HomeMy WebLinkAboutFY 2020 Comprehensive Annual Financial ReportOtay Water District
Comprehensive Annual Financial Report
for the Fiscal Years Ended June 30, 2020 and 2019
BOARD OF DIRECTORS
Gary Croucher, Division 3 President
Mark Robak, Division 5 Vice President
Mitch Thompson, Division 2 Treasurer
Tim Smith, Division 1
Hector Gastelum, Division 4
DISTRICT FINANCIAL MANAGEMENT
Jose Martinez General Manager
Joseph R. Beachem Chief Financial Officer
Kevin Koeppen Assistant Chief, Finance
PREPARED BY
Finance Department
Otay Water District, Spring Valley, California
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Table of Contents
Introductory Section
Letter of Transmittal……………………………………………………………………………………………………………………………………. iii
Organization Chart…………………………………………………………………………………………...………………………………………… xiv
List of Principal Officials…………………………………………………………………………………………………...……………………….. xv
GFOA Certificate of Achievement……………………………………………………………………………………………...……………. xvi
Financial Section
Independent Auditors’ Report………………………………………………………………………………………………………...………..… 1
Management’s Discussion & Analysis…………………………………………………...…………………………………...………….. 3
Basic Financial Statements:
Statements of Net Position..…………………………………………………………………………………………………………...….….. 13
Statements of Revenues, Expenses, and Changes in Net Position………….…………………………...…… 15
Statements of Cash Flows……………………………………………………………….…………………………………………………...….. 16
Notes to Financial Statements………………………………………………………………………………………………………………... 18
Required Supplementary Information:
Schedule of Changes in the Net OPEB Liability and Related Ratios for Measurement
Periods Ended June 30, ……………………………………………………………………………………………………………………….. 69
Schedule of Contributions for Fiscal Year Ended June 30, ……………………………………………………………. 70
Schedule of Changes in the Net Pension Liability and Related Ratios for Fiscal Year Ended
June 30, …………………………………………………………. ………………………………………………………………………………………... 71
Schedule of Plan Contributions for Fiscal Year Ended June 30, ..…………………………………………………. 73
Statistical Section
Net Position by Component…………………………………………………………………………………………………………………….. 76
Changes in Net Position………………………………………………………………..………………………………………………………….. 77
Operating Revenues by Source…………………………………………………………………………………………….……………….. 78
Operating Expenses by Function………………………………………………………..…………………………………………………. 79
Non-Operating Revenues by Source……………………………………………………………………………………………………. 80
Non-Operating Expenses by Function………………………………………………………………………………………………. 81
Assessed Valuation of Taxable Property within the District…………………………………………………………. 82
Water Purchases, Production, and Sales……………………………………………...………………………….…………………. 83
Meter Sales by Type…………………………………………………………………….……………………………………………………………. 84
Number of Customers by Service Type……………………………………………………………………………………………….. 85
Property Tax Levies and Collections…………………………………………………………………………………………………….. 86
Water Fixed Rates ……….………………………………………………………………………………………………………………………….…. 87
Water Variable Rates…….…………………………………………………………………………………………………………………………... 89
Sewer Variable and Fixed Rates…….………………………………………………………………………..…………………………….. 90
Ten Largest Customers…………………………………………………………………………………………………………………………….. 91
Ratios of Outstanding Debt by Type…………………………………………………….……………………………………………….. 92
Pledged Revenue Coverage (Water)……………………………………………………………………………………………………. 93
Pledged Revenue Coverage (Wastewater)…………………………………………………………………………………………. 94
Ratios of General Bonded Debt Outstanding………………………………………………………………….………………..… 95
Computation of Direct and Overlapping Bonded Debt………………………………………………………………… 96
Principal Employers…………………………..……………………………………….......................................................……………….. 98
Demographic and Economic Statistics……………………………………………………………………………………………….. 99
Number of Employees by Function………………………………………………………………………………………………………. 100
Active Meters by Size………………………………………………………………..………………………………………………………………. 101
Operating and Capital Indicators…………………………………………………………………………………………………………... 102
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October 22, 2020
Honorable Board of Directors
Otay Water District
We are pleased to present the Otay Water District's (the "District") Comprehensive Annual Financial
Report (CAFR) for the fiscal year ended June 30, 2020.
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.
Teaman, Ramirez & Smith, Inc., a firm of licensed certified public accountants, audited the District's
financial statements. 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, 2020, 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 District as of June 30, 2020, and are
presented in conformity with GAAP. The Independent Auditors' Report is presented as the first
component of the financial section of this report.
REPORTING ENTITY
The District is a publicly owned water and sewer agency, authorized on January 27, 1956, as a
California special district by the State Legislature, with an entitlement to import water under the
Municipal Water District Act 1911. Its ordinances, policies, taxes, and service rates 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 that does not operate at a profit.
The District also performs cost of service studies to ensure that each end-user pays only their fair share
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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 oversees day-to-day operations of
Administrative Services, Finance, Water Operations, and Engineering through the four District Chiefs.
These and other lines of reporting are shown on the organization chart on page xiv. Over the last 64
years, the District has grown from a handful of customers and two employees to become an
organization operating a network of more than 933 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 service area's character 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
approximately 50,994
potable and 735 recycled
customers within 125
square miles of the
southeastern San Diego
metropolitan area. The
District purchases all
potable water sold to its
customers from the San
Diego County Water
Authority (CWA). The CWA
purchases much of this
water from the region's
primary water importer, the Metropolitan Water District of Southern California (MWD), and the Imperial
Irrigation District. In December 2015, the Claude "Bud" Lewis Carlsbad Desalination Plant began
delivering water to the region. The District also entered into an agreement with the CWA that brought
regional water treatment closer to our customers and helped reduce dependence on water treatment
facilities located outside of San Diego County. In 2010, the District constructed two ten million-gallon
reservoirs and a 5.1-mile, 36-inch diameter pipeline to receive locally treated potable water from Helix
Water District's R.M. Levy Water Treatment Plant and convey it to customers.
The District also owns and operates a wastewater collection and recycling system providing public
sewer service to approximately 4,737 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 Reclamation Facility, capable of recycling wastewater at a rate
of 1.3 million gallons per day. The District also can purchase up to 6 million gallons per day of recycled
water from the City of San Diego's South Bay Water Reclamation Plant. The District used the recycled
water from these two sources to irrigate eastern Chula Vista schools, public parks, roadway
landscapes, a golf course, and various other approved uses per California Code of Regulations, Title
iv
22. 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 District's mission is to provide high quality and reliable water and wastewater services to the Otay
Water District customers in a professional, effective, and efficient manner.
According to the Xpera Group, the national unemployment rate was 3.6% in January, and then six
months later went up to 10.8%. The massive increase in unemployment was likely due to workers
being furloughed because of the COVID-19 pandemic.
The effect of Governor Newsom's stay-at-home orders issued statewide on March 19, 2020, is
reflective in San Diego County's unemployment rate, which had the most massive increase from
March to April of 10.8%. The leisure and hospitality industry suffered the most considerable loss.
The District analyzed the data provided by a local economist, communication from the County of San
Diego, and other reports to assess the unprecedented impacts of COVID-19 on the region and the
District. The adverse financial impacts of the COVID-19 pandemic were projected to impact sales
volumes, property tax collection, growth revenues, and bad debt.
The San Diego County growth slowed down in Fiscal Year 2020. The District's Public Services Division
has seen declines in recent years, approving an average of 10 permits per month and selling 306 water
meters during the Fiscal Year 2020, compared to 502 and 592 water meters in fiscal years 2019 and
2018, respectively. As of July 2020, it is estimated that the District served approximately 225,870
residents. The San Diego Association of Governments (SANDAG), the regional planning agency, has
estimated the District's average long-term growth of 0.25%. The District expects nominal growth in
the customer base of 1.0% for Fiscal Year 2021 and projects an ultimate customer population of
319,000 residents by 2050.
KEY LEGISLATION
Throughout the 2020 legislative session, the California legislature has prioritized economic recovery to
protect Californians and spur job creation during and even after the COVID-19 pandemic. However,
the Legislature was unable to compromise on a comprehensive recovery package.
Several legislative issues that could have potentially affected water agencies, including the District,
were deferred due to the COVID-19 pandemic. There are still many unknowns regarding the state
budget, funding sources, and executive orders' duration, including Governor Gavin Newsom's stay-at-
home and water shutoff restriction orders. More than 2,200 new bills were introduced by the February
deadline, but COVID-19 has altered the legislative session's customary structure, limiting the number
of allowed assembly and senate bills.
On August 31, 2020, the Legislature completed its work for the 2020 legislative session and adjourned
for the year. The Governor had until September 30, 2020 to sign or veto the legislation sent to him
during the final weeks of the legislative session. The legislature is scheduled to convene for an
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organizational session on December 7, 2020. During this session, legislators will be sworn into office,
officers will be elected, and bills can be introduced for 2021. Legislators will then return during the
second week of January 2021 to begin the 2021-22 two-year legislative session. As was this last year,
as a result of the pandemic, it is unclear how many bills will be introduced and accepted for the next
legislative session.
The State Water Resources Control Board (SWRCB) and many water agencies, including the District,
continue to focus on conservation laws such as Senate Bill 606 and Assembly Bill 1668, which passed
in 2018. Other new legislative issues include the Resiliency Bond Package, Senate Bill 1386, and
Assembly Bill 1588, a new law that paves the way for veteran's reciprocity while increasing the pool
of qualified applicants in California's water industry.
As an effort to make water conservation a way of life and to better prepare the state for droughts and
climate change, the District has worked with San Diego County Water Authority (CWA), other water
agencies, and state officials on defining the implementation of Senate Bill 606 and Assembly Bill 1668.
These laws outline an overall framework to guide the District and other urban water suppliers in
setting water-use targets. The laws require water agencies to establish a residential indoor GPCD
goal of 55, effective in 2023, and the SWRCB to adopt an outdoor water-use standard by June 2022.
As the year continues to unfold, the SWRCB is releasing draft recommendations regarding these laws.
The District has worked collectively with other water agencies to discuss and provide comments to
the SWRCB to ensure that the regulations are equitable and reflect local conditions. The District will
continue to work on these efforts as the SWRCB releases more recommendations.
As part of its responsibility to keep stakeholders engaged in the conservation laws, the SWRCB held
several stakeholder meetings to inform the District and other state water agencies of the big picture
through progress reports provided by eight urban project workgroups. The workgroups include the
following: Model Water Efficient Landscape Ordinance; Landscape Area Measurement; Wholesale
Water Loss; Water Use Studies; Standard, Methodologies and Performance Measures; Urban Water
Management Plan Guidebook; Annual Water Supply and Demand Assessment; and Data
Streamlining.
As California faces a range of existing challenges, the state released its Final Water Resilience Portfolio
in July 2020 to broaden its water management approach. The Executive Order N-10-19 directs the
secretaries of the California Natural Resources Agency, the California Environmental Protection
Agency, and the California Department of Food and Agriculture to identify and assess a suite of
complementary actions to ensure safe and resilient water supplies, flood protection, and healthy
waterways for the state's communities, economy, and environment. The state developed the portfolio
to improve California's capacity to prepare for disruptions, withstand and recover from climate-related
shocks, and adapt to the future.
Building on state and local initiatives already underway and months of public input, the District and
other water agencies throughout California are actively looking to the SWRCB and its portfolio. The
state developed the portfolio to empower local and regional entities to meet their unique challenges
while delivering on the state's responsibility to provide tools and leadership, advance statewide scale
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and importance, and address challenges beyond any region's scope. The District staff, working with
CWA and other local agencies, will continue to evaluate the portfolio's actions and resolve the most
strategic methods to implement them.
As directed by the Governor and building on work already conducted, the Department of Water
Resources is pursuing a new environmental review and planning process for a single tunnel solution
to modernize Delta conveyance. This approach is also consistent with the Governor's executive order
directing state agencies to develop statewide water actions and investments that improve water
recycling, recharge depleted groundwater reserves, strengthen existing levee protections, and
improve Delta water quality.
Senate Bill 998 (Dodd) requirements continue to have a financial impact on the District and its
ratepayers. The law, which went into effect on February 1, 2020, increased the District's service
shutoff days for delinquent accounts from 45 days to no less than 60 days, creating a cap on
reconnection fees, and granted authority to both the SWRCB and the Attorney General to enforce
provisions of the bill. Because the new law impacted existing practices, policies, and procedures,
District staff evaluated, developed, and implemented new practices to comply with the requirements.
Given that the Governor's executive order halts all disconnections due to the COVID-19 pandemic, it
is still unknown what financial impact these new requirements will have.
On September 28, 2020, the Governor signed Senator John Moorlach’s Senate Bill 1386 into law. This
new law clarifies the existing law regarding the imposition of fire-related water service charges being
implemented across the customer base in compliance with Proposition 218. The District, other water
agencies, municipalities, fire districts, and professional fire fighter organizations supported SB 1386.
CWA and Irvine Ranch Water District cosponsored this legislation to reaffirm that water agencies’
existing water service charge practices relative to water service for fire prevention services are fully
compliant with Proposition 218.
To address an aging and retiring workforce in the water and wastewater operator fields and increase
the pool of qualified individuals for these positions, the District also co-sponsored CWA, Assembly Bill
1588. The new law, which passed in October 2019, ensures military veterans transitioning into civilian
water and wastewater operator occupations receive appropriate credit for experience and education
gained during military service. The District, other water agencies, and stakeholders continue to define
the process with the SWRCB and educate veterans and other stakeholders about how veterans can
obtain sufficient credit for their experience and education.
STRATEGIC PLAN
The Strategic Plan is the core document that ensures alignment of common goals across the agency
and a unified approach toward plan execution. The District extensively reviewed and revised the plan
every three to four years. The current Strategic Plan (covering fiscal years 2019-2022) is a continuation
of the 2015-2018 plan and is the sixth multi-year plan.
Since its establishment, the District's motto has been "Dedicated to Community Service." From modest
beginnings in 1956 through today, the District continues its commitment to providing outstanding
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service to the residents and businesses. It has the honor to serve as a great reminder to our staff and
customers about why the District exists.
During the District's early years, a key focus of its initial strategic plans was to meet the growing
demands. Today, the District's four-year Strategic Plan still has the word "growth" in its theme of
"Growth and Sustainability," but "sustainability" is a critical element in managing long-term
maintenance and replacement of infrastructure. Moving from growth to sustainment is based on
recognizing that fewer resources may be needed to support growth as an organization evolves.
However, a more significant effort is required to maintain and upgrade infrastructure and assets. It is
important because, in this life cycle phase, an organization derives income more from customer rates
and less from developer fees.
Therefore, future rise in maintenance and replacement costs will place increased pressure on
customer rates. To balance rate pressure while also maintaining the organization's infrastructure,
investments, and strong financial position, the management team, must emphasize efficiencies within
the agency, including innovation and continued technology adoption.
The District's Strategic Plan also serves as a roadmap to execute its objectives and track day-to-day
performance metrics. Ensuring deliverables are being met and continuously fine-tuning essential work
processes, positively impacting the District's long-term financial health. Using the Balanced Scorecard
framework, management and staff share a focused strategy to ensure the District moves along the
right path and maximizes its limited resources.
In effect, the District leverages its investments in technology to do more with the same or fewer
resources. With sound planning, prudent fiscal management, community focus, and a work culture
prepared to adapt to new challenges, the District is well-positioned to support its growing customer
base while sustaining its customers' quality of water service. It means determining the optimal water
supply, treatment, and delivery solutions for customers from a water supply perspective. From a daily
operational perspective, efficiency enhancements have become the principal source of competitive
advantage and cost optimization.
Finding ways to utilize technology, streamline operations, and reduce external costs are critical
elements of the District's ongoing commitment and dedication to its customers. The District passed
the savings generated through streamlining and reducing costs to our ratepayers. For example, from
2017 to 2021, the District is upgrading or replacing more than 49,600 automated meter reading (AMR)
meters, originally installed between 2004 and 2012. To be as cost-efficient as possible, the District is
replacing meter registers instead of the entire meter and, when applicable, taking advantage of
existing warranties. The meter replacement and upgrade saves the District and its ratepayers
approximately $3.3 million in meter replacement costs. Because of the meter's life expectancy and
warranty, the District can delay the meters' replacement by approximately ten years. There are many
benefits to utilizing AMR meters, including reducing meter reading staff, increased staff safety, and
storing historical water use data. These advanced meters can help customers and the District identify
unexplained usage by providing leak, tamper, and backflow detection alarms. The efforts related to
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meter technology are an example of cost savings and the District's ongoing commitment to pursuing
cost efficiencies.
The District's gains in productivity, reduction in staffing, and associated costs proved this approach's
success. The District has reduced staffing by 35.75 full-time equivalent positions, or 20%. At the
same time, the number of customer accounts increased by 3,994 from 2007 through 2021. Because of
increased efficiency and higher employee productivity, the District has continued absorbing some of
the pass-through costs from its water suppliers, including the City of San Diego, CWA, and
Metropolitan Water District (MWD). This helps to address customer concerns about rising water rates.
To reduce the District's costs of retirement obligations, the District made an advanced payment of
$31.8 million to its CalPERS pension plan on August 15, 2018. This strategic step significantly reduced
the high financing cost of the unfunded liability at CalPERS and brought the funding level up to 87%,
saving the District approximately $16 million. In Fiscal Year 2020, the District's Other Post Employee
Benefit (OPEB) plan became fully funded. With the OPEB plan being fully funded, the District has
budgeted to redirect $1.0 million of additional advanced payments to CalPERS annually. The District
projects to save an additional $5.0 million over 14 years and become fully funded in 2034, seven years
earlier than projected without the additional contribution due to the advanced funding.
Other cost savings include reducing the number of vehicles and equipment, fuel consumption,
pavement costs, and decreasing water loss through the successful leak detection and repair program.
Staff continues to seek other operational efficiencies, thus decreasing costs and minimizing rate
impacts on the District's customers.
Based on an annual survey of water and sewer rates conducted by staff, the District continues to be
one of the lowest cost providers in San Diego County.
BUDGETING CONTROLS
The District views the budget as an essential tool for proper financial management and is adopted
before each fiscal year. The budget is developed by combining the District's strategic objectives and
measures with input from the organization's various departments. The budget becomes a direct
reflection of the District's strategic plan by incorporating these strategic measures and objectives. The
budget is designed and presented for the general needs of the District, its staff, and its customers. It
is a comprehensive and balanced financial plan that features District services, resources and
allocation, financial policies, strategic objectives, and other useful information that allows the users to
understand the District's financial status and future. The District monitors performance monthly by
generating comparative reports of budget to actual and distributing them to all department heads,
with top-level information provided to the Board at the monthly board meetings.
BUDGET SUMMARY
The District's operating expenditures consist of three major sectors: potable water, recycled water, and
wastewater. The total operating budget is $98,533,000 for Fiscal Year 2021. Revenues from potable
and recycled water sales are projected to be $87,160,000, about $6,608,300 (7.0%) lower than the Fiscal
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Year 2020 budget. Water sales volumes are expected to decrease by 12.9% versus Fiscal Year 2020.
The MWD and CWA water supply rate increased by 4.9% due to the high cost of supply programs,
higher energy costs, and increasing operating costs. District staff projects sewer revenues to be
$2,870,000, approximately $20,000 less than the Fiscal Year 2020. The remaining budgeted revenues
of $8.5 million come from various special fees, assessments, and non-operating revenues. An increase
of 2.9.% for water rate has been budgeted for January 1, 2021, while a 2.8% rate increase for
wastewater has been budgeted, effective January 1, 2021.
The 2020-21 Capital Improvement Program (CIP) budget consists of 104 projects and an $8.5 million
budget. This year's six-year CIP budget increased by $4.0 million from $88.3 million to $92.3 million.
The CIP budget emphasizes long-term planning for ongoing programs to meet population growth,
facilities replacement, and betterment of infrastructure while functioning within fiscal constraints
THE FUTURE
The District continues its commitment to diversify water resources, reducing dependence on
traditional water supplies from the Colorado River and the Sacramento-San Joaquin Bay-Delta. The
coming years will continue to pose challenges for those in California's water community. Due to
lower than above average rains in Fiscal Year 2020, potable sales volumes increased 0.6% from Fiscal
Year 2019 levels. Due to the uncertainty of the COVID-19 pandemic impacts on residential and
commercial water usage resulting from increasing unemployment and mandated closures, the
District projects a 12.9% decrease in water sales volume in Fiscal Year 2021.
SAN DIEGO COUNTY WATER SUPPLY
San Diego County imports about 73% 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, incorporating water-
use efficiency and conservation programs as a way of life, increased water storage, and groundwater,
and seawater desalination.
OTAY MESA DESALINATION CONVEYANCE AND DISINFECTION SYSTEM
PROJECT (P2451)
Otay Water District continues its commitment to conserve and recycle water and diversify the water
resources that serve its customers, thus reducing dependence on traditional water supplies from the
Colorado River and the Sacramento-San Joaquin Delta.
In light of the growing need for new potable water supplies in Mexico and San Diego County, the
proposed Rosarito plant and the District's Otay Mesa Conveyance and Disinfection System Project
would provide a new drought-proof water supply to its customers. In May 2017, the U.S. Department
of State granted a presidential permit to allow the Otay Water District to build a potable water pipeline
to cross the U.S.-Mexico border. This permit authorized the District to "construct, connect, operate,
and maintain cross-border water pipeline facilities for the importation of desalinated seawater at the
International Boundary between the United States and Mexico in San Diego County, California."
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Although purchasing and transporting water from Aguas de Rosarito's desalination plant in Rosarito,
Baja California, Mexico has been a component of the District's water supply diversification efforts, the
project for the District has been halted. The District is interested in diversifying its water supplies by
purchasing potential excess desalinated ocean water from a future Rosarito desalination plant after
the project has first satisfied and secured its Mexican consumers' water needs in northern Baja,
California.
If the project does move forward, the District's project has already undergone environmental review
as required by the California Environmental Quality Act and National Environmental Policy Act and has
obtained a U.S. Fish and Wildlife biological permit. The District recognizes that such a project requires
rigorous safeguards and review to ensure public health protection. A permit from the California Water
Resources Control Board's Division of Drinking Water will be needed to ensure that water imported
from Mexico meets the same water quality drinking standards as water from regional lakes, from the
Claude "Bud" Lewis Carlsbad Desalination Plant, and the City of San Diego's Pure Water Program.
The District fully understands and respects Baja California's sovereign decision to approve or not
approve the project. This interest has been discussed openly and transparently at the District's public
Board meetings, as has its continued commitment to water conservation, recycling, diversification,
and reducing the District's reliance on the Colorado River for the future benefit of our water customers.
If the project advances, San Diego County and the District's cross-border region would add
desalinated water to the long list of energy, aerospace, medical device, and electronics products that
cross the border every day.
CAPITAL IMPROVEMENT PROGRAM (CIP)
The District provides water and wastewater service to a population of approximately 225,870
customers, including residential, business, government, industrial, and agricultural water users across
urban, suburban, and rural areas. The District's service area population is projected to grow by
41% to 319,000 residents by 2050. To ensure a reliable water supply and sewer system for the future,
including sustaining the current infrastructure, the District has developed several future planning
documents, which provide a guide to defining the District's proposed projects. These planning
documents include: The District's 2015 Water Facilities Master Plan Update, Wastewater
Management Plan, 2015 Urban Water Management Plan, 2015 Integrated Water Resources Plan,
and 2019-2022 Strategic Plan.
The major projects planned for delivery over the next six fiscal years include:
• 711-2 Pump Station Replacement (P2578)
• Various Waterline Replacements (18 Total)
• Reservoir Improvements (12 Total)
•Sewer Basin Improvements (S2049, S2050, and S2053)
• Automated Meter Reading (P2604 and R2143) and Meter Replacement (P2594, P2662,
R2148, and R2152)
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ACCOUNTING SYSTEM
The Finance Department is responsible for providing financial services to the District, including
financial accounting, debt management, 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 an accrual basis when revenues are earned, and
expenses are incurred.
INTERNAL CONTROLS
The 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 its value 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 finances 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, 2019. To earn 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 one year only. Staff believes that the District's current
Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's
requirements and is submitting it to the GFOA to determine its eligibility for another certificate.
In addition to the Certificate of Achievement for Excellence in Financial Reporting, the District has
received the following awards:
The Government Finance Officers Association of the United States and Canada presented a
Distinguished Budget Presentation Award to Otay Water District for its annual budget for the
Fiscal Year 2019-2020. To achieve this award, a governmental unit must publish a budget
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document that meets program criteria as a policy document, an operations guide, a financial
plan, and a communications device.
The California Society of Municipal Finance Officers presented the District with the Certificate
of Award for Excellence in Operating Budgeting for Fiscal Year 2019-2020.
The California Society of Municipal Finance Officers presented the District with the Certificate
of Award for Excellence in Capital Budgeting for Fiscal Year 2019-2020.
We want to thank all the staff involved for their efforts to prepare this Comprehensive Annual Financial
Report and their hard work to ensure a successful outcome. We would also like to thank the firm of
Teaman, Ramirez & Smith, Inc., for their professional work and opinion.
To the Board of Directors, staff, and we acknowledge and appreciate the Board's continued support
and direction in achieving excellence in financial management.
Joseph R. Beachem
Chief Financial Officer
Jose Martinez
General Manager
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Organization Chart
District Position Count – (138 Positions)
Citizens and Customers Board of Directors
General Manager (5)
Safety and
Security
Administration
Purchasing
and Facilities
Controller and
Budgetary
Services
Treasury and
Accounting
Services
Customer
Service
Meter
Services
Water System
Operations
Utility
Maintenance/
Construction
Water Resources,
Planning, Design
and
Environmental
Administrative
Services
(23)
Human
Resources
Information
Technology
and Geographic
Information
System
Finance
(31)
Strategic
Planning
Public Services
and
Field Services
Engineering
(26)
Water
Operations
(53)
Collection/
Treatment/
Reclamation
Operations
xiv
List of Principal Officials
Tim Smith
Division 1
Mitch Thompson
Treasurer
Division 2
Mark Robak
Vice President
Division 5
Gary Croucher
President
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.
Hector Gastelum
Division 4
Mission Statement
To provide exceptional water and
wastewater service to its customers, and
to manage District resources in a
transparent and fiscally responsible
manner.
xv
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, 2019. This is the sixteenth 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.
xvi
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2
MANAGEMENT’S DISCUSSION AND ANALYSIS
As the management of the Otay Water District (the "District"), we offer readers of the District's financial
statements, this narrative overview, and an analysis of the District's financial performance during the fiscal
year ending June 30, 2020. 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) Statements of Net Position, 2) Statements of
Revenues, Expenses, and Changes in Net Position, 3) Statements of Cash Flows, and 4) Notes to the
Financial Statements. This report also contains other supplementary information in addition to the basic
financial statements.
The Statements of Net Position presents information on the District's assets, deferred outflows of
resources, liabilities, and deferred inflows of resources, with the difference reported as Total Net Position.
Over time, increases or decreases in net positions may serve as a useful indicator of whether the District's
financial position is improving or weakening.
The Statements of Revenues, Expenses, and Changes in Net Position presents information showing how
the District's net position changed during the most recent fiscal year. All changes in net positions are
reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
related cash flows. Thus, revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation
leave).
The Statements of Cash Flows presents information on cash receipts and payments for the fiscal year.
The Notes to the Financial Statements provides additional information essential to a full understanding of
the data supplied in each of the specific financial statements listed above.
Financial Highlights
The assets and deferred outflows of resources of the District exceeded its liabilities and deferred inflows of resources at
the close of the most recent fiscal year by $387.5 million (net position). Of this amount, $38.0 million (unrestricted net
position) may be used to meet the District’s ongoing obligations to residents and creditors.
Total assets increased by $2.9 million or 0.53% during Fiscal Year 2020, to $550.9 million, due to increases in cash and
cash equivalents and receivables which were partially offset by a decrease in capital assets from depreciation
exceeding current year capital asset additions.
3
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
retirement 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 $387.5 million at the close of Fiscal Year 2020.
The most considerable portion of the District's net position, $345.2 million (89%), reflects its investment in
capital assets, plus unused debt proceeds, less any remaining outstanding debt used to acquire those
capital assets. The District uses these capital assets to provide services to customers; 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.
4
MANAGEMENT’S DISCUSSION AND ANALYSIS
Statements of Net Position
(In Millions of Dollars)
2020 2019 2018
Assets
Current and Other Assets $ 94.4 $ 89.7 $ 103.6
Capital Assets 456.5 458.3 450.9
Total Assets 550.9 548.0 554.5
Deferred Outflows of Resources
Deferred Actuarial Pension Costs 3.4 39.0 10.2
Deferred Actuarial OPEB Costs 1.1 2.2 2.2
Total Deferred Outflows of Resources 4.5 41.2 12.4
Liabilities
Long-Term Debt Outstanding 112.0 114.3 91.2
Net Pension Liability 16.6 48.4 49.6
Net OPEB Liability 0.0 3.4 4.7
Other Liabilities 35.7 33.8 32.4
Total Liabilities 164.3 199.9 177.9
Deferred Inflows of Resources
Deferred Actuarial Pension Costs 1.3 1.2 0.9
Deferred Actuarial OPEB Costs 2.3 0.5 0.6
Total Deferred Inflows of Resources 3.6 1.7 1.5
Net Position
Net Investment in Capital Assets 345.2 354.6 355.6
Restricted for Debt Service 4.3 4.3 4.2
Unrestricted 38.0 28.7 27.7
Total Net Position $ 387.5 $ 387.6 $ 387.5
The District's operations and population continue to grow, albeit at slower rates than the housing boom
years. Much of this growth has and will continue to occur in the residential sector, especially in multi-
family dwellings and commercial areas. The District still has available land to develop, unlike other parts of
the County.
In FY 2020, the District's Capital Assets increased by $11.3 million before accumulated depreciation. (See
Note 4 in the Notes to Financial Statements). The District also saw a decrease in long-term debt of $2.3
5
MANAGEMENT’S DISCUSSION AND ANALYSIS
million due to annual debt service payments partially offset by the issuance of the 2019 Wastewater
Revenue Bonds (See Note 5 in the Notes to Financial Statements).
Deferred outflows of Resources decreased by $36.7 million in FY 2020 and increased by $28.8 million in FY
2019. The significant decrease and increase in FY 2020 and FY 2019 is due to the $31.8 additional funding
to CalPERS and decrease in FY 2020 CalPERS Unfunded Actuarial Liability (UAL).
At the end of FY 2020, the District can report positive balances in all net position categories. This situation
also applies to the prior two fiscal years.
Statements of Revenues, Expenses, and Changes in Net Position
(In Millions of Dollars)
2020 2019 2018
Water Sales $ 90.4 $ 86.8 $ 92.6
Wastewater Revenue 2.9 3.0 2.9
Connection and Other Fees 2.6 2.2 2.0
Non-operating Revenues 10.9 11.5 9.6
Total Revenues 106.8 103.5 107.1
Depreciation Expense 16.8 16.8 17.5
Other Operating Expenses 90.2 86.9 88.3
Non-operating Expenses 6.9 9.2 6.7
Total Expenses 113.9 112.9 112.5
Income (Loss) Before Capital
Contributions (7.1) (9.4) (5.4)
Capital Contributions 7.0 9.5 9.5
Change in Net Position (0.1) 0.1 4.1
Beginning Net Position, As Previously Stated 387.6 387.5 401.2
Prior Period Adjustment 0.0 0.0 (17.8)
Beginning Net Position, As Restated 387.6 387.5 383.4
Ending Net Position $ 387.5 $ 387.6 $ 387.5
Water Sales increased by $3.6 million in FY 2020 due to increases in units sold and water rates. Water
Sales decreased by $5.8 million in FY 2019 due to decreased units sold due to above-average rainfall.
6
MANAGEMENT’S DISCUSSION AND ANALYSIS
Other Operating Expenses increased by $3.3 million in FY 2020 and decreased by $1.4 million in FY 2019,
predominantly due to the increases and decreases in water units purchased driven by changes in water
sales volumes in FY 2020 and FY 2019, respectively.
Specific planning and environmental study costs associated with capital projects do not qualify as capital
costs under Generally Accepted Accounting Principles. These costs are included in the District's
miscellaneous (non-operating) expenses. For FY 2020 and FY 2019, those expenses were $0.4 million and
$3.3 million, respectively.
Connection and Other Fees increased by $0.4 million and $0.2 million in FY 2020 and FY 2019. Capital
Contributions decreased by $2.4 million in FY 2020 and increased by $0.1 million in FY 2019 due to the
slowdown in housing development.
Non-operating Revenues
Non-operating Revenues by Major Source
(In Millions of Dollars)
2020 2019 2018
Taxes and Assessments $ 4.9 $ 4.7 $ 4.5
Rents and Leases 1.5 1.4 1.4
Other Non-operating Revenue 4.5 5.5 3.7
Total Non-operating Revenues $ 10.9 $ 11.6 $ 9.6
The District's total non-operating revenues decreased by $0.7 million in FY 2020 due primarily to a
decrease in investment earnings and decreases to the transfer of capacity revenue from capital
contribution to fund project expenditures that do not qualify as capital expenditures. Total non-operating
revenues increased by $2.0 million in FY 2019 due to increases in investment earnings, taxes, and transfer
of capacity revenue from capital contribution to fund project expenditures that do not qualify as capital
expenditures.
Capital Assets and Debt Administration
The District's capital assets (net of accumulated depreciation) as of June 30, 2020, totaled $456.5 million.
Included in this amount is land, which is a non-depreciable asset. The District's net capital assets
decreased by 0.39% in FY 2020 and increased by 1.64% in FY 2019.
7
MANAGEMENT’S DISCUSSION AND ANALYSIS
Capital Assets
(In Millions of Dollars)
As indicated by the figures in the table above, most capital assets added during both fiscal years were
related to the water and wastewater systems. Additionally, the majority of the cost of construction-in-
progress is also related to water systems. Additional information on the District's capital assets can be
found in Note 4 of the Notes to Financial Statements.
In November 2018, the District issued $32.4 million in Water Revenue Bonds, Series 2018 to provide funds
for the construction of water storage, treatment, transmission facilities, and advance refunded $6.9 million
of the 1996 Certificates of Participation. As of June 30, 2020, approximately $5.6 million of the 2018 Water
Revenue Bond proceeds remain in Restricted Cash and Cash Equivalents.
In December 2019, the District issued $3.1 million in Wastewater Revenue Bonds to fund specific capital
improvements made to the District's wastewater system. As of June 30, 2020, all the bond proceeds were
used to pay for the construction cost of the wastewater main replacement at Campo Road.
On June 30, 2020, the District had $112.0 million in outstanding debt (net of $5.0 million of maturities
occurring in FY 2021), which consisted of the following:
General Obligation Bonds $ 1.5
Revenue Bonds 110.5
Total Long-Term Debt $ 112.0
2020 2019 2018
Land $ 14.4 $ 14.4 $ 14.4
Construction in Progress 24.7 33.2 17.6
Potable Water System 498.1 488.8 484.2
Recycled Water System 115.5 114.8 114.7
Wastewater System 59.1 48.5 48.2
Field Equipment 8.4 8.6 8.5
Buildings 19.5 19.2 20.1
Transportation Equipment 3.6 3.5 3.4
Communication Equipment 2.7 3.4 3.5
Office Equipment 16.5 16.8 17.7
Total Capital Assets 762.5 751.2 732.3
Less Accumulated
Depreciation (306.0) (292.9) (281.4)
Net Capital Assets $ 456.5 $ 458.3 $ 450.9
8
MANAGEMENT’S DISCUSSION AND ANALYSIS
Additional information on the District's long-term debt can be found in Note 5 of the Notes to Financial
Statements.
Prior Period Adjustment
The Governmental Accounting Standards Board (GASB) issued Statement No. 75, "Accounting and
Financial Reporting for Postemployment Benefits Other Than Pensions - an amendment of GASB
Statement No. 45", for periods beginning after June 15, 2017. The District implemented these standards in
FY 2018. The result of implementing these standards was to decrease the net position on July 1, 2017, by
$17.8 million, which recognizes net OPEB liability, deferred outflows of resources, deferred inflows of
resources, and expenses related to the OPEB plan.
Fiscal Year 2020-2021 Budget
Economic Factors
The San Diego region imports 80% of its potable supply, so factors such as local rainfall as well as weather
conditions elsewhere in the western portion of the nation can affect the region. San Diego received above-
average rainfall in FY 2020, but not as high as FY 2019. The Western Regional Climate Center predicts that
San Diego's rainfall for FY 2021 will be 4.21 inches more than the 10-year average of 9.5 inches.
While water sales peaked around 2008, conservation has permanently impacted volumes. Subsequent to
the recession water sales peaked in 2013. Prolonged droughts have resulted in additional conservation
further impacting volumes. As the community transitions to more efficient water use, the impact of above
average rainfall results in further reductions in water volumes. Decreases in water sales during this period
were offset by corresponding decreases in water purchases, and District managed costs such as reduced
employee count and internal cost cuts, achieved through automation and streamlining of processes.
Above-average rainfall has led to potable water sales volume, increasing by only 0.6% in FY 2020, and
decreased by 7.4% in 2019. The District is budgeting a 12.9% sales volume decrease in FY 2021 compared
to the FY 2020 budget. The FY 2019 budget assumed that rainfall would be less than average and
comparable to FY 2018. The FY 2020 budget is based on 3-year average sales volumes.
The District continues to respond to the challenges presented by growth, State mandates, and the
potential of drought by creating new opportunities and new organizational efficiencies. Utilizing and
refining its Strategic Business Plan has captured the Board of Director's vision and united its staff in a joint
mission. The District has achieved several significant accomplishments due to 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. However, it is set to reap the rewards of
greater efficiencies and economies of scale.
9
MANAGEMENT’S DISCUSSION AND ANALYSIS
The District is currently at about 69% of its projected ultimate population, serving approximately 226,000
people. Long-term, this percentage should continue to increase as the District's service area continues to
develop and grow. By 2050, the District is projected to serve approximately 319,000 people, with an
average daily demand of 46 million gallons per day (MGD) compared to current average daily demand of
26.5 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).
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 CWA contract. Also, the District has an emergency agreement with the City of San Diego to
purchase water in the case of a shutdown of the primary 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, both parties can achieve benefits by using another agency's
excess capacity and diversifying local supply, thereby increasing reliability.
Financial
The District is budgeted to deliver approximately 23,478.2 acre-feet of potable water to 51,156 potable
customer accounts during FY 2020-2021. Management feels that these projections are realistic after
accounting for low growth, supply changes, and the economic impacts of COVID-19. A combination of
factors, including weather patterns and the economic uncertainty brought about by the COVID-19
pandemic, have created challenges in developing projections for the current fiscal year. Unemployment is
currently at historic highs, and there is minimal activity in the commercial and residential resale market.
The adverse financial impacts of the COVID-19 pandemic were projected to impact sales volume, property
tax collections, revenue growth, and bad debt. District staff projects that the District will sell another 2,320
meters over the next six years, translating to 3,473 equivalent dwelling units (EDUs). This growth is
estimated to increase sales volumes by an average of less than 1% per year over the next five years. While
all these factors impact the region's water usage, people's need for water remains an underlying constant.
Management is unaware of any other conditions that could significantly impact 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, customers, 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.
10
11
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12
2020 2019
ASSETS
Current Assets:
Cash and Cash Equivalents (Notes 1 and 2)65,089,488$ 34,024,168$
Board Designated Cash and Cash Equivalents (Notes 1 and 2)2,598,569 -
Restricted Cash and Cash Equivalents (Notes 1 and 2)6,077,597 19,114,137
Investments (Note 2)- 18,951,991
Board Designated Investments (Note 2)- 2,537,589
Restricted Investments (Notes 1 and 2)3,740,520 460,060
Accounts Receivable, Net 13,420,104 11,787,954
Accrued Interest Receivable 260,735 341,518
Taxes and Availability Charges Receivable, Net 178,777 187,203
Restricted Taxes and Availability Charges Receivable, Net 75,263 38,070
Inventories 942,564 775,546
Prepaid Items and Other Receivables 2,003,970 1,493,831
Total Current Assets 94,387,587 89,712,067
Non-current Assets:
Net OPEB Asset (Note 8)20,021 -
Capital Assets (Note 4):
Land 14,423,773 14,403,823
Construction in Progress 24,711,844 33,149,164
Capital Assets, Net of Depreciation 417,367,132 410,756,360
Total Capital Assets, Net of Depreciation 456,502,749 458,309,347
Total Non-current Assets 456,522,770 458,309,347
Total Assets 550,910,357 548,021,414
DEFERRED OUTFLOWS OF RESOURCES
Deferred Actuarial Pension Costs (Note 7)3,358,365 39,022,818
Deferred Actuarial OPEB Costs (Note 8)1,139,535 2,209,574
Total Deferred Outflows of Resources 4,497,900$ 41,232,392$
Continued
STATEMENTS OF NET POSITION
June 30, 2020 and 2019
The accompanying notes are an integral part of this statement.
13
2020 2019
LIABILITIES
Current Liabilities:
Current Maturities of Long-term Debt (Note 5)4,955,000$ 4,725,000$
Accounts Payable 16,224,117 14,061,824
Accrued Payroll Liabilities 811,521 639,247
Other Accrued Liabilities 4,644,505 5,519,259
Customer and Developer Deposits 3,673,975 3,601,094
Accrued Interest 1,790,955 1,826,242
Unearned Revenues 57,024 135,223
Liabilities Payable from Restricted Assets:
Restricted Accrued Interest 28,067 36,733
Total Current Liabilities 32,185,164 30,544,622
Non-current Liabilities:
Long-term Debt (Note 5):
General Obligation Bonds 1,460,435 2,156,789
Revenue Bonds 110,487,562 112,114,228
Net Pension Liability 16,616,855 48,388,906
Net OPEB Liability - 3,415,025
Other Non-current Liabilities 3,550,571 3,337,674
Total Non-current Liabilities 132,115,423 169,412,622
Total Liabilities 164,300,587 199,957,244
DEFERRED INFLOWS OF RESOURCES
Deferred Actuarial Pension Costs (Note 7)1,366,658 1,157,175
Deferred Actuarial OPEB Costs (Note 8)2,274,249 544,777
Total Deferred Inflows of Resources 3,640,907 1,701,952
NET POSITION
Net Investment in Capital Assets 345,156,470 354,639,520
Restricted for Debt Service 4,261,399 4,248,007
Unrestricted 38,048,894 28,707,083
Total Net Position 387,466,763$ 387,594,610$
STATEMENTS OF NET POSITION - Continued
June 30, 2020 and 2019
The accompanying notes are an integral part of this statement.
14
Statements of Revenues, Expenses, and Changes in Net Position
2020 2019
OPERATING REVENUES
Water Sales 90,435,148$ 86,756,222$
Wastewater Revenue 2,921,310 2,961,157
Connection and Other Fees 2,582,351 2,234,787
Total Operating Revenues 95,938,809 91,952,166
OPERATING EXPENSES
Cost of Water Sales 62,573,257 60,065,964
Wastewater 2,439,117 2,784,579
Administrative and General 25,196,555 24,070,648
Depreciation 16,778,967 16,807,797
Total Operating Expenses 106,987,896 103,728,988
Operating Income (Loss)(11,049,087)(11,776,822)
NON-OPERATING REVENUES (EXPENSES)
Investment Earnings 1,784,834 1,978,392
Taxes and Assessments 4,939,950 4,671,182
Availability Charges 694,768 723,246
Gain (Loss) on Disposal of Capital Assets (1,243,742)(1,058,571)
Rents and Leases 1,501,328 1,384,211
Miscellaneous Revenues 1,936,162 2,800,613
Donations (121,600)(118,040)
Interest Expense (4,953,987)(4,713,883)
Miscellaneous Expenses (558,405)(3,293,055)
Total Non-operating Revenues (Expenses)3,979,308 2,374,095
Income (Loss) Before Capital Contributions (7,069,779)(9,402,727)
Capital Contributions 6,941,932 9,456,809
Change in Net Position (127,847)54,082
Total Net Position, Beginning 387,594,610 387,540,528
Total Net Position, Ending 387,466,763$ 387,594,610$
For the Years Ended June 30, 2020 and 2019
The accompanying notes are an integral part of this statement.
15
2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers 91,797,189$ 90,299,887$
Receipts from Connections and Other Fees 2,582,351 2,234,787
Receipts from Property Rents and Leases 1,501,328 1,384,211
Other Receipts 1,857,963 2,702,585
Payments to Suppliers (64,513,739)(63,834,433)
Payments to Employees (21,233,287)(54,403,110)
Other Payments (680,005)(3,411,095)
Net Cash Provided By (Used For) Operating Activities 11,311,800 (25,027,168)
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Receipts from Taxes and Assessments 4,911,183 4,689,093
Net Cash Provided By (Used For) Noncapital and Related
Financing Activities 4,911,183 4,689,093
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Proceeds from Capital Contributions 5,223,069 6,788,777
Proceeds from Sale of Capital Assets 139,965 50,119
Proceeds from Debt Related Taxes and Assessments 694,768 723,246
Proceeds from Long-Term Debt 3,106,320 35,145,512
Principal Payments on Long-Term Debt (4,725,000)(10,940,000)
Interest Payments and Fees (5,472,280)(4,708,034)
Acquisition and Construction of Capital Assets (14,637,213)(22,707,238)
Net Cash Provided By (Used For) Capital and Related
Financing Activities (15,670,371)4,352,382
CASH FLOWS FROM INVESTING ACTIVITIES
Interest Received on Investments 1,865,617 1,932,821
Proceeds from Sale and Maturities of Investments 25,918,767 43,170,616
Purchase of Investments (7,709,647)(207,913)
Net Cash Provided By (Used For) Investing Activities 20,074,737 44,895,524
Net Increase (Decrease) in Cash and Cash Equivalents 20,627,349 28,909,831
Cash and Cash Equivalents - Beginning 53,138,305 24,228,474
Cash and Cash Equivalents - Ending 73,765,654$ 53,138,305$
Continued
Statements of Cash Flows
For the Years Ended June 30, 2020 and 2019
The accompanying notes are an integral part of this statement.
16
2020 2019
Reconciliation of Operating Income (Loss) to Net Cash Flows
Provided By (Used For) Operating Activities:
Operating Income (Loss)(11,049,087)$ (11,776,822)$
Adjustments to Reconcile Operating Income to
Net Cash Provided By (Used For) Operating Activities:
Depreciation 16,778,967 16,807,797
Receipts from Property Rents and Leases 1,501,328 1,384,211
Miscellaneous Revenues 1,857,963 2,702,585
Miscellaneous Expenses and Donations (680,005) (3,411,095)
(Increase) Decrease in Accounts Receivable (1,632,150) 321,424
(Increase) Decrease in Inventory (167,018) 47,191
(Increase) Decrease in Prepaid Items and Other Receivables (510,139) (475,011)
(Increase) Decrease in Net OPEB Asset (20,021) -
(Increase) Decrease in Deferred Actuarial Pension Costs 35,664,453 (28,836,589)
(Increase) Decrease in Deferred Actuarial OPEB Costs 1,070,039 (7,570)
Increase (Decrease) in Accounts Payable 2,162,293 (1,375,741)
Increase (Decrease) in Accrued Payroll and Related Expenses 172,274 (55,612)
Increase (Decrease) in Other Accrued Liabilities (874,754) 1,429,619
Increase (Decrease) in Customer and Developer Deposits 72,881 261,084
Increase (Decrease) in Prepaid Capacity Fees 212,897 219,969
Increase (Decrease) in Net OPEB Liability (3,415,025) (1,295,467)
Increase (Decrease) in Net Pension Liability (31,772,051) (1,193,410)
Increase (Decrease) in Deferred Actuarial Pension Costs 209,483 220,941
Increase (Decrease) in Deferred Actuarial OPEB Costs 1,729,472 5,328
Net Cash Provided By (Used For) Operating Activities 11,311,800$ (25,027,168)$
Schedule of Cash and Cash Equivalents:
Current Assets:
Cash and Cash Equivalents 65,089,488$ 34,024,168$
Board Designated Cash and Cash Equivalents 2,598,569 -
Restricted Cash and Cash Equivalents 6,077,597 19,114,137
Total Cash and Cash Equivalents 73,765,654$ 53,138,305$
Supplemental Disclosures
Non-Cash Investing and Financing Activities Consisted of the Following:
Contributed Capital for Water and Sewer System 1,718,863$ 2,668,032$
Change in Fair Value of Investments and Recognized Gains/Losses (432,728) (685,227)
Amortization Related to Long-term Debt 474,340 431,482
For the Years Ended June 30, 2020 and 2019
Statements of Cash Flows - Continued
The accompanying notes are an integral part of this statement.
17
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
NOTE DESCRIPTION PAGE
1 Reporting Entity and Summary of Significant Accounting Policies..…………. 19 - 28
2 Cash and Investments……………………………………………………….......................................... 28 - 34
3 Fair Value Measurements…………………………………………..………....................................... 34 - 35
4 Capital Assets…………………………………………………..………………………………………………………. 36 - 37
5 Long-Term Debt………………………………………………….…………………………………………………… 38 - 44
6 Net Position………………………………………………………………………………………………………………. 45
7 Defined Benefit Pension Plan………………………………………………………………………………. 45 - 53
8 Other Post Employment Benefits………………………..…………........................................... 53 - 59
9 Water Conservation Authority……………………………………….............................................. 59 - 60
10 Commitments and Contingencies……………………………………………………………………… 60 - 61
11 Risk Management…………………………………………………………………………………………………… 61 - 62
12 Segment Information………………………………………………..……………………………………………. 63 - 65
18
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
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, Otay
Service Corporation (the “Corporation”) 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 Otay Service Corporation on June 21, 1993, a nonprofit public benefit
corporation duly organized and existing under the laws of the State of California. The Service
Corporation was formed to assist the District in the financing of public capital improvements.
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 units will provide a financial benefit or impose a financial burden
on the District. The District has accounted for the Service Corporation and Financing Authority as
“blended” component units. Despite being legally separate, the Service Corporation and Financing
Authority are so intertwined with the District that they are in substance, part of the District’s
operations. Accordingly, the balances and transactions of these component units are reported within
the funds of the District. Separate financial statements are not issued for the Service Corporation and
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
19
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued
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.
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.
20
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued
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 $28,227 at June 30, 2020 and
$25,030 at June 30, 2019.
Additionally, capacity fee contributions received which are related to specific operating expenses are
offset against those expenses and included in Cost of Water Sales in the Statements of Revenues and
Expenses and Changes in Net Position.
Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted
bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as
restricted - net position and unrestricted - net position, a flow assumption must be made about the
order in which the resources are considered to be applied.
It is the District’s practice to consider restricted - net position to have been depleted before unrestricted
- net position is applied, however it is at the Board’s discretion.
C) New Accounting Pronouncements
Implemented as of June 30, 2020
Governmental Accounting Standard Board Statement No. 95
In May of 2020, GASB issued Statement No. 95, Postponement of the Effective Dates of Certain
Authoritative Guidance. The objective of this statement is to provide temporary relief to governments
and other stakeholders in light of the COVID-19 pandemic by postponing the effective dates of certain
provisions in Statements and Implementation Guides which are as follows:
a.Statement 83 - Reporting periods beginning after June 15, 2019.
b.Statement 84 and Implementation Guide 2019-2 - Reporting periods beginning after
December 15, 2019.
c.Statement 87 and Implementation Guide 2019-3 - Fiscal years beginning after June 15,
2021, and all reporting periods thereafter.
d.Statement 88 - Reporting periods beginning after June 15, 2019.
e.Statement 89 - Reporting periods beginning after December 15, 2020.
f.Statement 90 - Reporting periods beginning after December 15, 2019.
21
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
C) New Accounting Pronouncements - Continued
Implemented as of June 30, 2020 - Continued
Governmental Accounting Standard Board Statement No. 95 - Continued
g.Statement 91 - Reporting periods beginning after December 15, 2021.
h.Statement 92, paragraphs 6 and 7 - Fiscal years beginning after June 15, 2021.
i.Statement 92, paragraphs 8, 9, and 12 - Reporting periods beginning after June 15, 2021.
j.Statement 92, paragraph 10 - Government acquisitions occurring in reporting periods
beginning after June 15, 2021.
k.Statement 93, paragraphs 13 and 14 - Fiscal years beginning after June 15, 2021, and all
reporting periods thereafter.
l.Implementation Guide 2017-3, Questions 4.484 and 4.491 - The first reporting period in
which the measurement date of the (collective) net OPEB liability is on or after June 15,
2019.
m. Implementation Guide 2017-3, Questions 4.85, 4.103, 4.108, 4.109, 4.225, 4.239, 4.244, 4.245,
and 5.1-5.4 - Actuarial valuations as of December 15, 2018, or later.
n.Implementation Guide 2018-1 - Reporting periods beginning after June 15, 2019.
o.Implementation Guide 2019-1- Reporting periods beginning after June 15, 2020.
Statement No. 95 is effective immediately. The District has elected to delay certain provisions in the
GASB Statements as allowed by GASB Statement No. 95. GASB Statements Nos. 83, 88 and 89 were
implemented by the District in fiscal year 2019.
Implemented as of June 30, 2019
Governmental Accounting Standard Board Statement No. 83
In November of 2016, GASB issued Statement No. 83, Certain Asset Retirement Obligations. This
Statement was issued to address the criteria for the recognition and measurement of the liability and
corresponding deferred outflows of resources associated with certain asset retirement obligations
(AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital
asset. Statement No. 83 is effective for reporting periods beginning after June 15, 2018. Currently,
this Statement has no effect on the District’s financial statements.
Governmental Accounting Standard Board Statement No. 88
In March of 2018, GASB issued Statement No. 88, Certain Disclosures Related to Debt, including
Direct Borrowings and Direct Placements. This Statement was issued to improve the information
that is disclosed in the notes to government financial statements related to debt, including direct
borrowings and direct placements. This Statement requires that additional essential information
22
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
C) New Accounting Pronouncements - Continued
Implemented as of June 30, 2019 - Continued
Governmental Accounting Standard Board Statement No. 88 - Continued
related to debt be disclosed in notes to financial statements, including unused lines of credit; assets
pledged as collateral for the debt; and terms specified in debt agreements related to significant
events of default with finance-related consequences, significant termination events with finance-
related consequences, and significant subjective acceleration clauses. Statement No. 88 is effective
for fiscal years beginning after June 15, 2018. Currently, this Statement has no effect on the District’s
financial statements.
Governmental Accounting Standard Board Statement No. 89
In June of 2018, GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End
of a Construction Period. This Statement was issued to (1) to enhance the relevance and
comparability of information about capital assets and the cost of borrowing for a reporting period
and (2) to simplify accounting for interest cost incurred before the end of a construction period. This
Statement requires that interest cost incurred before the end of a construction period be recognized
as an expense in the period in which the cost is incurred for financial statements prepared using the
economic resources measurement focus. As a result, interest cost incurred before the end of a
construction period will not be included in the historical cost of a capital asset reported in a business-
type activity or enterprise fund. Statement No. 89 is effective for fiscal years beginning after
December 15, 2019. The District elected to early implement this Statement in the 2019 fiscal year
which is reflected in the District’s financial statements.
Pending Accounting Standards
GASB has issued the following statements which impact the District’s financial reporting
requirements in the future:
i. GASB 84 – “Fiduciary Activities”, effective for fiscal years beginning after December 15, 2019*.
ii. GASB 87 – “Leases”, effective for fiscal years beginning after June 15, 2021*.
iii. GASB 90 – “Majority Equity Interests – an amendment of GASB Statements No. 14 and No.
61”, effective for fiscal years beginning after December 15, 2019*.
iv. GASB 91 – “Conduit Debt Obligations”, effective for fiscal years beginning after December 15,
2021*.
v. GASB 92 – “Omnibus 2020”, effective for reporting periods beginning after June 15, 2021*.
vi. GASB 93 – “Replacement of Interbank Offered Rates”, effective for reporting periods
beginning after June 15, 2021*.
23
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
C) New Accounting Pronouncements - Continued
Pending Accounting Standards - Continued
vii.GASB 94 – “Public-Private and Public-Public Partnerships and Availability Payment
Arrangements”, effective for reporting periods beginning after June 15, 2022.
viii.GASB 96 – “Subscription-Based Information Technology Arrangements”, effective for
reporting periods beginning after June 15, 2022.
ix.GASB 97 – “Certain Component Unit Criteria, and Accounting and Financial Reporting for
Internal Revenue Code Section 457 Deferred Compensation Plans”, effective for reporting
periods beginning after June 15, 2021.
*These GASB Statements original effective dates were postponed by GASB Statement No. 95.
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 two items
that qualify for reporting in this category, deferred actuarial pension costs and deferred actuarial OPEB
costs are items that are deferred and recognized as an outflow of resources in the period the amounts
become available.
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 two items that qualify for reporting in
this category. Accordingly, the items, deferred actuarial pension costs and deferred actuarial OPEB
costs, 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
24
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
F) Investments - Continued
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 Prepaid Items
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 prepaid items use the
consumption method whereby they are reported as an asset and expensed as they are consumed.
H) Capital Assets
Capital assets are recorded at cost, where historical records are available, and at an estimated
historical cost where no historical records exist. Infrastructure assets in excess of $20,000 and other
capital assets in excess of $10,000 are capitalized if they have an expected useful life of two years or
more. The District will also capitalize individual purchases under the capitalization threshold if they are
part of a new capital program. The cost of purchased and self-constructed additions to utility plant
and major replacements of property are capitalized. Costs include materials, direct labor,
transportation, and such indirect items as engineering, supervision, employee fringe benefits,
overhead, and interest incurred during the construction period. Repairs, maintenance, and minor
replacements of property are charged to expense. Donated assets are capitalized at their acquisition
value on the date contributed.
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 2-7 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.
25
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
I) Compensated Absences - Continued
June 30, 2020
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Compensated
Absences $ 3,011,855 $ 1,644,010 $ 1,409,593 $ 3,246,272 $ 324,627
Current portion is reflected in accrued payroll liabilities and remainder in other non-current
liabilities on the Statements of Net Position.
June 30, 2019
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Compensated
Absences $ 2,807,614 $ 1,637,194 $ 1,432,953 $ 3,011,855 $ 301,186
Current portion is reflected in accrued payroll liabilities and remainder in other non-current
liabilities on the Statements 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 $201,152 for 2020 and $96,944
for 2019.
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
26
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
L) Property Taxes – Continued
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) Other Post-Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows/inflows of resources related to
OPEB, and OPEB expense, information about the fiduciary net position of the District’s plan (OPEB Plan)
and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the
same basis. For this purpose, benefit payments are recognized when currently due and payable in
accordance with the benefit terms. Investments are reported at fair value.
Generally accepted accounting principles require that the reported results must pertain to liability and
asset information within certain defined timeframes. For this report, the following timeframes are used:
2020 2019
Valuation Date June 30, 2019 June 30, 2018
Measurement Date June 30, 2019 June 30, 2018
Measurement Period July 1, 2018 to June 30, 2019 July 1, 2017 to June 30, 2018
O) 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, deferred outflows of resources, liabilities, and deferred inflows of
resources, 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.
27
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
P) 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, remain sufficiently liquid to enable the District to meet all operating requirements
and generate income under the parameters of such policies.
Cash and Investments are classified in the accompanying financial statements as follows:
2020 2019
Statements of Net Position:
Cash and Cash Equivalents $ 65,089,488 $ 34,024,168
Board Designated Cash and Cash Equivalents 2,598,569 -
Restricted Cash and Cash Equivalents 6,077,597 19,114,137
Investments - 18,951,991
Board Designated Investments - 2,537,589
Restricted Investments 3,740,520 460,060
Total Cash and Investments $ 77,506,174 $ 75,087,945
Cash and Investments consist of the following:
2020 2019
Cash on Hand $ 2,950 $ 2,950
Deposits with Financial Institutions 2,775,114 1,218,516
Investments 74,728,110 73,866,479
Total Cash and Investments $ 77,506,174 $ 75,087,945
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
28
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
2) CASH AND INVESTMENTS - Continued
Investments Authorized by the California Government Code and the District’s Investment Policy-
Continued
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 10% 2%
Commercial Paper 270 days 10% 2%
Money Market Mutual Funds N/A 10% None
County Pooled Investment Funds N/A None None
Local Agency Investment Fund (LAIF) N/A None None
(1)Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.
Investments Authorized by Debt Agreements
Investments of debt proceeds held by the bond trustee are governed by provisions of the debt agreements,
rather than the general provisions of the California Government Code or the District’s Investment Policy.
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value
to changes in market interest rates. One of the ways that the District manages its exposure to interest rate
risk is by purchasing investments with shorter durations than the maximum 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, 2020 and 2019.
29
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
2) CASH AND INVESTMENTS - Continued
June 30, 2020 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 $ 3,740,520 $ - $ 3,740,520 $-$-
Local Agency Investment Fund (LAIF) 65,748,989 65,748,989 - - -
San Diego County Pool 5,155,000 5,155,000 - - -
Money Market Funds 83,601 83,601 - - -
Total $ 74,728,110 $ 70,987,590 $ 3,740,520 $ -$ -
June 30, 2019 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 $ 31,670,612 $ 27,673,372 $ 3,997,240 $ - $ -
Local Agency Investment Fund (LAIF) 41,855,272 41,855,272 - - -
San Diego County Pool 281,000 281,000 - - -
Money Market Funds 59,595 59,595 - - -
Total $ 73,866,479 $ 69,869,239 $ 3,997,240 $ -$ -
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, 2020 and 2019.
June 30, 2020 Minimum Rating as of Year End
Legal Not
Investment Type Rating AAA AA A-1 Rated
U.S. Government Sponsored Entities $ 3,740,520 N/A $ 3,740,520 $ - $ - $ -
Local Agency Investment Fund (LAIF) 65,748,989 N/A - - - 65,748,989
San Diego County Pool 5,155,000 N/A - - - 5,155,000
Money Market Funds 83,601 N/A - - 83,601 -
Total $ 74,728,110 $ 3,740,520 $ - $ 83,601 $70,903,989
30
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
2) CASH AND INVESTMENTS - Continued
Disclosures Relating to Credit Risk - Continued
June 30, 2019 Minimum Rating as of Year End
Legal Not
Investment Type Rating AAA AA A-1 Rated
U.S. Government Sponsored Entities $ 31,670,612 N/A $31,670,612 $ - $ - $ -
Local Agency Investment Fund (LAIF) 41,855,272 N/A - - - 41,855,272
San Diego County Pool 281,000 N/A - - - 281,000
Money Market Funds 59,595 N/A -- 59,595 -
Total $ 73,866,479 $ 31,670,612 $ -$ 59,595 $42,136,272
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. All the investments for fiscal years 2020 and 2019 are within the limitations of
the District’s investment policy. The investments listed below disclose the concentration of risk within the
District’s investment portfolio. 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, 2020 and
2019:
June 30, 2020
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 3,740,520
June 30, 2019
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 5,986,340
Federal National Mortgage Association U.S. Government Sponsored Entities $ 19,689,152
Federal Farm Credit Banks U.S. Government Sponsored Entities $ 3,995,820
31
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
2) CASH AND INVESTMENTS - Continued
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution,
a government will not be able to recover its deposits or will not be able to recover collateral securities that
are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the
event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able
to recover the value of its investment or collateral securities that are in the possession of another party.
The California Government Code and the District’s Investment Policy do not contain legal or policy
requirements that would limit the exposure to custodial credit risk for deposits or investments, other than
the following provision for deposits: The California Government Code requires that a financial institution
secure deposits made by state or local government units by pledging securities in an undivided collateral
pool held by a depository regulated under state law (unless so waived by the governmental unit). The
market value of the pledged securities in the collateral pool must equal at least 110% of the total amount
deposited by the public agencies. California law also allows financial institutions to secure deposits by
pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.
As of June 30, 2020, $2,937,575 and as of June 30, 2019, $1,570,995 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.
The LAIF is a special fund of the California State Treasury through which local governments may pool
investments. The District may invest up to $65,000,000 in the fund. Investments in LAIF are highly liquid,
as deposits can be converted to cash within twenty-four hours without loss of interest. Investments with
LAIF are secured by the full faith and credit of the State of California. The yield of LAIF for the quarter ended
June 30, 2020 was 1.47%. The estimated amortized cost and fair value of the LAIF pool at June 30, 2020
was $101,110,343,833 and $101,607,078,218. The District’s share of the pool at June 30, 2020 was
approximately 0.05895%. The yield of LAIF for the quarter ended June 30, 2019 was 2.57%. The estimated
amortized cost and fair value of the LAIF pool at June 30, 2019 was $105,633,660,465 and $105,814,483,092.
The District’s share of the pool at June 30, 2019 was approximately 0.03955%.
32
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
2) CASH AND INVESTMENTS - Continued
San Diego County Pooled Fund
The San Diego County Pooled Investment Fund (SDCPIF) is a pooled investment fund program governed
by the County of San Diego Board of Supervisors, and administered by the County of San Diego Treasurer
and Tax Collector. Investments in SDCPIF are highly liquid as deposits and withdrawals can be made at
anytime without penalty, determined on an amortized cash basis, the same as the fair value of the District’s
position in the pool.
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
2020 2019
Debt Service:
General Obligation Bond ID No. 27-2009 $ 437,278 $ -
Water Revenue Bond Series 2010A 24,452 1,044,426
Water Revenue Bond Series 2010B 59,149 2,743,521
Water Revenue Bond Series 2018 5,556,718 15,326,190
Total $ 6,077,597 $ 19,114,137
Board Designated Cash and Investments
Cash and investments are Board restricted for the cost of the following District projects:
2020 2019
Cash and Cash Equivalents:
New Water Supply $ 2,598,569 $ -
Investments:
New Water Supply - 2,537,589
Total $ 2,598,569 $ 2,537,589
33
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
2) CASH AND INVESTMENTS - Continued
Restricted Investments
2020 2019
Debt Service:
General Obligation Bond ID No. 27-2009 $ - $ 460,060
Water Revenue Bond Series 2010A 1,029,924 -
Water Revenue Bond Series 2010B 2,710,596 -
Total $ 3,740,520 $ 460,060
3) FAIR VALUE MEASUREMENTS
Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurements and
Application, provides the framework for measuring fair value. The framework provides a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value with Level 1 given
the highest priority and Level 3 the lowest priority. The three levels of the fair value hierarchy are as
follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
organization has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly. Level 2 inputs include the following:
a. Quoted prices for similar assets or liabilities in active markets.
b. Quoted prices for identical or similar assets or liabilities in markets that are not active.
c. Inputs other than quoted prices that are observable for the asset or liability (for example, interest
rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds,
loss severities, credit risks, and default rates).
d. Inputs that are derived principally from or corroborated by observable market data by correlation
or other means (market-corroborated inputs).
Level 3 inputs are unobservable inputs for the asset or liability.
34
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
3) FAIR VALUE MEASUREMENTS - Continued
Fair value of assets measured on a recurring basis at June 30, 2020 and 2019, are as follows:
June 30, 2020
Significant Other
Observable Inputs
Fair Value (Level 2) Uncategorized
U.S. Government Sponsored Entities $ 3,740,520 $ 3,740,520 $ -
Local Agency Investment Fund (LAIF) 65,748,989 -65,748,989
San Diego County Pool 5,155,000 -5,155,000
Money Market Funds 83,601 83,601 -
Total $ 74,728,110 $ 3,824,121 $ 70,903,989
June 30, 2019
Significant Other
Observable Inputs
Fair Value (Level 2) Uncategorized
U.S. Government Sponsored Entities $ 31,670,612 $ 31,670,612 $ -
Local Agency Investment Fund (LAIF) 41,855,272 -41,855,272
San Diego County Pool 281,000 -281,000
Money Market Funds 59,595 59,595 -
Total $ 73,866,479 $ 31,730,207 $ 42,136,272
Investments classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique.
Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted
prices. Uncategorized investments do not fall under the fair value hierarchy as there is no active market
for the investments.
35
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
4) CAPITAL ASSETS
The following is a summary of changes in Capital Assets for the year ended June 30, 2020:
Beginning Ending
Balance Additions Deletions Balance
Capital Assets, Not Depreciated:
Land $ 14,403,823 $ 19,950 $ - $ 14,423,773
Construction in Progress 33,149,164 14,637,214 (23,074,534) 24,711,844
Total Capital Assets,
Not Depreciated 47,552,987 14,657,164 (23,074,534) 39,135,617
Capital Assets, Being Depreciated:
Infrastructure 652,066,029 23,561,440 (2,927,831) 672,699,638
Field Equipment 8,572,710 208,646 (382,634) 8,398,722
Buildings 19,242,739 220,154 -19,462,893
Transportation Equipment 3,525,948 504,210 (413,706) 3,616,452
Communication Equipment 3,417,918 64,066 (778,525) 2,703,459
Office Equipment 16,781,571 219,347 (556,677) 16,444,241
Total Capital Assets,
Being Depreciated 703,606,915 24,777,863 (5,059,373) 723,325,405
Less Accumulated Depreciation:
Infrastructure 256,979,110 14,846,658 (1,558,358) 270,267,410
Field Equipment 6,385,742 394,970 (382,634) 6,398,078
Buildings 8,915,004 525,446 -9,440,450
Transportation Equipment 2,588,003 242,050 (410,212) 2,419,841
Communication Equipment 2,915,093 190,218 (778,525) 2,326,786
Office Equipment 15,067,603 579,625 (541,520) 15,105,708
Total Accumulated
Depreciation 292,850,555 16,778,967 (3,671,249) 305,958,273
Total Capital Assets,
Being Depreciated, Net 410,756,360 7,998,896 (1,388,124) 417,367,132
Total Capital Assets, Net $ 458,309,347 $ 22,656,060 $ (24,462,658) $ 456,502,749
Depreciation expense for the year ended June 30, 2020 was $16,778,967.
36
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
4) CAPITAL ASSETS - Continued
The following is a summary of changes in Capital Assets for the year ended June 30, 2019:
Beginning Ending
Balance Additions Deletions Balance
Capital Assets, Not Depreciated:
Land $ 14,406,778 $ - $ (2,955) $ 14,403,823
Construction in Progress 17,618,059 22,707,240 (7,176,135) 33,149,164
Total Capital Assets,
Not Depreciated 32,024,837 22,707,240 (7,179,090) 47,552,987
Capital Assets, Being Depreciated:
Infrastructure 647,074,001 7,980,161 (2,988,133) 652,066,029
Field Equipment 8,518,901 803,018 (749,209) 8,572,710
Buildings 20,080,216 270,320 (1,107,797) 19,242,739
Transportation Equipment 3,429,304 338,220 (241,576) 3,525,948
Communication Equipment 3,514,315 101,878 (198,275) 3,417,918
Office Equipment 17,649,987 353,273 (1,221,689) 16,781,571
Total Capital Assets,
Being Depreciated 700,266,724 9,846,870 (6,506,679) 703,606,915
Less Accumulated Depreciation:
Infrastructure 243,900,677 14,960,831 (1,882,398) 256,979,110
Field Equipment 6,819,064 314,198 (747,520) 6,385,742
Buildings 9,505,939 516,862 (1,107,797) 8,915,004
Transportation Equipment 2,627,069 201,495 (240,561) 2,588,003
Communication Equipment 2,860,523 252,845 (198,275) 2,915,093
Office Equipment 15,727,726 561,566 (1,221,689) 15,067,603
Total Accumulated
Depreciation 281,440,998 16,807,797 (5,398,240) 292,850,555
Total Capital Assets,
Being Depreciated, Net 418,825,726 (6,960,927) (1,108,439) 410,756,360
Total Capital Assets, Net $ 450,850,563 $ 15,746,313 $ (8,287,529) $ 458,309,347
Depreciation expense for the year ended June 30, 2019 was $16,807,797.
37
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
5) LONG-TERM DEBT
Long-term liabilities for the year ended June 30, 2020 are as follows:
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
General Obligation Bonds:
Improvement District No. 27 – 2009 $ 2,755,000 $ - $ 650,000 $ 2,105,000 $ 680,000
Unamortized Bond Premium 51,789 -16,354 35,435 -
Net General Obligation Bonds 2,806,789 -666,354 2,140,435 680,000
Revenue Bonds:
2010 Water Revenue Bonds Series A 6,905,000 - 1,015,000 5,890,000 1,065,000
2010 Water Revenue Bonds Series B 36,355,000 --36,355,000 -
2013 Water Revenue Refunding Bonds 3,875,000 - 715,000 3,160,000 745,000
2016 Water Revenue Refunding Bonds 30,125,000 - 1,100,000 29,025,000 1,155,000
2018 Water Revenue Bonds 32,435,000 - 1,245,000 31,190,000 1,310,000
2019 Wastewater Revenue Bonds -3,120,000 -3,120,000 -
2010 Series A Unamortized Premium 390,609 - 74,402 316,207 -
2013 Bonds Unamortized Premium 400,396 - 96,095 304,301 -
2016 Bonds Unamortized Premium 3,065,476 -178,572 2,886,904 -
2018 Bonds Unamortized Premium 2,637,747 - 109,148 2,528,599 -
2019 Bonds Unamortized Discount -(13,680)(231)(13,449)-
Net Revenue Bonds 116,189,228 3,106,320 4,532,986 114,762,562 4,275,000
Total Long-Term Liabilities $ 118,996,017 $ 3,106,320 $ 5,199,340 $116,902,997 $ 4,955,000
38
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
5) LONG-TERM DEBT - Continued
Long-term liabilities for the year ended June 30, 2019 are as follows:
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
General Obligation Bonds:
Improvement District No. 27 – 2009 $ 3,390,000 $ -$ 635,000 $ 2,755,000 $ 650,000
Unamortized Bond Premium 68,143 -16,354 51,789 -
Net General Obligation Bonds 3,458,143 -651,354 2,806,789 650,000
Certificates of Participation:
1996 Certificates of Participation 7,600,000 -7,600,000 (1) - -
1996 COPS Unamortized Discount (6,707) -(6,707)- -
Net Certificates of Participation 7,593,293 -7,593,293 - -
Revenue Bonds:
2010 Water Revenue Bonds Series A 7,880,000 -975,000 6,905,000 1,015,000
2010 Water Revenue Bonds Series B 36,355,000 --36,355,000 -
2013 Water Revenue Refunding Bonds 4,560,000 -685,000 3,875,000 715,000
2016 Water Revenue Refunding Bonds 31,170,000 -1,045,000 30,125,000 1,100,000
2018 Water Revenue Bonds -32,435,000 -32,435,000 1,245,000
2010 Series A Unamortized Premium 465,009 -74,400 390,609 -
2013 Bonds Unamortized Premium 496,493 -96,097 400,396 -
2016 Bonds Unamortized Premium 3,244,048 -178,572 3,065,476 -
2018 Bonds Unamortized Premium -2,710,512 72,765 2,637,747 -
Net Revenue Bonds 84,170,550 35,145,512 3,126,834 116,189,228 4,075,000
Total Long-Term Liabilities $ 95,221,986 $35,145,512 $ 11,371,481 $118,996,017 $ 4,725,000
(1) This amount includes a bond refunding of $6,900,000.
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
39
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
5) LONG-TERM DEBT - Continued
General Obligation Bonds - Continued
consisted of unpaid principal and accrued interest, was deposited into an escrow fund. Pursuant to an
optional redemption clause in the 1998 bonds, the District was able to redeem the 1998 bonds, without
premium at any time after September 1, 2009. On December 15, 2009 the 1998 bonds were refunded.
These bonds are general obligations of Improvement District No. 27 (ID 27) of the District. The Board of
Directors has the power and is obligated to levy annual ad valorem taxes without limitation, as to rate or
amount for payment of the bonds and the interest upon all property which is within ID 27 and subject to
taxation. The General Obligation Bonds are payable from District-wide tax revenues. The Board may utilize
other sources for servicing the bond debt and interest.
The Improvement District No. 27-2009 General Obligation Refunding Bonds have interest rates from 3.00%
to 4.00% with maturities through Fiscal Year 2023.
Future debt service requirements for the bonds are as follows:
For the Year Ended
June 30, Principal Interest
2021 $ 680,000 $ 70,600
2022 705,000 42,900
2023 720,000 14,400
$ 2,105,000 $ 127,900
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, 2020. The installment payments are to
be paid annually at $350,000 to $1,100,000 from September 1, 1996 through September 1, 2026. During the
2019 fiscal year, these COPS were advanced refunded.
The COPS debt issue contain various covenants and restrictions, principally that the District fix, prescribe,
revise and collect rates, fees and charges for the Water System which will at lease sufficient to yield, during
40
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
5) LONG-TERM DEBT - Continued
Certificates of Participation (COPS) - Continued
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, 2019.
Certificate of Participation (COPS) Advanced Refunding
In November 2018, the District issued $32,435,000 in Water Revenue Bonds, Series 2018, with interest rates
of 3% to 5% which a portion of the proceeds was used to advance refund $6,900,000 of the 1996 Certificates
of Participation. Bond proceeds of $6,900,000 were used to advance refund the 1996 Certificates of
Participation on November 1, 2018 to fully repay the obligation. The net savings and economic gain (loss)
from this current advance refunding is unavailable due to the 1996 Certificates of Participation having a
variable interest rate.
Water Revenue Bonds
In April 2010, Water Revenue Bonds with a face value of $50,195,000 were sold by the Otay Water District
Financing Authority to provide funds for the construction of water storage and transmission facilities. The
bond issue consisted of two series; Water Revenue Bonds, Series 2010A (Non-AMT Tax Exempt) with a
face value of $13,840,000 plus a $1,078,824 original issue premium, and Water Revenue Bonds, Series
2010B (Taxable Build America Bonds) with a face value of $36,355,000. The Series 2010A bonds are due
in annual installments of $785,000 to $1,295,000 from September 1, 2012 through September 1, 2025;
bearing interest at 2% to 5.25%. The Series 2010B bonds are due in annual installments of $1,365,000 to
$3,505,000 from 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 Certificates of Participation
described above and the 2013 and 2016 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, 2020 was $74,402 and for June 30, 2019 was $74,400. The amortizations are
included in interest expense. The unamortized premium at June 30, 2020 is $316,207 and at June 30, 2019
is $390,609.
41
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
5) LONG-TERM DEBT - Continued
Water Revenue Bonds - Continued
The 2010 Water Revenue Bonds contains various covenants and restrictions, principally that the District fix,
prescribe, revise and collect rates, fees and charges for the Water System which will at least be 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 years ended June 30, 2020 and 2019.
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 2016 Water Revenue Bonds 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, 2020 was $96,095 and for June 30, 2019 was $96,097. The amortizations are
included in interest expense. The unamortized premium at June 30, 2020 is $304,301 and at June 30, 2019
is $400,396.
In May 2016, Water Revenue Refunding Bonds were issued to defease the 2007 Revenue Certificates of
Participation. The bonds are due in annual installments of $1,200,000 to $2,235,000 from September 1,
2016 through September 1, 2036; bearing interest of 2% to 5%. The bonds were issued with a face value
of $33,385,000 plus $3,630,950 original issue premium. The savings between the cash flow required to
service, the old debt and the cash flow required to service the new debt is $5,664,140 and represent an
economic gain on refunding of $4,538,175.
The original issue premium is being amortized over the 20-year life of the Series 2016 bonds. Amortization
for the year ending June 30, 2020 was $178,572 and for June 30, 2019 was $178,572. The amortizations are
included in interest expense. The unamortized premium at June 30, 2020 is $2,886,904 and at June 30,
2019 is $3,065,476.
In November 2018, Water Revenue Bonds were issued to provide funds for construction of water storage,
treatment and transmission facilities and to refinance the 1996 Certificates of Participation. The bonds are
due in annual installments of $775,000 to $1,915,000 from September 1, 2019 through September 1, 2043;
bearing interest of 3% to 5%. The bonds were issued with a face value of $32,435,000 plus $2,710,512
original issue premium.
The original issue premium is being amortized over the 25-year life of the Series 2018 bonds. Amortization
for the year ending June 30, 2020 was $109,148 and for June 30, 2019 was $72,765. The amortization
expense is included in interest expense. The unamortized premium at June 30, 2020 is $2,528,599 and at
June 30, 2019 is $2,637,747.
42
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
5) LONG-TERM DEBT - Continued
Water Revenue Bonds - Continued
The total amount outstanding at June 30, 2020 and aggregate maturities of the revenue bonds for the fiscal
years subsequent to June 30, 2020, 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
2021 $ 1,065,000 $ 271,112 $ -$ 2,371,868 $ 745,000 $ 111,500
2022 1,120,000 216,488 - 2,371,868 775,000 81,100
2023 1,175,000 159,113 - 2,371,868 805,000 49,500
2024 1,235,000 98,862 -2,371,868 835,000 16,700
2025 1,295,000 33,994 - 2,371,868 - -
2026-2030 - - 7,745,000 10,685,178 - -
2031-2035 - - 10,570,000 7,756,703 - -
2036-2040 - - 14,535,000 3,664,211 - -
2041 - - 3,505,000 115,262 - -
$ 5,890,000 $ 779,569 $ 36,355,000 $ 34,080,694 $ 3,160,000 $ 258,800
For the Year
2016 Water Revenue
Refunding Bonds
2018 Water Revenue
Refunding Bonds
Ended June 30, Principal Interest Principal Interest
2021 $ 1,155,000 $ 1,063,456 $ 1,310,000 $ 1,361,038
2022 1,215,000 1,004,206 1,370,000 1,294,038
2023 1,285,000 941,706 1,455,000 1,223,413
2024 1,350,000 875,831 1,650,000 1,145,787
2025 1,420,000 806,581 1,730,000 1,061,288
2026-2030 8,210,000 2,941,181 6,980,000 4,107,437
2031-2035 9,985,000 1,319,885 6,485,000 2,663,512
2036-2040 4,405,000 130,413 6,360,000 1,346,743
2041-2044 - - 3,850,000 274,400
$ 29,025,000 $ 9,083,259 $ 31,190,000 $ 14,477,656
43
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
5) LONG-TERM DEBT - Continued
Wastewater Revenue Bonds
In December 2019, Wastewater Revenue Bonds were issued to provide funds to pay for certain capital
improvements to the District’s wastewater system. The bonds are due in annual installments of $65,000 to
$160,000 from September 1, 2021 through September 1, 2049; bearing interest of 2% to 3.125%. The bonds
were issued with a face value of $3,120,000 less a $13,680 original issue discount.
The original issue discount is being amortized over the 50 year life of the Series 2019 bonds. Amortization
for the year ending June 30, 2020 was $231. The amortization expense is included in interest expense. The
unamortized discount at June 30, 2020 is $13,449.
Future debt service requirements for the bonds are as follows:
For the Year
2019 Wastewater
Revenue Bonds
Ended June 30, Principal Interest
2021 $ -$ 90,741
2022 65,000 90,091
2023 70,000 88,741
2024 75,000 87,291
2025 75,000 85,416
2026-2030 420,000 390,707
2031-2035 480,000 326,394
2036-2040 550,000 255,095
2041-2045 635,000 167,191
2046-2050 750,000 60,156
$ 3,120,000 $ 1,641,823
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 $164,299,978 payable through fiscal year 2044. For June 30, 2020, principal
and interest paid by the water sales revenues were $4,075,000 and $5,380,424, respectively. For June 30,
2019, principal and interest paid by the water sales revenues were $3,405,000 and $4,593,173, respectively.
The District has pledged a portion of future wastewater sales revenues to repay its Wastewater Revenue
Bonds. Total principal and interest remaining on the wastewater revenue bonds is $4,761,823 payable
through fiscal year 2050. For June 30, 2020, principal and interest paid by the wastewater sales revenues
were $0 and $19,913, respectively.
44
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
6) 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, 2020 and 2019:
2020 2019
Designated Betterment $ 4,208,271 $ 2,204,313
Replacement Reserve 25,545,931 18,650,150
Designated Expansion 2,262,219 7,155
Designated New Supply Fund 240,764 406,545
Employee Benefits Reserve 386,907 276,168
Total $ 32,644,092 $ 21,544,331
7) 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.
45
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
7) DEFINED BENEFIT PENSION PLAN - Continued
Benefits Provided - Continued
The Plans’ provisions and benefits in effect at June 30, 2020 and 2019 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 (2019 and 2018) 8.00% 6.25%
Required Employer Contribution Rates
2020 40.689% 40.689%
2019 37.436% 37.436%
Employees Covered
The following employees were covered by the benefit terms for the Plan:
2020 2019
Inactive Employees or Beneficiaries Currently Receiving Benefits 175 183
Inactive Employees Entitled to But Not Yet Receiving Benefits 140 131
Active Employees 134 133
Total 449 447
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.
46
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
7) DEFINED BENEFIT PENSION PLAN - Continued
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,
2019 and 2018, using the annual actuarial valuations as of June 30, 2018 and 2017, respectively, rolled
forward to June 30, 2019 and 2018, respectively, 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, 2020 and 2019 actuarial valuations were determined using
the following actuarial assumptions:
2020 2019
Valuation Date June 30, 2018 June 30, 2017
Measurement Date June 30, 2019 June 30, 2018
Actuarial Cost Method Entry-Age Normal Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.15% 7.15%
Inflation 2.5% 2.5%
Salaries Increases Varies(1) Varies(1)
Mortality Rate Table CalPERS Membership Data(2) CalPERS Membership Data(4)
Post Retirement Benefit Increase See Footnote(3) See Footnote(5)
(1)Depending on age, service and type of employment.
(2)The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the
2017 CalPERS Experience Study for the period from 1997 to 2015. Pe-retirement and Post-retirement mortality rates include
15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more
details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report form
December 2017 that can be found on the CalPERS website.
(3)The lesser of contract COLA or 2.5% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.5%
thereafter.
(4)The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality
improvements using the Society of Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to
the December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015) that can be found
on the CalPERs website.
(5)Contract COLA up to 2% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.50%
thereafter.
47
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
7) DEFINED BENEFIT PENSION PLAN - Continued
B) Net Pension Liability - Continued
Discount Rate
The discount rate used to measure the total pension liability at June 30, 2019 and 2018 measurement
dates was 7.15% 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. The tests
revealed the assets would not run out. Therefore, the 7.15% discount rate is appropriate and the use
of the municipal bond rate calculation is not deemed necessary. The long term expected discount
rate of 7.15% is applied to all plans in the Public Employees Retirement Fund (PERF). The stress test
results are presented in a detailed report called “GASB 68 Crossover Testing Report” that can be
obtained from the CalPERS website.
Long-term Expected Rate of Return
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+ 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
equal to the single equivalent rate calculated above and adjusted to account for assumed
administrative expenses.
48
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
7) DEFINED BENEFIT PENSION PLAN - Continued
B) Net Pension Liability - Continued
Long-term Expected Rate of Return - Continued
The following table reflects the long-term expected real rate of return by asset class.
Asset Class(a)
Assumed
Asset Allocation
Real Return
Years 1 - 10(b)
Real Return
Years 11+(c)
2019 2018 2019 2018 2019 2018
Global Equity 50.0% 50.0% 4.80% 4.80% 5.98% 5.98%
Global Fixed Income 28.0% 28.0% 1.00% 1.00% 2.62% 2.62%
Inflation Assets/Sensitive - - 0.77% 0.77% 1.81% 1.81%
Private Equity 8.0% 8.0% 6.30% 6.30% 7.23% 7.23%
Real Estate 13.0% 13.0% 3.75% 3.75% 4.93% 4.93%
Liquidity 1.0% 1.0% - - -0.92% -0.92%
Total 100% 100%
(a) In the System’s CAFR, Fixed Income in included in Global Debt Securities; Liquidity is included in Short-term
Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
(b) An expected inflation of 2.00% used for this period.
(c)An expected inflation of 2.92% used for this period.
49
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
7) DEFINED BENEFIT PENSION PLAN - Continued
C) Changes in the Net Pension Liability
The changes in the Net Pension Liability for the Plan for June 30, 2020:
Increase (Decrease)
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
Beginning Balance $135,659,308 $ 87,270,402 $ 48,388,906
Changes in the Year:
Service Cost 2,586,911 - 2,586,911
Interest on the Total Pension Liability 9,638,674 - 9,638,674
Changes in Benefit Terms - - -
Changes in Assumptions - - -
Differences Between Actual and Expected
Experience 1,183,213 - 1,183,213
Net Plan to Plan Resource Movement - - -
Contributions - Employer - 36,706,983 (36,706,983)
Contributions - Employees - 1,019,255 (1,019,255)
Net Investment Income -7,516,686 (7,516,686)
Benefit Payments, Including Refunds of
Employee Contributions (6,658,719) (6,658,719)-
Administrative Expense -(62,278)62,278
Other Miscellaneous Income/(Expense) -203 (203)
Net Changes 6,750,079 38,522,130 (31,772,051)
Ending Balance $142,409,387 $ 125,792,532 $ 16,616,855
50
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
7) DEFINED BENEFIT PENSION PLAN - Continued
C) Changes in the Net Pension Liability - Continued
The changes in the Net Pension Liability for the Plan for June 30, 2019:
Increase (Decrease)
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
Beginning Balance $130,809,611 $ 81,227,295 $ 49,582,316
Changes in the Year:
Service Cost 2,528,271 -2,528,271
Interest on the Total Pension Liability 9,168,092 - 9,168,092
Changes in Benefit Terms - - -
Changes in Assumptions (1,312,634) - (1,312,634)
Differences Between Actual and Expected
Experience 461,917 -461,917
Net Plan to Plan Resource Movement -(203)203
Contributions - Employer -4,441,517 (4,441,517)
Contributions - Employees - 1,015,008 (1,015,008)
Net Investment Income - 6,949,676 (6,949,676)
Benefit Payments, Including Refunds of
Employee Contributions (5,995,949) (5,995,949)-
Administrative Expense -(126,575)126,575
Other Miscellaneous Income/(Expense) -(240,367)240,367
Net Changes 4,849,697 6,043,107 (1,193,410)
Ending Balance $135,659,308 $ 87,270,402 $ 48,388,906
51
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
7) DEFINED BENEFIT PENSION PLAN - Continued
C) Changes in the Net Pension 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:
2020 2019
1% Decrease 6.15% 6.15%
Net Pension Liability $ 35,122,134 $ 66,284,590
Current Discount Rate 7.15% 7.15%
Net Pension Liability $ 16,616,855 $ 48,388,906
1% Increase 8.15% 8.15%
Net Pension Liability $ 1,228,256 $ 33,516,191
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 years ended June 30, 2020 and 2019, the District recognized pension expense of $6,567,636
and $6,855,984. At June 30, 2020 and 2019, 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
2020 2019 2020 2019
Pension contributions subsequent to measurement date $ 2,465,751 $36,665,042 $ - $ -
Differences between actual and expected experience 892,614 296,947 - (313,339)
Changes in assumptions - 1,894,792 (375,038) (843,836)
Net difference between projected and actual earnings
on pension plan investments - 166,037 (991,620) -
Total $ 3,358,365 $39,022,818 $(1,366,658) $ (1,157,175)
52
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
7) DEFINED BENEFIT PENSION PLAN - Continued
D) Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
Liability - Continued
For fiscal year 2019, $36,665,042 reported as deferred outflows of resources related to contributions
subsequent to the measurement date was recognized as a reduction of the net pension liability
during the year ended June 30, 2020. Those contributions include a $31,800,000 additional payment
to reduce the District’s unfunded pension liability. For fiscal year 2020, $2,465,751 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, 2021. Other amounts
reported as deferred outflows of resources and deferred inflows of resources related to pensions will
be recognized as pension expense as follows:
Deferred
Year Ended Outflow/(Inflows)
June 30 of Resources
2021 $ 364,622
2022 (524,453)
2023 (277,046)
2024 (37,167)
2025 -
Thereafter -
E) Payable to the Pension Plan
At June 30, 2020 and 2019, the District reported a payable of $72,881 and $44,905, respectively, for
the outstanding amount of contributions to the pension plan required for the years ended June 30,
2020 and 2019. These payables are reflected in the accrued payroll liabilities on the Statements of
Net Position.
8) OTHER POST EMPLOYMENT BENEFITS (OPEB)
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.
53
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
Plan Description - Continued
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 up to 100% medical and/or 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.
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.
Employees Covered
As of June 30, 2019 and 2018 actuarial valuations, the following current and former employees were
covered by the benefit terms under the Plan:
2019 2018
Active employees 133 131
Inactive employees or beneficiaries currently receiving benefits 76 79
Inactive employees entitled to, but not yet receiving benefits - -
Total 209 210
Contributions
The annual contribution is based on the actuarially determined contribution. For the fiscal years ended
June 30, 2020 and 2019, the District’s cash contributions were $840,543 and $2,049,038, respectively, in
payments to the trust and the estimated implied subsidy was $170,815 and $160,536, respectively,
resulting in total payments of $1,011,358 and $2,209,574, respectively.
54
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
Net OPEB Liability
The District’s net OPEB liability was measured as of June 30, 2019 and 2018 and the total OPEB liability
used to calculate the net OPEB liability was determined by actuarial valuations dated June 30, 2019 and
2018 based on the following actuarial methods and assumptions:
Actuarial Assumptions
Discount Rate 7.00%
Inflation 2.75%
Salary Increases 2.75% plus merit
Investment Rate of Return 7.00%
Mortality Rate(1)Derived using CalPERS Membership Data for all funds
Pre-Retirement Turnover(2) Derived using CalPERS Membership Data for all funds
Healthcare Trend Rate 6.50% PPO decreasing to 5.00% PPO
Notes:
(1)Pre-retirement mortality information was derived from data collected during 1997 to 2015 CalPERS Experience Study dated
December 2017 and post-retirement mortality information was derived from the 1997 to 2015 CalPERS Experience Study. The
Experience Study Reports may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications.
(2)The pre-retirement turnover information was developed based on CalPERS specific data. For more details, please refer to the 1997
to 2015 Experience Study Report. The Experience Study Report may be accessed on the CalPERS website www.calpers.ca.gov
under Forms and Publications.
The long-term expected rate of return on OPEB 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 OPEB
plan investment expense and inflation) are developed for each major asset class. These ranges are
combined to produce the long-term expected rate of return by weighting the expected future real rates of
return by the target asset allocation percentage and by adding expected inflation. Best estimates of
arithmetic real rates of return for each major asset class included in the OPEB plan’s target asset are
summarized in the following table for the June 30, 2019 and 2018 actuarial valuations:
Long-term
Target Expected Real
Asset Class Allocation Rate of Return
2019 2018 2019 2018
Global Equity 59.0% 57.0% 5.5% 5.5%
Global Fixed Income 25.0% 27.0% 2.35% 2.35%
TIPS 5.0% 5.0% 1.50% 1.50%
Commodities 3.0% 3.0% 1.75% 1.75%
REITs 8.0% 8.0% 3.65% 3.65%
Total 100% 100%
55
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
Discount Rate
The discount rate used to measure the total OPEB liability was 7.00% for the June 30, 2019 and 2018
actuarial valuations. The projection of cash flows used to determine the discount rate assumed that District
contributions will be made at rates equal to the actuarially determined contribution rates. Based on those
assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected
OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term
expected rate of return on OPEB plan investments was applied to all periods of projects benefit payments
to determine the total OPEB liability.
Changes in the OPEB Liability (Asset)
The changes in the net OPEB liability (asset) for the Plan are as follows:
June 30, 2020 Increase (Decrease)
Total OPEB
Liability
(a)
Plan
Fiduciary
Net Position
(b)
Net OPEB
Liability/(Asset)
(c) = (a) - (b)
Balance at June 30, 2019
(Valuation Date June 30, 2018) $ 27,964,563 $ 24,549,538 $ 3,415,025
Changes Recognized for the Measurement
Period:
Service Cost 757,725 -757,725
Interest 1,970,613 - 1,970,613
Differences between expected and actual
experience (2,029,118) - (2,029,118)
Changes of Assumptions (345,110) -(345,110)
Contributions - Employer - 2,206,363 (2,206,363)
Net Investment Income - 1,595,092 (1,595,092)
Benefit Payments (1,141,344) (1,141,344)-
Administrative Expenses -(12,299)12,299
Other Expenses ---
Net Changes (787,234) 2,647,812 (3,435,046)
Balance at June 30, 2020
(Measurement Date June 30, 2019) $ 27,177,329 $ 27,197,350 $ (20,021)
56
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
Changes in the OPEB Liability (Asset) - Continued
June 30, 2019 Increase (Decrease)
Total OPEB
Liability
(a)
Plan
Fiduciary
Net Position
(b)
Net OPEB
Liability/(Asset)
(c) = (a) - (b)
Balance at June 30, 2018
(Valuation Date June 30, 2017) $ 26,449,527 $ 21,739,035 $ 4,710,492
Changes Recognized for the Measurement
Period:
Service Cost 735,655 -735,655
Interest 1,864,967 - 1,864,967
Changes of Assumptions - - -
Contributions - Employer - 2,202,004 (2,202,004)
Net Investment Income - 1,734,626 (1,734,626)
Benefit Payments (1,085,586) (1,085,586)-
Administrative Expenses -(11,784)11,784
Other Expenses -(28,757)28,757
Net Changes 1,515,036 2,810,503 (1,295,467)
Balance at June 30, 2019
(Measurement Date June 30, 2018) $ 27,964,563 $ 24,549,538 $ 3,415,025
Sensitivity of the Net OPEB Liability (Asset) to Changes in the Discount Rate
The following presents the net OPEB liability (asset) of the District if it were calculated using a discount
rate that is one percentage point lower or one percentage point higher than the current rate, for the
measurement periods ended June 30, 2019 and 2018:
2020
(2019 Measurement Period)
2019
(2018 Measurement Period)
1% Decrease
Net OPEB Liability (Asset) $ 4,124,269 $ 7,750,569
Current Discount Rate
Net OPEB Liability (Asset) $ (20,021) $ 3,415,025
1% Increase
Net OPEB Liability (Asset) $ (3,385,633) $ (95,486)
57
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates
The following presents the net OPEB liability of the District if it were calculated using health care cost
trend rates that are one percentage point lower or one percentage point higher than the current rate, for
measurement periods ended June 30, 2019 and 2018:
1% Decrease
(5.00% HMO/5.00% PPO
Decreasing to
4.00% HMO/4.00% PPO)
Current Healthcare Cost
Trend Rates
(6.00% HMO/6.0% PPO
Decreasing to
5.00% HMO/5.00% PPO)
1% Increase
(7.00% HMO/7.00% PPO
Decreasing to
6.00% HMO/6.00% PPO)
2020 Net OPEB Liability (Asset) $ (3,730,121) $ (20,021) $ 4,639,466
(2019 Measurement Period)
2019 Net OPEB Liability (Asset) $ (550,596) $ 3,415,025 $ 8,456,194
(2018 Measurement Period)
OPEB Plan Fiduciary Net Position
CERBT issues a publicly available financial report that may be obtained from the California Public
Employees Retirement System Executive Office, 400 P Street, Sacramento, California 95814.
Recognition of Deferred Outflows and Deferred Inflows of Resources
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in
OPEB expense systematically over time.
Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining
amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and
are to be recognized in future OPEB expense.
The recognition period differs depending on the source of the gain or loss:
Net difference between projected and actual
earnings on OPEB plan investments 5 years
All other amounts Expected average remaining service lifetime (EARSL)
58
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the fiscal years ended June 30, 2020 and 2019, the District recognized OPEB expense of $(692,893)
and $(177,250), respectively. As of fiscal years ended June 30, 2020 and 2019, the District reported
deferred outflows of resources related to OPEB from the following sources:
Deferred Outflows
of Resources
Deferred Inflows of
Resources
2020 2019 2020 2019
OPEB contributions subsequent to measurement date $ 1,011,358 $2,209,574 $ - $ -
Differences between expected and actual experience -
-
(1,623,294) -
Changes in assumptions - - (276,088) -
Net difference between projected and actual earnings
on OPEB plan investments 128,177 - (374,867) (544,777)
Total $ 1,139,535 $2,209,574 $(2,274,249) $ (544,777)
The $1,011,358 reported as deferred outflows of resources related to contributions subsequent to the
June 30, 2019 measurement date will be recognized as a reduction of the net OPEB liability during the
fiscal year ending June 30, 2021. Other amounts reported as deferred outflows of resources related to
OPEB will be recognized as expense as follows:
Year Ended Deferred Outflow/(Inflows)
June 30, of Resources
2021 $ (612,712)
2022 (612,713)
2023 (477,848)
2024 (442,799)
2025 -
Thereafter -
9) WATER CONSERVATION AUTHORITY
In 1999, the District formed the Water Conservation Garden Authority (the “Authority”), a Joint Powers
Authority, with other local entities to construct, maintain and operate a xeriscape demonstration garden in
the furtherance of water conservation. The authority is a non-profit public charity organization and is
exempt from income taxes. During the years ended June 30, 2020 and 2019, the District contributed
$121,060 and $118,040, respectively, for the development, construction and operation costs of the
xeriscape demonstration garden.
59
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
9) WATER CONSERVATION AUTHORITY - Continued
A summary of the Authority’s June 30, 2019 audited financial statement is as follows (latest report available):
Assets $ 1,110,708
Liabilities -
Net Position $ 1,110,708
Revenues, Gains and Other Support $ 303,920
Expenses 389,839
Changes in Net Position $ (85,919)
10) COMMITMENTS AND CONTINGENCIES
Construction Commitments
The District had committed to capital projects under construction with an estimated cost to complete of
$2,706,350 and $2,245,835 at June 30, 2020 and 2019, respectively.
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, 2020, 1,750 EDUs had been relinquished and refunded, 15,143
EDUs had been connected, and 974 EDUs have neither been relinquished nor connected. At June 30,
2019, 1,750 EDUs had been relinquished and refunded, 15,143 EDUs had been connected, and 974 EDUs
have neither been relinquished nor connected.
60
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
10) COMMITMENTS AND CONTINGENCIES - Continued
Developer Agreements
The District has entered into various Developer Agreements with developers towards the expansion of
District facilities. The developers agree to make certain improvements and after the completion of the
projects the District agrees to reimburse such improvements with a maximum reimbursement amount for
each developer. Contractually, the District does not incur a liability for the work until the work is accepted
by the District. As of June 30, 2020 and 2019, none of the outstanding developer agreements had been
accepted.
COVID-19 Pandemic
On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19)
a global pandemic and recommended containment and mitigation measures worldwide. The
pandemic continued subsequent to year end with certain restrictions required by the Governor of
California, as well as local governments, which may affect revenue sources and also caused subsequent
stock market volatility. The duration of the pandemic and the impact of COVID-19 on the District’s
operational and financial performance is uncertain at this time.
11) 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. Separate financial
statements of SDRMA may be obtained at Special District Risk Management Authority, 1112 “I” Street, Suite
300, Sacramento, CA 95814.
General and Auto Liability, Public Officials’ Errors and Omissions and Employment Practices Liability: Total
risk financing limits of $10 million combined single limit at $10 million per occurrence, subject to the
following deductibles:
$50,000 per occurrence for third party general liability property damage;
$50,000 per occurrence for third party auto liability property damage;
61
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
11) RISK MANAGEMENT - Continued
General Liability - Continued
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 $1,000,000 per loss includes Public Employee Dishonesty,
Forgery or Alteration and Theft, Disappearance and Destruction coverage’s effective July 1, 2018 and 2019.
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, 2018 and 2019.
Boiler and Machinery: Replacement cost up to $100 million per occurrence, subject to a $1,000 deductible,
effective July 1, 2018 and 2019.
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 $1,000 per occurrence, effective
July 1, 2018 and 2019.
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 – 2018-19 and 2019-20, effective
July 1, 2018 and 2019.
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, 2018 and 2019.
Cyber Coverage: $2,000,000 Annual Aggregate Limit of Liability for each Insured/Member for Information
Security & Privacy Liability. Policy includes at $25,000 deductible per claim.
Health Insurance
Beginning in January 2008, the District began providing health insurance through SDRMA covering all of
its employees, retirees, and other dependents. SDRMA is a pooled medical program, administered in
conjunction with the California State Association of Counties (CSAC).
Adequacy of Protection
During the past four 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.
62
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
12) SEGMENT INFORMATION
The District has issued Water and Wastewater Revenue Bonds in the current and previous fiscal years
to finance certain capital improvements. While water and wastewater services are accounted for jointly
in these financial statements, the investors in the Water Revenue Bonds rely solely on the revenues of
the water services for repayment and the Wastewater Revenue Bonds solely on the revenues of the
wastewater services for repayment.
Summary financial information for the water and wastewater services is presented for June 30, 2020 and
2019:
Condensed Statements of Net Position
June 30, 2020 and 2019
Water Services Wastewater Services
2020 2019 2020 2019
ASSETS
Cash and Investments $ 73,048,806 $ 72,508,971 $ 4,457,368 $ 2,578,974
Accounts Receivable, Net 13,244,367 11,577,454 175,737 210,500
Other Current Asset 3,365,177 2,801,868 96,132 34,300
Net OPEB Asset 19,191 -830 -
Capital Assets, Net of Depreciation 426,126,556 428,856,190 30,376,193 29,453,157
Total Assets 515,804,097 515,744,483 35,106,260 32,276,931
DEFERRED OUTFLOWS OF RESOURCES
Deferred Actuarial Pension Costs 3,306,371 36,957,507 51,994 2,065,311
Deferred Actuarial OPEB Costs 1,094,697 2,105,670 44,838 103,904
Total Deferred Outflows of Resources 4,401,068 39,063,177 96,832 2,169,215
LIABILITIES
Accounts Payable 16,040,522 13,882,636 183,595 179,188
Other Miscellaneous Liabilities 4,970,208 5,515,011 485,818 643,495
Other Current Liabilities 10,474,774 10,324,292 30,247 -
General Obligation Bonds 1,460,435 2,156,789 - -
Revenue Bonds 107,381,011 112,114,228 3,106,551 -
Net Pension Liability 16,194,242 46,167,836 422,613 2,221,070
Net OPEB Liability - 3,263,717 -151,308
Other Non-current Liabilities 3,550,571 3,337,674 --
Total Liabilities 160,071,763 196,762,183 4,228,824 3,195,061
DEFERRED INFLOWS OF RESOURCES
Deferred Actuarial Pension Costs 1,323,207 1,125,287 43,451 31,888
Deferred Actuarial OPEB Costs 2,190,616 519,135 83,633 25,642
Total Deferred Inflows of Resources 3,513,823 1,644,422 127,084 57,530
NET POSITION
Net Investment in Capital Assets 317,886,828 325,186,363 27,269,642 29,453,157
Restricted for Debt Service 4,261,399 4,248,007 - -
Unrestricted 34,471,352 26,966,685 3,577,542 1,740,398
Total Net Position $ 356,619,579 $ 356,401,055 $ 30,847,184 $ 31,193,555
63
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
12) SEGMENT INFORMATION - Continued
Condensed Statements of Revenues, Expenses and Changes in Net Position
For the Years Ended June 30, 2020 and 2019
Water Services Wastewater Services
2020 2019 2020 2019
Operating Revenues
Water Sales $ 90,435,148 $ 86,756,222 $ - $ -
Wastewater Revenue - - 2,921,310 2,961,157
Connection and Other Fees 2,570,891 2,222,393 11,460 12,394
Total Operating Revenues 93,006,039 88,978,615 2,932,770 2,973,551
Operating Expenses
Cost of Water Sales 62,573,257 60,065,964 - -
Wastewater - - 2,439,117 2,784,579
Administrative and General 25,196,555 24,070,648 - -
Depreciation 15,886,575 15,973,877 892,392 833,920
Total Operating Expenses 103,656,387 100,110,489 3,331,509 3,618,499
Operating Income (Loss) (10,650,348) (11,131,874) (398,739) (644,948)
Non-operating Revenues (Expenses)
Investment Earnings 1,734,364 1,845,805 50,470 132,587
Taxes and Assessments 4,939,950 4,671,182 - -
Availability Charges 645,996 671,428 48,772 51,818
Gain (Loss) on Sale of Capital Assets (1,243,742) (1,030,346) -(28,225)
Rents and Leases 1,501,328 1,384,211 --
Miscellaneous Revenues 1,750,411 2,407,989 185,751 392,624
Donations (121,600) (118,040) - -
Interest Expense (4,903,602) (4,713,883) (50,385) -
Miscellaneous Expenses (453,971) (3,288,540) (104,434) (4,515)
Total Non-operating Revenues (Expenses) 3,849,134 1,829,806 130,174 544,289
Income (Loss) Before Capital Contributions
and Transfers (6,801,214) (9,302,068) (268,565) (100,659)
Capital Contributions 6,825,909 9,416,804 116,023 40,005
Transfers In (Out) 193,829 (4,214,411) (193,829) 4,214,411
Change in Net Position 218,524 (4,099,675) (346,371) 4,153,757
Total Net Position, Beginning 356,401,055 360,500,730 31,193,555 27,039,798
Total Net Position, Ending $356,619,579 $356,401,055 $ 30,847,184 $ 31,193,555
64
Notes to Financial Statements
Years Ended June 30, 2020 and 2019
12) SEGMENT INFORMATION - Continued
Condensed Statements of Cash Flows
For the Years Ended June 30, 2020 and 2019
Water Services Wastewater Services
2020 2019 2020 2019
Net Cash Provided/(Used) by:
Operating Activities $ 10,725,595 $ (23,286,064) $ 586,205 $ (1,741,104)
Non-capital and Related Financing Activities 5,105,011 474,682 (193,828) 4,214,411
Capital and Related Financing Activities (17,105,918) 9,584,026 1,435,547 (5,231,644)
Investing Activities 17,445,293 42,137,187 2,629,444 2,758,337
Net Increase (Decrease) in
Cash and Cash Equivalents 16,169,981 28,909,831 4,457,368 -
Cash and Cash Equivalents, Beginning 53,138,305 24,228,474 - -
Cash and Cash Equivalents, Ending $ 69,308,286 $ 53,138,305 $ 4,457,368 $ -
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68
Schedule of Changes in the Net OPEB Liability and Related
Ratios for Measurement Periods Ended June 30,
Last Ten Fiscal Years (1)
Measurement Period 2019 2018 2017
Total OPEB Liability
Service Cost $ 757,725 $ 735,655 $ 687,528
Interest on the Total OPEB Liability 1,970,613 1,864,967 1,764,343
Actual and Expected Experience Difference (2,029,118) - -
Changes in Assumptions (345,110) - -
Changes in Benefit Terms - - -
Benefit Payments (1,141,344) (1,085,586) (1,039,420)
Net Change in Total OPEB Liability (787,234) 1,515,036 1,412,451
Total OPEB Liability - Beginning 27,964,563 26,449,527 25,037,076
Total OPEB Liability - Ending (a) $ 27,177,329 $ 27,964,563 $ 26,449,527
Plan Fiduciary Net Position
Contributions - Employer $ 2,206,363 $ 2,202,004 $ 2,284,420
Net Investment Income 1,595,092 1,734,626 2,011,985
Benefit Payments (1,141,344) (1,085,586) (1,039,420)
Administrative Expenses (12,299) (11,784) (10,167)
Other Expenses -(28,757)-
Net Change in Plan Fiduciary Net Position 2,647,812 2,810,503 3,246,818
Plan Fiduciary Net Position - Beginning 24,549,538 21,739,035 18,492,217
Plan Fiduciary Net Position - Ending (b) $ 27,197,350 $ 24,549,538 $ 21,739,035
Net OPEB Liability/(Asset) - Ending (a)-(b) $ (20,021) $ 3,415,025 $ 4,710,492
Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability 100.1% 87.8% 82.2%
Covered Payroll $ 13,176,602 $ 12,677,000 $ 12,513,000
Net OPEB Liability/(Asset) as a Percentage of Covered Payroll -0.2%26.9% 37.6%
Notes to Schedule:
(1)Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be
displayed up to 10 years as information becomes available. Contributions are determined by an actuarial valuation based on eligible
participants’ estimated medical and dental benefits.
69
Schedule of Contributions
For Fiscal Year Ended June 30,
Last Ten Fiscal Years (1)
Fiscal
Year
Actuarially
Determined
Contribution
(ADC)
Contributions
in Relation to
the ADC
Contribution
Deficiency
(Excess)
Covered
Payroll
Contributions as a
Percentage of
Covered Payroll
2018 $ 1,116,418 $ (2,202,004) $ (1,085,586) $ 12,677,000 17.37%
2019 $ 1,149,911 $ (2,206,363) $ (1,056,452) $ 13,176,602 16.74%
2020 $ 1,011,358 $ (1,011,358) $ 0 $ 13,688,895 7.39%
Notes to Schedule:
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year
2020 were from the June 30, 2019 actuarial valuation. Also note, that some of the data from prior years were
updated with the most current available information.
Methods and assumptions used to determine contributions:
Actuarial Cost Method Entry Age Normal
Amortization Method/Period Level percent of payroll over a closed rolling 15-year period
Asset Valuation Method Market value
Inflation 2.75%
Payroll Growth 2.75% plus merit
Investment Rate of Return 7.00% per annum
Healthcare Cost-trend Rates 6.00% HMO/6.5% PPO decreasing to 5.00% HMO/5.00% PPO
Retirement Age Tier 1 employees - 2.7% at 55 and Tier 2 employees - 2.0% at 62.
The probabilities of Retirement are based on the 2014 CalPERS
Experience Study for the period from 1997 to 2011.
Mortality Pre-retirement mortality and post-retirement mortality probability
based on CalPERS Experience Study with mortality improvements
using Mortality Improvement Scale MP2018.
(1)Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be
displayed up to 10 years as information becomes available. Contributions are determined by an actuarial valuation based on eligible
participants’ medical and dental benefits.
70
Schedule of Changes in the Net Pension Liability
and related Ratios for Fiscal Years Ended June 30,
Last Ten Fiscal Years (1)
Measurement Period2 2018-2019 2017-2018 2016-2017 2015-2016
TOTAL PENSION LIABILITY
Service Cost $ 2,586,911 $ 2,528,271 $ 2,556,902 $ 2,298,617
Interest 9,638,674 9,168,092 8,836,284 8,575,275
Changes of Benefit Terms - - - -
Changes of Assumptions - (1,312,634) 7,308,486 -
Difference Between Expected and Actual
Experience 1,183,213 461,917 (1,208,593) (613,440)
Benefit Payments, Including Refunds of
Employee Contributions (6,658,719) (5,995,949) (5,779,040) (5,448,218)
Net Change in Total Pension Liability 6,750,079 4,849,697 11,714,039 4,812,234
Total Pension Liability - Beginning 135,659,308 130,809,611 119,095,572 114,283,338
Total Pension Liability - Ending (a) $ 142,409,387 $ 135,659,308 $ 130,809,611 $ 119,095,572
PLAN FIDUCIARY NET POSITION
Net Plan to Plan Resource Movement $ - $ (203) $- $-
Contributions - Employer 36,706,983 4,441,517 4,105,810 3,819,770
Contributions - Employee 1,019,255 1,015,008 1,014,329 1,010,337
Net Investment Income 7,516,686 6,949,676 8,149,097 369,214
Benefit Payments, Including Refunds of
Employee Contributions (6,658,719) (5,995,949) (5,779,040) (5,448,218)
Administrative Expense (62,278) (126,575) (109,029) (45,185)
Other Changes in Fiduciary Net Position 203 (240,367) - -
Net Change in Fiduciary Net Position 38,522,130 6,043,107 7,381,167 (294,082)
Plan Fiduciary Net Position - Beginning 87,270,402 81,227,295 73,846,128 74,140,210
Plan Fiduciary Net Position - Ending (b) $ 125,792,532 $ 87,270,402 $ 81,227,295 $ 73,846,128
Plan Net Pension Liability/(Asset) -
Ending (a) - (b) $ 16,616,855 $ 48,388,906 $ 49,582,316 $ 45,249,444
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 88.33% 64.33% 62.10% 62.01%
Covered Payroll $ 12,892,655 $ 12,969,485 $ 12,829,415 $ 12,767,963
Plan Net Pension Liability/(Asset) as a
Percentage of Covered Payroll 128.89% 373.10% 386.47% 354.40%
Continued
1 Measurement period 2018-19 (fiscal year 2019-2020) was the sixth year of implementation; therefore, only six years are shown.
2 Historical information is required only for measurement periods for which GASB 68 is applicable.
Notes to Schedule:
Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes
which occurred after June 30, 2016. 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: For the 2020, 2019 and 2017 fiscal years, there were no changes. For the 2018 fiscal
year, the accounting discount rate reduced from 7.65% to 7.15%. For the 2016 fiscal year, amounts reported
reflect an adjustment the discount rate of 7.5% (net of administrative expense) to 7.65% (without a reduction for
pension plan administrative expense). In 2014, amounts reported were based on the 7.5% discount rate.
71
Schedule of Changes in the Net Pension Liability and
related Ratios for Fiscal Years Ended June 30, - Continued
Last Ten Fiscal Years (1)
Measurement Period2 2014-2015 2013-2014
TOTAL PENSION LIABILITY
Service Cost $ 2,250,860 $ 2,330,709
Interest 8,229,312 7,907,915
Changes of Benefit Terms - -
Changes of Assumptions (1,996,819) -
Difference Between Expected and Actual
Experience (981,200) -
Benefit Payments, Including Refunds of
Employee Contributions (5,288,251) (4,885,406)
Net Change in Total Pension Liability 2,213,902 5,353,218
Total Pension Liability - Beginning 112,069,436 106,716,218
Total Pension Liability - Ending (a) $114,283,338 $112,069,436
PLAN FIDUCIARY NET POSITION
Net Plan to Plan Resource Movement $ - $ -
Contributions - Employer 3,557,098 3,137,174
Contributions - Employee 1,007,023 1,074,954
Net Investment Income 1,601,760 10,874,999
Benefit Payments, Including Refunds of
Employee Contributions (5,288,251) (4,885,406)
Administrative Expense (83,511) -
Other Changes in Fiduciary Net Position - -
Net Change in Fiduciary Net Position 794,119 10,201,721
Plan Fiduciary Net Position - Beginning 73,346,091 63,144,370
Plan Fiduciary Net Position - Ending (b) $ 74,140,210 $73,346,091
Plan Net Pension Liability/(Asset) -
Ending (a) - (b) $40,143,128 $38,723,345
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 64.87% 65.45%
Covered Payroll $12,451,513 $12,276,578
Plan Net Pension Liability/(Asset) as a
Percentage of Covered Payroll 322.40% 315.42%
1 Measurement period 2018-19 (fiscal year 2019-2020) was the sixth year of implementation; therefore, only six years are shown.
2 Historical information is required only for measurement periods for which GASB 68 is applicable.
72
Schedule of Plan Contributions
For Fiscal Year Ended June 30,
Last Ten Fiscal Years (1)
Fiscal
Year
Actuarially
Determined
Contribution2
Contributions in
Relation to the
Actuarially Determined
Contribution2
Contribution
Deficiency
(Excess)
Covered
Payroll3
Contributions as
a Percentage of
Covered Payroll3
2015 $ 3,557,098 $ (3,557,098) $ 0 $ 12,451,513 28.57%
2016 $ 3,819,770 $ (3,819,770) $ 0 $ 12,767,963 29,92%
2017 $ 4,105,810 $ (4,105,810) $ 0 $ 12,829,415 32.00%
2018 $ 4,441,517 $ (4,441,517) $ 0 $ 12,969,485 34.25%
2019 $ 4,906,983 $ (36,706,983) $ (31,800,000) $ 12,892,655 284.71%
2020 $ 2,465,751 $ (2,465,751) $ 0 $ 13,688,895 18.01%
1Historical 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 Includes one year’s payroll growth assumption using 2.75% payroll growth assumption for fiscal years 2018-19; 3.00% payroll growth
assumption for fiscal years 2015-2017.
Notes to Schedule:
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year
2019-20 were from the June 30, 2017 public agency valuations. Also note, that some of the data from prior
years were updated with the most current available information.
Actuarial Cost Method Entry Age Normal
Amortization Method/Period For details see June 30, 2017 Funding Valuation Report
Asset Valuation Method Actuarial Value of Assets. For details, see June 30, 2017 Funding
Valuation Report
Discount Rate 7.25%
Inflation 2.625%
Salary Increases Varies by Entry Age and Service
Payroll Growth 2.875%
Investment Rate of Return 7.00% Net of Pension Plan Investment and Administrative Expenses;
includes Inflation
Retirement Age The probabilities of Retirement are based on the 2017 CalPERS
Experience Study.
Mortality The probabilities of mortality are based on the 2017 CalPERS
Experience Study.
73
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74
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 76
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 82
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 tax.
Debt 92
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 98
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 100
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.
75
Fiscal Net Investment Total
Year in Capital Assets Restricted Unrestricted Net Position
2020 345,156,470$ 4,261,399$ 38,048,894$ 387,466,763$
2019 354,639,520 4,248,007 28,707,083 387,594,610
2018 355,628,577 4,247,025 27,664,926 387,540,528 (1)
2017 350,981,714 4,306,724 45,898,551 401,186,989
2016 351,617,201 4,402,301 45,268,275 401,287,777
2015 354,046,090 4,658,306 43,717,930 402,422,326 (2)
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
(1)For Fiscal Year ending June 30, 2018, the $13.6 million decrease of Total Net Position is primarily a result of the
implementation of GASB Statement No. 75 "Accounting and Financial Reporting for Postemployment Benefits Other
Than Pensions-an amendment of GASB Statement No. 45”. Implementation of this standard decreased the net
position at July 1, 2017 by $17.8 million and recognized a net OPEB liability, deferred outflows of resources, and
expenses related to the OPEB plan.
(2)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 Transistions
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
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Net Positon, in Thousands ($)
76
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
2020 95,938,809$ 106,987,896$ (11,049,087)$ 3,979,308$ (7,069,779)$ 6,941,932$ (127,847)$
2019 91,952,166 103,728,988 (11,776,822)2,374,095 (9,402,727)9,456,809 54,082
2018 97,473,772 105,734,349 (8,260,577)2,923,999 (5,336,578)9,506,192 4,169,614
2017 88,481,254 96,624,381 (8,143,127)2,471,420 (5,671,707)5,570,919 (100,788)
2016 78,876,307 89,669,543 (10,793,236)2,687,368 (8,105,868)6,971,319 (1,134,549)
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)
Source: Otay Water District
Changes in Net Position - Last Ten Fiscal Years
-$6,000
-$4,000
-$2,000
$0
$2,000
$4,000
$6,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Changes in Net Position, in Thousands ($)
77
Fiscal Connection and Percent
Year Water Sales Wastewater Other Fees Total Change
2020 90,435,148$ 2,921,310$ 2,582,351$ 95,938,809$ 4.3%
2019 86,756,222 2,961,157 2,234,787 91,952,166 -5.7%
2018 92,595,195 2,865,520 2,013,057 97,473,772 10.2%
2017 83,720,150 2,983,495 1,777,609 88,481,254 12.2%
2016 73,940,200 3,175,300 1,760,807 78,876,307 -5.9%
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%
Source: Otay Water District
Operating Revenues by Source - Last Ten Fiscal Years
$0
$20,000
$40,000
$60,000
$80,000
$100,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Operating Revenues, in Thousands ($)
78
Fiscal Cost of Administrative Percent
Year Water Sales Wastewater and General Depreciation Total Change
2020 62,573,257$ 2,439,117$ 25,196,555$ 16,778,967$ 106,987,896$ 3.1%
2019 60,065,964 2,784,579 24,070,648 16,807,797 103,728,988 -1.9%
2018 62,321,213 2,501,240 23,445,578 17,466,318 105,734,349 9.4%
2017 56,882,487 1,964,855 19,991,542 17,785,497 96,624,381 7.8%
2016 51,826,046 2,051,913 19,318,247 16,473,337 89,669,543 -2.4%
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%
Source: Otay Water District
Operating Expenses by Function - Last Ten Fiscal Years
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Operating Expenses, in Thousands ($)
Cost of Water Sales Wastewater Administrative and General Depreciation
79
Fiscal Investment Taxes and Availability Rents and Percent
Year Earnings Assessments Charges Leases Miscellaneous Total Change
2020 1,784,834$ 4,939,950$ 694,768$ 1,501,328$ 1,936,162$ 10,857,042$ -6.1%
2019 1,978,392 4,671,182 723,246 1,384,211 2,800,613 11,557,644 20.4%
2018 723,860 4,481,719 697,724 1,439,247 2,255,605 9,598,155 -10.6%
2017 408,754 4,114,583 729,325 1,375,305 4,107,558 10,735,525 20.7%
2016 758,004 3,966,593 616,591 1,281,150 2,274,623 8,896,961 -0.6%
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%
Source: Otay Water District
Non-Operating Revenues by Source - Last Ten Fiscal Years
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Non-Operating Revenues, in Thousands ($)
80
Fiscal Interest Percent
Year Donations (1)Expense Miscellaneous Total Change
2020 121,600$ 4,953,987$ 1,802,147$ (6)6,877,734$ -25.1%
2019 118,040 4,713,883 4,351,626 (5)9,183,549 37.6%
2018 123,050 3,941,321 2,609,785 6,674,156 -19.2%
2017 125,742 5,069,767 3,068,596 (4)8,264,105 33.1%
2016 120,722 4,603,093 1,485,778 6,209,593 3.7%
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%
(1)Donations are contributions to the Water Conservation Authority formed in 1999. See Note 9 in the Notes to Financial
Statements for more information.
(2)Miscellaneous expense includes $1.4 million of non-capitalizable expenses with corresponding miscellaneous revenues. In
prior years these expenses and revenues were presented, net of revenue, in miscellaneous revenues.
(3)Miscellaneous expense includes $2.3 million of non-capitalizable expenses which were partially funded by capacity revenue.
(4)Miscellaneous expense includes $1.8 million of non-capitalizable expenses which were primarily funded by capacity revenue.
(5)Miscellaneous expense includes $3.0 million of non-capitalizable expenses which were partially funded by capacity revenue
and $1.1 million loss on disposal of capital assets.
(6)Miscellaneous expense includes $0.4 million of non-capitalizable expenses which were partially funded by capacity revenue
and $1.2 million loss on disposal of capital assets.
Source: Otay Water District
Non-Operating Expenses by Function - Last Ten Fiscal Years
$0
$2,000
$4,000
$6,000
$8,000
$10,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Non-Operating Expenses, in Thousands ($)
Miscellaneous Interest Expense Donations
81
Fiscal Total Direct
Year Real Personal Total Tax Rate
2020 32,068,524,548$ 570,816,478$ 32,639,341,026$ 1.00%
2019 30,175,832,441 591,916,883 30,767,749,324 1.00%
2018 28,808,597,510 578,765,787 29,387,363,297 1.00%
2017 27,060,627,238 538,359,438 27,598,986,676 1.00%
2016 25,506,243,489 551,455,064 26,057,698,553 1.00%
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%
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
$35,000,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Assessed Valuation of Property, In Thousands ($)
82
Fiscal
Year Purchases Sales Production Purchases Sales
2020 11,995,858 11,390,483 382,670 1,070,079 (2)1,451,957
2019 11,928,819 11,326,752 323,690 1,168,780 1,462,632
2018 12,910,269 12,227,383 377,450 1,460,271 1,810,502
2017 11,762,115 11,250,331 242,800 1,386,600 1,625,768
2016 11,108,105 10,475,290 439,650 1,163,117 1,591,677
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 12,363,857 461,060 1,293,310 1,675,591
(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 87-90 for meter sizes and their corresponding water rates.
(2)In FY 2020, recycled water purchases from the City of San Diego declined due to the City's plant being shut
down from January to June of 2020.
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
5,000,000
10,000,000
15,000,000
20,000,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Recycled Purchases Recycled Production Potable Purchases
Water Purchases, Productions, and Sales, in Hundred Cubic Feet (HCF)
83
Fiscal
Year Total (1)
2020 302 4 306
2019 463 12 475
2018 574 14 588
2017 109 9 118
2016 116 4 120
2015 138 8 146
2014 195 3 198
2013 305 5 310
2012 457 24 481
2011 283 9 292
(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
200
400
600
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Meter Sales by Type
Recycled Potable
84
Fiscal
Year Potable Recycled Sewer Total
2020 50,994 735 4,737 56,466
2019 50,555 726 4,737 56,018
2018 50,045 724 4,714 55,483
2017 49,502 721 4,683 54,906
2016 49,425 708 4,677 54,810
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
Source: Otay Water District
Number of Customers by Service Type - Last Ten Fiscal Years
0
7,500
15,000
22,500
30,000
37,500
45,000
52,500
60,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Number of Customers by Service Type
Sewer Recycled Potable
85
Fiscal
Year 1% Property Tax
Special
Assessments
Total
Levies
Total
Collections (1)
End of the Year
Percent
Collected
2020 $ 4,203,245 $ 2,013,450 $ 6,216,694 $ 6,122,835 98%
2019 4,036,261 2,023,939 6,060,200 5,955,998 98%
2018 3,795,363 1,960,771 5,756,134 5,691,467 99%
2017 3,539,836 1,999,480 5,539,316 5,532,395 100%
2016 3,367,615 1,998,874 5,366,489 5,127,563 96%
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%
(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
$7,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Levies and Collections, in Thousands ($)
Levy Collections
86
Fixed Rates 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
System Fee by Meter Size
Residential Potable
3/4"18.87$ 18.05$ 17.38$ 15.91$ 18.91$ 19.39$ 16.19$ 16.74$ 14.58$ 14.58$
1"26.67 25.51 24.56 22.47 26.71 27.39 22.87 21.26 18.52 18.52
1.5"46.13 44.13 42.49 38.88 46.22 47.40 39.58 32.57 28.37 28.37
3/4"41.49 39.69 38.21 15.91 18.91 19.39 16.19 16.74 14.58 14.58
1"58.59 56.05 53.97 22.47 26.71 27.39 22.87 21.26 18.52 18.52
1.5"101.38 96.98 93.37 38.88 46.22 47.40 39.58 32.57 28.37 28.37
2"152.67 146.04 140.61 58.55 69.61 71.39 59.62 46.13 40.18 40.18
3"289.53 276.96 266.66 111.04 132.02 135.41 113.08 82.29 71.68 71.68
4"443.54 424.28 408.50 170.10 202.24 207.43 173.22 122.99 107.13 107.13
6"871.38 833.54 802.55 334.18 397.31 407.50 340.29 236.02 205.59 205.59
8"1,384.73 1,324.59 1,275.34 531.05 631.37 647.56 540.76 371.64 323.73 323.73
10"1,983.62 1,897.47 1,826.91 760.72 904.44 927.63 774.64 529.88 461.57 461.57
3/4"39.08 37.38 35.99 15.91 18.91 19.39 16.19 16.74 14.58 14.58
1"55.19 52.79 50.83 22.47 26.71 27.39 22.87 21.26 18.52 18.52
1.5"95.50 91.35 87.95 38.88 46.22 47.40 39.58 32.57 28.37 28.37
2"143.82 137.57 132.45 58.55 69.61 71.39 59.62 46.13 40.18 40.18
3"272.73 260.89 251.19 111.04 132.02 135.41 113.08 82.29 71.68 71.68
4"417.79 399.65 384.79 170.10 202.24 207.43 173.22 122.99 107.13 107.13
6"820.82 785.17 755.97 334.18 397.31 407.50 340.29 236.02 205.59 205.59
8"1,304.36 1,247.71 1,201.32 531.05 631.37 647.56 540.76 371.64 323.73 323.73
10"1,868.46 1,787.32 1,720.86 760.72 904.44 927.63 774.64 529.88 461.57 461.57
3/4"33.00 31.57 30.40 15.91 18.91 19.39 16.19 16.74 14.58 14.58
1"46.61 44.59 42.93 22.47 26.71 27.39 22.87 21.26 18.52 18.52
1.5"80.65 77.15 74.28 38.88 46.22 47.40 39.58 32.57 28.37 28.37
2"121.44 116.17 111.85 58.55 69.61 71.39 59.62 46.13 40.18 40.18
3"230.32 220.32 212.13 111.04 132.02 135.41 113.08 82.29 71.68 71.68
4"352.85 337.53 324.98 170.10 202.24 207.43 173.22 122.99 107.13 107.13
6"693.20 663.10 638.44 334.18 397.31 407.50 340.29 236.02 205.59 205.59
8"1,101.58 1,053.74 1,014.56 531.05 631.37 647.56 540.76 371.64 323.73 323.73
10"1,577.99 1,509.46 1,453.33 760.72 904.44 927.63 774.64 529.88 461.57 461.57
3/4"40.21 38.14 36.85 15.91 18.91 19.39 16.19 16.74 14.58 14.58
1"56.78 53.86 52.04 22.47 26.71 27.39 22.87 21.26 18.52 18.52
1.5"98.27 93.21 90.06 38.88 46.22 47.40 39.58 32.57 28.37 28.37
2"148.00 140.38 135.63 58.55 69.61 71.39 59.62 46.13 40.18 40.18
3"280.65 266.21 257.21 111.04 132.02 135.41 113.08 82.29 71.68 71.68
4"429.92 407.80 394.01 170.10 202.24 207.43 173.22 122.99 107.13 107.13
6"844.62 801.16 774.07 334.18 397.31 407.50 340.29 236.02 205.59 205.59
8"1,342.20 1,273.13 1,230.08 531.05 631.37 647.56 540.76 371.64 323.73 323.73
10"1,922.69 1,823.75 1,762.08 760.72 904.44 927.63 774.64 529.88 461.57 461.57
Continued
Water Fixed Rates - Last Ten Fiscal Years
Landscape, Agricultural & Construction Potable (1)
Public Agency & Commercial Potable (1)
Master Meter Potable (1)
Recycled Commercial (1)
87
Fixed Rates 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Water Fixed Rates - Last Ten Fiscal Years
System Fee by Meter Size
3/4"33.95$ 32.20$ 31.11$ 15.91$ 18.91$ 19.39$ 16.19$ 16.74$ 14.58$ 14.58$
1"47.95 45.48 43.94 22.47 26.71 27.39 22.87 21.26 18.52 18.52
1.5"82.97 78.70 76.04 38.88 46.22 47.40 39.58 32.57 28.37 28.37
2"124.94 118.51 114.50 58.55 69.61 71.39 59.62 46.13 40.18 40.18
3"236.94 224.75 217.15 111.04 132.02 135.41 113.08 82.29 71.68 71.68
4"362.99 344.31 332.67 170.10 202.24 207.43 173.22 122.99 107.13 107.13
6"724.02 686.76 663.54 334.18 397.31 407.50 340.29 236.02 205.59 205.59
8"1,133.22 1,074.91 1,038.56 531.05 631.37 647.56 540.76 371.64 323.73 323.73
10"1,623.32 1,539.79 1,487.72 760.72 904.44 927.63 774.64 529.88 461.57 461.57
Fire Services
All Types 30.11 30.11
Less than 3 inch 22.55 21.57 20.77 20.77 24.69 25.32 21.14 34.57
4 inch and higher 30.38 29.06 27.98 27.98 33.27 34.12 28.49 34.57
CWA and MWD Pass-through charges by Meter Size
Residential Potable
3/4"15.56 15.10 15.45 15.00 16.84 13.67 14.45 13.28 14.01 11.82
1"28.89 28.04 28.68 27.84 31.24 25.35 26.79 22.12 23.33 19.69
1.5"65.31 63.40 64.85 62.96 70.66 57.35 60.61 44.31 46.74 39.44
Non-Residential & Other Potable
3/4"15.56 15.10 15.45 15.00 16.84 13.67 14.45 13.28 14.01 11.82
1"28.89 28.04 28.68 27.84 31.24 25.35 26.79 22.12 23.33 19.69
1.5"65.31 63.40 64.85 62.96 70.66 57.35 60.61 44.31 46.74 39.44
2"111.10 107.84 110.30 107.08 120.17 97.53 103.08 70.85 74.74 63.07
3"236.29 229.36 234.60 227.75 255.60 207.44 219.23 141.71 149.48 126.14
4"378.38 367.29 375.68 364.72 409.32 332.20 351.09 221.43 233.58 197.17
6"774.56 751.85 769.02 746.59 837.89 680.02 718.69 442.80 467.09 394.17
8"1,250.83 1,214.16 1,241.89 1,205.65 1,353.09 1,098.15 1,160.59 708.53 747.39 630.71
10"1,800.41 1,747.63 1,787.55 1,735.39 1,947.62 1,580.67 1,670.55 1,015.06 1,070.74 903.58
(1)Effective 2018 for System Fees, instead of one rate structure for all customers, each class of customers is assigned a different
rate structure.
Source: Otay Water District
Recycled Irrigation (1)
88
Usage Rate 2020 2019 2018 (2)2017 2016 2015 2014 2013 2012 2011
Tier 1 (conservation tier)-$ -$ -$ 2.53$ 2.13$ 1.95$ 1.86$ 1.73$ 1.58$ 1.49$
Tier 2 3.31 3.17 3.05 3.95 3.32 3.04 2.90 2.69 2.45 2.31
Tier 3 5.91 5.65 5.44 5.13 4.32 3.95 3.77 3.50 3.19 3.00
Tier 4 7.63 7.30 7.03 7.90 6.65 6.08 5.80 5.39 4.92 4.63
Tier 1 3.09 2.96 2.85 3.90 3.28 3.00 2.86 2.66 2.43 2.29
Tier 2 5.61 5.37 5.17 5.05 4.25 3.89 3.71 3.45 3.15 2.97
Tier 3 6.90 6.60 6.35 7.80 6.56 6.00 5.73 5.32 4.85 4.57
Government Fee (1)0.42 0.42 0.41 0.41 0.37 0.32 0.31 0.29 0.29 0.29
Tier 1 3.92 3.75 3.61 4.17 3.51 3.21 3.06 2.84 2.59 2.44
Tier 2 4.23 3.56 3.26 3.14 2.92 2.66 2.50
Tier 3 4.30 3.62 3.31 3.19 2.96 2.70 2.54
Tier 1 5.72 5.47 5.27 5.68 4.78 4.37 4.17 3.87 3.53 3.32
Tier 2 5.74 4.83 4.42 4.25 3.95 3.60 3.39
Tier 3 5.81 4.89 4.47 4.32 4.01 3.66 3.45
Tier 1 3.29 3.12 3.01 3.53 2.97
Tier 2 3.60 3.03
Tier 3 3.65 3.07
Government Fee (1)0.42 0.42 0.41 0.41 0.37 0.32 0.31 0.29 0.29 0.29
Tier 1 4.65 4.41 4.26 4.85 4.08 3.73 3.56 3.31 3.02 2.84
Tier 2 4.92 4.14 3.79 3.61 3.35 3.06 2.88
Tier 3 4.99 4.20 3.84 3.68 3.42 3.12 2.94
Energy Pumping Fee
Per 100 cubic feet (3)0.060 0.056 0.053 0.044 0.072 0.050 0.048 0.042 0.045 0.044
(1) An additional charge per unit is assessed to governmental customers in lieu of tax revenues.
(2) Effective 2018, there is no more conservation tier for residential; and there is only one tier each for Public Agency & Commercial,
Landscape, Agricultural & Construction, Recycled Commercial, and Recycled Irrigation.
(3) 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 $.060 per 100 cubic feet of water for each 100 feet of
lift above the base elevation of 450 feet. All water customers are in one of twenty-nine zones based on elevation.
Source: Otay Water District
Water Variable Rates - Last Ten Fiscal Years
Recycled Irrigation
Recycled Commercial
Public Agency & Commercial
Landscape, Agricultural & Construction
Master Meter
Residential
89
Description 2020 2019 2018 2017 2016 2015 2014 2013** 2012 2011
Per Unit 2.93$ 2.67$ 2.77$ 2.58$ 2.46$ 2.46$ 2.46$ 2.35$ 1.77$ 1.67$
Low Strength 2.93 2.67 2.77 2.58 2.46 2.46 2.46 2.35
Medium Strength 3.64 3.31 3.98 3.70 3.53 3.53 3.53 3.37
High Strength 5.01 4.56 6.34 5.90 5.63 5.63 5.63 5.37
Sewer Rate Per ASU 41.75 39.39
3/4"16.38 14.91 17.08 15.89 27.07 15.89 15.89 14.38 12.26 11.57
1"16.38 14.91 17.08 15.89 27.07 15.89 15.89 14.38 17.88 16.87
3/4"16.38 14.91 30.50 28.37 27.07 27.07 27.07 25.83
1"40.94 37.27 44.94 41.80 39.86 39.86 39.86 38.03
1.5"81.88 74.55 80.92 75.27 71.82 71.82 71.82 68.53
2"131.00 119.27 124.12 115.46 110.17 110.17 110.17 105.12
3"245.64 223.64 224.93 209.24 199.66 199.66 199.66 190.52
4"409.40 372.73 368.97 343.23 327.51 327.51 327.51 312.51
6"818.79 745.45 729.04 678.18 647.12 647.12 647.12 617.48
8"1,310.08 1,192.73 1,161.15 1,080.14 1,030.67 1,030.67 1,030.67 983.46
10"1,883.23 1,714.54 1,665.25 1,549.07 1,478.12 1,478.12 1,478.12 1,410.42
Calculation of Monthly Residential Sewer Billing:
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% 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 into 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-December of previous year.
(6)The usage fee is a per unit charge 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.
Source: Otay Water District
Non-Residential
Sewer Variable and Fixed Rates - Last Ten Fiscal Years
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) x Usage Fee (6)) + Fixed Fee (7)
Residential
Non-Residential
Residential
90
Customer Customer Annual % of Water
Name Type Revenues Sales
1.City of Chula Vista Publicly Owned 3,531,178$ 3.9%
2.State of California Publicly Owned 1,140,710 1.3%
3.County of San Diego Publicly Owned 1,026,287 1.1%
4.Eastlake III Community Association Commercial 886,948 1.0%
5.Chula Vista Elementary School District Publicly Owned 705,034 0.8%
6.Sweetwater Union High School District Publicly Owned 596,194 0.7%
7.Eastlake Country Club Commercial Recycled 551,600 0.6%
8.Elite Athlete Services, LLC Commercial 388,580 0.4%
9.Windingwalk Master Association Commercial 336,757 0.4%
10.Homefed Village III Temporary 329,712 0.4%
Total Top Ten Customers 9,493,000$ 10.6%
Other Customers 80,942,148 89.4%
Total Water Sales 90,435,148$ 100.0%
Customer Customer Annual % of Water
Name Type Revenues Sales
1.City of Chula Vista Publicly Owned 2,298,356$ 3.9%
2.State of California Publicly Owned 1,003,099 1.7%
3.Sweetwater School District Publicly Owned 668,588 1.1%
4.County of San Diego Publicly Owned 636,773 1.1%
5.Eastlake Summit Association Commercial (Irrigation)628,860 1.1%
6.Eastlake III Community Association Commercial (Irrigation)578,224 1.0%
7.Eastlake Country Club Commercial (Irrigation)412,035 0.7%
8.Cuyamaca College Publicly Owned 399,884 0.7%
9.Chula Vista School District Publicly Owned 391,737 0.7%
10.Windingwalk Master Association Commercial (Irrigation)341,281 0.6%
Total Top Ten Customers 7,358,837$ 12.6%
Other Customers 50,934,347 87.4%
Total Water Sales 58,293,184$ 100.0%
Source: Otay Water District
Ten Largest Customers - Current Year and Nine Years Ago
Fiscal Year 2020
Fiscal Year 2011
91
As a Share
Fiscal Population GO Revenue Capital Per of Personal
Year Estimate Bond COPS Bonds Notes Leases Total Capita Income (1)
2020 226,000 2,140,435$ -$ 114,762,562$ (5)-$ -$ 116,902,997$ 517.27$ 0.85%
2019 225,000 2,806,789 - 116,189,228 (4)- - 118,996,017 528.87 0.89%
2018 225,000 3,458,143 7,593,293 84,170,550 - - 95,221,986 423.21 0.73%
2017 224,000 4,079,498 8,192,548 87,134,618 - - 99,406,664 443.78 0.80%
2016 220,000 4,680,853 8,791,803 (3)90,218,686 - - 103,691,342 471.32 0.86%
2015 217,000 5,267,208 44,990,103 54,887,993 - - 105,145,304 484.54 0.90%
2014 213,000 5,833,563 46,475,314 56,508,490 - - 108,817,367 510.88 1.00%
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%
(1) See the Demographics and Economic Statistics schedule on page 99 for personal income data.
Per Capita Personal Income used in the calculation of "As a Share of Personal Income" is updated annually for the last
ten fiscal years based on the most recent LAEDC economic reports published. The Share of Personal Income is therefore adjusted
to reflect the economic data update.
(2)2004 COPS were refunded with the issuance of 2013 Water Revenue Refunding Bonds in June 2013.
(3)2007 COPS were refunded with the issuance of 2016 Water Revenue Refunding Bonds in May 2016.
(4) In November 2018, the District issued $32,435,000 in Water Revenue Bonds, Series 2018, of which a portion of the proceeds was
used to advance refund $6,900,000 of the 1996 Certificates of Participation.
(5) In December 2019, the District issued $3,120,000 in Wastewater Revenue Bonds to pay for certain capital improvements to the
District's wastewater system.
Source: Otay Water District
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years
$0
$100
$200
$300
$400
$500
$600
$700
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Outstanding Debt, Per Capita
92
Adjusted Net Revenues
Fiscal Adjusted Operating Available for Debt Service Requirements (4)Coverage
Year Revenues (1)Expenses (2)Debt Service Principal Interest Total Factor (3)
2020 105,820,913$ 88,223,522$ 17,597,391$ 4,075,000$ 5,289,640$ 9,364,640$ 188%
2019 103,126,288 85,243,519 17,882,769 3,405,000 5,037,638 8,442,638 212%
2018 110,274,227 86,437,355 23,836,872 3,215,000 4,334,368 7,549,368 316%
2017 94,551,308 79,062,983 15,488,325 3,335,000 4,420,433 7,755,433 200%
2016 85,417,850 72,117,631 13,300,219 3,120,000 4,640,947 7,760,947 171%
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%
(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 Revenue Bonds.
Source : Otay Water District
Pledged Revenue Coverage (Water) - Last Ten Fiscal Years
0%
50%
100%
150%
200%
250%
300%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Coverage Factor, in Percentage (%)
Actual Ratio Minimum ratio
93
Adjusted Net Revenues
Fiscal Sewer Operating Available for Debt Service Requirements (3)Coverage
Year Revenues Expenses (1)Debt Service Principal Interest Total Factor (2)
2020 (5)3,061,829$ 2,439,432$ 622,397$ -$ 50,154$ 50,154$ 1,241%
(1)Adjusted operating expenses exclude depreciation expense.
(2)The District's bond covenants require a minimum coverage factor of 125%.
(3)Pledge debts are Revenue Bonds.
(4)No wasterwater revenue bonds were issued between FY2011 and FY2019.
(5)In December 2019, the District issued $3,120,000 in Wastewater Revenue Bonds to pay for certain
capital improvements to the District's wastewater system.
Source: Otay Water District
Pledged Revenue Coverage (Wastewater) - Last Ten Fiscal Years (4)
0%
200%
400%
600%
800%
1000%
1200%
1400%
2020
Coverage Factor, in Percentage (%)
Actual Ratio Minimum ratio
94
Net Bonded
Net Debt to Net Bonded
Fiscal Population Assessed Bonded Assessed Debt Per
Year Estimate Valuation Debt Valuation Capita
2020 226,000 32,639,341,026$ 2,140,435$ 0.01%9.47$
2019 225,000 30,767,749,324 2,806,789 0.01%12.47
2018 225,000 29,387,363,297 3,458,143 0.01%15.37
2017 224,000 27,598,986,676 4,079,498 0.01%18.21
2016 220,000 26,057,698,553 4,680,853 0.02%21.28
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
Source: Otay Water District
Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years
0.00%
0.01%
0.02%
0.03%
0.04%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Bonded Debt Ratios, in Percentage (%)
95
Computation of Direct and Overlapping Bonded Debt
June 30, 2020
2019-20 Assessed Valuation: $32,639,341,026
Total Debt District’s Share of
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/2020 % Applicable (1) Debt 6/30/2020
Metropolitan Water District $ 37,300,000 1.054% $ 393,142
Otay Water District Improvement District No. 27 2,140,435 100. 2,140,435
Grossmont-Cuyamaca Community College District 308,340,377 14.781 45,575,791
Southwestern Community College District 415,123,676 40.980 170,117,682
Grossmont Union High School District 610,442,915 15.218 92,897,203
Sweetwater Union High School District 395,759,333 48.794 193,106,809
Chula Vista City School District and School Facilities Improvement
District 175,038,285 61.604 & 27.228 80,474,164
San Ysidro School District 115,873,131 50.295 58,278,391
Other School Districts 5,355,472,259 Various 53,707,878
Grossmont Healthcare District 254,648,330 13.474 34,311,316
City of Chula Vista Community Facilities District 127,550,000 100.127,550,000
Sweetwater Union High School District Community Facilities
Districts 66,371,938 10.894 - 100. 62,023,842
City 1915 Act Bonds 6,450,000 100.6,450,000
California Statewide Communities Development Authority
San Diego County / Venture Community Center Assessment District 905,150 100.905,150
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $927,931,803
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
San Diego County General Fund Obligations $231,350,000 5.868% $ 13,575,618
San Diego County Pension Obligation Bonds 456,040,000 5.868 26,760,427
San Diego Superintendent of Schools Certificates of Participation 9,350,000 5.868 548,658
Otay Water District 114,762,562 100. 114,762,562
Grossmont and Southwestern Community College District
General Fund Obligations 820,000 14.781 & 40.980 277,088
Sweetwater Union High School District Certificates of Participation 38,060,000 48.794 18,570,996
Chula Vista City School District Certificates of Participation 152,895,000 61.604 94,189,436
San Ysidro School District Certificates of Participation 51,844,715 50.295 26,075,299
Other School District Certificates of Participation 27,984,639 Various 5,972,630
City of Chula Vista Certificates of Participation 149,435,000 69.481 103,828,932
City of San Diego General Fund Obligations 496,327,409 0.823 4,084,775
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $408,646,421
Less: Otay Water District Revenue Bonds (100% self-supporting) 114,762,562
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $293,883,859
Continued
96
Computation of Direct and Overlapping Bonded Debt
OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $24,540,000 16.221% $3,980,633
TOTAL GROSS DIRECT DEBT 116,902,997
TOTAL NET DIRECT DEBT 2,140,435 (3)
TOTAL OVERLAPPING DEBT $1,223,655,860
COMBINED TOTAL DEBT $1,225,760,860 (2)
Ratios to 2019-20 Assessed Valuation:
Direct Debt ($2,140,435) ............................................................................ 0.01%
Total Direct and Overlapping Tax and Assessment Debt .................. 2.84%
Combined Total Debt ......................................................................................... 3.76%
Ratios to Redevelopment Successor Agency Incremental Valuation ($341,142,224):
Total Overlapping Tax Increment Debt ...................................................... 1.17%
(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.
(3)Excludes $114,762,562 Revenue Bonds supported by water revenues and backed by a rate covenant.
Source: California Municipal Statistics, Inc. and Otay Water District
97
2011
% of Total % of Total
County County
Employer Employees Rank Employment Employees Rank Employment
Federal Government (1)50,400 1 3.38% 46,300 1 3.41%
Qualcomm Inc.37,000 2 2.48%10,509 8 0.77%
UC San Diego (2)35,802 3 2.40% 27,393 2 2.02%
County of San Diego (1)21,100 4 1.42% 15,109 4 1.11%
Sharp HealthCare 18,770 5 1.26%14,969 5 1.10%
City of San Diego (1)18,700 6 1.26% 10,211 9 0.75%
Scripps Health (3)15,000 7 1.01% 13,830 6 1.02%
San Diego Unified School District (4)13,559 8 0.91% 13,730 7 1.01%
State of California excluding UCSD (1)10,398 9 0.70% 18,107 3 1.33%
Kaiser Permanente 9,630 10 0.65%8,200 10 0.60%
Total 230,359 15.47%178,358 13.12%
Sources: San Diego Business Journal (Book of Lists)
(1) EDD Labor Market Information
(2) University of California
(3) Scripps Health
(4) San Diego Unified School District
Principal Employers - Current Year and Nine Years Ago
2020
98
Personal Per Capita
Fiscal Income Personal Unemployment
Year Population (in 000'S)Income Rate
2020 3,343,400 204,283,000$ (1)61,100$ (1)6.06%
2019 3,351,800 199,936,000 59,650 3.31%
2018 3,337,500 194,633,000 58,317 3.57%
2017 (2)3,316,200 184,260,000 55,563 4.37%
2016 (2)3,288,600 179,717,000 54,649 4.86%
2015 3,275,500 177,300,000 53,628 5.75%
2014 3,212,300 172,900,000 51,190 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%
(1)Forecast; excludes COVID-19 impact.
(2)Values were updated to reflect actual data.
Source: SANDAG; Census 2010, California Department of Finance; LAEDC-Los Angeles Economic Development
Corp.
Demographic and Economic Statistics - Last Ten Fiscal Years
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Unemployment Rate, in Percentage (%)
99
Department 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
General Manager 5 5 6 6 5 5 5 5 5 6
Finance 31 31 29 31 32 34 34 36 39 42
Operations/Maintenance 53 52 52 51 51 51 51 54 54 54
Engineering 26 26 24 24 24 24 25 24 26 26
Administrative Services 23 23 23 23 26 26 28 29 31 31
Total 138 137 134 135 138 140 143 148 155 159
Source : Otay Water District
Number of Employees by Function - Last Ten Fiscal Years
0
25
50
75
100
125
150
175
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Employees
100
Meter Size 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
3/4" & 5/8" 44,520 44,490 44,473 44,423 44,413 44,395 44,375 44,354 44,376 44,065
1" 4,080 3,680 3,235 2,800 2,756 2,674 2,557 2,412 2,099 1,881
1-1/2" 1,365 1,362 1,343 1,349 1,342 1,335 1,332 1,333 1,326 1,317
2" 1,344 1,334 1,326 1,301 1,299 1,294 1,293 1,295 1,277 1,278
3"105 102 87 87 82 81 77 76 75 75
4"281 279 272 232 210 207 189 169 180 193
6"25 25 24 22 22 18 18 18 19 21
Others 9 9 9 9 9 9 9 9 9 9
Total 51,729 51,281 50,769 50,223 50,133 50,013 49,850 49,666 49,361 48,839
% Change 0.9% 1.0% 1.1% 0.2% 0.2% 0.3% 0.4% 0.6% 1.1% 0.6%
Increase 448 512 546 90 120 163 184 305 522 311
Source : Otay Water District
Active Meters by Size - Last Ten Fiscal Years
0
6,500
13,000
19,500
26,000
32,500
39,000
45,500
52,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Active Meters by Size
101
2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
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 723.0 723.0
(1) 727.0 727.0 727.0 727.0 726.0 725.0 724.0 723.0
40 40 40 40 40 40 40 40 40 40
Water Storage Capacity
(in Acre-Feet) 672.0 672.0 672.0 672.0 672.0 668.0 668.0 667.8 670.8 673.8
Total Potable Water Connections
(No. of Meters in Service)50,994 50,555 50,045 49,502 49,425 49,308 49,148 48,962 48,665 48,154
Number of Pump Stations 21 21 21 21 21 21 21 21 21 21
Number of Potable Water
Valves 20,981 20,746 20,746 20,746 20,746 20,676 20,460 20,317 20,317 19,522
Sewer System
Miles of Sewer Lines 84.0 84.0 (1)88.0 88.0 88.0 88.0 88.0 88.0 88.0 88.0
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)399 388 381 393 336 388 405 422 423 481
Total Sewer Connections
(No. of Meters in Service)4,737 4,737 4,714 4,683 4,677 4,679 4,657 4,655 4,655 4,655
Recycled System
Miles of Recycled Water Mains 104.0 104.0 104.0 104.0 104.0 104.0 102.0 99.0 99.0 98.0
Number of Pumping Facilities 3 3 3 3 3 3 3 3 3 3
Number of Operational
Storage Reservoirs in Service 4 4 4 4 4 4 4 4 4 4
Number of Acre-Feet Storage 133.2 133.2
(1) 134.2 134.2 134.2 134.2 134.2 134.1 134.1 134.1 Total Recycled Water
Connections
(No. of Meters in Service)735 726 724 721 708 705 702 704 696 685
Number of Recycled
Water Valves 1,506 1,497 1,497 1,497 1,497 1,492 1,473 1,430 1,430 1,380
(1)For Fiscal Year ending June 30, 2019, the decreases are a result of sewer gravity mains now maintained by the County of San Diego.
Source : Otay Water District
Operating and Capital Indicators - Last Ten Fiscal Years
Number of Operational
Storage Reservoirs in Service
102