HomeMy WebLinkAboutFY 2015 Comprehensive Annual Financial Report
Otay Water District
Comprehensive Annual Financial Report
for the year ended June 30, 2015
BOARD OF DIRECTORS
Jose Lopez, Division 4 President
Mitchell Thompson, Division 2 Vice President
Mark Robak, Division 5 Treasurer
Tim Smith, Division 1
Gary Croucher, Division 3
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:
Statement of Net Position..……………………………………………………………………………………………….…. 24
Statement of Revenues, Expenses, and Changes in Net Position…………..………………. 26
Statement of Cash Flows……………………………………………………………….……………………………………… 27
Notes to Financial Statements……………………………………………………………………………………………... 29
Required Supplementary Information:
Schedule of Funding Progress for DPHP……………………………………………...…………………………… 62
Schedule of Changes in the Net Pension Liability and Related Ratios……………………… 63
Schedule of Contributions……………………………………………………………………………………………………… 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 21, 2015
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, 2015.
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,
2015, 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
financial statements present fairly, in all material respects, the respective financial position of the
Otay Water District as of June 30, 2015 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, oversees 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 59 years, the District has grown from a handful of customers and two employees to
become an organization operating a network of more than 919 miles of pipelines, 44 operational
reservoirs, a recycled 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 49,308 potable and
705 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), and the Imperial Irrigation
District. Beginning in November 2015, a new desalination plant in Carlsbad, California will begin
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delivering water to the region. The District also has entered into an agreement to purchase treated
water from CWA 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 4,670 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, the District’s Public Services Division has seen improvement in recent years
approving an average of 12 permits per month and selling 139 water meters during fiscal 2014-
2015. The District continues to face numerous challenges with the slow recovery from the largest
economic downturn since the Great Depression and now with the severe drought the State of
California is facing. Additionally, the region experienced large water supply cost increases totaling
more than 90% since 2007. Finally, the inaction in the State Capitol to address the crisis in the
927‐I Recycled Water Reservoir Cover and Liner Replacement
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Sacramento – San Joaquin Bay Delta, the source of 30 percent of Southern California’s water
supply, adds further uncertainty to the future cost and availability of water. Fortunately, the District,
as a member of the CWA, is well-positioned for water coming from the Colorado River due to the
Quantification Settlement Agreements (QSA) and the development of the new desalination plant in
Carlsbad, mentioned previously.
Growth in San Diego County has remained flat 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 2015, it is estimated that the District served 217,000 residents. The San
Diego Association of Governments (SANDAG), the regional planning agency, has estimated the
District’s approximate growth will be 0.96% per year for the next decade. Using historical data and
considering current economic conditions, staff has moderated this projection to a growth rate of
0.33% for FY 2016. The District projects an ultimate customer population of 308,000 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 2016 – 2018) consists of a two-phased approach. Phase 1
has been completed with the primary focus on developing key enterprise-wide projects – SCADA,
Work Order/Asset Management, and Emergency Preparedness/NIMS. We are now entering
Phase 2 of the FY 2016-2018 Strategic Plan where the focus is to build upon the system foundation,
business process improvement, and facilities. Where rapid growth had been a significant focus in
the early years of the District and in its earlier strategic plans, today we are primarily focused on
managing long-term maintenance and replacement of infrastructure.
The Strategic Plan is focused on the District’s transformation from a growth-centric to a
maintenance-based organization. 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
highest priority goals but also examining the details of what we do every day and be willing to alter
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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 $89,236,000 for Fiscal Year 2016. Revenues from
potable and recycled water are projected to be $78,899,700, about $1,886,000 (2.3%) lower than the
Fiscal Year 2015 budget. Water sales volumes are expected to decrease by 7.95% versus FY 2015.
This decrease in volume is primarily due to mandatory drought restrictions imposed by the State
Water Resources Control Board. MWD and CWA water supply rate increased by 2.5% and 3.6%,
respectively. CWA’s increase is due to the high cost of supply programs, including the early
delivery of Carlsbad desalination water. CWA also needs to secure a prudent financial position by
achieving the rate stabilization fund targets and smoothing the water rates. Sewer revenues are
projected to be $3,206,300, approximately $198,600 more than the Fiscal Year 2015. The remaining
budgeted revenues of $7.1 million come from various special fees, assessments, and
miscellaneous income.
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The 2015-16 Capital Improvement Program
(CIP) budget consists of 80 projects and a
budget of $11.1 million. The budget
emphasizes long-term planning for on-going
programs while functioning within fiscal
constraints and population growth. This
year’s CIP budget increased by $.5 million
compared to last year’s budget. The increase
is due to an increase in capital purchases for
vehicles and the Air Pollution Control District
(APCD) engine replacements and retrofits.
THE FUTURE
The coming years will continue to pose considerable challenges for those in California’s water
community. The state is facing its fourth straight year of a record drought and despite extensive
local efforts to develop more reliable water, Governor Jerry Brown and the State Water Resources
Control Board (SWRCB) have ordered mandatory cuts in potable water use across California and
set a statewide conservation goal of 25 percent.
To reduce potable water use by 25 percent statewide, the regulations adopted by the SWRCB
place each urban water supplier into one of eight tiers which are assigned a conservation standard
ranging from 4 percent to 36 percent. Under the SWRCB order, customers of the Otay Water District
must reduce water use by 20 percent over the next nine months. This order came despite Otay
customers having reduced water use 27 percent since 2007. Each month, the SWRCB will
compare every urban water suppliers’ water use with their use for the same month in 2013 to
determine if they are on track for meeting their conservation standard. Agencies that consistently
fail to meet the conservation standard could be fined as much as $10,000 per day. The order was
also imposed without regard to San Diego County having 99 percent of the water supply it needs to
meet customer demand this year, despite four years of record drought. San Diego County,
including Otay Water District customers by virtue of being a member of the San Diego County
Water Authority (CWA), have expended more than $3.1 billion over the last decade to create a more
reliable water supply network that has shielded customers from the most severe of the drought’s
impacts. Water supplies in the San Diego region will improve with the development of the western
hemisphere’s largest desalination plant in Carlsbad, California.
624‐2 Reservoir Exterior
6
Rosarito Desalination Project rendering
SAN DIEGO COUNTY WATER SUPPLY
San Diego County imports about 90 percent of its
water from the Colorado River and Northern
California. Since these sources face legal and
environmental constraints, the region has been
exploring other ways to ensure an adequate
water supply, including increased water recycling,
more aggressive conservation programs,
increased water storage, groundwater
desalination, and seawater desalination.
CARLSBAD DESALINATION PROJECT
The District’s water wholesaler, the 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 will
generate enough water to serve about 112,000
families and meet 7 to 10 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 cost 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 would 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 2020. 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.
7
ACCOUNTING SYSTEM
The Finance Department is responsible for providing financial services to the District including
financial accounting; reporting; payroll; accounts payable; investment of funds; billing and
collection of water and wastewater charges; taxes; and other revenues. The District’s books and
records are maintained on an enterprise basis, matching revenues against the costs of providing
services. Revenues and expenses are recorded on the accrual basis in the period in which
revenues are earned and expenses are incurred.
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 for the fiscal year ended June 30, 2014. This was the
eleventh 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.
8
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
Engineering
Services and
Environmental
Services
Public Services
Survey
Field Services
Citizens and
Customers
Information Technology
and Strategic Planning
BOARD OF DIRECTORS
Meter
Maintenance
10
List of Principal Officials
Mission Statement
To provide safe, reliable water, recycled
water, and wastewater services to our
community in an innovative, cost efficient,
water-wise and environmentally
responsible manner.
Mark Robak
Treasurer
Division 5
Tim Smith
Division 1
Mitchell Thompson
Vice President
Division 2
Jose Lopez
President
Division 4
Gary Croucher
Division 3
Board of Directors
The Otay Water District is a revenue-
neutral public agency established in
accordance with the California Water
Code. This not-for-profit status means
Otay has no private shareholders, pays no
dividends and therefore does not report
to, nor answer to the California Public
Utilities Commission. The District does,
however, answer to the public through a
five-member Board of Directors. Each
Director is elected by voters within their
respective division boundaries to
represent the public's interest with regard
to rates for service, taxes, policies,
ordinances, and other matters related to
the management and operation of the
Otay Water District. Directors serve four-
year alternating terms on the Board.
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GFOA 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, 2014. This is the eleventh 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.
12
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, 2015,
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.
Emphasis of Matter
As described in Note 13 to the financial statements, in 2015, the District adopted new accounting guidance,
GASB Statement No. 68 Accounting and Financial Reporting for Pensions – an amendment of GASB
Statement No. 27 and GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to
the Measurement Date – an amendment of GASB Statement No. 68. Our opinion is not modified with
respect to these matters.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and required supplementary information on pages 16-23 and 62-64 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 opinions 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.
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Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 21, 2015,
on our consideration of the District’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.
The purpose of that report is to describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing, and not to provide an opinion on 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 21, 2015
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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, 2015. Please read it in conjunction with the District’s financial statements that follow
Management’s Discussion and Analysis. All amounts, unless otherwise indicated, are expressed in
millions of dollars.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the District’s basic financial
statements, which are comprised of the following: 1) Statement of Net Position, 2) Statement of Revenues,
Expenses, and Changes in Net Position, 3) Statement of Cash Flows, and 4) Notes to the Financial
Statements. This report also contains other supplementary information in addition to the basic financial
statements.
The Statement of Net 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 Statement 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 Statement of Cash Flows presents information on cash receipts and payments for the fiscal year.
The Notes to the Financial Statements provide additional information that is essential to a full
understanding of the data supplied in each of the specific financial statements listed above.
Financial Highlights
The assets of the District exceeded its liabilities at the close of the most recent fiscal year by $402.4 million (net
position). Of this amount, $43.7 million (unrestricted net position) may be used to meet the District’s ongoing
obligations to citizens and creditors.
Total assets decreased by $7.7 million or 1.33% during Fiscal Year 2015, to $568.9 million, due primarily to depreciation
offset by investments in capital infrastructure, contributions, and improved operating results.
Net Position at July 1, 2014 was decreased by $40.4 million due to the implementation of Governmental Accounting
Standards Board (GASB) Statements No. 68 and No. 71. The most significant impact of the implementation requires
the presentation of Defined Benefit Pension Plan’s $38.7 million Unfunded Actuarial Accrual as a liability on the
Statement of Net Position.
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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 $402.4 million at the close of the most recent fiscal year.
By far, the largest portion of the District’s net position, $354.0 million (88%), 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.
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Management’s Discussion and Analysis
Statements of Net Position
(In Millions of Dollars)
2015 2014 2013
Assets
Current and Other Assets $ 109.7 $ 109.9 $ 106.3
Capital Assets 459.2 466.7 476.0
Total Assets 568.9 576.6 582.3
Deferred Outflows of Resources
Deferred Amount on Refunding 0.0 0.1 0.4
Deferred Contributions to Pension Plan 3.6 0.0 0.0
Total Deferred Outflows of Resources 3.6 0.1 0.4
Liabilities
Long-Term Debt Outstanding 101.5 105.3 109.0
Net Pension Liability 38.7 0.0 0.0
Other Liabilities 24.9 26.6 25.5
Total Liabilities 165.1 131.9 134.5
Deferred Inflows of Resources
Deferred Actuarial Pension Costs 5.0 0.0 0.0
Total Deferred Inflows of Resources 5.0 0.0 0.0
Net Position(1)
Net Investment in Capital Assets 354.0 357.9 376.5
Restricted for Debt Service 4.7 3.9 4.6
Unrestricted 43.7 83.0 67.1
Total Net Position $ 402.4 $ 444.8 $ 448.2
While the District’s operations and population continue to grow, albeit at slower rates than the housing
boom years, the pattern of reduced growth of the District’s Net Position is indicative of the reduction and
slow recover of new development projects within the District. This reduction is a result of the slow
recovery from the national housing slump.
In FY 2015, the District’s Capital Assets increased by $8.2 million before accumulated depreciation. (See
Note 3 in the Notes to Financial Statements). The District also saw a decrease in Long-Term Debt of $3.8
million due to the annual payments of long-term debt (See Note 4 in the Notes to the Financial
Statements).
(1) GASB No. 68 & 71 implemented in FY 2015. Prior years were not restated as the information was not
readily available.
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Management’s Discussion and Analysis
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 2015 and FY 2014 those expenses were $1.2 million and $1.6 million,
respectively.
At the end of FY 2015 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)
2015 2014 2013
Water Sales $ 79.1 $ 81.3 $ 72.2
Wastewater Revenue 3.1 2.8 2.6
Connection and Other Fees 1.7 1.9 2.1
Non-operating Revenues 8.9 7.8 7.7
Total Revenues 92.8 93.8 84.6
Depreciation Expense 16.2 16.1 16.5
Other Operating Expense 75.7 76.5 70.8
Non-operating Expense 6.0 8.0 6.0
Total Expenses 97.9 100.6 93.3
Loss Before Capital
Contributions (5.1) (6.8) (8.7)
Capital Contributions 3.1 3.4 2.8
Change in Net Position (2.0) (3.4) (3.1)
Beginning Net Position, As Previously Stated 444.8 448.2 454.1
Prior Period Adjustment (40.4) 0.0 0.0
Beginning Net Position, As Restated 404.4 448.2 454.1
Ending Net Position $ 402.4 $ 444.8 $ 448.2
Water Sales decreased by $2.2 million in FY 2015 and increased by $9.1 million in FY 2014. The year over
year reduction was mainly due to decreases in units sold during FY 2015 as a result of the ongoing drought
conditions. This reduction as a result of the drought was partially offset by increases in rates. The FY 2014
increase was a result of both increasing volume due to the economic recovery and rate increases.
Other Operating Expense decreased predominantly due to the decrease in Cost of Water Sales brought
about by the decrease in units purchased in FY 2015.
19
Management’s Discussion and Analysis
The reduction in District growth, as a result of the economic slowdown, continues to impact the District as
Connection and Other Fees revenues declined by $0.2 million in FY 2015 and in FY 2014. During the
nationwide housing mortgage crisis, developers had either slowed down or totally stopped work on
projects until economic conditions improve and the demand for growth returned. While the economy has
improved, the demand and 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.
Non-operating Revenues
Non-operating Revenues by Major Source
(In Millions of Dollars)
2015 2014 2013
Taxes and Assessments $ 3.8 $ 3.5 $ 3.5
Rents and Leases 1.2 1.3 1.3
Other Non-operating Revenue 3.9 3.0 2.9
Total Non-operating Revenues $ 8.9 $ 7.8 $ 7.7
The District’s total non-operating revenues increased by $1.1 million in FY 2015 and by $0.1 million in
FY 2014. The increase in FY 2015 was primarily a result of increased revenues from property taxes,
availability fees, and investment earnings.
Capital Assets and Debt Administration
The District’s capital assets (net of accumulated depreciation) as of June 30, 2015, totaled $459.2 million.
Included in this amount is land. The District’s net capital assets decreased by 1.6% for FY 2015 and 2.0% for
FY 2014.
20
Management’s Discussion and Analysis
Capital Assets
(In Millions of Dollars)
2015 2014 2013
Land $ 13.7 $ 13.7 $ 13.7
Construction in Progress 15.1 11.7 17.1
Water System 468.7 465.9 458.8
Recycled Water System 110.5 110.3 108.9
Sewer System 42.0 41.2 41.2
Field Equipment 8.7 8.8 8.9
Buildings 19.0 18.9 18.8
Transportation Equipment 3.4 3.3 3.5
Communication Equipment 3.1 2.9 2.6
Office Equipment 18.2 17.5 17.3
702.4 694.2 690.8
Less Accumulated
Depreciation (243.2) (227.5) (214.8)
Net Capital Assets $ 459.2 $ 466.7 $ 476.0
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, 2015, the District had $101.5 million in outstanding debt (net of $3.7 million of maturities
occurring in FY 2016), which consisted of the following:
General Obligation Bonds $ 4.7
Certificates of Participation 43.4
Revenue Bonds 53.4
Total Long-Term Debt $ 101.5
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 was 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
21
Management’s Discussion and Analysis
Prior Period Adjustment
The Governmental Accounting Standards Board (GASB) issued Statement No. 68, “Accounting and
Financial Reporting for Pensions-an amendment of GASB Statement No. 27”, and No. 71 “Pension
Transitions for Contributions Made Subsequent to the Measurement Date-an amendment of GASB No. 68”
for periods beginning after June 15, 2014. The District implemented these standards in fiscal year 2015.
The result of the implementation of these standards was to decrease the net position at July 1, 2014 by
$40.4 million which consists of net pension liability, deferred outflows of resources, deferred inflows of
resources, and pension expense.
Fiscal Year 2015-2016 Budget
Economic Factors
Demand and supply of water in the San Diego area has declined over the last five years. Although San
Diego received less than normal rainfall in Fiscal Year 2015, the District is expecting that San Diego’s
rainfall will return to its average pattern and volume in the coming years. San Diego rainfall, while a
contributing factor, is not the controlling factor for our potable water supply shortage. The San Diego
region imports 90% of its potable supply, so conditions elsewhere significantly affect the actual amount of
water available to the District. In the event the amount of water supplied to the District is reduced, water
sales revenues would decrease. Related water purchase expenses would also be reduced, mitigating the
impact of the decrease in net revenues. The amount of any supply reduction would dictate the magnitude
of the District's response and type of reaction.
The District continues to use the challenges presented by growth and the ongoing drought to create new
opportunities and new organizational efficiencies. By utilizing and continuing to refine its Strategic
Business Plan, it has captured the Board of Director’s vision and united its staff in a common mission. The
District has achieved a number of significant accomplishments based on its successful adherence to its
Strategic Business Plan. The District is not only poised to continue successfully providing an affordable,
safe, and reliable water supply for the people of its service area, but is set to reap the rewards of greater
efficiencies and economies of scale.
The District is currently at about 52% of its projected ultimate population, serving approximately 217,000
people. Long-term, this percentage should continue to increase as the District's service area continues to
develop and grow. By 2035, 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 the San Diego County Water Authority (CWA), who in turn
purchases its water from the Metropolitan Water District (MWD) and the Imperial Irrigation District (IID).
22
Management’s Discussion and Analysis
Otay takes delivery of the water through several connections of large diameter pipelines owned and
operated by CWA. The District currently receives treated water from CWA directly and from the Helix Water
District via a 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 budgeted to deliver approximately 27,000 acre-feet of potable water to 49,500 potable
customer accounts during Fiscal Year 2015-2016. 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,
while unemployment has recovered, housing starts remain significantly below the levels of the boom years
from 2001 to 2005. The negative impacts to the District of the economic indicators and conservation are
partially offset by growth as the District’s commercial and residential permits have shown slow and steady
improvement from previous lows. 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.
23
Statement of Net Position
ASSETS
Current Assets:
Cash and Cash Equivalents (Notes 1 and 2)23,168,511$
Restricted Cash and Cash Equivalents (Notes 1 and 2)47,083
Investments (Note 2)35,888,511
Board Designated Investments (Note 2)22,395,347
Restricted Investments (Notes 1 and 2)4,532,725
Accounts Receivable, Net 9,987,050
Accrued Interest Receivable 97,291
Taxes and Availability Charges Receivable, Net 321,178
Restricted Taxes and Availability Charges Receivable, Net 31,848
Inventories 807,008
Prepaid Items and Other Receivables 988,882
Total Current Assets 98,265,434
Non-current Assets:
Net OPEB Asset (Note 7)11,472,386
Capital Assets (Note 3):
Land 13,714,963
Construction in Progress 15,106,336
Capital Assets, Net of Depreciation 430,370,095
Total Capital Assets, Net of Depreciation 459,191,394
Total Non-current Assets 470,663,780
Total Assets 568,929,214
DEFERRED OUTFLOWS OF RESOURCES
Deferred Contributions to Pension Plan 3,575,595
Total Deferred Outflows of Resources 3,575,595$
Continued
June 30, 2015
See accompanying independent auditors' report and notes to financial statements.
24
Statement of Net Position
LIABILITIES
Current Liabilities:
Current Maturities of Long-term Debt (Note 4)3,690,000$
Accounts Payable 9,779,477
Accrued Payroll Liabilities 3,335,149
Other Accrued Liabilities 3,642,511
Customer and Developer Deposits 2,227,173
Accrued Interest 1,540,122
Liabilities Payable from Restricted Assets:
Restricted Accrued Interest 65,304
Total Current Liabilities 24,279,736
Non-current Liabilities:
Long-term Debt (Note 4):
General Obligation Bonds4,697,208
Certificates of Participation 43,355,103
Revenue Bonds 53,402,993
Net Pension Liability 38,723,345
Other Non-current Liabilities 656,158
Total Non-current Liabilities 140,834,807
Total Liabilities 165,114,543
DEFERRED INFLOWS OF RESOURCES
Deferred Actuarial Pension Costs (Note 6)4,967,940
Total Deferred Inflows of Resources 4,967,940
NET POSITION
Net Investment in Capital Assets 354,046,090
Restricted for Debt Service 4,658,306
Unrestricted 43,717,930
Total Net Position 402,422,326$
June 30, 2015 - Continued
See accompanying independent auditors' report and notes to financial statements.
25
Statement of Revenues, Expenses and Changes in Net Position
OPERATING REVENUES
Water Sales 79,135,000$
Wastewater Revenue 3,044,158
Connection and Other Fees 1,686,249
Total Operating Revenues 83,865,407
OPERATING EXPENSES
Cost of Water Sales 54,364,884
Wastewater 1,866,711
Administrative and General 19,437,141
Depreciation 16,194,992
Total Operating Expenses 91,863,728
Operating Income (Loss)(7,998,321)
NON-OPERATING REVENUES (EXPENSES)
Investment Earnings 656,925
Taxes and Assessments 3,856,276
Availability Charges 685,555
Gain (Loss) on Sale of Capital Assets 30,282
Rents and Leases 1,232,920
Miscellaneous Revenues 2,490,796
Donations (117,462)
Interest Expense (4,545,530)
Miscellaneous Expenses (1,324,155)
Total Non-operating Revenues (Expenses)2,965,607
Income (Loss) Before Capital Contributions (5,032,714)
Capital Contributions 3,081,894
Change in Net Position (1,950,820)
Total Net Position, Beginning, As Previously Reported 444,807,820
Prior Period Adjustment (40,434,674)
Total Net Position, Beginning, As Restated 404,373,146
Total Net Position, Ending 402,422,326$
For the Year Ended June 30, 2015
See accompanying independent auditors' report and notes to financial statements.
26
Statement of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers 84,879,648$
Receipts from Connections and Other Fees 1,686,249
Other Receipts 2,490,796
Payments to Suppliers (57,803,850)
Payments to Employees (20,838,190)
Other Payments (1,501,218)
Net Cash Provided By (Used For) Operating Activities 8,913,435
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Receipts from Taxes and Assessments 3,877,931
Receipts from Property Rents and Leases 1,115,458
Net Cash Provided By (Used For) Noncapital and Related
Financing Activities 4,993,389
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Proceeds from Capital Contributions 2,979,305
Proceeds from Sale of Capital Assets 30,735
Proceeds from Debt Related Taxes and Assessments 685,555
Principal Payments on Long-Term Debt (3,495,000)
Interest Payments and Fees (4,497,782)
Acquisition and Construction of Capital Assets (8,632,578)
Net Cash Provided By (Used For) Capital and Related
Financing Activities (12,929,765)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest Received on Investments 643,313
Proceeds from Sale and Maturities of Investments 44,917,589
Purchase of Investments (53,932,480)
Net Cash Provided By (Used For) Investing Activities (8,371,578)
Net Increase (Decrease) in Cash and Cash Equivalents (7,394,519)
Cash and Cash Equivalents - Beginning 30,610,113
Cash and Cash Equivalents - Ending 23,215,594$
Continued
For the Year Ended June 30, 2015
See accompanying independent auditors' report and notes to financial statements.
27
Statement of Cash Flows
Reconciliation of Operating Income (Loss) to Net Cash Flows
Provided By (Used For) Operating Activities:
Operating Income (Loss)(7,998,321)$
Adjustments to Reconcile Operating Income to
Net Cash Provided By (Used For) Operating Activities:
Depreciation 16,194,992
Miscellaneous Revenues 2,490,796
Miscellaneous Expenses (1,501,218)
(Increase) Decrease in Accounts Receivable 2,892,071
(Increase) Decrease in Inventory (32,001)
(Increase) Decrease in Net OPEB Asset (1,087,050)
(Increase) Decrease in Prepaid Items and Other Receivables 58,826
(Increase) Decrease in Contributions to Pension Plan (318,984)
Increase (Decrease) in Accounts Payable (2,126,549)
Increase (Decrease) in Accrued Payroll and Related Expenses 280,629
Increase (Decrease) in Other Accrued Liabilities 245,011
Increase (Decrease) in Customer Deposits (191,581)
Increase (Decrease) in Prepaid Capacity Fees 6,814
Net Cash Provided By (Used For) Operating Activities 8,913,435$
Schedule of Cash and Cash Equivalents:
Current Assets:
Cash and Cash Equivalents 23,168,511$
Restricted Cash and Cash Equivalents 47,083
Total Cash and Cash Equivalents 23,215,594$
Supplemental Disclosures
Non-Cash Investing and Financing Activities Consisted of the Following:
Contributed Capital for Water and Sewer System 102,590$
Change in Fair Value of Investments and Recognized Gains/Losses 23,827
Amortization Related to Long-term Debt 78,118
Amortization Related to Pension 1,241,985
For the Year Ended June 30, 2015 - Continued
See accompanying independent auditors' report and notes to financial statements.
28
Notes to Financial Statements
See Independent Auditors' report
NOTE DESCRIPTION PAGE
1 Reporting Entity and Summary of Significant Accounting Policies..…….….. 30
2 Cash and Investments…………………………………………………………………………………………... 35
3 Capital Assets…………………………………………………..………………………………………………………. 40
4 Long-Term Debt………………………………………………….………………………………………….……….. 41
5 Net Position……………………………………………………………………………………………………..……….. 45
6 Defined Benefit Pension Plan…………………………………………………………………..…………. 46
7 Other Post Employment Benefits………………………..………............................................. 51
8 Water Conservation Authority……………………………………................................................ 54
9 Commitments and Contingencies……………………………………………………………..……… 55
10 Risk Management…………………………………………………………………………………………………... 55
11 Interest Expense…………………………………………………............................................................ 58
12 Segment Information………………………………………………..…………………………………….…….. 58
13 Prior Period Adjustment……………………………………………………………………………….……….. 61
29
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
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.
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.
30
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation – Continued
The basic financial statements of the Otay Water District have been prepared in conformity with
accounting principles generally accepted in the United States of America. The Governmental
Accounting Standards Board (GASB) is the accepted standard setting body for governmental
accounting financial reporting purposes.
Net position of the District is classified into three components: (1) net investment in capital assets,
(2) restricted net position, and (3) unrestricted net position. These classifications are defined as
follows:
Net Investment in Capital Assets
This component of net position consists of capital assets, net of accumulated depreciation and
reduced by the outstanding balances of notes or borrowing that are attributable to the acquisition of
the assets, construction, or improvement of those assets. If there are significant unspent related debt
proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in
the calculation of the net investment in capital assets.
Restricted Net Position
This component of net position consists of net position with constrained use through external
constraints imposed by creditors (such as through debt covenants), grantors, contributions, or laws
or regulations of other governments or constraints imposed by law through constitutional provisions
or enabling legislation.
Unrestricted Net Position
This component of net position consists of net position that do not meet the definition of “net
investment in capital assets” or “restricted net position”.
The District distinguishes operating revenues and expenses from those revenues and expenses that
are non-operating. Operating revenues are those revenues that are generated by water sales and
wastewater services while operating expenses pertain directly to the furnishing of those services.
Non-operating revenues and expenses are those revenues and expenses generated that are not
associated with the normal business of supplying water and wastewater treatment services.
The District recognizes revenues from water sales, wastewater revenues, and meter fees as they are
earned. Taxes and assessments are recognized as revenues based upon amounts reported to the
District by the County of San Diego, net of allowance for delinquencies of $39,225 at June 30, 2015.
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.
31
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation – Continued
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 Statements No. 68, “Accounting and Financial Reporting for Pensions-an
amendment of GASB Statement No. 27”, No. 69 “Government Combinations and Disposals of
Government Operations”, and No. 71 “Pension Transition for Contributions Made Subsequent to the
Measurement Date-an amendment of GASB Statement No. 68”. The requirements for Statements
No. 68 and No. 71 are effective for financial statements for periods beginning after June 15, 2014
and Statement No. 69 is effective for financial statements for periods beginning after December 15,
2013. Statement No. 69 is not applicable to the District at this time. Statements No. 68 and No. 71
have been implemented and are reflected on the District’s financial statements and beginning net
position.
Pending Accounting Standards
GASB has issued the following statement which impact the District’s financial reporting
requirements in the future:
i. GASB 72 – “Fair Value Measurement and Application”, effective for the fiscal years beginning
after June 15, 2015.
ii. GASB 73 – “Accounting and Financial Reporting for Pensions and Related Assets That Are Not
within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB
Statements 67 and 68”, effective for fiscal years beginning after June 15, 2015.
iii. GASB 74 – “Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans”,
effective for fiscal years beginning after June 15, 2016.
iv. GASB 75 – “Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions”, effective for fiscal years beginning after June 15, 2017.
v. GASB 76 – “The Hierarchy of Generally Accepted Accounting Principles for State and Local
Governments”, effective for fiscal years beginning after June 15, 2015.
32
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
D) Deferred Outflows / Inflows of Resources
In addition to assets, the statements of net position will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element, deferred outflows of
resources, represents a consumption of net position that applies to a future period(s) and so will not
be recognized as an outflow of resources (expense/expenditure) until then. The District has one item
that qualifies for reporting in this category, deferred contributions to pension plan, which is related to
contributions subsequent to the measurement date of the pension plan.
In addition to liabilities, the statements of net position will sometimes report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period(s) and will not be
recognized as an inflow of resources (revenue) until that time. The District has only one item that
qualifies for reporting in this category. Accordingly, the item, deferred actuarial pension cost, are
deferred and recognized as an inflow of resources in the period that the amounts become available.
E) Statements of Cash Flows
For purposes of the Statements of Cash Flows, the District considers all highly liquid investments
(including restricted assets) with a maturity period, at purchase, of three months or less to be cash
equivalents.
F) Investments
Investments are stated at their fair value, which represents the quoted or stated market value.
Investments that are not traded on a market, such as investments in external pools, are valued
based on the stated fair value as represented by the external pool. All investments are stated at
their fair value, the District has not elected to report certain investments at amortized costs.
G) Inventory and 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,
33
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
H) Capital Assets - Continued
overhead, and interest incurred during the construction period. Repairs, maintenance, and minor
replacements of property are charged to expense. Donated assets are capitalized at their
approximate fair market value on the date contributed.
The District capitalizes interest on construction projects up to the point in time that the project is
substantially completed. Capitalized interest for fiscal year ending June 30, 2015 of $179,476 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
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.
Beginning Ending Due Within
Balance Additions Reductions Balance(1) One Year
Compensated
Absences $ 2,352,861 $ 2,700,572 $ 2,523,241 $ 2,530,192 $ 253,019
(1)Balance is reflected in Accrued Payroll Liabilities on the Statement of Net Position.
J) Classification of Liabilities
Certain current liabilities have been classified as current liabilities payable from restricted assets as
they will be funded from restricted assets.
K) Allowance for Doubtful Accounts
The District charges doubtful accounts arising from water sales receivable to bad debt expense when
it is probable that the accounts will be uncollectible. Uncollectible accounts are determined by the
allowance method based upon prior experience and management’s assessment of the collectability
of existing specific accounts. The allowance for doubtful accounts was $158,716 for 2015.
34
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
L) Property Taxes
Tax levies are limited to 1% of full market value (at time of purchase) which results in a tax rate of
$1.00 per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for voter-
approved indebtedness are excluded from this limitation.
The County of San Diego (the “County”) bills and collects property taxes on behalf of the District. The
County’s tax calendar year is July 1 to June 30. Property taxes attach as a lien on property on January
1. Taxes are levied on July 1 and are payable in two equal installments on November 1 and February
1, and become delinquent after December 10 and April 10, respectively.
M) Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources
related to pensions, and pension expense, information about the fiduciary net position of the
District’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions
to/deductions from the Plans’ fiduciary net position have been determined on the same basis as
they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee
contributions) are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
N) 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.
O) 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.
35
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
2) CASH AND INVESTMENTS - Continued
Cash and Investments are classified in the accompanying financial statements as follows:
Statement of Net Position:
Cash and Cash Equivalents $ 23,168,511
Restricted Cash and Cash Equivalents 47,083
Investments 35,888,511
Board Designated Investments 22,395,347
Restricted Investments 4,532,725
Total Cash and Investments $ 86,032,177
Cash and Investments consist of the following:
Cash on Hand $ 2,950
Deposits with Financial Institutions 2,074,424
Investments 83,954,803
Total Cash and Investments $ 86,032,177
Investments Authorized by the California Government Code and the District’s Investment Policy
The table below identifies the investment types that are authorized for the District by the California
Government Code (or the District’s Investment Policy, where more restrictive). The table also identifies
certain provisions of the California Government Code (or the District’s Investment Policy, where more
restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does
not address investments of debt proceeds held by bond trustee that are governed by the provisions of
debt agreements of the District, rather than the general provisions of the California Government Code
or the District’s Investment Policy.
Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity Of Portfolio(1) In One Issuer
U.S. Treasury Obligations 5 years 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.
36
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
2) CASH AND INVESTMENTS - Continued
Investments Authorized by Debt Agreements
Investments of debt proceeds held by the bond trustee are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the District’s
Investment Policy.
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value
to changes in market interest rates. One of the ways that the District manages its exposure to interest
rates risk is by purchasing investments with shorter durations than what is allowable under the District’s
investment policy and by timing cash flows from maturities, so that a portion of the portfolio is maturing
or coming close to maturity evenly over time, as necessary, to provide the cash flow and liquidity needed
for operations.
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, 2015.
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 $ 62,730,204 $ 3,000,390 $28,006,120 $31,723,694 $ -
Local Agency Investment Fund (LAIF) 7,593,516 7,593,516 - - -
San Diego County Pool 13,584,000 13,584,000 - - -
Money Market Funds 47,083 47,083 - - -
Total $ 83,954,803 $ 24,224,989 $28,006,120 $31,723,694 $ -
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, 2015.
37
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
2) CASH AND INVESTMENTS - Continued
Disclosures Relating to Credit Risk - Continued
Minimum Rating as of Year End
Legal Not
Investment Type Rating AAA AA A-1 Rated
U.S. Government Sponsored Entities $ 62,730,204 N/A $62,730,204 $ $ - $ -
Local Agency Investment Fund (LAIF) 7,593,516 N/A - - 7,593,516
San Diego County Pool 13,584,000 N/A - - 13,584,000
Money Market Funds 47,083 N/A - 47,083 -
Total $ 83,954,803 $ 62,730,204 $ $ 47,083 $21,177,516
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, 2015 are as follows:
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 13,989,160
Federal Home Loan Mortgage Corp U.S. Government Sponsored Entities $ 22,006,280
Federal National Mortgage Association U.S. Government Sponsored Entities $ 8,003,200
Federal Farm Credit Banks U.S. Government Sponsored Entities $ 18,731,564
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.
38
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
2) CASH AND INVESTMENTS - Continued
Custodial Credit Risk - Continued
As of June 30, 2015, $1,569,955 of the District’s deposits with financial institutions in excess of federal
depository insurance limits were held in collateralized accounts.
Local Agency Investment Fund (LAIF)
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by
California Government Code Section 16429 under the oversight of the Treasurer of the State of California.
The fair value of the District’s investment in this pool is reported in the accompanying financial
statements at amounts based upon District’s pro-rata share of the fair value provided by LAIF for the
entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for
withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized
cost-basis.
San Diego County Pooled Fund
The San Diego County Pooled Investment Fund (SDCPIF) is 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.
Restricted Cash and Cash Equivalents
Debt Service:
Water Revenue Bond Series 2010A $ 12,816
Water Revenue Bond Series 2010B 34,267
Total $ 47,083
Board Designated Investments
Investments are Board restricted for the cost of the following District projects:
New Water Supply $ 287,697
Replacement 22,107,650
Total $ 22,395,347
39
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
2) CASH AND INVESTMENTS - Continued
Restricted Investments
Debt Service:
General Obligation Bond ID No. 27-2009 $ 793,131
Water Revenue Bond Series 2010A 1,031,267
Water Revenue Bond Series 2010B 2,708,327
Total $ 4,532,725
3) CAPITAL ASSETS
The following is a summary of changes in Capital Assets for the year ended June 30, 2015:
Beginning Ending
Balance Additions Deletions Balance
Capital Assets, Not Depreciated
Land $ 13,714,963 $ - $ - $ 13,714,963
Construction in Progress 11,642,506 9,829,453 (6,365,623) 15,106,336
Total Capital Assets Not Depreciated 25,357,469 9,829,453 (6,365,623) 28,821,299
Capital Assets, Being Depreciated
Infrastructure 617,348,375 4,032,123 (296,458) 621,084,040
Field Equipment 8,812,693 16,188 (108,693) 8,720,188
Buildings 18,928,879 63,773 - 18,992,652
Transportation Equipment 3,308,602 205,180 (115,412) 3,398,370
Communication Equipment 2,880,141 216,927 - 3,097,068
Office Equipment 17,513,193 755,189 (44,938) 18,223,444
Total Capital Assets Being Depreciated 668,791,883 5,289,380 (565,501) 673,515,762
Less Accumulated Depreciation:
Infrastructure 193,225,204 13,624,785 (278,683) 206,571,306
Field Equipment 7,495,508 182,754 (108,694) 7,569,568
Buildings 8,336,568 504,880 - 8,841,448
Transportation Equipment 2,299,848 259,162 (115,412) 2,443,598
Communication Equipment 1,746,613 473,344 - 2,219,957
Office Equipment 14,394,208 1,150,067 (44,485) 15,499,790
Total Accumulated Depreciation 227,497,949 16,194,992 (547,274) 243,145,667
Total Capital Assets Being Depreciated,
Net
441,293,934
(10,905,612)
(18,227)
430,370,095
Total Capital Assets, Net $ 466,651,403 $ (1,076,159) $ (6,383,850) $ 459,191,394
Depreciation expense for the year ended June 30, 2015 was $16,194,992.
40
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
4) LONG-TERM DEBT
Long-term liabilities for the year ended June 30, 2015 are as follows:
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
General Obligation Bonds:
Improvement District No. 27 - 2009 $ 5,700,000 $ - $ 550,000 $ 5,150,000 $ 570,000
Unamortized Bond Premium 133,563 - 16,355 117,208 -
Net General Obligation Bonds 5,833,563 - 566,355 5,267,208 570,000
Certificates of Participation:
1996 Certificates of Participation 9,900,000 - 500,000 9,400,000 600,000
2007 Certificates of Participation 36,790,000 - 995,000 35,795,000 1,035,000
1996 COPS Unamortized Discount (9,687) - (745) (8,942) -
2007 COPS Unamortized Discount (204,999) - (9,044) (195,955) -
Net Certificates of Participation 46,475,314 - 1,485,211 44,990,103 1,635,000
Revenue Bonds:
2010 Water Revenue Bonds Series A 11,435,000 - 845,000 10,590,000 870,000
2010 Water Revenue Bonds Series B 36,355,000 - - 36,355,000 -
2013 Water Revenue Refunding Bonds 7,075,000 - 605,000 6,470,000 615,000
2010 Series A Unamortized Premium 762,617 - 74,402 688,215 -
2013 Bonds Unamortized Premium 880,873 - 96,095 784,778 -
Net Revenue Bonds 56,508,490 - 1,620,497 54,887,993 1,485,000
Total Long-Term Liabilities $ 108,817,367 $ - $ 3,672,063 $ 105,145,304 $ 3,690,000
General Obligation Bonds
In June 1998, the District issued $11,835,000 of General Obligation Refunding Bonds. The proceeds of this
issue, together with other lawfully available monies, were to be used to establish an irrevocable escrow to
advance refund and defease in their entirety the District’s previous outstanding General Obligation Bond
issue. In November 2009, the District issued $7,780,000 of General Obligation Refunding Bonds
Improvement District No. 27-2009 to refund the 1998 issue. The proceeds from the bond issue were
$7,989,884, which included an original issue premium of $209,884. An amount of $7,824,647, which
consisted of unpaid principal and accrued interest, was deposited into an escrow fund. Pursuant to an
optional redemption clause in the 1998 bonds, the District was able to redeem the 1998 bonds, without
premium at any time after September 1, 2009. On December 15, 2009 the 1998 bonds were refunded.
41
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
4) LONG-TERM DEBT - Continued
General Obligation Bonds - Continued
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
2016 $ 570,000 $ 187,362
2017 585,000 169,306
2018 605,000 147,700
2019 635,000 122,900
2020 650,000 97,200
2021-2025 2,105,000 127,900
$ 5,150,000 $ 852,368
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.
42
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
4) LONG-TERM DEBT - Continued
Certificates of Participation (COPS) - Continued
In March 2007, Revenue Certificates of Participation (COPS) with face value of $42,000,000 were sold by
the Otay Service Corporation to improve the District’s water storage system and distribution facilities. An
installment purchase agreement between the District, as a Buyer, and the Corporation, as Seller, was
executed for the scheduled payment of principal and interest associated with the COPS. The installment
payments are to be paid from taxes and net revenues, as described in the installment agreement. The
certificates are due in annual installments of $785,000 to $2,445,000 from September 1, 2007 through
September 1, 2036; bearing interest at 3.7% to 4.47%.
There is no aggregate reserve requirement for the COPS. Future debt service requirements for the
certificates are as follows:
For the Year 1996 COPS 2007 COPS
Ended June 30, Principal Interest(1) Principal Interest
2016 $ 600,000 $ 4,450 $ 1,035,000 $ 1,479,239
2017 600,000 4,150 1,075,000 1,439,408
2018 600,000 3,850 1,115,000 1,397,798
2019 700,000 3,508 1,155,000 1,354,234
2020 700,000 3,158 1,200,000 1,308,456
2021-2025 4,100,000 9,942 6,785,000 5,762,360
2026-2030 2,100,000 725 8,335,000 4,192,867
2031-2035 - - 10,310,000 2,208,437
2036-2037 - - 4,785,000 211,641
$ 9,400,000 $ 29,783 $ 35,795,000 $ 19,354,440
(1) Variable Rate - Interest reflected at June 30, 2015 at a rate of 0.05%.
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, 2015.
Water Revenue Bonds
In April 2010, Water Revenue Bonds with a face value of $50,195,000 were sold by the Otay Water District
Financing Authority to provide funds for the construction of water storage and transmission facilities. The
bond issue consisted of two series; Water Revenue Bonds, Series 2010A (Non-AMT Tax Exempt) with a
face value of $13,840,000 plus a $1,078,824 original issue premium, and Water Revenue Bonds Series
2010B (Taxable Build America Bonds) with a face value of $36,255,000. The Series 2010A bonds are due
43
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
4) LONG-TERM DEBT - Continued
Water Revenue Bonds - Continued
in annual installments of $785,000 to $1,295,000 from September 1, 2012 through September 1, 2025;
bearing interest at 2% to 5.25%. The Series 2010B bonds are due in annual installments of
$1,365,000 to $3,505,000 from September 1, 2026 through September 1, 2040; bearing interest at 6.377%
to 6.577%. Interest on both Series is payable on September 1, 2010 and semiannually thereafter on March
1st and September 1st of each year until maturity or earlier redemption. The installment payments are to
be made from Taxes and Net Revenues of the Water System as described in the installment purchase
agreement, on parity with the payments required to be made by the District for the 1996, 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, 2015 was $74,402 and is included in interest expense. The
unamortized premium at June 30, 2015 is $688,215.
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, 2015.
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, 2015 was $96,095 and is included in interest expense. The
unamortized premium at June 30, 2015 is $784,778.
44
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
4) LONG-TERM DEBT - Continued
Water Revenue Bonds - Continued
The total amount outstanding at June 30, 2015 and aggregate maturities of the revenue bonds for the
fiscal years subsequent to June 30, 2015, are as follows:
For the Year
2010 Water Revenue Bond
Series A
2010 Water Revenue Bond
Series B
2013 Water Revenue
Refunding Bonds
Ended June 30, Principal Interest Principal Interest Principal Interest
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 940,000 406,287 - 2,371,868 660,000 195,600
2019 975,000 367,987 - 2,371,868 685,000 168,700
2020 1,015,000 323,112 - 2,371,868 715,000 140,700
2021-2025 5,890,000 779,569 - 11,859,342 3,160,000 258,800
2026-2030 - - 7,745,000 10,685,177 - -
2031-2035 - - 10,570,000 7,756,703 - -
2036-2040 - - 14,535,000 3,664,212 - -
2041-2042 - - 3,505,000 115,262 - -
$ 10,590,000 $ 2,798,531 $ 36,355,000 $ 45,940,036 $ 6,470,000 $ 1,228,725
Revenues Pledged
The District has pledged a portion of future water sales revenues to repay its Water Revenue Bonds and
Certificates of Participation. Total principal and interest remaining on the water revenue bonds and
certificates of participation is $167,961,515 payable through fiscal year 2042. For the current year,
principal and interest paid by the water sales revenues were $2,945,000 and $4,634,937, respectively.
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, 2015:
Designated Betterment $ 5,072,063
Expansion Reserve 4,486,171
Replacement Reserve 23,822,678
Designated New Supply Fund 758,956
Employee Benefits Reserve 31,445
Total $ 34,171,313
45
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
6) DEFINED BENEFIT PENSION PLAN
A) General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the District’s Plan,
agent multiple-employer defined benefit pension plans administered by the California Public
Employees’ Retirement System (CalPERS), which acts as a common investment and
administrative agent for its participating member employers. Benefit provisions under the Plans
are established by State statute and District resolution. CalPERS issues publicly available reports
that include a full description of the pension plans regarding provisions, assumptions and
membership information that can be found on the CalPERS website.
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and
death benefits to plan members, who must be public employees and beneficiaries. Benefits are
based on years of credited service, equal to one year of full time employment. Members with five
years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members
are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the
following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death
Benefit. The cost of living adjustments for the plan are applied as specified by the Public
Employees’ Retirement Law.
The Plans’ provisions and benefits in effect at June 30, 2015, are summarized as follows:
Prior to On or After
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 2.7% at 55 2% at 62
Benefit Vesting Schedule 5 years service 5 years service
Benefit Payments Monthly for life Monthly for life
Retirement Age 50 - 55 52 - 67
Monthly Benefits, as a % of Eligible Compensation 2.0% to 2.7% 1.0% to 2.5%
Required Employee Contribution Rates 8% 6.25%
Required Employer Contribution Rates 20.869% - 25.435% 25.435% - 29.152%
Employees Covered
At June 30, 2015, the following employees were covered by the benefit terms for the Plan:
Inactive Employees or Beneficiaries Currently
Receiving Benefits
161
Inactive Employees Entitled to But Not Yet Receiving Benefits 142
Active Employees 137
Total 440
46
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
6) DEFINED BENEFIT PENSION PLAN - Continued
A) General Information about the Pension Plans - Continued
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer
contribution rates for all public employers be determined on an annual basis by the actuary and
shall be effective on the July 1 following notice of a change in the rate. Funding contributions for
the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially
determined rate is the estimated amount necessary to finance the costs of benefits earned by
employees during the year, with an additional amount to finance any unfunded accrued liability.
The District is required to contribute the difference between the actuarially determined rate and the
contribution rate of employees.
B) Net Pension Liability
The District’s net pension liability for the Plan is measured as the total pension liability, less the
pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June
30, 2014, using the annual actuarial valuation as of June 30, 2013 rolled forward to June 30, 2014
using standard update procedures. A summary of principal assumptions and methods used to
determine the net pension liability is shown below:
Actuarial Assumptions
The total pension liabilities in the June 30, 2013 actuarial valuations were determined using the
following actuarial assumptions:
Valuation Date June 30, 2013
Measurement Date June 30, 2014
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.5%
Inflation 2.75%
Payroll Growth 3.0%
Projected Salary Increase 3.3% - 14.2%(1)
Investment Rate of Return 7.5%(2)
(1) Depending on age, service and type of employment.
(2) Net of pension plan investment expenses, including inflation.
The underlying mortality assumptions and all other actuarial assumptions used in the
June 30, 2013 valuation were based on the results of a January 2014 actuarial
experience study for the period 1997 to 2011. Further details of the Experience Study
can be found on the CalPERS website.
47
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
6) DEFINED BENEFIT PENSION PLAN - Continued
B) Net Pension Liability - Continued
Discount Rate
The discount rate used to measure the total pension liability was 7.50% for the Plan. To determine
whether the municipal bond rate should be used in the calculation of a discount rate for each plan,
CalPERS stress tested plans that would most likely result in a discount rate that would be different
from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out
of assets. Therefore, the current 7.50 percent discount rate is adequate and the use of the
municipal bond rate calculation is not necessary. The long term expected discount rate of 7.50
percent will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress
test results are presented in a detailed report that can be obtained from the CalPERS website.
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined
without reduction for pension plan administrator expense. The 7.50 percent investment return
assumption used in this accounting valuation is net of administrative expenses. Administrative
expenses are assumed to be 15 basis points. An investment return excluding administrative
expenses would have been 7.65 percent. Using this lower discount rate has resulted in a slightly
higher Total Pension Liability and Net Pension Liability. CalPERS checked the materiality threshold
for the difference in calculation and did not find it to be a material difference.
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability
Management (ALM) review cycle that is scheduled to be completed in February 2018. Any
changes to the discount rate will require Board action and proper stakeholder outreach. For these
reasons, CalPERS expects to continue using a discount rate net of administrative expenses for
GASB 67 and 68 calculations through at least 2017-18 fiscal year. CalPERS will continue to check
the materiality of the difference in calculation until such time as we have changed our
methodology.
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which best-estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expense and inflation) are developed for each
major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term
and long-term market return expectations as well as the expected pension fund cash flows. Using
historical returns of all the funds’ asset classes, expected compound returns were calculated over
the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach.
Using the expected nominal returns for both short-term and long-term, the present value of
benefits was calculated for each fund. The expected rate of return was set by calculating the
single equivalent expected return that arrived at the same present value of benefits for cash flows
as the one calculated using both short-term and long-term returns. The expected rate of return
was then set equivalent to the single equivalent rate calculated above the rounded down to the
nearest one quarter of one percent.
48
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
6) DEFINED BENEFIT PENSION PLAN - Continued
B) Discount Rate – Continued
The following table reflects the long-term expected real rate of return by asset class. The rate of
return was calculated using the capital market assumptions applied to determine the discount rate
and asset allocation. These rates of return are net of administrative expenses.
Asset Class
New Strategic
Allocation
Real Return
Years 1 - 10(a)
Real Return
Years 11+(b)
Global Equity 47.0% 5.25% 5.71%
Global Fixed Income 19.0% 0.99% 2.43%
Inflation Sensitive 6.0% 0.45% 3.36%
Private Equity 12.0% 6.83% 6.95%
Real Estate 11.0% 4.50% 5.13%
Infrastructure and Forestland 3.0% 4.50% 5.09%
Liquidity 2.0% -0.55% -1.05%
Total 100%
(a) An expected inflation of 2.5% used for this period.
(b) An expected inflation of 3.0% used for this period.
C) Changes in the Net Position Liability
The changes in the Net Position Liability for the Plan:
Increase (Decrease)
Total
Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
Beginning Balance $ 106,716,218 $ 63,144,370 $ 43,571,848
Changes in the Year:
Service Cost 2,330,709 2,330,709
Interest on the Total Pension Liability 7,907,915 7,907,915
Changes in Benefit Terms 0 0
Differences Between Actual and Expected
Experience
0
0
Changes in Assumptions 0 0
Contribution - Employer 3,137,174 (3,137,174)
Contribution - Employee 1,074,954 (1,074,954)
Net Investment Income 10,874,999 (10,874,999)
Benefit Payments, Including Refunds of
Employee Contributions
(4,885,406)
(4,885,406)
0
Net Changes 5,353,218 10,201,721 (4,848,503)
Ending Balance $ 112,069,436 $ 73,346,091 $ 38,723,345
49
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
6) DEFINED BENEFIT PENSION PLAN - Continued
C) Changes in the Net Position Liability - Continued
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the District for the Plan, calculated using the
discount rate for the Plan, as well as what the District’s net pension liability would be if it were
calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than
the current rate:
1% Decrease 6.50%
Net Pension Liability $ 53,440,281
Current Discount Rate 7.50%
Net Pension Liability $ 38,723,345
1% Increase 8.50%
Net Pension Liability $ 26,496,138
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately
issued CalPERS financial reports.
D) Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2015, the District recognized pension expense of $3,256,611. At June
30, 2015, the District reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following services:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to measurement date $ 3,575,595 $
Differences between actual and expected experience
Changes in assumptions
Net differences between projected and actual earnings
on pension plan investments
(4,967,940)
Total $ 3,575,595 $ (4,967,940)
$3,575,595 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended
June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to pensions will be recognized as pension expense as follows:
50
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
6) DEFINED BENEFIT PENSION PLAN - Continued
D) Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions -
Continued
Year Ended
June 30
2016 $ (1,241,985)
2017 (1,241,985)
2018 (1,241,985)
2019 (1,241,985)
2020
Thereafter
E) Payable to the Pension Plan
At June 30, 2015, the District reported a payable of $167,970 for the outstanding amount of
contributions to the pension plan required for the year ended June 30, 2015.
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 on or after January 1, 1981 but before July 1,
1993 and employees hired on or after July 1, 1993. Board members elected before January 1, 1995 are
also eligible for the plan. Eligibility also includes age and years of service requirements which vary by
tier. Benefits include 100% medical and dental premiums for life for the retiree for Tier I, II or III
employees, and up to 100% spouse premium until death of retiree or age 65 whichever is greater and
dependent premium up to age 19 depending on the tier. 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.
51
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
7) OTHER POST EMPLOYMENT BENEFITS - Continued
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 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 $165 per month for coverage to age 65, and from $0 to $170 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
(ARC) of the employer, 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 11.4% 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 for the year
ended June 30, 2015:
Annual Required Contribution (ARC) $ 1,413,000
Interest on Net OPEB Asset (752,937)
Adjustment to Annual Required Contribution (ARC) 713,000
Annual OPEB Cost (Expense) 1,373,063
Contributions Made 2,460,113
Increase in Net OPEB Asset (1,087,050)
Net OPEB Asset - Beginning of Year (10,385,336)
Net OPEB Asset - End of Year $ (11,472,386)
For 2015, 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 $929,113, which is included in the $2,460,113 of contributions shown above.
52
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
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 2015, 2014 and 2013 were as follows:
THREE-YEAR TREND INFORMATION FOR CERBT
Fiscal Annual OPEB Percentage of Net OPEB
Year Cost (AOC) OPEB Cost Contributed Obligation
6/30/15 $ 1,373,063 179% $ (11,472,386)
6/30/14 $ 1,386,456 175% $ (10,385,336)
6/30/13 $ 1,226,662 183% $ (9,345,437)
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.
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.
53
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
7) OTHER POST EMPLOYMENT BENEFITS - Continued
Actuarial Methods and Assumptions - Continued
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 23-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 year ended June 30, 2015, the District contributed $117,462 for the
development, construction and operation costs of the xeriscape demonstration garden.
A summary of the Authority’s June 30, 2014 audited financial statement is as follows (latest report
available):
Assets $ 1,467,333
Liabilities 0
Net Assets $ 1,467,333
Revenues, Gains and Other Support $ 520,000
Expenses 604,707
Changes in Net Assets $ (84,707)
9) COMMITMENTS AND CONTINGENCIES
Construction Commitments
The District had committed to capital projects under construction with an estimated cost to complete of
$12,724,286 at June 30, 2015.
54
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
9) COMMITMENTS AND CONTINGENCIES - Continued
Litigation
Certain claims, suits and complaints arising in the ordinary course of operation have been filed or are
pending against the District. In the opinion of the staff and counsel, 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, 2015, 1,750 EDUs had been relinquished and
refunded, 15,076 EDUs had been connected, and 1,041 EDUs have neither been relinquished nor
connected.
Developer Agreements
The District has entered into various Developer Agreements with developers towards the expansion of
District facilities. The developers agree to make certain improvements and after the completion of the
projects the District agrees to reimburse such improvements with a maximum reimbursement amount
for each developer. Contractually, the District does not incur a liability for the work until the work is
accepted by the District. As of June 30, 2015, 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.
55
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
10) RISK MANAGEMENT - Continued
General Liability - Continued
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.
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, 2014.
Coverage was increased by $600,000 during the fiscal year for a total of $1,000,000 as of June 30, 2015.
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 $1,000 deductible per occurrence, effective July 1, 2014.
Boiler and Machinery: Replacement cost up to $100 million per occurrence, subject to a $1,000
deductible, effective July 1, 2014.
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,
2014.
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 – 2014-15, effective July 1, 2014.
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, 2014.
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).
56
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
10) RISK MANAGEMENT - Continued
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.
11) INTEREST EXPENSE
Interest expense for the years ended June 30, 2015 is as follows:
Amount Expensed $ 4,545,530
Amount Capitalized as a Cost of
Construction Projects 179,476
Total Interest $ 4,725,006
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.
58
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
12) SEGMENT INFORMATION - Continued
Summary financial information for the water services is presented for June 30, 2015:
Condensed Statement of Net Position
June 30, 2015
Water Services
ASSETS
Current Assets $ 98,230,595
Capital Assets 441,407,136
Other Assets 11,472,386
Total Assets 551,110,117
DEFERRED OUTFLOWS OF RESOURCES
Deferred Contributions to Pension Plans 3,411,118
Total Deferred Outflows of Resources 3,411,118
LIABILITIES
Current Liabilities 23,872,564
Long-term Liabilities 139,053,533
Total Liabilities 163,926,097
DEFERRED INFLOWS OF RESOURCES
Deferred Actuarial Pension Costs 4,739,415
Total Deferred Inflows of Resources 4,739,415
NET POSITION
Net Investment in Capital Assets 336,261,832
Restricted for Debt Service 4,658,306
Unrestricted 45,935,585
Total Net Position $ 386,855,723
59
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
12) SEGMENT INFORMATION - Continued
Condensed Statement of Revenues, Expenses and Changes in Net
Position
For the Year Ended June 30, 2015
Water Services
Operating Revenues
Water Sales $ 79,135,000
Connection and Other Fees 1,679,503
Total Operating Revenues 80,814,503
Operating Expenses
Cost of Water Sales 54,324,307
Administrative and General 19,520,170
Depreciation 15,144,486
Total Operating Expenses 88,988,963
Operating Income (Loss) (8,174,460)
Non-operating Revenues (Expenses)
Investment Earnings 583,225
Taxes and Assessments 3,855,839
Availability Charges 641,002
Gain (Loss) on Sale of Capital Assets 30,282
Rents and Leases 1,232,920
Miscellaneous Revenues 2,490,796
Donations (117,462)
Interest Expense (4,545,530)
Miscellaneous Expenses (1,312,480)
Total Non-operating Revenues (Expenses) 2,858,592
Income (Loss) Before Capital Contributions (5,315,868)
Capital Contributions 2,394,280
Change in Net Position (2,921,588)
Total Net Position, Beginning, As Previously Stated 428,351,990
Prior Period Adjustment (38,574,679)
Total Net Position, Beginning, As Restated 389,777,311
Total Net Position, Ending $ 386,855,723
60
Notes to Financial Statements
See Independent Auditors' report
Year Ended June 30, 2015
12) SEGMENT INFORMATION - Continued
Condensed Statement of Cash Flows
For the Year Ended June 30, 2015
Water Services
Net Cash Provided/(Used) by:
Operating Activities $ 7,808,220
Non-capital and Related Financing Activities 5,110,851
Capital and Related Financing Activities (11,878,822)
Investing Activities (8,434,768)
Net Increase (Decrease) in Cash and Cash Equivalents (7,394,519)
Cash and Cash Equivalents, Beginning 30,610,113
Cash and Cash Equivalents, Ending $ 23,215,594
13) PRIOR PERIOD ADJUSTMENT
The prior period adjustment of $40,434,674 relates to the implementation of GASB Statements 68 and
71 for defined benefit pension plans. According to GASB Statement 68, Accounting and Financial
Reporting for Pensions - an amendment of GASB 68 Statement No. 27, and GASB Statement No. 71,
Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of
GASB No. 68, which was implemented by the District in the 2015 fiscal year, recognizing liabilities,
deferred outflows of resources, deferred inflows of resources, and expenses related to defined benefit
pension plans.
61
Schedule of Funding Progress for DPHP
See Independent Auditors’ report
Year Ended June 30, 2015
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%
62
Schedule of Changes In the Net Pension Liability
and Related Ratios
See Independent Auditors’ report
Year Ended June 30, 2015
Measurement Period 2013-14(1)
TOTAL PENSION LIABILITY
Service Cost $ 2,330,709
Interest 7,907,915
Changes of Benefit Terms 0
Difference Between Expected and Actual Experience 0
Changes of Assumptions 0
Benefit Payments, Including Refunds of Employee Contributions (4,885,406)
Net Change in Total Pension Liability 5,353,218
Total Pension Liability - Beginning 106,716,218
Total Pension Liability – Ending (a) $ 112,069,436
PLAN FIDUCIARY NET POSITION
Contributions - Employer(2) $ 3,137,174
Contributions – Employee(2) 1,074,954
Net Investment Income(2) 10,874,999
Benefit Payments, Including Refunds of Employee Contributions(2) (4,885,406)
Other Changes in Fiduciary Net Position(2) 0
Net Change in Fiduciary Net Position 10,201,721
Plan Fiduciary Net Position - Beginning(2) 63,144,370
Plan Fiduciary Net Position – Ending (b) $ 73,346,091
Plan Net Pension Liability/(Asset) – Ending (a) – (b) $ 38,723,345
Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 65.45%
Covered-Employee Payroll $ 12,276,578
Plan Net Pension Liability/(Asset) as a Percentage of Covered Employee Payroll 315.42%
(1) Historical information is required only for measurement periods for which GASB 68 is applicable.
(2) Net of administrative expenses.
Notes to Schedule:
Benefit Changes: The figures above do not include any liability impact that may have results from plan
changes which occurred after June 30, 2013. This applies for voluntary benefit changes as well as any
offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).
Changes of Assumptions: There were no changes in assumptions.
63
Schedule of Contributions
See Independent Auditors’ report
Year Ended June 30, 2015
Schedule of Plan Contributions(1)
Fiscal Year 2013-14
Actuarially Determined Contribution(2) $ 3,137,174
Contributions in Relation to the Actuarially Determined Contribution(2) (3,137,174)
Contribution Deficiency (Excess) (2) $ 0
Covered-Employee Payroll(3), (4) $ 12,276,578
Contributions as a Percentage of Covered-Employee Payroll(3) 25.55%
(1)Historical information is required only for measurement periods for which GASB 68 is applicable.
(2)Employers are assumed to make contributions equal to the actuarially determined contributions. However,
some employers may choose to make additional contributions toward their unfunded liability. Employer
contributions for such plans exceed the actuarially determined contributions.
(3) Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer.
However, GASB 68 defines covered-employee payroll as the total payroll of employees that are provided
pensions through the pension plan. Accordingly, if pensionable earnings are different than total earnings for
covered-employees, the employer should display in the disclosure footnotes the payroll based on total
earnings for the covered group and recalculate the required payroll-related ratios.
(4)Payroll from prior year $11,919,008 was assumed to increase by the 3.00 percent payroll growth
assumption.
Notes to Schedule:
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year
2013-14 were from the June 30, 2011 public agency valuations.
Actuarial Cost Method Entry Age Normal
Amortization Method/Period For details see June 30, 2011 Funding Valuation Report
Asset Valuation Method Actuarial Value of Assets. For details, see June 30, 2011 Funding
Valuation Report
Inflation 2.75%
Salary Increases Varies by Entry Age and Service
Payroll Growth 3.00%
Investment Rate of Return 7.50% Net of Pension Plan Investment and Administrative Expenses;
includes Inflation
Retirement Age
The probabilities of Retirement are based on the 2010 CalPERS
Experience Study for the period from 1997 to 2007
Mortality
The probabilities of mortality are based on the 2010 CalPERS Experience
Study for the period from 1997 to 2007. Pre-retirement and Post-
retirement mortality rates include 5 years of projected mortality
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
2015 354,046,090$ 4,658,306$ 43,717,930$ 402,422,326$ (1)
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
(1) For Fiscal Year ending June 30, 2015, the $42.4 million decrease of Total Net Position is primarily due
to the implementation of Governmental Accounting Standards Board (GASB) Statements No. 68 "Accounting
and Financial Reporting for Pensions-an amendment of GASB Statement No. 27" and No. 71 "Pension
Transitions for Contributions Made Subsequent to the Measurement Date-an amendment of GASB No. 68".
Implementation of these standards resulted in a decrease of Net Position at July 1, 2014 by $40.4 million.
Source: Otay Water District
Net Position by Component - Last Ten Fiscal Years
$360,000
$380,000
$400,000
$420,000
$440,000
$460,000
$480,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total Net Positon, in Thousands ($)
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
2015 83,865,407$ 91,863,728$ (7,998,321)$ 2,965,607$ (5,032,714)$ 3,081,894$ (1,950,820)$
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
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
$30,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Changes in Net Position, in Thousands ($)
67
Fiscal Connection and Percent
Year Water Sales Wastewater Other Fees Total Change
2015 79,135,000$ 3,044,158$ 1,686,249$ 83,865,407$ -2.5%
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%
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
$100,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Operating Revenues, in Thousands ($)
68
Fiscal Cost of Administrative Percent
Year Water Sales Wastewater and General Depreciation Total Change
2015 54,364,884$ 1,866,711$ 19,437,141$ 16,194,992$ 91,863,728$ -0.8%
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%
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
$100,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Operating Expenses, in Thousands ($)
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
2015 656,925$ 3,856,276$ 685,555$ 1,232,920$ 2,521,078$ 8,952,754$ 15.2%
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 (1)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%
(1) The District received a large, one-time legal settlement as a member of a class action lawsuit
in Fiscal Year 2009.
Source: Otay Water District
Non-Operating Revenues by Source - Last Ten Fiscal Years
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Non-Operating Revenues, in Thousands ($)
70
Non-Operating Expenses by Function - Last Ten Fiscal Years
Fiscal Interest Percent
Year Donations (1)Expense Miscellaneous Total Change
2015 117,462$ 4,545,530$ 1,324,155$ 5,987,147$ -25.6%
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%
(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 $2 million of non-capitalizable expenses which were funded by the
2010 Water Revenue Bonds.
Source: Otay Water District
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Non-Operating Expenses, in Thousands ($)
Miscellaneous Interest Expense Donations
71
Fiscal Total Direct
Year Real Personal Total Tax Rate
2015 24,109,906,912$ 572,400,598$ 24,682,307,510$ 1.00%
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%
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
$30,000,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Assessed Valuation of Property, In Thousands ($)
72
Fiscal
Year Purchases Sales Production Purchases Sales
2015 13,198,201 12,744,425 443,090 1,447,737 1,841,956
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
(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
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Recycled Purchases Recycled Production Potable Water Purchases
Water Purchases, Productions, and Sales, in Hundred Cubic Feet (HCF)
73
Fiscal
Year Total (1)
2015 138 8 146
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
(1) Meters may not be activated in the year sold.
Source: Otay Water District
Meter Sales by Type - Last Ten Fiscal Years
Potable Recycled
0
500
1,000
1,500
2,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Meter Sales by Type
Recycled Potable
74
Fiscal
Year Potable Recycled Sewer Total
2015 49,308 705 4,679 54,692
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 47,689 671 4,638 52,998
2008 47,593 626 4,627 52,846
2007 47,460 588 4,567 52,615
2006 46,851 558 4,571 51,980
Source: Otay Water District
Number of Customers by Service Type - Last Ten Fiscal Years
5,000
15,000
25,000
35,000
45,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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
2015 3,276,296$ 2,012,420$ 5,288,716$ 5,071,336$ 96%
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%
(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
$7,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Levies and Collections, in Thousands ($)
Levy Collections
76
Fixed Rates 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
System Fee by Meter Size
Residential
3/4"19.39$ 16.19$ 16.74$ 14.58$ 14.58$ 14.58$ 13.83$ 12.30$ 11.30$ 10.25$
1"27.39 22.87 21.26 18.52 18.52 18.52 17.56 19.80 18.15 16.50
1.5"47.40 39.58 32.57 28.37 28.37 28.37 26.90 51.95 35.75 32.50
Non-Residential & Others
3/4"19.39 16.19 16.74 14.58 14.58 14.58 13.83 24.00 22.00 20.00
1"27.39 22.87 21.26 18.52 18.52 18.52 17.56 36.95 33.90 30.80
1.5"47.40 39.58 32.57 28.37 28.37 28.37 26.90 51.95 47.50 43.30
2"71.39 59.62 46.13 40.18 40.18 40.18 38.10 64.95 59.60 54.20
3"135.41 113.08 82.29 71.68 71.68 71.68 67.98 104.55 95.90 87.20
4"207.43 173.22 122.99 107.13 107.13 107.13 101.59 119.70 109.80 99.80
6"407.50 340.29 236.02 205.59 205.59 205.59 194.96 239.20 219.45 199.50
8"647.56 540.76 371.64 323.73 323.73 323.73 307.00 - - -
10"927.63 774.64 529.88 461.57 461.57 461.57 437.71 456.60 418.90 380.50
CWA and MWD Pass-through charges by Meter Size
Residential
3/4"13.67 14.45 13.28 14.01 11.82 9.77 4.33 3.85 3.55 2.85
1"25.35 26.79 22.12 23.33 19.69 16.28 6.91 6.15 5.65 4.55
1.5"57.35 60.61 44.31 46.74 39.44 32.61 13.04 11.60 10.65 8.55
Non-Residential & Others
3/4"13.67 14.45 13.28 14.01 11.82 9.77 4.33 3.85 3.55 2.85
1"25.35 26.79 22.12 23.33 19.69 16.28 6.91 6.15 5.65 4.55
1.5"57.35 60.61 44.31 46.74 39.44 32.61 13.04 11.60 10.65 8.55
2"97.53 103.08 70.85 74.74 63.07 52.15 22.54 20.05 18.45 14.80
3"207.44 219.23 141.71 149.48 126.14 104.30 41.53 36.95 34.05 27.35
4"332.20 351.09 221.43 233.58 197.17 162.98 70.98 63.15 58.20 46.75
6"680.02 718.69 442.80 467.09 394.17 325.92 129.82 115.50 106.45 85.50
8"1,098.15 1,160.59 708.53 747.39 630.71 521.51 374.62 - - -
10"1,580.67 1,670.55 1,015.06 1,070.74 903.58 749.61 538.52 300.30 276.75 222.30
Fire Services
All Types 30.11 30.11 30.11 28.55 25.40 23.30 21.20
Lower than 4 inch 25.32 21.14 34.57
Higher than 4 inch 34.12 28.49 34.57
Source: Otay Water District
Water Fixed Rates - Last Ten Fiscal Years
77
Usage Rate (1)2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
Tier 1 1.95$ 1.86$ 1.73$ 1.58$ 1.49$ 1.35$ 1.12$ 1.12$ 1.08$ 1.05$
Tier 2 3.04 2.90 2.69 2.45 2.31 2.10 1.74 1.85 1.78 1.73
Tier 3 3.95 3.77 3.50 3.19 3.00 2.73 2.26 2.01 1.94 1.88
Tier 4 6.08 5.80 5.39 4.92 4.63 4.21 3.48 2.94 2.83 2.75
Tier 1 3.00 2.86 2.66 2.43 2.29 2.08 1.72 1.85 1.78 1.73
Tier 2 3.89 3.71 3.45 3.15 2.97 2.70 2.23 2.01 1.94 1.88
Tier 3 6.00 5.73 5.32 4.85 4.57 4.15 3.43 2.94 2.83 2.75
Publicly-Owned (2)2.06 1.99 1.93
Commercial & Others (3)1.98 1.91 1.85
Government Fee (2)0.32 0.31 0.29 0.29 0.29 0.29 0.29 0.28 - -
Tier 1 3.21 3.06 2.84 2.59 2.44 2.22 1.84
Tier 2 3.26 3.14 2.92 2.66 2.50 2.27 1.88
Tier 3 3.31 3.19 2.96 2.70 2.54 2.31 1.91
Tier 1 4.37 4.17 3.87 3.53 3.32 3.02 2.50
Tier 2 4.42 4.25 3.95 3.60 3.39 3.08 2.55
Tier 3 4.47 4.32 4.01 3.66 3.45 3.14 2.60
Recycled (Commercial)1.67 1.65 1.57
Recycled (Publicly-Owned) (2)1.75 1.73 1.65
Tier 1 3.73 3.56 3.31 3.02 2.84 2.58 2.13
Tier 2 3.79 3.61 3.35 3.06 2.88 2.62 2.17
Tier 3 3.84 3.68 3.42 3.12 2.94 2.67 2.21
Energy Pumping Fee
Per 100 cubic feet (4)0.050 0.048 0.042 0.045 0.044 0.038 0.034 0.034 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 $.32 per unit was charged to governmental customers 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 $.050 per 100 cubic
feet of water for each 100 feet of lift above the base elevation of 450 feet. All water customers are in one of
twenty-nine zones based on elevation.
Source: Otay Water District
Water Variable Rates - Last Ten Fiscal Years
Recycled
Public Agency & Commercial
Landscape, Agricultural & Construction
Master Meter
Residential
78
Description 2015 2014 2013** 2012 2011 2010 2009 2008* 2007 2006
1 Unit 2.46$ 2.46$ 2.35$ 1.77$ 1.67$ 1.56$ 1.47$ 1.41$ - -
Low Strength 2.46 2.46 2.35
Medium Strength 3.53 3.53 3.37
High Strength 5.63 5.63 5.37
Sewer Rate Per ASU 41.75 39.39 36.88 34.79 33.26 32.70$ 30.90$
3/4"15.89 15.89 14.38 12.26 11.57 10.80 10.20 9.75
1"15.89 15.89 14.38 17.88 16.87 15.75 14.90 14.25
3/4"27.07 27.07 25.83
1"39.86 39.86 38.03
1.5"71.82 71.82 68.53
2"110.17 110.17 105.12
3"199.66 199.66 190.52
4"327.51 327.51 312.51
6"647.12 647.12 617.48
8"1,030.67 1,030.67 983.46
10"1,478.12 1,478.12 1,410.42
Calculation of Monthly Residential Sewer Billing:
*Bill calculation prior to calendar year 2008: Sewer Rate per ASU (9)
Bill calculation beginning calendar year 2008: (Winter Average (8) x .85 (2) x Usage Fee) + Fixed Fee (7)
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 customers 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 (6))) + Fixed Fee (7)
Residential
Non-Residential
Residential
79
Customer Customer Annual % of Water
Name Type Revenues Sales
1. City of Chula Vista Publicly Owned 3,508,939$ 4.4%
2. County of San Diego Publicly Owned 950,461 1.2%
3. State of California Publicly Owned 833,907 1.1%
4. Eastlake III Community Commercial 781,004 1.0%
5. Steele Canyon Golf Club LLC Commercial 735,908 0.9%
6. Chula Vista School District Publicly Owned 541,036 0.7%
7. Sweetwater School District Publicly Owned 379,353 0.5%
8. SANDAG Commercial 376,714 0.5%
9. Highlands Golf Company LLC Commercial 365,660 0.5%
10. Eastlake 1 HOA Commercial 364,252 0.5%
Total Top Ten Customers 8,837,234$ 11.3%
Other Customers 70,297,766 88.7%
Total Water Sales 79,135,000$ 100.0%
Customer Customer Annual % of Water
Name Type Revenues Sales
1. City of Chula Vista Publicly Owned 1,320,142$ 3.0%
2. State of California Publicly Owned 948,695 2.2%
3. McMillin Commercial 666,770 1.5%
4. County of San Diego Publicly Owned 665,694 1.5%
5. Eastlake III Community Commercial 502,189 1.1%
6. Country Hills Apartments Commercial 461,984 1.1%
7. Eastlake 1 HOA Commercial 417,029 1.0%
8. Steele Canyon Golf Club LLC Commercial 319,216 0.7%
9. California Bank & Trust Commercial 284,783 0.7%
10. The EastLake Company Commercial 214,593 0.5%
Total Top Ten Customers 5,801,095$ 13.3%
Other Customers 37,954,515 86.7%
Total Water Sales 43,755,610$ 100.0%
Source: Otay Water District
Ten Largest Customers - Current Year and Nine Years Ago
FISCAL YEAR 2015
FISCAL YEAR 2006
80
As a Share
Fiscal Population GO Revenue Capital Per of Personal
Year Estimate Bond COPS Bonds Notes Leases Total Capita Income(1)
2015 217,000 5,267,208$ 44,990,103$ 54,887,993$ $ - $ - 105,145,304$ 484.54$ 0.86%
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%
(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
$700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Outstanding Debt, Per Capita
81
Adjusted Net Revenues
Fiscal Adjusted Operating Available for Debt Service Requirements (4)Coverage
Year Revenues (1)Expenses (2)Debt Service Principal Interest Total Factor (3)
2015 89,646,845$ 74,320,591$ $15,326,254 $2,945,000 4,767,618$ $7,712,618 199%
2014 90,948,021 75,575,679 15,372,342 2,935,000 4,895,622 7,830,622 196%
2013 81,778,447 70,228,987 11,549,460 2,800,000 4,988,640 7,788,640 148%
2012 74,484,691 64,028,686 10,456,005 1,850,000 6,050,746 7,900,746 132%
2011 69,653,627 60,117,245 9,536,382 1,795,000 5,084,450 6,879,450 139%
2010 65,573,058 57,084,904 8,488,154 1,745,000 2,720,258 4,465,258 190%
2009 63,739,773 57,076,567 6,663,207 1,700,000 2,342,048 4,042,048 165%
2008 63,732,275 56,420,286 7,311,989 800,000 2,567,884 3,367,884 217%
2007 69,442,301 52,413,282 17,029,019 790,000 1,513,834 2,303,834 739%
2006 58,572,428 47,520,682 11,051,746 745,000 917,790 1,662,790 665%
(1) Adjusted revenues exclude sewer revenues and taxes collected for Improvement District 27 and are
inclusive of capacity fees.
(2) Adjusted operating expenses exclude sewer expenses and depreciation expense.
(3) The District's bond covenants require a minimum coverage factor of 125%.
(4) Pledge debts are Certificates of Participation (COPS) and Revenue Bonds.
Source : Otay Water District
Pledged Revenue Coverage - Last Ten Fiscal Years
00%
200%
400%
600%
800%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Coverage Factor, in Percentage (%)
Actual Ratio Minimum ratio
82
Net Bonded
Net Debt to Net Bonded
Fiscal Population Assessed Bonded Assessed Debt Per
Year Estimate Valuation Debt Valuation Capita
2015 217,000 24,682,307,510$ 5,267,208$ 0.02%24.27
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
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%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Bonded Debt Ratios, in Percentage (%)
83
Computation of Direct and Overlapping Bonded Debt
June 30, 2015
2014-15 Assessed Valuation: $24,682,307,510
Redevelopment Incremental Valuation: 267,915,708
Total Overlapping Tax Increment Debt 1.31%
Total Debt District’s Share of
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/15 % Applicable (1) Debt 6/30/15
Metropolitan Water District $ 110,420,000 1.064% $ 1,174,869
Otay Water District Improvement District No. 27 5,150,000 100. 5,150,000
Grossmont-Cuyamaca Community College District 245,912,686 15.317 37,666,446
Southwestern Community College District 222,049,345 40.758 90,502,872
Grossmont Union High School District 500,541,773 15.725 78,710,194
Sweetwater Union High School District 336,119,415 48.670 163,589,319
Chula Vista City School District and School Facilities Improvement District 99,830,000 61.013 & 23.698 44,865,694
San Ysidro School District 135,717,132 49.212 66,789,115
Other School Districts 3,761,571,918 Various 54,537,081
Grossmont Healthcare District 267,413,330 13.938 37,272,070
City of Chula Vista Community Facilities District 177,025,000 100. 177,025,000
Chula Vista City School District Community Facilities Districts 3,830,000 100. 3,830,000
Sweetwater Union High School District Community Facilities Districts 132,150,570 10.894-100. 123,624,282
City 1915 Act Bonds 22,031,000 100. 22,031,000
California Statewide Communities Development Authority
San Diego County / Venture Community Center Assessment District 717,907 100. 717,907
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $907,485,849
Ratios to 2014-15 Assessed Valuation:
Direct Debt ($5,150,000) .......................................................................................... 0.02%
Total Overlapping Tax and Assessment Debt .........................................................3.68%
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
San Diego County General Fund Obligations $351,670,000 5.889% $ 20,709,846
San Diego County Pension Obligation Bonds 682,615,180 5.889 40,199,208
San Diego Superintendent of Schools Certificates of Participation 14,732,500 5.889 867,597
Otay Water District Certificates of Participation & Revenue Bonds 98,610,000 100. 98,610,000
Grossmont and Southwestern Community College District General Fund Obligations 2,190,000 15.317 & 40.758 607,661
Grossmont Union High School District Certificates of Participation 652,500 15.725 102,606
Sweetwater Union High School District Certificates of Participation 42,165,000 48.670 20,521,706
Chula Vista City School District Certificates of Participation 134,745,000 61.013 82,211,967
San Ysidro School District Certificates of Participation 41,015,125 49.212 20,184,363
Other School District Certificates of Participation 6,475,000 Various 1,587,994
City of Chula Vista Certificates of Participation 117,590,000 69.118 81,275,856
City of San Diego General Fund Obligations 634,010,000 0.855 5,420,786
San Miguel Consolidated Fire Protection District Certificates of Participation 3,895,000 52.269 2,035,878
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $374,335,468
Less: Otay Water District Certificates of Participation & Revenue Bonds (100% self-supporting) 98,610,000
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $275,725,468
OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $ 21,050,000 16.680% $ 3,511,140
TOTAL GROSS DIRECT DEBT $ 103,760,000
TOTAL NET DIRECT DEBT $ 5,150,000
TOTAL OVERLAPPING DEBT $1,181,572,457
GROSS COMBINED TOTAL DEBT $1,231,917,457 (2)
NET COMBINED TOTAL DEBT $1,186,722,457
(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 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 ($50,345,000) ................................................................ 0.20%
Net Total Direct Debt ($5,150,000) ...................................................................... 0.02%
Gross Combined Total Debt .............................................................................................4.99%
Net Combined Total Debt .................................................................................................4.81%
Source: California Municipal Statistics, Inc. and Otay Water District
84
2006
% of Total % of Total
County County
Employer Employees Rank Employment Employees Rank Employment
State of California 40,100 1 2.74% 38,700 2 2.71%
UC San Diego 28,341 2 1.93% 26,654 3 1.87%
Sharp HealthCare 16,477 3 1.12% 13,175 6 0.92%
Scripps Health 13,717 4 0.94% 10,617 8 0.74%
Qualcomm Inc.13,700 5 0.93%- - -
City of San Diego 10,584 6 0.72% 12,213 7 0.85%
UC San Diego Health System 7,726 7 0.53%- - -
Kaiser Permanente 7,549 8 0.51%7,121 9 0.50%
General Atomics (and affiliated companies) 6,714 9 0.46%- - -
San Diego State University 6,042 10 0.41%- - -
Federal Government of State of California(1)- --38,900 1 2.72%
San Diego Unified School District(1)- --17,914 4 1.25%
County of San Diego(1)- --15,687 5 1.10%
US Postal Service, San Diego District - --6,968 10 0.49%
Total 150,950 10.29% 187,949 13.15%
County of San Diego declined to participate in the survey organized by the San Diego Business Journal.
Source: Book of Lists, San Diego Business Journal.
Principal Employers - Current Year and Nine Years Ago
2015
(1) For Fiscal Year ending June 30, 2015, the Federal Government, San Diego Unified School Disrict and
85
Personal Per Capita
Fiscal Income Personal Unemployment
Year Population (in 000'S)Income Rate
2015 (1) 3,250,100 181,500,000$ 56,100$ 5.66%
2014 3,212,300 172,900,000 54,000 7.11%
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%
(1) Forecast
Source: SANDAG; Census 2010, California Department of Finance; LAEDC-Los Angeles Economic Development
Corp., The Kyser Center for Economic Research Employment Development Department; Labor Market Info.
Demographic and Economic Statistics - Last Ten Fiscal Years
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Unemployment Rate, in Percentage (%)
86
Number of Employees by Function - Last Ten Fiscal Years
Department 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
General Manager 5 5 5 5 6 6 6 6 6 6
Finance 34 29 30 32 35 38 37 36 35 34
Operations/Maintenance 56 61 65 66 66 68 70 71 71 72
Engineering 19 20 19 21 21 21 23 27 31 15
Administrative Services 14 16 17 18 19 20 20 20 19 19
IT and Strategic Planning 12 12 12 13 12 13 13 13 13 12
Development Services (1) - - - - - - - - - 17
Total 140 143 148 155 159 166 169 173 175 175
(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
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total Employees
87
Meter Size 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
3/4" & 5/8" 44,395 44,375 44,354 44,376 44,065 43,815 43,641 43,551 43,544 43,070
1" 2,674 2,557 2,412 2,099 1,881 1,815 1,804 1,747 1,618 1,514
1-1/2" 1,335 1,332 1,333 1,326 1,317 1,317 1,309 1,275 1,242 1,199
2" 1,294 1,293 1,295 1,277 1,278 1,292 1,299 1,283 1,262 1,242
3"81 77 76 75 75 75 75 76 76 69
4"207 189 169 180 193 184 202 258 275 277
6"18 18 18 19 21 22 21 19 24 27
Others 9 9 9 9 9 8 9 10 7 11
Total 50,013 49,850 49,666 49,361 48,839 48,528 48,360 48,219 48,048 47,409
% Change 0.3% 0.4% 0.6% 1.1%0.6% 0.3% 0.3% 0.4% 1.3% 1.9%
Increase 163 184 305 522 311 168 141 171 639 884
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
55,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Active Meters by Size
88
2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
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 727.0 726.0 725.0 724.0 723.0 723.0 722.0 722.0 680.0 663.0
40 40 40 40 40 40 38 36 37 37
Water Storage Capacity
(in Acre-Feet) 668.0 668.0 667.8 670.8 673.8 663.8 655.5 605.5 601.7 601.7
Total Potable Water Connections
(No. of Meters in Service)49,308 49,148 48,962 48,665 48,154 47,845 47,689 47,593 47,460 46,851
Number of Pump Stations 21 21 21 21 21 21 21 21 21 22
Number of Potable Water
Valves 20,676 20,460 20,317 20,317 19,522 19,522 19,192 19,131 18,721 18,042
Sewer System
Miles of Sewer Lines 88.0 88.0 88.0 88.0 88.0 88.0 88.0 88.0 86.2 86.2
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)388 405 422 423 481 474 483 503 514 528
Recycled System
Miles of Recycled Water Mains 104.0 102.0 99.0 99.0 98.0 98.0 97.0 93.0 83.0 77.6
Number of Pumping Facilities 3 3 3 3 3 3 3 3 3 2
Number of Operational
Storage Reservoirs in Service 4 4 4 4 4 4 4 4 4 4
Number of Acre-Feet Storage 134.2 134.2 134.1 134.1 134.1 134.1 133.2 135.0 134.1 97.3
Total Recycled Water
Connections 705 702 704 696 685 683 671 626 588 558
Number of Recycled
Water Valves 1,492 1,473 1,430 1,430 1,380 1,380 1,338 1,314 1,245 1,189
Source: Otay Water District
Operating and Capital Indicators - Last Ten Fiscal Years
Number of Operational
Storage Reservoirs in Service
550
600
650
700
750
2006 2007 2008 2010 2012 2013 2014 2015
Potable Water Mains, in Miles
89