all landscaped areas twice a year or as needed.
•Haul away all trimmings and debris.
•Install/maintain, repair, and operate fire sprinklers around fence bi-weekly during
summertime or fire season.
•Install/maintain and operate irrigation drip system.
•Weed control as needed.
•Install/maintain erosion control as needed.
11 1090-1-2 Tank (2-2 tank) 12300 Millar Anita Lane,
Spring Valley, CA
32.71976311486826, -
116.92319455798108
•Trim, clean and fertilize all landscaped areas twice a year or as needed.
•Haul away all trimmings and debris.
•Removal of natural growth for fire abatement/protection.
•Rake around tank, outside and access roads.
•Install/maintain, repair, and operate irrigation drip system.
•Spray herbicides for weed prevention twice a year or as needed.
12 Wastewater Reclamation
Plant; and Steele Canyon PS
11901/11977 Singer Lane,
Spring Valley, CA
Reclamation Plant:
32.7281113759401, -
116.94721943623401
Steele Canyon PS:
32.734197119879155, -
116.94148071183844
•Trim oleanders at Steele Canyon PS Tank once a year.
•Trim, clean and fertilize all landscaped areas twice a year or as needed
•Trim all ice plant and ivy 3 times a year or as needed.
•Apply granular pre-emergent as needed twice a year.
•Line trim inside treatment plant for weed abatement 3 or 4 times a year or as needed.
•Keep a 25 feet firebreak between fence line and natural growth vegetation before fire
season.
•Spray herbicides around roadway, treatment plant and accessories for weed
prevention four times a year or as needed.
•Haul away all trimmings.
•Clean-up and mow roadside as needed.
•Clean all culverts from dirt and debris before rainy season or as needed.
•Install/maintain and operate all irrigation systems including adjusting timers for
different seasons of the year.
•Blow driveways and hardscapes as may be requested.
13 Cottonwood Meadows
Sewer Lift Station
3550 Par Four Drive, El Cajon,
CA
32.739909811891664, -
116.91929365129484
•Trim of fence and clean all landscaped areas twice a year or as needed.
•Haul away all trimmings and debris.
•Line trim inside station and entry access road for weed abatement twice a year or as
needed.
•Spray herbicides for weed prevention twice a year or as needed.
14 Intentionally left blank
8
15 860-1
Cottonwood
Hydropneumatic Station
Pump Station (Windriver)
2508 Windriver Road, El
Cajon, CA
32.75338851918531, -
116.91056930191007
• Trim neighbor’s landscape overgrowth twice a year.
• Haul away all trimmings and debris.
• General clean-up.
• Line trim for weed abatement twice a year.
• Spray herbicides for weed prevention twice a year.
16 803-4 Tank (Vista Grande
Reservoir)
1612 Vista Grande Road, El
Cajon, CA
32.76960268564462, -
116.91066405085418
• Trim, clean and fertilize all landscaped areas 3 times a year or as needed.
• Haul away all trimmings and debris.
• Install/maintain and operate irrigation d rip system or hand water during summer.
• Install and maintain erosion control before rainy season.
• Line trim for weed abatement as needed.
• Spray herbicides for weed prevention 3 times a year or as needed.
• Clean all culverts from debris and dirt before rainy season or as needed.
17 1200-1-3 Tank 1697 Burris Drive, El Cajon,
CA
32.76795586052126, -
116.90310707931694
• Bee removal as needed.
• Trim natural growth to keep it contained within limits once a year.
• Haul away all trimmings and debris.
• Line trim for weed abatement as needed.
• Install/maintain and operate irrigation system.
18 978-2 Reservoir
Filipponi Reservoir
1124 Vista Grande Road, El
Cajon, CA
32.77788787445248, -
116.91037479676977
• Trim, clean and fertilize all landscaped areas twice a year or as needed.
• Haul away all trimmings and debris.
• Clean all culverts from debris and dirt before rainy season and as needed.
• Set erosion control for protection of all culverts.
• Line trim for weed abatement as needed.
• Spray herbicides for weed prevention twice a year or as needed.
• Install/maintain and operate irrigation drip line system.
• Maintain clean all access road to the tank from the first chain link fence gate to
second chain link fence gate.
• Spread mulch around bottlebrushes as needed.
19 978-1-2 Reservoir (3-2 Res.) 2542 Pence Drive, El Cajon,
CA
32.776558081950526, -
116.89806797066288
• Trim, clean and fertilize all landscaped areas inside tank twice a year.
• Haul away all trimmings and debris.
• Line trim for weed abatement as needed.
• Spray herbicides for weed prevention twice a year or as needed.
• Clean all culverts from dirt and debris before rainy season or as needed.
• Maintain access road and trim and top oleanders twice a year.
• Install/maintain and operate all irrigation systems.
9
20 803-3 Reservoir (Singing Hills
Reservoir)
2568 Pence Drive, El Cajon,
CA
•Trim, clean and fertilize all landscaped areas twice a year or as needed.
•Haul away all cuttings and debris.
•Clean all culverts from debris and dirt before rainy season.
•Install/maintain and operate irrigation drip system.
•Spray herbicides for weed prevention twice a year.
21 Silverado Sewer Lift Station Camino De Las Piedras, El
Cajon, CA
32.77050748670371, -
116.88077914855046
•General clean-up as needed.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention as needed.
22 Hidden Mesa Sewer Lift
Station
1256 Hidden Mountain
Drive, El Cajon, CA
32.776723599517446, -
116.91557748026821
•Trim and clean all landscaped areas, keep overgrowth away from stairs once a year.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention once a year or as needed.
•Haul away all trimmings and debris.
23 803-2 Tank (20-3 Res.) 2825 Willow Glen Drive, El
Cajon, CA
32.753407931069255, -
116.8941429995109
•Trim the roadside entrance to keep natural growth contained once a year or as
needed.
•Trim around fence to keep natural growth contained twice a year or as needed.
•Spray herbicides for weed prevention twice a year or as needed.
•Haul away all trimmings and debris.
24 Intentionally left blank
25 Russell Square Sewer PS 5139 ½ Russell Square, La
Mesa, CA
32.77279785912984, -
116.96974240764581
•Trim all landscaped areas away from fence twice a year or as needed.
•Haul away all trimmings and debris.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention twice a year or as needed.
•General clean-up as needed.
26 Calavo Sewer Lift Station 3700 Avocado Blvd. @
Campo Road, La Mesa, CA
32.74728816994529, -
116.96256906759936
•Trim, clean and fertilize all landscape areas twice a year or as needed.
•Line trim for weed abatement as needed.
•Haul away all trimmings and debris.
•Spray herbicides for weed prevention twice a year or as needed.
•Install/maintain and operate all drip irrigation system.
27 Intentionally left blank
10
28 Regulatory Reservoir 11880 Campo Road, Spring
Valley, CA
32.74420079038116, -
116.94654134247054
•Install erosion control around storm drains before rainy season.
•Line trim entrance road, reservoirs and inside property for weed abatement twice a
•year, or as needed.
•Trim, clean and fertilize all landscaped areas once a year, or as needed.
•Haul away all trimmings and debris.
•Spray herbicides for weed prevention 3 times a year or as needed.
•Clean all culverts for dirt and debris before rainy season or as needed.
•Install/maintain and operate all drip line irrigation system.
•Clean around reservoir vaults, maintain free of weeds and debris as often as needed.
29 Intentionally left blank
30 850-1-1 Tank (20-1 Res, 1-6
Tank)
2105 Ledge Avenue, Spring
Valley, CA
32.72635333708018, -
116.9785635020983
•Trim road entrance to keep natural growth contained once a year.
•Line trim for weed abatement inside and outside twice a year or as needed.
•Spray herbicides for weed prevention inside and outside twice a year or as needed.
•Haul away all trimmings and debris.
•Clean all culverts from dirt and debris before rainy season or as needed.
•Tree branch removal when needed.
31 850-1-RES; Pointe Hydro Station
(1050 HS)
10105 Pure Waters Court,
Spring Valley, CA
32.7187927802632, -
116.96300338300756
•Line trim for weed abatement twice a year or as needed.
•Spray herbicides for weed prevention twice a year or as needed.
•General clean-up of trash and debris 3 times a year.
32 657-1/850-1 PRV. (La Presa PS)10557 Jamacha Blvd., Spring
Valley, CA
32.72425301927596, -
116.96970376943331
•Tree branch removal when needed.
•Trim, clean and fertilize all landscaped areas once yearly or as needed.
•Haul away all trimmings and debris.
•Line trim for weed abatement twice a year or as needed.
•Spray herbicides for weed prevention twice a year or as needed.
•General clean-up of trash and debris twice a year.
33 657-1-1 and 657-2-1 Tanks
(San Bernardino Tanks)
1156 San Bernardino
Avenue, Spring Valley, CA
32.716065012706075, -
116.98615215112774
•Trim, Clean and fertilize all landscaped areas twice a year or as needed.
•Haul away all trimmings and debris.
•Line trim for weed abatement including easement 3 times a year or as needed.
•Spray herbicides for weed prevention twice a year or as needed.
•Install/maintain and operate all drip line irrigation system.
11
34 1004-1-1 PS (Buena Vista PS
and adjacent property)
1306 Buena Vista
Avenue, Spring Valley, CA
32.71781963340492, -
116.99351796940242
•Pull all weeds, trim, clean and fertilize all landscaped areas twice a year.
•Haul away all trimmings and debris,
•Line trim for weed abatement as needed.
•Clean outside road from debris twice a year.
•Spray herbicides for weed prevention including adjacent lot, twice a year.
•Maintain and operate irrigation system. Adjust irrigation timers according to yearly
seasons.
•Clean all culverts from dirt and debris before rainy season or as needed.
35 Intentionally left blank
36 Intentionally left blank
37 1004 Tank 1828 La Presa Ave., Spring
Valley, CA
32.72610855530305, -
116.99209435468974
•Trim, clean and fertilize all landscaped areas twice a year or as needed.
•Haul away all trimmings and debris.
•Removal of natural growth for fire abatement/protection.
•Rake around tank, outside and access roads.
•Spray herbicides for weed prevention twice a year or as needed.
38 Mexico Connection (TJ) International fence
boundary
32.55322370317177, -
116.91901761264101
•Mow and line trim around property and valves for weed abatement twice a year.
•Spray herbicides for weed prevention twice a year.
•Wash with water all pipes and concrete pad every two weeks.
39 870-1-7 Reservoir (Upper
Res.)
440 North Alta Road, San
Diego, CA
32.594773446305204, -
116.92707751528816
•Maintain a firebreak outside fence before fire season or as needed.
•Mow and line trim property, valves, reservoirs, and vaults for weed abatement twice a year or
as often as necessary.
•Spray herbicides for weed prevention twice a year.
•Clean culverts from dirt and debris before rainy season.
40 High Head and Low Head PS
Low Head: 32.59629631593492, -
116.92706618556636
800 and 1200 North
Alta Road., High Head:
32.59525569178576, -
116.9256069085635
•Line trim around reservoir and pump stations for weed abatement twice a year.
•Mow and line trim around all valves and vaults for weed abatement twice a year.
•Spray herbicides for weed prevention twice a year or as needed
41 458-1-10 & 458-2-10
Reservoir
651 Pt. Barrow Drive, Chula
Vista, CA
32.60574093348044, -
117.02580946979134
•Trim, clean and fertilize all landscaped areas twice a year.
•Remove any fallen trees or branches as needed.
•Haul away all trimmings and debris.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention twice a year.
•Install/maintain and operate irrigation drip system.
•Spread mulch as needed.
12
42 Greg Rogers Sewer Lift
Station
1195 Oleander Avenue.,
Chula Vista, CA
32.617679521533276, -
117.03440041064212
• Trim, clean and fertilize all landscaped areas once a year.
• Haul away all trimmings and debris.
• Line trim for weed abatement as needed.
• Spray herbicides for weed prevention twice a year.
• Install/maintain and operate irrigation drip system.
43 Intentionally left blank
44 485-1-22 Tank (22-2 Res) 996 East H Street, Chula
Vista, CA
32.63511540325052, -
117.01927415802191
• Trim, clean and fertilize all landscaped areas twice a year.
• Haul away all trimmings and debris.
• Line trim for weed abatement as needed. Spread mulch as needed.
• Spray herbicides for weed prevention twice a year.
• Fallen tree branch removal as needed.
• Install/maintain and operate irrigation drip line system.
45 Rancho Del Rey Well site 760 N. Rancho del Rey Pkwy
Chula Vista, CA
32.64519124685684, -
117.03288652057776
• Pull out weeds from property as often as needed.
• Spray herbicides for weed prevention as often as needed.
• Haul away all debris. Spread mulch as needed.
• Trim, clean and fertilize all landscaped areas as needed.
• Install/maintain and operate irrigation drip line system.
46 624-2 Reservoir 2010 Gotham, Chula Vista, CA
32.64840910054817, -
116.97881276693982
• Mow and line trim for weed abatement twice a year.
• Spray herbicides for weed prevention twice a year. Spread mulch as needed.
• Trim overgrowth on fence areas as needed. Rake for fallen debris as needed.
• Tree and branch removal as needed.
• Haul away all trimmings and debris. Asphalt clean-up after rain.
• Install erosion control around storm drains.
47 711-1-27 (7-11 Tanks) 2710 Otay Lakes Road
access off or Park
Meadows, Chula Vista, CA
32.647970505580105, -
116.95503839367176
• Spread mulch as needed.
• Install erosion control around storm drains before rainy season.
• Line trim for weed abatement as often as needed.
• Spray herbicides for weed prevention twice a year.
• Trim and clean all landscaped areas twice a year.
• Tree and branch removal as needed.
• Haul all trimmings and debris.
• Clean all culverts from debris and dirt before rainy season or as needed.
• Install/maintain and operate irrigation drip line system.
13
48 624-3 Reservoir (30 Million) 1230 Eastlake Parkway,
Chula Vista, CA
32.63492102495674, -
116.96958889153214
•Inspect and assign work to landscape contractors weekly.
•Make recommendations as to how to improve landscaped areas weekly.
•Troubleshoot irrigation systems as needed.
49 711-1 Pump Station
Central Area
10391 Otay Lakes Road,
Chula Vista, CA
32.63757558739006, -
116.97343213757372
•Mow and line trim upper, lower property, all vaults, valves, and easement for weed
abatement 3 times a year.
•Spray herbicides for weed prevention 3 times a year.
•Clean all culverts from dirt and debris at the upper and lower property before rainy season
or as needed.
•Install and maintain erosion control program before rainy season.
•Trim, clean and fertilize all landscaped areas twice a year.
•Haul away all trimmings and debris.
•Install/maintain and operate irrigation drip line system.
50 980-1 PS (EastLake 980 PS) 2406 Otay Lakes Road, Chula
Vista, CA
32.64922092407599, -
116.96133257495077
•Trim, clean and fertilize all landscaped areas twice a year.
•Haul away all trimmings and debris.
•Clean around pump station for trash and debris as often as needed.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention twice a year.
•Install/maintain and operate irrigation systems weekly.
•Tree trimming and branch removal as needed.
51 711-3 Res.Hunte Parkway and Salt
Creek Golf Course, Chula
Vista, CA
32.66839070371882, -
116.9550217140657
•Inspect and assign work to landscape contractors weekly.
•Make recommendations to landscape contractors weekly.
•Maintain and operate irrigation systems as needed.
•Mow and line trim around property boundaries and wild habitat fencing twice a year or as
needed.
•Repair and inspect wild habitat fencing as often as needed.
•Haul away any trimmings or debris.
52 980-1-27 and 980-2-27 Res
(Use Area) End of road
Hunte Parkway and Salt
Creek Golf Course Chula
Vista, CA
32.68228113563474, -
116.95579978329295
•Inspect and repair wild habitat fencing as needed.
•Line trim and power mow around reservoir and adjacent areas for weed abatement twice a
year.
•Spray herbicides for weed control twice a year.
•Remove fallen trees as needed.
14
53 Main Yard (Ops and Admin
Buildings)
2553-2554 Sweetwater
Springs Blvd., Spring Valley,
CA
32.72444055730977, -
116.96701539344284
•General clean-up of trash and debris as often as needed.
•Trim, clean and fertilize all landscaped areas as needed.
•Water schedule and maintenance.
•Install/maintain and operate irrigation systems. Adjust timers according to yearly
seasons.
•Supply mulch for landscape contractors as needed.
•Inspect and assign work of landscape contractors weekly.
•Make recommendations to landscape contractors weekly.
54 450-1 Recycle Tank 1680 Maxwell Rd., Chula
Vista, CA
32.605133895814426, -
117.02238965058142
•Trim, clean and fertilize all landscaped areas twice a year.
•Haul away all trimmings and debris.
•Line trim for weed abatement as needed. Spread mulch as needed.
•Spray herbicides for weed prevention twice a year.
•Fallen tree branch removal as needed.
•Install/maintain and operate irrigation drip line system.
55 1485-1 & 2 Reservoir 15008 Lyons Valley Rd, Jamul,
CA
32.73264419522376, -
116.83467824891598
•Trim, clean and fertilize all landscaped areas twice a year.
•Haul away all trimmings and debris.
•Line trim for weed abatement as needed. Spread mulch as needed.
•Spray herbicides for weed prevention twice a year.
•Fallen tree branch removal as needed.
•Install/maintain and operate irrigation drip line system.
56 Intentionally left blank
57 Future N-S Pump Station Site
Parcels
5809-5835 Quarry Rd
Bonita, CA 91902
32.68905917613489, -
117.01565759738499
•Mow and line trim for weed abatement twice a year.
•Spray herbicides for weed prevention three times a year.
•Tree and branch removal as needed
•Haul away all trimmings and debris.
•General clean-up for trash and debris as often as needed
58 850-3 RES 12887 Wieghorst Way, El
Cajon, CA
32.75823741939893, -
116.93117888475454
•Line trim for weed abatement twice a year or as needed.
•Spray herbicides for weed prevention twice a year or as needed.
•General clean-up of trash and debris 3 times a year or as needed.
15
59 870-2 Pump Station 440 ALTA RD, SAN DIEGO, CA
92154
32.593388672943945, -
116.92654746075392
•Trim, clean and fertilize all landscaped areas twice a year.
•Haul away all trimmings and debris.
•Line trim for weed abatement as needed. Spread mulch as needed.
•Spray herbicides for weed prevention twice a year.
•Fallen tree branch removal as needed.
•Install/maintain and operate irrigation drip line system.
60 Easement - Sewer Line
Approx 1300 Linear Feet
12-foot clearance
PASEO SALAMONER, LA
MESA, 91941
32.744641, -116.954781
32.74465351198073, -
116.95463843844432
•Line trim and clear brush along access and around clean outs once per year
61 Summit Chlorine Station 444 Ruxton Ave., Spring
Valley, CA
32.70597773835129, -
117.0061816523569
•Line trim for weed abatement as needed.
•Spray herbicides for week prevention twice a year or as needed.
•Haul away all trimmings and debris.
62 1100-1 Hydro Station 475 Coastal Hills Drive, Chula
Vista
32.67202610086155, -
116.9421217881619
•Trim, clean and fertilize all landscaped areas twice a year.
•Haul away all trimmings and debris.
•Clean around pump station for trash and debris as often as needed.
•Line trim for weed abatement as needed.
•Spray herbicides for weed prevention twice a year.
•Install/maintain and operate irrigation systems weekly.
•Tree trimming and branch removal as needed.
63 927-2 RECY - RES 520 Hunte Parkway, Chula
Vista
32.68032367933262, -
116.95367899752998
•Line trim for weed abatement as needed.
•Spray herbicides for week prevention twice a year or as needed.
•Haul away all trimmings and debris.
*Duties may be modified from time-to-time as circumstances require.
16
ATTACHMENT C
SUBJECT/PROJECT:
AUTHORIZE A TWO-YEAR FIXED CONTRACT, PLUS THREE (3)
ONE-YEAR OPTIONS, WITH NATURESCAPE SERVICES, INC. FOR
LANDSCAPE MAINTENANCE SERVICES IN AN AMOUNT NOT-TO-
EXCEED $617,724
SCORESHEET
FY22-2231-008 - Landscape Maintenance Services
Company
Background
Staff
Qualifications
Quality
Assurance
Combined
Rating Fee Total Score
SCORE 20 25 25 70 30 100
AZTEC
LANDSCAPING,
INC.
Evaluator 1 19 23 23
65.67 1 67 Evaluator 2 19 24 25
Evaluator 3 18 23 23 $953,351
Greenridge
Landscape, Inc.
Evaluator 1 13 11 12
43.33 15 58 Evaluator 2 13 11 12
Evaluator 3 17 20 21 $709,932
NatureScape
Services, Inc.
Evaluator 1 16 17 17
54.00 30 84 Evaluator 2 16 17 17
Evaluator 3 18 21 23 $617,724
STAFF REPORT
TYPE MEETING: Regular Board MEETING DATE: November 3, 2021
PROJECT: Various DIV. NO. ALL
SUBMITTED BY: Kent Payne
Purchasing and Facilities Manager
APPROVED BY: Adolfo Segura, Chief, Administrative Services
Jose Martinez, General Manager
SUBJECT: AUTHORIZE A TWO-YEAR FIXED CONTRACT, PLUS THREE (3) ONE-YEAR
OPTIONS, WITH AZTEC JANITORIAL SERVICES FOR JANITORIAL SERVICES
IN AN AMOUNT NOT-TO-EXCEED $525,181.20
GENERAL MANAGER’S RECOMMENDATION:
That the Otay Water District (District) Board of Directors (Board) award
a contract to Aztec Janitorial Services (Aztec) and authorize the
General Manager to execute a two-year fixed contract, plus three (3)
one-year options, with Aztec of Lemon Grove, CA, for janitorial services
at the Administration, Operations, Warehouse, and Treatment Plant
buildings, plus seven remote facility restrooms in an amount not-to-
exceed $525,181.20.
COMMITTEE ACTION:
See “Attachment A”.
PURPOSE:
To obtain Board authorization for the General Manager to enter into a
two-year fixed contract with Aztec, plus three (3) one-year options,
for janitorial services in an amount not-to-exceed $525,181.20.
ANALYSIS:
The District utilizes a multi-year contract for janitorial services at
its main facilities and seven remote sites. A scope of work matrix is
AGENDA ITEM 6
2
provided (see “Attachment B”).
Staff issued a Request for Proposal through its online solicitation
portal, Periscope (formerly BidSync). Seven (7) firms attended a
mandatory pre-proposal meeting via Zoom and a site walk was conducted
at the main campus.
The District received three (3) proposals as of the submittal deadline.
These proposals were evaluated by a three-person review panel that
scored each firm’s experience, proposed supervisor qualifications,
quality control plan, and monthly fee for each year of the contract
(see “Attachment C”).
Firm Five-Year Fee Total Score
Aztec Janitorial Services $525,181.20 63
JLK Enterprise, Inc. $519,600.00 51
T&T Janitorial, Inc.* $319,800.00 60
Monthly and annual fees are as follows:
Calendar Year Monthly Fee Annual Fee
2022 $8,409.90 $100,918.80
2023 $8,578.00 $102,936.00
2024 Option 1 $8,749.50 $104,994.00
2025 Option 2 $8,924.60 $107,095.20
2026 Option 3 $9,103.10 $109,237.20
Contract Total $525,181.20
*Incumbent contract holder
Aztec’s proposal received the highest score and was determined to be
the best value for the required scope of services. Staff checked their
references and all rated Aztec as good to excellent. An internet search
revealed no negative ratings or complaints. Aztec is a locally owned
company located in Lemon Grove, CA, and has been providing janitorial
services for over 29 years. Aztec’s current clients include SANDAG,
City of Murrieta, and KRA Corporation.
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
The annual contracted services operating budget is sufficient to cover
the yearly cost of the contract.
3
STRATEGIC GOAL:
Supports the Districts Strategy: Ensure financial health through
formalized policies, prudent investing, and efficient operations.
LEGAL IMPACT:
None.
ATTACHMENTS:
Attachment A – Committee Action Report
Attachment B – Scope of Work Matrix
Attachment C – Scoresheet
ATTACHMENT A
SUBJECT/PROJECT:
AUTHORIZE A TWO-YEAR FIXED CONTRACT, PLUS THREE (3) ONE-
YEAR OPTIONS, WITH AZTEC JANITORIAL SERVICES FOR JANITORIAL
SERVICES IN AN AMOUNT NOT-TO-EXCEED $525,181.20
COMMITTEE ACTION:
The Finance, Administration, and Communications Committee reviewed this
item at a meeting held on October 20, 2021. The Committee supports
presentation to the full Board for their consideration.
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for Board approval. This report will be sent to
the Board as a Committee approved item or modified to reflect any
discussion or changes as directed from the Committee prior to
presentation to the full Board.
Task #Lunchroom and Department Kitchenettes: M T W T F
1 Faucets, Sinks and Drains:clean and polish; remove all stains
2 Microwaves:clean and sanitize interior; polish exterior
3 Coffee Machine and Toasters:clean, polish exteriors
4 Refrigerators and Vending Machines:clean, sanitize exteriors
5 Countertops, Cabinet Faces and Handles:clean and sanitize
6 Lunchroom Tables, Chairs & Furniture:clean and sanitize
7 Waste Containers:empty, replace liners (supplied by Otay), clean
8 Floors:sweep, mop and sanitize
9 Wall Switches:clean and sanitize
Task #Restrooms and Gym Locker Rooms: M T W T F
1 Sinks and Faucets:clean, sanitize and polish
2 Countertops:clean and sanitize
3 Mirrors:clean and polish
4 Toilets, *Urinals and Flushers:clean, sanitize and polish; remove stains and buildup
*monthly replace urinal mats (provided by Otay)
5 Toilet Seats:clean and sanitize top and underneath; remove stains
6 Dispensers:clean, sanitize and polish; refill soap, paper towels, toilet paper and seat covers
7 Waste Containers:empty and replace liners (supplied by Otay), clean and polish
8 Sanitary Napkins:empty container and replace inserts
9 Partitions and Handles:wipe down and sanitize
10 Floors:sweep, mop and sanitize
11 Gym Showers:clean and sanitize; remove buildup and stains; polish metal fixtures
Task #Common Areas, Meeting Rooms, Offices & Cubicles: M T W T F
1 Waste & Recycle Containers:empty and replace liners (supplied by Otay), clean and polish
2 Lobby Security Glass:spot clean both sides per strict instructions on file
3 Glass Doors and Partitions:spot clean and polish
4 Drinking Fountains:clean, sanitize and polish
5 Door Handles:clean and sanitize
6 Conference Rooms:dust and clean tables
7 Carpeted Walkways and Copier Areas:vacuum
8 Main Entrance Exterior:sweep clean
9 Non-Carpeted Floors:sweep, clean and mop
10 Interior Stairway:sweep and clean treads; clean and sanitize handrails
11 Elevators:clean and sanitize buttons; polish metal surfaces
12 Wall Switches:clean and sanitize
Task #Lunchroom and Department Kitchenettes: Q1 Q2 Q3 Q4
1 Countertops, Cabinet Faces and Handles:detail clean tops, corners, edges, backsplash
2 Lunchroom Floor:clean, wax and polish
3 Kitchenette Floor:detail clean/polish floor, base, corners, under/behind refrigerators
4 Refrigerators and Vending Machines:clean top, exteriors, water dispensers
Task #Restrooms and Gym Locker Rooms: Q1 Q2 Q3 Q4
1 Floors and Base:detail clean floors, edges, corners, grout
2 Partitions and Ceramic Tile Walls:wash down and sanitize
3 Gym Showers:detail clean floors, edges, corners, grout
Task #Common Areas, Meeting Rooms, Offices & Cubicles: Q1 Q2 Q3 Q4
1 Lobby Security Glass:fully clean both sides per strict instructions on file
2 Glass Doors and Partitions:fully clean and polish
3 Meeting Rooms:vacuum and dust chairs and furniture
4 Board Room:clean and polish the Dais, wood surfaces; vacuum and dust chairs and furniture
5 Elevator Floors:detail clean and polish
6 Ceiling Vents:brush down and vacuum
7 Carpet:detail vacuum offices, cubicles, walkways, Board room, training room, etc.
Administration Building
Daily Tasks
Administration Building
Quarterly Tasks*
Scope of Work Matrix
8 Cobwebs:remove from walls, ceilings, windows
9 Dust:file cabinets, bookcases, shelves, desks, fixtures, baseboards, pictures, windowsills, high
reach ledges, partition tops, door tops, air conditioning vents
10 Doors and Frames: clean, remove smudges and marks
11 Floors:detail clean and polish floors, edges, corners, base
12 Painted Walls: spot clean
Task #Janitor and Utility Rooms: Q1 Q2 Q3 Q4
1 Floors:detail clean and polish floors, edges, corners, base
2 Utility Sinks and Drains:detail clean and sanitize; remove stains and buildup
*Work to be observed and certified by janitorial supervisor; duties may be modified from time-to-time as circumstances require.
Scope of Work Matrix
Task #Crew Room and Department Kitchenettes: M T W T F
1 Faucets, Sinks and Drains:clean and polish; remove all stains
2 Microwaves:clean and sanitize interior; polish exterior
3 Coffee Machine and Toasters:clean, polish exteriors
4 Refrigerators and Vending Machines:clean, sanitize exteriors
5 Countertops, Cabinet Faces and Handles:clean and sanitize
6 Waste Containers:empty, replace liners (supplied by Otay), clean
7 Floors:sweep, mop and sanitize
8 Wall Switches:clean and sanitize
Task #Restrooms and Locker Rooms: M T W T F
1 Sinks and Faucets:clean, sanitize and polish
2 Countertops:clean and sanitize
3 Mirrors:clean and polish
4 Toilets, *Urinals and Flushers:clean, sanitize and polish; remove stains and buildup
*monthly replace urinal mats (provided by Otay)
5 Toilet Seats:clean and sanitize top and underneath; remove stains
6 Dispensers:clean, sanitize and polish; refill soap, paper towels, toilet paper and seat covers
7 Waste Containers:empty and replace liners (supplied by Otay), clean and polish
8 Sanitary Napkins:empty container and replace inserts
9 Partitions and Handles:wipe down and sanitize
10 Floors:sweep, mop and sanitize
11 Showers:clean and sanitize; remove buildup and stains; polish metal fixtures
Task #Common Areas, Meeting Rooms, Offices & Cubicles: M T W T F
1 Waste & Recycle Containers:empty and replace liners (supplied by Otay), clean and polish
2 Glass Doors and Partitions:spot clean and polish
3 Drinking Fountains:clean, sanitize and polish
4 Door Handles:clean and sanitize
5 Conference Rooms:dust and clean tables
6 Carpeted Walkways and Copier Areas:vacuum
7 Main Entrance Exterior:sweep clean
8 Non-Carpeted Floors:sweep, clean and mop
9 Exterior Stairway:sweep and clean treads
10 Elevators:clean and sanitize buttons; polish metal surfaces
11 Wall Switches:clean and sanitize
Task #Lunchroom and Department Kitchenettes: Q1 Q2 Q3 Q4
1 Countertops, Cabinet Faces and Handles:clean tops, corners, edges, backsplash
2 Kitchenette Floor:detail clean/polish floor, base, corners, under/behind refrigerators
3 Refrigerators and Vending Machines:clean top, exteriors, water dispensers
Task #Restrooms and Gym Locker Rooms: Q1 Q2 Q3 Q4
1 Floors and Base:detail clean floors, edges, corners, grout
2 Partitions and Ceramic Tile Walls:wash down and sanitize
3 Gym Showers:detail steam clean; remove buildup and stains; polish metal fixtures
Task #Common Areas, Meeting Rooms, Offices & Cubicles: Q1 Q2 Q3 Q4
1 Lobby Security Glass:fully clean both sides per strict instructions on file
2 Glass Doors and Partitions:fully clean and polish
3 Meeting Rooms:vacuum and dust chairs and furniture
4 Board Room:clean and polish the Dais, wood surfaces; vacuum and dust chairs and furniture
5 Elevator Floors:detail clean and polish
6 Ceiling Vents:brush down and vacuum
7 Carpet:detail vacuum offices, cubicles, walkways, Board room, training room, etc.
8 Cobwebs:remove from walls, ceilings, windows
9 Dust:file cabinets, bookcases, shelves, desks, fixtures, baseboards, pictures, windowsills, high
reach ledges, partition tops, door tops, air conditioning vents
Operations Admin, Crew Room and Fleet Shop
Quarterly Tasks*
Operations Admin, Crew Room and Fleet Shop
Daily Tasks
Scope of Work Matrix
10 Doors and Frames: clean, remove smudges and marks
11 Floors:detail clean and polish floors, edges, corners, base
12 Painted Walls: spot clean
Task #Janitor and Utility Rooms: Q1 Q2 Q3 Q4
1 Floors:detail clean and polish floors, edges, corners, base
2 Utility Sinks and Drains:detail clean and sanitize; remove stains and buildup
*Work to be observed and certified by janitorial supervisor; duties may be modified from time-to-time as circumstances require.
Scope of Work Matrix
Task #Restrooms: M T W T F
1 Sinks, Countertops & Faucets:clean, sanitize and polish
2 Mirrors:clean and polish
3 Toilets, *Urinals and Flushers:clean, sanitize and polish; remove stains and buildup
*monthly replace urinal mats (provided by Otay)
4 Toilet Seats:clean and sanitize top and underneath; remove stains
5 Dispensers:clean, sanitize and polish; refill soap, paper towels, toilet paper and seat covers
6 Waste Containers:empty and replace liners (supplied by Otay), clean and polish
7 Sanitary Napkins:empty container and replace inserts
8 Partitions and Handles:wipe down and sanitize
9 Floors:sweep, mop and sanitize
Task #Common Areas, Warehouse & Shops Offices: M T W T F
1 Microwaves:clean and sanitize interior; polish exterior
2 Coffee Machine:clean, polish exteriors
4 Waste & Recycle Containers:empty and replace liners (supplied by Otay), clean and polish
5 Drinking Fountains:clean, sanitize and polish
6 Door Handles:clean and sanitize
7 Warehouse Office:vacuum
9 Front Warehouse Floors:sweep, clean and mop
10 Wall Switches:clean and sanitize
Task #Restrooms: Q1 Q2 Q3 Q4
1 Floors and Base:detail clean floors, edges, corners, grout
2 Partitions and Laminate Walls:wash down and sanitize
Task #Warehouse & Shops Offices: Q1 Q2 Q3 Q4
1 Ceiling Vents:brush down and vacuum
2 Floors:detail clean: vacumm, sweep, mop
3 Cobwebs:remove from walls, ceilings, windows (Shop and Warehouse Offices only)
4 Dust:file cabinets, bookcases, shelves, desks, fixtures, baseboards, pictures, windowsills, door
tops, air conditioning vents
5 Doors and Frames: clean, remove smudges and marks
6 Painted Walls: spot clean
*Work to be observed and certified by janitorial supervisor; duties may be modified from time-to-time as circumstances require.
Warehouse
Daily Tasks
Warehouse
Quarterly Tasks*
Scope of Work Matrix
Task #Lunchroom: M T W T F
1 Faucets, Sinks and Drains:clean and polish; remove all stains
2 Microwaves:clean and sanitize interior; polish exterior
3 Coffee Machine and Toasters:clean, polish exteriors
4 Refrigerators:clean, sanitize exteriors
5 Countertops, Cabinet Faces and Handles:clean and sanitize
6 Lunchroom Tables:clean and sanitize
7 Waste Containers:empty, replace liners (supplied by Otay), clean
8 Floors:sweep, mop and sanitize
9 Wall Switches:clean and sanitize
Task #Restrooms and Locker Rooms: M T W T F
1 Sinks and Faucets:clean, sanitize and polish
2 Countertops:clean and sanitize
3 Mirrors:clean and polish
4 Toilets, Urinals and Flushers:clean, sanitize and polish; remove stains and buildup
5 Toilet Seats:clean and sanitize top and underneath; remove stains
6 Dispensers:clean, sanitize and polish; refill soap, paper towels, toilet paper and seat covers
7 Waste Containers:empty and replace liners (supplied by Otay), clean and polish
8 Sanitary Napkins:empty container and replace inserts
9 Partitions and Handles:wipe down and sanitize
10 Floors:sweep, mop and sanitize
11 Showers:clean and sanitize; remove buildup and stains; polish metal fixtures
Task #Common Areas and Offices: M T W T F
1 Waste & Recycle Containers:empty and replace liners (supplied by Otay), clean and polish
2 Drinking Fountains:clean, sanitize and polish
3 Door Handles:clean and sanitize
4 Carpeted Walkways:vacuum
5 Admin Trailer Entrance Exterior:sweep clean
6 Non-Carpeted Floors:sweep, clean and mop
7 Wall Switches:clean and sanitize
Task #Lunchroom: Q1 Q2 Q3 Q4
1 Countertops, Cabinet Faces and Handles:detail clean tops, corners, edges, backsplash
2 Lunchroom Floor:clean, wax and polish
3 Refrigerators:clean top, exteriors, water dispensers
Task #Restrooms and Locker Rooms: Q1 Q2 Q3 Q4
1 Floors and Base:detail clean floors, edges, corners, grout
2 Partitions and Ceramic Tile Walls:wash down and sanitize
3 Showers:detail steam clean; remove buildup and stains; polish metal fixtures
Task #Common Areas, Meeting Rooms, Offices & Cubicles: Q1 Q2 Q3 Q4
3 Meeting Rooms:vacuum and dust chairs and furniture
6 Ceiling Vents:brush down and vacuum
7 Admin Trailer Carpet:detail vacuum offices, cubicles, walkways, Board room, training room, etc.
8 Cobwebs:remove from walls, ceilings, windows
9 Dust:file cabinets, bookcases, shelves, desks, fixtures, baseboards, pictures, windowsills, high
reach ledges, partition tops, door tops, air conditioning vents
10 Doors and Frames: clean, remove smudges and marks
11 Floors:detail clean and polish floors, edges, corners, base
12 Painted Walls: spot clean
*Work to be observed and certified by janitorial supervisor; duties may be modified from time-to-time as circumstances require.
Treatment Plant Lab and Admin Trailer
Daily Tasks
Treatment Plant Lab and Admin Trailer
Quarterly Tasks*
Scope of Work Matrix
Task #Restrooms: 1 2
1 Sinks, Faucets & Countertops:clean, sanitize and polish
2 Mirrors:clean and polish
3 Toilets, Urinals and Flushers:clean, sanitize and polish; remove stains and buildup
4 Toilet Seats:clean and sanitize top and underneath; remove stains
5 Dispensers:clean, sanitize and polish; refill soap, paper towels, toilet paper and seat covers
6 Waste Containers:empty and replace liners (supplied by Otay), clean and polish
7 Sanitary Napkins:empty container and replace inserts
8 Partitions and Handles:wipe down and sanitize
9 Floors:sweep, mop and sanitize
Task #Restrooms: Q1 Q2 Q3 Q4
1 Floors and Base:detail clean floors, edges, corners, grout
2 Partitions and Ceramic Tile Walls:wash down and sanitize
3 Showers:detail clean; remove buildup and stains; polish metal fixtures
4 Ceiling Vents:brush down and vacuum
5 Cobwebs:remove from walls, ceilings, windows
6 Doors and Frames: clean, remove smudges and marks
7 Painted Walls: spot clean
Pump Stations (7)
Quarterly Tasks
Pump Stations (7)
Twice Weekly Tasks
1296 PS - Buena Vista - Regulatory - Central - 30 Million - 450/680 Recycled - 870-2 PS
Scope of Work Matrix
Scoresheet
Company
Background
Staff
Qualifications
Quality
Assurance
Combined
Rating Fee Total Score
20 25 25 70 30 100
Evaluator 1 20 20 30
Evaluator 2 17 17 22
Evaluator 3 18 18 25 $525,181
Evaluator 1 15 15 15
Evaluator 2 16 14 19
Evaluator 3 15 16 21 $519,600
Evaluator 1 10 10 10
Evaluator 2 15 13 16
Evaluator 3 5 5 6 $319,800
30.00
63
51
60
1
2
30
SCORE
AZTEC JANITORIAL
SERVICES
JLK ENTERPRISE,
INC.
T&T JANITORIAL,
INC.
62.33
48.67