HomeMy WebLinkAboutFY 2014 Comprehensive Annual Financial Report
Otay Water District
Comprehensive Annual Financial Report
for the years ended June 30, 2014 and 2013
BOARD OF DIRECTORS
Jose Lopez, Division 4 President
David Gonzalez, Jr., Division 1 Vice President
Mitchell Thompson, Division 2 Treasurer
Gary Croucher, Division 3
Mark Robak, Division 5
DISTRICT FINANCIAL MANAGEMENT
Mark Watton General Manager
German Alvarez Assistant General Manager
Joseph R. Beachem Chief Financial Officer
PREPARED BY Finance Department
Otay Water District, Spring Valley, California
Table of Contents
Introductory Section
Letter of Transmittal…………………………………………………………………………………………………………………… 1
Organization Chart…………………………………………………………………………………………...……………………….. 10
List of Principal Officials……………………………………………………………………………………………………………… 11
GFOA Certificate of Achievement…………………………………………………………………………………………… 12
Financial Section
Independent Auditors’ Report………………………………………………………………………………………………..…. 13
Management’s Discussion & Analysis…………………………………………………...……………………………… 16
Basic Financial Statements:
Statements of Net Position..……………………………………………………………………………………………….…. 23
Statements of Revenues, Expenses, and Changes in Net Position…………..………………. 25
Statements of Cash Flows……………………………………………………………….……………………………………… 26
Notes to Financial Statements……………………………………………………………………………………………... 28
Required Supplementary Information:
Schedule of Funding Progress for PERS………………………………………………...…………………………… 64
Schedule of Funding Progress for DPHP…………………………………………….....…………………………… 64
Statistical Section
Net Position by Component………………………………………………………………………………………………….. 66
Changes in Net Position………………………………………………………………..…………………………………………. 67
Operating Revenues by Source…………………………………………………………………………………………….. 68
Operating Expenses by Function………………………………………………………..………………………………… 69
Non-Operating Revenues by Source…………………………………………………………………………………… 70
Non-Operating Expenses by Function……………………………………………………………………………… 71
Assessed Valuation of Taxable Property within the District………………………………………… 72
Water Purchases, Production, and Sales……………………………………………...………………………….… 73
Meter Sales by Type…………………………………………………………………….……………………………………………. 74
Number of Customers by Service Type……………………………………………………………………………….. 75
Property Tax Levies and Collections…………………………………………………………………………………….. 76
Water Fixed Rates ……….………………………………………………………………………………………………………….…. 77
Water Variable Rates…….…………………………………………………………………………………………………………... 78
Sewer Variable and Fixed Rates…….………………………………………………………………………..…………….. 79
Ten Largest Customers…………………………………………………………………………………………………………….. 80
Ratios of Outstanding Debt by Type…………………………………………………….……………………………….. 81
Pledged Revenue Coverage………………………………………………………………………………………………….... 82
Ratios of General Bonded Debt Outstanding…………………………………………………………………...… 83
Computation of Direct and Overlapping Bonded Debt………………………………………………… 84
Principal Employers…………………………..………………………………………......................................................... 85
Demographic and Economic Statistics……………………………………………………………………………….. 86
Number of Employees by Function………………………………………………………………………………………. 87
Active Meters by Size………………………………………………………………..………………………………………………. 88
Operating and Capital Indicators…………………………………………………………………………………………... 89
October 22, 2014
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, 2014.
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 Teaman, Ramirez & Smith Inc. 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,
2014, 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. In the independent auditors’ opinion, the following
District’s financial statements present fairly, in all material respects, the respective financial position
of the Otay Water District as of June 30, 2014 and are presented in conformity with GAAP. The
Independent Auditors’ Report is presented as the first component of the financial section of this
report.
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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 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 10.
Over the last 58 years, the District has grown from a handful of customers and two employees to
become an organization operating a network of more than 916 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 approxi-
mately 49,260 potable and
713 recycled customers
within 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 to purchase treated water from CWA
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directly and from Helix Water District via contract with CWA. These actions have 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 in 2010. 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 4,679 customer accounts
within portions of the communities of La
Mesa, Rancho San Diego, El Cajon, Jamul,
and Spring Valley. Wastewater collected is
conveyed to the District’s Ralph W.
Chapman Water Recycling Facility
(RWCWRF), which is capable of recycling
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 however, this slowdown appears to have leveled off as the District’s Public Services
Division approved on average 16 permits per month, and sold 195 water meters in fiscal 2013-2014.
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. The passage of Proposition 1 will fund critical
investment in regional water supply solutions including recycling and desalination. These
constraints are being actively addressed by the State Water Project and the Bay Delta
927‐I Recycled Water Reservoir Cover and Liner Replacement
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Balanced Scorecard
Conservation Plan as a part of California’s overall water management portfolio. It is being
developed as a 50-year habitat conservation plan with the goals of restoring the Sacramento-San
Joaquin delta ecosystem and securing California water supplies. In addition, weather and rainfall
always bring a level of uncertainty to the delivery of water to customers in the arid southwestern
states. California is experiencing an unprecedented drought due to three years of lower than
anticipated rainfall. In response, Governor Brown declared a statewide drought emergency
conservation regulations. On July 15, 2014, the State Water Resources Board, in response to
continued drought conditions, set forth emergency conservation regulations. 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 now expected to gradually
improve. The population within the District’s service area continues to increase, albeit at a reduced
rate. As of July 2014, it is estimated that the District served 213,000 residents. The San Diego
Association of Governments (SANDAG), the regional planning agency, has estimated the District’s
approximate growth will be 1.6% per year for the next decade. The District projects an ultimate
customer population of 285,000 residents.
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 2015 – 2018) will take the District through it’s 16th year of
strategic planning.
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 to
achieve the strategic vision. Performance metrics are designed to ensure the day-to-day
operations of the utility are meeting agreed-upon expectations. Both performance metrics and
objectives are revised from the prior year, 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
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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.
BUDGETING CONTROLS
The District views the budget as an essential tool for proper financial management and is adopted
prior to the start of each fiscal year. The budget is developed by combining the District’s strategic
objectives and measures with input from the various departments of the organization. By
incorporating these strategic measures and objectives the budget becomes a direct reflection of
the District’s strategic plan. The budget 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, strategic objectives, and other
useful information that allows the users to gain a general understanding of the District’s financial
status and future. To monitor the District’s performance monthly comparison reports of budget to
actual are prepared and distributed to all department heads, with top level information provided to
the Board at the monthly board meetings.
BUDGET SUMMARY
The Otay Water District’s operating expenditures consist of three major sectors: potable water,
recycled water, and sewer. The total budget is $91,640,000 for Fiscal Year 2015. Revenues from
potable and recycled water are projected to be $80,785,700, about $5,412,100 (7.2%) more than the
Fiscal Year 2014 budget. Water sales volumes are expected to increase by less than .7% versus FY
2014. This slight increase in volume is the net result of the economic recovery and conservation
efforts. The remaining 6.5% increase is due to rate increases that are essential to keep pace with
rising wholesale water costs. MWD and CWA water supply rate increased 7.7% due to high cost of
supply programs, higher energy costs and increasing operating costs. Sewer revenues are
projected to be $3,007,700, about $306,100 more than the Fiscal Year 2014. This increase, from
higher sewer rates, is primarily to cover $1.6 million of capital projects in Fiscal Year 2015. The
remaining budgeted revenues of $7.8 million come from various special fees, assessments, and
miscellaneous income.
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The 2014-15 Capital Improvement Program
(CIP) budget consists of 73 projects and a
budget of $10.6 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 $3.2 million
compared to last year’s projection. The
decrease is due to the completion of some
large projects and the deferment of several
projects to match the timing of land
development.
THE FUTURE
The coming years will continue to pose challenges for those in California’s water community. For
instance, the ongoing drought due to lower rainfall and the challenges facing the Sacramento-San
Joaquin Bay Delta, the source of 30 percent of Southern California’s water supply, are being
addressed by the Bay Delta Conservation Plan (BDCP); however, the impact to end users has not
been fully determined at this time. The District, as a member of the CWA, is well positioned for
water coming from the Colorado River thanks to the Quantification Settlement Agreement (QSA).
As the cost of water has increased to the retail customer, sales volumes have decreased. As one
would expect, water sales reductions have impacted revenues and will continue to affect the
District finances. However, these volume decreases have moderated as the economy continues to
recover and the District is seeing slight increases in water volumes. Our success as an
organization is significantly enhanced by the practices and policies put in place by the Board of
Directors to ensure the strength and stability of the District. We are fully confident that with these
policies and practices, supported by dedicated and talented staff, we will achieve continued
success as an organization and thus, assure the well-being of the people we serve.
SAN DIEGO COUNTY WATER SUPPLY
San Diego County is a semi-arid region, local surface water and groundwater supplies comprise
about 10 percent of the regional demand. With conservation and recycled water comprising 15
percent, the remaining 75 percent is imported from sources outside the region, including the
Colorado River and Northern California. Since the Colorado River and Northern California sources
face legal and environmental constraints the region has been exploring other ways to ensure
adequate supply programs for the region, such as increased water storage, groundwater
desalination, and seawater desalination.
624‐2 Reservoir Exterior
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CARLSBAD DESALINATION PROJECT
The District’s water wholesaler, the San Diego
County Water Authority, voted on November 29,
2012, to approve a water purchase agreement
with Poseidon Resources Corporation (Poseidon).
Under the water purchase agreement, the County
Water Authority will purchase 48,000 to 56,000
acre-feet of water annually from the desalination
plant located in Carlsbad, California. The plant is
expected to produce up to 50 million gallons of
water a day beginning in 2016 and will generate enough water to meet 7 percent of the region’s
demand. The total price for the desalinated water, including related upgrades to the County Water
Authority’s pipelines and treatment plant, is projected to start between $2,014 and $2,257 per acre-
foot (in 2012 dollars). An acre-foot is approximately 325,900 gallons, or enough to supply two
typical single-family households of four for a year.
ROSARITO DESALINATION AND THE OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM
PROJECTS
The Rosarito Desalination Project is comprised of
a 100 million gallons per day seawater reverse
osmosis desalination plant, together with a pump
station and pipeline, to convey water to Tijuana
and to the District. This will be the first cross-
border water supply project of its kind and
requires public messaging to inform key
stakeholders and the public of the significance of
the project. If successful, this project will start delivering water to the District customers by early
2018. The project includes the construction of facilities on the U.S. side to include a large diameter
pipeline 3.5 miles long, a pump station, a disinfection facility and the use of the Roll Reservoir in
Otay Mesa.
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
Rosarito Desalination Project rendering
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services. Revenues and expenses are recorded on the accrual basis in the period in which
revenues are earned and expenses are incurred.
INTERNAL CONTROLS
Otay Water District operates within a system of internal controls established and periodically
reviewed by management. This provides reasonable 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 (CAFR) for the fiscal year ended June 30, 2013. This was
the tenth 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, 2013. In order to receive this award, a
8
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Organization Chart
GENERAL MANAGER
Assistant General Manager
Administrative
Services Finance Water
Operations Engineering
Human
Resources
Purchasing and
Facilities
Safety and
Security
Administration
Controller
and
Budgetary
Services
Treasury and
Accounting
Services
Customer
Service
IT Applications
IT Operations
GIS
Water System
Operations
Utility
Maintenance/
Construction
Planning Design
Environmental
Water Resources
Public Services
Survey
Inspection
Construction
Citizens and
Customers
Information Technology
and Strategic Planning
BOARD OF DIRECTORS
Meter
Maintenance
10
List of Principal Officials
Mission Statement
To provide high value water and
wastewater services to the customers of
the Otay Water District in a professional,
effective, and efficient manner.
Mitchell Thompson
Treasurer
Division 2
Gary Croucher
Division 3
David Gonzalez, Jr.
Vice President
Division 1
Jose Lopez
President
Division 4
Mark Robak
Division 5
Board of Directors
The Otay Water District is a revenue-
neutral public agency established in
accordance with the California Water
Code. This not-for-profit status means
Otay has no private shareholders, pays no
dividends and therefore does not report
to, nor answer to the California Public
Utilities Commission. The District does,
however, answer to the public through a
five-member Board of Directors. Each
Director is elected by voters within their
respective division boundaries to
represent the public's interest with regard
to rates for service, taxes, policies,
ordinances, and other matters related to
the management and operation of the
Otay Water District. Directors serve four-
year staggered terms on the Board.
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CERTIFICATE OF ACHIEVEMENT
FOR EXCELLENCE IN FINANCIAL REPORTING
The Government Finance Officers Association (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the Otay Water District for its
CAFR for the fiscal year ended June 30, 2013. This is the tenth year that the District
has achieved this prestigious award. In order to be awarded a Certificate of
Achievement, the District had to publish an easily readable and comprehensive
report. This report must satisfy both Generally Accepted Accounting Principles
(GAAP) and applicable legal requirements.
This award is valid for a period of one year only. We believe our current CAFR
continues to meet the Certificate of Achievement Program’s requirements, and will
be submitting it to GFOA to determine its eligibility for another certificate.
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::re>cs TEAMAN, RAMIREZ & SMITH, INC. •• I ~ c E R T I F I E D p u B L I c A c c 0 u N T A N T s
Board ofDirectors
Otay Water District
Spring Valley, California
Report on Financial Statements
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying fmancial statements of the business-type activities of the Otay Water District
(the "District"), as of and for the year ended June 30, 2014, and the related notes to the fmancial statements, which
collectively comprise the District's basic fmancial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these fmancial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation,
and maintenance of internal control relevant to the preparation and fair presentation of fmancial statements that are
free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these fmancial statements based on our audit. We conducted our audit
in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the
United States and the State Controller's Minimum Audit Requirements for California Special Districts. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the fmancial statements, whether due to fraud or error. fu making those risk assessments,
the auditor considers internal control relevant to the District's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the District's internal control. Accordingly, we express no such
opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of significant accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Richard A. Teaman, CPA • David M. Ramirez, CPA • Javier H. Carrillo , CPA
4201 Brockton Ave. S uite 100, Riverside C A 92501 • 951.274.9500 • 951 .274.7828 FAX • www.trscpas.com 13
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the business-type activities of the Otay Water District as of June 30, 2014, and the respective
changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles
generally accepted in the United States of America, as well as the accounting systems prescribed by the California
State Controller’s Office and California regulations governing Special Districts.
Other Matters
Prior Period Financial Statements
The financial statements of the District as of June 30, 2013, were audited by other auditors whose report dated
October 22, 2013, expressed an unqualified opinion on those statements. Additionally, those statements included an
emphasis of matter paragraph describing the implementation of GASB standards and an other matter paragraph
relating to required supplementary information and other information.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion
and analysis and required supplementary information on pages 16-22 and 64 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing
the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain
limited procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management's responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise
the District’s basic financial statements. The introductory section and statistical section are presented for purposes of
additional analysis and are not required part of the basic financial statements.
The introductory and statistical sections 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 22, 2014, on our
consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the results of that
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testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s
internal control over financial reporting and compliance.
Riverside, California
October 22, 2014
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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, 2014. 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 $444.8 million (net
position). Of this amount, $83.0 million (unrestricted net position) may be used to meet the District’s ongoing
obligations to citizens and creditors.
Total assets decreased by $5.7 million or 1.0% during Fiscal Year 2014, to $576.6 million, due primarily to
depreciation offset by investments in capital infrastructure, contributions and improved operating results.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the District’s basic financial
statements, which are comprised of the following: 1) Statements of Net Position, 2) Statements of
Revenues, Expenses and Changes in Net Position, 3) Statements of Cash Flows, and 4) Notes to the
Financial Statements. This report also contains other supplementary information in addition to the basic
financial statements.
The Statements of Net Position presents information on all of the District’s assets, deferred outflows of
resources, liabilities and deferred inflows of resources, with the difference reported as net position. Over
time, increases or decreases in net positions may serve as a useful indicator of whether the financial
position of the District is improving or weakening.
The Statements of Revenues, Expenses and Changes in Net Position presents information showing how
the District’s net position changed during the most recent fiscal year. All changes in net positions are
reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
related cash flows. Thus, revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation
leave).
The Statements of Cash Flows 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.
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Management’s Discussion and Analysis
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 position may serve, over time, as a useful indicator of an entity’s financial position. In the
case of the District, assets and deferred outflows of resources exceeded liabilities and deferred inflows of
resources by $444.8 million at the close of the most recent fiscal year.
By far the largest portion of the District’s net position, $357.9 million (80%), 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, 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.
Statements of Net Position
(In Millions of Dollars)
2014 2013 2012
Assets
Current and Other Assets $ 109.9 $ 106.3 $ 109.9
Capital Assets 466.7 476.0 480.8
Total Assets 576.6 582.3 590.7
Deferred Outflows of Resources
Deferred Amount on Refunding 0.1 0.4 0.0
Total Deferred Outflows of Resources 0.1 0.4 0.0
Liabilities
Long-Term Debt Outstanding 105.3 109.0 112.0
Other Liabilities 26.6 25.5 24.6
Total Liabilities 131.9 134.5 136.6
Net Position
Net Investment in Capital Assets 357.9 376.5 381.7
Restricted for Debt Service 3.9 4.6 4.7
Unrestricted 83.0 67.1 67.7
Total Net Position $ 444.8 $ 448.2 $ 454.1
17
Management’s Discussion and Analysis
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 Position is indicative of the reduction in new
development projects within the District. This reduction is a result of the ongoing national housing slump
and slow recovery from financial crisis.
In FY-2014 the District has fully used the remainder of the $51.2 million proceeds from the issuance of its
2010 Water Revenue Bonds program (See Note 4 in the Notes to Financial Statements) for its CIP program
(See Note 3 in the Notes to Financial Statements) as seen by the increase in Capital Assets of $3.4 million
before accumulated depreciation. The District also saw a decrease in Long-Term Debt of $3.7 million due
to the annual payments of long-term debt.
Certain planning and environmental study costs associated with capital projects such as the Otay Mesa
Desalination and Disinfection System or San Miguel Habitat Management/Mitigation Area do not qualify
as capital costs under Generally Accepted Accounting Principles and are included in the miscellaneous
expenses of the District. For FY-2013 and FY-2014 those expenses were $1.6 million and $2.9 million,
respectively.
For the entire financial reporting period, Fiscal Years 2014 and 2013, Total Net Position decreased
approximately $3.4 million for FY-2014, to $444.8 million, as compared to FY-2013 when Net Position
decreased by $5.9 million. At the end of FY-2014 the District is able to report positive balances in all
categories of net position. This situation also held true for the prior two fiscal years.
Statements of Revenues, Expenses, and Changes in Net Position
(In Millions of Dollars)
2014 2013 2012
Water Sales $ 81.3 $ 72.2 $ 63.8
Wastewater Revenue 2.8 2.6 2.4
Connection and Other Fees 1.9 2.1 2.2
Non-operating Revenues 7.8 7.7 8.4
Total Revenues 93.8 84.6 76.8
Depreciation Expense 16.1 16.5 15.2
Other Operating Expense 76.5 70.8 65.8
Non-operating Expense 8.0 6.0 5.7
Total Expenses 100.6 93.3 86.7
Loss Before Capital
Contributions (6.8) (8.7) (9.9)
Capital Contributions 3.4 2.8 6.8
Change in Net Position (3.4) (5.9) (3.1)
Beginning Net Position 448.2 454.1 457.2
Ending Net Position $ 444.8 $ 448.2 $ 454.1
18
Management’s Discussion and Analysis
Water Sales increased by $9.1 million in FY-2014 and $8.4 million in FY-2013, mainly due to rate increases
in both years and an increase in units sold in FY-2014 due to the ongoing drought conditions. The
slowdown in District growth, as a result of the economic crisis, continues to impact the District as
Connection and Other Fees revenues declined by $0.2 million in FY-2014 and $0.1 million in FY-2013.
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 the Los Angeles Metropolitan
Water District of 7.7%, and 4.0% from San Diego County Water Authority, brought on by the high cost of
supply programs as well as higher energy and operating costs. Increases in units purchased in FY-2014
also contributed to the increases in Operating Expenses.
The slowdown in the economy appears to have leveled off. However, during the nationwide housing
mortgage crisis, developers had either slowed down or totally stopped work on many projects until
economic conditions improve and the demand for growth returns. The development that has returned has
done so at a much slower rate. This has resulted in Capital Contributions remaining low over the last three
years, compared to the extended growth of the previous 10 years. While this slowdown now appears to
have stabilized, the District was also aided in its Capital Contributions through the receipt of additional
federal grant monies and state reimbursements of $169,000 in FY-2014 and $184,000 in FY-2013.
Non-operating Revenues
Non-operating Revenues by Major Source
(In Millions of Dollars)
2014 2013 2012
Taxes and Assessments $ 3.5 $ 3.5 $ 3.5
Rents and Leases 1.3 1.3 1.2
Other Non-operating Revenue 3.0 2.9 3.7
Total Non-operating Revenues $ 7.8 $ 7.7 $ 8.4
The District’s other non-operating revenues increased by $0.1 million in FY-2014 and decreased by $0.8
million in FY-2013. The decrease in FY-2013 was primarily a result of decreased miscellaneous and
investment earnings.
Capital Assets and Debt Administration
The District’s capital assets (net of accumulated depreciation) as of June 30, 2014, totaled $466.7 million.
Included in this amount is land. The District’s capital assets decreased by 2.0% for FY-2014 and by 1.0% in
FY-2013.
19
Management’s Discussion and Analysis
Capital Assets
(In Millions of Dollars)
2014 2013 2012
Land $ 13.7 $ 13.7 $ 13.7
Construction in Progress 11.7 17.1 17.5
Water System 465.9 458.8 452.1
Recycled Water System 110.3 108.9 108.0
Sewer System 41.2 41.2 37.8
Field Equipment 8.8 8.9 8.6
Buildings 18.9 18.8 18.6
Transportation Equipment 3.3 3.5 3.2
Communication Equipment 2.9 2.6 2.5
Office Equipment 17.5 17.3 17.2
694.2 690.8 679.2
Less Accumulated
Depreciation (227.5) (214.8) (198.4)
Net Capital Assets $ 466.7 $ 476.0 $ 480.8
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.
At June 30, 2014, the District had $105.3 million in outstanding debt (net of $3.5 million of maturities
occurring in FY-2015), which consisted of the following:
General Obligation Bonds $ 5.3
Certificates of Participation 45.0
Revenue Bonds 55.0
Total Long-Term Debt $ 105.3
In June 2013, the District issued $7.7 million of 2013 Water Revenue Refunding Bonds for an advance
refunding of its 2004 Certificates of Participation, which will be called on September 1, 2014. Excluding
costs of issuance the District received $8.5 million in proceeds, including a $1.0 million premium, to fund
the $8.1 million of outstanding principal and $0.4 million of remaining interest payments. In accordance
with GASB Nos. 23 and 65, the remaining interest payments of $0.1 million in FY-2014 and $0.4 million in
FY-2013 are reflected as a deferred outflow of resources on the Statement of Net Position.
Additional information on the District’s long-term debt can be found in Note 4 of the Notes to Financial
Statements.
20
Management’s Discussion and Analysis
Fiscal Year 2014-2015 Budget
Economic Factors
Growth in the San Diego area has declined over the last five years, but is now 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 2014, 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, by less
than one percent over FY-2014 actual sales as the economy improves and both hotter and drier than
normal climatic conditions persist. Higher usage is expected to occur even as efforts to promote water
conservation ramp-up due to the adoption of emergency drought regulations. 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, proposals to construct tunnels under the Bay Delta are extremely costly,
face tremendous environmental obstacles, and will be tested and challenged in the court as well as at the
ballot box. 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 is currently at about 75% of its projected ultimate population, serving approximately 213,000
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
directly and from Helix Water District via 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 these, 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 29,192 acre-feet of potable water to 49,257 potable
customer accounts during Fiscal Year 2014-2015. Management feels that these projections are realistic
after accounting for low growth, supply changes, and a focus on conservation. A combination of factors,
including the ongoing drought and recession, have created challenges in developing economic
projections for the current fiscal year. Both unemployment and levels of distressed activity in the
commercial and residential resale market have improved from their economic crisis peaks. However, both
economic indicators remain significantly above the levels of the boom years from 2001 to 2005. The
ongoing negative impacts to the District of the economic indicators and conservation are partially offset by
21
Management’s Discussion and Analysis
growth as the District’s commercial and residential permits have shown slow and steady improvement
from the lows of the economic crisis. While all of these factors impact the region’s water usage, 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 position, or operating results.
Contacting the District’s Financial Management
This financial report is designed to provide a general overview of the Otay Water District’s finances for the
Board of Directors, citizens, 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.
22
2014 2013
ASSETS
Current Assets:
Cash and cash equivalents (Notes 1 and 2)30,493,474$ 33,958,281$
Restricted cash and cash equivalents (Notes 1 and 2)116,639 4,087,042
Investments (Note 2)27,631,622 16,258,960
Board designated investments (Note 2)21,605,368 14,860,502
Restricted investments (Notes 1 and 2)4,564,972 13,560,004
Accounts receivable, net 12,879,121 11,856,029
Accrued interest receivable 83,679 53,950
Taxes and availability charges receivable, net 333,589 431,159
Restricted taxes and availability charges receivable, net 41,091 41,657
Inventories 775,007 800,085
Prepaid items and other receivables 1,047,708 1,072,706
Total Current Assets 99,572,270 96,980,375
Non-current Assets:
Net OPEB asset (Note 7)10,385,336 9,345,437
Capital Assets (Note 3):
Land 13,714,963 13,714,963
Construction in progress 11,642,506 17,110,048
Capital assets, net of depreciation 441,293,934 445,203,648
Total capital assets, net of depreciaton 466,651,403 476,028,659
Total Non-current Assets 477,036,739 485,374,096
Total Assets 576,609,009 582,354,471
DEFERRED OUTFLOWS OF RESOURCES
Deferred amount on refunding 78,118 390,591
Total Deferred Outflows of Resources 78,118$ 390,591$
See accompanying independent auditors' report and notes to financial statements.
Statements of Net Position
June 30, 2014 and 2013
23
2014 2013
LIABILITIES
Current Liabilities:
Current maturities of long-term debt (Note 4)3,495,000$ 3,470,000$
Accounts payable 11,906,026 11,733,543
Accrued payroll liabilities 3,054,520 2,755,421
Other accrued liabilities 3,397,500 3,487,430
Customer and developer deposits 2,418,754 1,756,983
Accrued interest 1,564,992 1,518,651
Liabilities payable from restricted assets:
Restricted accrued interest 70,804 76,154
Total Current Liabilities 25,907,596 24,798,182
Non-current Liabilities:
Long-term debt (Note 4):
General obligation bonds 5,283,563 5,849,918
Certificates of participation 44,980,314 46,465,525
Revenue bonds 55,058,490 56,678,987
Other non-current liabilities 649,344 718,543
Total Non-current Liabilities 105,971,711 109,712,973
Total Liabilities 131,879,307 134,511,155
NET POSITION
Net investment in capital assets 357,912,154 376,549,168
Restricted for debt service 3,855,673 4,612,890
Unrestricted 83,039,993 67,071,849
Total Net Position 444,807,820$ 448,233,907$
See accompanying independent auditors' report and notes to financial statements.
June 30, 2014 and 2013 - Continued
Statements of Net Position
24
Statements of Revenues, Expenses and Changes in Net Position
2014 2013
OPERATING REVENUES
Water sales 81,287,164$ 72,187,081$
Wastewater revenue 2,791,523 2,625,087
Connection and other fees 1,946,886 2,069,220
Total Operating Revenues 86,025,573 76,881,388
OPERATING EXPENSES
Cost of water sales 56,068,147 50,600,551
Wastewater 1,834,465 1,638,354
Administrative and general 18,608,603 18,550,811
Depreciation 16,055,808 16,545,622
Total Operating Expenses 92,567,023 87,335,338
Operating Income (Loss)(6,541,450) (10,453,950)
NON-OPERATING REVENUES (EXPENSES)
Investment earnings 522,286 22,155
Taxes and assessments 3,537,162 3,545,595
Availability charges 729,961 707,881
Gain (loss) on sale of capital assets (426,140) (546,799)
Rents and leases 1,317,736 1,276,914
Miscellaneous revenues 2,088,132 2,780,603
Donations (119,687)(120,684)
Interest expense (4,872,060) (3,977,538)
Miscellaneous expenses (3,054,447) (1,917,389)
Total Non-operating Revenues (Expenses)(277,057) 1,770,738
Income (Loss) Before Capital Contributions (6,818,507) (8,683,212)
Capital Contributions 3,392,420 2,775,132
Changes in Net Position (3,426,087) (5,908,080)
Total Net Position, Beginning, 448,233,907 454,141,987
Total Net Position, Ending 444,807,820$ 448,233,907$
See accompanying independent auditors' report and notes to financial statements.
For the Years Ended June 30, 2014 and 2013
25
2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 83,717,366$ 73,425,100$
Receipts from connections and other fees 1,946,886 2,069,220
Other receipts 2,088,132 2,780,603
Payments to suppliers (57,217,950) (50,206,581)
Payments to employees (19,974,636) (20,491,758)
Other payments (3,231,510) (2,038,073)
Net Cash Provided By (Used For) Operating Activities 7,328,288 5,538,511
CASH FLOWS FROM NON-CAPITAL AND RELATED FINANCING ACTIVITIES
Receipts from taxes and assessments 3,635,298 3,612,045
Receipts from property rents and leases 1,202,050 1,276,914
Net Cash Provided By (Used For) Non-capital
and Related Financing Activities 4,837,348 4,888,959
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from capital contributions 1,903,528 1,515,238
Proceeds from sale of capital assets 102,574 -
Proceeds from debt related taxes and assessments 729,961 707,881
Net proceeds from issuance of long-term debt - 8,329,385
Retirement of long-term debt - (8,100,000)
Principal payments on long-term debt (3,470,000) (3,320,000)
Interest payments and fees (4,518,596) (5,201,467)
Acquisition and construction of capital assets (5,718,373) (10,035,376)
Net Cash Provided By (Used For) Capital
and Related Financing Activities (10,970,906) (16,104,339)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on investments 492,557 395,773
Proceeds from sale and maturities of investments 52,121,219 68,832,000
Purchase of investments (61,243,716) (60,638,762)
Net Cash Provided By (Used For) Investing Activities (8,629,940) 8,589,011
Net Increase (Decrease) in
Cash and cash equivalents (7,435,210) 2,912,142
Cash and cash equivalents, Beginning 38,045,323 35,133,181
Cash and cash equivalents, Ending 30,610,113$ 38,045,323$
See accompanying independent auditors' report and notes to financial statements.
Statements of Cash Flows
For the Years Ended June 30, 2014 and 2013
26
2014 2013
Reconciliation of operating income (loss) to net cash flows provided by
(used for) by operating activities:
Operating income (loss)(6,541,450)$ (10,453,950)$
Adjustments to reconcile operating income
to net cash provided by (used for) operating activities:
Depreciation 16,055,808 16,545,622
Miscellaneous revenues 2,088,132 2,780,603
Miscellaneous expenses (3,231,510) (2,038,073)
(Increase) decrease in accounts receivable (1,023,092) (1,280,059)
(Increase) decrease in inventory 25,078 (10,316)
(Increase) decrease in net OPEB asset (1,039,899) (1,023,535)
(Increase) decrease in prepaid items and other receivables 20,997 153,997
Increase (decrease) in accounts payable 172,483 1,255,177
Increase (decrease) in accrued payroll and related expenses 299,099 164,149
Increase (decrease) in other accrued liabilities (89,930) (445,012)
Increase (decrease) in customer deposits 661,771 (107,009)
Increase (decrease) in prepaid capacity fees (69,199) (3,083)
Net Cash Provided By (Used For) Operating Activities 7,328,288$ 5,538,511$
Schedule of Cash and Cash Equivalents:
Current assets:
Cash and cash equivalents 30,493,474$ 33,958,281$
Restricted cash and cash equivalents 116,639 4,087,042
Total Cash and Cash Equivalents 30,610,113$ 38,045,323$
Supplemental Disclosures:
Non-cash Investing and Financing Activities Consisted of the Following:
Contributed Capital for Water and Sewer System 1,488,893$ 1,259,894$
Change in Fair Value of Investments and Recognized Gains/Losses 201,891 (353,950)
Amortization Related to Long-Term Debt 177,063 154,246
See accompanying independent auditors' report and notes to financial statements.
For the Years Ended June 30, 2014 and 2013 - Continued
Statements of Cash Flows
27
Notes to Financial Statements
See Independent Auditors’ report
NOTE DESCRIPTION PAGE
1 Reporting Entity and Summary of Significant Accounting Policies..…………. 29
2 Cash and Investments……………………………………………………………………….…………..……... 35
3 Capital Assets……………………………………………………………………………………………….…..……... 42
4 Long–Term Debt…………………………………………………………………………………………..……….. 44
5 Net Position………………………………………………………………………………………………………….…… 50
6 Defined Benefit Pension Plan………………………………………….…………………………………... 51
7 Other Post Employment Benefits………………………………………………………...…………..... 53
8 Water Conservation Authority……………………………………………………………………………... 56
9 Commitments and Contingencies……………………………………………………………..……... 57
10 Risk Management……………………………………………………………………………………………….….. 58
11 Interest Expense………………………………………………………………………………………………..…..... 60
12 Segment information………………………………………………………………………………….….......... 60
28
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) Reporting Entity
The reporting entity Otay Water District (the “District”) includes the accounts of the District and the Otay
Water District Financing Authority (the “Financing Authority”).
The Otay Water District (the “District”) is a public entity established in 1956 pursuant to the Municipal
Water District Law of 1911 (Section 711 et. Seq. of the California Water Code) for the purpose of providing
water and 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.
The District formed the Financing Authority on March 3, 2010 under the Joint Exercise of Powers Act,
constituting Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the
California Government Code. The Financing Authority was formed to assist the District in the financing
of public capital improvements.
The financial statements present the District and its component units. The District is the primary
government unit. Component units are those entities which are financially accountable to the primary
government, either because the District appoints a voting majority of the component unit’s board, or
because the component unit will provide a financial benefit or impose a financial burden on the District.
The District has accounted for the Financing Authority as a “blended” component unit. Despite being
legally separate, the Financing Authority is so intertwined with the District that it is in substance, part of
the District’s operations. Accordingly, the balances and transactions of this component unit are reported
within the funds of the District. Separate financial statements are not issued for the Financing Authority.
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation
Measurement focus is a term used to describe “which” transactions are recorded within the various
financial statements. Basis of accounting refers to “when” transactions are recorded regardless of the
measurement focus applied. The accompanying financial statements are reported using the
economic resources measurement focus, and the accrual basis of accounting. Under the economic
measurement focus all assets and liabilities (whether current or noncurrent) associated with these
activities are included on the Statements of Net Position. The Statements of Revenues, Expenses and
Changes in Net Position present increases (revenues) and decreases (expenses) in total net position.
Under the accrual basis of accounting, revenues are recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of related cash flows.
29
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued
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 position of the District is classified into three components: (1) net investment in capital assets, (2)
restricted net position, and (3) unrestricted net position. These classifications are defined as follows:
Net Investment in Capital Assets
This component of net position consists of capital assets, net of accumulated depreciation and reduced
by the outstanding balances of notes or borrowing that are attributable to the acquisition of the assets,
construction, or improvement of those assets. If there are significant unspent related debt proceeds at
year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation
of the net investment in capital assets.
Restricted Net Position
This component of net position consists of net position with constrained use through external constraints
imposed by creditors (such as through debt covenants), grantors, contributions, or laws or regulations
of other governments or constraints imposed by law through constitutional provisions or enabling
legislation.
Unrestricted Net Position
This component of net position consists of net position that do not meet the definition of “net investment
in capital assets” or “restricted net position”.
30
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued
Unrestricted Net Position - 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 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 $41,631 and $52,535 at June
30, 2014 and 2013, 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 Statements of Revenues and
Expenses and Changes in Net Position.
Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted bond
or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted
- net position and unrestricted - net position, a flow assumption must be made about the order in which
the resources are considered to be applied.
It is the District’s practice to consider restricted - net position to have been depleted before unrestricted
- net position is applied, however it is at the Board’s discretion.
C) New Accounting Pronouncements
Implemented
The GASB has issued Statement No. 66, “Technical Corrections – 2012; an amendment of GASB
Statements No. 10 and No. 62.” The requirements of this Statement are effective for financial statements
for periods beginning after December 15, 2012. Currently, the Statement is not applicable to the District.
31
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
C) New Accounting Pronouncements - Continued
Pending Accounting Standards
GASB has issued the following statements which impact the District’s financial reporting requirements
in the future:
GASB 68 - “Accounting and Financial Reporting for Pensions, an amendment of GASB Statement
No. 27”, effective for the fiscal years beginning after June 15, 2014.
GASB 69 - “Government Combinations and Disposals of Government Operations”, effective for
periods beginning after December 15, 2013.
GASB 70 - “Accounting and Financial Reporting for Nonexchange Financial Guarantees”,
effective for the periods beginning after June 15, 2013.
D) Deferred Outflows / Inflows of Resources
In addition to assets, the statements of net position will sometimes report a separate section for deferred
outflows of resources. This separate financial statement element, deferred outflows of resources,
represents a consumption of net position that applies to a future period(s) and so will not be recognized
as an outflow of resources (expense/expenditure) until then. The District has one item that qualifies for
reporting in this category, deferred amount on refunding, which resulted from the difference in the
carrying value of refunded debt and its reacquisition price. This amount is shown as deferred and
amortized over the shorter of the life of the refunded or refunding debt.
In addition to liabilities, the statements of net position will sometimes report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of resources,
represents an acquisition of net position that applies to a future period(s) and will not be recognized as
an inflow of resources (revenue) until that time. The District does not have any type of these items as of
June 30, 2014 or June 30, 2013.
E) Statements of Cash Flows
For purposes of the Statements of Cash Flows, the District considers all highly liquid investments
(including restricted assets) with a maturity period, at purchase, of three months or less to be cash
equivalents.
32
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
F) Investments
Investments are stated at their fair value, which represents the quoted or stated market value.
Investments that are not traded on a market, such as investments in external pools, are valued based
on the stated fair value as represented by the external pool. All investments are stated at their fair
value, the District has not elected to report certain investments at amortized costs.
G) Inventory and 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.
H) Capital Assets
Capital assets are recorded at cost, where historical records are available, and at an estimated historical
cost where no historical records exist. Infrastructure assets in excess of $20,000 and other capital assets
in excess of $10,000 are capitalized if they have an expected useful life of two years or more. The District
will also capitalize individual purchases under the capitalization threshold if they are part of a new capital
program. The cost of purchased and self-constructed additions to utility plant and major replacements
of property are capitalized. Costs include materials, direct labor, transportation, and such indirect items
as engineering, supervision, employee fringe benefits, 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 years ending June 30, 2014 and 2013 of $176,782
and $995,721, respectively, 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.
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
33
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
I) Compensated Absences
It is the District’s policy to record vested or accumulated vacation and sick leave as an expense and
liability as benefits accrue to employees. As of June 30, 2014 and 2013, total accrued paid time off was
$2,352,861 and $2,120,399, respectively.
J) Classification of Liabilities
Certain current liabilities have been classified as current liabilities payable from restricted assets as
they will be funded from restricted assets.
K) Allowance for Doubtful Accounts
The District charges doubtful accounts arising from water sales receivable to bad debt expense when it
is probable that the accounts will be uncollectible. Uncollectible accounts are determined by the
allowance method based upon prior experience and management’s assessment of the collectibility of
existing specific accounts. The allowance for doubtful accounts was $152,680 and $150,000 for 2014
and 2013, respectively.
L) Property Taxes
Tax levies are limited to 1% of full market value (at time of purchase) which results in a tax rate of $1.00
per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for voter-approved
indebtedness are excluded from this limitation.
The County of San Diego (the “County”) bills and collects property taxes on behalf of the District. The
County’s tax calendar year is July 1 to June 30. Property taxes attach as a lien on property on January 1.
Taxes are levied on July 1 and are payable in two equal installments on November 1 and February 1,
and become delinquent after December 10 and April 10, respectively.
M) 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.
34
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
N) Reclassifications
Certain reclassifications have been made to prior year amounts to conform to the current year
presentation.
2) CASH AND INVESTMENTS
The primary goals of the District’s Investment Policy are to assure compliance with all Federal, State, and
Local laws governing the investment of funds under the control of the organization, protect the principal of
investments entrusted, and generate income under the parameters of such policies.
Cash and Investments are classified in the accompanying financial statements as follows:
2014 2013
Statement of Net Position:
Cash and Cash Equivalents $ 30,493,474 $ 33,958,281
Restricted Cash and Cash Equivalents 116,639 4,087,042
Investments 27,631,622 16,258,960
Board Designated Investments 21,605,368 14,860,502
Restricted Investments 4,564,972 13,560,004
Total Cash and Investments $ 84,412,075 $ 82,724,789
Cash and Investments consist of the following:
2014 2013
Cash on Hand $ 2,950 $ 2,950
Deposits with Financial Institutions 2,065,122 1,107,051
Investments 82,344,003 81,614,788
Total Cash and Investments $ 84,412,075 $ 82,724,789
35
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
2) CASH AND INVESTMENTS - Continued
Investments Authorized by the California Government Code and the District’s Investment Policy
The table below identifies the investment types that are authorized for the District by the California
Government Code (or the District’s Investment Policy, where more restrictive). The table also identifies
certain provisions of the California Government Code (or the District’s Investment Policy, where more
restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not
address investments of debt proceeds held by bond trustee that are governed by the provisions of debt
agreements of the District, rather than the general provisions of the California Government Code or the
District’s Investment Policy.
Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity Of Portfolio 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.
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 rates
risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows
(1)
36
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
2) CASH AND INVESTMENTS - Continued
Disclosures Relating to Interest Rate Risk – Continued
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, 2014 and 2013.
June 30, 2014
Remaining Maturity (in Months)
12 Months 13 to 24 25 to 60 More Than
Investment Type Or Less Months Months 60 Months
U.S. Government Sponsored Entities $ 53,716,144 $ 3,005,760 $ 7,001,050 $ 43,709,334 $ -
Local Agency Investment Fund (LAIF) 11,368,272 11,368,272 - - -
San Diego County Pool 17,143,000 17,143,000 - - -
Money Market Funds 116,587 116,587 - - -
Total $ 82,344,003 $ 31,633,619 $ 7,001,050 $ 43,709,334 $ -
June 30, 2013
Remaining Maturity (in Months)
12 Months 13 to 24 25 to 60 More Than
Investment Type Or Less Months Months 60 Months
U.S. Government Sponsored Entities $ 44,599,731 $ 3,002,850 $ 17,974,890 $ 23,621,991 $ -
Local Agency Investment Fund (LAIF) 17,032,057 17,032,057 - - -
San Diego County Pool 19,983,000 19,983,000 - - -
Total $ 81,614,788 $ 40,017,907 $ 17,974,890 $ 23,621,991 $ -
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, 2014 and 2013 for each investment type.
37
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
2) CASH AND INVESTMENTS - Continued
Disclosures Relating to Credit Risk - Continued
June 30, 2014
Minimum Rating as of Year End
Legal Not
Investment Type Rating AAA AA A-1 Rated
June 30, 2013
Minimum Rating as of Year End
Legal Not
Investment Type Rating AAA AA Rated
U.S. Government Sponsored Entities $ 44,599,731 N/A $ 44,599,731 $ - $ -
Local Agency Investment Fund (LAIF) 17,032,057 N/A - - 17,032,057
San Diego County Pool 19,983,000 N/A - - 19,983,000
Total $ 81,614,788 $ 44,599,731 $ - $ 37,015,057
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, 2014 and 2013 are as follows:
U.S. Government Sponsored Entities $ 53,716,144 N/A $ 53,716,144 $ - $ - $ -
Local Agency Investment Fund (LAIF) 11,368,272 N/A - - - 11,368,272
San Diego County Pool 17,143,000 N/A - - - 17,143,000
Money Market Funds 116,587 N/A - - 116,587 -
Total $ 82,344,003 $ 53,716,144 $ - $ 116,587 $ 28,511,272
38
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
2) CASH AND INVESTMENTS - Continued
Concentration of Credit Risk - Continued
June 30, 2014
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 19,723,794
Federal Home Loan Mortgage Corp U.S. Government Sponsored Entities $ 17,997,640
Federal National Mortgage Association U.S. Government Sponsored Entities $ 7,986,280
Federal Farm Credit Banks U.S. Government Sponsored Entities $ 8,008,430
June 30, 2013
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 12,961,010
Federal Home Loan Mortgage Corp U.S. Government Sponsored Entities $ 9,720,091
Federal National Mortgage Association U.S. Government Sponsored Entities $ 4,976,820
Federal Farm Credit Banks U.S. Government Sponsored Entities $ 14,955,390
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution,
a government will not be able to recover its deposits or will not be able to recover collateral securities that
are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event
of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to
recover the value of its investment or collateral securities that are in the possession of another party. The
California Government Code and the District’s Investment Policy do not contain legal or policy requirements
that would limit the exposure to custodial credit risk for deposits or investments, other than the following
provision for deposits: The California Government Code requires that a financial institution secure deposits
made by state or local government units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The market value of the
pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public
agencies. California law also allows financial institutions to secure deposits by pledging first trust deed
mortgage notes having a value of 150% of the secured public deposits.
As of June 30, 2014, $1,553,944 of the District’s deposits with financial institutions in excess of federal
depository insurance limits were held in collateralized accounts. As of June 30, 2013, $1,063,279 of the
39
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
2) CASH AND INVESTMENTS - Continued
Custodial Credit Risk - Continued
District’s deposits with financial institutions in excess of federal depository insurance limits were held in
collateralized accounts.
Local Agency Investment Fund (LAIF)
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by
California Government Code Section 16429 under the oversight of the Treasurer of the State of California.
The fair value of the District’s investment in this pool is reported in the accompanying financial statements
at amounts based upon District’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio
(in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the
accounting records maintained by LAIF, which are recorded on an amortized cost-basis.
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 Treasurers
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 - 1600 Pacific Coast Highway, San Diego California 92101.
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.
40
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
2) CASH AND INVESTMENTS - Continued
Board Designated Investments
Investments are Board restricted for the cost of the following District projects:
2014 2013
New Water Supply $ 322,087 $ 863,973
Expansion 6,078 369,791
Replacement 21,277,203 13,626,738
Total $ 21,605,368 $ 14,860,502
Restricted Cash and Cash Equivalents
2014 2013
Debt Service:
Water Revenue Bond Series 2010 $ 116,639 $ 4,087,042
Total $ 116,639 $ 4,087,042
Restricted Investments
2014 2013
Debt Service:
General Obligation Bond ID No. 27-2009 $ 812,239 $ 917,708
Water Revenue Bond Series 2010A 1,026,909 1,029,999
Water Revenue Bond Series 2010B 2,696,849 11,602,893
Construction:
Betterment 28,975 9,404
Total $ 4,564,972 $ 13,560,004
41
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
3) CAPITAL ASSETS
The following is a summary of changes in Capital Assets for the year ended June 30, 2014:
Beginning Ending
Balance Additions Deletions Balance
Capital Assets, Not Depreciated
Land $ 13,714,963 $ - $ - $ 13,714,963
Construction in Progress 17,110,048 8,498,574 (13,966,116) 11,642,506
Total Capital Assets Not Depreciated 30,825,011 8,498,574 (13,966,116) 25,357,469
Capital Assets, Being Depreciated
Infrastructure 608,634,474 11,562,280 (2,848,379) 617,348,375
Field Equipment 8,934,034 144,207 (265,548) 8,812,693
Buildings 18,849,509 79,370 - 18,928,879
Transportation Equipment 3,497,789 422,566 (611,753) 3,308,602
Communication Equipment 2,562,480 428,140 (110,479) 2,880,141
Office Equipment 17,298,342 274,011 (59,160) 17,513,193
Total Capital Assets Being Depreciated 659,776,628 12,910,574 (3,895,319) 668,791,883
Less Accumulated Depreciation:
Infrastructure 181,997,301 13,313,914 (2,086,011) 193,225,204
Field Equipment 7,579,663 181,393 (265,548) 7,495,508
Buildings 7,832,547 504,021 - 8,336,568
Transportation Equipment 2,615,775 295,826 (611,753) 2,299,848
Communication Equipment 1,448,152 408,940 (110,479) 1,746,613
Office Equipment 13,099,542 1,351,714 (57,048) 14,394,208
Total Accumulated Depreciation 214,572,980 16,055,808 (3,130,839) 227,497,949
Total Capital Assets Being Depreciated, Net 445,203,648 (3,145,234) (764,480) 441,293,934
Total Capital Assets, Net $ 476,028,659 $ 5,353,340 $ (14,730,596) $ 466,651,403
Depreciation expense for the year ended June 30, 2014 was $16,055,808.
42
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
3) CAPITAL ASSETS - Continued
The following is a summary of changes in Capital Assets for the year ended June 30, 2013:
Beginning Ending
Balance Additions Deletions Balance
Capital Assets, Not Depreciated
Land $ 13,703,463 $ 11,500 $ - $ 13,714,963
Construction in Progress 17,452,274 11,751,086 (12,093,312) 17,110,048
Total Capital Assets Not Depreciated 31,155,737 11,762,586 (12,093,312) 30,825,011
Capital Assets, Being Depreciated
Infrastructure 597,894,929 11,620,876 (881,331) 608,634,474
Field Equipment 8,602,060 331,974 - 8,934,034
Buildings 18,649,209 200,300 - 18,849,509
Transportation Equipment 3,221,249 277,860 (1,320) 3,497,789
Communication Equipment 2,514,151 81,670 (33,341) 2,562,480
Office Equipment 17,201,420 209,037 (112,115) 17,298,342
Total Capital Assets Being Depreciated 648,083,018 12,721,717 (1,028,107) 659,776,628
Less Accumulated Depreciation:
Infrastructure 169,258,402 12,993,086 (254,187) 181,997,301
Field Equipment 7,373,481 206,182 - 7,579,663
Buildings 7,347,820 484,727 - 7,832,547
Transportation Equipment 2,306,300 310,796 (1,321) 2,615,775
Communication Equipment 1,035,846 445,648 (33,342) 1,448,152
Office Equipment 11,086,817 2,105,183 (92,458) 13,099,542
Total Accumulated Depreciation 198,408,666 16,545,622 (381,308) 214,572,980
Total Capital Assets Being Depreciated, Net 449,674,352 (3,823,905) (646,799) 445,203,648
Total Capital Assets, Net $ 480,830,089 $ 7,938,681 $ (12,740,111) $ 476,028,659
Depreciation expense for the year ended June 30, 2013 was $16,545,622.
43
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
4) LONG-TERM DEBT
Long-term liabilities for the year ended June 30, 2014 are as follows:
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
General Obligation Bonds:
Improvement District No. 27 - 2009 $ 6,235,000 $ - $ 535,000 $ 5,700,000 $ 550,000
Unamortized Bond Premium 149,918 - 16,355 133,563 -
Net General Obligation Bonds 6,384,918 - 551,355 5,833,563 550,000
Certificates of Participation:
1996 Certificates of Participation 10,400,000 - 500,000 9,900,000 500,000
2007 Certificates of Participation 37,745,000 - 955,000 36,790,000 995,000
1996 COPS Unamortized Discount (10,432) - (745) (9,687) -
2007 COPS Unamortized Discount (214,043) - (9,044) (204,999) -
Net Certificates of Participation 47,920,525 - 1,445,211 46,475,314 1,495,000
Revenue Bonds:
2010 Water Revenue Bonds Series A 12,255,000 - 820,000 11,435,000 845,000
2010 Water Revenue Bonds Series B 36,355,000 - - 36,355,000 -
2013 Water Revenue Refunding Bonds 7,735,000 - 660,000 7,075,000 605,000
2010 Series A Unamortized Premium 837,019 - 74,402 762,617 -
2013 Bonds Unamortized Premium 976,968 - 96,095 880,873 -
Net Revenue Bonds 58,158,987 - 1,650,497 56,508,490 1,450,000
Total Long-Term Liabilities $ 112,464,430 $ - $ 3,647,063 $ 108,817,367 $ 3,495,000
44
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
4) LONG-TERM DEBT - Continued
Long-term liabilities for the year ended June 30, 2013 are as follows:
Beginning
Balance Ending Due Within
(As Restated) Additions Deletions Balance One Year
General Obligation Bonds:
Improvement District No. 27 - 2009 $ 6,755,000 $ - $ 520,000 $ 6,235,000 $ 535,000
Unamortized Bond Premium 166,271 - 16,353 149,918 -
Net General Obligation Bonds 6,921,271 - 536,353 6,384,918 535,000
Certificates of Participation:
1996 Certificates of Participation 10,900,000 - 500,000 10,400,000 500,000
2004 Certificates of Participation 8,680,000 - 8,680,000 - -
2007 Certificates of Participation 38,665,000 - 920,000 37,745,000 955,000
1996 COPS Unamortized Discount (11,178) - (746) (10,432) -
2007 COPS Unamortized Discount (223,087) - (9,044) (214,043) -
2004 COPS Unamortized Premium 13,005 - 13,005 - -
Net Certificates of Participation 58,023,740 - 10,103,215 47,920,525 1,455,000
Revenue Bonds:
2010 Water Revenue Bonds Series A 13,055,000 - 800,000 12,255,000 820,000
2010 Water Revenue Bonds Series B 36,355,000 - - 36,355,000 -
2010 Series A Unamortized Premium 911,421 - 74,402 837,019 -
2013 Water Revenue Refunding Bonds - 7,735,000 - 7,735,000 660,000
2013 Bonds Unamortized Premium - 984,976 8,008 976,968 -
Net Revenue Bonds 50,321,421 8,719,976 882,410 58,158,987 1,480,000
Total Long-Term Liabilities $ 115,266,432 $ 8,719,976 $ 11,521,978 $ 112,464,430 $ 3,470,000
45
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
4) 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
Improvement District No. 27-2009 to refund the 1998 issue. The proceeds from the bond issue were
$7,989,884, which included an original issue premium of $209,884. An amount of $7,824,647, which consisted
of unpaid principal and accrued interest, was deposited into an escrow fund. Pursuant to an optional
redemption clause in the 1998 bonds, the District was able to redeem the 1998 bonds, without premium at
any time after September 1, 2009. On December 15, 2009 the 1998 bonds were refunded.
These bonds are general obligations of Improvement District No. 27 (ID 27) of the District. The Board of
Directors has the power and is obligated to levy annual ad valorem taxes without limitation, as to rate or
amount for payment of the bonds and the interest upon all property which is within ID 27 and subject to
taxation. The General Obligation Bonds are payable from District-wide tax revenues. The Board may utilize
other sources for servicing the bond debt and interest.
The Improvement District No. 27-2009 General Obligation Refunding Bonds have interest rates from 3.00%
to 4.00% with maturities through Fiscal Year 2023.
Future debt service requirements for the bonds are as follows:
For the Year Ended
June 30, Principal Interest Total
2015 $ 550,000 $ 204,162 $ 754,162
2016 570,000 187,362 757,362
2017 585,000 169,306 754,306
2018 605,000 147,700 752,700
2019 635,000 122,900 757,900
2020-2023 2,755,000 225,100 2,980,100
$ 5,700,000 $ 1,056,530 $ 6,756,530
46
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
4) 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, 2017. The interest rate at June 30, 2014
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.
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%.
Defeased Certificate of Participation (COPS)
In June 2013, the July 2004 COPS were refunded with the issuance of the 2013 Water Revenue Refunding
Bonds (see Revenue Bonds on page 49). Proceeds of $8,575,519, which consisted of unpaid principal and
accrued interest, were used to establish an irrevocable escrow to advance refund and defease in their
entirety the District’s 2004 COPS. Pursuant to an optional redemption clause in the 2004 COPS, the District
will be able to redeem the 2004 bonds, without premium at any time after September 1, 2014. As a result,
the 2004 COPS are considered to be defeased and the liability of those bonds has been removed from long-
term liabilities. The outstanding balance at June 30, 2014 is $7,500,000.
47
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
4) LONG-TERM DEBT - Continued
Defeased Certificates of Participation (COPS) – Continued
There is no aggregate reserve requirement for the COPS. Future debt service requirements for the
certificates are as follows:
For the Year 1996 COPS 2007 COPS
Ended June 30, Principal Interest* Principal Interest
2015 $ 500,000 $ 14,225 $ 995,000 $ 1,517,301
2016 600,000 13,350 1,035,000 1,479,239
2017 600,000 12,450 1,075,000 1,439,408
2018 600,000 11,550 1,115,000 1,397,798
2019 700,000 10,525 1,155,000 1,354,234
2020-2024 3,900,000 35,925 6,515,000 6,031,444
2025-2029 3,000,000 5,550 7,995,000 4,538,196
2030-2034 - - 9,875,000 2,644,028
2035-2036 - - 7,030,000 470,094
$ 9,900,000 $ 103,575 $ 36,790,000 $ 20,871,742
*Variable Rate - Interest reflected at June 30, 2014 at a rate of 0.15%.
The two 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, 2014.
Water Revenue Bonds
In April 2010, Water Revenue Bonds with a face value of $50,195,000 were sold by the Otay Water District
Financing Authority to provide funds for the construction of water storage and transmission facilities. The
bond issue consisted of two series; Water Revenue Bonds, Series 2010A (Non-AMT Tax Exempt) with a face
value of $13,840,000 plus a $1,078,824 original issue premium, and Water Revenue Bonds Series 2010B
(Taxable Build America Bonds) with a face value of $36,355,000. The Series 2010A bonds are due in annual
installments of $785,000 to $1,295,000 from September 1, 2012 through September 1, 2025; bearing interest
at 2% to 5.25%. The Series 2010B bonds are due in annual installments of $1,365,000 to $3,505,000 from
48
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
4) LONG-TERM DEBT - Continued
Water Revenue Bonds - Continued
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, and 2007 Certificates of Participation described above and
the 2013 Water Revenue Refunding Bonds described below.
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, 2014 was $74,402 and is included in interest expense. The unamortized
premium at June 30, 2014 is $762,617.
The 2010 Water Revenue Bonds contains various covenants and restrictions, principally that the District fix,
prescribe, revise and collection 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, 2014.
In June 2013, the 2013 Water Revenue Refunding Bonds were issued to defease the 2004 Refunding
Certificates of Participation. The bonds were issued with a face value of $7,735,000 plus a $984,975 original
issue premium. The bonds are due in annual installments of $660,000 to $835,000 from September 1, 2013
through September 1, 2023; bearing interest at 1% to 4%. The installment payments are to be made from
Taxes and Net Revenues of the Water System, on parity with the payments required to be made by the
District for the 1996, and 2007 Certificates of Participation and the 2010A and 2010B described above.
The original issue premium is being amortized over the 11 year life of the Series 2013 bonds. Amortization
for the year ending June 30, 2014 was $96,095 and is included in interest expense. The unamortized
premium at June 30, 2014 is $880,873.
49
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
4) LONG-TERM DEBT - Continued
Water Revenue Bonds - Continued
The total amount outstanding at June 30, 2014 and aggregate maturities of the revenue bonds for the fiscal
years subsequent to June 30, 2014, are as follows:
5) NET POSITION
Designations of Net Position
In addition to the restricted net position, a portion of unrestricted net position, have been designated by the
Board of Directors for the following purposes as of June 30, 2014 and 2013:
2014 2013
Designated Betterment $ 4,543,776 $ 3,629,786
Expansion Reserve 4,457,117 623,834
Replacement Reserve 21,473,229 24,182,442
Designated New Supply Fund 24,125 24,000
Employee Benefits Reserve 307,279 149,705
Total $ 30,805,526 $ 28,609,767
For the Year
Ended June 30,
2010 Water Revenue Bond
Series A
2010 Water Revenue Bond
Series B
2013 Water Revenue
Refunding Bonds
Principal Interest Principal Interest Principal Interest
2015 $ 845,000 $ 508,563 $ - $ 2,371,868 $ 605,000 $ 258,700
2016 870,000 478,488 - 2,371,868 615,000 243,425
2017 900,000 443,088 - 2,371,868 635,000 221,500
2018 940,000 406,288 - 2,371,868 660,000 195,600
2019 975,000 367,988 - 2,371,868 685,000 168,700
2020-2024 5,610,000 1,068,687 - 11,859,342 3,875,000 399,500
2025-2029 1,295,000 33,994 6,000,000 11,123,436 - -
2030-2034 - - 9,925,000 8,425,226 - -
2035-2039 - - 13,635,000 4,590,582 - -
2040-2042 - - 6,795,000 453,978 - -
$ 11,435,000 $ 3,307,096 $ 36,355,000 $ 48,311,904 $ 7,075,000 $ 1,487,425
50
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
6) 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 classic members in the Plan are required to contribute 8% of their annual covered salary. By
agreement between the Employee Association 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, contributed an additional
3.5% of covered salaries. Effective January 1, 2013, classic represented employees contribution was
reduced to an additional 2.75% of covered salaries. For new members (employees hired on or after January
1, 2013 and are new entrants to the PERS System), employees pay a 6.25% contribution. The District is
required to contribute the actuarially determined remaining amounts necessary to fund the 2.7% at age 55
retirement plan benefits for its classic members and 2.0% at age 62 for its new members under the California
Employees’ Pension Reform Act (PEPRA) provisions. 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, 2014 was 25.435%. The contribution requirements of the Plan members are
established by State statute and the employer contribution rate is established and may be amended by
CalPERS.
Annual Pension Costs
For the fiscal year ended June 30, 2014, the District’s annual pension cost and actual contribution was
$3,294,341. The required contribution for the fiscal year ended June 30, 2014 was determined as part of the
June 30, 2011 actuarial valuation.
51
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
6) DEFINED BENEFIT PENSION PLAN - Continued
Annual Pension Costs - Continued
The following is a summary of the actuarial assumptions and methods:
Valuation Date June 30, 2011
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 7.50% (Net of Administrative Expenses)
Projected Salary Increase 3.30% to 14.20% Depending on Age, Service, and Type of Employment
Inflation 2.75%
Payroll Growth 3.00%
Individual Salary Growth A merit scale varying by duration of employment coupled with an
assumed annual inflation component of 2.75% 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 30 year 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 not 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
6/30/14 $ 3,294,341 100% $ -
6/30/13 $ 3,130,754 100% $ -
6/30/12 $ 2,951,409 100% $ -
Fund Status and Funding Progress
As of June 30, 2012, the most recent actuarial valuation date, the plan was 69.4% funded. The actuarial
accrued liability (AAL) for benefits was $95,927,777, and the actuarial value of assets was $66,578,121,
resulting in an unfunded actuarial accrued liability (UAAL) of $29,349,656. The covered payroll (annual
52
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
6) DEFINED BENEFIT PENSION PLAN - Continued
Fund Status and Funding Progress - Continued
payroll of active employees covered by the plan) was $11,474,462, and the ratio of the UAAL to the covered
payroll was 255.8%.
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.
7) OTHER POST EMPLOYMENT BENEFITS
Plan Description
The District’s defined benefit postemployment healthcare plan, (DPHP), provides medical benefits to eligible
retired District employees and beneficiaries. DPHP is part of the Public Agency portion of the California
Employers’ Retiree Benefit Trust Fund (CERBT), an agent multiple-employer plan administered by California
Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative
agent for participating public employers within the State of California. CalPERS issues a separate
Comprehensive Annual Financial Report. Copies of the CalPERS’ annual financial report may be obtained
from the CalPERS Executive Office, 400 P Street, Sacramento, California 95814.
Prior to the plan agreements signed in 2011, the eligibility in the plan was broken into 3 tiers, employees
hired before January 1, 1981, employees hired between January 1, 1981 but before July 1, 1993 and
employees hired on or after July 1, 1993. Board members elected before January 1, 1995 are also eligible
for the plan. Eligibility also includes age and years of service requirements which vary by tier. Benefits
include 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
includes survivor benefits to Medicare.
Subsequent to the agreements in 2011 and 2012 all employees are eligible for the plan after 20 years of
consecutive service and unrepresented employees hired before January 1, 2013 are eligible after 15 years.
Survivor benefits are covered beyond Medicare.
Funding Policy
The contribution requirements of plan members and the District are established and may be amended by
the Board of Directors. Effective January 1, 2013, represented employees hired prior to January 1, 2013 or
53
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
7) OTHER POST EMPLOYMENT BENEFITS - Continued
Funding Policy- Continued
hired on or after January 1, 2013 from another public agency that has reciprocity without having a break
in service of more than six months, contribute .75% of covered salaries. In addition, unrepresented and
represented employees hired on or after January 1, 2013, and do not have reciprocity from another public
agency, contribute 1.75% and 2.5% of covered salaries, respectively. DPHP members receiving benefits
contribute based on their selected plan options of EPO, HMO or PPO and whether they are outside the
State of California. Contributions by plan members range from $0 to $154 per month for coverage to age
65, and from $0 to $154 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 12.0% 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:
2014 2013
Annual Required Contribution (ARC) $ 1,439,000 $ 1,287,000
Interest on Net OPEB Asset (677,544) (603,338)
Adjustment to Annual Required Contribution (ARC) 625,000 543,000
Annual OPEB Cost (Expense) 1,386,456 1,226,662
Contributions Made 2,426,355 2,250,198
Increase in Net OPEB Asset (1,039,899) (1,023,535)
Net OPEB Asset - Beginning of Year (9,345,437) (8,321,902)
Net OPEB Asset - End of Year $ (10,385,336) $ (9,345,437)
For 2014, 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 $940,355, which is included in the $2,426,355 of contributions shown above. For 2013 this
amount was $877,196, which is included in the $2,250,198 of contributions shown above.
54
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
7) OTHER POST EMPLOYMENT BENEFITS - Continued
Annual OPEB Cost and Net OPEB Obligation/Asset - Continued
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 2014, 2013 and 2012 were as follows:
THREE-YEAR TREND INFORMATION FOR CERBT
Fiscal Annual OPEB Percentage of Net OPEB
Year Cost (AOC) OPEB Cost Contributed Obligation
6/30/14 $ 1,386,456 175% $ (10,385,336)
6/30/13 $ 1,226,662 183% $ (9,345,437)
6/30/12 $ 1,239,315 173% $ (8,321,902)
Funded Status and Funding Progress
The funded status of the plan as of June 30, 2013, the most recent actuarial valuation date, was as follows:
Actuarial Accrued Liability (AAL) $ 22,891,000
Actuarial Value of Plan Assets $ 11,831,000
Unfunded Actuarial Accrued Liability (UAAL) $ 11,060,000
Funded Ratio (Actuarial Value of Plan Assets/AAL) 51.68%
Covered Payroll (Active Plan Members) $ 11,969,000
UAAL as a Percentage of Covered Payroll 92.41%
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 the plan assets is increasing or decreasing over time relative to the actuarial accrued
liabilities for benefits.
55
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
7) 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 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 the employer and plan
members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of 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, 2013
Actuarial Cost Method Entry Age Normal Cost Method
Amortization Method Level Percent of Payroll
Remaining Amortization Period 24-Year Fixed (Closed) Period as of the Valuation Date
Asset Valuation Method 5-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.
8) WATER CONSERVATION AUTHORITY
In 1999 the District formed the Water Conservation Garden 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, 2014 and 2013, the District contributed $119,687 and
$120,684, respectively, for the development, construction and operation costs of the xeriscape
demonstration garden.
56
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
8) WATER CONSERVATION AUTHORITY - Continued
A summary of the Authority’s June 30, 2013 audited financial statement is as follows (latest report available):
9) COMMITMENTS AND CONTINGENCIES
Construction Commitments
The District had committed to capital projects under construction with an estimated cost to complete of
$8,488,804 at June 30, 2014.
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 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, 2013, 1,751 EDUs had been relinquished and refunded, 15,031
EDUs had been connected, and 1,085 EDUs have neither been relinquished nor connected. At June 30,
2014, 1,751 EDUs had been relinquished and refunded, 15,073 EDUs had been connected, and 1,043 EDUs
have neither been relinquished nor connected.
Assets $ 1,555,790
Liabilities 3,750
Net Assets $ 1,552,040
Revenues, Gains and Other Support $ 135,000
Expenses 238,551
Changes in Net Assets $ (103,551)
57
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
9) COMMITMENTS AND CONTINGENCIES - Continued
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, 2014, 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 $221,320 at the point of
acceptance. Accordingly, the District has accrued a liability as of year end.
10) RISK MANAGEMENT
General Liability
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’ 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,
as respects any employment practices claim or suit arising in whole or any part out of any action
involving discipline, demotion, reassignment or termination of any employee of the member.
.
58
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
10) RISK MANAGEMENT - Continued
General Liability – 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, 2013
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, 2013.
Boiler and Machinery: Replacement cost up to $100 million per occurrence, subject to a $1,000 deductible,
effective July 1, 2013.
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, 2013.
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 - 201314, effective July 1, 2013.
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, 2013.
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 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.
59
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
11) INTEREST EXPENSE
Interest expense for the years ended June 30, 2014 and 2013, is as follows:
2014 2013
Amount Expensed $ 4,872,060 $ 3,977,538
Amount Capitalized as a Cost of
Construction Projects 176,782 995,721
Total Interest $ 5,048,842 $ 4,973,259
12) 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.
60
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
12) SEGMENT INFORMATION - Continued
Summary financial information for the water services is presented for June 30, 2014:
Condensed Statement of Net Position
June 30, 2014
Water Services
ASSETS
Current Assets $ 99,383,693
Capital Assets 448,775,521
Other Assets 11,756,796
Total Assets 559,916,010
DEFERRED OUTFLOWS OF RESOURCES
Deferred Amount on Refunding 78,118
Total Deferred Outflows of Resources 78,118
LIABILITIES
Current Liabilities 25,670,427
Long-term Liabilities 105,971,711
Total Liabilities 131,642,138
NET POSITION
Invested in Capital Assets 343,531,272
Restricted for Debt Service 3,855,673
Unrestricted 80,965,045
Total Net Position $ 428,351,990
61
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
12) SEGMENT INFORMATION - Continued
Condensed Statement of Revenues, Expenses
and Changes in Net Position
For the Year Ended June 30, 2014
Water Services
Operating Revenues
Water Sales $ 81,287,164
Connection and Other Fees 1,943,306
Total Operating Revenues 83,230,470
Operating Expenses
Cost of Water Sales 56,068,147
Administrative and General 18,608,603
Depreciation 15,014,281
Total Operating Expenses 89,691,031
Operating Income (Loss) (6,460,561)
Non-operating Revenues (Expenses)
Investment Earnings 459,098
Taxes and Assessments 3,536,200
Availability Charges 685,444
Gain (Loss) on Sale of Capital Assets (426,140)
Rents and Leases 1,317,736
Miscellaneous Revenues 2,034,182
Donations (119,687)
Interest Expense (4,872,060)
Miscellaneous Expenses (3,054,447)
Total Non-operating Revenues (Expenses) (439,674)
Income (Loss) Before Capital Contributions (6,900,235)
Capital Contributions 2,725,666
Change in Net Position (4,174,569)
Total Net Position, Beginning 432,526,559
Total Net Position, Ending $ 428,351,990
62
Notes to Financial Statements
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
12) SEGMENT INFORMATION - Continued
Condensed Statement of Cash Flows
For the Year Ended June 30, 2014
Water Services
Net Cash Provided By (Used For):
Operating Activities $ 6,536,602
Non-capital and Related Financing Activities 4,836,386
Capital and Related Financing Activities (10,115,070)
Investing Activities (8,693,128)
Net Increase (Decrease) in Cash and Cash Equivalents (7,435,210)
Cash and Cash Equivalents, Beginning 38,045,323
Cash and Cash Equivalents, Ending $ 30,610,113
63
Required Supplementary Information
See Independent Auditors’ report
Years Ended June 30, 2014 and 2013
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]
6/30/12
Miscellaneous $ 66,578,121 $ 95,927,777 $ 29,349,656 69.4% $ 11,474,462 255.8%
6/30/11
Miscellaneous $ 62,435,349 $ 88,411,019 $ 25,975,670 70.6% $ 12,289,529 211.4%
6/30/10
Miscellaneous $ 57,613,987 $ 81,306,934 $ 23,692,947 70.9% $ 12,140,989 195.1%
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]
6/30/13
Miscellaneous $ 11,831,000 $ 22,891,000 $ 11,060,000 51.68% $ 11,969,000 92.41%
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%
64
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 6666
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 7722
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 8811
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.
Demographic and Economic Information 8855
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 8877
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.
65
Fiscal Net Investment Total
Year in Capital Assets Restricted Unrestricted Net Position
2014 357,912,154$ 3,855,673$ 83,039,993$ 444,807,820$
2013 376,549,168 4,612,890 67,071,849 448,233,907
2012 381,725,015 4,715,904 67,701,068 454,141,987
2011 377,656,762 4,915,555 74,627,563 457,199,880
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
Source: Otay Water District
Net Position by Component - Last Ten Fiscal Years
$360,000
$380,000
$400,000
$420,000
$440,000
$460,000
$480,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total Net Positon, in Thousands ($)
66
Total
Operating Non-Operating Income (Loss) Changes
Fiscal Operating Operating Income/ Revenues/ Before Capital Capital in Net
Year Revenues Expenses (Loss) (Expenses)Contributions Contributions Position
2014 86,025,573$ 92,567,023$ (6,541,450)$ (277,057)$ (6,818,507)$ 3,392,420$ (3,426,087)$
2013 76,881,388 87,335,338 (10,453,950) 1,770,738 (8,683,212) 2,775,132 (5,908,080)
2012 68,400,349 81,795,466 (13,395,117) 3,511,327 (9,883,790) 6,825,897 (3,057,893)
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
Source: Otay Water District
Changes in Net Position - Last Ten Fiscal Years
-$6,000
-$2,000
$2,000
$6,000
$10,000
$14,000
$18,000
$22,000
$26,000
$30,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Changes in Net Position, in Thousands ($)
67
Fiscal Connection and Percent
Year Water Sales Wastewater Other Fees Total Change
2014 81,287,164$ 2,791,523$ 1,946,886$ 86,025,573$ 11.9%
2013 72,187,081 2,625,087 2,069,220 76,881,388 12.4%
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%
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
$90,000
$100,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Operating Revenues, in Thousands ($)
68
Fiscal Cost of Administrative Percent
Year Water Sales Wastewater and General Depreciation Total Change
2014 56,068,147$ 1,834,465$ 18,608,603$ 16,055,808$ 92,567,023$ 6.0%
2013 50,600,551 1,638,354 18,550,811 16,545,622 87,335,338 6.8%
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%
CHART SOURCE DATA
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
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
$100,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Operating Expenses, in Thousands ($)
Cost of Water Sales Wastewater Administrative and General Depreciation
69
Fiscal Investment Taxes and Availability Rents and Percent
Year Earnings Assessments Charges Leases Miscellaneous Total Change
2014 522,286$ 3,537,162$ 729,961$ 1,317,736$ 1,661,992$ 7,769,137$ -0.2%
2013 22,155 3,545,595 707,881 1,276,914 2,233,804 7,786,349 -14.9%
2012 436,596 3,502,155 696,863 1,222,060 3,288,111 9,145,785 4.4%
2011 854,440 3,895,938 653,012 1,185,573 2,174,690 8,763,653 0.2%
2010 1,323,844 3,973,328 670,784 1,083,988 1,693,942 8,745,886 -37.7%
2009 2,252,335 4,586,823 625,065 1,029,506 5,545,344 (2)14,039,073 3.5%
2008 4,538,791 4,591,023 744,722 962,929 2,729,277 13,566,742 22.3%
2007 4,416,342 4,151,956 715,664 914,403 897,216 11,095,581 29.7%
2006 3,188,645 2,779,635 609,099 806,014 1,172,618 8,556,011 4.1%
2005 2,052,292 2,326,526 556,590 766,733 2,518,395 (1)8,220,536 15.5%
(1) The District sold capital assets during Fiscal Year 2005 which resulted in a gain of $2,196,655.
in Fiscal Year 2009.
Source: Otay Water District
Non-Operating Revenues by Source - Last Ten Fiscal Years
(2) The District received a large, one-time legal settlement as a member of a class action lawsuit
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Non-Operating Revenues, in Thousands ($)
70
Fiscal Interest Percent
Year Donations (1)Expense Miscellaneous Total Change
2014 119,687$ 4,872,060$ 3,054,447$ (3)8,046,194$ 33.8%
2013 120,684 3,977,538 1,917,389 6,015,611 6.8%
2012 121,617 3,899,927 1,612,914 (2)5,634,458 35.6%
2011 120,648 3,877,531 158,337 4,156,516 48.0%
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%
(1) Donations are contributions to the Water Conservation Authority formed in 1999. See Note 8 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.
(3) Miscellaneous expense includes $2 million of non-capitalizable expenses which were funded by the
2010 Water Revenue Bonds.
Source: Otay Water District
Non-Operating Expenses by Function - Last Ten Fiscal Years
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Non-Operating Expenses, in Thousands ($)
Miscellaneous Interest Expense Donations
71
Fiscal Total Direct
Year Real Personal Total Tax Rate
2014 22,739,584,104$ 564,518,965$ 23,304,103,069$ 1.00%
2013 22,253,255,369 583,080,854 22,836,336,223 1.00%
2012 22,556,489,450 588,978,085 23,145,467,535 1.00%
2011 22,997,752,952 521,424,896 23,519,177,848 1.00%
2010 23,671,616,006 527,200,694 24,198,816,700 1.00%
2009 26,269,630,081 482,465,611 26,752,095,692 1.00%
2008 25,333,821,005 568,975,196 25,902,796,201 1.00%
2007 22,166,251,649 518,441,943 22,684,693,592 1.00%
2006 19,204,029,184 361,636,280 19,565,665,464 1.00%
2005 16,121,465,817 301,937,884 16,423,403,701 1.00%
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
$30,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Assessed Valuation of Property, In Thousands ($)
72
Fiscal
Year Purchases Sales Production Purchases Sales
2014 14,554,049 13,720,119 503,120 1,664,630 2,068,330
2013 13,888,496 13,189,042 486,610 1,415,610 1,878,950
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
(1) Rates are not presented on this schedule because the District has multiple water rates for various meter sizes
and customer classes and cannot represent rates in a meaningful manner with a weighted average rate. See
Water and Sewer rates on pages 77-79 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
Water Purchases, Production, and Sales - Last Ten Fiscal Years
Recycled Water (1)
Per 100 Cubic Feet
Potable Water (1)
0
50,000
100,000
150,000
200,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Recycled Purchases Recycled Water Production Potable Water Purchases
Water Purchases, Productions, and Sales, in Hundred Cubic Feet (HCF)
73
Fiscal
Year Total
2014 195 3 198 2014
2013 305 5 310
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
Source: Otay Water District
Meter Sales by Type - Last Ten Fiscal Years
Potable Recycled
0
500
1,000
1,500
2,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Meter Sales by Type
Recycled Potable
74
Fiscal
Year Potable Recycled Sewer Total
2014 49,148 702 4,657 54,507
2013 48,962 704 4,655 54,321
2012 48,665 696 4,655 54,016
2011 48,154 685 4,655 53,494
2010 47,845 683 4,646 53,174
2009 47,608 671 4,638 52,917
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
Source: Otay Water District
Number of Customers by Service Type - Last Ten Fiscal Years
5,000
15,000
25,000
35,000
45,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of Customers by Service Type
Sewer Recycled Potable
75
Fiscal
Year 1% Property Tax
Special
Assessments
Total
Levies
Total
Collections (1)
End of the Year
Percent
Collected
2014 3,032,618$ 2,096,409$ 5,129,027$ 4,885,718$ 95%
2013 3,014,180 2,139,415 5,153,595 4,790,286 93%
2012 3,115,841 2,108,269 5,224,110 4,809,293 92%
2011 3,156,446 2,497,117 5,653,563 5,199,833 92%
2010 3,622,861 2,179,270 5,802,131 5,272,728 91%
2009 3,661,961 2,455,211 6,117,172 5,591,554 91%
2008 3,437,810 2,561,574 5,999,384 5,612,821 94%
2007 2,689,068 2,403,275 5,092,343 4,735,879 93%
2006 1,420,049 2,489,123 3,909,172 3,713,714 95%
2005 1,173,319 2,406,521 3,579,840 3,324,186 93%
(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
$7,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Levies and Collections, in Thousands ($)
Levies Collections
76
Fixed Rates 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
System Fee by Meter Size
Residential
3/4"16.19$ 16.74$ 14.58$ 14.58$ 14.58$ 13.83$ 12.30$ 11.30$ 10.25$ 10.25$
1"22.87 21.26 18.52 18.52 18.52 17.56 19.80 18.15 16.50 16.50
1.5"39.58 32.57 28.37 28.37 28.37 26.90 51.95 35.75 32.50 32.50
Non-Residential & Others
3/4"16.19 16.74 14.58 14.58 14.58 13.83 24.00 22.00 20.00 20.00
1"22.87 21.26 18.52 18.52 18.52 17.56 36.95 33.90 30.80 30.80
1.5"39.58 32.57 28.37 28.37 28.37 26.90 51.95 47.50 43.30 43.30
2"59.62 46.13 40.18 40.18 40.18 38.10 64.95 59.60 54.20 54.20
3"113.08 82.29 71.68 71.68 71.68 67.98 104.55 95.90 87.20 87.20
4"173.22 122.99 107.13 107.13 107.13 101.59 119.70 109.80 99.80 99.80
6"340.29 236.02 205.59 205.59 205.59 194.96 239.20 219.45 199.50 199.50
8"540.76 371.64 323.73 323.73 323.73 307.00 - - - -
10"774.64 529.88 461.57 461.57 461.57 437.71 456.60 418.90 380.50 380.50
CWA and MWD Pass-through charges by Meter Size
Residential
3/4"14.45 13.28 14.01 11.82 9.77 4.33 3.85 3.55 2.85 2.50
1"26.79 22.12 23.33 19.69 16.28 6.91 6.15 5.65 4.55 4.00
1.5"60.61 44.31 46.74 39.44 32.61 13.04 11.60 10.65 8.55 7.50
Non-Residential & Others
3/4"14.45 13.28 14.01 11.82 9.77 4.33 3.85 3.55 2.85 2.50
1"26.79 22.12 23.33 19.69 16.28 6.91 6.15 5.65 4.55 4.00
1.5"60.61 44.31 46.74 39.44 32.61 13.04 11.60 10.65 8.55 7.50
2"103.08 70.85 74.74 63.07 52.15 22.54 20.05 18.45 14.80 13.00
3"219.23 141.71 149.48 126.14 104.30 41.53 36.95 34.05 27.35 19.20
4"351.09 221.43 233.58 197.17 162.98 70.98 63.15 58.20 46.75 41.00
6"718.69 442.80 467.09 394.17 325.92 129.82 115.50 106.45 85.50 75.00
8"1,160.59 708.53 747.39 630.71 521.51 374.62 - - - -
10"1,670.55 1,015.06 1,070.74 903.58 749.61 538.52 300.30 276.75 222.30 195.00
Fire Services
All Types 30.11 30.11 30.11 28.55 25.40 23.30 21.20 21.20
Lower than 4 inch 21.14 34.57
Higher than 4 inch 28.49 34.57
Source: Otay Water District
Water Fixed Rates - Last Ten Fiscal Years
77
Usage Rate (1)2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
Tier 1 1.86$ 1.73$ 1.58$ 1.49$ 1.35$ 1.12$ 1.12$ 1.08$ 1.05$ 1.01$
Tier 2 2.90 2.69 2.45 2.31 2.10 1.74 1.85 1.78 1.73 1.67
Tier 3 3.77 3.50 3.19 3.00 2.73 2.26 2.01 1.94 1.88 1.81
Tier 4 5.80 5.39 4.92 4.63 4.21 3.48 2.94 2.83 2.75 2.65
Tier 5 - - - - - - - - - -
Tier 1 2.86 2.66 2.43 2.29 2.08 1.72 1.85 1.78 1.73 1.67
Tier 2 3.71 3.45 3.15 2.97 2.70 2.23 2.01 1.94 1.88 1.81
Tier 3 5.73 5.32 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
Commercial & Others (3)1.98 1.91 1.85 1.78
Government Fee (2)0.31 0.29 0.29 0.29 0.29 0.29 0.28 - - -
Tier 1 3.06 2.84 2.59 2.44 2.22 1.84
Tier 2 3.14 2.92 2.66 2.50 2.27 1.88
Tier 3 3.19 2.96 2.70 2.54 2.31 1.91
Tier 1 4.17 3.87 3.53 3.32 3.02 2.50
Tier 2 4.25 3.95 3.60 3.39 3.08 2.55
Tier 3 4.32 4.01 3.66 3.45 3.14 2.60
Recycled (Commercial)1.67 1.65 1.57 1.51
Recycled (Publicly-Owned) (2)1.75 1.73 1.65 1.59
Tier 1 3.56 3.31 3.02 2.84 2.58 2.13
Tier 2 3.61 3.35 3.06 2.88 2.62 2.17
Tier 3 3.68 3.42 3.12 2.94 2.67 2.21
Energy Pumping Fee
Per 100 cubic feet (4)0.048 0.042 0.045 0.044 0.038 0.034 0.034 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 $.31 per unit was 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 agricultural and temporary meters.
(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 $.048 per 100 cubic
feet of water for each 100 feet of lift above the base elevation of 450 feet. All water customers are in one of
twenty-nine zones based on elevation.
Source: Otay Water District
Water Variable Rates - Last Ten Fiscal Years
Recycled
Public Agency & Commercial
Landscape, Agricultural & Construction
Master Meter
Residential
78
Description 2014 2013** 2012 2011 2010 2009 2008* 2007 2006 2005
1 Unit 2.46$ 2.35$ 1.77$ 1.67$ 1.56$ 1.47$ 1.41$ - - -
Low Strength 2.46 2.35
Medium Strength 3.53 3.37
High Strength 5.63 5.37
Sewer Rate Per ASU 41.75 39.39 36.88 34.79 33.26 32.70$ 30.90$ 26.90$
3/4"15.89 14.38 12.26 11.57 10.80 10.20 9.75
1"15.89 14.38 17.88 16.87 15.75 14.90 14.25
3/4"27.07 25.83
1"39.86 38.03
1.5"71.82 68.53
2"110.17 105.12
3"199.66 190.52
4"327.51 312.51
6"647.12 617.48
8"1,030.67 983.46
10"1,478.12 1,410.42
Calculation of Monthly Residential Sewer Billing:
*Bill calculation prior to calendar year 2008: Sewer Rate per ASU (10)
Bill calculation beginning calendar year 2008: (Winter Average (9) x .85 (2) x Usage Fee) + Fixed Fee (8)
Calculation of Monthly Non-Residential Sewer Billing:
Footnotes:
(1) Flow in gallons per day (Flow) is calculated using monthly readings from account's water meter.
(2) Flow is reduced by 15 percent to reflect that not all water purchased is disposed of into the public sewer system.
(3) Flow is divided by 250 gallons per day to convert it in terms of residential equivalence.
(4) Strength factors for business cutomers are categorized as low, medium or high strength.
(5) The average annual usage is defined as the units of water billed from January through December of previous year.
(6) The usage fee is based on the commercial account's strength factor as shown on the usage fee table as being either
Low, Medium, or High.
(7) The fixed rate is based on the size of the water meter.
(8) The winter average for a residential customer is defined as the units of water billed from January-April of the previous
calendar year divided by the number of months of service.
(9) The ASU (assigned service unit) is then multiplied by the district-wide sewer rate.
Source: Otay Water District
Sewer Variable and Fixed Rates - Last Ten Fiscal Years
Non-Residential
Fixed Rates
Usage Fee
**Bill calculation prior to calendar year 2012: ((Flow in gallons per day (1) x .85 (2)/250 (3))) x Strength Factor (4)
Bill calculation beginning calendar year 2013: ((Average Annual Usage (5) x .85 (2) )/250 (3) x Usage Fee (7))) + Fixed Fee (8)
Residential
Non-Residential
Residential
79
Annual % of
Business Type Revenues Water Sales
1. City of Chula Vista Publicly Owned 3,595,360$ 4.4%
2. State of California Publicly Owned 1,130,281 1.4%
3. County of San Diego Publicly Owned 935,465 1.2%
4. Eastlake III Community Commercial 841,818 1.0%
5. Eastlake Country Club Commercial 618,403 0.8%
6. Chula Vista School District Publicly Owned 510,535 0.6%
7. Highlands Golf Company, LLC Commercial 464,298 0.6%
8. SANDAG Commercial 404,250 0.5%
9. Sweetwater School District Publicly Owned 390,445 0.5%
10. City of San Diego Publicly Owned 362,662 0.4%
Total (10 Largest)9,253,517$ 11.4%
Other Customers 72,033,647 88.6%
Total Water Sales 81,287,164$ 100.0%
Annual % of
Business Type Revenues Water Sales
1. City of Chula Vista Publicly Owned 1,011,094$ 2.6%
2. State of California Publicly Owned 841,516 2.1%
3. County of San Diego Publicly Owned 689,928 1.8%
4. Eastlake III Business/Irrigation (Recycled)494,954 1.3%
5. Steele Canyon Irrigation (Potable Permanent)435,783 1.1%
6. McMillin Construction (Potable)379,118 1.0%
7. Signs & Pinnick, Inc.Irrigation (Potable Temporary)374,752 1.0%
8. Eastlake Country Club Irrigation (Recycled)333,671 0.8%
9. California Bank & Trust Irrrigation (Recycled)303,053 0.8%
10. Singing Hills Residential/Irrigation (Potable)281,216 0.7%
Total (10 Largest)5,145,085$ 13.2%
Other Customers 34,202,971 86.8%
Total Water Sales 39,348,056$ 100.0%
Source: Otay Water District
Ten Largest Customers - Current Year and Nine Years Ago
Customer Name
Customer Name
FISCAL YEAR 2014
FISCAL YEAR 2005
80
As a Share
Fiscal Population GO Revenue Capital Per of Personal
Year Estimate Bond COPS Bonds Notes Leases Total Capita Income(1)
2014 213,000 5,833,563$ 46,475,314$ 56,508,490$ -$ - 108,817,367$ 510.88$ 0.99%
2013 211,000 6,384,918 47,920,525 (2)58,158,987 - - 112,464,430 533.01 1.06%
2012 208,500 6,921,271 58,023,740 50,321,421 - - 115,266,432 552.84 1.14%
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%
(1) See the Demographics and Economic Statistics schedule on page 86 for personal income data.
(2) 2004 COPS were refunded with the issuance of 2013 Water Revenue Refunding Bonds in June 2013.
Source: Otay Water District
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years
$0
$100
$200
$300
$400
$500
$600
$700
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Outstanding Debt, Per Capita
81
Adjusted Net Revenues
Fiscal Adjusted Operating Available for Debt Service Requirements (4)Coverage
Year Revenues (1)Expenses (2)Debt Service Principal Interest Total Factor (3)
2014 90,948,021$ 75,575,679$ $15,372,342 $2,935,000 $4,895,622 $7,830,622 196%
2013 81,778,447 70,228,987 11,549,460 2,800,000 4,988,640 7,788,640 148%
2012 74,484,691 64,028,686 10,456,005 1,850,000 6,050,746 7,900,746 132%
2011 69,653,627 60,117,245 9,536,382 1,795,000 5,084,450 6,879,450 139%
2010 65,573,058 57,084,904 8,488,154 1,745,000 2,720,258 4,465,258 190%
2009 63,739,773 57,076,567 6,663,207 1,700,000 2,342,048 4,042,048 165%
2008 63,732,275 56,420,286 7,311,989 800,000 2,567,884 3,367,884 217%
2007 69,442,301 52,413,282 17,029,019 790,000 1,513,834 2,303,834 739%
2006 58,572,428 47,520,682 11,051,746 745,000 917,790 1,662,790 665%
2005 56,597,040 43,936,109 12,660,931 650,000 869,715 1,519,715 833%
(1) Adjusted revenues exclude sewer revenues and taxes collected for Improvement District 27 and are
inclusive of capacity fees.
(2) Adjusted operating expenses exclude sewer expenses and depreciation expense.
(3) The District's bond covenants require a minimum coverage factor of 125%.
(4) Pledge debts are Certificates of Participation (COPS) and Revenue Bonds.
Source : Otay Water District
Pledged Revenue Coverage - Last Ten Fiscal Years
00%
200%
400%
600%
800%
1,000%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Coverage Factor, in Percentage (%)
Actual Ratio Minimum ratio
82
Net Bonded
Net Debt to Net Bonded
Fiscal Population Assessed Bonded Assessed Debt Per
Year Estimate Valuation Debt Valuation Capita
2014 213,000 23,304,103,069$ 5,833,563$ 0.03%27.39
2013 211,000 22,836,336,223 6,384,918 0.03%30.26
2012 208,500 23,145,467,535 6,921,271 0.03%33.20
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
Source: Otay Water District
Last Ten Fiscal Years
Ratios of General Bonded Debt Outstanding -
0.00%
0.01%
0.02%
0.03%
0.04%
0.05%
0.06%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Bonded Debt Ratios, in Percentage (%)
83
Computation of Direct and Overlapping Bonded Debt
June 30, 2014
2013-14 Assessed Valuation: $23,304,103,069
Redevelopment Incremental Valuation: 268,264,662
Total Overlapping Tax Increment Debt 1.35%
Total Debt District’s Share of
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/14 % Applicable (1) Debt 6/30/14
Metropolitan Water District $ 132,275,000 1.064% $ 1,407,406
Otay Water District Improvement District No. 27 5,700,000 100.000 5,700,000
Grossmont-Cuyamaca Community College District 256,139,481 15.553 39,837,373
Southwestern Community College District 230,589,345 40.251 92,814,517
Grossmont Union High School District 440,000,095 15.974 70,285,615
Sweetwater Union High School District 354,404,415 48.065 170,344,482
Chula Vista City School District 91,585,000 60.115 & 23.413 43,678,703
San Ysidro School District 123,382,611 51.542 63,593,865
Other School Districts 38,791,763,631 Various 51,316,520
Grossmont Healthcare District 220,567,076 14.202 31,324,936
City of Chula Vista Community Facilities District 186,220,000 100.000 186,220,000
Chula Vista City School District Community Facilities Districts 4,440,000 100.000 4,440,000
Sweetwater Union High School District Community Facilities Districts 139,688,004 10.894-100. 130,675,505
City 1915 Act Bonds 30,676,388 7.3132-100. 27,400,250
California Statewide Communities Development Authority
San Diego County / Venture Community Center Assessment District 1,039,261 100.000 1,039,261
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ 920,078,433
Ratios to 2013-14 Assessed Valuation:
Direct Debt ($5,700,000) .......................................................................................... 0.02%
Total Overlapping Tax and Assessment Debt .........................................................3.95%
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
San Diego County General Fund Obligations $ 379,835,000 5.899% $ 22,406,467
San Diego County Pension Obligations 720,855,256 5.899 42,523,252
San Diego Superintendent of Schools Certificates of Participation 16,125,000 5.899 951,214
Otay Water District Certificates of Participation & Revenue Bonds 101,555,000 100.000 101,555,000
Grossmont and Southwestern Community College District General Fund Obligations 2,430,000 15.553 & 40.251 664,435
Grossmont Union High School District Certificates of Participation 800,000 15.974 127,792
Sweetwater Union High School District Certificates of Participation 42,475,000 48.065 20,415,609
Chula Vista City School District Certificates of Participation 141,895,000 60.115 85,300,179
San Ysidro School District Certificates of Participation 42,013,755 51.542 21,654,730
Other School District Certificates of Participation 7,960,000 Various 1,976,388
City of Chula Vista Certificates of Participation 121,650,000 68.129 82,878,929
City of San Diego General Fund Obligations 546,930,000 0.891 4,873,146
San Miguel Consolidated Fire Protection District Certificates of Participation 4,575,000 52.463 2,400,182
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 387,727,323
Less: Otay Water District Certificates of Participation & Revenue Bonds (100% self-supporting) 101,555,000
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 286,172,323
OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $ 21,625,000 16.781% $ 3,628,891
TOTAL GROSS DIRECT DEBT $ 107,255,000
TOTAL NET DIRECT DEBT $ 5,700,000
TOTAL OVERLAPPING DEBT $1,204,179,647
GROSS COMBINED TOTAL DEBT $1,311,434,647 (2)
NET COMBINED TOTAL DEBT $1,209,879,647
(1) The percentage of overlapping debt applicable to the District is estimated using taxable assessed property value. Applicable percentages were estimated by determining
the portion of the overlapping district’s assessed value that is within the boundaries of the water district divided by the overlapping district’s total taxable assessed value.
(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 ($107,255,000) ............................................................. 0.46%
Net Total Direct Debt ($5,700,000) ...................................................................... 0.02%
Gross Combined Total Debt.............................................................................................5.63%
Net Combined Total Debt .................................................................................................5.19%
Source: California Municipal Statistics, Inc. and Otay Water District
84
2005
% of Total % of Total
County County
Employer Employees Rank Employment Employees Rank Employment
State of California 43,300 1 2.90% 38,700 2 2.71%
UC San Diego 28,672 2 1.92% 26,654 3 1.87%
Federal Government (1)24,200 3 1.62% 38,900 1 2.73%
U.S. Department of Defense (1)21,500 4 1.44%
County of San Diego 20,100 5 1.35% 16,803 5 1.18%
City of San Diego 18,000 6 1.21% 12,384 7 0.87%
Sharp HealthCare 15,865 7 1.06% 13,175 6 0.92%
Scripps Health 13,750 8 0.92% 10,617 8 0.74%
San Diego Unified School District 13,559 9 0.91% 21,073 4 1.48%
Kaiser San Diego Medical Center 8,900 10 0.60%7,121 9 0.50%
US Postal Service, San Diego District -6,464 10 0.44%
Total 207,846 13.93% 191,891 13.44%
were based on each individual respective units employees. In prior Fiscal Years, the Federal Government and
U.S. Department of Defense figures were summarized combined totals of the underlying units.
Source: California Labor Marker Info, San Diego Sourcebook, and San Diego Business Journal.
Principal Employers - Current Year and Nine Years Ago
2014
(1) For Fiscal Years ending June 30, 2014 and later, the Federal Government and U.S. Department of Defense figures
85
Personal Per Capita
Fiscal Income Personal Unemployment
Year Population (in 000'S)Income Rate
2014 (1) 3,220,300 168,400,000$ 51,821$ 6.10%
2013 3,182,100 161,100,000 50,288 7.40%
2012 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%
(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%
5.00%
7.00%
9.00%
11.00%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Unemployment Rate, in Percentage (%)
86
Number of Employees by Function - Last Ten Fiscal Years
Department 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
General Manager 5 5 5 6 6 6 6 6 6 6
Finance 29 30 32 35 38 37 36 35 34 34
Operations/Maintenance 61 65 66 66 68 70 71 71 72 71
Engineering 20 19 21 21 21 23 27 31 15 13
Administrative Services 16 17 18 19 20 20 20 19 19 20
IT and Strategic Planning 12 12 13 12 13 13 13 13 12 11
Development Services (1) - - - - - - - - 17 17
Total 143 148 155 159 166 169 173 175 175 172
(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
125
130
135
140
145
150
155
160
165
170
175
180
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total Employees
87
Meter Size 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
3/4" & 5/8"44,375 44,354 44,376 44,065 43,815 43,641 43,551 43,544 43,070 42,420
1"2,557 2,412 2,099 1,881 1,815 1,804 1,747 1,618 1,514 1,364
1-1/2"1,332 1,333 1,326 1,317 1,317 1,309 1,275 1,242 1,199 1,147
2"1,293 1,295 1,277 1,278 1,292 1,299 1,283 1,262 1,242 1,199
3"77 76 75 75 75 75 76 76 69 67
4"189 169 180 193 184 202 258 275 277 289
6"18 18 19 21 22 21 19 24 27 27
Others 9 9 9 9 8 9 10 7 11 12
Total 49,850 49,666 49,361 48,839 48,528 48,360 48,219 48,048 47,409 46,525
% Change 0.4%0.6%1.1%0.6%0.3%0.3%0.4%1.3%1.9%3.5%
Increase 184 305 522 311 168 141 171 639 884 1,594
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
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Active Meters by Size
88
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
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 726 725 724 723 723 722 722 680 663 623
40 40 40 40 40 38 36 37 37 36
Water Storage Capacity
(in Acre-Feet) 668.03 667.79 670.83 673.84 663.8 655.5 605.5 601.7 601.7 582.4
Total Water Connections
(No. of Meters in Service)49,260 49,150 49,493 49,094 48,662 48,522 48,376 47,615 47,409 46,525
Number of Pump Stations 21 21 21 21 21 21 21 21 22 21
Number of Potable Water
Valves 20,460 20,317 20,317 19,522 19,522 19,192 19,131 18,721 18,042 17,696
Sewer System
Miles of Sewer Lines 88.0 88.0 88.0 88.0 88.0 88.0 88.0 86.2 86.2 85.9
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 (in Million Gallons)405 422 423 481 474 483 503 514 528 506
Recycled System
Miles of Recycled Water Mains 102.0 99.0 99.0 98.0 98.0 97.0 93.0 83.0 77.6 76.4
Number of Pumping Facilities 3 3 3 3 3 3 3 3 2 2
Number of Operational
Storage Reservoirs in Service 4 4 4 4 4 4 4 4 4 4
Number of Acre-Feet Storage 134.2 134.1 134.1 134.1 134.1 133.2 135.0 134.1 97.3 97.3
Number of Recycled
Water Valves 1,473 1,430 1,430 1,380 1,380 1,338 1,314 1,245 1,189 1,155
Source: Otay Water District
Operating and Capital Indicators - Last Ten Fiscal Years
Number of Operational Storage
Reservoirs in Service
550
600
650
700
750
2005 2006 2007 2008 2010 2011 2012 2013 2014
Potable Water Mains, in Miles
89