HomeMy WebLinkAboutFY 2012 Comprehensive Annual Financial ReportTable of Contents
Introductory Section
Letter of Transmittal……………………………………………………………………. 1
Organization Chart……………………………………………………………………… 8 List of Principal Officials……………………………………………………………….. 9
GFOA Certificate of Achievement……………………………………………………….. 10
Financial Section
Independent Auditors’ Report………………………………………………………….. 11 Management’s Discussion & Analysis…………………………………………………... 13
Basic Financial Statements: Statements of Net Assets………………………………………………………………. 21
Statements of Revenues, Expenses, and Changes in Net Assets………………………. 23 Statements of Cash Flows………………………………………………………………. 24
Notes to Financial Statements…………………………………………………………... 26
Required Supplementary Information:
Schedule of Funding Progress for PERS………………………………………………... 53
Schedule of Funding Progress for DPHP……………………………………………...... 53 Statistical Section
Net Assets by Component……………………………………………………………… 56 Changes in Net Assets…………………………………………………………………... 57
Operating Revenues by Source…………………………………………………………. 58 Operating Expenses by Function……………………………………………………….. 59 Non-Operating Revenues by Source…………………………………………………… 60
Non-Operating Expenses by Function………………………………………………… 61 Assessed Valuation of Taxable Property within the District………………………… 62
Water Purchases, Production, and Sales……………………………………………...… 63
Meter Sales by Type……………………………………………………………………. 64 Number of Customers by Service Type………………………………………………… 65 Property Tax Levies and Collections…………………………………………………… 66
Water and Sewer Fixed Rates ……….…………………………………………………. 67 Water and Sewer Variable Rates…….…………………………………………………. 68
Ten Largest Customers…………………………………………………………………. 69
Ratios of Outstanding Debt by Type……………………………………………………. 70 Pledged Revenue Coverage…………………………………………………………….. 71
Ratios of General Bonded Debt Outstanding…………………………………………… 72
Computation of Direct and Overlapping Bonded Debt……………………………..… 73 Principal Employers…………………………..………………………………………... 74
Demographic and Economic Statistics………………………………………………….. 75
Number of Employees by Function…………………………………………………….. 76 Active Meters by Size………………………………………………………………..… 77
Operating and Capital Indicators……………………………………………………….. 78
October 15, 2012
Honorable Board of Directors Otay Water District
I am pleased to present the Otay Water District’s (the “District”) Comprehensive Annual
Financial Report (CAFR) for the fiscal year ended June 30, 2012.
This report was prepared by the District’s Finance Department following guidelines set forth by the Government Accounting Standards Board (GASB) and generally accepted accounting
principles (GAAP). Responsibility for the accuracy of the data presented and the completeness
and fairness of the presentation, including all disclosures, rests with the District’s management.
We believe the data, as presented, is accurate in all material respects and that it is presented in a manner that provides a fair representation of the financial position and results of the District’s operations. Included are all disclosures we believe necessary to enhance your understanding of
the financial condition of the District. GAAP requires that management provide a narrative
introduction, overview, and analysis, to accompany the basic financial statements in the form of
Management’s Discussion and Analysis (MD&A), which should be read in conjunction with this report. The District’s MD&A can be found immediately following the Independent Auditors’ Report.
The District’s financial statements have been audited by White Nelson Diehl Evans LLP, a firm
of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2012, are free of material misstatement. The independent audit involved examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by management; and evaluating the
overall financial statement presentation. The independent auditor concluded, based upon the
audit, that there was reasonable basis for rendering an unqualified opinion that the District’s financial statements for the fiscal year ended June 30, 2012, are fairly presented in conformity
with GAAP. The Independent Auditors’ Report is presented as the first component of the
financial section of this report.
REPORTING ENTITY
The District is a publicly-owned water and sewer agency, authorized on January 27, 1956 as a
California special district by the State Legislature, with an entitlement to import water under the
provisions of the Municipal Water District Act of 1911. Its ordinances, policies, taxes, and rates
for service are set by five Directors, elected by voters in their respective divisions, to serve staggered four-year terms on its Governing Board. The District is a “revenue neutral” public
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agency, meaning that each end-user pays only their fair share of the District’s costs of water
acquisitions, construction, operation, maintenance, betterment, renewal, and replacement of the
public water and sewer facilities.
The General Manager reports directly to the Board of Directors and, through the Assistant General Manager and the District management, oversee day-to-day operations. The Assistant
General Manager oversees the five departments of Administrative Services, Finance, Information
Technology and Strategic Planning, Water Operations, and Engineering. These and other lines
of reporting are shown on the organization chart on page 8. Over the last 56 years, the District has grown from a handful of customers and two employees to
become an organization operating a network of more than 911 miles of pipelines, 44 operational
reservoirs, a reclaimed water facility, and one of the largest recycled water distribution networks
in the State of California. The character of the service area has also changed from predominantly dry-land farming and cattle ranching, to businesses, high-tech industries, and large master-planned communities.
Today the District
provides water service to nearly 48,860 potable and 702 recycled customers
within approximately
125.5 square miles of the
southeastern San Diego metropolitan area. All of the potable water sold to
customers is purchased
through the San Diego
County Water Authority (CWA). Much of this water is purchased from
the region’s water importer, the Metropolitan Water District of Southern California (MWD), or
Imperial Irrigation District. The District also has entered into an agreement with the CWA to
have the neighboring Helix Water District treat imported water, on behalf of the Otay Water
District, at their Levy Water Treatment Plant. This action has brought regional water treatment closer to our customers and helped reduce dependence on water treatment facilities located
outside of San Diego County.
To deliver this locally treated water to customers, the District constructed a 5.1 mile, 36-inch
diameter pipeline. Drinking water delivered by this new pipeline is stored in two 10 million gallon reservoirs. In addition to bringing water treatment closer to customers, this new source of
water diversifies the District’s supply and improves reliability.
The District also owns and operates a wastewater collection and recycling system providing
public sewer service to approximately 4,652 customer accounts within portions of the communities of La Mesa, Rancho San Diego, El Cajon, Jamul, and Spring Valley.
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Balanced Scorecard
Wastewater collected is conveyed to the District’s
Ralph W. Chapman Water Recycling Facility
(RWCWRF), which is capable of reclaiming
wastewater at a rate of 1.3 million gallons per day. The District also has the capability to purchase up to 6 million gallons per day of recycled water from
the City of San Diego’s South Bay Reclamation
Plant. Recycled water from these two sources is
used to irrigate golf courses, schools, public parks, roadway landscapes, and various other approved uses in eastern Chula Vista. The use of recycled
water reduces dependency on imported supplies
and provides a local supply, thereby diversifying
District resources. MISSION, CURRENT ECONOMIC CONDITIONS, AND OUTLOOK
The mission of the District is to provide high value water and wastewater services to the
customers of the Otay Water District, in a professional, effective, and efficient manner. As with the past few years, we continue to face numerous challenges with the large economic
slowdown and ongoing home foreclosures, however, this slowdown appears to have leveled off
as the District’s Public Services Division approved on average 40 permits per month, and sold
316 water meters in Fiscal 2011-2012. The coming years will continue to pose challenges for those in California’s water community. It is uncertain if the challenges facing the Sacramento-San Joaquin Bay Delta, the source of 30% of Southern California’s water supply, will be
addressed. In addition, weather and rainfall always bring a level of uncertainty to the delivery of
water to customers in the arid southwestern states. The combination of these factors add to the
cost of providing a stable supply of water as water providers look to new and more costly sources of water.
Growth in San Diego County has slowed over the last four years, but is gradually improving and
population within the District’s service area continues to increase, albeit at a reduced rate. As of
July 2012, it is estimated that the District served 208,000 residents. The San Diego Association
of Governments (SANDAG), the regional planning agency, has estimated the District’s approximate growth will be 1.7% per year for the next decade. The District projects an ultimate
customer population of 285,000 residents.
BUDGETING CONTROLS
The District views the budget as an essential tool for proper financial management. The budget
is developed with input from the various departments of the organization and is adopted prior to
the start of each fiscal year. It is designed and presented for the general needs of the District, its
staff, and customers. It is a comprehensive and balanced financial plan that features District
services, resources and their allocation, financial policies, and other useful information to allow the users to gain a general understanding of the District’s financial status and future. Monthly
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comparison reports of budget to actual are prepared and distributed along with variance
explanations to all department heads, with top level information provided to the Board at the
monthly board meetings.
BUDGET SUMMARY
The District’s Fiscal Year 2013 budget is $100.3 million, with operating expenditures of $82.3
million and capital expenditures of $18.0 million. The District’s goal is to provide the most
effective and efficient service possible while maintaining affordability of the water supply for the community.
The Otay Water District’s operating expenditures consist of three major sectors: potable water,
recycled water, and sewer, totaling $82,318,200 for Fiscal Year 2013. Revenues from potable
and recycled water are projected to be $69,456,800, about $4,152,500 (6.4%) more than the Fiscal Year 2012 budget. Water revenues are expected to increase as a result of water supply rate increases of 7.5% from MWD and 9.1% from CWA. The wholesale prices are increasing
because of the high cost of supply programs, energy, and operating costs. Sewer revenues are
projected to be $2,555,200, about $219,200 more than the Fiscal Year 2012 budget, because of
necessary rate increases. The remaining revenue of $10.3 million comes from special fees and assessments and miscellaneous income.
The 2011-12 Capital Improvement Program
(CIP) budget consists of 70 projects and a
budget of $18.0 million. The budget emphasizes long-term planning for on-going programs while functioning within fiscal
constraints and population growth. This
year’s CIP budget decreased by $4.6 million
compared to last year’s projection, which is due to the reduction in projects as a result of the slowdown in growth and deferment of
several additional projects until growth
resumes.
STRATEGIC PLAN
The Strategic Plan is the core document which guides the District’s efforts to meet and positively
adapt to change. Every three years the District engages in a major revision of its Strategic Plan.
The current plan (covering fiscal years 2012 – 2014) is the fourth in a series of three-year plans
than began in 2003.
The Strategic Plan is focused on the District’s transformation from a growth-centric to a
maintenance-based organization. Where growth has been a significant focus in prior years,
today we have become equally focused in managing long-term maintenance and replacement of
our infrastructure. Performance metrics and targets are a critical element of the Strategic Plan but differ from Strategic Plan objectives. Objectives identify the action items that are necessary
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to achieve the strategic vision. Performance measures are designed to ensure the day-to-day
operations of the utility are meeting agreed-upon expectations. Performance measures are
revised from the prior year and updated quarterly, and reviewed by the Board on a semi-annual
basis. Our key District challenge is to add increased value by improving our core business processes.
From a water supply perspective, this means determining the optimum mix of water supply,
treatment, and delivery solutions for our customers. From a daily operating perspective,
efficiency improvements have become the primary source of competitive advantage and cost optimization for utilities. Adding value from this perspective means the entire team focusing on not only the highest priority goals but also examining the details of what we do every day and be
willing to alter how we do it if it makes a positive difference. Our employees voice a high
degree of personal and professional satisfaction with our direction and the entire team is
committed to meeting this key challenge with distinction.
The Future
The coming years will continue to pose challenges for those in California’s water community. It is uncertain how the challenges facing the Sacramento-San Joaquin Bay Delta, the source of 30%
of Southern California’s water supply, will be addressed. In addition, weather and rainfall
always bring a level of uncertainty to the delivery of water to customers in the arid southwestern
states. The combination of these factors add to the cost of providing a stable supply of water as
water providers look to new and more costly sources of water. However, through foresight, investments in drought-proof recycled water, conservation, and a water rate structure that
rewards conservation, the Otay Water District has thus far avoided having to require mandatory
water conservation. The District has instead achieved its water conservation goals using
voluntary measures.
As one would expect, the anticipated reduction in water availability has impacted projected
revenues and will continue to affect the District’s finances. With that in mind, our success as an
organization is vastly enhanced by the practices and policies put in place by the Board of
Directors to ensure the strength and stability of the District, even as we move forward into
uncertain times. We are fully confident that with these policies and practices, supported by dedicated and talented staff, the District will achieve continued success as an organization and thus assure the well-being of the people we serve.
ACCOUNTING SYSTEM
The Finance Department is responsible for providing financial services to the District, including
financial accounting, reporting, payroll, accounts payable, investment of funds, billing and
collection of water and wastewater charges, taxes, and other revenues. The District’s books and
records are maintained on an enterprise basis, matching revenues against the costs of providing
services. Revenues and expenses are recorded on the accrual basis in the period in which revenues are earned and expenses are incurred.
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INTERNAL CONTROLS
Otay Water District operates within a system of internal controls established and continually
reviewed by management. This provides reasonable, but not absolute, assurance that assets are adequately safeguarded and transactions are recorded correctly according to District policies and procedures. When establishing or reviewing controls, management must also consider the cost
of the control and the value of the benefit derived from its utilization. Management maintains
and implements all sensitive controls, and those controls whose value adequately exceeds their
cost. Management believes the District’s internal controls, procedures, and policies adequately
safeguard assets and provide reasonable assurance of proper recording of financial transactions.
In addition, the District maintains controls to provide for compliance with all finance related
legal and contractual provisions. Management believes the activities reported within the presented Comprehensive Annual Financial Report comply with these finance related legal and contractual provisions, including bond covenants and fiduciary responsibilities.
AWARDS AND ACKNOWLEDGMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Otay Water
District for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2011.
This was the eighth consecutive year that the District has achieved this prestigious award. In
order to be awarded a Certificate of Achievement, a government agency must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.
In addition to the Certificate of Achievement for Excellence in Financial Reporting, Otay Water
District has received the following awards:
The Government Finance Officers Association of the United States and Canada (GFOA)
presented a Distinguished Budget Presentation Award to Otay Water District, California
for its annual budget for the fiscal year beginning July 1, 2011. 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.
The California Society of Municipal Finance Officers (CSMFO) presented Otay Water
District the Certificate of Award for Excellence in Operating Budgeting for Fiscal Year
2011-2012.
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The California Society of Municipal Finance Officers (CSMFO) presented Otay Water
District the Certificate of Award for Excellence in Capital Budgeting for Fiscal Year
2011-2012.
The Municipal Information Systems Association of California (MISAC) presented the
2010-2011 Award for Excellence Information Technology Practices to Otay Water
District. The award recognizes outstanding practices in Information Technology that
have met or surpassed local government standards.
I would like to thank all of the staff involved for their efforts in preparing this Comprehensive Annual Financial Report and for their hard work to ensure a successful outcome. I would also
like to thank the firm of White Nelson Diehl Evans LLP, for their professional work and opinion.
To the Board of Directors, staff and I acknowledge and appreciate their continued support and direction in achieving excellence in financial management.
___________________________ Mark Watton, General Manager
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Organization Chart
GENERAL MANAGER
Assistant General Manager
Administrative
Services Finance Water
Operations Engineering
Human
Resources
Purchasing and
Facilities
Safety and Risk
Administration
Water
Conservation
Controller
and Budgetary
Services
Treasury and
Accounting
Services
Customer
Service
Payroll and
Accounts
Payable
IT Applications
IT Operations
GIS
Water System
Operations
Utility
Maintenance/
Construction
Collection/
Treatment/
Recycle Operations
Planning
Design
Water
Resources
Public
Services
Construction
Survey
Environmental
Citizens and
Customers
Information Technology
and Strategic Planning
BOARD OF DIRECTORS
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List of Principal Officials
Board of Directors - Fiscal Year 2011-2012
District Financial Management
Mark Watton - General Manager
German Alvarez - Assistant General Manager
Joseph R. Beachem - Chief Financial Officer
Mitchell Thompson
Gary Croucher Treasurer
David Gonzalez, Jr. Vice President
Division 3
Division 2
Division 1
Division 4
Division 5
Jose Lopez President
Mark Robak
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GFOA Certificate of Achievement
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2965 Roosevelt Street, Carlsbad, CA 92008-2389 • Tel: 760.729.2343 • Fax: 760.729.2234
Offices located in Orange and San Diego Counties
INDEPENDENT AUDITORS' REPORT
Board of Directors
Otay Water District
Spring Valley, California
We have audited the accompanying basic financial statements of Otay Water District as of and for the years
ended June 30, 2012 and 2011, as listed in the table of contents. These basic financial statements are the
responsibility of the Otay Water District’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States and the State Controller’s Minimum Audit Requirements for
California Special Districts. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
District’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinions.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the
respective financial position of the Otay Water District as of June 30, 2012 and 2011, and the respective changes
in financial position and cash flows for the years then ended in conformity with accounting principles generally
accepted in the United States of America as well as the accounting systems prescribed by the California State
Controller’s Office and California regulations governing Special Districts..
In accordance with Government Auditing Standards, we have also issued our report dated October 15, 2012 on
our consideration of the District’s internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report
is to describe the scope of our testing of internal control over financial reporting and compliance and the results
of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance.
That report is an integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audits.
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Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis, PERS Defined Benefit Pension Plan – schedule of funding progress, and Other Post-
Employment Benefit Plan – schedule of funding progress, as identified in the accompanying table of contents be
presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic financial statements, and
other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the District’s basic financial statements. The Introductory Section and the Statistical Section, as
identified in the accompanying table of contents, are presented for purposes of additional analysis and are not a
required part of the financial statements. The Introductory Section and the Statistical Section have not been
subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we
do not express an opinion or provide any assurance on them.
October 15, 2012
Carlsbad, California
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Management’s Discussion and Analysis
As management of the Otay Water District (the “District”), we offer readers of the District’s financial statements this narrative overview and analysis of the District’s financial performance during the fiscal year ending June 30, 2012. Please
read it in conjunction with the District’s financial statements that follow Management’s Discussion and Analysis. All amounts, unless otherwise indicated, are expressed in millions of dollars.
Financial Highlights
The assets of the District exceeded its liabilities at the close of the most recent fiscal year by $456.4 million
(net assets). Of this amount, $70.0 million (unrestricted net assets) may be used to meet the District’s ongoing obligations to citizens and creditors.
Total assets decreased by $6.3 million or 1.05% during Fiscal Year 2012, to $592.3 million, due primarily to the write-off of CIP projects that were no longer viable as a part of the District’s long range plans for growth and
improvements to infrastructure. Other significant factors were the annual payment of long-term debt and a reduction in grant funds received.
Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements, which are
comprised of the following: 1) Statement of Net Assets, 2) Statement of Revenues, Expenses and Changes in Net Assets, 3) Statement of Cash Flows, and 4) Notes to the Financial Statements. This report also contains other supplementary
information in addition to the basic financial statements.
The Statement of Net Assets presents information on all of the District’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether
the financial position of the District is improving or weakening.
The Statement of Revenues, Expenses and Changes in Net Assets presents information showing how the District’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event
giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and
earned but unused vacation leave).
The Statement of Cash Flows presents information on cash receipts and payments for the fiscal year.
The Notes to the Financial Statements provide additional information that is essential to a full understanding of the data supplied in each of the specific financial statements listed above.
In addition to the basic financial statements and accompanying notes, this report also presents certain required
supplementary information concerning the District’s progress in funding its obligation to provide pension benefits to its employees.
Financial Analysis
As noted, net assets may serve over time as a useful indicator of an entity’s financial position. In the case of the District,
assets exceeded liabilities by $456.4 million at the close of the most recent fiscal year.
By far the largest portion of the District’s net assets, $381.7 million (84%), reflects its investment in capital assets, less any remaining outstanding debt used to acquire those assets. The District uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the District’s investment in its capital assets is reported effectively as a resource, however, it should be noted that the resources needed to repay the debt must be
provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
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Management’s Discussion and Analysis
Statements of Net Assets
(In Millions of Dollars)
2012 2011 2010
Assets
Current and Other Assets $ 111.5 $ 124.1 $ 135.3
Capital Assets 480.8 474.4 469.2
Total Assets 592.3 598.5 604.5
Liabilities Long-Term Debt Outstanding 111.2 114.5 117.7
Other Liabilities 24.7 24.4 25.5
Total Liabilities 135.9 138.9 143.2
Net Assets
Invested in Capital Assets
Net of Related Debt 381.7 377.7 375.9
Restricted for Debt Service 4.7 4.9 5.2
Unrestricted 70.0 77.0 80.2
Total Net Assets $ 456.4 $ 459.6 $ 461.3
While the District’s operations and population continue to grow, albeit at slower rates than in prior years, the pattern of reduced growth of the District’s Net Assets is indicative of the reduction in new development projects within the District.
This reduction is a result of the ongoing national housing slump and financial crisis.
In FY-2012 the District continued its use of the $51.2 million of proceeds from the issuance of its 2010 Water Revenue Bonds program (See Note 5 in the Notes to Financial Statements) for its CIP program (See Note 3 in the Notes to Financial
Statements), as seen by the decrease in Current and Other Assets of $12.6 million, which was partially offset by a corresponding increase in Capital Assets of $6.4 million. The District also saw a decrease in Long-Term Debt of $3.3
million due to the annual payments of long-term debt.
In response to the prolonged business slowdown, during FY-2011 the District performed a review of Fixed Assets throughout the system and wrote off $2.9 million of fully depreciated Property, Plant & Equipment that was no longer serviceable or
functioning efficiently. Additionally, the Engineering Department completed an analysis of several Construction-in-Progress projects that were still in the developmental stages and determined they were no longer viable as a part of the District’s long
range plan for growth and improvements to infrastructure. This resulted in FY-2011 expenses of $1.2 million and FY-2010 expenses of $1.3 million.
For the entire financial reporting period, Fiscal Years 2012 and 2011, Total Net Assets decreased approximately $3.2 million
for FY-2012, to $456.4 million, as compared to FY-2011 when Net Assets decreased by $1.7 million. At the end of FY-2012 the District is able to report positive balances in all categories of net assets. This situation also held true for the prior two
fiscal years.
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Management’s Discussion and Analysis
Statements of Revenues, Expenses, and Changes in Net Assets
(In Millions of Dollars)
2012 2011 2010
Water Sales $ 63.8 $ 58.3 $ 56.3 Wastewater Revenue 2.4 2.4 2.3 Connection and Other Fees 2.2 2.5 2.1 Non-operating Revenues 9.1 8.8 8.9
Total Revenues 77.5 72.0 69.6
Depreciation Expense 15.2 13.9 13.3
Other Operating Expense 66.5 63.4 59.8
Non-operating Expense 5.8 4.3 3.0
Total Expenses 87.5 81.6 76.1
Loss Before Capital
Contributions (10.0) (9.6) (6.5)
Capital Contributions 6.8 7.9 8.8
Change in Net Assets Prior Period Adjustment (3.2) (1.7) 2.3 (1.3)
Beginning Net Assets 459.6 461.3 460.3
Ending Net Assets $ 456.4 $ 459.6 $ 461.3
Water Sales increased by $2.0 million in FY-2011 and $5.5 million in FY-2012, mainly due to rate increases in both years.
The slowdown in growth throughout the District was also reflected in the modest increase in Connection and Other Fees of $0.4 million in FY-2011, followed by a slight decrease of $0.3 million in FY-2012.
Other Operating Expense increased predominantly due to the increase in Cost of Water Sales, from a combination of the
increased price-per-acre-foot of water obtained from Los Angeles Metropolitan Water District of 7.50%, and 9.97% from San Diego County Water Authority, brought on by the high cost of supply programs as well as higher energy and operating costs.
The slowdown in the economy appears to have leveled off. However, due to the nationwide housing mortgage crisis
throughout the last several years, developers have either slowed-down or totally stopped work on many projects until economic conditions improve and the demand for growth returns. This has resulted in Capital Contributions remaining low
over the last 3-years, compared to the extended growth of the previous 10-years. While this slowdown now appears to have stabilized, the District was aided in its Capital Contributions through the receipt of additional federal grant monies of $1.6
million in FY-2011, and $935,000 in FY-2012.
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Management’s Discussion and Analysis
Non-operating Revenues
Non-operating Revenues by Major Source (In Millions of Dollars) 2012 2011 2010
Taxes and assessments $ 3.5 $ 3.9 $ 4.0 Rents and leases 1.2 1.2 1.1 Other Non-operating Revenue 4.4 3.7 3.8
Total Non-operating Revenues 9.1 8.8 8.9
The District’s non-operating revenues decreased by $0.1 million in FY-2011 and grew $0.3 million in FY-2012. The increase in FY-2012 was primarily a result of increased miscellaneous income offset by decreases in investment income as
well as taxes and assessments. Capital Assets and Debt Administration
The District’s capital assets (net of accumulated depreciation) as of June 30, 2012, totaled $480.8 million. Included in this
amount is land. The total increase in the District’s capital assets was 1.1% for FY-2011 and 1.4% in FY-2012.
Capital Assets (In Millions of Dollars)
2012 2011 2010
Land $ 13.7 $ 13.6 $ 13.6
Construction in Progress 17.5 17.9 35.2
Water System 452.1 441.9 409.5
Recycled Water System 108.0 98.3 97.7
Sewer System 37.8 37.7 37.4
Field Equipment 8.6 9.8 9.5
Buildings 18.6 18.5 18.5
Transportation Equipment 3.2 3.2 3.3
Communication Equipment 2.5 2.4 1.3
Office Equipment 17.2 17.3 18.4
679.2 660.6 644.4
Less Accumulated
Depreciation (198.4) (186.2) (175.2)
Net Capital Assets $ 480.8 $ 474.4 $ 469.2
As indicated by figures in the table above, the majority of capital assets added during both fiscal years were related to the
potable and recycled water systems. In addition, the majority of the cost of construction-in-progress is also related to these water systems. Additional information on the District’s capital assets can be found in Note 3 of the Notes to Financial
Statements.
16
Management’s Discussion and Analysis
At June 30, 2012, the District had $111.2 million in outstanding debt (net of $3.3 million of maturities occurring in FY-
2013), which consisted of the following: General Obligation Bonds $ 5.8
Certificates of Participation 55.9 Revenue Bonds 49.5
Total Long-Term Debt $ 111.2
Additional information on the District’s long-term debt can be found in Note 5 of the Notes to Financial Statements. Fiscal Year 2012-2013 Budget
Economic Factors
Growth in the San Diego area has declined over the last 4 years, but is slowly improving. This modest shift is also being reflected in the demand for housing. Although San Diego received less than normal rainfall in Fiscal Year 2012, the District is expecting that San Diego’s rainfall will return to its average pattern and volume in the coming years. Water sales volumes are expected to increase slightly as the economy is slowly improving, but will be partially offset by
expanded efforts to promote water conservation. The coming years will continue to pose challenges for those in California’s water community. It is uncertain if the challenges facing the Sacramento-San Joaquin Bay Delta, the source of
30% of Southern California’s water supply, will be addressed. In addition, weather and rainfall always bring a level of uncertainty to the delivery of water to customers in the arid southwestern states. The combination of these factors add to the cost of providing a stable supply of water as water providers look to new and more costly sources of water.
The District currently provides water service to about 73% of its projected ultimate population, serving approximately 208,000 people. Long-term, this percentage should continue to increase as the District's service area continues to develop
and grow. Ultimately, the District is projected to serve approximately 285,000 people, with an average daily demand of 46 million gallons per day (MGD). Currently, the District services the needs of this growing population by purchasing water
from CWA, who in turn purchases its water from MWD and the Imperial Irrigation District (IID). Otay takes delivery of the water through several connections of large diameter pipelines owned and operated by CWA. The District currently
receives treated water from CWA and the Helix Water District (HWD), by contract with CWA. In addition, the District has an emergency agreement with the City of San Diego to purchase water in the case of a shutdown of the main treated
water source. The City of San Diego also has a long-term contract with the District to provide recycled water for landscape and irrigation usage. Through innovative agreements like this, benefits can be achieved by both parties by using excess
capacity of another agency, and diversifying local supply, thereby increasing reliability. Financial The District is projected to deliver approximately 28,925 acre-feet of potable water to 48,860 potable customer accounts
during Fiscal Year 2012-2013. Management feels that these projections are realistic after accounting for low growth, supply changes, and a focus on conservation. Current economic conditions throughout America have created an
unprecedented uncertainty for business and economic projections in the current fiscal year. The nationwide housing mortgage crisis has leveled off, but continues to result in foreclosures within the District. Additionally, the crisis in the
banking and financial industry has had a ripple effect resulting in continued levels of high unemployment. One of the subsequent results of these two broad events is the relocation of many homeowners and renters into new housing
arrangements throughout San Diego County. Even with the various challenges, people’s need for water remains an underlying constant. Staff continues working diligently on developing new water supplies as they work through the
financial impacts of conservation and the modest economic turnaround. Management is unaware of any other conditions that could have a significant impact on the District’s current financial
position, net assets, or operating results.
Contacting the District’s Financial Management This financial report is designed to provide a general overview of the Otay Water District’s finances for the Board of
Directors, taxpayers, creditors, and other interested parties. Questions concerning any of the information provided in the
report or requests for additional information should be addressed to the District’s Finance Department, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978-2004.
17
2012 2011
ASSETS
Current Assets:
Cash and cash equivalents (Notes 1 and 2)31,075,455$ 48,563,129$
Restricted cash and cash equivalents (Notes 1 and 2)4,057,726 5,239,430
Investments (Note 2)37,069,853 28,691,752
Restricted investments (Notes 1 and 2)16,124,042 20,622,679
Accounts receivable, net 10,575,970 9,235,138
Accrued interest receivable 106,375 180,113
Taxes and availability charges receivable, net 481,955 454,948
Restricted taxes and availability charges receivable, net 57,313 75,588
Inventories 789,769 835,321
Prepaid expenses and other current assets 1,226,703 1,189,206
Total Current Assets 101,565,161 115,087,304
Non-current Assets:
Net OPEB asset (Note 8)8,321,902 7,416,346
Deferred bond issuance costs (Note 4)1,532,857 1,618,069
Capital Assets (Note 3):
Land 13,703,463 13,636,663
Construction in progress 17,452,274 17,909,282
Capital assets, net of depreciation 449,674,352 442,881,020
Total capital assets, net of depreciaton 480,830,089 474,426,965
Total Non-current Assets 490,684,848 483,461,380
Total Assets 592,250,009 598,548,684
See accompanying independent auditors' report and notes to financial statements.
Statements of Net Assets
June 30, 2012 and 2011
21
2012 2011
LIABILITIES
Current Liabilities:
Current maturities of long-term debt (Note 5)3,320,000 3,146,010
Accounts payable 10,478,366 13,000,560
Accrued payroll liabilities 2,591,272 2,932,277
Other accrued liabilities 3,932,442 739,868
Customer deposits 1,863,992 2,105,187
Accrued interest 1,639,681 1,656,826
Liabilities payable from restricted assets:
Restricted accrued interest 81,354 86,405
Total Current Liabilities 23,907,107 23,667,133
Non-current Liabilities:
Long-term debt (Note 5):
General obligation bonds 5,819,027 6,298,577
Certificates of participation 55,886,449 57,865,531
Revenue bonds 49,521,421 50,395,822
Other non-current liabilities 721,626 715,037
Total Non-current Liabilities 111,948,523 115,274,967
Total Liabilities 135,855,630 138,942,100
NET ASSETS
Invested in capital assets, net of related debt 381,725,015 377,656,762
Restricted for debt service 4,715,904 4,915,555
Unrestricted 69,953,460 77,034,267
Total Net Assets 456,394,379$ 459,606,584$
See accompanying independent auditors' report and notes to financial statements.
June 30, 2012 and 2011 - Continued
Statements of Net Assets
22
2012 2011
OPERATING REVENUES
Water sales 63,830,272$ 58,293,184$
Wastewater revenue 2,400,313 2,396,385
Connection and other fees 2,169,764 2,514,647
Total Operating Revenues 68,400,349 63,204,216
OPERATING EXPENSES
Cost of water sales 46,106,403 42,029,819
Wastewater 2,547,929 2,592,823
Administrative and general 17,926,430 18,763,380
Depreciation 15,214,704 13,880,206
Total Operating Expenses 81,795,466 77,266,228
Operating Income (Loss)(13,395,117) (14,062,012)
NON-OPERATING REVENUES (EXPENSES)
Investment income 436,596 854,440
Taxes and assessments 3,502,155 3,895,938
Availability charges 696,863 653,012
Gain (loss) on sale of capital assets (278,540) 55,300
Miscellaneous revenues 4,788,711 3,304,963
Donations (121,617)(120,648)
Interest expense (3,899,927) (3,877,531)
Miscellaneous expenses (1,767,226) (312,649)
Total Non-operating Revenues (Expenses)3,357,015 4,452,825
Income (Loss) Before Capital Contributions (10,038,102) (9,609,187)
Capital Contributions 6,825,897 7,866,190
Changes in Net Assets (3,212,205) (1,742,997)
Total Net Assets, Beginning 459,606,584 461,349,581
Total Net Assets, Ending 456,394,379$ 459,606,584$
See accompanying independent auditors' report and notes to financial statements.
Statements of Revenues, Expenses and Changes in Net Assets
For the Years Ended June 30, 2012 and 2011
23
2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 64,648,558$ 60,372,625$
Receipts from connections and other fees 2,169,764 2,514,647
Other receipts 3,566,651 2,119,390
Payments to suppliers (46,620,831) (47,028,888)
Payments to employees (20,521,468) (19,439,549)
Other payments (1,724,744) (269,198)
Net Cash Provided (Used) by Operating Activities 1,517,930 (1,730,973)
CASH FLOWS FROM NON-CAPITAL AND RELATED FINANCING ACTIVITIES
Receipts from taxes and assessments 3,493,423 3,918,750
Receipts from property rents and leases 1,222,060 1,185,573
Net Cash Provided (Used) by Non-capital
and Related Financing Activities 4,715,483 5,104,323
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from capital contributions 3,363,090 7,386,617
Proceeds from sale of capital assets 28,128 81,220
Proceeds from debt related taxes and assessments 696,863 653,012
Principal payments on long-term debt (3,146,010) (2,668,734)
Interest payments and fees (5,199,488) (4,696,309)
Acquisition and construction of capital assets (17,276,246) (17,474,142)
Net Cash Provided (Used) by Capital
and Related Financing Activities (21,533,663) (16,718,336)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on investments 580,872 945,888
Proceeds from sale and maturities of investments 108,410,000 114,918,280
Purchase of investments (112,360,000) (110,029,066)
Net Cash Provided (Used) by Investing Activities (3,369,128) 5,835,102
Net Increase (Decrease) in
Cash and cash equivalents (18,669,378) (7,509,884)
Cash and cash equivalents, Beginning 53,802,559 61,312,443
Cash and cash equivalents, Ending 35,133,181$ 53,802,559$
See accompanying independent auditors' report and notes to financial statements.
Statements of Cash Flows
For the Years Ended June 30, 2012 and 2011
24
2012 2011
Reconciliation of operating income (loss) to net cash flows provided
(used) by operating activities:
Operating income (loss)(13,395,117)$ (14,062,012)$
Adjustments to reconcile operating income
to net cash provided (used) by operating activities:
Depreciation 15,214,704 13,880,206
Miscellaneous revenues 3,566,651 2,119,390
Miscellaneous expenses (1,724,744) (269,198)
(Increase) decrease in accounts receivable (1,340,832) (275,771)
(Increase) decrease in inventory 45,552 118,686
(Increase) decrease in net OPEB asset (905,556) (632,961)
(Increase) decrease in prepaid expenses and other current assets (37,497) (562,785)
Increase (decrease) in accounts payable (2,522,194) (2,326,805)
Increase (decrease) in accrued payroll and related expenses (341,005) 188,869
Increase (decrease) in other accrued liabilities 3,192,574 101,853
Increase (decrease) in customer deposits (241,195) (41,173)
Increase (decrease) in prepaid capacity fees 6,589 30,728
Net Cash Provided (Used) By Operating Activities 1,517,930$ (1,730,973)$
Schedule of Cash and Cash Equivalents:
Current assets:
Cash and cash equivalents 31,075,455$ 48,563,129$
Restricted cash and cash equivalents 4,057,726 5,239,430
Total Cash and Cash Equivalents 35,133,181$ 53,802,559$
Supplemental Disclosures:
Non-cash Investing and Financing Activities Consisted of the Following:
Contributed Capital for Water and Sewer System 3,462,807$ 479,573$
Change in Fair Value of Investments and Recognized Gains/Losses (127,662) (73,092)
Amortization Related to Long-Term Debt 164,101 164,101
See accompanying independent auditors' report and notes to financial statements.
For the Years Ended June 30, 2012 and 2011 - Continued
Statements of Cash Flows
25
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
NOTE DESCRIPTION PAGE
1 Reporting Entity and Summary of Significant Accounting Policies..… 27
2 Cash and Investments…………………………………………..……... 30
3 Capital Assets…………………………………………………..……... 35
4 Other Non-current Assets…………………………………………….. 36
5 Long-Term Debt………………………………………………….…… 37
6 Net Assets……………………………………………………………... 41
7 Defined Benefit Pension Plan…………………………………………. 41
8 Other Post Employment Benefits………………………..…………..... 43
9 Water Conservation Authority………………………………………... 45
10 Commitments and Contingencies……………………………………... 46
11 Risk Management…………………………………………………….. 46
12 Interest Expense……………………………………………………..... 47
13 Segment information…………………………………………….......... 48
Required Supplementary Information:
1 Schedule of Funding Progress for PERS……………………………… 53
2 Schedule of Funding Progress for DPHP……………………………... 53
26
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A) Reporting Entity
Otay Water District (the “District”) is a public entity established in 1956 pursuant to the Municipal Water District Law of 1911 (Section 711 et. Seq. of the California Water Code) for the purpose of providing water and sewer services to the
properties in the District. The District is governed by a Board of Directors consisting of five directors elected by geographical divisions based on District population for a four-year alternating term. B) Measurement Focus, Basis of Accounting and Financial Statement Presentation
Measurement focus is a term used to describe “which” transactions are recorded within the various financial statements. Basis of accounting refers to “when” transactions are recorded regardless of the measurement focus
applied. The accompanying financial statements are reported using the economic resources measurement focus, and the accrual basis of accounting. Under the economic measurement focus all assets and liabilities (whether current or
non-current) associated with these activities are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets present increases (revenues) and decreases (expenses) in total net assets. Under
the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
The District reports its activities as an enterprise fund, which is used to account for operations that are financed and
operated in a manner similar to a private business enterprise, where the intent of the District is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered
primarily through user charges.
The basic financial statements of the Otay Water District have been prepared in conformity with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the
accepted standard setting body for governmental accounting financial reporting purposes.
Net assets of the District are classified into three components: (1) invested in capital assets, net of related debt, (2)
restricted net assets, and (3) unrestricted net assets. These classifications are defined as follows:
Invested in Capital Assets, Net of Related Debt
This component of net assets consists of capital assets, net of accumulated depreciation and reduced by the
outstanding balances of notes or borrowing that are attributable to the acquisition of the asset, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt
attributable to the unspent proceeds are not included in the calculation of invested in capital assets, net of related debt.
Restricted Net Assets
This component of net assets consists of net assets with constrained use through external constraints imposed by
creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
Unrestricted Net Assets
This component of net assets consists of net assets that do not meet the definition of “invested in capital assets, net of related debt” or “restricted net assets.”
27
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation – Continued
The District distinguishes operating revenues and expenses from those revenues and expenses that are non-operating. Operating revenues are those revenues that are generated by water sales and wastewater services while operating
expenses pertain directly to the furnishing of those services. Non-operating revenues and expenses are those revenues and expenses generated that are not directly associated with the normal business of supplying water and wastewater
treatment services.
The District recognizes revenues from water sales, wastewater revenues, and meter fees as they are earned. Taxes and assessments are recognized as revenues based upon amounts reported to the District by the County of San Diego, net of allowance for delinquencies of $57,465 and $58,948 at June 30, 2012 and 2011, respectively.
Additionally, capacity fee contributions received which are related to specific operating expenses are offset against those expenses and included in Cost of Water Sales in the Statement of Revenues and Expenses and Changes in Net
Assets. When both restricted and unrestricted resources are available for use, it is the District’s practice to use restricted resources first, then unrestricted resources as they are needed.
C) Statement of Cash Flows For purposes of the Statement of Cash Flows, the District considers all highly liquid investments (including
restricted assets) with a maturity period, at purchase, of three months or less to be cash equivalents.
D) Investments
The District’s investments are stated at fair value, except for short-term investments, which are reported at cost, which approximates fair value. Investments in governmental investment pools are reported on the fair value per
share of the pool’s underlying portfolio.
E) Inventory and Prepaids
Inventory consists primarily of materials used in the construction and maintenance of the water and sewer system and is valued at weighted average cost. Both inventory and prepaids use the consumption method whereby they are
reported as an asset and expensed as they are consumed.
F) Capital Assets
Capital assets are recorded at cost, where historical records are available, and at an estimated historical cost where no historical records exist. Infrastructure assets in excess of $20,000 and other capital assets in excess of $10,000 are
capitalized if they have an expected useful life of two years or more. The District will also capitalize individual purchases under the capitalization threshold if they are part of a new capital program. The cost of purchased and self-
constructed additions to utility plant and major replacements of property are capitalized. Costs include materials, direct labor, transportation, and such indirect items as engineering, supervision, employee fringe benefits, overhead, and interest incurred during the construction period. Repairs, maintenance, and minor replacements of property are charged to expense. Donated assets are capitalized at their approximate fair market value on the date contributed.
The District capitalizes interest on construction projects up to the point in time that the project is substantially completed. Capitalized interest for fiscal year ending June 30, 2012 of $1,185,443 is included in the cost of water
system assets and is depreciated on the straight-line basis over the estimated useful lives of such assets.
28
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued F) Capital Assets - Continued
Depreciation is calculated using the straight-line method over the following estimated useful lives:
Water System 15-70 Years Field Equipment 2-50 Years Buildings 30-50 Years
Communication Equipment 2-10 Years Transportation Equipment 2-4 Years
Office Equipment 2-10 Years Recycled Water System 50-75 Years Sewer System 25-50 Years
G) Compensated Absences
It is the District’s policy to record the cost of paid time off (vacation and sick leave) as it is earned. Paid time off is payable to employees at the time it is taken or upon termination of employment. As of June 30, 2012 and 2011, total
accrued paid time off was $1,991,841 and $2,162,352, respectively.
H) Restricted Assets and Liabilities
Certain current liabilities have been classified as current liabilities payable from restricted assets as they will be
funded from restricted assets.
I) Allowance for Doubtful Accounts
The District charges doubtful accounts arising from water sales receivable to bad debt expense when it is probable that
the accounts will be uncollectible. Uncollectible accounts are determined by the allowance method based upon prior experience and management’s assessment of the collectability of existing specific accounts. The allowance for
doubtful accounts were $14,461 and $148,047 for 2012 and 2011, respectively.
J) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
K) Property Taxes
Tax levies are limited to 1% of full market value (at time of purchase) which results in a tax rate of $1.00 per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for voter-approved indebtedness are excluded
from this limitation.
The County of San Diego (the “County”) bills and collects property taxes on behalf of the District. The County’s tax calendar year is July 1 to June 30. Property taxes attach as a lien on property on January 1. Taxes are levied on July 1
and are payable in two equal installments on November 1 and February 1, and become delinquent after December 10 and April 10, respectively.
L) Reclassifications
Certain reclassifications have been made to prior year amounts to conform to the current year presentation.
29
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
2) CASH AND INVESTMENTS
The primary goals of the District’s Investment Policy are to assure compliance with all federal, state, and local laws
governing the investment of funds under the control of the organization, protect the principal of investments entrusted, and generate income under the parameters of such policies.
Cash and Investments are classified in the accompanying financial statements as follows:
Statement of Net Assets:
Current Assets 2012 2011
Cash and Cash Equivalents $ 31,075,455 $ 48,563,129
Restricted Cash and Cash Equivalents 4,057,726 5,239,430
Investments 37,069,853 28,691,752
Restricted Investments 16,124,042 20,622,679
Total Cash and Investments $ 88,327,076 $ 103,116,990
Cash and Investments consist of the following:
2012 2011
Cash on Hand $ 2,950 $ 2,950
Deposits with Financial Institutions 1,519,979 981,696
Investments 86,804,147 102,132,344
Total Cash and Investments $ 88,327,076 $ 103,116,990
Investments Authorized by the California Government Code and the District’s Investment Policy
The table below identifies the investment types that are authorized for the District by the California Government Code (or the District’s Investment Policy, where more restrictive). The table also identifies certain provisions of the California
Government Code (or the District’s Investment Policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by the bond trustee that are
governed by the provisions of debt agreements of the District, rather than the general provisions of the California Government Code or the District’s Investment Policy.
Maximum Maximum Authorized Maximum Percentage Investment
Investment Type Maturity Of Portfolio(1) In One Issuer U.S. Treasury Obligations 5 years None None U.S. Government Sponsored Entities 5 years None None
Certificates of Deposit 5 years 15% None Corporate Medium-Term Notes 5 years 15% None
Commercial Paper 270 days 15% 10%
Money Market Mutual Funds N/A 15% None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A None None
(1) Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.
30
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
2) CASH AND INVESTMENTS - Continued
Investments Authorized by Debt Agreements
Investments of debt proceeds held by the bond trustee are governed by provisions of the debt agreements, rather than the
general provisions of the California Government Code or the District’s Investment Policy.
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.
Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter
term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time, as necessary, to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the District’s investments to market interest rate fluctuations are provided by the following tables that show the distribution of the District’s investments by maturity as of June 30, 2012
and 2011.
June 30, 2012
12 Months 13 to 24 25 to 60 More Than
Investment Type Or Less Months Months 60 Months
U.S. Government Sponsored Entities $ 53,100,166 $ 5,744,244 $24,995,670 $22,360,252 $ - Local Agency Investment Fund
(LAIF) 11,614,981 11,614,981 - - -
San Diego County Pool 22,089,000 22,089,000 - - -
Total $ 86,804,147 $39,448,225 $24,995,670 $22,360,252 $ -
Remaining Maturity (in Months)
June 30, 2011
12 Months 13 to 24 25 to 60 More Than
Investment Type Or Less Months Months 60 Months
U.S. Government Sponsored Entities $ 49,263,245 $ - $ 21,821,835 $ 27,441,411 $ -
Local Agency Investment Fund
(LAIF) 35,876,620 35,876,620 - - -
Corporate Medium-Term Notes - - - - -
San Diego County Pool 16,992,479 16,992,479 - - -
Total $ 102,132,344 $ 52,869,099 $ 21,821,835 $ 27,441,411 $ -
Remaining Maturity (in Months)
31
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
2) CASH AND INVESTMENTS – Continued Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.
This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code or the District’s Investment Policy, or debt agreements, and the Moody’s ratings as of June 30, 2012 and 2011 for each investment type.
June 30, 2012
Minimum
Legal Not
Investment Type Rating AAA AA Rated
U.S. Government Sponsored Entities $ 53,100,166 N/A $ 53,100,166 $ - $ -
Local Agency Investment
Fund (LAIF) 11,614,981 N/A - - 11,614,981
San Diego County Pool 22,089,000 N/A - - 22,089,000
Total $ 86,804,147 $ 53,100,166 $ - $ 33,703,981
Rating as of Year End
June 30, 2011
Minimum
Legal Not
Investment Type Rating AAA AA Rated
U.S. Government Sponsored Entities $ 49,263,245 N/A $ 49,263,246 $ - $ -
Local Agency Investment
Fund (LAIF) 35,876,620 N/A - - 35,876,620
San Diego County Pool 16,992,479 N/A - - 16,992,479
Total $ 102,132,344 $ 49,263,246 $ - $ 52,869,099
Rating as of Year End
32
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
2) CASH AND INVESTMENTS - Continued
Concentration of Credit Risk
The Investment Policy of the District contains various limitations on the amounts that can be invested in any one type or
group of investments and in any issuer, beyond that stipulated by the California Government Code, Sections 53600 through 53692. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total District investments as of June 30, 2012 and 2011 are as follows:
June 30, 2012
June 30, 2011
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside
party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in
the possession of another party. The California Government Code and the entity’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following
provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local government units by pledging securities in an undivided collateral pool held by a depository regulated under state law
(unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure
deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.
As of June 30, 2012, $1,720,135 of the District’s deposits with financial institutions in excess of federal depository insurance
limits were held in collateralized accounts. As of June 30, 2011, $1,308,661 of the District’s deposits with financial institutions in excess of federal depository insurance limits were held in collateralized accounts.
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 17,991,270 Federal Home Loan Mortgage Corp
Federal National Mortgage Association Federal Farm Credit Banks
U.S. Government Sponsored Entities
U.S. Government Sponsored Entities U.S. Government Sponsored Entities
15,753,834
14,993,400 4,361,662
Issuer Investment Type Reported Amount Federal Home Loan Bank U.S. Government Sponsored Entities $ 17,791,131
Federal Home Loan Mortgage Corp Federal National Mortgage Association U.S. Government Sponsored Entities U.S. Government Sponsored Entities 25,827,735 5,644,380
33
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
2) CASH AND INVESTMENTS - Continued
Local Agency Investment Fund (LAIF)
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California
Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the District’s investment in this pool is reported in the accompanying financial statements at amounts based upon District’s pro-
rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an
amortized cost-basis.
San Diego County Pooled Fund
The San Diego County Pooled Investment Fund (SDCPIF) is a pooled investment fund program governed by the County of San Diego Board of Supervisors, and administered by the County of San Diego Treasurer and Tax Collector. Investments in
SDCPIF are highly liquid as deposits and withdrawals can be made at anytime without penalty.
The County of San Diego’s bank deposits are either federally insured or collateralized in accordance with the California
Government Code. Pool detail is included in the County of San Diego Comprehensive Annual Financial Report (CAFR). Copies of the CAFR may be obtained from the County of San Diego Auditor-Controller’s Office – 5530 Overland Avenue,
Suite 330 – San Diego, CA 92123.
Collateral for Deposits
All cash is entirely insured or collateralized.
Under the provisions of the California Government Code, California banks and savings and loan associations are required to
secure the District's deposits by pledging government securities as collateral. The market value of the pledged securities must equal at least 110% of the District's deposits. California law also allows financial institutions to secure District deposits by
pledging first trust deed mortgage notes having a value of 150% of the District's total deposits.
The District may waive the 110% collateral requirement for deposits which are insured up to $250,000 by the FDIC.
34
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
3) CAPITAL ASSETS
The following is a summary of changes in Capital Assets for the year ended June 30, 2012:
Depreciation expense for the years ended June 30, 2012 and 2011 was $15,214,704 and $13,880,206, respectively.
Beginning Balance Additions Deletions Ending Balance
Capital Assets, Not Depreciated
Land 13,636,663$ 66,800$ -$ 13,703,463$
Construction in Progress 17,909,282 19,086,698 (19,543,706) 17,452,274
Total Capital Assets Not Depreciated 31,545,945 19,153,498 (19,543,706) 31,155,737
Capital Assets, Being Depreciated
Infrastructure 577,926,518 20,908,862 (940,451) 597,894,929
Field Equipment 9,847,809 149,661 (1,395,410) 8,602,060
Buildings 18,451,132 198,077 - 18,649,209
Transportation Equipment 3,177,687 221,872 (178,310) 3,221,249
Communication Equipment 2,359,043 155,108 - 2,514,151
Office Equipment 17,332,966 681,123 (812,669) 17,201,420
Total Capital Assets Being Depreciated 629,095,155 22,314,703 (3,326,840) 648,083,018
Less Accumulated Depreciation:
Infrastructure 157,565,903 12,330,306 (637,807) 169,258,402
Field Equipment 8,619,183 149,708 (1,395,410) 7,373,481
Buildings 6,911,291 436,529 7,347,820
Transportation Equipment 2,250,422 234,188 (178,310) 2,306,300
Communication Equipment 644,017 391,829 1,035,846
Office Equipment 10,223,319 1,672,144 (808,646) 11,086,817
Total Accumulated Depreciation 186,214,135 15,214,704 (3,020,173) 198,408,666
Total Capital Assets Being Depreciated, Net 442,881,020 7,099,999 (306,667) 449,674,352
Total Capital Assets, Net 474,426,965$ 26,253,497$ (19,850,373)$ 480,830,089$
35
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
3) CAPITAL ASSETS (Continued)
The following is a summary of changes in Capital Assets for the year ended June 30, 2011:
Beginning Balance (As Restated)
Additions Deletions
Ending Balance
Capital Assets, Not Depreciated
Land $ 13,620,963 $ 15,700 $ - $ 13,636,663 Construction in Progress 35,179,104 18,141,296 (35,411,118) 17,909,282
Total Capital Assets Not Depreciated 48,800,067 18,156,996 (35,411,118) 31,545,945
Capital Assets, Being Depreciated Infrastructure 544,533,985 33,440,219 (47,686) 577,926,518
Field Equipment 9,529,558 489,019 (170,768) 9,847,809 Buildings 18,451,132 - - 18,451,132 Transportation Equipment 3,278,692 347,077 (448,082) 3,177,687
Communication Equipment 1,335,820 1,023,223 - 2,359,043 Office Equipment 18,430,388 1,123,775 (2,221,197) 17,332,966
Total Capital Assets Being Depreciated 595,559,575 36,423,313 (2,887,733) 629,095,155 Less Accumulated Depreciation:
Infrastructure 146,106,000 11,507,589 (47,686) 157,565,903 Field Equipment 8,685,579 104,372 (170,768) 8,619,183 Buildings 6,475,141 436,150 - 6,911,291 Transportation Equipment 2,477,854 203,715 (431,147) 2,250,422 Communication Equipment 468,548 175,469 - 644,017 Office Equipment 10,982,620 1,452,911 (2,212,212) 10,223,319
Total Accumulated Depreciated 175,195,742 13,880,206 (2,861,813) 186,214,135 Total Capital Assets Being Depreciated, Net 420,363,833 22,543,107 (25,920) 442,881,020
Total Capital Assets, Net $ 469,163,900 $ 40,700,103 $ (35,437,038) $ 474,426,965
Depreciation expense for the years ended June 30, 2011 and 2010 was $13,880,206 and $13,297,497, respectively.
4) OTHER NON-CURRENT ASSETS
Deferred bond issue costs totaled $1,532,857 and $1,618,069, net of accumulated amortization of $466,081 and $380,418 as of June 30, 2012 and 2011, respectively. The costs are amortized on the straight-line method based on the estimated term of the related bond debt. Amortization expense of $85,212 and $85,212 for the years ended June 30, 2012 and 2011 is included in miscellaneous non-operating expenses.
36
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
5) LONG-TERM DEBT Long-term liabilities for the year ended June 30, 2012 are as follows:
Beginning Balance Additions Deletions Ending Balance Due Within One Year
General Obligation Bonds:
Improvement District No. 27 – 2009 $ 7,260,000 - $ 505,000 $ 6,755,000 $ 520,000
Unauthorized Bond Premium 182,626 - 16,355 166,271 -
Deferred Amount on Refunding (639,049) - (56,805) (582,244) -
Net General Obligation Bonds 6,803,577 - 464,550 6,339,027 520,000
Certificates of Participation:
1996 Certificates of Participation 11,300,000 - 400,000 10,900,000 500,000
2004 Certificates of Participation 9,245,000 - 565,000 8,680,000 580,000
2007 Certificates of Participation 39,550,000 - 885,000 38,665,000 920,000
1996 COPS Unamortized Discount (11,923) - (745) (11,178) -
2007 COPS Unamortized Discount (232,131) - (9,044) (223,087) -
2004 COPS Unamortized Premium 14,170 - 1,165 13,005 -
2004 COPS Deferred Amount on Refunding (149,585) - (12,294) (137,291) -
Net Certificates of Participation 59,715,531 - 1,829,082 57,886,449 2,000,000
Revenue Bonds:
2010 Water Revenue Bonds Series A 13,840,000 785,000 13,055,000 800,000
2010 Water Revenue Bonds Series B 36,355,000 - - 36,355,000 -
2010 Series A Unamortized Premium 985,822 74,401 911,421 -
Net Revenue Bonds 51,180,822 - 859,401 50,321,421 800,000
Notes Payable:
State Water Resources Control Board 6,010 - 6,010 - -
Total Long-Term Liabilities $ 117,705,940 $ - $3,159,043 $114,546,897 $ 3,320,000
37
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
5) LONG-TERM DEBT – Continued
General Obligation Bonds
In June 1998, the District issued $11,835,000 of General Obligation Refunding Bonds. The proceeds of this issue, together with other lawfully available monies, were to be used to establish an irrevocable escrow to advance refund and defease in
their entirety the District’s previous outstanding General Obligation Bond issue. In November 2009, The District issued $7,780,000 of General Obligation Refunding Bonds to refund the 1998 issue. The proceeds from the bond issue were $7,989,884, which included an original issue premium of $209,884. An amount of $7,824,647, which consisted of unpaid principal and accrued interest, was deposited into an escrow fund. Pursuant to an optional redemption clause in the 1998
bonds, the District was able to redeem the 1998 bonds, without premium at any time after September 1, 2009. On December 15, 2009 the 1998 bonds were refunded.
The savings between the cash flow required to service the old debt and the cash flow required to service the new debt is
$1,099,110 and represents an economic gain on refunding of $640,925.
These bonds are general obligations of Improvement District No. 27 (ID 27) of the District. The Board of Directors has the power and is obligated to levy annual ad valorem taxes without limitation, as to rate or amount for payment of the bonds and
the interest upon all property which is within ID 27 and subject to taxation. The General Obligation Bonds are payable from District-wide tax revenues. The Board may utilize other sources for servicing the bond debt and interest.
The refunding of the 1998 bonds resulted in a deferred amount of $728,989 which is being amortized over the remaining life
of the refunded debt. Amortization for the year ended June 30, 2012 was $56,805 and is included in miscellaneous non-operating expenses. As of June 30, 2012, the unamortized deferred amount of refunding is $582,244.
The 2009 General Obligation Bonds have interest rates from 3.00% to 4.00% with maturities through Fiscal Year 2023.
Future debt service requirements for the bonds are as follows:
For the Year Ended
June 30, Principal Interest Total
2013 $ 520,000 $ 236,262 756,262$
2014 535,000 220,437 755,437
2015 550,000 204,162 754,162
2016 570,000 187,362 757,362
2017 585,000 169,306 754,306
2018-2022 3,275,000 481,300 3,756,300
2023 720,000 14,403 734,403
$ 6,755,000 $ 1,513,232 $ 8,268,232
38
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
5) LONG-TERM DEBT - Continued
Certificates of Participation (COPS)
In June 1996, COPS with face value of $15,400,000 were sold by the Otay Service Corporation to finance the cost of design, acquisition, and construction of certain capital improvements. An installment purchase agreement between the District, as
Buyer, and the Corporation, as Seller, was executed for the scheduled payment of principal and interest associated with the COPS. The installment payments are to be paid from taxes and “net revenues,” as described in the installment agreement. The certificates bear interest at a variable weekly rate not to exceed 12%. The variable interest rate is tied to the 30-day LIBOR index and the Securities Industry and Financial Markets Association (SIFMA) index. An irrevocable letter of credit
facility is necessary to market the District’s variable rate debt. This facility is with Union Bank and covers the outstanding principal and interest. The facility expires on June 29, 2014. The interest rate at June 30, 2012 was 0.15%. The installment
payments are to be paid annually at $350,000 to $900,000 from September 1, 1996 through September 1, 2026.
In July 2004, Refunding Certificates of Participation (COPS) with a face value of $12,270,000 were sold by the Otay Service
Corporation to advance refund $11,680,000 of outstanding 1993 COPS. An installment agreement between the District, as Buyer, and the Corporation, as Seller, was executed for the scheduled payment of principal and interest associated with the
COPS. The installment payments are to be paid from taxes and “net revenues,” as described in the installment agreement. The certificates are due in annual installments of $445,000 to $895,000 from September 1, 2005 through September 1, 2023;
bearing interest at 3% to 4.625%.
In March 2007, Revenue Certificates of Participation (COPS) with face value of $42,000,000 were sold by the Otay Service
Corporation to improve the District’s water storage system and distribution facilities. An installment purchase agreement between the District, as a Buyer, and the Corporation, as Seller, was executed for the scheduled payment of principal and
interest associated with the COPS. The installment payments are to be paid from taxes and “net revenues,” as described in the
installment agreement. The certificates are due in annual installments of $785,000 to $2,445,000 from September 1, 2007 through September 1, 2036; bearing interest at 3.7% to 4.47%.
There is no aggregate reserve requirement for the COPS. Future debt service requirements for the certificates are as follows:
For the Year
Ended June 30, Principal Interest* Principal Interest Principal Interest
2013 $ 500,000 $ 15,725 $ 580,000 $ 349,566 $ 920,000 $ 1,589,020
2014 500,000 14,975 600,000 328,906 955,000 1,553,864
2015 500,000 14,225 625,000 306,388 995,000 1,517,301
2016 600,000 13,350 650,000 281,994 1,035,000 1,479,239
2017 600,000 12,450 675,000 255,819 1,075,000 1,439,408
2018-2022 3,500,000 47,225 3,795,000 828,394 6,020,000 6,529,600
2023-2027 4,700,000 16,325 1,755,000 81,441 7,360,000 5,181,071
2028-2032 - - - - 9,070,000 3,453,857
2033-2037 - - - - 11,235,000 1,271,265
$ 10,900,000 $ 134,275 $ 8,680,000 $ 2,432,508 $ 38,665,000 $ 24,014,625
1996 COPS 2004 COPS 2007 COPS
* Variable Rate - Interest reflected at June 30, 2012 at a rate of 0.15%.
The three COP debt issues contain various covenants and restrictions, principally that the District fix, prescribe, revise and collect rates, fees and charges for the Water System which will be at least sufficient to yield, during each fiscal year, taxes and net revenues equal to one hundred twenty-five percent (125%) of the debt service for such fiscal year. The District
was in compliance with these rate covenants for the fiscal year ended June 30, 2012.
39
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
5) LONG-TERM DEBT - Continued
Water Revenue Bonds
In April 2010, Water Revenue Bonds with a face value of $50,195,000 were sold by the Otay Water District Financing
Authority to provide funds for the construction of water storage and transmission facilities. The bond issue consisted of two series; Water Revenue Bonds, Series 2010A (Non-AMT Tax Exempt) with a face value of $13,840,000 plus a $1,078,824 original issue premium, and Water Revenue Bonds Series 2010B (Taxable Build America Bonds) with a face value of $36,255,000. The Series 2010A bonds are due in annual installments of $785,000 to $1,295,000 from September 1, 2012
through September 1, 2025; bearing interest at 2% to 5.25%. The Series 2010B bonds are due in annual installments of $1,365,000 to $3,505,000 from September 1, 2026 through September 1, 2040; bearing interest at 6.377% to 6.577%. Interest
on both Series is payable on September 1, 2010 and semiannually thereafter on March 1st and September 1st of each year until maturity or earlier redemption. The installment payments are to be made from Taxes and Net Revenues of the Water System
as described in the installment purchase agreement, on parity with the payments required to be made by the District for the 1996, 2004 and 2007 Certificates of Participation described above.
The proceeds of the bonds will be used to fund the project described above as well as to fund reserve funds of $1,030,688
(Series 2010A) and $2,707,418 (Series 2010B). $542,666 was used to fund various costs of issuance.
The original issue premium is being amortized over the 14 year life of the Series 2010A bonds. Amortization for the year ending June 30, 2012 was $74,402 and is included in interest expense. The unamortized premium at June 30, 2012 is
$911,421.
The 2011 Water Revenue Bonds contains various covenants and restrictions, principally that the District fix, prescribe, revise and collect rates, fees and charges for the Water System which will be at least sufficient to yield, during each fiscal
year, taxes and net revenues equal to one hundred twenty-five percent (125%) of the debt service for such fiscal year. The District was in compliance with these rate covenants for the fiscal year ended June 30, 2012.
The total amount outstanding at June 30, 2012 and aggregate maturities of the revenue bonds for the fiscal years subsequent
to June 30, 2012, are as follows:
For the Year
Ended June 30, Principal Interest Principal Interest
2013 $ 800,000 $ 553,838 $ - $ 2,371,868
2014 820,000 533,538 - 2,371,868
2015 845,000 508,563 - 2,371,868
2016 870,000 478,488 - 2,371,868
2017 900,000 443,088 - 2,371,868
2018-2022 5,115,000 1,584,988 - 11,859,342
2023-2027 3,705,000 291,969 2,815,000 11,682,539
2028-2032 - - 8,760,000 9,631,794
2033-2037 - - 12,005,000 6,275,280
2038-2042 - - 12,775,000 1,747,344
$ 13,055,000 $ 4,394,470 $ 36,355,000 $ 53,055,639
2010 Water Revenue Bond Series A 2010 Water Revenue Bond Series B
40
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
5) LONG-TERM DEBT - Continued
Note Payable
In December 1990, the District entered into a 3.5% note payable to the State Water Resources Control Board. This note is
unsecured and payable in annual installments of $366,325 including principal and interest from 1992 through 2012. The note was paid off during the year.
6) NET ASSETS
Designated Net Assets
In addition to the restricted net assets, a portion of the unrestricted net assets have been designated by the Board of Directors
for the following purposes as of June 30, 2012 and 2011:
7) DEFINED BENEFIT PENSION PLAN
Plan Description
The District’s defined plan, (the “Plan”), provides retirement and disability benefits, annual cost-of-living adjustments, and
death benefits to plan members and beneficiaries. The Plan is part of the Public Agency portion of the California Public Employees’ Retirement System (CalPERS), an agent multiple-employer plan administered by CalPERS, which acts as a
common investment and administrative agent for participating public employers within the State of California. A menu of benefit provisions as well as other requirements is established by State statute within the Public Employees’ Retirement Law.
The Plan selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through District resolution. CalPERS issues a separate Comprehensive Annual Financial Report. Copies of the CalPERS’
annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, California 95814. Funding Policy
Active members in the Plan are required to contribute 8% of their annual covered salary. By agreement between the employee union and the District, the represented employees paid 5.25% of covered salaries beginning August 15, 2011. Also by agreement, the unrepresented employees began paying 4.5% of covered salaries as of July 15, 2011. Prior to these agreements all employees paid 1% of covered salaries. In these same agreements, all employees, after June 30, 2012 will pay an additional 3.5% of covered salaries. The District is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The required employer contribution rate for the fiscal year ended June 30, 2012 was 23.428%. The contribution requirements of the Plan members are established by State statute and the employer contribution rate is established and may be amended by the CalPERS.
2012 2011
Designated Betterment $ - $ 13,221,595
Expansion Reserve 17,943,825 13,216,223
Replacement Reserve 15,911,850 30,156,082
Designated New Supply Fund 1,593,571 -
Employee Benefits Reserve 1,660,369 4,526,516
Total $ 37,109,615 $ 61,120,416
41
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
7) DEFINED BENEFIT PENSION PLAN - Continued
Annual Pension Costs For the fiscal year ended June 30, 2012, the District’s annual pension cost and actual contribution was $2,951,409. The
required contribution for the fiscal year ended June 30, 2012 was determined as part of the June 30, 2009 actuarial valuation. The following is a summary of the actuarial assumptions and methods:
Valuation Date June 30, 2009 Actuarial Cost Method Entry Age Actuarial Cost Method Amortization Method Level Percent of Payroll Average Remaining Period 21-Years as of the Valuation Date Asset Valuation Method 15-Year Smoothed Market Actuarial Assumptions: Investment Rate of Return 7.75% (Net of Administrative Expenses) Projected Salary Increase 3.55% to 14.45% Depending on Age, Service, and Type of Employment Inflation 3.00% Payroll Growth 3.25% Individual Salary Growth A merit scale varying by duration of employment coupled with an assumed annual inflation component of 3.00% and an annual production growth of 0.25%.
Initial unfunded liabilities are amortized over a closed period that depends on the Plan’s date of entry into CalPERS. Subsequent Plan amendments are amortized as a level percentage of pay over a closed 20-year period. Gains and losses that
occur in the operation of the plan are amortized over a rolling period, which results in an amortization of 6% of unamortized gains and losses each year. If the plan’s accrued liability exceeds the actuarial value of the plan assets, then the amortization
payment of the total unfunded liability may be lower than the payment calculated over a 30-year amortization period.
THREE-YEAR TREND INFORMATION FOR PERS
Fiscal Annual Pension Percentage of Net Pension Year Cost (APC) APC Contributed Obligation 6/30/12 $ 2,951,409 100% $ - 6/30/11 $ 2,427,744 100% $ - 6/30/10 $ 2,240,538 100% $ -
Funded Status and Funding Progress
As of June 30, 2010, the most recent actuarial valuation date, the plan was 70.9% funded. The actuarial accrued liability (AAL) for benefits was $81,306,934, and the actuarial value of assets was $57,613,987, resulting in an unfunded actuarial accrued liability (UAAL) of $23,692,947. The covered payroll (annual payroll of active employees covered by the plan) was $12,140,989, and the ratio of the UAAL to the covered payroll was 195.1%. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over the time relative to the actuarial accrued liability for benefits.
42
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011 8) OTHER POST EMPLOYMENT BENEFITS
Plan Description
The District’s defined benefit post employment healthcare plan, (DPHP), provides medical benefits to eligible retired District employees and beneficiaries. DPHP is part of the Public Agency portion of the California Employers’ Retiree Benefit Trust
Fund (CERBT), an agent multiple-employer plan administered by California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for participating public employers within the State
of California. CalPERS issues a separate Comprehensive Annual Financial Report. Copies of the CalPERS’ annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, California 95814.
Prior to the plan agreements signed in 2011 the eligibility in the plan was broken into 3 tiers, employees hired before
January 1, 1981, employees hired between January 1, 1981 and July 1, 1993 and employees hired on or after July 1, 1993. Board Members elected before January 1, 1995 are also eligible for the plan. Eligibility also include age and years of
service requirements which vary by tier. Benefits include 100% medical and dental premiums for life for the retiree for Tier I, II or III employees, and up to 100% spouse premium for life and dependent premium up to age 19 depending on the
tier. The plan also include survivor benefits to Medicare.
Subsequent to the agreements in 2011 the represented employees are eligible for the plan after 20 years of consecutive service while unrepresented employees are eligible after 15 years. Survivor benefits are covered beyond Medicare.
Funding Policy
The contribution requirements of plan members and the District are established and may be amended by the Board of
Directors. DPHP members receiving benefits contribute based on their selected plan options of EPO, HMO or Gold and if they are located outside the State of California. Contributions by plan members range from $0 to $146 per month for
coverage to age 65, and from $0 to $147 per month, respectively, thereafter.
Annual OPEB Cost and Net OPEB Obligation/Asset
The District’s annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level
of funding that, if paid on an ongoing basis is projected to cover the normal annual cost. Any unfunded actuarial liability (or funding excess) is amortized over a period not to exceed thirty years. The current ARC rate is 10.5% of the annual
covered payroll.
The following table shows the components of the District’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the District’s net OPEB obligation/asset:
2012 2011
Annual Required Contribution (ARC) $ 1,304,000 $ 289,000
Interest on net OPEB asset (537,685) (525,712) Adjustment to annual Required Contribution (ARC) 473,000 646,000
Annual OPEB Cost (expense) 1,239,315 409,288 Contributions made 2,144,871 1,042,249 Increase in net OPEB asset (905,556) (632,961)
Net OPEB asset – beginning of year (7,416,346) (6,783,385)
Net OPEB asset – end of year $ (8,321,902) $ (7,416,346)
43
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
8) OTHER POST EMPLOYMENT BENEFITS - Continued
Annual OPEB Cost and Net OPEB Obligation/Asset - Continued
For 2012, in addition to the ARC, the District contributed cash benefit payments outside the trust (healthcare premium
payments for retirees to Special District Risk Management Authority (SDRMA) ) in the amount of $749,871, which is included in the $2,144,871 of contributions shown above. For 2011 this amount was $654,250, which is included in the $1,042,249 of contributions shown above.
The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation/asset for the fiscal years 2012, 2011 and 2010 were as follows:
THREE-YEAR TREND INFORMATION FOR CERBT
Fiscal Annual OPEB Percentage of Net OPEB
Year Cost (AOC) OPEB Cost Contributed Asset
6/30/2012 $ 1,239,315 173% $ (8,321,902)
6/30/2011 $ 409,288 255% $ (7,416,346)
6/30/2010 $ 455,122 227% $ (6,783,385)
Funded Status and Funding Progress
The funded status of the plan as of June 30, 2011, the most recent actuarial valuation date, was as follows:
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality,
and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and
new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for the benefits.
Actuarial Accrued Liability (AAL) $ 18,289,000
Actuarial Value of Plan Assets $ 7,893,000
Unfunded Actuarial Accrued Liability (UAAL) $ 10,396,000
Funded Ratio (Actuarial Value of Plan Assets/AAL)43.16%
Covered Payroll (Active Plan Members) $ 12,429,000
UAAL as a Percentage of Covered Payroll 83.64%
44
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
8) OTHER POST EMPLOYMENT BENEFITS - Continued
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the
employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial assets, consistent with the long-term perspective of the calculations.
The following is a summary of the actuarial assumptions and methods:
Valuation Date June 30, 2011 Actuarial Cost Method Entry Age Normal Cost Method
Amortization Method Level Percent of Payroll Remaining Amortization Period 26-Year fixed (closed) period as of the Valuation Date
Asset Valuation Method 15-year Smoothed Market Actuarial Assumptions:
Investment Rate of Return 7.25% (Net of Administrative Expenses) Projected Salary Increase 3.25%
Inflation 3.00% Individual Salary Growth CalPERS 1997-2007 Experience Study
Healthcare Cost Trend Rate Medical: 10% per annum graded down in approximately one-half percent increments to an
ultimate rate of 5%. Dental: 4% per annum.
9) WATER CONSERVATION AUTHORITY
In 1999 the District formed the Water Conservation Authority (the “Authority”), a Joint Powers Authority, with other local
entities to construct, maintain and operate a xeriscape demonstration garden in the furtherance of water conservation. The authority is a non-profit public charity organization and is exempt from income taxes. During the years ended June 30, 2012
and 2011, the District contributed $121,617 and $120,648, respectively, for the development, construction and operation costs of the xeriscape demonstration garden.
A summary of the Authority’s June 30, 2011 audited financial statement is as follows (latest report available):
Assets $ 1,815,887
Liabilities 85
Net Assets $ 1,815,802
Revenues, Gains and Other Support $ 370,012
Expenses (597,808)
Transfer of Assets (367,946)
Changes in Net Assets $ (595,742)
45
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
10) COMMITMENTS AND CONTINGENCIES Construction Commitments
The District had committed to capital projects under construction with an estimated cost to complete of $3,151,775 at
June 30, 2012.
Litigation
Certain claims, suits and complaints arising in the ordinary course of operation have been filed or are pending against the District. In the opinion of the staff and counsel, all such matters are adequately covered by insurance, or if not so covered, are
without merit or are of such kind, or involved such amounts, as would not have a significant effect on the financial position or results of operations of the District if disposed of unfavorably.
Refundable Terminal Storage Fees
The District has entered into an agreement with several developers whereby the developers prepaid the terminal storage fee in
order to provide the District with the funds necessary to build additional storage capacity. The agreement further allows the developers to relinquish all or a portion of such water storage capacity. If the District grants to another property owner the
relinquished storage capacity, the District shall refund to the applicable developer $746 per equivalent dwelling unit (EDU). There were 17,867 EDUs that were subject to this agreement. At June 30, 2011, 1,751 EDUs had been relinquished and
refunded, 14,663 EDUs had been connected, and 1,453 EDUs have neither been relinquished nor connected. At June 30, 2012, 1,751 EDUs had been relinquished and refunded, 15,026 EDUs had been connected, and 1,090 EDUs have neither been
relinquished nor connected.
Developer Agreements
The District has entered into various Developer Agreements with developers towards the expansion of District facilities. The developers agree to make certain improvements and after the completion of the projects the District agrees to reimburse such
improvements with a maximum reimbursement amount for each developer. Contractually, the District does not incur a liability for the work until the work is accepted by the District. As of June 30, 2012, none of the outstanding developer
agreements had been accepted, however, it is anticipated that the District will be liable for an amount not to exceed $56,000 at the point of acceptance. Accordingly, the District has accrued a liability as of year end.
11) RISK MANAGEMENT
The District is exposed to various risks of loss related to torts, theft, damage and destruction of assets, errors and
omissions, and natural disasters. Beginning in July 2003, the District began participation in an insurance pool through the Special District Risk Management Authority (SDRMA). SDRMA is a not-for-profit public agency formed under
California Government Code Sections 6500 et. Seq. SDRMA is governed by a board composed of members from participating agencies. The mission of SDRMA is to provide renewable, efficiently priced risk financing and risk
management services through a financially sound pool. The District pays an annual premium for commercial insurance covering general liability, excess liability, property, automobile, public employee dishonesty, and various other claims.
Accordingly, the District retains no risk of loss. Separate financial statements of SDRMA may be obtained at Special District Risk Management Authority, 1112 “I” Street, Suite 300, Sacramento, CA 95814.
General and Auto Liability, Public Officials’ and Employees’ Errors and Omissions and Employment Practices Liability:
Total risk financing limits of $10 Million combined single limit at $10 Million per occurrence, subject to the following deductibles:
$500 per occurrence for third party general liability property damage;
$1,000 per occurrence for third party auto liability property damage;
50% co-insurance of cost expended by SDRMA, in excess of $10,000 up to $50,000, per occurrence, for employment related claims. However, 100% of the obligation will be waived if certain criteria are met, as
provided in the Memorandum of Coverage.
46
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
11) RISK MANAGEMENT (Continued) Employee Dishonesty Coverage: Total of $400,000 per loss includes Public Employee Dishonesty, Forgery or Alteration and
Theft, Disappearance and Destruction coverage’s effective July 1, 2011.
Property Loss: Replacement cost, for property on file, if replaced, and if not replaced within two years after the loss, paid on an actual cash value basis, to a combined total of $1 Billion per occurrence, subject to a $2,000 deductible per occurrence, effective July 1, 2011.
Boiler and Machinery: Replacement cost up to $100 Million per occurrence, subject to a $1,000 deductible, effective July 1, 2011.
Public Officials Personal Liability: $500,000 each occurrence, with an annual aggregate of $500,000 per each
elected/appointed official to which this coverage applies, subject to the terms, conditions and exclusions as provided in the Memorandum of Coverage’s, deductible of $500 per claim, effective July 1, 2011.
Comprehensive and Collision: on selected vehicles, with deductibles of $250/$500 or $500/$1,000, as elected; ACV limits;
fully self-funded by SDRMA; Policy No. LCA - SDRMA - 201111, effective July 1, 2011.
Workers’ Compensation Coverage and Employer’s Liability: Statutory limits per occurrence for Workers’ Compensation and $5.0 Million for Employer’s Liability Coverage, subject to the terms, conditions and exclusions as provided in the
Memorandum of Coverage, effective July 1, 2011.
Health Insurance
Beginning in January 2008, the District began providing health insurance through SDRMA covering all of its employees, retirees, and other dependents. SDRMA is a self-funded, pooled medical program, administered in conjunction with the
California State Association of Counties (CSAC).
Adequacy of Protection
During the past three fiscal (claims) years none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage
from coverage in the prior year.
12) INTEREST EXPENSE
Interest expense for the years ended June 30, 2012 and 2011, is as follows:
2012 2011
Amount Expensed $ 3,899,927 $ 3,877,531 Amount Capitalized as a Cost of
Construction Projects 1,185,443 1,215,476
Total Interest $ 5,085,370 $ 5,093,007
47
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
13) SEGMENT INFORMATION
During the June 30, 2011 fiscal year, the District issued Revenue Bonds to finance certain capital improvements. While water
and wastewater services are accounted for jointly in these financial statements, the investors in the Revenue Bonds rely solely on the revenues of the water services for repayment.
Summary financial information for the water services is presented for June 30, 2012.
Condensed Statement of Net Assets
June 30, 2012
Water Services
ASSETS
Current Assets $ 102,545,752 Capital Assets 464,947,634
Other Assets 9,854,759
Total Assets 577,348,145
LIABILITIES
Current Liabilities 22,900,886 Long-Term Liabilities 111,941,023
Total Liabilities 134,841,909
NET ASSETS Invested in capital assets, net of related debt 365,842,560
Restricted for debt service 4,715,904 Unrestricted 71,947,772
Total Net Assets $ 442,506,236
48
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
13) SEGMENT INFORMATION - Continued
Condensed Statement of Revenues, Expenses
and Changes in Net Assets For the Year Ended June 30, 2012
Water Services
Operating Revenues Water sales $ 63,803,099
Connection and other fees 1,993,555
Total Operating Revenues 65,796,654
Operating Expenses
Cost of Water Sales 46,106,403 Administrative and General 17,901,008
Depreciation 14,367,787
Total Operating Expenses 78,375,198
Operating Income (Loss) (12,578,544)
Non-operating Revenues (Expenses)
Investment income 416,045 Taxes and assessments 3,487,954
Availability charges 646,278 Gain (loss) on sale of capital assets (278,540)
Miscellaneous revenues 4,788,711 Donations (121,617)
Interest expense (3,899,927) Miscellaneous expenses (1,755,782)
Total Non-operating Revenues (Expenses) 3,283,122
Income (Loss) Before Capital Contributions (9,295,422)
Capital Contributions 6,942,986
Changes in Net Assets (2,352,436)
Total Net Assets, Beginning 444,858,672
Total Net Assets, Ending $ 442,506,236
49
Notes to Financial Statements
See independent auditors’ report.
Years Ended June 30, 2012 and 2011
13) SEGMENT INFORMATION - Continued
Condensed Statement of Cash Flows
For the Year Ended June 30, 2012
Water Services
Net Cash Provided by Operating Activities $ 1,295,193
Net Cash Provided by Non-capital and Related Financing Activities 3,944,795
Net Cash Provided (Used) by Capital and Related Financing Activities (20,519,687)
Net Cash Used by Investing Activities (3,389,679)
Net Increase (Decrease) in Cash and Cash Equivalents (18,669,378)
Cash and cash equivalents, Beginning 53,802,559
Cash and cash equivalents, Ending $ 35,133,181
50
Required Supplementary Information
Years Ended June 30, 2012 and 2011 Schedule of Funding Progress for PERS Actuarial Accrued UAAL as a
Actuarial Actuarial Liability Unfunded Percentage of Valuation Value of (AAL) Entry AAL Funded Covered Covered Date Assets Age (UAAL) Ratio Payroll Payroll (A) (B) (B - A) (A/B) (C) [(B-A)/C] 6/30/10 Miscellaneous $ 57,613,987 $ 81,306,934 $ 23,692,947 70.9% $ 12,140,989 195.1% 6/30/09 Miscellaneous $ 53,736,612 $ 75,300,790 $ 21,564,178 71.4% $ 11,880,481 181.5% 6/30/08 Miscellaneous $ 49,712,016 $ 65,542,736 $ 15,830,720 75.8% $ 11,174,528 141.7%
Schedule of Funding Progress for DPHP Actuarial Accrued UAAL as a Actuarial Actuarial Liability Unfunded Percentage of Valuation Value of (AAL) Entry AAL Funded Covered Covered Date Assets Age (UAAL) Ratio Payroll Payroll (A) (B) (B - A) (A/B) (C) [(B-A)/C]
6/30/11
Miscellaneous $ 7,893,000 $ 18,289,000 $ 10,396,000 43.16% $ 12,429,000 83.64% 6/30/09 Miscellaneous $ 6,273,000 $ 10,070,000 $ 3,797,000 62.29% $ 11,878,000 31.97% 6/30/08 Miscellaneous $ 5,649,000 $ 11,581,000 $ 5,932,000 48.78% $ 11,307,000 52.50%
See independent auditors’ report.
53
Statistical Schedules
The Statistical Schedule is part of understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the District’s overall financial health.
Contents Page
Financial Trends 5566 These schedules contain trend information to help the reader understand how the
District’s financial performance and well-being have changed over time.
Revenue Capacity 6622 These schedules contain information to help the reader assess the factors affecting the
District’s ability to generate its potable and recycled water, and sewer sales as well as
property and sales taxes.
Debt 7700
These schedules present information to help the reader assess the affordability of the District’s current levels of outstanding debt and the District’s ability to issue
additional debt in the future.
Demographic and Economic Information 7744
These schedules offer demographic and economic indicators to help the reader understand the environment within which the District’s financial activities take place
and to help make comparisons over time and with other governments.
Operating Information 7766
These schedules contain information about the District’s operation and resources to
help the reader understand how the District’s financial information relates to the services the District provides and the activities it performs.
Sources
Unless otherwise noted, the information in these schedules is derived from the comprehensive
annual financial reports of the relevant year. The District implemented GASB Statement 34 in 2001; schedules presenting government-wide information include information beginning in
that year.
55
Invested in
Fiscal Capital Assets Total
Year Net of Related Debt Restricted Unrestricted Net Assets
2012 381,725,015$ 4,715,904$ 69,953,460$ 456,394,379$
2011 377,656,762 4,915,555 77,034,267 459,606,584
2010 375,953,042 5,192,111 80,204,428 461,349,581
2009 382,410,491 1,797,512 76,136,868 460,344,871
2008 372,696,591 9,411,114 74,719,712 456,827,417
2007 374,667,591 2,071,307 70,282,627 447,021,525
2006 361,590,845 2,408,473 58,066,009 422,065,327
2005 325,676,089 16,188,364 69,224,020 411,088,473
2004 291,863,666 23,853,441 67,244,139 382,961,246
2003 269,579,907 40,945,837 49,828,535 360,354,279
Source: Otay Water District
Net Assets by Component - Last Ten Fiscal Years
$0
$80,000
$160,000
$240,000
$320,000
$400,000
$480,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Total Net Assets, in Thousands ($)
56
Total
Non-Operating Income (Loss)Change
Fiscal Operating Operating Operating Revenues/Before Capital Capital in Net
Year Revenues Expenses Income (Expenses)Contributions Contributions Assets
2012 68,400,349$ 81,795,466$ (13,395,117)$ 3,357,015$ (10,038,102)$ 6,825,897$ (3,212,205)$
2011 63,204,216 77,266,228 (14,062,012)4,452,825 (9,609,187)7,866,190 (1,742,997)
2010 60,686,681 73,126,342 (12,439,661)5,937,575 (6,502,086)8,839,892 2,337,806
2009 57,103,311 71,507,161 (14,403,850)10,932,096 (3,471,754)6,989,208 3,517,454
2008 55,714,845 71,474,372 (15,759,527)10,623,457 (5,136,070)14,941,962 9,805,892
2007 53,250,481 64,651,050 (11,400,569)9,793,692 (1,606,877)26,563,075 24,956,198
2006 47,861,088 59,528,094 (11,667,006)7,242,280 (4,424,726)15,401,580 10,976,854
2005 43,335,915 56,449,475 (13,113,560)6,271,482 (6,842,078)34,969,305 28,127,227
2004 41,539,293 51,516,096 (9,976,803)3,484,492 (6,492,311)29,099,278 22,606,967
2003 36,961,980 46,143,486 (9,181,506)4,517,049 (4,664,457)22,616,580 17,952,123
Source: Otay Water District
Changes in Net Assets - Last Ten Fiscal Years
-$5,000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Changes in Net Assets, in Thousands ($)
57
Fiscal Wastewater Connection and Percent
Year Water Sales Revenue Other Fees Total Change
2012 63,830,272$ 2,400,313$ 2,169,764$ 68,400,349$ 8.2%
2011 58,293,184 2,396,385 2,514,647 63,204,216 4.1%
2010 56,249,816 2,299,585 2,137,280 60,686,681 6.3%
2009 52,428,648 2,182,429 2,492,234 57,103,311 2.5%
2008 50,808,825 2,386,285 2,519,735 55,714,845 4.6%
2007 48,605,606 2,604,431 2,040,444 53,250,481 11.3%
2006 43,755,610 2,331,094 1,774,384 47,861,088 10.4%
2005 39,348,056 2,018,596 1,969,263 43,335,915 4.3%
2004 39,044,712 1,774,366 720,215 41,539,293 12.4%
2003 34,621,890 1,648,227 691,863 36,961,980 -0.9%
CHART SOURCE DATA
Source: Otay Water District
Operating Revenues by Source - Last Ten Fiscal Years
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Operating Revenues, in Thousands ($)
58
Administrative Percent
Year Water Sales Wastewater and General Depreciation Total Change
2012 46,106,403$ 2,547,929$ 17,926,430$ 15,214,704$ 81,795,466$ 5.9%
2011 42,029,819 2,592,823 18,763,380 13,880,206 77,266,228 5.7%
2010 39,338,495 2,169,988 18,320,362 13,297,497 73,126,342 2.3%
2009 37,252,482 1,890,804 19,888,161 12,475,714 71,507,161 0.05%
2008 35,296,002 2,009,876 21,127,922 13,040,572 71,474,372 10.6%
2007 33,994,841 1,508,672 18,418,441 10,729,096 64,651,050 8.6%
2006 32,043,395 1,899,957 15,477,287 10,107,455 59,528,094 5.5%
2005 30,127,087 2,050,643 13,747,611 10,524,134 56,449,475 9.6%
2004 27,899,376 2,446,603 11,081,599 10,088,518 51,516,096 11.6%
2003 24,477,487 2,548,881 9,310,381 9,806,737 46,143,486 6.1%
CHART SOURCE DATA
Source: Otay Water District
Operating Expenses by Function - Last Ten Fiscal Years
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Operating Expenses, in Thousands ($)
Depreciation Administrative and General Wastewater Cost of Water Sales
59
Fiscal Investment Taxes and Availability Percent
Year Income Assessments Charges Miscellaneous Total Change
2012 436,596$ 3,502,155$ 696,863$ 4,510,171$ 9,145,785$ 4.4%
2011 854,440 3,895,938 653,012 3,360,263 8,763,653 0.2%
2010 1,323,844 3,973,328 670,784 2,777,930 8,745,886 -37.7%
2009 2,252,335 4,586,823 625,065 6,574,850 (2)14,039,073 3.5%
2008 4,538,791 4,591,023 744,722 3,692,206 13,566,742 22.3%
2007 4,416,342 4,151,956 715,664 1,811,619 11,095,581 29.7%
2006 3,188,645 2,779,635 609,099 1,978,632 8,556,011 4.1%
2005 2,052,292 2,326,526 556,590 3,285,128 (1)8,220,536 15.5%
2004 1,097,449 3,071,685 1,132,278 1,816,967 7,118,379 -10.8%
2003 2,578,231 2,600,411 1,069,750 1,731,384 7,979,776 -12.4%
(1) The District sold capital assets during Fiscal Year 2005 which resulted in a gain of $2,196,655.
(2) The District received a large, one-time legal settlement as a member of a class action lawsuit in Fiscal Year 2009.
Source: Otay Water District
Non-Operating Revenues by Source - Last Ten Fiscal Years
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Non-Operating Revenues, in Thousands ($)
Fiscal Year
60
Fiscal Interest Percent
Year Donations (1)Expense Miscellaneous Total Change
2012 121,617$ 3,899,927$ 1,767,226$ (2)5,788,770$ 34.3%
2011 120,648 3,877,531 312,649 4,310,828 53.5%
2010 100,240 2,404,530 303,541 2,808,311 -9.6%
2009 95,270 1,340,110 1,671,597 3,106,977 5.6%
2008 80,541 2,601,252 261,492 2,943,285 126.1%
2007 80,000 950,479 271,410 1,301,889 -0.9%
2006 75,000 959,225 279,506 1,313,731 -32.6%
2005 61,411 1,327,844 559,799 1,949,054 -46.4%
2004 59,220 1,252,307 2,322,360 3,633,887 4.9%
2003 68,756 947,099 2,446,872 3,462,727 18.8%
(1) Donations are contributions to the Water Conservation Authority formed in 1999. See Note 9 in the Notes
to Financial Statements for more information.
(2) Miscellaneous expense includes $1.4 million of non-capitalizable expenses with corresponding miscellaneous
revenues. In prior years these expenses and revenues were presented, net of revenue, in miscellaneous revenues.
Source: Otay Water District
Non-Operating Expenses by Function - Last Ten Fiscal Years
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Non-Operating Expenses, in Thousands ($)
Miscellaneous Interest Expense Donations
61
Fiscal PercentYearRealPersonalTotalChange
2012 22,556,489,450$ 588,978,085$ 23,145,467,535$ -1.59%
2011 22,997,752,952 521,424,896 23,519,177,848 -2.81%
2010 23,671,616,006 527,200,694 24,198,816,700 -9.54%
2009 26,269,630,081 482,465,611 26,752,095,692 3.28%
2008 25,333,821,005 568,975,196 25,902,796,201 14.19%
2007 22,166,251,649 518,441,943 22,684,693,592 15.94%
2006 19,204,029,184 361,636,280 19,565,665,464 19.13%
2005 16,121,465,817 301,937,884 16,423,403,701 16.23%
2004 13,833,852,366 296,691,701 14,130,544,067 16.50%
2003 11,786,410,218 343,253,933 12,129,664,151 15.63%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: County of San Diego Auditor and Controller
Last Ten Fiscal Years
Assessed Valuation of Taxable Property within the District -
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Assessed Valuation of Property, In Thousands ($)
62
Fiscal
Year Purchases Sales Production Purchases Sales
2012 13,304,444 12,510,894 285,190 1,381,300 1,652,833
2011 13,007,365 12,363,608 461,060 1,293,310 1,676,775
2010 13,580,004 12,749,799 449,771 1,250,873 1,774,563
2009 15,233,498 14,923,843 367,461 1,593,621 1,991,737
2008 16,572,271 15,575,662 538,227 1,566,148 2,001,137
2007 18,255,735 16,059,464 550,206 284,499 (2)1,920,287
2006 17,972,146 14,723,988 537,400 - 1,722,057
2005 16,412,711 13,708,001 501,114 - 1,447,020
2004 18,424,007 14,711,176 568,589 - 1,492,453
2003 16,486,502 13,613,885 486,739 - 1,109,691
(1) Rates are not presented on this schedule because the District has multiple water rates for various meter sizes and
cannot represent rates in a meaningful manner with a weighted average rate. See Water and Sewer rates on page 67-68
for meter sizes and their corresponding water rates.
(2) The District entered into an agreement with the City of San Diego and began purchasing recycled water from
their South Bay Water Reclamation Plant in 2007.
Source: Otay Water District
Per 100 Cubic Feet
Potable Water (1)
Water Purchases, Production, and Sales - Last Ten Fiscal Years
Recycled Water (1)
Per 100 Cubic Feet
0
50,000
100,000
150,000
200,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Recycled Water Purchases Recycled Water Production Potable Water Purchases
Water Purchases, Productions, and Sales, in Hundred Cubic Feet (HCF)
63
Fiscal
Year Potable Recycled Total
2012 457 24 481
2011 283 9 292
2010 288 17 305
2009 113 44 157
2008 224 22 246
2007 563 85 648
2006 788 47 835
2005 1,406 95 1,501
2004 2,125 64 2,189
2003 1,782 123 1,905
Source: Otay Water District
Meter Sales by Type - Last Ten Fiscal Years
0
500
1,000
1,500
2,000
2,500
3,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Meter Sales by Type
Recycled Potable
64
Fiscal
Year Potable Recycled Sewer Total
2012 48,665 696 4,655 54,016
2011 48,169 685 4,655 53,509
2010 47,844 684 4,646 53,174
2009 47,689 671 4,638 52,998
2008 47,591 626 4,627 52,844
2007 47,461 588 4,567 52,616
2006 46,851 558 4,571 51,980
2005 46,042 483 4,570 51,095
2004 44,583 348 4,548 49,479
2003 42,438 312 4,510 47,260
Source: Otay Water District
Number of Customers by Service Type - Last Ten Fiscal Years
0
20,000
40,000
60,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Number of Customers by Service Type
Potable Recycled Sewer
Fiscal Year
65
LEVIES (1)
Fiscal 1% Property Special Total Total Net Percent
Year Tax Assessments Levies Collections (1)Receivable Collected
2012 2,570,764$ 2,162,134$ 4,732,898$ 4,725,649$ 7,249$ 100%
2011 2,651,938 2,497,117 5,149,055 5,123,709 25,346 100%
2010 3,030,369 2,179,270 5,209,639 5,259,442 (49,803) 101%
2009 3,415,348 2,370,767 5,786,115 5,712,831 73,284 99%
2008 3,202,880 2,627,518 5,830,398 5,754,836 75,563 99%
2007 2,775,882 2,465,497 5,241,379 5,263,367 (21,988) 100%
2006 1,420,049 2,519,927 3,939,976 3,935,983 3,993 100%
2005 1,173,319 2,430,267 3,603,586 3,455,852 147,734 96%
2004 1,844,604 2,442,356 4,286,961 4,108,581 178,380 96%
2003 1,541,362 2,246,865 3,788,227 3,721,776 66,451 98%
(1) Levies and collections include Current Secured, Current Unsecured, and Supplemental Homeowners Exemptions.
Source: Otay Water District
Property Tax Levies and Collections - Last Ten Fiscal Years
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Levies and Collections, in Thousands ($)
Levies Collections
66
System Fee (Meter Size)2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Residential
3/4"14.58$ 14.58$ 14.58$ 13.83$ 12.30$ 11.30$ 10.25$ 10.25$ 10.25$ 10.25$
1"18.52 18.52 18.52 17.56 19.80 18.15 16.50 16.50 16.50 16.50
1.5"28.37 28.37 28.37 26.90 51.95 35.75 32.50 32.50 32.50 32.50
Non-Residential & Others
3/4"14.58 14.58 14.58 13.83 24.00 22.00 20.00 20.00 20.00 20.00
1"18.52 18.52 18.52 17.56 36.95 33.90 30.80 30.80 30.80 30.80
1.5"28.37 28.37 28.37 26.90 51.95 47.50 43.30 43.30 43.30 43.30
2"40.18 40.18 40.18 38.10 64.95 59.60 54.20 54.20 54.20 54.20
3"71.68 71.68 71.68 67.98 104.55 95.90 87.20 87.20 87.20 87.20
4"107.13 107.13 107.13 101.59 119.70 109.80 99.80 99.80 99.80 99.80
6"205.59 205.59 205.59 194.96 239.20 219.45 199.50 199.50 199.50 199.50
8"323.73 323.73 323.73 307.00 - - - - - -
10"461.57 461.57 461.57 437.71 456.60 418.90 380.50 380.50 380.50 380.50
CWA and MWD Pass-through charges (Meter Size)
Residential
3/4"14.01 11.82 9.77 4.33 3.85 3.55 2.85 2.50 2.00 1.00
1"23.33 19.69 16.28 6.91 6.15 5.65 4.55 4.00 3.20 1.60
1.5"46.74 39.44 32.61 13.04 11.60 10.65 8.55 7.50 6.00 3.00
Non-Residential & Others
3/4"14.01 11.82 9.77 4.33 3.85 3.55 2.85 2.50 2.00 1.00
1"23.33 19.69 16.28 6.91 6.15 5.65 4.55 4.00 3.20 1.60
1.5"46.74 39.44 32.61 13.04 11.60 10.65 8.55 7.50 6.00 3.00
2"74.74 63.07 52.15 22.54 20.05 18.45 14.80 13.00 10.40 5.20
3"149.48 126.14 104.30 41.53 36.95 34.05 27.35 19.20 9.60 9.60
4"233.58 197.17 162.98 70.98 63.15 58.20 46.75 41.00 16.40 16.40
6"467.09 394.17 325.92 129.82 115.50 106.45 85.50 75.00 30.00 30.00
8"747.39 630.71 521.51 374.62 - - - - - -
10"1,070.74 903.58 749.61 538.52 300.30 276.75 222.30 195.00 78.00 78.00
Fire Services
All Types 30.11 30.11 30.11 28.55 25.40 23.30 21.20 21.20 21.20 21.20
Sewer Fixed Fee 41.75 39.39 36.88 33.26 32.70 30.90 26.90 23.35 20.95 20.95
Source: Otay Water District
Water and Sewer Fixed Rates - Last Ten Fiscal Years
67
Usage Rate (1)2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Tier 1 1.58$ 1.49$ 1.35$ 1.12$ 1.12$ 1.08$ 1.05$ 1.01$ 1.01$ 1.01$
Tier 2 2.45 2.31 2.10 1.74 1.85 1.78 1.73 1.67 1.67 1.67
Tier 3 3.19 3.00 2.73 2.26 2.01 1.94 1.88 1.81 1.81 1.81
Tier 4 4.92 4.63 4.21 3.48 2.94 2.83 2.75 2.65 2.13 2.13
Tier 5 - - - - - - 2.65 2.65
Tier 1 2.43 2.29 2.08 1.72 1.85 1.78 1.73 1.67 1.78 1.78
Tier 2 3.15 2.97 2.70 2.23 2.01 1.94 1.88 1.81 - -
Tier 3 4.85 4.57 4.15 3.43 2.94 2.83 2.75 2.65 - -
Publicly-Owned (2)2.06 1.99 1.93 1.86 1.86 1.86
Commercial & Others (3)1.98 1.91 1.85 1.78 1.78 1.78
Government Fee (2)0.29 0.29 0.29 0.29 0.28 - - - - -
Tier 1 2.59 2.44 2.22 1.84
Tier 2 2.66 2.50 2.27 1.88
Tier 3 2.70 2.54 2.31 1.91
Tier 1 3.53 3.32 3.02 2.50
Tier 2 3.60 3.39 3.08 2.55
Tier 3 3.66 3.45 3.14 2.60
Recycled (Commercial)1.67 1.65 1.57 1.51 1.51 1.51
Recycled (Publicly-Owned) (2)1.75 1.73 1.65 1.59 1.59 1.59
Tier 1 3.02 2.84 2.58 2.13
Tier 2 3.06 2.88 2.62 2.17
Tier 3 3.12 2.94 2.67 2.21
Energy Pumping Fee:
Per 100 cubic feet (4)0.045 0.044 0.038 0.034 0.034 0.032 0.032 0.032 0.032 0.032
(1) Effective 2009, all non-residential customers are charged based on a tiered rate system in which the water rates are
based on meter size and amount of water units consumed each month.
(2) An additional $.29 per unit is charged to governmental customers this is in lieu of tax revenues. In the past an additional $.08
is added to the publicly-owned companies water rate.
(3) Others include landscaping, agricultural, and temporary meters. Agricultural customers under Special Agricultural
Water Program (SAWR) shall receive a $0.12 discount per hundred cubic feet (HCF).
(4) Water customers are charged an energy pumping charge based on the quantity of water used and the elevation to which
the water has been lifted to provide service. The energy pumping charge is the rate of $.045 per 100 cubic feet of water
for each 100 feet of lift above the base elevation of 450 feet. All water customers are in one of twenty-nine zones based
on elevation.
Source: Otay Water District
Recycled:
Public Agency & Commercial:
Landscape, Agricultural & Construction:
Master Meter:
Residential:
Water and Sewer Variable Rates - Last Ten Fiscal Years
68
FISCAL YEAR 2012
Annual % of
Business Type Revenues Water Sales
1. City of Chula Vista Publicly Owned 2,534,914$ 4.0%
2. State of California Publicly Owned 983,882 1.5%
3. Eastlake Summit Assoc Commercial (Irrigation)741,847 1.2%
4. County of San Diego Publicly Owned 703,141 1.1%
5. Sweetwater School District Publicly Owned 495,750 0.8%
6. Cuyamaca College Publicly Owned 459,615 0.7%
7. ERP Operating LP Commercial (Irrigation)431,952 0.7%
8. Windingwalk Master Association Commercial (Irrigation)429,534 0.7%
9. Belleme HOA Commercial (Irrigation)399,036 0.6%
10. Eastlake Country Club Commercial (Irrigation)397,629 0.6%
Total (10 Largest)7,577,300$ 11.9%
Other Customers 56,252,972 88.1%
Total Water Sales 63,830,272$ 100.0%
FISCAL YEAR 2004 (1)
Annual % of
Business Type Revenues Water Sales
1. City of Chula Vista Publicly Owned 1,127,011$ 2.9%
2. State of California Publicly Owned 849,140 2.2%
3. County of San Diego Publicly Owned 725,507 1.9%
4. Steele Canyon Irrigation (Potable Permanent)526,582 1.3%
5. Eastlake III Business/Irrigation (Reclaimed)419,942 1.1%
6. Singing Hills Residential/Irrigation (Potable Permanent)390,720 1.0%
7. McMillin Construction (Potable Temporary)377,591 1.0%
8. Eastlake Country Club Irrigation (Reclaimed Permanent)325,036 0.8%
9. California Bank & Trust Irrigation (Reclaimed Permanent)243,689 0.6%
10. Sweetwater School District School/Irrigation (Reclaimed Publicly Owned)224,054 0.6%
Total (10 Largest)5,209,272$ 13.3%
Other Customers 33,835,440 86.7%
Total Water Sales 39,044,712$ 100.0%
(1) Because the District did not begin tracking its ten largest customers until Fiscal Year 2004, data for nine years ago is not available.
Accordingly, the current fiscal year and Fiscal Year 2004 are presented.
Source: Otay Water District
Ten Largest Customers - Current Year and Nine Years Ago
Customer Name
Customer Name
69
As a Share
Fiscal Population GO Revenue Capital Per of Personal
Year Estimate Bond COPS Bonds Notes Leases Total Capita Income (1)
2012 208,500 6,339,027$ 57,886,449$ 50,321,421$ -$ - 114,546,897$ 549.39$ 1.13%
2011 206,500 6,803,577 59,715,531 51,180,822 6,010 - 117,705,940 570.00 1.19%
2010 206,000 7,283,127 61,489,612 51,255,224 359,744 - 120,387,707 584.41 1.28%
2009 195,000 7,726,575 63,213,693 - 701,516 - 71,641,784 367.39 0.83%
2008 191,500 8,093,302 64,892,774 - 1,031,730 - 74,017,806 386.52 0.85%
2007 190,000 8,445,029 65,851,790 - 1,350,778 - 75,647,597 398.15 0.89%
2006 189,000 8,776,755 24,909,352 - 1,659,037 51,589 35,396,733 187.28 0.44%
2005 186,000 9,093,482 25,653,607 - 1,956,871 100,666 36,804,626 197.87 0.49%
2004 180,000 9,395,209 25,666,312 - 2,244,633 147,343 37,453,497 208.07 0.54%
2003 176,000 9,681,937 26,298,239 - 2,522,665 191,742 38,694,583 219.86 0.62%
(1) See the Demographics and Economic Statistics schedule on page 75 for personal income data.
Source: Otay Water District
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years
$0
$100
$200
$300
$400
$500
$600
$700
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Outstanding Debt, Per Capita
70
Adjusted Net Revenues
Fiscal Adjusted Operating Available for Debt Service Requirements (4)Coverage
Year Revenues (1)Expenses (2)Debt Service Principal Interest Total Factor (3)
2012 74,484,691$ 64,028,686$ $10,456,005 $1,850,000 $6,050,746 $7,900,746 132%
2011 69,653,627 60,117,245 9,536,382 1,795,000 5,084,450 6,879,450 139%
2010 65,573,058 57,084,904 8,488,154 1,745,000 2,720,258 4,465,258 190%
2009 63,739,773 57,076,567 6,663,207 1,700,000 2,342,048 4,042,048 165%
2008 63,732,275 56,420,286 7,311,989 800,000 2,567,884 3,367,884 217%
2007 69,442,301 52,413,282 17,029,019 790,000 1,513,834 2,303,834 739%
2006 58,572,428 47,520,682 11,051,746 745,000 917,790 1,662,790 665%
2005 56,597,040 43,936,109 12,660,931 650,000 869,715 1,519,715 833%
2004 57,195,289 38,980,975 18,214,314 635,000 891,796 1,526,796 1,193%
2003 53,077,164 33,787,868 19,289,296 620,000 908,416 1,528,416 1,262%
(1) Adjusted revenues exclude sewer revenues and taxes collected for Improvement District 27 and are inclusive
of capacity fees.
(2) Adjusted operating expenses exclude sewer expenses and depreciation expense.
(3) The District's bond covenants require a minimum coverage factor of 125%.
(4) Pledge debts are Certificates of Participation (COPS) and Revenue Bonds.
Source : Otay Water District
Pledged Revenue Coverage - Last Ten Fiscal Years
00%
200%
400%
600%
800%
1,000%
1,200%
1,400%
2003 2004 2005 2006 2007 2008 2009 2010 2012
Fiscal Year
Coverage Factor, in Percentage (%)
71
Net Bonded
Net Debt to Net Bonded
Fiscal Population Assessed Bonded Assessed Debt Per
Year Estimate Valuation Debt Valuation Capita
2012 208,500 23,145,467,535$ $6,339,027 0.03%30.40
2011 206,500 23,519,177,848 6,803,577 0.03%32.95
2010 206,000 24,198,816,700 7,283,127 0.03%35.35
2009 195,000 26,752,095,692 7,726,575 0.03%39.62
2008 191,500 25,902,796,201 8,093,302 0.03%42.26
2007 190,000 22,684,693,592 8,449,025 0.04%44.47
2006 189,000 19,565,665,464 8,776,755 0.04%46.44
2005 186,000 16,423,403,701 9,093,482 0.06%48.89
2004 180,000 14,130,544,067 9,395,209 0.07%52.20
2003 176,000 12,129,664,151 9,681,937 0.08%55.01
Source: Otay Water District
Ratios of General Bonded Debt Outstanding -
Last Ten Fiscal Years
0.00%
0.01%
0.02%
0.03%
0.04%
0.05%
0.06%
0.07%
0.08%
0.09%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Bonded Debt Ratios, in Percentage (%)
72
Computation of Direct and Overlapping Bonded Debt
June 30, 2012 2011-12 Assessed Valuation: $23,145,467,535 Redevelopment Incremental Valuation: 282,854,004
Adjusted Assessed Valuation: $22,862,613,531 Total Debt District’s Share of DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/12 % Applicable (1) Debt 6/30/12 Metropolitan Water District $ 196,545,000 1.262% $ 2,486,294 Otay Water District Improvement District No. 27 6,755,000 100.000 6,755,000 Grossmont-Cuyamaca Community College District 188,314,045 16.979 31,973,842 Southwestern Community College District 240,489,345 44.921 108,030,219 Grossmont Union High School District 412,395,045 17.503 72,181,513 Sweetwater Union High School District 334,479,415 54.285 181,572,150
Chula Vista City School District 70,265,000 62.882 44,184,037 San Ysidro School District 133,902,611 60.164 80,561,167 Other School Districts 2,951,010,678 Various 41,142,132 Grossmont Healthcare District 221,902,076 15.443 34,268,338 City of Chula Vista Community Facilities District 215,740,000 100.000 215,740,000
Chula Vista City School District Community Facilities Districts 5,580,000 100.000 5,580,000 Sweetwater Union High School District Community Facilities Districts 173,576,177 2.523-100. 161,896,609 City 1915 Act Bonds 44,237,400 37.539-100. 38,191,236 California Statewide Communities Development Authority San Diego County / Venture Community Center Assessment District 1,078,754 100.000 1,078,754 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $1,025,641,291 Ratios to 2011-12 Assessed Valuation: Direct Debt ($6,755,000) ............................................................ 0.03% Total Overlapping Tax and Assessment Debt .............................. 4.43%
DIRECT AND OVERLAPPING GENERAL FUND DEBT: San Diego County General Fund Obligations $395,115,000 6.633% $ 26,207,978 San Diego County Pension Obligations 787,112,618 6.633 52,209,180 San Diego Superintendent of Schools Certificates of Participation 18,750,000 6.633 1,243,688
Otay Water District Certificates of Participation 58,245,000 100.000 58,245,000 Grossmont and Southwestern Community College District General Fund Obligations 2,870,000 16.979 & 44.921 858,926 Grossmont Union High School District Certificates of Participation 1,080,000 17.503 189,032 Sweetwater Union High School District Certificates of Participation 11,325,000 54.285 6,147,776 Chula Vista City School District Certificates of Participation 148,925,000 62.882 93,647,019
San Ysidro School District Certificates of Participation 43,946,015 60.164 26,439,680 Other School District Certificates of Participation 11,235,000 Various 3,115,241 City of Chula Vista Certificates of Participation 132,290,000 71.723 94,882,357 City of San Diego General Fund Obligations 481,630,000 1.113 5,360,542 San Miguel Consolidated Fire Protection District Certificates of Participation 5,855,000 52.797 3,091,264
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $371,637,683 Less: Otay Water District Certificates of Participation (100% self-supporting) 58,245,000 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $313,392,683 TOTAL GROSS DIRECT DEBT $65,000,000 TOTAL NET DIRECT DEBT $6,755,000 TOTAL OVERLAPPING DEBT $1,332,278,974 GROSS COMBINED TOTAL DEBT $1,397,278,974 (2) NET COMBINED TOTAL DEBT $1,339,033,974
(1) Percentage of overlapping agency's assessed valuation located within boundaries of the District.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Qualified Zone Academy Bonds are included based on principal due at maturity. Ratios to Adjusted Assessed Valuation: Gross Total Direct Debt ($65,000,000) ..................................... 0.28% Net Total Direct Debt ($6,755,000) ............................................ 0.03% Gross Combined Total Debt ......................................................... 6.11% Net Combined Total Debt ............................................................ 5.86%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/12: $0 Source: California Municipal Statistics, Inc. and Otay Water District
73
2003
% of Total % of TotalCountyCounty
Employer Employees Rank Employment Employees Rank Employment
U.S. Department of Defense 133,323 1 9.50%-0.00%
Federal Government 45,500 2 3.24%40,700 1 2.96%
State of California 42,900 3 3.06%38,800 2 2.82%
UC San Diego 27,391 4 1.95%23,225 3 1.69%
Sharp HealthCare 15,231 5 1.09%12,945 4 0.94%
County of San Diego 15,076 6 1.07%16,810 5 1.22%
San Diego Unified School District 14,603 7 1.04%26,701 6 1.94%
Scripps Health 14,097 8 1.00%10,517 7 0.76%
Qualcomm Inc.11,400 9 0.81%5,000 -0.36%
City of San Diego 10,057 10 0.72%12,398 8 0.90%
General Atomics (and affiliated companies)7,386 -0.53%0 9 0.00%
UCSD Medical Center 6,043 -0.43%6,619 10 0.48%
Total 343,007 23.65%193,715 14.03%
Source: California Labor Market Info, The Daily Transcript, and San Diego Business Journal
Principal Employers - Current Year and Nine Years Ago
2012
74
Personal Per Capita
Income Personal Unemployment
Year Population (in 000'S)Income Rate
2012 (1) 3,143,429 154,200,000$ 48,674$ 9.30%
2011 3,140,069 149,600,000 47,776 10.40%
2010 3,095,313 137,525,000 45,627 10.50%
2009 3,173,407 134,696,000 44,412 10.20%
2008 3,001,072 143,783,000 45,728 6.00%
2007 2,959,734 131,499,657 44,830 4.60%
2006 2,948,362 126,193,721 42,801 4.20%
2005 2,941,658 118,792,540 40,383 4.50%
2004 2,938,822 113,003,044 38,452 5.10%
2003 2,932,802 104,630,453 35,676 5.70%
(1) Forecast
Source: SANDAG, Census 2010,California Department of Finance; LAEDC-Los Angeles Economic Development
Corp., The Kyser Center for Economic Research Employment Development Department; Labor Market Info
Demographic and Economic Statistics - Last Ten Fiscal Years
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Unemployment Rate, in Percentage (%)
75
Department 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
General Manager 5 6 6 6 6 6 6 6 4 4
Finance 32 35 38 37 36 35 34 34 33 32
Operations/Maintenance 66 66 68 70 71 71 72 71 70 70
Engineering 21 21 21 23 27 31 15 13 33 31
Administrative Services 18 19 20 20 20 19 19 20 21 24
IT and Strategic Planning 13 12 13 13 13 13 12 11 10 10
Development Services (1) - - - - - - 17 17 - -
Total 155 159 166 169 173 175 175 172 171 171
(1) Development Services was broken out from the Engineering and Planning Department in FY 2005
and then re-combined in FY 2007.
Source : Otay Water District
Number of Employees by Function - Last Ten Fiscal Years
125
130
135
140
145
150
155
160
165
170
175
180
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Total Employees
76
Meter Size 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
3/4" & 5/8"44,376 44,065 43,815 43,641 43,551 43,544 43,070 42,420 41,069 39,138
1"2,099 1,881 1,815 1,804 1,747 1,618 1,514 1,364 1,220 1,132
1-1/2"1,326 1,317 1,317 1,309 1,275 1,242 1,199 1,147 1,037 918
2"1,277 1,278 1,292 1,299 1,283 1,262 1,242 1,199 1,168 1,140
3"75 75 75 75 76 76 69 67 66 61
4"180 193 184 202 258 275 277 289 329 308
6"19 21 22 21 19 24 27 27 27 27
Others 9 9 8 9 10 7 11 12 15 26
Total 49,361 48,839 48,528 48,360 48,219 48,048 47,409 46,525 44,931 42,750
% Change 1.1%0.6%0.3%0.3%0.4%1.3%1.9%3.5%5.1%4.4%
Increase 522 311 168 141 171 639 884 1,594 2,181 1,791
Source : Otay Water District
Active Meters by Size - Last Ten Fiscal Years
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Active Meters by Size
Fiscal Year
77
2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Water System
Service Area (Square Miles)125.5 125.5 125.5 125.5 125.5 125.5 125.5 125.5 125.5 125.5
Miles of Potable Water Main 724 723 723 722 722 680 663 623 609 594
Number of Operational Storage
Reservoirs in Service 40 40 40 38 36 37 37 36 37 37
Water Storage Capacity
(in Acre-Feet) 693.64 694.74 663.8 655.5 605.5 601.7 601.7 582.4 585.4 582.3
Total Water Connections
(No. of Meters in Service)49,493 49,094 48,662 48,522 48,376 47,615 47,409 46,525 44,931 42,750
Number of Pump Stations 24 24 23 24 24 24 22 21 21 21
Number of Potable Water Valves 20,317 19,522 19,522 19,192 19,131 18,721 18,042 17,696 16,204 15,830
Sewer System
Miles of Sewer Lines 88.0 88.0 88.0 88.0 88.0 86.2 86.2 85.9 85.4 84.8
Number of Treatment Plants 1 1 1 1 1 1 1 1 1 1
Treatment Plant Capacity
(Million Gallons per Day)1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3
Total Flows for Fiscal Year 2012
(in Million Gallons)423 481 474 483 503 514 528 506 479 463
Recycled System
Miles of Recycled Water Mains 99.0 98.0 98.0 97.0 93.0 83.0 77.6 76.4 70.7 60.6
Number of Pumping Facilities 3 3 3 3 3 3 2 2 2 2
Number of Acre-Feet Storage 134.1 134.1 134.1 133.2 135.0 134.1 97.3 97.3 97.3 97.3
Number of Recycled Water Valves 1,430 1,380 1,380 1,338 1,314 1,245 1,189 1,155 1,097 948
Source: Otay Water District
Operating and Capital Indicators - Last Ten Fiscal Years
0
200
400
600
800
2003 2004 2005 2006 2007 2008 2010 2011 2012
Fiscal Year
Potable Water Mains, in Miles
78