HomeMy WebLinkAboutOperating and Capital Budget FY 2009-2010
ADOPTED OPERATING AND CAPITAL BUDGET
FISCAL YEAR 2009-2010
TABLE OF CONTENTS
Page
Letter of Transmittal iv
BUDGET FOREWORD
Otay Water District At-A-Glance 1
General Information 2
Statement of Values 3
Awards 4
Balanced Scorecard 8
Organization Chart 15
Budget Guide 16
Budget Calendar 18
Budget Process and Basis 20
Resolution No. 4136 23
HISTORY AND COMMUNITY PROFILE
Past and Present 24
Current Economic Conditions 25
The Future 26
Demographics 27
Ten Largest Customers 28
Water Rate Comparison 29
Sewer Rate Comparison 30
Service Area Assessed Valuation 31
Ten Principal Taxpayers 32
San Diego Rainfall 33
FINANCIAL SUMMARIES
Budget Summary 34
Operating Budget Summary – General Fund 38
Operating Budget Summary by System 39
Operating Revenues and Expenditures 40
Fund Balance Summary by Fund 41
Revenues and Expenditures by Fund 42
Revenues and Expenditures by Type 44
FIVE-YEAR FORECAST
Five-Year Forecast 45
General Fund Forecast 46
Fund Balances 47
Debt Management 48
Schedule of Outstanding Debt 49
Projected Principal Payments by Debt Issuance 50
Projected Interest Payments by Debt Issuance 51
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REVENUES AND EXPENDITURES
Potable Revenues and Expenditures
Potable Narrative 52
Operating Budget Summary 54
Classification of Water Sales 55
Water Sales Summary by Service Class 56
Unit Sales History by Customer Class 57
System Fees 58
MWD and CWA Fixed Fees (Pass-Through) 59
Meter Fees 60
Revenue History 61
Water Purchases and Related Costs 62
Power Costs 63
Administrative Expenses 64
Materials and Maintenance Expenses 65
Potable Water Service Area Maps 66
Recycled Revenues and Expenditures
Recycled Narrative 67
Operating Budget Summary 69
Classification of Water Sales 70
Water Sales Summary by Service Class 71
System Fees 72
Meter Fees 73
Revenue History 74
Water Purchases 75
Power Costs 76
Administrative Expenses 77
Materials and Maintenance Expenses 78
Recycled Water Service Area Maps 79
Sewer Revenues and Expenditures
Sewer Narrative 80
Operating Budget Summary 81
Sewer Charges Summary by Service Class 82
Revenue History 83
Power Costs 84
Administrative Expenses 85
Materials and Maintenance Expenses 86
Formula for Sewer Rates 87
Sewer Service Area Map 88
General Revenues and Expenditures
General Revenues and Expenses Narrative 89
General Revenues 91
General Expenses 92
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DEPARTMENTAL OPERATING BUDGET
Departmental Operating Budget Narrative 93
Labor and Benefits 96
Labor and Benefits by Fund 97
Position Count by Department 98
Contract/Temporary Employees 99
Administrative Expenses 100
Materials and Maintenance Expenses 101
Operating Expenditures by Department 102
Operating Expenditures by Object 103
Departmental Budgets:
Board of Directors 104
General Manager 108
Administrative Services 114
Finance 125
Information Technology and Strategic Planning 136
Water Operations 144
Engineering 158
General Expense 168
CAPITAL BUDGET
Capital Improvement Program Narrative 171
Major CIP Projects 173
Flagship CIP Projects in Construction 174
CIP Projects in Construction 177
CIP Reserve Funds 179
CIP Funding Source and Category 180
CIP Projects 181
CIP Justification and Impact on Operating Budget 183
Capital Purchases Budget 185
POLICIES
Summary of Financial Policies 186
Reserve Policy 188
Reserve Policy Glossary 213
Investment Policy 215
Investment Policy Glossary 221
Debt Policy 227
Debt Policy Glossary 240
APPENDIX
Glossary 244
List of Acronyms 250
Index 254
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September 1, 2009
Honorable Board of Directors
Otay Water District
I am pleased to present the Otay Water District’s (District) Adopted Operating and Capital
Budget for Fiscal Year 2010. This year’s budget establishes the management plan to finance all
of the District’s services and programs during the 2010 fiscal year.
The mission of the District is to provide customers with the best quality water, wastewater, and
recycled water service in a professional, effective, and efficient manner. As in past years, we
again face key challenges. These challenges include an economy in recession and continuing
instability in the financial markets; ongoing home
foreclosures; drought in the Southwest; water shortages
brought about by legal action to reduce water deliveries
from the Sacramento – San Joaquin Bay Delta; and the
higher cost of imported water.
Given these uncertain times, the District must find the best
solutions that balance the many expectations placed on it
by its customers. Meeting our customer’s expectations
requires dedication and a commitment to continuous
improvement.
The primary way to achieve our objectives is to improve all
aspects of our core business processes. The main tool we
will continue to use is our Strategic Plan. The District
adopted its first Strategic Plan in 2003, and it’s updated
every three years. It is reviewed quarterly by management
and semi-annually by the Board. This year it was updated for the 2009 through 2011 timeframe.
Efficiency improvements have become the new competitive advantage for utilities. As a result,
the theme of the 2009 through 2011 Strategic Plan is to capitalize on the technology investments
we have made and to utilize these technologies to continue to improve productivity and
efficiency.
The Strategic Plan also carries forth the District’s transformation from a growth-centric to a
maintenance-based organization. Where capital and developer fees supported growth for many
years, today we have become equally focused in managing long-term maintenance and
replacement of our infrastructure.
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This necessary change is illustrated by the
business maturity curve. During high growth
periods, we focused on achieving the macro
targets of building and installing new
infrastructure.
In the future, however, fewer resources are
needed to support slowing growth, but the
effort to maintain and improve infrastructure
and assets increases. In future years, the District also derives income more from rates and less
from fees. Consequently, increased costs place pressure on rates more directly. Therefore, to
balance the customer’s interest in minimizing rate increases while also maintaining its
infrastructure investments and our strong financial position, the District will emphasize internal
efficiency and development of technology assisted best practices. In effect, we will use our
investments in technology to do more with the same or even fewer resources.
Today, the District provides water service to nearly 47,125 potable and 683 recycled water
customers within approximately 125.5 square miles of southeastern San Diego County. All of
the potable water sold to customers is purchased from the San Diego County Water Authority
(CWA). Much of this water is purchased from the region’s water importer, the Metropolitan
Water District of Southern California (MWD). The District entered into an agreement with
CWA to have the Helix Water District, at their Levy Water Treatment Plant, treat imported
untreated water on behalf of the Otay Water District. This action brought regional water
treatment closer to customers and reduced dependence on water treatment facilities located
outside of San Diego County.
To deliver that locally treated water to customers, the District initiated construction of a 5.1 mile,
36-inch diameter pipeline. Drinking water delivered by the new pipeline will be stored in two
newly constructed 10 million gallon reservoirs. In addition to bringing water treatment closer to
customers, this new source of treated water, pipeline, and storage reservoir system diversifies the
District’s water supply and improves reliability.
The Otay Water District also owns and operates a wastewater collection and recycling system to
provide public sewer service to approximately 4,640 homes and businesses. Wastewater
collected is conveyed to the District’s Ralph W. Chapman Water Recycling Facility
(RWCWRF), which is capable of reclaiming wastewater at a rate of 1.3 million gallons per day.
The District also purchases up to six million gallons per day of recycled water from the City of
San Diego’s South Bay Water Reclamation Plant. Recycled water from these two sources is
used to irrigate golf courses, schools, public parks, roadway landscapes, and other approved uses
in the City of Chula Vista, California. The use of recycled water reduces dependency on
imported supplies and provides a local supply thereby diversifying District resources.
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BUDGET SUMMARY
The Otay Water District’s operating expenditures consist of three major sectors: potable water,
recycled water, and sewer, totaling $75,716,500 for Fiscal Year 2010. Revenues from potable
and recycled water are projected to be $64,077,000, about $8.5 million (15.3%) more than Fiscal
Year 2009. Water sales volumes are expected to decrease as a result of the slowing economy
and expanded efforts to promote water conservation, however, rate increases are essential to
offset the higher cost of water. Sewer revenues are projected to be $2,244,800, about $99,500
more than Fiscal Year 2009 because of necessary rate increases. The remaining revenue of $9.4
million comes from special fees and assessments and miscellaneous income.
Significant aspects of the Operating Budget are:
• A balanced budget meeting the goals of the Strategic Plan.
• An updated six-year Rate Model to ensure sound financial planning and reserve levels.
• Unprecedented water supply rate increases of 21.1% from MWD and 18.1% from CWA
because of the high cost of supply programs, higher energy, and operating costs.
• Implemented rate increases in potable, recycled water, and sewer. This included pass-
through rate increases from CWA, and County of San Diego.
• In response to the economic slowdown, the District has again reduced staffing levels
from 169 full time equivalents to 166. It also cut operating expenditures by $793,100 due
to program funding changes and other discretionary spending cuts.
• Of San Diego County’s 23 water agencies, Otay’s water rate is the eight-lowest and
below the county-wide average.
• Expanded residential, landscape, and commercial water conservation programs.
The 2009-10 Capital Improvement Budget (CIP) consists of 87 projects and a budget of $37.2
million. The budget emphasizes long-term planning for on-going programs while functioning
within fiscal constraints and population growth. This year’s CIP budget increased by $10.5
million compared to last year’s projection due to new water supply projects.
The Future
The coming years will continue to be challenging times for those in California’s water
community. After years of record low precipitation that dramatically curtailed snow runoff from
the Sierra Nevada Mountains, California’s governor declared an official statewide
drought. Following the governor’s action, Southern California’s largest water wholesaler
announced a water supply alert across its six-county service area. It also urged all local
jurisdictions to implement water conservation ordinances and to “significantly increase efforts”
to conserve water.
In addition to the drought, federal court orders have curtailed water deliveries from Northern
California due to environmental factors in the Sacramento-San Joaquin Bay Delta. Worsening
environmental conditions in the Bay Delta now challenge Southern California’s ability to receive
water from the State Water Project. A political stalemate in the state capital has also made
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finding compromise or addressing the environmental issues in the Bay Delta more difficult.
These factors combined are driving higher costs for water across the state.
Through foresight and its investments in drought-proof recycled water, conservation, and a water
rate structure that rewards conservation, the Otay Water District has thus far avoided having to
require mandatory water conservation. Rather, the District has achieved its water conservation
goals using voluntary measures. As you would expect, the planned water sales reductions have
impacted price and will continue to affect the District’s finances. Staff continues working
diligently to address the financial impacts of conservation as it prepares for the possibility of a
severe water shortage and prolonged sales reductions.
With these factors in mind, our success as an organization is vastly enhanced by the practices
and policies put in place by the Board of Directors to ensure the strength and stability of the
District as we move forward into uncertain times. We are fully confident that with the policies
and practices put in place by the Board, supported by dedicated and talented staff; we will
achieve continued success as an organization and assure the well-being of the customers we
serve.
In adopting this budget, these factors were met by the Otay Water District’s Board of Directors
resolve to keep the stability and strength of the District as one of its highest priorities.
AWARDS AND ACKNOWLEDGMENTS
• The Government Finance Officers Association (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the Otay Water District for its
Comprehensive Annual Financial Report (CAFR) for the fiscal year that ended June 30,
2008. In order to be awarded a Certificate of Achievement, a government agency must
publish an easy to understand and efficiently organized Comprehensive Annual Financial
Report. This report must satisfy both generally accepted accounting principles and
applicable legal requirements.
• The District also received a Distinguished Budget Presentation Award from the GFOA
for the District’s Operating and Capital Budget for the Fiscal Year beginning July 1,
2008, as well as two awards from the California Society of Municipal Finance Officers
(CSMFO) for Excellence in Operating Budgeting and Excellence in Capital Budgeting.
These prestigious awards recognize conformance with the highest standards for
preparation of state and local government financial reports.
• The American Society of Civil Engineers (ASCE) presented Otay Water District and
Infrastructure Engineering Corporation the 2008 Outstanding Civil Engineering Project
for Water Supply/Waste Water Treatment & Reuse for 640 Reservoirs. Additionally, the
Construction Management Association of America (CMAA) presented Otay Water
District the 2009 Project Achievement Award for the 640-1 and 640-2 Reservoirs to
recognize outstanding achievement in the practice of construction management.
• The Otay Water District’s Information Technology and Strategic Planning Department
was awarded the Center for Digital Government’s Best of California, Leadership and
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Excellence Award for 2008 and the Municipal Information Systems Association of
California’s (MISAC) "Excellence in IT Practices Award."
• The California Highway Patrol presented the Otay Water District a Certificate of
Achievement for its terminal which has achieved consecutive satisfactory compliance
ratings. This is a meritorious achievement that “recognizes the commitment to highway
safety demonstrated by the personnel responsible for operation of this terminal.”
In conclusion, this Budget reflects the vision of the Board of Directors of the Otay Water
District, its management, and its employees. We will continue to strive to make improvements
in our budget processes, including an extensive review and analysis of projections for revenues,
expenditures, capital projects, and reserves.
I would like to thank all the staff involved in this process for the efforts put forth in the
preparation of this budget to ensure a successful outcome.
To the Board of Directors, we acknowledge and appreciate their continued support and direction
in achieving excellence in financial management.
__
Mark Watton, General Manager
viii
HISTORY
The Otay Water District was formed in January 1956 and joined the San Diego County Water
Authority (CWA) in September 1956 to acquire the right to purchase and distribute imported
water throughout its service area. The District is also responsible for the collection, treatment,
and disposal of wastewater from a portion of the northern region of the District. In 1980, the
District started operation of the Ralph W. Chapman Water Recycling Facility (RWCWRF), and
in June, 2007, a new source of recycled water from the City of San Diego was obtained, allowing
Otay Water District to supply 15 to 20 percent of total water demand with recycled water.
MISSION STATEMENT
The mission of the District is to provide customers with the best quality water, wastewater, and
recycled water service in a professional, effective, and efficient manner.
SERVICE AREA
The District's boundaries encompass an area of approximately 125 square miles in San Diego
County, lying immediately east of the City of San Diego metropolitan area and running from the
City of El Cajon south to the international border.
GOVERNMENT
The Otay Water District was formed in 1956 to serve as a public water and sewer agency,
authorized as a California special district under the provisions of the Municipal Water District
Act of 1911. The District’s ordinances, policies, taxes, and rates for service are set by five
Directors, elected by voters in their respective geographic division, to serve staggered four-year
terms on its governing board. The District is a “revenue neutral” public agency, meaning that
each end-user pays only their fair share of the District’s costs of water acquisitions and the
operation and maintenance of the public facilities.
ORGANIZATIONAL STRUCTURE
The General Manager reports directly to the Board of Directors, and through two Assistant
General Managers and the District management, oversees day-to-day operations. One Assistant
General Manager oversees the departments of Administrative Services, Finance, Information
Technology and Strategic Planning while the other oversees the Water Operations and
Engineering departments. These and other lines of reporting are shown on the organization chart
on page 15.
Otay Water District At‐A‐Glance
1
For Fiscal Year 2010, the District will have a staff of 166 full-time equivalent employees under
the leadership of the General Manager. The District provides water service to approximately
39% of its land area with a population of more than 195,000 people. This percentage increases
as the District's service area continues to grow to ultimate build-out. The District is projected to
deliver approximately 33,300 acre-feet of potable water to 47,125 potable customer accounts and
to ultimately deliver 60,700 acre-feet of potable water to serve 277,000 people or 66,000
accounts. The rate of growth, as projected by the San Diego Association of Governments
(SANDAG) for the Chula Vista area of San Diego County, is approximately 1.7% per year over
the next decade. Using historical data and considering current economic conditions, staff has
moderated this projection to a growth rate of 0.2% for Fiscal Year 2010.
Since 1956, the District has provided high quality water to a semi-arid region of the southeastern
San Diego County. In 1971, the District constructed a small collection and treatment plant for
sewer in the northern section of the District, and in 1980 the District opened the Ralph W.
Chapman Water Recycling Facility (RWCWRF). For over 50 years, the available supply of
water has helped transform the District service area from a mostly scrub and cactus-covered
backcountry into a wonderful balance of diverse environments.
Recycled water from the RWCWRF is used to irrigate golf courses, schools, public parks,
roadway landscapes, and various other approved uses in eastern Chula Vista. The RWCWRF is
capable of recycling wastewater at a rate of 1.3 million gallons per day. The District is also in a
partnership with the City of San Diego to beneficially reuse an additional 3,356 acre-feet per
year of recycled water for Fiscal Year 2010, and ultimately up to 6,720 acre-feet per year. This
makes Otay Water District the largest retail provider of recycled water in the county.
The District also owns and operates a wastewater collection system providing public sewer
service to approximately 4,640 customer accounts within the Jamacha drainage basin. The sewer
service area covers approximately 8,797 acres, which is about 11% of the District’s total service
area. Residential customers comprise 98% of the sewer customer base.
Photo Credit: “The Metropolitan Water District of Southern California”, see Sisyrinchium
bellum and wildflower Tidy Tips on “This page intentionally left blank.”
General Information
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As Otay Water District employees we dedicate ourselves to:
CUSTOMERS
We take pride that our commitment to customer-centered service is our highest priority.
EXCELLENCE
We strive to provide the highest quality and value in all that we do.
INTEGRITY
We commit ourselves to doing the right thing.
Ethical behavior, trustworthiness and accountability are the District’s foundation.
TEAMWORK
We promote mutual trust.
We share information, knowledge and ideas to reach our common goals.
EMPLOYEES
We see each individual as unique and important.
We value diversity and open communication to promote fairness, dignity and respect.
Otay Water District Employees
Dedicated to Community Service
Statement of Values
3
Financial Awards
The Government Finance Officers
Association of the United States and
Canada (GFOA) presented a
Distinguished Budget Presentation
Award to Otay Water District, California
for its annual budget for the fiscal year
beginning July 1, 2008. In order to
receive this award, a governmental unit
must publish a budget document that
meets program criteria as a policy
document, as an operations guide, as a
financial plan, and as a communications
device.
This award is valid for a period of one
year only. We believe our current budget
continues to conform to program
requirements, and we are submitting it to
GFOA to determine its eligibility for
another award.
The California Society of
Municipal Finance
Officers (CSMFO)
presented Otay Water
District the Certificate of
Award for Excellence in
Operating Budgeting for
Fiscal Year 2008-2009.
4
Awards
The California Society of
Municipal Finance
Officers (CSMFO)
presented Otay Water
District the Certificate of
Award for Excellence in
Capital Budgeting for
Fiscal Year 2008- 2009.
The American Society of Civil
Engineers (ASCE) presented
Otay Water District and
Infrastructure Engineering
Corporation the 2008
Outstanding Civil Engineering
Project for Water Supply/Waste
Water Treatment & Reuse for
640 Reservoirs.
5
Awards
The Construction Management Association of
America (CMAA) presented Otay Water District
the 2009 Project Achievement Award for the
640-1 and 640-2 Reservoirs to recognize
outstanding achievement in the practice of
construction management.
The Construction Management Association of
America (CMAA) presented Otay Water
District the 2008 Client of the Year Award.
The Otay Water District’s Information
Technology and Strategic Planning
Department was awarded the Center for
Digital Government’s Best of California,
Excellence in IT Operations Support and
Service, Award for 2008.
The Otay Water District’s Information
Technology and Strategic Planning
Department was awarded the Municipal
Information Systems Association of
California’s (MISAC) Excellence in IT
Practices Award.
6
Awards
The California Highway Patrol presented the
Otay Water District a Certificate of Achievement
for its terminal which has achieved consecutive
satisfactory compliance ratings. This is a
meritorious achievement and recognizes the
commitment to highway safety demonstrated by
the personnel responsible for operation of this
terminal.
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Introduction
The Strategic Plan is the core document which guides the agency’s efforts to meet and positively
adapt to change. The plan examines a three year timeframe and explicitly defines the strategies,
goals, objectives and performance measures needed to meet these challenges. It is based upon
the District’s mission, vision and values, and focused around a key challenge – which is the
theme for the FY 2009-2011 plan.
Key Challenge
The theme of the FY 2009-2011 plan is to capitalize on the infrastructure investments made in
the last few years. The District has begun to address the transformation from a growth-centric to
a maintenance-based organization. Capital and developer fees support growth but replacement
and maintenance are supported by rates and operating expenses. The District has been very
Balanced Scorecard
8
successful in managing growth but now needs to become more focused in managing long-term
maintenance and replacement of its infrastructure. As the current economic environment cools,
there is opportunity to realign energies and optimize the management and maintenance of the
nearly half billion dollars of District “in-ground” assets. In addition, with water supplies being
challenged due to drought conditions, the District needs to be flexible in managing a limited
supply while maintaining a positive relationship with customers.
Efficiency improvements have become the new competitive advantage for utilities. Staff will
need to do more with the same or fewer resources. The primary way to achieve this target is to
improve all aspects of core business processes.
Key Challenge
The key challenge for the District is to find the best solutions that balance our requirements
with the significant constraints we face. Some of these constraints are escalating cost,
drought, increasing regulatory compliance and uncertainty, customer demands for improved
services, and competition for supply and resources. Meeting these challenges requires
dedication and commitment to continuous improvement, and the innovative use of
technologies and resources.
This necessary change is illustrated by the business maturity curve. During high growth, we
focused on achieving the macro targets of building and installing new infrastructure. In the
future, the resources required to support slower growth are reduced but the effort to maintain and
improve assets is increasing. Income, however, will be derived more from rates and less from
fees. Consequently, increased costs place pressure more directly on rates. Therefore, to meet
customer and financial goals, the District will need to emphasize internal efficiency and
development of technology-assisted best practices.
Methodology
The Balanced Scorecard focuses on four perspectives as a mechanism for setting strategic
direction and balancing competing priorities. This industry best practice has been adopted by the
District because it allows for examination of our plans from different perspectives.
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Every three years the District engages in a major revision of its Strategic Plan. This current plan
(covering Fiscal Years 2009-2011) is the third in a series of three-year plans beginning in 2003.
The process is inclusive, starting with a thorough review of the last effort, the District’s Vision,
Mission, and Key Challenge statements are examined and revised. Individual interviews are
conducted with the Board of Directors, approximately 30 staff members, union representatives,
as well as team meetings involving all Otay staff. Assistance from professional consultants and
industry best practice advice are taken into account to provide third party input.
The primary tool, however, is a very thorough review process by the Senior Management Team
of every strategy, goal, objective, project plan, performance measure, and target contained in the
plan. Through this team discussion process the General Manager gains consensus with his staff
on the exact priorities for the District, including detailed financial and resource considerations
required to execute the plan. Thus, the plan serves as an informal contract between District staff
and the General Manager on the strategic work that will be done and what the District hopes to
achieve over the next three years. In turn, the General Manager presents the plan to the Board
for approval. Through the Strategic Plan and budget approval processes, the Board is then able
to make well-informed decisions about the District’s direction.
Performance Management
Performance metrics and targets are a critical element of the Strategic Plan but differ from
Strategic Plan objectives. Objectives identify the action items that are necessary to achieve the
strategic vision. Performance measures are designed to ensure the day-to-day operations of the
utility are meeting agreed-upon expectations. Performance measures were revised from the prior
year and are updated quarterly, and reviewed by the Board on a semi-annual basis.
I. CUSTOMER
1. Maximize Our Customers’ Satisfaction
A. Listen to Our Customers
1. Capture customers’ attitudes and awareness through a repeatable customer
survey program.
2. Expand a more detailed customer complaint tracking and reporting system.
B. Effective Use Multi-Channel Communications
1. Incoming calls – Streamline and document the District’s incoming customer
call processes.
2. Interactive Voice Response - Enhance the usefulness of the Interactive Voice
Response (IVR) for better customer service across the District.
3. Auto-dialer – Evaluate enhancing the usefulness of the auto-dialer to
efficiently notify customers of District events.
4. Web Page - Evaluate and enhance the District’s website design to allow easier
use and navigation.
5. E-Customer Account - Enhance the customer’s ease of access to personalized
account information including water use, payment status, and historical
trending.
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6. Written Publications – Develop an effective program for producing new
customer communication including drought related communication.
Evaluate bi-lingual options.
7. Evaluate the most cost effective and efficient processes and tools to
communicate service related issues to customers. For example: email, target
mail, door hanger, etc.
8. Develop a comprehensive community outreach plan and materials to target
specific community stakeholders with additional information or presentations
on drought, recycled water, and water conservation.
2. Educate our Customers on Important Water Related Matters
A. Expand the District’s water conservation programs to maximize District-wide
water conservation
1. Promote and encourage adoption of conservation practices for new
construction within District service territory.
2. Participate in the revision of the 14 water conservation Best Management
Practices and prepare to implement those that are locally cost-effective.
B. Maximize recycled water use and public knowledge
1. Continue a regional approach and expand District’s recycled water outreach
program to landscape architects, maintenance companies, developers,
contractors, and home owner associations.
3. Help Shape the Water Industry’s Direction
A. Legislative and political influence for District programs
1. Continue to actively participate in County Water Authority, Metropolitan
Water District of Southern California, state policy making and pending
legislative review and comment.
2. Promote enhancements to city, county and state water conservation
requirements and implement appropriate BMPs.
B. Optimize the District’s water industry participation
1. Promote and encourage leadership opportunities for District staff in water
industry committees.
2. Evaluate and implement American Water Works Association Peer Review for
the District.
II. FINANCIAL
1. Develop a Long Term Financial Planning Program
A. Establish a long-term (15 year) financial plan including scenarios and
contingencies for changes in demographics, local economy, and drought
uncertainties including:
1. Facilities and staffing plan needs.
2. Developing the long term financial plan.
B. Conduct financial threat assessment for growth, water availability, inflation and
other revenue sources
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C. Re-calculate all Capacity and Annexation Fees with New Rehabilitation and Repair
Plan
2. Optimize All Revenue Streams
A. Modify existing rate structures
1. Simplify residential fee structures and the billing system.
2. Reduce complexity of and simplify rate structure.
3. Evaluate drought stage rates and propose changes.
4. Evaluate and improve effectiveness of bill (including fees for Chula Vista
sewer billing).
III. BUSINESS PROCESSES
1. Implement Industry Best Practices for Utility Development
A. Potable Water
1. Prioritize and implement recommendations contained in the Integrated
Resources Plan and Water Resources Master Plan to obtain an additional 15%
of potable water.
2. Update the District’s Drought Management Plan including actions for
enforcement.
3. Create a comprehensive environmental program that is cost-effective and
proactive in response to environmental compliance.
4. Develop and implement a proactive leak detection program to reduce
distribution system water loss.
B. Sewer
1. Evaluate the long-term requirement for costs and benefits of seeking
additional sewer collection flow treatment, and/or disposal capacity.
2. Develop and implement Treatment Plant enhancements including automation
for remote operation and shutdown, technology improvements, and upgrade of
facilities.
C. Recycled Water
1. Obtain 10% in new recycled water supplies by prioritizing and implementing
the recommendations in the IRP & WRMP.
2. Finalize evaluation of North District service area expansion for recycled water
and seek approvals and funding.
2. Optimize the District’s Operating Efficiency
A. Minimize the District’s total life cycle asset costs
1. Develop and implement an Asset Management Program Plan to extend useful
life of capital assets.
2. Expand meter testing for 3” and larger calibration and replacement program.
3. Evaluate increasing the completion schedule of District’s valve actuation,
valve replacement, and air vac programs.
4. Enhance construction inspection on construction projects by implementing
IMS.
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B. Update the District’s IT Strategic Plan
1. Evaluate the long-term viability of Eden financials and billing system.
2. Enhance the integration of Infrastructure Management System, Eden,
Customer Information System, Supervisory Control and Data Acquisition, and
Geographic Information System.
3. Enhance existing Capital Project Tracking System.
4. Enhance the District’s data management, data update process, and data
architecture including enterprise standard data. Update process for ensuring
GIS data is accurate.
5. Develop and deploy the field wireless network for key facilities.
C. Optimize the use of existing technologies
1. Optimize functionality, business continuity, bandwidth, and use of SCADA.
2. Optimize use of Voice Over Internet Protocol and unified messaging.
3. Evaluate implementing a fixed network Automated Meter Reading.
4. Optimize the use of SharePoint.
5. Develop optimized field work processing using integrated technology.
6. Assess and implement security best practices for all Otay networks.
D. Increase field productivity through improved efficiency
1. To obtain access to shared electricity, gas, telephone, and other utilities from
cell site vendors, San Diego County and, other agencies.
E. Improve the efficiency of business processes
1. Investigate using electronic signatures on staff reports, shutdown plans,
contracts, magazines, newsletters, reimbursements, project closeouts, etc.
2. Evaluate web-based employee performance reviews.
3. Enhance accounts payable to electronically pay bills for frequent vendors and
routine bills and maximize the use of e-bills.
4. Enhance fuel tracking and reporting system.
5. Automate application process.
6. Develop a Heavy Equipment Capital Replacement Plan.
7. Identify existing facilities that are good candidates for conversion to separated
irrigation meters (recycled and/or potable water), specifically for multi-
family/industrial/commercial projects.
8. Enforce use of separate meters for irrigation during the Sub-Area Master Plan
(SAMP) Review Process to maximize the use of recycled water. Irrigation of
landscaped areas shall have a separate meter regardless if potable or recycled
water is available, while maximizing the use of recycled water.
F. Optimize Disaster Preparedness
1. Review/consolidate the District’s Disaster Preparedness Plan
2. Update Security Assessment and implement Technology Recommendations.
3. Evaluate and make recommendations regarding Environmental Health, and the
Emergency Preparedness and Safety Management System.
13
3. Improve Financial Analysis and Reporting
A. Improve per cost unit reporting
1. Develop and measure cost per unit expenditures and forecasts.
B. Improve the efficiency and effectiveness of District-wide reporting
1. Utilize SCADA to calibrate water model.
IV. LEARNING AND GROWTH
1. Results-oriented Workforce
A. Retain Dedicated Workforce
1. Evaluate effective communication tools throughout the organization.
2. Evaluate the Pay-for-Performance Program.
3. Evaluate the Employee Recognition Program.
4. Assess findings of 2008 Employee Survey.
5. Conduct Employee Survey in preparation for 2012 Strategic Plan
development.
B. Hire the “Best”
1. Review and update classification plan and revise critical areas.
2. Review and revise marketing strategy and recruiting tools.
C. Staff Development
1. Develop and identify required and desired District-wide training for all
classifications.
2. Develop and maintain a formal program to track employee training.
D. Workforce Management
1. Identify core elements of Succession Planning that can be tailored to the
District’s needs.
E. Performance Management
1. Update and expand annual review process to include greater emphasis of
Strategic Plan objectives and performance measures and understanding of
career goals and how they may relate to the District's Succession Plan.
F. Knowledge Management
1. Update District-wide Records Management Program.
2. Develop information systems support for asset management program.
G. Community Involvement/District Outreach
1. Optimize community involvement throughout the District.
14
GENERAL MANAGER
BOARD OF DIRECTORS
Assistant General Manager
Engineering
Planning
Water
Operations
Water System
Operations
Assistant General Manager
Information
Technology and
Strategic Planning
IT Applications
Finance
Controller
and
Budgetary
Administrative
Services
Human Resources
Organization Chart
Citizens and
Customers
GENERAL MANAGER
BOARD OF DIRECTORS
Assistant General Manager
Engineering
Planning
Design
Water
Resources
Public Services
Construction
Survey
Environmental
Water
Operations
Water System
Operations
Utility
Maintenance/
Construction
Collection/
Treatment/
Recycle
Operations
Assistant General Manager
Information
Technology and
Strategic Planning
IT Applications
IT Operations
GIS
Finance
Controller
and
Budgetary
Services
Treasury
and
Accounting
Services
Customer
Service
Payroll and
Accounts
Payable
Administrative
Services
Human Resources
Purchasing and
Facilities
Safety and Risk
Administration
Water
Conservation
Organization Chart
Citizens and
Customers
15
The District views the budget as an essential tool for proper financial management. This budget
is developed with input from the various department levels of the organization and is adopted
prior to the start of each fiscal year. It is designed and presented for the general needs of the
District, its staff, and citizens. It is a comprehensive and balanced financial plan that features
District services, resources and their allocation, financial policies, and other useful information
to allow the users to gain a general understanding of the District’s financial status and future
plans. To help readers navigate this document, the following is a general description of each of
the tabulated sections of the budget.
Budget Foreword
This introductory section contains descriptions and general information about the District,
strategic focus areas highlighting major initiatives and accomplishments, and the Budget
Calendar and Process.
Policies
This section includes a summary of the District’s financial policies and practices, including the
Reserve Policy, Investment Policy, and Debt Policy.
History and Community Profile
Included in this section is the history of the District, along with the current and future economic
conditions and projections. It also includes statistics on the District’s customers, the region’s tax
base, and rainfall.
Financial Summaries
This section contains an overview of the District’s revenues and expenditures by fund for the
current budgeted fiscal year and prior two years’ actual and estimated amounts. It includes a
description of each of the revenue and expense categories as well as charts depicting their
relationships.
Five-Year Forecast
The District prepares a comprehensive Rate Model each year based on budget input, trends, new
programs, and requirements. Estimates are made of cost increases, rate increases, targeted fund
balances, capital needs, and debt requirements. Analysis for the current budget year plus five
subsequent years is conducted and a five-year forecast is prepared based on the Rate Model
results.
Budget Guide
16
Revenues and Expenditures
The District budgets revenues and expenditures by Potable, Recycled, and Sewer Systems.
General revenues and expenditures that are not specific to one system or department are
budgeted in General Revenues and Expenses section. An allocation of overhead type costs is
made to equitably spread the cost of running the District among the various business segments.
Departmental Operating Budget
This section provides a summary of each department’s operating expenditures and detailed
budget information including its mission, responsibilities, three-year staffing, performance
indicators, accomplishments, and goals. Also provided are graphical presentations of
departmental budget percentages to District total, as well as summary expenditure information
by division for three fiscal years.
Capital Budget
An overview of the District’s Capital Improvement Program (CIP), the Water Resources Master
Plan (WRMP), major assumptions and criteria, a five-year listing of CIP project expenditures
and the justification and impact on the Operating Budget and capital purchases budget for the
fiscal year are located in this section.
Appendix
The last section consists of a Glossary of budget and financial terms, List of Acronyms, and an
Index.
Budget Guide
17
Each year, the Finance Department prepares a Budget Workbook for distribution to the
departments. This workbook gives instructions and deadlines for each phase of the budget.
The budget process is explained on pages 20 and 21.
February 13, 2009 Chiefs submit CIP budget for New Projects and changes to existing
projects.
February 18, 2009 Chiefs submit request for new Personnel/Personnel Reclassifications
and long-term staffing to Human Resources.
February 25, 2009 Human Resources Department (HR) to complete preliminary review
of new Personnel and Personnel Reclassification request.
March 2, 2009
Each department submits the following items:
• Operating and administrative budget
• Capital purchases and justification
• Labor Budget Worksheet
March 4, 2009 Human Resources to review new personnel and reclassification
requests with General Manager.
March 9, 2009 Finance Department reviews Operating Budget and performs
Reconciliation with departments.
March 11, 2009 Chiefs submit GM approved Personnel Requests and Request for
Reclassification; and Position Analysis Questionnaire forms to HR.
April 21, 2009 Finance reviews assumptions and rates with Chiefs, AGMs and GM.
April 24, 2009 General Manager reviews Preliminary Budget.
May 13, 2009
Finance reviews Department Operating Budgets with GM and
AGMs, and reviews department preliminary CIP budget with Chief
of Engineering.
Budget Calendar
18
May 13, 2009 Practice run of budget presentation with Finance, Chiefs, AGMs and
GM.
May 20, 2009 Finance reviews personnel costs with Chiefs, AGMs and GM.
May 21, 2009 Public Workshop – Adopt FY 2009-10 Operating and Capital
Budgets.
July 9, 2009 Mail Proposition 218 Notices.
August 24, 2009 Proposition 218 Hearing.
19
The District has integrated the Capital Improvement Program (CIP) Budget and the Operating
Budget. These budgets are developed based on the District’s Water Resources Master Plan and
Strategic Business Plan. New initiatives and programs are categorized into the Balanced
Scorecard perspectives. Appropriate budget amounts are determined by using the historical data
of operations, growth, developers’ input, SANDAG projections, and economic outlook. The
District is accounted for and budgeted on an enterprise basis and conforms to the guidelines of
Generally Accepted Accounting Principles (GAAP).
To assure reliable, high-quality service to the growing customer base, the District has committed
to a number of long-range strategies that drive the budgeting process. The strategies and
assumptions used to develop the District’s integrated budget are:
• an average projected long-term growth rate of 1.7%
• pass-through rate increases for costs imposed on the District by the wholesale
water providers
• accurate projections of capital budget needs (including replacement needs)
• reserve funding in accordance with the Reserve Policy to meet future growth
demands and maintain financial stability
• funding of the Strategic Plan initiatives as categorized into the Balanced
Scorecard perspectives
• avoid rate spikes by leveling rate increases over a six-year period
Each year, the Finance Department prepares a Budget Workbook for distribution to the
departments. This workbook gives instructions to departments on how to budget for positions,
administrative, and materials expenses. Included in this workbook are historical trends,
assumptions, and training on how to enter the expense data into the District budget system.
Administrative and Materials Expenses are entered into the budget system by individual
requests. These requests are compared to last year’s budget and expenses to determine
reasonableness by the Finance Department. New or large increases in costs are supported by
explanations for these costs and presented to the General Manager and the Board of Directors
prior to adopting the budget.
The budgeting of salaries and benefits is performed in the position budgeting module of the
budget system. This tool allows the District to budget for each authorized position and the
associated benefits in an automated fashion. Departments submit requests for new positions,
reclassifications, or advancements to the Assistant General Managers. These requests are
reviewed by the Assistant General Managers and then presented to the General Manager for
approval. Upon their approval, the Finance Department enters these changes, as well as
negotiated pay increases and benefit rate changes, into the position budget system. Position
budgeting calculates the salaries and benefits to be included in the District’s budget.
Budget Process
20
The Finance Department prepares the budget for the Potable, Recycled, and Sewer Systems
based on estimated cost increases from the District’s wholesale water providers as well as
estimated sewer charge increases provided by the City of San Diego. Other significant factors in
the budget development include projected growth in customer accounts and weather.
Additionally, all general revenue and expense budgets are calculated using trend analysis and
any external factors that may affect these items.
The Engineering Department issues budget instructions for the CIP budget process. Each
project manager receives a report of year-to-date project expenses and then estimates cost to the
end of the fiscal year. They also project future costs to complete the project. Costs are adjusted
for scope changes as well as construction cost increases. Engineering then compiles the CIP
Budget and submits it to the Assistant General Managers and the General Manager for review
prior to presentation to the Board of Directors.
Once all of these budgets have been calculated, the Finance Department inputs all of the
operating revenues and expenses, CIP expenses, reserve funding, and reserve levels into the
District’s Rate Model. Inflators for cost and volume are input into the Rate Model to project the
next five years of revenue and expenses. Rates are then set for the current fiscal year, plus five
subsequent years, such that all financial targets are met. Using this comprehensive modeling
tool, the District is able to smooth future rate increases, determine when debt should be issued,
and maintain all of the reserve levels in accordance with the Reserve Policy.
The District has a three year Strategic Plan, and each year in the spring, the portion of the plan
that pertains to the upcoming fiscal year is presented to the Board of Directors for review and
direction. This is followed by a coordinated presentation of the budget by all departments, to the
Board of Directors for their approval at a special budget workshop in May. The review of
Strategic Plan and the adoption budget on an annual basis gives the District its direction for the
following fiscal year.
During the year, each department receives monthly budget and cost reports that are essential to
monitor and control costs. As events occur or conditions change, modifications to or deviations
from the original budget may be necessary. In the event the General Manager determines that an
emergency exists which requires immediate action, he may transfer appropriation within the
budget allocations, or request that the Board of Directors increase the current budgeted funds.
Due to the size of the District’s CIP, a separate budget book has been prepared outlining in detail
the projects and expenditures required to ultimate build-out. A synopsis of the CIP may be
found under the Capital Budget section of this report. As part of the integrated budget, capital
purchases have been included within the CIP Budget.
The Budget Report is intended as a financial guide and may be modified by the Board of
Directors during Fiscal Year 2010.
21
The District utilizes the accrual basis for budget and accounting, recognizing revenues and
expenses in the period in which they are earned and incurred, respectively. The District reports
its activities on an enterprise basis, which is used to account for operations that are financed and
operated in a manner similar to a private business enterprise. The intent of the District is that the
costs (including replacement cost of existing assets) of providing goods or services to the general
public on a continuing basis, be financed or recovered primarily through user charges.
Budget Basis
1296-3 Reservoir, July 2009
22
23
On January 27, 2006, the Otay Water District celebrated its golden anniversary. Over 50 years
ago, the California State Legislature officially authorized the District to an entitlement to
imported water. The Otay Water District was formed in 1956 by a small group of ranchers,
farmers and other property owners concerned about the declining quality and quantity of well
water. In 1957, developers in south Spring Valley created the La Presa County Water District to
gain water from the San Diego County Water Authority (CWA). In the fall of 1969, these two
districts merged into the Otay Water District.
Since then, the District has grown from a handful of customers and two employees to become an
organization operating a water network with more than 736 miles of potable and 97 miles of
recycled pipelines, 42 reservoirs, a sewer treatment plant, and one of the largest recycled water
distribution systems in the State of California. The character of the service area has also changed
from predominantly dry-land farming and cattle ranching to businesses, high-tech industries, and
large master-planned communities. The water district’s boundaries currently stretch from Otay
Mesa and eastern Chula Vista to Spring Valley, southern El Cajon, and Jamul.
The District is facing another dry year with the Colorado River in the midst of a prolonged multi-
year drought and the Sierra Nevada snow pack at its lowest level in many years. To add to this
situation, water deliveries are being curtailed to the State Water Project to protect endangered
Delta Smelt. All of this is likely to mean less water for Southern California in the years ahead.
These current problems make the work the District is doing all the more critical. On June 1,
2007 the District dedicated Supply Link Project connecting recycled water system to the City of
San Diego’s City South Bay Water Reclamation Plant. Today, the District purchases about three
million gallons per day (mgd) of recycled water from the city, increasing to six mgd ultimately,
and in addition one mgd is produced at RWCWRF. With recycled water meeting a large portion
of the landscape irrigation needs, this means in the future approximately seven mgd of potable
water does not have to be pumped hundreds of miles from northern California or the Colorado
River. Instead, enough drinking water to serve more than 15,000 homes is being conserved and
can be used to address shortages in the years to come.
Past and Present
24
Current Economic Conditions
Currently, the District services the needs of a growing population by purchasing water from the
San Diego County Water Authority (CWA). CWA purchases its water from the Metropolitan
Water District of Southern California (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, and the Helix
Water District (HWD) by contract with CWA. In the Southern region, in addition to the treated
water deliveries from CWA, the District has an emergency agreement with the City of San Diego
in the case of a shutdown of the main treated water source. Through innovative agreements like
this, benefits can be achieved by both parties by using excess capacity of another agency, and
diversifying local supply, thereby increasing reliability.
For several decades, the District has collected and recycled wastewater generated within the
Jamacha drainage basin and pumped the recycled water south to the Salt Creek basin where it is
used for irrigation and other non-potable uses. However, the demand for recycled water out-
paced the supply, requiring the District to supplement the limited supply of recycled water with
potable water. Through the new agreement with the City of San Diego, the District has
discontinued supplementing its recycled demand with potable water. Once again, this decreases
the demand on potable water and increases reliability of the District’s supply.
The District’s sewer service area is growing at a slow but steady rate of approximately 0.6%
each year. Most of this growth is from small development projects or homeowners converting
their septic system to sewer because of environmental issues.
The District’s service area was one of the fastest growing regions in the nation. During the past
decade, the population of the service area has nearly doubled. It is estimated that the District is
currently serving approximately 195,000 residents. In just the past seven years, the District has
added more than 7,994 new customer connections, with most of this occurring in just four years.
The phenomenal growth has slowed, as our local and national economy is experiencing a
downturn. This slowdown is reflected internally as the District’s Development Services
Department approved on average only 13 permits per month, and sold 158 water meters in Fiscal
Year 2008-2009.
25
The Future
The District continues to use the challenges presented by growth to create new opportunities and
new organizational efficiencies. By utilizing and continuing to refine its Strategic Business Plan,
it has captured the Board of Director’s vision and united its staff in a common mission. The
organization has achieved a number of significant accomplishments based on its successful
adherence to its Strategic Business Plan. The District is not only poised to continue successfully
providing an affordable, safe, and reliable water supply for the people of its service area, but is
set to reap the rewards of greater efficiencies and economies of scale.
2,
3
2
6
1,
3
9
7
83
5
63
8
22
0
15
8
99
78 18
2
1,
3
2
4
1,
8
7
9
2,
1
5
6
-
500
1,000
1,500
2,000
2,500
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
METER SALES
Projected Actual
The Engineering Department projects that over the next six years the District will sell another
5,718 meters. SANDAG, the regional planning agency, shows a slowing of the historic annual
growth rate of 6.3% since 1980, to a projected future annual growth rate of 1.7% through 2030,
for the City of Chula Vista. For the unincorporated areas of the region the historic annual growth
rate has been only 1.3% since 1980, but is expected to increase to 1.7% through 2030.
26
Demographics
The District boundaries shown in the chart below encompass an area of approximately 125
square miles in San Diego County, located immediately east of the City of San Diego
metropolitan area and running from the City of El Cajon south to the international border.
SANDAG creates and maintains a tremendous quantity of demographic, economic, land use,
transportation and criminal justice information about the San Diego region. The demographic
data include population characteristics like age, education, and employment. Because of the
overlapping of the District’s service area with the cities of Chula Vista, La Mesa, El Cajon, and
the unincorporated areas of Spring Valley and Jamul, the following demographic data is from the
City of Chula Vista as it most closely represents the District.
The population of Chula Vista has grown from 83,927 in 1980, to 135,136 in 1990, to 173,556 in
2000, and in 2008 the population reached 231,305. This represents an increase of 147,378 in the
past 28 years or a 175.6% increase, which correlates to the Districts rapid growth for the same
period.
The racial make up of Chula Vista is 50% Hispanic, 28% White, 13% Asian, 4% Black, and the
remaining 5% is all other groups. The median household income for Chula Vista was $71,298 in
2007, and 97% of Chula Vista’s housing units were occupied.
27
% of
Annual Water
Customer Type Revenues Sales
1. City Of Chula Vista Publicly Owned 2,083,668$ 4.0%
2. Otay River Const/Southbay Expressway Construction (Potable, Temporary)1,044,277 2.0%
3. County Of San Diego Publicly Owned 1,023,342 2.0%
4. State Of California Publicly Owned 864,858 1.7%
5. Eastlake III Community Assoc Construction (Potable, Temporary)539,324 1.0%
6. Sweetwater School District Publicly Owned 477,150 0.9%
7. Eastlake Country Club Irrigation (Reclaimed, Permanent)458,259 0.9%
8. Steele Canyon Irrigation (Potable, Permanent)370,516 0.7%
9. Salt Creek Partners LLC Irrigation (Reclaimed, Permanent)357,528 0.7%
10. Chula Vista School District Publicly Owned 329,847 0.6%
Total 7,548,770$ 14.4%
Estimated FY09 Water Sales 52,398,371$
Customer Name
Ten Largest Customers ‐ Fiscal Year 2009
Ten Largest
14.4%
Others
85.6%
CUSTOMERS
FISCAL YEAR 2009
28
Water Rate Comparison
The District strives to remain cost effective in its rate setting, by controlling operating cost, yet
passing through the full cost of supply. The following two charts show how the District
compares in rates with its neighboring water and sewer providers.
Water Rate Comparison of Water Providers
in San Diego County
$4
8
.
6
3
$5
3
.
0
7
$5
5
.
3
4
$5
7
.
2
7
$5
9
.
9
0
$6
0
.
1
0
$6
2
.
1
5
$6
3
.
7
9
$6
5
.
5
0
$6
5
.
5
9
$6
5
.
7
3
$6
6
.
3
0
$6
7
.
4
6
$6
8
.
5
2
$6
8
.
9
8
$6
9
.
5
2
$6
9
.
7
7
$7
1
.
2
3
$7
4
.
8
9
$7
7
.
0
4
$8
0
.
4
8
$8
2
.
8
1
$8
9
.
9
7
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100 Oceanside Lakeside VallecitosSan Dieguito Helix Olivenhain Poway Otay Padre Dam W Carlsbad YuimaVistaValley CenterSan DiegoSanta Fe RamonaSweetwater Padre Dam E EscondidoRincon Rainbow Fallbrook Del Mar Rates effective January 1, 2010 for residential
customer with 15 HCF water use and 3/4 inch meter
29
Sewer Rate Comparison
Sewer Rate Comparison of Sewer Providers
in San Diego County
18
.
0
0
19
.
5
6
20
.
9
3
28
.
0
0
30
.
4
0
31
.
6
7
32
.
0
8
34
.
8
3
39
.
1
0
39
.
5
3
40
.
5
0
41
.
0
4
42
.
7
5
44
.
0
7
44
.
4
2
46
.
3
0
46
.
6
7
51
.
7
5
53
.
0
0
53
.
3
7
58
.
7
5
61
.
5
1
62
.
2
8
66
.
6
7
68
.
5
4
70
.
6
9
72
.
2
5
73
.
6
2
74
.
0
0
74
.
6
7
75
.
3
2
98
.
6
0
10
8
.
9
0
$-
$20
$40
$60
$80
$100
$120
W i n t e r G a r d en s - C o u n t y
L e u c ad i a
C arlsb a d
S p ri n g V all e y - C o u n t y
V a ll e cit o s
L a ke s id e - C o u n t y
N atio n al Cit y
Al p in e - C o u n t y
E l C ajo n O tay
V all e y C en t er - M G
E s c o n d id o
R am o n a
L a M es a Vi s t aP o w a y
S o lan a B e ac hB u en a
P in e V all e y - C o u n ty
O c ea n si d e
J ulian - C o u n t y
S an Di e g o
C h u la V i s t a
R an c h o S a n t a F e
R ai n b o w
P a d r e D a m
O li ve n h a in
E n c in it as
V all ey C en t er - M P
E n cinit as
F all b r o o k
V all e y C e n t e r - W V
D el M ar
Rates effective January 1, 2010 (with Special Assessment)
for residential customers with 15 HCF water usage
Water-consumption based sewer rate
Flat sewer rate
Otay Water District
30
Service Area Assessed Valuation
Otay Water District’s service area encompasses property with over $25 billion of assessed valuation.
Properties are assessed at 100% of their full value less any exemptions such as, exemption from
taxation under the law and homeowner’s exemptions. As shown in the chart below, there has been a
significant increase in the assessed value of properties in the District service area. The historic
increases was due to both growth in the number of new homes, as well as increases in home prices.
Despite the slow down in the current housing market, the long-term growth in new homes is expected
to continue at approximately 2% until ultimate build-out. The assessed valuation is the basis for the
property tax change. The District receives its portion of the 1% property tax, according to Proposition
13 and AB8, and with the increases in the assessed valuation the District will benefit by receiving its
proportionate share of this increase. Even with the down turn in the property values the District is
anticipating a modest increase of 3%.
$20,000
$24,000
$28,000
6 2,6
8
5
$2
5
,
9
0
3
$2
6
,
7
5
2
FIVE-YEAR SERVICE AREA ASSESSED VALUATION
Source: County of San Diego Auditor and Controller
$-
$4,000
$8,000
$12,000
$16,000
$20,000
$24,000
$28,000
2004 2005 2006 2007 2008 2009
$1
4
,
1
3
1
$1
6
,
4
2
3
$1
9
,
5
6
6
$2
2
,
6
8
5
$2
5
,
9
0
3
$2
6
,
7
5
2
Mi
l
l
i
o
n
D
o
l
l
a
r
s
Fiscal Year
FIVE-YEAR SERVICE AREA ASSESSED VALUATION
31
Percent
Assessed Value to Total
1. SAN DIEGO EXPRESSWAY LIMITED PARTNERSHIP (SDELP) $ 600,000,000 2.24%
2. VILLAGE II OF OTAY HB SUB 181,107,368 0.68%
3. GGP-OTAY RANCH LP 168,025,096 0.63%
4. OV THREE TWO LLC 118,746,964 0.44%
5. REGULO PLACE APARTMENTS INVESTORS LLC 113,980,960 0.43%
6. SHEA HOMES LIMITED PARTNERSHIP 103,911,311 0.39%
7. EQR-MISSIONS AT SUNBOW LLC 88,805,655 0.33%
8. RANCHO MESA LP 85,503,816 0.32%
9. VILLAGE II OF OTAY LP 84,565,792 0.32%
10. SP LAVIDA REAL LLC 80,027,108 0.30%
Total $ 1,624,674,070 6.07%
Total Service Area Assessed Valuation $ 26,752,095,692
Organization
Ten Principal Taxpayers As Of June 30, 2009
Source: County of San Diego Auditor and Controller
Ten Principal
Taxpayers
6.07%
Other Taxpayers
93.93%
SERVICE AREA TAXPAYERS
FISCAL YEAR 2009
32
San Diego Rainfall
5.76
8.58
2.99
10.62
5.18
22.50
5.42 3.85
7.49 9.17
0
5
10
15
20
25
30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
In
c
h
e
s
Fiscal Year
FISCAL YEARS 2000-2009
Annual Rainfall 10-Year Average Rainfall (8.16 inches)
The 10-year average of 8.16 inches for San Diego rainfall reflects the long-term drought conditions
for our area. San Diego's rainfall average over 20 years is 9.81 inches; the 30-year average is 10.25
inches. The District expects drought conditions to continue for Fiscal Year 2010.
5.76
8.58
2.99
10.62
5.18
22.50
5.42 3.85
7.49 9.17
0
5
10
15
20
25
30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
In
c
h
e
s
Fiscal Year
FISCAL YEARS 2000-2009
Annual Rainfall 10-Year Average Rainfall (8.16 inches)
The 10-year average of 8.16 inches for San Diego rainfall reflects the long-term drought conditions
for our area. San Diego's rainfall average over 20 years is 9.81 inches; the 30-year average is 10.25
inches. The District expects drought conditions to continue for Fiscal Year 2010.
Under drought conditions there is the real potential for mandatory cutbacks. In the event of
cutbacks, District water-sale revenues would decrease. Related water purchase expenses would also
be reduced dampening the impact of the decrease in revenues. The severity of cutbacks would
dictate the magnitude of the District's response and type of reaction.
The San Diego rainfall information shown in the chart above uses data from the San Diego Airport
at Lindbergh Field and is provided by the Western Regional Climate Center. More information can
be obtained from their website: http://www.wrcc.dri.edu. The Western Regional Climate Center’s
website data, in turn, is derived from data received from the National Climatic Data Center, the
National Weather Service, the National Resource Conservation Service, the Bureau of Land
Management, the U.S. Forest Service, and other federal, state, and local agencies. Although the
data reflects actual rainfall at Lindbergh field, it is representative of rainfall for the area served by
the Otay Water District.
San Diego rainfall, while a contributing factor, is not the controlling factor for a potable water
supply shortage. As stated before, the San Diego region imports 90% of its potable supply so
drought conditions or the Colorado River and the State Water Project determine the cutback level.
33
Budget Summary
The Operating Budget is summarized and presented in the Operating Budget Summary on page
38. Also included in this section is the Operating Budget Summary by System on page 39, the
Fund Balance Summary by Fund on page 41, and the Revenues and Expenditures by Fund on
pages 42 and 43. The Revenues, Expenditures, and Sources and Uses of Funds by Type for all
funds are presented on page 44. For Fiscal Year 2010, the District increased both water and
sewer rates for its customers in order to pass-through cost increases from water and sewer
agencies. These cost increases are being experienced by our neighboring water agencies and
most are encountering similar rate increases.
Operating Budget Summary
The Operating Budget for Fiscal Year 2010 is $75,716,500 in comparison to the previous fiscal
year budget of $67,062,700. The $8,653,800 increase is primarily due to unprecedented water
supply rate increases of 21.1% from MWD and 18.1% from CWA because of the high cost of
supply programs, higher energy and operating costs.
The District uses a rate model to build the budget for the current fiscal year and five subsequent
years. To do this, estimates for growth, water costs, and others such as rainfall, and average
water consumption per customer, are used throughout the model to calculate various revenue and
expense amounts in each year. The Engineering Department is primarily responsible for the
growth estimates as described in the budget process on pages 20 and 21. Water cost estimates
are obtained from District water suppliers, CWA and MWD, and power cost inflators from San
Diego Gas and Electric, the District power supplier. Labor and benefit cost inflators are based
on the Memorandum of Understanding with the District’s labor union, as well as estimates from
District health providers. Other general inflators are derived from statistical data from consumer
price indexes for the region.
Revenues
Potable Water Sales
Potable water sales represent revenue collected from the sale of water, including: system
charges, energy charges, and penalties. It is estimated that 33,300 acre-feet of potable water will
be sold during Fiscal Year 2010. Budgeted revenues from water sales are projected to be
$56,474,500, an increase of 14.7% over the previous year's budget due to two years of
unprecedented increases in water costs and the need to pass these costs along to the District’s
customers. Additional schedules relating to potable water sales are included in the Potable
Revenues and Expenditures section of this budget.
Recycled Water Sales
Recycled water sales represent revenue collected from the sale of 4,560 acre-feet of recycled
water to customers at a discount of 15% of the potable irrigation rate. The FY 2010 sales
revenue budget of $7,602,500, an increase of $1,258,000 from FY 2009, includes the incentive
credits provided by MWD and the CWA.
34
Sewer Revenues
Sewer charges are the monthly fees collected from the sewer service connections. The fees are
determined by volume of flow and the strength of solids discharged into the sewer system.
Meter Fees
Meter fees are charges collected for new water service connections. Fees vary depending upon
meter size and type of service. The costs associated with meter installations are included in the
Operating Expenses section.
Capacity Fee Revenues
These fees are earned by the General Fund for Engineering Department’s support for expansion
functions.
Betterment Fees for Maintenance
These fees are earned by the General Fund for Water Operations Department’s maintenance of
certain District assets.
Annexation Fees
The District collects annexation fees when new customers annex into the District. The fee is
based on the excess capacity built by existing users and ensures that future users fund a portion
of the facilities that were sized and built for their future use.
Tax Revenues
The District receives 1% property tax revenues, debt-related assessments, and availability fees on
properties within the District’s boundaries. These revenues are collected by the County of San
Diego via the Property Tax Roll and remitted to the District annually.
Non-Operating Revenues
Non-operating revenues are revenues that are not directly related to the operation of a water or
sewer utility, and include such items as District property rentals and leases, and billing services
for the City of Chula Vista.
Interest
Interest is earned by each fund that has a positive balance and is paid by each fund with a
negative balance. Interest income on General Fund balances is considered general use revenue.
Transfer from OPEB
This money is available to fund operations from the OPEB trust fund. In Fiscal Year 2008, the
District established a reserve through PERS, lowering the amount necessary to reserve for OPEB
expenses allowing the excess to be available to the general fund.
35
Expenditures
Potable Water Purchases
Water purchases indicate the expense of purchasing 35,557 acre-feet for the District's potable
water supply. A provision has been made to allow 2,255 acre-feet of water for District usage,
leakage, and evaporation.
Recycled Water Purchases
Recycled water purchases indicate the expense of purchasing 3,356 acre-feet for the District's
recycled water supply. The District no longer budgets for a potable supplement to the recycled
system due to the source of recycled water from the City of San Diego.
Infrastructure Access Charge
This charge was established in Fiscal Year 1999 by CWA to finance a portion of its fixed annual
costs including construction, operation, and maintenance of its aqueducts. This fixed charge is
based on the number of "household meter equivalents."
Customer Service Charge
This charge was established in Fiscal Year 2004 by CWA as a fixed charge. The Customer
Service Charge is set to recover costs necessary to support CWA’s development of policies and
implementation of programs that benefit the region as a whole.
Emergency Storage Charge
The Emergency Storage Charge was established by CWA in Calendar Year 2003, to recover
costs associated with non-agricultural water deliveries and is allocated based on each member
agency’s share of deliveries.
Capacity Reservation Charge
This charge was established in Fiscal Year 2002 by the MWD, as a fixed charge on a member
agency's requested maximum day capacity. The Capacity Reservation Charge is a charge per
cubic-foot-second (cfs) and is applied to the amount of capacity (daily flow) a member agency
expects to use during the peak period from May through September.
Readiness-to-Serve Charge
This charge was established in Fiscal Year 1996 by MWD, to recover the principal and interest
payments on non-tax supported debt service used to fund the capital improvements necessary to
meet the continuing reliability and quality needs associated with current demands. These costs
are offset by standby charges collected by the MWD on the tax bills of District customers.
Power Costs
Power is the cost associated with the transmission and distribution of water to customers. The
pumping costs to distribute water vary with elevation and will increase as water sales increase.
Labor and Benefits
Labor and benefits are the wages and fringe benefits for 166 Full-time Equivalent (FTE)
employees. Labor costs are reduced by the number of hours that are charged to non-operating
Capital Improvement Program (CIP) and developer deposit projects. The detail of actual
personnel and payroll related expenses is included in the Departmental Operating Budget
section.
36
Administrative Expenses
Administrative expenses are costs incurred by various departments that are directly related to
District operations. Additional details are supplied in the Departmental Operating Budget
section.
Materials and Maintenance
Materials and maintenance expense is the cost associated with the operation and maintenance of
District facilities. Additional details are supplied in the Departmental Operating Budget section.
Expansion Reserves
These reserves are established to fund expansion needs including project costs, existing debt
payments, and new debt that will be issued in the future to fund expansion.
Betterment Reserves
These reserves are established to fund the betterment needs of facilities including project costs,
existing debt payments, and new debt that will be issued in the future to fund betterment.
Replacement Reserves
These reserves are established to fund the replacement needs including project costs, existing
debt payments, and new debt that will be issued in the future to fund replacement.
Transfers
These transfers are necessary to ensure that each fund pays its fair share of costs, or to achieve
required fund balances per the District’s policy. The Transfer Out for Prop 1A is an anticipated
loan to the state of the District’s 1% property tax revenue.
Operating Budget Summary by Business
The Budget Summary by System schedule reflects the separation of operating revenues and
expenses among potable water, recycled water, and sewer. This information is provided due to
the necessity to collect sufficient revenue from each type of operation to recover the full cost of
operating expenses and to ensure that the customers are charged for services received.
Fund Balance Summary by Fund
This schedule shows each fund’s balance at June 30, 2009, and the projected balance for June 30,
2010, based on the results of the budget and Rate Model. This includes transfers between funds
made to meet target levels as outlined in the Reserve Policy.
Revenues and Expenditures by Fund
The Revenues and Expenditures by Fund schedule reflect each fund’s revenues and expenditures
by business line, where appropriate. This schedule is reconciled to the Fund Balance Summary
and excludes transfers between funds.
Revenues and Expenditures by Type – All Funds
This is a consolidated schedule of revenues and expenditures, including sources and uses of
funds but excluding fund transfers.
37
FY 2008 FY 2010 Budget Variance
11-Actual Budget Estimated Budget Variance %
REVENUES
##Potable Water Sales 44,804,854$ 49,229,400$ 46,160,394$ 56,474,500$ 7,245,100$ 14.7%
Recycled Water Sales 5,948,258 6,344,500 6,238,358 7,602,500 1,258,000 19.8%
##Sewer Revenues 2,414,886 2,145,300 2,184,523 2,244,800 99,500 4.6%
##Meter Fees 79,790 103,800 71,448 45,600 (58,200) (56.1%)
##Capacity Fee Revenues 1,480,165 1,301,900 1,521,707 1,397,000 95,100 7.3%
##Betterment Fees for Maintenance 802,021 895,900 661,998 571,400 (324,500) (36.2%)
Annexation Fees 526,435 483,600 392,349 120,500 (363,100) (75.1%)
Tax Revenues 4,024,645 4,137,300 4,054,895 3,852,600 (284,700) (6.9%)
##Non-operating Revenues 2,297,826 1,633,100 4,881,548 1,585,600 (47,500) (2.9%)
##Interest 1,038,425 667,800 377,829 322,900 (344,900) (51.6%)
OPETransfer from OPEB - 810,000 - 1,030,000 220,000 27.2%
General Fund Draw Down - 120,100 - 469,100 349,000 290.6%
TOTAL REVENUES 63,417,304 67,872,700 66,545,049 75,716,500 7,843,800 11.6%
EXPENDITURES
##Potable Water Purchases 22,253,362 25,183,600 22,778,545 28,033,700 2,850,100 11.3%
Recycled Water Purchases 1,278,084 1,490,800 1,299,976 1,312,000 (178,800) (12.0%)
##CWA - Infrastructure Access Charge 1,090,228 1,227,500 1,227,408 1,344,900 117,400 9.6%
##CWA - Customer Service Charge 949,222 1,049,800 1,049,470 1,148,800 99,000 9.4%
##CWA - Emergency Storage Charge 1,507,895 1,774,700 1,774,776 2,246,600 471,900 26.6%
##MWD - Capacity Reservation Charge 570,980 602,800 603,072 628,800 26,000 4.3%
##MWD - Net RTS and Standby Charges 564,193 665,100 665,087 1,140,700 475,600 71.5%
Subtotal - Water Costs 28,213,964 31,994,300 29,398,334 35,855,500 3,861,200 12.1%
##Power 2,647,885 2,780,500 2,905,101 2,637,100 (143,400) (5.2%)
##Labor and Benefits 16,462,021 17,185,400 16,440,651 17,212,800 27,400 0.2%
##Administrative Expenses 6,153,593 5,935,100 5,941,924 5,329,200 (605,900) (10.2%)
##Materials & Maintenance 4,112,180 3,872,800 3,482,653 3,801,600 (71,200) (1.8%)
##Expansion Reserve 2,590,200 5,016,700 5,016,700 1,610,000 (3,406,700) (67.9%)
Bet Betterment Reserve 3,432,900 - - 3,810,000 3,810,000 100.0%
RepReplacement Reserve 235,400 277,900 277,900 3,660,000 3,382,100 1217.0%
Transfer to Sewer GF - - - 200,000 200,000 100.0%
Transfer Out/In Prop 1A - - - 270,300 270,300 100.0%
Transfer to General Fund Reserve - - - 1,330,000 1,330,000 100.0%
TOTAL EXPENDITURES 63,848,142 67,062,700 63,463,263 75,716,500 8,653,800 12.9%
EXCESS REVENUES (EXPENSE)(430,837)$ 810,000$ 3,081,786$ -$ (810,000)$ (100.0%)
Note: FY 2009 Budget has been restated to present Board-authorized use of designated OPEB Reserve.
FY 2009
Operating Budget Summary ‐ General Fund
38
Potable Recycled Sewer Total
REVENUES
Water Sales 56,474,500$ -$ -$ 56,474,500$
Recycled Water Sales - 7,602,500 - 7,602,500
Sewer Revenues - - 2,244,800 2,244,800
Meter Fees 25,600 20,000 - 45,600
Capacity Fee Revenues 1,397,000 - - 1,397,000
Bett Betterment Fees for Maintenance 571,400 - - 571,400
Annexation Fees 120,500 - - 120,500
Tax Revenues 3,802,300 - 50,300 3,852,600
Non-operating Revenues 1,556,500 - 29,100 1,585,600
Interest 286,400 8,000 28,500 322,900
OPEBTransfer from OPEB 1,030,000 - - 1,030,000
General Fund Draw Down - - 469,100 469,100
TOTAL REVENUES 65,264,200 7,630,500 2,821,800 75,716,500
EXPENDITURES
Water Purchases (CWA)28,033,700 - - 28,033,700
Water Purchases (CSD)- 1,312,000 - 1,312,000
CWA - Infrastructure Access Charge 1,344,900 - - 1,344,900
CWA - Customer Service Charge 1,148,800 - - 1,148,800
CWA - Emergency Storage Charge 2,246,600 - - 2,246,600
MWD - Capacity Reservation Charge 628,800 - - 628,800
MWD - Net RTS and Standby Charges 1,140,700 - - 1,140,700
Subtotal - Water Costs 34,543,500 1,312,000 - 35,855,500
Power 2,033,400 504,500 99,200 2,637,100
Labor and Benefits 15,111,000 1,177,200 924,600 17,212,800
Administrative Expenses 4,555,000 318,100 456,100 5,329,200
Materials & Maintenance 2,127,500 332,200 1,341,900 3,801,600
5716 Expansion Reserve - 1,610,000 - 1,610,000
Bett RBetterment Reserve 3,700,000 110,000 - 3,810,000
Repl RReplacement Reserve 2,710,000 950,000 - 3,660,000
Transfer to Sewer GF 200,000 - - 200,000
Transfer Out/In Prop 1A 270,300 - - 270,300
Transfer to GF Reserve 13,500 1,316,500 - 1,330,000
TOTAL EXPENDITURES 65,264,200 7,630,500 2,821,800 75,716,500
EXCESS REVENUES -$ -$ -$ -$
FY 2010 Operating Budget Summary by System
FY 2010 OPERATING EXPENDITURES
Recycled
10%
Sewer
4%
Potable
86%
39
Operating Revenues and Expenditures
Potable Water Sales
74.6%Recycled Water Sales
10.0%
Sewer Revenues
2.9%
Meter Fees
0.1%
Capacity Fee
Revenues
1.8%
Betterment Fees for
Maintenance
0.8%
Annexation Fees
0.2%Tax Revenues
5.1%
Transfer from OPEB
1.4%
Non-Operating
Revenues
2.1%
Interest
0.4%
General Fund Draw
Down
0.6%
FY 2010 OPERATING REVENUES
`
FY 2010 OPERATING EXPENDITURES
Potable Water Sales
74.6%Recycled Water Sales
10.0%
Sewer Revenues
2.9%
Meter Fees
0.1%
Capacity Fee
Revenues
1.8%
Betterment Fees for
Maintenance
0.8%
Annexation Fees
0.2%Tax Revenues
5.1%
Transfer from OPEB
1.4%
Non-Operating
Revenues
2.1%
Interest
0.4%
General Fund Draw
Down
0.6%
FY 2010 OPERATING REVENUES
`
Potable Water Costs
46.5%
Recycled Water
Purchases
1.8%
Power
3.6%
Labor and Benefits
23.2%
Administrative
Expenses
7.2%Materials &
Maintenance
5.1%
Expansion Reserve
2.2%
Betterment Reserve
5.1%
Replacement Reserve
4.9%
Transfer Out for Prop
1A
0.4%
FY 2010 OPERATING EXPENDITURES
40
Estimated Projected
Balance Interfund Balance
June 30, 2009 Revenues Expenditures Transfers (1)June 30, 2010
GENERAL FUND
Potable 9,020,518$ 65,264,200$ 65,264,200$ -$ 9,020,518$
Recycled 634,946 7,630,500 7,630,500 - 634,946
Sewer 11,366,709 2,821,800 2,821,800 (753,000) 10,613,709
Total General Fund 21,022,173 75,716,500 75,716,500 (753,000) 20,269,173
EXPANSION FUND
Potable and Recycled (2)18,137,390 15,467,400 18,583,100 1,610,000 16,631,690
Sewer 432,220 4,100 - (410,000) 26,320
Total Expansion Fund 18,569,610 15,471,500 18,583,100 1,200,000 16,658,010
BETTERMENT FUND
Potable 2,863,675 23,596,800 15,653,700 3,700,000 14,506,775
Recycled 106,047 (700) 24,700 110,000 190,647
Sewer - 47,000 673,900 1,163,000 536,100
Total Betterment Fund 2,969,722 23,643,100 16,352,300 4,973,000 15,233,522
REPLACEMENT FUND
Potable 20,108,672 12,350,700 8,136,600 2,710,000 27,032,772
Recycled 3,830,196 77,000 915,000 950,000 3,942,196
Sewer 2,449,944 39,200 514,300 - 1,974,844
Estimated, Fiscal Year 2010
Fund Balance Summary by Fund
,,,,,,
Total Replacement Fund 26,388,812 12,466,900 9,565,900 3,660,000 32,949,812
OPEB FUND 8,436,721 883,300 1,150,600 (1,030,000) 7,139,421
DEBT RESERVE FUND 1,732,715 1,058,000 1,190,400 - 1,600,315
TOTAL 79,119,753$ 129,239,300$ 122,558,800$ 8,050,000$ 93,850,253$
(1)The total for interfund transfers does not net to $0 because some transfers are already reflected in the Operating
Revenues and Expenditures for General Fund as follows:
Expansion Reserve (1,610,000)$
Betterment Reserve (3,810,000)
Replacement Reserve (3,660,000)
OPEB Reserve 1,030,000
Total (8,050,000)
(2)Potable and Recycled funds are combined for expansion purposes.
41
FY 2008 FY 2010
Actual Budget Estimated Projected
REVENUES
GENERAL FUND
GPrev Potable 54,716,191$ 59,083,300$ 57,968,090$ 65,264,200$
GRrev Recycled 6,050,180 6,380,500 6,259,578 7,630,500
GSrev Sewer 2,650,933 2,408,900 2,317,381 2,821,800
Total General Fund (1)63,417,304 67,872,700 66,545,049 75,716,500
EXPANSION FUND
EPrev Potable 18,495,813 5,652,900 4,445,557 14,343,600
ERrev Recycled 4,154,878 1,039,700 1,711,182 1,123,800
ESrev Sewer 19,586 11,900 12,512 4,100
Total Expansion Fund 22,670,277 6,704,500 6,169,251 15,471,500
BETTERMENT FUND
BPrev Potable 1,491,179 1,462,400 1,487,503 23,596,800
BRrev Recycled 57,527 17,900 16,876 (700)
BSrev Sewer 51,508 52,100 36,661 47,000
Total Betterment Fund 1,600,213 1,532,400 1,541,041 23,643,100
REPLACEMENT FUND
RPrev Potable 1,632,201 551,300 643,213 12,350,700
RRrev Recycled 190,859 121,400 123,069 77,000
RSrev Sewer 452,254 162,800 92,569 39,200
Total Replacement Fund 2,275,314 835,500 858,852 12,466,900
OrevOPEB FUND 718,071 293,000 269,600 883,300
DrevDEBT RESERVE FUND 2,135,184 1,028,100 1,238,139 1,058,000
Total Revenues 92,816,364$ 78,266,200$ 76,621,932 129,239,300$
(1)FY 2009 General Fund Budget is restated and includes Board-authorized use of designated OPEB Reserve in the
amount of $810,000.
Revenues and Expenditures by Fund
FY 2009
42
FY 2008 FY 2010
Actual Budget Estimated Projected
Revenues and Expenditures by Fund
FY 2009
EXPENDITURES
GENERAL FUND
GPexp Potable 55,353,927$ 58,273,300$ 55,119,417$ 65,264,200$
GRexp Recycled 5,870,127 6,380,500 6,103,430 7,630,500
GSexp Sewer 2,649,089 2,408,900 2,240,416 2,821,800
Total General Fund 63,873,142 67,062,700 63,463,263 75,716,500
EXPANSION FUND
EPexp Potable 14,764,399 18,525,600 7,602,270 15,902,200
ERexp Recycled 1,077,034 2,141,000 991,176 2,680,900
ESexp Sewer 5,288 100,000 21,282 -
Total Expansion Fund 15,846,721 20,766,600 8,614,728 18,583,100
BETTERMENT FUND
BPexp Potable 6,865,949 6,963,500 11,086,808 15,653,700
BRexp Recycled 299,218 964,200 770,690 24,700
BSexp Sewer 67,344 18,900 18,893 673,900
Total Betterment Fund 7,232,511 7,946,600 11,876,390 16,352,300
REPLACEMENT FUND
RPexp Potable 6,228,063 6,877,700 2,975,778 8,136,600
RRexp Recycled 155,829 1,000,000 960,581 915,000
RSexp Sewer 126,116 852,400 521,002 514,300
Total Replacement Fund 6,510,008 8,730,100 4,457,361 9,565,900
Oex OPEB FUND 7,153,008 1,020,000 1,481,070 1,150,600
DexpDEBT RESERVE FUND 21,666,012 1,190,400 7,583,759 1,190,400
Total Expenditures 122,281,402 106,716,400 97,476,571 122,558,800
EXCESS (DEFICIT) (1)(29,465,038)$ (28,450,200)$ (20,854,639) 6,680,500$
(1) This excess is primarily due to the $41 million proposed COP (debt) issuance. This issuance is to cover both the
2010 and 2011 CIP. In part this excess is also to maintain reserve balances in accordance with the reserve policy,
shown on page 213, and to improve the District's debt coverage ratio, which in turn strengthens the financial
position and saves millions in the cost of issuing debt, as described in the debt management narrative on page 48.
43
FY 2008 FY 2010
Actual Budget Estimated Projected
REVENUES AND FUND SOURCES
Potable Water Sales 44,804,854$ 49,229,400$ 46,160,394$ 56,474,500$
Proposed COPs - - - 41,000,000
Recycled Water Sales 5,948,258 6,344,500 6,238,358 7,602,500
Grants 2,931,466 2,420,000 2,315,000 5,221,000
Tax Revenues 4,024,645 4,137,300 4,054,895 3,852,600
Capacity Fee Revenues 20,104,726 3,880,900 3,331,640 2,790,000
Sewer Revenues 2,414,886 2,145,300 2,184,523 2,244,800
Interest 4,660,292 2,182,400 2,251,329 1,623,700
Non-Operating Revenues 2,297,826 1,633,100 4,881,548 1,585,600
Capacity Fees for Maintenance 1,480,165 1,301,900 1,521,707 1,397,000
Transfer from OPEB (1)- 810,000 - 1,030,000
Betterment Fee Revenues 909,191 1,078,000 875,582 948,000
Reimbursement from PERS Trust - - - 715,900
GO Bond Debt Tax Revenues 917,168 628,200 747,175 665,900
Betterment Fees for Maintenance 802,021 895,900 661,998 571,400
Availability Fees 520,709 515,700 527,018 518,600
General Fund Draw Down - 120,100 - 469,100
Sewer Debt Tax Revenues 393,931 356,100 406,968 362,600
Annexation Fees 526,435 483,600 392,349 120,500
Meter Fees 79,790 103,800 71,448 45,600
Total Revenues and Fund Sources 92,816,364$ 78,266,200$ 76,621,932 129,239,300$
Revenues and Expenditures by Type ‐ All Funds
FY 2009
EXPENDITURES AND USES OF FUNDS
CIP Expenses 24,833,132$ 30,939,000$ 11,658,138$ 37,272,100$
Potable Water Purchases 26,935,880 30,503,500 28,098,358 34,543,500
Labor Expenses 16,462,021 17,185,400 16,440,651 17,212,800
Interfund Transfers 6,283,500 5,294,600 5,294,600 9,080,000
Administrative Expenses 6,153,593 5,935,100 5,941,924 5,329,200
Debt Service 3,668,751 5,496,900 5,232,079 5,221,200
Materials and Maintenance 4,112,180 3,872,800 3,482,653 3,801,600
Power 2,647,885 2,780,500 2,905,101 2,637,100
General Fund Transfers - - - 1,800,300
Capacity Fees for Maintenance 1,480,165 1,301,900 1,521,707 1,397,000
Recycled Water Purchases 1,278,084 1,490,800 1,299,976 1,312,000
Bond/Loan Issuance Expense - - - 1,230,000
OPEB Health Expenses 7,153,008 655,000 608,070 715,900
Betterment Fees for Maintenance 802,021 895,900 7,724,112 571,400
Payment to PERS - 365,000 873,000 434,700
COPs Proceeds Distribution 20,471,183 - 6,396,203 -
Total Expenditures and Uses of Funds 122,281,402 106,716,400 97,476,571 122,558,800
EXCESS (DEFICIT) (2)(29,465,038)$ (28,450,200)$ (20,854,639) 6,680,500$
(1)FY 2009 Budget has been restated to present Board-authorized use of designated OPEB Reserve.
(2)See note (1) on page 43 describing the Excess (Deficit).
44
Five‐Year Forecast
Financial Forecast for Fiscal Years 2011-2015
This financial forecast is designed to provide a general understanding of how revenues and
expenditures are expected to influence the District over the next five years. Revenue and
expenditure projections are reviewed in relation to their effect on funding capital projects,
reserve levels, and operating fund balances. The District updates its Rate Model on an annual
basis in order to make these projections and determine recommended rates. The model looks at
debt ratios, projected rate increases, cost increases, and growth projections.
The District must look at building new infrastructure to service the needs of its customers. The
CIP Master Plan looks at the service needs of all customers over the next six years and at the
betterment and expansion needs from now until ultimate build-out. These capital projects and
the funding for them are reviewed annually by the Engineering Department. As new capital
assets are brought into service, they are managed by an Infrastructure Management System
(IMS) which is crucial to tracking and maintaining the history of 736 miles of potable pipelines,
97 miles of recycled pipelines, 90 miles of sewer lines, 38 potable and 4 recycled reservoirs, 24
potable and 3 recycled pump stations, and a 1.3 million gallons per day reclamation plant.
Utilizing an integrated database from the Geographic Information System (GIS) provides real-
time work order planning, execution, and consolidation of all maintenance history. These
systems are also integrated with financial software to allow asset tracking and management
information. As these systems are further developed, the District will be able to better anticipate
operating costs associated with these capital projects. The impact of the CIPs on the Operating
Budget is addressed in the CIP section of this budget.
Projected Cost of Water
The projected water cost is based on CWA’s Rate Modeling Program. This process evaluates
many options of the Regional Water Facilities Master Plan, which determines the most feasible
projects for water resources and incorporates these decisions into CWA’s Capital Improvement
Program. This cost is also based on CWA’s estimated water cost for purchases from MWD and
the Imperial Irrigation District (IID).
$907
$1,031
$1,153
$1,264 $1,350
$600
$800
$1,000
$1,200
$1,400
Pe
r
A
c
r
e
F
o
o
t
.
2011 2012 2013 2014 2015
Fiscal Year
PROJECTED COST OF WATER
45
General Fund Forecast ‐ FY 2011 Through FY 2015
This forecast incorporates both cost increases for expenditures and rate increases for revenues, as well
as growth projections.
$0
$20
$40
$60
$80
$100
$120
$140
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
$81
$91
$101
$111 $123
$81
$91 $101
$111 $123
Mi
l
l
i
o
n
s
Fiscal Year
REVENUES AND EXPENDITURES FORECAST
Revenues Expenditures
Revenues FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Water/Sewer Rates 72,460,600$ 81,664,900$ 89,361,500$ 98,477,500$ 108,997,800$
Meter Fees 39,600 75,900 391,500 535,800 620,700
Capacity Fee Revenues 1,404,000 1,418,000 1,432,200 1,446,500 1,461,000
Betterment Fees 582,800 594,500 606,400 618,400 630,800
Annexation Fees 194,500 444,100 2,578,700 3,506,200 4,153,500
Non-operating Revenues 1,613,000 1,641,600 1,677,300 1,715,900 1,756,700
Tax Revenues 3,854,300 3,921,300 4,003,400 4,192,000 4,393,800
Interest Income 428,800 565,000 727,500 917,700 1,120,100
General Fund Draw Down 346,000 261,000 178,700 81,200 -
TOTAL 80,923,600$ 90,586,300$ 100,957,200$ 111,491,200$ 123,134,400$
16,873,800$ 21,571,500$ 27,060,700$ 32,884,900$
Expenditures and Transfers
Water Cost 42,796,300$ 46,434,700$ 52,579,900$ 59,466,800$ 65,941,100$
Power 2,707,600 2,628,500 2,786,900 2,982,800 3,211,100
Labor and Benefits 18,231,600 19,330,400 20,087,000 20,731,300 21,620,900
Administrative Expenses 5,342,900 5,471,200 5,611,800 5,761,000 5,907,800
Materials & Maintenance 3,997,000 4,137,000 4,337,700 4,548,900 4,771,100
Fund Transfers, Net 7,848,200 12,584,500 15,553,900 18,000,400 21,682,400
TOTAL 80,923,600$ 90,586,300$ 100,957,200$ 111,491,200$ 123,134,400$
Excess Revenues -$ -$ -$ -$ -$
$0
$20
$40
$60
$80
$100
$120
$140
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
$81
$91
$101
$111 $123
$81
$91 $101
$111 $123
Mi
l
l
i
o
n
s
Fiscal Year
REVENUES AND EXPENDITURES FORECAST
Revenues Expenditures
46
Fund FY 2011 FY 2012 *FY 2013 FY 2014 *FY 2015
General Fund 18,288,100$ 19,944,300$ 22,352,000$ 24,454,700$ 26,447,800$
Betterment Fund 9,433,700 20,965,700 5,598,100 3,001,700 3,039,900
Replacement Fund 26,028,900 29,666,600 33,832,100 37,894,300 39,400,500
Expansion Fund 10,021,900 22,651,700 11,322,900 16,046,600 14,334,400
Medical Fund (1)6,305,000 4,614,000 3,197,900 2,799,100 2,397,000
Debt Reserve 1,317,200 1,239,100 979,300 789,000 613,000
TOTAL 71,394,800$ 99,081,400$ 77,282,300$ 84,985,400$ 86,232,600$
Fund Balances ‐ FY 2011 Through FY 2015
$40
$60
$80
$100
Mi
l
l
i
o
n
s
FUND BALANCES FORECAST
(1) Medical Fund decreases as the OPEB Trust is funded.
$0
$20
$40
$60
$80
$100
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Mi
l
l
i
o
n
s
Fiscal Year
FUND BALANCES FORECAST
General Fund Betterment Fund Replacement Fund
Expansion Fund Medical Fund (1)Debt Reserve
* Increase in Fund Total due to bond issuances in FY 2012 and FY 2014
47
Financing the capital improvements needed to keep up with the growing demand for water in the
District’s service area has been accomplished through a combination of long-term and short-term
financing sources. These include General Obligation Bonds, Certificates of Participation
(COPs), developer fees, and pay-as-you-go funding.
Debt Management
The District’s primary debt management objective is to keep the level of indebtedness within
available resources and within limits that will allow the District to meet the debt service
coverage ratios required by the bond covenant. Currently, there are four outstanding bond issues
and a State Sewer Loan, which the District will gradually retire per scheduled principal and
interest payments. Bonds have been and will be used to improve existing facilities and to build
the projects in the Capital Improvement Program (CIP). The District’s debt service obligations
have a significant effect upon the District’s current and future water rates. All efforts that
minimize the cost of debt have a corresponding affect that reduces water rates.
In a continuing effort to reduce debt expenses, the District was successful in raising its overall
credit rating from A+ to AA- in early 2007. This was projected to save in excess of $1.5 million
in interest expense over the life of the 2007 bond issuance. In late 2008 the District received a
second upgrade from AA- to AA, leaving the District with a split rating of AA-/AA. These
combined ratings upgrades are expected to save the District over $5.4 million in interest
expenses over the life of the pending 2010 bond issuance.
To meet the bond indebtedness obligation and maintain stable rates, a Long-Term Financing Plan
has been developed to forecast revenues and operating requirements. The District has projected
a schedule of rate increases designed to generate sufficient revenue to pay off existing and
planned future debt issues. See the Policies Section of the budget for the District’s complete
Debt Policy.
The legal minimum debt coverage ratio is 1.25 in accordance with District bond covenants.
Debt Management
DEBT COVERAGE RATIO FORECAST
FISCAL YEARS 2011 - 2015
2.34 2.72 3.06 3.43
1.63
0.00
2.00
4.00
6.00
8.00
10.00
2011 2012 2013 2014 2015
Fiscal Year
Co
v
e
r
a
g
e
R
a
t
i
o
.
.
Actual Ratio Legal Minimum Ratio = 1.25
48
Outstanding
Year Original Balance
# Incurred Maturity Date Amount 06/30/09
1 1996 Certificates of Participation (COPs) 15,400,000$ 12,100,000$
2 1998 General Obligation (GO) Bonds 11,835,000 8,395,000
3 2004 Certificates of Participation (COPs)12,270,000 10,320,000
4 1994 State Loan 5,000,000 701,516
5 2007 Certificates of Participation (COPs)42,000,000 41,215,000
Total Outstanding Debt 86,505,000$ 72,731,516$
Total Assessed Valuation - FY 2009
Percentage of Original Debt to Assessed Valuation 0.32%0.10%
Debt Limit per District Debt Policy (% of Assessed Valuation)15.00%15.00%
November 30, 2010
26,752,095,692$
All Debts
Schedule of Outstanding Debt
Description
September 1, 2026
August 31, 2022
September 1, 2036
September 1, 2023
12,308,043,285$
GO Bonds
49
1996 COPs GOBs 2004 COPs State Loan 2007 COPs Total
400,000 435,000 530,000 341,800 815,000 2,521,800
400,000 455,000 545,000 353,700 850,000 2,603,700
400,000 475,000 565,000 6,000 885,000 2,331,000
500,000 495,000 580,000 - 920,000 2,495,000
500,000 520,000 600,000 - 955,000 2,575,000
500,000 545,000 625,000 - 995,000 2,665,000
600,000 575,000 650,000 - 1,035,000 2,860,000
600,000 600,000 675,000 - 1,075,000 2,950,000
600,000 630,000 700,000 - 1,115,000 3,045,000
700,000 665,000 725,000 - 1,155,000 3,245,000
700,000 695,000 755,000 - 1,200,000 3,350,000
700,000 730,000 790,000 - 1,250,000 3,470,000
800,000 770,000 825,000 - 1,300,000 3,695,000
800,000 805,000 860,000 - 1,355,000 3,820,000
900,000 - 895,000 - 1,410,000 3,205,000
900,000 - - - 1,470,000 2,370,000
1,000,000 - - - 1,530,000 2,530,000
1,100,000 - - - 1,595,000 2,695,000
- - - - 1,665,000 1,665,000
- - - - 1,735,000 1,735,000
- - - - 1,810,000 1,810,000
- - - - 1,890,000 1,890,000
- - - - 1,970,000 1,970,000
- - - - 2,055,000 2,055,000
2018
2019
2010
2011
2012
2013
2022
2023
2024
2025
2028
2029
2030
2027
2031
2032
2033
2014
2015
2026
2021
Projected Principal Payments by Debt Issuance
FY
2017
2020
2016
- - - - 2,150,000 2,150,000
- - - - 2,245,000 2,245,000
- - - - 2,340,000 2,340,000
- - - - 2,445,000 2,445,000
12,100,000$ 8,395,000$ 10,320,000$ 701,500$ 41,215,000$ 72,731,500$ TOTAL
2035
2036
2037
2034
50
1996 COPs (1)GOBs 2004 COPs State Loan 2007 COPs Total
646,000 396,000 397,300 17,600 1,676,400 3,133,300
655,200 375,300 380,600 5,200 1,644,800 3,061,100
638,200 353,200 362,500 - 1,611,800 2,965,700
621,600 329,600 343,000 - 1,577,500 2,871,700
602,900 304,500 321,700 - 1,541,900 2,771,000
572,700 278,000 298,600 - 1,504,900 2,654,200
537,500 249,500 273,500 - 1,466,300 2,526,800
501,200 219,800 246,800 - 1,425,800 2,393,600
465,000 188,500 219,000 - 1,383,700 2,256,200
465,000 155,500 188,900 - 1,339,300 2,148,700
423,700 121,000 157,100 - 1,292,900 1,994,700
339,200 84,800 123,000 - 1,243,400 1,790,400
291,900 46,700 86,300 - 1,191,700 1,616,600
243,600 6,700 47,800 - 1,136,800 1,434,900
190,200 - 6,900 - 1,079,300 1,276,400
135,900 - - - 1,019,200 1,155,100
76,500 - - - 955,500 1,032,000
11,100 - - - 955,500 966,600
- - - - 818,000 818,000
- - - - 744,800 744,800
- - - - 668,400 668,400
- - - - 588,600 588,600
- - - - 505,500 505,500
- - - - 416,600 416,600
2014
2015
Projected Interest Payments by Debt Issuance
FY
2010
2011
2012
2013
2026
2027
2016
2017
2018
2019
2020
2021
2028
2029
2030
2031
2022
2023
2024
2025
2032
2033 ,,
- - - - 323,200 323,200
- - - - 225,700 225,700
- - - - 124,000 124,000
- - - - 17,800 17,800
7,417,400$ 3,109,100$ 3,453,000$ 22,800$ 28,479,300$ 42,481,600$
(1)Interest on the 1996 Certificates of Participation is variable and is projected using an interest rate of 5.49%
Note: The total projected debt payment of $5,221,200 for FY 2010 as shown on the Debt Service Expenditure on the
Revenues and Expenditures by Type - All Funds Schedule on page 44 is less than the projected principal payment of
$2,521,800 shown on page 50, plus the interest payment of $3,133,300 shown above, by $433,900 due to the difference of
the stated rate of 5.49% and the actual rate the district is currently paying, causing a variance of $528,300 on the 1996
COPs, and the miscellaneous administrative fees of ($94,400) is not shown on the principal and interest schedules.
TOTAL
2034
2035
2036
2037
51
Potable Revenues and Expenses
The District will provide water service to approximately 47,125 potable customers by the end of
Fiscal Year 2010. Ninety-two percent of the potable customers are residential and the remaining
eight percent are comprised of: master-metered, publicly owned, commercial, agricultural,
landscaping, and construction. Although the extensive residential developments have slowed
down in recent years, the District still expects nominal growth of 0.2% for Fiscal Year 2010.
Unit sales are anticipated to decrease 8.4% from the previous year's budget due to the water
shortage message being received by our customers and the overall economic slowdown.
Water rates vary among the customer classifications. The water rates for residential customers
are based on an accelerated block structure; as more units are consumed, a higher unit rate is
charged on the higher units. Last fiscal year the District implemented a similar tiered rate
structure for all customer types to encourage conservation and bring equity among the classes.
This new rate structure began January 1, 2009.
Unit sales represent approximately 67% of the water sales budget. Other revenue sources
include: system charges, energy charges, penalties, and other pass-through charges from the
County Water Authority (CWA) and the Metropolitan Water District (MWD).
All customers are required to pay fixed monthly fees of the MWD and CWA fixed charge and
the District system fee, based on meter size. These fees recover 28.2% of the potable water sales
revenue. Water rates, energy fees, and penalties recover the remaining 71.8% of remaining
revenues necessary to fund operations. The District adjusts the system fee, as needed, to balance
fixed costs with fixed revenues following industry best practice.
Energy charges are based on the quantity of water used and the elevation to which the water has
been lifted to provide service. Revenue from energy charges is used to recover the power costs
associated with pumping. This charge increases based on a review of these costs to ensure that
sufficient revenue is collected to offset pumping costs.
Penalties are charged to District customers when late payments are made on accounts. These
penalty revenues are budgeted based on historical trends.
The District receives 100% of its potable water from CWA, which purchases water from MWD
and IID. Any increase in costs by CWA or MWD impacts the District's water purchases and
directly affects the District's fees, rates, and service charges.
The District entered into an agreement with CWA to have the Helix Water District, at their Levy
Water Treatment Plant, treat imported untreated water on behalf of the Otay Water District. This
action brought regional water treatment closer to customers and reduced dependence on water
treatment facilities located outside of San Diego County.
52
The District was assigned a water allocation budget from CWA to ensure the region as a whole
remains within its allocation from MWD. This allocation is 40,247 acre feet. In Fiscal Year
2010, the District is estimating the purchase of 35,554 acre-feet of potable water, well below the
allocation set by CWA and sufficient to meet the demands of its customers. Provisions have
been made for District usage, leakage, and evaporation in the amount of 2,255 acre-feet.
53
FY 2008 FY 2010 Budget Variance
11-Actual Budget Estimated Budget Variance %
REVENUES
##Water Sales 44,804,854$ 49,229,400$ 46,160,394$ 56,474,500$ 7,245,100$ 14.7%
##Meter Fees 70,614 92,400 53,112 25,600 (66,800) (72.3%)
##Capacity Fee Revenues 1,468,123 1,301,900 1,516,260 1,397,000 95,100 7.3%
##Betterment Fees for Maintenance 802,021 895,900 661,998 571,400 (324,500) (36.2%)
##Annexation Fees 526,435 483,600 392,349 120,500 (363,100) (75.1%)
Tax Revenues 3,968,046 4,080,900 4,004,135 3,802,300 (278,600) (6.8%)
##Property Tax 3,279,923 3,430,000 3,429,830 3,175,600 (254,400) (7.4%)
##Sewer Debt - - - - - 0.0%
##GO Bond Debt - - - - - 0.0%
##Availability Fees 688,123 650,900 574,305 626,700 (24,200) (3.7%)
Others - - - - - 0.0%
##Non-operating Revenues 2,270,714 1,606,700 4,847,207 1,556,500 (50,200) (3.1%)
##Interest 805,385 582,500 332,633 286,400 (296,100) (50.8%)
OPETransfer from OPEB - 810,000 - 1,030,000 220,000 27.2%
TOTAL REVENUES 54,716,191 59,083,300 57,968,090 65,264,200 6,180,900 10.5%65,264,200
EXPENDITURES
##Water Purchases (CWA)20,184,919 25,183,600 22,872,115 28,033,700 2,850,100 11.3%
##Water Purchases (CSD)2,009,193 - (95,671) - - 0.0%
##Tier II Purchases 59,249 - 2,101 - - 0.0%
##CWA - Infrastructure Access Charge 1,090,228 1,227,500 1,227,408 1,344,900 117,400 9.6%
##CWA - Customer Service Charge 949,222 1,049,800 1,049,470 1,148,800 99,000 9.4%
##CWA - Emergency Storage Charge 1,507,895 1,774,700 1,774,776 2,246,600 471,900 26.6%
##MWD - Capacity Reservation Charge 570,980 602,800 603,072 628,800 26,000 4.3%
##MWD - Net RTS and Standby Charges 564,193 665,100 665,087 1,140,700 475,600 71.5%
Subtotal - Water Costs 26,935,880 30,503,500 28,098,358 34,543,500 4,040,000 13.2%
##Power 2,261,265 2,216,100 2,343,830 2,033,400 (182,700) (8.2%)
##Labor and Benefits 14,774,392 15,400,300 14,701,967 15,111,000 (289,300) (1.9%)
##Administrative Expenses 5,663,175 5,433,300 5,465,351 4,555,000 (878,300) (16.2%)
##Material & Maintenance 2,511,316 2,133,400 1,923,210 2,127,500 (5,900) (0.3%)
##Expansion Reserve - 2,586,700 2,586,700 - (2,586,700) (100.0%)
BettBetterment Reserve 3,207,900 - - 3,700,000 3,700,000 100.0%
RepReplacement Reserve - - - 2,710,000 2,710,000 100.0%
GF Transfer to Potable General Fund - - - 13,500 13,500 100.0%
swr Transfer to Sewer General Fund - - - 200,000 200,000 100.0%
propTransfer Out/In Prop 1A - - - 270,300 270,300 100.0%
TOTAL EXPENDITURES 55,353,927 58,273,300 55,119,417 65,264,200 6,990,900 12.0%
EXCESS REVENUES (EXPENSES) (637,735)$ 810,000$ 2,848,673$ -$ (810,000)$ (100.0%)
EXCESS REVENUES, w/o restatement and transfers -$
FY 2009
Operating Budget Summary ‐ Potable
POTABLE OPERATING EXPENDITURES
FY 2010
Water Costs
59.2%
Material &
Maintenance
3.6%
Administrative
Expenses
7.8%
Labor and Benefits
25.9%
Power
3.5%
54
FY 2009
Estimated
FY 2010
Budget Variance
Water Sales:
Water Sales 30,375,618$ 37,870,000$ 7,494,382$
System Fees 9,510,996 9,408,000 (102,996)
Energy Fees 1,866,237 1,981,200 114,963
MWD and CWA Fixed Fees 3,758,403 6,511,200 2,752,797
Penalties 649,683 704,100 54,417
Total 46,160,938$ 56,474,500$ 10,313,562$
Water Sales: Unit Sales x Rate
System Charges : Fixed monthly fee based on meter size
Energy Charges : Energy pumping fee of $0.038 per unit of water for each 100 feet of lift
or fraction thereof above the base elevation of 450 feet.
MWD and CWA Fixed Fees: Fixed monthly fee based on meter size a passed-through costs directly from
water providers MWD & CWA.
Penalties : Late charges, locks , etc.
Classification of Water Sales ‐ Potable
Water Sales
67%
System Charges
17%
Energy Charges
3%
Penalties
1%
MWD & CWA
Fixed Charges
12%
WATER SALES SUMMARY
FY 2010
55
Current Approved*
Accounts Units Amount Rates Rates
Residential 43,441 8,713,200 22,318,200$ 2.20$ 2.56$ **
Master Meter 808 1,364,500 3,564,900 2.23 2.61 **
Public & Commercial 1,494 1,893,200 4,135,800 1.87 2.18 **
Irrigation 1,235 2,072,600 6,083,500 2.54 2.94 **
Temporary and Others 147 461,400 1,377,100 2.54 2.98 **
Total Potable Water Sales 47,125 14,504,900 37,479,500$ 2.22$ 2.58$
Government Fee - - 390,500 0.28 0.29
47,125 14,504,900 37,870,000$ 2.50$ 2.61$ **
-
*Approved rates effective September 1, 2009.
**Based on average rate.
Fiscal Year 2010 Sales Budget
Water Sales Summary by Service Class ‐ Potable
UNIT SALES BY SERVICE CLASS
FY 2010
Residential
60%
Master Meter
9%
Public & Commercial
13%
Irrigation
14%
Temporary and Others
3%
UNIT SALES BY SERVICE CLASS
FY 2010
56
Estimated Budget
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
Residential 8,083,816 9,668,100 9,713,112 9,402,189 8,881,191 8,713,200
Master Meters 1,181,402 1,198,200 1,434,040 1,445,634 1,430,235 1,364,500
Public & Commercial 1,796,737 1,902,500 1,886,006 1,859,226 1,938,215 1,893,200
Irrigation 1,979,732 2,174,336 2,329,790 2,301,699 2,183,823 2,072,600
Temporary and Others 723,712 689,000 696,516 566,920 490,297 461,400
Total 13,765,399 15,632,136 16,059,464 15,575,668 14,923,761 14,504,900
Actual
Unit Sales History by Customer Class ‐ Potable
45,000
50,000
16,000
18,000
)
UNIT SALES AND METER TRENDS
25,000
30,000
35,000
40,000
45,000
50,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
FY05 Actual FY06 Actual FY07 Actual FY08 Actual FY09
Estimated
FY10 Budget
Me
t
e
r
s
Un
i
t
s
(
t
h
o
u
s
a
n
d
s
)
UNIT SALES AND METER TRENDS
Unit Sales Meters
57
Meter Current Approved* Existing Additional Total
Service Class Size 6/30/2009
FY10
Growth Rates Rates Meters Meters Meters
All Service Types 0.75 43,039 52 13.83$ 14.58$ 7,465,500$ 4,900$ 7,470,400$
1.00 1,658 15 17.56 18.52 365,300 1,800 367,100
1.50 930 - 26.90 28.37 313,900 - 313,900
2.00 1,113 8 38.10 40.18 532,000 2,100 534,100
3.00 72 - 67.98 71.68 61,400 - 61,400
4.00 213 - 101.59 107.13 271,500 - 271,500
6.00 18 - 194.96 205.59 44,000 - 44,000
10.00 7 - 437.71 461.57 38,400 - 38,400
Fire Services Various 573 - 28.55 30.11 205,200 - 205,200
Turn Over Fees 850 10.00 10.00 102,000 - 102,000
Budgeted Potable System Fees 47,623 75 9,399,200$ 8,800$ 9,408,000$
*Approved rates effective September 1, 2009.
Meter Count
Budgeted System Fees
System Fees ‐ Potable
METER COUNT HISTORY
-
15,000
30,000
45,000
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Actual
FY09
Estimated
FY10
Budget
METER COUNT HISTORY
58
Meter Current Approved*
Classification Size 6/30/2009
FY10
Growth Rates Rates Existing Growth Total
All Service Types 0.75 43,032 52 7.02$ 9.77$ 4,808,900$ 3,100$ 4,812,000$
1.00 1,652 15 11.71 16.28 307,600 1,500 309,100
1.50 923 - 23.41 32.61 344,200 - 344,200
2.00 1,108 8 37.46 52.15 660,800 2,500 663,300
3.00 72 74.92 104.30 85,900 - 85,900
4.00 91 - 117.07 162.98 169,600 - 169,600
6.00 18 - 234.14 325.92 67,100 - 67,100
10.00 7 - 538.52 749.61 60,000 - 60,000
Total 46,903 75 6,504,100$ 7,100$ 6,511,200$
*Approved rates effective September 1, 2009.
Budgeted MWD & CWA - Fixed
ChargesMeter Count
MWD and CWA Fixed Fees (Pass-Through) - Potable
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Th
o
u
s
a
n
d
s
FY05 Actual FY06 Actual FY07 Actual FY08 Actual FY09 Estimated FY10 Budget
MWD AND CWA FIXED CHARGES (PASS-THROUGH)
59
Meter Installation Meter AMR
Size Fee Fee Fee
Meter Fees:0.75 60.00$ 59.00$ 147.00$
Meter Fees are charges collected for new water 1.00 60.00 117.00 147.00
service connections. Fees vary depending upon 1.50 103.00 250.00 147.00
meter size and type of service. The costs associated 2.00 240.00 475.00 147.00
with meter installations are included in the Operating 3.00 300.00 653.00 147.00
Expenses section of the budget. These charges are 4.00 300.00 1,370.00 147.00
funded by developers.6.00 300.00 2,500.00 147.00
10.00 300.00 3,737.00 147.00
Fiscal Year 2010 Growth by Meter Size
Service Class 0.75 1.00 1.50 2.00 3.00 Total
Residential 52 15 - 8 - 75
Total Meter Fees 13,800$ 4,900$ -$ 6,900$ 25,600$
Meter Fees - Potable
-
10,000
20,000
30,000
40,000
50,000
FY05 Actual FY06 Actual FY07 Actual FY08 Actual FY09
Estimated
FY10 Budget
METER COUNT
60
Estimated Budget
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
Water Sales 24,760,101$ 27,975,777$ 30,696,070$ 30,049,415$ 30,375,618$ 37,870,000$
System Fees 7,933,913 8,056,340 8,658,339 9,611,046 9,510,996 9,408,000
Energy Fees 1,573,999 1,696,492 1,801,455 1,834,102 1,866,237 1,981,200
MWD and CWA Fixed Fees 1,620,548 1,775,186 2,159,269 2,530,306 3,758,403 6,511,200
Penalties 494,915 688,374 797,615 779,985 649,683 704,100
Total 36,383,476$ 40,192,169$ 44,112,748$ 44,804,854$ 46,160,938$ 56,474,500$
Actual
Revenue History ‐ Potable
$20,000
$30,000
$40,000
$50,000
$60,000
Thousands REVENUE HISTORY
Note:
Fiscal Year 2005 Water Sales and Energy Fees drop due to 22.51 inches of rainfall.
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
FY05 Actual FY06 Actual FY07 Actual FY08 Actual FY09
Estimated
FY10 Budget
Water Sales System FeesEnergy FeesMWD & CWA Fixed Fees Penalties
Thousands REVENUE HISTORY
61
FY10 Budget FY10 Budget
Acre Feet Rate (1)Purchase Costs % to Total
Potable Water Purchases
Budgeted Sales (CWA)33,298.7 $695/$814 26,257,800$ 93.7%
District & Unbilled Usage 477.3 $695/$814 374,300 1.3%
Water Loss 1,777.6 $695/$814 1,401,600 5.0%
OA A A CAGS 336 28 033 00$100 0%
Water Purchases and Related Costs ‐ Potable
-
10,000
20,000
30,000
40,000
FY05 ActualFY06 ActualFY07 ActualFY08 ActualFY09 EstimatedFY10 Budget
Ac
r
e
F
e
e
t
POTABLE WATER PURCHASES
TOTAL VARIABLE CHARGES 35,553.6 28,033,700$ 100.0%
MWD & CWA FIXED CHARGES:FY09 Estimated FY10 Budget
Infrastructure Access Charge (IAC) 1,227,408$ 1,344,900$
Customer Service Charge (CSC)1,049,470 1,148,800
Emergency Storage Charge (ESC)1,774,776 2,246,600
Capacity Reservation Charge (CRC)603,072 628,800
Readiness-to-Serve Charge (RTS)665,087 1,140,700
TOTAL FIXED CHARGES 5,319,813$ 6,509,800$
(1)The first rate applies to purchases from July to August of the budget fiscal year; the second from
September to June.
-
10,000
20,000
30,000
40,000
FY05 ActualFY06 ActualFY07 ActualFY08 ActualFY09 EstimatedFY10 Budget
Ac
r
e
F
e
e
t
POTABLE WATER PURCHASES
62
Admin and
Operations
Buildings
Potable
Transmission
Total Potable
Power Costs
FY05 Actual 142,630 1,551,029 1,693,659
FY06 Actual 154,567 1,628,153 1,782,721
FY07 Actual 172,646 1,838,636 2,011,282
FY08 Actual 160,945 2,100,320 2,261,265
FY09 Estimated 185,059 2,158,771 2,343,830
FY10 Budget 181,900 1,851,500 2,033,400
Power Costs ‐ Potable
$1,000
$1,500
$2,000
$2,500
Thousands HISTORICAL POWER COSTS AND PROJECTIONS
Admin and Operations Buildings
Potable Transmission
Note: The reduction in budgeted power cost is related to projected decreases in water sales.
$0
$500
$1,000
$1,500
$2,000
$2,500
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Actual
FY09
Estimated
FY10
Budget
Thousands HISTORICAL POWER COSTS AND PROJECTIONS
Admin and Operations Buildings
Potable Transmission
63
FY 2008 FY 2010 Budget
Actual Budget Estimated Budget Variance %
Director's Fees 24,002$ 40,000$ 20,200$ 40,000$ - 0.0%
Travel and Meetings 184,690 239,400 213,488 222,200 (17,200) (7.2%)
Conservation and Outreach 286,240 348,000 254,209 352,800 4,800 1.4%
General Office Expense 380,573 364,900 397,104 434,500 69,600 19.1%
Equipment 1,012,075 1,045,300 1,098,693 1,020,900 (24,400) (2.3%)
Fees 400,310 419,000 402,572 442,100 23,100 5.5%
Services 2,112,143 2,454,700 1,907,949 1,709,100 (745,600) (30.4%)
Training 92,693 167,600 146,746 156,500 (11,100) (6.6%)
Utilities 14,495 15,600 15,874 17,500 1,900 12.2%
Miscellaneous 239 133,900 258,933 212,400 78,500 58.6%
Total 4,507,459 5,228,400 4,715,768 4,608,000 (620,400) (11.9%)
Less: Overhead Allocation (697,212) (767,400) (789,788) (918,800) (151,400) 19.7%
Subtotal 3,810,247 4,461,000 3,925,980 3,689,200 (771,800) (17.3%)
General Expenses 1,852,927 972,300 1,539,372 865,800 (106,500) (11.0%)
Total Administrative Expenses 5,663,174$ 5,433,300$ 5,465,351$ 4,555,000$ (878,300)$ (16.2%)
6,360,386$ 6,200,700$ 6,255,139$ 5,473,800$
FY 2009
Administrative Expenses ‐ Potable
ADMINISTRATIVE EXPENSES - POTABLE
FY 2010
Director's Fees
0.9%Travel and Meetings
4.8%
Conservation and
Outreach
7.7%
General Office Expense
9.4%
Equipment
22.1%
Fees
9.6%
Services
37.1%
Training
3.4%
Utilities
0.4%
Miscellaneous
4.6%
ADMINISTRATIVE EXPENSES - POTABLE
FY 2010
64
FY 2008 FY 2010 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil 494,190$ 369,000$ 193,792$ 231,400$ (137,600) (37.3%)
Meters and Materials 327,882 138,000 133,581 157,600 19,600 14.2%
Fleet Parts and Equipment 152,794 161,000 170,271 161,000 - 0.0%
Infrastructure Equipment and Supplies 625,944 470,000 493,478 469,600 (400) (0.1%)
Chemicals 161,961 200,000 247,071 225,000 25,000 12.5%
Safety Equipment 18,970 27,500 34,666 158,500 131,000 476.4%
Laboratory Equipment and Supplies 31,178 30,000 32,453 35,000 5,000 16.7%
Other Materials and Supplies 129,433 163,600 107,846 148,800 (14,800) (9.0%)
Building and Grounds Materials 93,735 93,000 90,679 86,600 (6,400) (6.9%)
Contracted Services 475,228 481,300 419,374 454,000 (27,300) (5.7%)
Total Materials and Maintenance 2,511,316$ 2,133,400$ 1,923,210$ 2,127,500$ (5,900)$ (0.3%)
Materials and Maintenance Expenses ‐ Potable
FY 2009
Fuel and Oil
10.9%
Meters and Materials
7.4%
Building and Grounds
Materials
4.1%
Contracted Services
22.5%
MATERIALS AND MAINTENANCE EXPENSES - POTABLE
FY 2010
Fuel and Oil
10.9%
Meters and Materials
7.4%
Fleet Parts and
Equipment
7.6%
Infrastructure
Equipment and
Supplies
22.1%
Chemicals
10.6%
Safety Equipment
7.5%
Laboratory Equipment
and Supplies
1.6%
Other Materials and
Supplies
7.0%
Building and Grounds
Materials
4.1%
Contracted Services
22.5%
MATERIALS AND MAINTENANCE EXPENSES - POTABLE
FY 2010
65
PADRE DAM MUNICIPALWATER DISTRICT
LOWER OTAYRESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKE
MURRAY LOVELAND
RESERVOIR
LAKEJENNINGS EL CAPITANRESERVOIR
MEXICO
Reservoir Pump Station
San Diego County Water Authority Pipes
Otay Water District Pipes
Otay Headquarters
EXISTING FACILITIES
San Diego County Water
Authority Connections
EXISTING
Potable Water Service Area
66
Recycled Revenues and Expenses
In 1980, the District started operation of the Ralph W. Chapman Water Recycling Facility
(RWCWRF). The RWCWRF project is capable of recycling wastewater at the rate of 1.3
million gallons per day (MGD) to augment potable water supplies for irrigation purposes. The
RWCWRF treatment process consists of primary, secondary, and tertiary treatment. The
RWCWRF’s conversion time from raw sewage to full Title 22 recycled water is approximately
20 hours.
The steps of the water recycling process are as follows:
Primary Treatment: The raw sewage flows in at the drum screen, also known as the
“headworks” which removes a large amount of coarse organic and inorganic material that is
either floating or in suspension. This is followed by a grit chamber, which removes the heavy
settled material.
Secondary Treatment: This is where the biological treatment begins. The first step takes place
in the aeration tanks, also known as reactors or sedimentation basins, which contain a huge mass
of bacteria that feed on the organic material in sewage. These bacteria are aerobic, and therefore
require a great quantity of pumped-in air to help them thrive. The second step in the process is
clarification where the sludge from the aeration tanks is allowed to settle to the bottom and the
67
clear liquid, or secondary effluent, flows out over weirs at the surface. Some of the settled sludge
is disposed of and some is returned to the aeration tanks to keep the process in balance. The
secondary effluent flowing over the weirs is now ready for the next step. Solids, screenings, and
sludge are discharged to the City of San Diego Metropolitan Wastewater (Metro) system.
Tertiary Treatment: Just before filtration, a small amount of coagulant is added as a filter aid
which helps suspended material in the secondary effluent “clump” on the surface of the filters.
The filters consist of a layer of sand with a layer of anthracite coal on top. As the fluid moves
through the filters, the flow goes through a chlorine contact chamber where disinfection takes
place.
The District operates the largest recycled water distribution system in San Diego County and will
supply approximately 4,558 acre-feet of recycled water to 683 landscaping and construction
customers by the end of Fiscal Year 2010. The recycled water customer base consists primarily
of irrigation at golf courses, schools, parks and open space in the Eastlake, Otay Ranch, and
Rancho Del Rey and other areas of eastern Chula Vista.
The District entered an agreement with the City of San Diego in October 2003, to purchase up to
six million gallons a day of recycled water from their South Bay Water Reclamation Plant. To
bring this plan to fruition, the District constructed a 30-inch, six mile pipeline, a 12 million
gallon reservoir and a pump station to bring this new source of recycled water into the District’s
system. These projects were completed in Spring 2007, which eliminates the immediate need for
a potable supplement of the recycled system. The benefits of this to the region as a whole are
great as less demand on the potable system will be made, which reduces future capacity and
storage requirements. The $42 million investment in capital outlay results in a significant
reduction of water purchase costs and an increase in system reliability. The District expects that
15 to 20 percent of its total water demand will be met using recycled water.
To increase demand of recycled water and reduce the demands of potable water, the District has
begun a capital project to offer incentives to suitable customers to convert potable to recycled
water. See page 181 of the Capital Budget to view project R2094. With this program the
District hopes to convert 300 acre feet of potable water to recycled, helping the region reduce
demands on the potable water system.
Producing and distributing recycled water is costly. To help offset the costs of supplying
alternative water sources, both CWA and MWD offer incentive programs. In Fiscal Year 1991,
the District signed agreements with CWA and MWD to take advantage of the programs they
offered. A second agreement was signed in 2000. In 2005, the District agreed to terminate both
agreements and to enter into a new agreement which will allow the District to maximize its
ability to earn incentives and to simplify the grant requirements. Currently, the District receives
$200 from CWA and $185 from MWD for every acre-foot (AF) of recycled water sold.
68
FY 2008 FY 2010 Budget Variance
31-Actual Budget Estimated (d Budget Variance %
REVENUES
###Recycled Water Sales 3,347,964$ 3,648,700$ 4,015,184$ 5,154,100$ 1,505,400 41.3%
###System Fees 425,061 524,900 246,218 253,600 (271,300) (51.7%)
###Energy Fees 248,429 304,000 181,219 374,800 70,800 23.3%
###MWD/CWA Rebates 1,833,949 1,798,400 1,711,787 1,754,900 (43,500) (2.4%)
###Penalties 92,855 68,500 83,950 65,100 (3,400) (5.0%)
###Total Reclaimed Water Sales 5,948,258 6,344,500 6,238,358 7,602,500 1,258,000 19.8%
###Meter Fees 9,176 11,400 18,336 20,000 8,600 75.4%
###Capacity Fee Revenues 12,042 - 5,447 - - 0.0%
###Interest 80,704 24,600 (9,102) 8,000 (16,600) (67.5%)
TOTAL REVENUES 6,050,180 6,380,500 6,259,578 7,630,500 1,250,000 19.6%
EXPENDITURES
###Water Purchases (CSD) / Meter Fees 1,278,084 1,490,800 1,299,976 1,312,000 (178,800) (12.0%)
Total Water Purchases 1,278,084 1,490,800 1,299,976 1,312,000 (178,800) (12.0%)
###Power 288,261 466,800 498,074 504,500 37,700 8.1%
###Labor and Benefits 955,086 1,143,100 1,071,137 1,177,200 34,100 3.0%
###Administrative Expenses 290,718 346,500 301,933 318,100 (28,400) (8.2%)
###Materials & Maintenance 242,779 225,400 224,410 332,200 106,800 47.4%
GF Transfer to General Fund Reserve - - - 1,316,500 1,316,500 100.0%
###Expansion Reserve 2,590,200 2,430,000 2,430,000 1,610,000 (820,000) (33.7%)
Bett Betterment Reserve 225,000 - - 110,000 110,000 100.0%
ReplReplacement Reserve - 277,900 277,900 950,000 672,100 241.8%
TOTAL EXPENDITURES 5,870,127 6,380,500 6,103,430 7,630,500 1,071,200 16.8%
EXCESS REVENUES (EXPENSES)180,054$ -$ 156,148$ -$ 178,800$ 0.0%
-$
FY 2009
Operating Budget Summary ‐ Recycled
RECYCLED OPERATING EXPENDITURES
FY 2010
Labor and Benefits
32.3%Power
13.9%
Total Water
Purchases
36.0%
Materials &
Maintenance
9.1%
Administrative
Expenses
8.7%
69
FY 2009
Estimated
FY 2010
Budget Variance
Recycled Water Sales:
Water Sales 3,787,845$ 5,154,100$ 1,366,255$
System Fees 366,529 253,600 (112,929)
Energy Fees 288,247 374,800 86,553
MWD & CWA Rebates 1,711,787 1,754,900 43,113
Penalties 83,950 65,100 (18,850)
Total 6,238,358$ 7,602,500$ 1,364,142$
Water Sales : Unit Sales x Rate
System Charges : Fixed monthly fee based on meter size
Energy Charges : Energy pumping fee of $0.038 per unit of water for each 100 feet of lift
or fraction thereof above the base elevation of 450 feet
MWD & CWA Rebates : Incentive from MWD & CWA for providing recycled water.
Penalties : Late charges, locks, etc.
Classification of Water Sales ‐ Recycled
WATER SALES SUMMARY
FY 2010
Water Sales
68%
System Charges
3%
Energy Charges
5%
Penalties
1%
MWD & CWA
Rebates
23%
WATER SALES SUMMARY
FY 2010
70
Current Approved*
Accounts Units Amount Rates Rates
Recycled Water Sales:
Recycled .75" & 1.0" Meter 104 62,500 157,100$ 2.16$ 2.51$ **
Recycled 1.5" & 2.0" Meter 568 1,452,100 3,633,500 2.16 2.50 **
Recycled 3.0" & 4.0" Meter 8 49,800 123,300 2.16 2.48 **
3 421,100 1,047,600 2.16 2.49 **
683 1,985,500 4,961,500$ 2.51$ 2.50$
Government Fee 192,600 0.28 0.29
683 1,985,500 5,154,100$ 2.79$ 2.60$ **
*Approved rates effective September 1, 2009.
**Based on average rate.
Estimated Budget
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
Unit Sales 1,368,462 1,729,000 1,920,084 2,001,137 2,034,500 1,985,500
Water Sales Summary by Service Class ‐ Recycled
UNIT SALES HISTORY - RECYCLED
ACTUAL
Fiscal Year 2010 Sales Budget
Recycled > 6.0" Meter
-
200
400
600
800
-
500
1,000
1,500
2,000
2,500
FY05 Actual FY06 Actual FY07 Actual FY08 Actual FY09 Estimated FY10 Budget
Me
t
e
r
s
Un
i
t
s
(
t
h
o
u
s
a
n
d
s
)
UNIT SALES & METER TRENDS
Unit Sales Meters
71
Meter Current Approved* Existing Additional Total
Service Class Size 6/30/09 FY10 Growth Rates Rates Meters Meters Meters
Recycled 0.75 - - 13.83$ 14.58$ -$ -$ -$
1.00 89 15 17.56 18.52 19,300 3,200 22,500
1.50 376 9 26.90 28.37 124,700 3,000 127,700
2.00 183 - 38.10 40.18 86,000 - 86,000
3.00 3 - 67.98 71.68 2,500 - 2,500
4.00 5 - 101.59 107.13 6,300 - 6,300
6.00 2 194.96 205.59 4,800 - 4,800
8.00 1 307.00 323.73 3,800 - 3,800
10.00 - - 437.71 461.57 - - -
-
Total 659 24 247,400$ 6,200$ 253,600$
Budgeted Recycled System Fees 253,600$
*Approved rates effective September 1, 2009.
Meter Count
Budgeted System Fees
System Fees ‐ Recycled
-
200
400
600
800
FY05 Actual FY06 Actual FY07 Actual FY08 Actual FY09 Estimated FY10 Budget
METER COUNT
72
Meter Installation Meter AMR
Size Fee Fee Fee
Meter Fees:0.75 60.00$ 59.00$ 147.00$
Meter Fees are charges collected for new water 1.00 60.00 117.00 147.00
service connections. Fees vary depending upon 1.50 103.00 250.00 147.00
meter size and type of service. The costs associated 2.00 240.00 475.00 147.00
with meter installations are included in the Operating 3.00 300.00 653.00 147.00
Expenses section of the budget. These charges are 4.00 300.00 1,370.00 147.00
funded by developers.6.00 300.00 2,500.00 147.00
10.00 300.00 3,737.00 147.00
0.75 1.00 1.50 2.00 3.00 Total
Recycled - 15 9 - - 24
Total Meter Fees -$ 4,900$ 15,100$ -$ -$ 20,000$
Fiscal Year 2010 Growth by Meter Size
Meter Fees ‐ Recycled
METER COUNT
-
200
400
600
800
FY05 Actual FY06 Actual FY07 Actual FY08 Actual FY09 Estimated FY10 Budget
METER COUNT
73
Estimated Budgeted
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
Water Sales 2,292,432$ 2,694,517$ 3,294,170$ 3,347,964$ 3,787,845$ 5,154,100$
System Fees 256,659 298,153 335,063 425,061 366,529 253,600
Energy Fees 52,119 198,599 190,570 248,429 288,247 374,800
MWD & CWA Rebates 363,370 372,172 592,056 1,833,949 1,711,787 1,754,900
Penalties - - 80,998 92,855 83,950 65,100
Total 2,964,580$ 3,563,441$ 4,492,857$ 5,948,258$ 6,238,358$ 7,602,500$
Actual
Revenue History ‐ Recycled
$4,000
$5,000
$6,000
Thousands REVENUE HISTORY
Note:
Retroactive increase was given by CWA from $147 to $200 acre foot received in FY 08 applicable to FY 07.
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Actual
FY09
Estimated
FY10
Budget
Water Sales System Fees Energy FeesMWD & CWA Rebates Penalties
Thousands REVENUE HISTORY
74
FY10 Budget FY10 Budget
(1)
Water Purchases ‐ Recycled
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Actual
FY09
Estimated
FY10
Budget
Ac
r
e
F
e
e
t
RECYCLED WATER PURCHASES
Acre Feet Rate (1)Purchase Costs % to Total
SBWRP Recycled Water Purchases (CSD)
Recycled Water Purchases 3,356.0 $350/$445 1,292,200$ 98.5%
Meter Fee - 1,646.50 19,800 1.5%
Total 3,356.0 1,312,000$ 100.0%
(1)The first rate applies to purchases from July to December of the budget fiscal year; the second from
September to June.
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Actual
FY09
Estimated
FY10
Budget
Ac
r
e
F
e
e
t
RECYCLED WATER PURCHASES
75
Treatment and
Recycled
Transmission
FY05 Actual 241,000
FY06 Actual 224,200
FY07 Actual 358,359
FY08 Actual 530,038
FY09 Estimated 498,074
FY10 Budget 504,500
Power Costs ‐ Recycled
$200
$300
$400
$500
$600
Thousands
HISTORICAL POWER COSTS AND PROJECTIONS
Note: The increase in power cost in FY 2008 relates to the new source of recycled water from the City of San Diego.
$-
$100
$200
$300
$400
$500
$600
FY05 Actual FY07 Actual FY09 Estimated
Thousands
HISTORICAL POWER COSTS AND PROJECTIONS
76
FY 2008 FY 2010 Budget
Actual Budget Estimated Budget Variance %
Equipment 868$ 6,300$ 4,277$ 6,300$ -$ 0.0%
Fees 33,738 53,000 25,396 54,400 1,400 2.6%
Services 88,873 75,200 85,542 48,500 (26,700) (35.5%)
Miscellaneous - 9,900 - - (9,900) (100.0%)
Total 123,479 144,400 115,215 109,200 (35,200) (24.4%)
Overhead Allocation 167,239 202,100 186,718 208,900 6,800 3.4%
Total Administrative Expenses 290,718$ 346,500$ 301,933$ 318,100$ (28,400)$ (8.2%)
FY 2009
Administrative Expenses ‐ Recycled
Equipment
2.0%
Overhead Allocation
ADMINISTRATIVE EXPENSES - RECYCLED
FY 2010
Equipment
2.0%
Fees
15.8%
Services
15.2%
Miscellaneous
0.0%
Overhead Allocation
65.7%
ADMINISTRATIVE EXPENSES - RECYCLED
FY 2010
77
FY 2008 FY 2010 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil 13,646$ 13,500$ 6,776$ 13,300$ (200) (1.5%)
Meters and Materials 16,321 10,500 22,803 13,000 2,500 23.8%
Infrastructure Equipment and Supplies 134,430 114,500 92,185 64,000 (50,500) (44.1%)
Chemicals 62,426 46,000 46,326 225,000 179,000 389.1%
Safety Equipment 1,353 2,800 2,543 1,600 (1,200) (42.9%)
Laboratory Equipment and Supplies 5,200 5,000 5,109 6,000 1,000 20.0%
Other Materials and Supplies 7,088 10,600 12,048 8,800 (1,800) (17.0%)
Contracted Services 2,315 22,500 36,621 500 (22,000) (97.8%)
Total Materials and Maintenance 242,779$ 225,400$ 224,410$ 332,200$ 106,800$ 47.4%
Materials and Maintenance Expenses ‐ Recycled
FY 2009
Fuel and Oil
4.0%
Meters and Materials
Laboratory
Equipment and
Supplies
1.8%
Other Materials and
Supplies
2.6%
Contracted Services
0.2%
MATERIALS AND MAINTENANCE EXPENSES - RECYCLED
FY 2010
Fuel and Oil
4.0%
Meters and Materials
3.9%
Infrastructure
Equipment and
Supplies
19.3%Chemicals
67.7%
Safety Equipment
0.5%
Laboratory
Equipment and
Supplies
1.8%
Other Materials and
Supplies
2.6%
Contracted Services
0.2%
MATERIALS AND MAINTENANCE EXPENSES - RECYCLED
FY 2010
78
LOWER OTAYRESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKEMURRAY LOVELANDRESERVOIR
LAKEJENNINGS
RALPH W. CHAPMANWATER RECYCLING
FACILITY
SOUTH BAY WATER RECLAMATION PLANT MEXICO
Reservoir Pump Station
Otay Water District Pipes
Otay
Headquarters
EXISTING FACILITIES
Treatment Plants
Recycled Water Service Area
EXISTING
79
Sewer Revenues and Expenses
The District provides sewer service to approximately 15,200 customers through 4,640 accounts
(or approximately 6,710 Assigned Service Units) located in the northern section of the District.
The District operates and maintains the sewage collection system serving Rancho San Diego,
Singing Hills and portions of Mount Helix within the Upper Sweetwater River Basin, also
known as the Jamacha Basin. Residential customers comprise 98.5% of the customer base.
Modest growth of 0.6% is anticipated in Fiscal Year 2010.
Wastewater collection within the Jamacha Basin is provided by two agencies: the Otay Water
District and the Spring Valley Sanitation District. Customers in the basin, not served by either
agency, dispose of their sewage through septic tanks. After the sewer has been collected, it is
sent to the District’s Ralph W. Chapman Water Recycling Facility (RWCWRF) treatment plant
where the District produces recycled water, see page 67 outlining the sewer process. The
byproduct of the treatment process is called sludge and it is discharged through the City of San
Diego Metropolitan Wastewater (Metro) and the Spring Valley Sanitation District systems.
The Otay Water District is a member of Metro Wastewater System and a significant amount of
the sewer operation costs is for estimated sewer service charges from Metro totaling $981,100
for Fiscal Year 2010. Additionally, the District will pay $230,100 for its share of the operation
and maintenance cost of the Rancho San Diego Outfall and the Spring Valley Outfall to dispose
of sewage to Metro for Fiscal Year 2010.
The charge for sewer service is mandated by the State Revenue Program Guidelines which
requires the use of a "Service Unit Assignment Formula" that converts higher strength uses into a
service unit value comparable to the use impact of a single-family residential user or equivalent
dwelling unit (EDU). The rate of discharge and strength of sewage for non-residential customers
tends to be higher than a single-family residential user. Due to their higher discharge and
strength, non-residential customers are assigned more units: 12.5% of the total service units,
while only comprising 1.5% of the customer base. The formula for the sewer rates is shown on
page 87.
In addition to the monthly sewer fee, sewer customers are annually assessed $54 per assigned
service unit on their property tax statements. This revenue of $362,600 is necessary for the
payment of principal and interest on the $5 million State loan to modify the RWCWRF. The
outstanding balance on the loan is $ 701,516 with an interest rate of 3.5%. The debt service
payment for Fiscal Year 2010 is $359,400.
80
FY 2008 FY 2010 Budget Variance
11-Actual Budget Estimated Budget Variance %
REVENUES
4200 Sewer Charges 2,414,886 2,145,300 2,184,523 2,244,800 99,500 4.6%
4400 Non-operating Revenues 27,112 26,400 27,801 29,100 2,700 10.2%
Tax Revenues 56,599 56,400 50,759 50,300 (6,100) (10.8%)
4510 Interest 152,336 60,700 54,298 28,500 (32,200) (53.0%)
General Fund Draw Down - 120,100 - 469,100 349,000 290.6%
TOTAL REVENUES 2,650,933 2,408,900 2,317,381 2,821,800 412,900 17.1%
5411 Power 98,360 97,600 63,197 99,200 1,600 1.6%
5110 Labor and Benefits 732,543 642,000 667,547 924,600 282,600 44.0%
5200 Administrative Expenses 199,700 155,300 174,639 456,100 300,800 193.7%
5300 Material & Maintenance 1,358,086 1,514,000 1,335,033 1,341,900 (172,100) (11.4%)
Repl RReplacement Reserve 235,400 - - - - 0.0%
St Ln State Loan Reserve 25,000 - - - - 0.0%
TOTAL EXPENDITURES 2,649,089 2,408,900 2,240,416 2,821,800 412,900 17.1%
EXCESS REVENUES 1,844$ -$ 76,965$ -$ -$ 0.0%
EXCESS REVENUES, w/o restatement and transfers (6,880,300)$
FY 2009
Operating Budget Summary ‐ Sewer
SEWER OPERATING EXPENDITURES
Power
3.5%
Labor and Benefits
32.8%
Administrative
Expenses
16.2%
Material &
Maintenance
47.5%
SEWER OPERATING EXPENDITURES
FY 2010
81
Units/FY 2010
Accounts ASU(1)Current Proposed(3)Current Proposed(3)Budget
Single Family 4,518 4,518 10.20 10.80 1.47 1.56 1,569,400$
Multi-Family 50 1,360 10.20 10.80 1.47 1.56 288,200
Schools 6 s 297 34.79 36.88 127,700
Churches 4 c 88 34.79 36.88 37,700
Commercial
Low Strength 37 239 34.79 36.88 102,700
Medium Strength 18 124 34.79 36.88 53,200
High Strength 6 88 34.79 36.88 37,900
Penalties 28,000
TOTAL SEWER CHARGES 4,639 6,714 2,244,800$
Sewer Charges Summary by Service Class
Usage Fee / Sewer RateBase Fee for 3/4" Meter(2)
SEWER CHARGES BY SERVICE CLASS
(1)Assigned Service Units
(2)Current and proposed base fees for 1" meter are 14.90 and 15.75, respectively.
(3)Adopted fee/rate is effective January 1, 2010.
Single Family
70.8%
Multi-Family
13.0%Schools
5.8%Churches
1.7%
Commercial - Low
Strength
4.6%
Commercial -
Medium Strength
2.4%
Commercial - High
Strength
1.7%
SEWER CHARGES BY SERVICE CLASS
FY 2010
82
Estimated Budget
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
Sewer Charges 1,995,548$ 2,296,856$ 2,531,513$ 2,359,173$ 2,154,628$ 2,216,800$
Penalties (1)- - 46,480 55,713 29,896 28,000
Total 1,995,548$ 2,296,856$ 2,577,993$ 2,414,886$ 2,184,523$ 2,244,800$
Actual
Revenue History ‐ Sewer
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Th
o
u
s
a
n
d
s
s
SEWER REVENUE HISTORY
(1)Prior to Fiscal Year 2007, penalties were Potable revenues only.
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
FY05 Actual FY06 Actual FY07 Actual FY08 Actual FY09
Estimated
FY10
Budget
Th
o
u
s
a
n
d
s
s
SEWER REVENUE HISTORY
Sewer Charges Penalties
83
Sewer Lift Station
FY05 Actual 82,447$
FY06 Actual 85,894
FY07 Actual 94,989
FY08 Actual 98,359
FY09 Estimated 88,512
FY10 Budget 99,200
Power Costs ‐ Sewer
$25
$50
$75
$100
Thousands
HISTORICAL POWER COSTS AND PROJECTIONS
$-
$25
$50
$75
$100
FY05 ActualFY06 ActualFY07 ActualFY08 ActualFY09 EstimatedFY10 Budget
Thousands
HISTORICAL POWER COSTS AND PROJECTIONS
84
FY 2008 FY 2010 Budget
Actual Budget Estimated Budget Variance %
Equipment 468$ 500$ 685$ 1,500$ 1,000 200.0%
Fees 20,016 8,500 10,053 11,500 3,000 35.3%
Services 48,968 25,600 38,783 269,000 243,400 950.8%
Miscellaneous - 6,200 6,808 7,600 1,400 22.6%
Total 69,452 40,800 56,328 289,600 248,800 609.8%
Overhead Allocation 130,248 114,500 118,311 166,500 52,000 45.4%
Total Administrative Expenses 199,700$ 155,300$ 174,639$ 456,100$ 300,800$ 193.7%
FY 2009
Administrative Expenses ‐ Sewer
Equipment
0.3%Fees
2.5%Overhead Allocation
36.5%
ADMINISTRATIVE EXPENSES - SEWER
FY 2010
Equipment
0.3%Fees
2.5%
Services
59.0%
Miscellaneous
1.7%
Overhead Allocation
36.5%
ADMINISTRATIVE EXPENSES - SEWER
FY 2010
9
85
FY 2008 FY 2010 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil 996$ -$ -$ -$ - 0.0%
Fleet Parts and Equipment 406 3,000 - 3,000 - 0.0%
Infrastructure Equipment and Supplies 104,579 83,000 68,953 67,000 (16,000) (19.3%)
Chemicals 3,089 4,000 5,810 4,500 500 12.5%
Safety Equipment 1,208 1,000 1,694 1,000 - 0.0%
Laboratory Equipment and Supplies 3,626 5,000 5,330 6,000 1,000 20.0%
Other Materials and Supplies 33 100 970 300 200 200.0%
Contracted Services 7,628 129,000 92,436 49,000 (80,000) (62.0%)
Materials and Maintenance 121,564 225,100 175,353 130,800 (94,300) (41.9%)
Sewer Charges
Metro O&M Costs 1,034,276 1,041,900 913,033 981,000 (60,900) (5.8%)
Spring Valley Sewer Charge 202,246 247,000 246,647 230,100 (16,900) (6.8%)
Total Sewer Charges 1,236,522 1,288,900 1,159,680 1,211,100 (77,800) (6.0%)
Total Materials and Maintenance 1,358,086$ 1,514,000$ 1,335,033$ 1,341,900$ (172,100)$ (11.4%)
Materials and Maintenance Expenses ‐ Sewer
FY 2009
Fleet Parts and
Equipment
Infrastructure
Ei td
MATERIALS AND MAINTENANCE EXPENSES - SEWER
FY 2010
Fleet Parts and
Equipment
0.2%
Infrastructure
Equipment and
Supplies
5.0%Chemicals
0.3%
Safety Equipment
0.1%
Laboratory Equipment
and Supplies
0.5%
Other Materials and
Supplies
0.0%
Contracted Services
3.7%
Metro O&M Costs
73.1%
Spring Valley Sewer
Charge
17.1%
MATERIALS AND MAINTENANCE EXPENSES - SEWER
FY 2010
86
Formula for Sewer Rates
Each year the District is required to revise its formula for determining sewer rates in accordance
with the State Revenue Program Guidelines.
For residential sewer customers, effective January 1, 2008, a “Winter Average” fee structure was
implemented for calculating the monthly sewer charge. A usage fee is charged based on the
customer’s prior year’s “Winter Average” water consumption, reduced by a 15% usage discount.
The current and proposed usage fees are $1.47 and $1.56, respectively. A base fee is also
applied. Current and proposed base fees are $10.20 and $10.80 for ¾ inch water meter, and
$14.90 and $15.75 for 1 inch or greater. Proposed fees are effective January 1, 2010, pending
the Proposition 218 hearing and Board approval.
For commercial customers, the sewer charge takes into consideration the cost associated with
daily flow, chemical oxygen demand (COD) and the removal of suspended solids (SS). The
COD and SS determine the strength factor for the groups of high, medium and low, and the State
Water Resources Control Board (SWRCB) determines these factors. The factors beginning
January 1, 2004 are shown below:
1.000 Schools
1.000 Churches
1.000 Low Strength Commercial
1.238 Medium Strength Commercial
2.203 High Strength Commercial
The following formula is based on an estimated daily flow of 250 gallons per day plus 280
milligrams per liter of Biological Oxygen Demand (BOD) and 234 milligrams per liter of SS for
a residential equivalent dwelling unit or an assigned service unit (ASU). The new method of
calculating the sewer rate is to multiply the flow by the strength factor to determine the Assigned
Service Unit (ASU) as follows:
Daily Flow x Strength Factor = Assigned Service Unit
(gpd x .85)/250gpd x
as shown above = ASU
The ASU is then multiplied by the district-wide sewer rate to determine the monthly sewer
charge. The current and proposed sewer rates per ASU are $34.79 and $36.88, respectively. The
proposed rate is effective January 1, 2010, pending Proposition 218 hearing and Board approval.
The minimum charge for commercial shall be no lower than one ASU at low strength. For
public schools, flow is based on average daily attendance for the prior school year, including
summer school, as reported by schools to meet state requirements. For elementary schools, 50
students equal one ASU; for junior high schools, 40 students equal one ASU; for high schools,
24 students equal one ASU. For colleges, flow is based on the number of Certificated and
Classified Staff, and students enrolled in each school session.
87
PADRE DAM MUNICIPALWATER DISTRICT
LOWER OTAYRESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKEMURRAY LOVELANDRESERVOIR
LAKEJENNINGS EL CAPITANRESERVOIR
RALPH CHAPMANWATER RECYCLINGFACILITY
MEXICO
Holding Tanks Lift Stations
OWD Pipes
Otay
Headquarters
EXISTING FACILITIES
Treatment Plants
Sewer Service Area
SOUTH BAY WATERRECLEMATION PLANT
88
General Revenues and Expenses
The District’s revenues and expenses in this section are not directly related to the services
delivered to potable, recycled, or sewer customers, yet they are operating expenses or revenues.
General Revenues
Capacity fees have a restricted purpose when collected to cover costs including, but not limited
to, planning, design, construction, and financing associated with facilities for the District’s
expansion needs. The District uses a portion of capacity fee revenues to provide general
planning and developer support. These fees reimburse the General Fund for the cost of
providing these services.
Betterment fees for maintenance are earned by the General Fund for Water Operations
Department’s maintenance of certain District assets.
Annexation fees are collected when developers buy into the District’s potable and recycled water
facilities. The fee ensures that future users fund the portion of the facilities that were sized and
built for their future use by prior customers. Annexation fees are unrestricted and therefore
included in the General Fund revenues.
The 1% Property Tax is a result of Proposition 13 that was approved in 1978 which limited
general levy property tax rate for all taxing authorities to a total rate of 1% of the assessed value.
Subsequent legislation AB8, established that the receipts from the 1% levy were to be distributed
to taxing agencies according to approximately the same proportions received prior to Proposition
13. These general use funds are currently being used as a source of operating revenue.
The District levies availability charges each year in developed areas to be used for upgrades and
betterment and in undeveloped areas to provide a funding for planning, mapping, and
preliminary design of facilities to meet future development. Current legislation provides that any
availability charge in excess of $10.00 per acre shall be used only for the benefit of the
improvement district in which it is assessed.
Included in the General Revenues are a variety of Non-Operating Revenues. These revenues
include lease revenue, set-up fees, sewer billing fees, grants, and any miscellaneous revenues.
Revenues are received from the lease of District property, mainly for the purpose of cell-sites.
When the District enters a new lease there is a one-time fee charged with the set-up of each cell-
site. The District incurs expenses related to these leases and the purpose of the fee is to recover
the cost to set up the lease.
In addition to the cell-site leases, the District leases land to the Salt Creek Golf Club. The lease
terms include a minimum annual rent guarantee plus a percentage of sales over 3%. This lease is
a 40-year term with two additional five-year options.
89
For most of the District’s water customers in the city of Chula Vista, the City of Chula Vista
(CCV) provides the sewer services. The CCV sewer fees are based on water consumption.
Because of the interrelated functions, the CCV contracts with the District for processing and
billing of their sewer customers within the District for a fee.
General Expenses
The expenses in this section are general operating expenses not associated with an individual
department. These include legal costs, insurance premiums, changes in accrued employee leave
balances, and miscellaneous interest. These expenses represent 3.3% of the total Departmental
Budget.
Legal expenses are viewed as a District-wide general expense because they benefit all
departments and usually are not attributed to any one department. The District retains outside
legal services instead of in-house counsel.
Insurance expense is also viewed as District-wide general expense because it benefits all
departments and cannot be attributed to any one department. The District participates in a
program where it can reduce its premium by implementing training sessions to reduce on-the-
job accidents and injuries.
Some employee benefits are charged to the General Expense Department because they are not
entirely attributable to a specific department or fiscal year in which they are incurred. For
example, when a pay rate increase occurs for an employee, his/her leave balances increase in
value due to this change. In this case, the expense is charged to the General Expense
Department.
90
FY 2008 FY 2010 Budget Variance
Actual Budget Estimated Budget Variance %
Capacity Fee Revenues 1,480,165$ 1,301,900$ 1,521,707$ 1,397,000 95,100$ 7.3%
Betterment Fees for Maintenance 802,021 895,900 661,998 571,400 (324,500) (36.2%)
Annexation Fees 526,435 483,600 392,349 120,500 (363,100) (75.1%)
Tax Revenues
1% General Tax 3,279,923 3,430,000 3,429,830 3,175,600 (254,400) (7.4%)
Availability Fees 744,722 707,300 625,065 677,000 (30,300) (4.3%)
Total Tax Revenues 4,024,645 4,137,300 4,054,895 3,852,600 (284,700) (6.9%)
General Revenues 6,833,265$ 6,818,700$ 6,630,949$ 5,941,500$ (877,200)$ (12.9%)
FY 2008 FY 2010 Budget Variance
Actual Budget Estimated Budget Variance %
Property Rental 962,929$ 1,052,600$ 1,029,506$ 1,043,400$ (9,200) (0.9%)
Sewer Billing Fees 358,053 359,900 359,180 359,800 (100) (0.0%)
Set-up Fee for Lease Site 9,000 14,000 48,301 - (14,000) (100.0%)
Grants 74,175 50,500 85,742 - (50,500) (100.0%)
Revenue from Shared Facility 26,430 26,400 26,387 29,100 2,700 10.2%
Miscellaneous 867,239 129,700 3,325,892 153,300 23,600 18.2%
Non-Operating Revenues 2,297,826$ 1,633,100$ 4,875,008$ 1,585,600$ (47,500)$ (2.9%)
Non‐Operating Revenues
FY 2009
General and Non‐Operating Revenues by Business
General Revenues
FY 2009
Potable Recycled Sewer Total
Capacity Fee Revenues 1,397,000$ -$ -$ 1,397,000$
Betterment Fees for Maintenance 571,400 - - 571,400
Annexation Fees 120,500 - - 120,500
Tax Revenues -
1% Property Tax 3,175,600 - - 3,175,600
Availability Fees 626,700 - 50,300 677,000
Total Tax Revenues 3,802,300 - 50,300 3,852,600
Non-Operating Revenues
Property Rental 1,043,400 - - 1,043,400
Sewer Billing Fees 359,800 - - 359,800
Set-up Fee for Lease Site - - - -
Grants - - - -
Revenue from Shared Facility - - 29,100 29,100
Miscellaneous 153,300 - - 153,300
Total Non-Operating Revenues 1,556,500 - 29,100 1,585,600
Total General and Non-Operating Revenues 7,447,700$ -$ 79,400$ 7,527,100$
Note: For General and Non-Operating Revenues, the Potable Fund serves as the District's General Fund for
accounting purposes.
FY 2010 Budget
General and Non Operating Revenues by Business
91
FY 2008 FY 2010 Budget Variance
Actual Budget Estimated Budget Variance %
Administrative Expenses
Legal Fees 1,405,594$ 467,500$ 1,053,575 454,300$ (13,200)$ (2.8%)
General Insurance 447,333 504,800 485,796 411,500 (93,300) (18.5%)
Interest - - - - - 0.0%
Total Administrative Expenses 1,852,927 972,300 1,539,372 865,800 (106,500) (11.0%)
Benefits
Benefits (1)694,712 (188,300) 383,300 (300) 188,000 0,000.0%
Total General Expenses 2,547,639$ 784,000$ 1,922,672$ 865,500$ 81,500$ 10.4%
(1) FY 2009 budget amount is negative because of Vacancy Factor (salary savings) of $424,300. This is netted
against other District-wide Labor and Benefit Expenses. In prior years Vacancy Factor was budgeted in the
individual departments.
FY 2009
General Expenses
92
Labor and Benefits
Labor and Benefits represent 22.7% of the total Operating Budget. In Fiscal Year 2008, the
Employees’ Association signed a six-year Memorandum of Understanding (MOU) with the
District. The highlights of this agreement included: changes to salaries based on a salary
survey, changes to the medical and dental plans, enhancements of the retirement package with
to include post retirement health benefits for active employees, and rewriting MOU to
streamline the District practices.
District personnel are assigned to work in six departments: General Manager, Administrative
Services, Finance, Information Technology & Strategic Planning, Water Operations, and
Engineering. The departments are further categorized by functions into divisions. The Fiscal
Year 2010 Budget includes funding for labor and benefits for 166 Full-time Equivalent (FTE)
employees and a 3% across-the-board salary increase on July 1, 2009.
The staffing level for Fiscal Year 2010 has a decrease of three FTE employees from Fiscal
Year 2009. The District has chosen to eliminate three vacant positions in areas that have
experienced a reduction of work due to slowing of growth.
A projected 10.0% of the labor and benefits costs will be charged to projects included in the
Capital Improvement Program (CIP) and Developer Deposits. These are not considered
Operating Projects and therefore reduce the Operating Budget by $2,022,900. The Water
Operations Department, with its staff of 68 employees, is responsible for maintaining and
operating the District's facilities.
Administrative Expenses
Administrative Expenses represent 7.0% of the District's total operating costs. A detailed
listing of the Administrative Expenses for Fiscal Year 2010 is shown on page 100. The
reduction of $528,900 in outside services expenses is due to shifting of some projects that will
become capital assets to the capital budget, and cost cutting measures lead to this overall
reduction of over $600,000 in Administrative Expenses.
Administrative Expenses include such items as memberships, office supplies, staff training,
Directors' fees, water conservation programs, safety expenses, and regulatory agencies' fees.
Some of the administrative expenses are more discretionary than others such as insurance or
regulatory fees which are mandatory, where the District may be better able to control expenses
such as training or business meetings to some extent. The safety needs of the District's
customers and employees, and compliance with regulatory agencies are of utmost importance,
so related expenses are considered necessary.
Departmental Operating Budget
93
Departmental Operating Budget
Materials and Maintenance
The Materials and Maintenance Expenses allow the District to provide reliable, high-quality
products, services, and support to its customers.
As the District continues to grow and new facilities are added, additional maintenance and
services will be required. This year, there is a 1.8% decrease in Materials and Maintenance
Expenses due to the reductions of $137,800 in fuel costs due to price reductions and another
$129,300 in contracted service, offset some what by increases in chemical costs of $204,500,
and other cost-saving measures.
The Water Operations Department has implemented an Infrastructure Management System
(IMS) which allows for better maintenance of existing assets and monitoring of new assets
coming on-line. It also facilitates planning for repair or replacement of assets as well as
assessing the condition of infrastructures. IMS helps the District to better track and manage
the Materials and Maintenance Expenses.
Performance Measurement Program
Strategic goals and objectives approved by the Board of Directors are incorporated into
departmental operating budgets to ensure adequate funds are available to implement the
Strategic Plan. The District has updated its performance measurement program this fiscal year
to provide measurable results of progress on both strategic and key operational goals and
objectives. (See the plan objectives and measures in the department sections that follow.)
Performance measures have been developed by comparing key District activities with
functional and available operational data that provide reliable feedback on progress.
Developed cooperatively with staff and the help of measurement experts, the measures are
designed to be comparable to measures commonly found in similar industries.
The performance measures focus on “best practice” as applied to the District. Measures are
collected and reviewed quarterly by the Senior Management Team and reviewed by the Board
at least twice a year. Results are used to set new targets for the following fiscal year and to
hold staff accountable for the current fiscal year.
94
Departmental Operating Budget
TOTAL DEPARTMENTAL OPERATING BUDGET
Fiscal Year 2010
$27,818,200
Information
Technology and
Strategic Planning
10.3%
Water Operations
41.3%
Finance
17.5%
General Manager
6.0%
Administrative
Services
14.1%
General Expense
3.1%
Board of Directors
0.3%
Engineering
7.4%
95
FY08 FY10
Actual Budget Estimated Budget
Total Labor Costs 10,317,566$ 11,175,500$ 10,922,011$ 11,456,800$
Benefits
Pension 3,063,318 3,140,400 3,111,655 3,227,500
Employee Assistance Program 5,269 7,500 5,138 7,500
Worker's Compensation 358,860 281,100 156,822 262,300
Health/Dental/Life Insurance 1,909,802 1,934,900 1,810,350 2,076,700
Social Security / Medicare 870,316 954,300 889,137 937,000
Salary Continuation Insurance 81,560 87,700 86,342 87,800
Employee Awards 23,860 - 29,233 -
State Unemployment Insurance 26,711 20,000 6,227 20,000
Vacation / Sick / Holiday / Other Leave 1,991,568 2,063,100 2,066,505 2,091,300
Total Fringe Benefits 8,331,264 8,489,000 8,161,409 8,710,100
Total Labor and Benefits 18,648,830 19,664,500 19,083,420 20,166,900
Less: Non-Operating Labor and Benefits
Labor Costs 943,249 1,063,800 1,143,905 1,282,300
Fringe Benefits Allocation 558,549 642,700 668,132 740,600
Total WO Allocation 1,501,798 1,706,500 1,812,037 2,022,900
Operating Labor & Benefits 17,147,032 17,958,000 17,271,383 18,144,000
Total Overhead Allocation 1,084,736 1,223,400 1,315,491 1,474,600
Less: Overhead Allocation Personnel Portion 685,011 772,600 830,733 931,200
Admin Portion of OH (36.85%)399,725$ 450,800$ 484,758$ 543,400$
Operating Labor and Benefits 16,462,021$ 17,185,400$ 16,440,650$ 17,212,800$
FY09
Labor and Benefits
0
20
40
60
80
100
120
140
160
180
FULL TIME EQUIVALENT (FTE)
COMPARISON BY DEPARTMENT
FY 08-09 6 20 36.75 13 70 23 168.75
FY 09-10 6 2038136821166
GM ADM FIN IT OPS ENG Total
GM……General Manager
ADM.…Administrative Services
FIN…....Finance
IT…...…Information Technology
and Strategic Planning
OPS…...Water Operations
ENG…..Engineering & Planning
96
Potable Sewer Recycled
Developer
Reimbursed-
CIP Total
Total Operating Labor Costs 9,304,100$ 387,600$ 482,800$ -$ 10,174,500$
Benefits 7,381,400 251,700 336,400 - 7,969,500
Overhead Allocation-Personnel Portion (1,563,300) 281,500 350,600 - (931,200)
Total Operating Labor and Benefits 15,122,200 920,800 1,169,800 - 17,212,800
Total CIP Labor Costs 658,000$ 67,400$ 378,400$ 178,500$ 1,282,300$
Benefits 387,800 37,300 207,400 108,100 740,600
Overhead Allocation-Personnel Portion 477,900 48,900 274,800 129,600 931,200
Total CIP Labor and Benefits 1,523,700 153,600 860,600 416,200 2,954,100
Total Labor and Benefits 16,645,900 1,074,400 2,030,400 416,200 20,166,900
Labor and Benefits by Fund - Fiscal Year 2010
LABOR and BENEFITS BY FUND
Recycle CIP, 4%
Potable-Ops, 76%
Sewer-Ops, 5%
Recycle-Ops, 6%
Potable-CIP, 8%
Sewer-CIP, 1%
Potable-Operating Potable-CIP Sewer-Operating
Sewer-CIP Recycle-Operating Recycle-CIP
97
FY 2008 FY 2009 FY 2010
General Manager 6 6 6
Total - General Manager Department 6 6 6
FTE 6.00 6.00 6.00
Administrative Services 3 3 3
Human Resources 5 4 4
Purchasing 9 9 9
Safety 111
Conservation 233
Total Administrative Services Department 20 20 20
FTE 20.00 20.00 20.00
Controller and Budgetary Services 7 7 7
Treasury and Accounting Services 6 6 6
Customer Service 19 20 22
Payroll and Accounts Payable 4 4 3
Total Finance Department 36 37 38
FTE 35.75 36.75 38.00
Information Technology and Strategic Planning:
Information Technology and Strategic Planning Applications 5 5 5
Information Technology Operations 4 4 4Geographic Information Systems 444
Total IT and Strategic Planning Department 13 13 13
FTE 13.00 13.00 13.00
Operations Management 222
Water System Operations 27 28 28
Utility Maintenance/Construction 35 33 31
Collection/Treatment/Reclamation Operations 7 7 7
Total Operations Department 71 70 68
FTE 71.00 70.00 68.00
Engineering Management 333
Engineering 24 20 18
Total Engineering Department 27 23 21
FTE 27.00 23.00 21.00
District Total Position Count 173 169 166
FTE 172.75 168.75 166.00
Position Count by Department
98
FY 2008 FY 2009 FY 2010
Consultant 0 1 0
Customer Service Field Representative I and II 2 2 1
Customer Service Representative I and II 0 0 1
Water Conservation Intern 1 0 0
Administrative Analyst 1 1 0
County Water Authority Interns 1 1 0
Engineering Intern 1 1 0
Sr. Engineering Technician 0 0 1
Strategic Planning Assistant 001
Total Contract/Temporary Employees 6 6 4
Contract / Temporary Employees
POSITION COUNT
General Manager
4%Administrative Services
12%
Finance
23%
Information Technology
and Strategic Planning
8%
Operations
41%
Engineering
12%
99
FY 2008 FY 2010 Budget
Actual Budget Estimated Budget Variance %
Director's Fees 24,002$ 40,000$ 20,200$ 40,000$ - 0.0%
Travel and Meetings 184,690 239,400 213,488 222,200 (17,200) (7.2%)
Conservation and Outreach 286,240 348,000 254,209 352,800 4,800 1.4%
General Office Expense 380,573 364,900 397,104 434,500 69,600 19.1%
Equipment 1,013,411 1,052,100 1,103,654 1,028,700 (23,400) (2.2%)
Fees 454,063 480,500 438,020 508,000 27,500 5.7%
Services 2,249,985 2,555,500 2,032,274 2,026,600 (528,900) (20.7%)
Training 92,693 167,600 146,746 156,500 (11,100) (6.6%)
Utilities 14,495 15,600 15,874 17,500 1,900 12.2%
Miscellaneous 239 150,000 265,741 220,000 70,000 46.7%
Total 4,700,391 5,413,600 4,887,310 5,006,800 (406,800) (7.5%)
Less: Overhead Allocation (399,725) (450,800) (484,758) (543,400) (92,600) 20.5%
Subtotal 4,300,666 4,962,800 4,402,552 4,463,400 (499,400) (10.1%)
General Expenses 1,852,927 972,300 1,539,372 865,800 (106,500) (11.0%)
Total Administrative Expenses 6,153,593$ 5,935,100$ 5,941,924$ 5,329,200$ (605,900)$ (10.2%)
6,553,318$ 6,385,900$ 6,426,682$ 5,872,600$
FY 2009
Administrative Expenses ‐ Total
ADMINISTRATIVE EXPENSES - TOTAL
FY 2010
Services
40.5%Fees
10.1%
Training
3.1%
Utilities
0.3%
Director's Fees
0.8%Miscellaneous
4.4%
Travel and Meetings
4.4%
Conservation and
Outreach
7.1%
General Office Expense
8.7%
Equipment
20.6%
100
FY 2008 FY 2010 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil 508,832$ 382,500$ 200,568$ 244,700$ (137,800) (36.0%)
Meters and Materials 344,203 148,500 156,384 170,600 22,100 14.9%
Fleet Parts and Equipment 153,200 164,000 170,271 164,000 - 0.0%
Infrastructure Equipment and Supplies 864,954 667,500 654,616 600,600 (66,900) (10.0%)
Chemicals 227,476 250,000 299,207 454,500 204,500 81.8%
Safety Equipment 21,530 31,300 38,903 161,100 129,800 414.7%
Laboratory Equipment and Supplies 40,004 40,000 42,891 47,000 7,000 17.5%
Other Materials and Supplies 136,554 174,300 120,864 157,900 (16,400) (9.4%)
Building and Grounds Materials 93,735 93,000 90,679 86,600 (6,400) (6.9%)
Contracted Services 485,171 632,800 548,431 503,500 (129,300) (20.4%)
Materials and Maintenance 2,875,658 2,583,900 2,322,973 2,590,500 6,600 0.3%
Sewer Charges
Metro O&M Costs 1,034,276 1,041,900 913,033 981,000 (60,900) (5.8%)
Spring Valley Sewer Charge 202,246 247,000 246,647 230,100 (16,900) (6.8%)
Total Sewer Charges 1,236,522 1,288,900 1,159,680 1,211,100 (77,800) (6.0%)
Total Materials and Maintenance 4,112,180$ 3,872,800$ 3,482,653$ 3,801,600$ (71,200)$ (1.8%)
Materials and Maintenance Expenses - Total
FY 2009
MATERIALS AND MAINTENANCE EXPENSES - TOTAL
FY 2010
Fuel and Oil
6.4%
Meters and Materials
4.5%
Fleet Parts and
Equipment
4.3%
Infrastructure
Equipment and
Supplies
15.8%
Chemicals
12.0%
Safety Equipment
4.2%
Laboratory
Equipment and
Supplies
1.2%
Other Materials and
Supplies
4.2%
Building and
Grounds Materials
2.3%
Contracted Services
13.2%
Sewer Charges
31.9%
101
FY 2008 FY 2010
Actual Budget Estimated Budget
Departmental Expenditures
BoaBoard of Directors 38,951$ 98,800$ 42,405$ 98,100$
GenGeneral Manager 1,766,341 1,768,800 1,687,607 1,667,100
GenGeneral Expense 2,547,639 784,000 1,922,672 865,500
AdmAdministrative Services 3,224,540 3,640,100 3,337,536 3,912,500
FinaFinance 4,023,183 4,471,600 4,368,063 4,869,100
InfoInformation Technology and Strategic Planning 2,666,776 2,819,800 2,809,666 2,856,400
WatWater Operations 10,858,139 11,678,900 10,716,485 11,478,800
EngEngineering (1)2,686,961 2,954,700 2,296,284 2,070,700
Total Departmental Expenditures 27,812,529 28,216,700 27,180,718 27,818,200
Less: Overhead Allocation (1,084,736) (1,223,400) (1,315,491) (1,474,600)
Net Departmental Expenditures 26,727,793 26,993,300 25,865,227 26,343,600
Non-Departmental Expenditures
Water Purchases 28,213,964 31,994,300 29,398,334 35,855,500
Power 2,647,885 2,780,500 2,905,101 2,637,100
Expansion Reserve 2,590,200 5,016,700 5,016,700 1,610,000
Betterment Reserve 3,432,900 - - 3,810,000
Replacement Reserve 235,400 277,900 277,900 3,660,000
Transfer to Sewer General Fund - - - 200,000
Transfer Out/In Prop 1A - - - 270,300
Transfer to General Fund Reserve - - - 1,330,000
Total Non-Departmental Expenditures 37,120,349 40,069,400 37,598,035 49,372,900
TOTAL OPERATING EXPENDITURES 63,848,142$ 67,062,700$ 63,463,262$ 75,716,500$
(1)Engineering, and Planning and Development Services sections combined in FY2008
FY 2009
Operating Expenditures by Department
102
FY 2008 FY 2010
Actual Budget Estimated Budget
Departmental Expenditures
Labor and Benefits 17,147,032$ 17,958,000$ 17,271,383$ 18,144,000$
Director's Fees 24,002 40,000 20,200 40,000
Travel and Meetings 184,690 239,400 213,488 222,200
Conservation and Outreach 286,240 348,000 254,209 352,800
General Office Expense 380,573 364,900 397,104 434,500
Equipment 1,013,411 1,052,100 1,103,654 1,028,700
Fees 2,306,990 1,452,800 1,977,392 1,373,800
Services 2,249,985 2,555,500 2,032,274 2,026,600
Training 92,693 167,600 146,746 156,500
Materials & Maintenance 2,875,658 2,583,900 2,322,973 2,590,500
Power and Utilities 14,495 15,600 15,874 17,500
Sewer Charges 1,236,522 1,288,900 1,159,680 1,211,100
Miscellaneous 239 150,000 265,741 220,000
Total Departmental Expenditures 27,812,529 28,216,700 27,180,718 27,818,200
Less: Overhead Allocation (1,084,736) (1,223,400) (1,315,491) (1,474,600)
Net Departmental Expenditures 26,727,793 26,993,300 25,865,227 26,343,600
Non-Departmental Expenditures
Water Purchases 28,213,964 31,994,300 29,398,334 35,855,500
Power 2,647,885 2,780,500 2,905,101 2,637,100
Expansion Reserve 2,590,200 5,016,700 5,016,700 1,610,000
Betterment Reserve 3,432,900 - - 3,810,000
Replacement Reserve 235,400 277,900 277,900 3,660,000
Transfer to Sewer General Fund - - - 200,000
Transfer Out/In Prop 1A - - - 270,300
Transfer to General Fund Reserve - - - 1,330,000
Total Non-Departmental Expenditures 37,120,349 40,069,400 37,598,035 49,372,900
TOTAL OPERATING EXPENDITURES 63,848,142$ 67,062,700$ 63,463,262$ 75,716,500$
FY 2009
Operating Expenditures by Object
103
104
OTAY WATER
DISTRICT
LOWER OTAYRESERVOIR
UPPER OTAY
RESERVOIR
SWEETWATERRESERVOIR
LAKEMURRAY LOVELAND
RESERVOIR
LAKEJENNINGS EL CAPITANRESERVOIR
OWD
HEADQUARTERS
D i v i s i o n 5D i v i s i o n 5M a r k R o b a kM a r k R o b a k
D i v i s i o n 4D i v i s i o n 4J o s e L o p e zJ o s e L o p e z
D i v i s i o n 1D i v i s i o n 1L a r r y B r e i t f e l d e rL a r r y B r e i t f e l d e r
D i v i s i o n 2D i v i s i o n 2J a m i e B o n i l l aJ a m i e B o n i l l a
D i v i s i o n 3D i v i s i o n 3G a r y C r o u c h e rG a r y C r o u c h e r
8
8
805
54
67
94
94
54
125
125
125
905
CITY OF
SAN DIEGO
SW
E
E
T
W
A
T
E
R
AU
T
H
O
R
I
T
Y
HELIX WATER
DISTRICT
CITY OF
SAN DIEGO
OPEN SPACE
OPEN SPACE
MEXICO
CITY OF
SAN DIEGO
PADRE DAM MUNICIPAL
WATER DISTRICT
Director's Division Boundaries
105
FY 2008 FY 2010
Actual Budget Estimated Budget
Board of Directors 38,951$ 98,800$ 42,405$ 98,100$
TOTAL 38,951$ 98,800$ 42,405$ 98,100$
FY 2009
Board of Directors
FY 2010 Total Departmental Budget - $27.8 Million
Board of Directors - $98,100
Board of Directors
.3%
General Manager
6.0%
General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%
Information
Technology and
Strategic Planning
10.3%
Water Operations
41.3%
Engineering
7.4%
106
Board of Directors
FY 2008 FY 2010
Board of Directors Actual Budget Estimated Budget
Benefits 2,147$ 40,000$ 1,744$ 40,000$
Director's Fees 24,002 40,000 20,200 40,000
Travel and Meetings 12,751 18,800 20,440 18,100
General Office Expense 50 - 20 -
Total 38,951$ 98,800$ 42,405$ 98,100$
FY 2009
$88
$33
$92
$28
$112
$39
$99
$42
$98
$-
$50
$100
$150
(i
n
T
h
o
u
s
a
n
d
D
o
l
l
a
r
s
)
FY06 FY07 FY08 FY09 FY10
Fiscal Year
Budget vs. Actual
Budget Actual
107
108
District Position Count ‐ 166
General Manager Department ‐ 6
Assistant General Manager,
Engineering and Operations
Board of Directors
District Secretary
Sr. Confidential
Executive Secretary
Communications
Officer
Assistant General Manager,
Finance and Administration
General Manager
Personnel Count FY 2007 FY 2008 FY 2009
General Manager 1 1 1
Assistant General Manager, Finance and Administration 1 1 1
Assistant General Manager, Engineering and Operations 1 1 1
District Secretary 1 1 1
Sr. Confidential Executive Secretary 1 1 1
Communications Officer 1 1 1
Total 666
Assistant General Manager,
Engineering and Operations
Board of Directors
District Secretary
Sr. Confidential
Executive Secretary
Communications
Officer
Assistant General Manager,
Finance and Administration
General Manager
109
FY 2008 FY 2010
Actual Budget Estimated Budget
General Manager 1,029,403$ 1,056,000$ 962,779$ 1,043,200$
Legal 202,545 178,300 190,460 6,000
Assistant General Manager, Finance and Administration 267,243 272,300 273,116 297,100
Assistant General Manager, Engineering and Operations 267,150 262,200 261,252 320,800
TOTAL 1,766,341$ 1,768,800$ 1,687,607$ 1,667,100$
FY 2009
General Manager
FY 2010 Total Departmental Budget - $27.8 Million
General Manager - $1,667,100
Board of Directors
0.3%General Manager
6.0%General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%Information
Technology and
Strategic Planning
10.3%
Water Operations
41.3%
Engineering
7.4%
110
General Manager
FY 2008 FY 2010
Actual Budget Estimated Budget
Labor and Benefits 1,419,734$ 1,403,400$ 1,363,974$ 1,309,400$
Travel and Meetings 76,043 93,500 88,985 74,900
Conservation and Outreach 3,868 7,000 5,705 6,000
General Office Expense 27,033 9,000 18,061 15,500
Equipment 1,198 3,000 2,031 -
Fees 37,700 45,000 45,482 39,000
Services 200,488 207,000 163,092 222,000
Training 40 900 25 300
Miscellaneous 239 - 251 -
Total 1,766,341$ 1,768,800$ 1,687,607$ 1,667,100$
FY 2009
$1,327 $1,365 $1,404 $1,344
$1,486
$1,766 $1,769 $1,688 $1,667
$-
$500
$1,000
$1,500
$2,000
(i
n
T
h
o
u
s
a
n
d
D
o
l
l
a
r
s
)
FY06 FY07 FY08 FY09 FY10
Fiscal Year
Budget vs. Actual
Budget Actual
111
TAY WATER DISTRICT AT-A-GLANCE
Services We Provide
The General Manager’s office provides staffing, scheduling, and other support to the
Board of Directors, General Manager, and Assistant General Managers. The office posts
and disseminates meeting notices, agendas, minutes, sets board meeting dates, and assists
in conducting board and committee meetings. It also manages public and media relations,
bi-national and legislative affairs, and provides liaison with local elected officials and
community groups. The General Manager’s office oversees the production and
distribution of publications and notices to inform the public of District functions, policies,
and services. The office also coordinates special events and provides staffing and support
to local water associations.
Strategic Plan Objectives
• Capture customers' attitude and awareness through a repeatable customer survey
program.
• Develop an effective program for producing new customer communication,
including drought related communication. Evaluate bi-lingual options.
• Develop a comprehensive community outreach plan and materials to target
specific community stakeholders with additional information or presentations on
drought, recycled water, and water conservation.
• Continue to actively participate in the both the County Water Authority and
Metropolitan Water District of Southern California, state policy making and
pending legislative review and comment.
• Optimize community involvement throughout the District.
Performance Measures
General Manager
Customer Satisfaction
Measures the level of overall customer
satisfaction with the District. Survey
is conducted on an annual basis.
Formation of survey begins in Q1.
Actual survey measures calendar year
(January-December). Currently
reported quarterly.
112
Accomplishments Fiscal Year 2008-2009
• The District adopted a balanced budget for FY 2010 during difficult economic
times and under challenging water supply conditions.
• Implemented a new three year Strategic Plan in FY 2009. The plan was redrafted
to include new performance measures and metrics. The plan and its reporting
mechanism allow transparency to all staff and board members of up-to-date status
on a wide range of District activities.
• Through the expanded use of recycled water and by supporting conservation, the
District avoided declaring a Level 2 - Drought Alert or requiring customers to
face mandatory water use restrictions.
• Utilized technology to improve productivity, customer service, and reduce the
District’s FTE positions without layoffs.
• The District negotiated and signed a Letter of Intent with its Mexican counterparts
in an effort to develop a seawater desalination facility in Rosarito, Mexico.
• Continued support for integrated business systems and practices, and leveraged
those systems to improve asset management and customer billing accuracy.
• Completed planning, design, and awarded the construction contract for the 5.1-
mile long, 36”diameter, Jamacha Pipeline Project. The $16.1 million project will
connect the 640-1 and 640-2 reservoirs to the County Water Authority’s (CWA)
Flow Control Facility No. 14.
• The District concluded an agreement and general release with Northrop Grumman,
avoiding a potential lawsuit related to their automated meter reading system, and
recovering $915,000.
• The District completed construction of the 640-1 and 640-2 water storage
reservoirs on time and on budget. These two new 10-million gallon reservoirs
cost $28 million to construct and will improve firefighting capabilities and
provide a 10-day supply of emergency water storage for customers in the north
district.
• Successfully developed a methodology and executed an agreement with
Cuyamaca College to install a new 10” meter at no cost to the District, generating
a savings of more than $60,000 and recovering $179,000 for previously un-
metered water.
• Provided leadership as the Vice Chair of CWA’s Board.
• Entered negotiations to set formal terms and conditions to annex 634 acres of the
original Sycuan Reservation to the Otay Water District, the San Diego County
Water Authority, and Metropolitan Water District of Southern California.
• As in prior years, the District has received numerous awards and recognition in all
aspects of operations, finance, administration, engineering, operations and IT.
113
114
Personnel Count FY 2008 FY 2009 FY 2010
Chief, Administrative Services 1 1 1
Confidential Executive Secretary 001
District Position Count ‐ 166
Administrative Services Department ‐ 20
Purchasing and
Facilities
Safety and Risk
Administration
Water
Conservation
Human
Resources
Administrative
Services
Confidential Executive Secretary 0 0 1
Confidential Secretary 2 2 1
Human Resources Manager 1 1 1
Senior Human Resources Analyst 1 1 1
Human Resources Analyst 2 1 1
Human Resources Technician 1 1 1
Purchasing & Facilities Manager 1 1 1
Buyer I and II 2 2 2
Lead Warehouse Worker / Facilities Worker 1 1 1
Warehouse / Delivery Worker 2 2 2
Facilities Maintenance Technician 2 2 2
Facilities Maintenance Assistant 1 1 1
Safety & Security Administrator 1 1 1
Water Conservation Manager 1 1 1
Water Conservation Specialist 1 2 2
Total 20 20 20
Purchasing and
Facilities
Safety and Risk
Administration
Water
Conservation
Human
Resources
Administrative
Services
115
Department Responsibilities
Administrative Services
The Administrative Services Department, under the general direction of the Assistant General Manager,
provides the following support services: Human Resources, Purchasing and Facilities, Safety and Risk
Administration, and Water Conservation. It also coordinates assigned activities with other District
departments and outside agencies, and provides highly responsible and complex administrative support
for the District, General Manager and Board of Directors.
Board of Directors
0.3%
General Manager
6.0%
General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%Information
Technology and
Strategic Planning
10 3%
Water Operations
41.3%
Engineering
7.4%
FY 2010 Total Departmental Budget - $27.8Million
Administrative Services - $3,912,500
FY 2008 FY 2010
Actual Budget Estimated Budget
Administrative Chief 366,778$ 397,400$ 341,197$ 403,600$
Human Resources 693,278 799,400 769,060 790,900
Purchasing and Facilities 1,417,751 1,520,300 1,460,747 1,601,400
Safety and Security 188,515 217,400 241,591 371,300
Water Conservation 558,218 705,600 524,940 745,300
TOTAL 3,224,540$ 3,640,100$ 3,337,536$ 3,912,500$
FY 2009
Board of Directors
0.3%
General Manager
6.0%
General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%Information
Technology and
Strategic Planning
10.3%
Water Operations
41.3%
Engineering
7.4%
FY 2010 Total Departmental Budget - $27.8Million
Administrative Services - $3,912,500
116
Administrative Services
FY 2008 FY 2010
Actual Budget Estimated Budget
Labor and Benefits 1,990,684$ 2,226,600$ 2,094,097$ 2,328,700$
Travel and Meetings 25,314 21,700 14,047 25,700
Conservation and Outreach 282,372 341,000 248,504 346,800
General Office Expense 125,918 132,800 123,882 180,400
Equipment 93,824 94,600 84,655 100,100
Fees 8,564 7,500 7,411 8,000
Services 293,482 330,600 286,680 325,900
Training 80,556 126,400 113,058 119,800
Materials & Maintenance 309,330 343,300 349,329 459,600
Power and Utilities 14,495 15,600 15,874 17,500
Total 3,224,540$ 3,640,100$ 3,337,536$ 3,912,500$
FY 2009
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$2,789
$3,316
$3,868 $3,640
$3,913
$2,850
$3,212 $3,225 $3,338
Tho
u
s
a
n
d
D
o
l
l
a
r
s
)
Budget vs. Actual
Budget Actual
$-
$500
$1,000
$1,500
FY06 FY07 FY08 FY09 FY10
(i
n
T
h
Fiscal Year
Proposed
117
Human Resources
Services We Provide
Human Resources, under the direction of the Chief of Administrative Services, provides the
following support services: recruits, selects and ensures the retention of qualified employees;
develops, implements and administers policies, procedures, collective bargaining contracts
and employee programs; ensures up-to-date classification plans and a competitive
compensation program; manages benefits programs for employees and retirees; manages the
Workers’ Compensation program; oversees employee performance through management
staff to include employee training and development, recognition and incentives, performance
evaluation process and employee discipline; ensures legal compliance and implements
work/life balance initiatives to include a comprehensive wellness program.
Strategic Plan Objectives
• Facilities and Staffing Plan needs.
• Evaluate web-based employee performance reviews.
• Automate application process.
• Evaluate effective communication tools throughout the organization.
• Evaluate the Pay-for-Performance Program.
• Evaluate the Employee Recognition Program.
• Assess findings of 2008 Employee Survey.
• Conduct Employee Survey.
• Review and update classification plan and revise critical areas.
• Review and revise marketing strategy and recruiting tools.
• Develop and identify required and desired District-wide training for all
classifications.
• Develop and maintain a formal program to track employee training.
• Identify core elements of Succession Planning that can be tailored to the District’s
needs.
• Update and expand annual review process to include greater emphasis of strategic
plan objectives and performance measures and understanding of career goals and
how they may relate to the District's Succession Plan.
Administrative Services
118
Performance Measures
Accomplishments Fiscal Year 2008-2009
• Implemented an on-line application process and updated employment portion of
the District’s website to improve efficiency, save staff time, and provide a more
convenient method for users. This new recruitment process allows applicants to
view the status of their application, search all positions and request to be notified
when a position becomes available.
• Updated and expanded our Employee Performance Manual, forms, and process to
emphasize strategic planning and employee development.
• Identified and implemented core elements of Succession Planning to include
establishing a list of difficult to fill positions where employees might retire within
five years, developed a process to be prepared to recruit for vacancies
immediately, and ensure the plan is monitored on an on-going basis. • Coordinated and received all credit for the Special District Risk Management
Authority Credit Incentive Program. The credit totaled $54,866 for Property and
Liability and Workers’ Compensation premiums.
Turnover Rate
Annual percent of voluntary
terminations.
(Excludes retirement)
Training Hours per Employee
Measures the quantity of formal
training utility employees are
actually completing.
119
Purchasing
Services We Provide
The Purchasing Department, under general direction of the Chief of Administrative
Services, oversees the general purchasing standards used within the District; purchases
and oversees the procurement of supplies, equipment, and services; controls and
administers the District’s standard materials inventory; disposes of surplus materials,
equipment, and supplies; assists in the acquisition and disposal of non-infrastructure
related real estate; performs non-structural facility maintenance work; and administers
and manages outsourced facility maintenance service contracts. It also provides, as
needed, complex purchasing related analysis and consultation to the District and General
Manager.
Performance Measures
Accomplishments Fiscal Year 2008-2009
• Bid janitorial services, resulting in a reduction of the per month cost from $2,795
to $2,675.07 ($1,439.16 annual cost reduction).
• Successfully negotiated the purchase of the one-acre lot adjacent to the
Operations’ yard. The purchase price of $350,000 was $75,000 below the median
appraised value of $425,000.
• To take advantage of current low cost of labor, bid meter replacement and retrofit
services for a five-year agreement (one year with four option years, price adjusted
to consumer price index) and obtained a per unit price reduction of $6.89
compared to the FY-09 price ($33.00 vs. $39.89). Based on the planned retrofit
of 4,500 units, the expected cost reduction for FY-10 will be $31,005.
• Retrofitted/modified the Administrative Office buildings’ bathroom fixtures,
irrigation, and landscaping, resulting in a reduction of water use by 44%. The
Blanket Order Activity
Percentage of material
purchases acquired via
blanket POs.
120
modification to the landscaping also resulted in a reduction of pest related issues
and increased building visibility and security.
Safety and Security
Services We Provide
Safety and Security, under the direction of the Chief of Administrative Services, provides
the following: assesses the occupational exposure to risk; evaluates hazards and
mitigation of safety hazards and risk to injury; directs and supervises accident
investigations relating to occupational injuries, fleet incidents and/or damage to, or theft
of District property; develops hazardous materials business plans, community right-to-
know, Risk Management Prevention and Process Safety Management plans; develops
and implements procedures to ensure compliance with safe work practices and
determines training needs to address issues; develops, implements and manages safety
programs; manages the District’s security program; implements, schedules and
coordinates recurring safety training; coordinates the Department of Transportation
(DOT), the District’s Drug Free Workplace, and DMV Pull-Notice Programs; plans and
coordinates the District’s emergency preparedness program.
Strategic Plan Objectives
• Review/consolidate the District's Disaster Preparedness Plan.
• Update Security Assessment and implement Technology Recommendations.
• Evaluate and make recommendations regarding Environmental Health,
Emergency Preparedness, and Safety Management System.
Performance Measures
H&S Severity Rate
Quantifies the rate of
employee days lost from
work due to illness or injury.
121
Accomplishments Fiscal Year 2008-2009
• Updated 40 Safety Program policies and procedures and posted on SharePoint.
• Completed and submitted the CalARP Program for the Reclamation Plant to the
County of San Diego Dept. of Environmental Health (DEH) in June 2009.
• Completed and submitted the Risk Management Program (RMP)/Process Safety
Management (PSM) programs to the Federal Environmental Protection Agency
(EPA) prior to the deadline.
• HAZWOPER (Emergency Response Team) – Updated training requirements,
medical certificates, equipment inventory, and team organization.
• Completed the submittal and updating of 23 Hazardous Materials Business Plans
(HMBPs) and posted them to SharePoint. Completed the San Diego County DEH
inspections of all HMBP sites – no violations or fines levied.
• Successfully completed the 2008 Annual Fire Inspection from San Miguel Fire
District. Included annual checks on Fire Fighting systems (all Fire systems, Fire
Extinguishers and alarm system checks).
• Participated in the California State-wide Golden Guardian 08 Emergency
Preparedness Exercise. Provided valued input on improving the District’s
preparedness during emergencies.
Water Conservation
Services We Provide
The Water Conservation Division, under general direction of the Assistant General
Manager of Finance and Administration, the Chief of Administrative Services, and the
Water Conservation Manager provides the following services:
• Promotes and conducts residential surveys.
• Promotes large landscape surveys.
Safety Training Program
Safety & Risk Administration
will provide a minimum of 8
safety training programs/hours
per fiscal year which 61 field
employees will attend.
122
• Promotes the Water Conservation Garden.
• Staffs outreach events throughout the community, including the WaterSmart plant
sale, the Spring Garden Festival, Cinco de Mayo, Lemon Festival, Bonita
Festival, JamulFest, and the Fall WaterSmart Gardening Festival.
• Funds and promotes a variety of incentive and other programs available to its
customers including rebates for high efficiency clothes washers, high efficiency
toilets, turfgrass replacement with WaterSmart plants, rotating sprinkler nozzles
and weather based irrigation controllers, and the WaterSmart Landscape contest.
• Promotes the school education program, which includes funding tours at the
Water Conservation Garden, the “Water is Life” poster contest, and the water
themed high school photo contest.
• Develops water efficiency requirements for new construction.
• Submits regular reports on the District's status with regard to the Water
Conservation Best Management Practices as developed by the California Urban
Water Conservation Council.
• Manages the District’s Water Shortage Response Plan as well as its water waste
reporting program.
Strategic Plan Objectives
• Promote and encourage adoption of conservation practices for new construction
within District service territory.
• Participate in the revision of the 14 water conservation Best Management
Practices and prepare to implement those that are locally cost-effective.
• Promote enhancements to city, county and state water conservation requirements
and implement appropriate BMPs.
• Update District’s Drought Management Plan including actions for enforcement.
Performance Measures
Total Water Saved
Estimate of water saved per
acre-feet through conservation
programs.
123
Accomplishments Fiscal Year 2008-2009
• Increased the District's annual active water conservation savings figure another
281 acre-feet (1,403 + 281) to 1,684) acre-feet of water saved due to many of the
activities outlined above.
• Funded the installation of 175,000 square-feet of artificial turf at another two high
schools (Monte Vista and Eastlake) within the District.
• Funded the removal of turf grass with approximately 21,000 square feet of water-
wise plants and 54,510 square feet artificial turf grass at 80 single-family homes
through our programs. Another 13,000 square feet of turf grass was replaced
with water-wise plants at two Home Owner Association landscapes.
• Conducted 90 residential water use surveys, targeted to the District’s top single-
family customers.
• Funded 31 residential Smart Controller rebates, 95 commercial Smart Controller
vouchers, and 42 rotating nozzle rebates involving 1,764 rotating nozzles. Both
residential programs were promoted through an oversized postcard mailed to the
top 40% of our single-family customers.
Otay Water Use (District Meters)
Consume 76.6 acre-feet
or less of potable water.
124
125
PlCt FY 2008 FY 2009 FY 2010
District Position Count ‐ 166
Finance Department ‐ 38
Treasury and
Accounting
Services
Customer
Service
Payroll and
Accounts
Payable
Controller and
Budgetary
Services
Finance
Personnel Count FY 2008 FY 2009 FY 2010
Chief Financial Officer 1 1 1
Executive Secretary 1 1 1
Secretary 1 1 1
Finance Manager, Treasury and Accounting 1 1 1
Finance Manager, Controller and Budget 1 1 1
Finance Supervisor, Payroll and A/P 1 1 1
Customer Service Manager 1 1 1
Customer Service Supervisor 1 2 2
Senior Accountant 4 4 4
Accountant 4 4 4
Payroll Technician 1 1 1
Accounting Assistant 2 2 1
Senior Customer Service Representative 2 2 2
Customer Service Representative I, II and III 8 8 9
Lead Customer Service Field Representative 1 1 1
Customer Service Field Representative I and II 6 6 7
Total 36 37 38
Treasury and
Accounting
Services
Customer
Service
Payroll and
Accounts
Payable
Controller and
Budgetary
Services
Finance
126
Department Responsibilities
Finance
The Finance and Accounting Department, under the general direction of the Assistant General Manager, provides
the following support services: Controller and Budgetary Services, Treasury and Accounting Services, Customer
Service, and Payroll and Accounts Payable; ensures District’s conformance with modern finance and accounting
theory, practices, and compliance with applicable state and federal laws; implements financial accounting and
reporting programs and practices to meet the District’s fiduciary responsibilities; and provides highly responsible
and complex administrative support to the District, General Manager, and Board of Directors.
Board of Directors
0.3%
General Manager
6.0%
General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%
If i
Water Operations
41.3%
Engineering
7.4%
FY 2010 Total Departmental Budget - $27.8 Million
Finance - $4,869,100
FY 2008 FY 2010
Actual Budget Estimated Budget
Finance Chief 399,061$ 421,600$ 392,267$ 432,100$
Controller and Budgetary Services 491,969 545,100 571,191 572,900
Treasury and Accounting Services 965,988 1,005,200 979,607 1,104,100
Customer Service 1,811,273 2,105,400 2,058,263 2,410,700
Payroll and Accounts Payable 354,893 394,300 366,736 349,300
TOTAL 4,023,183$ 4,471,600$ 4,368,063$ 4,869,100$
FY 2009
Board of Directors
0.3%
General Manager
6.0%
General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%
Information
Technology and
Strategic Planning
10.3%
Water Operations
41.3%
Engineering
7.4%
FY 2010 Total Departmental Budget - $27.8 Million
Finance - $4,869,100
127
Finance
FY 2008 FY 2010
Actual Budget Estimated Budget
Labor and Benefits 3,347,617$ 3,762,300$ 3,636,729$ 4,089,700$
Travel and Meetings 15,521 19,900 19,198 20,100
General Office Expense 205,088 196,800 239,183 217,500
Equipment 2,627 8,600 4,731 200
Fees 292,138 280,000 294,019 308,000
Services 160,192 203,500 173,926 233,000
Training - 500 278 600
Total 4,023,183$ 4,471,600$ 4,368,063$ 4,869,100$
FY 2009
$-
$1,000
$2,000
$3,000
$4,000
$5,000
FY06 FY07 FY08 FY09 FY10
$3,475 $3,813
$3,994
$4,472
$4,869
$3,567 $3,784
$4,023
$4,368
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Budget vs. Actual
Budget Actual
FY06 FY07 FY08 FY09 FY10
Fiscal YearProposed
128
Controller and Budgetary Services
Services We Provide
Responsible for developing and publishing the annual operating and capital budgets as well
as preparing the six-year financial plan and setting rates. Prepares monthly and annual
reports, monitors budget variances and coordinates interactions with outside agencies.
Assists other departments with special projects such as; the preparation of cost studies,
validation of financial data, and preparation of the District’s overhead and benefits rates and
calculations.
Strategic Plan Objectives
• Develop the long-term financial plan.
• Re-calculate all Capacity and Annexation Fees with New Rehabilitation and
Repair Plan.
• Simplify residential fee structures and the billing system.
• Evaluate drought stage rates and propose changes.
• Develop and measure cost per unit expenditures and forecasts.
Performance Measures
O&M Cost per Account
Operations & Maintenance (O&M)
cost per account (QualServe)
operation costs for O&M per
account (per customer).
Finance
129
Distribution System Loss
Percentage for unaccounted
water. (QualServe)
Water Rate Ranking
District's average customer bill
as compared to other agencies
in San Diego County. Otay is
ranked 7th of 23 agencies.
Sewer Rate Ranking
District's average customer bill
as compared to other agencies
in San Diego County. Otay is
ranked 7th of 28 agencies.
Overtime Percentage
Comparing actual to budgeted
overtime to monitor costs.
130
Accomplishments 2008-2009
• Prepared a balanced budget that met the Strategic Plan and received the
Government Finance Officers Association (GFOA) “Distinguished Budget
Presentation Award” for the fifth consecutive year. In addition, received the
“Excellence in Operating Budgeting” award from the California Society of
Municipal Finance Officers (CSMFO).
• The Capital Improvement Program (CIP) Budget received the “Excellence in
Capital Budgeting Award” from the CSMFO for the fourth year in a row.
• Prepared a Budget-at-a-Glance document to be used by Board members and
management staff at public outreach events.
• Several new financial reports were developed as part of the Strategic Plan, to
enhance financial reporting and automate reports and processes to improve
efficiency. The water sales report uses the new rate structure which is vital for
the accurate budgeting of water sales. A separate report for the Infrastructure
Access Charge is used for reporting purposes and a new water Sales vs. CWA
allocation report is available to track the District’s allocation.
• Completed a Financial Threat Assessment using the Rate Model to determine the
impact of various threats on the District’s financial well-being.
• Presented to the Board, at various workshops, the results of the Financial Threat
Assessment, a Budget Assumptions presentation, and a Budget Build
presentation, all in preparation for the presentation of the FY 2010 budget and
recommended rates.
• Prepared the FY 2010 Rate Model and recommended rates in record time.
District staff had two days, once the water costs were delivered from CWA, to
finalize the Rate Model and prepare the rates. This was achievable because of a
rate balance tool that was developed to link and balance the rates.
• Performed a rate study including the preparation of drought rates. The result was
a new tiered rate structure for all customer classes which encourages
conservation. With the implementation of the new rates, a rate simplification in
other areas was implemented.
• Presented our financial reporting tools at the AWWA conference in Reno, NV.
Treasury and Accounting Services
Services We Provide
Coordinates and directs the activities of the general ledger accounting, audit, banking and
cash management, investments and treasury functions, debt financing, job costing, cost
accounting, accounts receivable and debt collections, fixed assets, and contract review. Also
responsible for completing the District’s annual financial audit and publishing of the
Comprehensive Annual Financial Report (CAFR). Conducts an annual review of the
131
District’s Investment Policy, as required by law, with approval by the Board of Directors.
Provides financial analysis and review of staff projects and operational business proposals.
Assists in the preparation of the District’s annual operating and capital budgets, along with
updating the Rate Model and the six-year financial plan.
Strategic Plan Objective
• Conduct financial threat assessment for growth, water availability, inflation and
other revenue sources.
Performance Measures
Accomplishments 2008-2009
• Completed the District’s FY 08 audit and CAFR, and received the GFOA award
for Excellence in Financial Reporting for the fifth consecutive year.
• Wrote and implemented Policy #51: Identity Theft Red Flags Policy.
Debt Coverage Ratio
Measures level of debt coverage
ratio (ability to pay debt).
(QualServe) The minimum
legal level is 125%.
Reserve Level
Measures all of the District's
reserves against the Board
adopted Reserve Policy levels.
132
• Continued to achieve an overall rate of return on the District’s portfolio in excess
of the LAIF rate of return (over 18 months), despite the falling economy and
available investment rates.
• Completed the close-out audit of the District’s FEMA claims for the Oct-07
wildfires.
• Completed a detailed review of the District’s SDRMA insurance for facilities and
equipment, to include all reservoirs, pump stations, buildings, and support
installations.
• Completed implementation of the Eden Fixed Assets module. All of the
accounting staff participated in the successful implementation of the Eden Fixed
Assets module, which is now fully operational.
• Provided support to the long-term financing plan. Completed GFOA training in
long-term financial planning. Assisted in the expanded Rate Model and CIP
Budget through fiscal 2015.
Customer Service
Services We Provide
The customer service unit is responsible for providing; meter reading, billing, receipting and
customer care for water and sewer services. The meter reading team reads approximately
49,000 meters a month using manual and automatic meter reading technology. The District
is half way through a conversion to an automated meter reading system that will enhance the
District’s efficiency, accuracy and customer service. The billing and customer care teams
handle the coordination of billing and receipting of approximately 50,000 accounts per
month. Customers are offered various payment options including ACH, web, IVR
(telephone) and the convenience of two locations for walk-in payments. The District has an
automated phone system and web portal which gives customer’s access to their account
information 24/7. If they desire more personal service, the customer care team handles an
average of 6,500 customer calls per month.
Strategic Plan Objectives
• Expand a more detailed customer complaint tracking and reporting system.
• Streamline and document the District’s incoming customer call processes.
• Evaluate the most cost effective and efficient processes and tools to communicate
service related issues to customers. For example: e-mail, target mail, door
hangers, etc.
• Reduce complexity of and simplify rate structure.
• Evaluate and improve effectiveness of the bill format (including fees for Chula
Vista sewer billing).
133
Performance Measures
Accomplishments 2008-2009
• Implemented the drought rate stages.
• Simplified the billing rate structure by eliminating 158 fees.
• Customized the Prop 218 notices by customer class and inserted them in the
customer bills.
• Converted 7 routes from manual to AMR and retrofitted over 4,000 AMR meters.
• Changed out 4,000 defective Raymar meters to Master meters.
• Created Master meter count report.
• Created and implemented Water Waste Tracking Mechanism which included out-
dialer.
• Successfully transitioned to a new billing vendor.
• Automated the collection process.
Answer Rate
Percentage of calls as a
measure of all calls received.
Billing Accuracy
Number of incorrect bills
issued. (QualServe)
134
• Used auto-dialer for meter change out calls.
• Implemented and trained on the new handhelds.
• Automated the verification and QC of the billing process.
• Provided Engineering staff with research on customer service type.
Payroll and Accounts Payable
Services We Provide
The Payroll department pays its 169 employees on a bi-weekly basis using the District’s
Integrated Financial Eden System. Timesheets and pay stubs are collected and distributed
electronically. Tax returns are filed on a quarterly basis and W2’s filed annually. Benefits
and deductions are processed bi-weekly through Accounts Payable. Approximately 750
invoices are processed on a monthly basis.
Strategic Plan Objective
• Enhance Accounts Payable to electronically pay invoices for frequent vendors and
routine bills and maximize the use of e-bills.
Accomplishments 2008-2009
• Completed bi-weekly payroll and weekly account payable check runs in a timely
manner. While these processes are routine, they are highly visible and sensitive
to employees and vendors.
• Completed quarterly tax returns for the District which culminated with the
processing, printing, and distributing of W2s and 1099s for 2008.
• Streamlined processes for SDG&E bills and W-9 forms.
135
136
District Position Count ‐166
Information Technology & Strategic Planning Department ‐ 13
IT Applications IT Operations GIS
Information Technology and
Strategic Planning
Personnel Count FY 2008 FY 2009 FY 2010
Chief Information Officer 1 1 1
GIS Manager 1 1 1
IT Operations Manager 1 1 1
GIS Programmer/Analyst 1 1 1
GIS Technician 2 2 2
Network Engineer 1 1 1
Database Administrator 1 1 1
Business System Analyst I and II 3 3 3
Network Analyst 1 1 1
Records Assistant 1 1 1
Total 13 13 13
IT Applications IT Operations GIS
Information Technology and
Strategic Planning
137
Department Responsibilities
Information Technology and Strategic Planning
The Information Technology and Strategic Planning Department, under the general direction of the
Assistant General Manager, provides the following support services: development and implementation
of information technology; District’s Strategic Planning Process, including the development of long-
term strategic initiatives, and defining performance measurement metrics; information system support to
the District and provides highly responsible and complex administrative support to the District, General
Manager, and Board of Directors.
Board of Directors
0.3%General Manager
6.0%
General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%
Water Operations
41.3%
Engineering
7.4%
FY 2010 Total Departmental Budget - $27.8 Million
Information Technology and Strategic Planning - $2,856,400
FY 2008 FY 2010
Actual Budget Estimated Budget
IT Chief/Applications 826,726$ 878,000$ 843,069$ 919,100$
IT Operations 1,315,667 1,378,300 1,403,973 1,344,400
Geographic Information System 524,382 563,500 562,625 592,900
TOTAL 2,666,776$ 2,819,800$ 2,809,666$ 2,856,400$
FY 2009
Board of Directors
0.3%General Manager
6.0%
General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%
Information
Technology and
Strategic Planning
10.3%
Water Operations
41.3%
Engineering
7.4%
FY 2010 Total Departmental Budget - $27.8 Million
Information Technology and Strategic Planning - $2,856,400
138
Information Technology and Strategic Planning
FY 2008 FY 2010
Actual Budget Estimated Budget
Labor and Benefits 1,558,653$ 1,693,100$ 1,666,372$ 1,757,600$
Travel and Meetings 7,366 18,100 11,083 13,900
General Office Expense 6,732 6,800 3,975 5,200
Equipment 871,909 862,600 947,674 858,000
Services 215,174 213,500 154,862 204,800
Training 6,942 25,700 25,700 16,900
Total 2,666,776$ 2,819,800$ 2,809,666$ 2,856,400$
FY 2009
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$2,328
$2,655 $2,706 $2,820 $2,856
$2,297 $2,371
$2,667 $2,810
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Budget vs. Actual
Budget Actual
$-
FY06 FY07 FY08 FY09 FY10
Fiscal YearProposed
139
IT Applications
Services We Provide
The Information Technology and Strategic Planning Department (IT/SP) under the general
direction of the Assistant General Manager, Finance and Administration, and Chief
Information Officer (CIO) provides the following support services:
• Development and implementation of information technology.
• District’s Strategic Planning process, including the development of long term
strategic initiatives, and defining performance measurement metrics.
• Information system support to the District.
• Provides highly responsible and complex administrative support to the District,
General Manager, and Board of Directors.
Strategic Plan Objectives
• Interactive Voice Response - Enhance the usefulness of the Interactive Voice
Response for better customer service across the District.
• Auto dialer - Evaluate enhancing the usefulness of the auto dialer to efficiently
notify customers of District events.
• E-Customer Account - Enhance the customer’s ease of access to personalized
account information including water use, payment status, and historical trending.
• Promote and encourage leadership opportunities for District staff in water
industry committees.
• Evaluate and implement American Water Works Association Peer Review for
District.
• Evaluate the long-term viability of Eden financials and billing system.
• Enhance the integration of Infrastructure Management System, Eden, Customer
Information System, Supervisory Control and Data Acquisition, and Geographic
Information System.
• Enhance existing Capital Project Tracking System.
• Evaluate implementing a fixed network Automated Meter Reading.
• Optimize the use of SharePoint.
• Update District-wide Records Management Program.
Information Technology and Strategic Planning
140
Accomplishments – Fiscal Year 2008-2009
• Strategic Plan results were on target with over 90% of objectives on or ahead of
schedule and over 80% of performance measures on or above target.
• The District implemented many improvements to the core application systems
including:
o Extension of work order processing to Engineering
o Deployment of District-wide SharePoint intranet
o Complete re-crafting of our rate and billing structures
o Implementation of a new fixed asset module
o Development of a water waste customer tracking system
IT Operations
Services We Provide
IT Operations is responsible for day-to-day functions of the District’s data center, network
and desktop hardware/software, disaster recovery center, telecommunications, mobile and
wireless networks, website, and help desk. IT Operations has collateral responsibilities for
access security control and video surveillance.
Strategic Plan Objectives
• Web Page - Evaluate and enhance the District’s website design to allow easier use
and navigation.
• Develop and deploy the field wireless network for key facilities.
• Optimize use of Voice Over Internet Protocol and unified messaging.
• Assess and implement security best practices for all Otay networks.
• Investigate using electronic signatures on staff reports, shutdown plans, contracts,
magazines, newsletters, reimbursements, project closeouts, etc.
Performance Measures
Customer Satisfaction
with web site
Tracks customer satisfaction
with website through survey.
141
Accomplishments – Fiscal Year 2008-2009
• IT Department wins “Best of California 2008” award from the Center for Digital
Government.
• IT Department wins the “2008 Municipal Information Systems Association of
California” (MISAC) Excellence Award for the second year in a row.
• Enhanced a “COLO” data center. This is a backup data center to accommodate
disaster recovery in the event that our primary system is disabled.
• Began implementation of a high speed wireless network to provide connectivity
to all District facilities.
Network Availability
Percentage of uptime for network
during normal business hours.
Website Hits
Fiscal Year 06-07 and 07-08
tracked the number of website
hits per month. Fiscal Year
08-09 and projected Fiscal Years
09-10 and 10-11 track the
number of visitors to our
website per month.
142
Geographic Information System (GIS)
Services We Provide
The GIS department is responsible for the technical and administrative support to the
Engineering and Operations Departments on GIS/AM/FM and CAD systems. It is also
responsible for the data collection and data QA/QC of the District’s facility data and land
based data. In addition, it provides technical support in designing, developing, documenting
and maintaining the District’s database systems and creates database structures that
consolidate the conceptual, logical and physical models of data.
Strategic Plan Objectives
• Enhance the District’s data management, data update process, and data
architecture including enterprise standard data. Update process for ensuring GIS
data is accurate.
• Develop optimized field work processing using integrated technology.
• Utilize SCADA to calibrate water model.
• Develop information systems support for asset management program.
Accomplishments – Fiscal Year 2008-2009
• Replaced the system architecture design for the new GIS system including
clustered servers and application upgrades for field software. Ordered new
laptops for all field staff.
• Created the fixed asset database which will serve as the foundation for future
asset management planning consisting of over 240,000 items categorized in line
with AWWA and industry best practices guidelines.
• Provided consulting and guidance to Engineering to develop water modeling
database.
• Implemented a field base system using GIS maps to improve the efficiency of
inspectors doing “mark-out” work when requested by builders and developers.
143
144
District Postion Count ‐ 166
Operations Department ‐ 68
Fleet/Equipment
Maintenance
Construction
Maintenance
Water Systems
Operations
Utility
Maintenance
Pump/Electrical
Water Systems
Water Operations
Fleet/Equipment
Maintenance
Construction
Maintenance
Water Systems
Operations
Utility
Maintenance
Pump/Electrical
Water Systems
Meter
Maintenance
SCADA
Recycled
Maintenance
Treatment Plant
Laboratory
Water Operations
145
Personnel Count FY 2008 FY 2009 FY 2010
Chief, Water Operations 1 1 1
Executive Secretary 1 1 1
Systems Operations Manager 1 1 1
Water Systems Supervisor 1 1 1
Pump Electrical Supervisor 1 1 1
Recycled Water Systems Supervisor 0 1 1
Meter Maintenance/Cross Connect Supervisor 1 1 1
Lead Water Systems Operator 2 2 2
Water Systems Operator I, II, and III 9 9 9
Valve Maintenance Worker 1 1 1
Senior Disinfection Technician 2 2 2
Senior SCADA Instrumentation Technician 2 1 1
SCADA Instrumentation Technician 0 1 1
Electrician I and II 2 2 2
Pump Mechanic I and II 2 2 2
Lead Cross Connection/ Meter Maintenance Worker 1 1 1
Meter Maintenance/Cross Connect Worker I and II 5 5 5
Construction Maintenance Manager 1 1 1
Utility Maintenance Supervisor 2 2 2
Utility Crew Leader 5 5 5
Utility Workers I and II 10 10 8
District Position Count ‐ 166
Operations Department ‐ 68
y
Senior Utility/Equipment. Operator 4 3 3
Fleet Maintenance Supervisor 1 1 1
Equipment Shop Mechanic I and II 4 3 3
Welder II 111
Reclamation Plant Supervisor 1 1 1
Lead Reclamation Plant Operator 1 1 1
Reclamation Plant Operator 3 3 3
Lead Recycled Water Distribution Operator 1 1 1
Recycled Water Distribution Operator 3 3 3
Laboratory Analysts I and II 2 2 2
Total 71 70 68
146
Department Responsibilities
Water Operations
The Water Operations Department, under the general direction of the Assistant General Manager, provides the
following support services: Potable and Recycled Water System Operations, Construction Maintenance, and
Sewer Collection and Treatment Operations; and provides highly responsible and complex technical and
administrative support to the District, General Manager, and Board of Directors.
Board of Directors
0.3%General Manager
6.0%
General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%
Information
Technology and
Strategic Planning
Water Operations
41.3%
Engineering
7.4%
FY 2010 Total Departmental Budget - $27.8 Million
Water Operations - $11,478,800
FY 2008 FY 2010
Actual Budget Estimated Budget
Water Operations Chief 405,756$ 446,300$ 391,986$ 398,300$
Water Systems 5,917,659 6,748,800 6,410,453 6,884,000
Construction Maintenance 4,534,724 4,483,800 3,914,046 4,196,500
TOTAL 10,858,139$ 11,678,900$ 10,716,485$ 11,478,800$
FY 2009
Board of Directors
0.3%General Manager
6.0%
General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%
Information
Technology and
Strategic Planning
10.3%
Water Operations
41.3%
Engineering
7.4%
FY 2010 Total Departmental Budget - $27.8 Million
Water Operations - $11,478,800
147
Water Operations
FY 2006 FY 2010
Actual Budget Estimated Budget
Labor and Benefits 6,539,909$ 7,381,100$ 6,717,225$ 7,403,600$
Travel and Meetings 28,509 44,500 46,628 46,200
General Office Expense 4,863 6,000 4,931 6,600
Equipment 40,530 77,100 58,810 66,900
Fees 91,725 93,000 53,394 88,000
Services 345,289 386,500 431,260 291,300
Training 4,716 11,200 5,424 14,200
Materials & Maintenance 2,566,076 2,240,600 1,973,644 2,130,900
Sewer Charges 1,236,522 1,288,900 1,159,680 1,211,100
Miscellaneous - 150,000 265,490 220,000
Total 10,858,139$ 11,678,900$ 10,716,485$ 11,478,800$
FY 2009
$2 000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$10,261 $10,804 $11,253 $11,679 $11,479
$10,008 $9,652
$10,858 $10,716
(in
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Budget vs. Actual
Budget Actual
$-
$2,000
FY06 FY07 FY08 FY09 FY10
(i
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Fiscal Year
Proposed
148
Water Systems Operations
Services We Provide
Water Operations staff is responsible for operations and maintenance of the wastewater
collection system, potable and recycled water distribution systems, and the R. W. Chapman
Water Recycling Facility. Pump and electrical staff perform preventative, predictive and
corrective maintenance on all pumps, motors, switchgear, and control valves in the District
and assists with electrical maintenance and installation throughout the District. The SCADA
staff performs installations, maintenance, updates, and modifications to the SCADA control
system and related communications equipment, both for existing facilities as well as CIP
projects. Laboratory staff ensures all regulatory-required sampling, analyses, and reporting is
done to meet the requirements from the California Department of Public Health for potable
water and the Regional Water Quality Control Board for recycled water and the reclamation
plant treatment process. Laboratory staff works closely with the water system operators and
disinfection staff to monitor and optimize the water quality in the distribution system. They
also perform bacteriological sampling and analyses for Utility Maintenance and Engineering
to ensure proper disinfection was performed after maintenance or new construction.
Strategic Plan Objectives
• Develop and implement a proactive leak detection program to reduce distribution
system water loss.
• Develop and implement Treatment Plant Enhancements including automation for
remote operation and shutdown, technology improvements, and upgrade of
facilities.
• Optimize functionality, business continuity, bandwidth, and use of SCADA.
Performance Measures
Water Operations
Unplanned Disruptions
Quantifies the number of
unplanned water outages
experienced by the utility
customer expressed as number
of accounts affected per
1,000 accounts (QualServe).
149
Technical Quality Complaint
The number of complaints is a
good measure of customer service.
Technical quality complaints
allow us to measure the complaint
rates we are experiencing with
individual quantification of those
related to core utility services.
It is expressed as complaints per
1,000 customer accounts.
Planned Recycled Water
Maintenance Ratio in Dollars
Compares how effectively the
District is investing in planned
maintenance.
This measure was not tracked
until FY 2008-2009.
Planned Wastewater Maintenance
Ratio in Dollars
Percentage of planned
maintenance costs compared
to combined planned and
corrective maintenance costs.
Direct Cost of Treatment
per MG
Measures the direct cost of
wastewater treatment and
does not include staff
overhead or fringe benefits,
but it does include their
salaries (QualServe).
150
O&M Cost per MG
Measure for the operation
and maintenance cost to treat
one million gallons of
wastewater (QualServe).
Percentage of Preventative
Maintenance Completed in the
Reclamation Plant
To track the percentage of
scheduled PM's that are
completed in the
Reclamation Plant.
This measure was not tracked
until FY 2008-2009.
Percentage of Preventative
Maintenance Completed in the
Pump/Electric Section
To track the percentage of
scheduled PM's that are
completed in the Pump/Electric
Section.
This measure was not tracked
until FY 2008-2009.
Percentage of Preventative
Maintenance Completed in the
Valve Maintenance Program
To track the percentage of
scheduled PM's that are
completed in the Valve
Maintenance Program.
This measure was not tracked
until FY 2008-2009.
151
Valve Exercising Program
Maintenance of distribution
systems' infrastructure to
ensure minimal interruption
of potable water delivery to
customers.
Potable Water Distribution
System Integrity
Measures the condition of the
water distribution system
expressed as the total annual
number of leaks and break
per 100 miles of distribution
piping (QualServe).
Planned Water Service
Disruption Rate
Quantifies the number of planned
water outages experienced by
the utility customer expressed
as number of accounts affected
per 1,000 accounts (QualServe).
Drinking Water Compliance Rate
Quantifies the percentage of
time each year that the District
meets all of the health related
drinking water standards in
U.S. National Primary Drinking
Water Regulations (QualServe).
152
Accomplishments – Fiscal Year 2008-2009
• Water System Section is ahead of schedule on the completion of the District’s
valve actuation, valve replacement, and air-vac upgrades program. Air-vac
upgrades in the northern portion of the District have been completed.
• Reduced corrective maintenance and decreased the betterment fee for
maintenance by 36.2%.
Collection System Integrity
Number of wastewater collection
system failures per 100 miles of
collection system pipeline
(QualServe).
Recycled Water Distribution
System Integrity
Tracks number of leaks or breaks
per 100 miles of water distribution
system.
Sewer Overflow Rate
Measures the wastewater
collection system pipeline
condition and the effectiveness
of planned maintenance
(QualServe).
153
• Reduced overtime requirements contributed to a reduction of over $30K in
overtime costs.
• Successfully completed 24 planned shutdowns. Some of these were to complete
the 640 reservoirs project and the "Three Amigos" pipeline replacement project.
• Modified the Lower Otay Pump Station in order to provide potable water to the
City of San Diego while their Otay Treatment Plant was out of service. The
District provided the City with 7 MGD for approximately five weeks. Total flow
delivered was 834 AF or 272 MG.
• Provided Mexico with 5,544 AF or 1,807 MG potable water for the fiscal year.
• Assisted Engineering staff with pump testing at the 680-944 Recycled Pump
Station so they can recommend modifications to the pumps to meet future
demands of the Central Area and Otay Mesa recycled systems.
• Increased the reliability of the reclamation plant/sewer lift station SCADA control
system by installing a back-up server and upgrading the software.
• Reclamation Plant, Pump/Electrical, and SCADA staff assisted Engineering in the
replacement of the Calavo Sewer Lift Station.
• Completed an automation of the flow-control metering valves at the Regulatory
Site.
• Operations staff coordinated with Engineering staff on the conversion of the
20-inch potable line in the Use Area to a recycled transmission main. The
conversion ties into the existing recycled transmission main at the intersection of
Proctor Valley Road and Lane Avenue allowing more pumping capacity.
• The 450-1 Recycled Reservoir was cleaned and a warranty inspection was
completed. While the reservoir was empty, a static mixer for the chlorine-
injection system was installed in the reservoir’s inlet pipe.
• Recycled water force main air-vacs were upgraded which required the Treatment
Plant to be shutdown. When the air-vac upgrades were taking place, Treatment
Plant staff completed an abundance of preventive and corrective maintenance
while the plant was off-line.
• Exercised 1,812 valves during FY-09 completing IDs 7, 10 and 22. Since
February 2006 the valve crew has exercised 5,380 valves, or 32% of the total
valves in the District.
• Added SCADA controls along with automatic valve controls on the four new
metering valves needed for the 640 reservoirs.
• The Treatment Plant office trailers were returned to the vendor and staff was
moved into the new office building.
• The Collection System section completed the creation of IMS work order
templates for the hydro-cleaning maintenance of the entire 86 mile collection
system, as well as sewer manhole inspections.
154
• As preventive maintenance, the 944 and 927 Recycled Reservoirs floating covers
were inspected, cleaned, and repaired.
• Participated in the creation of the District’s new Report Water Waste database, on
the District’s website, in order to handle an increase of water waste calls due to
the current drought.
• Continue to be very responsive to all water leaks and breaks, minimizing
disruptions to customers.
Utility Maintenance / Construction
Services We Provide
The Utility Maintenance and Construction staff provides vital maintenance functions that
ensure the best quality of water and wastewater service to customers while adhering to all
applicable regulatory compliance requirements. Tasks include valve exercising, large meter
installation, main line and service line repairs as well as proactive regulatory system
upgrades, and constant evaluation of the system integrity to allow for system planning
upgrades. The Meter Maintenance staff provides meter maintenance and repairs and/or
replacement of meters to ensure accurate accounting of water usage. Provides
comprehensive protection of water quality by proactively administering the Backflow/Cross-
Connection program, regulated by the Department of Health. The Fleet Maintenance staff
implements active preventative maintenance practices and repairs the District’s vehicles and
equipment to ensure optimum performance while establishing fuel efficient operational
practices and emissions compliance.
Strategic Plan Objectives
• Expand meter testing for 3" and larger calibration and replacement program.
• Evaluate increasing the completion schedule of District’s valve actuation, valve
replacement, and air vac programs.
• Enhance fuel tracking and reporting system.
• Develop a Heavy Equipment Capital Replacement Plan.
Performance Measures
Technical Quality Complaint
The number of complaints is a
good measure of customer service.
Technical quality complaints
allow us to measure the complaint
rates we are experiencing with
individual quantification of those
related to core utility services.
It is expressed as complaints per
1,000 customer accounts.
155
Accomplishments – Fiscal Year 2008-2009
• Utility Maintenance Section is ahead of schedule on the completion of the
District’s valve actuation, valve replacement, and air-vac upgrades program. Air-
vac upgrades in the northern portion of the District have been completed.
• Reduced corrective maintenance decreased the betterment fee for maintenance by
36.2%.
Planned Drinking Water
Maintenance Ratio in Dollars
Compares how effectively the
District is investing in planned
maintenance (QualServe).
Percentage of Preventative
Maintenance Completed in the
Fleet Shop
To track the percentage of
scheduled PM's that are
completed in the Fleet Shop.
This measure was not tracked
until FY 2008-2009.
Replace Manual Read Meters with
Automated Meters
Increase meter reading efficiency
and reduce water loss.
156
• Reduced overtime requirements contributed to a reduction of over $30K in
overtime costs.
• Successfully coordinated a methodology and had an agreement executed with
Cuyamaca College to install a new ten-inch meter at no cost to the District, a
$60,120 savings, and to recuperate funds for un-metered water from previous
years estimated at $179,000.
• The Fleet Maintenance Section has successfully managed to assure all data has
been registered and the maintenance/repair costs are properly being tracked
though the IMS system in order to be within code compliance per California Air
Resources Board (CARB) and/or Air Pollution Control District (APCD)
regulations.
• Developed a detailed listing for all three-inch and larger meters. Also,
documented a comprehensive Large Meter Testing program which generated the
development of a Priority Testing schedule and created a large meter testing
protocol and procedure for the upcoming Large Meter Testing CIP project.
• Installed a 12-inch pressure relief valve in the 803-1 Pump Station to prevent
over-pressurizing the system.
• Modified the return activated sludge piping at the Reclamation Plant’s aeration
basins from 4-inch to 6-inch piping.
• New material and pipe bins for field crews were installed at the Regulatory Site in
order to increase efficiency for activities in the northern portion of the District.
• Continue to be very responsive to all water leaks and breaks, minimizing
disruptions to customers.
157
158
Personnel Count FY 2008 FY 2009 FY 2010
Chief, Engineering 1 1 1
District Position Count ‐ 166
Engineering Department ‐ 21
Water Resources Design / Planning /
Construction /
Environmental
Public Services /
Survey / Inspection
Engineering
gg
Executive Secretary 1 1 1
Secretary 1 1 1
Engineering Manager 2 2 2
Public Services Manager 1 1 1
Senior Civil Engineer 2 2 1
Associate Civil Engineer 3 2 2
Assistant Civil Engineer 1 0 0
Environmental Compliance Specialist 1 1 1
Permit Technicians I and II 2 2 2
Senior Engineering Technician 0 3 3
Engineering Technicians I, II and III 4 0 0
Inspection Supervisor 1 1 1
Construction Inspectors I and II 4 3 2
Supervising Land Surveyor 1 1 1
Survey Technician 1 1 1
Assistant Survey Technician 1 1 1
Total 27 23 21
Water Resources Design / Planning /
Construction /
Environmental
Public Services /
Survey / Inspection
Engineering
159
Department Responsibilities
Engineering
The Engineering Department, under the general direction of the Assistant General Manager, provides the
following support services: Planning, Design, Construction, Project Management and surverying of all District
facilities; responsible for strategic planning, capital budget, water resources planning, support facilities planning,
environmental services, quality control, construction, developer designed and constructed facilities; coordinates
assigned activities with other district departments and outside agencies; provides highly responsible and complex
administrative and technical support to the District, General Manager, and Board of Directors.
Board of Directors
0.3%
General Manager
6.0%
General Expense
3.1%
Administrative Services
14.1%
Finance
17.5%
Water Operations
41.3%
Engineering
7.4%
FY 2010 Total Departmental Budget 27.8 Million
Engineering - $2,070,700
FY 2008 FY 2010
Actual Budget Estimated Budget
Engineering Chief (1)418,228$ 359,200$ 338,055$ 319,200$
Planning 353,222 605,000 403,119 366,000
Design 429,041 291,700 267,342 211,300
Water Resources 146,718 157,400 130,254 157,700
Public Services 253,658 280,900 247,257 265,800
Construction Services 520,110 356,100 281,888 216,100
Survey Services 235,877 302,100 231,250 272,400
Environmental Services 330,106 602,300 397,119 262,200
TOTAL 2,686,961$ 2,954,700$ 2,296,284$ 2,070,700$
(1) Effective FY 2008, Engineering and Development Services Departments are combined; Development
Services Chief Section is deactivated.
FY 2009
Board of Directors
0.3%
General Manager
6.0%
General Expense
3.1%
Administrative Services
14.1%
Finance
17.5%
Information Technology
and Strategic Planning
10.3%
Water Operations
41.3%
Engineering
7.4%
FY 2010 Total Departmental Budget 27.8 Million
Engineering - $2,070,700
160
Engineering
FY 2008 FY 2010
Actual Budget Estimated Budget
Labor and Benefits 1,593,576$ 1,639,800$ 1,407,942$ 1,215,300$
Travel and Meetings 19,186 22,900 13,107 23,300
General Office Expense 10,890 13,500 7,052 9,300
Equipment 3,322 6,200 5,754 3,500
Fees 23,936 55,000 37,714 65,000
Services 1,035,360 1,214,400 822,454 749,600
Training 439 2,900 2,261 4,700
Materials & Maintenance 253 - - -
Total 2,686,961$ 2,954,700$ 2,296,284$ 2,070,700$
FY 2009
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$2,858
$3,428 $3,306
$2,955
$2,071
$2,801 $2,653 $2,687
$2,296
(i
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Budget vs. Actual
Budget Actual
$-
$500
FY06 FY07 FY08 FY09 FY10
(
Fiscal Year Proposed
161
Water Resources
Services We Provide
The Water Resources Division within the Engineering Department is responsible for a
variety of water resources planning functions directly related to potable, recycled water,
and sewer services. This includes identification, negotiation, acquisition, and
development of additional potable and recycled water supplies of various interagency
cooperative agreements and coordination of water resources functions with other entities
such as the Metropolitan Water District of Southern California, San Diego County Water
Authority, City of San Diego, County of San Diego, and the City of Chula Vista. Prepare
capital improvement program facility plan and budget, and land development projects to
ensure adequate and reliable water service to customers and compliance with local and
state laws for land development projects. Provide guidance and technical assistance for
the development of the water and sewer capacity and annexation fees methodology and
rates. Coordinate funding resources such as grants, loans, and cost sharing opportunities.
Strategic Plan Objectives
• Prioritize and implement recommendations contained in the Integrated Resources
Plan and Water Resources Master plan to obtain additional potable water supply
by 15%.
• Evaluate the long-term requirement for costs and benefits of seeking additional
sewer collection flow, treatment, and/or disposal capacity.
• Obtain new recycled water supplies by 10% by prioritizing and implementing the
recommendations in the IRP & WRMP.
• Develop and implement an Asset Management Program Plan to extend useful life
of capital assets.
• Identify existing facilities that are good candidates for conversion to separate
irrigation meters (recycled and/or potable water), specifically for multi-
family/industrial/commercial projects.
• Enforce use of separate meters for irrigation during the Sub-Area Master Plan
(SAMP) Review Process to maximize the use of recycled water.
Accomplishments – Fiscal Year 2008-2009
• Received $1,895,000 from the United States Bureau of Reclamation for
participation in their Title XIV Program. Total received to date is $6,535,000.
Engineering
162
The agreement provides for up to 25% funding of over $90 million for District
recycled water projects.
• Initiated the temporary connection of the upgraded Otay14FCF to the La Mesa
Sweetwater Extension to maximize the water supply take from the Helix Water
District Levy Water Treatment Plant in an effort to mitigate the 10,000 acre-feet
per year requirement per terms of the East County Regional Treated Water
Improvement Program Agreement.
• Prepared scope of work and request for proposal resulting in the acquisition of
consulting services for the Middle Sweetwater River Basin Groundwater Well
Pilot project.
• Completed MBR Wastewater Reclamation Facility Feasibility Report and study
effort in collaboration with Sweetwater Authority and the City of Chula Vista.
Prepared a draft scope of work for consultant to prepare a study to develop a
realistic reclamation facility option and cost estimate for MBR proposal for
contrasting with purchasing of Metro System capacity and prepared a draft
agreement with the City of Chula Vista for joint participation in the study.
• Obtained Board approval of the SB 221 and SB 610 report for the Otay Ranch
Company Resort Parcel development project. Managed the complex activities for
the SB 221 and SB 610 study efforts for the Otay Ranch Resort project.
• Finalized three technical memorandums for Rosarito Desalination Study.
Prepared draft California Environmental Quality Act and preliminary design
report scope of work for a planned Request for Proposal.
• Participated in the Otay Mesa CDC, Donovan Prison Medical Facility, George
Bailey Expansion, Sycuan Indian Reservation, Peaceful Valley Ranch
developments and their water supply offset requirements. Developed an analysis
of the draft water supply offset costs for each of these projects.
• Worked with MWH to develop the Sweetwater Authority Water Supply Study
from the Sweetwater Authority Perdue Water Treatment Plant.
Planning / Design / Construction / Environmental
Services We Provide
The Planning, Design, Construction, and Environmental Divisions within the Engineering
Department provide a variety of services directly related to potable water, recycled water,
and sewer facilities. This includes taking a project literally from “cradle to grave.”
Planning staff develops the preliminary design of a project in order to facilitate final
design and ultimately construction of the facility. Planning staff also coordinates the
review of planning documents related to potential new development. Design staff
prepares the design of facilities and advertises projects for bid. Once bid, the
Construction staff provides construction management for the projects. Environmental
staff coordinates and tracks the project through the construction stage and for a period
163
after construction if long-term mitigation is required. In addition, we assist the
Operations Department on special projects related to maintenance of existing facilities
including the Ralph W. Chapman Water Reclamation Facility.
Strategic Plan Objectives
• Create a comprehensive environmental program that is cost-effective and
proactive in response to environmental compliance.
• Finalize evaluation of North District service area expansion for recycled water
and seek approvals for funding.
Performance Measures
CIP Project Expenditures
vs. Budget
Compares quarterly CIP
expenditures with budget.
Construction Change Order Incidences
Measures the rate of change orders for
CIP projects under construction.
164
Accomplishments – Fiscal Year 2008-2009
• The following projects were completed:
o 640-1 & 2 Reservoirs (P2185)
o Force Main Air Vac Replacement and Road Improvement Project
(R2086)
o Tres Amigas Pipeline Conversion Project (P2356, P2387, P2038)
o Calavo Sewer Lift Station Replacement (S2015)
o Lane Avenue 20-inch Conversion Project (R2081)
o RO Building Remodel (R2053)
• The following CIP projects began construction:
o 36-Inch Jamacha Road Pipeline (P2009)
o 850-4 Reservoir (P2191)
o 1296-3 Reservoir (P2143)
o 1485-1 Pump Station (P2172)
o Agency Interconnections (P2422)
o Regulatory Site Material Storage Bins (P2465)
• Obtained Low-effect Habitat Conservation Plan Take Permit for the Force Main
Air Vac Replacement Project (R2086).
• Mitigated Negative Declaration (MND) for the 36-inch Jamacha Road Pipeline
adopted by the Board on August 6, 2008 (P2009).
• Mitigated Negative Declaration for the 1296-3 Reservoir adopted by the Board on
August 6, 2008 (P2143).
• Completed the North District Recycled Water Concept, Phase I Study (R2089).
Project Closeout Time
Measures the average number of days
between the issuance of a Notice of
Substantial Completion (NOSC) and a
Notice of Completion (NOC) for CIP
projects in construction.
165
Public Services / Survey / Inspection
Services We Provide
We assist the public by responding to customer visits, phone calls, and inquiries
regarding permits, plan-checking fees, filing procedures, permit status, meter sales, meter
costs, and lateral costs. We administer all plan-checking submittals for potable water,
recycled water and sewer applications for approval, cellular lease agreements, fire
service, and backflow inspections, project deposits, and invoicing. We provide
inspections to private developer funded projects and the District's Capital Improvement
Projects, easement and encroachment enforcements, and survey and utility mark outs of
District facilities and GPS plots.
Strategic Plan Objectives
• Continue a regional approach and expand the District’s recycled water outreach
program to landscape architects, maintenance companies, developers, contractors,
and homeowner associations.
• Enhance Construction Inspection on construction projects by implementing IMS.
• Obtain access to shared electricity, gas, telephone, and other utilities from cell site
vendors, San Diego County, and other agencies.
Performance Measures
Accomplishments – Fiscal Year 2008-2009
• Generated revenue in excess of $2 million.
• Thirty (30) cell site leases brought in over $843,000 in revenue.
• Processed over 450 permits.
• Established and implemented an Easement Inspection Program.
Mark-out Accuracy
Measures the percentage of at-fault
hits over time.
166
• Analyzed the Retrofit Recycled Optimization Program.
• Completed 2,240 mark-outs with an accuracy rate of 100%.
• Located 1,713 facilities (facilities include appurtenances, valves, fire hydrants,
blow offs, fire services, all sewer manholes, laterals and clean outs throughout the
District) and transferred them into our information system.
• Eleven (11) parcel maps and 2 subdivision maps totaling 15 lots were added to the
cadastral base map. In addition, 327 assessor's parcel map pages were researched
and all new parcels updated.
• Drafted 72 easements and exported them to the GIS.
• Quality assurance and control exercised for over 11,631 linear feet of pipe on
approximately 249 projects constructed by developers. All projects were
accomplished with no loss of time due to injuries or accidents.
167
168
Description
FY 2008 FY 2010
Actual Budget Estimated Budget
General Expense 2,547,639$ 784,000$ 1,922,672$ 865,500$
TOTAL 2,547,639$ 784,000$ 1,922,672$ 865,500$
FY 2009
General Expense
The expenses in this section are general operating expenses not associated with an individual department. The expenses
include: legal costs, insurance premiums, changes in accrued employee leave balances and miscellaneous interest.
These expenses represent 4% of the total Departmental Budget.
FY 2010 Total Departmental Budget - $27.8 Million
General Expense - $865,000
Board of Directors
0.3%General Manager
6.0%
General Expense
3.1%
Administrative
Services
14.1%
Finance
17.5%Information
Technology and
Strategic Planning
10.3%
Water Operations
41.3%
Engineering
7.4%
169
General Expense
FY 2008 FY 2010
Actual Budget Estimated Budget
Labor and Benefits (1)694,712$ (188,300)$ 383,300$ (300)$
Fees 1,852,927 972,300 1,539,372 865,800
Total 2,547,639$ 784,000$ 1,922,672$ 865,500$
(1) FY 2010 and FY09 Labor and Benefits budget amounts are negative because of Vacancy Factor (salary savings)
of $207,700 and $424,300 respectively. This is netted against other District-wide Labor and Benefit Expenses.
In prior years Vacancy Factor was budgeted in the individual departments.
FY 2009
$863 $942 $1,054
$1,813 $1,686
$2,548
$784
$1,923
$866
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
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FY06 FY07 FY08 FY09 FY10
Fiscal Year
Budget vs. Actual
Budget Actual
170
Capital Improvement Program
The District provides water service to a population of approximately 195,000 which is
expected to ultimately increase to 277,000. This growth as well as the maintenance of
existing assets requires long term capital planning. The process is a dynamic one, due
to the evolving needs of the community, the water supply issues, and changing
regulations, and therefore is part of the District’s overall strategic planning. The capital
planning process involves identifying current and future needs, and prioritizing them
based on certain operating assumptions. The primary objective of this planning effort
is to support an orderly, efficient program of expansion, replacement and betterment,
while maintaining a stable long-range financial plan.
To accommodate this growth requires that the District invest $500 million in capital
assets through ultimate build-out. The Fiscal Year 2010 Capital Budget is $37.2
million and the five-year Capital Improvement Program (CIP) totals $222.4 million. A
separate CIP Budget Notebook contains the descriptions, justifications, expenditures,
and funding for all the identified projects to ultimate build-out.
Assumptions and Criteria
The Water Resources Master Plan was based on several major assumptions and design
criteria as follows:
1. Utilizing historical water demands for each land use type in the District to calculate
future demands;
2. Using maximum day peaking factors that vary with demand level;
3. Utilizing land use as planned by the City of Chula Vista;
4. Providing ten days of emergency water supply through a maximum of five days in
covered reservoirs and a minimum of five days from interconnections with adjacent
agencies;
5. Inclusion of emergency operational storage to meet the five-day covered storage
requirement into the ten-day outage supply requirement.
In summary, the CIP is developed based on the District's Water Resources Master Plan,
incorporating historical data, growth, developers' input, SANDAG projections, and
long-term economic outlook.
Justification for Project and Impact on Operating Budget
The justification for each project is determined by whether it is required due to growth
(Expansion), improvements or upgrades (Betterment), or to replace an existing asset
(Replacement). As these projects are completed and placed into service, there may be
an impact on the Operating Budget by increasing cost in the areas of maintenance,
energy or chemicals as shown on the justification and impact pages in this section.
171
Capital Purchases and Facilities
This year, all capital expenditures are in the CIP. This includes capital facilities and
capital purchases. Capital purchases are non-recurring operating expense items for
District-wide use that cost more than $10,000 each and have an estimated useful life of
two years or more. The Capital Purchase Projects include Vehicle, Office Equipment and
Furniture, and Field Equipment purchases, the details of which can be found on page 185.
Capital Facility Projects are items that exceed $10,000 or $20,000 for infrastructure
related items (as defined under Capital Equipment on page 245 of the Glossary) and have
a useful life of at least two years.
The CIP projects identified are prioritized based on the following criteria:
1. Safety, restoration of service, immediate obligation, Board directed or critical system
need.
2. System upgrades or requirements to maintain system reliability in the next few fiscal
years.
3. Need to meet the future growth of the system.
4. Project requirement may be reduced in capacity or may have low probability of need
in the future.
The following three categories of CIP projects are:
Expansion
Facilities required to support new or future users which are funded from capacity fees, or
user rates.
Betterment
Facilities required because of inadequate capacity or new requirements that benefit
existing users and funded from availability, betterment fees or rates.
Replacement
Facilities required to renew or replace existing facilities that have deteriorated or have
exceeded their useful life and are funded from user rates.
Capital Improvement Projects
The 2010 Fiscal Year CIP Budget contains 87 projects. The cost of the work planned for
Fiscal Year 2010 is $37.2 million. Of the 87 projects planned for Fiscal Year 2010, only
one is designated as reimbursable projects with estimated costs of $1,000. These projects
are built by developers and reimbursed by the District.
Capital Improvement Program
172
The following shows how the $37.2 million of projects are broken down into four
categories:
1.Capital facilities $ 28.7 million
2.Replacement or renewal projects $ 6.7 million
3.Capital purchase projects $ 1.8 million
4.Developer reimbursement projects $ 1.0 thousand
The Five-Year CIP and Fiscal Year 2010 Capital Budgets
are consistent with the District's Water Resources Master
Plan, current capacity fees, and the District's strategic
financial objectives.
Major CIP Projects
173
Flagship CIP Project in Construction
Key Component:
A new 2.0 MG Steel Reservoir will provide additional storage in the 1296
Pressure Zone.
Schedule: Notice to Proceed was issued on February 10, 2009. Project is on schedule
and is expected to be completed prior to February 16, 2010.
Cost:
The project budget is $3.64 million, of which $1.7 million, or 47%, has been
spent.
Significant
Issues:
None.
Highlights: The design of this reservoir is a Type III concrete reservoir. The lifecycle cost
of building a concrete reservoir is much lower than a welded steel reservoir.
A solar power generating system was added to this project which includes a
75 square-foot photovoltaic panel for generating power, which is tied to the
SDG&E power grid.
1296-3 Reservoir 2.0 MG (P2143)
This project was awarded in
February 2009. This project will
provide additional storage in the
1296 Pressure Zone.
174
Flagship CIP Project in Construction
Key Component:
A new 2.2 MG Steel Reservoir to meet the ultimate demand in the 850
pressure zone.
Schedule:
Construction is approximately 98% complete. The project is scheduled for
completion in June 2009.
Cost:
The project budget is $3.25 million, of which $3.14 million, or 97%, has been
spent.
Significant
Issues:
The project completion date has been extended from June 2009 to August
2009, due to delays by SDG&E for service to the site along with long lead
times for materials.
Highlights: The design includes a solar panel capable of producing a minimum of 1 kW
that will be tied back to the grid.
850-4 Reservoir (P2191)
This project was awarded and started
in February 2008. This project includes
the construction of a 2.2 MG steel
reservoir.
175
Flagship CIP Project in Construction
36-Inch Pipeline From FCF No. 14 to Regulatory Site Project
Key
Component:
Approximately 5 miles of 36-inch pipeline for potable water from Otay’s FCF
No. 14 to the Regulatory Site.
Schedule: A construction contract was awarded on June 3, 2009.
Cost:
The project budget is $22.0 million, of which $3.77 million, or 17% has been
spent.
Significant
Issues:
None
Highlights:
The first and main component of the Jamacha Road Pipeline Project consists of
the construction of a 36-inch tape wrapped cement mortar lined and coated steel
pipeline which will transfer water from the Otay 14 Flow Control Facility. The
second component consists of the replacement of concrete cylinder pipe with
approx. 4,500 feet of 12-inch and 8-inch polyvinyl chloride pipe along Jamacha
Road.
176
CIP Project in Construction
1485-1 Pump Station Replacement (P2172)
This project was awarded and started in January 2009. This project consists of
construction of a new pump station to replace the existing pump station and to
expand capacity as projected within the Water Resources Master Plan.
177
CIP Project in Construction
450-1 Reservoir Disinfection Facility (R2092)
This project was awarded in December 2008. The recycled water will be additionally
disinfected prior to delivery to District customers. This project will supplement the
disinfection provided for the South Bay Water Reclamation Plant.
178
CIP Reserve Funds
The CIP Reserve Funds presentation, shown on the following pages, is designed to provide an
understanding of how the funding of CIPs is expected to financially influence the District over the next
six years. The financial impacts are based on CIP and its funding sources, including fund transfers in
accordance with the District’s Reserve Policy, and planned debt issuances. This data is captured in the
District’s Rate Model on an annual basis in order to make these projections.
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
$15,046 $9,434
$20,966
$5,598 $3,002 $3,040
$31,910
$26,029
$29,667
$33,832 $37,894 $39,400
$17,245
$8,712
$17,034
$4,343 $6,413
$1,616
Th
o
u
s
a
n
d
s
Fiscal Year
RESERVE FUND BALANCES
Betterment Replacement Expansion
(Thousand $000s)FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Total
Capacity Fees 1,619$ 1,514$ 2,576$ 10,051$ 13,584$ 16,340$ 45,683$
Debt financing 41,000 - 54,380 - 14,610 - 109,990
Grants 5,221 3,970 1,130 1,050 1,000 1,000 13,371
Interest 1,104 1,354 1,755 2,133 2,112 2,502 10,961
Betterment Charges 948 948 976 1,006 1,036 1,067 5,981
Temporary Meters 1,171 1,171 1,173 1,178 1,185 1,187 7,064
Availability (Betterment Portion) 519 519 534 550 567 584 3,273
Transfer from General Fund 9,833 8,669 13,859 15,894 17,683 21,582 87,520
Interfund Transfers - - - - - 1,545 1,545
Total Sources 61,415 18,144 76,384 31,862 51,776 45,807 285,387
CIP Projects 37,272 29,946 42,366 43,841 35,041 33,949 222,415
Betterment Fees for Maintenance 571 583 595 606 618 631 3,604
Debt Service 5,261 6,238 8,513 9,876 11,134 11,474 52,496
Developer Services 1,397 1,404 1,418 1,432 1,447 1,461 8,559
Interfund Transfers - - - - - 1,545 1,545
Total Uses 44,501 38,171 52,892 55,756 48,240 49,060 288,619
Net Sources (Uses)16,913$ (20,027)$ 23,492$ (23,894)$ 3,537$ (3,253)$ (3,232)$
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
$15,046 $9,434
$20,966
$5,598 $3,002 $3,040
$31,910
$26,029
$29,667
$33,832 $37,894 $39,400
$17,245
$8,712
$17,034
$4,343 $6,413
$1,616
Th
o
u
s
a
n
d
s
Fiscal Year
RESERVE FUND BALANCES
Betterment Replacement Expansion
179
(Thousands $000s)FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 TOTAL
Expansion 13,915$ 14,415$ 19,966$ 23,210$ 22,494$ 28,620$ 122,620$
Betterment 14,614 9,152 18,307 17,406 9,695 4,302 73,476
Replacement 8,744 6,379 4,093 3,225 2,852 1,027 26,319
TOTAL 37,272$ 29,946$ 42,366$ 43,841$ 35,041$ 33,949$ 222,415$
(Thousands $000s)FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 TOTAL
Capital Facility Projects 28,728$ 21,672$ 34,246$ 30,407$ 21,699$ 18,082$ 154,834$
Maintenance Projects 6,716 6,830 3,520 2,325 2,250 500 22,141
Capital Purchase Projects 1,827 995 1,090 1,310 962 867 7,051
Developer Reimbursement Projects 1 99 825 350 - - 1,275
CIP Funding Source and Category
$0
$10,000
$20,000
$30,000
$40,000
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
SIX-YEAR CIP BY FUNDING SOURCE
Expansion
Replacement
Betterment
pj ,
Subtotal 37,272 29,596 39,681 34,392 24,911 19,449 185,301
FY 2011 Through FY 2015 Projects - 350 2,685 9,449 10,130 14,500 37,114
TOTAL 37,272$ 29,946$ 42,366$ 43,841$ 35,041$ 33,949$ 222,415$
$0
$10,000
$20,000
$30,000
$40,000
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
SIX-YEAR CIP BY FUNDING SOURCE
Expansion
Replacement
Betterment
$0
$10,000
$20,000
$30,000
$40,000
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
SIX-YEAR CIP BY CATEGORY
Capital Facility Projects Maintenance Projects
Capital Purchase Projects Developer Reimbursement Projects
180
2010 2011 2012 2013 2014 2015
CIP No.Description FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Total
CAPITAL FACILITY PROJECTS
P2009 PL - 36-Inch, SDCWA Otay FCF No. 14 to Regulatory Site 15,000$ 3,200$ -$ -$ -$ -$ 18,200$
P2010 PL - 24-Inch, Sweetwater Authority Perdue WTP to 36-Inch Main 135 400 1,600 1,600 - - 3,735
P2038 PL - 12-Inch, 978 Zone, Jamacha, Hidden Mesa, and Chase Upsize and Replacements 1,100 200 - - - - 1,300
P2040 Res - 1655-1 Reservoir 0.5 MG 1 1 1 78 700 795 1,576
P2143 Res - 1296-3 Reservoir 2 MG 2,000 40 - - - - 2,040
P2172 PS - 1485-1 Pump Station Replacement 1,550 25 - - - - 1,575
P2181 PL - 30-Inch, 1296 Zone, Proctor Valley Road - Proctor Valley PS/Millar Ranch 100 400 2,000 1,700 - - 4,200
P2185 Res - 640-1 Reservoir 20.0 MG 550 - - - - - 550
P2191 Res - 850-4 Reservoir 2.2 MG 435 - - - - - 435
P2203 PL - 36-Inch, 1296 Zone, Proctor Valley Road - Millar Ranch/Pioneer 120 140 800 440 - - 1,500
P2204 PL - 24-Inch, 1296 Zone, Pioneer Way - Proctor Valley/1296 Reservoirs 100 200 1,100 600 - - 2,000
P2318 PL - 20-Inch, 657 Zone, Summit Cross-Tie and 36-Inch Main Connections 1 99 230 200 - - 530
P2387 PL - 12-Inch, 832 Zone, Steele Canyon Road - Via Caliente/Campo 15 - - - - - 15
P2391 PS - Perdue WTP Pump Station (5 MGD)200 300 2,700 2,000 - - 5,200
P2430 PL - 30-Inch, 980 Zone, Proctor Valley Road - PB Bndy/Proctor Valley PS 150 450 2,400 2,200 - - 5,200
P2434 Rancho Del Rey Groundwater Well Development 1,450 1,648 - - - - 3,098
P2450 Otay River Groundwater Well Demineralization Project 20 100 500 1,000 5,000 4,400 11,020
P2451 Rosarito Desalination Facility Conveyance System 500 850 12,000 14,000 2,450 - 29,800
P2465 Regulatory Site Material Storage Bins 10 - - - - - 10
P2466 Regional Training Facility 90 60 - - - - 150
P2467 San Diego Formation Groundwater Feasibility Study 600 600 - - - - 1,200
P2471 850/657 PRS at La Presa Pump Station 80 225 - - - - 305
P2472 Water Supply Feasibility Studies 150 -----150
CIP Projects ($1,000s)
The 2010 Fiscal Year CIP Budget contains 87 projects. The costs for the work planned for Fiscal Year
2010 is $37.3 million. Of the 87 projects planned for Fiscal Year 2010, one is designated as reimbursable
project with an estimated cost of $1,000. This project is built by a developer and reimbursed by the
District.
P2472 Water Supply Feasibility Studies 150 - - - - - 150
P2473 PS - 711-1 Pump Station Improvement 325 50 - - - - 375
P2474 Fuel Storage Covers and Containment 100 - - - - - 100
P2475 Pump Station Fire Hydrant Installations 40 - - - - - 40
P2481 Middle Sweetwater River Basin Groundwater Well System 1,000 2,000 4,000 - - - 7,000
P2482 Otay Mesa Lot 7 Groundwater Well System 150 1,700 1,200 - - - 3,050
P2487 Sir Francis Helix and Otay Valley Cal American Agency Interconnections 200 - - - - - 200
P2488 Del Rio Road Helix and Otay Agency Interconnection 25 125 - - - - 150
P2489 Gillespie Drive Helix and Otay Agency Interconnection 25 125 - - - - 150
P2497 Solar Power Feasibility Study 50 - - - - - 50
P2498 Brine Disposal Pipeline Otay River Demineralization Plant to South Bay Outfall 5 10 40 100 4,000 1,445 5,600
R2048 RecPL - Otay Mesa Distribution Pipelines and Conversions 150 250 1,500 90 - - 1,990
R2053 RWCWRF - R.O. Building Remodel and Office Furniture 15 - - - - - 15
R2058 RecPL - 16-Inch, 860 Zone, Airway Road - Otay Mesa/Alta 350 775 775 700 - - 2,600
R2077 RecPL - 24-Inch, 860 Zone, Alta Road - Alta Gate/Airway 295 3,150 400 55 - - 3,900
R2081 RecPL - 20-Inch, 944 Zone, Lane Avenue - Proctor Valley/Pond No. 1 70 - - - - - 70
R2087 RecPL - 20-Inch, 944 Zone, Wueste Road - Olympic/Otay WTP 350 3,500 450 - - - 4,300
R2088 RecPL - 20-Inch, 860 Zone, County Jail - Roll Reservoir/860-1 Reservoir 5 20 200 1,700 1,510 - 3,435
R2089 North District Recycled Water Regulatory Compliance 20 - - - - - 20
R2091 RecPS - 944-1 Pump Station Upgrade 500 - - - - - 500
R2092 Dis - 450-1 Reservoir Disinfection Facility 70 - - - - - 70
R2093 MBR City of Chula Vista 50 50 50 50 1,500 3,280 4,980
R2094 Potable Irrigation Meters to Recycled Water Conversions 500 500 1,000 - - - 2,000
R2097 RWCWRF - Salt Creek Live Stream Discharge 26 160 100 - - - 286
S2018 RWCWRF - Secondary Process Automation 50 - - - - - 50
47 Total Capital Facility Projects 28,728 21,353 33,046 26,513 15,160 9,920 134,720
181
CIP Projects ($1,000s)
CIP No.Description FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Total
REPLACEMENT/RENEWAL PROJECTS
P2356 PL - 12-Inch, 803 Zone, Jamul Drive Permastran Pipeline Replacement 15 - - - - - 15
P2366 APCD Engine Replacements and Retrofits 180 190 220 200 200 200 1,190
P2382 Safety and Security Improvements 70 50 50 50 50 50 320
P2416 SR-125 Utility Relocations 40 - - - - - 40
P2440 I-905 Utility Relocations 200 63 - - - - 263
P2453 SR-11 Utility Relocations 75 175 245 - - - 495
P2456 Air and Vacuum Valve Upgrades 500 450 450 - - - 1,400
P2458 AMR Manual Meter Replacement 1,400 1,500 1,650 1,700 1,650 - 7,900
P2477 Res - 624-1 Reservoir Cover Replacement 325 100 - - - - 425
P2483 PS - 870-1Pump Motor and Switch Gear Replacement 130 - - - - - 130
P2484 Large Water Meter Replacement Program 135 100 100 100 100 - 535
P2485 SCADA Communication System and Software Replacement 265 350 300 - - - 915
P2486 Asset Management Plan Condition Assessment and Data Acquisition 300 300 200 - - - 800
P2490 1296-1 Reservoir Interior/Exterior Coating and Upgrades 340 10 - - - - 350
P2491 850-3 Reservoir Exterior Coating 290 10 - - - - 300
P2492 1296-2 Reservoir Interior/Exterior Coating and Upgrades 30 560 10 - - - 600
P2493 624-2 Reservoir Interior Coating and Upgrades 30 910 10 - - - 950
P2494 Multiple Species Conservation Plan 141 75 10 - - - 226
P2495 San Miguel Habitat Management/Mitigation Area 225 150 150 175 150 150 1,000
P2496 Otay Lakes Road Utility Relocations 75 25 - - - - 100
R2086 RWCWRF Force Main AirVac Replacements and Road Improvements 40 - - - - - 40
R2095 RWCWRF - Filter Storage Reservoir Cover Replacement 75 - - - - - 75
R2096 RWCWRF - Blower System Rehabilitation/Replacement 800 200 - - - - 1,000
S2012 SVSD Outfall and RSD Replacement and OM Reimbursement 300 130 100 100 100 100 830
S2015 Calavo Lift Station Replacement 10 - - - - - 10
S2019 Avocado Boulevard 8-Inch Sewer Main Improvement 600 1,032 - - - - 1,632
S2020 Calavo Drive 8-Inch Sewer Main Replacement 40 300 10 - - - 350
S2021 Jamacha Road 8-Inch Sewer Main Replacement 30 110 10 - - - 150
S2022 Hidden Mesa Drive 8-Inch Sewer Main Rehabilitation 5 40 5 - - - 50
S2023 Calavo Drive Sewer Main Utility Relocation 50 -----50S2023Calavo Drive Sewer Main Utility Relocation 50 - - - - - 50
30 Total Replacement/Renewal Projects 6,716 6,830 3,520 2,325 2,250 500 22,141
CAPITAL PURCHASE PROJECTS
P2282 Vehicle Capital Purchases 484 410 420 640 392 382 2,728
P2285 Office Equipment and Furniture Capital Purchases 40 20 20 20 20 20 140
P2286 Field Equipment Capital Purchases 183 65 50 50 50 15 413
P2443 Information Technology Mobile Services 150 100 100 100 - - 450
P2461 Records Management System Upgrade 100 - - - - - 100
P2469 Information Technology Network and Hardware 300 200 300 300 300 250 1,650
P2470 Application Systems Development and Integration 430 200 200 200 200 200 1,430
P2478 Administration Building Engine/Generator Set 120 - - - - - 120
P2479 Operations Yard Property Acquisition 20 - - - - - 20
9 Total Capital Purchase Projects 1,827 995 1,090 1,310 962 867 7,051
CIP No.Description FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Total
DEVELOPER REIMBURSEMENT PROJECTS
P2325 PL - 10" to 12" Oversize, 1296 Zone, PB Road - Rolling Hills Hydro PS/PB Bndy 1 49 - - - - 50
1 Total Developer Reimbursement Projects 1 49 - - - - 50
87 Total - FY 2010 Projects 37,272 29,227 37,656 30,148 18,372 11,287 163,962
19 FY 2011 Through FY 2015 Projects - 719 4,710 13,693 16,669 22,662 58,453
Grand Totals 37,272$ 29,946$ 42,366$ 43,841$ 35,041$ 33,949$ 222,415
182
CIP No.Description J/FS (1)Total FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Total
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
P2009 PL - 36-Inch, SDCWA Otay E/B 9,300$ - - 9,300 9,600 9,900 10,200 39,000$
P2010 PL - 24-Inch, Sweetwater Authority E/B 1,400 - - - - 1,400 1,400 2,800
P2037 Res - 980-3 Reservoir 15 MG E 28,200 - - - - - - -
P2181 PL - 30-Inch, 1296 Zone E/B 1,800 - - - - 1,800 1,900 3,700
P2203 PL - 36-Inch, 1296 Zone E/B 1,000 - - - - 1,000 1,000 2,000
P2204 PL - 24-Inch, 1296 Zone E/B 700 - - - - 700 700 1,400
P2235 Res - 624-4 Emergency Reservoir E 75,100 - - - - - - -
P2391 PS - Perdue WTP Pump Station E/B 51,800 - - - - 51,800 53,400 105,200
P2430 PL - 30-Inch, 980 Zone E/B 2,700 - - - - 2,700 2,800 5,500
P2434 Rancho Del Rey Groundwater Well E/B 5,700 - - 5,700 5,900 6,100 6,300 24,000
P2451 Rosarito Desalination Facility E/B 3,400 - - - - - 3,400 3,400
P2481 Middle Sweetwater River Basin E/B 9,700 - - - 9,700 10,000 10,300 30,000
P2482 Otay Mesa Lot 7 Groundwater Well E/B 3,200 - - - 3,200 3,300 3,400 9,900
P2498 Brine Disposal Pipeline Otay River E/B 2,700 - - - - - - -
P2033 PL - 16-Inch, 1296 Zone E 2,200 - - - - 1,100 2,200 3,300
P2038 PL - 12-Inch, 978 Zone B/R 1,500 - - 1,500 1,500 1,500 1,500 6,000
P2040 Res - 1655-1 Reservoir B 900 - - - - - - -
P2143 Res - 1296-3 Reservoir E 3,800 - 3,800 3,900 4,000 4,100 4,200 20,000
P2172 PS - 1485-1 Pump Station B/R 7,400 - 7,400 7,600 7,800 8,000 8,200 39,000
P2185 Res - 640-1 Reservoir E/B 37,600 - 18,800 37,600 38,700 39,900 41,100 176,100
P2190 PL - 10-Inch, 1485 Zone B 400 - - - - 400 400 800
P2191 Res - 850-4 Reservoir E/B 4,200 2,100 4,200 4,300 4,400 4,500 4,600 24,100
P2318 PL - 20-Inch, 657 Zone B 100 - - - - 100 100 200
P2357 PS - 657-1/850-1 Pump Station B (44,400) - - - (44,400) (45,700) (47,100) (137,200)
P2370 Res - Dorchester Reservoir B (4,800) - - - (4,800) (4,900) (5,000) (14,700)
P2387 PL - 12-Inch, 832 Zone B 600 500 600 600 600 600 600 3,500
P2450 Otay River Groundwater Well E/B 28,100 - - - - - - -
R2034 RecRes - 860-1 Reservoir E 7,500 - - - - - 7,500 7,500
R2048 RPLO M Diibi E 10 200 10 200 10 200
CAPITAL FACILITY PROJECTS
CIP Justification and Impact on Operating Budget
Projected Incremental Operating Expenditures (1)
R2048 RecPL - Otay Mesa Distribution E 10,200 - - - - - 10,200 10,200
R2077 RecPL - 24-Inch, 860 Zone E 3,200 - - - - 3,200 3,300 6,500
R2081 RecPL - 16-Inch, 944 Zone E 2,700 2,300 2,400 2,500 2,600 2,700 2,800 15,300
R2087 RecPL - 16-Inch, 944 Zone E 5,100 - - - 5,100 5,300 5,500 15,900
R2088 RecPL - 24-Inch, 860 Zone E/B 2,400 - - - - - 1,800 1,800
R2091 RecPS - 944-1 Pump Station Upgrade E 107,900 - 107,900 111,100 114,400 117,800 121,300 572,500
R2092 Dis - 450-1 Res Disinfection Facility E 10,700 - 5,400 10,700 11,000 11,300 11,600 50,000
Total Capital Facility Projects 384,000$ 4,900$ 150,500$ 194,800$ 169,300$ 238,600$ 269,600$ 1,027,700$
P2458 AMR Retrofit R (226,400) (36,500) (34,500) (34,700) (39,300) (40,400) (41,000) (226,400)
Total Replacement/Renewal Projects (226,400) (36,500) (34,500) (34,700) (39,300) (40,400) (41,000) (226,400)
(1)Projected Incremental Operating Expenditures(operating cost) or O&M includes labor, benefits, materials and overhead.
(2)J/FS - Justification and Funding Source - Some projects have multiple funding sources as indicated by a slash (/):
E - Expansion B - Betterment R - Replacement
O&M cost for pipes: Total annual operating cost divided by the number of feet of pipe in the system = O&M cost to maintain a foot of pipe.
This rate is then multiplied by the number of feet in new pipeline, and is increased annually for inflation.
O&M cost for a pump station: Total annual operating cost divided by the number of million of gallons a day (MGD) capacity in the system =
O&M cost per MGD. This rate is then multiplied by the MGD capacity of the new pump station. Similarly, power cost per MGD for
transmission is calculated and applied to the MGD of the new pump station. Chemical expenses are incurred for pumping at the well sites.
All estimated costs are increased annually for inflation.
O&M cost for a reservoir: Total annual operating cost divided by the number of million gallons (MG) of storage capacity in the system. This
rate per MG is then multiplied by the MG capacity of the new reservoir. Reservoirs require chemical treatment; therefore, the chemical cost
per MG is estimated and applied to the future operating cost. Both O&M and chemical costs are increased annually for inflation.
Each of the capital purchases and other types of assets has its own unique O&M cost.
REPLACEMENT/RENEWAL PROJECTS
183
CIP Justification and Impact on Operating Budget
CIP No.Description J/FS (2)Total FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Total
P2443 IT Mobile Services E/R 18,000$ 18,000 18,500 19,100 19,700 20,300 20,900 116,500$
Total Capital Purchase Projects 18,000 18,000 18,500 19,100 19,700 20,300 20,900 116,500
P2104 PL - 12-Inch, 711 Zone E 2,000 - - - - 2,000 2,100 4,100
P2107 PL - 12-Inch, 711 Zone E 1,700 - - - - 1,700 1,800 3,500
P2325 PL - 10" to 12" Oversize E 2,300 - - 2,300 2,400 2,500 2,600 9,800
P2402 PL - 12-Inch, 624 Zone E 1,000 - - - - 1,000 1,000 2,000
P2403 PL - 12-Inch, 624 Zone E 3,100 - - - - - 3,100 3,100
R2028 RecPL - 8-Inch, 680 Zone E 2,400 - - - - - 2,400 2,400
R2042 RecPL - 8-Inch, 944 Zone E 900 - - - 500 500 500 1,500
R2047 RecPL - 12-Inch, 680 Zone E 1,400 - - - 1,400 1,400 1,400 4,200
R2058 RecPL - 16-Inch, 860 Zone E 3,600 - - - - 3,600 3,700 7,300
R2082 RecPL - 24-Inch, 680 Zone E 1,200 - - - 1,200 1,200 1,200 3,600
R2083 RecPL - 20-Inch, 680 Zone E 700 - - - 700 700 700 2,100
R2084 RecPL - 20-Inch, 680 Zone E 1,900 - - - - 1,900 2,000 3,900
R2085 RecPL - 20-Inch, 680 Zone E 1,300 - - - - 1,300 1,300 2,600
Total Developer Reimbursement Projects 23,500 - - 2,300 6,200 17,800 23,800 50,100
Total Operating Budget Cost Impact 199,100$ (13,600)$ 134,500$ 181,500$ 155,900$ 236,300$ 273,300$ 967,900$
CAPITAL PURCHASE PROJECTS
DEVELOPER REIMBURSEMENT PROJECTS
The preceding schedule shows anticipated operating costs associated with each project in the CIP, and
below is a summary of each category of new costs that will be impacted. No additional revenues are
associated with the individual projects, as revenues are linked more directly to growth in water sales
and capacity fee revenues.
Projected Incremental Operating Expenditures
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Total
(14,600)$ 18,150$ 43,000$ 43,400$ 76,200$ 105,000$ 271,150$
- 98,200 105,500 78,400 124,800 128,500 535,400
1,000 18,150 33,000 34,100 35,300 39,800 161,350
(13,600)$ 134,500$ 181,500$ 155,900$ 236,300$ 273,300$ 967,900$
Note:See pages 184-185 for complete description of CIP projects.
Operations and Maintenance
Energy
Chemical
Total Operating Budget Cost Impact
Cost Category
184
Item#Amount Type
Field Equipment (CIP P2286)
N
47 Replacement of filter equipment cover at the treatment plant.R
R
R
R
N
Total of Field Equipment
Office Equipment and Furniture (CIP P2285)
Administration
46 To replace copier, printer at the Treatment Plant R
R
Total of Office Equipment
Heavy Truck
R
R
R
Subtotal Heavy Truck
Light Duty Vehicles
R
R
R
R
R
R
R
R
R
R
R
Subtotal Light Duty Vehicles
Total of Vehicles
N -NewR - Replacement Total Capital Purchases Budget
FY 2010 Capital Purchases
Capital purchases are non-recurring operating expense items for District-wide use that cost more than $10,000 each and have an estimated useful
life of two years or more. The Capital Purchase Projects include Field Equipment, Office Equipment and Furniture, and Vehicles purchases.
Vehicles (CIP P2282)
36 Ford F-150 Supercab Four-door or equivalent.23,000
Ford F-150 Supercab Four-door or equivalent.23,000
32 Ford F-250 or equivalent.
707,000$
224,000
260,000
484,000
34 Ford F-150 Supercab Four-door 4X4 or equivalent.26,000
35
23,000
33 Ford F-150 Supercab Four-door or equivalent.23,000
30 Ford F-150 Supercab Four-door or E150 Van. Vehicle assignment
due to for re-evaluation.
23,000
31 Ford Explorer 4X4 or equivalent.25,000
28 Ford Explorer or equivalent.25,000
29 Ford F-150 Supercab Four-door 4X4 or equivalent.26,000
26 Toyota Matrix.20,000$
27 Ford F-150 Supercab Four-door or equivalent.23,000
41 2009 Class 8 ten-wheel dump truck with a 10-12 yard dump bed.78,000
42 2009 Ford F550 or equivalent with a service body and pipe rack.56,000
Operations
40 2009 F550 or equivalent equipped with a custom made and
POT/engine-driven hydraulic system, 220 gallon vacuum tank, power
wash gun, racks, cabinets, and hose reels.
90,000$
38 Replacement copier.20,000
40,000
183,000
Operations
45 Five-ton cable operated power with manual extend power rotating
crane.
13,000
39 Water leak detection system consisting of eight data loggers, field
docking station, and leak correlation software.
22,000
Skid-steer wheel-loader with ripper bucket, finish bucket, and
sweeper attachments.
48,000
44 Crew truck cross-mounted air compressor.15,000
20,000$
43
75,000$
Description
Administration
37 Storage Container 10,000$
Operations
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Introduction
This section includes a brief synopsis of the District’s Reserve Policy, Investment Policy, and
Debt Policy.
The Reserve Policy is a comprehensive policy which explains how the District is operated,
including the distinction of business segments to ensure users pay their fair share of costs. It
explains how fees are collected and what they are used for. It also explains the difference
between funds, as well as how transfers shall be made, and defines each reserve target funding
level. The District adopted this new policy in March 2006.
The following chart depicts the detailed flow of funds that may be useful in understanding the
Reserve Policy.
Summary of Financial Policies
186
Investment Policy is a guideline for the prudent investment of cash. It follows government
code as well as authority granted by the Board of Directors. The primary objectives, in order
of significance, are to invest safely, with adequate liquidity, and to achieve sufficient return on
investments. This policy was revised and adopted by the Board in September 2006 and
received a Certification of Excellence Award from the Association of Public Treasurers of the
United States and Canada (APT US&C).
The Debt Policy establishes that debt financing will only be used for capital Improvement
Projects (CIP), which have an extended useful life on ten years or longer, and that exceed the
District’s ability to be funded with current resources such as annual cash flow, fund balances,
or reserves. Additionally, the life of a project is expected to exceed the term of the financing.
The District strives to maintain the highest possible credit ratings for all categories of long-
term debt that can be achieved without compromising delivery of basic services and the
achievement of district policy objectives. This policy was revised and adopted by the Board in
January 2007 and receive a Certification of Excellence award from the Association of Public
Treasurers of the United States and Canada (APT US&C).
187
Reserve Policy
1.0 The District
The Otay Water District is a publicly-owned water and sewer service agency, more specifically,
a California special district, authorized in 1956 by the State Legislature under the provisions of
the Municipal Water District Act of 1911. The District is a "revenue neutral" public agency,
meaning each end user pays its fair share of the District's costs of water acquisition, construction
of infrastructure and the operation and maintenance of the public water facilities.
The District operates three distinct business segments:
• Potable water
• Recycled water
• Sewer
Each of these business segments has a distinct customer base. In addition, the developer
community, large and small, makes up a significant class of customer for each business segment.
As a result, the District has four distinct customer service types:
• Developers
• Potable water users
• Recycled water users
• Sewer users
The District has established practices and developed computer systems that have enabled the
District to maintain a clear separation between these service costs. Regardless of customer class,
financial principles regarding cost allocation and fund accounting are fundamental to the
District’s Reserve Policy. These principles are derived from the statements of the Governmental
Accounting Standards Board (GASB), and from oversight and advisory bodies such as the
California State Auditor, the Little Hoover Commission, and the Government Finance Officers
Association (GFOA). These have significant impacts on how the finances of the District are
organized and how financial processes work within the organization.
1.1 The District’s Use of Funds
All of the District’s expenditures fall into two broad categories: operating costs and capital
expenditures. The Operating and Maintenance (O&M) expenditures generally support the
purchase and delivery of potable and recycled water, and the transportation and treatment of
sewage. The capital expenditures support the construction of infrastructure necessary to deliver
service. The District uses various reserves to support the operating and capital efforts. Capital
infrastructure is funded using two methods: pay-as-you-go or debt issuance (requiring annual
debt service). The Capital Improvement Program (CIP) and the two funding methods support
the construction of infrastructure in all three business areas: potable, recycled, and sewer. Both
the capital and operating efforts within the District are different for each of the four distinct
customer types.
188
The District uses a set of funds to accumulate and account for revenues allocated to different
activities. Those funds receive funding up to the levels defined in this policy. Each year, as a
part of the annual budget process, the District’s rate model is updated for each fund with the
current fund balances and the estimated revenues and expenditures for the next six years. The
expenditure or funding requirements are then evaluated to ensure that the existing fund levels
and additional revenues are sufficient within the current budget cycle and the next five years. If
a deficit is identified, then options for transfers, debt, and/or rate increases are evaluated.
1.2 The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all facilities within the three business segments
are allocated to three cost areas: Expansion, Betterment, and/or Replacement. The funding
allocation for these three cost areas is defined in the District’s Capital Improvement Program
(CIP) and is determined by an engineering analysis which identifies which type of customers will
benefit from the facility. Expansion is for new customers, betterment is for existing customers
where the facility is improved, and replacement is for existing customers where the facility is
replaced. If an expansion capital project also results in
betterment or replacement, the costs are allocated to
new users (Expansion) and existing users (Betterment
and Replacement) so that the developers will only pay
the expansion portions. This policy protects both the
developing and established areas from incurring
inappropriate costs. Developing areas are not required
to finance facilities that are due for replacement or
betterment; conversely, established areas are not
required to replace facilities before they are worn out
simply because of new development. Each facility has
the potential to be classified into all three categories to
various degrees. In addition to these standard
categories there are occasional CIPs that may be
billable to a third party such as relocations.
a. Expansion Fund
The portion of a project that benefits new users is funded by the developing areas through
capacity fees. Future expansion costs are divided by all future connections to calculate the
capacity fee. This capacity fee is the primary funding source for expansion projects and is
accounted for separately and used solely for the planning, design, and construction of expansion
facilities. The majority of the funding sources are restricted in nature with the exception of the
general use funds placed into the Designated Expansion Fund.
b. Betterment Fund
The District may construct a project that results in a significant benefit to existing users.
Facilities that improve reliability or meet new or increased standards of service are considered
betterment facilities. In such a case, user rate charges and betterment fees could be used as a
funding source for that portion of the project that results in a lowering of overall operation and
maintenance costs or an improvement to the existing users. Betterment may also be a result of
increased standards or regulations on water or sewer systems. If the existing system must be
improved in order to meet the new standards this cost is a betterment cost. The majority of the
189
funding sources are restricted in nature of their use and the geographic area of use, with the
exception of the general use funds placed in the Designated Betterment Fund.
c. Replacement Fund
Replacement of facilities is funded primarily by
general user rates. The portion of a project that
benefits existing users is funded by the
Replacement Fund. It is expected that the
District will debt finance a significant portion
of the future replacement facilities. The
District has a Debt Policy (Policy No. 45) that
guides the debt issuance process. The
replacement reserve will serve as an immediate
funding source for replacement projects and
will provide the necessary flexibility to begin
projects while the appropriate debt financing is
being obtained.
1.21 Relocations
Occasionally, relocation of facilities is required when the District has easements for the pipe
location. When a project is relocated, the cost of the new facility shall be funded by the party
without an easement or if no parties have easements then it is funded by the party causing the
relocation. When this occurs, a CIP project may be created which is wholly or partially funded
by a third party who must reimburse the District for the cost of the relocation. Depending on the
nature of the facilities, the funding source for these projects could be from replacement,
expansion, betterment or third party funding of projects at the District. Each project is
individually negotiated. When determining how much this fund will pay for construction, the
following guideline is suggested: If a project has more than five years of useful life remaining
then funding is incremental, if there is less than five years remaining funds are contributed from
the Replacement Fund on a pro-rata basis.
1.22 Oversizing
In some cases, where reasonable, the developer may be required by the District to oversize new
facilities for future development in order to obtain economies of scale. The developer will be
reimbursed for incremental over-sizing costs as per Policy No. 27. These reimbursements are
only for backbone facilities funded by capacity fees - not for the distribution system within a
development which is an obligation of the developer separate from the capacity fees. These
smaller distribution pipes serving the individual homes within a development are often referred
to as “in-tract” pipelines.
1.23 Exclusion of Developed Areas from Expansion Costs
Developed areas are considered to have sufficient supply and capacity to meet their current
requirements as provided by the developers. In addition, they are considered to have borne
capital financial costs that are at least proportionate to the benefits they have received from
capital facilities. Accordingly, no regional capital financial costs are allocated to these areas so
that they will not incur any costs for newly developing areas. In the case of a capital project that
produces District-wide cost savings, however; the District may provide financial support to new
facilities.
190
1.24 Improvement Districts (IDs)
Improvement Districts are established in order to facilitate the funding of a particular
improvement by the specific beneficiaries. The District has a number of Improvement Districts
that were established for General Obligation (GO) debt repayment. Many of these GO issuances
have been paid off and, as outlined in the Debt Policy, it is unlikely that the District will issue
additional GO debt. IDs continue to be used for other funding purposes. First, to distinguish
sewer customers from water customers on the county tax roll; second, to place parcels on the
county tax roll for the collection of availability fees; third, for the charging of special water rates;
and fourth, to track which properties have paid annexation fees.
Over the years, the District has taken a district-wide perspective to funding improvements. This
philosophy is evident by the district-wide capacity fee and annexation fee. The District also uses
district-wide water rates. As time continues, it is expected that IDs will continue to outgrow
their purpose. So, while many IDs remain their use will diminish over time.
1.3 The Purpose of the Policy
Public entities accumulate and maintain reserves to ensure both
financial stability and the continuation of the ability to provide
services. Financial stability and the increase in credit quality that
result from stability allow the public entity to weather times of
uncertainty and the impacts of negative events, both major and
minor. Funded reserves allow for the continued maintenance of
property and payment of expenses beyond the magnitude of the
funds available in a single fiscal period. In the final analysis, the
type and level of reserves are driven by the type and magnitude of
uncertainty faced by the District.
A “reserve” has a number of meanings:
• Working capital required to insure timely payment of
obligations
• A buffer against volatility in revenues
• Liquidity required to obtain other goods and services (e.g.,
bank services)
• Designated funds to protect creditors
• Funds set aside to replace assets at the end of their useful lives
• Funds set aside to repair or replace assets damaged or destroyed at unanticipated times
It is important to note that reserve, fund balance, and net assets are not the same. Fund balance
and net assets are accounting terms and may not always be in the form of cash or liquid
investments. Fund balances and net assets may not always be reserves unless a designation of all
or a portion of fund balance is made. It is important to note that the term, fund balance was
recently replaced by net assets as codified by the Governmental Accounting Standards Board
(GASB).
191
In short, reserves are the liquid assets of the District, accumulated and maintained for application
to fund contingent future activities, whether known or unanticipated, operating or capital in
nature. The District’s Reserve Policy governs the management and use of these funds. Few
policies have a more significant impact on the financial health and stability of the District. This
policy explains several key financial concepts used by the District and provides some
background information to the overall strategies and practices utilized. The District has a
fiduciary obligation to its customers to manage and direct the use of public funds for the purpose
of providing water and sewer services in an efficient and financially sound manner.
1.4 Policy Guidelines
In 2000, the Little Hoover Commission reviewed the levels of reserve funds for special districts
in California and prepared a report reflecting that special districts were accumulating
unreasonable levels of funds. As a proactive response, the California Special Districts
Association (CSDA) prepared Reserve Guidelines for its members. The Reserve Guidelines
were significant in noting that reserve levels need to be in context of the organization’s overall
business model and capital improvement plan.
There are a number of potential events which the District should consider in the development of
reserves:
• Economic Uncertainty—performance of the regional economy and the impact of that
performance on demand for water
• Weather—the amount of rainfall and the impact of weather on the availability and the cost of
water
• Government Mandates—the impact of federal and state regulation, particularly
environmental regulation
• Tax Changes—Limitations on the District’s taxing and spending powers through the passage
of a voter referendum, the impound of District property taxes or the removal of the District’s
power to levy property taxes, further increases to ERAF contributions or changes in
calculation methodology
• Operating Costs—Increases in operating and maintenance costs because of inflation, labor
agreement or other modification
• Force Majeure—Unanticipated expenditures resulting from natural disasters or intentional
acts
• Emergency Maintenance—Unanticipated expenditures resulting from unexpected failure of
assets (e.g. rupture in the primary transmission system)
• Unexpected Variation in Cash Flow—the incidence of additional costs or decreased revenues
that requires short-term borrowing in the absence of sufficient funds
The California State Auditor has, in its oversight role, offered a number of quality
recommendations for the development of reserve policies as outlined in its report entitled,
“California’s Independent Water Districts: Reserve Amounts Are Not Always Sufficiently
Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004,
2003-137. Each of these recommendations has been incorporated into this policy in an effort to
address key issues surrounding the management and use of District reserves. The detailed
objectives as identified by the State Auditor are as follows:
192
• Distinguish between restricted and unrestricted reserves
• Establish distinct purposes for all reserves
• Set target levels, such as minimums and maximums, for the accumulation of reserves
• Identify the events or conditions that prompt the use of reserves
• Conform with plans to acquire or build capital assets
• Receive Board approval and be in writing
• Require periodic review of reserve balances and rationale for maintaining them
Yet, the State Auditor’s report acknowledges that the California Constitution (Article XIII B,
Section 5) is vague in its provisions governing the accumulation and use of reserve. Specifically,
the Constitution states that “each entity of the government can establish contingency, emergency,
reserve, or similar funds as it deems reasonable and proper.1” Similarly, the State’s Water Code
does not impose any requirements as to specific or recommended reserve fund levels. As a result,
the public finance community as a whole has yet to settle on any real objective standards for the
level of reserve funds appropriate for governmental enterprises. This lack of consensus as to
specific standards is indicative of the wide variance of the financial and operations contexts for
different districts and different contingencies justifying reserve of funds.
The Government Finance Officers Association (GFOA) in its Recommended Practice on
Appropriate Level of Unreserved Fund Balance in the General Fund (2002) states:
In establishing a policy governing the level of unreserved fund balance in the general
fund, a government should consider a variety of factors, including:
• The predictability of its revenues and the volatility of its expenditures (i.e., higher
levels of unreserved fund balance may be needed if significant revenue sources are
subject to unpredictable fluctuations or if operating expenditures are highly volatile).
• The availability of resources in other funds as well as the potential drain upon general
fund resources from other funds (i.e., the availability of resources in other funds may
reduce the amount of unreserved fund balance needed in the general fund, just as
deficits in other funds may require that a higher level of unreserved fund balance be
maintained in the general fund).
• Liquidity (i.e., a disparity between when financial resources actually become
available to make payments and the average maturity of related liabilities may require
that a higher level of resources be maintained).
• Designations (i.e., governments may wish to maintain higher levels of unreserved
fund balance to compensate for any portion of unreserved fund balance already
designated for a specific purpose).
In the preparation of this policy, each of the CSDA guidelines and the GFOA recommendations
has been considered. In addition, all seven objectives provided by the State Auditor are
specifically addressed for each reserve. The District wholly supports the State Auditor’s efforts
to bring a high-level of quality to reserve governance and establishing a standard of performance.
1 California State Auditor, Bureau of State Audits, “California’s Independent Water Districts: Reserve Amounts Are
Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004,
2003-137; p. 8.
193
The District recognizes that the customer pays for services provided. Quality management
requires that periodic valuations be performed so that fees and charges can be set at appropriate
levels to recover the cost of service. The District’s Reserve Policy has been drafted with
consideration of the GFOA, CSDA, and State Auditor general guidelines as provided above. In
addition, the District has adopted the following principles in the management of its funds:
• Funds are held and used only for the purpose for which they are collected. This is done to
maintain equity between customers.
• Each of the service types is tracked separately so that expenditures and revenues can be
monitored and evaluated for each customer type. This provides the District with the
necessary information to appropriately charge for each of the services.
• Separation of O&M from capital expenditures occurs within each of the service types. This
is done because the funding of these expenditures is often on different timelines or use
different funding sources.
• The District will hold its reserve at responsible and prudent levels. This policy sets
minimum, maximum, and target levels for each of the various funds. This has been done so
that the District can maintain funds to meet the purpose for which the funds were established.
The levels are set by reference to line items in the District’s financial statements and
approved budgets. This allows reserve levels to adjust to the District’s changing financial
circumstances.
• Debt financing of facilities provides intergenerational equity and maintains rates at
reasonable levels. This equity is accomplished with the long-term financing by spreading the
cost of facilities over the life of the facilities. The burden to pay for facilities is then paid by
those who use them. Optionally, the District could amass significant reserves by pre-
collecting funds in a Replacement Reserve Fund allowing the District to cash fund all
replacements. In order to obtain those funds, significant rate increases would be required,
burdening the current customers and creating reserve levels difficult to defend to the
ratepayers or other oversight entities.
These concepts are fundamental to the way the District manages its funds and have a direct
impact on the way rates and charges are set. The District performs annual budget evaluations
and updates its rate study model on at least an annual basis to monitor and adjust the various
funds and revenue sources. The separation, tracking, and projecting of the various funds and
expenditures create the essential information necessary for the equitable rate structure
maintained by the District. The annual review preserves the balance between services provided
and the prices charged. This review also insures that funds will be available to continue to serve
the District’s customers.
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Sources of Funds
2. 0 Developers
a. Meter Installation Charges (General Use)
Meter fees are charges collected for new water service connections. Fees vary depending upon
meter size and type of service. The costs associated with meter installations are included in the
Operating Expenses section of the budget. These charges are funded by developers.
b. Annexation Fees (General Use)
Annexation Fees are outlined in Section 9 of the Code of Ordinances. This is the buy-in to the
District’s potable and recycled water facilities paid by the developer and based on the excess
capacity built by existing users. This fee insures that future users fund a portion of the facilities
that were sized and built for their future use by prior customers. The annexation fees are general
use funds and help to offset current customer costs. The calculation of the fee uses a system-
wide evaluation that combines the potable and reclamation systems. This methodology is used
because the two water systems work hand-in-hand, the recycled system brings a new supply of
water to the District reducing the need for potable systems and the higher cost of obtaining new
potable supplies.
c. Developer Deposits (General Use)
These deposits are for the engineering and operations services provided to developers. They are
tracked separately for each developer and any excess amount is returned to the developer.
d. Capacity Fees (Restricted)
The capacity fee is outlined in Section 28 of the Code of Ordinances. Capacity fees are based on
the estimated construction cost of expansion divided by the number of future Equivalent
Dwelling Units (EDUs). The capacity fee covers costs including, but not limited to, planning,
design, construction, and financing associated with facilities for the District’s expansion needs.
Ultimate facility needs are based on projected land use planning. These needs and the projected
costs change over time as regulatory agencies determining land use make changes. Significant
variations in future land use occur and can alter projected facility requirements. As these
changes occur, the District will review the capacity fee calculation. These fees are paid by
developers.
The District’s construction of infrastructure occurs prior to the addition of EDUs. This serves
two purposes: one it ensures that the District can serve the pending construction as it is
completed; two, it is more efficient to oversize many facilities at the outset rather than build for
the current need and then reconstruct when the future need is realized. As a result of this
strategy, the District has financed construction with bond financing as the existing expansion
funds are depleted.
The capacity fee is calculated based on the expansion costs of the combined recycled and potable
water systems needs. This methodology, just like the annexation fee methodology, is used
because the two water systems work hand-in-hand. All capacity fees can be used for either
195
DIAGRAM 2.0:
Flow of Funds – Developer Sources
potable or recycled but only for expansion needs. So, while capacity fees are not restricted
separately, one portion for potable and the other portion for recycled, they are tracked separately.
2.1 Customers/Users
a. Uniform Rates and Charges (General Use)
Charges to users for water, sewer, and recycled water are uniform throughout the District for
similar customer types. This policy reduces possible misunderstanding that might occur among
customers if rates varied between geographical areas. It also provides for an administratively
straightforward billing process.
b. Monthly System Fees (General Use)
This is a fixed revenue source that is charged monthly. The amount of the charge is based on the
meter size.
c. Energy Charges (General Use)
The energy pumping fee is $0.034 per unit of water for each 100 feet of lift, or fraction thereof,
above the base elevation of 450 feet. This charge is placed on the monthly water bills of all
water customers.
d. Penalties (General Use)
Penalties are added to the monthly water and sewer bills for late charges, locks, etc.
e. Pass-through Fixed Charges (General Use)
A fixed monthly charge to the District’s customers intended to collect sufficient funds to pass-
through the increased fixed cost from CWA and MWD.
DEVELOPERS
Annexation Fees Developer DepositsMeter Installation
Charges
Unrestricted and Undesignated (General Use) Fund
Designated Funds Restricted Funds
Capacity Fees
196
f. Special Rates and Charges (Restricted)
In addition to the uniform water charges, the District currently has five special water rates and
one sewer rate. The five water rates are all for construction, installation, and maintenance of
water storage reservoirs, pump stations, and water lines in the respective areas. Each of these is
listed as follows:
• North District water charge (code section 25.03H)
• ID 9 water charge (code section 25.03I)
• ID 3 water charge (code section 25.03J)
• ID 10 water charge (code section 25.03J)
• La Presa water charge (code section 25.03J)
• Russell Square sewer charge (code section 53.04C)
When these rates were established they were for the
specific purpose of constructing, installing, and
maintaining the water and sewer systems in the areas that
they were collected. Therefore, these are Restricted
Funds by geographic area as well as by purpose. These
fees however, can be used for maintenance, unlike the
availability fees. These six special fees along with
availability fees are tracked separately, by geographic area, so they can be evaluated for the
target funding levels separately. To meet this need, each special rate and charge is accounted for
in a “sub-fund” of the betterment fund.
g. Temporary Meter Fees (General Use/Restricted)
Water charges, in lieu of capacity fees, are charged on temporary meters. This is done because
while temporary meters use system capacity they are not charged a capacity fee. Temporary
water use is charged at two times the water rate with the added charge placed in the Restricted
Expansion Fund. The primary users of these temporary meters are developers however; general
customers also use these for various purposes.
197
2.2 County-Collected Taxes and Fees
a. General Levy Property Tax Receipts (1% Property Tax) (General Use)
In 1978, Proposition 13 limited general levy property tax rates for all taxing authorities to a total
rate of one percent of the assessed value. Subsequent legislation, AB 8, established that the
receipts from the one percent levy were to be distributed to taxing agencies proportionate to each
agency’s general levy receipts prior to Proposition 13. Funds received are for general use.
b. Availability Charges (General Use/Restricted)
The District levies availability charges each year in developed and undeveloped areas. Current
legislation provides that any amount up to $10 per parcel is general use and any amount over $10
per parcel is restricted to be expended in and for that Improvement District (ID). IDs were
formed to provide the lowest cost funding possible for the development of water and sewer
systems. Accordingly, the District may use any amount over $10 to develop water and sewer
systems which are either, expansion, betterment, or replacement. This portion is geographically
restricted and restricted by purpose. The Restricted Funds are accounted for in “sub-funds” of the
Betterment Fund (see 2.1 f.).
Availability fees can be used for the development of facilities consistent with the purpose of the
ID which they are collected in, while special rates and fees can also cover the maintenance of
those facilities. As charges are incurred on these projects the respective IDs are charged
reducing the betterment fund. In the event that funds are not used, the Restricted Funds must be
returned to the property owners that paid them. Therefore, the monies in this fund may only be
used to finance the construction, installation, and maintenance of the systems within the
geographic area of the specific IDs. The District has historically used these funds for
CUSTOMERS / USERS
Energy ChargesMonthly System
Fees
Uniform Rates
and Charges
Unrestricted and
Undesignated
(General Use)
Fund
Designated Funds Restricted Funds
Penalties
Pass - through
Fixed Charges Temporary
Meter Fees Special Rates
and Charges
DIAGRAM 2.1: Flow of Funds – Customer Sources
198
betterment capital facilities however, they are available for any facility construction purpose
benefiting the ID whether replacement, betterment, or expansion.
Each year the District sends notices to all new customers informing them of the availability fees
and their purpose. This notice also informs the customers of the date and time of the public
hearing to receive public comment on this fee. The availability fees are split between the
Betterment Fund and the General Fund.
c. State Loan Assessment (Restricted)
The District assesses a $54 charge per unit of sewer service each year on the sewer customers.
This is collected via the County Tax Roll and is specifically collected for the repayment of the
State Loan.
d. General Obligation (GO) Bond Assessments (Restricted)
The District occasionally issues GO debt and establishes an Improvement District for the
repayment of that debt. When this financing method is used, the County Tax Roll can be used to
collect funds and pay debt obligation
.
COUNTY-COLLECTED TAXES AND FEES
State Loan
Assessment
Availability
Charges
General Levy
Property Tax
Receipts
Unrestricted and
Undesignated
(General Use)
Fund
Designated Funds Restricted Funds
General Obligation
Bond Assessments
DIAGRAM 2.2: Flow of Funds – County Collection Sources
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2.3 Miscellaneous Income
a. Miscellaneous Rents and Leases (General Use)
Revenues received from the rental and lease of District property. There is also a one-time fee
charged with the set-up of each new lease. The District incurs expenses related to these rents and
leases and this fee’s purpose is to recover the cost to set up the lease.
b. Sewer Billing Fees (General Use)
Fees received from the City of Chula Vista for processing and billing of their sewer customers
within our District.
c. Interest Income or Expense Allocation (General Use, Designated, and Restricted)
Interest income (expense) will be allocated each month based upon each fund's month-ending
balance.
MISCELLANEOUS INCOME
Interest Income
or Expense
Allocation
Sewer Billing FeesMiscellaneous
Rents and Leases
Unrestricted and
Undesignated
(General Use)
Fund
Designated Funds Restricted Funds
DIAGRAM 2.3: Flow of Funds – Miscellaneous Income Sources
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DEBT PROCEEDS
Certificates of
Participation
General Obligation
BondsLoans
Unrestricted and
Undesignated
(General Use)
Fund
Designated Funds Restricted Funds
2.4 Debt Issuance
a. Loans (General/Restricted Use)
As the District determines that additional funding is required for a particular purpose the option
of borrowing is considered. The determination to borrow is made as a part of the annual rate
model update and is evaluated in accordance with the Debt Policy before it is recommended to
the Board for action. As an option to bond indebtedness, loans are available especially to satisfy
short tern financing needs. These loans may or may not be contractually restricted for a
particular purpose.
b. General Obligation (GO) Bonds (Restricted)
As the District becomes more developed it becomes less likely that GO debt will be used as it
requires a vote of the public to be approved. Bond proceeds are restricted for the construction of
those facilities identified in the GO bond issuance. Occasionally, specific portions of bond
proceeds may be allocated for the repayment of the principal and interest, also called debt
service, on these bonds. As the District determines that additional funding is required for a
particular purpose, the option of debt issuance is considered. The determination to issue debt is
made as a part of the annual rate model update and is evaluated in accordance with the Debt
Policy before it is recommended to the Board for action.
c. Certificates of Participation (Restricted)
General revenues of the District are pledged as security for COPs indebtedness. Before issuing
COPs, the District will determine that additional funding is required for a particular purpose, the
option of debt issuance is considered. The determination to issue debt is made as a part of the
annual rate study update and is evaluated in accordance with the Debt Policy before it is
recommended to the Board for action. This form of financing has become the industry’s
preferred form of financing as it does not require a vote of the general public.
DIAGRAM 2.4: Flow of Funds – Debt Issuance Sources
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2.5 Inter-fund Transfers
Each year in the budgeting process future reserve levels are projected over the next six years.
Based on these projections, fund transfers are recommended. Monies may be transferred
between Unrestricted and General Fund (see 4.0 “Funding Levels” and 4.1 “Fund Transfers”).
Funds may not be transferred to or from any of the restricted funds.
Fund Types
3.0 General Funds
a. Purpose
The General Fund is neither restricted nor designated. The District maintains only one General
Fund for each business segment (water, sewer, and recycled). This fund holds the working
capital and emergency operating reserves. This fund can be used to supplement the District’s
rates and charges and be a temporary source of revenue to balance the Operating Budget and
avoid spikes in the rates or significant and abrupt increases. This would only occur if there was a
temporary need for funds that would smooth out a rate spike or to ramp up what would otherwise
be a dramatic rate increase.
This fund also plays a role in the debt planning of the District. It is an industry practice to have a
fund that can be used to stabilize rates. This fund is viewed by the debt markets as a
commitment by the District to ensure financial stability of the rates and charges of the District.
The District is anticipated to issue a number of debt issuances over the years and this fund will
help the District not only to stabilize rate fluctuations but also access low cost financing for
future projects.
While the General Fund has a short-term focus to fund the District’s annual operations, it is
supported by the six year rate model. This fund is primarily used to fund the operations of the
District however; it can be used for any District purpose.
b. Sources
Meter installation charges, annexation fees, temporary meter fees, uniform rates and charges,
monthly system fees, energy charges, penalties, pass-through fixed charges, general levy
property tax receipts, availability charges, miscellaneous rents and leases, sewer billing fees,
interest incomes or expense allocation, loans, and a portion of the temporary meter fees.
c. Levels
i. Minimum Level – The minimum funding level for the General Fund is three months of
operating budget expenses.
ii. Maximum Level – The maximum funding level for the General Fund is nine months of
operating budget expenses. In the event that this fund exceeds the seven month level, the
excess will be evaluated or transferred to one or more of the designated funds.
iii. Target Level – The target level of funding is three months of operating budget expenses.
In the event that the fund drops below the target level rate increases or fund transfers would
be considered.
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3.1 Designated Funds
a. Purpose
Designated cash funds are “general use” funds that have been set apart by Board action for a
specific purpose. These funds can only be used for those purposes. However, these funds are at
the discretion of the Board and can be used for any other District purpose by an action of the
Board. The District maintains designated cash funds as follows:
• Other Post Employment Benefits Fund (OPEB)
• Designated Expansion Fund
• Designated Betterment Fund
• Replacement Fund
Detailed descriptions of the funds are as follows:
i. Other Post Employment Benefits Fund (OPEB)
The OPEB Fund is used to fund the medical benefits of qualified retirees as outlined in the
District’s benefits plan. It is fully funded by user rates. Every two years the fund is
evaluated for additional funding requirements. Changes in the actuarial valuation may
result from changes in benefit levels, employee population, costs of health insurance, or
general market conditions.
These funds are currently designated but may be placed into a trust effectively removing
the District’s day-to-day access to the funds. This would allow the funds to offset the
actuarial liability of the District to fund OPEB. However, these funds are currently
designated and therefore, may be used at Board direction for any purpose.
ii. Designated Expansion Fund
The purpose of this fund is to supplement the financing of expansion projects. In the event
the restricted expansion funds are not sufficient to fund the expansion projects these funds
may be used. This fund must be evaluated in conjunction with the Restricted Expansion
Fund as they work in concert.
There is significant interdependency between the District’s potable and recycled water
systems. For this reason, the two systems are supported by one combined capacity fee. The
same capacity fee is charge on all water connection regardless of whether they are potable
or recycled. For this reason the Restricted and Designated Expansion Funds for these two
business segments must be considered jointly when using the rate model and setting fees.
The District currently has not sewer expansion and therefore has no sewer capacity fees and
no active sewer expansion funds.
This fund contains general use funds and at the direction of the Board may be used for any
District purpose.
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iii. Designated Betterment Fund
The purpose of this fund is to supplement the
Restricted Betterment Fund for sewer, water, or
recycled. The District maintains three separate
designated betterment funds, one for each
business segment. In the event a Restricted
Betterment Fund is not sufficient to fund
betterment projects this fund will be used. This
fund must be evaluated in conjunction with the
Restricted Betterment Fund as they work in
concert. When considering the funding levels f
or betterment funds there are multiple sub-funds
within betterment that must be individually
considered (see 2.1 f.). This is a general use
fund and at the direction of the Board may be
used for any District purpose.
iv. Replacement Fund
The purpose of this fund is to pay for the
replacement of capital infrastructure and capital
purchases. This is a Designated Fund and was
created to meet a portion of the District’s
replacement needs. This fund is not to be used
for the replacement of non-capital items. Debt
financing of replacement will be the primary
source of funds for replacement however; this
reserve is established to fund a portion of
replacement and ensure that necessary
replacements will occur regardless of the
immediate availability of the debt markets.
With the District’s development of its financial
systems and the greater need and ability to
separate funds, the Replacement Fund has been
separated into three funds: water, recycled, and
sewer.
Projects undertaken solely for the purpose of
replacing major capital equipment or facilities,
i.e., where the cost exceeds $10,000 for capital
purchases or $20,000 for infrastructure items,
generally are not considered normal maintenance.
Where the cost is below $10,000 the costs are
financed annually as operational maintenance.
As charges are incurred on a replacement project
the funds are deducted from the Replacement Fund
on a monthly basis.
This is a Designated Fund and may be redirected for any purpose at Board direction.
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b. Sources
The sources of funding for designated funds are limited to interfund transfers from available
unrestricted funds (see 3.0 b.) and interest earnings on fund balances within designated funds.
Unrestricted funds may come from other designated funds or from the General Fund. The
operating budget is another source of designated general revenues. As a part of the normal
budget process the general revenues are sufficient to fund a significant portion of the ongoing
needs of the designated funds.
c. Levels Other Post Employment Benefits Fund
A. Minimum Level – Fully funded as identified
under the actuarial study of the District’s OPEB
liability.
B. Maximum Level – Fully funded as identified
by an actuarial study. In the event that the fund is
over funded, the District will target for the full
funding within five (5) years reducing the annual
funding levels.
C. Target Level – Fully funded to meet the actuarially defined valuation. In the event that
the fund is not fully funded, the District will target for full funding within five (5) years by
increasing funding levels. This increased funding would be in the form of either annual
budget funding or fund transfers.
i Designated Expansion Fund
A. Minimum Level – As the District matures the CIP will move to purely replacement
projects. As the District moves through its lifecycle the need for expansion funds will
decrease and eventually be reduced to zero. When considering the funding of expansion
the Restricted Expansion Fund and the Designated Expansion Fund work in concert and
must be considered jointly.
B. Maximum Level – The maximum level of this fund is limited to five years of unfunded
expansion needs as described in the District’s CIP Budget. To determine the unfunded
amount the total expansion costs must be reduced by the projected restricted expansion
revenues. Bond financing is expected to fund a large portion of expansion.
C. Target Level – In order to facilitate debt financing of expansion, it is important that the
expansion funds retain a reserve of six months prior to any attempt to obtain bond
financing. This reserve allows the District the time necessary to issue additional debt
without running out of expansion funds. If the combined expansion funds drop below six
months of expenditures this would trigger either a transfer of general use funds or a
borrowing of funds with a bond sale. Bond funds would be placed in the Restricted
Expansion Fund while transfers would be placed in the Designated Expansion Fund. If
the combined expansion funds exceeded target the District should considered the need to
reduce capacity fees or transferring designated funds to meet another purpose.
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ii. Designated Betterment Fund
A. Minimum Level – As the District matures the CIP will move to purely replacement
projects. As the District moves through its lifecycle the need for betterment funds will
decrease and eventually be reduced to zero. When considering the funding of expansion
the Restricted Betterment Fund and the Designated Betterment fund work in concert and
must be considered jointly.
B. Maximum Level – The maximum level of this fund is limited to five years of unfunded
betterment needs as described in the District’s CIP Budget. To determine the unfunded
amount the total betterment costs must be reduced by the projected restricted betterment
revenues. Bond financing is expected to fund a large portion of betterment.
C. Target Level – In order to facilitate debt financing of betterment, it is important that the
betterment funds retain a reserve of six months prior to any attempt to obtain bond
financing. This reserve allows the District the time necessary to issue additional debt
without running out of betterment funds. When considering the funding levels for
betterment funds there are multiple sub-funds within betterment that must be individually
considered (see 2.1 f.). If the combined betterment funds drop below six months of
expenditures this would trigger either a transfer of general use funds or a borrowing of
funds with a bond sale. Bond funds would be placed in the Restricted Betterment Fund
while transfers would be placed in the Designated Betterment Fund. If this target is
exceeded, then the District should evaluate reductions in the special water rates and
availability fees and also consider transfers to other funds.
iii. Replacement Fund
A. Minimum Level – The minimum level of funding is 3% of the historical value of
existing assets as identified in the District’s current financial statement.
B. Maximum Level – The maximum level of funding is 6% of existing assets. In the event
the maximum level is exceeded in any year, then the excess will be transferred as per the
general transfer guidelines found in Section IV.
C. Target Level – The target level of funding is 4% of existing assets. In the event that the
fund falls below the recommended target level, transfers or operating revenues would be
shifted to support the Replacement Funds. The District will act based on the annual five
(5) year rate study to insure that at the end of that planning horizon the fund exceeds the
minimum level and is approaching the target level.
3.2 Restricted Funds
a. Purpose
Restricted cash funds are those that are legally set aside for a particular purpose and cannot be
used for any other purpose. The District maintains three Restricted Funds:
• Restricted Expansion Fund
• Restricted Betterment Fund
• Debt Reserve Fund
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The definition and purpose of each of these funds is described below:
i. Restricted Expansion Fund
The Restricted Expansion Fund works hand-in-hand with the Designated Expansion
Fund. When evaluating the need for additional funding, both the restricted and
designated funds must be considered as one fund. The sole purpose of this fund is to
construct potable, recycled, and sewer facilities to the extent they serve the expansion
needs of the District. Recycled and potable are jointly accounted for as these water
systems work in concert. The sewer expansion is accounted for separately but is
currently inactive as there is no sewer expansion.
This fund is restricted by law and therefore is a Restricted Fund that can be used for no
other purpose. Government Code section 66001 requires that these funds be accounted
for separately and upon request that an accounting be provided. In addition, five years
after the first deposit into the account or fund, the Code requires the District make
specific findings regarding any unexpended funds, whether those funds are committed to
expenditure or not (Government Code
section 66001). The same findings
must continue to be made once every
five years thereafter. If the findings are
not made, the statute requires the
District refund the fees to the current
owner of the affected property. The
manner of the refund is at the District’s
discretion.
As charges are incurred on a project,
and the project has been identified as
an expansion project, the costs are deducted from the Expansion Fund. This allocation of
funds is done on a monthly basis. In the event that funds are not used for the expansion
of District facilities the funds must be returned to the developers who paid them. In the
case where a policy change requires a betterment project that would have been an
expansion project at the time the capacity fee was collected, reserves may be used for that
betterment project. The expansion reserves may also be used for bond repayment, to the
extent the debt was incurred to fund expansion.
ii. Restricted Betterment Fund
The Betterment Reserve covers the cost to construct, install, and in some cases to
maintain the potable, recycled, and sewer systems. The District maintains three separate
designated betterment funds, one for each business segment. These funds are restricted
by law for use within the area in which the fees are collected (Water Code 71631.6).
However, the legal restriction of this fund depends upon the particular revenue source.
(see Section 2.1 f. for a review of the special rates and availability fees).
iii. Debt Reserve Fund
The purpose of the Debt Reserve Fund is to pay periodic principal and interest debt
payments on the outstanding debt. As these payments are made the funds are reduced.
As additional debt is incurred, new property tax assessments may be authorized funded
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from assessments on the Property Tax Roll. Annually, the District sets the tax rate at a
level necessary to fund that year’s debt payments. These rates are applied to the assessed
valuation of the property. Changes in property values in assessment areas result in inverse
fluctuations in the tax rate necessary to generate the required debt payments.
In other cases, such as assessment districts, the debt service is funded through an
assessment being levied on each parcel within the district. In assessment districts, the
amount of the levy will vary by parcel and is based on the amount of benefit that parcel
received from the improvement.
In addition, debt service may be funded through water rates. In the case of funding from
water rates, there would not be a restriction on those debt reserve funds. They may
remain in the General Fund or be placed in a Designated Fund if the Board were to take
specific action to designate rate funds for the purpose of debt payments.
These funds are legally restricted for the specific debt issuance for which they are
collected. These funds are not available for any other purpose and may not be designated
for any other purpose. If these funds are not used for the payment of the specific debt for
which they are collected they must be returned to the customers who made the tax roll
payments. The District must evaluate the exact need of funds to avoid the costly
reimbursement process.
b. Sources
Temporary meter fees and capacity fees fund expansion while special rates and charges
and availability charges fund the betterment fund. The debt reserves are funded by the
State Loan Assessment, and GO bond assessments. Each debt fund can also be funded
with the proceeds of the debt. Lastly, each fund is allotted its share of the interest income
or expense.
c. Levels
i. Restricted Expansion Fund
A. Minimum Level –While there is no minimum balance, an action is required when the
balance of the combined Restricted Expansion Fund and the Designated Expansion Fund
drops below six months of expenditures. This would trigger either a transfer of funds
from a non-Restricted Fund or a borrowing of funds with a bond sale. Bond funds would
be placed in the Restricted Expansion Fund while transfers would be placed in the
Designated Expansion Fund.
B. Maximum Level – The maximum of this fund is limited not by a particular dollar
amount but by the limited ability to collect funds for this purpose. This limitation is
mandated by Government Code section 66001. Under the Code, the District must identify
the purpose of the fee and the use to which it will be put, effectively establishing a nexus
between the development project or class of project and the improvement being financed.
The District must further establish that the amount of the funds being collected will not
exceed that needed to pay for the improvement (Government Code section 66005). Under
this mandate, also referred to as AB 1600, the Mitigation Fee Act and Government Code
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sections 66000 et seq., the District can only collect capacity fees for expansion projects.
To insure compliance with this, the District performs periodic rate studies, a part of
which is the calculation of the legally defensible capacity fee. Therefore, the District is
limited in this fund by the nexus between the need for expansion expenditures and the fee
that is approved for its collection.
With the lack of a dollar limitation for the maximum, it is incumbent on the District to
maintain the planned construction of capital infrastructure. While building ahead of the
need makes it unlikely that the capacity fees will accumulate to any great degree,
significant delays in construction may result in high levels of the Restricted Expansion
Fund. This is one reason why the District reports to the Board on a periodic basis the
progress of the CIP spending. Further, the annual update of the rate model brings the
Restricted and Designated Expansion Fund balances to the Board’s attention. Also, the
District provides annual Developer meetings where the existing and projected reserve
levels are reviewed.
C. Target Level – In order to facilitate debt financing of
expansion, it is important that the expansion funds
retain a reserve of six months prior to any attempt to
obtain bond financing. This reserve allows the
District the time necessary to issue additional debt
without running out of expansion funds.
ii. Restricted Betterment Fund
A. Minimum Level – While there is no minimum, less
than six months of available funds in the combined
Restricted Betterment and Designated Betterment
Funds would trigger either a transfer of funds from a non-Restricted Fund or a borrowing
of funds with a bond sale. Bond funds would be placed in the Restricted Betterment
Fund while transfers would be placed in the Designated Betterment Fund.
B. Maximum Level – The maximum to be retained in this fund is five years of unfunded
CIP betterment expenditures as defined in the CIP budget forecast. To determine the
unfunded amount the total betterment costs must be reduced by the projected restricted
betterment revenues. If this maximum is exceeded, then the District should evaluate
reductions in the special water rates and availability fees and also consider transfers to
other funds.
C. Target Level – In order to facilitate debt financing of betterment, it is important that the
betterment funds retain a reserve of six months prior to any attempt to obtain bond
financing. This reserve allows the District the time necessary to issue additional debt
without running out of betterment funds. When considering the funding levels for
betterment funds there are multiple sub-funds within betterment that must be individually
considered (see 2.1 f.).
iii. Debt Reserve Fund
A. Minimum Level – As debt service payments are made the funds may be completely
depleted if no other payments are required.
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B. Maximum Level – Sufficient to pay the periodic annual debt service payments. As
levels approach this maximum, the District must evaluate the rate at which funds are
being collected so as to not over collect. Reductions in the tax rates have been common
as property values have risen. Even if the maximum is exceeded, no refunds would occur
if future debt payments are necessary. The action required if funds exceed the maximum
is a reduction of the rate of collection which will bring the balance down over time.
C. Target Level – The target level of funds for the various debt issuances is six months of
debt service. This target level will be reduced as the term of the debt comes to a close.
FUND
ACTIONS TO
CONSIDER IF
BELOW TARGET
TARGET MAXIMUM
Restricted Expansion
Fund *
Capacity fee increase
Bond financing
Six months of
capital
expenditures
Nexus of cost to
fee
Restricted Betterment
Funds **
Rate increase
Bond financing
Six months of
capital
expenditures
5 yr unfunded
needs
Debt Reserve Fund
Increase tax collection
One semi-annual
payment
Two semi-annual
payments
Designated Expansion
Fund *
Fund transfers
Six months of
capital
expenditures
5 yr unfunded
needs
Designated
Betterment Fund **
Fund transfers
Six months of
capital
expenditures
5 yr unfunded
needs
OPEB Fund
Fund transfers Full funding Full funding
Replacement Fund
Fund transfers 4% of
infrastructure
6% of
infrastructure
General Fund
Rate increase
Fund transfers
Three months of
operating budget
expenses
Nine months
* Expansion needs must consider the Restricted and Designated Expansion Funds as well as any available bond financing.
** Betterment needs must consider the Restricted and Designated Betterment Funds as well as any available bond financing
DIAGRAM 3.0: Fund Targets
210
Fund Transfers
4.0 Funding Levels
As described in the preceding sections, the District maintains funds for its operating and capital
activities. These funds fall into three accounting categories; 1) unrestricted and undesignated, or
general use funds, 2) designated, and 3) restricted. The source of the money for each fund was
discussed along with the purpose, source of funds, and levels. Key determinants of these funds
are the target levels, minimums, and maximums. The funding levels must be viewed in the
context of the economic environment, political environment, and must always be viewed in light
of a District’s rate model. The District’s six-year rate model not only shows the current balance
but also shows the trend of the fund balances. Often the trend of the fund is a greater indicator of
financial stability than is the current balance.
The rate model is updated each year with the budget process and evaluates each fund over the
next six years. The rate model will take into account the general economic environment, looking
at the development rate, supply rate increases, the possibility of raising rates, capital
infrastructure spending, and strategic plan initiatives. The fund balances may at times be over
the target amount or under the target amount. This is not only acceptable but expected. The rate
model provides an empirical estimate of the conformance between the District’s financial
activities and the guidelines of this policy.
4.1 Fund Transfers
A significant portion of the funding for the District’s designated funds comes from interfund
transfers from the Unrestricted or General Funds. It is important to note that the District has the
ability to use General Funds for any business purpose. General Funds may be transferred to any
other unrestricted fund for any business need. Designated funds are General Funds which have
been set aside for a specific purpose by Board action. These funds can only be used for the
purpose they were designated, or with Board action, they may be used for any business purpose.
General Funds may also be used for any restricted purpose but are not transferred to Restricted
Funds due to the sensitivity of the tracking of Restricted Funds. If funds are needed for a
restricted purpose they are transferred to a Designated Fund identified with the restricted
purpose. Restricted Funds may only be used for the purpose that they were collected therefore
no transfers are made to or from these funds.
In many situations, fund transfers are expected as some funds will exceed their maximum or drop
below their minimums. Only funds that are below the stated target are eligible to receive
transferred funds. Funds that exceed their maximums are first to be considered for transfers out
followed by funds that exceed their targets. Funds that exceed their minimums are also available
for fund transfer out but only when other options are not available.
The rationale for prioritizing fund transfers is based on the immediacy of the need and the
availability of funds from other funding sources. For example, the General Fund is first to
receive funds when it drops below its target or minimum levels. This is because of the
immediate and ongoing nature of the expenditures that are served by this fund. The operation of
the District is first and foremost of the objectives of the District. On the other end of the
spectrum, the Replacement Fund has a long-term perspective and will be used to partially fund
replacement assets for many years to come. Debt financing is available to respond to this long
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term, foreseeable, and planned cash flow. This fund is less likely to have immediate needs and
has other funding options.
When making the determination of when transfers are necessary, all funds work as independent
funds. The exceptions to this rule are the two expansion funds (one restricted and one
designated) and the two betterment funds (one restricted and one designated). Each of these two
sets of funds work as one but are kept separate due to the significant difference in the fund types,
one being restricted and one originating from General Funds. It is unlikely to have high
immediacy of need in these funds as they, like the Replacement Fund, are long term in nature
and have debt financing as an alternative funding source.
As an example, if during the rate model update process it was determined that the expansion
funds (designated and restricted) would drop and stay below the minimum during the planning
horizon, this would trigger a bond sale or a transfer of unrestricted funds. If in the cash planning
process, it was anticipated that the General Fund would remain above target during the planning
horizon of six (6) years and that the trend did not present a problematic underfunded status, then
those funds would be considered available for transfer prior to making funds available from the
sale of bonds. Also, if during this period another Designated Fund was anticipated to exceed its
maximum then the excess would be transferred to the Designated Expansion Fund prior to any
other transfers. Funds are evaluated to determine which has the greatest need or availability of
funds before any fund transfer recommendation is presented to the Board.
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The Reserve Policy contains terminology that is unique to public finance and budgeting. The
following glossary provides assistance in understanding these terms.
Annexation Fees: Whenever utility service is requested for land outside the boundaries of an
improvement district, the land to be serviced must first be annexed. The annexation fee for water
was set on March 3, 1997 at $1,000 per EDU. The fee for sewer annexation was set at $3,819 on
December 16, 1998. These base rates are adjusted quarterly according to a cost of living index.
Assets: Resources owned or held by Otay Water District that have monetary value.
Availability Fees: The District levies charges each year in developed areas to be used for
upgrades, betterment, or replacement and in undeveloped areas to provide a source of funding for
planning, mapping, and preliminary design of facilities to meet future development. Current
legislation provides that any availability charge in excess of $10.00 per acre shall be used only
for the purpose of the improvement district for which it was assessed.
Betterment Fees: In addition to other applicable water rates and charges, water customers pay a
fee based on water service zone or Improvement District. These fees are restricted for use in the
area where they are collected and may be used for the construction and maintenance of facilities.
Bond: A written promise to pay a sum of money on a specific date at a specified interest rate.
The interest payments and the repayment of the principal are authorized in a District bond
resolution. The most common types of bonds are General Obligation (GO) bonds and
Certificates of Participation (COPs). These are frequently used for construction of large capital
projects such as buildings, reservoirs, pipelines and pump stations.
Capital Equipment: Fixed assets such as vehicles, marine equipment, computers, furniture,
technical instruments, etc. which have a life expectancy of more than two years and a value over
$10,000.
Capital Improvement Program: A long-range plan of the District for the construction,
rehabilitation and modernization of the District-owned and operated infrastructure.
CWA: The County Water Authority was organized in 1944 under the State County Water
Authority Act for the primary purpose of importing Colorado River water to augment the local
water supplies of the Authority's member agencies. The Authority purchases water from the
Metropolitan Water District of Southern California (MWD) which imports water from the
Colorado River and the State Water Project.
Debt Service: The District's obligation to pay the principal and interest of bonds and other debt
instruments according to a predetermined payment schedule.
Reserve Policy Glossary
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Expenditures/Expenses: These terms refer to the outflow of funds paid or to be paid for an asset,
goods, or services obtained regardless of when actually paid for. (Note: An encumbrance is not
an expenditure). An encumbrance reserves funds to be expended in a future period.
Fund: An account used to track the collection and use of monies for a specifically defined
purpose.
Fund Balance: The current funds on hand resulting from the historical collection and use of
monies. The difference between assets and liabilities reported in the District’s Operating Fund
plus residual equities or balances and changes therein, from the results of operations.
Interest Income: Earnings from the investment portfolio. Per District Policy Number 25, interest
income will be allocated to the various funds each month based upon each fund’s prior month-
ending balance.
Late Charges/Penalties: Charges and penalties are imposed on customer accounts for late
payments, returned checks, and related telephone contacts.
Operating Budget: The portion of the budget that pertains to daily operations that provide basic
governmental services. The operating budget contains appropriations for such expenditures as
personnel, supplies, utilities, materials, travel and fuel, and does not include purchases of major
capital plant or equipment which is budgeted for separately in the Capital Budget. The
Operating Budget also identifies planned non-operating revenues and expenses.
Revenue: Monies that the District receives as income. It includes such items as water sales and
sewer fees. Estimated revenues are those expected to be collected during the fiscal year.
System Fees: Each water service customer pays a monthly system charge for water system
replacement, maintenance, and operation expenses. The charge is based on the size of the meter
and class of service.
Taxes: California Water Code Section 72091 authorizes the District, as a municipal water
district, to levy ad valorem property taxes which are equal to the amount required to make annual
payments for principal and interest on General Obligation bonds approved by the voters prior to
July 1, 1978.
Water Rates: Rates vary among classes of service and are measured in units. The water rates for
residential customers are based on an accelerated block structure. As more units are consumed, a
higher unit rate is charged. All non-residential customers are charged a flat rate per unit. A unit
of water is 100 cubic feet or 748 gallons of water.
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Investment Policy
1.0 Policy
It is the policy of the Otay Water District to invest public funds in a manner which will provide
maximum security with the best interest return, while meeting the daily cash flow demands of
the entity and conforming to all state statues governing the investment of public funds.
2.0 Scope
This investment policy applies to all financial assets of the Otay Water District. The District
pools all cash for investment purposes. These funds are accounted for in the District’s audited
Comprehensive Annual Financial Report (CAFR) and include:
2.1 General Fund
2.2 Capital Project Funds
2.2. Designated Expansion Fund
2.2.2 Restricted Expansion Fund
2.2.3 Designated Betterment Fund
2.2.4 Restricted Betterment Fund
2.2.5 Designated Replacement Fund
2.3 Other Post Employment Fund (OPEB)
2.4 Debt Reserve Fund
Exceptions to the pooling of funds do exist for tax-exempt debt proceeds and deferred
compensation funds. Funds received from the sale of general obligation bonds, certificates of
participation or other tax-exempt financing vehicles are segregated from pooled investments and
the investment of such funds are guided by the legal documents that govern the terms of such
debt issuances.
3.0 Prudence
Investments should be made with judgment and care, under current prevailing circumstances,
which persons of prudence, discretion and intelligence exercise in the management of their own
affairs, not for speculation, but for investment, considering the probable safety of their capital as
well as the probable income to be derived.
The standard of prudence to be used by investment officials shall be the “Prudent Person” and/or
"Prudent Investor" standard (California Government Code 53600.3) and shall be applied in the
context of managing an overall portfolio. Investment officers acting in accordance with written
procedures and the investment policy and exercising due diligence shall be relieved of personal
responsibility for an individual security's credit risk or market price changes, provided deviations
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from expectations are reported in a timely fashion and appropriate action is taken to control
adverse developments.
4.0 Objective
As specified in the California Government Code 53600.5, when investing, reinvesting,
purchasing, acquiring, exchanging, selling and managing public funds, the primary objectives, in
priority order, of the investment activities shall be:
4.1 Safety: Safety of principal is the foremost objective of the investment program.
Investments of the Otay Water District shall be undertaken in a manner that seeks to
ensure the preservation of capital in the overall portfolio. To attain this objective, the
District will diversify its investments by investing funds among a variety of securities
offering independent returns and financial institutions.
4.2 Liquidity: The Otay Water District’s investment portfolio will remain sufficiently liquid
to enable the District to meet all operating requirements which might be reasonably
anticipated.
4.3 Return on Investment: The Otay Water District’s investment portfolio shall be designed
with the objective of attaining a benchmark rate of return throughout budgetary and
economic cycles, commensurate with the District’s investment risk constraints and the
cash flow characteristics of the portfolio.
5.0 Delegation of Authority
Authority to manage the Otay Water District’s investment program is derived from the
California Government Code, Sections 53600 through 53692. Management responsibility for the
investment program is hereby delegated to the Chief Financial Officer (CFO), who shall be
responsible for all transactions undertaken and shall establish a system of controls to regulate the
activities of subordinate officials and their procedures in the absence of the CFO.
The CFO shall establish written investment policy procedures for the operation of the investment
program consistent with this policy. Such procedures shall include explicit delegation of
authority to persons responsible for investment transactions. No person may engage in an
investment transaction except as provided under the terms of this policy and the procedures
established by the CFO.
6.0 Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from personal business
activity that could conflict with the proper execution and management of the investment
program, or that could impair their ability to make impartial investment decisions. Employees
and investment officials shall disclose to the General Manager any material financial interests in
financial institutions with which they conduct business. They shall further disclose any personal
financial/investment positions that could be related to the performance of the investment
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portfolio. Employees and officers shall refrain from undertaking personal investment
transactions with the same individual with whom business is conducted on behalf of the District.
7.0 Authorized Financial Dealers and Institutions
The Chief Financial Officer shall maintain a list of financial institutions authorized to provide
investment services. In addition, a list will also be maintained of approved security
broker/dealers who are authorized to provide investment services in the State of California.
These may include “primary” dealers or regional dealers that qualify under Securities &
Exchange Commission Rule 15C3-1 (Uniform Net Capital Rule). No public deposit shall be
made except in a qualified public depository as established by state laws.
All financial institutions and broker/dealers who desire to become qualified bidders for
investment transactions must supply the District with the following, as appropriate:
• Audited Financial Statements.
• Proof of National Association of Security Dealers (NASD) certification.
• Proof of state registration.
• Completed broker/dealer questionnaire.
• Certification of having read the District’s Investment Policy.
• Evidence of adequate insurance coverage.
An annual review of the financial condition and registrations of qualified bidders will be
conducted by the CFO. A current audited financial statement is required to be on file for each
financial institution and broker/dealer in which the District invests.
8.0 Authorized and Suitable Investments
From the governing body perspective, special care must be taken to ensure that the list of
instruments includes only those allowed by law and those that local investment managers are
trained and competent to handle. The District is governed by the California Government Code,
Sections 53600 through 53692, to invest in the following types of securities, as further limited
herein:
8.01 United States Treasury Bills, Bonds, Notes or those instruments for which the full faith
and credit of the United States are pledged for payment of principal and interest. There is
no percentage limitation of the portfolio which can be invested in this category, although
a five-year maturity limitation is applicable.
8.02 Local Agency Investment Fund (LAIF), which is a State of California managed
investment pool, may be used up to the maximum permitted by State Law (currently $40
million). The District may also invest bond proceeds in LAIF with the same but
independent maximum limitation.
8.03 Bonds, debentures, notes and other evidence of indebtedness issued by any of the
following government agency issuers:
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• Federal Home Loan Bank (FHLB)
• Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac")
• Federal National Mortgage Association (FNMA or "Fannie Mae")
• Government National Mortgage Association (GNMA or “Ginnie Mae”)
• Student Loan Marketing Association (SLMA or "Sallie Mae")
• Federal Farm Credit Bank (FFCB)
There is no percentage limitation of the portfolio which can be invested in this category,
although a five-year maturity limitation is applicable.
8.04 Interest-bearing demand deposit accounts and Certificates of Deposit (CD) will be made
only in Federal Deposit Insurance Corporation (FDIC) insured accounts. For deposits in
excess of the insured maximum of $100,000, approved collateral shall be required in
accordance with California Government Code, Section 53652. Investments in CD’s are
limited to 15 percent of the District’s portfolio.
8.05 Commercial paper, which is short-term, unsecured promissory notes of corporate and
public entities. Purchases of eligible commercial paper may not exceed 10 percent of the
outstanding paper of an issuing corporation, and maximum investment maturity will be
restricted to 270 days. Investment is further limited as described in California
Government Code, Section 53601(g). Purchases of commercial paper may not exceed 15
percent of the District’s portfolio.
8.06 Medium-term notes defined as all corporate debt securities with a maximum remaining
maturity of five years or less, and that meet the further requirements of California
Government Code, Section 53601(j). Investments in medium-term notes are limited to 15
percent of the District’s portfolio.
8.07 Money market mutual funds that invest only in Treasury securities and repurchase
agreements collateralized with Treasury securities, and that meet the further requirements
of California Government Code, Section 53601(k). Investments in money market mutual
funds are limited to 15 percent of the District's portfolio.
8.08 The San Diego County Treasurer’s Pooled Money Fund, which is a County managed
investment pool, may be used by the Otay Water District to invest excess funds. There is
no percentage limitation of the portfolio which can be invested in this category.
8.09 Under the provisions of California Government Code 53601.6, the Otay Water District
shall not invest any funds covered by this Investment Policy in inverse floaters, range
notes, interest-only strips derived from mortgage pools, or any investment that may result
in a zero interest accrual if held to maturity. Also, the borrowing of funds for investment
purposes, known a leveraging, is prohibited.
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9.0 Investment Pools/Mutual Funds
A thorough investigation of the pool/fund is required prior to investing, and on a continual basis.
There shall be a questionnaire developed which will answer the following general questions:
• A description of eligible investment securities, and a written statement of investment policy
and objectives.
• A description of interest calculations and how it is distributed, and how gains and losses are
treated.
• A description of how the securities are safeguarded (including the settlement processes), and
how often the securities are priced and the program audited.
• A description of who may invest in the program, how often, and what size deposits and
withdrawals are allowed.
• A schedule for receiving statements and portfolio listings.
• Are reserves, retained earnings, etc., utilized by the pool/fund?
• A fee schedule, and when and how is it assessed.
• Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds?
10.0 Collateralization
Collateralization will be required on certificates of deposit. In order to anticipate market changes
and provide a level of security for all funds, the collateralization level will be 102% of market
value of principal and accrued interest. Collateral will always be held by an independent third
party with whom the entity has a current custodial agreement. A clearly marked evidence of
ownership (safekeeping receipt) must be supplied to the entity and retained. The right of
collateral substitution is granted.
11.0 Safekeeping and Custody
All security transactions entered into by the Otay Water District shall be conducted on a
delivery-versus-payment (DVP) basis. Securities will be held by a third party custodian
designated by the District and evidenced by safekeeping receipts.
12.0 Diversification
The Otay Water District will diversify its investments by security type and institution, with
limitations on the total amounts invested in each security type as detailed in Paragraph 8.0,
above, so as to reduce overall portfolio risks while attaining benchmark average rate of return.
With the exception of U.S. Treasury securities, government agencies, and authorized pools, no
more than 50% of the District’s total investment portfolio will be invested with a single financial
institution.
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13.0 Maximum Maturities
To the extent possible, the Otay Water District will attempt to match its investments with
anticipated cash flow requirements. Unless matched to a specific cash flow, the District will not
directly invest in securities maturing more than five years from the date of purchase. However,
for time deposits with banks or savings and loan associations, investment maturities will not
exceed two years. Investments in commercial paper will be restricted to 270 days.
14.0 Internal Control
The Chief Financial Officer shall establish an annual process of independent review by an
external auditor. This review will provide internal control by assuring compliance with policies
and procedures.
15.0 Performance Standards
The investment portfolio shall be designed with the objective of obtaining a rate of return
throughout budgetary and economic cycles, commensurate with the investment risk constraints
and the cash flow needs.
The Otay Water District’s investment strategy is passive. Given this strategy, the basis used by
the CFO to determine whether market yields are being achieved shall be the State of California
Local Agency Investment Fund (LAIF) as a comparable benchmark.
16.0 Reporting
The Chief Financial Officer shall provide the Board of Directors monthly investment reports
which provide a clear picture of the status of the current investment portfolio. The management
report should include comments on the fixed income markets and economic conditions,
discussions regarding restrictions on percentage of investment by categories, possible changes in
the portfolio structure going forward and thoughts on investment strategies. Schedules in the
quarterly report should include the following:
• A listing of individual securities held at the end of the reporting period by authorized
investment category.
• Average life and final maturity of all investments listed.
• Coupon, discount or earnings rate.
• Par value, amortized book value, and market value.
• Percentage of the portfolio represented by each investment category.
17.0 Investment Policy Adoption
The Otay Water District’s investment policy shall be adopted by resolution of the District’s
Board of Directors. The policy shall be reviewed annually by the Board and any modifications
made thereto must be approved by the Board.
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Investment Policy Glossary
Active Investing: Active investors will purchase investments and continuously monitor their
activity, often looking at the price movements of their stocks many times a day, in order to
exploit profitable conditions. Typically, active investors are seeking short term profits.
Agencies: Federal agency securities and/or Government-sponsored enterprises.
Bankers’ Acceptance (BA): A draft or bill or exchange accepted by a bank or trust company.
The accepting institution guarantees payment of the bill, as well as the issuer.
Benchmark: A comparative base for measuring the performance or risk tolerance of the
investment portfolio. A benchmark should represent a close correlation to the level of risk and
the average duration of the portfolio’s investments.
Broker/Dealer: Any individual or firm in the business of buying and selling securities for itself
and others. Broker/dealers must register with the SEC. When acting as a broker, a broker/dealer
executes orders on behalf of his/her client. When acting as a dealer, a broker/dealer executes
trades for his/her firm's own account. Securities bought for the firm's own account may be sold
to clients or other firms, or become a part of the firm's holdings.
Certificate of Deposit (CD): A short or medium term, interest bearing, FDIC insured debt
instrument offered by banks and savings and loans. Money removed before maturity is subject
to a penalty. CDs are a low risk, low return investment, and are also known as “time deposits”,
because the account holder has agreed to keep the money in the account for a specified amount
of time, anywhere from a few months to several years.
Collateral: Securities, evidence of deposit or other property, which a borrower pledges to secure
repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public
monies.
Commercial Paper: An unsecured short-term promissory note, issued by corporations, with
maturities ranging from 2 to 270 days.
Comprehensive Annual Financial Report Report (CAFR): The official annual report for the Otay
Water District. It includes detailed financial information prepared in conformity with generally
accepted accounting principles (GAAP). It also includes supporting schedules necessary to
demonstrate compliance with finance-related legal and contractual provisions, extensive
introductory material, and a detailed statistical section.
Coupon: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on
the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a set date.
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Dealer: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling
for his own account.
Depenture: A bond secured only by the general credit of the issuer.
Delivery Versus Payment: There are two methods of delivery of securities: delivery versus
payment and delivery versus receipt. Delivery versus payment is delivery of securities with an
exchange of money for the securities. Delivery versus receipt is delivery of securities with an
exchange of a signed receipt for the securities.
Derivatives: (1) Financial instruments whose return profile is linked to, or derived from, the
movement of one or more underlying index or security, and may include a leveraging factor, or
(2) financial contracts based upon notional amounts whose value is derived from an underlying
index or security (interest rates, foreign exchange rates, equities or commodities).
Discount: The difference between the cost price of a security and its maturity when quoted at
lower than face value. A security selling below original offering price shortly after sale also is
considered to be at a discount.
Discount Securities: Non-interest bearing money market instruments that are issued at a discount
and redeemed at maturity for full face value, e.g., U.S. Treasury Bills.
Diversification: Dividing investment funds among a variety of securities offering independent
returns.
Federal Credit Agencies: Agencies of the Federal government set up to supply credit to various
classes of institutions and individuals, e.g., S&L’s, small business firms, students, farmers, farm
cooperatives, and exporters.
Federal Deposit Insurance Corporation (FDIC): A federal agency that insures deposits in
member banks and thrifts, currently up to $100,000 per deposit.
Federal Farm Credit Bank (FFCB): The Federal Farm Credit Bank system supports agricultural
loans and issues securities and bonds in financial markets backed by these loans. It has
consolidated the financing programs of several related farm credit agencies and corporations.
Federal Funds Rate: The rate of interest at which Fed funds are traded. This rate is currently
pegged by the Federal Reserve through open-market operations.
Federal Home Loan Bank (FHIB): Government sponsored wholesale banks (currently 12
regional banks), which lend funds and provide correspondent banking services to member
commercial banks, thrift institutions, credit unions and insurance companies.
Federal Home Loan Mortgage Corporation (FHLMC Or Freddie Mac): A stockholder owned,
publicly traded company chartered by the United States federal government in 1970 to purchase
mortgages and related securities, and then issue securities and bonds in financial markets backed
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by those mortgages in secondary markets. Freddie Mac, like its competitor Fannie Mae, is
regulated by the United States Department of Housing and Urban Development (HUD).
Federal National Mortgage Association (FNMA Or Fannie Mae): FNMA, like GNMA was
chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal
corporation working under the auspices of the Department of Housing and Urban Development
(HUD). It is the largest single provider of residential mortgage funds in the United States.
Fannie Mae is a private stockholder-owned corporation. The corporation’s purchases include a
variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA’s
securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all
security holders will receive timely payment of principal and interest.
Federal Reserve System: The central bank of the United States created by Congress and
consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and
about 5,700 commercial banks that are members of the system.
Government National Mortgage Association (GNMA Or Ginnie Mae): A government owned
agency which buys mortgages from lending institutions, securitizes them, and then sells them to
investors. Because the payments to investors are guaranteed by the full faith and credit of the
U.S. Government, they return slightly less interest than other mortgage-backed securities.
Interest-Only Strips: A mortgage backed instrument where the investor receives only the interest,
no principal, from a pool of mortgages. Issues are highly interest rate sensitive, and cash flows
vary between interest periods. Also, the maturity date may occur earlier than that stated if all
loans within the pool are pre-paid. High prepayments on underlying mortgages can return less to
the holder than the dollar amount invested.
Inverse Floater: A bond or note that does not earn a fixed rate of interest. Rather, the interest
rate is tied to a specific interest rate index identified in the bond/note structure. The interest rate
earned by the bond/note will move in the opposite direction of the index. An inverse floater
increases the market rate risk and modified duration of the investment.
Leverage: Investing with borrowed money with the expectation that the interest earned on the
investment will exceed the interest paid on the borrowed money.
Liquidity: A liquid asset is one that can be converted easily and rapidly into cash without a
substantial loss of value. In the money market, a security is said to be liquid if the spread
between bid and asked prices is narrow and reasonable size can be done at those quotes.
Local Agency Investment Fund (LAIF): The aggregate of all funds from political subdivisions
that are placed in the custody of the State Treasurer for investment and reinvestment.
Market Value: The price at which a security is trading and could presumably be purchased or
sold.
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Master Repurchase Agreement: A written contract covering all future transactions between the
parties to repurchase/reverse repurchase agreements that establish each party’s rights in the
transactions. A master agreement will often specify, among other things, the right of the buyer-
lender to liquidate the underlying securities in the event of default by the seller borrower.
Maturity: The date upon which the principal or stated value of an investment becomes due and
payable.
Money Market: The market in which short-term debt instruments (bills, commercial paper,
bankers’ acceptances, etc.) are issued and traded.
Mutual Funds: An open-ended fund operated by an investment company which raises money
from shareholders and invests in a group of assets, in accordance with a stated set of objectives.
Mutual funds raise money by selling shares of the fund to the public. Mutual funds then take the
money they receive from the sale of their shares (along with any money made from previous
investments) and use it to purchase various investment vehicles, such as stocks, bonds, and
money market instruments.
Money Market Mutual Funds: An open-end mutual fund which invests only in money markets.
These funds invest in short term (one day to one year) debt obligations such as Treasury bills,
certificates of deposit, and commercial paper.
National Association Of Securities Dealers (NASD): A self-regulatory organization of the
securities industry responsible for the operation and regulation of the NASDAQ stock market
and over-the-counter markets. Its regulatory mandate includes authority over firms that
distribute mutual fund shares as well as other securities.
Passive Investing: An investment strategy involving limited ongoing buying and selling actions.
Passive investors will purchase investments with the intention of long term appreciation and
limited maintenance, and typically don’t actively attempt to profit from short term price
fluctuations. Also known as a buy-and-hold strategy.
Primary Dealer: A designation given by the Federal Reserve System to commercial banks or
broker/dealers who meet specific criteria, including capital requirements and participation in
Treasury auctions. These dealers submit daily reports of market activity and positions and
monthly financial statements to the Federal Reserve Bank of New York and are subject to its
informal oversight. Primary dealers include Securities and Exchange Commission registered
securities broker/dealers, banks, and a few unregulated firms.
Prudent Person Rule: An investment standard. In some states the law requires that a fiduciary,
such as a trustee, may invest money only in a list of securities selected by the custody state—the
so-called legal list. In other states the trustee may invest in a security if it is one which would be
bought by a prudent person of discretion and intelligence who is seeking a reasonable income
and preservation of capital.
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Public Securities Association (PSA): A trade organization of dealers, brokers, and bankers who
underwrite and trade securities offerings.
Qualified Public Depositories: A financial institution which does not claim exemption from the
payment of any sales or compensating use or ad valorem taxes under the laws of this state, which
has segregated for the benefit of the commission eligible collateral having a value of not less
than its maximum liability and which has been approved by the Public Deposit Protection
Commission to hold public deposits.
Range Note: An investment whose coupon payment varies and is dependent on whether the
current benchmark falls within a pre-determined range.
Rate of Return: The yield obtainable on a security based on its purchase price or its current
market price. This may be the amortized yield to maturity on a bond the current income return.
Regional Dealer: A securities broker/dealer, registered with the Securities & Exchange
Commission (SEC), who meets all of the licensing requirements for buying and selling
securities.
Repurchase Agreement (RP OR REPO): A holder of securities sells these securities to an
investor with an agreement to repurchase them at a fixed price on a fixed date. The security
“buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the
agreement are structured to compensate him for this. Dealers use RP extensively to finance their
positions. Exception: When the Fed is said to be doing RP, it is lending money that is increasing
bank reserves.
Safekeeping: A service to customers rendered by banks for a fee whereby securities and
valuables of all types and descriptions are held in the bank’s vaults for protection.
Secondary Market: A market made for the purchase and sale of outstanding securities issues
following their initial distribution.
Securities & Exchange Commission: Agency created by Congress to protect investors in
securities transactions by administering securities legislation.
Sec Rule 15C3-1: See Uniform Net Capital Rule.
Structured Notes: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, SLMA,
etc.), and Corporations, which have imbedded options (e.g., call features, step-up coupons,
floating rate coupons, derivative-based returns) into their debt structure. Their market
performance is impacted by the fluctuation of interest rates, the volatility of the imbedded
options and shifts in the shape of the yield curve.
Student Loan Marketing Association (SLMA or Sallie Mae): A federally established, publicly
traded corporation which buys student loans from colleges and other lenders, pools them, and
sells them to investors.
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Treasury Bills: A non-interest bearing discount security issued by the U.S. Treasury to finance
the national debt. Most bills are issued to mature in three months, six months, or one year.
Treasury Bonds: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations
of the U.S. Government and having initial maturities of more than 10 years.
Treasury Notes: Medium-term coupon-bearing U.S. Treasury securities issued as direct
obligations of the U.S. Government and having initial maturities from two to 10 years.
Uniform Net Capital Rule: Securities and Exchange Commission requirement that member firms
as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to
liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all
money owed to a firm, including margin loans and commitments to purchase securities, one
reason new public issues are spread among members of underwriting syndicates. Liquid capital
includes cash and assets easily converted into cash.
Yield: The rate of annual income return on an investment, expressed as a percentage. (a)
INCOME YIELD is obtained by dividing the current dollar income by the current market price
for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus
any premium above par or plus any discount from par in purchase price, with the adjustment
spread over the period from the date of purchase to the date of maturity of the bond.
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Debt Policy
1.0 Policy
It is the policy of the Otay Water District to finance the acquisition of high value assets that have
an extended useful life through a combination of current revenues and debt financing. Regularly
updated debt policies and procedures are an important tool to insure the use of the District’s
resources to meet its commitments, to provide the highest quality of service to the District’s
customers, and to maintain sound financial management practices. These guidelines are for
general use and allow for exceptions as circumstances dictate.
2.0 Scope
This policy is enacted in an effort to standardize the issuance and management of debt by the
Otay Water District. The primary objective is to establish conditions for the use of debt, to
minimize the District’s debt service requirements and cost of issuance, to retain the highest
practical credit rating, maintain full and complete financial disclosure and reporting, and to
maintain financial flexibility for the District. This policy applies to all debt issued by the District
including general obligation bonds, revenue bonds, capital leases and special assessment debt.
3.0 Legal & Regulatory Requirements
The Chief Financial Officer (CFO) and the District’s Legal Counsel will coordinate their
activities to ensure that all securities are issued in full compliance with Federal and State law.
4.0 Capital Facilities Funding
Financial Planning
The District maintains a six-year financial projection that identifies operating requirements and
public facility and equipment requirements, and has developed a Rate Model for funding the
District’s 6-Year Capital Improvement Program (CIP). The District’s CIP Budget places the
capital requirements in order of priority and schedules them for funding and implementation. It
identifies a full range of capital needs, provides for the ranking of the importance of such needs,
and identifies all the funding sources that are available to cover the costs of the projects. In cases
where the program identifies project funding through the use of debt financing, the budget
should provide information needed to determine debt capacity. The Rate Model and the CIP
Budget give the Board part of the data needed to make informed judgments concerning the
possibility of issuing debt.
Funding Criteria
The Chief Financial Officer (CFO) will evaluate all capital project requests and develop a
proposed funding plan. Priority may be given to those projects that can be funded with current
resources (annual cash flow, fund balances or reserves). Those projects that cannot be funded
with current resources may be deferred or the CFO may recommend that they be funded with
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debt financing. However, debt financing will not be considered appropriate for any recurring
purpose such as current operating and maintenance expenditures. The issuance of short-term
cash-flow instruments is excluded from this limitation.
The General Manager will recommend the funding plan to the Board. The General Manager
may deem it necessary or desirable in certain circumstances to convene a Finance Committee
meeting to evaluate funding options presented by the Chief Financial Officer.
Funding Sources
The District’s capital improvements can be classified in three categories: those related to an
expansion of the system (“expansion”), those related to upgrading the existing system
(“betterment”) and those related to repairing or replacing existing infrastructure (“replacement”).
In general, capital improvements for betterment or replacement are financed primarily through
user charges, availability charges, and betterment charges. Capital improvements for expansion
are financed through capacity fees. Accordingly, these fees are reviewed at least annually or
more frequently as required and set at levels sufficient to ensure that new development pays its
fair share of the costs of constructing necessary infrastructure. Additionally, the District will seek
State and Federal grants and other forms of intergovernmental aid wherever possible.
Pay-As-You-Go Projects
The District’s capacity fees are the major funding source in financing additions to the water
system and the recycled water system. Over time, the fees collected and the cost to construct the
capital projects should balance. However, collection of these fees is subject to significant
fluctuation based on the rate of new development. Accordingly, the Chief Financial Officer, in
developing the funding plan for the CIP, will determine that current revenues and adequate fund
balances are available so project phasing can be accomplished. If this is not the case, the Chief
Financial Officer may recommend that:
1. The project be deferred until funds are available, or
2. Based on the priority of the project, long-term debt is issued to finance the project.
Debt Financed Projects
If a project or projects are to be financed with long-term debt, the District should use the
following criteria to evaluate the suitability of the financing for the particular project or projects:
1. The life of the project or asset to be financed is 10 years or longer and its useful life is
expected to exceed the term of the financing.
2. Revenues available for debt service are deemed to be sufficient and reliable so that long-
term financing can be marketed without jeopardizing the credit rating of the District.
3. Market conditions present favorable interest rates and demand for District financing.
4. The project is mandated by State and/or Federal requirements and current resources are
insufficient or unavailable.
5. The project is immediately required to meet or relieve capacity needs and current
resources are insufficient or unavailable.
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5.0 Debt Structure
General
The District will normally issue debt with a maturity of not more than 30 years. The structure
should approximate level debt service for the term where it is practical or desirable. There will
be no debt structures that include increasing debt service levels in subsequent years, with the first
and second year of a debt payoff schedule the exception and related to projected additional
income to be generated by the project to be funded. There will be no "balloon" debt repayment
schedules that consist of low annual payments and one large payment of the balance due at the
end of the term. There will always be at least interest paid in the first fiscal year after debt
issuance and principal starting no later than the first fiscal year after the date the facility or
equipment is expected to be placed in service. Capitalized interest will not be for a period of
more than necessary to provide adequate security for the financing.
Limitations on the Issuance of Variable Rate Debt
The District will normally issue debt with a fixed rate of interest. The District may issue variable
rate for the purpose of managing its interest costs. At the same time, the District should protect
itself from too much exposure to interest rate fluctuations. In determining that it is in the
District’s best interest to issue certain debt at variable rates instead of fixed rates, at the time of
issuing any variable rate debt, there should be at least a 10% estimated reduction in annual debt
costs by issuing variable rate debt when compared to a similar issuance of fixed rate debt. If the
estimated overall cost savings from issuing variable rate debt is not at least 10% at the time of
issuance, relatively small fluctuations in rates could actually increase the District’s financing
costs over the life of the bonds compared to a similar fixed rate financing. By using this 10%
factor at the time of issuance, the District can be relatively assured that its variable rate financing
will be cost-effective over the term of the bonds.
The comparison will be based on the following criteria:
1. The interest rate used to estimate interest costs will be the 10 year average for weekly
variable rates.
2. The variable rate debt costs will include an estimate for annual costs such as letter of
credit fees, liquidity fees, remarketing fees, monthly draw fees and annual rating fees
applicable to the letter of credit.
3. Any potential reserve fund earnings will reduce the fixed rate debt service or variable rate
debt service as applicable.
Periodically, using the criteria described above, the Chief Financial Officer will compare the
estimated annual debt service costs to maturity of any variable rate debt with estimated debt
service if the debt was converted to fixed rates. If this analysis produces a break even in total
payments over the life of the issue, the Chief Financial Officer will recommend converting such
variable rate debt to fixed rate.
Variable rate debt should not represent more than 25% of the District’s total debt portfolio. This
level of exposure to interest rate fluctuations is considered to be manageable in an environment
of increasing interest rates. At a higher ratio than this, the District might be faced with an
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unplanned water rate increase to meet its Rate Covenants. Rating agencies use this ratio in their
analysis of the District’s overall credit rating.
Further, Rate Covenants applicable to variable rate debt shall not compromise the issuance of
additional debt planned by the District and variable rate debt should always contain a provision
to allow conversion to a fixed rate at the District’s option.
6.0 Credit Objectives
The Otay Water District seeks to maintain the highest possible credit ratings for all categories of
long-term debt that can be achieved without compromising delivery of basic services and
achievement of District policy objectives.
Factors taken into account in determining the credit rating for a financing include:
1. Diversity of the District’s customer base.
2. Proven track record of completing capital projects on time and within budget.
3. Strong, professional management.
4. Adequate levels of staffing for services provided.
5. Reserves.
6. Ability to consistently meet or exceed Rate Covenants.
The District recognizes that external economic, natural, or other events may from time to time
affect the creditworthiness of its debt. Nevertheless, the District is committed to ensuring that
actions within its control are prudent and well planned.
7.0 Competitive and Negotiated Sale Criteria
Competitive Sale
The District will use a competitive bidding process in the sale of debt unless the nature of the
issue or specific circumstances warrants a negotiated sale. The CFO will determine the best bid
in a competitive sale by calculating the true interest cost (TIC) of each bid.
Negotiated Sale
Types of debt that would typically lend themselves to the negotiated sale format are variable rate
debt and unrated debt. Circumstances that might warrant a negotiated sale may occur when the
issue is of a limited size that would not attract wide-spread investor interest, during periods of
high levels of issuance by other entities in the State, or during periods of market volatility. In the
event the District decides to use a negotiated sale, it will pay management fees only to those
firms that place orders for bonds.
If the size of the District’s proposed issue is not cost effective, the District may also consider
issuing its debt though the California Statewide Communities Development Authority, which
provides a mechanism for pooling financings with similar issuers to obtain economies of scale.
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8.0 Refunding Debt
Purpose
Periodic reviews of all outstanding debt will be undertaken by the Chief Financial Officer to
determine refunding (refinancing) opportunities. The purpose of the refinancing may be to:
1. Lower annual debt service by taking advantage of lower current interest rates.
2. Update or revise covenants on outstanding debt issue if a Rate Covenant appears to be
too high, has precluded the District from implementing its financing plan, or has caused
the District to increase rates to customers.
3. Restructure debt service associated with an issue to facilitate the issuance of additional
debt, usually in order to smooth out peaks in total debt service which can occur
frequently as one debt issue is layered on top of existing debt issues.
4. Alter bond characteristics such as call provisions or payment dates.
5. Pay for conversion costs such as funding a reserve fund or paying for credit enhancement
when converting variable rate debt to fixed rate debt.
Restrictions on Refunding
Tax-exempt bonds typically have provisions that preclude early redemption of the bonds for a
period of years after issuance. The number of times a tax-exempt bond can be refinanced prior
to its Optional Redemption date (known as Advance Refunding) is limited by the IRS. For debt
issued after 1986, issuers may only provide for Advance Refunding of obligations in advance of
the Optional Redemption date one time. There is no limit by the IRS on the ability of issuers to
redeem bonds early once the Optional Redemption date has been reached.
Savings Criteria
In cases where an Advance Refunding is intended to provide debt service savings, the District
may commence the refinancing process if a minimum five percent (5%) present value savings
net of issuance costs and any cash contributions can be demonstrated. Since interest rates may
fluctuate between the time when a refinancing is authorized and when the debt is issued,
beginning the process with at least a 5% savings should provide the District with some level of
protection that it can achieve a minimum of three percent (3%) net present value savings of the
refunding bonds when and if the debt is issued. These minimum standards are intended to
protect the District staff from spending time on refinancings that become marginally cost-
effective after the entire issuance process is complete.
The savings target may be waived, however, if sufficient justification for lowering the savings
target can be provided by meeting one or more of the other refunding objectives described above.
9.0 Subordinate Lien Debt
The District will issue subordinate lien debt only if it is financially beneficial to the District or
consistent with creditworthiness objectives. Subordinate lien debt is structured to be payable
second in priority to the District’s other outstanding debt. Typically, subordinate lien debt might
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be issued if the District desired a more flexible Rate Covenant with respect to its new obligations
and did not want to refinance all of its existing debt to obtain that less restrictive Rate Covenant.
10.0 Derivatives
The District may consider the use of derivative products on a case-by-case basis, consistent with
State statute and financial prudence. The most common derivatives include transactions known
as “swaps,” in which the District, by contract with an investment bank (known as a “provider”),
swaps its fixed rate debt payments for variable rate debt payments or vice versa, and “forwards,”
in which the District enters into a purchase contract with an underwriter to purchase refunding
bonds at a future date at interest rates locked in today (not at today’s rates, but at rates locked in
today). Derivative products introduce an additional risk factor into a financing, called “third-
party risk.” Once a derivative product is entered into, the District must rely upon the financial
stability of the provider to perform under the contract. Because the nature of derivatives is
speculative, that is, the District is assuming that rates will either go up or down over the period of
the contract and therefore expects to lock in a financial benefit today based on that assumption,
the financial benefits actually obtained from any derivative contract need to be monitored
periodically to determine if it is in the District’s interest to terminate the contract and what the
penalty might be for early termination. This requires a certain level of vigilance, and impartial
advice in this area is actually difficult to obtain since the derivative market is not particularly
liquid or price-transparent and is currently made up of a small handful of reputable providers.
There must be an overwhelming demonstrable financial benefit to the District based on
reasonable assumptions concerning future interest rates in order for the District to use
derivative products.
11.0 Financing Participants
The District’s purchasing guidelines provide the process for securing professional services
related to individual debt issues. The solicitation and selection process include encouraging
participation from qualified service providers, both local and national, and securing services at
competitive prices.
Financial Advisor: The use of a Financial Advisor is necessary for the sale of debt by a
competitive bid process and is desirable when issuing debt through a negotiated sale. The
Financial Advisor has a fiduciary duty to the District and will seek to structure the District’s debt
in the manner that is saleable, yet meets the District’s objectives for the financing. The Financial
Advisor will advise the District on alternative structures for its debt, the cost of different debt
structures and potential pricing mechanisms that can be expected from underwriters (such as call
features, term bonds and premium and discount bond pricing) and, at the District’s direction, will
write the offering document (preliminary official statement). With respect to competitive sales,
the Financial Advisor will arrange for distributing the preliminary official statement, accepting
bids via the internet, verifying the lowest bid and provide detailed instructions for the flow of
funds at closing to the winning Underwriter, the Trustee and the District. In a negotiated sale,
the Financial Advisor will provide independent confirmation on the Underwriter’s proposed
pricing to ensure that interest rates and Underwriter’s compensation are appropriate for the credit
quality of the issue and competitive in the overall public finance market in California.
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Underwriter: The Underwriter markets the bonds for sale to investors. While the District’s
preference is to select the Underwriter for the debt via sale of the debt at competitive bid, there
are circumstances when a negotiated issue is in the best interests of the District. Negotiated sales
are preferable if the security features are particularly complex or market conditions are volatile.
The Chief Financial Officer will recommend whether the method of sale is competitive or
negotiated based on the type of issue and other market conditions. In the case of negotiated
sales, the Underwriter will be required to demonstrate sufficient capitalization and sufficient
experience related to the specific type of debt issuance.
The Underwriter will work in connection with the District’s Financial Advisor on structuring the
issue and offering different pricing ideas.
Bond Counsel: The District’s Bond Counsel provides the primary legal documents that detail
the security for the bonds and the authority under which bonds are issued. The Bond Counsel
also provides an opinion to bond holders that the bonds are tax-exempt under both State and
Federal law. All closing documents in connection with an issue are also prepared by Bond
Counsel.
Disclosure Counsel: The District’s Disclosure Counsel provides legal advice to the District
regarding the adequacy of the District’s disclosure of financial information or risks of investing
in the District’s debt issue to the investing public. The Disclosure Counsel can prepare the
official statement or review the official statement and gives the District an opinion that there is
no information missing from the official statement of a material nature that would be necessary
for an investor to make an informed decision about investing in the District’s bonds.
Trustee: The Trustee is a financial institution selected by the District to administer the collection
of revenues pledged to repay the bonds and to distribute those funds to bondholders.
Letter of Credit Bank: The Letter of Credit Bank is a U.S. or foreign bank that has issued a
letter of credit providing both credit enhancement (the Letter of Credit Bank will pay the debt in
the event that the District defaults on the payment) and liquidity for a variable rate bond issue.
These banks have their own short-term credit rating, which is generally higher than the District’s
short-term credit rating. Liquidity is needed because variable rate bondholders are allowed to
“put” their bonds back to the District if they do not like the interest rate currently being offered.
The District’s Remarketing Agent then finds a new buyer for those bonds, but in the event that
no buyer is found, a draw is made under the letter of credit to purchase the bonds that have been
“put.” As soon as the bonds are remarketed to another buyer, the letter of credit is repaid. The
letter of credit fees are paid annually. Letter of credits are typically issued for 5-7 years and
must be renewed during the life of the bonds. Credit enhancement is discussed further under the
heading “CREDIT ENHANCEMENT.”
Municipal Bond Insurer: The Municipal Bond Insurer can be one of several insurance
companies that provide municipal bond insurance policies securing payment of the District’s
debt. These policies provide that the Municipal Bond Insurer will pay the District’s debt in the
event that the District defaults on its payments. Debt which is insured carries the Municipal
Bond Insurer’s credit rating, in most cases, AAA. The insurance premium for the bond
insurance policy is paid one time at the issuance of the debt and is non-cancelable for the term of
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the debt. Unlike a letter of credit, bond insurance policies do not provide liquidity and are most
typically purchased for fixed rate debt.
Remarketing Agent: The Remarketing Agent is an investment bank that, each week, determines
the interest rate for the District’s variable rate obligations. The rate is set at the rate at which the
obligations could be sold on the open market at 100% of their face value. The Remarketing
Agent also finds new buyers for any of the obligations that are “put” back to the District.
Rating Agencies: Currently, there are three rating agencies that rate municipal debt in the
United States: Standard & Poor’s, Moody’s Investors Service, and Fitch Investors Service.
Rating agencies establish objective criteria under which each type of financing undertaken by the
District is to be analyzed. Upon request, a rating agency will rate the underlying strength of the
District’s financings, without regard to the purchase of any credit enhancement. The rating is
released to the general public and thereafter, the rating agency will periodically update its
analysis of a particular issue, and may raise or lower the rating if circumstances warrant.
Investment-grade ratings range from “AAA” to “BBB.” A rating below “BBB” is not
investment grade. Many mutual funds cannot buy bonds that do not carry an investment grade.
Verification Agent: In a refunding, the District will deposit funds with an escrow agent (usually
the trustee) in an amount sufficient, together with earnings thereon, to pay the debt service and
redemption price of the debt being refunded through and including the call date. The
Verification Agent verifies the mathematical accuracy of calculation of the amount to be
deposited in escrow and the bond counsel relies on this verification in giving their opinion that
the debt is defeased within the meaning of the indenture and that the lien of the debt on the
revenues pledged to the debt being refunded is released.
12.0 Conflict Of Interest And Standards Of Conduct
Members of the District, the Board of Directors and its consultants, service providers and
underwriters shall adhere to standards of conduct and conflict of interest rules as stipulated by
the California Political Reform Act or the Municipal Securities Rulemaking Board (MSRB), as
applicable. All debt financing participants shall maintain the highest standards of professional
conduct at all times, in accordance with MSRB Rules, including Rule G-37. There shall be no
conflict of interest with the District with any debt financing participant.
13.0 Continuing Disclosure
The District acknowledges the responsibilities of the underwriting community and pledges to
make all reasonable efforts to assist underwriters in their efforts to comply with SEC Rule 15c2-
12 and MSRB Rule G-36. The District will file its official statements with the MSRB and the
nationally recognized municipal securities information repositories. The District will also post
copies of its comprehensive financial reports on the Internet and provide hard copies of these
documents to interested parties upon request, and will disseminate other information that it
deems pertinent to the market in a timely manner. While initial bond disclosure requirements
pertain to underwriters, the District will provide financial information and notices of material
events on an ongoing basis throughout the life of the issue. Material events are defined as those
events which are considered to likely reflect on the credit supporting the securities. The events
considered material according to the SEC are:
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1. Rating changes.
2. Non-payment related defaults.
3. Adverse tax opinions or events affecting the tax exempt status.
4. Unscheduled draws on debt service reserves or credit enhancements reflecting financial
difficulties.
5. Modifications to the rights of securities holders.
6. Defeasance.
7. Bond calls.
8. Release, substitution, or sale of property securing repayment of the securities.
9. Substitution of credit or liquidity providers, or their failure to perform.
10. Principal and interest payment delinquencies.
14.0 Investment & Arbitrage Compliance
Tax-exempt bonds are required to meet certain provisions of the federal tax code in order to
maintain their tax-exempt status. In order to prevent municipal issuers from borrowing money at
tax-exempt rates solely for the purpose of investing the proceeds in higher yielding investments
and making a profit (“arbitrage”), the federal tax code contains a provision that requires issuers
to compare the interest earned on any bond funds held (such as a reserve fund) with interest that
would theoretically be earned if the funds were invested at the yield of the bonds, and to “rebate”
to the federal government any interest earned in excess of the theoretical earnings limit.
The Chief Financial Officer shall invest the bond proceeds subject to the District’s Investment
Policy in a timely manner, to ensure the availability of funds to meet operational requirements.
In doing so, the CFO will maintain a system of record keeping and reporting to meet the
arbitrage rebate compliance requirements of the federal tax code.
15.0 Types of Debt Financing
General Obligation Bonds
General obligation bonds are secured by a pledge of the ad-valorem taxing power of the issuer
and are also known as a full faith and credit obligations. Bonds of this nature must serve a public
purpose to be considered lawful taxation of the property owners within the District and require a
two third’s majority vote in a general election. The benefit of the improvements or assets
constructed and acquired as a result of this type of bond must be generally available to all
property owners.
The District can issue general obligation bonds up to but not in excess of 15% of the assessed
valuation under Article XVI, Section 18 of the State constitution. An annual amount of the levy
necessary to meet debt service requirements is calculated and placed on the tax roll through the
County of San Diego. The District also has a policy that the ad-valorem tax to be used to pay
debt service on general obligation bonds will not exceed $.10 per $100 of assessed value.
Voters within Improvement District No. 27 of the District authorized $100 million general
obligation bonds in 1989. The District issued $11,500,000 general obligation bonds in 1992 and
refinanced the bonds in 1998. The District also has approximately $29 million in general
obligation bonds authorized between 1960 and 1978 for various Improvement Districts
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throughout the District, but unissued. General obligation bonds can only be issued under these
existing authorizations to the extent necessary to fund the improvements specified by each ballot
measure.
General obligation bonds generally are regarded as the broadest and soundest security among
tax-secured debt instruments. An unlimited-tax pledge would enable a trustee to invoke
mandamus to force the District to raise the tax rate as much as necessary to pay off the bonds.
General obligation bonds have other credit strengths as well: the property tax tends to be a steady
and predictable revenue source, and when a vote is required to issue them, bondholders have
some indication of taxpayers’ willingness to pay. General obligation bonds carry the highest
credit rating that a public agency can achieve and therefore, the lowest interest cost. General
obligation bonds typically are issued to finance capital facilities and not for ongoing operational
or maintenance costs.
The District will use an objective analytical approach to determine whether it can afford to
assume new general obligation debt for the improvement districts, or in the case of projects not
approved by the original ID 27 vote, prior to any submission of a general obligation bond ballot
measure to voters. This process will compare generally accepted standards of affordability to the
current values for the District. These standards will include debt per capita, debt as a percent of
taxable value, debt service payments as a percent of current revenues and current expenditures,
and the level of overlapping net debt of all local taxing jurisdictions. The process will also
examine the direct costs and benefits of the proposed expenditures. The decision on whether or
not to assume new debt will be based on these costs and benefits, the current conditions of the
municipal bond market, and the District’s ability to "afford" new debt as determined by the
aforementioned standards.
Revenue Bonds
Revenue bonds are limited-liability obligations that pledge net revenues of the District to debt
service. The net revenue pledge is after payment of all operating costs. Though revenue bonds
are not generally secured by the full faith and credit of the District, the financial markets require
coverage ratios of the pledged revenue stream and a covenant to levy rates and charges sufficient
to produce net income at some level in excess of debt service (a Rate Covenant).
Also there may be a test required to demonstrate that future revenues will be sufficient to
maintain debt service coverage levels after any proposed additional bonds are issued. The
District will strive to meet industry and financial market standards with such ratios. Annual
adjustments to the District’s rate structure may be necessary to maintain these coverage ratios.
The underlying credit of revenue bonds is judged on the ability of the District’s existing rates to
provide sufficient net income to pay debt service and the perceived willingness of the District to
raise rates and charges in accordance with its Rate Covenant. Actual past performance also plays
a role in evaluating the credit quality of revenue bonds, as well as the diversity of the customer
base. Revenue bonds generally carry a credit rating one or two investment grades below a
general obligation bond rating.
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The District may use a debt structure called “Certificates of Participation” to finance capital
facilities. However, if the certificates contain a pledge of net revenues and a Rate Covenant,
they are treated as essentially the same as a revenue bond.
Lease/Purchase Agreements
Over the lifetime of a lease, the total cost to the District will generally be higher than purchasing
the asset outright. As a result, the use of lease/purchase agreements in the acquisition of
vehicles, equipment and other capital assets will generally be avoided, particularly if smaller
quantities of the capital asset(s) can be purchased on a "pay-as-you-go" basis.
The District may utilize lease-purchase agreements to acquire needed equipment and facilities.
Criteria for such agreements should be that the asset life is three years or more, the minimum
value of the agreement is $50,000 and interest costs must not exceed the interest rate earned by
the District’s portfolio for the average of the past 6 months. Lease payments of this type are
considered operating expenses and would reduce net operating income available to pay any
District revenue bonds. There are no coverage requirements or rate covenants associated with
lease/purchase agreements.
State Water Loans
The State Water Resources Control Board makes certain funds available to water districts
throughout the State. These loans typically carry a below-market rate of interest and are short
term in nature. While State loans should be incorporated into the District’s debt portfolio for the
financing of capital improvements, the payment of the loan should not compromise the District’s
ability to issue other planned debt or cause the District to violate its rate covenants or make it
necessary for the District to increase rates to maintain existing rate covenants.
Land Based Financing
The District may consider developer or property owner initiated applications requesting the
formation of community facilities or assessment districts and the issuance of bonds to finance
eligible District facilities necessary to serve newly developing commercial, industrial and/or
residential projects. Facilities will be financed in accordance with the provisions of the
Municipal Improvement Act of 1913 and the Improvement Bond Act of 1915, or the Mello-Roos
Community Facilities Act of 1982.
Typically, the bonds issued would be used to prepay, in a lump-sum, the District’s capacity fees
with respect to a large tract of land under development, or to finance in-tract infrastructure that
will eventually be dedicated to the District. The bonds are secured by a special tax or assessment
to be levied on property within the boundaries established for the community facilities district
(sometimes known as a “Mello-Roos” district) or the assessment district. If the District becomes
the sponsoring public agency for such financing district and the issuance of debt, the District will
be required to enter into a Funding, Construction and Acquisition agreement for any of the
facilities to be dedicated to the District upon completion. This agreement governs the type of
facilities to be constructed with bond proceeds and how the facilities will be accepted by the
District.
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In some cases, the District may not be asked to be the sponsoring agency for the formation of a
financing district, rather, the developer or property owner may approach a school district or a
city to be the sponsoring agency. Nonetheless, the property owner may want to include lump-
sum payment of District fees in the financing or construction of certain facilities to be dedicated
to the District upon completion. In this case, if the District desired to participate, the District
would enter into a Joint Financing Agreement with the sponsoring agency, again governing the
type of facilities to be constructed with bond proceeds and how the facilities will be accepted by
the District.
On a case-by-case basis, the Board shall make the determination as to whether a proposed district
will proceed under the provisions of the Assessment Acts or the Mello-Roos Community
Facilities Act. The Board may confer with other consultants and the applicant to learn of any
unique district requirements, such as long-term development phasing, prior to making any final
determination.
All District and District consultant costs incurred in the evaluation of new development, district
applications and the establishment of districts will be paid by the applicant(s) by advance
deposits in those instances where a party or parties other than the District have initiated a
proposed district. Expenses not legally reimbursable by the financing district will be borne by
the applicant. The District may incur expenses for analyzing proposed assessment or community
facilities districts where the District is the principal proponent of the formation or financing of
the district.
Prior to the issuance of any land secured financing and in accordance with State law, the Board
will adopt policies and procedures with criteria to be met before any special tax bonds or
assessment district bonds may be issued. These criteria include the qualifications of the
appraiser, the minimum value to lien ratio to be achieved prior to issuing the land secured debt
and the maximum tax to be levied on different categories of property.
16.0 Rating Agency Applications
The District may seek a rating on all new issues that are being sold in the public market. To
ensure a fair rating, more than one rating agency shall be considered to rate the District’s issues.
These rating agencies include, but are not limited to, Fitch Investors Service, Moody’s Investors
Service, and Standard and Poor’s. When applying for a rating on an issue over $1 million or
more, the District shall make a formal presentation of the finances and positive developments
within the District to the rating agencies. The District will report all financial information to the
rating agencies as they are published and upon request. This information shall include, but shall
not be limited to, the District’s Comprehensive Annual Financial Report (CAFR), and the
Adopted Operating and Capital Budget.
17.0 Use of Credit Enhancement
Credit enhancement is a generic term that means any third-party guarantee of debt service.
Credit enhancement providers include municipal bond insurance companies or financial
institutions. The purchase of credit enhancement allows the District’s bond issue to carry the
same credit rating as the credit provider. The District will seek to use credit enhancement when
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such credit enhancement proves cost-effective. Selection of credit enhancement providers will
be subject to a competitive bid process using the District’s purchasing guidelines.
Fixed Rate Bonds
Credit enhancement for fixed rate bonds is obtained by the purchase of bond insurance. With
few exceptions, bond insurance companies are rated AAA. If a commitment for bond insurance
is obtained for a particular issue, the District will estimate the annual debt service for the issue
based on current AAA-rated bond interest rates with the cost of issuance including the payment
of the bond insurance premium. If the estimated debt service on this basis is less than or equal to
estimated debt service for the issue based on interest rates for bonds with the District’s
underlying or stand-alone credit rating, the District will purchase the bond insurance. Any
intention of the District to prepay the debt ahead of its scheduled maturity will be taken into
account in the analysis. Credit enhancement may be used to improve or establish a credit rating
on a District debt obligation even if such credit enhancement is not cost effective if, in the
opinion of the Chief Financial Officer, the use of such credit enhancement meets the District’s
debt financing goals and objectives.
Variable Rate Bonds
Credit enhancement for variable rate bonds is comprised of two components: credit support and
liquidity. The interest on variable rate bonds is based on a 7-day investment rate. Any investor
can tender their bonds back to the District to be repurchased on 7 days’ notice. Because of the
short-term nature of the investment, the securities that the District is “competing” with for
investors are AAA-rated or AA-rated mutual funds. Therefore, variable debt needs to have
credit enhancement to achieve a comparable AAA or AA rating, as well as liquidity support to
provide the District with a mechanism to purchase any bonds that are tendered before they can be
remarketed to new investors. A limited number of financial institutions offer letters of credit that
combine both credit support and liquidity for one fee. An alternative is to purchase bond
insurance to provide credit support and enter into a separate purchase agreement with a financial
institution to provide liquidity. The difference in cost between the two structures will be
analyzed before either alternative is selected for variable rate debt.
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Debt Policy Glossary
Ad Valorem Tax: A tax calculated “according to the value” of property. Such a tax is based on
the assessed valuation of tangible personal property. In most jurisdictions, the tax is a lien on the
property enforceable by seizure and sale of the property. General restrictions, such as overall
restrictions on rates, or the percent of charge allowed, sometimes apply. As a result, ad valorem
taxes often function as the balancing element in local budgets.
Advance Refunding: A procedure whereby outstanding bonds are refinanced by the proceeds
of a new bond issue prior to the date on which outstanding bonds become due or are callable.
Typically an advance refunding is performed to take advantage of interest rates that are
significantly lower than those associated with the original bond issue. At times, however, an
advance refunding is performed to remove restrictive language or debt service reserve
requirements required by the original issue.
Amortization: The planned reduction of a debt obligation according to a stated maturity or
redemption schedule.
Arbitrage: The gain that may be obtained by borrowing funds at a lower (often tax-exempt) rate
and investing the proceeds at higher (often taxable) rates. The ability to earn arbitrage by issuing
tax-exempt securities has been severely curtailed by the Tax Reform Act of 1986, as amended.
Assessed Valuation: The appraised worth of property as set by a taxing authority through
assessments for purposes of ad valorem taxation.
Basis Point: One one-hundredth of one percent.
Bond: A security that represents an obligation to pay a specified amount of money on a specific
date in the future, typically with periodic interest payments.
Bond Counsel: An attorney (or firm of attorneys) retained by the issuer to give a legal opinion
concerning the validity of the securities. The bond counsel’s opinion usually addresses the
subject of tax exemption. Bond counsel may prepare, or review and advise the issuer regarding
authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings
and litigation.
Bond Insurance: A type of credit enhancement whereby a monocline insurance company
indemnifies an investor against a default by the issuer. In the event of a failure by the issuer to
pay principal and interest in-full and on-time, investors may call upon the insurance company to
do so. Once assigned, the municipal bond insurance policy generally is irrevocable. The
insurance company receives an up-front fee, or premium, when the policy is issued.
Call Option: A contract through which the owner is given the right but is not obligated to
purchase the underlying security or commodity at a fixed price within a limited time frame.
240
Cap: A ceiling on the interest rate that would be paid.
Capital Lease: The acquisition of a capital asset over time rather than merely paying rent for
temporary use. A lease-purchase agreement, in which provision is made for transfer of
ownership of the property for a nominal price at the scheduled termination of the lease, is
referred to as a capital lease.
Certificate of Participation: A financial instrument representing a proportionate interest in
payments such as lease payments by one party (such as the District acting as a lessee) to another
party (often a trustee).
CIP: Capital Improvement Program.
Competitive Sale: The sale of securities in which the securities are awarded to the bidder who
offers to purchase the issue at the best price or lowest cost.
Continuing Disclosure: The requirement by the Securities and Exchange Commission for most
issuers of municipal debt to provide current financial information to the informational
repositories for access by the general marketplace.
Debt Service: The amount necessary to pay principal and interest requirements on outstanding
bonds for a given year or series of years.
Defeasance: Providing for payment of principal of premium, if any, and interest on debt
through the first call date or scheduled principal maturity in accordance with the terms and
requirements of the instrument pursuant to which the debt was issued. A legal defeasance
usually involves establishing an irrevocable escrow funded with only cash and U.S. Government
obligations.
Derivative: A financial product that is based upon another product. Generally, derivatives are
risk mitigation tools.
Discount: The difference between a bond’s par value and the price for which it is sold when the
latter is less than par.
Financial Advisor: A consultant who advises an issuer on matters pertinent to a debt issue,
such as structure, sizing, timing, marketing, pricing, terms and bond ratings.
General Obligation Bonds: Debt that is secured by a pledge of the ad valorem taxing power of
the issuer. Also known as a full faith and credit obligation.
Municipal Securities Rulemaking Board (MSRB): The MSRB, comprised of representatives
from investment banking firms, dealer bank representatives, and public representatives, is
entrusted with the responsibility of writing rules of conduct for the municipal securities market.
Negotiated Sale: A sale of securities in which the terms of sale are determined through
negotiation between the issuer and the purchaser, typically an underwriter, without competitive
bidding.
241
Official Statement: A document published by the issuer that discloses material information on
a new issue of municipal securities including the purposes of the issue, how the securities will be
repaid, and the financial, economic and social characteristics of the issuing government.
Investors may use this information to evaluate the credit quality of the securities.
Option: A derivative contract. There are two primary types of options (see Put Option and Call
Option). An option is considered a wasting asset because it has a stipulated life to expiration and
may expire worthless. Hence, the premium could be wasted.
Optional Redemption: The redemption of an obligation prior to its stated maturity, which can
only occur on dates specified in the bond indenture.
Overlapping Debt: The legal boundaries of local governments often overlap. In some cases,
one unit of government is located entirely within the boundaries of another. Overlapping debt
represents the proportionate share of debt that must be borne by one unit of government because
another government with overlapping or underlying taxing authority issued its own bonds.
Par Value: The face value or principal amount of a security.
Pay-as-you-go: To pay for capital improvements from current resources and fund balances
rather than from debt proceeds.
Put Option: A contract that grants to the purchaser the right but not the obligation to exercise.
Rate Covenant: A covenant between the District and bondholders, under which the District
agrees to maintain a certain level of net income compared to its debt payments, and covenants to
increase rates if net income is not sufficient to meet such level.
Refunding: A procedure whereby an issuer refinances an outstanding bond issue by issuing new
bonds.
Revenue Bonds: A bond which is payable from a specific source of revenue and to which the
full faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable
from identified sources of revenue, and do not permit the bondholders to compel a jurisdiction to
pay debt service from any other source. Pledged revenues often are derived from the operation
of an enterprise. Generally, no voter approval is required prior to issuance.
Special Assessments: A charge imposed against property or parcel of land that receives a
special benefit by virtue of some public improvement that is not, or cannot be enjoyed by the
public at large. Special assessment debt issues are those that finance such improvements and are
repaid by the assessments charged to the benefiting property owners.
Swap: A customized financial transaction between two or more counterparties who agree to
make periodic payments to one another. Swaps cover interest rate, equity, commodity and
currency products. They can be simple floating for fixed exchanges or complex hybrid products
with multiple option features.
242
True Interest Cost (TIC): A method of calculating the overall cost of a financing that takes
into account the time value of money. The TIC is the rate of interest that will discount all future
payments so that the sum of their present value equals the issue proceeds.
Underwriter: The term used broadly in the municipal market, to refer to the firm that purchases
a securities offering from a governmental issuer.
Yield Curve: Refers to the graphical or tabular representation of interest rates across different
maturities. The presentation often starts with the shortest-term rates and extends towards longer
maturities. It reflects the market’s views about implied inflation/deflation, liquidity, economic
and financial activity, and other market forces.
243
The Fiscal Budget contains terminology that is unique to public finance and budgeting. The
following budget glossary provides assistance in understanding these terms.
Accrual Basis of Accounting: The basis of accounting under which transactions are
recognized when they occur, regardless of the timing of cash receipts and disbursements.
Acre-Foot: The volume of water that will cover one acre to a depth of one foot. One acre-
foot equals 435.6 units or 325,850 gallons.
Additional Systems Fees: Effective May 1, 1986, each customer receiving water service in
the Improvement District 9 water service zone pays an additional monthly meter system
charge of $2.00 for each meter in service.
Annexation Fees: Whenever utility service is requested for land outside the boundaries of
an improvement district, the land to be serviced must first be annexed. The annexation fee
for water was set on May 30, 2006 at $1,411 per EDU. The fee for sewer annexation was
set at $3,819 on December 16, 1998. These base rates are adjusted quarterly according to a
cost of living index. The rates as of July 1, 2009 are $1,603 and $5,450 for water and
sewer, respectively.
Appropriation: The annual budget adopted by the District’s Board for monitoring and
control purposes, serving as a financial plan.
Assets: Resources owned or held by the District that have monetary value.
Availability Fees: The District levies charges each year in developed areas to be used for
general purposes for construction of facilities, and in undeveloped areas to provide a source
of funding for planning, mapping, and preliminary design of facilities to meet future
development. Current legislation provides that any availability charge in excess of $10.00
per acre shall be restricted only for the purpose of constructing facilities in the improvement
district for which it was assessed.
Balanced Budget: A balanced financial plan, for a specified period of time that matches all
planned revenues and expenditures with various services. The District uses a fiscal year
beginning each July 1 and ending each June 30 for budgetary and financial reporting
purposes.
Betterment Fees: In addition to other applicable water rates and charges, certain water
customers pay a fee based on water service zone or improvement district. These are
restricted for the use in the area where they are collected and may be used for the
construction and maintenance of facilities.
Glossary
244
Betterment Fees for Maintenance: The Operating Budget earns betterment fees for
maintenance work performed on infrastructure within special betterment zones, where fees
are collected for the construction and maintenance of these specific assets.
Bond: A written promise to pay a sum of money on a specific date at a specified interest
rate. The interest payments and the repayment of the principal are authorized in a District
bond resolution. The most common types of bonds are general obligation (GO) bonds and
Certificates of Participation (COPs). These are frequently used for construction of large
capital projects such as buildings, reservoirs, pipelines and pump stations.
Budget Basis: The budget and accounting basis for the District is recognized on an accrual
basis. Accrual basis means that revenues are recognized when earned and expenses are
recognized when incurred.
Capacity Fee: A connection fee is charged when a new water meter is placed into service.
This fee is based on the estimated construction cost of expansion of the system to meet the
needs of all future customers. This fee covers the cost including, but is not limited to,
planning, design, construction, and financing of expansion of the system.
Capacity Fee Revenues: These fees are earned by the Operating Budget as the Engineering
Department supports expansion functions.
Capacity Reservation Charge: An MWD charge passed on by CWA to individual agencies.
This fee is paid based on the District’s peak water demand.
Capital Budget: The portion of the annual budget that appropriates funds for the purchase
of capital equipment items and capital improvements. These expenditures are separated
from regular operating items, such as salaries, utilities and office supplies. The Capital
Budget includes funds for capital equipment purchases over $10,000, such as vehicles,
furniture, machinery, microcomputers and special tools or $20,000 for infrastructure related
items, which are distinguished from operating items according to their value and projected
useful life.
Capital Equipment: Fixed assets such as vehicles, marine equipment, computers, furniture,
technical instruments, etc. which have a life expectancy of more than two years and a value
over $10,000 or $20,000 for infrastructure related items (this may not extend useful life of
the infrastructure, but without it, the whole asset is rendered useless).
Capital Improvement Program: A long-range plan of the District for the construction,
rehabilitation and modernization of the District-owned and operated infrastructure.
Glossary
245
Class of Service: All customers are classified based on the type of service used. For
example, the water rate per unit is determined by a classification such as residential versus
business.
CWA: The County Water Authority was organized in 1944 under the State County Water
Authority Act for the primary purpose of importing Colorado River water to augment the
local water supplies of the Authority's member agencies. The Authority purchases water
from MWD which imports water from the Colorado River and the State Water Project.
Deannexation Fees: Each request for detachment of land from an improvement district is
reviewed on a case-by-case basis. The fees are determined based on the present value of
future debt service requirements.
Debt Service: The District's obligation to pay the principal and interest of bonds and other
debt instruments according to a predetermined payment schedule.
Depreciation: An expense recorded to allocate a tangible asset’s cost over its useful life.
Desalination: The removal of dissolved minerals (including salts) from seawater or
brackish water. Engineered water desalination processes, which produce potable water from
seawater or brackish water, have become important because many regions throughout the
world suffer from water shortages.
Energy Fees: Water customers are charged an energy pumping charge based on the quantity
of water used and the elevation to which the water has been lifted to provide service. The
energy pumping charge is the rate of $.037 (to increase on September 1, 2009 to $.038) per
100 cubic feet of water for each 100 feet of lift above the base elevation of 450 feet. All
water customers are in one of 29 zones based on elevation.
Enterprise Fund: Fund that provides goods or services to the public for a fee that makes the
entity self-supporting.
Expenditures/Expenses: These terms refer to the outflow of funds paid or to be paid for an
asset, goods or services obtained regardless of when actually paid for. (Note: An
encumbrance is not expenditure). An encumbrance reserves funds to be expended in a
future period.
Fire Service: Water service is provided by the District solely for use in fire hydrants or fire
sprinkler systems from lines or laterals connected to the District’s water mains. The
monthly system charge is $28.55 per month (to increase to $30.11 on September 1, 2009)
for each connection for fire protection service.
Glossary
246
Fiscal Year: Twelve-month term designating the beginning and ending period for recording
financial transactions. The District has specified July 1 to June 30 as its fiscal year.
Fund Balance: The current funds on hand resulting from the historical collection and use of
monies. The difference between assets and liabilities reported in the District’s Operating
Fund plus residual equities or balances and changes therein, from the result of operations.
General Fund: The District’s general fund is an enterprise fund – one for each of the
District’s three business lines Potable, Recycled and Sewer services. Each is an accounting
entity with a self-balancing set of accounts established to record the financial position and
results that pertain to a specific activity. The activities of enterprise funds closely resemble
those of ongoing businesses in which the purpose is to conserve and add to basic resources
while meeting operating expenses from current revenues. Enterprise funds account for
operations that provide services on a continuous basis and are substantially financed by
revenues derived from user charges.
Grants: Contributions or gifts of cash or other assets from another governmental agency to
be used or expended for a specified purpose, activity, or facility. Capital grants are
restricted by the grantor for the acquisition and/or construction of fixed assets. Operating
grants are restricted by the grantor for operating purposes or may be used for either capital
or operating purposes at the discretion of the grantee.
Infrastructure Access Charge (IAC): A pass-through charge from CWA to each member
agency. The charge is to finance a portion of CWA’s fixed annual costs including the
construction, operation and maintenance of aqueducts and emergency storage projects. The
fee was adopted in January of 1999.
Interest Income: Earnings from the investment portfolio. Per District Policy Number 25,
interest income will be allocated to improvement districts each month based upon each
fund’s prior month-ending balance.
Late Charges/Penalties: Charges and penalties are imposed on delinquent accounts. A late
payment charge of 5% of the most recent delinquent amount is added to the account. Other
miscellaneous late fees and penalties are detailed in the District’s Code of Ordinances.
Meter and Lateral Fees: Charge includes the material costs for the meter, meter box, and
the labor cost for installation to connect a new service to the distribution system.
Metropolitan Water District (MWD) Standby Charges: Revenue generated from property
taxes by MWD to cover the Readiness-to-Serve (RTS) Charge for the new debt service for
construction projects necessary to meet reliability and quality needs. The RTS Charge was
adopted in 1996.
Glossary
247
Net Assets: The difference between total assets and total liabilities. Increases or decreases
in net assets may serve as a useful indicator of whether the financial position of the District
is strengthening or weakening.
1% General Tax: In 1978, Proposition 13 limited general levy property tax rates for all
taxing authorities to a total rate of 1% of full cash value. Subsequent legislation, AB8,
established that the receipts from the 1% levy were to be distributed to taxing agencies
according to approximately the same proportions received prior to Proposition 13. Funds
received are to be used for facilities construction or debt service on bonds sold to build
facilities.
Operating Budget: The portion of the budget that pertains to daily operations that provide
basic governmental services. The operating budget contains appropriations for such
expenditures as personnel, supplies, utilities, materials, travel and fuel, and does not include
purchases of major capital plant or equipment which is budgeted for separately in the
Capital Budget.
Other Income: Revenues that are not directly related to the business of providing water and
sewer services. For example, contract billing service for the City of Chula Vista and the
City of San Diego to bill their sewer customers based on water consumption.
Property Rental Income: Rent or lease agreements for the use of District property.
QualServe: a voluntary quality improvement program designed exclusively for water and
wastewater utilities.
Recycled Water Rates: Non-potable water service provided from water produced by the
District’s reclamation plant and other non-potable sources. Recycled water is not used for
domestic purposes and all other uses must comply with federal, state and local laws and
regulations regarding the use of recycled water.
Reserve Fund: The District maintains Reserve Funds per the District’s policy for both
designated and restricted balances. Designated Reserve Funds are “general use” funds
designated by the Board. Restricted reserves are those that are legally set aside for a
particular purpose and cannot be used for any other purpose.
Residential Conservation: The water rates for residential customers are based on an
accelerated block structure; as more units are consumed, a higher unit rate is charged. The
District has established a water conservation program to promote water conservation and
planning.
Glossary
248
Revenue: Monies that the District receives as income. It includes such items as water sales
and sewer fees. Estimated revenues are those expected to be collected during the fiscal
year.
Readiness-to-Serve Charge (RTS): was adopted by MWD in Fiscal 1996. The charge
serves as a foundation of fixed revenue for MWD. It covers the new debt service for
construction projects necessary to meet reliability and quality needs of current water-users
as opposed to new customers.
Sale of Fixed Assets: District equipment, which has been determined by the Board to be of
no use, obsolete and/or beyond the useful life and therefore, may be sold.
Set-up Fees for Accounts: A charge of $10 is added for each account transferred to another
customer.
System Fees: Each water service customer pays a monthly system charge for water system
replacement, maintenance and operation expenses. The charge is based on the size of the
meter and class of service.
Taxes: California Water Code Section 72091 authorizes the District, as a municipal water
district, to levy ad valorem property taxes which are equal to the amount required to make
annual payments for principal and interest on general obligation bonds approved by the
voters prior to July 1, 1978.
Temporary Water Charge: The rate for temporary water service is two times the rate for
permanent service. The additional charge is to offset the cost of construction of facilities for
larger capacity.
Tier 2 Charge: An MWD charge passed on by CWA to individual agencies. This is an
added charge on all water sales by CWA in excess of the District’s 90% baseline water
usage.
Water Capacity Fees: Charges paid by customers to connect to a District water system for
potable or recycled water service. Fees are determined by multiplying the demand factor for
the meter size by the total of the District-wide capacity fee and applicable zone charge
Water Rates: Rates vary among classes of service and are measured in units. The water
rates for residential customers are based on an accelerated block structure. As more units
are consumed, a higher unit rate is charged. On January 1, 2009 the District implemented a
tiered rate structure for all customer types to encourage conservation and bring equity
among the classes.
Working Capital: A financial measure which represents available operating liquidity. It is
calculated as current assets minus current liabilities.
Glossary
249
AF Acre-Foot/Feet
AMR Automated Meter Reader/Reading
APCD Air Pollution Control District
ASCE American Society of Civil Engineers
ASU Assigned Service Unit
AWWA American Water Works Association
BIT Bi-annual Inspection Terminals
BMP Best Management Practices
BOD Biological Oxygen Demand
BRP Business Resumption Plan
CADD Computer Aided Design & Drafting
CARB California Air Resources Board
CDPH California Department of Public Health
CAFR Comprehensive Annual Financial Report
CCV City of Chula Vista
CEQA California Environmental Quality Act
CFS Cubic Foot per Second
CHP California Highway Patrol
CIP Capital Improvement Program
CIS Customer Information System
CIT Collaborative Improvement Teams
CMOM Capacity, Management, Operations & Maintenance
CMTA California Municipal Treasurers Association
COD Chemical Oxygen Demand
COPS Certificates of Participation
CRC Capacity Reservation Charge
CSC Customer Service Charge
CSD City of San Diego
CSMFO California Society of Municipal Finance Officers
CWA County Water Authority (San Diego)
DBMS Database Management System
DBP Disinfectant By-Products
DEH Department of Environmental Health
DHS Department of Health Services
DVP Delivery-versus-Payment
EDU Equivalent Dwelling Unit
EIR Environmental Impact Review
EOC Equal Opportunity Commission
ERP Enterprise Resource Planning
List of Acronyms
250
List of Acronyms
ESC Emergency Storage Charge
FCF Flow Control Facility
FHLMC Freddie Mac or Federal Home Loan Mortgage Corporation
FNMA Fannie Mae or Federal National Mortgage Association
FTE Full-time Equivalent
FY Fiscal Year
GASB Government Accounting Standards Board
GFOA Government Finance Officers Association
GIS Geographic Information System
GO General Obligation (bonds)
GPM Gallons per Minute
GPS Global Positioning System
HCF Hundred Cubic Foot
HMA Habitat Management Area
HR Human Resources
HRIS Human Resources Information System
HWD Helix Water District
IAC Infrastructure Access Charge
ID Improvement District
IID Imperial Irrigation District
IIPP Injury and Illness Prevention Program
IMS Infrastructure Management System
IRP Integrated Water Resources Plan
IRS Internal Revenue Service
IT Information Technology
IVR Interactive Voice Response
LAFCO Local Agency Formation Commission
LAIF Local Agency Investment Fund
LMSE La Mesa Sweetwater Extension
LOPS Lower Otay Pump Station
MBR Membrane Bioreactor
MG Million Gallons
MGD Million Gallons per Day
MISAC Municipal Information Systems Association of California
MH Man-hours
MOU Memorandum of Understanding
MSCP Multiple Species Conservation Program
MSRB Municipal Securities Rulemaking Board
MWD Metropolitan Water District
251
List of Acronyms
MWWD Metropolitan Waste Water Department (City of San Diego)
NCCP Natural Community Conservation Plan
NEPA National Environmental Policy Act
NIMS National Incident Management System
NOC Notice of Completion
NOSC Notice of Substantial Completion
NPDES National Pollution Discharge Elimination System
O&M or O/M Operations and Maintenance
OES Office of Emergency Services (State)
OIS Otay Information System
OPEB Other Post Employee Benefits
OWD Otay Water District
PB Pacific Bay
PDR Preliminary Design Report
PEIR Program Environmental Impact Report
PERS Public Employees' Retirement System
PL Pipeline
POU Principles of Understanding
PRS Pressure Reducing Station
PS Pump Station
PT Part-time
RFID Radio Frequency Identification
RFP Request for Proposal
RSD Rancho San Diego
RTS Readiness-to-Serve
R/W Right-of-Way
RWCWRF Ralph W. Chapman Water Recycling Facility
SAMP Sub-Area Master Plan
SANDAG San Diego Association of Governments
SCADA Supervisory Control and Data Acquisition
SBWRP South Bay Water Reclamation Plant
SDRMA San Diego Risk Management Association
SEC Securities and Exchange Commission
SHRM Society of Human Resources Management
SLMA Sallie Mae or Student Loan Marketing Association
SS Suspended Solids
SSMP Sewer System Management Plan
SVSD Spring Valley Sanitation District
SWA Sweetwater Authority
252
List of Acronyms
SWRCB State Water Resources Control Board
USBR U.S. Bureau of Reclamation
UWMP Urban Water Management Plan
WADG Water Agency Design Guideline
WD Water District
WER Work Environment Review
WRMP Water Resources Master Plan
WTP Water Treatment Plant
253
Administrative Expenses 64,77,85,93,100
Awards 4-7
Balanced Scorecard 8-14
Budget Calendar 18-19
Budget Guide 16-17
Budget Process and Basis 20-22
Budget Summary 34-37
Capital Improvement Program Narrative 171-172
Capital Purchases Budget 185
CIP Flagship Projects in Construction 174-176
CIP Funding Source and Category 180
CIP Justification and Impact on Operating Budget 183-184
CIP Major Projects 173
CIP Projects 181-182
CIP Projects in Construction 177-178
CIP Reserve Funds 179
Classification of Water Sales 55,70
Debt Management 48
Debt Policy 227-239
Debt Policy Glossary 240-243
Demographics 27
Department Budgets:
Administrative Services 114-124
Board of Directors 104-107
Engineering 158-167
Finance 125-135
General Expense 168-170
General Manager 108-113
Information Technology and Strategic Planning 136-143
Water Operations 144-157
Departmental Operating Budget Narrative 93-95
Economic Conditions 25
Five-Year Forecast 45
Formula for Sewer Rates 87
Fund Balance Summary by Fund 41
Fund Balances 47
Index
254
Future, The 26
General Fund Forecast 46
General Information 2
General Expenses 92
General Revenues 91
General Revenues and Expenses Narrative 89-90
Glossary 244-249
Investment Policy 215-220
Investment Policy Glossary 221-226
Labor and Benefits 96-97
Letter of Transmittal iv-viii
List of Acronyms 250-253
Materials and Maintenance Expenses 65,78,86,101
Meter Fees 60,73
MWD and CWA Fixed Fees (Pass-Through) 59
Operating Budget Summary 54,69,81
Operating Budget Summary by System 39
Operating Budget Summary – General Fund 38
Operating Expenditures by Department 102
Operating Expenditures by Object 103
Operating Revenues and Expenditures 40
Organization Chart 15
Otay Water District At-A-Glance 1
Past and Present 24
Position Count by Department 98-99
Potable Narrative 52-53
Potable Water Service Area Maps 66
Power Costs 63,76,84
Projected Principal and Interest Payments by Debt Issuance 50-51
Recycled Narrative 67-68
Recycled Water Service Area Maps 79
Reserve Policy 188-212
Reserve Policy Glossary 213-214
Resolution 4136 23
Revenue History 61,74,83
Index
255
Revenues and Expenditures by Fund 42-43
Revenues and Expenditures by Type 44
San Diego Rainfall 33
Schedule of Outstanding Debt 49
Service Area Assessed Valuation 31
Sewer Charges Summary by Service Class 82
Sewer Narrative 80
Sewer Rate Comparison 30
Sewer Service Area Map 88
Statement of Values 3
Summary of Financial Policies 186-187
System Fees 58,72
Ten Largest Customers 28
Ten Principal Taxpayers 32
Unit Sales History by Customer Class 57
Recycled Water Purchases 75
Potable Water Purchases and Related Costs 62
Water Rate Comparison 29
Water Sales Summary by Service Class 56,71
Index
256