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Home My WebLink About03-03-21 Board PacketOTAY WATER DISTRICT AND OTAY WATER DISTRICT FINANCING AUTHORITY BOARD OF DIRECTORS MEETING BY TELECONFERENCE 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA WEDNESDAY March 3, 2021 3:30 P.M. AGENDA 1. ROLL CALL 2. PLEDGE OF ALLEGIANCE 3. APPROVAL OF AGENDA 4. APPROVE THE MINUTES OF THE REGULAR MEETINGS OF JANUARY 6, 2021 AND FEBRUARY 3, 2021 5. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURIS- DICTION BUT NOT AN ITEM ON TODAY'S AGENDA This meeting is being held via teleconference. Members of the public may submit their comments on agendized and non-agendized items by either of the following two meth- ods: a) No later than a half hour before the start of the meeting, complete the Request to Speak Form and email it to BoardSecretary@otaywater.gov. Your request to speak will be acknowledged during the “Public Participation” portion of the meeting when the board will hear your public comment. When called to speak, please state your Name and the City in which you reside. You will be provided three minutes to speak. OR b) No later than a half hour before the start of the meeting, email your comment to BoardSecretary@otaywater.gov and it will be read aloud during the “Public Partici- pation” portion of the meeting. 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 District’s meeting is live streamed. Information on how to watch and listen to the Dis- trict’s meeting can be found at this link: https://otaywater.gov/board-of-directors/agenda- and-minutes/board-agenda/ CONSENT CALENDAR 6. ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICU- LAR ITEM: a) GENERAL MANAGER’S EXECUTION OF AN EMERGENCY AGREEMENT WITH CASS-ARRIETA CONSTRUCTION TO REPAIR THE DISTRICT’S 16-INCH WATER MAIN AND ROAD ON PASEO LADERA IN CHULA VISTA, CAUSED BY A MAIN BREAK, UPDATE ACTION ITEMS 7. FINANCE AND ADMINISTRATION a) ADOPT RESOLUTION NO. 4392 AUTHORIZING THE DISSOLUTION OF THE OTAY SERVICE CORPORATION (KOEPPEN) b) ADOPT RESOLUTION NO. 4393 AMENDING POLICY NO. 45, THE DEBT POL- ICY, OF THE DISTRICT’S CODE OF ORDINANCES (FAKHOURI) 8. BOARD a) DISCUSS THE 2021 BOARD MEETING CALENDAR (RAMOS-KROGMAN) 9. RECESS OTAY WATER DISTRICT BOARD MEETING 10. CONVENE OTAY SERVICE CORPORATION BOARD MEETING 11. ROLL CALL 12. ADOPT RESOLUTION NO. 1008 AUTHORIZING THE DISSOLUTION OF THE OTAY SERVICE CORPORATION (KOEPPEN) 13. ADJOURN OTAY SERVICE CORPORATION BOARD MEETING 14. CONVENE OTAY WATER DISTRICT BOARD MEETING INFORMATIONAL ITEMS 15. THE FOLLOWING ITEMS ARE PROVIDED TO THE BOARD FOR INFORMATIONAL PURPOSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEMS: a) SECOND QUARTER OF FISCAL YEAR 2021 CAPITAL IMPROVEMENT PRO- GRAM REPORT (LONG) b) FISCAL YEAR 2021 MID-YEAR STRATEGIC PLAN UPDATE (KERR) REPORTS 16. GENERAL MANAGER’S REPORT a) UPDATE ON DISTRICT’S RESPONSE TO COVID-19 PANDEMIC 17. SAN DIEGO COUNTY WATER AUTHORITY UPDATE 18. DIRECTORS' REPORTS/REQUESTS 19. PRESIDENT’S REPORT/REQUESTS RECESS TO CLOSED SESSION 20. CLOSED SESSION a) DISCUSSION RELATING TO CORONAVIRUS (COVID-19) AND PUBLIC SER- VICES [GOVERNMENT CODE §54957] b) CONFERENCE WITH LEGAL COUNSEL – PENDING LITIGATION [GOVERN- MENT CODE §54956.9] MARK COZIAHR, ET AL. vs. OTAY WATER DISTRICT, CASE NO. 37-2015-00400000-CU-MC-CTL RETURN TO OPEN SESSION 21. 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 22. NO MATTERS TO DISCUSS 23. ADJOURNMENT All items appearing on this agenda, whether or not expressly listed for action, may be deliber- ated 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 Acting District Secretary at (619) 670- 2253. If you have any disability which would require accommodation in order to enable you to partici- pate in this meeting, please call the Acting District Secretary at (619) 670-2253 at least 24 hours prior to the meeting. Certification of Posting I certify that on February 26, 2021 I posted a copy of the foregoing agenda near the regu- lar meeting place of the Board of Directors of Otay Water District, said time being at least 72 hours in advance of the regular meeting of the Board of Directors (Government Code Section §54954.2). Executed at Spring Valley, California on February 26, 2021. /s/ Tita Ramos-Krogman, Acting District Secretary 1 MINUTES OF THE BOARD OF DIRECTORS MEETINGS OF THE OTAY WATER DISTRICT AND OTAY WATER DISTRICT FINANCING AUTHORITY January 6, 2021 1.The meeting was called to order by President Smith at 3:32 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 of Engineering Rod Posada, Chief Financial Officer Joe Beachem, Chief of Administration Adolfo Segura, Chief of Operations Pedro Porras, Asst. Chief of Finance Kevin Koeppen, District Secretary Susan Cruz and others per attached list. 3.PLEDGE OF ALLEGIANCE 4.APPROVAL OF AGENDA President Smith indicated that the Board should have received notification fromGeneral Manager Jose Martinez requesting that the board ratify at today’s board meeting his declaration of an emergency action to repair an extensive main break. President Smith stated that he is making a motion to amend the agenda to add thematter (Adopt Resolution No. 4391 to ratify the General Manager’s declaration andcontinue the emergency action) under item number thirteen (13), GeneralManager’s Report. He noted, at the time the item is discussed, the board will take any public comments concerning the matter. The motion was 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 agenda with the amendment proposed by President Smith. 5.ADOPT RESOLUTION NO. 4390 COMMENDING MR. MITCHELL THOMPSON FOR NEARLY NINE YEARS OF DEDICATED SERVICE TO THE OTAY WATERDISTRICT AS DIRECTOR OF DIVISION TWO President Smith read Resolution No. 4390 into the record, congratulated former Director Thompson and presented an award recognizing him for nearly nine (9) AGENDA ITEM 4 2 years of leadership and dedicated service to the District, the community and all of San Diego County. Mr. Thompson indicated that he has learned a lot serving on the board and always felt like he was part of a team. He stated he has great respect for his fellow board members and the staff and will miss being a part of the organization. He thanked everyone and said that he was proud to have served on the District’s board and wished everyone the best. Directors Croucher, Lopez, Keyes, Robak and President Smith made statements, congratulated and thanked former Director Thompson for his service to the District. A motion was made by President Smith, seconded by Director Croucher and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez, Robak and Smith Noes: None Abstain: None Absent: None to adopt Resolution 4390 commending former Director Mitchell Thompson for nearly nine years of dedicated service to the Otay Water District as Director of division two. 6.APPROVE THE MINUTES OF THE REGULAR MEETING OF NOVEMBER 4, 2020AND SPECIAL BOARD MEETING OF AUGUST 21, 2020 A motion was made by Director Croucher, seconded by President Smith and carried with the following vote: Ayes: Directors Croucher, Robak and Smith Noes: None Abstain: Directors Keyes and Lopez Absent: None to approve the minutes of the regular board meeting of November 4, 2020 and special board meeting of August 21, 2020. 7.PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'SJURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA No one wished to be heard. CONSENT CALENDAR 8.ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST ISMADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: 3 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 the following consent calendar items: a)AWARD A PROFESSIONAL SERVICES AGREEMENT TO COATINGSPECIALISTS AND INSPECTION SERVICES, INC. FOR AS-NEEDED COATING INSPECTION SERVICES IN AN AMOUNT NOT-TO-EXCEED $175,000 DURING FISCAL YEARS 2021, 2022, AND 2023 (ENDING JUNE30, 2023) b)APPROVE THE FINAL CONTRACT CHANGE ORDER NO. 3 TO THE EXISTING CONSTRUCTION CONTRACT WITH LB CIVIL CONSTRUCTION, INC. IN THE REDUCED AMOUNT OF ($174,241.91)FOR THE DICTIONARY HILL WATERLINE REPLACEMENT PROJECT ACTION ITEMS 9.ENGINEERING AND OPERATIONS a)APPROVE THE WATER SUPPLY ASSESSMENT REPORT AND VERIFICATION DATED NOVEMBER 2020 FOR THE CITY OF CHULAVISTA SUNBOW II, PHASE 3 PROJECT, AS REQUIRED BY SENATEBILLS 610 AND 221 Environmental Compliance Specialist Lisa Coburn-Boyd requested that the Board approve the Water Supply Assessment Report and Verification dated November 2020 for the City of Chula Vista Sunbow II, Phase 3 Project, as required by Senate Bills 610 and 221. Please reference Exhibit D to the staff report for details of Ms. Coburn-Boyd’s presentation. Following Ms. Coburn-Boyd’s presentation, the board had no comments or questions. A motion was made by Director Croucher, seconded by President Smith 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. 10.BOARD 4 a) DISCUSS THE 2021 BOARD MEETING CALENDAR There were no changes to the board meeting calendar. INFORMATIONAL ITEMS 11. FIRST QUARTER OF FISCAL YEAR 2021 CAPITAL IMPROVEMENT PROGRAM REPORT Engineering Manager Michael Long provided an update on the District’s first quarter of Fiscal Year 2021 Capital Improvement Program (CIP). Please reference Attachment C to the staff report for the details of Mr. Long’s presentation. Director Croucher and President Smith requested that staff provide information on how expenditures and the completion of CIP projects relate to one another in terms of productivity. Staff responded to additional questions and comments from the board. 12. REPORT ON IMPACTS OF COVID-19 ON THE DISTRICT’S FISCAL YEAR 2021 BUDGET AND SIX-YEAR PROJECTION Assistant Chief of Finance Kevin Koeppen provided a report on the impacts of COVID-19 on the District’s FY 2021 budget and six-year projection. Please reference Attachment A (Committee Action) to the staff report for the details of Mr. Koeppen’s presentation. Staff responded to questions and comments from the board. 13. REPORT ON CUSTOMER DELINQUENCIES AND THE DISTRICT’S EFFORTS TO ENCOURAGE CUSTOMERS TO PAY THEIR WATER BILLS DURING THE PANDEMIC Customer Service Manager Andrea Carey presented an update on customer delinquencies and the District’s efforts to encourage customers to pay their water bills during the pandemic. Please reference Attachment A (Committee Action) to the staff report for the details of Ms. Carey’s presentation. It was noted that the agencies, with Sweetwater Authority taking the lead, are looking at legislative action to assist ratepayers with their outstanding bills as Proposition 218 restricts agencies from forgiving outstanding water bills as ratepayers cannot subsidize other ratepayers. The board supported and encouraged staff to continue to work with other agencies to see what they are doing and explore ways in which they can collect delinquent bill payments. Staff responded to additional comments and questions from the board. 5 REPORTS 14. GENERAL MANAGER’S REPORT General Manager Martinez presented information from his report that included the District’s response to the COVID-19 pandemic, new Cal-OSHA 3205 COVID-19 Emergency Regulation, collections and bad debt exposure, fiscal year 2022 budget preparation, FEMA reimbursement application submittal for COVID-19 impacts, 870-2 pump station replacement project, Dictionary Hill water line replacement project, Mexico water deliveries, and SDG&E public safety power shutoff program. Mr. Martinez also discussed the declared emergency on January 3, 2021 for the repair of a ruptured pipeline on Paseo Ladera in Chula Vista. He indicated that in accordance with the District’s Code of Ordinances and Public Contracting Code, the District has added an item to today’s agenda to adopt Resolution No. 4391 to ratify the General Manager’s emergency declaration and to continue the emergency action to repair the pipeline. He introduced Mr. Charles Mederos, Utility Services Manager, who is overseeing the repair who will provide an update on the progress. Mr. Mederos provided a PowerPoint presentation that showed the location of the break on Paseo Ladera, between Telegraph Canyon Road and Givens Street, in Division 4, and the damage to 16-inch PVC pipeline and the pavement. The 16-inch pipeline is a redundant source for the Sharp Chula Vista Hospital and was installed in February 2005. He stated the City of Chula Vista assisted with the initial clean-up and provided additional equipment and labor to remove the debris. As the mainline clean-up progressed, staff concluded that the excavation and amount of work required to continue the repair safely was beyond the capability of the District’s resources. Therefore, the General Manager was asked to declare an emergency and to proceed with critical and necessary repairs in accordance with the District’s Code of Ordinances. It is currently estimated that 500 feet of 16-inch pipeline and 800 feet of asphalt will require replacement. The contractor Cass Arrieta was selected and has begun the repairs. It is expected the repairs will take approximately three weeks. In response to an inquiry from Director Lopez, staff indicated that they could add this area and adjacent pipelines to be to be reviewed in this year’s leak detection program. Staff responded to additional questions and comments from the board. President Smith opened the meeting for public comments. District Secretary Susan Cruz stated that there were no requests from the public to comment on this item. With no public comments or further discussion from the Board, a motion was made by Director Robak, seconded by Director Lopez and carried with the following vote: Ayes: Directors Croucher, Keyes, Lopez, Robak and Smith Noes: None Abstain: None Absent: None 6 Adopt Resolution No. 4391, Resolution of the Board of Directors of the Otay Water District to Ratify the General Manager’s Emergency Declaration and Continue the Emergency Action. A copy of Resolution No. 4391 will be attached to the minutes for today’s meeting. 15.SAN DIEGO COUNTY WATER AUTHORITY UPDATE Director Croucher reported that at the December 10, 2020 CWA Special Board of Directors’ meeting, Senator Jones provided an update on legislative activities andupcoming legislation for 2021. Director Croucher also reported that Mona Rios fromthe Sweetwater Authority was elected to serve as Vice Chair for CWA. Director Smith added that CWA approved Phase B of the Regional Conveyance System Study at its November 19, 2020 CWA Formal Board of Directors’ meeting.He also provided an update on Metropolitan Water District (MWD), which includedMWD’s approval to fund an agreement that would allocate 47.2% of the planningcosts for the State’s environmental review of the single-tunnel Bay-Delta project. MWD also approved funding for the Regional Recycled Water Program’s environmental work. 16.DIRECTORS' REPORTS/REQUESTS Directors Croucher, Keyes, Lopez and Robak indicated that they will submit their written report to District Secretary Cruz, which will be attached to the minutes fortoday’s meeting. 17.PRESIDENT’S REPORT President Smith reported that he attended his normal meetings and that he hassubmitted a written report to District Secretary Cruz, which will be attached to theminutes for today’s meeting. 18.CLOSED SESSION General Manager Martinez indicated that he did not have anything to report onCOVID-19 in closed session and there would be no need to meet in closed session. OTAY WATER DISTRICT FINANCING AUTHORITY 19.NO MATTERS TO DISCUSS There were no items scheduled for discussion for the Otay Water District Financing Authority board. 20.ADJOURNMENT With no further business to come before the Board, President Smith adjourned the meeting at 5:35 p.m. 7 ___________________________________ President ATTEST: Acting District Secretary (Director’s Signature) GM Receipt: Date: FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $ INSTRUCTIONS ON REVERSE OTAY WATER DISTRICT BOARD OF DIRECTORS PER-DIEM AND MILEAGE CLAIM FORM Pay To: Tim Smith Period Covered: Employee Number: 1845 From: 12/1/20 To: 12/31/20 ITEM DATE MEETING PURPOSE / ISSUES DISCUSSED MILEAGE HOME to OWD OWD to HOME MILEAGE OTHER LOCATIONS 1 12/4/20 OWD Special Board Mtg. Special Board Meeting (video conf.) - - 2 12/17/20 Board Agenda Briefing Reviewed Board Agenda Items for January 2021 Board Meeting with GM (video conf.) - - Total Meeting Per Diem: $ 304 ($152 per diem) Total Mileage Claimed: 0 miles 1/8/21 (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: Gary Croucher Period Covered: Employee Number: 7011 From: 12/1/20 To: 12/31/20 ITEM DATE MEETING PURPOSE / ISSUES DISCUSSED MILEAGE HOME to OWD OWD to HOME MILEAGE OTHER LOCATIONS 1 12/1/20 Qtrly Mtg w/ GM Quarterly Update Meeting with General Manager Martinez 2 12/3/20 Regional Mtg of Presidents & GMs Met with the Presidents and General Managers of Helix WD, Lakeside WD, Padre Dam MWD & Sweetwater Authority to share information and discuss issues of mutual interest 3 12/4/20 OWD Special Brd Meeting OWD Special Board Meeting 4 12/7/20 LAFCO Ad Hoc Committee LAFCO Ad Hoc Committee Meeting to discuss the Fallbrook PUD and Rainbow MWD Reorganization Request Total Meeting Per Diem: ($152 per meeting) $608.00 _________________ Total Mileage Claimed: 0 miles 1/8/21 Mark Robak 7014 From:12/1/2020 12/31/2020 ITEM DATE MEETING PURPOSE / ISSUES MILEAGE HOME TO OWD OWD TO HOME MILEAGE OTHER LOCATIONS 1 12/1/2020 Finance & Administration Committee Discussed District finance and administration items 0 0 2 12/2/2020 ACWA Fall Conference Semi-Annual Conference 0 0 3 12/3/2020 ACWA Fall Conference Semi-Annual Conference 0 0 4 12/4/2020 OWD Special Board Meeting OWD Monthly Board Meeting 0 0 5 12/8/2020 SCEDC Elected Officials Webinar City of Chula Vista Councilmember McCann 0 0 6 12/10/2020 SDCWA Special Board Meeting Monthly meeting 0 0 7 12/18/2020 LAFCO Special Districts Advisory Committee Draft Municipal Service Reviews, et al.0 0 0 0 $ 1,064 0 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 1/8/21 1 MINUTES OF THE BOARD OF DIRECTORS MEETINGS OF THE OTAY WATER DISTRICT AND OTAY WATER DISTRICT FINANCING AUTHORITY February 3, 2021 1.The meeting was called to order by President Smith at 3:35 p.m. 2.ROLL CALL Directors Present: Croucher, Keyes, Lopez (Arrived at 3:37 p.m.), Robak and Smith Staff Present: General Manager Jose Martinez, General Counsel Dan Shinoff, General Counsel Jeanne Blumenfeld, Chief of Engineering Rod Posada, Chief Financial Officer Joe Beachem, Chief of Administration Adolfo Segura, Chief of Operations Pedro Porras, Asst. Chief of Finance Kevin Koeppen, District Secretary Susan Cruz and others per attached list. 3.PLEDGE OF ALLEGIANCE 4.APPROVAL OF AGENDA A motion was made by Director Robak, seconded by Director Keyes, and carried with the following vote: Ayes: Directors Croucher, Keyes, Robak and Smith Noes: None Abstain: None Absent: Director Lopez to approve the agenda. 5.APPROVE THE MINUTES OF THE REGULAR MEETING OF OCTOBER 7, 2020 AND SPECIAL BOARD MEETING OF DECEMBER 4, 2020 A motion was made by Director Robak, seconded by Director Keyes and carriedwith 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 October 7, 2020 and special board meeting of December 4, 2020. AGENDA ITEM 4 2 6. 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 No one wished to be heard. 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 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 following consent calendar items: a) AUTHORIZE AN AGREEMENT WITH KIRK PAVING IN AN AMOUNT NOT-TO-EXCEED $141,980.00 FOR THE FINAL PAVING WORK ON OLYMPIC PARKWAY TO ENSURE THE ROAD IS TO CODE, PER THE CITY OF CHULA VISTA’S REGULATIONS b) APPROVE AN INCREASE TO THE BUDGET FOR CIP P2083 FOR THE 870-2 PUMP STATION REPLACEMENT PROJECT IN AN AMOUNT NOT-TO-EXCEED $300,000.00 (FROM $19,550,000.00 TO $19,850,000.00) ACTION ITEMS 8. ENGINEERING AND OPERATIONS a) APPROVE THE WATER SUPPLY ASSESSMENT REPORT DATED DECEMBER 2020 FOR THE COUNTY OF SAN DIEGO’S OTAY HILLS PROJECT, AS REQUIRED BY SENATE BILL 610 Environmental Compliance Specialist Lisa Coburn-Boyd requested that the Board approve the Water Supply Assessment Report and Verification dated December 2020 for the County of San Diego’s Otay Hills Project, as required by Senate Bill 610. Please reference Exhibit D to the staff report for details of Ms. Coburn-Boyd’s presentation. Following Ms. Coburn-Boyd’s presentation, the board had no comments or questions. 3 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 staff’s recommendation. 9. FINANCE a) ADOPT ORDINANCE NO. 581 TO AMEND SECTION 72, PENALTIES AND DAMAGES, OF THE DISTRICT’S CODE OF ORDINANCES EFFECTIVE MARCH 1, 2021, TO ALLOW THE DISTRICT TO LIEN RENTAL PROPERTY IF THERE ARE OUTSTANDING BALANCES OWED BY TENANTS, AND TO EXPAND THE SCOPE OF WHEN THE DISTRICT CAN REQUIRE A PROPERTY TO REMAIN IN THE OWNER’S NAME Customer Service Manager Andrea Carey requested that the Board adopt Ordinance No. 581 to amend Section 72, Penalties and Damages, of the District’s Code of Ordinances effective March 1, 2021 to allow the District too lien rental property if there are outstanding balances owed by tenants, and to expand the scope of when the District can require a property to remain in the owner’s name. Please reference the staff report for the details of Ms. Carey’s presentation. In response to a question from President Smith, Ms. Carey stated that approximately 6,800 property owners/tenants with delinquencies will be notified (via correspondence and email) of the District’s updated lien process. Staff responded to additional comments and 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. 10. BOARD a) DISCUSS THE 2021 BOARD MEETING CALENDAR There were no changes to the board meeting calendar. 4 REPORTS 11. GENERAL MANAGER’S REPORT General Manager Martinez presented information from his report that included the District’s response to the COVID-19 pandemic, new Cal-OSHA 3205 COVID-19 Emergency Regulation, fiscal year 2022 budget preparation, inter-agency assistance, and customer service feedback. Mr. Martinez also provided an update of the Paseo Ladera emergency break and ongoing repairs located in Chula Vista (Division 4). Since his last update at the January 6th board meeting, he reported that the District was unable to complete the paving process due to rain. It is anticipated that paving will be completed within a week or less and accessible to the public by mid-February. Following his presentation, Mr. Martinez and staff responded to comments and questions from the board. 12. SAN DIEGO COUNTY WATER AUTHORITY UPDATE Director Smith provided an update of CWA’s Fiscal Sustainability Task Force, water sales and projections, and Metropolitan Water District’s single-tunnel Bay-Delta project. Director Lopez thanked President Smith for the invitation to attend CWA meetings. President Smith stated that he will inform board members of CWA meetings that may be beneficial for them to attend. He indicated that board members are entitled to attend four (4) CWA board meetings a year. 13. DIRECTORS' REPORTS/REQUESTS Directors Croucher, Keyes, Lopez and Robak indicated that they will submit their written report to the District Secretary Cruz, which will be attached to the minutes for today’s meeting. Director Croucher left at 4:37 p.m. 14. PRESIDENT’S REPORT President Smith reported that he attended his normal meetings and that he has submitted a written report to District Secretary Cruz, which will be attached to the minutes for today’s meeting. RECESS TO CLOSED SESSION 15. CLOSED SESSION The board recessed to closed session at 4:41 p.m. to discuss the following matter: a) DISCUSSION RELATING TO CORONAVIRUS (COVID-19) AND PUBLIC SERVICES [GOVERNMENT CODE §54957] 5 b) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [GOVERNMENT CODE §54956.9] KESSNER, ET AL. vs. CITY OF SANTA CLARA, ET AL.; CASE NO. 20CV364054, SANTA CLARA COUNTY SUPERIOR COURT 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 REAL PROPERTY NEGOTIATORS pursuant to California Government Code section 54956.8 Property: SALT CREEK GOLF COURSE 525 HUNTE PARKWAY CHULA VISTA, CA 91914 Agency negotiator: General Counsel Under negotiation: Disposition of Property RETURN TO OPEN SESSION 16. 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 approximately 5:15 p.m. and General Counsel Dan Shinoff reported that the board took no reportable actions in closed session. OTAY WATER DISTRICT FINANCING AUTHORITY 17. NO MATTERS TO DISCUSS There were no items scheduled for discussion for the Otay Water District Financing Authority board. 18. ADJOURNMENT With no further business to come before the Board, President Smith adjourned the meeting at 5:15 p.m. ___________________________________ President ATTEST: Acting District Secretary (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: Tim Smith Period Covered: Employee Number: 1845 From: 1/1/21 To: 1/31/21 ITEM DATE MEETING PURPOSE / ISSUES DISCUSSED MILEAGE HOME to OWD OWD to HOME MILEAGE OTHER LOCATIONS 1 1/6/21 OWD Regular Board Meeting Monthly Board Meeting (video conf.) - - 2 1/13/21 Committee Agenda Briefing Met w/ GM Martinez to review items that will be presented at the January committee meetings (video conf.) - - 3 1/19/21 EO&WR Committee Reviewed items that will be presented at the February Board Meeting (video conf.) - - 4 1/25/21 CWA Matters Meeting Discuss CWA Matters (video conf.) - - 5 1/26/21 Board Agenda Briefing Met with GM Martinez and GC’s Blumenfeld and Shinoff to review the February Board Meeting Agenda (video conf.) - - 6 1/27/21 East County Caucus Meeting Discuss East County issues with agencies and CWA (video conf.) - - 7 1/29/21 Prep Meeting for LAFCO Ad Hoc Committee Prep Meeting to discuss LAFCO Ad Hoc Committee Meeting regarding Fallbrook PUD and Rainbow MWD Reorganization Request (video conf.) - - Total Meeting Per Diem: $ 1,064 ($152 per diem) Total Mileage Claimed: 0 miles 2/4/21 (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: Gary Croucher Period Covered: Employee Number: 7011 From: 1/1/21 To: 1/31/21 ITE M DATE MEETING PURPOSE / ISSUES DISCUSSED MILEAGE HOME to OWD OWD to HOME MILEAGE OTHER LOCATIONS 1 1/6/21 Board Mtg Regular Board of Directors Meeting 2 1/19/21 Committee Engineering and Operations Committee Meeting 3 1/25/21 GM/Staff CWA Matters Meeting (Issue and Updates) 4 1/29/21 GM/GC GM/GC and Board President - LAFCO Discussion and Impacts 5 Total Meeting Per Diem: ($152 per meeting) $608 _________________ Total Mileage Claimed: 0 miles EXHIBIT B (Director’s Signature) GM Receipt: Date: FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $ INSTRUCTIONS ON REVERSE OTAY WATER DISTRICT BOARD OF DIRECTORS PER-DIEM AND MILEAGE CLAIM FORM Pay To: Ryan Keyes Period Covered: Employee Number: 1896 From: 12-18-20 To: 1-31-21 ITEM DATE MEETING PURPOSE / ISSUES DISCUSSED MILEAGE HOME to OWD OWD to HOME MILEAGE OTHER LOCATIONS 1 12/18/20 Jose Martinez Meeting with Otay Water Staff 0 2 1/6/21 Regular Board of Directors Meeting January Board of Directors Meeting 0 3 1-8-21 Jeanne Blumenfield Meeting with Otay Water Counsel 0 4 1-15-21 Rod Posada, Tenille Otero Joe Beachem, Pedro Porras, Meeting with Otay Water Staff 0 5 1-22-21 Kelli Williamson, Adolfo Segura, Susan Cruz, others Meeting with Otay Water Staff 0 Total Meeting Per Diem: $760 ($152 per meeting) Total Mileage Claimed: 0 Miles 2/5/21 OTA Y WATER DISTRICT BOARD OF DIRECTORS PER-DIEM AND MILEAGE CLAIM FORM Pay To: Jose Lopez Employee Number: 7010 ITEM 1 2 3 4 5 6 7 DATE MEETING 1/6/21 OT A Y General Mtg l/12/21 Joe Beachum, Chief Financial Officer & Staff Members 1/13/21 Pedro Porras, Chief of Operations & Staff 1/14/21 Kelli Williamson, HR Manager 1/14/21 Adolfo Segura, Chief of Administration 1/19/21 Susan Cruz, District Sec. 1/20/21 Finance & Admin Committee 1/21/21 GM Martinez & Counsels Schinoff & Blumenfield Total Meeting Per Diem: ($152 per diem) $ Total Mileage Claimed: Period Covered: 1/1/21 PURPOSE I ISSUES DISCUSSED Monthly Board Meeting Financial Update for new Boardmember Operations Update for new Boardmember HR Update for new Boardmember Administration Update for new Boardmember Update on all training and policy manual Review debt policy amendment & 2021 mid-year Strategic Plan Update Review District Lawsuits 0 miles To: 1/31/21 MILEAGE MILEAGE HOMEtoOWD OTHER OWDtoHOME LOCATIONS -- -- -- -- -- -- - (Director's Signature) GM Receipt: ___________________ _ Date: _________ _ FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $ _____ _ 02/25/21 OTA Y WATER DISTRICT BOARD OF DIRECTORS PER-DIEM AND MILEAGE CLAIM FORM Pay To: Jose Lopez Period Covered: Employee Number: 7010 ITEM 1 2 3 4 5 6 7 8 DATE MEETING 1/22/21 Water Conservation Garden 1/22/21 Tennille Otero, Communications Officer 1/27/21 Counsel Jeanne Blumenfield Tota) Meeting Per Diem: ($152 per diem) $ Total Mileage Claimed: 1/1/21 PURPOSE I ISSUES DISCUSSED Regular Board Mtg Update on Communication Projects Review Brown Act Policy 0 miles To: 1/31/21 MILEAGE MILEAGE HOMEtoOWD OTHER OWDtoHOME LOCATlONS -- -- -- -- -- -- -- (Director's Signature) GM Receipt: ___________________ _ Date: FOR OFFICE USE: TOT AL MILEAGE REIMBURSEMENT: $ _____ _ 02/25/21 Mark Robak 7014 From:1/1/2021 1/30/2021 ITEM DATE MEETING PURPOSE / ISSUES MILEAGE HOME TO OWD OWD TO HOME MILEAGE OTHER LOCATIONS 1 1/3/2021 AB 1234 Review and Exam Mandatory biennial training 0 0 2 1/4/2021 County of San Diego 2nd District Supervisor, Joel Anderson Swearing In 0 0 3 1/5/2021 East County Chamber of Commerce Government Affairs & Infrastructure Committee 0 0 4 1/6/2021 OWD Board Meeting OWD Monthly Board Meeting 0 0 5 1/12/2021 SCEDC Monthly Board Meeting 0 0 6 1/20/2021 Finance & Administration Committee Discussed District finance and administration items 0 0 7 1/22/2021 Water Conservation Garden JPA Meeting 0 0 8 1/26/2021 San Diego Chamber of Commerce Sustainability & Industry Committee 0 0 9 1/28/2021 Water Conservation Garden Friends of the Water Conservation Garden 0 0 0 0 $ 1,368 0 Miles GM Receipt: Date: ___________________ FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $_____________ OTAY WATER DISTRICT BOARD OF DIRECTORS PER-DIEM AND MILEAGE CLAIM FORM Pay To:Period Covered Employee Number Total Mileage Claimed: Director Signature ($152 PER MEETING) Total Meeting Per Diem: 2/4/21 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: March 3, 2021 SUBMITTED BY: Charles Mederos, Utility Services Manager PROJECT: Various DIV. NO. 4 APPROVED BY: Pedro Porras, Chief Water Operations Jose Martinez, General Manager SUBJECT: INFORMATIONAL ITEM – JANUARY 3, 2021 PASEO LADERA WATER MAIN BREAK AND EMERGENCY REPAIR. GENERAL MANAGER’S RECOMMENDATION: None. This is an informational item only. COMMITTEE ACTION: None. This is an informational item only. PURPOSE: To inform the Board of the General Manager’s execution of an emergency agreement with Cass-Arrieta Construction to repair the District’s 16-inch water main and road on Paseo Ladera in Chula Vista caused by a main break. ANALYSIS: As defined in the District Code of Ordinances Article I, Section 2.01, Paragraph I, “In a declared emergency, the General Manager may direct employees, take action to continue or restore service capability, and execute any contracts for necessary equipment, services, or supplies directly related and required by the emergency.” AGENDA ITEM 6a 2 On Sunday, January 3, 2021, at approximately 9:30 PM, the District experienced a main break on a 16-inch polyvinyl chloride (PVC) water main in the northbound lanes of Paseo Ladera between Givens Street and Telegraph Canyon Road in Chula Vista (Attachment B). District crew responded and isolated the water main. Upon clean-up activities and further inspection of the break, District crews concluded that the damage to the road and water main on Paseo Ladera was extensive and the amount of work required to complete the repairs safely was beyond the District’s resources. Therefore, a contractor equipped to handle a repair of this magnitude was required. The 16-inch main line is the redundant source to feed Sharp Chula Vista Hospital from Telegraph Canyon Road and Paseo Ladera into Medical Center Drive. According to the as built, the main line was installed in February 2005 and is approximately four and five feet in depth. As a precaution, District crews also isolated the 16-inch 624 Pressure Zone line due to the proximity of the damage and it was unknown if the bedding was compromised from the water main break. This did not impact water services to customers. Consequently, it was imperative for the General Manager to declare the situation an emergency to expedite the repair and to prevent the loss or impairment of essential public services. Therefore, the General Manager declared the emergency on Monday, January 4th and the Board ratified the decision during their regular Board meeting on Wednesday, January 6th. The value of the loss is estimated to be $1.25 million, including third party damages. On Monday, January 4th, the District reached out to three construction contractors with a crew and equipment available to complete the repair. Cass-Arrieta Construction was selected and began coordinating with the City of Chula Vista ensuring all necessary permits were obtained and mobilized on Thursday, January 7th to begin the repairs. Upon excavation and exposing the pipe, it was determined that the cause of the break was improper fitting at the pipe which caused a deformity at the joint gasket (Attachment C). Cass-Arrieta Construction replaced 700 feet of 16-inch PVC that was compromised by the break. The pipe was hydro-tested, passed all bacteriological sample tests, as required by the State Water Resources Control Board, and was put back in service on Sunday, January 24th, along with the 16-inch 624 Pressure Line. Cass- Arrieta Construction is also replacing 36,000 square feet of asphalt, per City of Chula Vista codes and regulations standards, to ensure the road is back in service by mid to end of February. 3 FISCAL IMPACT: Joe Beachem, Chief Financial Officer This incident is an insurable event, and a claim has been opened with the District’s insurance carrier Association of California Water Agencies Joint Powers Insurance Authority (ACWA JPIA). The road repair expenses, along with all third-party damages, will be submitted to the District’s insurance carrier for reimbursement under the District’s insurance coverage. All labor and materials related to the pipe replacement are not covered under the District’s insurance. The estimated amount is $500,000. STRATEGIC GOAL: Key Performance Indicator (KPI) I1.11 – Potable Water Distribution System Integrity. Maintaining a safe and continuous water supply and safety to the general public. LEGAL IMPACT: This emergency was enacted in accordance with the District Code of Ordinances Article I, Chapter 2, Section 2.01, Paragraph I. Attachments: Attachment A – Committee Action Attachment B – Map of Area Attachment C – Photos ATTACHMENT A SUBJECT/PROJECT: INFORMATIONAL ITEM – JANUARY 3, 2021 PASEO LADERA WATER MAIN BREAK AND EMERGENCY REPAIR. COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee reviewed this item at a meeting held on Wednesday, February 17, 2021 and the following comments were made: • It was noted that the purpose of this item is to update the Board of the General Manager’s execution of an emergency agreement with Cass-Arrieta Construction to repair the District’s 16-inch water main and road on Paseo Ladera in Chula Vista (Division 4) caused by a main break. • In response to a question from the Committee, staff stated that this location and surrounding areas will be included in the Leak Detection Campaign beginning March 1, 2021. Upon completion of the discussion, the Committee supported staff’s recommendation and presentation to the full board on the consent calendar. 16-INCH PVC POTABLE WATER MAINEMERGENCY REPAIR ON PASEO LADERA OTAY WATER DISTRICT EXHIBIT A\\ O t a y W a t e r D i s t r i c t \ E N G O P E R A T I N G - D o c u m e n t s \ T e c h n i c i a n \ P r o j e c t s \ O W D \ O p e r a t i o n s \ 1 6 - I n c h P W M a i n o n P a s e o L a d e r a \ E x h i b i t A - L o c a t i o n M a p , E m e r g e n c y R e p a i r o n P a s e o L a d e r a P A S E O L A D E R A GIVENS ST TELEGRAPH CANYON RD 16-Inch PVC PW Main Repair(Approx 700 feet) Tele g r a p h C a n y o n R d Sag e V w Tu r m e r i c T e r VICINITY MAP PROJECT SITE DIV 5 DIV 1 DIV 2 DIV 4 DIV 3 ÃÅ54 !\ ÃÅ125 ÃÅ94 ÃÅ905 §¨¦805 FNTS F 0 250125 Feet JAN 2021 Legend EXISTING POTABLE WATER MAINS 16-INCH PVC PW MAIN REPAIR Attachment B Paseo Ladera main break road damage Attachment C Paseo Ladera main break damage with 16-inch pipe exposed Paseo Ladera and Telegraph Canyon Road conditions after main break District crews working on initial clean up City of Chula Vista assisting with road clean up. Rubber gasket on 16-inch pipe Close up of gasket and pipe Contractor mobilizing Contractor working New 16-inch pipe on the ground Road ready for paving STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: March 3, 2021 SUBMITTED BY: Kevin Koeppen, Assistant Chief of Finance PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Jose Martinez, General Manager SUBJECT: Adopt Resolution No. 4392 Authorizing the Dissolution of the Otay Service Corporation GENERAL MANAGER’S RECOMMENDATION: That the Board adopt Resolution No. 4392 authorizing the dissolution of the Otay Service Corporation. COMMITTEE ACTION: See Attachment A. PURPOSE: To obtain the Board’s adoption of Resolution No. 4392 to dissolve the Otay Service Corporation which was created in June 1993 for the purpose of issuing Certificates of Participation (COP). The District will no longer be issuing COPs or any other debt using the Otay Service Corporation. The Otay Service Corporation no longer has any outstanding debt obligations and therefore, the Otay Service Corporation may be dissolved. ANALYSIS: As a government entity special district, the Otay Water District does not have the authority to issue debt directly, except for refunding debt; therefore, the District must establish entities that have the authority to issue debt. Currently the District has two entities capable of issuing debt secured by an installment sale agreement with the District as security for the debt -- the Otay Service Corporation and the Otay Water District Financing Authority. The Otay Service Corporation was the original entity established by the District and is limited by State law to assisting in conduit financing via COPs. The Otay Water District Financing Authority was created in 2010 for AGENDA ITEM 7a the purpose of issuing the 2010 Build America Bonds and can issue traditional revenue bonds secured by installment payments to be made by the District to the Otay Water District Financing Authority. When compared to COPs, revenue bonds are more desirable to the investment community; therefore, future District debt will be structured as bonds and not COPs. This eliminates the need for the Otay Service Corporation to issue debt in the future. The Otay Service Corporation had to be effective as long as it had secured COPs with installment sale agreements with the District. The Otay Service Corporation’s last outstanding debt, the 1996 COPs, were refunded as part of the 2018 Water Revenue Bond issuance. As the Otay Service Corporation no longer has any outstanding debt obligations, it is no longer necessary to maintain the entity. If Resolution No. 4392 is adopted by this Board and if the Otay Service Corporation Board adopts Resolution No. 1008, then attachments C and D will be filed with the California Secretary of State. FISCAL IMPACT: Joe Beachem, Chief Financial Officer Once dissolved, there will be minor savings related to eliminated administrative time and expenses required to file the annual tax returns for the Otay Service Corporation. STRATEGIC GOAL: The District ensures its continued financial health through long-term financial planning, as well as sound policies and procedures. LEGAL IMPACT: None. Attachments: A) Committee Action B) Resolution No. 4392 C) Nonprofit Certificate of Election to Wind Up and Dissolve D) Nonprofit Certificate of Dissolution ATTACHMENT A SUBJECT/PROJECT: Adopt Resolution No. 4392 Authorizing the Dissolution of the Otay Service Corporation COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on February 16, 2021 and the following comments were made: • Staff presented the staff report to the Committee and requested that the Board adopt Resolution No. 4392 authorizing the dissolution of the Otay Service Corporation (Service Corporation). • As stated in the staff report, the Service Corporation was the original entity established by Otay to issue debt; but is limited by State law to Certificates of Participation, commonly referred to as COPS debt issuance and cannot issue traditional bonds. • In conjunction with the issuance of the 2010 Build America Bonds, the District established the Otay Financing Authority, which has the authority to issue traditional bonds. • Staff stated that when compared to COPS, revenue bonds are more desirable to the investment community; therefore, future debt issuances will be structured as bonds and not COPS. This eliminates the need for the Service Corporation. • Staff noted that once dissolved, there will be minor savings related to the eliminated administrative time and expenses required to file the Service Corporation’s annual tax returns. • Staff indicated that this staff report will be presented to both the full board and the Otay Service Corporation for consideration at the March 3, 2021 board meeting. Upon completion of the discussion, the Committee supported staff’s recommendation and presentation to the full board as an action item. Attachment B RESOLUTION NO. 4392 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT AUTHORIZING THE DISSOLUTION OF THE OTAY SERVICE CORPORATION AND THE FILING OF ALL DOCUMENTS REQUIRED TO EXECUTE SAID DISSOLUTION WHEREAS, the Otay Water District (the “District”) Board of Directors has met on this 3rd day of March 2021, to transact all necessary business relating to the dissolution of the Otay Service Corporation (“Service Corporation”); and WHEREAS, the District Board of Directors has been presented all forms necessary to dissolve the Service Corporation, incorporated herein as Attachments C and D; and WHEREAS, the dissolution of the Service Corporation has been reviewed and considered by the Board, and it is in the interest of the District to adopt this Resolution; and NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the Board of Directors of the District that this resolution is hereby adopted. PASSED, APPROVED AND ADOPTED BY THE Board of Directors of the Otay Water District at a board meeting held this 3rd day of March 2021, by the following vote: AYES: NOES: ABSTAIN: ABSENT: ___________________________ President 2 Attest: _________________________ District Secretary Secretary of State ELEC NP This Space For Office Use Only Nonprofit Certificate of Election to Wind Up and Dissolve (California Nonprofit Corporation ONLY) IMPORTANT — Read Instructions before completing this form. There is No Fee for filing a Nonprofit Certificate of Election to Wind Up and Dissolve Copy Fees – First page $1.00; each attachment page $0.50; Certification Fee - $5.00 plus copy fees 1.Corporate Name (Enter the exact name of the nonprofit corporation as it isrecorded with the California Secretary of State.)2.7-Digit Secretary of State Entity Number 3. Election (Check the applicable statement. Only one box may be checked. If the first box is checked, enter the number of members (do not enter the percentage of members). Note: This Form ELEC NP is not required when the vote to dissolve was made by all of the members, or if the nonprofit corporation has no members, by all of the directors, and that fact is noted on the Nonprofit Certificate of Dissolution (Form DISS NP).) The election was made by the vote of ______________ members of the nonprofit corporation, and representing a majority of the members. The election was made by the board of directors together with the vote of a majority of the members voting on the election to dissolve. The nonprofit corporation has no members; the election was made by the board of directors of the nonprofit corporation 4.Required Statement (This Statement is required. Do not alter.) The nonprofit corporation has elected to wind up and dissolve. 5.Read, Verify, Date and Sign Below (See Instructions for signature requirements. Do not use a computer generated signature.) I declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of my own knowledge and that I am authorized by California law to sign. __________________ ____________________________________________ ______________________________________________ Date Signature Type or Print Name __________________ __________________________________________ ______________________________________________ Date Signature Type or Print Name __________________ __________________________________________ ______________________________________________ Date Signature Type or Print Name ELEC NP (REV 12/2020) 2020 California Secretary of State bizfile.sos.ca.gov Attachment C Secretary of State DISS NP This Space For Office Use Only Nonprofit Certificate of Dissolution (California Nonprofit Corporation ONLY) IMPORTANT — Read Instructions before completing this form. There is No Fee for filing a Nonprofit Certificate of Dissolution Copy Fees – First page $1.00; each attachment page $0.50; Certification Fee - $5.00 plus copy fees Attorney General Letter: All nonprofit public benefit and religious nonprofit corporations are required to get a letter from the California Attorney General’s office waiving objections to the nonprofit corporation’s distribution of assets, or confirming the nonprofit corporation has no assets. If your corporation is a public benefit or religious corporation, you must attach that letter to this Nonprofit Certificate of Dissolution (see instructions). 1.Corporate Name (Enter the exact name of the nonprofit corporation as it isrecorded with the California Secretary of State.)2.7-Digit Secretary of State Entity Number 3. Election The dissolution was made by a vote of ALL of the members, or if there are no members, by a vote of ALL of the directors of the California nonprofit corporation. Note: If the above box is not checked, a Nonprofit Certificate of Election to Wind Up and Dissolve (Form ELEC NP) must be filed prior to or together with this Nonprofit Certificate of Dissolution. (California Corporations Code sections 6611, 8611, 9680 and 12631.) 4.Debts and Liabilities (Check the applicable statement. Only one box may be checked. If second box is checked, you mustinclude the required information in an attachment.) The known debts and liabilities have been actually paid or paid as far as its assets permitted. The known debts and liabilities have been adequately provided for in full or as far as its assets permitted by their assumption. Included in the attachment to this certificate, incorporated herein by this reference, is a description of the provisions made and the name and address of the person, corporation or government agency that has assumed or guaranteed the payment, or the depository institution with which deposit has been made. The nonprofit corporation never incurred any known debts or liabilities. 5.Required Statements (Do not alter the Required Statements – ALL must be true to file Form DISS NP.) a. The nonprofit corporation has been completely wound up and is dissolved. b.All final returns required under the California Revenue and Taxation Code have been or will be filed with theCalifornia Franchise Tax Board.c.For Mutual Benefit or General Cooperative Corporations ONLY: The known assets have been distributed to thepersons entitled thereto or the nonprofit corporation acquired no known assets. 6.Read, Verify, Date and Sign Below (See Instructions for signature requirements. Do not use a computer generated signature.) The undersigned is the sole director or a majority of the directors now in office. I declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of my own knowledge. ______________ ___________________________________________ _________________________________________________ Date Signature Type or Print Name _______________ __________________________________________ _________________________________________________ Date Signature Type or Print Name _______________ __________________________________________ _________________________________________________ Date Signature Type or Print Name DISS NP (REV 12/2020) 2020 California Secretary of State bizfile.sos.ca.gov Attachment D STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: March 3, 2021 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: Adopt Resolution No. 4393 Amending Policy No. 45, the Debt Policy, of the District’s Code of Ordinances GENERAL MANAGER’S RECOMMENDATION: That the Board adopt Resolution No. 4393 amending Policy No. 45, the Debt Policy, of the District’s Code of Ordinances. COMMITTEE ACTION: See Attachment A. PURPOSE: The Debt Policy is being updated to reflect the current debt standards and environment. The proposed Debt Policy (Attachment C) revises and expands upon the existing Policy (Exhibit 1) that was previously approved by the Board on February 1, 2017. ANALYSIS: The District regularly updates the Debt Policy as regulations, laws, best practices, and the environment changes. The proposed updates reflect applicable regulatory changes made by the Internal Revenue Service (IRS), Securities Exchange Committee (SEC), and the Municipal AGENDA ITEM 7b 2 Securities Rule Making Board (MSRB). The proposed updates also include a new section on “Internal Lending/Borrowing” which establishes guidelines regarding the use of internal lending/borrowing between Water and Sewer Funds. Regulatory Policy Updates • Section 8.0 REFUNDING DEBT: Proposes to replace verbiage under “Restrictions on Refunding” to include specific language referring to the restrictions and limitations imposed by the Tax Code. The passage of the Tax Cuts and Jobs Act (TCJA) in December 2017 eliminated state and local governments’ ability to use tax- exempt bonds to advance refund outstanding bonds, as of January 1, 2018. While government agencies and others are currently lobbying to modify this portion of the act, the proposed Policy language was modified to meet this most recent change. • Section 10.0 FINANCING PARTICIPANTS: In accordance with the new MSRB rules and the Dodd-Frank Act, the terminology of “Financial Advisor” is being proposed to replace with “Municipal Advisor”. Prior to passage of the Dodd-Frank Act, independent financial advisors and certain other advisors who serviced municipalities, local agencies, and special districts were not required to be registered and were unregulated. Historically, anyone could provide advice to these organizations regarding the issuance of securities. Under the Dodd-Frank Act the individuals who provide advice to municipalities, local agencies, and special districts regarding the issuance of securities be referred to as Municipal Advisors. It also established the requirement for the advisors to register with the SEC and be subject to rules promulgated by the MSRB. Additional changes related to the Dodd- Frank Act include: o Section 11.0 CONFLICT OF INTEREST AND STANDARDS OF CONDUCT: Added “Municipal Advisors shall also adhere to applicable SEC rules and MSRB Rule G-42.” o Section 18.0 GLOSSARY: Proposed to replace Financial Advisor with Municipal Advisor. Added Financial Obligation and Internal Lending/Borrowing to the glossary. • Section 12.0 CONTINUING DISCLOSURE: The list of reportable, material, and significant events is recommended to be updated to 3 reflect the most recent SEC amendment to Rule 15c2-12 which requires bond issuers to provide information to the MSRB when certain events occur. Internal Lending/Borrowing Internal lending/borrowing, also known as Inter-Fund loans, is a practice found within governmental fund accounting. The accounting treatment and financial reporting guidelines are addressed under the Governmental Standards Board Statements No. 34, Basic Financial Statements and No. 38, Certain Financial Statement Note Disclosures. Internal lending between funds is a funding option that is practiced by various government agencies such as Counties, Cities, and Special Districts. Some agencies use these internal loans to fund Capital Improvements and others use them to fund short term cash flow needs. The District has used internal loans for medium term funding needs. There are currently no internal loans outstanding, or projected, between water and sewer funds as of the draft of this report. Based on recent non-District related events, staff is recommending the District’s Debt Policy be updated to establish standards and guidelines regarding the use of internal loans. The proposed changes to the Debt Policy in regards to internal lending/borrowing are located in the following sections: • Section 2.0 SCOPE: Adds “It also establishes a standard for internal lending/borrowing between water (potable and recycled) and sewer funds, either direction.” And states the policy applies to all debt issued and internal borrowings. • Section 3.0: LEGAL & REGULATORY REQUIREMENTS Adds “lending/borrowing agreements”. • Section 4.0 CAPITAL FACILITIES FUNDING: Replaces “long-term debt” with “debt”. • Section 15.0 TYPES OF DEBT FINANCING: Adds “Internal Borrowing” Paragraph. This new paragraph establishes the policy around internal lending/borrowing and includes the following items: Internal Lending/Borrowing allows the lending and/or borrowing of funds between the Water (Potable and Recycled) and the Sewer 4 Funds, either direction, to meet financial needs in lieu of the borrowing fund obtaining outside debt. Upon recommendation by the CFO, the lending arrangement may be brought to the Board as a resolution to be approved. To the extent any inter-fund lending/borrowing is undertaken in anticipation of long-term financing, the District shall adopt a Resolution of its intention to repay such funds out of tax-exempt debt proceeds so as to meet the requirement of federal tax law for such borrowing. If the funds being loaned are restricted, prevailing law requires that the Resolution the Board adopts include a finding by the Board that the lending fund has sufficient money to lend and that the borrowing fund can repay the loan without adversely affecting the District’s credit ratings. The lending arrangement must be documented including a repayment schedule and interest rate charge equal to the District’s investment rate of return for the same period. Internal Borrowing arrangements will be recorded in accordance with GASB Reporting Requirements. The policy is consistent with the current law and the overall objectives of the policy are being met. FISCAL IMPACT: Joe Beachem, Chief Financial Officer A debt policy improves the quality of decisions, provides guidelines for the structure of debt issuance, and demonstrates a commitment to long-term capital and financial planning. Adherence to a debt policy signals to rating agencies and the capital markets that the District is well managed and therefore is likely to meet its debt obligations. STRATEGIC GOAL: The District ensures its continued financial health through long-term financial planning and debt planning. LEGAL IMPACT: None. Attachments: A) Committee Action 5 B) Resolution No. 4393 Exhibit 1: Strike-through Debt Policy C) Proposed Debt Policy ATTACHMENT A SUBJECT/PROJECT: Adopt Resolution No. 4393 Amending Policy No. 45, the Debt Policy, of the District’s Code of Ordinances COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on February 16, 2021 and the following comments were made: • Staff presented the staff report to the Committee and requested that the Board adopt Resolution No. 4393 amending Policy No. 45, the Debt Policy, of the District’s Code of Ordinances. It was indicated that the Debt Policy was last updated on February 1, 2017. • Staff stated that the primary objective of the policy is to establish conditions for the use of debt, minimize the District’s debt service requirements and cost of issuance, retain the highest practical credit rating, maintain full and complete financial disclosure and reporting, and maintain financial flexibility for the District. • It was noted that the proposed updates reflect applicable regulatory changes made by the Internal Revenue Service, Securities Exchange Committee, and the Municipal Securities Rule Making Board. The updates also include a new section on “Internal Lending/Borrowing” that establishes guidelines regarding the use of internal lending/borrowing between Water and Sewer Funds. • Staff stated that the proposed updates have been reviewed and accepted by both the District’s Municipal Advisor and Attorney. • In response to a question from the Committee, staff stated that Policy No. 45 was updated to comply with regulations, laws, best practices, and environment changes. In addition, an Internal Lending/Borrowing guideline was incorporated into the policy at the request of the board. The above signatures attest that the attached document has been reviewed and to the best of their ability the signers verify that it meets the District quality standard by clearly and concisely conveying the intended information; being grammatically correct and free of formatting and typographical errors; accurately presenting calculated values and numerical references; and being internally consistent, legible and uniform in its presentation style. Upon completion of the discussion, the Committee supported staff’s recommendation and presentation to the full board as an action item. Page 1 of 2 RESOLUTION NO. 4393 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT AMENDING DEBT POLICY NO. 45 OF THE DISTRICT’S CODE OF ORDINANCES WHEREAS, the Otay Water District Board of Directors has been presented with an amended Debt Policy No. 45 of the District’s Code of Ordinances for the financial management of the Otay Water District; and WHEREAS, the amended Debt Policy has been reviewed and considered by the Board, and it is in the interest of the District to adopt the amended Debt Policy; and WHEREAS, the strike-through copy of the proposed policy is attached as Exhibit 1 to this resolution; and NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the Board of Directors of the Otay Water District that the amended Debt Policy, incorporated herein as Attachment C, is hereby adopted. PASSED, APPROVED AND ADOPTED by the Board of Directors of Otay Water District at a board meeting held this 3rd day of March 2021, by the following vote: Ayes: Noes: Abstain: Absent: ________________________ President Attachment B Page 2 of 2 ATTEST: ____________________________ District Secretary OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 1 of 254 1.0: POLICY It is the policy of the Otay Water District to finance the acquisition of high value assets that have an extended useful life through a combination of current revenues and debt financing. Regularly updated debt policies and procedures are an important tool to insure the use of the District’s resources to meet its commitments, to provide the highest quality of service to the District’s customers, and to maintain sound financial management practices. These guidelines are for general use and allow for exceptions as circumstances dictate. 2.0: SCOPE This policy is enacted in an effort to standardize the issuance and management of debt by the Otay Water District. It also establishes a standard for internal lending/borrowing between water (potable and recycled) and sewer funds, either direction. The primary objective is to establish conditions for the use of debt, to minimize the District’s debt service requirements and cost of issuance, to retain the highest practical credit rating, maintain full and complete financial disclosure and reporting, and to maintain financial flexibility for the District. This policy applies to all debt issued by the District including general obligation bonds, revenue bonds, capital leases, and special assessment debt and loans between water and sewer funds. 3.0: LEGAL & REGULATORY REQUIREMENTS The Chief Financial Officer (CFO) and the District’s Legal Counsel will coordinate their activities to ensure that all securities and lending/borrowing agreements are issued in full compliance with Federal and State law. 4.0: CAPITAL FACILITIES FUNDING Financial Planning The District maintains a six-year financial projection that identifies operating requirements and public facility and equipment requirements, and has developed a Rate Model for funding the District’s 6-Year Capital Improvement Program (CIP). The District’s CIP Budget places the capital requirements in order of priority and schedules them for funding and implementation. It identifies a full range of capital Exhibit 1 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 2 of 254 needs, provides for the ranking of the importance of such needs, and identifies all the funding sources that are available to cover the costs of the projects. In cases where the program identifies project funding through the use of debt financing, the budget should provide information needed to determine debt capacity. The Rate Model and the CIP Budget give the Board part of the data needed to make informed judgments concerning the possibility of issuing debt. Funding Criteria The Chief Financial Officer (CFO) will evaluate all capital project requests and develop a proposed funding plan. Priority may be given to those projects that can be funded with current resources (annual cash flow, fund balances or reserves). Those projects that cannot be funded with current resources may be deferred or the CFO may recommend that they be funded with debt financing. However, debt financing will not be considered appropriate for any recurring purpose such as current operating and maintenance expenditures. The issuance of short-term cash-flow instruments is excluded from this limitation. The General Manager will recommend the funding plan to the Board. The General Manager may deem it necessary or desirable in certain circumstances to convene a Finance Committee meeting to evaluate funding options presented by the Chief Financial Officer. Funding Sources The District’s capital improvements can be classified in three categories: those related to an expansion of the system (“expansion”), those related to upgrading the existing system (“betterment”) and those related to repairing or replacing existing infrastructure (“replacement”). In general, capital improvements for betterment or replacement are financed primarily through user charges, availability charges, and betterment charges. Capital improvements for expansion are financed through capacity fees. Accordingly, these fees are reviewed at least annually or more frequently as required and set at levels sufficient to ensure that new development pays its fair share of the costs of constructing necessary infrastructure. Additionally, the District will seek State and Federal grants and other forms of intergovernmental aid wherever possible. Pay-As-You-Go Projects The District’s capacity fees are the major funding source in financing additions to the water system and the recycled water system. Over OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 3 of 254 time, the fees collected and the cost to construct the capital projects should balance. However, collection of these fees is subject to significant fluctuation based on the rate of new development. Accordingly, the Chief Financial Officer, in developing the funding plan for the CIP, will determine that current revenues and adequate fund balances are available so project phasing can be accomplished. If this is not the case, the Chief Financial Officer may recommend that: 1. The project be deferred until funds are available, or 2. Based on the priority of the project, long-term debt beis issued to finance the project. Debt Financed Projects If a project or projects are to be financed with long-term debt, the District should use the following criteria to evaluate the suitability of the financing for the particular project or projects: 1. The life of the project or asset to be financed is 10 years or longer and its useful life is expected to exceed the term of the financing. 2. Revenues available for debt service are deemed to be sufficient and reliable so that long-term financing can be marketed without jeopardizing the credit rating of the District. 3. Market conditions present favorable interest rates and demand for District financing. 4. The project is mandated by State and/or Federal requirements and current resources are insufficient or unavailable. 5. The project is immediately required to meet or relieve capacity needs and current resources are insufficient or unavailable. 5.0: DEBT STRUCTURE General The District will normally issue debt with a maturity of not more than 30 years. The structure should approximate level debt service for the term where it is practical or desirable. There will be no debt structures that include increasing debt service levels in subsequent years, with the first and second year of a debt payoff schedule the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 4 of 254 exception and related to projected additional income to be generated by the project to be funded. There will be no "balloon" debt repayment schedules that consist of low annual payments and one large payment of the balance due at the end of the term. There will always be at least interest paid in the first fiscal year after debt issuance and principal starting no later than the first fiscal year after the date the facility or equipment is expected to be placed in service. Capitalized interest will not be for a period of more than necessary to provide adequate security for the financing. Limitations on the Issuance of Variable Rate Debt The District will normally issue debt with a fixed rate of interest. The District may issue variable rate for the purpose of managing its interest costs. At the same time, the District should protect itself from too much exposure to interest rate fluctuations. In determining that it is in the District’s best interest to issue certain debt at variable rates instead of fixed rates, at the time of issuing any variable rate debt, there should be at least a 10% estimated reduction in annual debt costs by issuing variable rate debt when compared to a similar issuance of fixed rate debt. If the estimated overall cost savings from issuing variable rate debt is not at least 10% at the time of issuance, relatively small fluctuations in rates could actually increase the District’s financing costs over the life of the bonds compared to a similar fixed rate financing. By using this 10% factor at the time of issuance, the District can be relatively assured that its variable rate financing will be cost-effective over the term of the bonds. The comparison will be based on the following criteria: 1. The interest rate used to estimate variable interest costs will be the higher of the 10 year average rate or the current weekly variable rate. 2. The variable rate debt costs will include an estimate for annual costs such as letter of credit fees, liquidity fees, remarketing fees, monthly draw fees and annual rating fees applicable to the letter of credit. 3. Any potential reserve fund earnings will reduce the fixed rate debt service or variable rate debt service as applicable. Periodically, using the criteria described above, the Chief Financial Officer will compare the estimated annual debt service costs to OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 5 of 254 maturity of any variable rate debt with estimated debt service if the debt was converted to fixed rates. If this analysis produces a break even in total payments over the life of the issue, the Chief Financial Officer will recommend converting such variable rate debt to fixed rate. Variable rate debt should not represent more than 25% of the District’s total debt portfolio. This level of exposure to interest rate fluctuations is considered to be manageable in an environment of increasing interest rates. At a higher ratio than this, the District might be faced with an unplanned water rate increase to meet its Rate Covenants. Rating agencies use this ratio in their analysis of the District’s overall credit rating. Further, Rate Covenants applicable to variable rate debt shall not compromise the issuance of additional debt planned by the District and variable rate debt should always contain a provision to allow conversion to a fixed rate at the District’s option. 6.0: CREDIT OBJECTIVES The Otay Water District seeks to maintain the highest possible credit ratings for all categories of long-term debt that can be achieved without compromising delivery of basic services and achievement of District policy objectives. Factors taken into account in determining the credit rating for a financing include: 1. Diversity of the District’s customer base. 2. Proven track record of completing capital projects on time and within budget. 3. Strong, professional management. 4. Adequate levels of staffing for services provided. 5. Reserves. 6. Ability to consistently meet or exceed Rate Covenants. The District recognizes that external economic, natural, or other events may from time to time affect the creditworthiness of its debt. Nevertheless, the District is committed to ensuring that actions within its control are prudent and well planned. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 6 of 254 7.0: COMPETITIVE AND NEGOTIATED SALE CRITERIA Competitive Sale The District will use a competitive bidding process in the sale of debt unless the nature of the issue or specific circumstances warrants a negotiated sale. The CFO will determine the best bid in a competitive sale by calculating the true interest cost (TIC) of each bid. Negotiated Sale Types of debt that would typically lend themselves to the negotiated sale format are variable rate debt and unrated debt. Circumstances that might warrant a negotiated sale may occur when the issue is of a limited size that would not attract wide-spread investor interest, during periods of high levels of issuance by other entities in the State, or during periods of market volatility or with relatively new financing techniques. In the event the District decides to use a negotiated sale, it will pay management fees only to those firms that place orders for bonds. If the size of the District’s proposed issue is not cost effective, the District may also consider issuing its debt by private placement or through any qualified Joint Power Authority (JPA) in the State of California whose principal business is issuing bonds. 8.0: REFUNDING DEBT Purpose Periodic reviews of all outstanding debt will be undertaken by the Chief Financial Officer to determine refunding (refinancing) opportunities. The purpose of the refinancing may be to: 1. Lower annual debt service by taking advantage of lower current interest rates. 2. Update or revise covenants on outstanding debt issue if a Rate Covenant appears to be too high, has precluded the District from implementing its financing plan, or has caused the District to increase rates to customers. 3. Restructure debt service associated with an issue to facilitate the issuance of additional debt, usually in order to smooth out OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 7 of 254 peaks in total debt service which can occur frequently as one debt issue is layered on top of existing debt issues. 4. Alter bond characteristics such as call provisions or payment dates. 5. Pay for conversion costs such as funding a reserve fund or paying for credit enhancement when converting variable rate debt to fixed rate debt. Restrictions on Refunding Tax-exempt bonds typically have provisions that preclude early redemption of the bonds for a period of years after issuance. The number of times a tax-exempt bond can be refinanced prior to its Optional Redemption date (known as Advance Refunding) is limited by the IRS. For debt issued after 1986, issuers may only provide for Advance Refunding of obligations in advance of the Optional Redemption date one time. There is no limit by the IRS on the ability of issuers to redeem bonds early once the Optional Redemption date has been reached (known as Current Refunding). Tax-exempt bonds typically have provisions that preclude early redemption of the bonds for a period of years after issuance. The ability of issuers to refinance a tax-exempt bond prior to its Optional Redemption date (known as Advance Refunding) is limited by the Tax Code. There is no limit in the Tax Code on the ability of issuers to redeem bonds prior to their maturity date once the Optional Redemption date has been reached (known as Current Refunding). Savings Criteria In cases where an Advance Refunding or Current Refunding is intended to provide debt service savings, the District may commence the refinancing process if a minimum five percent (5%) present value savings net of issuance costs and any cash contributions can be demonstrated. Since interest rates may fluctuate between the time when a refinancing is authorized and when the debt is issued, beginning the process with at least a 5% savings should provide the District with some level of protection that it can achieve a minimum of three percent (3%) net present value savings of the refunding bonds when and if the debt is issued. These minimum standards are intended to protect the District staff from spending time on refinancings that OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 8 of 254 become marginally cost-effective after the entire issuance process is complete. The savings target may be waived, however, if sufficient justification for lowering the savings target can be provided by meeting one or more of the other refunding objectives described above. 9.0: SUBORDINATE LIEN DEBT The District will issue subordinate lien debt only if it is financially beneficial to the District or consistent with creditworthiness objectives. Subordinate lien debt is structured to be payable second in priority to the District’s other outstanding debt. Typically, subordinate lien debt might be issued if the District desired a more flexible Rate Covenant with respect to its new obligations and did not want to refinance all of its existing debt to obtain that less restrictive Rate Covenant. 10.0: FINANCING PARTICIPANTS The District’s purchasing guidelines provide the process for securing professional services related to individual debt issues. The solicitation and selection process include encouraging participation from qualified service providers, both local and national, and securing services at competitive prices. Financial Municipal Advisor: The use of a FinancialMunicipal Advisor is necessary for the sale of debt by a competitive bid process and is desirable when issuing debt through a negotiated sale. The FinancialMunicipal Advisor has a fiduciary duty to the District and will seek to structure the District’s debt in the manner that is saleable, yet meets the District’s objectives for the financing. The FinancialMunicipal Advisor will advise the District on alternative structures for its debt, the cost of different debt structures and potential pricing mechanisms that can be expected from underwriters (such as call features, term bonds and premium and discount bond pricing) and, at the District’s direction, will write the offering document (preliminary official statement). With respect to competitive sales, the FinancialMunicipal Advisor will arrange for distributing the preliminary official statement, accepting bids via an internet bidding platform, verifying the lowest bid and provide detailed instructions for the flow of funds at closing to the winning Underwriter, the Trustee and the District. In a negotiated sale, the FinancialMunicipal Advisor will provide independent confirmation on OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 9 of 254 the Underwriter’s proposed pricing to ensure that interest rates and Underwriter’s compensation are appropriate for the credit quality of the issue and competitive in the overall public finance market in California. Underwriter: The Underwriter markets the bonds for sale to investors. While the District’s preference is to select the Underwriter for the debt via sale of the debt at competitive bid, there are circumstances when a negotiated issue is in the best interests of the District. Negotiated sales are preferable if the security features are particularly complex or market conditions are volatile. The Chief Financial Officer will recommend whether the method of sale is competitive or negotiated based on the type of issue and other market conditions. In the case of negotiated sales, the Underwriter will be required to demonstrate sufficient capitalization and sufficient experience related to the specific type of debt issuance. The Underwriter will work in connection with the District’s FinancialMunicipal Advisor on structuring the issue and offering different pricing ideas. Bond Counsel: The District’s Bond Counsel provides the primary legal documents that detail the security for the bonds and the authority under which bonds are issued. The Bond Counsel also provides an opinion to bond holders that the bonds are tax-exempt under both State and Federal law. All closing documents in connection with an issue are also prepared by Bond Counsel. Disclosure Counsel: The District’s Disclosure Counsel provides legal advice to the District regarding the adequacy of the District’s disclosure of financial information or risks of investing in the District’s debt issue to the investing public. The Disclosure Counsel can prepare the official statement or review the official statement and gives the District an opinion that there is no information missing from the official statement of a material nature that would be necessary for an investor to make an informed decision about investing in the District’s bonds. Trustee: The Trustee is a financial institution selected by the District to administer the collection of revenues pledged to repay the bonds and to distribute those funds to bondholders. Letter of Credit Bank: The Letter of Credit Bank is a U.S. or foreign bank that has issued a letter of credit providing both credit OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 10 of 254 enhancement (the Letter of Credit Bank will pay the debt in the event that the District defaults on the payment) and liquidity for a variable rate bond issue. These banks have their own short-term credit rating, which can be higher than the District’s short-term credit rating. Liquidity is needed because variable rate bondholders are allowed to “put” their bonds back to the District if they do not like the interest rate currently being offered. The District’s Remarketing Agent then finds a new buyer for those bonds, but in the event that no buyer is found, a draw is made under the letter of credit to purchase the bonds that have been “put.” As soon as the bonds are remarketed to another buyer, the letter of credit is repaid. The letter of credit fees are paid annually or quarterly. Letter of credits are typically issued for not more than 3 years and must be renewed during the life of the bonds. Credit enhancement is discussed further under the heading “CREDIT ENHANCEMENT.” Municipal Bond Insurer: The Municipal Bond Insurer can be one of several insurance companies that provide municipal bond insurance policies securing payment of the District’s debt. These policies provide that the Municipal Bond Insurer will pay the District’s debt in the event that the District defaults on its payments. Debt which is insured carries the Municipal Bond Insurer’s credit rating. The insurance premium for the bond insurance policy is paid one time at the issuance of the debt and is non-cancelable for the term of the debt. Unlike a letter of credit, bond insurance policies do not provide liquidity and are most typically purchased for fixed rate debt. Remarketing Agent: The Remarketing Agent is an investment bank that, each week, determines the interest rate for the District’s variable rate obligations. The rate is set at the rate at which the obligations could be sold on the open market at 100% of their face value. The Remarketing Agent also finds new buyers for any of the obligations that are “put” back to the District. Rating Agencies: Currently, there are three widely recognized rating agencies that rate municipal debt in the United States: Standard & Poor’s, Moody’s Investors Service, and Fitch Investors Service. Rating agencies establish objective criteria under which each type of financing undertaken by the District is to be analyzed. Upon request, a rating agency will rate the underlying strength of the District’s financings, without regard to the purchase of any credit enhancement. The rating is released to the general public and thereafter, the rating agency will periodically update its analysis of a particular OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 11 of 254 issue, and may raise or lower the rating if circumstances warrant. Investment-grade ratings range from “AAA” to “BBB-.” A rating below “BBB-” is not investment grade. Many mutual funds cannot buy bonds that do not carry an investment grade. Verification Agent: In a refunding, the District will deposit funds with an escrow agent (usually the trustee) in an amount sufficient, together with earnings thereon, to pay the debt service and redemption price of the debt being refunded through and including the call date. The Verification Agent verifies the mathematical accuracy of calculation of the amount to be deposited in escrow and the bond counsel relies on this verification in giving their opinion that the debt is defeased within the meaning of the indenture and that the lien of the debt on the revenues pledged to the debt being refunded is released. 11.0: CONFLICT OF INTEREST AND STANDARDS OF CONDUCT Members of the District, the Board of Directors and its consultants, service providers and underwriters shall adhere to standards of conduct and conflict of interest rules as stipulated by the California Political Reform Act or the Municipal Securities Rulemaking Board (MSRB), as applicable. All debt financing participants shall maintain the highest standards of professional conduct at all times, in accordance with MSRB Rules, including Rule G-37. Municipal Advisors shall also adhere to applicable SEC rules and MSRB Rule G-42. There shall be no conflict of interest with the District with any debt financing participant. 12.0: CONTINUING DISCLOSURE The District acknowledges the responsibilities of the underwriting community and pledges to make all reasonable efforts to assist underwriters in their efforts to comply with SEC Rule 15c2-12 and MSRB Rule G-36. The District will file its official statements with the MSRB and the nationally recognized municipal securities information repositories. The District will also post copies of its comprehensive financial reports on the MSRB’s Electronic Municipal Market Access (EMMA) website, and will disseminate other information that it deems pertinent to the market in a timely manner (For bonds issued after 2012, 10 days). While initial bond disclosure requirements pertain to underwriters, the District will provide financial information and notices of material events on an ongoing basis throughout the life of OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 12 of 254 the issue. Material events are defined as those events which are considered to likely reflect on the credit supporting the securities. (a) The events considered material according to the SEC are: 1. Principal and interest payment delinquencies; 2. Unscheduled draws on debt service reserves reflecting financial difficulties; 3. Unscheduled draws on credit enhancements reflecting financial difficulties; 4. Substitution of credit or liquidity providers, or their failure to perform; 5. Adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB); 6. Tender offers; 7. Defeasances; 8. Ratings changes; and 9. Bankruptcy, insolvency, receivership or similar proceedings. Note: For the purposes of the event identified in subparagraph (9) above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 13 of 254 (b) Pursuant to the provisions of this section (b)item, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: 1. Unless described in paragraph (a) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; 2. The consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; 3. Appointment of a successor or additional trustee or the change of the name of a trustee; 4. Nonpayment related defaults; 5. Modifications to the rights of Owners of the Bonds; 6. Notices of redemption; and 7. Release, substitution or sale of property securing repayment of the Bonds. Whenever the District obtains knowledge of the occurrence of a Listed Event under (b) above, the District shall as soon as possible determine if such event would be material under applicable federal securities laws. The District acknowledges the responsibilities of the underwriting community and pledges to make all reasonable efforts to assist underwriters in their efforts to comply with SEC Rule 15c2-12 and MSRB Rule G-36. The District will file its official statements with the MSRB and the nationally recognized municipal securities information repositories. The District will also post copies of its comprehensive financial reports on the MSRB’s Electronic Municipal Market Access OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 14 of 254 (EMMA) website, and will disseminate other information that it deems pertinent to the market in a timely manner (For bonds issued after 2012, 10 days). Reporting of Listed Events While initial bond disclosure requirements pertain to underwriters, the District will provide financial information and notices of listed events on an ongoing basis throughout the life of the issue. The list below (as of the most current SEC amendment effective February 27, 2019) can change in the future, and any new requirements added to SEC Rule 15(c)2-12 in the future are deemed to be added to this section without the need to update the policy. (a) The District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to any bonds (in each case to the extent applicable) in a timely manner not more than ten business days after the occurrence of the event: 1. Principal or interest payment delinquencies; 2. Non-payment related defaults, if material; 3. Modifications to the rights of the Holders, if material; 4. Optional, contingent or unscheduled calls, if material, and tender offers; 5. Defeasances; 6. Rating changes; 7. Adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; 8. Unscheduled draws on the debt service reserves reflecting financial difficulties; 9. Unscheduled draws on the credit enhancements reflecting financial difficulties; 10. Substitution of the credit or liquidity providers or their failure to perform; 11. Release, substitution or sale of property securing repayment of the Bonds, if material; 12. Bankruptcy, insolvency, receivership or similar proceedings of the District, which shall occur as described below; OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 15 of 254 13. Appointment of a successor or additional trustee or the change of name of a trustee, if material; 14. The consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; 15. Incurrence of a financial obligation of the District, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the District, any of which affect security holders, if material; or 16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the District, any of which reflect financial difficulties. For these purposes, any event described in item 12 is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. Whenever the District obtains knowledge of the occurrence of a Listed Event under item 12 above, the District shall or shall cause the Dissemination Agent (if not the District) as soon as possible determine if such event would be material under applicable federal securities laws and if applicable file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Significant Event. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 16 of 254 Notwithstanding the foregoing, notice of Significant Events described in subparagraph (a)(8) above need not be given any earlier than the notice (if any) of the underlying event is given to holders of affected bonds under the applicable indenture securing such bonds. The events described in subparagraphs (a)(2), (a)(7),(a)(8) (if the event is a bond call), (a)(10), (a)(11), (a)(13), (a)(14) and (a)(15) contain the qualifier “if material.” The District shall cause a notice to be filed with respect to any such event only to the extent that the District determines the event’s occurrence is material for purposes of U.S. federal securities law. 13:0 INVESTMENT & ARBITRAGE COMPLIANCE Tax-exempt bonds are required to meet certain provisions of the federal tax code in order to maintain their tax-exempt status. In order to prevent municipal issuers from borrowing money at tax-exempt rates solely for the purpose of investing the proceeds in higher yielding investments and making a profit (“arbitrage”), the federal tax code contains a provision that requires issuers to compare the interest earned on any bond funds held (such as a reserve fund) with interest that would theoretically be earned if the funds were invested at the yield of the bonds, and to “rebate” to the federal government any interest earned in excess of the theoretical earnings limit. The Chief Financial Officer shall invest the bond proceeds subject to the District’s Investment Policy in a timely manner, to ensure the availability of funds to meet operational requirements. In doing so, the CFO will maintain a system of record keeping and reporting to meet the arbitrage rebate compliance requirements of the federal tax code. 14.0: INTERNAL CONTROL The District has implemented the following procedure to ensure that the proceeds of the proposed debt issuance will be directed to the intended use: OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 17 of 254 1. A separate Reserve Account shall be maintained for the proceeds of each bond to ensure that there is no comingling of funds. 2. All related expenditures charged against the bond proceeds shall be properly approved by the authorized authority. 3. All related transactions shall be fully documented so that an undisputable audit trail exists. 4. All related transactions shall be tracked in the District’s Accounting System. A financial report reflecting all charges related to the bond shall be prepared and maintained. 5. The District shall establish a retention policy which states that all supporting documents related to bond proceeds spending shall be kept indefinitely. 6. The Reserve Account shall be reconciled on a monthly basis. 15.0: TYPES OF DEBT FINANCING General Obligation Bonds General obligation bonds are secured by a pledge of the ad-valorem taxing power of the issuer and are also known as a full faith and credit obligations. Bonds of this nature must serve a public purpose to be considered lawful taxation of the property owners within the District and require a two third’s majority vote in a general election. The benefit of the improvements or assets constructed and acquired as a result of this type of bond must be generally available to all property owners. The District can issue general obligation bonds up to but not in excess of 15% of the assessed valuation under Article XVI, Section 18 of the State constitution. An annual amount of the levy necessary to meet debt service requirements is calculated and placed on the tax roll through the County of San Diego. The District also has a policy that the ad-valorem tax to be used to pay debt service on general obligation bonds will not exceed $.10 per $100 of assessed value. Voters within Improvement District No. 27 of the District authorized $100 million general obligation bonds in 1989. The District issued $11,500,000 general obligation bonds in 1992 and refinanced the bonds in 1998 and again in 2009. The District also has approximately $29 million in general obligation bonds authorized between 1960 and 1978 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 18 of 254 for various improvement districts throughout the District, but unissued. General obligation bonds can only be issued under these existing authorizations to the extent necessary to fund the improvements specified by each ballot measure. General obligation bonds generally are regarded as the broadest and soundest security among tax-secured debt instruments. An unlimited- tax pledge would enable a trustee to invoke mandamus to force the District to raise the tax rate as much as necessary to pay off the bonds. General obligation bonds have other credit strengths as well: the property tax tends to be a steady and predictable revenue source, and when a vote is required to issue them, bondholders have some indication of taxpayers’ willingness to pay. General obligation bonds carry the highest credit rating that a public agency can achieve and therefore, the lowest interest cost. General obligation bonds typically are issued to finance capital facilities and not for ongoing operational or maintenance costs. The District will use an objective analytical approach to determine whether it can afford to assume new general obligation debt for the improvement districts, or in the case of projects not approved by the original ID 27 vote, prior to any submission of a general obligation bond ballot measure to voters. This process will compare generally accepted standards of affordability to the current values for the District. These standards will include debt per capita, debt as a percent of taxable value, debt service payments as a percent of current revenues and current expenditures, and the level of overlapping net debt of all local taxing jurisdictions. The process will also examine the direct costs and benefits of the proposed expenditures. The decision on whether or not to assume new debt will be based on these costs and benefits, the current conditions of the municipal bond market, and the District’s ability to "afford" new debt as determined by the aforementioned standards. Revenue Bonds Revenue bonds are limited-liability obligations that pledge net revenues of the District to debt service. The net revenue pledge is after payment of all operating costs. Since revenue bonds are not generally secured by the full faith and credit of the District, the financial markets require coverage ratios of the pledged revenue stream and a covenant to levy rates and charges sufficient to produce net income at some level in excess of debt service (a Rate Covenant). OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 19 of 254 Also there may be a test required to demonstrate that future revenues will be sufficient to maintain debt service coverage levels after any proposed additional bonds are issued. The District will strive to meet industry and financial market standards with such ratios without impacting the current rating. Annual adjustments to the District’s rate structure may be necessary to maintain these coverage ratios. The underlying credit of revenue bonds is judged on the ability of the District’s existing rates to provide sufficient net income to pay debt service and the perceived willingness of the District to raise rates and charges in accordance with its Rate Covenant. Actual past performance also plays a role in evaluating the credit quality of revenue bonds, as well as the diversity of the customer base. Revenue bonds generally carry a credit rating one or two investment grades below a general obligation bond rating. The District may use a debt structure called “Certificates of Participation” to finance capital facilities. However, if the certificates contain a pledge of net revenues and a Rate Covenant, they are treated as essentially the same as a revenue bond. Lease/Purchase Agreements Over the lifetime of a lease, the total cost to the District will generally be higher than purchasing the asset outright. As a result, the use of lease/purchase agreements in the acquisition of vehicles, equipment and other capital assets will generally be avoided, particularly if smaller quantities of the capital asset(s) can be purchased on a "pay-as-you-go" basis. The District may utilize lease-purchase agreements to acquire needed equipment and facilities. Criteria for such agreements should be that the asset life is three years or more, the minimum value of the agreement is $50,000 and interest costs must not exceed the interest rate earned by the District’s portfolio for the average of the past 6 months. Lease payments of this type are considered operating expenses and would reduce net operating income available to pay any District revenue bonds. There are no coverage requirements or rate covenants associated with lease/purchase agreements. State Water Loans The State Water Resources Control Board makes certain funds available to water districts throughout the State. These loans typically carry a below-market rate of interest and are short term in nature. While OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 20 of 254 State loans should be incorporated into the District’s debt portfolio for the financing of capital improvements, the payment of the loan should not compromise the District’s ability to issue other planned debt or cause the District to violate its rate covenants or make it necessary for the District to increase rates to maintain existing rate covenants. Land Based Financing The District may consider developer or property owner initiated applications requesting the formation of community facilities or assessment districts and the issuance of bonds to finance eligible District facilities necessary to serve newly developing commercial, industrial and/or residential projects. Facilities will be financed in accordance with the provisions of the Municipal Improvement Act of 1913 and the Improvement Bond Act of 1915, or the Mello-Roos Community Facilities Act of 1982. Typically, the bonds issued would be used to prepay, in a lump-sum, the District’s capacity fees with respect to a large tract of land under development, or to finance in-tract infrastructure that will eventually be dedicated to the District. The bonds are secured by a special tax or assessment to be levied on property within the boundaries established for the community facilities district (sometimes known as a “Mello-Roos” district) or the assessment district. If the District becomes the sponsoring public agency for such financing district and the issuance of debt, the District will be required to enter into a Funding, Construction and Acquisition agreement for any of the facilities to be dedicated to the District upon completion. This agreement governs the type of facilities to be constructed with bond proceeds and how the facilities will be accepted by the District. In some cases, the District may not be asked to be the sponsoring agency for the formation of a financing district, rather, the developer or property owner may approach a school district or a city to be the sponsoring agency. Nonetheless, the property owner may want to include lump-sum payment of District fees in the financing or construction of certain facilities to be dedicated to the District upon completion. In this case, if the District desired to participate, the District would enter into a Joint Financing Agreement with the sponsoring agency, again governing the type of facilities to be constructed with bond proceeds and how the facilities will be accepted by the District. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 21 of 254 On a case-by-case basis, the Board shall make the determination as to whether a proposed district will proceed under the provisions of the Assessment Acts or the Mello-Roos Community Facilities Act. The Board may confer with other consultants and the applicant to learn of any unique district requirements, such as long-term development phasing, prior to making any final determination. All District and District consultant costs incurred in the evaluation of new development, district applications and the establishment of districts will be paid by the applicant(s) by advance deposits in those instances where a party or parties other than the District have initiated a proposed district. Expenses not legally reimbursable by the financing district will be borne by the applicant. The District may incur expenses for analyzing proposed assessment or community facilities districts where the District is the principal proponent of the formation or financing of the district. Prior to the issuance of any land secured financing and in accordance with State law, the Board will adopt policies and procedures with criteria to be met before any special tax bonds or assessment district bonds may be issued. These criteria include the qualifications of the appraiser, the minimum value to lien ratio to be achieved prior to issuing the land secured debt and the maximum tax to be levied on different categories of property. Internal Lending/Borrowing Internal Lending/Borrowing allows the lending and/or borrowing of funds between the Water (Potable and Recycled) and the Sewer Funds, either direction to meet financial needs in lieu of the borrowing fund obtaining outside debt. Upon recommendation by the Chief Financial Officer, the Board may adopt a resolution allowing lending/borrowing arrangements between Water and Sewer funds. To the extent any inter-fund lending/borrowing is undertaken in anticipation of long-term financing, the District shall adopt a Resolution of its intention to repay such funds out of tax-exempt debt proceeds so as to meet the requirement of federal tax law for such borrowing. If the funds being loaned are restricted, prevailing law requires that the Resolution that the Board adopts must include a finding by the Board that the lending fund has sufficient money to lend and that the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 22 of 254 borrowing fund can repay the loan without adversely affecting the District’s credit ratings. Internal Lending/Borrowing arrangements will be recorded in accordance with GASB reporting requirements. The arrangement will include the purpose, a debt repayment schedule and a periodic interest charge that is equal to the District’s investment rate of return for that same period. This ensures that the lending fund is recapturing earnings that would have been otherwise realized had these funds been invested in the District’s investment portfolio. 16.0: RATING AGENCY APPLICATIONS The District may seek one or more ratings on all new issues that are being sold in the public market. These rating agencies include, but are not limited to, Fitch Investors Service, Moody’s Investors Service, and Standard & Poor’s. When applying for a rating on an issue over $1 million or more, the District shall make a formal presentation of the finances and positive developments within the District to the rating agencies. The District will report all financial information to the rating agencies upon request. This information shall include, but shall not be limited to, the District’s Comprehensive Annual Financial Report (CAFR), and the Adopted Operating and Capital Budget. 17.0: USE OF CREDIT ENHANCEMENT Credit enhancement is a generic term that means any third-party guarantee of debt service. Credit enhancement providers include municipal bond insurance companies or financial institutions. The purchase of credit enhancement allows the District’s bond issue to carry the same credit rating as the credit provider. The District will seek to use credit enhancement when such credit enhancement proves cost-effective. Selection of credit enhancement providers will be subject to a competitive bid process using the District’s purchasing guidelines, if applicable. Fixed Rate Bonds Credit enhancement for fixed rate bonds is obtained by the purchase of bond insurance. If a commitment for bond insurance is obtained for a OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 23 of 254 particular issue, the District will estimate the annual debt service for the issue based on current interest rates applicable to the credit rating of the bond insurer. If the estimated debt service on this basis is less than or equal to estimated debt service for the issue based on interest rates for bonds with the District’s underlying or stand-alone credit rating, the District will purchase the bond insurance. Any intention of the District to prepay the debt ahead of its scheduled maturity will be taken into account in the analysis. Credit enhancement may be used to improve or establish a credit rating on a District debt obligation even if such credit enhancement is not cost effective if, in the opinion of the Chief Financial Officer, the use of such credit enhancement meets the District’s debt financing goals and objectives, such as, funding of a reserve fund for the bonds. Variable Rate Bonds Credit enhancement for variable rate bonds is comprised of two components: credit support and liquidity. The interest on variable rate bonds is based on a short-term investment rate (usually 7 days). Any investor can tender their bonds back to the District to be repurchased on short notice (usually 7 days). Because of the short- term nature of the investment, the securities that the District is “competing” with for investors are AA-rated mutual funds. Therefore, variable debt needs to have credit enhancement to achieve a comparable AA rating, as well as liquidity support to provide the District with a mechanism to purchase any bonds that are tendered before they can be remarketed to new investors. A limited number of financial institutions offer letters of credit that combine both credit support and liquidity for one fee. An alternative is to purchase bond insurance to provide credit support and enter into a separate purchase agreement with a financial institution to provide liquidity. The difference in cost between the two structures will be analyzed before either alternative is selected for variable rate debt. 18.0: GLOSSARY Ad Valorem Tax: A tax calculated “according to the value” of property. Such a tax is based on the assessed valuation of tangible personal property. In most jurisdictions, the tax is a lien on the property enforceable by seizure and sale of the property. General restrictions, such as overall restrictions on rates, or the percent of OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 24 of 254 charge allowed, sometimes apply. As a result, ad valorem taxes often function as the balancing element in local budgets. Advance Refunding: A procedure whereby outstanding bonds are refinanced by the proceeds of a new bond issue prior to the date on which outstanding bonds become due or are callable. Typically an advance refunding is performed to take advantage of interest rates that are significantly lower than those associated with the original bond issue. At times, however, an advance refunding is performed to remove restrictive language or debt service reserve requirements required by the original issue. Amortization: The planned reduction of a debt obligation according to a stated maturity or redemption schedule. Arbitrage: The gain that may be obtained by borrowing funds at a lower (often tax-exempt) rate and investing the proceeds at higher (often taxable) rates. The ability to earn arbitrage by issuing tax- exempt securities has been severely curtailed by the Tax Reform Act of 1986, as amended. Assessed Valuation: The appraised worth of property as set by a taxing authority through assessments for purposes of ad valorem taxation. Basis Point: One one-hundredth of one percent. Bond: A security that represents an obligation to pay a specified amount of money on a specific date in the future, typically with periodic interest payments. Bond Counsel: An attorney (or firm of attorneys) retained by the issuer to give a legal opinion concerning the validity of the securities. The bond counsel’s opinion usually addresses the subject of tax exemption. Bond counsel may prepare, or review and advise the issuer regarding authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation. Bond Insurance: A type of credit enhancement whereby a monocline insurance company indemnifies an investor against a default by the issuer. In the event of a failure by the issuer to pay principal and interest in-full and on-time, investors may call upon the insurance company to do so. Once assigned, the municipal bond insurance policy OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 25 of 254 generally is irrevocable. The insurance company receives an up-front fee, or premium, when the policy is issued. Call Option: A contract through which the owner is given the right but is not obligated to purchase the underlying security or commodity at a fixed price within a limited time frame. Cap: A ceiling on the interest rate that would be paid. Capital Lease: The acquisition of a capital asset over time rather than merely paying rent for temporary use. A lease-purchase agreement, in which provision is made for transfer of ownership of the property for a nominal price at the scheduled termination of the lease, is referred to as a capital lease. Certificate of Participation: A financial instrument representing a proportionate interest in payments such as lease payments by one party (such as the District acting as a lessee) to another party (often a trustee). CIP: Capital Improvement Program. Competitive Sale: The sale of securities in which the securities are awarded to the bidder who offers to purchase the issue at the best price or lowest cost. Continuing Disclosure: The requirement by the Securities and Exchange Commission for most issuers of municipal debt to provide current financial information to the informational repositories for access by the general marketplace. Debt Service: The amount necessary to pay principal and interest requirements on outstanding bonds for a given year or series of years. Defeasance: Providing for payment of principal of premium, if any, and interest on debt through the first call date or scheduled principal maturity in accordance with the terms and requirements of the instrument pursuant to which the debt was issued. A legal defeasance usually involves establishing an irrevocable escrow funded with only cash and U.S. Government obligations. Derivative: A financial product that is based upon another product. Generally, derivatives are risk mitigation tools. Discount: The difference between a bond’s par value and the price for which it is sold when the latter is less than par. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 26 of 254 Financial Advisor: A consultant who advises an issuer on matters pertinent to a debt issue, such as structure, sizing, timing, marketing, pricing, terms and bond ratings. Municipal Advisor: A person that provides advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, including advice with respect to the structure, timing, terms, and other similar matters concerning such financial products or issues. Financial Obligation: A debt obligation, lease, guarantee, derivative instrument, or monetary obligation resulting from a judicial, administrative, or arbitration proceeding, but not including municipal securities as to which a final official statement has been provided to the MSRB. General Obligation Bonds: Debt that is secured by a pledge of the ad valorem taxing power of the issuer. Also known as a full faith and credit obligation. Internal Lending/Borrowing: An Inter-fund lending arrangement between Water and Sewer funds. Municipal Securities Rulemaking Board (MSRB): The MSRB, comprised of representatives from investment banking firms, dealer bank representatives, and public representatives, is entrusted with the responsibility of writing rules of conduct for the municipal securities market. Negotiated Sale: A sale of securities in which the terms of sale are determined through negotiation between the issuer and the purchaser, typically an underwriter, without competitive bidding. Official Statement: A document published by the issuer that discloses material information on a new issue of municipal securities including the purposes of the issue, how the securities will be repaid, and the financial, economic and social characteristics of the issuing government. Investors may use this information to evaluate the credit quality of the securities. Option: A derivative contract. There are two primary types of options (see Put Option and Call Option). An option is considered a OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 27 of 254 wasting asset because it has a stipulated life to expiration and may expire worthless. Hence, the premium could be wasted. Optional Redemption: The redemption of an obligation prior to its stated maturity, which can only occur on dates specified in the bond indenture. Overlapping Debt: The legal boundaries of local governments often overlap. In some cases, one unit of government is located entirely within the boundaries of another. Overlapping debt represents the proportionate share of debt that must be borne by one unit of government because another government with overlapping or underlying taxing authority issued its own bonds. Par Value: The face value or principal amount of a security. Pay-as-you-go: To pay for capital improvements from current resources and fund balances rather than from debt proceeds. Put Option: A contract that grants to the purchaser the right but not the obligation to exercise. Rate Covenant: A covenant between the District and bondholders, under which the District agrees to maintain a certain level of net income compared to its debt payments, and covenants to increase rates if net income is not sufficient to meet such level. Refunding: A procedure whereby an issuer refinances an outstanding bond issue by issuing new bonds. Revenue Bonds: A bond which is payable from a specific source of revenue and to which the full faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable from identified sources of revenue, and do not permit the bondholders to compel a jurisdiction to pay debt service from any other source. Pledged revenues often are derived from the operation of an enterprise. Generally, no voter approval is required prior to issuance. Special Assessments: A charge imposed against property or parcel of land that receives a special benefit by virtue of some public improvement that is not, or cannot be enjoyed by the public at large. Special assessment debt issues are those that finance such improvements and are repaid by the assessments charged to the benefiting property owners. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 28 of 254 Swap: A customized financial transaction between two or more counterparties who agree to make periodic payments to one another. Swaps cover interest rate, equity, commodity and currency products. They can be simple floating for fixed exchanges or complex hybrid products with multiple option features. True Interest Cost (TIC): A method of calculating the overall cost of a financing that takes into account the time value of money. The TIC is the rate of interest that will discount all future payments so that the sum of their present value equals the issue proceeds. Underwriter: The term used broadly in the municipal market, to refer to the firm that purchases a securities offering from a governmental issuer. Yield Curve: Refers to the graphical or tabular representation of interest rates across different maturities. The presentation often starts with the shortest-term rates and extends towards longer maturities. It reflects the market’s views about implied inflation/deflation, liquidity, economic and financial activity, and other market forces. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 1 of 25 1.0: POLICY It is the policy of the Otay Water District to finance the acquisition of high value assets that have an extended useful life through a combination of current revenues and debt financing. Regularly updated debt policies and procedures are an important tool to insure the use of the District’s resources to meet its commitments, to provide the highest quality of service to the District’s customers, and to maintain sound financial management practices. These guidelines are for general use and allow for exceptions as circumstances dictate. 2.0: SCOPE This policy is enacted in an effort to standardize the issuance and management of debt by the Otay Water District. It also establishes a standard for internal lending/borrowing between water (potable and recycled) and sewer funds, either direction. The primary objective is to establish conditions for the use of debt, to minimize the District’s debt service requirements and cost of issuance, to retain the highest practical credit rating, maintain full and complete financial disclosure and reporting, and to maintain financial flexibility for the District. This policy applies to all debt issued by the District including general obligation bonds, revenue bonds, capital leases, and special assessment debt and loans between water and sewer funds. 3.0: LEGAL & REGULATORY REQUIREMENTS The Chief Financial Officer (CFO) and the District’s Legal Counsel will coordinate their activities to ensure that all securities and lending/borrowing agreements are issued in full compliance with Federal and State law. 4.0: CAPITAL FACILITIES FUNDING Financial Planning The District maintains a six-year financial projection that identifies operating requirements and public facility and equipment requirements, and has developed a Rate Model for funding the District’s 6-Year Capital Improvement Program (CIP). The District’s CIP Budget places the capital requirements in order of priority and schedules them for funding and implementation. It identifies a full range of capital needs, provides for the ranking of the importance of such needs, and identifies all the funding sources that are available to cover the Attachment C OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 2 of 25 costs of the projects. In cases where the program identifies project funding through the use of debt financing, the budget should provide information needed to determine debt capacity. The Rate Model and the CIP Budget give the Board part of the data needed to make informed judgments concerning the possibility of issuing debt. Funding Criteria The Chief Financial Officer (CFO) will evaluate all capital project requests and develop a proposed funding plan. Priority may be given to those projects that can be funded with current resources (annual cash flow, fund balances or reserves). Those projects that cannot be funded with current resources may be deferred or the CFO may recommend that they be funded with debt financing. However, debt financing will not be considered appropriate for any recurring purpose such as current operating and maintenance expenditures. The issuance of short-term cash-flow instruments is excluded from this limitation. The General Manager will recommend the funding plan to the Board. The General Manager may deem it necessary or desirable in certain circumstances to convene a Finance Committee meeting to evaluate funding options presented by the Chief Financial Officer. Funding Sources The District’s capital improvements can be classified in three categories: those related to an expansion of the system (“expansion”), those related to upgrading the existing system (“betterment”) and those related to repairing or replacing existing infrastructure (“replacement”). In general, capital improvements for betterment or replacement are financed primarily through user charges, availability charges, and betterment charges. Capital improvements for expansion are financed through capacity fees. Accordingly, these fees are reviewed at least annually or more frequently as required and set at levels sufficient to ensure that new development pays its fair share of the costs of constructing necessary infrastructure. Additionally, the District will seek State and Federal grants and other forms of intergovernmental aid wherever possible. Pay-As-You-Go Projects The District’s capacity fees are the major funding source in financing additions to the water system and the recycled water system. Over time, the fees collected and the cost to construct the capital projects should balance. However, collection of these fees is subject OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 3 of 25 to significant fluctuation based on the rate of new development. Accordingly, the Chief Financial Officer, in developing the funding plan for the CIP, will determine that current revenues and adequate fund balances are available so project phasing can be accomplished. If this is not the case, the Chief Financial Officer may recommend that: 1.The project be deferred until funds are available, or 2.Based on the priority of the project, debt be issued to finance the project. Debt Financed Projects If a project or projects are to be financed with long-term debt, the District should use the following criteria to evaluate the suitability of the financing for the particular project or projects: 1.The life of the project or asset to be financed is 10 years or longer and its useful life is expected to exceed the term of the financing. 2.Revenues available for debt service are deemed to be sufficient and reliable so that long-term financing can be marketed without jeopardizing the credit rating of the District. 3.Market conditions present favorable interest rates and demand for District financing. 4.The project is mandated by State and/or Federal requirements and current resources are insufficient or unavailable. 5.The project is immediately required to meet or relieve capacity needs and current resources are insufficient or unavailable. 5.0: DEBT STRUCTURE General The District will normally issue debt with a maturity of not more than 30 years. The structure should approximate level debt service for the term where it is practical or desirable. There will be no debt structures that include increasing debt service levels in subsequent years, with the first and second year of a debt payoff schedule the exception and related to projected additional income to be generated by the project to be funded. There will be no "balloon" debt OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 4 of 25 repayment schedules that consist of low annual payments and one large payment of the balance due at the end of the term. There will always be at least interest paid in the first fiscal year after debt issuance and principal starting no later than the first fiscal year after the date the facility or equipment is expected to be placed in service. Capitalized interest will not be for a period of more than necessary to provide adequate security for the financing. Limitations on the Issuance of Variable Rate Debt The District will normally issue debt with a fixed rate of interest. The District may issue variable rate for the purpose of managing its interest costs. At the same time, the District should protect itself from too much exposure to interest rate fluctuations. In determining that it is in the District’s best interest to issue certain debt at variable rates instead of fixed rates, at the time of issuing any variable rate debt, there should be at least a 10% estimated reduction in annual debt costs by issuing variable rate debt when compared to a similar issuance of fixed rate debt. If the estimated overall cost savings from issuing variable rate debt is not at least 10% at the time of issuance, relatively small fluctuations in rates could actually increase the District’s financing costs over the life of the bonds compared to a similar fixed rate financing. By using this 10% factor at the time of issuance, the District can be relatively assured that its variable rate financing will be cost-effective over the term of the bonds. The comparison will be based on the following criteria: 1. The interest rate used to estimate variable interest costs will be the higher of the 10 year average rate or the current weekly variable rate. 2. The variable rate debt costs will include an estimate for annual costs such as letter of credit fees, liquidity fees, remarketing fees, monthly draw fees and annual rating fees applicable to the letter of credit. 3. Any potential reserve fund earnings will reduce the fixed rate debt service or variable rate debt service as applicable. Periodically, using the criteria described above, the Chief Financial Officer will compare the estimated annual debt service costs to maturity of any variable rate debt with estimated debt service if the debt was converted to fixed rates. If this analysis produces a break OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 5 of 25 even in total payments over the life of the issue, the Chief Financial Officer will recommend converting such variable rate debt to fixed rate. Variable rate debt should not represent more than 25% of the District’s total debt portfolio. This level of exposure to interest rate fluctuations is considered to be manageable in an environment of increasing interest rates. At a higher ratio than this, the District might be faced with an unplanned water rate increase to meet its Rate Covenants. Rating agencies use this ratio in their analysis of the District’s overall credit rating. Further, Rate Covenants applicable to variable rate debt shall not compromise the issuance of additional debt planned by the District and variable rate debt should always contain a provision to allow conversion to a fixed rate at the District’s option. 6.0: CREDIT OBJECTIVES The Otay Water District seeks to maintain the highest possible credit ratings for all categories of long-term debt that can be achieved without compromising delivery of basic services and achievement of District policy objectives. Factors taken into account in determining the credit rating for a financing include: 1. Diversity of the District’s customer base. 2. Proven track record of completing capital projects on time and within budget. 3. Strong, professional management. 4. Adequate levels of staffing for services provided. 5. Reserves. 6. Ability to consistently meet or exceed Rate Covenants. The District recognizes that external economic, natural, or other events may from time to time affect the creditworthiness of its debt. Nevertheless, the District is committed to ensuring that actions within its control are prudent and well planned. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 6 of 25 7.0: COMPETITIVE AND NEGOTIATED SALE CRITERIA Competitive Sale The District will use a competitive bidding process in the sale of debt unless the nature of the issue or specific circumstances warrants a negotiated sale. The CFO will determine the best bid in a competitive sale by calculating the true interest cost (TIC) of each bid. Negotiated Sale Types of debt that would typically lend themselves to the negotiated sale format are variable rate debt and unrated debt. Circumstances that might warrant a negotiated sale may occur when the issue is of a limited size that would not attract wide-spread investor interest, during periods of high levels of issuance by other entities in the State, or during periods of market volatility or with relatively new financing techniques. In the event the District decides to use a negotiated sale, it will pay management fees only to those firms that place orders for bonds. If the size of the District’s proposed issue is not cost effective, the District may also consider issuing its debt by private placement or through any qualified Joint Power Authority (JPA) in the State of California whose principal business is issuing bonds. 8.0: REFUNDING DEBT Purpose Periodic reviews of all outstanding debt will be undertaken by the Chief Financial Officer to determine refunding (refinancing) opportunities. The purpose of the refinancing may be to: 1. Lower annual debt service by taking advantage of lower current interest rates. 2. Update or revise covenants on outstanding debt issue if a Rate Covenant appears to be too high, has precluded the District from implementing its financing plan, or has caused the District to increase rates to customers. 3. Restructure debt service associated with an issue to facilitate the issuance of additional debt, usually in order to smooth out OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 7 of 25 peaks in total debt service which can occur frequently as one debt issue is layered on top of existing debt issues. 4. Alter bond characteristics such as call provisions or payment dates. 5. Pay for conversion costs such as funding a reserve fund or paying for credit enhancement when converting variable rate debt to fixed rate debt. Restrictions on Refunding Tax-exempt bonds typically have provisions that preclude early redemption of the bonds for a period of years after issuance. The ability of issuers to refinance a tax-exempt bond prior to its Optional Redemption date (known as Advance Refunding) is limited by the Tax Code. There is no limit in the Tax Code on the ability of issuers to redeem bonds prior to their maturity date once the Optional Redemption date has been reached (known as Current Refunding). Savings Criteria In cases where an Advance Refunding or Current Refunding is intended to provide debt service savings, the District may commence the refinancing process if a minimum five percent (5%) present value savings net of issuance costs and any cash contributions can be demonstrated. Since interest rates may fluctuate between the time when a refinancing is authorized and when the debt is issued, beginning the process with at least a 5% savings should provide the District with some level of protection that it can achieve a minimum of three percent (3%) net present value savings of the refunding bonds when and if the debt is issued. These minimum standards are intended to protect the District staff from spending time on refinancings that become marginally cost-effective after the entire issuance process is complete. The savings target may be waived, however, if sufficient justification for lowering the savings target can be provided by meeting one or more of the other refunding objectives described above. 9.0: SUBORDINATE LIEN DEBT The District will issue subordinate lien debt only if it is financially beneficial to the District or consistent with creditworthiness objectives. Subordinate lien debt is structured to be OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 8 of 25 payable second in priority to the District’s other outstanding debt. Typically, subordinate lien debt might be issued if the District desired a more flexible Rate Covenant with respect to its new obligations and did not want to refinance all of its existing debt to obtain that less restrictive Rate Covenant. 10.0: FINANCING PARTICIPANTS The District’s purchasing guidelines provide the process for securing professional services related to individual debt issues. The solicitation and selection process include encouraging participation from qualified service providers, both local and national, and securing services at competitive prices. Municipal Advisor: The use of a Municipal Advisor is necessary for the sale of debt by a competitive bid process and is desirable when issuing debt through a negotiated sale. The Municipal Advisor has a fiduciary duty to the District and will seek to structure the District’s debt in the manner that is saleable, yet meets the District’s objectives for the financing. The Municipal Advisor will advise the District on alternative structures for its debt, the cost of different debt structures and potential pricing mechanisms that can be expected from underwriters (such as call features, term bonds and premium and discount bond pricing) and, at the District’s direction, will write the offering document (preliminary official statement). With respect to competitive sales, the Municipal Advisor will arrange for distributing the preliminary official statement, accepting bids via an internet bidding platform, verifying the lowest bid and provide detailed instructions for the flow of funds at closing to the winning Underwriter, the Trustee and the District. In a negotiated sale, the Municipal Advisor will provide independent confirmation on the Underwriter’s proposed pricing to ensure that interest rates and Underwriter’s compensation are appropriate for the credit quality of the issue and competitive in the overall public finance market in California. Underwriter: The Underwriter markets the bonds for sale to investors. While the District’s preference is to select the Underwriter for the debt via sale of the debt at competitive bid, there are circumstances when a negotiated issue is in the best interests of the District. Negotiated sales are preferable if the security features are particularly complex or market conditions are volatile. The Chief Financial Officer will recommend whether the method of sale is competitive or negotiated based on the type of issue and other market OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 9 of 25 conditions. In the case of negotiated sales, the Underwriter will be required to demonstrate sufficient capitalization and sufficient experience related to the specific type of debt issuance. The Underwriter will work in connection with the District’s Municipal Advisor on structuring the issue and offering different pricing ideas. Bond Counsel: The District’s Bond Counsel provides the primary legal documents that detail the security for the bonds and the authority under which bonds are issued. The Bond Counsel also provides an opinion to bond holders that the bonds are tax-exempt under both State and Federal law. All closing documents in connection with an issue are also prepared by Bond Counsel. Disclosure Counsel: The District’s Disclosure Counsel provides legal advice to the District regarding the adequacy of the District’s disclosure of financial information or risks of investing in the District’s debt issue to the investing public. The Disclosure Counsel can prepare the official statement or review the official statement and gives the District an opinion that there is no information missing from the official statement of a material nature that would be necessary for an investor to make an informed decision about investing in the District’s bonds. Trustee: The Trustee is a financial institution selected by the District to administer the collection of revenues pledged to repay the bonds and to distribute those funds to bondholders. Letter of Credit Bank: The Letter of Credit Bank is a U.S. or foreign bank that has issued a letter of credit providing both credit enhancement (the Letter of Credit Bank will pay the debt in the event that the District defaults on the payment) and liquidity for a variable rate bond issue. These banks have their own short-term credit rating, which can be higher than the District’s short-term credit rating. Liquidity is needed because variable rate bondholders are allowed to “put” their bonds back to the District if they do not like the interest rate currently being offered. The District’s Remarketing Agent then finds a new buyer for those bonds, but in the event that no buyer is found, a draw is made under the letter of credit to purchase the bonds that have been “put.” As soon as the bonds are remarketed to another buyer, the letter of credit is repaid. The letter of credit fees are paid annually or quarterly. Letter of credits are typically issued for not more than 3 years and must be renewed during the life of the bonds. Credit enhancement is discussed further under the heading “CREDIT ENHANCEMENT.” OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 10 of 25 Municipal Bond Insurer: The Municipal Bond Insurer can be one of several insurance companies that provide municipal bond insurance policies securing payment of the District’s debt. These policies provide that the Municipal Bond Insurer will pay the District’s debt in the event that the District defaults on its payments. Debt which is insured carries the Municipal Bond Insurer’s credit rating. The insurance premium for the bond insurance policy is paid one time at the issuance of the debt and is non-cancelable for the term of the debt. Unlike a letter of credit, bond insurance policies do not provide liquidity and are most typically purchased for fixed rate debt. Remarketing Agent: The Remarketing Agent is an investment bank that, each week, determines the interest rate for the District’s variable rate obligations. The rate is set at the rate at which the obligations could be sold on the open market at 100% of their face value. The Remarketing Agent also finds new buyers for any of the obligations that are “put” back to the District. Rating Agencies: Currently, there are three widely recognized rating agencies that rate municipal debt in the United States: Standard & Poor’s, Moody’s Investors Service, and Fitch Investors Service. Rating agencies establish objective criteria under which each type of financing undertaken by the District is to be analyzed. Upon request, a rating agency will rate the underlying strength of the District’s financings, without regard to the purchase of any credit enhancement. The rating is released to the general public and thereafter, the rating agency will periodically update its analysis of a particular issue, and may raise or lower the rating if circumstances warrant. Investment-grade ratings range from “AAA” to “BBB-.” A rating below “BBB-” is not investment grade. Many mutual funds cannot buy bonds that do not carry an investment grade. Verification Agent: In a refunding, the District will deposit funds with an escrow agent (usually the trustee) in an amount sufficient, together with earnings thereon, to pay the debt service and redemption price of the debt being refunded through and including the call date. The Verification Agent verifies the mathematical accuracy of calculation of the amount to be deposited in escrow and the bond counsel relies on this verification in giving their opinion that the debt is defeased within the meaning of the indenture and that the lien of the debt on the revenues pledged to the debt being refunded is released. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 11 of 25 11.0: CONFLICT OF INTEREST AND STANDARDS OF CONDUCT Members of the District, the Board of Directors and its consultants, service providers and underwriters shall adhere to standards of conduct and conflict of interest rules as stipulated by the California Political Reform Act or the Municipal Securities Rulemaking Board (MSRB), as applicable. All debt financing participants shall maintain the highest standards of professional conduct at all times, in accordance with MSRB Rules, including Rule G-37. Municipal Advisors shall also adhere to applicable SEC rules and MSRB Rule G-42. There shall be no conflict of interest with the District with any debt financing participant. 12.0: CONTINUING DISCLOSURE The District acknowledges the responsibilities of the underwriting community and pledges to make all reasonable efforts to assist underwriters in their efforts to comply with SEC Rule 15c2-12 and MSRB Rule G-36. The District will file its official statements with the MSRB and the nationally recognized municipal securities information repositories. The District will also post copies of its comprehensive financial reports on the MSRB’s Electronic Municipal Market Access (EMMA) website, and will disseminate other information that it deems pertinent to the market in a timely manner (For bonds issued after 2012, 10 days). Reporting of Listed Events While initial bond disclosure requirements pertain to underwriters, the District will provide financial information and notices of listed events on an ongoing basis throughout the life of the issue. The list below (as of the most current SEC amendment effective February 27, 2019) can change in the future, and any new requirements added to SEC Rule 15(c)2-12 in the future are deemed to be added to this section without the need to update the policy. (a) The District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to any bonds (in each case to the extent applicable) in a timely manner not more than ten business days after the occurrence of the event: 1. Principal or interest payment delinquencies; 2. Non-payment related defaults, if material; OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 12 of 25 3. Modifications to the rights of the Holders, if material; 4. Optional, contingent or unscheduled calls, if material, and tender offers; 5. Defeasances; 6. Rating changes; 7. Adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; 8. Unscheduled draws on the debt service reserves reflecting financial difficulties; 9. Unscheduled draws on the credit enhancements reflecting financial difficulties; 10. Substitution of the credit or liquidity providers or their failure to perform; 11. Release, substitution or sale of property securing repayment of the Bonds, if material; 12. Bankruptcy, insolvency, receivership or similar proceedings of the District, which shall occur as described below; 13. Appointment of a successor or additional trustee or the change of name of a trustee, if material; 14. The consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; 15. Incurrence of a financial obligation of the District, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the District, any of which affect security holders, if material; or 16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the District, any of which reflect financial difficulties. For these purposes, any event described in item 12 is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other proceeding OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 13 of 25 under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. Whenever the District obtains knowledge of the occurrence of a Listed Event under item 12 above, the District shall or shall cause the Dissemination Agent (if not the District) as soon as possible determine if such event would be material under applicable federal securities laws and if applicable file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Significant Event. Notwithstanding the foregoing, notice of Significant Events described in subparagraph (a)(8) above need not be given any earlier than the notice (if any) of the underlying event is given to holders of affected bonds under the applicable indenture securing such bonds. The events described in subparagraphs (a)(2), (a)(7),(a)(8) (if the event is a bond call), (a)(10), (a)(11), (a)(13), (a)(14) and (a)(15) contain the qualifier “if material.” The District shall cause a notice to be filed with respect to any such event only to the extent that the District determines the event’s occurrence is material for purposes of U.S. federal securities law. 13:0 INVESTMENT & ARBITRAGE COMPLIANCE Tax-exempt bonds are required to meet certain provisions of the federal tax code in order to maintain their tax-exempt status. In order to prevent municipal issuers from borrowing money at tax-exempt rates solely for the purpose of investing the proceeds in higher yielding investments and making a profit (“arbitrage”), the federal tax code contains a provision that requires issuers to compare the interest earned on any bond funds held (such as a reserve fund) with interest that would theoretically be earned if the funds were invested at the yield of the bonds, and to “rebate” to the federal government any interest earned in excess of the theoretical earnings limit. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 14 of 25 The Chief Financial Officer shall invest the bond proceeds subject to the District’s Investment Policy in a timely manner, to ensure the availability of funds to meet operational requirements. In doing so, the CFO will maintain a system of record keeping and reporting to meet the arbitrage rebate compliance requirements of the federal tax code. 14.0: INTERNAL CONTROL The District has implemented the following procedure to ensure that the proceeds of the proposed debt issuance will be directed to the intended use: 1. A separate Reserve Account shall be maintained for the proceeds of each bond to ensure that there is no comingling of funds. 2. All related expenditures charged against the bond proceeds shall be properly approved by the authorized authority. 3. All related transactions shall be fully documented so that an undisputable audit trail exists. 4. All related transactions shall be tracked in the District’s Accounting System. A financial report reflecting all charges related to the bond shall be prepared and maintained. 5. The District shall establish a retention policy which states that all supporting documents related to bond proceeds spending shall be kept indefinitely. 6. The Reserve Account shall be reconciled on a monthly basis. 15.0: TYPES OF DEBT FINANCING General Obligation Bonds General obligation bonds are secured by a pledge of the ad-valorem taxing power of the issuer and are also known as a full faith and credit obligations. Bonds of this nature must serve a public purpose to be considered lawful taxation of the property owners within the District and require a two third’s majority vote in a general election. The benefit of the improvements or assets constructed and acquired as a result of this type of bond must be generally available to all property owners. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 15 of 25 The District can issue general obligation bonds up to but not in excess of 15% of the assessed valuation under Article XVI, Section 18 of the State constitution. An annual amount of the levy necessary to meet debt service requirements is calculated and placed on the tax roll through the County of San Diego. The District also has a policy that the ad-valorem tax to be used to pay debt service on general obligation bonds will not exceed $.10 per $100 of assessed value. Voters within Improvement District No. 27 of the District authorized $100 million general obligation bonds in 1989. The District issued $11,500,000 general obligation bonds in 1992 and refinanced the bonds in 1998 and again in 2009. The District also has approximately $29 million in general obligation bonds authorized between 1960 and 1978 for various improvement districts throughout the District, but unissued. General obligation bonds can only be issued under these existing authorizations to the extent necessary to fund the improvements specified by each ballot measure. General obligation bonds generally are regarded as the broadest and soundest security among tax-secured debt instruments. An unlimited- tax pledge would enable a trustee to invoke mandamus to force the District to raise the tax rate as much as necessary to pay off the bonds. General obligation bonds have other credit strengths as well: the property tax tends to be a steady and predictable revenue source, and when a vote is required to issue them, bondholders have some indication of taxpayers’ willingness to pay. General obligation bonds carry the highest credit rating that a public agency can achieve and therefore, the lowest interest cost. General obligation bonds typically are issued to finance capital facilities and not for ongoing operational or maintenance costs. The District will use an objective analytical approach to determine whether it can afford to assume new general obligation debt for the improvement districts, or in the case of projects not approved by the original ID 27 vote, prior to any submission of a general obligation bond ballot measure to voters. This process will compare generally accepted standards of affordability to the current values for the District. These standards will include debt per capita, debt as a percent of taxable value, debt service payments as a percent of current revenues and current expenditures, and the level of overlapping net debt of all local taxing jurisdictions. The process will also examine the direct costs and benefits of the proposed expenditures. The decision on whether or not to assume new debt will be based on these costs and benefits, the current conditions of the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 16 of 25 municipal bond market, and the District’s ability to "afford" new debt as determined by the aforementioned standards. Revenue Bonds Revenue bonds are limited-liability obligations that pledge net revenues of the District to debt service. The net revenue pledge is after payment of all operating costs. Since revenue bonds are not generally secured by the full faith and credit of the District, the financial markets require coverage ratios of the pledged revenue stream and a covenant to levy rates and charges sufficient to produce net income at some level in excess of debt service (a Rate Covenant). Also there may be a test required to demonstrate that future revenues will be sufficient to maintain debt service coverage levels after any proposed additional bonds are issued. The District will strive to meet industry and financial market standards with such ratios without impacting the current rating. Annual adjustments to the District’s rate structure may be necessary to maintain these coverage ratios. The underlying credit of revenue bonds is judged on the ability of the District’s existing rates to provide sufficient net income to pay debt service and the perceived willingness of the District to raise rates and charges in accordance with its Rate Covenant. Actual past performance also plays a role in evaluating the credit quality of revenue bonds, as well as the diversity of the customer base. Revenue bonds generally carry a credit rating one or two investment grades below a general obligation bond rating. The District may use a debt structure called “Certificates of Participation” to finance capital facilities. However, if the certificates contain a pledge of net revenues and a Rate Covenant, they are treated as essentially the same as a revenue bond. Lease/Purchase Agreements Over the lifetime of a lease, the total cost to the District will generally be higher than purchasing the asset outright. As a result, the use of lease/purchase agreements in the acquisition of vehicles, equipment and other capital assets will generally be avoided, particularly if smaller quantities of the capital asset(s) can be purchased on a "pay-as-you-go" basis. The District may utilize lease-purchase agreements to acquire needed equipment and facilities. Criteria for such agreements should be that the asset life is three years or more, the minimum value of the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 17 of 25 agreement is $50,000 and interest costs must not exceed the interest rate earned by the District’s portfolio for the average of the past 6 months. Lease payments of this type are considered operating expenses and would reduce net operating income available to pay any District revenue bonds. There are no coverage requirements or rate covenants associated with lease/purchase agreements. State Water Loans The State Water Resources Control Board makes certain funds available to water districts throughout the State. These loans typically carry a below-market rate of interest and are short term in nature. While State loans should be incorporated into the District’s debt portfolio for the financing of capital improvements, the payment of the loan should not compromise the District’s ability to issue other planned debt or cause the District to violate its rate covenants or make it necessary for the District to increase rates to maintain existing rate covenants. Land Based Financing The District may consider developer or property owner initiated applications requesting the formation of community facilities or assessment districts and the issuance of bonds to finance eligible District facilities necessary to serve newly developing commercial, industrial and/or residential projects. Facilities will be financed in accordance with the provisions of the Municipal Improvement Act of 1913 and the Improvement Bond Act of 1915, or the Mello-Roos Community Facilities Act of 1982. Typically, the bonds issued would be used to prepay, in a lump-sum, the District’s capacity fees with respect to a large tract of land under development, or to finance in-tract infrastructure that will eventually be dedicated to the District. The bonds are secured by a special tax or assessment to be levied on property within the boundaries established for the community facilities district (sometimes known as a “Mello-Roos” district) or the assessment district. If the District becomes the sponsoring public agency for such financing district and the issuance of debt, the District will be required to enter into a Funding, Construction and Acquisition agreement for any of the facilities to be dedicated to the District upon completion. This agreement governs the type of facilities to be constructed with bond proceeds and how the facilities will be accepted by the District. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 18 of 25 In some cases, the District may not be asked to be the sponsoring agency for the formation of a financing district, rather, the developer or property owner may approach a school district or a city to be the sponsoring agency. Nonetheless, the property owner may want to include lump-sum payment of District fees in the financing or construction of certain facilities to be dedicated to the District upon completion. In this case, if the District desired to participate, the District would enter into a Joint Financing Agreement with the sponsoring agency, again governing the type of facilities to be constructed with bond proceeds and how the facilities will be accepted by the District. On a case-by-case basis, the Board shall make the determination as to whether a proposed district will proceed under the provisions of the Assessment Acts or the Mello-Roos Community Facilities Act. The Board may confer with other consultants and the applicant to learn of any unique district requirements, such as long-term development phasing, prior to making any final determination. All District and District consultant costs incurred in the evaluation of new development, district applications and the establishment of districts will be paid by the applicant(s) by advance deposits in those instances where a party or parties other than the District have initiated a proposed district. Expenses not legally reimbursable by the financing district will be borne by the applicant. The District may incur expenses for analyzing proposed assessment or community facilities districts where the District is the principal proponent of the formation or financing of the district. Prior to the issuance of any land secured financing and in accordance with State law, the Board will adopt policies and procedures with criteria to be met before any special tax bonds or assessment district bonds may be issued. These criteria include the qualifications of the appraiser, the minimum value to lien ratio to be achieved prior to issuing the land secured debt and the maximum tax to be levied on different categories of property. Internal Lending/Borrowing Internal Lending/Borrowing allows the lending and/or borrowing of funds between the Water (Potable and Recycled) and the Sewer Funds, either direction to meet financial needs in lieu of the borrowing fund obtaining outside debt. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 19 of 25 Upon recommendation by the Chief Financial Officer, the Board may adopt a resolution allowing lending/borrowing arrangements between Water and Sewer funds. To the extent any inter-fund lending/borrowing is undertaken in anticipation of long-term financing, the District shall adopt a Resolution of its intention to repay such funds out of tax-exempt debt proceeds so as to meet the requirement of federal tax law for such borrowing. If the funds being loaned are restricted, prevailing law requires that the Resolution that the Board adopts must include a finding by the Board that the lending fund has sufficient money to lend and that the borrowing fund can repay the loan without adversely affecting the District’s credit ratings. Internal Lending/Borrowing arrangements will be recorded in accordance with GASB reporting requirements. The arrangement will include the purpose, a debt repayment schedule and a periodic interest charge that is equal to the District’s investment rate of return for that same period. This ensures that the lending fund is recapturing earnings that would have been otherwise realized had these funds been invested in the District’s investment portfolio. 16.0: RATING AGENCY APPLICATIONS The District may seek one or more ratings on all new issues that are being sold in the public market. These rating agencies include, but are not limited to, Fitch Investors Service, Moody’s Investors Service, and Standard & Poor’s. When applying for a rating on an issue over $1 million or more, the District shall make a formal presentation of the finances and positive developments within the District to the rating agencies. The District will report all financial information to the rating agencies upon request. This information shall include, but shall not be limited to, the District’s Comprehensive Annual Financial Report (CAFR), and the Adopted Operating and Capital Budget. 17.0: USE OF CREDIT ENHANCEMENT Credit enhancement is a generic term that means any third-party guarantee of debt service. Credit enhancement providers include municipal bond insurance companies or financial institutions. The purchase of credit enhancement allows the District’s bond issue to carry the same credit rating as the credit provider. The District will OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 20 of 25 seek to use credit enhancement when such credit enhancement proves cost-effective. Selection of credit enhancement providers will be subject to a competitive bid process using the District’s purchasing guidelines, if applicable. Fixed Rate Bonds Credit enhancement for fixed rate bonds is obtained by the purchase of bond insurance. If a commitment for bond insurance is obtained for a particular issue, the District will estimate the annual debt service for the issue based on current interest rates applicable to the credit rating of the bond insurer. If the estimated debt service on this basis is less than or equal to estimated debt service for the issue based on interest rates for bonds with the District’s underlying or stand-alone credit rating, the District will purchase the bond insurance. Any intention of the District to prepay the debt ahead of its scheduled maturity will be taken into account in the analysis. Credit enhancement may be used to improve or establish a credit rating on a District debt obligation even if such credit enhancement is not cost effective if, in the opinion of the Chief Financial Officer, the use of such credit enhancement meets the District’s debt financing goals and objectives, such as, funding of a reserve fund for the bonds. Variable Rate Bonds Credit enhancement for variable rate bonds is comprised of two components: credit support and liquidity. The interest on variable rate bonds is based on a short-term investment rate (usually 7 days). Any investor can tender their bonds back to the District to be repurchased on short notice (usually 7 days). Because of the short- term nature of the investment, the securities that the District is “competing” with for investors are AA-rated mutual funds. Therefore, variable debt needs to have credit enhancement to achieve a comparable AA rating, as well as liquidity support to provide the District with a mechanism to purchase any bonds that are tendered before they can be remarketed to new investors. A limited number of financial institutions offer letters of credit that combine both credit support and liquidity for one fee. An alternative is to purchase bond insurance to provide credit support and enter into a separate purchase agreement with a financial institution to provide liquidity. The difference in cost between the two structures will be analyzed before either alternative is selected for variable rate debt. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 21 of 25 18.0: GLOSSARY Ad Valorem Tax: A tax calculated “according to the value” of property. Such a tax is based on the assessed valuation of tangible personal property. In most jurisdictions, the tax is a lien on the property enforceable by seizure and sale of the property. General restrictions, such as overall restrictions on rates, or the percent of charge allowed, sometimes apply. As a result, ad valorem taxes often function as the balancing element in local budgets. Advance Refunding: A procedure whereby outstanding bonds are refinanced by the proceeds of a new bond issue prior to the date on which outstanding bonds become due or are callable. Typically an advance refunding is performed to take advantage of interest rates that are significantly lower than those associated with the original bond issue. At times, however, an advance refunding is performed to remove restrictive language or debt service reserve requirements required by the original issue. Amortization: The planned reduction of a debt obligation according to a stated maturity or redemption schedule. Arbitrage: The gain that may be obtained by borrowing funds at a lower (often tax-exempt) rate and investing the proceeds at higher (often taxable) rates. The ability to earn arbitrage by issuing tax- exempt securities has been severely curtailed by the Tax Reform Act of 1986, as amended. Assessed Valuation: The appraised worth of property as set by a taxing authority through assessments for purposes of ad valorem taxation. Basis Point: One one-hundredth of one percent. Bond: A security that represents an obligation to pay a specified amount of money on a specific date in the future, typically with periodic interest payments. Bond Counsel: An attorney (or firm of attorneys) retained by the issuer to give a legal opinion concerning the validity of the securities. The bond counsel’s opinion usually addresses the subject of tax exemption. Bond counsel may prepare, or review and advise the issuer regarding authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 22 of 25 Bond Insurance: A type of credit enhancement whereby a monocline insurance company indemnifies an investor against a default by the issuer. In the event of a failure by the issuer to pay principal and interest in-full and on-time, investors may call upon the insurance company to do so. Once assigned, the municipal bond insurance policy generally is irrevocable. The insurance company receives an up-front fee, or premium, when the policy is issued. Call Option: A contract through which the owner is given the right but is not obligated to purchase the underlying security or commodity at a fixed price within a limited time frame. Cap: A ceiling on the interest rate that would be paid. Capital Lease: The acquisition of a capital asset over time rather than merely paying rent for temporary use. A lease-purchase agreement, in which provision is made for transfer of ownership of the property for a nominal price at the scheduled termination of the lease, is referred to as a capital lease. Certificate of Participation: A financial instrument representing a proportionate interest in payments such as lease payments by one party (such as the District acting as a lessee) to another party (often a trustee). CIP: Capital Improvement Program. Competitive Sale: The sale of securities in which the securities are awarded to the bidder who offers to purchase the issue at the best price or lowest cost. Continuing Disclosure: The requirement by the Securities and Exchange Commission for most issuers of municipal debt to provide current financial information to the informational repositories for access by the general marketplace. Debt Service: The amount necessary to pay principal and interest requirements on outstanding bonds for a given year or series of years. Defeasance: Providing for payment of principal of premium, if any, and interest on debt through the first call date or scheduled principal maturity in accordance with the terms and requirements of the instrument pursuant to which the debt was issued. A legal defeasance usually involves establishing an irrevocable escrow funded with only cash and U.S. Government obligations. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 23 of 25 Derivative: A financial product that is based upon another product. Generally, derivatives are risk mitigation tools. Discount: The difference between a bond’s par value and the price for which it is sold when the latter is less than par. Municipal Advisor: A person that provides advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, including advice with respect to the structure, timing, terms, and other similar matters concerning such financial products or issues. Financial Obligation: A debt obligation, lease, guarantee, derivative instrument, or monetary obligation resulting from a judicial, administrative, or arbitration proceeding, but not including municipal securities as to which a final official statement has been provided to the MSRB. General Obligation Bonds: Debt that is secured by a pledge of the ad valorem taxing power of the issuer. Also known as a full faith and credit obligation. Internal Lending/Borrowing: An Inter-fund lending arrangement between Water and Sewer funds. Municipal Securities Rulemaking Board (MSRB): The MSRB, comprised of representatives from investment banking firms, dealer bank representatives, and public representatives, is entrusted with the responsibility of writing rules of conduct for the municipal securities market. Negotiated Sale: A sale of securities in which the terms of sale are determined through negotiation between the issuer and the purchaser, typically an underwriter, without competitive bidding. Official Statement: A document published by the issuer that discloses material information on a new issue of municipal securities including the purposes of the issue, how the securities will be repaid, and the financial, economic and social characteristics of the issuing government. Investors may use this information to evaluate the credit quality of the securities. Option: A derivative contract. There are two primary types of options (see Put Option and Call Option). An option is considered a wasting asset because it has a stipulated life to expiration and may expire worthless. Hence, the premium could be wasted. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 24 of 25 Optional Redemption: The redemption of an obligation prior to its stated maturity, which can only occur on dates specified in the bond indenture. Overlapping Debt: The legal boundaries of local governments often overlap. In some cases, one unit of government is located entirely within the boundaries of another. Overlapping debt represents the proportionate share of debt that must be borne by one unit of government because another government with overlapping or underlying taxing authority issued its own bonds. Par Value: The face value or principal amount of a security. Pay-as-you-go: To pay for capital improvements from current resources and fund balances rather than from debt proceeds. Put Option: A contract that grants to the purchaser the right but not the obligation to exercise. Rate Covenant: A covenant between the District and bondholders, under which the District agrees to maintain a certain level of net income compared to its debt payments, and covenants to increase rates if net income is not sufficient to meet such level. Refunding: A procedure whereby an issuer refinances an outstanding bond issue by issuing new bonds. Revenue Bonds: A bond which is payable from a specific source of revenue and to which the full faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable from identified sources of revenue, and do not permit the bondholders to compel a jurisdiction to pay debt service from any other source. Pledged revenues often are derived from the operation of an enterprise. Generally, no voter approval is required prior to issuance. Special Assessments: A charge imposed against property or parcel of land that receives a special benefit by virtue of some public improvement that is not, or cannot be enjoyed by the public at large. Special assessment debt issues are those that finance such improvements and are repaid by the assessments charged to the benefiting property owners. Swap: A customized financial transaction between two or more counterparties who agree to make periodic payments to one another. Swaps cover interest rate, equity, commodity and currency products. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 03/03/2021 Page 25 of 25 They can be simple floating for fixed exchanges or complex hybrid products with multiple option features. True Interest Cost (TIC): A method of calculating the overall cost of a financing that takes into account the time value of money. The TIC is the rate of interest that will discount all future payments so that the sum of their present value equals the issue proceeds. Underwriter: The term used broadly in the municipal market, to refer to the firm that purchases a securities offering from a governmental issuer. Yield Curve: Refers to the graphical or tabular representation of interest rates across different maturities. The presentation often starts with the shortest-term rates and extends towards longer maturities. It reflects the market’s views about implied inflation/deflation, liquidity, economic and financial activity, and other market forces. STAFF REPORT TYPE MEETING: Regular Board Meeting MEETING DATE: March 3, 2021 SUBMITTED BY: Tita Ramos-Krogman, Acting District Secretary W.O./G.F. NO: DIV. NO. APPROVED BY: Tita Ramos-Krogman, Acting District Secretary Jose Martinez, General Manager SUBJECT: Board of Directors 2021 Calendar of Meetings GENERAL MANAGER’S RECOMMENDATION: At the request of the Board, the attached Board of Director’s meeting calendar for 2021 is being presented for discussion. PURPOSE: This staff report is being presented to provide the Board the opportunity to review the 2021 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 2021 G:\UserData\DistSec\WINWORD\STAFRPTS\Board Meeting Calendar 03-03-21.doc AGENDA ITEM 8a Board of Directors, Workshops and Committee Meetings (Teleconference) 2021 Regular Board Meetings: Special Board or Committee Meetings (3rd Wednesday of Each Month or as Noted) January 6, 2021 February 3, 2021 March 3, 2021 April 7, 2021 May 5, 2021 June 2, 2021 July 7, 2021 August 4, 2021 September 1, 2021 October 6, 2021 November 3, 2021 December 1, 2021 January 20, 2021 February 17, 2021 March 17, 2021 April 21, 2021 May 19, 2021 June 16, 2021 July 21, 2021 August 18, 2021 September 15, 2021 October 20, 2021 November 17, 2021 December 15, 2021 STAFF REPORT TYPE MEETING: Otay Service Corporation Regular Board MEETING DATE: March 3, 2021 SUBMITTED BY: Kevin Koeppen, Assistant Chief of Finance PROJECT: DIV. NO.All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Jose Martinez, General Manager SUBJECT: Adopt Resolution No. 1008 Authorizing the Dissolution of the Otay Service Corporation GENERAL MANAGER’S RECOMMENDATION: That the Board adopt Resolution No. 1008 authorizing the dissolution of the Otay Service Corporation. PURPOSE: To obtain the Board’s adoption of Resolution No. 1008 to dissolve the Otay Service Corporation which was created in June 1993 for the purpose of issuing Certificates of Participation (COP). The Otay Water District will no longer be issuing COPs or any other debt using the Otay Service Corporation. The Otay Service Corporation no longer has any outstanding debt obligations and therefore, the Otay Service Corporation may be dissolved. ANALYSIS: As a government entity special district, the Otay Water District does not have the authority to issue debt directly, except for refunding debt; therefore, the District must establish entities that have the authority to issue debt. Currently the District has two entities capable of issuing debt secured by an installment sale agreement with the District as security for the debt -- the Otay Service Corporation and the Otay Water District Financing Authority. The Otay Service Corporation was the original entity established by the District and is limited by State law to assisting in conduit financing via COPs. The Otay Water District Financing Authority was created in 2010 for the purpose of issuing the 2010 Build America Bonds and can issue AGENDA ITEM 12 traditional revenue bonds secured by installment payments to be made by the District to the Otay Water District Financing Authority. When compared to COPs, revenue bonds are more desirable to the investment community; therefore, future District debt will be structured as bonds and not COPs. This eliminates the need for the Otay Service Corporation to issue debt in the future. The Otay Service Corporation had to be effective as long as it had secured COPs with installment sale agreements with the District. The Otay Service Corporation’s last outstanding debt, the 1996 COPs, were refunded as part of the 2018 Water Revenue Bond issuance. As the Otay Service Corporation no longer has any outstanding debt obligations, it is no longer necessary to maintain the entity. If Resolution No. 1008 is adopted by this Board and if the Otay Water District Board adopts Resolution No. 4392, then attachments B and C will be filed with the California Secretary of State. FISCAL IMPACT: Joe Beachem, Chief Financial Officer Once dissolved, there will be minor savings related to eliminated administrative time and expenses required to file the annual tax returns for the Otay Service Corporation. STRATEGIC GOAL: The District ensures its continued financial health through long-term financial planning, as well as sound policies and procedures. LEGAL IMPACT: None. Attachments: A) Resolution No. 1008 B) Nonprofit Certificate of Election to Wind Up and Dissolve C) Nonprofit Certificate of Dissolution Attachment A RESOLUTION NO. 1008 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE OTAY SERVICE CORPORATION AUTHORIZING THE DISSOLUTION OF THE OTAY SERVICE CORPORATION AND THE FILING OF ALL DOCUMENTS REQUIRED TO EXECUTE SAID DISSOLUTION WHEREAS, the Otay Service Corporation Board of Directors has met on this 3rd day of March 2021, to transact all necessary business relating to the dissolution of the Otay Service Corporation (“Service Corporation”); and WHEREAS, the Service Corporation Board of Directors has been presented all forms necessary to dissolve the Service Corporation, incorporated herein as Attachments B and C; and WHEREAS, the dissolution of the Service Corporation has been reviewed and considered by the Board; and NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the Board of Directors of the Service Corporation that this resolution is hereby adopted. PASSED, APPROVED AND ADOPTED BY THE Board of Directors of the Otay Service Corporation at a board meeting held this 3rd day of March 2021, by the following vote: AYES: NOES: ABSTAIN: ABSENT: ___________________________ President 2 Attest: _________________________ Secretary of Otay Service Corporation Secretary of State ELEC NP This Space For Office Use Only Nonprofit Certificate of Election to Wind Up and Dissolve (California Nonprofit Corporation ONLY) IMPORTANT — Read Instructions before completing this form. There is No Fee for filing a Nonprofit Certificate of Election to Wind Up and Dissolve Copy Fees – First page $1.00; each attachment page $0.50; Certification Fee - $5.00 plus copy fees 1.Corporate Name (Enter the exact name of the nonprofit corporation as it isrecorded with the California Secretary of State.)2.7-Digit Secretary of State Entity Number 3. Election (Check the applicable statement. Only one box may be checked. If the first box is checked, enter the number of members (do not enter the percentage of members). Note: This Form ELEC NP is not required when the vote to dissolve was made by all of the members, or if the nonprofit corporation has no members, by all of the directors, and that fact is noted on the Nonprofit Certificate of Dissolution (Form DISS NP).) The election was made by the vote of ______________ members of the nonprofit corporation, and representing a majority of the members. The election was made by the board of directors together with the vote of a majority of the members voting on the election to dissolve. The nonprofit corporation has no members; the election was made by the board of directors of the nonprofit corporation 4.Required Statement (This Statement is required. Do not alter.) The nonprofit corporation has elected to wind up and dissolve. 5.Read, Verify, Date and Sign Below (See Instructions for signature requirements. Do not use a computer generated signature.) I declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of my own knowledge and that I am authorized by California law to sign. __________________ ____________________________________________ ______________________________________________ Date Signature Type or Print Name __________________ __________________________________________ ______________________________________________ Date Signature Type or Print Name __________________ __________________________________________ ______________________________________________ Date Signature Type or Print Name ELEC NP (REV 12/2020) 2020 California Secretary of State bizfile.sos.ca.gov Attachment B Secretary of State DISS NP This Space For Office Use Only Nonprofit Certificate of Dissolution (California Nonprofit Corporation ONLY) IMPORTANT — Read Instructions before completing this form. There is No Fee for filing a Nonprofit Certificate of Dissolution Copy Fees – First page $1.00; each attachment page $0.50; Certification Fee - $5.00 plus copy fees Attorney General Letter: All nonprofit public benefit and religious nonprofit corporations are required to get a letter from the California Attorney General’s office waiving objections to the nonprofit corporation’s distribution of assets, or confirming the nonprofit corporation has no assets. If your corporation is a public benefit or religious corporation, you must attach that letter to this Nonprofit Certificate of Dissolution (see instructions). 1.Corporate Name (Enter the exact name of the nonprofit corporation as it isrecorded with the California Secretary of State.)2.7-Digit Secretary of State Entity Number 3. Election The dissolution was made by a vote of ALL of the members, or if there are no members, by a vote of ALL of the directors of the California nonprofit corporation. Note: If the above box is not checked, a Nonprofit Certificate of Election to Wind Up and Dissolve (Form ELEC NP) must be filed prior to or together with this Nonprofit Certificate of Dissolution. (California Corporations Code sections 6611, 8611, 9680 and 12631.) 4.Debts and Liabilities (Check the applicable statement. Only one box may be checked. If second box is checked, you mustinclude the required information in an attachment.) The known debts and liabilities have been actually paid or paid as far as its assets permitted. The known debts and liabilities have been adequately provided for in full or as far as its assets permitted by their assumption. Included in the attachment to this certificate, incorporated herein by this reference, is a description of the provisions made and the name and address of the person, corporation or government agency that has assumed or guaranteed the payment, or the depository institution with which deposit has been made. The nonprofit corporation never incurred any known debts or liabilities. 5.Required Statements (Do not alter the Required Statements – ALL must be true to file Form DISS NP.) a. The nonprofit corporation has been completely wound up and is dissolved. b.All final returns required under the California Revenue and Taxation Code have been or will be filed with theCalifornia Franchise Tax Board.c.For Mutual Benefit or General Cooperative Corporations ONLY: The known assets have been distributed to thepersons entitled thereto or the nonprofit corporation acquired no known assets. 6.Read, Verify, Date and Sign Below (See Instructions for signature requirements. Do not use a computer generated signature.) The undersigned is the sole director or a majority of the directors now in office. I declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of my own knowledge. ______________ ___________________________________________ _________________________________________________ Date Signature Type or Print Name _______________ __________________________________________ _________________________________________________ Date Signature Type or Print Name _______________ __________________________________________ _________________________________________________ Date Signature Type or Print Name DISS NP (REV 12/2020) 2020 California Secretary of State bizfile.sos.ca.gov Attachment C STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: March 3, 2021 SUBMITTED BY: Michael J. Long Engineering Manager PROJECT: Various DIV. NO. ALL APPROVED BY: Rod Posada, Chief, Engineering Jose Martinez, General Manager SUBJECT: Informational Item – Second Quarter Fiscal Year 2021 Capital Improvement Program Report GENERAL MANAGER’S RECOMMENDATION: No recommendation. This is an informational item only. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To update the Board about the status of all CIP project expenditures and to highlight significant issues, progress, and milestones on major projects. ANALYSIS: To keep up with growth and to meet our ratepayers' expectations to adequately deliver safe, reliable, cost-effective, and quality water, each year the District staff prepares a Six-Year CIP Plan that identifies the District’s infrastructure needs. The CIP is comprised of four categories consisting of backbone capital facilities, replacement/renewal projects, capital purchases, and developer's reimbursement projects. The Second Quarter Fiscal Year 2021 update is intended to provide a detailed analysis of progress in completing these projects within the allotted time and budget of $8.5 million. Expenditures through the AGENDA ITEM 15a 2 Second Quarter totaled approximately $4.637 million. Approximately 55% of the Fiscal Year 2021 expenditure budget was spent (see Attachment B). FISCAL IMPACT: Joe Beachem, Chief Financial Officer No fiscal impact as this is an informational item only. STRATEGIC GOAL: This Project supports the District’s Mission statement, “To provide exceptional water and wastewater service to its customers, and to manage District resources in a transparent and fiscally responsible manner” and the General Manager’s Vision, "To be a model water agency by providing stellar service, achieving measurable results, and continuously improving operational practices." LEGAL IMPACT: None. MJL/RP:jf https://otaywater365.sharepoint.com/sites/engoperating/Shared Documents/Forms_New/D-Construction/CIP Quarterly Reports/CIP Qtr Reports/FY 2021/Q2/Staff Report/BD 03-03-21 Staff Report Second Quarter FY 2021 CIP Update(ML-RP).docx Attachments: Attachment A – Committee Action Attachment B - Fiscal Year 2021 Second Quarter CIP Expenditure Report Attachment C – Presentation ATTACHMENT A SUBJECT/PROJECT: VARIOUS Informational Item – Second Quarter Fiscal Year 2021 Capital Improvement Program Report COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on February 17, 2021 and the following comments were made: • As indicated in the PowerPoint presentation (Attachment C), the District’s FY 2021 CIP budget consists of 105 projects. Staff stated that the $8.5 million CIP budget is divided into four categories: o Capital Facilities= $3.0 million o Replacement/Renewal= $4.9 million o Capital Purchases= $.6 million o Developer Reimbursement= $2.0 thousand • Staff reviewed the PowerPoint presentation with the Committee and indicated that the expenditures through the second quarter of FY 2021 totaled $4.637 million, which is approximately 55% of the District’s fiscal year budget. • The PowerPoint presentation included the following: o Total Life-to-Date Expenditures o CIP Budget Forecast vs. Expenditures o Major CIP Projects that have been completed, are in design or are in construction o A review of CIP Projects in Construction o Construction Contract Status of projects, contract amount with allowances, net change orders, and percent of project completion o Consultant Contract Status of contract amounts, approved payments to date, change orders, dates when contracts were signed and the end date of contracts • The Committee thanked staff for enhancing the PowerPoint presentation by adding columns that provides a quarterly percentage and Year-to-Date amount for Change Orders With and Without Allowances. See Page 12 of the PowerPoint presentation for details. Following the discussion, the committee supported presentation to the full board as an informational item. FISCAL YEAR 2021 2ND QUARTER REPORT (Expenditures through 12/31/2020)($ In Thousands) Attachment B 2021 12/31/20 CIP No.Description Project Manager FY 2021 Budget Expenses Balance Expense to Budget %Budget Expenses Balance Expense to Budget %Comments CAPITAL FACILITY PROJECTS - P2040 Res - 1655-1 Reservoir 0.5 MG Cameron 25$ 16$ 9$ 64%5,750$ 658$ 5,092$ 11%The project is in the planning phase. Design to start in Q4 FY 2021. P2405 PL - 624/340 PRS, Paseo Ranchero and Otay Valley Road Cameron 25 - 25 0%1,500 - 1,500 0% Project is driven by the City of Chula Vista's schedule for replacement; the City has delayed the design. Design began in Q4 FY 2020. Tied to P2553. P2451 Otay Mesa Desalination Conveyance and Disinfection System Kennedy 5 - 5 0%3,968 3,823 145 96% EIR/EIS complete and Presidential permit issued. Continue meetings with DDW and AdR. P2453 SR-11 Utility Relocations Marchioro 50 145 (95) 290%3,000 2,137 863 71% Schedule driven by Caltrans. Caltrans issued construction contract notice to proceed Q1 FY 2020. Completion of construction anticipated for Q2 FY 2022. P2460 I.D. 7 Trestle and Pipeline Demolition Beppler 50 24 26 48%750 67 683 9% Environmental documentation preparation continued in Q2 and is expected to be completed in FY 2022. Outreach to City of Chula Vista and County of San Diego begun on access issues. P2485 SCADA - Infrastructure and Communications Replacement Kerr 100 70 30 70%2,450 2,300 150 94%Currently on target; no additional funding. P2494 Multiple Species Conservation Plan Coburn-Boyd 25 4 21 16%1,000 937 63 94% Continuing minor expenses as staff responds to USFWS questions. Project should be completed this fiscal year. P2516 PL - 12-Inch, 640 Zone, Jamacha Road - Darby/Osage Marchioro - - - 0%1,000 - 1,000 0% No expenditures anticipated in FY 2021. Completion of construction anticipated FY 2026. P2521 Large Meter Vault Upgrade Program Carey 75 81 (6) 108%620 454 166 73% Installation of the Cuyamaca College vault top occurred in Q1 FY 2021. No activities are proposed for the remainder of FY 2021. P2553 Heritage Road Bridge Replacement and Utility Relocation Cameron 25 39 (14) 156%3,613 102 3,511 3% Project is driven by the City of Chula Vista's schedule for replacement; the City has delayed the design. Design began in Q4 FY 2020. Waiting for 90% Drawings from the City P2584 Res - 657-1 and 657-2 Reservoir Demolitions Marchioro - - - 0%720 - 720 0% No expenditures anticipated in FY 2021. These Reservoirs are scheduled to be removed at the end of their useful life. P2608 PL - 8-inch, 850 Zone, Coronado Ave, Chestnut/Apple Cameron 200 144 56 72%1,820 382 1,438 21% Construction will be completed in Q2 FY 2021. Project acceptance expected in Q3 P2611 Quarry Road Bridge Replacement and Utility Relocation Cameron 25 - 25 0%399 124 275 31% Construction will be completed in Q2 FY 2021. P2612 PL - 12-inch, 711 Zone, Paso de Luz/Telegraph Canyon Rd Cameron 75 14 61 19%1,250 125 1,125 10% Project design started in Q2, expected to continue through the remainder of FY 2021. Project expected to start construction in FY 2022.P2614 485-1 Reservoir Interior/Exterior Coating Cameron - - - 0%1,150 - 1,150 0%No expenditures in FY 2021. P2617 Lobby Security Enhancements Payne 20 1 19 5%225 179 46 80% Pending completion of security study recommendations. P2619 PS - Temporary Lower Otay Pump Station Redundancy Marchioro 500 546 (46) 109%3,300 2,419 881 73% Construction completion anticipated Q3 FY 2021. P2623 Central Area to Otay Mesa Interconnection Pipelines Combination Air/Vacuum Valve Replacements Marchioro 30 - 30 0%600 218 382 36% Easement offer sent to property owner Q4 FY 2019. Design phase for valve relocations commenced Q4 FY 2020. Completion of construction anticipated FY 2022. P2626 803-4 Reservoir Water Quality Improvements – PAX System Purchase Coburn-Boyd 25 37 (12) 148%325 297 28 91% This project is complete. There may be minor additional charges if an issue comes up during the warranty period that requires staff time. P2630 624-3 Reservoir Automation of Chemical Feed System Cameron 25 - 25 0%625 - 625 0% The project is in the planning phase. Design to start in Q4 FY 2021. P2638 Buildings and Grounds Refurbishments Payne 25 - 25 0%114 36 78 32% Q4 FY 2021 Admin Plaza vegetation refurbishment. P2639 Vista Diego Hydropneumatic Pump Station Replacement Marchioro 50 27 23 54%2,800 50 2,750 2% Design consultant agreement executed Q1 FY 2021. Completion of construction anticipated FY 2024. P2640 Portable Trailer Mounted VFD Pumps Marchioro 30 94 (64) 313%550 497 53 90% Portable Trailer Mounted Pumps delivered Q4 FY 2020 with defects. Trailer defects will be completed Q3 FY 2021. This project has experienced delays associated COVID-19. FISCAL YEAR-TO-DATE, 12/31/20 LIFE-TO-DATE, 12/31/20 https://otaywater365.sharepoint.com/sites/engoperating/Shared Documents/Forms_New/D-Construction/CIP Quarterly Reports/CIP Qtr Reports/FY 2021/Q2/Expenditures/FY2021 2nd Qtr CIP Exp-Final.xlsx Page 1 of 5 2/10/2021 FISCAL YEAR 2021 2ND QUARTER REPORT (Expenditures through 12/31/2020)($ In Thousands) Attachment B 2021 12/31/20 CIP No.Description Project Manager FY 2021 Budget Expenses Balance Expense to Budget %Budget Expenses Balance Expense to Budget %Comments FISCAL YEAR-TO-DATE, 12/31/20 LIFE-TO-DATE, 12/31/20 P2642 Rancho Jamul Pump Station Replacement Marchioro 5 8 (3) 160%2,500 10 2,490 0% Project will be coordinated with 1655-1 Reservoir (P2040). Completion of construction currently scheduled for FY 2026. P2646 North District Area Cathodic Protection Improvements Marchioro 25 - 25 0%1,200 - 1,200 0% No expenditures anticipated in FY 2021. Completion of construction anticipated FY 2025. P2647 Central Area Cathodic Protection Improvements Marchioro 5 1 4 20%1,300 1 1,299 0% Advance planning work commenced Q1 FY 2021. Completion of construction anticipated FY 2024. P2648 Otay Mesa Area Cathodic Protection Improvements Marchioro 200 442 (242) 221%700 623 77 89% Construction contract awarded and executed Q1 FY 2021. Completion of construction anticipated Q3 FY 2021. P2649 HVAC Equipment Purchase Payne 20 36 (16) 180%130 54 76 42% Q1 FY 2021 Operations installed; Q4 FY 2021 AC-2 Accounting and AC-4 Finance. P2652 520 to 640 Pressure Zone Conversion Cameron 60 5 55 8%250 37 213 15%The project is in the planning phase. Design to start in Q4 FY 2021. P2654 Heritage Road Interconnection Improvements Marchioro 10 7 3 70%200 35 165 18% Project scope will change pending City preference. Completion of construction anticipated FY 2023. P2658 832-1 Pump Station Modifications Marchioro 50 - 50 0%600 10 590 2% Advance planning work commenced FY 2020. Completion of construction anticipated FY 2026. P2659 District Boardroom Improvements Kerr 20 11 9 55%300 185 115 62% Project has been approved for a budget increase to cover additional non-technical upgrades; extended through FY 2023. P2663 Potable Water Pressure Vessel Program Marchioro 25 65 (40) 260%1,696 86 1,610 5% Construction work to replace Rancho Jamul Hydropneumatic Pump Station pressure vessel began in Q1 FY 2021. Completion of construction scheduled for Q4 FY 2021. P2664 Otay Mesa Dual Piping Modification Program Beppler 55 10 45 18%350 31 319 9% Outreach to other utilities occurred during Q2, implementation of recommendations to be investigated during the remainder of FY 2021. P2665 PL - 12-inch Pipeline Replacement, 870 Zone, Cactus Road Marchioro 5 - 5 0%110 - 110 0% No expenditures anticipated in FY 2021. Completion of construction scheduled beyond six-year planning budget. P2666 Low Head and High Head Pump Stations Demolition Marchioro 25 - 25 0%200 - 200 0% Advanced planning work scheduled to commence Q4 FY 2021. Completion of construction scheduled beyond six-year planning budget. P2667 Small Meter Testing Bench Carey 150 - 150 0%250 - 250 0%Planned for Q3 or Q4 FY 2021. P2669 Fuel Tank Safety and Integrity Rahders 26 - 26 0%100 - 100 0%Anticipate $18,000 will be charged to this CIP Q3 FY 2021. P2674 System Pressure Reducing Program Beppler 50 - 50 0%100 - 100 0%No activities occurred during Q2. Planning work expected to begin later in FY 2021. R2117 RWCWRF Disinfection System Improvements Beppler 240 58 182 24%1,500 171 1,329 11% Planning completed during Q2. Consultant selection to occur in Q3 of FY 2021. R2120 RWCWRF Filtered Water Storage Tank Improvements Cameron 400 35 365 9%700 86 614 12% Construction began in Q2 FY 2021. Expected Completion in Q3 FY 2021. R2146 Recycled Pipeline Cathodic Protection Improvements Marchioro 25 35 (10) 140%700 57 643 8% Advanced planning work commenced Q3 FY 2020. Completion of construction anticipated FY 2025. R2153 Recycled Water Pressure Vessel Program Marchioro 1 - 1 0%50 - 50 0%No expenditures anticipated in FY 2021. S2012 San Diego County Sanitation District Outfall and RSD Outfall Replacement Beppler 5 - 5 0%1,646 1,111 535 67%No activities occurred during Q2; project subject to County direction. S2043 RWCWRF Sludge Handling System Beppler 1 - 1 0%184 129 55 70% No activities occurred during Q2; limited planning work anticipated this fiscal year. S2047 Asset Management - Info Master Sewer Implementation Zhao 5 - 5 0%58 38 20 66% No activity planned until completion of potable asset management. S2061 RWCWRF Aeration Controls Consolidation & Optimization Upgrades (S)Beppler 50 - 50 0%220 6 214 3% Review of blower equipment and instrumentation to be reviewed in Q3 to confirm any potential change in scope of work. S2067 RWCWRF Roofing Replacement and Natural Light Enhancement (S)Payne 75 - 75 0%190 16 174 8%Scheduled for Q4 2021; solicitation for RFP is currently out ending Feb 18, 2021. S2071 San Diego Metro Wastewater Capital Improvements Kennedy 40 18 22 45%553 150 403 27% Annual City of S.D. invoicing covers this project. No District involvement in design and construction. Total Capital Facility Projects Total:2,958 1,973 985 67%53,316 17,641 35,675 33% https://otaywater365.sharepoint.com/sites/engoperating/Shared Documents/Forms_New/D-Construction/CIP Quarterly Reports/CIP Qtr Reports/FY 2021/Q2/Expenditures/FY2021 2nd Qtr CIP Exp-Final.xlsx Page 2 of 5 2/10/2021 FISCAL YEAR 2021 2ND QUARTER REPORT (Expenditures through 12/31/2020)($ In Thousands) Attachment B 2021 12/31/20 CIP No.Description Project Manager FY 2021 Budget Expenses Balance Expense to Budget %Budget Expenses Balance Expense to Budget %Comments FISCAL YEAR-TO-DATE, 12/31/20 LIFE-TO-DATE, 12/31/20 REPLACEMENT/RENEWAL PROJECTS P2083 PS - 870-2 Pump Station Replacement Marchioro 46 290 (244) 630%19,550 19,513 37 100%Completion of construction anticipated Q3 FY 2021. P2174 PS - 1090-1 Pump Station Upgrade Beppler 375 47 328 13%2,000 208 1,792 10%Construction contract awarded in Q2, construction to begin in Q3. P2508 Pipeline Cathodic Protection Replacement Program Marchioro 10 2 8 20%1,250 1,247 3 100% Construction completed Q1 FY 2020. Project one year warranty ended Q1 FY 2021. P2533 1200-1 Reservoir Interior & Exterior Coating Cameron 400 84 316 21%1,275 129 1,146 10%Construction to begin in Q3 FY 2021. P2539 South Bay Bus Rapid Transit (BRT) Utility Relocations Cameron 40 14 26 35%1,090 1,014 76 93% Project is driven by SANDAG. Expenditures within overall project budget. P2543 850-1 Reservoir Interior/Exterior Coating Cameron 375 116 259 31%1,270 167 1,103 13%Construction began in Q2 FY 2021. Expected Completion in Q4 FY 2021. P2546 980-2 Reservoir Interior/Exterior Coating Cameron 15 1 14 7%1,705 1,686 19 99% This project is in the 2 yr. warranty period. Warranty dive inspection performed in Q2 FY 2021. Warranty Repairs to be done during winter months of FY 2022. P2555 Administration and Operations Parking Lot Improvements Cameron 30 - 30 0%935 905 30 97%This project is complete. P2561 Res - 711-3 Reservoir Cover/Liner Replacement Marchioro 30 5 25 17%2,450 2,446 4 100% Construction completed Q3 FY 2020. Project one year warranty ended Q2 FY 2021. P2562 Res - 571-1 Reservoir Cover/Liner Replacement Marchioro 10 102 (92) 1020%2,900 2,809 91 97% As part of the larger 870-2 Pump Station project, the 571-1 Reservoir was placed back into service April 2018. P2563 Res - 870-1 Reservoir Cover/Liner Replacement Marchioro 5 15 (10) 300%188 27 161 14% Existing cover/liner material testing completed Q4 FY 2020 suggests 1-3 years remaining useful life. Construction schedule will be moved up during annual FY 2022 budget cycle. Advance planning work to confirm replacement alternative commenced Q1 FY 2021. P2565 803-2 Reservoir Interior/Exterior Coating & Upgrades Cameron 10 - 10 0%1,200 986 214 82% This project is in the 2 yr. warranty period. Warranty dive inspection scheduled for Q4 FY 2021. P2567 1004-2 Reservoir Interior/Exterior Coating & Upgrades Cameron - - - 0%1,150 - 1,150 0%No expenditures in FY 2021. P2573 PL - 12-Inch Pipeline Replacement, 803 Zone, Hillsdale Road Beppler 4 - 4 0%2,580 2,572 8 100%Warranty period is over and CIP to be closed. P2574 PL - 12-Inch Pipeline Replacement, 978 Zone, Vista Vereda Beppler 5 2 3 40%1,785 1,766 19 99% Construction is complete and warranty period concludes in Q4 FY 2021. P2578 PS - 711-2 (PS 711-1 Replacement and Expansion) - 14,000 gpm Beppler 25 - 25 0%13,775 - 13,775 0% No activities occurred during Q2 FY 2021. Planning work to be performed later in Fiscal Year 2021.P2593 458-1 Reservoir Interior/Exterior Coating & Upgrades Cameron 10 - 10 0%1,050 - 1,050 0%Planning to begin in Q4 FY 2021. P2594 Large Meter Replacement Carey 1 14 (13) 1400%650 486 164 75% A couple of change-outs carried over from FY 2020 and two large meters failed that were not repairable during testing. P2604 AMR Change-Out Carey 250 241 9 96%6,290 5,979 311 95%On track. P2605 458/340 PRS Replacement, 1571 Melrose Ave Beppler 60 - 60 0%750 97 653 13% Project to be rebid in Q3 FY 2021 with CIPs P2627 & P2671. P2607 Douglas Ave SWA and OWD Interconnection Upgrade Beppler 45 1 44 2%50 5 45 10% SWA awarded construction project in Q2, OWD to monitor construction progress through remainder of FY 2021. P2609 PL - 8-inch, 1004 Zone, Eucalyptus St, Coronado/Date/La Mesa Cameron 900 851 49 95%2,100 1,055 1,045 50% Construction will be completed in Q2 FY 2021. Project acceptance expected in Q3. P2610 Valve Replacement Program - Phase 1 Cameron 100 52 48 52%2,000 74 1,926 4% Operations has begun replacement in critical areas. P2615 PL - 12-Inch Pipeline Replacement, 803 PZ, Vista Grande Beppler 10 - 10 0%2,600 35 2,565 1% No activities occurred during Q2 FY 2021. Planning work to be performed later in FY 2021. P2616 PL - 12-Inch Pipeline Replacement, 978 Zone, Pence Dr/Vista Sierra Dr Cameron 425 22 403 5%4,200 186 4,014 4% Project design started in Q2, expected to continue through the remainder of FY 2021. Project expected to start construction in FY 2022. P2625 PL - 12-inch, 978 Zone, Hidden Mesa Road Beppler 10 1 9 10%2,210 2,205 5 100% Construction is complete and warranty period concludes in Q4 FY 2021. P2627 458/340 PRS Replacement, 1505 Oleander Avenue Beppler 60 - 60 0%750 125 625 17% Project to be rebid in Q3 FY 2021 with CIPs P2605 & P2671. P2631 1485-2 Reservoir Interior/Exterior Coating & Upgrades Cameron - - - 0%1,250 - 1,250 0%No expenditures in FY 2021. P2653 1200 Pressure Zone Improvements Marchioro 150 32 118 21%650 257 393 40% Construction of Phase 1 completed Q4 FY 2020. Completion of Phase 2 construction scheduled for FY 2022. https://otaywater365.sharepoint.com/sites/engoperating/Shared Documents/Forms_New/D-Construction/CIP Quarterly Reports/CIP Qtr Reports/FY 2021/Q2/Expenditures/FY2021 2nd Qtr CIP Exp-Final.xlsx Page 3 of 5 2/10/2021 FISCAL YEAR 2021 2ND QUARTER REPORT (Expenditures through 12/31/2020)($ In Thousands) Attachment B 2021 12/31/20 CIP No.Description Project Manager FY 2021 Budget Expenses Balance Expense to Budget %Budget Expenses Balance Expense to Budget %Comments FISCAL YEAR-TO-DATE, 12/31/20 LIFE-TO-DATE, 12/31/20 P2655 La Presa Pipeline Improvements Cameron 180 71 109 39%1,750 258 1,492 15%Construction will be completed in Q2 FY 2021. Project acceptance expected in Q3. P2656 Regulatory Site Desilting Basin Improvements Beppler 30 - 30 0%150 7 143 5% No activities occurred during Q2 FY 2021. Operations to implement improvements as time allows. P2657 1485-1 Reservoir Interior/Exterior Coating & Upgrades Cameron - - - 0%950 - 950 0%No expenditures in FY 2021. P2661 Replacement of Backflow Prevention Devices on Pipeline Interconnections on Otay Mesa Beppler 75 2 73 3%375 7 368 2% Minimal activities occurred during Q2 FY 2021. Operations to implement improvements as time allows. P2662 Potable Water Meter Change Out Carey - - - 0%16,500 - 16,500 0%No expenditures planned in FY 2021. P2670 Administration and Operations Roof Repairs and Replacement Payne 5 - 5 0%325 - 325 0% Q4 FY 2021 minor maintenance; major work in future fiscal years. P2671 980 Reservoirs Altitude Valve Vaults Renovation Beppler 120 45 75 38%300 45 255 15% Design initiated in Q2 and is expected to be completed in Q3. Project to be bid in Q3 FY 2021 with CIPs P2605 & P2627. P2672 District Roof Repairs and Replacement Program Payne 25 - 25 0%375 - 375 0% Q4 FY 2021 minor maintenance; major work future FY's. P2673 803-4 Reservoir Interior/Exterior Coating Cameron - - - 0%2,100 - 2,100 0%No expenditures in FY 2021. P2675 458-1 and 458-2 Reservoirs Site Pavement Refurbishment Cameron 5 - 5 0%450 - 450 0% Planning to coincide with 458-1 Reservoir Coating (P2593). R2121 Res - 944-1 Reservoir Cover/Liner Replacement Marchioro 5 - 5 0%2,400 25 2,375 1% Replacement scheduled for FY 2025 since existing cover/liner testing completed in FY 2020 suggested four to six years remaining life. R2143 AMR Change-Out Carey 130 36 94 28%525 369 156 70%Most work in Q2 and Q3 FY 2021. R2144 RWCWRF Roofing Replacement and Natural Light Enhancement (R)Payne 100 - 100 0%175 - 175 0% Scheduled for Q4 2021; solicitation for RFP is currently out ending Feb 18, 2021. R2147 RWCWRF Fuel Lines Replacement Marchioro 2 - 2 0%230 222 8 97% Construction completed Q1 FY 2020. Project one year warranty ended Q1 FY 2021. R2148 Large Meter Replacement - Recycled Carey 10 6 4 60%58 20 38 34%On track.R2152 Recycled Water Meter Change-Out Carey - - - 0%550 - 550 0%No expenditures planned in FY 2021. R2154 RWCWRF Entrance Storm Water Improvements (R)Beppler 115 21 94 18%125 21 104 17% Scope of work modifications identified during Q2, implementation to be completed during FY 2021. R2156 RecPL - 14-inch RWCWRF Effluent Force Main Improvements Marchioro 250 202 48 81%500 202 298 40% Construction contract awarded and executed Q1 FY 2021. Completion of construction anticipated Q3 FY 2021. R2157 RWCWRF Backwash Supply Pumps Upgrade Beppler 100 - 100 0%300 - 300 0%No activities occurred during Q2. Planning to begin in Q3 FY 2021. R2158 RWCWRF Stormwater Pond Improvements (R)Beppler 40 - 40 0%175 - 175 0% No activities occurred during Q2. Planning to begin in Q3 FY 2021. S2024 Campo Road Sewer Main Replacement Beppler 10 7 3 70%11,000 10,988 12 100% Construction is complete and warranty period concludes in Q4 FY 2021. S2049 Calavo Basin Sewer Rehabilitation - Phase 2 Beppler 25 3 22 12%1,050 67 983 6% Planning activities occurred during Q2 FY 2021. Limited design to be completed in Fiscal Year 2021. S2050 Rancho San Diego Basin Sewer Rehabilitation - Phase 2 Beppler 5 - 5 0%1,100 7 1,093 1% No activities occurred during Q2 FY 2021. Limited design to be completed in Fiscal Year 2021. S2054 Calavo Basin Sewer Rehabilitation - Phase 3 Beppler - - - 0%1,150 - 1,150 0%No activities planned for FY 2021. S2060 Steele Canyon Pump Station Replacement Beppler - - - 0%1,700 - 1,700 0%No activities planned for FY 2021. S2066 Rancho San Diego Basin Sewer Rehabilitation - Phase 3 Beppler - - - 0%950 - 950 0%No activities planned for FY 2021. S2069 Cottonwood Sewer Pump Station Renovation Beppler 75 16 59 21%2,500 36 2,464 1% Surveying of the site occurred during Q2. Property assessment to be performed in Q3 FY 2021. S2070 Hidden Mountain Sewer Pump Station Wet Well Renovation Beppler 5 7 (2) 140%215 215 - 100% Construction is complete and warranty period concludes in Q4 FY 2021. S2072 RWCWRF Rotary Screen Replacement Beppler 1 - 1 0%115 - 115 0%No activities planned for FY 2021. S2073 RWCWRF Entrance Storm Water Improvements (S)Beppler 115 22 93 19%125 22 103 18% Scope of work modifications identified during Q2, implementation to be completed during FY 2021. S2074 RWCWRF Stormwater Pond Improvements (S)Beppler 40 - 40 0%175 - 175 0% No activities occurred during Q2. Planning to begin in Q3 FY 2021. Total Replacement/Renewal Projects Total:4,869 2,330 2,539 48%128,046 58,490 69,556 46% CAPITAL PURCHASE PROJECTS P2282 Vehicle Capital Purchases Rahders 315 42 273 13%6,500 5,033 1,467 77% $283,866.78 encumbered. There will be additional charges against P2282 once vehicles arrive in Q3 FY 2021. Anticipate 100% expense in this area FY 2021. https://otaywater365.sharepoint.com/sites/engoperating/Shared Documents/Forms_New/D-Construction/CIP Quarterly Reports/CIP Qtr Reports/FY 2021/Q2/Expenditures/FY2021 2nd Qtr CIP Exp-Final.xlsx Page 4 of 5 2/10/2021 FISCAL YEAR 2021 2ND QUARTER REPORT (Expenditures through 12/31/2020)($ In Thousands) Attachment B 2021 12/31/20 CIP No.Description Project Manager FY 2021 Budget Expenses Balance Expense to Budget %Budget Expenses Balance Expense to Budget %Comments FISCAL YEAR-TO-DATE, 12/31/20 LIFE-TO-DATE, 12/31/20 P2286 Field Equipment Capital Purchases Rahders 57 143 (86) 251%2,500 2,169 331 87% $57,038.36 for field equipment; $70,449.98 for the repair of Pump 4 at 927-1 RPS and Pump 1 at 680 RPS putting this CIP over budget in FY 2021. P2571 Data Center Network Data Storage and Infrastructure Enhancements Kerr 130 149 (19) 115%450 294 156 65% Project is on schedule; recently purchased new hardware (approved by Board); anticipating using remainder of funds prior to year-end. P2572 Enterprise Resource Planning (ERP) Replacement Kerr 80 - 80 0%130 - 130 0%Project on hold. p2668 Implementation of PSIcapture Software for Accounts Payable Invoice Kerr 25 - 25 0%25 - 25 0%Project on hold. s2075 Field Equipment Capital Purchases Rahders 25 - 25 0%300 - 300 0%$21,693.31 - skimmings pump and motor ordered for Treatment Plant pump. Total Capital Purchase Projects Total:632 334 298 53%9,905 7,496 2,409 76% DEVELOPER REIMBURSEMENT PROJECTS P2595 PL - 16-inch, 624 Zone, Village 3N - Heritage Road, Main St/Energy Way Beppler 1 - 1 0%150 - 150 0% Project under construction; awaiting developer submission for reimbursement. R2084 RecPL - 20-Inch, 680 Zone, Village 2 - Heritage/La Media Beppler 1 - 1 0%365 1 364 0% Project under construction; awaiting developer submission for reimbursement. Total Developer Reimbursement Projects Total:2 - 2 0%515 1 514 0% 117 GRAND TOTAL 8,461$ 4,637$ 3,824$ 55%191,782$ 83,628$ 108,154$ 44% https://otaywater365.sharepoint.com/sites/engoperating/Shared Documents/Forms_New/D-Construction/CIP Quarterly Reports/CIP Qtr Reports/FY 2021/Q2/Expenditures/FY2021 2nd Qtr CIP Exp-Final.xlsx Page 5 of 5 2/10/2021 Otay Water District Capital Improvement Program Fiscal Year 2021 Second Quarter (through December 31, 2020) Ralph W. Chapman Water Reclamation Facility Recycled Water Storage Tank Coating and Rehabilitation 12/21/20 Attachment C Background The approved CIP Budget for Fiscal Year 2021 consists of 105 projects that total $8.5 million. These projects are broken down into four categories. 1.Capital Facilities $ 3.0 million 2.Replacement/Renewal $ 4.9 million 3.Capital Purchases $ 0.6 million 4.Developer Reimbursement $ 2.0 thousand Overall expenditures through the Second Quarter of Fiscal Year 2021 totaled approximately $4.637 million, which is 55% of the Fiscal Year budget. 2 Fiscal Year 2021 Second Quarter Update ($000) CIP CAT Description FY 2021 Budget FY 2021 Expenditures % FY 2021 Budget Spent Total Life-to-Date Budget Total Life-to-Date Expenditures % Life-to-Date Budget Spent 1 Capital Facilities $2,958 $1,973 67%$53,316 $17,641 33% 2 Replacement/ Renewal $4,869 $2,330 48%$128,046 $58,490 46% 3 Capital Purchases $632 $334 53%$9,905 $7,496 76% 4 Developer Reimbursement $2 $0 0%$515 $1 0% Total: $8,461 $4,637 55%$191,782 $83,628 44% 3 Fiscal Year 2021 Second Quarter CIP Budget Forecast vs. Expenditures 4 $4,637,000 $8,037,950 5 CIP Projects in Construction 850-1 and 1200-1 Reservoir Coatings and Upgrades Project (P2543 & P2533) Removing and replacing the interior and exterior coatings of the 850-1 (1.15 MG) and 1200-1 (1.00 MG) reservoirs including structural modifications and upgrades. $2.55M Combined Budget Construction Began: November 2020 Estimated Completion: July 2021 Reservoir Coatings and Upgrades Project Installing Roof Patches 850-1 Reservoir Division No. 3 & 5 Locations: Sweetwater Springs/Jamacha (850-1) and Hillsdale (1200-1) areas 6 CIP Projects in Construction 7 850-1 Reservoir Interior Scaffolding CIP Projects in Construction Temporary Lower Otay Pump Station (TLOPS) Redundancy Project (P2619) Add a second pump to the TLOPS. Project includes site work, yard piping, instrumentation and controls, and security improvements. $3.20M Budget Start: Sept 2019 Est. Completion: February 2021 8 Division No. 1 Location: TLOPS is located south of Wueste Road at the south end of the Lower Otay Reservoir TLOPS –Discharge Pipe Replacement TLOPS – Suction Pipe Installation CIP Projects in Construction Ralph W. Chapman Recycled Water Facility (RWCRWF) 0.43 MG Tank Coating and Repair Project (R2120) Provide and install interior/exterior coating and upgrades to the storage reservoir including removal and replacement of deteriorating reservoir coatings and providing upgrades to increase the service life and maintain compliance with recycled water standards. $700K Budget Construction Began: November 2020 Estimated Completion: February 2021 Division No. 3 Location: Ralph W. Chapman Water Recycling Facility 9 CIP Projects in Construction 10 Recycled Water Tank Tenting, Exterior Scaffolding, and Existing Outlet Corrosion Repairs 12/15/20 Construction Contract Status 11 PROJECT TOTAL % P2083 P2562 870-2 Pump Station Replacement/ 571-1 Reservoir Liner and Cover Replacement Pacific Hydrotech Corporation $16,500,900 $16,925,900 $763,719 4.6%$17,371,211 $17,371,211 2.6%100.0%February 2021 P2619 P1320*** Temporary Lower Otay Pump Station Redundancy Tharsos, Inc.$1,600,500 $1,647,000 $99,832 6.2%$1,704,133 $629,997 3.5%37.0%February 2021 P2608 P2609 P2655 Dictionary Hill Waterline Replacement - 2019 LB Civil Construction, Inc.$1,125,315 $1,345,315 $71,819 6.4%$1,215,784 $1,242,892 -9.6%102.2%January 2021 P2648 Otay Mesa Pipeline CP Improvements Kay Construction $368,740 $379,115 ($10,375)-2.8%$368,740 $0 -2.7%0.0%January 2021 R2156 14-Inch Force Main Air-Vac Replacements Burtech Pipeline, Inc.$147,000 $212,100 $0 0.0%$147,000 $0 -30.7%0.0%February 2021 P2533/ P2543 850-1 & 1200-1 Reservoirs Interior/Exterior Coatings & Upgrades Capital Industrial Coatings, LLC $1,329,210 $1,443,000 $0 0.0%$1,329,210 $0 -7.9%0.0%June 2021 R2120 Recycled Water Storage Tank Coating Unified Field Service Corporation $364,242 $506,252 $0 0.0%$364,242 $0 -28.1%0.0%February 2021 TOTALS:$21,435,907 $22,458,682 $924,995 4.3%$22,500,320 $19,244,100 0.2% FY 2021 CIP CONSTRUCTION PROJECTS as of December 31, 2021 CURRENT CONTRACT AMOUNT TOTAL EARNED TO DATE CIP NO.PROJECT TITLE CONTRACTOR BASE BID AMOUNT CONTRACT AMOUNT W/ ALLOWANCES ***ADDITIONAL SCOPE WAS ADDED TO THIS CONTRACT VIA CHANGE ORDER TO PERFORM FUEL LEAK REMEDIATION AT THE 1485 PUMP STATION **THIS CHANGE ORDER RATE INCLUDES THE CREDIT FOR UNUSED ALLOWANCES *NET CHANGE ORDERS DO NOT INCLUDE ALLOWANCE ITEM CREDITS. IT'S A TRUE CHANGE ORDER PERCENTAGE FOR THE PROJECT % CHANGE ORDERS W/ ALLOWANCE CREDIT** % COMPLETE EST. COMP. DATE NET CHANGE ORDERS LTD* Construction Contract Status 12 PRIOR YEARS Q1 Q2 QTD (Q2)YTD %PROJECT TOTAL % P2083 P2562 870-2 Pump Station Replacement/ 571-1 Reservoir Liner and Cover Replacement Pacific Hydrotech Corporation $16,500,900 $16,925,900 $674,797 $88,922 $0 0.0%$88,922 0.5%$763,719 4.6%$17,371,211 $17,371,211 2.6%100.0%February 2021 P2619 P1320*** Temporary Lower Otay Pump Station Redundancy Tharsos, Inc.$1,600,500 $1,647,000 $99,832 $0 $0 0.0%$0 0.0%$99,832 6.2%$1,704,133 $1,196,083 3.5%70.2%February 2021 P2608 P2609 P2655 Dictionary Hill Waterline Replacement - 2019 LB Civil Construction, Inc.$1,125,315 $1,345,315 $0 $24,067 $47,752 4.2%$71,819 6.4%$71,819 6.4%$1,197,134 $1,180,747 -11.0%98.6%January 2021 P2648 Otay Mesa Pipeline CP Improvements Kay Construction $368,740 $379,115 $0 $0 ($10,375)-2.8%($10,375)-2.8%($10,375)-2.8%$368,740 $368,740 -2.7%100.0%January 2021 R2156 14-Inch Force Main Air-Vac Replacements Burtech Pipeline, Inc.$147,000 $212,100 $0 $0 $0 0.0%$0 0.0%$0 0.0%$147,000 $136,250 -30.7%92.7%February 2021 P2533/ P2543 850-1 & 1200-1 Reservoirs Interior/Exterior Coatings & Upgrades Capital Industrial Coatings, LLC $1,329,210 $1,443,000 $0 $0 $0 0.0%$0 0.0%$0 0.0%$1,329,210 $66,410 -7.9%5.0%June 2021 R2120 Recycled Water Storage Tank Coating Unified Field Service Corporation $364,242 $506,252 $0 $0 $0 0.0%$0 0.0%$0 0.0%$364,242 $267,777 -28.1%73.5%February 2021 TOTALS:$21,435,907 $22,458,682 $774,629 $112,989 $37,377 0.2%$150,366 0.7%$924,995 4.3%$22,481,670 $20,587,218 0.1% FY 2021 CIP CONSTRUCTION PROJECTS as of December 31, 2021 CURRENT CONTRACT AMOUNT TOTAL EARNED TO DATE CIP NO.PROJECT TITLE CONTRACTOR BASE BID AMOUNT CONTRACT AMOUNT W/ ALLOWANCES NET CHANGE ORDERS FY 2021* ***ADDITIONAL SCOPE WAS ADDED TO THIS CONTRACT VIA CHANGE ORDER TO PERFORM FUEL LEAK REMEDIATION AT THE 1485 PUMP STATION **THIS CHANGE ORDER RATE INCLUDES THE CREDIT FOR UNUSED ALLOWANCES*NET CHANGE ORDERS DO NOT INCLUDE ALLOWANCE ITEM CREDITS. IT'S A TRUE CHANGE ORDER PERCENTAGE FOR THE PROJECT % CHANGE ORDERS W/ ALLOWANCE CREDIT** % COMPLETE EST. COMP. DATE NET CHANGE ORDERS LTD* Consultant Contract Status 13 Consultant Contract Status 14 Consultant Contract Status 15 QUESTIONS? 16 1 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: March 3, 2021 PROJECT: Various DIV. NO. ALL SUBMITTED BY: Michael Kerr, Information Technology Manager APPROVED BY: Adolfo Segura, Chief of Administrative Services Jose Martinez, General Manager SUBJECT: FY21 MID-YEAR REPORT FOR THE DISTRICT’S FY19-22 STRATEGIC PLAN GENERAL MANAGER’S RECOMMENDATION: No recommendation. This is an informational item only. COMMITTEE ACTION: Please see “Attachment A”. PURPOSE: To provide a mid-year report of the District’s FY19-22 Strategic Performance Plan for FY21. ANALYSIS: Summary The current Otay Water District Strategic Plan is a four-year plan ranging from FY19 through the end of FY22. This report details the mid-year results for the third year. Objectives – Target 90% Strategic Plan objectives are designed to ensure the District is executing mission developed strategies and making appropriate changes necessary to guide the agency, meet new challenges, and positively adapt to change. FY21 mid-year results are below target at 88%, with 45 of 51 active items completed or on schedule; six (6) objectives are on hold. AGENDA ITEM 15b 2 Objectives on Hold (6): CUSTOMER Strategy #1: Enhance and build awareness and engagement among the District’s customers and stakeholders, and within the San Diego Region of the District’s strategies, policies, projects, programs, and legislative/regulatory issues. Objective: Ensure consistency of branding and representation across the District, using consistent logos, colors, messaging, communications tools, and other collaterals through enhancement of internal and external marketing materials. This objective was placed on hold as COVID-19-related outreach and communication was a priority for staff. Assuming budget availability; this objective will resume in FY22. FINANCIAL Strategy #3: Enhancement of business systems. Objective: Enterprise Resource Planning (ERP)/Customer Information System (CIS)/Customer Relationship Management (CRM) validation and replacement evaluation This objective was placed on hold in the first quarter due to COVID-19. Project is scheduled to resume in FY22. Objective: Evaluate enhancements to, or replacement, of the rate model program. 0 5 10 15 20 25 30 35 40 45 45 0 6 1 On Schedule/Completed Behind On Hold Not Started 45 of 51 Active Objectives are On Target (88%) 3 Through the reporting period ending December 31, 2020, this objective was placed on hold due to the additional work required to complete the capacity fee study. The capacity fee study was completed in December 2020, and staff resumed this effort in January 2021. Objective: Re-evaluate prior payroll solutions and identify any new cloud-based payroll solutions. Through the reporting period ending December 31, 2020, this objective was placed on hold for six months due to the additional work required to complete the capacity fee study. The capacity fee study was completed in December 2020. In January 2021, staff re-engaged with the vendor on this objective to evaluate their ability to meet the District's requirements. INTERNAL BUSINESS PROCESSES Strategy #2: Enhance customer experience. (collaboration between Customer Service and Communications) Objective: Enterprise Resource Planning (ERP)/Customer Information System (CIS)/Customer Relationship Management (CRM) validation and replacement evaluation. This objective was placed on hold in the first quarter due to COVID-19. Objective had in-person planned meetings and demonstrations. Project is scheduled to resume in FY22. Strategy #10: Optimize District’s Hazardous Waste Operations and Emergency Response (HAZWOPER) and Confined Space Emergency Response Team. Objective: Certify at Industry State Level and under the Incident Command System, streamline chlorine gas and confined space rescue training, operations, response, and areas of responsibility and convert to inventory lists and equipment logs to electronic form. Due to COVID-19, chlorine gas training has been put on hold until conditions allow the HAZWOPER Team to meet in-person and complete this training, including hands-on practical exercises as part of its completion. Key Performance Indicators (KPI’s) – Target 75% KPI’s are designed to track the District’s day-to-day performance. These items measure the effectiveness and efficiency of essential operational services. The District’s overall goal of 75% is considered “on target”. For FY21, mid-year results are above target at 83%, with 29 of 35 items achieving the desired level or better. KPI’s are based on established AWWA performance benchmarks, water agency standards, and historical trends. Seven (7) measures are reported at year’s end: 4 • Water Debt Coverage • Sewer Debt Coverage • Reserve Level • Accounts Per FTE • Leak Detection Program • Injury Incident Rate • Enterprise Technology Services KPI’s Not on Target (6): FINANCIAL Overtime Percentage Target: Less than 100% of the budgeted overtime per quarter Year-to-date overtime expenditures amounted to $88,901 vs. the budgeted amount of $78,800. Second-quarter results were below target ($41,105 actuals vs. $42,500 budgeted); however, the year-to-date overtime variance was primarily driven by main breaks in the first quarter. Planned Recycled Water Maintenance Ratio in $ Target: 70% of all labor dollars spent on preventative maintenance per quarter. Year-to-date 61% of labor dollars were spent on preventative maintenance. 0 5 10 15 20 25 30 35 40 29 6 On Target Not on Target 29 of 35 Key Performance Indicators are On Target (83%) 5 Reasons target was not met: 1. Repair effluent pump #4 for the 927 PS at the Treatment Plant was repaired (amount: $69,517) 2. Repair effluent pump engine #1 for the 927 PS at the Treatment Plant (amount: $39,207) 3. Repair gear head for pump #5 for the 927 PS at the Treatment Plant (amount: $6,655) 4. Repair/replace surge tank sight glass at the 927 PS at the Treatment Plant (amount: $2,821) 5. Repaired 20" Recycled main on Olympic Parkway (amount $146,315.28) Direct Cost of Treatment per MGD Target: No more than $1050 per million gallons spent on wastewater. The year-to-date amount spent on wastewater treatment per million gallons was $1,295.00 vs. the target of $1,050. The target was not met because the Treatment Plant was off-line for planned CIP work (Force Main Air-Vac repairs and Filter Storage Tank recoating) in November and December 2020. The Treatment Plant is projected to go back online on March 1, 2021. INTERNAL BUSINESS PROCESSES Annual Recycled Water Site Inspections Target: 100% recycled water sites inspected annually (125 sites are scheduled for FY21) 68% of site inspections have been completed (85 of 125). The year- to-date target was 71%. Due to COVID–19 impacts, annual inspections for several customers were shifted to the third quarter. Sewer Overflow Rate (AWWA) Target & AWWA: Zero (0) overflows per quarter There were zero (0) overflows in the second quarter; however, the year-to-date target was not met due to one (1) sewer overflow in the first quarter caused by root intrusion on top of a manhole located upstream of MH-354-074. The collection system in this area was televised and flushed to assure all debris was located and removed. LEARNING AND GROWTH Safety Training Program Target: 24 hours per field employee annually. Due to COVID-19 and work shift rotations, staff completed 7.48 training 6 hours during the second quarter but fell short of the year-to-date target of 12 hours for the mid-year. The annual target for training is 24 hours for field employees. The total training hours, to date, is 10.66. Next Steps Staff will continue to execute the plan’s objectives and key performance indicators and track emerging trends. Staff will also begin strategic plan discussions late this summer for the development of new strategic objectives. Committee Reports – Slideshow The Strategic Plan results are presented to both the Finance & Administration, and the Engineering, Operations, & Water Resources Committee with a specific focus on the most relevant information for each Committee (see “Attachment B”). FISCAL IMPACT: Joe Beachem, Chief Financial Officer Informational item only; no fiscal impact. STRATEGIC GOAL: Strategic Plan and Performance Measure reporting is a critical element in providing performance reporting to the Board and staff. LEGAL IMPACT: None. ATTACHMENTS: Attachment A – Committee Action Report Attachment B – PowerPoint Presentation Attachment C – List of Strategic Objectives and KPI’s 7 ATTACHMENT A SUBJECT/PROJECT: FY21 MID-YEAR REPORT FOR THE DISTRICT’S FY19-22 STRATEGIC PLAN COMMITTEE ACTION: The Finance & Administration, and the Engineering, Operations & Water Resources Committees reviewed this item at meetings held on February 16 and 17, 2021, respectively and the following comments were made: • Information was presented from the staff report and a PowerPoint (Attachment B) was presented that provided the mid-year results of each of the objectives and key performance indicators for FY 2021. • It was indicated that the District’s four-year plan is made up of strategies, objectives and key performance indicators (KPI). The objectives and KPI’s are focused in four perspectives: customer, financial, internal business processes and learning and growth. Additionally, the District’s Strategic Plan is influenced by AWWA’s performance indicators of organizational development, business operations, customer relations, water and wastewater operations. • In response to an inquiry from the Committee, staff stated that the District did not meet the Safety Training Program goal due to the COVID-19 pandemic protocols that prohibit face-to-face interaction. With the recent implementation of the COVID-19 vaccination program, it is anticipated that the Safety Training Program will be back on track by year-end. It was noted that safety staff has engaged in virtual safety trainings and attend meetings with lead supervisors. • In response to comments and questions from the Committee, it was indicated that staff will meet late this summer to evaluate and brainstorm new objectives (i.e. System Valve Exercising Program) and determine which objectives can be enhanced to increase District efficiencies and savings, among others. Afterwards, a Board Retreat will be held to share planned strategies and objectives for the District’s new Strategic Plan. The current plan ends in FY2022. The retreat will give the board the 8 opportunity to weigh-in and provide feedback for the development of the new Strategic Plan. • Staff indicated that the District did not meet the Overtime Percentage goal primarily due to the Olympic Parkway main break and the Calavo Drive sewer main break. Overtime expenditures amounted to $88,901 vs. the budgeted amount of $78,800. • In response to a question from the Committee, staff stated that non-met objectives were mostly objectives impacted by the COVID-19 pandemic. With the recent implementation of the COVID-19 vaccination program, staff anticipates these objectives will meet their target goal by the end of the fiscal year. • Staff noted some photos seen in the presentation were taken prior to the COVID-19 pandemic and reaffirmed that the District continues to comply with the health guidelines. At the request of the Committee, staff will replace Pre-COVID photos with current ones. Upon completion of the discussion, the Committee supported presentation as an informational item. FY21 Mid-Year Report Otay Water District FY19-22 Strategic Plan ATTACHMENT B Contoso Pharmaceuticals Employee growth/ Retention Financial Results and Growth Increase Customer Satisfaction/Engagement Improve Operational Efficiency Customer Financial Internal Business Processes Learning & Growth 2 88% 45 Objectives TRENDS ON TARGET/COMPLETED OVERALL TARGET 90% TOTAL OBJECTIVES 52 NOT ON TARGET OBJECTIVES ON HOLD 0% 0 Objectives 12% 6 Objectives 75% 85% 95% FY16 FY17 FY18 FY19 FY20 NOT STARTED 1 RESULT TARGET ACTIVE LEARNING AND GROWTH CUSTOMER FINANCIAL INTERNAL BUSINESS PROCESSES 51 45/51 = 88%6/51 = 12% 3 C01. Enhance and build awareness and engagement among the District’s customers and stakeholders and within the San Diego Region of the District’s strategies, policies, projects, programs, and legislative/regulatory issues Continue implementation of and enhance the District’s community and business outreach, media, and government relations programs *Ensure consistency of branding and representation across the District, using consistent logos, colors, messaging, communications tools, and other collaterals through enhancement of internal and external marketing materials Evaluate and enhance the District’s water conservation programs CUSTOMER | 4 ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED C02. Assess and enhance communications tools and increase online presence and social media exposure Assess communication tools (social media presence) *Objective placed on hold due to COVID-19 4 Eileen Salmeron Communications Assistant F01. Integrated resource planning and facility optimization Recycled water long-term business plan South District Potable Water Supply Alternatives to San Diego County Water Authority (SDCWA) Pipeline 4 Supply Interruption (catastrophic event) Treatment Plant long-term business plan (sewer portion) F02. Evaluation of key system alternatives and financial impact Conduct desalination (Rosarito) financial analysis In support of the Engineering Department, conduct recycled water and sewer business financial analysisFINANCIAL | 19 5 ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED Matt Carriveau Pump Mechanic I F03. Enhancement of business systems *Enterprise Resource Planning (ERP)/Customer Information System (CIS)/Customer Relationship Management (CRM) validation and replacement evaluation Evaluate, and if beneficial, implement cloud-based payroll service Evaluate enhancements to, or replacement, of the rate model program Implement Paperless Account Payable (AP) solution Re-evaluate prior payroll solutions and identify any new cloud-based payroll solutions Complete a sewer cost of service study and recommend a rate structure that will provide for more stable sewer revenues Evaluate the Capacity and New Water Supply Fees, including an update of applicable costs, and, if possible, recommend a fee structure that is more efficient and effective than the current structure *Objective has been placed on hold due to COVID-19.FINANCIAL | 19 (cont’d) 6 ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED Cyndi Alcantara Business Systems Analyst F04. Enhancement of the Asset Management (AM) and Capital Improvement Programs (CIP) Enhancement of the framework for systematic development, validation, and implementation of new CIPs Enhancements of the AM Program Financial activity-based cost cross-training In support of the Engineering Department, enhance financial impact forecasting and analysis of future CIPs F05. Develop alternative Public Employees Retirement System (PERS) financing strategy to fund ahead of PERS schedule Optimize funding and liability schedule FINANCIAL | 19 (cont’d) F06. Negotiate and implement a new labor agreement and optimize employee benefit programs Negotiate and implement new labor agreement Review Deferred Compensation Program for reduced fees and streamlined approach and ensure offerings are fully utilized 7 ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED Bernardo Separa Engineering Design Technician I01. Optimize meter activity operations Evaluation of Advanced Metering Infrastructure (AMI) technology Explore web-based options for meter reading and backflow test entry Optimize Global Positioning System (GPS) fleet assignment and routing operation I02. Enhance customer experience (collaboration between Customer Service and Communications) Customer electronic communication and outreach *Enterprise Resource Planning (ERP)/Customer Information System (CIS)/ Customer Relationship Management (CRM) validation and replacement evaluationINTERNAL BUSINESS PROCESSES | 27 8 *Objective has been placed on hold due to COVID-19. ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED Shannon Coffin Meter Services Supervisor I03. Evaluate and leverage the use of available Human Resources self-service and capital management technology solutions Evaluate on-boarding programs and implement, if determined necessary Implement Human Resource Information System (HRIS) in coordination with payroll conversion Pilot cloud-based human capital performance management system and implement, if determined necessary I04. Maintain a reliable, scalable, secure, and high-performing technology infrastructure to support current and future service needs Adopt National Institute of Standards and Technology (NIST) cyber security framework and enhance disaster recovery planning Advance business processes and operational efficiencies through effective implementation of information technology Create framework to evaluate cost efficiency of new technology services and cloud vs. on-premise selection Deploy next generation storage services and communication architecture INTERNAL BUSINESS PROCESSES | 27 (cont’d) 9 ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED Michael Kerr IT Manager I05. Enhance SCADA system services via SCADA roadmap project Prioritize fourteen strategic project/initiatives, recently developed I06. Enhancement of enterprise geographic data Deploy ArcGIS Pro for 3D analysis Evaluate the use of Drone2Map technology for asset, field inspections, and condition assessment Migrate Geographic Information System (GIS) data structure from geometric network to utility dashboard Standardization of District asset data and collection processINTERNAL BUSINESS PROCESSES | 27 (cont’d) 10 ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED Adam Scott Senior SCADA/Instrumentation Technician I07. Enhancement of maintenance and program standards Analyze electric energy-saving programs as they become available Evaluate the effectiveness of various methods to reduce nitrification events Evaluate the efficiency and effectiveness of the District’s valve exercise preventative maintenance including proposed recommendations Evaluate the impacts as a result of recent and upcoming regulatory changes including, but not limited to, Air Pollution Control District (APCD), State Water Resource Control Board (SWRCB), and Occupational Safety and Health Administration (OSHA), etc. Establish an access and defensible space vegetation mitigation program with maintenance schedules for District remote facilities, access roads, and off-road appurtenances I08. Enhancement of contracting and facility services Enhance Customer and Public Service security in public lobby areas Evaluate feasibility of incorporating electric and hybrid vehicles into District fleet Streamline contract and purchase order (contract) management and lifecycle INTERNAL BUSINESS PROCESSES | 27 (cont’d) 11 ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED Tyrese Powell-Slotterbeck Reclamation Plant Operator II I09. Enhancement of the Confined Space Program Automate confined space regulatory and work forms (electronic conversion), add confined space data layer in the District’s enterprise Geographic Information System (GIS), and use data to electronically automate the District’s confined space inventory INTERNAL BUSINESS PROCESSES | 27 (cont’d) I10. Optimize District’s Hazardous Waste Operations and Emergency Response (HAZWOPER) Confined Space Rescue Team *Certify at Industry Level and under the Incident Command System, streamline chlorine gas and confined space rescue training, operations, response and areas of responsibility and convert to inventory lists and equipment logs to electronic form 12 *Objective has been placed on hold due to COVID-19 ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED Ming Zhao GIS Manager L01. Enhance Leadership and employee training programs, and knowledge transfer process Continue development of leadership and District-wide training programs Review and enhance knowledge transfer process to ensure retention of District knowledge (FY22 Q1) LEARNING AND GROWTH | 2 13 ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED Juan Tamayo Recycled Program Supervisor 50% 60% 70% 80% 90% 100% FY16 FY17 FY18 FY19 FY20 LEARNING AND GROWTH CUSTOMERTRENDS ON TARGET KEY PERFORMANCE INDICATORS FINANCIAL OVERALL TARGET INTERNAL BUSINESS PROCESSES 75% TOTAL KPIs 42 REPORTED QUARTERLY35 REPORTED ANNUALLY7 17% 6 KPIs NOT ON TARGET 83% 29 KPIs RESULT TARGET 6/35 = 17%29/35= 83% 14 ANSWER RATE Target: 97% average answer rate per quarter annually Calculation: Number of all calls answered/Number of all calls received 15 98.48%98.41% 96% 97% 97% 98% 98% 99% 99% Q1 Q2 Q3 Q4 TARGET Eugenio Andreu, Customer Service Rep II, answering a customer call TECHNICAL QUALITY COMPLAINT (AWWA) (Customer Service) Target & AWWA: No more than 7.1 complaints per 1000 customer accounts annually 75th Percentile for population served between 100,001-500,000 (combined utilities) Calculation: Number of technical quality complaints per year/Number of active customer accounts per reporting period Keith Swiatkowski, Lead Water Systems Operator,at the 870-2 Pump Station 16 1.06 1.27 0 1 2 3 4 5 6 7 8 9 10 Q1 Q2 Q3 Q4 AWWA BENCHMARK TARGET POTABLE WATER COMPLIANCE RATE (AWWA) (Water Operations) Target & AWWA: 100% of all health-related drinking water standards per quarter annually 75th Percentile for population served between 100,001-500,000 (water) Calculation: Number of days the primary health regulations are met/Number of days in the reporting period 17 100%100% 90% 95% 100% Q1 Q2 Q3 Q4 TARGET & AWWA BENCHMARK CIP PROJECT EXPENDITURES VS. BUDGET Target: 95% of budget but not to exceed 100% annually Calculation: Actual Expenditures/Annual budget 18 25.0%30.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4870-2 Pump Station CONSTRUCTION CHANGE ORDER INCIDENCE Target: No more than 5% annually Calculation: Total cost of Change Orders (not including allowances)/Total original construction contract amount (not including allowances) Temporary Lower Otay Pump Station 19 TARGET 4.5% 4.3% 4% 4% 4% 4% 5% 5% 5% 5% Q1 Q2 Q3 Q4 O&M COST PER ACCOUNT Target: Less than $575.00 per account annually (based on Operating budget) Calculation: Total operations O&M costs/Number of accounts Stephen Martinez, Lead Meter Maintenance/Cross Connection Worker, testing a large water meter to ensure accuracy TARGET 20 $127.00 $138.00 -$50 $50 $150 $250 $350 $450 $550 Q1 Q2 Q3 Q4 BILLING ACCURACY (Customer Service) Target: 99.8% billing accuracy per quarter annually Calculation: Number of correct bills/Total number of bills during the reporting period 21 99.99%99.94% 95% 96% 97% 98% 99% 100% 101% Q1 Q2 Q3 Q4 TARGET Monic Ndouangsy, Customer Service Rep II, reviewing integrity checks to ensure billing accuracy OVERTIME PERCENTAGE Target: Less than 100% of budgeted overtime per quarter annually (based on Operating budget and historical trends; FY21 Overtime budget is $182,300) Calculation: Actual overtime costs (including comp time)/Budgeted overtime costs Utility Maintenance staff completing a service replacement (left to right): German Garcia, Trevor Rogers, and Silas Hess 22 132% 97% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% Q1 Q2 Q3 Q4 TARGET SEWER RATE RANKING Calculation: Ranking for the average monthly sewer bill Brandon Perry, Senior Utility Worker/Equipment Operator,holding a CCTV camera, which are used to inspect the District’s collection system Target: Bottom 50th percentile for the 28 sewer service providers in San Diego (Otay ranks 5th out of 28 sewer service providers) 23 5 0 5 10 15 20 25 YTD Reported in Q1 TARGET WATER RATE RANKING Calculation: Ranking for the average monthly water bill among CWA member agencies Target: Bottom 50th percentile for the 22 member agencies in San Diego (Otay ranks 5th out of 22 member agencies) Hannah Tamjidi, Finance Department Assistant, preparing the budget book 24 5 0 5 10 15 20 25 YTD Reported in Q1 TARGET PERCENT OF CUSTOMERS PAYING BILLS ELECTRONICALLY Target: No less than 75% per quarter annually Calculation: Number of customers paying bills electronically/Total number of customers District customer making an online bill payment 25 82.03%82.50% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4 TARGET DISTRIBUTION SYSTEM LOSS Target: Less than 5%of unaccounted water annually 26 3.7% 3.2% 0% 1% 2% 3% 4% 5% 6% Q1 Q2 Q3 Q4 TARGET Calculation: Volume purchased from CWA, City of San Diego & RWCTP Production –volume sold to customers + volume used by District/Volume purchased from CWA, City of San Diego & RWCTP Production Regulatory site in Rancho San Diego. Site includes four reservoirs, two pump stations, and disinfection facilities PLANNED POTABLE WATER MAINTENANCE RATIO IN $ Target: 66% of all labor costs spent on preventative maintenance per quarter annually Calculation: Total Planned Maintenance Cost/Total Maintenance Cost Silas Hess, Sr. Utility Worker/Equipment Operator,connecting a customer’s meter after pulling a new copper service 27 70.8% 66.0% 50% 60% 70% 80% Q1 Q2 Q3 Q4 TARGET PLANNED RECYCLED WATER MAINTENANCE RATIO IN $ Target: 70% of all labor costs spent on preventative maintenance per quarter annually Calculation: Total Planned Maintenance Cost/Total Maintenance Cost 28 63% 59% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4 TARGET PLANNED WASTEWATER MAINTENANCE RATIO IN $ Target: 77% of all labor costs spent on preventative maintenance per quarter annually Calculation: Total Planned Maintenance Cost/Total Maintenance Cost Aerial view of the Ralph W. Chapman Recycling Plant 29 94.8%99.9% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4 TARGET DIRECT COST OF TREATMENT PER MGD Calculation: Total O&M costs directly attributable to sewer treatment/Total volume in MG for one quarter 30 $877.59 $2,586.84 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Q1 Q2 Q3 Q4 Target: No more than $1,050 per MGD spent on wastewater treatment annually Rob Leigh, Lead Reclamation Plant Operator, taking samples of Mixed Liquor Suspended Solids (MLSS) to be weighed MARK-OUT ACCURACY Target: 100% mark-out accuracy per quarter annually Calculation: Number of mark-outs performed without an at-fault hit, which is damage to a District facility that results from a missing or erroneous mark-out/Total number of mark-outs Gus Gracia, Sr. Utility Locator, conducting a mark-out 31 100.00%100.00% 95% 96% 97% 98% 99% 100% 101% Q1 Q2 Q3 Q4 TARGET PROJECT CLOSEOUT TIME Target: 45-day average annually Calculation: Number of days between NOSC and NOC for all construction projects within the quarter/ Number of construction projects within the quarter 32 7.5 7.5 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 Q1 Q2 Q3 Q4 TARGET Recycled Water Tank ANNUAL RECYCLED WATER SITE INSPECTIONS Target: 100% of recycled sites inspected annually (125 recycled water sites scheduled for FY21) Calculation: Cumulative percentage of recycled water sites inspected per quarter of those required by DEH 33 36.00% 68.00% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4Juan Tamayo, Recycled Water Program Supervisor, at a recycled water site in Chula Vista Calculation: Cumulative percentage of recycled site shutdown tests performed per year compared to those scheduled RECYCLED WATER SHUTDOWN TESTING Target: 90% of recycled site shutdown tests performed annually (55 recycled water sites scheduled for shutdown in FY21) 34 Larry Cannon, Recycled Water Specialist, conducting a shutdown test at Veterans Elementary in Chula Vista 36% 62% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4 EASEMENT EVALUATION AND FIELD INSPECTION Target: 100% assigned easements, evaluated via desktop tools, and inspected annually (100 easements were assigned for FY21) 35 28.0% 57.0% 0% 20% 40% 60% 80% 100% 120% Q1 Q2 Q3 Q4 Calculation: Number of easements evaluated and inspected/Total easements assigned for the period Aaron Hazard, Construction Inspector II, conducting an easement evaluation PERCENT OF PM’S COMPLETED –FLEET MAINTENANCE Target: 90% of scheduled preventative maintenance completed per quarter annually 36 100%100% 80% 85% 90% 95% 100% Q1 Q2 Q3 Q4 TARGET Calculation: Number of PM’s completed/Number of PM’s scheduled Abraham Yanez, Equipment Mechanic II, performing maintenance on an air relief valve for a vactor truck PERCENT OF PM’S COMPLETED –RECLAMATION PLANT Target: 90% of scheduled preventative maintenance completed each quarter annually Calculation: Number of PM’s completed/Number of PM’s scheduled 37 100%100% 80% 85% 90% 95% 100% Q1 Q2 Q3 Q4 TARGET Tyrese Powell-Slotterbeck, Reclamation Plant Operator II, moving chlorine gas containers after a delivery PERCENT OF PM’S COMPLETED –PUMP/ELECTRIC SECTION Target: 90% of scheduled preventative maintenance completed per quarter annually Calculation: Number of PM’s completed/Number of PM’s scheduled Motor Control Center at the 803-1 Pump Station 38 100%100% 80% 85% 90% 95% 100% Q1 Q2 Q3 Q4 TARGET SYSTEM VALVE EXERCISING PROGRAM Target: 3,080 valves exercised annually Calculation: Total number of valves exercised per year Utility Maintenance staff performing a valve exercise (left to right): Marco Ramirez and Daniel Jones 39 1492 1068 0 200 400 600 800 1,000 1,200 1,400 1,600 Q1 Q2 Q3 Q4 TARGET POTABLE WATER DISTRIBUTION SYSTEM INTEGRITY (Water Operations) Target: No more than 16 leaks or breaks per 100 miles of distribution system annually AWWA: 16.1 leaks and breaks per 100 miles of distribution system (50th percentile Potable Water System Integrity: Leaks and Breaks for population served between 100,000-500,000) Calculation: [100 (annual total number of leaks + annual total number of breaks)] /total miles of distribution piping 805-2 Pump Station 40 4.27 3.70 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Q1 Q2 Q3 Q4 AWWA BENCHMARK TARGET RECYCLED WATER SYSTEM INTEGRITY Target: No more than 6.6 leaks or breaks per 100 miles of recycled distribution system annually Calculation: (100 x Number of leaks and breaks)/Number of miles of recycled distribution system 41 0.95 0.95 0 1 2 3 4 5 Q1 Q2 Q3 Q4 TARGET SEWER OVERFLOW RATE (AWWA) (Wastewater Operations) Target & AWWA: 0 overflows per quarter 75th Percentile for Sewer Overflow rate for population served between 0-50,000 Calculation: 100 x Total number of sewer overflows during the reporting period/Total miles of pipe in the sewage collection system Brandon Perry, Senior Utility Worker/Equipment Operator,operating and documenting the condition of the collection system 42 1.14 0.000 1 2 Q1 Q2 Q3 Q4 TARGET & AWWA BENCHMARK is 0 EMERGENCY FACILITY POWER TESTING Target: Test 100% of all facilities scheduled per quarter to have all emergency facilities tested annually (36 powered ready facilities) Calculation: Number of facilities tested/Total number of facilities Emergency standby genset at the Cottonwood Sewer Lift Station *Due to COVID-19, all site testing was halted in 4th quarter 43 100%100% 75% 80% 85% 90% 95% 100% 105% 110% Q1 Q2 Q3 Q4 ANNUAL TARGET POTABLE TANK INSPECTION AND CLEANING Target: 8 potable water storage tanks and/or reservoirs cleaned annually Calculation: Total number of tanks cleaned and inspected annually 1004-2 Reservoir Tank 44 0 6 0 1 2 3 4 5 6 7 8 9 10 Q1 Q2 Q3 Q4 ANNUAL TARGET MAIN FLUSHING AND HYDRANT MAINTENANCE Target: 215 mains flushed and fire hydrants maintained annually Calculation: Total number of mains flushed and fire hydrants maintained per year Vince Brown, Utility Worker II, exercising a hydrant valve and flushing a hydrant at the same time 45 235 131 0 50 100 150 200 250 300 350 400 450 500 Q1 Q2 Q3 Q4 TARGET CRITICAL VALVE EXERCISING Target: 631 critical valves exercised annually Calculation: Total number of critical valves exercised in a year Utility Maintenance staff exercising a District valve (left to right): Luis Zavala and Daniel Jones 46 631 00 100 200 300 400 500 600 700 Q1 Q2 Q3 Q4 ANNUAL TARGET EMPLOYEE VOLUNTARY TURNOVER RATE (Organizational Development) Target: Less than 5% turnover annually Calculation: Number of voluntary terminations (not including retirements)/Average number of employees 47 0%0%0% 1% 2% 3% 4% 5% 6% Q1 Q2 Q3 Q4 ANNUAL TARGET TRAINING HOURS PER EMPLOYEE (Organizational Development) Target: 12 hours per employee annually Calculation: Total qualified training hours for all employees/Average number of FTEs Calculation: Total qualified training hours for all employees/Average number of FTEs 48 2.71 4.54 0 1 2 3 4 5 6 7 8 9 10 Q1 Q2 Q3 Q4 TARGET SAFETY TRAINING PROGRAM Target: 24 hours per field employee annually Calculation: Total qualified safety training hours for field employees/Average number of field employees David Rocha, Utility Crew Leader, completing a service replacement 49 4.00 7.48 0 5 10 15 20 25 Q1 Q2 Q3 Q4 TARGET Questions? https://otaywater.gov/about-otay/news-and-documents/strategic-plan/ C01.2 Ensure consistency of branding and representation across the District, using consistent logos, colors, messaging, communications tools, and other collaterals through enhancement of internal and external marketing materials. 6/30/2022 ON HOLD C01.3 Evaluate and enhance the District’s water conservation programs.6/30/2022 ON TARGET F01.2 South District Potable Water Supply Alternatives to San Diego County Water Authority (SDCWA) Pipeline 4 Supply Interruption (catastrophic event).12/31/2021 ON TARGET F01.3 Treatment Plant long-term business plan (sewer portion).12/31/2021 ON TARGET F02.2 In support of the Engineering Department, conduct recycled water and sewer business financial analysis.6/30/2021 COMPLETED F03.2 Evaluate, and if beneficial, implement Cloud payroll service.6/30/2019 COMPLETED F03.3 Evaluate enhancements to, or replacement, of the rate model program.6/30/2021 ON HOLD F03.4 Implement Paperless Account Payable (AP) solution.6/30/2021 COMPLETED F03.5 Re-evaluate prior payroll solutions and identify any new cloud-based payroll solutions.12/31/2021 ON HOLD F03.6 Complete a sewer cost of service study and recommend a rate structure that will provide for more stable sewer revenues.12/31/2020 COMPLETED F03.7 Evaluate the Capacity and New Water Supply Fees, including an update of applicable costs, and, if possible, recommend a fee structure that is more efficient and effective than the current structure. 6/30/2020 COMPLETED F04.2 Enhancement of the AM Program.12/31/2021 ON TARGET F04.3 Financial activity-based cost cross-training.6/30/2022 ON TARGET F04.4 In support of the Engineering Department, enhance financial impact forecasting and analysis of future CIPs.12/31/2018 COMPLETED F06.2 Review Deferred Compensation Program for reduced fees and streamlined approach and ensure program offerings are fully utilized.3/31/2020 COMPLETED F03. Enhancement of business systems. F02. Evaluation of key system alternatives and financial impact. F01. Integrated resource planning and facility optimization. FINANCIAL F06. Negotiate and implement a new labor agreement and optimize employee benefit programs. F05. Develop alternative Public Employees Retirement System (PERS) financing strategy to fund ahead of PERS schedule. F04. Enhancement of the Asset Management (AM) and Capital Improvement Programs (CIP). I01 1 Evaluation of Advanced Metering Infrastructure (AMI) technology 6/30/2022 ON TARGET F06.1 Negotiate and implement new labor agreement.9/30/2019 COMPLETED F05.1 Optimize funding and liability schedule.6/30/2019 COMPLETED 9/30/2019 COMPLETED F01.1 Recycled water long-term business plan.12/31/2021 ON TARGET F02.1 Conduct desalination (Rosarito) financial analysis.6/30/2019 COMPLETED F03.1 Enterprise Resource Planning (ERP)/Customer Information System (CIS)/Customer Relationship Management (CRM) validation and replacement evaluation. 12/31/2021 ON HOLD F04.1 Enhancement of the framework for systematic development, validation, and implementation of new CIPs. Status CUSTOMER C01. Enhance and build awareness and engagement among the District’s customers and stakeholders and within the San Diego Region of the District’s strategies, policies, projects, programs, and legislative/regulatory issues. C02. Assess and enhance communications tools and increase online presence and social media exposure. Perspective Objectives Target Date C01.1 Continue implementation of and enhance the District’s community and business outreach, media, and government relations programs.6/30/2022 ON TARGET C02.1 Assess communications tools.6/30/2022 ON TARGET Strategy ATTACHMENT C I01.2 Explore web-based options for meter reading and backflow test entry.6/30/2019 COMPLETED I01.3 Optimize Global Positioning System (GPS) fleet assignment and routing operation.6/30/2020 COMPLETED I02.2 Enterprise Resource Planning (ERP)/Customer Information System (CIS)/Customer Relationship Management (CRM) validation and replacement evaluation. 6/30/2022 ON HOLD I03.2 Implement Human Resource Information System (HRIS) in coordination with payroll conversion.6/30/2020 COMPLETED I03.3 Pilot cloud-based human capital performance management system and implement, if determined necessary.6/30/2021 ON TARGET I04.2 Advance business processes and operational efficiencies through effective implementation of information technology.6/30/2019 COMPLETED I04.3 Create framework to evaluate cost efficiency of new technology services and cloud vs. on-premise selection.12/31/2019 COMPLETED I04.4 Deploy next generation storage services and communication architecture.6/30/2019 COMPLETED I06.2 Evaluate the use of Drone2Map technology for asset, field inspections, and condition assessment.12/31/2020 COMPLETED I06.3 Migrate Geographic Information System (GIS) data structure from geometric network to utility dashboard.6/30/2022 ON TARGET I06.4 Standardization of District asset data and collection process.6/30/2020 COMPLETED I07.2 Evaluate the effectiveness of various methods to reduce nitrification events.6/30/2022 ON TARGET I07.3 Evaluate the efficiency and effectiveness of the District’s valve exercise preventative maintenance including proposed recommendations.6/30/2021 ON TARGET I07.4 Evaluate the impacts as a result of recent and upcoming regulatory changes including, but not limited to, Air Pollution Control District (APCD), State Water Resource Control Board (SWRCB), Occupational Safety and Health Administration (OSHA), etc. 6/30/2021 ON TARGET I07. Enhancement of maintenance and program standards. INTERNAL BUSINESS PROCESSES I06. Enhancement of enterprise geographic data. I05. Enhance SCADA system services via SCADA roadmap project. I04. Maintain a reliable, scalable, secure, and high-performing technology infrastructure to support current and future service needs. I03. Evaluate and leverage the use of available Human Resources self- service and capital management technology solutions. I02. Enhance customer experience. (collaboration between Customer Service and Communications) I01. Optimize meter activity operations. I02.1 Customer electronic communication and outreach.6/30/2022 ON TARGET I01.1 Evaluation of Advanced Metering Infrastructure (AMI) technology.6/30/2022 ON TARGET COMPLETED I06.1 Deploy ArcGIS Pro for 3D analysis.6/30/2021 ON TARGET I05.1 Prioritize fourteen strategic project/initiatives, recently developed.6/30/2020 COMPLETED I04.1 Adopt National Institute of Standards and Technology (NIST) cyber security framework and enhance disaster recovery planning.12/31/2018 COMPLETED I03.1 Evaluate on-boarding programs and implement, if determined necessary.12/31/2020 I07.1 Analyze electric energy-saving programs as they become available.6/30/2022 ON TARGET I07.5 Establish an access and defensible space vegetation mitigation program with maintenance schedules for District remote facilities, access roads, and off-road appurtenances. 3/31/2020 COMPLETED I08.2 Evaluate feasibility of incorporating electric and hybrid vehicles into District fleet.6/30/2022 COMPLETED I08.3 Streamline contract and purchase order (contract) management and lifecycle.12/31/2019 COMPLETED L01.2 Review and enhance knowledge transfer process to ensure retention of District knowledge 6/30/2022 NOT STARTED LEARNING AND GROWTH L01. Enhance Leadership and employee training programs, and knowledge transfer process. I09. Enhancement of the Confined Space Program. I08. Enhancement of contracting and facility services. I10. Optimize District’s Hazardous Waste Operations and Emergency Response (HAZWOPER) and Confined Space Emergency Response Team. L01.1 Continue development of leadership and District-wide training programs.6/30/2022 ON TARGET I10.1 Certify at Industry State Level and under the Incident Command System, streamline chlorine gas and confined space rescue training, operations, response and areas of responsibility and convert to inventory lists and equipment logs to electronic form. 6/30/2023 ON HOLD I09.1 Automate confined space regulatory and work forms (electronic conversion), add confined space data layer in the District’s enterprise Geographic Information System (GIS) and use data to electronically automate the District’s confined space inventory. 6/30/2023 ON TARGET I08.1 Enhance Customer and Public Service security in public lobby areas.6/30/2020 COMPLETED STAFF REPORT TYPE MEETING:Regular Board MEETING DATE:March 3, 2021 SUBMITTED BY: Jose Martinez General Manager W.O./G.F. NO: N/A DIV. NO. N/A APPROVED BY: Jose Martinez, General Manager SUBJECT:General Manager’s Report GENERAL MANAGER •District’s Response to COVID-19 Pandemic – As a result of the COVID-19 pandemic emergency declarations and the social distancingorders have resulted in a portion of the District’s staff telecommuting, the District has had no impacts to its water supplyand has maintained a continuity of operations and services duringthe challenging and dynamic environment. Staff continues to monitor and provide updates as needed relating to responding tothis pandemic, including but not limited to: water and wastewater services, supplies, operations, finances, and communication.The District is continuing to hold Board of Directors meetings viateleconference services which provides public access to themeetings. The District remains committed to the safety of the public and its employees who continue to provide the public with essentialservices. A Safe Reopening Plan and a Social Distancing andSanitation Protocol have been implemented and are updated inaccordance with county health guidelines including the recentemergency regulations discussed in this report. Staff will continue to monitor and comply with all Federal, State and Local orders andguidelines that apply or affect the District including theeligibility of staff to receive the COVID vaccine. The District continues to advocate for COVID-related funding relief to those customers adversely affected by the pandemic as a resultof the restrictions imposed by Proposition 218 which restricts theability of water suppliers to utilize rate revenue for delinquencyforgiveness or relief. AGENDA ITEM 16 2 ADMINISTRATIVE SERVICES: GIS: • GIS Dashboard 2.0 Training – GIS staff continues to conduct training for District staff as the new Dashboard not only incorporates existing functions, but new improved desktop and mobile features. The District’s Dashboard presents information in a geographic representation and it includes data ranging from customer information to engineering as-build project drawings. The training includes coordinating with department workgroups, creating District specific user Dashboard menus, and providing different use cases of work flows for different functional units. Feedback from the completed training sessions has been very positive. The training sessions also offered an opportunity to communicate with other District staff in order to collect feedback for further improvements. The custom in-house training has been very effective and has proved to be very cost effective as internal staff not only developed the training, but also served as trainers. Human Resources: • COVID—19 Laws and Regulations – HR staff continues to stay abreast of legal updates to ensure policies and procedures are kept up-to-date and relevant updates are communicated internally. • Recruitments/New Hires/Promotions: o The District is or will be recruiting for the following positions:  Accountant  Construction Inspector I/II  District Secretary  Utility Worker I/II  Water Systems Operator I/II/III • Human Resources will be or recently onboarded the following positions: o Human Resources Assistant I o Utility Worker I/II o Recycled Water Specialist IT Operations: • Solarwinds Cybersecurity Intrusion - Staff recently completed internal and external vulnerability assessments, reviewed system configuration logs, and determined that the District network and operational systems were not affected by the recent Solarwinds cybersecurity intrusion. The District's technology safeguards are continuously evaluated for potential weaknesses and vulnerabilities. One of the safeguards includes an on-going and scheduled DHS Cyber Hygiene assessment, which evaluates potential 3 security weaknesses and mitigation actions. Additionally, as part of the Cybersecurity and Infrastructure Security Agency (CISA) awareness group, the team continues to stay abreast of the latest exploits that pose potential threats to all critical infrastructure entities. • Oldsmar Water Treatment Cyber Intrusion - Staff recently attended a briefing regarding the Florida water treatment facility cyber-attack. It was determined that a remote software contributed to the exploit, which led to the manipulation of SCADA control settings. Several key recommendations were addressed during the briefing, including proactively monitoring essential events within SCADA control systems, monitoring key setpoints of critical process parameters, and disabling capabilities for remote accessibility. Further, in addition to implementing the NIST (National Institute of Standards and Technology) cybersecurity framework, via automated alert settings and notifications, staff continuously monitors the District's air-gapped or non-internet connected SCADA system for abnormal behaviors. Staff also recently conducted a table-top exercise focusing on such an incident during a monthly EOC (Emergency Operations Center) meeting. • Tyler Eden Upgrade - Staff formally kicked off the annual Eden Management System upgrade, version 5.24, which includes functional upgrades and a new validation testing process. For this year’s criteria, all testing will be held remotely with IT staff coordinating this task. After the completion of scheduled tests, staff will perform a District-wide upgrade during the first week of March. Purchasing & Facilities: • Administration Plaza Garden Entrance – The landscape in and around the Administration building’s customer parking, Plaza, and entrance was installed over 20 years ago and is in need of an update, not only due to aging and missing vegetation but also to reflect current conservation trends and environmental thought and practice. Staff has invited WYAC, the original landscape design firm, to review and propose fees to provide a renewed inspiring public space. Staff is also exploring promotional and maintenance opportunities with the Conservation Garden to connect the Plaza and Garden in mutually beneficial ways. Safety & Security: • COVID-19 (COVID): o Work continues on the District’s COVID Prevention Program (CPP). A change was made to the originally selected CCP and replaced by a template purchased from Liebert Cassidy & Whitmore: “Template for COVID-19 Prevention Program and Guide to Employer Obligations Under the COVID-19 Prevention Program”. 4 o Staff continues to provide information on, and in support of, the new Cal-OSHA COVID-19 Temporary Standard 3205. o Staff continues to monitor the following for updates and the latest information: County’s activated Emergency Operations Center (for local water agencies), Cal/OSHA, County & State health departments, CDC, County’s Water Hub as part of the Office of Emergency Services, WebEOC, CalWARN, local and neighboring water agencies. • Monthly WebEOC Exercise - The exercise for February was successfully completed. The exercise consisted of: “Navigating to the WAEC Members list under Plugins, File & Map Library, Water Hub Docs. Find OWD’s agency’s information and email any updates ng was to colvera@sdcwa.org”. o The exercise was completed remotely and without physical presence from District EOC staff. This process will continue until further notice. o The purpose of these exercises is to aid in maintaining the District’s emergency readiness. • DOT and Drug-Free Workplace Testing - The quarterly testing was successfully completed; a total of 18 staff members underwent and completed this process. • Safety Training During COVID-19: o The annual regulatory Asbestos Cement Pipe (ACP) refresher training for Utility Maintenance staff has been scheduled for March 2021 and will be taking place virtually. o Other training, as applicable, will continue to be evaluated for completion virtually, via Target Solutions, and/or on-line. 5 FINANCE: • Collections and Bad Debt Exposure: 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. Collections and Bad Debt Exposure # of Accounts $'s March 2020 (31 Days) January 2021 (31 Days) February 2021 (17 Days) FY 2020 End of Year Lockable Lockable Balances as of February 2021 (17 Days) FY 2020 Remainder FY 2021 Lockable Total Lockable Accounts Owner 129 633 671 $205,805 $44,800 $283,714 $328,514 Tenant 147 558 556 $158,471 $42,744 $270,670 $313,414 Total 276 1,191 1,227 $364,276 $87,544 $554,384 $641,928 Typical Monthly Values 200 Actual Sales $40,861,103 $63,057,418 Percent of Bad Debt Exposure 0.21% 0.88% FY2021 Waived Penalties $545,586 Lockable $'s From Recycled Accounts $- $- There are no lockable recycle accounts. Note: Prior to the COVID-19 pandemic the lockable balance was $48,500. • FY 2022 Budget – Staff is continuing its efforts to prepare the FY 2022 budget process. The tentative budget calendar for the Board is consistent with the FY 2021 budget with the Economist report being presented at the April Board meeting, followed by a Board budget workshop in late April or early May, and a final Budget presentation at the June Board meeting. • CSMFO Operating Budget Award – The District received CSMFO’s Operating Budget Excellence Award for its FY 2021 Operating Budget document. This is the 15th consecutive year the District has received the award. 6 • CSMFO Capital Budget Award – The District received CSMFO’s Capital Budget Excellence Award for its FY 2021 Capital Budget document. This is the 16th consecutive year the District has received the CSMFO award. • Union Bank Trust and Custody Accounts – Union Bank notified the District that its Trust and Custody business is being sold to US Bank. The sale is currently under review by State and Federal Regulators and is expected to be completed by July 1, 2021. Currently Union Bank provides the debt service management function for the District’s outstanding bonds. In the meantime, Union Bank will continue servicing our Trust and Custody accounts under normal operating procedures until July 1st. Union Bank confirmed that the current Trust Agreements contain language which states the issue will be transferred to the successor Trustee without the filing of any paper or act. • Rate Increases – Rate increases have been fully tested and were successfully implemented beginning January 1, 2021. Financial Reporting: • The financial reporting for January 31, 20201 is as follows: o For the seventh month ending January 31, 2021, there are total revenues of $70,691,096 and total expenses of $62,487,433. The revenues exceeded expenses by $8,203,663. • The financial reporting for investments for January 31, 2021 is as follows: o The market value shown in the Portfolio Summary and in the Investment Portfolio Details as of January 31, 2021 total $80,558,410 with an average yield to maturity of 0.730%. The total earnings year-to-date are $349,376. ENGINEERING AND WATER SYSTEM OPERATIONS: Engineering: • 870-2 Pump Station Replacement: This project consists of a new Pump Station to replace the existing Low Head 571-1 and High Head 870-1 Pump Stations. The project also includes the replacement of the existing liner and cover for the 571-1 Reservoir (36.7 MG). On June 29, 2020, Pacific Hydrotech, the Pump Station’s contractor, achieved substantial completion and began seven-day operational testing. Currently, the Pump Station remains in the testing phase and remains offline pending mechanical repairs. The Pump Station has four (4) pumps, two (2) electric motor driven and two (2) external gas engine driven motor/pump combinations. There are on- going mechanical repairs that are expected to be complete in March 2021, at which time, the 7-day testing will resume and be completed 7 for project acceptance. Unanticipated District costs associated with the continuing repairs are being tracked for reimbursement from the contract retention. Forensic reports for the mechanical issues are under development and a consultant with pump expertise has been hired to analyze and document the specific mechanical issues. (P2083 & P2562) • Temporary Lower Otay Pump Station Redundancy: This project will add a second pump to the District’s existing Temporary Lower Otay Pump Station (TLOPS) to provide redundancy. The District’s contractor, Tharsos, moved the District’s pre-purchased trailer, which had been stored in the Operations employee parking lot, to the project site on May 18, 2020. Tharsos set the trailer and installed staircases and platforms around the trailer in May 2020. Installation of aboveground pipe was completed in December 2020. Construction of below grade piping was completed February 2021. Tharsos’s construction contract also includes mechanical, electrical, and instrumentation & control. Project completion is expected in April 2021. The project is within budget. COVID-19 IMPACTS: The contractor is alleging that the project has experienced delays associated with pipe fabrication. Staff is waiting for proof of the impacts and continues to collect liquidated damages for the 240+ days the contractor is past the contract expiration date. The District has collected $228K in liquidated damages through January 2021. (P2619) • Portable Trailer Mounted VFD Pumps: This project consists of procurement of a portable trailer mounted hydropneumatic pump station designed for deployment at up to seven (7) existing sites including four (4) hydropneumatic pump stations and three (3) small pressure zones each fed by a single gravity reservoir. District staff have been working with the trailer vendor (Cortech) and Cortech’s subcontractor (PremierFlow) to resolve manufacturing issues since the trailer was delivered to the District on the trailer to District headquarters on June 27, 2020. PremierFlow’s subcontractor (Henry’s Trailers located in El Cajon) completed several repairs October 12 through November 13, 2020. The trailer was partially deployed at the District’s existing 1200-1 Pump Station site late November in support of the 1200-1 Reservoir Interior/Exterior Coating Project (P2533). Electrical wiring repairs were completed by District in-house electrician staff during the month of December 2020. The District collected all the costs and is negotiating with the vendor for reimbursement. PremierFlow’s system integrator subcontractor (TechKnowsion) completed system integration and testing early-January through mid-February 2021. (P2640) 8 • Otay Mesa Pipeline Cathodic Protection Improvements: This project includes repairs to existing cathodic protection systems, such as anode replacement and cathodic test station repairs located in the Otay Mesa Area. The construction contract was awarded at the August Board Meeting. Notice to proceed was issued September 8, 2020 and the Pre-Construction Meeting was held on September 11, 2020. The District’s contractor, Kay Construction, commenced field work mid-September 2020 and project substantial completion was achieved on December 11, 2020. Project closeout is underway. This project is within budget. (P2648) • 14-Inch Force Main Air-Vac Replacements Project: This project includes replacement of nineteen (19) existing combination air- vacuum valve assemblies previously replaced in 2006-2008, which are reaching the end of their useful life. The construction contract was awarded at the August 2020 Board Meeting. The District’s contractor, Burtech, mobilized to the site early November 2020. District pre-purchased air-vacuum valves were delivered months late to the District on December 1, 2020. The delayed delivery impacted the contractor, Burtech, and the District is currently negotiating a change order. Project substantial completion was achieved on December 18, 2020. Project closeout is underway. This project is within budget. (R2156) • 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. Award of a professional engineering services agreement to Murraysmith was presented at the September Board Meeting and the agreement was executed on October 9, 2020. A site visit with Murraysmith and topographical/boundary survey field work was completed during the month of December 2020. District staff have been working together with Murraysmith to develop and select a replacement concept for preliminary design. District staff coordinated with the Vista Diego Property Owners Association (VDPOA) and scheduled the District’s as-needed geotechnical engineer consultant (Ninyo & Moore) to complete geotechnical field work late February 2021 in Vista Diego Road and at the Pump Station site. Murraysmith is anticipated to deliver a draft preliminary design report by March 2021. 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. Design was completed using as-needed electrical design services and in-house engineering and drafting personnel. Award of the contract to Cora Constructors was 9 authorized at the November 2020 Board meeting. Notice to proceed was issued on January 8, 2021. A Pre-construction Meeting was held on January 20, 2021. This project is within budget. (P2174) • RWCWRF Disinfection System Improvements: Currently, the Ralph W. Chapman Water Reclamation Facility uses the 14-inch force main to meet the contact time (CT) for the disinfection of recycled water from the plant. This makes the force main part of the treatment process and requires sampling of the plant effluent to be performed at the Day Use area over a 20-minute drive time away. An update of a study to perform disinfection on-site, completed in 2015, has been completed by Arcadis U.S., Inc., to compare the newest generation of ultraviolet (UV) methods, that are significantly more energy efficient, to constructing a chlorine contact basin. The final report was submitted in November 2020 and staff has reviewed the recommendations as well as investigated other facilities that use UV including the City of San Diego’s South Bay Water Reclamation Plant (South Bay WRP). District staff visited the South Bay WRP to understand better the system pros and cons of how it is operated and maintained. Staff will verify with the Regional Board that the permit will not need to be amended if the District boosts the chlorine residual of the product water after the UV system. The District uses chlorine gas today and that does not increase the TDS in the product water; however, switching to chloramine to boost the residual will increase the TDS. Staff has started developing the scope of work for the consultant selection for design. (R2117) • Melrose Ave and Oleander Ave PRSs and 980 Reservoirs Altitude Valve Vaults: Project involves the replacement of two 1960’s era pressure reducing stations in Chula Vista. The 340 PZ is a closed system with no storage, requiring pressure relief capabilities at each station. Project design was originally completed and bid in December 2019, but the sole bid received was substantially over budget and rejected. The project was advertised again in February 2021, with it being packaged with renovations to the 980-1 & -2 Reservoirs altitude valve vaults. The valves and piping have significant corrosion impacts, with new corrosion protection included in the design. Bid opening will be in March 2021. Projects are within budget (P2605, P2627, & P2671) • 850-1 & 1200-1 Reservoirs Interior/Exterior Coating and Upgrades: This project consists of removing and replacing the interior and exterior coatings of the 850-1 (1.15 MG) and the 1200-1 (1.0 MG) Reservoirs, along with providing structural upgrades, to ensure the tanks comply with both state and federal OSHA standards as well as the American Water Works Association and the County Health Department standards. Capital Industrial Coatings, Inc. completed the structural work on the 850-1 Reservoir. The roof and shell 10 have been recoated, and the contractor is currently working on recoating the floor and erecting scaffolding on the exterior in preparation to wrap the tank for the external recoating. The project is within budget. (P2543 & P2533) • Recycled Water Storage Tank Coating: This project consists of removing and replacing the interior and exterior coatings of the Recycled Water Storage Tank (0.43 MG) and minor structural repairs. The tank was built in 1979 and is located at the R.W. Chapman Water Recycling Facility. United Field Services Corp. (Unified) repaired the pitting that was exposed during the coating removal. Unified completed the recoating on the exterior and interior on February 12, 2021. The coating required a 7-9 day cure period. The tank was returned to service at the end of February 2021. The project is within budget. (R2120) • CIP Projects Mitigation Areas Receive Final Approval: A letter was received by the General Manager’s office on February 11, 2021 from United States Fish & Wildlife Service (USFWS). The letter provided final sign-off of two mitigation areas that had been created for vegetation impacts due to the construction of two CIP projects, the 640 Reservoirs project at the Regulatory site and the 1296-3 Reservoir project in Jamul. Both projects resulted in significant impacts to Coastal Sage Scrub and the impacted areas surrounding these Reservoirs had to be restored. Although these projects were completed many years ago, they required 5-year restorations. After the restoration was completed at each site and the success criteria met, it required diligence by District staff to get the required sign-off letter from USFWS. The letter confirms that all the District’s obligations for the restoration of these sites have been completed. • FY 2021 Sewage Flows to Metro vs Planned Capacity: The treatment plant has been offline since November due to construction work on the force main and storage tank, with recycled water production to begin again in March 2021. The projected total flow to Metro for the fiscal year will be about 190 MG or just over 0.5 MGD. Metro flows for next fiscal year should return to below the planned capacity as there are no planned projects to require the plant to go offline for an extended period. The Metro amended agreement indicates three (3) consecutive years of exceeding the allocated capacity before having to increase the agency’s capacity. 11 • Summary of Budgeted and Sold Meters and EDUs for Fiscal Year 2021 up through 1/30/2021: Water System Operations (reporting for January): • On Sunday, January 3rd, the District had a 16-inch main break on Paseo Ladera. Staff responded and isolated the water main. Due to the magnitude of the damage, the District declared it an emergency. Contractor Cass Arrieta was hired to perform the repairs with an estimated completion date for mid-February. Potable discharge reports were sent to the State and City of Chula Vista on Tuesday, January 5th. Weekly updates were provided to the Board. Date Meters (Budgeted) Meters Sold (Actual) EDUs (Budgeted) EDUs Sold (Actual) Total $ Collected (Budgeted) Total $ Collected (Actual) Jan 2021 23.8 21 37.9 74.5 $256,459 $853,971 Totals FY 2021 166.3 161 265.4 367 $1,795,208 $3,433,184 12 • The following events occurred on Thursday, January 7th: o There was a planned power outage that affected 1485 Reservoirs. Small portable generators were deployed and no APCD approvals were required. o Staff performed a simulated shutdown on Kempton Street in Spring Valley for new tie-ins for future development. • On Thursday, January 14th, staff completed the National Pollutant Discharge Elimination System report for the potable water system discharges and sent to the State Water Resources Control Board. • On Wednesday, January 20th, there was a brush fire in Campo resulting in an estimated 200,000 gallons in water used due to fire crews fighting the fire. • The following events occurred on Thursday, January 21st: o Staff performed a planned shutdown on a 12-inch main on Paseo de La Fuente in Otay Mesa to relocate fire hydrants. No customers were affected. o The Summit CL2 building in La Presa was tampered with. Nothing was stolen, but a police report was requested. o Staff performed an emergency shutdown on 10174 Austin Drive in Spring Valley due to an AC pipe failure during a two-inch wet tap. The shutdown lasted for two hours and 35 minutes affecting three customers. Water trailers were provided. • On Sunday, January 24th, Pressure Zone lines 624 and 711 were put back in service in Paseo Ladera. • The City of Chula Vista is transitioning to San Diego Community Power as an electric provider instead of SDG&E. This is a green energy plan that they will phase in over the next year. The District was informed that two of its electric accounts are part of the Phase 1 implementation program, which is scheduled to begin in March. Phase 2 will begin in June and Phase 3 will begin in about a year. Staff has reached out to SDG&E and San Diego Community Power to get more information and staff from San Diego Community Power has confirmed that they currently charge more for power, but they hope to have more competitive pricing in the future. Staff opted out of the Phase 1 implementation and will continue to monitor San Diego Community Power’s program and pricing. 13 Purchases and Change Orders: • The following table summarizes purchases and Change Orders issued during the period from January 13 through February 17, 2021, that were within staff’s signatory authority: Date Action Amount Contractor/ Consultant Project 1/13/2021 P.O. $16,000.00 EYEMED VISION BENEFITS ADMIN (CY2021) 1/15/2021 P.O. $1,077.50 EDCO DISPOSAL CORPORATION RECYCLED WASTE SVCS 1/19/2021 P.O. $2,690.00 D&D WILDLIFE HABITAT PRUNE VEGETATION & WEED REMOVAL 1/25/2021 P.O. $4,133.53 WATCHLIGHT CORPORATION RWCWRF GATE CAMERA & DVR 2/2/2021 P.O. $3,820.95 WATCHLIGHT CORPORATION SECURITY AND ACCESS SYSTEM 2/2/2021 P.O. $2,692.67 SKYDIO, INC DRONE PURCHASE 2/4/2021 FIRST AMENDMENT $70,000.00 MURRAYSMITH, INC. PLAN CHECK SERVICES FOR DEVELOPER POTABLE AND RECYCLED WATER PROJECTS (VARIOUS) 2/10/2021 P.O. $15,000.00 FRANKLINCOVEY CLIENT SALES, INC LEADERSHIP/ MANAGEMENT TRAINING 2/10/2021 P.O. $1,080.00 FIRST AMERICAN TITLE COMPANY RECYCLED PIPELINE CATHODIC PROTECTION IMPROVEMENTS (R2146) 2/16/2021 C.C. $2,624.00 STATE OF CALIFORNIA DOT CAMPO ROAD SEWER MAIN REPLACMENT (S2024) 2/17/2021 P.O. $49,270.00 WATER SYSTEMS CONSULTING, INC. 2020 URBAN WATER MANAGEMENT PLAN (P1210) 2/17/2021 P.O. $9,963.78 ADVANCED INFRASTRUCTURE TECHNOLOGIES, LLC WATER THUMBER (SURVEY) 14 Water Conservation and Sales: • Water Conservation – Due to an unusually hot and dry month, January 2021 usage was 10% higher than January 2013 usage. Since January 2020, customers have saved an average of 6% over 2013 levels. • Potable Water Purchases – The January potable water purchases were 1,990 acre-feet which is 30% above the budget of 1,529 acre-feet. The cumulative purchases through January were 18,409 acre-feet which is 20% above the cumulative budget of 15,293 acre-feet. The surplus volumes for the month and year are most likely due to January month and year-to-date rainfall being below the three-year average rainfall by 22% and 42%, respectively. In addition, the FY 2021 potable water sales budget was cut by 12% from the projected FY 2021 actuals as a response to COVID-19 and the expected economic impacts. It is too early to say if the expected COVID-19 related reductions will or will not happen the rest of the year. 15 • Recycled Water Purchases – The January recycled water purchases from the City of San Diego and production at the District’s treatment facility were 148 acre-feet which is 70% above the budget of 87 acre-feet. The cumulative production and purchases through January were 2,682 acre-feet which is 27% above the cumulative budget of 2,119 acre-feet. The surplus volumes for the month and year are most likely due to January month and year-to-date rainfall being below the three-year average rainfall by 22% and 42%, respectively. In addition, the FY 2021 recycled water sales budget was cut by 15% from the projected FY 2021 actuals as a response to COVID-19 and the expected economic impacts. It is too early to say if the expected COVID-19 related reductions will or will not happen the rest of the year. Potable, Recycled, and Sewer (Reporting up to the month of January): • Total number of potable water meters: 51,216. • Total number of sewer connections: 4,740. • Recycled water consumption for the month of January: o Total consumption: 230.19 acre-feet or 75,003,456 gallons. o Average daily consumption: 2,419,466 gallons per day. o Total cumulative recycled water consumption since January 1, 2020: 2,789 acre-feet. o Total number of recycled water meters: 743. 16 • Wastewater flows for the month of January: o Total basin flow: 1,621,226 gallons per day.  This is a decrease of 1.7 percent from January 2020. o Spring Valley Sanitation District flow to Metro: 537,841 gallons per day. o Total Otay flow: 1,083,484 gallons per day. o Flow processed at the Ralph W. Chapman Water Recycling Facility: 0 gallons per day. o Flow to Metro from Otay Water District: 1,083,484 gallons per day. o By the end of January, there were 6,752 wastewater EDUs. Exhibit A Annual YTD YTD YTD Budget Actual Budget Variance Var % REVENUES: Potable Water Sales 46,419,000$ 36,809,258$ 30,058,000$ 6,751,258$ 22.5% Recycled Water Sales 8,411,000 7,418,368 5,793,300 1,625,068 28.1% Potable Energy Charges 2,034,000 1,707,577 1,412,000 295,577 20.9% Potable System Charges 16,805,000 9,744,676 9,731,000 13,676 0.1% Potable MWD & CWA Fixed Charges 12,869,000 7,377,539 7,375,000 2,539 0.0% Potable Penalties and Other Fees 622,000 18,953 276,400 (257,447) (93.1%) Total Water Sales 87,160,000 63,076,371 54,645,700 8,430,671 15.4% Sewer Charges 2,870,000 1,616,187 1,616,800 (613) (0.0%) Meter Fees 123,000 83,554 71,400 12,154 17.0% Capacity Fee Revenues 1,869,000 1,229,122 1,180,600 48,522 4.1% Non-Operating Revenues 2,177,000 1,622,229 1,211,600 410,629 33.9% Tax Revenues 4,155,000 2,928,995 2,467,800 461,195 18.7% Interest 179,000 134,638 114,300 20,338 17.8% Total Revenues 98,533,000$ 70,691,096$ 61,308,200$ 9,382,896$ 15.3% EXPENSES: Potable Water Purchases 33,631,000$ 24,758,075$ 20,545,200 (4,212,875)$ (20.5%) Recycled Water Purchases 4,058,000 3,389,433 3,389,433 - 0.0% CWA-Infrastructure Access Charge 2,839,000 1,571,958 1,571,958 - 0.0% CWA-Customer Service Charge 1,703,000 998,273 998,273 - 0.0% CWA-Reliability Charge 2,711,000 1,553,400 1,553,400 - 0.0% CWA-Emergency Storage Charge 4,608,000 2,721,928 2,721,928 - 0.0% MWD-Capacity Res Charge 628,000 350,488 350,488 - 0.0% MWD-Readiness to Serve Charge 720,000 417,688 417,688 - 0.0% Subtotal Water Purchases 50,898,000 35,761,243 31,548,368 (4,212,875) (13.4%) Power Charges 2,898,000 1,894,241 1,617,967 (276,274) (17.1%) Payroll & Related Costs 21,860,000 12,162,618 12,345,700 183,082 1.5% Material & Maintenance 3,720,000 1,923,971 2,044,108 120,137 5.9% Administrative Expenses 6,280,000 3,248,492 3,564,657 316,165 8.9% Legal Fees 707,000 397,668 412,400 14,732 3.6% Expansion Reserve 150,000 87,500 87,500 - 0.0% Replacement Reserve 9,676,000 5,644,300 5,644,300 - 0.0% OPEB Trust 1,100,000 641,700 641,700 - 0.0% General Fund Reserve 259,000 151,100 151,100 - 0.0% Total Expenses 98,533,000$ 62,487,433$ 58,632,400$ (3,855,033)$ (6.6%) EXCESS REVENUES(EXPENSE)-$ 8,203,663$ 2,675,800$ 5,527,863$ OTAY WATER DISTRICT COMPARATIVE BUDGET SUMMARY FOR THE SEVEN MONTHS ENDED JANUARY 31, 2021 F:/MORPT/FS2021-0121.xlsx 2/25/2021 11:54 AM COMPARATIVE BUDGET SUMMARY NET REVENUES AND EXPENSES FOR THE SEVEN MONTHS ENDED JANUARY 31, 2021 $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000 $6,000,000 $6,500,000 $7,000,000 $7,500,000 $8,000,000 $8,500,000 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 The year-to-date actual net revenues through January show a positive variance of $5,527,862. $1,955,090 2.43% $74,727,722 93.00% $3,669,636 4.57% Otay Water District Investment Portfolio: 01/31/2021 Banks (Passbook/Checking/CD)Pools (LAIF & County)Agencies & Corporate Notes Total Cash and Investments: $80,352,448 (Book Value) OTAY WATER DISTRICT INVESTMENT PORTFOLIO REVIEW January 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 January 27, 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 January 2021 was .72%, which was five basis points lower than the previous month. LAIF return on deposits was eight basis points lower than the previous month, reaching an average effective yield of .46% for the month of January 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: January 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 $65 Million $30.88 Million 8.02: Local Agency Investment Fund (Bonds) 100% 100% $ 2.58 Million 8.03: Federal Agency Issues 100% 100% $ 3.67 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 8.08: San Diego County Pool 100% 100% 51.36% 12.0: Maximum Single Financial Institution 100% 50% 2.43% July FY20 Aug FY20 Sep FY20 1st Qtr FY20 Oct FY20 Nov FY20 Dec FY20 2nd Qtr FY20 Jan FY20 Feb FY20 Mar FY20 3rd Qtr FY20 Apr FY20 May FY20 Jun FY20 4th Qtr FY20 Jul FY21 Aug FY21 Sep FY21 1st Qtr FY21 Oct FY21 Nov FY21 Dec FY21 2nd Qtr FY21 Jan FY21 LAIF 2.38 2.34 2.28 2.33 2.19 2.10 2.04 2.11 1.97 1.91 1.79 1.89 1.65 1.36 1.22 1.41 0.92 0.78 0.69 0.80 0.62 0.58 0.54 0.58 0.46 Otay 1.91 1.90 1.93 1.92 1.94 1.97 1.92 1.95 1.90 1.86 1.71 1.83 1.51 1.31 1.19 1.34 0.95 0.93 0.82 0.91 0.81 0.87 0.77 0.82 0.72 Difference -0.47 -0.44 -0.35 -0.42 -0.25 -0.13 -0.12 -0.16 -0.07 -0.05 -0.08 -0.06 -0.14 -0.05 -0.03 -0.07 0.03 0.15 0.14 0.11 0.19 0.29 0.23 0.24 0.26 -1.00 -0.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Re t u r n o n I n v e s t m e n t s Month Performance Measure FY-21 Return on Investment LAIF Otay Difference Target: Meet or Exceed 100% of LAIF Month End Portfolio Management January 31, 2021 Portfolio Summary % of Portfolio Book ValueInvestmentsMarket Value Par Value Days toMaturityTerm YTM360 Equiv.YTM365 Equiv. Federal Agency Issues - Coupon 3,669,636.45 7364.68 1.4542213,700,333.503,650,000.00 1.474 BOND PROCEEDS (LAIF)2,583,020.92 13.29 0.45212,588,887.782,583,020.92 0.458 Local Agency Investment Fund (LAIF)30,876,967.31 139.39 0.452130,947,098.7230,876,967.31 0.458 San Diego County Pool 41,267,733.22 152.64 0.873141,367,000.0041,267,733.22 0.885 78,397,357.90 100.00%Investments 78,603,320.0078,377,721.45 35 11 0.720 0.730 Cash (not included in yield calculations)Passbook/Checking 1,955,089.91 1 0.33111,955,089.911,955,089.91 0.335 80,352,447.81Total Cash and Investments 80,558,409.9180,332,811.36 35 11 0.720 0.730 Current Year January 31 49,314.56 Fiscal Year To Date 349,375.96 Average Daily Balance Effective Rate of Return 80,905,787.97 76,498,993.05 0.73%0.72% 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 06, 2020. The market valueinformation 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: 02/18/2021 11:32 Reporting period 01/01/2021-01/31/2021 Run Date: 02/18/2021 - 11:32 PM (PRF_PM1) 7.3.0 Report Ver. 7.3.5 02/22/2021 YTM360 Page 1 Par Value Book Value MaturityDateStatedRateMarket Value January 31, 2021 Portfolio Details - Investments AverageBalanceIssuer Portfolio Management Month End Days toMaturityS&PCUSIPInvestment #PurchaseDate Federal Agency Issues - Coupon 1.454Federal Home Loan Bank2384 1,005,000.00 1,010,406.75 09/10/20212.37509/05/2019 1,018,858.95 AA313378JP7 221 1.454Federal Home Loan Bank2385 2,645,000.00 2,659,229.70 09/10/20212.37509/05/2019 2,681,474.55 AA313378JP7 221 3,669,636.453,700,333.503,650,000.003,670,894.64Subtotal and Average 1.454 221 BOND PROCEEDS (LAIF) 0.452STATE OF CALIFORNIA9015 2,583,020.92 2,583,020.92 0.4582,588,887.78LAIF 2018 1 2,583,020.922,588,887.782,583,020.922,594,091.27Subtotal and Average 0.452 1 Local Agency Investment Fund (LAIF) 0.452STATE OF CALIFORNIA9001 30,876,967.31 30,876,967.31 0.45830,947,098.72LAIF 1 30,876,967.3130,947,098.7230,876,967.3130,532,258.17Subtotal and Average 0.452 1 San Diego County Pool 0.873San Diego County9007 41,267,733.22 41,267,733.22 0.88541,367,000.00SD COUNTY POOL 1 41,267,733.2241,367,000.0041,267,733.2241,240,805.17Subtotal and Average 0.873 1 80,905,787.97 78,377,721.45 0.720 1178,603,320.00 78,397,357.90Total and Average Portfolio OTAY NL! APData Updated: SET_ME8: 02/18/2021 11:32 Run Date: 02/18/2021 - 11:32 PM (PRF_PM2) 7.3.0 Report Ver. 7.3.5 YTM360 Page 2 Par Value Book Value StatedRateMarket Value January 31, 2021 Portfolio Details - Cash AverageBalanceIssuer Portfolio Management Month End Days toMaturityS&PCUSIPInvestment #PurchaseDate Union Bank 0.010STATE OF CALIFORNIA9002 403,480.21 403,480.21 0.010403,480.21UNION MONEY 1 0.000STATE OF CALIFORNIA9003 2,950.00 2,950.002,950.00PETTY CASH 1 0.444STATE OF CALIFORNIA9004 1,444,548.93 1,444,548.93 0.4501,444,548.93UNION OPERATING 1 0.000STATE OF CALIFORNIA9005 29,545.43 29,545.4307/01/2020 29,545.43PAYROLL 1 0.030STATE OF CALIFORNIA9010 12,622.24 12,622.24 0.03007/01/2020 12,622.24RESERVE-10 COPS 1 0.030STATE OF CALIFORNIA9011 31,419.82 31,419.82 0.03007/01/2020 31,419.82RESERVE-10 BABS 1 0.000STATE OF CALIFORNIA9014 30,523.28 30,523.2807/01/2020 30,523.28UBNA-FLEX ACCT 1 0.00 80,905,787.97 80,332,811.36 0.720 11 1Average Balance 80,558,409.91 80,352,447.81Total Cash and Investments Portfolio OTAY NL! APData Updated: SET_ME8: 02/18/2021 11:32 Run Date: 02/18/2021 - 11:32 PM (PRF_PM2) 7.3.0 Month End Activity Report Sorted By Issuer January 1, 2021 - January 31, 2021 Current Rate Transaction Date BalanceBeginning Balance Ending Par Value Percent of Portfolio Par Value CUSIP Investment # Issuer Purchases orDeposits Redemptions orWithdrawals Issuer: STATE OF CALIFORNIA BOND PROCEEDS (LAIF) STATE OF CALIFORNIA9015 4,629.940.458 136,000.00LAIF 2018 136,000.002,714,390.98 2,583,020.92Subtotal and Balance 4,629.94 Union Bank STATE OF CALIFORNIA9002 3.250.010 875.00UNION MONEY STATE OF CALIFORNIA9004 993,632.410.450 919,516.17UNION OPERATING STATE OF CALIFORNIA9010 0.310.030 0.00RESERVE-10 COPS STATE OF CALIFORNIA9011 0.670.030 0.00RESERVE-10 BABS STATE OF CALIFORNIA9014 0.00 23,867.74UBNA-FLEX ACCT 944,258.911,905,712.18 1,955,089.91Subtotal and Balance 993,636.64 Local Agency Investment Fund (LAIF) STATE OF CALIFORNIA9001 4,148,998.800.458 3,000,000.00LAIF 3,000,000.0029,727,968.51 30,876,967.31Subtotal and Balance 4,148,998.80 5,147,265.38 4,080,258.9134,348,071.67 35,415,078.1444.085%Issuer Subtotal Issuer: Federal Home Loan Bank Federal Agency Issues - Coupon 3,650,000.00 3,650,000.00Subtotal and Balance 0.00 0.003,650,000.00 3,650,000.004.544%Issuer Subtotal Issuer: San Diego County San Diego County Pool San Diego County9007 36,294.330.885 0.00SD COUNTY POOL 0.0041,231,438.89 41,267,733.22Subtotal and Balance 36,294.33 36,294.33 0.0041,231,438.89 41,267,733.2251.371%Issuer Subtotal Portfolio OTAY AP Run Date: 02/18/2021 - 11:39 DA (PRF_DA) 7.2.0 Report Ver. 7.3.5 Current Rate Transaction Date BalanceBeginning Balance Ending Par Value Page 2 Percent of Portfolio Par Value January 1, 2021 - January 31, 2021 Activity Report Month End CUSIP Investment # Issuer Purchases orDeposits Redemptions orWithdrawals 79,229,510.56 80,332,811.36Total4,080,258.915,183,559.71100.000% Portfolio OTAY AP Run Date: 02/18/2021 - 11:39 DA (PRF_DA) 7.2.0 Report Ver. 7.3.5 Month End Duration Report Sorted by Investment Type - Investment Type Through 01/31/2021 Investment #Security ID Issuer Investment Class Book Value Par Value Market Value Current Rate YTM Current Yield Maturity/ Call Date DurationModified360Fund Federal Home Loan Bank238499 1,005,000.00 1,018,858.95313378JP7 0.107 09/10/2021 0.6021,010,406.75 1.454Fair2.375000 Federal Home Loan Bank238599 2,645,000.00 2,681,474.55313378JP7 0.107 09/10/2021 0.6022,659,229.70 1.454Fair2.375000 STATE OF CALIFORNIA901599 2,583,020.92 2,588,887.78LAIF 2018 0.458 0.0002,583,020.92 0.452Fair.4580000 STATE OF CALIFORNIA900199 30,876,967.31 30,947,098.72LAIF 0.458 0.00030,876,967.31 0.452Fair.4580000 San Diego County900799 41,267,733.22 41,367,000.00SD COUNTY 0.885 0.00041,267,733.22 0.873Fair.8850000 0.666 0.02878,397,357.90 78,377,721.45 78,603,320.00Report Total Portfolio OTAY NL! APPage 1Data Updated: SET_ME8: 02/18/2021 11:32 Run Date: 02/18/2021 - 11:32 DU (PRF_DU) 7.1.1 Report Ver. 7.3.5 Month End GASB 31 Compliance Detail Sorted by Fund - Fund January 1, 2021 - January 31, 2021 Investment #Maturity Date BeginningInvested Value Purchaseof Principal InvestmentClassFundCUSIP Adjustment in Value EndingInvested ValueAdditionto Principal Redemptionof Principal AmortizationAdjustment Change inMarket Value Fund: Treasury Fund 2384 1,020,286.05Fair Value 09/10/2021 -1,427.1099 1,018,858.95313378JP70.00 0.00 0.00 0.00 2385 2,685,230.45Fair Value 09/10/2021 -3,755.9099 2,681,474.55313378JP70.00 0.00 0.00 0.00 9002 404,351.96Amortized 0.0099 403,480.21UNION MONEY 0.00 3.25 875.00 0.00 9003 2,950.00Amortized 0.0099 2,950.00PETTY CASH 0.00 0.00 0.00 0.00 9015 2,720,556.23Fair Value -298.3899 2,588,887.78LAIF 2018 0.00 4,629.94 136,000.00 0.00 9004 1,370,432.69Amortized 0.0099 1,444,548.93UNION OPERATING 0.00 993,632.41 919,516.17 0.00 9001 29,795,490.18Fair Value 2,609.7499 30,947,098.72LAIF0.00 4,148,998.80 3,000,000.00 0.00 9010 12,621.93Amortized 0.0099 12,622.24RESERVE-10 COPS 0.00 0.31 0.00 0.00 9011 31,419.15Amortized 0.0099 31,419.82RESERVE-10 BABS 0.00 0.67 0.00 0.00 9014 54,391.02Amortized 0.0099 30,523.28UBNA-FLEX ACCT 0.00 0.00 23,867.74 0.00 9005 29,545.43Amortized 0.0099 29,545.43PAYROLL0.00 0.00 0.00 0.00 9007 41,455,000.00Fair Value -124,294.3399 41,367,000.00SD COUNTY POOL 0.00 36,294.33 0.00 0.00 79,582,275.09Subtotal -127,165.97 80,558,409.910.00 5,183,559.71 4,080,258.91 0.00 79,582,275.09Total 80,558,409.91-127,165.970.00 5,183,559.71 4,080,258.91 0.00 Portfolio OTAY NL! APData Updated: SET_ME8: 02/18/2021 11:32 Run Date: 02/18/2021 - 11:32 GD (PRF_GD) 7.1.1 Report Ver. 7.3.5 Month End Interest Earnings Sorted by Fund - Fund January 1, 2021 - January 31, 2021 Yield on Beginning Book Value Maturity Date Current Rate Ending Par Value EndingSecurityTypeFundBook ValueBeginningBook Value Adjusted Interest Earnings AccretionAmortization/EarningsAdjusted InterestAnnualized YieldCUSIPInvestment #Interest Earned Fund: Treasury Fund 1,010,406.7523841,005,000.00 2.375FAC09/10/2021 1,989.06 -740.65 1,248.411.454991,011,147.40313378JP7 2,659,229.7023852,645,000.00 2.375FAC09/10/2021 5,234.90 -1,949.27 3,285.631.454992,661,178.97313378JP7 403,480.219002403,480.21 0.010PA1 3.43 0.00 3.430.01099404,351.96UNION MONEY 2,583,020.9290152,583,020.92 0.458LA2 1,009.07 0.00 1,009.070.438992,714,390.98LAIF 2018 1,444,548.9390041,444,548.93 0.450PA1 891.87 0.00 891.870.766991,370,432.69UNION OPERATING 30,876,967.31900130,876,967.31 0.458LA1 11,876.63 0.00 11,876.630.4709929,727,968.51LAIF 12,622.24901012,622.24 0.030PA1 0.32 0.00 0.320.0309912,621.93RESERVE-10 COPS 31,419.82901131,419.82 0.030PA1 0.80 0.00 0.800.0309931,419.15RESERVE-10 BABS 41,267,733.22900741,267,733.22 0.885LA3 30,998.40 0.00 30,998.400.8859941,231,438.89SD COUNTY POOL 80,269,792.65Subtotal 80,289,429.10 0.733 49,314.56-2,689.9252,004.4879,164,950.48 80,269,792.65Total 80,289,429.10 0.733 49,314.56-2,689.9252,004.4879,164,950.48 Portfolio OTAY NL! APData Updated: SET_ME8: 02/18/2021 11:32 Run Date: 02/18/2021 - 11:32 IE (PRF_IE) 7.2.0 Report Ver. 7.3.5 Check Total 47,495.00 19192 12/31/20 BACTERIOLOGICAL TEST (12/7/20)226.00 19194 12/31/20 BACTERIOLOGICAL TEST (12/15/20-12/16/20)376.00 19190 12/31/20 BACTERIOLOGICAL TEST (11/30/20)226.00 19189 12/31/20 BACTERIOLOGICAL TEST (11/30/20-12/1/20)452.00 19193 12/31/20 BACTERIOLOGICAL TEST (12/15/20-12/16/20)452.00 45.00 45.00 2055479 01/27/21 04119 CLARKSON LAB & SUPPLY INC 19195 12/31/20 BACTERIOLOGICAL TEST (12/16/20-12/17/20)504.00 REGISTRATION/SPONSORSHIP 3,000.00 3,000.00 2055582 02/17/21 04071 CAPITOL WEBWORKS LLC 30766 01/31/21 OUTSIDE SERVICES - LOBBYING DISCLOSURE 2055581 02/17/21 05211 CALIFORNIA FOUNDATION ON THE C2101-10 01/29/21 6,910.00 2055580 02/17/21 20595 CALIFORNIA FOOD MANAGEMENT LLC Ref002618151 02/12/21 UB Refund Cst #0000215347 250.48 250.48 12,587.50 12,587.50 2055478 01/27/21 20374 CALBURTON INC CAL327 01/07/21 UTILITY LOCATING SERVICES (DEC 2020)6,910.00 TELEPHONE SERVICES (11/12/20 - 1/11/21)9,260.24 9,260.24 2055544 02/10/21 18665 BURTECH PIPELINE INC 301112021 01/12/21 14" FORCE MAIN AIR-VACS REPLACE (1/11/21) 2055543 02/10/21 07785 AT&T 000015873654 01/12/21 15,182.50 2055542 02/10/21 17264 ARTIANO SHINOFF ABED 304523 01/19/21 PROFESSIONAL SERVICES (DEC 2020)52,937.76 52,937.76 5,414.00 5,414.00 2055477 01/27/21 13171 ARCADIS US INC 34208781 01/07/21 WATER RECLAMATION SERVICES (OCT 2020)15,182.50 UB Refund Cst #0000260237 44.30 44.30 2055541 02/10/21 13171 ARCADIS US INC 34211695 01/20/21 WATER RECLAMATION SERVICES (NOV 2020) CM20218 01/10/21 CMIS (12/1/20-12/31/20)500.00 2055509 02/03/21 20573 ANDREW LUND Ref002616727 01/29/21 CM20212 01/10/21 CMIS (10/1/20-11/30/20)4,960.00 CM20211 01/10/21 CMIS (12/1/20-12/31/20)2,560.00 CM20213 01/10/21 CMIS (10/1/20-12/31/20)6,775.00 CM20214 01/10/21 CMIS (10/1/20-12/31/20)6,720.00 CM20216 01/10/21 CMIS (10/1/20-12/31/20)7,200.00 CM20215 01/10/21 CMIS (10/1/20-12/31/20)7,040.00 6,530.00 2055476 01/27/21 14462 ALYSON CONSULTING CM20217 01/10/21 CMIS (12/1/20-12/31/20)11,740.00 695.00 695.00 2055475 01/27/21 15024 AIRX UTILITY SURVEYORS INC 3512312020 01/06/21 UTILITY LOCATING (DEC 2020)6,530.00 UB Refund Cst #0000266511 59.87 59.87 2055540 02/10/21 17989 ADS CORP 22446.22-0121 01/23/21 SEWER FLOW MONITORING 2055508 02/03/21 20576 ADAM WALTON Ref002616730 01/29/21 1,950.00 2055474 01/27/21 18122 ACC BUSINESS 210132568 01/27/21 INTERNET CIRCUIT SERVICES FY20-22 1,013.64 1,013.64 Amount 2055539 02/10/21 08488 ABLEFORCE INC 9867 02/08/21 SHAREPOINT & INTRANET SUPPORT SVCS 1,950.00 CHECK REGISTER Otay Water District Date Range: 1/21/2021 - 2/17/2021 Check #Date Vendor Vendor Name Invoice Inv. Date Description Page 1 of 7 Check Total Amount CHECK REGISTER Otay Water District Date Range: 1/21/2021 - 2/17/2021 Check #Date Vendor Vendor Name Invoice Inv. Date Description 2,650.00 1,696.60 620.50 1,530.00 1,949.90 9,751.66 1,297.38 107.11 107.11 2055485 01/27/21 20511 EYEMED 164644336 01/20/21 VISION BENEFITS ADMINISTRATION (CY2021)1,297.38 UB Refund Cst #0000050359 9.48 9.48 2055522 02/03/21 02447 EDCO DISPOSAL CORPORATION 155458 013121 01/31/21 RECYCLED WASTE SERVICE 2055511 02/03/21 20564 DONNA SHIEPE Ref002616718 01/29/21 248.00 2055484 01/27/21 14374 DISCFLO CORPORATION 006307 01/04/21 SKIMMINGS PUMP AND MOTOR 21,693.31 21,693.31 50.57 50.57 2055584 02/17/21 02965 DIPIETRO, BRANDON 011321 01/13/21 EXPENSE REIMBURSEMENT 248.00 DATA CENTER HARDWARE 14,910.92 14,910.92 2055510 02/03/21 20563 DELORES LEONARD Ref002616717 01/29/21 UB Refund Cst #0000048094 2055548 02/10/21 02603 DELL MARKETING LP 10458984728 01/25/21 3,017.28 2055521 02/03/21 14008 DELL AWARDS 216209 11/14/20 AWARD 111.36 111.36 420.00 420.00 2055547 02/10/21 11797 D&H WATER SYSTEMS INC 2021-0055 01/14/21 V10 CHLORINATOR 3,017.28 PERMIT FEES # 01214 (MAR 2021-MAR 2022)460.00 460.00 2055483 01/27/21 04497 D & R CRANE INC 15994 01/11/21 CRANE MAINTENANCE 2055546 02/10/21 02122 COUNTY OF SAN DIEGO 2012RI2021 01/27/21 PERMIT FEES # 003617 (JAN 2021-JAN 2022)4,875.83 3315379 01/13/21 PERMIT FEES # 01214 (JAN 2021-JAN 2022)4,875.83 2055482 01/27/21 02122 COUNTY OF SAN DIEGO 3315380 01/13/21 E632930121 02/04/21 DEVELOPER INSPECTION (1/27/21-1/28/21)164.90 E634020121 02/04/21 SHUT DOWN TEST (1/14/21-1/22/21)153.00 DEVELOPER INSPECTION (12/7/20-12/10/20)1,377.00 E602090121 02/11/21 SHUT DOWN TEST (1/8/21)255.00 2055583 02/17/21 00184 COUNTY OF SAN DIEGO E634101220 02/04/21 DEVELOPER PLAN CHECK (1/11/21)765.00 E634040121 01/22/21 DEVELOPER PLAN CHECK (1/22/21)765.00 2055520 02/03/21 00184 COUNTY OF SAN DIEGO E602340121 01/13/21 DEVELOPER PLAN CHECK (12/2/20-12/18/20)348.50 E633791220 01/04/21 DEVELOPER PLAN CHECK (12/1/20-12/18/20)272.00 2055481 01/27/21 00184 COUNTY OF SAN DIEGO E633811220 01/04/21 E633931220 01/04/21 SHUT DOWN TEST (12/8/20)229.50 E602271220 01/04/21 SHUT DOWN TEST (12/9/20)153.00 804.10 E602321220 01/04/21 SHUT DOWN TEST (11/25/20)255.00 E602351220 01/21/21 SHUT DOWN TEST (12/11/20)255.00 EXCAVATION PERMITS (DEC 2020)971.10 971.10 2055480 01/27/21 00184 COUNTY OF SAN DIEGO E632811220 01/04/21 DEVELOPER INSPECTION (12/11/20) 19191 12/31/20 BACTERIOLOGICAL TEST (12/2/20)188.00 2055545 02/10/21 00099 COUNTY OF SAN DIEGO DPWMWD1220 01/12/21 19196 12/31/20 BACTERIOLOGICAL TEST (12/21/20)226.00 Page 2 of 7 Check Total Amount CHECK REGISTER Otay Water District Date Range: 1/21/2021 - 2/17/2021 Check #Date Vendor Vendor Name Invoice Inv. Date Description 4,774.83 596.63 729783 01/22/21 AS-NEEDED SODIUM HYPOCLORITE FY21 478.54 729784 01/22/21 AS-NEEDED SODIUM HYPOCLORITE FY21 1,307.65 728221 01/12/21 AS-NEEDED SODIUM HYPOCLORITE FY21 1,190.79 AS-NEEDED SODIUM HYPOCLORITE FY21 1,914.17 728922 01/15/21 AS-NEEDED SODIUM HYPOCLORITE FY21 1,494.61 12269025 01/05/21 AMMONIA MONOCHLORAMINE REAGENT 176.24 2055553 02/10/21 19978 HASA INC.729199 01/19/21 536.97 2055488 01/27/21 00174 HACH COMPANY 12263142 12/30/20 AMMONIA MONOCHLORAMINE REAGENT 420.39 9,689.00 9,689.00 2055529 02/03/21 00174 HACH COMPANY 12271956 01/05/21 AMMONIA MONOCHLORAMINE REAGENT 536.97 UB Refund Cst #0000259032 7.84 7.84 2055552 02/10/21 12907 GREENRIDGE LANDSCAPE INC 20288 01/19/21 LANDSCAPING SERVICES 2055576 02/17/21 20591 GORETTI GONZALEZ Ref002618146 02/12/21 3,099.16 2055528 02/03/21 18333 GEOCON INCORPORATED 120120252 12/30/20 GEOTECHNICAL SERVICES (NOV 2020)360.00 360.00 105.99 105.99 2055551 02/10/21 03094 FULLCOURT PRESS 37322 02/09/21 PRINTING NEWSLETTERS 3,099.16 BI-WEEKLY PAYROLL DEDUCTION 25.00 25.00 2055527 02/03/21 20520 FRANCHISE TAX BOARD Ben2616780 02/04/21 BI WEEKLY PAYROLL DEDUCTION 2055589 02/17/21 20481 FRANCHISE TAX BOARD Ben2618163 02/18/21 75.00 2055526 02/03/21 20481 FRANCHISE TAX BOARD Ben2616778 02/04/21 BI-WEEKLY PAYROLL DEDUCTION 25.00 25.00 75.00 75.00 2055588 02/17/21 19640 FRANCHISE TAX BOARD Ben2618161 02/18/21 BI-WEEKLY PAYROLL DEDUCTION 75.00 FLEET WASH SERVICES FY21 169.96 169.96 2055525 02/03/21 19640 FRANCHISE TAX BOARD Ben2616776 02/04/21 BI-WEEKLY PAYROLL DEDUCTION 2055587 02/17/21 11962 FLEETWASH INC 2104570 01/22/21 116.90 2055550 02/10/21 11962 FLEETWASH INC 2097875 01/15/21 FLEET WASH SERVICES FY21 38.97 38.97 372.34 372.34 2055524 02/03/21 11962 FLEETWASH INC 2093523 01/08/21 FLEET WASH SERVICES FY21 116.90 UB Refund Cst #0000240581 1,570.69 1,570.69 2055586 02/17/21 20570 FJ WILLERT CONTRACTING CO Ref002618150 02/12/21 UB Refund Cst #0000240581 12/31/20 DOCUMENT SERVICE (MONTHLY)99.00 99.00 2055523 02/03/21 20570 FJ WILLERT CONTRACTING CO Ref002616724 01/29/21 3,284.22 0743896 01/11/21 C900 PIPE 1,490.61 2055487 01/27/21 17888 FIRST AMERICAN DATA TREE LLC 9003401220 INVENTORY 239.64 239.64 2055486 01/27/21 03546 FERGUSON WATERWORKS # 1083 0743757 01/07/21 INVENTORY 2055549 02/10/21 03546 FERGUSON WATERWORKS # 1083 0742450 12/17/20 2055585 02/17/21 04986 FARR, STEVEN 020821 02/08/21 EXPENSE REIMBURSEMENT 150.00 150.00 Page 3 of 7 Check Total Amount CHECK REGISTER Otay Water District Date Range: 1/21/2021 - 2/17/2021 Check #Date Vendor Vendor Name Invoice Inv. Date Description 7,900.40 5,121.52 21,101.85 8,182.60 21,312.3518420801/03/21 BILL PROCESSING SERVICES 2,616.38 BILL PROCESSING SERVICES 14,170.66 183920 12/31/20 BILL PROCESSING SERVICES 4,525.31 185285 01/23/21 BILL PROCESSING SERVICES 1,826.03 2055492 01/27/21 08969 INFOSEND INC 183921 12/31/20 855.43 855.43 2055558 02/10/21 08969 INFOSEND INC 185286 01/23/21 BILL PROCESSING SERVICES 6,356.57 GAS DETECTION PROGRAM 316.93 316.93 2055491 01/27/21 17816 INDUSTRIAL SCIENTIFIC CORP 2383837 12/31/20 GAS DETECTION PROGRAM 0152504 01/21/21 ENVIRONMENTAL SVCS (11/28/20-12/31/20)2,076.65 2055557 02/10/21 17816 INDUSTRIAL SCIENTIFIC CORP 2388602 01/12/21 0152500 01/21/21 ENVIRONMENTAL SVCS (11/28/20-12/31/20)2,712.50 0152505 01/21/21 ENVIRONMENTAL SVCS (11/28/20-12/31/20)2,417.47 0152503 01/21/21 SAN MIGUEL HMA (11/28/20-12/31/20)5,149.83 0152501 01/21/21 ENVIRONMENTAL SVCS (11/28/20-12/31/20)3,252.50 9,087.45 2055556 02/10/21 15622 ICF JONES & STOKES INC 0152502 01/21/21 ENVIRONMENTAL SVCS (11/28/20-12/31/20)5,492.90 4,843.75 4,843.75 2055555 02/10/21 13349 HUNSAKER & ASSOCIATES 2020110091 01/12/21 LAND SURVEYING SERV (9/26/20-11/27/20)9,087.45 POTABLE PIPELINE REPLACE (NOV 2020)20,448.37 20,448.37 2055554 02/10/21 18436 HAZEN AND SAWYER DPC 200940043 01/21/21 ASSET MANAGEMENT SVCS (DEC 2020) 2055490 01/27/21 18436 HAZEN AND SAWYER DPC 2009400213 12/29/20 727777 01/07/21 AS-NEEDED SODIUM HYPOCLORITE FY21 133.55 727192 12/30/20 AS-NEEDED SODIUM HYPOCLORITE FY21 116.85 727191 12/30/20 AS-NEEDED SODIUM HYPOCLORITE FY21 351.67 727190 12/30/20 AS-NEEDED SODIUM HYPOCLORITE FY21 178.06 727193 12/30/20 AS-NEEDED SODIUM HYPOCLORITE FY21 467.41 727924 01/08/21 AS-NEEDED SODIUM HYPOCLORITE FY21 445.16 727189 12/30/20 AS-NEEDED SODIUM HYPOCLORITE FY21 511.93 727922 01/08/21 AS-NEEDED SODIUM HYPOCLORITE FY21 472.98 AS-NEEDED SODIUM HYPOCLORITE FY21 1,654.87 727923 01/08/21 AS-NEEDED SODIUM HYPOCLORITE FY21 789.04 728855 01/14/21 AS-NEEDED SODIUM HYPOCLORITE FY21 104.61 2055489 01/27/21 19978 HASA INC.727458 01/05/21 728926 01/15/21 AS-NEEDED SODIUM HYPOCLORITE FY21 134.66 729561 01/21/21 AS-NEEDED SODIUM HYPOCLORITE FY21 111.29 728924 01/15/21 AS-NEEDED SODIUM HYPOCLORITE FY21 362.80 729787 01/22/21 AS-NEEDED SODIUM HYPOCLORITE FY21 356.12 728923 01/15/21 AS-NEEDED SODIUM HYPOCLORITE FY21 445.16 Page 4 of 7 Check Total Amount CHECK REGISTER Otay Water District Date Range: 1/21/2021 - 2/17/2021 Check #Date Vendor Vendor Name Invoice Inv. Date Description 732.37 25,304.00 ENGINEERING DESIGN (NOV 2020)1,455.00 1,455.00205556502/10/21 18332 NV5 INC 193593 12/29/20 60.18 2055496 01/27/21 16607 NINTEX USA LLC 30780 12/30/20 SOFTWARE LICENSE 9,776.00 9,776.00 17,413.00 17,413.00 2055578 02/17/21 20594 NELSON ESTRADA Ref002618149 02/12/21 UB Refund Cst #0000266872 60.18 ELECTRICAL ENGINEERING (DEC 2020)3,400.00 3,400.00 2055594 02/17/21 19824 MURRAYSMITH INC 1926560011 12/21/20 PLAN CHECK SERVICES (NOV 2020) 2055495 01/27/21 19765 MORAES/PHAM & ASSOCIATES 201057 12/31/20 44.50 2055564 02/10/21 20334 MODERN CUSTOM FABRICATION INC 50569 12/18/20 RANCHO JAMUL PRESSURE VESSEL 32,599.48 32,599.48 25.00 25.00 2055593 02/17/21 16613 MISSION RESOURCE CONSERVATION 420 02/03/21 OUTSIDE SERVICES - HWUE 44.50 REPROGRAPHIC SERVICES 1,844.16 1,844.16 2055531 02/03/21 20578 MIDTOWN PLUMBING INC 10859 02/02/21 OVERPAYMENT REFUND 2055563 02/10/21 02882 MAYER REPROGRAPHICS INC I21627968 01/31/21 SPRAY HEAD REPLACEMENT 17,700.00 201101-1 12/17/20 AERATION BASIN SLIDE GATE VALVE INSTALL 7,604.00 01/29/21 UB Refund Cst #0000205678 38.33 38.33 2055494 01/27/21 19313 MAXIM ENGINEERING 201101-2 12/17/20 374.87 OWD-12235 12/11/20 AS-NEEDED PRINTING & MAILING SERVICES 357.50 2055516 02/03/21 20568 MARIA NAVARRO Ref002616722 UB Refund Cst #0000249916 872.22 872.22 2055562 02/10/21 10512 MAIL MANAGEMENT GROUP INC OWD-12245 01/13/21 AS-NEEDED PRINTING & MAILING SERVICES 2055515 02/03/21 20571 LUIS FUENTES Ref002616725 01/29/21 6,402.00 2055561 02/10/21 14513 LB CIVIL CONSTRUCTION INC 711302020 01/12/21 DICTIONARY HILL LINE REPLACE (DEC 2020)31,642.68 31,642.68 137.03 137.03 2055560 02/10/21 05840 KIRK PAVING INC 7719 01/14/21 AS-NEEDED PAVING SERVICE FY21 6,402.00 UB Refund Cst #0000060409 42.55 42.55 2055514 02/03/21 20572 JOYCE BELL Ref002616726 01/29/21 UB Refund Cst #0000252669 2055513 02/03/21 20567 JOHN HIGGINS Ref002616721 01/29/21 1,933.98 2055592 02/17/21 20593 JMI CONSTRUCTION Ref002618148 02/12/21 UB Refund Cst #0000265505 1,762.83 1,762.83 769.48 769.48 2055591 02/17/21 20592 JMI CONSTRUCTION Ref002618147 02/12/21 UB Refund Cst #0000265456 1,933.98 UB Refund Cst #0000258207 2,465.00 2,465.00 2055530 02/03/21 20577 JESSE CASILLAS 4019020121 02/01/21 CUSTOMER REFUND 2055590 02/17/21 20590 JAMES W FOWLER CO Ref002618145 02/12/21 70.03 2055512 02/03/21 20566 JAMES SHEPARD Ref002616720 01/29/21 UB Refund Cst #0000053305 92.27 92.27 1,938.00 1,938.00 2055577 02/17/21 20588 JAMES COLLINS Ref002618143 02/12/21 UB Refund Cst #0000256938 70.03 SCRUBBER ANNUAL SERVICE 2,450.00 2,450.00 2055493 01/27/21 17106 IWG TOWERS ASSETS II LLC 602806 01/27/21 ANTENNA SUBLEASE 2055559 02/10/21 15368 INTEGRITY MUNICIPAL SYSTEMS 10078 01/19/21 Page 5 of 7 Check Total Amount CHECK REGISTER Otay Water District Date Range: 1/21/2021 - 2/17/2021 Check #Date Vendor Vendor Name Invoice Inv. Date Description 140,678.39 81,261.19 20,928.48 2,500.00 2,500.00 RED DYED CARB DIESEL 5,280.02 5,280.02 2055502 01/27/21 18376 SVPR COMMUNICATIONS 1386 12/31/20 COMMUNICATIONS CONSULTING SERVICES 494447 01/06/21 UNLEADED FUEL & DIESEL 9,409.81 2055571 02/10/21 10339 SUPREME OIL COMPANY 495158 01/19/21 10,031.28 2055501 01/27/21 10339 SUPREME OIL COMPANY 494446 01/06/21 UNLEADED FUEL & DIESEL 11,518.67 6,011.50 6,011.50 2055537 02/03/21 15974 SUN LIFE FINANCIAL 38166010121 01/01/21 LIFE INSURANCE AND STD/LTD (JAN 2021)10,031.28 DRONE PURCHASE 2,692.68 2,692.68 2055570 02/10/21 03516 SPECIAL DISTRICT RISK 8040020321 02/03/21 GENERAL LIABILITY DEDUCTIBLE 2055536 02/03/21 19985 SKYDIO INC 10427 11/02/20 1,696.20 2055500 01/27/21 02660 SILVA, GABRIEL GS012321 01/23/21 TUITION REIMBURSEMENT 163.00 163.00 19,669.69 19,669.69 2055535 02/03/21 20575 SHEA HOMES Ref002616729 01/29/21 UB Refund Cst #0000266014 1,696.20 UTILITY EXPENSES (MONTHLY)40.85 40.85 2055534 02/03/21 17840 SANGIS / COUNTY OF SAN DIEGO SAN876 01/28/21 IMAGERY CONSORTIUM SUBSCRIPTION SVCS 012921 01/29/21 UTILITY EXPENSES (MONTHLY)494.53 2055595 02/17/21 00121 SAN DIEGO GAS & ELECTRIC 020421A 02/04/21 UTILITY EXPENSES (MONTHLY)79,564.42 020221 02/02/21 UTILITY EXPENSES (MONTHLY)1,202.24 012621 01/26/21 UTILITY EXPENSES (MONTHLY)665.71 2055569 02/10/21 00121 SAN DIEGO GAS & ELECTRIC 020421 02/04/21 012221 01/22/21 UTILITY EXPENSES (MONTHLY)50,379.45 012721 01/27/21 UTILITY EXPENSES (MONTHLY)25,797.04 125.00 125.00 2055533 02/03/21 00121 SAN DIEGO GAS & ELECTRIC 012821 01/28/21 UTILITY EXPENSES (MONTHLY)63,836.19 UB Refund Cst #0000051573 62.90 62.90 2055568 02/10/21 02586 SAN DIEGO COUNTY ASSESSOR 202100105 02/08/21 ASSESSOR DATA (MONTHLY) 2055518 02/03/21 20565 ROBERT WILKINSON Ref002616719 01/29/21 3,012.50 2055499 01/27/21 00521 RICK POST WELD & WET TAPPING 12778 12/29/20 WELDING SERVICES 1,550.00 1,550.00 3,015.00 3,015.00 2055498 01/27/21 08972 RICK ENGINEERING COMPANY 0078585 12/29/20 TRAFFIC ENGINEERING SERVICES (NOV 2020)3,012.50 PUMP EFFICIENCY TESTING 9,625.00 9,625.00 2055497 01/27/21 15647 RFYEAGER ENGINEERING LLC 21000 01/04/21 CORROSION SERVICES (DEC 2020) 2055567 02/10/21 01409 PUMP CHECK 8251 01/22/21 42.72 2055532 02/03/21 15081 PINOMAKI DESIGN 6052 02/01/21 GRAPHIC DESIGN SERVICES 340.00 340.00 180.00 180.00 2055517 02/03/21 20569 PETER NAJOR Ref002616723 01/29/21 UB Refund Cst #0000212957 42.72 ENGINEERING DESIGN (NOV 2020)1,455.00 1,455.00 2055566 02/10/21 03215 O'DONNELL, MICHAEL 020421 02/08/21 EXPENSE REIMBURSEMENT 2055565 02/10/21 18332 NV5 INC 193593 12/29/20 Page 6 of 7 Check Total Amount CHECK REGISTER Otay Water District Date Range: 1/21/2021 - 2/17/2021 Check #Date Vendor Vendor Name Invoice Inv. Date Description 1,050.30 738.93 6,929.45 UB Refund Cst #0000019736 175.00 175.00 Amount Pd Total:1,075,997.39 Check Grand Total:1,075,997.39 2055579 02/17/21 12232 ZARMINA KHALIQ Ref002618142 02/12/21 7,494.78 UB Refund Cst #0000264659 78.42 78.42205551902/03/21 20574 ZACHARY SHALIT Ref002616728 01/29/21 1,608.75 1,608.75 2055575 02/10/21 20003 WESTERN AUDIO VISUAL 14905 02/08/21 RETAINAGE RELEASE 7,494.78 GARDEN FUNDING CONTRIBUTION 20,691.00 20,691.00 2055507 01/27/21 15726 WATER SYSTEMS CONSULTING INC 5265 12/31/20 HYDRAULIC MODELING (DEC 2020) 02/02/21 SECURITY AND ACCESS SYSTEM 3,820.95 3,820.95 2055506 01/27/21 14879 WATER CONSERVATION GARDEN JPA 9512 01/01/21 4,133.53 702295 01/15/21 SECURITY ALARM MONITORING 2,795.92 2055574 02/10/21 15807 WATCHLIGHT CORPORATION 703980 CMIS (DEC 2020)3,278.00 3,278.00 2055505 01/27/21 15807 WATCHLIGHT CORPORATION 703755 01/13/21 RWCWRF GATE CAMERA & DVR 2055504 01/27/21 08028 VALLEY CONSTRUCTION MANAGEMENT SD687704 01/07/21 114-11484779 01/13/21 PORT. TOILET RENTAL 98.91 114-11477739 01/09/21 PORT. TOILET RENTAL 90.10 PORT. TOILET RENTAL 439.85 114-11484781 01/13/21 PORT. TOILET RENTAL 110.07 dsb20197343 01/01/21 DIG SAFE BOARD FEES (MONTHLY)477.65 2055538 02/03/21 15675 UNITED SITE SERVICES INC 114-11484803 01/13/21 1,693.15 1,693.15 2055503 01/27/21 00427 UNDERGROUND SERVICE ALERT 1220200503 01/01/21 UNDERGROUND ALERTS (MONTHLY)572.65 TLOPS REDUNDANCY PROJECT (DEC 2020)205,423.14 205,423.14 2055597 02/17/21 20589 TURNER CONSTRUCTION COMPANY Ref002618144 02/12/21 UB Refund Cst #0000257116 2055596 02/17/21 19272 THARSOS INC 1212312020 02/04/21 4,780.00 2055573 02/10/21 03770 TEAMAN RAMIREZ & SMITH INC 100540 02/02/21 AUDIT SERVICES FOR FY20 19,890.00 19,890.00 2055572 02/10/21 17704 T&T JANITORIAL INC 2018-6513 12/31/20 JANITORIAL SERVICES 4,780.00 Page 7 of 7