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02-02-22 Board Packet
OTAY WATER DISTRICT BOARD OF DIRECTORS MEETING DISTRICT BOARDROOM 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA WEDNESDAY February 2, 2022 3:30 P.M. AGENDA 1.ROLL CALL 2.PLEDGE OF ALLEGIANCE 3.APPROVAL OF AGENDA 4.APPROVE THE MINUTES OF THE REGULAR MEETING OF JANUARY 5, 2022 5.PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION INCLUDING AN ITEM ON TODAY'S AGENDA Additionally, members of the public may submit their comments on agendized and non-agendized items by either of the following two methods: a)If you wish to provide public comment directly - that is, live during the “Public Participation” portion of the meeting - please complete and submit a Request to Speak Form via email to BoardSecretary@otaywater.gov before the start of the meeting. Your request to speak will be acknowledged during the “Public Participation” portion of the meeting when the Board will hear your comment. When called to speak, please state your Name and the City in which you reside. You will be provided three minutes to speak. The Board is not permitted to enter into a dialogue with the speaker during this time. OR b)If you wish to have your comment read to the Board during the “Public Par- ticipation” portion of the meeting, please email your comment to BoardSecre- tary@otaywater.gov at least thirty minutes prior to the start of the meeting, and it will be read aloud during the “Public Participation” portion of the meet- ing. Please provide your Name and the City in which you reside, with your comment. Your comment must not take more than three minutes to read. The Board is not permitted to respond to written public comment dur- ing this time. The District’s meeting is live streamed. Information on how to watch and listen to the District’s meeting can be found at this link: https://otaywater.gov/board-of- directors/agenda-and-minutes/board-agenda/ PUBLIC HEARING 6. THE BOARD WILL HOLD A PUBLIC HEARING TO CONSIDER APPROVING THE FOLLOWING AGENDA ITEM AND INVITES THE PUBLIC TO PROVIDE COMMENTS ON THE ITEMS: a) REDISTRINGING PRESENTATION: PLANWEST PARTNERS INC. b) PUBLIC HEARING ON REDISTRICTING OTAY WATER DISTRICT, BECAUSE OF AN INCREASE IN THE POPU- LATION WITHIN ITS SERVICE AREA, AS MEASURED BY THE 2020 U.S. CENSUS, WILL BE ADJUSTING THE BOUNDARIES OF ITS FIVE (5) DIVISIONS TO EQUALIZE THE POPULATION WITHIN THOSE DIVI- SION BOUNDARIES PURSUANT TO CALIFORNIA WATER CODE §71540 AND ELECTIONS CODE § 22001. THIS PUBLIC HEARING IS HELD TO INVITE AND SOLICIT PUBLIC COMMENT ON THE CRITERIA FOR AND THE COMPOSITION OF THE REDISTRICTING DIVISIONS PRIOR TO DRAWING DRAFT MAPS OF PROPOSED DIVISION BOUNDARIES (MARTINEZ) CONSENT CALENDAR 7. ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: a) ADOPT RESOLUTION NO. 4403 APPROVING THE ANNEXATION OF THE PROPERTY OWNED BY ANNLAND INVESTMENTSM LLC (APN 517-091-08-00; 1761 JAMACHA ROAD, EL CAJON, CA) TO OTAY WA- TER DISTRICT SEWER IMPROVEMENT DISTRICT NO. 18 b) ADOPT RESOLUTION NO. 4404 APPROVING THE ANNEXATION OF THE PROPERTY OWNED BY MICHAEL TOHE AND HANNA NIDAA (AKA MAJHER MEKHA) (APN 517-111-67-00; VISTA VEREDA, EL CA- JON, CA) TO OTAY WATER DISTRICT SEWER IMPROVEMENT NO. 18 c) AUTHORIZE THE GENERAL MANAGER TO ISSUE A PURCHASE OR- DER TO CORE AND MAIN IN AN AMOUNT NOT TO EXCEED $133,197.57 FOR THE PURCHASE OF A NEW METER TEST BENCH ACTION ITEMS 8. BOARD a) AUTHORIZE STAFF TO CONDUCT REMOTE TELECONFERENCE MEETINGS OF THE BOARD OF DIRECTORS, INCLUDING COMMIT- TEE MEETINGS, PURSUANT TO RESOLUTION NO. 4401 WHICH THE BOARD ADOPTED AT A SPECIAL BOARD MEETING ON SEPTEMBER 27, 2021, AND IN ACCORDANCE WITH THE PROVISIONS OF GOV- ERNMENT CODE § 54953(e) FOR THE NEXT 30 DAYS BECAUSE (1) A STATE OF EMERGENCY RELATED TO COVID-19 IS CURRENTLY IN EFFECT; (2) LOCAL OFFICIALS IN SAN DIEGO COUNTY HAVE IM- POSED OR RECOMMENDED MEASURES TO PROMOTE SOCIAL DIS- TANCING IN CONNECTION WITH COVID-19; AND (3) DUE TO THE COVID-19 EMERGENCY, MEETING IN PERSON WOULD PRESENT IM- MINENT RISKS TO THE HEALTH AND SAFETY OF ATTENDEES (MARTINEZ) b) DISCUSSION OF 2022 BOARD MEETING CALENDAR (TITA RAMOS- KROGMAN) 9. FINANCE a) APPROVE THE FINANCE AND ADMINISTRATION COMMITTEE’S SE- LECTION OF DAVIS FARR, LLP, TO SERVE AS THE DISTRICT’S AUDI- TORS FOR THE FISCAL YEAR ENDING JUNE 30, 2022. THE CON- TRACT WILL BE FOR ONE YEAR, WITH FOUR (4) ONE-YEAR OP- TIONS, WITH EACH OPTION YEAR SUBJECT TO GENERAL MAN- AGER REVIEW AND APPROVAL REPORTS 10. GENERAL MANAGER’S REPORT 11. SAN DIEGO COUNTY WATER AUTHORITY UPDATE 12. DIRECTORS' REPORTS/REQUESTS 13. PRESIDENT’S REPORT/REQUESTS RECESS TO CLOSED SESSION 14. CLOSED SESSION a) DISCUSSION RELATING TO CORONAVIRUS (COVID-19) AND PUBLIC SERVICES [GOVERNMENT CODE §54957] b) LIABILITY CLAIMS PURSUANT TO GOVERNMENT CLAIM SECTION 54956.95 CLAIMANT: MR. MARK POPPETT, ATTORNEY FOR MS. JORDAN SCHUSTER AND MRS. JESSICA SCHUSTER AGENCY CLAIMED AGAINST: OTAY WATER DISTRICT c) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [GOV- ERNMENT CODE §54956.9] OTAY WATER DISTRICT vs. CITY OF SAN DIEGO; CASE NO. 37-2017- 00019348-CU-WM-CTL d) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [GOVERNMENT CODE §54956.9] MARK COZIAHR, ET AL. vs. OTAY WATER DISTRICT, CASE NO. 37- 2015-000-CU-MC-CTL e) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (§ 54956.9(b)), ONE MATTER: BONNIE KESSNER AND ANDREA MCCARTNEY-PAGE, ET AL. vs. CITY OF SANTA CLARA, ET AL.; SANTA CLARA COUNTY SUPERIOR COURT, CASE NO.: 20CV364054 f) CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION SIGNIFICANT EXPOSURE TO LITIGATION PURSUANT TO §54956.9(b): Four (4) Cases COST OF SERVICE STUDY KEY ASSUMPTIONS g) EVALUATION OF GENERAL COUNSEL Pursuant to Government Code §54954.5 RETURN TO OPEN SESSION 15. REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION. OTAY WATER DISTRICT FINANCING AUTHORITY 16. NO MATTERS TO DISCUSS 17. ADJOURNMENT All items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the Board. The Agenda, and any attachments containing written information, are available at the District’s website at www.otaywater.gov. Written changes to any items to be considered at the open meeting, or to any attachments, will be posted on the District’s website. Copies of the Agenda and all attachments are also available by contacting the District Secretary at (619) 670-2253. If you have any disability which would require accommodation in order to enable you to participate in this meeting, please call the District Secretary at (619) 670-2253 at least 24 hours prior to the meeting. Certification of Posting I certify that on January 28, 2022, I posted a copy of the foregoing agenda near the regular meeting place of the Board of Directors of Otay Water District, said time be- ing at least 72 hours in advance of the regular meeting of the Board of Directors (Gov- ernment Code Section §54954.2). Executed at Spring Valley, California on January 28, 2022. /s/ Tita Ramos-Krogman, District Secretary 1 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT AND OTAY WATER DISTRICT FINANCING AUTHORITY January 5, 2022 1.The meeting was called to order by President Smith at 3:30 p.m. 2.ROLL CALL Directors Present:Croucher, Keyes, Lopez, Robak and Smith Staff Present:General Manager Jose Martinez, General Counsel Dan Shinoff, General Counsel Jeanne Blumenfeld, Chief Financial Officer Joe Beachem, Chief of Operations Andrew Jackson, Chief of Engineering Rod Posada, Chief of Administration Adolfo Segura, Asst. Chief of Finance Kevin Koeppen, District Secretary Tita Ramos-Krogman and others per attached list. 3.PLEDGE OF ALLEGIANCE 4.APPROVAL OF AGENDA A motion was made by Director Croucher, seconded by Director Keyes and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez, Robak and Smith Noes: None Abstain: None Absent: None to approve the agenda. 5.PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA Ms. Adriana Ochoa addressed the board and indicated her support for Agenda Item 19b, Approval of an Agreement Regarding Responsibilities Under Water Recycling Act of 1991 with Sweetwater Authority to Explore the Feasibility of Providing Recycled Water to SCI California Funeral Services, Inc. for the Glen Abbey Memorial Park and Mortuary, Located at 3838 Bonita Road, Bonita, CA 91902. Mr. Peter Chabot addressed the board to indicate his opposition of Agenda Item 16c, Impose a $5,000 Fine for Meter Tampering. AGENDA ITEM 4 2 6.PRESENTATION OF RECOGNITION PLAQUE TO BOARD PRESIDENT Vice President Robak presented a recognition plaque on behalf of the Board of Directors and staff to Board President Smith to thank him for his excellence in public service and outstanding leadership as president of the Otay Water District’s board of Directors during the past year. 7.ELECTION OF BOARD PRESIDENT As per Chapter 2, Section 1.03.B, Procedure for Election, of the District’s Code of Ordinances, General Manager Jose Martinez chaired the proceeding for election of the President. Afterwards, the newly elected president assumed office immediately and chaired the proceedings for the election of the Vice President and Treasurer. A motion was made by Director Robak for Director Tim Smith to continue as Board President. The motion was seconded by Director Croucher and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez and Robak Noes: None Abstain: Smith Absent: None to elect Director Smith as President. 8.ELECTION OF BOARD VICE PRESIDENT A motion was made by Director Smith for Director Robak to continue as Board Vice President. The motion was seconded by Director Keyes and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez and Smith Noes: None Abstain: Robak Absent: None to elect Director Smith as Vice President. 9.ELECTION OF BOARD TREASURER A motion was made by Director Smith for Director Lopez to continue as Board Treasurer. The motion was seconded by Director Croucher and carried with the following vote: Ayes: Directors Croucher, Keyes, Robak and Smith Noes: None Abstain: Lopez Absent: None 3 to elect Director Smith as Vice President. 10.RECESS OTAY WATER DISTRICT BOARD MEETING AND CONVENE THE OTAY WATER DISTRICT FINANCING AUTHORITY BOARD MEETING The Otay Water District board meeting was recessed at 3:54 p.m. and a meeting of the Otay Water District Financing Authority board was convened. 11.ROLL CALL Directors Present:Croucher, Keyes, Lopez, Robak and Smith 12.RE-AFFIRM OFFICERS OF THE OTAY WATER DISTRICT FINANCING AUTHORITY A motion was made by President Smith, seconded by Director Robak and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez, Robak and Smith Noes: None Abstain: None Absent: None to elect Director Smith as President, Director Robak as Vice President, General Manager Martinez as Executive Director, Chief Financial Officer Joe Beachem as Treasurer/Auditor, and District Secretary Tita Ramos-Krogman as Secretary to the Otay Water District Financing Authority. 13.ADJOURN OTAY WATER DISTRICT FINANCING AUTHORITY BOARD MEETING AND RECONVENE THE OTAY WATER DISTRICT BOARD MEETING President Smith adjourned the Otay Water District Financing Authority board meeting at 3:56 p.m. and reconvened the Otay Water District board meeting. 14.APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF NOVEMBER 3, 2021, AND SPECIAL MEETINGS OF OCTOBER 19, 2021, DECEMBER 1, 2021, AND DECEMBER 20, 2021 A motion was made by Director Keyes, seconded by Director Lopez and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez, Robak and Smith Noes: None Abstain: None Absent: None to approve the minutes of the regular board meeting of November 3, 2021, and special meeting of October 19, 2021, December 1, 2021, and December 20, 2021. 4 CONSENT ITEMS 15.ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: a)AWARD TWO (2) PROFESSIONAL SERVICES CONTRACTS FOR AS- NEEDED ELECTRICAL ENGINEERING CONSULTING SERVICES TO BSE ENGINEERING, INC. AND ENGINEERING PARTNERS, INC. FOR FISCAL YEARS 2022-2024 Director Keyes disclosed that he is an employee of BSE Engineering, Inc. and recused himself from this agenda item and left the meeting at 4 p.m. A motion was made by Director Croucher, seconded by Director Lopez and carried with the following vote: Ayes: Directors Croucher, Lopez, Robak and Smith Noes: None Abstain: None Absent: Keyes to approve staff’s recommendation. Director Keyes returned to the meeting at 4:02pm. b)AWARD OF TWO (2) PROFESSIONAL SERVICES CONTRACTS FOR AS- NEEDED ENGINEERING DESIGN SERVICES TO NV5, INC. AND WOOD RODGERS, INC. FOR FISCAL YEARS 2022-2024 c)IMPOSE A $5,000 FOR METER TAMPERING A motion was made by Director Croucher, seconded by Director Lopez and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez, Robak and Smith Noes: None Abstain: None Absent: None to approve staff’s recommendation. ACTION ITEMS 16.BOARD a)AUTHORIZE STAFF TO CONDUCT REMOTE TELECONFERENCE MEETINGS OF THE BOARD OF DIRECTORS, INCLUDING COMMITTEE MEETINGS, PURSUANT TO RESOLUTION NO. 4401 WHICH THE BOARD 5 ADOPTED AT A SPECIAL BOARD MEETING ON SEPTEMBER 27, 2021, AND IN ACCORDANCE WITH THE PROVISIONS OF GOVERNMENT CODE § 54953(e) FOR THE NEXT 30 DAYS BECAUSE (1) A STATE OF EMERGENCY RELATED TO COVID-19 IS CURRENTLY IN EFFECT; (2) LOCAL OFFICIALS IN SAN DIEGO COUNTY HAVE IMPOSED OR RECOMMENDED MEASURES TO PROMOTE SOCIAL DISTANCING IN CONNECTION WITH COVID-19; AND (3) DUE TO THE COVID-19 EMERGENCY, MEETING IN PERSON WOULD PRESENT IMMINENT RISKS TO THE HEALTH AND SAFETY OF ATTENDEES (MARTINEZ) A motion was made by Director Keyes, seconded by Director Robak and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez, Robak and Smith Noes: None Abstain: None Absent: None to authorize staff to conduct remote teleconference meetings of the board of directors for the next 30 days, including committee meetings, pursuant to Resolution No. 4401 which the board adopted at a special board meeting on September 17, 2021, and in accordance with the provisions of Government Code § 54953(e). b)DISCUSS THE 2022 BOARD MEETING CALENDAR (RAMOS-KROGMAN) There were no changes to the board meeting calendar. 17.FINANCE AND ADMINISTRATION a)REVIEW OF THE FY 2021 ACTUARIAL VALUATION REPORT OF THE RETIREE HEALTHCARE BENEFITS; AND REQUEST THE BOARD APPROVE THE REDIRECTION OF THE FY 2022 BUDGETED OPEB CONTRIBUTION FROM THE CERBT OPEB FUND TO THE CALPERS PENSION FUND Mr. Eid Fakhouri, Finance Manager of Treasury & Accounting Services, provided the staff report to the board and introduced Mr. Luis Murrillo who provided details and results of the 2021 Actuarial Valuation Report. Staff responded to questions from the board. A motion was made by Director Lopez, seconded by Director Robak and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez, Robak and Smith Noes: None Abstain: None Absent: None to approve staff’s recommendation. 6 18.ENGINEERING AND OPERATIONS a)RENEWAL OF MEXICO AGREEMENT TO TRANSFER WATER AND TO ADJUST THE WHEELING RATE FOR THE DELIVERY OF TREATY WATERS TO MEXICO System Operations Manager Jake Vaclavek provided the staff report to the board. He responded to questions from the board. A motion was made by Director Keyes, seconded by Director Lopez and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez, Robak and Smith Noes: None Abstain: None Absent: None to approve staff’s recommendation. b)APPROVAL OF AN AGREEMENT REGARDING RESPONSIBILITIES UNDER WATER RECYCLING ACT OF 1991 WITH SWEETWATER AUTHORITY TO EXPLORE THE FEASIBILITY OF PROVIDING RECYCLED WATER TO SCI CALIFORNIA FUNERAL SERVICES, INC. FOR THE GLEN ABBEY MEMORIAL PARK AND MORTUARY, LOCATED AT 3838 BONITA ROAD, BONITA, CA 91902 Engineering Manager Michael Long provided the staff report to the board. General Counsel Dan Shinoff indicated that District staff will be collaborating with Ms. Adriana Ochoa to draft an agreement for recycled water services. Staff responded to additional comments and questions from the board. A motion was made by Director Lopez, seconded by Director Keyes and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez, Robak and Smith Noes: None Abstain: None Absent: None to approve staff’s recommendation. INFORMATIONAL ITEMS 19.THE FOLLOWING ITEMS ARE PROVIDED TO THE BOARD FOR INFORMATION PURPOSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEMS: 7 a)INFORMATIONAL ITEM – FIRST QUARTER FISCAL YEAR 2022 CAPITAL IMPROVEMENT PROGRAM REPORT Engineering Manager Michael Long provided a PowerPoint presentation to the board. He responded to comments and questions from the board. b)DISCUSSION AND DIRECTION REGARDING THE PROPOSED FY 2023-FY 2026 STRATEGIC PLAN Information Technology Manager Michael Kerr provided a PowerPoint Presentation to the board and indicated that several key performance indicators were removed from the FY 2023-FY 2026 Strategic Plan. The board shared their input for the upcoming strategic plan and provided their list of several key indicators they wished to keep. 20.GENERAL MANAGER’S REPORT General Manager Martinez presented information from his report that included an update on the District’s response to the COVID-19 pandemic, redistricting project, State Water Arrearages Program, November 14th ten-day shutdown by San Diego County Water Authority, and the District’s 65th Anniversary. 21.SAN DIEGO COUNTY WATER AUTHORITY UPDATE President Smith shared that the December 2021 San Diego County Water Authority (CWA) Board meeting was cancelled. Director Croucher shared that CWA is preparing for a January 13, 2022, Board Retreat, and that CWA continues to work with MWD. 22.DIRECTORS’ REPORTS/REQUESTS Director Lopez requested a tour of the District’s Ralph W. Chapman Water Recycling Facility. Director Keyes indicated that he is interested in attending field trips and inter-agency meetings. 23.PRESIDENT’S REPORT/REQUESTS President Smith indicated that he provided his report to District Secretary Tita Ramos- Krogman which will be attached to the minutes of this meeting. He shared that he continues to support the safety of employees and the support of customers. He also shared other goals for 2022 as President. 8 24.CLOSED SESSION The board recessed to closed session at 5:52pm to discuss the following matters: a)DISCUSSION RELATING TO CORONAVIRUS (COVID-19) AND PUBLIC SERVICES [GOVERNMENT CODE §54957] b)CONFERENCE WITH REAL PROPERTY NEGOTIATORS Pursuant to California Government Code §54956.8 Property: SALT CREEK GOLF COURSE 525 HUNTEPARKWAY CHULA VISTA, CA 91914 Agency negotiator: General Counsel Under negotiation: Disposition of Property c)CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [GOVERNMENT CODE §54956.9] OTAY WATER DISTRICT vs. CITY OF SAN DIEGO; CASE NO. 37-2017- 00019348-CU-WM-CTL d)CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [GOVERNMENT CODE §54956.9] MARK COZIAHR, ET AL. vs. OTAY WATER DISTRICT, CASE NO. 37-2015- 000-CU-MC-CTL e)CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [GOVERNMENT CODE §54956.9] RONALD BENSKIN vs. OTAY WATER DISTRICT, ET AL. CASE NO. 37-2021- 00007686-CU-WM-CTL f)CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (GOVERNMENT CODE § 54956.9) NAME OF CLAIMANT: THARSOS, INC. g)CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (GOVERNMENT CODE § 54956.9) NAME OF CLAIMANT: WEIR CONSTRUCTION 9 h)CONFERENCE WITH LEGAL COUNSEL – PENDING LITIGATION (GOVERNMENT CODE § 54956.9(b)) ONE MATTER: BONNIE KESSNER AND ANDREA MCCARTNEY-PAGE, ET AL. vs. CITY OF SANTA CLARA, ET AL.; SANTA CLARA COUNTY SUPERIOR COURT, CASE NO.: 20CV364054 i)EVALUATION OF GENERAL COUNSEL Pursuant to Government Code §54954.5 General Counsels Dan Shinoff and Jeanne Blumenfeld left the meeting at approximately 7:20 p.m. and returned to the meeting at 7:58 p.m. Director Croucher left the meeting at 8:16pm. RETURN TO OPEN SESSION 25.REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION. The board reconvened from closed session at 8:17pm and General Counsel Dan Shinoff reported that the board took three (3) reportable actions in closed session. Agenda Item 25b: The board unanimously approved the authorization for the General Manager to proceed with a final purchase agreement; Agenda Item 25f: The board unanimously approved to settle a claim with Tharsos, Inc., and directed the General Manager and Counsel to draft and execute all necessary documents to resolve and settle the disputed claim, which would include a full release of all claims; and Agenda Item 25i: The board unanimously approved to extend the agreement of general counsel until May 30, 2022. OTAY WATER DISTRICT FINANCING AUTHORITY 26.NO MATTERS TO DISCUSS 27.ADJOURNMENT With no further business to come before the Board, President Smith adjourned the meeting at 8:19 p.m. ___________________________________ President ATTEST: District Secretary (Director’s Signature) GM Receipt: Date: 01/07/22 FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $ OTAY WATER DISTRICT BOARD OF DIRECTORS PER-DIEM AND MILEAGE CLAIM FORM Pay To: Tim Smith Period Covered: Employee Number: 1845 From: 12/1/21 To: 12/31/21 ITEM DATE MEETING PURPOSE / ISSUES DISCUSSED (Via Teleconference) MILEAGE HOME to OWD OWD to HOME MILEAGE OTHER LOCATIONS 1 12/01/21 OWD Special Board Meeting Special Board Meeting - - 2 12/01/21 ACWA Fall Conference NO CHARGE - - 3 12/02/21 ACWA Fall Conference - 156 4 12/07/21 EO&WR Committee Meeting Meeting with GM, Legal and staff to discuss agenda items going to the January 5, 2022 board meeting - - 5 12/14/21 Ad-Hoc Salt Creek Golf Course Meeting Discuss Salt Creek Golf Course property matters - - 6 12/17/21 CWA Matters Meeting Discuss CWA Matters with GM Martinez and Director Croucher - - 7 12/20/21 OWD Special Board Meeting Special Board Meeting -- 8 12/29/21 Agenda Review Meeting Meeting with GM and Legal Counsel to review agenda items going to the January 5, 2022 board meeting - Total Meeting Per Diem: $ 1,064 ($152 per diem) Total Mileage Claimed: 156 miles (Director’s Signature) GM Receipt: Date: FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $ OTAY WATER DISTRICT BOARD OF DIRECTORS PER-DIEM AND MILEAGE CLAIM FORM Pay To: Ryan Keyes Period Covered: Employee Number: 1896 From: 12-1-21 To: 12-31-21 ITEM DATE MEETING PURPOSE / ISSUES DISCUSSED MILEAGE HOME to OWD OWD to HOME MILEAGE OTHER LOCATIONS 1 12-1-21 OWD Regular Board Meeting Monthly Board Meeting - - 2 12-20-21 OWD Special Board Meeting Special Board Meeting - - 3 - - 4 - - 5 - - 6 - - 7 - - 8 - - 9 - - 10 - - Total Meeting Per Diem: $304 ($152 per meeting) Total Mileage Claimed: 0 Miles (Director’s Signature) GM Receipt: Date: FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $ OTAY WATER DISTRICT BOARD OF DIRECTORS PER-DIEM AND MILEAGE CLAIM FORM Pay To: Jose Lopez Period Covered: Employee Number: 7010 From: 12/1/21 To: 12/31/21 ITEM DATE MEETING PURPOSE / ISSUES DISCUSSED MILEAGE HOME to OWD OWD to HOME MILEAGE OTHER LOCATIONS 1 12/01/21 Otay Water District Special Board Meeting 2 12/07/21 Otay Water District Finance/Admin Committee 3 12/07/21 South County Economic Development Council Monthly Board meeting (No Charge) 4 12/20/21 Otay Water District Special Board Meeting 5 6 7 8 9 10 Total Meeting Per Diem: $ 456 ($152 per diem) Total Mileage Claimed: miles Mark Robak 7014 From:12/1/2021 12/31/2021 ITEM DATE MEETING PURPOSE / ISSUES MILEAGE HOME TO OWD OWD TO HOME MILEAGE OTHER LOCATIONS 1 12/1/2021 ACWA Conference Semi-Annual meeting 0 0 2 12/1/2021 Otay Water District Special Board Meeting - NO CHARGE 0 0 3 12/2/2021 ACWA Conference Semi-Annual meeting 0 150 4 12/3/2021 East County Chamber of Commerce First Friday Breakfast - NO CHARGE 0 0 5 12/3/2021 Cuyamaca College Ornamental Horticulture Complex Grand Opening - NO CHARGE 0 0 6 12/6/2021 LAFCO Meeting Discussion of draft municipal service review on the Fallbrook region.0 0 7 12/7/2021 East County Chamber of Commerce Government Affairs & Infrastructure Committee -NO CHARGE 0 0 8 12/7/2021 Otay Finance & Administration Committee Discuss finance & operations issues 0 0 9 12/14/2021 Ad-Hoc Salt Creek Golf Course Committee Discuss disposition of property 0 0 10 12/15/2021 East County EDC Monthly Board Meeting 0 0 11 12/17/2021 LAFCO Special Districts Advisory Committee Discussion of government efficiency matters 0 0 12 12/20/2021 Otay Water District Special Board Meeting 0 0 0 150 $ 1,216 150 Miles GM Receipt: Date: ___________________ FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $_____________ Pay To:Period Covered Employee Number Total Mileage Claimed: Director Signature ($152 PER MEETING) Total Meeting Per Diem: OTAY WATER DISTRICT BOARD OF DIRECTORS PER-DIEM AND MILEAGE CLAIM FORM STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: February 2, 2022 SUBMITTED BY: Michael Long Engineering Manager PROJECT NO: FILE NO: D1108-090517 ANX-21-002 DIV. NO. 5 APPROVED BY: Rod Posada, Chief, Engineering Jose Martinez, General Manager SUBJECT: Adopt Resolution No. 4403 Approving the Sewer Annexation of Property Owned by Annland Investments, LLC (APN 517-091-08-00; 1761 Jamacha Road, El Cajon, CA) to Otay Water District Sewer Improvement District No. 18 GENERAL MANAGER’S RECOMMENDATION: Adopt Resolution No. 4403 approving the annexation of the property owned by Annland Investments, LLC (APN 517-091-08-00; 1761 Jamacha Road, El Cajon, CA) to Otay Water District Sewer Improvement District (ID) No. 18 (see Exhibit C for Location Map). COMMITTEE ACTION: Please see Attachment A. PURPOSE: The proposed annexation is to provide sewer service to the parcel located at 1761 Jamacha Road, El Cajon, in an unincorporated area of the County of San Diego California 92019 (APN 517-091-08-00). ANALYSIS: A written request and Petition signed by Project Manager, Saad Bourachi at USA Proficiency Designs, has been received for annexation of APN 517-091-08-00, located at 1761 Jamacha Road, AGENDA ITEM 7a 2 in the City of El Cajon and County of San Diego, for sewer service. The total acreage to be annexed is 0.50 acres. The property is within the jurisdictional boundary of the Otay Water District and following the Board’s approval, it will become part of Sewer ID No. 18. The parcel is located adjacent to an existing 8-inch Otay Water District sewer main in Jalisco Road and 12-inch water main in Jamacha Road. The parcel is already contained within the District’s water ID boundary. This parcel is part of the District’s Wastewater Master Plan. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The property owner has paid the District’s annexation processing fee of $898.01, sewer annexation fee for one (1) sewer EDU (current fee is $1,264.41 per EDU) and will pay sewer capacity fees upon annexation approval for parcels located outside the sewer ID (current fee is $8,873.06 per EDU) in effect at the time the service is provided, and any additional fees, including the availability fee, as established in the attached Resolution. STRATEGIC GOAL: Provide enhanced sewer service to meet customer needs. LEGAL IMPACT: No legal impact. MJL/RP:jf https://otaywater365.sharepoint.com/sites/engpublicservices/Shared Documents/SAMP WSA ANX/D1108-090517 Sewer Annexation 1761 Jamacha Road/Staff Report/BD 02-02-2022 - Staff Report Sewer Annexation ID 18 - Annland Investments LLC Sewer Annex Request.doc Attachments: Attachment A - Committee Action Attachment B - Resolution No. 4403 Exhibit A - Legal Description Exhibit B - Legal Map Exhibit C – Location Map ATTACHMENT A SUBJECT/PROJECT: D1108-090517 ANX-21-002 Adopt Resolution No. 4403 Approving the Sewer Annexation of Property Owned by Annland Investments, LLC (APN 517-091-08-00; 1761 Jamacha Road, El Cajon, CA) to Otay Water District Sewer Improvement District No. 18 COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on January 19, 2022 and the following comments were made: • Staff recommended that the Board Adopt Resolution No. 4403 approving the sewer annexation of property owned by Annland Investments, LLC (APN 517-091-08-00; 1761 Jamacha Road, El Cajon, CA) to Otay Water District Sewer Improvement District No. 18. • Staff mentioned that the sewer lateral would be connected via an easement which takes off over to Jalisco through the neighboring property behind them. • A comment was made that this sewage would be collected and treated at the Otay Water District sewage plant. Currently, they are on septic and the sewage would be reused rather than injected into the ground. Following the discussion, the Committee supported staffs’ recommendation and presentation to the full board as a Consent Item. ATTACHMENT B Page 1 of 4 RESOLUTION NO. 4403 A RESOLUTION OF THE BOARD OF DIRECTORS OF OTAY WATER DISTRICT APPROVING THE ANNEXATION TO OTAY WATER DISTRICT IMPROVEMENT DISTRICT NO. 18 OF THOSE LANDS DESCRIBED AS “ANNLAND INVESTMENTS, LLC SEWER ANNEXATION (APN: 517-091-08-00)” (FILE NO. ANX-21-002/DIVISION 5) WHEREAS, a letter has been submitted by Saad Bourachi, the Project Manager representing the owner and party (Annland Investments, LLC) that has an interest in the land described in Exhibit "A," attached hereto, for annexation of said land to Otay Water District Sewer Improvement District No. 18 pursuant to California Water Code Section 72670 et seq.; and WHEREAS, pursuant to Section 72680.1 of said Water Code, the Board of Directors may proceed and act thereon without notice and hearing. NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT FINDS, RESOLVES, ORDERS AND DETERMINES as follows: 1. A depiction of the area proposed to be annexed, and the boundaries of ID 18 following the annexation, is set forth on a map in Exhibit “B” filed with the Secretary of the District, which map shall govern for all details as to the area proposed to be annexed. 2. The purpose of the proposed annexation is to make sewer service available to the area to be annexed, which availability constitutes a benefit to said area. 3. The Board finds and determines that the area proposed to be annexed to ID 18 will be benefited by such annexation and that the property currently within ID 18 will also be benefited and not injured by such annexation because after the annexation ATTACHMENT B Page 2 of 4 a larger tax base will be available to finance the sewer facilities and improvements of ID 18. 4. The Board of Directors hereby declares that the annexation of said property is subject to the owners complying with the following terms and conditions: (a) The petitioner for said annexation shall pay to Otay Water District the following: (1) The annexation processing fee at the time of application; (2) State Board of Equalization filing fees in the amount of $3,500, if applicable; (3) The sewer annexation fees at the time of connection to the Otay Water District water system; (4) Yearly assessment fees will be collected through the County Tax Assessor’s office in the amount of $10 for APN 517-091-08-00; (5) In the event that sewer service is to be provided, Petitioners shall pay all applicable sewer fees per Equipment Dwelling Unit (EDU) at the time the sewer connection is purchased; and (6) Payment by the owner of APN 517-091-08-00 of all other applicable local or state agency fees or charges. (b) The property to be annexed shall be subject to taxation after annexation thereof for the ATTACHMENT B Page 3 of 4 purposes of the improvement district, including the payment of principal and interest on bonds and other obligations of the improvement district, authorized and outstanding at the time of annexation, the same as if the annexed property had always been a part of the improvement district. 5. The Board hereby declares the property described in Exhibit "A" shall be considered annexed to ID 18 upon passage of this resolution. 6. The Board of Directors further finds and determines that there are no exchanges of property tax revenues to be made pursuant to California Revenue and Taxation Code Section 95 et seq., as a result of such annexation. 7. The annexation of APN 517-091-08-00 to the District’s Sewer Improvement District 18 is hereby designated as the “ANNLAND INVESTMENTS, LLC SEWER ANNEXATION (APN: 517-091-08- 00).” 8. Pursuant to Section 57202(a) of the Government Code, the effective date of the ANNLAND INVESTMENTS, LLC SEWER ANNEXATION (APN: 517-111-67-00) shall be the date this Resolution is adopted by the Board of Directors of the Otay Water District. 9. The General Manager of the District and the Secretary of the District, or their respective designees, are hereby ordered to take all actions required to complete this annexation. ATTACHMENT B Page 4 of 4 PASSED, APPROVED AND ADOPTED by the Board of Directors of the Otay Water District at a regular meeting held this 2nd day of February, 2022. President ATTEST: __________________________________ District Secretary LAN¿) 11, Ter*iiçu; t..$. CIng1 AL J U tY 22, 2C21 ANNEXATION NO.2021. ANNEXATION TO OTAY WATER DISTRICT GEOGRAPHICAL DESCRI PTION ALL THAT CIRTATN PROPIRTY STTUATID tN THE SOUTHW[Sr 1/4 Or THE SOUTHWEST 1/4 OF SECTTON '19, TOWNSHTP 16 SOUTH, RANGE 1 EAST, SAN BERNARDINO MERIDIAN, IN THI COUNTY OF SAN DIIGO, STATE OF CALIFORNIA, ACCORDING TO THt UNITTD STATES GOVERNMENT SURVEY, DESCRIBID AS FOLLOWS: BIING LOT B OF SUBDIVISION N4AP NO 4651 JAMACHA TERRACT, IN THE COUNTY OF SAN DITGO, STATE OF CALIFORNIA, TILID IN THI OFFICE OT THI RTCORDER OF SAN DIIGO COUNTY, BTING N/ORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT TIT CINTERLINE INTERSECTION OF HILTSDALE ROAD AND JALISCO ROAD, AS SHOWN ON MAP NO.4651, OI JAN/ACHA TERRACE, RTCORDID AS FILE NO 2OBB1O IN THE OFFICE OF THE RTCORDIR OF THE COUNIY OT SAN DIEGO, AND THE TRUE POINT Or BEGINNING; THENCT ALONG THt CTNIERLINE OF JALISCO ROAD 1. SOUTH OO' OB' OO,, WEST 368.84 TEET TO AN ANGLT POINT IN THE CTNTERLINE OF SAID JALISCO ROAD, THENCE LEAVING SAID LINI 2. NORTH 89" 52' OO" WEST 30.00 r[ET TO AN POINT ON THE TASTERLY PROFERTY LINE OF LOT 20 OI- SUBDIVISION N/AP NO. 465i, 0.R., AND THE BEGINNING OF A NON_TANGTNTIAL CURVI, SAID CURVE HAVING A RADIUS OF 43O.OO FEET, AND WHOST LONG CHORD BEARS 3. NORTr-] 03' 03' 29" WIST 4f .91 FIET THENCI LEAVING SAID EASTTRLY LINE 4. SOUTH 83" 44, 54,' WEST 231.79 FEIT THINCE 5. SOUTH O" OB, OO" WEST 82.43 FE'I TO THE NORTH IAST C OF LOT B OT SUBDIVISION MAP NO. 4651, O.R, AND THE POINT OF BEGINNìNG, TH[NCE 6. SOUTH 13" 42' 00" IAST 94.02 FZIT THENCE sH[tT 1 0t 2 EXHIBIT A J U tY 22, 202tr LAND l-.$. 90e1 riF c 1.S.9091 2231 l tRl¿z [*p.3/ c) a rt-lnrt- LA ND : J * s ofl oF cnuô ANNEXATION NO.2021- 7. SOUTH 76" 18, OO,, WTST 212.00 tttT TO THI SOUTHWISTERLY CORNER OF LOT B OF SUBDIVISION MAP NO. +651, O.R, THENCE B. NORTH 13' 42' OO'' WEST 4.47 TE:I TO A POINT ON THI WTSTERLY PROPERÏY LINE OF LOT B OF SUBDIVISION MAP NO. 4651, O.R., AND THE BEGINNING OF A NON_TANGTNTIAL CURVE, SAID CURVE BTING CONCAVE NORTHEASTERLY AND TURNING THROUGH AN ANGLT OF 05"24, 13.5'" HAVING A RADIUS OF 1150.OO FTIT, AND WHOSI LONG CHORD BEARS 9. NORTH 1 0' 59' 53" WIST 108.46 FEET THENCE LEAVING SAID TASTERLY LINT 10. NORTH 81' 28, 38,' EAST 207.73 aEET TO THI NORTHIASTERLY CORNER OT LOT B OF SUBDIVISION IVlAP NO. 4651, O.R, AND THE POINT OF BEGINNING. CONTAINING .5OACRES N/ORE OR LTSS FOR ASSESSMENT PURPOSES ONLY. THIS DESCRIPTION OF LAND IS NOT A LEGAL PROPERTY DESCRIPTION AS DEFINED IN THE SUBDIVISION MAP ACT AND MAY NOT BE USED AS THE B/^S/S FOR AN OFFER FOR SALE OF THE LAND DESCRIBED I TERTIIITtIGER THOMAS L.S. 9091 LAND SURVEY ENGINEERS 14 MONARCH BAY PLAZA, #231 DANA POINT, CA 92629 310.66ô.25'10 Ltc. EXP. 03131122 TE z sHttT 2 0r 2 LAND Thomas t-.$. 9c31 OTAY WATER DISTRICT ANNEXATION IN THE SW Í OF THT SW ; OT SECTION 19, T. 16 S, R. 1 [., S.B.l\/ Ëft \ '". ..' . ... Y:'--.,'Á, r '-- YII Fø '*'1:*:.i? VICINIry MAP @ 1 oF.1 ANNEXATION NO.2021- ANNEXATION TO OTAY WATER DISTRICT PLAT MAP LEGEND r I I I I:: I I J' EXISTINC OTAY ITATER DISTRICT BOUNDARY PROPOSED OTAY WATER DISTRICT DOUNDARY SEWER EASEMENT POINT OF BECINNING RADIAL BEARINC DISCLeIMER: "FOR ASSESSMENT PURPOSES ONLY, THIS DESCRIPTION OF LA,ND IS NOT A LEC.4,L PROPERTY DESCRIPTION AS DEFINEDIN TTTE SUBDIVISION MAP ACT A,ND MAY NOT BE USED AS THE BASIS FOR AN OFFER FOR SÀLE OF LAND DESCRIBED. P.O.B. (R) - - N91'-l!- 99! - - IIiI @ 231 19' @l I'''. t I IL:55.90' R:4J0 .uu -{00" \ \_r EXISTING DìSTRICT Y i-) ñ00 Lrloo io() ¿)z 30 .00 v( (Pro\o BOUNDAR LOT 19 1 19-00 LOT 7 ^^517-091-0 /-uu @ @ 517-09 ,.' 00"N3'qL 2\+t g1 NPA N1 3' 42 Oo'N 21 2l SE$]ER ÉASÉ\¡ÉN1 APN N16 L--I-,o 0030.00 \\s t 7A' 35' 0 \\n\o\P\ 1 otv Fo . ^{ 18 ^ o-00LU-' nq1- \o 5\ l-"" APN - -¿¿¿¿¿'='I\\ \\\-"--'J/"/ ú \ \ \\tt \ tl@ IlúI \ POR. SW 1/4 OF sw 1/4 oF sEC. 19,T.16S.R.18. S.B.M. THû$¡S L5, $0Ð'1 l-lû. EXP, ü3,äT¡¿Ê TERWIttIûER LAND SURVEY ENGINËÊRS )cRnpHtc SCALE: 1":70' J U LY 22, 2C21 fu.ÐÂYE T 14 MONARCH BAY PLAZA, #231 DANA POINT, CA 92629 310.666.2510 N13" 42' 00" s4.o2 LOl B @ --00 09\- -_ 5\ Jb1708'L 0050. ,_Ê 40 +,L +'1' $l00"3N1 &.NAP å- ç\ O J eLA ND Rt1W F,xp.3/3 ¿2 % OI L.S. 9091 6) t-._ fn;\) EXHIBIT B OTAY WATER DISTRICT ANNEXATION OF APN 517-091-08-00 TO THEOTAY WATER DISTRICT AND TO IMPROVEMENT DISTRICT 18LOCATION MAPEXHIBIT AC:\Users\donald.bienvenue\OneDrive - Otay Water District\Desktop\Exhibit A - 1761 Jamacha Rd.mxd R$ VICINITY MAP PROJECT SITE DIV 5 DIV 1 DIV 2 DIV 4 DIV 3 ÃÅ54!\ ÃÅ125 ÃÅ94 ÃÅ905 §¨¦805 FNTS PROJECT SITE ANX-21-002F 0 16080 Feet DISTRICTSEWER J A L E S C O R D HILLSDALE RD J A M A C H A R D STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: February 2, 2022 SUBMITTED BY: Michael Long Engineering Manager PROJECT NO: FILE NO: D1113-090518 ANX-21-003 DIV. NO. 5 APPROVED BY: Rod Posada, Chief, Engineering Jose Martinez, General Manager SUBJECT: Adopt Resolution No. 4404 Approving the Sewer Annexation of Property Owned by Michael Tohe and Hanna Nidaa (aka Maher Mekha) (APN 517-111-67-00 - Vista Vereda, El Cajon, CA) to Otay Water District Sewer Improvement District No. 18 GENERAL MANAGER’S RECOMMENDATION: Adopt Resolution No. 4404 approving the annexation of the property owned by Michael Tohe and Hanna Nidaa (aka Maher Mekha) (APN 517-111-67-00; Vista Vereda, El Cajon, CA) to Otay Water District Sewer Improvement District (ID) No. 18 (see Exhibit C for Location Map). COMMITTEE ACTION: Please see Attachment A. PURPOSE: The proposed annexation is to provide sewer service to the parcel located on Vista Vereda, El Cajon, in an unincorporated area of the County of San Diego California 92019 (APN 517-111-67-00). ANALYSIS: A written request and Petition signed by Licensed Surveyor, Nicole Spencer, has been received for annexation of APN 517-111- 67-00, located on Vista Vereda, in the City of El Cajon and AGENDA ITEM 7b 2 County of San Diego, for sewer service. The total acreage to be annexed is 0.60 acres. The property is within the jurisdictional boundary of the Otay Water District and following the Board’s approval, it will become part of Sewer ID No. 18. The parcel is located adjacent to an existing 8-inch Otay Water District sewer main and 12-inch water main. The parcel is already contained within the District’s water ID boundary. This parcel is part of the District’s Wastewater Master Plan. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The property owner has paid the District’s annexation processing fee of $898.01, sewer annexation fee for one (1) sewer EDU (current fee is $1,264.41 per EDU) and will pay sewer capacity fees upon annexation approval for parcels located outside the sewer ID (current fee is $8,873.06 per EDU) in effect at the time the service is provided, and any additional fees, including the availability fee, as established in the attached Resolution. STRATEGIC GOAL: Provide enhanced sewer service to meet customer needs. LEGAL IMPACT: No legal impact. MJL/RP:jf https://otaywater365.sharepoint.com/sites/engpublicservices/Shared Documents/SAMP WSA ANX/D1113-090518 Sewer Annexation Vista Vereda/Staff Report/BD 02-02-2022 - Staff Report Sewer Annexation ID 18 - Tohe Sewer Annex Request.doc Attachments: Attachment A - Committee Action Attachment B - Resolution No. 4404 Exhibit A - Legal Description Exhibit B - Legal Map Exhibit C – Location Map ATTACHMENT A SUBJECT/PROJECT: D1113-090518 ANX-21-003 Adopt Resolution No. 4404 Approving the Sewer Annexation of Property Owned by Michael Tohe and Hanna Nidaa (aka Maher Mekha) (APN 517-111-67-00 - Vista Vereda, El Cajon, CA) to Otay Water District Improvement District No. 18 COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on January 19, 2022 and the following comments were made: • Staff recommended that the Board adopt Resolution No. 4404 approving the sewer annexation of property owned by Michael Tohe and Hanna Nidaa (aka Maher Mekha) (APN 517-111-67-00 - Vista Vereda, El Cajon, CA) to Otay Water District Improvement District No. 18. • A comment was made that this sewage would be collected and treated at the Otay Water District sewage plant. Currently, they are on septic and the sewage would be reused rather than injected into the ground. Following the discussion, the Committee supported staffs’ recommendation and presentation to the full board as a Consent Item. ATTACHMENT B Page 1 of 4 RESOLUTION NO. 4404 A RESOLUTION OF THE BOARD OF DIRECTORS OF OTAY WATER DISTRICT APPROVING THE ANNEXATION TO OTAY WATER DISTRICT IMPROVEMENT DISTRICT NO. 18 OF THOSE LANDS DESCRIBED AS “MICHAEL TOHE SEWER ANNEXATION (APN: 517-111-67-00)” (FILE NO. ANX-21-003/DIVISION 5) WHEREAS, a letter has been submitted by NICOLE SPENCER, the Licensed Surveyor representing the owner and party (Michael Tohe) that has an interest in the land described in Exhibit "A," attached hereto, for annexation of said land to Otay Water District Sewer Improvement District No. 18 pursuant to California Water Code Section 72670 et seq.; and WHEREAS, pursuant to Section 72680.1 of said Water Code, the Board of Directors may proceed and act thereon without notice and hearing. NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT FINDS, RESOLVES, ORDERS AND DETERMINES as follows: 1. A depiction of the area proposed to be annexed, and the boundaries of ID 18 following the annexation, is set forth on a map in Exhibit “B” filed with the Secretary of the District, which map shall govern for all details as to the area proposed to be annexed. 2. The purpose of the proposed annexation is to make sewer service available to the area to be annexed, which availability constitutes a benefit to said area. 3. The Board finds and determines that the area proposed to be annexed to ID 18 will be benefited by such annexation and that the property currently within ID 18 will also be benefited and not injured by such annexation because after the annexation ATTACHMENT B Page 2 of 4 a larger tax base will be available to finance the sewer facilities and improvements of ID 18. 4. The Board of Directors hereby declares that the annexation of said property is subject to the owners complying with the following terms and conditions: (a) The petitioner for said annexation shall pay to Otay Water District the following: (1) The annexation processing fee at the time of application; (2) State Board of Equalization filing fees in the amount of $3,500, if applicable; (3) The sewer annexation fees at the time of connection to the Otay Water District water system; (4) Yearly assessment fees will be collected through the County Tax Assessor’s office in the amount of $10 for APN 517-111-67-00; (5) In the event that sewer service is to be provided, Petitioners shall pay all applicable sewer fees per Equipment Dwelling Unit (EDU) at the time the sewer connection is purchased; and (6) Payment by the owner of APN 517-111-67-00 of all other applicable local or state agency fees or charges. (b) The property to be annexed shall be subject to taxation after annexation thereof for the ATTACHMENT B Page 3 of 4 purposes of the improvement district, including the payment of principal and interest on bonds and other obligations of the improvement district, authorized and outstanding at the time of annexation, the same as if the annexed property had always been a part of the improvement district. 5. The Board hereby declares the property described in Exhibit "A" shall be considered annexed to ID 18 upon passage of this resolution. 6. The Board of Directors further finds and determines that there are no exchanges of property tax revenues to be made pursuant to California Revenue and Taxation Code Section 95 et seq., as a result of such annexation. 7. The annexation of APN 517-111-67-00 to the District’s Sewer Improvement District 18 is hereby designated as the “MICHAEL TOHE SEWER ANNEXATION (APN: 517-111-67-00).” 8. Pursuant to Section 57202(a) of the Government Code, the effective date of the MICHAEL TOHE SEWER ANNEXATION (APN: 517-111-67-00) shall be the date this Resolution is adopted by the Board of Directors of the Otay Water District. 9. The General Manager of the District and the Secretary of the District, or their respective designees, are hereby ordered to take all actions required to complete this annexation. ATTACHMENT B Page 4 of 4 PASSED, APPROVED AND ADOPTED by the Board of Directors of the Otay Water District at a regular meeting held this 2nd day of February, 2022. President ATTEST: __________________________________ District Secretary ANNEXATION NO. 2021-__ ANNEXATION T OTAY WATER DISTRICT GEOGRAPHICAL DESCRIPTION PARCEL 2 OF PARCEL MAP 7030, RECORDED MARCH 17, 1978 IN BOOK OF PARCEL MAPS, AT PAGE 7030, AS FILE NO. 78-1064535, BEING A PORTION OF THE SOUTHWEST QUARTER OF THE NORTHEAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 19, TOWNSHIP 16 SOUTH, RANGE 1 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF THE NORTHEAST QUARTER OF THE NORTHEAST QUARTER OF SAID SECTION 19; THENCE, ALONG THE FOLLOWING COURSES: COURSE 1: SOUTH 00˚ 38’ 51” WEST, 121.00 FEET TO THE TRUE POINT OF BEGINNING COURSE 2: SOUTH 00˚ 38’ 51” WEST, 99.00 FEET COURSE 3: SOUTH 89˚ 54’ 28” EAST, 265.89 FEET COURSE 4: NORTH 00˚ 33’ 32” EAST, 98.99 FEET COURSE 5: NORTH 89˚ 54’ 21” WEST, 265.74 FEET TO THE TRUE POINT OF BEGINNING CONTAINING 26313.20 SQUARE FEET OR 0.604 ACRES MORE OR LESS FOR ASSESSMENT PURPOSES ONLY. THIS DESCRIPTION IS NOT A LEGAL PROPERTY DESCRIPTION AS DEFINED IN SUBDIVISION MAP ACT AND MAY NOT BE USED AS THE BASIS FOR AN OFFER FOR SALE OF THE LAND DESCRIBED. __________________________9/20/2021_ N. J. SPENCER DATE L.S. 8734 LIC. EXP. 12/31/2022 OTAY WATER DISTRICT ANNEXATION OF APN 517-111-67-00 TO THEOTAY WATER DISTRICT AND TO IMPROVEMENT DISTRICT 18LOCATION MAPEXHIBIT AC:\Users\donald.bienvenue\OneDrive - Otay Water District\Desktop\Exhibit A - 1640 Vista Vereda.mxd !\ VICINITY MAP PROJECT SITE DIV 5 DIV 1 DIV 2 DIV 4 DIV 3 ÃÅ54 ÃÅ125 ÃÅ94 ÃÅ905 §¨¦805 FNTS PROJECT SITE ANX-21-003F 0 16080 Feet DISTRICTSEWER VISTA VEREDA CT VISTA VEREDA HIDDEN MESA RD HIDDEN S P R I N G S CT HIDDEN MESA TRL STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: February 2, 2022 SUBMITTED BY: Andrea Carey, Customer Service Manager PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Jose Martinez, General Manager SUBJECT: Authorize a Purchase Order to Core and Main in an Amount not to Exceed $133,197.57 for the Purchase of a New Meter Test Bench GENERAL MANAGER’S RECOMMENDATION: That the Board authorize the General Manager to issue a purchase order to Core and Main in an amount not to exceed $133,197.57 for the purchase of a new meter test bench. COMMITTEE ACTION: See Attachment A. PURPOSE: To obtain Board authorization to purchase a new meter test bench from Core and Main in an amount not to exceed $133,197.57. ANALYSIS: The District’s current meter test bench, responsible for evaluating the accuracy of meters 2” or smaller, is over 40 years old and is no longer functioning as needed. At present time, the current meter test bench can only test one 3/4” or one 1” meter at a time and can no longer test any meters above 1 1/2”. AGENDA ITEM 7c 2 Having an in-house test bench for smaller meters is an integral part of the District’s meter program. Many of the District’s small meters are over 15 years old. Currently, the District plans to begin changing out these meters at 20 years. However, the American Water Works Association (AWWA) recommends setting meter replacement goals based on results of a comprehensive meter testing program to evaluate the condition of the meters and confirm the need for meters to be replaced. To successfully establish a systematic testing program for small meters, the District must upgrade its meter test bench to allow multiple meters to be evaluated at once. Quotes were solicited for a new meter test bench via Periscope, the District’s purchasing solicitation system. Three companies responded. A five-year cost of ownership was calculated, and the costs are as follows: Vendor Test Bench Manufacturer 5-Year Price Core and Main Ford $133,197.57 Ferguson Ford $133.197.67 MARS Company MARS Company $166,619.41 Both test benches met all required specifications such as the ability to test at minimum seven 3/4” meters at once and conform to all AWWA testing standards. Staff spoke with multiple references of both manufacturers. The references provided by MARS Company (MARS) were satisfied with the bench and the support they received from MARS; however, all had an annual service plan in place. Staff spoke with two other agencies that had experience with the MARS test bench without a service plan. Both of those agencies recently switched from MARS to Ford because they were unable to get timely support from MARS and the fees for support were extremely high with no contracted service plan. Given the feedback from MARS’ clients and MARS’ own comments that 99.9% of customers do purchase an annual support plan, the price above includes the cost of a five-year annual service plan. Ford’s references all spoke highly of the test bench, the installation process, and the support received by the manufacturer. The District’s current meter test bench is a Ford bench. Although it is over 40 years old, Ford continues to be responsive to all service calls. Ford has a service technician located in Southern California that can be called directly for assistance with no additional cost or annual subscription. Based on the quotes above, staff recommends purchasing the Ford meter test bench from Core and Main. Core and Main has the lowest overall 3 cost and is offering a 2% discount if paid within 15 days, which will reduce the purchase price by $2,663.96. FISCAL IMPACT: The cost of the meter test bench will be charged against the Small Meter Testing Bench CIP P2667. STRATEGIC GOAL: Optimize meter activity operations and the meter testing program. LEGAL IMPACT: None. Attachments: A)Committee Action Form B) Pictures ATTACHMENT A SUBJECT/PROJECT: Authorize a Purchase Order to Core and Main in an Amount not to Exceed $133,197.57 for the Purchase of a New Meter Test Bench COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on January 18, 2022 and the following comments were made: • Staff presented information from the staff report and highlighted how imperative it is for the District’s meter program to have an optimally functioning meter test bench. The District’s current bench, being 40 years old, is no longer able to test certain sized meters nor test more than a single meter at a time. • The Committee commented how it is crucial to keep District systems updated. The fact that our current bench is 40 years old and no longer functioning as intended is a sufficient reason to acquire a new test bench. • Staff extensively researched the best option for the District not only for the present, but also looking at future costs and has taken the time to ensure this recommendation is the best option. Upon completion of the discussion, the Committee supported staff’s recommendation and presentation to the full board as a consent item. Current Otay Test Bench ATTACHMENT B New Ford Test Bench STAFF REPORT TYPE MEETING: Regular Board Meeting MEETING DATE: February 2, 2022 SUBMITTED BY: Tita Ramos-Krogman, District Secretary W.O./G.F. NO: DIV. NO. APPROVED BY: Tita Ramos-Krogman, District Secretary Jose Martinez, General Manager SUBJECT: Board of Directors 2022 Calendar of Meetings GENERAL MANAGER’S RECOMMENDATION: At the request of the Board, the attached Board of Director’s meeting calendars for 2022 is being presented for discussion. PURPOSE: This staff report is being presented to provide the Board the opportunity to review the 2022 Board of Director’s meeting calendar and amend the schedules as needed. COMMITTEE ACTION: N/A ANALYSIS: The Board requested that this item be presented at each meeting so they may have an opportunity to review the Board meeting calendar schedule and amend it as needed. STRATEGIC GOAL: N/A FISCAL IMPACT: None. LEGAL IMPACT: None. Attachment: Calendar of Meetings for 2022 G:\UserData\DistSec\WINWORD\STAFRPTS\Board Meeting Calendar 2-02-22.doc AGENDA ITEM 8b Board of Directors, Workshops and Committee Meetings (Via Teleconference) 2022 Regular Board Meetings: Special Board or Committee Meetings (3rd Wednesday of Each Month or as Noted) January 5, 2022 February 2, 2022 March 2, 2022 April 6, 2022 May 4, 2022 June 1, 2022 July 6, 2022 August 3, 2022 September 7, 2022 October 5, 2022 November 2, 2022 December 7, 2022 January 19, 2022 February 16, 2022 March 16, 2022 April 20, 2022 May 18, 2022 June 15, 2022 July 20, 2022 August 17, 2022 September 21, 2022 October 19, 2022 November 16, 2022 December 21, 2022 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: February 2, 2022 SUBMITTED BY: Eid Fakhouri Finance Manager PROJECT: DIV. NO. All APPROVED BY: Kevin Koeppen, Assistant Chief of Finance Joseph R. Beachem, Chief Financial Officer Jose Martinez, General Manager SUBJECT: Selection of Auditor for Fiscal Year Ending June 30, 2022 GENERAL MANAGER’S RECOMMENDATION: That the Board approve the Finance and Administration (F&A) Committee’s selection of an accounting firm to serve as the District’s auditors for the fiscal year ending June 30, 2022. The contract will be for one year, with four (4) one-year options, with each option year subject to General Manager review and approval. The F&A Committee’s proposed firm is listed in Attachment A. COMMITTEE ACTION: See Attachment A. PURPOSE: To retain the services of an accounting firm to serve as the District’s auditors for the fiscal year ending June 30, 2022. The District is required to retain the services of an independent auditing firm each fiscal year to perform an audit of the District’s financial statements. The F&A Committee serves the Board as the Audit Committee (the Committee). The purpose of the Committee is to review the reports of external auditors, to include management letters and internal control AGENDA ITEM 9a 2 recommendations, and ensure implementation by management. The Committee also has the opportunity to recommend an accounting firm to the Board to perform the annual audit. Staff is also recommending that the Board delegate the exercising of the annual optional extensions to the General Manager. In previous years, the exercise of the extensions was subject to the review and approval of the Board. Delegation of this authority to the General Manager will increase the efficiency of District operations. BACKGROUND: The District is required to retain the services of an independent auditing firm each fiscal year to perform an audit of the District’s financial statements. For the past seven years, the District has retained the services of Teaman, Ramirez & Smith, Inc. (TRS). The initial five-year term with TRS expired in FY 2019, however, the Board weighed the benefit of greater continuity and extended the contract with TRS for one year with the option of one additional year. Due to the challenges of the COVID-19 pandemic, the Board exercised the option and extended the contract for one additional year. The District has had the long-standing practice of rotating audit firms every five years. This practice ensures a fresh perspective and yet allows for the benefits of a fair amount of continuity. Therefore, the District has issued a Request for Proposals (RFP) for services related to the fiscal year 2022 financial audit. The services related to the financial audit include performing the financial audit procedures, preparation of the audited financial statements, preparation of the State Controller’s Report, and performing agreed upon procedures related to the District’s Investment Policy. Proposals also included fees for a Single Audit, however, this service has not been utilized for nearly 10 years and is not anticipated to be required by the District. ANALYSIS: On September 13, 2021, the District issued an RFP through its Periscope portal (formally BidSync), which includes those firms that currently provide audit services to local water agencies. The District received proposals from six audit firms. Technical proposals representing each of the firms were reviewed and evaluated by staff, then rated according to qualifications and audit approach. Based on this evaluation staff recommended, and the Committee agreed, that the Committee interview the three most qualified firms. The three 3 recommended firms were interviewed during the January 18, 2022 F&A Committee meeting. Based on the evaluations and interviews the Committee is recommending the District’s auditor (see Attachment A) for the fiscal year ending June 30, 2022, with the option of four (4) additional one-year terms. The table below summarizes Staff’s ratings of the three firms that were interviewed. OTAY WATER DISTRICT FY22-2231-006 PROFESSIONAL AUDITING SERVICES RATINGS SUMMARY (Order by Qualifications) Points 60 40 100 Year 1 Firm Name Qualifications Pricing Total Davis Farr LLP 51 22 73 $ 31,830 Clifton Larson Allen LLP 50 19 69 $ 32,600 Lance Soll & Lunghard LLP 46 21 67 $ 33,205 Following is a brief summary of the qualifications for the firms that were interviewed. Davis Farr, LLP – A regional CPA firm, with a local office in San Diego, was founded 30 years ago and employs 52 individuals. They have broad experience auditing municipal-owned utilities throughout Southern California, including many water agencies in San Diego County. The proposal includes five local water agencies as client references. The proposed audit staff from Partner through the Manager role are California CPAs. The proposed staffing plan includes three firm partners, Ms. Shannon Ayala, Ms. Jennifer Farr, and Mr. Diego Venegas. Ms. Farr will serve as the Quality Control Reviewer and has over 20 years of experience auditing public agencies, including water agencies. Ms. Jennifer Ayala also serves as the auditor for the San Diego County Water Authority (SDCWA) and other municipal members of SDCWA. Clifton, Larson, Allen, LLP (CLA) – A large national CPA firm with a local office in Carlsbad. As a national firm CLA has 7,400 employees, including 400 professionals serving more than 4 4,150 governmental entities. White, Nelson, Diehl, Evans LLP merged into CLA in 2020. The proposed audit staff from Partner through the Senior Auditor role are California CPAs. CLA will be managing the audit from its Carlsbad office. Mr. David Forman is the proposed partner and has 27 years of experience, including as a manager and partner on the Otay Water Audit. The firm submitted three local municipal water districts as references. Lance, Soll & Lunghard, LLP (LSL) - LSL is a regional firm with offices in Brea (headquarters), Santa Ana, and Sacramento, California, as well as Houston, Texas. The firm was founded in 1929. The firm has approximately 125 employees including 14 partners. LSL provides auditing services to over 70 municipal clients in California. The firm references included five Municipal Water Agencies as references, including one in San Diego County. The proposed audit staff from Partner through the Senior Auditor role are California CPAs. The proposed engagement Partner, Mr. Bryan Gruber, has audit experience with the SDCWA and other agencies. The following is a planning schedule for selecting the District’s auditor and the major activities involved in completing the FY 2022 financial audit: ➢ Sep-2021: Issue Audit Services RFP ➢ Oct-2021: Staff evaluate and rate proposals ➢ Dec-2021: F&A Committee select firms to interview ➢ Jan-2022: F&A Committee interviews and recommends firm to Board ➢ Feb-2022: Board awards audit services contract ➢ May-2022: Interim field work (five days) ➢ Aug-2022: Final field work (five days) ➢ Oct-2022: F&A Committee presentation of audited financials ➢ Nov-2022: Board presentation of audited financials ➢ Dec-2022: Completed ACFR FISCAL IMPACT: Audit service costs for the previous audit performed for Fiscal Year 2021 were $30,250. Based on qualifications and experience, below are the top three firms staff recommends, along with their proposed fees for performing the Fiscal Year 2022 financial audit and related services. Audit fees of $35,000 were included in the FY 2022 budget. $31,830 Davis Farr LLP $32,600 Clifton, Larson, Allen LLP $33,205 Lance, Soll & Lunghard, LLP 5 *Proposed fees exclude fees associated with performing a single audit. The District currently does not anticipate that a single audit will be required for FY 2022. STRATEGIC GOAL: The District ensures its continued financial health through long-term financial planning and debt planning. LEGAL IMPACT: Compliance with the laws governing the District. Attachments: A) Committee Action B) Davis Farr LLP Audit Cost Proposal C) Clifton, Larson, Allen LLP Audit Cost Proposal D) Lance, Soll & Lunghard, LLP Audit Cost Proposal ATTACHMENT A SUBJECT/PROJECT: Selection of Auditor for Fiscal Year Ending June 30, 2022 COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on January 18, 2022 and the following comments were made: • Staff presented the staff report to the Committee, summarizing that the purpose was to interview the three audit firms that were selected at the December Committee. Each firm was given 15 minutes for an opening presentation and the Committee had an additional 20 minutes allotted for asking questions to each firm. The interviews were scheduled in alphabetical order and conducted in closed session with each firm being permitted to join closed session independently. • The Committee recommended that the Board appoint Davis Farr LLP to serve as the District’s auditors for the fiscal year ending June 30, 2022. The contract will be for one year, with four (4) one-year options, with each option year subject to General Manager review and approval. Upon completion of the discussion, the Committee supported presentation to the full board as an action item. Davis FarrLLP Bid Contact Brandy Volden bvolden@davisfarr.com Ph 949-783-1752 Address 18201 Von Karman Ave Suite 1100 Irvine, CA 92612 Item #Line Item Notes Unit Price Qty/Unit Total Price Attch. Docs FY22-2231-006--01-01 Professional Auditing Services Supplier Product Code: Supplier Notes: Please find attached Proposal for Professional Audit Services and Cost Proposal for Audit Services Requested by Otay Water District. First Offer -1 / lot Y Supplier Total $0.00 FY22-2231-006Otay Water District BidSync10/12/2021 p. 1 Attachment B Davis Farr LLP Item: Professional Auditing Services Attachments Otay Water District Proposal.pdf Otay Water District Cost Proposal.pdf FY22-2231-006Otay Water District BidSync10/12/2021 p. 2 PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Otay Water District 2554 Sweetwater Springs Boulevard Spring Valley, CA 91978 October 11, 2021 Prepared By: Davis Farr LLP 5927 Priestly Drive | Suite 201 Carlsbad, CA 92008 Contact Person: Shannon Ayala, CPA | Partner Office: 760.536.5140 | Direct: 760.298.5872 Email: sayala@davisfarr.com FY22-2231-006Otay Water District BidSync10/12/2021 p. 3 Table of Contents Section A – About Davis Farr LLP .................................................................................... 1 Section B – Qualifications and Related Experience ......................................................... 3 Section C – Client References ......................................................................................... 4 Section D – Proposed Staffing ........................................................................................ 5 Section E – Work Plan .................................................................................................... 6 Section F – Implementation of New GASB Pronouncements .......................................... 8 Section G – Scope of Work ............................................................................................. 9 Section H – Proposed Timing of the Audit for FY 20/21 .................................................. 9 Section I – Proposed Segmentation of the Audit ........................................................... 10 APPENDIX Resumes Peer Review Documentation FY22-2231-006Otay Water District BidSync10/12/2021 p. 4 October 11, 2021 Otay Water District 2554 Sweetwater Springs Boulevard Spring Valley, CA 91978 We are pleased to provide our proposal to perform audit services to the Otay Water District (“OWD”) for the fiscal year ending June 30, 2022, with optional extensions through 2026. Our service philosophy is one of open and constant communication, a proactive approach and responsive, value-added services. We will listen to your ideas and concerns and will bring creative solutions to you in both financial and other operational areas. We are aware that while OWD have solicited numerous proposals, Davis Farr LLP would be your best selection for the following reasons which are set forth in greater detail in our proposal: We take a proactive leadership role in local government accounting and auditing issues. Jennifer Farr, one of the founding Partners, is the current Chair of the Government Accounting and Audit Committee of the CalCPA Society and our Partners are active members of the CSMFO Professional Standards Committee, the GFOA Special Review Committee, and other organizations. Our Partners are frequent speakers on technical topics at conferences and training events throughout California, including the recent CSMFO Annual Conference. We currently provide audit services to over 15 water districts in Southern California. Our deep understanding of the issues facing California governments and water districts enables us to provide high quality audit services to OWD. We extensively utilize data mining software to evaluate anomalies in your accounting data. This helps focus our auditors’ attention on potential errors in the accounting records and transactions that could be more susceptible to fraud. We appreciate the opportunity to share our credentials and look forward to developing our professional relationship. Our proposal remains a firm and irrevocable offer until March 4, 2022. I look forward to you contacting me so that I may answer further any questions which you may have. You may contact me at (760) 298-5872. Very truly yours, Shannon Ayala, CPA Partner FY22-2231-006Otay Water District BidSync10/12/2021 p. 5 1 Otay Water District | Proposal for Professional Auditing Services Section A – About Davis Farr LLP Background Information – Davis Farr LLP is a full-service regional accounting firm that specializes in providing attest and advisory services to federal, state, and local governments out of our California and Washington offices. This engagement would be serviced by our Carlsbad office. Our personnel have served governmental entities for over 30 years. A breakdown of our government audit personnel by classification is provided below. License to Practice in California – Davis Farr LLP and all key personnel are licensed with the California State Board of Accountancy to practice as independent certified public accountants. Independence – Davis Farr LLP is independent with respect to OWD as defined by U.S. General Accounting Office’s Government Auditing Standards and Generally Accepted Auditing Standards. Davis Farr LLP has not had any engagements with the District in the past 5 years. Neither Davis Farr LLP nor the key personnel have any potential or real conflicts of interest. Quality Control – Davis Farr LLP and its Partners are members of the American Institute of Certified Public Accountants (AICPA) and is a member of the AICPA’s Government Audit Quality Center. Our firm is a voluntary participant in the AICPA Peer Review Program. Included in the appendix is our most recent Peer Review report where our firm received a Pass. A Pass demonstrates the highest level of quality control in a Peer Review. The Peer Review included a review of government engagements. There has been no disciplinary action taken or pending against the firm during the past three years with state regulatory bodies or professional organizations. Training – Every professional of the firm participates in continuing professional education courses. Each person is required to take at least 80 hours of training over a two-year period including 24 hours a year specific to government accounting and audit topics. Courses cover a wide spectrum of professional and technical subjects, and include Fraud, Professional Ethics and Governmental Accounting and Auditing topics to help the practitioner maintain his/her professional expertise. Classification Number of Employees Partners 7 Managers 8 Supervisors 4 Seniors 17 Staff 13 Administrative 3 Total personnel 52 FY22-2231-006Otay Water District BidSync10/12/2021 p. 6 2 Otay Water District | Proposal for Professional Auditing Services Professional Affiliations Government Audit Quality Center – Davis Farr LLP is a member of the Government Audit Quality Center (GAQC). The GAQC promotes the importance of quality governmental audits and the value of such audits to purchasers of governmental audit services. GAQC is a voluntary membership center for CPA firms and state audit organizations that perform governmental audits. National Registry of CPE Sponsors – Davis Farr LLP is registered to provide continuing professional education through the National Association of State Board of Accountancy (NASBA). NASBA recognizes CPE program sponsors who provide continuing professional education programs in accordance with nationally recognized standards. We provide CPE to our clients at our annual GASB Update. CalCPA – Many of the CPAs employed by Davis Farr LLP are members of CalCPA and regularly participate in chapter meetings, education, and events. CalCPA recognized one of Davis Farr LLP’s partners with their Women to Watch award in the Experienced Leader category. Davis Farr presented at the 2020 Women’s Leadership Forum. Davis Farr LLP partners are also members of the Governmental Accounting and Auditing Committee of the CalCPA and founding firm Partner Jennifer Farr is the current Chair of the Committee. American Institute of CPAs – Davis Farr LLP and the firm’s Partners are members of the American Institute of CPAs (AICPA). The AICPA develops standards for audits, provides educational guidance materials to its members, and monitors and enforces compliance with the profession’s technical and ethical standards. CSMFO – The Partners of Davis Farr LLP are members of the California Society of Municipal Finance Officers (CSMFO), the statewide organization serving all California municipal finance professionals. Firm personnel regularly attend CSMFO Chapter Meetings and Conferences. The Partners of Davis Farr LLP are frequent presenters on accounting and auditing technical topics at Chapter Meetings and Conferences. Davis Farr presented at the annual CSMFO conference in February 2021. GFOA – The Government Finance Officers Association (GFOA) enhances and promotes the professional management of governmental financial resources by identifying, developing, and advancing fiscal strategies, policies, and practices for the public benefit. The Partners of Davis Farr LLP are members of the Certificate of Achievement Program’s Special Review Committee. The Committee reviews Annual Comprehensive Financial Reports submitted to GFOA for the Excellence in Financial Reporting Award Program. FY22-2231-006Otay Water District BidSync10/12/2021 p. 7 3 Otay Water District | Proposal for Professional Auditing Services Section B – Qualifications and Related Experience Davis Farr LLP is a leader in the local government sector throughout the Southern California Area. Currently, we service approximately 60 local, state, and federal government entities. Davis Farr LLP services routinely provided to our clients include, but are not limited to: Our government expertise includes Cities, Special Districts, and other Governmental entities. Among the government agencies that the professionals of Davis Farr LLP have served recently are the following: City of Avalon City of Los Angeles Leucadia Wastewater District City of Carlsbad City of Mission Viejo Metropolitan Water District of So CA City of Commerce City of Newport Beach Municipal Water District of So CA City of Coronado City of Poway Orange County LAFCO City of Costa Mesa City of Rancho Santa Margarita Oxnard Housing Authority City of Cypress City of Santee Placer County Water Agency City of Delano City of South Gate Rancho California Water District City of Encinitas City of Vista San Diego Association of Governments City of Fontana County Los Angeles San Diego County Water Authority City of Garden Grove County of Placer San Diego LAFCO City of Huntington Beach County of San Diego Sweetwater Authority City of Indio East Orange County Water District Tahoe Regional Planning Agency City of Irvine Hass Avocado Board Tahoe Transportation District City of Laguna Niguel Irvine Ranch Water District Vallecitos Water District FY22-2231-006Otay Water District BidSync10/12/2021 p. 8 4 Otay Water District | Proposal for Professional Auditing Services Section C – Client References For your convenience, we have listed below references for audit work currently being performed by Davis Farr LLP personnel for several Cities throughout Southern California. For each of the references, we currently serve as independent auditors and have served these clients for a number of years. CLIENT 1 City of Carlsbad – Carlsbad MWD 1635 Faraday Avenue |Carlsbad, CA Ryan Green, Finance Director 760.602.2414 rgreen@carlsbadca.gov Financial Statement Audit of the City, including the Water District CLIENT 2 City of Encinitas – San Dieguito WD 505 S. Vulcan Avenue | Encinitas, CA Teresa McBroome, Director of Finance 760.633.2772 tmcbroome@encinitasca.gov Financial Statement Audit of City, including the Water District CLIENT 3 San Diego County Water Authority 4677 Overland Avenue | San Diego, CA Chris Woidzik, Controller 858.522.6679 cwoidzik@sdcwa.org Financial Statement Audit of the Authority and Quantification Settlement Agreement CLIENT 4 Vallecitos Water District 201 Vallecitos De Oro | San Marcos, CA Wes Owen, Finance Manager 760.744.0460 wowen@vwd.org Financial Statement Audit of District CLIENT 5 Sweetwater Authority – South Bay ID 505 Garrett Avenue | Chula Vista, CA Rich Stevenson, Director of Finance 619.409.6711 rstevenson@sweetwater.org Financial Statement Audit of the Authority and South Bay Irrigation District 700 Hours 650 Hours 325 Hours 250 Hours 250 Hours FY22-2231-006Otay Water District BidSync10/12/2021 p. 9 5 Otay Water District | Proposal for Professional Auditing Services Section D – Proposed Staffing The successful outcome of any audit requires personnel with the managerial and technical skills to perform the work required. The engagement team who will serve OWD have served together as a team of professionals on numerous financial audit examinations of local government entities. Key personnel include the Partner, Manager, and Senior Auditor. Key personnel will not be removed or replaced without the prior written concurrence of OWD. We believe that efficient administrative management and supervision of the audits is an extremely critical factor in achieving the desired results for OWD. In that regard, our proposal organizational structure for providing independent auditing services is as follows: Shannon Ayala, CPA Jeffrey Olinarez, CPA Jennifer Farr, CPA, MBA Makaylyn Tallman Diego Vanegas, CPA, CISA AUDIT SENIOR Staff Auditor FY22-2231-006Otay Water District BidSync10/12/2021 p. 10 6 Otay Water District | Proposal for Professional Auditing Services Section E – Work Plan Davis Farr plans and conducts our engagements in the most efficient manner possible, and our audit approach is unique with regard to the following: Our firm is sensitive to the priorities and work requirements of our clients. We work around the schedules of our clients when scheduling segments of the audit or requesting documentation in order to minimize disruption of OWD staff and to complete the audit in a timely manner. Whenever possible, we use accounting support already prepared by OWD staff to avoid duplication or unnecessary requests for audit supporting schedules. Typically, we request support for balance sheet items, the year ending trial balance and cash and long-term debt confirmations. Our firm’s expertise is in governmental auditing. Our auditors are GASB experts and skilled at addressing audit issues that are specific to local governments. You will not spend time training our personnel. When formulating internal control recommendations, we obtain a thorough understanding of the specific circumstances at OWD to provide a tailored, practical recommendation. Throughout the year we are a resource to our clients in providing accounting advice, researching technical questions, dealing with tax problems, and helping with other problems as they arise. Audit Software - We utilize CaseWare audit software for the electronic copy of OWD workpapers. We have the ability to accept audit documentation in either hard copy or electronic format. CaseWare allows us the ability to import trial balances that can be provided in either excel or a text document. Some of the benefits of using CaseWare trial balance software are as follows: We create our own lead sheets (i.e., analytical review comparison schedules). This limits the amount of time finance staff spends creating audit schedules. Our software automatically generates analytical review reports by account number for ease of analyzing significant fluctuations between fiscal years. We can link the financial statement schedules directly to the CaseWare trial balances. As a result, we can provide OWD with financial statements almost immediately after receiving the trial balance from OWD. Additionally, journal entries are easy to post to the financial statement schedules and the risk of data entry error is minimized. We can provide OWD with reports showing the grouping of the financial statement schedules for ease of review by OWD staff. These reports show each account grouped to a specific financial statement line item as well as journal entries that are posted during the audit. Data Mining Software - We have a dedicated team of personnel trained to use special data mining software, IDEA. Our software uses source data from your accounting system to search for anomalies, such as duplicate or voided checks, cross-referencing vendor addresses with employee addresses, detecting accounting transactions recorded on the weekend, reviewing journal entry postings for unauthorized individuals. The IDEA software identifies specific transactions for the auditors to review for potential fraud or error. Internal Control Evaluation - Our approach to evaluating internal controls involves observation and inquiry. We spend time with the personnel responsible for the accounting cycles to gain an understanding of the processes. We also carefully evaluate your policies and procedures. After our initial evaluation, we identify key controls in your processes and design test to evaluate the effectiveness of those processes. In the initial year of the audit, we will focus on the following accounting cycles: Billing and cash receipting Capital assets Purchase and disbursements Payroll Investment and cash controls Information systems FY22-2231-006Otay Water District BidSync10/12/2021 p. 11 7 Otay Water District | Proposal for Professional Auditing Services In future years, we will review the accounting cycles noted above but also look at other processes such as credit card transactions, petty cash, inventory controls, offsite cash receipting, employee reimbursements, contract compliance, and other areas. Our goal is to modify our audit approach every year to further evaluate your internal controls. Audit Stage Procedures Performed Planning and Inquiry During the planning phase of the audit, we plan to perform the following procedures: Meet with finance personnel to obtain an understanding of significant transactions during the year. Communicate with the Board of Directors regarding fraud, compliance with laws, and any concerns they have regarding the finances of OWD. Perform internal control evaluations as noted on the previous page. Determine materiality levels that will be used in selecting audit transactions. Perform a risk assessment to develop the audit plan for the year. Review minutes of the Board meetings. Review important new contracts, bond documents, and agreements. Evaluate compliance with investments. Test purchase orders and contract management. Test a sample of cash disbursements to determine adherence to policies and internal controls. Perform a review of OWD’s information systems and controls. Perform compliance testing of federal grants, as necessary. Review the prior audited financial statements and provide feedback to OWD staff regarding best practices for financial reporting. Provide a GASB Update and templates for implementing new accounting standards including the upcoming lease accounting standard. Year-End Testing After the books are closed and ready for audit, we will perform our year-end procedures which include the following: We will confirm 100% of all cash and investment balances and test market values provided by your investment custodians. We will test for proper cutoffs of accounts receivable and grants receivable. We will confirm and test material notes and loans receivable. We will test additions and deletions to capital assets. We will review depreciation expense for reasonableness. We will test interfund transactions including due to/due from other funds and transfers. We will test current liabilities and perform a search for unrecorded liabilities. We will review unearned revenue balances for proper cutoffs. We will test the balances of accrued payroll and employee related liabilities. We will confirm long-term debt with independent parties, when applicable. In years of new debt issuances, we will review the journal entry to record the debt to ensure the accuracy of the accounting. Testing of actuarial valuations and calculations related to pension and OPEB obligations and disclosures under GASB 68 and 75. Evaluation of claims and judgments payable. Testing of restrictions and classifications of net position. Analyze grant revenues and expenses to ensure proper matching within the fiscal year. Test the reasonableness of interest income, realized, and unrealized gains/losses on investments. Analytically and substantively test revenues and expenses reported in the financial statements. We will incorporate an element of unpredictability every year that will focus on an audit area that is not typically considered a high or significant risk area such as petty cash, credit card purchases, new vendors, travel expenses, etc. The aforementioned tests are only a few of the tests performed during the examination and by no means is it meant to be all inclusive. During the final stage of the audit, we will meet with Finance staff to review our audit findings and any adjusting journal entries. FY22-2231-006Otay Water District BidSync10/12/2021 p. 12 8 Otay Water District | Proposal for Professional Auditing Services Audit Stage Procedures Performed Single Audit Approach As part of our Single Audit for the years in which OWD expends granter than $750,000, we will perform the following procedures in accordance with the Uniform Guidance: Perform an evaluation of the major programs required to be tested. Review OMB guidance and the OMB Compliance Supplement for the grant program audited. Review internal controls for each of the applicable 14 compliance areas for each program audited. Using AICPA sampling guidance, we will select a sample for each of the applicable 14 compliance areas for each program audited. We will test the sample for compliance with those 14 areas. Test the indirect cost rate, if applicable. Review monitoring reports for noncompliance and follow up on the resolution of past noncompliance, if applicable. Issue a single audit report of federal expenditures. File the data collection form within the specified deadline. Completion of the Audit and Preparation of Financial Statements The nature and extent of the work required is dependent on our assessment of the likelihood of misstatements in the financial statements together with our conclusions from the planning and testing stages of the audit. All of the audit information is then used to reach a conclusion on whether the financial statements taken as a whole conform with generally accepted accounting principles. We will review significant events after year end. We will review attorney letters for significant legal matters. We will provide five levels of review on the OWD Annual Comprehensive Financial Report. We will meet with Board of Directors to present the audit results, as requested. Section F – Implementation of New GASB Pronouncements OWD will be required to implement the following accounting standards during the upcoming fiscal years. Part of our service to you includes consulting on these new auditing standards. A sampling of significant new GASB pronouncements planned or proposed for local governments that will impact OWD are listed below: The objective of this statement is to better meet the information needs of the financial statement users by improving accounting and financial reporting for leases by governments. The standard will be effective for the fiscal year ending June 30, 2022. GASB 87: Leases The primary objective of this Statement is to provide guidance related to public- private and public-public partnership arrangements in which a government contracts with an operator to provide public services. This statement also provides guidance or accounting and financial reporting for availability payment arrangements in which a government compensates an operator for services in and exchange transaction. This standard will be effective for the fiscal year ending June 30, 2023. GASB 94: Public-Private and Public-Public Arrangements The Statement provides guidance to governments on the accounting and financial reporting for subscription- based information technology arrangements. This Statement is effective for the fiscal year ending June 30, 2023. GASB 96: Subscription Based IT Agreements FY22-2231-006Otay Water District BidSync10/12/2021 p. 13 9 Otay Water District | Proposal for Professional Auditing Services Section G – Scope of Work Our understanding of the objectives and scope of the work to be performed is as follows: We will perform an audit examination of the financial statements of OWD for the fiscal year ending June 30, 2022, with optional extensions through 2026. Our examination will be conducted in accordance with generally accepted auditing standards, the AICPA Audit and Accounting Guide, Audits of State and Local Government Units, and the Government Auditing Standards issued by the Comptroller General of the United States. We will ensure that the Basic Financial Statements are prepared in conformity with the most recent edition of the GAAFR, the GAAFR Update, and subsequent GASB pronouncements. When necessary, we will perform a compliance audit of federal expenditures in accordance with the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards in any year OWD has federal expenditures of more than $750,000. We will prepare a letter to the Board of Directors summarizing the audit results in accordance with the Codification of Auditing Standards Section 260. We will prepare a letter to the Board of Directors reporting matters dealing with internal control that meet the threshold of being a significant deficiency or material weakness, as defined by the Codification of Auditing Standards Section 265. We will immediately report any irregularities or illegal acts that come to our attention to management and/or those charged with governance. As requested, we will meet with the Board of Directors to discuss the results of the audit. Finally, we perceive the scope of our work as being advisors to OWD regarding generally accepted accounting principles. Throughout the year, the management and other finance personnel of OWD will have access to us to seek advice in the application of generally accepted accounting principles, advice regarding debt issuance, financial statement preparation and content, tax and any other matters relating to OWD. Each year, we will review upcoming accounting standards in a meeting with OWD staff. Section H – Proposed Timing of the Audit for FY 21/22 The following proposed timing is subject to OWD’s revision and approval: Ta s k 0 1 April 2022 Audit Request List Provided Ta s k 0 2 May 9, 2022 Audit Planning Meeting Ta s k 0 3 May 9-13, 2022 Interim Audit Procedures Ta s k 0 4 July 15, 2022 Final Audit Request List Provided Ta s k 0 5 August 22- 26, 2022 Final Audit Procedures Ta s k 0 6 August 31, 2022 Exit Meeting Ta s k 0 7 September 9, 2022 Review of Draft Financial Report Ta s k 0 8 Finalization of Audit Reports Within 5 Working Days of Receiving Approval FY22-2231-006Otay Water District BidSync10/12/2021 p. 14 10 Otay Water District | Proposal for Professional Auditing Services Section I – Proposed Segmentation of the Audit The following is our estimate of the hours by professional classification required to perform the audit and additional services: Davis Farr does not anticipate any potential audit problems. Classification Hours Percentage Partner 28 9% Manager 44 15% Audit Senior 132 43% Staff Auditor 102 33% Total 306 100% FY22-2231-006Otay Water District BidSync10/12/2021 p. 15 11 Otay Water District | Proposal for Professional Auditing Services RFP FORMS FY22-2231-006Otay Water District BidSync10/12/2021 p. 16 APPENDIX C PROPOSER GUARANTEES I. The Proposer certifies it can and will provide and make available, as a minimum, all services set forth in Section II, Nature of Services Required. Signature of Official: _____________________________ Name (typed): __________________________________ Title: __________________________________________ Firm: __________________________________________ Date: ___________________________________________ FY22-2231-006Otay Water District BidSync10/12/2021 p. 17 APPENDIX D PROPOSER WARRANTIES A. Proposer warrants that it is willing and able to comply with State of California laws with respect to foreign (non-state of California) corporations. B. Proposer warrants that it is willing and able to provide proof of insurance covering the following areas: 1) general liability; 2) worker’s compensation; 3) errors and omissions providing a prudent amount of coverage for the willful or negligent acts, or omissions of any officers, employees or agents thereof. C. Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement without the prior written permission of the District. D. Proposer warrants that all information provided by it in connection with this proposal is true and accurate. Signature of Official: _____________________________ Name (typed): __________________________________ Title: __________________________________________ Firm: __________________________________________ Date: ___________________________________________ FY22-2231-006Otay Water District BidSync10/12/2021 p. 18 APPENDIX F FORMATION OF CONTRACT; ADDITIONAL CONTRACT PROVISIONS 1. This Request for Proposal (RFP), together with proposer’s signed offer (Proposal) and the Otay Water District’s written acceptance thereof, including any contract provisions approved by the parties pursuant to subsequent negotiations, if any, shall constitute a binding contract (collective, the “Contract”). The Contract shall only be amended or modified annually, upon approval by the District of an updated Appendix E or pursuant to a written amendment signed by both parties. 2. Conflict of Interest a. Auditor has received and reviewed a copy of the District's Conflict of Interest Code (the "COI"), set forth under Division I, Chapter 5, Section 6 of the District's Code of Ordinance. Auditor understands that, to the extent it (i) conducts research and arrives at conclusions concerning advice, recommendations or information independently from the District; and (ii) renders information, advice, recommendations or counsel to the District, it may be required to file a disclosure statement in accordance with the COI. b. No officer or employee of the District shall have any financial interest, direct or indirect, in this Agreement nor shall any such officer or employee participate in any decision relating to the Agreement which effects his or her financial interest or the financial interest of any corporation, partnership or association in which he or she has a financial interest if such participation would be in violation of any State statute or regulation. c. Auditor, its officers, managers, related entities, affiliates, business associates, and their respective relatives or living trusts or other similar entities or persons (each, a “Related Person”) shall avoid any relationship with District or any contractor of District that constitutes or may constitute a conflict of interest in connection with services provided under this Agreement. d. Prior to entering into this Agreement and during the term, Auditor shall have a duty to disclose to the District any and all circumstances that pose an actual or potential conflict of interest. e. Auditor shall not obtain for itself or any Related Person any financial gain from the services other than as specified in this Agreement. Auditor represents that neither Auditor nor any Related Person has an existing financial interest and that neither will acquire any such interest, direct or indirect, that conflicts in any manner or degree with the performance of services required under this Agreement and that no person having any such interest shall be subcontracted in connection with this agreement, or employed by Auditor. Auditor shall not enter into this FY22-2231-006Otay Water District BidSync10/12/2021 p. 19 Agreement if such a conflict of interests exists at present. f. If an actual or potential conflict of interest issue arises, Auditor agrees to fully cooperate in any inquiry and to provide the District with all documents or other information reasonably necessary to enable the District to determine whether or not a conflict of interest existed or exists. g. Auditor shall not conduct or solicit any non-District business while on District property or time. h. Failure to comply with the provisions of this section shall constitute grounds for immediate termination of this Agreement, in addition to whatever other remedies the District may have. 3. The Contract shall be interpreted and enforced pursuant to the laws of the State of California, without regard to any conflict of laws principles. Disputes which cannot be resolved by mutual agreement or by the terms and condition of this Contract shall be resolved by a court of competent jurisdiction in the County of San Diego, State of California. Signature of Official: _____________________________ Name (typed): __________________________________ Title: __________________________________________ Firm: __________________________________________ Date: ___________________________________________ FY22-2231-006Otay Water District BidSync10/12/2021 p. 20 12 Otay Water District | Proposal for Professional Auditing Services APPENDIX FY22-2231-006Otay Water District BidSync10/12/2021 p. 21 Shannon Ayala, CPA Partner Ms. Ayala will serve as the Partner on this audit. She will oversee the project to ensure all required deadlines are met, provide technical assistance to the audit teams, and review the final reports before they are released. Ms. Ayala is a Certified Public Accountant with twenty years of audit experience, spending most of that time on audits for local governments in San Diego County. Ms. Ayala has performed financial statement audits of cities and special districts; grant specific audits of funds awarded by Federal, state, and county governments; Single Audits in accordance with Uniform Guidance, and compliance audits. Employment History Davis Farr LLP – Since 2015 National CPA Firm – 10 years Lennar Homes – 2 years Education Bachelor of Science - Accounting (San Diego State University) Licenses / Registrations California CPA Certificate No. 88126 Professional Affiliations & Awards American Institute of Certified Public Accountants California Society of Certified Public Accountants California Society of Municipal Finance Officers AUDITS OF GOVERNMENTAL AGENCIES City of Carlsbad Rancho California Water District City of Coronado San Diego Local Agency Formation Commission City of Del Mar San Diego County Water Authority City of Escondido San Diego Association of Governments City of Poway Salton Sea Authority City of San Marcos San Dieguito River Park Joint Powers Authority City of Santee Sweetwater Authority Imperial County Local Agency Formation Vallecitos Water District Leucadia Wastewater District Rancho California Water District FY22-2231-006Otay Water District BidSync10/12/2021 p. 22 Jennifer Farr, CPA, MBA Partner Ms. Farr will serve as the Quality Control Reviewer on this audit. She will be involved in approving the audit plan, reviewing key audit workpapers, reviewing all reports and acting as a second technical resource. Ms. Farr is a Certified Public Accountant with over 20 years of experience in local government auditing. Ms. Farr is a frequent speaker on matters pertaining to technical issues and new GASB pronouncements. Ms. Farr is also responsible for training in the area of local governmental accounting and auditing. Employment History Davis Farr LLP – Founding Partner Shareholder – National CPA Firm Education Bachelor of Arts - Business Administration / Accounting (California State University, Fullerton) Bachelor of Arts - English (California State University, Fullerton) Master of Business Administration (California State University, Fullerton) Licenses / Registrations California CPA Certificate No. 76292, October 1998 Professional Affiliations & Awards California Society of Certified Public Accountants Government Accounting & Auditing Committee o Current Chair of Committee California Society of Municipal Finance Officers American Institute of Certified Public Accountants Government Finance Officers Association Financial Review Committee AUDITS OF GOVERNMENTAL AGENCIES City of Avalon City of RSM Inland Empire Utilities Agency City of Carlsbad City of Rosemead Irvine Ranch Water District City of Commerce City of San Bruno Leucadia Wastewater District City of Campbell City of Santa Ana Mesa Water District City of Coronado City of Santee Moulton Niguel Water District City of Costa Mesa City of Villa Park Orange County Water District City of Encinitas City of Walnut Creek Placer County Water Agency City of Fontana City of West Covina San Diego Association of Governments District City of Fountain Valley City of Whittier Sweetwater Authority City of Garden Grove City of Woodland Tahoe Transportation District City of Half Moon Bay City of RSM Tahoe Regional Planning Agency City of Mission Viejo Cucamonga Valley WD West Basin Municipal Water District City of Palm Springs Eastern Municipal WD Yucaipa Valley Water District FY22-2231-006Otay Water District BidSync10/12/2021 p. 23 Diego Vanegas, CPA, CISA, CITP Partner Mr. Vanegas will serve as the IT Specialist on the engagement. Mr. Vanegas, CPA, CISA, CITP has over 16 years of progressive governmental accounting and audit experience, including extensive compliance audit experience for governmental and non-profit agencies. He has been involved in financial/compliance audits, internal control audits and assessments, operational/performance audits, and cost proposal analysis/price reviews for various governmental agencies. Mr. Vanegas has served in many capacities depending on the size and requirements of the engagements. He has participated in audits of federal agencies such as NSF, CMS, and CNCS, among others. Additionally, Mr. Vanegas has been involved in agreed-upon-procedures and audit engagements of state/local agencies. These engagements have often combined both financial and compliance aspects of the audit as well as Information Technology (IT). Furthermore, he has strong internal control audit experience through the performance of System and Organization Control examinations of the internal controls of service organizations, as well as knowledge of Government Auditing Standards, Office of Management and Budget (OMB) Circular A-87 and the Federal Acquisition Regulations (FAR). Employment History Davis Farr LLP: Partner – January 1, 2018 – Present Davis Farr LLP: Manager – June 2015 – December 31, 2017 Top 10 National CPA Firm – May 2005 - June 2015 Education Bachelor of Science in Business Administration, with an emphasis in Accounting (California State University - Los Angeles) Bachelor of Science in Computer Information Systems, with an emphasis in Business Systems (California State University - Los Angeles) Licenses / Registrations CA CPA Certificate No. 113040 Certified Information Systems Auditor Certified Information Technology Professional, No. 3298 FY22-2231-006Otay Water District BidSync10/12/2021 p. 24 Jeffrey Olinarez, CPA Manager Mr. Olinarez has five years of audit experience, spending the majority of that time on audits for local and federal government agencies. The types of audits Mr. Olinarez has been involved in include: financial audits of cities, special districts; grant specific audits of funds awarded by Federal, state, and county governments; Single Audits in accordance with OMB Circular A-133; and Federal compliance audits. Employment History Davis Farr LLP: July 2016-current Education Bachelor of Science in Accounting Azusa Pacific University Licenses / Registrations CA CPA Certificate No. 140993 AUDITS OF LOCAL AND FEDERAL GOVERNMENTS City of Mission Viejo City of Woodland City of Poway County of San Diego City of Santee City of Fountain Valley City of Victorville Special Inspector General for Afghanistan Reconstruction Sweetwater Authority Yucaipa Valley Water District FY22-2231-006Otay Water District BidSync10/12/2021 p. 25 Makaylyn Tallman Audit Senior Ms. Tallman will service as the in-charge on this engagement. She will be the main point of contact for the staff. She will be responsible for performing the work and supervising staff. Ms. Tallman has two years of audit experience, spending the majority of that time on audits for non-profits, and federal and local government engagements. The types of audits Ms. Tallman has been involved in include: financial audits of non-profits, cities and special districts; grant specific audits of funds awarded by Federal, state, and county governments; Single Audits in accordance with OMB Circular A-133; and Federal compliance audits. Employment History Davis Farr LLP: July 2018-current Education Bachelor of Science in Accounting University of Nevada, Reno AUDITS OF LOCAL & FEDERAL GOVERNMENTS City of Carlsbad City of Delano City of Encinitas City of Poway City of Santee Centers for Medicare and Medicaid Services County of San Diego AUDITS OF SPECIAL DISTRICTS Eastern Municipal Water District Imperial County LAFCO Placer County Water Agency Rancho California Water District San Diego County Water Authority San Diego Geographic Information Source San Dieguito River Park Valley JPA Santa Rosa Regional Resources Authority AUDITS OF NON-PROFITS & OTHER Family YMCA of the Desert San Diego Children’s Discovery Museum Palmetto - SOC FY22-2231-006Otay Water District BidSync10/12/2021 p. 26 Report on the Firm’s System of Quality Control Davis Farr LLP Irvine, California; and the Peer Review Committee of the California Society of CPAs We have reviewed the system of quality control for the accounting and auditing practice of Davis Farr LLP (the firm) in effect for the year ended May 31, 2019. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants (Standards). A summary of the nature, objectives, scope, limitations of, and the procedures performed in a System Review as described in the Standards may be found at www.aicpa.org/prsummary. The summary also includes an explanation of how engagements identified as not performed or reported in conformity with applicable professional standards, if any, are evaluated by a peer reviewer to determine a peer review rating. Firm’s Responsibility The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. The firm is also responsible for evaluating actions to promptly remediate engagements deemed as not performed or reported in conformity with professional standards, when appropriate, and for remediating weaknesses in its system of quality control, if any. Peer Reviewer’s Responsibility Our responsibility is to express an opinion on the design of the system of quality control and the firm’s compliance therewith based on our review. Required Selections and Considerations Engagements selected for review included engagements performed under Government Auditing Standards, including a compliance audit under the Single Audit Act, and examination of a service organization (SOC 1, Type 2 Report). As part of our peer review, we considered reviews by regulatory entities as communicated by the firm, if applicable, in determining the nature and extent of our procedures. FY22-2231-006Otay Water District BidSync10/12/2021 p. 27 Peer Review Report Page 2 of 2 Opinion In our opinion, the system of quality control for the accounting and auditing practice of Davis Farr LLP in effect for the year ended May 31, 2019, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency(ies) or fail. Davis Farr LLP has received a peer review rating of pass. Ontario, California September 23, 2019 FY22-2231-006Otay Water District BidSync10/12/2021 p. 28 13 Otay Water District | Proposal for Professional Auditing Services FY22-2231-006Otay Water District BidSync10/12/2021 p. 29 COST PROPOSAL FOR PROFESSIONAL AUDITING SERVICES OTAY WATER DISTRICT 2554 Sweetwater Springs Boulevard Spring Valley, CA 91978 October 11, 2021 Prepared By: Davis Farr LLP 5927 Priestly Drive | Suite 201 Carlsbad, CA 92008 Contact Person: Shannon Ayala, CPA| Partner Office: 760.536.5140 | Direct: 760.298.5872 Email: sayala@davisfarr.com FY22-2231-006Otay Water District BidSync10/12/2021 p. 30 October 11, 2021 Otay Water District 2554 Sweetwater Springs Boulevard Spring Valley, CA 91978 We are pleased to provide our cost proposal for audit services to the Otay Water District (“OWD”) for the fiscal year ending June 30, 2022, with optional extensions through 2026. I certify that I am entitled to represent the firm, empowered to submit the proposal, and authorized to sign a contract with OWD. I look forward to you contacting me so that I may answer further any questions which you may have. You may contact me at (760) 298-5872. Very truly yours, Shannon Ayala, CPA Partner FY22-2231-006Otay Water District BidSync10/12/2021 p. 31 1 REQUIRED FORMS FY22-2231-006Otay Water District BidSync10/12/2021 p. 32 2 FINANCIAL AUDITING SERVICES PROPOSAL SCHEDULE OF PROFESSIONAL FEES AND EXPENSES The compensation for services to be provided for fiscal year ending June 30, 2022, in accordance with this agreement, is shown below: Audit/Agreed-Upon Procedures (AUP) State Controller Report Single Audit Hours Rate Total Hours Total Hours Total Partner 25 $180 $4,500 1 $180 2 $360 Manager 40 $150 $6,000 - - 4 $600 Senior 115 $110 $12,650 2 $220 15 $1,650 Staff 85 $90 $7,650 7 $630 10 $900 Total for Fiscal Year 265 $30,800 10 $1,030 31 $3,510 Portion for AUP $1,000 N/A N/A Fiscal Year Total Audit and AUP Total State Controller Report Total Single Audit Total All- Inclusive 2022-23 $31,725 $1,060 $3.615 $36,400 2023-24 $32,675 $1,090 $3,275 $37,040 2024-25 $33,655 $1,125 $3,375 $38,155 2025-26 $33,655 $1,125 $3,375 $38,155 For additional work performed outside the engagement, our rates are as follows by personnel. Hourly Rate Partners $180 Managers $150 Supervisor/Senior $110 Staff $90 FY22-2231-006Otay Water District BidSync10/12/2021 p. 33 3 FY22-2231-006Otay Water District BidSync10/12/2021 p. 34 Create Opportunities ©2021 CliftonLarsonAllen LLP | 1 October 12, 2021 Technical Proposal to provide professional auditing services to: Otay Water District Prepared by: CliftonLarsonAllen LLP David Forman, CPA, Principal 2965 Roosevelt Street, Suite A Carlsbad, CA 92008 Direct 760-994-4029 | fax 760-729-2234 david.forman@CLAconnect.com CLAconnect.com WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member-firm-disclaimer. Attachment C Create Opportunities ©2021 CliftonLarsonAllen LLP |2 Table of Contents Transmittal Letter .................................................................................................................................. 3 1. General Requirements ........................................................................................................................ 5 Appendix C – Proposer Guarantees ............................................................................................................... 5 Appendix D – Proposer Warranties ............................................................................................................... 6 2. Independence .................................................................................................................................... 7 3. License to Practice in California .......................................................................................................... 7 4. Firm Qualifications and Experience ..................................................................................................... 7 Size of firm and governmental audit staff ..................................................................................................... 7 Office location, number and nature of professionals proposed for this engagement .................................. 8 Joint venture .................................................................................................................................................. 8 Peer Review Report ..................................................................................................................................... 10 Federal or state desk or field reviews ......................................................................................................... 12 5. Partner, Supervisory and Staff Qualifications and Experience ............................................................ 12 Staff continuity ............................................................................................................................................ 12 6. Similar Engagements with Other Government Entities ...................................................................... 13 References ................................................................................................................................................... 13 7. Specific Audit Approach .................................................................................................................... 14 Financial statement audit approach ............................................................................................................ 14 Work plan .................................................................................................................................................... 15 Level of staff and number of hours assigned to each segment of engagement ......................................... 22 Sample size and statistical sampling............................................................................................................ 23 Type and extent of analytical procedures to be used in the engagement .................................................. 23 Approach to be taken to understanding the District’s internal control structure ...................................... 25 Approach to be taken in determining laws and regulations that will be subject to audit test work .......... 26 Approach to be taken in drawing audit samples for purposes of tests of compliance ............................... 26 Engagement timetable ................................................................................................................................ 26 8. Identification of anticipated potential audit problems ....................................................................... 27 Additional Information......................................................................................................................... 27 Appendix - Engagement team biographies ............................................................................................ 29 CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member-firm-disclaimer for details. 3 Transmittal Letter October 12, 2021 Eid Fakhouri, Finance Manager Otay Water District 2554 Sweetwater Springs Boulevard Spring Valley, CA 91978-2004 RE: Request for Proposals (RFP) for Professional Auditing Services Dear Mr. Fakhouri: Thank you for inviting us to propose our services to you. We gladly welcome the opportunity to share our approach to helping Otay Water District (the District) meet its need for professional services. The enclosed proposal responds to your request for auditing services for the fiscal year ending June 20, 2022, with the possible option of four subsequent fiscal years. We are confident that our extensive experience serving similar governmental entities, bolstered by our client-oriented philosophy and depth of resources, will make CLA a top qualified candidate to fulfill the scope of your engagement. The following differentiators are offered for the District’s consideration: Industry-specialized insight and resources. As one of the nation’s leading professional services firms, and one of the largest firms who specialize in regulated industries, CLA has the experience and resources to assist the District with their audit needs. In addition to your experienced local engagement team, the District will have access to one of the country’s largest and most knowledgeable pools of regulated industry resources. OMB Uniform Guidance (UG) experience. CLA performs single audits for hundreds of organizations annually, ranking top in the nation for the number of single audits performed by any CPA firm. The single audit requires a specific set of skills in order to properly perform the procedures. As such, we have developed a group of professionals who specialize in providing single audit services. Strong methodology and responsive timeline. In forming our overall audit approach, we have carefully reviewed the RFP and considered our past experience performing similar work for other municipalities. Our local government clients are included amongst the more than 4,150 governmental organizations we serve nationally. Our staff understands your complexities not just from a compliance standpoint, but also from an operational point of view. We have developed a work plan that takes into consideration your unique needs as a governmental entity in California. The work plan also minimizes the disruption of your staff and operations and provides a blueprint for timely delivery of your required reports. Communication and proactive leadership. The District will benefit from a high level of hands-on service from our team’s senior professionals. We can provide this level of service because, unlike other national firms, our principal-to-staff ratio is similar to smaller firms – allowing our senior level professionals to be involved and immediately available throughout the entire engagement process. Our approach helps members of the engagement team stay abreast of key issues at the District and take an active role in addressing them. A focus on providing consistent, dependable service. We differ from other national firms in that our corporate practice focuses on the needs of non-SEC clients, thus allowing us to avoid the workload CliftonLarsonAllen LLP 2965 Roosevelt Street, Suite A Carlsbad, CA 92008 phone 760-729-2343 fax 760-729-2234 CLAconnect.com CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member-firm-disclaimer for details. 4 compression typically experienced by firms that must meet public companies’ SEC filing deadlines. CLA is organized into industry teams, affording our clients with specialized industry-specific knowledge supplemented by valuable local service and insight. Therefore, the District will enjoy the service of members of our state and local government services team who understand the issues and environment critical to governmental entities. Fresh perspective. By engaging CLA, the District will benefit from a “fresh look” at its business operations, information systems, and financial and risk management policies and procedures. You will be served by an engagement team with enthusiasm and a desire to meet and exceed expectations. We are confident that our industry experience will bring to the District new ideas, creative approaches, and fresh opportunities to meet the financial management and accountability challenges before the District. Certification statement I, David Forman, your engagement principal, will serve as the District’s primary contact person for this engagement. Furthermore, as a principal of CLA, I am authorized to sign, bind, and commit the firm to the obligations contained in this proposal and the District’s RFP. My contact information is as follows: David Forman, CPA, Principal Office: 760-994-4029 Email: david.forman@CLAconnect.com This proposal is a firm and irrevocable offer until March 4, 2022 (175 days). Understanding of the work to be done We have read the Request for Proposal (RFP) and we understand the work to be done as detailed in the RFP under “Section II. Nature of Services Required”. Commitment to perform the work within the time period CLA will perform these services in the time period specified in the RFP and as finalized in the planning stages of the engagement. We are confident that our technical approach, insight, and resources will result in distinguished client service for the District. For ease of evaluation, the structure of our proposal follows your RFP section “VI, B. Technical Proposal”. We are eager to work with you and welcome the chance to present our proposal to the finance and administration committee. If you have any questions about our offerings, please do not hesitate to contact me. Sincerely, CliftonLarsonAllen LLP David Forman, CPA Principal Create Opportunities ©2021 CliftonLarsonAllen LLP | 5 1. General Requirements Appendix C – Proposer Guarantees Create Opportunities ©2021 CliftonLarsonAllen LLP | 6 Appendix D – Proposer Warranties Create Opportunities ©2021 CliftonLarsonAllen LLP | 7 2. Independence CLA is independent of the District as required by auditing standards generally accepted in the United States and the U.S. Government Accountability Office’s Government Auditing Standards. Our firm-wide quality control policies and procedures foster strict compliance with these professional standards. In addition, the individuals assigned to your audit are independent of the District. CLA and its employees have no prior relationship with the District, any of its agencies, component units, or oversight unit for the past five years with the exception of we were the independent auditors for the Metro Wastewater JPA through June 30, 2019. The Otay Water District is a member of this JPA. Additionally, we will not be using any subcontractors on this engagement. Any professional relationship entered into during the period of this agreement shall be discussed with the District through written notification. No conflict of interest CLA is not aware of any existing or potential conflict of interest matters that would impair our independence for the performance of this engagement. 3. License to Practice in California CLA is duly licensed to practice public accountancy in the state of California. A copy of our state license is provided below: 4. Firm Qualifications and Experience Size of firm and governmental audit staff With more than 7,400 people, including 400 state and local government audit professionals serving more than 4,150 governmental entities in more than 120 U.S. locations, and a global affiliation, CLA brings a wide array of approaches to help clients in all markets, foreign and domestic. Our professionals are immersed in the industries they serve and have specialized knowledge of their operating and regulatory environments. Create Opportunities ©2021 CliftonLarsonAllen LLP | 8 Office location, number and nature of professionals proposed for this engagement The District will be served from our Carlsbad location: CLA Carlsbad 2965 Roosevelt Street, Suite A Carlsbad, CA 92008 760-729-2343 | fax 760-729-2234 The professionals we have selected for the District’s engagement are full-time employees of CLA. The resources of all 400 CLA state and local government audit professionals is available to the District from this location. Joint venture We are not a joint venture or alliance of firms. We have the capabilities of providing all services outlined in the proposal, including Information Technology services Governmental auditing experience CLA offers the credibility, reputation, and resources of a leading professional services firm — without sacrificing the small-firm touch. We bring unsurpassed levels of technical excellence, commitment, and dedication to our clients, which have made us one of the most successful professional service firms serving governmental entities. Our strong reputation for serving state and local government units provides the District the confidence in their decision to select CLA as their professional service provider. CLA has one of the largest governmental audit and consulting practices in the country, serving more than 4,150 governmental clients nationwide. Regulated industry clients represent approximately one-quarter of all firm- wide revenue, and each of the government services team members are well versed in the issues critical to complex governmental entities. Our professionals have deep, technical experience in serving governmental entities. As a professional service firm experienced in serving state and local units of government, we are very aware of the financial and legal compliance requirements that government officials are faced with daily. This creates complexities and service issues within a unique operational and regulatory environment. Because of our experience, we have become adept at providing our clients with insights in this environment not typical of other professional service firms. Create Opportunities ©2021 CliftonLarsonAllen LLP | 9 California special district auditing experience As a CPA firm experienced in serving state and local governments, CLA is aware of the financial and legal compliance requirements that government officials are facing daily, specifically in the state of California. We understand and appreciate California governmental organizations like no other firm. Each of our government services team members specifically chose to work in this industry. As such, our people are passionate about what they do and are eager to meet and exceed your expectations both now and in the future. Industry participation CLA actively supports industry education as a thought leader and industry speaker. Our firm focuses on supporting the educational needs of the industry through nationally sponsored trade events. Our team of professionals is sought after, both as educators and as experienced speakers who are invited to speak and teach at major professional events by leading trade associations. Single audit experience CLA has become the national leader in providing audit, tax, and many other financial services to government entities similar to the District. Our client portfolio of nonprofit, government, and health care institutions represents nearly half of the firm’s total revenues. The chart below illustrates CLA’s experience in serving organizations that receive federal funds and demonstrates our firm’s dedication to serving the government and nonprofit industry. CLA performs the largest number of single audits in the United States! We audited more $56 billion dollars in federal funds in 2019. In the current environment of increased oversight and new federal funding being available through the CARES Act in response to the COVID-19 pandemic, it is more important than ever to find qualified auditors who have significant experience with federal grants specific to the District and can enhance the quality of the District’s single audit. Therefore, the single audit will be performed by a team of individuals who are managed by personnel who specialize in single audits in accordance with OMB’s UG and who will offer both knowledge and quality for the District. As part of our quality control process, the single audit will be reviewed by a firm Designated Single Audit Reviewer. Create Opportunities ©2021 CliftonLarsonAllen LLP | 10 The AICPA clarified auditing standard “AU-C 935 “Compliance Audits” requires risk-based concepts to be used in all compliance audits including those performed in accordance with OMB UG. Our risk-based approach incorporates this guidance. The District needs an audit firm experienced in performing single audits and a familiarity with the specific programs in which you are involved. You will benefit from CLA’s experience in this area! Peer Review Report In the most recent peer review report, dated November 2019, we received a rating of pass, which is the most positive report a firm can receive. We are proud of this accomplishment and its strong evidence of our commitment to technical excellence and quality service. The full report is provided on the following page. In addition to an external peer review, we have implemented an intensive internal quality control system to provide reasonable assurance that the firm and our personnel comply with professional standards and applicable legal and regulatory requirements. Our quality control system includes the following: A quality control document that dictates the quality control policies of our firm. In many cases, these policies exceed the requirements of standard setters and regulatory bodies. Firm leadership promotes and demonstrates a culture of quality that is pervasive throughout the firm’s operations. To monitor our adherence to our policies and procedures, and to foster quality and accuracy in our services, internal inspections are performed annually. Quality control standards as prescribed by the AICPA. The engagement principal is involved in the planning, fieldwork, and post-fieldwork review. In addition, an appropriately experienced professional performs a risk- based second review of the engagement prior to issuance of the reports. Hiring decisions and professional development programs designed so personnel possess the competence, capabilities, and commitment to ethical principles, including independence, integrity, and objectivity, to perform our services with due professional care. An annual internal inspection program to monitor compliance with CLA’s quality control policies. Workpapers from a representative sample of engagements are reviewed and improvements to our practices and processes are made, if necessary, based on the results of the internal inspection. Strict adherence to the AICPA’s rules of professional conduct, which specifically require maintaining the confidentiality of client records and information. Privacy and trust are implicit in the accounting profession, and CLA strives to act in a way that will honor the public trust. A requirement that all single audit engagements be reviewed by a designated single audit reviewer, thereby confirming we are in compliance with the standards set forth in Uniform Guidance. Create Opportunities ©2021 CliftonLarsonAllen LLP | 11 Create Opportunities ©2021 CliftonLarsonAllen LLP | 12 Federal or state desk or field reviews CLA has been subject to several federal and state desk reviews by state oversight agencies during the past three years, and we have resolved all findings. In addition, our government audits are subject to review by each agency’s Office of Inspector General, as well as the U.S. Government Accountability Office, and we have also resolved all findings identified in those reviews. Moreover, in those cases where claims have been resolved by settlement (the vast majority of our cases), the firm is typically subject to confidentiality agreements that prohibit the disclosure of information regarding those matters. Disclosure by the firm of any details about those matters could invalidate the settlement agreements. 5. Partner, Supervisory and Staff Qualifications and Experience An experienced engagement team has been aligned to provide the most value to your organization. The team members have performed numerous engagements of this nature and will commit the resources necessary to provide top quality service throughout the engagement. Following are our proposed management team members: Engagement Team Member Role Years’ Experience David Forman, CPA Engagement and Assurance Principal 27 Lauren K. Hoodenpyle, CPA Engagement Director 7 Jonathan Supple, CPA Engagement Staff 2 Detailed biographies including continuing professional education are available in the Appendix of this proposal. We will assign additional staff to your engagement based on your needs and their experience providing services to state and local governments. All management team members hold a CPA designation. Additional staff will hold a minimum of a bachelor’s degree from an accredited university, be a licensed CPA or CPA candidate and will be closely managed by one or more of the individuals listed above. Staff continuity We are committed to providing continuity throughout this engagement. It is our policy to maintain the same staff throughout an engagement, providing maximum efficiency and keeping the learning curve low. In any business, however, turnover is inevitable. When it happens, we will provide summaries of suggested replacements and will discuss re-assignments prior to finalizing. We have an adequate number of qualified staff members to provide the District with top service over the term of the engagement. Create Opportunities ©2021 CliftonLarsonAllen LLP | 13 6. Similar Engagements with Other Government Entities Listed below are some of the most significant engagements performed in the past five years that are similar to the District’s engagement. Similar entities Association of Ground Water Agencies California Groundwater Coalition Calleguas Municipal Water District Camarosa Water District Casitas Municipal Water District Central Basin Water Association Chino Basin Desalter Authority Coachella Valley Water District Crescenta Valley Water District East Valley Water District Encina Wastewater Authority Fairbanks Ranch Community Services District Fallbrook Public Utility District Fallbrook Regional Health District Gateway Water Management Authority Hemet-San Jacinto Watermaster Inland Empire Utilities Agency Jurupa Community Services District Laguna Beach County Water District Las Virgenes Municipal Water District Leucadia Wastewater District Main San Gabriel Basin Watermaster Mesa Water District Montebello Land and Water Company North Fork Water Company Olivenhain Municipal Water District Orange County Water District Orchard Dale Water District Padre Dam Municipal Water District Pico Rivera Water Authority Pomona Walnut-Rowland Joint Water Line Commission Rainbow Municipal Water District Rancho California Water District Rancho Santa Fe Community Services District Rincon del Diablo Municipal water District Rowland Water District San Gabriel Valley Council of Governments San Gabriel Valley Municipal Water District San Gabriel Water Association Santa Ana Watershed Project Authority Santa Fe Irrigation District Serrano Water District Southwest Water Coalition South Coast Water District Sweetwater Authority Valley County Water District Vista Irrigation District Western Municipal Water District West Valley Water District Whispering Palms Community Services District Yorba Linda Water District References CLA offers its clients the best of two worlds — a firm with national governmental experience, complemented by a local team dedicated to accessibility and responsiveness. We are pleased to provide you with the following references, similar to the District, who can describe their experience in greater detail. Fallbrook Public Utility District Client contact David, Shank, Assistant General Manager/Chief Financial Officer Phone number | email 760-728-1125 | dshank@fpud.com Dates of services 2018-Present Scope of work District and Single Audits Create Opportunities ©2021 CliftonLarsonAllen LLP | 14 Rincon del Diablo Municipal Water District Client contact Jeffrey Umbrasas, Director of Administration & Finance Phone number | email 760-445-1514 | jumbrasas@rinconwater.org Dates of services 2015 - Present Scope of Work District Audits, Preparation of State Controllers Audit Olivenhain Municipal Water District Client contact Rainy Selamat, Finance Manager Phone number | email 760-632-4218 | rselamat@olivenhain.com Dates of services 2011-2018 Scope of work District and Single Audits 7. Specific Audit Approach Financial statement audit approach Many organizations view an audit as a requirement that doesn’t contribute to their overall operations or value. At CLA, we believe an audit should be an annual check-up that gives you insight into your organization, allowing you to take advantage of opportunities and improve your operations. Our industry experience makes it easier. CLA auditors are industry aligned, making our audit process fast and smooth. We focus on operational efficiency and leverage our industry experience to bring you meaningful insights that go beyond compliance requirements. A dedicated team of professionals will listen to your goals and concerns, then work with you to navigate industry pressures, changing markets, and complex standards, all with a common goal to drive your business toward success. Your time has value. We recognize that you and your teams’ day is filled with competing priorities and constant distractions. We elevate your experience by utilizing a variety of communication mediums, such as a web-based document portal, video conferencing, email, and phone calls, to keep everyone informed and on track. These mediums provide ultimate flexibility so that you can choose where and how your audit is performed. In contrast to a traditional engagement, where a team spends weeks on site at your location, our Seamless Assurance Advantage focuses on having the right team members on your engagement and isn’t dependent upon any physical locations. A simple transition. We recognize changing accounting firms presents an opportunity as well as a challenge. Our approach deliberately and effectively minimizes the impact of transition. No surprises. We will provide the District with a no surprises approach to our services, based on frequent and timely communication and clarity around roles and expectations. If and when issues arise during the course of your audit, we engage the right people in a frank discussion to resolve them. Significant involvement of principals and managers. Because our principals and managers are directly involved in your engagement, we can proactively identify significant issues and resolve them with your management. We Create Opportunities ©2021 CliftonLarsonAllen LLP | 15 believe that your time is best spent with key decision makers so that you can ask clarifying questions, discuss organizational strategies, and navigate sensitive reporting issues. Established Methodology. Our audit is performed based on a risk-based approach. We conduct our audits under the concept of “understanding the entity.” This concept is based fundamentally on the fact that the District is unique. By understanding the District, we gain the necessary perspective for performing an effective audit. Our audit approach places particular emphasis on the planning phase to determine maximum efficiency and effectiveness. When performing an audit, we are sensitive and understanding of the fact that we report to those charged with governance. We maintain objectivity and independence in order to be able to issue our audit opinions. We will act within our philosophy of total client service, maintain the professional relationship refined with management, and fulfill our responsibilities with the utmost professionalism. Year-long support. We encourage your staff to take advantage of our accessibility throughout the year for questions that may arise. Our people, working with you and your staff, can provide proactive advice on new accounting or GAAP pronouncements and their potential impact; help with immediate problems including answers to brief routine questions; and share insights and best practices to assist you in planning for your future success. Work plan We will conduct our audit in four primary phases, as shown below. PHASE 1: PLANNING AND STRATEGY The main objective of the planning phase is to identify significant areas and design efficient audit procedures. We will accomplish our planning by following the methodology below: Conduct an entrance meeting with the District – David Forman and staff will meet with the District personnel to mutually agree on an outline of responsibilities and timeframes. The agenda will include but not be limited to the following: o Establish audit approach and timing schedule o Assistance to be provided by the District personnel o Application of generally accepted accounting principles o Initial audit concerns o Concerns of the District’s management o Establishment of report parameters and timetables o Progress reporting process Create Opportunities ©2021 CliftonLarsonAllen LLP | 16 o Establish principal contacts Gain an understanding of the operations of the District, including any changes in its organization, management style, and internal and external factors influencing the operating environment. We will utilize reference materials such as the budget and related materials, organizational charts, manuals and programs, financial, and other management information systems Identify significant accounts and accounting applications, critical audit areas, significant provisions of laws and regulations, and relevant controls over operations Determine the likelihood of effective Information Systems (IS) - related controls Perform a preliminary overall risk assessment Confirm protocol for meeting with and requesting information from relevant staff Establish a timetable for the fieldwork phase of the audit Determine a protocol for using TeamMate Analytics and Expert Analyzer, our data extraction and analysis software, to facilitate timely receipt and analysis of reports from management Compile an initial comprehensive list of items to be prepared by the District, and establish mutually agreed upon deadlines We will document our planning through preparation of the following: Entity Profile. This profile will help us gain an understanding of the District activities, organizational structure, services, management, key employees, and regulatory requirements. Preliminary Analytical Procedures. These procedures will assist in planning the nature, timing and extent of auditing procedures that will be used to obtain evidential matter. They will focus on enhancing our understanding of the financial results and will be used to identify any significant transactions and events that have occurred since the last audit date, as well as to identify any areas that may represent specific risks relevant to the audit. General Risk Analysis. This will contain our overall audit plan, including materiality calculations, fraud risk assessments, overall audit risk assessments, effects of our IS assessment, timing, staffing, client assistance, a listing of significant provisions of laws and regulations and other key planning considerations. Account Risk Analysis. This document will contain the audit plan for the financial statements, including risk assessment and the extent and nature of testing by assertion. Prepared by Client Listing. This document will contain a listing of schedules and reports to be prepared by the District personnel with due dates for each item. Assurance Information Exchange. CLA utilizes a secure web-based application to request and obtain documents necessary to complete client engagements. This application allows clients to view detailed information, including due dates for all of the items CLA is requesting. Additionally, clients have the ability to attach electronic files and add commentary related to the document requests directly on the application. One of the key elements in the planning of this audit engagement will be the heavy involvement of principals and managers. We will clearly communicate any issues in a timely manner and will be in constant contact with the District as to what we are finding and where we expect it will lead. We will develop our audit programs during this phase. Utilizing the information we have gathered and the risks identified we will produce an audit program specifically tailored to the District. This program will detail by major section the nature and types of tests to be performed. We view our programs as living documents, subject to change as conditions warrant. Create Opportunities ©2021 CliftonLarsonAllen LLP | 17 PHASE 2: SYSTEMS EVALUATION During the systems evaluation phase, we will gain an understanding of the internal control structure of the District for financial accounting and relevant operations. Next, we will identify control objectives for each type of control that is material to the financial statements, and then identify and gain an understanding of the relevant control policies and procedures that effectively achieve the control objectives. Finally, we will determine the nature, timing, and extent of our control testing and perform tests of controls. This phase of the audit will include testing of certain key internal controls: Electronic data, including general and application controls reviews and various user controls Financial reporting and compliance with laws and regulations We will test controls over certain key cycles. One audit efficiency initiative is to rely heavily on internal controls when appropriate, and to creatively look at internal control testing to make it as efficient as possible. This means not routinely performing detailed tests of transactions using large samples. We first seek to identify key controls, and then identify possible testing through alternative methods, such as observation, interviews, and re-performance. These tests serve not only to gather evidence about the existence and effectiveness of internal control for purposes of assessing control risk, but also to gather evidence about the reasonableness of an account balance. We will also develop our internal control tests to assess the compliance with certain provisions of laws, regulations, contracts, and grants for which noncompliance could have a direct and material effect on the determination of financial statement amounts. Our use of multi-purpose tests allows us to provide a more efficient audit without sacrificing quality. Our assessment of internal controls will determine whether the District has established and maintained internal controls to provide reasonable assurance that the following objectives are met: Transactions are properly recorded, processed, and summarized to permit the preparation of reliable financial statements and to maintain accountability over assets Assets are safeguarded against loss from unauthorized acquisition, use, or disposition Transactions are executed in accordance with laws and regulations that could have a direct and material effect on the financial statements We will finalize our audit programs during this phase. We will also provide an updated Prepared by Client Listing based on our test results and our anticipated substantive testing. During the internal control phase, we will also perform a review of general and application Information Systems (IS) controls for the applications that are significant to financial statements to conclude whether IS general controls are properly designed and operating effectively and consider application controls as part of the internal control assessment in the financial statement audit. Our strategy for the IS review of the applications will involve reviewing all of the general control activities, including the computerized and manual processes. We will determine the scope of work by applying the concepts of materiality and risk assessment to effectively reduce examination inefficiencies. When planning this examination, we will gain an understanding of the District’s operations by reviewing its current controls and control objectives as documented and will also review prior years’ audit work and the status of corrective actions. Create Opportunities ©2021 CliftonLarsonAllen LLP | 18 Based on our preliminary review, we will perform an initial risk assessment of each critical element in each general control category, as well as an overall assessment of each control category. We will then proceed to assess the significant computer-related controls. For IS-related controls that we deem to be ineffectively designed or not operating as intended, we will gather sufficient evidence to support appropriate findings and will provide recommendations to improve internal controls. For those IS controls that we deem to be effectively designed, we will perform testing to determine if they are operating as intended through a combination of procedures, including observation, inquiry, inspection, and re-performance. PHASE 3: TESTING AND ANALYSIS The extent of our substantive testing will be based on results of our internal control tests. It has been our experience that governmental entities, like the District, often have a system of internal controls that, with appropriately designed tests and correlation to account balances, can be used to limit the extent of account balance substantiation testing. Audit sampling will be used only in those situations where it is the most effective method of testing. Before deciding to sample, we will consider all possible approaches and audit techniques. Items where, in our judgment, acceptance of some sampling risk is not justified will be examined 100 percent. These may include unusual items or items for which potential misstatements could individually equal or exceed tolerable error. After identifying individually significant or unusual items, we will decide on the audit approach for the remaining balance of items by considering tolerable error and audit risk. This may include (1) testing a sample of the remaining balance; (2) lowering the previously determined threshold for individually significant items to increase the percent of coverage of the account balance; or (3) applying analytical procedures to the remaining balance. When we elect to sample balances, we will use TeamMate to efficiently control and select our samples. Our workpapers during this phase will clearly document our work as outlined in our audit programs. We will also provide the District with status reports during the course of the audit fieldwork. As in all phases of the audit, we will be in communication with the District to determine that all identified issues are resolved in a timely manner. We will also hold a final exit conference with the District to summarize the results of our fieldwork and review significant findings. PHASE 4: REPORTING AND FOLLOW-UP Reports to management will include oral and/or written reports regarding: Independent Auditors’ Report Independent Auditors’ Report on Internal Control over financial reporting and on compliance and other matters based on an audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor’s Report on Compliance for Each Major Federal Program, Report on Internal Control Over Compliance, and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance Management Letter Written Communication to Those Charged with Governance, which includes the following areas: o Our responsibility under auditing standards generally accepted in the United States of America Create Opportunities ©2021 CliftonLarsonAllen LLP | 19 o Changes in significant accounting policies or their application o Unusual transactions o Management judgments and accounting estimates o Significant audit adjustments o Other information in documents containing the audited financial statements o Disagreements with the District o the District’s consultations with other accountants o Major issues discussed with management prior to retention o Difficulties encountered in performing the audit o Fraud or illegal acts Once the final reviews of working papers and financial statements are completed, which is a process that actually starts while the fieldwork is in process, our opinion, the financial statements, and management letter will be issued. The District will be provided a draft of any comments that we propose to include in the management letter, enabling you to review the comments for accuracy prior to final release. Any items that come to our attention that are not what we consider major items may be discussed verbally with management and not included in the management letter. Our management letter will include items noted during our analysis of your operations. We will also make a formal presentation of the results of the audit to those charged with governance of the District, if requested. Single audit approach The OMB’s Uniform Guidance (2 CFR Part 200) is effective for federal grants made on or after December 26, 2014. This affects how federal grants are managed and audited and impacts every organization that receives federal assistance. Grant compliance can be a confusing topic and many of our clients rely on their federal funding as a major revenue source, so it is important that they understand what these changes mean to their organization. As a leader in the industry, CLA was out in front of these changes and informed our clients of how to be proactive about these changes could impact their entity. CLA professionals are available to provide guidance and tools tailored to the District’s needs, and to assist in compliance with these rules. The AICPA clarified auditing standard “AU-C 935 “Compliance Audits” requires risk-based concepts to be used in all compliance audits including those performed in accordance with 2 CFR Part 200. Our risk-based approach incorporates this guidance. Single audit work plan We will conduct our single audit in three primary phases, as shown, below: Create Opportunities ©2021 CliftonLarsonAllen LLP | 20 PHASE 1: RISK ASSESSMENT AND PLANNING The risk assessment and planning phase will encompass the overall planning stage of the single audit engagement. During this phase, we will work closely with the District’s management to determine that programs and all clusters of programs are properly identified and risk-rated for determination of the major programs for testing. We will also review the forms and programs utilized in the prior year to determine the extent of any changes which are required. We will accomplish this by following the methodology below: Determine the threshold to distinguish between Type A and B programs, including the effect of any loans and loan programs Utilizing the preliminary Schedule of Expenditure of Federal Awards, we will identify the Type A and significant Type B programs (25% of Type A threshold) in accordance with the Uniform Guidance Identify the programs tested and the findings reported for the past two fiscal years. Determine and document the program risk based on the past two single audits Prepare and distribute Type B program questionnaires to determine risk associated with Type B programs Determine the major programs to be tested for the current fiscal year based on the previous steps Based on our determination of the major programs, we will obtain the current year compliance supplement to aid in the determination of Direct and Material Compliance requirements, and customize the audit program accordingly Determine the preferred methods of communication during the audit PHASE 2: MAJOR PROGRAM TESTING We will determine the programs to be audited based on the risk assessment performed in the planning phase. We will perform the audit of the programs in accordance with UG. To accomplish this, we will perform the following: Schedule an introductory meeting and notify the District’s management of the major programs for the current fiscal year Plan and execute the testing of the expenditures reported on the Schedule of Expenditures of Federal Awards Perform tests of compliance and internal controls over compliance for each major program identified Schedule periodic progress meetings to determine that schedules are adhered to and identify issues as they arise Conduct entrance and exit conference meetings with each grant manager PHASE 3: FINAL ASSESSMENT AND REPORTING We will re-perform the steps noted in the preliminary assessment and planning stage once the final Schedule of Expenditures of Federal Awards is received to determine if additional major programs were identified. Based on the final determination of the programs we will perform the following: Create Opportunities ©2021 CliftonLarsonAllen LLP | 21 Identify Type A and significant Type B programs which were not previously identified. Re-assess the risk and determine if we are required to audit additional programs. Perform compliance testing at the entity wide level related to procurement and cash management requirements. Perform testing to validate the status of prior year findings for those programs not selected for audit. Prepare the Schedule of Findings and Questioned Costs. Conduct exit conference with the District’s management to review drafts of required reports: o Independent Auditors’ Report on Internal Control over financial reporting and on compliance and other matters based on an audit of Financial Statements Performed in Accordance with Government Auditing Standards o Independent Auditor’s Report on Compliance for Each Major Federal Program, Report on Internal Control Over Compliance, and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance Throughout the single audit, we will maintain communication through periodic progress meetings with those designated by the District. These meetings will be on a set schedule, but as frequently as the District determines. During these meetings, we will discuss progress impediments and findings as they arise. Commitment to communication with management As you will see, we are committed to ongoing communication throughout the engagement. Continual communication starts when an engagement letter is issued, continues until the completion or closeout of an engagement, and throughout the remainder of the year. We believe effective communication is critical to a successful engagement. This communication includes the exchange of ideas and advice as changes are considered or implemented by the entity or the accounting profession. During the engagement we will hold regular status meetings with the District to enhance day-to-day operations, results, and any issues are commonly understood and addressed. The objectives of tracking and formally reporting the engagement status are to: Provide a consistent technique for monitoring progress against plan Identify any issues quickly to allow for timely corrective action Provide an objective rather than subjective evaluation of status Provide timely information on a regular basis Assist with obtaining buy-in of any audit recommendations on a timely basis Our proactive measures foster communications, both written and oral, which are ongoing, relevant, and routine to our engagements. Our commitment to this practice encourages open lines of communication and often prevents and/or mitigates service delivery issues. Our professionals are trained in documenting observations, recommendations, business issues, and new developments as part of their daily routine. We explain exactly what we’re doing and what we’ve found in plain, everyday language. We translate our findings into ideas on how you can address them. We believe our services are a contributing factor to better business and administrative practices. We gain a better understanding of your organization by working closely with your staff. This involvement enables us to offer you recommendations or suggestions for improvement in your systems and procedures that are more comprehensive, better understood, and more frequently implemented. Create Opportunities ©2021 CliftonLarsonAllen LLP | 22 Workpaper retention Workpapers will be maintained for at least a seven-year period and will be available for examination by authorized representatives of the District, internal audit staff, and by authorized representatives of regulatory personnel, subject to professional ethics requirements. Significant records are stored in one of our secure Master Record Repositories per the engagement type. Upon the receipt of a request for retrieval, an appropriate review format will be determined based on the scope of the examination. Use of technology in the audit We’re reimagining the audit process through technology to elevate your experience! Assurance Information Exchange – CLA offers a secure web-based application to request and obtain documents necessary to complete client engagements. This application allows clients to view detailed information, including due dates for items that CLA requests. Additionally, the application allows clients to attach electronic files and add commentary related to the document requests directly on the application. AIE is provided at no additional cost, subject to the terms of the Assurance Information Exchange Portal Agreement. TeamMate Analytics and Expert Analyzer (TeamMate) – To analyze and understand large data sets, we use TeamMate Analytics and Expert Analyzer. We customize the application by industry in order to perform the most applicable procedures. This allows us to go beyond sampling and instead analyze the entire general ledger for targeted anomalies. Far beyond the audit application, our six-phase process of Risk Assessment, Data Analytics and Review (RADAR) can also provide actionable insights to help you understand your entity better. Microsoft® Teams – Our services approach focuses on impactful interactions. We’ve said goodbye to the days of setting up camp in our clients’ conference rooms for weeks on end. We know our clients have organizations to run, so our interactions have purpose. To assist with communications when we are not onsite, we utilize tools such as Microsoft Teams, which allow for two-way screen sharing and video. We’ve found this helps minimize disruptions in our clients’ environments while continuing to effectively communicate with each other. Level of staff and number of hours assigned to each segment of engagement Financial Statement Audit Engagement Segment Principal Manager Supervisory Staff Staff Others Total Hours Planning and Strategy 3.00 26.25 20.00 9.20 - 58.45 Systems Evaluation 2.00 15.00 20.00 23.00 - 60.00 Testing and Analysis 1.00 15.00 35.00 50.60 - 101.60 Reporting and Follow- up 14.00 18.75 25.00 9.20 8.00 74.95 Total 20.00 75.00 100.00 92.00 8.00 295.00 Create Opportunities ©2021 CliftonLarsonAllen LLP | 23 Sample size and statistical sampling We follow the guidance of AU-C Section 530, Audit Sampling, in using statistical and nonstatistical approach. We use quality control material in all our audit engagements. These AU-C Section 530 – “Audit Sampling” forms guide our staff through a logical process of assessing inherent risk, control risk, and combined audit risk, followed by an assessment of appropriate sample size for testing. Sample sizes will vary depending on the nature of the testing (compliance versus substantive) and the size of the population being sampled. Sampling techniques are utilized in compliance and internal control testing, as well as substantive testing of certain asset and liability account balances. Sample sizes used for internal control testing depend on a number of factors, namely the number of expected or actual control deviations, size of population, and level of control assurance anticipated. Sample sizes can range from 20 to 90 possible selections. To illustrate, if no internal control deviations are anticipated and the frequency of the population (i.e., the number of times the control is performed in a given year) is less than 100, then we will test 20 transactions in order to obtain moderate control assurance. If 2 internal control deviations are anticipated, and the frequency of the population is greater than 200, then we will test 90 transactions in order to obtain low control assurance. We are usually able to cover a substantial portion of the compliance and controls testing with one sample, resulting in a very efficient approach. Type and extent of analytical procedures to be used in the engagement In addition to standard auditing methodology, a distinguishing aspect of CLA’s audit services incorporates the power of data analytics to multiply the value of the analyses and the results we produce for clients. CLA’s data methodology is a six-phase, systematic approach to examining an organization’s known risks and identifying unknown risks. Successful data analysis is a dynamic process that continuously evolves throughout the duration of an engagement and requires collaboration of the engagement team. Data analytics are utilized throughout our audit process, our Risk Assessment, Data Analytics and Review (“RADAR”) is a specific application of general ledger data analytics that has been implemented on all audit engagements. RADAR is an innovative approach created and used only by CLA that aims to improve and replace traditional preliminary analytics that were being performed. The phases in our data analytics process are as follows: 1. Planning In the planning stage of the engagement, the use of data analysis is considered and discussed to determine that analytics are directed and focused on accomplishing objectives within the risk assessment. Areas of focus, such as journal entries, cash disbursements, inventory, and accounts receivable are common. 2. Expectations We consider the risks facing our client and design analytics to address these risks. Through preliminary discussions with management and governance, we develop and document expectations of financial transactions and results for the year. These expectations will assist in identifying anomalies and significant audit areas in order to appropriately assess risk. Create Opportunities ©2021 CliftonLarsonAllen LLP | 24 3. Data acquisition Sufficient planning, a strong initial risk assessment, and an adequate understanding of your systems will serve as the foundation necessary to prepare our draft data request list. We will initially request information in written format and conduct follow-up conversations helping CLA practitioners our staff share a mutual understanding of the type of data requested and the format required. If there are going to be any challenges/obstacles related to obtaining data, or obtaining data in the preferred format, they will generally be discovered at this point. 4. Technical data analysis Technical analysis of the data requires the skillful blend of knowledge and technical capability. Meaningful technical analysis provides the engagement team with a better understanding of the organization. The additional clarity assists the engagement team to better assess what is “normal” and, in turn, be better suited to spot anomalies, red- flags and other indications of risk. Analytics generally fall into five categories, each looking into the data set in a different way and deployed with a different purpose. 5. Interpret results and subsequent risk assessment Trends and anomalies will be identified through the performance of the above referenced analytics. Comments regarding the interpretation of those trends and anomalies will be captured. When trends are identified they are reconciled against expectations. For anomalies identified, the approach to further audit procedures will be considered. 6. Response and document The last process is to capture responses and determine that our procedures are properly documented. Abstracts, charts or summaries of both trends and anomalies are retained in the audit documentation to support our identification of risks. Our analysis can be tailored and customized to help analyze an array of information, including client specific and proprietary data. Key benefits of data analytics include: Built-in audit functionality including powerful, audit specific commands and a self-documenting audit trail 100 percent data coverage, which means that certain audit procedures can be performed on entire populations, and not just samples Unlimited data access allows us to access and analyze data from virtually any computing environment Eliminates the need to extrapolate information from errors (a common effort when manually auditing data) and allows for more precise conclusions This figure illustrates typical data analytics scenarios. Data Analytics. At the end of a series of pre-determined analytics (often retrieved from multiple proprietary accounting systems) that are customized to the project at hand, we identify anomalies and potential errors in transactions. In every case, we review what appears to be inappropriate activity, including supporting documentation evidencing the transactions. Create Opportunities ©2021 CliftonLarsonAllen LLP | 25 Approach to be taken to understanding the District’s internal control structure We understand changing audit firms would require a new set of auditors to develop an understanding of the District and its internal control and operating structure. We also strive to develop our understanding in the least intrusive manner possible, while still maintaining our professional responsibilities. We would utilize a combination of internal control forms and interviews with key accounting personnel to gain and document our understanding of the District. We will also use as a baseline any existing internal control processes, policies, organizational charts, etc. the District may have already documented. Tests of design and operating effectiveness would then be performed to confirm our understanding. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has established a framework for internal control systems. Under the COSO framework, internal control is a process to provide reasonable assurance that those internal objectives, including effectiveness and efficiency of business operations, reliability of financial reporting, and compliance with applicable laws and regulations, will be met. Our audit approach is designed to evaluate and test the departmental internal controls in accordance with COSO concepts. Our procedures include a review of the overall control environment, determination of the internal controls which are determined to be direct and material to the federal program under review, determination of the adequacy of those procedures, and testing of the procedures to determine if they are functioning as designed. During the planning and internal control phases of our audit, we will develop our understanding of the District business operations and internal control structure for financial accounting and relevant operations through observation, discussion, and inquiries with management and appropriate personnel. During this phase of the audit, we will review budgets and related materials, organization charts, accounting and purchase manuals, and other systems documentation that may be available. Once we understand your operations, we will then identify control objectives for each type of control that is material to the financial statements. The next step will be to identify and gain an understanding of the relevant control policies and procedures that effectively achieve the control objectives. We will then determine the nature, timing, and extent of our control testing, and perform tests of controls. This phase of the audit will include extensive testing of controls over transactions, financial reporting, and compliance with laws and regulations. Whenever possible, we will use dual-purpose tests to reduce the need to select multiple samples for internal control and compliance testing. We will be as efficient as possible, thereby reducing the disruption to your operations while achieving our audit objectives. Our assessment of internal controls will determine whether the District has established and maintained internal controls to provide reasonable assurance that the following objectives are met: Transactions are properly recorded, processed, and summarized to permit the preparation of reliable financial statements and to maintain accountability over assets Assets are safeguarded against loss from unauthorized acquisition, use, or disposition Create Opportunities ©2021 CliftonLarsonAllen LLP | 26 Transactions are executed in accordance with laws and regulations that could have a direct and material effect on the financial statements Our workpapers during this phase will clearly document our work through the preparation of the following for each significant transaction cycle or accounting application: Audit program Cycle memo and supporting documentation Account risk analysis (ARA) Specific control evaluation (SCE) Approach to be taken in determining laws and regulations that will be subject to audit test work We will obtain an understanding of the laws and regulations that have an impact on the District’s operations by reviewing council minutes to identify any ordinances or resolutions that might have an impact to operations and reporting by the District, as well as interview key personnel and management of the District. Additionally, the staff assigned to the engagement attend regular trainings and are well versed in upcoming legislation, federal and state laws (i.e. Uniform Grant Guidance) and proactively discuss these upcoming changes with our clients. We will also review current operations, contracts and IGA’s that may have an impact on current operations. Approach to be taken in drawing audit samples for purposes of tests of compliance We follow the guidance of AU-C Section 530, Audit Sampling, in using statistical and nonstatistical approach. We use quality control material in all our audit engagements. These forms guide our staff through a logical process of assessing inherent risk, control risk, and combined audit risk, followed by an assessment of appropriate sample size for testing. Because our sample sizes are affected by many variables, a statement about sample sizes cannot be made in absolute terms. However, with regard to sample selection, we will generally utilize representative sampling for internal control and compliance tests, including those related to single audit compliance. Samples will also be used in conjunction with other tests of compliance. In general terms, sample sizes for compliance and controls testing obtained via our guidance usually fall into categories of 25, 40, or 60 depending on circumstances. Where the population being tested is less than 100 items, we will use the 20%, 30%, or 40% of the population depending on our control risk assessment. We are usually able to cover a substantial portion of the compliance and controls testing with one sample, resulting in a very efficient approach. Engagement timetable Our project management methodology results in a client service plan that provides for regular, formal communication with the entire management team and allows us to be responsive to your needs. The schedule allows for input from your personnel to make certain that the services are completed based on your requirements. The plan may also be amended during the year based on input from the finance and administration committee. Create Opportunities ©2021 CliftonLarsonAllen LLP | 27 Annual Audit Task Estimated Date Entrance conference March-April 2022 Begin interim audit work May 23, 2022 Complete interim audit work June 30, 2022 Begin audit fieldwork August 22, 2022 Complete audit fieldwork August 29, 2022 Presentation to finance and administration committee August-September 2022 Assistance to be furnished by the District Our approach is to draw on our experience with similar organizations and have discussions with the District staff to determine the items that will be prepared and provided in relation to the audit. Our experience working with similar organizations enables us to streamline the Prepared by Client listing for the financial audit for both the interim and final fieldwork time periods. The Assurance Information Exchange enables an interactive exchange of items between the District and engagement team. The audit team will work with the District staff to develop timelines for the requests that are in line with the closing schedule of the District and will meet the overall objective of issuing the final reports during the District meeting when requested. 8. Identification of anticipated potential audit problems In situations where authoritative guidance on a particular transaction or accounting issue is unclear or subject to interpretation, our approach is to proactively meet with management to discuss the issue and reach a conclusion that is hopefully agreed upon by both parties. We do not have specific “firm policies” that dictate our conclusions to be reached on all complex accounting issues. Rather, each issue must be evaluated independently by our engagement team. As discussed above, we will not only meet internally, but also facilitate discussion with the District’s management team in order to obtain a mutual understanding of the particular accounting issue, determine the applicable authoritative guidance that most closely relates to the issue, and strive to reach an approach agreed upon by both parties. If there still remains any ambiguity or disagreement, we can explore other resources that could possibly assist, such as subject matter professionals within the Government Accounting Standards Board staff or the Government Finance Officers Association (GFOA) or perhaps other municipalities who may have dealt with similar issues. Additional Information Certificate of achievement assistance The Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting is awarded to state and local governments that go beyond the minimum requirements of generally accepted accounting principles. It is awarded to state and local governments who produce a comprehensive annual financial report that evidences the spirit of transparency and full disclosure. Members of the GFOA staff and the GFOA Special Review Committee (SRC) review reports submitted to the CAFR program. Create Opportunities ©2021 CliftonLarsonAllen LLP | 28 CLA provides audit services to many entities that received the GFOA Certificate of Excellence in Financial Report. All of the procedures noted in our audit approach and our technical review of the CAFR are done to help the District prepare and publish the top product possible. Our managers and principals who review the CAFR have a strong understanding of the GFOA requirement for the certificate. We understand that this is a prestigious award for the District and a great accomplishment for the Finance and Accounting departments. We will review the GFOA comment letter for each CAFR and provide the District advice regarding the response to the GFOA reviewer’s comments. Our procedures with respect to the CAFR will be the review of the comments from GFOA on the prior year submission to determine they were adequately addressed, completion of the CAFR checklist, and review of the transmittal letter and statistical data to determine that information presented is reasonable and agrees with the information in the financial statements and management’s discussion and analysis (MD&A), where applicable. We understand the interrelationships of the many and varied components of a governmental entity’s financial statements, allowing us to quickly determine errors or problems with the financial statements. Our depth of knowledge and experience also allows us to assist the District with the preparation of the CAFR and improvement of the District’s financial statements. Our involvement with clients in the GFOA Certificate program helps to determine that we are on the leading edge of reporting trends and techniques. We have been engaged by various entities to review their statements for compliance with program requirements. We have aided clients in the early implementation of professional pronouncements and regularly provide our clients with updates on new pronouncements which will affect them and will do the same for the District. Single audit resource center (SARC) award CLA received the Single Audit Resource Center (SARC) Award for Excellence in Knowledge, Value, and Overall Client Satisfaction. SARC's award recognizes audit firms that provide an outstanding service to their clients based on feedback received from an independent survey in June 2020. We take seriously our responsibility for staying current with new accounting pronouncements, auditing standards, other professional standards and laws and regulations. Continuing education program In order to maintain and expand our assurance knowledge, we consistently provide continuing education for our professionals. Each member of our professional team, including principals, attends at least 40 hours of technical training annually. Updated information on recent changes in technical standards and regulations, as well as the firm’s professional policies and procedures, is distributed to our team members on a regular basis. Individuals are required to familiarize themselves with all current changes in standards and procedures. CLA invests in our government practice by hiring high caliber professionals and providing additional training to develop and enhance our knowledge. With seasoned professionals, we provide valuable insight into your day-to- day operations and your accounting systems and controls. Insurance CLA carries commercially reasonable amounts of professional liability insurance. If requested, the firm will provide a certificate of coverage for an amount specified by the District upon being engaged. Create Opportunities ©2021 CliftonLarsonAllen LLP | 29 Appendix - Engagement team biographies David Forman, CPA CLA (CliftonLarsonAllen LLP) Principal 760-994-4029 Carlsbad, CA david.forman@CLAconnect.com Profile David is a principal at CLA’s Carlsbad office, formerly White Nelson Diehl Evans (WNDE). He has been with the firm since 1994 and has performed all phases of local governmental audits including cities, special districts, successor agencies/redevelopment agencies, single audit of federal grants, compliance audits and agreed-upon procedure engagements. His experience also includes consulting services for governmental agencies, including internal control reviews, information technology reviews, reviews of purchasing systems, and transient occupancy tax reviews of city hotels/motels. David is also involved in the firm’s training, quality control review, and internal peer review programs. Technical experience State and local government Nonprofit entities Education and professional involvement Bachelor of arts from the University of California, San Diego Professional Certificate in accounting from the University of California, San Diego Extension Certified Public Accountant in the state of California California Society of Certified Public Accountants (CalCPA), member Local government experience David has acted as engagement partner, principal, or manager for the following governmental clients: Cities: Special Districts: Carlsbad Del Mar Encinitas Hesperia Fallbrook Public Utility District Rincon del Diablo Municipal Water District Encina Wastewater Authority Olivenhain Municipal Water District Padre Dam Water District Santa Fe Irrigation District Rainbow Municipal Water District Leucadia Wastewater District San Dieguito Water District Vallecitos Water District Sweetwater Authority Create Opportunities ©2021 CliftonLarsonAllen LLP | 30 Continuing professional education Program name Total 2021 GASB update 2.0 Common audit deficiencies: Governmental audits 2.0 Revenue Recognition: ASC 606 Analysis for the Technology Industry 1.0 Revenue Recognition - Fundamentals 3.0 Not-for-profit accounting and reporting: an introduction 3.0 CLA 2021 California State and Local Government Training Academy 4.0 Coaching in the Summer at CLA Walkthrough 2021 1.0 Coaching for Inspired Careers - May 2021 1.0 Fraud 101 - Fraudulent Financial Reporting 3.0 Ethics for California CPAs 4.0 Single Audit Methodology - Legacy WNDE and Legacy Atkinson 3.0 XCM: General User Learning 1.0 CalSavers Mandate: What Your Clients Need to Know 1.0 Revenue Risks: Identifying and Determining Responses (Industry Agnostic) 1.0 2021 30.0 Think Security: Don't be a Target 1.0 Risk Assessment Part 1 Do's & Don'ts 2.0 Assurance Methodology - Legacy WNDE 4.5 Technology Overview - Legacy WNDE 2.5 Assurance & Tax Policies and Procedures - Legacy WNDE 3.0 Government Accounting, Auditing and Reporting 3.0 Risk Assessment - Government Audits 2.0 GASB 68 - Pension 3.0 GASB 75 - Other Postemployment Benefits 3.0 Independence Gov't 1.0 Independence Gov't 1.0 GASB 87 Leases 2.5 Government Interim Training 4.0 2020 BDO USA ALLIANCE CONFERENCE 5.5 Risk Assessment Part 2 2.5 2020 40.5 CLAconnect.com WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor . Create Opportunities ©2021 CliftonLarsonAllen LLP | 31 Lauren K. Hoodenpyle, CPA CLA (CliftonLarsonAllen LLP) Director 760-994-4138 Carlsbad, CA lauren.hoodenpyle@CLAconnect.com Profile Lauren is a director at CLA’s Carlsbad office, formerly White Nelson Diehl Evans (WNDE). She has been with the firm since 2014 and has performed various phases of local governmental audits including cities, special districts, nonprofits, single audits of federal grants, and agreed upon procedures engagements. Technical experience State and local government Commercial Nonprofit entities Employee benefit plans Education and professional involvement Bachelor of science in business administration from California State University, San Marcos Certified Public Accountant in the state of California American Institute of Certified Public Accountants (AICPA), member California Society of Certified Public Accountants (CalCPA), member Local government experience Cities: Special Districts: Hesperia Nonprofits: California Transplant Services Fairbanks Ranch Community Services District Fallbrook Public Utility District Granada Community Services District Grossmont Healthcare District Leucadia Wastewater District Rancho Santa Fe Community Services District Rincon Del Diablo Municipal Water District Sweetwater Authority Southbay Irrigation District Torrey Pines High School Foundation Whispering Palms Community Services District Create Opportunities ©2021 CliftonLarsonAllen LLP | 32 Continuing professional education Program name Total State and Local Gov (SLG) learning series - Part 3 2.0 2021 Yellow Book and Single Audit Update 2.0 State and Local Gov (SLG) learning series - Part 2 2.0 State and Local Gov (SLG) learning series - Part 1 2.0 Think Security: Don't be a Target 1.0 Single Audit Methodology - Legacy WNDE and Legacy Atkinson 3.0 XCM: General User Learning 1.0 Culture of Feedback 1.0 Think Security: New Family Members 1.0 2021 15.0 Government Accounting, Auditing and Reporting 3.0 Risk Assessment - Government Audits 2.0 GASB 68 - Pension 3.0 GASB 75 - Other Postemployment Benefits 3.0 Independence Gov't 1.0 GASB 87 Leases 2.5 Government Interim Training 4.0 Risk Assessment Part 2 2.5 Risk Assessment Part 1 Do's & Don'ts 2.0 2020 23.0 CLAconnect.com WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. Create Opportunities ©2021 CliftonLarsonAllen LLP | 33 Jonathan Supple, CPA CLA (CliftonLarsonAllen LLP) Senior 760-994-4305 Carlsbad, CA jonathan.supple@CLAconnect.com Profile Jonathan is a senior at CLA’s Carlsbad office, formerly White Nelson Diehl Evans (WNDE). He has been with the firm since 2019 and has been the staff on many local government audits. Technical experience State and local government Education and professional involvement Bachelor of science in management science with a minor in accounting from University of California San Diego, La Jolla, CA Certified Public Accountant in the state of California Americna Institute of Certified Public Accountants (AICPA), member California Society of Certified Public Accounts (CalCPA), member Local government experience Cities: Special Districts: Carlsbad Nonprofits: California Transplant Services Rincon del Diablo Municipal Water District Rainbow Municipal Water District Vista Irrigation District Heber Public Utility District Valley-Wide Recreation and Park District Fallbrook Regional Health District Fairbanks Ranch Community Services District Rancho Santa Fe Community Services District Whispering Palms Community Services District Continuing professional education Program name Total State and Local Gov (SLG) learning series - Part 4 2.0 Coaching in the Summer at CLA Walkthrough 2021 1.0 State and Local Gov (SLG) learning series - Part 3 2.0 State and Local Gov (SLG) learning series - Part 2 2.0 2021 Yellow Book and Single Audit Update 2.0 XCM: General User Learning 1.0 2021 10.0 Create Opportunities ©2021 CliftonLarsonAllen LLP | 34 Program name Total Assurance Methodology - Legacy WNDE 4.5 Culture of Feedback 1.0 Think Security: New Family Members 1.0 Think Security: Don't be a Target 1.0 Technology Overview - Legacy WNDE 2.5 Assurance & Tax Policies and Procedures - Legacy WNDE 3.0 Risk Assessment - Government Audits 2.0 Independence Gov't 1.0 Government Interim Training 4.0 2020 20.0 CLAconnect.com WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. Create Opportunities ©2021 CliftonLarsonAllen LLP October 12, 2021 Proposal to provide professional auditing services to: Otay Water District Cost Submittal Prepared by: David Forman, CPA, Principal david.forman@CLAconnect.com Direct 760-994-4029 CLAconnect.com WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member-firm-disclaimer. Create Opportunities ©2021 CliftonLarsonAllen LLP | 2 1. Total all-inclusive Maximum Price a. Name of firm CLA (CliftonLarsonAllen LLP) b. Certification I, David Forman, your engagement principal, will serve as Otay Water District’s primary contact person for this engagement. Furthermore, as a principal of CLA, I am authorized to sign, bind, and commit the firm to the obligations contained in this proposal and the District’s RFP. c. Total all-inclusive maximum price Our fees are based on the timely delivery of services provided, the experience of personnel assigned to the engagement, and our commitment to meeting your deadlines. CLA understands the importance of providing our clients with value-added strategies. We propose to provide routine, proactive meetings — as part of our fee — that will allow us to review and discuss with you the impact of new accounting issues, as well as any other business issues you are facing and how they should be handled. This level and frequency of interaction will no doubt enable CLA to help you tackle challenges as they come up and take full advantage of every opportunity that presents itself. Below is a total all-inclusive maximum price for the 2022 engagement and the portion for the Agreed Upon Procedures: Professional Services 2022 General purpose financial statement audit and ACFR Review $28,300 Agreed Upon Procedures $1,500 State Controller’s Report $1,250 Single audit and report (if required) $5,525 Technology and client support fee (5%)* $1,825 Serve as a resource throughout the year - Out-of-pocket expenses - Total all-inclusive maximum price $38,400 *Like most firms, we are investing heavily in technology to enhance the client experience, protect our data environment, and deliver quality services. We believe our clients deserve clarity around fees, and we will continue to be transparent with our fee structure. Create Opportunities ©2021 CliftonLarsonAllen LLP | 3 APPENDIX E Page 1 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE JUNE 30, 2022 FINANCIAL STATEMENTS GENERAL PURPOSE FINANCIAL STATEMENTS, AGREED-UPON PROCEDURES & ACFR REVIEW Hours Standard Hourly Rates Quoted Hourly Rates Total Principal 20.00 $275 $150 $3,000 Manager 75.00 $175 $140 $10,500 Supervisory Staff 100.00 $125 $90 $9,000 Staff 92.00 $95 $75 $6,900 Other 8.00 $80 $50 $400 Subtotal 295.00 $29,800 Out-of-pocket costs None Other (specify): 5% Technology and client support fee* $1,490 Total all-inclusive maximum price for 2022 audit $31,290 Portion for Agreed-Upon Procedures $1,500 Total all-inclusive maximum price for 2023 audit $32,500 Total all-inclusive maximum price for 2024 audit $33,850 Total all-inclusive maximum price for 2025 audit $35,175 Total all-inclusive maximum price for 2026 audit $36,500 Note: The rate quoted should not be presented as a general percentage of the standard hourly rate or as a gross deduction from the total all-inclusive maximum price. Create Opportunities ©2021 CliftonLarsonAllen LLP | 4 APPENDIX E Page 2 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 2022 FINANCIAL STATEMENTS SUPPORTING SCHEDULE FOR STATE CONTROLLER’S REPORT Hours Standard Hourly Rates Quoted Hourly Rates Total Principal 2.00 $275 $150 $300 Manager 2.50 $175 $140 $350 Supervisory Staff 2.50 $125 $90 $225 Staff 4.00 $95 $75 $300 Other 1.50 $80 $50 $75 Subtotal 12.50 $1,250 Out-of-pocket costs None Other (specify): 5% Technology and client support fee* $60 Total all-inclusive maximum price for State Controller’s Report for 2022 $1,310 Total all-inclusive maximum price for State Controller’s Report for 2023 $1,365 Total all-inclusive maximum price for State Controller’s Report for 2024 $1,450 Total all-inclusive maximum price for State Controller’s Report for 2025 $1,520 Total all-inclusive maximum price for State Controller’s Report for 2026 $1,575 Note: The rate quoted should not be presented as a general percentage of the standard hourly rate or as a gross deduction from the total all-inclusive maximum price. Create Opportunities ©2021 CliftonLarsonAllen LLP | 5 APPENDIX E Page 3 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES If required, FOR THE SINGLE AUDIT 2022 FINANCIAL STATEMENTS Hours Standard Hourly Rates Quoted Hourly Rates Total Principal 5.00 $275 $150 $275 Manager 10.00 $175 $140 $1,400 Supervisory Staff 15.00 $125 $90 $1,350 Staff 25.00 $95 $75 $1,875 Other 3.00 $80 $50 $150 Subtotal 58.00 $5,525 Out-of-pocket costs None Other (specify): 5% Technology and client support fee* $275 Total all-inclusive maximum price for Single Audit and Report 2022 $5,800 Total all-inclusive maximum price for Single Audit and Report 2023 $5,960 Total all-inclusive maximum price for Single Audit and Report 2024 $6,090 Total all-inclusive maximum price for Single Audit and Report 2025 $6,250 Total all-inclusive maximum price for Single Audit and Report 2026 $6,400 Note: The rate quoted should not be presented as a general percentage of the standard hourly rate or as a gross deduction from the total all-inclusive maximum price. Create Opportunities ©2021 CliftonLarsonAllen LLP | 6 2. Rates by partner, specialist, supervisory and staff See Appendix E, Pages 1, 2 and 3 above. 3. Out-of-pocket expenses See Appendix E, Pages 1, 2 and 3 above. 4. Rates for additional professional services For any additional work, it is our practice to bill for actual hours incurred at an hourly rate applicable to the professional completing the project at hand. If additional work is requested by the District outside of the scope of the audit, we will discuss with you our proposed fee for additional services before we begin the project. Any such additional work agreed to between the District and CLA shall be performed only if set forth in an addendum to the contract between the District and the firm. Any such additional work agreed to between the District and the firm shall be performed at the same rates set forth in the schedule of fees and expenses included in this cost submittal. 5. Manner of Payment CLA acknowledges that progress payments will be made on the basis of hours of work completed during the course of the engagement and out-of-pocket expenses incurred in accordance with the firm’s pricing section of the proposal. Billings will be submitted monthly as work progresses based on the percentage of completion. The final billing will cover the auditor’s drafting and preparation of all final reports, schedules, and financial statements requested by this RFP. A period of at least 30 days should lapse between billings. LSL CPAs Bid Contact Bryan Gruber bryan.gruber@lslcpas.com Ph 714-672-0022 Address 203 N. Brea Blvd Suite 203 Brea, CA 92821 Item #Line Item Notes Unit Price Qty/Unit Total Price Attch. Docs FY22-2231-006--01-01 Professional Auditing Services Supplier Product Code: First Offer -1 / lot Y Supplier Total $0.00 FY22-2231-006Otay Water District BidSync10/12/2021 p. 1 Attachment D LSL CPAs Item: Professional Auditing Services Attachments Otay Water District Technical Proposal.pdf Otay Water District Cost Proposal.pdf FY22-2231-006Otay Water District BidSync10/12/2021 p. 2 PREPARED BY: Lance, Soll & Lunghard, LLP Certified Public Accountants License Number 2584 203 N. Brea Blvd. Suite 203 Brea, CA 92821 (714)672-0022 CONTACT PERSON: Bryan Gruber, CPA, Managing Partner Bryan.Gruber@lslcpas.com (714) 672-0022 October 12, 2021 Proposal Presented to OTAY WATER DISTRICT Request for Proposal For INDEPENDENT AUDIT SERVICES FY22-2231-006Otay Water District BidSync10/12/2021 p. 3 1 TABLE OF CONTENTS TABLE OF CONTENTS ........................................................................................................................... 1 TRANSMITTAL LETTER ......................................................................................................................... 2 FIRM QUALIFICATIONS AND EXPERIENCE ......................................................................................... 4 About LSL .............................................................................................................................................................. 4 Independence ........................................................................................................................................................ 4 License to Practice in California ............................................................................................................................. 4 Size of Firm and Quality of Staff to be Assigned ................................................................................................... 4 Government Industry Experience .......................................................................................................................... 4 Peer Review ........................................................................................................................................................... 5 Desk Reviews/Disciplinary Action .......................................................................................................................... 5 PARTNER, SUPERVISORY, AND STAFF QUALIFICATIONS ............................................................... 6 Engagement Team ................................................................................................................................................ 6 Organizational Chart .............................................................................................................................................. 6 Involvement and Experience in the Profession ...................................................................................................... 7 Continuing Education ............................................................................................................................................. 7 Quality of Staff Assurance ..................................................................................................................................... 7 SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENT ENTITIES .................................................. 8 Santa Clarita Valley Water Agency ........................................................................................................................ 8 Inland Empire Utilities Agency ............................................................................................................................... 8 City of San Bernardino Municipal Water Department ............................................................................................ 8 Rainbow Municipal Water District .......................................................................................................................... 9 Three Valleys Municipal Water District .................................................................................................................. 9 SPECIFIC AUDIT APPROACH .............................................................................................................. 10 Proposed Segmentation ...................................................................................................................................... 10 Sample Size And Extent Of Statistical Sampling ................................................................................................. 11 Type And Extent Of Analytical Procedures .......................................................................................................... 11 Approach to Understanding The District’s Internal Control Structure .................................................................. 12 Determining Laws And Regulations Subject To Audit Test Work ........................................................................ 12 Drawing Audit Samples ........................................................................................................................................ 12 Level of Staff And Number of Hours to Be Assigned ........................................................................................... 13 IDENTIFICATION OF POTENTIAL AUDIT PROBLEMS ...................................................................... 13 PROPOSER GUARANTEES ................................................................................................................. 14 PROPOSER WARRANTIES .................................................................................................................. 15 APPENDIX A: PEER REVIEW LETTER ................................................................................................ 16 APPENDIX B: STAFF RESUMES ......................................................................................................... 19 FY22-2231-006Otay Water District BidSync10/12/2021 p. 4 2 TRANSMITTAL LETTER October 12, 2021 Attn: Stephanie Chen Otay Water District Administration Building 2554 Sweetwater Springs Blvd. Spring Valley, CA 91978 Dear Ms. Chen, LANCE, SOLL & LUNGHARD, LLP (LSL) is pleased to respond to your request for proposal for professional auditing services. As a leader in the field of governmental accounting and auditing, we appreciate the opportunity to present our professional qualifications. Because of our extensive local government experience, dedication to excellence, and determination to retain the brightest talent, we hope you find that LSL is the most qualified accounting firm to provide professional auditing services to Otay Water District (the District). Members of our team have extensive experience providing auditing services for cities, counties, and special- purpose government agencies. Also, we have provided seminars on GASB Statement No.75, “Accounting and Financial Reporting” for post-employment benefits other than pensions (OPEB), and GASB Statement No. 87 Leases, and we are knowledgeable and ready to assist the District in implementing upcoming GASBs. BENEFITS OF WORKING WITH LSL In today’s environment, keeping up with the numerous accounting and regulatory changes can seem unmanageable. Now, more than ever, finance departments are facing more complexity, risk, and changes, and with fewer resources. As the industry continues to evolve, a strategic relationship with LSL can help you better manage these changes and better understand the industry’s best management practices. 1) Annual Governmental Accounting Update: Annually, we hold a half-day seminar providing an update to new accounting and regulatory standards impacting local governments. The goal is to provide useful, relevant information that impacts your organization. 2) Annual Onsite Client Specific Training: Tailored training for your organization on topics that are most relevant and needed for you and your team. Topics may include fraud risk management, internal controls, accounting pronouncements, governmental accounting, and ACFR preparation. 3) Focused Topic Specific Webinars and Ongoing News & Alerts: Important topics affecting local governments and government entities sometimes need more attention and explanation. In addition to our annual update, our webinars and newsletters offer a short, focused approach to these critical areas. 4) Meetings with Governing Bodies: We believe communication is the key to a successful relationship and offer two annual meetings with your Board of Directors or committees. Meetings promote dialogue between LSL and the District during the preliminary and concluding segments of the audit. FY22-2231-006Otay Water District BidSync10/12/2021 p. 5 3 TRANSMITTAL LETTER (continued) 5) Consistency: Best practices for government agencies include an RFP for auditors every 5 years. Changing an auditor can help ensure independence and objectivity. At LSL, we understand that changing auditors can be challenging. This often requires a broad learning curve resulting in unmet expectations. LSL takes pride in open and consistent communication to seamlessly transition a new client and close the expectations gap. We will immediately bring the tough issues to the discussion table to eliminate the element of surprise. LSL will perform the services listed in Section II “Nature of Services Required” on pages 6-8 of the District’s RFP document for three fiscal years beginning with fiscal year 2021-22 with four one-year extensions at the District’s discretion. These audits will be performed per auditing standards generally accepted in the United States of America, the standards set forth for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Throughout the year and during the period of this engagement, we will be available on a day-to-day basis for consultation on accounting and reporting matters related to new government accounting standards and other ongoing auditing needs. We will also communicate periodically new state and national developments affecting municipal finance and reporting standards and trends, including changes in federal/state grant program accounting, and other reporting requirements. All working papers and reports will be retained at our expense for a minimum of three (3) years unless we are notified in writing by the District of the need to extend that retention period. Upon written request, we will make working papers available to parties designated by the District. Furthermore, we will respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance. We affirm that our proposal is in accordance with all the terms, conditions, and requirements contained in the RFP. Our proposal is a firm and irrevocable offer for 175 days following the closing date for the receipt of proposals. For this proposal, Bryan Gruber, CPA, Managing Partner, is authorized to make representations for our firm. He can be reached at the address below, by phone at (714) 672-0022, or through email at Bryan.Gruber@lslcpas.com. Bryan Gruber, CPA Managing Partner Lance, Soll & Lunghard, LLP 203 N. Brea Blvd., Ste. 203 Brea, CA 92821 FY22-2231-006Otay Water District BidSync10/12/2021 p. 6 4 FIRM QUALIFICATIONS AND EXPERIENCE ABOUT LSL LSL is a regional, full-service firm with offices in Brea (headquarters), Santa Ana, and Sacramento, California, and Houston, Texas. Established in 1929, LSL has grown as a leader in the governmental auditing industry. We offer a team of educated professionals with extensive experience in auditing government entities. Our clients have grown to understand that an audit from LSL provides them with a wealth of knowledge, confidence, and value-added services. For this and many other reasons, our firm has consistently been named one of the “Top Orange County firms” by the Orange County Business Journal. We were also on the list of CalCPA’s Top 150 firms. INDEPENDENCE We meet the independence requirements as defined by Government Auditing Standards for the District. Our partners do not own any other business organization that has in the past, or will in the future, be providing services, supplies, materials, or equipment to the District. LSL will provide written notice of any other reportable professional relationship entered into during the period of the proposed agreement. LSL has not had any professional relationships or conflict of interest with the District in the last five years. LICENSE TO PRACTICE IN CALIFORNIA LSL is a public accounting firm licensed by the State of California, Department of Consumer Affairs, as a Public Accounting Partnership. As a firm, we are members of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. Each key member of this engagement team is a Certified Public Accountant licensed to practice in the State of California. SIZE OF FIRM AND QUALITY OF STAFF TO BE ASSIGNED Our firm has approximately 125 employees including 14 partners. Our governmental staff consists of four partners, two senior managers, four managers, four supervisors, four seniors, and fifteen professional staff. All staff assigned to the District will be employed by LSL on a full-time basis. The engagement with the District will be staffed from our Brea office. Our Brea office is a full-service office offering services in audit and attestation, tax and accounting services, and consulting services. LSL has the resources to complete this project and will not use sub-contractors. LSL is not a joint venture or consortium. GOVERNMENT INDUSTRY EXPERIENCE Currently, we provide auditing services to over 70 municipal clients in California. Our extensive experience in local government auditing has led to the development of efficient procedures that provide numerous benefits to our clients. Approximately 30% of our practice deals with the government sector and related services. Generally, our government sector services break down into the following major classifications: attestation, compliance, performance, strategic planning, and tax services. As a firm, we have extensive experience with audits of municipalities in California including cities, counties, water and electric utilities, and compliance with OMB Uniform Guidance. We are familiar with all federal and state grant programs typically awarded to municipalities. We have also performed engagements related to bond reporting, including issuing letters of comfort and other services. FY22-2231-006Otay Water District BidSync10/12/2021 p. 7 5 FIRM QUALIFICATIONS AND EXPERIENCE (continued) PEER REVIEW We have participated in the peer review program since its inception. All of our peer reviews covered governmental engagements and have received pass ratings. The most recently completed peer review was conducted by Mark F Willie, A Professional Accountancy Corporation, and a copy of the report is included in the Appendix A to this proposal. DESK REVIEWS/DISCIPLINARY ACTION There have been no disciplinary actions against our organization since its inception. There have no litigations against our firm in the past three years. Our Single Audit reports are desk reviewed either by the federal cognizant agency or the State Controller’s Office acting as the Oversight Agency. We have never had a report rejected by any of these agencies and are highly regarded and recognized by the staff of the State Controller’s Office for top quality reports. FY22-2231-006Otay Water District BidSync10/12/2021 p. 8 6 PARTNER, SUPERVISORY, AND STAFF QUALIFICATIONS ENGAGEMENT TEAM The most critical component in the successful completion of an audit is the personnel assigned to carry out the responsibilities. We have assembled a team composed of individuals with an optimum mix of talents. The personnel assigned have experience in performing the tasks for which they are responsible, as well as familiarity with all municipal accounting operations. Additionally, each has developed extensive skills in a variety of other complementary subjects through their work with clients in other industries. Thus, the experience gained on previous assignments can be applied and tailored to the unique needs of your organization. Moreover, the partners at LSL are an integral part of the audit process and will be overseeing and supervising staff personnel in the field. The proposed engagement team consists of Bryan Gruber (Engagement Partner), Deborah Harper (Quality Assurance Partner), Brandon Young (Technical Resources Partner), Ryan Domino (Senior Audit Manager), Riley Greenlee (Audit Supervisor), Brian Gross (Senior Auditor) and one additional staff accountant. This team brings a combined total of over 60 years of governmental auditing and accounting experience to the District’s engagement. Resumes for the personnel assigned to the engagement with the District can be found in Appendix B and list their governmental auditing experience, applicable continuing professional education for the past three years, and memberships in professional organizations relevant to the performance of the audit of the District. ORGANIZATIONAL CHART Otay Water District Brandon Young, CPATechnical Resource Partner Over 10 Years of experience Bryan Guber, CPAEngagement Partner Over 17 Years of experience Ryan Domino, CPASenior Audit ManagerOver 9 years of experience Riley Greenlee, CPAAudit Supervisor Over 5 years of experience Brian Gross, CPASenior AuditorOver 3 years of experience STAFF AUDITOR Deborah Harper, CPAQuality Assurance Partner Over 20 Years of experience FY22-2231-006Otay Water District BidSync10/12/2021 p. 9 7 PARTNER, SUPERVISORY, AND STAFF QUALIFICATIONS (continued) INVOLVEMENT AND EXPERIENCE IN THE PROFESSION The engagement team for the District and the extent of experience they have in auditing governmental entities in California is noted in the organizational chart on the previous page. Both Deborah Harper and Brandon Young serve on the CalCPA Governmental Accounting and Auditing Committee, a committee specific to the State of California that has been responsible for numerous white papers and technical clarifications, including those for GASB 68 and 75. This equips our firm with the latest knowledge and expertise to train our government audit professionals on the proper implementation of new GASB pronouncements, an advantage that extends to our clientele. Bryan Gruber, Brandon Young, and Ryan Domino volunteer for the GFOA as part of the Special Review Committee, which reviews financial statements from across the country for eligibility for the GFOA’s Award for Excellence in Financial Reporting. CONTINUING EDUCATION As a firm policy, all professional government staff meet the requirement of 40 hours of continuing education every year, with at least 24 hours in governmental accounting and auditing in a two-year period. Our educational programs include training from CalCPA, AICPA, Government Audit Quality Center, and GFOA. We have continuous talent development throughout the year that focuses on new government pronouncements. Deborah Harper, the Quality Assurance Partner assigned to this engagement and the firm’s Learning Director, is an elite executive member of the AICPA Government Audit Quality Center Executive Committee. As a member of this committee, she routinely participates in the creating process of new AICPA Audit Guides and partakes in the discussion of Uniform Guidance requirements and changes, which allows her immediate access to oversight and cognizant agencies for any technical questions that may arise. Resumes for the personnel assigned to the engagement with the District can be found in Appendix B and list their governmental auditing experience, applicable continuing professional education for the past three years, and memberships in professional organizations relevant to the performance of the audit of the District. QUALITY OF STAFF ASSURANCE LSL will ensure the quality of staffing over the term of the engagement through firm policies which provide for maintaining continuity of engagement teams, except in instances where an employee has left the firm or has been promoted. All other changes in staffing Auditor In-Charge position and above will first have the District’s expressed written permission. Our focused efforts to obtain and retain quality staff have further enabled us to provide high levels of services to our clients. If changes are required, our extensive team of government auditors provides for qualified replacements. FY22-2231-006Otay Water District BidSync10/12/2021 p. 10 8 SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENT ENTITIES The following are client references for which services similar to those outlined in the District’s RFP are currently being provided by our Brea Office. SANTA CLARITA VALLEY WATER AGENCY Engagement Partner: Brandon Young, CPA Quality Assurance Partner: Deborah Harper, CPA Total Hours: 480 Dates of Service: 2019 – present Types of Services: Audit and preparation of the District’s Comprehensive Annual Financial Report, which receives the GFOA Award for Excellence in Financial Reporting; audit and preparation of the financial statements of the Agency’s various joint venture entities and component units; and preparation of the Agency’s and its component units’ respective Financial Transactions Reports for the State Controller’s Office. Contact Name: Amy Aguer, Controller Telephone: (661) 513-1237 INLAND EMPIRE UTILITIES AGENCY Engagement Partner: Deborah Harper, CPA Quality Assurance Partner: Brandon Young, CPA Total Hours: 340 Dates of Service: 2016 – 2020 Types of Services: Audit of the Agency’s Comprehensive Annual Financial Report, which receives the GFOA Award for Excellence in Financial Reporting; audits and preparation of the respective financial statements of the Agency’s component unit and joint venture entity; Single Audit of the Agency’s federal expenditures in accordance with the Uniform Guidance; and agreed-upon procedures over the Agency’s calculation of its Appropriations Limits (GANN). Contact Name: Javier Chagoyen-Lazaro, Manager of Finance and Accounting Telephone: (909) 993-1675 CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT Engagement Partner: Bryan Gruber, CPA Quality Assurance Partner: Deborah Harper, CPA Total Hours: 300 Dates of Service: 2019 – present Types of Services: Audit and preparation of the Department’s Comprehensive Annual Financial Report, which receives the GFOA Award for Excellence in Financial Reporting; audit and preparation of the financial statements of the Department’s joint venture entity; Single Audit of the Department’s federal expenditures in accordance with the Uniform Guidance. Contact Name: Cindy Mouser, Director of Finance Telephone: (909) 453-6010 FY22-2231-006Otay Water District BidSync10/12/2021 p. 11 9 SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENT ENTITIES (continued) RAINBOW MUNICIPAL WATER DISTRICT Engagement Partner: Bryan Gruber, CPA Quality Assurance Partner: Deborah Harper, CPA Total Hours: 270 Dates of Service: 2020 – present Types of Services: Audit and preparation of the District’s Comprehensive Annual Financial Report, which receives the GFOA Award for Excellence in Financial Reporting; and preparation of the District’s Financial Transactions Reports for the State Controller’s Office. Contact Name: Tracy Largent, Finance Manager Telephone: (760) 728-1178 THREE VALLEYS MUNICIPAL WATER DISTRICT Engagement Partner: Richard Kikuchi, CPA Quality Assurance Partner: Deborah Harper, CPA Total Hours: 170 Dates of Service: 2011 – present Types of Services: Audit of the District’s Comprehensive Annual Financial Report, which receives the GFOA Award for Excellence in Financial Reporting. Contact Name: James Linthicum, CFO Telephone: (909) 621-5568 FY22-2231-006Otay Water District BidSync10/12/2021 p. 12 10 SPECIFIC AUDIT APPROACH We utilize a governmental audit program which we will tailor to the District’s operations. The tailoring is necessary to accommodate specific client circumstances and to recognize differences in the organizational structure. Our audit programs are organized by financial statement category. This approach takes full advantage of our accumulated experience. The primary benefit is that the risk of omitting important procedures is substantially reduced. We believe that this approach tends to be the most effective and efficient for an entity such as the District. The audit procedures are listed in the most logical sequence which improves efficiency. The savings in effort and time gained by using our audit program can free an auditor’s attention for unusual or difficult situations that may arise. The audit programs are designed to increase audit efficiency by linking financial statement assertions, audit objectives, and procedures that are basic to most governmental audit engagements. PROPOSED SEGMENTATION The services will be divided into three segments. Segment 1 - Planning and Obtaining an Understanding: LSL will provide an annual audit communication letter, engagement letter, and Government Audit Quality Center information letter. The audit communication letter is to be provided to the Board of Directors. In addition, this can be communicated orally to the Board of Directors or audit- committee, if requested. This communication will discuss the planning stages, the responsibilities of the Board of Directors, auditors, and management, and provide an opportunity for communication with us as the auditors. An entrance conference will be scheduled ahead of the on-site visit that is used to obtain an understanding of the District’s internal controls. This meeting helps to ensure that the transition to new auditors is as seamless as possible. Discussions in this meeting include, but are not limited to, the following: Understanding of reports and key milestones for deliverables, prior audit reportable conditions and issues, and “Prepared by Client” (PBC) schedules. LSL’s audit team will meet before our initial on-site visit to brainstorm and discuss economic conditions, industry elements, and new standards that will affect the District. A trial balance is requested for our planning meeting to assist the LSL team in obtaining knowledge and preparing expectations for the audit year. We will compile a list of PBC items based on our review of the prior year's financial statements and the information gathered. This will be provided to the District one month prior to our scheduled testwork or earlier if requested. We operate on a paperless software system and provide a secured cloud-based portal for all clients. The District will have a separate folder that can be customized to organize, and upload requested schedules, support documents, etc. If available, a current Schedule of Expenditures of Federal Awards (SEFA) will be evaluated during this segment to make a preliminary determination of the District’s major programs. This allows us to properly plan and schedule the timing of the Single Audit with the appropriate finance personnel as well as appropriate grant managers. LSL will make every effort to be proactive in our network of federal grants during the interim stages of the audit. After our interim testing, we will have an exit meeting to discuss potential weaknesses, if any, and provide any feedback for improvements or valuable information we have gathered from our outside clientele that would benefit the District. FY22-2231-006Otay Water District BidSync10/12/2021 p. 13 11 SPECIFIC AUDIT APPROACH (continued) Segment 2 - Financial Audit Testing: Based on the information gathered each year thus far, we will utilize a customized audit program based on the risk assessment developed during our assessment of the District’s internal controls and Government Auditing Standards. The primary benefit of a tailored program is a focused set of procedures to address relevant areas. We believe that this approach will be the most effective and efficient by linking financial statement assertions, audit objectives, and procedures that are basic to most governmental audit engagements and critical to compliance with other material laws and regulations. We will annually compile another customized PBC list for the year-end testing provided at least one month prior or earlier if requested. We will request a trial balance for our analytical review to be provided one week before our scheduled testing. Year-end testing will include testing of the balance sheet, revenue and expenditures accounts, confirmation of selected balances, analytical procedures, evaluation of the internal controls, and preparation of reports and letters. Segment 3 - Conclusion: Based on our year-end exit meeting we will schedule a plan to finalize the financial statements according to the timetable of the District. We will schedule dates for the initial and final drafts including time for the District review and approval of the financial statements. This period will also account for the review of the engagement partner and quality assurance partner. After the review and receipt of the signed representation letter from the District, we will provide the final report by September 3 of each year. SAMPLE SIZE AND EXTENT OF STATISTICAL SAMPLING Our approach may be to utilize statistical sampling in the areas of receipts, disbursements, utility billing, and payroll. Here we develop a statistical conclusion based upon an initial computer selected random sample which is based on the population and other risk factors identified. If errors are noted in the sample, the sample size will be expanded. We believe that a random selection can be efficient while providing each item in the population an equal chance of being selected. Additionally, we may select a stratified sample of all transactions over a specified dollar limit for review. This allows us to cover all high dollar value transactions not otherwise selected in the random sample. Our samples are selected randomly utilizing IDEA data analysis software. TYPE AND EXTENT OF ANALYTICAL PROCEDURES For the audits of the financial statements, we will use analytical procedures as an overall review of the financial information in the preliminary and final stages of the audits. These procedures are designed to assist us in planning our audits and in assessing the propriety of the conclusions reached and evaluating the overall financial statement presentation. The procedures to be utilized consist of determining expectations for changes to significant revenue, expenditure, and balance sheet accounts, reading the financial statements and related notes, reviewing the budget and related material, and focusing on overall relationships within the financial statements. Once determined, these are reviewed to evaluate if the changes appear reasonable or require further analysis. For all significant differences, explanations are obtained as to why the situation occurred and additional substantive procedures may be applied, and related evidence gathered to resolve concerns and questions. We ask that the District provide a check register electronically for July 1st forward (period after the audit year), so we can pre-select our sample for accounts payable cut-off test work and provide that information ahead of time. Our PBC list will detail out schedules we would like provided, which is directed straight from the audit report. Support requested and sampling for these schedules will be assessed each year based on the strengths and weaknesses of the internal control processes of the District, and the materiality level of the account. We will discuss our analytical variances with the District and obtain documentation that provides support for the accounts. FY22-2231-006Otay Water District BidSync10/12/2021 p. 14 12 SPECIFIC AUDIT APPROACH (continued) APPROACH TO UNDERSTANDING THE DISTRICT’S INTERNAL CONTROL STRUCTURE To gain an understanding of the internal control structure over the financial statements, we will perform procedures as required by SAS 122-125. This will include a review of internal controls in the areas of financial reporting, cash, revenues and receivables, utility billing, expenses, accounts payable, payroll, capital assets, long-term debt, and grant reporting, as applicable. Based on the result of our review, we will issue a management letter (SAS 115 Letter) that will identify any significant deficiencies and/or material weaknesses noted. This report is required by the Government Auditing Standards issued by the Comptroller General of the United States. Auditing Standards require auditors to obtain an understanding of the entity and its environment along with assessing the risks of material misstatements. LSL obtains an understanding through a variety of ways throughout the year, but the most pertinent time each year is during our interim on-site visit. We will conduct interviews with the management of finance along with each audit section responsible party (e.g., cashier, accounts payable clerk, payroll clerk, etc.) to review the processes and controls through observation and discussions. Based on our observations, we will sample transactions as part of a “walk-through” to verify the system of control is working in accordance with policies and procedures. Each year, we will provide a list of randomly selected District employees to interview for SAS 99 fraud interviews. This list will consist of all levels and across all departments within the District. DETERMINING LAWS AND REGULATIONS SUBJECT TO AUDIT TEST WORK The laws and regulations that will be subject to audit test work are determined from the applicable laws, regulations, contracts, and grant agreements which we identify through the understanding we obtain of the District and our extensive experience with governmental entities. DRAWING AUDIT SAMPLES For tests of controls, we use audit sampling. Tests of controls are procedures directed towards determining the effectiveness of the design or operation of an internal structure policy or procedures. Normally, audit sampling is used for tests of controls and tests of compliance that involve inspection of documents and reports indicating the performance of the applicable policy or procedures and compliance with the applicable laws and regulations. These sampling procedures test the operating effectiveness of an internal control structure policy or procedures by determining how the policy or procedure was applied, the consistency with which it was applied during the audit period, and by whom it was applied. To achieve this goal, we will draw samples for disbursements, receipts, and payroll when applicable. Each document selected will be tested for various attributes that are designed to verify compliance with different aspects of internal controls and applicable laws and regulations. Additionally, each sample item will be tested for coding to the proper accounts and posting to the general ledger. Sample sizes vary based on the population and risk-based calculations. FY22-2231-006Otay Water District BidSync10/12/2021 p. 15 13 SPECIFIC AUDIT APPROACH (continued) LEVEL OF STAFF AND NUMBER OF HOURS TO BE ASSIGNED IDENTIFICATION OF POTENTIAL AUDIT PROBLEMS With our familiarity with similar government agencies, we do not anticipate unusual audit problems. A new challenge that has emerged has been the need for more remote audit services as a result of the COVID-19 pandemic. We have successfully been conducting audits primarily remotely throughout this process and believe certain aspects of the remote audit will remain in place into the future. This challenge will be alleviated by frequent communication between the audit team and the District, a secure upload system to provide all documents, and clear expectations as far as fieldwork dates and timing of reports. The only special assistance requested from District staff would be the need to possibly scan documents that are currently not available in electronic form, as well as potentially read- only access to the District’s financial reporting system to view items and information remotely. Segment/Task Partner Senior Manager Supervisor Senior Staff Clerical Total City Financial Audit and Related Reports Interim Testwork - - - 40 40 - 80 Year-End Testwork - - - 50 45 - 95 Report/Review/Supervision 15 15 30 - - 5 65 Subtotal 15 15 30 90 85 5 240 Investment Policy Agreed-Upon Procedures Testwork - - - - 5 - 5 Report/Review/Supervision 1 1 2 5 - 1 10 Subtotal 1 1 2 5 5 1 15 Annual State Controller's Report Preparation Testwork - - - - 8 - 8 Report/Review/Supervision - - 1 - - 1 2 Subtotal - - 1 - 8 1 10 TOTAL PROPOSED HOURS: 16 16 33 95 98 7 265 LEVEL OF STAFF ASSIGNED AND NUMBER OF HOURS TO BE ASSIGNED TO REQUIRED SERVICES FY22-2231-006Otay Water District BidSync10/12/2021 p. 16 14 PROPOSER GUARANTEES FY22-2231-006Otay Water District BidSync10/12/2021 p. 17 15 PROPOSER WARRANTIES FY22-2231-006Otay Water District BidSync10/12/2021 p. 18 16 APPENDIX A: PEER REVIEW LETTER FY22-2231-006Otay Water District BidSync10/12/2021 p. 19 17 FY22-2231-006Otay Water District BidSync10/12/2021 p. 20 18 FY22-2231-006Otay Water District BidSync10/12/2021 p. 21 19 APPENDIX B: STAFF RESUMES FY22-2231-006Otay Water District BidSync10/12/2021 p. 22 20 ACHIEVEMENTS Bryan is a recognized expert in the field of Governmental Accounting and Auditing. He has made numerous presentations for CSMFO at the annual conference and local chapter meetings throughout the state on current accounting and auditing material. He has also served as a technical reviewer for the Government Finance Officers Association (GFOA) for over 10 years. Bryan routinely teaches current audit and accounting related material at Lance, Soll & Lunghard, LLP’s training seminars, webinars, and client education workshops and training events. LICENSE Certified Public Accountant - California 2008 CONTINUING EDUCATION Total hours were 132 in last three years of which 74 were in governmental accounting and auditing subjects. Bryan has met the Governmental Auditing Standards requirement for governmental CPE. MEMBERSHIPS California Society of Certified Public Accountants (CalCPA) American Institute of Certified Public Accountants (AICPA) California Society of Municipal Finance Officers, Associate Member (CSMFO) Government Finance Officers Association, Associate Member (GFOA) Association of Local Government Auditors EXPERIENCE Bryan has over seventeen years of experience in governmental audits including CAFR audits, component-unit audits and Single Audits. He has also made numerous presentations to City Councils, Boards of Directors and Audit Committees. He has been involved in the following governmental engagements: Bryan Gruber, CPA Engagement Partner FY22-2231-006Otay Water District BidSync10/12/2021 p. 23 21 Bryan S. Gruber, CPA, Engagement Partner (Continued) City of Redondo Beach Orange County Water District City of Burbank Three Valleys Municipal Water District City of Santa Barbara City of Oceanside City of Emeryville City of Palm Springs Foothill Transit Authority Orange County Fire Authority San Diego County Water Authority City of Solana Beach Union Sanitary District Orange County Sanitation District Monterey One Water Ontario International Airport This work entailed: • The preparation of the Comprehensive Annual Financial Report for those entities involved in the award programs of the Government Finance Officers Association of the United States and Canada. • Review the audit of these entities provide and technical assistance throughout the year to provide the most up to date information with current GASB pronouncement. • Present the overall audit results to audit committees or other Board Members. • Risk assessment, internal controls evaluation with COSO and Federal Green Book • Single Audits in accordance with new Uniform Guidance EDUCATION Bachelor of Arts Degree in Business Administration with an emphasis in Accounting – California State University, Fullerton, 2004 FY22-2231-006Otay Water District BidSync10/12/2021 p. 24 22 ACHIEVEMENTS Deborah was accepted as a 2015 and 2016 executive committee member of the AICPA Government Audit Quality Center, which is a national division for governments. As an executive board member, Deborah participates in the development, review, and first-hand discussion of new standards and guidance published in the AICPA Audit Guides which is provided to audit firms across the country. In 2017, Deborah participated in the GASB Research Note Disclosure Reexamination Roundtable. Deborah leads the Lance, Soll & Lunghard, LLP training program and serves as the firm Learning Director. LICENSE Certified Public Accountant - California 2005 CONTINUING EDUCATION Total hours were 132 in last three years of which 68 were in governmental accounting and auditing subjects. Deborah has met the Governmental Auditing Standards requirement for governmental CPE. MEMBERSHIPS California Society of Certified Public Accountants (CalCPA) American Institute of Certified Public Accountants (AICPA) California Society of Municipal Finance Officers, Associate Member (CSMFO) Government Finance Officers Association, Associate Member (GFOA) Governmental Accounting and Auditing Committee AICPA Government Audit Quality Center EXPERIENCE Deborah has over twenty years of experience in governmental audits. During her time with the firm, she has performed all phases of our government audits and made numerous presentations to Boards of Directors and Audit Committees. Deborah Harper, CPA Quality Assurance Partner FY22-2231-006Otay Water District BidSync10/12/2021 p. 25 23 Deborah A. Harper, CPA, Quality Assurance Partner (Continued) She has been involved on the following similar engagements: Cucamonga Valley Water District Sutter County Coachella Valley Water District Yolo County Inland Empire Utilities Agency City of Riverside East Bay Municipal Utilities District City of Camarillo City of Pasadena City of Thousand Oaks City of Santa Monica City of Corona City of Monrovia City of Banning City of Orange City of Claremont City of Seal Beach City of Brea This work entailed: • The preparation of the Comprehensive Annual Financial Report for those entities involved in the award programs of the California Society of Municipal Finance Officers and the Government Finance Officers Association of the United States and Canada. • Review the audit of these entities and provide technical assistance throughout the year to deliver the most up to date information with current GASB pronouncement. • Present the overall audit results to audit committees or other Board Members. TRAINING COURSES Deborah provides training courses throughout California. She provides training to the California Association of State Auditors, the County Auditors, and the California Society of Municipal Finance Officers. In addition, Deborah provides courses to a variety of Cities throughout the year on current and upcoming GASB pronouncements. Recent courses included: • GASB 87, Lease Accounting • Introductory to Government Accounting • GASB update • Preliminary Views on Financial Reporting • Internal Control Risk Assessments EDUCATION Bachelor of Arts Degree in Business Administration with an emphasis in Accounting – California State University, Fullerton, 2000 FY22-2231-006Otay Water District BidSync10/12/2021 p. 26 24 ACHIEVEMENTS Brandon is an up-and-coming expert in the field of Governmental Accounting and Auditing, serving a wide range of clients in both type and size throughout the state. He relocated to Sacramento in 2017 to establish LSL’s first Northern California office, and has nearly tripled the size of the office in just over two years, while building a fantastic team along the way. He routinely presents at both CSMFO local chapter meetings and State Association of County Auditors Accounting and Reporting Mangers meetings throughout the state on current accounting and auditing material. He currently serves on the CalCPA Governmental Accounting and Auditing Committee, which released the white paper for both GASB 75 and 84. He has also served as a technical reviewer for the Government Finance Officers Association (GFOA) for over 3 years. Brandon regularly teaches current audit and accounting related material at LSL training seminars, webinars, and client education workshops and training events. LICENSE Certified Public Accountant - California 2014 CONTINUING EDUCATION Total hours were 125 in last three years of which 74 were in governmental accounting and auditing subjects. Brandon has met the Governmental Auditing Standards requirement for governmental CPE. MEMBERSHIPS California Society of Certified Public Accountants (CalCPA) American Institute of Certified Public Accountants (AICPA) CalCPA State Governmental Accounting & Auditing Committee (GAA) California Society of Municipal Finance Officers (CSMFO) Government Finance Officers Association, Associate Member (GFOA) EXPERIENCE Brandon has over 10 years of experience in governmental audits. During his time with the firm, he has performed all phases of our government audits and made numerous presentations to City Council’s, Board of Supervisors, Boards of Directors and Audit Committees. Brandon Young, CPA Technical Resource Partner FY22-2231-006Otay Water District BidSync10/12/2021 p. 27 25 Brandon T. Young, CPA, Technical Resource Partner (Continued) He has been involved on the following recent engagements: City of Pasadena City of Coronado City of Santa Monica City of Dinuba City of Riverside City of Live Oak County of Yolo Santa Clarita Valley Water Agency County of Sutter Union Sanitary District East Bay Municipal Utility District San Joaquin Council of Governments City of Chula Vista Monterey Peninsula Airport District City of Dixon Orange County Water District City of Newark Coachella Valley Water District City of Galt Inland Empire Utilities Agency City of Menlo Park Georgetown Divide Public Utility District City of Citrus Heights Three Valleys Municipal Water District City of Camarillo Covered California This work entailed: • The preparation of the Comprehensive Annual Financial Report for those entities involved in the award programs of the California Society of Municipal Finance Officers and the Government Finance Officers Association of the United States and Canada. • Review the audit of these entities and provide technical assistance throughout the year to deliver the most up to date information with current GASB pronouncement. • Present the overall audit results to audit committees or others charged with governance. • Single Audits in accordance with new Uniform Guidance, including REAC Submission. • Risk assessment and internal controls evaluation with COSO Framework EDUCATION Bachelor of Arts Degree in Accounting – Magna Cum Laude – Vanguard University, 2012 FY22-2231-006Otay Water District BidSync10/12/2021 p. 28 26 ACHIEVEMENTS Ryan currently serves as a technical reviewer for the Government Finance Officers Association (GFOA). He has been involved with teaching current audit and accounting related material at Lance, Soll & Lunghard’s in-house training seminars. Ryan has also earned the Advanced Single Audit Certification issued by the AICPA, for planning, performing, and evaluating Single Audits in compliance with the Uniform Guidance. LICENSE AND CERTIFICATIONS Certified Public Accountant - California 2016 License Number: 130928 Advanced Single Audit Certificate – 2018 Certificate ID: 14978884 Verify at: credly.com/verify/e48f44 CONTINUING EDUCATION Total hours were 231 in last three years of which 204 were in governmental accounting and auditing subjects. Ryan has met the Governmental Auditing Standards requirement for governmental CPE. MEMBERSHIPS California Society of Certified Public Accountants (CalCPA) American Institute of Certified Public Accountants (AICPA) California Society of Municipal Finance Officers, Associate Member (CSMFO) Government Finance Officers Association, Special Review Committee Member (GFOA) EXPERIENCE Ryan has over nine years of experience in governmental auditing including financial statement audits (including audits and preparation of Comprehensive Annual Financial Reports), Housing Successor compliance audits, TDA compliance audits, Single Audits, Federal Student Financial Aid audits, and various consulting and agreed-upon procedures projects. Ryan is one of the firm’s leaders for ensuring audit quality control and Government Practice training for staff. He has also made several presentations to City Councils, Boards of Directors, and Audit Committees. Ryan Domino, CPA Senior Audit Manager FY22-2231-006Otay Water District BidSync10/12/2021 p. 29 27 Ryan C. Domino, CPA, Senior Audit Manager (Continued) Ryan has been involved in the following municipal engagements: Big Bear Fire Authority City of San Bernardino Municipal Water Dept. City of Agoura Hills City of San Clemente City of Big Bear Lake City of San Marino City of Canyon Lake City of Santa Monica City of Chino Hills City of Solana Beach City of Chula Vista City of Vista City of Fullerton Clean Energy Alliance City of Indio Coachella Valley Association of Governments City of Malibu Diversified Education Company City of Moorpark Inland Empire Utilities Agency City of Oceanside Los Angeles County Development Authority City of Pasadena Orange County Fire Authority City of Riverside Rainbow Municipal Water District City of Rolling Hills Six Basins Watermaster City of Rosemead This work entailed: • The preparation of the Comprehensive Annual Financial Report for those entities involved in the award programs of the California Society of Municipal Finance Officers and the Government Finance Officers Association of the United States and Canada. • Review the audit of these entities and provide technical assistance throughout the year to deliver the most up to date information with current GASB pronouncement. • Present the overall audit results to audit committees or other Board Members. EDUCATION Bachelor of Arts Degree in Business Administration with an emphasis in Accounting – California State University, Fullerton, 2012 FY22-2231-006Otay Water District BidSync10/12/2021 p. 30 28 LICENSE & CERTIFICATIONS Certified Public Accountant – California 2019 License #141837 AICPA Advanced Single Audit Certificate – 2021 CONTINUING EDUCATION Total hours were 272 in last three years of which 217 were in governmental accounting and auditing subjects. Riley has met the Governmental Auditing Standards requirement for governmental CPE. MEMBERSHIPS California Society of Certified Public Accountants (CalCPA) EXPERIENCE Riley has progressed in an outstanding manner. During his time with the firm, Riley has performed all phases of our government audits, including water districts, other special districts, CAFR audits, successor agency audits and Single Audits. He has been involved in the following municipal engagements: City of Inglewood City of Pasadena City of Monrovia City of Palm Desert LA County Development Authority City of Camarillo City of San Marino City of Riverside SEAACA City of Cypress Camarillo Ranch Foundation City of Big Bear Lake Orange County Fire Authority Monterey One Water City of Oceanside City of San Clemente City of Cathedral City of Palm Springs City of Indio City of Thousand Oaks Indio Water Authority Jurupa CSD City of Santa Barbara City of Santa Fe Springs Covered California City of Diamond Bar EDUCATION Bachelor of Arts Degree in Economics and Accounting – University of California, Santa Barbara, 2016 Riley Greenlee, CPA Audit Supervisor FY22-2231-006Otay Water District BidSync10/12/2021 p. 31 29 ACHIEVEMENTS Brian has earned the Intermediate Single Audit Certification issued by the AICPA, for planning, performing, and evaluating Single Audits in compliance with the Uniform Guidance. LICENSE Certified Public Accountant - 2021 License Number: 146428 CONTINUING EDUCATION Total hours were 105 in last three years of which 99 were in governmental accounting and auditing subjects. Brian has met the Governmental Auditing Standards requirement for governmental CPE. EXPERIENCE During his time with the firm, Brian has progressed in an outstanding manner. He has performed all phases of our government audits, including water districts, other special districts, Comprehensive Annual Financial Report audits, successor agency audits and Single Audits. He has been involved in the following municipal engagements: City of Pasadena City of Imperial Beach City of Santa Monica City of Ocean Side City of San Dimas City of San Clemente City of Big Bear Lake City of Canyon Lake City of Banning Ontario International Airport City of Fullerton Three Valleys Municipal Water District City of Inglewood Orchard Dale Water District City of Monrovia San Joaquin Council of Governments Santa Clarita Valley Water Agency EDUCATION Master of Science Degree in Accountancy – California State University of Fullerton, 2020 Bachelor of Science Degree in Accounting –Franciscan University of Steubenville, 2018 Brian Gross, MSA, CPA Senior Auditor FY22-2231-006Otay Water District BidSync10/12/2021 p. 32 WWW.LSLCPAS.COM (714) 672-0022 PREPARED BY: Lance, Soll & Lunghard, LLP Certified Public Accountants License Number 2584 203 N. Brea Blvd. Suite 203 Brea, CA 92821 CONTACT PERSON: Bryan Gruber, CPA Bryan.Gruber@lslcpas.com (714) 672-0022 October 12, 2021 Cost Proposal Presented to OTAY WATER DISTRICT For INDEPENDENT AUDIT SERVICES Focused on YOU FY22-2231-006Otay Water District BidSync10/12/2021 p. 33 2 www.lslcpas.com LANCE, SOLL & LUNGHARD, LLP COST PROPOSAL For the purpose of this proposal, Bryan S. Gruber, CPA, Managing Partner, is authorized to make representations for our firm, empowered to submit this bid and authorized to sign a contract with the City of Irvine. The fees quoted in this proposal are valid for 175 days. I can be reached by phone at (714) 672- 0022 or through email at Bryan.Gruber@lslcpas.com Bryan S. Gruber, CPA LANCE, SOLL & LUNGHARD, LLP Description 2021/ 2022 30,375$ Investment Policy Agreed-Upon Procedures 1,895$ 935$ 33,205$ Financial Audit and Related Reports TOTAL ALL-INCLUSIVE MAXIMUM PRICE Annual State Controller's Report Preparation FY22-2231-006Otay Water District BidSync10/12/2021 p. 34 3 www.lslcpas.com LANCE, SOLL & LUNGHARD, LLP COST PROPOSAL (continued) Standard Quoted Hourly Hourly Hours Rates Rates Total Partners 16 290$ 290$ 4,640$ Senior Manager 16 200$ 200$ 3,200$ Manager 32 140$ 140$ 4,480$ Supervisory Staff 95 120$ 120$ 11,400$ Staff 90 90$ 90$ 8,100$ Clerical 6 75$ 75$ 450$ Subtotal 255 32,270$ Out-of-pocket expenses: Meals and lodging Transportation Other (specify):-$ Total all-inclusive maximum price for 2022 audit 32,270$ Portion for Agreed-Upon Procedures 1,895$ Total all-inclusive maximum price for 2023 audit 32,916$ Total all-inclusive maximum price for 2024 audit 33,575$ Total all-inclusive maximum price for 2025 audit 34,246$ Total all-inclusive maximum price for 2026 audit 34,931$ SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE JUNE 30, 2022 FINANCIAL STATEMENTS GENERAL PURPOSE FINANCIAL STATEMENTS, AGREED-UPON PROCEDURES & ACFR REVIEW FY22-2231-006Otay Water District BidSync10/12/2021 p. 35 4 www.lslcpas.com LANCE, SOLL & LUNGHARD, LLP COST PROPOSAL (continued) Standard Quoted Hourly Hourly Hours Rates Rates Total Partners - 290$ 290$ -$ Senior Manager - 200$ 200$ -$ Manager 1 140$ 140$ 140$ Supervisory Staff - 120$ 120$ -$ Staff 8 90$ 90$ 720$ Clerical 1 75$ 75$ 75$ Subtotal 10 935$ Out-of-pocket expenses: Meals and lodging Transportation Other (specify):-$ Total all-inclusive maximum price for State Controller's Report for 2022 935$ Total all-inclusive maximum price for State Controller's Report for 2023 954$ Total all-inclusive maximum price for State Controller's Report for 2024 973$ Total all-inclusive maximum price for State Controller's Report for 2025 992$ Total all-inclusive maximum price for State Controller's Report for 2026 1,012$ SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE JUNE 30, 2022 FINANCIAL STATEMENTS SUPPORTING SCHEDULE FOR STATE CONTROLLER'S REPORT FY22-2231-006Otay Water District BidSync10/12/2021 p. 36 5 www.lslcpas.com LANCE, SOLL & LUNGHARD, LLP COST PROPOSAL (continued) Standard Quoted Hourly Hourly Hours Rates Rates Total Partners 2 290$ 290$ 580$ Senior Manager 2 200$ 200$ 400$ Manager 5 140$ 140$ 700$ Supervisory Staff 15 120$ 120$ 1,800$ Staff 15 90$ 90$ 1,350$ Clerical 1 75$ 75$ 75$ Subtotal 40 4,905$ Out-of-pocket expenses: Meals and lodging Transportation Other (specify):-$ Total all-inclusive maximum price for Single Audit and Report 2022 4,905$ Total all-inclusive maximum price for Single Audit and Report 2023 5,003$ Total all-inclusive maximum price for Single Audit and Report 2024 5,103$ Total all-inclusive maximum price for Single Audit and Report 2025 5,205$ Total all-inclusive maximum price for Single Audit and Report 2026 5,309$ SCHEDULE OF PROFESSIONAL FEES AND EXPENSES If required, FOR THE SINGLE AUDIT 2022 FINANCIAL STATEMENTS FY22-2231-006Otay Water District BidSync10/12/2021 p. 37 6 www.lslcpas.com LANCE, SOLL & LUNGHARD, LLP COST PROPOSAL (continued) Out of Pocket Expenses Included in the Total All-Inclusive Maximum Price and Reimbursement Rates For purposes of RFP compliance, LSL affirms that out-of-pocket expenses for firm personnel (e.g., travel, lodging and subsistence) would be reimbursed at the rates used by the District for its employees. However, these costs are considered “included” in the all-inclusive maximum price and are not listed out separately, are not billed for, or requested for reimbursement. Rates for Additional Professional Services If it should become necessary for the District to request LSL to render any additional services to either supplement the services requested in this RFP or to perform additional work as a result of the specific recommendations included in any report issued on this engagement, then such additional work shall be performed only if set forth in an addendum to the contract between the District and the firm. Any such additional work agreed to between the District and the firm shall be performed at the same rates set forth in the schedule of fees and expenses included in this cost submittal. The details of which are on the table below: Manner of Payment Progress payments will be made on the basis of hours of work completed during the course of the engagement in accordance with the firm's cost submittal. Interim billing shall cover a period of not less than a calendar month. The total payments shall not exceed the total all-inclusive cost. 2021/ 2022 2022/ 2023 2023/ 2024 2024/ 2025 2025/ 2026 (Optional)(Optional)(Optional)(Optional) 290$ 296$ 302$ 308$ 314$ 200$ 204$ 208$ 212$ 216$ 140$ 143$ 146$ 149$ 152$ 120$ 122$ 124$ 126$ 129$ 105$ 107$ 109$ 111$ 113$ 90$ 92$ 94$ 96$ 98$ 75$ 77$ 79$ 81$ 83$ AUDITOR'S STANDARD HOURLY BILLING RATES Position Partner Senior Manager Manager Senior Experienced Staff Staff Clerical FY22-2231-006Otay Water District BidSync10/12/2021 p. 38 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: February 2, 2022 SUBMITTED BY: Jose Martinez 0B0B0B0BGeneral Manager W.O./G.F. NO: N/A DIV. NO. N/A SUBJECT: 1B1B1B1BGeneral Manager’s Report UUUUGENERAL MANAGER • UUDistrict’s Response to COVID-19 PandemicUU – The COVID-19 pandemic emergency declarations and the social distancing orders have resulted in a portion of the District’s staff telecommuting. The District has had no impacts to its water supply and has maintained a continuity of operations and services during the challenging and dynamic environment. Staff continues to monitor and provide updates relating to responding to this pandemic, as needed, including but not limited to water and wastewater services, supplies, operations, finances, and communication. The District is continuing to hold Board of Directors meetings via teleconference services in accordance with AB361, which provides public access to the meetings. •The District remains committed to the safety of the public and its employees who continue to provide the public with essential services. A Safe Reopening Plan and a Social Distancing and Sanitation Protocol have been implemented and are updated in accordance with County health guidelines including the recent emergency regulations discussed in this report. Staff will continue to monitor and comply with all Federal, State, and Local orders and guidelines. •As a note, throughout the pandemic, the District has had staff reporting to the office, as needed. This was necessary to maintain the safe and reliable distribution of water and wastewater services to our customers. Given the most recent Cal/OSHA updates effective on January 14, 2022, the District continues to maintain a phased transition to a normal on-site workforce. If necessary, and on a case-by-case basis, the District will work with staff requiring COVID-19 related accommodations. Staff will continue to monitor and provide updates, as necessary. AGENDA ITEM 10 2 UUUUADMINISTRATIVE SERVICESUUUU: UGIS: • USupplemental As-builts Development on DashboardU –Staff designed and developed a new location-based function to display multiple as- builts for field assets. This new function has intelligence to identify whether the asset has additional supplemental as-builts and dynamically presents them via the GIS Dashboard. This function will save staff various steps and time in searching for multiple as-builts. UHuman ResourcesU: • UCOVID-19 UpdateU – As with the general community, the District has experienced a surge of COVID-related cases and employees needing to stay home due to close contacts, symptoms, or positive tests results. Staff has been very engaged in keeping up with recent changes to regulations and working with employees requiring to stay home during the close contact period. Since Christmas, approximately 40 employees have been on a COVID-related leave. During the recent COVID case surge, the District has maintained a hybrid workforce with staff rotations, work from home schedule, and limited onsite personnel. Staff continues to monitor the situation and will adjust staffing/processes as needed. • URecruitments/New HiresU – The District is or will be recruiting for the following positions: o Customer Service Representative I/II o Electrician o Meter Maintenance Worker I/II o Utility Worker I/II The District recently filled the following positions: o Facilities Maintenance Technician o Utility Locator o Accountant o Senior Utility Worker/Equipment Operator (internal candidate) UIT OperationsU: • UMonthly Cybersecurity SafeguardsU -The Agency's external cyber environment is monitored and analyzed by the Cybersecurity and Infrastructure Security Agency (CISA). CISA evaluates the Agency's exposure to external threats once a month using external vulnerability scanning, risk assessment, and the architectural 3 design report validation. The Agency continues to satisfy these criteria, according to the December evaluation. • USCADA Server Refresh ProjectU - Staff is working with outside vendors and the SCADA team to upgrade the hardware environment, which runs the District's SCADA database and application services. By virtualizing components necessary for the new iFix.NET application, the SCADA server upgrade project will add new capabilities, improve performance, strengthen security, and lower total cost of ownership. Staff anticipates the project to be completed by the end of February. UPurchasing & Facilities: • USan Diego County Water Authority Presentation at the Institute of Supply Management San Diego (ISM-SD)U – Purchasing Staff coordinated with the District’s Communications Officer and the Water Authority, to have Water Resources Manager, Jeff Stephenson, present at ISM- SD’s 2022 inaugural virtual professional develop meeting on January 19, 2022. The presentation was an overview of water supply conditions in California, including an update on the current drought with a look at how the San Diego region has prepared for future droughts. In attendance were association members and guests including a few Otay Water District staff and students from the University of San Diego’s Supply Chain Management Program. ISM-SD is a non-profit educational association affiliated with ISM-World, a worldwide professional organization promoting “the study, development and application of supply management, including improved procurement methods and practices.” The District’s Purchasing and Facilities Manager currently serves as ISM-SD Board President. USafety & Security: • UHazard Mitigation Plan DevelopmentU – The internal Hazard Mitigation teams continue to complete the discovery phase and hazard ranking to catch up with the County of San Diego’s Multi-Hazard Mitigation Plan (HMP) update, which is required every five years. The current multi-HMP was prepared four years ago with input from county residents, officials, San Diego Water County Water Authority, Alpine and Rancho Santa Fe Fire Protection Districts, Padre Dam Municipal Water District, San Diego Foundation, ICLEI, Cal OES, and FEMA. The District is participating this year to be eligible for pre-disaster funding such as the FEMA Hazard Mitigation Grant Program. Funding can help rebuild to reduce or mitigate future 4 disaster losses throughout our service area. The plan is scheduled to be finalized in June 2022 and sent to the Board for approval. • USafety Training and Program ComplianceU – Staff completed their second-quarter online safety training, part of the District Strategic Plan KPI or performance metric. Staff is required to complete an average of 6 hours of safety training per quarter. Staff also completed the annual respiratory fit testing. Employees in the Respiratory Protection Program must be fit tested annually to measure the amount of contaminant leakage through the facepiece. • UWebEOC Monthly ExerciseU – Staff completed the monthly exercise for January. The activity consisted of logging in and navigating to the County’s WebEOC portal to access the SigAlert traffic map and cameras. Staff familiarized themselves with the roads within the District’s jurisdiction. The purpose of these monthly exercises is to maintain the District’s emergency readiness state if the District faces a response to an emergency condition. UUUFINANCE: • UUUCollections and Bad Debt ExposureUUU – Below is information that shows lockable accounts and differentiates Owner accounts from Tenant accounts. While the District collects a portion of these balances, it is less likely to collect the tenant account balances that have become lockable. This balance is being monitored on a weekly basis to assess the potential bad debt exposure. FY 2020 Remainder FY 2021 Remainder FY 2022 Lockable Total(1) Lockable Accounts Owner 129 870 738 205,805$ 163,557$ -$ 8,962$ 327,385$ 336,347$ Tenant 147 492 442 158,471$ 247,239$ -$ 27,999$ 197,939$ 225,938$ Total 276 1,362 1,180 364,276$ 410,796$ -$ 36,961$ 525,324$ 562,285$ Typical Monthly Values 200 Actual Sales(2)40,861,103$ 101,742,970$ 46,377,874$ Percent of Bad Debt Exposure 0.00%0.04% 1.13% FY2021 Waived Penalties*841,697$ -$ -$ -$ *The District reinstated penalties as of July 1, 2021. Note: Prior to the COVID-19 pandemic the lockable balance was $48,500. Lockable $'s From Recycled Accounts (1)The District received State funds to credit past due water accounts. These funds have now been applied. The lockable owner balances were reduced by approximately $150,000 and the lockable tenant balances were reduced by approximately $120,000. (2)FY 2020 Actual Sales only includes four months of sales, from the beginning of the pandemic in March 2020 to the end of the fiscal year. Collections and Bad Debt Exposure # of Accounts $'s March 2020 (31 Days) December 2021 (31 Days) January 2022 (24 Days) FY 2020 End of Year Lockable FY 2021 End of Year Lockable Lockable Balances as of January 24, 2022 5 •COVID-19 FEMA Update – In response to the pandemic, the Federal Government issued FEMA policies in 2020 and throughout the duration of the pandemic to assist local and state governments with expenses related to COVID-19. The District collected and submitted its first reimbursement request in December 2020 for $218,000 to cover the period of March 2020 through October 2020. As of mid-January, FEMA has not declared an end to this emergency and in December 2021 extended their review of our first submittal through March 31, 2022. Since FEMA and the Federal Government have not declared an end to this emergency, eligible expenses from October 2020 through today continue to be collected and recorded in anticipation of a second reimbursement request to be filed in February or early March 2022. Our second submittal for expense reimbursement will be in the range of $30,000 to $60,000 and is mostly related to disinfection, personal protective equipment, qualifying overtime expenses, and other COVID- 19 related items. •Disconnection for Non-Payment – The moratorium on disconnection of water service ended December 31, 2021. Staff plans to resume disconnection for non-payment on February 14. Legally required notification will resume on February 1. Due to the substantial number of delinquent accounts, staff may adjust the process for the first few months to keep numbers manageable.UUUFinancial Reporting: •The financial reporting for December 31, 2021 is as follows: o For the sixth month ending December 31, 2021, there are total revenues of $59,678,623 and total expenses of $54,440,707. The revenues exceeded expenses by $5,237,916. •The financial reporting for investments for December 31, 2021 is as follows: o The market value shown in the Portfolio Summary and in the Investment Portfolio Details as of December 31, 2021 total $100,938,226 with an average yield to maturity of 0.529%. The total earnings year to date are $252,908. ENGINEERING AND WATER SYSTEM OPERATIONSUUU: UUUEngineering: •Vista Diego Hydropneumatic Pump Station Replacement: This project includes replacement of the existing Pump Station, which serves the small 1530 Pressure Zone, containing approximately thirty-seven (37) potable water meters and four (4) hydrants. An amendment to Murraysmith’s agreement for design of Vista Diego Road distribution piping replacements (P2680) was executed November 2, 2021. 6 Murraysmith’s revised preliminary design report addressing Vista Diego Road distribution piping replacements was finalized November 30, 2021. Murraysmith’s 30% design deliverable is anticipated late January 2022. This project is within budget. (P2639) •1090-1 Pump Station Renovation: This project includes renovation of the existing Pump Station, including pump replacement and addition of a third pump, which serves the small 1090 Pressure Zone, containing approximately thirty-three (33) potable water meters and seven (7) hydrants. Award of the contract to Cora Constructors was authorized at the November 2020 Board Meeting. Notice to proceed was issued on January 8, 2021. The procurement of long-lead items occurred initially, and construction began on May 20, 2021. Pump motors were damaged during transportation, which has delayed completion of the work. The project is substantially complete as of January 14, 2022 and is within budget. (P2174) •RWCWRF Disinfection System Improvements: The project involves the replacement of the chlorine gas disinfection system with an ultraviolet (UV) process at the Ralph W. Chapman Water Reclamation Facility. Consultant selection for design and construction support to Carollo Engineers was approved by the Board at the June 2021 Board Meeting. Design work initiated in July 2021. Monitoring of ultraviolet transmittance is in progress for sizing the proposed system. Initial contact with the regulating state agencies has been made. Information on available equipment manufacturers has been received and preferred manufacturers have been identified to initiate procurement quotes so improvements can be designed around the particular equipment. Preparation of the preliminary design report is in progress. (R2117) •Melrose Ave and Oleander Ave PRSs and 980 Reservoirs Altitude Valve Vaults: This project involves the replacement of two (2) 1960’s era pressure reducing stations in Chula Vista. The 340 Pressure Zone is a closed system with no storage, requiring pressure relief capabilities at each station. The project was advertised in February 2021 with it packaged with renovations to the 980-1 & -2 Reservoirs altitude valve vaults. The Board approved awarding a contract to CCL Contracting at the May 5, 2021 Board Meeting. Submittal review started in June and a Notice to Proceed was issued on July 1, 2021; the project has been extended for seventy-five (75) additional days due to submittal and material ordering delays and the current project completion date is established as June 11, 2022. (P2605, P2627, & P2671) •Olympic Parkway Recycled Water Line Replacement: Several main breaks within the past year of the 20-inch recycled water line in Olympic Parkway between Heritage Road and La Media Road resulted in the establishment of this Capital Improvement Program Project at the May 7 2021 Board meeting. The engineering firm, NV5, has been selected to design the replacement waterline using the District’s As-Needed Engineering Design Services contract. The preliminary design report has been completed and direction provided to NV5 for the final design. Consideration was given to potentially using trenchless installation, but several drawbacks and limitations eliminated it from selection. (R2159) •Paso de Luz and Vista Sierra Waterlines Replacement: The existing 1950’s steel water lines in the Hillsdale area have been identified for replacement due to past failures. Under this contract, the water line between Vista Grande and Vista Sierra will be replaced. Also included in this project is the replacement of a water line between Paso de Luz and Telegraph Canyon Road in Chula Vista that is located in an easement on an embankment. The water line has been isolated due to a leak, removing the redundancy for this neighborhood. This project was designed by Hazen and is currently out for bid with construction expected to begin in Spring 2022. The project is currently within budget. (P2612 & P2616) •1200 Pressure Zone Improvements – Phase II: The project consists of the replacement of existing pump station discharge header, pressure relief, suction manifold, and yard piping improvements, and all other work and appurtenances in accordance with the contract documents. NTP was issued on November 29, 2021 and project completion date is set for July 27, 2022. The project is on schedule and within budget. (P2653) •850-1 & 1200-1 Reservoirs Interior/Exterior Coating and Upgrades: Capital Industrial Coatings, Inc. (Capital) has completed the recoating of both the 850-1 and 1200-1 Reservoirs. The 850-1 was returned to service on December 1, 2021, and the 1200-1 was returned to service on December 3, 2021. Currently, Capital is completing the punch list items to close out the project. The project is behind schedule, but within budget. (P2543 & P2533) •1655-1 Reservoir & Rancho Jamul Hydropneumatic Pump Station: This project consists of constructing a new 0.5 MG prestressed concrete potable water tank in Jamul and modifying the existing Rancho Jamul Hydropneumatic Pump Station (HPS) to become the permanent Pump Station to feed the new 1655-1 Reservoir. The project also includes replacing approximately 1,500 linear feet of existing pipe that will be experiencing pressure over the rated pressure class under the new configuration. At the May 2021 Board Meeting, Richard Brady and Associates (Brady) was awarded a professional services agreement to be the design engineer on the project. The field work for the geotechnical investigation was completed on December 3, 2021. Once the geotechnical report is received, the Basis of Design Report can 8 be completed. Brady continues to work towards 30% design. The project is on schedule and within budget. (P2040 & P2642) •458-1 & Reservoir Interior/Exterior Coating and Upgrades: This project consists of removing and replacing the interior and exterior coatings of the 458-1 (0.8 MG) Reservoir, along with providing structural upgrades, to ensure the tank complies with both state and federal OSHA standards as well as the American Water Works Association and the Health Department standards. Advanced Industrial Services (AIS) was awarded a construction contract at the November 3, 2021 Board meeting. Project information was sent to the neighboring customers on December 10, 2021. AIS mobilized to the site January 5, 2022 and began the structural improvements on the tank. The project is on schedule and within budget. (P2593) •Water Facilities Master Plan (WFMP) and Program Environmental Impact Report (PEIR) Update: The WFMP is periodically updated to identify and provide planning and design data for future potable and recycled water capital improvement projects. The WFMP and PEIR Update consultant (Hazen and Sawyer) submitted a 30% draft WFMP with focus on demand projections on January 14, 2022. This project is on schedule and within budget. (P1210) •As-needed Grant Writing and Administrative Services: The District has entered into a contract with Hoch Consulting to provide as-needed services for identification of funding opportunities, application assistance, and post-award administration. Hoch Consulting has assisted several agencies in southern California in procuring grants, including SDCWA, Olivenhain MWD, Rainbow MWD, and the City of Oceanside. Hoch worked with staff on the preparation of an application for a Water & Energy Efficiency Grant under the Bureau of Reclamation’s WaterSMART program, which was submitted in early November. Hoch is currently working with staff on the preparation of two grant applications for the SANDAG TransNet Environmental Mitigation Environmental Mitigation Program, one for threat reduction and one for habitat development at the HMA. A Request for Proposal (RFP) for an additional contract of $300,000 is currently out and proposals are due on January 27th. Two consultants will be chosen for this new contract. (Various CIPs) •FY 2022 Sewage Flows to Metro vs Planned Capacity: The Amended and Restated Agreement was signed by the City on July 22, 2021. The effective date of the agreement is August 22, 2021, one month after the agreement was signed. Per the terms of the agreement, tracking for flow, chemical oxygen demand, and suspended solids begin Fiscal Year 2023, the year after the effective date of the agreement. The treatment plant continues to operate normally this fiscal year. At this time, no planned interruptions of operation are expected to 9 cause the District to exceed the planned Metro capacity of 139 MG (0.38 MGD) that goes into effect next fiscal year with the Metro amended agreement. •Summary of Budgeted and Sold Meters and EDUs for Fiscal Year 2022 through December 31, 2021:UWater System Operations (reporting for December): •On Friday, December 3rd, the 1200-1 Reservoir was placed back in service after recoating work was complete. Reservoir recoating is a standard maintenance process that preserves the quality and safety of customers’ water supply by maintaining the integrity of the storage structure. Customers save money over time when routine maintenance is performed on a regular basis. •On Wednesday, December 8th, staff assisted with a planned shutdown for a developer project on Otay Mesa Road in Otay Mesa. The contractor needed to abandon an existing six-inch water service lateral. The shutdown lasted for 40 hours, and no customer meters were affected. Date Meters (Budgeted) Meters Sold (Actual) EDUs (Budgeted) EDUs Sold (Actual) Total $ Collected (Budgeted) Total $ Collected (Actual) December 2021 15 13 25.3 95.5 $256,458 $1,169,095 Totals FY 2022 90 77 151.5 384.5 $1,538,750 $4,593,387 10 •On Monday, December 13th, staff performed an unplanned shutdown at Jonel Way in Bonita while performing planned maintenance. The water main tapping saddle that connects to the one-inch meter service lateral failed. The unplanned shutdown lasted four hours and affected 20 customer meters. The District provided one water trailer at the site for those affected by the service outage. •On Tuesday, December 14th, staff performed an unplanned shutdown at Circulo Verde and Florido Plaza in Chula Vista. The water main tapping saddle to a two-inch blow off failed. The unplanned shutdown lasted for two hours and affected 49 customer meters. The District provided one water trailer at the site for those affected by the service outage. •On Wednesday, December 15th, staff performed a planned shutdown on Raven Avenue and Thrush Street in Chula Vista to replace four (4) eight-inch isolation valves and four (4) six-inch fire hydrant valves. The District strategically replaces isolation valves that have reached the end of their useful life. Water isolation valves are critical components of water distribution systems for separating pipe segments from the network for repair and maintenance purposes. The shutdown lasted for eight hours and affected 57 customer meters. The Operations Department worked with the Engineering Department to determine the optimal placement of three water trailers for those affected by the service outage. •On Thursday, December 16th, staff assisted a developer with performing a planned shutdown on Fuerte Drive and Monte Vista Road in El Cajon to install two new eight-by-ten-inch tees for Fuerte Ranch Estates. The shutdown lasted for nine hours, and seven customer meters were affected. There were two water trailers available on site for those affected by the service outage. •On Monday, December 27th, staff performed an unplanned shutdown on Pioneer Way in Jamul to repair a failed a one-inch service tap caused by steel pipe corrosion. The shutdown lasted for 11.5 hours and affected 33 customer meters. The District set up two water trailers on site for those affected by the service outage.UU 11 UPurchases and Change OrdersUUU: •The following table summarizes purchases and change orders issued during the period from November 16, 2021 through January 15, 2022 that were within staff signatory authority: Water Conservation and SalesUUU: •Water Conservation – December 2021 usage was 12% lower than December 2013 usage. Since December 2020, customers have saved an average of 7% over 2013 levels. Date Action Amount Contractor/ Consultant/Vendor Project 11/22/2021 P.O. $5,500.00 GEOGRAPHIC INFO SERVICE, INC ANNUAL GIS SUPPORT BLOCK (CONSULTING) 11/29/2021 P.O. $69,299.08 AHEAD, INC DBA KOVARUS, LLC SCADA HARDWARE 12/14/2021 P.O. $4,400,000.00 SDRMA ANNUAL EMPLOYEE MEDICAL BENEFITS 12/22/2021 C.C.$921.59 REPROHAUS 458-1 RESERVOIR COATING (P2593) 01/05/2022 P.O. $20,000.00 WATCHLIGHT 458-1 RESERVOIR (P2593) 12 •Conservation 2020 vs 2021 – On July 8, 2021, Governor Gavin Newsom called on Californians to voluntarily reduce water use by 15%. The chart below shows the difference in usage for July-December 2020 and July-December 2021. Total conservation between 2020 and 2021 is 4%. •Potable Water Purchases – The December potable water purchases were 1,829 acre-feet which is 14.3% below the budget of 2,133 acre-feet. Year-to-date potable purchases through December were 15,718 acre-feet which is 2.7% below the budget of 16,155 acre-feet. December rainfall exceeded historical averages continuing the above average rainfall trend for fiscal year 2022. 13 •Recycled Water Purchases – The December recycled water purchases from the City of San Diego and production at the District’s treatment facility were 121 acre-feet which is 36% below the budget of 189 acre feet. Year-to-date recycled purchases and production through December were 2,124 acre-feet which is 10.7% below the budget of 2,379 acre- feet. UUUPotable, Recycled, and Sewer (Reporting up to the month of December): •Total number of potable water meters: 51,380. •Total number of sewer connections: 4,740. •Recycled water consumption for the month of December: o Total consumption: 206.37 acre-feet or 67,242,956 gallons. o Average daily consumption: 2,169,127 gallons per day. o Total cumulative recycled water consumption since December 1, 2020: 2,317.4 acre-feet. o Total number of recycled water meters: 763 14 •Wastewater flows for the month of September: o Total basin flow: 1,616,161 gallons per day. ▪This is a decrease of 8.03 percent from December 2020. o Spring Valley Sanitation District flow to Metro: 538,720 gallons per day. o Total Otay flow: 1,077,484 gallons per day. o Flow processed at the Ralph W. Chapman Water Recycling Facility: 896,548 gallons per day. o Flow to Metro from Otay Water District: 180,935 gallons per day. o By the end of September there were 6,752 wastewater EDUs. Exhibit A Annual YTD REVENUES: Budget Actual Budget Variance Var % Potable Water Sales 55,548,600$ 30,509,070$ 31,454,000$ (944,930)$ (3.0%) Recycled Water Sales 9,681,500 5,701,188 6,137,000 (435,812) (7.1%) Potable Energy Charges 2,574,900 1,493,790 1,472,100 21,690 1.5% Potable System Charges 17,393,000 8,538,432 8,514,000 24,432 0.3% Potable MWD & CWA Fixed Charges 13,505,000 6,633,535 6,624,000 9,535 0.1% Potable Penalties and Other Fees 912,000 445,965 456,000 (10,035) (2.2%) Total Water Sales 99,615,000 53,321,980 54,657,100 (1,335,120) (2.4%) Sewer Charges 3,068,000 1,514,713 1,488,000 26,713 1.8% Meter Fees 74,000 76,443 37,200 39,243 105.5% Capacity Fee Revenues 1,976,000 1,334,069 988,200 345,869 35.0% Non-Operating Revenues 2,219,500 1,248,568 1,110,300 138,268 12.5% Tax Revenues 4,969,000 2,113,669 1,921,400 192,269 10.0% Interest 236,000 69,180 118,200 (49,020) (41.5%) Total Revenues 112,157,500$ 59,678,623$ 60,320,400$ (641,777)$ (1.1%) EXPENSES: Potable Water Purchases 40,446,000$ 19,109,639$ 22,373,000$ 3,263,362$ 14.6% Recycled Water Purchases 4,865,000 3,212,858 3,212,858 - 0.0% CWA-Infrastructure Access Charge 3,080,000 1,535,760 1,536,000 240 0.0% CWA-Customer Service Charge 1,817,000 883,680 883,800 120 0.0% CWA-Reliability Charge 2,867,000 1,392,900 1,392,900 - 0.0% CWA-Emergency Storage Charge 4,595,000 2,239,854 2,239,860 6 0.0% MWD-Capacity Res Charge 765,000 343,212 343,260 48 0.0% MWD-Readiness to Serve Charge 653,000 326,684 326,400 (284) (0.1%) Subtotal Water Purchases 59,088,000 29,044,587 32,308,078 3,263,492 10.1% Power Charges 3,485,000 1,885,084 2,030,800 145,716 7.2% Payroll & Related Costs 22,048,500 10,163,965 10,911,300 747,335 6.8% Material & Maintenance 3,987,900 1,669,882 1,994,000 324,118 16.3% Administrative Expenses 6,890,800 3,400,721 3,445,350 44,629 1.3% Legal Fees 657,000 287,069 328,500 41,431 12.6% Expansion Reserve 2,066,900 1,033,300 1,033,300 - 0.0% Betterment Reserve 735,000 367,500 367,500 - 0.0% Replacement Reserve 11,986,900 5,993,400 5,993,400 - 0.0% OPEB Trust 1,100,000 550,100 550,100 - 0.0% General Fund Reserve 90,500 45,100 45,100 - 0.0% Rate Stabilization Reserve 21,000 - - - 0.0% Total Expenses 112,157,500$ 54,440,707$ 59,007,428$ 4,566,721$ 7.7% EXCESS REVENUES(EXPENSE)-$ 5,237,916$ 1,312,972$ 3,924,944$ OTAY WATER DISTRICT COMPARATIVE BUDGET SUMMARY FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 F:/MORPT/FS2022-P6 1/20/2022 2:50 PM COMPARATIVE BUDGET SUMMARY NET REVENUES AND EXPENSES FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 The year-to-date actual net revenues through December show a positive variance of $5,237,916. ‐$1,400,000 ‐$800,000 ‐$200,000 $400,000 $1,000,000 $1,600,000 $2,200,000 $2,800,000 $3,400,000 $4,000,000 $4,600,000 $5,200,000 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD Actual Net Revenues YTD Budget Net Revenues YTD Variance in Net Revenues OTAY WATER DISTRICT INVESTMENT PORTFOLIO REVIEW December 31, 2021 INVESTMENT OVERVIEW & MARKET STATUS: At the Federal Reserve Board’s regular scheduled meeting on March 15, 2020, the Committee lowered the target range for the federal funds rate from 1.50-1.750% to 0-0.25% in light of the effects of the coronavirus which harmed communities and disrupted economic activity in many countries, including the United States. There have been no further changes made to the federal funds rate at the most recent meeting which was held on December 15, 2021. The Committee anticipates maintaining the target range of 0-0.25% until labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. The Committee will continue to observe the effects of incoming information for the economic outlook. In determining the timing and size of future adjustments to the target range for the federal funds rate, they went on to say: “the Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.” The District’s effective rate of return for the month of December 2021 was .52%, which was the same as the previous month. LAIF return was one basis point higher than the previous month, reaching an average effective yield of .21 for the month of December 2021. Based on our success at maintaining a competitive rate of return on our portfolio during this extended period of low interest rates, no changes in investment strategy regarding returns on investment are being considered at this time. In accordance with the District’s Investment Policy, all District funds continue to be managed based on the objectives, in priority order, of safety, liquidity, and return on investment. PORTFOLIO COMPLIANCE: December 31, 2021 Investment State Limit Otay Limit Otay Actual 8.01: Treasury Securities 100% 100% 0 8.02: Local Agency Investment Fund (Operations) $75 Million $75 Million $34.55 Million 8.03: Federal Agency Issues 100% 100% $ 7.75 Million 8.04: Certificates of Deposit 30% 15% 0 8.05: Short-Term Commercial Notes 25% 10% 0 8.06: Medium-Term Commercial Debt 30% 10% 0 8.07: Money Market Mutual Funds 20% 10% 0.21% 8.08: San Diego County Pool 100% 100% 55.80% 12.0: Maximum Single Financial Institution 100% 50% 2.24% Jul FY21 Aug FY21 Sep FY21 1st Qtr FY21 Oct FY21 Nov FY21 Dec FY21 2nd Qtr FY21 Jan FY21 Feb FY21 Mar FY21 3rd Qtr FY21 Apr FY21 May FY21 June FY21 4th Qtr FY21 July FY22 Aug FY22 Sep FY22 1st Qtr FY22 Oct FY22 Nov FY22 Dec FY22 2nd Qtr FY22 LAIF 0.92 0.78 0.69 0.80 0.62 0.58 0.54 0.58 0.46 0.41 0.36 0.41 0.34 0.32 0.26 0.31 0.22 0.22 0.21 0.20 0.20 0.20 0.21 0.20 Otay 0.95 0.93 0.82 0.91 0.81 0.87 0.77 0.82 0.72 0.70 0.65 0.70 0.62 0.61 0.61 0.61 0.57 0.59 0.57 0.58 0.54 0.52 0.52 0.53 Difference 0.03 0.15 0.13 0.11 0.19 0.29 0.23 0.24 0.26 0.29 0.29 0.29 0.28 0.29 0.35 0.30 0.35 0.37 0.36 0.38 0.34 0.32 0.31 0.33 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 Re t u r n o n I n v e s t m e n t s Month Performance Measure FY-22 Return on Investment LAIF Otay Difference Target: Meet or Exceed 100% of LAIF $2,271,492 2.24% $91,092,605 89.90% $7,959,031 7.86% Otay Water District Investment Portfolio: 12/31/2021 Banks (Passbook/Checking/CD)Pools (LAIF & County) Agencies & Money Market Mutual Funds Total Cash and Investments: $101,323,128 (Book Value) Month End Portfolio Management December 31, 2021 Portfolio Summary % of Portfolio Book ValueInvestmentsMarket Value Par Value Days to MaturityTerm YTM 360 Equiv. YTM 365 Equiv. Federal Agency Issues - Bullet 7,749,217.54 1,3647.82 0.8451,3047,680,724.327,796,000.00 0.857 US Money Market 209,813.19 10.21 0.0101209,813.19209,813.19 0.010 Local Agency Investment Fund (LAIF)34,554,687.03 134.89 0.209134,466,196.6234,554,687.03 0.212 San Diego County Pool 56,537,917.93 157.08 0.671156,310,000.0056,537,917.93 0.680 99,051,635.69 100.00%Investments 98,666,734.1399,098,418.15 108 103 0.522 0.529 Cash (not included in yield calculations)Passbook/Checking 2,271,491.87 1 0.42912,271,491.872,271,491.87 0.435 101,323,127.56Total Cash and Investments 100,938,226.00101,369,910.02 108 103 0.522 0.529 Current Year December 31 43,504.76 Fiscal Year To Date 252,908.40 Average Daily Balance Effective Rate of Return 98,016,630.64 92,855,790.95 0.54%0.52% Total Earnings Month Ending I hereby certify that the investments contained in this report are made in accordance with the District Investment Policy Number 27 adopted by the Board of Directors on May 05, 2021. The market value information provided by Interactive Data Corporation. The investments provide sufficient liquidity to meet the cash flow requirements of the District for the next six months of expenditures. __________________________________________________ ____________________ Joseph Beachem, Chief Financial Officer Portfolio OTAY NL! APData Updated: SET_ME8: 01/19/2022 11:57 Reporting period 12/01/2021-12/31/2021 Run Date: 01/19/2022 - 11:57 PM (PRF_PM1) 7.3.0 Report Ver. 7.3.5 1/21/2022 YTM 360 Page 1 Par Value Book Value Maturity Date Stated RateMarket Value December 31, 2021 Portfolio Details - Investments Average BalanceIssuer Portfolio Management Month End Days to MaturityS&PCUSIPInvestment # Purchase Date Federal Agency Issues - Bullet 0.612Federal Home Loan Mortgage2391 1,045,000.00 1,035,550.59 09/23/20250.37509/16/2021 1,016,701.40 AA3137EAEX3 1,361 0.618Federal Home Loan Mortgage2392 2,751,000.00 2,725,610.58 09/23/20250.37509/22/2021 2,676,502.92 AA3137EAEX3 1,361 0.996Federal National Mortage Assoc2393 2,000,000.00 2,036,437.85 01/07/20251.62512/09/2021 2,036,160.00 AA3135G0X24 1,102 1.129Federal National Mortage Assoc2394 2,000,000.00 1,951,618.52 11/07/20250.50012/15/2021 1,951,360.00 AA3135G06G3 1,406 7,749,217.547,680,724.327,796,000.006,342,059.69Subtotal and Average 0.845 1,304 BOND PROCEEDS (LAIF) 0.203STATE OF CALIFORNIA9015 0.00 0.00 0.2060.00LAIF 2018 1 0.000.000.000.00Subtotal and Average 0.000 0 US Money Market 0.010FIRST AMERICAN US TREASURY9016 209,813.19 209,813.19 0.01010/25/2021 209,813.19OWD TRUST & CUS 1 209,813.19209,813.19209,813.192,430,353.09Subtotal and Average 0.010 1 Local Agency Investment Fund (LAIF) 0.209STATE OF CALIFORNIA9001 34,554,687.03 34,554,687.03 0.21234,466,196.62LAIF 1 34,554,687.0334,466,196.6234,554,687.0332,706,299.93Subtotal and Average 0.209 1 San Diego County Pool 0.671San Diego County9007 56,537,917.93 56,537,917.93 0.68056,310,000.00SD COUNTY POOL 1 56,537,917.9356,310,000.0056,537,917.9356,537,917.93Subtotal and Average 0.671 1 98,016,630.64 99,098,418.15 0.522 10398,666,734.13 99,051,635.69Total and Average Portfolio OTAY NL! APData Updated: SET_ME8: 01/19/2022 11:57 Run Date: 01/19/2022 - 11:57 PM (PRF_PM2) 7.3.0 Report Ver. 7.3.5 YTM 360 Page 2 Par Value Book Value Stated RateMarket Value December 31, 2021 Portfolio Details - Cash Average BalanceIssuer Portfolio Management Month End Days to MaturityS&PCUSIPInvestment # Purchase Date US Money Market 0.000STATE OF CALIFORNIA9002 100.02 100.02100.02UNION MONEY 1 0.000STATE OF CALIFORNIA9003 2,950.00 2,950.002,950.00PETTY CASH 1 0.444STATE OF CALIFORNIA9004 2,197,182.11 2,197,182.11 0.4502,197,182.11UNION OPERATING 1 0.000STATE OF CALIFORNIA9005 29,545.36 29,545.3607/01/2021 29,545.36PAYROLL 1 0.030STATE OF CALIFORNIA9010 4,286.17 4,286.17 0.0304,286.17RESERVE-10 COPS 1 0.030STATE OF CALIFORNIA9011 5,642.77 5,642.77 0.0305,642.77RESERVE-10 BABS 1 0.000STATE OF CALIFORNIA9014 31,785.44 31,785.4407/01/2021 31,785.44UBNA-FLEX ACCT 1 0.00 98,016,630.64 101,369,910.02 0.522 103 1Average Balance 100,938,226.00 101,323,127.56Total Cash and Investments Portfolio OTAY NL! APData Updated: SET_ME8: 01/19/2022 11:57 Run Date: 01/19/2022 - 11:57 PM (PRF_PM2) 7.3.0 Month End Activity Report Sorted By Issuer December 1, 2021 - December 31, 2021 Current Rate Transaction Date Balance Beginning Balance Ending Par Value Percent of Portfolio Par Value CUSIP Investment # Issuer Purchases or Deposits Redemptions or Withdrawals Issuer: STATE OF CALIFORNIA BOND PROCEEDS (LAIF) 0.00 0.00Subtotal and Balance US Money Market STATE OF CALIFORNIA9004 882,566.090.450 0.00UNION OPERATING STATE OF CALIFORNIA9010 45.940.030 0.00RESERVE-10 COPS STATE OF CALIFORNIA9011 120.620.030 0.00RESERVE-10 BABS STATE OF CALIFORNIA9014 790.10 13,977.62UBNA-FLEX ACCT 13,977.621,401,946.74 2,271,491.87Subtotal and Balance 883,522.75 Local Agency Investment Fund (LAIF) STATE OF CALIFORNIA9001 7,000,000.000.212 5,600,000.00LAIF 5,600,000.0033,154,687.03 34,554,687.03Subtotal and Balance 7,000,000.00 7,883,522.75 5,613,977.6234,556,633.77 36,826,178.9036.329%Issuer Subtotal Issuer: FIRST AMERICAN US TREASURY US Money Market FIRST AMERICAN US TREASURY9016 4,208,601.970.010 4,003,013.78OWD TRUST & CUS 4,003,013.784,225.00 209,813.19Subtotal and Balance 4,208,601.97 4,208,601.97 4,003,013.784,225.00 209,813.190.207%Issuer Subtotal Issuer: Federal Home Loan Mortgage Federal Agency Issues - Bullet 3,796,000.00 3,796,000.00Subtotal and Balance 0.00 0.003,796,000.00 3,796,000.003.745%Issuer Subtotal Issuer: Federal National Mortage Assoc Portfolio OTAY NL! APData Updated: SET_ME8: 01/19/2022 11:49 Run Date: 01/19/2022 - 11:49 DA (PRF_DA) 7.2.0 Report Ver. 7.3.5 Current Rate Transaction Date Balance Beginning Balance Ending Par Value Page 2 Percent of Portfolio Par Value December 1, 2021 - December 31, 2021 Activity Report Month End CUSIP Investment # Issuer Purchases or Deposits Redemptions or Withdrawals Issuer: Federal National Mortage Assoc Federal Agency Issues - Bullet Federal National Mortage Assoc2393 2,000,000.001.625 12/09/2021 0.003135G0X24 Federal National Mortage Assoc2394 2,000,000.000.500 12/15/2021 0.003135G06G3 0.000.00 4,000,000.00Subtotal and Balance 4,000,000.00 4,000,000.00 0.000.00 4,000,000.003.946%Issuer Subtotal Issuer: San Diego County San Diego County Pool 56,537,917.93 56,537,917.93Subtotal and Balance 0.00 0.0056,537,917.93 56,537,917.9355.774%Issuer Subtotal 94,894,776.70 101,369,910.02Total 9,616,991.4016,092,124.72100.000% Portfolio OTAY NL! APData Updated: SET_ME8: 01/19/2022 11:49 Run Date: 01/19/2022 - 11:49 DA (PRF_DA) 7.2.0 Report Ver. 7.3.5 Month End Duration Report Sorted by Investment Type - Investment Type Through 12/31/2021 Investment #Security ID Issuer Investment Class Book Value Par Value Market Value Current Rate YTM Current Yield Maturity/ Call Date Duration Modified 360Fund Federal Home Loan Mortgage239199 1,045,000.00 1,016,701.403137EAEX3 1.119 09/23/2025 3.6801,035,550.59 0.612Fair.3750000 Federal Home Loan Mortgage239299 2,751,000.00 2,676,502.923137EAEX3 1.119 09/23/2025 3.6802,725,610.58 0.618Fair.3750000 Federal National Mortage Assoc239399 2,000,000.00 2,036,160.003135G0X24 -1.956 01/07/2025 2.9682,036,437.85 0.996Fair1.625000 Federal National Mortage Assoc239499 2,000,000.00 1,951,360.003135G06G3 5.498 11/07/2025 3.7081,951,618.52 1.129Fair.5000000 STATE OF CALIFORNIA901599 0.00 0.00LAIF 2018 0.206 0.0000.00 0.203 †Fair .2060000 FIRST AMERICAN US TREASURY901699 209,813.19 209,813.19OWD TRUST &0.010 0.000209,813.19 0.010 †Amort .0100000 STATE OF CALIFORNIA900199 34,554,687.03 34,466,196.62LAIF 0.212 0.00034,554,687.03 0.209Fair.2120000 San Diego County900799 56,537,917.93 56,310,000.00SD COUNTY 0.680 0.00056,537,917.93 0.671Fair.6800000 0.572 0.27299,051,635.69 99,098,418.15 98,666,734.13Report Total † † = Duration can not be calculated on these investments due to incomplete Market price data. Portfolio OTAY NL! AP Page 1 Data Updated: SET_ME8: 01/19/2022 11:49 Run Date: 01/19/2022 - 11:49 DU (PRF_DU) 7.1.1 Report Ver. 7.3.5 Month End GASB 31 Compliance Detail Sorted by Fund - Fund December 1, 2021 - December 31, 2021 Investment #Maturity Date Beginning Invested Value Purchase of Principal Investment ClassFundCUSIP Adjustment in Value Ending Invested Value Addition to Principal Redemption of Principal Amortization Adjustment Change in Market Value Fund: Treasury Fund 2391 1,017,526.95Fair Value 09/23/2025 -825.5599 1,016,701.403137EAEX3 0.00 0.00 0.00 0.00 2392 2,678,676.21Fair Value 09/23/2025 -2,173.2999 2,676,502.923137EAEX3 0.00 0.00 0.00 0.00 2394 0.00Fair Value 11/07/2025 300.0099 1,951,360.003135G06G3 1,951,060.00 0.00 0.00 0.00 2393 0.00Fair Value 01/07/2025 -1,016.0099 2,036,160.003135G0X24 2,037,176.00 0.00 0.00 0.00 9004 1,314,616.02Amortized 0.0099 2,197,182.11UNION OPERATING 0.00 882,566.09 0.00 0.00 9005 29,545.36Amortized 0.0099 29,545.36PAYROLL 0.00 0.00 0.00 0.00 9002 100.02Amortized 0.0099 100.02UNION MONEY 0.00 0.00 0.00 0.00 9011 5,522.15Amortized 0.0099 5,642.77RESERVE-10 BABS 0.00 120.62 0.00 0.00 9014 44,972.96Amortized 0.0099 31,785.44UBNA-FLEX ACCT 0.00 790.10 13,977.62 0.00 9001 33,150,498.30Fair Value -84,301.6899 34,466,196.62LAIF 0.00 7,000,000.00 5,600,000.00 0.00 9010 4,240.23Amortized 0.0099 4,286.17RESERVE-10 COPS 0.00 45.94 0.00 0.00 9003 2,950.00Amortized 0.0099 2,950.00PETTY CASH 0.00 0.00 0.00 0.00 9015 0.00Fair Value 0.0099 0.00LAIF 2018 0.00 0.00 0.00 0.00 9007 56,114,000.00Fair Value 196,000.0099 56,310,000.00SD COUNTY POOL 0.00 0.00 0.00 0.00 9016 4,225.00Amortized 0.0099 209,813.19OWD TRUST & CUS 0.00 4,208,601.97 4,003,013.78 0.00 94,366,873.20Subtotal 107,983.48 100,938,226.003,988,236.00 12,092,124.72 9,616,991.40 0.00 94,366,873.20Total 100,938,226.00107,983.483,988,236.00 12,092,124.72 9,616,991.40 0.00 Portfolio OTAY NL! APData Updated: SET_ME8: 01/19/2022 11:49 Run Date: 01/19/2022 - 11:49 GD (PRF_GD) 7.1.1 Report Ver. 7.3.5 Month End Interest Earnings Sorted by Fund - Fund December 1, 2021 - December 31, 2021 Yield on Beginning Book Value Maturity Date Current Rate Ending Par Value EndingSecurity TypeFund Book Value Beginning Book Value Adjusted Interest Earnings AccretionAmortization/EarningsAdjusted InterestAnnualized YieldCUSIP Investment # Interest Earned Fund: Treasury Fund 1,035,550.592391 1,045,000.00 0.375FAC 09/23/2025 326.57 211.24 537.810.61299 1,035,339.353137EAEX3 2,725,610.582392 2,751,000.00 0.375FAC 09/23/2025 859.69 567.57 1,427.260.61799 2,725,043.013137EAEX3 1,951,618.522394 2,000,000.00 0.500FAC 11/07/2025 444.44 558.52 1,002.961.10499 0.003135G06G3 2,036,437.852393 2,000,000.00 1.625FAC 01/07/2025 1,986.11 -738.15 1,247.960.97299 0.003135G0X24 2,197,182.119004 2,197,182.11 0.450PA1 743.64 0.00 743.640.66699 1,314,616.02UNION OPERATING 5,642.779011 5,642.77 0.030PA1 0.14 0.00 0.140.03099 5,522.15RESERVE-10 BABS 34,554,687.039001 34,554,687.03 0.212LA1 5,888.92 0.00 5,888.920.20999 33,154,687.03LAIF 4,286.179010 4,286.17 0.030PA1 0.11 0.00 0.110.03199 4,240.23RESERVE-10 COPS 56,537,917.939007 56,537,917.93 0.680LA3 32,652.58 0.00 32,652.580.68099 56,537,917.93SD COUNTY POOL 209,813.199016 209,813.19 0.010PA1 3.38 0.00 3.380.94299 4,225.00OWD TRUST & CUS 101,305,529.20Subtotal 101,258,746.74 0.526 43,504.76599.1842,905.5894,781,590.72 101,305,529.20Total 101,258,746.74 0.526 43,504.76599.1842,905.5894,781,590.72 Portfolio OTAY NL! APData Updated: SET_ME8: 01/19/2022 11:49 Run Date: 01/19/2022 - 11:49 IE (PRF_IE) 7.2.0 Report Ver. 7.3.5 Check Total CHECK REGISTER Otay Water District Date Range: 12/23/2021 - 1/19/2022 Check #Date Vendor Vendor Name Invoice Inv. Date Description Amount 2057114 12/28/21 15416 24 HOUR ELEVATOR INC 112635 12/01/21 ELEVATOR GENERAL MAINTENANCE 552.68 552.68 2057190 01/12/22 08488 ABLEFORCE INC 10701 01/10/22 SHAREPOINT & INTRANET SUPPORT SVCS 375.00 375.00 2057191 01/12/22 18122 ACC BUSINESS 213474521 12/27/21 INTERNET CIRCUIT SERVICES FY20-22 1,013.64 1,013.64 2057218 01/19/22 17989 ADS CORP 22446.22-1221 12/29/21 SEWER FLOW MONITORING FY22 750.00 750.00 2057162 01/05/22 21083 ALVIN SHAMOUN Ref002651089 01/03/22 UB Refund Cst #0000251932 41.79 41.79 2057115 12/28/21 08967 ANTHEM EAP 81637 01/03/22 EMPLOYEE ASSISTANCE PROGRAM (CY2022)320.07 320.07 2057116 12/28/21 03492 AQUA-METRIC SALES COMPANY 0085670 12/02/21 INVENTORY 7,212.55 7,212.55 2057117 12/28/21 17264 ARTIANO SHINOFF ABED 305604 12/20/21 PROF SERV - NOV 2021 74,174.13 74,174.13 2057118 12/28/21 07785 AT&T 000017452985 12/12/21 TELEPHONE SERVICES (11/12/2021 - 12/11/2021 3,464.77 3,464.77 2057176 01/05/22 08156 BROWNSTEIN HYATT FARBER 870588 12/12/21 LEGISLATIVE ADVOCACY CONSULTING SERVIC 574.00 574.00 2057119 12/28/21 14112 BSE ENGINEERING INC 754101716 11/30/21 ELECTRICAL DESIGN (NOV 2021)1,392.00 1,392.00 2057163 01/05/22 21080 BYRON ANDRADE Ref002651086 01/03/22 UB Refund Cst #0000188069 134.25 134.25 2057177 01/05/22 02401 CAJON VALLEY UNION SCHOOL DIST 22098 12/27/21 OUTSIDE SERVICES - BUS TRANSPORTATION 360.00 360.00 2057192 01/12/22 20374 CALBURTON INC CAL624 12/15/21 UTILITY LOCATING SERVICES (NOV 2021)10,656.25 10,656.25 2057193 01/12/22 18560 CA DEPT OF TAX & FEE ADMIN 0023227876 01/06/22 UNDERGROUND STORAGE TANK FEES (CY2021 1,275.00 1,275.00 2057120 12/28/21 20410 CAPITAL INDUSTRIAL 610282021 11/15/21 850-1 & 1200-1 RES UPGRADE PROJ (OCT 2021)178,600.00 178,600.00 2057121 12/28/21 15177 CAROLLO ENGINEERS INC FB17176 11/30/21 DISINFECTION SYS IMPROVE (OCT 2021)9,187.00 9,187.00 2057194 01/12/22 15177 CAROLLO ENGINEERS INC FB18015 12/17/21 DISINFECTION SYS IMPROVE (NOV 2021)3,867.25 3,867.25 2057122 12/28/21 00234 CITY TREASURER 1000317857 11/30/21 TLOPS (OCT 2021)1,175.45 1,175.45 2057123 12/28/21 04119 CLARKSON LAB & SUPPLY INC 23809 11/30/21 BACTERIOLOGICAL TEST (11/12/21-11/14/21)1,093.00 23805 11/30/21 BACTERIOLOGICAL TEST (11/15/21-11/22/21)636.00 23800 11/30/21 BACTERIOLOGICAL TEST (11/9/21)531.00 23806 11/30/21 BACTERIOLOGICAL TEST (11/22/21)330.00 23807 11/30/21 BACTERIOLOGICAL TEST (11/10/21)324.00 23804 11/30/21 BACTERIOLOGICAL TEST (11/17/21)324.00 23798 11/30/21 BACTERIOLOGICAL TEST (11/2/21)276.00 23799 11/30/21 BACTERIOLOGICAL TEST (11/4/21)216.00 3,802.00 21,154.84 455.60 3,536.28 23808 11/30/21 BACTERIOLOGICAL TEST (12/1/21)72.00 2057124 12/28/21 18331 CORE & MAIN LP Q029276 12/03/21 INVENTORY 10,995.35 P928098 12/03/21 INVENTORY 6,494.37 P511941 12/01/21 INVENTORY 3,665.12 2057125 12/28/21 15049 CORELOGIC SOLUTIONS LLC 82109327 11/30/21 DATA SERVICES 540.75 540.75 2057219 01/19/22 15049 CORELOGIC SOLUTIONS LLC 82112319 12/31/21 DATA SERVICES 540.75 540.75 2057126 12/28/21 00184 COUNTY OF SAN DIEGO E633791121 12/04/21 DEVELOPER INSPECTION (NOV 2021)226.10 E635921121 12/04/21 DEVELOPER INSPECTION (NOV 2021)153.00 E602191121 12/04/21 SHUT DOWN TEST (11/19/21)76.50 2057195 01/12/22 00099 COUNTY OF SAN DIEGO DPWARWD1121 12/15/21 COUNTY PERMITS (NOV 2021)427.80 427.80 2057196 01/12/22 02122 COUNTY OF SAN DIEGO 3553397 12/22/21 PERMIT FEES 234.40 234.40 2057127 12/28/21 04443 CSI SERVICES INC 10979 12/13/21 COATING INSPECTION SERVICES (OCT 2021)5,473.00 5,473.00 2057128 12/28/21 04497 D & R CRANE INC 16254 12/03/21 CRANE MAINTENANCE 420.00 420.00 2057164 01/05/22 21088 DANIEL HIRSCH Ref002651094 01/03/22 UB Refund Cst #0000267730 5.38 5.38 2057165 01/05/22 21086 DANIELLE MACKEY Ref002651092 01/03/22 UB Refund Cst #0000266622 38.04 38.04 2057178 01/05/22 21090 DOTY BROS EQUIPMENT CO Ref002651096 01/03/22 UB Refund Cst #0000273399 1,256.53 1,256.53 2057197 01/12/22 02447 EDCO DISPOSAL CORPORATION 5458123121 12/31/21 RECYCLED WASTE SERVICE FY22 149.69 149.69 2057166 01/05/22 21076 ELIZABETH RICE Ref002651082 01/03/22 UB Refund Cst #0000082167 35.66 35.66 2057220 01/19/22 20794 ENTISYS 360 175484 01/11/22 MS SOFTWARE MAINTENANCE RENEWAL 2,793.74 2,793.74 2057129 12/28/21 03546 FERGUSON WATERWORKS # 1083 0781770-1 12/13/21 INVENTORY 1,637.80 0778238-2 12/02/21 INVENTORY 1,001.76 0782055 12/02/21 INVENTORY 896.72 2057130 12/28/21 17888 FIRST AMERICAN DATA TREE LLC 9003401121 11/30/21 DOCUMENT SERVICE (MONTHLY)99.00 99.00 2057131 12/28/21 02591 FITNESS TECH 12002 12/01/21 GYM EQUIPMENT MAINTENANCE 135.00 135.00 2057179 01/05/22 11962 FLEETWASH INC 2387549 12/03/21 FLEET WASH SERVICES FY 22 359.21 359.21 2057221 01/19/22 11962 FLEETWASH INC 2396930 12/17/21 FLEET WASH SERVICES FY 22 183.81 183.81 2057180 01/05/22 20481 FRANCHISE TAX BOARD Ben2651124 01/06/22 BI-WEEKLY PAYROLL DEDUCTION 25.00 25.00 2057181 01/05/22 21053 FRANCHISE TAX BOARD Ben2651122 01/06/22 BI WEEKLY PAYROLL DEDUCTION 250.00 250.00 2057222 01/19/22 20481 FRANCHISE TAX BOARD Ben2653613 01/20/22 BI-WEEKLY PAYROLL DEDUCTION 25.00 25.00 2057223 01/19/22 21053 FRANCHISE TAX BOARD Ben2653611 01/20/22 BI WEEKLY PAYROLL DEDUCTION 250.00 250.00 2057198 01/12/22 00174 HACH COMPANY 12795017 12/16/21 HACH 5500AMC ANALYZER MONOCHLORAMINE 1,036.80 1,036.80 4,708.09 1,295.18 26,635.00 2,545.00 3,834.01 21,029.09 2057132 12/28/21 19978 HASA INC.790689 12/06/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 1,184.62 791242 12/09/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 663.38 791246 12/09/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 492.07 790269 12/02/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 419.17 791245 12/09/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 400.95 790268 12/02/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 351.13 790267 12/01/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 328.05 790270 12/02/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 257.58 791244 12/09/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 243.00 790956 12/08/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 221.13 791243 12/09/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 147.01 2057199 01/12/22 19978 HASA INC.792872 12/22/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 596.56 791952 12/15/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 243.00 792189 12/16/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 243.00 792188 12/16/21 AS-NEEDED SODIUM HYPOCHLORITE FY22 212.62 2057133 12/28/21 18436 HAZEN AND SAWYER DPC 2009400411 09/29/21 ASSET MANAGEMENT SVCS (AUG 2021)3,835.00 3,835.00 2057200 01/12/22 18436 HAZEN AND SAWYER DPC 200940062 12/15/21 2022 WATER FACILITIES PLAN (NOV 2021)23,147.50 200940053 12/15/21 ASSET MANAGEMENT SVCS (NOV 2021)3,487.50 2057134 12/28/21 13349 HUNSAKER & ASSOCIATES 2021100107 12/02/21 LAND SURVEYING SERVICES (OCT 2021)26,467.01 26,467.01 2057135 12/28/21 15622 ICF JONES & STOKES INC 0159642 12/01/21 ENVIRONMENTAL SVCS (9/1/21-10/29/21)6,067.50 6,067.50 2057201 01/12/22 15622 ICF JONES & STOKES INC 0159835 12/09/21 ENVIRONMENTAL SVCS (NOV 2021)1,615.00 0159833 12/16/21 ENVIRONMENTAL SVCS (NOV 2021)930.00 2057202 01/12/22 21030 IMEG CORP 21008190001 12/13/21 PREPARATION OF RECORD DRAWINGS 500.00 500.00 2057203 01/12/22 17816 INDUSTRIAL SCIENTIFIC CORP 2460970 09/30/21 GAS DETECTION PROGRAM (SYS OPS, TP, ETC 855.43 2469514 10/31/21 GAS DETECTION PROGRAM (SYS OPS, TP, ETC 855.43 2478836 11/30/21 GAS DETECTION PROGRAM (SYS OPS, TP, ETC 855.43 2458245 09/12/21 GAS DETECTION PROGRAM (HAZWOP)316.93 2466535 10/12/21 GAS DETECTION PROGRAM (HAZWOP)316.93 2475879 11/12/21 GAS DETECTION PROGRAM (HAZWOP)316.93 2483692 12/12/21 GAS DETECTION PROGRAM (HAZWOP)316.93 2057136 12/28/21 08969 INFOSEND INC 203011 11/30/21 BILL PROCESSING SERVICES FY22 14,547.89 203010 11/30/21 BILL PROCESSING SERVICES FY22 3,805.00 203491 12/02/21 BILL PROCESSING SERVICES FY22 2,676.20 2057167 01/05/22 21079 JAMES POLLOCK Ref002651085 01/03/22 UB Refund Cst #0000182022 44.59 44.59 104,585.88 11,998.00 40,740.00 2057137 12/28/21 10563 JCI JONES CHEMICALS INC 874299 12/02/21 CHLORINE GAS 3,905.33 3,905.33 2057224 01/19/22 10563 JCI JONES CHEMICALS INC 876693 01/06/22 CHLORINE GAS 4,058.21 4,058.21 2057168 01/05/22 21081 JEANETTE HERNANDEZ Ref002651087 01/03/22 UB Refund Cst #0000243833 39.26 39.26 2057225 01/19/22 21097 KB HOME COASTAL Ref002653593 01/18/22 UB Refund Cst #0000240414 964.77 964.77 2057138 12/28/21 05840 KIRK PAVING INC 21-115-120921 12/09/21 AS-NEEDED EMERGENCY PAVING SERV FY22 13,245.00 13,245.00 2057182 01/05/22 02063 LA MESA - SPRING VALLEY 4406013 12/27/21 OUTSIDE SERVICES - BUS TRANSPORTATION 718.00 718.00 2057169 01/05/22 21074 LAURA ZUZIELA Ref002651080 01/03/22 UB Refund Cst #0000006615 46.49 46.49 2057139 12/28/21 15615 LAYFIELD USA CORPORATION E09975-1 11/30/21 CLEANING/MAINT FLOATING RES COVERS FY22 69,464.25 E09975-2 11/30/21 CLEANING/MAINT FLOATING RES COVERS FY22 35,121.63 2057226 01/19/22 19742 MARINE INDUSTRIAL TANK INC 28036 12/17/21 RESERVOIR INSPECTION & CLEANING FY22 41,250.00 41,250.00 2057170 01/05/22 21085 MARISOL THORN Ref002651091 01/03/22 UB Refund Cst #0000266354 67.11 67.11 2057140 12/28/21 01824 MERKEL & ASSOCIATES INC 21120101 12/01/21 SMA HABITAT MANAGEMENT (OCT 2021)12,248.66 12,248.66 2057141 12/28/21 19824 MURRAYSMITH INC 202947005 07/30/21 HYDROPNEUMATIC REPLACE (5/1/21-6/30/21)4,618.90 4,618.90 2057204 01/12/22 19824 MURRAYSMITH INC 202947006 12/15/21 HYDROPNEUMATIC REPLACE (7/1/21-11/30/21)11,863.50 11,863.50 2057171 01/05/22 21084 NICHOLAS ACHEAMPONG Ref002651090 01/03/22 UB Refund Cst #0000265700 151.83 151.83 2057205 01/12/22 00761 NINYO & MOORE GEOTECHNICAL 255968 12/15/21 GEOTECHNICAL SERVICES (NOV 2021)9,840.00 9,840.00 2057206 01/12/22 20996 NORTH CAROLINA DEPT OF REVENUE 601397030 12/31/21 WITHHOLDING TAX 405.00 405.00 2057142 12/28/21 07447 NTU TECHNOLOGIES INC 11789 12/08/21 908 POLYMER 13,020.70 13,020.70 2057143 12/28/21 18332 NV5 INC 254080 12/09/21 ENGINEERING DESIGN (OCT 2021)10,880.50 245077 12/09/21 ENGINEERING DESIGN (OCT 2021)1,117.50 2057183 01/05/22 19310 PALM LAUNDRY INC 114 01/01/22 TOWEL LAUNDRY SERVICE FY22 263.22 263.22 2057144 12/28/21 07860 PROTECTIVE LIFE INSURANCE CO 102788121021 12/10/21 ANNUAL LIFE INSURANCE PREMIUM (2022)1,950.00 1,950.00 2057207 01/12/22 03613 PSOMAS 179326 12/14/21 LAND SURVEYING SERVICES (NOV 2021)500.00 500.00 2057145 12/28/21 20861 RAFTELIS 21591 12/08/21 WATER COST OF SERVICE STUDY 6,361.25 6,361.25 2057227 01/19/22 20861 RAFTELIS 22071 01/18/22 WATER COST OF SERVICE STUDY 5,321.25 5,321.25 2057146 12/28/21 15647 RFYEAGER ENGINEERING LLC 21200 12/01/21 CORROSION SERVICES (NOV 2021)32,350.00 21169 12/02/21 CORROSION SERVICES (OCT 2021)8,390.00 2057147 12/28/21 04542 ROBAK, MARK 120121123121 12/27/21 MILEAGE REIMBURSEMENT (DEC 2021)84.00 84.00 2057148 12/28/21 15729 ROCKWELL SOLUTIONS INC 2794 12/13/21 ROTATING ASSEMBLY 9,103.88 9,103.88 2057208 01/12/22 18033 SAFETY-R-US LLC 20211221315 12/21/21 RESPIRATOR FIT TESTING 1,535.00 1,535.00 144,076.39 21,593.78 23,919.66 5,000.00 1,025.50 2057184 01/05/22 21091 SALLY BALDINO 0929010422 01/04/22 CUSTOMER REFUND 1,212.98 1,212.98 2057228 01/19/22 21098 SAMER MIKAH Ref002653594 01/18/22 UB Refund Cst #0000274144 1,716.98 1,716.98 2057209 01/12/22 02586 SAN DIEGO COUNTY ASSESSOR 202200020 01/04/22 ASSESSOR DATA (MONTHLY)125.00 125.00 2057185 01/05/22 00121 SAN DIEGO GAS & ELECTRIC 123021 12/30/21 UTILITY EXPENSES (MONTHLY)72,349.58 122321 12/23/21 UTILITY EXPENSES (MONTHLY)37,377.88 122921 12/29/21 UTILITY EXPENSES (MONTHLY)29,113.26 122821 12/28/21 UTILITY EXPENSES (MONTHLY)4,935.13 122821A 12/28/21 UTILITY EXPENSES (MONTHLY)207.46 122721 12/27/21 UTILITY EXPENSES (MONTHLY)93.08 2057210 01/12/22 00121 SAN DIEGO GAS & ELECTRIC 010422 01/04/22 UTILITY EXPENSES (MONTHLY)21,141.96 010522 01/05/22 UTILITY EXPENSES (MONTHLY)451.82 2057229 01/19/22 00121 SAN DIEGO GAS & ELECTRIC 01062022 01/06/22 UTILITY EXPENSES (MONTHLY)69,383.95 69,383.95 2057230 01/19/22 19603 SECURITAS SECURITY SVC USA INC W7008601 12/31/21 ON-DEMAND SECURITY RESPONSE 345.00 345.00 2057149 12/28/21 14785 SEW-EURODRIVE INC 8701810731 12/09/21 SPARE LARGE DRUM SCREEN GEAR DRIVE 3,711.14 3,711.14 2057186 01/05/22 21082 SLSCO LTD Ref002651088 01/03/22 UB Refund Cst #0000244738 1,182.36 1,182.36 2057211 01/12/22 16229 SMITH, TIMOTHY 120121123121 12/31/21 MILEAGE REIMBURSEMENT (DEC 2021)87.36 87.36 2057172 01/05/22 21077 SOFIA CHAYEB- OLIVARES Ref002651083 01/03/22 UB Refund Cst #0000088416 112.00 112.00 2057212 01/12/22 05755 STATE WATER RESOURCES 28579010622 01/06/22 CERTIFICATION RENEWAL 60.00 60.00 2057150 12/28/21 20411 STC TRAFFIC INC 4971 12/06/21 TRAFFIC ENGINEERING SERV (9/1/21-10/31/21)460.00 460.00 2057151 12/28/21 15974 SUN LIFE FINANCIAL 38166120121 12/01/21 LIFE INSURANCE AND STD/LTD (DEC 2021)10,301.07 10,301.07 2057152 12/28/21 10339 SUPREME OIL COMPANY 409006 12/02/21 UNLEADED & DIESEL FUEL 14,648.42 409005 12/02/21 UNLEADED & DIESEL FUEL 9,271.24 2057173 01/05/22 21075 SUSANA DE ALSUA Ref002651081 01/03/22 UB Refund Cst #0000075433 30.96 30.96 2057187 01/05/22 18376 SVPR COMMUNICATIONS LLC 1469 11/30/21 COMMUNICATIONS CONSULTING SERVICES 2,500.00 1445 09/30/21 COMMUNICATIONS CONSULTING SERVICES 2,500.00 2057153 12/28/21 17704 T&T JANITORIAL INC 2018-7273 11/30/21 JANITORIAL SERVICES 5,330.00 5,330.00 2057174 01/05/22 21078 TAMMY CAOLE Ref002651084 01/03/22 UB Refund Cst #0000127344 27.90 27.90 2057188 01/05/22 21089 TEC EQUIPMENT INC Ref002651095 01/03/22 UB Refund Cst #0000268501 3,922.44 3,922.44 2057213 01/12/22 02795 THE HARTFORD INSURANCE CO 13911443120821 12/08/21 INSURANCE PREMIUM (CY2022)750.00 750.00 2057154 12/28/21 00427 UNDERGROUND SERVICE ALERT 1120210495 12/01/21 UNDERGROUND ALERTS (MONTHLY)602.35 dsb20206070 12/01/21 DIG SAFE BOARD FEES (MONTHLY)423.15 854.04 6,407.00 27,004.71 5,480.00 375.00 2,500.00 2057189 01/05/22 15675 UNITED SITE SERVICES INC 114-12685622 12/15/21 PORT. TOILET RENTAL 576.40 114-12685552 12/15/21 PORT. TOILET RENTAL 150.00 114-12685550 12/15/21 PORT. TOILET RENTAL 127.64 2057155 12/28/21 08028 VALLEY CONSTRUCTION MANAGEMENT SD030510 12/05/21 CMIS (NOV 2021)5,066.00 SD222105 12/05/21 CMIS (NOV 2021)1,341.00 2057156 12/28/21 15807 WATCHLIGHT CORPORATION 734470 10/08/21 REMOVE/REPLACE ALARM SYS - 850-1 RES 14,281.45 741515 11/11/21 SECURITY SYSTEM - 1200-1 PUMP STATION 10,146.34 743240 12/15/21 SECURITY ALARM MONITORING FY22 2,576.92 2057214 01/12/22 15807 WATCHLIGHT CORPORATION 741784 12/03/21 TLOPS REDUNDANCY SEC & ACCESS INSTALL 6,725.01 6,725.01 2057157 12/28/21 15726 WATER SYSTEMS CONSULTING INC 6225 11/30/21 HYDRAULIC MODELING (NOV 2021)7,305.00 7,305.00 2057158 12/28/21 20739 WATERTALENT LLC 2933 12/06/21 TEMPORARY EMPLOYEE SERVICES FY22 2,192.00 2,192.00 2057215 01/12/22 20739 WATERTALENT LLC 2970 12/20/21 TEMPORARY EMPLOYEE SERVICES FY22 3,288.00 2984 12/27/21 TEMPORARY EMPLOYEE SERVICES FY22 2,192.00 2057159 12/28/21 01343 WE GOT YA PEST CONTROL INC 49368 12/07/21 AS-NEEDED BEE REMOVAL 125.00 49384 12/07/21 AS-NEEDED BEE REMOVAL 125.00 49398 12/10/21 AS-NEEDED BEE REMOVAL 125.00 2057216 01/12/22 15181 WILLDAN FINANCIAL SERVICES 010-49653 11/09/21 ARBITRAGE REBATE SERVICES 1,250.00 010-49654 11/09/21 ARBITRAGE REBATE SERVICES 1,250.00 2057175 01/05/22 21087 WILLY MORALES Ref002651093 01/03/22 UB Refund Cst #0000266912 171.50 171.50 2057160 12/28/21 19866 WOOD RODGERS INC 152259 11/30/21 HYDRAULIC MODELING (NOV 2021)4,147.50 4,147.50 2057161 12/28/21 08023 WORKTERRA 0101566 11/30/21 EMPLOYEE BENEFITS 840.00 840.00 2057217 01/12/22 08023 WORKTERRA 0101753 12/28/21 EMPLOYEE BENEFITS 20.00 20.00 Amount Pd Total:1,092,596.05 Check Grand Total:1,092,596.05117 Checks