HomeMy WebLinkAboutOperating and Capital Budget FY 2010-2011
ADOPTED OPERATING AND CAPITAL BUDGET
FISCAL YEAR 2010-2011
TABLE OF CONTENTS
Page
Letter of Transmittal iv
BUDGET FOREWORD
Otay Water District At-A-Glance 1General Information 2
Statement of Values 3
Awards 4Balanced Scorecard 7
Organization Chart 14
Budget Guide 15Budget Calendar 17
Budget Process and Basis 19
Resolution No. 4159 22
HISTORY AND COMMUNITY PROFILE
Past and Present 24
Current Economic Conditions 25The Future 26
Demographics 27
Ten Largest Customers 28Water Rate Comparison 29
Sewer Rate Comparison 30
Service Area Assessed Valuation 31Ten Principal Taxpayers 32
San Diego Rainfall 33
FINANCIAL SUMMARIES
Budget Summary 34Operating Budget Summary – General Fund 38
Operating Budget Summary by System 39Operating Revenues and Expenditures 40Fund Balance Summary by Fund 41
Revenues and Expenditures by Fund 42Revenues and Expenditures by Type 44
FIVE-YEAR FORECAST
Five-Year Forecast 45
General Fund Forecast 46Fund Balances 47
Debt Management 48Schedule of Outstanding Debt 49Projected Principal Payments by Debt Issuance 50
Projected Interest Payments by Debt Issuance 51
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REVENUES AND EXPENDITURES
Potable Revenues and Expenditures
Potable Narrative 52
Operating Budget Summary 54
Classification of Water Sales 55Water Sales Summary by Service Class 56
Unit Sales History by Customer Class 57
System Fees 58MWD and CWA Fixed Fees (Pass-Through) 59
Meter Fees 60
Revenue History 61Water Purchases and Related Costs 62
Power Costs 63
Administrative Expenses 64Materials and Maintenance Expenses 65
Potable Water Service Area Maps 66
Recycled Revenues and Expenditures
Recycled Narrative 67Operating Budget Summary 69
Classification of Water Sales 70
Water Sales Summary by Service Class 71System Fees 72
Meter Fees 73
Revenue History 74Water Purchases 75
Power Costs 76Administrative Expenses 77Materials and Maintenance Expenses 78
Recycled Water Service Area Maps 79
Sewer Revenues and Expenditures
Sewer Narrative 80
Operating Budget Summary 81
Sewer Charges Summary by Service Class 82Revenue History 83
Power Costs 84
Administrative Expenses 85Materials and Maintenance Expenses 86
Formula for Sewer Rates 87
Sewer Service Area Map 88
General Revenues and Expenditures
General Revenues and Expenses Narrative 89
General Revenues 91General Expenses 92
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DEPARTMENTAL OPERATING BUDGET
Departmental Operating Budget Narrative 93
Labor and Benefits 96
Labor and Benefits by Fund 97Position Count by Department 98
Contract/Temporary Employees 99Administrative Expenses 100Materials and Maintenance Expenses 101
Operating Expenditures by Department 102Operating Expenditures by Object 103Departmental Budgets:
Board of Directors 104 General Manager 108
Administrative Services 114
Finance 125 Information Technology and Strategic Planning 136
Water Operations 144
Engineering 157 General Expense 166
CAPITAL BUDGET
Capital Improvement Program Narrative 169
Major CIP Projects 171Flagship CIP Projects in Construction 172
CIP Reserve Funds 175CIP Funding Source and Category 176CIP Projects 177
CIP Justification and Impact on Operating Budget 179Capital Purchases Budget 181
POLICIES
Summary of Financial Policies 182Reserve Policy 184
Reserve Policy Glossary 209
Investment Policy 211Investment Policy Glossary 217
Debt Policy 223Debt Policy Glossary 236
APPENDIX
Glossary 240
List of Acronyms 246Index 250
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September 1, 2010
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 2011. This year’s budget supports the management plan to finance all of the
District’s services and programs during the 2011 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. As with the past few
years, we continue to face numerous challenges with the slow recovery from the largest
economic downturn since the Great Depression and
ongoing home foreclosures. The District also faces large water supply cost increases and inaction in the State Capitol to address the crisis in the Sacramento
– San Joaquin Bay Delta, the source of 30% of our
imported water.
Given the continuing uncertain times and the demand by customers to keep rates low, the District
must find the best solutions that balance the many
expectations placed on it by its customers. The
District is looking to do this while also meeting the expectation for continuous improvement.
The way we will achieve our mission in this
challenging environment is to continue to improve
all aspects of our core business processes. The tool we use to accomplish this goal is our Strategic Plan.
Our first Strategic Plan was created in 2003 and it has been updated every three years since that
time. The District is now entering the third year of the 2009-2011 Strategic Plan. The goal of
the plan is to capitalize on the technology investments we have made and to utilize those technologies as we continue to improve productivity and efficiency.
The Strategic Plan is focused on the District’s transformation from a growth-centric to a
maintenance-based organization. Where growth has been a significant focus in prior years,
today we have become equally focused on managing long-term maintenance and replacement of infrastructure.
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This change is illustrated by the Business Maturity
Curve (see illustration). During high growth
periods, efforts are focused on achieving the
macro targets of building and installing new infrastructure. As an organization matures, fewer resources are needed to support growth, but the
effort to maintain and improve infrastructure and
assets increases. In addition, as an organization
matures it derives income more from customer rates and less from developer fees. At this stage, increased maintenance and replacement costs
place pressure on customer rates. To balance the customer’s interest in minimizing rate
increases while also maintaining an organization’s infrastructure investments and a strong
financial position, it must place greater emphasis on internal efficiency and the development of technology assisted best practices. In effect, we must use our investments in technology to do more with the same or fewer resources.
Today, the District provides water service to nearly 47,932 potable and 683 recycled water
customers within approximately 125.5 square miles of southeastern San Diego County. All of the potable water sold to customers is purchased from the San Diego County Water Authority (CWA). Much of this water is purchased from the region’s primary water importer, the
Metropolitan Water District of Southern California (MWD).
The District also has entered into an agreement with the CWA to have the neighboring Helix Water District treat imported water on behalf of the Otay Water District at their Levy Water Treatment Plant. This action brought regional water treatment closer to customers, which helps
reduce dependence on water treatment facilities located outside of San Diego County.
To deliver this locally treated water to customers, the District is nearing completion on a 5.1 mile, 36-inch diameter pipeline. Drinking water delivered by this new pipeline will be stored in two recently constructed 10 million gallon reservoirs. In addition to bringing water treatment
closer to customers, this new source of water diversifies the District’s supply and improves
reliability.
The District also owns and operates a wastewater collection and recycling system to provide public sewer service to approximately 4,646 homes and businesses. Wastewater collected is
delivered to the Ralph W. Chapman Water Recycling Facility (RWCWRF), which is capable of
reclaiming wastewater at a rate of 1.3 million gallons per day. In addition to the Chapman
facility, the District 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 other approved uses in the City of Chula Vista, California. The use of
recycled water reduces dependence on imported supplies and provides a local supply that
diversifies District resources.
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BUDGET SUMMARY
The Otay Water District’s operating expenditures consist of three major sectors: potable water,
recycled water, and sewer, totaling $76,993,900 for Fiscal Year 2011. Revenues from potable and recycled water are projected to be $63,954,500, about $122,500 (0.2%) less than the Fiscal Year 2010 budget. Water sales volumes are expected to decrease as a result of the slowing
economy and expanded efforts to promote water conservation. Rate increases are therefore
essential to offset the higher wholesale cost of water. Sewer revenues are projected to be
$2,270,500, about $25,700 more than Fiscal Year 2010 because of necessary rate increases. The remaining revenue of $10.8 million comes from special fees and assessments and miscellaneous income.
Significant aspects of the Operating Budget are:
A balanced budget meeting the goals of the Strategic Plan.
An updated six-year Rate Model to ensure sound financial planning and reserve levels.
Ongoing water supply rate increases of 12.2% from MWD and 11.3% from CWA because of the high cost of supply programs, higher energy costs, and operating costs.
Implemented rate increases in potable, recycled water, and sewer. This included pass-
through rate increases from CWA and the County of San Diego.
In response to the economic slowdown, the District has again reduced staffing levels from 166 full-time equivalent positions to 159. It has also cut operating expenditures by
$233,100 due to program funding changes and other discretionary spending cuts.
Of San Diego County’s 23 water agencies, Otay’s water rate is the seventh-lowest and
below the county-wide average.
Expanded residential, landscape, and commercial water conservation programs.
The 2010-11 Capital Improvement Program (CIP) Budget consists of 82 projects and a budget of
$28.4 million. The budget emphasizes long-term planning for ongoing programs while functioning within fiscal constraints and population growth. This year’s CIP budget decreased by $8.7 million compared to last year’s projection, which is due to the completion of the
Jamacha Pipeline Project.
The Future
The coming years will continue to pose challenges for those in California’s water community.
While the State of California received a normal amount of rainfall this year, federal court orders
continue to curtail water deliveries from Northern California due to environmental factors in the
Sacramento-San Joaquin Bay Delta, the source of 30% of our imported water. The political
stalemate in the State Capitol has also made finding compromise or addressing the environmental issues in the Bay Delta difficult. These factors combined are driving the higher
cost of water statewide.
However, through foresight, investments in drought-proof recycled water, conservation, and a
water rate structure that rewards conservation, the Otay Water District has thus far avoided having to require mandatory water conservation. The District has instead achieved its water
conservation goals using voluntary measures.
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As you would expect, the planned water sales reductions have impacted revenues and will
continue to affect the District’s finances. With that in mind, our success as an organization is
vastly enhanced by the practices and policies put in place by the Board of Directors to ensure the strength and stability of the District, even as we move forward into uncertain times.
We are fully confident that with these policies and practices supported by dedicated and talented
staff we will achieve continued success as an organization and thus assure the well-being of the
people we serve. In adopting this budget, the challenges presented this year were met by the Otay Water District
Board of Directors resolve to keep the stability and strength of the District as one of its highest
priorities.
AWARDS AND ACKNOWLEDGMENTS
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, 2009.
In order to be awarded a Certificate of Achievement, a government agency must publish
an easy to understand and efficiently organized Comprehensive Annual Financial Report.
This report must satisfy both generally accepted accounting principles and applicable legal requirements.
The District also received a Distinguished Budget Presentation Award from the GFOA for the District’s Operating and Capital Budget for the Fiscal Year beginning July 1, 2009, as well as two awards from the California Society of Municipal Finance Officers
(CSMFO) for Excellence in Operating Budgeting and Excellence in Capital Budgeting.
These prestigious awards recognize conformance with the highest standards for
preparation of state and local government financial reports.
The Construction Management Association of America (CMAA) presented Otay Water
District the 2010 Project Achievement Award for the 1296-3 Reservoir Project (public
works projects less than $2.5 million). In addition, the Otay Water District and
Infrastructure Engineering Corporation received the American Public Works Association (APWA) 2010 Project of the Year Award for the 640-1 and 640-2 Reservoirs.
The Otay Water District was presented with the 2010 Public Agency Partnership Award from the Engineering and General Contractors Association, San Diego.
In conclusion, this budget reflects the vision of the Board of Directors of the Otay Water District,
its management, and its employees. We will continue to strive to make improvements in our
budget processes, including an extensive review and analysis of projections for revenues, expenditures, capital projects, and reserves.
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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 their continued support and direction in achieving excellence in financial management.
__
Mark Watton, General Manager
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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 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.
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 14.
Otay Water District At-A-Glance
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For Fiscal Year 2011, the District will have a staff of 159 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 206,000 people. This percentage increases
as the District's service area continues to grow to ultimate build-out. The District is projected to deliver approximately 29,900 acre-feet of potable water to 48,060 potable customer accounts and
to ultimately deliver 61,000 acre-feet of potable water to serve 295,000 people or 69,000
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 1.7% per year over
the next decade. Using historical data and considering current economic conditions, staff has moderated this projection to a growth rate of 0.3% for Fiscal Year 2011.
Since 1956, the District has provided high quality water to a semi-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 Ralph W. Chapman Water Recycling Facility (RWCWRF). 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 balance of diverse environments.
Recycled water from the 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 (1,200 acre-feet per
year). The District is also in a partnership with the City of San Diego to beneficially reuse an
additional 3,098 acre-feet per year of recycled water for Fiscal Year 2011, and ultimately up to
6,720 acre-feet per year. 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 4,646 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 97% of the sewer customer base.
General Information
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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
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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, 2009. 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 2009-2010.
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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 2009-2010.
The Construction Management
Association of America (CMAA) presented Otay Water
District and Valley Construction
Management the 2010 Project
Achievement Award for the
1296-3 Reservoir Project.
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Awards
The Public Works Association (APWA)
presented Otay Water District and Infrastructure Engineering Corporation the
2010 Project of the Year Award for the
640-1 and 640-2 (10 MG) Reservoirs.
The Public Works Association (APWA) presented Otay Water District the 2010
the Honor Award for the 850-4 (2.2
MG) 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
Balanced Scorecard
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successful in managing growth but now needs to become more focused in managing long-term 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
developer 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.
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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 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 were revised from the prior
year and are updated quarterly, and reviewed by the Board on a semi-annual basis.
I. CUSTOMER
1. Maximize Our Customers’ Satisfaction
A. Listen to Our Customers 1. Capture customers’ attitudes and awareness through a repeatable customer
survey program.
2. Expand a more detailed customer complaint tracking and reporting system.
B. Effective Use Multi-Channel Communications 1. Enhance our communication with our customers by evaluating and upgrading
all aspects of the district’s phone system.
2. Web Page - Evaluate and enhance the District’s website design to allow easier
use and navigation. 3. E-Customer Account - Enhance the customer’s ease of access to personalized
account information including water use, payment status, and historical
trending.
4. Evaluate the most cost effective and efficient processes and tools to
communicate service related issues to customers. For example: E-Mail, Target mail, door hanger, etc.
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5. Written Publications – Develop an effective program for producing new customer communication including drought related communication.
Evaluate bi-lingual options.
6. 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.
2. Educate our Customers on Important Water Related Matters
A. Expand the District’s water conservation programs to maximize District-wide
water conservation 1. Promote and encourage adoption of conservation practices for new
construction within District service territory.
2. Participate in the revision of the 14 water conservation Best Management
Practices and prepare to implement those that are locally cost-effective.
B. Maximize recycled water use and public knowledge
1. Continue a regional approach and expand District’s recycled water outreach
program to landscape architects, maintenance companies, developers,
contractors, and home owner associations.
3. Help Shape the Water Industry’s Direction
A. Legislative and political influence for District programs 1. Continue to actively participate in County Water Authority, Metropolitan Water District of Southern California, state policy making and pending
legislative review and comment.
2. Promote enhancements to city, county and state water conservation
requirements and implement appropriate BMPs.
B. Optimize the District’s water industry participation 1. Promote and encourage leadership opportunities for District staff in water
industry committees.
2. Evaluate and implement American Water Works Association Peer Review for
the District.
II. FINANCIAL
1. Develop a Long Term Financial Planning Program
A. Establish a long-term (15 year) financial plan including scenarios and
contingencies for changes in demographics, local economy, and drought
uncertainties including:
1. Facilities and staffing plan needs. 2. Developing the long term financial plan.
B. Conduct financial threat assessment for growth, water availability, inflation and
other revenue sources
C. Re-calculate all Capacity and Annexation Fees with New Rehabilitation and Repair
Plan
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2. Optimize All Revenue Streams
A. Modify existing rate structures
1. Simplify residential fee structures and the billing system. 2. Reduce complexity of and simplify rate structure. 3. Evaluate drought stage rates and propose changes.
4. Evaluate and improve effectiveness of bill (including fees for Chula Vista
sewer billing).
III. BUSINESS PROCESSES
1. Implement Industry Best Practices for Utility Development
A. Potable Water 1. Prioritize and implement recommendations contained in the Integrated
Resources Plan and Water Resources Master Plan to obtain an additional 15%
of potable water.
2. Update the District’s Drought Management Plan including actions for
enforcement. 3. Create a comprehensive environmental program that is cost-effective and
proactive in response to environmental compliance.
4. Develop and implement a proactive leak detection program to reduce
distribution system water loss.
B. Sewer
1. Evaluate the long-term requirement for costs and benefits of seeking
additional sewer collection flow treatment, and/or disposal capacity.
2. Develop and implement Treatment Plant enhancements including automation for remote operation and shutdown, technology improvements, and upgrade of facilities.
C. Recycled Water
1. Obtain 10% in new recycled water supplies by prioritizing and implementing the recommendations in the IRP & WRMP. 2. Finalize evaluation of North District service area expansion for recycled water
and seek approvals and funding.
2. Optimize the District’s Operating Efficiency
A. Minimize the District’s total life cycle asset costs
1. Develop and implement an Asset Management Program Plan to extend useful
life of capital assets.
2. Expand meter testing for 3” and larger calibration and replacement program. 3. Evaluate increasing the completion schedule of District’s valve actuation,
valve replacement, and air vac programs.
4. Enhance construction inspection on construction projects by implementing
IMS.
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B. Update the District’s IT Strategic Plan 1. Evaluate the long-term viability of Eden financials and billing system.
2. Enhance existing Capital Project Tracking System.
3. Enhance the District’s data management, data update process, and data
architecture including enterprise standard data. Update process for ensuring GIS data is accurate. 4. Develop and deploy the field wireless network for key facilities.
C. Optimize the use of existing technologies
1. Optimize functionality, business continuity, bandwidth, and use of SCADA. 2. Optimize use of Voiceover Internet Protocol and unified messaging. 3. Evaluate implementing a fixed network Automated Meter Reading.
4. Optimize the use of SharePoint.
5. Develop optimized field work processing using integrated technology.
6. Assess and implement security best practices for all Otay networks.
D. Increase field productivity through improved efficiency
1. To obtain access to shared electricity, gas, telephone, and other utilities from
cell site vendors, San Diego County and, other agencies.
E. Improve the efficiency of business processes
1. Investigate using electronic signatures on staff reports, shutdown plans,
contracts, magazines, newsletters, reimbursements, project closeouts, etc.
2. Evaluate web-based employee performance reviews. 3. Enhance accounts payable to electronically pay bills for frequent vendors and routine bills and maximize the use of e-bills.
4. Enhance fuel tracking and reporting system.
5. Automate application process.
6. Develop a Heavy Equipment Capital Replacement Plan. 7. Identify existing facilities that are good candidates for conversion to separated irrigation meters (recycled and/or potable water), specifically for multi-
family/industrial/commercial projects.
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.
F. Optimize Disaster Preparedness
1. Review/consolidate the District’s Disaster Preparedness Plan 2. Update Security Assessment and implement Technology Recommendations. 3. Evaluate and make recommendations regarding Environmental Health, and
the Emergency Preparedness and Safety Management System.
3. Improve Financial Analysis and Reporting
A. Improve per cost unit reporting
1. Develop and measure cost per unit expenditures and forecasts.
B. Improve the efficiency and effectiveness of District-wide reporting 1. Utilize SCADA to calibrate water model.
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IV. LEARNING AND GROWTH
1. Results-oriented Workforce
A. Retain Dedicated Workforce 1. Evaluate effective communication tools throughout the organization.
2. Evaluate the Pay-for-Performance Program.
3. Evaluate the Employee Recognition Program.
4. Assess findings of 2008 Employee Survey.
5. Conduct Employee Survey in preparation for 2012 Strategic Plan development.
B. Hire the “Best”
1. Review and update classification plan and revise critical areas.
2. Review and revise marketing strategy and recruiting tools.
C. Staff Development
1. Develop and identify required and desired District-wide training for all
classifications. 2. Develop and maintain a formal program to track employee training.
D. Workforce Management
1. Identify core elements of Succession Planning that can be tailored to the
District’s needs.
E. Performance Management
1. Update and expand annual review process to include greater emphasis of
Strategic Plan objectives and performance measures and understanding of
career goals and how they may relate to the District's Succession Plan.
F. Knowledge Management
1. Update District-wide Records Management Program.
2. Develop information systems support for asset management program.
G. Community Involvement/District Outreach
1. Optimize community involvement throughout the District.
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GENERAL MANAGER
BOARD OF DIRECTORS
Assistant General Manager
Engineering
Planning
Water
Operations
Water System
Operations
Assistant General Manager
Information
Technology and
Strategic Planning
IT Applications
Finance
Controller
and
Budgetary
Administrative
Services
Human Resources
Organization Chart
Citizens and
Customers
GENERAL MANAGER
BOARD OF DIRECTORS
Assistant General Manager
Engineering
Planning
Design
Water
Resources
Public Services
Construction
Survey
Environmental
Water
Operations
Water System
Operations
Utility
Maintenance/
Construction
Collection/
Treatment/
Recycle
Operations
Assistant General Manager
Information
Technology and
Strategic Planning
IT Applications
IT Operations
GIS
Finance
Controller
and
Budgetary
Services
Treasury
and
Accounting
Services
Customer
Service
Payroll and
Accounts
Payable
Administrative
Services
Human Resources
Purchasing and
Facilities
Safety and Risk
Administration
Water
Conservation
Organization Chart
Citizens and
Customers
14
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.
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.
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.
Budget Guide
15
Budget Guide
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.
Policies
This section includes a summary of the District’s financial policies and practices, including the
Reserve Policy, Investment Policy, and Debt Policy.
Appendix
The last section consists of a Glossary of budget and financial terms, List of Acronyms, and an
Index.
16
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 19 and 20.
February 12, 2010 Chiefs submit CIP budget for New Projects and changes to existing
projects.
February 17, 2010 Chiefs submit request for new Personnel/Personnel Reclassifications
and long-term staffing to Human Resources.
February 24, 2010 Human Resources Division (HR) to complete preliminary review of new Personnel and Personnel Reclassification request.
March 1, 2010
Each department submits the following items:
Operating and administrative budget
Capital purchases and justification
Labor Budget Worksheet
March 3, 2010 Human Resources to review new personnel and reclassification requests with General Manager.
March 8, 2010 Finance Department reviews Operating Budget and performs
Reconciliation with departments.
March 10, 2010 Chiefs submit GM approved Personnel Requests and Request for
Reclassification; and Position Analysis Questionnaire forms to HR.
April 5, 2010 Finance reviews assumptions and rates with Chiefs, AGMs and GM.
April 15, 2010 General Manager reviews Preliminary Budget.
May 6, 2010 Practice run of budget presentation with Finance, Chiefs, AGMs and
GM.
Budget Calendar
17
May 17, 2010 Public Workshop – Adopt FY 2010-11 Operating and Capital
Budgets.
October 1, 2010 Mail Proposition Rate Increase Notices.
January 1, 2011 Increase Water and Sewer Rates for amounts billed after January 1, 2011.
18
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 1.7%
pass-through rate increases for costs imposed on the District by the wholesale
water providers
accurate projections of capital budget needs (including replacement needs)
reserve funding in accordance with the Reserve Policy to meet future growth demands and maintain financial stability
funding of the Strategic Plan initiatives as categorized into the Balanced
Scorecard perspectives
avoid rate spikes by leveling rate increases over a six-year period
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. All costs are justified and supported by explanations. These budgets are then 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 in an automated fashion. 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
19
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 maintain all of the reserve levels in accordance with the Reserve Policy.
The District has a three year Strategic Plan, and each year in the spring, the portion of the plan
that pertains to the upcoming fiscal year is presented to the Board of Directors for review and direction. This is followed by a coordinated presentation of the budget by all departments, to the Board of Directors for their approval at a special budget workshop in May. The review of the
Strategic Plan and the adoption of the 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 2011.
20
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
Jamacha Road 36” Potable Water Pipeline
21
22
23
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 709 miles of potable and 96 miles of
recycled pipelines, 44 reservoirs, a water reclamation plant, and one of the largest recycled water distribution systems in the State of California. 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 District’s boundaries currently stretch from Otay Mesa
and eastern Chula Vista to Spring Valley, southern El Cajon, and Jamul.
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. As with the past few
years, we continue to face numerous challenges with the slow recovery from the largest
economic downturn since the Great Depression and ongoing home foreclosures. The District
also faces large water supply cost increases and inaction in the State Capitol to address the crisis in the Sacramento – San Joaquin Bay Delta, the source of 30% of our imported water.
These current problems make the work the District is doing all the more critical. On June 1,
2007, the District dedicated the 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 3 million gallons per day (mgd) of recycled water from the city, increasing to 6 mgd ultimately, and in addition 1 mgd is produced at RWCWRF. With recycled water meeting a
large portion of the landscape irrigation needs, this means in the future approximately 7 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
24
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 CWA, and the Helix Water District (HWD) by contract with CWA. 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 several decades, 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 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 0.6% 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 206,000 residents. In just the past seven years, the District has
added more than 5,876 new customer connections, with 2,326 occurring in Fiscal Year 2004.
The phenomenal growth has slowed, as our local and national economy is experiencing a
downturn. This slowdown appears to have leveled off as the District’s Public Services Division
approved on average 25 permits per month, and sold 302 water meters in Fiscal Year 2009-2010 compared to 158 last year.
25
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.
The Engineering Department projects that over the next six years the District will sell another
7,656 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 1.7% through 2030.
26
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 2009 the population reached 233,108. This represents an increase of 149,181 in the past 29 years or a 177.7% increase, which correlates to the District’s rapid growth for the same
period.
The racial make up of Chula Vista is 51% Hispanic, 27% White, 14% Asian, 4% Black, and the remaining 7% is all other groups. The median household income for Chula Vista was $74,881 in
2009, and 95% of Chula Vista’s housing units were occupied.
27
% of
Annual Water
Customer Type Revenues Sales
1. City of Chula Vista Publicly Owned $2,218,583.82 3.9%
2. County of San Diego Publicly Owned 943,132 1.7%
3. State of California Publicly Owned 803,450 1.4%
4. EastLake III Community Assoc Construction (Potable, Temporary)531,489 0.9%
5. EastLake Summit Assoc Construction (Potable, Temporary)523,703 0.9%
6. EastLake Country Club Irrigation (Reclaimed)406,813 0.7%
7. Belleme HOA Irrigation (Reclaimed)397,621 0.7%
8. Chula Vista School District Publicly Owned 377,411 0.7%
9. Cuyamaca College Publicly Owned 354,666 0.6%
10. Sweetwater School District Publicly Owned 348,083 0.6%
Total 6,904,952$ 12.3%
Estimated FY10 Water Sales 56,186,972$
Customer Name
Ten Largest Customers - Fiscal Year 2010
Ten Largest
12.3%
Others87.7%
CUSTOMERS
FISCAL YEAR 2010
28
Water Rate Comparison
The District strives to remain cost effective in its rate setting, by controlling operating cost, yet
passing through the full cost of supply. The following two charts show how the District
compares in rates with its neighboring water and sewer providers.
Water Rate Comparison of Water Providers
in San Diego County
$5
9
.
4
8
$5
9
.
8
6
$6
6
.
7
6
$6
7
.
0
7
$6
8
.
9
9
$6
9
.
0
7
$6
9
.
2
2
$7
1
.
6
6
$7
3
.
3
6
$7
4
.
7
0
$7
4
.
8
1
$7
5
.
0
6
$7
7
.
3
2
$7
9
.
8
3
$8
0
.
6
8
$8
1
.
6
1
$8
3
.
2
8
$8
4
.
3
5
$8
4
.
6
9
$8
5
.
5
0
$8
8
.
6
8
$9
4
.
2
4
$9
5
.
0
5
$-
$20
$40
$60
$80
$100
$120 Lakeside Oceanside Vallecitos OlivenhainSan Dieguito Poway Otay Yuima Padre Dam WValley Center Helix CarlsbadSanta FeSan Diego Padre Dam ESweetwaterVista Ramona Rainbow EscondidoRincon Fallbrook Del MarSURVEY OF MEMBER AGENCY WATER RATES
Rates effective January 1, 2011 for residential
customer with 15 HCF water use and 3/4 inch meter
29
Sewer Rate Comparison
Sewer Rate Comparison of Sewer Providers
in San Diego County
18
.
0
0
20
.
9
3
22
.
4
0
28
.
0
0
31
.
6
7
32
.
2
2
34
.
3
3
34
.
8
3
41
.
8
4
41
.
9
5
43
.
0
9
43
.
3
4
47
.
1
6
47
.
5
3
49
.
1
6
49
.
5
4
49
.
9
3
53
.
0
0
55
.
3
7
56
.
9
3
58
.
7
5
61
.
5
1
71
.
3
3
73
.
3
4
73
.
9
7
76
.
2
0
77
.
3
1
78
.
0
7
79
.
1
8
80
.
5
9
98
.
6
0
11
7
.
1
0
$-
$20
$40
$60
$80
$100
$120
W i nt e r G a r d e n s - C ou nty
L e u c a dia
C arls b a d
S p rin g V alle y - C o u nty
L a k e side - C o u n ty
V alle cit o s
N ati o nal C ity
A lpi n e - C o u nt y
E l C ajo n O ta y
E s c on did o
V alle y C e nte r - M G
La M e s a Vist a
R a m o n a
P o w a y
S ola na B e a c h
P in e Valle y - C o unty
B u e n a
C h ula Vis ta
J ulia n - C o un ty
S a n D ie go
R a n c h o S a nta Fe
R ain b o w
O c e a n sid e
E n cinita s
Oliv e n hain
P a d re D a m
V alle y C e nte r - M P
Fallbr o ok
V alle y C e nter - W V
D el M a r
Proposed Rates effective Fiscal Year 2011 (with Special Assessment)
for residential customers with 15 HCF water usage
Water-consumption based sewer rate
Flat sewer rate
Otay Water District
30
Service Area Assessed Valuation
Otay Water District’s service area encompasses property with over $24 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. The historic
increases was due to both growth in the number of new homes, as well as increases in home prices.
Despite the slow down in the current housing market, the long-term growth in new homes is expected
to continue at approximately 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. With the down turn in the property values the District is
anticipating a moderate decrease of 6%.
$24,000
$28,000
5,
9
0
3
26,
7
5
2
9
FIVE-YEAR SERVICE AREA ASSESSED VALUATION
Source: County of San Diego Auditor and Controller
$-
$4,000
$8,000
$12,000
$16,000
$20,000
$24,000
$28,000
2005 2006 2007 2008 2009 2010
$1
6
,
4
2
3
$1
9
,
5
6
6
$2
2
,
6
8
5
$2
5
,
9
0
3
$2
6
,
7
5
2
$2
4
,
1
9
9
Mi
l
l
i
o
n
D
o
l
l
a
r
s
Fiscal Year
FIVE-YEAR SERVICE AREA ASSESSED VALUATION
31
Percent
Assessed Value to Total
1. San Diego Expressway Limited Partnership (SDELP) $ 612,000,000 2.53%
2. GGP-Otay Ranch LP 175,700,015 0.73%
3. Village II Of Otay HB SUB 135,600,000 0.56%
4. Regulo Place Apartments Investors LLC 116,184,212 0.48%
5. O V Three Two LLC 92,571,468 0.38%
6. E Q R-Missions At Sunbow LLC 90,550,330 0.37%
7. S P Lavida Real LLC 81,334,891 0.34%
8. S V Portfolio LP 80,104,884 0.33%
9. Corrections Corp Of America 76,621,912 0.32%
10. Rancho Mesa LP 64,100,000 0.26%
Total $ 1,524,767,712 6.30%
Total Service Area Assessed Valuation $ 24,198,816,700
Organization
Ten Principal Taxpayers as of June 30, 2010
Source: County of San Diego Auditor and Controller
Ten Principal Taxpayers6.30%Other Taxpayers93.70%
SERVICE AREA TAXPAYERS
FISCAL YEAR 2010
32
San Diego Rainfall
8.58
2.99
10.62
5.18
22.50
5.42 3.85
7.49 9.17 11.01
0
5
10
15
20
25
30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
In
c
h
e
s
Fiscal Year
FISCAL YEARS 2001-2010
Annual Rainfall 10-Year Average Rainfall (8.68 inches)
Although San Diego's Fiscal Year 2010 rainfall was greater in volume and more broadly distributed
across the year than normal, the District is expecting that San Diego's rainfall will return to its
average pattern and volume for Fiscal Year 2011. The 10-year average of 8.68 inches for San Diego
rainfall reflects the long-term drought conditions for our area. San Diego's rainfall average over 20
8.58
2.99
10.62
5.18
22.50
5.42 3.85
7.49 9.17 11.01
0
5
10
15
20
25
30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
In
c
h
e
s
Fiscal Year
FISCAL YEARS 2001-2010
Annual Rainfall 10-Year Average Rainfall (8.68 inches)
Although San Diego's Fiscal Year 2010 rainfall was greater in volume and more broadly distributed
across the year than normal, the District is expecting that San Diego's rainfall will return to its
average pattern and volume for Fiscal Year 2011. The 10-year average of 8.68 inches for San Diego
rainfall reflects the long-term drought conditions for our area. San Diego's rainfall average over 20 years is 9.96 inches; the 30-year average is 10.10 inches.
San Diego rainfall, while a contributing factor, is not the controlling factor for a potable water
supply shortage. The San Diego region imports 90% of its potable supply, so conditions elsewhere
affect the actual amount of water available to the District. In the event the amount of water supplied to the District is reduced, water-sale revenues would decrease. Related water purchase expenses
would also be reduced dampening the impact of the decrease in revenues. The amount of any
supply reduction would dictate the magnitude of the District's response and type of reaction.
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
website 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.
33
Budget Summary
The Operating Budget is summarized and presented in the Operating Budget Summary on page
38. Also included in this section is the Operating Budget Summary by System on page 39, the Fund Balance Summary by Fund on page 41, and the Revenues and Expenditures by Fund on
pages 42 and 43. The Revenues, Expenditures, and Sources and Uses of Funds by Type for all
funds are presented on page 44. For Fiscal Year 2011, the District increased both water and
sewer rates for its customers in order to pass-through cost increases from water suppliers and
sewer treatment agencies. These cost increases are being experienced by our neighboring water agencies and most are encountering similar rate increases.
Operating Budget Summary
The Operating Budget for Fiscal Year 2011 is $76,993,900 in comparison to the previous fiscal
year budget of $75,716,500. The $1,277,400 increase is primarily due to water supply rate
increases of 12.2% from MWD and 11.3% 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 various revenue and
expense amounts in each year. The Engineering Department is primarily responsible for the growth estimates as described in the budget process on pages 19 and 20. 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 Understanding with the District’s 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 29,900 acre-feet of potable water will
be sold during Fiscal Year 2011. Budgeted revenues from water sales are projected to be $56,333,900, a decrease of 0.2% from the previous year's budget due to decreased water sales,
despite two years of unprecedented increases in water cost. 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 4,295 acre-feet of recycled
water to customers at a discount of 15% off the potable irrigation rate. The FY 2011 sales
revenue budget of $7,620,600, an increase of $18,100 from FY 2010, includes the incentive credits provided by MWD and the CWA.
34
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 prior property tax and availability fees paid 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 or
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.
Transfer from OPEB
This money is available to fund operations from the OPEB trust fund. In Fiscal Year 2008, the
District established a reserve through PERS, lowering the amount necessary to reserve for OPEB expenses allowing the excess to be available to the general fund.
35
Expenditures
Potable Water Purchases Water purchases indicate the expense of purchasing 31,088 acre-feet for the District's potable
water supply. A provision has been made to allow 1,215 acre-feet of water for District usage,
leakage, and evaporation.
Recycled Water Purchases Recycled water purchases indicate the expense of purchasing 3,098 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 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 159 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.
36
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.
Betterment Reserves These reserves are established to fund the betterment needs of facilities including project costs,
existing debt payments, and new debt that will be issued in the future to fund betterment.
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.
Transfers These transfers are necessary to ensure that each fund pays its fair share of costs, or to achieve
required fund balances per the District’s policy. The Transfer Out for Prop 1A occurred in FY
2010 and was a loan to the state of the District’s 1% property tax revenue.
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, 2010, and the projected balance for June 30, 2011, 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.
37
FY 2009 FY 2011 Budget
11-Actual Budget Estimated (drf Budget Variance
REVENUES
##Potable Water Sales 46,160,394$ 56,474,500$ 49,544,333$ 56,333,900$ (140,600)$
Recycled Water Sales 6,238,358 7,602,500 6,622,886 7,620,600 18,100
##Sewer Revenues 2,184,523 2,244,800 2,311,586 2,270,500 25,700
##Meter Fees 71,448 45,600 92,246 50,300 4,700
##Capacity Fee Revenues 1,521,707 1,397,000 1,030,688 1,095,300 (301,700)
##Betterment Fees for Maintenance 661,998 571,400 575,721 657,400 86,000
Annexation Fees 392,349 120,500 555,751 - (120,500)
Tax Revenues 4,054,895 3,852,600 3,679,280 3,843,900 (8,700)
##Non-operating Revenues 4,881,548 1,585,600 2,544,875 1,948,300 362,700
##Interest 377,829 322,900 214,280 296,300 (26,600)
OP Transfer from OPEB - 1,030,000 1,030,000 1,220,000 190,000
General Fund Draw Down - 469,100 469,100 1,657,400 1,188,300
TOTAL REVENUES 66,545,049 75,716,500 68,670,746 76,993,900 1,277,400
EXPENDITURES
##Potable Water Purchases 22,778,545 28,033,700 24,530,567 26,238,700 (1,795,000)
Recycled Water Purchases 1,299,976 1,312,000 1,024,162 1,179,900 (132,100)
##CWA - Infrastructure Access Charge 1,227,408 1,344,900 1,344,828 1,550,700 205,800
##CWA - Customer Service Charge 1,049,470 1,148,800 1,128,306 1,315,200 166,400
##CWA - Emergency Storage Charge 1,774,776 2,246,600 2,196,876 2,875,200 628,600
##MWD - Capacity Reservation Charge 603,072 628,800 637,884 665,100 36,300
##MWD - Net RTS and Standby Charges 665,087 1,140,700 952,226 1,232,400 91,700
Subtotal - Water Costs 29,398,334 35,855,500 31,814,849 35,057,200 (798,300)
##Power 2,905,101 2,637,100 2,307,611 2,520,700 (116,400)
##Labor and Benefits 16,440,651 17,212,800 16,659,222 16,749,400 (463,400)
##Administrative Expenses 5,941,924 5,329,200 4,646,029 5,581,600 252,400
##Materials & Maintenance 3,482,653 3,801,600 3,491,494 3,769,500 (32,100)
##Expansion Reserve 5,016,700 1,610,000 1,610,000 2,775,000 1,165,000
BetBetterment Reserve - 3,810,000 3,810,000 1,435,000 (2,375,000)
RepReplacement Reserve 277,900 3,660,000 3,660,000 6,965,000 3,305,000
Transfer to Sewer General Fund - 200,000 200,000 - (200,000)
Transfer Out - Prop 1A - 270,300 270,300 - (270,300)
Transfer to General Fund Reserve - 1,330,000 1,330,000 390,500 (939,500)
Transfer to Sewer Replacement - - - 1,750,000 1,750,000
TOTAL EXPENDITURES 63,463,263 75,716,500 69,799,505 76,993,900 1,277,400
EXCESS REVENUES (EXPENSE)3,081,786$ -$ (1,128,759)$ -$ -$
FY 2010
Operating Budget Summary - General Fund
38
Potable Recycled Sewer Total
REVENUES
Water Sales 56,333,900$ -$ -$ 56,333,900$
Recycled Water Sales - 7,620,600 - 7,620,600
Sewer Revenues - - 2,270,500 2,270,500
Meter Fees 40,200 10,100 - 50,300
Capacity Fee Revenues 1,095,300 - - 1,095,300
Bett Betterment Fees for Maintenance 657,400 - - 657,400
Tax Revenues 3,792,500 - 51,400 3,843,900
Non-operating Revenues 1,919,200 - 29,100 1,948,300
Interest 256,700 12,400 27,200 296,300
OPEBTransfer from OPEB 1,220,000 - - 1,220,000
General Fund Draw Down 662,800 - 994,600 1,657,400
TOTAL REVENUES 65,978,000 7,643,100 3,372,800 76,993,900
EXPENDITURES
Water Purchases (CWA)26,238,700 - - 26,238,700
Water Purchases (CSD)- 1,179,900 - 1,179,900
CWA - Infrastructure Access Charge 1,550,700 - - 1,550,700
CWA - Customer Service Charge 1,315,200 - - 1,315,200
CWA - Emergency Storage Charge 2,875,200 - - 2,875,200
MWD - Capacity Reservation Charge 665,100 - - 665,100
MWD - Net RTS and Standby Charges 1,232,400 - - 1,232,400
Subtotal - Water Costs 33,877,300 1,179,900 - 35,057,200
Power 1,915,900 529,800 75,000 2,520,700
Labor and Benefits 14,951,000 1,086,800 711,600 16,749,400
Administrative Expenses 4,597,200 343,100 641,300 5,581,600
Materials & Maintenance 2,046,600 303,000 1,419,900 3,769,500
5716 Expansion Reserve - 2,775,000 - 2,775,000
Bett ResBetterment Reserve - 315,000 1,120,000 1,435,000
Repl ResReplacement Reserve 6,245,000 720,000 - 6,965,000
Transfer to Sewer GF 595,000 - (595,000) -
Transfer to GF Reserve - 390,500 - 390,500
Transfer to Sewer Replacement 1,750,000 - - 1,750,000
TOTAL EXPENDITURES 65,978,000 7,643,100 3,372,800 76,993,900
EXCESS REVENUES -$ -$ -$ -$
FY 2011 Operating Budget Summary by System
Potable
86%
Recycled
10%
Sewer
4%
FY 2011 Operating Expenditures
39
4611
4612
TOTAL REVENUES
4621
EXPENDITURES:
5511
5523
5521
5522
5531
5532
5411
5110
5200
5300
TOTAL EXPENDITURES
EXCESS REVENUES
Operating Revenues and Expenditures
73%
10%
3%
< 1%
1%1%
5%2%
3%< 1%
2%
Potable Water Sales
Recycled Water Sales
Sewer Revenues
Meter Fees
Capacity Fee Revenues
Betterment Fees for Maintenance
Tax Revenues
Transfer from OPEB
Non-Operating Revenues
Interest
General Fund Draw Down
FY 2011 Operating Revenues
44%
2%3%
22%
7%
5%
4%2%9%
1%
2%
Potable Water Costs
Recycled Water Purchases
Power
Labor and Benefits
Administrative Expenses
Materials & Maintenance
Expansion Reserve
Betterment Reserve
Replacement Reserve
Transfer to General Fund Reserve
Transfer to Sewer Replacement
FY 2011 Operating Expenditures
40
Estimated Projected
Balance Interfund Balance
June 30, 2010 Revenues Expenditures Transfers (1)June 30, 2011
GENERAL FUND
Potable 21,107,588$ 65,978,000$ 65,978,000$ -$ 21,107,588$
Recycled 1,751,257 7,643,100 7,643,100 - 1,751,257
Sewer 1,617,801 3,372,800 3,372,800 - 1,617,801
Total General Fund 24,476,646 76,993,900 76,993,900 - 24,476,646
EXPANSION FUND
Potable and Recycled (2)20,659,114 5,084,700 17,548,200 1,365,000 9,560,614
Sewer 437,635 7,700 - - 445,335
Total Expansion Fund 21,096,749 5,092,400 17,548,200 1,365,000 10,005,949
BETTERMENT FUND
Potable 5,815,334 1,428,200 6,691,900 - 551,634
Recycled 216,085 3,100 374,200 315,000 159,985
Sewer 622,491 47,100 1,653,800 1,120,000 135,791
Total Betterment Fund 6,653,909 1,478,400 8,719,900 1,435,000 847,409
REPLACEMENT FUND
Potable 17,668,450 1,317,900 7,918,800 7,655,000 18,722,550
Recycled 4,600,306 472,100 1,200,000 720,000 4,592,406
Sewer 2,215,121 12,600 1,267,900 1,750,000 2,709,821
Total Replacement Fund 24 483 877 1 802 600 10 386 700 10 125 000 26 024 777
Estimated, Fiscal Year 2011
Fund Balance Summary by Fund
Total Replacement Fund 24,483,877 1,802,600 10,386,700 10,125,000 26,024,777
OPEB FUND 6,639,952 96,300 905,000 (1,220,000) 4,611,252
DEBT RESERVE FUND 32,197,323 962,200 1,195,200 - 31,964,323
TOTAL 115,548,457$ 86,425,800$ 115,748,900$ 11,705,000$ 97,930,357$
Note: See page 198 - 206 for a description of fund types.
(1)The total for interfund transfers does not net to $0 because some transfers are already reflected in the Operating
Revenues and Expenditures for General Fund as follows:
Expansion Reserve (2,775,000)$
Betterment Reserve (1,435,000)
Replacement Reserve (8,715,000)
OPEB Reserve 1,220,000
Total (11,705,000) -
(2)Potable and Recycled funds are combined for expansion purposes.
41
FY 2009 FY 2011
Actual Budget Estimated Projected
REVENUES
GENERAL FUND
GPrev Potable 57,968,090$ 65,264,200$ 58,128,501$ 65,978,000$
GRrev Recycled 6,259,578 7,630,500 6,629,817 7,643,100
GSrev Sewer 2,317,381 2,821,800 2,413,330 3,372,800
Total General Fund (1)66,545,049 75,716,500 67,171,647 76,993,900
EXPANSION FUND
EPrev Potable 4,445,557 14,343,600 5,160,255 4,514,400
ERrev Recycled 1,711,182 1,123,800 2,825,962 570,300
ESrev Sewer 12,512 4,100 6,113 7,700
Total Expansion Fund 6,169,251 15,471,500 7,992,331 5,092,400
BETTERMENT FUND
BPrev Potable 1,487,503 23,596,800 1,262,227 1,428,200
BRrev Recycled 16,876 (700) 2,800 3,100
BSrev Sewer 36,661 47,000 44,897 47,100
Total Betterment Fund 1,541,040 23,643,100 1,309,925 1,478,400
REPLACEMENT FUND
RPrev Potable 643,213 12,350,700 278,880 1,317,900
RRrev Recycled 123,069 77,000 64,857 472,100
RSrev Sewer 92,569 39,200 33,323 12,600
Total Replacement Fund 858,852 12,466,900 377,060 1,802,600
OrevOPEB FUND 269,600 883,300 104,862 96,300
DrevDEBT RESERVE FUND 1,238,139 1,058,000 51,775,186 962,200
Total Revenues 76,621,932$ 129,239,300$ 128,731,010 86,425,800$
Revenues and Expenditures by Fund
FY 2010
42
FY 2009 FY 2011
Actual Budget Estimated Projected
Revenues and Expenditures by Fund
FY 2010
EXPENDITURES
GENERAL FUND
GPexp Potable 55,119,417$ 65,264,200$ 60,343,525$ 65,978,000$
GRexp Recycled 6,103,430 7,630,500 6,939,833 7,643,100
GSexp Sewer 2,240,416 2,821,800 2,516,147 3,372,800
Total General Fund 63,463,263 75,716,500 69,799,505 76,993,900
EXPANSION FUND
EPexp Potable 7,602,270 15,902,200 6,861,420 8,469,700
ERexp Recycled 991,176 2,680,900 213,074 9,078,500
ESexp Sewer 21,282 - 698 -
Total Expansion Fund 8,614,728 18,583,100 7,075,192 17,548,200
BETTERMENT FUND
BPexp Potable 11,086,808 15,653,700 2,010,569 6,691,900
BRexp Recycled 770,690 24,700 2,762 374,200
BSexp Sewer 18,893 673,900 175,406 1,653,800
Total Betterment Fund 11,876,390 16,352,300 2,188,737 8,719,900
REPLACEMENT FUND
RPexp Potable 2,975,778 8,136,600 5,429,102 7,918,800
RRexp Recycled 960,581 915,000 244,747 1,200,000
RSexp Sewer 521,002 514,300 268,146 1,267,900
Total Replacement Fund 4,457,361 9,565,900 5,941,995 10,386,700
Oex OPEB FUND 1,481,070 1,150,600 871,631 905,000
DexpDEBT RESERVE FUND 7,583,759 1,190,400 21,285,578 1,195,200
Total Expenditures 97,476,571 122,558,800 107,162,638 115,748,900
EXCESS (DEFICIT) (1)(20,854,639)$ 6,680,500$ 21,568,372 (29,323,100)$
43
FY 2009 FY 2011
Actual Budget Estimated Budget
REVENUES AND FUND SOURCES
Potable Water Sales 46,160,394$ 56,474,500$ 49,544,333$ 56,333,900$
Recycled Water Sales 6,238,358 7,602,500 6,622,886 7,620,600
Tax Revenues 4,054,895 3,852,600 3,679,280 3,843,900
Capacity Fee Revenues 3,331,640 2,790,000 2,978,943 3,464,800
Grants 2,315,000 5,221,000 4,765,000 2,540,000
Sewer Revenues 2,184,523 2,244,800 2,311,586 2,270,500
Non-Operating Revenues 4,881,548 1,585,600 2,544,875 1,948,300
General Fund Draw Down - 469,100 - 1,657,400
Interest 2,251,329 1,623,700 1,057,832 1,522,600
Transfer from OPEB - 1,030,000 - 1,220,000
Capacity Fees for Maintenance 1,521,707 1,397,000 1,030,688 1,095,300
Betterment Fee Revenues 875,582 948,000 705,655 739,300
Betterment Fees for Maintenance 661,998 571,400 575,721 657,400
GO Bond Debt Tax Revenues 747,175 665,900 605,405 578,400
Availability Fees 527,018 518,600 543,654 521,000
Sewer Debt Tax Revenues 406,968 362,600 385,997 362,100
Meter Fees 71,448 45,600 92,246 50,300
Proposed COPs - 41,000,000 - -
COPs Proceeds - - 50,731,158 -
Annexation Fees 392,349 120,500 555,751 -
Reimbursement from PERS Trust - 715,900 - -
T t lR dF dS 76 621 932$129 239 300$128 731 010 86 425 800$
Revenues and Expenditures by Type - All Funds
FY 2010
Total Revenues and Fund Sources 76,621,932$ 129,239,300$ 128,731,010 86,425,800$
EXPENDITURES AND USES OF FUNDS
Potable Water Purchases 28,098,358$ 34,543,500$ 30,790,687$ 33,877,300$
CIP Expenses 11,658,138 37,272,100 9,134,348 28,383,100
Labor Expenses 16,440,651 17,212,800 16,659,222 16,749,400
Interfund Transfers 5,294,600 9,080,000 9,080,000 12,925,000
Debt Service 5,232,079 5,221,200 5,898,401 7,714,200
Administrative Expenses 5,941,924 5,329,200 4,646,029 5,581,600
Materials and Maintenance 3,482,653 3,801,600 3,491,494 3,769,500
Power 2,905,101 2,637,100 2,307,611 2,520,700
Recycled Water Purchases 1,299,976 1,312,000 1,024,162 1,179,900
Capacity Fees for Maintenance 1,521,707 1,397,000 1,030,688 1,095,300
Payment to PERS 873,000 434,700 274,000 905,000
Betterment Fees for Maintenance 7,724,112 571,400 575,721 657,400
General Fund Transfers - 1,800,300 1,800,300 390,500
Bond/Loan Issuance Expense - 1,230,000 - -
OPEB Health Expenses 608,070 715,900 597,631 -
COPs Proceeds Distribution 6,396,203 - 19,852,345 -
Total Expenditures and Uses of Funds 97,476,571 122,558,800 107,162,638 115,748,900
EXCESS (DEFICIT) (20,854,639)$ 6,680,500$ 21,568,372 (29,323,100)$
44
Five-Year Forecast
Financial Forecast for Fiscal Years 2011-2015
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 709 miles of potable pipelines,
96 miles of recycled pipelines, 88 miles of sewer lines, 40 potable and 4 recycled reservoirs, 23
potable and 3 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).
45
Revenues FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Water/Sewer Rates 72,096,400$ 81,347,700$ 89,798,300$ 95,301,000$ 100,669,900$
Meter Fees 39,600 75,900 391,500 535,800 620,700
Capacity Fee Revenues 1,100,800 1,111,800 1,122,900 1,134,100 1,145,400
Betterment Fees 660,700 667,300 674,000 680,700 687,500
Annexation Fees 76,100 274,200 403,500 436,400 342,400
Non-operating Revenues 1,983,700 2,024,100 2,069,100 2,117,900 2,166,300
Tax Revenues 3,850,600 3,929,400 4,017,000 4,211,500 4,412,900
Interest Income 381,700 560,600 835,700 1,361,100 2,396,800
General Fund Draw Down 279,800 149,500 37,500 (58,900) -
TOTAL 80,469,400$ 90,140,500$ 99,349,500$ 105,719,600$ 112,441,900$
16,419,600$ 21,125,700$ 25,453,000$ 27,113,300$
Expenditures and Transfers
Water Cost 39,427,100$ 44,868,700$ 51,070,200$ 56,122,300$ 61,077,300$
Power 2,640,200 2,632,900 2,821,100 3,045,900 3,268,900
Labor and Benefits 17,763,800 18,373,200 19,076,000 19,909,600 20,746,200
Administrative Expenses 5,622,700 5,785,500 5,950,200 6,115,200 6,285,800
Materials & Maintenance 3,881,400 3,997,900 4,160,600 4,330,200 4,506,600
Fund Transfers, Net 11,123,600 14,470,900 16,259,000 16,183,100 16,543,000
TOTAL 80,458,800$ 90,129,100$ 99,337,100$ 105,706,300$ 112,427,800$
Excess Revenues 10,600$ 11,400$ 12,400$ 13,300$ 14,100$
General Fund Forecast - FY 2012 Through FY 2016
This forecast incorporates both cost increases for expenditures and rate increases for revenues, as well as
growth projections.
$0
$20
$40
$60
$80
$100
$120
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
$8
0
$9
0
$9
9
$1
0
6
$1
1
2
$8
0
$9
0
$9
9
$1
0
6
$1
1
2
Mi
l
l
i
o
n
s
Fiscal Year
REVENUES AND EXPENDITURES FORECAST
Revenues Expenditures
46
Fund FY 2012*FY 2013 FY 2014 FY 2015 FY 2016
General Fund 17,887,700$ 20,046,500$ 22,576,400$ 46,838,300$ 75,399,800$
Betterment Fund 22,087,500 9,439,200 4,489,900 1,579,600 1,597,100
Replacement Fund 31,600,600 30,915,200 32,533,300 31,676,600 31,589,900
Expansion Fund 24,452,700 11,409,200 6,735,200 5,144,800 5,142,600
Medical Fund (1)2,300,500 518,500 539,200 560,800 583,200
Debt Reserve 1,024,300 834,800 671,800 536,000 393,300
TOTAL 99,353,300$ 73,163,400$ 67,545,800$ 86,336,100$ 114,705,900$
(1) Medical Fund decreases as the OPEB Trust is funded.
Fund Balances - FY 2012 Through FY 2016
$0
$20
$40
$60
$80
$100
$120
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Mi
l
l
i
o
n
s
Fund Balances Forecast
Debt Reserve
Medical Fund (1)
Expansion Fund
Replacement Fund
Betterment Fund
General Fund
* Increase in Fund Total due to bond issuances in FY 2012
47
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 six 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. All efforts that
minimize the cost of debt have a corresponding affect that reduces water rates.
In a continuing effort to reduce debt expenses, the District was successful in raising its overall
credit rating from AA- to AA, this past fiscal year. In March 2010, the District issued $50.2 million in debt with a combination of both tax-exempt and taxable Build America Bonds
(BABs). The effective interest rate on the combined series of bonds is 4.176%, after taking the
BABs interest payment subsidy into account. This bond sale takes advantage of the 35%
reimbursement by the Federal Government of the interest cost of the BABs as part of the
economic stimulus program. As a result, the District will save $275,000 a year in interest costs.
To meet the bond indebtedness obligation and maintain stable rates, the rate model is used to forecast revenues and operating requirements. The District has projected a schedule of rate
increases designed to generate sufficient revenue to pay off existing and planned future debt
issues. See the Policies Section of the budget for the District’s complete Debt Policy.
The legal minimum debt coverage ratio is 1.25 in accordance with District bond covenants.
Debt Management
48
Outstanding
Year Original Balance
# Incurred Maturity Date Amount 06/30/10
1 1996 Certificates of Participation (COPs)September 1, 2026 15,400,000$ 11,700,000$
2 2009 General Obligation (GO) Bonds August 31, 2022 11,835,000 7,780,000
3 2004 Certificates of Participation (COPs)September 1, 2023 12,270,000 9,790,000
4 1994 State Loan November 30, 2010 5,000,000 359,744
5 2007 Certificates of Participation (COPs)September 1, 2036 42,000,000 40,400,000
6 2010 Certificates of Participation Series A (COPs)September 1, 2024 13,840,000 13,840,000
7 2010 Certificates of Participation Series B (COPs)September 1, 2040 36,355,000 36,355,000
Total Outstanding Debt 136,700,000$ 120,224,744$
Total Assessed Valuation - FY 2010
Percentage of Original Debt to Assessed Valuation 0.56%0.11%
Debt Limit per District Debt Policy (% of Assessed Valuation)15.00% 15.00%
Schedule of Outstanding Debt
GO Bonds
10,476,542,393$ 24,198,816,700$
All Debts
Description
49
1996 COPs GOBs (2) 2004 COPs State Loan 2007 COPs 2010A COPs 2010B COPs Total
400,000 520,000 545,000 353,700 850,000 - - 2,668,700
400,000 505,000 565,000 6,000 885,000 785,000 - 3,146,000
500,000 520,000 580,000 - 920,000 800,000 - 3,320,000
500,000 535,000 600,000 - 955,000 820,000 - 3,410,000
500,000 550,000 625,000 - 995,000 845,000 - 3,515,000
600,000 570,000 650,000 - 1,035,000 870,000 - 3,725,000
600,000 585,000 675,000 - 1,075,000 900,000 - 3,835,000
600,000 605,000 700,000 - 1,115,000 940,000 - 3,960,000
700,000 635,000 725,000 - 1,155,000 975,000 - 4,190,000
700,000 650,000 755,000 - 1,200,000 1,015,000 - 4,320,000
700,000 680,000 790,000 - 1,250,000 1,065,000 - 4,485,000
800,000 705,000 825,000 - 1,300,000 1,120,000 - 4,750,000
800,000 720,000 860,000 - 1,355,000 1,175,000 - 4,910,000
900,000 - 895,000 - 1,410,000 1,235,000 - 4,440,000
900,000 - - - 1,470,000 1,295,000 - 3,665,000
1,000,000 - - - 1,530,000 - 1,365,000 3,895,000
1,100,000 - - - 1,595,000 - 1,450,000 4,145,000
- - - - 1,665,000 - 1,545,000 3,210,000
- - - - 1,735,000 - 1,640,000 3,375,000
- - - - 1,810,000 - 1,745,000 3,555,000
- - - - 1,890,000 - 1,855,000 3,745,000
- - - - 1,970,000 - 1,975,000 3,945,000
- - - - 2,055,000 - 2,105,000 4,160,000
- - - - 2,150,000 - 2,245,000 4,395,000
- - - - 2,245,000 - 2,390,000 4,635,000
- - - - 2,340,000 - 2,550,000 4,890,000
- - - - 2,445,000 - 2,715,000 5,160,000
- - - - - - 2,895,000 2,895,000
- - - - - - 3,085,000 3,085,000
- - - - - - 3,290,000 3,290,000
- - - - - - 3,505,000 3,505,000
11,700,000$ 7,780,000$ 9,790,000$ 359,700$ 40,400,000$ 13,840,000$ 36,355,000$ 120,224,700$
2011
2012
2013
2014
2015
Projected Principal Payments by Debt Issuance
FY
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
TOTAL
50
1996 COPs (1) GOBs (2) 2004 COPs State Loan 2007 COPs 2010A COPs 2010B COPs Total
655,200 261,813 380,600 5,200 1,644,800 498,928 2,049,031 5,495,571
638,200 246,588 362,500 - 1,611,800 569,688 2,371,868 5,800,643
621,600 231,063 343,000 - 1,577,500 553,838 2,371,868 5,698,868
602,900 215,088 321,700 - 1,541,900 533,538 2,371,868 5,586,993
572,700 198,663 298,600 - 1,504,900 508,563 2,371,868 5,455,293
537,500 181,663 273,500 - 1,466,300 478,488 2,371,868 5,309,318
501,200 162,969 246,800 - 1,425,800 443,088 2,371,868 5,151,725
465,000 139,633 219,000 - 1,383,700 406,288 2,371,868 4,985,489
465,000 114,433 188,900 - 1,339,300 367,988 2,371,868 4,847,489
423,700 88,533 157,100 - 1,292,900 323,113 2,371,868 4,657,214
339,200 61,533 123,000 - 1,243,400 271,113 2,371,868 4,410,114
291,900 33,500 86,300 - 1,191,700 216,488 2,371,868 4,191,756
243,600 4,800 47,800 - 1,136,800 159,113 2,371,868 3,963,981
190,200 - 6,900 - 1,079,300 98,863 2,371,868 3,747,131
135,900 - - - 1,019,200 33,994 2,371,868 3,560,962
76,500 - - - 955,500 - 2,328,345 3,360,345
11,100 - - - 955,500 - 2,238,589 3,205,189
- - - - 818,000 - 2,143,093 2,961,093
- - - - 744,800 - 2,041,540 2,786,340
- - - - 668,400 - 1,933,609 2,602,009
- - - - 588,600 - 1,818,823 2,407,423
- - - - 505,500 - 1,694,728 2,200,228
- - - - 416,600 - 1,560,558 1,977,158
- - - - 323,200 - 1,417,508 1,740,708
- - - - 225,700 - 1,265,086 1,490,786
- - - - 124,000 - 1,102,634 1,226,634
- - - - 17,800 - 929,495 947,295
- - - - - - 745,010 745,010
- - - - - - 548,357 548,357
- - - - - - 338,716 338,716
- - - - - - 115,262 115,262
6,771,400$ 1,940,277$ 3,055,700$ 5,200$ 26,802,900$ 5,463,084$ 57,476,540$ 101,515,102$
(1)Interest on the 1996 Certificates of Participation is variable and is projected using an interest rate of 5.8%
(2)The GO Bonds were refinanced in April of 2009.
2011
2012
Projected Interest Payments by Debt Issuance
FY
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
Note: The total projected debt payment of $7,714,200 for FY 2011 as shown on the Debt Service Expenditure on the Revenues and Expenditures by
Type - All Funds Schedule on page 44 is less than the projected principal payment of $2,668,700 shown on page 50, plus the interest payment of
$5,495,571 shown above, by $450,071 due to the difference of the stated rate of 5.8% and the actual rate the district is currently paying, causing a
variance of $484,700 on the 1996 COPs, and the miscellaneous administrative fees of ($83,074) is not shown on the principal and interest schedules.
The remaing variance of $48,446 resulted from a reduction in payment when the District refinanced the GO Bonds in 2009.
2037
2038
2039
2040
2041
TOTAL
51
Potable Revenues and Expenses
The District will provide water service to approximately 48,060 potable customers by the end of
Fiscal Year 2011. Ninety-two percent of the potable customers are residential and the remaining
eight percent are comprised of: master-metered, publicly owned, commercial, agricultural,
landscaping, and construction. Although the extensive residential developments have slowed down in recent years, the District still expects nominal growth of 0.3% for Fiscal Year 2011. Unit sales are anticipated to decrease 10.3% from the previous year's budget due to the water
shortage message being received by our customers and the overall economic slowdown.
Water rates vary among the customer classifications. The water rates for all customers are based on an accelerated block structure; as more units are consumed, a higher unit rate is charged on the higher units.
Unit sales represent approximately 65% 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 30% of the potable water sales
revenue. Water rates, energy fees, and penalties recover the remaining 70% of remaining revenues necessary to fund operations. The District adjusts 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 increases 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
and IID. Any increase in costs by CWA, MWD, or IID impacts the District's water purchases
and directly affects the District's fees, rates, and service charges.
The District entered into an agreement with CWA to have the Helix Water District, at their Levy
Water Treatment Plant, treat imported untreated water on behalf of the Otay Water District. This
action brought regional water treatment closer to customers and reduced dependence on water
treatment facilities located outside of San Diego County.
The District was assigned a water allocation budget from CWA to ensure the region as a whole
remains within its allocation from MWD. For the District this allocation is 40,247 acre feet. In
Fiscal Year 2011, the District is estimating the purchase of 31,088 acre-feet of potable water,
52
well below the allocation set by CWA and sufficient to meet the demands of its customers.
Provisions have been made for District usage, leakage, and evaporation in the amount of 1,215
acre-feet.
53
FY 2009 FY 2011 Budget Variance
11-Actual Budget Estimated (d Budget Variance %
REVENUES
##Water Sales 46,160,394$ 56,474,500$ 49,544,333$ 56,333,900$ (140,600)$ (0.2%)
##Meter Fees 53,112 25,600 86,278 40,200 14,600 57.0%
##Capacity Fee Revenues 1,516,260 1,397,000 1,030,467 1,095,300 (301,700) (21.6%)
##Betterment Fees for Maintenance 661,998 571,400 575,721 657,400 86,000 15.1%
##Annexation Fees 392,349 120,500 555,751 - (120,500) (100.0%)
Tax Revenues 4,004,135 3,802,300 3,627,302 3,792,500 (9,800) (0.3%)
##Non-operating Revenues 4,847,207 1,556,500 2,517,169 1,919,200 362,700 23.3%
##Interest 332,633 286,400 191,479 256,700 (29,700) (10.4%)
OPETransfer from OPEB - 1,030,000 1,030,000 1,220,000 190,000 18.4%
TOTAL REVENUES 57,968,090 65,264,200 59,158,500 65,978,000 713,800 1.1%65,978,000
EXPENDITURES
Water Purchases 22,778,545 28,033,700 24,530,567 26,238,700 (1,795,000) (6.4%)
##CWA - Infrastructure Access Charge 1,227,408 1,344,900 1,344,828 1,550,700 205,800 15.3%##CWA - Customer Service Charge 1,049,470 1,148,800 1,128,306 1,315,200 166,400 14.5%
##CWA - Emergency Storage Charge 1,774,776 2,246,600 2,196,876 2,875,200 628,600 28.0%
##MWD - Capacity Reservation Charge 603,072 628,800 637,884 665,100 36,300 5.8%
##MWD - Net RTS and Standby Charges 665,087 1,140,700 952,226 1,232,400 91,700 8.0%
Subtotal - Water Costs 28,098,358 34,543,500 30,790,687 33,877,300 (666,200) (1.9%)
##Power 2,343,830 2,033,400 1,800,424 1,915,900 (117,500) (5.8%)
##Labor and Benefits 14,701,967 15,111,000 14,967,014 14,951,000 (160,000) (1.1%)
##Administrative Expenses 5,465,351 4,555,000 3,927,558 4,597,200 42,200 0.9%
##Material & Maintenance 1,923,210 2,127,500 1,964,042 2,046,600 (80,900) (3.8%)
##Expansion Reserve 2,586,700 - - - - 0.0%
BettBetterment Reserve - 3,700,000 3,700,000 - (3,700,000) (100.0%)
RepReplacement Reserve 2 710 000 2 710 000 6 245 000 3 535 000 130 4%
FY 2010
Operating Budget Summary - Potable
RepReplacement Reserve - 2,710,000 2,710,000 6,245,000 3,535,000 130.4%
GF Transfer to Potable General Fund - 13,500 13,500 - (13,500) (100.0%)
swr Transfer to Sewer General Fund - 200,000 200,000 595,000 395,000 197.5%
propTransfer Out/In Prop 1A - 270,300 270,300 - (270,300) (100.0%)
SwrTransfer to Sewer Replacement - - - 1,750,000 1,750,000 100.0%
TOTAL EXPENDITURES 55,119,417 65,264,200 60,343,525 65,978,000 713,800 1.1%
EXCESS REVENUES (EXPENSES) 2,848,673$ -$ (1,185,025)$ -$ -$ 0.0%
EXCESS REVENUES, w/o restatement and transfers (1,185,025)$ -$
59.0%
3.3%
26.1%
8.0%3.6%
Potable Operating Expenditures
FY 2011
Water Costs
Power
Labor and Benefits
Administrative Expenses
Material & Maintenance
54
FY 2010
Estimated
FY 2011
Budget Variance
Water Sales:
Water Sales 31,326,151$ 36,560,100$ 5,233,949$
System Fees 9,342,732 9,532,200 189,468
Energy Fees 1,662,233 1,854,600 192,367
MWD and CWA Fixed Fees 6,359,939 7,639,400 1,279,461
Penalties 853,279 747,600 (105,679)
Total 49,544,334$ 56,333,900$ 6,789,566$
Classification of Water Sales - Potable
64.9%
16.9%3.3%1.3%
13.6%
Water Sales: Unit Sales x Water Rate
System Charges: System Fee x Meter Size
Energy Charges: Energy Fee of $0.044 per unit of water for each 100 feet of
lift or fraction thereof above the base elevation of 450 feet
Penalties: Late charges, locks, etc.
55
Current Approved*
Accounts Units Amount Rates Rates
Residential 43,694 7,776,400 21,545,700$ 2.66$ 2.77$ **
Master Meter 805 1,358,800 3,836,100 2.69 2.82 **
Public and Commercial 1,515 1,857,100 4,378,600 2.25 2.36 **
Irrigation 1,212 1,739,700 5,510,400 3.06 3.17 **
Temporary and Others 115 280,500 895,800 3.06 3.19 **
Total Potable Water Sales 47,341 13,012,500 36,166,600$ 2.67$ 2.78$
Government Fee - - 393,500 0.29 0.29
47,341 13,012,500 36,560,100$ 2.96$ 3.07$ **
-
*Approved rates for water billed after January 1, 2011.
**Based on average rate.
Fiscal Year 2011 Sales Budget
Water Sales Summary by Service Class - Potable
59.8%
10.3%
14.3%
13.4%
2.2%
UNIT SALES BY SERVICE CLASS FY 2011
Residential
Master Meter
Public and Commercial
Irrigation
Temporary and Others
56
Estimated Budget
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Residential 9,668,100 9,713,112 9,402,189 8,881,191 7,679,574 7,776,400
Master Meters 1,198,200 1,434,040 1,445,634 1,430,235 1,369,784 1,358,800
Public & Commercial 1,902,500 1,886,006 1,859,226 1,938,215 1,800,055 1,857,100
Irrigation 2,174,336 2,329,790 2,301,699 2,183,823 1,646,164 1,739,700
Temporary and Others 689,000 696,516 566,920 490,297 254,197 280,500
Total 15,632,136 16,059,464 15,575,668 14,923,761 12,749,774 13,012,500
Unit Sales History by Customer Class - Potable
Actual
5,000
15,000
25,000
35,000
45,000
55,000
5,000
10,000
15,000
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Budget
Me
t
e
r
s
Un
i
t
s
(
t
h
o
u
s
a
n
d
s
)
UNIT SALES AND METER COUNT TRENDS
Unit Sales Meters
57
Meter Current Approved*Existing Additional Total
Service Class Size 6/30/2010
FY11
Growth Rates Rates Meters Meters Meters
All Service Types 0.75 43,300 104 14.58$ 14.58$ 7,575,800$ 18,200$ 7,594,000$
1.00 1,740 19 18.52 18.52 386,700 4,200 390,900
1.50 922 - 28.37 28.37 313,900 - 313,900
2.00 1,100 4 40.18 40.18 530,400 1,900 532,300
3.00 71 - 71.68 71.68 61,100 - 61,100
4.00 180 - 107.13 107.13 231,400 - 231,400
6.00 21 1 205.59 205.59 51,800 2,500 54,300
8.00 - - 323.73 323.73 - - -
10.00 7 - 461.57 461.57 38,800 - 38,800
Fire Services Various 591 - 30.11 30.11 213,500 - 213,500
Turn Over Fees 850 10.00 10.00 102,000 - 102,000
Budgeted Potable System Fees 47,932 128 9,505,400$ 26,800$ 9,532,200$
*Approved rates for water billed after January 1, 2011.
Budgeted System Fees
System Fees - Potable
Meter Count
$-
$2,000
$4,000
$6,000
$8,000
$10,000
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Budget
Th
o
u
s
a
n
d
s
58
Meter Current Approved*
Classification Size 6/30/2010
FY11
Growth Rates Rates Existing Growth Total
All Service Types 0.75 43,189 104 9.77$ 11.82$ 5,594,700$ 72,300$ 5,667,000$
1.00 1,712 19 16.28 19.69 369,500 4,400 373,900
1.50 916 - 32.61 39.44 396,000 - 396,000
2.00 1,094 4 52.15 63.07 756,300 1,600 757,900
3.00 71 - 104.30 126.14 98,200 - 98,200
4.00 91 - 162.98 197.11 196,600 - 196,600
6.00 18 1 325.92 394.17 77,800 2,400 80,200
8.00 - - 521.51 630.71 - - -
10.00 7 - 749.61 906.58 69,600 - 69,600
Total 47,098 128 7,558,700$ 80,700$ 7,639,400$
*Approved rates for water billed after January 1, 2011.
Budgeted MWD & CWA - Fixed ChargesMeter Count
MWD and CWA Fixed Fees (Pass-Through) - Potable
$-
$2,000
$4,000
$6,000
$8,000
$10,000
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Budget
Th
o
u
s
a
n
d
s
59
Meter Installation Meter AMR
Size Fee Fee Fee
Meter Fees:0.75 60.00$ 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
Service Class 0.75 1.00 1.50 2.00 6.00 Total
Residential 104 19 -4 1 128
Non-Residential ------
Total Meter Fees $27,700 $6,200 -$3,400 $2,900 $40,200
Meter Fees - Potable
Fiscal Year 2011 Growth by Meter Size
-
15,000
30,000
45,000
60,000
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Budget
NUMBER OF METERS
60
Estimated Budget
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Water Sales 27,975,777$ 30,696,070$ 30,049,415$ 30,375,618$ 31,326,151$ 36,560,100$
System Fees 8,056,340 8,658,339 9,611,046 9,510,996 9,342,732 9,532,200
Energy Fees 1,696,492 1,801,455 1,834,102 1,866,237 1,662,233 1,854,600
MWD and CWA Fixed Fees 1,775,186 2,159,269 2,530,306 3,758,403 6,359,939 7,639,400
Penalties 688,374 797,615 779,985 649,683 853,279 747,600
Total 40,192,169$ 44,112,748$ 44,804,854$ 46,160,938$ 49,544,334$ 56,333,900$
Revenue History - Potable
Actual
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Budget
Th
o
u
s
a
n
d
s
Water Sales System Fees Energy Fees MWD & CWA Fixed Fees Penalties
61
FY11 Budget FY11 Budget
Acre Feet Rate (1)Purchase Costs % to Total
Potable Water Purchases
Budgeted Sales (CWA)29,872.6 $814/$887 25,212,300$ 96.1%
District & Unbilled Usage 127.2 $814/$887 108,000 0.4%
Water Loss 1,088.1 $814/$887 918,400 3.5%
TOTAL VARIABLE CHARGES 31,087.9 26,238,700$ 100.0%
MWD & CWA FIXED CHARGES:FY10 Estimated FY11 Budget
Infrastructure Access Charge (IAC)1,344,828$ 1,550,700$
Customer Service Charge (CSC)1,128,306 1,315,200
Emergency Storage Charge (ESC)2,196,876 2,875,200
Capacity Reservation Charge (CRC)637,884 665,100
Readiness-to-Serve Charge (RTS)952,226 1,232,400
TOTAL FIXED CHARGES 6,260,120$ 7,638,600$
(1)The first rate applies to purchases from July to December of the budget fiscal year; the second from
January to June.
Water Purchases and Related Costs - Potable
-
10,000
20,000
30,000
40,000
50,000
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Budget
Ac
r
e
F
e
e
t
HISTORICAL POTABLE WATER PURCHASES
62
Admin and
Operations
Buildings
Potable
Transmission
Total Potable
Power Costs
FY06 Actual 154,567 1,628,153 1,782,721
FY07 Actual 172,646 1,838,636 2,011,282
FY08 Actual 170,564 2,090,701 2,261,265
FY09 Actual 185,059 1,718,938 1,903,997
FY10 Estimated 177,651 1,622,773 1,800,424
FY11 Budget 217,300 1,698,600 1,915,900
164,300.00
2,677,800.00
Note: FY 2010 Otay received credits from SDG&E.
Power Costs - Potable
$0
$500
$1,000
$1,500
$2,000
$2,500
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Budget
Th
o
u
s
a
n
d
s
HISTORICAL POWER COSTS
Admin & Operations Buildings
Potable Transmission
63
FY 2009 FY 2011 Budget
Actual Budget Estimated Budget Variance %
Director's Fees 20,200$ 40,000$ 15,100$ 30,000$ (10,000) (25.0%)
Travel and Meetings 213,488 222,200 162,652 221,400 (800) (0.4%)
Conservation and Outreach 254,209 352,800 240,734 479,700 126,900 36.0%
General Office Expense 397,104 434,500 343,859 368,700 (65,800) (15.1%)
Equipment 1,098,693 1,020,900 1,009,501 1,030,200 9,300 0.9%
Fees 402,572 442,100 439,105 434,100 (8,000) (1.8%)
Services 1,907,949 1,709,100 1,343,641 1,738,300 29,200 1.7%
Training 146,746 156,500 126,746 151,800 (4,700) (3.0%)
Utilities 15,874 17,500 16,514 15,300 (2,200) (12.6%)
Miscellaneous 258,933 212,400 145,110 171,100 (41,300) (19.4%)
Total 4,715,767 4,608,000 3,842,962 4,640,600 32,600 0.7%
Less: Overhead Allocation (789,788) (918,800) (845,113) (959,400) (40,600) 4.4%
Subtotal 3,925,979 3,689,200 2,997,849 3,681,200 (8,000) (0.2%)
General Expenses 1,539,372 865,800 929,708 916,000 50,200 5.8%
Total Administrative Expenses 5,465,351$ 4,555,000$ 3,927,557$ 4,597,200$ 42,200$ 0.9%
6,255,139$ 5,473,800$ 4,772,670$ 5,556,600$
Director's Fees
Equipment
Fees
Services
Training
Utilities
Miscellaneous
#########
FY 2010
Administrative Expenses - Potable
.6%4.8%
10.3%
7.9%
22.2%
9.4%
37.5%
3.3%
.3%
3.7%
ADMINISTRATIVE EXPENSES -POTABLE
FY 2011
Director's Fees
Travel and Meetings
Conservation and Outreach
General Office Expense
Equipment
Fees
Services
Training
Utilities
Miscellaneous
64
FY 2009 FY 2011 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil 193,792$ 231,400$ 196,420$ 231,400$ - 0.0%
Meters and Materials 133,581 157,600 137,678 213,300 55,700 35.3%
Fleet Parts and Equipment 170,271 161,000 157,161 165,400 4,400 2.7%
Landscaping Materials - - 45 - - 0.0%
Infrastructure Equipment and Supplies 493,478 469,600 461,417 452,900 (16,700) (3.6%)
Chemicals 247,071 225,000 227,708 219,000 (6,000) (2.7%)
Safety Equipment 34,666 158,500 47,001 50,900 (107,600) (67.9%)
Laboratory Equipment and Supplies 32,453 35,000 35,137 35,000 - 0.0%
Other Materials and Supplies 107,846 148,800 132,885 163,800 15,000 10.1%
Building and Grounds Materials 90,679 86,600 95,116 76,000 (10,600) (12.2%)
Contracted Services 419,374 454,000 473,474 438,900 (15,100) (3.3%)
Total Materials and Maintenance 1,923,210$ 2,127,500$ 1,964,042$ 2,046,600$ (80,900)$ (3.8%)
Materials And Maintenance Expenses - Potable
FY 2010
11.3%
10.4%
8.1%
22.1%
10.7%
2.5%
1.7%
8.0%
3.7%
21.5%
MATERIALS AND MAINTENANCE EXPENSES -POTABLE
FY 2011 Fuel and Oil
Meters and Materials
Fleet Parts and Equipment
Landscaping Materials
Infrastructure Equipment and Supplies
Chemicals
Safety Equipment
Laboratory Equipment and
Supplies
Other Materials and Supplies
Building and Grounds Materials
Contracted Services
65
PADRE DAM MUNICIPALWATER DISTRICT
LOWER OTAY
RESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKE
MURRAY LOVELAND
RESERVOIR
LAKEJENNINGS EL CAPITANRESERVOIR
MEXICO
Reservoir Pump Station
San Diego County Water Authority Pipes
Otay Water District Pipes
Otay Headquarters
EXISTING FACILITIES
San Diego County Water
Authority Connections
EXISTING
Potable Water Service Area
66
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
67
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. Solids, screenings, and
sludge are discharged to the City of San Diego Metropolitan Wastewater (Metro) system.
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.
The District operates the largest recycled water distribution system in San Diego County and will
supply approximately 4,295 acre-feet of recycled water to 701 landscaping and construction
customers by the end of Fiscal Year 2011. 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 an agreement with the City of San Diego in October 2003, to purchase up to
six million gallons a day of recycled water from their South Bay Water Reclamation Plant. 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 eliminates 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 will be made, 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.
To increase demand of recycled water and reduce the demands of potable water, the District has begun a capital project to offer incentives to suitable customers to convert potable to recycled water. See page 177 of the Capital Budget to view project R2094. With this program the
District hopes to convert 300 acre feet of potable water to recycled, helping the region reduce
demands on the potable water system.
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 will allow the District to maximize its
ability to earn incentives and to simplify the grant requirements. Currently, the District receives $200 from CWA and $185 from MWD for every acre-foot (AF) of recycled water sold.
68
FY 2009 FY 2011 Budget Variance
31-Actual Budget Estimated (drft)Budget Variance %
REVENUES
##Recycled Water Sales 4,015,184$ 5,154,100$ 4,417,995$ 5,257,000$ 102,900 2.0%
##System Fees 246,218 253,600 261,946 264,500 10,900 4.3%
##Energy Fees 181,219 374,800 266,599 372,900 (1,900) (0.5%)
##MWD/CWA Rebates 1,711,787 1,754,900 1,583,801 1,655,500 (99,400) (5.7%)
##Penalties 83,950 65,100 92,545 70,700 5,600 8.6%
##Total Reclaimed Water Sales 6,238,358 7,602,500 6,622,886 7,620,600 18,100 0.2%
##Meter Fees 18,336 20,000 5,968 10,100 (9,900) (49.5%)
##Capacity Fee Revenues 5,447 - 221 - - 0.0%
##Interest (9,102) 8,000 742 12,400 4,400 55.0%
TOTAL REVENUES 6,259,578 7,630,500 6,629,817 7,643,100 12,600 0.2%
EXPENDITURES
##Water Purchases (CSD) / Meter Fees 1,299,976 1,312,000 1,024,162 1,179,900 (132,100) (10.1%)
Total Water Purchases 1,299,976 1,312,000 1,024,162 1,179,900 (132,100) (10.1%)
##Power 498,074 504,500 422,780 529,800 25,300 5.0%
##Labor and Benefits 1,071,137 1,177,200 1,042,791 1,086,800 (90,400) (7.7%)
##Administrative Expenses 301,933 318,100 282,800 343,100 25,000 7.9%
##Materials & Maintenance 224,410 332,200 180,800 303,000 (29,200) (8.8%)
GF Transfer to General Fund Reserve - 1,316,500 1,316,500 390,500 (926,000) (70.3%)
##Expansion Reserve 2,430,000 1,610,000 1,610,000 2,775,000 1,165,000 72.4%
Bett ResBetterment Reserve - 110,000 110,000 315,000 205,000 186.4%
Repl ResReplacement Reserve 277,900 950,000 950,000 720,000 (230,000) (24.2%)
TOTAL EXPENDITURES 6,103,430 7,630,500 6,939,833 7,643,100 (119,500) (1.6%)
EXCESS REVENUES (EXPENSES)156,148$ -$ (310,016)$ -$ 132,100$ 0.0%
-$
FY 2010
Operating Budget Summary - Recycled
34.3%
13.9%31.6%
10.0%
8.8%
RECYCLED OPERATING EXPENDITURES
FY 2011
Total Water Purchases
Power
Labor and Benefits
Administrative Expenses
Materials & Maintenance
69
FY 2010
Estimated
FY 2011
Budget Variance
Recycled Water Sales:
Water Sales 4,417,995$ 5,257,000$ 839,005$
System Fees 261,946 264,500 2,554
Energy Fees 266,599 372,900 106,301
MWD & CWA Rebates 1,583,801 1,655,500 71,699
Penalties 92,545 70,700 (21,845)
Total 6,622,886$ 7,620,600$ 997,714$
Classification of Water Sales - Recycled
69.0%
3.5%
4.9%21.7%
0.9%
Water Sales: Unit Sales x Water Rate
System Charges: System Fee x Meter Size
Energy Charges: Energy Fee of $0.044 per unit of water for each 100 feet of lift or fraction thereof above the base elevation of 450 feet.
MWD & CWA Rebates: Incentive from MWD & CWA for providing recycled water.
Penalties: Late charges, locks, etc.
70
WATER SALES SUMMARY BY SERVICE CLASS - RECYCLED
Fiscal Year 2011 Sales Budget Current Approved*
Accounts Units Amount Rates Rates
Recycled Water Sales:
106 54,000 146,800$ 2.61$ 2.72$ **
584 1,384,300 3,746,700 2.61 2.71 **
Recycled 3.0" & 4.0" Meter 10 70,700 191,000 2.61 2.70 **
1 362,200 978,300 2.61 2.70 **
701 1,871,200 5,062,800$ 2.72$ 2.71$
Government Fee 194,200 0.29 0.29
701 1,871,200 5,257,000$ 3.01$ 2.81$ **
*Approved rates for water billed after January 1, 2011.
**Based on average rate.
Estimated Budget
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Unit Sales 1,920,084 2,001,137 1,991,389 1,847,370 1,871,200
ACTUAL
Water Sales Summary by Service Class - Recycled
Recycled > 6.0" Meter
Recycled .75" & 1.0" Meter
Recycled 1.5" & 2.0" Meter
Unit Sales History - Recycled
-
200
400
600
800
-
500
1,000
1,500
2,000
2,500
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Budget
Me
t
e
r
s
Un
i
t
s
(
t
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d
s
)
UNIT SALES AND METER COUNT TRENDS
Unit Sales Meters
71
Meter Current Approved*Existing Additional Total
Service Class Size 6/30/10 FY11 Growth Rates Rates Meters Meters Meters
Recycled 0.75 - - 14.58$ 14.58$ -$ -$ -$
1.00 96 10 18.52 18.52 21,300 2,200 23,500
1.50 382 - 28.37 28.37 130,000 - 130,000
2.00 194 8 40.18 40.18 93,500 3,900 97,400
3.00 4 - 71.68 71.68 3,400 - 3,400
4.00 6 - 107.13 107.13 7,700 - 7,700
6.00 1 - 205.59 205.59 2,500 - 2,500
8.00 - - 323.73 323.73 - - -
10.00 - - 461.57 461.57 - - -
Total 683 18 258,400$ 6,100$ 264,500$
Budgeted Recycled System Fees 264,500$
*Approved rates for water billed after January 1, 2011.
Meter Count
Budgeted System Fees
System Fees - Recycled
-
1,000
2,000
3,000
4,000
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Budget
Hu
n
d
r
e
d
s
HISTORICAL SYSTEM FEES
72
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
Recycled -10 -8 -18
Total Meter Fees -$3,200 -$6,900 -$10,100
Fiscal Year 2011 Growth by Meter Size
Meter Fees - Recycled
-
200
400
600
800
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Budget
HISTORICAL NUMBER OF METERS
73
Estimated Budgeted
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Water Sales 2,694,517$ 3,294,170$ 3,347,964$ 3,787,845$ 4,417,995$ 5,257,000$
System Fees 298,153 335,063 425,061 366,529 261,946 264,500
Energy Fees 198,599 190,570 248,429 288,247 266,599 372,900
MWD & CWA Rebates 372,172 592,056 1,833,949 1,711,787 1,583,801 1,655,500
Penalties - 80,998 92,855 83,950 92,545 70,700
Total 3,563,441$ 4,492,857$ 5,948,258$ 6,238,358$ 6,622,886$ 7,620,600$
Revenue History - Recycled
Actual
$-
$2,000
$4,000
$6,000
$8,000
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Budget
Water Sales System Fees Energy FeesMWD & CWA Rebates Penalties
Th
o
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74
FY11 Budget FY11 Budget
Acre Feet Rate (1)Purchase Costs % to Total
SBWRP Recycled Water Purchases (CSD)
Recycled Water Purchases 3,097.9 $350/$417 1,160,100$ 98.3%
Meter Fee - 1,646.50 19,800 1.7%
Total 3,097.9 1,179,900$ 100.0%
(1)The first rate applies to purchases from July to December of the budget fiscal year; the second from
January to June.
Water Purchases - Recycled
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Budget
Ac
r
e
F
e
e
t
RECYCLED WATER PURCHASES
75
Treatment and
Recycled
Transmission
FY06 Actual 224,200$
FY07 Actual 358,359
FY08 Actual 306,480
FY09 Actual 572,331
FY10 Estimated 422,780
FY11 Budget 529,800
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.
(3) FY 2010 Otay received credits from SDG&E.
Power Costs - Recycled
$0
$100
$200
$300
$400
$500
$600
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Budget
Th
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d
s
HISTORICAL POWER COSTS
76
FY 2009 FY 2011 Budget
Actual Budget Estimated Budget Variance %
Equipment 4,277$ 6,300$ 3,801$ 4,500$ (1,800)$ (28.6%)
Fees 25,396 54,400 36,265 40,400 (14,000) (25.7%)
Services 85,542 48,500 59,353 108,100 59,600 122.9%
Miscellaneous - - 491 - - 0.0%
Total 115,215 109,200 99,910 153,000 43,800 40.1%
Overhead Allocation 186,718 208,900 182,890 190,100 (18,800) (9.0%)
Total Administrative Expenses 301,933$ 318,100$ 282,800$ 343,100$ 25,000$ 7.9%
FY 2010
Administrative Expenses - Recycled
1.3%
11.8%
31.5%
55.4%
ADMINISTRATIVE EXPENSES -RECYCLED
FY 2011
Equipment
Fees
Services
Overhead Allocation
77
FY 2009 FY 2011 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil 6,776$ 13,300$ 10,788$ 13,300$ - 0.0%
Meters and Materials 22,803 13,000 10,708 8,800 (4,200) (32.3%)
Fleet Parts and Equipment - - - - - 0.0%
Landscaping Materials - - - - - 0.0%
Infrastructure Equipment and Supplies 92,185 64,000 72,469 86,500 22,500 35.2%
Chemicals 46,326 225,000 73,786 172,000 (53,000) (23.6%)
Safety Equipment 2,543 1,600 1,358 3,900 2,300 143.8%
Laboratory Equipment and Supplies 5,109 6,000 6,266 4,000 (2,000) (33.3%)
Other Materials and Supplies 12,048 8,800 4,475 9,600 800 9.1%
Building and Grounds Materials - - - - - 0.0%
Contracted Services 36,621 500 951 4,900 4,400 880.0%
Total Materials and Maintenance 224,410$ 332,200$ 180,800$ 303,000$ (29,200)$ (8.8%)
Materials and Maintenance Expenses - Recycled
FY 2010
4.4%2.9%
28.5%
56.8%
1.3%1.3%
3.2%1.6%
MATERIALS AND MAINTENANCE EXPENSES -RECYCLED
FY 2011
Fuel and Oil
Meters and Materials
Infrastructure Equipment and
Supplies
Chemicals
Safety Equipment
Laboratory Equipment and Supplies
Other Materials and Supplies
Contracted Services
78
LOWER OTAYRESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKEMURRAY LOVELANDRESERVOIR
LAKEJENNINGS
RALPH W. CHAPMANWATER RECYCLING
FACILITY
SOUTH BAY WATER RECLAMATION PLANT MEXICO
Reservoir Pump Station
Otay Water District Pipes
Otay
Headquarters
EXISTING FACILITIES
Treatment Plants
Recycled Water Service Area
EXISTING
79
Sewer Revenues and Expenses
The District provides sewer service to approximately 15,200 customers through 4,646 accounts
(or approximately 6,706 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 0.6% is anticipated in Fiscal Year 2011.
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 67 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 $1,038,600
for Fiscal Year 2011. Additionally, the District will pay $264,000 for its share of the operation
and maintenance cost of the Rancho San Diego Outfall and the Spring Valley Outfall to transport sewage to Metro for Fiscal Year 2011.
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: 12.3% of the total service units,
while only comprising 1.5% of the customer base. The formula for the sewer rates is shown on
page 87.
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 $362,100 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 $ 359,744 with an interest rate of 3.5%. The debt service
payment for Fiscal Year 2011 is $358,900.
80
FY 2009 FY 2011 Budget Variance
11-Actual Budget Estimated (drft)Budget Variance %
REVENUES
4200 Sewer Charges 2,184,523 2,244,800 2,311,586 2,270,500 25,700 1.1%
4400 Non-operating Revenues 27,801 29,100 27,706 29,100 - 0.0%
Tax Revenues 50,759 50,300 51,978 51,400 1,100 2.2%
4510 Interest 54,298 28,500 22,059 27,200 (1,300) (4.6%)
General Fund Draw Down - 469,100 469,100 994,600 525,500 112.0%
TOTAL REVENUES 2,317,381 2,821,800 2,882,429 3,372,800 551,000 19.5%
5411 Power 63,197 99,200 84,408 75,000 (24,200) (24.4%)
5110 Labor and Benefits 667,547 924,600 649,417 711,600 (213,000) (23.0%)
5200 Administrative Expenses 174,639 456,100 435,670 641,300 185,200 40.6%
5300 Material & Maintenance 1,335,033 1,341,900 1,346,652 1,419,900 78,000 5.8%
Bett ResBetterment Reserve - - - 1,120,000 1,120,000 100.0%
swr gfTransfer to Sewer General Fund - - - (595,000) (595,000) 100.0%
TOTAL EXPENDITURES 2,240,416 2,821,800 2,516,147 3,372,800 551,000 19.5%
EXCESS REVENUES 76,965$ -$ 366,282$ -$ -$ 0.0%
EXCESS REVENUES, w/o restatement and transfers (8,590,000)$
75,000
711,600
641,300
1,419,900
2,847,800
FY 2010
Operating Budget Summary - Sewer
2.6%
25.0%
22.5%
49.9%
SEWER OPERATING EXPENDITURES
FY 2011Power
Labor and Benefits
Administrative Expenses
Material & Maintenance
81
Units/FY 2011
Accounts ASU(1)Current Approved(3)Current Approved(3)Budget
Single Family 4,524 4,524 10.80 11.57 1.56 1.67 1,555,000$
Multi-Family 50 1,360 10.80 11.57 1.56 1.67 299,000
Schools 6 s 303 36.88 39.39 137,500
Churches 4 c 50 36.88 39.39 32,000
Commercial
Low Strength 37 1 236 36.88 39.39 108,800
Medium Strength 19 2 148 36.88 39.39 68,200
High Strength 6 3 86 36.88 39.39 39,900
Penalties 30,100
TOTAL SEWER CHARGES 4,646 6,706 2,270,500$
(1)Assigned Service Units
(2)Current and Approved base fees for 1" meter are 15.75 and 16.87 respectively.
(3)Approved rates for sewer billed after January 1, 2011.
Sewer Charges Summary by Service Class
Usage Fee / Sewer RateBase Fee for 3/4" Meter(2)
69.4%
13.4%
6.1%1.4%4.9%3.0%
1.8%
SEWER CHARGES BY SERVICE CLASS FY 2011
Single Family
Multi-Family
Schools
Churches
Commercial -Low Strength
Commercial -Medium StrengthCommercial -High Strength
82
Estimated Budget
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Sewer Charges 2,296,856$ 2,531,513$ 2,359,173$ 2,154,628$ 2,271,879$ 2,240,400$
Penalties (1)- 46,480 55,713 29,896 39,707 30,100
Total 2,296,856$ 2,577,993$ 2,414,886$ 2,184,523$ 2,311,586$ 2,270,500$
(1)Prior to Fiscal Year 2007, penalties were Potable revenues only.
Actual
Revenue History - Sewer
$1,900
$2,000
$2,100
$2,200
$2,300
$2,400
$2,500
$2,600
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Budget
Th
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SEWER REVENUE HISTORY
Sewer Charges Penalties
83
Sewer Lift
Stations
FY06 Actual 85,894
FY07 Actual 94,989
FY08 Actual 82,023
FY09 Actual 88,512
FY10 Estimated 84,408
FY11 Budget 75,000
Note:
(1) The fluctuation in the power cost is caused by increases and decreases in annual rainfall.
(2) Subsequent to FY 2009 Budget approval, staff identified a misclassification of a power meter among
potable, recycled, and sewer which also caused the fluctuation in power costs.
(3) FY 2010 Otay received credits from SDG&E.
Power Costs - Sewer
$-
$25
$50
$75
$100
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Budget
Th
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HISTORICAL POWER COSTS
84
FY 2009 FY 2011 Budget
Actual Budget Estimated Budget Variance %
Equipment 685$ 1,500$ 1,099$ 1,000$ (500) (33.3%)
Fees 10,053 11,500 4,444 2,000 (9,500) (82.6%)
Services 38,783 269,000 311,308 503,600 234,600 87.2%
Miscellaneous 6,808 7,600 3,084 6,200 (1,400) (18.4%)
Total 56,328 289,600 319,935 512,800 223,200 77.1%
Overhead Allocation 118,311 166,500 115,737 128,500 (38,000) (22.8%)
Total Administrative Expenses 174,639$ 456,100$ 435,672$ 641,300$ 185,200$ 40.6%
FY 2010
Administrative Expenses - Sewer
0.2%0.3%
78.5%
1.0%
20.0%
ADMINISTRATIVE EXPENSES -SEWER
FY 2011
Equipment
Fees
Services
Miscellaneous
Overhead Allocation
85
FY 2009 FY 2011 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fleet Parts and Equipment - 3,000 1,634 3,000 - 0.0%
Landscaping Materials (1)158 - - - - 0.0%
Infrastructure Equipment and Supplies 68,953 67,000 76,169 52,500 (14,500) (21.6%)
Chemicals 5,810 4,500 4,831 7,000 2,500 55.6%
Safety Equipment 1,694 1,000 1,639 5,500 4,500 450.0%
Laboratory Equipment and Supplies 5,330 6,000 5,904 6,000 - 0.0%
Other Materials and Supplies 970 300 118 300 - 0.0%
Contracted Services 92,436 49,000 24,140 43,000 (6,000) (12.2%)
Materials and Maintenance 175,353 130,800 114,435 117,300 (13,500) (10.3%)
Sewer Charges
Metro O&M Costs 913,033 981,000 986,027 1,038,600 57,600 5.9%
Spring Valley Sewer Charge 246,647 230,100 246,190 264,000 33,900 14.7%
Total Sewer Charges 1,159,680 1,211,100 1,232,217 1,302,600 91,500 7.6%
Total Materials and Maintenance 1,335,033$ 1,341,900$ 1,346,652$ 1,419,900$ 78,000$ 5.8%
Materials and Maintenance Expenses - Sewer
FY 2010
.2%3.7%
0.5%
0.4%.4%
3.0%
73.2%
18.6%
MATERIALS AND MAINTENANCE EXPENSES -SEWER
FY 2011
Fleet Parts and Equipment
Infrastructure Equipment and Supplies
Chemicals
Safety Equipment
Laboratory Equipment and Supplies
Other Materials and Supplies
Contracted Services
Metro O&M Costs
Spring Valley Sewer Charge
86
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 is charged based on the
customer’s prior year’s “Winter Average” water consumption, reduced by a 15% usage discount. The current and approved usage fees are $1.56 and $1.67, respectively. A base fee is also applied. Current and approved base fees are $10.80 and $11.57 for ¾ inch water meter, and $15.75 and $16.87 for 1 inch or greater. Approved fees are effective for all services billed after January 1, 2011. For commercial customers, the sewer charge 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 current and proposed sewer rates per ASU are $36.88 and $39.39, respectively. The
approved rate is effective for all services billed after January 1, 2011. 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.
87
LOWER OTAYRESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKEMURRAY LOVELANDRESERVOIR
LAKEJENNINGS
RALPH CHAPMANWATER RECYCLINGFACILITY
MEXICO
Lift Stations
OWD Pipes
Otay
Headquarters
EXISTING FACILITIES
Treatment Plants
Sewer Service Area
SOUTH BAY WATERRECLEMATION PLANT
88
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 the cost of
providing these services.
Betterment fees for maintenance are earned by the General Fund for Water Operations Department’s maintenance of certain District assets.
Annexation fees are collected when developers buy into the District’s potable and recycled water
facilities. The fee ensures that future users fund the portion of the facilities that were sized and
built for their future use by prior customers. Prior to FY 2011, annexation fees were unrestricted and therefore included in the General Fund revenues. With the new fee methodology, these fees
are now restricted for the purpose of capital improvements.
The 1% Property Tax is a result of Proposition 13 that was approved in 1978 which limited the
general levy property tax rate for all taxing authorities to a total rate of 1% of the assessed value. Subsequent legislation, AB8, established that the receipts from the 1% levy were to be
distributed to taxing agencies according to approximately the same proportions received prior to
Proposition 13. These general use funds are currently being used as a source of operating
revenue.
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 parcel or 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 from the lease 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.
89
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. This lease has a 40-
year term with two additional five-year options.
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 shared customer base, the CCV contracts with the District for the billing of their
sewer customers who live within the District.
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 3.4% of the total Departmental Budget.
Legal expenses are viewed as a District-wide general expense because they benefit all
departments and usually are not attributed to any one department. The District retains outside
legal services instead of in-house counsel. Insurance expense is also viewed as District-wide general expense because it benefits all
departments and cannot be attributed to any one department. The District participates in a
program where it can reduce its premium by implementing training sessions to reduce on-the-
job accidents and injuries. Some employee benefits are charged to the General Expense Department because they are not
entirely attributable to a specific department or fiscal year in which they are incurred. For
example, when a pay rate increase occurs for an employee, his/her leave balances increase in
value due to this change. In this case, the expense is charged to the General Expense Department.
90
FY 2009 FY 2011 Budget Variance
Actual Budget Estimated Budget Variance %
Fee Revenues
Capacity Fee Revenues 1,521,707$ 1,397,000$ 1,030,688$ 1,095,300 (301,700)$ (21.6%)
Betterment Fees for Maintenance 661,998 571,400 575,721 657,400 86,000 15.1%
Annexation Fees 392,349 120,500 555,751 - (120,500) (100.0%)
Subtotal Fee Revenues 2,576,054 2,088,900 2,162,160 1,752,700 (336,200) (16.1%)
Tax Revenues
1% General Tax 3,429,830 3,175,600 3,008,496 3,143,400 (32,200) (1.0%)
Availability Fees 625,065 677,000 670,784 700,500 23,500 3.5%
Subtotal Tax Revenues 4,054,895 3,852,600 3,679,280 3,843,900 (8,700) (0.2%)
General Revenues 6,630,949$ 5,941,500$ 5,841,440$ 5,596,600$ (344,900)$ (5.8%)
FY 2009 FY 2011 Budget Variance
Actual Budget Estimated Budget Variance %
Property Rental 1,029,506$ 1,043,400$ 1,083,988$ 1,163,900$ 120,500 11.5%
Sewer Billing Fees 359,180 359,800 360,651 361,500 1,700 0.5%
Set-up Fee for Lease Site 48,301 - 26,500 8,000 8,000 100.0%
Grants 85,742 - - 120,000 120,000 100.0%
Revenue from Shared Facility 26,387 29,100 27,706 29,100 - 0.0%
Miscellaneous(1)3,325,892 153,300 1,046,030 265,800 112,500 73.4%
Non-Operating Revenues 4,875,008$ 1,585,600$ 2,544,875$ 1,948,300$ 362,700$ 22.9%
Potable Recycled Sewer Total
Capacity Fee Revenues 1,095,300$ -$ -$ 1,095,300$
Betterment Fees for Maintenance 657,400 - - 657,400
Annexation Fees - - - -
Tax Revenues -
1% Property Tax 3,143,400 - - 3,143,400
Availability Fees 649,100 - 51,400 700,500
Total Tax Revenues 3,792,500 - 51,400 3,843,900
Non-Operating Revenues
Property Rental 1,163,900 - - 1,163,900
Sewer Billing Fees 361,500 - - 361,500
Set-up Fee for Lease Site 8,000 - - 8,000
Grants 120,000 - - 120,000
Revenue from Shared Facility - - 29,100 29,100
Miscellaneous 265,800 - - 265,800
Total Non-Operating Revenues 1,919,200 - 29,100 1,948,300
Total General and Non-Operating Revenues 7,464,400$ -$ 80,500$ 7,544,900$
Note: For General and Non-Operating Revenues, the Potable Fund serves as the District's General Fund for
accounting purposes.
(1) In FY 2010 the District received a unbudgeted settlement from a lawsuit from a class action lawsuit for $767,254.
FY 2011 Budget
Non-Operating Revenues
FY 2010
General and Non-Operating Revenues by Business
General Revenues
FY 2010
91
FY 2009 FY 2011 Budget Variance
Actual Budget Estimated Budget Variance %
Administrative Expenses
Legal Fees 1,053,575$ 454,300$ 472,924 451,200$ (3,100)$ (0.7%)
General Insurance 485,796 411,500 456,784 464,800 53,300 13.0%
Interest - - - - - 0.0%
Total Administrative Expenses 1,539,372 865,800 929,708 916,000 50,200 5.8%
Benefits
Benefits (1)383,300 (300) 427,547 (28,000) (27,700) 0.0%
Total General Expenses 1,922,672$ 865,500$ 1,357,255$ 888,000$ 22,500$ 2.6%
(1) FY 2011 and FY 2010 Benefits budget amounts are negative because of Vacancy Factor (salary savings) of
$204,200 and $207,700 respectively. This is netted against other District-wide Labor and Benefit Expenses.
In prior years Vacancy Factor was budgeted in the individual departments.
FY 2010
General Expenses
92
Labor and Benefits
Labor and Benefits represent 21.8% 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 to
include post retirement health benefits for active employees, and rewriting the 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 2011 Budget includes funding for labor and benefits for 159 Full-time Equivalent (FTE)
employees and a 3% across-the-board salary increase on July 1, 2010.
The staffing level for Fiscal Year 2011 has a decrease of seven FTE employees from Fiscal Year 2010. The District has chosen to eliminate seven vacant positions in areas that have
experienced a reduction of work due to slowing of growth.
A projected 11.9% 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 $2,413,900. The Water
Operations Department, with its staff of 66 employees, is responsible for maintaining and
operating the District's facilities.
Administrative Expenses
Administrative Expenses represent 7.3% of the District's total operating costs. A detailed
listing of the Administrative Expenses for Fiscal Year 2011 is shown on page 100. The increase of $252,400 is due to an increase in temporary help for work that is temporary in
nature, in outside services for studies and the outsourcing of laboratory work, and in
conservation incentive programs some of which is offset by grant revenue.
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, where the District may be better able to control expenses
such as training or business meetings to some extent. The safety needs of the District's customers and employees, and compliance with regulatory agencies are of utmost importance, so related expenses are considered necessary.
Departmental Operating Budget
93
Departmental Operating Budget
Materials and Maintenance
The Materials and Maintenance Expenses allow the District to provide reliable, high-quality
products, services, and support to its customers.
As the District continues to grow and new facilities are added, additional maintenance and
services will be required. This year, there is a 0.8% decrease in Materials and Maintenance
Expenses totaling $32,100. These reductions include lower in chemical costs due to price
reductions and efficiencies through automation, as wells as reductions in safety equipment costs and contracted services. These lower costs are offset somewhat by higher costs for
meters, and increases in Metro O&M and Spring Valley Sanitation Sewer Charges.
The Water Operations Department has implemented an Infrastructure Management System
(IMS) which allows for better maintenance of existing assets and enhanced monitoring of new assets coming on-line. It also facilitates planning for repair and replacement of assets as well
as assessing the condition of infrastructures. IMS helps the District to better track and manage
the Materials and Maintenance Expenses.
Performance Measurement Program
Strategic goals and objectives approved by the Board of Directors are incorporated into
departmental operating budgets to ensure adequate funds are available to implement the
Strategic Plan. The District has updated its performance measurement program this fiscal year
to provide measurable results of progress on both strategic and key operational goals and objectives. (See the plan objectives and measures in the department sections that follow.)
Performance 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 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.
94
General Manager
General Expense
Finance
Water Operations
Engineering
Departmental Operating Budget
0.3%6.4%3.2%
14.1%
17.0%
10.7%
41.0%
7.3%
TOTAL DEPARTMENTAL OPERATING BUDGET
Fiscal Year 2011
$27,839,400
Board of Directors
General Manager
General Expense
Administrative Services
Finance
Information Technology and
Strategic Planning
Water Operations
Engineering
95
FY09 FY11
Actual Budget Estimated Budget
Total Labor Costs 10,951,244$ 11,456,800$ 11,115,520$ 11,514,300$
Benefits
Pension 3,111,655 3,227,500 3,212,514 3,320,800
Employee Assistance Program 5,138 7,500 4,485 7,500
Worker's Compensation 156,822 262,300 264,927 267,800
Health/Dental/Life Insurance 1,810,350 2,076,700 1,940,034 2,014,900
Social Security / Medicare 889,137 937,000 909,265 936,400
Salary Continuation Insurance 86,342 87,800 82,544 75,600
State Unemployment Insurance 6,227 20,000 33,931 20,000
Vacation / Sick / Holiday / Other Leave 2,066,505 2,091,300 2,073,645 2,104,100
Total Fringe Benefits 8,132,176 8,710,100 8,521,345 8,747,100
Total Labor and Benefits 19,083,420 20,166,900 19,636,865 20,261,400
Less: Non-Operating Labor and Benefits
Labor Costs 1,143,905 1,282,300 1,289,566 1,512,100
Fringe Benefits Allocation 668,132 740,600 751,562 901,800
Total WO Allocation 1,812,037 2,022,900 2,041,128 2,413,900
Operating Labor & Benefits 17,271,383 18,144,000 17,595,737 17,847,500
Total Overhead Allocation 1,315,491 1,474,600 1,483,001 1,738,900
Less: Overhead Allocation Personnel Portion 830,733 931,200 936,515 1,098,100
Admin Portion of OH (36.85%)484,758$ 543,400$ 546,486$ 640,800$
Operating Labor and Benefits 16,440,650$ 17,212,800$ 16,659,222$ 16,749,400$
Labor and Benefits
FY10
0
20
40
60
80
100
120
140
160
180
GM ADM FIN IT OPS ENG TotalFY 09-10 6 20 38 13 68 21 166
FY 10-11 6 19 35 12 66 21 159
FULL-TIME EQUIVALENT (FTE) COMPARISON BY DEPARTMENT
GM……General Manager
ADM.…Administrative Services
FIN…....Finance
IT…...…Information Technology and Strategic Planning
OPS…...Water Operations
ENG…..Engineering & Planning
96
Potable Sewer Recycled
Developer
Reimbursed-
CIP Total
Total Operating Labor Costs 9,250,200$ 303,300$ 448,700$ - 10,002,200$
Benefits 7,345,100 188,000 312,200 - 7,845,300
Overhead Allocation-Personnel Portion (1,644,300) 220,300 325,900 - (1,098,100)
Total Operating Labor and Benefits 14,951,000 711,600 1,086,800 - 16,749,400
Total CIP Labor Costs 806,400 69,000 432,700 204,000 1,512,100
Benefits 487,900 40,300 247,800 125,800 901,800
Overhead Allocation-Personnel Portion 585,700 50,100 314,200 148,100 1,098,100
Total CIP Labor and Benefits 1,880,000 159,400 994,700 477,900 3,512,000
Total Labor and Benefits 16,831,000$ 871,000$ 2,081,500$ 477,900$ 20,261,400$
Labor and Benefits by Fund - Fiscal Year 2011
73.8
9.3%
3.5%.8%5.4%
4.9%2.3%
LABOR and BENEFITS BY FUND
Potable-Operating
Potable-CIP
Sewer-Operating
Sewer-CIP
Recycle-Operating
Recycle-CIP
Developer Reimbursed-CIP
97
FY 2009 FY 2010 FY 2011
General Manager 6 6 6
Total - General Manager Department 6 6 6
FTE 6.00 6.00 6.00
Administrative Services 3 3 3
Human Resources 4 4 4
Purchasing 9 9 8Safety111Conservation333
Total Administrative Services Department 20 20 19
FTE 20.00 20.00 19.00
Controller and Budgetary Services 7 7 7
Treasury and Accounting Services 6 6 6Customer Service 20 22 19Payroll and Accounts Payable 4 3 3
Total Finance Department 37 38 35
FTE 36.75 38.00 35.00
Information Technology and Strategic Planning Applications 5 5 5Information Technology Operations 4 4 3Geographic Information Systems 4 4 4
Total IT and Strategic Planning Department 13 13 12
FTE 13.00 13.00 12.00
Operations Management 2 2 2Water System Operations 28 28 28
Utility Maintenance/Construction 33 31 30Collection/Treatment/Reclamation Operations 7 7 6
Total Operations Department 70 68 66
FTE 70.00 68.00 66.00
Engineering Management 3 3 3Engineering201818
Total Engineering Department 23 21 21
FTE 23.00 21.00 21.00
District Total Position Count 169 166 159
FTE 168.75 166.00 159.00
Position Count by Department
98
FY 2009 FY 2010 FY 2011
Consultant 1 0 0
Customer Service Field Representative I and II 2 1 1
Customer Service Representative I and II 0 1 0
Administrative Analyst 1 0 0
County Water Authority Interns 1 0 0
Reclamation Plant Operator 0 0 0
Sr. Civil Engineers (P/T)0 0 0
Sr. Engineering Technician 0 1 1
Engineering Intern 1 0 0
Strategic Planning Assistant 0 1 1
Total Contract/Temporary Employees 6 4 3
Contract / Temporary Employees
4%
12%
22%
8%
41%
13%
POSITION COUNT
General Manager
Administrative Services
Finance
Information Technology and Strategic Planning
Operations
Engineering
99
FY 2009 FY 2011 Budget
Actual Budget Estimated Budget Variance %
Director's Fees 20,200$ 40,000$ 15,100$ 30,000$ (10,000) (25.0%)
Travel and Meetings 213,488 222,200 162,652 221,400 (800) (0.4%)
Conservation and Outreach 254,209 352,800 240,734 479,700 126,900 36.0%
General Office Expense 397,104 434,500 343,859 368,700 (65,800) (15.1%)
Equipment 1,103,654 1,028,700 1,014,401 1,035,700 7,000 0.7%
Fees 438,020 508,000 479,814 476,500 (31,500) (6.2%)
Services 2,032,274 2,026,600 1,714,302 2,350,000 323,400 16.0%
Training 146,746 156,500 126,746 151,800 (4,700) (3.0%)
Utilities 15,874 17,500 16,514 15,300 (2,200) (12.6%)
Miscellaneous 265,741 220,000 148,685 177,300 (42,700) (19.4%)
Total 4,887,310 5,006,800 4,262,807 5,306,400 299,600 6.0%
Less: Overhead Allocation (484,758) (543,400) (546,486) (640,800) (97,400) 17.9%
Subtotal 4,402,552 4,463,400 3,716,321 4,665,600 202,200 4.5%
General Expenses 1,539,372 865,800 929,708 916,000 50,200 5.8%
Total Administrative Expenses 5,941,924$ 5,329,200$ 4,646,029$ 5,581,600$ 252,400$ 4.7%
6,426,682$ 5,872,600$ 5,192,515$ 6,222,400$
FY 2010
Administrative Expenses - Total
.6%4.2%
9.0%
6.9%
19.5%
9.0%
44.3%
2.9%
0.3%3.3%
ADMINISTRATIVE EXPENSES -TOTAL
FY 2011
Director's Fees
Travel and Meetings
Conservation and Outreach
General Office Expense
Equipment
Fees
Services
Training
Utilities
Miscellaneous
100
FY 2009 FY 2011 Budget
Actual Budget Estimated Budget Variance %
Materials and Maintenance
Fuel and Oil 200,568$ 244,700$ 207,208$ 244,700$ - 0.0%
Meters and Materials 156,384 170,600 148,386 222,100 51,500 30.2%
Fleet Parts and Equipment 170,271 164,000 158,795 168,400 4,400 2.7%
Landscaping Materials (1)158 - 45 - - 0.0%
Infrastructure Equipment and Supplies 654,616 600,600 610,055 591,900 (8,700) (1.4%)
Chemicals 299,207 454,500 306,325 398,000 (56,500) (12.4%)
Safety Equipment 38,903 161,100 49,998 60,300 (100,800) (62.6%)
Laboratory Equipment and Supplies 42,891 47,000 47,306 45,000 (2,000) (4.3%)
Other Materials and Supplies 120,864 157,900 137,478 173,700 15,800 10.0%
Building and Grounds Materials 90,679 86,600 95,116 76,000 (10,600) (12.2%)
Contracted Services 548,431 503,500 498,565 486,800 (16,700) (3.3%)
Materials and Maintenance 2,322,973 2,590,500 2,259,277 2,466,900 (123,600) (4.8%)
Sewer Charges
Metro O&M Costs 913,033 981,000 986,027 1,038,600 57,600 5.9%
Spring Valley Sewer Charge 246,647 230,100 246,190 264,000 33,900 14.7%
Total Sewer Charges 1,159,680 1,211,100 1,232,217 1,302,600 91,500 7.6%
Total Materials and Maintenance 3,482,653$ 3,801,600$ 3,491,494$ 3,769,500$ (32,100)$ (0.8%)
Materials and Maintenance Expenses - Total
FY 2010
6.5%5.9%
4.5%
15.7%
10.6%
1.6%1.2%
4.6%
2.0%12.9%
34.5%
MATERIALS AND MAINTENANCE EXPENSES -TOTAL
FY 2011
Fuel and Oil
Meters and Materials
Fleet Parts and Equipment
Infrastructure Equipment and
Supplies
Chemicals
Safety Equipment
Laboratory Equipment and
Supplies
Other Materials and Supplies
Building and Grounds
Materials
Contracted Services
Sewer Charges
101
FY 2009 FY 2011
Actual Budget Estimated Budget
Departmental Expenditures
BoaBoard of Directors 87,712$ 98,100$ 63,353$ 86,600$
GenGeneral Manager 1,687,607 1,667,100 1,530,406 1,790,600
GenGeneral Expense 1,877,365 865,500 1,314,537 888,000
AdmAdministrative Services 3,337,536 3,912,500 3,387,950 3,935,200
FinaFinance 4,368,063 4,869,100 4,617,243 4,730,300
InfoInformation Technology and Strategic Planning 2,809,666 2,856,400 2,864,200 2,964,100
WatWater Operations 10,716,485 11,478,800 10,585,316 11,420,500
EngEngineering 2,296,284 2,070,700 1,916,741 2,024,100
Total Departmental Expenditures 27,180,718 27,818,200 26,279,746 27,839,400
Less: Overhead Allocation (1,315,491) (1,474,600) (1,483,001) (1,738,900)
Net Departmental Expenditures 25,865,227 26,343,600 24,796,745 26,100,500
Non-Departmental Expenditures
Water Purchases 29,398,334 35,855,500 31,814,849 35,057,200
Power 2,905,101 2,637,100 2,307,611 2,520,700
Expansion Reserve 5,016,700 1,610,000 1,610,000 2,775,000
Betterment Reserve - 3,810,000 3,810,000 1,435,000
Rl tR 277 900 3 660 000 3 660 000 6 965 000
FY 2010
Operating Expenditures by Department
Replacement Reserve 277,900 3,660,000 3,660,000 6,965,000
Transfer to Sewer General Fund - 200,000 200,000 -
Transfer Out/In Prop 1A - 270,300 270,300 -
Transfer to General Fund Reserve - 1,330,000 1,330,000 390,500
Transfer to Sewer Replacement - - - 1,750,000
Total Non-Departmental Expenditures 37,598,035 49,372,900 45,002,760 50,893,400
TOTAL OPERATING EXPENDITURES 63,463,262$ 75,716,500$ 69,799,505$ 76,993,900$
102
FY 2009 FY 2011
Actual Budget Estimated Budget
Departmental Expenditures
Labor and Benefits 17,271,383$ 18,144,000$ 17,595,737$ 17,847,500$
Director's Fees 20,200 40,000 15,100 30,000
Travel and Meetings 213,488 222,200 162,652 221,400
Conservation and Outreach 254,209 352,800 240,734 479,700
General Office Expense 397,104 434,500 343,859 368,700
Equipment 1,103,654 1,028,700 1,014,401 1,035,700
Fees 1,977,392 1,373,800 1,409,522 1,392,500
Services 2,032,274 2,026,600 1,714,302 2,350,000
Training 146,746 156,500 126,746 151,800
Materials & Maintenance 2,322,973 2,590,500 2,259,277 2,466,900
Power and Utilities 15,874 17,500 16,514 15,300
Sewer Charges 1,159,680 1,211,100 1,232,217 1,302,600
Miscellaneous 265,741 220,000 148,685 177,300
Total Departmental Expenditures 27,180,718 27,818,200 26,279,746 27,839,400
Less: Overhead Allocation (1,315,491) (1,474,600) (1,483,001) (1,738,900)
Net Departmental Expenditures 25,865,227 26,343,600 24,796,745 26,100,500
Non-Departmental Expenditures
Water Purchases 29 398 334 35 855 500 31 814 849 35 057 200
FY 2010
Operating Expenditures by Object
Water Purchases 29,398,334 35,855,500 31,814,849 35,057,200
Power 2,905,101 2,637,100 2,307,611 2,520,700
Expansion Reserve 5,016,700 1,610,000 1,610,000 2,775,000
Betterment Reserve - 3,810,000 3,810,000 1,435,000
Replacement Reserve 277,900 3,660,000 3,660,000 6,965,000
Transfer to Sewer General Fund - 200,000 200,000 -
Transfer Out/In Prop 1A - 270,300 270,300 -
Transfer to General Fund Reserve - 1,330,000 1,330,000 390,500
Transfer to Sewer Replacement - - - 1,750,000
Total Non-Departmental Expenditures 37,598,035 49,372,900 45,002,760 50,893,400
TOTAL OPERATING EXPENDITURES 63,463,262$ 75,716,500$ 69,799,505$ 76,993,900$
103
104
LOWER OTAYRESERVOIR
UPPER OTAYRESERVOIR
SWEETWATERRESERVOIR
LAKEMURRAY LOVELAND
RESERVOIR
OWD
HEADQUARTERS
Division 5Division 5
Mark RobakMark Robak
Division 4Division 4
Jose LopezJose Lopez
Division 1Division 1
Larry Breitfelder/Larry Breitfelder/
David GonzalezDavid Gonzalez
Division 2Division 2
Jamie BonillaJamie Bonilla
Division 3Division 3
Gary CroucherGary Croucher
8
8
805
54
67
94
94
54
125
125
125
905
CITY OF
SAN DIEGO
SW
E
E
T
W
A
T
E
R
AU
T
H
O
R
I
T
Y
HELIX WATER
DISTRICT
CITY OF
SAN DIEGO
OPEN SPACE
OPEN SPACE
MEXICO
CITY OF
SAN DIEGO
PADRE DAM MUNICIPAL
WATER DISTRICT
Director’s Division Boundaries
105
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Board of Directors 87,712$ 98,100$ 63,353$ 86,600$
TOTAL 87,712$ 98,100$ 63,353$ 86,600$
Board of Directors
0.3%
6.4%3.2%
14.1%
17.0%
10.7%
41.0%
7.3%
FY 2011 Total Departmental Budget -$27.8 Million
Board of Directors -$86,600
Board of Directors
General Manager
General Expense
Administrative Services
Finance
Information Technology and
Strategic Planning
Water Operations
Engineering
106
Board of Directors
FY 2009 FY 2010 FY 2011
Board of Directors Actual Budget Estimated Budget
Benefits 47,052$ 40,000$ 44,018$ 40,000$
Director's Fees 20,200 40,000 15,100 30,000
Travel and Meetings 20,440 18,100 4,236 16,600
General Office Expense 20 - - -
Total 87,712$ 98,100$ 63,353$ 86,600$
$-
$50
$100
$150
FY07 FY08 FY09 FY10 FY11
$92
$112
$99 $98
$87
$68
$79 $88
$63
Th
o
u
s
a
n
d
s
Fiscal Year
Budget vs. Actual
Budget Actual
107
108
District Position Count - 159 General Manager Department - 6
Assistant General Manager,
Engineering and Operations
Board of Directors
District Secretary
Sr. Confidential
Communications
Officer
Assistant General Manager,
Finance and Administration
General Manager
Personnel Count FY 2009 FY 2010 FY 2011
General Manager 1 1 1
Assistant General Manager, Finance and Administration 1 1 1
Assistant General Manager, Engineering and Operations 1 1 1
District Secretary 1 1 1
Sr. Confidential Executive Secretary 1 1 1
Communications Officer 1 1 1
Total 666
Assistant General Manager,
Engineering and Operations
Board of Directors
District Secretary
Sr. Confidential
Executive Secretary
Communications
Officer
Assistant General Manager,
Finance and Administration
General Manager
109
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
General Manager 962,779$ 1,043,200$ 975,124$ 1,194,600$
Legal 190,460 6,000 3,777 -
Assistant General Manager, Finance and Administration 273,116 297,100 285,261 306,500
Assistant General Manager, Engineering and Operations 261,252 320,800 266,244 289,500
TOTAL 1,687,607$ 1,667,100$ 1,530,406$ 1,790,600$
General Manager
0.3%6.4%
3.2%
14.1%
17.0%
10.7%
41.0%
7.3%
FY 2011 Total Departmental Budget -$27.8 Million
General Manager -$1,790,600
Board of Directors
General Manager
General Expense
Administrative Services
Finance
Information Technology and
Strategic Planning
Water Operations
Engineering
110
General Manager
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Labor and Benefits 1,363,974$ 1,309,400$ 1,275,172$ 1,327,900$
Travel and Meetings 88,985 74,900 46,816 73,800
Conservation and Outreach 5,705 6,000 5,562 7,000
General Office Expense 18,061 15,500 14,505 24,000
Equipment 2,031 - - 1,500
Fees 45,482 39,000 39,159 46,000
Services 163,092 222,000 148,780 310,400
Training 25 300 99 -
Miscellaneous 251 - 313 -
Total 1,687,607$ 1,667,100$ 1,530,406$ 1,790,600$
$-
$500
$1,000
$1,500
$2,000
FY07 FY08 FY09 FY10 FY11
$1
,
4
0
4
$1
,
4
8
6
$1
,
7
6
9
$1
,
6
6
7
$1
,
7
9
1
$1
,
3
4
4
$1
,
7
6
6
$1
,
6
8
8
$1
,
5
3
0
Th
o
u
s
a
n
d
s
Fiscal Year
Budget vs. Actual
Budget Actual
111
TAY WATER DISTRICT AT-A-GLANCE
Services We Provide
The General Manager’s office provides staffing, scheduling, and other support to the Board of
Directors, General Manager, and Assistant General Managers. The office posts and
disseminates meeting notices, agendas, minutes, sets board meeting dates, and assists in conducting board and committee meetings. It also manages public and media relations, bi-
national and legislative affairs, and provides liaison with local elected officials and community
groups. The General Manager’s office oversees the production and distribution of publications
and notices to inform the public of District functions, policies, and services. The office also
coordinates special events and provides staffing and support to local water associations.
Strategic Plan Objectives
• Continually evaluate communications tools and explore the effective use of new media options including electronic newsletters, autodial services, video streaming, social
networks, or web media to ensure the District's outreach efforts are cost-effectively
reaching all stakeholders.
Performance Measures
General Manager
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.
112
Accomplishments Fiscal Year 2009-2010
• The District adopted a balanced budget for FY 2011 despite ongoing economic concerns
and challenging water supply conditions.
• The District successfully implemented its Strategic Business Plan, which included
meeting performance measures and metrics. The plan and its reporting mechanisms
foster transparency to staff, the Board of Directors, and interested community stakeholders for an up-to-date status on a wide range of District activities.
• For another year, the District avoided declaring a Level 2 - Drought Alert or requiring
customers to face mandatory water use restrictions through the expanded use of recycled
water and by supporting conservation.
• Utilized technology to improve productivity and customer service, while reducing FTE
positions without any layoffs.
• Continued efforts to support the development of a sea water desalination facility in the
City of Rosarito Beach, Mexico.
• Launched the Rancho Del Rey Groundwater Project to validate the ability of a local
aquifer to produce drinking water. This project is an element of the District’s Integrated
Resources Plan.
• Continued support for integrated business systems and practices, and leveraged those
systems to improve asset management, customer billing accuracy, and field services to
staff.
• Awarded the construction contract for the 5.1-mile long, 36-inch Jamacha Pipeline
Project. The $16.1 million pipeline project will connect the 640-1 and 640-2 reservoirs to
the County Water Authority’s Flow Control Facility No. 14 and improve water reliability
in San Diego’s East County.
• Completed construction of the 850 and 1296 water storage reservoirs on time and on
budget. This is the first Type III concrete water storage tank in San Diego County. It
meets American Water Works Association and District standards, performs well during
earthquakes, lasts longer and is more cost-effective than a comparable Type I steel tank. In addition, the 1296 Reservoir includes a 75 square-foot photovoltaic panel to generate
electricity.
113
114
Personnel Count FY 2009 FY 2010 FY 2011
Chief, Administrative Services 1 1 1
Confidential Executive Secretary 0 1 1
Confidential Secretary 2 1 1
Human Resources Manager 1 1 1
Senior Human Resources Analyst 1 1 1
Human Resources Analyst 1 1 1
Human Resources Technician 1 1 1
Purchasing & Facilities Manager 1 1 1
Buyer I and II 2 2 0
Senior Buyer 0 0 1
Assistant Buyer 0 0 1
Lead Warehouse Worker / Facilities Worker 1 1 1
Warehouse / Delivery Worker 2 2 1
Facilities Maintenance Technician 2 2 2
Facilities Maintenance Assistant 1 1 0
Records Assistant 0 0 1
Safety & Security Administrator 1 1 1
Water Conservation Manager 1 1 1
Water Conservation Specialist 2 2 2
Total 20 20 19
District Position Count - 159Administrative Services Department - 19
Purchasing and
Facilities
Safety and Risk
Administration
Water
Conservation
Human
Resources
Administrative
Services
115
Department Responsibilities
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Administrative Chief 341,197$ 403,600$ 392,147$ 430,500$
Human Resources 769,060 790,900 705,449 852,200
Purchasing and Facilities 1,460,747 1,601,400 1,448,780 1,458,900
Safety and Security 241,591 371,300 264,678 338,500
Water Conservation 524,940 745,300 576,895 855,100
TOTAL 3,337,536$ 3,912,500$ 3,387,950$ 3,935,200$
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.
0.3%6.4%3.2%
14.1%
17.0%
10.7%
41.0%
7.3%
FY 2011 Total Departmental Budget -$27.8Million
Administrative Services -$3,935,200
Board of Directors
General Manager
General Expense
Administrative Services
Finance
Information Technology
and Strategic Planning
Water Operations
Engineering
116
Administrative Services
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Labor and Benefits 2,094,097$ 2,328,700$ 2,250,322$ 2,382,200$
Travel and Meetings 14,047 25,700 11,179 25,200
Conservation and Outreach 248,504 346,800 235,172 472,700
General Office Expense 123,882 180,400 102,471 126,000
Equipment 84,655 100,100 79,548 76,200
Fees 7,411 8,000 7,220 8,000
Services 286,680 325,900 211,288 390,200
Training 113,058 119,800 90,744 112,500
Materials & Maintenance 349,329 459,600 383,491 326,900
Power and Utilities 15,874 17,500 16,514 15,300
Total 3,337,536$ 3,912,500$ 3,387,950$ 3,935,200$
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
FY07 FY08 FY09 FY10 FY11
$3
,
3
1
6
$3
,
8
6
8
$3
,
6
4
0
$3
,
9
1
3
$3
,
9
3
5
$3
,
2
1
2
$3
,
2
2
5
$3
,
3
3
8
$3
,
3
8
8
Th
o
u
s
a
n
d
s
Fiscal Year
Budget vs. Actual
Budget Actual
117
Human Resources
Services We Provide
Human Resources, under the direction of the Chief of Administrative Services, provides the
following support services: recruits, selects and ensures the retention of qualified employees;
develops, implements and administers policies, procedures, collective bargaining contracts and
employee programs; ensures up-to-date classification plans and a competitive compensation
program; manages benefits programs for employees and retirees; manages the Workers’ Compensation program; oversees employee performance through management staff to include
employee training and development, recognition and incentives, performance evaluation process and
employee discipline; ensures legal compliance and implements work/life balance initiatives to
include a comprehensive wellness program.
Strategic Plan Objectives
• Evaluate the Employee Recognition Program.
• Conduct Employee Survey.
• Develop and maintain a formal program to track employee required training.
Performance Measures
Administrative Services
Turnover Rate
Annual percent of voluntary
terminations.
(Excludes retirement)
118
Accomplishments Fiscal Year 2009-2010
• Conducted a review of the District’s Employee Pay-for-Performance Program.
• Reviewed, revised, and conducted a District-wide Employee Satisfaction Survey.
• Successfully enhanced our employee health benefits plan by providing additional choice
of health plans. • Researched, developed, and implemented a Training and Development website to provide
employees and managers easy access to information and resources.
• Coordinated and received all credit for the Special District Risk Management Authority Credit Incentive Program. The credit totaled $51,619 each for Property and Liability and
Workers’ Compensation premiums.
Purchasing
Services We Provide
The Purchasing Division, under general direction of the Chief of Administrative Services,
oversees the general purchasing standards used within the District; purchases and oversees the
procurement of supplies, equipment, and services; controls and administers the District’s
standard materials inventory; disposes of surplus materials, equipment, and supplies; assists in the acquisition and disposal of non-infrastructure related real estate; performs non-structural
facility maintenance work; and administers and manages outsourced facility maintenance service
contracts. It also provides, as needed, complex purchasing related analysis and consultation to
the District and General Manager.
Training Hours per Employee
Measures the quantity of general
and management formal training
employees are completing.
119
Performance Measures
Accomplishments Fiscal Year 2009-2010
• Modified the Operations building heating ventilation and air conditioning (HVAC) to
provide thermostats in “private” office areas and added the system to the District’s centralized HVAC computer control system. This work completes the upgrade of HVAC systems to provide limited individual control of temperatures within closed
offices while providing centralized control of the system’s general operating
parameters which would result in energy savings and a reduction of system conflicts.
• Negotiated and awarded a five-year agreement for auction services for the disposal of
surplus materials, supplies, and equipment. The agreement provides for the disposal
of e-waste and online bidding, and includes a public utilization clause to allow other
public agencies the opportunity to use the agreement.
• Worked with the Safety and Security and IT divisions to add Radio Frequency
Identification gate controllers to the District’s water recycling plant to provide
automatic gate operating and logging, eliminating the need to use “garage door clickers.”
• Evaluated vacant positions within Purchasing and Facilities Maintenance Divisions,
resulting in the reduction of two FTE’s without a reduction in service. Changes
provided for the consolidation of duties, the opportunity for movement between the Purchasing, Warehouse, and Facilities Maintenance Divisions, and the consolidation
of Warehouse and Facilities Maintenance staff into one office.
Blanket Order Activity
Percentage of material purchases acquired via
blanket POs.
120
Safety and Security
Services We Provide
Safety and Security, under the direction of the Chief of Administrative Services, provides the following: assesses the occupational exposure to risk; evaluates hazards and mitigation of safety hazards and risk to injury; directs and supervises accident investigations relating to occupational
injuries, fleet incidents and/or damage to, or theft of District property; develops hazardous
materials business plans, community right-to-know, Risk Management Prevention and Process
Safety Management plans; develops and implements procedures to ensure compliance with safe work practices and determines training needs to address issues; develops, implements and manages safety programs; manages the District’s security program; implements, schedules and
coordinates recurring safety training; coordinates the Department of Transportation (DOT), the
District’s Drug Free Workplace, and DMV Pull-Notice Programs; plans and coordinates the
District’s emergency preparedness program. Strategic Plan Objectives
• Review/consolidate the District's Disaster Preparedness Plan. Performance Measures
H&S Severity Rate
Quantifies the rate of
employee days lost from
work due to illness or injury.
Safety Training Program
Safety & Risk Administration
will provide a minimum of 8
safety training programs/hours,
per quarter, which 61 field employees attend.
In Fiscal Year 07-08 the measure-
ment reflects 55 field employees
instead of 61.
121
Accomplishments Fiscal Year 2009-2010
• Worked with HR and IT to develop and capture Safety training information.
• Successfully completed the CPR/First Aid/AED classes for 66 students -- reduced cost by
over $900.
• Updated all Hazardous Materials Business Plans for submission to the county.
• Addressed safety concern and worked with the County of San Diego to re-pave
Sweetwater Springs Boulevard, between Administration and Operations.
• Successfully completed the 2009 Annual Fire Inspection from San Miguel Fire District.
Included annual checks on fire-fighting systems (all fire systems, fire extinguishers, and
alarm system checks).
Water Conservation
Services We Provide
Water Conservation, under the direction of the Chief of Administrative Services, provides the
following services:
• Promotes and conducts residential surveys.
• Promotes large landscape surveys.
• Promotes the Water Conservation Garden.
• Staffs outreach events throughout the community, including the WaterSmart plant sale, the Spring Garden Festival, Cinco de Mayo, Lemon Festival, Bonita Festival, JamulFest,
and the Fall WaterSmart Gardening Festival.
• Funds and promotes a variety of incentive and other programs available to its customers including rebates for high efficiency clothes washers, high efficiency toilets, turfgrass
replacement with WaterSmart plants, rotating sprinkler nozzles and weather based
irrigation controllers, and the WaterSmart Landscape contest.
• Promotes the school education program, which includes funding tours at the Water
Conservation Garden, the “Water is Life” poster contest, and the water themed high
school photo contest.
• Develops water efficiency requirements for new construction.
• Submits regular reports on the District's status with regard to the Water Conservation Best Management Practices as developed by the California Urban Water Conservation Council.
• Manages the District’s Water Shortage Response Plan as well as its water waste reporting program.
122
Strategic Plan Objectives
• Promote enhancements to city, county and state water conservation requirements and
implement appropriate BMPs. Performance Measures
Accomplishments Fiscal Year 2009-2010
• Increased the District’s annual active water conservation savings figure another 299.5 acre-feet to 1983.5 acre-feet (1,684 + 299.5) of water saved this fiscal year, primarily due
to the implantation of water savings recommendations at the County of San Diego’s
Bailey Correctional Facility suggested by a District-funded water use survey, but also due
to the activities outlined below.
• Funded the replacement of 94,000 acre-feet of turfgrass with water-wise plants in
landscapes both in front of single-family homes and in common areas maintained by
homeowners’ associations.
Total Water Saved
Estimate of water saved per
acre-feet through conservation programs.
High levels of conservation
during FY 08-09 and 09-10 was
achieved via several large projects and rebates for conservation have been eliminated by MWD.
Otay Water Use
(District Meters)
Consume 32 acre-feet or less of potable water
at District sites.
123
• Conducted 118 residential water use surveys, targeted all the District’s top single-family
customers and one large landscape audit for the Fuller Ford/Honda/Kia auto complex.
• Funded rebates for 1,406 rotating sprinkler nozzles, 378 high-efficiency clothes washers,
153 high-efficiency toilets, 96 zero water consumption urinals and 14 residential smart
controllers. In addition, staff distributed 133 showerhead therm kits, provided funding
toward one process improvement involving Fuller Ford’s car wash, as well as one irrigation efficiency upgrade at Mt. Miguel Covenant Village.
124
125
Personnel Count FY 2009 FY 2010 FY 2011
Chief Financial Officer 1 1 1
Executive Secretary 1 1 1
Secretary 1 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 2 2 2
Senior Accountant 4 4 4
Accountant 4 4 4
Payroll Technician 1 1 0
Accounting Assistant 2 1 0
Accounting Assistant/Payroll Technician 0 0 2
Senior Customer Service Representative 2 2 2
Customer Service Representative I, II and III 8 9 8
Lead Customer Service Field Representative 1 1 1
Customer Service Field Representative I and II 6 7 5
Total 37 38 35
District Position Count - 159 Finance Department - 35
Treasury and
Accounting
Services
Customer
Service
Payroll and
Accounts
Payable
Controller and
Budgetary
Services
Finance
126
Department Responsibilities
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Finance Chief 392,267$ 432,100$ 416,044$ 448,300$
Controller and Budgetary Services 571,191 572,900 607,303 619,500
Treasury and Accounting Services 979,607 1,104,100 1,094,767 1,148,000
Customer Service 2,058,263 2,410,700 2,160,885 2,142,200
Payroll and Accounts Payable 366,736 349,300 338,243 372,300
TOTAL 4,368,063$ 4,869,100$ 4,617,243$ 4,730,300$
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.
0.3%6.4%3.2%
14.1%
17.0%
10.7%
41.0%
7.3%
FY 2011 Total Departmental Budget -$27.8 Million
Finance -$4,730,300
Board of Directors
General Manager
General Expense
Administrative Services
Finance
Information Technology
and Strategic Planning
Water Operations
Engineering
127
Finance
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Labor and Benefits 3,636,729$ 4,089,700$ 3,858,267$ 4,027,500$
Travel and Meetings 19,198 20,100 17,998 19,100
General Office Expense 239,183 217,500 213,045 197,400
Equipment 4,731 200 143 3,200
Fees 294,019 308,000 316,324 308,000
Services 173,926 233,000 211,167 174,500
Training 278 600 300 600
Total 4,368,063$ 4,869,100$ 4,617,243$ 4,730,300$
$-
$1,000
$2,000
$3,000
$4,000
$5,000
FY07 FY08 FY09 FY10 FY11
$3
,
8
1
3
$3
,
9
9
4
$4
,
4
7
2
$4
,
8
6
9
$4
,
7
3
0
$3
,
7
8
4
$4
,
0
2
3
$4
,
3
6
8
$4
,
6
1
7
Th
o
u
s
a
n
d
s
Fiscal Year
Budget vs. Actual
Budget Actual
128
Controller and Budgetary Services
Services We Provide
The Controller and Budgetary Services Division is responsible for developing and publishing the
annual operating and capital budgets as well as preparing the six-year financial plan and setting
rates. Prepares monthly and annual reports, monitors budget variances and coordinates interactions
with outside agencies. Assists other departments with special projects such as; the preparation of cost studies, validation of financial data, and preparation of the District’s overhead and benefits rates
and calculations.
Strategic Plan Objectives
• Develop and measure cost per unit expenditures and forecasts.
Performance Measures
Overtime Percentage
Comparing actual to budgeted
overtime to monitor costs.
O&M Cost per Account
Operations & Maintenance (O&M) cost per account (QualServe) operation costs for O&M per
account (per customer).
Finance
129
Sewer Rate Ranking
District's average customer bill
as compared to other agencies
in San Diego County. Otay is ranked 10 th of 32 agencies.
Water Rate Ranking
District's average customer bill as compared to other agencies
in San Diego County. Otay is
ranked 7th of 23 agencies.
Distribution System Loss
Percentage for unaccounted
water (QualServe).
130
Accomplishments Fiscal Year 2009-2010
• Prepared a balanced budget that is coordinated with the Strategic Plan and received the
Government Finance Officers Association (GFOA) “Distinguished Budget Presentation Award” for the sixth consecutive year. In addition, the budget received the “Excellence in Operating Budgeting” award from the California Society of Municipal Finance
Officers (CSMFO).
• The Capital Improvement Program (CIP) Budget received the “Excellence in Capital Budgeting Award” from the CSMFO for the fifth year in a row.
• Prepared the Budget-at-a-Glance document to be used by board members and
management staff at public outreach events.
• Completed a Capacity and Annexation Fee Study that resulted in a change in
methodology of the calculation of these fees and an update of facilities cost. In addition,
a New Water Supply Fee was developed to offset the cost of obtaining new water supplies.
• Prepared the debt coverage ratio calculations for the 2010 debt issuance of $50.2 million.
Treasury and Accounting Services
Services We Provide
The Treasury and Accounting Services Division coordinates and directs the activities of the general
ledger accounting, audit, banking and cash management, investments and treasury functions, debt financing, job costing, cost accounting, accounts receivable and debt collections, fixed assets, and contract review. Also responsible for completing the District’s annual financial audit and publishing
of the Comprehensive Annual Financial Report (CAFR). Conducts an annual review of the
District’s Investment Policy, as required by law, with approval by the Board of Directors. Provides
financial analysis and review of staff projects and operational business proposals. Assists in the preparation of the District’s annual operating and capital budgets, along with updating the Rate Model and the six-year financial plan.
Strategic Plan Objective
• Develop the long-term financial plan.
131
Performance Measures
Accomplishments Fiscal Year 2009-2010
• Fitch Ratings upgraded the District’s credit rating to AA from AA-. This is an acknowledgment of the District's excellent planning, management, and financial
strength.
• Completed the District’s FY 2009 audit and CAFR, and received the GFOA award for Excellence in Financial Reporting for the sixth consecutive year.
• Achieved an overall rate of return on the District’s portfolio in excess of the LAIF rate of
return for the third consecutive year, despite the economic downturn and available investment rates.
• Issued $50.2 million in new debt via Series A Bonds (tax-exempt) and Series B Bonds
(taxable Build America Bonds) in March 2010.
• Refinanced $7.78 million in General Obligation (GO) bonds in November 2009 to fully
refund the outstanding 1998 GO Bonds, saving the District's customers over $65,000 per
year.
Debt Coverage Ratio
Measures level of debt coverage
ratio (ability to pay debt).
(QualServe) The minimum legal level is 125%.
Reserve Level
Measures all of the District's
reserves against the Board
adopted Reserve Policy levels.
132
• Completed the District’s successful participation in the Proposition 1A Securitization
Program, to receive the District’s share of property tax revenues withheld pursuant to the
2009-2010 California State Budget. Total funds received: $267,197.
• Completed the refunding of California State Warrants, issued to the District for payment
of state obligations between 7/1/09 – 9/3/09. Total funds received: $163,194.
• Conducted internal audits of the following: computers, vehicles, and disposal of District property. By performing the work in-house, it is estimated the District saved $21,000 -
$30,000.
Customer Service
Services We Provide
The Customer Service Division is responsible for providing; meter reading, billing, receipting, and
customer care for water and sewer services. The meter reading team reads approximately 49,000
meters a month using manual and automatic meter reading technology. The District is more than
half way through a conversion to an automated meter reading system that will enhance the District’s efficiency, accuracy and customer service. The billing and customer care teams handle the coordination of billing and receipting of approximately 50,000 accounts per month. Customers are
offered various payment options including ACH, web, IVR (telephone) and the convenience of
multiple locations for walk-in payments. The District has an automated phone system and web
portal which gives customer’s access to their account information 24/7. If they desire more personal service, the customer care team handles an average of 6,500 customer calls per month.
Strategic Plan Objectives
• Enhance communication with our customers by evaluating and upgrading all aspects of the District’s phone system.
• Evaluate and improve effectiveness of the bill format (including fees for Chula Vista
sewer billing).
Performance Measures
Answer Rate
Percentage of calls as a
measure of all calls received.
133
Accomplishments Fiscal Year 2009-2010
• Successfully implemented credits to customer accounts due to a rate implementation
change.
• The ongoing AMR meter change out program, which included 4,481 meters this year, reduced manual metering reading by 32 hours or one day per month, which in turn
reduced staff by three positions (14%) and made improvements to the collection and
locking processes.
• Implemented Check-Free Pay which added significant convenience for customers and
reduced staff’s manual entry and processing time by 30 hours per month.
• Implemented Electronic Bill Pay and Presentation (EBPP) payment options for enhanced web payment services with an expected savings of more than $120,000 annually.
• Analyzed and implemented changes to the collections process that resulted in a 20%
reduction of write-offs. • Continued the simplification of the billing rate structure by eliminating 47 fees. • Instituted an additional level of contact to customers by mailing postcards to delinquent
accounts subject to being locked.
Payroll and Accounts Payable
Services We Provide
The Payroll Division pays 159 full-time and temporary employees on a bi-weekly basis using the
District’s Integrated Financial Eden System. Timesheets and pay stubs are collected and distributed
electronically. Tax returns are filed on a quarterly basis and W2’s are filed annually. Benefits and
deductions are processed bi-weekly through Accounts Payable. Approximately 750 invoices are processed on a monthly basis.
Billing Accuracy
Percentage of correct bills
issued. (QualServe)
134
Strategic Plan Objective
• Enhance Accounts Payable to electronically pay invoices for frequent vendors and
routine bills and maximize the use of e-bills. Accomplishments Fiscal Year 2009-2010
• 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.
• W-9 forms are now scanned and attached to vendors electronically therefore eliminating
the paper file and making it a more efficient process.
• Completed quarterly tax returns that culminated with the processing, printing, and
distributing of W2s and 1099s for 2009.
135
136
Personnel Count FY 2009 FY 2010 FY 2011
Chief Information Officer 1 1 1
GIS Manager 1 1 1
IT Operations Manager 1 1 1
GIS Programmer/Analyst 1 1 1
GIS Technician 2 2 2
Network Engineer 1 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 0
Total 13 13 12
District Position Count - 159
Information Technology & Strategic Planning Department - 12
IT Applications IT Operations GIS
Information Technology and
Strategic Planning
137
Department Responsibilities
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
IT Chief/Applications 843,069$ 919,100$ 899,603$ 965,600$
IT Operations 1,403,973 1,344,400 1,361,574 1,349,400
Geographic Information System 562,625 592,900 603,023 649,100
TOTAL 2,809,666$ 2,856,400$ 2,864,200$ 2,964,100$
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.
0.3%6.4%3.2%
14.1%
17.0%
10.7%
41.0%
7.3%
FY 2011 Total Departmental Budget -$27.8 Million
Information Technology and Strategic Planning -$2,964,100
Board of Directors
General Manager
General Expense
Administrative Services
Finance
Information Technology and
Strategic Planning
Water Operations
Engineering
138
Information Technology and Strategic Planning
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Labor and Benefits 1,666,372$ 1,757,600$ 1,769,028$ 1,863,800$
Travel and Meetings 11,083 13,900 11,669 13,000
General Office Expense 3,975 5,200 3,358 6,200
Equipment 947,674 858,000 880,561 870,800
Services 154,862 204,800 185,937 192,300
Training 25,700 16,900 13,647 18,000
Total 2,809,666$ 2,856,400$ 2,864,200$ 2,964,100$
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY07 FY08 FY09 FY10 FY11
$2
,
6
5
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,
7
0
6
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,
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,
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6
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Fiscal Year
Budget vs. Actual
Budget Actual
139
IT Applications
Services We Provide
The Information Technology and Strategic Planning Department provides the following support
services: development and implementation of information technology; the 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 also provides
highly responsible and complex administrative support to the District, General Manager, and Board of Directors.
Strategic Plan Objectives
• Evaluate and implement American Water Works Association Peer Review for District.
• Evaluate the long-term viability of Eden financials and billing system.
• Enhance existing Capital Project Tracking System.
• Evaluate implementing a fixed network Automated Meter Reading (completed 2010).
• Update District-wide Records Management Program.
Accomplishments – Fiscal Year 2009-2010
• Developed three-year asset management plan and completed first year objectives
including classification scheme and business process redesign of high cost processes.
• Successfully implemented new control and lab reporting system for the District’s
treatment plan (Hach WIMS OPS32).
• Implemented new work order processes for engineering staff. This saves the inspection team a total of 12 hours a month.
• Staff successfully met annual targets for objectives and performance measures in the
Strategic Plan.
• Developed District’s SharePoint website and added new applications for employee
information.
Information Technology and Strategic Planning
140
IT Operations
Services We Provide
IT Operations is responsible for day-to-day functions of the District’s data center, network and desktop hardware/software, disaster recovery center, telecommunications, mobile and wireless networks, website, and help desk. IT Operations has collateral responsibilities for access security
control and video surveillance.
Strategic Plan Objectives
• Web Page - Evaluate and enhance the District’s website design to allow easier use and
navigation.
• Develop and deploy the field wireless network for key facilities.
• Optimize use of Voice Over Internet Protocol and unified messaging.
Performance Measures
Customer Satisfaction
with web site
Tracks customer satisfaction
with website through survey.
Network Availability
Percentage of uptime for network
during normal business hours.
141
Accomplishments – Fiscal Year 2009-2010
• Developed a test implementation for high speed wireless network and will expand this
equipment throughout major District facilities over the next two years.
• Issued an RFP to replace the District’s telephone system.
• Upgraded the financial system to the latest release and improved overall network
performance.
• Revised and streamlined process for installing new computers and ensuring accurate
procedures to surplus used equipment.
• Consolidated door/gate access control and video surveillance to a single platform (Lenel).
• Developed new Otay website and committee approved the final design and requirements.
• Deployed 40 desktop workstations with Windows 7.
• Installed software (TriActive) to assist in IT Asset Management.
Geographic Information System (GIS)
Services We Provide
The GIS division is responsible for the technical and administrative support to the Engineering and
Operations Departments on GIS/AM/FM and CAD systems. It is also responsible for the data collection and data QA/QC of the District’s facility data and land based data. In addition, it provides technical support in designing, developing, documenting and maintaining the District’s database
systems and creates database structures that consolidate the conceptual, logical and physical models
of data.
Website Hits Fiscal Year 07-08 tracked the
number of website hits per
month. Fiscal Year 08-09
and projected Fiscal Years 09-10 and 10-11 track the number of visitors to our
website per month.
142
Strategic Plan Objectives
• Enhance the District’s data management, data update process, and data architecture
including enterprise standard data. Update process for ensuring GIS data is accurate.
• Develop optimized field work processing using integrated technology.
• Develop and implement an Asset Management Program Plan to extend useful life of capital assets.
• Develop information systems support for the Asset Management Program.
Accomplishments – Fiscal Year 2009-2010
• Deployed 50 Field Mobile units (laptops) with the Field Mapplet 2.0 application and
hosted over 20 sessions of training. The Field Mobile deployment was a great success.
• Completed the potable water Unified Modeling Language (UML) design which
accommodates both vertical and horizontal assets in the District. This design is the
foundation for future data collection, decision making and improving business processes.
• Completed the programming for Asset Management data entry data interfaces for the
pilot area. This in-house development saved the District money by utilizing staff’s
technical skills.
• Completed the data update based on the InfoWater modeling. This will further improve
the accuracy of the GIS data and the Water Resources Master Plan (WRMP) data model.
• Worked with the engineering staff and implemented the new Water Agency CAD
standards. This implementation will improve efficiency for both GIS and engineering
staff for data collection and updates.
• Staff received free aerial imaging to update the maps which saved the District
approximately $30,000.
143
144
District Position Count - 159 Operations Department - 66
Fleet/Equipment
Maintenance
Construction
Maintenance
Water Systems
Operations
Utility
Maintenance
Pump/Electrical
Water Systems
Meter
Maintenance
SCADA
Recycled
Maintenance
Treatment Plant
Laboratory
Water Operations
145
Personnel Count FY 2009 FY 2010 FY 2011
Chief, Water Operations 1 1 1
Executive Secretary 1 1 1
Systems Operations Manager 1 1 1
Water Systems Supervisor 1 1 1
Pump Electrical Supervisor 1 1 1
Recycled Water Systems Supervisor 1 1 1
Meter Maintenance/Cross Connect Supervisor 1 1 1
Lead Water Systems Operator 2 2 2
Water Systems Operator I, II, and III 9 9 9
Valve Maintenance Worker 1 1 1
Senior Disinfection Technician 2 2 2
Senior SCADA Instrumentation Technician 1 1 1
SCADA Instrumentation Technician 1 1 1
Electrician I and II 2 2 2
Pump Mechanic I and II 2 2 2
Lead Cross Connection/ Meter Maintenance Worker 1 1 1
Meter Maintenance/Cross Connect Worker I and II 5 5 5
Construction Maintenance Manager 1 1 1
Utility Maintenance Supervisor 2 2 2
Utility Crew Leader 5 5 4
Utility Workers I and II 10 8 8
Senior Utility/Equipment. Operator 3 3 3
Fleet Maintenance Supervisor 1 1 1
Equipment Shop Mechanic I and II 3 3 3
Welder II 1 1 1
Reclamation Plant Supervisor 1 1 1
Lead Reclamation Plant Operator 1 1 1
Reclamation Plant Operator 3 3 3
Lead Recycled Water Distribution Operator 1 1 1
Recycled Water Distribution Operator 3 3 3
Laboratory Analysts I and II 2 2 1
Total 70 68 66
District Position Count - 159 Operations Department - 66
146
Department Responsibilities
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Water Operations Chief 391,986$ 398,300$ 435,031$ 447,300$
Water Systems 6,410,453 6,884,000 6,502,135 6,900,200
Construction Maintenance 3,914,046 4,196,500 3,648,150 4,073,000
TOTAL 10,716,485$ 11,478,800$ 10,585,316$ 11,420,500$
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.
0.3%6.4%3.2%
14.1%
17.0%
10.7%
41.0%7.3%
FY 2011 Total Departmental Budget -$27.8 Million
Water Operations -$11,420,500
Board of Directors
General Manager
General Expense
Administrative Services
Finance
Information Technology and Strategic Planning
Water Operations
Engineering
147
Water Operations
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Labor and Benefits 6,717,225$ 7,403,600$ 6,776,267$ 7,144,300$
Travel and Meetings 46,628 46,200 52,591 51,000
General Office Expense 4,931 6,600 4,389 6,000
Equipment 58,810 66,900 50,197 68,900
Fees 53,394 88,000 78,913 74,500
Services 431,260 291,300 349,348 441,900
Training 5,424 14,200 17,237 14,000
Materials & Maintenance 1,973,644 2,130,900 1,875,786 2,140,000
Sewer Charges 1,159,680 1,211,100 1,232,217 1,302,600
Miscellaneous 265,490 220,000 148,371 177,300
Total 10,716,485$ 11,478,800$ 10,585,316$ 11,420,500$
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
FY07 FY08 FY09 FY10 FY11
$1
0
,
8
0
4
$1
1
,
2
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3
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,
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7
9
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Fiscal Year
Budget vs. Actual
Budget Actual
148
Water Systems Operations
Services We Provide Water Operations staff is responsible for operations and maintenance of the wastewater collection
system, potable and recycled water distribution systems, and the Ralph W. Chapman Water
Recycling Facility. Pump and electrical staff perform preventative, predictive and corrective
maintenance on all pumps, motors, switchgear, and control valves in the District and assists with electrical maintenance and installation throughout the District. The SCADA staff performs installations, maintenance, updates, and modifications to the SCADA control system and related
communications equipment, both for existing facilities as well as CIP projects. Laboratory staff
ensures all regulatory-required sampling, analyses, and reporting is done to meet the requirements
from the California Department of Public Health for potable water and the Regional Water Quality Control Board for recycled water and the reclamation plant treatment process. Laboratory staff works closely with the water system operators and disinfection staff to monitor and optimize the
water quality in the distribution system. They also perform bacteriological sampling and analyses
for Utility Maintenance and Engineering to ensure proper disinfection was performed after
maintenance or new construction. Strategic Plan Objectives
• Develop and implement a proactive leak detection program to reduce distribution system
water loss.
• Develop and implement Treatment Plant Enhancements including automation for remote
operation and shutdown, technology improvements, and upgrade of facilities.
• Optimize functionality, business continuity, bandwidth, and use of SCADA.
Performance Measures
Water Operations
Unplanned Disruptions
Quantifies the number of
unplanned water outages
experienced by the utility customer expressed as number
of accounts affected per
1,000 accounts (QualServe).
149
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 Recycled Water
Maintenance Ratio in Dollars
Compares how effectively the District is investing in planned maintenance.
This measure was not tracked
until FY 2008-2009.
Planned Wastewater Maintenance
Ratio in Dollars
Percentage of planned
maintenance costs compared
to combined planned and
corrective maintenance costs.
Direct Cost of Treatment
per MG
Measures the direct cost to treat one million gallons of wastewater and does not
include staff overhead or
fringe benefits, but it does
include their salaries (QualServe).
150
O&M Cost per MG
Measure for the full operation and maintenance cost to treat
one million gallons of
wastewater (QualServe).
Percentage of Preventative
Maintenance Completed in the
Reclamation Plant
To track the percentage of
scheduled PM's that are
completed in the Reclamation Plant.
This measure was not tracked
until FY 2008-2009.
Percentage of Preventative
Maintenance Completed in the
Pump/Electric Section
To track the percentage of
scheduled PM's that are
completed in the Pump/Electric
Section.
This measure was not tracked
until FY 2008-2009.
Percentage of Preventative
Maintenance Completed in the
Valve Maintenance Program
To track the percentage of scheduled PM's that are
completed in the Valve
Maintenance Program.
This measure was not tracked until FY 2008-2009.
151
Valve Exercising Program Maintenance of distribution
systems' infrastructure to
ensure minimal interruption
of potable water delivery to customers.
Potable Water Distribution
System Integrity
Measures the condition of the
water distribution system expressed as the total annual
number of leaks and breaks
per 100 miles of distribution
piping (QualServe).
Planned Water Service
Disruption Rate
Quantifies the number of planned
water outages experienced by
the utility customer expressed as number of accounts affected per 1,000 accounts (QualServe).
Drinking Water Compliance Rate
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 (QualServe).
Both Actual/Projected and Targets
are at 100%.
152
Accomplishments – Fiscal Year 2009-2010
• Assisted in five major CIP projects including the 850-4 Reservoir, 1485-2 Pump Station,
1296-3 Reservoir, 450-1 Recycled Disinfection Facility, and the 36-inch Jamacha
Pipeline Project. All except the Jamacha Road Pipeline were put into service this year.
• Began replacing SCADA radios with Ethernet radios in the North District, allowing for
increased reliability and bandwidth capacity for planned video surveillance security
enhancements.
Collection System Integrity
Number of wastewater collection
system failures per 100 miles of
collection system pipeline (QualServe).
Recycled Water Distribution
System Integrity
Tracks number of leaks or breaks per 100 miles of water distribution
system.
Sewer Overflow Rate Measures the wastewater
collection system pipeline
condition and the effectiveness
of planned maintenance (QualServe).
153
• Provided Mexico with 1,169.55 AF or 381.1 MG of potable water.
Exercised 2,023 valves this year, primarily in areas of ID10 and 22. Since this began in
2006, 8,952 valves or 43% of the total number of valves in the District have been exercised.
• Installed a new generator at the Administration Building to handle all building power
requirements. The existing generator was moved to the Operations Center to increase the reliability of back-up power for the Emergency Operations Center and the Operations Building.
• Installed a new 480 volt system at the 870-1 Pump Station to replace the old 2300 volt system. This entailed installing new 480 volt switch gear, motor control centers, and two new 200 HP pump motors.
• Staff converted mechanical altitude valve controls to SCADA control at nine reservoirs. This allows for remote valve adjustment instead of manual adjustment, saving man-hours, money, and reduces the need for confined space entries into these vaults.
• Implemented a dye-injection system for cross-connection testing and received regulatory
approval for its use. This new system allows daytime testing without customer interruption of service, reducing overtime costs and regulatory fees.
• Installed, tested, and put into full operation the new chlorination system on the 450
Reservoir/680 Recycled Pump Station.
• Installed a new three-inch recycled meter at the Otay Landfill for dust control. This is the
District’s first permanent recycled meter that is not for irrigation purposes.
• Installed a Fiber-Optic communications system at the Reclamation Plant for use in the
automation of the SCADA controls in the plant, increasing reliability and information
capacity. This system also allows for SCADA monitoring and control to the headworks
and secondary treatment processes that were previously manual.
• Upgraded the chlorination equipment at the reclamation plant to provide the capability to
remotely adjust chlorine dosages which will save overtime costs. This equipment also
allows for a different method of automatically controlling chlorine dosing which will lead to a significant savings in chlorine chemical costs.
• Implemented a Water Information Management System (with IT) at the reclamation
plant, which will streamline documentation and reporting of plant and laboratory data.
• Expanded the use of outside laboratory services, allowing the District to cut one
Laboratory Technician position from the budget. This will save the District
approximately $73,300 per year, plus the cost of a car.
• Completed updating the Bacteriological Sample Site Plan which was approved by the
California Department of Public Health. The plan shows where and when weekly
samples are collected in the distribution system. Several new locations were added to reflect pressure zones not previously covered and areas developed since 1992 when the
last update was made.
154
Utility Maintenance / Construction
Services We Provide
The Utility Maintenance and Construction staff provides vital maintenance functions that ensure the best quality of water and wastewater service to customers while adhering to all applicable regulatory compliance requirements. Tasks include valve exercising, large meter installation, main line and
service line repairs as well as proactive regulatory system upgrades, and constant evaluation of the
system integrity to allow for system planning upgrades. The Meter Maintenance staff provides
meter maintenance and repairs and/or replacement of meters to ensure accurate accounting of water usage. Provides comprehensive protection of water quality by proactively administering the Backflow/Cross- Connection program, regulated by the Department of Health. The Fleet
Maintenance staff implements active preventative maintenance practices and repairs the District’s
vehicles and equipment to ensure optimum performance while establishing fuel efficient operational
practices and emissions compliance. Strategic Plan Objectives
• Expand meter testing for 3" and larger calibration and replacement program. Performance Measures
Planned Drinking Water
Maintenance Ratio in Dollars
Compares how effectively the
District is investing in planned maintenance (QualServe).
Percentage of Preventative
Maintenance Completed in the
Fleet Shop To track the percentage of
scheduled PM's that are
completed in the Fleet Shop.
This measure was not tracked until FY 2008-2009.
155
Accomplishments – Fiscal Year 2009-2010
• The Meter Maintenance crew, in tandem with the Utility Maintenance crew replaced 52
large meters.
• Utility Maintenance crew upgraded 120 Air Vacs.
• Contractually tested 120 large meters through the Meter Maintenance Section.
• Utility Maintenance and Water Operations staff completed a 24-inch bypass on Alta
Road to provide a looped system that assists with water reliability in the event of a water
main break in the Otay Mesa area.
• The Meter Maintenance crew tested 94 Backflows for operability.
Replace Manual Read Meters
with Automated Meters This measure reflects the total
number of AMR Meter Replace-
ments per year which will increase
meter reading efficiency and reduce water loss through
increased meter accuracy.
156
157
Personnel Count FY 2009 FY 2010 FY 2011
Chief, Engineering 1 1 1
Executive Secretary 1 1 1
Secretary 1 1 1
Engineering Manager 2 2 2
Public Services Manager 1 1 1
Senior Civil Engineer 2 1 1
Associate Civil Engineer 2 2 2
Assistant Civil Engineer 0 0 1
Environmental Compliance Specialist 1 1 1
Permit Technicians I and II 2 2 2
Senior Engineering Technician 3 3 2
Inspection Supervisor 1 1 1
Construction Inspectors I and II 3 2 2
Supervising Land Surveyor 1 1 1
Survey Technician 1 1 1
Assistant Survey Technician 1 1 1
Total 23 21 21
District Position Count - 159 Engineering Department - 21
Water Resources Design / Planning /
Construction /
Environmental
Public Services /
Survey / Inspection
Engineering
158
Department Responsibilities
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Engineering Chief 338,055$ 319,200$ 238,363$ 228,300$
Planning 403,119 366,000 340,598 550,000
Design 267,342 211,300 194,459 317,700
Water Resources 130,254 157,700 146,762 154,400
Public Services 247,257 265,800 289,508 183,300
Construction Services 281,888 216,100 266,839 133,200
Survey Services 231,250 272,400 256,274 224,300
Environmental Services 397,119 262,200 183,938 232,900
TOTAL 2,296,284$ 2,070,700$ 1,916,741$ 2,024,100$
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.
0.3%6.4%
3.2%
14.1%
17.0%
10.7%
41.0%
7.3%
FY 2011 Total Departmental Budget 27.8 Million
Engineering -$2,024,100
Board of Directors
General Manager
General Expense
Administrative Services
Finance
Information Technology
and Strategic Planning
Water Operations
Engineering
159
Engineering
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Labor and Benefits 1,407,942$ 1,215,300$ 1,237,834$ 1,089,800$
Travel and Meetings 13,107 23,300 18,163 22,700
General Office Expense 7,052 9,300 6,091 9,100
Equipment 5,754 3,500 3,952 15,100
Fees 37,714 65,000 38,198 40,000
Services 822,454 749,600 607,782 840,700
Training 2,261 4,700 4,720 6,700
Materials & Maintenance - - - -
Total 2,296,284$ 2,070,700$ 1,916,741$ 2,024,100$
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY07 FY08 FY09 FY10 FY11
$3
,
4
2
8
$3
,
3
0
6
$2
,
9
5
5
$2
,
0
7
1
$2
,
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2
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,
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3
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,
6
8
7
$2
,
2
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6
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,
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Th
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s
Fiscal Year
Budget vs. Actual
Budget Actual
160
Water Resources
Services We Provide
The Water Resources Division is responsible for a variety of water resources planning
functions directly related to potable, recycled water, and sewer services. This includes identification, negotiation, acquisition, and development of additional potable and
recycled water supplies of various interagency cooperative agreements and coordination
of water resources functions with other entities such as the Metropolitan Water District of
Southern California, San Diego County Water Authority, City of San Diego, County of
San Diego, and the City of Chula Vista. Prepare capital improvement program facility plan and budget, and land development projects to ensure adequate and reliable water
service to customers and compliance with local and state laws for land development
projects. Provide guidance and technical assistance for the development of the water and
sewer capacity and annexation fees methodology and rates. Coordinate funding
resources such as grants, loans, and cost sharing opportunities.
Strategic Plan Objectives
• Prioritize and implement recommendations contained in the Integrated Resources Plan and Water Resources Master plan to obtain additional potable water supply
by 15%.
• Obtain 10% in new recycled water supplies by prioritizing and implementing the recommendations in the IRP & WRMP.
• 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.
• Complete the RFP and retain a consultant for the Waste Water Master Plan.
Accomplishments – Fiscal Year 2009-2010
• Received $2,875,000 in grant funds from the U.S. Bureau of Reclamation for
participation in their Title XIV Program. Total Title XVI grant funds received to date is $9,410,000.
• Prepared the six-year Fiscal Year (FY) 2011 Capital Improvement Program (CIP)
and received the Board’s approval on May 17, 2010.
Engineering
161
Planning / Design / Construction / Environmental
Services We Provide
The Planning, Design, Construction, and Environmental Divisions provide a variety of
services directly related to potable water, recycled water, and sewer facilities. This
includes taking a project literally from “cradle to grave.” Planning staff develops the preliminary design of a project in order to facilitate final design and ultimately
construction of the facility. Planning staff also coordinates the review of planning
documents related to potential new development. Design staff prepares the design of
facilities and advertises projects for bid. Once bid, the Construction staff provides
construction management for the projects. Environmental staff coordinates and tracks the project through the construction stage and for a period after construction if long-term
mitigation is required. In addition, we assist the Operations Department on special
projects related to maintenance of existing facilities including the Ralph W.
Chapman Water Reclamation Facility.
Strategic Plan Objectives
• Create a comprehensive environmental program that is cost-effective and
proactive in response to environmental compliance.
• Identify, prioritize, and implement gravity sewer main improvements as
recommended in the Sewer System Management Plan.
Performance Measures
CIP Project Expenditures
vs. Budget
Compares quarterly CIP
expenditures with budget.
162
Accomplishments – Fiscal Year 2009-2010 with Corresponding Project Numbers in
Parenthesis
• Received a $2.31 million reimbursement from the San Diego County Water Authority for the East County Treated Water Improvement Program. (P2009)
• Certified the Sewer System Management Plan.
• Completed the Water Resources Master Plan.
• Completed the following projects:
o 850-4 Reservoir (P2191)
o Sir Francis Drake and Otay Valley Road Interconnection (P2487)
o 450-1 Disinfection Facility (R2092)
o 1296-3 Reservoir (P2143)
o 1485-1 Pump Station (P2172)
o Otay FCF 14 Temporary Reconnection (P2009)
o Regulatory Site Material Storage Bins (P2465)
Project Closeout Time
Measures the average number
of days between the issuance
of a Notice of Substantial Completion (NOSC) and a
Notice of Completion (NOC)
for CIP projects in construction.
Construction Change Order
Incidences
Measures the rate of change orders for CIP projects under
construction.
163
• The Program Environmental Impact Report for the Water Resources Master Plan was certified by the Board on February 3, 2010. (P1210)
• Mitigated Negative Declaration (MND) for the Rancho del Rey Groundwater Well Project was adopted by the Board on March 3, 2010. (P2434)
• The Environmental Impact Report for the Otay Mesa Recycled Water Supply
Link was certified by the Board on June 2, 2010. (R2058/R2077/R2087)
• Received final approval from California Dept. of Fish and Game that the Rickey
Pond mitigation area in the District’s Habitat Management Area has met its five-
year success criteria.
• Received the 2010 Project Achievement Award for Public Works, in the less than
$2.5 million category, from the Construction Management Association of
America (CMAA) for the 1296-3 Reservoir Project. This award recognizes outstanding achievement in the practice of construction management.
• Received two awards from the American Public Works Association (APWA), the
2010 Project of the Year Award for the 640-1 and 640-2 (10 MG) Reservoirs and the Honor Award for the 850-4 (2.2 MG) Reservoir.
Public Services / Survey / Inspection
Services We Provide The Public Services, Survey, and Inspection Divisions assist the public by responding to
customer visits, phone calls, and inquiries regarding permits, plan-checking fees, filing
procedures, permit status, meter sales, meter costs, and lateral costs. We administer all
plan-checking submittals for potable water, recycled water and sewer applications for approval, cellular lease agreements, fire service, and backflow inspections, project deposits, and invoicing. We provide inspections to private developer funded projects and
the District's Capital Improvement Projects, easement and encroachment enforcements,
and survey and utility mark outs of District facilities and GPS plots.
Strategic Plan Objectives
• Continue a regional approach and expand the District’s recycled water outreach
program to landscape architects, maintenance companies, developers, contractors,
and homeowner associations.
• Obtain access to shared electricity, gas, telephone, and other utilities from cell site
vendors, San Diego County, and other agencies.
164
Performance Measures
Accomplishments – Fiscal Year 2009-2010
• Collected capacity fee and annexation fee revenues in excess of $1.9 million based on the 212 meters sold.
• Maintained 33 cell site leases which brought in more than $950,000 in revenue.
• Added 3 cell site leases to the existing lease portfolio.
• Processed over 350 permits.
• Maintained the Easement Inspection and Encroachment Program which resulted
in inspections of 202 easements, 38 encroachment surveys, and 19 work requests.
• Implemented and maintained the Retrofit Recycled Optimization Program saving
95 acre-feet of potable water.
• Completed 2,238 mark-outs with an accuracy rate of 100%.
• Provided new information on 2,453 facilities including: transmission pipelines,
appurtenances, valves, fire hydrants, blow-offs, fire services, sewer manholes,
laterals and clean outs and transferred them into the information system.
• Completed the review and drafting of 41 legal descriptions and plats for right-of-
way acquisitions.
• Performed 13 fire service plan checks and 3 potable water plan checks.
Mark-out Accuracy
Measures the percentage of
at-fault hits over time.
Both Actual/Projected and
Targets are at 100%.
165
166
Description
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
General Expense 1,877,365$ 865,500$ 1,314,537$ 888,000$
TOTAL 1,877,365$ 865,500$ 1,314,537$ 888,000$
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.
0.3%6.4%3.2%
14.1%
17.0%
10.7%
41.0%
7.3%
FY 2011 Total Departmental Budget -$27.8 Million
General Expense -$888,000
Board of Directors
General Manager
General Expense
Administrative Services
Finance
Information Technology and Strategic Planning
Water Operations
Engineering
167
General Expense
FY 2009 FY 2010 FY 2011
Actual Budget Estimated Budget
Labor and Benefits (1)337,993$ (300)$ 384,829$ (28,000)$
Fees 1,539,372 865,800 929,708 916,000
Total 1,877,365$ 865,500$ 1,314,537$ 888,000$
(1) FY 2011 and FY 2010 budget amounts are negative because of Vacancy Factor (salary savings) of $204,200 and
$207,200 respectively. This is netted against other District-wide Labor and Benefit Expenses. In prior years
Vacancy Factor was budgeted in the individual departments.
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
FY07 FY08 FY09 FY10 FY11
$1
,
0
5
4
$1
,
6
8
6
$7
8
4
$8
6
6
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8
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Th
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Fiscal Year
Budget vs. Actual
Budget Actual
168
Capital Improvement Program
The District provides water service to a population of approximately 206,000 which is expected to ultimately increase to 295,000. This growth as well as the maintenance of existing assets requires long term capital planning. The process is dynamic, 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 and 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 2011 Capital Budget is $28.4 million and the six-year Capital Improvement Program (CIP) totals $181.4 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 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.
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.
CIP Justification 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 costs in the areas of maintenance, energy, or chemicals as shown on the justification and impact pages in this section.
169
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 expenditures for assets that cost more than $10,000 each and have an estimated useful life of two years or more. The Capital Purchase Projects include Vehicle, Office Equipment and Furniture, and
Field Equipment purchases, the details of which can be found on page 181. Capital
Facility Projects are items that exceed $10,000 or $20,000 for infrastructure related items
(as defined under Capital Equipment on page 241 of the Glossary) and have a useful life of at least two years.
The CIP projects identified and 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 are the three categories of CIP projects:
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 2011 Fiscal Year CIP Budget contains 82 projects. The cost of the work planned for
Fiscal Year 2011 is $28.4 million. Of the 82 projects planned for Fiscal Year 2011, only
four are designated as reimbursable projects with estimated costs totaling $12,000. These projects are built by developers and reimbursed by the District.
Capital Improvement Program
170
The following shows how the $28.4 million of projects
are broken down into four categories:
1. Capital facilities $ 16.2 million
2. Replacement or renewal projects $ 10.0 million
3. Capital purchase projects $ 2.2 million
4. Developer reimbursement projects $ 12.0 thousand
The Six-Year CIP and Fiscal Year 2011 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
171
Flagship CIP Project in Construction
Key Component:
Approximately 5 miles of 36-inch pipeline for potable water from Otay’s
FCF No. 14 to the Regulatory Site.
Schedule: A construction contract was awarded to CCL Contracting (CCL) on June 3,
2009. Project is approximately 90% complete. Project completion is anticipated for September 2010.
Cost:
The FY 2010 project budget is $15.0 million, of which $13.2 million, or 88%
has been spent. The life-to-date project budget is $22.2 million, of which $16.9 million, or 76%, has been spent.
Significant
Issues: None.
Highlights:
CCL completed the installation of the 36-Inch Pipeline. The tie-ins for the 12-
inch pipeline are complete. Testing, paving, tie-ins, and appurtenances on the
36-Inch remain.
Final road paving is scheduled to start in early August.
36-Inch Pipeline from FCF
No. 14 to Regulatory Site
(P2009)
This project was awarded to
CCL Contracting in June
2009. This project consists of
construction of approximately
27,300 feet of 36-Inch pipeline
to upgrade FCF No. 14 to a
capacity of 16 million gallons
per day.
172
Flagship CIP Project in Construction
Key Component:
A new 2.2 MG concrete Reservoir will provide additional storage in the 1296
Pressure Zone.
Schedule:
Project is complete.
Cost: The FY 2010 project budget was $2.0 million, of which $1.7 million, or 84%
was spent. The life-to-date project budget is $3.6 million, of which $3.4 million, or 93%, has been spent.
Significant
Issues: None.
Highlights:
The design of this reservoir is a Type III concrete reservoir. The lifecycle cost
of building a concrete reservoir is lower than a welded steel reservoir.
A solar power generating system was added to this project which includes a 75 square-foot photovoltaic panel for generating power, which is tied to the SDG&E power grid.
1296-3 Reservoir 2.0 MG (P2143)
This project was awarded to Natgun
Corporation in February 2009. This
project will provide additional storage
in the 1296 Pressure Zone.
173
Flagship CIP Project in Construction
Key Component:
The existing pump station was near capacity and had reached the end of its
useful life. The improved pump station systems and additional capacity are
required to meet projected demands of the 1485 and higher pressure zones as projected within the Water Resources Master Plan.
Schedule:
Project is complete.
Cost: The FY 2010 project budget was $1.6 million, of which $1.3 million, or 81% was spent. The life-to-date project budget is $2.48 million, of which $2.46 million, or 99%, has been spent.
Significant
Issues: None.
Highlights:
The new pump station will include SCADA equipment and will protect the
existing equipment from the elements.
1485-1 Pump Station Replacement (P2172)
This project was awarded to SCW Contracting and was started in January 2009. This
project consists of construction of a new pump station to replace the existing pump
station and to expand capacity as projected within the Water Resources Master Plan.
174
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.
$60,000
$ 56,145 $ 78,141
$ 51,764
Reserve Fund Balances
$20,000
$30,000
$40,000
$50,000
$60,000
$ 56,145 $ 78,141
$ 51,764
$ 43,759 $ 38,401 $ 38,330
Th
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Reserve Fund Balances
Expansion
Replacement
Betterment
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
$ 56,145 $ 78,141
$ 51,764
$ 43,759 $ 38,401 $ 38,330
Th
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Fiscal Year
Reserve Fund Balances
Expansion
Replacement
Betterment
(Thousand $000s)FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Total
Beginning Balance 71,567$ 56,145$ 78,141$ 51,764$ 43,759$ 38,401$
Capacity Fees 1,218 2,768 6,424 10,057 13,110 12,207 45,783$
Debt financing - 51,770 - - - - 51,770
Grants 2 540 1 050 1 050 1 000 1 000 500 7 140
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
$ 56,145 $ 78,141
$ 51,764
$ 43,759 $ 38,401 $ 38,330
Th
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Fiscal Year
Reserve Fund Balances
Expansion
Replacement
Betterment
Grants 2,540 1,050 1,050 1,000 1,000 500 7,140
Interest 1,108 1,495 1,922 1,875 1,614 1,507 9,522
Betterment Charges 739 761 784 808 832 857 4,782
Temporary Meters 860 860 861 865 870 872 5,187
Availability (Betterment Portion) 521 536 553 570 587 605 3,372
Capacity Fees 1,388 3,136 7,290 11,453 14,935 13,911 -
Transfer from General Fund 12,925 12,465 14,945 15,455 (6,235) (10,255) 39,300
Total Sources 21,298 74,842 33,829 42,083 26,713 20,204 166,855
CIP Projects 28,448 42,285 47,898 36,887 18,853 7,053 181,424
Betterment Fees for Maintenance 657 671 684 698 712 726 4,147
Debt Service 6,519 8,790 10,512 11,380 11,372 11,352 59,925
Developer Services 1,095 1,101 1,112 1,123 1,134 1,145 6,710
Total Uses 36,720 52,846 60,206 50,088 32,070 20,276 252,206
Net Sources (Uses)(15,421)$ 21,995$ (26,377)$ (8,005)$ (5,357)$ (71)$ (85,351)$
Ending Balance 56,145$ 78,141$ 51,764$ 43,759$ 38,401$ 38,330$
175
(Thousands $000s)FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 TOTAL
Expansion 12,026$ 22,375$ 20,984$ 15,757$ 6,662$ 3,482$ 81,285$
Betterment 6,531 12,322 17,588 10,278 8,298 2,400 57,417
Replacement 9,892 7,588 9,326 10,852 3,893 1,171 42,722
TOTAL 28,448$ 42,285$ 47,898$ 36,887$ 18,853$ 7,053$ 181,424$
(Thousands $000s)FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 TOTAL
Capital Facility Projects 16,181$ 32,488$ 39,025$ 27,930$ 14,830$ 5,550$ 136,004$
Maintenance Projects 10,006 5,966 4,512 4,264 2,405 783 27,936
Capital Purchase Projects 2,249 1,220 1,340 1,000 945 700 7,454
Developer Reimbursement Projects 12 1,314 1,296 544 - - 3,166
Subtotal 28,448 40,988 46,173 33,738 18,180 7,033 174,560
FY 2012 Through FY 2016 Projects - 1,297 1,725 3,149 673 20 6,864
TOTAL 28,448$ 42,285$ 47,898$ 36,887$ 18,853$ 7,053$ 181,424$
CIP Funding Source and Category
$0
$10,000
$20,000
$30,000
$40,000
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
SIX-YEAR CIP BY FUNDING SOURCE
Expansion
Replacement
Betterment
Th
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s
$0
$10,000
$20,000
$30,000
$40,000
$50,000
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
SIX-YEAR CIP BY CATEGORY Developer
Reimbursement Projects
Capital Purchase Projects
Maintenance Projects
Capital Facility Projects
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2011 2012 2013 2014 2015 2016
CIP No.Description FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Total
CAPITAL FACILITY PROJECTS
P2009 PL - 36-Inch, SDCWA Otay FCF No. 14 to Regulatory Site 2,200$ -$ -$ -$ -$ -$ 2,200$
P2038 PL - 12-Inch, 978 Zone, Jamacha, Hidden Mesa, and Chase Upsize and Replacements 130 - - - - - 130
P2083 PS - 870-2 Pump Station Replacement (28,000 GPM)50 1,000 4,000 6,000 950 - 12,000
P2143 Res - 1296-3 Reservoir 2 MG 5 - - - - - 5
P2172 PS - 1485-1 Pump Station Replacement 5 - - - - - 5
P2191 Res - 850-4 Reservoir 2.2 MG 5 - - - - - 5
P2318 PL - 20-Inch, 657 Zone, Summit Cross-Tie and 36-Inch Main Connections 100 230 200 - - - 530
P2357 PS - 657-1/850-1 Pump Station Demolition 50 250 - - - - 300
P2370 Res - Dorchester Reservoir and Pump Station Demolition 67 70 - - - - 137
P2391 PS - Perdue WTP Pump Station (10,000 GPM)5 182 300 2,700 4,700 4,000 11,887
P2399 PL - 30-Inch, 980 Zone, 980 Reservoirs to Hunte Parkway 200 650 10 - - - 860
P2431 Res - 980-4 Reservoir 5 MG 5 45 1,000 4,800 50 - 5,900
P2434 Rancho Del Rey Groundwater Well Development 1,000 1,500 250 - - - 2,750
P2451 Rosarito Desalination Facility Conveyance and Disinfection System 1,000 12,000 12,500 4,200 - - 29,700
P2466 Regional Training Facility 24 - - - - - 24
P2467 San Diego Formation Groundwater Feasibility Study 600 400 - - - - 1,000
P2471 850/657 PRS at La Presa Pump Station 240 - - - - - 240
P2472 Water Supply Feasibility Studies 30 30 30 30 30 - 150
P2473 PS - 711-1 Pump Station Improvement 200 250 - - - - 450
P2474 Fuel Storage Covers and Containment 50 50 - - - - 100
P2475 Pump Station Fire Hydrant Installations 45 - - - - - 45
P2481 Middle Sweetwater River Basin Groundwater Well Feasibility 50 770 - - - - 820
P2488 Del Rio Road Helix and Otay Agency Interconnection 120 5 - - - - 125
P2489 Gillispie Drive Helix and Otay Agency Interconnection 135 5 - - - - 140
P2497 Solar Power Feasibility Study 150 - - - - - 150
P2502 803-1 Pump Station Modifications 50 150 - - - - 200
P2503 850-2 Pump Station Modifications 150 500 - - - - 650
P2510 Operations Yard Improvements 25 335 10 - - - 370
P2511 North District - South District Interconnection System 800 2,200 15,000 10,200 9,100 - 37,300
R2034 RecRes - 860-1 Reservoir 4 MG 200 2,200 1,370 - - - 3,770
R2048 RecPL - Otay Mesa Distribution Pipelines and Conversions 250 850 1,040 - - - 2,140
R2058 RecPL - 16-Inch, 860 Zone, Airway Road - Otay Mesa/Alta 1,000 1,495 5 - - - 2,500
R2077 RecPL - 24-Inch, 860 Zone, Alta Road - Alta Gate/Airway 1,750 2,121 5 - - - 3,876
R2087 RecPL - 24-Inch, 927 Zone, Wueste Road - Olympic/Otay WTP 3,378 3,000 5 - - - 6,383
R2088 RecPL - 30-Inch, 860 Zone, County Jail - Roll Reservoir/860-1 Reservoir 240 1,200 2,000 - - - 3,440
R2091 RecPS - 927-1 Pump Station Upgrade (10,000 GPM) and System Enhancements 1,250 500 450 - - 1,550 3,750
R2092 Dis - 450-1 Reservoir Disinfection Facility 2 - - - - - 2
R2093 MBR City of Chula Vista Feasibility Study 120 - - - - - 120
R2094 Potable Irrigation Meters to Recycled Water Conversions 500 500 850 - - - 1,850
39 Total Capital Facility Projects 16,181 32,488 39,025 27,930 14,830 5,550 136,004
REPLACEMENT/RENEWAL PROJECTS
P2366 APCD Engine Replacements and Retrofits 442 220 200 200 200 200 1,462
P2382 Safety and Security Improvements 102 102 102 5 5 5 321
P2416 SR-125 Utility Relocations 50 - - - - - 50
P2440 I-905 Utility Relocations 100 - - - - - 100
P2453 SR-11 Utility Relocations 50 50 50 - - - 150
P2456 Air and Vacuum Valve Upgrades 450 450 - - - - 900
P2458 AMR Manual Meter Replacement 1,500 1,650 1,700 1,650 - - 6,500
P2477 Res - 624-1 Reservoir Cover Replacement 5 5 5 5 400 3 423
P2484 Large Water Meter Replacement Program 100 100 100 100 - - 400
P2485 SCADA Communication System and Software Replacement 350 475 235 - - - 1,060
P2486 Asset Management Plan Condition Assessment and Data Acquisition 600 200 100 - - - 900
P2490 1296-1 Reservoir Interior/Exterior Coating 240 10 - - - - 250
CIP Projects ($1,000s)
The 2011 Fiscal Year CIP Budget contains 82 projects. The costs for the work planned for Fiscal Year 2011 is
$28.4 million. Of the 82 projects planned for Fiscal Year 2011, one is designated as reimbursable project with
an estimated cost of $12,000. This project is built by a developer and reimbursed by the District.
177
CIP Projects ($1,000s)
P2491 850-3 Reservoir Exterior Coating 10 284 5 - - - 299
P2492 1296-2 Reservoir Interior/Exterior Coating 440 10 - - - - 450
P2493 624-2 Reservoir Interior Coating 5 5 935 4 - - 949
P2494 Multiple Species Conservation Plan 170 10 - - - - 180
P2495 San Miguel Habitat Management/Mitigation Area 250 250 250 250 250 250 1,500
P2496 Otay Lakes Road Utility Relocations 195 10 - - - - 205
P2504 Regulatory Site Access Road and Pipeline Relocation 200 400 - - - - 600
CIP No.Description FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Total
REPLACEMENT/RENEWAL PROJECTS (continued)
P2505 657-1 Reservoir Interior/Exterior Coating 325 50 - - - - 375
P2506 657-2 Reservoir Interior/Exterior Coating 325 50 - - - - 375
P2507 East Palomar Street Utility Relocation 20 75 155 250 - - 500
P2508 Pipeline Cathodic Protection Replacement Program 50 100 - - - - 150
R2096 RWCWRF - Upgrades and Modifications 1,200 900 - - - - 2,100
S2012 SVSD Outfall and RSD Replacement and OM Reimbursement 642 350 300 300 300 300 2,192
S2019 Avocado Boulevard 8-Inch Sewer Main Improvement 1,515 15 - - - - 1,530
S2020 Calavo Drive 8-Inch Sewer Main Replacement 360 10 - - - - 370
S2021 Jamacha Road 8-Inch Sewer Main Replacement 40 5 - - - - 45
S2022 Hidden Mesa Drive 8-Inch Sewer Main Rehabilitation 120 5 - - - - 125
S2023 Calavo Drive Sewer Main Utility Relocation 50 - - - - - 50
S2024 Campo Road Sewer Main Replacement 75 150 250 1,500 1,250 25 3,250
S2025 Wieghorst Way Sewer Main Replacement 25 25 125 - - - 175
32 Total Replacement/Renewal Projects 10,006 5,966 4,512 4,264 2,405 783 27,936
CAPITAL PURCHASE PROJECTS
P2282 Vehicle Capital Purchases 540 470 640 450 445 400 2,945
P2286 Field Equipment Capital Purchases 201 100 100 100 100 100 701
P2443 Information Technology Mobile Services 250 150 100 - - - 500
P2461 Records Management System Upgrade 150 - - - - - 150
P2469 Information Technology Network and Hardware 300 300 300 250 200 - 1,350
P2470 Application Systems Development and Integration 408 200 200 200 200 200 1,408
P2501 Telecommunications Equipment Upgrade 400 - - - - - 400
7 Total Capital Purchase Projects 2,249 1,220 1,340 1,000 945 700 7,454
CIP No.Description FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Total
DEVELOPER REIMBURSEMENT PROJECTS
P2325 PL - 10" to 12" Oversize, 1296 Zone, PB Road - Rolling Hills Hydro PS/PB Bndy 1 49 - - - - 50
R2082 RecPL - 24-Inch, 680 Zone, Olympic Parkway - Village 2/Heritage 5 795 946 - - - 1,746
R2083 RecPL - 20-Inch, 680 Zone, Heritage Road - Village 2/Olympic 5 395 - - - - 400
R2084 RecPL - 20-Inch, 680 Zone, Village 2 - Heritage/La Media 1 75 350 544 - - 970
4 Total Developer Reimbursement Projects 12 1,314 1,296 544 - - 3,166
82 Total - FY 2011 Projects 28,448 40,988 46,173 33,738 18,180 7,033 174,560
12 FY 2012 Through FY 2016 Projects - 1,297 1,725 3,149 673 20 6,864
Grand Totals 28,448$ 42,285$ 47,898$ 36,887$ 18,853$ 7,053$ 181,424
178
CIP No.Description J/FS (2) FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Total (3)
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
P2009 PL - 36-Inch, SDCWA Otay E/B 4,650 9,300 9,600 9,900 10,200 10,500 54,150$
P2033 PL - 16-Inch, 1296 Zone E - - - - - 2,200 2,200$
P2038 PL - 12-Inch, 978 Zone B/R 750 1,500 1,500 1,500 1,500 1,500 8,250
P2143 Res - 1296-3 Reservoir 2 MG E - 3,800 3,900 4,000 4,100 4,200 20,000
P2172 PS - 1485-1 Pump Station Replacement B/R - 7,400 7,600 7,800 8,000 8,200 39,000
P2191 Res - 850-4 Reservoir 2.2 MG E/B - 4,200 4,300 4,400 4,500 4,600 22,000
P2318 PL - 20-Inch, 657 Zone B - - - 100 100 100 300
P2357 PS - 657-1/850-1 Pump Station B - - (44,400) (45,700) (47,100) (48,500) (185,700)
P2370 Res - Dorchester Reservoir B - - (4,800) (4,900) (5,000) (5,200) (19,900)
P2391 PS - Perdue WTP Pump Station E/B - - - - - - -
P2399 PL - 30-Inch, 980 Zone E - - - 700 700 700 2,100
P2431 Res - 980-4 Reservoir 5 MG E - - - - - 9,400 9,400
P2434 Rancho Del Rey Groundwater E/B - - - 5,900 6,100 6,300 18,300
P2451 Rosarito Desalination Facility E/B - - - - 3,400 3,500 6,900
P2481 Middle Sweetwater River Basin E/B - - 8,900 9,200 9,500 9,800 37,400
P2502 803-1 Pump Station Modifications B - - (81,900) (84,400) (86,900) (89,500) (342,700)
P2503 850-2 Pump Station Modifications B - - (50,400) (51,900) (53,500) (55,100) (210,900)
P2511 North District-South District Interconnect E/B - - - - - 10,900 10,900
R2034 RecRes - 860-1 Reservoir 4 MG E - - - 7,500 7,700 7,900 23,100
R2048 RecPL - Otay Mesa Distribution Pipelines E - - - 10,200 10,500 10,800 31,500
R2058 RecPL - 16-Inch, 860 Zone E - - - 3,600 3,700 3,800 11,100
R2077 RecPL - 24-Inch, 860 Zone E - - - 3,200 3,300 3,400 9,900
R2087 RecPL - 24-Inch, 927 Zone E - - - 5,100 5,300 5,500 15,900
R2088 RecPL - 30-Inch, 860 Zone E - - - 2,400 2,500 2,600 7,500
R2091 RecPS - 927-1 Pump Station Upgrade E - - - - - - -
R2092 Dis - 450-1 Reservoir Disinfection Facility E 11,250 22,500 23,200 23,900 24,600 25,300 130,750
Total Capital Facility Projects 16,650$ 48,700$ (122,500)$ (87,500)$ (86,800)$ (67,100)$ (298,550)$
P2458 AMR Manual Meter Replacement R - - - - (226,400) (233,200) (459,600)
Total Replacement/Renewal Projects - - - - (226,400) (233,200) (459,600)
(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
(3)Negative cost reflect savings gained from operational efficiencies or the retirement of a facility.
Note:See pages 177-178 for complete description of CIP 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. Chemical
expenses are incurred for pumping at the well sites. All estimated 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.
CAPITAL FACILITY PROJECTS
CIP Justification and Impact on Operating Budget
Projected Incremental Operating Expenditures (1)
179
CIP Justification and Impact on Operating Budget
CIP No.Description J/FS (2) FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Total (3)
P2443 Information Technology Mobile Services E/R - - - 18,000 18,500 19,100 55,600
Total Capital Purchase Projects - - - 18,000 18,500 19,100 55,600
P2104 PL - 12-Inch, 711 Zone E - - - - 2,000 2,100 4,100
P2107 PL - 12-Inch, 711 Zone E - - - - 1,700 1,800 3,500
P2325 PL - 10" to 12" Oversize, 1296 Zone, E - - 2,300 2,400 2,500 2,600 9,800
P2402 PL - 12-Inch, 624 Zone E - - - - 1,000 1,000 2,000
P2403 PL - 12-Inch, 624 Zone, Heritage Road E - - - - 3,100 3,200 6,300
R2028 RecPL - 8-Inch, 680 Zone, Heritage Road E - - - - 2,400 2,500 4,900
R2042 RecPL - 8-Inch, 927 Zone E - - - 900 900 900 2,700
R2047 RecPL - 12-Inch, 680 Zone E - - - 1,400 1,400 1,400 4,200
R2082 RecPL - 24-Inch, 680 Zone E - - - 1,200 1,200 1,200 3,600
R2083 RecPL - 20-Inch, 680 Zone E - - 700 700 700 700 2,800
R2084 RecPL - 20-Inch, 680 Zone E - - - - 1,900 2,000 3,900
R2085 RecPL - 20-Inch, 680 Zone E - - - 1,300 1,300 1,300 3,900
Total Developer Reimbursement Projects - - 3,000 7,900 20,100 20,700 51,700
Total Operating Budget Cost Impact 16,650$ 48,700$ (119,500)$ (61,600)$ (274,600)$ (260,500)$ (650,850)$
FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Total
11,300$ 27,900$ 24,900$ 78,400$ (130,500)$ (116,700)$ (104,700)$
- 6,300 (158,500) (158,200) (162,900) (167,700) (641,000)
5,350 14,500 14,100 18,200 18,800 23,900 94,850
16,650$ 48,700$ (119,500)$ (61,600)$ (274,600)$ (260,500)$ (650,850)$
(1) (2) (3) see page 179
Note:See pages 177-178 for complete description of CIP projects.
Operations and Maintenance
EnergyChemical
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
180
Item#Amount Type
R
N
R
R
R
R
R
R
R
R
R
R
R
R
R
N
Grand Total :
670,000.00
919,400.00
Total of Vehicles
12 Ford F150 Supercab four-door or equivalent.25,000.00
13 Class 8 Vactor Hydro Excavator.280,000.00
11 Ford F150 Supercab four-door or equivalent.25,000.00
130,000.00
8 Small multi-passenger mini van or SUV.25,000.00
10
5 Class 7, 7/8 yard dump body dump truck.
13,000.00
249,400.00Total of Field Equipment
Small multi-passenger sedan or compact car.20,000.00
Replacement heavy equipment trailer.20,000.00
18 Replacement engine for pump engine number one at the
Treatment Plant.
48,500.00
14 RWCWRF Emergency stand by gen set.69,000.00
15 Towable Boom Lift: Allows an employee to work up to 61
feet above the ground, with an articulating arm to work
above water tanks or buildings. The primary use will be for
the SCADA technicians to install, aim, and maintain the
thernet radio antennas to meet Strategic Plan goals for
SCADA, IT and security.
43,900.00
Description
Field Equipment
Operations
N - New
16 Filter media removal and replacement at the reclamation
plant.
40,000.00
17
Ford F150 1/2 ton pick up truck 25,000.00
19 Replacement compressor for Unit 136.15,000.00
20 Replacement crane for Unit No. 136.
70,000.00
Vehicles
Operations
R - Replacment
6 Class 7, 7/8 yard dump body dump truck.70,000.00
7 Class 7 line truck with utility body.
9
FY 2011 Capital Purchases
Capital purchases are non-recurring operating expenditures for assets that cost more than $10,000 each and have an
estimated useful life of two years or more. The Capital Purchase Projects include Field Equipment, Office Equipment
and Furniture, and Vehicles 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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The 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.
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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).
187
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:
188
• 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.
189
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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DIAGRAM 2.0:
Flow of Funds – Developer Sources
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.
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.
DEVELOPERS
Annexation Fees Developer DepositsMeter Installation
Charges
Unrestricted andUndesignated(General Use)Fund
Designated Funds Restricted Funds
Capacity Fees
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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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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
CUSTOMERS / USERS
Energy ChargesMonthly System
Fees
Uniform Rates
and Charges
Unrestricted and
Undesignated
(General Use)
Fund
Designated Funds Restricted Funds
Penalties
Pass - through
Fixed Charges Temporary
Meter Fees Special Rates
and Charges
DIAGRAM 2.1: Flow of Funds – Customer Sources
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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.
MISCELLANEOUS INCOME
Interest Income
or Expense
Allocation
Sewer Billing FeesMiscellaneous
Rents and Leases
Unrestricted and
Undesignated
(General Use)
Fund
Designated Funds Restricted Funds
DIAGRAM 2.3: Flow of Funds – Miscellaneous Income Sources
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DEBT PROCEEDS
Certificates of
Participation
General Obligation
BondsLoans
Unrestricted and
Undesignated
(General Use)
Fund
Designated Funds Restricted Funds
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)
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
* 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
DIAGRAM 3.0: Fund Targets
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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 water service is requested for land outside the boundaries of the
District it must first be annexed into the District. The annexation fee for water service was set at $1,477 per EDU on July 1, 2009. Whenever sewer service is requested for land outside the boundaries of an improvement district (ID) it must first be annexed into the ID. 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, 2010 are $1,505 and $5,553
for water and sewer, respectively.
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.
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Debt Service: The District's obligation to pay the principal and interest of bonds and other debt instruments according to a predetermined payment schedule.
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’ Acceptance (BA): A draft or bill or exchange accepted by a bank or trust company.
The accepting institution guarantees payment of the bill, as well as the issuer.
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
234
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.
Certificates 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.
237
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.
238
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.
239
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 water service is requested for land outside the boundaries of
the District it must first be annexed into the District. The annexation fee for water service
was set at $1,477 per EDU on July 1, 2009. Whenever sewer service is requested for land
outside the boundaries of an improvement district (ID) it must first be annexed into the ID. 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, 2010 are $1,505 and $5,553 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 July 1 and ending 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
240
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
241
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 $.038 (to increase on January 1, 2011 to $.044) 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 $30.11 per month for each connection for fire protection service.
Glossary
242
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
243
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.
QualServe: a voluntary quality improvement program designed exclusively for water and
wastewater utilities.
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
244
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.
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
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. On January 1, 2009 the District implemented a
tiered rate structure for all customer types to encourage conservation and bring equity
among the classes.
Working Capital: A financial measure which represents available operating liquidity. It is
calculated as current assets minus current liabilities.
Glossary
245
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
CSDA California Special Districts Association
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
List of Acronyms
246
List of Acronyms
ERP Enterprise Resource Planning
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 Agency 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
247
List of Acronyms
MWD Metropolitan Water District
MWWD Metropolitan Waste Water Department (City of San Diego)
NCCP Natural Community Conservation Plan
NEPA National Environmental Policy 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
248
List of Acronyms
SWA Sweetwater Authority
SWRCB State Water Resources Control Board
UML Unified Modeling Language
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
249
Administrative Expenses 64,77,85,100
Awards 4-6
Balanced Scorecard 7-13
Budget Calendar 17-18
Budget Guide 15-16
Budget Process and Basis 19-21
Budget Summary 34-37
Capital Improvement Program Narrative 169-170
Capital Purchases Budget 181
CIP Flagship Projects in Construction 172-174
CIP Funding Source and Category 176
CIP Justification and Impact on Operating Budget 179-180
CIP Major Projects 171
CIP Projects 177-178
CIP Reserve Funds 175
Classification of Water Sales 55,70
Current Economic Conditions 25
Debt Management 48
Debt Policy 223-235
Debt Policy Glossary 236-239
Demographics 27
Department Budgets:
Administrative Services 114-124
Board of Directors 104-107
Engineering 157-165
Finance 125-135
General Expense 166-168
General Manager 108-113
Information Technology and Strategic Planning 136-143
Water Operations 144-156
Departmental Operating Budget Narrative 93-95
Five-Year Forecast 45
Formula for Sewer Rates 87
Fund Balance Summary by Fund 41
Fund Balances 47
Index
250
Future, The 26
General Fund Forecast 46
General Information 2
General Expenses 92
General Revenues 91
General Revenues and Expenses Narrative 89-90
Glossary 240-245
Investment Policy 211-216
Investment Policy Glossary 217-222
Labor and Benefits 96-97
Letter of Transmittal iv-viii
List of Acronyms 246-249
Materials and Maintenance Expenses 65,78,86,101
Meter Fees 60,73
MWD and CWA Fixed Fees (Pass-Through) 59
Operating Budget Summary 54,69,81
Operating Budget Summary by System 39
Operating Budget Summary – General Fund 38
Operating Expenditures by Department 102
Operating Expenditures by Object 103
Operating Revenues and Expenditures 40
Organization Chart 14
Otay Water District At-A-Glance 1
Past and Present 24
Position Count by Department 98-99
Potable Narrative 52-53
Power Costs 63,76,84
Projected Interest Payments by Debt Issuance 50
Projected Principal Payments by Debt Issuance 51
Recycled Narrative 67-68
Reserve Policy 184-208
Reserve Policy Glossary 209-210
Resolution 4159 22-23
Revenue History 61,74,83
Index
251
Revenues and Expenditures by Fund 42-43
Revenues and Expenditures by Type 44
San Diego Rainfall 33
Schedule of Outstanding Debt 49
Service Area Assessed Valuation 31
Service Area Maps 66,79,88,105
Sewer Charges Summary by Service Class 82
Sewer Narrative 80
Sewer Rate Comparison 30
Statement of Values 3
Summary of Financial Policies 182-183
System Fees 58,72
Ten Largest Customers 28
Ten Principal Taxpayers 32
Unit Sales History by Customer Class 57
Recycled Water Purchases 75
Potable Water Purchases and Related Costs 62
Water Rate Comparison 29
Water Sales Summary by Service Class 56,71
Index
252