HomeMy WebLinkAboutOperating and Capital Budget FY 2020-2021Otay Water District
Adopted Operating and Capital Budget
Fiscal Year 2020-2021
BOARD OF DIRECTORS
Gary Croucher, Division 3 President
Mark Robak, Division 5 Vice President
Mitch Thompson, Division 2 Treasurer
Tim Smith, Division 1
Hector Gastelum, Division 4
MANAGEMENT TEAM
Jose Martinez General Manager
Joseph R. Beachem Chief Financial Officer
Kevin Koeppen Assistant Chief, Finance
Adolfo Segura Chief, Administrative Services
Pedro Porras Chief, Water Operations
Rod Posada Chief, Engineering
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Table of Contents
Page
Letter of Transmittal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Awards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvi
Resolution No. 4384. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xx
OVERVIEW
Budget Guide. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Mission Statement, Vision, Statement of Values. . . . . . . . . . . . . . . . . . . . . . . 3
District Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Service Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Budget Control and Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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7
Budget Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Fund Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Budget Calendar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
COMMUNITY PROFILE
Demographics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Service Area Assessed Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Ten Principal Taxpayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Ten Largest Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Water Rate Comparison – Member Agency Water Rates. . . . . . . . . . . . . . . . . 15
Sewer Rate Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
San Diego Rainfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Current Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
STRATEGIC PLAN
Strategic Plan Narrative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Administrative Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Water Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Engineering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
FINANCIAL SUMMARIES
Financial Summaries Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Operating Budget Summary – General Fund . . . . . . . . . . . . . . . . . . . . . . . . 46
Operating Budget Summary by System . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
General Fund Revenues, Expenditures and Transfers . . . . . . . . . . . . . . . . . . . 49
Fund Balance Summary by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Revenues and Expenditures by Type. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Revenues and Expenditures by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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Table of Contents
FIVE-YEAR FORECAST
Five-Year Forecast Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
General Fund Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Fund Balances Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Debt Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Schedule of Outstanding Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Projected Principal Payments by Debt Issuance . . . . . . . . . . . . . . . . . . . . . . 61
Projected Interest Payments by Debt Issuance . . . . . . . . . . . . . . . . . . . . . . . 62
REVENUES AND EXPENDITURES
Potable Revenues and Expenditures
Potable Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Classification of Water Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Water Sales Summary by Service Class. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Unit Sales History and Meter Count by Customer Class . . . . . . . . . . . . . . . . . . 68
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
MWD and CWA Fixed Fees (pass-through) . . . . . . . . . . . . . . . . . . . . . . . . . 70
Meter Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Water Purchases and Related Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Potable Water Service Area Maps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Recycled Revenues and Expenditures
Recycled Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Classification of Water Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Water Sales Summary by Meter Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Unit Sales History and Meter Count by Customer Class . . . . . . . . . . . . . . . . . . 85
Meter Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Water Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Materials and Maintenance Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . 91
Recycled Water Service Area Maps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Sewer Revenues and Expenditures
Sewer Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Charges Summary by Service Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
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Table of Contents
Sewer Revenues and Expenditures (continued)
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . 100
Formula for Sewer Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Sewer Service Area Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
General Revenues and Expenditures
General Revenues and Expenditures Narrative . . . . . . . . . . . . . . . . . . . . . . . 105
General Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
General Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
DEPARTMENTAL OPERATING BUDGET
Departmental Operating Budget Narrative . . . . . . . . . . . . . . . . . . . . . . . . . 109
Labor and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Labor and Benefits by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Position Count by Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Contract/Temporary Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Operating Expenditures by Department . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Operating Expenditures by Object . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Departmental Budgets:
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
General Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Water Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
General Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
CAPITAL BUDGET
Capital Budget Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
CIP Reserve Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Six-Year CIP Projects Summary by Source ($1,000s). . . . . . . . . . . . . . . . . . . . 167
Six-Year CIP Projects Summary by Fund ($1,000s). . . . . . . . . . . . . . . . . . . . . 167
Six-Year CIP Projects by Source and Fund ($1,000s). . . . . . . . . . . . . . . . . . . . 168
CIP Justification and Impact on Operating Budget . . . . . . . . . . . . . . . . . . . . 172
Capital Purchases FY 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
POLICIES
Summary of Financial Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Reserve Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Reserve Policy Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
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Table of Contents
POLICIES (continued)
Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Investment Policy Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Debt Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Debt Policy Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255
APPENDIX
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
List of Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
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September 24, 2020
Honorable Board of Directors
Otay Water District
I am pleased to present the Otay Water District’s Adopted Operating and Capital Budget for
Fiscal Year 2021. The budget supports the District’s Fiscal Year 2019-2022 Strategic Plan
titled, “Growth and Sustainability,” as well as the financing of all the District’s services,
programs, and capital needs during Fiscal Year 2021. The success as an agency is
significantly enhanced by the policies and practices implemented by its Board and
management to ensure stability, reliability, strength, and sustainability. The management
team is fully confident that through sound financial management and streamlining of
District operations, supported by the Strategic Plan and a dedicated and talented staff, the
District will continue to achieve success and thus, ensure the well-being and quality of life
of its nearly 226,000 customers. Our goal is to sustain the services we provide while
minimizing rate impacts to our ratepayers.
In early 2020, the unprecedented COVID-19 pandemic initiated unexpected outcomes
throughout the world, the nation, the state, and locally to the District. The pandemic has
impacted state water agencies, including the District, but the degree of impact remains
unknown, due to other factors that also caused negative impact on District revenues such
as wet weather. As a result of the dynamic COVID-19 crisis environment, staff continues to
assess impacts to the District and its budget. The duration of the pandemic continues to
remain unpredictable; however, the budget was prepared on the assumption that it will not
subside until at least the close of the first quarter of Fiscal Year 2021. Based on various
scenarios, staff prudently evaluated and developed a budget with the expectation that the
fiscal impacts related to the pandemic could adversely impact the District for the entire
fiscal year and into the following fiscal year.
Areas expected to be adversely impacted include water sales volumes, property tax
income, growth revenues, collections and bad debt, and penalty revenues. Due to the
financial adversity facing the District, staff worked diligently to identify savings initiatives for
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the Fiscal Year 2021 budget. Furthermore, increased costs for water, sewer, reclamation
plant, and regulatory fees continue to put pressure on rates.
Legislative issues
Throughout the 2020 legislative session, the California legislature has worked to prioritize
economic recovery to protect Californians and spur job creation during and even after the
COVID-19 pandemic. However, the legislature was unable to compromise on a
comprehensive recovery package.
As of a result of the COVID-19 pandemic, several legislative issues that could have
potentially affected water agencies, including the District, were deferred. There are still
many unknowns regarding the state budget, funding sources, and the duration of executive
orders, including Governor Gavin Newsom’s stay-at-home and water shutoff restriction
orders. More than 2,200 new bills were introduced by the February deadline, but COVID-19
has altered the customary structure of the legislative session, limiting the number of allowed
assembly and senate bills.
On August 31, 2020, the legislature completed its work for the 2020 legislative session and
adjourned for the year. The Governor has until September 30, 2020 to act on signing or
vetoing legislation sent to him during the final weeks of the legislative session. At this time,
there is no extraordinary session of the legislature planned between now and November
30, 2020. However, there have been calls for the Governor to convene a special session to
address any variety of issues, including wildfires, grid reliability and rolling power outages,
and post-COVID-19 economic recovery. It is unclear whether the Governor will convene a
special session during the fall.
The State Water Resources Control Board (SWRCB) and many water agencies, including
the District, continue to focus on conservation laws such as Senate Bill 606 and Assembly
Bill 1668 which passed in 2018. Other legislative issues that were new to this year’s budget
include the Resiliency Bond Package, protecting fire hydrant system funding through
Senate Bill 1386, and clarifying the SWRCB’s process while educating the public due to the
recent passage of Assembly Bill 1588, a new law that paves the way for veterans reciprocity
while increasing the pool of qualified applicants in California’s water industry.
Building on efforts to make water conservation a way of life and to better prepare the state
for droughts and climate change, the District and water agencies throughout the state have
worked with San Diego County Water Authority (CWA), other water agencies, and state
officials to define how the conservation laws – Senate Bill 606 and Assembly Bill 1668 – will
be implemented. These laws outline an overall framework to guide the District and other
urban water suppliers in setting water-use targets. The laws require water agencies to
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establish a residential indoor GPCD goal of 55, effective in 2023, and the SWRCB to adopt
an outdoor water-use standard by June 2022. As the year continues to unfold, the SWRCB
is releasing draft recommendations regarding these laws. The District has worked
collectively with other water agencies to discuss and provide comments to the SWRCB to
ensure the regulations are both equitable and reflect local conditions. The District will
continue to work on these efforts as the SWRCB releases more recommendations.
As part of its responsibility to keep stakeholders engaged in the conservation laws, the
SWRCB held several stakeholder meetings with a goal to inform the District and other state
water agencies of the big picture through progress reports provided by eight urban project
workgroups. The workgroups include the following: Model Water Efficient Landscape
Ordinance; Landscape Area Measurement; Wholesale Water Loss; Water Use Studies;
Standard, Methodologies and Performance Measures; Urban Water Management Plan
Guidebook; Annual Water Supply and Demand Assessment; and Data Streamlining.
To broaden the state’s approach on water, as California faces a range of existing
challenges, and per Governor Newsom’s 2019 Executive Order N-10-19, the state released
its Final Water Resilience Portfolio in July 2020. The order directs the secretaries of the
California Natural Resources Agency, the California Environmental Protection Agency, and
the California Department of Food and Agriculture to identify and assess a suite of
complementary actions to ensure safe and resilient water supplies, flood protection, and
healthy waterways for the state’s communities, economy, and environment. The state
developed the portfolio to improve California’s capacity to prepare for disruptions, withstand
and recover from climate-related shocks, and adapt into the future.
Building on state and local initiatives already underway and months of public input, the
District and other water agencies throughout California are actively looking to the SWRCB
and its portfolio to assist in empowering local and regional entities to meet their unique
challenges, while delivering on the state’s responsibility to provide tools and leadership,
advance projects of statewide scale and importance, and help address challenges that are
beyond the scope of any region. District staff, working with CWA and other local agencies,
will continue to evaluate the actions in the portfolio and resolve the most strategic methods
to implement them.
As directed by the Governor and building on work already conducted, the Department of
Water Resources is pursuing a new environmental review and planning process for a single
tunnel solution to modernize Delta conveyance. This approach is also consistent with the
Governor’s executive order directing state agencies to develop the aforementioned portfolio
of statewide water actions and investments that improve water recycling, recharge
depleted groundwater reserves, strengthen existing levee protections, and improve Delta
water quality.
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The requirements from Senate Bill 998 (Dodd) continue to have a financial impact on the
District and its ratepayers. The law, which went into effect on February 1, 2020, increased
the District’s service shut-off days for delinquent accounts from 45 days to no less than 60
days, created a cap on reconnection fees, and granted authority to both the SWRCB and
the Attorney General to enforce provisions of the bill. Because the new law impacted
existing practices, policies, and procedures, District staff evaluated, developed, and
implemented new practices to comply with the requirements. Given that the Governor’s
executive order halts all disconnections due to the COVID-19 pandemic, it is still unknown
what financial impact these new requirements will have.
Senator John Moorlach’s Senate Bill 1386 passed unanimously out of both houses of the
Legislature and is currently pending final action on the Governor’s desk. This bill seeks to
clarify existing law regarding the imposition of fire-related water service charges being
implemented across the customer base in compliance with Proposition 218. Senate Bill
1386 is broadly supported by the District, other water agencies, municipalities, fire districts,
and professional fire fighter organizations. CWA and Irvine Ranch Water District are
cosponsoring this legislation to reaffirm that water agencies’ existing water service charge
practices relative to water service for fire prevention services are fully compliant with
Proposition 218.
To address an aging and retiring workforce in the water and wastewater operator fields and
to increase the pool of qualified individuals for these positions, the District also
cosponsored, with CWA, Assembly Bill 1588. The new law, which passed in October 2019,
ensures military veterans transitioning into civilian water and wastewater operator
occupations receive appropriate credit for experience and education gained during military
service. The District, other water agencies, and stakeholders continue to work on defining
the process with the SWRCB and educating veterans and other stakeholders about how
veterans can obtain sufficient credit for their experience and education.
Fiscal Year 2019 - 2022 Strategic Plan
Since its establishment, the District’s motto has been “Dedicated to Community Service.”
From modest beginnings in 1956 through today, the District stands committed to providing
outstanding service to the residents and businesses it has the honor to serve. This serves
as a great reminder to our staff and customers as to why the District exists.
During the District’s early years, a key focus of its preceding strategic plans was to meet the
demands of growth. Today, the District’s four-year Strategic Plan (Fiscal Years 2019-2022)
still has the word “growth” in its theme of “Growth and Sustainability,” but “sustainability” is
a critical element in managing long-term maintenance and replacement of infrastructure.
Staff works diligently to ensure its planning documents and programs support the District’s
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water supply and sewer facilities that serve its customers now and in the future. The four-
year Strategic Plan aims to support the goals in our planning documents, which include the
Water Facilities Master Plan Update, Wastewater Management Plan, Urban Water
Management Plan, and other critical plans.
The District’s Strategic Plan also serves as a roadmap to execute its organizational
objectives and track day-to-day performance metrics which ensure deliverables are being
met and essential work processes are continuously being fine-tuned. The District’s
Strategic Plan was developed using the Balanced Scorecard performance management
framework. Via this framework, management and staff share a focused business and
operational strategy to ensure the District is moving along the right path and maximizing its
limited resources.
The District’s strategic philosophy recognizes that as the agency evolves and service
footprint matures, fewer development resources and fees will be available, while
operational assets and infrastructure maintenance, rehabilitation, and replacement costs
will increase. This is an important phase of the operational lifecycle and will therefore place
pressure to increase customer rates to counter more costly service expenses. To balance
the customer’s interest in minimizing rate increases, while also maintaining the agency’s
infrastructure, investments, and financial position, the management team continues to
place emphasis on efficiencies within the agency, including innovation and continued use
of technology throughout its operations.
In effect, the District leverages its investments in technology to manage operational cost
and do more with the same or fewer resources. With sound planning, prudent fiscal
management, community focus, and a work culture prepared to adapt to new challenges,
the District is well positioned to support its growing customer base, while sustaining the
quality of water service our customers expect. From a water supply perspective, this
means determining the optimal water supply, treatment, and delivery solutions for
customers. From a daily operating perspective, efficiency enhancements have become
the principal source of competitive advantage and cost optimization.
Finding ways to utilize technology, streamline operations, and reduce external costs are
critical elements of the District’s ongoing commitment and dedication to its customers.
Savings generated through streamlining and reducing costs are passed to our ratepayers.
For example, from 2017 to 2021 the District is upgrading or replacing more than 49,600
automated meter reading (AMR) meters, originally installed between 2004 and 2012. To be
as cost efficient as possible, the District is replacing meter registers instead of the entire
meter and, when applicable, taking advantage of existing warranties. This saves the District
and its ratepayers approximately $3.3 million in meter replacement costs. Because of the
meter’s life expectancy and warranty, the District can delay the replacement of the meters
ix
by approximately 10 years. There are many benefits to utilizing AMR meters, including the
reduction of meter reading staff, increased safety of staff, and allowing staff to store
historical water use data. These advanced meters can assist customers and the District, to
identify unexplained usage by providing leak, tamper, and backflow detection alarms. The
efforts related to meter technology are an example of cost savings and the District’s ongoing
commitment to pursue cost efficiencies.
The success of this approach is proven by the District’s gains in productivity, reduction in
staffing, and associated costs. The following charts show that since 2007 through 2021, the
District has reduced staffing by 35.75 full-time equivalent positions, or 20%, while the
number of customer accounts increased by 3,994.
Employee Count and Number of Customer Accounts
Because of increased efficiency and higher employee productivity, the District has been
able to continue absorbing some of the pass-through costs from its water suppliers,
including the City of San Diego, CWA, and Metropolitan Water District (MWD). This helps
to address customer concerns about rising water rates.
To reduce the District’s costs of retirement obligations, the District made an advanced
payment of $31.8 million to its CalPERS pension plan on August 15, 2018. This strategic
step significantly reduced the high financing cost of the unfunded liability at CalPERS and
brought the funding level up to 87%, which will save the District approximately $16
million. In Fiscal Year 2020, the District’s Other Post Employee Benefit (OPEB) plan became
fully funded. With the OPEB plan being fully funded, the District has budgeted to redirect
$1.0 million of additional advanced payments to CalPERS annually. These advanced
payments are projected to save an additional $5.0 million over 14 years resulting in the plan
17
4
.
7
5
17
2
.
7
5
16
8
.
7
5
16
6
15
9
15
6
14
8
14
3
14
0
13
8
13
5
13
4
13
7
13
8
13
9
52,615
56,609
51,500
52,500
53,500
54,500
55,500
56,500
57,500
0
20
40
60
80
100
120
140
160
180
200
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Em
p
l
o
y
e
e
C
o
u
n
t
Fiscal Year
x
becoming fully funded in 2034, seven years earlier than projected without the additional
contribution.
Other cost savings include the reduction of the number of vehicles and equipment, fuel
consumption, pavement costs, and decreasing water loss through the successful leak
detection and repair program. Staff continues to seek out other operational efficiencies,
thus decreasing costs and minimizing rate impacts on the District’s customers.
Based on an annual survey of water and sewer rates conducted by staff, the District
continues to be one of the lowest cost providers in San Diego County. The District has the
fifth lowest water rate out of the 24 member agencies in San Diego County (based on the
District’s average water user who uses 11 units of water and has a ¾” residential meter size)
and the fifth lowest sewer rate out of the 28 sewer service providers in the County (based
on 10.3 units of water and a ¾” residential meter size). The results of the water and sewer
surveys are shown on pages 15 and 16, respectively.
The following chart shows that since 2007, the wholesale water supply costs have
increased 111.9%, while the District’s retail water rates have increased 107.2%.
Wholesale Water Supply Costs vs. District Retail Rate Increases
0%
20%
40%
60%
80%
100%
120%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
111.9%
107.2%
CWA Water Cost Increase
Otay Water Rate Increase
xi
The District currently delivers water service to 51,156 potable and 739 recycled water
customer accounts. The District purchases all the potable water sold to customers from
the CWA. Eleven percent of this water, in turn, is purchased from the region’s primary water
importer, MWD, which derives its supply from the Colorado River and the California State
Water Project. The percentage of water purchased from MWD has decreased significantly
over the last several years due to conservation efforts, the water transfer agreement with
Imperial Irrigation District (IID), the All-American and Coachella lining project agreements,
and the water purchase agreement for water produced at the Carlsbad Desalination Plant.
The District continues its efforts to diversify water resources, reducing dependence on
traditional water supplies from the Colorado River and the Sacramento-San Joaquin Delta.
The District also has been proactive in reducing its dependence on MWD water treatment
facilities. For example, in 2009 the District entered into an agreement with the CWA that
allowed the neighboring Helix Water District to treat imported water on behalf of the District
at Helix’s Levy Water Treatment Plant. This has brought regional water treatment closer to
District customers, which lessens dependence on water treatment facilities located outside
of the County.
The District also collects and recycles wastewater from approximately 4,714 homes and
businesses. The District collects wastewater and delivers it to its Ralph W. Chapman Water
Recycling Facility (Chapman), which is capable of recycling wastewater at a rate of 1.3
million gallons per day. In addition to the Chapman facility, the District continues to
purchase up to 6 million gallons per day of recycled water from the City of San Diego’s
South Bay Water Reclamation Plant. The use of recycled water for landscape irrigation and
industrial processes reduces dependence on imported potable supplies, provides a local
supply that is drought proof, and diversifies District sources.
Sewer Cost of Service Study
The District performed a sewer cost of service study and the results were communicated
to the Board on May 6, 2020. Staff recommended a modification to the residential and multi-
residential rate structures by changing the volume basis from a one-year winter average to
a three-year winter average consumption methodology. This method will stabilize
residential sewer rates and revenues, which is an important component of budgeting to
meet the ongoing debt covenant requirements of a 2019 Wastewater Revenue Bond
issuance. At the direction of the Board, the Fiscal Year 2021 budget reflects the cost of
service study results with the proposed modifications to sewer rates and rate structure. A
Proposition 218 hearing is scheduled for October 7, 2020, and District staff does not
anticipate opposition to the rates and rate structure modifications. Upon completion of the
hearing, the Board can approve the rates and rate structure changes to be effective January
1, 2021.
xii
Fiscal Year 2021 Operating Budget Summary
The Fiscal Year 2021 budget was prepared with the continuing challenges of CIP inflation,
water costs, insurance costs, the City of San Diego’s Pure Water program costs, as well as
stabilizing the sewer rates. The budget has been further challenged with having to project
the fiscal impacts of the COVID-19 pandemic. Included in the proposed budget are
reductions in water sales, capacity fee revenues, property tax and penalty revenues, and an
increase in the District’s bad debt expense. These impacts have been offset by savings
initiatives instituted in response to the projected adverse impacts.
The District’s operating expenditures consist of three major sectors: potable water, recycled
water, and sewer, totaling $98.5 million of budget expenditures for Fiscal Year 2021.
Revenues from potable and recycled water are projected to be $87.2 million, approximately
$6.6 million less than the Fiscal Year 2020 budget. District staff budgeted potable water
sales volumes to decrease by 12.9% compared to Fiscal Year 2020 budgeted potable sales.
This decline is due to uncertain impacts of the COVID-19 pandemic on residential and
commercial water usage resulting from increasing unemployment and mandated
commercial closures. The District projects sewer revenues to be $2.9 million, approximately
$20 thousand less than Fiscal Year 2020. The remaining budgeted revenues of $8.4 million,
approximately $0.8 million less than Fiscal Year 2020, come from various special fees,
assessments, and miscellaneous income.
Other significant aspects of the Operating Budget are:
A balanced budget supporting the goals of the Strategic Plan.
The use of an economist to project growth for the region.
An updated six-year Rate Model to ensure sound financial planning and reserve
levels.
Ongoing water supply rate increases of 4.9% from MWD and CWA due to the high
cost of supply programs, higher energy costs, and increasing operating costs.
2.9% water rate increase to District customers budgeted for January 1, 2021, and a
2.8% rate increase for sewer, effective January 1, 2021.
Metro sewer costs include the anticipated impact of the City of San Diego’s Pure
Water Program costs.
The District maintains low water rates, below the countywide average of the County’s
24 water agencies.
xiii
Fiscal Year 2021-2026 Capital Improvement Program (CIP)
The CIP budget emphasizes long-term planning for ongoing programs to meet population
growth, facilities replacement, and betterment of infrastructure while functioning within
fiscal constraints. The Fiscal Year 2021 CIP budget contains 104 projects and totals $8.46
million. The District categorizes projects into three business segments: potable water,
recycled water, and sewer. Funding for the Fiscal Year 2021 potable, recycled, and sewer
projects are $6.6 million, $1.4 million, and $477 thousand, respectively. CIP projects are
also categorized into four categories: expansion, betterment, replacement, or new water
supply.
The following is a breakdown of the CIP projects into the four categories:
Expansion projects $ 69,000
Betterment projects 1,684,000
Replacement projects 6,551,000
New Supply projects 157,000
Total $ 8,461,000
The Fiscal Year 2021-2026 CIP budget of $92.3 million has increased by $4.0 million versus
last year. The total water CIP budget for the six-year period is $85.4 million, which is a $5.5
million increase compared to Fiscal Year 2020, while the sewer CIP of $6.9 million is
decreasing $1.5 million compared to Fiscal Year 2020.
During Fiscal Year 2020, sewer completed a $3.0 million wastewater revenue bond
issuance. The District projects water debt issuances of $5.5 million and $15.3 million in
Fiscal Year 2023 and Fiscal Year 2025, respectively, as well as a sewer debt issuance of $3.2
million in Fiscal Year 2024.
COVID-19 Impacts
Due to the ongoing pandemic, the District has reviewed the CIP projects and has deferred
projects that may be deferred without placing undo risk on the District. In addition,
projects that may qualify for stimulus funds have been identified and are planned to meet
potential timelines and deliverables required by stimulus programs.
Awards and Acknowledgments
The Government Finance Officers Association of the United States and Canada
presented Otay Water District the Distinguished Budget Presentation Award for its
annual budget for the fiscal year beginning July 1, 2019. To receive this award, a
governmental unit must publish a budget document that meets program criteria as
xiv
a policy document, as an operations guide, as a financial plan, and as a
communications device.
The California Society of Municipal Finance Officers presented Otay Water District
the Certificate of Award for Excellence in Operating Budgeting for Fiscal Year 2019-
2020.
The California Society of Municipal Finance Officers presented Otay Water District
the Certificate of Award for Excellence in Capital Budgeting for Fiscal Year 2019-2020.
The Government Finance Officers Association Officers presented Otay Water District
the Certificate of Excellence in Financial Reporting for its Comprehensive Annual
Financial Report for the Fiscal Year ended June 30, 2019.
Conclusion
The dynamic challenges presented this year, including the COVID-19 pandemic, are being
met by the District’s Board of Directors’ resolve to keep the stability and financial strength
of the District as one of its highest priorities. Reserves will be maintained above target levels
as will the District’s debt coverage level. The Board of Directors, management team, and
staff are all committed to efficiency in both District operations as well as in its capital
development. With these efficiencies and the ongoing investment in new technologies, the
District has a competitive edge in providing quality service.
This budget reflects the vision of the District’s Board, management, and staff. The District
will continue to strive to make improvements in budget processes, including an extensive
review and analysis of projections for revenues, expenditures, capital projects, and reserves.
I would like to thank 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, we acknowledge and appreciate their continued support and direction in
achieving excellence in the financial management and operations of the District.
Jose Martinez, General Manager
xv
Distinguished Budget Presentation Award
The Government Finance Officers Association presented a Distinguished Budget
Presentation Award to the District for its annual budget for the fiscal year 2019-2020. 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.
xvi
Financial Awards
The California Society of Municipal Finance Officers presented Otay Water District the Operating
Budget Excellence Award for Fiscal Year 2019-2020.
xvii
Financial Awards
The California Society of Municipal Finance Officers presented Otay Water District the Capital
Budgeting Excellence Award for Fiscal Year 2019-2020.
xviii
Financial Awards
The Government Finance Officers Association Officers presented Otay Water District
the Certificate of Achievement for Excellence in Financial Reporting for its
Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2019.
xix
RESOLUTION NO. 4384
A RESOLUTION OF THE BOARD OF DIRECTORS OF
OTAY WATER DISTRICT ADOPTING THE FISCAL YEAR 2020-2021
OPERATING AND CAPITAL BUDGET; AND SALARY SCHEDULE
WHEREAS, the Otay Water District Board of Directors have
been presented with three budget options (Exhibits A, B, and C)
for the operation of the Otay Water District for Fiscal Year
2020-2021; and
WHEREAS, the Fiscal Year 2020-2021 Operating and Capital
Budget options, have been reviewed and considered by the Board;
WHEREAS, it is in the interest of the District to adopt a
budget for said year;
WHEREAS, in connection with the adoption of the budget, the
Board is also being presented with the Salary Schedule
(Exhibit D) for its consideration, in order to comply with
California Code of Regulations Section 570.5,
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by
the Board of Directors of the Otay Water District that the
Operating and Capital Budget for the operation of the District,
incorporated herein by reference as Exhibit C, is hereby adopted
for water and Exhibit C, is hereby adopted for sewer as the
District’s budget for Fiscal Year 2020-2021.
BE IT FURTHER RESOLVED that the Board hereby approves and
adopts the Salary Schedule included with the budget and,
consistent with his authority over employee compensation under
xx
both State law and the District’s Code of Ordinances, authorizes
the General Manager to update the Salary Schedule, whenever
necessary, to reflect changes made within his authority.
PASSED, APPROVED AND ADOPTED by the Board of Directors of
Otay Water District at a board meeting held this 3rd day of June
2020, by the following vote:
Ayes: Directors Croucher, Robak, Smith and Thompson Noes: Director Gastelum Abstain: None Absent: None
________________________ President ATTEST:
____________________________ District Secretary
xxi
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xxii
Overview
Budget Guide
The District views the budget as an essential tool for proper financial management. This budget is
developed with input from each department of the organization and is set prior to the start of each
fiscal year. It is designed and presented for the general needs of the District, its staff, and citizens.
The budget 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.
Overview
This introductory section contains general information about the District such as: mission statement,
vision, statement of values, District formation, organizational chart, and the budget process and
calendar.
Community Profile
This section contains the demographics of the District along with the current and projected
economic conditions and water and sewer rate comparison. It also includes statistics on the
District’s customers, the region’s tax base, rainfall, future development, and projects that will have an
impact on the District in the coming years.
Strategic Plan
The Strategic Plan is the core document which guides the District’s efforts to meet and positively
adapt to change. The overall plan is extensively reviewed and revised every three-to-four years. This
current edition (covering fiscal years 2019-2022) is a continuation of the 2015-2018 plan and is the
6th multi-year plan dating back to 2002. Included in this section are the District’s perspectives, goals,
key performance indicators, measurement methods, targets for each department, and the historical
results of each key performance indicator.
Financial Summaries
This section contains an overview of the District’s revenues and expenditures by fund for the current
budgeted fiscal year, the prior year’s actual amounts, and the future 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 for 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 six-year forecast is prepared based on the Rate Model results.
1
Overview
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 the
General Revenues and Expenses section. An allocation of overhead costs is made to equitably
distribute 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 schedules, performance
indicators, accomplishments, and goals. Also provided are graphical presentations of departmental
budget percentages to District totals, 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,
the Sewer Master Plan, major assumptions and criteria, a six-year listing of CIP project expenditures
justifications, and the impact on the Operating Budget and capital purchases budget for the fiscal
year are located in this section. The District also publishes a separate Six-Year Capital Budget that
provides more detail of each project (budget amount, description, justification, comments, fund
details, expenditure schedule and a map of the project location). The FY 2021-2026 Six-Year Capital
Budget is available on our website at otaywater.gov/cip.
Policies
This section includes a summary of the District’s financial policies and practices, including the
Reserve Policy, Investment Policy, and Debt Policy.
Appendix
The last section consists of a Glossary, List of Acronyms, and an Index.
2
Overview
Mission Statement
To provide exceptional water and wastewater service to its customers, and to manage District
resources in a transparent and fiscally responsible manner.
Vision
To be a model water agency by providing stellar service, achieving measurable results, and
continually improving operational practices.
Statement of Values
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.
Employees:
We see each individual as unique and important. We value diversity and open communication to
promote fairness, dignity, and respect.
Teamwork:
We promote mutual trust by sharing information, knowledge, and ideas to reach our common goals.
Innovation:
We constantly seek better, more efficient, and cost-effective ways to deliver our services.
3
Overview
District Formation
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. The District was
established 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. In 1957, developers in south Spring
Valley created the La Presa County Water District to obtain water from the San Diego County Water
Authority (CWA). The CWA is the water wholesale supplier of the member agencies in San Diego
County. In the fall of 1969, Otay Water District and La Presa County Water District merged into the
Otay Water District. Since then, the District has provided high quality water to a semi-arid region of
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). 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
(1,200 acre-feet per year). The District is also in partnership with the City of San Diego to beneficially
reuse an additional 1,928 acre-feet per year of recycled water for fiscal year 2021, and ultimately up
to 5,900 acre-feet per year. The District continues to be the largest retail provider of recycled water
in the County of San Diego.
The District also owns and operates a wastewater collection system providing public sewer service
to approximately 4,700 customer accounts within the Jamacha drainage basin. The sewer service
area covers approximately 8,800 acres, which is about 11% of the District’s total service area.
Residential customers comprise 97% of the sewer customer base.
Service Area
The District's boundaries encompass an area of
approximately 125.3 square miles or 80,208 acres 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, abutting the cities of
El Cajon and La Mesa and encompassing most of the City
of Chula Vista and a small portion of the City of San Diego.
The District purchases 100% of its treated water. Regionally,
about 80% is imported, which is a blend from the Colorado
River and the California State Water Project. Twenty percent
of the District’s treated water comes from local supplies,
including groundwater, local water storage within the
county and from the Pacific Ocean via seawater
desalination. The District purchases its treated water from
the San Diego County Water Authority and receives a blend
of treated water from the Metropolitan Water District of
Southern California’s R.A. Skinner Treatment Plant, the San
4
Overview
Diego County Water Authority’s Twin Oaks Valley Water Treatment Plant, the Carlsbad Desalination
Plant, and the Helix Water District’s R.M. Levy Water Treatment Plant.
Organizational Structure
The District has a five-member Board of Directors that serve four-year, alternating terms on the
Board. Each Director is elected by voters within their respective division boundaries to represent the
public’s interest with regard to rates for service, taxes, policies, ordinances, and other matters related
to the management and operation of the District. The Board generally meets in open public session
on the first Wednesday of each month at 3:30 p.m. at the District headquarters located at 2554
Sweetwater Springs Boulevard, Spring Valley, California. Due to COVID-19, as of March 16, 2020,
Board Meetings have been streamed live via audio and video Zoom.
Citizens and
Customers Board of Directors
General Manager (5)
Safety and
Security
Administration
Purchasing
and Facilities
Controller and
Budgetary
Services
Treasury and
Accounting
Services
Customer
Service
Meter
Services
Water System
Operations
Utility
Maintenance/
Construction
Water Resources,
Planning, Design
and
Environmental
Administrative
Services
(23)
Human
Resources
Information
Technology
and
Geographic
Information
System
Finance
(31)
Strategic
Planning
Public Services
and
Field Services
Engineering
(26)
Water
Operations
(54)
Collection,
Treatment, and
Reclamation
Operations
5
Overview
Budget Process
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, the
Sewer 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 and new growth, developers’ input, SANDAG projections, and economic
outlook.
To assure reliable and 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 0.25%.
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.
The Finance Department prepares the budget for the potable, recycled, and sewer systems. This is
done using estimated changes in costs from the District’s wholesale water providers as well as
estimated changes in sewer charges provided by the County and City of San Diego. Other significant
factors in the budget development include estimated water volumes, water cost projections, debt
Year-end
Balances
Operating
Budget Input 6-Year
Rate Model
Strategic
Plan
Operating
Budget Water
&
Sewer
Rates CIP
Budget 6-Year CIP
Budget Input
MWD/CWA & City
Sewer Rates
Assumptions
Interest Rates
Inflation
Growth
Sales
Targets
Debt Coverage
Reserve Levels
6
Overview
coverage for current and future debt issuances, reserve levels, 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.
Personnel Budget
The budgeting of salaries and benefits is performed in the position budgeting module of the
Enterprise Resource Planning (ERP) 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 General Manager. 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.
Administrative and Materials and Maintenance Budget
Administrative and Materials and Maintenance expenses are entered into the budget model of the
ERP system by individual department requests. These requests are compared to last year’s
budgeted and actual expenses to determine reasonableness by the Finance Department. All costs
are justified and supported by explanations. Finance compiles the operating budget and submits it
to the General Manager for review prior to presentation to the Board of Directors.
Capital Improvement Plan (CIP) Budget
The Engineering Department issues budget instructions for the CIP budget process. Each year, all
existing CIP projects are reviewed and capital project costs are adjusted and/or closed as
appropriate. This requires each project manager to review the year-to-date project expenses and
then estimate costs to the end of the fiscal year. They also project future costs to complete the
project. Adjustments to capital project expenses include scope changes and/or construction cost
increases. District Chiefs discuss the cost-benefit of projects, evaluate the reasonableness of the
project budget, current and alternate funding source(s) as well as the timing and/or priority of the
project. All new CIP project requests and significant changes to existing projects are reviewed and
approved by all District’s Chiefs and the General Manager. All CIP projects are entered into the CIP
Budget application. The Engineering Department works closely with the Finance Department to
finalize the six-year CIP Program Budget. Finance ensures that the District funding and reserve levels
are maintained in accordance with the District’s policy. Engineering then compiles the six-year CIP
Program Budget and submits it to the General Manager for review prior to presentation to the Board
of Directors.
Budget Control and Jurisdiction
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 June. The review of the Strategic Plan
and the adoption of the budget on an annual basis give the District its direction for the following fiscal
year.
7
Overview
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 appropriations 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 the fiscal year. All approved modifications to the budget will be documented in the form of a
staff report and noted in the board meeting minutes.
Budget Basis
The District utilizes the accrual basis for budgeting which is the same as the basis of accounting
used in the audited financial statements, recognizing revenues and expenses in the period in which
they are earned and incurred, regardless of the timing of cash receipts and disbursements. The
District reports its activities on an enterprise fund basis, which is used to account for operations that
are financed and operated in a manner similar to a private business enterprise and conforms to the
guidelines of Generally Accepted Accounting Principles (GAAP). It is the intent of the District to
recover the costs (including replacement cost of existing assets) of providing goods or services to
the general public on a continuing basis, through financing or primarily through user charges.
Fund Structure
The District budgets services in one of the three business segments: Potable, Sewer, or Recycled.
Each business segment categorizes revenue and expenditure as a function of the Operating
Budget, Capital Improvement Plan Budget, or Developer Deposits. Please refer to the District’s
Reserve Policy, beginning on page 177, which provides the detailed flow of funds.
Recycled Sewer
Sewer
Operating
Budget
Sewer
CIP Budget
Sewer
Developer
Deposits
Recycled
Operating
Budget
Recycled
Developer
Deposits
Recycled
CIP Budget
Potable
Potable
Operating
Budget
Potable
CIP Budget
Potable
Developer
Deposits
8
Overview
Budget Calendar
December/January
The Finance Department posts a budget workbook on the District’s intranet which provides
instructions on the upcoming operating budget deadlines, budget procedures for personnel,
administrative expenses, and materials and maintenance expenses. Included in this workbook are
historical trends, assumptions, and instructions on how to enter the expense data into the District’s
budget module. For the six-year Capital Budget process, the Engineering Department provides
Chiefs with the upcoming CIP deadlines and procedures.
February
Chiefs submit requests to Human Resources for personnel reclassifications changes,
advancements, long term staffing and new personnel. Human Resources evaluates the requests
and provides recommendations to the General Manager. Human Resources notifies the Chiefs of
the status of the requests and Finance is provided with preliminary personnel changes. Departments
enter their budget requests in the budget module and provide their year-end projections to the
Senior Accountant. Explanations of variances from the current year’s budget versus the current year
projected expenditures and explanations of the projected expenditures versus the next fiscal year’s
budget request are provided to the Senior Accountant. The Senior Accountant reviews the year end
projections for reasonableness and documents the explanations of the variances for the Assistant
Chief of Finance to review. CIP project managers review and update their existing CIP projects,
identify projects to be deleted and submit new CIP projects to Engineering for consideration. The
CIP budget requests are reviewed with the General Manager.
March
The Finance Department meets with other departments to review their current year administrative,
materials and maintenance expenditures, year-end projections, and the preliminary budget requests
with Chiefs and Section Managers. Finance finalizes the explanations of the variances and
consolidates the year-end projections and the new fiscal year’s budget requests for Chiefs and the
General Manager’s review and discussion.
Human Resources finalizes new personnel requests, reclassifications, and change requests with the
General Manager and provides it to Finance for budgeting. The Engineering Department reviews
the CIP budget with the Finance Department and provides year over year explanations of the
changes. The preliminary six-year CIP Budget is incorporated into the Rate Model to determine
proposed water and sewer rates.
Once budgets have been calculated, the Finance Department inputs all 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 six years of revenue and
expenses. The debt coverage ratio is also evaluated to ensure adequate levels. Projected 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 the reserve levels in accordance with the
Reserve Policy.
9
Overview
Budget Calendar (continued)
Governor Newsom issued stay-at-home orders for California on March 19, 2020. In anticipation of
an economic downturn, District staff re-evaluated the preliminary Fiscal Year 2021 operating and six-
year capital improvement program budgets. Staff incorporated saving initiatives, deferred expenses,
evaluated revenues, and delayed capital improvement project expenditures to future years. As a
result, staff was prepared with different budget scenarios in response to the COVID-19 pandemic.
April
Finance provides the Chiefs and General Manager preliminary budget schedules containing key
budget assumptions for their review and incorporates recommended changes.
During the regular board meeting, the independent consultant presents the District’s economic
outlook report. This report is used by the engineering department to validate growth projections,
meter sales and construction climate. In late April, staff schedules a budget workshop (workshop
#1) to review the Strategic Plan Initiatives, to discuss the key budget assumptions and to provide
preliminary information on the Capital Improvement Program Budget.
May
At the regularly scheduled May Board meeting, staff presents the results of the sewer cost of service
study and requests direction to prepare the FY 2021 budget based on the results of the study.
Based on the Board’s input from the budget workshop, staff will modify the budget for final
presentation and approval in June.
June
At the regularly scheduled June Board meeting, staff presents the consolidated operating and CIP
budgets (workshop #2), along with recommended rate changes, to the Board for approval.
July
Rate increase notices containing changes in water rates, fees, and charges, effective January 1, 2021,
are included as inserts for the following customers classes: residential, multi-residential, recycled,
irrigation, and commercial agricultural water, and business and publicly-owned.
For sewer customers, notices of the public hearing (Proposition 218 hearing) to be held on October
7, 2020 are included as inserts for the following customer classes: residential, land only, and
commercial. To ensure that the public hearing noticing requirements are met, the District also
provides the notices to the record owner in a separate mailing.
October
On October 7, 2020, a public hearing (Proposition 218 Hearing) on sewer rates, fees, and charges
will be held in the Board of Directors Meeting Room, 2554 Sweetwater Springs Blvd., Spring Valley,
California, 91978. If, due to COVID-19, the State or County Shelter in Place Orders have not been lifted
by October 7, 2020, the Public Hearing will be live streamed (audio and video) via Zoom. The purpose
of the hearing is to consider all protests against the proposed rates, fees, and charges that, if
approved, will be imposed on properties serviced by the District.
January 2021
Water and sewer rates, fees, and charges become effective January 1, 2021.
10
Overview
Budget Calendar
December-January February March-April May-June July-January 2021
12/9/19
Budget instructions
for the Operating and
Capital Budget are
distributed to
departments
1/2/20
Budget workbooks
for the Operating and
Capital Budget are
distributed to
departments
1/17/20
Project managers
submit CIP Budgets
for New Projects and
changes to existing
Projects in CIP
Budget Application
2/4/20
Finance initial review of
CIP Budget with Chief of
Engineering including year
over year explanations
2/7/20
Chiefs to submit request
for new personnel,
personnel reclassification
changes, Position Analysis
Questionnaire,
advancements, and long-
term staffing to HR
2/11/20
Chiefs to submit Operating
and Admin Budget
requests
2/14/20
Chiefs to submit Labor
Budget Worksheets
2/20/20
Chiefs to submit Capital
Purchases and
justifications
2/21/20
HR to complete
preliminary review of new
personnel, personnel
reclassification changes,
requests, and
advancements
3/4/20
HR to review new
personnel,
reclassifications and
change requests with
General Manager
3/19/20
CIP Budget finalized with
Chiefs and General
Manager
3/24/20
Revised budget
worksheets are
distributed to
departments to evaluate
savings due to financial
impacts of the COVID-19
pandemic
4/1/20
Economic Outlook
presented to Board by
external Economist
4/9/20
Finance to review
Department Operating
Budgets and personnel
cost with Chiefs and
General Manager
4/20/20
FY 2021 Key Assumption
Practice Run-through
4/29/20
Key Budget Workshop to
discuss budget key
figures and assumptions
5/11/20
Review assumptions
and rates with Chiefs
and General
Manager
5/14/20
Preliminary Budget
provided to Assistant
Chiefs, Chiefs, and
General Manager for
review
5/18/20
FY 2021 Budget
Practice Run-through
6/3/20
Board
Meeting/Board
Workshop – approval
of the FY 2020-2021
Operating and
Capital Budget and
FY 2021-2026 Capital
Improvement
Program Budget
07/16/20-08/18/20
Water rate increase
notice inserted with
water billing.
Proposition 218
Hearing notice
inserted with sewer
billing and mailed
separately to record
owners.
10/7/20
Proposition 218
Hearing on sewer
rates, fees, and
charges.
1/1/21
The 2021 water and
sewer rates, fees,
and charges are
applied to customer’s
monthly billing
11
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12
Community Profile
Demographics
The City of Chula Vista is the second largest city in the San Diego metropolitan area and most of the
City east of the I-805 freeway is within the District’s service area. The following reflects the
demographics of the City of Chula Vista:
Demographics
Population – City of Chula Vista 272,202
Otay Water District population served (approximate) 225,870
Persons/Household 3.35
Ethnic/Racial makeup (City of Chula Vista)
Hispanic 61%
Non-Hispanic White 19%
Asian 13%
Black 4%
Other 3%
Median Age 33.5
Median Household Income $76,354
Percentage with 4-year degree or higher 28.8%
Source: San Diego Association of Governments, Current Estimates and
United States Census Bureau
Service Area Assessed Valuation
The District’s service area encompasses property with over $32.5 billion of assessed valuation.
Properties are assessed at 100% of their full value less exemption from taxation under the law and
homeowner’s exemptions. The District receives its portion of the 1% property tax, according to
Proposition 13 and AB8. With the very recent increases in the assessed valuation, the District will
benefit by receiving its proportionate share of this increase.
Five-Year Service Area Assessed Valuation
$ 26
$ 28
$ 29
$ 31
$ 33
$0
$5
$10
$15
$20
$25
$30
$35
FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
Bi
l
l
i
o
n
s
13
Community Profile
Ten Principal Taxpayers – Fiscal Year 2020
Organization Assessed Percent
Value to Total
1. GGP-Otay Ranch LP $ 205,753,716 0.63%
2. Rancho Investors LP 166,821,912 0.51%
3. John Hancock Life Insurance Co USA 152,798,205 0.47%
4. Sharp Chula Vista Medical Center 143,048,978 0.44%
5. Corrections Corporation of America 128,137,991 0.39%
6. Regulo Place Apartments Investors LLC 117,747,271 0.36%
7. Homefed Otay Land II LLC 109,469,069 0.34%
8. Brisa Acquisitions LLC 100,316,870 0.31%
9. N M Pulse LLC 98,957,104 0.30%
10. Vista Pacific Villas LP/Sunbow Partners LP 98,744,456 0.30%
Total Top 10 Principal Taxpayers $1,321,795,572 4.05%
Total Service Area Assessed Valuation $32,526,483,633
Ten Largest Customers – Fiscal Year 2020
Customer Customer Annual % of Water
Name Type Revenues Sales
1. City of Chula Vista Publicly Owned $ 3,531,178 3.9%
2. State of California Publicly Owned 1,140,710 1.3%
3. County of San Diego Publicly Owned 1,026,287 1.1%
4. Eastlake III Community Association Commercial 886,948 1.0%
5. Chula Vista Elementary School District Publicly Owned 705,034 0.8%
6. Sweetwater Union High School District Publicly Owned 596,194 0.7%
7. Eastlake Country Club Commercial Recycled 551,600 0.6%
8. Elite Athlete Services, LLC Commercial 388,580 0.4%
9. Windingwalk Master Association Commercial 336,757 0.4%
10. Homefed Village III Temporary 329,712 0.4%
Total 10 Largest Customers $ 9,493,000 10.6%
Total District Customers $ 90,435,099
Source: County of San Diego Auditor and Controller
14
Community Profile
Water Rate Comparison, Member Agency Water Rates (1)
The District strives to remain cost effective in its rate setting by controlling operating costs, yet
passing through the full cost of supply. In September 2020, the District conducted a survey of the
water rates of the water providers within San Diego County. The following chart shows that the
District has the fifth lowest water rate in the region.
Projected Water Bill for FY 2021
Based on 11 Units of water used and ¾” Residential meter size
119.76
117.39
115.94
112.11
107.23
105.67
105.54
104.16
103.89
94.64
88.55
86.42
83.39
83.38
82.67
81.17
78.58
77.96
76.46
73.93
71.22
63.24
$0 $20 $40 $60 $80 $100 $120 $140
Ramona
Padre Dam
*Rainbow
*Fallbrook
Escondido
*Valley Center
Rincon
Yuima
Del Mar
Vista
San Diego
Olivenhain
*Vallecitos
Helix
Poway
Oceanside
*Carlsbad
Otay Water District
Sweetwater
*Santa Fe
San Dieguito
Lakeside
* At the time of the survey in September 2020, the member agency's FY 2021 rate was unavailable and an
assumption was made that no rate increase will be implemented in FY 2021.
(1) Only 22 of the 24 member agencies are surveyed. Camp Pendleton is not included in this survey due to being
a Marine Corps Base. The City of National City is not included because their water is supplied by Sweetwater.
15
Community Profile
Sewer Rate Comparison
The District conducted a survey of the rates of the sewer providers within San Diego County. Sewer
rates are billed at either a fixed or variable rate. The following chart shows the various sewer
providers and the type of rate that is charged to the consumers. The District has the fifth lowest sewer
rates in the County of San Diego.
134.83
81.39
81.25
80.99
80.41
79.17
76.26
68.46
66.08
64.01
62.15
61.08
60.54
57.58
56.86
56.67
56.45
55.25
54.72
53.08
52.39
48.75
42.47
42.46
39.52
38.99
28.66
28.64
$- $20 $40 $60 $80 $100 $120 $140 $160
Del Mar
*Fallbrook
Oceanside
Olivenhain
Encinitas
*Rancho Santa Fe
Padre Dam
Ramona
*Rainbow
El Cajon
Poway
Imperial Beach
La Mesa
Escondido
Solana Beach
Vista
*Valley Center - MG
Buena
Chula Vista
Lemon Grove
San Diego, City
Coronado, City
National City
Otay Water District
San Diego, County
*Vallecitos
*Carlsbad
Leucadia
Projected Sewer Bill for FY 2021
Based on 10.3 Units of water used and ¾” residential meter size
* At the time of the survey in September 2020, the member agency's FY 2021 rate was unavailable and an
assumption was made that no rate increase will be implemented for FY 2021.
16
Community Profile
San Diego Rainfall
San Diego received above average rainfall of 13.71 inches in FY 2020. The 10-year average of 9.50
inches for San Diego rainfall reflects the long-term drought conditions for our area. San Diego's
rainfall average over 20 years is 9.05 inches; the 30-year average is 9.78 inches; and the 40-year
average is 9.93 inches.
San Diego rainfall, while a contributing factor, is not the controlling factor for our potable water supply
shortage. The San Diego region imports 80.0% of its potable supply, so conditions elsewhere
significantly affect the actual amount of water available to the District. In the event the amount of
water supplied to the District is reduced, water sales revenues would decrease. Related water
purchase expenses would also be reduced, mitigating the impact of the decrease in revenues. The
amount of any supply reduction would dictate the magnitude of the District's response and type of
reaction.
Current Economic Conditions
COVID-19 Pandemic
According to the Xpera Group, the national unemployment rate dipped to 3.6% in January and six
months later, dropped down to 10.8%. The gains in May and June show that unemployment
claims were likely due to workers being furloughed as a result of the COVID-19 pandemic.
12.62
8.03
6.51 5.06
9.03 10.82 12.97
3.40
12.84 13.71
0
5
10
15
20
25
30
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
In
c
h
e
s
San Diego Rainfall
Fiscal Years 2011 - 2020
Annual Rainfall
10 year average
Source: Western Regional Climate Center
17
Community Profile
Total Employment
United States
January – July 2020
Month
Total Jobs
(in thousands) Change
January 158,714
February 158,759 45
March 155,772 (2,987)
April 133,403 (22,369)
May 137,242 3,839
June 142,182 4,940
July 143,532 1,350
Source: Xpera Group, Bureau of Labor Statistics
COVID-19: San Diego Employment
The impact of Governor Newsom’s stay-at-home orders issued statewide on March 19, 2020 is
reflective in San Diego County’s unemployment rate which had the largest increase from March to
April of 4.2% to 15%. The industry that suffered the largest loss has been leisure and hospitality as
shown below.
Job Losses by Category
Wage and Salary Employment
San Diego County
March – June 2020
Category March June Change % of Losses
Leisure & Hospitality 192,900 114,600 78,300 40.6%
Construction 80,200 77,200 3,000 1.6%
Professional & Business Services 259,500 251,000 8,500 4.4%
Manufacturing 117,100 106,800 10,300 5.3%
Government 252,900 240,000 12,900 6.7%
Education & Health Services 219,600 199,300 20,300 10.5%
Trade, Transportation & Utilities 218,800 190,300 28,500 14.8%
TOTAL 1,494,000 1,301,000 193,000
Source: Xpera Group, Bureau of Labor Statistics
COVID-19 Impacts
The impacts of COVID-19 on the region, and the District, are unprecedented. To estimate the
impact of COVID-19 on this budget and the subsequent fiscal years the District analyzed data
provided by a local economist, communication from the County of San Diego, and reports
published by AWWA. The adverse financial impacts of the COVID-19 pandemic were projected to
impact sales volumes, property tax collections, growth revenues, and bad debt. In response to
these impacts the District has incorporated savings initiatives into the FY 2021 budget and six-year
Unemployment Rate
United States
January – July 2020
Month
Unemployment
Rate
Employment
Rate
January 3.6% 96.4%
February 4.4% 95.6%
March 4.4% 95.6%
April 14.7% 85.0%
May 13.3% 86.7%
June 11.1% 88.9%
July 10.8% 89.2%
18
Community Profile
rate model. The cumulative savings initiatives implemented as part of this budget and six-year
rate model are projected to fully offset the projected financial impacts of the COVID-19 pandemic.
San Diego County Water Supply
A safe, reliable water supply is crucial for the vitality of the San Diego region’s economy and quality
of life of its residents. San Diego County imports approximately 80% of its water from the Colorado
River and Northern California. Since these sources face legal and environmental constraints, the
region has been making investments in the region’s water delivery and storage system and
exploring other avenues to ensure an adequate water supply. This includes water recycling, water-
use efficiency programs, water storage, groundwater desalination, and seawater desalination.
Desalinated Water Supply
In December 2015, the Claude “Bud” Lewis Carlsbad Desalination Plant began producing
approximately 50 million gallons of water per day to the CWA, enough to serve approximately
400,000 people, meeting 7% – 10% of the region’s demand. Since the production of desalinated
water from the Carlsbad plant, the District’s customers have received a portion of this highly reliable,
drought-proof water supply. The amount of desalinated water that the District’s customers receive
fluctuates daily based on a variety of factors including the CWA’s potable water demands.
Economic Outlook
At the start of each budget cycle, the District enters into a contract with an economist to complete
an economic and demographic analysis of the national and local economy. The study also provides
information on the changes in population, residential and commercial development within the
District service area. The following highlights the report:
The U.S. population growth is approximately 2.0-2.5 million annually and projections
anticipate a gradual decline in the rate of annual population gain.
The U.S. unemployment rate, as of April 2020, was 4% nationally and is projected to remain
in the 4.0% - 4.5% range.
San Diego’s population is projected to reach more than 3.8 million by the year 2040.
San Diego County has averaged 30,000 new civilian jobs annually. As a result, the civilian
unemployment rate is below 3%. If the statistics include the military, the unemployment rate
would be lower.
The median price of a detached home in San Diego County is $665,000.
The Future
Capital Improvement Program
The District provides water and sewer service to a population of approximately 225,870 customers,
including residential, business, government, industrial, and agricultural water users across urban,
suburban, and rural areas. The District’s service area population is projected to grow by 41% to
319,000 residents by 2050. To ensure a reliable water supply and sewer system for the future
19
Community Profile
including sustaining the current infrastructure, the District has developed several future planning
documents, which provide a guide to defining the District’s proposed projects. These planning
documents include: The District’s 2015 Water Facilities Master Plan Update, Wastewater
Management Plan, 2015 Urban Water Management Plan, 2015 Integrated Water Resources Plan,
and 2019-2022 Strategic Plan.
The major projects planned for delivery over the next six fiscal years include:
•711-2 Pump Station Replacement (P2578)
•Various Waterline Replacements (18 Total)
•Reservoir Improvements (12 Total)
•Sewer Basin Improvements (S2049, S2050, and S2053)
•Automated Meter Reading (P2604 and R2143) and Meter Replacement (P2594, P2662, R2148,
and R2152)
Otay Mesa Desalination Conveyance and Disinfection System Project (P2451)
The Otay Water District continues its commitment to conserve and recycle water and to diversify the
water resources that serve its customers, thus reducing dependence on traditional water supplies
from the Colorado River and the Sacramento-San Joaquin Delta.
In light of the growing need for new potable water supplies in Mexico and San Diego County, the
proposed Rosarito plant and the District’s Otay Mesa Conveyance and Disinfection System Project
would provide a new drought-proof water supply to its customers. In May 2017, the U.S. Department
of State granted a presidential permit to allow the Otay Water District to build a potable water pipeline
to cross the U.S.-Mexico border. This permit authorized the District to “construct, connect, operate,
and maintain cross-border water pipeline facilities for the importation of desalinated seawater at the
International Boundary between the United States and Mexico in San Diego County, California.”
Although purchasing and transporting water from Aguas de Rosarito’s desalination plant in Rosarito,
Baja California, Mexico, has been a component of the District’s water supply diversification efforts,
the project for the District has been halted. The District is interested in diversifying its water supplies
by purchasing potential excess desalinated ocean water from a future Rosarito desalination plant,
after the project has first satisfied and secured the water needs of its Mexican consumers in northern
Baja California.
If the project does move forward, the District’s project has already undergone environmental review
as required by the California Environmental Quality Act and National Environmental Policy Act and
has obtained a U.S. Fish and Wildlife biological permit. The District recognizes that such a project
requires rigorous safeguards and review to ensure the protection of public health and a permit from
the California Water Resources Control Board’s Division of Drinking Water will be needed to ensure
that water imported from Mexico meets the same water quality drinking standards as water from
regional lakes, from the Claude “Bud” Lewis Carlsbad Desalination Plant, and from the City of San
Diego’s Pure Water Program.
20
Community Profile
The District fully understands and respects Baja California’s sovereign decision to either approve or
not approve the project. This interest has been discussed openly and transparently at the District’s
public Board meetings, as has its continued commitment to water conservation, recycling,
diversification, and reducing the District’s reliance on the Colorado River for the future benefit of our
water customers.
If the project advances, San Diego County and the District’s cross-border region would add
desalinated water to the long list of energy, aerospace, medical device, and electronics products that
cross the border every day.
Future Development
Using the economist’s report, the District’s engineering staff projects that over the next six years the
District will sell another 2,320 meters which translates to 3,473 equivalent dwelling units (EDUs).
These projections have been incorporated in the Five-Year Forecast on page 55.
Residential Construction
The following table summarizes the projected new units for sale and new units for rent from Fiscal
Year 2021 through Fiscal Year 2026. It is anticipated that most of the development in the District will
be in East Chula Vista (Otay Ranch). There is a large development in apartments and townhomes
to appeal to the young families.
Projected Meter Sales in Equivalent Dwelling Unit (EDUs)
33
3
28
3
55
9
80
3
81
6
68
2
0
200
400
600
800
1,000
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
21
Community Profile
Projected Units for Sale and Rental
Otay Water District Service Area
FY 2021 through FY 2026
Project 2021 2022 2023 2024 2025 2026 Total
Total Single-Family Detached 175 125 337 539 562 450 2,188
Total Single-Family Attached 250 225 450 642 760 697 3,024
Total For Sale 425 350 787 1,181 1,322 1,147 5,212
Revised Apartments 482 500 1,000 1,200 1,000 1,000 5,182
Total 907 850 1,787 2,381 2,322 2,147 10,394
% Sale 47% 41% 44% 50% 57% 53% 50%
% Rental 53% 59% 56% 50% 43% 47% 50%
Source: The Xpera Group, March, 2020
Commercial Construction
Commercial construction in the District is projected to be significant during the next six years with
6,860,000 square feet of commercial development in the planning stages and under construction,
including a 3.4 million square foot Amazon facility. There are also approximately 682 total hotel
rooms in five planned hotel projects.
Under Construction and Planned Commercial Development
Expected Delivery FY 2021 through FY 2026
Expected Delivery
Year 2021 2022 2023 2024 2025 2026 TOTAL
Industrial (Sq. Ft.) 700,000 500,000 400,000 400,000 400,000 400,000 2,800,000
Amazon (Sq. Ft.) 3,400,000 3,400,000
Office (Sq. Ft.) 10,000 10,000 150,000 150,000 10,000 150,000 480,000
Retail (Sq. Ft.) 15,000 20,000 20,000 20,000 90,000 15,000 180,000
Total (Sq. Ft.) 725,000 3,930,000 570,000 570,000 500,000 565,000 6,860,000
Hotels (Rooms) 153 179 _ 250 _ 100 682
Source: The Xpera Group March 2020
Miscellaneous Development
The City of Chula Vista has two major upcoming projects that are located in the District’s service
area: University Village and Sunroad East Otay Mesa Business Park (Sunroad Project). The Sunroad
Project is currently planned for a combination of 3,100 multi-family units and 843,000 square feet of
commercial space. University Village is a proposed campus of St. Katherine University which is
currently based in San Marcos. The land is also planned for a total of 1,597 residential units and 29.3
acres of industrial space.
22
Community Profile
Proposed Miscellaneous Development Activity
Chula Vista/Otay Mesa
Property Location Type Acres Est Date of
Completion
Sunroad East
Otay Mesa
Business Park
SR125 & Otay
Mesa Road
Mixed use, including 3,100
housing units, 78,000
square feet of retail space
and 765,000 square feet of
industrial/high tech space.
253 2025
Salt Creek Golf
Course
Hunte
Parkway, east
of SR125
164 acres to be sold, 80
acres to remain
undeveloped
245 2025
University Village Innovation
Center
First project: St. Katherine’s
University in planning with
1,000 students
1,281 2023
Brown Field Otay Mesa
Road
Airport with commercial
development
880 2038
Source: The Xpera Group March 2020
23
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24
Strategic Plan
Strategic Planning Process
The District’s strategic planning process is designed to provide clarity, direction, and focus for its water service
and to ensure the agency is working toward a common goal. The primary purpose of the Strategic Plan is to
ensure alignment of the District’s mission, vision, values, and plan execution. Lastly, the Strategic Plan helps
the District manage its day-to-day operations and services, and reduce business risk.
The District’s Strategic Plan is developed using the Balanced Scorecard framework. Using this framework, the
District’s Strategic Plan is centered on four perspectives: customer, financial, internal business process, and
learning and growth. The key to this planning framework is that these perspectives are not developed in
isolation of each other, but as a unified set of strategies and objectives. This unified approach is clearly
understood throughout the District and by its governing Board.
Each of the four perspectives is explained below:
Customer: Focuses on performance related to customer service levels, satisfaction, brand, and confidence.
Financial: Focuses on the financial performance of the agency.
Internal Business Process: Focuses on business processes designed to deliver and improve customer
objectives and services.
Learning and Growth: Focuses on the agency’s culture and development of staff to ensure there
is a productive and skilled workforce in place.
In addition, the District uses the American Water Works Association’s (AWWA) utility benchmarking
performance indicators to monitor, track, and improve day-to-day essential tasks and services, which are
collected on a quarterly schedule. Execution of strategic objectives and industry-based performance
indicators are presented bi-annually to the public and Board.
The District’s current strategic plan is a continuation of the 2015-2018 plan, and it is the 6th multi-year plan
dating back to 2002. Led by the General Manager and management team, strategic sessions were held to
review risks, opportunities, and develop short and long-term goals. The team carefully examined and
prioritized operational and service goals ranging from enhancing customer engagement to pension liability.
In a special workshop held in December 2017, the District’s Board, along with an outside consultant,
reviewed and provided feedback on the 2019-2022 Strategic Plan and set in motion via the General
Manager, the direction to prepare, finalize, and complete the District’s new four-year plan. The complete
2019-2022 Strategic Plan is located on our website. The following pages reflect the District’s perspectives,
goals, key performance indicators, measurement methods, and targets for each department:
25
Key Performance Indicators: Administrative Services
Performance
Indicator Target
Enterprise
System
Availability
No less than 99.5%
availability per quarter
annually
FY 2019 (1)FY 2020 FY 2021
Target 99.5% 99.5% 99.5%
Actual 99.5% 99.5% 99.5% (2)
Performance
Indicator Target
Employee
Voluntary
Turnover Rate
Less than 5%
turnover annually
FY 2019 (1)FY 2020 FY 2021
Target 5.0% 5.0% 5.0%
Actual 3.7% 2.2% 0.0% (2)
Performance
Indicator Target
Training Hours
per Employee
12 hours or more per
employee annually
FY 2019 (1)FY 2020 FY 2021
Target 12.0 12.0 12.0
Actual 26.9 59.9 12.0 (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
99.5% = 3.60 hours of
downtime per
month/1.83 days of
downtime in a year
Le
a
r
n
i
n
g
a
n
d
G
r
o
w
t
h
Goal Measurement
Method
Provide hands-on leadership, support,
and empowerment of staff, in order to
maintain an accountable high-
performing workforce.
Total qualified training
hours for all
employees/ Average
number of full time
employees (FTE)
Le
a
r
n
i
n
g
a
n
d
G
r
o
w
t
h
Goal Measurement
Method
Provide hands-on leadership, support,
and empowerment of staff, in order to
maintain an accountable high-
performing workforce.
Number of voluntary
resignations (not
including retirements)
/Average number of
employees
26
Key Performance Indicators: Administrative Services (continued)
Performance
Indicator Target
Safety
Training
Program
24 hours or more per
field employee
annually
FY 2019 (1)FY 2020 FY 2021
Target 24.0 24.0 24.0
Actual 34.0 79.0 24.0 (2)
Performance
Indicator Target
Injury Incident
Rate(3)
No more than 6.8
incidents per 200,000
hours worked
annually
FY 2019 (1)FY 2020 FY 2021
Target 6.8 6.8 6.8
Actual 4.4 2.9 6.8 (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
(3) KPI based on calendar year and results would be available at 4th quarter of the following fiscal year
Strategic Plan
Le
a
r
n
i
n
g
a
n
d
G
r
o
w
t
h
Goal Measurement
Method
Provide hands-on leadership, support,
and empowerment of staff, in order to
maintain an accountable high-
performing workforce.
Number of safety
training hours/
Number of field
employees (includes
mandated training)
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
[200,000 (Number of
injuries and
illnesses)]/Employee
hours worked
27
Key Performance Indicators: Finance
Performance
Indicator Target
Answer Rate No less than 97% per
quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 97.0% 97.0% 97.0%
Actual 98.4% 98.4% 97.0% (2)
Performance
Indicator Target
Billing
Accuracy
No less than 99.8%
per quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 99.8% 99.8% 99.8%
Actual 99.9% 99.99% 99.8% (2)
Performance
Indicator Target
Percentage of
Customers
Paying Bills
Electronically
No less than 75% per
quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 75.0% 75.0% 75.0%
Actual 78.7% 80.5% 75.0% (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
Strategic Plan
Measurement
Method
Number of all calls
answered/Number of
all calls received
Goal Measurement
Method
Cu
s
t
o
m
e
r
Fi
n
a
n
c
i
a
l
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Number of correct
bills/Number of total
bills
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Number of
customers paying
bills electronically/
Total number of
customers
Goal
Execute and deliver services that meet or
exceed customer expectations, and
increase customer engagement in order
to improve District services.
28
Key Performance Indicators: Finance (continued)
Performance
Indicator Target
Overtime
Percentage
Less than 100% of the
budgeted overtime
per quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 100.0% 100.0% 100.0%
Actual 129.0% 72.0% 100.0% (2)
Performance
Indicator Target
Sewer Rate
Ranking
Bottom 50th
percentile for the 28
sewer service
providers
in San Diego annually
FY 2019 (1)FY 2020 FY 2021
Target 14 14 14
Actual 3 5 5 (2)
Performance
Indicator Target
Water Rate
Ranking
Bottom 50th
percentile for the 22
member agencies in
San Diego annually
FY 2019 (1)FY 2020 FY 2021
Target 11 11 11
Actual 3 5 5 (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
Fi
n
a
n
c
i
a
l
Fi
n
a
n
c
i
a
l
Fi
n
a
n
c
i
a
l
Actual overtime
costs (including
comp time)
Strategic Plan
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Otay percentage
ranking among
regional agencies
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Otay percentage
ranking or the
average bill for sewer
among regional
agencies
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
29
Key Performance Indicators: Finance (continued)
Performance
Indicator Target
Reserve Level No less than 85%
annually
FY 2019 (1)FY 2020 FY 2021
Target 85.0% 85.0% 85.0%
Actual 100.0% 100.0% 85.0% (2)
Performance
Indicator Target
Distribution
System Loss
Less than 5% per
quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 5.0% 5.0% 5.0%
Actual 3.6% 3.8% 5.0% (2)
Performance
Indicator Target
Accounts per
Full-Time
Employee
(FTE)
407 accounts per
FTE annually
FY 2019 (1)FY 2020 FY 2021
Target 409.0 408.0 407.0
Actual 410.0 410.0 407.0 (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Number of reserve
funds that meet or
exceed fund target
levels/Total number
of reserve funds
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Potable + Recycled +
Sewer Accounts/
Number of full-time
employees
Fi
n
a
n
c
i
a
l
Goal
Strategic Plan
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
100 [Volume
purchased–(volume
sold + volume
used)/Volume
purchased]
30
Key Performance Indicators: Finance (continued)
Performance
Indicator Target
O&M Cost per
Account
No more than $575
per account annually
FY 2019 (1)FY 2020 FY 2021
Target $571 $552 $575
Actual $548 $545 $575 (3)
Performance
Indicator Target
Water Debt
Coverage
Ratio
150% excluding
growth revenue
annually
FY 2019 (1)FY 2020 FY 2021
Target 150% 150% 150%
Actual 165% 188% 150% (3)
Performance
Indicator Target
Sewer Debt
Coverage
Ratio (3)
150% excluding
growth revenue
annually
FY 2019(1)FY 2020 FY 2021(2)
Target NA 150% 150%
Actual NA 1241% 150% (3)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 is the first year for this key performance indicator
(3) FY 2021 projected performance indicator
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Qualified net
operating
revenue/Debt
Service
requirements
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Qualified net
operating
revenues/Debt
service requirements
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Total O&M costs/
Number of Accounts Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Strategic Plan
31
Key Performance Indicators: Water Operations
Performance
Indicator Target (1)
Technical
Quality
Complaint
No more than 7.1
complaints per 1,000
customer accounts
annually/7.1
FY 2019 (2)FY 2020 FY 2021
Target 7.10 7.10 7.10
Actual 3.55 3.51 4.0 (3)
Performance
Indicator Target
Planned
Potable Water
Maintenance
Ratio in $
66% of labor dollars
spent on preventative
maintenance per
quarter annually
FY 2019 (2)FY 2020 FY 2021
Target 66.0% 66.0% 66.0%
Actual 74.0% 76.9% 66.0% (3)
Performance
Indicator Target
Planned
Recycled
Maintenance
Ration in $
70% of labor dollars
spent on preventative
maintenance per
quarter annually
FY 2019 (2)FY 2020 FY 2021
Target 70.0% 70.0% 70.0%
Actual 74.0% 70.0% 70.0% (3)
(1) Target utilizes AWWA benchmark
(2) The first year of the FY 2019-2022 Strategic Plan
(3) FY 2021 projected performance indicator
Strategic Plan
Cu
s
t
o
m
e
r
Goal Measurement
Method
Execute and deliver services that meet or
exceed customer expectations, and
increase customer engagement in order
to improve District services.
1,000 (Number of
technical quality
complaints)]/
Number of active
customer accounts
per reporting period
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Total planned
maintenance
cost/Total
maintenance cost
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Total planned
maintenance
cost/Total
maintenance cost
32
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Target
Planned
Wastewater
Maintenance
Ratio in $
77% of labor dollars
spent on preventative
maintenance per
quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 77.0% 77.0% 77.0%
Actual 84.4% 91.6% 77.0% (2)
Performance
Indicator Target
Leak
Detection
Program
At least 20% of
system surveyed for
leaks annually
FY 2019 (1)FY 2020 FY 2021
Target 20.0% 20.0% 20.0%
Actual 20.0% 20.0% 20.0% (2)
Performance
Indicator Target
Direct Cost of
Treatment per
MGD
No more than $1,050
per MG spent on
wastewater treatment
annually
FY 2019(1)FY 2020 FY 2021
Target $1,050 $1,050 $1,050
Actual $1,072 $771.50 $1,050 (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
Strategic Plan
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Total planned
maintenance
cost/Total
maintenance cost
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Percentage
distribution system
surveyed for leaks
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Total O&M costs
directly attributable to
sewer treatment/
Total volume
(in MGD)
33
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Target
Percent of
Preventative
Maintenance
Completed -
Reclamation
Plant
No less than 90% per
quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 90.0% 90.0% 90.0%
Actual 98.0% 100.0% 90.0% (2)
Performance
Indicator Target
Percent of
Preventative
Maintenance
Completed -
Fleet
Maintenance
No less than 90% per
quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 90.0% 90.0% 90.0%
Actual 98.5% 95.9% 90.0% (2)
Performance
Indicator Target
Percent of
Preventative
Maintenance
Completed -
Pump/Electric
No less than 90% per
quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 90.0% 90.0% 90.0%
Actual 100.0% 100.0% 90.0% (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of PM's
completed/Number
of PM's scheduled to
be completed
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of PM's
completed/Number
of PM's scheduled to
be completed
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of PM's
completed/Number
of PM's scheduled to
be completed
34
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Target
System Valve
Exercising
Program
3,080 valves exercised
annually
FY 2019 (1)FY 2020 FY 2021
Target 3,080 3,080 3,080
Actual 3,298 2,969 3,080 (2)
Performance
Indicator Target (3)
Potable Water
Distribution
System
Integrity
No more than 16
leaks or breaks per
100 miles of
distribution piping
annually/16.1
FY 2019 (1)FY 2020 FY 2021
Target 16.0 16.0 16.0
Actual 8.4 7.6 16.0 (2)
Performance
Indicator Target
Recycled
Water System
Integrity
No more than 6.6
leaks or breaks per
100 miles of recycled
distribution system
annually
FY 2019 (1)FY 2020 FY 2021
Target 6.6 6.6 6.6
Actual 4.5 0.96 2.7 (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
(3) Target utilizes AWWA benchmark
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
[100 (Annual total
number of leaks &
breaks)]/
Total miles of
distribution pipes
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Actual number of
valves exercised
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
[100 (Collection
system failure)]/
Total miles of
collection system
piping
35
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Target (1)
Potable Water
Compliance
Rate
No less than 100%
per quarter
annually/100%
FY 2019 (2)FY 2020 FY 2021
Target 100.0% 100.0% 100.0%
Actual 100.0% 100.0% 100.0% (3)
Performance
Indicator Target (1)
Sewer
Overflow
Rate
0 Overflows per
quarter annually/0
FY 2019 (2)FY 2020 FY 2021
Target 0 0 0
Actual 1 1 0 (3)
Performance
Indicator Target
Emergency
Facility Power
Testing
Test 100% of all
facilities scheduled
per quarter to have all
emergency facilities
tested annually
FY 2019 (2)FY 2020 FY 2021
Target 36 36 36
Actual 38 26 36 (3)
(1) Target utilizes AWWA benchmark
(2) FY 2019 is the first year of the FY 2019-2022 Strategic Plan
(3) FY 2021 projected performance indicator
Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
[100 (Total number of
sewer
overflows)]/Total
miles of pipe in the
sewage collection
system
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of facilities
and generators
tested/Total facilities
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
All primary health
regulations are met
Strategic Plan
In
t
e
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n
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B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
e
s
Goal
36
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Target
Main Flushing
and Hydrant
Maintenance
215 or more mains
flushed and fire
hydrants maintained
annually
FY 2019 (1)FY 2020 FY 2021
Target 215 215 215
Actual 601 413 215 (2)
Performance
Indicator Target
Critical Valve
Exercising
631 critical valves
exercised annually
FY 2019 (1)FY 2020 FY 2021
Target 631 631 631
Actual 631 631 631 (2)
Performance
Indicator Target
Tank
Inspection and
Cleaning
No less than 8
potable water storage
tanks and/or
reservoirs cleaned
annually
FY 2019 (1)FY 2020 FY 2021
Target 8 8 8
Actual 7 11 8 (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of tanks
cleaned and
inspected annually
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of mains
flushed and fire
hydrants maintained
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Cumulative number
of mains flushed plus
hydrants maintained
37
Key Performance Indicators: Engineering
Performance
Indicator Target
CIP Project
Expenditures
vs. Budget
95%-100% of
budget, but not to
exceed 100%
annually
FY 2019 (1)FY 2020 FY 2021
Target 95.0% 95.0% 95.0%
Actual 104.8% 87.3%
95.0% (2)
Performance
Indicator Target
Construction
Change Order
Incidence
No more than
5% annually
FY 2019 (1)FY 2020 FY 2021
Target 5.0% 5.0% 5.0%
Actual 3.1% 4.8%
5.0% (2)
Performance
Indicator Target
Mark-out
Accuracy
No less than 100%
per quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 100.0% 100.0% 100.0%
Actual 99.95% 100.0%
100.0% (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
Strategic Plan
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to
customers.
Actual quarterly
expenditures/
Annual budget
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by
continually improving essential
processes, invest in strategic
technology, and achieve new
efficiencies.
Number of mark-outs
performed without an at-
fault hit/Total number of
mark-outs performed
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to
customers.
Total cost of change
orders (not including
allowances)/Total original
construction contract
amount (not including
allowances)'
38
Key Performance Indicators: Engineering (continued)
Performance
Indicator Target
Project
Closeout Time
No more than a
45 day average per
quarter annually
FY 2019 (1)FY 2020 FY 2021
Target 45.0 45.0 45.0
Actual 37.0 37.3 45.0 (2)
Performance
Indicator Target
Annual
Recycled
Water Site
Inspections
100% of recycled
water sites
inspected annually
FY 2019 (1)FY 2020 FY 2021
Target 100.0% 100.0% 100.0%
Actual 100.0% 100.0% 100.0% (2)
Performance
Indicator Target
Recycled
Water
Shutdown
Testing
90% of recycled site
shutdown tests
performed annually
FY 2019 (1)FY 2020 FY 2021
Target 90.0% 90.0% 90.0%
Actual 100.0% 96.4% 90.0% (2)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) FY 2021 projected performance indicator
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by
continually improving essential
processes, invest in strategic
technology, and achieve new
efficiencies.
Number of days between
Notice of Substantial
Completion and Notice of
Completion for all
construction projects
within the quarter/Number
of construction projects
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by
continually improving essential
processes, invest in strategic
technology, and achieve new
efficiencies.
Percentage of recycled
sites inspected per year of
those required by the
Department of
Environmental Health
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by
continually improving essential
processes, invest in strategic
technology, and achieve new
efficiencies.
Percentage of recycled
water use sites per year
compared to those
scheduled
39
Key Performance Indicators: Engineering (continued)
Performance
Indicator Target
Easement
Desktop
Evaluation and
Field
Inspection (1)
100% of easements
evaluated and
inspected annually
FY 2019 (1)(2)FY 2020 FY 2021
Target 100.0% 100.0% 100.0%
Actual 129.0% 188.0% 100.0% (3)
(1) The first year of the FY 2019-2022 Strategic Plan
(2) The first year for this key performance measure
(3) FY 2021 projected performance indicator
Improve business services by
continually improving essential
processes, invest in strategic
technology, and achieve new
efficiencies.
Number of Actual
Easements Evaluated and
Inspected/Total Number
of EasementsIn
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Strategic Plan
40
Financial Summaries
Budget Summary
The FY 2021 Operating Budget is summarized and presented in the Operating Budget Summary- General
Fund on pages 46-47. This schedule presents the District’s overall revenues and expenditures by type.
Also included in this section is the Operating Budget Summary by System on page 48 which presents the
General Fund budget in the business segments of Potable, Recycled, and Sewer. Additional schedules
provided in this section are the General Fund Revenues, Expenditures and Transfers; Fund Balance
Summary by Fund; Revenues and Expenditures by Type - All Funds; and Revenues and Expenditures by
Fund ; and are presented on pages 49-53.
General Fund Revenues
Potable Water Sales
Potable water sales revenue collected from the sale of water including system charges, energy charges,
and penalties account for 79.9% of the District’s operating revenues. It is estimated that 23,478.2 acre-
feet of potable water will be sold during FY 2021, which is a decrease of 3,471 acre-feet from FY 2020.
Prior to the onset of the COVID-19 pandemic, staff anticipated that potable water sales volume would be
consistent with FY 2020 and the total actual water volumes for FY 2020 would finish 1.0% below budget.
Due to the anticipated adverse economic impacts of COVID-19, staff reduced budgeted potable water
volumes by 12% for FY 2021 and projected volumes to return to historic levels over the following three
years. Budgeted revenues from water sales are projected to be $78.7 million, a decrease of 6.2%
compared to FY 2020. The decrease is largely due to the economic impact of COVID-19, which is partially
offset by a rate increase. Schedules relating to potable water sales are included in the Potable Revenues
and Expenditures section of this budget.
Recycled Water Sales
The District’s recycled sales continue to be adversely impacted by measures implemented as a result of
the permanent conservation efforts. Recycled water sales revenue is generated from the sale of 2,952.7
acre-feet of recycled water, which is below historic volumes which were as high as 4,748 acre-feet sold
in 2014. The FY 2021 sales revenue budget is $8.4 million which is a decrease of $1.4 million from FY 2020
and includes the incentive credits provided by MWD and CWA. Prior to the onset of the COVID-19
pandemic, recycled water sales volume was trending 5% below the FY 2020 budget. Due to anticipated
economic impacts of COVID-19, staff reduced FY 2021 budgeted recycled water volumes by 15%. The
decline in the volumes is projected to return to historic levels over the following three years. Recycled
water volumes are budgeted to have a larger decline compared to potable water volumes being that
recycled water usage is more discretionary.
Sewer Revenues
Sewer charges, which represents 99% of sewer revenue, are the monthly fees collected from residential,
multi-residential, and commercial customers. The remaining 1.0% of revenue is derived from penalties.
The monthly fees are determined by volume of flow and the strength of solids discharged into the sewer
system. Due to the timing of volumes used to determine the sewer charges and the fixed nature of the
charges, the FY 2021 revenues were not anticipated to be materially impacted by the COVID pandemic.
The FY 2021 Sewer Revenues are relatively flat and projected to be $2.9 million.
41
Financial Summaries
Meter Fees
Meter fees are charges collected for new water service connections. Fees vary depending upon meter
size and the type of service. The FY 2021 revenue from meter fees are projected to be $123,000 which is
a decrease of $106,400 from FY 2020. The decrease in meter fees is primarily due to reduced growth due
to impacts of the COVID-19 pandemic. 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 the Engineering Department’s support for expansion
functions. The FY 2021 capacity fee revenue is relatively flat and projected to be $1.87 million.
Tax Revenues
The District receives 1% property tax revenues 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 are
remitted to the District annually. The District anticipates that the County’s property tax collections will be
adversely impacted by the COVID-19 pandemic. Based on past declines in property tax revenues during
economic recessions, the District budgeted for a 10% decline in property tax revenues. The District
budgeted tax revenues of $4.2 million which is a decrease of $460,900 compared to FY 2020.
Spending limits for the District are governed by the 1979 passage of California Proposition 4, Limitations
of Government Appropriations (Article XIII B of the California Constitution, commonly known as the Gann
Limit). Proposition 4 places an appropriations limit on most spending from tax proceeds. The following
table shows that the District is below the Gann Limit.
Otay Water District Appropriations Limit (in thousands)
Fiscal Year 2015 2016 2017 2018 2019 2020
Gann Limit $ 4,454 $ 4,673 $ 4,969 $ 5,196 $ 5,430 $ 5,710
Appropriations subject to the limit $ 3,134 $ 3,323 $ 3,551 $ 3,795 $ 3,942 $ 4,161
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. The District projected $2.2 million in revenues for FY 2021 which is an increase of $111,100
compared to FY 2020.
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. Interest revenue
is projected to be $179,000 in FY 2021 which is a decrease of $188,900 from FY 2020.
General Fund Expenditures
Potable Water Purchases
Water purchases are the expenses of purchasing 24,642.6 acre-feet for the District's potable water supply.
42
Financial Summaries
A provision has been made to allow 1,164.4 acre-feet of water for District usage, leakage, and evaporation.
Total Potable Water Purchases are projected to be $33.6 million in FY 2021 which is a decrease of $3.7
million compared to FY 2020.
Recycled Water Purchases
Recycled water purchases are the expenses of purchasing 1,927.6 acre-feet for the District's recycled
water supply which is a decrease of 679.6 acre-feet compared to Fiscal Year 2020. In addition to the
purchases there is a contractual Take-or-Pay payment budgeted for 3,419.4 acre-feet which is 679.6 acre-
feet more than FY 2020. Total Recycled Purchases are projected to be $4.1 million in FY 2020 which is
flat to FY 2020.
Infrastructure Access Charge
This charge was established in FY 1999 by CWA and is imposed on member agencies as a condition of
maintaining connections to the CWA facilities. It is apportioned based on water meters within each
member agency. Infrastructure access charges are projected at $2.8 million in FY 2021 which is an
increase of $458,200 compared to FY 2020.
Customer Service Charge
This charge was established in FY 2004 by CWA as a fixed charge. The customer service charge is set to
recover costs that are necessary to support the functioning of the CWA. The customer service charge is
allocated among the member agencies based on each agency’s three-year rolling average of member
agency supply purchases from the CWA. Budgeted customer service charges of $1.7 million are relatively
flat compared to FY 2020.
Supply Reliability Charge
This charge was established in FY 2016 by CWA as a fixed charge and became effective January 2016.
The Supply Reliability Charge is set to recover a portion of the fixed costs associated with the CWA’s
highly reliable water supplies, such as desalinated water (Carlsbad Desalination Plant) and Imperial
Irrigation District (IID) water transfer costs. Allocation of this charge is based upon member agencies
share of the rolling five-year average M&I deliveries (agricultural deliveries are not included). The
reliability charge is projected at $2.7 million in FY 2021 which is an increase of $333,800 compared to FY
2020.
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. The emergency storage charge is projected to be $4.6 million in FY 2021 which is flat
compared to FY 2020.
Capacity Reservation Charge
This charge was established in FY 2002 by the MWD, as a fixed charge on a member agency's requested
maximum daily capacity. The Capacity Reservation Charge is a charge per cubic-foot-second and is
applied to the amount of capacity (daily flow) a member agency expects to use during the peak period
from May through September. Capacity reservation charges are projected to be $628,000 in FY 2021
43
Financial Summaries
which is an increase of $21,400 compared to FY 2020.
Readiness-to-Serve Charge
This charge was established in FY 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 MWD on the tax bills of District customers. These charges are projected to be $720,000 in
FY 2021, which is a decrease of $150,000 compared to FY 2020.
Power Costs
Power costs are expenses 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. The
District’s power costs are projected to be $2.9 million in FY 2021, which is a decrease of $286,700
compared to FY 2020.
Labor and Benefits
Labor and benefits are the wages and fringe benefits for FY 2021 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. Labor and benefits are projected to
be $21.9 million, which is an increase of $702,300 compared to FY 2020.
Administrative Expenses
Administrative expenses are costs incurred by various departments that are directly related to District
operations. Administrative expenses are projected to be $7.0 million in FY 2021, which is an increase of
$653,200 compared to FY 2020. Additional details are supplied in the Departmental Operating Budget
section.
Materials and Maintenance Expenses
Materials and maintenance expenses are costs associated with the operation and maintenance of
District facilities. Materials and maintenance expenses are projected to be $3.7 million in FY 2020, which
is a decrease of $114,100 compared to FY 2020. Additional details are supplied in the Departmental
Operating Budget section.
General Fund Reserves
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. For FY 2021, these reserves will be
funded with $150,000 from the Potable Water Fund.
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. For FY 2021, these
reserves will be funded with $985,000 from the Recycled Water Fund.
44
Financial Summaries
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. For FY 2021, these reserves
will be funded with $8.9 million from the Potable Water Fund, $615,000 from the Recycled Water Fund,
and $169,000 from the Sewer Fund.
New Water Supply Reserves
These reserves are established to fund new water supply needs including project costs, existing debt
payments, and new debt that will be issued in the future to fund expansion. For FY 2021, there is no
reserve funding budgeted.
Fund Transfers
Fund 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.
Transfer to OPEB Trust
For FY 2021, the General Fund is budgeted to fund the OPEB Trust $1.1 million for retiree health liabilities.
Other Financial Schedules/Presentations
Operating Budget Summary by System
The Budget Summary by System schedule reflects the separation of operating revenues and expenses
among potable water, recycled water, and sewer. This is provided as information but is necessary to
ensure sufficient revenue is collected from sewer customers versus water customers.
General Fund – Revenue, Expenditures, and Transfers
This schedule shows the General Fund’s total revenues, expenditures, and transfers showing the prior
year’s actuals, the prior year’s budget and audited actuals, the current year’s budget, along with the
variance from the prior year’s budget.
Fund Balance Summary by Fund
This schedule shows each fund’s balance at June 30, 2020, and the projected balance for June 30, 2021.
These balances are 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 reflects 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.
45
FY 2019 FY 2020 FY 2020 FY 2021
11-Actual Budget Actual Budget $ %
Revenues
Potable Water Sales 77,974,743$ 83,951,500$ 81,481,668$ 78,749,000$ (5,202,500)$ (6.2%)
Recycled Water Sales 8,781,479 9,816,800 8,336,802 8,411,000 (1,405,800) (14.3%)
Sewer Revenues 2,933,657 2,890,000 2,892,883 2,870,000 (20,000) (0.7%)
Meter Fees 220,439 229,400 166,249 123,000 (106,400) (46.4%)
Capacity Fee Revenues 1,898,333 1,868,900 2,250,845 1,869,000 100 0.0%
Tax Revenues 4,673,453 4,615,900 4,919,583 4,155,000 (460,900) (10.0%)
Non-operating Revenues 2,639,856 2,065,900 2,781,157 2,177,000 111,100 5.4%
Interest 340,727 367,900 335,783 179,000 (188,900) (51.3%)
Total Revenues 99,462,687 105,806,300 103,164,970 98,533,000 (7,273,300) (6.9%)
Expenditures
Potable Water Purchases 35,777,445 37,282,800 36,333,195 33,631,000 (3,651,800) (9.8%)
Recycled Water Purchases 3,843,264 4,058,400 3,919,507 4,058,000 (400) (0.0%)
CWA - Infrastructure Access Charge 2,127,072 2,380,800 2,380,782 2,839,000 458,200 19.2%
CWA - Customer Service Charge 1,637,269 1,659,600 1,659,013 1,703,000 43,400 2.6%
CWA - Reliability Charge 2,069,007 2,377,200 2,377,331 2,711,000 333,800 14.0%
CWA - Emergency Storage Charge 4,464,397 4,579,800 4,580,016 4,608,000 28,200 0.6%
MWD - Capacity Reservation Charge 692,429 606,600 606,271 628,000 21,400 3.5%
MWD - Net RTS and Standby Charge 925,194 870,000 791,452 720,000 (150,000) (17.2%)
Subtotal - Water Costs 51,536,077 53,815,200 52,647,567 50,898,000 (2,917,200) (5.4%)
Labor and Benefits 21,981,251 21,157,700 20,966,791 21,860,000 702,300 3.3%
Administrative Expenses 5,733,412 6,333,800 6,465,335 6,987,000 653,200 10.3%
Materials and Maintenance 3,472,162 3,834,100 3,398,293 3,720,000 (114,100) (3.0%)
Power 2,877,016 3,184,700 3,102,364 2,898,000 (286,700) (9.0%)
Subtotal - Operations Costs 34,063,841 34,510,300 33,932,783 35,465,000 954,700 2.8%
DSGeneral Fund Reserve - 954,400 954,400 259,000 (695,400) (72.9%)
Expansion Reserve 2,712,100 4,927,300 4,927,300 150,000 (4,777,300) (97.0%)
Bett ResBetterment Reserve - 3,048,000 3,048,000 985,000 (2,063,000) (67.7%)
Repl ResReplacement Reserve 12,778,600 7,513,000 7,513,000 9,676,000 2,163,000 28.8%
TOPEBOPEB Reserve 980,800 1,038,100 1,038,100 1,100,000 61,900 6.0%
New Supply Reserve 75,000 - - - - -
Subtotal - Reserve Funding 16,546,500 17,480,800 17,480,800 12,170,000 (5,310,800) (30.4%)
Total Expenditures 102,146,418 105,806,300 104,061,150 98,533,000 (7,273,300) (6.9%)
Excess Revenues (Expenditures)(2,683,731)$ -$ (896,180)$ -$-$
-
Operating Budget Summary - General Fund
Budget to Budget
Variance
46
Potable Water Sales 78,749,000$ 80.0%
Recycled Water Sales 8,411,000 8.5%
Sewer Revenues 2,870,000 2.9%
Meter Fees 123,000 0.1%
Capacity Fee Revenues 1,869,000 1.9%
Tax Revenues 4,155,000 4.2%
Non-operating Revenues 2,177,000 2.2%
Interest 179,000 0.2%
98,533,000 100.0%
Potable Water Purchases 46,840,000 47.5%
Recycled Water Purchases 4,058,000 4.1%
Power 2,898,000 2.9%
Labor and Benefits 21,860,000 22.2%
Administrative Expenses 6,987,000 7.1%
Materials & Maintenance 3,720,000 3.8%
Reserve Funding 12,170,000 12.4%
98,533,000$ 100.0%
Operating Budget Summary - General Fund
FY 2021 Operating Revenues
FY 2021 Operating Expenditures
47
Potable Recycled Sewer Total
Revenues
Water Sales 78,749,000$ -$ -$ 78,749,000$
Recycled Water Sales - 8,411,000 8,411,000
Sewer Revenues - -2,870,000 2,870,000
Meter Fees 118,000 5,000 - 123,000
Capacity Fee Revenues 1,869,000 - - 1,869,000
Tax Revenues 4,106,000 - 49,000 4,155,000
Non-operating Revenues 2,109,000 - 68,000 2,177,000
Interest 162,000 13,000 4,000 179,000
Total Revenues 87,113,000 8,429,000 2,991,000 98,533,000
Expenditures
Water Purchases 33,631,000 4,058,000 - 37,689,000
CWA - Infrastructure Access Charge 2,839,000 - - 2,839,000
CWA - Customer Service Charge 1,703,000 - - 1,703,000
CWA - Reliability Charge 2,711,000 - - 2,711,000
CWA - Emergency Storage Charge 4,608,000 - - 4,608,000
MWD - Capacity Reservation Charge 628,000 - - 628,000
MWD - Net RTS and Standby Charge 720,000 - - 720,000
Subtotal - Water Costs 46,840,000 4,058,000 - 50,898,000
Labor and Benefits 19,459,000 1,367,000 1,034,000 21,860,000
Administrative Expenses 6,203,000 559,000 225,000 6,987,000
Materials and Maintenance 2,307,000 298,000 1,115,000 3,720,000
Power 2,244,000 502,000 152,000 2,898,000
Subtotal - Operations Costs 30,213,000 2,726,000 2,526,000 35,465,000
DSGeneral Fund Reserve - - 259,000 259,000
Expansion Reserve 150,000 - - 150,000
Bett ResBetterment Reserve - 985,000 - 985,000
Repl ResReplacement Reserve 8,892,000 615,000 169,000 9,676,000
TOPEBOPEB Reserve 1,018,000 45,000 37,000 1,100,000
Subtotal - Reserve Funding 10,060,000 1,645,000 465,000 12,170,000
Total Expenditures 87,113,000 8,429,000 2,991,000 98,533,000
Excess Revenue (Expenditures)-$ -$ -$ -$
FY 2021 Operating Budget Summary by System
48
FY 2019 FY 2021
Actual Budget Actual Budget $%
Revenues
Water Sales 86,756,222$ 93,768,300$ 89,818,470$ 87,160,000$ (6,608,300)$ (7.0%)
Sewer Revenues 2,933,657 2,890,000 2,892,883 2,870,000 (20,000) (0.7%)
Meter Fees 220,439 229,400 166,249 123,000 (106,400) (46.4%)
Capacity Fee Revenues 1,898,333 1,868,900 2,250,845 1,869,000 100 0.0%
Tax Revenues 4,673,453 4,615,900 4,919,583 4,155,000 (460,900) (10.0%)
Non-Operating Revenues 2,639,856 2,065,900 2,781,157 2,177,000 111,100 5.4%
Interest 340,727 367,900 335,783 179,000 (188,900) (51.3%)
Total Revenues and Sources 99,462,687 105,806,300 103,164,970 98,533,000 (7,273,300) (6.9%)
Expenditures and Transfers
Water Purchases 51,536,077 53,815,200 52,647,567 50,898,000 (2,917,200) (5.4%)
Power 2,877,016 3,184,700 3,102,364 2,898,000 (286,700) (9.0%)
Labor and Benefits 21,981,251 21,157,700 20,966,791 21,861,000 703,300 3.3%
Administrative Expenses 5,733,412 6,333,800 6,465,335 6,986,000 652,200 10.3%
Materials and Maintenance 3,472,162 3,834,100 3,398,293 3,720,000 (114,100) (3.0%)
Transfers 16,546,500 17,480,800 17,480,800 12,170,000 (5,310,800) (30.4%)
- - Total Expenditures and Transfers 102,146,418 105,806,300 104,061,150 98,533,000 (7,273,300) (6.9%)
Excess Revenues (Expenditures)(2,683,731)$ -$ (896,180)$ -$ -$ -
General Fund Revenues, Expenditures and Transfers, in millions ($)
FY 2020
Budget to Budget
Variance
General Fund - Revenues, Expenditures and Transfers
$80
$85
$90
$95
$100
$105
$110
FY 2019-Actual FY 2020-Budget FY 2020-Actual FY 2021-Budget
$9
9
$1
0
6
$1
0
3
$9
9
$1
0
2
$1
0
6
$1
0
4
$9
9
Revenue Expenditures
49
Actual Projected
Balance Interfund Balance
June 30, 2020 Revenues Expenditures Transfers (1)June 30, 2021
General Fund
Potable 29,420,349$ 87,113,000$ 87,113,000$ -$ 29,420,349$
Recycled 2,113,495 8,429,000 8,429,000 - 2,113,495
Sewer 516,356 2,991,000 2,991,000 - 516,356
Total General Fund 32,050,200 98,533,000 98,533,000 - 32,050,200
Expansion Fund
Water (2)2,254,462 2,428,300 5,532,500 985,000 135,262
Sewer 7,758 100 32,400 55,000 30,458
Total Expansion Fund 2,262,220 2,428,400 5,564,900 1,040,000 165,720
Betterment Fund
Potable 2,644,100 1,022,600 2,994,500 (30,000) 642,200
Recycled (72,274) 7,000 742,000 1,450,000 642,726
Sewer(3)1,636,445 59,200 106,300 (1,750,000) (160,655)
Total Betterment Fund 4,208,271 1,088,800 3,842,800 (330,000) 1,124,271
Replacement Fund
Potable 18,838,152 1,731,654 9,028,000 14,004,000 25,545,806
Recycled 4,251,919 267,000 761,000 800,000 4,557,919
Sewer 2,455,860 23,800 429,000 1,864,000 3,914,660
Total Replacement Fund 25,545,931 2,022,454 10,218,000 16,668,000 34,018,385
New Supply Fund
Water (2)2,839,333 307,637 199,000 (235,000) 2,712,970
Total New Supply Fund 2,839,333 307,637 199,000 (235,000) 2,712,970
Rate Stabilization Fund - - - 175,000 175,000
OPEB Fund 276,168 2,600 1,100,000 1,100,000 275,768
Debt Service Fund 9,324,368 685,400 810,400 (3,904,000) 5,295,368
Total 76,506,491$ 105,068,291$ 120,268,100$ 14,514,000$ 75,817,682$
(1) The total for interfund transfers does not net to $0 because some transfers are already reflected in the Operating
Revenues and Expenditures for General Fund as follows:
General Fund Reserve (264,000)$
Expansion Reserve (290,000)
Betterment Reserve (1,450,000)
Replacement Reserve (7,969,000)
OPEB Reserve (1,134,000)
Total (11,107,000)$
Fund Balance Summary by Fund
Fiscal Year 2021 Budget
(2)Potable and Recycled funds are combined.
(3)The fund balance is anticipated to change more than 10% due to the District's ongoing current year CIP expenditures funded by current years
revenues, prior year debt issuances, current year debt issuance proceeds, as well as transfers made in accordance with the Reserve Policy
found on pages 177-218.
(4) The District has budgeted to expend the remaining 2018 issuance proceeds of $3.9 million in FY 2020, which are presented in this table as a
transfer from the Debt Service fund to the Potable Replacement Fund and Potable Expansion Fund.
50
FY 2019 FY 2021
Actual Budget Actual Budget
Revenues and Fund Sources
Water Sales 86,756,222$ 93,768,300$ 89,818,470$ 87,160,000$
Sewer Revenues 2,933,657 2,890,000 2,892,883 2,870,000
Meter Fees 220,439 229,400 166,249 123,000
Capacity Fee Revenues 1,898,333 1,868,900 2,250,845 1,869,000
Capacity Fees for Maintenance 7,153,778 7,584,700 6,671,658 4,083,291
Tax Revenues 4,673,453 4,615,900 4,919,583 4,155,000
Availability Fees 541,553 714,600 518,602 715,600
Non-Operating Revenues 2,639,856 2,065,900 2,781,157 2,177,000
GO Bond Debt Tax Revenues 720,975 664,900 715,136 611,000
Bond Proceeds and BABs Subsidy (1)35,678,700 6,778,700 3,827,085 782,000
Interest 910,837 1,325,600 945,056 522,400
Annexation Fees 23,774 - 97,665 -
Total Revenue and Fund Sources 144,151,577 122,506,900 115,604,389 105,068,291
-$ -$ -$ -
Expenditures and Fund Uses
Water Purchases 51,536,077 53,815,200 52,647,567 50,898,000
Power 2,877,016 3,184,700 3,102,364 2,898,000
Labor Expenses 21,981,251 21,157,700 20,966,791 21,861,000
Administrative Expenses 5,733,412 6,333,800 6,465,335 6,986,000
Materials and Maintenance 3,472,162 3,834,100 3,398,293 3,720,000
CIP Expenses(2)14,953,752 18,881,200 14,890,313 10,334,200
Debt Service(3)7,703,519 10,539,200 9,387,823 10,300,900
Operating Projects 6,396,804 - 2,250,845 -
OPEB Retiree Expenses & PERS Funding 32,784,019 1,038,100 949,330 1,100,000
Total Expenditures and Fund Uses 147,438,012 118,784,000 114,058,661 108,098,100
Surplus/(Deficit)(3,286,435)$ 3,722,900$ 1,545,728$ (3,029,809)$
Revenues and Expenditures by Type - All Funds
FY 2020
(1)FY 2019 Actual includes $34.9 million Water Revenue Bond Debt proceeds and $778,700 BABs subsidy.
(2)FY 2019 Includes $13.9 million of potable CIP expenditures, which were funded by bond proceeds.
(3)Includes $6.9 million current refunding of the 1996 Variable Rate Certificates of Participation.
51
FY 2019 FY 2021
Actual Budget Actual Budget
Revenues
General Fund
Potable 87,207,461$ 92,969,600$ 91,615,357$ 87,113,000$
Recycled 8,823,257 9,845,700 9,163,146 8,429,000
Sewer 3,431,969 2,991,000 3,171,983 2,991,000
Total General Fund (1)99,462,687 105,806,300 103,950,486 98,533,000
Expansion Fund
Potable 7,072,977 3,280,600 2,385,564 2,149,300
Recycled 146,022 283,600 104,112 279,000
Sewer (206) - 223 100
Total Expansion Fund 7,218,793 3,564,200 2,489,899 2,428,400
Betterment Fund
Potable 441,013 843,200 559,748 1,022,600
Recycled (129,162) 9,200 20,835 7,000
Sewer 56,923 6,700 1,552,636 59,200
Total Betterment Fund (72,240) 859,100 2,133,219 1,088,800
Replacement Fund
Potable 35,430,500 3,942,700 4,110,138 1,731,654
Recycled 121,029 262,800 (1,090) 267,000
Sewer 70,965 61,800 1,630,057 23,800
Total Replacement Fund 35,622,494 4,267,300 5,739,105 2,022,454
New Supply Fund
Potable 691,692 623,700 536,865 265,637
Recycled 49,984 40,600 17,709 42,000
Total New Supply Fund 741,676 664,300 554,574 307,637
OPEB and PERS Fund 16,178 4,700 21,970 2,600
Debt Service Fund 720,975 7,341,000 715,136 685,400
Total Revenues 144,151,577$ 122,506,900$ 115,604,389 105,068,291$
Revenues and Expenditures by Fund
FY 2020
Note: This schedule excludes interfund transfers.
52
FY 2019 FY 2021
Actual Budget Actual Budget
Revenues and Expenditures by Fund
FY 2020
Expenditures
General Fund
Potable 76,465,387$ 78,511,100$ 77,843,892$ 77,053,000$
Recycled 6,422,232 7,019,100 6,336,546 6,784,000
Sewer 2,712,299 2,795,300 2,399,912 2,526,000
Total General Fund 85,599,918 88,325,500 86,580,350 86,363,000
Expansion Fund
Potable 8,524,513 4,421,500 5,506,617 4,389,500
Recycled 940,283 1,144,600 809,070 1,143,000
Sewer 12,393 2,500 16,447 32,400
Total Expansion Fund 9,477,189 5,568,600 6,332,134 5,564,900
Betterment Fund
Potable 1,755,307 4,638,400 2,163,030 2,994,500
Recycled 118,359 152,700 104,067 742,000
Sewer 2,330,636 1,022,000 1,120,364 106,300
Total Betterment Fund 4,204,302 5,813,100 3,387,461 3,842,800
Replacement Fund
Potable 3,272,806 15,238,100 8,694,095 9,028,000
Recycled 2,083,774 264,100 170,384 761,000
Sewer 2,826,426 1,155,000 740,545 429,000
Total Replacement Fund 8,183,006 16,657,200 9,605,024 10,218,000
New Supply Fund
Potable 29,461 660,500 485,924 194,000
Recycled (490,199) 4,600 3,450 5,000
Total New Supply Fund (460,738) 665,100 489,374 199,000
OPEB and PERS Fund 32,784,019 1,016,000 949,330 1,100,000
Debt Reserve Fund 7,650,318 738,500 6,714,988 810,400
Total Expenditures 147,438,012 118,784,000 114,058,661 108,098,100
Surplus/(Deficit)(3,286,435)$ 3,722,900$ 1,545,728 (3,029,809)$
Note: This schedule excludes interfund transfers.
53
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54
Five-Year Forecast
The District updates its Rate Model to build the budget for the upcoming fiscal year and to forecast
the five subsequent years, FY 2022 through FY 2026. This financial forecast is designed to provide a
general understanding of how revenues and expenditures are expected to influence the District.
This forecast also highlights the funding of capital projects and reserve levels. Estimates for
growth, water costs, and others such as rainfall, and average water consumption per customer, are
used throughout the Rate 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 page 6. Water cost estimates are obtained from District’s water suppliers, CWA
and MWD. Power cost inflators are obtained from San Diego Gas and Electric, the District’s 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 the District’s health providers, and the actuarial
reports related to the District’s pension and OPEB plans. Other general inflators are derived from
consumer price index statistical data for the region.
The District must look at replacing existing aging and future 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, replacement, and expansion needs from now until ultimate build-out.
Capital projects and their funding are reviewed annually by the Engineering Department. As new
capital assets are brought into service, they are managed by a GIS-centric Asset Management
System, CityWorks, which is crucial to tracking and maintaining the history of 723 miles of potable
pipelines, 104 miles of recycled pipelines, 84 miles of sewer mains, 40 potable and 4 recycled
reservoirs, 21 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 the systems are further developed, the District will be able to better anticipate
operating costs associated with the 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 cost of water is based
on CWA’s Rate Modeling Program.
This CWA program 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).
55
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Revenues
Water/Sewer Rates 96,410,400$ 102,305,400$ 109,295,200$ 113,772,800$ 119,125,600$
Meter Fees 128,700 135,400 140,800 143,200 146,000
Capacity Fee Revenues 1,878,300 1,897,100 1,916,100 1,935,300 1,954,700
Non-operating Revenues 2,499,900 2,576,300 2,828,100 2,645,300 2,422,900
Tax Revenues 4,373,300 4,558,300 4,560,100 4,561,900 4,563,700
Interest Income 221,200 233,400 245,800 260,000 276,200
Total Revenues 105,511,800 111,705,900 118,986,100 123,318,500 128,489,100
41,462,000$ 42,691,100$ 45,089,600$ 44,712,200$
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Expenditures
Water Cost 54,011,000 57,606,100 61,439,700 66,667,100 72,024,000
Power 3,005,700 3,117,300 3,233,000 3,353,200 3,477,800
Labor and Benefits 23,066,300 24,086,700 24,700,100 25,349,600 25,981,200
Administrative Expenses 7,120,600 7,166,700 7,377,400 7,594,500 7,818,000
Materials & Maintenance 3,977,400 4,177,300 4,388,800 4,615,300 4,856,100
Net Reserve Funding 14,330,800 15,551,800 17,847,100 15,738,800 14,332,000
Total Expenditures and Transfers 105,511,800 111,705,900 118,986,100 123,318,500 128,489,100
Excess Revenues (Expenditures)-$ -$ -$ -$ -$
-$ -$ -$-$-$
General Fund Forecast
This forecast incorporates both cost increases for expenditures and rate increases for revenues, as well as growth
projections.
Expenditures and Transfers
Revenues
$0
$20
$40
$60
$80
$100
$120
$140
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
10
6
11
2
11
9
12
3
12
8
$1
0
6
$1
1
2
$1
1
9
$1
2
3
$1
2
8
Revenues and Expenditures Forecast, in millions ($)
Revenues Expenditures
56
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Fund Balance
General Fund 22,835,400$ 24,080,600$ 25,321,900$ 26,935,300$ 28,584,300$
Betterment Fund 1,033,100 1,243,900 1,902,300 2,228,700 2,218,100
Replacement Fund 27,115,100 30,697,800 34,357,000 44,182,800 34,042,400
Expansion Fund 166,900 408,100 597,700 519,600 519,800
New Supply Fund 2,368,300 2,295,200 2,283,700 2,272,100 2,223,600
Debt Reserve 9,748,800 9,596,000 8,868,000 8,861,100 8,854,100
Total Fund Balance 63,267,600$ 68,321,600$ 73,330,600$ 84,999,600$ 76,442,300$
(382,253) (386,121) (389,948) (393,822) (397,696)
Fund Balances Forecast
Fund Balances by Fund
$0
$20
$40
$60
$80
$100
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Fund Balances Forecast, in millions ($)
General Fund Betterment Fund Replacement Fund Expansion Fund Debt Reserve New Supply Fund
57
Debt Management
The District has been successful in financing capital improvements through a combination of long-
term and short-term financing plans. Financial tools used include General Obligation Bonds,
Certificates of Participation (COPs), Build America Bonds (BABs), Water Revenue Bonds (WRBs),
developer fees, and pay-as-you-go funding.
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. 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 effect that reduces water rates.
The District’s water side achieved a 212% actual debt coverage ratio, with growth revenues, for fiscal
year 2020, which exceeded the debt covenant minimum ratio of 125%. To meet the bond
indebtedness obligation and maintain stable rates, the rate model is used to forecast revenues and
operating requirements. On the water side, the District anticipates issuing new debt in FY 2023 and
FY 2025 for approximately $5.5 million and $15.3 million respectively. The chart on the following page
shows the District’s projected debt coverage ratio, for the water side of the District, from FY 2021
through FY 2026. The debt coverage ratios are growing as rates are set to ensure adequate funding
of the reserves.
The District’s Board of Directors believes that a strong debt coverage ratio will benefit the ratepayers
as it reduces the cost of water infrastructure; and therefore have been willing to support this with
necessary rate increases. 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.
Projected Water Debt Coverage Ratio
1.49
1.89
2.32
2.77 2.80
2.33
-
0.50
1.00
1.50
2.00
2.50
3.00
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Co
v
e
r
a
g
e
R
a
t
i
o
Projected Ratio Minimum Covenant = 1.25
58
Debt Management
For sewer, the District originally planned to issue $6 million of debt for sewer capital projects. At the
direction of the Board, staff evaluated alternative options for issuing debt to smooth in the rate impact
on customers. During the evaluation process, staff was informed by the County of San Diego of
plans to replace a shared force main of which, the District’s share of the project is approximately $6
million. Considering the impact of this potential cost, staff performed a long-term analysis and
evaluated alternative options with the District’s financial advisor. Staff recommended and the Board
approved for staff to pursue two separate $3 million issuances. The first issuance was completed in
December 2019 and the second issuance is projected in FY 2024.
The 2019 Wastewater Revenue Bond issuance for $3.1 million reimbursed the District for a portion
of the Campo Road Sewer Replacement project (S2024). The project will replace 1.41 miles of 10-
inch-diameter sewer main with a new 15-inch-diameter sewer main pipeline along State Route 94
in Rancho San Diego. The project is part of an ongoing series of projects to rehabilitate and upgrade
the sewer system. The proposed increases in the sewer rates are necessary to ensure the sewer
debt coverage ratio meets the minimum covenant of 125%. The chart below shows the District’s
projected debt coverage ratio, for the sewer side of the District, from FY 2021 through FY 2026. The
debt coverage ratios are growing as rates are set to ensure adequate funding of the of reserves.
Sewer Debt Coverage Ratio
5.54
2.18 2.47 2.85
1.78 1.65
-
1.00
2.00
3.00
4.00
5.00
6.00
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Co
v
e
r
a
g
e
R
a
t
i
o
Projected Ratio Minimum Covenant = 1.25
59
Outstanding
Year Maturity Original Balance
#Incurred Description Date Amount 6/30/2021
1 2009 General Obligation (GO) Bonds August 31, 2022 7,780,000$ 2,105,000$
2 2010 Water Revenue Bonds Series A September 1, 2024 13,840,000 5,890,000
3 2010
Water Revenue Bonds Series B (1)September 1, 2040 36,355,000 36,355,000
4 2013 Water Revenue Refunding Bonds (2)September 1, 2023 7,735,000 3,160,000
5 2016 Water Revenue Refunding Bonds (3)September 1, 2036 33,385,000 29,025,000
6 2018 Water Revenue Refunding Bonds (4)September 1, 2043 32,435,000 31,190,000
Subtotal Water Bonds 131,530,000 107,725,000
7 2019 Wastewater Revenue Bonds September 1, 2049 3,120,000 3,120,000
Subtotal Wastewater Bonds 3,120,000 3,120,000
Total Outstanding Debt 134,650,000$ 110,845,000$
Total Assessed Valuation - FY 2020
Percentage of Original Debt to Assessed Valuation 0.41%0.09%
Debt Limit per District Debt Policy (% of Assessed Valuation)15.00%15.00%
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2013 Water Revenue Refunding Bonds were an advanced refunding of the 2004 COPs, which was a
refunding of the 1993 COPs.
(3)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(4)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable
Rate COPs.
Total Outstanding Debt, in millions ($)
Note: The accounting for debt proceeds and payments is described in the District's Reserve Policy found
on pages 177 -218.
32,526,483,633$ 15,251,488,128$
Schedule of Outstanding Debt
All Debts GO Bonds
$0
$10
$20
$30
$40
$50
$60
$70
2009 GOBs 2010A WRBs 2010B
WRBs(1)
2013
WRRBs(2)
2016
WRRBs(3)
2018
WRRBs(4)
2019
WWRBs
Principal Interest
60
2009 GOBs 2010A WRBs 2010B WRBs(1)2013 WRRBs(2)2016 WRRBs(3)2018 WRRBs(4)2019 WWRBs Total
680,000 1,065,000 - 745,000 1,155,000 1,310,000 - 4,955,000
705,000 1,120,000 - 775,000 1,215,000 1,370,000 65,000 5,250,000
720,000 1,175,000 - 805,000 1,285,000 1,455,000 70,000 5,510,000
- 1,235,000 - 835,000 1,350,000 1,650,000 75,000 5,145,000
- 1,295,000 - - 1,420,000 1,730,000 75,000 4,520,000
- - 1,365,000 - 1,495,000 1,820,000 80,000 4,760,000
- - 1,450,000 - 1,570,000 1,915,000 80,000 5,015,000
- - 1,545,000 - 1,645,000 1,030,000 85,000 4,305,000
- - 1,640,000 - 1,715,000 1,080,000 85,000 4,520,000
- - 1,745,000 - 1,785,000 1,135,000 90,000 4,755,000
- - 1,855,000 - 1,855,000 1,195,000 90,000 4,995,000
- - 1,975,000 - 1,955,000 1,245,000 95,000 5,270,000
- - 2,105,000 - 2,005,000 1,295,000 95,000 5,500,000
- - 2,245,000 - 2,055,000 1,350,000 100,000 5,750,000
- - 2,390,000 - 2,115,000 1,400,000 100,000 6,005,000
- - 2,550,000 - 2,170,000 1,460,000 105,000 6,285,000
- - 2,715,000 - 2,235,000 1,270,000 105,000 6,325,000
- - 2,895,000 - - 1,235,000 110,000 4,240,000
- - 3,085,000 - - 1,185,000 115,000 4,385,000
- - 3,290,000 - - 1,210,000 115,000 4,615,000
- - 3,505,000 - - 1,290,000 120,000 4,915,000
- - - - - 985,000 125,000 1,110,000
- - - - - 775,000 125,000 900,000
- - - - - 800,000 130,000 930,000
- - - - - - 135,000 135,000
- - - - - - 140,000 140,000
- - - - - - 145,000 145,000
- - - - - - 150,000 150,000
- - - - - - 155,000 155,000
- - - - - - 160,000 160,000
2,105,000$ 5,890,000$ 36,355,000$ 3,160,000$ 29,025,000$ 31,190,000$ 3,120,000$ 110,845,000$
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2013 Water Revenue Refunding Bonds were an advanced refunding of the 2004 COPs, which was a refunding of the 1993 COPs.
(3)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(4)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable Rate COPs.
2049
2050
Total
Combined Debt Service through Maturity, in millions ($)
2044
2040
2041
2042
2043
2045
2046
2047
2048
2034
2035
2036
2037
2038
2039
2028
2029
2030
2031
2032
2033
2022
2023
2024
2025
2026
2027
2021
Projected Principal Payments by Debt Issuance
FY
$0
$2
$4
$6
$8
$10
$12
20
2
1
20
2
2
20
2
3
20
2
4
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
20
3
0
20
3
1
20
3
2
20
3
3
20
3
4
20
3
5
20
3
6
20
3
7
20
3
8
20
3
9
20
4
0
20
4
1
20
4
2
20
4
3
20
4
4
20
4
5
20
4
6
20
4
7
20
4
8
20
4
9
20
5
0
Interest
Principal
61
2009 GOBs 2010A WRBs 2010B WRBs(1)2013 WRRBs(2)2016 WRRBs(3)2018 WRRBs (4)2019 WWRBs Total
42,100 271,113 2,371,868 96,600 1,034,581 1,328,288 90,741 5,235,291
28,500 216,488 2,371,868 65,600 973,831 1,259,788 89,441 5,005,516
14,400 159,113 2,371,868 33,400 909,581 1,187,038 88,041 4,763,441
- 98,863 2,371,868 - 842,081 1,104,538 86,541 4,503,891
- 33,994 2,371,868 - 771,081 1,018,038 84,291 4,279,272
- - 2,328,345 - 696,331 927,038 81,891 4,033,605
- - 2,238,589 - 617,831 831,288 79,491 3,767,199
- - 2,143,093 - 552,031 779,788 76,941 3,551,854
- - 2,041,540 - 483,431 725,788 74,391 3,325,150
- - 1,933,609 - 412,031 669,038 71,691 3,086,369
- - 1,818,823 - 337,831 609,288 68,991 2,834,933
- - 1,694,728 - 288,956 559,488 66,616 2,609,789
- - 1,560,558 - 238,831 507,688 64,146 2,371,223
- - 1,417,508 - 184,888 453,688 61,446 2,117,529
- - 1,265,086 - 126,725 397,688 58,696 1,848,195
- - 1,102,634 - 67,050 339,288 55,756 1,564,728
- - 929,495 - - 288,488 52,738 1,270,720
- - 745,010 - - 245,263 49,575 1,039,847
- - 548,357 - - 197,863 46,269 792,489
- - 338,716 - - 154,000 42,819 535,534
- - 115,262 - - 102,400 39,219 256,881
- - - - - 63,000 35,469 98,469
- - - - - 32,000 31,719 63,719
- - - - - - 27,656 27,656
- - - - - - 23,438 23,438
- - - - - - 19,063 19,063
- - - - - - 14,531 14,531
- - - - - - 9,844 9,844
- - - - - - 5,000 5,000
85,000$ 779,569$ 34,080,695$ 195,600$ 8,537,094$ 13,780,763$ 1,596,453$ 59,055,172$
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2013 Water Revenue Refunding Bonds were an advanced refunding of the 2004 COPs, which was a refunding of the 1993 COPs.
(3)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(4)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable Rate COPs.
2045
2046
2047
2048
2030
2031
2032
Total
2035
2036
2037
2038
2042
2043
2039
2049
2033
2034
2044
2040
2041
2024
2025
2026
2027
2028
2029
2021
2022
2023
Projected Interest Payments by Debt Issuance
FY
62
Potable Revenues and Expenditures
Potable Revenues
The District will provide water service to approximately 51,156 potable customers by the end of FY
2021. Ninety-one percent of the potable customers are residential and the remaining 9.0% are
comprised of multi-residential, business and publicly-owned, and irrigation and commercial
agricultural. The District expects nominal growth in the customer base of 1.0% for FY 2021. Due to
COVID-19, unit sales are anticipated to decrease 14.8% compared to the previous year's budget, and
decrease by 11.4% versus the previous year’s actual unit sales. According to the Western Regional
Climate Center, San Diego’s rainfall for Fiscal Year 2021 was 4.21 inches more than the 10-year
average of 9.5 inches. As a result, the District budgeted lower water sales volumes. In addition, due
to the economic impacts of COVID-19, the District reduced Fiscal Year 2021 budgeted sales volumes
by 12%.
Other revenue sources include: system charges, energy charges, penalties, and other pass-through
charges from the San Diego County Water Authority (CWA) and the Metropolitan Water District
(MWD).
All customers are required to pay fixed monthly fees, the MWD/CWA fixed charge, and the District
system charge. The MWD/CWA fixed charges are based on meter size. The District system fee is
based on meter size and customer type. These fees generate 37.7% of the potable water sales
revenue. Water rates, energy charges, and penalties generate the remaining 62.3% of revenues
necessary to fund operations.
Energy charges are based on the quantity of water used and the elevation to which the water has
been lifted to provide service. Energy charges are set so as to recover the power costs associated
with pumping. This charge is adjusted based on an annual review of these costs to ensure that
sufficient revenue is collected to offset pumping costs.
Penalties are charged to the District customer accounts when payments are delinquent. These
penalty revenues are budgeted based on historical trends.
Potable Expenditures
In FY 2021, the District estimates to purchase 24,642.6 acre-feet of potable water, sufficient to meet
the demands of its customers. Provisions have been made for District usage and loss in the amount
of 1,164.4 acre-feet.
Today, the District purchases 100% of its potable water from CWA. In the past the District purchased
only treated water through the CWA’s treated water Pipeline No. 4. In 2010, to diversify the water
supply and to become less reliant on CWA’s Pipeline No. 4, the District entered an agreement with
CWA to purchase water treated by neighboring Helix Water District at their Levy Water Treatment
Plant. This treated water from Flow Control Facility No. 14 gives the District redundancy in water
supply. This is beneficial as it enhances reliability of water deliveries in an emergency situation such
as earthquakes or other natural disasters. The District’s agreement also brings regional water
treatment closer to our customers, which reduces dependence on water treatment facilities located
outside of San Diego County. Flow Control Facility No. 14 connects the Helix Water District to Otay
Water District through approximately 5 miles of 36-inch pipeline.
63
Potable Revenues and Expenditures
Although the District does not own a direct water supply reservoir to capture surface water, there are
cooperative agreements between CWA and the other member agencies to manage water demands
and supply the region in times of need.
The reservoirs of member agencies and CWA serve multiple functions including: surface water
capture, seasonal water storage and carryover storage to provide a reliable water source in dry years.
The CWA’s emergency and carryover storage project interconnected reservoirs, pipelines and pump
stations make water available to the San Diego region if imported water deliveries are interrupted,.
The CWA purchases water for the 24 member agencies from MWD and the Imperial Irrigation
District. Any cost increases by CWA, MWD, or IID impacts the District's water purchases and directly
affects the District's fees, rates, and service charges. The Carlsbad Desalination Plant began
commercial operations in December 2015 and is the largest seawater desalination plant in the
nation. It produces approximately 56,000 acre-feet per year of drinking water for the San Diego
region. It currently meets about 10% of the county’s water demand.
64
FY 2019 FY 2020 FY 2020 FY 2021
11-Actual Budget Actual Budget $%
Revenues
##Water Sales 77,974,743$ 83,951,500$ 81,481,668$ 78,749,000$ (5,202,500)$ (6.2%)
##Meter Fees 213,770 225,200 159,372 118,000 (107,200) (47.6%)
##Capacity Fee Revenues 1,885,940 1,868,900 2,239,385 1,869,000 100 0.0%
Tax Revenues 4,621,635 4,563,700 4,870,811 4,106,000 (457,700) (10.0%)
##Non-operating Revenues 2,218,262 2,032,600 2,571,010 2,109,000 76,400 3.8%
##Interest 293,111 327,700 293,111 162,000 (165,700) (50.6%)
Total Revenues 87,207,461 92,969,600 91,615,357 87,113,000 (5,856,600) (6.3%)
Expenditures
Potable Water Purchases 35,777,445 37,282,800 36,333,195 33,631,000 (3,651,800) (9.8%)
##CWA - Infrastructure Access Charge 2,127,072 2,380,800 2,380,782 2,839,000 458,200 19.2%
##CWA - Customer Service Charge 1,637,269 1,659,600 1,659,013 1,703,000 43,400 2.6%
##CWA - Reliability Charge 2,069,007 2,377,200 2,377,331 2,711,000 333,800 14.0%
##CWA - Emergency Storage Charge 4,464,397 4,579,800 4,580,016 4,608,000 28,200 0.6%
##MWD - Capacity Reservation Charge 692,429 606,600 606,271 628,000 21,400 3.5%
##MWD-Net RTS and Standby Charge 925,194 870,000 791,452 720,000 (150,000) (17.2%)
Subtotal - Water Costs 47,692,813 49,756,800 48,728,060 46,840,000 (2,916,800) (5.9%)
##Labor and Benefits 19,555,682 18,547,600 18,852,943 19,459,000 911,400 4.9%
##Administrative Expenses 5,032,115 5,460,600 5,761,204 6,203,000 742,400 13.6%
##Materials and Maintenance 1,987,515 2,311,200 2,074,644 2,307,000 (4,200) (0.2%)
##Power 2,197,262 2,434,900 2,427,041 2,244,000 (190,900) (7.8%)
11-1311-5133Subtotal - Operations Costs 28,772,574 28,754,300 29,115,832 30,213,000 1,458,700 5.1%
DS General Fund Reserve - 556,100 556,100 - (556,100) (100.0%)
##Expansion Reserve - 2,599,900 2,599,900 150,000 (2,449,900) (94.2%)
Bett ResBetterment Reserve - 3,048,000 3,048,000 - (3,048,000) (100.0%)
Repl ResReplacement Reserve 12,489,600 7,321,600 7,321,600 8,892,000 1,570,400 21.4%
TOPEBOPEB Reserve 906,300 932,900 932,900 1,018,000 85,100 9.1%
Subtotal - Reserve Funding 13,395,900 14,458,500 14,458,500 10,060,000 (4,398,500) (30.4%)
Total Expenditures 89,861,287 92,969,600 92,302,392 87,113,000 (5,856,600) (6.3%)-
Excess Revenues (Expenditures)(2,653,826)$ -$ (687,035)$ -$ -$ -
Operating Budget Summary - Potable
Budget to Budget
Variance
65
FY 2019 FY 2021
Actual Budget Actual Budget $ %
Water Sales 47,517,849$ 52,353,600$ 50,081,789$ 46,419,000$ (5,934,600)$ -11.3%
System Charges 15,383,214 16,078,600 16,205,007 16,805,000 726,400 4.5%
Energy Charges 2,123,039 2,366,100 2,276,779 2,034,000 (332,100) -14.0%
MWD and CWA Fixed Charges 12,149,114 12,258,800 12,305,712 12,869,000 610,200 5.0%
Penalties 801,527 894,400 612,381 622,000 (272,400) -30.5%-$
Total Water Sales 77,974,743$ 83,951,500$ 81,481,668$ 78,749,000$ (5,202,500)$ -6.2%
Water Sales 46,419,000$
System Charges 16,805,000
Energy Charges 2,034,000
MWD and CWA Fixed Charges 12,869,000
Penalties 622,000
Total Water Sales 78,749,000$
Water Sales: Water rates vary among classes of service and are charged per unit of water. A unit of water is
equal to 100 cubic feet of water.
System Charges: 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.
Energy Charges: The energy pumping charge is $ .063 per 100 cubic feet of water for each 100 feet of lift above
the elevation of 450 feet. All water customers are in one of 29 zones based on elevation.
MWD and CWA Fixed Charges: These pass-through charges are calculated to recover the MWD's and CWA's fixed
annual costs including the construction, operation and maintenance of aqueducts, and emergency storage projects.
These fixed charges are based on the size of the meter.
Penalties: Charges and penalties are imposed on customer accounts for late payments and returned checks.
FY 2021 Classification of Water Sales
FY 2020
Classification of Water Sales - Potable
Budget to Budget
Variance
66
Tier Rate Structure Current Approved (1)Accounts (2)Unit Sales Budget
Residential 46,459 5,670,100 24,679,000$
1 - 10 3.31$ 3.38$
11 - 22 5.91 6.04
over 23 hcf 7.63 7.79
Multi-Residential 884 1,379,500 5,908,000
0 - 4 3.09 3.16
5 - 9 5.61 5.73
over 10 hcf 6.90 7.05
Business and Publicly-Owned
All units 3.92 4.00 1,494 1,625,800 6,436,000
Irrigation and Commercial Agricultural
All units 5.72 5.84 1,471 1,551,700 8,950,000
Total 50,308 10,227,100 45,973,000$
Government Fee 0.42 0.42 - - 446,000
Total Water Sales 50,308 10,227,100 46,419,000$
Units %
Residential 5,670,100 55.4%
Multi-Residential 1,379,500 13.5%
Business and Publicly-Owned 1,625,800 15.9%
Irrigation and Commercial 1,551,700 15.2%
Agricultural
Total Water Sales 10,227,100 100.0%
(2) Does not include fire service.
Water Sales Summary by Service Class - Potable
FY 2021
FY 2021 Unit Sales by Service Class
(1)Approved rates for water billed beginning in January 2021.
Water Rates
67
FY 2016 FY 2017 FY 2018 FY 2019 FY 2021
Budget Actual Budget
Residential 5,832,549 6,266,299 6,761,701 6,187,132 6,508,300 6,311,655 5,670,000
Multi-Residential 1,417,211 1,516,436 1,602,807 1,598,041 1,583,400 1,658,205 1,379,500
Business and Publicly-Owned 1,827,965 1,815,635 1,924,280 1,874,312 1,866,200 1,810,410 1,625,800
Irrigation and Commercial Agricultural 1,397,565 1,651,961 1,938,595 1,667,267 1,781,200 1,610,213 1,551,800
Total Unit Sales 10,475,290 11,250,331 12,227,383 11,326,752 11,739,100 11,390,483 10,227,100
FY 2016 FY 2017 FY 2018 FY 2019 FY 2021
Budget Actual Budget
Residential 45,038 45,086 45,518 45,972 46,463 46,298 46,459
Multi-Residential 817 802 820 821 826 874 884
Business and Publicly-Owned 2,216 2,227 2,271 2,302 2,291 2,349 2,342
Irrigation and Commercial Agricultural 1,354 1,387 1,436 1,460 1,454 1,473 1,471
Total Meter Count 49,425 49,502 50,045 50,555 51,034 50,994 51,156
Unit Sales History and Meter Count by Customer Class - Potable
Unit Sales in thousands and Meter Count Trends
Actual
Actual
FY 2020
FY 2020
5,000
15,000
25,000
35,000
45,000
55,000
-
5,000
10,000
15,000
20,000
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
Potable Meters Potable Unit Sales
Units Meters M
68
FY 2020 FY 2021 FY 2020 FY 2021
Meter Size Count Count Current Approved Budget Budget $%
Residential
0.75 45,369 45,301 18.87$ 19.27$ 9,984,400$ 10,336,000$ 351,600$ 3.5%
1.00 1,071 1,135 26.67 27.24 335,300 367,000 31,700 9.5%
1.50 19 19 46.13 47.12 10,300 11,000 700 6.8%
2.00 4 4 69.49 70.98 3,300 3,000 (300) -9.1%
Sub-total 46,463 46,459 10,333,300 10,717,000 383,700 3.7%
Multi-Residential
0.75 33 37 41.49 42.38 16,100 19,000 2,900 18.0%
1.00 152 190 58.59 59.84 104,600 135,000 30,400 29.1%
1.50 247 249 101.38 103.55 294,000 305,000 11,000 3.7%
2.00 257 263 152.67 155.94 459,700 487,000 27,300 5.9%
3.00 61 66 289.53 295.73 198,900 218,000 19,100 9.6%
4.00 66 69 443.54 453.03 343,700 371,000 27,300 7.9%
6.00 7 7 871.38 890.03 71,600 74,000 2,400 3.4%
8.00 3 3 1,384.73 1,414.36 48,800 50,000 1,200 2.5%
10.00 - - 1,983.62 2,026.07 - - - 0.0%
Sub-total 826 884 1,537,400 1,659,000 121,600 7.9%-
Business and Publicly-Owned
0.75 329 344 39.08 39.92 150,900 163,000 12,100 8.0%
1.00 355 371 55.19 56.37 230,000 248,000 18,000 7.8%
1.50 303 305 95.50 97.54 339,700 353,000 13,300 3.9%
2.00 392 394 143.82 146.90 661,800 687,000 25,200 3.8%
3.00 38 39 272.73 278.57 121,700 129,000 7,300 6.0%
4.00 28 27 417.79 426.73 137,300 137,000 (300) -0.2%
6.00 9 9 820.82 838.39 86,700 90,000 3,300 3.8%
8.00 - - 1,304.36 1,332.27 - - -
10.00 5 5 1,868.46 1,908.45 109,700 113,000 3,300 3.0%
Sub-total 1,459 1,494 1,837,800 1,920,000 82,200 4.5%-
Irrigation and Commercial Agricultural
0.75 124 124 33.00 33.71 48,000 50,000 2,000 4.2%
1.00 290 300 46.61 47.61 158,400 169,000 10,600 6.7%
1.50 392 393 80.65 82.38 370,700 383,000 12,300 3.3%
2.00 463 463 121.44 124.04 660,100 682,000 21,900 3.3%
3.00 3 3 230.32 235.25 8,100 8,000 (100) -1.2%
4.00 175 181 352.85 360.40 724,900 775,000 50,100 6.9%
6.00 7 7 693.20 708.03 57,000 59,000 2,000 3.5%
8.00 - - 1,101.58 1,125.15 - - -
10.00 - - 1,577.99 1,611.76 - - -
Sub-total 1,454 1,471 2,027,200 2,126,000 98,800 4.9%
Fire Services
Less than 3"50 49 22.55 23.03 13,200 13,000 (200)
More than 4"782 799 30.38 31.03 278,900 294,000 15,100
Sub-total 832 848 292,100 307,000 14,900 5.1%
Set-up Fees 15.00 15.00 50,800 76,000 25,200
Total 51,034 51,156 16,078,600$ 16,805,000$ 726,400$ 4.5%
(1) Approved rates for water billed beginning in January 2021.
System Charges - Potable
System Charges Budget to Budget Variance
(1)
69
FY 2021 FY 2020 FY 2021
Meter Size Count Current Approved Budget Budget $%
0.75 45,800 15.56$ 16.36$ 8,379,400$ 8,747,000$ 367,600$ 4.4%
1.00 1,988 28.89 30.38 635,500 707,000 71,500 11.3%
1.50 962 65.31 68.67 738,700 772,000 33,300 4.5%
2.00 1,123 111.10 116.81 1,464,100 1,536,000 71,900 4.9%
3.00 108 236.29 248.44 278,000 303,000 25,000 9.0%
4.00 102 378.38 397.83 447,400 475,000 27,600 6.2%
6.00 18 774.56 814.38 164,900 172,000 7,100 4.3%
8.00 3 1,250.83 1,315.14 44,400 46,000 1,600 3.6%
10.00 5 1,800.41 1,892.97 106,400 111,000 4,600 4.3%
Total 50,109 12,258,800$ 12,869,000$ 610,200$ 5.0%
(1) Construction Meters, Fire Services, and Recycled Meters are exempt from MWD and CWA Fixed Charges.
(2) Approved rates for water billed beginning in January 2021.
Historical MWD and CWA Fixed Charges, in millions ($)
Budget to Budget
Variance
MWD and CWA Fixed Charges (Pass-Through) - Potable
MWD and CWA Fixed Charges
$0
$2
$4
$6
$8
$10
$12
$14
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
(1)(2)
70
Meter Size Meter Sales Installation Fee Meter Fee Total Fees Budget
0.75 266 112.11$ 236.25$ 348.36$ 93,000$
1.00 - 112.11 304.86 416.97 -
1.50 3 112.11 495.51 607.62 2,000
2.00 - 112.11 710.01 822.12 -
3.00 8 674.99 2,212.68 2,887.67 23,000
4.00 - 674.99 3,843.08 4,518.07 -
6.00 - 1,066.20 6,638.04 7,704.24 -
8.00 - 1,634.92 8,293.74 9,928.66 -
10.00 - 1,634.92 11,927.94 13,562.86 -
Total 277 118,000$
Meter Fees - Potable
Meter Fees: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.
Historical Meter Count
FY 2021
-
15,000
30,000
45,000
60,000
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
71
FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Budget
Water Sales 37,243,504$ 46,265,872$ 54,262,051$ 47,517,849$ 50,081,789$ 46,419,000$
System Charges 13,391,005 12,243,766 13,078,386 15,383,214 16,205,007 16,805,000
Energy Charges 2,151,538 2,334,565 2,040,410 2,123,039 2,276,779 2,034,000
MWD and CWA Fixed Charges 11,850,406 12,398,886 11,920,268 12,149,114 12,305,712 12,869,000
Penalties 776,704 734,261 830,217 801,527 612,381 622,000
Total Potable Revenues 65,413,157$ 73,977,350$ 82,131,332$ 77,974,743$ 81,481,668$ 78,749,000$
Revenue History - Potable, in millions ($)
Revenue History - Potable
Actual
$-
$20
$40
$60
$80
$100
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
Water Sales System Charges Energy Charges MWD & CWA Fixed Charges Penalties
72
FY 2021 FY 2021
Budget Actual Budget Budget Actual Budget $ %
Potable Water Purchases (CWA):
Rate Effective January 1,337.00$ 1,319.35$ 1,399.00$ 62.00$ 4.6%
Budgeted Sales 26,949.2 26,148.9 23,478.2 35,558,600$ 34,479,319$ 32,043,000$ (3,515,600)$ -9.9%
District, Unbilled Usage (1)176.3 265.1 178.7 232,900 350,856 243,000 10,100 4.3%
Water Loss 1,130.2 1,124.7 985.7 1,491,300 1,503,020 1,345,000 (146,300) -9.8%
Total Variable Charges 28,255.7 27,538.7 24,642.6 37,282,800$ 36,333,195$ 33,631,000$ (3,651,800)$ -9.8%
CWA and MWD Fixed Charges:
CWA - Infrastructure Access Charge 2,380,800$ 2,380,782$ 2,839,000$ 458,200$ 19.2%
CWA - Customer Service Charge 1,659,600 1,659,013 1,703,000 43,400 2.6%
CWA - Emergency Storage Charge 4,579,800 4,580,016 4,608,000 28,200 0.6%
CWA - Reliability Fixed Charge 2,377,200 2,377,331 2,711,000 333,800 14.0%
MWD - Capacity Reservation Charge 606,600 606,271 628,000 21,400 3.5%
MWD - Readiness-to-Serve Charge 870,000 791,452 720,000 (150,000) -17.2%
Total Fixed Charges 12,474,000$ 12,394,865$ 13,209,000$ 735,000$ 5.9%
Total Variable and Fixed Charges 49,756,800$ 48,728,060$ 46,840,000$ (2,916,800)$ -5.9%
Average Cost Per Acre-Foot 1,761$ 1,769$ 1,901$
(1) Excludes potable supplement to recycled system.
Water Purchases and Related Costs - Potable
Budget to Budget
VariancePurchase Costs
FY 2020FY 2020
Acre-Feet
-
8,000
16,000
24,000
32,000
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
Historical Potable Water Purchases, in acre-feet
73
FY 2016 FY 2017 FY 2018 FY 2019 FY 2021
Budget Actual Budget $ %
Administrative Buildings 212,448$ 196,288$ 188,067$ 168,286$ 183,800$ 166,175$ 154,000$ (29,800)$ -16.2%
Potable Transmission 1,804,810 1,981,178 2,111,203 2,028,976 2,251,100 2,260,865 2,090,000 (161,100) -7.2%
Total Power Costs 2,017,258$ 2,177,466$ 2,299,270$ 2,197,262$ 2,434,900$ 2,427,040$ 2,244,000$ (190,900)$ -7.8%
Power Costs - Potable
Budget to Budget
Variance
Historical Power Costs, in thousands ($)
Actual
FY 2020
$0
$500
$1,000
$1,500
$2,000
$2,500
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
Administrative Buildings Potable Transmission
74
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $ %
Administrative Expenditures
Directors' Fees 55,925$ 80,000$ 61,553$ 80,000$ -$ 0.0%
Travel and Memberships 220,516 262,600 200,335 198,000 (64,600) (24.6%)
Conservation and Outreach 157,644 171,400 161,793 164,000 (7,400) (4.3%)
General Office Expense 232,821 270,900 268,353 250,000 (20,900) (7.7%)
Equipment 1,374,465 1,346,600 1,371,401 1,427,000 80,400 6.0%
Fees 666,276 674,200 731,474 776,000 101,800 15.1%
Services 1,687,171 1,844,300 1,721,886 1,746,000 (98,300) (5.3%)
Training 109,005 173,100 127,312 143,000 (30,100) (17.4%)
Utilities 13,894 15,800 14,692 16,000 200 1.3%
Insurance and Legal 1,218,137 1,420,700 1,707,851 1,782,000 361,300 25.4%
Miscellaneous Expense - - 262 - - 0.0%
Bad Debt Expense 111,547 104,700 169,659 485,000 380,300 363.2%
Subtotal before Overhead 5,847,401 6,364,300 6,536,571 7,067,000 702,700 11.0%
Less: Overhead Allocation (815,417) (903,700) (775,367) (864,000) 39,700 (4.4%)
Total Expenditures 5,031,984$ 5,460,600$ 5,761,204$ 6,203,000$ 742,400$ 13.6%
4,403,925$ 8,244,422$ 8,849,000$
Directors' Fees 80,000$ 1.2%
Travel and Memberships 198,000 2.8%
Conservation and Outreach 164,000 2.3%
General Office Expense 250,000 3.5%
Equipment 1,427,000 20.2%
Fees 776,000 11.0%
Services 1,746,000 24.7%
Training 143,000 2.0%
Utilities 16,000 0.2%
Insurance and Legal 1,782,000 25.2%
Bad Debt Expense (1)485,000 6.9%
7,067,000 100.0%
Less: Overhead Allocation (864,000)
Total Administrative Expenses 6,203,000$
(1)Includes Miscellaneous Expense.
Administrative Expenditures - Potable
Budget to Budget
Variance
FY 2021 Administrative Expenditures - Potable
75
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $ %
Materials and Maintenance
Fuel and Oil 179,711$ 189,200$ 179,265$ 189,000$ (200)$ (0.1%)
Meters and Materials 243,489 251,000 209,352 136,000 (115,000) (45.8%)
Fleet Parts and Equipment 123,525 135,300 130,452 130,000 (5,300) (3.9%)
Infrastructure Equipment & Supplies 402,932 394,800 326,670 371,000 (23,800) (6.0%)
Chemicals 117,883 194,400 216,914 207,000 12,600 6.5%
Safety Equipment 51,876 76,500 43,509 69,000 (7,500) (9.8%)
Laboratory Equipment and Supplies 40,087 45,700 47,102 43,000 (2,700) (5.9%)
Other Materials and Supplies 245,919 200,600 238,907 282,000 81,400 40.6%
Building and Grounds Materials 66,428 68,000 68,505 61,000 (7,000) (10.3%)
Contracted Services 515,665 755,700 613,968 819,000 63,300 8.4%
Total Expenditures 1,987,515$ 2,311,200$ 2,074,644$ 2,307,000$ (4,200)$ (0.2%)
Fuel and Oil 189,000$ 8.2%
Meters and Materials 136,000 5.9%
Fleet Parts and Equipment 130,000 5.6%
Infrastructure Equipment and Supplies 371,000 16.1%
Chemicals 207,000 9.0%
Safety Equipment 69,000 3.0%
Laboratory Equipment and Supplies 43,000 1.9%
Other Materials and Supplies 282,000 12.2%
Building and Grounds Materials 61,000 2.6%
Contracted Services 819,000 35.5%
Total Expenditures 2,307,000$ 100.0%
Materials and Maintenance Expenditures - Potable
Budget to Budget
Variance
FY 2021 Materials and Maintenance Expenditures - Potable
76
Potable Water Service Area
77
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78
Recycled Revenues and Expenditures
In 1980, the District began operation of the Ralph W. Chapman Water Recycling Facility. The
RWCWRF plant is capable of recycling wastewater at the rate of 1.3 million gallons per day (MGD)
to augment water supplies for irrigation purposes only. The treatment process consists of primary,
secondary, and tertiary treatment. The facility’s conversion time to treat 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 rotary 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 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 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. Sludge is discharged to the City of San Diego Metropolitan Wastewater (Metro)
system.
79
Recycled Revenues and Expenditures
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, completing the process of
recycling wastewater into recycled water.
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 (SBWRP). 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 eliminated the need for a potable supplement into the recycled system. The
benefits of this to the region are great, as less demand on the potable system will be made, reducing
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 12.0% of its total water demand will be met using recycled water.
Both the RWCWRF plant, owned and operated by the District, and the SBWRP plant, owned and
operated by the City of San Diego, supply the District’s recycled distribution system. The District
operates the largest recycled water distribution system in San Diego County and will supply
approximately 2,952.7 acre-feet of recycled water to 738 landscaping and construction customers by
the end of Fiscal Year 2021. The recycled water customer base consists primarily of irrigation at golf
courses, schools, parks, and open space. The geographic area of this water use includes Eastlake,
Otay Ranch, Rancho Del Rey, and other areas of eastern Chula Vista.
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
entered into a new agreement, which expires June 30, 2024, allowing 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.
80
FY 2019 FY 2020 FY 2020 FY 2021
31-Actual Budget Actual Budget $%
Revenues
Recycled Water Sales 8,781,479$ 9,816,800$ 8,336,802$ 8,411,000$ (1,405,800)$ (14.3%)
Meter Fees 6,669 4,200 6,877 5,000 800 19.0%
Interest 33,639 24,700 27,467 13,000 (11,700)(47.4%)
Total Revenues 8,823,257 9,845,700 8,377,630 8,429,000 (1,416,700)(14.4%)
Expenditures
Recycled Water Purchases 3,843,264 4,058,400 3,919,507 4,058,000 (400)(0.0%)
Labor and Benefits 1,343,434 1,442,800 1,195,201 1,367,000 (75,800)(5.3%)
Administrative Expenses 486,328 591,300 476,367 559,000 (32,300)(5.5%)
Materials and Maintenance 213,027 331,100 222,608 298,000 (33,100)(10.0%)
Power 536,179 595,500 522,863 502,000 (93,500)(15.7%)
1 Subtotal - Operations Costs 6,422,232 7,019,100 6,336,546 6,784,000 (235,100)(3.3%)
DGeneral Fund Reserve - 398,300 398,300 - (398,300) (100.0%)
Expansion Reserve 2,712,100 2,281,400 2,281,400 - (2,281,400) (100.0%)
BBetterment Reserve - - - 985,000 985,000 100.0%
RReplacement Reserve - 81,100 81,100 615,000 533,900 658.3%
T OPEB Reserve 34,900 65,800 65,800 45,000 (20,800) (31.6%)
NNew Supply Reserve 75,000 - - - - -
Subtotal - Reserve Funding 2,822,000 2,826,600 2,826,600 1,645,000 (1,181,600) (41.8%)
Total Expenditures 9,244,232 9,845,700 9,163,146 8,429,000 (1,416,700) (14.4%)
(420,975)$ -$ (785,516)$ -$ -$ - Excess Revenues/Expenditures
Operating Budget Summary - Recycled
Budget to Budget
Variance
81
FY 2019 FY 2021
Actual Budget Actual Budget $%
Water Sales 6,481,692$ 7,187,000$ 6,481,692$ 6,094,000$ (1,093,000)$ -15.2%
System Charges 833,113 827,600 833,113 869,000 41,400 5.0%
Energy Charges 331,188 360,900 331,188 289,000 (71,900) -19.9%
MWD and CWA Rebates 1,283,359 1,407,800 1,283,359 1,137,000 (270,800) -19.2%
Penalties 24,129 33,500 24,129 20,000 (13,500) -40.3%
Total Recycled Water Sales 8,953,481$ 9,816,800$ 8,953,481$ 8,409,000$ (1,407,800)$ -14.3%
Water Charges 6,094,000$
System Charges 869,000
Energy Charges 289,000
MWD and CWA Rebates 1,137,000
Penalties 20,000
8,409,000$
Water Sales: Water rates vary among classes of service and are charged per unit of water. A unit of water is equal to
100 cubic feet of water.
System Charges: 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.
Energy Charges: The energy pumping charge is $ .063 per 100 cubic feet of water for each 100 feet of lift above the
elevation of 450 feet. All water customers are in one of 29 zones based on elevation.
MWD and CWA Rebates: Incentive from MWD and CWA for providing recycled water. The District receives $200
from CWA and $185 from MWD for every acre-foot (AF) of recycled water sold.
Penalties: Charges and penalties are imposed on customer accounts for late payments and returned checks.
Budget to Budget
Variance
FY 2021 Classification of Water Sales
Classification of Water Sales - Recycled
FY 2020
82
Current Approved (1)Accounts Unit Sales Budget
Recycled Irrigation
All units $4.65 $4.80 738 1,165,400 5,480,000$
Recycled Commercial
All units 3.29 3.40 1 120,800 402,000
Total 739 1,286,200 5,882,000$
Government Fee 0.42 0.42 - - 212,000
Total Water Sales 739 1,286,200 6,094,000$
Units %
Recycled Irrigation 1,165,400 91%
Recycled Commercial 120,800 9%
1,286,200 100%
(1)Approved rates for water billed beginning in January 2021.
FY 2021
Water Sales Summary by Meter Size - Recycled
Water Rates
FY 2021 Unit Sales by Meter Size
(1)
83
FY 2021 FY 2020 FY 2021
Meter Size Meter Count Current Approved (1)Budget Budget $%
Irrigation
0.75 3 33.95$ 35.07$ 1,200$ 1,000$ (200)$ -16.7%
1.00 112 47.95 49.53 59,950 65,000 5,050 8.4%
1.50 405 82.97 85.71 391,300 408,000 16,700 4.3%
2.00 205 124.94 129.06 290,650 310,000 19,350 6.7%
3.00 4 236.94 244.76 11,100 12,000 900 8.1%
4.00 7 362.99 374.97 34,000 31,000 (3,000) -8.8%
6.00 2 724.02 747.91 16,900 18,000 1,100 6.5%
8.00 - 1,133.22 1,170.62 - - - -
10.00 - 1,623.32 1,676.89 - - - -
Sub-total 738 805,100$ 845,000$ 39,900$ 5.0%
Commercial
0.75 - 40.21$ 41.54$ - - - -
1.00 - 56.78 58.65 - - - -
1.50 - 98.27 101.51 - - - -
2.00 - 148.00 152.88 - - - -
3.00 - 280.65 289.91 - - - -
4.00 - 429.92 444.11 - - - -
6.00 - 844.62 872.49 - - - -
8.00 - 1,342.20 1,386.49 - - - -
10.00 1 1,922.69 1,986.14 22,500 24,000 1,500 6.7%
Sub-total 1 22,500 24,000 1,500 6.7%
Total 739 827,600$ 869,000$ 41,400$ 5.0%
(1)Approved rates for water billed beginning in January 2021.
System Charges - Recycled
System Charges Budget to Budget Variance
84
FY 2016 FY 2017 FY 2018 FY 2019 FY 2021
Budget Actual Budget
Recycled Irrigation 1,357,347 1,393,468 1,588,141 1,313,652 1,443,200 1,302,137 1,165,400
Recycled Commercial 234,330 232,300 222,361 148,980 149,600 149,820 120,800
Total Unit Sales 1,591,677 1,625,768 1,810,502 1,462,632 1,592,800 1,451,957 1,286,200
FY 2016 FY 2017 FY 2018 FY 2019 FY 2021
Budget Actual Budget
Recycled Irrigation 706 719 723 725 730 734 738
Recycled Commercial 2 2 1 1 1 1 1
Total Meter Count 708 721 724 726 731 735 739
Unit Sales History and Meter Count by Customer Class - Recycled
Unit Sales in thousands and Meter Count Trends
FY 2020
Actual
Actual
FY 2020
-
150
300
450
600
750
100
500
900
1,300
1,700
2,100
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
MetersUnits
Meter Count Recycled Unit Sales
85
Meter Size Meter Sales Installation Fee Meter Fee Total Fees Budget
0.75 - 112.11$ 236.25$ 348.36$ -$
1.00 2 112.11 304.86 416.97 1,000
1.50 3 112.11 495.51 607.62 2,000
2.00 3 112.11 710.01 822.12 2,000
3.00 - 674.99 2,212.68 2,887.67 -
4.00 - 674.99 3,843.08 4,518.07 -
6.00 - 1,066.20 6,638.04 7,704.24 -
8.00 - 1,634.92 8,293.74 9,928.66 -
10.00 - 1,634.92 11,927.94 13,562.86 -
Total 8 5,000$
Meter Fees - Recycled
FY 2021
Meter Fees: 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.
86
FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Budget
Water Sales 6,240,661$ 7,431,235$ 7,883,748$ 6,347,342$ 6,481,692$ 6,094,000$
System Charges 471,962 434,775 594,049 798,349 833,113 869,000
Energy Charges 379,026 417,595 347,841 315,385 331,188 289,000
MWD and CWA Rebates 1,396,472 1,436,936 1,600,214 1,292,330 1,283,359 1,137,000
Penalties 38,921 22,259 38,012 28,073 24,129 20,000
Total Recycled Revenues 8,527,042$ 9,742,800$ 10,463,864$ 8,781,479$ 8,953,481$ 8,409,000$
Revenue History - Recycled
Revenue History - Recycled, in millions ($)
Actual
$-
$2
$4
$6
$8
$10
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
Water Sales System Charges Energy Charges MWD and CWA Rebates Penalties
87
FY 2021 FY 2021
Budget Actual Budget Budget Actual Budget $ %
Rate Per Acre Feet 756.00$ 755.33$ 756.00$ -$ 0.0%
Recycled Water Purchases 2,607.2 1,686.6 1,927.6 1,971,100$ 1,273,913$ 1,457,000$ (514,100)$ -26.1%
Potable Supplement 770.0 1,029,490
Meter Fee $1,333.75 monthly 16,000 10,670 16,000 - 0.0%
Take-or-pay contract (1)2,739.8 3,488.4 3,419.4 2,071,300 2,634,923 2,585,000 513,700 24.8%
Total 5,347.0 5,945.0 5,347.0 4,058,400$ 4,948,996$ 4,058,000$ (400)$ 0.0%
Average Cost Per Acre-Foot (Effective Rate)1,556.59$ 2,934.37$ 2,105.18$
(1) This is the anticipated take-or-pay amount to be paid to the City of San Diego. The contract requires the purchase of a
minimum volume of water. The District does not anticipate meeting the minimum therefore, a payment would be due
to the City of San Diego.
HISTORICAL RECYCLED WATER PURCHASES, IN ACRE-FEET
Water Purchases - Recycled
FY 2020
Purchase CostsAcre Feet
FY 2020 Budget to Budget
Variance
-
500
1,000
1,500
2,000
2,500
3,000
3,500
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
88
FY 2016 FY 2017 FY 2018 FY 2019 FY 2021
Budget Actual Budget $ %
Total Power Cost 526,842$ 590,035$ 665,509$ 536,179$ 595,500$ 522,863$ 502,000$ (93,500)$ -15.7%
Power Costs - Recycled
FY 2020 Budget to Budget
Variance
Historical Power Costs, in thousands ($)
Actual
$0
$100
$200
$300
$400
$500
$600
$700
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
89
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $ %
Administrative Expenditures
Equipment 4,291$ 7,500$ 5,795$ 6,000$ (1,500)$ (20.0%)
Fees 24,340 20,500 25,044 29,000 8,500 41.5%
Services 109,005 138,500 116,915 111,000 (27,500) (19.9%)
Insurance and Legal (1)129,404 175,000 122,336 175,000 - 0.0%
Subtotal before Overhead 267,040 341,500 270,090 321,000 (20,500) (6.0%)
Add: Overhead Allocation 219,288 249,800 206,277 238,000 (11,800) (4.7%)
Total Expenditures 486,328$ 591,300$ 476,367$ 559,000$ (32,300)$ (5.5%)
Equipment 6,000$ 1.0%
Fees 29,000 5.2%
Services 111,000 19.9%
Insurance and Legal 175,000 31.3%
Overhead Allocation 238,000 42.6%
Total Expenditures 559,000$ 100.0%
(1)Legal expenses pertaining to the City of San Diego Recycled Water Rate Lawsuit.
FY 2021 Administrative Expenditures - Recycled
Administrative Expenditures - Recycled
Budget to Budget
Variance
90
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $%
Materials and Maintenance
Fuel and Oil 17,548$ 31,800$ 16,411$ 24,000$ (7,800)$ (24.5%)
Meters and Materials 2,285 7,500 1,820 8,000 500 6.7%
Infrastructure Equipment & Supplies 62,487 102,800 68,484 82,000 (20,800) (20.2%)
Chemicals 85,225 146,000 112,577 149,000 3,000 2.1%
Safety Equipment 3,040 7,000 6,998 - (7,000) (100.0%)
Laboratory Equipment and Supplies 4,559 4,400 4,233 5,000 600 13.6%
Other Materials and Supplies 4,781 4,500 3,307 4,000 (500) (11.1%)
Contracted Services 33,102 27,100 8,778 26,000 (1,100) (4.1%)
Total Expenditures 213,027$ 331,100$ 222,608$ 298,000$ (33,100)$ (10.0%)
Fuel and Oil 24,000$ 8.1%
Meters and Materials 8,000 2.7%
Infrastructure Equipment & Supplies 82,000 27.5%
Chemicals 149,000 50.0%
Laboratory Equipment and Supplies 5,000 1.7%
Other Materials and Supplies 4,000 1.3%
Contracted Services 26,000 8.7%
Total Expenditures 298,000$ 100.0%
Materials and Maintenance Expenditures - Recycled
Budget to Budget
Variance
FY 2021 Materials and Maintenance Expenditures - Recycled
91
Recycled Water Service Area
92
Sewer Revenues and Expenditures
The District provides sewer service to approximately 15,300 customers through 4,729 accounts
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, all within
the Upper Sweetwater River Basin. This basin is also known as the Jamacha Basin. Residential
customers comprise 97.3% of the customer base.
Wastewater collection within the Jamacha Basin is provided by two agencies: the Otay Water District
and the County of San Diego, (formerly the Spring Valley Sanitation District). Customers in the basin,
not served by either agency, dispose of their sewage through septic tanks. After the sewage has
been collected, it is sent to the District’s Ralph W. Chapman Water Recycling Facility treatment plant
where the District produces recycled water, see page 79 outlining the sewer process. The by-
product of the treatment process is called sludge and it is discharged through County’s
transmission system into the City of San Diego Metropolitan Wastewater (Metro) systems.
The District is a member of Metro Wastewater Joint Powers Authority and shares in the use of the
City of San Diego's regional wastewater facilities. A significant amount of the sewer operation costs
is for sewer service charges from the Metro Wastewater JPA which is budgeted at $663,400 for FY
2021. Additionally, the District Is budgeted to pay $205,200 for its share of the operation and
maintenance cost of the Rancho San Diego Outfall and the Spring Valley Outfall to transport sewage
to Metro for FY 2021.
To meet State of California requirements, customers must pay their fair share of sewer costs. The
District is required to set sewer rates in accordance with the State’s Revenue Program Guidelines. In
January 2020, the District performed a Cost of Service Study and Rate Study (i.e. reviewed rates, fees,
charges, costs, and the usage structure) and determined that changes in rates, fees, and charges
were necessary in order to recover sufficient revenues to operate and maintain the public sewer
system.
Sewer bills are based on the rate of discharge and the strength. Due to their higher discharge and
strength, non-residential customers (comprising 1.6% of the customer base) comprise 14.0% of the
total sewer charges. The formula for sewer rates is shown on pages 101-102.
93
FY 2019 FY 2020 FY 2020 FY 2021
21-Actual Budget Actual Budget $ %
Revenues
Sewer Revenues 2,933,657$ 2,890,000$ 2,892,883$ 2,870,000$ (20,000)$ (0.7%)
Capacity Fee Revenues 12,393 - 11,460 - - -
Tax Revenues 51,818 52,200 48,772 49,000 (3,200) (6.1%)
Non-operating Revenues 420,124 33,300 203,663 68,000 34,700 104.2%
Interest 13,977 15,500 15,205 4,000 (11,500) (74.2%)
Total Revenue 3,431,969 2,991,000 3,171,983 2,991,000 - -
Expenditures
Labor and Benefits 1,082,135 1,167,300 918,647 1,034,000 (133,300) (11.4%)
Administrative Expenses 214,969 281,900 227,764 225,000 (56,900) (20.2%)
Materials and Maintenance 1,271,620 1,191,800 1,101,041 1,115,000 (76,800) (6.4%)
Power 143,575 154,300 152,460 152,000 (2,300) (1.5%)
11-1311-5133Subtotal - Operations Costs 2,712,299 2,795,300 2,399,912 2,526,000 (269,300) (9.6%)
DSGeneral Fund Reserve - - - 259,000 259,000 100.0%
Expansion Reserve - 46,000 46,000 - (46,000) (100.0%)
Repl ResReplacement Reserve 289,000 110,300 110,300 169,000 58,700 53.2%
TOPEBOPEB Reserve 39,600 39,400 39,400 37,000 (2,400) (6.1%)
Subtotal - Reserve Funding 328,600 195,700 195,700 465,000 269,300 137.6%
Total Expenditures 3,040,899 2,991,000 2,595,612 2,991,000 - 0.0%
391,070$ -$ 576,371$ -$ -$
- Excess Revenue/(Expenditures)
Operating Budget Summary - Sewer
Budget to Budget
Variance
94
FY 2021 FY 2021
Accounts Current Approved(1)Budget Actual Budget $%
Residential 4,589 2.93$ 2.96$ 1,382,000$ 1,386,200$ 1,300,000$ (82,000)$ -5.9%
Multi-Residential 50 2.93 2.96 193,100 193,700 197,000 3,900 2.0%
Commercial
Low Strength 46 2.93 2.96 67,100 67,300 73,000 5,900 8.8%
Medium Strength 12 3.64 3.37 34,700 34,800 36,000 1,300 3.7%
High Strength 7 5.01 4.75 24,300 24,400 25,000 700 2.9%
Schools 6 2.93 2.96 97,300 97,600 100,000 2,700 2.8%
Churches 4 2.93 2.96 10,400 10,400 10,000 (400) -3.8%
Subtotal Commercial 75 233,800 234,500 244,000 10,200 4.4%
Total Sewer Charges 4,714 1,808,900$ 1,814,400$ 1,741,000$ (67,900)$ -3.8%
Single-Family 1,300,000$ 74.7%
Multi-Family 197,000 11.3%
Commercial 244,000 14.0%
1,741,000$ 100.0%
(1)Subject to a Proposition 218 Hearing, the rates will become effective in January 2021.
FY 2021 Charges Summary by Service Class
Charges Summary by Service Class - Sewer
Usage Rate Budget to Budget
VarianceFY 2020
95
FY 2021 Current Approved (1)FY 2020 FY 2021
Meter Size Accounts Charges Charges Budget Budget $ %
Residential 4,589 16.38 16.55$ 864,500$ 907,000$ 42,500$ 4.9%
Multi-Residential/Commercial
0.75 24 16.38 16.55 4,300 5,000 700 16.3%
1.00 5 40.94 41.36 2,300 2,000 (300) -13.0%
1.50 20 81.88 82.71 18,800 20,000 1,200 6.4%
2.00 62 131.00 132.33 93,100 98,000 4,900 5.3%
3.00 6 245.64 248.13 16,900 18,000 1,100 6.5%
4.00 6 409.40 413.55 28,200 30,000 1,800 6.4%
6.00 1 818.79 827.09 9,400 10,000 600 6.4%
8.00 - 1,310.08 1,323.36 - - -
10.00 1 1,883.23 1,902.34 21,600 23,000 1,400 6.5%
Total System Charges 4,714 1,059,100$ 1,113,000$ 53,900$ 5.1%
(1)Subject to a Proposition 218 Hearing, the rates will become effective in January 2021.
System Charges - Sewer
Budget to Budget
Variance
96
FY 2016 FY 2017 FY 2018 FY 2019 FY 2021
Budget Actual Budget
Sewer Charges 3,124,595$ 2,929,899$ 2,809,415$ 2,913,787$ 2,868,000$ 2,876,592$ 2,854,000$
Penalties 24,700 25,531 28,797 19,870 22,000 16,291 16,000
Total 3,149,295$ 2,955,430$ 2,838,212$ 2,933,657$ 2,890,000$ 2,892,883$ 2,870,000$
Revenue History - Sewer, in thousands ($)
Revenue History - Sewer
FY 2020
Actual
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
Sewer Charges Penalties
97
FY 2016 FY 2017 FY 2018 FY 2019 FY 2021
Budget Actual Budget $ %
Total Power Cost 153,815$ 122,622$ 173,997$ 143,575$ 154,300$ 152,461$ 152,000$ (2,300)$ -1.5%
Power Costs - Sewer
FY 2020 Budget to Budget
Variance
Actual
Historical Power Costs, in thousands ($)
$20
$60
$100
$140
$180
FY 2016
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
98
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $ %
Administrative Expenditures
Travel and Memberships -$ -$ 5,098$ 7,000$ 7,000$ 0.0%
Equipment 9,070 23,300 15,805 8,000 (15,300) (65.7%)
Fees 3,686 3,800 4,025 4,000 200 5.3%
Services 25,538 50,300 40,781 26,000 (24,300) (48.3%)
Bad Debt Expense 1,085 4,300 3,673 3,000 (1,300) (30.2%)
Total 39,379 81,700 69,382 48,000 (33,700) (41.2%)
Add: Overhead Allocation 175,590 200,200 158,382 177,000 (23,200) (11.6%)
Total Expenditures 214,969$ 281,900$ 227,764$ 225,000$ (56,900)$ (20.2%)
Travel & Memberships 7,000$ 3.1%
Equipment 8,000 3.6%
Fees 4,000 1.8%
Services 26,000 11.6%
Bad Debt Expense 3,000 1.2%
Overhead Allocation 177,000 78.7%
Total Expenditures 225,000$ 100.0%
Administrative Expenditures - Sewer
Budget to Budget
Variance
FY 2021 Administrative Expenditures - Sewer
99
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $ %
Materials and Maintenance
Fleet Parts and Equipment 8,444$ 8,000$ 10,200$ 8,000$ -$ -
Infrastructure Equipment & Supplies 118,046 132,900 90,531 122,000 (10,900) (8.2%)
Chemicals 4,059 27,400 10,007 24,000 (3,400) (12.4%)
Safety Equipment - 7,000 5,511 - (7,000) (100.0%)
Laboratory Equipment and Supplies 6,640 5,600 3,578 8,000 2,400 42.9%
Other Materials and Supplies 178 100 - 1,000 900 900.0%
Contracted Services 75,317 158,800 133,948 84,000 (74,800) (47.1%)
Subtotal Materials and Maintenance 212,684 339,800 253,775 247,000 (92,800) (27.3%)
Sewer Charges
Metro O&M Costs 782,379 600,900 618,116 663,000 62,100 10.3%
Spring Valley Sewer Charge 276,557 251,100 229,150 205,000 (46,100) (18.4%)
Subtotal Sewer Charges 1,058,936 852,000 847,266 868,000 16,000 1.9%
Total Expenditures 1,271,620$ 1,191,800$ 1,101,041$ 1,115,000$ (76,800)$ (6.4%)
Fleet Parts and Equipment 8,000$ 0.7%
Infrastructure Equipment & Supplies 122,000 10.9%
Chemicals 24,000 2.2%
Laboratory Equipment & Supplies (1)9,000 0.8%
Contracted Services 84,000 7.5%
Metro O&M Costs 663,000 59.5%
Spring Valley Sewer Charge 205,000 18.4%
Total Expenditures 1,115,000$ 100.0%
Includes Other Materials & Supplies.
Materials and Maintenance Expenditures - Sewer
Budget to Budget
Variance
FY 2021 Materials and Maintenance Expenditures - Sewer
(1)
100
Formula for Sewer Rates
To meet State of California requirements, customers must pay their fair share of sewer costs. The
District is required to set sewer rates in accordance with the State’s Revenue Program Guidelines.
Residential and Multi-Residential Sewer Service
To estimate sewer use, the District averages metered water use for the winter months of January
through April of the previous three years. The “three-year winter average” is the basis of the sewer
charges for the entire year. The winter months are used to measure average water use because less
water is typically used outdoors during this time and therefore this average water use will more
accurately measure the typical water that flows into the sewer system. The District gives customers
a 15.0 percent usage discount to acknowledge that not all water purchased goes to the sewer
system. The maximum consumption charge is based on 35 units.
The following is the sewer bill formula for residential and multi-residential customers:
(Sewer Rate x 3-Year Winter Average x 85%) + System Charges = Total Monthly Bill
The current sewer rates and system charges for single-family residential customers are $2.93 and
$16.38, respectively. Effective January 1, 2021, the sewer rate and system charges will be $2.96 and
$16.55, respectively.
The current sewer rates for multi-residential customers is $2.93 and will increase to $2.96 for the
calendar year 2021. The sewer rates and system charges for residential and multi-residential
customers is shown on pages 95 and 96.
Commercial and Industrial Sewer Service
To estimate sewer use, the District averages metered water use. An “average annual consumption”
is the basis of the sewer charges for the entire year. The average annual consumption is defined as
the units of water billed from January through December of the previous year. The District gives
customers a 15.0 percent usage discount to acknowledge that not all water purchased goes to the
sewer system.
The following is the sewer bill formula for commercial and industrial customers:
(Average Annual Consumption x 85% x Sewer Rate(1)) + System Charges = Total Monthly Bill
The District calculates the monthly bill based on the customer’s water use, sewer strength, and the
size of the customer’s water meter, which is more equitable among customer classes. The rates
and charges by meter size are shown on page 96.
(1) Sewer rates are based on the customer’s assigned strength factor
101
Formula for Sewer Rates
The District is required to determine sewer rates in accordance with the State’s Revenue Program
Guidelines. The SWRCB has grouped commercial and industrial customers into various categories
and has identified Strength Factors for each of these business categories. The standard of measure
for Strength Factors is the typical sewer strength of a single-family residence (SFR). The Strength
Factors established by the SWRCB are listed below and are used by the District in the calculation of
commercial sewer rates. These factors are in terms of the strength relative to an SFR, with an SFR
having a strength factor of 1.
The following are the Strength Factors:
Description
Fee, Effective
1/1/2021
Low-Strength Commercial * $ 2.96
Medium-Strength Commercial $ 3.37
High-Strength Commercial $ 4.75
*Schools and churches are categorized as Low-Strength Commercial customers
102
Sewer Service Area
103
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104
General Revenues and Expenditures
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 are restricted for the purpose of funding the District facilities. When collected these
fees may cover costs including but not limited to planning, design, construction, and financing
associated with facilities. The District uses a portion of capacity fee revenues to provide general
expansion planning and developer support. These fees reimburse the General Fund for the cost of
providing these services. For FY 2021, capacity fees are projected to be $1.9 million which is flat to
FY 2020.
Annexation fees are collected when developers buy into the District’s potable or 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. Prior to FY 2010, annexation fees were unrestricted and
therefore included in the General Fund revenues. With the revised fee methodology, these fees are
now restricted for the purpose of capital improvements.
The 1% property tax is a result of Proposition 13 that was approved in 1978, which limited the 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. Property Tax Revenues
are projected to be $3.5 million which is $411,400 less than the FY 2020 budget. The decline is due
to anticipated reductions in collections related to the adverse impacts of the COVID-19 pandemic.
The District levies availability charges each year in developed areas to be used for upgrades and
betterment and in undeveloped areas to provide funding for planning, mapping, and preliminary
design of facilities to meet future development. Current legislation provides that any availability
charge up to $10.00 per parcel is general use and any amount over $10.00 per parcel or acre shall
be used only for the benefit of the improvement district in which it is assessed. Budgeted availability
fees are projected to decrease from $714,500 to $665,000.
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 miscellaneous revenues. Lease revenues
make up a large portion of general revenues and are mainly from the lease of cell-sites on District
property. 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.
105
General Revenues and Expenditures
For most of the District’s water customers in the City of Chula Vista (CCV), the City of Chula Vista
provides the sewer services. The CCV sewer fees are based on water consumption. Because of the
shared customer base, the CCV contracts with the District for the billing of their sewer customers
who live within the District.
General Expenditures
The expenses in this section are general operating costs not associated with an individual
department. These include legal costs, insurance premiums, changes in accrued employee leave
balances, and miscellaneous interest. These expenditures represent 8.9% of the total Departmental
Budget.
Legal expenditures are viewed as a District-wide general cost 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 premiums are also viewed as District-wide general cost 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 cost is charged to the General Expense Department.
106
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $%
Fee Revenues
Capacity Fee Revenues 1,898,333$ 1,868,900$ 2,250,845$ 1,869,000$ 100$ 0.0%
Subtotal Fee Revenues 1,898,333 1,868,900 2,250,845 1,869,000 100 0.0%
Tax Revenues
1% General Tax 3,950,206 3,901,400 4,224,814 3,490,000 (411,400) -10.5%
Availability Fees 723,247 714,500 694,769 665,000 (49,500) -6.9%
Subtotal Tax Revenues 4,673,453 4,615,900 4,919,583 4,155,000 (460,900) -10.0%
General Revenue 6,571,786$ 6,484,800$ 7,170,428$ 6,024,000$ (460,800)$ -7.1%
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $%
Property Rental 1,384,211$ 1,487,900$ 1,508,221$ 1,554,000$ 66,100$ 4.4%
Sewer Billing Fees 409,765 422,900 429,683 438,000 15,100 3.6%
Set-up Fee for Lease Site 13,500 - 9,000 - - 0.0%
Revenue from Shared Facility 27,500 28,300 28,426 30,000 1,700 6.0%
Miscellaneous 804,880 126,800 805,827 155,000 28,200 22.2%
Non-Operating Revenue 2,639,856$ 2,065,900$ 2,781,157$ 2,177,000$ 111,100$ 5.4%
Potable Recycled Sewer Total
Capacity Fee Revenues 1,869,000$ -$ -$ 1,869,000$
1% General Tax 3,490,000 - - 3,490,000
Availability Fees 616,000 - 49,000 665,000
Property Rental 1,554,000 - - 1,554,000
Sewer Billing Fees 438,000 - - 438,000
Grants - - 38,000 38,000
Revenue from Shared Facility - - 30,000 30,000
Miscellaneous 117,000 - - 117,000
Total General and Non-Operating Revenue 8,084,000$ -$ 117,000$ 8,201,000$
(1) For General and Non-Operating Revenues, the Potable Fund serves as the District's General Fund
for accounting purposes.
FY 2021
Non-Operating Revenues(1)
Budget to Budget
Variance
General and Non-Operating Revenues by Business(1)
General Revenues
General Revenues(1)
Budget to Budget
Variance
107
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $ %
General Expense
General Expense 1,160,104$ 1,046,300$ 1,275,173$ 1,042,000$ (4,300)$ (0.4%)
Total labor and benefits (1)1,160,104$ 1,046,300$ 1,275,173$ 1,042,000$ (4,300)$ (0.4%)
Administrative Expenditures
Insurance expenses 773,943 975,700 1,091,358 1,250,000 274,300 28.1%
Legal expenses (2)573,598 620,000 739,799 707,000 87,000 14.0%
Services - - - - 0.0%
Training - - - - - 0.0%
Total General Expense 2,507,645$ 2,642,000$ 3,106,330$ 2,999,000$ 357,000$ 13.5%
General Expense
Budget to Budget
Variance
(1)Benefits include District-wide labor and benefit costs not attributable to any one department, such as the
effect of cost of living raises on accrued leave liabilities or the Other Post Employment Benefit (OPEB) costs.
These costs are netted against the District's anticipated Vacancy Factor. The Vacancy Factor for FY 2020 and FY
2021 is $202,600 and $209,700, respectively. Additionally, the labor and benefits shown on this schedule are
those related to operating costs and does not include CIP labor and benefit costs.
(2)Included in the Legal Expenses for FY 2020 and FY 2021 is $175,000 and $175,000, respectively, for the City of
San Diego Recycled Water Rate Lawsuit.
108
Departmental Operating Budget
Labor and Benefits
The District reviews and studies organizational/personnel changes and performs a five-year long-term
staffing review on an annual basis as part of the budgeting process. Labor and Employee Benefits
expenditures for FY 2021 were estimated based on proposed staffing level needs. The objective of the
annual review is to examine the implementation of department efficiencies and evolving business
practices, impacts on staffing levels, as well as prepare future leaders of the organization. The annual
review is also used as a reference tool for District succession planning purposes.
The District provides employees and Board members with a choice of four health providers (Blue Shield
HMO, EPO and PPO, and Kaiser HMO) and a dental PPO plan. The District pays 100% of employee
coverage and 88% of spouse and dependent coverage. Other ancillary benefits include basic life and
accidental death and dismemberment insurance, short- and long-term disability benefits, flexible
spending accounts for health and dependent care, and an Employee Assistance Program. In addition,
the District offers the CalPERS Pension plan 2.7% @ 55 for classic members and 2.0% @ 62 for PEPRA
employees and Other Post-Employment Benefits after the employees reach certain age and tenure
requirements. Employees participate in the contribution for both plans. Increases in employee benefits
costs are mainly due to continued increases in group health insurance premiums, additional payments
to OPEB to reduce long-term retiree health liability, and an increase in compensation due to a 2.3%
increase in salary and wages, based on the Memorandum of Understanding (MOU) between the District
and its employee association.
Labor and Benefits represent 22.2% of the total Operating Budget. District personnel are assigned to
work in five departments: General Manager, Administrative Services, Finance, Water Operations, and
Engineering. The departments are further categorized by functions into divisions. The FY 2021 Budget
includes funding for labor and benefits for 139 full-time equivalent (FTE) employees.
The staffing level for FY 2021 has increased by one (1) FTE employee from FY 2020. The District
continuously analyzes workload requirements, opportunities for automation and areas where resources
can be effectively shared or relocated. A Senior Utility Worker/Equipment Operator position will be added
to allow for staffing to complete more valve replacements and support small CIP projects.
A projected 6.9% of the labor and benefits costs will be charged to projects included in the Capital
Improvement Program (CIP) and Developer Deposits. These labor and benefit costs totaling $1,689,000
are not considered operating costs and therefore are not included in the Operating Budget.
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 less discretionary than others. The safety needs of the District's customers
and employees, and compliance with regulatory agencies are of utmost importance and are considered
necessary.
109
Departmental Operating Budget
Administrative Expenses (Continued)
Overall administrative expenses increased by $653,200 or 10.3% compared to FY 2020 and are shown
on page 119. The Insurance and legal expenses budget increased by $361,300 or 22.6% due to
higher insurance deductibles and increased insurance premiums. Due to COVID-19, bad debt
expense is expected to increase by $379,000 or 347.7%. These increases were partially offset by
decreasing outside service fees due to leveraging internal labor. Fees increased by $110,500 or 15.8%
primarily due to an increase in credit card activity and secondarily due to election costs. Training
decreased by $30,100 or 17.4% due to savings initiatives implemented in response to the COVID-19
pandemic. The equipment budget increased by $63,600 or 4.6% primarily due to additional
supported devices (such as cellular phones, iPads, and additional cell devices required for
security/facilities) which also increased the District’s annual cost for Verizon cellular service.
Materials and Maintenance
Like all costs included by the District, 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 technology and regulations change, maintenance and services will be adjusted, as needed.
For FY 2021, overall materials and maintenance expenses decreased by 3.0%, or $114,100 compared to
FY 2020. Meters and materials decreased by $114,500 or 44.3% due to a reduction in meter sales based
on growth projections and historical needs. Infrastructure equipment and supplies decreased by $55,500
or 8.8% primarily due to one-time purchases in FY 2020 and revised five-year averages. The Spring Valley
Sewer Charge decreased $46,100 or 18.4% based on the County maintenance plan for shared facility.
Safety equipment decreased by $21,500 or 23.8% primarily due to COVID-19 savings initiatives. Expenses
for HAZWOPER team equipment purchases and District-wide revisions to lockout/tagout/blockout
program have been deferred to FY 2022. Contracted Services decreased by $12,600 or 1.3% primarily
due to a reduction on the landscape contract.
These decreases were offset by increases in other materials and supplies, Metro operating and
maintenance costs, and chemicals. Other materials and supplies increased by $81,800 or 39.9% for repair
and replacement of appurtenances. Metro O&M costs of $62,100 or 10.3% due to capitalization of pure
water capital costs offset by Metro operating increases. Chemicals increased $12,200 or 3.3% for the
purchase of Chemkeys for water quality testing.
110
Board of Directors 186,000$ 0.6%
General Manager 1,657,000 4.9%
General Expense 2,999,000 8.9%
Administrative Services 6,927,000 20.5%
Finance 6,256,000 18.5%
Water Operations 11,935,000 35.3%
Engineering 3,827,000 11.3%
33,787,000$ 100.0%
Departmental Operating Budget
Total FY 2021 Departmental Operating Budget
$33,787,000
111
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $%
Labor Costs 12,041,669$ 12,866,000$ 12,672,160$ 13,160,000$ 294,000$ 2.3%
Benefits
Pension 4,865,042 2,499,100 2,465,750 2,855,000 355,900 14.2%
Employee Assistance Program 3,726 4,000 3,807 4,000 - 0.0%
Workers' Compensation 405,168 602,900 595,677 428,000 (174,900) -29.0%
Health/Dental/Life Insurance/OPEB 3,664,269 3,930,500 3,762,633 4,069,000 138,500 3.5%
Social Security/Medicare 1,003,750 1,090,900 1,049,345 1,119,000 28,100 2.6%
Salary Continuation Insurance 56,483 60,100 63,594 58,000 (2,100) -3.5%
State Unemployment Insurance - 20,000 - 20,000 - 0.0%
Vacation/Sick/Holiday/Other Leave 2,398,576 2,541,400 2,580,429 2,606,000 64,600 2.5%
Total Benefits 12,397,014 10,748,900 10,521,235 11,159,000 410,100 3.8%
Total Labor and Benefits 24,438,683 23,614,900 23,193,395 24,319,000 704,100 3.0%
Less: Non-Operating Labor and Benefits
Labor Costs 992,363 1,070,400 969,166 1,061,000 (9,400) -0.9%
Benefits Allocation 744,391 609,400 553,605 628,000 18,600 3.1%
Total Non-Operating Labor and Benefits 1,736,754 1,679,800 1,522,771 1,689,000 9,200 0.5%
Operating Labor & Benefits 22,701,929 21,935,100 21,670,624 22,630,000 694,900 3.2%
Overhead Allocation (115% of labor costs) 1,141,217 1,231,100 1,114,541 1,220,000 (11,100) -0.9%
Admin Overhead (36.85%)420,539 453,700 410,708 450,000 (3,700) -0.8%
Less: Non-operating labor overhead (720,678) (777,400) (703,833) (770,000) 7,400 -1.0%
Net Operating Labor and Benefits 21,981,251$ 21,157,700$ 20,966,791$ 21,860,000$ 702,300$ 3.3%
Labor and Benefits
Budget to Budget
Variance
Budget vs. Actual, in thousands ($)
$2,500
$4,000
$5,500
2019 2020 2021
$2
2
,
1
1
2
$2
1
,
1
5
8
$2
1
,
8
6
0
$2
1
,
9
8
1
$2
0
,
9
6
7
Budget Actual
112
Potable Recycled Sewer
Developer
Reimbursed
CIP Total
Operating Labor Costs 11,120,000$ 562,000$ 417,000$ -$ 12,099,000$
Benefits 9,820,000 397,000 314,000 - 10,531,000
Overhead Allocation-Personnel (1,481,000) 408,000 303,000 - (770,000)
Total Operating Labor and Benefits 19,459,000 1,367,000 1,034,000 - 21,860,000
CIP Labor Costs 552,000 40,000 78,000 391,000 1,061,000
Benefits 326,000 24,000 43,000 235,000 628,000
Overhead Allocation-Personnel 400,000 29,000 57,000 284,000 770,000
Total CIP Labor and Benefits 1,278,000 93,000 178,000 910,000 2,459,000
Total Labor and Benefits 20,737,000$ 1,460,000$ 1,212,000$ 910,000$ 24,319,000$
Potable-Operating 19,459,000$ 80.0%
Potable-CIP 1,278,000 5.3%
Sewer-Operating 1,034,000 4.3%
Sewer-CIP 178,000 0.7%
Recycle-Operating 1,367,000 5.6%
Recycle-CIP 93,000 0.4%
Developer Reimbursed-CIP 910,000 3.7%
24,319,000$ 100.0%
Labor and Benefits by Fund - Fiscal Year 2021
113
FY 2020
General Manager
General Manager 1 1 1
District Secretary 1 1 1
Sr. Confidential Executive Assistant 1 1 1
Communications Officer 1 1 1
Communications Assistant 1 1 1
Total FTE - General Manager Department 5 5 5
Administrative Services
Chief, Administrative Services 1 1 1
Confidential Executive Assistant 1 1 1
Confidential Department Assistant 1 1 1
Administrative Services 3 3 3
Human Resources
Human Resources Manager 1 1 1
Senior Human Resources Analyst 1 1 1
Human Resources Analyst 1 1 1
Human Resources 3 3 3
Purchasing
Purchasing and Facilities Manager 1 1 1
Senior Procurement & Contracting Analyst 1 1 1
Senior Warehouse Worker 1 1 1
Facilities Maintenance Technician 2 2 2
Purchasing 5 5 5
Safety
Safety & Security Specialist 1 1 1
Safety 1 1 1
Information Technology Operations/Applications
IT Manager 1 1 1
GIS Manager 1 1 1
GIS Programmer Analyst 1 1 1
GIS Analyst 1 1 1
GIS Technician 1 1 1
Network Engineer 1 1 1
Database Administrator 1 1 1
Business Systems Technician 1 1 1
System Support Analyst 1 1 1
Business Systems Analyst I and II 2 2 2
Information Technology 11 11 11
Total FTE - Administrative Services Department 23 23 23
Position Count by Department
FY 2019 FY 2021
114
FY 2020
Finance
Chief Financial Officer 1 1 1
Assistant Chief, Finance 1 1 1
Executive Assistant 1 1 1
Department Assistant 1 1 1
Finance 4 4 4
Controller and Budgetary Services
Senior Accountant 2 2 2
Accountant 1 1 1
Accounting Technician 1 1 1
Controller and Budgetary Services 4 4 4
Treasury and Accounting Services
Finance Manager, Treasury and Accounting 1 1 1
Senior Accountant 2 2 2
Accountant 1 1 1
Accounting Technician 1 1 1
Treasury and Accounting Services 5 5 5
Customer Service
Customer Service Manager 1 1 1
Customer Service Supervisor 1 1 1
Lead Customer Service Representative 1 1 1
Customer Service Representative I, II, III 6 6 6
Customer Service 9 9 9
Meter Services
Meter Services Supervisor 1 1 1
Lead Meter Maintenance/Cross Connection Worker 0 1 1
Meter Maintenance Worker I & II 4 3 3
Lead Customer Service Field Representative 1 1 1
Customer Service Field Representative I and II 3 3 3
Meter Services 9 9 9
Total FTE - Finance Department 31 31 31
Operations
Chief, Water Operations 1 1 1
Assistant Chief, Water Operations 1 1 0
Executive Assistant 1 1 1
Operations 3 3 2
Water System Operations
System Operations Manager 1 1 1
Water Systems Supervisor 1 1 1
Lead Water Systems Operator 2 2 2
Position Count by Department
FY 2019 FY 2021
115
FY 2020
Operations (continued)
Water System Operations (continued)
Water Systems Operator I, II, and III 8 8 8
Senior SCADA Instrumentation Technician 2 2 2
SCADA Instrumentation Technician 0 1 1
Senior Disinfection Technician 2 1 1
Disinfection Technician 0 1 1
Water System Operations 16 17 17
Utility Maintenance/Construction
Utility Services Manager 0 0 1
Utility Maintenance Supervisor 2 1 1
Utility Maintenance Assistant Supervisor 0 1 1
Utility Crew Leader 3 3 3
Utility Workers I and II 8 9 9
Senior Utility/Equipment Operator 3 3 4
Valve Maintenance Worker 2 1 1
Pump Electrical Supervisor 1 1 1
Electrician I and II 2 2 2
Pump Mechanic I and II 2 2 2
Fleet Maintenance Supervisor 1 1 1
Equipment Mechanic I and II 3 3 3
Utility Maintenance/Construction 27 27 29
Collection/Treatment/Reclamation Operations
Reclamation Plant Supervisor 1 1 1
Lead Reclamation Plant Operator 1 1 1
Reclamation Plant Operator I, II, III 2 2 2
Laboratory Analyst 2 2 2
Collection/Treatment/Reclamation Operations 6 6 6
Total FTE - Operations Department 52 53 54
Engineering
Chief, Engineering 1 1 1
Assistant Chief of Engineering 0 1 0
Executive Assistant 1 1 1
Department Assistant 1 1 1
Engineering 3 4 3
Water Resources, Planning, Design & Environmental
Engineering Manager 1 1 1
Senior Civil Engineer 2 3 3
Associate Civil Engineer 1 0 0
Environmental Compliance Specialist 1 1 1
Senior Engineering Technician 2 2 1
Engineering Design Technician 0 0 1
Water Resources, Planning, Design & Environmental 7 7 7
FY 2019 FY 2021
Position Count by Department
116
FY 2020
Engineering (continued)
Public Services, Survey, Inspection, & Recycled Water Program
Engineering Manager 1 0 1
Field Services Manager 1 1 1
Permit Technicians 2 2 2
Recycled Water Program Supervisor 1 1 1
Recycled Water Specialist 3 3 3
Inspection Supervisor 1 1 1
Construction Inspectors I and II 4 4 4
Supervising Land Surveyor 1 1 1
Assistant Survey Technician 2 0 0
Senior Utility Locator 0 1 1
Utility Locator 0 1 1
Public Services, Survey, Inspection, & Recycled Water
Program 16 15 16
Total FTE - Engineering Department 26 26 26
District Total FTE Position Count 137 138 139
Position Count by Department
FY 2019 FY 2021
137
138
139
136
137
137
138
138
139
139
140
Full-Time Equivalent (FTE)
FY 2021 - BudgetFY 2020 - ActualFY 2019 - Actual
117
FY 2020
Reclamation Plant Supervisor 0 0 0.5
Human Resources Analyst 0 0 0.5
Total Contract/Temporary Employees 0 0.5 1.0
General Manager 5 4%
Administrative Services 23 17%
Finance 31 22%
Operations 54 39%
Engineering 26 19%
Total 139 100%
Contract / Temporary Employees
FY 2019 FY 2021
FY 2021 Position Count by Department
118
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $%
Administrative Expenditures
Directors' Fees 55,925$ 80,000$ 61,553$ 80,000$ -$ -
Travel and Memberships 220,516 262,600 205,433 205,000 (57,600) (21.9%)
Conservation and Outreach 157,644 171,400 161,793 164,000 (7,400) (4.3%)
General Office Expense 232,821 270,900 268,353 250,000 (20,900) (7.7%)
Equipment 1,387,826 1,377,400 1,393,001 1,441,000 63,600 4.6%
Fees 694,302 698,500 760,543 809,000 110,500 15.8%
Services 1,821,714 2,033,100 1,879,582 1,883,000 (150,100) (7.4%)
Training 109,005 173,100 127,312 143,000 (30,100) (17.4%)
Utilities 13,894 15,800 14,692 16,000 200 1.3%
Insurance and Legal 1,347,541 1,595,700 1,830,187 1,957,000 361,300 22.6%
Miscellaneous Expense - - 262 - - -
Bad Debt Expense 112,632 109,000 173,332 488,000 379,000 347.7%
Subtotal before Overhead 6,153,820 6,787,500 6,876,043 7,436,000 648,500 9.6%
Less: Overhead Allocation (420,539) (453,700) (410,708) (449,000) 4,700 (1.0%)
Total Expenditures 5,733,281$ 6,333,800$ 6,465,335$ 6,987,000$ 653,200$ 10.3%
4,702,612$ 5,605,400$ 8,706,230$ 9,393,000$
Directors' Fees 80,000$ 1.1%
Travel and Memberships 205,000 2.8%
Conservation & Outreach 164,000 2.2%
General Office Expense 250,000 3.4%
Equipment 1,441,000 19.4%
Fees 809,000 10.9%
Services 1,883,000 25.3%
Training 143,000 1.9%
Utilities 16,000 0.1%
General Expense 1,957,000 26.3%
Bad Debt Expense (1)488,000 6.6%
7,436,000 100.0%
Less: Overhead Allocation (449,000)
Total Administrative Expenses 6,987,000$
(1)Includes Miscellaneous Expense
Administrative Expenditures - Total
Budget to Budget
Variance
FY 2021 Total Administrative Expenditures, in thousands ($)
119
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget $ %
Materials and Maintenance
Fuel and Oil 197,259$ 221,000$ 195,676$ 213,000$ (8,000)$ (3.6%)
Meters and Materials 245,774 258,500 211,172 144,000 (114,500) (44.3%)
Fleet Parts and Equipment 131,969 143,300 140,652 138,000 (5,300) (3.7%)
Infrastructure Equipment & Supplies 583,465 630,500 485,685 575,000 (55,500) (8.8%)
Chemicals 207,167 367,800 339,498 380,000 12,200 3.3%
Safety Equipment 54,916 90,500 56,018 69,000 (21,500) (23.8%)
Laboratory Equipment and Supplies 51,286 55,700 54,913 56,000 300 0.5%
Other Materials and Supplies 250,878 205,200 242,214 287,000 81,800 39.9%
Building and Grounds Materials 66,428 68,000 68,505 61,000 (7,000) (10.3%)
Contracted Services 624,084 941,600 756,694 929,000 (12,600) (1.3%)
Subtotal Materials and Maintenance 2,413,226 2,982,100 2,551,027 2,852,000 (130,100) (4.4%)
Sewer Charges
Metro O&M Costs 782,379 600,900 618,116 663,000 62,100 10.3%
Spring Valley Sewer Charge 276,557 251,100 229,150 205,000 (46,100) (18.4%)
Subtotal Sewer Charges 1,058,936 852,000 847,266 868,000 16,000 1.9%
Total Expenditures 3,472,162$ 3,834,100$ 3,398,293$ 3,720,000$ (114,100)$ (3.0%)
Fuel and Oil 213,000$ 5.7%
Meters and Materials 144,000 3.9%
Fleet Parts and Equipment 138,000 3.7%
Infrastructure Equipment and Supplies 575,000 15.5%
Chemicals 380,000 10.2%
Safety Equipment 69,000 1.9%
Laboratory Equipment and Supplies 56,000 1.5%
Other Materials and Supplies 287,000 7.7%
Building and Grounds Materials 61,000 1.6%
Contracted Services 929,000 25.0%
Sewer Charges 868,000 23.3%
Total Expenditures 3,720,000$ 100.0%
Materials and Maintenance Expenditures - Total
Budget to Budget
Variance
FY 2021 Materials and Maintenance Expenditures
120
FY 2019 FY 2020 FY 2020 FY 2021
Budget to
Budget
Actual Budget Actual Budget Variance
Departmental Expenditures
Board of DirectorsBoard of Directors 151,815$ 190,000$ 157,123$ 186,000$ (4,000)$
General ManagerGeneral Manager 1,499,791 1,674,900 1,490,089 1,657,000 (17,900)
General ExpenseGeneral Expense 2,507,645 2,642,000 3,106,330 2,999,000 357,000
Administrative ServicesAdministrative Services 6,788,109 6,737,000 6,679,983 6,927,000 190,000
FinanceFinance 5,956,833 5,754,100 5,702,071 6,256,000 501,900
Water OperationsWater Operations 11,606,626 11,857,500 11,148,922 11,935,000 77,500
EngineeringEngineering 3,817,092 3,701,200 3,661,109 3,827,000 125,800
Total Departmental ExpendituresTotal Departmental Expenditures 32,327,911 32,556,700 31,945,627 33,787,000 1,230,300
Less: Overhead Allocation (1,141,217) (1,231,100) (1,115,208) (1,220,000) 11,100
Net Departmental Expenditures 31,186,694 31,325,600 30,830,419 32,567,000 1,241,400
Non-Departmental Expenditures & Reserve Funding
Water Purchases 51,536,077 53,815,200 52,647,567 50,898,000 (2,917,200)
Power 2,877,016 3,184,700 3,102,364 2,898,000 (286,700)
Subtotal Non-Departmental Expenditures 54,413,093 56,999,900 55,749,931 53,796,000 (3,203,900)
General Fund Reserve - 954,400 954,400 259,000 (695,400)
Expansion Reserve 2,712,100 4,927,300 4,927,300 150,000 (4,777,300)
Betterment Reserve - 3,048,000 3,048,000 985,000 (2,063,000)
Replacement Reserve 12,778,600 7,513,000 7,513,000 9,676,000 2,163,000
OPEB Reserve 980,800 1,038,100 1,038,100 1,100,000 61,900
New Supply Reserve 75,000 - - - -
Subtotal Reserve Funding 16,546,500 17,480,800 17,480,800 12,170,000 (5,310,800)
Total Operating Expenditures 102,146,287$ 105,806,300$ 104,061,150$ 98,533,000$ (7,273,300)$
Operating Expenditures by Department
FY 2021 Funding Source by Department, in Millions ($)
$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000
Board of Directors
General Manager
Administrative Services
Finance
Water Operations
Engineering
General Expense
Potable
Recycled
Sewer
121
FY 2019 FY 2020 FY 2020 FY 2021
Budget to
Budget
Actual Budget Actual Budget Variance
Departmental Expenditures
Labor and Benefits 22,701,929$ 21,935,100$ 21,671,291$ 22,631,000$ 695,900$
Director's Fees 55,925 80,000 61,553 80,000 -
Travel and Memberships 220,516 262,600 205,433 205,000 (57,600)
Conservation and Outreach 157,644 171,400 161,793 164,000 (7,400)
General Office Expense 232,821 270,900 268,353 250,000 (20,900)
Equipment 1,387,826 1,377,400 1,393,001 1,441,000 63,600
Fees 2,041,843 2,294,200 2,590,730 2,766,000 471,800
Services 1,821,714 2,033,100 1,879,582 1,883,000 (150,100)
Training 109,005 173,100 127,312 143,000 (30,100)
Materials & Maintenance 2,413,226 2,982,100 2,551,027 2,852,000 (130,100)
Utilities 13,894 15,800 14,692 16,000 200
Sewer Charges 1,058,936 852,000 847,266 868,000 16,000
Bad Debt Expense 112,632 109,000 173,594 488,000 379,000
Total Departmental Expenditures 32,327,911 32,556,700 31,945,627 33,787,000 1,230,300
Less: Overhead Allocation (1,141,217) (1,231,100) (1,115,208) (1,220,000) 11,100
Net Departmental Expenditures 31,186,694 31,325,600 30,830,419 32,567,000 1,241,400
Non-Departmental Expenditures & Reserve Funding
Water Purchases 51,536,077 53,815,200 52,647,567 50,898,000 (2,917,200)
Power 2,877,016 3,184,700 3,102,364 2,898,000 (286,700)
Subtotal Non-Departmental Expenditures 54,413,093 56,999,900 55,749,931 53,796,000 (3,203,900)
General Fund Reserve - 954,400 954,400 259,000 (695,400)
Expansion Reserve 2,712,100 4,927,300 4,927,300 150,000 (4,777,300)
Betterment Reserve - 3,048,000 3,048,000 985,000 (2,063,000)
Replacement Reserve 12,778,600 7,513,000 7,513,000 9,676,000 2,163,000
OPEB Reserve 980,800 1,038,100 1,038,100 1,100,000 61,900
New Supply Reserve 75,000 - - - -
Subtotal Reserve Funding 16,546,500 17,480,800 17,480,800 12,170,000 (5,310,800)
Total Operating Expenditures 102,146,287$ 105,806,300$ 104,061,150$ 98,533,000$ (7,273,300)$
Operating Expenditures by Object
122
Departmental Operating Budget
Gary Croucher
President
Division 3
Mark Robak
Vice President
Division 5
Mitch Thompson
Treasurer
Division 2
Tim Smith
Division 1
Board of Directors
The Otay Water District is a revenue-
neutral public agency established in
accordance with the California Water
Code. This not-for-profit status means
Otay has no private shareholders, pays no
dividends and therefore does not report
to, nor answer to the California Public
Utilities Commission. The District does,
however, answer to the public through a
five-member Board of Directors. Each
Director is elected by voters within their
respective division boundaries to
represent the public's interest with regard
to rates for service, taxes, policies,
ordinances, and other matters related to
the management and operation of the
Otay Water District. Directors serve four-
year alternating terms on the Board.
Hector Gastelum
Division 4
123
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Board of Directors 151,815$ 190,000$ 157,123$ 186,000$
Total Expenses 151,815 190,000 157,123 186,000
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Labor & Benefits 74,612 82,300 74,053 81,000
Director's Fees 55,925 80,000 61,553 80,000
Travel and Memberships 21,278 27,700 21,502 25,000
General Office Expense - - 15 -
Total Expenses 151,815$ 190,000$ 157,123$ 186,000$
-$ -$ -$ -
Department
Object
Budget vs. Actual, in thousands ($)
Board of Directors
$0
$30
$60
$90
$120
2019 2020 2021
17
6
19
0
18
6
15
2
15
7
Budget Actual
124
Director’s Division Boundaries
125
This page intentionally left blank
126
Departmental Operating Budget
(1) See Position count by Department on page 114-118 for the list of positions per department. District Chiefs
report directly to the General Manager; however, they are budgeted within their respective department.
General Manager
Mission
To provide exceptional water and wastewater service to its customers, and to manage the Otay
Water District’s resources in a transparent and fiscally responsible manner.
General Manager’s Vision
“To be a model water agency by providing stellar community service, achieving measurable results,
and continuously improving our operational practices.”
C
Statement of values
As Otay Water District employees we dedicate ourselves to:
Customers: We take pride that our commitment to customer-centered service is our highest
priority.
Excellence: We strive to provide the highest quality and value in all that we do.
Integrity: We commit ourselves to doing the right thing. Ethical behavior, trustworthiness, and
accountability are the District’s foundation.
Employees: We see each individual as unique and important. We value diversity and open
communication to promote fairness, dignity, and respect.
Teamwork: We promote mutual trust by sharing information, knowledge, and ideas to reach our
common goals.
Innovation: We constantly seek better, more efficient, and cost-effective ways to deliver our
services.
General Manager – 5 Positions (1)
District Secretary
1211
Communications Officer
1211
General Manager
1211
Sr. Confidential
Executive Secretary
1211
Chief Financial Officer
2311
Board of Directors
1111
Communications Assistant
1211
Chief, Administrative
Services 2211
Chief, Water
Operations 3211
Chief, Engineering
3311
127
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
General Manager 1,365,060$ 1,498,900$ 1,345,062$ 1,495,000$
Conservation 134,731 176,000 145,027 162,000
Total Expenses 1,499,791 1,674,900 1,490,089 1,657,000
-$
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Labor and Benefits 1,074,739 986,900 1,000,883 998,000
Travel and Memberships 79,289 97,000 81,887 97,000
Conservation and Outreach 157,644 171,400 161,793 164,000
General Office Expense 5,541 9,300 10,751 5,000
Equipment 1,530 3,200 - -
Fees 59,577 82,000 61,095 109,000
Services 120,555 223,600 169,087 181,000
Training 916 1,500 2,589 3,000
Materials & Maintenance - 100,000 1,742 100,000
Miscellaneous - - 262 -
Total Expenses 1,499,791$ 1,674,900$ 1,490,089$ 1,657,000$
-$ -$ -$ -$
-$ -$ -$ -$
General Manager
Department
Object
Budget vs. Actual, in thousands ($)
$1,000
$1,300
$1,600
$1,900
2019 2020 2021
1,
7
3
3
1,
6
7
5
1,6
5
7
1,
5
0
0
1,
4
9
0
Budget Actual
128
Departmental Operating Budget
General Manager
Services We Provide
The General Manager’s office provides leadership and direction for all District services and
operations including potable, recycled, and the treatment plant. As leader of the agency, the General
Manager interacts with the Board of Directors to set policies and strategic direction and ensures that
applicable laws and regulations are met. The General Manager oversees, coordinates, and directs
the development and execution of annual plans and the operating and capital improvement projects.
The General Manager represents the District in establishing and maintaining relationships with
member agencies and external organizations. The General Manager is also focused on executing
the District’s mission, Strategic Plan, and Board priorities. The General Manager’s office also supports
communications, outreach, water conservation, and legislation. The office participates in outreach
events throughout the community and helps fund and promote a variety of incentive and other
programs available to its customers. Staff also promotes water-use efficiency through educating the
District’s customers about available rebates, water conservation programs, and the Water
Conservation Garden. The office also works with other departments to coordinate the District’s Water
Shortage Response Plan as well as its water waste reporting program.
Accomplishments – Fiscal Year 2019-2020
The District’s rates were ranked the third lowest among San Diego County’s 22 public water
agencies and the third lowest among the County’s 28 sewer service providers in the County.
Saved approximately $6.1 million compared to 2007 due to staffing efficiencies. In total, from
2007 to fiscal year 2020, the Full Time Equivalent (FTE) reductions have saved the District $48.4
million.
As of June 30, 2019, the District funded 85 percent of its Defined Benefit Pension Plan, with a
plan to have it fully funded by 2034.
In response to increasing Property and Liability Insurance expenses, the District joined the
Association of California Water Agencies Joint Powers Insurance Authority (JPIA). Participation
in the JPIA resulted in a reduction of Fiscal Year 2021 budgeted insurance services by nearly
25 percent while maintaining the equivalent coverage.
Achieved 100 percent funding of the District’s Other Post Employment Benefit Plan.
Played a critical role in passing Assembly Bill 1588, a bill to ensure military veterans
transitioning into civilian water and wastewater operator occupations receive appropriate
crediting for experience and education gained during military service. The District
cosponsored AB 1588, which Governor Gavin Newsom signed into law in October 2019.
129
Departmental Operating Budget
General Manager (continued)
Accomplishments – Fiscal Year 2019-2020 (continued)
Led executive management and staff in efforts to address the COVID-19 pandemic, which
included managing communications with employees and customers and implementing
policies and procedures related to telecommuting, safe work practices, employee absences,
staffing plans, testing, and more.
Published the annual consumer confidence report, indicating to customers that the District
met or surpassed all public health drinking water requirements and standards.
Completed the District’s Risk and Resilience Assessment in compliance with the America’s
Water Infrastructure Act of 2018 (AWIA 2018) and incorporated the District’s 16 emergency
procedures in the AWIA 2018 Emergency Response Plan.
Recognized as a leader in technology, data migration, and management practices through
receiving the “Digital Transformation Award,” which recognizes an agency for its exemplary
efforts for content management practices, workflow automation, and public record
compliance.
Continued to develop, leverage, and enhance technologies for the District, such as
smartphone apps using drone technology, Geographic Information Systems technology
identifying high priority valves, deploying GPS fleet-tracking management systems, upgrading
the Boardroom’s audio visual equipment, updating asset management software, and more.
Completed the Customer Opinion survey in English and Spanish with key takeaways from the
survey being that customer satisfaction is high regarding the water service the public receives
from District. Satisfaction is also high for various aspects of water service including reliability,
hours of operation, and keeping the system well-maintained. Additionally, customers gave
high marks to customer service as well as the District’s efforts to communicate with customers
through newsletters, social media, bill inserts, web, direct mail, and other means.
Coordinated public outreach for various Capital Improvement Projects, including the Vista
Vereda Pipeline Replacement and Campo Road Sewer Replacement projects.
Partnered with the San Diego County Water Authority and other local water agencies to
support the San Diego Food Bank and launch a virtual food drive during the COVID-19 crisis.
Raised more than $3,500 through employee, Board member, and customer contributions.
Partnered with the Water Authority in its Faces of Water and Water Utility Hero campaigns,
highlighting District employees.
Reduced the number of vehicles and other equipment the District maintained by 17 percent
since 2006, saving the District approximately $109,000 in fiscal year 2020.
Reduced overall fuel consumption for gas and diesel vehicles by 34 percent, saving the District
approximately $68,000 in fiscal year 2020.
130
Departmental Operating Budget
General Manager (continued)
Accomplishments – Fiscal Year 2019-2020 (continued)
As part of the District’s Leak Detection and Repair Program, the District surveyed
approximately 172 miles of potable and recycled pipelines, finding and repairing 31 District-
side leaks, saving approximately 30.2 gallons of water per month.
Reduced water loss by 43 percent since 2011, saving the District approximately $1.1 million in
2019.
To continue promoting water-use efficiency to customers, it recognized the WaterSmart
Landscape Contest “Best in District” winner, an El Cajon resident.
Developed an educational partnership with Chula Vista Elementary School District and the
Sweetwater Authority to establish the first Hydro Station, an interactive educational space that
houses learning exhibits and hands-on activities and teaches more than 4,000 fifth graders
about the ecological cycle of water, water conservation, water quality, and careers in the water
industry. Held a media event and launched the program.
Partnered with TEDX Chula Vista to sponsor its 2019 event, an independently organized TED
event that took place at Southwestern College selling out and generating more than 400
attendees, more than 33,000 YouTube video views, and more than 2,300 Facebook streaming
views from an audience including educators, business leaders, elected officials, students,
entrepreneurs and more.
Partnered with Cuyamaca College’s Center for Water Studies program to enhance outreach to
veterans and women in the water industry.
The District continues to enhance its website and social media sites by increasing the
frequency of posts and use of increased Spanish-language content. As a result, from July 1,
2019 to June 30, 2020, the District’s Facebook gained a 62 percent increase in followers from
274 to 445 followers and a nine percent increase in Twitter followers from 1,897 to 2,070.
YouTube video views increased by 88 percent from 16,633 in fiscal year 2019 to 31,292 in fiscal
year 2020. Nextdoor members in the District’s service area have increased by 27 percent from
38,213 to 48,463. LinkedIn followers has increased by 79 percent from 327 to 586. Also, since
staff launched the District’s Instagram page account in November 2018, it has attracted 729
followers.
To help increase the talent pool in the water industry, staff worked with the Board to establish a
scholarship fund at the Foundation for Grossmont and Cuyamaca Colleges to support students
attending the Center for Water Studies at Cuyamaca. The scholarship was named after the
District’s former General Manager Mark Watton to recognize him for his 40 years of combined
service to the water industry.
131
Departmental Operating Budget
General Manager (continued)
Accomplishments – Fiscal Year 2019-2020 (continued)
To increase Instagram engagement, staff implemented the District’s first-ever Instagram contest
with themes of “Thankful for Water” and “Drink Tap December,” encouraging the public to
creatively capture images of why they are thankful for water and why water is important to them.
Participated in the “Water is Life” Poster contest for grades kindergarten through twelfth and
awarded six students from four schools in the District’s service area. As part of Metropolitan
Water District of Southern California calendar contest, one District winner from last year’s
contest was published in MWD’s 2020 calendar.
132
Departmental Operating Budget
Administrative Services
Mission Statement
To provide support to the Board of Directors, the General Manager, and District staff by executing
objectives that meet and serve the needs of our customers by providing, through best administrative
practices, the full range of employer and employee services, administrative services, risk
management, safety and security, emergency preparedness and response, enterprise computing,
and strategic planning.
Department Responsibilities
The Administrative Services Department, under the general direction of the Chief of Administrative
Services, provides the following support services: Human Resources, Purchasing, Facilities
Maintenance, Safety and Security, Information Technology, and Strategic Planning. The department
also coordinates assigned activities with other departments and outside agencies and provides
highly responsible and complex administrative support to the District, Board of Directors, and
General Manager.
Administrative Services Department – 23 Positions (1)
(1) See Position Count by Department on page 114 for the list of positions per department.
Purchasing
and Facilities
2231
Human
Resources
2221
Chief,
Administrative Services
2211
Information
Technology
2421
Geographic
Information
Systems
2431
Safety and Security
2241
133
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Administrative Chief 602,160$ 556,700$ 535,622$ 446,000$
Human Resources 782,413 748,000 778,337 889,000
Purchasing and Facilities 1,482,377 1,562,100 1,578,539 1,635,000
Safety and Security 343,696 447,700 341,069 436,000
IT Operations 2,594,852 2,408,700 2,483,486 2,469,000
Geographic Information System (GIS)982,611 1,013,800 962,930 1,052,000
Total Expenses 6,788,109 6,737,000 6,679,983 6,927,000
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Labor and Benefits 4,397,135 4,123,000 4,110,774 4,288,000
Travel and Memberships 52,096 54,300 28,515 22,000
General Office Expense 81,061 92,500 112,623 91,000
Equipment 1,340,358 1,280,600 1,315,536 1,339,000
Services 371,578 458,100 458,973 431,000
Training 89,454 147,000 105,569 118,000
Materials & Maintenance 442,533 565,700 533,301 622,000
Power and Utilities 13,894 15,800 14,692 16,000
Total Expenses 6,788,109$ 6,737,000$ 6,679,983$ 6,927,000$
-$ -$ -$ -$
Administrative Services
Budget vs. Actual, in thousands ($)
Department
Object
$6,500
$6,600
$6,700
$6,800
$6,900
$7,000
2019 2020 2021
6,
8
4
9
6,
7
3
7
6,
9
2
7
6,
7
8
8
6,6
8
0
Budget Actual
134
Departmental Operating Budget
Human Resources
Services We Provide
Human Resources, under the direction of the Chief of Administrative Services, provides the following:
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 staff management to include employee training and development;
recognition and incentives; performance evaluation process and employee discipline; ensures legal
compliance; and implements work/life balance initiatives.
Accomplishments – Fiscal Year 2019-2020
Completed the change and consolidation of Deferred Compensation carriers, which
included setting up plan documents and transitioning all employees and retirees from two
providers to one new provider. This consolidation resulted in streamlined administration and
significantly reduced fees for employees by approximately 75 percent.
Completed the 2019 Employee Satisfaction Survey with a high employee participation rate
of 96 percent. The survey measured employees’ opinions about compensation, workload,
teamwork, employees’ perceptions about management, resources, and more. The
conclusion drawn by the consultant who conducted the survey is that overall employees are
very satisfied with their employment.
Established a District Deferred Compensation Committee, developed a Deferred
Compensation Investment Policy, and hired a Deferred Compensation Investment Advisor to
oversee the administration of the plan.
Coordinated with Finance staff to develop and implement Request for Proposals for the
Workers’ Compensation insurance, which resulted in savings of approximately $196,000 per
year in insurance costs.
Monitored and managed significant legislation and health orders related to COVID-19, which
included implementing several District policies and procedures, managing employee-
related leaves of absence, and working with communications staff to manage employee
communications.
Purchasing and Facilities
Services We Provide
Purchasing and Facilities, under the direction of the Chief of Administrative Services, provides the
following: oversees the general purchasing and contracting standards used within the District;
purchases and oversees the procurement of supplies, equipment, and services; controls and
135
Departmental Operating Budget
Purchasing and Facilities (continued)
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.
Accomplishments – Fiscal Year 2019-2020
In conjunction with other departments, Purchasing and Facilities quickly refocused to address the
growing threat of COVID-19 by procuring and introducing equipment and safety protocols to
combat the spread of the virus at District facilities, which included: installation of tissue dispensers
at high traffic doors and restroom hygienic wrist and forearm door handles with motion activated
lighting, which provides touchless and germ-free access; placement of floor markers, barriers,
and informational signage to encourage safe social distancing; distribution of personal protective
items and sanitizing supplies to staff; maintained inventory of supplies; implementation of
enhanced cleaning and disinfecting practices and routines and modified as virus transmission
and longevity were more clearly understood; and incorporation of ultraviolet germicidal irradiation
coil sterilization into Operations’ HVAC rooftop replacement unit.
Enhanced the lobby and Public Service areas. To provide Customer Service staff with a clear view
and to open lobby sight lines, staff removed two architectural pilasters. At the same time, staff
upgraded the lobby entrance door with the latest safety features. Expanded the Public Service
conference room, integrating several security elements, which complements a refurbished and
security-augmented Public Service Desk. These enhancements were the culmination of a two-
year project to improve public space safety and security.
Deployed facilities Computerized Maintenance Management System (CMMS), eMaint. This
CMMS is part of Fluke Corporation’s instrumentation and Internet of Things (IoT) platforms, which
the District has adopted. eMaint is Software as a Service (SaaS) cloud-based and includes
Android and iOS app support. Key features consist of a customizable interface, work-order routing,
inventory management, asset tracking, equipment condition real-time monitoring, maintenance
of regulatory compliance, and interactive plans to visualize data. Staff online support and training
are provided through monthly collaborative webinars and eMaint University.
Safety and Security
Services We Provide
Safety and Security, under the direction of the Chief of Administrative Services, provides the following:
interprets safety regulations and standards, participates in the development and management of new
or revised safety standards, policies, plans, organizes, coordinates and implements the occupational
safety and health and security management programs for the District. Ensures the workplace follows
Cal/OSHA regulations. Coordinates programs, which support a safe workplace including: safety
orientations, Injury and Illness Prevention Program, emergency preparedness, HAZWOPER Team and
136
Departmental Operating Budget
Safety and Security (continued)
confined space entry and rescue. Takes or recommends action to ensure compliance with security
and occupational safety and health regulations and requirements. Advises staff on safe work methods
and practices and the elimination of hazards. Assesses the occupational exposure to risk by
evaluating hazards and mitigation of safety hazards and risk to injury; directs and supervises accident
investigations related to occupational injuries, fleet incidents and/or damage to, or theft of District
property; develops 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; coordinates the Department of
Transportation (DOT), the District’s Drug-Free Workplace, and DMV Pull-Notice Programs; and plans
and coordinates the District’s emergency preparedness program.
Accomplishments – Fiscal Year 2019-2020
Fulfilled and certified the District’s Risk and Resilience Assessment in compliance with the
America’s Water Infrastructure Act of 2018 (AWIA 2018). Also, staff completed the District’s 16
emergency procedures for use in the AWIA 2018 Emergency Response Plan.
Completed annual queries and District registration in the DOT’s new Clearinghouse query system
for commercial drivers, ensuring that new and existing staff with commercial driving privileges
are up to date with all DOT requirements.
Accomplished all designated County Office of Emergency Services (OES) Web Emergency
Operations Center (EOC) monthly exercises to maintain the District’s emergency readiness.
Completed active shooter awareness and personal safety training for staff and Board of Directors.
Completed active shooter and cyber security breach exercises with EOC members.
Streamlined the incident investigation process by converting to electronic format.
Participation in the National American Water Works Association health, safety, and environment
committees.
Information Technology Operations/Applications
Services We Provide
IT Operations, under the direction of the Chief of Administrative Services, provides the following: day-
to-day support of the District’s enterprise business computing environment to include network and
desktop hardware/software; disaster recovery; telecommunications; cybersecurity; physical access
controls; mobile, physical, and wireless networks; internal/external website support; and end-user
helpdesk services.
137
Departmental Operating Budget
Information Technology Operations/Applications (continued)
Accomplishments – Fiscal Year 2019-2020
Completed the deployment of a new GPS Fleet Tracking Management System. The new system
supports the District’s strategic fleet management services such as scheduled preventive
maintenance, collection and reporting of vehicle activity trends, and provides real-time vehicle
location and route optimization.
Upgraded the Board Room’s audio visual (AV) equipment including AV live streaming, a voting
system, electrical system improvements, remote administration, and ADA upgrades and
compliance. The upgrade provides improved capabilities and efficiencies, thus enhancing public
engagement.
Recognized as a leader in technology, data migration, and management practices, through the
presentation of the “Digital Transformation Award.” The award recognizes exemplary efforts for
content management practices, workflow automation, and public record compliance.
Geographic Information Systems (GIS)
Services We Provide
GIS, under the direction of the Chief of Administrative Services, provides the following: technical and
administrative support of the District’s enterprise GIS and computer aided design systems. GIS is also
responsible for the data collection and data Quality Assurance/Quality Control of the District’s facility
data and land-based data. In addition, GIS 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.
Accomplishments – Fiscal Year 2019-2020
Developed smartphone apps to display key facilities within the District’s service area using drone
technology. Throughout the year, staff flew and collected drone pictures and videos of key
facilities. The apps, images, and videos will be used for asset inspection, maintenance,
recordkeeping, management, Board reports, and more.
Leveraged GIS technology to identify high priority valves based on location, type, and a number
of services. Collaborating with Esri, staff developed a utility tool to generate a list of high priority
valves based on a variety of criteria and scenarios. The tool will allow Operations staff to prioritize
work based on intelligent information, which in turn will save time and money for the District’s
preventative maintenance program.
138
Departmental Operating Budget
Geographic Information Systems (GIS) (continued)
Accomplishments – Fiscal Year 2019-2020 (continued)
Leveraged the existing InfraMap field reporting solution to develop the “Vault Inspection Form,”
which now allows field staff from different departments to centrally manage the vault inventory
and collect condition data collaboratively. The vault information is then synched to the central GIS
database for reporting and analysis. This project saves staff time by collecting data immediately
and avoiding redundant data collection and entry efforts.
Updated the enterprise Asset Management Software InfoMaster to InfoAsset Planner, which
provides enterprise features from day-to-day asset maintenance prioritization to long term
condition and budget forecasting, and overall asset lifecycle management.
Signed a purchase agreement with the San Diego Regional Image Consortium for the new sub
3-inch resolution image. For more than 12 years, Otay has worked with public and private
agencies to acquire aerial imagery. This regional approach of joint acquisition has been beneficial
for all, as it saves tens of thousands of dollars for the District.
To alert the District of power shutdowns, staff worked with San Diego Gas & Electric and the
Operations department to connect Planned Safety Power Shutoff (PSPS) data to the District’s GIS
Operation Dashboard through a secured portal using the latest GIS technology. Via a staff-built
dashboard, Operations staff can now view PSPS data in real-time and take appropriate actions.
The current paving log is a paper-based process which required multiple steps in the field and at
the office to complete. The new smartphone app replaces the legacy paper process, and now
allows field staff to collect paving work activity at field job sites. The app also allows for the
supervisors and managers to monitor progress and produce real-time reports and receipts of
each project. The app will save approximately 20-25 hours a month of staff time.
Hosted the National Association of Sewer Service Companies certification training for the Pipe
Assessment Certification Program, Manhole Assessment Certification Program, and Lateral
Assessment Program. Keeping the District’s sewer asset condition assessment practice in line
with the national unified standard is key to the District’s Asset Management program. Staff from
the Operations department and GIS group attended the certification and re-certification training,
as well as staff from Moulton Niguel Water District, City of Chula Vista, and private companies,
Kennedy Jenks and NV5.
Created a dashboard using Esri’s latest technology, Insights, to report workorder history of valve
replacements and repairs by integrating the Cityworks workorder data with GIS facility data. The
report will present changes in facility data and work orders in real time as well as provide data
analysis for further decision making.
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140
Departmental Operating Budget
Finance
Mission Statement
To provide timely, accurate, and clear information that optimizes service to the District’s staff and
ratepayers. Through continuous improvement, professional service, and effective fiscal policies the
Finance Department will ensure that financial resources are collected, recorded, protected, and
expended in a fiscally responsible manner.
Department Responsibilities
The Finance Department, under the general direction of the Chief Financial Officer, provides the
following support services: Controller and Budgetary Services, Treasury and Accounting Services,
Meter Services, and Customer Service. The department ensures the District’s conformance with
modern finance, accounting theory and practices, and compliance with applicable state and federal
laws. In addition, it provides customer support, meter reading and maintenance, and water
conservation outreach programs. The Finance staff also provides highly responsible and complex
administrative and technical support to the District, General Manager, and Board of Directors.
Finance Department – 31positions (1)
(1) See Position Count by Department on page 115 for the list of positions per department.
Treasury and
Accounting
Services
2331
Customer
Service
2341
Controller and
Budgetary
Services
2321
Assistant Chief of Finance - 2321231
Chief Finance Officer - 2311
Meter
Services
2342
141
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Finance Chief 799,267$ 817,700$ 550,378$ 567,000$
Controller and Budgetary Svs 698,904 653,735 853,253 899,000
Treasury and Accounting Svs 1,405,083 1,263,265 1,389,915 1,385,000
Customer Service 2,105,495 2,028,000 2,019,612 2,496,000
Meter Shop 948,084 991,400 888,913 909,000
Total Expenses 5,956,833 5,754,100 5,702,071 6,256,000
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Labor and Benefits 4,820,089 4,539,700 4,432,827 4,757,000
Travel and Memberships 10,512 17,900 7,431 8,000
General Office Expense 145,393 168,000 144,561 153,000
Equipment 1,450 2,500 1,095 3,000
Fees 461,687 431,300 507,205 492,000
Services 109,901 167,400 173,936 147,000
Training 700 1,300 758 1,000
Materials & Maintenance 294,469 317,000 260,926 207,000
Bad Debt Expense 112,632 109,000 173,332 488,000
Total Expenses 5,956,833$ 5,754,100$ 5,702,071$ 6,256,000$
-$ -$ -$ -$
Finance
Budget vs. Actual, in thousands ($)
Department
Object
$2,500
$4,000
$5,500
2019 2020 2021
6,
1
6
4
5,
7
5
4
6,2
5
6
5,
9
5
7
5,
7
0
2
Budget Actual
142
Departmental Operating Budget
Controller and Budgetary Services
Services We Provide
The Controller and Budgetary Services Division is responsible for developing and publishing the
annual operating and capital budgets as well as preparing the six-year financial plan and proposing
rate changes. Staff prepares monthly and annual reports, monitors budget variances, and
coordinates interactions with outside agencies. This division is responsible for performing cost of
service and capacity fee studies and preparing rate notices and property tax assessments. This
division is also responsible for the bi-weekly payroll of 139 full-time and temporary employees using
the District’s Eden System. Division staff collects and distributes timesheets and pay stubs
electronically. Staff also processes benefits and deductions biweekly and files federal and state tax
returns on a quarterly basis, and W2s annually. This division also assists in the general ledger
accounting, audit, cost accounting, and contract review.
Accomplishments – Fiscal Year 2019-2020
For the sixteenth consecutive year, the Government Finance Officers Association (GFOA)
awarded the District with the Distinguished Budget Presentation Award for the Fiscal Year
2019-2020 Budget. This is a significant achievement and is the highest form of recognition in
governmental budgeting.
The California Society of Municipal Finance Officers (CSMFO) for the fourteenth consecutive
year, recognized the District with the Operating Budget Excellence Award for the Fiscal Year
2019-2020 Budget.
The CSMFO awarded the District for the fifteenth consecutive year with the Capital Budgeting
Excellence Award for the Fiscal Year 2019-2020 CIP Budget.
Treasury and Accounting Services
Services We Provide
The Treasury and Accounting Services Division coordinates and directs the activities of the general
ledger accounting and audit, banking and cash management, investments and treasury functions,
debt financing, job costing, cost accounting, fixed assets, property and liability insurance, and
contract review. The division is also responsible for the accounts payable process, which pays
approximately 750 invoices on a monthly basis. Additionally, it is responsible for completing the
District’s annual financial audit and publishing the Comprehensive Annual Financial Report. The
division also conducts an annual review of the District’s Investment Policy, as required by law, with
approval by the Board of Directors. Moreover, it 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, and updates the rate model and the six-year financial plan.
143
Departmental Operating Budget
Treasury and Accounting Services (continued)
Accomplishments – Fiscal Year 2019-2020
For the sixteenth consecutive year, the GFOA awarded a Certification of Achievement for
Excellence in Financial Reporting to the District for its Comprehensive Annual Financial
Report for the fiscal year ended June 30, 2019.
As a component of the cash flow strategic plan, issued $3 million in Wastewater Revenue
bonds to support the continuing long-term Capital Improvement Program while maintaining
the targeted reserve levels in accordance with the District’s Reserve Policy.
In response to increasing Property and Liability Insurance expenses, the District joined the
Association of California Water Agencies Joint Powers Insurance Authority (JPIA).
Participation in the JPIA resulted in a reduction of Fiscal Year 2021 budgeted insurance
services by nearly 25 percent while maintaining the equivalent coverage.
Achieved 100 percent funding of the District’s Other Post Employment Benefit plan unfunded
liability.
Completed the 2019 State Water Resources Control Board’s water loss audit certification
program and submitted a certified water loss audit to the Department of Water Resources.
Customer Service
Services We Provide
The Customer Service Division is responsible for providing billing, receipting, collections, and
customer care for water and sewer services in addition to assisting the Communications Division
with water conservation. The billing and customer care teams handle the coordination of billing and
receipting of approximately 49,000 accounts per month. Customers have the choice of receiving
either a paper or an electronic bill, and various payment options including check, ACH, web,
interactive voice response (telephone), and the convenience of multiple locations for walk-in
payments. The District has an automated phone system and web portal which give customers
access to their account information 24/7. If customers desire more personal service, the customer
care team handles an average of 4,000 calls per month.
The Meter Services Division is responsible for the installation and maintenance of all meters. Division
staff manages the District’s backflow/cross-connection prevention, which includes annual testing of
devices and water meters to ensure the continued safety of the potable water system. Staff also
responds to customer issues regarding meter accuracy, conducts site audits, and maintains records
as required by various regulatory agencies. Meter reading staff reads approximately 50,000 potable
and recycled meters a month using Automatic Meter Reading (AMR) technology.
144
Departmental Operating Budget
Customer Service (continued)
Accomplishments – Fiscal Year 2019-2020
Meter maintenance staff completed more than 450 new meter installations.
In accordance with new legislation, staff revamped the District’s delinquency process, which
included creating and posting to the District’s website a Discontinuation for Water Service
Policy translated into five languages. Customers are now given additional time to pay their
delinquent bills as disconnection of service for nonpayment was changed from 45 days
outstanding to 60 days outstanding. Staff enhanced delinquent notification to customers by
adding an additional text message and phone call.
As part of the District’s AMR change-out program, staff upgraded approximately 6,500 meters
to a new register, which extends the automated reading life of the meter for another 10 years.
Staff completed installation of the remainder of cellular meter reading units on its temporary
meters, which allows the meter reads to be transmitted directly to the office, saving hours of
manual reading.
Customer Service staff created an online leak adjustment form, which allows customers to
supply all necessary information to staff, minimizing the need for follow up and saving staff
time.
Staff implemented exit surveys for phone calls received through the District’s customer
service line. The new system allows customers to elect to take a survey immediately
following a customer service call to rate the call on level of service, friendliness of staff, and
overall satisfaction of the call.
145
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146
Departmental Operating Budget
Water Operations Department
Mission Statement
To provide operations and maintenance service in the most efficient, safe, and cost-effective manner
to internal and external customers, and to strive to continually improve the level of service.
Department Responsibilities
The Water Operations Department, under the general direction of the Chief of Water Operations,
provides the following support services: Potable and Recycled Water System Operations,
Construction Maintenance, Sewer Collection, and Wastewater Treatment. The department provides
highly responsible and complex technical and administrative support to the District, General
Manager, and Board of Directors.
Water Operations Department – 54 Positions (1)
(1) See Position Count by Department on pages 115-116 for the list of positions per department.
Chief, Water Operations
3211
Utility Services
Utility Maintenance 3232
Fleet Maintenance 3233
Pump & Electrical 3236
Water Operations
Water System Operations 3221
Water System 3225
SCADA System 3227
Laboratory 3243
Reclamation Plant 3244
147
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Water Operations Chief (1)498,326$ 472,100$ 471,950$ 511,000$
Water Systems (1)5,908,141 6,100,500 5,672,256 6,018,000
Construction Maintenance (1)5,200,159 5,284,900 5,004,716 5,406,000
Total Expenses 11,606,626 11,857,500 11,148,922 11,935,000
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Labor and Benefits (1)8,210,826 8,162,700 7,816,129 8,399,000
Travel and Memberships 43,154 46,600 49,885 49,000
General Office Expense 99 300 118 -
Equipment 44,488 76,600 61,592 76,000
Fees 115,824 123,200 142,236 141,000
Services 448,886 585,800 469,883 467,000
Training 8,189 10,900 6,964 12,000
Materials & Maintenance 1,378,228 1,584,000 1,423,175 1,591,000
Materials & Maintenance 2,175 500 1,108 1,000
Materials & Maintenance 295,821 414,900 330,566 331,000
Materials & Maintenance 1,676,224 1,999,400 1,754,849 1,923,000
Sewer Charges 1,058,936 852,000 847,266 868,000
Total Expenses 11,606,626$ 11,857,500$ 11,148,922$ 11,935,000$
-$ -$ -$ -$
(1)Excludes CIP labor & benefits.-$ -$ -$ -$
Water Operations
Budget vs. Actual, in thousands ($)
Department
Object
$-
$4,000
$8,000
$12,000
2019 2020 2021
12
,
1
6
6
11
,
8
5
8
11
,
9
3
5
11
,
6
0
7
11
,
1
4
9
Budget Actual
148
Departmental Operating Budget
Water System Operations
Services We Provide
The Water Systems Operations Division encompasses five sections, which are responsible for
operations and monitoring of the potable and recycled water distribution systems as well as the
Ralph W. Chapman Water Recycling Facility. The water system operators monitor and operate the
water distribution system to ensure it provides safe, reliable drinking water to the District’s customers.
The SCADA staff performs installations, maintenance, updates, and modifications to the SCADA
control system and related communications equipment, for existing facilities and the Capital
Improvement Project. The treatment plant staff maintains and operates the District’s sewer treatment
plant in order to produce high-quality recycled water to the District’s recycled water customers. The
water system operators monitor and operate the recycled water distribution system ensuring it
provides an adequate recycled water supply. Laboratory staff ensures regulatory-required sampling,
analyses, and reporting complies with the State Water Resources Control Board (SWRCB)
requirements for potable water, and the Regional Water Quality Control Board requirements 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 staff to ensure proper disinfection was performed after maintenance or new
construction.
Accomplishments – Fiscal Year 2019-2020
Assisted with the SWRCB Permit Amendment for the new disinfection facilities at the 870-2
and 803-4 reservoir sites, allowing the operation of a chlorine-boosting disinfection station,
which is critical to maintaining water quality and meet State and Federal regulations.
Developed operational plans for the new disinfection facilities at 870-2 and 803-4 sites.
Coordinated the Fiscal Year 2020 leak detection campaign by providing administrative and
operational support to verify leaks. Also, created a document for the cost-effectiveness of the
campaign.
Supported the Vista Vereda Pipeline Replacement Capital Improvement Project.
Assisted Engineering with 803-2, 978-1, 850-2 reservoir recoating projects and 711-3 cover-
liner replacements. Operations coordinated work around these projects to avoiding
additional costs and ensuring no delays.
Coordinated planned water deliveries to Mexico as requested by the International Boundary
and Water Commission (IBWC), Comision Internacional de Limites y Aguas (CILA-Mexico),
Metropolitan Water District, and San Diego County Water Authority.
Coordinated bi-annual cleaning and annual dive inspections for the floating cover reservoirs.
149
Departmental Operating Budget
Water System Operations (continued)
Accomplishments – Fiscal Year 2019-2020 (continued)
Coordinated the cleaning and inspection of seven potable reservoirs per American Water
Works Association standards and as part of Key Performance Indicator I1.15 Potable Tank
Inspection and Cleaning.
Coordinated portable pump tests at different District-service area locations, including Otay
Mesa ensuring system redundancy and reliability in the case of an emergency.
Worked closely with vendor, D & H, to design and implement the 803-4 Residual Control
System (RCS) PAX mixer Capital Improvement Project.
Coordinated and monitored the results of the pilot test RCS PAX mixer trailer disinfection
station at the 944-2 reservoir site.
Developed an operational strategy to maintain the recycled system demands with potable
supplementation while the City of San Diego Treatment Plant is offline due to UV upgrades.
Worked closely with contractors, Pacific Hydro-Tech and Michael Baker International to
perform requested shutdowns for system tie-ins, provide operational support, and coordinate
testing and training related to the new 870-2 Pump Station.
Coordinated with disinfection staff the replacement of the treatment plant scrubber check
valves for safety and operational purposes.
Coordinated with the City of San Diego the testing of the Temporary Lower Pump Station to
ensure functionality before the San Diego County Water Authority had their treated water
shutdown.
Coordinated with Utility Maintenance staff the valve exercising along Telegraph Canyon
Road in Chula Vista helping to correct closed loops in the distribution system and update GIS
records.
Assisted to develop an essential, minimal staffing plan during the COVID-19 pandemic. Staff
adapted to the new plan and maintained systems operations continuing to deliver high water
quality to District customers without any interruptions.
Installed and configured Deragger System at Steele Canyon to reduce labor hours of
unplugging sewer pumps and reduced electrical consumption costs.
Sealed asphalt slurry at the treatment plant as part of the Stormwater Permit BMP’s.
Configured a seven-day reporting program via SCADA for analytical data reports.
Installed turbidity meters for each tertiary filter to monitor filter efficiency, allowing staff to
track when filter cleanings are warranted.
Installed chlorine valve identification tags and installed washers on chlorine crane hoist as
part of Process Safety Management/Risk Management Program recommendations.
150
Departmental Operating Budget
Water System Operations (continued)
Accomplishments – Fiscal Year 2019-2020 (continued)
Utility Maintenance completed road improvements on the Effluent Force Main road.
Prepared the Water Quality Report for the Consumer Confidence Report.
Performed required monitoring to ensure potable, recycled, and wastewater regulatory
requirements were met, including more than 2,000 bacteriological samples in the potable
water system.
Completed the Unregulated Containment Monitoring Requirement for four and five-year
recycled water discharge permits.
Streamlined turbidity and odor analyses in potable water to reduce staff time by three and a
half hours per week.
Updated laboratory Quality Assurance Manual and other required documentation to comply
with upcoming Environmental Laboratory Accreditation Program/The National
Environmental Laboratory Accreditation Conference Institute regulations.
Utility Services Maintenance
Services We Provide
The Utility Maintenance and Construction Division has three sections, which provide vital
maintenance functions to ensure continuity of the potable, recycled, and wastewater services to
District customers while adhering to all applicable regulatory compliance requirements. Utility
Maintenance staff maintains all collection and potable distribution and recycled distribution systems,
including regular inspection and cleaning of the wastewater collection system. Staff also exercises
valves and installs and repairs main pipelines and service lines expediently while following all
established safety rules and regulations. The Fleet Maintenance staff implements active preventative
maintenance practices and repairs on District vehicles and equipment to ensure optimum
performance while establishing fuel-efficient operational practices and emissions compliance.
Pump and Electrical staff performs preventative, predictive, and corrective maintenance on pumps,
motors, switchgear, and control valves, and assists with electrical maintenance and installation
throughout the District.
Utility Services Maintenance
Accomplishments – Fiscal Year 2019-2020
Supported the County Storm Drain CIP by the replacement of a 12-inch gate valve and
installed another on Kempton Street in Spring Valley.
Supported the County Road Widening CIP through staff extending a six-inch recycled blow-
off on Alta Road, a four-inch potable blow off, and a two-inch service on Otay Mesa Road.
151
Departmental Operating Budget
Utility Services Maintenance (continued)
Accomplishments – Fiscal Year 2019-2020 (continued)
Supporting the County Sewer Force Main CIP, staff installed a potable highline, avoiding
water interruptions for customers on San Carlos in Spring Valley.
Supporting the Caltrans CIP, staff extended and adjusted to an grade air-vac, blow off,
manhole, and cathodic protection can for Campo Road/94 widening at Millar Ranch Road in
Spring Valley.
Continued to work with County of San Diego and City of Chula Vista paving contractors,
which include Superior, Eagle, and ATP General Engineering Contractor, to complete
improvements throughout the District, adjusting to grade manholes, and valve caps as
needed.
Supporting the Hidden Mountain Wet Well improvements, staff used a Vactor truck to wet
well and used CCTV to line to assure routing of pipes in El Cajon.
Improved stormwater and run-off for Treatment Plant in Spring Valley.
Completed approximately 60 pro-active poly service replacements on Hidden Springs Drive,
Ledgeside Street, Aqua View Court, and Verde Ridge Road.
Completed valve inspections throughout and has provided training to other sections to cross
train staff.
In coordination with Utility Maintenance and IT, staff converted the District’s Driver’s Vehicle
Inspection Report into an electronic form making it accessible using the Nintex app.
Worked with Engineering to develop specifications for the Lower Otay Pump Station 2 trailer
as well as emissions retrofits to allow for the engine to run unrestricted, if needed.
Worked with Engineering to develop specifications for the hydro station Variable Frequency
Drive trailer.
Worked with Engineering and Utility maintenance to deploy and successfully test the
portable pumps at the 870-1 Pump Station.
Reviewed GPS vendors with IT and awarded a contract to Samsara. Trackers were installed
in District vehicles and staff assisted with training of the GPS vehicle tracking system.
Installed a valve indication at the 458 reservoirs and the Otay Lakes Recycled Pressure
Reducing Valve to enhance SCADA controls.
Installed lock out/tag-out stations and instructions at all pump stations with dual
electric/engine driven pumps.
152
Departmental Operating Budget
Utility Services Maintenance (continued)
Accomplishments – Fiscal Year 2019-2020 (continued)
Designed and installed manual operators to a newly installed cabinet above Otay Lakes
Recycled PRV so the station can be operated without solar panels and without requiring
confined space entries.
Installed new exhaust fans in disinfection rooms and blower rooms in the southern region of
the District.
Installed cooling fans in the Motor Control Centers at the 980-2 Pump Station to cool internal
equipment. Also, installed adequate ventilation, which reduces chemical degradation of
components and keeps vital equipment cool preventing heat damage and extending the
lifespan of electronics.
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154
Departmental Operating Budget
Engineering
Mission Statement
To provide Engineering, Construction, and Environmental services for the District and for the
development community, quality control of future District assets, and expediting of the
permitting process, through the use of our dedicated employees and innovative technology
with the goal of attaining excellent customer satisfaction.
Departmental Responsibilities
The Engineering Department, under the general direction of the Chief of Engineering,
provides the following support services: Planning, Design, Construction Management,
Inspection Project Management, Surveying, and Public Services of all District facilities. The
department is responsible for strategic planning, the capital budget, water resources
planning, support facilities planning, environmental services, quality control, construction,
and developer designed and constructed facilities. The department also coordinates
assigned activities with other District departments and outside agencies and provides highly
responsible and complex administrative and technical support to the District, General
Manager, and the Board of Directors.
Engineering Department – 26 Positions (1)
(1) See Position Count by Department on pages 116-117 for the list of positions per department.
Chief, Engineering
3311
Water Resources, Planning,
and Design 3321
Environmental Services 3451
Public Services 3421
Field Services 3431
155
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Engineering Chief (1)740,820$ 593,800$ 559,304$ 589,000$
Engineering Services (1), (2)889,997 841,200 787,970 911,000
Public Services (1), (3)1,804,920 1,921,700 1,938,653 1,970,000
Environmental Services (1)381,355 344,500 375,182 357,000
Total Expenses 3,817,092 3,701,200 3,661,109 3,827,000
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Labor and Benefits (3)2,964,424 2,994,200 2,960,785 3,066,000
Travel and Memberships 14,187 19,100 16,880 4,000
General Office Expense 727 800 285 1,000
Equipment - 14,500 14,778 23,000
Fees 57,214 62,000 50,007 67,000
Services 770,794 598,200 606,733 657,000
Training 9,746 12,400 11,432 9,000
Materials & Maintenance - - 209 -
Total Expenses 3,817,092$ 3,701,200$ 3,661,109$ 3,827,000$
(1) Excludes CIP labor and benefits.-$
(2) Engineering Services includes Planning, Design, and Water Resources.
(3) Public Services includes Public, Construction and Survey Services.
Budget vs. Actual, in thousands ($)
Engineering
Department
Object
05,000BudgetActual/
$3,500
$3,550
$3,600
$3,650
$3,700
$3,750
$3,800
$3,850
2019 2020 2021
3,
6
2
6
3,
7
0
1
3,
8
2
7
3,
8
1
7
3,
6
6
1
Budget Actual
156
Departmental Operating Budget
Water Resources, Planning, Design, and Environmental Services
Services We Provide
The Planning, Design, Environmental, and Water Resources Divisions provide a variety of
services directly related to potable water, recycled water, and sewer services. Water
resources staff identifies, negotiates, and develops additional potable and recycled water
supplies. Planning staff develops the preliminary design of a project 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. Environmental staff coordinates and tracks the
project through the construction stage and for a period after construction if long-term
mitigation is required. In addition, staff assists the Operations Department on special design
projects related to maintenance of existing facilities including the Ralph W. Chapman Water
Reclamation Facility. Additionally, Water Resources staff coordinates with other agencies on
regional issues and is responsible for obtaining grants, loans, and cost-sharing opportunities.
Accomplishments – Fiscal Year 2019-2020
Approved the 2019 Five-Year Update of the District’s Sewer System Management
Plan.
Approved Water Supply Assessment and Verification Report for the Village 14 and
Planning Area 16/19 project.
Completed the designs for the following projects
-Melrose Avenue and Oleander Avenue Pressure Reducing Station
Replacement
-850-1 Reservoir Recoating and Lining
-Recycled Water Filter Water Storage Tank Recoating and Lining
Completed the designs and awarded construction contracts for the following
projects:
-The Hidden Mountain Sewer Pump Station Wet Well Renovation
-The Dictionary Hill Waterline Replacement on Coronado Avenue, Date
Street, Birch Street, and Kempton Avenue
-1200 Pressure Zone Improvements-Phase I
-Temporary Lower Otay PS Redundancy
Prepared Request for Proposals (RFP) and awarded consultant services contracts
for:
-As-Needed Environmental Planning Services
-As-Needed Electrical Engineering Consulting Services
-As-Needed Hydraulic Modeling Consulting Services
157
Departmental Operating Budget
Water Resources, Planning, Design, and Environmental Services
(continued)
Accomplishments – Fiscal Year 2019-2020 (continued)
Approved Sub-Area Master Plans and Amendments for:
-250 East Otay Mesa
-Otay Crossings Commerce Park Amendment No. 1
-Otay Ranch Village 8 West Amendment No. 1
-Village 8 West Amendment No. 1
Prepared reports and studies for:
-International Boundary Water Commission Recycled Water Supply
Augmentation Planning Level Study Update
-Ralph W. Chapman Water Reclamation Facility Solids Handling Feasibility
Study
-Asset Management Business Practices Gap Assessment Results and
Recommendations
Managed the following related to District Surplus Properties:
-Negotiated a purchase agreement and closed escrow for the sale of the
Campo Road and Hillside Drive property for $508,000.
-Negotiated a purchase agreement and closed escrow for the sale of the La
Presa Property for $30,000.
-Prepared a boundary adjustment and certificate of compliance certificate
for the Jamacha Boulevard property and negotiated a purchase agreement
that was canceled before going to the Board.
Public Services and Field Services
Services We Provide
The Public Services, Survey, Inspection, and Construction Divisions 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. Staff
administers all plan-checking submittals for potable and recycled water, and sewer
applications for approval, cellular lease agreements, fire service, backflow inspections,
project deposits, and invoicing. Staff also provides 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 global positioning
system plots. Once bid, construction staff provides construction management for the
projects.
158
Departmental Operating Budget
Public Services and Field Services (continued)
Accomplishments – Fiscal Year 2019-2020
Sold 306 meters, which totaled $5.35 million and equated to 645.5 Equivalent
Dwelling Units.
Completed 5,274 USA mark-out tickets with an accuracy rate of 100 percent and
completed 33 surveys related to various projects included in the Fiscal Year 2019
CIP.
Supported $32.8 million of developer projects.
Amended leases to generate Fiscal Year 2021 revenue in excess of $1.54 million from
the District’s 31 cell-site leases.
Completed and closed out 17 developer-recycled projects.
Completed the construction of the following projects:
-Cathodic Protection Improvements at five locations, including Interconnect
Pipelines, Proctor Valley Pipeline, Sweetwater Bridge Pipelines, Salt Creek
Pipeline, and Willow Glen Pipeline.
-803-2 Reservoir Interior/Exterior Coating plus new structural roof rafters,
cathodic protection, and other structural repairs.
-Ralph W. Chapman Water Reclamation Facility Fuel System Improvements
project including replacement of fuel lines and return tank.
-Reservoir 711-3 Floating Cover and Liner Replacement project.
-Vista Vereda and Hidden Mesa Road Water Line Replacement project,
including construction of 3,700 linear feet of 12-inch water line, 400 linear
feet of 8-inch water line, and connections to existing water lines and
services.
-Campo Road Sewer Replacement Project, including construction of 7,575-
feet of 8-inch and 15-inch gravity sewer pipe, and 660 feet of 16-inch FPVC
carrier pipe.
Prepared RFP and awarded As-Needed Consultant Services contract for:
-Construction Management and Inspection Services
-Plan Check Services
-Facility Mark-out Services
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160
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
General Expense (1)1,934,047$ 2,022,000$ 2,365,561$ 2,292,000$
Legal 573,598 620,000 740,769 707,000
Total Expenses 2,507,645 2,642,000 3,106,330 2,999,000
FY 2019 FY 2020 FY 2020 FY 2021
Actual Budget Actual Budget
Labor and Benefits (1)1,160,104 1,046,300 1,275,173 1,042,000
Insurance expenses 773,943 975,700 1,091,358 1,250,000
Legal expenses (2)573,598 620,000 739,799 707,000
Total Expenses 2,507,645$ 2,642,000$ 3,106,330$ 2,999,000$
-$ -$ -$ -$
(1)Benefits include District-wide labor and benefit costs not attributable to any one department, such
as the effect of cost of living raises on accrued leave liabilities or the Other Post Employment Benefit
(OPEB) costs. These costs are netted against the District's anticipated Vacancy Factor. The Vacancy
Factor for FY 2020 and FY 2021 is $202,600 and $209,700, respectively. Additionally, the labor and
benefits shown on this schedule are those related to operating costs and does not include CIP labor
and benefit costs.
(2)Included in the Legal Expenses for FY 2020 and FY 2021 is $175,000 and $175,000 respectively, for
the City of San Diego Recycled Water Rate Lawsuit.
General Expense
The expenditures in this section are general operating costs not associated with an
individual department. The expenditures include: legal costs, insurance premiums,
changes in accrued employee leave balances and miscellaneous interest. These
expenditures represent 8.3% of the total Department Budget.
Department
Object
161
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162
Capital Budget
The District provides water service to a population of approximately 225,870, which is expected to
ultimately increase to 319,000 by the year 2050. This growth, as well as the maintenance of existing
assets, requires a long-term capital planning process. The process is dynamic, due to evolving
needs of the community, water supply issues, and changing regulations. As such, capital planning
is part of the District’s overall strategic planning process. 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 and efficient program of
expansion, new water supply, replacement, and betterment, while maintaining a stable long-range
financial plan.
To accommodate growth requires that the District invest approximately $280 million in capital assets
through ultimate build-out. The Fiscal Year 2021 Capital Budget is $8.5 million and the six-year
Capital Improvement Program (CIP) totals $92.3 million. The CIP is consistent with the District's
Water Facilities Master Plan, Sewer System Master Plan, current capacity fees, and the District's
strategic financial objectives. This CIP Budget document contains the descriptions, justifications,
expenditures, and funding for all the identified projects to ultimate build-out.
The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all capital facilities within three business segments
(Potable Water, Recycled Water and Sewer) are allocated to four cost types and corresponding fund
categories: Expansion, Betterment, Replacement, and/or New Water Supply. The allocation to these
four cost types is defined in the District’s Capital Improvement Program (CIP) and is determined by
an engineering analysis that identifies which type of customer will benefit from each facility, planned
or existing. The costs of the capital improvements are borne by either existing users or by the
developing areas, or by a combination of the two, as applicable. Alternative funding sources are not
identified until they have been secured. Any secured alternative funding sources will be noted in the
project schedule.
The following are general descriptions of the four fund categories:
Expansion
Facilities required to support new or future users are funded from capacity fees or user rates.
Betterment
Facilities required because of inadequate capacity or new requirements that benefit existing users
are 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 are funded from user rates.
New Water Supply
Facilities required to support new sources of water are funded from new supply fees or user rates.
163
Capital Budget
Assumptions and Criteria
As a component of the annual budget development process, the Engineering staff update the CIP
budget using the following process:
CIP projects are selected based on the Water Facilities Master Plan (WFMP), the Urban
Water Management Plan (UWMP), Sub Area Master Plans (SAMP), Integrated Water
Resources Plan (IRP), Wastewater Management Plan (WWMP),the Cathodic Protection
Plan, the District’s Strategic Plan, and other focused or specific planning documents and
reports to manage growth, maintenance, and the life extension of assets.
The CIP goes through an iterative process to meet the criteria of growth, service levels,
supply targets, and system reliability.
CIP target expenditures for the next six (6) years are refined and used in the rate model.
The following general criteria are used to determine the reasonableness of a project before it is
considered for inclusion within the CIP budget:
Safety and existing facility conditions
Operating system conditions and energy improvements
Water and sewer system deficiencies
Regulatory and permitting requirements
Developer driven requirements
Economic outlook
Growth projections
Water supply diversification goals
Board and management directives
CIP Justification and Impact on Operating Budget
The justification for each project is determined by whether it is required due to growth (Expansion),
new water sources (New Supply), 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 costs in the areas of maintenance, energy, or
chemicals as shown on the justification and impact pages in this section.
New CIP projects and projects with material changes are subject to a formal approval process,
whereby the projects are reviewed and approved by each department and a senior management
panel. At each level of review, projects may be dropped or returned for more information. Once a
project has been approved by the department and senior management panel, the project is forward
to the General Manager (GM) for approval. Once approved by the GM, projects are added to the
CIP budget.
The Engineering Department evaluates the District’s recent construction and bidding data and
adjusts costs for individual CIP projects as appropriate. Projects are reprioritized based on the
District’s planning documents and to control spending to stabilize water and sewer rates. For the
Fiscal Years 2021 through 2026 capital improvement program budget, the District anticipates that
164
Capital Budget
the recent economic slowdown will increase the number of bids on future projects. Other factors
that influence the construction climate are:
Shortage of skilled and unskilled labor
Regional competition for contracting resources
Materials cost escalation due to demand and Federal tariffs
To mitigate the factors that influence the construction climate, Engineering staff utilize value
engineering, which involves reviewing new and existing projects during the design phase to reduce
costs and while maintaining the quality, value, and/or functionality of the capital project. In addition,
Engineering staff have identified projects that can be grouped together to attract bidders.
Capital Purchases and Facilities
All capital expenditures are in the CIP. This includes capital facilities and capital purchases. Capital
purchases are non-recurring operating expenditures for assets that cost more than $10,000 each
and have an estimated useful life of two years or more. The capital purchase projects include
vehicles, office equipment, furniture, and field equipment purchases. Capital facility projects are
items that exceed $10,000 or $20,000 for infrastructure related items (as defined under capital
equipment on page 262 of the Glossary) and have a useful life of at least two years and the cost is
based on current costs.
Major CIP Projects
165
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
Beginning Balance 36,047$ 35,313$ 30,769$ 34,778$ 39,149$ 48,993$ 36,047$
Sources
Capacity Fees 2,555 3,189 6,295 9,251 9,428 8,011 38,729
Debt financing - - 5,500 3,225 15,250 - 23,975
Grants - 260 260 260 - - 780
Interest 266 329 325 367 440 439 2,166
Temporary Meters 1,251 1,254 1,257 1,260 1,264 1,267 7,553
Availability (Betterment Portion)716 743 771 801 832 864 4,727
New Supply Fee 278 - - - - - 278
COPS 2010B Reimbursement 782 781 781 781 781 757 4,663
Transfer from General Fund 13,174 12,878 14,060 16,289 13,712 12,196 82,309
Interfund Transfers 65 87 87 87 87 87 500
Total Sources 19,087 19,521 29,336 32,321 41,794 23,621 165,680
Uses
CIP Projects 8,461 12,642 13,758 16,081 20,418 20,896 92,256
Debt Service 9,491 9,545 9,672 9,953 9,597 10,020 58,278
Developer Services 1,869 1,878 1,897 1,916 1,935 1,955 11,450
Total Uses 19,821 24,065 25,327 27,950 31,950 32,871 161,984
Net Sources (Uses)(734) (4,544) 4,009 4,371 9,844 (9,250) 3,696
Ending Balance 35,313$ 30,769$ 34,778$ 39,149$ 48,993$ 39,743$ 39,743$
CIP Reserve Funds ($1,000)
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 CIPs and their 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.
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
CIP SOURCES OF FUNDS
($1,000)
Capacity Fees Debt financing
Grants Interest
Temporary Meters Availability (Betterment Portion)
New Supply Fee COPS 2010B Reimbursement
Transfer from General Fund Interfund Transfers
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
CIP USES OF FUNDS
($1,000)
CIP Projects Debt Service Developer Services
166
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
Source
Expansion 69$ 168$ 316$ 801$ 1,186$ 1,018$ 3,558$
Betterment 1,684 2,727 1,945 2,543 3,974 3,471 16,344
Replacement 6,551 9,682 11,432 12,734 15,255 16,376 72,030
New Supply 157 65 65 3 3 31 324
Total 8,461$ 12,642$ 13,758$ 16,081$ 20,418$ 20,896$ 92,256$
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
Fund
Potable 6,565$ 10,269$ 12,123$ 14,439$ 16,741$ 18,004$ 78,141$
Recycled 1,419 1,656 615 370 2,285 917 7,262
Sewer 477 717 1,020 1,272 1,392 1,975 6,853
Total 8,461$ 12,642$ 13,758$ 16,081$ 20,418$ 20,896$ 92,256$
CIP Funding Source
CIP by Fund
Six-Year CIP Projects Summary by Source ($1,000s)
Six-Year CIP Projects Summary by Fund ($1,000s)
$-
$5
$10
$15
$20
$25
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Six-Year CIP Projects by Funding Source, in Thousands ($)
Expansion Betterment Replacement New Supply
$-
$5
$10
$15
$20
$25
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Six-Year CIP Projects by Fund, in Thousands ($)
Potable Recycled Sewer
167
Expansion
CIP No CIP Project Title FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
P2040 (1), (3)Res - 1655-1 Reservoir 0.5 MG 8$ 85$ 163$ 372$ 481$ 395$ 1,504$
P2494 Multiple Species Conservation Plan 25 25 20 - - - 70
P2595 PL - 16-inch, 624 Zone, Village 3N - Heritage Road, Main St/Energy Way 1 1 1 1 145 1 150
P2642 (3)Rancho Jamul Pump Station Replacement 2 2 51 225 326 155 760
R2084 (1)RecPL - 20-Inch, 680 Zone, Village 2 - Heritage/La Media 1 1 1 1 1 358 363
S2069 (3)Cottonwood Sewer Pump Station Renovation 19 38 63 175 200 75 569
S2071 (3)San Diego Metro Wastewater Capital Improvements 14 17 17 27 34 34 143
Total Expansion 69$ 168$ 316$ 801$ 1,186$ 1,018$ 3,558$
Potable 35$ 113$ 235$ 598$ 951$ 551$ 2,483$
Recycled 1 1 1 1 1 358 363
Sewer 32 55 80 202 234 109 712
Total Expansion 69$ 168$ 316$ 801$ 1,186$ 1,018$ 3,558$
Betterment
CIP No CIP Project Title FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
P2040 (1), (3)Res - 1655-1 Reservoir 0.5 MG 17.3 189.8 362.3 828.0 1,069.5 879.8 3,347
P2451 (3)Otay Mesa Desalination Conveyance and Disinfection System 4 7 7 7 7 69 100
P2521 Large Meter Vault Upgrade Program 75 75 60 50 - - 260
P2578 (1)PS - 711-2 (PS 711-1 Replacement and Expansion) - 14,000 gpm 8 85 209 806 1,581 1,581 4,270
P2619 (1)PS - Temporary Lower Otay Pump Station Redundancy 345 138 138 - - - 621
P2626 803-4 Reservoir Water Quality Improvements – PAX System Purchase 25 50 50 25 - - 150
P2630 624-3 Reservoir Automation of Chemical Feed System 25 175 300 5 65 50 620
P2642 (3)Rancho Jamul Pump Station Replacement 4 4 114 500 725 345 1,691
P2652 520 to 640 Pressure Zone Conversion 60 85 10 10 10 55 230
P2653 1200 Pressure Zone Improvements 150 200 75 - - - 425
P2654 Heritage Road Interconnection Improvements 10 85 85 - - - 180
P2656 Regulatory Site Desilting Basin Improvements 30 100 - - - - 130
P2658 832-1 Pump Station Modifications 50 100 50 - 190 200 590
P2664 Otay Mesa Dual Piping Modification Program 55 50 50 50 50 90 345
P2668 Implementation of PSIcapture Software for Accounts Payable Invoice 25 - - - - - 25
P2669 Fuel Tank Safety and Integrity 26 35 39 - - - 100
P2674 System Pressure Reducing Program 50 10 10 10 10 10 100
R2117 RWCWRF Disinfection System Improvements 240 1,000 240 20 - - 1,500
R2120 (1)RWCWRF Filtered Water Storage Tank Improvements 400 225 25 - - - 650
R2157 RWCWRF Backwash Supply Pumps Upgrade 25 35 13 3 - - 75
S2024 (2)Campo Road Sewer Main Replacement 5 3 3 - - - 10
S2043 (3)RWCWRF Sludge Handling System 1 1 1 1 1 50 55
S2047 Asset Management - Info Master Sewer Implementation 5 5 9 - - - 19
S2069 Cottonwood Sewer Pump Station Renovation 19 38 63 175 200 75 569
S2070 Hidden Mountain Sewer Pump Station Wet Well Renovation 5 - - - - - 5
S2071 (3)San Diego Metro Wastewater Capital Improvements 26 33 33 53 66 66 277
Total Betterment 1,684$ 2,728$ 1,945$ 2,543$ 3,974$ 3,471$ 16,344$
Potable 958$ 1,389$ 1,559$ 2,291$ 3,707$ 3,280$ 13,184$
Recycled 665 1,260 278 23 - - 2,225
Sewer 61 79 108 229 267 191 935
Total Betterment 1,684$ 2,728$ 1,945$ 2,543$ 3,974$ 3,471$ 16,344$
Six-Year CIP Projects by Source and Fund ($1,000s)
(1) Partially funded by 2018A Water Revenue Bonds.
(2) Project may by funded with Sewer Debt proceeds.
(3) Project expenditures go beyond FY 2026. See project detail sheet for more information.
168
Replacement
CIP No CIP Project Title FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
P2083 (1)PS - 870-2 Pump Station Replacement 46 2 2 - - - 50
P2174 (1)PS - 1090-1 Pump Station Upgrade 375 850 525 120 - - 1,870
P2282 (3)Vehicle Capital Purchases 315 405 250 200 210 200 1,580
P2286 (3)Field Equipment Capital Purchases 57 60 60 60 60 60 357
P2405 (1), (3)PL - 624/340 PRS, Paseo Ranchero and Otay Valley Road 25 150 425 500 200 140 1,440
P2451 (3)Otay Mesa Desalination Conveyance and Disinfection System - - - - - - -
P2453 (1), (3)SR-11 Utility Relocations 50 100 100 150 200 300 900
P2460 I.D. 7 Trestle and Pipeline Demolition 50 150 350 70 90 17 727
P2485 SCADA - Infrastructure and Communications Replacement 100 95 25 - - - 220
P2508 Pipeline Cathodic Protection Replacement Program 10 - - - - - 10
P2516 (1)PL - 12-Inch, 640 Zone, Jamacha Road - Darby/Osage - - 75 125 400 400 1,000
P2533 1200-1 Reservoir Interior & Exterior Coating 400 350 310 5 50 120 1,235
P2539 South Bay Bus Rapid Transit (BRT) Utility Relocations 40 40 20 - - - 100
P2543 850-1 Reservoir Interior/Exterior Coating 375 400 300 5 5 115 1,200
P2546 980-2 Reservoir Interior/Exterior Coating 15 - - - - - 15
P2553 (1), (3)Heritage Road Bridge Replacement and Utility Relocation 25 25 25 425 1,350 1,700 3,550
P2555 Administration and Operations Parking Lot Improvements 30 - - - - - 30
P2561 (1)Res - 711-3 Reservoir Cover/Liner Replacement 30 - - - - - 30
P2562 Res - 571-1 Reservoir Cover/Liner Replacement 10 1 1 1 86 86 185
P2563 (3)Res - 870-1 Reservoir Cover/Liner Replacement 5 5 5 5 5 150 175
P2565 803-2 Reservoir Interior/Exterior Coating & Upgrades 10 10 5 5 5 165 200
P2567 1004-2 Reservoir Interior/Exterior Coating & Upgrades - 20 850 40 5 235 1,150
P2571 Data Center Network Data Storage and Infrastructure Enhancements 130 130 30 - - - 290
P2572 (3)Enterprise Resource Planning (ERP) Replacement 80 50 - - - - 130
P2573 (3)PL - 12-Inch Pipeline Replacement, 803 Zone, Hillsdale Road 4 4 - - - - 8
P2574 (1)PL - 12-Inch Pipeline Replacement, 978 Zone, Vista Vereda 5 - - - - - 5
P2578 (1), (3)PS - 711-2 (PS 711-1 Replacement and Expansion) - 14,000 gpm 17 190 466 1,794 3,519 3,519 9,505
P2584 (3)Res - 657-1 and 657-2 Reservoir Demolitions - - - - - 50 50
P2593 458-1 Reservoir Interior/Exterior Coating & Upgrades 10 895 110 5 30 - 1,050
P2594 Large Meter Replacement 1 1 1 77 25 60 165
P2604 AMR Change-Out 250 250 40 - - - 540
P2605 (1)458/340 PRS Replacement, 1571 Melrose Ave 60 325 225 40 - - 650
P2607 Douglas Ave SWA and OWD Interconnection Upgrade 45 - - - - - 45
P2608 (1)PL - 8-inch, 850 Zone, Coronado Ave, Chestnut/Apple 200 50 100 300 400 695 1,745
P2609 (1)PL - 8-inch, 1004 Zone, Eucalyptus St, Coronado/Date/La Mesa 900 165 25 300 400 110 1,900
P2610 (3)Valve Replacement Program - Phase 1 100 175 400 400 400 400 1,875
P2611 (1), (3)Quarry Road Bridge Replacement and Utility Relocation 25 10 10 10 10 210 275
P2612 (1)PL - 12-inch, 711 Zone, Paso de Luz/Telegraph Canyon Rd 75 500 350 90 55 60 1,130
P2614 485-1 Reservoir Interior/Exterior Coating - - 20 800 200 130 1,150
Six-Year CIP Projects by Source and Fund ($1,000s)
(1) Partially funded by 2018A Water Revenue Bonds.
(2) Project may by funded with Sewer Debt proceeds.
(3) Project expenditures go beyond FY 2026. See project detail sheet for more information.
169
Replacement, Continued
CIP No CIP Project Title FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
P2615 (1), (3)PL - 12-Inch Pipeline Replacement, 803 PZ, Vista Grande 10 250 600 1,500 100 150 2,610
P2616 (1)PL - 12-Inch Pipeline Replacement, 978 Zone, Pence Dr/Vista Sierra Dr 425 1,100 1,400 900 25 150 4,000
P2617 Lobby Security Enhancements 20 20 20 20 - - 80
P2623 Central Area to Otay Mesa Interconnection Pipelines Combination Air/Vacuum Valve Replacements30 300 10 - - - 340
P2625 (1)PL - 12-inch, 978 Zone, Hidden Mesa Road 10 - - - - - 10
P2627 (1)458/340 PRS Replacement, 1505 Oleander Ave 60 325 225 15 - - 625
P2631 1485-2 Reservoir Interior/Exterior Coating & Upgrades - - 5 40 500 705 1,250
P2638 Buildings and Grounds Refurbishments 25 50 14 - - - 89
P2639 Vista Diego Hydropneumatic Pump Station Replacement 50 150 900 1,500 175 - 2,775
P2640 Portable Trailer Mounted VFD Pumps 30 - - - - - 30
P2646 North District Area Cathodic Protection Improvements 25 125 325 450 275 - 1,200
P2647 (3)Central Area Cathodic Protection Improvements 5 25 45 275 500 350 1,200
P2648 Otay Mesa Area Cathodic Protection Improvements 200 250 50 40 - - 540
P2649 HVAC Equipment Purchase 20 15 30 40 - - 105
P2655 La Presa Pipeline Improvements 180 150 575 550 170 50 1,675
P2657 (3)1485-1 Reservoir Interior/Exterior Coating & Upgrades - - - 5 25 900 930
P2659 District Boardroom Improvements 20 50 50 - - - 120
P2661 Replacement of Backflow Prevention Devices on Pipeline Interconnections on Otay Mesa75 75 75 75 65 5 370
P2662 (3)Potable Water Meter Change Out - - 20 30 1,900 2,000 3,950
P2663 (3)Potable Water Pressure Vessel Program 25 25 375 400 425 425 1,675
P2665 (3)PL - 12-inch Pipeline Replacement, 870 Zone, Cactus Road 5 5 25 25 25 25 110
P2666 (3)Low Head and High Head Pump Stations Demolition 25 25 25 25 50 50 200
P2667 Small Meter Testing Bench 150 100 - - - - 250
P2670 Administration and Operations Roof Repairs and Replacement 5 5 5 5 25 280 325
P2671 980 Reservoirs Altitude Valve Vaults Renovation 120 170 10 - - - 300
P2672 District Roof Repairs and Replacement Program 25 25 125 25 75 100 375
P2673 (3)803-4 Reservoir Interior/Exterior Coating - - - - - 30 30
P2675 458-1 and 458-2 Reservoir Site Pavement Refurbishment 5 55 250 100 40 - 450
R2121 Res - 944-1 Reservoir Cover/Liner Replacement 5 5 30 50 2,000 289 2,379
R2143 AMR Change-Out 130 35 25 - - - 190
R2144 RWCWRF Roofing Replacement and Natural Light Enhancement (R)100 40 35 - - - 175
R2146 Recycled Pipeline Cathodic Protection Improvements 25 25 150 250 200 25 675
R2147 RWCWRF Fuel Lines Replacement 2 5 - - - - 7
R2148 (2)Large Meter Replacement - Recycled 10 9 8 8 8 - 43
R2152 (3)Recycled Water Meter Change-Out - - 10 10 50 60 130
R2153 Recycled Water Pressure Vessel Program 1 1 1 1 1 45 50
R2154 RWCWRF Entrance Storm Water Improvements (R)115 10 - - - - 125
R2156 (3)RecPL - 14-inch RWCWRF Effluent Force Main Improvements 250 65 10 10 25 140 500
R2157 RWCWRF Backwash Supply Pumps Upgrade 75 105 38 8 - - 225
R2158 RWCWRF Stormwater Pond Improvements (R)40 95 30 10 - - 175
S2012 (3)San Diego County Sanitation District Outfall and RSD Outfall
Replacement
5 5 125 125 125 150 535
S2024 (2)Campo Road Sewer Main Replacement 5 3 3 - - - 10
Six-Year CIP Projects by Source and Fund ($1,000s)
(1) Partially funded by 2018A Water Revenue Bonds.
(2) Project may by funded with Sewer Debt proceeds.
(3) Project expenditures go beyond FY 2026. See project detail sheet for more information.
170
Replacement, Continued
CIP No CIP Project Title FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
S2049 Calavo Basin Sewer Rehabilitation - Phase 2 25 190 450 300 20 - 985
S2050 (3)Rancho San Diego Basin Sewer Rehabilitation - Phase 2 5 5 10 20 180 800 1,020
S2054 (3)Calavo Basin Sewer Rehabilitation - Phase 3 - - - - 10 100 110
S2060 (3)Steele Canyon Pump Station Replacement - - - 10 40 250 300
S2061 RWCWRF Aeration Controls Consolidation & Optimization Upgrades (S) 50 100 40 - - - 190
S2066 (3)Rancho San Diego Basin Sewer Rehabilitation - Phase 3 - - - - 5 25 30
S2067 RWCWRF Roofing Replacement and Natural Light Enhancement (S)75 75 24 - - - 174
S2069 (3)Cottonwood Sewer Pump Station Renovation 38 75 125 350 400 150 1,138
S2072 (3)RWCWRF Rotary Screen Replacement 1 1 1 1 11 100 115
S2073 RWCWRF Entrance Storm Water Improvements (S)115 10 - - - - 125
S2074 RWCWRF Stormwater Pond Improvements (S)40 95 30 10 - - 175
S2075 (3)Field Equipment Capital Purchases 25 25 25 25 100 100 300
Total Replacement 6,552$ 9,681$ 11,433$ 12,735$ 15,255$ 16,376$ 72,031$
Potable 5,415$ 8,703$ 10,264$ 11,547$ 12,080$ 14,142$ 62,151$
Recycled 753 395 337 347 2,284 559 4,674
Sewer 384 584 833 841 891 1,675 5,207
Total Replacement 6,552$ 9,681$ 11,433$ 12,735$ 15,255$ 16,376$ 72,031$
New Supply
CIP No CIP Project Title FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
P2451 (3)Otay Mesa Desalination Conveyance and Disinfection System 2 3 3 3 3 31 45
P2619 (1)PS - Temporary Lower Otay Pump Station Redundancy 155 62 62 - - - 279
Total New Supply 157$ 65$ 65$ 3$ 3$ 31$ 324$
Potable 157$ 65$ 65$ 3$ 3$ 31$ 324$
Total New Supply 157$ 65$ 65$ 3$ 3$ 31$ 324$
Summary by Source
Funding Source FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
Expansion 69 168 316 801 1,186 1,018 3,558$
Betterment 1,684 2,727 1,945 2,543 3,974 3,471 16,344
Replacement 6,551 9,682 11,432 12,734 15,255 16,376 72,030
New Supply 157 65 65 3 3 31 324
Total CIP by Funding Source 8,461$ 12,642$ 13,758$ 16,081$ 20,418$ 20,896$ 92,256$
Summary by Fund
Fund FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total
Potable 6,565 10,269 12,123 14,439 16,741 18,004 78,141$
Recycled 1,419 1,656 615 370 2,285 917 7,262$
Sewer 477 717 1,020 1,272 1,392 1,975 6,853$
Total CIP by Fund 8,461$ 12,642$ 13,758$ 16,081$ 20,418$ 20,896$ 92,256$
Six-Year CIP Projects by Source and Fund ($1,000s)
(1) Partially funded by 2018A Water Revenue Bonds.
(2) Project may by funded with Sewer Debt proceeds.
(3) Project expenditures go beyond FY 2026. See project detail sheet for more information.
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CIP#Description Cost
Cat. (2)
Funding
Source (3)
FY
2021
FY
2022
FY
2023
FY
2024
FY
2025
FY
2026 Total
P2083 PS - 870-2 Pump Station Replacement M R
$ 5,000 $ 5,000 $ 5,000 $ 5,000 $ -$ -$ 20,000
P2626 803-4 Reservoir Water Quality Improvements
– PAX System Purchase
M/E B
200 1,700 1,700 1,700 - - 5,300
P2654 Heritage Road Interconnection
Improvements M B
- - 1,500 1,500 1,500 -4,500
R2084 RecPL - 20-Inch, 680 Zone, Village 2 -
Heritage/La Media
M E 1,900 1,900 1,900 1,900 - - 7,600
$ 7,100 $ 8,600 $ 10,100 $ 10,100 $ 1,500 $ -$ 37,400
FY
2021
FY
2022
FY
2023
FY
2024
FY
2025
FY
2026 Total
$ 6,900 $ 8,400 $ 9,900 $ 9,900 $ 1,500 $ -$ 36,600
200 200 200 200 0 0 800
0 0 0 0 0 0 0
$ 7,100 $ 8,600 $ 10,100 $ 10,100 $ 1,500 $ -$ 37,400
(1)
(2)
(3)
Note: See pages 168-171 for complete description of CIP projects.
Each of the capital purchases and other types of assets has its own unique O&M cost.
Maintenance (M)
Energy (E)
Chemical (C)
Total Operating Budget Cost Impact
CIP Justification and Impact on Operating Budget
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.
Projected Incremental Operating Expenditures (1)
E - Expansion B - Betterment R - Replacement N - New Supply
The following schedule shows anticipated operating costs associated with each project in the CIP. 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.
Funding Source - Some projects have multiple funding sources as indicated by a slash (/):
Cost Category - Indicates maintenance cost (M), energy cost (E), or chemical cost (C), based on the project type and Engineer's
estimates.
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.
Projected Incremental Operating Expenditures (operating cost) or O&M includes labor, benefits, materials, and overhead.
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.
Cost Category
172
Quantity Amount
Vehicles
1 41,000$
1 1/2 ton truck for the Construction Services department.37,000
1 1/2 ton truck for the Construction Services department. 37,000
1 3/4 ton truck with utility body for SCADA department.46,500
1 3/4 ton truck with utility body for SCADA department 46,500
1 Class compact pickup truck.30,500
1 3/4 ton extra cab truck with utility body for Disinfection section.46,500
1 Compact vehicle.25,200
Total vehicles - P2282 310,200
Field Equipment
1 38,000
2 18,500
1 Replacement skimmer pump and related parts 25,000
Total field equipment - P2286/S2075 81,500
Total 391,700$
Summary by Project
P2282 Vehicles 310,200
P2286 Field equipment 56,500
S2075 Field Equipment 25,000
Grand Total:391,700$
Two 3" portable trash pumps, two high-pressure hoses, and one
spreader bar.
FY 2021 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 vehicles,
office equipment and furniture, field equipment and air pollution control district engine replacements, and
retrofits.
Description
1/2 ton truck for the Survey department.
Sewer camera and tractor.
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174
Summary of Financial Policies
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 the various 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. This policy was adopted by the Board in February 1993. The District periodically reviews the
policy to ensure it reflects current policies and financial practices. The Reserve Policy was updated
and adopted by the Board in November 2014.
The following chart depicts the detailed flow of funds that may be useful in understanding the
Reserve Policy.
Unrestricted and
Undesignated
(General Use) Funds
Restricted Funds
FUND CHART
Designated Funds
Designated
Expansion
Designated
New Supply
Designated
Replacement
Designated
Betterment
Potable
General Fund
Recycled General
Fund
Sewer
General Fund
Restricted
Expansion
Restricted
Betterment
Debt
Reserve
Restricted
New Supply
OPEB
Reserve
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Summary of Financial Policies
The Investment Policy is a guideline for the prudent investment of cash. It outlines 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 a return on investments. In
August 2007, the District received a Certification of Excellence Award from the Association of Public
Treasurers of the United States and Canada (APT US&C) for this policy. The Investment Policy was
updated and adopted by the Board in May 2019.
The Debt Policy establishes that debt financing will only be used for Capital Improvement Projects
(CIP), which have an extended useful life for 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. In August 2007, the District received a Certification of Excellence award from the
Association of Public Treasurers of the United States and Canada (APT US&C) for this policy. The
Debt Policy was updated and adopted by the Board in February 2017.
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1.0 The District
The Otay Water District is a California municipal water district,
authorized in 1956 by the State Legislature under the provisions
of the Municipal Water District Act of 1911. The District is a
"revenue neutral" public agency; meaning each end user pays their
fair share of the District's costs of water acquisition,
construction of infrastructure, and the operation and maintenance
of the public water facilities.
The District provides water service within its boundaries, and
provides sewer and recycled water service within certain portions
of the District. As such, the District operates three distinct
business segments:
• Potable water
• Recycled water
• Sewer
Each of these business segments has an identifiable customer base.
In addition, the developer community, large and small, makes up a
significant class of customer for each business segment. As a
result, the District has four distinct customer service types:
• Developers
• Potable water users
• Recycled water users
• Sewer users
The District has established practices and developed computer
systems that have enabled the District to maintain a clear
separation between the service costs relating to each of its four
customer service types. Regardless of customer class, financial
principles regarding cost allocation and fund accounting are
fundamental to the District’s Reserve Policy. These principles
are derived from the statements of the Governmental Accounting
Standards Board (GASB), and from oversight and advisory bodies
such as the California State Auditor, the Little Hoover
Commission, and the Government Finance Officers Association
(GFOA). These have significant impacts on how the finances of
the District are organized and how financial processes work within
the organization.
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1.1 The District’s Use of Financial Resources
All of the District’s expenditures fall into two broad categories:
operating costs and capital expenditures. The operating costs
include costs relating to the purchase and delivery of potable and
recycled water, and the transportation and treatment of sewage.
The capital expenditures support the construction of
infrastructure necessary to deliver services. The District uses
various funds to support the operating and capital efforts.
Operations and maintenance is financed only by rates and charges,
also called pay-as-you-go, while capital infrastructure is
financed using two financing methods: pay-as-you-go and debt
issuance (requiring annual debt service). The Capital Improvement
Program (CIP) and the two funding methods support the
construction, betterment, and replacement of infrastructure in all
three business areas: potable, recycled, and sewer.
The District establishes different funds to track revenues
allocated to different activities. Once established, each fund
receives financial resources up to the levels defined in this
policy. Every year, as a part of the annual budget process, the
District’s rate model is updated for each fund with the current
fund balances and the estimated revenues and expenditures for the
next six years. The expenditure requirements and financial
resources are then evaluated to ensure that the existing fund
balances and additional revenues are sufficient within the current
budget cycle and for the next five years to maintain target fund
levels. If a deficit is identified, then options for transfers,
shifting CIP projects, debt, cost saving measures, and/or rate
increases are evaluated.
1.2 The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all capital
facilities within the three business segments are allocated to
four cost types and corresponding fund categories: New Water
Supply, Expansion, Replacement, and/or Betterment. The allocation
to these four cost types is defined in the District’s Capital
Improvement Program (CIP) and is determined by an engineering
analysis that identifies which type of customer will benefit from
each facility, planned or existing. The costs of the capital
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improvements are borne by either existing users or by the
developing areas, or by a combination of the two, as applicable.
This Reserve Policy protects both the existing users and the
developing areas from incurring unwarranted costs. Developing
areas are not required to finance facilities that are replacement
or betterment and established areas are not required to replace
facilities before they are worn out because of new development.
However, to ensure a fair allocation of costs, each facility has
the potential to be classified into any or all of the four cost
types. In addition to these cost types there are occasional CIPs
that may be billable to a third party, if for example a third
party requires a District facility be relocated. Paragraphs a
through d below, describe how the costs of capital facilities are
financed through various fees.
a. New Water Supply
The portion of a new supply project that benefits new users
is financed from the reserves in the New Water Supply Fund
category. These reserves are primarily derived from proceeds
of the new water supply fee. The New Water Supply Fund is
restricted, meaning the amounts credited to this fund are
accounted for separately and are used solely for the
planning, design, and construction of the new water supply
expansion facilities. Debt financing may also be a temporary
financial resource to finance new water supply projects. The
District has a Debt Policy (Policy No. 45) that guides the
debt issuance process. Any debt proceeds used for this
purpose would be restricted in nature and tracked separately.
General use reserves may also be placed in the Designated New
Water Supply Fund and used for water supply projects.
b. Expansion
The portion of a CIP project that benefits new users is
financed from the reserves in the Expansion Fund category.
These reserves are primarily derived from proceeds of the
“incremental” portion of the capacity fees collected within
developing areas. Capacity fees are accounted for separately
and used for the planning, design, and construction of
expansion facilities. Additionally, expansion may be
financed by the “buy-in” portion of the capacity fee which is
restricted for CIP purposes, but not specifically for
expansion. Debt financing may also be a temporary financial
resource for expansion projects. General use reserves may
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also be placed in the Designated Expansion Fund and used for
expansion projects.
c. Replacement
The portion of a CIP project that benefits existing users by
replacing an existing facility is financed from the reserves
in the Replacement Fund category. Replacement of facilities
may be financed with proceeds of the “buy-in” portion of the
capacity fees, general use reserves held in the Designated
Replacement Fund, and debt proceeds. The various funding
sources available for replacement projects is anticipated to
provide the necessary flexibility to begin projects while any
necessary debt financing is being obtained.
d. Betterment
Facilities that improve reliability, meet new regulations, or
create increased levels of service are considered betterment
facilities that benefit existing users. The reserves in the
Betterment Fund category are used to finance these projects
or portions of projects. Proceeds of the “buy-in” portion of
the capacity fees may also be used to finance betterment
projects. General use reserves may be placed in the
Designated Betterment Fund and used for betterment projects.
1.21 Relocations
Occasionally, relocation of a District facility is required by a
third party. If the District has a superior easement the
relocation cost will be paid by the third party, but only to the
extent that the District does not benefit from the relocation.
When relocation is required, a CIP project may be created which is
wholly or partially financed by a third party. On occasion, the
District will require that its own facilities be relocated.
Depending on the nature of the facilities, the financial resources
for these projects could be from new water supply, expansion,
replacement, betterment or third party financing. Each project is
individually negotiated with the third party based on the facts
and circumstances of the relocation. Occasionally, the District
will improve the facilities that are being relocated. When
determining how to allocate costs to various funds the following
guideline is suggested: if a project has more than five years of
useful life remaining, an incremental cost view should be
considered; if the project has less than five years of useful life
remaining, a pro-rata cost approach should be considered. Also,
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the likelihood the District will benefit from an asset’s life
extension should be evaluated prior to allocating costs.
1.22 Oversizing
If deemed reasonable by the District, in connection with the
construction of backbone facilities, a developer may be required
to oversize new facilities for future development. The developer
is reimbursed for incremental oversizing costs as per Policy
No. 26. These reimbursements are not available for the
distribution system within a development which is an obligation
of the developer.
1.23 Exclusion of Developed Areas from Expansion Costs
Developed areas are assumed to have sufficient supply and capacity
to meet their current requirements as provided by the developers.
In addition, they are considered to have borne capital financial
costs that are at least proportionate to the benefits they have
received from capital facilities. Accordingly, no regional
capital financing costs are allocated to these areas so that they
will not incur any costs for newly developing areas, except for
capital projects that produce district-wide benefit or cost
savings.
1.24 Improvement Districts (IDs)
Improvement Districts (IDs) are established to facilitate the
financing of particular improvements by the specific
beneficiaries. The District has a number of improvement districts
that were established for General Obligation (GO) debt repayment.
Most GO debt has been paid off and it is unlikely that the
District will issue additional GO debt. Improvement districts
continue to be used for other purposes: 1) to distinguish sewer
customers from water customers on the county tax roll; or 2) to
place parcels on the county tax roll for the collection of
availability fees.
Over the years, the District moved to a district-wide perspective
of financing improvements. This philosophy is evident by the
district-wide capacity and annexation fees. The District also
uses district-wide water rates. As time goes on, it is expected
that IDs will continue to outgrow their purpose and their use will
diminish.
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1.3 The Purpose of the Policy
Public entities accumulate and maintain reserves to ensure both
financial stability and continuous availability of services.
Financial stability and the resulting improved credit quality
allow the public entity to weather times of uncertainty and the
impact of negative events, both major and minor. Reserves allow
for the ongoing maintenance of property and timely payment of
expenses even when such expenses exceed money available from a
single fiscal period. In the final analysis, the type and level
of reserves are driven by the type and magnitude of uncertainty
faced by the public entity.
A “reserve” has a number of meanings, as follows:
• Working capital is required to insure timely payment of
obligations.
• A buffer against volatility in revenues.
• Liquidity is required to obtain other goods and services
(e.g., bank services).
• Designated money to protect creditors.
• Money set aside to replace assets at the end of their useful
lives.
• Money set aside to repair or replace assets damaged or
destroyed at unanticipated times.
It is important to note that reserves, fund balance, and net
assets are not the same. Fund balance and net assets are
accounting terms and may not always be in the form of cash or
liquid investments. Fund balances and net assets may not always
be reserves unless a designation of all or a portion of fund
balance is made. In addition, the term fund balance was replaced
by net assets as codified by the Governmental Accounting Standards
Board (GASB).
In short, reserves are the liquid assets of the District,
accumulated and maintained for application to finance contingent
future activities, whether known or unanticipated, operating or
capital in nature. The District’s Reserve Policy governs the
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management and use of these financial resources. Few policies
have a more significant impact on the financial health and
stability of the District. This policy explains several key
financial concepts used by the District and provides some
background information to the overall strategies and practices
utilized. The District has a fiduciary obligation to its
customers, to manage and direct the use of public funds for the
purpose of providing water and sewer services in an efficient and
financially sound manner.
1.4 Policy Guidelines
In 2000, the Little Hoover Commission reviewed the levels of
reserve funds for special districts in California and prepared a
report reflecting that special districts were accumulating
unreasonable levels of funds. As a proactive response, the
California Special Districts Association (CSDA) prepared Reserve
Guidelines for its members. The Reserve Guidelines were
significant in noting that reserve levels need to be in context of
the organization’s overall business model and capital improvement
plan.
There are a number of potential events which the District should
consider in the development of reserves:
• Economic Uncertainty - performance of the regional economy
and the impact of that performance on demand for water.
• Weather - the amount of rainfall and the impact of weather on
the availability and the cost of water as well as the demand
for water.
• Government Mandates - the impact of federal and state
regulation, particularly environmental regulation.
• Tax Changes - limitations on the District’s taxing and
spending powers through the passage of a voter referendum,
the impound of District property taxes or the removal of the
District’s power to levy property taxes, further increases to
Educational Revenue Augmentation Fund (ERAF) contributions or
changes in calculation methodology.
• Operating Costs - increases in operating and maintenance
costs because of inflation, labor agreement or other
modification.
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• Force Majeure - unanticipated expenditures resulting from
natural disasters or intentional acts.
• Emergency Maintenance - unanticipated expenditures resulting
from unexpected failure of assets (e.g., rupture in the
primary transmission system).
• Unexpected Variation in Cash Flow - the incidence of
additional costs or decreased revenues that require short-
term borrowing in the absence of sufficient financial
resources.
The California State Auditor has, in its oversight role, offered a
number of quality recommendations for the development of reserve
policies as outlined in its report entitled, “California’s
Independent Water Districts: Reserve Amounts Are Not Always
Sufficiently Justified, and Some Expenses and Contract Decisions
Are Questionable,” dated June 2004, Report No. 2003-137. All of
these recommendations have been incorporated into this policy in
an effort to address key issues surrounding the management and use
of District reserves. The detailed objectives as identified by
the State Auditor are as follows:
• Distinguish between restricted and unrestricted reserves.
• Establish distinct purposes for all reserves.
• Set target levels, including minimums and maximums, for the
accumulation of reserves.
• Identify the events or conditions that prompt the use of
reserves.
• Conform to plans to acquire or build capital assets.
• Receive Board approval and that it is in writing.
• Require periodic review of reserve balances and rationale for
maintaining them.
Yet, the State Auditor’s report acknowledges that the California
Constitution (Article XIII B, Section 5) is vague in its
provisions governing the accumulation and use of reserves.1
1 California State Auditor, Bureau of State Audits, “California’s Independent Water Districts: Reserve Amounts Are
Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004,
2003-137; p. 8.
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Specifically, the Constitution states that “each entity of the
government can establish contingency, emergency, unemployment,
reserve, sinking fund… or similar funds as it shall deem
reasonable and proper.”2 Similarly, the State’s Water Code does
not impose any requirements as to specific or recommended reserve
fund levels. As a result, the public finance community as a whole
has yet to settle on any real objective standards for the level of
reserve funds appropriate for governmental enterprises. This lack
of consensus as to specific standards is indicative of the wide
variance of the financial and operations context for different
districts and different contingencies justifying reserves.
The Government Finance Officers Association (GFOA) in its
“Recommended Practice on Appropriate Level of Unreserved Fund
Balance in the General Fund” (2002) states that in
establishing a policy governing the level of unreserved fund
balance in the general fund, a government should consider a
variety of factors. These include:
•The predictability of its revenues and the volatility of
its expenditures (i.e., higher levels of the unreserved
fund balances may be needed if significant revenue
sources are subject to unpredictable fluctuations or if
operating expenditures are highly volatile).
•The availability of resources in other funds as well as
the potential drain upon general fund resources from
other funds (i.e., the availability of resources in
other funds may reduce the amount of the unreserved fund
balance needed in the general fund, just as deficits in
other funds may require that a higher level of
unreserved fund balance be maintained in the general
fund).
•Liquidity (i.e., a disparity between when financial
resources actually become available to make payments and
the average maturity of related liabilities may require
that a higher level of resources be maintained).
•Designations (i.e., governments may wish to maintain
higher levels of the unreserved fund balance to
compensate for any portion of unreserved fund balance
already designated for a specific purpose).
2 California Constitution, Article XIII B, Section 5.
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In the preparation of this policy, each of the CSDA guidelines and
the GFOA recommendations has been considered. In addition, all
seven objectives provided by the State Auditor are specifically
addressed for each reserve. The District wholly supports the
State Auditor’s efforts to bring a high-level of quality to
reserve governance and establishing a standard of performance.
The District recognizes that the customer pays for services
provided. Quality management requires that periodic valuations be
performed so that fees and charges can be set at appropriate
levels to recover the cost of service. The District’s Reserve
Policy has been drafted with consideration of the GFOA, CSDA, and
State Auditor’s general guidelines as provided above. In
addition, the District has adopted the following principles in the
management of its financial resources:
• Reserves are held and used only for the purpose for which
they are collected. This is done to maintain equity among
customers.
• Each of the service types is tracked separately so that
expenditures and revenues can be monitored and evaluated for
each customer type. This provides the District with the
necessary information to appropriately charge for each of the
services.
• Separation of operations and maintenance from capital
expenditures occurs within each of the service types. This
is done because the financing of these expenditures is often
on different timelines or use different reserves.
• The District will hold its reserves at responsible and
prudent levels. This policy sets minimum, maximum, and
target levels for each of the various funds. This has been
done so that the District can maintain reserves to meet the
purpose for which the funds were established. The levels are
set by reference to line items in the District’s financial
statements and approved budgets. This allows reserve levels
to adjust to the District’s changing financial circumstances.
• Debt financing of facilities provides intergenerational
equity and maintains rates at reasonable levels. This equity
is accomplished with long-term financing which spreads the
cost of facilities over the life of the facilities. The
burden to pay for facilities is then paid by those who use
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them. The District could amass significant reserves by pre-
collecting financial resources in a Replacement Reserve Fund
allowing the District to cash finance all replacements.
However, this would require significant rate increases
burdening the current customers and creating reserve levels
difficult to defend to the ratepayers or other oversight
entities.
These concepts are fundamental to the way the District manages its
funds and have a direct impact on the way rates and charges are
set. The District performs annual budget evaluations and updates
its rate model on an annual basis to monitor and adjust the
various funds and revenue sources. The separation, tracking, and
projecting of the various funds and expenditures create the
essential information necessary for the equitable rate structure
maintained by the District. The annual review preserves the
balance between services provided and the fees charged. This
review also insures that reserves will be available to continue to
serve the District’s customers.
Financial Sources
2.0 Developers
a. Meter Installation Charges (General Use)
Meter fees are charges collected for new water service
connections. Fees vary depending upon meter size and type of
service. The costs associated with meter installations are
included in the Operating Expenses section of the budget.
These charges are financed by developers.
b. Developer Deposits (General Use)
These deposits are for the engineering and operations
services provided to developers. They are tracked separately
for each developer and any excess amount is returned to the
developer.
c. Water Annexation Fees (General Use)
Annexation fees3 are collected as a condition of annexing
into the District’s potable or recycled water facilities.
Since the existing facilities have been built and maintained
3 Code of Ordinances, Section 9.
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by developers or customers within the District, the
annexation fee is calculated based on the present value of
all property taxes (1% property tax and availability fees)
paid by existing and prior customers. The annexation fee
reimburses existing customers for past contributions so that
all customers have contributed more equally to water
facilities. Proceeds of annexation fees are unrestricted and
may be used for any general fund purpose.
d. Sewer Annexation Fees (General Use)
A sewer annexation fee is collected when property is annexed
into an improvement district. Since the existing facilities
have been built and maintained by developers or customers
within a sewer IDs, the annexation fee is calculated based on
the present value of all availability fees paid by existing
and prior customers. The annexation fee reimburses existing
customers for past contributions so that all customers have
contributed more equally to sewer facilities. Proceeds of the
annexation fees are unrestricted and may be used for any
general fund purpose.
e. New Water Supply Fee (Restricted)
New water supply fees4 are based on the cost of the expansion
portion of new water supply projects divided by the number of
future equivalent dwelling units (EDU). The new water supply
fee covers the cost of planning, design, construction, and
financing associated with facilities for the District’s new
supply needs. These fees are paid by developers. The
proceeds of this fee may be used only for new potable or
recycled water supply projects. Although the fees collected
are not restricted separately, one portion for potable and
the other for recycled, they are tracked separately.
f. Water Capacity Fees (Restricted)
Water capacity fees4 are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers costs to repay
existing customers for the facilities that they have built,
and where the “incremental” portion of the capacity fee
4 Code of Ordinances, Section 28
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covers the cost of future expansion facilities. The “buy-in”
portion of the capacity fee is restricted to pay for
planning, design, construction, and financing associated with
expansion, replacement or betterment facilities. The “buy-
in” portion may be shifted back and forth between expansion,
betterment or replacement as the financing needs change. The
“incremental” portion of the capacity fee is limited to
planning, design, construction, and financing exclusively for
expansion facilities (excluding new water supply expansion).
g. Sewer Capacity Fees (Restricted)
Sewer capacity fees are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers cost to repay existing
customers for the facilities that they have built, and where
the “incremental” portion of the capacity fee covers the cost
of future expansion facilities. The “buy-in” portion of
the capacity fee is restricted to pay for planning, design,
construction, and financing associated with expansion,
replacement or betterment facilities. The “buy-in” portion
may be shifted back and forth between expansion, betterment
or replacement as the financing needs change. The
“incremental” portion of the capacity fee is limited to
planning, design, construction, and financing exclusively for
expansion facilities. For parcels within a sewer ID the
calculation excludes the tax debt already paid by these
customers therefore, producing a lower fee than for parcels
outside of a sewer ID. The capacity fees are restricted to
pay for planning, design, construction, and financing
associated with the expansion, replacement, or betterment of
facilities.
Facility needs are based on projected land use planning. Changes
in anticipated future land use occur and can alter projected
facility requirements. Thus, both the anticipated facilities
needs and their projected costs change over time as regulatory
agencies make changes to land use. The District periodically
reviews the capacity fee calculation to accommodate such
variations. These fees are paid by developers.
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The District’s construction of infrastructure occurs prior to the
addition of EDUs. This sequence serves two purposes: one it
ensures that the District can serve the pending construction as it
is completed; and two, it is more efficient to oversize many
facilities at the outset rather than build for the current need
and then reconstruct when the future need is realized. As a
result of this strategy, the District has financed construction
with bond financing as the existing expansion reserves are
depleted.
The water capacity fee is calculated based on the combined
recycled and potable water systems’ needs. This methodology is
used because the two water systems work hand-in-hand. All
capacity fees can be used for either potable or recycled but must
be tracked to distinguish between the “buy-in” and “incremental”
portions as described above. So, while capacity fees are not
restricted separately by potable and recycled, they are tracked
separately.
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.
DEVELOPERS
Diagram 2.0: Flow of Funds - Developer Sources
Unrestricted and
Undesignated
(General Use) Funds
Meter
Installation
Charges
Developer
Deposits
Restricted Funds
Annexation
Fees
Capacity
Fees
New Water
Supply Fees
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b. Monthly System Fees (General Use)
This is a fixed revenue source that is charged monthly. The
amount of the charge is based on the meter size.
c. Energy Charges (General Use)
The energy pumping fee is a charge per Unit of water for each
100 feet of lift, or fraction thereof, above the base
elevation of 450 feet. This charge is placed on the monthly
water bills of all water customers.
d. Penalties (General Use)
Penalties are added to the monthly water and sewer bills for
late charges, locks, etc.
e. Pass-through Fixed Charges (General Use)
A fixed monthly charge to the District’s customers intended
to collect sufficient funds to pass-through the increased
fixed costs from the County Water Authority (CWA) and the
Metropolitan Water District (MWD).
f. Special Rates and Charges (General Use)
In addition to the uniform water and sewer charges, the
District has a special sewer rate for the Russell Square lift
station. The Russell Square fee is for construction,
installation, maintenance or repair of the Russell Square
lift station. This fee is collected in accordance with the
Russell Square sewer charge (see Code of Ordinances Section
53.03B).
g. Temporary Meter Fees (General Use/Restricted)
Water charges, in lieu of capacity fees, are charged on
temporary meters. This is done because temporary meters use
system capacity but they are not charged a capacity fee.
Temporary water use is charged at two times the water rate
with the added charge placed in the Restricted Expansion
Fund. The primary users of these temporary meters are
developers; however, general customers also use these for
various purposes.
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2.2 County-Collected Taxes and Fees
a. General Levy Property Tax Receipts (1% Property Tax)
(General Use)
In 1978, Proposition 13 limited the levy of ad valorem
property taxes on real property to one percent of the
assessed value of such property. Subsequent legislation,
AB 8, established that the receipts from the one percent levy
were to be distributed to taxing agencies proportionate to
each agency’s general levy receipts prior to Proposition 13.
Taxes received are for general use. Spending limits for the
District are governed by the 1979 passage of California
Proposition 4, Limitations of Government Appropriations (GANN
limit). Proposition 4 places an appropriation limit on most
spending from tax proceeds.
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
CUSTOMERS / USERS
Diagram 2.1: Flow of Funds - Customer Sources
Unrestricted and
Undesignated
(General Use) Funds
Monthly
System Fees
Restricted Funds
Energy
Charges
Penalties
Pass –Through
Fixed Charges
2x Water
Rate
Special Rates
and Charges
Uniform Rates
and Charges
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and any amount over $10 per parcel is restricted to be
expended in and for the improvement district (ID) within
which it is collected. Accordingly, the District may use
availability charges in excess of $10 toward costs of water
and sewer facilities which are either, expansion, betterment,
or replacement of facilities consistent with the purpose of
the ID in which they are collected. This portion of the
proceeds of availability charges is geographically restricted
and restricted by purpose. As costs are incurred on these
projects the respective IDs are charged, reducing the
reserves. To the extent that availability charges are not
used for the purpose for which they are collected, they must
be returned to the property owners that paid them. The
District has historically used these reserves for betterment
capital facilities thus, the restricted reserves are
accounted for in “sub-funds” of the Betterment Fund
(See 2.1 f.).
c. Improvement District General Obligation (GO) Bond
Assessments (Restricted)
The District has historically issued general obligation (GO)
debt and establishes an improvement district for the
repayment of that debt. When this financing method is used,
the county tax roll can be used to collect special taxes or
assessments within the ID to pay the debt obligation. The
proceeds of the debt are restricted for the purpose as
defined in the bond documents.
COUNTY COLLECTED TAXES AND FEES
Unrestricted and
Undesignated
(General Use)
Funds
General Levy
Property Tax
Receipts
Availability
Charges
Restricted Funds
General Obligation
Bond Assessments
Diagram 2.2: Flow of Funds – County Collection Sources
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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 are general use revenues. Not only are they
periodic revenues, but there is also a one-time fee charged
with the setup of each new lease. The District incurs
expenses related to these rents and leases. The one-time
fees are calculated to recover the costs to setup the leases.
b. Sewer Billing Fees (General Use)
Sewer billing fees are general use revenues. The District
provides processing and billing services to the City of Chula
Vista to bill and collect from their customers for sewer
service. These fees are to recover the cost the District
incurs to provide this service.
c. Interest Income or Expense Allocation (General Use,
Designated, and Restricted)
Interest income (expense) will be allocated every month based
upon each fund's month-ending balance. In this way, each
fund receives credit for interest earned by that fund and
each fund with a negative balance is charged for the use of
the other fund’s reserves.
MISCELLANEOUS INCOME
Unrestricted and
Undesignated
(General Use) Funds
Miscellaneous
Rents and Leases
Sewer Billing
Fees
Restricted Funds
Interest Income or
Expense Allocation
Diagram 2.3: Flow of Funds – Miscellaneous Income Sources
Designated Funds
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2.4 Debt Issuance
a. Loans (General/Restricted Use)
As the District determines that additional financing is
required for a particular purpose, the option of borrowing is
considered. The determination to borrow is made as a part of
the annual rate model update and is evaluated in accordance
with the Debt Policy before it is recommended to the Board
for action. As an option to bond indebtedness, loans are
available to satisfy short-term financing needs. These loans
may or may not be contractually restricted for a particular
purpose.
b. General Obligation (GO) Bonds (Restricted)
As the District becomes more developed it becomes less likely
that general obligation debt will be used as it requires a
vote of the public to be approved. Bond proceeds are
restricted for the construction of those facilities
identified in the GO bond issuance. Occasionally, specific
portions of bond proceeds may be allocated for the repayment
of the principal and interest, also called debt service, on
these bonds. As the District determines that additional
financing is required for a particular purpose, the option of
debt issuance is considered. The determination to issue debt
is made as a part of the annual rate model update and is
evaluated in accordance with the Debt Policy before it is
recommended to the Board for action.
c. Certificates of Participation (COPs) (Restricted)
General revenues of the District are pledged as security for
Certificates of Participation (COPs) indebtedness. If the
District determines that additional financing is required for
a particular purpose, the option of debt issuance is
considered. The determination to issue debt is made as a
part of the annual rate model update and is evaluated in
accordance with the Debt Policy before it is recommended to
the Board for action. This form of financing has become the
industry’s preferred form of financing as it does not require
a vote of the general public.
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2.5 Inter-fund Transfers
Each year in the budgeting process, future fund levels are
projected for the next six years. Based on these projections
transfers are recommended. Reserves may be transferred
between Unrestricted or Designated Funds and the General Fund
(see 4.0 “Funding Levels” and 4.1 “Fund Transfers”).
Reserves may not be transferred to or from any of the
restricted funds unless it is between two restricted funds
with a shared purpose.
Fund Types and Categories
3.0 General Funds
a. Purpose
The General Fund is neither restricted nor designated. The
District maintains one General Fund for each business segment
(water, sewer, and recycled). This fund holds the working
capital and emergency operating reserves. While the General
Fund has a short-term focus to finance the District’s annual
operations, it is supported by the six-year rate model. This
DEBT PROCEEDS
Unrestricted and
Undesignated
(General Use) Funds
Loans General
Obligation Bonds
Restricted Funds
Certificates of
Participation
Diagram 2.4: Flow of Funds – Debt Issuance Sources
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fund is primarily used to finance the operations of the
District; however, it can be used for any District purpose.
This fund can be used to supplement the District’s rates and
charges and be a temporary source of revenue to balance the
Operating Budget. This fund can also be used to avoid spikes
in the rates or significant and abrupt increases. It is an
industry practice to have a fund that can be used to
stabilize rates. This would only occur if there was a
temporary need for reserves that would smooth out a rate
spike or to ramp up what would otherwise be a dramatic rate
increase.
The General Fund also plays a role in the debt planning of
the District. This fund is viewed by the debt markets as a
commitment by the District to ensure financial stability of
the rates and charges of the District. The District is
anticipated to need a number of debt issuances over the years
and this fund will help the District not only to stabilize
rate fluctuations but also to access low cost financing for
future projects.
b. Sources
Meter installation charges, temporary meter fees, uniform
rates and charges, monthly system fees, energy charges,
penalties, pass-through fixed charges, general levy property
tax receipts, water annexation fees, availability charges,
miscellaneous rents and leases, sewer billing fees, interest
income or expense allocation, loans, and a portion of the
temporary water sales.
The sewer general fund receives sewer charges, penalties,
availability charges, sewer annexation fees, and interest
income or expense allocation.
c. Funding Levels
I. Minimum Level – The minimum reserve level for each
business segment of the General Fund is three
months of operating budget expenses (evaluated
separately for each segment).
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II. Maximum Level – The maximum reserve level for the
General Fund is nine months of operating budget
expenses. In the event that this fund exceeds the
seven month level, the excess will be evaluated or
transferred to one or more of the designated funds.
III. Target Level – The target level of reserves is
three months of operating budget expenses. In the
event that the fund drops below the target level,
rate increases or fund transfers would be
considered.
3.1 Designated Other Post Employment Benefits (OPEB) Fund
a. Purpose
Designated Other Post Employment Benefits (OPEB) reserves are
“general use” reserves that have been set apart by Board
action to finance the medical benefits of qualified retirees
as outlined in the District’s benefits plan. This fund is
available to hold any Board designated OPEB funds. The
District also has a trust at CalPERS and is restricted for
the purpose of financing the OPEB liability. Money held in
the CalPERS trust restricts the funds from any use other than
OPEB. The two funds are considered jointly when looking at
target reserve levels. Every two years, actuarial study is
performed to update the annual financing requirements.
Changes in the actuarial valuation may result from changes in
benefit levels, employee population, health insurance costs,
or general market conditions.
b. Sources
The OPEB liability may be financed by general use reserves
coming from user rates and charges, either from an operating
budget expenditure or from interfund transfers. Transfers of
unrestricted reserves may come from the various designated
funds or from the General Fund. As a part of the normal
budget process, annual operating revenues have been
sufficient to finance the ongoing needs of this designated
fund. While debt financing is also an option, the District
has only used user rates and charges to finance this fund.
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c. Funding Levels
I. Minimum Level – The minimum reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. When
considering the reserve level of this fund, both
the District held OPEB reserves and CalPERS held
OPEB reserves must be considered jointly.
II. Maximum Level – The maximum reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. In the event
that the two funds, as described above, exceed the
OPEB liability, the District will reduce the annual
funding levels as defined by the actuarial study.
III. Target Level – The target reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. In the event
that the two funds, as described above, fall below
the OPEB liability, the District will increase the
annual funding levels as defined by the actuarial
study.
3.2 New Water Supply Fund Category
a. Purpose
The New Water Supply Fund category is to finance the
expansion portion of new water supply projects and is
therefore to be paid by developers. When considering the
reserve level of the New Water Supply category; the New Water
Supply Fund, the New Water Supply Debt Fund, and the
Designated New Water Supply Fund all work in concert and must
be considered jointly.
b. Sources
The New Water Supply Fund receives reserves only from the new
water supply fee. Other funds within the new water supply
category of funds receive debt proceeds and general use
reserves through a designation to this category.
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c. Funding Levels
I. Minimum Level – As the District matures the CIP
will move to purely replacement projects. As the
District moves through its lifecycle the need for
new water supply reserves will decrease and may be
reduced to zero.
II. Maximum Level – The maximum reserve level for the
new water supply category of funds is limited to
five years of the unfinanced new water supply
facilities as described in the District’s CIP
Budget. To determine the unfinanced amount, the
total new water supply financing needs must be
reduced by the projected new water supply revenues,
general fund designations, and bond financing. If
the combined new water supply reserves exceed the
target level, the District should consider
transferring designated reserves to meet other
purposes, reduce the new water supply fee, or
change the timing of the new water supply projects.
III. Target Level – In order to facilitate debt
financing of the new water supply, it is important
that the various new water supply funds retain an
overall reserve level of six months, prior to any
attempt to obtain debt financing. This reserve
level allows the District the time necessary to
issue additional debt without depleting new water
supply reserves. If the combined new water supply
reserve levels drop below six months of
expenditures, this would trigger a transfer of
general use reserves, a bond sale, or a change in
the timing of new water supply projects. Bond
proceeds would be placed in the Restricted New
Water Supply Debt Fund while transfers would be
placed in the Designated New Water Supply Fund.
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3.3 Expansion Fund Category
a. Purpose
The Expansion Fund category is to finance the expansion
portion of capital projects and therefore is to be paid for
by developers. When considering the reserve levels of the
expansion category, the following funds work in concert and
must be considered jointly: the Expansion Fund, Expansion
Debt Fund, Capital Improvement Fund, and the Designated
Restricted Funds
Unrestricted and
Undesignated Funding
Sources
Funding Source New Water
Supply Fees
Debt
Proceeds
Restricted Funds
Restricted Funds
Designated Funds
New Water
Supply Fund
Expansion
New Water
Supply Fund
Designated
New Water
Supply Fund
Debt Fund
General Fund – Rates and Charges
New Water
Supply Fund
Category
New Water
Supply
Debt Fund
Diagram 3.2: New Water Supply Fund Category
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Expansion Fund. Potable and recycled reserves are considered
jointly while sewer is evaluated separately.
b. Sources
The Expansion Fund is financed by water charges in lieu of
capacity fees (for temporary meters) and the “incremental”
portion of the capacity fee. The other funds in this
category may also be financed by debt proceeds, the “buy-in”
portion of the capacity fee, and the general fund through a
designation of reserves.
c. Funding Levels
I. Minimum Level – As the District matures the CIP
will move to purely replacement and betterment
projects. As the District moves through this
lifecycle the need for expansion reserves will
decrease and may be reduced to zero.
II. Maximum Level – The maximum reserve level for the
expansion category of funds is limited to five
years of unfinanced expansion facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing needs must be reduced by the projected
expansion revenues, bond financing, and any
restricted or general fund revenues allocated to
this fund category. If the combined expansion
reserves exceed target levels, the District should
consider reducing capacity fees, reallocating
restricted or designated funds to meet other
purposes, or shifting the timing of expansion
projects.
III. Target Level – The target level is six months of
expansion expenditures. It is important that the
expansion reserves remain at a minimum of six
months of expansion expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting expansion
reserves. If the combined expansion reserves drop
below six months of expenditures this would trigger
a transfer of general use reserves, a bond sale, an
adjustment to the timing of expansion projects, or
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a reallocation of restricted reserves. Bond
proceeds would be placed in the Restricted Bond
Fund, transfers of general use reserves would be
placed in the Designated Expansion Fund, and
transfers of restricted reserves would be placed in
the Expansion Capital Improvement Fund.
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Unrestricted and
Undesignated Funding
Sources
Diagram 3.3: Expansion Fund Category
Funding Source 2x Water
Rates
Capacity
Fees (1)
Restricted Funds
Restricted Funds
Designated Funds
Expansion
Fund
Expansion
Debt Fund
General Fund – Rates and Charges
Restricted Funds Expansion Capital
Improvement
Fund
Debt
Proceeds
Restricted Funds
Capital
Improvement
Fund
Bond
Debt
Expansion
Fund
Designated
Expansion
Fund
Expansion
Fund
Category
(1) For Water Capacity Fees 32.4% goes into the Expansion fund and 67.6% goes into
the Capital Improvement Fund. For Sewer Capacity Fees 100% goes into the
Capital Improvement Fund.
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3.4 Replacement Fund Category
a. Purpose
The Replacement Fund category is to finance replacement
projects. When considering the reserve levels of the
replacement category of funds, the following funds work
in concert and must be considered jointly: the Debt
Fund, Capital Improvement Fund, and the Designated
Replacement Fund. The purpose of these reserves is to
pay for the replacement of capital infrastructure and
capital purchases. These reserves are not to be used
for the replacement of non-capital items.
With the District’s development of its financial systems
and the greater need and ability to separate and track
reserves, the replacement reserves have been separated
into three funds: water, recycled, and sewer.
Projects undertaken solely for the purpose of replacing
major capital equipment or facilities, i.e., where the
cost exceeds $10,000 for capital purchases or $20,000
for infrastructure items, generally these are not
considered normal maintenance. When the cost is below
$10,000, the costs are financed annually as operational
maintenance. As charges are incurred on replacement
projects the reserves are deducted from the respective
Replacement Funds on a monthly basis.
b. Sources
The various funds in this category are financed by debt
proceeds, the “buy-in” portion of the capacity fee, and
general fund designations.
c. Funding Levels
I. Minimum Level – The minimum reserve level of this
category of funds is 3% of the historical value of
existing assets as identified in the District’s
current financial statements. Potable, recycled,
and sewer replacement are evaluated separately.
II. Maximum Level – The maximum reserve level of this
category of funds is 6% of existing assets. If the
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combined replacement reserves exceed target levels,
the District should consider transferring the “buy-
in” portion of the capacity fee to meet other
purposes. Another consideration would be to shift
the timing of replacement projects.
III. Target Level – The target reserve level of this
category of funds is 4% of existing assets. In the
event that the reserves fall below the recommended
target level, the District should consider
transferring the “buy-in” portion of the capacity
fee. The District should also consider shifting
the timing of replacement projects or issuing debt
to support the planned level of facility
replacement. The District will act based on the
annual six-year rate model, to insure that at the
end of that planning horizon the reserves exceed
the minimum level and is approaching the target
level.
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(1) For Water Capacity Fees 67.6% goes into the Capital Improvement Fund.
For Sewer Capacity Fees 100% goes into the Capital Improvement Fund.
3.5 Betterment Fund Category
a. Purpose
The Betterment Fund category is to finance the
betterment portion of capital projects with a portion
going to maintenance of the potable, recycled, and sewer
systems. The District maintains separate Betterment
Fund categories, one for each improvement district. An
Funding Source
Unrestricted and
Undesignated Funding
Sources
Capacity
Fees (1)
Diagram 3.4: Replacement Fund Category
Restricted Funds
Restricted Funds
Designated Funds
Capital
Improvement Fund
Replacement
Debt Fund
Designated
Replacement
Fund
General Fund – Rates and Charges
Debt
Proceeds
Debt Fund
Restricted Funds
Replacement
Capital
Improvement
Fund
Replacement
Fund
Category
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improvement district is a legally defined geographic
area usually established for the purpose of bond
financing of facilities. The betterment reserves within
these funds are restricted by law for use within the
improvement district in which the fees were collected
(Water Code 71631.6). However, the legal restriction of
this reserve depends upon the particular revenue source.
(See Section 2.2 b. for a review of the availability
fees).
When considering the reserve levels of the betterment
category of funds, the following funds work in concert
and must be considered jointly: the Betterment Fund,
Debt Fund, Capital Improvement Fund, and Designated
Betterment Fund.
b. Sources
The Betterment Fund category receives restricted
revenues by improvement district from availability fees
(the first $10 is unrestricted, while amounts over $10
are restricted) collected through the county tax roll.
Betterment may also be financed by debt proceeds, the
“buy-in” portion of the capacity fee, as well as the
general fund through a designation of reserves.
c. Funding Levels
I. Minimum Level – As the District matures the CIP
will move to purely replacement projects. As the
District moves through this lifecycle the need for
betterment reserves will decrease and may be
reduced to zero.
II. Maximum Level – The maximum reserve level for the
betterment category of funds is limited to five
years of unfinanced betterment facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing need must be reduced by the projected
betterment revenues, bond financing, and general
fund designations. If this maximum is exceeded,
then the District should evaluate reductions in the
special water rates and availability fees,
transferring designated reserves to meet other
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purposes, or shifting the timing of betterment
projects.
III. Target Level – The target is six months of
betterment expenditures. It is important that the
betterment reserves remain at a minimum of six
months of betterment expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting betterment
reserves. If the combined betterment reserves drop
below six months of expenditures this would trigger
a transfer of general use reserves, a bond sale, or
an adjustment to the timing of betterment projects.
Bond proceeds would be placed in the Betterment
Bond Fund while transfers would be placed in the
Designated Betterment Fund.
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Fund
Unrestricted and
Undesignated Funding
Sources
Diagram 3.5: Betterment Fund Category
Funding Source Capacity
Fees (2)
Restricted Funds
Restricted Funds
Designated Funds
Capital
Improvement
Fund
Betterment
Debt Fund
Betterment
Fund
General Fund – Rates and Charges
Availability
Charges (1)
Restricted Funds
Debt
Proceeds
Restricted Funds
Bond
Debt
Designated
Betterment
Fund
Betterment
Fund
Betterment
Capital
Improvement
Fund
Betterment
Fund
Category
(1) The portion of charges over $10 per parcel is restricted.
(2) For Water Capacity Fees 67.6% goes into the Capital Improvement Fund. For Sewer
Capacity Fees 100% goes into the Capital Improvement Fund.
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Diagram 3.6: Fund Targets
Fund or Fund
Category
Actions to Consider if
below Target Target Maximum
New Supply Fund
Category
New supply fee
increase, bond
financing, or transfer to
designated or CIF Funds
Total of all funds in fund
category = six months
of capital expenditures
Nexus of cost to fee
Expansion Fund
Category
Capacity fee increase,
bond financing, or
transfer to designated
or CIF Funds
Total of all funds in fund
category = six months
of capital expenditures
Nexus of cost to fee
Replacement Fund
Category
Bond financing, or
transfer to designated
or CIF Funds
Total of all funds in fund
category = 4% of
infrastructure
Nexus of cost to fee
Betterment Fund
Category
Bond financing, or
transfer to designated
or CIF Funds
Total of all funds in fund
category = six months
of capital expenditures
5 years unfunded needs
Debt Reserve Fund Increase tax collection
or rates
One semi-annual
payment
Two semi-annual
payments
OPEB Fund Fund transfers Full funding Full funding
General Fund Rate increase or fund
transfers
Three months of
operating budget
expenses
Nine months of
operating budget
expenses
Additional Restricted Funds
4.0 Capital Improvement Fund
a. Purpose
The “Capital Improvement Fund’s sole purpose is to track the
“buy-in” portion of the capacity fee and to ensure these fees
are expended solely for the purpose for which they were
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collected. In this case it is to pay for facilities that
were in existence at the time this fee was established.
These fees may be used for expansion, replacement, or
betterment projects or any debt related to these categories.
The water capacity fees may also be used for either the
potable or the recycled systems. As capacity fees are
collected, the “buy-in” portion of the fee is allocated as
needed to one of three capital improvement funds, one in each
of the Expansion, Replacement, and Betterment Fund
categories. These reserves are used to pay debt or offset
any negative balance within these three categories of funds.
For sewer, these fees fund the Expansion, Replacement, or
Betterment Fund categories. These fees may not be used to
finance the New Water Supply category, as there were no new
water supply facilities in existence at the time the new
methodology for capacity fees was established.
b. Sources
The “buy-in” portion of the capacity fee collected after
June 30, 2010 or after September 30, 2014 for sewer.
c. Funding Levels
There are no minimums, maximums, or target levels for these
reserves on an individual basis. The allocation of this fee
to the various capital improvement funds is dependent on the
overall reserve levels within each fund category.
4.1 Debt Reserve Fund
a. Purpose
The Debt Reserve Fund is established to hold the proceeds
from the various debt issuances. There are two types of
debt, General Obligation bonds and Certificates of
Participation bonds. The proceeds are transferred to the New
Water Supply, Expansion, Replacement, or Betterment Debt
Funds as they are expended for various facilities within
those fund categories. As repayment of the debt occurs, the
balances within these individual funds are reduced so that
the financial impact of issuing debt is tracked within the
category for which the debt was issued.
b. Sources
Debt proceeds.
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c. Uses
There are no minimums, maximums, or target levels for this
fund on an individual basis. This fund is available on an as
needed basis to fund CIP projects for new water supply,
expansion, replacement, or betterment. From a funding level
perspective, these reserves are evaluated in the context of
all the various funds within each fund category.
Fund Transfers
5.0 Funding Levels
As described in the preceding sections, the District maintains
reserves for its operating and capital activities. These reserves
can be of three types: 1) undesignated or general use reserves,
2) designated, and 3) restricted for a specific purpose. The
restricted reserves can be restricted geographically and/or by
purpose. The District maintains various funds to track the
various designations and restrictions. The source of the money
for each fund was discussed along with the purpose, source of
funds, and levels. Key characteristics of these funds are the
target levels, minimums, and maximums. The funding levels must be
viewed in the context of the economic environment, political
environment, and in light of the District’s rate model. The
District’s six-year rate model not only shows the current balance
but also shows the trend of the fund balances. Often the trend of
the fund is a greater indicator of financial stability than is the
current balance.
The rate model is updated each year with the budget process and
evaluates each fund over the next six years. The rate model will
take into account the general economic environment, looking at the
development rate, supply rate increases, the possibility of
raising rates, capital infrastructure spending, and strategic plan
initiatives. The fund balances may at times be over or under the
target amount. This is not only acceptable but expected. The
rate model provides an empirical estimate of the conformance
between the projected District’s financial activities and the
guidelines of this policy.
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5.1 Fund Transfers
Reserves within the District’s various designated funds come from
interfund transfers of unrestricted general use reserves. It is
important to note that the District has the ability to use general
use reserves for any business purpose. General use reserves may
be transferred to and from any unrestricted fund for any business
need. Designated reserves are general use reserves which have
been set aside for a specific purpose by Board action. These
reserves can only be used for the purpose they were designated, or
with Board action they may be used for any other business purpose.
While general use reserves may be used for any restricted purpose
they may not be transferred to Restricted Funds due to the
sensitivity of the tracking of restricted reserves. If reserves
are needed for a restricted purpose they are transferred to a
Designated Fund within the fund category with that particular
purpose. Reserves restricted to a fund category may only be used
within that category and may not be transferred to another
category. For example, the new water supply fee and the
“incremental” portion of the capacity fee are restricted reserves
for a specific purpose, and may not be transferred to another
category as no other category has the same purpose. However, the
“buy-in” portion of the capacity fees are restricted for purposes
that are shared by more than one category of funds and may
therefore be transferred to a restricted fund within another fund
category as long as it shares the same purpose.
In many situations reserve transfers are expected as some fund
categories will exceed their maximums or drop below their
minimums. Only fund categories that are below the stated target
are eligible to receive transferred reserves. Fund categories
that exceed their maximums are first to be considered for
transfers out, followed by funds that exceed their targets. Funds
that exceed their minimums are also available for reserve
transfers out, but only when other options are not available.
The rationale for prioritizing reserve transfers is based on the
immediacy of the need and the availability of reserves from other
funding sources. For example, the General Fund is first to
receive reserves when it drops below its target or minimum levels.
This is because of the immediate and ongoing nature of the
expenditures that are served by this fund. The operation of the
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District is first and foremost of the objectives of the District.
On the other end of the spectrum, the Replacement Fund has a long-
term perspective and will be used to partially finance replacement
assets for many years to come. Debt financing is available to
respond to this long term, foreseeable, and planned cash flow.
This fund is less likely to have immediate needs and has other
financing options.
When making the determination of when transfers are necessary, all
funds within a fund category work as a group. The combined
balance of the restricted and designated funds is looked at when
determining whether the fund category requires additional funding
from the Restricted Capital Improvement Fund, Restricted Debt
Fund, or the General Fund. Because the Capital Improvement Fund
may finance expansion, replacement or betterment reserves may be
transferred between these fund categories, but only back and forth
within its own type of restricted fund.
As an example, if during the rate model update process it was
determined that the Expansion Funds (designated and restricted)
would drop and stay below the minimum during the six-year planning
horizon, this would trigger a bond sale, a transfer of general use
reserves, and/or a transfer of restricted reserves. If in the
cash planning process, it was anticipated that the General Fund
would remain above target during the planning horizon and that the
trend did not present a problematic underfunded status, then
General Fund reserves would be considered available for transfer
prior to making proceeds available from a bond sale. Also, if
during this period the Betterment Fund category was anticipated to
exceed its maximum, then reserves from either the Designated
Betterment Fund, or the Capital Improvement Fund would be
transferred to the corresponding Expansion Fund prior to a bond
sale. All funds are evaluated to determine which has the greatest
need or availability of reserves before any reserve transfer
recommendation is presented to the Board.
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GLOSSARY
The Reserve Policy contains terminology that is unique to public
finance and budgeting. The following glossary provides assistance
in understanding these terms.
Annexation Fees: When water service is requested for land outside
the boundaries of the District, the land to be serviced must first
be annexed. For sewer service the land must be annexed into an
improvement district within the District.
Assets: Resources owned or held by Otay Water District that has
monetary value.
Availability Fees: The District levies charges each year in
developed areas to be used for upgrades, betterment, or
replacement and in undeveloped areas to provide a source of
funding for planning, mapping, and preliminary design of
facilities to meet future development. Current legislation
provides that any availability charge in excess of $10.00 per acre
shall be used only for the purpose of the improvement district for
which it was assessed.
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.
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CWA: The County Water Authority was organized in 1944 under the
State County Water Authority Act for the primary purpose of
importing Colorado River water to augment the local water supplies
of the Authority's member agencies. The Authority purchases water
from the Metropolitan Water District of Southern California (MWD)
which imports water from the Colorado River and the State Water
Project.
Debt Service: The District's obligation to pay the principal and
interest of bonds and other debt instruments according to a
predetermined payment schedule.
Expenditures/Expenses: These terms refer to the outflow of funds
paid or to be paid for an asset, goods, or services obtained
regardless of when actually paid for. (Note: An encumbrance is
not an expenditure). An encumbrance reserves funds to be expended
in a future period.
Fund: An account used to track the collection and use of monies
for a specifically defined purpose.
Fund Balance: The current funds on hand resulting from the
historical collection and use of monies. The difference between
assets and liabilities reported in the District’s Operating Fund
plus residual equities or balances and changes therein, from the
results of operations.
Interest Income: Earnings from the investment portfolio. Per
District Policy Number 25, interest income will be allocated to
the various funds each month based upon each fund’s prior month-
ending balance.
Late Charges/Penalties: Charges and penalties are imposed on
customer accounts for late payments, returned payments, and other
infringements of the District’s Code of Ordinances.
1% Property Tax: In 1978, Proposition 13 limited general levy
property tax rates for all taxing authorities to a total rate of
1% of full cash value. Subsequent legislation, AB 8, established
that the receipts from the 1% levy were to be distributed to
taxing agencies according to approximately the same proportions
received prior to Proposition 13.
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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.
Russell Square: A sewer lift station constructed in 1983 that
serves four properties in the Russell Square Development.
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.
Tax Collection for Bond Debt: California Water Code Section 72091
authorizes the District, as a municipal water district, to levy ad
valorem property taxes which are equal to the amount required to
make annual payments for principal and interest on General
Obligation bonds approved by the voters prior to July 1, 1978.
Unit: A Unit of water is 100 cubic feet or 748 gallons of water.
Water Rates: Rates vary among classes of service and are measured
in Units. The water rates for residential customers are based on
an accelerated block structure. As more Units are consumed, a
higher Unit rate is charged. Effective in 2009, all non-
residential customers are charged for water based on a tiered rate
structure in which water rates are based on meter size and amount
of Units consumed.
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1.0: POLICY
It is the policy of the Otay Water District to invest public funds in
a manner which will provide maximum security with the best interest
return, while meeting the daily cash flow demands of the entity and
conforming to all state statues governing the investment of public
funds.
2.0: SCOPE
This investment policy applies to all financial assets of the Otay
Water District. The District pools all cash for investment purposes.
These funds are accounted for in the District’s audited Comprehensive
Annual Financial Report (CAFR) and include:
2.1) General Fund
2.2) Capital Project Funds
2.2.1) Designated Expansion Fund
2.2.2) Restricted Expansion Fund
2.2.3) Designated Betterment Fund
2.2.4) Restricted Betterment Fund
2.2.5) Designated Replacement Fund
2.2.6) Restricted New Water Supply 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, debt reserves 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.
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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 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
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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 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 District selected
financial institutions and security broker/dealers authorized and
approved to provide investment services in the State of California.
Investment services include the buying or selling of permissible
investments such as treasuries, government agencies, etc. for delivery
to the custodian bank. 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:
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•Audited Financial Statements.
•Proof of Financial Industry Regulatory Authority (FINRA)
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 through 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 $65 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”)
•Federal Farm Credit Bank (FFCB)
•Federal Agricultural Mortgage Corporation (FAMCA or “Farmer
Mac”)
There is no percentage limitation of the portfolio which can be
invested in this category, although a five-year maturity from the
settlement date limitation is applicable. Government agencies
whose implied guarantee has been reduced or eliminated shall
require an “A” rating or higher by a nationally recognized
statistical rating organization.
8.04) Interest-bearing demand deposit accounts must be made
only in Federal Deposit Insurance Corporation (FDIC) insured
accounts. For deposits in excess of the insured maximum of
$250,000, approved collateral shall be required in accordance
with California Government Code, Section 53652. Certificates of
Deposit (CD) will be made only to the FDIC-insured limit of
$250,000. 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 2 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(h). Purchases of commercial paper may not exceed 10
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 from
the settlement date or less, and that meet the further
requirements of California Government Code, Section 53601(k).
Investments in medium-term notes are limited to 10 percent of the
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District’s portfolio and no more than 2 percent of the
outstanding medium-term notes of any single issuer.
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(l). Investments in money market
mutual funds are limited to 10 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 as leveraging, is prohibited.
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.
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•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
exceeding the $250,000 FDIC insured maximum. 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.
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 settlement date
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of the 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.
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17.0: INVESTMENT POLICY ADOPTION
The Otay Water District’s investment policy shall be adopted by
resolution of the District’s Board of Directors. The policy shall be
reviewed annually by the Board and any modifications made thereto must
be approved by the Board.
18.0: GLOSSARY
See Appendix A.
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APPENDIX A: GLOSSARY
ACTIVE INVESTING: Active investors will purchase investments and
continuously monitor their activity, often looking at the price
movements of their stocks many times a day, in order to exploit
profitable conditions. Typically, active investors are seeking short
term profits.
AGENCIES: Federal agency securities and/or Government-sponsored
enterprises.
BANKERS’ ACCEPTANCE (BA): A draft or bill or exchange accepted by a
bank or trust company. The accepting institution guarantees payment
of the bill, as well as the issuer.
BENCHMARK: A comparative base for measuring the performance or risk
tolerance of the investment portfolio. A benchmark should represent a
close correlation to the level of risk and the average duration of the
portfolio’s investments.
BROKER/DEALER: Any individual or firm in the business of buying and
selling securities for itself and others. Broker/dealers must register
with the SEC. When acting as a broker, a broker/dealer executes
orders on behalf of his/her client. When acting as a dealer, a
broker/dealer executes trades for his/her firm's own account.
Securities bought for the firm's own account may be sold to clients or
other firms, or become a part of the firm's holdings.
CERTIFICATE OF DEPOSIT (CD): A short or medium term, interest bearing,
FDIC insured debt instrument offered by banks and savings and loans.
Money removed before maturity is subject to a penalty. CDs are a low
risk, low return investment, and are also known as “time deposits”,
because the account holder has agreed to keep the money in the account
for a specified amount of time, anywhere from a few months to several
years.
COLLATERAL: Securities, evidence of deposit or other property, which a
borrower pledges to secure repayment of a loan. Also refers to
securities pledged by a bank to secure deposits of public monies.
COMMERCIAL PAPER: An unsecured short-term promissory note, issued by
corporations, with maturities ranging from 2 to 270 days.
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COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual
report for the Otay Water District. It includes detailed financial
information prepared in conformity with generally accepted accounting
principles (GAAP). It also includes supporting schedules necessary to
demonstrate compliance with finance-related legal and contractual
provisions, extensive introductory material, and a detailed
statistical section.
COUPON: (a) The annual rate of interest that a bond’s issuer promises
to pay the bondholder on the bond’s face value. (b) A certificate
attached to a bond evidencing interest due on a set date.
DEALER: A dealer, as opposed to a broker, acts as a principal in all
transactions, buying and selling for his own account.
DEBENTURE: A bond secured only by the general credit of the issuer.
DELIVERY VERSUS PAYMENT: There are two methods of delivery of
securities: delivery versus payment and delivery versus receipt.
Delivery versus payment is delivery of securities with an exchange of
money for the securities. Delivery versus receipt is delivery of
securities with an exchange of a signed receipt for the securities.
DERIVATIVES: (1) Financial instruments whose return profile is linked
to, or derived from, the movement of one or more underlying index or
security, and may include a leveraging factor, or (2) financial
contracts based upon notional amounts whose value is derived from an
underlying index or security (interest rates, foreign exchange rates,
equities or commodities).
DISCOUNT: The difference between the cost price of a security and its
maturity when quoted at lower than face value. A security selling
below original offering price shortly after sale also is considered to
be at a discount.
DISCOUNT SECURITIES: Non-interest bearing money market instruments
that are issued at a discount and redeemed at maturity for full face
value, e.g., U.S. Treasury Bills.
DIVERSIFICATION: Dividing investment funds among a variety of
securities offering independent returns.
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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.
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 AGRICULTURAL MORTGAGE CORPORATION (FAMC or Farmer Mac): A
stockholder owned, publicly-traded corporation that was established
under the Agricultural Credit Act of 1987, which added a new Title
VIII to the Farm Credit Act of 1971. Farmer Mac is a government
sponsored enterprise, whose mission is to provide a secondary market
for agricultural real estate mortgage loans, rural housing mortgage
loans, and rural utility cooperative loans. The corporation is
authorized to purchase and guarantee securities. Farmer Mac
guarantees that all security holders will receive timely payments of
principal and interest.
FEDERAL HOME LOAN BANK (FHLB): Government sponsored wholesale banks
(currently 12 regional banks), which lend funds and provide
correspondent banking services to member commercial banks, thrift
institutions, credit unions and insurance companies.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC or Freddie Mac): A
stockholder owned, publicly traded company chartered by the United
States federal government in 1970 to purchase mortgages and related
securities, and then issue securities and bonds in financial markets
backed by those mortgages in secondary markets. Freddie Mac, like its
competitor Fannie Mae, is regulated by the United States Department of
Housing and Urban Development (HUD).
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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.
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (FINRA): An independent,
not-for-profit organization authorized by Congress to protect
America’s investors by making sure the securities industry operates
fairly and honestly. It is dedicated to investor protection and
market integrity through effective and efficient regulation of the
securities industry. FINRA is the successor to the National
Association of Securities Dealers, Inc. (NASD).
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
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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.
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
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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.
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.
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.
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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, FAMCA, 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.
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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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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
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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 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
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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.
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
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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 variable interest costs will
be the higher of the 10 year average rate or the current weekly
variable rate.
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.
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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 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.
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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 or with relatively new
financing techniques. 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 by private placement
or through any qualified Joint Power Authority (JPA) in the State of
California whose principal business is issuing bonds.
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
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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 (known as Current Refunding).
Savings Criteria
In cases where an Advance Refunding or Current 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.
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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 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: 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 an internet bidding platform, 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.
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
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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 can be 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
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bonds are remarketed to another buyer, the letter of credit is repaid.
The letter of credit fees are paid annually or quarterly. Letter of
credits are typically issued for not more than 3 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. 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 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 widely recognized 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
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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.
11.0: 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.
12.0: 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 MSRB’s Electronic Municipal Market Access
(EMMA) website, and will disseminate other information that it deems
pertinent to the market in a timely manner (For bonds issued after
2012, 10 days). 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.
(a)The events considered material according to the SEC are:
1.Principal and interest payment delinquencies;
2.Unscheduled draws on debt service reserves reflecting
financial difficulties;
3.Unscheduled draws on credit enhancements reflecting
financial difficulties;
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4.Substitution of credit or liquidity providers, or their
failure to perform;
5.Adverse tax opinions or the issuance by the Internal Revenue
Service of proposed or final determinations of taxability or
of a Notice of Proposed Issue (IRS Form 5701-TEB);
6.Tender offers;
7.Defeasances;
8.Ratings changes; and
9.Bankruptcy, insolvency, receivership or similar proceedings.
Note: For the purposes of the event identified in subparagraph
(9) above, the event is considered to occur when any of the
following occur: the appointment of a receiver, fiscal agent or
similar officer for an obligated person in a proceeding under
the U.S. Bankruptcy Code or in any other proceeding under state
or federal law in which a court or governmental authority has
assumed jurisdiction over substantially all of the assets or
business of the obligated person, or if such jurisdiction has
been assumed by leaving the existing governmental body and
officials or officers in possession but subject to the
supervision and orders of a court or governmental authority, or
the entry of an order confirming a plan of reorganization,
arrangement or liquidation by a court or governmental authority
having supervision or jurisdiction over substantially all of the
assets or business of the obligated person.
(b)Pursuant to the provisions of this section (b), the District
shall give, or cause to be given, notice of the occurrence of
any of the following events with respect to the Bonds, if
material:
1.Unless described in paragraph (a) above, notices or
determinations by the Internal Revenue Service with respect
to the tax status of the Bonds or other material events
affecting the tax status of the Bonds;
2.The consummation of a merger, consolidation or acquisition
involving an obligated person or the sale of all or
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substantially all of the assets of the obligated person,
other than in the ordinary course of business, the entry
into a definitive agreement to undertake such an action or
the termination of a definitive agreement relating to any
such actions, other than pursuant to its terms;
3.Appointment of a successor or additional trustee or the
change of the name of a trustee;
4.Nonpayment related defaults;
5.Modifications to the rights of Owners of the Bonds;
6.Notices of redemption; and
7.Release, substitution or sale of property securing repayment
of the Bonds.
Whenever the District obtains knowledge of the occurrence of a Listed
Event under (b) above, the District shall as soon as possible
determine if such event would be material under applicable federal
securities laws.
13:0 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.
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14.0: INTERNAL CONTROL
The District has implemented the following procedure to ensure that
the proceeds of the proposed debt issuance will be directed to the
intended use:
1.A separate Reserve Account shall be maintained for the
proceeds of each bond to ensure that there is no comingling
of funds.
2.All related expenditures charged against the bond proceeds
shall be properly approved by the authorized authority.
3.All related transactions shall be fully documented so that
an undisputable audit trail exists.
4.All related transactions shall be tracked in the District’s
Accounting System. A financial report reflecting all charges
related to the bond shall be prepared and maintained.
5.The District shall establish a retention policy which states
that all supporting documents related to bond proceeds
spending shall be kept indefinitely.
6.The Reserve Account shall be reconciled on a monthly basis.
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
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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 and again in 2009. The District also has approximately $29
million in general obligation bonds authorized between 1960 and 1978
for various improvement districts throughout the District, but
unissued. 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.
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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. Since 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 without
impacting the current rating. 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.
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
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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.
In some cases, the District may not be asked to be the sponsoring
agency for the formation of a financing district, rather, the
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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 one or more ratings on all new issues that are
being sold in the public market. These rating agencies include, but
are not limited to, Fitch Investors Service, Moody’s Investors
Service, and Standard & 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
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financial information to the rating agencies 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 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, if applicable.
Fixed Rate Bonds
Credit enhancement for fixed rate bonds is obtained by the purchase of
bond insurance. 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 interest rates applicable to the credit
rating of the bond insurer. 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, such as, funding of a reserve fund for the
bonds.
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 short-term investment rate (usually 7 days).
Any investor can tender their bonds back to the District to be
repurchased on short notice (usually 7 days). Because of the short-
term nature of the investment, the securities that the District is
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“competing” with for investors are AA-rated mutual funds. Therefore,
variable debt needs to have credit enhancement to achieve a comparable
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.
18.0: 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.
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DEBT POLICY
Policy
Number
Date
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Date
Revised
45 4/13/04 2/1/17
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.
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
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DEBT POLICY
Policy
Number
Date
Adopted
Date
Revised
45 4/13/04 2/1/17
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.
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
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DEBT POLICY
Policy
Number
Date
Adopted
Date
Revised
45 4/13/04 2/1/17
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.
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Policy
Number
Date
Adopted
Date
Revised
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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.
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.
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Glossary
The Fiscal Budget contains terminology that is unique to public finance and budgeting. The following
budget glossary provides assistance in understanding these terms.
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.
ACCRUAL: A charge for work that has been done but not yet invoiced, for which provision is made at
the end of a financial period.
ANNEXATION FEES: When water service is requested for land outside the boundaries of the District,
the land to be serviced must first be annexed. For sewer service the land must be annexed into an
improvement district within the District.
APPROPRIATIONS: The annual budget adopted by the District’s Board appropriates funds for
monitoring and control purposes, and serves 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. This fee is levied 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 in which it was assessed.
BALANCED BUDGET: A financial plan, for a specified period of time that matches all planned
revenues and expenditures with various services. This plan has sufficient sources of funds to support
the planned expenditures. The District uses a fiscal year beginning July 1 and ending June 30 for
budgetary and financial reporting purposes.
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 meter is placed into service. This fee is a
contribution of capital to either reimburse existing customers for the available capacity in the existing
system, or to help finance planned future growth-related capacity improvements.
CAPACITY FEE REVENUES: These fees are earned by the Operating Budget as the Engineering
Department supports expansion functions.
261
Glossary
CAPACITY RESERVATION CHARGE: An MWD charge passed on by CWA to individual agencies. This
charge is 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, computer systems,
and special tools. The capital budget also includes funds for infrastructure related items over $20,000
(as explained below) 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.
CAPITAL EXPENDITURE: Capital expenditure or capital expense is an expense where the benefit
continues over a long period, rather than being exhausted in a short period. Such expenditure is of a
non-recurring nature and results in acquisition of permanent assets.
CAPITAL IMPROVEMENT PROGRAM: A long-range plan of the District for the construction,
rehabilitation and modernization of the District-owned and operated infrastructure.
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.
COVID-19: Illness caused by a novel coronavirus which was first identified amid an outbreak of
respiratory illness cases in Wuhan City, Hubei Province, China.
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.
DEBT COVERAGE RATIO: The ratio of net revenue to annual interest and principal payments on debt.
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.
262
Glossary
ENERGY CHARGE: 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. 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.
ENTERPRISE RESOURCE PLANNING: Systems with a shared database that supports multiple
functions used by different business units.
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.
FINANCIAL AUDIT: Official financial examination of the District’s accounts.
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.
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 net 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.
GALLONS PER CAPITA PER DAY: The total number of gallons used by the city divided by the
population, divided by the number of days.
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.
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.
263
Glossary
LATE CHARGES/PENALTIES: Charges and penalties are imposed on customer accounts for late
payments, returned payments, and other infringement of 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 Charge. This charge pays for the debt service for
construction projects necessary to meet reliability and quality needs. The RTS Charge was adopted in
1996.
MWD AND CWA FIXED SYSTEM CHARGES: These pass-through charges are calculated to recover
the MWD’s and CWA’s fixed annual costs including the construction, operation and maintenance of
aqueducts, and emergency storage projects. These fixed charges are based on the size of the meter.
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% PROPERTY TAX: In 1978, Proposition 13 limited general levy property tax rates for all taxing
authorities to a total rate of 1% of full cash value. Subsequent legislation, AB 8, established that the
receipts from the 1% levy were to be distributed to taxing agencies according to approximately the
same proportions received prior to Proposition 13. Funds received are to be used for facilities
construction or debt service on bonds sold to build facilities.
OPERATING BUDGET: The portion of the budget that pertains to daily operations that provide basic
governmental services. The operating budget contains appropriations for such expenditures as
personnel, supplies, utilities, materials, travel and fuel, and does not include purchases of major capital
plant or equipment which are budgeted for separately in the Capital Budget.
READINESS-TO-SERVE CHARGE: Adopted by MWD in Fiscal Year 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.
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 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.
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.
264
Glossary
SYSTEM CHARGE: Each water service customer pays a monthly system charge for water system
replacement, maintenance and operation expenses. The charge is based on the size of the meter and
class of service.
TAXES: California Water Code Section 72091 authorizes the District, as a municipal water district, to
levy ad valorem property taxes which are equal to the amount required to make annual payments for
principal and interest on general obligation bonds approved by the voters prior to July 1, 1978.
UNIT: A unit of water is 100 cubic feet or 748 gallons of water.
WATER RATES: Rates vary among classes of service. The water rates for residential customers use
an accelerated block structure. As more units are consumed, a higher unit rate is charged. Effective in
2009, all non-residential customers are charged for water based on a tiered rate structure in which
water rates are based on meter size and amount of units consumed.
WORKING CAPITAL: A financial measure which represents available operating liquidity. The
calculation is current assets minus current liabilities.
265
AB Assembly Bill
AF Acre-Foot/Feet
AMR Automated Meter Reader/Reading
AWWA American Water Works Association
BABS Build America Bonds
CALPERS California Public Employees' Retirement System
CCV City of Chula Vista
CEQA California Environmental Quality Act
CIP Capital Improvement Program
COPS Certificates of Participation
CSD City of San Diego
CSDA California Special Districts Association
CSMFO California Society of Municipal Finance Officers
CWA County Water Authority (San Diego)
EDU Equivalent Dwelling Unit
ERP Enterprise Resource Planning
FTE Full-time Equivalent
FY Fiscal Year
GAAP Generally Accepted Accounting Principles
GASB Government Acounting Standards Board
GF General Funds
GFOA Government Finance Officers Association
GIS Geographic Information System
GO General Obligation (bonds)
GPCD Gallons Per Capita Per Day
GPM Gallons Per Minute
HCF Hundred Cubic Foot
HR Human Resources
ID Improvement District
IID Imperial Irrigation District
IT Information Technology
LAIF Local Agency Investment Fund
MG Million Gallons
MGD Million Gallons per Day
MOU Memorandum of Understanding
MWD Metropolitan Water District
NIMS National Incident Management System
O&M or O/M Operations and Maintenance
OPEB Other Post Employee Benefits
OWD Otay Water District
PL Pipeline
PRS Pressure Reducing Station
List of Acronyms
266
List of Acronyms
PS Pump Station
RWCWRF Ralph W. Chapman Water Recycling Facility
SANDAG San Diego Association of Governments
SB Senate Bill
SBWRP South Bay Water Reclamation Plant
SCADA Supervisory Control and Data Acquisition
SWRCB State Water Resources Control Board
267
Index
Administrative Expenditures 75,90,99,119
Awards xvi-xix
Budget Basis 8
Budget Calendar 9-11
Budget Control and Jurisdiction 7
Budget Guide 1-2
Budget Process 6-8
Budget Summary 41
Capital Budget Narrative 163-165
Capital Purchases FY 2021 173
CIP Justification and Impact on Operating Budget 172
CIP Reserve Funds 166
Classification of Water Sales 66,82
Contract/Temporary Employees 118
Current Economic Conditions 17-19
Debt Management 58-59
Debt Policy 236-255
Debt Policy Glossary 255-259
Demographics 13
Department Budgets:
Administrative Services 133-139
Board of Directors 123-124
Engineering 155-159
Finance 141-145
General Expense 161
General Manager 127-132
Water Operations 147-153
Departmental Operating Budget Narrative 109-110
Director’s Division Boundaries 125
District Formation 4
Economic Outlook 19
Five-Year Forecast 55
Formula for Sewer Rates 101-102
Fund Balance Summary by Fund 50
Fund Balances Forecast 57
Fund Structure 8
Future, The 19-23
General Fund Forecast 56
General Fund Revenues, Expenditures and Transfers 41-47, 49
General Expense 108,161
268
Index
General Revenues 107
General Revenues and Expenditures Narrative 105-106
Glossary 261-265
Investment Policy 219-227
Investment Policy Glossary 228-235
Labor and Benefits 112
Labor and Benefits by Fund 113
Letter of Transmittal v-xv
List of Acronyms 266-267
Materials and Maintenance Expenditures 76,91,100,120
Meter Fees 71,86
Mission Statement, Statement of Values 3
MWD and CWA Fixed Fees (pass-through) 70
Operating Budget Summary 65,81,94
Operating Budget Summary by System 48
Operating Budget Summary – General Fund 46-48
Operating Expenditures by Department 121
Operating Expenditures by Object 122
Organizational Structure 5
Position Count by Department 114-118
Potable Narrative 63-64
Power Costs 74,89,98
Projected Interest Payments by Debt Issuance 62
Projected Principal Payments by Debt Issuance 61
Recycled Narrative 79-80
Reserve Policy 177-215
Reserve Policy Glossary 216-218
Resolution 4384 xx-xxi
Revenue History 72,87,97
Revenues and Expenditures by Fund 52-53
Revenues and Expenditures by Type 51
San Diego Rainfall 17
Schedule of Outstanding Debt 60
Service Area 4
Service Area Assessed Valuation Fees 13
Service Area Maps 77,92,103
Sewer Charges Summary by Service Class 95
Sewer Narrative 93
Sewer Rate Comparison 16
Six-Year CIP Projects Summary by Fund ($1,000s) 167
269
Index
Six-Year CIP Projects Summary by Source ($1,000s) 167
Six-Year CIP Projects by Source and Fund ($1,000s) 168-171
Statement of Values 3
Strategic Plan 25-40
Summary of Financial Policies 175-176
System Charges 69,84,96
Table of Contents i-iv
Ten Largest Customers 14
Ten Principal Taxpayers 14
Unit Sales History and Meter Count by Customer Class 68,85
Water Purchases - Recycled 88
Water Purchases and Related Costs - Potable 73
Water Rate Comparison- Member Agency Water Rates 15
Water Sales Summary by Meter Size 83
Water Sales Summary by Service Class 67
270