HomeMy WebLinkAboutOperating and Capital Budget FY 2024-2025ADOPTED OPERATING AND CAPITAL
Otay Water District
Fiscal Year
2024-2025
BUDGET
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Otay Water District
Adopted Operating and Capital Budget
Fiscal Year 2024-2025
BOARD OF DIRECTORS
Jose Lopez, Division 4 President
Ryan Keyes, Division 2 Vice President
Mark Robak, Division 5 Treasurer
Tim Smith, Division 1
Gary Croucher, Division 3
MANAGEMENT TEAM
Jose Martinez General Manager
Joseph Beachem Chief Financial Officer
Kevin Koeppen Assistant Chief, Finance
Adolfo Segura Chief, Administrative Services
Michael Long Chief, Engineering
Andrew Jackson Chief, Water Operations
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Table of Contents
Page
Letter of Transmittal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Awards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Resolution No. 4442. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
OVERVIEW
Budget Guide. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Mission Statement, Vision, Statement of Values. . . . . . . . . . . . . . . . . . . . . . . 26
District Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Service Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Budget Control and Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Budget Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Fund Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Public Input. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Budget Calendar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
COMMUNITY PROFILE
Demographics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Service Area Assessed Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Ten Principal Taxpayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Ten Largest Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Water Rate Comparison – Agency Water Rates. . . . . . . . . . . . . . . . . . . . . . . 38
Sewer Rate Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
San Diego Rainfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Current Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
The Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
STRATEGIC PLAN
Strategic Plan Narrative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
General Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Administrative Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Water Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Engineering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
FINANCIAL SUMMARIES
Financial Summaries Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Operating Budget Summary – General Fund . . . . . . . . . . . . . . . . . . . . . . . . 65
Operating Budget Summary by System . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
General Fund Revenues, Expenditures and Transfers . . . . . . . . . . . . . . . . . . . 68
Fund Balance Summary by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Revenues and Expenditures by Type. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Revenues and Expenditures by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
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FIVE-YEAR FORECAST
Five-Year Forecast Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
General Fund Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Fund Balances Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Debt Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Impact of Current Debt Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Schedule of Outstanding Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Projected Principal Payments by Debt Issuance . . . . . . . . . . . . . . . . . . . . . . 82
Projected Interest Payments by Debt Issuance . . . . . . . . . . . . . . . . . . . . . . . 83
REVENUES AND EXPENDITURES
Potable Revenues and Expenditures
Potable Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Classification of Water Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Water Sales Summary by Customer Class . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Unit Sales and Meter Count History by Customer Class . . . . . . . . . . . . . . . . . . 89
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
MWD and CWA Fixed Fees (pass-through) . . . . . . . . . . . . . . . . . . . . . . . . . 92
Meter Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Water Purchases and Related Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Potable Water Service Area Map. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Recycled Revenues and Expenditures
Recycled Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Classification of Water Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Water Sales Summary by Customer Class . . . . . . . . . . . . . . . . . . . . . . . . . 104
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Unit Sales and Meter Count History by Customer Class . . . . . . . . . . . . . . . . . . 106
Meter Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Water Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Materials and Maintenance Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . 112
Recycled Water Service Area Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Sewer Revenues and Expenditures
Sewer Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Charges Summary by Customer Class. . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
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Sewer Revenues and Expenditures (continued)
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . 121
Formula for Sewer Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Sewer Service Area Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
General Revenues and Expenditures
General Revenues and Expenditures Narrative . . . . . . . . . . . . . . . . . . . . . . . 126
General Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
General Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
DEPARTMENTAL OPERATING BUDGET
Departmental Operating Budget Narrative . . . . . . . . . . . . . . . . . . . . . . . . . 130
Labor and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Labor and Benefits by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Position Count by Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Operating Expenditures by Department . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Operating Expenditures by Object . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Departmental Budgets:
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
General Manager’s Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Water Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
CAPITAL BUDGET
Capital Budget Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
CIP Reserve Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
Six-Year CIP Projects Summary by Source ($1,000s). . . . . . . . . . . . . . . . . . . . 182
Six-Year CIP Projects Summary by Fund ($1,000s). . . . . . . . . . . . . . . . . . . . . 182
Six-Year CIP Projects by Source and Fund ($1,000s). . . . . . . . . . . . . . . . . . . . 183
CIP Justification and Impact on Operating Budget . . . . . . . . . . . . . . . . . . . . 186
Capital Purchases FY 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
POLICIES
Summary of Financial Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
Reserve Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
Debt Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
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APPENDIX
Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
List of Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
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June 5, 2024
Honorable Board of Directors
Otay Water District
I am pleased to present the Otay Water District’s Adopted Operating and Capital Budget for
Fiscal Year 2025. The budget supports the District’s Fiscal Year 2023-2026 Strategic Plan as
well as the financing of all District services, programs, and capital needs during Fiscal Year
2025. The success as an agency is significantly enhanced by the policies and practices
implemented by its Board and management to ensure stability, reliability, strength, and
sustainability. The management team is fully confident that through sound financial
management and streamlining of operations and services, supported by the Strategic Plan
and a dedicated and talented staff, the District will continue to achieve success and thus,
ensure the well-being and quality of life of its over 240,000 customers. Our goal is to sustain
the services we provide while minimizing rate impacts to our ratepayers.
Legislative and Regulatory Issues
The District continues to monitor legislative and regulatory activity and how it could impact
the District and its customers. August 31 is the final day for bills to pass the legislature and
the Governor has until September 30, 2024 to sign or veto legislation.
The primary legislative activity for the District and its legislative consultant has been its
sponsorship of Senate Bill 1072 (Padilla), which provides that, if a court determines that a
fee or charge for a property-related service violates Proposition 218, then the local agency
must credit that amount against the cost of providing the property related service, as
opposed to providing a refund. The bill is making its way through the legislature with a
strong coalition in support.
The District is also supporting the Association of California Water Agencies (ACWA)
sponsored AB 2257 (Wilson), which creates an exhaustion of administrative remedies
procedure that, if a local agency chooses to implement it, requires ratepayers to bring an
objection regarding a Proposition 218 proposed property-related water or sewer fee or
charge, prior to specified deadlines. The bill is also moving its way through the legislature
with significant support.
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The District has also joined a coalition to support AB 1827 (Papan), which provides that fees
or charges for Proposition 218 property-related water service imposed or increased
pursuant to the California Constitution may include the incrementally higher costs of water
service peaking factors. This bill is also moving through the legislature.
The District is watching SB 1255 (Durazo), which requires, on or before July 1, 2027, retail
water suppliers that serve more than 3,300 residential connections to establish an opt-out
water rate assistance program (WRAP), as specified, to provide financial assistance to
eligible ratepayers for their water and wastewater bills.
The District is also tracking two remaining bills from a package of highly controversial bills
intended to “modernize” the state’s water rights system. ACWA is engaged in these bills
including AB 1337 (Wicks) and AB 460 (Baur Kahan).
The District has also joined ACWA’s coalition in support of a multibillion-dollar Climate
Resiliency Bond that includes funding for water projects.
Upon the April 2023 adoption of the California Air Resources Board’s (CARB) Advanced
Clean Fleets Regulations, which the District provided written and spoken comments on, the
District has continued to monitor the implementation of the regulations, including how
CARB is implementing AB 1594 (Garcia, 2023), which the District supported last year to
provide greater flexibility for utilities regarding the rule.
The District is also monitoring water quality regulatory developments at the State Water
Resources Control Board (SWRCB). In March of this year, the SWRCB adopted a resolution
for drinking water regulations development for the remainder of this calendar year. The
Board’s Division of Drinking Water has established a proposed prioritized list for regulatory
development projects for 2023. This includes minimum contaminant levels (MCLs) for
Chromium (hexavalent), Arsenic, Perfluoro-octanoic acid (PFOA), perfluoro-octane sulfonic
acid (PFOS), N-nitroso dimethylamine (NDMA), Disinfection Byproducts, Styrene,
Cadmium, and Mercury. The SWRCB continues to work through the adoption of these
various proposed MCLs.
The SWRCB and many water agencies, including the District, continue to focus on
conservation-related laws such as SB 1157 (Hertzberg, 2022), which lowered the indoor
residential water-use standard. The bill established the indoor residential water-use
standards to be as follows: 55 gallons per capita per day (GPCD) until January 1, 2025; 47
GPCD until January 1, 2030; and 42 GPCD as of January 1, 2030. The District is currently
projected to meet the GPCD requirements. SB 1157 supersedes SB 606 and AB 1668, which
passed in 2018 to build on efforts to make water conservation a way of life and to better
prepare the state for droughts and climate change.
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The District and other water agencies throughout the state have worked with state officials
to define how the conservation laws will be implemented. These laws outline an overall
framework to guide the District and other urban water suppliers in setting water-use targets.
The laws also required the SWRCB to adopt an outdoor water-use standard by June 2022.
The District has worked collectively with other water agencies and water industry
associations to discuss and provide comments to the SWRCB to ensure the regulations are
both equitable and reflect local conditions. The District will continue to work on these efforts
as the SWRCB releases more recommendations, reports, and draft regulations. The District
has signed on to letters by ACWA in response to various draft regulations as the July 3, 2024
Board meeting for adoption approaches.
In August 2022, the Governor released a new California’s Water Supply Strategy, Adapting
to a Hotter, Drier Future, listing actions needed to address 10% loss of water supplies by
2040. This includes seeking or expanding new sources of supplies like desalination,
recycled water and potable reuse, increased storage, reducing urban and agricultural water
use, and improved forecasting, data collection, and management of water. These are all
related to actions included in the 2020 Water Resilience Portfolio.
On December 8, 2023, the Department of Water Resources released the Final
Environmental Impact Report (EIR) for the proposed Delta Conveyance Project, advancing
an essential piece of the state’s strategy to protect water access for millions of Californians.
It was redesigned following public input and Governor Newsom’s pledge of rightsizing the
project to one tunnel to better support both environmental and water supply needs. DWR
approved the project on December 21 and released a benefit-cost analysis in mid-May
2024. The project, however, is facing litigation by opponents.
Regarding Federal legislation, the District has joined the California Special District
Association’s coalition in support of H.R. 7525 by Representative Pat Fallon, which would
require the Office of Management and Budget (OMB) to issue guidance within 180 days
that clarifies how a federal agency recognizes a special district as a unit of local government
for the purpose of being eligible to receive federal financial assistance. The Resolution
passed the House on May 6.
Fiscal Year 2023 - 2026 Strategic Plan
The strategic plan details our commitment to remain a model public agency that
maintains stakeholder trust through fiscal responsibility, environmental stewardship,
and effective leadership. Since 1956 the District's theme has been and continues to be
"Dedicated to Community Service." This motto serves as a great reminder for our staff of
the responsibility and significance of delivering exceptional service to the residents and
businesses in our community.
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Over the years the District’s strategic plan has evolved from one focused on growth to one
focusing on consistent, albeit lower, growth levels, long-term operations, and capital
maintenance needs of the District. The District’s current strategic plan (FY 2023-2026),
adopted by the Board in January 2022, highlights areas of focus, including a stronger
emphasis on financial and long-term demands, legislative matters, aging workforce and
knowledge transfer, organizational culture, customer service, cybersecurity, and asset
management. Quarterly and annual performance metrics support short-term and long-term
objectives linked to these strategies to promote and track continuous improvement.
The plan reinforces the Board’s vision, mission, and value statements and the business
perspectives that serve as the foundation for the new strategies, goals, and objectives. The
strategic plan addresses several challenges facing the District today. They include fulfilling
more stringent water quality requirements, meeting the water demands of a developing
community, discovering methods to better use our current water resources through storage
and water conservation, retention and recruitment of a skilled workforce, and maintaining
an adaptable organization to meet future challenges. The strategic plan allows us to also
convey our plans to our customers, other agencies, and water regulators. As with past
plans, we are confident that this plan will help us to successfully implement the Board’s
direction.
As the District's infrastructure ages, there will be increasing financial pressure to meet the
costs of replacing infrastructure. To mitigate these pressures, the management team
continues to prioritize efficiency inside the agency via investments in operational and
business technologies to optimize an efficient workforce.
Through community focus, sound planning, preparation, and fiscal management, and a
prepared and adaptable work culture, the District is well positioned to support its growing
customer base while sustaining the quality water service that our community and our
ratepayers expect. These high-level strategic objectives are further articulated within the
current Strategic Plan, outlining District-wide accountability, and performance metrics to
measure and improve outcomes.
The success of this approach is proven by the District’s gains in productivity and reduction
in staffing while service growth continues. The District has reduced staffing by 28.75 full-
time equivalent positions, or 16%, while the number of customer accounts increased by
4,989, or 9% from 2007 through 2025. The following chart shows that the District’s ratio of
customer accounts per full time employee has increased by 94 or 31% since 2007.
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Customer Accounts per Full Time Employee
The District’s Other Post-Employment Benefit (OPEB) plan is 74% funded as of June 30,
2023, which is an 11% decline from the previous 85% funding status as of June 30, 2022.
The reduced funding level is similarly a result of lower than expected investment returns in
2022 as well as a 15% increase in medical costs that was effective January 1, 2024. The
District will continue its strategy of advance funding its unfunded pension and OPEB
obligations. On June 5, 2024, the Board adopted the 2024-2027 Memorandum of
Understanding between the Otay Water District and the Otay Water District Employee's
Association (MOU). The terms of the MOU include the closure of the OPEB defined benefit
plan to new members after September 1, 2024. The MOU provides employees hired
subsequent to September 1, 2024 with eligibility for a defined contribution Health
Reimbursement Arrangement.
The FY 2025 budget includes a $350 thousand advance contribution to its defined benefit
programs. Staff is also recommending to return the advance funding amount to the $1.3
million level over the next six years. The strategy of advance funding the District’s unfunded
obligations aims to reduce the District’s highest cost debt. This strategy is aimed to save the
ratepayers money and will save the District approximately $5.5 million over the 12-year
advance funding period, which began in 2021.
Other cost savings include the reduction in number of vehicles and equipment, fuel
consumption, pavement costs, and decreasing water loss through the successful leak
detection and repair program. Staff continues to seek out other operational efficiencies, thus
decreasing costs and minimizing rate impacts on District customers.
Based on an annual survey of water and sewer rates conducted by staff, the District
continues to be one of the lower cost providers in San Diego County. The District has the
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7
40
6
39
9
39
8
39
5
-
50
100
150
200
250
300
350
400
450
Ac
c
o
u
n
t
s
p
e
r
F
u
l
l
T
i
m
e
E
m
p
l
o
y
e
e
Fiscal Year
12
eleventh lowest water rate out of the 24 agencies in San Diego County (based on the
District’s average water user who uses 10 units of water and has a ¾” residential meter size),
and the fourth lowest sewer rate out of the 28 sewer service providers in the County (based
on 9.4 units of water and a ¾” residential meter size). The results of the water and
sewer surveys are shown on pages 38 and 39, respectively.
The following chart shows that since 2007, the wholesale water supply costs have
increased 144.8% and the District’s retail water rates have increased 134.9%.
Wholesale Water Supply Costs vs. District Retail Rate Increases
The District currently delivers water service to 52,057 potable and 808 recycled water
customer accounts. The District purchases all the potable water sold to customers from the
CWA. Seventy-six percent of this water, in turn, is purchased from the region’s primary water
importer, MWD, which derives its supply from the Colorado River and the California State
Water Project. The percentage of water purchased from MWD has decreased significantly
over the last several years due to conservation efforts, the water transfer agreement with
Imperial Irrigation District (IID), the All-American and Coachella lining project agreements,
and the water purchase agreement for water produced at the Carlsbad Desalination Plant.
The District continues its efforts to diversify water resources, reducing dependence on
traditional water supplies from the Colorado River and the Sacramento-San Joaquin Delta.
The District also has been proactive in reducing its dependence on MWD water treatment
facilities. For example, in 2009 the District entered into an agreement with the CWA that
allowed the neighboring Helix Water District to treat imported water on behalf of the District
at Helix’s Levy Water Treatment Plant. This has brought regional water treatment closer to
0%
20%
40%
60%
80%
100%
120%
140%
160%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
144.8%
134.9%
CWA Water Cost Increase
Otay Water Rate Increase
13
District customers, which lessens dependence on water treatment facilities located outside
of the County.
The District also collects and recycles wastewater from approximately 4,739 homes and
businesses. The District collects wastewater and delivers it to its Ralph W. Chapman Water
Recycling Facility (Chapman), which is capable of recycling wastewater at a rate of 1.3
million gallons per day. In addition to the Chapman facility, the District continues to
purchase up to 5.6 million gallons per day of recycled water from the City of San Diego’s
South Bay Water Reclamation Plant. The use of recycled water for landscape irrigation and
industrial processes reduces dependence on imported potable supplies, provides a local
supply that is drought proof, and diversifies District sources.
Fiscal Year 2025 Operating Budget Summary
The Fiscal Year 2025 budget was prepared with the continuing challenges of potable water
wholesale supplier rate increases, inflation, additional CIP projects, increasing power costs,
and current and pending legislative initiatives. Additional challenges are the City of San
Diego’s Pure Water program costs, and the County of San Diego’s rehabilitation of shared
facilities.
The District’s operating expenditures consist of three major sectors: potable water, recycled
water, and sewer, totaling $138.1 million of budget expenditures for Fiscal Year 2025.
Revenues from potable and recycled water sales are projected to be $121.1 million,
approximately $9.2 million more than the Fiscal Year 2024 budget. The District projects
sewer revenues to remain flat at $3.5 million. The remaining budgeted revenues of $13.5
million, approximately $874 thousand more than Fiscal Year 2024, come from various
special fees, assessments, and miscellaneous income.
Other significant aspects of the Operating Budget are:
A balanced budget supporting the goals of the Strategic Plan.
The use of an economist to project growth for the region.
An updated six-year Rate Model to ensure sound financial planning and reserve
levels.
Effective 20.0% rate increases from MWD and CWA due to the high cost of supply
programs, higher energy costs, and increasing operating costs.
Implementation of a 12.8% rate increase for potable water, a 5.3% rate increase for
recycled water, and a 4.8% rate increase for sewer, effective January 1, 2025.
14
Metro sewer costs include the anticipated impact of the City of San Diego’s Pure
Water Program costs.
The District maintains low water rates, below the countywide average of the County’s
24 water agencies.
Fiscal Year 2025-2030 Capital Improvement Program (CIP)
The CIP budget emphasizes long-term planning for ongoing programs to meet population
growth, facilities replacement, and betterment of infrastructure while functioning within
fiscal constraints. The Fiscal Year 2025 CIP budget contains 134 projects and totals $16.0
million. The District categorizes projects into three business segments: potable water,
recycled water, and sewer. Funding for the Fiscal Year 2025 potable, recycled, and sewer
projects are $10.5 million, $4.2 million, and $1.3 million, respectively. CIP projects are also
categorized into three categories: expansion, betterment, or replacement.
The following is a breakdown of the CIP projects into the three categories:
Replacement projects $ 12,321,000
Betterment projects 2,999,000
Expansion projects 684,000
Total $ 16,004,000
The Fiscal Year 2025-2030 CIP budget contains 145 projects and totals $170.7
million, increasing by $22.7 million versus last year. The total water CIP budget for the
six-year period is $157.9 million, which is a $21.3 million increase compared to Fiscal
Year 2024, while the sewer CIP of $12.8 million is increasing $1.3 million compared to
Fiscal Year 2024.
The District projects water debt issuances of $30.3 million, $43.2 million, and $10.1 million
in Fiscal Years 2026, 2028, and 2030, respectively. A debt issuance for sewer of $3.0 million
is projected for FY 2027.
Awards and Acknowledgments
The Government Finance Officers Association of the United States and Canada
presented Otay Water District the Distinguished Budget Presentation Award for its
annual budget for the fiscal year beginning July 1, 2023. To receive this award, a
governmental unit must publish a budget document that meets program criteria as
a policy document, as an operations guide, as a financial plan, and as a
communications device.
15
The California Society of Municipal Finance Officers presented Otay Water District
the Certificate of Award for Excellence in Operating Budgeting for Fiscal Year 2023-
2024.
The California Society of Municipal Finance Officers presented Otay Water District
the Certificate of Award for Excellence in Capital Budgeting for Fiscal Year 2023-2024.
The Government Finance Officers Association Officers presented Otay Water District
the Certificate of Excellence in Financial Reporting for its Annual Comprehensive
Financial Report for the Fiscal Year ended June 30, 2023.
Conclusion
The District’s Board of Directors met the challenges presented this year with responsibility,
commitment, and persistence to keep the stability and financial strength of the District as
one of its highest priorities. The District’s debt coverage level will remain above target and
reserves will be maintained above minimum levels and return to target in Fiscal Year 2026.
The Board of Directors, management team, and staff are all committed to efficiency in both
District operations as well as in its capital development. With these efficiencies and the
ongoing investment in new technologies, the District has a competitive edge in providing
quality service.
This budget reflects the vision of the District’s Board, management, and staff. The District
will continue to strive to make improvements in budget processes, including an extensive
review and analysis of projections for revenues, expenditures, capital projects, and reserves.
I would like to thank the staff involved in this process for the efforts put forth in the
preparation of this budget to ensure a successful outcome.
To the Board, we acknowledge and appreciate their continued support and direction in
achieving excellence in the financial management and operations of the District.
Jose Martinez, General Manager
16
Distinguished Budget Presentation Award
The Government Finance Officers Association presented a Distinguished Budget
Presentation Award to the District for its annual budget for the fiscal year 2023-2024. In
order to receive this award, a governmental unit must publish a budget document that
meets program criteria as a policy document, as an operations guide, as a financial
plan, and as a communications device.
This award is valid for a period of one year only. We believe our current budget
continues to conform to program requirements, and we are submitting it to GFOA to
determine its eligibility for another award.
17
Financial Awards
The California Society of Municipal Finance Officers presented Otay Water District the Operating
Budget Excellence Award for Fiscal Year 2023-2024.
18
Financial Awards
The California Society of Municipal Finance Officers presented Otay Water District the Capital
Budgeting Excellence Award for Fiscal Year 2023-2024 .
19
Financial Awards
The Government Finance Officers Association Officers presented Otay Water District
the Certificate of Achievement for Excellence in Financial Reporting for its Annual
Comprehensive Financial Report for the Fiscal Year Ended June 30, 2023.
20
RESOLUTION NO. 4442
A RESOLUTION OF THE BOARD OF DIRECTORS OF
OTAY WATER DISTRICT ADOPTING THE
FISCAL YEAR 2024-2025
OPERATING AND CAPITAL BUDGET;
AND SALARY SCHEDULE
WHEREAS, the Otay Water District Board of Directors have
been presented with a budget (Exhibit A) for the operation of
the Otay Water District for Fiscal Year 2024-2025; and
WHEREAS, the Fiscal Year 2024-2025 Operating and Capital
Budget, has been reviewed and considered by the Board;
WHEREAS, it is in the interest of the District to adopt a
budget for said year;
WHEREAS, in connection with the adoption of the budget, the
Board is also being presented with the Job Classification and
Salary Schedule (Exhibit B) for its consideration, in order to
comply with California Code of Regulations Section 570.5,
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by
the Board of Directors of the Otay Water District that the
Operating and Capital Budget for the operation of the District,
incorporated herein by reference, is hereby adopted as the
District’s budget for Fiscal Year 2024-2025.
BE IT FURTHER RESOLVED that the Board hereby approves and
adopts the Salary Schedule included with the budget and,
consistent with his authority over employee compensation under
both State law and the District’s Code of Ordinances, authorizes
21
the General Manager to update the Salary Schedule, whenever
necessary, to reflect changes made within his authority.
PASSED, APPROVED AND ADOPTED by the Board of Directors of
Otay Water District at a board meeting held this 5th day of June
2024, by the following vote:
Ayes:
Noes:
Abstain:
Absent:
________________________
President
ATTEST:
____________________________
District Secretary
Directors Croucher, Lopez and Robak
Director Keyes
None
Director Smith
22
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23
Overview
Budget Guide
The District views the budget as an essential tool for proper financial management. This budget is
developed with input from each department of the organization and is set prior to the start of each
fiscal year. It is designed and presented for the general needs of the District, its staff, and citizens.
The budget is a comprehensive and balanced financial plan that features District services, resources
and their allocation, financial policies, and other useful information to allow the users to gain a
general understanding of the District’s financial status and future plans. To help readers navigate this
document, the following is a general description of each of the tabulated sections of the budget.
Overview
This introductory section contains general information about the District such as: mission statement,
vision, statement of values, District formation, organizational chart, and the budget process and
calendar.
Community Profile
This section contains the demographics of the District along with the current and projected
economic conditions and water and sewer rate comparison. It also includes statistics on the District’s
customers, the region’s tax base, rainfall, future development, and projects that will have an impact
on the District in the coming years.
Strategic Plan
The Strategic Plan is the core document which guides the District’s efforts to meet and positively
adapt to change. The overall plan is extensively reviewed and revised every three-to-four years. This
current edition (covering fiscal years 2023-2026) is a continuation of the 2019-2022 plan and is the
seventh multi-year plan dating back to 2002. Included in this section are the District’s perspectives,
goals, key performance indicators, measurement methods, targets for each department, and the
historical results of each key performance indicator.
Financial Summaries
This section contains an overview of the District’s revenues and expenditures by fund for the current
budgeted fiscal year, the prior year’s actual amounts, and the future estimated amounts. It includes
a description of each of the revenue and expense categories as well as charts depicting their
relationships.
Five-Year Forecast
The District prepares a comprehensive Rate Model each year based on budget input, trends, new
programs, and requirements. Estimates are made for cost increases, rate increases, targeted fund
balances, capital needs, and debt requirements. Analysis for the current budget year plus five
subsequent years is conducted and a six-year forecast is prepared based on the Rate Model results.
This process helps the District make informed decisions and ensure long-term financial stability.
24
Overview
Revenues and Expenditures
The District budgets revenues and expenditures by Potable, Recycled, and Sewer systems. General
revenues and expenditures that are not specific to one system or department are budgeted in the
General Revenues and Expenses section. An allocation of overhead costs is made to equitably
distribute the cost of running the District among the various business segments enabling the District
to effectively manage its financial resources and allocate expenses in a balanced manner across
different operational areas.
Departmental Operating Budget
This section provides a summary of each department’s operating expenditures and detailed budgets
including its mission, responsibilities, three-year staffing schedules, and accomplishments. Also
provided are graphical presentations of departmental budget percentages to District totals, as well
as summary expenditure information by division for three fiscal years.
Capital Budget
An overview of the District’s Capital Improvement Program (CIP), the Water Resources Master Plan,
the Sewer Master Plan, major assumptions and criteria, a six-year listing of CIP project expenditures
justifications, and the impact on the Operating Budget and capital purchases budget for the fiscal
year are located in this section. The District also publishes a separate six-year Capital Budget that
provides more detail of each project (budget amount, description, justification, comments, fund
details, expenditure schedule and a map of the project location). The FY 2025-2030 Six-Year Capital
Budget is available on our website at otaywater.gov/cip.
Policies
This section includes a summary of the District’s financial policies and practices, including the
Reserve Policy, Investment Policy, and Debt Policy.
Appendix
The last section consists of a Glossary, List of Acronyms, and an Index.
25
Overview
Mission Statement
To provide exceptional water and wastewater service to its customers, and to manage District
resources in a transparent and fiscally responsible manner.
Vision
To be a model water agency by providing stellar service, achieving measurable results, and
continually improving operational practices.
Statement of Values
As Otay Water District employees we dedicate ourselves to:
Customers:
We take pride that our commitment to customer-centered service is our highest priority.
Excellence:
We strive to provide the highest quality and value in all that we do.
Integrity:
We commit ourselves to doing the right thing. Ethical behavior, trustworthiness, and accountability
are the District’s foundation.
Employees:
We see each individual as unique and important. We value diversity and open communication to
promote fairness, dignity, and respect.
Teamwork:
We promote mutual trust by sharing information, knowledge, and ideas to reach our common goals.
Innovation:
We constantly seek better, more efficient, and cost-effective ways to deliver our services.
26
Overview
District Formation
The Otay Water District was formed in 1956 by a small group of ranchers, farmers, and other property
owners concerned about the declining quality and quantity of well water. The District was
established to serve as a public water and sewer agency, authorized as a California special district
under the provisions of the Municipal Water District Act of 1911. In 1957, developers in south Spring
Valley created the La Presa County Water District to obtain water from the San Diego County Water
Authority (CWA). The CWA is the wholesale water supplier of the member agencies in San Diego
County. In the fall of 1969, Otay Water District and La Presa County Water District merged into the
Otay Water District. Since then, the District has provided high quality water to a semi-arid region of
southeastern San Diego County. In 1971, the District constructed a small collection and treatment
plant for sewer in the northern section of the District, and in 1980 the District opened the Ralph W.
Chapman Water Recycling Facility (RWCWRF). Recycled water from the RWCWRF is used to irrigate
a golf course, schools, public parks, roadway landscapes, and various other approved uses in
eastern Chula Vista. The RWCWRF is capable of recycling wastewater at a rate of 1.3 million gallons
per day (1,200 acre-feet per year). The District is also in partnership with the City of San Diego to
beneficially reuse an additional 2,697 acre-feet per year of recycled water for fiscal year 2025, and
ultimately up to 5,900 acre-feet per year. The District continues to be the largest retail provider of
recycled water in the County of San Diego.
The District also owns and operates a wastewater collection system providing public sewer service
to approximately 4,750 customer accounts within the Jamacha drainage basin. The sewer service
area covers approximately 8,800 acres, which is about 11% of the District’s total service area.
Residential customers comprise 97% of the sewer customer base.
Service Area
The District's boundaries encompass an area of approximately
125.3 square miles or 80,208 acres in San Diego County, lying
immediately east of the City of San Diego metropolitan area and
running from the City of El Cajon south to the international border,
abutting the cities of El Cajon and La Mesa and encompassing most
of the City of Chula Vista and a small portion of the City of San Diego.
The District purchases 100% of its treated water. Regionally, about
72% is imported, which is a blend from the Colorado River and the
California State Water Project. Twenty-eight percent of the District’s
treated water comes from local supplies, including groundwater,
local water storage within the county and from the Pacific Ocean via
seawater desalination. The District purchases its treated water from
the San Diego County Water Authority and receives a blend of
treated water from the Metropolitan Water District of Southern
California’s R.A. Skinner Treatment Plant, the San Diego County
Water Authority’s Twin Oaks Valley Water Treatment Plant, the
Carlsbad Desalination Plant, and the Helix Water District’s R.M. Levy
Water Treatment Plant.
27
Overview
Organizational Structure
The District has a five-member Board of Directors that serve four-year, alternating terms on the
Board. Each Director is elected by voters within their respective division boundaries to represent the
public’s interest with regard to rates for service, taxes, policies, ordinances, and other matters related
to the management and operation of the District. The Board generally meets in open public session
on the first Wednesday of each month at 3:30 p.m. at the District headquarters located at 2554
Sweetwater Springs Boulevard, Spring Valley, California. Board meetings are live streamed online.
Collection,
Treatment, and
Reclamation
Operations
District Secretary
General Counsel
Public Information
Conservation
Citizens and
Customers Board of Directors
General Manager (4)
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
(33)
Strategic
Planning
Public Services
and
Field Services
Engineering
(29)
Water
Operations
(57)
28
Overview
Budget Process
The District has integrated the Capital Improvement Program (CIP) Budget and the Operating
Budget. These budgets are developed based on the District’s Water Facilities Master Plan, the Sewer
System Management Plan, and Strategic Business Plan. New initiatives and programs are
categorized into the Balanced Scorecard perspectives. Appropriate budget amounts are determined
by using the historical data of operations and new growth, developers’ input, SANDAG projections,
and economic outlook.
To assure reliable and high-quality service to the growing customer base, the District has committed
to a number of long-range strategies that drive the budgeting process. The strategies and
assumptions used to develop the District’s six-year integrated budget are:
An average projected long-term growth rate of 0.22%.
Pass-through rate increases for costs imposed on the District by the wholesale water
providers.
Accurate projections of capital budget needs (including replacement needs).
Reserve funding in accordance with the Reserve Policy to meet future growth demands and
maintain financial stability.
Funding of the Strategic Plan initiatives as categorized into the Balanced Scorecard
perspectives.
Avoid rate spikes by leveling rate increases over a six-year period.
The Finance Department prepares the budget for the potable, recycled, and sewer systems. This is
done using estimated changes in costs from the District’s wholesale water providers as well as
estimated changes in sewer charges provided by the County and City of San Diego. Other significant
factors in the budget development include estimated water volumes, water cost projections, debt
29
Overview
coverage for current and future debt issuances, reserve levels, projected growth in customer
accounts, and weather. Additionally, all general revenue and expense budgets are calculated using
trend analysis and any external factors that may affect these items.
Personnel Budget
The budgeting of salaries and benefits is performed in the position budgeting module of the
Enterprise Resource Planning (ERP) system. This tool allows the District to budget for each
authorized position and the associated benefits in an automated fashion. Departments submit
requests for new positions, reclassifications, or advancements to the General Manager. Upon their
approval, the Finance Department enters these changes, as well as negotiated pay increases and
benefit rate changes, into the position budget system. Position budgeting calculates the salaries and
benefits to be included in the District’s budget.
Administrative and Materials and Maintenance Budget
Administrative and Materials and Maintenance expenses are entered into the budget model of the
ERP system by individual department requests. These requests are compared to last year’s budgeted
and actual expenses to determine reasonableness by the Finance Department. All costs are justified
and supported by explanations. Finance compiles the operating budget and submits it to the General
Manager for review prior to presentation to the Board of Directors.
Capital Improvement Plan (CIP) Budget
The Engineering Department issues budget instructions for the CIP budget process. Each year, all
existing CIP projects are reviewed and capital project costs are adjusted and/or closed as
appropriate. This requires each project manager to review the year-to-date project expenses and
then estimate costs to the end of the fiscal year. They also project future costs to complete the project.
Adjustments to capital project expenses include scope changes and/or construction cost increases.
District Chiefs discuss the cost-benefit of projects, evaluate the reasonableness of the project budget,
current and alternate funding source(s) as well as the timing and/or priority of the project. All new
CIP project requests and significant changes to existing projects are reviewed and approved by all
District’s Chiefs and the General Manager. All CIP projects are entered into the CIP Budget
application. The Engineering Department works closely with the Finance Department to finalize the
six-year CIP Program Budget. Finance ensures that the District funding and reserve levels are
maintained in accordance with the District’s policy. Engineering then compiles the six-year CIP
Program Budget and submits it to the General Manager for review prior to presentation to the Board
of Directors.
Budget Control and Jurisdiction
The District has a four-year Strategic Plan, and each year in the spring, the portion of the plan that
pertains to the upcoming fiscal year is presented to the Board of Directors for review and direction.
This is followed by a coordinated presentation of the budget by all departments, to the Board of
Directors for their approval at the Board meeting in June. The review of the Strategic Plan and the
adoption of the budget on an annual basis give the District its direction for the following fiscal year.
During the year, each department receives monthly budget and actual cost reports that are essential
30
Overview
to monitor and control costs. As events occur or conditions change, modifications to or deviations
from the original budget may be necessary. The General Manager has the authority to transfer
appropriations within the budget allocations or request that the Board of Directors increase the
current budget.
Once adopted, District staff allocate the annual budget amounts to months based on historical
trends, the timing of anticipated activities, or a straight-lined approach. On a monthly basis, staff
prepares an operating financial statement comparing year to date results to budget, which is
included in the District’s monthly Board package. On a quarterly basis, staff prepares a comparison
of actual to budgeted CIP expenditures, which is also reported to the District’s Board of Directors.
The budget report is intended as a financial guide and may be modified by the Board of Directors
during the fiscal year. All approved modifications to the budget are documented in the form of a staff
report and noted in the Board meeting minutes.
Due to the size of the District’s CIP, a separate budget book has been prepared outlining in detail the
projects and expenditures required to ultimate build-out. A synopsis of the CIP may be found under
the Capital Budget section of this report. As part of the integrated budget, capital purchases have
been included within the CIP Budget.
Budget Basis
The District utilizes the accrual basis for budgeting which is the same as the basis of accounting
used in the audited financial statements, recognizing revenues and expenses in the period in which
they are earned and incurred, regardless of the timing of cash receipts and disbursements. The
District reports its activities in enterprise funds, which is used to account for operations that are
financed and operated in a manner similar to a private business enterprise and conforms to the
guidelines of Generally Accepted Accounting Principles (GAAP). It is the intent of the District to
recover the costs (including replacement cost of existing assets) of providing goods or services to
the general public on a continuing basis, through financing or primarily through user charges.
Fund Structure
The District operates three major distinct business segments: potable water, recycled water, and
sewer. Each business segment categorizes revenue and expenditure as a function of the Operating
Budget, Capital Improvement Plan Budget, or Developer Deposits. Please refer to the District’s
Reserve Policy, beginning on page 190, which provides the detailed flow of funds.
Recycled Sewer
Sewer
Operating
Budget
Sewer
CIP Budget
Sewer
Developer
Deposits
Recycled
Operating
Budget
Recycled
Developer
Deposits
Recycled
CIP Budget
Potable
Potable
Operating
Budget
Potable
CIP Budget
Potable
Developer
Deposits
31
Overview
Public Input
The District’s budget process begins in January and ends with the adoption of the next fiscal year
budget at the June Board meeting, and implementation of rates the following January. The budget
is typically presented to the Board twice, during which the public has the opportunity to provide input
and comment. The budget is first presented at a workshop in late April wherein key assumptions
and preliminary Capital Improvement Program budget information is reviewed, and the Economic
Study is presented by an independent consultant. Agendas and Board packets are posted on the
District’s website in advance of the meetings.
Budget Calendar
December/January
The Finance Department posts a budget workbook on the District’s intranet which provides
instructions on the upcoming operating budget deadlines, budget procedures for personnel,
administrative expenses, and materials and maintenance expenses. Included in this workbook are
historical trends, assumptions, and instructions on how to enter the expense data into the District’s
budget module. For the six-year Capital Budget process, the Engineering Department provides
Chiefs with the upcoming CIP deadlines and procedures.
February
Chiefs submit requests to Human Resources for personnel reclassifications, advancements, long
term staffing and new personnel. Human Resources evaluates the requests and provides
recommendations to the General Manager. Human Resources notifies the Chiefs of the status of the
requests and Finance is provided with preliminary personnel changes.
Departments enter their administrative and materials and maintenance budget requests in the
budget module and provide their current year-end projections to Finance. Variance explanations are
provided comparing the current year’s budget versus the current year projected expenditures and
the current year’s projected expenditures versus the next fiscal year’s budget requests. Finance
reviews the year-end projections for reasonableness and documents the explanations of the
variances for review by the Management and Executive Team. CIP project managers review and
update their existing CIP projects, identify completed projects and submit new CIP projects to
Engineering for consideration. The CIP budget requests are reviewed with the General Manager.
March
The Finance Department meets with Chiefs and Section Managers of all departments to review their
current year administrative, materials and maintenance expenditures, year-end projections, and the
preliminary budget requests. Finance finalizes the explanations of the variances and consolidates
the year-end projections and the new fiscal year’s budget requests for the Management Team’s
review and discussion.
Human Resources finalizes new personnel requests, reclassifications, and change requests with the
General Manager and provides it to Finance for budgeting. The Engineering Department reviews the
CIP budget with the Finance Department and provides year-over-year explanations of the changes.
Once the General Manager has reviewed the preliminary CIP, Finance staff enters the proposed CIP,
administrative, material, labor, energy, water purchase, and treatment costs into the Rate Model to
32
Overview
develop a finance strategy for funding the projected operating and CIP needs of the District via a
combination of water rates, sewer rates, and debt issuances that meet the District's financial
objectives. Other data incorporated into the Rate Model includes the six-year operating revenues
and expenses, multi-year CIP expenses, reserve funding, reserve levels, and debt issuances. Inflators
for cost and volume are applied to project the next six years of revenue and expenses. The debt
coverage ratio is also evaluated to ensure adequate levels. Projected rates are then set for the current
fiscal year, plus five subsequent years, such that all financial targets are met. Using this
comprehensive modeling tool, the District is able to smooth future rate increases, determine when
debt should be issued, and maintain all the reserve levels in accordance with the Reserve Policy.
April
Finance provides the Management Team preliminary budget schedules containing key budget
assumptions for their review and incorporates recommended changes.
In late April, staff conducts a budget workshop during a special Board meeting to discuss the key
budget assumptions and provide preliminary information on the Capital Improvement Program
Budget. During this special Board meeting, an independent consultant presents the District’s
economic outlook report. This report is used by the Engineering Department to validate growth
projections, meter sales and construction climate.
May
Based on the Board and public’s input from the April Special Board meeting, staff may modify the
budget for final presentation and approval in June.
June
At the regularly scheduled public June Board meeting, staff presents the consolidated operating and
CIP budgets, along with the recommended changes to water and sewer rates and charges, to the
Board for approval. Generally, no modifications are made to the proposed budget once adopted.
However, as events occur and/or conditions change, a modification to a specific budget item may
be necessary. In such an event, a modification is documented in the form of a staff report and
presented to the Board for approval. The modification may occur any time of the year.
September/October
Water and sewer rate increase notices containing changes in rates, fees, and charges, effective
January 1, 2025, are included as inserts with regular monthly bills for all customer classes.
January 2025
Water and sewer rates, fees, and charges become effective January 1, 2025.
33
Overview
Budget Calendar
Dec. 2023-Jan. 2024 February March-April May-June Sept. 2024-Jan. 2025
12/4/23
Budget instructions
and workbook site for
the operating and
capital budget are
made available on the
District’s intranet
1/2/24
Labor budget
worksheets are made
available on the
District’s intranet
1/10/24
Project managers
submit CIP budgets for
new projects and
changes to existing
projects in CIP budget
application
1/31/24
Finance initial review
of CIP budget with
Engineering including
year over year
explanations
2/2/24
Chiefs to submit
Capital Purchases and
justifications
2/5/24
Chiefs to submit admin
and materials budget
requests
2/16/24
Chiefs to submit
requests for new
personnel, personnel
reclassification
changes, Position
Analysis Questionnaire,
advancements, and
long-term staffing to
HR
2/16/24
Chiefs to submit labor
budget worksheets
2/20/24
Finance second review
of CIP budget with
Engineering including
year over year
explanations
2/28/24
Chiefs to finalize CIP
projects and sign-off
on new projects
3/1/24
HR to complete
preliminary review of
new personnel,
personnel
reclassification
changes, requests, and
advancements
3/6/24
CIP Budget finalized
with Management
Team
3/13/24
HR to review new
personnel,
reclassifications and
change requests with
General Manager
4/10/24
Finance to review
Department Operating
Budgets and
personnel cost with
Management Team
4/17/24
FY 2025 Key Budget
Assumption Workshop
practice run
4/24/24
Special Board Meeting
consisting of the
Economic Outlook
presented by external
Economist and the Key
Budget Assumption
Workshop conducted
by staff to discuss
budget key figures and
assumptions
5/10/24
Review assumptions
and rates with
Management Team
5/14/24
Preliminary Budget
provided to
Management Team for
review
5/20/24
FY 2025 Budget
Presentation practice
run
6/5/24
Budget Presentation at
the regular Board
Meeting – approval of
the FY 2024-2025
Operating and Capital
Budget and
FY 2025-2030 Capital
Improvement Program
Budget
9/13/24-10/11/24
Rate increase notices
inserted with water and
sewer billing
1/1/25
The 2025 water and
sewer rates, fees, and
charges are applied to
customer’s monthly
billing
34
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35
Community Profile
Demographics
The City of Chula Vista is the second largest city in the San Diego metropolitan area and most of the
City east of the I-805 freeway is within the District’s service area. The following reflects the
demographics of the City of Chula Vista:
Demographics
Population – City of Chula Vista 277,333
Otay Water District population served (estimated) 240,290
Persons/Household 3.30
Ethnic/Racial makeup (City of Chula Vista)
Hispanic 60.2%
Non-Hispanic White 16.1%
Asian 15.5%
Black 5.2%
Other 3.0%
Median Age 36
Median Household Income $101,984
Percentage with 4-year degree or higher 31.2%
Source: San Diego Association of Governments, Current Estimates and
United States Census Bureau
Service Area Assessed Valuation
The District’s service area encompasses property with approximately $43.1 billion of assessed
valuation. Properties are assessed at 100% of their full value less exemption from taxation under the
law and homeowner’s exemptions. The District receives its portion of the 1% property tax according
to Proposition 13 and AB8. With the very recent increases in the assessed valuation, the District will
benefit by receiving its proportionate share of this increase.
Six-Year Service Area Assessed Valuation
$30.8 $32.6 $34.6 $36.2 $40.1 $43.1
$0
$10
$20
$30
$40
$50
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024
Bi
l
l
i
o
n
s
36
Community Profile
Ten Principal Taxpayers – Fiscal Year 2025
Organization Assessed Percent
Value to Total
1. Amazon.com Services, LLC $ 340,294,261 0.81%
2. Ryan Millenia Owner, LCC 228,707,676 0.54%
3. Rancho Investors, LP 178,866,782 0.42%
4. John Hancock Life Insurance Co USA 163,830,523 0.39%
5. Eastgroup Properties, LP 160,952,679 0.38%
6. Lipt Sanyo Avenue, LLC 159,732,000 0.38%
7. Corrections Corporation of America 158,518,511 0.38%
8. Chula Vista Apartments, LLC 136,968,735 0.32%
9. Otay Enrico Industrial, LLC 130,764,883 0.31%
10. GGP-Otay Ranch, LP 128,617,041 0.30%
Total Top Ten Principal Taxpayers $ 1,787,253,091 4.23%
Total Service Area Assessed Valuation $ 42,187,708,031
Source: County of San Diego Auditor and Controller
Ten Largest Customers – Fiscal Year 2024
Customer Name Customer Type Annual
Revenues
% of
Water
Sales
1. City of Chula Vista Publicly Owned $ 5,707,119 5.4%
2. State of California Publicly Owned 3,164,569 3.0%
3. Sweetwater School District Publicly Owned 1,928,357 1.8%
4. County of San Diego Publicly Owned 1,873,916 1.8%
5.Chula Vista School District Commercial 1,293,268 1.2%
6. Calpine-Otay Mesa Energy Center Commercial 1,027,445 1.0%
7.Eastlake III Community Association Commercial 998,227 0.9%
8. Elite Athlete Services, LLC Commercial 830,521 0.8%
9. Eastlake Country Club Commercial 816,287 0.8%
10. Southwestern College Publicly Owned 596,328 0.6%
Total Top Ten Customers $ 18,236,036 17.3%
Total Water Sales $ 105,736,842 100.0%
37
Community Profile
Water Rate Comparison, Agency Water Rates (1)
The District strives to remain cost effective in its rate setting by controlling operating costs, yet
passing through the full cost of supply. In June 2024, the District conducted a survey of the water
rates of the water providers within San Diego County. The following chart shows that the District has
the eleventh lowest water rate in the region.
Projected Potable Water Ranking January 1, 2025
Based on 10 Units of water used and ¾” residential meter size
*At the time of the survey in June 2024, the agency's FY 2025 rate was unavailable. An estimated increase was
applied equal to the other districts’ average FY 2025 known rate increases.
(1)Only 22 of the 24 agencies are surveyed. Camp Pendleton is not included in this survey due to being a Marine
Corps Base. The City of National City is not included because their water is supplied by Sweetwater.
38
Community Profile
Sewer Rate Comparison
The District conducted a survey of the rates of the sewer providers within San Diego County. Sewer
rates are billed at either a fixed or variable rate. The following chart shows the various sewer
providers and the rate that is charged to the consumers. The District has the fourth lowest sewer rate
in the County of San Diego.
159.54
93.89
89.85
88.54
85.13
83.68
79.75
77.04
75.23
74.57
72.65
65.50
64.92
63.36
63.25
62.61
60.34
60.19
58.63
56.24
54.31
53.80
52.85
51.73
48.31
48.18
43.08
41.37
$0 $20 $40 $60 $80 $100 $120 $140 $160 $180
28
27
26*
25
24*
23*
22
21
20
19
18*
17*
16
15
14
13*
12*
11
10*
9
8*
7
6
5*
4
3
2
1*
Projected Sewer Ranking January 1, 2025
Based on 9.4 units of water used and ¾” residential meter size
*At the time of the survey in July 2024, the agency's FY 2025 rate was unavailable. An estimated increase was
applied equal to the other districts’ average FY 2025 known rate increases.
39
Community Profile
San Diego Rainfall
San Diego received above average rainfall of 12.18 inches in Fiscal Year 2024. San Diego's average
rainfall over 10 years is 10.66 inches; the 20-year average is 9.87 inches; the 30-year average is 9.48
inches; and the 40-year average is 9.93 inches.
San Diego rainfall, while a contributing factor, is not the only controlling factor for our potable water
supply shortage. The San Diego region imports 72% of its potable supply, so conditions elsewhere
significantly affect the actual amount of water available to the District. In the event the amount of
water supplied to the District is reduced, water sales revenues would decrease. Related water
purchase expenses would also be reduced, mitigating the impact of the decrease in revenues. The
amount of any supply reduction would dictate the magnitude of the District's response and type of
reaction.
Current Economic Conditions
San Diego County Water Supply
A safe, reliable water supply is crucial for the vitality of the San Diego region’s economy and quality
of life of its residents. San Diego County imports approximately 72% of its water from the Colorado
River and Northern California. Since these sources face legal and environmental constraints, the
region has been making investments in the region’s water delivery and storage system and exploring
other avenues to ensure an adequate water supply. This includes water recycling, water-use
efficiency programs, water storage, groundwater desalination, and seawater desalination.
Desalinated Water Supply
In December 2015, the Claude “Bud” Lewis Carlsbad Desalination Plant began producing
approximately 50 million gallons of water per day to CWA, enough to serve approximately 400,000
9.03
10.82
12.97
3.40
12.62
16.65
4.93
6.83
17.12
12.18
0
2
4
6
8
10
12
14
16
18
20
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
In
c
h
e
s
San Diego Rainfall
Fiscal Years 2015 - 2024
Annual Rainfall 10 year average
Source: Weather Underground
40
Community Profile
people, meeting more than 10% of the region’s demand. Since the production of desalinated water
from the Carlsbad plant, the District’s customers have received a portion of this highly reliable,
drought-proof water supply. The amount of desalinated water that the District’s customers receive
fluctuates daily based on a variety of factors including the CWA’s potable water demands.
Challenges
The District’s operating and CIP budgets are affected by wholesale supplier costs, regulatory
compliance requirements, endeavors related to the District’s strategic plan, and inflation. The FY 2025
impact of inflation on material and administrative expenses is approximately $486 thousand, while
the inflationary impact to the CIP is estimated to be $5.4 million for the six-year projection. In addition,
SDG&E rate increases are anticipated to raise the District’s FY 2025 energy costs by 18%, or
approximately $773 thousand. This energy cost increase is primarily due to a nearly 20% SDG&E rate
increase experienced in FY 2024, compared to the budgeted increase of 10%, and a projected
increase of 7% in FY 2025. Furthermore, regulatory mandates are similarly adding pressure to both
the operating and CIP budgets. Regulatory costs increased the FY 2025 material and administrative
expense budgets by $800 thousand.
The District partially mitigates inflationary impacts through increasing returns on investments and
long-term contracts with pricing structures that are fixed for the duration of the contract or include
pricing structures whereby annual price increases are for fixed dollar amounts that are less than CPI
levels.
The London Moeder Advisors’ economic report indicated that while the County’s economy would
continue to expand in 2024, the pace was anticipated to be consistent with the prior year in key
metrics including inflation, as supported by the March 2024 CPI data. For the FY 2025 six-year rate
model, staff is assuming administrative and material inflation of 3.6% from FY 2025 through FY 2030.
Economic Outlook
At the start of each budget cycle, the District enters into a contract with an economist to complete
an economic and demographic analysis of the national and local economy. The study also provides
information on changes in population and residential and commercial development within the
District service area. The following highlights the report:
San Diego County’s economy has recovered from the pandemic downturn of early 2020 with
current employment well above pre-pandemic levels. The unemployment rate increased
since last November from 3.3% to 4.2% in November of 2023. This is between the National
unemployment rate of 3.7% and the State unemployment rate of 4.9%. San Diego’s economy
is expected to continue to outpace the State and National economies.
San Diego County added 21,900 jobs between November 2022 and November 2023 – down
from 37,500 the previous year. 2024 is expected to continue to achieve job growth similar to
the last two years with additional job additions and stability in the unemployment rate in the
County.
With the exception of Manufacturing and Professional and Business Services, all of the
41
Community Profile
Cottonwood Sewer Pump Station
region’s sectors experienced year-over-year growth. Leading the way was Health Care and
Social Assistance sector which increased by 5.3% or 10,700 jobs.
San Diego County’s population has declined 1.8% since 2011. The cause is two-fold. The
population’s natural increase (births over deaths) is declining while at the same time, more
people are leaving the County (and State) than are entering. We expect this trend to continue.
Housing construction is forecasted to average 8,000 to 10,000 units annually during each of
the next five years, with as much as 20% of that growth in the District’s service area.
Affordability will be a concern as mortgage rate volatility (when rates increase, the maximum
amount that a buyer can borrow decreases) coupled with a supply constrained market will
ultimately drive prices up, but at slower rates than in recent years.
As much as 90% of the new housing in the District’s service area will be attached, both for-
sale and rental. The preponderance of attached housing (combined with mandated
conservation efforts) will inevitably result in substantially less water usage per household.
Commercial development in the District’s service area is expected to decline as the industrial
space under construction has dropped to just over one million square feet compared to more
than two million square feet last year.
The Future
Capital Improvement Program
The District provides water and sewer service to a
population of over 240,000 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 13% to 271,531 residents by
2055. 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, 2020 Urban Water Management
Plan, 2015 Integrated Water Resources Plan, and
2023-2026 Strategic Plan.
The major projects planned for delivery over the next six fiscal years include:
Pipeline Replacement Projects (10 Total): Replacement of approximately 10 locations of
potable/recycled pipeline.
Reservoir Construction or Rehabilitation: Construction of one new reservoir and rehabilitation
of two other reservoirs, including the replacements of liner and floating cover.
42
Community Profile
Meter Replacement: The meter replacement program is an upgrade of all our existing meters
to Advanced Metering Infrastructure (AMI) meters. This includes the replacement of about
35,000 potable and 400 recycled meters over the six year period.
Pump Station Replacement and Rehabilitation: Over the six year period, six pump stations
will require upgrades and replacements of critical equipment.
Vehicles: Purchase of 43 vehicles for use in District operations.
Reservoir Coatings: The District schedules replacement coatings of steel reservoirs to
prolong the lifespan of the infrastructure. Specialized inspections are done regularly to
ensure the highest priority reservoirs are coated. The six year CIP includes coating of 12
reservoirs.
Valve Replacement: Through the District’s Asset Management Program, information is
collected and analyzed to prioritize valve replacement. The valve replacement program
estimates replacement of more than 400 valves over the six year period.
RWCWRF Treatment: The RWCWRF projects include upgrading to ultraviolet (UV)
disinfection, and improvements and replacements of tertiary troughs, backwash supply
pumps, blowers, grit chambers, rotary screen replacements, and stormwater pond
improvements.
Residential Construction
The following table summarizes the projected new units for sale and new units for rent from Fiscal
Year 2024 through Fiscal Year 2030. The average annual total residential units are projected to be
1,412. The consensus among developers is that future attached projects, including multifamily
rentals, will choose to outfit projects with master water meters and submeters for each unit.
Future Development
Using the economist’s report, the District’s engineering staff projects that over the next six years, the
District will sell another 906 meters which translates to 3,209 equivalent dwelling units (EDUs).
These projections have been incorporated in the Five-Year Forecast on page 74.
Projected Meter Sales in Equivalent Dwelling Unit (EDUs)
70
6
47
8
47
5
48
4
55
3
51
4
0
200
400
600
800
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
43
Community Profile
Source: London Moeder Advisors Economic Report, February 2024
Commercial Construction
Commercial construction in the District area will be largely industrial with over one million square
feet under construction and expected to deliver in the first half of 2024. Office development is
expected to be significant with the first phase of the Millenia office complex underway. Three hotel
projects are in the pipeline. One is under construction and is expected to be delivered in early 2024.
Another one is expected to start construction in late 2024. A third hotel project is expected to start
construction in early 2025.
Commercial Pipeline Anticipated Delivery
Year Industrial Office Retail
(Storefront)
Retail (Strip
Center)
Total Hotel
2024 1,072,237 SF 1,072,237 SF 179 Rooms
2025 168,000 SF 168,000 SF
2026 72,000 SF 72,000 SF
Unknown 2,527,593 SF 862,200 SF 88,725 SF 3,478,518 SF 260 Rooms
Total 3,599,830 SF 1,030,200 SF 72,000 SF 88,725 SF 4,790,755 SF 439 Rooms
Source: London Moeder Advisors Economic Report, February 2024
Of the 3,478,518 square feet of development with unknown delivery dates, half should start
construction in 2024. This includes 994,142 square feet in the first phase of the Otay Business Park
and 60,000 square feet of retail strip center in three different projects.
Commercial Pipeline Anticipated Construction Start (Unknown Delivery)
Year Industrial Office Retail
(Storefront)
Retail (Strip
Center)
Total
2024 1,718,872 SF 88,725 SF 1,877,597 SF
Unknown 738,721 SF 862,200 SF 1,600,921 SF
Total 2,527,593 SF 862,200 SF 88,725 SF 3,478,518 SF
Source: London Moeder Advisors Economic Report, February 2024
Projected New Residential Construction (Otay Water District Service Area)
FY 2024 through FY 2030
2024 2025 2026 2027 2028 2029 2030 Total Avg.
Annual
Attached (For Sale) 109 247 337 571 598 470 440 2,772 396
Attached
(Unknown)
0 0 0 0 29 591 697 1,317 188
Detached 106 179 57 60 60 60 60 582 83
Multifamily
(incl. Affordable)
986 942 735 503 609 718 718 5,211 744
Total 1,201 1,368 1,129 1,134 1,296 1,839 1,915 9,882 1,412
% Multifamily
(incl. Unkn Att)
82.1% 68.9% 65.1% 44.4% 49.2% 71.2% 73.9% 66.1%
44
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45
Strategic Plan
Strategic Planning Process
Otay Water District’s Strategic Plan (Plan) acts as the roadmap for defining the organization’s
operational objectives and directing the activities of District staff. This plan iteration emerged from
sessions to explore current and future opportunities and challenges, leveraging SWOT analysis as
the framework. This approach allowed the organization to step back from daily activities and focus
on ways to achieve the District’s mission: “To provide exceptional water and wastewater service to
its customers, and to manage District resources in a transparent and fiscally responsible manner.”
As we enter the third year of our four-year plan, our commitment to a comprehensive and balanced
approach is unwavering. Using the Balanced Scorecard methodology, this approach, grounded in
prudent financial management and operational excellence, translates the District’s strategic
objectives into performance indicators across the four essential perspectives: Financial, Customer,
Internal Business Processes, and Learning and Growth. These perspectives are the foundation of
our strategic planning efforts, as detailed below:
Customer: Enhance customer satisfaction and build greater trust
Financial: Demonstrate excellence in financial stewardship and accountability
Internal Business Process: Optimize and advance internal process excellence and organizational
performance
Learning and Growth: Foster a foundation focused on people, safety, and environmental awareness
within our organization
As we progress into the third year of our plan, our focus is clear. We are committed to strengthening
our financial analysis for long-term benefits, improving our cybersecurity measures, facilitating
knowledge transfer, and optimizing our asset management program. These goals, along with many
others, are detailed in project charters and aligned with specific performance metrics for each
objective, supporting our mission to provide this essential resource to the communities we serve.
The following pages contain details of the District’s perspectives, goals, key performance indicators,
measurement methods, and targets for each department.
(1)A detailed discussion of the Strategic Plan process is found on page 15 of the District's Strategic Plan.
46
Key Performance Indicators: General Manager
Performance
Indicator Definition Measurement
Method Target
Customer Opinion
Survey
To provide
information to the
District about
customers’
perceptions, opinions,
and satisfaction as
they relate to the
District and its
services.
Multiple recruiting
methods (email and
telephone) and
multiple data
collection methods
(telephone and
online)
85% or greater
satisfaction
FY 2023 (1)FY 2024 FY 2025 (2)
Target 85%N/A N/A
Actual 85% N/A N/A
(1)FY 2023 is the first year for this key performance indicator
(2)Key performance indicator is measured biennially to triennially
Strategic Plan
Cu
s
t
o
m
e
r
Goal
Enhance customer and community engagement to increase
public awareness of the water industry and the District,
while continuing to provide superior customer service.
47
Key Performance Indicators: Administrative Services
Performance
Indicator Definition Measurement
Method Target
Business Recovery
Exercises
Exercises focused on
recovering data,
restoring essential
business applications,
and continuing
operations following
an unplanned
network outage.
Number of business
recovery exercises
completed annually
2 exercises
completed annually
FY 2023 (1)FY 2024 FY 2025
Target 2 2 2
Actual 2 2 2 (2)
Performance
Indicator Definition Measurement
Method Target
Vulnerability
Assessment
Assessments
designed to identify
and classify security
vulnerabilities. Its
purpose is to reduce
the possibility of
unauthorized access
to sensitive systems
and data.
Number of
vulnerability
assessments
completed annually
2 assessments
completed annually
FY 2023 (1)FY 2024 FY 2025
Target 2 2 2
Actual 2 2 2 (2)
Performance
Indicator Definition Measurement
Method Target
Injury Incident
Rate(3)(4)
Measures the rate of
work-related injuries
and illnesses.
(Number of
recordable
injuries/illnesses x
200,000 average
hours worked)/total
hours employees
worked
No more than 4.1
incidents per 200,000
hours worked
annually
FY 2023 FY 2024 FY 2025
Target 4.1 4.1 4.1
Actual 4.1 3.3 3.7 (2)
(1)FY 2023 is the first year for this key performance indicator
(2) FY 2025 projected performance indicator
(3)Key performance indicator is based on calendar year and results are available in the 4th quarter of the following fiscal year
(4) Key performance indicator utilizes AWWA Benchmark
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
Goal
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
48
Key Performance Indicators: Administrative Services (continued)
Performance
Indicator Definition Measurement
Method Target
Employee Turnover
Rate
Measures the number
of voluntary
departures, excluding
retirements.
Number of voluntary
resignations (not
including retirements)
/Average number of
employees
Less than 5%
turnover annually
FY 2023 FY 2024 FY 2025
Target 5%5%5%
Actual 6%9% 4.5% (1)
Performance
Indicator Definition Measurement
Method Target
Training Hours per
Employee (2)
Measures the quantity
of general and
management formal
training employees
are completing
(excludes safety
training).
Total qualified training
hours for all
employees/ Average
number of full time
employees (FTE)
15.6 hours or more
per employee
annually
FY 2023 FY 2024 FY 2025
Target 15.6 15.6 15.6
Actual 24.9 26.6 26 (1)
Performance
Indicator Definition Measurement
Method Target
Safety Training
Program
Measures the quantity
of safety training for
field operational
employees.
Number of safety
training hours/
Number of field
employees (includes
mandated training)
24 hours or more per
field employee
annually
FY 2023 FY 2024 FY 2025
Target 24.0 24.0 24.0
Actual 42.3 48.6 45 (1)
(1) FY 2025 projected performance indicator
(2)Key performance indicator utilizes AWWA Benchmark
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Foster a workforce culture of employee development and
innovation.
Le
a
r
n
i
n
g
a
n
d
G
r
o
w
t
h
Goal
Foster a workforce culture of employee development and
innovation.
Strategic Plan
Le
a
r
n
i
n
g
a
n
d
G
r
o
w
t
h
Goal
Foster a workforce culture of employee development and
innovation.
49
Key Performance Indicators: Finance
Performance
Indicator Definition Measurement
Method Target
Answer Rate
Measures the
percentage of calls
answered out of total
calls received.
Number of all calls
answered/Number of
all calls received
No less than 97%
answer rate annually
FY 2023 FY 2024 FY 2025
Target 97.0%97.0%97.0%
Actual 98.7%98.5% 98.6% (1)
Performance
Indicator Definition Measurement
Method Target
Billing Accuracy
Percentage of bills
issued without error
as a percentage of
total statements
issued.
Number of correct
bills/Number of total
bills
No less than 99.8%
accuracy rate
annually
FY 2023 FY 2024 FY 2025
Target 99.8%99.8%99.8%
Actual 99.99%99.87% 99.93% (1)
Performance
Indicator Definition Measurement
Method Target
Sewer Rate Ranking
District's average
customer sewer bill
compared to other
San Diego County
agencies.
Otay percentage
ranking or the
average bill for sewer
among regional
agencies
Bottom 50th
percentile for the 28
sewer service
providers
in San Diego annually
FY 2023 FY 2024 FY 2025
Target 14 14 14
Actual 5 4 4 (1)
(1)FY 2025 projected performance indicator
Strategic Plan
Goal
Cu
s
t
o
m
e
r
Fi
n
a
n
c
i
a
l
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
Fi
n
a
n
c
i
a
l
Goal
Goal
Enhance customer and community engagement to
increase public awareness of the water industry and the
District, while continuing to provide superior customer
service.
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
50
Key Performance Indicators: Finance (continued)
Performance
Indicator Definition Measurement
Method Target
Water Rate Ranking
District's average
customer water bill
compared to other
San Diego County
agencies.
Otay percentage
ranking among
regional agencies
Bottom 50th
percentile for the 22
agencies in
San Diego annually
FY 2023 FY 2024 FY 2025
Target 11 11 11
Actual 5 9 11 (1)
Performance
Indicator Definition Measurement
Method Target
Water Debt Coverage
Ratio
Measures the level of
debt service to the net
revenues available to
pay debt service,
excluding growth
revenues and non-
cash transactions
(GASB 68
adjustment).
Qualified net
operating
revenues/Debt
service requirements
150% excluding
growth revenue
annually
FY 2023 FY 2024 FY 2025
Target 150%150%150%
Actual 219%133% 175% (1)
Performance
Indicator Definition Measurement
Method Target
Sewer Debt Coverage
Ratio
Measures level of
sewer debt service to
the net revenues
available to pay debt
service.
Qualified net
operating
revenue/Debt Service
requirements
150% excluding
growth revenue
annually
FY 2023 FY 2024 FY 2025
Target 150%150%150%
Actual 603%797% 557% (1)
(1)FY 2025 projected performance indicator
Fi
n
a
n
c
i
a
l
Fi
n
a
n
c
i
a
l
Fi
n
a
n
c
i
a
l
Strategic Plan
Goal
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
Goal
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
Goal
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
51
Key Performance Indicators: Finance (continued)
Performance
Indicator Definition Measurement
Method Target
Reserve Level
All reserve levels in
the District measured
to a predetermined
plan developed
during the initial
budget process
Number of reserve
funds that meet or
exceed fund target
levels/Total number
of reserve funds
No less than 83%
annually
FY 2023 FY 2024 FY 2025
Target 85%85%83%
Actual 85%83% 83% (1)
Performance
Indicator Definition Measurement
Method Target
Accounts per Full-
Time Employee (FTE)
Measures the number
of active accounts per
full-time employee.
The greater the
number of accounts
per employee, the
more efficient
technology and staff
are utilized.
Potable + Recycled +
Sewer Accounts/
Number of full-time
employees
395 accounts per FTE
annually
FY 2023 FY 2024 FY 2025
Target 399 398 395
Actual 423 442 432 (1)
Performance
Indicator Definition Measurement
Method Target
Distribution System
Loss
Percentage of
unaccounted potable
and recycled water
100 [Volume
purchased–(volume
sold + volume
used)/Volume
purchased]
Less than 5%
annually
FY 2023 FY 2024 FY 2025
Target 5.0%5.0%5.0%
Actual 3.5%3.3% 3.5% (1)
(1)FY 2025 projected performance indicator
Fi
n
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.Fi
n
a
n
c
i
a
l
Goal
Strategic Plan
Fi
n
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
52
Key Performance Indicators: Water Operations
Performance
Indicator Definition Measurement
Method Target
Technical Quality
Complaint (1)
Measures the
complaint rate related
to core utility services.
It is expressed as
complaints per 1,000
customer accounts.
1,000 (Number of
technical quality
complaints)]/
Number of active
customer accounts
per reporting period
No more than 4.6
complaints per 1,000
customer accounts
annually
FY 2023 FY 2024 FY 2025
Target 4.6 4.6 4.6
Actual 1.0 0.8 1.0 (2)
Performance
Indicator Definition Measurement
Method Target
Potable Water
Compliance Rate (1)
Quantifies the
percentage of time
each year that the
District meets all
health related
drinking water
standards in U.S.
National Primary
Drinking Water
Regulations.
All primary health
regulations are met
100% of all health
regulations met
annually
FY 2023 FY 2024 FY 2025
Target 100%100%100%
Actual 100%100% 100% (2)
Performance
Indicator Definition Measurement
Method Target
Planned Potable
Water Maintenance
Ratio in $
Compares how
effectively the District
is investing in
planned maintenance
for Potable Water.
Total planned
maintenance
cost/Total
maintenance cost
70% of labor dollars
spent on preventative
maintenance
annually
FY 2023 FY 2024 FY 2025
Target 70%70%70%
Actual 76%72% 74% (2)
(1)Key performance indicator utilizes AWWA benchmark
(2)FY 2025 projected performance indicator
Cu
s
t
o
m
e
r
Goal
Enhance customer and community engagement to
increase public awareness of the water industry and the
District, while continuing to provide superior customer
service.
Fi
n
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
Strategic Plan
Cu
s
t
o
m
e
r
Goal
Enhance customer and community engagement to
increase public awareness of the water industry and the
District, while continuing to provide superior customer
service.
53
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Definition Measurement
Method Target
Planned Recycled
Maintenance Ratio
in $
Compares how
effectively the District
is investing in
planned maintenance
for Recycled Water.
Total planned
maintenance
cost/Total
maintenance cost
70% of labor dollars
spent on preventative
maintenance
annually
FY 2023 FY 2024 FY 2025
Target 70%70%70%
Actual 90%93% 91% (1)
Performance
Indicator Definition Measurement
Method Target
Planned Wastewater
Maintenance Ratio
in $
Compares how
effectively the District
is investing in
planned maintenance
for Wastewater.
Total planned
maintenance
cost/Total
maintenance cost
80% of labor dollars
spent on preventative
maintenance
annually
FY 2023 FY 2024 FY 2025
Target 80%80%80%
Actual 92%92% 92% (1)
Performance
Indicator Definition Measurement
Method Target
Direct Cost of
Treatment per MGD
Measures the direct
cost of wastewater
treatment and
excludes staff
overhead and fringe
benefits but includes
salaries. The costs of
solid waste disposal
are not included.
Total O&M costs
directly attributable to
sewer treatment/
Total volume
(in MGD)
No more than $1,464
per MG spent on
wastewater treatment
annually
FY 2023 FY 2024 FY 2025
Target $1,315 $1,464 $1,464
Actual $1,049.67 $1,101.51 $1,075 (1)
(1)FY 2025 projected performance indicator
Fi
n
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
Strategic Plan
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
Goal
Fi
n
a
n
c
i
a
l
Fi
n
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
54
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Definition Measurement
Method Target
System Valve
Exercising Program
Quantifies the
number of system
valves exercised in
the distribution
system.
Number of valves
exercised/ Total
number of District
valves
20% of District valves
exercised annually
(4092 valves) to
accomplish 100%
every 5 years
FY 2023 FY 2024 FY 2025
Target 20%20%20%
Actual 21%21% 20% (2)
Performance
Indicator Definition Measurement
Method Target
Potable Water
Distribution System
Integrity (Leaks) (3)
Measures the
condition of the
potable water
distribution system
expressed as the total
annual number of
leaks per 100 miles of
distribution piping.
(Total number of
leaks x 100)/ Total
miles of distribution
system piping
No more than 2.5
leaks per 100 miles of
distribution piping
annually
FY 2023 (1)FY 2024 FY 2025
Target 2.5 2.5 2.5
Actual 0.3 0.6 0.4 (2)
Performance
Indicator Definition Measurement
Method Target
Potable Water
Distribution System
Integrity (Breaks) (3)
Measures the
condition of the
potable water
distribution system
expressed as the total
annual number of
breaks per 100 miles
of distribution piping.
(Total number of
breaks x 100)/ Total
miles of distribution
system piping
No more than 3
breaks per 100 miles
of distribution piping
annually
FY 2023 (1)FY 2024 FY 2025
Target 3 3 3
Actual 0.41 0.42 0.41 (2)
(1)FY 2023 is the first year for this key performance indicator
(2) FY 2025 projected performance indicator
(3)Key performance indicator utilizes AWWA Benchmark
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
55
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Definition Measurement
Method Target
Recycled Water
System Integrity
(Leaks)
Measures the
condition of the
recycled water
distribution system
expressed as the total
annual number of
leaks per 100 miles of
distribution piping.
(Total number of
leaks x 100)/ Total
miles of recycled
distribution system
piping
No more than 2.5
leaks per 100 miles of
recycled distribution
system
annually
FY 2023 (1)FY 2024 FY 2025
Target 2.5 2.5 2.5
Actual 0 0 0 (2)
Performance
Indicator Definition Measurement
Method Target
Recycled Water
System Integrity
(Breaks)
Measures the
condition of the
recycled water
distribution system
expressed as the total
annual number of
breaks per 100 miles
of distribution piping.
(Total number of
breaks x 100)/ Total
miles of recycled
distribution system
piping
No more than 3
breaks per 100 miles
of recycled
distribution system
annually
FY 2023 (1)FY 2024 FY 2025
Target 3 3 3
Actual 0 0 0 (2)
Performance
Indicator Definition Measurement
Method Target
Sewer Overflow
Rate (3)
Measures the
wastewater collection
system pipeline
condition and the
effectiveness of
planned
maintenance.
[100 (Collection
system failure)]/
Total miles of
collection system
piping
0 overflow rate
annually
FY 2023 FY 2024 FY 2025
Target 0 0 0
Actual 1.14 0 0 (2)
(1)FY 2023 is the first year for this key performance indicator
(2)FY 2025 projected performance indicator
(3)Key performance indicator utilizes AWWA benchmark
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
56
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Definition Measurement
Method Target
Potable Tank
Inspection and
Cleaning
This provision
ensures that the
District adheres to the
American Water
Works Association
(AWWA)
recommendation and
guidelines of a tank
cleaning program
that cleans all tanks
and reservoirs every
five years.
Number of tanks
cleaned and
inspected annually
8 potable water
storage tanks and/or
reservoirs cleaned
annually
FY 2023 FY 2024 FY 2025
Target 8 8 8
Actual 7 6 8 (1)
Performance
Indicator Definition Measurement
Method Target
Hydrant Maintenance
Program
Evaluates the
condition and
maintenance of
hydrants to ensure
that they are readily
accessible,
completely functional,
and leak-free.
Number of hydrants
maintained/ Total
number of hydrants
20% of District
hydrants maintained
annually (1220
hydrants) to
accomplish 100%
every 5 years
FY 2023 (2)FY 2024 FY 2025
Target 20%20%20%
Actual 22%20% 20% (1)
(1)FY 2025 projected performance indicator
(2)FY 2023 is the first year for this key performance indicator
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
57
Key Performance Indicators: Engineering
Performance
Indicator Definition Measurement
Method Target
CIP Project
Expenditures vs.
Budget
Compares CIP
expenditures vs.
Budget
Actual quarterly
expenditures/
Annual budget
Greater than or equal
to 95% of budget
annually
FY 2023 FY 2024 FY 2025
Target 95%95%95%
Actual 94%42% 95% (1)
Performance
Indicator Definition Measurement
Method Target
Construction Change
Order Incidence
Measures rate of
Change Orders for
CIP projects under
Construction.
Total cost of change
orders (not including
allowances)/Total
original construction
contract amount (not
including allowances)
No more than
5% change order rate
annually
FY 2023 FY 2024 FY 2025
Target 5.0%5.0%5.0%
Actual 0.50%-0.40% 1% (1)
Performance
Indicator Definition Measurement
Method Target
Mark-out Accuracy
The percentage of
mark-outs performed
without an at-fault hit;
defined as damage to
a District facility that
results from a missing
or erroneous mark-
out.
Number of mark-outs
performed without an
at-fault hit/Total
number of mark-outs
performed
100% of mark-outs
performed without an
at fault hit annually
FY 2023 FY 2024 FY 2025
Target 100%100%100%
Actual 99%100% 100% (1)
(1)FY 2025 projected performance indicator
Strategic Plan
Fi
n
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
Fi
n
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and
transparent manner while maintaining a fair rate structure.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
58
Key Performance Indicators: Engineering (continued)
Performance
Indicator Definition Measurement
Method Target
Easement Desktop
Evaluation and Field
Inspection
Inspection of District
easements to ensure
that no unauthorized
encroachments exist.
Number of Actual
Easements Evaluated
and Inspected/Total
Number of
Easements
100% of easements
evaluated and
inspected annually
FY 2023 FY 2024 FY 2025
Target 100%100%100%
Actual 106%100% 100% (1)
(1)FY 2025 projected performance indicator
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Strategic Plan
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
59
Financial Summaries
Budget Summary
The FY 2025 Operating Budget is summarized and presented in the Operating Budget Summary- General
Fund on pages 65-66. This schedule presents the District’s overall revenues and expenditures by type.
Also included in this section is the Operating Budget Summary by System on page 67 which presents the
General Fund budget in the business segments of Potable, Recycled, and Sewer. Additional schedules
provided in this section are the General Fund Revenues, Expenditures and Transfers; Fund Balance
Summary by Fund; Revenues and Expenditures by Type - All Funds; and Revenues and Expenditures by
Fund; and are presented on pages 68-72.
General Fund Revenues
Potable Water Sales
Potable water sales revenue collected from the sale of water including system charges, energy charges,
and penalties account for 79.7% of the District’s operating revenues. It is estimated that 27,296.2 acre-feet
of potable water will be sold during FY 2025, which is a decrease of 270 acre-feet from FY 2024. Budgeted
revenues from potable water sales are projected to be $110.1 million, an increase of 9.1% compared to
FY 2024. Schedules relating to potable water sales are included in the Potable Revenues and
Expenditures section of this budget.
Recycled Water Sales
The District’s recycled water sales continue to be adversely impacted by measures implemented as a
result of the permanent conservation efforts. Recycled water sales revenue is generated from the sale of
3,636.4 acre-feet of recycled water, which is below historic volumes which were as high as 4,748 acre-
feet sold in 2014. The FY 2025 sales revenue budget is $11.0 million which is an increase of $108 thousand
from FY 2024.
Sewer Revenues
Sewer charges, which represent 99% of sewer revenue, are the monthly fees collected from residential,
multi-residential, and commercial customers. The remaining 1% of revenue is derived from penalties. The
monthly fees are determined by volume of flow and the strength of solids discharged into the sewer
system. The FY 2025 sewer revenues are projected to be $3.5 million, an increase of $14,000 from FY 2024.
Meter Fees
Meter fees are charges collected for new water service connections. Fees vary depending upon meter
size and the type of service. The FY 2025 revenue from meter fees is projected to be $158,000 which is a
decrease of $10,000 when compared to FY 2024. The costs associated with meter installations are
included in the Operating Expenses section.
Capacity Fee Revenues
These fees are earned by the General Fund for the Engineering Department’s support for expansion
functions. The FY 2025 capacity fee revenue is projected to be $2.8 million, an increase of $481,000 from
FY 2024.
Tax Revenues
The District receives a portion of the 1% property tax revenues and availability fees on properties within
the District’s boundaries. These revenues are collected by the County of San Diego via the Property Tax
60
Financial Summaries
Roll and are remitted to the District annually. The District budgeted tax revenues of $6.8 million which is
an increase of $597,000 compared to FY 2024.
Spending limits for government entities are governed by the 1979 passage of California Proposition 4,
Limitations of Government Appropriations (Article XIII B of the California Constitution, commonly known
as the Gann Limit). Proposition 4 places an appropriations limit on most spending from tax proceeds. It
plays a crucial role in maintaining fiscal discipline and accountability in government appropriations and
establishes a framework for managing public finances ensuring that taxpayer funds are used responsibly
and in accordance with the limitations set forth by the California Constitution.
Non-Operating Revenues
Non-operating revenues are revenues that are not directly related to the operation of a water or sewer
utility and include such items as District property rentals and leases, and billing services for the City of
Chula Vista. The District projected $2.6 million in revenues for FY 2025, which is a decrease of $205,000
compared to FY 2024.
Interest
Interest is earned by each fund that has a positive balance and is paid by each fund with a negative
balance. Interest income on General Fund balances is considered general use revenue. Interest revenue
for FY 2025 is projected to remain relatively flat compared to FY 2024 at $1.1 million.
General Fund Expenditures
Potable Water Purchases
Water purchases are the expenses of purchasing 28,424.2 acre-feet for the District's potable water supply.
A provision has been made to allow 1,065.3 acre-feet of water for District usage, leakage, and evaporation.
Total Potable Water Purchases are projected to be $54.3 million in FY 2025, which is an increase of $6.2
million compared to FY 2024.
Recycled Water Purchases
Recycled water purchases are the expenses of purchasing 2,719.4 acre-feet for the District's recycled
water supply which is an increase of 22.4 acre-feet compared to FY 2024. In addition to the purchases,
there is a contractual Take-or-Pay payment budgeted for 2,984.4 acre-feet which is 67.6 acre-feet more
than FY 2024. Total Recycled Purchases are projected to be $6.1 million in FY 2025, which is an increase
of $325,000 compared to FY 2024.
Infrastructure Access Charge
This charge was established in FY 1999 by CWA and is imposed on member agencies as a condition of
maintaining connections to the CWA facilities. It is apportioned based on water meters within each
member agency. Infrastructure access charges are projected at $3.3 million in FY 2025, which is an
increase of $112,000 compared to FY 2024.
Customer Service Charge
This charge was established in FY 2004 by CWA as a fixed charge. The customer service charge is set to
recover costs that are necessary to support the functioning of the CWA. Prior to 2025, this charge was
allocated among the member agencies based on each agency’s three-year rolling average of member
agency supply purchases from the CWA. Beginning in 2025, the allocation among the member agencies
61
Financial Summaries
is based on a seven-year rolling average of member agency supply purchases from CWA. Budgeted
customer service charges are projected to be $2.2 million in FY 2025, an increase of $195,000 compared
to FY 2024.
Supply Reliability Charge
This charge was established in FY 2016 by CWA as a fixed charge and became effective in January 2016.
The supply reliability charge is set to recover a portion of the fixed costs associated with the CWA’s highly
reliable water supplies, such as desalinated water (Carlsbad Desalination Plant) and Imperial Irrigation
District (IID) water transfer costs. Prior to 2025, this charge was allocated to member agencies based
upon member agencies’ share of the rolling five-year average Municipal and Industrial (M&I) deliveries
(agricultural deliveries are not included). Beginning in 2025, the allocation among the member agencies
is based on seven-year rolling average M&I deliveries. The reliability charge is projected at $3.8 million in
FY 2025, which is an increase of $533,000 compared to FY 2024.
Emergency Storage Charge
The Emergency Storage Charge was established by CWA in calendar year 2003 to recover costs
associated with non-agricultural water deliveries. Prior to 2025, this charge was allocated among the
member agencies based on each agency’s three-year rolling average of member agency supply
purchases from the CWA (excluding contract water). Beginning in 2025, the allocation among the
member agencies is based on seven-year rolling average of member agency supply purchases from
CWA (excluding contract water). The emergency storage charge is projected to be $5.2 million in FY 2025,
which is an increase of $313,000 compared to FY 2024.
Fixed Transportation Charge
This charge was established in FY 2025 by CWA as a fixed charge to recover the costs associated with
the capital, operation, and maintenance of the Water Authority’s aqueduct system. The Fixed
Transportation Charge is allocated based on total demands averaged over seven years and for CY 2025,
at 40% of total Transportation Revenue requirement. The charges, set to start on January 1, 2025, are
projected at $1.1 million.
Capacity Reservation Charge
This charge was established in FY 2002 by MWD as a fixed charge on a member agency's requested
maximum daily capacity. The capacity reservation charge is a charge per cubic-foot-second and is
applied to the amount of capacity (daily flow) a member agency expects to use during the peak period
from May through September. Capacity reservation charges are projected to be $840,000 in FY 2025,
which is an increase of $278,000 compared to FY 2024.
Readiness-to-Serve Charge
This charge was established in FY 1996 by MWD to recover the principal and interest payments on non-
tax supported debt service used to fund the capital improvements necessary to meet the continuing
reliability and quality needs associated with current demands. These costs are offset by standby charges
collected by MWD on the tax bills of District customers. These charges are projected to be $684,000 in FY
2025, an increase of $30,000 compared to FY 2024.
Labor and Benefits
Labor and benefits are the wages and fringe benefits for FY 2025 Full-time Equivalent (FTE) employees.
62
Financial Summaries
Labor costs are reduced by the number of hours that are charged to non-operating Capital Improvement
Program (CIP) and developer deposit projects. The detail of actual personnel and payroll related
expenses is included in the Departmental Operating Budget section. Labor and benefits are projected to
be $28.1 million, which is an increase of $2.2 million compared to FY 2024.
Administrative Expenses
Administrative expenses are costs incurred by various departments that are directly related to District
operations. Administrative expenses are projected to be $9.9 million in FY 2025, which is an increase of
$987,000 compared to FY 2024. Additional details are supplied in the Departmental Operating Budget
section.
Materials and Maintenance Expenses
Materials and maintenance expenses are costs associated with the operation and maintenance of
District facilities. Materials and maintenance expenses are projected to be $5.2 million in FY 2025, which
is an increase of $400,000 compared to FY 2024. Additional details are supplied in the Departmental
Operating Budget section.
Power Costs
Power costs are expenses associated with the transmission and distribution of water to customers. The
pumping costs to distribute water vary with elevation and will increase as water sales increase. The
District’s power costs are projected to be $5.1 million in FY 2025, which is an increase of $773,000
compared to FY 2024.
General Fund Reserves(1)
General Fund Reserves
These reserves are established to fund the operational needs of the District in accordance with the
District’s Reserve Policy. For FY 2025, these reserves will be funded with $3.1 million from the Potable
Water Fund and $928,000 from the Recycled Fund.
Expansion Reserves
These reserves are established to fund expansion needs including project costs, existing debt payments,
and new debt that will be issued in the future to fund expansion. For FY 2025, these reserves will be funded
with $5.6 million from the Potable Water Fund and $135,000 from the Sewer Fund.
Betterment Reserves
These reserves are established to fund the betterment needs of facilities including project costs, existing
debt payments, and new debt that will be issued in the future to fund betterment. For FY 2025, these
reserves will be funded with $1.9 million from the Potable Water Fund, $251,000 from the Recycled Water
Fund, and $529,000 from the Sewer Fund.
Replacement Reserves
These reserves are established to fund the replacement needs including project costs, existing debt
payments, and new debt that will be issued in the future to fund replacement. There is no allocated
budget for reserve funding in FY 2025.
(1)See the Policies section for the District’s complete Reserve Policy.
63
Financial Summaries
Rate Stabilization Reserves
This sewer reserve is established for the purpose of minimizing rate increases in response to one-time
events and therefore stabilizing the rates and charges imposed by the District to meet covenanted debt
service coverage levels. This fund is anticipated to be fully funded in accordance with the District’s
Reserve Policy.
New Water Supply Reserves
These reserves are established to fund new water supply needs including project costs, existing debt
payments, and new debt that will be issued in the future to fund expansion. This fund is fully funded in
accordance with the District's Reserve Policy in FY 2025.
Fund Transfers
Fund transfers are necessary to ensure that each fund pays its fair share of costs, or to achieve required
fund balances per the District’s policy.
Other Financial Schedules/Presentations
Operating Budget Summary by System
The Budget Summary by System schedule reflects the breakdown of operating revenues and expenses
per fund. The schedule presents a balanced budget for each fund and shows that anticipated resources
are sufficient to cover current expenditures. This is provided as information but is necessary to ensure
sufficient revenue is collected from sewer customers versus water customers.
General Fund – Revenues, Expenditures, and Transfers
This schedule shows the General Fund’s total revenues, expenditures, and transfers showing the prior
year’s actuals, the prior year’s budget and audited actuals, the current year’s budget, along with the
variance from the prior year’s budget.
Fund Balance Summary by Fund
This schedule shows each fund’s balance at June 30, 2024, and the projected balance for June 30, 2025.
These balances are based on the results of the budget and rate model. This includes transfers between
funds made to meet target levels as outlined in the Reserve Policy.
Revenues and Expenditures by Fund
The Revenues and Expenditures by Fund schedule reflects each fund’s revenues and expenditures by
business line, where appropriate. This schedule is reconciled to the Fund Balance Summary and
excludes transfers between funds.
Revenues and Expenditures by Type – All Funds
This is a consolidated schedule of revenues and expenditures, including sources and uses of funds but
excluding fund transfers.
64
FY 2023 FY 2024 FY 2024 FY 2025
11-Actual Budget Actual Budget $%
Revenues
Potable Water Sales 90,549,740$ 100,949,000$ 96,088,323$ 110,098,000$ 9,149,000$ 9.1%
Recycled Water Sales 9,351,434 10,906,000 9,648,519 11,014,000 108,000 1.0%
Sewer Revenues 3,297,522 3,468,000 3,487,345 3,482,000 14,000 0.4%
Meter Fees 135,079 168,000 165,582 158,000 (10,000) (6.0%)
Capacity Fee Revenues 2,734,072 2,352,000 2,869,179 2,833,000 481,000 20.5%
Tax Revenues 6,084,144 6,243,000 6,511,467 6,840,000 597,000 9.6%
Non-Operating Revenues 3,131,555 2,770,600 3,007,602 2,566,000 (204,600) (7.4%)
Interest 772,218 1,091,000 796,767 1,102,000 11,000 1.0%
Total Revenues 116,055,764 127,947,600 122,574,783 138,093,000 10,145,400 7.9%
Expenditures
Potable Water Purchases 41,263,647 48,147,000 46,429,379 54,323,000 6,176,000 12.8%
Recycled Water Purchases 5,432,169 5,798,000 5,741,405 6,123,000 325,000 5.6%
CWA - Infrastructure Access Charge 3,097,476 3,146,000 3,146,388 3,258,000 112,000 3.6%
CWA - Customer Service Charge 1,900,266 1,971,000 2,022,276 2,166,000 195,000 9.9%
CWA - Reliability Charge 3,042,420 3,235,000 3,258,612 3,768,000 533,000 16.5%
CWA - Emergency Storage Charge 4,748,834 4,865,000 4,877,952 5,178,000 313,000 6.4%
CWA - Fixed Transportation Charge - - - 1,125,000 1,125,000 100.0%
MWD - Capacity Reservation Charge 740,531 562,000 710,292 840,000 278,000 49.5%
MWD - Readiness-to-Serve Charge 613,556 654,000 620,328 684,000 30,000 4.6%
Subtotal - Water Costs 60,838,899 68,378,000 66,806,632 77,465,000 9,087,000 13.3%
Labor and Benefits 23,700,531 25,860,600 24,716,808 28,074,800 2,214,200 8.6%
Administrative Expenses 7,610,526 8,942,300 8,128,651 9,928,800 986,500 11.0%
Materials and Maintenance 4,424,819 4,824,900 4,508,052 5,224,400 399,500 8.3%
Power 4,400,025 4,285,000 4,618,120 5,058,000 773,000 18.0%
Subtotal - Operations Costs 40,135,902 43,912,800 41,971,631 48,286,000 4,373,200 10.0%
DSGeneral Fund Reserve 40,400 - - 3,978,700 3,978,700 100.0%
Expansion Reserve 684,800 4,320,000 4,320,000 5,720,000 1,400,000 32.4%
Bett ResBetterment Reserve 4,890,000 2,562,000 2,562,000 2,643,300 81,300 3.2%
Repl ResReplacement Reserve 8,393,600 8,774,800 8,774,800 - (8,774,800) (100.0%)
Transfer to Rate Stabilization Fund 19,000 - - - - -
Subtotal - Reserve Funding 14,027,800 15,656,800 15,656,800 12,342,000 (3,314,800) (21.2%)
Total Expenditures 115,002,601 127,947,600 124,435,063 138,093,000 10,145,400 7.9%
Excess Revenues (Expenditures)1,053,164$ -$ (1,860,280)$ -$ -$
-
Operating Budget Summary - General Fund
Budget to Budget
Variance
65
Potable Water Sales 110,098,000$ 79.7%
Recycled Water Sales 11,014,000 8.0%
Sewer Revenues 3,482,000 2.5%
Meter Fees 158,000 0.1%
Capacity Fee Revenues 2,833,000 2.0%
Tax Revenues 6,840,000 5.0%
Non-Operating Revenues 2,566,000 1.9%
Interest 1,102,000 0.8%
138,093,000 100.0%
Potable Water Purchases 71,342,000 51.7%
Recycled Water Purchases 6,123,000 4.4%
Power 5,058,000 3.7%
Labor and Benefits 28,074,800 20.3%
Administrative Expenses 9,928,800 7.2%
Materials and Maintenance 5,224,400 3.8%
Reserve Funding 12,342,000 8.9%
138,093,000$ 100.0%
Operating Budget Summary - General Fund
FY 2025 OPERATING REVENUES
FY 2025 OPERATING EXPENDITURES
52%
4%
4%20%
7%
4%
9%
80%8%
2%
2%
5%
2%
1%
66
Potable Recycled Sewer Total
Revenues
Water Sales 110,098,000$ -$ -$ 110,098,000$
Recycled Water Sales - 11,014,000 - 11,014,000
Sewer Revenues - - 3,482,000 3,482,000
Meter Fees 145,000 13,000 - 158,000
Capacity Fee Revenues 2,833,000 - - 2,833,000
Tax Revenues 6,787,000 - 53,000 6,840,000
Non-Operating Revenues 2,479,000 75,000 12,000 2,566,000
Interest 1,008,000 73,000 21,000 1,102,000
Total Revenues 123,350,000 11,175,000 3,568,000 138,093,000
Expenditures
Water Purchases (CWA)54,323,000 - - 54,323,000
Water Purchases (CSD)- 6,122,000 - 6,122,000
CWA - Fixed Transportation Charge 1,125,000 - - 1,125,000
CWA - Infrastructure Access Charge 3,258,000 - - 3,258,000
CWA - Customer Service Charge 2,166,000 - - 2,166,000
CWA - Reliability Charge 3,768,000 - - 3,768,000
CWA - Emergency Storage Charge 5,178,000 - - 5,178,000
MWD - Capacity Reservation Charge 840,000 - - 840,000
MWD - Readiness-to-Serve Charge 684,000 - - 684,000
Subtotal - Water Costs 71,342,000 6,122,000 - 77,464,000
Labor and Benefits 25,361,000 1,650,700 1,063,100 28,074,800
Administrative Expenses 8,773,400 891,200 264,200 9,928,800
Materials and Maintenance 3,327,500 553,500 1,343,400 5,224,400
Power 4,047,000 778,000 233,000 5,058,000
Subtotal - Operations Costs 41,508,900 3,873,400 2,903,700 48,286,000
DSGeneral Fund Reserve 3,051,100 928,600 - 3,979,700
#Expansion Reserve 5,585,000 - 135,000 5,720,000
Bett ResBetterment Reserve 1,863,000 251,000 529,300 2,643,300
Subtotal - Reserve Funding 10,499,100 1,179,600 664,300 12,343,000
Total Expenditures 123,350,000 11,175,000 3,568,000 138,093,000
Excess Revenue (Expenditures)-$ -$ -$ -$
FY 2025 Operating Budget Summary by System
67
FY 2023 FY 2025
Actual Budget Actual Budget $%
Revenues
Water Sales 99,901,174$ 111,855,000$ 105,736,842$ 121,112,000$ 9,257,000$ 8.3%
Sewer Revenues 3,297,522 3,468,000 3,487,345 3,482,000 14,000 0.4%
Meter Fees 135,079 168,000 165,582 158,000 (10,000) (6.0%)
Capacity Fee Revenues 2,734,072 2,352,000 2,869,179 2,833,000 481,000 20.5%
Tax Revenues 6,084,144 6,243,000 6,511,467 6,840,000 597,000 9.6%
Non-Operating Revenues 3,131,555 2,770,600 3,007,602 2,566,000 (204,600) (7.4%)
Interest 772,219 1,091,000 796,767 1,102,000 11,000 1.0%
Total Revenues 116,055,764 127,947,600 122,574,783 138,093,000 10,145,400 7.9%
Expenditures and Transfers
Water Purchases 60,838,899 68,378,000 66,806,632 77,464,000 9,086,000 13.3%
Power 4,400,025 4,285,000 4,618,120 5,058,000 773,000 18.0%
Labor and Benefits 23,700,531 25,860,600 24,716,808 28,074,800 2,214,200 8.6%
Administrative Expenses 7,610,526 8,942,300 8,128,651 9,928,800 986,500 11.0%
Materials and Maintenance 4,424,819 4,824,900 4,503,805 5,224,400 399,500 8.3%
Transfers 14,027,800 15,656,800 15,656,800 12,343,000 (3,313,800) (21.2%)
- Total Expenditures and Transfers 115,002,601 127,947,600 124,430,816 138,093,000 10,145,400 7.9%
Excess Revenues (Expenditures)1,053,164$ -$ (1,856,033)$ -$ -$ 0%
General Fund Revenues, Expenditures and Transfers, in millions ($)
FY 2024
Budget to Budget
Variance
General Fund - Revenues, Expenditures and Transfers
$80
$90
$100
$110
$120
$130
$140
FY 2023
Actual
FY 2024
Budget
FY 2024
Actual
FY 2025
Budget
$1
1
6
$1
2
8
$1
2
3
$1
3
8
$1
1
5
$1
2
8
$1
2
4
$1
3
8
Revenue Expenditures
68
Actual Projected
Balance Interfund Balance
June 30, 2024 Revenues Expenditures Transfers (1)June 30, 2025
General Fund
Potable 26,968,100$ 123,350,000$ 123,350,000$ -$ 26,968,100$
Recycled 2,358,700 11,175,000 11,175,000 - 2,358,700
Sewer 688,000 3,568,000 3,568,000 - 688,000
Total General Fund 30,014,800 138,093,000 138,093,000 - 30,014,800 (1)
Expansion Fund
Water (2)(1,693,000) 3,465,200 6,380,800 4,815,000 206,400
Sewer 156,800 500 77,500 135,000 214,800
Total Expansion Fund (1,536,200) 3,465,700 6,458,300 4,950,000 421,200 (3)
Betterment Fund
Potable 2,586,200 1,230,800 3,324,000 1,863,000 2,356,000
Recycled 938,700 31,000 1,250,800 1,200,000 918,900
Sewer 142,600 52,700 498,100 776,000 473,200
Total Betterment Fund 3,667,500 1,314,500 5,072,900 3,839,000 3,748,100
Replacement Fund
Potable 64,778,000 8,625,500 12,088,500 (1,803,000) 59,512,000
Recycled 8,284,000 961,000 3,072,300 (346,000) 5,826,700
Sewer 5,905,800 305,000 874,600 (631,000) 4,705,200
Total Replacement Fund 78,967,800 9,891,500 16,035,400 (2,780,000) 70,043,900 (3)
New Supply Fund
Water (2)3,090,300 133,100 89,700 - 3,133,700
Total New Supply Fund 3,090,300 133,100 89,700 - 3,133,700
Rate Stabilization Fund 215,000 - - - 215,000
OPEB Fund 842,400 16,400 1,199,000 350,000 9,800 (3)
Debt Service Fund 4,414,600 177,000 - (179,000) 4,412,600
Total 119,676,200$ 153,091,200$ 166,948,300$ 6,180,000$ 111,999,100$
(1)The total for interfund transfers does not net to $0 because some transfers are already reflected in the Operating Revenues and Expenditures for General Fund as follows:
General Fund Reserve (3,978,700)$
Expansion Reserve (5,720,000)
Betterment Reserve (2,643,300)
OPEB Reserve (350,000)
Total (12,692,000)$ #
Fund Balance Summary by Fund
Fiscal Year 2025 Budget
(2)Potable and Recycled funds are combined.
(3) The fund balance is anticipated to change more than 10% due to the District's ongoing current year CIP expenditures funded by current years revenues and
transfers made in accordance with the Reserve Policy found on pages 190-225.
69
FY 2023 FY 2025
Actual Budget Actual Budget
Revenues and Fund Sources
Water Sales 99,901,174$ 111,855,000$ 105,736,842$ 121,112,000$
Sewer Revenues 3,297,522 3,468,000 3,487,345 3,482,000
Meter Fees 135,079 168,000 165,582 158,000
Capacity Fee Revenues 2,734,072 2,352,000 2,869,179 2,833,000
Capacity Fees for Maintenance 7,899,071 11,456,300 9,566,976 10,005,300
Tax Revenues 6,084,144 6,243,000 6,511,467 6,840,000
Availability Fees 489,357 743,000 487,635 844,000
Non-Operating Revenues 3,131,555 2,770,600 3,007,602 2,566,000
GO Bond Debt Tax Revenues (1)245,063 - 7,250 -
Bond Proceeds and BABs Subsidy 782,835 783,000 782,835 783,000
Interest 2,968,065 3,810,400 4,407,719 4,467,900
Annexation Fees 82,682 - 64,952 -
Total Revenue and Fund Sources 127,750,619 143,649,300 137,095,383 153,091,200
-$ (0.03)$
Expenditures and Fund Uses
Water Purchases 60,838,899 68,378,000 66,806,632 77,465,000
Power 4,400,025 4,285,000 4,618,120 5,058,000
Labor Expenses 21,386,531 24,590,600 23,321,926 27,724,800
Administrative Expenses 7,610,526 8,942,300 8,128,651 9,928,800
Materials and Maintenance 4,424,819 4,824,900 4,508,052 5,224,400
CIP Expenses 11,689,248 17,693,100 6,464,342 18,837,400
Debt Service 9,506,229 9,676,800 8,884,064 8,818,900
Operating Projects 2,730,760 - 2,917,155 -
OPEB Retiree Expenditures & PERS/OPEB Funding 2,314,000 1,270,000 1,394,882 350,000
Total Expenditures and Fund Uses 124,901,038 139,660,700 127,043,824 153,407,300
Surplus/(Deficit)2,849,581$ 3,988,600$ 10,051,559$ (316,100)$
(0)$ -$ -$
(1)The District's General Obligation (GO) bonds fully matured in FY 2023.
Revenues and Expenditures by Type - All Funds
FY 2024
70
FY 2023 FY 2025
Actual Budget Actual Budget
Revenues
General Fund
Potable 103,933,980$ 113,292,600$ 110,080,844$ 123,350,000$
Recycled 9,478,155 11,075,000 9,722,637 11,175,000
Sewer 3,426,465 3,580,000 3,554,137 3,568,000
Total General Fund (1)116,838,600 127,947,600 123,357,618 138,093,000
Expansion Fund
Potable 2,099,251 3,103,900 1,894,613 2,705,200
Recycled 694,856 804,000 562,367 760,000
Sewer 3,091 3,000 12,673 500
Total Expansion Fund 2,797,197 3,910,900 2,469,654 3,465,700
Betterment Fund
Potable 534,684 1,105,400 627,331 1,230,800
Recycled 47,317 37,000 73,624 31,000
Sewer 35,348 56,800 44,087 52,700
Total Betterment Fund 617,349 1,199,200 745,042 1,314,500
Replacement Fund
Potable 6,149,848 9,039,600 9,133,594 8,625,500
Recycled 628,873 964,000 705,054 961,000
Sewer 202,792 289,700 303,284 305,000
Total Replacement Fund 6,981,513 10,293,300 10,141,932 9,891,500
New Supply Fund
Potable 93,710 106,200 105,312 119,100
Recycled 8,061 12,000 11,604 14,000
Total New Supply Fund 101,771 118,200 116,916 133,100
OPEB Fund 58,739 30,100 85,350 16,400
Debt Service Fund 355,451 150,000 178,871 177,000
Total Revenues 127,750,619$ 143,649,300$ 137,095,383$ 153,091,200$
Revenues and Expenditures by Fund
FY 2024
Note: This schedule excludes interfund transfers.
71
FY 2023 FY 2025
Actual Budget Actual Budget
Revenues and Expenditures by Fund
FY 2024
Expenditures
General Fund
Potable 88,365,116$ 99,387,900$ 96,777,095$ 112,525,900$
Recycled 7,925,584 9,002,700 8,483,827 9,980,400
Sewer 2,370,101 2,630,200 2,122,459 2,894,700
Total General Fund 98,660,801 111,020,800 107,383,381 125,401,000
Expansion Fund
Potable 5,060,187 5,043,600 5,536,251 5,227,300
Recycled 995,525 1,150,300 995,986 1,153,500
Sewer 38,478 102,200 39,989 77,500
Total Expansion Fund 6,094,190 6,296,100 6,572,226 6,458,300
Betterment Fund
Potable 2,524,295 2,601,100 2,146,629 3,324,000
Recycled 324,292 336,100 634,804 1,250,800
Sewer 131,293 229,500 147,923 498,100
Total Betterment Fund 2,979,880 3,166,700 2,929,355 5,072,900
Replacement Fund
Potable 12,550,592 13,084,300 8,199,869 12,088,500
Recycled 1,099,313 3,897,300 275,663 3,072,300
Sewer 399,527 835,700 209,182 874,600
Total Replacement Fund 14,049,433 17,817,300 8,684,714 16,035,400
New Supply Fund
Potable 73,822 85,000 75,703 84,900
Recycled 3,313 4,800 3,312 4,800
Total New Supply Fund 77,135 89,800 79,016 89,700
OPEB Fund 2,314,000 1,270,000 1,394,882 350,000
Debt Reserve Fund (1)725,600 - 250 -
Total Expenditures 124,901,038 139,660,700 127,043,824 153,407,300
Surplus/(Deficit)2,849,580$ 3,988,600$ 10,051,559$ (316,100)$
Note: This schedule excludes interfund transfers.
72
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73
Five-Year Forecast
The District updates its Rate Model to build the budget for the upcoming fiscal year and to forecast
the five subsequent years, FY 2026 through FY 2030. This financial forecast is designed to provide a
general understanding of how revenues and expenditures are expected to influence the District.
This forecast also highlights the funding of capital projects and reserve levels.
Revenue forecasting is crucial in assessing the available resources to sustain District operations
and fulfill commitments. It involves a complex process that requires analysis of historical trends
and various external factors. Primary factors include historical consumption(1) and rainfall(2) data
which provide insight into and can influence water consumption levels and wastewater generation.
Growth estimates are derived from an economic study performed by an external consultant at the
start of the budget cycle. The study involves a comprehensive analysis of the economy’s historical,
current, and future states spanning from the District’s service area to a global perspective. The
District also receives property tax revenues(3) that are forecasted based on historical trends.
The District utilizes an in-depth approach in developing the expenditure budget. Water cost
estimates are obtained from District’s water suppliers, CWA and MWD. Power cost inflators are
obtained from San Diego Gas and Electric, the District’s power supplier. Labor and benefit cost
inflators are based on the Memorandum of Understanding with the District’s labor union, estimates
from the District’s health providers, and actuarial reports related to the District’s pension and OPEB
plans. Other general inflators are derived from consumer price index statistical data for the region.
The District must look at replacing existing aging and future infrastructure to service the needs of
its customers. The six-year CIP plan looks at the service needs of all customers over the next six
years and at the betterment, replacement, and expansion needs from now until ultimate build-out.
Capital projects and their funding are reviewed annually by the Engineering Department. As new
capital assets are brought into service, they are managed by a GIS-centric Asset Management
System, CityWorks, which is critical in tracking and maintaining the history of 737 miles of potable
pipelines, 102 miles of recycled pipelines, 88 miles of sewer mains, 40 potable and four recycled
reservoirs, 21 potable and three recycled pump stations, five sewer lift stations, and a 1.3 million
gallons per day reclamation plant. Utilizing an integrated database from the Geographic
Information System (GIS) provides real-time work order planning, execution, and consolidation of
all maintenance history. These systems are also integrated with financial software to allow asset
tracking and management information. The impact of the CIP on the Operating Budget is
addressed in the CIP section of this budget.
(1)Historical unit sales can be found on pages 89 and 106.
(2)Rainfall history can be found on page 40.
(3)Service area assessed property valuation is found on page 36.
74
Five-Year Forecast
Projected Cost of Water
The projected cost of water is based on CWA’s Rate Modeling Program. This CWA program
evaluates many options of the Regional Water Facilities Master Plan, which determines the most
feasible projects for water resources and incorporates these decisions into CWA’s Capital
Improvement Program. This cost is also based on CWA’s estimated water cost for purchases from
MWD and the Imperial Irrigation District (IID).
75
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Revenues
Water/Sewer Revenues 136,830,600$ 148,385,500$ 158,909,400$ 169,468,100$ 180,722,500$
Meter Fees 154,600 150,500 150,900 151,300 152,100
Capacity Fee Revenues 2,847,200 2,875,700 2,904,500 2,933,500 2,962,800
Non-operating Revenues 2,925,000 2,991,500 3,105,700 2,754,600 2,857,500
Tax Revenues 6,900,800 7,087,000 7,279,800 7,479,300 7,682,700
Interest Income 1,299,800 1,327,000 1,306,500 1,372,900 1,450,200
Total Revenues 150,958,000 162,817,200 173,656,800 184,159,700 195,827,800
86,908,200$ 93,802,400$ 99,760,300$ 105,553,400$
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Expenditures
Water Cost 89,464,100 95,375,200 99,880,000 105,972,370 112,431,200
Power 5,422,200 5,812,600 6,231,100 6,679,700 7,160,600
Labor and Benefits 30,080,800 32,393,600 33,736,400 35,478,800 37,409,400
Administrative Expenses 9,957,200 10,434,600 10,695,600 11,264,000 11,482,900
Materials & Maintenance 5,120,400 5,181,800 5,416,800 5,636,300 5,864,900
Net Reserve Funding 10,913,300 13,619,400 17,679,900 19,111,530 21,478,800
Transfer to Rate Stabilization Fund - - 17,000 17,000 -
Total Expenditures and Transfers 150,958,000 162,817,200 173,656,800 184,159,700 195,827,800
Excess Revenues (Expenditures)-$ -$ -$ -$ -$
-$ -$ -$ -$ -$
General Fund Forecast
This forecast incorporates both cost increases for expenditures and rate increases for revenues, as well as growth
projections.
Expenditures and Transfers
Revenues
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
$1
5
1
$1
6
3
$1
7
4
$1
8
4
$1
9
6
$1
5
1
$1
6
3
$1
7
4
$1
8
4
$1
9
6
Revenues and Expenditures Forecast, in millions ($)
Revenues Expenditures
76
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Fund Balance
General Fund 34,931,200$ 37,165,500$ 38,805,100$ 41,020,200$ 43,302,500$
Betterment Fund 3,594,100 3,692,000 3,672,600 2,357,000 2,346,100
Replacement Fund 23,754,400 35,987,900 34,821,000 38,669,900 38,378,200
Expansion Fund 1,603,300 2,190,400 1,862,500 546,500 547,300
New Supply Fund 3,165,600 3,195,600 3,233,200 3,272,400 3,312,100
Debt Reserve 14,558,600 4,771,400 24,143,100 4,395,800 4,393,400
Rate Stabilization Fund 232,500 241,200 266,900 293,500 303,800
Total Fund Balance 81,839,700$ 87,244,000$ 106,804,400$ 90,555,300$ 92,583,400$
- - 50 40 (39)
Fund Balances Forecast
Fund Balances by Fund
$0
$20
$40
$60
$80
$100
$120
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Fund Balances Forecast, in millions ($)
General Fund Betterment Fund Replacement Fund Expansion Fund
Debt Reserve New Supply Fund Rate Stabilization Fund
77
Debt Management
Water Debt Coverage
The District has achieved success in financing capital improvements through a combination of long-
term and short-term financing plans. Financial tools used include Certificates of Participation (COPs),
Build America Bonds (BABs), Water Revenue Bonds (WRBs), Wastewater Revenue Bonds, developer
fees, and pay-as-you-go funding.
The District’s primary debt management objective is to keep the level of indebtedness within
available resources and within limits that will allow the District to meet the debt service coverage
ratios required by the bond covenants. Bonds have been and will be used for the purpose of
improving the District’s existing facilities and to build the projects outlined in the Capital Improvement
Program (CIP). The District’s debt service obligations have a significant impact on the District’s
current and future water rates. All efforts that minimize the cost of debt have a corresponding effect
that reduce water rates.
In September 2018, Standard & Poor’s (S&P) affirmed the District’s water operation’s AA rating and
stable outlook. The rating was based on good historical coverage metrics, strong liquidity position,
moderate leverage, and strong financial management policies and practices. The District’s sewer
debt is not rated.
The District’s water operations achieved a 202% actual debt coverage ratio, with growth revenues,
for fiscal year 2024, which exceeded the debt covenant minimum ratio of 125%. To meet the bond
indebtedness obligation and maintain stable rates, the rate model is used to forecast revenues and
operating requirements. On the water side, the District anticipates debt issuances of $30.3 million,
$43.2 million, and $10.1 million for budget years FY 2026, FY 2028, and FY 2030, respectively. The
charts below show the District’s projected debt coverage calculations and ratios, for the water side
of the District, from FY 2025 through FY 2030.
2.56
1.98 1.93
2.57 2.42 2.43
-
1
2
3
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Co
v
e
r
a
g
e
R
a
t
i
o
Projected Water Debt Coverage Calculations and Ratios
Projected Ratio Minimum Covenant = 1.25
78
5.57
6.48
7.55
3.77 3.44 3.43
-
1
2
3
4
5
6
7
8
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Co
v
e
r
a
g
e
R
a
t
i
o
Debt Management
The District’s Board of Directors believes that a strong debt coverage ratio will benefit the ratepayers
as it reduces the cost of water infrastructure; and therefore have been willing to support this with
necessary rate increases. The District has projected a schedule of rate increases designed to
generate sufficient revenue to pay off existing and planned future debt issues. See the Policies
section of the budget for the District’s complete Debt Policy.
Sewer Debt Coverage
For sewer, the District originally issued $3.1 million of debt for sewer capital projects in 2019. This is
sewer’s only current outstanding debt obligation. The District is forecasting an additional debt
issuance of $3.0 million in FY 2027. This funding is necessary to meet the projected capital project
expenditures and maintain reserves above target levels in all six years.
The financial needs of sewer for the FY 2025 six-year projection include funding anticipated Metro
JPA increases, increases in County of San Diego shared facility costs for county rehabilitation
projects, increases in the six-year CIP, and meeting the debt coverage requirements of future debt
issuances. Sewer’s debt service coverage, with growth revenues, for FY 2024 was 837%. The charts
below show the District’s projected debt coverage calculations and ratios for the sewer operations
from FY 2025 through FY 2030. The projected debt coverage ratios from FY 2024 to FY 2027 will
steadily increase due to stable rate increases. However, the debt coverage ratios are expected to
decrease when the repayment of the debt issued in FY 2027 starts in FY 2028. The projected debt
coverage ratios from FY 2028 to FY 2030 are projected to remain consistent due to stable rate
increases.
Projected Sewer Debt Coverage Calculations and Ratios
Projected Ratio Minimum Covenant = 1.25
79
The District's debt service payments for FY 2025 is $8.8 million on total outstanding debt of $130 million as of
June 30, 2025. The FY 2025 debt service payments represent 6.4% of the District's total budget. The District
considers this debt level low and does not impact the level of utility service provided to customers.
The following schedule shows the District's debt service payments for FY 2025:
Year Incurred Debt Description Principal Interest Principal Interest Total
2010 Water Revenue Bonds Series A 1,295,000$ 33,994$ -$ -$ 1,328,994$
2010 Water Revenue Bonds Series B - 2,371,868 - - 2,371,868
2016 Water Revenue Refunding Bonds 1,420,000 771,081 - - 2,191,081
2018 Water Revenue Refunding Bonds 1,730,000 1,018,038 - - 2,748,038
2019 Wastewater Revenue Bonds - - 75,000 84,291 159,291
Total 4,445,000$ 4,194,981$ 75,000$ 84,291$ 8,799,272$
Water Sewer
Impact of Current Debt Levels
80
Outstanding
Year Maturity Original Principal Balance
#Incurred Description Date Amount 6/30/2025
1 2010 Water Revenue Bonds Series A September 1, 2024 13,840,000$ 1,295,000$
2 2010
Water Revenue Bonds Series B (1)September 1, 2040 36,355,000 36,355,000
3 2016
Water Revenue Refunding Bonds (2)September 1, 2036 33,385,000 24,020,000
4 2018 Water Revenue Refunding Bonds (3)September 1, 2043 32,435,000 25,405,000
Subtotal Water Bonds 123,750,000 87,075,000
5 2019 Wastewater Revenue Bonds September 1, 2049 3,120,000 2,910,000
Subtotal Wastewater Bonds 3,120,000 2,910,000
Total Outstanding Debt 126,870,000$ 89,985,000$
Total Assessed Valuation - FY 2024
Percentage of Original Debt to Assessed Valuation 0.29%
Debt Limit per District Debt Policy (% of Assessed Valuation)15.00%
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(3)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable
Rate COPs.
Schedule of Outstanding Debt
All Debt
Total Outstanding Debt, in millions ($)
Note: The accounting for debt proceeds and payments is described in the District's Reserve Policy found on
pages 190-225.
43,072,336,140$
$0
$10
$20
$30
$40
$50
$60
$70
Interest Principal
2010A
WRBs
2010B
WRBs(1)
2016
WRBs(2)
2018
WRBs(3)
2019
WWRBs
81
2010A WRBs 2010B WRBs(1)2016 WRRBs(2)2018 WRRBs(3)2019 WWRBs Total
1,295,000 - 1,420,000 1,730,000 75,000 4,520,000
- 1,365,000 1,495,000 1,820,000 80,000 4,760,000
- 1,450,000 1,570,000 1,915,000 80,000 5,015,000
- 1,545,000 1,645,000 1,030,000 85,000 4,305,000
- 1,640,000 1,715,000 1,080,000 85,000 4,520,000
- 1,745,000 1,785,000 1,135,000 90,000 4,755,000
- 1,855,000 1,855,000 1,195,000 90,000 4,995,000
- 1,975,000 1,955,000 1,245,000 95,000 5,270,000
- 2,105,000 2,005,000 1,295,000 95,000 5,500,000
- 2,245,000 2,055,000 1,350,000 100,000 5,750,000
- 2,390,000 2,115,000 1,400,000 100,000 6,005,000
- 2,550,000 2,170,000 1,460,000 105,000 6,285,000
- 2,715,000 2,235,000 1,270,000 105,000 6,325,000
- 2,895,000 - 1,235,000 110,000 4,240,000
- 3,085,000 - 1,185,000 115,000 4,385,000
- 3,290,000 - 1,210,000 115,000 4,615,000
- 3,505,000 - 1,290,000 120,000 4,915,000
- -- 985,000 125,000 1,110,000
- -- 775,000 125,000 900,000
- -- 800,000 130,000 930,000
- -- - 135,000 135,000
- -- - 140,000 140,000
- -- - 145,000 145,000
- -- - 150,000 150,000
- -- - 155,000 155,000
- -- - 160,000 160,000
1,295,000$ 36,355,000$ 24,020,000$ 25,405,000$ 2,910,000$ 89,985,000$
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(3)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable Rate COPs.
2049
2050
Total
Combined Debt Service through Maturity, in millions ($)
2044
2040
2041
2042
2043
2045
2046
2047
2048
2034
2035
2036
2037
2038
2039
2028
2029
2030
2031
2032
2033
2025
2026
2027
Projected Principal Payments by Debt Issuance
FY
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
20
3
0
20
3
1
20
3
2
20
3
3
20
3
4
20
3
5
20
3
6
20
3
7
20
3
8
20
3
9
20
4
0
20
4
1
20
4
2
20
4
3
20
4
4
20
4
5
20
4
6
20
4
7
20
4
8
20
4
9
20
5
0
Principal Interest
82
2010A WRBs 2010B WRBs(1)2016 WRRBs(2)2018 WRRBs (3)2019 WWRBs Total
33,994 2,371,868 771,081 1,018,038 84,291 4,279,272
- 2,328,345 696,331 927,038 81,891 4,033,605
- 2,238,589 617,831 831,288 79,491 3,767,199
- 2,143,093 552,031 779,788 76,941 3,551,854
- 2,041,540 483,431 725,788 74,391 3,325,150
- 1,933,609 412,031 669,038 71,691 3,086,369
- 1,818,823 337,831 609,288 68,991 2,834,933
- 1,694,728 288,956 559,488 66,616 2,609,789
- 1,560,558 238,831 507,688 64,146 2,371,223
- 1,417,508 184,888 453,688 61,446 2,117,529
- 1,265,086 126,725 397,688 58,696 1,848,195
- 1,102,634 67,050 339,288 55,756 1,564,728
- 929,495 - 288,488 52,738 1,270,720
- 745,010 - 245,263 49,575 1,039,847
- 548,357 - 197,863 46,269 792,489
- 338,716 - 154,000 42,819 535,534
- 115,262 - 102,400 39,219 256,881
- -- 63,000 35,469 98,469
- -- 32,000 31,719 63,719
- -- - 27,656 27,656
- -- - 23,438 23,438
- -- - 19,063 19,063
- -- - 14,531 14,531
- -- - 9,844 9,844
- -- - 5,000 5,000
33,994$ 24,593,221$ 4,777,019$ 8,901,113$ 1,241,688$ 39,547,034$
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(3)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable Rate COPs.
2045
2046
2047
2048
2030
2031
2032
Total
2035
2036
2037
2038
2042
2043
2039
2049
2033
2034
2044
2040
2041
2025
2026
2027
2028
2029
Projected Interest Payments by Debt Issuance
FY
83
Potable Revenues and Expenditures
Potable Revenues
The District will provide water service to approximately 52,057 potable customers by the end of FY
2025. Ninety percent of the potable customers are residential and the remaining 10% are comprised
of multi-residential, business and commercial, publicly-owned, non-public irrigation and commercial
agriculture, public irrigation, and construction. The District expects nominal growth in the customer
base of 1.0% for FY 2025. Unit sales are budgeted to decrease by 1.0% compared to the previous
year's budget but come in 5.2% higher than the previous year’s actual unit sales. Other revenue
sources include system charges, energy charges, penalties, and other pass-through charges from
the San Diego County Water Authority (CWA) and the Metropolitan Water District (MWD).
All customers are required to pay fixed monthly fees: the MWD/CWA fixed charge, and the District
system charge. The MWD/CWA fixed charges are based on meter size. The District system fee is
based on meter size and customer type. These fees generate 15.0% of the potable water sales
revenue. Water rates, energy charges, and penalties generate the remaining 85.0% of revenues
necessary to fund operations.
Energy charges are based on the quantity of water used and the elevation to which the water is lifted
to provide service. Energy charges are set to annually recover the power costs associated with
pumping water to higher elevation.
Penalties are charged to the District customer accounts when payments are delinquent. These
penalty revenues are budgeted based on historical trends.
Potable Expenditures
In FY 2025, the District estimates to purchase 28,424.2 acre-feet of potable water, sufficient to meet
the demands of its customers. Provisions have been made for District usage and loss in the amount
of 1,128 acre-feet.
Today, the District purchases 100% of its potable water from CWA. In the past the District purchased
only treated water through the CWA’s treated water Pipeline No. 4. In 2010, to diversify the water
supply and to become less reliant on CWA’s Pipeline No. 4, the District entered an agreement with
CWA to purchase water treated by neighboring Helix Water District at their Levy Water Treatment
Plant. This treated water from Flow Control Facility No. 14 gives the District redundancy in water
supply. This is beneficial as it enhances reliability of water deliveries in an emergency situation such
as earthquakes or other natural disasters. The District’s agreement also brings regional water
treatment closer to our customers, which reduces dependence on water treatment facilities located
outside of San Diego County. Flow Control Facility No. 14 connects the Helix Water District to the
Otay Water District through approximately five miles of 36-inch pipeline.
Although the District does not own a direct water supply reservoir to capture surface water, there are
cooperative agreements between CWA and the other member agencies to manage water demands
and supply the region in times of need.
84
Potable Revenues and Expenditures
The reservoirs of member agencies and CWA serve multiple functions including: surface water
capture, seasonal water storage and carryover storage to provide a reliable water source in dry years.
The CWA’s emergency and carryover storage project interconnected reservoirs, pipelines and pump
stations make water available to the San Diego region if imported water deliveries are interrupted.
Historically, CWA purchases water for the 24 member agencies from MWD and the Imperial Irrigation
District. In December 2015, the Claude “Bud” Lewis Carlsbad Desalination Plant began its
commercial operations and has entered into an agreement with CWA as its sole water purchaser.
Any cost increases by CWA, MWD, IID, or Carlsbad Desalination Plant impacts the District's water
purchases and directly affects the District's fees, rates, and service charges. The Carlsbad
Desalination Plant began commercial operations in December 2015 and is the largest seawater
desalination plant in the nation. It produces approximately 56,000 acre-feet per year of drinking water
for the San Diego region. It currently meets about 10% of the county’s water demand.
85
FY 2023 FY 2024 FY 2024 FY 2025
11-Actual Budget Actual Budget $%
Revenues
#Water Sales 90,549,740$ 100,949,000$ 96,088,323$ 110,098,000$ 9,149,000$ 9.1%
#Meter Fees 122,639 154,000 156,931 145,000 (9,000) (5.8%)
#Capacity Fee Revenues 2,718,270 2,352,000 2,868,514 2,833,000 481,000 20.5%
Tax Revenues 6,032,251 6,190,000 6,460,154 6,787,000 597,000 9.6%
#Non-Operating Revenues 3,104,697 2,712,600 2,990,411 2,479,000 (233,600) (8.6%)
#Interest 623,548 935,000 733,677 1,008,000 73,000 7.8%
Total Revenues 103,151,145 113,292,600 109,298,009 123,350,000 10,057,400 8.9%
Water Purchases (CWA)41,263,647 48,147,000 46,429,379 54,323,000 6,176,000 12.8%
#CWA - Infrastructure Access Charge 3,097,476 3,146,000 3,146,388 3,258,000 112,000 3.6%
#CWA - Customer Service Charge 1,900,266 1,971,000 2,022,276 2,166,000 195,000 9.9%
#CWA - Reliability Charge 3,042,420 3,235,000 3,258,612 3,768,000 533,000 16.5%
#CWA - Emergency Storage Charge 4,748,834 4,865,000 4,877,952 5,178,000 313,000 6.4%
CWA - Fixed Transportation Charge - - - 1,125,000 1,125,000 100.0%
#MWD - Capacity Reservation Charge 740,531 562,000 710,292 840,000 278,000 49.5%
#MWD - Readiness-to-Serve Charge 613,556 654,000 620,328 684,000 30,000 4.6%
Subtotal - Water Costs 55,406,730 62,580,000 61,065,227 71,342,000 8,762,000 14.0%
#Labor and Benefits 21,696,252 23,228,500 22,683,321 25,361,000 2,132,500 9.2%
#Administrative Expenses 6,971,244 8,151,900 7,465,003 8,773,400 621,500 7.6%
#Materials and Maintenance 2,706,830 3,117,500 3,054,784 3,327,500 210,000 6.7%
#Power 3,679,103 3,487,000 3,801,537 4,047,000 560,000 16.1%
11-1311-5133Subtotal - Operations Costs 35,053,429 37,984,900 37,004,645 41,508,900 3,524,000 9.3%
DSTransfer to General Fund Reserve - - - 3,051,100 3,051,100 100.0%
#Expansion Reserve - 4,250,000 4,250,000 5,585,000 1,335,000 31.4%
Bett ResBetterment Reserve 4,065,000 1,803,000 1,803,000 1,863,000 60,000 3.3%
Repl ResReplacement Reserve 7,580,600 6,674,700 6,674,700 - (6,674,700) (100.0%)
Subtotal - Reserve Funding 11,645,600 12,727,700 12,727,700 10,499,100 (2,228,600) (17.5%)
Total Expenditures 102,105,759 113,292,600 110,797,572 123,350,000 10,057,400 8.9%
Excess Revenues (Expenditures)1,045,387$ -$ (1,499,563)$ -$ -$ -
Operating Budget Summary - Potable
Budget to Budget
Variance
86
FY 2023 FY 2025
Actual Budget Actual Budget $ %
Water Sales 58,208,380$ 70,298,000$ 65,413,730$ 74,767,000$ 4,469,000$ 6.4%
System Charges 15,248,032 13,011,000 13,074,323 14,131,000 1,120,000 8.6%
Energy Charges 2,538,846 2,916,000 2,788,348 3,578,000 662,000 22.7%
MWD and CWA Fixed Charges 13,595,126 13,746,000 13,761,148 16,555,000 2,809,000 20.4%
Penalties 959,356 978,000 1,050,774 1,067,000 89,000 9.1%
Total Water Sales 90,549,740$ 100,949,000$ 96,088,323$ 110,098,000$ 9,149,000$ 9.1%
Water Sales 74,767,000$
System Charges 14,131,000
Energy Charges 3,578,000
MWD and CWA Fixed Charges 16,555,000
Penalties 1,067,000
Total Water Sales 110,098,000$
Water Sales: Water rates vary among classes of service and are charged per unit of water. A unit of water is equal
to 100 cubic feet of water.
System Charges: Each water service customer pays a monthly system charge for water system replacement,
maintenance, and operation expenses. The charge is based on the meter size.
Energy Charges: The energy pumping charge is $0.11 per 100 cubic feet of water for each 100 feet of lift above the
elevation of 450 feet. All water customers are in one of 29 zones based on elevation.
MWD and CWA Fixed Charges: These pass-through charges are calculated to recover MWD's and CWA's fixed annual
costs, excluding MWD's Capacity Reservation charge. These fixed charges are based on meter size.
Penalties: Penalties are imposed on customer accounts for late payments and returned checks.
FY 2025 Classification of Water Sales
FY 2024
Classification of Water Sales - Potable
Budget to Budget
Variance
87
Customer Class and
Unit Structure(1)
Current
Rate
Approved
Rate (2)Accounts Unit Sales Budget
Residential 47,035 6,296,800 38,894,000$
0 - 9 5.60$ 6.08$
10 - 12 6.08 6.60
13 or more 6.76 7.33
Multi-Residential 1,006 1,844,000 10,826,000
0 - 9 5.56 6.03
10 - 12 6.01 6.52
13 or more 6.23 6.76
Business and Commerical(3)
All units 5.88 6.38 2,296 1,271,800 7,780,000
Publicly Owned
All units 6.47 7.02 201 664,500 4,459,000
Non-Public Irrigation and Commercial Agriculture
All units 6.77 7.35 1,098 1,195,600 8,332,000
Public Irrigation
All units 7.39 8.02 232 289,600 2,204,000
Construction
All units 6.73 7.30 189 327,700 2,272,000
Total Water Sales 52,057 11,890,000 74,767,000$
Unit Sales %
Residential 6,296,800 52.9%
Multi-Residential 1,844,000 15.5%
Business and Commercial 1,271,800 10.7%
Publicly Owned 664,500 5.6%
Non-Public Irrigation & Commercial Agriculture 1,195,600 10.1%
Public Irrigation 289,600 2.4%
Construction 327,700 2.8%
Total Water Sales 11,890,000 100.0%
Water Sales Summary by Customer Class - Potable
(3)Fire Services Meters are charged the Business and Commercial water rate.
FY 2025 Unit Sales by Customer Class
(2)Approved rates apply to water billed beginning January 1, 2025.
(1)This cost varies based on water usage and can be calculated using the consumption block tables. One unit of consumption
divided by the number of dwellings served.
equals 748 gallons of water or one HCF (hundred cubic feet). Consumption for Multi-Residential is the water usage
Water Rates FY 2025
88
FY 2020 FY 2021 FY 2022 FY 2023 FY 2025
Budget Actual Budget
Residential 6,311,655 6,926,913 6,499,686 5,814,587 6,133,000 5,758,814 6,296,800
Multi-Residential 1,658,205 1,798,024 1,806,626 1,831,262 1,925,000 1,917,540 1,844,000
Business and Commercial 1,100,358 1,132,851 1,326,708 1,287,432 1,259,000 1,378,391 1,271,800
Publicly Owned 710,052 689,237 743,983 677,092 682,000 665,311 664,500
Non-Public Irrigation and Commercial Agriculture 1,072,854 1,331,773 1,284,096 1,063,704 1,385,000 1,040,011 1,195,600
Public Irrigation 252,466 307,244 338,309 278,000 312,000 220,158 289,600
Construction 284,893 418,058 310,809 283,827 312,000 287,829 327,700
Total Unit Sales 11,390,483 12,604,100 12,310,217 11,235,904 12,008,000 11,268,054 11,890,000
FY 2020 FY 2021 FY 2022 FY 2023 FY 2025
Budget Actual Budget
Residential 46,298 46,482 46,574 46,742 46,878 46,876 47,035
Multi-Residential 874 884 896 965 1,003 979 1,006
Business and Commercial(1)2,099 2,113 2,180 2,222 2,188 2,299 2,296
Publicly Owned 250 252 253 202 200 205 201
Non-Public Irrigation and Commercial Agriculture 1,016 1,022 1,040 1,059 1,070 1,085 1,098
Public Irrigation 261 262 260 233 233 232 232
Construction 196 189 186 181 186 177 189
Total Meter Count 50,994 51,204 51,389 51,604 51,758 51,853 52,057
Unit Sales and Meter Count History by Customer Class - Potable
Unit Sales in thousands and Meter Count Trends
FY 2024
Unit Sales by Customer Class
Meter Count by Customer Class
Actual
Actual
FY 2024
(1)Business and Commercial Customer Class includes Fire Services Meters.
5,000
15,000
25,000
35,000
45,000
55,000
-
5,000
10,000
15,000
20,000
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
Unit Sales (in thousands) and Meter Count Trends
Potable Meters Potable Unit Sales
Units Meters
89
FY 2024 FY 2025 FY 2024 FY 2025
Meter Size Count Count Current Approved Budget Budget $%
Residential
0.75 45,390 45,520 19.24$ 20.87$ 10,156,000$ 10,945,000$ 789,000$ 7.8%
1.00 1,465 1,492 23.92 25.95 384,000 433,000 49,000 12.8%
1.50 19 19 35.91 38.96 8,000 9,000 1,000 12.5%
2.00 4 4 50.07 54.32 2,000 3,000 1,000 50.0%
Sub-total 46,878 47,035 10,550,000 11,390,000 840,000 8.0%
Multi-Residential
0.75 52 52 17.75 19.26 10,000 11,000 1,000 10.0%
1.00 234 230 21.44 23.26 58,000 61,000 3,000 5.2%
1.50 266 259 30.93 33.56 93,000 99,000 6,000 6.5%
2.00 292 296 42.13 45.71 140,000 153,000 13,000 9.3%
3.00 75 83 88.98 96.54 77,000 90,000 13,000 16.9%
4.00 74 76 149.93 162.67 128,000 141,000 13,000 10.2%
6.00 7 7 294.21 319.20 24,000 26,000 2,000 8.3%
8.00 3 3 454.24 492.83 16,000 17,000 1,000 6.3%
Sub-total 1,003 1,006 546,000 598,000 52,000 9.5%
Business and Commercial
0.75 315 322 19.40 21.05 71,000 78,000 7,000 9.9%
1.00 317 324 24.19 26.24 89,000 98,000 9,000 10.1%
1.50 285 301 36.43 39.52 121,000 137,000 16,000 13.2%
2.00 308 309 50.90 55.22 182,000 197,000 15,000 8.2%
3.00 31 33 108.17 117.36 39,000 45,000 6,000 15.4%
4.00 13 19 184.48 200.15 28,000 44,000 16,000 57.1%
6.00 3 3 370.98 402.49 13,000 14,000 1,000 7.7%
Sub-total 1,272 1,311 543,000 613,000 70,000 12.9%
Publicly Owned
0.75 15 21 18.06 19.59 3,000 5,000 2,000 66.7%
1.00 26 26 21.97 23.84 7,000 7,000 - -
1.50 35 33 32.00 34.72 13,000 13,000 - -
2.00 86 84 43.84 47.56 44,000 46,000 2,000 4.5%
3.00 12 11 92.70 100.57 13,000 13,000 - -
4.00 15 15 156.63 169.94 27,000 29,000 2,000 7.4%
6.00 6 6 309.09 335.35 22,000 23,000 1,000 4.5%
8.00 - - 479.79 520.55 - - - -
10.00 5 5 736.97 799.58 43,000 46,000 3,000 7.0%
Sub-total 200 201 172,000 182,000 10,000 5.8%
Non-Public Irrigation and Commercial Agriculture
0.75 128 139 17.17 18.63 25,000 29,000 4,000 16.0%
1.00 284 293 20.48 22.22 67,000 75,000 8,000 11.9%
1.50 339 345 29.02 31.49 114,000 124,000 10,000 8.8%
2.00 315 318 39.06 42.38 143,000 155,000 12,000 8.4%
4.00 2 1 137.83 149.54 3,000 2,000 (1,000) (33.3%)
6.00 2 2 267.29 290.00 6,000 7,000 1,000 16.7%
Sub-total 1,070 1,098 358,000$ 392,000$ 34,000$ 9.5%
(1)Rates apply to water billed beginning January 1, 2025.
System Charges - Potable
System Charges Budget to Budget Variance
(1)
90
FY 2024 FY 2025 FY 2024 FY 2025
Meter Size Count Count Current Approved Budget Budget $%
System Charges - Potable
System Charges Budget to Budget Variance
(1)
Public Irrigation
0.75 11 12 17.17$ 18.63$ 2,000$ 3,000$ 1,000$ 50.0%
1.00 23 22 20.48 22.22 5,000 6,000 1,000 20.0%
1.50 65 65 29.02 31.49 22,000 24,000 2,000 9.1%
2.00 130 129 39.06 42.38 59,000 63,000 4,000 6.8%
4.00 4 4 137.83 149.54 6,000 7,000 1,000 16.7%
Sub-total 233 232 94,000 103,000 9,000 9.6%
Construction
0.75 3 - 17.65 19.15 1,000 300 (700) (70.0%)
4.00 176 186 147.87 160.43 300,000 344,000 44,000 14.7%
6.00 7 3 289.63 314.23 26,000 11,000 (15,000) (57.7%)
Sub-total 186 189 327,000 355,000 28,300 8.7%
Fire Services
0.75 2 -2.77 3.01 100 - (100) 100.0%
1.00 7 -2.85 3.09 100 - (100) 100.0%
2.00 15 16 3.59 3.89 900 1,000 100 100.0%
3.00 2 1 5.31 5.76 100 - (100) (100.0%)
4.00 85 89 8.25 8.95 7,900 9,000 1,100 13.9%
6.00 213 183 18.83 20.43 46,900 43,000 (3,900) 100.0%
8.00 485 563 37.08 40.23 209,000 261,000 52,000 100.0%
10.00 107 133 64.51 69.99 80,000 107,000 27,000 100.0%
All Meters 916 985 345,000 421,000 76,000 22.0%
Set-up Fees 15.00 15.00 76,000 77,000 1,000 1.3%
Total 51,758 52,057 13,011,000$ 14,131,000$ 1,120,300$ 8.6%
(1)Rates apply to water billed beginning January 1, 2025.
91
FY 2025 FY 2024 FY 2025
Meter Size Count(1)Current Approved(2)Budget Budget $%
0.75 46,066 17.19$ 22.82$ 9,230,000$ 11,048,000$ 1,818,000$ 19.6%
1.00 2,387 28.65 38.03 758,000 936,000 178,000 23.5%
1.50 1,022 57.27 76.03 669,000 812,000 143,000 21.4%
2.00 1,140 91.62 121.63 1,210,000 1,453,000 243,000 20.1%
3.00 127 200.43 266.07 274,000 349,000 75,000 27.4%
4.00 301 360.77 478.92 1,195,000 1,512,000 317,000 26.5%
6.00 21 801.71 1,064.27 235,000 235,000 - 0.0%
8.00 3 1,374.34 1,824.44 48,000 58,000 10,000 20.8%
10.00 5 2,176.04 2,888.69 127,000 152,000 25,000 19.7%
Total 51,072 13,746,000$ 16,555,000$ 2,809,000$ 20.4%
(1)Excludes fire service meters.
(2)Approved rates apply to water billed beginning January 1, 2025.
Historical MWD and CWA Fixed Charges, in millions ($)
Budget to Budget VarianceMWD and CWA Fixed Charges
MWD and CWA Fixed Charges (Pass-Through) - Potable
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
92
Meter Size Meter Sales Installation Fee Meter Fee Total Fees Budget
0.75 94 141.81$ 298.83$ 440.64$ 41,000$
1.00 103 141.81 385.62 527.43 54,000
1.50 14 141.81 626.78 768.59 11,000
2.00 10 141.81 898.12 1,039.93 10,000
3.00 5 853.82 2,798.89 3,652.71 18,000
4.00 2 853.82 4,861.23 5,715.05 11,000
Total 228 145,000$
Meter Fees:Charges collected for new water service connections. Fees vary depending upon meter
size and type of service. The costs associated with meter installations are included in the Operating
Expenses section of the budget. These charges are funded by developers.
Historical Meter Count
Meter Fees - Potable
FY 2025
-
15,000
30,000
45,000
60,000
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
93
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Budget
Water Sales 50,081,789$ 58,610,501$ 57,900,777$ 58,208,380$ 65,413,730$ 74,767,000$
System Charges 16,205,007 16,828,509 17,439,502 15,248,032 13,074,323 14,131,000
Energy Charges 2,276,779 2,695,390 2,692,451 2,538,846 2,788,348 3,578,000
MWD and CWA Fixed Charges 12,305,712 12,889,974 13,548,475 13,595,126 13,761,148 16,555,000
Penalties 612,381 30,576 870,806 959,356 1,050,774 1,067,000
Total Potable Revenues 81,481,668$ 91,054,950$ 92,452,011$ 90,549,740$ 96,088,323$ 110,098,000$
Revenue History - Potable, in millions ($)
Revenue History - Potable
Actual
$-
$20
$40
$60
$80
$100
$120
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
Water Sales System Charges Energy Charges MWD & CWA Fixed Charges Penalties
94
FY 2025 FY 2025
Budget Actual Budget Budget Actual Budget $ %
Average Variable Rate Per Acre-Foot:(1)1,679.00$ 1,691.24$ 1,911.00$ 232.00$ 13.8%
Potable Water Sales 27,566.5 25,867.9 27,296.2 46,272,000 43,748,927 52,179,000 5,907,000 12.8%
District, Unbilled Usage(2)57.0 106.9 62.7 93,000 180,794 107,000 14,000 15.1%
Water Loss 1,060.9 1,691.8 1,065.3 1,782,000 2,499,658 2,037,000 255,000 14.3%
Total Variable Charges 28,684.4 27,452.8 28,424.2 48,147,000$ 46,429,379$ 54,323,000$ 6,176,000$ 12.8%
CWA and MWD Fixed Charges:
CWA - Infrastructure Access Charge 3,146,000$ 3,146,388$ 3,258,000$ 112,000$ 3.6%
CWA - Customer Service Charge 1,971,000 2,022,276 2,166,000 195,000 9.9%
CWA - Emergency Storage Charge 4,865,000 4,877,952 5,178,000 313,000 6.4%
CWA - Reliability Fixed Charge 3,235,000 3,258,612 3,768,000 533,000 16.5%
CWA - Fixed Transporation Charge - - 1,125,000 1,125,000 100.0%
MWD - Capacity Reservation Charge 562,000 710,292 840,000 278,000 49.5%
MWD - Readiness-to-Serve Charge 654,000 620,328 684,000 30,000 4.6%
Total Fixed Charges 14,433,000$ 14,635,848$ 17,019,000$ 2,586,000$ 17.9%
Total Variable and Fixed Charges 62,580,000$ 61,065,227$ 71,342,000$ 8,762,000$ 14.0%
Average Cost Per Acre-Foot 2,182$ 2,224$ 2,510$
(1)The average variable rate per acre-foot is a weighted average rate based on CWA’s actual calendar year variable rate of $1,772.00 per
acre-foot in 2024, and a projected 2025 calendar year variable rate of $2,071.00 per acre-foot.
Water Purchases and Related Costs - Potable
Budget to Budget
VariancePurchase Costs
FY 2024FY 2024
Acre-Feet
-
8,000
16,000
24,000
32,000
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
Historical Potable Water Purchases, in acre-feet
95
FY 2020 FY 2021 FY 2022 FY 2023 FY 2025
Budget Actual Budget $ %
Administrative Buildings 166,175$ 170,863$ 217,303$ 260,801$ 267,000$ 266,970$ 331,000$ 64,000$ 24.0%
Potable Transmission 2,260,865 2,464,206 2,773,392 3,418,302 3,220,000 3,534,567 3,716,000 496,000 15.4%
Total Power Costs 2,427,040$ 2,635,069$ 2,990,695$ 3,679,103$ 3,487,000$ 3,801,537$ 4,047,000$ 560,000$ 16.1%
Power Costs - Potable
Budget to Budget
Variance
Historical Power Costs, in thousands ($)
Actual
FY 2024
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
Administrative Buildings Potable Transmission
96
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Administrative Expenditures
Directors' Fees 59,130$ 75,000$ 54,340$ 79,000$ 4,000$ 5.3%
Travel and Conferences 214,998 254,700 201,665 261,500 6,800 2.7%
Memberships and Dues 83,420 94,800 90,622 111,700 16,900 17.8%
Conservation and Outreach 134,956 145,500 139,254 145,500 - -
General Office Expense 296,036 304,800 272,808 307,500 2,700 0.9%
IT Hardware, Software & Communication 1,423,467 1,690,000 1,646,424 1,952,500 262,500 15.5%
Miscellaneous Office & Field Equipment 95,598 149,900 112,519 107,000 (42,900) (28.6%)
Fees 984,171 1,076,000 1,035,729 1,307,500 231,500 21.5%
Services 1,906,478 2,764,100 1,932,713 2,525,800 (238,300) (8.6%)
Training 209,114 290,700 190,799 298,000 7,300 2.5%
Utilities 25,712 23,800 32,173 38,400 14,600 61.3%
Insurance and Legal 2,281,368 2,165,000 2,374,086 2,476,000 311,000 14.4%
Bad Debt Expense 21,028 70,000 130,990 70,000 - -
Subtotal before Overhead 7,735,476 9,104,300 8,214,122 9,680,400 576,100 6.3%
Less: Overhead Allocation (764,232) (952,400) (749,119) (907,000) 45,400 (4.8%)
Total Expenditures 6,971,244$ 8,151,900$ 7,465,003$ 8,773,400$ 621,500$ 7.6%
5,400,900$ 10,588,208$ 12,156,400$
Directors' Fees 79,000$ 0.8%
Travel and Conferences 261,500 2.7%
Memberships and Dues 111,700 1.2%
Conservation and Outreach 145,500 1.5%
General Office Expense 307,500 3.2%
IT Hard/Software & Comm 1,952,500 20.2%
Misc Office/Field Equipment 107,000 1.1%
Fees 1,307,500 13.5%
Services 2,525,800 26.1%
Training 298,000 3.1%
Utilities 38,400 0.4%
Insurance and Legal 2,476,000 25.5%
Bad Debt Expense 70,000 0.7%
Subtotal before Overhead 9,680,400 100.0%
Less: Overhead Allocation (907,000)
Total Expenditures 8,773,400$
Administrative Expenditures - Potable
Budget to Budget
Variance
FY 2025 Administrative Expenditures - Potable
97
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $ %
Materials and Maintenance
Fuel and Oil 293,552$ 296,500$ 251,739$ 296,500$ -$ -
Meters and Materials 218,266 187,100 202,410 281,700 94,600 50.6%
Fleet Parts and Equipment 157,508 165,600 160,941 135,000 (30,600) (18.5%)
Infrastructure Equipment and Supplies 498,077 589,200 582,473 676,700 87,500 14.9%
Chemicals 251,043 424,600 416,265 424,600 - -
Safety Equipment 79,536 100,700 87,898 102,300 1,600 1.6%
Laboratory Equipment and Supplies 55,575 50,500 44,757 55,800 5,300 10.5%
Other Materials and Supplies 322,434 350,000 504,918 349,500 (500) (0.1%)
Building and Grounds Materials 86,454 92,500 91,288 92,500 - -
Contracted Services 744,385 860,800 707,848 912,900 52,100 6.1%
Total Expenditures 2,706,830$ 3,117,500$ 3,050,537$ 3,327,500$ 210,000$ 6.7%
FY 2025 Materials and Maintenance Expenditures - Potable
Fuel and Oil 296,500$ 8.8%
Meters and Materials 281,700 8.5%
Fleet Parts and Equipment 135,000 4.1%
Infrastructure Equipment and Supplies 676,700 20.3%
Chemicals 424,600 12.8%
Safety Equipment 102,300 3.1%
Laboratory Equipment and Supplies 55,800 1.7%
Other Materials and Supplies 349,500 10.5%
Building and Grounds Materials 92,500 2.8%
Contracted Services 912,900 27.4%
Total Expenditures 3,327,500$ 100.0%
Materials and Maintenance Expenditures - Potable
Budget to Budget
Variance
98
Potable Water Service Area
99
Recycled Revenues and Expenditures
In 1980, the District began operation of the Ralph W. Chapman Water Recycling Facility. The
RWCWRF plant is capable of recycling wastewater at the rate of 1.3 million gallons per day (MGD)
to augment water supplies for irrigation purposes only. The treatment process consists of primary,
secondary, and tertiary treatment. The facility’s conversion time to treat raw sewage to full Title 22
recycled water is approximately 20 hours.
The steps of the water recycling process are as follows:
Primary Treatment
The raw sewage flows in at the rotary screen, also known as the “headworks” which removes a large
amount of coarse organic and inorganic material that is either floating or in suspension. This is
followed by a grit chamber, which removes the heavy settled material.
Secondary Treatment
This is where the biological treatment begins. The first step takes place in the aeration tanks, also
known as reactors or sedimentation basins, which contain bacteria that feed on the organic material
in sewage. These bacteria are aerobic, and therefore require a great quantity of pumped-in air to
help them thrive. The second step in the process is clarification where the sludge from the aeration
tanks is allowed to settle to the bottom and the clear liquid, or secondary effluent, flows out over
weirs at the surface. Some of the settled sludge is disposed of and some is returned to the aeration
tanks to keep the process in balance. The secondary effluent flowing over the weirs is now ready for
the next step. Sludge is discharged to the City of San Diego Metropolitan Wastewater (Metro) system.
100
Recycled Revenues and Expenditures
Tertiary Treatment
Just before filtration, a small amount of coagulant is added as a filter aid which helps suspended
material in the secondary effluent “clump” on the surface of the filters. The filters consist of a layer of
sand with a layer of anthracite coal on top. As the fluid moves through the filters, the flow goes
through a chlorine contact chamber where disinfection takes place, completing the process of
recycling wastewater into recycled water.
The District entered an agreement with the City of San Diego in October 2003, to purchase up to six
million gallons a day of recycled water from their South Bay Water Reclamation Plant (SBWRP). The
District constructed a 30-inch six-mile pipeline, a 12-million-gallon reservoir, and a pump station to
bring this new source of recycled water into the District’s system. These projects were completed in
spring 2007 which eliminated the need for a potable supplement into the recycled system. The
benefits of this to the region are great, as less demand on the potable system will be made, reducing
future capacity and storage requirements. The $42 million investment in capital outlay results in a
significant reduction of water purchase costs and an increase in system reliability. The District
expects that 11.8% of its total water demand will be met using recycled water.
Both the RWCWRF plant, owned and operated by the District, and the SBWRP plant, owned and
operated by the City of San Diego, supply the District’s recycled distribution system. The District
operates the largest recycled water distribution system in San Diego County and will supply
approximately 3,636.4 acre-feet of recycled water to 808 landscaping and construction customers by
the end of Fiscal Year 2025. The recycled water customer base consists primarily of irrigation at a
golf course, schools, parks, and open space. The geographic area of this water use includes
Eastlake, Otay Ranch, Rancho Del Rey, and other areas of eastern Chula Vista.
Producing and distributing recycled water is costly. To help offset the costs of supplying alternative
water sources, the District previously entered into incentive program agreements with CWA and
MWD. The District took advantage of programs offered by CWA and MWD, entering into agreements
in fiscal years 1991 and 2000. Most recently, in 2005, the District agreed to terminate both prior
agreements and entered into an agreement which expired June 30, 2024.
101
FY 2023 FY 2024 FY 2024 FY 2025
31-Actual Budget Actual Budget $%
Revenues
Recycled Water Sales 9,351,434$ 10,906,000$ 9,648,519$ 11,014,000$ 108,000$ 1.0%
Meter Fees 12,440 14,000 8,651 13,000 (1,000) (7.1%)
Non-Operating Revenues - 40,000 8,642 75,000 35,000 87.5%
Interest 114,280 115,000 56,825 73,000 (42,000) (36.5%)
Total Revenues 9,478,154 11,075,000 9,722,637 11,175,000 100,000 0.9%
Expenditures
Recycled Water Purchases 5,432,169 5,798,000 5,741,405 6,122,000 324,000 5.6%
Labor and Benefits 1,218,467 1,547,200 1,278,388 1,650,700 103,500 6.7%
Administrative Expenses 468,153 547,000 503,623 891,200 344,200 62.9%
Materials and Maintenance 386,663 551,500 417,849 553,500 2,000 0.4%
Power 547,458 616,000 605,192 778,000 162,000 26.3%
11-1311-5133Subtotal - Operations Costs 8,052,910 9,059,700 8,546,457 9,995,400 935,700 10.3%
DSTransfer to General Fund Reserve - - - 928,600 928,600 100.0%
Expansion Reserve 542,800 - - - - -
Bett ResBetterment Reserve 615,000 613,000 613,000 251,000 (362,000) (59.1%)
Repl ResReplacement Reserve 545,000 1,402,300 1,402,300 - (1,402,300) (100.0%)
Subtotal - Reserve Funding 1,702,800 2,015,300 2,015,300 1,179,600 (835,700) (41.5%)
Total Expenditures 9,755,710 11,075,000 10,561,757 11,175,000 100,000 0.9%
(277,556)$ -$ (839,121)$ -$ -$ - Excess Revenues/Expenditures
Operating Budget Summary - Recycled
Budget to Budget
Variance
102
FY 2023 FY 2025
Actual Budget Actual Budget $%
Water Sales 7,387,138$ 8,700,000$ 7,643,609$ 9,226,000$ 526,000$ 6.0%
System Charges 935,212 936,000 927,966 996,000 60,000 6.4%
Energy Charges 377,146 556,000 442,135 745,000 189,000 34.0%
MWD Rebate 606,634 674,000 591,112 - (674,000) (100.0%)
Penalties 45,304 40,000 43,697 47,000 7,000 17.5%
Total Recycled Water Sales 9,351,434$ 10,906,000$ 9,648,519$ 11,014,000$ 108,000$ 1.0%
Water Sales 9,226,000$ 83.8%
System Charges 996,000 9.0%
Energy Charges 745,000 6.8%
Penalties 47,000 0.4%
Total Recycled Water Sales 11,014,000$ 100.0%
Water Sales: Water rates vary among classes of service and are charged per unit of water. A unit of water is equal
to 100 cubic feet of water.
System Charges: Each water service customer pays a monthly system charge for water system replacement,
maintenance, and operation expenses. The charge is based on customer class and meter size.
Energy Charges: The energy pumping charge is $ 0.12 per 100 cubic feet of water for each 100 feet of lift above
the elevation of 450 feet. All water customers are in one of 29 zones based on elevation.
MWD Rebate: The District previously received a $185 incentive from MWD for every acre-foot (AF) of recycled water
sold. The agreement expired in FY 2024.
Penalties: Penalties are imposed on customer accounts for late payments and returned checks.
Budget to Budget
Variance
FY 2025 Classification of Water Sales
Classification of Water Sales - Recycled
FY 2024
103
Current Approved(1)Accounts Unit Sales Budget
Recycled Non-Public Irrigation 5.71$ 6.05$ 435 820,900 4,788,000$
Recycled Commercial 5.24 5.55 1 158,000 845,000
Recycled Public Irrigation 5.82 6.16 372 605,100 3,593,000
Total 808 1,584,000 9,226,000$
Units %
Recycled Non-Public Irrigation 820,900 51.8%
Recycled Commercial 158,000 10.0%
Recycled Public Irrigation 605,100 38.2%
1,584,000 100.0%
(1)Approved rates apply to water billed beginning January 1, 2025.
FY 2025
Water Sales Summary by Customer Class - Recycled
Water Rates
FY 2025 Unit Sales by Customer Class
(1)(1)
104
FY 2025 FY 2024 FY 2025
Meter Size Meter Count Current Approved(1)Budget Budget $%
0.75 13 38.39$ 40.64$ 4,000$ 6,000$ 2,000$ 50.0%
1.00 137 51.98 55.03 76,000 87,000 11,000 14.5%
1.50 436 86.46 91.54 432,000 462,000 30,000 6.9%
2.00 206 127.46 134.94 301,000 323,000 22,000 7.3%
3.00 6 279.35 295.75 18,000 19,000 1,000 5.6%
4.00 7 487.54 516.16 40,000 42,000 2,000 5.0%
6.00 2 1,014.90 1,074.47 35,000 25,000 (10,000) (28.6%)
10.00 1 2,567.06 2,717.75 30,000 32,000 2,000 6.7%
Total 808 936,000$ 996,000$ 60,000$ 6.4%
(1)Approved rates apply to water billed beginning January 1, 2025.
System Charges - Recycled
System Charges Budget to Budget
Variance
105
FY 2020 FY 2021 FY 2022 FY 2023 FY 2025
Budget Actual Budget
Recycled Non-Public Irrigation 796,764 965,690 872,845 733,343 803,000 686,118 820,900
Recycled Commercial 149,820 172,240 171,876 145,280 156,000 142,941 158,000
Recycled Public Irrigation 505,373 661,506 640,538 549,762 629,000 562,701 605,100
Total Unit Sales 1,451,957 1,799,436 1,685,259 1,428,385 1,588,000 1,391,760 1,584,000
FY 2020 FY 2021 FY 2022 FY 2023 FY 2025
Budget Actual Budget
Recycled Non-Public Irrigation 379 394 409 420 430 424 435
Recycled Commercial 1 1 1 1 1 1 1
Recycled Public Irrigation 355 358 358 361 362 373 372
Total Meter Count 735 753 768 782 793 798 808
Unit Sales and Meter Count History by Customer Class - Recycled
Unit Sales History in thousands and Meter Count Trends
FY 2024
FY 2024
Actual
Actual
Unit Sales by Customer Class
Meter Count by Customer Class
-
100
200
300
400
500
600
700
800
100
300
500
700
900
1,100
1,300
1,500
1,700
1,900
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
MetersUnits
Meter Count Unit Sales
106
Meter Size Meter Sales Installation Fee Meter Fee Total Fees Budget
0.75 1 141.81$ 298.83$ 440.64$ -$
1.00 4 141.81 385.62 527.43 2,000
1.50 6 141.81 626.78 768.59 5,000
2.00 2 141.81 898.12 1,039.93 2,000
3.00 1 853.82 2,798.89 3,652.71 4,000
Total 14 13,000$
Meter Fees - Recycled
FY 2025
Meter Fees: Charges collected for new water service connections. Fees vary depending upon meter size
and type of service. The costs associated with meter installations are included in the Operating
Expenses section of the budget. These charges are funded by developers.
Historical Meter Count
550
575
600
625
650
675
700
725
750
775
800
825
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
107
FY 2020 FY 2021 FY 2022 FY 2023 FY 2025
Actual Budget
Water Sales 6,481,692$ 8,604,255$ 8,247,269$ 7,387,138$ 7,643,609$ 9,226,000$
System Charges 833,113 876,898 929,628 935,212 927,966 996,000
Energy Charges 331,188 442,669 425,488 377,146 442,135 745,000
MWD Rebate(1)1,283,359 764,198 408,030 606,634 591,112 -
Penalties 24,129 -31,933 45,304 43,697 47,000
Total Recycled Revenues 8,953,481$ 10,688,020$ 10,042,348$ 9,351,434$ 9,648,519$ 11,014,000$
(1)The District previously received $185 from MWD for every acre-foot (AF) of recycled water sold. The agreement expired in FY 2024.
Revenue History - Recycled
Revenue History - Recycled, in millions ($)
FY 2024
$-
$2
$4
$6
$8
$10
$12
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
Water Sales System Charges Energy Charges MWD Rebate Penalties
108
FY 2025 FY 2025
Budget Actual Budget Budget Actual Budget $ %
Rate Per Acre-Foot 1,016.00$ 1,022.69$ 1,068.55$ 52.55$ 5.2%
Recycled Water Purchases 2,697.2 2,225.1 2,719.6 2,733,000$ 2,259,730$ 2,863,000$ 130,000$ 4.8%
Meter Fee 28,000 27,661 28,000 - -
Take-or-pay contract (1)2,916.8 3,388.9 2,984.4 3,037,000 3,454,014 3,232,000 195,000 6.4%
Total 5,614.0 5,614.0 5,704.0 5,798,000$ 5,741,405$ 6,123,000$ 325,000$ 5.6%
Average Cost Per Acre-Foot (Effective Rate)2,150$ 2,580$ 2,251$
(1) This is the anticipated take-or-pay amount to be paid to the City of San Diego. The contract requires the purchase of a minimum volume of water.
The District does not anticipate meeting the minimum, therefore a payment would be due to the City of San Diego.
HISTORICAL RECYCLED WATER PURCHASES, IN ACRE-FEET
Water Purchases - Recycled
FY 2024
Purchase Costs
Budget to Budget
Variance
FY 2024
Acre-Feet
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
109
FY 2020 FY 2021 FY 2022 FY 2023 FY 2025
Budget Actual Budget $ %
Total Power Costs 522,863$ 551,075$ 528,760$ 547,458$ 616,000$ 605,192$ 778,000$ 162,000$ 26.3%
Power Costs - Recycled
Budget to Budget
Variance
Historical Power Costs, in thousands ($)
Actual
FY 2024
$0
$100
$200
$300
$400
$500
$600
$700
$800
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
110
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Administrative Expenditures
Miscellaneous Office & Field Equipment 15,991$ 21,900$ 22,562$ 28,800$ 6,900$ 31.5%
Fees 47,496 54,700 76,958 66,700 12,000 21.9%
Services 198,370 205,100 161,704 510,100 305,000 148.7%
Insurance and Legal 7,630 5,000 31,410 10,000 5,000 100.0%
Subtotal before Overhead 269,487 286,700 292,634 615,600 328,900 114.7%
Add: Overhead Allocation 198,666 260,300 210,989 275,600 15,300 5.9%
Total Expenditures 468,153$ 547,000$ 503,623$ 891,200$ 344,200$ 62.9%
Misc. Office/Field Equip.28,800$ 3.3%
Fees 66,700 7.5%
Services 510,100 57.2%
Insurance and Legal 10,000 1.1%
Overhead Allocation 275,600 30.9%
Total Expenditures 891,200$ 100.0%
FY 2025 Administrative Expenditures - Recycled
Budget to Budget
Variance
Administrative Expenditures - Recycled
111
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Materials and Maintenance
Fuel and Oil 19,795$ 20,000$ 20,528$ 24,900$ 4,900$ 24.5%
Meters and Materials 5,603 13,800 9,155 16,600 2,800 20.3%
Infrastructure Equipment and Supplies 86,225 116,100 91,126 89,000 (27,100) (23.3%)
Chemicals 226,413 353,500 272,140 372,300 18,800 5.3%
Safety Equipment 910 8,200 2,702 8,200 - -
Laboratory Equipment and Supplies 5,743 5,400 2,498 4,500 (900) (16.7%)
Other Materials and Supplies 19,833 18,500 12,311 23,000 4,500 24.3%
Contracted Services 22,141 16,000 7,389 15,000 (1,000) (6.3%)
Total Expenditures 386,663$ 551,500$ 417,849$ 553,500$ 2,000$ 0.4%
FY 2025 Materials and Maintenance Expenditures - Recycled
Fuel and Oil 24,900$ 4.5%
Meters and Materials 16,600 3.0%
Infrastructure Equipment and Supplies 89,000 16.0%
Chemicals 372,300 67.3%
Safety Equipment 8,200 1.5%
Laboratory Equipment & Supplies 4,500 0.8%
Other Materials and Supplies 23,000 4.2%
Contracted Services 15,000 2.7%
Total Expenditures 553,500$ 100.0%
Materials and Maintenance Expenditures - Recycled
Budget to Budget
Variance
112
Recycled Water Service Area
113
Sewer Revenues and Expenditures
The District provides sewer service to approximately 15,300 customers through 4,739 accounts
located in the northern section of the District. The District operates and maintains the sewage
collection system serving Rancho San Diego, Singing Hills, and portions of Mount Helix, all within
the Upper Sweetwater River Basin. This basin is also known as the Jamacha Basin. Residential
customers comprise 98.4% of the customer base.
Wastewater collection within the Jamacha Basin is provided by two agencies: the Otay Water District
and the County of San Diego (formerly the Spring Valley Sanitation District). Customers in the basin
not served by either agency dispose of their sewage through septic tanks. After the sewage has been
collected, it is sent to the District’s Ralph W. Chapman Water Recycling Facility treatment plant
where the District produces recycled water (see page 100 outlining the sewer process). The by-
product of the treatment process is called sludge and it is discharged through the County’s
transmission system into the City of San Diego Metropolitan Wastewater (Metro) systems.
The District is a member of Metro Wastewater Joint Powers Authority (JPA) and shares in the use of
the City of San Diego's regional wastewater facilities. A significant amount of the sewer operation
costs is for sewer service charges from the Metro Wastewater JPA which is budgeted at $900,000 for
FY 2025. Additionally, the District is budgeted to pay $255,000 for its share of the operation and
maintenance cost of the Rancho San Diego Outfall and the Spring Valley Outfall to transport sewage
to Metro for FY 2025.
To meet State of California requirements, customers must pay their fair share of sewer costs. The
District is required to set sewer rates in accordance with the State’s Revenue Program Guidelines. In
January 2020, the District performed a Cost of Service Study and Rate Study (i.e. reviewed rates, fees,
charges, costs, and the usage structure) and determined that changes in rates, fees, and charges
were necessary in order to recover sufficient revenues to operate and maintain the public sewer
system.
Sewer bills are based on the rate of discharge and the strength. Due to their higher discharge and
strength, non-residential customers (comprising 1.6% of the customer base) comprise 11.6% of the
total sewer charges. The formula for sewer rates is shown on pages 122-123.
114
FY 2023 FY 2024 FY 2024 FY 2025
21-Actual Budget Actual Budget $%
Revenues
Sewer Revenues 3,297,522$ 3,468,000$ 3,487,345$ 3,482,000$ 14,000$ 0.4%
Capacity Fee Revenues 15,802 -665 - - -
Availability Fees 51,893 53,000 51,313 53,000 - -
Non-Operating Revenues 26,858 18,000 8,549 12,000 (6,000) (33.3%)
Interest 34,390 41,000 6,265 21,000 (20,000) (48.8%)
Total Revenue 3,426,465 3,580,000 3,554,137 3,568,000 (12,000) (0.3%)
Expenditures
Labor and Benefits 785,812 1,084,900 755,099 1,063,100 (21,800) (2.0%)
Administrative Expenses 171,129 243,400 160,025 264,200 20,800 8.5%
Materials and Maintenance 1,331,326 1,155,900 1,035,419 1,343,400 187,500 16.2%
Power 173,464 182,000 211,391 233,000 51,000 28.0%
11-1311-5133Subtotal - Operations Costs 2,461,731 2,666,200 2,161,934 2,903,700 237,500 8.9%
DSTransfer to General Fund Reserve 40,400 - - - - -
Expansion Reserve 142,000 70,000 70,000 135,000 65,000 92.9%
Bett ResBetterment Reserve 210,000 146,000 146,000 529,300 383,300 262.5%
Repl ResReplacement Reserve 268,000 697,800 697,800 - (697,800) (100.0%)
Transfer to Rate Stabilization Fund 19,000 - - - - -
Subtotal - Reserve Funding 679,400 913,800 913,800 664,300 (249,500) (27.3%)
Total Expenditures 3,141,131 3,580,000 3,075,734 3,568,000 (12,000) (0.3%)
285,334$ -$ 478,403$ -$ -$ -
Excess Revenue/(Expenditures)
Operating Budget Summary - Sewer
Budget to Budget
Variance
115
FY 2025 FY 2025
Accounts Current Approved(1)Budget Actual Budget $%
Residential 4,613 3.40$ 3.56$ 1,689,000$ 1,696,100$ 1,628,000$ (61,000)$ (3.6%)
Multi-Residential 50 3.40 3.56 248,000 249,000 262,000 14,000 5.6%
Commercial
Low Strength 46 3.40 3.56 67,000 67,300 67,000 - -
Medium Strength 13 3.87 4.05 46,000 46,200 47,000 1,000 2.2%
High Strength 7 5.45 5.70 25,000 25,100 22,000 (3,000) (12.0%)
Schools 6 3.40 3.56 100,000 100,400 102,000 2,000 2.0%
Churches 4 3.40 3.56 10,000 10,000 10,000 - -
Subtotal Commercial 76 248,000 249,000 248,000 - -
Total Sewer Charges 4,739 2,185,000$ 2,194,100$ 2,138,000$ (47,000)$ (2.2%)
Residential 1,628,000$ 76.1%
Multi-Residential 262,000 12.3%
Commercial 248,000 11.6%
2,138,000$ 100.0%
(1)Approved rates for sewer billed beginning in January 2025.
FY 2025 Charges Summary by Customer Class
Charges Summary by Customer Class - Sewer
Usage Rate Budget to Budget
VarianceFY 2024
116
FY 2025 Current Approved(1)FY 2024 FY 2025
Meter Size Accounts Charges Charges Budget Budget $ %
Residential 4,613 18.99$ 19.87$ 1,027,000$ 1,076,000$ 49,000$ 4.8%
Multi-Residential/Commercial
0.75 24 18.99 19.87 5,000 6,000 1,000 20.0%
1.00 5 47.45 49.64 3,000 3,000 - -
1.50 21 94.88 99.25 23,000 24,000 1,000 4.3%
2.00 62 151.80 158.80 111,000 116,000 5,000 4.5%
3.00 6 284.65 297.77 20,000 20,000 - -
4.00 6 474.41 496.28 33,000 35,000 2,000 6.1%
6.00 1 948.82 992.56 11,000 12,000 1,000 9.1%
10.00 1 2,182.31 2,282.91 26,000 27,000 1,000 3.8%
Total System Charges 4,739 1,259,000$ 1,319,000$ 60,000$ 4.8%
(1)Approved rates for sewer billed beginning in January 2025.
System Charges - Sewer
Budget to Budget
Variance
117
FY 2020 FY 2021 FY 2022 FY 2023 FY 2025
Budget Actual Budget
Sewer Charges 2,876,592$ 2,863,846$ 3,057,053$ 3,272,858$ 3,444,000$ 3,460,422$ 3,457,000$
Penalties 16,291 1,788 27,991 24,664 24,000 26,923 25,000
Total 2,892,883$ 2,865,634$ 3,085,044$ 3,297,522$ 3,468,000$ 3,487,347$ 3,482,000$
Revenue History - Sewer, in thousands ($)
Revenue History - Sewer
Actual
FY 2024
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
Sewer Charges Series2Penalties
118
FY 2020 FY 2021 FY 2022 FY 2023 FY 2025
Budget Actual Budget $ %
Total Power Cost 152,461$ 124,717$ 159,568$ 173,464$ 182,000$ 211,391$ 233,000$ 51,000$ 21.9%
Power Costs - Sewer
Budget to Budget
Variance
Historical Power Costs, in thousands ($)
Actual
FY 2024
$20
$60
$100
$140
$180
$220
$260
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
119
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Administrative Expenditures
Memberships and Dues 3,505$ 4,000$ 4,001$ 4,500$ 500$ 12.5%
Miscellaneous Office & Field Equipment 960 2,400 1,585 2,600 200 8.3%
Fees 5,191 5,500 5,397 6,100 600 10.9%
Services 32,883 50,600 24,352 74,800 24,200 47.8%
Bad Debt Expense 132 2,000 - 2,000 - -
Total 42,671 64,500 35,335 90,000 25,500 39.5%
Add: Overhead Allocation 128,458 178,900 124,690 174,200 (4,700) (2.6%)
Total Expenditures 171,129$ 243,400$ 160,025$ 264,200$ 20,800$ 8.5%
FY 2025 Administrative Expenditures - Sewer
Memberships and Dues 4,500$ 1.6%
Misc. Office & Field Equipment 2,600 1.0%
Fees 6,100 2.3%
Services 74,800 28.4%
Bad Debt Expense 2,000 0.8%
Overhead Allocation 174,200 65.9%
Total Expenditures 264,200$ 100.0%
Administrative Expenditures - Sewer
Budget to Budget
Variance
120
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Materials and Maintenance
Fleet Parts and Equipment 8,208$ 8,000$ 10,748$ 8,000$ $ - -
Infrastructure Equipment and Supplies 107,826 102,400 89,719 90,400 (12,000) (11.7%)
Chemicals 21,559 29,700 20,647 23,500 (6,200) (20.9%)
Laboratory Equipment and Supplies 6,425 7,000 3,392 7,900 900 12.9%
Other Materials and Supplies - 600 15 600 - -
Contracted Services 42,440 44,200 42,586 58,000 13,800 31.2%
Subtotal Materials and Maintenance 186,458 191,900 167,107 188,400 (3,500) (1.8%)
Metro O&M Costs 850,000 735,000 735,000 900,000 165,000 22.4%
Spring Valley Sewer Charge 294,868 229,000 133,312 255,000 26,000 11.4%
Subtotal Sewer Charges 1,144,868 964,000 868,312 1,155,000 191,000 19.8%
Total Expenditures 1,331,326$ 1,155,900$ 1,035,419$ 1,343,400$ 187,500$ 16.2%
Fleet Parts and Equipment 8,000$ 0.7%
Infrastructure Equipment and Supplies 90,400 6.7%
Chemicals 23,500 1.7%
Laboratory Equipment and Supplies (1)8,500 0.6%
Contracted Services 58,000 4.3%
Metro O&M Costs 900,000 67.0%
Spring Valley Sewer Charge 255,000 19.0%
Total Expenditures 1,343,400$ 100.0%
Includes Other Materials & Supplies.
Materials and Maintenance Expenditures - Sewer
Budget to Budget
Variance
FY 2025 Materials and Maintenance Expenditures - Sewer
(1)
121
Formula for Sewer Rates
To meet State of California requirements, customers must pay their fair share of sewer costs. The
District is required to set sewer rates in accordance with the State’s Revenue Program Guidelines.
Residential and Multi-Residential Sewer Service
To estimate sewer use, the District averages metered water use for the winter months of January
through April of the previous three years. The “three-year winter average” is the basis of the sewer
charges for the entire year. The winter months are used to measure average water use because less
water is typically used outdoors during this time and therefore this average water use will more
accurately measure the typical water that flows into the sewer system. The District gives customers a
15.0 percent usage discount to acknowledge that not all water purchased goes to the sewer system.
The maximum consumption charge is based on 35.29 units.
The following is the sewer bill formula for residential and multi-residential customers:
(Sewer Rate x 3-Year Winter Average x 85%) + System Charges = Total Monthly Bill
The current sewer rates and system charges for single-family residential customers are $3.40 and
$18.99, respectively. Effective January 1, 2025, the sewer rate and system charges will be $3.56 and
$19.87, respectively.
The current sewer rates for multi-residential customers is $3.40 and will increase to $3.56 for the
calendar year 2025. The sewer rates and system charges for residential and multi-residential
customers is shown on pages 116 and 117.
Commercial and Industrial Sewer Service
To estimate sewer use, the District averages metered water use. An “average annual consumption” is
the basis of the sewer charges for the entire year. The average annual consumption is defined as the
units of water billed from January through December of the previous year. The District gives customers
a 15.0 percent usage discount to acknowledge that not all water purchased goes to the sewer system.
The following is the sewer bill formula for commercial and industrial customers:
(Average Annual Consumption x 85% x Sewer Rate (1)) + System Charges = Total Monthly Bill
The District calculates the monthly bill based on the customer’s water use, sewer strength, and the
size of the customer’s water meter, which is more equitable among customer classes. The rates and
charges by meter size are shown on page 117.
(1) Sewer rates are based on the customer’s assigned strength factor
122
Formula for Sewer Rates
The District is required to determine sewer rates in accordance with the State’s Revenue Program
Guidelines. The SWRCB has grouped commercial and industrial customers into various categories
and has identified Strength Factors for each of these business categories. The standard of measure
for Strength Factors is the typical sewer strength of a single-family residence (SFR). The Strength
Factors established by the SWRCB are listed below and are used by the District in the calculation of
commercial sewer rates. These factors are in terms of the strength relative to an SFR, with an SFR
having a strength factor of 1.
The following are the Strength Factors:
Description
Fee, Effective
1/1/2025
Low-Strength Commercial(1) $ 3.56
Medium-Strength Commercial $ 4.05
High-Strength Commercial $ 5.70
(1)Schools and churches are categorized as Low-Strength Commercial customers
123
Sewer Service Area
124
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125
General Revenues and Expenditures
The District’s revenues and expenditures in this section are not directly related to the services
delivered to potable, recycled, or sewer customers, yet they are operating expenses or revenues.
General Revenues
Capacity fees are restricted for the purpose of funding the District facilities. When collected, these
fees may cover costs including but not limited to planning, design, construction, and financing
associated with facilities. The District uses a portion of capacity fee revenues to provide general
expansion planning and developer support. These fees reimburse the General Fund for the cost of
providing these services. For FY 2025, capacity fees are projected to be $2.8 million which is an
increase of $481,000 compared to FY 2024.
Annexation fees are collected when developers buy into the District’s potable or recycled water
facilities. The fee ensures that future users fund the portion of the facilities that were sized and built
for their future use by prior customers. Prior to FY 2010, annexation fees were unrestricted and
therefore included in the General Fund revenues. With the revised methodology, these fees are now
restricted for the purpose of capital improvements.
The 1% property tax is a result of Proposition 13 that was approved in 1978, which limited the general
levy property tax rate for all taxing authorities to a total rate of 1% of the assessed value. Subsequent
legislation, AB8, established that the receipts from the 1% levy were to be distributed to taxing
agencies according to approximately the same proportions received prior to Proposition 13. These
general use funds are currently being used as a source of operating revenue. Property Tax Revenues
are projected to be $6.0 million which is $494,000 more than the FY 2024 budget.
The District levies availability charges each year in developed areas to be used for upgrades and
betterment and in undeveloped areas to provide funding for planning, mapping, and preliminary
design of facilities to meet future development. Current legislation provides that any availability
charge up to $10.00 per parcel is general use and any amount over $10.00 per parcel or acre shall
be used only for the benefit of the improvement district in which it is assessed. Budgeted availability
fees are projected at $846,000, an increase of $103,000 when compared to the prior year’s budget.
Included in the General Revenues are a variety of Non-Operating Revenues. These revenues include
lease revenue, set-up fees, sewer billing fees, grants, and miscellaneous revenues. Lease revenues
make up a large portion of general revenues and are mainly from cell-site leases on District property.
When the District enters a new lease, there is a one-time fee charged with the set-up of each cell-
site. The District incurs expenses related to these leases and the purpose of the fee is to recover the
lease set up costs.
The City of Chula Vista provides the sewer services for most of the District’s water customers located
in Chula Vista. Sewer fees are based on water consumption. Because of the shared customer base,
the City of Chula Vista contracts with the District for the billing of their sewer customers who live
within the District.
126
General Revenues and Expenditures
General Expenditures
The general expenditures in this section are general operating costs not associated with an
individual department. These include legal costs, insurance premiums and changes in accrued
employee leave balances. These expenditures represent 9.4% of the total Departmental Budget.
Legal expenditures are viewed as a District-wide general cost because they benefit all departments
and usually are not attributed to any one department. The District retains outside legal services
instead of in-house counsel.
Insurance premiums are also viewed as District-wide general cost because it benefits all
departments and cannot be attributed to any one department. The District participates in a program
where it can reduce its premium by implementing training sessions to reduce on-the-job accidents
and injuries.
Some employee benefits are charged to general expenditures because they are not entirely
attributable to a specific department or fiscal year in which they are incurred. For example, when a
pay rate increase occurs for an employee, his/her leave balances increase in value. In this case, the
cost is charged to the General Expenditures category.
127
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Fee Revenues
Capacity Fee Revenues 2,734,072$ 2,352,000$ 2,869,179$ 2,833,000$ 481,000$ 20.5%
Subtotal Fee Revenues 2,734,072 2,352,000 2,869,179 2,833,000 481,000 20.5%
Tax Revenues
1% General Tax 5,373,190 5,500,000 5,769,762 5,994,000 494,000 9.0%
Availability Fees 710,954 743,000 741,705 846,000 103,000 13.9%
Subtotal Tax Revenues 6,084,144 6,243,000 6,511,467 6,840,000 597,000 9.6%
General Revenue 8,818,216$ 8,595,000$ 9,380,646$ 9,673,000$ 1,078,000$ 12.5%
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Property Rental 1,828,645$ 1,700,000$ 1,683,055$ 1,639,000$ (61,000)$ (3.6%)
Sewer Billing Fees 477,383 516,000 518,083 545,000 29,000 5.6%
Set-up Fee for Lease Site 22,500 - - - - -
Grants 2,919 374,600 320,250 185,000 (189,600) (50.6%)
Revenue from Shared Facility 18,232 18,000 6,967 12,000 (6,000) (33.3%)
Miscellaneous 428,579 162,000 479,247 185,000 23,000 14.2%
Non-Operating Revenue 2,778,258$ 2,770,600$ 3,007,602$ 2,566,000$ (204,600)$ (7.4%)
Potable Recycled Sewer Total
Capacity Fee Revenues 2,833,000$ -$ -$ 2,833,000$
1% General Tax 5,994,000 - - 5,994,000
Availability Fees 793,000 - 53,000 846,000
Property Rental 1,639,000 - - 1,639,000
Sewer Billing Fees 545,000 - - 545,000
Grants 110,000 75,000 - 185,000
Revenue from Shared Facility - - 12,000 12,000
Miscellaneous 185,000 - - 185,000
Total General and Non-Operating Revenue 12,099,000$ 75,000$ 65,000$ 12,239,000$
(1)For General and Non-Operating Revenues, the Potable Fund serves as the District's General Fund for accounting purposes.
FY 2025
Non-Operating Revenues(1)
Budget to Budget
Variance
General and Non-Operating Revenues by Fund (1)
General Revenues
General Revenues(1)
Budget to Budget
Variance
128
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
General Expense 4,036,091$ 4,164,600$ 4,442,987$ 3,789,400$ (375,200)$ (9.0%)
Legal 760,951 357,000 512,904 402,000 45,000 12.6%
Total Expenses 4,797,042 4,521,600 4,955,891 4,191,400 (330,200) (7.3%)
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Labor and Benefits (1), (2)2,508,044 2,351,600 2,550,395 1,705,400 (646,200) 27.5%
Insurance expenses 1,528,047 1,813,000 1,892,592 2,084,000 271,000 14.9%
Legal expenses 760,951 357,000 512,904 402,000 45,000 12.6%
Total Expenses 4,797,042$ 4,521,600$ 4,955,891$ 4,191,400$ (330,200)$ (7.3%)
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget
OPEB ADC(2)-$ $ 1,182,000 $ 1,138,661 $ 2,071,000
OPEB/PERS advance funding 2,314,000 1,270,000 1,394,882 350,000
Cost of Living Adjustment & Benefits 422,844 195,500 312,752 132,500
Vacancy Adjustment (228,800)(295,900)(295,900)(848,100)
Total $ 2,508,044 $ 2,351,600 $ 2,550,395 $ 1,705,400
(1)Includes District-wide labor and benefit costs not attributable to any one department, such as the effect of cost of living increases on
accrued leave liabilities or the Other Post Employment Benefit (OPEB) costs. These costs are netted against the District's anticipated Vacancy
Factor. The Vacancy Factors for FY 2024 and FY 2025 are $295,900 and $848,100, respectively. Additionally, the labor and benefits shown on this
schedule are related to operating costs and does not include CIP labor and benefit costs.
(2)In FY 2023, the District's OPEB plan was fully funded; therefore, no contribution was necessary. As of July 1, 2023, the OPEB plan was no
longer fully funded; therefore, the District’s FY 2024 and FY 2025 budgets include reinstating the funding of the OPEB plan’s Actuarially
Determined Contributions (ADC) in the amounts of $1,182,000 and $2,071,000, respectively.
General Expense
Department
Object
Budget to Budget
Variance
Budget to Budget
Variance
129
Departmental Operating Budget
Labor and Benefits
The District reviews and studies organizational/personnel changes and performs a five-year staffing
review on an annual basis as part of the budgeting process. Labor and Employee Benefits expenditures
for FY 2025 were estimated based on proposed staffing level needs. The objective of the annual review
is to examine the implementation of department efficiencies and evolving business practices, impacts on
staffing levels, as well as prepare future leaders of the organization. The annual review is also used as a
reference tool for District succession planning purposes.
The District provides employees and Board members with a choice of four health providers (Blue Shield
HMO, EPO and PPO, and Kaiser HMO) plus a vision and dental PPO plan. The District pays 100% of
employee coverage and 88% of spouse and dependent coverage. Other ancillary benefits include basic
life and accidental death and dismemberment insurance, short- and long-term disability benefits, flexible
spending accounts for health and dependent care, and an Employee Assistance Program. In addition,
the District offers the CalPERS Pension plan (2.7% @ 55 for classic members and 2.0% @ 62 for PEPRA
employees), Other Post-Employment Benefits (OPEB) after the employees reach certain age and tenure
requirements, and a newly created Health Reimbursement Arrangement (HRA) option. Employees
participate in the contribution for the pension and OPEB plans. For employees enrolled in the HRA option,
those hired before September 1, 2024 have no mandatory employee contribution and those hired after
do. Increases in employee labor and benefits costs are mainly due to continued increases in group health
insurance premiums and an increase in compensation due to a 6.0% increase in salary and wages,
based on the Memorandum of Understanding (MOU) between the District and its employee association.
Labor and Benefits represent 20.3% of the total Operating Budget. District personnel are assigned to work
in five departments: General Manager, Administrative Services, Finance, Water Operations, and
Engineering. The departments are further categorized by functions into divisions. The FY 2025 Budget
includes funding for labor and benefits for 146 full-time equivalent (FTE) employees.
The staffing level for FY 2025 has increased by two (2) FTE employees from FY 2024. The District
continuously analyzes workload requirements, opportunities for automation and areas where resources
can be effectively shared or relocated. For FY 2025, the staffing changes include the addition of two cross-
connection workers to comply with new and existing regulations.
A projected 8.5% of the labor and benefits costs will be charged to projects included in the Capital
Improvement Program (CIP) and Developer Deposits. These labor and benefit costs totaling $2,593,100
are not considered operating costs and therefore are not included in the Operating Budget.
Administrative Expenses
Administrative expenses are funds allocated to cover the costs associated with the day-to-day
administrative and support functions of the District. These expenses include memberships, office supplies
and equipment, staff training, Directors' fees, water conservation programs, safety expenses, and
regulatory agencies' fees. Some of the administrative expenses are less discretionary than others. The
safety needs of the District's customers and employees, and compliance with regulatory agencies are of
utmost importance and are considered necessary.
130
Departmental Operating Budget
Overall administrative expenses are increasing by $986,500 or 11.0% compared to FY 2024 and are
shown on page 139. The District’s budget for insurance and legal services is increasing by $316,000
or 14.6% due to soaring insurance premiums and additional legal costs associated with a potential new
lawsuit. IT hardware, software and communication is going up by $262,500 or 15.5%
predominantly due to increases related to: GIS cloud migration and hosting, transition to the Tyler
Enterprise ERP financial management system, and maintenance and support for the Advanced
Metering Infrastructure (AMI) project and the District’s server infrastructure. The $262,500 or 15.5%
increase in fees is primarily due to a rise in election costs driven by 2025 being an election year. Outside
services is going up by $90,900 or 3.0% due to the District’s involvement in various studies and plan
developments, including the joint intertie study with another agency, water and sewer capacity fee
studies, cost of service studies, development of the District’s Cross-Connection Control Plan, and update
of the District’s Watershed Management Plan. Overhead allocation is rising by $56,000 or 10.9% due to
a decrease in the allocation of administrative overhead costs to CIP projects.
The increases were partially offset by a $35,800 or 20.6% decline in small tools and equipment driven by
a reduced need for these items.
Materials and Maintenance
The materials and maintenance expenses allow the District to provide reliable, high-quality products,
services, and support to its customers. As the District continues to grow and technology and regulations
change, maintenance and services will be adjusted as needed.
For FY 2025, overall materials and maintenance expenses are increasing $399,500 or 8.3% compared to
FY 2024, as shown on page 140. The District’s budget for Metro sewer charges is set to rise by $165,000
or 22.4% due to an anticipated increase in wastewater flow to the Metro system during the ultraviolet (UV)
upgrades at the District’s treatment plant. Meter and materials are rising $97,400 or 48.5% due to a
projected increase in new meter sales and replacement of faulty meters not covered by warranty.
Contracted services are also increasing $64,900 or 7.0% attributable to an increase in as-needed services
driven by inflation and increasing material costs. Repairs for main breaks and service leaks primarily
contributed to a $48,400 or 6.0% increase in infrastructure equipment and supplies. Spring Valley sewer
charges are going up by $26,000 or 11.4% mainly driven by an increase in transportation costs. Chemicals
are also rising by $12,600 or 1.6% partly due to inflation and the need to maintain an adequate supply of
as-needed chemicals (polymer) in case of tertiary filtration process issues.
These increases were offset by a $30,600 or 17.6% decrease in fleet parts and equipment due to various
purchases of parts and equipment in FY 2024.
131
Board of Directors 295,000$ 0.7%
General Manager 1,965,800 4.4%
General Expense 4,191,400 9.4%
Administrative Services 9,100,800 20.5%
Finance 7,515,600 16.9%
Water Operations 15,478,700 34.8%
Engineering 5,921,500 13.3%
44,468,800$ 100.0%
Departmental Operating Budgets
Total FY 2025 Departmental Operating Budgets
$44,468,800
132
FY 2023 FY 2024 FY 2025
Actual Budget Actual Budget $%
Labor Costs 13,271,775$ 14,659,800$ 13,471,123$ 15,411,100$ 751,300$ 5.1%
Benefits
Pension 3,163,702 3,458,600 3,173,727 4,090,000 631,400 18.3%
Employee Assistance Program 3,208 3,400 2,971 2,400 (1,000) (29.4%)
Workers' Compensation 218,979 239,900 265,558 322,000 82,100 34.2%
Health/Dental/Life Insurance/Advance Funding to PERS/OPEB(1)5,553,500 6,159,400 6,305,592 6,385,400 226,000 3.7%
Social Security/Medicare 1,131,882 1,240,700 1,198,141 1,286,100 45,400 3.7%
Salary Continuation Insurance 64,347 64,700 67,258 63,700 (1,000) -1.5%
State Unemployment Insurance 3,743 20,000 19,857 20,000 - -
Vacation/Sick/Holiday/Other Leave 2,723,745 2,876,700 2,801,623 3,087,200 210,500 7.3%
Total Benefits 12,863,106 14,063,400 13,834,727 15,256,800 1,193,400 8.5%
Total Labor and Benefits 26,134,881 28,723,200 27,305,850 30,667,900 1,944,700 6.8%
Less: Non-Operating Labor and Benefits
Labor Costs 1,031,462 1,211,000 975,611 1,078,800 (132,200) (10.9%)
Benefits Allocation 653,815 772,000 904,918 730,800 (41,200) (5.3%)
Total Non-Operating Labor and Benefits 1,685,277 1,983,000 1,880,529 1,809,600 (173,400) (8.7%)
Operating Labor & Benefits 24,449,604 26,740,200 25,425,321 28,858,300 2,118,100 7.9%
Overhead Allocation (115% of labor costs)1,186,181 1,392,800 1,121,953 1,240,700 (152,100) (10.9%)
Admin Overhead (36.85%)437,108 513,200 413,440 457,200 (56,000) (10.9%)
Less: Non-operating labor overhead (749,073) (879,600) (708,513) (783,500) 96,100 (10.9%)
Net Operating Labor and Benefits $ 23,700,531 $ 25,860,600 $ 24,716,808 $ 28,074,800 $ 2,214,200 8.6%
(1)Includes the following advance fundings to the District's pension and retiree healthcare plans:
FY 2023
Actual
FY 2024
Budget
FY 2024
Actual
FY 2025
Budget
Advance Funding to OPEB/PERS 2,314,000$ 1,270,000$ 1,394,882$ 350,000$
Labor and Benefits
Budget to Budget
VarianceFY 2024
Budget vs. Actual, in thousands ($)
FY 2025FY 2024FY 2023
$21,000
$22,000
$23,000
$24,000
$25,000
$26,000
$27,000
$28,000
$29,000
2023 2024 2025
$24,730
$25,861
$28,075
$23,701
$24,717
Budget Actual
133
Potable Recycled Sewer
Developer
Reimbursed
CIP Total
Operating Labor Costs 13,270,900$ 650,300$ 411,100$ -$ 14,332,300$
Benefits 13,644,400 528,200 353,400 - 14,526,000
Overhead Allocation-Personnel (1,554,300) 472,200 298,600 - (783,500)
Total Operating Labor and Benefits 25,361,000 1,650,700 1,063,100 - 28,074,800
CIP Labor Costs 592,300 109,300 36,100 341,100 1,078,800
Benefits 406,700 75,400 20,400 228,300 730,800
Overhead Allocation-Personnel 430,100 79,400 26,200 247,800 783,500
Total CIP Labor and Benefits 1,429,100 264,100 82,700 817,200 2,593,100
Total Labor and Benefits 26,790,100$ 1,914,800$ 1,145,800$ 817,200$ 30,667,900$
Potable-Operating 25,361,000$ 82.6%
Potable-CIP 1,429,100 4.6%
Sewer-Operating 1,063,100 3.5%
Sewer-CIP 82,700 0.3%
Recycled-Operating 1,650,700 5.4%
Recycled-CIP 264,100 0.9%
Developer Reimbursed-CIP 817,200 2.7%
Total Labor and Benefits 30,667,900$ 100.0%
Labor and Benefits by Fund - Fiscal Year 2025
134
General Manager
General Manager 1 1 1
District Secretary 1 1 1
Communications Officer 1 1 1
Communications Assistant 1 1 1
Total FTE - General Manager Department 4 4 4
Administrative Services
Chief, Administrative Services 1 1 1
Confidential Executive Assistant 1 1 1
Administrative Services 2 2 2
Human Resources
Human Resources Manager 1 1 1
Senior Human Resources Analyst 2 2 2
HR Assistant I and II 1 1 1
Human Resources 4 4 4
Purchasing
Purchasing and Facilities Manager 1 1 1
Senior Procurement & Contracting Analyst 1 1 1
Warehouse Technician 1 1 1
Facilities Maintenance Technician 2 2 2
Purchasing 5 5 5
Safety
Safety & Security Specialist 1 1 1
Safety 1 1 1
Information Technology/GIS
IT Manager 1 1 1
GIS Manager 1 1 1
GIS Programmer Analyst 1 1 1
GIS Analyst 1 1 1
GIS Technician 1 1 1
Network Engineer 1 1 1
Database Administrator 1 1 1
Business Systems Technician 1 1 1
System Support Analyst 1 1 1
Business Systems Analyst I and II 2 2 2
Information Technology/GIS 11 11 11
Total FTE - Administrative Services Department 23 23 23
Position Count by Department
FY 2025FY 2023 FY 2024
135
Position Count by Department
FY 2025FY 2023 FY 2024
Finance
Chief Financial Officer 1 1 1
Assistant Chief, Finance 1 1 1
Executive Assistant 1 1 1
Department Assistant 1 1 1
Finance 4 4 4
Controller and Budgetary Services
Senior Accountant 2 2 2
Accountant 1 1 1
Accounting Technician 1 1 1
Controller and Budgetary Services 4 4 4
Treasury and Accounting Services
Finance Manager, Treasury and Accounting 1 1 1
Senior Accountant 2 2 2
Accountant 1 1 1
Accounting Technician 1 1 1
Treasury and Accounting Services 5 5 5
Customer Service
Customer Service Manager 1 1 1
Customer Service Supervisor 1 1 1
Lead Customer Service Representative 1 1 1
Customer Service Representative I and II 6 6 6
Customer Service 9 9 9
Meter Services
Meter Services Supervisor 1 1 1
Lead Meter Maintenance/Cross Connection Worker 1 1 1
Meter Maintenance Worker I and II 3 3 5
Lead Customer Service Field Representative 1 1 1
Customer Service Field Representative I and II 3 3 3
Meter Services 9 9 11
Total FTE - Finance Department 31 31 33
Operations
Chief, Water Operations 1 1 1
Executive Assistant 1 1 1
Asset Management Specialist 0 1 1
Operations 2 3 3
136
Position Count by Department
FY 2025FY 2023 FY 2024
Operations (continued)
Water System Operations
System Operations Manager 1 1 1
Water Systems Supervisor 1 1 1
Lead Water Systems Operator 2 2 2
Water Systems Operator I, II, and III 8 8 8
Senior Disinfection Technician 1 1 1
Disinfection Technician 1 1 1
Water System Operations 14 14 14
Reclamation Operations
Reclamation Plant Supervisor 1 1 1
Lead Reclamation Plant Operator 1 1 1
Reclamation Plant Operator I, II, and III 2 2 2
Laboratory Analyst 2 2 2
Reclamation Operations 6 6 6
Utility Maintenance/Construction
Utility Services Manager 1 1 1
Utility Maintenance Supervisor 1 1 1
Utility Maintenance Assistant Supervisor 1 1 1
Utility Crew Leader 3 3 3
Senior Utility/Equipment Operator 4 4 4
Utility Workers I and II 12 12 12
SCADA/Pump/Electrical Supervisor 1 1 1
Senior SCADA Instrumentation Technician 2 2 2
SCADA Instrumentation Technician 1 1 1
Electrician I and II 2 2 2
Pump Mechanic I and II 2 2 2
Fleet Maintenance Supervisor 1 1 1
Equipment Mechanic I and II 3 3 3
Utility Maintenance/Construction 34 34 34
Total FTE - Operations Department 56 57 57
Engineering
Chief, Engineering 1 1 1
Executive Assistant 1 1 1
Department Assistant 1 1 1
Engineering 3 3 3
Water Resources, Planning, Design & Environmental
Engineering Manager 1 1 1
Senior Civil Engineer 3 3 3
Environmental Compliance Specialist 1 1 1
Assistant/Associate Civil Engineer 0 0 1
Senior Engineering Technician 1 1 0
Engineering Design Technician 1 1 1
Water Resources, Planning, Design & Environmental 7 7 7
137
Position Count by Department
FY 2025FY 2023 FY 2024
Engineering (continued)
Public Services, Survey, Inspection, & Recycled Water Program
Engineering Manager 1 1 1
Field Services Manager 1 1 1
Permit Technician 2 2 2
Construction Technician 1 1 1
Recycled Water Program Supervisor 1 1 1
Recycled Water Specialist 4 4 4
Lead Construction Inspector 1 1 1
Construction Inspector I and II 4 4 4
Supervising Land Surveyor 1 1 1
Senior Utility Locator 0 3 3
Utility Locator 3 0 0
Public Services, Survey, Inspection, & Recycled Water Program 19 19 19
Total FTE - Engineering Department 29 29 29
District Total FTE Position Count 143 144 146
Contract / Temporary Employees
Human Resources Analyst 0 0.05 0.36
Senior SCADA Instrumentation Technician 0.50 0 0.63
Water Conservation Intern 0.50 0.50 0.00
Total Contract/Temporary Employees 1.00 0.55 0.99
General Manager 4 2.7%
Administrative Services 23 15.8%
Finance 33 22.6%
Operations 57 39.0%
Engineering 29 19.9%
Total 146 100.0%
143 144
146
125
130
135
140
145
150
FY 2023
Actual
FY 2024
Actual
FY 2025
Budget
Full-Time Equivalent (FTE)Position Count by Department
138
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Administrative Expenditures
Services 2,137,731$ 3,019,800$ 2,118,769$ 3,110,700$ 90,900$ 3.0%
Insurance and Legal 2,288,998 2,170,000 2,405,496 2,486,000 316,000 14.6%
IT Hardware, Software & Communication 1,423,467 1,690,000 1,646,424 1,952,500 262,500 15.5%
Fees 1,036,858 1,136,200 1,118,084 1,380,300 244,100 21.5%
General Office Expenses 296,036 304,800 272,808 307,500 2,700 0.9%
Training 209,114 290,700 190,799 298,000 7,300 2.5%
Travel and Conferences 214,998 254,700 201,665 261,500 6,800 2.7%
Conservation and Outreach 134,956 145,500 139,254 145,500 - -
Miscellaneous Office & Field Equipment 112,549 174,200 136,666 138,400 (35,800) (20.6%)
Memberships and Dues 86,925 98,800 94,623 116,200 17,400 17.6%
Directors' Fees 59,130 75,000 54,340 79,000 4,000 5.3%
Bad Debt Expense 21,160 72,000 130,990 72,000 - -
Utilities 25,712 23,800 32,173 38,400 14,600 61.3%
Subtotal before Overhead 106,002 170,800 217,503 189,400 18,600 10.9%
Less: Overhead Allocation (437,108) (513,200) (413,440) (457,200) 56,000 10.9%
Total Expenditures 7,610,526$ 8,942,300$ 8,128,651$ 9,928,800$ 986,500$ 11.0%
4,702,612$ 5,605,400$ 2,675,400$
Services 3,110,700$ 30.0%
Insurance and Legal 2,486,000 23.9%
IT Hardware, Software & Comm 1,952,500 18.7%
Fees 1,380,300 13.3%
General Office Expense 307,500 3.0%
Training 298,000 2.9%
Travel and Conferences 261,500 2.5%
Conservation and Outreach 145,500 1.4%
Misc Office & Field Equipment 138,400 1.3%
Memberships and Dues 116,200 1.1%
Directors' Fees 79,000 0.8%
Bad Debt Expense 72,000 0.7%
Utilities 38,400 0.4%
10,386,000 100.0%
Less: Overhead Allocation (457,200)
Total Administrative Expenditures 9,928,800$
Administrative Expenditures - Total
Budget to Budget
Variance
FY 2025 Total Administrative Expenditures
IT Hardware,
Software & Comm
Services
Fees
Insurance
and legal
14%
30%
24%
19%
13%
139
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $ %
Materials and Maintenance
Laboratory Equipment and Supplies 67,743$ 62,900$ 50,647$ 68,200$ 5,300$ 8.4%
Building and Grounds Materials 86,454 92,500 91,288 92,500 - -
Safety Equipment 80,446 108,900 90,600 110,500 1,600 1.5%
Fleet Parts and Equipment 165,716 173,600 171,689 143,000 (30,600) (17.6%)
Meters and Materials 223,869 200,900 211,565 298,300 97,400 48.5%
Fuel and Oil 313,347 316,500 272,267 321,400 4,900 1.5%
Other Materials and Supplies 342,267 369,100 517,244 373,100 4,000 1.1%
Infrastructure Equipment and Supplies 692,128 807,700 763,318 856,100 48,400 6.0%
Chemicals 499,015 807,800 709,052 820,400 12,600 1.6%
Contracted Services 808,966 921,000 762,070 985,900 64,900 7.0%
Subtotal Materials and Maintenance 2,655,723 3,222,100 3,023,951 3,356,900 134,800 4.2%
Sewer Charges
Metro O&M Costs 850,000 735,000 735,000 900,000 165,000 22.4%
Spring Valley Sewer Charge 294,868 229,000 133,312 255,000 26,000 11.4%
Subtotal Sewer Charges 1,144,868 964,000 868,312 1,155,000 191,000 19.8%
Total Expenditures 3,800,591$ 4,186,100$ 3,892,263$ 4,511,900$ 325,800$ 7.8%
FY 2025 Materials and Maintenance Expenditures
Laboratory Equipment & Supplies 68,200$ 1.3%
Building and Grounds Materials 92,500 1.8%
Safety Equipment 110,500 2.1%
Fleet Parts and Equipment 143,000 2.7%
Meters and Materials 298,300 5.7%
Fuel and Oil 321,400 6.2%
Other Materials & Supplies 373,100 7.1%
Chemicals 820,400 15.7%
Infrastructure Equipment & Supplies 856,100 16.4%
Contracted Services 985,900 18.9%
Metro and County Sewer Charges 1,155,000 22.1%
Total ExpendituresTotal Materials and Maintenance Expenditures 5,224,400$ 100.0%
Materials and Maintenance Expenditures - Total
Budget to Budget
Variance
16%
19%
22%
Sewer
Charges
Chemicals
Contracted
Services
Infrastructure,
Equipment &
Supplies
8%
16%
Other Mtls. &
Supplies
6%
6%
7%
140
FY 2023 FY 2024 FY 2024 FY 2025
Budget to
Budget
Actual Budget Actual Budget Variance
Departmental Expenditures
Board of DirectorsBoard of Directors 216,549$ 249,000$ 247,969$ 295,000$ 46,000$
General ManagerGeneral Manager 1,347,202 1,633,000 1,482,840 1,965,800 332,800
General ExpenseGeneral Expense 4,797,042 4,521,600 4,955,891 4,191,400 (330,200)
Administrative ServicesAdministrative Services 7,626,825 8,243,900 8,042,499 9,100,800 856,900
FinanceFinance 6,223,236 6,666,800 6,519,057 7,515,600 848,800
Water OperationsWater Operations 12,515,637 14,501,300 12,907,888 15,478,700 977,400
EngineeringEngineering 4,195,566 5,205,000 4,305,406 5,921,500 716,500
Total Departmental ExpendituresTotal Departmental Expenditures 36,922,057 41,020,600 38,461,550 44,468,800 3,448,200
Less: Overhead Allocation (1,186,181) (1,392,800) (1,121,953) (1,240,800) 152,000
Net Departmental Expenditures 35,735,876 39,627,800 37,339,597 43,228,000 3,600,200
Non-Departmental Expenditures & Reserve Funding
Water Purchases 60,838,899 68,378,000 66,806,632 77,464,000 9,086,000
Power 4,400,025 4,285,000 4,618,120 5,058,000 773,000
Subtotal Non-Departmental Expenditures 65,238,924 72,663,000 71,424,752 82,522,000 9,859,000
General Fund Reserve 40,400 - - 3,979,700 3,979,700
Expansion Reserve 684,800 4,320,000 4,320,000 5,720,000 1,400,000
Betterment Reserve 4,890,000 2,562,000 2,562,000 2,643,300 81,300
Replacement Reserve 8,393,600 8,774,800 8,774,800 - (8,774,800)
Transfer to Rate Stabilization Fund 19,000 - - - -
Subtotal Reserve Funding 14,027,800 15,656,800 15,656,800 12,343,000 (3,313,800)
Total Operating Expenditures 115,002,600$ 127,947,600$ 124,421,149$ 138,093,000$ 10,145,400$
Operating Expenditures by Department
FY 2025 Funding Source by Department, in Thousands ($)
$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000
Board of Directors
General Manager
Administrative Services
Finance
Water Operations
Engineering
General Expense
Potable
Sewer
Recycled
141
FY 2023 FY 2024 FY 2024 FY 2025
Budget to
Budget
Actual Budget Actual Budget
Variance
Departmental Expenditures
Labor and Benefits 24,449,604$ 26,740,200$ 25,425,321$ 28,858,300$ 2,118,100$
Director's Fees 59,130 75,000 54,340 79,000 4,000
Travel and Conferences 214,998 254,700 201,665 261,500 6,800
Memberships and Dues 86,925 98,800 94,623 116,200 17,400
Conservation and Outreach 134,956 145,500 139,254 145,500 -
General Office Expense 296,036 304,800 272,808 307,500 2,700
IT Hardware, Software & Communication 1,423,467 1,690,000 1,646,424 1,952,500 262,500
Misc Office & Field Equipment 112,549 174,200 136,666 138,400 (35,800)
Fees 3,325,856 3,306,200 3,523,580 3,866,300 560,100
Services 2,137,731 3,019,800 2,118,769 3,110,700 90,900
Training 209,114 290,700 190,799 298,000 7,300
Materials & Maintenance 3,279,951 3,860,900 3,635,493 4,069,400 208,500
Utilities 25,712 23,800 32,173 38,400 14,600
Sewer Charges 1,144,868 964,000 868,312 1,155,000 191,000
Bad Debt Expense 21,160 72,000 121,323 72,000 -
Total Departmental Expenditures 36,922,057 41,020,600 38,461,550 44,468,700 3,448,100
Less: Overhead Allocation (1,186,181) (1,392,800) (1,121,953) (1,240,700) 152,100
Net Departmental Expenditures 35,735,876 39,627,800 37,339,597 43,228,000 3,600,200
Non-Departmental Expenditures & Reserve Funding
Water Purchases 60,838,899 68,378,000 66,806,632 77,464,000 9,086,000
Power 4,400,025 4,285,000 4,618,120 5,058,000 773,000
Subtotal Non-Departmental Expenditures 65,238,924 72,663,000 71,424,752 82,522,000 9,859,000
General Fund Reserve 40,400 - - 3,979,700 3,979,700
Expansion Reserve 684,800 4,320,000 4,320,000 5,720,000 1,400,000
Betterment Reserve 4,890,000 2,562,000 2,562,000 2,643,300 81,300
Replacement Reserve 8,393,600 8,774,800 8,774,800 - (8,774,800)
Transfer to Rate Stabilization Fund 19,000 - - - -
Subtotal Reserve Funding 14,027,800 15,656,800 15,656,800 12,343,000 (3,313,800)
Total Operating Expenditures 115,002,600$ 127,947,600$ 124,421,149$ 138,093,000$ 10,145,400$
Operating Expenditures by Object
142
Departmental Operating Budget
Tim Smith
Division 1
Jose Lopez
President
Division 4
Ryan Keyes
Vice President
Division 2
Mark Robak
Treasurer
Division 5
Board of Directors
The Otay Water District is a revenue-neutral
public agency established in accordance with
the California Water Code. This not-for-profit
status means Otay has no private shareholders,
pays no dividends and therefore does not report
to, nor answer to the California Public Utilities
Commission. The District does, however, answer
to the public through a five-member Board of
Directors. Each Director is elected by voters
within their respective division boundaries to
represent the public's interest with regard to
rates for service, taxes, policies, ordinances, and
other matters related to the management and
operation of the Otay Water District. Directors
serve four-year alternating terms on the Board.
Gary Croucher
Division 3
143
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Board of Directors 216,549$ 249,000$ 247,969$ 295,000$ 46,000$ 18.5%
Total Expenses 216,549 249,000 247,969 295,000 46,000 18.5%
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Benefits 108,710 121,000 129,980 151,000 30,000 24.8%
Director's Fees 59,130 75,000 54,340 79,000 4,000 5.3%
Travel and Conferences 48,709 53,000 63,629 65,000 12,000 22.6%
Total Expenses 216,549$ 249,000$ 247,969$ 295,000$ 46,000$ 18.5%
-$
Department
Object
Budget vs. Actual, in thousands ($)
Board of Directors
Budget to Budget
Variance
Budget to Budget
Variance
$0
$50
$100
$150
$200
$250
$300
2023 2024 2025
$239 $249
$295
$217
$248
Budget Actual
144
Director’s Division Boundaries
145
Departmental Operating Budget
(1) See Position count by Department on page 135-138 for the list of positions per department. District Chiefs
report directly to the General Manager; however, they are budgeted within their respective department.
General Manager’s Office
Mission
To provide exceptional water and wastewater service to its customers, and to manage the Otay
Water District’s resources in a transparent and fiscally responsible manner.
General Manager’s Vision
“To be a model water agency by providing stellar community service, achieving measurable results,
and continuously improving our operational practices.”
C
Statement of values
As Otay Water District employees we dedicate ourselves to:
Customers: We take pride that our commitment to customer-centered service is our highest
priority.
Excellence: We strive to provide the highest quality and value in all that we do.
Integrity: We commit ourselves to doing the right thing. Ethical behavior, trustworthiness, and
accountability are the District’s foundation.
Employees: We see each individual as unique and important. We value diversity and open
communication to promote fairness, dignity, and respect.
Teamwork: We promote mutual trust by sharing information, knowledge, and ideas to reach our
common goals.
Innovation: We constantly seek better, more efficient, and cost-effective ways to deliver our
services.
General Manager – 4 Positions (1)
District Secretary
1211
Communications Officer
1211
General Manager
1211
Chief Financial Officer
2311
Board of Directors
1111
Communications Assistant
1211
Chief, Administrative
Services 2211
Chief, Water
Operations 3211
Chief, Engineering
3311
146
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
General Manager 1,232,976$ 1,482,200$ 1,336,445$ 1,792,900$ 310,700$ 21.0%
Conservation 114,226 150,800 146,395 172,900 22,100 14.7%
Total Expenses 1,347,202 1,633,000 1,482,840 1,965,800 332,800 20.4%
-$
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Labor and Benefits 917,669 985,500 1,041,830 1,113,800 128,300 13.0%
Travel and Conferences 27,643 41,200 26,816 36,100 (5,100) (12.4%)
Memberships and Dues 74,977 83,800 82,259 96,600 12,800 15.3%
Conservation and Outreach 134,956 145,500 139,254 145,500 - -
General Office Expense 6,335 6,700 4,746 6,700 - -
Fees 76,216 66,000 71,846 256,300 190,300 288.3%
Services 106,403 199,800 114,142 206,300 6,500 3.3%
Training 3,003 4,500 1,947 4,500 - -
Materials & Maintenance - 100,000 - 100,000 - -
Total Expenses 1,347,202$ 1,633,000$ 1,482,840$ 1,965,800$ 332,800$ 20.4%
-$ -$ -$ -$
Budget vs. Actual, in thousands ($)
General Manager
Budget to Budget
Variance
Budget to Budget
Variance
Department
Object
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
2023 2024 2025
$1,639 $1,633
$1,966
$1,347
$1,483
Budget Actual
147
Departmental Operating Budget
General Manager’s Office
Services We Provide
The general manager’s office provides leadership and direction for all Otay Water District operations
and services including potable, recycled, and wastewater. As leader of the agency, the general
manager interacts with the board of directors to set policies and strategic direction and ensures that
applicable laws and regulations are met. The general manager oversees, coordinates, and directs
the development and execution of planning and strategic documents and the operating and capital
improvement projects. The general manager’s office represents the District in establishing and
maintaining relationships with member agencies and external organizations. The general manager
is also focused on executing the District’s mission, Strategic Plan, and board priorities. The general
manager’s office collaborates with all District departments to provide and support communications,
including but not limited to the website, social media, the customer newsletter, the mobile
application, and other materials and technologies. In addition, the office coordinates media relations,
outreach, education, water conservation, and legislation. The office also assists to coordinate and
develop messaging to District staff. The office supports and participates in outreach and business
events throughout the community and helps fund and promote a variety of conservation rebates and
other programs available to its customers. Staff promotes water-use efficiency through educating
the District’s customers about available rebates, water conservation programs, and the Water
Conservation Garden. The office also works with other departments to coordinate the District’s Water
Shortage Contingency Plan as well as its water waste reporting program.
Accomplishments – Fiscal Year 2023-2024
The District’s rates were ranked the eleventh lowest among San Diego County’s 22 public
water agencies and the fourth lowest among the County’s 28 sewer service providers.
Saved more than $72.6 million due to staffing efficiencies and the reduction of full-time
equivalent positions from 2007 to fiscal year 2024.
Secured $15,000 in funding from the San Diego County Water Authority and the Metropolitan
Water District of Southern California to assist the District in updating its Compliance
Readiness Assessment regarding the conservation regulations.
Presented the 2024 Otay Water District Legislative Program Policy Guidelines and 2024 Top
10 Legislative Priorities to the board and remained engaged in legislative issues that could
impact the District.
Cosponsored SB 1072 (Stephen Padilla) with the City of San Diego, which if passed will
protect public agencies from costly legal challenges to their water, sewer, and refuse
collection service fee structures as well as protect future ratepayers whose bills would be
increased to pay for these lawsuits.
148
Departmental Operating Budget
General Manager’s Office (Continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
The District submitted letters of support for two bills, AB 1594 (Garcia) and AB 399 (Boerner).
Both bills passed in October 2024. AB 1594 will help provide public agencies with additional
flexibility to the Advanced Clean Fleets rule, requiring that any state regulation on medium-
and heavy-duty vehicle support an agency’s ability to maintain reliable water and electric
service, respond to emergencies and provide mutual aid assistance. AB 399 will enact the
Water Ratepayers Protection Act of 2023 to require as an additional condition to the Local
Agency Formation Commission (LAFCO) detachment process, a member agency to receive
majority voter approval of its electorate, and the entire water authority’s electorate, before it
detaches from a county water authority.
The District hosted a tour of its Mexico interconnection near the U.S.-Mexico border for
attendees from across the West and Denver regions for the U.S. Bureaus of Reclamation’s
Planning Conference.
Staff collaborated with other departments to prepare and submit the District’s Interim Annual
Report in accordance with the guidelines set forth by the Department of Water Resources.
Assisted the customer service section with outreach to customers about the application for
the last round of California Water and Wastewater Arrearage Program funds.
Assisted the customer service section with the application for a United States Bureau of
Reclamation WaterSmart grant in the amount of $500,000 for upgrading District meters to
AMI. Secured letters of support from Congressmembers Juan Vargas and Sara Jacobs,
Senators Steve Padilla and Brian Jones, Assemblymember David Alvarez, Mayor of Chula
Vista John McCann, County Supervisors Nora Vargas and Joel Anderson, the Chula Vista,
East County, and Otay Mesa chambers of commerce, and South County Economic
Development.
Staff distributed news releases to various media outlets about the District’s newly elected
2024 officers, poster and landscape contests, and more.
Staff participated in the “value of water” workgroup facilitated by the San Diego County Water
Authority to develop materials designed to enhance customer understanding of the
importance and value of water.
Staff coordinated with Scripps Institution of Oceanography to arrange a facility tour for board
members and executive staff.
Conducted outreach regarding the State’s Low Income Household Water Assistance
Program until the program ended on March 31, 2024. From October 2022 until the end of the
program, customers received more than $230,000 in water and wastewater payment
assistance.
149
Departmental Operating Budget
General Manager’s Office (Continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Worked with engineering staff to conduct outreach on the San Miguel Habitat management
Area Perimeter Fencing Restoration Project.
Effective July 31, 2023, the District rescinded level 1 of its Water Shortage Contingency Plan
(WSCP), which deactivated level 1.
Staff continued to conduct conservation outreach and education, including efforts to
encourage conversion of ornamental grass for sustainable landscapes that are more
climate-appropriate to San Diego County.
Published the annual consumer confidence report, indicating to customers that the District
met or surpassed all public health drinking water requirements and standards.
General manager continued serving as a board member representing Association of
California Water Agencies (ACWA) Region 10.
To assist with the 2019 law that provides a path for veterans transitioning to civilian
employment to receive credit for their military experience and education toward certifications
in the water industry, the general manager served on the Drinking Water Operator
Certification Program Advisory Committee as an “Active or Former Member of the U.S. Military
with Drinking Water Operator Experience within Their Military Service.”
Created and distributed the Pipeline newsletter to customers.
Continued to develop, leverage, and enhance District technologies, including the Enterprise
Resource Planning system, mobile and web-based applications, drone technology,
geographic information systems technology, GPS fleet-tracking management systems,
SCADA upgrades, the boardroom’s audio-visual equipment, work order management, asset
management software, cloud-based ticket management systems, cybersecurity, and more.
As one of the six Joint Powers Authority members of the Water Conservation Garden, the
District supported the Garden as it worked through financial reorganization.
Developed messaging and conducted outreach for the District’s Leak Detection and Repair
Program, which surveyed approximately 177 miles of potable and recycled pipelines,
pinpointing 30 water-system leaks and 20 consumer-side leaks.
As part of its outreach efforts, the District often sponsored and actively participated in various
community or business events. It hosted an informational booth at the Chula Vista
Elementary School District’s Chula Vista Community Expo, the Women in Water Symposium,
Chula Vista’s South Bay Earth Day, Construction Management Association of America
Owner’s Night, Spring Valley Day, South County Economic Development Council’s Economic
Summit, and the Spring Valley Safety Officer Appreciation Dinner. Additionally, the District
showcased a decorated Vactor truck in the Chula Vista Starlight Parade and supported the
Chula Vista Chamber of Commerce 97th Installation Dinner.
150
Departmental Operating Budget
General Manager’s Office (Continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Continued the educational partnership with Chula Vista Elementary School District and the
Sweetwater Authority for the Hydro Station, an interactive educational space that houses
learning exhibits, hands-on activities, and virtual opportunities, and teaches more than 4,000
fifth graders about the ecological cycle of water, water conservation, water quality, and
careers in the water industry.
Partnered with Cuyamaca College’s Center for Water Studies program to serve on
committees to enhance outreach to veterans and women in the water industry.
With its sponsorship and staff involvement in the planning process, the District participated
in the seventh annual Women in Water Symposium held at Cuyamaca College. The sold-out
event drew over 200 participants from more than 40 agencies, companies, and educational
institutions. Attendees engaged in insightful discussions led by industry experts and gained
valuable perspectives on advocating for workplace needs, managing change and
uncertainty, and fostering effective teamwork.
The District continued to support the “Mark Watton” scholarship fund through the Foundation
for Grossmont and Cuyamaca Colleges to increase the talent pool in the water industry by
supporting students attending the Center for Water Studies at Cuyamaca. Through the
scholarship, the Foundation for Grossmont & Cuyamaca College awarded scholarships to
ten recipients for $500 each.
The District continued to curate content using short video form, graphics, and images to fit
the ever-changing landscape of social media. The District’s platforms provide a place to
share about its services, projects, careers, conservation programs, and news related to the
water industry. As a result, the District’s social media followers increased from July 1, 2023,
through June 30, 2024. Its Facebook followers increased by 4%, from 727 to 753; X (previously
known as Twitter) followers increased by 3%, from 2,245 to 2,299; Instagram followers
increased by 14%, from 1,113 to 1,267; LinkedIn followers increased by 14%, from 1,003 to
1,140; and Nextdoor members in the District’s service area increased 14% from 65,839 to
75,206. Additionally, its YouTube channel’s cumulative video views increased by 6%, from
190,324 to 201,048.
Communications staff participated in a water-use efficiency panel for elected officials and
their staff. Elected officials and their staff members learned about the new State Water
Resources Control Board’s water-use efficiency regulation, benefits, and potential pitfalls.
Speakers from ACWA and CMUA were also included in the program. Representatives from
the following offices attended: Senator Steve Padilla, Senator Toni Atkins, Assemblymember
Akilah Weber, Tasha Boerner, Senator Catherin Blakespear, and Assemblymember Chris
Ward.
151
Departmental Operating Budget
General Manager’s Office (Continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Staff promoted World Water Day, which celebrates water and inspires action to take on the
global water crisis.
Staff produced short-form videos for social media that highlighted various community
outreach efforts made by the District. In September, the District published a reel highlighting
its 2023 WaterSmart Landscape Contest winner, Lois Scott, for her submission of “Nana’s
Garden.” The video has received over 425 views, 1,522 impressions, and 39 engagements. In
early December, the District published a reel of its holiday-decorated Vactor truck riding in
the Chula Vista Starlight Parade. The video has received over 1,404 views, 1,878 impressions,
and 96 engagements. Additionally, the District joined various agencies on social media
during the United States Environmental Protection Agency’s Fix a Leak Week to amplify the
message of detecting and addressing common household water leaks. The District created
a short video with tips and received over 9,090 views, 9,260 impressions, and 47
engagements.
As part of a countywide effort by water agencies to encourage outdoor water-use efficiency
and recognize residents who have adopted low-water-use plants and practices in their
outdoor spaces, the District launched its 2024 WaterSmart Landscape Contest. Shannon
Nembach from Chula Vista was selected as the winner for her Italian-inspired water-saving
garden. Her commitment to outdoor water-use efficiency over the past two decades resulted
in a water consumption decrease of approximately 42% in the 11 years following her initial
years in the home.
The District launched its annual Student Poster Contest in early spring and received 59
elementary school submissions. Prizes were awarded to four sixth-grade students from
Thurgood Marshall Elementary School in Chula Vista. Three winners attended the
recognition ceremony during a District board meeting, where they shared the inspiration
behind their illustrations. There is potential for MWD to select artwork from Otay to feature in
its 2025 student art calendar. Staff will be notified of the winners later in 2024.
In collaboration with the San Diego County Water Authority and its member agencies, the
District launched a public outreach and education campaign called “Thanks for Planting Me!”
It featured animated plant personalities, such as Succulent Sam and Rose Marie, who
expressed appreciation for being adopted across San Diego County as the next-generation
landscape. The District promoted the campaign through its social media channels and
newsletter. It also helped distribute over 100 garden tool bags, which included cilantro and
poppy seed packets, gardening gloves, a sticker of one of the campaign’s plant characters,
and an informational card with online resources on WaterSmart landscaping.
152
Departmental Operating Budget
Administrative Services
Mission Statement
To provide support to the board of directors, general manager, and District staff by executing
objectives that meet and serve the needs of our customers through best practices, including a full
range of employer and employee services, administrative services, risk management, safety and
security, emergency preparedness and response, enterprise technology, and strategic planning.
Department Responsibilities
The administrative services department, led by the chief of administrative services, offers a range of
support services, including human resources, purchasing, facilities maintenance, safety and security,
geographic information systems, information technology, and strategic planning. Additionally, the
department collaborates with other sections and external agencies while providing complex
administrative support to District staff, the board of directors, and general manager.
Administrative Services Department – 23 Positions (1)
(1) See Position Count by Department on page 135 for the list of positions per department.
Chief,
Administrative Services
2211
Purchasing
and Facilities
2231
Human
Resources
2221
Information
Technology
2421
Geographic
Information Systems
2431
Safety and
Security
2241
153
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Administrative Chief 497,218$ 507,300$ 498,390$ 554,000$ 46,700$ 9.2%
Human Resources 993,147 1,107,800 1,043,302 1,226,000 118,200 10.7%
Purchasing and Facilities 1,830,941 1,895,600 1,814,181 2,000,800 105,200 5.5%
Safety and Security 450,902 506,200 511,588 600,100 93,900 18.5%
IT Operations 2,758,576 3,053,100 3,022,340 3,413,800 360,700 11.8%
Geographic Information System (GIS)1,096,041 1,173,900 1,156,945 1,306,100 132,200 11.3%
Total Expenses 7,626,825 8,243,900 8,046,746 9,100,800 856,900 10.4%
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Labor and Benefits 4,626,599 4,799,200 4,740,078 5,309,400 510,200 10.6%
Travel and Conferences 55,184 48,000 41,450 45,100 (2,900) (6.0%)
Memberships and Dues 5,173 5,200 3,791 10,300 5,100 98.1%
General Office Expense 124,063 119,200 93,889 115,100 (4,100) (3.4%)
IT Hardware, Software & Communication 1,416,784 1,672,300 1,639,723 1,943,300 271,000 16.2%
Misc Office & Field Equipment 35,003 44,000 39,644 45,000 1,000 2.3%
Services 455,332 599,500 607,137 635,100 35,600 5.9%
Training 178,891 221,300 175,338 244,700 23,400 10.6%
Materials & Maintenance 704,084 711,400 673,523 714,400 3,000 0.4%
Utilities 25,712 23,800 32,173 38,400 14,600 61.3%
Total Expenses 7,626,825$ 8,243,900$ 8,046,746$ 9,100,800$ 856,900$ 10.4%
Administrative Services
Budget to Budget
Variance
Budget to Budget
Variance
Department
Object
Budget vs. Actual, in thousands ($)
$6,500
$7,000
$7,500
$8,000
$8,500
$9,000
$9,500
2023 2024 2025
$7,849
$8,244
$9,101
$7,627
$8,047
Budget Actual
154
Departmental Operating Budget
Human Resources
Services We Provide
The human resources (HR) section, under the direction of the chief of administrative services,
performs the following functions: recruitment, selection, and retention of qualified employees;
development, implementation, and administration of policies, procedures, collective bargaining
contracts, and employee programs; maintenance of up-to-date classification plans and a competitive
compensation program; management of benefits for employees and retirees; administration of the
workers’ compensation program; supervision of employee performance, including training and
development; establishment of recognition and incentive programs; oversight of performance
evaluations and employee discipline; compliance with legal requirements; and implementation of
work/life balance initiatives.
Accomplishments – Fiscal Year 2023-2024
Conducted 15 recruitments resulting in 1,194 submitted applications. Filled 18 positions, which
constitutes 13.2% of the District’s workforce. The recruitment-to-hire average for the District
was 92 days, which is below the national average of 119 days for public agencies.
Managed 14 leaves of absence.
Managed the Return-to-Work Program in coordination with the safety & security specialist.
Successfully accommodated six employees through transitional duty assignments.
Continued to manage legislation and health orders related to COVID-19, which included
updating District policies and procedures and managing employee communication and
related absences.
Continued to manage the District’s Pilot Telecommunications Program.
Completed harassment, retaliation, and discrimination prevention training for all District staff.
Secured and implemented a new contract with benefits broker Keenan & Associates.
Secured and implemented a new contract with benefits vendor, Ameriflex, for Retiree billing
and COBRA Administration.
Secured and implemented a new contract with benefits vendor, Aetna, for EAP services.
Secured and implemented a new contract with benefits vendor, Delta Dental, for a new dental
plan outside of the Alliant benefits pool.
Updated the District’s Drug- and Alcohol-Free Workplace Policy. Researched multiple drug-
testing vendors and secured contracts with two vendors (RCDA & Akeso) to administer oral-
fluid drug testing for the District.
Worked with a consultant to obtain a salary survey of 16 competitor agencies. Worked with
department chiefs to review data.
Completed negotiations for a three-year successor Memorandum of Understanding (MOU)
that will be in effect from July 1, 2024 through June 30, 2027.
155
Departmental Operating Budget
Human Resources (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Converted HR-District records to cloud-based data storage.
Consistent with the advancement of the District’s development and training program,
continued to offer the Franklin Covey training program to District management and lead staff.
Consistent with the current Strategic Plan, supported the development of an innovation
committee to promote innovation to advance the District’s culture of collaboration and
proactively improve processes and identify efficiencies among departments.
Purchasing and Facilities
Services We Provide
The purchasing and facilities section, under the direction of the chief of administrative services,
performs the following functions: oversees the implementation of general purchasing and contracting
standards within the District; manages the procurement of supplies, equipment, and services;
maintains control over the District’s standard materials inventory; handles the disposal of surplus
materials, equipment, and supplies; and provides assistance in the acquisition and disposal of non-
infrastructure-related real estate; performs facility maintenance work; and administers and manages
outsourced facility maintenance service contracts.
Accomplishments – Fiscal Year 2023-2024
For the second year in a row, purchasing received the Excellence in Procurement® Award
from the National Procurement Institute. This prestigious recognition highlights the District's
dedication to innovation, professionalism, productivity, e-procurement, and leadership in
public procurement. The District is among an elite group of organizations and special districts
in the United States and Canada honored for its exceptional procurement practices, which
include best-value procurement, vendor outreach, and continuous improvement through
technology and organizational structure.
Utilized DroneDeploy technology for annual site documentation, providing detailed aerial
maps and 3D models of most District facilities, aiding in long-term site management and
maintenance planning, including early stages of erosion. Employed thermal imaging for leak
detection over challenging terrain, which aided in identifying potential leaks in inaccessible
areas.
To enhance safety and convenience during board committee meetings, facilities installed
floor boxes in the board room for power, network, and HDMI connections.
Recertified the District's fire sprinkler systems for five years after rigorous inspections and
testing of the systems at the administration building, the warehouse, and the operations
building. The testing and certification follow the State of California's mandate and the
California State Fire Marshal's requirement for a Title 19 NFPA-25 test every five years.
156
Departmental Operating Budget
Purchasing and Facilities (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Upgraded the Regulatory Site entrance gate with a next-generation rail-driven controller to
enhance safety and optimize increased traffic flow. The upgraded gate is faster, more reliable,
and better suited for water operations staffs’ daily access as well as Cal-Fire’s access to the
Fire Training Facility. The new system offers advanced motion control, precise obstacle
detection, and flexible integration with the District’s security software, providing robust security
and long-term reliability.
Sponsored and coordinated by District staff, the Chula Vista Fire Department, in collaboration
with the San Diego County Training Officers Association, successfully hosted a CA-219
Wildland Firefighting - Firing Operations course, which prepares senior firefighters to lead
strike teams in large wildland fire scenarios. The event featured two days of live fire exercises
on the District's 54-acre property in Chula Vista.
Safety and Security
Services We Provide
The safety and security section, under the direction of the chief of administrative services, performs
the following functions: interprets and enforces safety regulations and standards; actively participates
in developing and managing new or revised safety standards, policies, and plans; organizes,
coordinates, and implements occupational safety and health and security management programs;
and ensures strict adherence to Cal/OSHA regulations. Furthermore, safety and security coordinates
programs that promote a safe workplace, which includes assessing and mitigating hazards,
conducting safety orientations, managing the Injury and Illness Prevention Program (IIPP), and
ensuring emergency preparedness. The group also directs and coordinates accident investigations
related to occupational injuries, fleet incidents, and damage to or theft of District property. Lastly, they
assess training needs to address safety issues and oversee the District’s Department of
Transportation (DOT), Drug-Free Workplace, and Department of Motor Vehicle Pull-Notice programs.
Accomplishments – Fiscal Year 2023-2024
Continued and scheduled the Bionomics (Body Mechanics) safety training for all staff. As a
result, reduced the number of OSHA-Recordable sprains and strains by 30%.
Under the District’s Return-to-Work Program and in coordination with HR, reviewed and
approved five temporary assignments to accommodate injured employees. Three of the five
cases were work-related, which helped reduce the number of lost workdays reported to the
California Department of Industrial Relations and decrease workers’ compensation temporary
total disability benefits. The cost savings will improve our electronic modification (e-mod) rate,
which is a factor that ACWA JPIA uses to calculate the District's insurance premiums.
Continued Federal Bureau of Investigation/InfraGard membership with the San Diego
Chapter and was promoted to the chapter’s sector coordinator, providing critical security
infrastructure for all 16 sectors.
157
Departmental Operating Budget
Safety and Security (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Reconfigured the WebEOC monthly exercises to review each of the District’s Emergency
Action Plan/Specific Hazard Response Plans in preparation for an upcoming communications
tabletop exercise.
Facilitated the District’s Drug- and Alcohol-Free Workplace Policy & Procedure updates and
scheduled training for District staff.
Completed The Centre of Organization Effectiveness’s Leadership Academy and capstone
project.
Completed cross-training under finance/risk management and processed small claims under
the liability program. Implemented and conducted incident investigations to determine the
root causes and provided corrective actions to prevent future liability exposure.
Information Technology Operations
Services We Provide
The information technology (IT) operations section, under the direction of the chief of administrative
services, performs the following functions: provides comprehensive support for the District's
enterprise business computing and network environment; manages essential services to ensure
smooth and efficient operations, including day-to-day maintenance and troubleshooting of the
District’s enterprise network, data center, telecommunications system, and desktop and mobile
hardware/software; management and support of critical systems, including the Enterprise Resource
Planning (ERP), Work Order Management, Enterprise Document Management, office productivity,
and security systems; and implements and manages disaster recovery measures and cybersecurity
safeguards of essential data and enterprise systems.
Accomplishments – Fiscal Year 2023-2024
Initiated an upgrade of the existing ERP system, which aims to optimize daily functions and
achieve seamless integration with other enterprise productivity tools, demonstrating our
commitment to the District’s future. The new ERP system is expected to offer significant
advancements in financial management and human resources capital, including automation
of routine tasks, streamlined business processes, improved reporting proficiencies, strong
security features, and advanced analytics capabilities.
Migrated the District's backup and recovery hardware to a new colocation facility, which
involved relocating critical disaster recovery resources, redundancy switches, storage
devices, and other essential components. The relocation ensures continued high availability
and strengthens the District's recovery framework, providing enhanced resilience and
reliability.
158
Departmental Operating Budget
Information Technology Operations (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Conducted a thorough threat and vulnerability assessment to evaluate the District’s
cybersecurity framework, which included examining the District’s preventive measures,
network infrastructure security, and configuration practices. Also addressed emerging threat
categories, including fraudulent activities, endpoint exploits, and the increasing frequency of
brute-force password attacks, ensuring a proactive approach to strengthening cybersecurity
defenses.
Staff successfully launched the latest version of the organization’s strategic planning capture
reporting application. This advanced web-based tool aligns with the District’s strategies and
objectives, integrates performance indicators, and streamlines approval routing and reporting
capabilities. This upgrade enhances the tool's effectiveness in supporting strategic planning
and performance management across the District.
Completed a multiday cybersecurity incident recovery course facilitated by the National
Emergency Response and Recovery Training Center. This program, designed for government,
critical infrastructure, and private sector professionals, addressed pre- and post-incident
perspectives with a focus on integrating IT and emergency management principles.
Geographic Information Systems
Services We Provide
The geographic information system (GIS) section, under the direction of the chief of administrative
services, provides the following functions: technical and administrative support of the District’s
enterprise GIS and computer-aided design systems; data collection and data Quality
Assurance/Quality Control of the District’s facility data and land-based data; design and technical
support of field and web applications; , operating and maintaining the District’s GIS database systems;
and support of the District asset management program.
Accomplishments – Fiscal Year 2023-2024
Migrated the on-premise infraMap field mobile application to the infraMap Cloud service,
which involved shifting hardware, database versions, applications, and the GIS Geodatabase,
all crucial for multiple GIS applications such as Cityworks, POSM, InfoAsset Planner, and
InfoWater.
Developed a comprehensive system for the lead service line inventory, including a web
application, mobile applications, and an operational dashboard. As a result of the deployment
of field mobile and web-based applications in the industry for lead service line projects, a
dynamic reporting mechanism for collected field data is necessary. In response, the team
created a customized dashboard to meet the specific needs of the operations department.
159
Departmental Operating Budget
Geographic Information Systems (GIS) (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Facilitated an asset management (AM) assessment workshop in collaboration with Esri with
the objective of deepening staffs’ understanding of the existing GIS/AM implementation. The
workshop, which was instrumental in providing insights to support the AM assessment
document update, focused on assessing current AM processes, data sources, workflows,
maps, applications, and system interfaces.
Completed the Utility Network (UN) Readiness assessment with selected vendor, Axim, a
leading expert in GIS system migration. The AM report includes the Utility Network
Implementation Road Map, which offers a detailed plan for the District’s UN migration and the
Utility Network Data Assessment that provides essential guidelines and a sophisticated data
improvement list.
Collaborated with IT staff to complete the GIS database server migration, which involved
hardware and database changes and reconfiguring the GIS database and applications. To
minimize impact on daily operations, staff conducted maintenance and database tasks
outside of normal business hours.
To save field staff time and to streamline processes, staff enhanced the recently deployed
web-based infraMap, which was well received by field staff. In response to key requests from
District field teams, staff made significant progress in implementing several enhancements to
the application, which include adding recurring tasks, linking customer information to
infraMap, and improving the valve exercise data-entry interface for greater accuracy.
Conducted the Hazard Assessment Survey, which is mandated by the State Water Resources
Control Board through the Cross-Connection Control Policy Handbook. This involved
conducting field inspections, reviewing water quality data, and supporting infrastructure
improvements. To support these tasks, staff proactively designed and implemented a GIS data
collection and communication system, which provides essential tools and resources,
including mobile data collection apps, a web-based application for monitoring and editing
data, and robust reporting tools. Staff continues to work closely with Customer Service staff to
continuously fine-tune the system and ensure its effectiveness.
160
Departmental Operating Budget
Finance
Mission Statement
To provide timely, accurate, and clear information that optimizes service to the District’s staff and
ratepayers. Through continuous improvement, professional service, and effective fiscal policies the
finance department will ensure that financial resources are collected, recorded, protected, and
expended in a fiscally responsible manner.
Department Responsibilities
The finance department, under the general direction of the chief financial officer, provides the
following support services: controller and budgetary services, treasury and accounting services,
meter services, and customer service. The department ensures the District’s conformance with
modern finance, accounting theory and practices, and compliance with applicable state and federal
laws. In addition, it provides customer support, meter reading and maintenance, and water
conservation support to the communications section. Finance staff is also responsible for providing
complex administrative and technical support to the District, general manager, and board of
directors.
Finance Department – 33 positions (1)
(1) See Position Count by Department on page 136 for the list of positions per department.
Treasury and
Accounting
Services
2331
Customer
Service
2341
Controller and
Budgetary
Services
2321
Assistant Chief of Finance - 2321231
Chief Finance Officer - 2311
Meter
Services
2342
161
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Finance Chief 652,347$ 659,700$ 655,710$ 703,500$ 43,800$ 6.6%
Controller and Budgetary Svs 991,555 1,053,400 960,154 1,206,000 152,600 14.5%
Treasury and Accounting Svs 1,618,117 1,762,800 1,670,673 1,863,300 100,500 5.7%
Customer Service 2,040,325 2,228,100 2,224,421 2,462,700 234,600 10.5%
Meter Shop 920,892 962,800 1,008,099 1,280,100 317,300 33.0%
Total Expenses 6,223,236 6,666,800 6,519,057 7,515,600 848,800 12.7%
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Labor and Benefits 4,872,252 5,154,300 5,011,977 5,756,200 601,900 11.7%
Travel and Conferences 23,095 29,900 5,165 31,900 2,000 6.7%
Memberships and Dues 3,534 4,300 3,701 5,000 700 16.3%
General Office Expense 164,515 177,900 173,225 184,700 6,800 3.8%
Misc Office & Field Equipment 3,395 3,000 2,750 3,000 - -
Fees 680,848 770,400 728,464 793,900 23,500 3.1%
Services 166,442 199,800 166,874 296,500 96,700 48.4%
Training 516 900 420 1,200 300 33.3%
Materials & Maintenance 287,479 254,300 305,158 371,200 116,900 46.0%
Bad Debt Expense 21,160 72,000 121,323 72,000 - -
Total Expenses 6,223,236 6,666,800 6,519,057 7,515,600 848,800 12.7%
Less: Bad Debt Expense (21,160) (72,000) (121,323) (72,000) - -
Expenses, Net of Bad Debt $ 6,202,076 $ 6,594,800 $ 6,397,734 $ 7,443,600 $ 848,800 12.9%
Finance
Department
Object
Budget to Budget
Variance
Budget to Budget
Variance
Budget vs. Actual, in thousands ($)
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
2023 2024 2025
$6,562
$6,667
$7,516
$6,223 $6,519
Budget Actual
162
Departmental Operating Budget
Controller and Budgetary Services
Services We Provide
The controller and budgetary services section is responsible for the following: developing and
publishing the annual operating and capital budget; preparing the six-year financial plan; developing
water and sewer rates and charges as well as capacity fees; preparing monthly and annual reports;
monitoring budget variances; coordinating interactions with outside agencies; performing cost-of-
service and capacity-fee studies; preparing rate notices; managing biweekly payroll of 146 full-time
and temporary employees; processing benefits and deductions biweekly; filing federal and state
tax returns and W2s; and assisting in the general ledger accounting, audit, cost accounting, and
contract review.
Accomplishments – Fiscal Year 2023-2024
For the twentieth consecutive year, the Government Finance Officers Association (GFOA)
awarded the District with the Distinguished Budget Presentation Award for the Fiscal Year
2023-2024 Budget.
The California Society of Municipal Finance Officers (CSMFO) awarded the District for the
eighteenth consecutive year, the Operating Budget Excellence Award for the Fiscal Year
2023-2024 Budget.
The CSMFO awarded the District for the nineteenth consecutive year with the Capital
Budgeting Excellence Award for the Fiscal Year 2023-2024 Capital Improvement Program
Budget.
Treasury and Accounting Services
Services We Provide
The treasury and accounting services section coordinates and directs the activities of the general
ledger accounting and audit; oversees banking and cash, investments and treasury functions;
manages debt financing job costing, cost accounting, fixed assets, property and liability insurance,
and contract review; coordinates the accounts payable process, which pays approximately 700
invoices monthly; completes the District’s annual financial audit; publishes the Annual
Comprehensive Financial Report; conducts an annual review of the District’s Investment Policy, as
required by law, with approval of the board of directors; provides financial analysis and review of
staff projects and operational business proposals; assists in the preparation of the District’s annual
operating and capital budgets; and updates the rate model and the six-year financial plan.
Accomplishments – Fiscal Year 2023-2024
For the twentieth consecutive year, the GFOA awarded a Certification of Achievement for
Excellence in Financial Reporting to the District for its Annual Comprehensive Financial
Report for the fiscal year ended June 30, 2023.
Received an Honorable Mention Award from the State Water Resources Control Board
(SWRCB) for timely drought and conservation reporting.
163
Departmental Operating Budget
Treasury and Accounting Services (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Implemented a centralized District-wide grant tracker, providing transparency and facilitating
status updates between departments.
Completed four COVID-related FEMA claims, resulting in more than $121,000 in grant
funding.
Completed the 2023 State Water Resources Control Board’s water loss audit certification
program and submitted a certified water loss audit to the Department of Water Resources.
Customer Service
Services We Provide
The customer service section is responsible for the following: coordinating billing, receipting, and
collections for approximately 50,000 accounts per month; managing customer care for water and
sewer services; and assisting the communications section with water conservation. Customer
service also manages the various options of how customers receive their bill (paper or electronic)
and pay their bill (check, ACH, web, interactive voice response (telephone), and/or the convenience
of multiple locations for walk-in payments). Also, the District has an automated phone system and
web portal, which provide customers with access to their account information 24/7. If customers
desire more personal service, the customer-care team, which handles an average of 4,000 calls per
month, will assist them.
The meter services section is responsible for the following: installation and maintenance of all
meters; managing the District’s backflow/cross-connection prevention, which includes annual
testing of devices and water meters to ensure the continued safety of the potable water system;
responding to customer issues regarding meter accuracy; conducts site audits; and maintains
records as required by various regulatory agencies. Meter reading staff reads approximately 50,000
potable and recycled meters a month using Automatic Meter Reading (AMR) technology.
Accomplishments – Fiscal Year 2023-2024
Completed 271 meter installations and 83 construction meter installations.
Collaborated with the District’s meter manufacturer to transition 5,700 meters from AMR to
Advanced Metering Infrastructure (AMI).
Upgraded the District’s online bill-pay website, which now allows customers to customize
their notification preferences and includes enhanced reporting for customer service staff.
Replaced 14 large aging District backflow devices, which eliminated anticipated servicing
and maintenance cost for this fiscal year. The replacement project provides a more reliable
system operation and has standardized the device type, allowing for a reduction in the cost
of future repair.
164
Departmental Operating Budget
Customer Service (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Applied for the last round of California Water and Wastewater Arrearage Program funds on
behalf of Otay customers. Unpaid water and wastewater balances from July 1, 2021
through December 31, 2022 were eligible for funding. The District received approximately
$65,000 from the program.
Applied for a United States Bureau of Reclamation WaterSmart grant in the amount of
$500,000 for upcoming meter changeouts that will upgrade meters to AMI.
Participated in the State’s Low Income Household Water Assistance Program until the
program ended on March 31, 2024. From October 2022 until the end of the program,
customers received more than $230,000 in water and wastewater payment assistance.
Submitted comments related to the SWRCB’s final draft of the Cross Connection Control
Policy handbook. The handbook was approved in December 2023. Staff is now working on
the Cross Connection Control Plan for the District due in July 2025.
165
Departmental Operating Budget
Water Operations Department
Mission Statement
To provide operations and maintenance service in the most efficient, safe, and cost-effective manner
to internal and external customers, and to strive to continually improve the level of service.
Department Responsibilities
The water operations department, under the general direction of the chief of water operations,
provides the following support services: potable and recycled water system operations, construction
maintenance, sewer collection, and wastewater treatment. The department provides highly
responsible and complex technical and administrative support to the District, general manager, and
board of directors.
Water Operations Department – 57 Positions (1)
(1) See Position Count by Department on pages 136-137 for the list of positions per department.
Chief, Water Operations
3211
Utility Services
Utility Maintenance 3232
Fleet Maintenance 3233
Pump & Electrical 3236
SCADA 3227
Water Operations
Water System Operations 3221
Water System 3225
Laboratory 3243
Reclamation Plant 3244
166
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Water Operations Chief (1)493,720$ 701,400$ 484,767$ 786,100$ 84,700$ 12.1%
Water Systems(1)6,610,554 7,534,500 6,327,184 7,694,100 159,600 2.1%
Utility Maintenance(1)5,411,363 6,265,400 6,095,937 6,998,500 733,100 11.7%
Total Expenses 12,515,637 14,501,300 12,907,888 15,478,700 977,400 6.7%
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Labor and Benefits(1)8,120,372 9,286,300 8,545,771 10,351,900 1,065,600 11.5%
Travel and Conferences 48,842 63,100 50,690 68,800 5,700 9.0%
Memberships and Dues 1,682 2,500 2,020 2,200 (300) (12.0%)
General Office Expense 448 500 368 500 - -
IT Hardware, Software & Communication 6,683 17,700 6,701 9,200 (8,500) (48.0%)
Misc Office & Field Equipment 52,003 82,100 65,538 56,500 (25,600) (31.2%)
Fees 184,005 202,100 196,356 215,100 13,000 6.4%
Services 652,712 1,045,500 503,594 699,100 (346,400) (33.1%)
Training 15,634 42,300 7,510 36,600 (5,700) (13.5%)
Materials & Maintenance 2,288,388 2,795,200 2,661,028 2,883,800 88,600 3.2%
Sewer Charges 1,144,868 964,000 868,312 1,155,000 191,000 19.8%
Total Expenses 12,515,637$ 14,501,300$ 12,907,888$ 15,478,700$ 977,400$ 6.7%
(1)Excludes CIP labor & benefits.
Budget vs. Actual, in thousands ($)
Water Operations
Budget to Budget
Variance
Budget to Budget
Variance
Department
Object
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
2023 2024 2025
$12,973
$14,501 $15,479
$12,516
$12,908
Budget Actual
167
Departmental Operating Budget
Water System Operations
Services We Provide
The water systems operations section encompasses four sections, which are responsible for
operating and monitoring the potable and recycled water distribution systems as well as the Ralph
W. Chapman Water Recycling Facility (Treatment Plant). The four sections include: 1) water system
operations, which oversees the water operations; 2) water systems, which monitor and operate the
water distribution system to ensure it provides safe, reliable drinking water to the District’s customers;
3) the treatment plant, which maintains and operates the District’s sewer treatment plant to produce
high-quality recycled water to the District’s recycled water customers; and 4) the laboratory, which
ensures regulatory-required sampling, analyses, and reporting complies with the State Water
Resources Control Board (SWRCB) requirements for potable water, the Regional Water Quality
Control Board requirements for recycled water, and the reclamation plant treatment process.
Laboratory staff works closely with water system operators and disinfection staff to monitor and
optimize the water quality in the distribution system. They also perform bacteriological sampling and
analyses for utility maintenance and engineering staff to ensure proper disinfection was performed
after maintenance or new construction.
Accomplishments – Fiscal Year 2023-2024
Coordinated and executed shutdowns to support the valve replacement Capital
Improvement Program (CIP) project.
Managed the biannual cleaning and dive inspections for the District’s floating cover
reservoirs.
Coordinated the cleaning and inspection of seven potable reservoirs to keep pace with the
American Water Works Association’s best practices and recommendations.
Completed the field verification portion of the District’s Lead and Copper Rule private water
service line inventory.
Managed the fiscal year 2024 leak detection program.
Assisted with the 1100 Hydro Station hydro tank replacement CIP project, including setting
up and daily operation of the temporary variable frequency drive pumping trailer.
Supported the Vista Sierra main replacement CIP project.
Assisted with the design of the 870-2 Reservoir and Vista Diego Hydropneumatic Station
projects.
Assisted with developer project support, including planned shutdowns for various developer
project needs.
Coordinated Mexico emergency water deliveries.
Participated in the San Diego County Water Authority’s Internship Program.
Continued support on the Treatment Plant Ultraviolet Disinfection System project.
Supported the Cottonwood Sewer Lift Station Rehabilitation CIP project.
168
Departmental Operating Budget
Water System Operations (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Conducted a tour of the Treatment Plant for students enrolled in the Center for Water Studies
Program at Cuyamaca College.
Assisted with the progression of the District’s Asset Management Plan.
Completed the annual Consumer Confidence Report.
Prepared and assisted with the County of San Diego’s Certified Uniform Program Agency
Hazardous Material Division inspection, reviewing the facilities Hazardous Materials
Business Plan (HMBP), Spill Prevention Control and Countermeasure Plan (SPCC Plan),
California Accidental Release Prevention Program, Risk Management Plan (RMP), and
Process Safety Management Plan.
Renewed three-year certification for the special waste profile for the Ralph W. Chapman
Water Recycling Facility for screenings disposal to the Otay Landfill.
Completed the triennial Lead and Copper Rule analysis.
Completed the fifth Unregulated Containment Monitoring Rule analysis.
Participated in a third-party assessor audit for The NELAC Institute Environmental Laboratory
Accreditation Program Quality Manual.
Prepared and assisted with the U.S. Environmental Protection Agency Region 9, reviewing
documents for compliance with industrial facilities that are subject to risk Management Plans
under the Clean Air Act of 1990, as well as requirements of the Emergency Planning and
Community Right-to-Know Act of 1986 and the Comprehensive Environmental Response,
Compensation and Liability Act.
Utility Services Maintenance
Services We Provide
The utility maintenance and construction section includes four sections, which provide vital
maintenance functions to ensure continuity of the potable, recycled, and wastewater services to
customers while adhering to all applicable regulatory compliance requirements. The four sections
include: 1) utility maintenance, which maintains collection, potable distribution, and recycled
distribution systems, including regular inspection and cleaning of the wastewater collection system;
exercises valves; and installs and repairs main pipelines and service lines expediently while following
safety rules and regulations; 2) fleet maintenance, which implements active preventative
maintenance practices; and repairs District vehicles and equipment to ensure optimum
performance while establishing fuel-efficient operational practices and emissions compliance; 3)
pump and electrical, which performs preventative, predictive, and corrective maintenance on
pumps, motors, switchgear, and control valves; and assists with electrical maintenance and
installation throughout the District; and 4) SCADA, which performs installations, maintenance,
updates, and modifications to the SCADA control system and related communications equipment
for existing facilities and the CIP.
169
Departmental Operating Budget
Utility Services Maintenance (continued)
Accomplishments – Fiscal Year 2023-2024
Initiated and finalized repairs on large potable water main breaks that also involved
coordinating paving work with contractors. Locations included: Rocking Horse Drive,
Olympic Parkway, and Bob Pletcher Way in Chula Vista; Cactus Road in Otay Mesa; Via
Rancho San Diego and Hilton Head Road in El Cajon; and Sweetwater Springs Boulevard in
Spring Valley.
Supported CIP projects including: replacing isolation valves to assist engineering staff with
the implementation of the rehabilitation of the 1004-2 Reservoir; retrofitting the 1100 Hydro
Station to assist engineering staff with the replacement of the existing hydro tank; and
installing a sacrificial anode on steel main at Hunte Parkway (easement road to the 944-1R
Pump Station at Eastlake Parkway in Chula Vista and Willow Glen Road in El Cajon).
Supported 16 potable wet taps and one sewer tap for new developments throughout the
District’s service area.
Completed 19 valve replacements and replaced nearly 140 valves since the start of the
ongoing pilot valve replacement program in fiscal year 2021.
Exercised 1,003 critical valves, 3,358 valves, and seven recycled isolation valves.
Maintained 1,226 hydrants and flushed 1,093 segments of mains.
Completed more than 384,886 feet of routine sewer flushing and 95,152 feet of Closed-Circuit
Television sewer inspections.
Replaced/repaired 171 service laterals, 35 pro-active polyethylene lines, and seven water
mains.
Continued to work with the County of San Diego and City of Chula Vista’s paving contractors
to complete improvements throughout the District’s service area, such as adjusting to grade
manholes and valve caps.
In response to California Air Resources Board’s (CARB) proposed regulation of the transition
to Zero Emissions Vehicles (ZEV) and Near Zero Emissions Vehicles (NZEV) for public fleets
per the Governor’s Executive Order of Advance Clean Fleet Regulation, operations staff
worked with engineering to develop a charging infrastructure master plan for electric
vehicles including applying to the San Diego Air Pollution Control District’s (SDAPCD) grant
program for the acquisition of five L2 charging stations.
To adopt ZEV earlier than required, staff replaced two class 2b vehicles and entered them
into CARB’s TRUCS system, which was determined to be compliant with CARB’s guidelines.
Continued to update Standard Operating Procedures as they relate to preventative and
corrective maintenance for each of the staffing sections.
Conducted 31 emergency facility power site tests.
Conducted 25 SDAPCD inspections.
170
Departmental Operating Budget
Utility Services Maintenance (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Conducted one HMBP/SPCC inspection for the operations, warehouse, and administrative
facilities with no violations noted.
Completed pump vibration and pump efficiency testing on District pump stations to ensure
system reliability.
Completed replacement of the existing 90/30 Programable Logic Controller (PLC) with RX3i
PLCs at the Tijuana interconnection.
Completed the testing of 10 automatic transfer switches.
Competed the calibration of 20 flowmeters.
Completed the setup of new motors at the 980-2 and 980-1 Pump Stations.
Completed the upgrade of SCADA programs including iFix version 5.8 to version 2022 and
Win 911 from version 4.20.5 to version 21 R6 to ensure compatibility with iFix 2022. These
programs check the water distribution system remotely.
Completed the integration of the Eucalyptus pressure reducing station to the SCADA system
to provide remote access to operating conditions.
Completed a predictive pilot program for remote temperature and vibration readings on
pump motor #2 at the 803 Pump Station.
Completed replacement of compressors at the 803 and 1055 Hydro Stations.
171
Departmental Operating Budget
Engineering
Mission Statement
To provide engineering, construction, and environmental services for the District and for the
development community, quality control of future District assets, and to expedite the permitting
process through the use of our dedicated employees and innovative technology, with the goal of
attaining excellent customer satisfaction.
Departmental Responsibilities
The engineering department, under the general direction of the chief of engineering, provides the
following support services: planning, design, construction management, inspection project
management, surveying, and public services for District facilities. The department is also responsible
for strategic planning, the capital budget, water resources planning, support facility planning,
environmental services, quality control, construction, and developer-designed and constructed
facilities. In addition, the department coordinates assigned activities with other District departments
and outside agencies and provides highly responsible and complex administrative and technical
support to the District, the general manager, and the board of directors.
Engineering Department – 29 Positions (1)
(1) See Position Count by Department on pages 137-138 for the list of positions per department.
Chief, Engineering
3311
Water Resources, Planning,
and Design 3321
Environmental Services 3451
Public Services 3421
Field Services 3431
172
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Engineering Chief (1)597,277$ 653,600$ 585,818$ 696,900$ 43,300$ 6.6%
Engineering Services (1), (2)1,182,930 1,443,600 916,308 1,734,500 290,900 20.2%
Field and Public Services (1), (3)2,012,448 2,603,200 2,364,775 2,900,400 297,200 11.4%
Environmental Services (1)402,911 504,600 438,505 589,700 85,100 16.9%
Total Expenses 4,195,566 5,205,000 4,305,406 5,921,500 716,500 13.8%
FY 2023 FY 2024 FY 2024 FY 2025
Actual Budget Actual Budget $%
Labor and Benefits (1)3,295,958 4,042,300 3,405,290 4,470,700 428,400 10.6%
Travel and Conferences 11,525 19,500 13,915 14,600 (4,900) (25.1%)
Memberships and Dues 1,559 3,000 2,852 2,100 (900) (30.0%)
General Office Expense 675 500 560 500 - -
Misc Office & Field Equipment 22,148 45,100 28,734 33,900 (11,200) (24.8%)
Fees 95,789 97,700 121,418 115,000 17,300 17.7%
Services 756,842 975,200 727,022 1,273,700 298,500 30.6%
Training 11,070 21,700 5,584 11,000 (10,700) (49.3%)
Total Expenses 4,195,566$ 5,205,000$ 4,305,406$ 5,921,500$ 716,500$ 13.8%
(1) Excludes CIP labor and benefits.
(2) Engineering Services includes planning, design, and water resources services.
(3)Public Services includes public, field, construction and survey services.
Engineering
Budget to Budget
Variance
Budget to Budget
Variance
Department
Object
Budget vs. Actual, in thousands ($)
$-
$2,000
$4,000
$6,000
2023 2024 2025
$5,042 $5,205 $5,922
$4,196 $4,305
Budget Actual
173
Departmental Operating Budget
Water Resources, Planning, Design, and Environmental Services
Services We Provide
The water resources, planning, design, and environmental sections provide a variety of services
directly related to potable water, recycled water, and sewer services. The water resources section
identifies, negotiates, and develops additional potable and recycled water supplies. It also
coordinates with other agencies on regional issues and is responsible for obtaining grants, loans, and
cost-sharing opportunities. The planning section develops the preliminary design of a project to
facilitate the final design and ultimately the construction of the facility along with coordinating the
review of planning documents related to potential new developments. The design section prepares
the design of facilities, advertises projects for bid, and assists the operations department on special
design projects related to the maintenance of existing facilities, including the Ralph W. Chapman
Water Reclamation Facility. The environmental section coordinates and tracks projects through the
construction stage and for a period after construction if long-term mitigation is required.
Accomplishments – Fiscal Year 2023-2024
The engineering department, in collaboration with the Sweetwater Authority, advertised and
awarded professional services to Carollo Engineers, Inc. for the Recycled Water Intertie
Study to develop recycled water opportunities with research and analysis underway.
Applied for and was awarded the following grants:
o $300,000 from the State Water Resources Control Board for the Water Recycling
Funding Program.
o $244,940 from FEMA through their Hazard Mitigation Assistance Program for the
District’s Climate Adaptation and Resilience Plan.
o $78,594 from SANDAG’s TransNet Environmental Mitigation Program for the San
Miguel Habitat Management Area Perimeter Fencing Restoration Project.
Applied for $500,000 from USBR’s WEEG Program (Water and Energy Efficiency Grants) for
Phase II of the Advanced Metering Infrastructure.
Continued progress on CIP completion. However, spending slowed this year to
approximately 40% due to material availability and labor shortage challenges.
Completed design for the 870-1 and 870-2 reservoir projects.
Completed the designs and awarded construction contracts for the following projects:
o Rolling Hills Hydropneumatic Tank Replacement
o Bob Pletcher Pipeline Replacement
o Ralph W. Chapman Water Reclamation Facility Compressor Replacement
o Ralph W. Chapman Water Reclamation Facility Disinfection System Improvements
Project
174
Departmental Operating Budget
Water Resources, Planning, Design, and Environmental Services (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
Prepared a Request for Proposals and awarded consultant service contracts for As-Needed
Services including geotechnical engineering, environmental, and asset management.
Prepared reports and studies, which included the Cathodic Protection Facility Inspection
and Report, Water Facilities Master Plan and Programmatic Environmental Impact Report,
Asset Management Pipeline Prioritized Rehabilitation and Replacement Methodology
Assessment for District-wide potable water pipelines, and Asset Management Pump Station
Rehabilitation and Replacement Pilot project.
Managed District surplus properties, including the execution of a purchase and sales
agreement for the Salt Creek property.
Maintained outside agency relationships through assistance with training events for local
and regional fire agencies.
Public Services and Field Services
Services We Provide
The public services, survey, inspection, and construction sections assist the public by responding to
customer visits, phone calls, and inquiries regarding permits, plan-checking fees, filing procedures,
permit status, meter sales, meter costs, and lateral costs. Staff administers all plan-checking
submittals for potable and recycled water, sewer applications for approval, cellular-lease agreements,
fire service, backflow inspections, project deposits, and invoicing. Staff also provides inspections of
private developer-funded projects and the District’s CIP, easement, and encroachment enforcement,
and survey and utility Mark-Outs of District facilities and global positioning system plots. Once bid,
construction staff provides construction management for the projects.
Accomplishments – Fiscal Year 2023-2024
Sold 193 meters, which totaled $9.63 million, and equated to 679.5 equivalent dwelling units.
Completed 5,982 USA Mark-Out tickets with an accuracy rate of 100%.
Supported $42 million of incoming assets to the District from developer projects.
Completed and closed out nine developer recycled water projects.
Supported operations staff in the lead service line inventory data collection.
Amended leases to generate fiscal year 2024 revenue in excess of $1.37 million from the
District’s 28 cell-site leases.
Completed or implemented the construction of the following projects:
o Recycled Water Pipeline Cathodic Protection Project (R2146) – Replaced the existing
cathodic protection on the recycled water system in various locations throughout the
City of Chula Vista, including cathodic test stations, galvanic anodes, bond wires,
and associated work.
175
Departmental Operating Budget
Public Services and Field Services (continued)
Accomplishments – Fiscal Year 2023-2024 (continued)
o 1004-2 & 485-1 Reservoir Coating & Upgrades (P2567 & P2614) – Removed and
replaced the interior and exterior coatings on the 1004-2 & 485-1 potable water-
welded steel tanks and also implemented structural modifications.
o Paso de Luz/Telegraph Canyon and Vista Grande/Vista Sierra Water Line
Replacement (P2612 & P2616) – Constructed approximately 1,750 linear feet of 12-
inch water line in El Cajon and Chula Vista, connected to existing water lines and
services, removed and abandoned existing water lines, restored pavement and
surfaces, controlled traffic, cathodic protection, and other associated work and
appurtenances.
o Advanced Metering Infrastructure (AMI) Project (P2682) – Installed Master Meter
Allegro AMI equipment, including base stations, antennas, folding towers, equipment
cabinets, associated conduits, wiring, and associated work at various locations
throughout the District’s service area in preparation for converting meter readings
from drive-by AMR to AMI.
o Olympic Parkway Recycled Water Pipeline Replacement (R2159) – Awarded the
contract for the construction of approximately 5,730 linear feet of 16-inch recycled
water pipeline and associated appurtenances on Olympic Parkway in Chula Vista
and the removal and abandonment of the existing 20-inch recycled water line.
o Ralph W. Chapman Water Reclamation Facility Disinfection System Improvements
(R2117 & R2157) – Began construction and replacement of the existing chlorine gas
disinfection system with the Trojan ultraviolet disinfection system, replaced the
existing filter backwash supply pumps, and conducted associated work.
o Prepared Request for Proposals and awarded consultant service contracts for as-
needed construction management and inspection, as-needed coating inspection,
as-needed in-plant inspection, and as-needed utility locating.
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177
Capital Budget
The District provides water service to a population of over 240,000, which is expected to ultimately
increase to 271,531 by the year 2055. This growth, as well as the maintenance of existing assets,
requires a long-term capital planning process. The process is dynamic, due to evolving needs of the
community, water supply issues, and changing regulations. As such, capital planning is part of the
District’s overall strategic planning process. The capital planning process involves identifying current
and future needs and prioritizing them based on certain operating assumptions. The primary
objective of this planning effort is to support an orderly and efficient program of expansion, new water
supply, replacement, and betterment, while maintaining a stable long-range financial plan.
To accommodate growth requires that the District invest approximately $529 million in capital assets
through ultimate build-out. The Fiscal Year 2025 Capital Budget is $16.0 million and the six-year
Capital Improvement Program (CIP) totals $170.7 million. The CIP is consistent with the District's
Water Facilities Master Plan, Sewer System Master Plan, current capacity fees, and the District's
strategic financial objectives. This CIP Budget document contains the descriptions, justifications,
expenditures, and funding for all the identified projects for the next six years.
The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all capital facilities within the three business
segments (potable water, recycled water, and sewer) are allocated to four cost types and
corresponding fund categories: Expansion, Betterment, Replacement, and/or New Water Supply.
The allocation to these four cost types is defined in the District’s Capital Improvement Program (CIP)
and is determined by an engineering analysis that identifies which type of customer will benefit from
each facility, planned or existing. The costs of the capital improvements are borne by either existing
users or by the developing areas, or by a combination of the two, as applicable. Alternative funding
sources are not identified until they have been secured. Any secured alternative funding sources will
be noted in the project schedule. The following are general descriptions of the four fund categories:
Expansion
Facilities required to support new or future users are funded from capacity fees or user rates.
Betterment
Facilities required because of inadequate capacity or new requirements that benefit existing users
are funded from availability, betterment fees, or rates.
Replacement
Facilities required to renew or replace existing facilities that have deteriorated or have exceeded their
useful life are funded from user rates.
New Water Supply
Facilities required to support new sources of water are funded from new supply fees or user rates.
As of November 4, 2020, the collection of the new water supply fee was discontinued. The new
water supply fund will remain until the funds collected from the new water supply fees have been
fully depleted.
178
Capital Budget
Assumptions and Criteria
As a component of the annual budget development process, the Engineering staff update the CIP
budget using the following process:
CIP projects are selected based on the Water Facilities Master Plan (WFMP), the Urban
Water Management Plan (UWMP), Sub Area Master Plans (SAMP), Integrated Water
Resources Plan (IRP), Wastewater Management Plan (WWMP), the Cathodic Protection
Plan, the District’s Strategic Plan, and other focused or specific planning documents and
reports to manage growth, maintenance, and the life extension of assets.
The CIP goes through an iterative process to meet the criteria of growth, service levels,
supply targets, and system reliability.
CIP target expenditures for the next six (6) years are refined and used in the rate model.
The following general criteria are used to determine the reasonableness of a project before it is
considered for inclusion within the CIP budget:
Safety and existing facility conditions
Operating system conditions and energy improvements
Water and sewer system deficiencies
Regulatory and permitting requirements
Developer driven requirements
Economic outlook
Growth projections
Water supply diversification goals
Board and management directives
CIP Justification and Impact on Operating Budget
The justification for each project is determined by whether it is required due to growth (Expansion),
new water sources (New Supply), improvements or upgrades (Betterment), or to replace an existing
asset (Replacement). As these projects are completed and placed into service, there may be an
impact on the Operating Budget by increasing costs in the areas of maintenance, energy, or
chemicals as shown on the justification and impact pages in this section.
New CIP projects and projects with material changes are subject to a formal approval process,
whereby the projects are reviewed and approved by each department and a senior management
panel. At each level of review, projects may be dropped or returned for more information. Once a
project has been approved by the department and senior management panel, the project is
forwarded to the General Manager (GM) for approval. Once approved by the GM, projects are added
to the CIP budget.
The Engineering Department evaluates the District’s recent construction and bidding data and
adjusts costs for individual CIP projects as appropriate. Projects are reprioritized based on the
District’s planning documents and to control spending to stabilize water and sewer rates.
179
Capital Budget
Other factors that influence the construction climate are:
Shortage of skilled and unskilled labor
Regional competition for contracting resources
Materials cost escalation due to demand and material shortages
To mitigate the factors that influence the construction climate, Engineering staff utilize value
engineering, which involves reviewing new and existing projects during the design phase to reduce
costs and while maintaining the quality, value, and/or functionality of the capital project. Staff also
identifies projects that can be grouped together to attract bidders, utilizes pre-purchasing of
materials, and adds no-cost time extensions into specs as further mitigation strategies.
Capital Purchases and Facilities
All capital expenditures are in the CIP. This includes capital facilities and capital purchases. Capital
purchases are non-recurring expenditures for assets that cost more than $10,000 each and have an
estimated useful life of two years or more. The capital purchase projects include vehicles, office
equipment, furniture, and field equipment purchases. Capital facility projects are items that exceed
$10,000 or $20,000 for infrastructure related items (as defined under capital equipment on page 258
of the Glossary) and have a useful life of at least two years and the cost is based on current costs.
CIP Projects
180
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total
Beginning Balance 84,314$ 77,472$ 82,276$ 85,438$ 103,335$ 84,846$ 84,314$
Sources
Capacity Fees 10,005 7,052 7,254 7,626 11,901 8,654 52,492
Debt financing - 30,250 3,000 43,250 - 10,100 86,600
Interest 3,173 1,557 1,122 1,871 1,861 1,538 11,122
Availability (Betterment Portion)844 875 906 939 972 1,007 5,543
COPS 2010B Reimbursement 783 759 731 698 663 625 4,259
Transfer from (to) General Fund 5,830 8,505 39,209 17,127 17,986 20,289 108,946
Interfund Transfers 179 179 167 156 156 156 993
Total Sources 20,814 49,177 52,389 71,667 33,539 42,369 269,955
Uses
CIP Projects (1)16,004 32,720 36,189 41,008 37,261 27,132 190,314
Debt Service 8,819 8,806 10,162 9,857 11,833 12,537 62,014
Developer Services 2,833 2,847 2,876 2,905 2,934 2,963 17,358
Total Uses 27,656 44,373 49,227 53,770 52,028 42,632 269,686
Net Sources (Uses)(6,842) 4,804 3,162 17,897 (18,489) (263) 269
Ending Balance 77,472$ 82,276$ 85,438$ 103,335$ 84,846$ 84,583$ 84,583$
(1)The CIP projects incorporate an average annual inflationary rate of 4.3% from FY 2026 to FY 2030.
CIP Reserve Funds ($1,000)
The CIP Reserve Funds presentation,shown on the following pages,is designed to provide an understanding of
how the funding of CIPs is expected to financially influence the District over the next six years. The financial
impacts are based on CIPs and their funding sources, including fund transfers in accordance with the District’s
Reserve Policy, and planned debt issuances. This data is captured in the District’s Rate Model on an annual basis
in order to make these projections.
$0
$10
$20
$30
$40
$50
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
CIP Reserve Fund Balances ($1,000)
Betterment Replacement Expansion New Supply
181
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total
Source
Expansion 684$ 2,183$ 2,943$ 3,865$ 3,141$ 871$ 13,687$
Betterment 2,999 5,958 6,765 6,761 6,421 4,031 32,935
Replacement 12,321 23,320 23,672 25,656 21,985 17,079 124,033
Total 16,004$ 31,461$ 33,380$ 36,282$ 31,547$ 21,981$ 170,655$
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total
Fund
Potable 10,471$ 25,649$ 26,730$ 28,853$ 25,013$ 18,176$ 134,892$
Recycled 4,248 4,235 3,169 4,903 4,289 2,175 23,019
Sewer 1,285 1,577 3,481 2,526 2,245 1,630 12,744
Total 16,004$ 31,461$ 33,380$ 36,282$ 31,547$ 21,981$ 170,655$
CIP Funding Source
CIP by Fund
Six-Year CIP Projects Summary by Source ($1,000s)
Six-Year CIP Projects Summary by Fund ($1,000s)
$-
$10
$20
$30
$40
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Six-Year CIP Projects by Funding Source, in Thousands ($)
Expansion Betterment Replacement
$-
$10
$20
$30
$40
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Six-Year CIP Projects by Fund, in Thousands ($)
Potable Recycled Sewer
182
Expansion
CIP No.CIP Project Title FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total
P2058 (1)PL - 20-Inch, 1296 Zone, Proctor Valley Road from Melody Road to Highway 94 $ 64 $ 155 $ 248 $ 186 $ 101 $ 62 $ 815
P2171 (1)PL - 20-Inch, 1296 Zone, Proctor Valley Road from Pioneer Way to Melody Road 70 155 310 234 155 155 1,079
P2195 (2)PL - 24 - Inch, 640 Zone, Campo Road - Regulatory Site/Millar Ranch 16 16 31 62 62 62 248
P2196 (2)PL - 24 - Inch, 640 Zone, Millar Ranch Road to 832-1 Pump Station 16 16 31 62 62 62 248
P2228 (1)Res - 870-2 Reservoir 3.4 MG 310 1,550 1,240 674 496 155 4,425
P2451 (2)Otay Mesa Desalination Conveyance and Disinfection System 2 2 2 2 31 31 68
P2595 PL - 16-inch, 624 Zone, Village 3N - Heritage Road, Main St/Energy Way 101 100 100 35 - - 336
P2596 PL – 16-inch, 624 Zone, Village 3N – Main St, Heritage Rd/Wolf Canyon 1 1 2 396 500 - 900
P2598 PL-16-Inch, 624 Zone, Village 8W – Main St, La Media/Village 4 1 1 13 45 220 - 280
P2599 PL-16-Inch, 624 Zone, Village 8W- Otay Valley Rd, School/Village 8E 1 1 1 147 350 - 500
P2602 PL - 16-inch, 624 Zone, Otay Valley Road, SR 125 Bridge 1 1 2 126 150 - 280
P2603 PL - 16-inch, 711 Zone, Hunte Parkway, SR 125 Bridge 1 1 2 136 200 - 340
P2642 Rancho Jamul Pump Station Replacement 2 6 16 87 310 310 730
P2714 870 Reservoir Storage Bins 12 12 93 6 - - 124
R2028 RecPL – 8-in, 680 Zone, Heritage Road to Main Street 5 45 300 500 50 - 900
R2037 RecPL – 8-in, 680 Zone, Main Street/Otay Valley Road – Village 8W 1 1 68 500 50 - 620
R2038 RecPL – 8-in, 680 Zone, Village 3N – Main St, Heritage Rd/Wolf Canyon 1 1 58 300 110 - 470
R2047 RecPL – 12-in, 680 Zone, La Media Road - Birch/Main St 1 49 300 150 50 - 550
R2136 RecPL – 8-in, 680 Zone, Otay Valley Rd, SR 125 Bridge 1 1 2 46 90 - 140
R2137 RecPL - 8-in, 815 Zone, Hunte Parkway, SR 125 Bridge 1 1 1 57 110 - 170
S2069 Cottonwood Sewer Pump Station Renovation 35 35 90 80 10 - 250
S2071 (2)San Diego Metro Wastewater Capital Improvements 43 34 34 34 34 34 213
Total Expansion $ 684 $ 2,183 $ 2,943 $ 3,865 $ 3,141 $ 871 $ 13,687
Note: Numbers may not total accurately due to rounding.
Potable $ 596 $ 2,016 $ 2,090 $ 2,198 $ 2,637 $ 837 $ 10,374
Recycled 10 98 729 1,553 460 - 2,850
Sewer 78 69 124 114 44 34 463
Total Expansion $ 684 $ 2,183 $ 2,943 $ 3,865 $ 3,141 $ 871 $ 13,687
Betterment
CIP No.CIP Project Title FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total
P2040 (1)Res - 1655-1 Reservoir 0.5 MG 5$ 25$ 150$ 2,000$ 2,000$ 2,000$ 6,180$
P2228 (1)Res - 870-2 Reservoir 3.4 MG 690 3,450 2,760 1,501 1,104 345 9,850
P2451 (2)Otay Mesa Desalination Conveyance and Disinfection System 3 3 4 4 69 69 152
P2521 Large Meter Vault Upgrade Program 49 40 40 25 40 40 234
P2563 (1)Res - 870-1 Reservoir Improvements 7 7 1,190 1,011 700 56 2,971
P2578 (2)PS - 711-2 (PS 711-1 Replacement and Expansion) - 14,000 GPM 19 88 124 124 124 124 603
P2630 624-3 Reservoir Automation of Chemical Feed System - 15 25 160 444 15 659
P2642 Rancho Jamul Pump Station Replacement 4 14 34 193 690 690 1,625
P2652 (2)520 to 640 Pressure Zone Conversion 5 5 5 5 25 50 95
P2654 Heritage Road Interconnection Improvements 5 30 30 30 30 34 159
P2656 Regulatory Site Desilting Basin Improvements 5 5 5 5 5 118 143
P2658 (2)832-2 Pump Station Modifications 5 5 5 5 25 25 70
P2664 Otay Mesa Dual Piping Modification Program 25 25 25 100 100 35 310
P2674 System Pressure Reducing Program 10 10 10 10 10 34 84
P2682 AMI Project 200 100 100 100 100 100 700
P2683 Pump Station Safety, Monitoring, and Automation Improvements 100 100 100 100 20 40 460
P2684 Zero Emission Vehicles and Charging Infrastructure 75 165 262 225 207 - 934
P2698 Improve Fire Sprinkler Protection System at RWCWRF (P)5 5 55 10 - - 75
P2709 ADA Compliance for Administration and Operation Buildings 3 30 100 117 - - 250
P2710 Conversion of the 803-4 Reservoir Disinfection System to LAS 5 10 25 50 400 10 500
P2714 870 Reservoir Storage Bins 28 28 207 14 - - 277
P2715 Replacement and Update of District’s Utility Network Framework 33 33 83 - - - 149
R2117 RWCWRF Disinfection System Improvements 1,122 1,200 400 100 50 50 2,922
R2157 RWCWRF Backwash Supply Pumps Upgrade 50 50 2 - - - 102
R2168 Improve Fire Sprinkler Protection System at RWCWRF (R)5 5 55 10 - - 75
S2024 Campo Road Sewer Main Replacement 12 3 - - - - 15
S2043 (2)RWCWRF Sludge Handling System 1 1 1 1 50 50 104
S2069 Cottonwood Sewer Pump Station Renovation 315 315 810 720 90 - 2,250
S2071 (2)San Diego Metro Wastewater Capital Improvements 82 66 66 66 66 66 412
S2081 Improve Fire Sprinkler Protection System at RWCWRF (S)5 5 55 5 5 - 75
Total Betterment 2,999$ 5,958$ 6,765$ 6,761$ 6,421$ 4,031$ 32,935$
Note: Numbers may not total accurately due to rounding.
Potable 1,407$ 4,313$ 5,376$ 5,859$ 6,160$ 3,865$ 26,980$
Recycled 1,177 1,255 457 110 50 50 3,099
Sewer 415 390 932 792 211 116 2,856
Total Betterment 2,999$ 5,958$ 6,765$ 6,761$ 6,421$ 4,031$ 32,935$
Six-Year CIP Projects by Source and Fund ($1,000s)
(1) Project may be funded with water and sewer debt proceeds.
(2) Project expenditures go beyond FY 2030. See project detail sheet for more information.
183
Replacement
CIP No.CIP Project Title FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total
P2058 (1)PL - 20-Inch, 1296 Zone, Proctor Valley Road from Melody Road to Highway 94 141$ 345$ 552$ 414$ 224$ 138$ 1,814$
P2171 (1)PL - 20-Inch, 1296 Zone, Proctor Valley Road from Pioneer Way to Melody Road 155 345 690 521 345 345 2,401
P2195 (2)PL - 24 - Inch, 640 Zone, Campo Road - Regulatory Site/Millar Ranch 35 34 69 138 138 138 552
P2196 (2)PL - 24 - Inch, 640 Zone, Millar Ranch Road to 832-1 Pump Station 35 34 69 138 138 138 552
P2282 (2)Vehicle Capital Purchases 1,134 1,077 333 630 598 720 4,492
P2286 Field Equipment Capital Purchases 170 125 130 400 140 70 1,035
P2405 PL - 624/340 PRS, Paseo Ranchero and Otay Valley Road 25 475 200 150 50 35 935
P2460 I.D. 7 Trestle and Pipeline Demolition 50 225 300 50 9 - 634
P2516 PL - 12-Inch, 640 Zone, Jamacha Road - Darby/Osage 5 125 400 390 280 - 1,200
P2533 1200-1 Reservoir Interior & Exterior Coating 45 25 19 - - - 89
P2543 (2)850-1 Reservoir Interior/Exterior Coating 5 5 5 40 45 - 100
P2553 (1)Heritage Road Bridge Replacement and Utility Relocation 25 4,000 725 - - - 4,750
P2563 (1)Res - 870-1 Reservoir Improvements 3 3 510 433 300 24 1,273
P2567 1004-2 Reservoir Interior/Exterior Coating & Upgrades 12 10 10 - - - 32
P2571 Data Center Network Data Storage and Infrastructure Enhancements 25 25 - - - - 50
P2572 Enterprise Resource Planning (ERP) Replacement 130 250 230 135 - - 745
P2578 (2)PS - 711-2 (PS 711-1 Replacement and Expansion) - 14,000 GPM 41 197 276 276 276 276 1,342
P2584 (2)Res - 657-1 and 657-2 Reservoir Demolitions - - - - 25 35 60
P2593 458-1 Reservoir Interior/Exterior Coating & Upgrades 45 20 20 5 - - 90
P2594 Large Meter Replacement 60 60 60 50 40 20 290
P2608 PL - 8-inch, 850 Zone, Coronado Avenue, Chestnut/Apple 65 65 800 455 10 - 1,395
P2609 PL - 8-inch, 1004 Zone, Eucalyptus Street, Coronado/Date/La Mesa 25 100 500 300 20 - 945
P2611 (2)Quarry Road Bridge Replacement and Utility Relocation 1 1 1 1 125 25 154
P2612 (2)PL - 12-inch, 711 Zone, Paso de Luz/Telegraph Canyon Road 50 50 50 - - - 150
P2614 485-1 Reservoir Interior/Exterior Coating 50 50 50 - - - 150
P2615 (1)PL - 12-Inch Pipeline Replacement, 803 PZ, Vista Grande 260 250 480 500 1,000 - 2,490
P2616 (1), (2)PL - 12-Inch Pipeline Replacement, 978 Zone, Pence Drive/Vista Sierra Drive 5 5 150 400 500 340 1,400
P2617 Lobby Security Enhancements 20 - - - - - 20
P2623 Central Area to Otay Mesa Interconnection Pipelines Combination Air/Vacuum Valve
Replacements
5 15 140 140 70 10 380
P2631 1485-2 Reservoir Interior/Exterior Coating & Upgrades 750 400 188 90 10 10 1,448
P2638 Buildings and Grounds Refurbishments 220 50 50 50 50 45 465
P2639 (1)Vista Diego Hydropneumatic Pump Station Replacement 175 1,000 1,000 700 315 310 3,500
P2646 North District Area Cathodic Protection Improvements 20 400 350 400 - - 1,170
P2647 Central Area Cathodic Protection Improvements 30 600 600 550 - - 1,780
P2649 HVAC Equipment Purchase 39 46 42 - - - 127
P2655 (2)La Presa Pipeline Improvements 25 25 25 200 500 500 1,275
P2657 1485-1 Reservoir Interior/Exterior Coating & Upgrades 25 650 270 150 15 - 1,110
P2659 District Boardroom Improvements 35 25 25 25 - - 110
P2662 (1), (2)Potable Water Meter Change Out 1,000 3,800 3,700 4,500 3,200 3,500 19,700
P2663 (2)Potable Water Pressure Vessel Program 400 400 400 400 400 400 2,400
P2665 (2)PL - 12-inch Pipeline Replacement, 870 Zone, Cactus Road 5 25 25 25 25 25 130
P2666 (2)Low Head and High Head Pump Stations Demolition 5 5 5 5 100 100 220
P2670 Administration and Operations Roof Repairs and Replacement 50 50 50 200 - - 350
P2672 District Roof Repairs and Replacement Program 100 100 100 40 - - 340
P2673 803-4 Reservoir Interior/Exterior Coating 5 5 700 1,550 40 50 2,350
P2675 458-1 and 458-2 Reservoirs Site Pavement Refurbishment 150 200 70 15 - - 435
P2676 (2)980-2 PS Motors and Motor Control Center Replacements 100 450 450 500 500 420 2,420
P2677 PL - 16-Inch, 870 Zone, La Media Road and Airway Road Utility Relocations 100 50 - - - - 150
P2678 (2)Jamacha Boulevard Utility Relocation 75 50 50 50 - - 225
P2680 PL - 12-inch Pipeline Replacement, 1530 Zone, Vista Diego Road 150 150 35 - - - 335
P2681 (1)PL-12-Inch, 1655 Zone, Presilla Drive Pipeline Replacement 5 25 350 500 500 290 1,670
P2684 Zero Emission Vehicles and Charging Infrastructure 75 165 262 225 208 - 935
P2685 980/711 PRS Renovation - Proctor Valley Rd 10 70 100 400 270 - 850
P2686 870 PZ Seismic Vault Renovation 5 5 150 150 90 - 400
P2687 Steele Canyon Rd Bridge 803 PZ 20-inch WL Renovation 100 100 170 140 - - 510
P2688 (2)Standby Power Renovations - Potable Water 76 150 170 200 - 200 796
P2689 944-1-9 Pump Station Meter Vault Renovation 20 60 60 60 - -200
P2690 850-4 Reservoir Interior/Exterior Coating - - - 15 1,350 485 1,850
P2691 City of San Diego - Otay 2nd Pipeline Phase 4 Interconnections Relocation 225 150 300 250 50 - 975
P2692 1485-2 PS Yard Piping Modifications 1 1 50 147 400 - 599
P2693 (1)PL – 12 & 16-inch, 1296 Zone, Jefferson Rd., Lyons Valley Rd to Jamul Dr.120 260 600 1,050 1,000 900 3,930
P2694 Operations Replacement Communication Radios 75 50 20 10 - - 155
Six-Year CIP Projects by Source and Fund ($1,000s)
(1) Project may be funded with water and sewer debt proceeds.
(2) Project expenditures go beyond FY 2030. See project detail sheet for more information.
184
Replacement, Continued
CIP No.CIP Project Title FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total
P2695 Relocation of Data Center 25$ 25$ 185$ 15$ -$ -$ 250$
P2696 (2)1296-1 Reservoir Interior/Exterior Coating - - - - 15 1,000 1,015
P2697 (1), (2)Valve Replacement Program - Phase 2 625 500 750 1,000 1,800 1,000 5,675
P2699 Miscellaneous Replacements and Improve Fire Sprinkler Protection System in the
Warehouse
300 190 - - - - 490
P2700 (2)Pump Station Equipment Replacement Program 250 150 100 150 100 - 750
P2706 (1) PL-16-Inch Transmission Main Assessment & Repair, 980 Zone, Olympic Parkway 350 650 800 1,000 100 100 3,000
P2707 Pipeline Relocation for County Storm Drain Replacement Projects 5 25 25 250 195 - 500
P2709 ADA Compliance for Administration and Operation Buildings 3 30 100 118 - - 251
P2711 City of Tijuana Pipeline Connection Upgrades 50 250 - - - - 300
P2712 (2) PL-12-Inch Steel Pipeline Replacement, 850 Zone, Sweetwater Springs Blvd,
Southeast of Jamacha Blvd.
- - - 50 300 825 1,175
P2713 (1), (2) PL-14-Inch ACP Pipeline Replacement, 640 Zone, SR125 Crossing and Orville Street - - - 50 350 1,000 1,400
P2715 Replacement and Update of District’s Utility Network Framework 67 67 168 - - - 302
R2121 (1)Res - 944-1 Reservoir Cover/Liner Replacement 4 10 60 1,000 1,200 1,200 3,474
R2146 Recycled Pipeline Cathodic Protection Improvements 10 20 20 100 100 100 350
R2148 Large Meter Replacement - Recycled 15 15 15 15 20 15 95
R2152 (2)Recycled Water Meter Change-Out 70 90 130 85 75 90 540
R2153 (2)Recycled Water Pressure Vessel Program 1 1 35 50 350 350 787
R2156 (2)RecPL - 14-inch RWCWRF Effluent Force Main Improvements 5 50 150 150 150 150 655
R2157 RWCWRF Backwash Supply Pumps Upgrade 150 150 8 - - - 308
R2158 RWCWRF Stormwater Pond Improvements (R)5 25 50 90 5 - 175
R2159 (1) RecPL - 16-Inch, 680 Zone, Olympic Parkway Recycled Pipeline Replacement 2,500 1,800 750 50 - - 5,100
R2160 (2)Recycled Water Field Equipment Capital Purchases - - - 200 200 - 400
R2161 450-1R Reservoir Interior/Exterior Coating & Upgrades - - 15 1,000 1,435 50 2,500
R2162 (2)Vehicle Capital Purchases - Recycled - 36 - - 40 80 156
R2163 450-1 RW Res Disinfection Injection Vault Renovation 5 20 50 110 100 15 300
R2164 450-1 RW Res Stormwater Improvements 80 50 300 300 - - 730
R2165 Recycled HVAC Equipment Purchase 1 30 30 10 4 - 75
R2166 RWCWRF Effluent Pump Station Compressors 50 50 50 5 - - 155
R2167 RecPL - 14-Inch, 927 Zone, Force Main Road Improvements and Erosion Repairs 50 250 245 - - - 545
R2169 (2)Pump Station Equipment Replacement Program (R)75 75 75 75 100 75 475
R2172 RWCWRF - Tertiary Trough Replacement 40 210 - - - - 250
S2012 San Diego County Sanitation District Outfall and RSD Outfall Replacement 300 300 400 440 500 500 2,440
S2024 Campo Road Sewer Main Replacement 12 3 - - - - 15
S2049 Calavo Basin Sewer Rehabilitation - Phase 2 30 100 600 250 50 40 1,070
S2050 Rancho San Diego Basin Sewer Rehabilitation - Phase 2 41 80 100 300 500 70 1,091
S2054 (2)Calavo Basin Sewer Rehabilitation - Phase 3 10 10 10 50 50 50 180
S2060 (2)Steele Canyon Pump Station Replacement 40 50 100 300 500 500 1,490
S2061 (2)RWCWRF Aeration Controls Consolidation & Optimization Upgrades (S)10 20 100 - - - 130
S2066 (2)Rancho San Diego Basin Sewer Rehabilitation - Phase 3 5 5 5 5 50 50 120
S2072 RWCWRF Rotary Screen Replacement 60 100 200 100 85 50 595
S2074 RWCWRF Stormwater Pond Improvements (S)10 40 40 30 30 25 175
S2076 RWCWRF Grit Chamber Improvements 24 25 30 40 80 50 249
S2077 RWCWRF Blowers Renovation 120 120 40 - - - 280
S2078 (2)Vehicle Capital Purchases - Sewer - - 660 - - - 660
S2079 Steele Canyon Rd Bridge 6-inch Sewer FM Renovation 50 200 70 10 - - 330
S2080 (2)Standby Power Renovations - Sewer - 10 - - - - 10
S2082 (2)Sewer Manhole Rehabilitation Program 5 10 25 50 100 100 290
S2083 Sewer Lift Station Equipment Replacement Program 75 45 45 45 45 45 300
Total Replacement 12,321$ 23,320$ 23,672$ 25,656$ 21,985$ 17,079$ 124,033$
Note: Numbers may not total accurately due to rounding.
Potable 8,468$ 19,320$ 19,264$ 20,796$ 16,216$ 13,474$ 97,538$
Recycled 3,061 2,882 1,983 3,240 3,779 2,125 17,070
Sewer 792 1,118 2,425 1,620 1,990 1,480 9,425
Total Replacement 12,321$ 23,320$ 23,672$ 25,656$ 21,985$ 17,079$ 124,033$
Summary by Source
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total
Expansion 684$ 2,183$ 2,943$ 3,865$ 3,141$ 871$ 13,687$
Betterment 2,999 5,958 6,765 6,761 6,421 4,031 32,935
Replacement 12,321 23,320 23,672 25,656 21,985 17,079 124,033
Total CIP by Funding Source 16,004$ 31,461$ 33,380$ 36,282$ 31,547$ 21,981$ 170,655$
Summary by Fund
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total
Potable 10,471$ 25,649$ 26,730$ 28,853$ 25,013$ 18,176$ 134,892$
Recycled 4,248 4,235 3,169 4,903 4,289 2,175 23,019$
Sewer 1,285 1,577 3,481 2,526 2,245 1,630 12,744$
Total CIP by Fund 16,004$ 31,461$ 33,380$ 36,282$ 31,547$ 21,981$ 170,655$
Funding Source
Fund
Six-Year CIP Projects by Source and Fund ($1,000s)
(1)Project may be funded with water and sewer debt proceeds.
(2)Project expenditures go beyond FY 2030. See project detail sheet for more information.
185
CIP#Description Cost/Savings
Category (1)
Funding
Source (2)
FY
2025
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030 Total
EXPENDITURES
P2572 Enterprise Resource Planning (ERP) Replacement M R $ 175 $ 175 $ 175 $ 175 $ 175 $ 175 $ 1,050
P2682 AMI Project M B 47 47 47 47 47 47 279
P2228 Res - 870-2 Reservoir 3.4 MG M B/E 1 1 1 1 1 1 6
Total Operating Budget Impacts - Expenditures $ 223 $ 223 $ 223 $ 223 $ 223 $ 223 $ 1,335
SAVINGS
P2714 870 Reservoir Storage Bins T B/E 47 47 47 47 47 47 282
Total Operating Budget Impacts - Savings 47 47 47 47 47 47 282
Total Operating Budget Cost Impact $ 176 $ 176 $ 176 $ 176 $ 176 $ 176 $ 1,053
Cost or Savings Category (2)Operating
Impacts
FY
2025
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030 Total
Operating costs $ 223 $ 223 $ 223 $ 223 $ 223 $ 223 $ 1,335
Operating costs - - - - - - -
Operating costs - - - - - - -
Transportation (T) Operating savings (47) (47) (47) (47) (47) (47) (282)
Total Operating Budget Cost Impact (in thousands) $ 176 $ 176 $ 176 $ 176 $ 176 $ 176 $ 1,053
(1)Cost Category - Indicates maintenance cost (M), energy cost (E), or chemical cost (C), based on the project type and Engineer's estimates.
Savings Category - Indicates reduction in transportation costs (T) which includes lower fuel costs, reduced mileage, and decreased vehicle maintenance.
(2)Funding Source - Some projects have multiple funding sources as indicated by a slash (/):
E - Expansion B - Betterment R - Replacement N - New Supply
Note: See pages 183-185 for complete description of CIP projects.
CIP Justification and Impact on Operating Budget
The following schedule shows anticipated operating costs and savings associated with each project in the CIP. Below is a summary of each category of
new costs that will be impacted. No additional revenues are associated with the individual projects, as revenues are linked more directly to growth in
water sales and capacity fee revenues.
Maintenance (M)
Energy (E)
Chemical (C)
Projected Incremental Operating Impacts (in thousands)(1)
186
Quantity Potable Recycled Sewer Total
Standby power system
1 Emergency Stand-by Genset 76,000$ -$ -$ 76,000$
76,000 - - 76,000
Vehicles
1 Class 7 hydro excavator - FY 2024 carryforward 601,000 - - 601,000
1 Class 7 utility truck - FY 2024 carryforward 347,000 - - 347,000
1 E-Transit Van (with flatbed)70,000 - - 70,000
2 E-Transit Van 133,000 - - 133,000
2 1/2 Ton Pick Up Truck 110,000 - - 110,000
1,261,000 - - 1,261,000
Field Equipment
1 Backhoe 170,000 - - 170,000
170,000 - - 170,000
1,507,000$ -$ -$ 1,507,000$
Summary by Project Total
P2282 Vehicle Capital Purchases (Potable)1,261,000$
P2286 Field Equipment Capital Purchases (Potable)170,000
P2688 Standby Power Renovations (Potable)76,000
Total 1,507,000$
FY 2025 Capital Purchases
Capital purchases are non-recurring expenditure items for District-wide use that cost more than $10,000 each and have an estimated
useful life of two years or more. The capital purchase projects include vehicles, office equipment and furniture, field equipment and air
pollution control district engine replacements, and retrofits.
Description
187
Summary of Financial Policies
Introduction
This section commences with a brief synopsis of the District’s Reserve Policy, Investment Policy,
and Debt Policy followed by the detailed policy documents.
The Reserve Policy is a comprehensive policy which explains how the District is operated,
including the distinction of business segments to ensure the various users pay their fair share of
costs. It explains how fees are collected and what they are used for. It also explains the difference
between funds, as well as how transfers shall be made, and defines each reserve target funding
level. This policy was adopted by the Board in February 1993. The District periodically reviews the
policy to ensure it reflects current policies and financial practices. The Reserve Policy was updated
and adopted by the Board in May 2023.
The following chart depicts the detailed flow of funds that may be useful in understanding the
Reserve Policy.
Unrestricted and
Undesignated
(General Use) Funds
Restricted Funds
FUND CHART
Designated Funds
Designated
Expansion
Designated
New Supply
Designated
Replacement
Designated
Betterment
Potable
General Fund
Recycled
General Fund
Sewer
General Fund
Restricted
Expansion
Restricted
Betterment
Debt
Reserve
Restricted
New Supply
OPEB
Reserve
188
Summary of Financial Policies
The Investment Policy is a guideline for the prudent investment of cash. It outlines government
code as well as authority granted by the Board of Directors. The primary objectives, in order of
significance, are to invest safely, with adequate liquidity, and to achieve a return on investments. In
August 2007, the District received a Certification of Excellence Award from the Association of Public
Treasurers of the United States and Canada (APT US&C) for this policy. The Investment Policy was
updated and adopted by the Board in May 2021.
The Debt Policy establishes that debt financing will only be used for Capital Improvement Projects
(CIP), which have an extended useful life for ten years or longer, and that exceed the District’s
ability to be funded with current resources such as annual cash flow, fund balances, or reserves.
Additionally, the life of a project is expected to exceed the term of the financing. The District strives
to maintain the highest possible credit ratings for all categories of long-term debt that can be
achieved without compromising delivery of basic services and the achievement of district policy
objectives. In August 2007, the District received a Certification of Excellence award from the
Association of Public Treasurers of the United States and Canada (APT US&C) for this policy. The
Debt Policy was updated and adopted by the Board in March 2021.
189
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
1.0 The District
The Otay Water District is a California municipal water district,
authorized in 1956 by the State Legislature under the provisions
of the Municipal Water District Act of 1911. The District is a
"revenue neutral" public agency; meaning each end user pays their
fair share of the District's costs of water acquisition,
construction of infrastructure, and the operation and maintenance
of the public water facilities.
The District provides water service within its boundaries, and
provides sewer and recycled water service within certain portions
of the District. As such, the District operates three distinct
business segments:
Potable water
Recycled water
Sewer
Each of these business segments has an identifiable customer base.
In addition, the developer community, large and small, makes up a
significant class of customers for each business segment. As a
result, the District has four distinct customer service types:
Developers
Potable water users
Recycled water users
Sewer users
The District has established practices and developed computer
systems that have enabled the District to maintain a clear
separation between the service costs relating to each of its four
customer service types. Regardless of customer class, financial
principles regarding cost allocation and fund accounting are
fundamental to the District’s Reserve Policy. These principles
are derived from the statements of the Governmental Accounting
Standards Board (GASB), and from oversight and advisory bodies
such as the California State Auditor, the Little Hoover
Commission, and the Government Finance Officers Association
(GFOA). These principles have significant impacts on how the
finances of the District are organized and how financial processes
work within the organization.
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OTAY WATER DISTRICT
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Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
1.1 The District’s Use of Financial Resources
All the District’s expenditures fall into two broad categories:
operating costs and capital expenditures. The operating costs
include costs relating to the purchase and delivery of potable and
recycled water, and the transportation and treatment of sewage.
The capital expenditures support the construction of
infrastructure necessary to deliver services. The District uses
various funds to support the operating and capital efforts.
Operations and maintenance are financed only by rates and charges,
also called pay-as-you-go, while capital infrastructure is
financed using two financing methods: pay-as-you-go and debt
issuance (requiring annual debt service). The Capital Improvement
Program (CIP) and the two funding methods support the
construction, betterment, and replacement of infrastructure in all
three business areas: potable, recycled, and sewer.
The District establishes different funds to track revenues
allocated to different activities. Once established, each fund
receives financial resources up to the levels defined in this
policy. Every year, as a part of the annual budget process, the
District’s rate model is updated for each fund with the current
fund balances and the estimated revenues and expenditures for the
next six years. The expenditure requirements and financial
resources are then evaluated to ensure that the existing fund
balances and additional revenues are sufficient within the current
budget cycle and for the next five years to maintain target fund
levels. If a deficit is identified, then options for transfers,
shifting CIP projects, debt issuance(s), cost saving measures,
and/or rate increases are evaluated.
1.2 The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all capital
facilities within the three business segments are allocated to
four cost types and corresponding fund categories: New Water
Supply, Expansion, Replacement, and/or Betterment. The allocation
to these four cost types is defined in the District’s Capital
Improvement Program (CIP) and is determined by an engineering
analysis that identifies which type of customer will benefit from
each facility, planned or existing. The costs of the capital
improvements are borne by either existing users or by the
developing areas, or by a combination of the two, as applicable.
191
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
This Reserve Policy protects both the existing users and the
developing areas from incurring unwarranted costs. Developing
areas are not required to finance facilities that are replacement
or betterment and established areas are not required to replace
facilities before they are worn out because of new development.
However, to ensure a fair allocation of costs, each facility has
the potential to be classified into any or all of the four cost
types. In addition to these cost types, there are occasional CIP
projects that may be billable to a third party, if for example a
third party requires a District facility be relocated.
Paragraphs a through d, which follow, describe how the costs of
capital facilities are financed through various fees.
a.New Water Supply
The portion of a new supply project that benefits new users
is financed from the reserves in the New Water Supply Fund
category. These reserves were primarily derived from
proceeds of the new water supply fee. The New Water Supply
Fund is restricted, meaning the amounts credited to this fund
are accounted for separately and are used solely for the
planning, design, and construction of new water supply
expansion facilities. Debt financing may also be a temporary
financial resource to finance new water supply projects. The
District has a Debt Policy (Policy No. 45) that guides the
debt issuance process. Any debt proceeds used for this
purpose would be restricted in nature and tracked separately.
General use reserves may also be placed in the designated New
Water Supply Fund and used for water supply projects.
Effective December 1, 2020, new water supply fee collection
was discontinued. The New Water Supply Fund will continue to
be used to fund qualified projects and to pay the
proportionate share of debt service for new water supply
projects until the monies in the fund are fully depleted.
b.Expansion
The portion of a CIP project that benefits new users is
financed from the reserves in the Expansion Fund category.
These reserves are primarily derived from proceeds of the
“incremental” portion of the capacity fees collected within
developing areas. Capacity fees are accounted for
separately and used for the planning, design, and
construction of expansion facilities. Additionally,
expansion may be financed by the “buy-in” portion of the
capacity fee, which is restricted for CIP purposes, but not
192
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
specifically for expansion. Debt financing can be a
temporary financial resource for expansion projects. General
use reserves may also be placed in the designated Expansion
Fund and used for expansion projects.
c.Replacement
The portion of a CIP project that benefits existing users by
replacing an existing facility is financed from the reserves
in the Replacement Fund category. Replacement of facilities
may be financed with proceeds from the “buy-in” portion of
the capacity fees, general use reserves held in the
designated Replacement Fund, and/or debt proceeds. The
various funding sources available for replacement projects
are anticipated to provide the necessary flexibility to begin
projects while any necessary debt financing is being
obtained.
d.Betterment
Facilities that improve reliability, meet new regulations, or
create increased levels of service are considered betterment
facilities that benefit existing users. The reserves in the
Betterment Fund category are used to finance these projects
or portions of projects. Proceeds of the “buy-in” portion of
the capacity fees may also be used to finance betterment
projects. General use reserves may be placed in the
designated Betterment Fund and used for betterment projects.
1.21 Relocations
Occasionally, a third party requires relocation of a District
facility. If the District has a superior easement the third
party will pay the relocation cost, but only to the extent that
the District does not benefit from the relocation. When
relocation is required, a CIP project may be created which is
wholly or partially financed by a third party. On occasion, the
District will require that its own facilities be relocated.
Depending on the nature of the facilities, the financial resources
for these projects could be from new water supply, expansion,
replacement, betterment, and/or third-party financing. Each
project is individually negotiated with the third party based on
the facts and circumstances of the relocation. Occasionally, the
District will improve the facilities that are being relocated.
When determining how to allocate costs to various funds the
following guideline is suggested: if a project has more than five
years of useful life remaining, an incremental cost view should
193
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
be considered; if the project has less than five years of useful
life remaining, a pro-rata cost approach should be considered.
Also, the likelihood that the District will benefit from an
asset’s life extension should be evaluated prior to allocating
costs.
1.22 Oversizing
If deemed reasonable by the District, in connection with the
construction of backbone facilities, a developer may be required
to oversize new facilities for future development. The developer
is reimbursed for incremental oversizing costs as per Policy
No. 26. These reimbursements are not available for the
distribution system within a development which is an obligation
of the developer.
1.23 Exclusion of Developed Areas from Expansion Costs
Developed areas are assumed to have sufficient supply and capacity
to meet their current requirements as provided by the developers.
In addition, they are considered to have borne capital financial
costs that are at least proportionate to the benefits they have
received from capital facilities. Accordingly, no regional
capital financing costs are allocated to these areas so that they
will not incur any costs for newly developing areas, except for
capital projects that produce district-wide benefit or cost
savings.
1.24 Improvement Districts (IDs)
Improvement Districts (IDs) are established to facilitate the
financing of particular improvements by the specific
beneficiaries. The District has a number of IDs that were
established for General Obligation (GO) debt repayment. All GO
debt has been paid off and it is unlikely that the District will
issue additional GO debt. IDs continue to be used for other
purposes: 1) to distinguish sewer customers from water customers
on the county tax roll; or 2) to place parcels on the county tax
roll for the collection of availability fees.
Over the years, the District moved to a district-wide perspective
of financing improvements. This philosophy is evident by the
district-wide capacity and annexation fees. The District also
uses district-wide water rates. As time goes on, it is expected
that IDs will continue to outgrow their purpose and their use will
diminish.
194
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
1.3 The Purpose of the Policy
Public entities accumulate and maintain reserves to ensure both
financial stability and continuous availability of services.
Financial stability and the resulting improved credit quality
allow the public entity to weather times of uncertainty and the
impact of negative events, both major and minor. Reserves allow
for the ongoing maintenance of property and timely payment of
expenses, even when such expenses exceed money available from a
single fiscal period. Ultimately, the type and level of
reserves are driven by the type and magnitude of uncertainty
faced by the public entity.
A “reserve” has a number of functions, as follows:
Working capital is required to ensure timely payment of
obligations.
A buffer against volatility in revenues.
Liquidity is required to obtain other goods and services
(e.g., bank services).
Designated money to protect creditors.
Money set aside to replace assets at the end of their useful
lives.
Money set aside to repair or replace assets damaged or
destroyed at unanticipated times.
It is important to note that reserves, fund balance, and net
assets are not the same. Fund balance and net assets are
accounting terms and may not always be in the form of cash or
liquid investments. Fund balances and net assets may not always
be reserves unless a designation of all or a portion of fund
balance is made. In addition, the term fund balance was replaced
by net assets as codified by the Governmental Accounting Standards
Board (GASB).
In short, reserves are the liquid assets of the District,
accumulated and maintained for application to finance contingent
future activities, whether known or unanticipated, operating or
capital in nature. The District’s Reserve Policy governs the
management and use of these financial resources. Few policies
have a more significant impact on the financial health and
stability of the District. This policy explains several key
195
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
financial concepts used by the District and provides some
background information on the overall strategies and practices
utilized. The District has a fiduciary obligation to its
customers, to manage and direct the use of public funds for the
purpose of providing water and sewer services in an efficient and
financially sound manner.
1.4 Policy Guidelines
In 2000, the Little Hoover Commission reviewed the levels of
reserve funds for special districts in California and prepared a
report reflecting that special districts were accumulating
unreasonable levels of funds. As a proactive response, the
California Special Districts Association (CSDA) prepared Reserve
Guidelines for its members. The Reserve Guidelines were
significant in noting that reserve levels need to be in context of
the organization’s overall business model and capital improvement
plan.
There are a number of potential events which the District should
consider in the development of reserves:
Economic Uncertainty - performance of the regional economy
and the impact of that performance on demand for water.
Weather - the amount of rainfall and the impact of weather on
the availability and cost of water as well as the demand for
water.
Government Mandates - the impact of federal and state
regulations, particularly environmental regulations.
Tax Changes - limitations on the District’s taxing and
spending powers through the passage of a voter referendum,
the impound of District property taxes, the removal of the
District’s power to levy property taxes, further increases to
Educational Revenue Augmentation Fund (ERAF) contributions,
or changes in calculation methodology.
Operating Costs - increases in operating and maintenance
costs because of inflation, labor agreements, or other
modifications.
Force Majeure - unanticipated expenditures resulting from
natural disasters or intentional acts.
196
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Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
Emergency Maintenance - unanticipated expenditures resulting
from unexpected failure of assets (e.g., rupture in the
primary transmission system).
Unexpected Variation in Cash Flow - the incidence of
additional costs or decreased revenues that require short-
term borrowing in the absence of sufficient financial
resources.
The California State Auditor has, in its oversight role, offered a
number of quality recommendations for the development of reserve
policies as outlined in its report entitled, “California’s
Independent Water Districts: Reserve Amounts Are Not Always
Sufficiently Justified, and Some Expenses and Contract Decisions
Are Questionable,” dated June 2004, Report No. 2003-137. All of
these recommendations have been incorporated into this policy in
an effort to address key issues surrounding the management and use
of District reserves. The detailed objectives as identified by
the State Auditor are as follows:
Distinguish between restricted and unrestricted reserves.
Establish distinct purposes for all reserves.
Set target levels, including minimums and maximums, for the
accumulation of reserves.
Identify the events or conditions that prompt the use of
reserves.
Conform to plans to acquire or build capital assets.
Receive Board approval and that it is in writing.
Require periodic review of reserve balances and rationale for
maintaining them.
Yet, the State Auditor’s report acknowledges that the California
Constitution (Article XIII B, Section 5) is vague in its
provisions governing the accumulation and use of reserves.1
1 California State Auditor, Bureau of State Audits, “California’s Independent Water Districts: Reserve Amounts Are
Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004,
2003-137; p. 8.
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BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
Specifically, the Constitution states that “each entity of the
government can establish contingency, emergency, unemployment,
reserve, sinking fund…or similar funds as it shall deem reasonable
and proper.”2 Similarly, the State’s Water Code does not impose
any requirements as to specific or recommended reserve fund
levels. As a result, the public finance community has yet to
settle on any real objective standards for the level of reserve
funds appropriate for governmental enterprises. This lack of
consensus as to specific standards is indicative of the wide
variance of the financial and operations context for different
districts and different contingencies justifying reserves.
The Government Finance Officers Association (GFOA) in its
“Recommended Practice on Appropriate Level of Unreserved Fund
Balance in the General Fund” (2002) states that in
establishing a policy governing the level of unreserved fund
balance in the general fund, a government should consider a
variety of factors. These include:
The predictability of its revenues and the volatility of
its expenditures (i.e., higher levels of the unreserved
fund balances may be needed if significant revenue
sources are subject to unpredictable fluctuations or if
operating expenditures are highly volatile).
The availability of resources in other funds as well as
the potential drain upon general fund resources from
other funds (i.e., the availability of resources in
other funds may reduce the amount of the unreserved fund
balance needed in the general fund, just as deficits in
other funds may require that a higher level of
unreserved fund balance be maintained in the general
fund).
Liquidity (i.e., a disparity between when financial
resources actually become available to make payments and
the average maturity of related liabilities may require
that a higher level of resources be maintained).
Designations (i.e., governments may wish to maintain
higher levels of the unreserved fund balance to
compensate for any portion of unreserved fund balance
already designated for a specific purpose).
2 California Constitution, Article XIII B, Section 5.
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Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
In the preparation of this policy, each of the CSDA guidelines and
the GFOA recommendations have been considered. In addition, all
seven objectives provided by the State Auditor are specifically
addressed for each reserve. The District wholly supports the
State Auditor’s efforts to bring a high-level of quality to
reserve governance and establish a standard of performance.
The District recognizes that the customer pays for services
provided. Quality management requires that periodic valuations be
performed so that fees and charges can be set at appropriate
levels to recover the cost of service. The District’s Reserve
Policy has been drafted with consideration of the GFOA, CSDA, and
State Auditor’s general guidelines as provided above.
Additionally, the District has adopted the following principles in
the management of its financial resources:
Reserves are held and used only for the purpose for which
they are collected. This is done to maintain equity among
customers.
Each of the service types is tracked separately so that
expenditures and revenues can be monitored and evaluated for
each customer type. This provides the District with the
necessary information to appropriately charge for each of the
services.
Separation of operations and maintenance from capital
expenditures occurs within each of the service types. This
is done because the financing of these expenditures is often
on different timelines or use different reserves.
The District will hold its reserves at responsible and
prudent levels.This policy sets minimum, maximum, and
target levels for each of the various funds. This has been
done so that the District can maintain reserves to meet the
purpose for which the funds were established. The levels are
set by reference to line items in the District’s financial
statements and approved budgets. This allows reserve levels
to adjust to the District’s changing financial circumstances.
Debt financing of facilities provides intergenerational
equity and maintains rates at reasonable levels. This equity
is accomplished with long-term financing which spreads the
cost of facilities over the life of the facilities. The
burden to pay for facilities is then paid by those who use
199
OTAY WATER DISTRICT
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Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
them. The District could amass significant reserves by pre-
collecting financial resources in a Replacement Reserve Fund
allowing the District to cash finance all replacements.
However, this would require significant rate increases
burdening the current customers and creating reserve levels
difficult to defend to the ratepayers or other oversight
entities.
These concepts are fundamental to the way the District manages its
funds and have a direct impact on the way rates and charges are
set. The District performs annual budget evaluations and updates
its rate model on an annual basis to monitor and adjust the
various funds, expenditures, and revenue sources. The separation,
tracking, and projecting of the various funds, expenditures, and
revenue sources create the essential information necessary for the
equitable rate structure maintained by the District. The annual
review preserves the balance between services provided and the
fees charged. This review also ensures that reserves will be
available to continue to serve the District’s customers.
Financial Sources
2.0 Developers
a.Meter Installation Charges (General Use)
Meter fees are charges collected for new water service
connections. Fees vary depending upon meter size and type of
service. The costs associated with meter installations are
included in the Operating Expenses section of the budget.
Developers finance these charges.
b.Developer Deposits (General Use)
These deposits are for the engineering and operations
services provided to developers. They are tracked separately
for each developer and any excess amount is returned to the
developer.
c.Water Annexation Fees (General Use)
Annexation fees3 are collected as a condition of annexing
into the District’s potable or recycled water facilities.
Since the existing facilities have been built and maintained
by developers or customers within the District, the
annexation fee is calculated based on the present value of
all property taxes (1% property tax and availability fees)
3 Otay Water District Code of Ordinances, Section 9.
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paid by existing and prior customers. The annexation fee
reimburses existing customers for past contributions so that
all customers have contributed more equally to water
facilities. Proceeds of annexation fees are unrestricted and
may be used for any general fund purpose.
d.Sewer Annexation Fees (General Use)
A sewer annexation fee is collected when property is annexed
into an improvement district (ID). Since the existing
facilities have been built and maintained by developers or
customers within a sewer ID, the annexation fee is calculated
based on the present value of all availability fees paid by
existing and prior customers. The annexation fee reimburses
existing customers for past contributions so that all
customers have contributed more equally to sewer facilities.
Proceeds of the annexation fees are unrestricted and may be
used for any general fund purpose.
e.Water Capacity Fees (Restricted)
Water capacity fees4 are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers costs to repay
existing customers for the facilities that they have built,
and where the “incremental” portion of the capacity fee
covers the cost of future expansion facilities. The “buy-in”
portion of the capacity fee is restricted to pay for
planning, design, construction, and financing associated with
expansion, replacement, or betterment of facilities. The
“buy-in” portion may be shifted back and forth between
expansion, betterment, or replacement as the financing needs
change. The “incremental” portion of the capacity fee is
limited to planning, design, construction, and financing
exclusively for expansion facilities (excluding new water
supply expansion).
f.Sewer Capacity Fees (Restricted)
Sewer capacity fees are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers costs to repay
4 Otay Water District Code of Ordinances, Section 28
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existing customers for the facilities that they have built,
and where the “incremental” portion of the capacity fee
covers the cost of future expansion facilities. The “buy-in”
portion of the capacity fee is restricted to pay for
planning, design, construction, and financing associated
with expansion, replacement, or betterment of facilities.
The “buy-in” portion may be shifted back and forth between
expansion, betterment, or replacement as the financing needs
change. The “incremental” portion of the capacity fee is
limited to planning, design, construction, and financing
exclusively for expansion facilities. For parcels within a
sewer ID the calculation excludes the tax debt already paid
by these customers, therefore producing a lower fee than for
parcels outside of a sewer ID. The capacity fees are
restricted to pay for planning, design, construction, and
financing associated with the expansion, replacement, or
betterment of facilities.
Facility needs are based on projected land use planning.
Changes in anticipated future land use occur and can alter
projected facility requirements. Thus, both the anticipated
facilities’ needs and their projected costs change over time as
regulatory agencies make changes to land use. The District
periodically reviews the capacity fee calculation to
accommodate such variations. These fees are paid by developers.
The District’s construction of infrastructure occurs prior to the
addition of EDUs. This sequence serves two purposes: 1) it
ensures that the District can serve the pending construction as it
is completed; and 2) it is more efficient to oversize many
facilities at the outset rather than build for the current need
and then reconstruct when the future need is realized. As a
result of this strategy, the District has financed construction
with bond financing as the existing expansion reserves are
depleted.
The water capacity fee is calculated based on the combined
recycled and potable water systems’ needs. This methodology is
used because the two water systems work hand-in-hand. All
capacity fees can be used for either potable or recycled but must
be tracked to distinguish between the “buy-in” and “incremental”
portions as described above. So, while capacity fees are not
restricted separately by potable and recycled, they are tracked
separately.
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Meter
Installation
Charges
Developer
Deposits Annexation
Fees
Capacity
Fees
Unrestricted and
Undesignated
(General Use)
Funds
Restricted Funds
DEVELOPERS
Diagram 2.0: Flow of Funds - Developer Sources
2.1 Customers/Users
a.Uniform Rates and Charges (General Use)
Charges to users for water, sewer, and recycled water are
uniform throughout the District for similar customer types.
b.Monthly System Fees (General Use)
This is a fixed revenue source that is charged monthly.The
amount of the charge is based on the customer class and
meter size.
c.Energy Charges (General Use)
The energy pumping fee is a charge per unit of water for each
100 feet of lift, or fraction thereof, above the base
elevation of 450 feet. This charge is placed on the
monthly water bills of all water customers.
d.Penalties (General Use)
Penalties are added to the monthly water and sewer bills for
late charges, locks, etc.
e.Pass-through Fixed Charges (General Use)
A fixed monthly charge to the District’s customers intended
to collect sufficient funds to pass-through the increased
fixed costs from the County Water Authority (CWA) and the
Metropolitan Water District (MWD).
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Uniform Rates
and Charges
Monthly
System Fees
Energy
Charges
Special Rates
and Charges
Pass –Through
Fixed Charges Penalties
Special Rates
and Charges
Restricted Funds
Unrestricted and
Undesignated
(General Use) Funds
CUSTOMERS / USERS
f.Special Rates and Charges (General Use)
In addition to the uniform water and sewer charges, the
District has a special sewer rate for the Russell Square lift
station. The Russell Square fee is for construction,
installation, maintenance, or repair of the Russell Square
lift station. This fee is collected in accordance with the
Russell Square sewer charge. (See Code of Ordinances
Section 53.03B.)
g.Special Rates and Charges (Restricted)
In addition to the uniform water charges, the District has a
special rate charged to outside and interim users. Outside
and interim users are charged an additional fee for
temporary capacity. The fee is collected in accordance with
outside and interim service agreements. (See Code of
Ordinances Section 25.)
Diagram 2.1: Flow of Funds - Customer Sources
2.2 County-Collected Taxes and Fees
a.General Levy Property Tax Receipts (1% Property
Tax) (General Use)
In 1978, Proposition 13 limited the levy of ad valorem
property taxes on real property to one percent of the
assessed value of such property. Subsequent legislation,
AB 8, established that the receipts from the one percent levy
were to be distributed to taxing agencies proportionate to
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each agency’s general levy receipts prior to Proposition 13.
Taxes received are for general use. Spending limits for the
District are governed by the 1979 passage of California
Proposition 4, Limitations of Government Appropriations (GANN
limit). Proposition 4 places an appropriation limit on most
spending from tax proceeds.
b.Availability Charges (General Use/Restricted)
The District levies availability charges each year in
developed and undeveloped areas. Current legislation
provides that any amount up to $10 per parcel is general use
and any amount over $10 per parcel is restricted to being
expended in and for the improvement district (ID) within
which it is collected. Accordingly, the District may use
availability charges in excess of $10 toward costs of water
and sewer facilities which are either, expansion,
betterment, or replacement of facilities consistent with the
purpose of the ID in which they are collected. This portion
of the proceeds of availability charges is geographically
restricted and restricted by purpose. As costs are incurred
on these projects the respective IDs are charged, reducing
the reserves. To the extent that availability charges are
not used for the purpose for which they are collected, they
must be returned to the property owners that paid them. The
District has historically used these reserves for the
betterment of capital facilities thus, the restricted
reserves are accounted for in “sub-funds” of the Betterment
Fund (See 2.1 f.).
c.Improvement District General Obligation (GO) Bond
Assessments (Restricted)
The District has historically issued general obligation
(GO) debt and established an ID for the repayment of that
debt. When this financing method is used, the county tax
roll can be used to collect special taxes or assessments
within the ID to pay the debt obligation. The proceeds of
the debt are restricted for the purpose as defined in the
bond documents.
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General Levy
Property Tax
Receipts
Availability
Charges General Obligation
Bond Assessments
Unrestricted and
Undesignated
(General Use)
Funds
Restricted Funds
COUNTY COLLECTED TAXES AND FEES
Diagram 2.2: Flow of Funds – County Collection Sources
2.3 Miscellaneous Income
a.Miscellaneous Rents and Leases (General Use)
Revenues received from the rental and lease of District
property are general use revenues. Not only are these
periodic revenues, but there is also a one-time fee charged
with the setup of each new lease. The District incurs
expenses related to these rents and leases. The one-time
fees are calculated to recover the costs of setting up the
leases.
b.Sewer Billing Fees (General Use)
Sewer billing fees are general use revenues. The District
provides processing and billing services to the City of Chula
Vista and bill and collect from their customers for sewer
service. These fees are to recover the cost the District
incurs to provide this service.
c.Interest Income or Expense Allocation (General Use,
Designated, and Restricted)
Interest income (expense) will be allocated every month based
upon each fund's month-ending balance. In this way, each
fund receives credit for interest earned by that fund and
each fund with a negative balance is charged for the use of
the other fund’s reserves.
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Miscellaneous
Rents and Leases
Sewer Billing
Fees
Interest Income or
Expense Allocation
Restricted FundsDesignated Funds
Unrestricted and
Undesignated
(General Use) Funds
MISCELLANEOUS INCOME
Diagram 2.3: Flow of Funds – Miscellaneous Income Sources
2.4 Debt Issuance
a.Loans (General/Restricted Use)
As the District determines that additional financing is
required for a particular purpose, the option of borrowing is
considered. The determination to borrow is made as a part of
the annual rate model update and is evaluated in accordance
with the Debt Policy before it is recommended to the Board
for action. As an option to bond indebtedness, loans are
available to satisfy short-term financing needs. These loans
may or may not be contractually restricted for a particular
purpose.
b.General Obligation (GO) Bonds (Restricted)
As the District becomes more developed it becomes less likely
that general obligation debt will be used as it requires a
vote of the public to be approved. Bond proceeds are
restricted for the construction of those facilities
identified in the GO bond issuance. Occasionally, specific
portions of bond proceeds may be allocated for the repayment
of the principal and interest, also called debt service, on
these bonds. As the District determines that additional
financing is required for a particular purpose, the option of
debt issuance is considered. The determination to issue
debt is made as a part of the annual rate model update and
is evaluated in accordance with the Debt Policy before it is
recommended to the Board for action.
c.Revenue Bonds (Restricted)
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General revenues of the District are pledged as security for
Revenue Bonds (previously Certificates of Participation)
indebtedness. If the District determines that additional
financing is required for a particular purpose, the option of
debt issuance is considered. The determination to issue
debt is made as a part of the annual rate model update and
is evaluated in accordance with the Debt Policy before it is
recommended to the Board for action. This form of financing
has become the industry’s preferred form of financing as it
does not require a vote of the general public.
Diagram 2.4: Flow of Funds – Debt Issuance Sources
2.5 Inter-fund Transfers
Each year in the budgeting process, future fund balance
levels are projected for the next six years. Based on these
projections, transfers are recommended. Reserves may be
transferred between Unrestricted or Designated Funds and the
General Fund (see 4.0 “Funding Levels” and 4.1 “Fund
Transfers”). Reserves may not be transferred to or from any
of the Restricted Funds unless it is between two restricted
funds with a shared purpose.
Fund Types and Categories
Loans General
Obligation Bonds
Revenue
Bonds
Restricted Funds
Unrestricted and
Undesignated
(General Use) Funds
DEBT PROCEEDS
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3.0 General Funds
a.Purpose
The General Fund is neither restricted nor designated. The
District maintains one General Fund for each business
segment (water, sewer, and recycled). This fund holds the
working capital and emergency operating reserves. While
the General Fund has a short-term focus to finance the
District’s annual operations, it is supported by the six-
year rate model. This fund is primarily used to finance the
operations of the District; however, it can be used for any
District purpose.
This fund can be used to supplement the District’s rates and
charges and be a temporary source of revenue to balance the
Operating Budget. This fund can also be used to avoid
spikes in the rates or significant and abrupt increases. It
is an industry practice to have a fund that can be used to
stabilize rates. This would only occur if there was a
temporary need to use reserves to smooth out a rate spike or
to ramp up what would otherwise be a dramatic rate increase.
The General Fund also plays a role in the debt planning of
the District. This fund is viewed by the debt markets as a
commitment by the District to ensure financial stability of
the rates and charges of the District. The District is
anticipated to need a number of debt issuances over the years
and this fund will help the District not only to stabilize
rate fluctuations but also to access low cost financing for
future projects.
b.Sources
The potable and recycled general funds receive meter
installation charges, special rates and charges, uniform
rates and charges, monthly system fees, energy charges,
penalties, pass-through fixed charges, general levy property
tax receipts, water annexation fees, availability charges,
miscellaneous rents and leases, sewer billing fees, interest
income or expense allocation, and loans.
The sewer general fund receives sewer charges, penalties,
availability charges, sewer annexation fees, and interest
income or expense allocation.
c.Funding Levels
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I.Minimum Level – The minimum reserve level for
each business segment of the General Fund is
three months of operating budget expenses
(evaluated separately for each segment).
II.Maximum Level – The maximum reserve level for the
General Fund is nine months of operating budget
expenses. In the event that this fund exceeds the
seven-month level, the excess will be evaluated or
transferred to one or more of the designated funds.
III.Target Level – The target level of reserves is
three months of operating budget expenses. In the
event that the fund drops below the target level,
rate increases or fund transfers would be
considered.
3.1 New Water Supply Fund Category
a.Purpose
The New Water Supply Fund category is to finance the
expansion portion of new water supply projects and is
therefore to be paid by developers. When considering the
reserve level of the New Water Supply category; the New Water
Supply Fund, the New Water Supply Debt Fund, and the
Designated New Water Supply Fund all work in concert and must
be considered jointly.
b.Sources
The New Water Supply Fund received reserves only from the new
water supply fee. Other funds within the new water supply
category of funds received debt proceeds and general use
reserves through a designation to this category. Effective
December 1, 2020, the new water supply fee collection was
discontinued. The New Water Supply Fund will continue to be
used to fund qualified projects and to pay the proportionate
share of debt service of new water supply projects until the
monies in the fund are fully depleted.
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Date
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Unrestricted and
Undesignated Funding
Designated
New Water
Supply Fund
Designated Funds
Expansion
New Water
Supply Fund
New
Water
Supply
Debt Fund
New Water
Supply Fund
General Fund – Rates and Charges
Debt Fund
Diagram 3.1: New Water Supply Fund
3.2 Expansion Fund Category
a.Purpose
The Expansion Fund category is to finance the expansion
portion of capital projects and therefore is to be paid for
by developers. When considering the reserve levels of the
expansion category, the following funds work in concert and
must be considered jointly: Expansion Fund, Expansion Debt
Fund, Capital Improvement Fund, and the Designated Expansion
Fund. Potable and recycled reserves are considered jointly
while sewer is evaluated separately.
b.Sources
The Expansion Fund is financed by the “incremental” portion
of the capacity fee and restricted special rates and
charges. The other funds in this category may also be
financed by debt proceeds, the “buy-in” portion of the
capacity fee, and the general fund through a designation of
reserves.
c.Funding Levels
Restricted Funds
Restricted Funds
Restricted Funds
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I.Minimum Level – As the District matures, the
CIP will move to purely replacement and
betterment projects. As the District moves
through this life cycle the need for expansion
reserves will decrease and may be reduced to
zero.
II.Maximum Level – The maximum reserve level for the
expansion category of funds is limited to five
years of unfinanced expansion facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing needs must be reduced by the projected
expansion revenues, bond financing, and any
restricted or general fund revenues allocated to
this fund category. If the combined expansion
reserves exceed target levels, the District should
consider reducing capacity fees, reallocating
restricted or designated funds to meet other
purposes, or shifting the timing of expansion
projects.
III.Target Level – The target level is six months of
expansion expenditures. It is important that the
expansion reserves remain at a minimum of six
months of expansion expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting expansion
reserves. If the combined expansion reserves
drop below six months of expenditures this would
trigger a transfer of general use reserves, a
bond sale, an adjustment to the timing of
expansion projects, or a reallocation of
restricted reserves. Bond proceeds would be
placed in the Restricted Bond Fund, transfers of
general use reserves would be placed in the
Designated Expansion Fund, and transfers of
restricted reserves would be placed in the
Expansion Capital Improvement Fund.
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Diagram 3.2: Expansion Fund Category
(1) For Water Capacity Fees 31.2% goes into the Expansion Fund and 68.8% goes into the
Capital Improvement Fund. For Sewer Capacity Fees 100% goes into the Capital
Improvement Fund.
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Date
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3.3 Replacement Fund Category
a.Purpose
The Replacement Fund category is to finance replacement
projects. When considering the reserve levels of the
replacement category of funds, the following funds work
in concert and must be considered jointly: Debt Fund,
Capital Improvement Fund, and the Designated
Replacement Fund. The purpose of these reserves is
to pay for the replacement of capital infrastructure
and capital purchases.These reserves are not to be used
for the replacement of non-capital items.
With the District’s development of its financial systems
and the greater need and ability to separate and track
reserves, the replacement reserves have been separated
into three funds: water, recycled, and sewer.
Projects undertaken solely for the purpose of replacing
major capital equipment or facilities, i.e., where the
cost exceeds $10,000 for capital purchases or $20,000
for infrastructure items, generally these are not
considered normal maintenance. When the cost is below
$10,000, the costs are financed annually as operational
maintenance. As charges are incurred on replacement
projects the reserves are deducted from the respective
Replacement Funds monthly.
b.Sources
The various funds in this category are financed by debt
proceeds, the “buy-in” portion of the capacity fee, and
general fund designations.
c.Funding Levels
I.Minimum Level – The minimum reserve level of this
category of funds is 3% of the historical value of
existing assets as identified in the District’s
current financial statements. Potable, recycled,
and sewer replacement are evaluated separately.
II.Maximum Level – The maximum reserve level of this
category of funds is 6% of existing assets. If the
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combined replacement reserves exceed target levels,
the District should consider transferring the “buy-
in” portion of the capacity fee to meet other
purposes. Another consideration would be to shift
the timing of replacement projects.
III.Target Level – The target reserve level of this
category of funds is 4% of existing assets. In the
event that the reserves fall below the recommended
target level, the District should consider
transferring the “buy-in” portion of the capacity
fee. The District should also consider shifting
the timing of replacement projects or issuing debt
to support the planned level of facility
replacement. The District will act based on the
annual six-year rate model to ensure that at the
end of that planning horizon the reserves exceed
the minimum level and are approaching the target
level.
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Diagram 3.3: Replacement Fund Category
(1)For Water Capacity Fees 68.8% goes into the Capital Improvement Fund.
For Sewer Capacity Fees 100% goes into the Capital Improvement Fund.
3.4 Betterment Fund Category
a.Purpose
The Betterment Fund category is to finance the
betterment portion of capital projects with a portion
going to maintenance of the potable, recycled, and sewer
systems. The District maintains separate Betterment
Fund categories, one for each improvement district. An
improvement district is a legally defined geographic
area usually established for the purpose of bond
financing of facilities. The betterment reserves within
Unrestricted and
Undesignated Funding
Sources
Designated
Replacement
Fund
Designated Funds
Replacement
Capital
Improvement
Fund
Restricted Funds
Replacement
Debt FundRestricted Funds
Restricted Funds
Replacement
Fund
Category
Debt
Proceeds
Capacity
Fees (1)Funding Source
General Fund – Rates and Charges
Debt FundCapital
Improvement Fund
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these funds are restricted by law for use within the
improvement district in which the fees were collected
(Water Code 71631.6). However, the legal restriction of
this reserve depends upon the particular revenue source.
(See Section 2.2 b. for a review of the availability
fees).
When considering the reserve levels of the betterment
category of funds, the following funds work in concert
and must be considered jointly: Betterment Fund, Debt
Fund, Capital Improvement Fund, and Designated
Betterment Fund.
b.Sources
The Betterment Fund category receives restricted
revenues through improvement districts from the
availability fees (the first $10 is unrestricted,
while amounts over $10 are restricted) collected
through the county tax roll. Betterment may also be
financed by debt proceeds, the “buy-in” portion of the
capacity fee, as well as the general fund through a
designation of reserves.
c.Funding Levels
I.Minimum Level – As the District matures, the CIP
will move to purely replacement projects. As the
District moves through this lifecycle the need for
betterment reserves will decrease and may be
reduced to zero.
II.Maximum Level – The maximum reserve level for the
betterment category of funds is limited to five
years of unfinanced betterment facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing need must be reduced by the projected
betterment revenues, bond financing, and general
fund designations. If this maximum is exceeded,
then the District should evaluate reductions in the
special water rates and availability fees,
transferring designated reserves to meet other
purposes, or shifting the timing of betterment
projects.
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Revised
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III.Target Level – The target is six months of
betterment expenditures. It is important that the
betterment reserves remain at a minimum of six
months of betterment expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting betterment
reserves. If the combined betterment reserves drop
below six months of expenditures this would trigger
a transfer of general use reserves, a bond sale, or
an adjustment to the timing of betterment projects.
Bond proceeds would be placed in the Betterment
Bond Fund while transfers would be placed in the
Designated Betterment Fund.
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Betterment
Fund
Diagram 3.4: Betterment Fund Category
(1)The portion of charges over $10 per parcel is restricted.
(2)For Water Capacity Fees 68.8% goes into the Capital Improvement Fund. For Sewer
Capacity Fees 100% goes into the Capital Improvement Fund.
Betterment
Capital
Improvement
Fund
Availability
Charges(1)
Capacity
Fees(2)
Debt
Proceeds
Betterment
Fund
Category
Betterment
Debt Fund
Designated
Betterment
Fund
General Fund - Rates and Charges
Betterment
Fund
Capital
Improvement
Fund
Bond/Debt
Fund
Funding Source
Restricted Funds
Restricted Funds
Restricted Funds
Unrestricted and
Undesignated Funding
Sources
Restricted Funds
Designated Funds
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Diagram 3.5: Fund Targets
Fund or Fund
Category
Actions to Consider if
below Target Target Maximum
New Supply Fund
Category
Bond financing, or
transfer to designated
or CIF
Total of all funds in fund
category = six months
of new supply capital
expenditures
Nexus of cost to fee
Expansion Fund
Category
Capacity fee increase,
bond financing, or
transfer to designated
or CIFs
Total of all funds in fund
category = six months
of expansion capital
expenditures
Five years unfunded
needs
Replacement Fund
Category
Bond financing, or
transfer to designated
or CIFs
Total of all funds in fund
category = 4% of
infrastructure
6% of infrastructure
Betterment Fund
Category
Bond financing, or
transfer to designated
or CIFs
Total of all funds in fund
category = six months
of betterment capital
expenditures
Five years unfunded
needs
Rate Stabilization Fund Fund transfers from
legally available funds
The financial impact of
two consecutive years of
low winter water usage
The financial impact of
three consecutive years
of low winter water
usage
General Fund Rate increase or fund
transfers
Three months of
operating budget
expenses
Nine months of
operating budget
expenses
Additional Restricted Funds
4.0 Capital Improvement Fund
a.Purpose
The Capital Improvement Fund’s (CIF) sole purpose is to
track the “buy-in” portion of the capacity fee and to ensure
these fees are expended solely for the purpose for which they
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were collected. In this case it is to pay for facilities
that were in existence at the time this fee was established.
These fees may be used for expansion, replacement, or
betterment projects or any debt related to these categories.
The water capacity fees may also be used for either the
potable or the recycled systems. As capacity fees are
collected, the “buy-in” portion of the fee is allocated as
needed to one of three CIFs, one in each of the Expansion,
Replacement, and Betterment Fund categories. These reserves
are used to pay debt or offset any negative balance within
these three categories of funds. For sewer, these fees fund
the Expansion, Replacement, or Betterment Fund categories.
These fees may not be used to finance the New Water Supply
category, as there were no new water supply facilities in
existence at the time the new methodology for capacity fees
was established.
b.Sources
The “buy-in” portion of the capacity fee collected after
June 30, 2010 for water or after September 30, 2014 for
sewer.
c.Funding Levels
There are no minimums, maximums, or target levels for these
reserves on an individual basis. The allocation of this
fee to the various CIFs is dependent on the overall reserve
levels within each fund category.
4.1 Debt Reserve Fund
a.Purpose
The Debt Reserve Fund is established to hold the proceeds
from the various debt issuances. There are two types of
debt, General Obligation bonds and Revenue bonds. The
proceeds are transferred to the New Water Supply, Expansion,
Replacement, or Betterment Debt Funds as they are expended
for various facilities within those fund categories. As
repayment of the debt occurs, the balances within these
individual funds are reduced so that the financial impact of
issuing debt is tracked within the category for which the
debt was issued.
b.Sources
Debt proceeds.
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c.Uses
There are no minimums, maximums, or target levels for this
fund on an individual basis. This fund is available on an as
needed basis to fund CIP projects for new water supply,
expansion, replacement, betterment, or maintain levels
defined within the District’s debt agreements. From a
funding level perspective, these reserves are evaluated in
the context of all the various funds within each fund
category.
4.2 Rate Stabilization Fund
a.Purpose
The Rate Stabilization Fund is established for the purpose of
minimizing rate increases in response to one-time events and
therefore stabilizing the rates and charges imposed by the
District to meet covenanted debt service coverage levels.
The Rate Stabilization Fund is not intended to be used to
offset regular rate increases needed to meet inflationary
cost increases in operations.
b.Sources
The District may budget for Rate Stabilization Fund deposits
from the Sewer Fund, amounts in excess of the annual debt
service coming due and payable in the fiscal year, after
payment of operating expenses. The allowable amount that may
be deposited shall not be transferred prior to payment of the
annual debt service obligation.
c. Uses
There is no minimum level for this fund. The maximum level
shall be equal to the financial impact of three (3)
consecutive years of low winter water usage. The target
level for this fund shall be equal to two (2) consecutive
years of low winter water usage. For the purposes of
calculating debt service, amounts transferred from the Rate
Stabilization Fund to the Sewer Fund will constitute Gross
Revenue in the fiscal year the transfer occurs. All interest
Or other earnings on deposits in the Rate Stabilization Fund
will be withdrawn at least annually and will be accounted for
as operating revenue in the Sewer Fund.
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Fund Transfers
5.0 Funding Levels
As described in the preceding sections, the District maintains
reserves for its operating and capital activities. These reserves
can be of three types: 1) undesignated or general use reserves, 2)
designated, and 3) restricted for a specific purpose. The
restricted reserves can be restricted geographically and/or by
purpose. The District maintains various funds to track the
various designations and restrictions. The source of the money
for each fund was discussed along with the purpose, source of
funds, and levels. Key characteristics of these funds are the
target levels, minimums, and maximums. The funding levels must
be viewed in the context of the economic environment, political
environment, and in light of the District’s rate model. The
District’s six-year rate model not only shows the current balance
but also shows the trend of the fund balances. Often the trend
of the fund is a greater indicator of financial stability than is
the current balance.
The rate model is updated each year with the budget process and
evaluates each fund over the next six years. The rate model will
take into account the general economic environment, looking at
the development rate, supply rate increases, the possibility of
raising rates, capital infrastructure spending, and strategic
plan initiatives. The fund balances may at times be over or
under the target amount. This is not only acceptable but
expected. The rate model provides an empirical estimate of the
conformance between the projected District’s financial activities
and the guidelines of this policy.
5.1 Fund Transfers
Reserves within the District’s various designated funds come from
interfund transfers of unrestricted general use reserves. It is
important to note that the District has the ability to use
general use reserves for any business purpose. General use
reserves may be transferred to and from any unrestricted fund for
any business need. Designated reserves are general use reserves
which have been set aside for a specific purpose by Board action.
These reserves can only be used for the purpose they were
designated, or with Board action they may be used for any other
business purpose. While general use reserves may be used for any
restricted purpose, they may not be transferred to Restricted
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Funds due to the sensitivity of the tracking of restricted
reserves. If reserves are needed for a restricted purpose, they
are transferred to a Designated Fund within the fund category
with that particular purpose. Reserves restricted to a fund
category may only be used within that category and may not be
transferred to another category. For example, the “incremental”
portion of the capacity fee are restricted reserves for a
specific purpose and may not be transferred to another category
as no other category has the same purpose. However, the “buy-in”
portion of the capacity fees are restricted for purposes that are
shared by more than one category of funds and may therefore be
transferred to a restricted fund within another fund category as
long as it shares the same purpose.
In many situations reserve transfers are expected as some fund
categories will exceed their maximums or drop below their
minimums. Only fund categories that are below the stated target
are eligible to receive transferred reserves. Fund categories
that exceed their maximums are first to be considered for
transfers out, followed by funds that exceed their targets.Funds
that exceed their minimums are also available for reserve
transfers out, but only when other options are not available.
The rationale for prioritizing reserve transfers is based on the
immediacy of the need and the availability of reserves from other
funding sources. For example, the General Fund is first to
receive reserves when it drops below its target or minimum levels.
This is because of the immediate and ongoing nature of the
expenditures that are served by this fund. The operation of the
District is the first and foremost objective of the District. On
the other end of the spectrum, the Replacement Fund has a long-
term perspective and will be used to partially finance replacement
assets for many years to come. Debt financing is available to
respond to this long-term, foreseeable, and planned cash flow.
This fund is less likely to have immediate needs and has other
financing options.
When making the determination of when transfers are necessary, all
funds within a fund category work as a group. The combined
balance of the restricted and designated funds are looked at when
determining whether the fund category requires additional funding
from the Restricted Capital Improvement Fund, Restricted Debt
Fund, or the General Fund. Because the Capital Improvement Fund
may finance expansion, replacement, or betterment, reserves may
be transferred between these fund categories, but only back and
forth within its own type of restricted fund.
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As an example, if during the rate model update process it was
determined that the Expansion Funds (designated and restricted)
would drop and stay below the minimum during the six-year
planning horizon, this would trigger a bond issuance, a transfer
of general use reserves, and/or a transfer of restricted reserves.
If in the cash planning process, it was anticipated that the
General Fund would remain above target during the planning
horizon and that the trend did not present a problematic
underfunded status, then General Fund reserves would be
considered available for transfer prior to issuing debt. Also,
if during this period the Betterment Fund category was
anticipated to exceed its maximum, then reserves from either the
Designated Betterment Fund, or the Capital Improvement Fund would
be transferred to the corresponding Expansion Fund prior to a
bond issuance. All funds are evaluated to determine which has
the greatest need or availability of reserves before any reserve
transfer recommendation is presented to the Board.
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1.0 POLICY
It is the policy of the Otay Water District to invest public funds in
a manner which will provide maximum security with the best interest
return, while meeting the daily cash flow demands of the entity and
conforming to all state statues governing the investment of public
funds.
2.0 SCOPE
This investment policy applies to all financial assets of the Otay
Water District. The District pools all cash for investment purposes.
These funds are accounted for in the District’s audited Comprehensive
Annual Financial Report (CAFR) and include:
2.1) General Fund
2.2)Capital Project Funds
2.2.1) Designated Expansion Fund
2.2.2) Restricted Expansion Fund
2.2.3) Designated Betterment Fund
2.2.4) Restricted Betterment Fund
2.2.5) Designated Replacement Fund
2.2.6) Restricted New Water Supply Fund
2.3) Other Post Employment Fund (OPEB)
2.4) Debt Reserve Fund
Exceptions to the pooling of funds do exist for tax-exempt debt
proceeds, debt reserves and deferred compensation funds. Funds
received from the sale of general obligation bonds, certificates of
participation or other tax-exempt financing vehicles are segregated
from pooled investments and the investment of such funds are guided by
the legal documents that govern the terms of such debt issuances.
3.0 PRUDENCE
Investments should be made with judgment and care, under current
prevailing circumstances, which persons of prudence, discretion and
intelligence, exercise in the management of their own affairs, not for
speculation, but for investment, considering the probable safety of
their capital as well as the probable income to be derived.
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The standard of prudence to be used by investment officials shall be
the “Prudent Person” and/or "Prudent Investor" standard (California
Government Code 53600.3) and shall be applied in the context of
managing an overall portfolio. Investment officers acting in
accordance with written procedures and the investment policy and
exercising due diligence shall be relieved of personal responsibility
for an individual security's credit risk or market price changes,
provided deviations from expectations are reported in a timely fashion
and appropriate action is taken to control adverse developments.
4.0 OBJECTIVE
As specified in the California Government Code 53600.5, when
investing, reinvesting, purchasing, acquiring, exchanging, selling and
managing public funds, the primary objectives, in priority order, of
the investment activities shall be:
4.1) Safety: Safety of principal is the foremost objective of
the investment program. Investments of the Otay Water
District shall be undertaken in a manner that seeks to
ensure the preservation of capital in the overall portfolio.
To attain this objective, the District will diversify its
investments by investing funds among a variety of securities
offering independent returns and financial institutions.
4.2) Liquidity: The Otay Water District’s investment portfolio
will remain sufficiently liquid to enable the District to
meet all operating requirements which might be reasonably
anticipated.
4.3) Return on Investment: The Otay Water District’s investment
portfolio shall be designed with the objective of attaining
a benchmark rate of return throughout budgetary and economic
cycles, commensurate with the District’s investment risk
constraints and the cash flow characteristics of the
portfolio.
5.0 DELEGATION OF AUTHORITY
Authority to manage the Otay Water District’s investment program is
derived from the California Government Code, Sections 53600 through
53692. Management responsibility for the investment program is hereby
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delegated to the Chief Financial Officer (CFO), who shall be
responsible for all transactions undertaken and shall establish a
system of controls to regulate the activities of subordinate officials
and their procedures in the absence of the CFO.
The CFO shall establish written investment policy procedures for the
operation of the investment program consistent with this policy. Such
procedures shall include explicit delegation of authority to persons
responsible for investment transactions. No person may engage in an
investment transaction except as provided under the terms of this
policy and the procedures established by the CFO.
6.0 ETHICS AND CONFLICTS OF INTEREST
Officers and employees involved in the investment process shall
refrain from personal business activity that could conflict with the
proper execution and management of the investment program, or that
could impair their ability to make impartial investment decisions.
Employees and investment officials shall disclose to the General
Manager any material financial interests in financial institutions
with which they conduct business. They shall further disclose any
personal financial/investment positions that could be related to the
performance of the investment portfolio. Employees and officers shall
refrain from undertaking personal investment transactions with the
same individual with whom business is conducted on behalf of the
District.
7.0 AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The Chief Financial Officer shall maintain a list of District selected
financial institutions and security broker/dealers authorized and
approved to provide investment services in the State of California.
Investment services include the buying or selling of permissible
investments such as treasuries, government agencies, etc. for delivery
to the custodian bank. These may include “primary” dealers or regional
dealers that qualify under Securities & Exchange Commission Rule 15C3-
1 (Uniform Net Capital Rule). No public deposit shall be made except
in a qualified public depository as established by state laws. All
financial institutions and broker/dealers who desire to become
qualified bidders for investment transactions must supply the District
with the following, as appropriate:
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Audited Financial Statements.
Proof of Financial Industry Regulatory Authority (FINRA)
certification.
Proof of state registration.
Completed broker/dealer questionnaire.
Certification of having read the District’s Investment
Policy.
Evidence of adequate insurance coverage.
An annual review of the financial condition and registrations of
qualified bidders will be conducted by the CFO. A current audited
financial statement is required to be on file for each financial
institution and broker/dealer through which the District invests.
8.0 AUTHORIZED AND SUITABLE INVESTMENTS
From the governing body perspective, special care must be taken to
ensure that the list of instruments includes only those allowed by law
and those that local investment managers are trained and competent to
handle. The District is governed by the California Government Code,
Sections 53600 through 53692, to invest in the following types of
securities, as further limited herein:
8.01) United States Treasury Bills, Bonds, Notes or those
instruments for which the full faith and credit of the United
States are pledged for payment of principal and interest. There
is no percentage limitation of the portfolio which can be
invested in this category, although a five-year maturity
limitation is applicable.
8.02) Local Agency Investment Fund (LAIF), which is a State
of California managed investment pool, may be used up to the
maximum permitted by State Law (currently $75 million). The
District may also invest bond proceeds in LAIF with the same but
independent maximum limitation.
8.03) Bonds, debentures, notes and other evidence of
indebtedness issued by any of the following government agency
issuers:
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Federal Home Loan Bank (FHLB)
Federal Home Loan Mortgage Corporation (FHLMC or "Freddie
Mac")
Federal National Mortgage Association (FNMA or "Fannie Mae")
Government National Mortgage Association (GNMA or “Ginnie
Mae”)
Federal Farm Credit Bank (FFCB)
Federal Agricultural Mortgage Corporation (FAMCA or “Farmer
Mac”)
There is no percentage limitation of the portfolio which can be
invested in this category, although a five-year maturity from the
settlement date limitation is applicable. Government agencies
whose implied guarantee has been reduced or eliminated shall
require an “A” rating or higher by a nationally recognized
statistical rating organization.
8.04) Interest-bearing demand deposit accounts must be made
only in Federal Deposit Insurance Corporation (FDIC) insured
accounts. For deposits in excess of the insured maximum of
$250,000, approved collateral shall be required in accordance
with California Government Code, Section 53652. Certificates of
Deposit (CD) will be made only to the FDIC-insured limit of
$250,000. Investments in CD’s are limited to 15 percent of the
District’s portfolio.
8.05) Commercial paper, which is short-term, unsecured
promissory notes of corporate and public entities. Purchases of
eligible commercial paper may not exceed 2 percent of the
outstanding paper of an issuing corporation, and maximum
investment maturity will be restricted to 270 days. Investment is
further limited as described in California Government Code,
Section 53601(h). Purchases of commercial paper may not exceed 10
percent of the District’s portfolio.
8.06) Medium-term notes defined as all corporate debt
securities with a maximum remaining maturity of five years from
the settlement date or less, and that meet the further
requirements of California Government Code, Section 53601(k).
Investments in medium-term notes are limited to 10 percent of the
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District’s portfolio and no more than 2 percent of the
outstanding medium-term notes of any single issuer.
8.07) Money market mutual funds that invest only in Treasury
securities and repurchase agreements collateralized with Treasury
securities, and that meet the further requirements of California
Government Code, Section 53601(l). Investments in money market
mutual funds are limited to 10 percent of the District's
portfolio.
8.08) The San Diego County Treasurer’s Pooled Money Fund,
which is a County managed investment pool, may be used by the
Otay Water District to invest excess funds. There is no
percentage limitation of the portfolio which can be invested in
this category.
8.09) Under the provisions of California Government Code
53601.6, the Otay Water District shall not invest any funds
covered by this Investment Policy in inverse floaters, range
notes, interest-only strips derived from mortgage pools, or any
investment that may result in a zero-interest accrual if held to
maturity. Also, the borrowing of funds for investment purposes,
known as leveraging, is prohibited.
9.0 INVESTMENT POOLS/MUTUAL FUNDS
A thorough investigation of the pool/fund is required prior to
investing, and on a continual basis. There shall be a questionnaire
developed which will answer the following general questions:
A description of eligible investment securities, and a
written statement of investment policy and objectives.
A description of interest calculations and how it is
distributed, and how gains and losses are treated.
A description of how the securities are safeguarded
(including the settlement processes), and how often the
securities are priced and the program audited.
A description of who may invest in the program, how often,
and what size deposits and withdrawals are allowed.
A schedule for receiving statements and portfolio listings.
Are reserves, retained earnings, etc., utilized by the
pool/fund?
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A fee schedule, and when and how is it assessed.
Is the pool/fund eligible for bond proceeds and/or will it
accept such proceeds?
10.0 COLLATERALIZATION
Collateralization will be required on certificates of deposit
exceeding the $250,000 FDIC insured maximum. In order to anticipate
market changes and provide a level of security for all funds, the
collateralization level will be 102% of market value of principal and
accrued interest. Collateral will always be held by an independent
third party with whom the entity has a current custodial agreement. A
clearly marked evidence of ownership (safekeeping receipt) must be
supplied to the entity and retained. The right of collateral
substitution is granted.
11.0 SAFEKEEPING AND CUSTODY
All security transactions entered into by the Otay Water District
shall be conducted on a delivery-versus-payment (DVP) basis.
Securities will be held by a third-party custodian designated by the
District and evidenced by safekeeping receipts.
12.0 DIVERSIFICATION
The Otay Water District will diversify its investments by security
type and institution, with limitations on the total amounts invested
in each security type as detailed in Paragraph 8.0, above, so as to
reduce overall portfolio risks while attaining benchmark average rate
of return. With the exception of U.S. Treasury securities, government
agencies, and authorized pools, no more than 50% of the District’s
total investment portfolio will be invested with a single financial
institution.
13.0 MAXIMUM MATURITIES
To the extent possible, the Otay Water District will attempt to match
its investments with anticipated cash flow requirements. Unless
matched to a specific cash flow, the District will not directly invest
in securities maturing more than five years from the settlement date
of the purchase. However, for time deposits with banks or savings and
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loan associations, investment maturities will not exceed two years.
Investments in commercial paper will be restricted to 270 days.
14.0 INTERNAL CONTROL
The Chief Financial Officer shall establish an annual process of
independent review by an external auditor. This review will provide
internal control by assuring compliance with policies and procedures.
15.0 PERFORMANCE STANDARDS
The investment portfolio shall be designed with the objective of
obtaining a rate of return throughout budgetary and economic cycles,
commensurate with the investment risk constraints and the cash flow
needs.
The Otay Water District’s investment strategy is passive. Given this
strategy, the basis used by the CFO to determine whether market yields
are being achieved shall be the State of California Local Agency
Investment Fund (LAIF) as a comparable benchmark.
16.0 REPORTING
The Chief Financial Officer shall provide the Board of Directors
monthly investment reports which provide a clear picture of the status
of the current investment portfolio. The management report should
include comments on the fixed income markets and economic conditions,
discussions regarding restrictions on percentage of investment by
categories, possible changes in the portfolio structure going forward
and thoughts on investment strategies. Schedules in the quarterly
report should include the following:
A listing of individual securities held at the end of the
reporting period by authorized investment category.
Average life and final maturity of all investments listed.
Coupon, discount or earnings rate.
Par value, amortized book value, and market value.
Percentage of the portfolio represented by each investment
category.
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17.0 INVESTMENT POLICY ADOPTION
The Otay Water District’s investment policy shall be adopted by
resolution of the District’s Board of Directors. The policy shall be
reviewed annually by the Board and any modifications made thereto must
be approved by the Board.
18.0 GLOSSARY
See Appendix A.
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1.0: POLICY
It is the policy of the Otay Water District to finance the acquisition
of high value assets that have an extended useful life through a
combination of current revenues and debt financing. Regularly updated
debt policies and procedures are an important tool to ensure the use
of the District’s resources to meet its commitments, to provide the
highest quality of service to the District’s customers, and to
maintain sound financial management practices. These guidelines are
for general use and allow for exceptions as circumstances dictate.
2.0: SCOPE
This policy is enacted in an effort to standardize the issuance and
management of debt by the Otay Water District. It also establishes a
standard for internal lending/borrowing between water (potable and
recycled) and sewer funds, either direction. The primary objective is
to establish conditions for the use of debt, to minimize the
District’s debt service requirements and cost of issuance, to retain
the highest practical credit rating, maintain full and complete
financial disclosure and reporting, and to maintain financial
flexibility for the District. This policy applies to all debt issued
by the District including general obligation bonds, revenue bonds,
capital leases, and special assessment debt and loans between water
and sewer funds.
3.0: LEGAL & REGULATORY REQUIREMENTS
The Chief Financial Officer (CFO) and the District’s Legal Counsel
will coordinate their activities to ensure that all securities and
lending/borrowing agreements are issued in full compliance with
Federal and State law.
4.0: CAPITAL FACILITIES FUNDING
Financial Planning
The District maintains a six-year financial projection that identifies
operating requirements and public facility and equipment requirements,
and has developed a Rate Model for funding the District’s 6-Year
Capital Improvement Program (CIP). The District’s CIP Budget places
the capital requirements in order of priority and schedules them for
funding and implementation. It identifies a full range of capital
needs, provides for the ranking of the importance of such needs, and
identifies all the funding sources that are available to cover the
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costs of the projects. In cases where the program identifies project
funding through the use of debt financing, the budget should provide
information needed to determine debt capacity. The Rate Model and the
CIP Budget give the Board part of the data needed to make informed
judgments concerning the possibility of issuing debt.
Funding Criteria
The Chief Financial Officer (CFO) will evaluate all capital project
requests and develop a proposed funding plan. Priority may be given
to those projects that can be funded with current resources (annual
cash flow, fund balances or reserves). Those projects that cannot be
funded with current resources may be deferred or the CFO may recommend
that they be funded with debt financing. However, debt financing will
not be considered appropriate for any recurring purpose such as
current operating and maintenance expenditures. The issuance of
short-term cash-flow instruments is excluded from this limitation.
The General Manager will recommend the funding plan to the Board. The
General Manager may deem it necessary or desirable in certain
circumstances to convene a Finance Committee meeting to evaluate
funding options presented by the Chief Financial Officer.
Funding Sources
The District’s capital improvements can be classified in three
categories: those related to an expansion of the system
(“expansion”), those related to upgrading the existing system
(“betterment”) and those related to repairing or replacing existing
infrastructure (“replacement”). In general, capital improvements for
betterment or replacement are financed primarily through user charges,
availability charges, and betterment charges. Capital improvements
for expansion are financed through capacity fees. Accordingly, these
fees are reviewed at least annually or more frequently as required and
set at levels sufficient to ensure that new development pays its fair
share of the costs of constructing necessary infrastructure.
Additionally, the District will seek State and Federal grants and
other forms of intergovernmental aid wherever possible.
Pay-As-You-Go Projects
The District’s capacity fees are the major funding source in financing
additions to the water system and the recycled water system. Over
time, the fees collected and the cost to construct the capital
projects should balance. However, collection of these fees is subject
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to significant fluctuation based on the rate of new development.
Accordingly, the Chief Financial Officer, in developing the funding
plan for the CIP, will determine that current revenues and adequate
fund balances are available so project phasing can be accomplished.
If this is not the case, the Chief Financial Officer may recommend
that:
1.The project be deferred until funds are available, or
2.Based on the priority of the project, debt be issued to finance
the project.
Debt Financed Projects
If a project or projects are to be financed with long-term debt, the
District should use the following criteria to evaluate the suitability
of the financing for the particular project or projects:
1.The life of the project or asset to be financed is 10 years or
longer and its useful life is expected to exceed the term of the
financing.
2.Revenues available for debt service are deemed to be sufficient
and reliable so that long-term financing can be marketed without
jeopardizing the credit rating of the District.
3.Market conditions present favorable interest rates and demand for
District financing.
4.The project is mandated by State and/or Federal requirements and
current resources are insufficient or unavailable.
5.The project is immediately required to meet or relieve capacity
needs and current resources are insufficient or unavailable.
5.0: DEBT STRUCTURE
General
The District will normally issue debt with a maturity of not more than
30 years. The structure should approximate level debt service for the
term where it is practical or desirable. There will be no debt
structures that include increasing debt service levels in subsequent
years, with the first and second year of a debt payoff schedule the
exception and related to projected additional income to be generated
by the project to be funded. There will be no "balloon" debt
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repayment schedules that consist of low annual payments and one large
payment of the balance due at the end of the term. There will always
be at least interest paid in the first fiscal year after debt issuance
and principal starting no later than the first fiscal year after the
date the facility or equipment is expected to be placed in service.
Capitalized interest will not be for a period of more than necessary
to provide adequate security for the financing.
Limitations on the Issuance of Variable Rate Debt
The District will normally issue debt with a fixed rate of interest.
The District may issue variable rate for the purpose of managing its
interest costs. At the same time, the District should protect itself
from too much exposure to interest rate fluctuations. In determining
that it is in the District’s best interest to issue certain debt at
variable rates instead of fixed rates, at the time of issuing any
variable rate debt, there should be at least a 10% estimated reduction
in annual debt costs by issuing variable rate debt when compared to a
similar issuance of fixed rate debt. If the estimated overall cost
savings from issuing variable rate debt is not at least 10% at the
time of issuance, relatively small fluctuations in rates could
actually increase the District’s financing costs over the life of the
bonds compared to a similar fixed rate financing. By using this 10%
factor at the time of issuance, the District can be relatively assured
that its variable rate financing will be cost-effective over the term
of the bonds.
The comparison will be based on the following criteria:
1.The interest rate used to estimate variable interest costs will
be the higher of the 10-year average rate or the current weekly
variable rate.
2.The variable rate debt costs will include an estimate for annual
costs such as letter of credit fees, liquidity fees, remarketing
fees, monthly draw fees and annual rating fees applicable to the
letter of credit.
3.Any potential reserve fund earnings will reduce the fixed rate
debt service or variable rate debt service as applicable.
Periodically, using the criteria described above, the Chief Financial
Officer will compare the estimated annual debt service costs to
maturity of any variable rate debt with estimated debt service if the
debt was converted to fixed rates. If this analysis produces a break
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even in total payments over the life of the issue, the Chief Financial
Officer will recommend converting such variable rate debt to fixed
rate.
Variable rate debt should not represent more than 25% of the
District’s total debt portfolio. This level of exposure to interest
rate fluctuations is considered to be manageable in an environment of
increasing interest rates. At a higher ratio than this, the District
might be faced with an unplanned water rate increase to meet its Rate
Covenants. Rating agencies use this ratio in their analysis of the
District’s overall credit rating.
Further, Rate Covenants applicable to variable rate debt shall not
compromise the issuance of additional debt planned by the District and
variable rate debt should always contain a provision to allow
conversion to a fixed rate at the District’s option.
6.0: CREDIT OBJECTIVES
The Otay Water District seeks to maintain the highest possible credit
ratings for all categories of long-term debt that can be achieved
without compromising delivery of basic services and achievement of
District policy objectives.
Factors taken into account in determining the credit rating for a
financing include:
1.Diversity of the District’s customer base.
2.Proven track record of completing capital projects on time and
within budget.
3.Strong, professional management.
4.Adequate levels of staffing for services provided.
5.Reserves.
6.Ability to consistently meet or exceed Rate Covenants.
The District recognizes that external economic, natural, or other
events may from time to time affect the creditworthiness of its debt.
Nevertheless, the District is committed to ensuring that actions
within its control are prudent and well planned.
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7.0: COMPETITIVE AND NEGOTIATED SALE CRITERIA
Competitive Sale
The District will use a competitive bidding process in the sale of
debt unless the nature of the issue or specific circumstances warrants
a negotiated sale. The CFO will determine the best bid in a
competitive sale by calculating the true interest cost (TIC) of each
bid.
Negotiated Sale
Types of debt that would typically lend themselves to the negotiated
sale format are variable rate debt and unrated debt. Circumstances
that might warrant a negotiated sale may occur when the issue is of a
limited size that would not attract wide-spread investor interest,
during periods of high levels of issuance by other entities in the
State, or during periods of market volatility or with relatively new
financing techniques. In the event the District decides to use a
negotiated sale, it will pay management fees only to those firms that
place orders for bonds.
If the size of the District’s proposed issue is not cost effective,
the District may also consider issuing its debt by private placement
or through any qualified Joint Power Authority (JPA) in the State of
California whose principal business is issuing bonds.
8.0: REFUNDING DEBT
Purpose
Periodic reviews of all outstanding debt will be undertaken by the
Chief Financial Officer to determine refunding (refinancing)
opportunities. The purpose of the refinancing may be to:
1.Lower annual debt service by taking advantage of lower current
interest rates.
2.Update or revise covenants on outstanding debt issue if a Rate
Covenant appears to be too high, has precluded the District from
implementing its financing plan, or has caused the District to
increase rates to customers.
3.Restructure debt service associated with an issue to facilitate
the issuance of additional debt, usually in order to smooth out
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peaks in total debt service which can occur frequently as one
debt issue is layered on top of existing debt issues.
4.Alter bond characteristics such as call provisions or payment
dates.
5.Pay for conversion costs such as funding a reserve fund or paying
for credit enhancement when converting variable rate debt to
fixed rate debt.
Restrictions on Refunding
Tax-exempt bonds typically have provisions that preclude early
redemption of the bonds for a period of years after issuance. The
ability of issuers to refinance a tax-exempt bond prior to its
Optional Redemption date (known as Advance Refunding) is limited by
the Tax Code. There is no limit in the Tax Code on the ability of
issuers to redeem bonds prior to their maturity date once the Optional
Redemption date has been reached (known as Current Refunding).
Savings Criteria
In cases where an Advance Refunding or Current Refunding is intended
to provide debt service savings, the District may commence the
refinancing process if a minimum five percent (5%) present value
savings net of issuance costs and any cash contributions can be
demonstrated. Since interest rates may fluctuate between the time
when a refinancing is authorized and when the debt is issued,
beginning the process with at least a 5% savings should provide the
District with some level of protection that it can achieve a minimum
of three percent (3%) net present value savings of the refunding bonds
when and if the debt is issued. These minimum standards are intended
to protect the District staff from spending time on refinancings that
become marginally cost-effective after the entire issuance process is
complete.
The savings target may be waived, however, if sufficient justification
for lowering the savings target can be provided by meeting one or more
of the other refunding objectives described above.
9.0: SUBORDINATE LIEN DEBT
The District will issue subordinate lien debt only if it is
financially beneficial to the District or consistent with
creditworthiness objectives. Subordinate lien debt is structured to be
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payable second in priority to the District’s other outstanding debt.
Typically, subordinate lien debt might be issued if the District
desired a more flexible Rate Covenant with respect to its new
obligations and did not want to refinance all of its existing debt to
obtain that less restrictive Rate Covenant.
10.0: FINANCING PARTICIPANTS
The District’s purchasing guidelines provide the process for securing
professional services related to individual debt issues. The
solicitation and selection process include encouraging participation
from qualified service providers, both local and national, and
securing services at competitive prices.
Municipal Advisor: The use of a Municipal Advisor is necessary for
the sale of debt by a competitive bid process and is desirable when
issuing debt through a negotiated sale. The Municipal Advisor has a
fiduciary duty to the District and will seek to structure the
District’s debt in the manner that is saleable, yet meets the
District’s objectives for the financing. The Municipal Advisor will
advise the District on alternative structures for its debt, the cost
of different debt structures and potential pricing mechanisms that can
be expected from underwriters (such as call features, term bonds and
premium and discount bond pricing) and, at the District’s direction,
will write the offering document (preliminary official statement).
With respect to competitive sales, the Municipal Advisor will arrange
for distributing the preliminary official statement, accepting bids
via an internet bidding platform, verifying the lowest bid and provide
detailed instructions for the flow of funds at closing to the winning
Underwriter, the Trustee and the District. In a negotiated sale, the
Municipal Advisor will provide independent confirmation on the
Underwriter’s proposed pricing to ensure that interest rates and
Underwriter’s compensation are appropriate for the credit quality of
the issue and competitive in the overall public finance market in
California.
Underwriter: The Underwriter markets the bonds for sale to investors.
While the District’s preference is to select the Underwriter for the
debt via sale of the debt at competitive bid, there are circumstances
when a negotiated issue is in the best interests of the District.
Negotiated sales are preferable if the security features are
particularly complex or market conditions are volatile. The Chief
Financial Officer will recommend whether the method of sale is
competitive or negotiated based on the type of issue and other market
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conditions. In the case of negotiated sales, the Underwriter will be
required to demonstrate sufficient capitalization and sufficient
experience related to the specific type of debt issuance.
The Underwriter will work in connection with the District’s Municipal
Advisor on structuring the issue and offering different pricing ideas.
Bond Counsel: The District’s Bond Counsel provides the primary legal
documents that detail the security for the bonds and the authority
under which bonds are issued. The Bond Counsel also provides an
opinion to bond holders that the bonds are tax-exempt under both State
and Federal law. All closing documents in connection with an issue
are also prepared by Bond Counsel.
Disclosure Counsel: The District’s Disclosure Counsel provides legal
advice to the District regarding the adequacy of the District’s
disclosure of financial information or risks of investing in the
District’s debt issue to the investing public. The Disclosure Counsel
can prepare the official statement or review the official statement
and gives the District an opinion that there is no information missing
from the official statement of a material nature that would be
necessary for an investor to make an informed decision about investing
in the District’s bonds.
Trustee: The Trustee is a financial institution selected by the
District to administer the collection of revenues pledged to repay the
bonds and to distribute those funds to bondholders.
Letter of Credit Bank: The Letter of Credit Bank is a U.S. or foreign
bank that has issued a letter of credit providing both credit
enhancement (the Letter of Credit Bank will pay the debt in the event
that the District defaults on the payment) and liquidity for a
variable rate bond issue. These banks have their own short-term
credit rating, which can be higher than the District’s short-term
credit rating. Liquidity is needed because variable rate bondholders
are allowed to “put” their bonds back to the District if they do not
like the interest rate currently being offered. The District’s
Remarketing Agent then finds a new buyer for those bonds, but in the
event that no buyer is found, a draw is made under the letter of
credit to purchase the bonds that have been “put.” As soon as the
bonds are remarketed to another buyer, the letter of credit is repaid.
The letter of credit fees are paid annually or quarterly. Letter of
credits are typically issued for not more than 3 years and must be
renewed during the life of the bonds. Credit enhancement is discussed
further under the heading “CREDIT ENHANCEMENT.”
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Municipal Bond Insurer: The Municipal Bond Insurer can be one of
several insurance companies that provide municipal bond insurance
policies securing payment of the District’s debt. These policies
provide that the Municipal Bond Insurer will pay the District’s debt
in the event that the District defaults on its payments. Debt which
is insured carries the Municipal Bond Insurer’s credit rating. The
insurance premium for the bond insurance policy is paid one time at
the issuance of the debt and is non-cancelable for the term of the
debt. Unlike a letter of credit, bond insurance policies do not
provide liquidity and are most typically purchased for fixed rate
debt.
Remarketing Agent: The Remarketing Agent is an investment bank that,
each week, determines the interest rate for the District’s variable
rate obligations. The rate is set at the rate at which the
obligations could be sold on the open market at 100% of their face
value. The Remarketing Agent also finds new buyers for any of the
obligations that are “put” back to the District.
Rating Agencies: Currently, there are three widely recognized rating
agencies that rate municipal debt in the United States: Standard &
Poor’s, Moody’s Investors Service, and Fitch Investors Service.
Rating agencies establish objective criteria under which each type of
financing undertaken by the District is to be analyzed. Upon request,
a rating agency will rate the underlying strength of the District’s
financings, without regard to the purchase of any credit enhancement.
The rating is released to the general public and thereafter, the
rating agency will periodically update its analysis of a particular
issue, and may raise or lower the rating if circumstances warrant.
Investment-grade ratings range from “AAA” to “BBB-.” A rating below
“BBB-” is not investment grade. Many mutual funds cannot buy bonds
that do not carry an investment grade.
Verification Agent: In a refunding, the District will deposit funds
with an escrow agent (usually the trustee) in an amount sufficient,
together with earnings thereon, to pay the debt service and redemption
price of the debt being refunded through and including the call date.
The Verification Agent verifies the mathematical accuracy of
calculation of the amount to be deposited in escrow and the bond
counsel relies on this verification in giving their opinion that the
debt is defeased within the meaning of the indenture and that the lien
of the debt on the revenues pledged to the debt being refunded is
released.
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11.0: CONFLICT OF INTEREST AND STANDARDS OF CONDUCT
Members of the District, the Board of Directors and its consultants,
service providers and underwriters shall adhere to standards of
conduct and conflict of interest rules as stipulated by the California
Political Reform Act or the Municipal Securities Rulemaking Board
(MSRB), as applicable. All debt financing participants shall maintain
the highest standards of professional conduct at all times, in
accordance with MSRB Rules, including Rule G-37. Municipal Advisors
shall also adhere to applicable SEC rules and MSRB Rule G-42. There
shall be no conflict of interest with the District with any debt
financing participant.
12.0: CONTINUING DISCLOSURE
The District acknowledges the responsibilities of the underwriting
community and pledges to make all reasonable efforts to assist
underwriters in their efforts to comply with SEC Rule 15c2-12 and MSRB
Rule G-36. The District will file its official statements with the
MSRB and the nationally recognized municipal securities information
repositories. The District will also post copies of its comprehensive
financial reports on the MSRB’s Electronic Municipal Market Access
(EMMA) website, and will disseminate other information that it deems
pertinent to the market in a timely manner (For bonds issued after
2012, 10 days).
Reporting of Listed Events
While initial bond disclosure requirements pertain to underwriters,
the District will provide financial information and notices of listed
events on an ongoing basis throughout the life of the issue.
The list below (as of the most current SEC amendment effective
February 27, 2019) can change in the future, and any new requirements
added to SEC Rule 15(c)2-12 in the future are deemed to be added to
this section without the need to update the policy.
(a)The District shall give, or cause to be given, notice of the
occurrence of any of the following events with respect to any
bonds (in each case to the extent applicable) in a timely
manner not more than ten business days after the occurrence of
the event:
1.Principal or interest payment delinquencies;
2.Non-payment related defaults, if material;
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3.Modifications to the rights of the Holders, if material;
4.Optional, contingent or unscheduled calls, if material, and
tender offers;
5.Defeasances;
6.Rating changes;
7.Adverse tax opinions or the issuance by the Internal Revenue
Service of proposed or final determinations of taxability,
Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices or determinations with respect to the tax
status of the Bonds or other material events affecting the
tax status of the Bonds;
8.Unscheduled draws on the debt service reserves reflecting
financial difficulties;
9.Unscheduled draws on the credit enhancements reflecting
financial difficulties;
10.Substitution of the credit or liquidity providers or their
failure to perform;
11.Release, substitution or sale of property securing repayment
of the Bonds, if material;
12.Bankruptcy, insolvency, receivership or similar proceedings
of the District, which shall occur as described below;
13.Appointment of a successor or additional trustee or the
change of name of a trustee, if material;
14.The consummation of a merger, consolidation, or acquisition
involving the District or the sale of all or substantially
all of the assets of the District other than in the ordinary
course of business, the entry into a definitive agreement to
undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant
to its terms, if material;
15.Incurrence of a financial obligation of the District, if
material, or agreement to covenants, events of default,
remedies, priority rights, or other similar terms of a
financial obligation of the District, any of which affect
security holders, if material; or
16.Default, event of acceleration, termination event,
modification of terms, or other similar events under the
terms of a financial obligation of the District, any of
which reflect financial difficulties.
For these purposes, any event described in item 12 is considered to
occur when any of the following occur: the appointment of a receiver,
fiscal agent, or similar officer for the District in a proceeding
under the United States Bankruptcy Code or in any other proceeding
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under state or federal law in which a court or governmental authority
has assumed jurisdiction over substantially all of the assets or
business of the District, or if such jurisdiction has been assumed by
leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or
governmental authority, or the entry of an order confirming a plan of
reorganization, arrangement, or liquidation by a court or governmental
authority having supervision or jurisdiction over substantially all of
the assets or business of the District.
Whenever the District obtains knowledge of the occurrence of a Listed
Event under item 12 above, the District shall or shall cause the
Dissemination Agent (if not the District) as soon as possible
determine if such event would be material under applicable federal
securities laws and if applicable file a notice of such occurrence
with the MSRB, in an electronic format as prescribed by the MSRB, in a
timely manner not in excess of 10 business days after the occurrence
of the Significant Event.
Notwithstanding the foregoing, notice of Significant Events described
in subparagraph (a)(8) above need not be given any earlier than the
notice (if any) of the underlying event is given to holders of
affected bonds under the applicable indenture securing such bonds.
The events described in subparagraphs (a)(2), (a)(7),(a)(8) (if the
event is a bond call), (a)(10), (a)(11), (a)(13), (a)(14) and (a)(15)
contain the qualifier “if material.” The District shall cause a notice
to be filed with respect to any such event only to the extent that the
District determines the event’s occurrence is material for purposes of
U.S. federal securities law.
13:0 INVESTMENT & ARBITRAGE COMPLIANCE
Tax-exempt bonds are required to meet certain provisions of the
federal tax code in order to maintain their tax-exempt status. In
order to prevent municipal issuers from borrowing money at tax-exempt
rates solely for the purpose of investing the proceeds in higher
yielding investments and making a profit (“arbitrage”), the federal
tax code contains a provision that requires issuers to compare the
interest earned on any bond funds held (such as a reserve fund) with
interest that would theoretically be earned if the funds were invested
at the yield of the bonds, and to “rebate” to the federal government
any interest earned in excess of the theoretical earnings limit.
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The Chief Financial Officer shall invest the bond proceeds subject to
the District’s Investment Policy in a timely manner, to ensure the
availability of funds to meet operational requirements. In doing so,
the CFO will maintain a system of record keeping and reporting to meet
the arbitrage rebate compliance requirements of the federal tax code.
14.0: INTERNAL CONTROL
The District has implemented the following procedure to ensure that
the proceeds of the proposed debt issuance will be directed to the
intended use:
1.A separate Reserve Account shall be maintained for the
proceeds of each bond to ensure that there is no comingling
of funds.
2.All related expenditures charged against the bond proceeds
shall be properly approved by the authorized authority.
3.All related transactions shall be fully documented so that
an undisputable audit trail exists.
4.All related transactions shall be tracked in the District’s
Accounting System. A financial report reflecting all charges
related to the bond shall be prepared and maintained.
5.The District shall establish a retention policy which states
that all supporting documents related to bond proceeds
spending shall be kept indefinitely.
6.The Reserve Account shall be reconciled on a monthly basis.
15.0: TYPES OF DEBT FINANCING
General Obligation Bonds
General obligation bonds are secured by a pledge of the ad-valorem
taxing power of the issuer and are also known as a full faith and
credit obligations. Bonds of this nature must serve a public purpose
to be considered lawful taxation of the property owners within the
District and require a two third’s majority vote in a general
election. The benefit of the improvements or assets constructed and
acquired as a result of this type of bond must be generally available
to all property owners.
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The District can issue general obligation bonds up to but not in
excess of 15% of the assessed valuation under Article XVI, Section 18
of the State constitution. An annual amount of the levy necessary to
meet debt service requirements is calculated and placed on the tax
roll through the County of San Diego. The District also has a policy
that the ad-valorem tax to be used to pay debt service on general
obligation bonds will not exceed $.10 per $100 of assessed value.
Voters within Improvement District No. 27 of the District authorized
$100 million general obligation bonds in 1989. The District issued
$11,500,000 general obligation bonds in 1992 and refinanced the bonds
in 1998 and again in 2009. The District also has approximately $29
million in general obligation bonds authorized between 1960 and 1978
for various improvement districts throughout the District, but
unissued. General obligation bonds can only be issued under these
existing authorizations to the extent necessary to fund the
improvements specified by each ballot measure.
General obligation bonds generally are regarded as the broadest and
soundest security among tax-secured debt instruments. An unlimited-
tax pledge would enable a trustee to invoke mandamus to force the
District to raise the tax rate as much as necessary to pay off the
bonds. General obligation bonds have other credit strengths as well:
the property tax tends to be a steady and predictable revenue source,
and when a vote is required to issue them, bondholders have some
indication of taxpayers’ willingness to pay. General obligation bonds
carry the highest credit rating that a public agency can achieve and
therefore, the lowest interest cost. General obligation bonds
typically are issued to finance capital facilities and not for ongoing
operational or maintenance costs.
The District will use an objective analytical approach to determine
whether it can afford to assume new general obligation debt for the
improvement districts, or in the case of projects not approved by the
original ID 27 vote, prior to any submission of a general obligation
bond ballot measure to voters. This process will compare generally
accepted standards of affordability to the current values for the
District. These standards will include debt per capita, debt as a
percent of taxable value, debt service payments as a percent of
current revenues and current expenditures, and the level of
overlapping net debt of all local taxing jurisdictions. The process
will also examine the direct costs and benefits of the proposed
expenditures. The decision on whether or not to assume new debt will
be based on these costs and benefits, the current conditions of the
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municipal bond market, and the District’s ability to "afford" new debt
as determined by the aforementioned standards.
Revenue Bonds
Revenue bonds are limited-liability obligations that pledge net
revenues of the District to debt service. The net revenue pledge is
after payment of all operating costs. Since revenue bonds are not
generally secured by the full faith and credit of the District, the
financial markets require coverage ratios of the pledged revenue
stream and a covenant to levy rates and charges sufficient to produce
net income at some level in excess of debt service (a Rate Covenant).
Also there may be a test required to demonstrate that future revenues
will be sufficient to maintain debt service coverage levels after any
proposed additional bonds are issued. The District will strive to
meet industry and financial market standards with such ratios without
impacting the current rating. Annual adjustments to the District’s
rate structure may be necessary to maintain these coverage ratios.
The underlying credit of revenue bonds is judged on the ability of the
District’s existing rates to provide sufficient net income to pay debt
service and the perceived willingness of the District to raise rates
and charges in accordance with its Rate Covenant. Actual past
performance also plays a role in evaluating the credit quality of
revenue bonds, as well as the diversity of the customer base. Revenue
bonds generally carry a credit rating one or two investment grades
below a general obligation bond rating.
The District may use a debt structure called “Certificates of
Participation” to finance capital facilities. However, if the
certificates contain a pledge of net revenues and a Rate Covenant,
they are treated as essentially the same as a revenue bond.
Lease/Purchase Agreements
Over the lifetime of a lease, the total cost to the District will
generally be higher than purchasing the asset outright. As a result,
the use of lease/purchase agreements in the acquisition of vehicles,
equipment and other capital assets will generally be avoided,
particularly if smaller quantities of the capital asset(s) can be
purchased on a "pay-as-you-go" basis.
The District may utilize lease-purchase agreements to acquire needed
equipment and facilities. Criteria for such agreements should be that
the asset life is three years or more, the minimum value of the
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Number
Date
Adopted
Date
Revised
45 4/13/04 03/03/2021
agreement is $50,000 and interest costs must not exceed the interest
rate earned by the District’s portfolio for the average of the past 6
months. Lease payments of this type are considered operating expenses
and would reduce net operating income available to pay any District
revenue bonds. There are no coverage requirements or rate covenants
associated with lease/purchase agreements.
State Water Loans
The State Water Resources Control Board makes certain funds available
to water districts throughout the State. These loans typically carry
a below-market rate of interest and are short term in nature. While
State loans should be incorporated into the District’s debt portfolio
for the financing of capital improvements, the payment of the loan
should not compromise the District’s ability to issue other planned
debt or cause the District to violate its rate covenants or make it
necessary for the District to increase rates to maintain existing rate
covenants.
Land Based Financing
The District may consider developer or property owner-initiated
applications requesting the formation of community facilities or
assessment districts and the issuance of bonds to finance eligible
District facilities necessary to serve newly developing commercial,
industrial and/or residential projects. Facilities will be financed
in accordance with the provisions of the Municipal Improvement Act of
1913 and the Improvement Bond Act of 1915, or the Mello-Roos Community
Facilities Act of 1982.
Typically, the bonds issued would be used to prepay, in a lump-sum,
the District’s capacity fees with respect to a large tract of land
under development, or to finance in-tract infrastructure that will
eventually be dedicated to the District. The bonds are secured by a
special tax or assessment to be levied on property within the
boundaries established for the community facilities district
(sometimes known as a “Mello-Roos” district) or the assessment
district. If the District becomes the sponsoring public agency for
such financing district and the issuance of debt, the District will be
required to enter into a Funding, Construction and Acquisition
agreement for any of the facilities to be dedicated to the District
upon completion. This agreement governs the type of facilities to be
constructed with bond proceeds and how the facilities will be accepted
by the District.
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BOARD OF DIRECTORS POLICY
Subject
DEBT POLICY
Policy
Number
Date
Adopted
Date
Revised
45 4/13/04 03/03/2021
In some cases, the District may not be asked to be the sponsoring
agency for the formation of a financing district, rather, the
developer or property owner may approach a school district or a city
to be the sponsoring agency. Nonetheless, the property owner may want
to include lump-sum payment of District fees in the financing or
construction of certain facilities to be dedicated to the District
upon completion. In this case, if the District desired to
participate, the District would enter into a Joint Financing Agreement
with the sponsoring agency, again governing the type of facilities to
be constructed with bond proceeds and how the facilities will be
accepted by the District.
On a case-by-case basis, the Board shall make the determination as to
whether a proposed district will proceed under the provisions of the
Assessment Acts or the Mello-Roos Community Facilities Act. The Board
may confer with other consultants and the applicant to learn of any
unique district requirements, such as long-term development phasing,
prior to making any final determination.
All District and District consultant costs incurred in the evaluation
of new development, district applications and the establishment of
districts will be paid by the applicant(s) by advance deposits in
those instances where a party or parties other than the District have
initiated a proposed district. Expenses not legally reimbursable by
the financing district will be borne by the applicant. The District
may incur expenses for analyzing proposed assessment or community
facilities districts where the District is the principal proponent of
the formation or financing of the district.
Prior to the issuance of any land secured financing and in accordance
with State law, the Board will adopt policies and procedures with
criteria to be met before any special tax bonds or assessment district
bonds may be issued. These criteria include the qualifications of the
appraiser, the minimum value to lien ratio to be achieved prior to
issuing the land secured debt and the maximum tax to be levied on
different categories of property.
Internal Lending/Borrowing
Internal Lending/Borrowing allows the lending and/or borrowing of
funds between the Water (Potable and Recycled) and the Sewer Funds,
either direction to meet financial needs in lieu of the borrowing fund
obtaining outside debt.
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BOARD OF DIRECTORS POLICY
Subject
DEBT POLICY
Policy
Number
Date
Adopted
Date
Revised
45 4/13/04 03/03/2021
Upon recommendation by the Chief Financial Officer, the Board may
adopt a resolution allowing lending/borrowing arrangements between
Water and Sewer funds. To the extent any inter-fund lending/borrowing
is undertaken in anticipation of long-term financing, the District
shall adopt a Resolution of its intention to repay such funds out of
tax-exempt debt proceeds so as to meet the requirement of federal tax
law for such borrowing.
If the funds being loaned are restricted, prevailing law requires that
the Resolution that the Board adopts must include a finding by the
Board that the lending fund has sufficient money to lend and that the
borrowing fund can repay the loan without adversely affecting the
District’s credit ratings.
Internal Lending/Borrowing arrangements will be recorded in accordance
with GASB reporting requirements. The arrangement will include the
purpose, a debt repayment schedule and a periodic interest charge that
is equal to the District’s investment rate of return for that same
period. This ensures that the lending fund is recapturing earnings
that would have been otherwise realized had these funds been invested
in the District’s investment portfolio.
16.0: RATING AGENCY APPLICATIONS
The District may seek one or more ratings on all new issues that are
being sold in the public market. These rating agencies include, but
are not limited to, Fitch Investors Service, Moody’s Investors
Service, and Standard & Poor’s. When applying for a rating on an
issue over $1 million or more, the District shall make a formal
presentation of the finances and positive developments within the
District to the rating agencies. The District will report all
financial information to the rating agencies upon request. This
information shall include, but shall not be limited to, the District’s
Comprehensive Annual Financial Report (CAFR), and the Adopted
Operating and Capital Budget.
17.0: USE OF CREDIT ENHANCEMENT
Credit enhancement is a generic term that means any third-party
guarantee of debt service. Credit enhancement providers include
municipal bond insurance companies or financial institutions. The
purchase of credit enhancement allows the District’s bond issue to
carry the same credit rating as the credit provider. The District will
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BOARD OF DIRECTORS POLICY
Subject
DEBT POLICY
Policy
Number
Date
Adopted
Date
Revised
45 4/13/04 03/03/2021
seek to use credit enhancement when such credit enhancement proves
cost-effective. Selection of credit enhancement providers will be
subject to a competitive bid process using the District’s purchasing
guidelines, if applicable.
Fixed Rate Bonds
Credit enhancement for fixed rate bonds is obtained by the purchase of
bond insurance. If a commitment for bond insurance is obtained for a
particular issue, the District will estimate the annual debt service
for the issue based on current interest rates applicable to the credit
rating of the bond insurer. If the estimated debt service on this
basis is less than or equal to estimated debt service for the issue
based on interest rates for bonds with the District’s underlying or
stand-alone credit rating, the District will purchase the bond
insurance. Any intention of the District to prepay the debt ahead of
its scheduled maturity will be taken into account in the analysis.
Credit enhancement may be used to improve or establish a credit rating
on a District debt obligation even if such credit enhancement is not
cost effective if, in the opinion of the Chief Financial Officer, the
use of such credit enhancement meets the District’s debt financing
goals and objectives, such as, funding of a reserve fund for the
bonds.
Variable Rate Bonds
Credit enhancement for variable rate bonds is comprised of two
components: credit support and liquidity. The interest on variable
rate bonds is based on a short-term investment rate (usually 7 days).
Any investor can tender their bonds back to the District to be
repurchased on short notice (usually 7 days). Because of the short-
term nature of the investment, the securities that the District is
“competing” with for investors are AA-rated mutual funds. Therefore,
variable debt needs to have credit enhancement to achieve a comparable
AA rating, as well as liquidity support to provide the District with a
mechanism to purchase any bonds that are tendered before they can be
remarketed to new investors. A limited number of financial
institutions offer letters of credit that combine both credit support
and liquidity for one fee. An alternative is to purchase bond
insurance to provide credit support and enter into a separate purchase
agreement with a financial institution to provide liquidity. The
difference in cost between the two structures will be analyzed before
either alternative is selected for variable rate debt.
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Glossary
The Fiscal Budget contains terminology that is unique to public finance and budgeting. The following
budget glossary provides assistance in understanding these terms.
ACCRUAL: A charge for work that has been done but not yet invoiced, for which provision is made at
the end of a financial period.
ACRE-FOOT: The volume of water that will cover one acre to a depth of one foot. One acre-foot equals
435.6 units or 325,850 gallons.
ACTIVE INVESTING: Active investors will purchase investments and continuously monitor their activity,
often looking at the price movements of their stocks many times a day, in order to exploit profitable
conditions. Typically, active investors are seeking short term profits.
AD VALOREM TAX: A tax calculated “according to the value” of property. Such a tax is based on the
assessed valuation of tangible personal property. In most jurisdictions, the tax is a lien on the property
enforceable by seizure and sale of the property. General restrictions, such as overall restrictions on
rates, or the percent of charge allowed, sometimes apply. As a result, ad valorem taxes often function
as the balancing element in local budgets.
ADVANCE REFUNDING: A procedure whereby outstanding bonds are refinanced by the proceeds of
a new bond issue prior to the date on which outstanding bonds become due or are callable. Typically,
an advance refunding is performed to take advantage of interest rates that are significantly lower than
those associated with the original bond issue. At times, however, an advance refunding is performed
to remove restrictive language or debt service reserve requirements required by the original issue.
AGENCIES: Federal agency securities and/or Government-sponsored enterprises.
AMORTIZATION: The planned reduction of a debt obligation according to a stated maturity or
redemption schedule.
ANNEXATION FEES: When water service is requested for land outside the boundaries of the District,
the land to be serviced must first be annexed. For sewer service the land must be annexed into an
improvement district within the District.
ANNUAL COMPREHENSIVE FINANCIAL REPORT: The official annual report for the Otay Water
District. It includes detailed financial information prepared in conformity with generally accepted
accounting principles (GAAP). It also includes supporting schedules necessary to demonstrate
compliance with finance-related legal and contractual provisions, extensive introductory material, and
a detailed statistical section.
APPROPRIATIONS: The annual budget adopted by the District’s Board appropriates funds for
monitoring and control purposes, and serves as a financial plan.
ARBITRAGE: The gain that may be obtained by borrowing funds at a lower (often tax-exempt) rate and
investing the proceeds at higher (often taxable) rates.
ASSETS: Resources owned or held by the District that have monetary value.
AUDIT: A systematic examination and evaluation of the District’s financial records, operations, or
systems to ensure accuracy, compliance with regulations, and the proper use of resources.
256
Glossary
AVAILABILITY FEES: The District levies charges each year in developed areas to be used for general
purposes for construction of facilities. This fee is levied in undeveloped areas to provide a source of
funding for planning, mapping, and preliminary design of facilities to meet future development. Current
legislation provides that any availability charge in excess of $10.00 per acre shall be restricted only for
the purpose of constructing facilities in the improvement district in which it was assessed.
BALANCED BUDGET: A financial plan, for a specified period of time that matches all planned revenues
and expenditures with various services. This plan has sufficient sources of funds to support the
planned expenditures. The District uses a fiscal year beginning July 1 and ending June 30 for
budgetary and financial reporting purposes.
BANKERS’ ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company. The
accepting institution guarantees payment of the bill, as well as the issuer.
BASIS POINT: One one-hundredth of one percent.
BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment
portfolio. A benchmark should represent a close correlation to the level of risk and the average
duration of the portfolio’s investments.
BOND: A written promise to pay a sum of money on a specific date at a specified interest rate. The
interest payments and the repayment of the principal are authorized in a District bond resolution. The
most common types of bonds are general obligation (GO) bonds and Certificates of Participation
(COPs). These are frequently used for construction of large capital projects such as buildings,
reservoirs, pipelines, and pump stations.
BOND COUNSEL: An attorney (or firm of attorneys) retained by the issuer to give a legal opinion
concerning the validity of the securities. The bond counsel’s opinion usually addresses the subject of
tax exemption. Bond counsel may prepare, or review and advise the issuer regarding authorizing
resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation.
BOND INSURANCE: A type of credit enhancement whereby a monocline insurance company
indemnifies an investor against a default by the issuer. In the event of a failure by the issuer to pay
principal and interest in-full and on-time, investors may call upon the insurance company to do so.
Once assigned, the municipal bond insurance policy generally is irrevocable. The insurance company
receives an up-front fee, or premium, when the policy is issued.
BROKER/DEALER: Any individual or firm in the business of buying and selling securities for itself and
others. Broker/dealers must register with the SEC. When acting as a broker, a broker/dealer executes
orders on behalf of his/her client. When acting as a dealer, a broker/dealer executes trades for his/her
firm's own account. Securities bought for the firm's own account may be sold to clients or other firms,
or become a part of the firm's holdings.
BUDGET BASIS: The budget and accounting basis for the District is recognized on an accrual basis.
Accrual basis means that revenues are recognized when earned and expenses are recognized when
incurred.
CALL OPTION: A contract through which the owner is given the right but is not obligated to purchase
the underlying security or commodity at a fixed price within a limited time frame.
257
Glossary
CAP: A ceiling on the interest rate that would be paid.
CAPACITY FEE: A connection fee is charged when a new meter is placed into service. This fee is a
contribution of capital to either reimburse existing customers for the available capacity in the existing
system, or to help finance planned future growth-related capacity improvements.
CAPACITY FEE REVENUES: These fees are earned by the Operating Budget as the Engineering
Department supports expansion functions.
CAPACITY RESERVATION CHARGE: An MWD charge passed on by CWA to individual agencies. This
charge is based on the District’s peak water demand.
CAPITAL BUDGET: The portion of the annual budget that appropriates funds for the purchase of
capital equipment items and capital improvements. These expenditures are separated from regular
operating items, such as salaries, utilities, and office supplies. The Capital Budget includes funds for
capital equipment purchases over $10,000, such as vehicles, furniture, machinery, computer systems,
and special tools. The capital budget also includes funds for infrastructure related items over $20,000
(as explained below) which are distinguished from operating items according to their value and
projected useful life.
CAPITAL EQUIPMENT: Fixed assets such as vehicles, marine equipment, computers, furniture,
technical instruments, etc. which have a life expectancy of more than two years and a value over
$10,000.
CAPITAL EXPENDITURE: Capital expenditure or capital expense is an expense where the benefit
continues over a long period, rather than being exhausted in a short period. Such expenditure is of a
non-recurring nature and results in acquisition of permanent assets.
CAPITAL IMPROVEMENT PROGRAM: A long-range plan of the District for the construction,
rehabilitation and modernization of the District-owned and operated infrastructure.
CAPITAL LEASE: The acquisition of a capital asset over time rather than merely paying rent for
temporary use. A lease-purchase agreement, in which provision is made for transfer of ownership of
the property for a nominal price at the scheduled termination of the lease, is referred to as a capital
lease.
CERTIFICATE OF DEPOSIT (CD): A short or medium term, interest bearing, FDIC insured debt
instrument offered by banks and savings and loans. Money removed before maturity is subject to a
penalty. CDs are a low risk, low return investment, and are also known as “time deposits”, because the
account holder has agreed to keep the money in the account for a specified amount of time,
anywhere from a few months to several years.
CERTIFICATE OF PARTICIPATION: A financial instrument representing a proportionate interest in
payments such as lease payments by one party (such as the District acting as a lessee) to another
party (often a trustee).
CLASS OF SERVICE: All customers are classified based on the type of service used. For example, the
water rate per unit is determined by a classification such as residential versus business.
COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to secure
repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies.
258
Glossary
COMMERCIAL PAPER: An unsecured short-term promissory note, issued by corporations, with
maturities ranging from 2 to 270 days.
COMPETITIVE SALE: The sale of securities in which the securities are awarded to the bidder who
offers to purchase the issue at the best price or lowest cost.
CONTINUING DISCLOSURE: The requirement by the Securities and Exchange Commission for most
issuers of municipal debt to provide current financial information to the informational repositories for
access by the general marketplace.
COUPON: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on
the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a set date.
COVID-19: Illness caused by a novel coronavirus which was first identified amid an outbreak of
respiratory illness cases in Wuhan City, Hubei Province, China.
CWA: The County Water Authority was organized in 1944 under the State County Water Authority Act
for the primary purpose of importing Colorado River water to augment the local water supplies of the
Authority's member agencies. The Authority purchases water from MWD which imports water from the
Colorado River and the State Water Project.
DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for
his own account.
DEBENTURE: A bond secured only by the general credit of the issuer.
DEBT COVERAGE RATIO: The ratio of net revenue to annual interest and principal payments on debt.
DEBT SERVICE: The District's obligation to pay the principal and interest of bonds and other debt
instruments according to a predetermined payment schedule.
DEFEASANCE: Providing for payment of principal of premium, if any, and interest on debt through the
first call date or scheduled principal maturity in accordance with the terms and requirements of the
instrument pursuant to which the debt was issued. A legal defeasance usually involves establishing an
irrevocable escrow funded with only cash and U.S. Government obligations.
DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus
payment and delivery versus receipt. Delivery versus payment is delivery of securities with an
exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange
of a signed receipt for the securities.
DEPRECIATION: An expense recorded to allocate a tangible asset’s cost over its useful life.
DERIVATIVE: A financial product that is based upon another product. Generally, derivatives are risk
mitigation tools.
DESALINATION: The removal of dissolved minerals (including salts) from seawater or brackish water.
Engineered water desalination processes, which produce potable water from seawater or brackish
water, have become important because many regions throughout the world suffer from water
shortages.
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Glossary
DISCOUNT: The difference between a bond’s par value and the price for which it is sold when the
latter is less than par.
DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued at a
discount and redeemed at maturity for full face value, e.g., U.S. Treasury Bills.
DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent
returns.
ENERGY CHARGE: Water customers are charged an energy pumping charge based on the quantity of
water used and the elevation to which the water has been lifted to provide service. All water customers
are in one of 29 zones based on elevation.
ENTERPRISE FUND: Fund that provides goods or services to the public for a fee that makes the entity
self-supporting.
ENTERPRISE RESOURCE PLANNING: Systems with a shared database that supports multiple
functions used by different business units.
EXPENDITURES/EXPENSES: These terms refer to the outflow of funds paid or to be paid for an asset,
goods or services obtained regardless of when actually paid for. (Note: An encumbrance is not an
expenditure). An encumbrance reserves funds to be expended in a future period.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION (FAMC OR FARMER MAC): A stockholder
owned, publicly-traded corporation that was established under the Agricultural Credit Act of 1987,
which added a new Title VIII to the Farm Credit Act of 1971. Farmer Mac is a government sponsored
enterprise, whose mission is to provide a secondary market for agricultural real estate mortgage loans,
rural housing mortgage loans, and rural utility cooperative loans. The corporation is authorized to
purchase and guarantee securities. Farmer Mac guarantees that all security holders will receive timely
payments of principal and interest.
FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various
classes of institutions and individuals, e.g., S&L’s, small business firms, students, farmers, farm
cooperatives, and exporters.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures deposits in
member banks and thrifts.
FEDERAL FARM CREDIT BANK (FFCB): The Federal Farm Credit Bank system supports agricultural
loans and issues securities and bonds in financial markets backed by these loans. It has consolidated
the financing programs of several related farm credit agencies and corporations.
FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently
pegged by the Federal Reserve through open-market operations.
FEDERAL HOME LOAN BANK (FHLB): Government sponsored wholesale banks (currently 12 regional
banks), which lend funds and provide correspondent banking services to member commercial banks,
thrift institutions, credit unions and insurance companies.
260
Glossary
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC OR FREDDIE MAC): A stockholder
owned, publicly traded company chartered by the United States federal government in 1970 to
purchase mortgages and related securities, and then issue securities and bonds in financial markets
backed by those mortgages in secondary markets. Freddie Mac, like its competitor Fannie Mae, is
regulated by the United States Department of Housing and Urban Development (HUD).
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA OR FANNIE MAE): FNMA, like GNMA was
chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation
working under the auspices of the Department of Housing and Urban Development (HUD). It is the
largest single provider of residential mortgage funds in the United States. Fannie Mae is a private
stockholder-owned corporation. The corporation’s purchases include a variety of adjustable
mortgages and second loans, in addition to fixed-rate mortgages. FNMA’s securities are also highly
liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive
timely payment of principal and interest.
FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and
consisting of a seven-member Board of Governors in Washington, D.C., 12 regional banks and about
5,700 commercial banks that are members of the system.
FINANCIAL AUDIT: Official financial examination of the District’s accounts.
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (FINRA): An independent, not-for-profit
organization authorized by Congress to protect America’s investors by making sure the securities
industry operates fairly and honestly. It is dedicated to investor protection and market integrity through
effective and efficient regulation of the securities industry. FINRA is the successor to the National
Association of Securities Dealers, Inc. (NASD).
FINANCIAL OBLIGATION: A debt obligation, lease, guarantee, derivative instrument, or monetary
obligation resulting from a judicial, administrative, or arbitration proceeding, but not including
municipal securities as to which a final official statement has been provided to the MSRB.
FIRE SERVICE: Water service is provided by the District solely for use in fire hydrants or fire sprinkler
systems from lines or laterals connected to the District’s water mains.
FISCAL YEAR: Twelve-month term designating the beginning and ending period for recording financial
transactions. The District has specified July 1 to June 30 as its fiscal year.
FUND: An account used to track the collection and use of monies for a specifically defined purpose.
FUND BALANCE: The current funds on hand resulting from the net historical collection and use of
monies. The difference between assets and liabilities reported in the District’s Operating Fund plus
residual equities or balances and changes therein, from the result of operations.
GALLONS PER CAPITA PER DAY: The total number of gallons used by the city divided by the
population, divided by the number of days.
261
Glossary
GENERAL FUND: The District’s general fund is an enterprise fund – one for each of the District’s three
business lines Potable, Recycled and Sewer services. Each is an accounting entity with a self-
balancing set of accounts established to record the financial position and results that pertain to a
specific activity. The activities of enterprise funds closely resemble those of ongoing businesses in
which the purpose is to conserve and add to basic resources while meeting operating expenses from
current revenues. Enterprise funds account for operations that provide services on a continuous basis
and are substantially financed by revenues derived from user charges.
GENERAL OBLIGATION BONDS: Debt that is secured by a pledge of the ad valorem taxing power of
the issuer. Also known as a full faith and credit obligation.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA OR GINNIE MAE): A government
owned agency which buys mortgages from lending institutions, securitizes them, and then sells them
to investors. Because the payments to investors are guaranteed by the full faith and credit of the U.S.
Government, they return slightly less interest than other mortgage-backed securities.
GRANTS: Contributions or gifts of cash or other assets from another governmental agency to be used
or expended for a specified purpose, activity, or facility. Capital grants are restricted by the grantor for
the acquisition and/or construction of fixed assets. Operating grants are restricted by the grantor for
operating purposes or may be used for either capital or operating purposes at the discretion of the
grantee.
INTEREST INCOME: Earnings from the investment portfolio. Per District Policy Number 25, interest
income will be allocated to improvement districts each month based upon each fund’s prior month-
ending balance.
INTEREST-ONLY STRIPS: A mortgage-backed instrument where the investor receives only the interest,
no principal, from a pool of mortgages. Issues are highly interest rate sensitive, and cash flows vary
between interest periods. Also, the maturity date may occur earlier than that stated if all loans within
the pool are pre-paid. High prepayments on underlying mortgages can return less to the holder than
the dollar amount invested.
INTERNAL LENDING/BORROWING: An Inter-fund lending arrangement between Water and Sewer
funds.
INVERSE FLOATER: A bond or note that does not earn a fixed rate of interest. Rather, the interest rate is
tied to a specific interest rate index identified in the bond/note structure. The interest rate earned by the
bond/note will move in the opposite direction of the index. An inverse floater increases the market rate
risk and modified duration of the investment.
LATE CHARGES/PENALTIES: Charges and penalties are imposed on customer accounts for late
payments, returned payments, and other infringement of the District’s Code of Ordinances.
LEVERAGE: Investing with borrowed money with the expectation that the interest earned on the
investment will exceed the interest paid on the borrowed money.
LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a
substantial loss of value. In the money market, a security is said to be liquid if the spread between bid
and asked prices is narrow and reasonable size can be done at those quotes.
262
Glossary
LOCAL AGENCY INVESTMENT FUND (LAIF): The aggregate of all funds from political subdivisions
that are placed in the custody of the State Treasurer for investment and reinvestment.
MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold.
MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the
parties to repurchase/reverse repurchase agreements that establish each party’s rights in the
transactions. A master agreement will often specify, among other things, the right of the buyer-lender to
liquidate the underlying securities in the event of default by the seller borrower.
MATURITY: The date upon which the principal or stated value of an investment becomes due and
payable.
METER AND LATERAL FEES: Charge includes the material costs for the meter, meter box, and the
labor cost for installation to connect a new service to the distribution system.
METROPOLITAN WATER DISTRICT (MWD) STANDBY CHARGES: Revenue generated from property
taxes by MWD to cover the Readiness-to-Serve Charge. This charge pays for the debt service for
construction projects necessary to meet reliability and quality needs. The RTS Charge was adopted in
1996.
MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’
acceptances, etc.) are issued and traded.
MONEY MARKET MUTUAL FUNDS: An open-end mutual fund which invests only in money markets.
These funds invest in short term (one day to one year) debt obligations such as Treasury bills,
certificates of deposit, and commercial paper.
MUNICIPAL ADVISOR: A person that provides advice to or on behalf of a municipal entity or obligated
person with respect to municipal financial products or the issuance of municipal securities, including
advice with respect to the structure, timing, terms, and other similar matters concerning such financial
products or issues.
MUNICIPAL SECURITIES RULEMAKING BOARD (MSRB): The MSRB, comprised of representatives
from investment banking firms, dealer bank representatives, and public representatives, is entrusted
with the responsibility of writing rules of conduct for the municipal securities market.
MUTUAL FUNDS: An open-ended fund operated by an investment company which raises money from
shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual
funds raise money by selling shares of the fund to the public. Mutual funds then take the money they
receive from the sale of their shares (along with any money made from previous investments) and use
it to purchase various investment vehicles, such as stocks, bonds, and money market instruments.
MWD AND CWA FIXED SYSTEM CHARGES: These pass-through charges are calculated to recover
the MWD’s and CWA’s fixed annual costs including the construction, operation and maintenance of
aqueducts, and emergency storage projects. These fixed charges are based on the size of the meter.
NEGOTIATED SALE: A sale of securities in which the terms of sale are determined through negotiation
between the issuer and the purchaser, typically an underwriter, without competitive bidding.
263
Glossary
NET ASSETS: The difference between total assets and total liabilities. Increases or decreases in net
assets may serve as a useful indicator of whether the financial position of the District is strengthening
or weakening.
OFFICIAL STATEMENT: A document published by the issuer that discloses material information on a
new issue of municipal securities including the purposes of the issue, how the securities will be repaid,
and the financial, economic and social characteristics of the issuing government. Investors may use
this information to evaluate the credit quality of the securities.
1% PROPERTY TAX: In 1978, Proposition 13 limited general levy property tax rates for all taxing
authorities to a total rate of 1% of full cash value. Subsequent legislation, AB 8, established that the
receipts from the 1% levy were to be distributed to taxing agencies according to approximately the
same proportions received prior to Proposition 13. Funds received are to be used for facilities
construction or debt service on bonds sold to build facilities.
OPERATING BUDGET: The portion of the budget that pertains to daily operations that provide basic
governmental services. The operating budget contains appropriations for such expenditures as
personnel, supplies, utilities, materials, travel and fuel, and does not include purchases of major capital
plant or equipment which are budgeted for separately in the Capital Budget.
OPTION: A derivative contract. There are two primary types of options (see Put Option and Call Option).
An option is considered a wasting asset because it has a stipulated life to expiration and may expire
worthless. Hence, the premium could be wasted.
OPTIONAL REDEMPTION: The redemption of an obligation prior to its stated maturity, which can only
occur on dates specified in the bond indenture.
OVERLAPPING DEBT: The legal boundaries of local governments often overlap. In some cases, one
unit of government is located entirely within the boundaries of another. Overlapping debt represents
the proportionate share of debt that must be borne by one unit of government because another
government with overlapping or underlying taxing authority issued its own bonds.
PAR VALUE: The face value or principal amount of a security.
PASSIVE INVESTING: An investment strategy involving limited ongoing buying and selling actions.
Passive investors will purchase investments with the intention of long-term appreciation and limited
maintenance, and typically don’t actively attempt to profit from short term price fluctuations. Also
known as a buy-and-hold strategy.
PAY-AS-YOU-GO: To pay for capital improvements from current resources and fund balances rather
than from debt proceeds.
PRIMARY DEALER: A designation given by the Federal Reserve System to commercial banks or
broker/dealers who meet specific criteria, including capital requirements and participation in Treasury
auctions. These dealers submit daily reports of market activity and positions and monthly financial
statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary
dealers include Securities and Exchange Commission registered securities broker/dealers, banks, and
a few unregulated firms.
264
Glossary
PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary,
such as a trustee, may invest money only in a list of securities selected by the custody state—the so-
called legal list. In other states the trustee may invest in a security if it is one which would be bought by
a prudent person of discretion and intelligence who is seeking a reasonable income and preservation
of capital.
PUBLIC SECURITIES ASSOCIATION (PSA): A trade organization of dealers, brokers, and bankers who
underwrite and trade securities offerings.
PUT OPTION: A contract that grants to the purchaser the right but not the obligation to exercise.
QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the
payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has
segregated for the benefit of the commission eligible collateral having a value of not less than its
maximum liability and which has been approved by the Public Deposit Protection Commission to hold
public deposits.
RANGE NOTE: An investment whose coupon payment varies and is dependent on whether the
current benchmark falls within a pre-determined range.
RATE COVENANT: A covenant between the District and bondholders, under which the District agrees
to maintain a certain level of net income compared to its debt payments, and covenants to increase
rates if net income is not sufficient to meet such level.
RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market
price. This may be the amortized yield to maturity on a bond the current income return.
READINESS-TO-SERVE CHARGE: Adopted by MWD in Fiscal Year 1996. The charge serves as a
foundation of fixed revenue for MWD. It covers the new debt service for construction projects
necessary to meet reliability and quality needs of current water-users as opposed to new customers.
REFUNDING: A procedure whereby an issuer refinances an outstanding bond issue by issuing new
bonds.
REGIONAL DEALER: A securities broker/dealer, registered with the Securities & Exchange
Commission (SEC), who meets all of the licensing requirements for buying and selling securities.
RECYCLED WATER RATES: Non-potable water service provided from water produced by the District’s
reclamation plant and other non-potable sources. Recycled water is not used for domestic purposes
and all uses must comply with federal, state and local laws and regulations regarding the use of
recycled water.
REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor
with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect
lends the “seller” money for the period of the agreement, and the terms of the agreement are structured
to compensate him for this. Dealers use RP extensively to finance their positions. Exception: When the
Fed is said to be doing RP, it is lending money that is increasing bank reserves.
265
Glossary
RESERVE FUND: The District maintains Reserve Funds per the District’s policy for both designated and
restricted balances. Designated Reserve Funds are “general use” funds designated by the Board.
Restricted reserves are those that are legally set aside for a particular purpose and cannot be used for
any other purpose.
REVENUE: Monies that the District receives as income. It includes such items as water sales and
sewer fees. Estimated revenues are those expected to be collected during the fiscal year.
REVENUE BONDS: A bond which is payable from a specific source of revenue and to which the full
faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable from
identified sources of revenue, and do not permit the bondholders to compel a jurisdiction to pay debt
service from any other source. Pledged revenues often are derived from the operation of an enterprise.
Generally, no voter approval is required prior to issuance.
RUSSELL SQUARE: A sewer lift station constructed in 1983 that serves four properties in the Russell
Square Development.
SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables
of all types and descriptions are held in the bank’s vaults for protection.
SEC RULE 15C3-1: See Uniform Net Capital Rule.
SECONDARY MARKET: A market made for the purchase and sale of outstanding securities issues
following their initial distribution.
SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in
securities transactions by administering securities legislation.
SPECIAL ASSESSMENTS: A charge imposed against property or parcel of land that receives a special
benefit by virtue of some public improvement that is not, or cannot be enjoyed by the public at large.
Special assessment debt issues are those that finance such improvements and are repaid by the
assessments charged to the benefiting property owners.
STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, FAMCA,
etc.), and Corporations, which have imbedded options (e.g., call features, step-up coupons, floating
rate coupons, derivative-based returns) into their debt structure. Their market performance is
impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the
shape of the yield curve.
SWAP: A customized financial transaction between two or more counterparties who agree to make
periodic payments to one another. Swaps cover interest rate, equity, commodity and currency
products. They can be simple floating for fixed exchanges or complex hybrid products with multiple
option features.
SYSTEM CHARGE: Each water service customer pays a monthly system charge for water system
replacement, maintenance and operation expenses. The charge is based on the size of the meter and
class of service.
SYSTEM FEES: Each water service customer pays a monthly system charge for water system
replacement, maintenance, and operation expenses. The charge is based on the size of the meter and
class of service.
266
Glossary
TAX COLLECTION FOR BOND DEBT: California Water Code Section 72091 authorizes the District, as a
municipal water district, to levy ad valorem property taxes which are equal to the amount required to
make annual payments for principal and interest on General Obligation bonds approved by the voters
prior to July 1, 1978.
TAXES: California Water Code Section 72091 authorizes the District, as a municipal water district, to
levy ad valorem property taxes which are equal to the amount required to make annual payments for
principal and interest on general obligation bonds approved by the voters prior to July 1, 1978.
TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance the
national debt. Most bills are issued to mature in three months, six months, or one year.
TREASURY BONDS: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of
the U.S. Government and having initial maturities of more than 10 years.
TREASURY NOTES: Medium-term coupon-bearing U.S. Treasury securities issued as direct
obligations of the U.S. Government and having initial maturities from two to 10 years.
TRUE INTEREST COST (TIC): A method of calculating the overall cost of a financing that takes into
account the time value of money. The TIC is the rate of interest that will discount all future payments
so that the sum of their present value equals the issue proceeds.
UNDERWRITER: The term used broadly in the municipal market, to refer to the firm that purchases a
securities offering from a governmental issuer.
UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms
as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to
liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money
owed to a firm, including margin loans and commitments to purchase securities, one reason new
public issues are spread among members of underwriting syndicates. Liquid capital includes cash
and assets easily converted into cash.
UNIT: A unit of water is 100 cubic feet or 748 gallons of water.
WATER RATES: Rates vary among classes of service. The water rates for residential customers use an
accelerated block structure. As more units are consumed, a higher unit rate is charged. Effective in
2009, all non-residential customers are charged for water based on a tiered rate structure in which
water rates are based on meter size and amount of units consumed.
WATER YEAR: The 12-month period for which precipitation totals are measured spanning October 1
through September 30 of the following year.
WORKING CAPITAL: A financial measure which represents available operating liquidity. The
calculation is current assets minus current liabilities.
YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME
YIELD is obtained by dividing the current dollar income by the current market price for the security. (b)
NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus
any discount from par in purchase price, with the adjustment spread over the period from the date of
purchase to the date of maturity of the bond.
267
Glossary
YIELD CURVE: Refers to the graphical or tabular representation of interest rates across different
maturities. The presentation often starts with the shortest-term rates and extends towards longer
maturities. It reflects the market’s views about implied inflation/deflation, liquidity, economic and
financial activity, and other market forces.
268
AB Assembly Bill
ACWA JPIA Association of California Water Agencies Joint Powers Insurance Authority
AF Acre-Foot/Feet
AMR Automated Meter Reader/Reading
AWWA American Water Works Association
BABS Build America Bonds
CIP Capital Improvement Program/Project
COPS Certificates of Participation
CSDA California Special Districts Association
CSMFO California Society of Municipal Finance Officers
CWA County Water Authority (San Diego)
EDU Equivalent Dwelling Unit
ERP Enterprise Resource Planning
FTE Full-time Equivalent
FY Fiscal Year
GAAP Generally Accepted Accounting Principles
GASB Government Accounting Standards Board
GFOA Government Finance Officers Association
GIS Geographic Information System
GO General Obligation (bonds)
GPCD Gallons Per Capita Per Day
GPM Gallons Per Minute
HCF Hundred Cubic Foot
HR Human Resources
ID Improvement District
IID Imperial Irrigation District
IT Information Technology
LAIF Local Agency Investment Fund
MG Million Gallons
MGD Million Gallons per Day
MOU Memorandum of Understanding
MWD Metropolitan Water District
O&M or O/M Operations and Maintenance
OPEB Other Post Employee Benefits
OSHA Occupational Safety and Health Administration
PL Pipeline
PRS Pressure Reducing Station
PS Pump Station
RWCWRF Ralph W. Chapman Water Recycling Facility
SANDAG San Diego Association of Governments
SB Senate Bill
SBWRP South Bay Water Reclamation Plant
SCADA Supervisory Control and Data Acquisition
SWRCB State Water Resources Control Board
USBR United States Bureau of Reclamation
WSCP Water Shortage Contingency Plan
List of Acronyms
269
Index
Administrative Expenditures 97,111,120,139
Awards 17-20
Budget Basis 31
Budget Calendar 32-34
Budget Control and Jurisdiction 30
Budget Guide 24-25
Budget Process 29-30
Budget Summary 60
Capital Budget Narrative 178-180
Capital Purchases FY 2025 187
CIP Justification and Impact on Operating Budget 186
CIP Reserve Funds 181
Classification of Water Sales 87,103
Contract/Temporary Employees 138
Current Economic Conditions 40-41
Debt Management 78-79
Debt Policy 235-254
Demographics 36
Department Budgets:
Administrative Services 153-160
Board of Directors 143-145
Engineering 148-152
Finance 172-176
General Manager 146-152
Water Operations 166-171
Departmental Operating Budget Narrative 130-131
Director’s Division Boundaries 145
District Formation 27
Economic Outlook 41-42
Five-Year Forecast 74-75
Formula for Sewer Rates 122-123
Fund Balance Summary by Fund 69
Fund Balances Forecast 77
Fund Structure 31
Future, The 42-44
General Fund Forecast 76
General Fund Revenues, Expenditures and Transfers 60-66, 68
General Expense 129
General Revenues 128
General Revenues and Expenditures Narrative 126-127
270
Index
Glossary 256-268
Impact of Current Debt Levels 80
Investment Policy 226-234
Labor and Benefits 133
Labor and Benefits by Fund 134
Letter of Transmittal 8-16
List of Acronyms 269
Materials and Maintenance Expenditures 98,112,121,140
Meter Fees 93,107
Mission Statement, Statement of Values 26
MWD and CWA Fixed Fees (pass-through) 92
Operating Budget Summary 86,102,115
Operating Budget Summary by System 67
Operating Budget Summary – General Fund 65-66
Operating Expenditures by Department 141
Operating Expenditures by Object 142
Organizational Structure 28
Position Count by Department 135-138
Potable Narrative 84-85
Power Costs 96,110,119
Projected Interest Payments by Debt Issuance 83
Projected Principal Payments by Debt Issuance 82
Recycled Narrative 100-102
Reserve Policy 190-225
Resolution 4442 21-22
Revenue History 94,108,118
Revenues and Expenditures by Fund 71-72
Revenues and Expenditures by Type 70
San Diego Rainfall 40
Schedule of Outstanding Debt 81
Service Area 27
Service Area Maps 99,113,124
Sewer Charges Summary by Customer Class 116
Sewer Narrative 114
Sewer Rate Comparison 39
Six-Year CIP Projects Summary by Fund ($1,000s) 182
Six-Year CIP Projects Summary by Source ($1,000s) 182
Six-Year CIP Projects by Source and Fund ($1,000s) 183-185
Statement of Values 26
Strategic Plan 46-59
271
Index
Summary of Financial Policies 188-189
System Charges 90-91,105,117
Table of Contents 4-7
Ten Largest Customers 37
Ten Principal Taxpayers 37
Unit Sales History and Meter Count by Customer Class 89,106
Water Purchases - Recycled 109
Water Purchases and Related Costs - Potable 95
Water Rate Comparison- Member Agency Water Rates 38
Water Sales Summary by Meter Size 104
Water Sales Summary by Customer Class 88
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