HomeMy WebLinkAbout02-16-21 F&A Committee Packet1
OTAY WATER DISTRICT
FINANCE AND ADMINISTRATION
COMMITTEE MEETING
and
SPECIAL MEETING OF THE BOARD OF DIRECTORS
BY TELECONFERENCE
2554 SWEETWATER SPRINGS BOULEVARD
SPRING VALLEY, CALIFORNIA
TUESDAY
February 16, 2021
12:00 P.M.
This is a District Committee meeting. This meeting is being posted as a special meeting
in order to comply with the Brown Act (Government Code Section §54954.2) in the event that
a quorum of the Board is present. Items will be deliberated, however, no formal board actions
will be taken at this meeting. The committee makes recommendations
to the full board for its consideration and formal action.
AGENDA
1.ROLL CALL
2.PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO
SPEAK TO THE COMMITTEE ON ANY SUBJECT MATTER WITHIN THE
COMMITTEE'S JURISDICTION 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 committee 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 Par-
ticipation” 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
District’s meeting can be found at this link: https://otaywater.gov/board-of-
directors/agenda-and-minutes/committee-meetings/
2
DISCUSSION ITEMS
3.ADOPT RESOLUTION NO. 4392 AUTHORIZING THE DISSOLUTION OF THE OTAY
SERVICE CORPORATION (KOEPPEN) [5 minutes]
4.ADOPT RESOLUTION NO. 4393 AMENDING POLICY NO. 45, THE DEBT POLICY,
OF THE DISTRICT’S CODE OF ORDINANCES (FAKHOURI) [5 minutes]
5.FISCAL YEAR 2021 MID-YEAR STRATEGIC PLAN UPDATE (SEGURA) [10 minutes]
6.ADJOURNMENT
BOARD MEMBERS ATTENDING:
Mark Robak, Chair
Jose Lopez
All items appearing on this agenda, whether or not expressly listed for action, may be delib-
erated and may be subject to action by the Board.
The Agenda, and any attachments containing written information, are available at the Dis-
trict’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 through the Senior Confidential Executive As-
sistant by contacting her at (619) 670-2253.
If you have any disability which would require accommodation in order to enable you to par-
ticipate in this meeting, please call the Senior Confidential Executive Assistant at 670-2253 at
least 24 hours prior to the meeting.
Certification of Posting
I certify that on February 12, 2021 I posted a copy of the foregoing agenda near the
regular meeting place of the Board of Directors of Otay Water District, said time being at least
24 hours in advance of the meeting of the Board of Directors (Government Code Section
§54954.2).
Executed at Spring Valley, California on February 12, 2021.
/s/ Tita Ramos-Krogman, Senior Confidential Executive Assistant
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 3
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:
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for board approval. This report will be sent
to the Board as a committee approved item or modified to reflect any
discussion or changes as directed from the committee prior to
presentation to the full board.
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
OTAY SERVICE CORPORATION 1860309
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
OTAY SERVICE CORPORATION 1860309
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 4
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, Administration and Communications Committee recommend
that the Board adopt Resolution No. 4393 amending Policy No. 45, the
Debt Policy, of the District’s Code of Ordinances.
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for board approval. This report will be sent
to the Board as a committee approved item or modified to reflect any
discussion or changes as directed from the committee prior to
presentation to the full board.
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
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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.
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7.0: COMPETITIVE AND NEGOTIATED SALE CRITERIA
Competitive Sale
The District will use a competitive bidding process in the sale of
debt unless the nature of the issue or specific circumstances warrants
a negotiated sale. The CFO will determine the best bid in a
competitive sale by calculating the true interest cost (TIC) of each
bid.
Negotiated Sale
Types of debt that would typically lend themselves to the negotiated
sale format are variable rate debt and unrated debt. Circumstances
that might warrant a negotiated sale may occur when the issue is of a
limited size that would not attract wide-spread investor interest,
during periods of high levels of issuance by other entities in the
State, or during periods of market volatility or with relatively new
financing techniques. In the event the District decides to use a
negotiated sale, it will pay management fees only to those firms that
place orders for bonds.
If the size of the District’s proposed issue is not cost effective,
the District may also consider issuing its debt by private placement
or through any qualified Joint Power Authority (JPA) in the State of
California whose principal business is issuing bonds.
8.0: REFUNDING DEBT
Purpose
Periodic reviews of all outstanding debt will be undertaken by the
Chief Financial Officer to determine refunding (refinancing)
opportunities. The purpose of the refinancing may be to:
1. Lower annual debt service by taking advantage of lower current
interest rates.
2. Update or revise covenants on outstanding debt issue if a Rate
Covenant appears to be too high, has precluded the District from
implementing its financing plan, or has caused the District to
increase rates to customers.
3. Restructure debt service associated with an issue to facilitate
the issuance of additional debt, usually in order to smooth out
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peaks in total debt service which can occur frequently as one
debt issue is layered on top of existing debt issues.
4. Alter bond characteristics such as call provisions or payment
dates.
5. Pay for conversion costs such as funding a reserve fund or paying
for credit enhancement when converting variable rate debt to
fixed rate debt.
Restrictions on Refunding
Tax-exempt bonds typically have provisions that preclude early
redemption of the bonds for a period of years after issuance. The
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
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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
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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
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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
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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
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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.
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(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
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(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;
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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.
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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:
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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
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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).
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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
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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.
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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
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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
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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
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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
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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.
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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
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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.
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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.
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1.0: POLICY
It is the policy of the Otay Water District to finance the acquisition
of high value assets that have an extended useful life through a
combination of current revenues and debt financing. Regularly updated
debt policies and procedures are an important tool to 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
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costs of the projects. In cases where the program identifies project
funding through the use of debt financing, the budget should provide
information needed to determine debt capacity. The Rate Model and the
CIP Budget give the Board part of the data needed to make informed
judgments concerning the possibility of issuing debt.
Funding Criteria
The Chief Financial Officer (CFO) will evaluate all capital project
requests and develop a proposed funding plan. Priority may be given
to those projects that can be funded with current resources (annual
cash flow, fund balances or reserves). Those projects that cannot be
funded with current resources may be deferred or the CFO may recommend
that they be funded with debt financing. However, debt financing will
not be considered appropriate for any recurring purpose such as
current operating and maintenance expenditures. The issuance of
short-term cash-flow instruments is excluded from this limitation.
The General Manager will recommend the funding plan to the Board. The
General Manager may deem it necessary or desirable in certain
circumstances to convene a Finance Committee meeting to evaluate
funding options presented by the Chief Financial Officer.
Funding Sources
The District’s capital improvements can be classified in three
categories: those related to an expansion of the system
(“expansion”), those related to upgrading the existing system
(“betterment”) and those related to repairing or replacing existing
infrastructure (“replacement”). In general, capital improvements for
betterment or replacement are financed primarily through user charges,
availability charges, and betterment charges. Capital improvements
for expansion are financed through capacity fees. Accordingly, these
fees are reviewed at least annually or more frequently as required and
set at levels sufficient to ensure that new development pays its fair
share of the costs of constructing necessary infrastructure.
Additionally, the District will seek State and Federal grants and
other forms of intergovernmental aid wherever possible.
Pay-As-You-Go Projects
The District’s capacity fees are the major funding source in financing
additions to the water system and the recycled water system. Over
time, the fees collected and the cost to construct the capital
projects should balance. However, collection of these fees is subject
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to significant fluctuation based on the rate of new development.
Accordingly, the Chief Financial Officer, in developing the funding
plan for the CIP, will determine that current revenues and adequate
fund balances are available so project phasing can be accomplished.
If this is not the case, the Chief Financial Officer may recommend
that:
1.The project be deferred until funds are available, or
2.Based on the priority of the project, debt be issued to finance
the project.
Debt Financed Projects
If a project or projects are to be financed with long-term debt, the
District should use the following criteria to evaluate the suitability
of the financing for the particular project or projects:
1.The life of the project or asset to be financed is 10 years or
longer and its useful life is expected to exceed the term of the
financing.
2.Revenues available for debt service are deemed to be sufficient
and reliable so that long-term financing can be marketed without
jeopardizing the credit rating of the District.
3.Market conditions present favorable interest rates and demand for
District financing.
4.The project is mandated by State and/or Federal requirements and
current resources are insufficient or unavailable.
5.The project is immediately required to meet or relieve capacity
needs and current resources are insufficient or unavailable.
5.0: DEBT STRUCTURE
General
The District will normally issue debt with a maturity of not more than
30 years. The structure should approximate level debt service for the
term where it is practical or desirable. There will be no debt
structures that include increasing debt service levels in subsequent
years, with the first and second year of a debt payoff schedule the
exception and related to projected additional income to be generated
by the project to be funded. There will be no "balloon" debt
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repayment schedules that consist of low annual payments and one large
payment of the balance due at the end of the term. There will always
be at least interest paid in the first fiscal year after debt issuance
and principal starting no later than the first fiscal year after the
date the facility or equipment is expected to be placed in service.
Capitalized interest will not be for a period of more than necessary
to provide adequate security for the financing.
Limitations on the Issuance of Variable Rate Debt
The District will normally issue debt with a fixed rate of interest.
The District may issue variable rate for the purpose of managing its
interest costs. At the same time, the District should protect itself
from too much exposure to interest rate fluctuations. In determining
that it is in the District’s best interest to issue certain debt at
variable rates instead of fixed rates, at the time of issuing any
variable rate debt, there should be at least a 10% estimated reduction
in annual debt costs by issuing variable rate debt when compared to a
similar issuance of fixed rate debt. If the estimated overall cost
savings from issuing variable rate debt is not at least 10% at the
time of issuance, relatively small fluctuations in rates could
actually increase the District’s financing costs over the life of the
bonds compared to a similar fixed rate financing. By using this 10%
factor at the time of issuance, the District can be relatively assured
that its variable rate financing will be cost-effective over the term
of the bonds.
The comparison will be based on the following criteria:
1. The interest rate used to estimate variable interest costs will
be the higher of the 10 year average rate or the current weekly
variable rate.
2. The variable rate debt costs will include an estimate for annual
costs such as letter of credit fees, liquidity fees, remarketing
fees, monthly draw fees and annual rating fees applicable to the
letter of credit.
3. Any potential reserve fund earnings will reduce the fixed rate
debt service or variable rate debt service as applicable.
Periodically, using the criteria described above, the Chief Financial
Officer will compare the estimated annual debt service costs to
maturity of any variable rate debt with estimated debt service if the
debt was converted to fixed rates. If this analysis produces a break
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even in total payments over the life of the issue, the Chief Financial
Officer will recommend converting such variable rate debt to fixed
rate.
Variable rate debt should not represent more than 25% of the
District’s total debt portfolio. This level of exposure to interest
rate fluctuations is considered to be manageable in an environment of
increasing interest rates. At a higher ratio than this, the District
might be faced with an unplanned water rate increase to meet its Rate
Covenants. Rating agencies use this ratio in their analysis of the
District’s overall credit rating.
Further, Rate Covenants applicable to variable rate debt shall not
compromise the issuance of additional debt planned by the District and
variable rate debt should always contain a provision to allow
conversion to a fixed rate at the District’s option.
6.0: CREDIT OBJECTIVES
The Otay Water District seeks to maintain the highest possible credit
ratings for all categories of long-term debt that can be achieved
without compromising delivery of basic services and achievement of
District policy objectives.
Factors taken into account in determining the credit rating for a
financing include:
1. Diversity of the District’s customer base.
2. Proven track record of completing capital projects on time and
within budget.
3. Strong, professional management.
4. Adequate levels of staffing for services provided.
5. Reserves.
6. Ability to consistently meet or exceed Rate Covenants.
The District recognizes that external economic, natural, or other
events may from time to time affect the creditworthiness of its debt.
Nevertheless, the District is committed to ensuring that actions
within its control are prudent and well planned.
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7.0: COMPETITIVE AND NEGOTIATED SALE CRITERIA
Competitive Sale
The District will use a competitive bidding process in the sale of
debt unless the nature of the issue or specific circumstances warrants
a negotiated sale. The CFO will determine the best bid in a
competitive sale by calculating the true interest cost (TIC) of each
bid.
Negotiated Sale
Types of debt that would typically lend themselves to the negotiated
sale format are variable rate debt and unrated debt. Circumstances
that might warrant a negotiated sale may occur when the issue is of a
limited size that would not attract wide-spread investor interest,
during periods of high levels of issuance by other entities in the
State, or during periods of market volatility or with relatively new
financing techniques. In the event the District decides to use a
negotiated sale, it will pay management fees only to those firms that
place orders for bonds.
If the size of the District’s proposed issue is not cost effective,
the District may also consider issuing its debt by private placement
or through any qualified Joint Power Authority (JPA) in the State of
California whose principal business is issuing bonds.
8.0: REFUNDING DEBT
Purpose
Periodic reviews of all outstanding debt will be undertaken by the
Chief Financial Officer to determine refunding (refinancing)
opportunities. The purpose of the refinancing may be to:
1. Lower annual debt service by taking advantage of lower current
interest rates.
2. Update or revise covenants on outstanding debt issue if a Rate
Covenant appears to be too high, has precluded the District from
implementing its financing plan, or has caused the District to
increase rates to customers.
3. Restructure debt service associated with an issue to facilitate
the issuance of additional debt, usually in order to smooth out
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peaks in total debt service which can occur frequently as one
debt issue is layered on top of existing debt issues.
4. Alter bond characteristics such as call provisions or payment
dates.
5. Pay for conversion costs such as funding a reserve fund or paying
for credit enhancement when converting variable rate debt to
fixed rate debt.
Restrictions on Refunding
Tax-exempt bonds typically have provisions that preclude early
redemption of the bonds for a period of years after issuance. The
ability of issuers to refinance a tax-exempt bond prior to its
Optional Redemption date (known as Advance Refunding) is limited by
the Tax Code. There is no limit in the Tax Code on the ability of
issuers to redeem bonds prior to their maturity date once the Optional
Redemption date has been reached (known as Current Refunding).
Savings Criteria
In cases where an Advance Refunding or Current Refunding is intended
to provide debt service savings, the District may commence the
refinancing process if a minimum five percent (5%) present value
savings net of issuance costs and any cash contributions can be
demonstrated. Since interest rates may fluctuate between the time
when a refinancing is authorized and when the debt is issued,
beginning the process with at least a 5% savings should provide the
District with some level of protection that it can achieve a minimum
of three percent (3%) net present value savings of the refunding bonds
when and if the debt is issued. These minimum standards are intended
to protect the District staff from spending time on refinancings that
become marginally cost-effective after the entire issuance process is
complete.
The savings target may be waived, however, if sufficient justification
for lowering the savings target can be provided by meeting one or more
of the other refunding objectives described above.
9.0: SUBORDINATE LIEN DEBT
The District will issue subordinate lien debt only if it is
financially beneficial to the District or consistent with
creditworthiness objectives. Subordinate lien debt is structured to be
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payable second in priority to the District’s other outstanding debt.
Typically, subordinate lien debt might be issued if the District
desired a more flexible Rate Covenant with respect to its new
obligations and did not want to refinance all of its existing debt to
obtain that less restrictive Rate Covenant.
10.0: FINANCING PARTICIPANTS
The District’s purchasing guidelines provide the process for securing
professional services related to individual debt issues. The
solicitation and selection process include encouraging participation
from qualified service providers, both local and national, and
securing services at competitive prices.
Municipal Advisor: The use of a Municipal Advisor is necessary for
the sale of debt by a competitive bid process and is desirable when
issuing debt through a negotiated sale. The Municipal Advisor has a
fiduciary duty to the District and will seek to structure the
District’s debt in the manner that is saleable, yet meets the
District’s objectives for the financing. The Municipal Advisor will
advise the District on alternative structures for its debt, the cost
of different debt structures and potential pricing mechanisms that can
be expected from underwriters (such as call features, term bonds and
premium and discount bond pricing) and, at the District’s direction,
will write the offering document (preliminary official statement).
With respect to competitive sales, the Municipal Advisor will arrange
for distributing the preliminary official statement, accepting bids
via an internet bidding platform, verifying the lowest bid and provide
detailed instructions for the flow of funds at closing to the winning
Underwriter, the Trustee and the District. In a negotiated sale, the
Municipal Advisor will provide independent confirmation on the
Underwriter’s proposed pricing to ensure that interest rates and
Underwriter’s compensation are appropriate for the credit quality of
the issue and competitive in the overall public finance market in
California.
Underwriter: The Underwriter markets the bonds for sale to investors.
While the District’s preference is to select the Underwriter for the
debt via sale of the debt at competitive bid, there are circumstances
when a negotiated issue is in the best interests of the District.
Negotiated sales are preferable if the security features are
particularly complex or market conditions are volatile. The Chief
Financial Officer will recommend whether the method of sale is
competitive or negotiated based on the type of issue and other market
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conditions. In the case of negotiated sales, the Underwriter will be
required to demonstrate sufficient capitalization and sufficient
experience related to the specific type of debt issuance.
The Underwriter will work in connection with the District’s Municipal
Advisor on structuring the issue and offering different pricing ideas.
Bond Counsel: The District’s Bond Counsel provides the primary legal
documents that detail the security for the bonds and the authority
under which bonds are issued. The Bond Counsel also provides an
opinion to bond holders that the bonds are tax-exempt under both State
and Federal law. All closing documents in connection with an issue
are also prepared by Bond Counsel.
Disclosure Counsel: The District’s Disclosure Counsel provides legal
advice to the District regarding the adequacy of the District’s
disclosure of financial information or risks of investing in the
District’s debt issue to the investing public. The Disclosure Counsel
can prepare the official statement or review the official statement
and gives the District an opinion that there is no information missing
from the official statement of a material nature that would be
necessary for an investor to make an informed decision about investing
in the District’s bonds.
Trustee: The Trustee is a financial institution selected by the
District to administer the collection of revenues pledged to repay the
bonds and to distribute those funds to bondholders.
Letter of Credit Bank: The Letter of Credit Bank is a U.S. or foreign
bank that has issued a letter of credit providing both credit
enhancement (the Letter of Credit Bank will pay the debt in the event
that the District defaults on the payment) and liquidity for a
variable rate bond issue. These banks have their own short-term
credit rating, which can be higher than the District’s short-term
credit rating. Liquidity is needed because variable rate bondholders
are allowed to “put” their bonds back to the District if they do not
like the interest rate currently being offered. The District’s
Remarketing Agent then finds a new buyer for those bonds, but in the
event that no buyer is found, a draw is made under the letter of
credit to purchase the bonds that have been “put.” As soon as the
bonds are remarketed to another buyer, the letter of credit is repaid.
The letter of credit fees are paid annually or quarterly. Letter of
credits are typically issued for not more than 3 years and must be
renewed during the life of the bonds. Credit enhancement is discussed
further under the heading “CREDIT ENHANCEMENT.”
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Municipal Bond Insurer: The Municipal Bond Insurer can be one of
several insurance companies that provide municipal bond insurance
policies securing payment of the District’s debt. These policies
provide that the Municipal Bond Insurer will pay the District’s debt
in the event that the District defaults on its payments. Debt which
is insured carries the Municipal Bond Insurer’s credit rating. The
insurance premium for the bond insurance policy is paid one time at
the issuance of the debt and is non-cancelable for the term of the
debt. Unlike a letter of credit, bond insurance policies do not
provide liquidity and are most typically purchased for fixed rate
debt.
Remarketing Agent: The Remarketing Agent is an investment bank that,
each week, determines the interest rate for the District’s variable
rate obligations. The rate is set at the rate at which the
obligations could be sold on the open market at 100% of their face
value. The Remarketing Agent also finds new buyers for any of the
obligations that are “put” back to the District.
Rating Agencies: Currently, there are three widely recognized rating
agencies that rate municipal debt in the United States: Standard &
Poor’s, Moody’s Investors Service, and Fitch Investors Service.
Rating agencies establish objective criteria under which each type of
financing undertaken by the District is to be analyzed. Upon request,
a rating agency will rate the underlying strength of the District’s
financings, without regard to the purchase of any credit enhancement.
The rating is released to the general public and thereafter, the
rating agency will periodically update its analysis of a particular
issue, and may raise or lower the rating if circumstances warrant.
Investment-grade ratings range from “AAA” to “BBB-.” A rating below
“BBB-” is not investment grade. Many mutual funds cannot buy bonds
that do not carry an investment grade.
Verification Agent: In a refunding, the District will deposit funds
with an escrow agent (usually the trustee) in an amount sufficient,
together with earnings thereon, to pay the debt service and redemption
price of the debt being refunded through and including the call date.
The Verification Agent verifies the mathematical accuracy of
calculation of the amount to be deposited in escrow and the bond
counsel relies on this verification in giving their opinion that the
debt is defeased within the meaning of the indenture and that the lien
of the debt on the revenues pledged to the debt being refunded is
released.
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11.0: CONFLICT OF INTEREST AND STANDARDS OF CONDUCT
Members of the District, the Board of Directors and its consultants,
service providers and underwriters shall adhere to standards of
conduct and conflict of interest rules as stipulated by the California
Political Reform Act or the Municipal Securities Rulemaking Board
(MSRB), as applicable. All debt financing participants shall maintain
the highest standards of professional conduct at all times, in
accordance with MSRB Rules, including Rule G-37. Municipal Advisors
shall also adhere to applicable SEC rules and MSRB Rule G-42. There
shall be no conflict of interest with the District with any debt
financing participant.
12.0: CONTINUING DISCLOSURE
The District acknowledges the responsibilities of the underwriting
community and pledges to make all reasonable efforts to assist
underwriters in their efforts to comply with SEC Rule 15c2-12 and MSRB
Rule G-36. The District will file its official statements with the
MSRB and the nationally recognized municipal securities information
repositories. The District will also post copies of its comprehensive
financial reports on the MSRB’s Electronic Municipal Market Access
(EMMA) website, and will disseminate other information that it deems
pertinent to the market in a timely manner (For bonds issued after
2012, 10 days).
Reporting of Listed Events
While initial bond disclosure requirements pertain to underwriters,
the District will provide financial information and notices of listed
events on an ongoing basis throughout the life of the issue.
The list below (as of the most current SEC amendment effective
February 27, 2019) can change in the future, and any new requirements
added to SEC Rule 15(c)2-12 in the future are deemed to be added to
this section without the need to update the policy.
(a) The District shall give, or cause to be given, notice of the
occurrence of any of the following events with respect to any
bonds (in each case to the extent applicable) in a timely
manner not more than ten business days after the occurrence of
the event:
1. Principal or interest payment delinquencies;
2. Non-payment related defaults, if material;
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3. Modifications to the rights of the Holders, if material;
4. Optional, contingent or unscheduled calls, if material, and
tender offers;
5. Defeasances;
6. Rating changes;
7. Adverse tax opinions or the issuance by the Internal Revenue
Service of proposed or final determinations of taxability,
Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices or determinations with respect to the tax
status of the Bonds or other material events affecting the
tax status of the Bonds;
8. Unscheduled draws on the debt service reserves reflecting
financial difficulties;
9. Unscheduled draws on the credit enhancements reflecting
financial difficulties;
10. Substitution of the credit or liquidity providers or their
failure to perform;
11. Release, substitution or sale of property securing repayment
of the Bonds, if material;
12. Bankruptcy, insolvency, receivership or similar proceedings
of the District, which shall occur as described below;
13. Appointment of a successor or additional trustee or the
change of name of a trustee, if material;
14. The consummation of a merger, consolidation, or acquisition
involving the District or the sale of all or substantially
all of the assets of the District other than in the ordinary
course of business, the entry into a definitive agreement to
undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant
to its terms, if material;
15. Incurrence of a financial obligation of the District, if
material, or agreement to covenants, events of default,
remedies, priority rights, or other similar terms of a
financial obligation of the District, any of which affect
security holders, if material; or
16. Default, event of acceleration, termination event,
modification of terms, or other similar events under the
terms of a financial obligation of the District, any of
which reflect financial difficulties.
For these purposes, any event described in item 12 is considered to
occur when any of the following occur: the appointment of a receiver,
fiscal agent, or similar officer for the District in a proceeding
under the United States Bankruptcy Code or in any other proceeding
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under state or federal law in which a court or governmental authority
has assumed jurisdiction over substantially all of the assets or
business of the District, or if such jurisdiction has been assumed by
leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or
governmental authority, or the entry of an order confirming a plan of
reorganization, arrangement, or liquidation by a court or governmental
authority having supervision or jurisdiction over substantially all of
the assets or business of the District.
Whenever the District obtains knowledge of the occurrence of a Listed
Event under item 12 above, the District shall or shall cause the
Dissemination Agent (if not the District) as soon as possible
determine if such event would be material under applicable federal
securities laws and if applicable file a notice of such occurrence
with the MSRB, in an electronic format as prescribed by the MSRB, in a
timely manner not in excess of 10 business days after the occurrence
of the Significant Event.
Notwithstanding the foregoing, notice of Significant Events described
in subparagraph (a)(8) above need not be given any earlier than the
notice (if any) of the underlying event is given to holders of
affected bonds under the applicable indenture securing such bonds.
The events described in subparagraphs (a)(2), (a)(7),(a)(8) (if the
event is a bond call), (a)(10), (a)(11), (a)(13), (a)(14) and (a)(15)
contain the qualifier “if material.” The District shall cause a notice
to be filed with respect to any such event only to the extent that the
District determines the event’s occurrence is material for purposes of
U.S. federal securities law.
13:0 INVESTMENT & ARBITRAGE COMPLIANCE
Tax-exempt bonds are required to meet certain provisions of the
federal tax code in order to maintain their tax-exempt status. In
order to prevent municipal issuers from borrowing money at tax-exempt
rates solely for the purpose of investing the proceeds in higher
yielding investments and making a profit (“arbitrage”), the federal
tax code contains a provision that requires issuers to compare the
interest earned on any bond funds held (such as a reserve fund) with
interest that would theoretically be earned if the funds were invested
at the yield of the bonds, and to “rebate” to the federal government
any interest earned in excess of the theoretical earnings limit.
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The Chief Financial Officer shall invest the bond proceeds subject to
the District’s Investment Policy in a timely manner, to ensure the
availability of funds to meet operational requirements. In doing so,
the CFO will maintain a system of record keeping and reporting to meet
the arbitrage rebate compliance requirements of the federal tax code.
14.0: INTERNAL CONTROL
The District has implemented the following procedure to ensure that
the proceeds of the proposed debt issuance will be directed to the
intended use:
1. A separate Reserve Account shall be maintained for the
proceeds of each bond to ensure that there is no comingling
of funds.
2. All related expenditures charged against the bond proceeds
shall be properly approved by the authorized authority.
3. All related transactions shall be fully documented so that
an undisputable audit trail exists.
4. All related transactions shall be tracked in the District’s
Accounting System. A financial report reflecting all charges
related to the bond shall be prepared and maintained.
5. The District shall establish a retention policy which states
that all supporting documents related to bond proceeds
spending shall be kept indefinitely.
6. The Reserve Account shall be reconciled on a monthly basis.
15.0: TYPES OF DEBT FINANCING
General Obligation Bonds
General obligation bonds are secured by a pledge of the ad-valorem
taxing power of the issuer and are also known as a full faith and
credit obligations. Bonds of this nature must serve a public purpose
to be considered lawful taxation of the property owners within the
District and require a two third’s majority vote in a general
election. The benefit of the improvements or assets constructed and
acquired as a result of this type of bond must be generally available
to all property owners.
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The District can issue general obligation bonds up to but not in
excess of 15% of the assessed valuation under Article XVI, Section 18
of the State constitution. An annual amount of the levy necessary to
meet debt service requirements is calculated and placed on the tax
roll through the County of San Diego. The District also has a policy
that the ad-valorem tax to be used to pay debt service on general
obligation bonds will not exceed $.10 per $100 of assessed value.
Voters within Improvement District No. 27 of the District authorized
$100 million general obligation bonds in 1989. The District issued
$11,500,000 general obligation bonds in 1992 and refinanced the bonds
in 1998 and again in 2009. The District also has approximately $29
million in general obligation bonds authorized between 1960 and 1978
for various improvement districts throughout the District, but
unissued. General obligation bonds can only be issued under these
existing authorizations to the extent necessary to fund the
improvements specified by each ballot measure.
General obligation bonds generally are regarded as the broadest and
soundest security among tax-secured debt instruments. An unlimited-
tax pledge would enable a trustee to invoke mandamus to force the
District to raise the tax rate as much as necessary to pay off the
bonds. General obligation bonds have other credit strengths as well:
the property tax tends to be a steady and predictable revenue source,
and when a vote is required to issue them, bondholders have some
indication of taxpayers’ willingness to pay. General obligation bonds
carry the highest credit rating that a public agency can achieve and
therefore, the lowest interest cost. General obligation bonds
typically are issued to finance capital facilities and not for ongoing
operational or maintenance costs.
The District will use an objective analytical approach to determine
whether it can afford to assume new general obligation debt for the
improvement districts, or in the case of projects not approved by the
original ID 27 vote, prior to any submission of a general obligation
bond ballot measure to voters. This process will compare generally
accepted standards of affordability to the current values for the
District. These standards will include debt per capita, debt as a
percent of taxable value, debt service payments as a percent of
current revenues and current expenditures, and the level of
overlapping net debt of all local taxing jurisdictions. The process
will also examine the direct costs and benefits of the proposed
expenditures. The decision on whether or not to assume new debt will
be based on these costs and benefits, the current conditions of the
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municipal bond market, and the District’s ability to "afford" new debt
as determined by the aforementioned standards.
Revenue Bonds
Revenue bonds are limited-liability obligations that pledge net
revenues of the District to debt service. The net revenue pledge is
after payment of all operating costs. Since revenue bonds are not
generally secured by the full faith and credit of the District, the
financial markets require coverage ratios of the pledged revenue
stream and a covenant to levy rates and charges sufficient to produce
net income at some level in excess of debt service (a Rate Covenant).
Also there may be a test required to demonstrate that future revenues
will be sufficient to maintain debt service coverage levels after any
proposed additional bonds are issued. The District will strive to
meet industry and financial market standards with such ratios without
impacting the current rating. Annual adjustments to the District’s
rate structure may be necessary to maintain these coverage ratios.
The underlying credit of revenue bonds is judged on the ability of the
District’s existing rates to provide sufficient net income to pay debt
service and the perceived willingness of the District to raise rates
and charges in accordance with its Rate Covenant. Actual past
performance also plays a role in evaluating the credit quality of
revenue bonds, as well as the diversity of the customer base. Revenue
bonds generally carry a credit rating one or two investment grades
below a general obligation bond rating.
The District may use a debt structure called “Certificates of
Participation” to finance capital facilities. However, if the
certificates contain a pledge of net revenues and a Rate Covenant,
they are treated as essentially the same as a revenue bond.
Lease/Purchase Agreements
Over the lifetime of a lease, the total cost to the District will
generally be higher than purchasing the asset outright. As a result,
the use of lease/purchase agreements in the acquisition of vehicles,
equipment and other capital assets will generally be avoided,
particularly if smaller quantities of the capital asset(s) can be
purchased on a "pay-as-you-go" basis.
The District may utilize lease-purchase agreements to acquire needed
equipment and facilities. Criteria for such agreements should be that
the asset life is three years or more, the minimum value of the
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agreement is $50,000 and interest costs must not exceed the interest
rate earned by the District’s portfolio for the average of the past 6
months. Lease payments of this type are considered operating expenses
and would reduce net operating income available to pay any District
revenue bonds. There are no coverage requirements or rate covenants
associated with lease/purchase agreements.
State Water Loans
The State Water Resources Control Board makes certain funds available
to water districts throughout the State. These loans typically carry
a below-market rate of interest and are short term in nature. While
State loans should be incorporated into the District’s debt portfolio
for the financing of capital improvements, the payment of the loan
should not compromise the District’s ability to issue other planned
debt or cause the District to violate its rate covenants or make it
necessary for the District to increase rates to maintain existing rate
covenants.
Land Based Financing
The District may consider developer or property owner initiated
applications requesting the formation of community facilities or
assessment districts and the issuance of bonds to finance eligible
District facilities necessary to serve newly developing commercial,
industrial and/or residential projects. Facilities will be financed
in accordance with the provisions of the Municipal Improvement Act of
1913 and the Improvement Bond Act of 1915, or the Mello-Roos Community
Facilities Act of 1982.
Typically, the bonds issued would be used to prepay, in a lump-sum,
the District’s capacity fees with respect to a large tract of land
under development, or to finance in-tract infrastructure that will
eventually be dedicated to the District. The bonds are secured by a
special tax or assessment to be levied on property within the
boundaries established for the community facilities district
(sometimes known as a “Mello-Roos” district) or the assessment
district. If the District becomes the sponsoring public agency for
such financing district and the issuance of debt, the District will be
required to enter into a Funding, Construction and Acquisition
agreement for any of the facilities to be dedicated to the District
upon completion. This agreement governs the type of facilities to be
constructed with bond proceeds and how the facilities will be accepted
by the District.
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In some cases, the District may not be asked to be the sponsoring
agency for the formation of a financing district, rather, the
developer or property owner may approach a school district or a city
to be the sponsoring agency. Nonetheless, the property owner may want
to include lump-sum payment of District fees in the financing or
construction of certain facilities to be dedicated to the District
upon completion. In this case, if the District desired to
participate, the District would enter into a Joint Financing Agreement
with the sponsoring agency, again governing the type of facilities to
be constructed with bond proceeds and how the facilities will be
accepted by the District.
On a case-by-case basis, the Board shall make the determination as to
whether a proposed district will proceed under the provisions of the
Assessment Acts or the Mello-Roos Community Facilities Act. The Board
may confer with other consultants and the applicant to learn of any
unique district requirements, such as long-term development phasing,
prior to making any final determination.
All District and District consultant costs incurred in the evaluation
of new development, district applications and the establishment of
districts will be paid by the applicant(s) by advance deposits in
those instances where a party or parties other than the District have
initiated a proposed district. Expenses not legally reimbursable by
the financing district will be borne by the applicant. The District
may incur expenses for analyzing proposed assessment or community
facilities districts where the District is the principal proponent of
the formation or financing of the district.
Prior to the issuance of any land secured financing and in accordance
with State law, the Board will adopt policies and procedures with
criteria to be met before any special tax bonds or assessment district
bonds may be issued. These criteria include the qualifications of the
appraiser, the minimum value to lien ratio to be achieved prior to
issuing the land secured debt and the maximum tax to be levied on
different categories of property.
Internal Lending/Borrowing
Internal Lending/Borrowing allows the lending and/or borrowing of
funds between the Water (Potable and Recycled) and the Sewer Funds,
either direction to meet financial needs in lieu of the borrowing fund
obtaining outside debt.
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Upon recommendation by the Chief Financial Officer, the Board may
adopt a resolution allowing lending/borrowing arrangements between
Water and Sewer funds. To the extent any inter-fund lending/borrowing
is undertaken in anticipation of long-term financing, the District
shall adopt a Resolution of its intention to repay such funds out of
tax-exempt debt proceeds so as to meet the requirement of federal tax
law for such borrowing.
If the funds being loaned are restricted, prevailing law requires that
the Resolution that the Board adopts must include a finding by the
Board that the lending fund has sufficient money to lend and that the
borrowing fund can repay the loan without adversely affecting the
District’s credit ratings.
Internal Lending/Borrowing arrangements will be recorded in accordance
with GASB reporting requirements. The arrangement will include the
purpose, a debt repayment schedule and a periodic interest charge that
is equal to the District’s investment rate of return for that same
period. This ensures that the lending fund is recapturing earnings
that would have been otherwise realized had these funds been invested
in the District’s investment portfolio.
16.0: RATING AGENCY APPLICATIONS
The District may seek one or more ratings on all new issues that are
being sold in the public market. These rating agencies include, but
are not limited to, Fitch Investors Service, Moody’s Investors
Service, and Standard & Poor’s. When applying for a rating on an
issue over $1 million or more, the District shall make a formal
presentation of the finances and positive developments within the
District to the rating agencies. The District will report all
financial information to the rating agencies upon request. This
information shall include, but shall not be limited to, the District’s
Comprehensive Annual Financial Report (CAFR), and the Adopted
Operating and Capital Budget.
17.0: USE OF CREDIT ENHANCEMENT
Credit enhancement is a generic term that means any third-party
guarantee of debt service. Credit enhancement providers include
municipal bond insurance companies or financial institutions. The
purchase of credit enhancement allows the District’s bond issue to
carry the same credit rating as the credit provider. The District will
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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.
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 5
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. The Committees support presentation to the
full Board for their consideration.
NOTE:
The “Committee Action” is written in anticipation of the Committee moving
the item forward for Board approval. This report will be sent to the
Board as a committee approved item or modified to reflect any discussion
or changes as directed from the committee prior to presentation to the
full Board.
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
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
ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED
5
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)
ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED
6
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
ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED
7
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
ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED8
*Objective has been placed on hold due to COVID-19.
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)
ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED9
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)
ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED
10
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)
ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED11
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
ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED
12
*Objective has been placed on hold due to COVID-19.
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
ON TARGET NOT ON TARGET ON HOLD COMPLETED NOT STARTED13
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 QUARTERLY
35
REPORTED ANNUALLY
7
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
Customer Service staff 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
Water Operations staff 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 $552.00 per account annually (based on Operating budget)
Calculation: Total operations O&M costs/Number of accounts
Meter Maintenance staff 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
Customer Service staff 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; FY20 Overtime budget is $185,500)
Calculation: Actual overtime costs (including comp time)/Budgeted overtime costs
Utility Maintenance staff conducting street repairs
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
Utility Maintenance staff 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)
Accounting staff 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
Utility Maintenance staff 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
Reclamation Plant staff 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
Utility Locator staff 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 Q4
RECYCLED WATER SHUTDOWN TESTING
Target: 90% of recycled site shutdown tests performed annually
(55 recycled water sites scheduled for shutdown in FY21)
Calculation: Cumulative percentage of recycled site shutdown tests performed per year compared to those scheduled
34
Recycled Water staff 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
Construction Inspection staff 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
Fleet staff 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
Reclamation Plant staff 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
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
Utility Maintenance staff 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
Utility Maintenance staff 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
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
2019 Employee Appreciation Luncheon
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
District staff attending the “Women in Water Symposium“
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
Utility Maintenance staff completing a service replacement
49
4.00
7.48
0
5
10
15
20
25
Q1 Q2 Q3 Q4
TARGET
Questions?
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