HomeMy WebLinkAboutOperating and Capital Budget FY 2008-2009
ADOPTED OPERATING AND CAPITAL BUDGET
FISCAL YEAR 2008-2009
TABLE OF CONTENTS
Page
Letter of Transmittal iv
BUDGET FOREWORD
Otay Water District At-A-Glance 1
General Information 2
Statement of Values 3
Awards 4
Balanced Scorecard 8
Organization Chart 13
Budget Guide 14
Budget Calendar 16
Budget Process & Basis 18
Resolution No. 4124 21
HISTORY AND COMMUNITY PROFILE
Past and Present 22
Current Economic Conditions 23
The Future 24
Demographics 25
Ten Largest Customers 26
Service Area Assessed Valuation 27
Ten Principal Taxpayers 28
San Diego County Rainfall 29
FINANCIAL SUMMARIES
Budget Summary 30
Operating Budget Summary – General Fund 34
Operating Budget Summary by System 35
Operating Revenues & Expenditures 36
Fund Balance Summary by Fund 37
Revenues & Expenditures by Fund 38
Revenues & Expenditures by Type 40
FIVE-YEAR FORECAST
Five-Year Forecast 41
General Fund Forecast 42
Fund Balances 43
Debt Management 44
Schedule of Outstanding Debt 45
Projected Principal & Interest Payments by Debt 46
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REVENUES AND EXPENDITURES
Potable Revenues and Expenditures
Potable Narrative 47
Operating Budget Summary 49
Classification of Water Sales 50
Water Sales Summary by Service Class 51
Unit Sales History by Customer Class 52
System Fees 53
MWD & CWA Fixed Fees (Pass-Through) 54
Meter Fees 55
Revenue History 56
Water Purchases and Related Costs 57
Power Costs 58
Administrative Expenses 59
Materials and Maintenance Expenses 60
Potable Water Service Area Maps 61
Recycled Revenues and Expenditures
Recycled Narrative 62
Operating Budget Summary 64
Classification of Water Sales 65
Water Sales Summary by Service Class 66
System Fees 67
Meter Fees 68
Revenue History 69
Water Purchases 70
Power Costs 71
Administrative Expenses 72
Materials and Maintenance Expenses 73
Recycled Water Service Area Maps 74
Sewer Revenues and Expenditures
Sewer Narrative 75
Operating Budget Summary 76
Sewer Charges Summary by Service Class 77
Revenue History 78
Power Costs 79
Administrative Expenses 80
Materials and Maintenance Expenses 81
Formula for Sewer Rates 82
Sewer Service Area Map 83
General Revenues and Expenditures
General Revenues and Expenses Narrative 84
General Revenues 86
General Expenses 87
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DEPARTMENTAL OPERATING BUDGET
Departmental Operating Budget Narrative 88
Labor & Benefits 91
Position Count by Department 93
Administrative Expenses 95
Materials and Maintenance Expenses 96
Operating Expenditures by Department 97
Operating Expenditures by Object 98
Departmental Budgets:
Board of Directors 99
General Manager 103
Administrative Services 109
Finance 121
Information Technology and Strategic Planning 134
Water Operations 145
Engineering 160
General Expense 172
CAPITAL BUDGET
Capital Improvement Program Narrative 175
Major CIP Projects 177
Flagship CIP Projects in Construction 178
Flagship CIP Project in Design 180
Progress on Major Project 181
CIP Reserve Funds 182
CIP Funding Source and Category 183
CIP Projects 184
CIP Justification and Impact on Operating Budget 186
Capital Purchases Budget 188
POLICIES
Summary of Financial Policies 189
Reserve Policy 191
Reserve Policy Glossary 216
Investment Policy 218
Investment Policy Glossary 224
Debt Policy 230
Debt Policy Glossary 243
APPENDIX
Glossary 247
List of Acronyms 254
Index 258
iii
September 2, 2008
Honorable Board of Directors
Otay Water District
I am pleased to present the Otay Water District’s Adopted Operating and Capital Budget for
Fiscal Year 2008-09. This year’s budget establishes the management plan to finance all of the
District’s services and programs during the 2009 fiscal year.
The mission of the District is to provide customers with the best quality water, wastewater, and
recycled water service in a professional, effective, and efficient manner. To do so, this year and
in coming years, we will be faced with several key challenges. These challenges include: the
slowdown in the local and national economy; instability in
the financial markets; widespread home foreclosures; the
likelihood of continued drought in the Southwest; and
possible water shortages due in part to the reduction in
water deliveries from the Sacramento – San Joaquin Bay
Delta. In adopting this budget, these factors motivated
your board to make the stability and strength of the District
among its highest priorities.
Given these uncertain times, the District must find the best
solutions that balance the expectations placed on it by our
customers and key community and financial stakeholders
with the significant challenges we face. Meeting these
challenges requires dedication and a commitment to
continuous improvement and the innovative use of
technologies and resources.
The primary way to achieve our objectives is to improve all aspects of our core business
processes. The main tool we will utilize in this regard is the Strategic Business Plan which was
updated this year and adopted by your board for the 2009 through 2011 timeframe.
Efficiency improvements have become the new competitive advantage for utilities. As a result,
the theme of the plan is to capitalize on the infrastructure investments we have already made in
the last few years. We will use the slowdown in the regional economy to realign our energies
and optimize how we manage and maintain the nearly half billion dollars of “in-ground” assets
utilizing the technology we have recently put in place.
The Strategic Business Plan also carries forth the District’s transformation from a growth-centric
to a maintenance-based organization. Where capital and developer fees supported growth the
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District was very successful in managing the rapid pace of development we experienced. Today
we have become equally focused in managing long-term maintenance and replacement of our
infrastructure.
This necessary change is illustrated by the business maturity curve. During high growth, we
focus on achieving the macro targets of
building and installing new infrastructure.
In the future, the resources required to
support slower growth are reduced but the
effort to maintain and improve assets
increases. Income, however, will be derived
more from rates and less from fees.
Consequently, increased costs place pressure
more directly on rates. Therefore, to meet
our customer and financial goals, the
District will emphasize internal efficiency
and development of technology assisted best practices. In effect, we will use our investments in
technology to do more with the same or fewer resources.
Today, the District provides water service to nearly 47,340 potable and 640 recycled customers
within approximately 125.5 square miles of southeastern San Diego County. In the past, all of
the potable water purchased by the District was purchased from the San Diego County Water
Authority (CWA) who in turn purchases water from the region’s water importer, the
Metropolitan Water District of Southern California. Last year, the District began purchasing raw
water from CWA and having that water treated by the Helix Water District. This action brought
regional water treatment closer to our customers and reduced dependence on water treatment
located outside of San Diego County proper.
The District also owns and operates a wastewater collection and recycling system to provide
public sewer service to approximately 4,630 homes and businesses, equivalent to 6,640 Assigned
Service Units, within portions of the communities of La Mesa, Rancho San Diego, El Cajon,
Jamul, and Spring Valley. Recycled water from the Ralph W. Chapman Water Recycling
Facility (RWCWRF) project is capable of recycling wastewater at a rate of 1.3 million gallons
per day. The District also purchases up to 6 million gallons per day of recycled water from the
City of San Diego’s South Bay Water Reclamation Plant. Recycled water from these two
sources is used to irrigate golf courses, schools, public parks, roadway landscapes, and various
other approved uses in eastern Chula Vista.
BUDGET SUMMARY
The District’s operating expenditures are from its three major sectors: potable water, recycled
water, and sewer, totaling $67,062,700 for Fiscal Year 2009. Revenues from potable and
recycled water for Fiscal Year 2009 are projected to be $55,573,900 about $4.8 million (9.5%)
more than Fiscal Year 2008. Water sales volumes are expected to decrease as a result of the
slowing economy and expanded efforts to promote water conservation, while the cost of water
increases due to supply limitations. Sewer revenues are projected to be $2,145,300, about
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$270,000 less than Fiscal Year 2008, due to a change in sewer billing methodology and lower
water consumption.
Significant aspects of the Operating Budget are:
• A balanced budget meeting the goals of the Strategic Plan.
• An updated a six-year Rate Model to ensure sound financial planning and reserve levels.
• Unprecedented water supply rate increases of 13.2% from CWA because of the high cost
of supply programs, higher energy and operating costs.
• Implemented rate increases in potable and recycled water and sewer. This included pass-
through rate increases from CWA, and County of San Diego who raised costs to water
and sewer customers.
• In response to the economic slowdown, the District has reduced staffing levels from 173
full time equivalents to 169, and cut operating expenditures by $885,800 due to program
deferrals and other discretionary spending cuts.
• Of San Diego County’s 23 water agencies, Otay’s water rate is the ninth-lowest and
below the county-wide average.
• Expanded residential, landscape, and commercial water conservation programs.
The Fiscal Year 2008-09 Capital Budget consists of 66 projects and a budget of $30.9 million.
The budget emphasizes long-term planning for on-going programs while functioning within
fiscal constraints and population growth. This year’s CIP budget was reduced by $7.5 million
compared to last year’s projection in response to the housing slowdown.
The Future
The coming years will be challenging times for everyone in the water industry. Following
Governor Schwarzenegger’s declaration of a statewide drought in California in June, the District
declared a Level 1 drought watch. By doing so, we have begun calling on all customers to
achieve up to a 10 percent reduction in their water use through voluntary measures. By summer
of next year, we estimate we could be in Level 2 drought alert or perhaps even a drought
emergency where voluntary conservation gives way to mandatory measures and all customers
are required to cut water use by 30 to 40 percent.
As you would expect, this will impact the finances of the District and staff throughout the
District are working diligently to prepare for the consequences of an extended drought should it
come to pass. With that in mind, our strength as an organization is vastly enhanced by the
practices and policies put in place by your board to ensure the strength and stability of the
District as we move forward into uncertain times. These actions will assure our success as an
organization and the well-being of the customers we serve.
AWARDS AND ACKNOWLEDGMENTS
To recognize the Supply Link Project, connecting our recycled water system to the City of San
Diego’s South Bay Water Reclamation Plant, the American Society of Civil Engineers (ASCE)
presented the District the 2007 Outstanding Civil Engineering Project for the 30” Recycled
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Water Pipeline, Dairy Mart Road to the 450-1 Reservoir. Additionally, for this same project, the
Construction Management Association of America (CMAA) presented Otay Water District the
2008 Project Achievement Award for the Recycled Water Pipeline to recognize outstanding
achievement in the practice of construction management.
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement
for Excellence in Financial Reporting to the Otay Water District for its Comprehensive Annual
Financial Report (CAFR) for the fiscal year ended June 30, 2007. In order to be awarded a
Certificate of Achievement, a government agency must publish an easily readable and efficiently
organized Comprehensive Annual Financial Report. This report must satisfy both generally
accepted accounting principles and applicable legal requirements. In addition, the CAFR
received the Outstanding Financial Reporting Award from the California Society of Municipal
Finance Officers (CSMFO).
The District also received a Distinguished Budget Presentation Award from the GFOA for the
District’s Operating and Capital Budget for Fiscal Year beginning July 1, 2007, as well as four
awards from the CSMFO for Excellence in Budgeting, Excellence in Capital Budgeting,
Meritorious in Public Communications, and Meritorious in Innovation. These prestigious
awards recognize conformance with the highest standards for preparation of state and local
government financial reports.
This budget reflects the Board of Directors’ vision for the District, management, and its
employees. We will continue to strive to make improvements in our budget process, including
an extensive review and analysis of projections for revenues, expenditures, capital projects, and
reserves. I would like to thank all the staff involved in this process for the efforts put forth in the
preparation of this budget to ensure a successful outcome.
To the Board of Directors, we acknowledge and appreciate your continued support and direction
in achieving excellence in financial management.
__
Mark Watton, General Manager
vii
HISTORY
The Otay Water District was formed in January 1956 and joined the San Diego County Water
Authority (CWA) in September 1956 to acquire the right to purchase and distribute imported
water throughout its service area. The District is also responsible for the collection, treatment,
and disposal of wastewater from a portion of the northern region of the District. In 1980, the
District started operation of the Ralph W. Chapman Water Recycling Facility (RWCWRF), and
in June, 2007, a new source of recycled water from the City of San Diego was obtained, allowing
Otay Water District to supply 15 to 20 percent of total water demand with recycled water.
MISSION STATEMENT
The District’s mission is to provide safe and reliable water and wastewater services to its
community with innovation, in a cost efficient, water-wise, and environmentally responsible
manner.
SERVICE AREA
The District's boundaries encompass an area of approximately 125 square miles in San Diego
County, lying immediately east of the City of San Diego metropolitan area and running from the
City of El Cajon south to the international border.
GOVERNMENT
The Otay Water District was formed in 1956 to serve as a public water and sewer agency,
authorized as a California special district under the provisions of the Municipal Water District
Act of 1911. The District’s ordinances, policies, taxes, and rates for service are set by five
Directors, elected by voters in their respective geographic division, to serve staggered four-year
terms on its governing board. The District is a “revenue neutral” public agency, meaning that
each end-user pays only their fair share of the District’s costs of water acquisitions and the
operation and maintenance of the public facilities.
ORGANIZATIONAL STRUCTURE
The General Manager reports directly to the Board of Directors, and through two Assistant
General Managers and the District management, oversees day-to-day operations. One Assistant
General Manager oversees the departments of Administrative Services, Finance, Information
Technology and Strategic Planning while the other oversees the Water Operations and
Engineering departments. These and other lines of reporting are shown on the organization chart
on page 13.
OTAY WATER DISTRICT AT-A-GLANCE
1
For Fiscal Year 2009, the District will have a staff of 168.75 full-time equivalent employees
under the leadership of the General Manager. The District provides water service to
approximately 39% of its land area with a population of more than 191,500 people. This
percentage increases as the District's service area continues to grow to ultimate build-out. The
District is projected to deliver approximately 38,800 acre-feet of potable water to 47,340 potable
customer accounts and to ultimately deliver 62,700 acre-feet of potable water to serve 277,000
people or 50,300 accounts. The rate of growth, as projected by the San Diego Association of
Governments (SANDAG) for the Chula Vista area of San Diego County, is approximately 2.1%
per year over the next decade. Using historical data and considering current economic
conditions, staff has moderated this projection to a growth rate of 0.6% for Fiscal Year 2009.
Since 1956, the District has provided high quality water to an arid region of the southeastern San
Diego County. In 1971, the District constructed a small collection and treatment plant for sewer
in the northern section of the District, and in 1980 the District opened the RWCWRF. Finally in
1986, the District found a use for recycled water in the construction industry for soil
compression. For over 50 years, the available supply of water has helped transform the District
service area from a mostly scrub and cactus-covered backcountry into a wonderful balance of
diverse environments.
Recycled water from the Ralph W. Chapman Water Recycling Facility (RWCWRF) is used to
irrigate golf courses, schools, public parks, roadway landscapes, and various other approved uses
in eastern Chula Vista. The RWCWRF is capable of recycling wastewater at a rate of 1.3
million gallons per day. The District is also in a partnership with the City of San Diego to
beneficially reuse an additional 6,720 acre-feet per year of recycled water beginning in Fiscal
Year 2008. This makes Otay Water District the largest retail provider of recycled water in the
county.
The District also owns and operates a wastewater collection system providing public sewer
service to approximately 4,630 customer accounts within the Jamacha drainage basin. The sewer
service area covers approximately 8,797 acres, which is about 11% of the District’s total service
area. Residential customers comprise 98% of the sewer customer base.
GENERAL INFORMATION
2
As Otay Water District employees we dedicate ourselves to:
CUSTOMERS
We take pride that our commitment to customer-centered service is our highest priority.
EXCELLENCE
We strive to provide the highest quality and value in all that we do.
INTEGRITY
We commit ourselves to doing the right thing.
Ethical behavior, trustworthiness and accountability are the District’s foundation.
TEAMWORK
We promote mutual trust.
We share information, knowledge and ideas to reach our common goals.
EMPLOYEES
We see each individual as unique and important.
We value diversity and open communication to promote fairness, dignity and respect.
Otay Water District Employees
Dedicated to Community Service
STATEMENT OF VALUES
3
FINANCIAL AWARDS
The Government Finance Officers
Association of the United States and
Canada (GFOA) presented a
Distinguished Budget Presentation
Award to Otay Water District, California
for its annual budget for the fiscal year
beginning July 1, 2007. In order to
receive this award, a governmental unit
must publish a budget document that
meets program criteria as a policy
document, as an operations guide, as a
financial plan, and as a communications
device.
This award is valid for a period of one
year only. We believe our current budget
continues to conform to program
requirements, and we are submitting it to
GFOA to determine its eligibility for
another award.
The California Society
of Municipal Finance
Officers (CSMFO)
presented Otay Water
District the Certificate
of Award for
Excellence in
Operating Budgeting
for Fiscal Year 2007-
2008.
4
FINANCIAL AWARDS
The California Society of
Municipal Finance
Officers (CSMFO)
presented Otay Water
District the Certificate of
Award for Excellence in
Capital Budgeting for
Fiscal Year 2007- 2008.
The California Society of
Municipal Finance Officers
(CSMFO) presented Otay
Water District the Certificate
of Award for Meritorious in
Public Communications for
Fiscal Year 2007 -2008.
5
FINANCIAL AWARDS
The California Society of Municipal
Finance Officers (CSMFO) presented
Otay Water District the Certificate of
Award for Meritorious in Budget
Innovations for Fiscal Year 2007-2008.
6
AWARDS
The Construction Management Association of
America (CMAA) presented Otay Water District
the 2008 Project Achievement Award for the
Recycled Water Pipeline to recognize
outstanding achievement in the practice of
construction management.
The American Society of
Civil Engineers (ASCE)
presented Otay Water District
and Lee & Ro, Inc. the
2007 Outstanding Civil
Engineering Project for 30”
Recycled Water Pipeline,
Dairy Mart Road to 450-1
Reservoir.
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Introduction
The strategic plan is the core document which guides the agency’s efforts to meet and positively
adapt to change. The plan examines a three year timeframe and explicitly defines the strategies,
goals, objectives and performance measures needed to meet these challenges. It is based upon the
District’s mission, vision and values, and focused around a key challenge – which is the theme
for the FY 2009-2011 plan.
Key Challenge
The theme of the FY 2009-2011 plan is to capitalize on the infrastructure investments made in
the last few years. The District has begun to address the transformation from a growth-centric to
a maintenance-based organization. Capital and developer fees support growth but replacement
and maintenance are supported by rates and operating expenses. The District has been very
successful in managing growth but now needs to become more focused in managing long-term
BALANCED SCORECARD
8
maintenance and replacement of its infrastructure. As the current economic environment cools
there is opportunity to realign energies and optimize the management and maintenance of the
nearly half billion dollars of District “in-ground” assets. In addition, with water supplies being
challenged due to drought conditions, the District needs to be flexible in managing a limited
supply while maintaining a positive relationship with customers.
Efficiency improvements have become the new competitive advantage for utilities. Staff will
need to do more with the same or fewer resources. The primary way to achieve this target is to
improve all aspects of core business processes.
Key Challenge
The key challenge for the District is to find the best solutions that balance our requirements
with the significant constraints we face. Some of these constraints are escalating cost,
drought, increasing regulatory compliance and uncertainty, customer demands for improved
services, and competition for supply and resources. Meeting these challenges requires
dedication and commitment to continuous improvement, and the innovative use of
technologies and resources.
This necessary change is illustrated by the business maturity curve. During high growth, we
focused on achieving the macro targets of building and installing new infrastructure. In the
future, the resources required to support slower growth are reduced but the effort to maintain and
improve assets is increasing. Income, however, will be derived more from rates and less from
fees. Consequently, increased costs place pressure more directly on rates. Therefore, to meet
customer and financial goals, the District will need to emphasize internal efficiency and
development of technology-assisted best practices.
Methodology
The Balanced Scorecard focuses on four perspectives as a mechanism for setting strategic
direction and balancing competing priorities. This industry best practice has been adopted by the
District because it allows for examination of our plans from different perspectives.
BALANCED SCORECARD
9
Every three years the District engages in a major revision of its strategic plan. This current plan
(covering Fiscal Years 2009-2011) is the third in a series of three-year plans beginning in 2003.
The process is inclusive. Starting with a thorough review of the last effort, the District’s Vision,
Mission, and Key Challenge statements are examined and revised. Individual interviews are
conducted with the Board of Directors, approximately 30 staff members, union representatives,
as well as team meetings involving all Otay staff. Assistance from professional consultants and
industry best practice advice are taken into account to provide third party input.
The primary tool, however, is a very thorough review process by the Senior Management Team
of every strategy, goal, objective, project plan, performance measure, and target contained in the
plan. Through this team discussion process the General Manager gains consensus with his staff
on the exact priorities for the District, including detailed financial and resource considerations
required to execute the plan. Thus the plan serves as an informal contract between District staff
and the General Manager on the strategic work that will be done and what the District hopes to
achieve over the next three years. In turn, the General Manager presents the plan to the Board
for approval. Through the strategic plan and budget approval processes, the Board is then able to
make well-informed oversight decisions about the District’s direction.
Performance Management
Performance metrics and targets are a critical element of the strategic plan but differ from
strategic plan objectives. Objectives identify the action items that are necessary to achieve the
strategic vision. Performance measures are designed to ensure the day-to-day operations of the
utility are meeting agreed-upon expectations. Performance measures are in the process of being
revised and will be finalized prior to plan initiation on July 1, 2008. The Board will be advised
in June when the measures have been thoroughly developed and meaningful targets have been
identified.
Customer
Maximize Our Customers’ Satisfaction
Listen to Our Customers
Effective Use Multi-Channel Communications
Educate our Customers on Important Water Related Matters
Expand the District’s Water Conservation Programs to maximize District-wide
water conservation
Maximize Recycled Water Use and Public Knowledge
BALANCED SCORECARD
10
Help Shape the Water Industry’s Direction
Legislative and Political Influence for District’s Programs
Optimize the District’s Water Industry Participation
Financial
Develop a Long Term Financial Planning Program
Establish a long-term (15 year) financial plan including scenarios and
contingencies for changes in demographics, local economy and drought
uncertainties.
Conduct financial threat assessment for growth, water availability, inflation and
other revenue sources.
Re-calculate all Capacity and Annexation Fees with New Rehabilitation and
Repair Plan.
Optimize All Revenue Streams
Modify existing rate structures.
Business Processes
Implement Industry Best Practices for Utility Development
Potable Water
Sewer
Recycled Water
Optimize the District’s Operating Efficiency
Minimize the District’s total life cycle asset costs
Update the District’s IT Strategic Plan.
Optimize the use of existing technologies
Increase field productivity through improved efficiency
Improve the efficiency of business process
Optimize Disaster Preparedness
BALANCED SCORECARD
11
Learning and Growth
Results-Oriented Workforce
Retain Dedicated Workforce
Hire the “Best”
Staff Development
Workforce Management
Knowledge Management
Community involvement/District Outreach
BALANCED SCORECARD
12
ORGANIZATION CHART
BOARD OF DIRECTORS
GENERAL MANAGER
FINANCEADMINISTRATIVE
SERVICES
INFORMATION
TECHNOLOGY
AND STRATEGIC
PLANNING
ENGINEERING WATER
OPERATIONS
Controller and
Budgetary Services
Treasury and
Accounting
Services
Customer
Service
Payroll and
Accounts Payable
Human
Resources
Purchasing and
Facilities
Safety and Risk
Administration
Water
Conservation
IT
Applications
Public Services
Construction
Survey
Environmental
Water System
Operations
Utility
Maintenance/
Construction
Collection/
Treatment/
Recycle
Operations
GIS
ASSISTANT GENERAL MANAGER ASSISTANT GENERAL MANAGER
IT
Operations Water Resources
Design
Planning
CITIZENS AND
CUSTOMERS
13
The District views the budget as an essential tool for proper financial management. This budget
is developed with input from the various department levels of the organization and is adopted
prior to the start of each fiscal year. It is designed and presented for the general needs of the
District, its staff, and citizens. It is a comprehensive and balanced financial plan that features
District services, resources and their allocation, financial policies, and other useful information
to allow the users to gain a general understanding of the District’s financial status and future
plans. To help readers navigate this document, the following is a general description of each of
the tabulated sections of the budget.
Budget Foreword
This introductory section contains descriptions and general information about the District,
strategic focus areas highlighting major initiatives and accomplishments, and the Budget
Calendar and Process.
Policies
This section includes a summary of the District’s financial policies and practices, including the
Reserve Policy, Investment Policy, and Debt Policy.
History and Community Profile
Included in this section is the history of the District, along with the current and future economic
conditions and projections. It also includes statistics on the District’s customers, the region’s tax
base, and rainfall.
Financial Summaries
This section contains an overview of the District’s revenues and expenditures by fund for the
current budgeted fiscal year and prior two years’ actual and estimated amounts. It includes a
description of each of the revenue and expense categories as well as charts depicting their
relationships.
Five-Year Forecast
The District prepares a comprehensive Rate Model each year based on budget input, trends, new
programs, and requirements. Estimates are made of cost increases, rate increases, targeted fund
balances, capital needs, and debt requirements. Analysis for the current budget year plus five
subsequent years is conducted and a five-year forecast is prepared based on the Rate Model
results.
BUDGET GUIDE
14
Revenues and Expenditures
The District budgets revenues and expenditures by Potable, Recycled, and Sewer Systems.
General revenues and expenditures that are not specific to one system or department are
budgeted in General Revenues and Expenses section. An allocation of overhead type costs is
made to equitably spread the cost of running the District among the various business segments.
Departmental Operating Budget
This section provides a summary of each department’s operating expenditures and detailed
budget information including its mission, responsibilities, three-year staffing, performance
indicators, accomplishments, and goals. Also provided are graphical presentations of
departmental budget percentages to District total, as well as summary expenditure information
by division for three fiscal years.
Capital Budget
An overview of the District’s Capital Improvement Program (CIP), the Water Resources Master
Plan (WRMP), major assumptions and criteria, a five-year listing of CIP project expenditures
and the justification and impact on the Operating Budget and capital purchases budget for the
fiscal year are located in this section.
Appendix
The last section consists of a Glossary of budget and financial terms, List of Acronyms, and an
Index.
BUDGET GUIDE
Gabrielle Topper
2007 “Water is Life” Winner
4th Grade
Rancho San Diego
Elementary School
15
Each year, the Finance Department prepares a Budget Workbook for distribution to the
departments. This workbook gives instructions and deadlines for each phase of the budget.
The budget process is explained on pages 18 and 19.
February 15, 2008 Chiefs submit CIP budget for new projects and changes to existing
projects.
February 20, 2008 Departments submit requests for new personnel and/or personnel
reclassifications, and long-term staffing to Human Resources.
February 27, 2008 Human Resources Department (HR) performs a preliminary review
of submitted requests.
March 3, 2008
Each department submits the following items:
• Position analysis questionnaires
• Operating and administrative budget
• Capital purchases and justification
• Personnel budget and work order percentage allocation
March 5, 2008 General Manager approves new personnel and/or personnel
reclassification requests.
March 10, 2008 Finance Department reviews Operating Budget and performs
Reconciliation with departments.
March 12, 2008 Chiefs submit GM approved Personnel Requests and Request for
Reclassification; and Position Analysis forms to HR.
May 14, 2008
Finance reviews department operating budgets with GM and AGMs,
and reviews department preliminary CIP budget with Chief of
Engineering.
May 21, 2008
Finance reviews personnel cost with Chiefs, AGMs and GM, and
completes second review of CIP budget with AGMs and
Engineering.
May 28, 2008 General Manager reviews CIP budget.
BUDGET CALENDAR
16
April 21, 2008 Finance reviews assumptions and rates with Chiefs, AGMs and GM.
April 24, 2008 General Manager reviews Preliminary Budget.
May 19, 2008 Practice run of budget presentation with Finance, Chiefs, AGMs and
GM.
June 10, 2008 Public Workshop – Adopt FY 2008-09 Operating and Capital
Budgets.
October 31, 2008 Mail Prop 218 Notices.
December 15, 2008 Prop 218 Hearing.
17
The District has integrated the Capital Improvement Program (CIP) Budget and the Operating
Budget. These budgets are developed based on the District’s Water Resources Master Plan and
Strategic Business Plan. New initiatives and programs are categorized into the Balanced
Scorecard perspectives. Appropriate budget amounts are determined by using the historical data
of operations, growth, developers’ input, SANDAG projections, and economic outlook. The
District is accounted for and budgeted on an enterprise basis and conforms to the guidelines of
Generally Accepted Accounting Principles (GAAP).
To assure reliable, high-quality service to the growing customer base, the District has committed
to a number of long-range strategies that drive the budgeting process. The strategies and
assumptions used to develop the District’s integrated budget are:
• an average projected long-term growth rate of 2%
• pass-through rate increases for cost imposed on the District by the wholesale
water providers
• accurate projections of capital budget needs (including replacement needs)
• reserve funding in accordance with the Reserve Policy to meet future growth
demands and financial stability
• funding of the Strategic Plan initiatives as categorized into the Balanced
Scorecard perspectives
• avoid rate spikes by leveling rate increases over a six-year period
Each year, the Finance Department prepares a Budget Workbook for distribution to the
departments. This workbook gives instructions to departments on how to budget for positions,
administrative, and materials expenses. Included in this workbook are historical trends,
assumptions, and training on how to enter the expense data into the District budget system.
Administrative and Materials Expenses are entered into the budget system by individual
requests. These requests are compared to last year’s budget and expenses to determine
reasonableness by the Finance Department. New or large increases in costs are supported by
explanations for these costs and presented to the General Manager and the Board of Directors
prior to adopting the budget.
The budgeting of salaries and benefits is performed in the position budgeting module of the
budget system. This tool allows the District to budget for each authorized position and the
associated benefits. Departments submit requests for new positions, reclassifications, or
advancements to the Assistant General Managers. These requests are reviewed by the Assistant
General Managers and then presented to the General Manager for approval. Upon their
approval, the Finance Department enters these changes, as well as negotiated pay increases and
benefit rate changes, into the position budget system. Position budgeting calculates the salaries
and benefits to be included in the District’s budget.
BUDGET PROCESS
18
The Finance Department prepares the budget for the Potable, Recycled, and Sewer Systems
based on estimated cost increases from the District’s wholesale water providers as well as
estimated sewer charge increases provided by the City of San Diego. Other significant factors in
the budget development include projected growth in customer accounts and weather.
Additionally, all general revenue and expense budgets are calculated using trend analysis and
any external factors that may affect these items.
The Engineering Department issues budget instructions for the CIP budget process. Each
project manager receives a report of year-to-date project expenses and then estimates cost to the
end of the fiscal year. They also project future costs to complete the project. Costs are adjusted
for scope changes as well as construction cost increases. Engineering then compiles the CIP
Budget and submits it to the Assistant General Managers and the General Manager for review
prior to presentation to the Board of Directors.
Once all of these budgets have been calculated, the Finance Department inputs all of the
operating revenues and expenses, CIP expenses, reserve funding, and reserve levels into the
District’s Rate Model. Inflators for cost and volume are input into the Rate Model to project the
next five years of revenue and expenses. Rates are then set for the current fiscal year, plus five
subsequent years, such that all financial targets are met. Using this comprehensive modeling
tool, the District is able to smooth future rate increases, determine when debt should be issued,
and mantain all of the reserve levels in accordance with the Reserve Policy.
In the spring, the Strategic Plan is presented to the Board of Directors for adoption. This is
followed by a coordinated presentation of the budget by all departments, to the Board of
Directors for their approval at a special budget workshop in May. The adoption of the Strategic
Plan and budget on an annual basis gives the District its direction for the following fiscal year.
During the year, each department receives monthly budget and cost reports that are essential to
monitor and control costs. As events occur or conditions change, modifications to or deviations
from the original budget may be necessary. In the event the General Manager determines that an
emergency exists which requires immediate action, he may transfer appropriation within the
budget allocations, or request that the Board of Directors increase the current budgeted funds.
Due to the size of the District’s CIP, a separate budget book has been prepared outlining in detail
the projects and expenditures required to ultimate build-out. A synopsis of the CIP may be
found under the Capital Budget section of this report. As part of the integrated budget, capital
purchases have been included within the CIP Budget.
The Budget Report is intended as a financial guide and may be modified by the Board of
Directors during Fiscal Year 2009.
BUDGET PROCESS
19
The District utilizes the accrual basis for budget and accounting, recognizing revenues and
expenses in the period in which they are earned and incurred, respectively. The District reports
its activities on an enterprise basis, which is used to account for operations that are financed and
operated in a manner similar to a private business enterprise. The intent of the District is that the
costs (including replacement cost of existing assets) of providing goods or services to the general
public on a continuing basis, be financed or recovered primarily through user charges.
BUDGET BASIS
2007 “Water is Life” Winner
Kirstine Donegan
6th Grade
Clear View Charter School
20
21
On January 27, 2006, the Otay Water District celebrated its golden anniversary. Over 50 years
ago, the California State Legislature officially authorized the District to an entitlement to
imported water. The Otay Water District was formed in 1956 by a small group of ranchers,
farmers and other property owners concerned about the declining quality and quantity of well
water. In 1957, developers in south Spring Valley created the La Presa County Water District to
gain water from the San Diego County Water Authority (CWA). In the fall of 1969, these two
districts merged into the Otay Water District.
Since then, the District has grown from a handful of customers and two employees to become an
organization operating a water network with more than 722 miles of potable and 93 miles of
recycled pipelines, 43 reservoirs, a sewer treatment plant, and one of the largest recycled water
distribution systems in San Diego County. The character of the service area has also changed
from predominantly dry-land farming and cattle ranching to businesses, high-tech industries, and
large master-planned communities. The water district’s boundaries currently stretch from Otay
Mesa and eastern Chula Vista to Spring Valley, southern El Cajon, and Jamul.
The District is facing a very dry year with the Colorado River in the midst of a prolonged multi-
year drought and the Sierra Nevada snow pack at its lowest level in many years. To add to this
situation, water deliveries are being curtailed to the State Water Project to protect endangered
Delta Smelt. All of this is likely to mean less water for Southern California in the years ahead.
These current problems make the work the District is doing all the more critical. On June 1,
2007 the District dedicated Supply Link Project connecting recycled water system to the City of
San Diego’s City South Bay Water Reclamation Plant. Today, the District purchases about six
million gallons per day (mgd) of recycled water from the city in addition to the one mgd
produced at RWCWRF. With recycled water meeting a large portion of the landscape irrigation
needs, this means approximately seven mgd of potable water does not have to be pumped
hundreds of miles from northern California or the Colorado River. Instead, enough drinking
water to serve more than 15,000 homes is being conserved and can be used to address shortages
in the years to come.
PAST AND PRESENT
22
CURRENT ECONOMIC CONDITIONS
Currently, the District services the needs of a growing population by purchasing water from the
San Diego County Water Authority (CWA). CWA purchases its water from the Metropolitan
Water District of Southern California (MWD) and the Imperial Irrigation District (IID). Otay
takes delivery of the water through several connections of large diameter pipelines owned and
operated by CWA. The District currently receives treated water from two sources, CWA, and
the Helix Water District (HWD) in the North area of the District. In the Southern region, in
addition to the treated water deliveries from CWA, the District has an emergency agreement with
the City of San Diego in the case of a shutdown of the main treated water source. Through
innovative agreements like this, benefits can be achieved by both parties by using excess
capacity of another agency, and diversifying local supply, thereby increasing reliability.
For almost as long as it has been delivering potable water, the District has collected and recycled
wastewater generated within the Jamacha drainage basin and pumped the recycled water south to
the Salt Creek basin where it is used for irrigation and other non-potable uses. However, the
demand for recycled water out-paced the supply, requiring the District to supplement the limited
supply of recycled water with potable water. Through the new agreement with the City of San
Diego, the District has discontinued supplementing its recycled demand with potable water.
Once again, this decreases the demand on potable water and increases reliability of the District’s
supply.
The District’s sewer service area is growing at a slow but steady rate of approximately 1.2%
each year. Most of this growth is from small development projects or homeowners converting
their septic system to sewer because of environmental issues.
The District’s service area was one of the fastest growing regions in the nation. During the past
decade, the population of the service area has nearly doubled. It is estimated that the District is
currently serving approximately 191,500 residents. In just the past six years, the District has
added more than 7,950 new customer connections. The phenomenal growth has slowed, as our
local and national economy is experiencing a downturn. This slowdown is reflected internally as
the District’s Development Services Department approved on average 24 permits per month, and
sold 220 water meters in Fiscal Year 2007-2008.
23
THE FUTURE
The District continues to use the challenges presented by growth to create new opportunities and
new organizational efficiencies. By utilizing and continuing to refine its Strategic Business Plan,
it has captured the Board of Director’s vision and united its staff in a common mission. The
organization has achieved a number of significant accomplishments based on its successful
adherence to its Strategic Business Plan. The District is not only poised to continue successfully
providing an affordable, safe, and reliable water supply for the people of its service area, but is
set to reap the rewards of greater efficiencies and economies of scale.
1,397
835
638
340 336 414
782
1,453
2,093
2,312
0
500
1,000
1,500
2,000
2,500
FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14
METER SALES
Actual Projected
The Engineering Department projects that over the next six years the District will sell another
7,390 meters. SANDAG, the regional planning agency, shows a slowing of the historic annual
growth rate of 6.3% since 1980, to a projected future annual growth rate of 1.7% through 2030,
for the City of Chula Vista. For the unincorporated areas of the region the historic annual growth
rate has been only 1.3% since 1980, but is expected to increase to 2.1% through 2030.
24
DEMOGRAPHICS
The District boundaries shown in the chart below encompass an area of approximately 125
square miles in San Diego County, located immediately east of the City of San Diego
metropolitan area and running from the City of El Cajon south to the international border.
SANDAG creates and maintains a tremendous quantity of demographic, economic, land use,
transportation and criminal justice information about the San Diego region. The demographic
data include population characteristics like age, education, and employment. Because of the
overlapping of the District’s service area with the cities of Chula Vista, La Mesa, El Cajon, and
the unincorporated areas of Spring Valley and Jamul, the following demographic data is from the
City of Chula Vista as it most closely represents the District.
The population of Chula Vista has grown from 83,927 in 1980, to 135,136 in 1990, to 173,556 in
2000, and in 2008 the population reached 231,305. This represents, an increase of 147,378 in the
past 28 years or a 175.6% increase, which correlates to the Districts rapid growth for the same
period.
The racial make up of Chula Vista is 50% Hispanic, 28% White, 13% Asian, 4% Black, and the
remaining 5% is all other groups. The median household income for Chula Vista was $71,298 in
2007, and 97% of Chula Vista’s housing units were occupied.
25
% of
Annual Water
Customer Type Revenues Sales
1. City Of Chula Vista Publicly Owned 1,934,992$ 3.8%
2. State Of California Publicly Owned 961,095 1.9%
3. County Of San Diego Publicly Owned 772,190 1.5%
4. Eastlake III Community Assoc Construction (Potable, Temporary)602,122 1.2%
5. Eastlake Country Club Irrigation (Reclaimed, Permanent)399,287 0.8%
6. Steele Canyon Irrigation (Potable, Permanent)359,162 0.7%
7. Salt Creek Partners LLC Irrigation (Reclaimed, Permanent)349,322 0.7%
8. Eastlake Summit Master-Metered (Potable, Permanent)316,696 0.6%
9. Sweetwater School District Publicly Owned 294,320 0.6%
10. Otay Project LP Construction (Potable, Temporary)271,068 0.5%
Total 6,260,256$ 12.3%
Estimated FY08 Water Sales 50,753,112$
Customer Name
TEN LARGEST CUSTOMERS - FISCAL YEAR 2008
CUSTOMERS
FISCAL YEAR 2008
Others
87.7%
Ten Largest
12.3%
26
Source: County of San Diego Auditor and Controller
SERVICE AREA ASSESSED VALUATION
Otay Water District’s service area encompasses property with over $25 billion of assessed valuation.
Properties are assessed at 100% of their full value less any exemptions such as, exemption from
taxation under the law and homeowner’s exemptions. As shown in the chart below, there has been a
significant increase in the assessed value of properties in the District service area. This increase is due
to both growth in the number of new homes, as well as increases in home prices. The growth in new
homes is expected to continue at a long-term rate of 2% until ultimate build-out. The assessed
valuation is the basis for the property tax change. The District receives its portion of the 1% property
tax, according to Proposition 13 and AB8, and with the increases in the assessed valuation the District
will benefit by receiving its proportionate share of this increase. Even with the down turn in the
property values the District is anticipating a modest increase of 3%.
$14,131
$16,423
$19,566
$22,685
$25,903
$-
$4,000
$8,000
$12,000
$16,000
$20,000
$24,000
$28,000
Mi
l
l
i
o
n
D
o
l
l
a
r
s
2004 2005 2006 2007 2008
Fiscal Year
FIVE-YEAR SERVICE AREA ASSESSED VALUATION
27
Percent
Assessed Value to Total
1. SAN DIEGO EXPRESSWAY LIMITED PARTNERSHIP (SDELP) $ 600,000,000 2.32%
2. GGP-OTAY RANCH LP 183,317,833 0.71%
3. VILLAGE II OF OTAY HB SUB 181,107,368 0.70%
4. OV THREE TWO LLC 118,746,964 0.46%
5. REGULO PLACE APARTMENTS INVESTORS LLC 113,980,960 0.44%
6. SHEA HOMES LIMITED PARTNERSHIP 93,277,630 0.36%
7. EQR-MISSIONS AT SUNBOW LLC 88,805,655 0.34%
8. RANCHO MESA LP 85,503,816 0.33%
9. VILLAGE II OF OTAY LP 84,565,792 0.34%
10. SP LAVIDA REAL LLC 80,027,108 0.31%
Total $ 1,629,333,126 6.29%
Total Service Area Assessed Valuation $ 25,902,796,201
Source: County of San Diego Auditor and Controller
Organization
TEN PRINCIPAL TAXPAYERS AS OF JUNE 30, 2008
SERVICE AREA TAXPAYERS
FISCAL YEAR 2008
Other Taxpayers
93.7%
Ten Principal
Taxpayers
6.3%
28
SAN DIEGO RAINFALL
FISCAL YEARS 1999-2008
8.58
6.71 5.76
2.99
10.62
5.18
22.50
5.42
3.85
7.49
0
5
10
15
20
25
30
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Fiscal Year
In
c
h
e
s
Annual Rainfall
10-Year Average Rainfall (7.91 inches)
The 10-year average of 7.91 inches for San Diego rainfall reflects the long-term drought conditions
for our area. San Diego's rainfall average over 20 years is 9.63 inches; the 30-year average is 10.47
inches. The District expects drought conditions to continue for FY2009.
Under drought conditions there is the real potential for mandatory cutbacks. In the event of
cutbacks, District water-sale revenues would decrease. Related water purchase expenses would also
be reduced dampening the impact of the decreae in revenues. The severity of cutbacks would
dictate the magnitude of the District's response and type of reaction.
The San Diego rainfall information shown in the chart above uses data from the San Diego Airport
at Lindbergh Field and is provided by the Western Regional Climate Center. More information can
be obtained from their website: http://www.wrcc.dri.edu. The Western Regional Climate Center’s
Web site data, in turn, is derived from data received from the National Climatic Data Center, the
National Weather Service, the National Resource Conservation Service, the Bureau of Land
Management, the U.S. Forest Service, and other federal, state, and local agencies. Although the
data reflects actual rainfall at Lindbergh field, it is representative of rainfall for the area served by
the Otay Water District.
29
BUDGET SUMMARY
The Operating Budget is summarized and presented in the Operating Budget Summary on page
34. Also included in this section is the Operating Budget Summary by Business on page 35, the
Fund Balance Summary by Fund on page 37, and the Revenues and Expenditures by Fund
schedule on pages 38 and 39. The Revenues, Expenditures, and Sources and Uses of Funds by
Type for all funds is presented on page 40. For Fiscal Year 2009, the District increased both
water and sewer rates for its customers in order to pass-through cost increases from water and
sewer agencies. These cost increases are being experienced by our neighboring water agencies
and most are encountering similar, if not greater, rate increases.
Operating Budget Summary
The Operating Budget for Fiscal Year 2009 is $67,062,700 in comparison to the previous
adjusted fiscal year budget of $66,180,500. The $882,200 increase is primarily due to
unprecedented water supply rate increases of 13.2% from CWA because of the high cost of
supply programs, higher energy and operating costs.
The District uses a rate model to build the budget for the current fiscal year and five subsequent
years. To do this, estimates for growth, water costs, and others such as rainfall, and average
water consumption per customer, are used throughout the model to calculate individual revenue
and expense amounts in each year. Engineering Department is primarily responsible for the
growth estimates as described in the budget process on pages 18 and 19. Water cost estimates
are obtained from District water suppliers, CWA and MWD, and power cost inflators from San
Diego Gas and Electric, the District power supplier. Labor and benefit cost inflators are based
on the Memorandum of Agreement with District labor union, as well as estimates from District
health providers. Other general inflators are derived from statistical data from consumer price
indexes for the region.
Revenues
Potable Water Sales
Potable water sales represent revenue collected from the sale of water, including: system
charges, energy charges, and penalties. It is estimated that 36,350 acre-feet of potable water will
be sold during Fiscal Year 2009. Budgeted revenues from water sales are projected to be
$49,229,400, an increase of 3.6% over the previous year's budget. Additional schedules relating
to potable water sales are included in the Potable Revenues and Expenditures section of this
budget.
Recycled Water Sales
Recycled water sales represent revenue collected from the sale of 4,670 acre-feet of recycled
water to customers at a discount of 15% of the potable irrigation rate. The FY 2009 sales
revenue budget of $6,344,500, an increase of $343,100 from FY 2008, includes the incentive
credits provided by MWD and the CWA.
30
Sewer Revenues
Sewer charges are the monthly fees collected from the sewer service connections. The fees are
determined by volume of flow and the strength of solids discharged into the sewer system.
Meter Fees
Meter fees are charges collected for new water service connections. Fees vary depending upon
meter size and type of service. The costs associated with meter installations are included in the
Operating Expenses section.
Capacity Fee Revenues
These fees are earned by the General Fund for Engineering Department’s support for expansion
functions.
Betterment Fees for Maintenance
These fees are earned by the General Fund for Water Operations Department’s maintenance of
certain District assets.
Annexation Fees
The District collects Annexation Fees when new customers annex into the District. The fee is
based on the excess capacity built by existing users and ensures that future users fund a portion
of the facilities that were sized and built for their future use.
Tax Revenues
The District receives 1% property tax revenues, debt-related assessments, and availability fees on
properties within the District’s boundaries. These revenues are collected by the County of San
Diego via the Property Tax Roll and remitted to the District annually.
Non-Operating Revenues
Non-Operating Revenues are revenues that are not directly related to the operation of a
water/sewer utility, and include such items as District property rentals and leases, and billing
services for the City of Chula Vista.
Interest
Interest is earned by each fund that has a positive balance, and is paid by each fund with a
negative balance. Interest income on General Fund balances is considered general use revenue.
General Fund Draw Down
This draw down of the General Fund is made when the balance is sufficient (in accordance to the
Reserve Policy) to fund operating expenditures of the District. If the balance was not sufficient,
either rates would be increased or expenditures cut to balance the budget. The Rate Model does
not show this as an ongoing funding source as revenues are sufficient to cover expenditures.
This draw down is being used as a means to smooth out the rate increases necessary to fund new
programs.
31
Expenditures
Potable Water Purchases
Water purchases indicate the expense of purchasing 38,800 acre-feet for the District's potable
water supply. A provision has been made to allow 2,440 acre-feet of water for District usage,
leakage, and evaporation.
Recycled Water Purchases
Recycled water purchases indicate the expense of purchasing 3,470 acre-feet for the District's
recycled water supply. The District no longer budgets for a potable supplement to the recycled
system due to the new source of recycled water from the City of San Diego.
Infrastructure Access Charge
This charge was established in Fiscal Year 1999 by CWA to finance a portion of its fixed annual
costs including construction, operation, and maintenance of its aqueducts. This fixed charge is
based on the number of "household meter equivalents."
Customer Service Charge
This charge was established in Fiscal Year 2004 by CWA as a fixed charge. The Customer
Service Charge is set to recover costs necessary to support CWA’s development of policies, and
implementation of programs that benefit the region as a whole.
Emergency Storage Charge
The Emergency Storage Charge was established by CWA in Calendar Year 2003, to recover
costs associated with non-agricultural water deliveries and is allocated based on each member
agency’s share of deliveries.
Capacity Reservation Charge
This charge was established in Fiscal Year 2002 by the MWD, as a fixed charge on a member
agency's requested maximum day capacity. The Capacity Reservation Charge is a charge per
cubic-foot-second (cfs) and is applied to the amount of capacity (daily flow) a member agency
expects to use during the peak period from May through September.
Readiness-to-Serve Charge
This charge was established in Fiscal Year 1996 by MWD, to recover the principal and interest
payments on non-tax supported debt service used to fund the capital improvements necessary to
meet the continuing reliability and quality needs associated with current demands. These costs
are offset by standby charges collected by the MWD on the tax bills of District customers.
Power Costs
Power is the cost associated with the transmission and distribution of water to customers. The
pumping costs to distribute water vary with elevation and will increase as water sales increase.
Labor and Benefits
Labor and benefits are the wages and fringe benefits for 168.75 Full-time Equivalent (FTE)
employees. Labor costs are reduced by the number of hours that are charged to non-operating
Capital Improvement Program (CIP) and developer deposit projects. The detail of actual
personnel and payroll related expenses is included in the Departmental Operating Budget
section.
32
Administrative Expenses
Administrative expenses are costs incurred by various departments that are directly related to
District operations. Additional details are supplied in the Departmental Operating Budget
section.
Materials and Maintenance
Materials and maintenance expense is the cost associated with the operation and maintenance of
District facilities. Additional details are supplied in the Departmental Operating Budget section.
Expansion Reserves
These reserves are established to fund expansion needs including project costs, existing debt
payments, and new debt that will be issued in the future to fund expansion.
Replacement Reserves
These reserves are established to fund the replacement needs including project costs, existing
debt payments, and new debt that will be issued in the future to fund replacement.
Operating Budget Summary by Business
The Budget Summary by System schedule reflects the separation of operating revenues and
expenses among potable water, recycled water, and sewer. This information is provided due to
the necessity to collect sufficient revenue from each type of operation to recover the full cost of
operating expenses and to ensure that the customers are charged for services received.
Fund Balance Summary by Fund
This schedule shows each fund’s balance at June 30, 2008, and the projected balance for June 30,
2009, based on the results of the budget and Rate Model. This includes transfers between funds
made to meet target levels as outlined in the Reserve Policy.
Revenues and Expenditures by Fund
The Revenues and Expenditures by Fund schedule reflect each fund’s revenues and expenditures
by business line, where appropriate. This schedule is reconciled to the Fund Balance Summary
and excludes transfers between funds.
Revenues and Expenditures by Type – All Funds
This is a consolidated schedule of revenues and expenditures, including sources and uses of
funds but excluding fund transfers.
33
FY 2007 FY 2009 Budget Variance
11-Actual Budget Estimated Budget Variance %
REVENUES
##Potable Water Sales 44,112,749$ 47,506,500$ 44,804,854$ 49,229,400$ 1,722,900$ 3.6%
Recycled Water Sales 4,492,858 6,001,400 5,948,258 6,344,500 343,100 5.7%
##Sewer Revenues 2,577,993 2,679,100 2,414,886 2,145,300 (533,800) (19.9%)
##Meter Fees 246,539 318,500 79,790 103,800 (214,700) (67.4%)
##Capacity Fee Revenues 1,536,911 1,414,500 1,480,165 1,301,900 (112,600) (8.0%)
##Betterment Fees for Maintenance - 73,300 802,021 895,900 822,600 1,122.2%
Annexation Fees 2,119,886 1,464,500 526,435 483,600 (980,900) (67.0%)
Tax Revenues 3,646,158 4,003,800 4,024,645 4,137,300 133,500 3.3%
##Non-operating Revenues 2,068,134 1,680,200 2,297,826 1,633,100 (47,100) (2.8%)
##Interest 1,173,649 1,038,700 1,038,425 667,800 (370,900) (35.7%)
ExpTransfer from Expansion Reserve - - - - - 0.0%
General Fund Draw Down 283,600 - - 120,100 120,100 100.0%
TOTAL REVENUES 62,258,477 66,180,500 63,417,304 67,062,700 882,200 1.3%
EXPENDITURES
##Potable Water Purchases 21,562,502 23,984,100 22,253,362 25,183,600 1,199,500 5.0%
Recycled Water Purchases 1,829,476 1,423,000 1,278,084 1,490,800 67,800 4.8%
##CWA - Infrastructure Access Charge 1,003,927 1,090,200 1,090,228 1,227,500 137,300 12.6%
##CWA - Customer Service Charge 846,505 950,400 949,222 1,049,800 99,400 10.5%
##CWA - Emergency Storage Charge 1,230,830 1,507,800 1,507,895 1,774,700 266,900 17.7%
##MWD - Capacity Reservation Charge 530,708 569,400 570,980 602,800 33,400 5.9%
##MWD - Net RTS and Standby Charges 512,206 552,600 564,193 665,100 112,500 20.4%
Subtotal - Water Costs 27,516,154 30,077,500 28,213,964 31,994,300 1,916,800 6.4%
##Power 2,489,977 2,804,800 2,647,885 2,780,500 (24,300) (0.9%)
##Labor and Benefits 14,602,940 15,604,500 16,462,021 17,185,400 1,580,900 10.1%
##Administrative Expenses 5,467,656 6,982,300 6,153,593 5,935,100 (1,047,200) (15.0%)
##Materials & Maintenance 3,701,221 4,452,900 4,112,180 3,872,800 (580,100) (13.0%)
##Expansion Reserve - 2,590,200 2,590,200 5,016,700 2,426,500 93.7%
Bet Betterment Reserve - 3,432,900 3,432,900 - (3,432,900) (100.0%)
RepReplacement Reserve 4,540,000 235,400 235,400 277,900 42,500 18.1%
State Loan Reserve - - - - - 0.0%
TOTAL EXPENDITURES 58,317,949 66,180,500 63,848,142 67,062,700 882,200 1.3%
EXCESS REVENUES (EXPENSE) 3,940,528$ -$ (430,837)$ -$ -$ 0.0%
EXCESS REVENUES, w/o restatement and transfers -
FY 2008
OPERATING BUDGET SUMMARY - GENERAL FUND
34
Potable Recycled Sewer Total
REVENUES
Water Sales 49,229,400$ -$ -$ 49,229,400$
Recycled Water Sales - 6,344,500 - 6,344,500
Sewer Revenues - - 2,145,300 2,145,300
Meter Fees 92,400 11,400 - 103,800
Capacity Fee Revenues 1,301,900 - - 1,301,900
Bett Betterment Fees for Maintenance 895,900 - - 895,900
Annexation Fees 483,600 - - 483,600
Tax Revenues 4,080,900 - 56,400 4,137,300
Non-operating Revenues 1,606,700 - 26,400 1,633,100
Interest 582,500 24,600 60,700 667,800
TF BeTransfer from Expansion Reserve - - - -
General Fund Draw Down - - 120,100 120,100
TOTAL REVENUES 58,273,300 6,380,500 2,408,900 67,062,700
EXPENDITURES
Water Purchases (CWA)25,183,600 1,471,000 - 26,654,600
Water Purchases (CSD)- 19,800 - 19,800
CWA - Infrastructure Access Charge 1,227,500 - - 1,227,500
CWA - Customer Service Charge 1,049,800 - - 1,049,800
CWA - Emergency Storage Charge 1,774,700 - - 1,774,700
MWD - Capacity Reservation Charge 602,800 - - 602,800
MWD - Net RTS and Standby Charges 665,100 - - 665,100
Subtotal - Water Costs 30,503,500 1,490,800 - 31,994,300
Power 2,216,100 466,800 97,600 2,780,500
Labor and Benefits 15,400,300 1,143,100 642,000 17,185,400
Administrative Expenses 5,433,300 346,500 155,300 5,935,100
Materials & Maintenance 2,133,400 225,400 1,514,000 3,872,800
5716 Expansion Reserve 2,586,700 2,430,000 - 5,016,700
Repl RReplacement Reserve - 277,900 - 277,900
TOTAL EXPENDITURES 58,273,300 6,380,500 2,408,900 67,062,700
EXCESS REVENUES -$ -$ -$ -$
FY 2009 OPERATING BUDGET SUMMARY BY BUSINESS
FY 2009 OPERATING EXPENDITURES
Recycled
10%
Sewer
4%
Potable
86%
35
OPERATING REVENUES AND EXPENDITURES
FY 2009 OPERATING REVENUES
General Fund Draw
Down
0.2%
Potable Water
Sales
73.4%Recycled Water
Sales
9.5%
Sewer Revenues
3.2%
Interest
1.0%
Non-Operating
Revenues
2.4%
Tax Revenues
6.2%
Annexation Fees
0.7%
Betterment Fees for
Maintenance
1.3%
Capacity Fee
Revenues
1.9%
Meter Fees
0.2%
`
FY 2009 OPERATING EXPENDITURES
Potable Water
Costs
45.5%
Administrative
Expenses
8.9%
Labor and Benefits
25.6%
Materials &
Maintenance
5.8%
Expansion Reserve
7.5%
Replacement
Reserve
0.4%
Power
4.1%
Recycled Water
Purchases
2.2%
36
Estimated Projected
Balance Interfund Balance
June 30, 2008 Revenues Expenditures
Transfers (1)June 30, 2009
GENERAL FUND
Potable 20,814,655$ 58,273,300$ 58,273,300$ (10,761,300)$ 10,053,355$
Recycled 186,779 6,380,500 6,380,500 (87,100) 99,679
Sewer 3,693,425 2,408,900 2,408,900 (2,250,000) 1,443,425
Total General Fund 24,694,859 67,062,700 67,062,700 (13,098,400) 11,596,459
EXPANSION FUND
Potable and Recycled (2)11,525,511 6,692,600 20,666,600 8,975,000 6,526,511
Sewer 440,991 11,900 100,000 - 352,891
Total Expansion Fund 11,966,501 6,704,500 20,766,600 8,975,000 6,879,401
BETTERMENT FUND
Potable (317,791) 1,462,400 6,963,500 12,855,500 7,036,609
Recycled 1,122,560 17,900 964,200 - 176,260
Sewer - 52,100 18,900 (33,200) -
Total Betterment Fund 804,769 1,532,400 7,946,600 12,822,300 7,212,869
REPLACEMENT FUND
Potable 17,367,594 551,300 6,877,700 5,072,500 16,113,694
Recycled 4,302,708 121,400 1,000,000 365,000 3,789,108
Sewer 10,115,607 162,800 852,400 (7,221,800) 2,204,207
Total Replacement Fund 31,785,910 835,500 8,730,100 (1,784,300) 22,107,010
OPEB FUND 10,458,191 293,000 1,020,000 (810,000) 8,921,191
DEBT RESERVE FUND 8,078,335 1,028,100 1,190,400 - 7,916,035
TOTAL 87,788,565$ 77,456,200$ 106,716,400$ 6,104,600$ 64,632,965$
(1)The total for interfund transfers does not net to $0 because some transfers are already reflected in the Operating
Revenues and Expenditures for General Fund as follows:
Expansion Reserve (5,826,700)$
Replacement Reserve (277,900)
Total (6,104,600)
(2)Potable and Recycled funds are combined for expansion purposes.
FUND BALANCE SUMMARY BY FUND
Estimated, Fiscal Year 2009
37
FY 2007 FY 2009
Actual (1)Budget Estimated Projected
REVENUES
GENERAL FUND
Potable 54,474,400$ 57,236,600$ 54,716,191 58,273,300$
Recycled 4,795,706 6,124,500 6,050,180 6,380,500
Sewer 2,988,371 2,819,400 2,650,933 2,408,900
Total General Fund 62,258,477 66,180,500 63,417,304 67,062,700
EXPANSION FUND
Potable 48,887,594 12,840,700 18,495,813 5,652,900
Recycled (21,951,341) (878,800) 4,154,878 1,039,700
Sewer 426,692 22,000 19,586 11,900
Total Expansion Fund 27,362,945 11,983,900 22,670,277 6,704,500
BETTERMENT FUND
Potable 3,543,792 1,739,400 1,491,179 1,462,400
Recycled (22,155) 13,000 57,527 17,900
Sewer 219,887 42,200 51,508 52,100
Total Betterment Fund 3,741,525 1,794,600 1,600,214 1,532,400
REPLACEMENT FUND
Potable (8,307,488) 946,100 1,632,201 551,300
Recycled 822,137 143,400 190,859 121,400
Sewer 10,210,374 468,600 452,254 162,800
Total Replacement Fund 2,725,023 1,558,100 2,275,314 835,500
OPEB FUND 1,094,165 885,800 718,071 293,000
DEBT RESERVE FUND 42,806,639 1,177,400 2,135,184 1,028,100
Total Revenues 139,988,773$ 83,580,300$ 92,816,363 77,456,200$
(1)FY 2007 Actual Revenues include distribution of reserve by fund:
Expansion Betterment Replacement
Potable 29,461,989$ (129,035)$ (10,406,080)
Recycled (29,867,860) (34,650) 682,818
Sewer 405,871 163,684 9,723,262
Total -$ -$ -
REVENUES AND EXPENDITURES BY FUND
FY 2008
38
FY 2007 FY 2009
Actual (1)Budget Estimated Projected
REVENUES AND EXPENDITURES BY FUND
FY 2008
EXPENDITURES
GENERAL FUND
Potable 52,175,932$ 57,236,600$ 55,353,927 58,273,300$
Recycled 4,423,063 6,124,500 5,870,127 6,380,500
Sewer 1,718,954 2,819,400 2,649,088 2,408,900
Total General Fund 58,317,949 66,180,500 63,873,142 67,062,700
EXPANSION FUND
Potable 9,260,303 18,458,700 14,764,399 18,525,600
Recycled 16,952,901 2,045,800 1,077,034 2,141,000
Sewer - 10,000 5,288 100,000
Total Expansion Fund 26,213,204 20,514,500 15,846,721 20,766,600
BETTERMENT FUND
Potable 6,251,183 9,278,600 6,865,949 6,963,500
Recycled (1,406) 769,700 299,218 964,200
Sewer 187,051 18,800 67,344 18,900
Total Betterment Fund 6,436,828 10,067,100 7,232,511 7,946,600
REPLACEMENT FUND
Potable 2,887,732 6,746,100 6,228,063 6,877,700
Recycled 84,459 670,000 155,829 1,000,000
Sewer (116,450) 1,284,400 126,116 852,400
Total Replacement Fund 2,855,741 8,700,500 6,510,008 8,730,100
OPEB FUND 629,982 580,000 7,153,008 1,020,000
DEBT RESERVE FUND (2)16,666,316 1,194,500 21,666,011 1,190,400
Total Expenditures 111,120,020 107,237,100 122,281,401 106,716,400
EXCESS (DEFICIT)28,868,754$ (23,656,800)$ (29,465,038) (29,260,200)$
39
FY 2007 FY 2009
Actual Budget Estimated Projected
REVENUES AND FUND SOURCES
Water Sales 44,112,749$ 47,506,500$ 44,804,854$ 49,229,400$
Recycled Water Sales 4,492,858 6,001,400 5,948,258 6,344,500
Sewer Charges 2,577,993 2,679,100 2,414,886 2,145,300
Capacity Fee Revenues 9,591,724 9,651,500 20,104,726 5,880,900
Capacity Fees for Maintenance 1,536,911 1,414,500 1,480,165 1,301,900
Betterment Fee Revenues 929,363 1,056,200 909,191 1,078,000
Betterment Fees for Maintenance - 73,300 802,021 895,900
Annexation Fees 2,119,886 1,464,500 526,435 483,600
Tax Revenues 3,646,158 4,003,800 4,024,645 4,137,300
Non-Operating Revenues 2,068,134 1,680,200 2,297,826 1,633,100
GO Bond Debt Tax Revenues 863,995 751,900 917,168 628,200
Sewer Debt Tax Revenues 357,467 357,500 393,931 356,100
Availability Fees 538,003 557,700 520,709 515,700
Grants 5,842,822 1,300,000 2,931,466 420,000
Meter Fees 246,539 318,500 79,790 103,800
COPs Proceeds 56,463,022 - - -
Interest 4,317,550 4,763,700 4,660,292 2,182,400
General Fund Draw Down 283,600 - - 120,100
Total Revenues and Fund Sources 139,988,773$ 83,580,300$ 92,816,364 77,456,200$
EXPENDITURES AND USES OF FUNDS
Water Purchases 25,686,678$ 28,654,500$ 26,935,880$ 30,503,500$
Recycled Water Purchases 1,829,476 1,423,000 1,278,084 1,490,800
CIP Expenses 32,448,472 34,463,100 24,833,132 30,939,000
Labor Expenses 14,602,940 15,604,500 16,462,021 17,185,400
Administrative Expenses 5,467,656 6,982,300 6,153,593 5,935,100
Debt Service 2,712,655 4,525,700 3,668,118 5,496,900
Materials and Maintenance 3,701,221 4,452,900 4,112,180 3,872,800
Power 2,489,977 2,804,800 2,647,885 2,780,500
Capacity Fees for Maintenance 1,536,911 1,414,500 1,480,165 1,301,900
Betterment Fees for Maintenance - 73,300 802,021 895,900
COPs Proceeds Distribution 15,473,225 - 20,471,183 -
OPEB Health Expenses 629,982 580,000 7,153,008 655,000
Payment to PERS - - - 365,000
Trustee Fees 825 - 632 -
General Fund Transfers 4,540,000 6,258,500 6,283,500 5,294,600
Total Expenditures and Uses of Funds 111,120,020 107,237,100 122,281,402 106,716,400
EXCESS (DEFICIT)28,868,754$ (23,656,800)$ (29,465,038) (29,260,200)$
REVENUES AND EXPENDITURES BY TYPE - ALL FUNDS
FY 2008
40
FIVE-YEAR FORECAST
Financial Forecast for Fiscal Years 2010-2014
This financial forecast is designed to provide a general understanding of how revenues and
expenditures are expected to influence the District over the next five years. Revenue and
expenditure projections are reviewed in relation to their effect on funding capital projects,
reserve levels, and operating fund balances. The District updates its Rate Model on an annual
basis in order to make these projections and determine recommended rates. The model looks at
debt ratios, projected rate increases, cost increases, and growth projections.
The District must look at building new infrastructure to service the needs of its customers. The
CIP Master Plan looks at the service needs of all customers over the next six years and at the
betterment and expansion needs from now until ultimate build-out. These capital projects and
the funding for them are reviewed annually by the Engineering Department. As new capital
assets are brought into service, they are managed by an Infrastructure Management System
(IMS) which is crucial to tracking and maintaining the history of 722 miles of potable pipelines,
93 miles of recycled pipelines, 88 miles of sewer lines, 39 potable and 4 recycled reservoirs, 22
potable and 2 recycled pump stations, and a 1.3 million gallons per day reclamation plant.
Utilizing an integrated database from the Geographic Information System (GIS) provides real-
time work order planning, execution, and consolidation of all maintenance history. These
systems are also integrated with financial software to allow asset tracking and management
information. As these systems are further developed, the District will be able to better anticipate
operating costs associated with these capital projects. The impact of the CIPs on the Operating
Budget is addressed in the CIP section of this budget.
Projected Cost of Water
The projected water cost is based on CWA’s Rate Modeling Program. This process evaluates
many options of the Regional Water Facilities Master Plan, which determines the most feasible
projects for water resources and incorporates these decisions into CWA’s Capital Improvement
Program. This cost is also based on CWA’s estimated water cost for purchases from MWD and
the Imperial Irrigation District (IID).
$749 $805 $861 $910 $942
$200
$400
$600
$800
$1,000
Pe
r
A
c
r
e
F
o
o
t
.
2010 2011 2012 2013 2014
Fiscal Year
PROJECTED COST OF WATER
41
Revenues FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Water/Sewer Rates 59,210,400$ 63,390,400$ 69,683,800$ 75,849,800$ 82,651,700$
Meter Fees 140,300 244,500 442,400 624,800 676,000
Capacity Fee Revenues 1,308,400 1,321,500 1,334,700 1,348,000 1,361,500
Betterment Fees 907,700 901,400 923,900 947,100 970,900
Annexation Fees 643,800 1,087,100 1,990,000 2,857,300 3,138,000
Non-operating Revenues 1,662,000 1,693,200 1,728,700 1,768,000 1,808,600
Tax Revenues 4,237,800 4,360,900 4,533,000 4,750,200 4,979,600
Interest Income 423,600 488,800 614,800 774,100 846,300
General Fund Draw Down 117,700 70,600 49,300 16,900 -
TOTAL 68,651,700$ 73,558,400$ 81,300,600$ 88,936,200$ 96,432,600$
4,601,900$ 4,543,600$ 7,404,100$ 10,329,900$
Expenditures and Transfers
Water Cost 33,138,400$ 34,638,700$ 37,875,600$ 41,300,400$ 44,266,200$
Power 2,726,500 2,758,900 2,926,400 3,129,000 3,353,000
Labor and Benefits 18,046,800 18,950,800 19,834,600 20,847,600 21,985,200
Administrative Expenses 6,407,700 6,579,000 6,756,900 6,937,400 7,121,100
Materials & Maintenance 3,996,000 4,130,900 4,331,500 4,542,700 4,764,800
Fund Transfers, Net 4,336,300 6,500,100 9,575,600 12,179,100 14,942,300
TOTAL 68,651,700$ 73,558,400$ 81,300,600$ 88,936,200$ 96,432,600$
Excess Revenues -$ -$ -$ -$ -$
GENERAL FUND FORECAST - FY 2010 THROUGH FY 2014
This forecast incorporates both cost increases for expenditures and rate increases for revenues, as well
as growth projections.
$69 $69 $74 $74
$81 $81 $89 $89
$96 $96
$0
$20
$40
$60
$80
$100
Mi
l
l
i
o
n
s
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Fiscal Year
REVENUES AND EXPENDITURES FORECAST
Revenues Expenses
42
Fund FY 2010 *FY 2011 FY 2012 *FY 2013 FY 2014 *
General Fund 16,088,300$ 16,987,200$ 18,756,800$ 20,724,500$ 22,439,400$
Betterment Fund 769,600 1,280,900 1,375,500 1,234,700 1,504,000
Replacement Fund 28,844,200 25,440,900 33,408,600 33,679,900 41,326,500
Expansion Fund 16,592,700 9,796,700 20,702,200 15,149,600 22,528,300
Medical Fund (1)7,237,200 5,024,200 2,522,100 187,300 (16,300)
Debt Reserve 1,297,600 1,117,000 987,600 617,800 233,300
TOTAL 70,829,600$ 59,646,900$ 77,752,800$ 71,593,800$ 88,015,200$
(1) Medical Fund is decreasing as the OPEB Trust is funded.
Year-End Forecast Balances
FUND BALANCES - FY 2010 THROUGH FY 2014
-$20
$0
$20
$40
$60
$80
$100
Mi
l
l
i
o
n
s
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Fiscal Year
FUND BALANCES FORECAST
General Fund Betterment Fund Replacement Fund
Expansion Fund Medical Fund (1)Debt Reserve
* Increase due to bond issuance in FY 2010, FY 2012 and FY 2014
43
Financing the capital improvements needed to keep up with the growing demand for water in the
District’s service area has been accomplished through a combination of long-term and short-term
financing sources. These include General Obligation Bonds, Certificates of Participation
(COPs), developer fees, and pay-as-you-go funding.
Debt Management
The District’s primary debt management objective is to keep the level of indebtedness within
available resources and within limits that will allow the District to meet the debt service
coverage ratios required by the bond covenant. Currently, there are four outstanding bond issues
and a State Sewer Loan, which the District will gradually retire per scheduled principal and
interest payments. Bonds have been and will be used to improve existing facilities and to build
the projects in the Capital Improvement Program (CIP). The District’s debt service obligations
have a significant effect upon the District’s current and future water rates. In a continuing effort
to reduce debt expenses, the District was successful in raising its overall credit rating from A+ to
AA-, which is projected to save in excess of $1.5 million over the life of the most recently issued
bonds. To meet the bond indebtedness obligation and maintain stable rates, a Long-Term
Financing Plan has been developed to forecast revenues and operating requirements. The
District has instituted a schedule of gradual rate increases designed to generate sufficient revenue
to pay off existing and planned future debt issues without large and/or rapid rate increases. See
the Policies Section of the budget for the District’s complete Debt Policy.
DEBT COVERAGE RATIO FORECAST
FISCAL YEARS 2010 - 2014
2.10
4.303.923.58
2.41
0.00
2.00
4.00
6.00
8.00
10.00
2010 2011 2012 2013 2014
Fiscal Year
Co
v
e
r
a
g
e
R
a
t
i
o
.
.
Actual Ratio Minimum Ratio = 1.25
The Actual Ratio includes growth-related revenues, such as Capacity and Annexation Fees. The
Minimum Ratio excludes these revenues in accordance with existing District Bond Covenants.
DEBT MANAGEMENT
44
Outstanding
Year Original Balance
# Incurred Maturity Date Amount 06/30/08
1 1996 Certificates of Participation (COPs)15,400,000$ 12,500,000$
2 1998 General Obligation (GO) Bonds 11,835,000 8,810,000
3 2004 Certificates of Participation (COPs)12,270,000 10,835,000
4 1994 State Loan 5,000,000 1,031,730
5 2007 Certificates of Participation (COPs)42,000,000 42,000,000
Total Outstanding Debt 86,505,000$ 75,176,730$
Total Assessed Valuation - FY 2008
Percentage of Original Debt to Assessed Valuation 0.33%0.09%
Debt Limit per District Debt Policy (% of Assessed Valuation)15.00%15.00%
November 30, 2010
September 1, 2036
SCHEDULE OF OUTSTANDING DEBT
Description
September 1, 2026
August 31, 2022
September 1, 2023
25,902,796,201$
All Debts
12,518,643,676$
GO Bonds
45
1996 COPs (1)GOBs 2004 COPs State Loan 2007 COPs Total
946,283 830,823 928,159 359,583 2,491,328 5,556,176
928,323 831,035 927,334 359,347 2,491,358 5,537,397
910,363 830,258 925,604 358,981 2,494,770 5,519,976
892,403 828,166 927,487 6,010 2,496,801 5,150,867
970,702 824,645 922,993 - 2,497,520 5,215,860
948,252 824,452 921,706 - 2,496,926 5,191,336
925,802 822,951 923,575 - 2,499,864 5,172,192
999,610 824,542 923,544 - 2,501,301 5,248,997
972,670 819,750 921,819 - 2,500,791 5,215,030
945,730 818,500 918,985 - 2,498,674 5,181,889
1,015,048 820,542 913,944 - 2,494,316 5,243,850
983,618 816,042 912,129 - 2,492,856 5,204,645
952,188 814,833 912,979 - 2,493,390 5,173,390
1,017,017 816,667 911,281 - 2,491,723 5,236,688
981,097 811,708 907,844 - 2,491,760 5,192,409
1,041,435 - 901,899 - 2,489,326 4,432,660
1,001,025 - - - 2,489,160 3,490,185
1,056,874 - - - 2,485,504 3,542,378
1,108,232 - - - 2,483,304 3,591,536
- - - - 2,483,038 2,483,038
- - - - 2,479,796 2,479,796
- - - - 2,478,402 2,478,402
- - - - 2,478,644 2,478,644
- - - - 2,475,485 2,475,485
- - - - 2,471,609 2,471,609
- - - - 2,473,240 2,473,240
- - - - 2,470,714 2,470,714
- - - - 2,464,031 2,464,031
- - - - 2,462,828 2,462,828
18,596,672$ 12,334,914$ 14,701,282$ 1,083,921$ 72,118,459$ 118,835,248$
(1)Interest on the 1996 Certificates of Participation is variable and is projected using an interest rate of 4.49%
2018
2019
2010
2011
2012
2013
TOTAL
2022
2023
2024
2025
2028
2029
2030
2035
2036
PROJECTED PRINCIPAL AND INTEREST PAYMENTS BY DEBT
FY
2037
2031
2032
2033
2034
2014
2015
2021
2026
2027
2009
2016
2017
2020
46
POTABLE REVENUES AND EXPENSES
The District will provide water service to approximately 47,340 potable customers by the end of Fiscal Year 2009. Ninety-four percent of the potable customers are residential and the remaining
six percent are comprised of: publicly owned, commercial, agricultural, landscaping, and
construction. Although the extensive residential developments have slowed down in recent
years, the District still expects moderate growth of 0.6% for Fiscal Year 2009. Unit sales are anticipated to increase 1.7% from the previous year's budget due to the slightly expanded customer base and a predicted change in the weather.
Water rates vary among the customer classifications. The water rates for residential customers
are based on an accelerated block structure; as more units are consumed, a higher unit rate is charged. Currently all non-residential customers are charged a flat rate per unit. The District plans to implement a tiered rate structure for all customer types to encourage conservation and
bring equity among the classes. This new rate structure is planned for a January 1, 2009
implementation.
Unit sales represent approximately 67% of the water sales budget. Other revenue sources include: system charges, energy charges, penalties, and other pass-through charges from the
County Water Authority (CWA) and the Metropolitan Water District (MWD).
All customers are required to pay fixed monthly fees of the MWD and CWA fixed charge and the District system fee, based on meter size. These fees recover 27.3% of the potable watersales revenue. Water rates, energy fees, and penalties recover the remaining 72.7% of
remaining revenues necessary to fund operations. The District will adjust the system fee, as
needed, to balance fixed costs with fixed revenues following industry best practice.
Energy charges are based on the quantity of water used and the elevation to which the water has
been lifted to provide service. Revenue from energy charges is used to recover the power costs
associated with pumping. This charge is proposed to increase based on a review of these costs to
ensure that sufficient revenue is collected to offset pumping costs.
Penalties are charged to District customers when late payments are made on accounts. These
penalty revenues are budgeted based on historical trends.
The District receives 100% of its potable water from CWA, which purchases water from MWD.
Any increase in costs by CWA or MWD impacts the District's water purchases and directly affectsthe District's fees, rates, and service charges.
Prior to Fiscal Year 2007, all water purchases from CWA were treated water. The District has
entered an agreement with the Helix Water District (Helix) to purchase raw water from CWA and
have Helix treat this water. This takes the pressure off the CWA treated demands as a region, and gives the District an additional source of water which increases the reliability of deliveries.
47
In Fiscal Year 2009, the District is estimating the purchase of 38,800 acre-feet of potable water to meet the demands of its customers. Provisions have been made for District usage, leakage,
and evaporation in the amount of 2,440 acre-feet.
Pipes feeding the 640-1 and 640-2 Reservoirs
48
FY 2007 FY 2009 Budget Variance
11-Actual Budget Estimated Budget Variance %
REVENUES
##Water Sales 44,112,749$ 47,506,500$ 44,804,854$ 49,229,400$ 1,722,900$ 3.6%
##Meter Fees 196,259 294,400 70,614 92,400 (202,000) (68.6%)
##Capacity Fee Revenues 1,430,092 1,414,500 1,468,123 1,301,900 (112,600) (8.0%)
##Betterment Fees for Maintenance - 73,300 802,021 895,900 822,600 1,122.2%
##Annexation Fees 2,119,886 1,464,500 526,435 483,600 (980,900) (67.0%)
Tax Revenues 3,593,168 3,952,500 3,968,046 4,080,900 128,400 3.2%
##Non-operating Revenues 2,066,796 1,679,200 2,270,714 1,606,700 (72,500) (4.3%)
##Interest 955,451 851,700 805,385 582,500 (269,200) (31.6%)
TOTAL REVENUES 54,474,400 57,236,600 54,716,191 58,273,300 1,036,700 1.8%58,273,300
EXPENDITURES
##Water Purchases (CWA)19,970,363 21,123,300 20,184,919 25,183,600 4,060,300 19.2%
##Water Purchases (CSD)1,595,019 2,860,800 2,009,193 - (2,860,800) (100.0%)
##Tier II Purchases (2,880) - 59,249 - - 0.0%
##CWA - Infrastructure Access Charge 1,003,927 1,090,200 1,090,228 1,227,500 137,300 12.6%
##CWA - Customer Service Charge 846,505 950,400 949,222 1,049,800 99,400 10.5%
##CWA - Emergency Storage Charge 1,230,830 1,507,800 1,507,895 1,774,700 266,900 17.7%
##MWD - Capacity Reservation Charge 530,708 569,400 570,980 602,800 33,400 5.9%
##MWD - Net RTS and Standby Charges 512,206 552,600 564,193 665,100 112,500 20.4%
Subtotal - Water Costs 25,686,678 28,654,500 26,935,880 30,503,500 1,849,000 6.5%
##Power 2,036,630 2,208,100 2,261,265 2,216,100 8,000 0.4%
##Labor and Benefits 13,479,021 13,876,500 14,774,392 15,400,300 1,523,800 11.0%
##Administrative Expenses 5,154,135 6,521,500 5,663,175 5,433,300 (1,088,200) (16.7%)
##Material & Maintenance 2,543,968 2,768,100 2,511,316 2,133,400 (634,700) (22.9%)
##Expansion Reserve - - - 2,586,700 2,586,700 100.0%
BettBetterment Reserve - 3,207,900 3,207,900 - (3,207,900) (100.0%)
Rep Replacement Reserve 3,275,500 - - - - 0.0%
TOTAL EXPENDITURES 52,175,932 57,236,600 55,353,927 58,273,300 1,036,700 1.8%
EXCESS REVENUES (EXPENSES) 2,298,468$ -$ (637,735)$ -$ -$ 0.0%
EXCESS REVENUES, w/o restatement and transfers -$
FY 2008
OPERATING BUDGET SUMMARY - POTABLE
POTABLE OPERATING EXPENDITURES
FY 2009
Water Costs
54.8%
Material &
Maintenance
3.8%
Administrative
Expenses
9.8%
Labor and
Benefits
27.6%
Power
4.0%
49
FY 2008
Estimated
FY 2009
Budget Variance
Water Sales:
Water Sales 30,049,415$ 32,836,500$ 2,787,085$
System Fees 9,611,046 10,619,400 1,008,354
Energy Fees 1,834,102 2,047,100 212,998
MWD and CWA Fixed Fees 2,530,306 2,819,500 289,194
Penalties 779,985 906,900 126,915
Total 44,804,854$ 49,229,400$ 4,424,546$
Water Sales : Unit Sales x Rate
System Charges : Fixed monthly fee based on meter size
Energy Charges : Energy pumping fee of $0.034 per unit of water for each 100 feet of lift
or fraction thereof above the base elevation of 450 feet
Penalties : Late charges, locks , etc.
CLASSIFICATION OF WATER SALES - POTABLE
WATER SALES SUMMARY
FY 2009
System Charges
22%
MWD & CWA
Fixed Charges
6%
Penalties
2%Energy Charges
4%
Water Sales
66%
50
Current Proposed*
Accounts Units Amount Rate Rate
Residential 44,502 11,013,600 22,665,600$ 1.95$ 2.06$ **
Publicly-Owned 246 997,700 2,162,300 2.06 2.31
Commercial 1,207 978,300 2,042,700 1.98 2.23
Landscaping 1,201 2,271,800 4,772,600 2.00 2.10 **
Agricultural 26 47,400 98,800 1.98 2.23
Temporary and Others 160 525,400 1,094,500 1.98 2.23
Total Potable Water Sales 47,342 15,834,200 32,836,500$ 1.97 2.07
*Proposed rate effective January 1, 2009, pending Proposition 218 hearing and Board approval.
**Based on average rate.
Fiscal Year 2009 Sales Budget
UNIT SALES BY SERVICE CLASS
FY 2009
Residential
70%
Commercial
6%
Others
4%
Publicly Owned
6%Landscaping
14%
WATER SALES SUMMARY BY SERVICE CLASS - POTABLE
51
Estimated Budget
FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Residential 8,275,224 8,083,816 9,668,100 9,713,112 9,402,189 9,627,700
Master Meters 1,055,922 1,181,402 1,198,200 1,434,040 1,445,634 1,385,900
Publicly-Owned 933,517 901,639 919,200 984,391 925,268 997,700
Commercial 904,788 895,098 983,300 901,615 933,958 978,300
Landscaping 2,219,274 1,931,104 2,122,500 2,276,003 2,243,012 2,271,800
Agricultural 82,343 48,628 51,836 53,787 58,687 47,400
Temporary 750,530 723,712 689,000 696,516 556,305 525,400
Others 6,429 - - - 10,615 -
Total 14,228,027 13,765,399 15,632,136 16,059,464 15,575,668 15,834,200
Actual
UNIT SALES AND METER TRENDS
6,000
8,000
10,000
12,000
14,000
16,000
18,000
FY04 Actual FY05 Actual FY06 Actual FY07 Actual FY08 EstimatedFY09 Budget
Un
i
t
s
(
t
h
o
u
s
a
n
d
s
)
25,000
30,000
35,000
40,000
45,000
50,000
Me
t
e
r
s
Unit Sales Meters
UNIT SALES HISTORY BY CUSTOMER CLASS - POTABLE
52
Meter Current Proposed* Existing Additional Total
Service Class Size FY09 Growth Rates Rates Meters Meters Meters
Residential 0.75 238 12.30$ 13.80$ 6,672,400$ 20,700$ 6,693,100$
1.00 - 19.80 22.25 200,300 - 200,300
1.50 - 38.95 43.78 9,400 - 9,400
2.00 - 64.95 73.00 6,600 - 6,600
3.00 - 104.55 117.51 - - -
4.00 - 119.70 134.54 15,300 - 15,300
6.00 - 239.20 268.86 - - -
10.00 - 456.60 513.22 - - -
Non-Residential 0.75 43 24.00 26.95 143,100 7,300 150,400
1.00 20 36.95 41.50 383,600 5,200 388,800
1.50 - 51.95 58.39 593,800 - 593,800
2.00 13 64.95 73.00 896,400 6,000 902,400
3.00 - 104.55 117.51 95,900 - 95,900
4.00 - 119.70 134.54 355,400 - 355,400
6.00 - 239.20 268.86 45,700 - 45,700
10.00 - 456.60 513.22 34,900 - 34,900
Fire Services Various - 25.40 28.55 203,000 - 203,000
Special System Fees - - 822,400
Turn Over Fees 850 10.00 10.00 102,000 - 102,000
Budgeted Potable System Fees 314 9,757,800$ 39,200$ 10,619,400$
*Proposed rates effective January 1, 2009 pending Proposition 218 hearing and Board approval.
Meter Count
Budgeted System Fees
-
10,000
20,000
30,000
40,000
50,000
FY04 Actual FY05 Actual FY06 Actual FY07 Actual FY08 Estimated FY09 Budget
METER COUNT HISTORY
SYSTEM FEES - POTABLE
53
Meter Current Proposed*
Classification Size FY09 Growth Rates Rates Existing Growth Total
Residential 0.75 238 3.85$ 4.33$ 2,091,200$ 6,500$ 2,097,700$
1.00 - 6.15 6.91 62,200 - 62,200
1.50 - 11.60 13.04 2,800 - 2,800
2.00 - 20.05 22.54 2,000 - 2,000
4.00 - 63.15 70.98 8,000.00 - 8,000
6.00 - 115.50 129.82 - - -
Non-Residential 0.75 43 3.85 4.33 22,700 1,200 23,900
1.00 20 6.15 6.91 63,500 900 64,400
1.50 - 11.60 13.04 132,200 - 132,200
2.00 13 20.05 22.54 275,500 1,800 277,300
3.00 - 36.95 41.53 33,900 - 33,900
4.00 - 63.15 70.98 70,000 - 70,000
6.00 - 115.50 129.82 22,100 - 22,100
10.00 - 300.30 337.54 23,000 - 23,000
Total 314 2,809,100$ 10,400$ 2,819,500$
*Proposed rates effective January 1, 2009 pending Proposition 218 hearing and Board approval.
Budgeted MWD & CWA - Fixed ChargesMeter Count
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Th
o
u
s
a
n
d
s
FY04
Actual
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Estimated
FY09
Budget
MWD AND CWA FIXED CHARGES (PASS-THROUGH)
MWD AND CWA FIXED FEES (PASS -THROUGH) POTABLE
54
Meter Installation Meter AMR
Size Fee Fee Fee
Meter Fees:0.75 60.00$ 59.00$ 147.00$
Meter Fees are charges collected for new water 1.00 60.00 117.00 147.00
service connections. Fees vary depending upon 1.50 103.00 250.00 147.00
meter size and type of service. The costs associated 2.00 240.00 475.00 147.00
with meter installations are included in the Operating 3.00 300.00 653.00 147.00
Expenses section of the budget. These charges are 4.00 300.00 1,370.00 147.00
funded by developers.6.00 300.00 2,500.00 147.00
10.00 300.00 3,737.00 147.00
Fiscal Year 2009 Growth by Meter Size
Service Class 0.75 1.00 1.50 2.00 3.00 Total
Residential 238 - - - - 238
Non-Residential 43 20 - 13 - 76
Total Number of Meters 281 20 - 13 - 314
Total Meter Fees 74,700$ 6,500$ -$ 11,200$ 92,400$
-
10,000
20,000
30,000
40,000
50,000
FY04 Actual FY05 Actual FY06 Actual FY07 Actual FY08 Estimated FY09 Budget
METER COUNT
METER FEES - POTABLE
55
Estimated Budget
FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Water Sales 25,204,669$ 24,760,101$ 27,975,777$ 30,696,070$ 30,049,415$ 32,836,500$
System Fees 7,576,328 7,933,913 8,056,340 8,658,339 9,611,046 10,619,400
Energy Fees 1,618,000 1,573,999 1,696,492 1,801,455 1,834,102 2,047,100
MWD and CWA Fixed Fee 1,088,156 1,620,548 1,775,186 2,159,269 2,530,306 2,819,500
Penalties 374,283 494,915 688,374 797,615 779,985 906,900
Total 35,861,436$ 36,383,476$ 40,192,169$ 44,112,748$ 44,804,854$ 49,229,400$
Note:
Fiscal Year 2005 Water Sales and Energy Fees dropped due to 22.51 inches of rainfall.
Actual
System FeesWater Sales PenaltiesEnergy FeesMWD & CWA Fixed Fees
$-
$10,000
$20,000
$30,000
$40,000
$50,000
Thousands
FY04 Actual FY05 Actual FY06 Actual FY07 Actual FY08 Estimated FY09 Budget
REVENUE HISTORY
REVENUE HISTORY - POTABLE
56
FY09 Budget FY09 Budget
Acre Feet Rate (1)Purchase Costs % to Total
Potable Water Purchases
Budgeted Sales (CWA)36,350.3 $614/$695 23,600,400$ 93.7%
District & Unbilled Usage 503.3 $614/$695 324,000 1.3%
Water Loss 1,939.7 $614/$695 1,259,200 5.0%
TOTAL VARIABLE CHARGES 38,793.3 25,183,600$ 100.0%
MWD & CWA FIXED CHARGES:FY08 Estimated FY09 Budget
Infrastructure Access Charge (IAC)1,090,228$ 1,227,500$
Customer Service Charge (CSC)949,222 1,049,800
Emergency Storage Charge (ESC)1,507,895 1,774,700
Capacity Reservation Charge (CRC)570,980 602,800
Readiness-to-Serve Charge (RTS)564,193 665,100
TOTAL FIXED CHARGES 4,682,518$ 5,319,900$
(1)The first rate applies to purchases from July to December of the budget fiscal year; the second from
January to June.
-
10,000
20,000
30,000
40,000
Ac
r
e
F
e
e
t
FY04
Actual
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Estimated
FY09
Budget
POTABLE WATER PURCHASES
WATER PURCHASES AND RELATED COSTS - POTABLE
57
POWER COSTS - POTABLE
Admin and
Operations
Buildings
Potable
Transmission
Total Potable
Power Costs
FY04 Actual 132,391 1,515,642 1,648,033
FY05 Actual 142,630 1,551,029 1,693,659
FY06 Actual 154,567 1,628,153 1,782,721
FY07 Actual 172,646 1,863,984 2,036,630
FY08 Estimated 160,945 2,100,320 2,261,265
FY09 Budget 177,500 2,038,600 2,216,100
Note:
(1) The fluctuation in the power cost is caused by increases and decreases in annual rainfall.
(2) Subsequent to Budget approval, staff identified a misclassification of a power meter among
potable, recycled, and sewer which also caused the fluctuation in power costs.
$0
$500
$1,000
$1,500
$2,000
$2,500
Thousands
FY04
Actual
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Estimated
FY09
Budget
HISTORICAL POWER COSTS AND PROJECTIONS
Admin and Operations Buildings
Potable Transmission
58
FY 2007 FY 2009 Budget
Actual Budget Estimated Budget Variance %
Director's Fees 18,700$ 48,000$ 24,002$ 40,000$ (8,000) (16.7%)
Travel and Meetings 158,506 270,900 184,690 239,400 (31,500) (11.6%)
Conservation and Outreach 168,831 481,800 286,240 348,000 (133,800) (27.8%)
General Office Expense 344,782 359,400 380,573 364,900 5,500 1.5%
Equipment 901,151 1,014,300 1,012,075 1,045,300 31,000 3.1%
Fees 421,420 367,700 400,310 419,000 51,300 14.0%
Services 2,023,530 2,923,300 2,112,143 2,454,700 (468,600) (16.0%)
Training 97,772 173,100 92,693 167,600 (5,500) (3.2%)
Utilities 12,870 14,000 14,495 15,600 1,600 11.4%
Miscellaneous 212 - 239 133,900 133,900 100.0%
Total 4,147,775 5,652,500 4,507,460 5,228,400 (424,100) (7.5%)
Less: Overhead Allocation (600,940) (807,300) (697,212) (767,400) 39,900 (4.9%)
Subtotal 3,546,834 4,845,200 3,810,248 4,461,000 (384,200) (7.9%)
General Expenses 1,607,300 1,676,300 1,852,927 972,300 (704,000) (42.0%)
Total Administrative Expenses 5,154,134$ 6,521,500$ 5,663,175$ 5,433,300$ (1,088,200)$ (16.7%)
5,755,075$ 7,328,800$ 6,360,387$ 6,200,700$
FY 2008
ADMINISTRATIVE EXPENSES - POTABLE
ADMINISTRATIVE EXPENSES - POTABLE
FY 2009
Services
46.9%
Miscellaneous
2.6%
Director's Fees
0.8%
Training
3.2%
Utilities
0.3%
Travel and Meetings
4.6%
Conservation and
Outreach
6.6%
General Office
Expense
7.0%
Fees
8.0%
Equipment
20.0%
59
FY 2007 FY 2009 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil 406,417$ 570,000$ 494,190$ 369,000$ (201,000) (35.3%)
Meters and Materials 312,406 304,400 327,882 138,000 (166,400) (54.7%)
Fleet Parts and Equipment 159,601 161,100 152,794 161,000 (100) (0.1%)
Infrastructure Equipment and Supplies 531,277 523,500 625,944 470,000 (53,500) (10.2%)
Chemicals 197,565 225,000 161,961 200,000 (25,000) (11.1%)
Safety Equipment 17,761 14,700 18,970 27,500 12,800 87.1%
Laboratory Equipment and Supplies 30,473 30,000 31,178 30,000 - 0.0%
Other Materials and Supplies 280,772 231,500 129,433 163,600 (67,900) (29.3%)
Building and Grounds Materials 109,016 122,000 93,735 93,000 (29,000) (23.8%)
Contracted Services 498,680 585,900 475,228 481,300 (104,600) (17.9%)
Total Materials and Maintenance 2,543,968$ 2,768,100$ 2,511,316$ 2,133,400$ (634,700)$ (22.9%)
MATERIALS AND MAINTENANCE EXPENSES - POTABLE
FY 2008
MATERIALS AND MAINTENANCE EXPENSES - POTABLE
FY 2009
Fuel and Oil
17.3%
Meters and
Materials
6.5%
Fleet Parts and
Equipment
7.5%
Infrastructure
Equipment and
Supplies
22.0%
Chemicals
9.4%
Safety Equipment
1.3%
Laboratory
Equipment and
Supplies
1.4%
Other Materials and
Supplies
7.7%
Building and
Grounds Materials
4.4%
Contracted Services
22.5%
60
LOWER OTAYRESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKEMURRAY LOVELANDRESERVOIR
MEXICO
Reservoir Pump Station
San Diego County Water Authority PipesOtay Water District Pipes
Otay Headquarters
EXISTING FACILITIES
San Diego County Water Authority Connections
EXISTING
POTABLE WATER SERVICE AREA
61
RECYCLED REVENUES AND EXPENSES
In 1980, the District started operation of the Ralph W. Chapman Water Recycling Facility (RWCWRF). The RWCWRF project is capable of recycling wastewater at the rate of 1.3
million gallons per day (MGD) to augment potable water supplies for irrigation purposes. The
RWCWRF treatment process consists of primary, secondary, and tertiary treatment. The
RWCWRF’s conversion time from raw sewage to full Title 22 recycled water is approximately 20 hours.
The steps of the water recycling process are as follows:
Primary Treatment: The raw sewage flows in at the drum screen, also known as the
“headworks” which removes a large amount of coarse organic and inorganic material that is
either floating or in suspension. This is followed by a grit chamber, which removes the heavy
settled material.
Secondary Treatment: This is where the biological treatment begins. The first step takes place
in the aeration tanks, also known as reactors or sedimentation basins, which contain a huge mass
of bacteria that feed on the organic material in sewage. These bacteria are aerobic, and therefore
require a great quantity of pumped-in air to help them thrive. The second step in the process is clarification where the sludge from the aeration tanks is allowed to settle to the bottom and the
62
clear liquid, or secondary effluent, flows out over weirs at the surface. Some of the settled sludge is disposed of and some is returned to the aeration tanks to keep the process in balance. The
secondary effluent flowing over the weirs is now ready for the next step.
Tertiary Treatment: Just before filtration, a small amount of coagulant is added as a filter aid which helps suspended material in the secondary effluent “clump” on the surface of the filters. The filters consist of a layer of sand with a layer of anthracite coal on top. As the fluid moves
through the filters, the flow goes through a chlorine contact chamber where disinfection takes
place. Solids, screenings, and sludge are discharged to the City of San Diego Metropolitan
Wastewater (Metro) system. The District operates the largest recycled water distribution system in San Diego County and will
supply approximately 4,670 acre-feet of recycled water to 642 landscaping and construction
customers by the end of Fiscal Year 2009. The recycled water customer base consists primarily
of irrigation at golf courses, schools, parks and open space in the Eastlake, Otay Ranch, and Rancho Del Rey and other areas of eastern Chula Vista.
The District entered a landmark agreement with the City of San Diego in October 2003, to
purchase up to six million gallons a day of recycled water from their South Bay Water
Reclamation Plant. To bring this plan to fruition, the District constructed a 30-inch, six-mile pipeline, a 12-million gallon reservoir and a pump station to bring this new source of recycled water into the District’s system. These projects were completed in Spring 2007, which
eliminated the immediate need for a potable supplement of the recycled system. The benefits of
this to the region as a whole are great as less demand on the potable system is created, which
reduces future capacity and storage requirements. The $42 million investment in capital outlay results in a significant reduction of water purchase costs and an increase in system reliability. The District expects that 15 to 20 percent of its total water demand will be met using recycled
water.
Producing and distributing recycled water is costly. To help offset the costs of supplying alternative water sources, both CWA and MWD offer incentive programs. In Fiscal Year 1991,
the District signed agreements with CWA and MWD to take advantage of the programs they
offered. A second agreement was signed in 2000. In 2005, the District agreed to terminate both
agreements and to enter into a new agreement which allowed the District to maximize its
ability to earn incentives and to simplify the grant requirements. Currently, the District receives $200 from CWA and $185 from MWD for every acre-foot (AF) of recycled water sold.
63
FY 2007 FY 2009 Budget Variance
31-Actual Budget Estimated (d Budget Variance %
REVENUES
###Recycled Water Sales 3,294,170$ 3,583,800$ 3,347,964$ 3,648,700$ 64,900 1.8%
###System Fees 335,063 432,800 425,061 524,900 92,100 21.3%
###Energy Fees 190,570 264,800 248,429 304,000 39,200 14.8%
###MWD/CWA Rebates 592,056 1,614,900 1,833,949 1,798,400 183,500 11.4%
###Penalties 80,998 105,100 92,855 68,500 (36,600) (34.8%)
###Total Reclaimed Water Sales 4,492,858 6,001,400 5,948,258 6,344,500 343,100 5.7%
###Meter Fees 50,280 24,100 9,176 11,400 (12,700) (52.7%)
###Capacity Fee Revenues 106,820 - 12,042 - - 0.0%
###Interest 145,748 99,000 80,704 24,600 (74,400) (75.2%)
TOTAL REVENUES 4,795,706 6,124,500 6,050,180 6,380,500 256,000 4.2%
EXPENDITURES
###Water Purchases (CWA) 1,597,592 1,423,000 - 1,471,000 48,000 3.4%
###Water Purchases (CSD) / Meter Fees 231,884 - 1,278,084 19,800 19,800 100.0%
Total Water Purchases 1,829,476 1,423,000 1,278,084 1,490,800 67,800 4.8%
###Power 358,359 493,600 288,261 466,800 (26,800) (5.4%)
###Labor and Benefits 567,385 895,400 955,086 1,143,100 247,700 27.7%
###Administrative Expenses 205,245 271,300 290,718 346,500 75,200 27.7%
###Materials & Maintenance 198,098 226,000 242,779 225,400 (600) (0.3%)
###Expansion Reserve - 2,590,200 2,590,200 2,430,000 (160,200) (6.2%)
Bett Betterment Reserve - 225,000 225,000 - (225,000) (100.0%)
ReplReplacement Reserve 1,264,500 - - 277,900 277,900 100.0%
TOTAL EXPENDITURES 4,423,063 6,124,500 5,870,127 6,380,500 256,000 4.2%
EXCESS REVENUES (EXPENSES) 372,643$ -$ 180,053$ -$ -$ 0.0%
-$
FY 2008
OPERATING BUDGET SUMMARY - RECYCLED
RECYCLED OPERATING EXPENDITURES
FY 2009
Expansion Reserve
38.1%Labor and Benefits
17.9%
Power
7.3%
Total Water
Purchases
23.4%
Materials &
Maintenance
3.5%
Administrative
Expenses
5.4%
Replacement
Reserve
4.4%
64
FY 2008
Estimated
FY 2009
Budget Variance
Recycled Water Sales:
Water Sales 3,347,964$ 3,648,700$ 300,736$
System Fees 425,061 524,900 99,839
Energy Fees 248,429 304,000 55,571
MWD & CWA Rebates 1,833,949 1,798,400 (35,549)
Penalties 92,855 68,500 (24,355)
Total 5,948,258$ 6,344,500$ 396,242$
Water Sales : Unit Sales x Rate
System Charges : Fixed monthly fee based on meter size
Energy Charges : Energy pumping fee of $0.032 per unit of water for each 100 feet of lift
or fraction thereof above the base elevation of 450 feet
Penalties : Late charges, locks , etc.
WATER SALES SUMMARY
FY 2009
System Charges
8%
MWD & CWA
Fixed Charges
28%
Penalties
1%Energy Charges
5%
Water Sales
58%
CLASSIFICATION OF WATER SALES - RECYCLED
65
Current Proposed*
Accounts Units Amount Rate Rate
Recycled Water Sales:
Publicly-Owned 290 875,000 1,611,000$ 1.75$ 1.97$
Commercial 352 1,159,800 2,037,700 1.67 1.88
Total 642 2,034,800 3,648,700$ 1.70$ 1.79$ **
*Proposed rate effective January 1, 2009, pending the Proposition 218 hearing and Board approval.
**Based on average rate.
Estimated Budget
FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Unit Sales 1,388,621 1,368,462 1,729,000 1,920,287 2,001,137 2,034,800
Fiscal Year 2009 Sales Budget
UNIT SALES HISTORY - RECYCLED
ACTUAL
UNIT SALES & METER TRENDS
-
500
1,000
1,500
2,000
2,500
FY04 Actual FY05 Actual FY06 Actual FY07 Actual FY08 Estimated FY09 Budget
Un
i
t
s
(
t
h
o
u
s
a
n
d
s
)
-
200
400
600
800
Me
t
e
r
s
Unit Sales Meters
WATER SALES SUMMARY BY SERVICE CLASS - RECYCLED
66
Meter Current Proposed* Existing Additional Total
Service Class Size 6/30/08 FY09 Rates Rates Meters Meters Meters
Recycled 0.75 1 - 27.85$ 31.30$ 400$ -$ 400$
1.00 84 11 42.90 48.00 45,800 6,000 51,800
1.50 355 - 60.30 67.78 272,800 - 272,800
2.00 171 9 75.40 84.40 164,000 8,600 172,600
3.00 3 - 121.30 136.00 4,600 - 4,600
4.00 5 - 138.90 156.00 8,800 - 8,800
6.00 2 277.60 312.00 7,100 - 7,100
10.00 1 - 529.90 595.50 6,800 - 6,800
Total 622 20 510,300$ 14,600$ 524,900$
Budgeted Recycled System Fees 524,900$
*Proposed rates effective January 1, 2009, pending the Proposition 218 hearing and Board approval.
Meter Count
Budgeted System Fees
-
200
400
600
800
FY04
Actual
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Estimated
FY09
Budget
METER COUNT
SYSTEM FEES - RECYCLED
67
Meter Installation Meter AMR
Size Fee Fee Fee
Meter Fees:0.75 60.00$ 59.00$ 147.00$
Meter Fees are charges collected for new water 1.00 60.00 117.00 147.00
service connections. Fees vary depending upon 1.50 103.00 250.00 147.00
meter size and type of service. The costs associated 2.00 240.00 475.00 147.00
with meter installations are included in the Operating 3.00 300.00 653.00 147.00
Expenses section of the budget. These charges are 4.00 300.00 1,370.00 147.00
funded by developers.6.00 300.00 2,500.00 147.00
10.00 300.00 3,737.00 147.00
0.75 1.00 1.50 2.00 3.00 Total
Residential 11 - 9 - 20
Total Meter Fees -$ 3,600$ -$ 7,800$ -$ 11,400$
Fiscal Year 2009 Growth by Meter Size
-
200
400
600
FY04 Actual FY05 Actual FY06 Actual FY07 Actual FY08 Estimated FY09 Budget
METER COUNT
METER FEES - RECYCLED
68
REVENUE HISTORY - RECYCLED
Estimated Budgeted
FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Water Sales 2,330,323$ 2,292,432$ 2,694,517$ $3,294,170 3,347,964$ 3,648,700$
System Fees 210,208 256,659 298,153 335,063 425,061 524,900
Energy Fees - 52,119 198,599 190,570 248,429 304,000
MWD & CWA Rebates 447,020 363,370 372,172 592,056 1,833,949 1,798,400
Penalties - - - 80,998 92,855 68,500
Total 2,987,551$ 2,964,580$ 3,563,441$ 4,492,857$ 5,948,258$ 6,344,500$
Note:
Retroactive increase was given by CWA from $147 to $200 acre foot received in FY 08 applicable to FY 07.
ACTUAL
System FeesWater Sales PenaltiesEnergy FeesMWD & CWA
Rebates
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Thousands
FY04
Actual
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Estimated
FY09
Budget
REVENUE HISTORY
69
WATER PURCHASES - RECYCLED
FY09 Budget FY09 Budget
Acre Feet Rate Purchase Costs % to Total
SBWRP Recycled Water Purchases (CSD)
Recycled Water Purchases 3,465.6 424.50$ 1,471,000$ 98.7%
Meter Fee - 1,646.50 19,800 1.3%
Total 3,465.6 1,490,800$ 100.0%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Ac
r
e
F
e
e
t
FY04
Actual
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Estimated
FY09
Budget
RECYCLED WATER PURCHASES
70
POWER COSTS - RECYCLED
Treatment and
Recycled
Transmission
FY04 Actual 219,500
FY05 Actual 241,000
FY06 Actual 224,200
FY07 Actual 358,359
FY08 Estimated 288,261
FY09 Budget 466,800
Note:
(1) The fluctuation in the power cost is caused by increases and decreases in annual rainfall.
(2) Subsequent to Budget approval, staff identified a misclassification of a power meter among
potable, recycled, and sewer which also caused the fluctuation in power costs.
$-
$100
$200
$300
$400
$500
Thousands
FY04
Actual
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Estimated
FY09
Budget
HISTORICAL POWER COSTS AND PROJECTIONS
71
FY 2007 FY 2009 Budget
Actual Budget Estimated Budget Variance %
Equipment 540$ 3,000$ 868$ 6,300$ 3,300$ 110.0%
Fees - 7,000 33,738 53,000 46,000 657.1%
Services 104,633 105,000 88,873 75,200 (29,800) (28.4%)
Miscellaneous - - - 9,900 9,900 100.0%
0.0%
Total 105,173 115,000 123,479 144,400 29,400 25.6%
Overhead Allocation 100,071 156,300 167,239 202,100 45,800 29.3%
Total Administrative Expenses 205,245$ 271,300$ 290,718$ 346,500$ 75,200$ 27.7%
FY 2008
ADMINISTRATIVE EXPENSES - RECYCLED
ADMINISTRATIVE EXPENSES - RECYCLED
FY 2009
Overhead Allocation
58.3%
Miscellaneous
2.9%
Services
21.7%
Fees
15.8%
Equipment
1.8%
72
FY 2007 FY 2009 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil 12,348$ 27,000$ 13,646$ 13,500$ (13,500) (50.0%)
Meters and Materials 9,632 10,000 16,321 10,500 500 5.0%
Infrastructure Equipment and Supplies 96,997 110,000 134,430 114,500 4,500 4.1%
Chemicals 64,508 66,000 62,426 46,000 (20,000) (30.3%)
Safety Equipment 2,379 1,500 1,353 2,800 1,300 86.7%
Laboratory Equipment and Supplies 2,060 4,000 5,200 5,000 1,000 25.0%
Other Materials and Supplies 5,765 5,000 7,088 10,600 5,600 112.0%
Contracted Services 4,210 2,500 2,315 22,500 20,000 800.0%
Total Materials and Maintenance 198,098$ 226,000$ 242,779$ 225,400$ (600)$ (0.3%)
MATERIALS AND MAINTENANCE EXPENSES - RECYCLED
FY 2008
MATERIALS AND MAINTENANCE EXPENSES - RECYCLED
FY 2009
Chemicals
20.4%
Laboratory
Equipment and
Supplies
2.2%
Other Materials
and Supplies
4.7%
Safety Equipment
1.2%
Contracted
Services
10.0%Fuel and Oil
6.0%
Meters and
Materials
4.7%
Infrastructure
Equipment and
Supplies
50.8%
73
LOWER OTAYRESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKEMURRAY LOVELANDRESERVOIR
RALPH W. CHAPMANWATER RECYCLINGFACILITY
SOUTH BAY WATER RECLAMATION PLANT MEXICO
Reservoir Pump Station
Otay Water District Pipes
Otay Headquarters
EXISTING FACILITIES
Treatment Plants
RECYCLED WATER SERVICE AREA
EXISTING
74
SEWER REVENUES AND EXPENSES
The District provides sewer service to approximately 15,200 customers through 4,630 accounts (or approximately 6,640 Assigned Service Units) located in the northern section of the District.
The District operates and maintains the sewage collection system serving Rancho San Diego,
Singing Hills and portions of Mount Helix within the Upper Sweetwater River Basin, also
known as the Jamacha Basin. Residential customers comprise 98.5% of the customer base. Modest growth of 1.2% is anticipated in Fiscal Year 2009.
Wastewater collection within the Jamacha Basin is provided by two agencies: the Otay Water
District and the Spring Valley Sanitation District. Customers in the basin, not served by either
agency, dispose of their sewage through septic tanks. After the sewer has been collected, it is sent to the District’s Ralph W. Chapman Water Recycling Facility (RWCWRF) treatment plant where the District produces recycled water, see page 62 outlining the sewer process. The
byproduct of the treatment process is called sludge and it is discharged through the City of San
Diego Metropolitan Wastewater (Metro) and the Spring Valley Sanitation District systems.
The Otay Water District is a member of Metro Wastewater System and a significant amount of the sewer operation costs is for estimated sewer service charges from Metro totaling $1,041,900
for Fiscal Year 2009. Additionally, the District will pay $247,000 for its share of the operation
and maintenance cost of the Rancho San Diego Outfall and the Spring Valley Outfall to dispose
of sewage to Metro for Fiscal Year 2009. The charge for sewer service is mandated by the State Revenue Program Guidelines which
requires the use of a "Service Unit Assignment Formula" that converts higher strength uses into a
service unit value comparable to the use impact of a single-family residential user or equivalent
dwelling unit (EDU). The rate of discharge and strength of sewage for non-residential customers tends to be higher than a single-family residential user. Due to their higher discharge and
strength, non-residential customers are assigned more units: 11% of the total service units, while
only comprising 1.5% of the customer base. The formula for the sewer rates is shown on page
82.
In addition to the monthly sewer fee, sewer customers are annually assessed $54 per assigned
service unit on their property tax statements. This revenue of $359,600 is necessary for the
payment of principal and interest on the $5 million State loan to modify the RWCWRF. The
outstanding balance on the loan is $1,031,730 with an interest rate of 3.5%. The debt service
payment for Fiscal Year 2009 is $359,800.
75
FY 2007 FY 2009 Budget Variance
11-Actual Budget Estimated Budget Variance %
REVENUES
4200 Sewer Charges 2,577,993 2,679,100 2,414,886 2,145,300 (533,800) (19.9%)
4400 Non-operating Revenues 1,338 1,000 27,112 26,400 25,400 2540.0%
Tax Revenues 52,990 51,300 56,599 56,400 5,100 9.9%
4510 Interest 72,450 88,000 152,336 60,700 (27,300) (31.0%)
General Fund Draw Down 283,600 - - 120,100 120,100 100.0%
TOTAL REVENUES 2,988,371 2,819,400 2,650,933 2,408,900 (410,500) (14.6%)
EXPENDITURES
5411 Power 94,989 103,100 98,359 97,600 (5,500) (5.3%)
5110 Labor and Benefits 556,534 832,600 732,543 642,000 (190,600) (22.9%)
5200 Administrative Expenses 108,276 189,500 199,700 155,300 (34,200) (18.0%)
5300 Material & Maintenance 959,155 1,458,800 1,358,086 1,514,000 55,200 3.8%
Repl RReplacement Reserve - 235,400 235,400 - (235,400) (100.0%)
TOTAL EXPENDITURES 1,718,954 2,819,400 2,624,088 2,408,900 (410,500) (14.6%)
EXCESS REVENUES 1,269,417$ -$ 26,844$ -$ -$ 0.0%
EXCESS REVENUES, w/o restatement and transfers ##########
FY 2008
OPERATING BUDGET SUMMARY - SEWER
SEWER OPERATING EXPENDITURES
FY 2009
Material &
Maintenance
62.9%
Administrative
Expenses
6.5%
Labor and Benefits
26.7%
Power
4.1%
76
Units/ FY 2009
Accounts ASU(1)Current Proposed(3)Current Proposed(3)Budget
Single Family 4,509 4,509 9.75 10.20 1.41 1.47 1,512,000$
Multi-Family 50 1,360 9.75 10.20 1.41 1.47 280,300
Schools 6 283.26 33.26 34.79 115,700
Churches 4 90.38 33.26 34.79 36,900
Commercial
Low Strength 35 186.98 33.26 34.79 76,300
Medium Strength 18 139.72 33.26 34.79 57,100
High Strength 6 67.47 33.26 34.79 27,500
Penalties 39,500
TOTAL SEWER CHARGES 4,628 6,637 2,145,300$
(1)Assigned Service Units
(2)Current and Proposed Base Fees for 1" meter are 14.25 and 14.90, respectively.
(3)Proposed fee/rate is effective January 1, 2009, pending the Proposition 218 hearing and Board approval.
SEWER CHARGES SUMMARY BY SERVICE CLASS
Usage Fee / Sewer RateBase Fee for 3/4" Meter(2)
SEWER CHARGES BY SERVICE CLASS
FY 2009
Single Family
71.8%
Churches
1.8%
Commercial -
High Strength
1.3%
Commercial -
Medium Strength
2.7%
Commercial - Low
Strength
3.6%
Schools
5.5%
Multi-Family
13.3%
77
Estimated Budget
FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Sewer Charges 1,767,118$ 1,995,548$ 2,296,856$ 2,531,513$ 2,359,173$ 2,105,800$
Penalties (1)- - - 46,480 55,713 39,500
Total 1,767,118$ 1,995,548$ 2,296,856$ 2,577,993$ 2,414,886$ 2,145,300$
(1)Prior to Fiscal Year 2007, penalties were Potable revenues only.
Actual
REVENUE HISTORY - SEWER
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Th
o
u
s
a
n
d
s
s
FY04 Actual FY05 Actual FY06 Actual FY07 Actual FY08 Estimated FY09 Budget
SEWER REVENUE HISTORY
Sewer Charges Penalties
78
POWER COSTS - SEWER
Sewer Lift Station
FY04 Actual 88,915$
FY05 Actual 82,447
FY06 Actual 85,894
FY07 Actual 94,989
FY08 Estimated 98,359
FY09 Budget 97,600
Note:
(1) The fluctuation in the power cost is caused by increases and decreases in annual rainfall.
(2) Subsequent to Budget approval, staff identified a misclassification of a power meter among
potable, recycled, and sewer which also caused the fluctuation in power costs.
$-
$25
$50
$75
$100
Thousands
FY04
Actual
FY05
Actual
FY06
Actual
FY07
Actual
FY08
Estimated
FY09
Budget
HISTORICAL POWER COSTS AND PROJECTIONS
79
FY 2007 FY 2009 Budget
Actual Budget Estimated Budget Variance %
Equipment 494$ 1,000$ 468$ 500$ (500) (50.0%)
Fees - 7,700 20,016 8,500 800 10.4%
Services 6,858 35,000 48,968 25,600 (9,400) (26.9%)
Miscellaneous - - - 6,200 6,200 100.0%
Total 7,351 43,700 69,452 40,800 (2,900) (6.6%)
Overhead Allocation 100,925 145,800 130,248 114,500 (31,300) (21.5%)
Total Administrative Expenses 108,276$ 189,500$ 199,700$ 155,300$ (34,200)$ (18.0%)
FY 2008
ADMINISTRATIVE EXPENSES - SEWER
ADMINISTRATIVE EXPENSES - SEWER
FY 2009
Overhead Allocation
73.7%
Services
16.5%
Miscellaneous
4.0%
Equipment
0.3%
Fees
5.5%
9
80
FY 2007 FY 2009 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil -$ -$ 996$ -$ - 0.0%
Fleet Parts and Equipment - 2,000 406 3,000 1,000 50.0%
Infrastructure Equipment and Supplies 98,183 99,000 104,579 83,000 (16,000) (16.2%)
Chemicals 3,837 3,000 3,089 4,000 1,000 33.3%
Safety Equipment 1,439 1,000 1,208 1,000 - 0.0%
Laboratory Equipment and Supplies 13,213 3,000 3,626 5,000 2,000 66.7%
Other Materials and Supplies 692 - 33 100 100 100.0%
Contracted Services - 127,000 7,628 129,000 2,000 1.6%
Materials and Maintenance 117,364 235,000 121,564 225,100 (9,900) (4.2%)
Sewer Charges
Metro O&M Costs 617,686 988,800 1,034,276 1,041,900 53,100 5.4%
Spring Valley Sewer Charge 224,105 235,000 202,246 247,000 12,000 5.1%
Total Sewer Charges 841,791 1,223,800 1,236,522 1,288,900 65,100 5.3%
Total Materials and Maintenance 959,155$ 1,458,800$ 1,358,086$ 1,514,000$ 55,200$ 3.8%
MATERIALS AND MAINTENANCE EXPENSES - SEWER
FY 2008
MATERIALS AND MAINTENANCE EXPENSES - SEWER
FY 2009
Spring Valley Sewer
Charge
16.3%
Metro O&M Costs
68.8%Contracted Services
8.5%
Other Materials and
Supplies
0.0%
Laboratory
Equipment and
Supplies
0.3%
Safety Equipment
0.1%
Chemicals
0.3%
Infrastructure
Equipment and
Supplies
5.5%
Fleet Parts and
Equipment
0.2%
81
FORMULA FOR SEWER RATES
Each year the District is required to revise its formula for determining sewer rates in accordance with the State Revenue Program Guidelines. For residential sewer customers, effective January 1, 2008, a “Winter Average” fee structure was implemented for calculating the monthly sewer charge. A usage fee will be charged based on the prior year’s “Winter Average” water consumption, reduced by a 15% usage discount, times a rate of $1.47. A base fee of $10.20 for a 3⁄4 inch water meter and $14.90 for a 1 inch or greater water meter shall be applied. The commercial formula takes into consideration the cost associated with daily flow, chemical oxygen demand (COD) and the removal of suspended solids (SS). The COD and SS determine
the strength factor for the groups of high, medium and low, and the State Water Resources
Control Board (SWRCB) determines these factors. The factors beginning January 1, 2004 are
shown below: 1.000 Schools
1.000 Churches
1.000 Low Strength Commercial
1.238 Medium Strength Commercial
2.203 High Strength Commercial
The following formula is based on an estimated daily flow of 250 gallons per day plus 280
milligrams per liter of Biological Oxygen Demand (BOD) and 234 milligrams per liter of SS for
a residential equivalent dwelling unit or an assigned service unit (ASU). The new method of
calculating the sewer rate is to multiply the flow by the strength factor to determine the Assigned Service Unit (ASU) as follows:
Daily Flow x Strength Factor = Assigned Service Unit
(gpd x .85)/250gpd x as shown above = ASU
The ASU is then multiplied by the district-wide sewer rate to determine the monthly sewer
charge. The sewer rates per ASU effective on January 1st of Calendar Years 2008 and 2009
(proposed rates pending the Proposition 218 hearing and Board approval) are $33.26 and $34.79, respectively.
The minimum charge for commercial shall be no lower than one ASU at low strength. For
public schools, flow is based on average daily attendance for the prior school year, including
summer school, as reported by schools to meet state requirements. For elementary schools, 50 students equal one ASU; for junior high schools, 40 students equal one ASU; for high schools,
24 students equal one ASU. For colleges, flow is based on the number of Certificated and
Classified Staff, and students enrolled in each school session.
82
LOWER OTAYRESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKEMURRAY LOVELANDRESERVOIR
RALPH CHAPMANWATER RECYCLINGFACILITY
MEXICO
Holding Tanks Lift Stations
OWD Pipes
Otay Headquarters
EXISTING FACILITIES
Treatment Plants
SEWER SERVICE AREA
SOUTH BAY WATERRECLEMATION PLANT
83
GENERAL REVENUES AND EXPENSES
The District’s revenues and expenses in this section are not directly related to the services delivered to potable, recycled, or sewer customers, yet they are operating expenses or revenues.
General Revenues
Capacity fees have a restricted purpose when collected to cover costs including, but not limited to, planning, design, construction, and financing associated with facilities for the District’s
expansion needs. The District uses a portion of capacity fee revenues to provide general
planning and developer support. These fees reimburse the General Fund for cost of providing
these services.
Betterment fees for maintenance are earned by the Operating Budget as our Operations
Department maintains specific assets of the district.
Annexation fees are collected when developers buy into the District’s potable and recycled water facilities. The fee insures that future users fund the portion of the facilities that were sized and
built for their future use by prior customers. Annexation fees are unrestricted and therefore
included in the General Fund revenues.
The 1% Property Tax is a result of Proposition 13 which occurred in 1978 which limited general levy property tax rate for all taxing authorities to a total rate of 1% of the assessed value.
Subsequent legislation AB8, established that the receipts from the 1% levy were to be distributed
to taxing agencies according to approximately the same proportions received prior to Proposition
13. These general use funds are currently being used as a source of operating revenue.
The District levies availability charges each year in developed areas to be used for upgrades and
betterment and in undeveloped areas to provide a funding for planning, mapping, and
preliminary design of facilities to meet future development. Current legislation provides that any
availability charge in excess of $10.00 per acre shall be used only for the benefit of the
improvement district in which it is assessed.
Included in the General Revenues are a variety of Non-Operating Revenues. These revenues
include lease revenue, set-up fees, sewer billing fees, grants, and any miscellaneous revenues.
Revenues are received from the lease of District property, mainly for the purpose of cell-sites.
When the District enters a new lease there is a one-time fee charged with the set-up of each cell-site. The District incurs expenses related to these leases and the purpose of the fee is to recover
the cost to set up the lease.
In addition to the cell-site leases, the District leases land to the Salt Creek Golf Club. The lease
terms include a minimum annual rent guarantee plus a percentage of sales over 3%. This lease is a 40 year term with two additional five year options.
84
For most of the District’s water customers in the City of Chula Vista, the City of Chula Vista (CCV) provides the sewer services. The CCV sewer fees are based on water consumption.
Because of the interrelated functions, the CCV contracts with the District for processing and
billing of their sewer customers within the District for a fee.
General Expenses
The expenses in this section are general operating expenses not associated with an individual
department. These include legal costs, insurance premiums, changes in accrued employee leave
balances, and miscellaneous interest. These expenses represent 6% of the total Departmental Budget.
Legal expenses are viewed as a District-wide general expense because it benefits each
department and usually is not attributed to any one department. The District retains outside legal
services rather than having in-house counsel. Insurance expense is viewed as District-wide general expense because it benefits each
department and cannot be attributed to any one department. The District participates in a
program where it can reduce its premium by implementing training sessions to reduce on-the-
job accidents and injuries. Some employee benefits are charged to the General Expense Department because they are not
entirely attributable to the specific department or year in which they are earned. For example,
when a pay rate increase occurs for an employee and leave balances increase in value due to this
change. In this case, the expense is charged to the General Expense Department.
450-1 Recycled Water Reservoir
85
FY 2007 FY 2009 Budget Variance
Actual Budget Estimated Budget Variance %
Capacity Fee Revenues 1,536,911$ 1,414,500$ 1,480,165$ 1,301,900 (112,600)$ (8.0%)
Betterment Fees for Maintenance - 73,300 802,021 895,900 822,600 1122.2%
Annexation Fees 2,119,886 1,464,500 526,435 483,600 (980,900) (67.0%)
Tax Revenues
1% General Tax 2,930,494 3,328,700 3,279,923 3,430,000 101,300 3.0%
Availability Fees 715,664 675,100 744,722 707,300 32,200 4.8%
Total Tax Revenues 3,646,158 4,003,800 4,024,645 4,137,300 133,500 3.3%
General Revenues 7,302,955$ 6,956,100$ 6,833,265$ 6,818,700$ (137,400)$ (2.0%)
FY 2007 FY 2009 Budget Variance
Actual Budget Estimated Budget Variance %
Property Rental 914,403$ 894,200$ 962,929$ 1,052,600$ 158,400 17.7%
Sewer Billing Fees 354,815 355,500 358,053 359,900 4,400 1.2%
Set-up Fee for Lease Site 10,000 18,000 9,000 14,000 (4,000) (22.2%)
Grants 14,246 197,000 74,175 50,500 (146,500) (74.4%)
Revenue from Shared Facility - 26,430 26,400 26,400 100.0%
Miscellaneous 774,671 215,500 867,239 129,700 (85,800) (39.8%)
Non-Operating Revenues 2,068,134$ 1,680,200$ 2,297,826$ 1,633,100$ (47,100)$ (2.8%)
Potable Recycled Sewer Total
Capacity Fee Revenues 1,301,900$ -$ -$ 1,301,900$
Betterment Fees for Maintenance 895,900 - - 895,900
Annexation Fees 483,600 - - 483,600
Tax Revenues -
1% Property Tax 3,430,000 - - 3,430,000
Availability Fees 650,900 - 56,400 707,300
Total Tax Revenues 4,080,900 - 56,400 4,137,300
Non-Operating Revenues
Property Rental 1,052,600 - - 1,052,600
Sewer Billing Fees 359,900 - - 359,900
Set-up Fee for Lease Site 14,000 - - 14,000
Grants 50,500 - - 50,500
Revenue from Shared Facility - - 26,400 26,400
Miscellaneous 129,700 - - 129,700
Total Non-Operating Revenues 1,606,700 - 26,400 1,633,100
Total General and Non-Operating Revenues 8,369,000$ -$ 82,800$ 8,451,800$
Note: For General and Non-Operating Revenues, the Potable Fund serves as the District's General Fund for
accounting purposes.
FY 2009 Budget
NON-OPERATING REVENUES
FY 2008
GENERAL AND NON-OPERATING REVENUES BY BUSINESS
GENERAL REVENUES
FY 2008
86
FY 2007 FY 2009 Budget Variance
Actual Budget Estimated Budget Variance %
Administrative Expenses
Legal Fees 1,224,441$ 1,209,000$ 1,405,594 467,500$ (741,500)$ (61.3%)
General Insurance 382,192 467,300 447,333 504,800 37,500 8.0%
Interest 667 - - - - 0.0%
Total Administrative Expenses 1,607,300 1,676,300 1,852,927 972,300 (704,000) (42.0%)
Benefits
Benefits (1)205,725 10,000 694,712 (188,300) (198,300) (1,983.0%)
Total General Expenses 1,813,025$ 1,686,300$ 2,547,639$ 784,000$ (902,300)$ (53.5%)
(1) FY 2009 budget amount is negative because of Vacancy Factor (salary savings) of $424,300. This is netted
against other District-wide Labor and Benefit Expenses. In prior years Vacancy Factor was budgeted in the
individual departments.
FY 2008
GENERAL EXPENSES
87
Labor and Benefits
Labor and Benefits represent 26.8% of the total Operating Budget. In Fiscal Year 2008, the Employees’ Association signed a six-year Memorandum of Understanding (MOU) with the District. The highlights of this agreement included: changes to salaries based on a salary
survey, changes to the medical and dental plans, enhancements of the retirement package with
to include post retirement health benefits for active employees, and rewriting MOU to
streamline the District practices.
District personnel are assigned to work in six departments: General Manager, Administrative
Services, Finance, Information Technology & Strategic Planning, Water Operations, and
Engineering. The departments are further categorized by functions into divisions. The Fiscal
Year 2009 Budget includes funding for labor and benefits for 168.75 Full-time Equivalent (FTE) employees and a 3% across-the-board salary increase on July 1, 2008.
The staffing level for Fiscal Year 2009 has a decrease of four FTE employees from Fiscal Year
2008. The District has chosen to eliminate four vacant positions in areas have experienced a reduction of work due to slowing of growth.
A projected 8.7% of the labor and benefits costs will be charged to projects included in the
Capital Improvement Program (CIP) and Developer Deposits. These are not considered Operating Projects and therefore reduce the Operating Budget by $1,706,500. The Water Operations Department, with its staff of 71 employees, is responsible for maintaining and
operating the District's facilities.
Administrative Expenses
Administrative Expenses represent 8.9% of the District's total operating costs. A detailed
listing of the Administrative Expenses for Fiscal Year 2009 is shown on page 95. The
reduction of $741,500 in legal expenses due to the completion of several significant cases, as well as, additional reductions in other areas of $305,700 based on the deferral of non-critical
projects, and cost cutting measures lead to this overall reduction of over $1 million in
Administrative Expenses.
Administrative Expenses include such items as memberships, office supplies, staff training,
directors' fees, water conservation programs, safety expenses, and regulatory agencies' fees.
Some of the administrative expenses are more discretionary than others such as insurance or
regulatory fees which are mandatory; whereas the District may be better able to control other
expenses such as training or business meetings to some extent. The safety needs of the District's customers and employees and the compliance with regulatory agencies are of utmost
importance to the District and these costs are considered necessary expenses.
DEPARTMENTAL OPERATING BUDGET
88
DEPARTMENTAL OPERATING BUDGET
Materials and Maintenance
The Materials and Maintenance budget allows the District to provide and improve reliable,
high-quality products, services, and support to its customers.
As the District continues to grow and new facilities are added, additional maintenance and services will be required. This year, there was a 13% decrease due to the following reductions;
a $214,500 reduction in fuel costs despite rising prices because of the discontinued use of a
gasoline powered pump station, a $165,900 reduction in meter cost because of the fewer new
meter sets for new homes, and finally the deferral of non-essential projects and other cost saving measures.
The Water Operations Department implemented an Infrastructure Management System (IMS)
which allows for better maintenance of assets as well as tracking new assets coming on-line,
planning for repair or replacement of assets as well as assessing the condition of the infrastructure. IMS is helping the District to better track and manage the Materials and Maintenance costs.
Performance Measurement Program
The Board of Directors approves the strategic goals and objectives. Departments then incorporate these into their budgets to ensure adequate funds are available to implement these
plans. The District has updated its performance measurement program this fiscal year (See the
plan objective and measures in the department sections that follow) to provide measurable
results of progress on both strategic and key operational goals and objectives. The measures have been developed by comparing key District activities with functional and available operational data that provide reliable feedback on progress. Developed cooperatively with
staff and the help of measurement experts, the measures are designed to be comparable to
measures commonly found in similar industries.
The performance measures focus on “best practice” as applied to the District. Measures are
collected and reviewed quarterly by the Senior Management Team and also reviewed by the
Board at least twice a year. Results are used to set new targets for the following fiscal year and
to hold staff accountable for the current fiscal year.
89
DEPARTMENTAL OPERATING BUDGET
TOTAL DEPARTMENTAL OPERATING BUDGET
Fiscal Year 2009
$28,216,700
Information
Technology and
Strategic Planning
10.0%
Water Operations
41.4%
Board of Directors
.3%General Manager
6.3%
General Expense
2.8%
Administrative
Services
12.9%
Engineering
10.5%
Finance
15.8%
90
FY07 FY09
Actual Budget Estimated Budget
Total Labor Costs 9,571,332$ 10,402,700$ 10,317,566$ 11,175,500$
Benefits
Pension 2,646,045 3,129,500 3,063,318 3,140,400
Employee Assistance Program 7,575 7,500 5,269 7,500
Worker's Compensation 314,130 287,800 358,860 281,100
Health/Dental/Life Insurance 1,614,703 1,669,800 1,909,802 1,934,900
Social Security / Medicare 798,752 904,600 870,316 954,300
Salary Continuation Insurance 71,355 74,900 81,560 87,700
Employee Awards 18,168 - 23,860 -
State Unemployment Insurance 1,304 10,000 26,711 20,000
Vacation / Sick / Holiday / Other Leave 1,745,843 1,911,000 1,991,568 2,063,100
Total Fringe Benefits 7,217,875 7,995,100 8,331,264 8,489,000
Total Labor & Benefits 16,789,207 18,397,800 18,648,830 19,664,500
Less: Non-Operating Labor & Benefits
Labor Costs 943,765 1,192,100 943,249 1,063,800
Fringe Benefits Allocation 557,116 735,600 558,549 642,700
Total WO Allocation 1,500,881 1,927,700 1,501,798 1,706,500
Operating Labor & Benefits 15,288,326 16,470,100 17,147,032 17,958,000
Less: Overhead Allocation Personnel Portion 685,386 865,700 685,011 772,600
Operating Labor & Benefits 14,602,940$ 15,604,400$ 16,462,021$ 17,185,400$
FY08
LABOR & BENEFITS
0
20
40
60
80
100
120
140
160
180
FULL TIME EQUIVALENT (FTE)
COMPARISON BY DEPARTMENT
FY 07-08 6 20 35.75 13 71 27 172.75
FY 08-09 6 20 36.75 13 70 23 168.75
GM ADM FIN IT OPS ENG Total
GM……General Manager
ADM.…Administrative Services
FIN…....Finance
IT…...…Information Technology
& Strategic Planning
OPS…...Water Operations
ENG…..Engineering & Planning
DEV…..Development Services
91
Potable Sewer Recycled
Developer
Reimbursed-
CIP Total
Total Operating Labor Costs 9,374,900$ 266,600$ 470,200$ -$ 10,111,700$
Benefits 7,340,700 179,100 326,500 - 7,846,300
Overhead Allocation-Personnel Portion (1,307,700) 193,600 341,500 - (772,600)
Total Operating Labor & Benefits 15,407,900 639,300 1,138,200 - 17,185,400
Total CIP Labor Costs 602,000$ 74,900$ 147,500$ 239,400$ 1,063,800$
Benefits 363,800 41,400 88,300 149,200 642,700
Overhead Allocation-Personnel Portion 437,200 54,400 107,000 174,000 772,600
Total CIP Labor & Benefits 1,403,000 170,700 342,800 562,600 2,479,100
Total Labor & Benefits 16,810,900 810,000 1,481,000 562,600 19,664,500
LABOR & BENEFITS BY FUND - FISCAL YEAR 2009
LABOR & BENEFITS BY FUND
Potable-Operating Potable-CIP Sewer-Operating
Sewer-CIP Recycle-Operating Recycle-CIP
92
FY 2007 FY 2008 FY 2009
General Manager 666
Total - General Manager Department 6 6 6
FTE 6.00 6.00 6.00
Administrative Services 3 3 3Human Resources 4 5 4
Purchasing 9 9 9
Safety 111Conservation223
Total Administrative Services Department 19 20 20
FTE 19.00 20.00 20.00
Controller and Budgetary Services 7 7 7Treasury and Accounting Services 6 6 6Customer Service 18 19 20Payroll and Accounts Payable 4 4 4
POSITION COUNT BY DEPARTMENT
Total Finance Department 35 36 37
FTE 34.75 35.75 36.75
Information Technology and Strategic Planning Applications 5 5 5
Information Technology Operations 5 4 4Geographic Information Systems 3 4 4
Total IT and Strategic Planning Department 13 13 13
FTE 13.00 13.00 13.00
Operations Management 222
Water System Operations 27 27 28Utility Maintenance/Construction 35 35 33Collection/Treatment/Reclamation Operations 7 7 7
Total Operations Department 71 71 70
FTE 71.00 71.00 70.00
Engineering Management 433Engineering272420
Total Engineering Department 31 27 23
FTE 31.00 27.00 23.00
District Total Position Count 175 173 169
FTE 174.75 172.75 168.75
93
FY 2007 FY 2008 FY 2009
Consultant 0 0 1
Customer Service Field Representative I and II 2 2 2
Customer Service Representative I and II 1 0 0
Water Conservation Intern 0 1 0
Administrative Analyst 0 1 1
County Water Authority Interns 1 1 1
Engineering Intern 111
Total Contract/Temporary Employees 566
CONTRACT / TEMPORARY EMPLOYEES
General Manager
3%
Administrative Services12%
Finance22%
Information Technology and Strategic Planning
8%
Operations41%
Engineering13%
POSITION COUNT BY DEPARTMENT
94
FY 2007 FY 2009 Budget
Actual Budget Estimated Budget Variance %
Director's Fees 18,700$ 48,000$ 24,002$ 40,000$ (8,000) (16.7%)
Travel and Meetings 158,506 270,900 184,690 239,400 (31,500) (11.6%)
Conservation and Outreach 168,831 481,800 286,240 348,000 (133,800) (27.8%)
General Office Expense 344,782 359,400 380,573 364,900 5,500 1.5%
Equipment 902,185 1,018,300 1,013,411 1,052,100 33,800 3.3%
Fees 421,420 382,400 454,063 480,500 98,100 25.7%
Services 2,135,021 3,063,300 2,249,985 2,555,500 (507,800) (16.6%)
Training 97,772 173,100 92,693 167,600 (5,500) (3.2%)
Utilities 12,870 14,000 14,495 15,600 1,600 11.4%
Miscellaneous 212 - 239 150,000 150,000 100.0%
Total 4,260,300 5,811,200 4,700,391 5,413,600 (397,600) (6.8%)
Less: Overhead Allocation (399,944) (505,200) (399,725) (450,800) 54,400 (10.8%)
Subtotal 3,860,356 5,306,000 4,300,666 4,962,800 (343,200) (6.5%)
General Expenses 1,607,300 1,676,300 1,852,927 972,300 (704,000) (42.0%)
Total Administrative Expenses 5,467,656$ 6,982,300$ 6,153,593$ 5,935,100$ (1,047,200)$ (15.0%)
5,867,600$ 7,487,500$ 6,553,318$ 6,385,900$
FY 2008
ADMINISTRATIVE EXPENSES - TOTAL
ADMINISTRATIVE EXPENSES - TOTAL
FY 2009
Services
47.2%
Fees
8.9%
Training
3.1%
Utilities
0.3%
Director's Fees
0.7%Miscellaneous
2.8%Travel and Meetings
4.4%
Conservation and
Outreach
6.4%
General Office Expense
6.8%
Equipment
19.4%
95
FY 2007 FY 2009 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil 418,765$ 597,000$ 508,832$ 382,500$ (214,500) (35.9%)
Meters and Materials 322,038 314,400 344,203 148,500 (165,900) (52.8%)
Fleet Parts and Equipment 159,801 163,100 153,200 164,000 900 0.6%
Infrastructure Equipment and Supplies 726,457 732,500 864,954 667,500 (65,000) (8.9%)
Chemicals 265,909 294,000 227,476 250,000 (44,000) (15.0%)
Safety Equipment 21,579 17,200 21,530 31,300 14,100 82.0%
Laboratory Equipment and Supplies 45,747 37,000 40,004 40,000 3,000 8.1%
Other Materials and Supplies 287,229 236,500 136,554 174,300 (62,200) (26.3%)
Building and Grounds Materials 109,016 122,000 93,735 93,000 (29,000) (23.8%)
Contracted Services 502,890 715,400 485,171 632,800 (82,600) (11.5%)
Materials and Maintenance 2,859,430 3,229,100 2,875,658 2,583,900 (645,200) (20.0%)
Sewer Charges
Metro O&M Costs 617,686 988,800 1,034,276 1,041,900 53,100 5.4%
Spring Valley Sewer Charge 224,105 235,000 202,246 247,000 12,000 5.1%
Total Sewer Charges 841,791 1,223,800 1,236,522 1,288,900 65,100 5.3%
Total Materials and Maintenance 3,701,221$ 4,452,900$ 4,112,180$ 3,872,800$ (580,100)$ (13.0%)
MATERIALS AND MAINTENANCE EXPENSES - TOTAL
FY 2008
MATERIALS AND MAINTENANCE EXPENSES - TOTAL
FY 2009
Sewer Charges
33.3%
Fuel and Oil
9.9%Meters and
Materials
3.8%
Fleet Parts and
Equipment
4.2%
Infrastructure
Equipment and
Supplies
17.3%
Chemicals
6.5%Safety Equipment
0.8%
Laboratory
Equipment and
Supplies
1.0%
Other Materials and
Supplies
4.5%
Building and
Grounds Materials
2.4%
Contracted Services
16.3%
96
FY 2007 FY 2009
Actual Budget Estimated Budget
Departmental Expenditures
BoaBoard of Directors 27,737$ 111,700$ 38,951$ 98,800$
GenGeneral Manager 1,344,001 1,485,500 1,766,341 1,768,800
GenGeneral Expense 1,813,025 1,686,300 2,547,639 784,000
AdmAdministrative Services 3,212,442 3,868,200 3,224,540 3,640,100
FinaFinance 3,783,964 3,994,100 4,023,183 4,471,600
InfoInformation Technology and Strategic Planning 2,371,027 2,705,900 2,666,776 2,819,800
WatWater Operations 9,651,972 11,253,200 10,858,139 11,678,900
EngEngineering (1)2,652,979 3,305,600 2,686,961 2,954,700
Total Departmental Expenditures 24,857,147 28,410,500 27,812,529 28,216,700
Less: Overhead Allocation (1,085,330) (1,370,900) (1,084,736) (1,223,400)
Net Departmental Expenditures 23,771,817 27,039,600 26,727,793 26,993,300
Non-Departmental Expenditures
Water Purchases 27,516,154 30,077,500 28,213,964 31,994,300
Power 2,489,978 2,804,800 2,647,885 2,780,500
Expansion Reserve - 2,590,200 2,590,200 5,016,700
Betterment Reserve - 3,432,900 3,432,900 -
Replacement Reserve 4,540,000 235,400 235,400 277,900
Total Non-Departmental Expenditures 34,546,132 39,140,800 37,120,349 40,069,400
TOTAL OPERATING EXPENDITURES 58,317,949$ 66,180,400$ 63,848,142$ 67,062,700$
(1)Engineering, and Planning and Development Services sections combined in FY2008
FY 2008
OPERATING EXPENDITURES BY DEPARTMENT
97
FY 2007 FY 2009
Actual Budget Estimated Budget
Departmental Expenditures
Labor and Benefits 15,288,326$ 16,470,100$ 17,147,031 17,958,000$
Director's Fees 18,700 48,000 24,002 40,000
Travel and Meetings 158,506 270,900 184,690 239,400
Conservation and Outreach 168,831 481,800 286,240 348,000
General Office Expense 344,783 359,400 380,573 364,900
Equipment 902,185 1,018,300 1,013,411 1,052,100
Fees 2,028,053 2,058,700 2,306,990 1,452,800
Services 2,135,021 3,063,300 2,249,985 2,555,500
Training 97,772 173,100 92,693 167,600
Materials & Maintenance 2,859,430 3,229,100 2,875,658 2,583,900
Power and Utilities 12,870 14,000 14,495 15,600
Sewer Charges 841,791 1,223,800 1,236,522 1,288,900
Miscellaneous 212 - 239 150,000
Interest 667 - - -
Total Departmental Expenditures 24,857,147 28,410,500 27,812,529 28,216,700
Less: Overhead Allocation (1,085,330) (1,370,900) (1,084,736) (1,223,400)
Net Departmental Expenditures 23,771,817 27,039,600 26,727,793 26,993,300
Non-Departmental Expenditures
Water Purchases 27,516,154 30,077,500 28,213,964 31,994,300
Power 2,489,978 2,804,800 2,647,885 2,780,500
Expansion Reserve - 2,590,200 2,590,200 5,016,700
Betterment Reserve - 3,432,900 3,432,900 -
Replacement Reserve 4,540,000 235,400 235,400 277,900
Total Non-Departmental Expenditures 34,546,132 39,140,800 37,120,349 40,069,400
TOTAL OPERATING EXPENDITURES 58,317,949$ 66,180,400$ 63,848,142$ 67,062,700$
FY 2008
OPERATING EXPENDITURES BY OBJECT
98
99
LOWER OTAYRESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKEMURRAY LOVELANDRESERVOIR
OWDHEADQUARTERS
D i v i s i o n 5M a r k R o b a k
D i v i s i o n 5M a r k R o b a k
D i v i s i o n 4J o s e L o p e z
D i v i s i o n 4J o s e L o p e z
D i v i s i o n 1L a r r y B r e i t f e l d e r
D i v i s i o n 1L a r r y B r e i t f e l d e r
D i v i s i o n 2J a m i e B o n i l l a
D i v i s i o n 2J a m i e B o n i l l a
D i v i s i o n 3G a r y C r o u c h e r
D i v i s i o n 3G a r y C r o u c h e r
8
8
805
54
67
94
94
54
125
125
125
905
CITY OFSAN DIEGO
SW
E
E
T
W
A
T
E
R
AU
T
H
O
R
I
T
Y
HELIX WATERDISTRICT
CITY OFSAN DIEGO
OPEN SPACE
OPEN SPACE
MEXICO
CITY OFSAN DIEGO
PADRE DAM MUNICIPALWATER DISTRICT
DISTRICT BOUNDARY
100
FY 2007 FY 2009
Actual Budget Estimated Budget
Board of Directors 27,737$ 111,700$ 38,951$ 98,800$
TOTAL 27,737$ 111,700$ 38,951$ 98,800$
FY 2008
BOARD OF DIRECTORS
FY 2009 Total Departmental Budget - $28.2 Million
Board of Directors - $98,800
Water Operations
41.4%Information
Technology and
Strategic Planning
10.0%
Finance
15.8%
General Manager
6.3%
General Expense
2.8%
Administrative
Services
12.9%
Board of Directors
0.3%
Engineering
10.5%
101
BOARD OF DIRECTORS
FY 2007 FY 2009
Board of Directors Actual Budget Estimated Budget
Benefits 1,671$ 40,000$ 2,148$ 40,000$
Director's Fees 18,700 48,000 24,002 40,000
Travel and Meetings 7,366 23,700 12,751 18,800
Total 27,737$ 111,700$ 38,951$ 98,800$
FY 2008
$156
$58
$88
$33
$92
$28
$112
$39
$99
$-
$50
$100
$150
$200
(i
n
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d
D
o
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l
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s
)
FY05 FY06 FY07 FY08 FY09
Fiscal Year
Budget vs. Actual
Budget Actual
Estimated Adopted
102
103
DISTRICT POSITION COUNT -169
GENERAL MANAGER DEPARTMENT - 6
General Manager
BOARD OF
DIRECTORS
District Secretary
Communications
Officer
Legal
(Contracted)
Personnel Count FY 2007 FY 2008 FY 2009
General Manager 1 1 1
Assistant General Manager, Finance and Administration 1 1 1
Assistant General Manager, Engineering and Operations 1 1 1
District Secretary 1 1 1
Assistant District Secretary 1 1 1
Communications Officer 1 1 1
Total 666
Assistant General Manager,
Finance and Administration
Assistant General Manager,
Engineering and Operations
104
FY 2007 FY 2009
Actual Budget Estimated Budget
General Manager 880,208$ 1,017,400$ 1,029,403$ 1,056,000$
Legal 6,059 - 202,545 178,300
Assistant General Manager, Finance and Administration 241,266 237,200 267,243 272,300
Assistant General Manager, Engineering and Operations 216,468 230,900 267,150 262,200
TOTAL 1,344,001$ 1,485,500$ 1,766,341$ 1,768,800$
FY 2008
GENERAL MANAGER
FY 2009 Total Departmental Budget - $28.2 Million
General Manager - $1,768,800
Water Operations
41.4%
Finance
15.8%
Board of Directors
0.3%
Administrative
Services
12.9%
General Manager
6.3%
General Expense
2.8%
Engineering
10.5%
Information
Technology and
Strategic Planning
10.0%
105
GENERAL MANAGER
FY 2007 FY 2009
Actual Budget Estimated Budget
Labor and Benefits 1,059,362$ 1,098,600$ 1,419,734 1,403,400$
Travel and Meetings 75,924 95,600 76,043 93,500
Conservation and Outreach 2,110 5,000 3,868 7,000
General Office Expense 19,133 8,300 27,033 9,000
Equipment 134 3,000 1,197 3,000
Fees 31,086 32,000 37,699 45,000
Services 156,040 240,500 200,488 207,000
Training - 2,500 40 900
Miscellaneous 212 - 239 -
Total 1,344,001$ 1,485,500$ 1,766,341$ 1,768,800$
FY 2008
$748
$1,550
$1,327 $1,365 $1,404 $1,344 $1,486
$1,766 $1,769
$-
$500
$1,000
$1,500
$2,000
(i
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d
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FY05 FY06 FY07 FY08 FY09
Fiscal Year
Budget vs. Actual Budget Actual
Estimated Adopted
106
TAY WATER DISTRICT AT-A-GLANCE
Accomplishments – Fiscal Year 2007-2008
• Adopted a new five-year Memorandum of Understanding (MOU) with employees of the
Otay Water District.
• Updated and adopted a 2009 through 2011 Strategic Business Plan.
• Adopted a balanced budget for FY 2009 during challenging economic and water supply
conditions.
• Adopted an updated Drought Response Conservation Program.
• Approved a ground lease and joint use agreement with the San Miguel Consolidated Fire Protection District for a Regional Training Center.
• Dedicated the micro-turbine gas-to-energy project. This energy project uses methane gas
created from a closed county landfill to power the District’s recycled water treatment plant.
• Continued to expand working relationships with Mexican counterparts in an effort to develop
new desalination water opportunities in Mexico.
• Maintained and provided potable water, sewer, and recycled water infrastructure that are appropriate to meet current and future needs.
• Provided Leadership within CWA Board in Organization and Water Supply.
• Received numerous awards recognizing the outstanding achievements of the District
including:
o Government Finance Officers Association: Certificate of Achievement for Excellence in Financial Reporting – Comprehensive Annual Financial Report (CAFR) FY 2007/2008;
and the Distinguished Budget Presentation award, Fiscal Year 2007-2008.
o California Society of Municipal Finance Officers: the Excellence in Operating Budgeting
award, Fiscal Year 2007-2008; the Meritorious in Public Communications award, Fiscal Year 2007-2008; the Meritorious in Innovation in Budgeting award, Fiscal Year 2007-2008; and the Excellence in Capital Budgeting award, Fiscal Year 2007-2008.
o Construction Management Association of America: Distinguished Owner Honoree for
2007; and the Client of the Year award for 2007.
o American Society of Civil Engineers – San Diego Section: Outstanding Civil Engineering Project for 2007 (presented in May 2008); and the Award of Merit for the 30-inch in diameter Recycled Water Pipeline, Dairy Mart Road to 450-1 Reservoir.
o Municipal Information Systems Association of California: Excellence in IT Practices
Award for 2006-2007 (presented in April of 2008).
o Certificate of Recognition for Excellence in Energy Conservation for 2008 from San Diego Gas and Electric Company.
GENERAL MANAGER
107
Other Recognition:
o California Assembly Certificate of Recognition presented by Assembly member Joel
Anderson, April 10, 2008. In recognition of using landfill gas to power the Ralph W.
Chapman Water Recycling Facility.
o Golden Watchdog of the Year Award for 2007 from the San Diego County Taxpayers Association 30-inch diameter Recycled Water Pipeline, Dairy Mart Road to 450-1
Reservoir.
108
109
DISTRICT POSITION COUNT -169
ADMINISTRATIVE SERVICES DEPARTMENT -20
Personnel Count FY 2007 FY 2008 FY 2009
Chief, Administrative Services 1 1 1
Confidential Secretary 1 2 2
Office Assistant 1 0 0
Human Resources Manager 1 1 1
Senior Human Resources Analyst 1 1 1
Human Resources Analyst 1 2 1
Human Resources Technician 1 1 1
Purchasing & Facilities Manager 1 1 1
Buyer I and II 1 2 2
Assistant Buyer 1 0 0
Lead Warehouse Worker 1 0 0
Lead Warehouse Worker / Facilities Worker 0 1 1
Warehouse / Delivery Worker 2 2 2
Warehouse Assistant (PT)0 0 0
Facilities Maintenance Technician 2 2 2
Facilities Maintenance Assistant 1 1 1
Safety & Security Administrator 1 1 1
Water Conservation Manager 1 1 1
Water Conservation Specialist 1 1 2
Total 19 20 20
110
Department Responsibilities
FY 2007 FY 2009
Actual Budget Estimated Budget
Administrative Chief 302,854$ 370,700$ 366,778$ 397,400$
Human Resources 863,138 941,000 693,278 799,400
Purchasing and Facilities 1,399,735 1,586,600 1,417,751 1,520,300
Safety and Security 238,666 226,600 188,515 217,400
Water Conservation 408,049 743,300 558,218 705,600
TOTAL 3,212,442$ 3,868,200$ 3,224,540$ 3,640,100$
FY 2008
ADMINISTRATIVE SERVICES
The Administrative Services Department, under the general direction of the Assistant General Manager, provides the
following support services: Human Resources, Purchasing and Facilities, Safety and Risk Administration, and Water
Conservation. It also coordinates assigned activities with other District departments and outside agencies, and provides
highly responsible and complex administrative support for the District, General Manager and Board of Directors.
FY 2009 Total Departmental Budget - $28.2Million
Administrative Services - $3,640,100
Information
Technology and
Strategic Planning
10.0%
Engineering
10.5%General Expense
2.8%
General Manager
6.3%
Administrative
Services
12.9%
Board of Directors
0.3%
Finance
15.8%
Water Operations
41.4%
111
ADMINISTRATIVE SERVICES
FY 2007 FY 2009
Actual Budget Estimated Budget
Labor and Benefits 1,815,729$ 2,052,800$ 1,990,684 2,226,600$
Travel and Meetings 12,525 23,800 25,314 21,700
Conservation and Outreach 166,721 476,800 282,372 341,000
General Office Expense 113,525 115,400 125,918 132,800
Equipment 113,626 111,000 93,824 94,600
Fees 5,451 7,500 8,564 7,500
Services 520,185 446,400 293,482 330,600
Training 72,629 126,600 80,557 126,400
Materials & Maintenance 379,181 493,900 309,330 343,300
Power and Utilities 12,870 14,000 14,495 15,600
Total 3,212,442$ 3,868,200$ 3,224,540$ 3,640,100$
FY 2008
$2,971
$2,627 $2,789 $2,850
$3,316 $3,212
$3,868
$3,225
$3,640
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
(i
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)
FY05 FY06 FY07 FY08 FY09
Fiscal Year
Budget vs. Actual
Budget Actual
Estimated Adopted
112
Strategy: Educate our customers on important water related matters.
Goal: Expand the District’s Water Conservation Programs to maximize District-wide
water conservation. Objectives:
1.2.1.1 Promote and encourage adoption of conservation practices
for new construction within District service territory.
1.2.1.2 Participate in the revision of the 14 water conservation Best
Management Practices and prepare to implement those that
are locally cost-effective.
Goal: Maximize recycled water use and public knowledge.
Strategy: Help shape the water industry’s direction.
Goal: Legislative and political influence for District programs.
Objectives:
1.3.1.1 Continue to actively participate in County Water Authority, Metropolitan Water District of Southern California, state
policy making and pending legislative review and
comment.
1.3.1.2 Promote enhancements to city, county and state water
conservation requirements and implement appropriate
BMPs (political side). Goal: Optimize the District’s water industry participation.
Scorecard Customer
Goals and Objectives – Fiscal Year 2008-2009
ADMINISTRATIVE SERVICES – BALANCED SCORECARD
113
Strategy: Maximize our customer’s satisfaction.
Goal: Effectively use multi-channel communications.
Objectives:
1.1.2.7 Written publications – develop and effective program for
producing new customer communications, including drought related communication. Evaluate bi-lingual options. 1.1.2.8 Develop a comprehensive community outreach plan and
materials to target specific community stakeholders with
additional information or presentations on drought, recycled water, and water conservation. Goal: Listen to our customers
Objective:
1.1.1.1 Capture customers’ attitude and awareness through a
repeatable customer survey program.
Strategy: Develop a long-term financial planning program.
Goal: Conduct financial threat assessment for growth, water availability, inflation and
other revenue sources.
Goal: Establish a long-term (15 year) financial plan including scenarios and contingencies for changes in demographics, local economy, and drought
uncertainties.
Objective:
2.1.1.1 Facilities and staffing plan needs.
Goal: Recalculate all capacity and annexation fees with new rehabilitation and repair
program.
Strategy: Optimize all revenue streams.
Goal: Modify existing rate structures.
Strategy: Implement industry best practices for utility development.
Objective:
3.1.1.2 Update District’s Drought Management Plan including
actions for enforcement.
Scorecard Financial
Scorecard Business Processes
114
Goal: Recycled water.
Goal: Sewers.
Strategy: Improve financial analysis and reporting.
Goal: Improve cost per unit reporting.
Goal: Improve the efficiency and effectiveness of District-wide reporting.
Strategy: Optimize the District’s operation efficiency.
Goal: Improve the efficiency of business processes.
Objectives:
3.2.5.2 Evaluate web-based employee performance reviews.
3.2.5.5 Automate application process.
Goal: Increase productivity through improved field efficiency.
Goal: Minimize the District’s total life cycle asset costs.
Goal: Optimize disaster preparedness.
Objectives:
3.2.6.1 Review/consolidate the District’s Disaster Preparedness Program.
3.2.6.2 Update security assessment and implement technology recommendations.
3.2.6.3 Evaluate and make recommendations regarding Environmental Health, Emergency Preparedness, and Safety Management System.
Goal: Optimize the use of existing technologies.
Goal: Update the District’s IT Strategic Plan.
Scorecard Learning and Growth
Strategy: Results oriented workforce.
Goal: Community Involvement/District outreach.
Objective:
4.1.7.1 Optimize community involvement throughout the District.
Goal: Hire the “best.”
Objectives:
4.1.2.1 Review and update classification plan and revise critical
areas. 4.1.2.2 Review and revise marketing strategy and recruiting tools.
Goal: Knowledge Management.
115
Goal: Performance Management.
Objective:
4.1.5.1 Update and expand annual review process to include
greater emphasis of the Strategic Plan objectives and
performance measures and understanding of career goals
and how they may relate to the District’s Succession Plan.
Goal: Retain dedicated workforce.
Objectives:
4.1.1.1 Evaluate effective communication tools throughout the
Organization.
4.1.1.2 Evaluate the Pay-for-Performance program.
4.1.1.3 Evaluate the Employee Recognition program.
4.1.1.4 Access findings of 2008 employee survey.
4.1.1.5 Conduct employee survey.
Goal: Staff Development.
Objectives:
4.1.3.1 Develop and identify required and desired District-wide
training for all classifications. 4.1.3.2 Develop and maintain a formal program to track employee
training.
Goal: Workforce Management.
Objective:
4.1.4.1 Identify core elements of Succession Planning that can be
tailored to the District’s needs.
Note: See pages 8-12 for the entire Balanced Scorecard presentation and explanation of the Performance
Measures.
116
ADMINISTRATIVE SERVICESADMINISTRATIVE SERVICES
PERFORMANCE MEASURES
Fiscal Year 2007-2008
Tt At l
Fiscal Year
2005-2006
Actual
Strategic Plan FY 2006-2008
Fiscal Year
2006-2007
Actual
Fiscal Year 2007-2008
Activity/Criterion
Target Actual
N/A 47.0% 50.0% 44.0%
N/A 90.0% 90.0% 93.0%
Actual Actual
Garden Awareness - measures the customer awareness of the
garden
Customer Satisfaction - measures the level of overall customer
satisfaction with the District
N/A 5 per year
(cumulative)
5 per year
(cumulative)100.0%
N/A 1.0 90.0% above 100.0%
Public Relations Plan Execution - measures implemetation of
public outreaches, 50th anniversary, and recycled water outreach
plans
Industry Papers and Publications - measures the number of
industry papers and presentations to industry
16.9% 16.1%
15% or
Greater 16.6%
99.8% 99.8% 97.0% 99.9%
94.0% 88.0% 100.0% 102.0%
Blanket Order Activity - percentage of material purchases
purchased via blanket purchase order
Inventory Accuracy - actual/recorded inventory
Total Water Saved - estimate of water saved per year through
conservation programs (voucher programs and landscape
N/A 11.0 per
quarter
9.3 per
quarter 43.7%Training Hours per Employee - measures the quantity of formal
training utility employees are actually completing
pg ( pg p
surveys)
117
99%13 6%10% per year 31%Turnover Rate - annual percentage of voluntary terminations 9.9%13.6%10% per year 3.1%
100.0% 95.7% 90.0% 93.0%
N/A 100%
19 per
171 0%
(excludes retirement)
Time to Fill - number of recruitments on time/total number of
recruitments
Safety Training Program - a minimum of 8 safety training
programs of which 90% of field employees attend. Supervision N/A 100%quarter
(cumulative)
171.0%
61054 or less per
year 142.5%
Greater than
pg % py p
will be required to ensure that their staff has attended the classes
as provided and track their employee's status.
H&S Severity Rate - quantifies the rate of employee days lost
from work due to illness or injury
Service Connections per FTE ratio of number of customers to 274 276.3%
Greater than
217 280.8%
** I D
Fiscal Year
Service Connections per FTE - ratio of number of customers to
Full -Time Equivalent
Strategic Plan FY 2009-2011
** I.D.
Number
Fiscal Year
2008-2009
Target
1.1.1 90.0%
Activity/Criterion
Customer Satisfaction - Measures the level of overall customer satisfaction with the District.
Survey is conducted on an annual basis. Formation of survey begins in Q1. Actual survey
measures calendar year (January-December). Currently reported quarterly.
1.3.2 120.0%
1.4.3 54.5%
1.4.4 8.0%Turnover Rate - Annual number of voluntary terminations (excludes retirement)
Training Hours Per Employee Measures the quantity of formal training utility employees are
Total Water Saved - Estimate of water saved per year through conservation programs
H&S Severity Rate - Quantifies the rate of employee days lost from work due to illness or
injury
1.4.5 37.4%
1.2.44 15.0%
Training Hours Per Employee - Measures the quantity of formal training utility employees are
actually completing. This indicator is expressed as the number of formal training hours per
employee per year.
Blanket Order Activity - Percentage of material purchases acquired via blanket POs
** See the Balanced Scorecard on pages 8-12 to locate individual performance measures.
118
Accomplishments – Fiscal Year 2007-2008
Human Resources
• Implemented a five-year labor agreement which included executing the results of
a District-wide compensation study, updating Employee Handbooks, and training
all employees regarding the changes.
• Facilitated a smooth transition of health, dental, life, and flexible benefits carriers
ensuring that all employees and retirees were well informed of the changes. This
was done by providing assistance, written communication materials, employee
informational meetings, and answering employee questions. • Conducted a Request for Proposal (RFP) process to obtain the services of a
consultant to develop a repeatable employee survey program. Worked with the
consultant to draft a comprehensive employee survey, administered the survey,
and the consultant compiled the results which will be presented in FY09.
• Coordinated and received all credit for the Special District Risk Management
Association Credit Incentive Program. The credit totaled $96,466 for Property
and Liability and Workers’ Compensation premiums.
• Researched and implemented a District-wide Employee Wellness Program.
Water Conservation
• Funded over 160,000 square-feet of artificial turf (two football fields) at two high
schools within the District; in part through a grant from the U.S. Bureau of
Reclamation.
• Funded 32 residential Smart Controllers rebates through our pilot rebate program
and 73 through the commercial smart landscape voucher program
• Funded the removal of turf grass with over 24,000 square feet of artificial turf grass at single-family homes in the last three months of the fiscal year.
• Funded 1,546 residential clothes washer vouchers, a new programmatic high since the program began in 1994.
• Conducted over 70 residential water use surveys.
• Funded large landscape audits involving over 28 acres of irrigated landscape.
• Increased the District's annual active water conservation savings figure another 158 acre-feet to 1,403 acre-feet of water saved due to many of the activities
outlined above.
ADMINISTRATIVE SERVICES
119
Purchasing
• Completed inventory of minor asset tracking using Radio Frequency
Identification (RFID).
• Implemented upgrades to heating, ventilating, and air conditioning (HVAC)
systems.
• Assisted IT in creating the CO-LO data center in Operations. This is a back-up
data center to accommodate disaster recovery in the event that our primary system
is disabled.
• Developed an outline for Long-term Facilities and Space Planning.
Safety and Security
• Implemented and coordinated an Emergency Operations Center (EOC) for
Firestorm 2007. Debriefed activities of the EOC and implemented
recommendations.
• Restored Habitat Management Area damaged by Firestorm 2007.
• Updated the CalARP Program for the Treatment Plant-Risk Management Program (RMP), Process Safety Management (PSM), and Seismic Analysis.
• Hazwooper Team – Updated training requirements, medical certificates, equipment inventory, and team organization.
120
121
DISTRICT POSITION COUNT -169
FINANCE DEPARTMENT - 37
Personnel Count FY 2007 FY 2008 FY 2009
Chief Financial Officer 1 1 1
Executive Secretary 1 1 1
Secretary (Part-Time)0 1 1
Finance Manager, Treasury and Accounting 1 1 1
Finance Manager, Controller and Budget 1 1 1
Finance Supervisor, Payroll and A/P 1 1 1
Customer Service Manager 1 1 1
Customer Service Supervisor 1 1 2
Senior Accountant 4 4 4
Accountant 4 4 4
Payroll Technician 1 1 1
Accounting Assistant 2 2 2
Senior Customer Service Representative 0 2 2
Customer Service Representative I, II and III 9 8 8
Lead Customer Service Field Representative 1 1 1
Customer Service Field Representative I and II 6 6 6
Office Assistant 0 0 0
Office Assistant (Part-Time)1 0 0
Total 35 36 37
122
Department Responsibilities
FY 2007 FY 2009
Actual Budget Estimated Budget
Finance Chief 371,435$ 405,800$ 399,060$ 421,600$
Controller and Budgetary Services 462,186 479,000 491,969 545,100
Treasury and Accounting Services 816,050 891,500 965,988 1,005,200
Customer Service 1,804,777 1,869,400 1,811,273 2,105,400
Payroll and Accounts Payable 329,516 348,400 354,893 394,300
TOTAL 3,783,964$ 3,994,100$ 4,023,183$ 4,471,600$
FY 2008
FINANCE
The Finance and Accounting Department, under the general direction of the Assistant General Manager, provides the
following support services: Controller and Budgetary Services, Treasury and Accounting Services, Customer Service, and
Payroll and Accounts Payable; ensures District’s conformance with modern finance and accounting theory, practices, and
compliance with applicable state and federal laws; implements financial accounting and reporting programs and practices to
meet the District’s fiduciary responsibilities; and provides highly responsible and complex administrative support to the
District, General Manager, and Board of Directors.
FY 2009 Total Departmental Budget - $28.2 Million
Finance - $4,471,600
Water Operations
41.4%
Finance
15.8%
Board of Directors
0.3%
Administrative
Services
12.9%
General Manager
6.3%
General Expense
2.8%
Engineering
10.5%
Information
Technology and
Strategic Planning
10.0%
123
FINANCE
FY 2007 FY 2009
Actual Budget Estimated Budget
Labor and Benefits 3,088,034$ 3,320,300$ 3,347,617$ 3,762,300$
Travel and Meetings 17,381 26,900 15,521 19,900
General Office Expense 190,826 198,600 205,088 196,800
Equipment 1,422 1,600 2,627 8,600
Fees 325,440 244,000 292,138 280,000
Services 160,861 202,700 160,192 203,500
Total 3,783,964$ 3,994,100$ 4,023,183$ 4,471,600$
FY 2008
$3,129 $3,453 $3,475 $3,567
$3,813 $3,784 $3,994 $4,023
$4,472
$-
$1,000
$2,000
$3,000
$4,000
$5,000
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Fiscal Year
Budget vs. Actual
Budget Actual
Estimated Adopted
124
Strategy: Educate our customers on important water related matters.
Goal: Expand the District’s Water Conservation Programs to maximize District-wide water conservation. Goal: Maximize recycled water use and public knowledge. Strategy: Help shape the water industry’s direction.
Goal: Legislative and political influence for District programs. Goal: Optimize the District’s water industry participation.
Strategy: Maximize our customer’s satisfaction. Goal: Effectively use multi-channel communications.
Objectives:
1.1.2.1 Incoming calls – streamline and document the District’s incoming customer call processes. 1.1.2.6 Evaluate the most cost effective and efficient processes and tools to communicate service related issues to custom- ers. For example: email, target mail, door hanger, etc.
Goal: Listen to our customers.
Objective:
1.1.1.2 Expand a more detailed customer complaint tracking and
reporting system.
Scorecard Customer
Goals and Objectives – Fiscal Year 2008-2009
FINANCE – BALANCED SCORECARD
125
Strategy: Develop a long-term financial planning program.
Goal: Conduct financial threat assessment for growth, water availability, inflation and
other revenue sources.
Objective:
2.1.2 Conduct financial threat assessment for growth, water
availability, inflation and other revenue sources.
Goal: Establish a long-term (15 year) financial plan including scenarios and
contingencies for changes in demographics, local economy, and drought
uncertainties.
Objective:
2.2.1.2 Develop the long-term financial plan.
Goal: Recalculate all capacity and annexation fees with new rehabilitation and repair
program.
Objective:
2.1.3 Recalculate all capacity and annexation fees with new
rehabilitation and repair program.
Strategy: Optimize all revenue streams.
Goal: Modify existing rate structures.
Objectives:
2.2.1.1 Simplify residential fee structures and the billing system. 2.2.1.2 Reduce complexity of and simplify rate structure. 2.2.1.3 Evaluate drought stage rates and propose changes.
2.2.1.4 Evaluate and improve effectiveness of bill.
Strategy: Implement industry best practices for utility development.
Goal: Potable water. Goal: Recycled water.
Goal: Sewers.
Strategy: Improve financial analysis and reporting.
Goal: Improve cost per unit reporting.
Objective:
3.3.1.1 Develop and measure cost per unit expenditures and
forecasts.
Scorecard Financial
Scorecard Business Processes
126
Goal: Improve the efficiency and effectiveness of District-wide reporting.
Strategy: Optimize the District’s operation efficiency.
Goal: Improve the efficiency of business processes.
Objective:
3.2.5.3 Enhance A/P to electronically pay bills for frequent
vendors and routine bills and maximize the use of e-bills.
Goal: Increase productivity through improved field efficiency.
Goal: Minimize the District’s total life cycle asset costs.
Goal: Optimize disaster preparedness.
Goal: Optimize the use of existing technologies.
Objective:
3.2.3.3 Evaluate implementing a fixed network Automated Meter
Reading.
Goal: Update the District’s IT Strategic Plan.
Scorecard Learning and Growth
Strategy: Results oriented workforce.
Goal: Community Involvement/District outreach.
Goal: Hire the “best.” Goal: Knowledge Management.
Goal: Performance Management. Goal: Retain dedicated workforce.
Goal: Staff Development.
Goal: Workforce Management.
Note: See pages 8-12 for the entire Balanced Scorecard presentation and explanation of the Performance
Measures
127
FINANCE
PERFORMANCE MEASURES
Fiscal Year 2007-2008
Target Actual
Fiscal Year
2006-2007
Actual
Fiscal Year
2005-2006
Actual
Strategic Plan FY 2006-2008
Fiscal Year 2007-2008
Activity/Criterion
g
17.8% 21.0%
20.0% of
total number
of payments
29.8%
N/A $50 $55 $52
Alternative Payments - number of non-traditional payments
Customer Service Cost per Account (QualServe) - measures the
amount of resources a utility applies to its customer service
100.0% 100.0% 100.0% 99.9%
94.3% 96.0%
97.0% or
Greater 96.1%Answer Rate - percentage of calls as a measure of all calls
received
Meter Reading Accuracy - number of misreads/total number of
meter reads
program
Greater
0.03% 0.01%
Less than
0.5%
Less than
0.01%
N/A 0.1% .20% or less 0.1%
Write-Offs - write-offs over water sales per month
received
Debt Coverage Ratio - measures level of debt service
N/A 100.0% 100.0% 100.0%
N/A 9.7% 9.3% 14.5%Billing Accuracy - number of incorrect bills reissued or adjusted
Reserve Level - measures the District's reserve levels against the
plan
128
N/A 39 0%
Less than 33 0%
Water Rate Ranking - District's average customer bill as N/A 39.0%Less than
50.0%33.0%
63.0% 50.0%
Less than
50.0%46.6%
83.0% 100.1%
Meet or
exceed 100% 105.4%Return on Investments - average rate of return on investments
Sewer Rate Ranking - District's average customer bill as
compared to other agencies in San Diego County
gg
compared to other agencies in San Diego County
of LAIF
70.7% 153.0%
Less than
100.0%102.3%
$408 per
customer
$433 per
customer
$387 per
customer $479O&M Cost per Account - operation cost for O&M per account
(per customer)
Overtime Percentage - comparing actual to budgeted overtime to
monitor costs
g
customer customer customer
N/A 89.0% of meters
in ground
75.0% of
meters in
ground
82.0%
6.0% 3.6% 5% or less 2.7%Unaccounted for Water Loss - percentage for unaccounted water
Automatic Meter Reading Program (AMR) - percentage of AMR
with radio reads used for billing
(pe cus o e )
N/A 30.7% 4.5% 0.0%
System Renewal/Replacement Rate - this indicator quantifies the
rate at which the utility is meeting its individual need for
infrastructure renewal and replacement
** I.D.
Number
Fiscal Year 2008-
2009 TargetActivity/Criterion
Strategic Plan FY 2009-2011
3.1.20 97.0%
3.2.11 $436 per
customer
3.2.13 99.8%Billing Accuracy (QualServe) - Number of incorrect bills issued
O&M Cost per Account (QualServe) - operation cost for O&M per account (per customer)
Answer Rate - percentage of calls as a measure of all calls received
3.2.14 100.0%
3.2.15 50.0%Sewer Rate Ranking - District's average customer bill as compared to other agencies in San Diego
County
Overtime Percentage - comparing actual to budgeted overtime to monitor costs
129
Water Rate Ranking -District's average customer bill as compared to other agencies in San Diego3.2.16 50.0%
3.2.17 168.0%
3218 100 0%
Debt Coverage Ratio (QualServe) - measures level of debt service
Water Rate Ranking Districts average customer bill as compared to other agencies in San Diego
County
Reserve Level -Measures all of the District's reserve levels against the plan3.2.18 100.0%
3.3.12 3.0%
3.3.19 24.7
Reserve Level Measures all of the Districts reserve levels against the plan
Distribution System Loss (QualServe) - Percentage for unaccounted water
System Renewal/Replacement Rate (QualServe) - This indicator quantifies the rate at which the
utility is meeting its individual need for infrastructure renewal and replacement
Measures.
** See pages 8-12 for the entire Balanced Scorecard presentation and explanation of the Performance
130
Accomplishments 2007-2008
Controller and Budgetary Services
• Prepared a balanced budget that met the Strategic Plan and received the
Government Finance Officers Association (GFOA) “Distinguished Budget Presentation Award” for the fourth consecutive year and in addition, received
three awards from the California Society of Municipal Finance Officers (CSMFO)
for “Excellence in Operating Budgeting,” “Meritorious in Public
Communications,” and “Meritorious in Innovation in Budgeting.”
• The Capital Improvement Program (CIP) Budget received the “Excellence in
Capital Budgeting Award” from the CSMFO for the third year in a row.
• Developed a Budget-at-a-Glance document to be used by Board members and management staff at public outreach events.
• Two new financial reports were developed, as part of the Strategic Plan, to enhance financial reporting, and automate reports and processes to improve efficiency. The first is the series of revenue reports and the second is an
automated Water Loss report.
• Designed and implemented a new sewer billing methodology along with a water and sewer bill calculator for customers to use on the District's website
to estimate their bill using a new set of rates.
Treasury and Accounting Services
• Received the GFOA award for Excellence in Financial Reporting 2006-07, for our
Comprehensive Annual Financial Report (CAFR), for the fourth consecutive year.
• Maintained the investment portfolio to consistently achieve a monthly return that
exceeds that of LAIF (benchmark).
• Set up an OPEB account with CALPers for retired employee health care benefits,
to include the initial funding authorized by the Board and the FY-08 Annual
Required Contribution (ARC).
• Completed a review of major assets for insurance with SDRMA, eliminating
duplicate entries and disposed assets, and updating service capacity and current
replacement costs.
• October 2007 wildfires: Worked with FEMA and the State Office of Emergency
Services (OES) to obtain disaster assistance funding for costs/losses incurred due
FINANCE
131
to the fires. Also billed Ramona & Fallbrook for assistance provided by the District. Total reimbursements received: $54,990.
• Reconciled the US/Mexico Interconnection account to assist in the billing and collection of $740,000, as a part of the renewal of the contract with Mexico.
Customer Service
• Implemented an auto-dialer which eliminated the need for charging a contact fee and resulted in a reduction of staff time by 40 hours per month. In addition, using
the auto-dialer to contact customers has resulted in a 90% contact rate up from
30% last year.
• Eliminated manual tagging with fees to customers for non-payment and replaced
it with postcard mailings with no fees. This saved 10 hours of staff time per week
with annual savings to customers of $72,000.
• Installed 4,409 AMR meters this year which continues to save many hours of
meter reading every month.
• Completed a review of meter reading routes and then changed or modified them to increase efficiency. This also resulted in the addition of another meter reading
route to even out the workload.
• Modified the dates for customers using auto-pay by increasing payment options from 2 days per month to 5 days per month to ensure customer accounts were
debited closer to their billing due date. This change positively affected over 2,000
customers.
• Restructured off-site payment center responsibilities which resulted in saving 6
hours per month of staff time.
• Increased overall customer satisfaction by 15% as measured by the survey results.
• Implemented auto-dialer calls to alert customers with higher than normal
consumption with options to curb usage or check for possible leaks.
• Simplified the billing fees which support our billing rate structure and in the
process eliminated over 40 fees which resulted in a faster bill processing time.
• Moving toward the one call customer resolution per issue, customers reported
making 1.6 calls per issue this year as opposed to 1.8 in 2006. The percentage of
customers with unresolved issues was only 7% this year down from 13% in 2006.
• Shifted the responsibility of routine billing functions from IT to Customer Service
which resulted in greater control and tighter management capabilities.
• Extensive laptop training yielded greater efficiency in work done by field representatives.
132
Payroll and Accounts Payable
• Completed bi-weekly payroll and weekly account payable check runs in a timely manner. While these processes are routine, they are highly visible and sensitive to employees and vendors.
• Completed quarterly tax returns for the District which culminated with the processing, printing, and distributing of W2s and 1099s for 2007.
• Implemented new MOU changes for healthcare coverage and insurance plans.
• Automated bi-weekly direct deposits pay check copies for employees. Instead of
employees receiving a hard copy the copies are being emailed saving both time
and money.
133
134
STRATEGIC PLANNING DEPARTMENT - 13
DISTRICT POSITION COUNT -169
INFORMATION TECHNOLOGY AND
Personnel Count FY 2007 FY 2008 FY 2009
Chief Information Officer 1 1 1
GIS Manager 0 1 1
GIS Supervisor 1 0 0
IT Operations Manager 0 1 1
IT Operations Supervisor 1 0 0
GIS Programmer/Analyst 0 1 1
GIS Technician 2 2 2
Computer Systems Administrator 1 0 0
Network Engineer 0 1 1
Database Administrator 1 1 1
Business System Analyst I and II 3 3 3
Network Analyst 1 1 1
Records Assistant 1 1 1
Program and Systems Support Analyst 1 0 0
Total 13 13 13
135
Department Responsibilities
FY 2007 FY 2009
Actual Budget Estimated Budget
IT Chief/Applications 663,364$ 800,800$ 826,727$ 878,000$
IT Operations 1,405,784 1,370,600 1,315,667 1,378,300
Geographic Information System 301,878 534,500 524,382 563,500
TOTAL 2,371,027$ 2,705,900$ 2,666,776$ 2,819,800$
FY 2008
INFORMATION TECHNOLOGY AND STRATEGIC PLANNING
The Information Technology and Strategic Planning Department, under the general direction of the Assistant
General Manager, provides the following support services: development and implementation of information
technology; District’s Strategic Planning Process, including the development of long-term strategic initiatives,
and defining performance measurement metrics; information system support to the District and provides highly
responsible and complex administrative support to the District, General Manager, and Board of Directors.
FY 2009 Total Departmental Budget - $28.2 Million
Information Technology and Strategic Planning - $2,819,800
Water Operations
41.4%
Finance
15.8%
Board of Directors
0.3%
Administrative
Services
12.9%
General Manager
6.3%
General Expense
2.8%
Engineering
10.5%
Information
Technology and
Strategic Planning
10.0%
136
INFORMATION TECHNOLOGY AND STRATEGIC PLANNING
FY 2007 FY 2009
Actual Budget Estimated Budget
Labor and Benefits 1,233,518$ 1,572,400$ 1,558,653$ 1,693,100$
Travel and Meetings 10,716 19,400 7,366 18,100
General Office Expense 6,613 10,000 6,732 6,800
Equipment 718,690 825,900 871,909 862,600
Services 382,713 249,700 215,174 213,500
Training 18,776 28,500 6,942 25,700
Total 2,371,027$ 2,705,900$ 2,666,776$ 2,819,800$
FY 2008
$1,862 $1,797
$2,328 $2,297
$2,655
$2,371
$2,706 $2,667 $2,820
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
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Budget vs. Actual
Budget Actual
AdoptedEstimated
137
Strategy: Educate our customers on important water related matters.
Goal: Expand the District’s Water Conservation Programs to maximize District-wide water conservation.
Goal: Maximize recycled water use and public knowledge.
Strategy: Help shape the water industry’s direction.
Goal: Legislative and political influence for District programs.
Goal: Optimize the District’s water industry participation.
Objectives:
1.3.2.1 Promote and encourage leadership opportunities for District staff in water industry committees.
1.3.2.2 Evaluate and implement American Water Works Peer Review for the District.
Strategy: Maximize our customers’ satisfaction.
Goal: Effectively use multi-channel communications.
Objectives:
1.1.2.2 Interactive voice response – enhance the usefulness of the Interactive Voice Response for better customer service
across the District.
1.1.2.3 Auto dialer – Enhance the usefulness of the Auto dialer to efficiently notify customers of District events.
1.1.2.4 Web page – Evaluate and enhance the District’s web site design to allow easier use and navigation.
Scorecard Customer
Goals and Objectives – Fiscal Year 2008-2009
IT – BALANCED SCORECARD
138
1.1.2.5 E-customer account – Enhance the customer’s ease of access to personalized account information including water
use, payment status and historical trending.
Goal: Listen to our customers.
Strategy: Develop a long-term financial planning program.
Goal: Conduct financial threat assessment for growth, water availability, inflation and
other revenue sources.
Goal: Establish a long-term (15 year) financial plan including scenarios and
contingencies for changes in demographics, local economy, and drought
uncertainties.
Goal: Recalculate all capacity and annexation fees with new rehabilitation and repair program.
Strategy: Optimize all revenue streams.
Goal: Modify existing rate structures.
Strategy: Implement industry best practices for utility development.
Goal: Potable water.
Goal: Recycled water.
Goal: Sewers.
Strategy: Improve financial analysis and reporting.
Goal: Improve cost per unit reporting.
Goal: Improve the efficiency and effectiveness of District-wide reporting.
Objective:
3.3.2.1 Utilize SCADA to calibrate water model.
Strategy: Optimize the District’s operation efficiency.
Goal: Improve the efficiency of business processes.
Objective:
3.2.5.1 Investigate using electronic signatures on staff reports,
shutdowns, contracts, magazines, newsletters,
reimbursements, project closeouts, etc.
Goal: Increase productivity through improved field efficiency.
Goal: Minimize the District’s total life cycle asset costs.
Goal: Optimize disaster preparedness.
Scorecard Financial
Scorecard Business Processes
139
Goal: Optimize the use of existing technologies.
Objectives:
3.2.3.2 Optimize use of Voiceover Internet Protocol and unified
messaging.
3.2.3.4 Optimize the use of SharePoint.
3.2.3.5 Develop optimized field use processing using integrated
technology.
3.2.3.6 Assess and implement security best practices for all Otay
networks.
Goal: Update the District’s IT Strategic Plan.
Objectives:
3.2.2.1 Evaluate the long-term viability of Eden financials and
billing system.
3.2.2.2 Enhance the integration of the Infrastructure Management
System, Eden, Customer Information System, Supervisory
Control and Data Acquisition, Geographic Information
System (GIS).
3.2.2.3 Enhance existing Capital Project tracking system.
3.2.2.4 Enhance the District’s data management, data update
process and data architecture including enterprise standard
data. Update process for ensuring GIS data is accurate.
3.2.2.5 Develop and employ the field wireless network for key
facilities.
Scorecard Learning and Growth
Strategy: Results oriented workforce.
Goal: Community Involvement/District outreach.
Goal: Hire the “best.”
Goal: Knowledge Management.
Objectives:
4.1.6.1 Update District-wide Record Management Program.
4.1.6.2 Develop information systems support for Asset
Management Program.
Goal: Performance Management.
Goal: Retain dedicated workforce.
Goal: Staff Development.
Goal: Workforce Management.
Note: See pages 8-12 for the entire Balanced Scorecard presentation and explanation of the Performance
measures.
140
INFORMATION TECHNOLOGY AND STRATEGIC PLANNINGINFORMATION TECHNOLOGY AND STRATEGIC PLANNING
PERFORMANCE MEASURES
Fiscal Year 2007-2008
Fiscal Year
Strategic Plan FY 2006-2008
Fiscal Year 2007-2008Fiscal Year
Target Actual
N/A 27 24 or above 28
2006-2007
Actual
Organizational Best Practices Index (QualServe) - summarizes
the implementation of management programs or practices
Activity/Criterion 2005-2006
Actual
N/A 24,616 per
month
20,000 per
month
24,961 per
month
97.0% 96.0% 90.0% 93.0%
87.7% 90.9% 90.0% 91.6%
IT Help Request - percentage of help requests resolved by due
dt
Web Site Hits - tracks the number of web site hits
Strategic Plan Goals - percentage of Strategic Plan Goals on
track
99.4% 99.0% 99.0% 99.0%
95.0% 91.0% 90.0% 91.0%
date
Network - total operational network time per year
GIS Accuracy - how quickly do additions to our infrastructure
get updated in the GIS system
141
Strategic Plan FY 2009-2011
** I.D.
Number
Fiscal Year
2008-2009
Target
4.1.23 77
Activity/Criterion
Customer Satisfaction with web site - tracks customer satisfaction with web site through
survey
g
4.3.25 99.0%
4.4.24 11,000 per
month
Network Availability - Percent of up time for network during normal business hours
Web Site Hits - tracks the number of web site hits per month
Measures.
** See pages 8-12 for the entire Balanced Scorecard presentation and explanation of the Performance
142
Accomplishments – Fiscal Year 2007-2008
Strategic Planning and Applications
• Developed the FY09-FY11 Strategic Plan in conjunction with the entire senior
team.
• A multi-year capital project (2003-2008) installing an Enterprise Resource Planning system (ERP) has been completed. The project included a complete
replacement of the Customer Billing System, Financial Systems, and Permitting
Systems which were running on an obsolete HP3000. The project also included
adding a new ESRI based GIS System and Infrastructure Management System. All software is now running on a new server-based platform with a common
MSSQL database environment. This effort was completed on time and 10%
under budget.
• Through database optimization and software upgrades, customer bill processing time was improved by more than 100% reducing cycle time from 14 hours to less
than six. This improvement significantly extends the life of our new systems.
• A complete upgrade of our special assessments process and implementation of a new Eden module realized nearly $1.5 million in revenue from property tax bills.
• Implementation of an out-dial application has saved a full headcount in Customer Service by automating a cumbersome manual customer contact process.
IT Operations
• Otay received the Municipal Information Systems Association of California
(MISAC) Award for “Excellence in IT Practices.”
• Developed a “COLO” data center. This is a back-up data center to accommodate
disaster recovery in the event that our primary system is disabled.
• Revised the records document type list, records retention schedule, records process, issued a one million page scanning bid, and set the stage for full
utilization of records management software.
• Added the following services or upgrades that significantly expanded capacity and services:
o Installed both a New SAN/Tape Library and File/Print Server.
o Upgraded backup software and process.
o New C-Class enclosures installed in both Data Center and COLO
o Increased internet bandwidth capacity 10 fold, eliminating a potential
bottleneck for web based work
INFORMATION TECHNOLOGY AND STRATEGIC PLANNING
143
o Upgraded email spam blocking software.
o When District Headquarters was under evacuation threat during Firestorm
October 2007, IT staff was able to stand up a remote Emergency
Operations Center.
Geographic Information Systems (GIS)
• Completed the architecture design for the new GIS system which will provide Otay GIS users a new platform with high reliability and availability. This design will accommodate Otay’s growing demand for the next 3-4 years.
• Completed the implementation of the new business process of creating “hydrant parcels” by loading GIS formatted hydrant data (including unique ID and street address) into Parcel Manager to create unique place holders for future temporary
meters. This effort will cleanup the duplicated and dummy APNs and supply the
customer service staff with a clear geographic location, address, and unique
identifier for each service location.
• Completed the update of the District’s asset list, including buildings and major
facilities, to provide insurance companies with the District’s latest assets for
accurate assessments.
• Completed the GIS-IMS synchronization. More than 210,000 potable records,
11,000 recycled records, and 16,000 sewer records have been fully populated into
Infrastructure Management System and are ready for creating Work Orders. After this mass update, the synchronization is an ongoing process.
144
145
DISTRICT POSITION COUNT -169
OPERATIONS DEPARTMENT - 70
146
Personnel Count FY 2007 FY 2008 FY 2009
Chief, Water Operations 1 1 1
Executive Secretary 1 1 1
Systems Operations Manager 1 1 1
Water Systems Supervisor 2 1 1
Pump Electrical Supervisor 1 1 1
Recycled Water Systems Supervisor 0 0 1
Meter Maintenance/Cross Connect Supervisor 1 1 1
Lead Water Systems Operator 2 2 2
Water Systems Operator I, II, and III 9 9 9
Valve Maintenance Worker 1 1 1
Senior Disinfection Technician 1 2 2
Disinfection Technician 1 0 0
Senior SCADA Instrumentation Technician 2 2 1
SCADA Instrumentation Technician 0 0 1
Electrician I and II 2 2 2
DISTRICT POSITION COUNT -169
OPERATIONS DEPARTMENT - 70
Pump Mechanic I and II 2 2 2
Lead Cross Connection/ Meter Maintenance Worker 1 1 1
Meter Maintenance/Cross Connect Worker I and II 5 5 5
Construction Maintenance Manager 1 1 1
Utility Maintenance Supervisor 2 2 2
Utility Crew Leader 5 5 5
Utility Workers I and II 10 10 10
Senior Utility/Equipment. Operator 4 4 3
Equipment Shop Supervisor 1 0 0
Fleet Maintenance Supervisor 0 1 1
Equipment Shop Mechanic I and II 4 4 3
Welder II 111
Reclamation Plant Supervisor 1 1 1
Lead Reclamation Plant Operator 0 1 1
Reclamation Plant Operator 3 3 3
Water System Technician 1 0 0
Lead Recycled Water Distribution Operator 0 1 1
Recycled Water Distribution Operator 3 3 3
Laboratory Analysts I and II 2 2 2
Total 71 71 70
147
Department Responsibilities
FY 2007 FY 2009
Actual Budget Estimated Budget
Water Operations Chief 349,382$ 456,400$ 405,756$ 446,300$
Water Systems 4,937,801 5,924,700 5,917,659 6,748,800
Construction Maintenance 4,364,789 4,872,100 4,534,724 4,483,800
TOTAL 9,651,972$ 11,253,200$ 10,858,139$ 11,678,900$
FY 2008
WATER OPERATIONS
The Water Operations Department, under the general direction of the Assistant General Manager, provides the following
support services: Potable and Recycled Water System Operations, Construction Maintenance, and Sewer Collection and
Treatment Operations; and provides highly responsible and complex technical and administrative support to the District,
General Manager, and Board of Directors.
FY 2009 Total Departmental Budget - $28.2 Million
Water Operations - $11,678,900
Water Operations
41.4%
Finance
15.8%
Board of Directors
0.3%
Administrative
Services
12.9%
General Manager
6.3%
General Expense
2.8%
Engineering
10.5%
Information
Technology and
Strategic Planning
10.0%
148
WATER OPERATIONS
FY 2006 FY 2009
Actual Budget Estimated Budget
Labor and Benefits 6,105,646$ 6,663,800$ 6,539,909$ 7,381,100$
Travel and Meetings 21,104 48,300 28,509 44,500
General Office Expense 5,903 7,000 4,863 6,000
Equipment 67,227 73,100 40,530 77,100
Fees 33,352 43,900 91,725 93,000
Services 103,732 442,600 345,289 386,500
Training 6,152 15,500 4,716 11,200
Materials & Maintenance 2,467,066 2,735,200 2,566,076 2,240,600
Sewer Charges 841,791 1,223,800 1,236,522 1,288,900
Miscellaneous - - - 150,000
Total 9,651,972$ 11,253,200$ 10,858,139$ 11,678,900$
FY 2008
$8,655 $8,150
$10,261 $10,008
$10,804
$9,652
$11,253 $10,858 $11,679
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
(i
n
T
h
o
u
s
a
n
d
D
o
l
l
a
r
s
)
FY05 FY06 FY07 FY08 FY09
Fiscal Year
Budget vs. Actual
Budget Actual
Estimated Adopted
149
Strategy: Educate our customers on important water related matters.
Goal: Expand the District’s Water Conservation Programs to maximize District-wide water conservation.
Goal: Maximize recycled water use and public knowledge. Strategy: Help shape the water industry’s direction.
Goal: Legislative and political influence for District programs.
Goal: Optimize the District’s water industry participation.
Strategy: Maximize our customer’s satisfaction.
Goal: Effectively use multi-channel communications.
Goal: Listen to our customers.
Strategy: Develop a long-term financial planning program.
Goal: Conduct financial threat assessment for growth, water availability, inflation, and
other revenue sources.
Goal: Establish a long-term (15 year) financial plan including scenarios and
contingencies for changes in demographics, local economy, and drought uncertainties.
Goal: Recalculate all capacity and annexation fees with new rehabilitation and repair
program.
Scorecard Customer
Scorecard Financial
Goals and Objectives – Fiscal Year 2008-2009
WATER OPERATIONS – BALANCED SCORECARD
150
Strategy: Optimize all revenue streams.
Goal: Modify existing rate structures.
Strategy: Implement industry best practices for utility development.
Goal: Potable water.
Objective:
3.1.1.4 Develop and implement a proactive leak detection program
to reduce distribution system water loss. Goal: Recycled water.
Goal: Sewers.
Objective:
3.1.2.2 Develop and implement Treatment Plant enhancements
including automation for remote operation and shutdown, technology improvement and upgrade of facilities. Strategy: Improve financial analysis and reporting.
Goal: Improve cost per unit reporting.
Goal: Improve the efficiency and effectiveness of District-wide reporting.
Strategy: Optimize the District’s operation efficiency.
Goal: Improve the efficiency of business processes.
Objectives:
3.2.5.4 Enhance fuel tracking and reporting system.
3.2.5.6 Develop a Heavy Equipment Capital Replacement Plan.
Goal: Increase productivity through improved field efficiency.
Goal: Minimize the District’s total life cycle asset costs.
Objectives:
3.2.1.2 Expand meter testing for 3” and larger calibration and
replacement program.
3.2.1.3 Evaluate increasing the completion schedule of District’s
valve actuation, valve replacement, and air vac programs.
Goal: Optimize disaster preparedness.
Goal: Optimize the use of existing technologies.
Objectives:
3.2.3.1 Optimize functionality, business continuity, bandwidth,
and use of SCADA.
Goal: Update the District’s IT Strategic Plan.
Scorecard Business Processes
151
Strategy: Results oriented workforce.
Goal: Community Involvement/District outreach.
Goal: Hire the “best.”
Goal: Knowledge Management.
Goal: Performance Management.
Goal: Retain dedicated workforce.
Goal: Staff Development.
Goal: Workforce Management.
Note: See pages 8-12 for the entire Balanced Scorecard presentation and explanation of the Performance
Measures.
Scorecard Learning and Growth
152
Target Actual
WATER OPERATIONS
PERFORMANCE MEASURES
Activity/Criterion
Strategic Plan FY 2006-2008
Fiscal Year 2007-2008Fiscal Year
2006-2007
Actual
Fiscal Year
2005-2006
Actual
Fiscal Year 2007-2008
Target Actual
N/A 3.9 8 3.6
N/A 2.0%
not to exceed
5% of system
demand
0.0%
98.0%685 per
quarter
381 per
quarter
538 per
quarter
N/A $2,211/MG $3,096/MG $1,829/MG
N/A 68.0% 63.5% 66.6%
Technical Quality Complaint Rate (QualServe) - complaints per
1,000 customer accounts. The median benchmark performance
indicator for technical quality complaints is expressed as follows:
Region for the west is 7.6; by size, between 100,001-500,000 is
8.6; and by type, combining water and wastewater is 7.6
Potable Water Supplement - measures the amount of potable
water needed to supplement recycled water demand
Valve Exercising Program - maintenance of distribution systems'
infrastructure to ensure minimal interruption of potable water
delivery to the customer
O&M Cost per MG (QualServe) - measures the operation and
maintenance costs to treat one million gallons of wastewater
Planned Drinking Water Maintenance Ratio in Cost - compares
how effectively the District is investing in planned maintenance
153
N/A 83.0% 75% 76.5%
N/A $1,113/MG $2,450/MG $930/MG
61.0% 100.0% 3,200 3,943
N/A 100.0% 1139 100.0%
N/A 0.7% 0.7% 0.5%
N/A 100.0% 100.0% 100.0%
Drinking Water Compliance Rate (QualServe) - quantifies the
percentage of time each year that the District meets all of the
health related drinking water standards in U.S. National Primary
Drinking Water Regulations
Planned Wastewater Maintenance Ratio in Cost - percentage of
planned maintenance costs compared to combined planned and
corrective maintenance costs
Direct Cost of Treatment per MG (QualServe) - measures the
direct cost of wastewater treatment and does not include staff
overhead or fringe benefits
AMR Program - Install a total of 3,200 retrofits per year; 800 per
quarter
AMR Ramar Replacement Program - Replacement of existing
Ramar Transponders
Unplanned Disruptions (QualServe) - quantifies the number of
unplanned water outages experienced by the utility customer
expressed as number of accounts affected per 1,000 accounts
N/A 27.0% 69.0% 63.5%
N/A 68.0% 63.5% 68.0%
N/A 0.0% 3.8% 0.6%
N/A N/A 70.0% 65.8%
N/A 0 2.5% 0.3%
N/A 100.0% 100.0% 100.0%
N/A 90.0% 90.0% 100.0%
Drinking Water Regulations
Recycled Water Production - produce greater than 1.20 MGD for
90% of the days with demand of 1.3 MGD
Pump Efficiency Testing - pump efficiency testing on 50% of the
potable water pumps each year
Automatic Control Valve Testing - test operation and perform
preventative maintenance on all automatic valves semi-annually
Planned Drinking Water Maintenance Ratio In Hours - compares
how effectively the District is investing in planned maintenance
Collection System Integrity (QualServe) - number of wastewater
collection system failures per 100 miles of collection system
pipeline
Planned Wastewater Maintenance Ratio in Hours - percentage of
planned maintenance hours compared to combined planned and
corrective maintenance hours performed
Sewer Overflow Rate (QualServe) - measures the wastewater
collection system pipeline condition and the effectiveness of
routine maintenance
154
0.0% 209.0% 90.0% 170.0%
N/A 16.3 16.9 15.6
N/A 1.4 16.9 3.1
N/A 100.0% 90.0% 103.0%
N/A 187.0 149.0 202.0
N/A 7.8 0.9 2.3
Main Flushing Program - actual over-planned pipelines (520) to
be flushed per quarter
Water Distribution System Integrity (QualServe) -measures the
condition of the water distribution system expressed as the total
annual number of leaks and breaks per 100 miles of distribution
piping
Recycled Water System Integrity - tracks number of leaks or
breaks per 100 miles of water distribution system
Air Vac Update Program - measures the number of potable air
vacs updated to DHS standards
Fire Hydrant Maintenance - measures the number of fire hydrants
serviced
Planned Water Service Disruption Rate (QualServe) - quantifies
the number of planned water outages experienced by the utility
customer expressed as number of accounts affected per 1,000
accounts
** I.D.
Number
Fiscal Year
2008-2009
Target
5.1.31 0.7%
5.1.32 9
5.2.26 $66
5.2.27 $70
5.2.28 $77
Strategic Plan FY 2009-2011
Activity/Criterion
Unplanned Disrumptions (QualServe) - Quantifies the number of unplanned water outages experienced by
the utility customer expressed as number of accounts affected per 1,000 accounts
Technical Quality Complaint - The number of complaints is a good measure of customer service. Technical
quality complaints allow us to measure the complaint rates we are experiencing with individual
quantification of those related to core utility services. It is expressed as complaints per 1,000 customer
accounts.
Planned Drinking Water Maintenance Ratio in $ (QualServe) - Compares how effectively the District is
investing in planned maintenance
Planned Recycled Water Maintenance Ratio in $ - Compares how effectively the District is investing in
planned maintenance
Planned Wastewater Maintenance Ration in $ - Percentage of planned maintenance costs compared to
combined planned and corrective maintenance costs
155
5.2.35 $1,008/MG
5.2.36 $1,959/MG
5.3.34 90.0%
5.3.25 1,692
5.3.29 16
5.3.3.2.5
5.3.33 100.0%
O&M Cost per MG (QualServe) - Qualserve measure for the operation and maintenance cost to
treat one million gallons of wastewater
% PMs completed - To track the percentage of scheduled PM's that are completed in the
Reclamation Plant, Pump/Electric Section, Valve Maintenance Program, and Fleet Shop
Valve Exercising Program - Maintenance of distribution systems' infrastructure to ensure minimal
interruption of potable water delivery to the customer
Water Distribution System Integrity (QualServe) - measures the condition of the water
distribution system expressed as the total annual number of leaks and break per 100 miles of
distribution piping
Direct Cost of Treatment per MG (QualServe) - Measures the direct cost of wastewater treatment and does
not include staff overhead or fringe benefits, but it does include their salaries
Planned Water Service Disruption Rate (QualServe) - Quantifies the number of planned water
outages experienced by the utility customer expressed as number of accounts affected per 1000
accounts.
Drinking Water Compliance Rate (QualServe) - Quantifies the percentage of time each year that
the District meets all of the health related drinking water standards in U.S. National Primary %
5.3.34 3.5
5.3.37 4,500
5.3.38 6.6%
5.3.39 0.0%
Measures.
Replace manual read meters with automated meter - Increase meter reading efficiency and reduce
water loss through increased meter accuracy
Recycled Water System Integrity - Tracks number of leaks or breaks per 100 miles of water
distribution system
Sewer Overflow Rate (QualServe) - Measures the wastewater collection system pipeline
condition and the effectiveness of planned maintenance
** See pages 8-12 for the entire Balanced Scorecard presentation and explanation of the Performance
gy
Drinking Water Regulations
Collection System Integrity (QualServe) - Number of wastewater collection system failures per
100 miles of collection system pipeline
156
Accomplishments – Fiscal Year 2007-2008
Water Operations Chief
• Through the use of the new micro turbines at the Treatment Plant, and installing
new soft starters at several pump stations, energy savings have been realized
while extending the life of the motors.
• Implemented automatically generated preventive work orders in the IMS system.
Utilization of IMS helps plan work schedules and provides accurate maintenance
records.
• Reorganized Treatment Plant tasks that have resulted in a reduction of overtime
per operator on holidays, while still complying with permit requirements and
ensuring proper operations.
• During the 2007 October fires, Operations staff volunteered to help restore service
to the Ramona Water District customers. Staff also worked in conjunction with
the County of San Diego to provide potable water and sewer disposal to displaced
customers in Otay’s North District.
• After the Fenton incident, Operations staff reacted quickly to inspect all meters
where dual service, potable and recycled, existed.
• Staff proceeded on changing green-colored recycled water appurtenances to the
required purple color. The conversion was documented, mapped, tested, and
Trimbled.
Water Systems
• Exceeded the annual targets for the Valve-exercising, Main-flushing, and Fire
Hydrant Maintenance Programs. All valves in the North District have now been
maintained due to a change in the work process that enabled us to streamline production.
• Successfully completed 40 planned shutdowns, 16 more than the previous year.
These shutdowns were performed for developer projects, valve replacements, and CIP projects which includes the two 640 Reservoir projects.
• While responding to the Fenton Business Center misconnection, the Systems
Operations staff worked diligently with the customers and the California Department of Public Health (CDPH) to restore proper service. They performed
disinfection, flushing, and sampling, and coordinated with the CDPH on
corrective actions.
WATER OPERATIONS
157
• Received a certificate of recognition from SDG&E for Excellence in Energy
Conservation.
• The Valve Crew exercised 2,153 valves, maintained 810 fire hydrants, and flushed 341 mains.
• Staff successfully repaired and made operational the automatic transfer switch at the 980-2 Pump Station resulting in an efficient run of the emergency generator
and supply power to the pump station in the event of a power outage.
• Automated fire suppression sprinklers were installed at the 1200-1, 1090-1, and 832-1 pump stations and the Treatment Plant.
• During the 2007 October fires, staff assisted with servicing and transporting a
backup generator to Fallbrook Public Utility District.
• The reclamation plant operators improved the method of managing the treatment
process by routinely interpreting the observation of micro-biological organisms
and calculating a daily mass balance to determine sludge wasting requirements.
• The Treatment Plant’s SCADA system was expanded to include the monitoring of
treatment process parameters and equipment operation to meet the new
requirements of the Master Reclamation Permit issued by the State Water Resources Control Board in May 2007.
• The collection system operators began development of a detailed sewer system
cleaning procedure for every pipeline segment in the collection system.
• The Treatment Plant’s preventative maintenance schedule was converted into
IMS - plant operators have been trained and work orders are now being generated.
• The preliminary screening sluice-water alternative modification was completed.
The new system uses screened wastewater and waste-backwash water, rather than
recycled water, to flush screenings.
• The old Recycled Operations (RO) building was converted into the Treatment
Plant’s storage building.
• The Treatment Plant’s chlorine-related: Process Safety Management, California
Accidental Release, and Process Safety Management programs were reviewed
and updated.
• Chopper pumps were installed at the Steele Canyon Sewer Lift Station which
greatly reduce plugging frequency and corrective maintenance cost.
• A turbidometer was installed and two polymer chemical-addition pumps were upgraded at the secondary clarifier discharge point to satisfy a permit
requirement. This now allows the plant to discontinue polymer feed when
turbidity is monitored continuously at this location.
• Staff worked in partnership with the City of San Diego’s South Bay Water Reclamation Plant (SBWRP). In the course of the year, SBWRP pumped
1,161,959,548 gallons or 3,567 acre/feet to the 450-1 Recycled Reservoir. With
158
the water received from San Diego and the production of the Treatment Plant, staff was able to eliminate the need for any potable supplementation.
Construction Maintenance
• Developed and implemented a modified and improved Vehicle Replacement and
Management Program that resulted in a reduction of needed staffing in the Fleet
Maintenance Section. Savings will be realized in labor, maintenance, and fuel costs while driving newer more efficient vehicles.
• The CIP Air-vac Upgrade Program was projected to upgrade 130 air-vacs to meet
CDPH standards. Staff actually was able to complete 164 upgrades, exceeding the projected amount.
• The green to purple recycled conversions in the central portion of the District
have produced significant numbers. Staff has produced 1,931 changes to the recycled-water system to show true recycled appurtenances, from air-vac cans to reclaimed markers.
• Through the use of IMS, the reporting system for the District’s Backflow Prevention Program has been updated and improved.
• Developed and implemented a Large Meter Testing Program.
159
160
DISTRICT POSITION COUNT -169
ENGINEERING DEPARTMENT - 23
Personnel Count FY 2007 FY 2008 FY 2009
Chief, Engineering 0 1 1
Chief, Engineering & Planning 1 0 0
Chief, Development Services 1 0 0
Executive Secretary 1 1 1
Secretary 1 1 1
Engineering Manager 2 2 2
Public Services Manager 1 1 1
Senior Civil Engineer 3 2 2
Associate Civil Engineer 2 3 2
Assistant Civil Engineer 3 1 0
Environmental Compliance Specialist 0 1 1
Permit Technicians I and II 0 2 2
Senior Engineering Technician 0 0 3
Engineering Technicians I, II and III 7 4 0
Inspection Supervisor 1 1 1
Construction Inspectors I and II 4 4 3
Surveying Supervisor 1 1 1
Survey Technician 1 1 1
Assistant Survey Technician 1 1 1
Office Assistant 1 0 0
Total 31 27 23
161
Department Responsibilities
FY 2007 FY 2009
Actual Budget Estimated Budget
Engineering Chief (1)454,447$ 490,400$ 418,228$ 359,200$
Planning 226,148 661,900 353,222 605,000
Design 510,873 466,500 429,041 291,700
Water Resources 306,146 143,300 146,718 157,400
Public Services 202,612 205,300 253,658 280,900
Construction Services 208,743 430,500 520,111 356,100
Survey Services 224,845 264,200 235,877 302,100
Environmental Services 519,166 643,500 330,106 602,300
TOTAL 2,652,979$ 3,305,600$ 2,686,961$ 2,954,700$
(1) Effective FY 2008, Engineering and Development Services Departments are combined; Development Services Chief
Section is deactivated.
FY 2008
ENGINEERING
The Engineering Department, under the general direction of the Assistant General Manager, provides the following support
services: Planning, Design, Construction, Project Management and surverying of all District facilities; responsible for
strategic planning, capital budget, water resources planning, support facilities planning, environmental services, quality
control, construction, developer designed and constructed facilities; coordinates assigned activities with other district
departments and outside agencies; provides highly responsible and complex administrative and technical support to the
District, General Manager, and Board of Directors.
FY 2009 Total Departmental Budget 28.2 Million
Engineering - $2,954,700
Water Operations
41.4%
Finance
15.8%
Board of Directors
0.3%
Administrative
Services
12.9%
General Manager
6.3%
General Expense
2.8%Engineering
10.5%
Information
Technology and
Strategic Planning
10.0%
162
ENGINEERING
FY 2007 FY 2009
Actual Budget Estimated Budget
Labor and Benefits 1,778,641$ 1,712,200$ 1,593,576$ 1,639,800$
Travel and Meetings 13,490 33,200 19,186 22,900
General Office Expense 8,784 20,100 10,889 13,500
Equipment 1,086 3,700 3,322 6,200
Fees 26,090 55,000 23,936 55,000
Services 811,490 1,481,400 1,035,360 1,214,400
Training 215 - 439 2,900
Materials & Maintenance 13,183 - 253 -
Total 2,652,979$ 3,305,600$ 2,686,961$ 2,954,700$
FY 2008
$592 $763
$2,858 $2,801
$3,428
$2,653
$3,306
$2,687 $2,955
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
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Budget Actual
Estimated Adopted
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Strategy: Educate our customers on important water related matters.
Goal: Expand the District’s Water Conservation Programs to maximize District-wide
water conservation. Goal: Maximize recycled water use and public knowledge.
Objective:
1.2.2.1 Continue a regional approach and expand District’s recycled water outreach program to landscape architects, maintenance companies, developers, contractors, and
homeowner associations. Strategy: Help shape the water industry’s direction.
Goal: Legislative and political influence for District programs.
Goal: Optimize the District’s water industry participation.
Strategy: Maximize our customer’s satisfaction.
Goal: Effectively use multi-channel communications.
Goal: Listen to our customers.
Strategy: Develop a long-term financial planning program.
Scorecard Customer
Scorecard Financial
Goals and Objectives – Fiscal Year 2008-2009
ENGINEERING – BALANCED SCORECARD
164
Goal: Conduct financial threat assessment for growth, water availability, inflation and
other revenue sources.
Goal: Establish a long-term (15 year) financial plan including scenarios and
contingencies for changes in demographics, local economy, and drought
uncertainties.
Goal: Recalculate all capacity and annexation fees with new rehabilitation and repair
program.
Strategy: Optimize all revenue streams.
Goal: Modify existing rate structures.
Strategy: Implement industry best practices for utility development.
Goal: Potable water.
Objectives:
3.3.1.1 Prioritize and implement recommendations contained in
the Integrated Resources Plan and Water Resources Master
Plan to obtain additional potable water supply by 15%. 3.1.1.3 Create a comprehensive environmental program that is
cost effective and proactive in response to environmental
compliance.
Goal: Recycled water.
Objectives:
3.1.3.1 Obtain new recycled water supplies by 10% by prioritizing
and implementing the recommendations in the IRP and
WRMP.
3.1.3.2 Finalize evaluation of North District service are expansion
for recycled water and seek approvals for funding.
Goal: Sewers
Objective:
3.1.2.1 Evaluate the long-term requirement for costs and benefits of seeking additional sewer collection flow, treatment,
and/or disposal capacity.
Strategy: Improve financial analysis and reporting.
Goal: Improve cost per unit reporting.
Goal: Improve the efficiency and effectiveness of District-wide reporting.
Strategy: Optimize the District’s operation efficiency.
Scorecard Business Processes
165
Goal: Improve the efficiency of business processes.
Objectives:
3.2.5.8 Enforce use of separate meters for irrigation during the
Sub-Area Master Plan (SAMP) Review Process to
maximize the use of recycled water. Irrigation of
landscaped areas shall have a separate meter regardless if
potable or recycled water is available, while maximizing
the use of recycled water.
3.2.5.7 Identify existing facilities that are good candidates for
conversion to separate irrigation meters (recycled and/or
potable water) specifically for multi-family/industrial/
commercial projects.
Goal: Increase productivity through improved field efficiency.
Objective:
3.2.4.1 To obtain access to shared electricity, gas, telephone, from
cell site vendors, San Diego County, and other agencies.
Goal: Minimize the District’s total life cycle asset costs.
Objectives:
3.2.1.1 Develop and implement an Asset Management Program
Plan to extend the useful life of capital assets.
3.2.1.4 Enhance construction inspection on construction projects
by implementing IMS.
Goal: Optimize disaster preparedness.
Goal: Optimize the use of existing technologies.
Goal: Update the District’s IT Strategic Plan.
Scorecard Learning and Growth
Strategy: Results oriented workforce.
Goal: Community Involvement/District outreach.
Goal: Hire the “best.”
Goal: Knowledge Management.
Goal: Performance Management.
Goal: Retain dedicated workforce.
Goal: Staff Development.
Goal: Workforce Management.
Note: See pages 8-12 for the entire Balanced Scorecard presentation and explanation of the Performance
Measures.
166
Fiscal Year
2005-2006 Fiscal Year 2007-2008Fiscal Year
2006-2007 Activity/Criterion
ENGINEERING
PERFORMANCE MEASURES
Strategic Plan FY 2006-2008
Fiscal Year 2007-2008
Target Actual
N/A 68.9% 0.0% 0.0%
N/A 57.9% 50.0% 57.9%
N/A 100% 80% or above 100.0%
92.0% 87.0% 75% or greater 81.0%
N/A 100.0% 100.0% 100.0%
N/A 100.0% 90.0% 82.0%
005 006
Actual Actual
CIP Projects Expenditures vs. Budget - compares quarterly
CIP expenditures with budget
Project Constructability Review - measures projects that
receive a review with those projects scheduled to receive a
review
cvy/C eo
Recycled Water Supply versus Demand - determine the
percentage of recycled water demand met with potable water
Grant Funds - measures the percentage of grants awarded
compared to relevant grant proposals submitted
Plan Check - measures the time to complete a plan check
Project Construction Budget - measures the number of
projects in contruction within plus or minus 5%-10% of the
budget
167
N/A 103.8% 90.0% 105.2%
40.0% 40.0% 100.0% or greater 110.0%
100.0% 110.0% 100.0% or greater 120.0%
N/A 154.8% 100.0% 172.4%
N/A 0.84 Less than 1.0 1.0%
N/A 1.01 Less than 1.0 100
Actual Recycled Water Demand vs. Projected Demand -
measures the actual recycled water demand against the
projected recycled water demand
North District Alternative Water Supply - measures alternative
water supply capabilities to meet a 10-day continuous supply
outage in the summer
Facility Maps - measures the timeliness of inserting maps to
CADD
Facility Surveying - measures the timeliness of surveying
facilities after project acceptance
Sewer Collection Disposal Capacity - measures sewer disposal
capacity vs. the total sewer collection rate
South District Alternative Water Supply - measures alternative
water supply capabilities to meet a 10-day continuous supply
outage in the summer
N/A 100.0%
Greater than
99.75%99.8%
N/A 100.0% 90.0% 100.0%
N/A 100.0% 90.0% 267.0%
-1.5% 0.0% Less than 4% 1.1%
N/A 100.0% 95% or above 100.0%
N/A 130.0% 90.0% or better 100.0%
-19.0% 0.0% Less than 5.0% 0.0%
facilities after project acceptance
Cathodic Protection Program - inspect and test Cathodic Test
Stations for pipelines, and anodes in steel reservoirs
Project Closeout Time - measures the average time between
the issuance of a NOSC and NOC for CIP projects in
construction
Construction Change Order Rate - measures the rate of change
orders for CIP projects under construction
APCD Compliance - measures the compliance of all engines
and generators permitted under APCD
Construction Inspection Productivity Index - measures
productivity of construction inspectors
Construction Claims - reduce construction claims
Mark out Accuracy - measures the percentage of at-fault hits
over time
168
** I.D.
Number
Fiscal Year
2008-2009
Target
2.2.9 95.0%
2.3.7 100.0%
2.3.8 100.0%
2.2.10 3.0%
Activity/Criterion
Project Closeout Time - Measures the average time between the issuance of a Notice of
Substantial Completion (NOSC) and a Notice of Completion (NOC) for CIP projects in
construction. Consider only projects where the NOC was completed within the Fiscal Year.
Strategic Plan FY 2009-2011
CIP Project Expenditures vs. Budget - Compares quarterly CIP expenditures with budget.
Extract data from CIP Quarterly Report using Grand Total numbers.
Mark-out Accuracy - Measures the percentage of at-fault hits over time
Construction Change Order Incidences - Measures the rate of change orders for CIP projects
under construction. Extract data from CIP Quaterly Construction Contract Status Report.
** See pages 8-12 for the entire Balanced Scorecard presentation and explanation of the Performance
Measures.
169
Accomplishments – Fiscal Year 2007-2008
Planning & Design
• Completed design of the Recycled Operations (RO) Building Remodel
(CIP R2053).
• Completed annual Comprehensive Cathodic Protection Survey for the District’s
pipelines, reservoirs, and miscellaneous facilities (CIP P1043).
Construction
• The following project was completed this fiscal year:
o Telegraph Canyon Road Paving (CIP P1270)
• Nine CIP projects were in construction with a total contract value of $34 million.
• Quality assurance and control exercised for over 31,914 linear feet of pipe on
approximately 245 projects constructed by developers. All projects were accomplished with no loss of time due to injuries or accidents.
Water Resources
• Received in excess of $2 million from the United States Bureau of Reclamation for participation in their Title XIV Program. The agreement provides for up to 25% funding
of over $90 million for District recycled water projects.
• Received $721,466 for the Proposition 50 Grant from the State Water Resources Control Board for the recycled water supply link between the City of San Diego South Bay Water
Reclamation Plant and the District's existing recycled water system.
• Successful completion of the Membrane Bioreactor Feasibility Report and Study effort.
• Negotiated the San Diego County Water Authority and District Recycled Water Sales
Incentive agreement and received Board approval for sales of supply from South Bay Water Reclamation Plant.
Public Services
• Generated revenue in excess of $3 million.
• Thirty (30) cell site leases brought in over $843,000 in revenue.
• Processed over $520,000 in Reimbursement Agreements.
• Processed 607 permits.
ENGINEERING
170
Survey
• Completed 2,655 mark-outs with an accuracy rate of 99.96%.
• Twelve (12) parcel maps and 7 subdivision maps totaling 142 lots added to the cadastral
base map this year. In addition, 201 assessor's parcel map pages were researched and all
new parcels updated.
• Drafted 327 easements and exported them to the GIS.
• Located 147 facilities (facilities include, appurtenances, valves, fire hydrants, blow offs,
fire services, all sewer manholes, laterals and clean out throughout the District) and transferred them into our information system.
Environmental
• Mitigated Negative Declaration (MND) for the 1485-1 Pump Station was adopted by the Board on September 5, 2007. (P2172)
171
172
Description
FY 2007 FY 2009
Actual Budget Estimated Budget
General Expense 1,813,025$ 1,686,300$ 2,547,639$ 784,000$
TOTAL 1,813,025$ 1,686,300$ 2,547,639$ 784,000$
FY 2008
GENERAL EXPENSE
The expenses in this section are general operating expenses not associated with an individual department. The expenses
include: legal costs, insurance premiums, changes in accrued employee leave balances and miscellaneous interest. These
expenses represent 4% of the total Departmental Budget.
FY 2009 Total Departmental Budget - $28.2 Million
General Expense - $784,000
Information
Technology and
Strategic Planning
10.0%
Engineering
10.5%General Expense
2.8%
General Manager
6.3%
Administrative
Services
12.9%
Board of Directors
0.3%
Finance
15.8%
Water Operations
41.4%
173
GENERAL EXPENSE
FY 2007 FY 2009
Actual Budget Estimated Budget
Labor and Benefits (1)205,725$ 10,000$ 694,712$ (188,300)$
Fees 1,606,633 1,676,300 1,852,927 972,300
Interest 667 - - -
Total 1,813,025$ 1,686,300$ 2,547,639$ 784,000$
(1) FY 2009 budget amount is negative because of Vacancy Factor (salary savings) of $424,300. This is netted
against other District-wide Labor and Benefit Expenses. In prior years Vacancy Factor was budgeted in the
individual departments.
FY 2008
$777
$1,170
$863 $942 $1,054
$1,813 $1,686
$2,548
$784
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
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Budget vs. Actual
Budget Actual
Estimated Adopted
174
CAPITAL IMPROVEMENT PROGRAM
The District provides water service to a population of approximately 191,500 which is
expected to ultimately increase to 277,000. This growth as well as the maintenance of existing
assets requires long term capital planning. The process is a dynamic one, due to the evolving
needs of the community, the water supply issues, and changing regulations, and therefore is
part of the District’s overall strategic planning. The capital planning process involves
identifying current and future needs, and prioritizing them based on certain operating
assumptions. The primary objective of this planning effort is to support an orderly, efficient
program of expansion, replacement and betterment, while maintaining a stable long-range
financial plan.
To accommodate this growth requires that the District invest $500 million in capital assets
through ultimate build-out. The Fiscal Year 2009 Capital Budget is $30.9 million and the five-
year Capital Improvement Program (CIP) totals $170 million. A separate CIP Budget
Notebook contains the descriptions, justifications, expenditures, and funding for all the
identified projects to ultimate build-out.
Assumptions and Criteria
The Water Resources Master Plan was based on several major assumptions and design criteria
as follows:
1. Utilizing historical water demands for each land use type in the District to calculate future
demands;
2. Using maximum day peaking factors that vary with demand level;
3. Utilizing land use as planned by the City of Chula Vista;
4. Providing ten days of emergency water supply through a maximum of five days in covered
reservoirs and a minimum of five days from interconnections with adjacent agencies;
5. Inclusion of emergency operational storage to meet the five-day covered storage
requirement into the ten-day outage supply requirement.
In summary, the CIP is developed based on the District's Water Resources Master Plan,
incorporating historical data, growth, developers' input, SANDAG projections, and long-term
economic outlook.
Justification for Project and Impact on Operating Budget
The justification for each project is determined by whether it is required due to growth
(Expansion), improvements or upgrades (Betterment), or to replace an existing asset
(Replacement). As these projects are completed and placed into service, there may be an
impact on the Operating Budget by increasing cost in the areas of maintenance, energy or
chemicals as shown on the justification and impact pages in this section.
175
Capital Purchases and Facilities
This year, all capital expenditures are in the CIP. This includes capital facilities and capital
purchases. Capital purchases are non-recurring operating expense items for District-wide use
that cost more than $10,000 each and have an estimated useful life of two years or more. The
Capital Purchase Projects include Vehicle, Office Equipment and Furniture, and Field
Equipment purchases, the details of which can be found on page 31. Capital Facility Projects
are items that exceed $10,000 or $20,000 for infrastructure related items (as defined under
Capital Equipment on page 171 of the Glossary) and have a useful life of at least two years.
The CIP projects identified are prioritized based on the following criteria:
1. Safety, restoration of service, immediate obligation, Board directed or critical system need.
2. System upgrades or requirements to maintain system reliability in the next few fiscal years.
3. Need to meet the future growth of the system.
4. Project requirement may be reduced in capacity or may have low probability of need in the
future.
The following three categories of CIP projects are:
Expansion
Facilities required to support new or future users which are funded from capacity fees, or user
rates.
Betterment
Facilities required because of inadequate capacity or new requirements that benefit existing
users and funded from availability, betterment fees or rates.
Replacement
Facilities required to renew or replace existing facilities that have deteriorated or have
exceeded their useful life and are funded from user rates.
Capital Improvement Projects
The 2009 Fiscal Year CIP Budget contains 66 projects. The cost of the work planned for
Fiscal Year 2009 is $30.9 million. Of the 66 projects planned for Fiscal Year 2009, three are
designated as reimbursable projects with estimated costs of $540,000. These projects are built
by developers and reimbursed by the District.
CAPITAL IMPROVEMENT PROGRAM
176
The following shows how the $30.9 million of projects are broken down into four categories:
1. Capital facilities $ 23.0 million
2. Replacement or renewal projects $ 5.8 million
3. Capital purchase projects $ 1.6 million
4. Developer reimbursement projects $ .5 million
The Five-Year CIP and Fiscal Year 2009 Capital Budgets
are consistent with the District's Water Resources Master
Plan, current capacity fees, and the District's strategic
financial objectives.
MAJOR CIP PROJECTS
177
FLAGSHIP CIP PROJECTS IN CONSTRUCTION
850-4 Reservoir
Project started in March 2008
and is expected to be completed
in June 2009. This project
includes the construction of a
2.2 MG steel reservoir.
SR-905 Utility
Relocations
Project started in September
2006 and is 95% completed.
This project includes the
relocation of three pipelines
crossing under SR-905 and
the reconditioning of two
seismic valve vaults.
178
Key Component:
Construction for two 10-MG pre-stressed circular reservoirs and associated
piping.
Schedule:
Notice to Proceed was issued in January 2007. Project completion expected
December 2008.
Cost: The project budget is $29.5 million, of which $22.2 million, or 75%, has been
spent.
Significant
Issues:
640-1 Reservoir: Completed construction.
640-2 Reservoir: Completed construction.
These Reservoirs are needed as operational storage for the La Presa System, as well as the
necessary emergency storage, consistent with the District’s planning criteria. Additionally this
project eliminates flow rejection and pressure fluctuation, and maximizes energy efficiency,
thereby reducing cost.
FLAGSHIP CIP PROJECTS IN CONSTRUCTION
640-1 & 640-2 Reservoirs
This project was awarded to Pacific Hydrotech and was started in January 2007.
Expected completion is December 2008. Project consists of two 10-million gallon
circular pre-stressed concrete reservoirs, 11,000 feet of large diameter pipe, several
valve and control vaults and demolition of the 520-1 Concrete Reservoir.
179
FLAGSHIP CIP PROJECT IN DESIGN
36-Inch Pipeline From FCF No. 14 to Regulatory Site Project
Key
Component:
Approximately 5 miles of 36-Inch pipeline for potable water from Otay’s FCF
No. 14 to the Regulatory Site.
Schedule: Preparing 90% design drawings.
Cost:
The project budget is $18.5 million, of which $1.6 million, or 9% has been spent.
Significant
Issues:
District continues coordination with CalTrans, City of El Cajon, Cuyamaca
College, and other agencies to incorporate comments into the project design.
A focus group was held to discuss potential alignment improvements.
The City of El Cajon will not permit the design alignment. Alternatives are being
considered.
(Note: Project engineering contract terminated. Lee & Ro, Inc. has been contracted
to finish.)
This 36” pipeline will provide the District with 16 million gallons a day water supply which will
result in enhanced reliability for the District’s water systems.
180
PROGRESS ON MAJOR PROJECT
City of San Diego’s Water Treatment Plant, Capacity
Key
Component:
Acquire at least 30 MGD and up to 50 MGD of local treatment capacity from
City of San Diego (City).
Schedule:
The District Board approved the SD17 Principals of Understanding (POU)
with the City and CWA. Draft SD17 Agreement and negotiations have been
halted by the City Water Department.
Cost:
Only staff time has been budgeted; project cost is dependent upon negotiations
outcome.
Significant
Issues:
The City will supply “Surplus Water” from the Otay Water Treatment Plant to
the District per the current 1999 Agreement.
181
(Thousand $000s) FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Total
Capacity Fees 2,841$ 3,722$ 6,158$ 11,121$ 15,890$ 17,437$ 57,168$
Debt financing - 27,640 - 25,325 - 21,600 74,565
Grants 2,420 2,890 2,890 1,000 1,000 1,000 11,200
Interest 1,178 1,089 1,222 1,582 2,070 2,263 9,404
Betterment Charges 1,078 1,100 1,123 1,146 1,170 1,194 6,811
Temporary Meters 1,040 1,040 1,042 1,047 1,053 1,055 6,278
Availability (Betterment Portion) 516 526 537 548 559 571 3,257
Transfer from General Fund 27,005 6,737 8,653 11,068 13,201 15,184 81,849
Interfund Transfers 156 160 163 167 171 175 993
Total Sources 36,233 44,904 21,790 53,004 35,113 60,479 251,524
CIP Projects 30,939 26,743 23,402 24,738 30,510 34,102 170,434
Betterment Fees for Maintenance 896 908 901 924 947 971 5,547
Debt Service 4,307 5,116 5,690 6,873 7,559 8,575 38,118
Developer Services 1,302 1,308 1,322 1,335 1,348 1,362 7,976
Interfund Transfers 7,411 160 163 167 171 175 8,248
Total Uses 44,854 34,235 31,478 34,037 40,535 45,185 230,323
Net Sources (Uses)(8,621)$ 10,669$ (9,688)$ 18,968$ (5,422)$ 15,295$ 21,201$
CIP RESERVE FUNDS
The CIP Reserve Funds presentation, shown on the following pages, is designed to provide an
understanding of how the funding of CIPs is expected to financially influence the District over the next
six years. The financial impacts are based on CIP and its funding sources, including fund transfers in
accordance with the District’s Reserve Policy, and planned debt issuances. This data is captured in the
District’s Rate Model on an annual basis in order to make these projections.
$999
$23,428
$11,110
$770
$28,844
$16,593
$1,281
$25,441
$9,797
$1,376
$33,409
$20,702
$1,235
$33,680
$15,150
$1,504
$41,326
$22,528
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
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Fiscal Year
RESERVE FUND BALANCES
Betterment Replacement Expansion
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(Thousands $000s) FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 TOTAL
Expansion 16,236$ 20,103$ 18,806$ 19,583$ 25,853$ 30,292$ 130,871$
Betterment 6,529 1,854 946 1,470 1,156 366 12,322
Replacement 8,174 4,787 3,651 3,686 3,501 3,444 27,241
TOTAL 30,939$ 26,743$ 23,402$ 24,738$ 30,510$ 34,102$ 170,434$
(Thousands $000s) FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 TOTAL
Capital Facility Projects 22,912$ 21,338$ 14,477$ 11,603$ 14,395$ 15,792$ 100,517$
Maintenance Projects 5,834 2,815 2,775 3,055 2,870 2,940 20,289
Capital Purchase Projects 1,553 1,030 930 1,030 1,030 870 6,443
Developer Reimbursement Projects 640 1,210 1,990 1,350 530 - 5,720
Subtotal 30,939 26,393 20,172 17,038 18,825 19,602 132,969
FY 2010 Through FY 2014 Projects - 350 3,230 7,700 11,685 14,500 37,465
TOTAL 30,939$ 26,743$ 23,402$ 24,738$ 30,510$ 34,102$ 170,434$
CIP FUNDING SOURCE AND CATEGORY
$0
$10,000
$20,000
$30,000
$40,000
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
SIX-YEAR CIP BY FUNDING SOURCE
Expansion
Replacement
Betterment
$0
$10,000
$20,000
$30,000
$40,000
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
SIX-YEAR CIP BY CATEGORY
Capital Facility Projects Maintenance Projects
Capital Purchase Projects Developer Reimbursement Projects
183
CIP No. Description FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Total
CAPITAL FACILITY PROJECTS
P2009 PL - 36-Inch, SDCWA Otay FCF No. 14 to Regulatory Site 8,000$ 11,450$ 700$ -$ -$ -$ 20,150$
P2033 PL - 16-Inch, 1296 Zone, Melody Road - Campo/Presilla 2 150 1,000 669 - - 1,821
P2038 PL - 12-Inch, 978 Zone, Jamacha, Hidden Mesa, and Chase Upsize and Replacements 900 1,000 - - - - 1,900
P2040 Res - 1655-1 Reservoir 0.5 MG 1 1 83 700 795 - 1,580
P2129 Groundwater Exploration Program 10 10 15 25 630 1,280 1,970
P2143 Res - 1296-3 Reservoir 2 MG 1,900 1,265 - - - - 3,165
P2172 PS - 1485-1 Pump Station Replacement 1,125 850 - - - - 1,975
P2185 Res - 640-1 Reservoir 20.0 MG 3,900 - - - - - 3,900
P2190 PL - 10-Inch, 1485 Zone, Jamul Highlands Road to Presilla Drive 5 5 120 94 - - 224
P2191 Res - 850-4 Reservoir 2.2 MG 1,950 200 - - - - 2,150
P2318 PL - 20-Inch, 657 Zone, Summit Cross-Tie and 36-Inch Main Connections 200 344 - - - - 544
P2387 PL - 12-Inch, 832 Zone, Steele Canyon Road - Via Caliente/Campo 500 - - - - - 500
P2450 Otay River Groundwater Well Demineralization/Development 115 85 800 3,600 400 - 5,000
P2451 Rosarito Desalination Facility Conveyance System 150 150 150 150 1,350 3,000 4,950
P2457 Otay Mountain Groundwater Well Development 10 290 6,000 200 - - 6,500
P2460 I.D. 7 Trestle and Pipeline Demolition 20 55 300 - - - 375
P2462 Otay River Demineralization Feasibility Study 150 - - - - - 150
P2463 South Bay Regional Concentrate Conveyance Feasibility Study 15 - - - - - 15
P2464 San Diego 17 Pump Station and Flow Control Facility 15 - - - - - 15
P2465 Regulatory Site Material Storage Bins 220 - - - - - 220
P2466 Regional Training Facility 150 - - - - - 150
P2467 San Diego Formation Groundwater Feasibility Study 400 800 - - - - 1,200
P2471 850/657 PRS at La Presa Pump Station 5 90 205 - - - 300
P2472 Water Supply Feasibility Studies 150 50 50 50 50 50 400
P2473 PS - 711-1 Pump Station Improvement 50 150 - - - - 200
P2474 Fuel Storage Covers and Containment 100 - - - - - 100
P2475 Pump Station Fire Safety Improvements 50 - - - - - 50
P2476 Dis - 1090-1 Pump Station Disinfection System Upgrade 100 - - - - - 100
P2477 Res - 624-1 Reservoir Cover Replacement 250 200 - - - - 450
R2034 RecRes - 860-1 Reservoir 4 MG 104 394 1,800 1,500 - - 3,798
R2048 RecPL - Otay Mesa Distribution Pipelines and Conversions 10 1,200 650 140 - - 2,000
R2053 RWCWRF - R.O. Building Remodel and Office Furniture 50 - - - - - 50
R2058 RecPL - 16-Inch, 860 Zone, Airway Road - Otay Mesa/Alta 100 300 750 1,000 530 - 2,680
R2077 RecPL - 24-Inch, 860 Zone, Alta Road - Alta Gate/Airway 200 1,000 377 1,000 1,500 - 4,077
R2081 RecPL - 20-Inch, 944 Zone, Lane Avenue - Proctor Valley/Pond No. 1 590 - - - - - 590
R2087 RecPL - 20-Inch, 944 Zone, Wueste Road - Olympic/Otay WTP 100 1,200 600 50 - - 1,950
R2088 RecPL - 20-Inch, 860 Zone, County Jail - Roll Reservoir/860-1 Reservoir 81 149 1,000 250 - - 1,480
R2089 North District Recycled Water Regulatory Compliance 110 - - - - - 110
R2091 RecPS - 944-1 Pump Station Upgrade 324 - - - - - 324
R2092 Dis - 450-1 Reservoir Disinfection Facility 750 - - - - - 750
R2093 MBR City of Chula Vista 50 50 50 50 1,500 3,300 5,000
S2016 Solar Panel Installation Phase I 100 200 200 200 - - 700
42 Total Capital Facility Projects 23,012 21,638 14,850 9,678 6,755 7,630 83,563
REPLACEMENT/RENEWAL PROJECTS
P2356 PL - 12-Inch, 803 Zone, Jamul Drive Permastran Pipeline Replacement 705 - - - - - 705
P2366 APCD Engine Replacements and Retrofits 170 180 190 220 200 200 1,160
P2382 Safety and Security Improvements 169 40 30 30 - - 269
P2416 SR-125 Utility Relocations 10 - - - - - 10
P2422 Agency Interconnections 250 250 250 250 250 250 1,500
P2440 I-905 Utility Relocations 925 125 - - - - 1,050
P2441 NG/RAMAR Meter Replacements 100 - - - - - 100
CIP PROJECTS ($1,000s)
The 2009 Fiscal Year CIP Budget contains 66 projects. The costs for the work planned for Fiscal Year
2009 is $30.9 million. Of the 66 projects planned for Fiscal Year 2009, three are designated as
reimbursable projects with estimated costs of $540,000. These projects are built by developers and
reimbursed by the District.
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CIP PROJECTS ($1,000s)
CIP No. Description FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Total
REPLACEMENT/RENEWAL PROJECTS
P2453 SR-11 Utility Relocations 5 165 125 205 - - 500
P2456 Air and Vacuum Valve Upgrades 520 550 580 600 620 640 3,510
P2458 AMR Manual Meter Replacement 1,250 1,375 1,500 1,650 1,700 1,750 9,225
R2086 RWCWRF Force Main AirVac Replacements and Road Improvements 1,000 - - - - - 1,000
S2012 SVSD Outfall and RSD Replacement and OM Reimbursement 430 130 100 100 100 100 960
S2015 Calavo Lift Station Replacement 300 - - - - - 300
13 Total Replacement/Renewal Projects 5,834 2,815 2,775 3,055 2,870 2,940 20,289
CAPITAL PURCHASE PROJECTS
P2282 Vehicle Capital Purchases 228 220 220 220 220 210 1,318
P2285 Office Equipment and Furniture Capital Purchases 20 60 60 60 60 60 320
P2286 Field Equipment Capital Purchases 45 100 100 100 100 100 545
P2443 Information Technology Mobile Services 250 150 150 150 150 - 850
P2461 Records Management System Upgrade 50 - - - - - 50
P2469 Information Technology Network and Hardware 500 300 200 300 300 300 1,900
P2470 Application Systems Development and Integration 380 200 200 200 200 200 1,380
P2478 Administration Building Engine/Generator Set 80 - - - - - 80
8 Total Capital Purchase Projects 1,553 1,030 930 1,030 1,030 870 6,443
DEVELOPER REIMBURSEMENT PROJECTS
P2134 PL - 16-Inch, 711 Zone, Birch Road - SR 125/EastLake 200 10 - - - - 210
P2414 PL - 12" to 16" Oversize, 803 Zone, Dehesa Road - Dehesa Meadow/OWD Bndy 10 - - - - - 10
R2033 RecPL - 12-Inch, 944 Zone, Birch Road - La Media/EastLake 330 - - - - - 330
3 Total Developer Reimbursement Projects 540 10 - - - - 550
66 Total - FY 2009 Projects 30,939 25,493 18,555 13,763 10,655 11,440 110,845
7 FY 2010 Through FY 2014 Projects - 1,250 4,847 10,975 19,855 22,662 59,589
Grand Totals 30,939$ 26,743$ 23,402$ 24,738$ 30,510$ 34,102$ 170,434
185
CIP No. Description J/FS (1)Total FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Total
P2009 PL - 36-Inch, SDCWA Otay E 8,700$ -$ -$ 8,700$ 9,000$ 9,300$ 9,600$ 36,600$
P2033 PL - 16-Inch, 1296 Zone E 2,200 - - - - 2,200 2,300 4,500
P2038 PL - 12-Inch, 978 Zone B/R 1,500 - 1,500 1,500 1,500 1,500 1,500 7,500
P2040 Res - 1655-1 Reservoir B 900 - - - - 500 900 1,400
P2143 Res - 1296-3 Reservoir E 3,800 - - 3,800 3,900 4,000 4,100 15,800
P2172 PS - 1485-1 Pump Station B/R 7,400 - - 7,400 7,600 7,800 8,000 30,800
P2185 Res - 640-1 Reservoir E/B 37,600 - 37,600 17,900 37,600 38,700 39,900 171,700
P2190 PL - 10-Inch, 1485 Zone B 400 - - - - 400 400 800
P2191 Res - 850-4 Reservoir E/B 4,200 - 2,100 4,300 4,400 4,500 4,600 19,900
P2258 PS - Lower Otay Pump Station E 133,100 - - - - - 133,100 133,100
P2318 PL - 20-Inch, 657 Zone B 100 - - 100 100 100 100 400
P2357 PS - 657-1/850-1 Pump Station B (44,400) - - - - (44,400) (45,700) (90,100)
P2370 Res - Dorchester Reservoir B (4,800) - - - - (4,800) (4,900) (9,700)
P2387 PL - 12-Inch, 832 Zone B 600 - 600 600 600 600 600 3,000
P2450 Otay River Groundwater Well E 28,100 - - - - - 28,100 28,100
P2457 East Otay Mesa Groundwater E 11,200 - - - - 11,200 11,500 22,700
R2034 RecRes - 860-1 Reservoir E 7,500 - - - - 7,500 7,700 15,200
R2048 RecPL - Otay Mesa Distribution E 10,200 - - - - 10,200 10,500 20,700
R2077 RecPL - 24-Inch, 860 Zone E 2,700 - - - - 2,700 2,800 5,500
R2081 RecPL - 16-Inch, 944 Zone E 2,700 1,400 2,800 2,900 3,000 3,100 3,200 16,400
R2087 RecPL - 16-Inch, 944 Zone E 1,500 - - - 1,100 1,500 1,500 4,100
R2088 RecPL - 24-Inch, 860 Zone E 2,400 - - - 1,800 2,500 2,600 6,900
R2091 RecPS - 944-1 Pump Station Upgrade E/B 107,900 - 107,900 111,100 114,400 117,800 121,300 572,500
R2092 Dis - 450-1 Res Disinfection Facility B 10,700 - 10,700 11,000 11,300 11,600 11,900 56,500
Total Capital Facility Projects 336,200$ 1,400$ 163,200$ 169,300$ 196,300$ 188,500$ 355,600$ 1,074,300$
P2458 AMR Retrofit B/R (226,400) (36,500) (34,500) (34,700) (39,300) (40,400) (41,000) (226,400)
Total Replacement/Renewal Projects (226,400) (36,500) (34,500) (34,700) (39,300) (40,400) (41,000) (226,400)
(1)Projected Incremental Operating Expenditures(operating cost) or O&M includes labor, benefits, materials and overhead.
(2)J/FS - Justification and Funding Source - Some projects have multiple funding sources as indicated by a slash (/):
E - Expansion B - Betterment R - Replacement
CAPITAL FACILITY PROJECTS
REPLACEMENT/RENEWAL PROJECTS
O&M cost for pipes: Total annual operating cost divided by the number of feet of pipe in the system = O&M cost to maintain a foot of pipe.
This rate is then multiplied by the number of feet in new pipeline, and is increased annually for inflation.
O&M cost for a pump station: Total annual operating cost divided by the number of million of gallons a day (MGD) capacity in the system =
O&M cost per MGD. This rate is then multiplied by the MGD capacity of the new pump station. Similarly, power cost per MGD for
transmission is calculated and applied to the MGD of the new pump station. Both O&M and power costs are increased annually for inflation.
O&M cost for a reservoir: Total annual operating cost divided by the number of million gallons (MG) of storage capacity in the system. This
rate per MG is then multiplied by the MG capacity of the new reservoir. Reservoirs require chemical treatment; therefore, the chemical cost
per MG is estimated and applied to the future operating cost. Both O&M and chemical costs are increased annually for inflation.
Each of the capital purchases and other types of assets has its own unique O&M cost.
CIP JUSTIFICATION AND IMPACT ON OPERATING BUDGET
As the District grows and constructs new capital assets, the cost to maintain these new assets will be
added to the operating budget as they are brought into service. To determine the cost to maintain these
new assets, the District looks at the cost of maintaining similar assets through the Infrastructure
Management System and financial system. Costs are tracked by three main infrastructure asset groups
of pipes, pump stations and reservoirs, as well as capital purchases and other types.
When the new assets are built or acquired for expansion or betterment, it is assumed that there will be
new operating costs associated with them. Some projects such as the Automated Meter Reading
program actually reduce operating costs through the automation process.
Projected Incremental Operating Expenditures (1)
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CIP JUSTIFICATION AND IMPACT ON OPERATING BUDGET
CIP No. Description J/FS
(2)Total FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Total
P2443 IT Mobile Services E/R 18,000$ 18,000$ 18,500$ 19,100$ 19,700$ 20,300$ 20,900$ 116,500$
Total Capital Purchase Projects 18,000 18,000 18,500 19,100 19,700 20,300 20,900 116,500
P2104 PL - 12-Inch, 711 Zone E 2,000 - - - - - 2,000 2,000
P2107 PL - 12-Inch, 711 Zone E 1,700 - - - - - 1,700 1,700
P2134 PL - 16-Inch, 711 Zone E 1,000 - - 1,000 1,000 1,000 1,000 4,000
P2325 PL - 10" to 12" Oversize E 2,300 - - - 2,300 2,400 2,500 7,200
P2367 PL - 16-Inch, 980 Zone E 3,300 - - 1,700 3,400 3,500 3,600 12,200
P2402 PL - 12-Inch, 624 Zone E 1,000 - - - 1,000 1,000 1,000 3,000
P2403 PL - 12-Inch, 624 Zone E 3,100 - - - - - 3,100 3,100
P2414 PL - 12" to 16" Oversize E 2,400 - 2,400 2,500 2,600 2,700 2,800 13,000
R2028 RecPL - 8-Inch, 680 Zone E 2,400 - - - - - 2,400 2,400
R2033 RecPL - 12-Inch, 944 Zone E 2,100 - 2,100 2,200 2,300 2,400 2,500 11,500
R2042 RecPL - 8-Inch, 944 Zone E 900 - - 500 900 900 900 3,200
R2047 RecPL - 12-Inch, 680 Zone E 1,400 - - 700 1,400 1,400 1,400 4,900
R2058 RecPL - 16-Inch, 860 Zone E 5,400 - - - - 5,400 5,600 11,000
R2082 RecPL - 24-Inch, 680 Zone E 1,200 - - 1,200 1,200 1,200 1,200 4,800
R2083 RecPL - 20-Inch, 680 Zone E 700 - - 700 700 700 700 2,800
R2084 RecPL - 20-Inch, 680 Zone E 1,900 - - - 1,900 2,000 2,100 6,000
R2085 RecPL - 20-Inch, 680 Zone E 1,300 - - - 1,300 1,300 1,300 3,900
Total Developer Reimbursement Projects 34,100 - 4,500 10,500 20,000 25,900 35,800 96,700
Total Operating Budget Cost Impact 161,900$ (17,100)$ 151,700$ 164,200$ 196,700$ 194,300$ 371,300$ 1,061,100$
FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Total
(17,100)$ 30,200$ 30,600$ 59,800$ 81,000$ 116,900$ 301,400$
- 91,900 100,900 103,900 75,500 213,100 585,300
- 29,600 32,700 33,000 37,800 41,300 174,400
(17,100)$ 151,700$ 164,200$ 196,700$ 194,300$ 371,300$ 1,061,100$
Note:See pages 184-185 for complete description of CIP projects.
Operations and Maintenance
Energy
Chemical
Total Operating Budget Cost Impact
Cost Category
CAPITAL PURCHASE PROJECTS
DEVELOPER REIMBURSEMENT PROJECTS
The preceding schedule shows anticipated operating costs associated with each project in the CIP, and
below is a summary of each category of new costs that will be impacted. No additional revenues are
associated with the individual projects, as revenues are linked more directly to growth in water sales
and capacity fee revenues.
Projected Incremental Operating Expenditures
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Item# Description Amount Type
Field Equipment
Engineering Development
25 Fuel island management system $ 45,000 R
Total Field Equipment - Engineering Development 45,000
Total Field Equipment 45,000
Office Equipment
Administration
12 Color Copier/Printer $ 20,000 R
Total Office Equipment - Administration 20,000
Total Office Equipment 20,000
Vehicles
Operations
13 2008 Ford Ranger or equivalent mid-size 17,000 R
14 2008 Ford Ranger or equivalent mid-size 17,000 R
15 2008 Ford F250 or similar cab and chassis 25,000 R
16 2008 Ford Ranger 4x4 or equivalent mid-size 19,000 R
17 2008 Ford F150 or similar 21,000 R
18 2008 Ford F250 or similar cab and chassis 21,000 R
19 2008 Toyota Matrix or equivalent 20,000 R
20 2008 Ford Ranger or equivalent mid-size 17,000 R
21 2008 Ford Ranger or equivalent mid-size 17,000 R
22 2008 Ford Explorer or equivalent 24,000 R
23 2008 Ford Ranger or equivalent 17,000 R
24 2007 or 2008 Yamaha Rhino 700 Auto 4x4 Utility Terrain Vehicle 13,000 R
Total Vehicles 228,000
Total Capital Purchases Budget 293,000$
N -New
R -Replacement
FY 2009 CAPITAL PURCHASES
Capital purchases are non-recurring operating expense items for District-wide use that cost more than
$10,000 each and have an estimated useful life of two years or more. The Capital Purchase Projects
include Vehicle, Office Equipment and Furniture, and Field Equipment purchases.
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Introduction
This section includes a brief synopsis of the District’s Reserve Policy, Investment Policy, and
Debt Policy.
The Reserve Policy is a comprehensive policy which explains how the District is operated,
including the distinction of business segments to ensure users pay their fair share of costs. It
explains how fees are collected and what they are used for. It also explains the difference
between funds, as well as how transfers shall be made, and defines each reserve target funding
level. The District adopted this new policy in March 2006.
The following chart depicts the detailed flow of funds that may be useful in understanding the
Reserve Policy.
SUMMARY OF FINANCIAL POLICIES
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Investment Policy is a guideline for the prudent investment of cash. It follows government
code as well as authority granted by the Board of Directors. The primary objectives, in order
of significance, are to invest safely, with adequate liquidity, and to achieve sufficient return on
investments. This policy was revised and adopted by the Board in September 2006 and
received a Certification of Excellence Award from the Association of Public Treasurers of the
United States and Canada (APT US&C).
The Debt Policy establishes that debt financing will only be used for capital Improvement
Projects (CIP), which have an extended useful life on ten years or longer, and that exceed the
District’s ability to be funded with current resources such as annual cash flow, fund balances,
or reserves. Additionally, the life of a project is expected to exceed the term of the financing.
The District strives to maintain the highest possible credit ratings for all categories of long-
term debt that can be achieved without compromising delivery of basic services and the
achievement of district policy objectives. This policy was revised and adopted by the Board in
January 2007 and receive a Certification of Excellence award from the Association of Public
Treasurers of the United States and Canada (APT US&C).
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RESERVE POLICY
1.0 The District
The Otay Water District is a publicly-owned water and sewer service agency, more specifically,
a California special district, authorized in 1956 by the State Legislature under the provisions of
the Municipal Water District Act of 1911. The District is a "revenue neutral" public agency,
meaning each end user pays its fair share of the District's costs of water acquisition, construction
of infrastructure and the operation and maintenance of the public water facilities.
The District operates three distinct business segments:
• Potable water
• Recycled water
• Sewer
Each of these business segments has a distinct customer base. In addition, the developer
community, large and small, makes up a significant class of customer for each business segment.
As a result, the District has four distinct customer service types:
• Developers
• Potable water users
• Recycled water users
• Sewer users
The District has established practices and developed computer systems that have enabled the
District to maintain a clear separation between these service costs. Regardless of customer class,
financial principles regarding cost allocation and fund accounting are fundamental to the
District’s Reserve Policy. These principles are derived from the statements of the Governmental
Accounting Standards Board (GASB), and from oversight and advisory bodies such as the
California State Auditor, the Little Hoover Commission, and the Government Finance Officers
Association (GFOA). These have significant impacts on how the finances of the District are
organized and how financial processes work within the organization.
1.1 The District’s Use of Funds
All of the District’s expenditures fall into two broad categories: operating costs and capital
expenditures. The Operating and Maintenance (O&M) expenditures generally support the
purchase and delivery of potable and recycled water, and the transportation and treatment of
sewage. The capital expenditures support the construction of infrastructure necessary to deliver
service. The District uses various reserves to support the operating and capital efforts. Capital
infrastructure is funded using two methods: pay-as-you-go or debt issuance (requiring annual
debt service). The Capital Improvement Program (CIP) and the two funding methods support
the construction of infrastructure in all three business areas: potable, recycled, and sewer. Both
the capital and operating efforts within the District are different for each of the four distinct
customer types.
191
The District uses a set of funds to accumulate and account for revenues allocated to different
activities. Those funds receive funding up to the levels defined in this policy. Each year, as a
part of the annual budget process, the District’s rate model is updated for each fund with the
current fund balances and the estimated revenues and expenditures for the next six years. The
expenditure or funding requirements are then evaluated to ensure that the existing fund levels
and additional revenues are sufficient within the current budget cycle and the next five years. If
a deficit is identified, then options for transfers, debt, and/or rate increases are evaluated.
1.2 The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all facilities within the three business segments
are allocated to three cost areas: Expansion, Betterment, and/or Replacement. The funding
allocation for these three cost areas is defined in the District’s Capital Improvement Program
(CIP) and is determined by an engineering analysis which identifies which type of customers will
benefit from the facility. Expansion is for new customers, betterment is for existing customers
where the facility is improved, and replacement is for existing customers where the facility is
replaced. If an expansion capital project also results in
betterment or replacement, the costs are allocated to
new users (Expansion) and existing users (Betterment
and Replacement) so that the developers will only pay
the expansion portions. This policy protects both the
developing and established areas from incurring
inappropriate costs. Developing areas are not required
to finance facilities that are due for replacement or
betterment; conversely, established areas are not
required to replace facilities before they are worn out
simply because of new development. Each facility has
the potential to be classified into all three categories to
various degrees. In addition to these standard
categories there are occasional CIPs that may be
billable to a third party such as relocations.
a. Expansion Fund
The portion of a project that benefits new users is funded by the developing areas through
capacity fees. Future expansion costs are divided by all future connections to calculate the
capacity fee. This capacity fee is the primary funding source for expansion projects and is
accounted for separately and used solely for the planning, design, and construction of expansion
facilities. The majority of the funding sources are restricted in nature with the exception of the
general use funds placed into the Designated Expansion Fund.
b. Betterment Fund
The District may construct a project that results in a significant benefit to existing users.
Facilities that improve reliability or meet new or increased standards of service are considered
betterment facilities. In such a case, user rate charges and betterment fees could be used as a
funding source for that portion of the project that results in a lowering of overall operation and
maintenance costs or an improvement to the existing users. Betterment may also be a result of
increased standards or regulations on water or sewer systems. If the existing system must be
improved in order to meet the new standards this cost is a betterment cost. The majority of the
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funding sources are restricted in nature of their use and the geographic area of use, with the
exception of the general use funds placed in the Designated Betterment Fund.
c. Replacement Fund
Replacement of facilities is funded primarily by
general user rates. The portion of a project that
benefits existing users is funded by the
Replacement Fund. It is expected that the
District will debt finance a significant portion
of the future replacement facilities. The
District has a Debt Policy (Policy No. 45) that
guides the debt issuance process. The
replacement reserve will serve as an immediate
funding source for replacement projects and
will provide the necessary flexibility to begin
projects while the appropriate debt financing is
being obtained.
1.21 Relocations
Occasionally, relocation of facilities is required when the District has easements for the pipe
location. When a project is relocated, the cost of the new facility shall be funded by the party
without an easement or if no parties have easements then it is funded by the party causing the
relocation. When this occurs, a CIP project may be created which is wholly or partially funded
by a third party who must reimburse the District for the cost of the relocation. Depending on the
nature of the facilities, the funding source for these projects could be from replacement,
expansion, betterment or third party funding of projects at the District. Each project is
individually negotiated. When determining how much this fund will pay for construction, the
following guideline is suggested: If a project has more than five years of useful life remaining
then funding is incremental, if there is less than five years remaining funds are contributed from
the Replacement Fund on a pro-rata basis.
1.22 Oversizing
In some cases, where reasonable, the developer may be required by the District to oversize new
facilities for future development in order to obtain economies of scale. The developer will be
reimbursed for incremental over-sizing costs as per Policy No. 27. These reimbursements are
only for backbone facilities funded by capacity fees - not for the distribution system within a
development which is an obligation of the developer separate from the capacity fees. These
smaller distribution pipes serving the individual homes within a development are often referred
to as “in-tract” pipelines.
1.23 Exclusion of Developed Areas from Expansion Costs
Developed areas are considered to have sufficient supply and capacity to meet their current
requirements as provided by the developers. In addition, they are considered to have borne
capital financial costs that are at least proportionate to the benefits they have received from
capital facilities. Accordingly, no regional capital financial costs are allocated to these areas so
that they will not incur any costs for newly developing areas. In the case of a capital project that
produces District-wide cost savings, however; the District may provide financial support to new
facilities.
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1.24 Improvement Districts (IDs)
Improvement Districts are established in order to facilitate the funding of a particular
improvement by the specific beneficiaries. The District has a number of Improvement Districts
that were established for General Obligation (GO) debt repayment. Many of these GO issuances
have been paid off and, as outlined in the Debt Policy, it is unlikely that the District will issue
additional GO debt. IDs continue to be used for other funding purposes. First, to distinguish
sewer customers from water customers on the county tax roll; second, to place parcels on the
county tax roll for the collection of availability fees; third, for the charging of special water rates;
and fourth, to track which properties have paid annexation fees.
Over the years, the District has taken a district-wide perspective to funding improvements. This
philosophy is evident by the district-wide capacity fee and annexation fee. The District also uses
district-wide water rates. As time continues, it is expected that IDs will continue to outgrow
their purpose. So, while many IDs remain their use will diminish over time.
1.3 The Purpose of the Policy
Public entities accumulate and maintain reserves to ensure both
financial stability and the continuation of the ability to provide
services. Financial stability and the increase in credit quality that
result from stability allow the public entity to weather times of
uncertainty and the impacts of negative events, both major and
minor. Funded reserves allow for the continued maintenance of
property and payment of expenses beyond the magnitude of the
funds available in a single fiscal period. In the final analysis, the
type and level of reserves are driven by the type and magnitude of
uncertainty faced by the District.
A “reserve” has a number of meanings:
• Working capital required to insure timely payment of
obligations
• A buffer against volatility in revenues
• Liquidity required to obtain other goods and services (e.g.,
bank services)
• Designated funds to protect creditors
• Funds set aside to replace assets at the end of their useful lives
• Funds set aside to repair or replace assets damaged or destroyed at unanticipated times
It is important to note that reserve, fund balance, and net assets are not the same. Fund balance
and net assets are accounting terms and may not always be in the form of cash or liquid
investments. Fund balances and net assets may not always be reserves unless a designation of all
or a portion of fund balance is made. It is important to note that the term, fund balance was
recently replaced by net assets as codified by the Governmental Accounting Standards Board
(GASB).
194
In short, reserves are the liquid assets of the District, accumulated and maintained for application
to fund contingent future activities, whether known or unanticipated, operating or capital in
nature. The District’s Reserve Policy governs the management and use of these funds. Few
policies have a more significant impact on the financial health and stability of the District. This
policy explains several key financial concepts used by the District and provides some
background information to the overall strategies and practices utilized. The District has a
fiduciary obligation to its customers to manage and direct the use of public funds for the purpose
of providing water and sewer services in an efficient and financially sound manner.
1.4 Policy Guidelines
In 2000, the Little Hoover Commission reviewed the levels of reserve funds for special districts
in California and prepared a report reflecting that special districts were accumulating
unreasonable levels of funds. As a proactive response, the California Special Districts
Association (CSDA) prepared Reserve Guidelines for its members. The Reserve Guidelines
were significant in noting that reserve levels need to be in context of the organization’s overall
business model and capital improvement plan.
There are a number of potential events which the District should consider in the development of
reserves:
• Economic Uncertainty—performance of the regional economy and the impact of that
performance on demand for water
• Weather—the amount of rainfall and the impact of weather on the availability and the cost of
water
• Government Mandates—the impact of federal and state regulation, particularly
environmental regulation
• Tax Changes—Limitations on the District’s taxing and spending powers through the passage
of a voter referendum, the impound of District property taxes or the removal of the District’s
power to levy property taxes, further increases to ERAF contributions or changes in
calculation methodology
• Operating Costs—Increases in operating and maintenance costs because of inflation, labor
agreement or other modification
• Force Majeure—Unanticipated expenditures resulting from natural disasters or intentional
acts
• Emergency Maintenance—Unanticipated expenditures resulting from unexpected failure of
assets (e.g. rupture in the primary transmission system)
• Unexpected Variation in Cash Flow—the incidence of additional costs or decreased revenues
that requires short-term borrowing in the absence of sufficient funds
The California State Auditor has, in its oversight role, offered a number of quality
recommendations for the development of reserve policies as outlined in its report entitled,
“California’s Independent Water Districts: Reserve Amounts Are Not Always Sufficiently
Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004,
2003-137. Each of these recommendations has been incorporated into this policy in an effort to
address key issues surrounding the management and use of District reserves. The detailed
objectives as identified by the State Auditor are as follows:
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• Distinguish between restricted and unrestricted reserves
• Establish distinct purposes for all reserves
• Set target levels, such as minimums and maximums, for the accumulation of reserves
• Identify the events or conditions that prompt the use of reserves
• Conform with plans to acquire or build capital assets
• Receive Board approval and be in writing
• Require periodic review of reserve balances and rationale for maintaining them
Yet, the State Auditor’s report acknowledges that the California Constitution (Article XIII B,
Section 5) is vague in its provisions governing the accumulation and use of reserve. Specifically,
the Constitution states that “each entity of the government can establish contingency, emergency,
reserve, or similar funds as it deems reasonable and proper.1” Similarly, the State’s Water Code
does not impose any requirements as to specific or recommended reserve fund levels. As a result,
the public finance community as a whole has yet to settle on any real objective standards for the
level of reserve funds appropriate for governmental enterprises. This lack of consensus as to
specific standards is indicative of the wide variance of the financial and operations contexts for
different districts and different contingencies justifying reserve of funds.
The Government Finance Officers Association (GFOA) in its Recommended Practice on
Appropriate Level of Unreserved Fund Balance in the General Fund (2002) states:
In establishing a policy governing the level of unreserved fund balance in the general
fund, a government should consider a variety of factors, including:
• The predictability of its revenues and the volatility of its expenditures (i.e., higher
levels of unreserved fund balance may be needed if significant revenue sources are
subject to unpredictable fluctuations or if operating expenditures are highly volatile).
• The availability of resources in other funds as well as the potential drain upon general
fund resources from other funds (i.e., the availability of resources in other funds may
reduce the amount of unreserved fund balance needed in the general fund, just as
deficits in other funds may require that a higher level of unreserved fund balance be
maintained in the general fund).
• Liquidity (i.e., a disparity between when financial resources actually become
available to make payments and the average maturity of related liabilities may require
that a higher level of resources be maintained).
• Designations (i.e., governments may wish to maintain higher levels of unreserved
fund balance to compensate for any portion of unreserved fund balance already
designated for a specific purpose).
In the preparation of this policy, each of the CSDA guidelines and the GFOA recommendations
has been considered. In addition, all seven objectives provided by the State Auditor are
specifically addressed for each reserve. The District wholly supports the State Auditor’s efforts
to bring a high-level of quality to reserve governance and establishing a standard of performance.
1 California State Auditor, Bureau of State Audits, “California’s Independent Water Districts: Reserve Amounts Are
Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004,
2003-137; p. 8.
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The District recognizes that the customer pays for services provided. Quality management
requires that periodic valuations be performed so that fees and charges can be set at appropriate
levels to recover the cost of service. The District’s Reserve Policy has been drafted with
consideration of the GFOA, CSDA, and State Auditor general guidelines as provided above. In
addition, the District has adopted the following principles in the management of its funds:
• Funds are held and used only for the purpose for which they are collected. This is done to
maintain equity between customers.
• Each of the service types is tracked separately so that expenditures and revenues can be
monitored and evaluated for each customer type. This provides the District with the
necessary information to appropriately charge for each of the services.
• Separation of O&M from capital expenditures occurs within each of the service types. This
is done because the funding of these expenditures is often on different timelines or use
different funding sources.
• The District will hold its reserve at responsible and prudent levels. This policy sets
minimum, maximum, and target levels for each of the various funds. This has been done so
that the District can maintain funds to meet the purpose for which the funds were established.
The levels are set by reference to line items in the District’s financial statements and
approved budgets. This allows reserve levels to adjust to the District’s changing financial
circumstances.
• Debt financing of facilities provides intergenerational equity and maintains rates at
reasonable levels. This equity is accomplished with the long-term financing by spreading the
cost of facilities over the life of the facilities. The burden to pay for facilities is then paid by
those who use them. Optionally, the District could amass significant reserves by pre-
collecting funds in a Replacement Reserve Fund allowing the District to cash fund all
replacements. In order to obtain those funds, significant rate increases would be required,
burdening the current customers and creating reserve levels difficult to defend to the
ratepayers or other oversight entities.
These concepts are fundamental to the way the District manages its funds and have a direct
impact on the way rates and charges are set. The District performs annual budget evaluations
and updates its rate study model on at least an annual basis to monitor and adjust the various
funds and revenue sources. The separation, tracking, and projecting of the various funds and
expenditures create the essential information necessary for the equitable rate structure
maintained by the District. The annual review preserves the balance between services provided
and the prices charged. This review also insures that funds will be available to continue to serve
the District’s customers.
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Sources of Funds
2. 0 Developers
a. Meter Installation Charges (General Use)
Meter fees are charges collected for new water service connections. Fees vary depending upon
meter size and type of service. The costs associated with meter installations are included in the
Operating Expenses section of the budget. These charges are funded by developers.
b. Annexation Fees (General Use)
Annexation Fees are outlined in Section 9 of the Code of Ordinances. This is the buy-in to the
District’s potable and recycled water facilities paid by the developer and based on the excess
capacity built by existing users. This fee insures that future users fund a portion of the facilities
that were sized and built for their future use by prior customers. The annexation fees are general
use funds and help to offset current customer costs. The calculation of the fee uses a system-
wide evaluation that combines the potable and reclamation systems. This methodology is used
because the two water systems work hand-in-hand, the recycled system brings a new supply of
water to the District reducing the need for potable systems and the higher cost of obtaining new
potable supplies.
c. Developer Deposits (General Use)
These deposits are for the engineering and operations services provided to developers. They are
tracked separately for each developer and any excess amount is returned to the developer.
d. Capacity Fees (Restricted)
The capacity fee is outlined in Section 28 of the Code of Ordinances. Capacity fees are based on
the estimated construction cost of expansion divided by the number of future Equivalent
Dwelling Units (EDUs). The capacity fee covers costs including, but not limited to, planning,
design, construction, and financing associated with facilities for the District’s expansion needs.
Ultimate facility needs are based on projected land use planning. These needs and the projected
costs change over time as regulatory agencies determining land use make changes. Significant
variations in future land use occur and can alter projected facility requirements. As these
changes occur, the District will review the capacity fee calculation. These fees are paid by
developers.
The District’s construction of infrastructure occurs prior to the addition of EDUs. This serves
two purposes: one it ensures that the District can serve the pending construction as it is
completed; two, it is more efficient to oversize many facilities at the outset rather than build for
the current need and then reconstruct when the future need is realized. As a result of this
strategy, the District has financed construction with bond financing as the existing expansion
funds are depleted.
The capacity fee is calculated based on the expansion costs of the combined recycled and potable
water systems needs. This methodology, just like the annexation fee methodology, is used
because the two water systems work hand-in-hand. All capacity fees can be used for either
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potable or recycled but only for expansion needs. So, while capacity fees are not restricted
separately, one portion for potable and the other portion for recycled, they are tracked separately.
DEVELOPERS
Annexation Fees Developer DepositsMeter Installation Charges Capacity F
unds Restricted Funds
ees
Designated F
Unrestricted and se)
Undesignated(General UFund
DIAGRAM 2.0:
Flow of Funds – Developer Sources
2.1 Customers/Users
a. Uniform Rates and Charges (General Use)
Charges to users for water, sewer, and recycled water are uniform throughout the District for
similar customer types. This policy reduces possible misunderstanding that might occur among
customers if rates varied between geographical areas. It also provides for an administratively
straightforward billing process.
b. Monthly System Fees (General Use)
This is a fixed revenue source that is charged monthly. The amount of the charge is based on the
meter size.
c. Energy Charges (General Use)
The energy pumping fee is $0.034 per unit of water for each 100 feet of lift, or fraction thereof,
above the base elevation of 450 feet. This charge is placed on the monthly water bills of all
water customers.
d. Penalties (General Use)
Penalties are added to the monthly water and sewer bills for late charges, locks, etc.
e. Pass-through Fixed Charges (General Use)
A fixed monthly charge to the District’s customers intended to collect sufficient funds to pass-
through the increased fixed cost from CWA and MWD.
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f. Special Rates and Charges (Restricted)
In addition to the uniform water charges, the District currently has five special water rates and
one sewer rate. The five water rates are all for construction, installation, and maintenance of
water storage reservoirs, pump stations, and water lines in the respective areas. Each of these is
listed as follows:
• North District water charge (code section 25.03H)
• ID 9 water charge (code section 25.03I)
• ID 3 water charge (code section 25.03J)
• ID 10 water charge (code section 25.03J)
• La Presa water charge (code section 25.03J)
• Russell Square sewer charge (code section 53.04C)
When these rates were established they were for the
specific purpose of constructing, installing, and
maintaining the water and sewer systems in the areas that
they were collected. Therefore, these are Restricted
Funds by geographic area as well as by purpose. These
fees however, can be used for maintenance, unlike the
availability fees. These six special fees along with
availability fees are tracked separately, by geographic area, so they can be evaluated for the
target funding levels separately. To meet this need, each special rate and charge is accounted for
in a “sub-fund” of the betterment fund.
g. Temporary Meter Fees (General Use/Restricted)
Water charges, in lieu of capacity fees, are charged on temporary meters. This is done because
while temporary meters use system capacity they are not charged a capacity fee. Temporary
water use is charged at two times the water rate with the added charge placed in the Restricted
Expansion Fund. The primary users of these temporary meters are developers however; general
customers also use these for various purposes.
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DIAGRAM 2.1: Flow of Funds – Customer Sources
CUSTOMERS / USERS
Energy ChargesMonthly System
Fees
Uniform Rates
and Charges
Unrestricted and
Undesignated
Penalties
Temporary
Meter Fees Special Rates
and Charges
Pass -through
Fixed Charges
Restricted FundsDesignated Funds
(General Use)
Fund
2.2 County-Collected Taxes and Fees
a. General Levy Property Tax Receipts (1% Property Tax) (General Use)
In 1978, Proposition 13 limited general levy property tax rates for all taxing authorities to a total
rate of one percent of the assessed value. Subsequent legislation, AB 8, established that the
receipts from the one percent levy were to be distributed to taxing agencies proportionate to each
agency’s general levy receipts prior to Proposition 13. Funds received are for general use.
b. Availability Charges (General Use/Restricted)
The District levies availability charges each year in developed and undeveloped areas. Current
legislation provides that any amount up to $10 per parcel is general use and any amount over $10
per parcel is restricted to be expended in and for that Improvement District (ID). IDs were
formed to provide the lowest cost funding possible for the development of water and sewer
systems. Accordingly, the District may use any amount over $10 to develop water and sewer
systems which are either, expansion, betterment, or replacement. This portion is geographically
restricted and restricted by purpose. The Restricted Funds are accounted for in “sub-funds” of the
Betterment Fund (see 2.1 f.).
Availability fees can be used for the development of facilities consistent with the purpose of the
ID which they are collected in, while special rates and fees can also cover the maintenance of
those facilities. As charges are incurred on these projects the respective IDs are charged
reducing the betterment fund. In the event that funds are not used, the Restricted Funds must be
returned to the property owners that paid them. Therefore, the monies in this fund may only be
used to finance the construction, installation, and maintenance of the systems within the
geographic area of the specific IDs. The District has historically used these funds for
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betterment capital facilities however, they are available for any facility construction purpose
benefiting the ID whether replacement, betterment, or expansion.
Each year the District sends notices to all new customers informing them of the availability fees
and their purpose. This notice also informs the customers of the date and time of the public
hearing to receive public comment on this fee. The availability fees are split between the
Betterment Fund and the General Fund.
c. State Loan Assessment (Restricted)
The District assesses a $54 charge per unit of sewer service each year on the sewer customers.
This is collected via the County Tax Roll and is specifically collected for the repayment of the
State Loan.
d. General Obligation (GO) Bond Assessments (Restricted)
The District occasionally issues GO debt and establishes an Improvement District for the
repayment of that debt. When this financing method is used, the County Tax Roll can be used to
collect funds and pay debt obligation
.
COUNTY-COLLECTED TAXES AND FEES
State Loan
Assessment
Availability
Charges
General Levy
Property Tax
Receipts
Unrestricted and
Undesignated
(General Use)
Fund
Designated Funds Restricted Funds
General Obligation
Bond Assessments
DIAGRAM 2.2: Flow of Funds – County Collection Sources
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2.3 Miscellaneous Income
a. Miscellaneous Rents and Leases (General Use)
Revenues received from the rental and lease of District property. There is also a one-time fee
charged with the set-up of each new lease. The District incurs expenses related to these rents and
leases and this fee’s purpose is to recover the cost to set up the lease.
b. Sewer Billing Fees (General Use)
Fees received from the City of Chula Vista for processing and billing of their sewer customers
within our District.
c. Interest Income or Expense Allocation (General Use, Designated, and Restricted)
Interest income (expense) will be allocated each month based upon each fund's month-ending
balance.
DIAGRAM 2.3: Flow of Funds – Miscellaneous Income Sources
MISCELLANEOUS INCOME
Interest Income
or Expense
Allocation
Sewer Billing FeesMiscellaneous
Rents and Leases
Unrestricted and
Undesignated
(General Use)
Fund
Designated Funds Restricted Funds
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2.4 Debt Issuance
a. Loans (General/Restricted Use)
As the District determines that additional funding is required for a particular purpose the option
of borrowing is considered. The determination to borrow is made as a part of the annual rate
model update and is evaluated in accordance with the Debt Policy before it is recommended to
the Board for action. As an option to bond indebtedness, loans are available especially to satisfy
short tern financing needs. These loans may or may not be contractually restricted for a
particular purpose.
b. General Obligation (GO) Bonds (Restricted)
As the District becomes more developed it becomes less likely that GO debt will be used as it
requires a vote of the public to be approved. Bond proceeds are restricted for the construction of
those facilities identified in the GO bond issuance. Occasionally, specific portions of bond
proceeds may be allocated for the repayment of the principal and interest, also called debt
service, on these bonds. As the District determines that additional funding is required for a
particular purpose, the option of debt issuance is considered. The determination to issue debt is
made as a part of the annual rate model update and is evaluated in accordance with the Debt
Policy before it is recommended to the Board for action.
c. Certificates of Participation (Restricted)
DEBT PROCEEDS
Certificates of
Participation
General Obligation
BondsLoans
Unrestricted and
Undesignated
(General Use)
Fund
Designated Funds Restricted Funds
General revenues of the District are pledged as security for COPs indebtedness. Before issuing
COPs, the District will determine that additional funding is required for a particular purpose, the
option of debt issuance is considered. The determination to issue debt is made as a part of the
annual rate study update and is evaluated in accordance with the Debt Policy before it is
recommended to the Board for action. This form of financing has become the industry’s
preferred form of financing as it does not require a vote of the general public.
DIAGRAM 2.4: Flow of Funds – Debt Issuance Sources
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2.5 Inter-fund Transfers
Each year in the budgeting process future reserve levels are projected over the next six years.
Based on these projections, fund transfers are recommended. Monies may be transferred
between Unrestricted and General Fund (see 4.0 “Funding Levels” and 4.1 “Fund Transfers”).
Funds may not be transferred to or from any of the restricted funds.
Fund Types
3.0 General Funds
a. Purpose
The General Fund is neither restricted nor designated. The District maintains only one General
Fund for each business segment (water, sewer, and recycled). This fund holds the working
capital and emergency operating reserves. This fund can be used to supplement the District’s
rates and charges and be a temporary source of revenue to balance the Operating Budget and
avoid spikes in the rates or significant and abrupt increases. This would only occur if there was a
temporary need for funds that would smooth out a rate spike or to ramp up what would otherwise
be a dramatic rate increase.
This fund also plays a role in the debt planning of the District. It is an industry practice to have a
fund that can be used to stabilize rates. This fund is viewed by the debt markets as a
commitment by the District to ensure financial stability of the rates and charges of the District.
The District is anticipated to issue a number of debt issuances over the years and this fund will
help the District not only to stabilize rate fluctuations but also access low cost financing for
future projects.
While the General Fund has a short-term focus to fund the District’s annual operations, it is
supported by the six year rate model. This fund is primarily used to fund the operations of the
District however; it can be used for any District purpose.
b. Sources
Meter installation charges, annexation fees, temporary meter fees, uniform rates and charges,
monthly system fees, energy charges, penalties, pass-through fixed charges, general levy
property tax receipts, availability charges, miscellaneous rents and leases, sewer billing fees,
interest incomes or expense allocation, loans, and a portion of the temporary meter fees.
c. Levels
i. Minimum Level – The minimum funding level for the General Fund is three months of
operating budget expenses.
ii. Maximum Level – The maximum funding level for the General Fund is nine months of
operating budget expenses. In the event that this fund exceeds the seven month level, the
excess will be evaluated or transferred to one or more of the designated funds.
iii. Target Level – The target level of funding is three months of operating budget expenses.
In the event that the fund drops below the target level rate increases or fund transfers would
be considered.
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3.1 Designated Funds
a. Purpose
Designated cash funds are “general use” funds that have been set apart by Board action for a
specific purpose. These funds can only be used for those purposes. However, these funds are at
the discretion of the Board and can be used for any other District purpose by an action of the
Board. The District maintains designated cash funds as follows:
• Other Post Employment Benefits Fund (OPEB)
• Designated Expansion Fund
• Designated Betterment Fund
• Replacement Fund
Detailed descriptions of the funds are as follows:
i. Other Post Employment Benefits Fund (OPEB)
The OPEB Fund is used to fund the medical benefits of qualified retirees as outlined in the
District’s benefits plan. It is fully funded by user rates. Every two years the fund is
evaluated for additional funding requirements. Changes in the actuarial valuation may
result from changes in benefit levels, employee population, costs of health insurance, or
general market conditions.
These funds are currently designated but may be placed into a trust effectively removing
the District’s day-to-day access to the funds. This would allow the funds to offset the
actuarial liability of the District to fund OPEB. However, these funds are currently
designated and therefore, may be used at Board direction for any purpose.
ii. Designated Expansion Fund
The purpose of this fund is to supplement the financing of expansion projects. In the event
the restricted expansion funds are not sufficient to fund the expansion projects these funds
may be used. This fund must be evaluated in conjunction with the Restricted Expansion
Fund as they work in concert.
There is significant interdependency between the District’s potable and recycled water
systems. For this reason, the two systems are supported by one combined capacity fee. The
same capacity fee is charge on all water connection regardless of whether they are potable
or recycled. For this reason the Restricted and Designated Expansion Funds for these two
business segments must be considered jointly when using the rate model and setting fees.
The District currently has not sewer expansion and therefore has no sewer capacity fees and
no active sewer expansion funds.
This fund contains general use funds and at the direction of the Board may be used for any
District purpose.
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iii. Designated Betterment Fund
The purpose of this fund is to supplement the
Restricted Betterment Fund for sewer, water, or
recycled. The District maintains three separate
designated betterment funds, one for each
business segment. In the event a Restricted
Betterment Fund is not sufficient to fund
betterment projects this fund will be used. This
fund must be evaluated in conjunction with the
Restricted Betterment Fund as they work in
concert. When considering the funding levels f
or betterment funds there are multiple sub-funds
within betterment that must be individually
considered (see 2.1 f.). This is a general use
fund and at the direction of the Board may be
used for any District purpose.
iv. Replacement Fund
The purpose of this fund is to pay for the
replacement of capital infrastructure and capital
purchases. This is a Designated Fund and was
created to meet a portion of the District’s
replacement needs. This fund is not to be used
for the replacement of non-capital items. Debt
financing of replacement will be the primary
source of funds for replacement however; this
reserve is established to fund a portion of
replacement and ensure that necessary
replacements will occur regardless of the
immediate availability of the debt markets.
With the District’s development of its financial
systems and the greater need and ability to
separate funds, the Replacement Fund has been
separated into three funds: water, recycled, and
sewer.
Projects undertaken solely for the purpose of
replacing major capital equipment or facilities,
i.e., where the cost exceeds $10,000 for capital
purchases or $20,000 for infrastructure items,
generally are not considered normal maintenance.
Where the cost is below $10,000 the costs are
financed annually as operational maintenance.
As charges are incurred on a replacement project
the funds are deducted from the Replacement Fund
on a monthly basis.
This is a Designated Fund and may be redirected for any purpose at Board direction.
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b. Sources
The sources of funding for designated funds are limited to interfund transfers from available
unrestricted funds (see 3.0 b.) and interest earnings on fund balances within designated funds.
Unrestricted funds may come from other designated funds or from the General Fund. The
operating budget is another source of designated general revenues. As a part of the normal
budget process the general revenues are sufficient to fund a significant portion of the ongoing
needs of the designated funds.
c. Levels Other Post Employment Benefits Fund
A. Minimum Level – Fully funded as identified
under the actuarial study of the District’s OPEB
liability.
B. Maximum Level – Fully funded as identified
by an actuarial study. In the event that the fund is
over funded, the District will target for the full
funding within five (5) years reducing the annual
funding levels.
C. Target Level – Fully funded to meet the actuarially defined valuation. In the event that
the fund is not fully funded, the District will target for full funding within five (5) years by
increasing funding levels. This increased funding would be in the form of either annual
budget funding or fund transfers.
i Designated Expansion Fund
A. Minimum Level – As the District matures the CIP will move to purely replacement
projects. As the District moves through its lifecycle the need for expansion funds will
decrease and eventually be reduced to zero. When considering the funding of expansion
the Restricted Expansion Fund and the Designated Expansion Fund work in concert and
must be considered jointly.
B. Maximum Level – The maximum level of this fund is limited to five years of unfunded
expansion needs as described in the District’s CIP Budget. To determine the unfunded
amount the total expansion costs must be reduced by the projected restricted expansion
revenues. Bond financing is expected to fund a large portion of expansion.
C. Target Level – In order to facilitate debt financing of expansion, it is important that the
expansion funds retain a reserve of six months prior to any attempt to obtain bond
financing. This reserve allows the District the time necessary to issue additional debt
without running out of expansion funds. If the combined expansion funds drop below six
months of expenditures this would trigger either a transfer of general use funds or a
borrowing of funds with a bond sale. Bond funds would be placed in the Restricted
Expansion Fund while transfers would be placed in the Designated Expansion Fund. If
the combined expansion funds exceeded target the District should considered the need to
reduce capacity fees or transferring designated funds to meet another purpose.
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ii. Designated Betterment Fund
A. Minimum Level – As the District matures the CIP will move to purely replacement
projects. As the District moves through its lifecycle the need for betterment funds will
decrease and eventually be reduced to zero. When considering the funding of expansion
the Restricted Betterment Fund and the Designated Betterment fund work in concert and
must be considered jointly.
B. Maximum Level – The maximum level of this fund is limited to five years of unfunded
betterment needs as described in the District’s CIP Budget. To determine the unfunded
amount the total betterment costs must be reduced by the projected restricted betterment
revenues. Bond financing is expected to fund a large portion of betterment.
C. Target Level – In order to facilitate debt financing of betterment, it is important that the
betterment funds retain a reserve of six months prior to any attempt to obtain bond
financing. This reserve allows the District the time necessary to issue additional debt
without running out of betterment funds. When considering the funding levels for
betterment funds there are multiple sub-funds within betterment that must be individually
considered (see 2.1 f.). If the combined betterment funds drop below six months of
expenditures this would trigger either a transfer of general use funds or a borrowing of
funds with a bond sale. Bond funds would be placed in the Restricted Betterment Fund
while transfers would be placed in the Designated Betterment Fund. If this target is
exceeded, then the District should evaluate reductions in the special water rates and
availability fees and also consider transfers to other funds.
iii. Replacement Fund
A. Minimum Level – The minimum level of funding is 3% of the historical value of
existing assets as identified in the District’s current financial statement.
B. Maximum Level – The maximum level of funding is 6% of existing assets. In the event
the maximum level is exceeded in any year, then the excess will be transferred as per the
general transfer guidelines found in Section IV.
C. Target Level – The target level of funding is 4% of existing assets. In the event that the
fund falls below the recommended target level, transfers or operating revenues would be
shifted to support the Replacement Funds. The District will act based on the annual five
(5) year rate study to insure that at the end of that planning horizon the fund exceeds the
minimum level and is approaching the target level.
3.2 Restricted Funds
a. Purpose
Restricted cash funds are those that are legally set aside for a particular purpose and cannot be
used for any other purpose. The District maintains three Restricted Funds:
• Restricted Expansion Fund
• Restricted Betterment Fund
• Debt Reserve Fund
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The definition and purpose of each of these funds is described below:
i. Restricted Expansion Fund
The Restricted Expansion Fund works hand-in-hand with the Designated Expansion
Fund. When evaluating the need for additional funding, both the restricted and
designated funds must be considered as one fund. The sole purpose of this fund is to
construct potable, recycled, and sewer facilities to the extent they serve the expansion
needs of the District. Recycled and potable are jointly accounted for as these water
systems work in concert. The sewer expansion is accounted for separately but is
currently inactive as there is no sewer expansion.
This fund is restricted by law and therefore is a Restricted Fund that can be used for no
other purpose. Government Code section 66001 requires that these funds be accounted
for separately and upon request that an accounting be provided. In addition, five years
after the first deposit into the account or fund, the Code requires the District make
specific findings regarding any unexpended funds, whether those funds are committed to
expenditure or not (Government Code
section 66001). The same findings
must continue to be made once every
five years thereafter. If the findings are
not made, the statute requires the
District refund the fees to the current
owner of the affected property. The
manner of the refund is at the District’s
discretion.
As charges are incurred on a project,
and the project has been identified as
an expansion project, the costs are deducted from the Expansion Fund. This allocation of
funds is done on a monthly basis. In the event that funds are not used for the expansion
of District facilities the funds must be returned to the developers who paid them. In the
case where a policy change requires a betterment project that would have been an
expansion project at the time the capacity fee was collected, reserves may be used for that
betterment project. The expansion reserves may also be used for bond repayment, to the
extent the debt was incurred to fund expansion.
ii. Restricted Betterment Fund
The Betterment Reserve covers the cost to construct, install, and in some cases to
maintain the potable, recycled, and sewer systems. The District maintains three separate
designated betterment funds, one for each business segment. These funds are restricted
by law for use within the area in which the fees are collected (Water Code 71631.6).
However, the legal restriction of this fund depends upon the particular revenue source.
(see Section 2.1 f. for a review of the special rates and availability fees).
iii. Debt Reserve Fund
The purpose of the Debt Reserve Fund is to pay periodic principal and interest debt
payments on the outstanding debt. As these payments are made the funds are reduced.
As additional debt is incurred, new property tax assessments may be authorized funded
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from assessments on the Property Tax Roll. Annually, the District sets the tax rate at a
level necessary to fund that year’s debt payments. These rates are applied to the assessed
valuation of the property. Changes in property values in assessment areas result in inverse
fluctuations in the tax rate necessary to generate the required debt payments.
In other cases, such as assessment districts, the debt service is funded through an
assessment being levied on each parcel within the district. In assessment districts, the
amount of the levy will vary by parcel and is based on the amount of benefit that parcel
received from the improvement.
In addition, debt service may be funded through water rates. In the case of funding from
water rates, there would not be a restriction on those debt reserve funds. They may
remain in the General Fund or be placed in a Designated Fund if the Board were to take
specific action to designate rate funds for the purpose of debt payments.
These funds are legally restricted for the specific debt issuance for which they are
collected. These funds are not available for any other purpose and may not be designated
for any other purpose. If these funds are not used for the payment of the specific debt for
which they are collected they must be returned to the customers who made the tax roll
payments. The District must evaluate the exact need of funds to avoid the costly
reimbursement process.
b. Sources
Temporary meter fees and capacity fees fund expansion while special rates and charges
and availability charges fund the betterment fund. The debt reserves are funded by the
State Loan Assessment, and GO bond assessments. Each debt fund can also be funded
with the proceeds of the debt. Lastly, each fund is allotted its share of the interest income
or expense.
c. Levels
i. Restricted Expansion Fund
A. Minimum Level –While there is no minimum balance, an action is required when the
balance of the combined Restricted Expansion Fund and the Designated Expansion Fund
drops below six months of expenditures. This would trigger either a transfer of funds
from a non-Restricted Fund or a borrowing of funds with a bond sale. Bond funds would
be placed in the Restricted Expansion Fund while transfers would be placed in the
Designated Expansion Fund.
B. Maximum Level – The maximum of this fund is limited not by a particular dollar
amount but by the limited ability to collect funds for this purpose. This limitation is
mandated by Government Code section 66001. Under the Code, the District must identify
the purpose of the fee and the use to which it will be put, effectively establishing a nexus
between the development project or class of project and the improvement being financed.
The District must further establish that the amount of the funds being collected will not
exceed that needed to pay for the improvement (Government Code section 66005). Under
this mandate, also referred to as AB 1600, the Mitigation Fee Act and Government Code
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sections 66000 et seq., the District can only collect capacity fees for expansion projects.
To insure compliance with this, the District performs periodic rate studies, a part of
which is the calculation of the legally defensible capacity fee. Therefore, the District is
limited in this fund by the nexus between the need for expansion expenditures and the fee
that is approved for its collection.
With the lack of a dollar limitation for the maximum, it is incumbent on the District to
maintain the planned construction of capital infrastructure. While building ahead of the
need makes it unlikely that the capacity fees will accumulate to any great degree,
significant delays in construction may result in high levels of the Restricted Expansion
Fund. This is one reason why the District reports to the Board on a periodic basis the
progress of the CIP spending. Further, the annual update of the rate model brings the
Restricted and Designated Expansion Fund balances to the Board’s attention. Also, the
District provides annual Developer meetings where the existing and projected reserve
levels are reviewed.
C. Target Level – In order to facilitate debt financing of
expansion, it is important that the expansion funds
retain a reserve of six months prior to any attempt to
obtain bond financing. This reserve allows the
District the time necessary to issue additional debt
without running out of expansion funds.
ii. Restricted Betterment Fund
A. Minimum Level – While there is no minimum, less
than six months of available funds in the combined
Restricted Betterment and Designated Betterment
Funds would trigger either a transfer of funds from a non-Restricted Fund or a borrowing
of funds with a bond sale. Bond funds would be placed in the Restricted Betterment
Fund while transfers would be placed in the Designated Betterment Fund.
B. Maximum Level – The maximum to be retained in this fund is five years of unfunded
CIP betterment expenditures as defined in the CIP budget forecast. To determine the
unfunded amount the total betterment costs must be reduced by the projected restricted
betterment revenues. If this maximum is exceeded, then the District should evaluate
reductions in the special water rates and availability fees and also consider transfers to
other funds.
C. Target Level – In order to facilitate debt financing of betterment, it is important that the
betterment funds retain a reserve of six months prior to any attempt to obtain bond
financing. This reserve allows the District the time necessary to issue additional debt
without running out of betterment funds. When considering the funding levels for
betterment funds there are multiple sub-funds within betterment that must be individually
considered (see 2.1 f.).
iii. Debt Reserve Fund
A. Minimum Level – As debt service payments are made the funds may be completely
depleted if no other payments are required.
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B. Maximum Level – Sufficient to pay the periodic annual debt service payments. As
levels approach this maximum, the District must evaluate the rate at which funds are
being collected so as to not over collect. Reductions in the tax rates have been common
as property values have risen. Even if the maximum is exceeded, no refunds would occur
if future debt payments are necessary. The action required if funds exceed the maximum
is a reduction of the rate of collection which will bring the balance down over time.
C. Target Level – The target level of funds for the various debt issuances is six months of
debt service. This target level will be reduced as the term of the debt comes to a close.
FUND
ACTIONS TO
CONSIDER IF
BELOW TARGET
TARGET MAXIMUM
Restricted Expansion
Fund *
Capacity fee increase
Bond financing
Six months of
capital
expenditures
Nexus of cost to
fee
Restricted Betterment
Funds **
Rate increase
Bond financing
Six months of
capital
expenditures
5 yr unfunded
needs
Debt Reserve Fund
Increase tax collection
One semi-annual
payment
Two semi-annual
payments
Designated Expansion
Fund *
Fund transfers
Six months of
capital
expenditures
5 yr unfunded
needs
Designated
Betterment Fund **
Fund transfers
Six months of
capital
expenditures
5 yr unfunded
needs
OPEB Fund
Fund transfers Full funding Full funding
Replacement Fund
Fund transfers 4% of
infrastructure
6% of
infrastructure
General Fund
Rate increase
Fund transfers
Three months of
operating budget
expenses
Nine months
DIAGRAM 3.0: Fund Targets
* Expansion needs must consider the Restricted and Designated Expansion Funds as well as any available bond financing.
** Betterment needs must consider the Restricted and Designated Betterment Funds as well as any available bond financing
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Fund Transfers
4.0 Funding Levels
As described in the preceding sections, the District maintains funds for its operating and capital
activities. These funds fall into three accounting categories; 1) unrestricted and undesignated, or
general use funds, 2) designated, and 3) restricted. The source of the money for each fund was
discussed along with the purpose, source of funds, and levels. Key determinants of these funds
are the target levels, minimums, and maximums. The funding levels must be viewed in the
context of the economic environment, political environment, and must always be viewed in light
of a District’s rate model. The District’s six-year rate model not only shows the current balance
but also shows the trend of the fund balances. Often the trend of the fund is a greater indicator of
financial stability than is the current balance.
The rate model is updated each year with the budget process and evaluates each fund over the
next six years. The rate model will take into account the general economic environment, looking
at the development rate, supply rate increases, the possibility of raising rates, capital
infrastructure spending, and strategic plan initiatives. The fund balances may at times be over
the target amount or under the target amount. This is not only acceptable but expected. The rate
model provides an empirical estimate of the conformance between the District’s financial
activities and the guidelines of this policy.
4.1 Fund Transfers
A significant portion of the funding for the District’s designated funds comes from interfund
transfers from the Unrestricted or General Funds. It is important to note that the District has the
ability to use General Funds for any business purpose. General Funds may be transferred to any
other unrestricted fund for any business need. Designated funds are General Funds which have
been set aside for a specific purpose by Board action. These funds can only be used for the
purpose they were designated, or with Board action, they may be used for any business purpose.
General Funds may also be used for any restricted purpose but are not transferred to Restricted
Funds due to the sensitivity of the tracking of Restricted Funds. If funds are needed for a
restricted purpose they are transferred to a Designated Fund identified with the restricted
purpose. Restricted Funds may only be used for the purpose that they were collected therefore
no transfers are made to or from these funds.
In many situations, fund transfers are expected as some funds will exceed their maximum or drop
below their minimums. Only funds that are below the stated target are eligible to receive
transferred funds. Funds that exceed their maximums are first to be considered for transfers out
followed by funds that exceed their targets. Funds that exceed their minimums are also available
for fund transfer out but only when other options are not available.
The rationale for prioritizing fund transfers is based on the immediacy of the need and the
availability of funds from other funding sources. For example, the General Fund is first to
receive funds when it drops below its target or minimum levels. This is because of the
immediate and ongoing nature of the expenditures that are served by this fund. The operation of
the District is first and foremost of the objectives of the District. On the other end of the
spectrum, the Replacement Fund has a long-term perspective and will be used to partially fund
replacement assets for many years to come. Debt financing is available to respond to this long
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term, foreseeable, and planned cash flow. This fund is less likely to have immediate needs and
has other funding options.
When making the determination of when transfers are necessary, all funds work as independent
funds. The exceptions to this rule are the two expansion funds (one restricted and one
designated) and the two betterment funds (one restricted and one designated). Each of these two
sets of funds work as one but are kept separate due to the significant difference in the fund types,
one being restricted and one originating from General Funds. It is unlikely to have high
immediacy of need in these funds as they, like the Replacement Fund, are long term in nature
and have debt financing as an alternative funding source.
As an example, if during the rate model update process it was determined that the expansion
funds (designated and restricted) would drop and stay below the minimum during the planning
horizon, this would trigger a bond sale or a transfer of unrestricted funds. If in the cash planning
process, it was anticipated that the General Fund would remain above target during the planning
horizon of six (6) years and that the trend did not present a problematic underfunded status, then
those funds would be considered available for transfer prior to making funds available from the
sale of bonds. Also, if during this period another Designated Fund was anticipated to exceed its
maximum then the excess would be transferred to the Designated Expansion Fund prior to any
other transfers. Funds are evaluated to determine which has the greatest need or availability of
funds before any fund transfer recommendation is presented to the Board.
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RESERVE POLICY GLOSSARY
The Reserve Policy contains terminology that is unique to public finance and budgeting. The
following glossary provides assistance in understanding these terms.
Annexation Fees: Whenever utility service is requested for land outside the boundaries of an
improvement district, the land to be serviced must first be annexed. The annexation fee for water
was set on March 3, 1997 at $1,000 per EDU. The fee for sewer annexation was set at $3,819 on
December 16, 1998. These base rates are adjusted quarterly according to a cost of living index.
Assets: Resources owned or held by Otay Water District that have monetary value.
Availability Fees: The District levies charges each year in developed areas to be used for
upgrades, betterment, or replacement and in undeveloped areas to provide a source of funding for
planning, mapping, and preliminary design of facilities to meet future development. Current
legislation provides that any availability charge in excess of $10.00 per acre shall be used only
for the purpose of the improvement district for which it was assessed.
Betterment Fees: In addition to other applicable water rates and charges, water customers pay a
fee based on water service zone or Improvement District. These fees are restricted for use in the
area where they are collected and may be used for the construction and maintenance of facilities.
Bond: A written promise to pay a sum of money on a specific date at a specified interest rate.
The interest payments and the repayment of the principal are authorized in a District bond
resolution. The most common types of bonds are General Obligation (GO) bonds and
Certificates of Participation (COPs). These are frequently used for construction of large capital
projects such as buildings, reservoirs, pipelines and pump stations.
Capital Equipment: Fixed assets such as vehicles, marine equipment, computers, furniture,
technical instruments, etc. which have a life expectancy of more than two years and a value over
$10,000.
Capital Improvement Program: A long-range plan of the District for the construction,
rehabilitation and modernization of the District-owned and operated infrastructure.
CWA: The County Water Authority was organized in 1944 under the State County Water
Authority Act for the primary purpose of importing Colorado River water to augment the local
water supplies of the Authority's member agencies. The Authority purchases water from the
Metropolitan Water District of Southern California (MWD) which imports water from the
Colorado River and the State Water Project.
Debt Service: The District's obligation to pay the principal and interest of bonds and other debt
instruments according to a predetermined payment schedule.
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Expenditures/Expenses: These terms refer to the outflow of funds paid or to be paid for an asset,
goods, or services obtained regardless of when actually paid for. (Note: An encumbrance is not
an expenditure). An encumbrance reserves funds to be expended in a future period.
Fund: An account used to track the collection and use of monies for a specifically defined
purpose.
Fund Balance: The current funds on hand resulting from the historical collection and use of
monies. The difference between assets and liabilities reported in the District’s Operating Fund
plus residual equities or balances and changes therein, from the results of operations.
Interest Income: Earnings from the investment portfolio. Per District Policy Number 25, interest
income will be allocated to the various funds each month based upon each fund’s prior month-
ending balance.
Late Charges/Penalties: Charges and penalties are imposed on customer accounts for late
payments, returned checks, and related telephone contacts.
Operating Budget: The portion of the budget that pertains to daily operations that provide basic
governmental services. The operating budget contains appropriations for such expenditures as
personnel, supplies, utilities, materials, travel and fuel, and does not include purchases of major
capital plant or equipment which is budgeted for separately in the Capital Budget. The
Operating Budget also identifies planned non-operating revenues and expenses.
Revenue: Monies that the District receives as income. It includes such items as water sales and
sewer fees. Estimated revenues are those expected to be collected during the fiscal year.
System Fees: Each water service customer pays a monthly system charge for water system
replacement, maintenance, and operation expenses. The charge is based on the size of the meter
and class of service.
Taxes: California Water Code Section 72091 authorizes the District, as a municipal water
district, to levy ad valorem property taxes which are equal to the amount required to make annual
payments for principal and interest on General Obligation bonds approved by the voters prior to
July 1, 1978.
Water Rates: Rates vary among classes of service and are measured in units. The water rates for
residential customers are based on an accelerated block structure. As more units are consumed, a
higher unit rate is charged. All non-residential customers are charged a flat rate per unit. A unit
of water is 100 cubic feet or 748 gallons of water.
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INVESTMENT POLICY
1.0 Policy
It is the policy of the Otay Water District to invest public funds in a manner which will provide
maximum security with the best interest return, while meeting the daily cash flow demands of
the entity and conforming to all state statues governing the investment of public funds.
2.0 Scope
This investment policy applies to all financial assets of the Otay Water District. The District
pools all cash for investment purposes. These funds are accounted for in the District’s audited
Comprehensive Annual Financial Report (CAFR) and include:
2.1 General Fund
2.2 Capital Project Funds
2.2. Designated Expansion Fund
2.2.2 Restricted Expansion Fund
2.2.3 Designated Betterment Fund
2.2.4 Restricted Betterment Fund
2.2.5 Designated Replacement Fund
2.3 Other Post Employment Fund (OPEB)
2.4 Debt Reserve Fund
Exceptions to the pooling of funds do exist for tax-exempt debt proceeds and deferred
compensation funds. Funds received from the sale of general obligation bonds, certificates of
participation or other tax-exempt financing vehicles are segregated from pooled investments and
the investment of such funds are guided by the legal documents that govern the terms of such
debt issuances.
3.0 Prudence
Investments should be made with judgment and care, under current prevailing circumstances,
which persons of prudence, discretion and intelligence exercise in the management of their own
affairs, not for speculation, but for investment, considering the probable safety of their capital as
well as the probable income to be derived.
The standard of prudence to be used by investment officials shall be the “Prudent Person” and/or
"Prudent Investor" standard (California Government Code 53600.3) and shall be applied in the
context of managing an overall portfolio. Investment officers acting in accordance with written
procedures and the investment policy and exercising due diligence shall be relieved of personal
responsibility for an individual security's credit risk or market price changes, provided deviations
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from expectations are reported in a timely fashion and appropriate action is taken to control
adverse developments.
4.0 Objective
As specified in the California Government Code 53600.5, when investing, reinvesting,
purchasing, acquiring, exchanging, selling and managing public funds, the primary objectives, in
priority order, of the investment activities shall be:
4.1 Safety: Safety of principal is the foremost objective of the investment program.
Investments of the Otay Water District shall be undertaken in a manner that seeks to
ensure the preservation of capital in the overall portfolio. To attain this objective, the
District will diversify its investments by investing funds among a variety of securities
offering independent returns and financial institutions.
4.2 Liquidity: The Otay Water District’s investment portfolio will remain sufficiently liquid
to enable the District to meet all operating requirements which might be reasonably
anticipated.
4.3 Return on Investment: The Otay Water District’s investment portfolio shall be designed
with the objective of attaining a benchmark rate of return throughout budgetary and
economic cycles, commensurate with the District’s investment risk constraints and the
cash flow characteristics of the portfolio.
5.0 Delegation of Authority
Authority to manage the Otay Water District’s investment program is derived from the
California Government Code, Sections 53600 through 53692. Management responsibility for the
investment program is hereby delegated to the Chief Financial Officer (CFO), who shall be
responsible for all transactions undertaken and shall establish a system of controls to regulate the
activities of subordinate officials and their procedures in the absence of the CFO.
The CFO shall establish written investment policy procedures for the operation of the investment
program consistent with this policy. Such procedures shall include explicit delegation of
authority to persons responsible for investment transactions. No person may engage in an
investment transaction except as provided under the terms of this policy and the procedures
established by the CFO.
6.0 Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from personal business
activity that could conflict with the proper execution and management of the investment
program, or that could impair their ability to make impartial investment decisions. Employees
and investment officials shall disclose to the General Manager any material financial interests in
financial institutions with which they conduct business. They shall further disclose any personal
financial/investment positions that could be related to the performance of the investment
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portfolio. Employees and officers shall refrain from undertaking personal investment
transactions with the same individual with whom business is conducted on behalf of the District.
7.0 Authorized Financial Dealers and Institutions
The Chief Financial Officer shall maintain a list of financial institutions authorized to provide
investment services. In addition, a list will also be maintained of approved security
broker/dealers who are authorized to provide investment services in the State of California.
These may include “primary” dealers or regional dealers that qualify under Securities &
Exchange Commission Rule 15C3-1 (Uniform Net Capital Rule). No public deposit shall be
made except in a qualified public depository as established by state laws.
All financial institutions and broker/dealers who desire to become qualified bidders for
investment transactions must supply the District with the following, as appropriate:
• Audited Financial Statements.
• Proof of National Association of Security Dealers (NASD) certification.
• Proof of state registration.
• Completed broker/dealer questionnaire.
• Certification of having read the District’s Investment Policy.
• Evidence of adequate insurance coverage.
An annual review of the financial condition and registrations of qualified bidders will be
conducted by the CFO. A current audited financial statement is required to be on file for each
financial institution and broker/dealer in which the District invests.
8.0 Authorized and Suitable Investments
From the governing body perspective, special care must be taken to ensure that the list of
instruments includes only those allowed by law and those that local investment managers are
trained and competent to handle. The District is governed by the California Government Code,
Sections 53600 through 53692, to invest in the following types of securities, as further limited
herein:
8.01 United States Treasury Bills, Bonds, Notes or those instruments for which the full faith
and credit of the United States are pledged for payment of principal and interest. There is
no percentage limitation of the portfolio which can be invested in this category, although
a five-year maturity limitation is applicable.
8.02 Local Agency Investment Fund (LAIF), which is a State of California managed
investment pool, may be used up to the maximum permitted by State Law (currently $40
million). The District may also invest bond proceeds in LAIF with the same but
independent maximum limitation.
8.03 Bonds, debentures, notes and other evidence of indebtedness issued by any of the
following government agency issuers:
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• Federal Home Loan Bank (FHLB)
• Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac")
• Federal National Mortgage Association (FNMA or "Fannie Mae")
• Government National Mortgage Association (GNMA or “Ginnie Mae”)
• Student Loan Marketing Association (SLMA or "Sallie Mae")
• Federal Farm Credit Bank (FFCB)
There is no percentage limitation of the portfolio which can be invested in this category,
although a five-year maturity limitation is applicable.
8.04 Interest-bearing demand deposit accounts and Certificates of Deposit (CD) will be made
only in Federal Deposit Insurance Corporation (FDIC) insured accounts. For deposits in
excess of the insured maximum of $100,000, approved collateral shall be required in
accordance with California Government Code, Section 53652. Investments in CD’s are
limited to 15 percent of the District’s portfolio.
8.05 Commercial paper, which is short-term, unsecured promissory notes of corporate and
public entities. Purchases of eligible commercial paper may not exceed 10 percent of the
outstanding paper of an issuing corporation, and maximum investment maturity will be
restricted to 270 days. Investment is further limited as described in California
Government Code, Section 53601(g). Purchases of commercial paper may not exceed 15
percent of the District’s portfolio.
8.06 Medium-term notes defined as all corporate debt securities with a maximum remaining
maturity of five years or less, and that meet the further requirements of California
Government Code, Section 53601(j). Investments in medium-term notes are limited to 15
percent of the District’s portfolio.
8.07 Money market mutual funds that invest only in Treasury securities and repurchase
agreements collateralized with Treasury securities, and that meet the further requirements
of California Government Code, Section 53601(k). Investments in money market mutual
funds are limited to 15 percent of the District's portfolio.
8.08 The San Diego County Treasurer’s Pooled Money Fund, which is a County managed
investment pool, may be used by the Otay Water District to invest excess funds. There is
no percentage limitation of the portfolio which can be invested in this category.
8.09 Under the provisions of California Government Code 53601.6, the Otay Water District
shall not invest any funds covered by this Investment Policy in inverse floaters, range
notes, interest-only strips derived from mortgage pools, or any investment that may result
in a zero interest accrual if held to maturity. Also, the borrowing of funds for investment
purposes, known a leveraging, is prohibited.
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9.0 Investment Pools/Mutual Funds
A thorough investigation of the pool/fund is required prior to investing, and on a continual basis.
There shall be a questionnaire developed which will answer the following general questions:
• A description of eligible investment securities, and a written statement of investment policy
and objectives.
• A description of interest calculations and how it is distributed, and how gains and losses are
treated.
• A description of how the securities are safeguarded (including the settlement processes), and
how often the securities are priced and the program audited.
• A description of who may invest in the program, how often, and what size deposits and
withdrawals are allowed.
• A schedule for receiving statements and portfolio listings.
• Are reserves, retained earnings, etc., utilized by the pool/fund?
• A fee schedule, and when and how is it assessed.
• Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds?
10.0 Collateralization
Collateralization will be required on certificates of deposit. In order to anticipate market changes
and provide a level of security for all funds, the collateralization level will be 102% of market
value of principal and accrued interest. Collateral will always be held by an independent third
party with whom the entity has a current custodial agreement. A clearly marked evidence of
ownership (safekeeping receipt) must be supplied to the entity and retained. The right of
collateral substitution is granted.
11.0 Safekeeping and Custody
All security transactions entered into by the Otay Water District shall be conducted on a
delivery-versus-payment (DVP) basis. Securities will be held by a third party custodian
designated by the District and evidenced by safekeeping receipts.
12.0 Diversification
The Otay Water District will diversify its investments by security type and institution, with
limitations on the total amounts invested in each security type as detailed in Paragraph 8.0,
above, so as to reduce overall portfolio risks while attaining benchmark average rate of return.
With the exception of U.S. Treasury securities, government agencies, and authorized pools, no
more than 50% of the District’s total investment portfolio will be invested with a single financial
institution.
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13.0 Maximum Maturities
To the extent possible, the Otay Water District will attempt to match its investments with
anticipated cash flow requirements. Unless matched to a specific cash flow, the District will not
directly invest in securities maturing more than five years from the date of purchase. However,
for time deposits with banks or savings and loan associations, investment maturities will not
exceed two years. Investments in commercial paper will be restricted to 270 days.
14.0 Internal Control
The Chief Financial Officer shall establish an annual process of independent review by an
external auditor. This review will provide internal control by assuring compliance with policies
and procedures.
15.0 Performance Standards
The investment portfolio shall be designed with the objective of obtaining a rate of return
throughout budgetary and economic cycles, commensurate with the investment risk constraints
and the cash flow needs.
The Otay Water District’s investment strategy is passive. Given this strategy, the basis used by
the CFO to determine whether market yields are being achieved shall be the State of California
Local Agency Investment Fund (LAIF) as a comparable benchmark.
16.0 Reporting
The Chief Financial Officer shall provide the Board of Directors monthly investment reports
which provide a clear picture of the status of the current investment portfolio. The management
report should include comments on the fixed income markets and economic conditions,
discussions regarding restrictions on percentage of investment by categories, possible changes in
the portfolio structure going forward and thoughts on investment strategies. Schedules in the
quarterly report should include the following:
• A listing of individual securities held at the end of the reporting period by authorized
investment category.
• Average life and final maturity of all investments listed.
• Coupon, discount or earnings rate.
• Par value, amortized book value, and market value.
• Percentage of the portfolio represented by each investment category.
17.0 Investment Policy Adoption
The Otay Water District’s investment policy shall be adopted by resolution of the District’s
Board of Directors. The policy shall be reviewed annually by the Board and any modifications
made thereto must be approved by the Board.
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INVESTMENT POLICY GLOSSARY
Active Investing: Active investors will purchase investments and continuously monitor their
activity, often looking at the price movements of their stocks many times a day, in order to
exploit profitable conditions. Typically, active investors are seeking short term profits.
Agencies: Federal agency securities and/or Government-sponsored enterprises.
Bankers’ Accptance (BA): A draft or bill or exchange accepted by a bank or trust company. The
accepting institution guarantees payment of the bill, as well as the issuer.
Benchmark: A comparative base for measuring the performance or risk tolerance of the
investment portfolio. A benchmark should represent a close correlation to the level of risk and
the average duration of the portfolio’s investments.
Broker/Dealer: Any individual or firm in the business of buying and selling securities for itself
and others. Broker/dealers must register with the SEC. When acting as a broker, a broker/dealer
executes orders on behalf of his/her client. When acting as a dealer, a broker/dealer executes
trades for his/her firm's own account. Securities bought for the firm's own account may be sold
to clients or other firms, or become a part of the firm's holdings.
Certificate of Deposit (CD): A short or medium term, interest bearing, FDIC insured debt
instrument offered by banks and savings and loans. Money removed before maturity is subject
to a penalty. CDs are a low risk, low return investment, and are also known as “time deposits”,
because the account holder has agreed to keep the money in the account for a specified amount
of time, anywhere from a few months to several years.
Collateral: Securities, evidence of deposit or other property, which a borrower pledges to secure
repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public
monies.
Commercial Paper: An unsecured short-term promissory note, issued by corporations, with
maturities ranging from 2 to 270 days.
Comprehensive Annual Financial Report Report (CAFR): The official annual report for the Otay
Water District. It includes detailed financial information prepared in conformity with generally
accepted accounting principles (GAAP). It also includes supporting schedules necessary to
demonstrate compliance with finance-related legal and contractual provisions, extensive
introductory material, and a detailed statistical section.
Coupon: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on
the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a set date.
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Dealer: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling
for his own account.
Depenture: A bond secured only by the general credit of the issuer.
Delivery Versus Payment: There are two methods of delivery of securities: delivery versus
payment and delivery versus receipt. Delivery versus payment is delivery of securities with an
exchange of money for the securities. Delivery versus receipt is delivery of securities with an
exchange of a signed receipt for the securities.
Derivatives: (1) Financial instruments whose return profile is linked to, or derived from, the
movement of one or more underlying index or security, and may include a leveraging factor, or
(2) financial contracts based upon notional amounts whose value is derived from an underlying
index or security (interest rates, foreign exchange rates, equities or commodities).
Discount: The difference between the cost price of a security and its maturity when quoted at
lower than face value. A security selling below original offering price shortly after sale also is
considered to be at a discount.
Discount Securities: Non-interest bearing money market instruments that are issued at a discount
and redeemed at maturity for full face value, e.g., U.S. Treasury Bills.
Diversification: Dividing investment funds among a variety of securities offering independent
returns.
Federal Credit Agencies: Agencies of the Federal government set up to supply credit to various
classes of institutions and individuals, e.g., S&L’s, small business firms, students, farmers, farm
cooperatives, and exporters.
Federal Deposit Insurance Corporation (FDIC): A federal agency that insures deposits in
member banks and thrifts, currently up to $100,000 per deposit.
Federal Farm Credit Bank (FFCB): The Federal Farm Credit Bank system supports agricultural
loans and issues securities and bonds in financial markets backed by these loans. It has
consolidated the financing programs of several related farm credit agencies and corporations.
Federal Funds Rate: The rate of interest at which Fed funds are traded. This rate is currently
pegged by the Federal Reserve through open-market operations.
Federal Home Loan Bank (FHIB): Government sponsored wholesale banks (currently 12
regional banks), which lend funds and provide correspondent banking services to member
commercial banks, thrift institutions, credit unions and insurance companies.
Federal Home Loan Mortgage Corporation (FHLMC Or Freddie Mac): A stockholder owned,
publicly traded company chartered by the United States federal government in 1970 to purchase
mortgages and related securities, and then issue securities and bonds in financial markets backed
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by those mortgages in secondary markets. Freddie Mac, like its competitor Fannie Mae, is
regulated by the United States Department of Housing and Urban Development (HUD).
Federal National Mortgage Association (FNMA Or Fannie Mae): FNMA, like GNMA was
chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal
corporation working under the auspices of the Department of Housing and Urban Development
(HUD). It is the largest single provider of residential mortgage funds in the United States.
Fannie Mae is a private stockholder-owned corporation. The corporation’s purchases include a
variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA’s
securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all
security holders will receive timely payment of principal and interest.
Federal Reserve System: The central bank of the United States created by Congress and
consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and
about 5,700 commercial banks that are members of the system.
Government National Mortgage Association (GNMA Or Ginnie Mae): A government owned
agency which buys mortgages from lending institutions, securitizes them, and then sells them to
investors. Because the payments to investors are guaranteed by the full faith and credit of the
U.S. Government, they return slightly less interest than other mortgage-backed securities.
Interest-Only Strips: A mortgage backed instrument where the investor receives only the interest,
no principal, from a pool of mortgages. Issues are highly interest rate sensitive, and cash flows
vary between interest periods. Also, the maturity date may occur earlier than that stated if all
loans within the pool are pre-paid. High prepayments on underlying mortgages can return less to
the holder than the dollar amount invested.
Inverse Floater: A bond or note that does not earn a fixed rate of interest. Rather, the interest
rate is tied to a specific interest rate index identified in the bond/note structure. The interest rate
earned by the bond/note will move in the opposite direction of the index. An inverse floater
increases the market rate risk and modified duration of the investment.
Leverage: Investing with borrowed money with the expectation that the interest earned on the
investment will exceed the interest paid on the borrowed money.
Liquidity: A liquid asset is one that can be converted easily and rapidly into cash without a
substantial loss of value. In the money market, a security is said to be liquid if the spread
between bid and asked prices is narrow and reasonable size can be done at those quotes.
Local Agency Investment Fund (LAIF): The aggregate of all funds from political subdivisions
that are placed in the custody of the State Treasurer for investment and reinvestment.
Market Value: The price at which a security is trading and could presumably be purchased or
sold.
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Master Repurchase Agreement: A written contract covering all future transactions between the
parties to repurchase/reverse repurchase agreements that establish each party’s rights in the
transactions. A master agreement will often specify, among other things, the right of the buyer-
lender to liquidate the underlying securities in the event of default by the seller borrower.
Maturity: The date upon which the principal or stated value of an investment becomes due and
payable.
Money Market: The market in which short-term debt instruments (bills, commercial paper,
bankers’ acceptances, etc.) are issued and traded.
Mutual Funds: An open-ended fund operated by an investment company which raises money
from shareholders and invests in a group of assets, in accordance with a stated set of objectives.
Mutual funds raise money by selling shares of the fund to the public. Mutual funds then take the
money they receive from the sale of their shares (along with any money made from previous
investments) and use it to purchase various investment vehicles, such as stocks, bonds, and
money market instruments.
Money Market Mutual Funds: An open-end mutual fund which invests only in money markets.
These funds invest in short term (one day to one year) debt obligations such as Treasury bills,
certificates of deposit, and commercial paper.
National Association Of Securities Dealers (NASD): A self-regulatory organization of the
securities industry responsible for the operation and regulation of the NASDAQ stock market
and over-the-counter markets. Its regulatory mandate includes authority over firms that
distribute mutual fund shares as well as other securities.
Passive Investing: An investment strategy involving limited ongoing buying and selling actions.
Passive investors will purchase investments with the intention of long term appreciation and
limited maintenance, and typically don’t actively attempt to profit from short term price
fluctuations. Also known as a buy-and-hold strategy.
Primary Dealer: A designation given by the Federal Reserve System to commercial banks or
broker/dealers who meet specific criteria, including capital requirements and participation in
Treasury auctions. These dealers submit daily reports of market activity and positions and
monthly financial statements to the Federal Reserve Bank of New York and are subject to its
informal oversight. Primary dealers include Securities and Exchange Commission registered
securities broker/dealers, banks, and a few unregulated firms.
Prudent Person Rule: An investment standard. In some states the law requires that a fiduciary,
such as a trustee, may invest money only in a list of securities selected by the custody state—the
so-called legal list. In other states the trustee may invest in a security if it is one which would be
bought by a prudent person of discretion and intelligence who is seeking a reasonable income
and preservation of capital.
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Public Securities Association (PSA): A trade organization of dealers, brokers, and bankers who
underwrite and trade securities offerings.
Qualified Public Depositories: A financial institution which does not claim exemption from the
payment of any sales or compensating use or ad valorem taxes under the laws of this state, which
has segregated for the benefit of the commission eligible collateral having a value of not less
than its maximum liability and which has been approved by the Public Deposit Protection
Commission to hold public deposits.
Range Note: An investment whose coupon payment varies and is dependent on whether the
current benchmark falls within a pre-determined range.
Rate of Return: The yield obtainable on a security based on its purchase price or its current
market price. This may be the amortized yield to maturity on a bond the current income return.
Regional Dealer: A securities broker/dealer, registered with the Securities & Exchange
Commission (SEC), who meets all of the licensing requirements for buying and selling
securities.
Repurchase Agreement (RP OR REPO): A holder of securities sells these securities to an
investor with an agreement to repurchase them at a fixed price on a fixed date. The security
“buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the
agreement are structured to compensate him for this. Dealers use RP extensively to finance their
positions. Exception: When the Fed is said to be doing RP, it is lending money that is increasing
bank reserves.
Safekeeping: A service to customers rendered by banks for a fee whereby securities and
valuables of all types and descriptions are held in the bank’s vaults for protection.
Secondary Market: A market made for the purchase and sale of outstanding securities issues
following their initial distribution.
Securities & Exchange Commission: Agency created by Congress to protect investors in
securities transactions by administering securities legislation.
Sec Rule 15C3-1: See Uniform Net Capital Rule.
Structured Notes: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, SLMA,
etc.), and Corporations, which have imbedded options (e.g., call features, step-up coupons,
floating rate coupons, derivative-based returns) into their debt structure. Their market
performance is impacted by the fluctuation of interest rates, the volatility of the imbedded
options and shifts in the shape of the yield curve.
Student Loan Marketing Association (SLMA or Sallie Mae): A federally established, publicly
traded corporation which buys student loans from colleges and other lenders, pools them, and
sells them to investors.
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Treasury Bills: A non-interest bearing discount security issued by the U.S. Treasury to finance
the national debt. Most bills are issued to mature in three months, six months, or one year.
Treasury Bonds: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations
of the U.S. Government and having initial maturities of more than 10 years.
Treasury Notes: Medium-term coupon-bearing U.S. Treasury securities issued as direct
obligations of the U.S. Government and having initial maturities from two to 10 years.
Uniform Net Capital Rule: Securities and Exchange Commission requirement that member firms
as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to
liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all
money owed to a firm, including margin loans and commitments to purchase securities, one
reason new public issues are spread among members of underwriting syndicates. Liquid capital
includes cash and assets easily converted into cash.
Yield: The rate of annual income return on an investment, expressed as a percentage. (a)
INCOME YIELD is obtained by dividing the current dollar income by the current market price
for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus
any premium above par or plus any discount from par in purchase price, with the adjustment
spread over the period from the date of purchase to the date of maturity of the bond.
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DEBT POLICY
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. 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.
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 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 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
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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 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 is 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.
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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 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 interest costs will be the 10 year average for weekly
variable rates.
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 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
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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.
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. 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 though the California Statewide Communities Development Authority, which
provides a mechanism for pooling financings with similar issuers to obtain economies of scale.
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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 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.
Savings Criteria
In cases where an Advance 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 payable
second in priority to the District’s other outstanding debt. Typically, subordinate lien debt might
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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 Derivatives
The District may consider the use of derivative products on a case-by-case basis, consistent with
State statute and financial prudence. The most common derivatives include transactions known
as “swaps,” in which the District, by contract with an investment bank (known as a “provider”),
swaps its fixed rate debt payments for variable rate debt payments or vice versa, and “forwards,”
in which the District enters into a purchase contract with an underwriter to purchase refunding
bonds at a future date at interest rates locked in today (not at today’s rates, but at rates locked in
today). Derivative products introduce an additional risk factor into a financing, called “third-
party risk.” Once a derivative product is entered into, the District must rely upon the financial
stability of the provider to perform under the contract. Because the nature of derivatives is
speculative, that is, the District is assuming that rates will either go up or down over the period of
the contract and therefore expects to lock in a financial benefit today based on that assumption,
the financial benefits actually obtained from any derivative contract need to be monitored
periodically to determine if it is in the District’s interest to terminate the contract and what the
penalty might be for early termination. This requires a certain level of vigilance, and impartial
advice in this area is actually difficult to obtain since the derivative market is not particularly
liquid or price-transparent and is currently made up of a small handful of reputable providers.
There must be an overwhelming demonstrable financial benefit to the District based on
reasonable assumptions concerning future interest rates in order for the District to use
derivative products.
11.0 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 Advisor: The use of a Financial Advisor is necessary for the sale of debt by a
competitive bid process and is desirable when issuing debt through a negotiated sale. The
Financial 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 Financial
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 Financial Advisor will arrange for distributing the preliminary official statement, accepting
bids via the internet, 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 Financial 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.
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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 Financial 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 is generally 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. Letter of credits are typically issued for 5-7 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, in most cases, AAA. 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
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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 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.
12.0 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. There shall be no
conflict of interest with the District with any debt financing participant.
13.0 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 Internet and provide hard copies of these
documents to interested parties upon request, and will disseminate other information that it
deems pertinent to the market in a timely manner. 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 the issue. Material events are defined as those
events which are considered to likely reflect on the credit supporting the securities. The events
considered material according to the SEC are:
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1. Rating changes.
2. Non-payment related defaults.
3. Adverse tax opinions or events affecting the tax exempt status.
4. Unscheduled draws on debt service reserves or credit enhancements reflecting financial
difficulties.
5. Modifications to the rights of securities holders.
6. Defeasance.
7. Bond calls.
8. Release, substitution, or sale of property securing repayment of the securities.
9. Substitution of credit or liquidity providers, or their failure to perform.
10. Principal and interest payment delinquencies.
14.0 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.
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. The District also has approximately $29 million in general
obligation bonds authorized between 1960 and 1978 for various Improvement Districts
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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. Though 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. 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.
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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 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.
16.0 Rating Agency Applications
The District may seek a rating on all new issues that are being sold in the public market. To
ensure a fair rating, more than one rating agency shall be considered to rate the District’s issues.
These rating agencies include, but are not limited to, Fitch Investors Service, Moody’s Investors
Service, and Standard and 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 as they are published and 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
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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.
Fixed Rate Bonds
Credit enhancement for fixed rate bonds is obtained by the purchase of bond insurance. With
few exceptions, bond insurance companies are rated AAA. 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 AAA-rated bond interest rates with the cost of issuance including the payment
of the bond insurance premium. 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.
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 7-day investment rate. Any investor
can tender their bonds back to the District to be repurchased on 7 days’ notice. Because of the
short-term nature of the investment, the securities that the District is “competing” with for
investors are AAA-rated or AA-rated mutual funds. Therefore, variable debt needs to have
credit enhancement to achieve a comparable AAA or AA rating, as well as liquidity support to
provide the District with a mechanism to purchase any bonds that are tendered before they can be
remarketed to new investors. A limited number of financial institutions offer letters of credit that
combine both credit support and liquidity for one fee. An alternative is to purchase bond
insurance to provide credit support and enter into a separate purchase agreement with a financial
institution to provide liquidity. The difference in cost between the two structures will be
analyzed before either alternative is selected for variable rate debt.
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DEBT POLICY 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.
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.
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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.
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.
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.
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.
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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.
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. They can be simple floating for fixed exchanges or complex hybrid products
with multiple option features.
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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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The Fiscal Budget contains terminology that is unique to public finance and budgeting. The
following budget glossary provides assistance in understanding these terms.
Accrual Basis of Accounting: The basis of accounting under which transactions are
recognized when they occur, regardless of the timing of cash receipts and disbursements.
Acre-Foot: The volume of water that will cover one acre to a depth of one foot. One acre-
foot equals 435.6 units or 325,850 gallons.
Additional Systems Fees: Effective May 1, 1986, each customer receiving water service in
the Improvement District 9 water service zone pays an additional monthly meter system
charge of $2.00 for each meter in service.
Annexation Fees: Whenever utility service is requested for land outside the boundaries of
an improvement district, the land to be serviced must first be annexed. The annexation fee
for water was set on May 30, 2006 at $1,411 per EDU. The fee for sewer annexation was
set at $3,819 on December 16, 1998. These base rates are adjusted quarterly according to a
cost of living index. The rates as of July 1, 2008 are $1,519 and $5,165 for water and
sewer, respectively.
Appropriation: The annual budget adopted by the District’s Board for monitoring and
control purposes, serving as a financial plan.
Assets: Resources owned or held by the District that have monetary value.
Availability Fees: The District levies charges each year in developed areas to be used for
general purposes for construction of facilities, and in undeveloped areas to provide a source
of funding for planning, mapping, and preliminary design of facilities to meet future
development. Current legislation provides that any availability charge in excess of $10.00
per acre shall be restricted only for the purpose of constructing facilities in the improvement
district for which it was assessed.
Balanced Budget: A balanced financial plan, for a specified period of time that matches all
planned revenues and expenditures with various services. The District uses a fiscal year
beginning each July 1 and ending each June 30 for budgetary and financial reporting
purposes.
Betterment Fees: In addition to other applicable water rates and charges, certain water
customers pay a fee based on water service zone or improvement district. These are
restricted for the use in the area where they are collected and may be used for the
construction and maintenance of facilities.
GLOSSARY
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Betterment Fees for Maintenance: The Operating Budget earns betterment fees for
maintenance work performed on infrastructure within special betterment zones, where fees
are collected for the construction and maintenance of these specific assets.
Bond: A written promise to pay a sum of money on a specific date at a specified interest
rate. The interest payments and the repayment of the principal are authorized in a District
bond resolution. The most common types of bonds are general obligation (GO) bonds and
Certificates of Participation (COPs). These are frequently used for construction of large
capital projects such as buildings, reservoirs, pipelines and pump stations.
Budget Basis: The budget and accounting basis for the District is recognized on an accrual
basis. Accrual basis means that revenues are recognized when earned and expenses are
recognized when incurred.
Capacity Fee: A connection fee is charged when a new water meter is placed into service.
This fee is based on the estimated construction cost of expansion of the system to meet the
needs of all future customers. This fee covers the cost including, but is not limited to,
planning, design, construction, and financing of expansion of the system.
Capacity Fee Revenues: These fees are earned by the Operating Budget as the Engineering
Department supports expansion functions.
Capacity Reservation Charge: An MWD charge passed on by CWA to individual agencies.
This fee is paid based on the District’s peak water demand.
Capital Budget: The portion of the annual budget that appropriates funds for the purchase
of capital equipment items and capital improvements. These expenditures are separated
from regular operating items, such as salaries, utilities and office supplies. The Capital
Budget includes funds for capital equipment purchases over $10,000, such as vehicles,
furniture, machinery, microcomputers and special tools or $20,000 for infrastructure related
items, which are distinguished from operating items according to their value and projected
useful life.
Capital Equipment: Fixed assets such as vehicles, marine equipment, computers, furniture,
technical instruments, etc. which have a life expectancy of more than two years and a value
over $10,000 or $20,000 for infrastructure related items (this may not extend useful life of
the infrastructure, but without it, the whole asset is rendered useless).
Capital Improvement Program: A long-range plan of the District for the construction,
rehabilitation and modernization of the District-owned and operated infrastructure.
GLOSSARY
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Class of Service: All customers are classified based on the type of service used. For
example, the water rate per unit is determined by a classification such as residential versus
business.
CWA: The County Water Authority was organized in 1944 under the State County Water
Authority Act for the primary purpose of importing Colorado River water to augment the
local water supplies of the Authority's member agencies. The Authority purchases water
from MWD which imports water from the Colorado River and the State Water Project.
Deannexation Fees: Each request for detachment of land from an improvement district is
reviewed on a case-by-case basis. The fees are determined based on the present value of
future debt service requirements.
Debt Service: The District's obligation to pay the principal and interest of bonds and other
debt instruments according to a predetermined payment schedule.
Depreciation: An expense recorded to allocate a tangible asset’s cost over its useful life.
Desalination: The removal of dissolved minerals (including salts) from seawater or
brackish water. Engineered water desalination processes, which produce potable water from
seawater or brackish water, have become important because many regions throughout the
world suffer from water shortages.
Energy Fees: Water customers are charged an energy pumping charge based on the quantity
of water used and the elevation to which the water has been lifted to provide service. The
energy pumping charge is the rate of $.034 (proposed to increase on January 1, 2009 to
$.037) per 100 cubic feet of water for each 100 feet of lift above the base elevation of 450
feet. All water customers are in one of 29 zones based on elevation.
Enterprise Fund: Fund that provides goods or services to the public for a fee that makes the
entity self-supporting.
Expenditures/Expenses: These terms refer to the outflow of funds paid or to be paid for an
asset, goods or services obtained regardless of when actually paid for. (Note: An
encumbrance is not expenditure). An encumbrance reserves funds to be expended in a
future period.
Fire Service: Water service is provided by the District solely for use in fire hydrants or fire
sprinkler systems from lines or laterals connected to the District’s water mains. The
monthly system charge is $25.40 per month (proposed to increase to $28.55 on January 1,
2009) for each connection for fire protection service.
GLOSSARY
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Fiscal Year: Twelve-month term designating the beginning and ending period for recording
financial transactions. The District has specified July 1 to June 30 as its fiscal year.
Fund Balance: The current funds on hand resulting from the historical collection and use of
monies. The difference between assets and liabilities reported in the District’s Operating
Fund plus residual equities or balances and changes therein, from the result of operations.
General Fund: The District’s general fund is an enterprise fund – one for each of the
District’s three business lines Potable, Recycled and Sewer services. Each is an accounting
entity with a self-balancing set of accounts established to record the financial position and
results that pertain to a specific activity. The activities of enterprise funds closely resemble
those of ongoing businesses in which the purpose is to conserve and add to basic resources
while meeting operating expenses from current revenues. Enterprise funds account for
operations that provide services on a continuous basis and are substantially financed by
revenues derived from user charges.
Grants: Contributions or gifts of cash or other assets from another governmental agency to
be used or expended for a specified purpose, activity, or facility. Capital grants are
restricted by the grantor for the acquisition and/or construction of fixed assets. Operating
grants are restricted by the grantor for operating purposes or may be used for either capital
or operating purposes at the discretion of the grantee.
Infrastructure Access Charge (IAC): A pass-through charge from CWA to each member
agency. The charge is to finance a portion of CWA’s fixed annual costs including the
construction, operation and maintenance of aqueducts and emergency storage projects. The
fee was adopted in January of 1999.
Interest Income: Earnings from the investment portfolio. Per District Policy Number 25,
interest income will be allocated to improvement districts each month based upon each
fund’s prior month-ending balance.
Late Charges/Penalties: Charges and penalties are imposed on delinquent accounts. A late
payment charge of 5% of the most recent delinquent amount is added to the account. Other
miscellaneous late fees and penalties are detailed in the District’s Code of Ordinances.
Meter and Lateral Fees: Charge includes the material costs for the meter, meter box, and
the labor cost for installation to connect a new service to the distribution system.
Metropolitan Water District (MWD) Standby Charges: Revenue generated from property
taxes by MWD to cover the Readiness-to-Serve (RTS) Charge for the new debt service for
construction projects necessary to meet reliability and quality needs. The RTS Charge was
adopted in 1996.
GLOSSARY
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Multiple Unit Charges: In addition to the system fee, a monthly charge is made for service
provided through one meter to more than one occupant in a building. The rate is $3.85
(proposed to be eliminated on January 1, 2009) per month for each unit in a multiple unit
residential, commercial or industrial building.
Net Assets: The difference between total assets and total liabilities. Increases or decreases
in net assets may serve as a useful indicator of whether the financial position of the District
is strengthening or weakening.
1% General Tax: In 1978, Proposition 13 limited general levy property tax rates for all
taxing authorities to a total rate of 1% of full cash value. Subsequent legislation, AB8,
established that the receipts from the 1% levy were to be distributed to taxing agencies
according to approximately the same proportions received prior to Proposition 13. Funds
received are to be used for facilities construction or debt service on bonds sold to build
facilities.
Operating Budget: The portion of the budget that pertains to daily operations that provide
basic governmental services. The operating budget contains appropriations for such
expenditures as personnel, supplies, utilities, materials, travel and fuel, and does not include
purchases of major capital plant or equipment which is budgeted for separately in the
Capital Budget.
Other Income: Revenues that are not directly related to the business of providing water and
sewer services. For example, contract billing service for the City of Chula Vista and the
City of San Diego to bill their sewer customers based on water consumption.
Property Rental Income: Rent or lease agreements for the use of District property.
Recycled Water Rates: Non-potable water service provided from water produced by the
District’s reclamation plant and other non-potable sources. Recycled water is not used for
domestic purposes and all other uses must comply with federal, state and local laws and
regulations regarding the use of recycled water.
Reserve Fund: The District maintains Reserve Funds per the District’s policy for both
designated and restricted balances. Designated Reserve Funds are “general use” funds
designated by the Board. Restricted reserves are those that are legally set aside for a
particular purpose and cannot be used for any other purpose.
Residential Conservation: The water rates for residential customers are based on an
accelerated block structure; as more units are consumed, a higher unit rate is charged. The
District has established a water conservation program to promote water conservation and
planning.
GLOSSARY
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Revenue: Monies that the District receives as income. It includes such items as water sales
and sewer fees. Estimated revenues are those expected to be collected during the fiscal
year.
Readiness-to-Serve Charge (RTS): was adopted by MWD in Fiscal 1996. The charge
serves as a foundation of fixed revenue for MWD. It covers the new debt service for
construction projects necessary to meet reliability and quality needs of current water-users
as opposed to new customers.
Sale of Fixed Assets: District equipment, which has been determined by the Board to be of
no use, obsolete and/or beyond the useful life and therefore, may be sold.
Set-up Fees for Accounts: A charge of $10 is added for each account transferred to another
customer.
System Fees: Each water service customer pays a monthly system charge for water system
replacement, maintenance and operation expenses. The charge is based on the size of the
meter and class of service.
Taxes: California Water Code Section 72091 authorizes the District, as a municipal water
district, to levy ad valorem property taxes which are equal to the amount required to make
annual payments for principal and interest on general obligation bonds approved by the
voters prior to July 1, 1978.
Temporary Water Charge: The rate for temporary water service is two times the rate for
permanent service. The additional charge is to offset the cost of construction of facilities for
larger capacity.
Tier 2 Charge: An MWD charge passed on by CWA to individual agencies. This is an
added charge on all water sales by CWA in excess of the District’s 90% baseline water
usage.
Usage Surcharge: In addition to the water rates, a surcharge is paid by each customer when
the number of units of water furnished in any month exceeds the monthly usage allowance
for the size of meter being used. This charge is proposed to be eliminated on January 1,
2009.
Water Capacity Fees: Charges paid by customers to connect to a District water system for
potable or recycled water service. Fees are determined by multiplying the demand factor for
the meter size by the total of the District-wide capacity fee and applicable zone charge.
GLOSSARY
252
Water Rates: Rates vary among classes of service and are measured in units. The water
rates for residential customers are based on an accelerated block structure. As more units
are consumed, a higher unit rate is charged. All non-residential customers are charged a flat
rate per unit. A unit of water is 100 cubic feet or 748 gallons of water. The District plans to
implement a tiered rate structure for all customer types to encourage conservation and bring
equity among the classes. The new rate structure will be implemented on January 1, 2009.
Working Capital: A financial measure which represents available operating liquidity. It is
calculated as current assets minus current liabilities.
GLOSSARY
253
AF Acre-Foot/Feet
AMR Automated Meter Reader/Reading
APCD Air Pollution Control District
ASCE American Society of Civil Engineers
ASU Assigned Service Unit
AWWA American Water Works Association
BIT Bi-annual Inspection Terminals
BMP Best Management Practices
BOD Biological Oxygen Demand
BRP Business Resumption Plan
CADD Computer Aided Design & Drafting
CARB California Air Resources Board
CDPH California Department of Public Health
CAFR Comprehensive Annual Financial Report
CCV City of Chula Vista
CEQA California Environmental Quality Act
CFS Cubic Foot per Second
CHP California Highway Patrol
CIP Capital Improvement Program
CIS Customer Information System
CIT Collaborative Improvement Teams
CMOM Capacity, Management, Operations & Maintenance
CMTA California Municipal Treasurers Association
COD Chemical Oxygen Demand
COPS Certificates of Participation
CRC Capacity Reservation Charge
CSC Customer Service Charge
CSD City of San Diego
CSMFO California Society of Municipal Finance Officers
CWA County Water Authority (San Diego)
DBMS Database Management System
DBP Disinfectant By-Products
DEH Department of Environmental Health
DHS Department of Health Services
DVP Delivery-versus-Payment
EDU Equivalent Dwelling Unit
EIR Environmental Impact Review
EOC Equal Opportunity Commission
ERP Enterprise Resource Planning
LIST OF ACRONYMS
254
LIST OF ACRONYMS
ESC Emergency Storage Charge
FCF Flow Control Facility
FHLMC Freddie Mac or Federal Home Loan Mortgage Corporation
FNMA Fannie Mae or Federal National Mortgage Association
FTE Full-time Equivalent
FY Fiscal Year
GASB Government Accounting Standards Board
GFOA Government Finance Officers Association
GIS Geographic Information System
GO General Obligation (bonds)
GPM Gallons per Minute
GPS Global Positioning System
HCF Hundred Cubic Foot
HMA Habitat Management Area
HR Human Resources
HRIS Human Resources Information System
HWD Helix Water District
IAC Infrastructure Access Charge
ID Improvement District
IID Imperial Irrigation District
IIPP Injury and Illness Prevention Program
IMS Infrastructure Management System
IRP Integrated Water Resources Plan
IRS Internal Revenue Service
IT Information Technology
IVR Interactive Voice Response
LAFCO Local Area Formation Commission
LAIF Local Agency Investment Fund
LMSE La Mesa Sweetwater Extension
LOPS Lower Otay Pump Station
MBR Membrane Bioreactor
MG Million Gallons
MGD Million Gallons per Day
MISAC Municipal Information Systems Association of California
MH Man-hours
MOU Memorandum of Understanding
MSCP Multiple Species Conservation Program
MSRB Municipal Securities Rulemaking Board
MWD Metropolitan Water District
255
LIST OF ACRONYMS
MWWD Metropolitan Waste Water Department (City of San Diego)
NCCP Natural Community Conservation Plan
NEPA National Environmental Protection Act
NIMS National Incident Management System
NOC Notice of Completion
NOSC Notice of Substantial Completion
NPDES National Pollution Discharge Elimination System
O&M or O/M Operations and Maintenance
OES Office of Emergency Services (State)
OIS Otay Information System
OPEB Other Post Employee Benefits
OWD Otay Water District
PB Pacific Bay
PDR Preliminary Design Report
PEIR Program Environmental Impact Report
PERS Public Employees' Retirement System
PL Pipeline
POU Principles of Understanding
PRS Pressure Reducing Station
PS Pump Station
PT Part-time
RFID Radio Frequency Identification
RFP Request for Proposal
RSD Rancho San Diego
RTS Readiness-to-Serve
R/W Right-of-Way
RWCWRF Ralph W. Chapman Water Recycling Facility
SAMP Sub-Area Master Plan
SANDAG San Diego Association of Governments
SCADA Supervisory Control and Data Acquisition
SBWRP South Bay Water Reclamation Plant
SDRMA San Diego Risk Management Association
SEC Securities and Exchange Commission
SHRM Society of Human Resources Management
SLMA Sallie Mae or Student Loan Marketing Association
SS Suspended Solids
SSMP Sewer System Management Plan
SVSD Spring Valley Sanitation District
SWA Sweetwater Authority
256
LIST OF ACRONYMS
SWRCB State Water Resources Control Board
USBR U.S. Bureau of Reclamation
UWMP Urban Water Management Plan
WADG Water Agency Design Guideline
WD Water District
WER Work Environment Review
WRMP Water Resources Master Plan
WTP Water Treatment Plant
257
Administrative Expenses 59,72,80
Awards 4-7
Balanced Scorecard 8-12
Budget Calendar 16-17
Budget Guide 14-15
Budget Process & Basis 18-20
Budget Summary 30-33
Capital Improvement Program Narrative 175
Capital Purchases Budget 188
CIP Funding Source and Category 183
CIP Justification and Impact on Operating Budget 186
CIP Projects 184-185
CIP Reserve Funds 182
Classification of Water Sales 50,65
Debt Management 44
Debt Policy 230-242
Debt Policy Glossary 243-246
Demographics 25
Department Budgets:
Administrative Services 109-120
Board of Directors 99-102
Engineering 160-171
Finance 121-133
General Expense 172-174
General Manager 103-108
Information Technology and Strategic Planning 134-144
Water Operations 145-159
Departmental Operating Budget Narrative 88-89
Economic Conditions 22-24
Five-Year Forecast 41
Flagship CIP Projects in Construction 178-179
Flagship CIP Projects in Design 180
Formula for Sewer Rates 82
Fund Balance Summary by Fund 37
Fund Balances 43
INDEX
258
General Fund Forecast 42
General Information 2
General Expenses 87
General Revenues 86
General Revenues and Expenses Narrative 84-85
Glossary 247-253
Investment Policy 218-223
Investment Policy Glossary 224-229
Labor & Benefits 91-92
Letter of Transmittal iv-vii
List of Acronyms 254-257
Major CIP Projects 177
Materials and Maintenance Expenses 60,73,81,96
Meter Fees 55,68
MWD & CWA Fixed Fees (Pass-Through) 54
Operating Budget Summary 49,64,76
Operating Budget Summary by System 35
Operating Budget Summary – General Fund 34
Operating Expenditures by Department 97
Operating Expenditures by Object 98
Operating Revenues and Expenditures 36
Organization Chart 13
Otay Water District At-A-Glance 1
Position Count by Department 93-94
Potable Narrative 47-48
Potable Water Service Area Maps 61
Power Costs 58,71,79
Progress on Major Projects 181
Projected Principal & Interest Payments by Debt 46
Recycled Narrative 62-63
Recycled Water Area Service Maps 74
Reserve Policy 191-215
Reserve Policy Glossary 216-217
Resolution 4124 21
Revenue History 56,69,78
INDEX
259
Revenues & Expenditures by Fund 38-39
Revenues & Expenditures by Type 40
San Diego County Rainfall 29
Schedule of Outstanding Debt 45
Service Area Assessed Valuation 27
Sewer Charges Summary by Service Class 77
Sewer Narrative 75
Sewer Service Area Map 83
Statement of Values 3
Summary of Financial Policies 189-190
System Fees 53,67
Ten Largest Customers 26
Ten Principal Taxpayers 28
Unit Sales History by Customer Class 52
Water Purchases 70
Water Purchases and Related Costs 57
Water Sales Summary by Service Class 51,66
INDEX
260